Senate Bill sb0218

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    Florida Senate - 2001                                   SB 218

    By Senator Horne





    6-133-01

  1                      A bill to be entitled

  2         An act relating to mortgage guaranty insurance;

  3         amending ss. 624.408, 635.042, F.S.; revising

  4         minimum surplus requirements for mortgage

  5         guaranty insurers; revising limits on total

  6         liability and exposure to losses for such

  7         insurers; requiring mortgage guaranty insurers

  8         to include certain information in audited

  9         financial reports required pursuant to s.

10         624.424(8); authorizing the Department of

11         Insurance to take certain actions against a

12         mortgage guaranty insurer that is not in

13         compliance; providing an effective date.

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15  Be It Enacted by the Legislature of the State of Florida:

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17         Section 1.  Section 624.408, Florida Statutes, is

18  amended to read:

19         624.408  Surplus as to policyholders required; new and

20  existing insurers.--

21         (1)(a)  To maintain a certificate of authority to

22  transact any one kind or combinations of kinds of insurance,

23  as defined in part V of this chapter, an insurer in this state

24  shall at all times maintain surplus as to policyholders not

25  less than the greater of:

26         1.  Except as provided in subparagraph 5. and paragraph

27  (b), $1.5 million;

28         2.  For life insurers, 4 percent of the insurer's total

29  liabilities;

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    Florida Senate - 2001                                   SB 218
    6-133-01




  1         3.  For life and health insurers, 4 percent of the

  2  insurer's total liabilities plus 6 percent of the insurer's

  3  liabilities relative to health insurance; or

  4         4.  For all insurers other than mortgage guaranty

  5  insurers, life insurers, and life and health insurers, 10

  6  percent of the insurer's total liabilities.

  7         5.  For property and casualty insurers, $4 million.

  8         (b)  For any property and casualty insurer holding a

  9  certificate of authority on December 1, 1993, the following

10  amounts apply instead of the $4 million required by

11  subparagraph (a)5.:

12         1.  On December 31, 1998, and until December 30, 1999,

13  $2.25 million.

14         2.  On December 31, 1999, and until December 30, 2000,

15  $2.5 million.

16         3.  On December 31, 2000, and until December 30, 2001,

17  $2.75 million.

18         4.  On December 31, 2001, and until December 30, 2002,

19  $3 million.

20         5.  On December 31, 2002, and until December 30, 2003,

21  $3.25 million.

22         6.  On December 31, 2003, and until December 30, 2004,

23  $3.6 million.

24         7.  On December 31, 2004, and thereafter, $4 million.

25         (2)  For purposes of this section, liabilities shall

26  not include liabilities required under s. 625.041(4). For

27  purposes of computing minimum surplus as to policyholders

28  pursuant to s. 625.305(1), liabilities shall include

29  liabilities required under s. 625.041(4).

30         (3)  No insurer shall be required under this section to

31  have surplus as to policyholders greater than $100 million.

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    Florida Senate - 2001                                   SB 218
    6-133-01




  1         (4)  A mortgage guaranty insurer shall maintain a

  2  minimum surplus as required by s. 635.042.

  3         Section 2.  Section 635.042, Florida Statutes, is

  4  amended to read:

  5         635.042  Minimum surplus requirement Limitation on

  6  outstanding liability.--

  7         (1)  A mortgage guaranty insurer shall maintain a

  8  minimum surplus of not less than the greater of $4 million or

  9  10 percent of the insurer's total outstanding liabilities

10  other than the required contingency reserve. A mortgage

11  guaranty insurer is not required to have a surplus as to

12  policyholders greater than $100 million.

13         (2)  A mortgage guaranty insurer must possess

14  sufficient capital and surplus so that the total outstanding

15  aggregate exposure net of reinsurance under mortgage guaranty

16  policies written by the insurer does not exceed 25 times its

17  paid-in capital, surplus, and contingency reserve combined. A

18  mortgage guaranty insurer shall disclose in the audited

19  financial reports required under s. 624.424(8), the total

20  aggregate exposure net of reinsurance under mortgage guaranty

21  policies written by the insurer.

22         (3)  If a mortgage guaranty insurer is not in

23  compliance with this section, the department may take any

24  action against the insurer that the department may take

25  against an insurer that is not in compliance with s. 624.408.

26  No mortgage guaranty insurer may at any time have outstanding

27  a total liability net of reinsurance, under its aggregate

28  mortgage guaranty insurance policies, exceeding 25 times its

29  paid-in capital, surplus, and contingency reserve combined.

30         Section 3.  This act shall take effect July 1, 2001.

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    Florida Senate - 2001                                   SB 218
    6-133-01




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  2                          SENATE SUMMARY

  3    Revises the minimum surplus requirement for mortgage
      guaranty insurers by providing that the insurer's
  4    contingency reserve would not be considered as a
      liability for purposes of requiring surplus to be 10
  5    percent of liabilities. Requires mortgage guaranty
      insurers to have sufficient capital and surplus so that
  6    the total outstanding exposure of their written policies
      does not exceed 25 times their paid-in-capital, surplus,
  7    and contingency reserve combined. Requires mortgage
      guaranty insurers to file their outstanding exposure in
  8    their audited financial report. Authorizes the Department
      of Insurance to take administrative action against a
  9    mortgage guaranty insurer if the insurer is not in
      compliance with these requirements.
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