A. Except as otherwise provided in this title, no insurer transactingbusiness in this Commonwealth shall expose itself to any loss on any one riskor hazard in an amount exceeding ten percent of its surplus to policyholders.Any risk or portion of any risk reinsured by an insurer meeting standards ofsolvency equal to those set forth in Article 3.1 (§ 38.2-1316.1 et seq.) ofChapter 13 shall be deducted in determining the limitation of risk prescribedin this section.
B. For the purpose of this section, the surplus to policyholders shall bedetermined from (i) the insurer's last sworn statement filed with theCommission or (ii) the Commission's last report of examination, whichever ismore recent at the time the risk is assumed.
C. For the purpose of this section, any one risk or hazard (i) in the case ofmunicipal bond insurance shall mean average annual debt service of insuredobligations backed by a single revenue source, provided that the insurancepolicy does not require any accelerated payment of principal by the insurerupon the event of default and (ii) in the case of all other kinds offinancial guaranty insurance shall mean the insured unpaid principal withrespect to obligations for any one entity, except that any risk or hazardshall be defined by revenue source, if the insured risk or hazard is payablefrom a specified revenue source or adequately secured by loan obligations orother assets.
D. As used in subsection C above:
"Municipal bond insurance" means a kind of financial guaranty insuranceproviding insurance against loss by reason of nonpayment of principal,interest or other payment obligations pursuant to the terms of municipalbonds.
"Municipal bond" means any security, or other instrument under which apayment obligation is created, issued by or on behalf of, or payable orguaranteed by, the United States, Canada, a state, a province of Canada, amunicipality or political subdivision of any of the foregoing, or any publicagency or instrumentality thereof, or by any other entity provided that suchsecurity is eligible for issuance by one of the foregoing.
"Average annual debt service" means the amount of insured unpaid principaland interest on an obligation multiplied by the number of such insuredobligations, assuming that each obligation represents a $1,000 par value,divided by the amount equal to the aggregate life of all such obligations.
"Financial guaranty insurance" means insurance against loss by reason ofthe failure of any obligor on any debt instrument or other monetaryobligation, including common or preferred stock or capital leases, to paywhen due principal, interest, premium, dividend, or purchase price of or onsuch instrument or obligation, or a fee in connection therewith, when suchfailure is the result of a financial default or insolvency, regardless ofwhether such obligation is incurred directly or as a guarantor by or onbehalf of another obligor that has also defaulted.
For the purposes of subsection C of this section, the amount of insuredunpaid principal shall be reduced by the amount of deposit of (i) cash, or(ii) the market value of obligations rated in the four highest major ratingcategories by a securities rating agency recognized by the Commission, or(iii) the stated amount of an unconditional, irrevocable letter of creditissued or confirmed by a bank or trust company that (a) is a member of thefederal reserve system or chartered by any state or (b) is organized andexisting under the laws of a foreign country, has been licensed as a branchor agency by any state or the federal government and is rated in the twohighest major rating categories by a securities ratings agency recognized bythe Commission or (c) is otherwise acceptable to the Commission or (iv) aconveyance or mortgage of real property, or (v) the scheduled cash flow fromobligations rated in the four highest major rating categories by a securitiesrating agency recognized by the Commission if scheduled to be received on orprior to the date of scheduled debt service on the insured obligations. Suchdeposit shall be held by the insurer or held in trust for the benefit of theinsurer or held in trust for the benefit of holders of the insured obligationwhether in the form of debt service, sinking funds or other reserves pursuantto the bond indenture by a trustee acceptable to the Commission.
For the purpose of subsection C of this section, an insurer's surplus topolicyholders shall include the amount of any contingency or similar reserveestablished and maintained by the insurer pursuant to applicable law for theprotection of insureds covered by financial guaranty insurance policiesagainst the effect of excessive losses usually occurring during adverseeconomic cycles.
E. The limitation of risk prescribed in this section for any alien insurershall apply only to the exposure to risk and the trusteed surplus of thealien insurer's policyholders.
F. This section shall not apply to (i) life insurance, (ii) annuities, (iii)accident and sickness insurance, (iv) insurance of marine risks or marineprotection and indemnity risks, (v) workers' compensation or employers'liability risks, or (vi) risks covered by title insurance.
(Code 1950, §§ 38-167, 38-168; 1952, c. 317, § 38.1-32; 1986, c. 562; 1987,c. 353; 1988, c. 554.)
