S.B. No. 416

	AN ACT
	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 [A] mortgage
	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 [A] mortgage
	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