38.2-4610.1 - Unearned premium reserve.
§ 38.2-4610.1. Unearned premium reserve.
A. A domestic title insurance company shall establish and maintain anunearned premium reserve computed in accordance with this section, and allsums attributed to such reserve shall at all times and for all purposes beconsidered and constitute unearned portions of the original premiums. Thisreserve shall be reported as a liability of the title insurance company inits financial statements.
B. The unearned premium reserve shall be maintained by the title insurancecompany for the protection of holders of title insurance policies. Except asprovided in this section, assets equal in value to the unearned premiumreserve are not subject to distribution among creditors or stockholders ofthe title insurance company until all claims of policyholders or claims underreinsurance contracts have been paid in full, and all liability on thepolicies or reinsurance contracts has been paid in full and discharged orlawfully reinsured.
C. Except as provided in § 38.2-4610.1:1, foreign or alien title insurancecompany licensed to transact title insurance business in the Commonwealthshall maintain at least the same unearned premium reserves on title insurancepolicies issued on properties located in the Commonwealth as are required ofdomestic title insurance companies, unless the laws of the jurisdiction ofdomicile of the foreign or alien title insurance company require a higheramount.
D. The unearned premium reserve shall consist of:
1. The amount of the unearned premium reserve on June 30, 1986; and
2. A sum equal to $1.50 for each policy, contract or agreement of titleinsurance covering a single risk written after June 30, 1986, plus a sumequal to 12 1/2 cents of each $1,000 of net retained liability under eachsuch policy, contract or agreement of title insurance on a single riskwritten after June 30, 1986.
E. Amounts placed in the unearned premium reserve in any year in accordancewith subdivision 2 of subsection D of this section shall be deducted indetermining the net profit of the title insurance company for that year.
F. A title insurance company shall release from the unearned premium reservea sum equal to ten percent of the amount added to the reserve during acalendar year on July 1 of each of the five years following the year in whichthe sum was added, and shall release from the unearned premium reserve a sumequal to 3 1/3 percent of the amount added to the reserve during that year oneach succeeding July 1 until the entire amount for that year has beenreleased. The amount of the unearned premium reserve maintained before July1, 1986, shall be released in accordance with the law in effect when therespective sums were reserved.
(1986, c. 404, § 38.1-730.1; 2008, c. 248.)