A. Except as otherwise provided in this title, no insurer transactingbusiness in this Commonwealth shall expose itself to any loss on any one riskor hazard in an amount exceeding ten percent of its surplus to policyholders.Any risk or portion of any risk reinsured by an insurer meeting standards ofsolvency equal to those set forth in Article 3.1 (§ 38.2-1316.1 et seq.) ofChapter 13 shall be deducted in determining the limitation of risk prescribedin this section.
B. For the purpose of this section, the surplus to policyholders shall bedetermined from (i) the insurer's last sworn statement filed with theCommission or (ii) the Commission's last report of examination, whichever ismore recent at the time the risk is assumed.
C. For the purpose of this section, any one risk or hazard (i) in the case ofmunicipal bond insurance shall mean average annual debt service of insuredobligations backed by a single revenue source, provided that the insurancepolicy does not require any accelerated payment of principal by the insurerupon the event of default and (ii) in the case of all other kinds offinancial guaranty insurance shall mean the insured unpaid principal withrespect to obligations for any one entity, except that any risk or hazardshall be defined by revenue source, if the insured risk or hazard is payablefrom a specified revenue source or adequately secured by loan obligations orother assets.
D. As used in subsection C above:
"Municipal bond insurance" means a kind of financial guaranty insuranceproviding insurance against loss by reason of nonpayment of principal,interest or other payment obligations pursuant to the terms of municipalbonds.
"Municipal bond" means any security, or other instrument under which apayment obligation is created, issued by or on behalf of, or payable orguaranteed by, the United States, Canada, a state, a province of Canada, amunicipality or political subdivision of any of the foregoing, or any publicagency or instrumentality thereof, or by any other entity provided that suchsecurity is eligible for issuance by one of the foregoing.
"Average annual debt service" means the amount of insured unpaid principaland interest on an obligation multiplied by the number of such insuredobligations, assuming that each obligation represents a $1,000 par value,divided by the amount equal to the aggregate life of all such obligations.
"Financial guaranty insurance" means insurance against loss by reason ofthe failure of any obligor on any debt instrument or other monetaryobligation, including common or preferred stock or capital leases, to paywhen due principal, interest, premium, dividend, or purchase price of or onsuch instrument or obligation, or a fee in connection therewith, when suchfailure is the result of a financial default or insolvency, regardless ofwhether such obligation is incurred directly or as a guarantor by or onbehalf of another obligor that has also defaulted.
For the purposes of subsection C of this section, the amount of insuredunpaid principal shall be reduced by the amount of deposit of (i) cash, or(ii) the market value of obligations rated in the four highest major ratingcategories by a securities rating agency recognized by the Commission, or(iii) the stated amount of an unconditional, irrevocable letter of creditissued or confirmed by a bank or trust company that (a) is a member of thefederal reserve system or chartered by any state or (b) is organized andexisting under the laws of a foreign country, has been licensed as a branchor agency by any state or the federal government and is rated in the twohighest major rating categories by a securities ratings agency recognized bythe Commission or (c) is otherwise acceptable to the Commission or (iv) aconveyance or mortgage of real property, or (v) the scheduled cash flow fromobligations rated in the four highest major rating categories by a securitiesrating agency recognized by the Commission if scheduled to be received on orprior to the date of scheduled debt service on the insured obligations. Suchdeposit shall be held by the insurer or held in trust for the benefit of theinsurer or held in trust for the benefit of holders of the insured obligationwhether in the form of debt service, sinking funds or other reserves pursuantto the bond indenture by a trustee acceptable to the Commission.
For the purpose of subsection C of this section, an insurer's surplus topolicyholders shall include the amount of any contingency or similar reserveestablished and maintained by the insurer pursuant to applicable law for theprotection of insureds covered by financial guaranty insurance policiesagainst the effect of excessive losses usually occurring during adverseeconomic cycles.
E. The limitation of risk prescribed in this section for any alien insurershall apply only to the exposure to risk and the trusteed surplus of thealien insurer's policyholders.
F. This section shall not apply to (i) life insurance, (ii) annuities, (iii)accident and sickness insurance, (iv) insurance of marine risks or marineprotection and indemnity risks, (v) workers' compensation or employers'liability risks, or (vi) risks covered by title insurance.
(Code 1950, §§ 38-167, 38-168; 1952, c. 317, § 38.1-32; 1986, c. 562; 1987,c. 353; 1988, c. 554.)
