Bill Text: TX SB416 | 2011-2012 | 82nd Legislature | Enrolled
Bill Title: Relating to the amount of outstanding total liability of a mortgage guaranty insurer.
Sponsorship: Partisan Bill (Republican 2)
Status: (Passed) 2011-05-10 - Effective immediately [SB416 Detail]
Download: Texas-2011-SB416-Enrolled.html
| S.B. No. 416 | ||
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| relating to the amount of outstanding total liability of a mortgage | ||
| guaranty insurer. | ||
| BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: | ||
| SECTION 1. Section 3502.156, Insurance Code, is amended by | ||
| amending Subsections (a) and (c) and adding Subsections (d) through | ||
| (j) to read as follows: | ||
| (a) Except as provided by Subsection (d), a [ |
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| guaranty insurer may not at any time have outstanding under the | ||
| insurer's aggregate mortgage guaranty insurance policies a total | ||
| liability, net of reinsurance, that exceeds the sum of the | ||
| insurer's capital, surplus, and contingency reserve, multiplied by | ||
| 25. | ||
| (c) Except as provided by Subsection (d), a [ |
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| guaranty insurer that has outstanding total liability that exceeds | ||
| the amount computed under Subsection (a) may not write new mortgage | ||
| guaranty insurance business until the insurer's total liability no | ||
| longer exceeds that amount. | ||
| (d) The commissioner may waive the limit imposed by | ||
| Subsection (a) at the written request of a mortgage guaranty | ||
| insurer on a finding by the commissioner that the sum of the | ||
| insurer's capital, surplus, and contingency reserve is reasonable | ||
| in relationship to the insurer's aggregate insured risk and | ||
| adequate to the insurer's financial needs. The request must be made | ||
| in writing on or before the 90th day before the date the insurer | ||
| expects to exceed the limit imposed by Subsection (a) and shall, at | ||
| a minimum, address the factors listed in Subsection (e). | ||
| (e) In determining whether a mortgage guaranty insurer's | ||
| capital, surplus, and contingency reserve is reasonable in relation | ||
| to the insurer's aggregate insured risk and adequate to the | ||
| insurer's financial needs, the commissioner, in the commissioner's | ||
| sole discretion, may consider relevant factors including: | ||
| (1) the insurer's size as measured by the insurer's | ||
| assets, capital and surplus, reserves, premium writings, insurance | ||
| in force, and other appropriate criteria; | ||
| (2) the extent to which the insurer's business is | ||
| diversified across time, geography, credit quality, origination, | ||
| and distribution channels; | ||
| (3) the nature and extent of the insurer's reinsurance | ||
| program; | ||
| (4) the quality, diversification, and liquidity of the | ||
| insurer's investment portfolio; | ||
| (5) the historical and forecasted trend in the size of | ||
| the insurer's capital, surplus, and contingency reserve; | ||
| (6) the capital, surplus, and contingency reserve | ||
| maintained by other comparable mortgage guaranty insurers in | ||
| relation to the nature of the insurers' respective insured risks; | ||
| (7) the reasonableness of the insurer's reserves; | ||
| (8) the quality and liquidity of the insurer's | ||
| investments in affiliates; and | ||
| (9) the quality of the insurer's earnings and the | ||
| extent to which the insurer's reported earnings include | ||
| extraordinary items. | ||
| (f) With respect to the factors listed in Subsection (e)(8), | ||
| the commissioner may treat an investment in an affiliate as a | ||
| nonadmitted asset for purposes of determining the adequacy of | ||
| surplus as regards policyholders. | ||
| (g) The commissioner may retain accountants, actuaries, or | ||
| other experts to assist the commissioner in the review of a request | ||
| made by a mortgage guaranty insurer under Subsection (d). The | ||
| insurer shall pay the commissioner's cost of retaining those | ||
| persons. | ||
| (h) A waiver granted under Subsection (d) must be for a | ||
| specified period that does not exceed two years and is subject to | ||
| any terms and conditions the commissioner considers best suited to | ||
| restoring the mortgage guaranty insurer's capital, surplus, and | ||
| contingency reserve to the level required by Subsection (a). The | ||
| mortgage guaranty insurer may apply to extend the waiver on or | ||
| before the 90th day before the date the waiver period expires. | ||
| (i) The commissioner may not under any circumstances allow | ||
| the mortgage guaranty insurer to have outstanding under the | ||
| insurer's aggregate mortgage guaranty insurance policies a total | ||
| liability, net of reinsurance, that exceeds the sum of the | ||
| insurer's capital, surplus, and contingency reserve, multiplied by | ||
| 50. | ||
| (j) An insurer may not be allowed a waiver under Subsections | ||
| (d) and (h) for a continuous period of more than six years. | ||
| SECTION 2. This Act takes effect immediately if it receives | ||
| a vote of two-thirds of all the members elected to each house, as | ||
| provided by Section 39, Article III, Texas Constitution. If this | ||
| Act does not receive the vote necessary for immediate effect, this | ||
| Act takes effect September 1, 2011. | ||
| ______________________________ | ______________________________ | |
| President of the Senate | Speaker of the House | |
| I hereby certify that S.B. No. 416 passed the Senate on | ||
| March 17, 2011, by the following vote: Yeas 31, Nays 0. | ||
| ______________________________ | ||
| Secretary of the Senate | ||
| I hereby certify that S.B. No. 416 passed the House on | ||
| April 26, 2011, by the following vote: Yeas 148, Nays 0, two | ||
| present not voting. | ||
| ______________________________ | ||
| Chief Clerk of the House | ||
| Approved: | ||
| ______________________________ | ||
| Date | ||
| ______________________________ | ||
| Governor | ||
