South Carolina Code of Regulations
Chapter 69 - DEPARTMENT OF INSURANCE
69-8 - Reserves for Mortgage Guaranty Insurance.
69-8. Reserves for Mortgage Guaranty Insurance.
This Regulation shall apply to all insurers writing mortgage guaranty insurance in South Carolina. Mortgage guaranty insurance is defined for the purposes of this Regulation as the insurance of mortgage lenders against loss by reason of nonpayment of mortgage indebtedness by borrowers, and should not be confused with other kinds of insurance written incidental to mortgage loan transactions such as mortgage redemption life insurance, hazard insurance covering improvements to real property, and credit accident and health coverages.
1. Unearned premium reserves for mortgage guaranty insurance shall be computed in accordance with §§ 38-5-60, 38-9-170 and 38-9-180 which specify that such reserves are to be computed by the use of annual or more frequent pro rata fractions.
2. In addition to the unearned premium reserve, every mortgage guaranty insurer writing business in this State must establish and maintain a contingency reserve, computed as hereinafter described, for the further protection of such companies and their policyholders against the adverse effects of economic cycles and other causes of excessive loss experience. The contingency reserve shall be credited not less frequently than annually, as of the end of each calendar year, with an amount equal to fifty per cent of the premiums earned during the year, computed in accordance with §§ 38-5-60, 38-9-170 and 38-9-180. Each such amount credited to the contingency reserve shall be carried as a liability for fifteen years following the year for which the credit is established, unless used to pay mortgage guaranty losses as hereinafter provided.
3. If for any year the incurred losses and loss expenses for mortgage guaranty insurance shall exceed forty per cent of the premiums earned on such business, the contingency reserve may be charged with the amount of such excess if such charge is approved by the Chief Insurance Commissioner. Any such annual charges shall be treated so as to reduce or remove the amounts originally credited to said reserve on a first-in, first-out basis.
4. Annual statements reflecting mortgage guaranty insurance transactions by licensed insurers must be prepared in compliance with this Regulation to meet the requirements of § 38-13-100.