A. Except as otherwise provided in this title, no insurer transactingbusiness in this Commonwealth shall expose itself to any loss on any one riskor hazard in an amount exceeding ten percent of its surplus to policyholders.Any risk or portion of any risk reinsured by an insurer meeting standards ofsolvency equal to those set forth in Article 3.1 (§ 38.2-1316.1 et seq.) ofChapter 13 shall be deducted in determining the limitation of risk prescribedin this section.
B. For the purpose of this section, the surplus to policyholders shall bedetermined from (i) the insurer's last sworn statement filed with theCommission or (ii) the Commission's last report of examination, whichever ismore recent at the time the risk is assumed.
C. For the purpose of this section, any one risk or hazard (i) in the case ofmunicipal bond insurance shall mean average annual debt service of insuredobligations backed by a single revenue source, provided that the insurancepolicy does not require any accelerated payment of principal by the insurerupon the event of default and (ii) in the case of all other kinds offinancial guaranty insurance shall mean the insured unpaid principal withrespect to obligations for any one entity, except that any risk or hazardshall be defined by revenue source, if the insured risk or hazard is payablefrom a specified revenue source or adequately secured by loan obligations orother assets.
D. As used in subsection C above:
"Municipal bond insurance" means a kind of financial guaranty insuranceproviding insurance against loss by reason of nonpayment of principal,interest or other payment obligations pursuant to the terms of municipalbonds.
"Municipal bond" means any security, or other instrument under which apayment obligation is created, issued by or on behalf of, or payable orguaranteed by, the United States, Canada, a state, a province of Canada, amunicipality or political subdivision of any of the foregoing, or any publicagency or instrumentality thereof, or by any other entity provided that suchsecurity is eligible for issuance by one of the foregoing.
"Average annual debt service" means the amount of insured unpaid principaland interest on an obligation multiplied by the number of such insuredobligations, assuming that each obligation represents a $1,000 par value,divided by the amount equal to the aggregate life of all such obligations.
"Financial guaranty insurance" means insurance against loss by reason ofthe failure of any obligor on any debt instrument or other monetaryobligation, including common or preferred stock or capital leases, to paywhen due principal, interest, premium, dividend, or purchase price of or onsuch instrument or obligation, or a fee in connection therewith, when suchfailure is the result of a financial default or insolvency, regardless ofwhether such obligation is incurred directly or as a guarantor by or onbehalf of another obligor that has also defaulted.
For the purposes of subsection C of this section, the amount of insuredunpaid principal shall be reduced by the amount of deposit of (i) cash, or(ii) the market value of obligations rated in the four highest major ratingcategories by a securities rating agency recognized by the Commission, or(iii) the stated amount of an unconditional, irrevocable letter of creditissued or confirmed by a bank or trust company that (a) is a member of thefederal reserve system or chartered by any state or (b) is organized andexisting under the laws of a foreign country, has been licensed as a branchor agency by any state or the federal government and is rated in the twohighest major rating categories by a securities ratings agency recognized bythe Commission or (c) is otherwise acceptable to the Commission or (iv) aconveyance or mortgage of real property, or (v) the scheduled cash flow fromobligations rated in the four highest major rating categories by a securitiesrating agency recognized by the Commission if scheduled to be received on orprior to the date of scheduled debt service on the insured obligations. Suchdeposit shall be held by the insurer or held in trust for the benefit of theinsurer or held in trust for the benefit of holders of the insured obligationwhether in the form of debt service, sinking funds or other reserves pursuantto the bond indenture by a trustee acceptable to the Commission.
For the purpose of subsection C of this section, an insurer's surplus topolicyholders shall include the amount of any contingency or similar reserveestablished and maintained by the insurer pursuant to applicable law for theprotection of insureds covered by financial guaranty insurance policiesagainst the effect of excessive losses usually occurring during adverseeconomic cycles.
E. The limitation of risk prescribed in this section for any alien insurershall apply only to the exposure to risk and the trusteed surplus of thealien insurer's policyholders.
F. This section shall not apply to (i) life insurance, (ii) annuities, (iii)accident and sickness insurance, (iv) insurance of marine risks or marineprotection and indemnity risks, (v) workers' compensation or employers'liability risks, or (vi) risks covered by title insurance.
(Code 1950, §§ 38-167, 38-168; 1952, c. 317, § 38.1-32; 1986, c. 562; 1987,c. 353; 1988, c. 554.)
