Senate Bill S5994

                            
                    S T A T E   O F   N E W   Y O R K
________________________________________________________________________

                                  5994

                       2009-2010 Regular Sessions

                            I N  S E N A T E

                              June 19, 2009
                               ___________

Introduced  by  Sen. BRESLIN -- read twice and ordered printed, and when
  printed to be committed to the Committee on Rules

AN ACT to amend the insurance law,  in  relation  to  mortgage  guaranty
  insurance and reinsurance

  THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section 1.  Subsection (d) of section 6507 of the  insurance  law,  as
added by chapter 517 of the laws of 1989, is amended to read as follows:
  (d) Where a mortgage insurer cedes any insurance to a mortgage insurer
not  licensed under this article or an insurer that insures or reinsures
other lines of insurance in addition to mortgage guaranty insurance,  in
order for the mortgage insurer to receive credit for such reinsurance as
an  asset  or as a reduction from liabilities, including its contingency
reserve liability, in its financial statements,  such  assuming  insurer
must maintain a surplus to policyholders of at least thirty-five million
dollars and the following must occur[;]:
  (1)  the  ASSUMING  insurer  [must]  SHALL establish and maintain in a
segregated trust an amount equal to the greater of either the contingen-
cy reserve required by paragraph two of subsection (a)  of  section  six
thousand  five  hundred  two  of  this  article,  or four percent of the
outstanding total  liability  under  the  aggregate  insurance  policies
assumed  from  the  mortgage insurer, BUT TO THE EXTENT IT DOES NOT, THE
MORTGAGE INSURER SHALL ESTABLISH AND MAINTAIN SUCH REQUIRED  CONTINGENCY
RESERVE  AND  SUCH  POLICYHOLDERS SURPLUS AS IS REQUIRED TO SUPPORT SUCH
LIABILITY;
  (2) the ASSUMING insurer must establish and maintain in  a  segregated
trust,  or  provide  a letter of credit in a form approved by the super-
intendent, an amount equal to the unearned premium and loss reserves;
  (3) any such [aggregated] SEGREGATED trust shall EXCEPT  AS  OTHERWISE
REQUIRED BY THE SUPERINTENDENT, COMPLY WITH THE REQUIREMENTS FOR A TRUST
AGREEMENT AS WOULD BE GENERALLY APPLICABLE IN ORDER TO OBTAIN CREDIT FOR

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD14281-01-9
              

S. 5994                             2

REINSURANCE  CEDED  TO  AN UNAUTHORIZED REINSURER INVOLVING PROPERTY AND
CASUALTY RISKS AND SHALL be funded by assets permitted by article  four-
teen of this chapter for the loss reserve required by paragraph three of
subsection  (a) of section six thousand five hundred two of this article
and for the unearned premium reserve required by  section  one  thousand
three  hundred  five  of this chapter, and shall be funded by either the
types of assets specified in paragraphs one, two and three of subsection
(b) of section one thousand four hundred two and paragraphs  one[,]  AND
two  [and twelve] of subsection (a) of section one thousand four hundred
four of this chapter or by tax and loss bonds purchased  pursuant  to  S
832(e)  of  the  Internal  Revenue Code for the greater of the amount of
reserves required by paragraph two of  subsection  (a)  of  section  six
thousand five hundred two of this article or paragraph one of subsection
(b) of section six thousand five hundred two of this article;
  (4)  [the  reinsurance agreement must be submitted to the commissioner
or superintendent of insurance of the mortgage  insurer's  domicile  for
approval]  EXCEPT AS OTHERWISE REQUIRED BY THE SUPERINTENDENT, THE REIN-
SURANCE AGREEMENT SHALL COMPLY WITH THE REQUIREMENTS FOR  A  REINSURANCE
AGREEMENT AS WOULD BE GENERALLY APPLICABLE IN ORDER TO OBTAIN CREDIT FOR
REINSURANCE  CEDED  TO  AN UNAUTHORIZED REINSURER INVOLVING PROPERTY AND
CASUALTY RISKS; and
  (5) [the reinsurance agreement must provide that:
  (A) it is not valid until approved by the commissioner or  superinten-
dent of insurance of the mortgage insurer's domicile;
  (B)  any  amendments to the reinsurance agreement must be submitted to
the commissioner or superintendent of insurance of the  mortgage  insur-
er's domicile for approval prior to becoming effective;
  (C) the ceding mortgage insurer has a right to terminate the ceding of
additional  insurance  under  the reinsurance agreement if so ordered by
the superintendent;
  (D) the superintendent has the right  to  request  from  the  assuming
reinsurer information concerning its financial condition;
  (E)  the  assuming  reinsurer  shall  notify the superintendent of any
material change in its financial condition; and
  (F) such agreements and any amendments thereto shall  be  provided  to
the superintendent, who shall have the right to disapprove of any agree-
ment.  Such  agreements  and  any  amendments  thereto  shall  be deemed
approved by the superintendent unless  disapproved  within  thirty  days
from  the  date  provided  to  the superintendent. If the superintendent
disapproves of any reinsurance agreement or amendments thereto the mort-
gage insurer shall not receive credit for such reinsurance as  an  asset
or  as  a  reduction  from  liabilities  in its financial statement] THE
ASSUMING INSURER AND THE TERMS OF THE REINSURANCE SHALL COMPLY WITH SUCH
OTHER REQUIREMENTS AS PRESCRIBED BY THE SUPERINTENDENT.
  S 2. This act shall take effect immediately.