2006 Code of Virginia § 38.2-1315 - Mortgage guaranty insurance contingency reserve

38.2-1315. Mortgage guaranty insurance contingency reserve.

A. To protect against the effect of adverse economic cycles, each insurertransacting the business of mortgage guaranty insurance in this Commonwealthshall establish and maintain a contingency reserve equal to fifty percent ofits earned premium.

B. Allocations to the contingency reserve shall be maintained for 120 months.That portion of the contingency reserve that has been maintained for morethan 120 months shall be released and shall no longer constitute part of thecontingency reserve and shall be allocated to surplus to policyholders.

C. Upon approval by the Commission, the contingency reserve shall beavailable for loss payments only when the incurred losses in any onetwelve-month period, less any amounts already released from the contingencyreserve during that period, exceed thirty-five percent of the correspondingearned premium.

D. In the event of release of the contingency reserve for payment of losses,the contributions required by subsection A of this section shall be treatedon a first-in-first-out basis.

E. Whenever the laws of any other state require a greater unearned premiumreserve than that set forth in 38.2-1312, the mortgage guaranty insurancecontingency reserve of mortgage guaranty insurers organized under the laws ofthat state may be an amount that, when added to such unearned premiumreserve, will result in a reserve equal to the sum of the unearned premiumreserve required by 38.2-1312 and the contingency reserve required by thissection.

F. The authority of the Commission under 38.2-223 to issue rules andregulations includes the authority to require that a greater reserve beestablished for mortgage guaranty insurance on liens other than first liens.

(1973, c. 250, 38.1-173.1, 38.1-173.2; 1981, c. 209; 1986, c. 562; 1989,c. 236; 2000, c. 46.)