{"formats":[{"name":"JSON","format":"json","url":"\/downloads\/2025\/code-json\/38.2-208.json"},{"name":"Plain Text","format":"text","url":"\/downloads\/2025\/code-text\/38.2-208.txt"},{"name":"XML","format":"xml","url":"\/downloads\/2025\/code-xml\/38.2-208.xml"},{"name":"HTML","format":"html","url":"\/downloads\/2025\/code-html\/38.2-208.html"}],"law_id":66293,"edition_id":1,"section_id":66293,"structure_id":14221,"section_number":"38.2-208","catch_line":"Limitation of risks generally","history":"Code 1950, \u00a7\u00a7 38-167, 38-168; 1952, c. 317, \u00a7 38.1-32; 1986, c. 562; 1987, c. 353; 1988, c. 554.","full_text":"A\n\nExcept as otherwise provided in this title, no insurer transacting business in this Commonwealth shall expose itself to any loss on any one risk or 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 of solvency equal to those set forth in Article 3.1 (§ 38.2-1316.1 et seq.) of Chapter 13 shall be deducted in determining the limitation of risk prescribed in this section.B\n\nFor the purpose of this section, the surplus to policyholders shall be determined from (i) the insurer’s last sworn statement filed with the Commission or (ii) the Commission’s last report of examination, whichever is more recent at the time the risk is assumed.C\n\nFor the purpose of this section, any one risk or hazard (i) in the case of municipal bond insurance shall mean average annual debt service of insured obligations backed by a single revenue source, provided that the insurance policy does not require any accelerated payment of principal by the insurer upon the event of default and (ii) in the case of all other kinds of financial guaranty insurance shall mean the insured unpaid principal with respect to obligations for any one entity, except that any risk or hazard shall be defined by revenue source, if the insured risk or hazard is payable from a specified revenue source or adequately secured by loan obligations or other assets.D\n\nAs used in subsection C above:\n\t\t\t“Municipal bond insurance” means a kind of financial guaranty insurance providing insurance against loss by reason of nonpayment of principal, interest or other payment obligations pursuant to the terms of municipal bonds.\n\t\t\t“Municipal bond” means any security, or other instrument under which a payment obligation is created, issued by or on behalf of, or payable or guaranteed by, the United States, Canada, a state, a province of Canada, a municipality or political subdivision of any of the foregoing, or any public agency or instrumentality thereof, or by any other entity provided that such security is eligible for issuance by one of the foregoing.\n\t\t\t“Average annual debt service” means the amount of insured unpaid principal and interest on an obligation multiplied by the number of such insured obligations, assuming that each obligation represents a $1,000 par value, divided by the amount equal to the aggregate life of all such obligations.\n\t\t\t“Financial guaranty insurance” means insurance against loss by reason of the failure of any obligor on any debt instrument or other monetary obligation, including common or preferred stock or capital leases, to pay when due principal, interest, premium, dividend, or purchase price of or on such instrument or obligation, or a fee in connection therewith, when such failure is the result of a financial default or insolvency, regardless of whether such obligation is incurred directly or as a guarantor by or on behalf of another obligor that has also defaulted.\n\t\t\tFor the purposes of subsection C of this section, the amount of insured unpaid 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 rating categories by a securities rating agency recognized by the Commission, or (iii) the stated amount of an unconditional, irrevocable letter of credit issued or confirmed by a bank or trust company that (a) is a member of the federal reserve system or chartered by any state or (b) is organized and existing under the laws of a foreign country, has been licensed as a branch or agency by any state or the federal government and is rated in the two highest major rating categories by a securities ratings agency recognized by the Commission or (c) is otherwise acceptable to the Commission or (iv) a conveyance or mortgage of real property, or (v) the scheduled cash flow from obligations rated in the four highest major rating categories by a securities rating agency recognized by the Commission if scheduled to be received on or prior to the date of scheduled debt service on the insured obligations. Such deposit shall be held by the insurer or held in trust for the benefit of the insurer or held in trust for the benefit of holders of the insured obligation whether in the form of debt service, sinking funds or other reserves pursuant to the bond indenture by a trustee acceptable to the Commission.