Texas 2011 - 82nd Regular

Texas Senate Bill SB416 Compare Versions

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1	1	By: Deuell S.B. No. 416
2	2	(Smithee)
3	3
4	4
5	5	A BILL TO BE ENTITLED
6	6	AN ACT
7	7	relating to the amount of outstanding total liability of a mortgage
8	8	guaranty insurer.
9	9	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
10	10	SECTION 1. Section 3502.156, Insurance Code, is amended by
11	11	amending Subsections (a) and (c) and adding Subsections (d) through
12	12	(j) to read as follows:
13	13	(a) Except as provided by Subsection (d), a [A] mortgage
14	14	guaranty insurer may not at any time have outstanding under the
15	15	insurer's aggregate mortgage guaranty insurance policies a total
16	16	liability, net of reinsurance, that exceeds the sum of the
17	17	insurer's capital, surplus, and contingency reserve, multiplied by
18	18	25.
19	19	(c) Except as provided by Subsection (d), a [A] mortgage
20	20	guaranty insurer that has outstanding total liability that exceeds
21	21	the amount computed under Subsection (a) may not write new mortgage
22	22	guaranty insurance business until the insurer's total liability no
23	23	longer exceeds that amount.
24	24	(d) The commissioner may waive the limit imposed by
25	25	Subsection (a) at the written request of a mortgage guaranty
26	26	insurer on a finding by the commissioner that the sum of the
27	27	insurer's capital, surplus, and contingency reserve is reasonable
28	28	in relationship to the insurer's aggregate insured risk and
29	29	adequate to the insurer's financial needs. The request must be made
30	30	in writing on or before the 90th day before the date the insurer
31	31	expects to exceed the limit imposed by Subsection (a) and shall, at
32	32	a minimum, address the factors listed in Subsection (e).
33	33	(e) In determining whether a mortgage guaranty insurer's
34	34	capital, surplus, and contingency reserve is reasonable in relation
35	35	to the insurer's aggregate insured risk and adequate to the
36	36	insurer's financial needs, the commissioner, in the commissioner's
37	37	sole discretion, may consider relevant factors including:
38	38	(1) the insurer's size as measured by the insurer's
39	39	assets, capital and surplus, reserves, premium writings, insurance
40	40	in force, and other appropriate criteria;
41	41	(2) the extent to which the insurer's business is
42	42	diversified across time, geography, credit quality, origination,
43	43	and distribution channels;
44	44	(3) the nature and extent of the insurer's reinsurance
45	45	program;
46	46	(4) the quality, diversification, and liquidity of the
47	47	insurer's investment portfolio;
48	48	(5) the historical and forecasted trend in the size of
49	49	the insurer's capital, surplus, and contingency reserve;
50	50	(6) the capital, surplus, and contingency reserve
51	51	maintained by other comparable mortgage guaranty insurers in
52	52	relation to the nature of the insurers' respective insured risks;
53	53	(7) the reasonableness of the insurer's reserves;
54	54	(8) the quality and liquidity of the insurer's
55	55	investments in affiliates; and
56	56	(9) the quality of the insurer's earnings and the
57	57	extent to which the insurer's reported earnings include
58	58	extraordinary items.
59	59	(f) With respect to the factors listed in Subsection (e)(8),
60	60	the commissioner may treat an investment in an affiliate as a
61	61	nonadmitted asset for purposes of determining the adequacy of
62	62	surplus as regards policyholders.
63	63	(g) The commissioner may retain accountants, actuaries, or
64	64	other experts to assist the commissioner in the review of a request
65	65	made by a mortgage guaranty insurer under Subsection (d). The
66	66	insurer shall pay the commissioner's cost of retaining those
67	67	persons.
68	68	(h) A waiver granted under Subsection (d) must be for a
69	69	specified period that does not exceed two years and is subject to
70	70	any terms and conditions the commissioner considers best suited to
71	71	restoring the mortgage guaranty insurer's capital, surplus, and
72	72	contingency reserve to the level required by Subsection (a). The
73	73	mortgage guaranty insurer may apply to extend the waiver on or
74	74	before the 90th day before the date the waiver period expires.
75	75	(i) The commissioner may not under any circumstances allow
76	76	the mortgage guaranty insurer to have outstanding under the
77	77	insurer's aggregate mortgage guaranty insurance policies a total
78	78	liability, net of reinsurance, that exceeds the sum of the
79	79	insurer's capital, surplus, and contingency reserve, multiplied by
80	80	50.
81	81	(j) An insurer may not be allowed a waiver under Subsections
82	82	(d) and (h) for a continuous period of more than six years.
83	83	SECTION 2. This Act takes effect immediately if it receives
84	84	a vote of two-thirds of all the members elected to each house, as
85	85	provided by Section 39, Article III, Texas Constitution. If this
86	86	Act does not receive the vote necessary for immediate effect, this
87	87	Act takes effect September 1, 2011.