California Insurance Code

§ 12640.05

INS § 12640.05 Effective Jan 1, 2010Div. 2 · Part 6 · Ch. 2A · Art. 2

Statute text

(a)A mortgage guaranty insurer shall maintain a policyholders surplus in an amount not less than the amount required by this section. The policyholders surplus shall be the calculated net of reinsurance ceded, but shall include reinsurance assumed. “Face amount of an insured mortgage” means the outstanding principal balance computed without any reduction because of an insurer’s option limiting its coverage, but shall exclude the outstanding principal balance of any loan that is in default and for which the insurer has established a loss reserve, provided that the loss reserve established for that loan is equal to or greater than the policyholders surplus the insurer would otherwise be required to establish with respect to that loan, pursuant to this section. Nothing in this subdivision limits the commissioner’s authority under Section 12640.04.

(b)If a policy of mortgage guaranty insurance insures individual loans with a percentage claim settlement option on such loans, the insurer shall maintain a policyholders surplus based on each one hundred dollars ($100) of the face amount of the mortgage, the percentage coverage or claim settlement option, and the loan-to-value category. The required amount of policyholders surplus shall be calculated in the following manner:

(1)If the total indebtedness is greater than 75 percent of the value of the collateral property at the date of the insurance: Policyholders Policyholders Surplus per $100 Surplus per $100 of the Face of the Face Percent Amount of the Percent Amount of the Coverage Mortgage Coverage Mortgage 5% $ .20 55% $1.50 10 .40 60 1.55 15 .60 65 1.60 20 .80 70 1.65 25 1.00 75 1.75 30 1.10 80 1.80 35 1.20 85 1.85 40 1.30 90 1.90 45 1.35 95 1.95 50 1.40 100 2.00 If the percent coverage is between any five-point increment, then the factor for policyholders surplus per one hundred dollars ($100) of the face amount of the mortgage shall be prorated.

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Legislative history

Amended by Stats. 2009, Ch. 574, Sec. 1. (SB 291) Effective January 1, 2010.