New Jersey Administrative Code
Title 11 - INSURANCE
Chapter 2 - INSURANCE GROUP
Subchapter 27 - DETERMINATION OF INSURERS IN A HAZARDOUS FINANCIAL CONDITION
Section 11:2-27.5 - Mortgage guaranty insurance; waivers

Universal Citation: NJ Admin Code 11:2-27.5

Current through Register Vol. 56, No. 24, December 18, 2024

(a) A mortgage guaranty insurance company shall not transact any new business if the total outstanding liability under its aggregate insurance policies, as computed as set forth in N.J.S.A. 17:46A-3, exceeds 25 times its policyholders' surplus.

(b) From February 1, 2011 until January 31, 2014, the Commissioner may approve a written request for a waiver of the restriction set forth in (a) above received from a mortgage guaranty insurer. The request shall be made in writing at least 90 days in advance of the date that the mortgage guaranty insurer expects to exceed the said restriction. Waiver requests shall be directed to: The Office of Solvency Regulation

Department of Banking and Insurance

PO Box 325

Trenton, New Jersey 08625-0325

Fax: 609 292-6765

Email: mailto:osr@dobi.state.nj.us

(c) A written request for a waiver as referenced in (b) above shall include all the following information:

1. The size of the mortgage guaranty insurer as measured by its assets, capital and surplus, reserves, premium writings, insurance in force, and other appropriate criteria;

2. The extent to which the mortgage guaranty insurer's business is diversified across time, geography, credit quality, origination, and distribution channels;

3. The nature and extent of the mortgage guaranty insurer's reinsurance program, demonstrated by a general description of the mortgage guaranty insurers' reinsurance program and a summary of the reinsurance contracts;

4. The mortgage guaranty insurer's assets and its investment portfolio, including information on its quality, diversity and liquidity;

5. The historical and forecasted trend in the size of the mortgage guaranty insurer's policyholder position;

6. The mortgage guaranty insurer's reserves and information on the adequacy of the reserves;

7. The extent and liquidity of the mortgage guaranty insurer's investments in affiliates, including information on the quality and liquidity of the investments. The Commissioner may treat any such investment as a non-admitted asset for purposes of determining the adequacy of surplus as regards policyholders;

8. The mortgage guaranty insurer's earnings, including information on the quality of the earnings, and the extent to which the reported earnings of the mortgage guaranty insurer include extraordinary items;

9. An independent actuary's opinion as to the reasonableness and adequacy of the mortgage guaranty insurer's historical and projected policyholder position;

10. The capital contributions which have been infused or are available for future infusion into the mortgage guaranty insurer; and

11. The historical and projected trends in the components of the mortgage guaranty insurer's aggregate insured risk, including, but not limited to, the quality and type of the risks included in the aggregate insured risk. Information on quality and type of risks should include the percentage of high risk loans and the percentage of primarily sub-prime lenders included in the aggregate risk.

(d) A waiver as referenced in (b) above shall be granted if the Commissioner determines that the relationship of the mortgage guaranty insurer's total liability outstanding under its aggregate insurance policies to the company's financial position is reasonable and adequate to meet its financial needs. In determining if that relationship is reasonable and adequate, the Commissioner shall consider and evaluate all of the information listed above and any other information as may be deemed necessary by the Commissioner.

(e) Upon concluding that a request for a waiver should be granted, written notice of such a determination shall be provided to the applicant. If the Commissioner determines that additional information is required to adequately monitor the mortgage guaranty insurer during the waiver period, such information shall be set forth in the Commissioner's written notice of determination granting the request for the waiver. The insurer shall then provide such information in the quarterly report referenced in (f) below.

(f) On the first day of the third month following the approval a waiver and every three months thereafter, the insurer to whom a waiver was issued shall submit to the Commissioner a quarterly report. All such reports shall include:

1. The quarterly statements filed by the insurer with the domestic regulator and the National Association of Insurance Commissioners;

2. Regional and economic indicators relevant to the mortgage guaranty insurer;

3. The mortgage guaranty insurer's reinsurance program;

4. Status of waivers in other states regarding the outstanding total liability under aggregate insurance policies to policyholders' surplus ratio; and

5. Any other information deemed necessary by the Commissioner which was set forth in the notice granting the request for a waiver as referenced in (e) above.

(g) Denials of waiver requests shall be issued in writing. An insurer whose waiver request is denied may request a hearing by filing with the Department a written request for a hearing within 30 days of the date of the notification of the denial of the waiver request. All such hearing requests shall be directed to the address specified in (b) above. Upon receipt of a timely-filed request for a hearing, the matter shall be considered in accordance with the provisions of the Administrative Procedure Act, N.J.S.A. 52:14B-1 et seq., and the rules promulgated thereunder at N.J.A.C. 1:1.

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