§ 58-10-135. Contingency reserve for mortgage guaranty insurers.
§ 58‑10‑135. Contingency reserve for mortgage guaranty insurers.
(a) Subject to G.S. 58‑7‑21,a mortgage guaranty insurer shall make an annual contribution to thecontingency reserve which in the aggregate shall be fifty percent (50%) of thenet earned mortgage guaranty premium reported in the annual statement.
(b) Repealed by SessionLaws 2007‑127, s. 6, effective July 1, 2007.
(c) The contingencyreserve established by this section shall be maintained for 120 months andreported in the financial statements as a liability. That portion of thecontingency reserve established and maintained for more than 120 months shallbe released and shall no longer constitute part of the contingency reserve.
(d) With the approvalof the Commissioner, withdrawals may be made from the contingency reserve whenincurred losses and incurred loss expenses exceed thirty‑five percent(35%) of the net earned premium. On a quarterly basis, provisional withdrawalsmay be made from the contingency reserve in an amount not to exceed seventy‑fivepercent (75%) of the withdrawal calculated in accordance with this subsection.
(e) With the approvalof the Commissioner, a mortgage guaranty insurer may withdraw from thecontingency reserve any amounts which are in excess of the minimum policyholdersposition as filed with the most recently filed annual statement. In reviewing arequest for withdrawal pursuant to this subsection, the Commissioner mayconsider loss development and trends. If any portion of the contingency reservefor which withdrawal is requested pursuant to this subsection is maintained bya reinsurer, the Commissioner may also consider the financial condition of thereinsurer. If any portion of the contingency reserve for which withdrawal isrequested pursuant to this subsection is maintained in a segregated account orsegregated trust and such withdrawal would result in funds being removed fromthe segregated account or segregated trust, the Commissioner may also considerthe financial condition of the reinsurer.
(f) Releases andwithdrawals from the contingency reserve shall be accounted for on a first‑in‑first‑outbasis as prescribed by the Commissioner.
(g) The calculations todevelop the contingency reserve shall be made in the following sequence:
(1) The additionsrequired by subsection (a) of this section;
(2) The releasespermitted by subsection (c) of this section;
(3) The withdrawalspermitted by subsection (d) of this section; and
(4) The withdrawalspermitted by subsection (e) of this section.
(h) Whenever the laws orregulations of another jurisdiction in which a mortgage guaranty insurer,subject to the requirements of this Part is licensed, require a larger unearnedpremium reserve or a larger contingency reserve in the aggregate than that setforth in this Part, the establishment and maintenance of the larger unearnedpremium reserve or contingency reserve shall be deemed to be in compliance withthis Part. (2001‑223,s. 11; 2001‑334, ss. 16.2, 16.3; 2007‑127, s. 6.)