\n\t\t\tFor the purpose of subsection C of this section, an insurer’s surplus to policyholders shall include the amount of any contingency or similar reserve established and maintained by the insurer pursuant to applicable law for the protection of insureds covered by financial guaranty insurance policies against the effect of excessive losses usually occurring during adverse economic cycles.E\n\nThe limitation of risk prescribed in this section for any alien insurer shall apply only to the exposure to risk and the trusteed surplus of the alien insurer’s policyholders.F\n\nThis section shall not apply to (i) life insurance, (ii) annuities, (iii) accident and sickness insurance, (iv) insurance of marine risks or marine protection and indemnity risks, (v) workers’ compensation or employers’ liability risks, or (vi) risks covered by title insurance.","order_by":null,"text":{"0":{"id":240740,"text":"Except as otherwise provided in this title, no insurer transacting business in this Commonwealth shall expose itself to any loss on any one risk or 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 of solvency equal to those set forth in Article 3.1 (§ 38.2-1316.1 et seq.) of Chapter 13 shall be deducted in determining the limitation of risk prescribed in this section.","type":"section","prefixes":["A"],"prefix":"A","entire_prefix":"A","prefix_anchor":"A","level":1,"next_prefix":"B"},"1":{"id":240741,"text":"For the purpose of this section, the surplus to policyholders shall be determined from (i) the insurer’s last sworn statement filed with the Commission or (ii) the Commission’s last report of examination, whichever is more recent at the time the risk is assumed.","type":"section","prefixes":["B"],"prefix":"B","entire_prefix":"B","prefix_anchor":"B","level":1,"prior_prefix":"A","next_prefix":"C"},"2":{"id":240742,"text":"For the purpose of this section, any one risk or hazard (i) in the case of municipal bond insurance shall mean average annual debt service of insured obligations backed by a single revenue source, provided that the insurance policy does not require any accelerated payment of principal by the insurer upon the event of default and (ii) in the case of all other kinds of financial guaranty insurance shall mean the insured unpaid principal with respect to obligations for any one entity, except that any risk or hazard shall be defined by revenue source, if the insured risk or hazard is payable from a specified revenue source or adequately secured by loan obligations or other assets.","type":"section","prefixes":["C"],"prefix":"C","entire_prefix":"C","prefix_anchor":"C","level":1,"prior_prefix":"B","next_prefix":"D"},"3":{"id":240743,"text":"As used in subsection C above:\n\t\t\t“Municipal bond insurance” means a kind of financial guaranty insurance providing insurance against loss by reason of nonpayment of principal, interest or other payment obligations pursuant to the terms of municipal bonds.\n\t\t\t“Municipal bond” means any security, or other instrument under which a payment obligation is created, issued by or on behalf of, or payable or guaranteed by, the United States, Canada, a state, a province of Canada, a municipality or political subdivision of any of the foregoing, or any public agency or instrumentality thereof, or by any other entity provided that such security is eligible for issuance by one of the foregoing.\n\t\t\t“Average annual debt service” means the amount of insured unpaid principal and interest on an obligation multiplied by the number of such insured obligations, assuming that each obligation represents a $1,000 par value, divided by the amount equal to the aggregate life of all such obligations.\n\t\t\t“Financial guaranty insurance” means insurance against loss by reason of the failure of any obligor on any debt instrument or other monetary obligation, including common or preferred stock or capital leases, to pay when due principal, interest, premium, dividend, or purchase price of or on such instrument or obligation, or a fee in connection therewith, when such failure is the result of a financial default or insolvency, regardless of whether such obligation is incurred directly or as a guarantor by or on behalf of another obligor that has also defaulted.\n\t\t\tFor the purposes of subsection C of this section, the amount of insured unpaid 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 rating categories by a securities rating agency recognized by the Commission, or (iii) the stated amount of an unconditional, irrevocable letter of credit issued or confirmed by a bank or trust company that (a) is a member of the federal reserve system or chartered by any state or (b) is organized and existing under the laws of a foreign country, has been licensed as a branch or agency by any state or the federal government and is rated in the two highest major rating categories by a securities ratings agency recognized by the Commission or (c) is otherwise acceptable to the Commission or (iv) a conveyance or mortgage of real property, or (v) the scheduled cash flow from obligations rated in the four highest major rating categories by a securities rating agency recognized by the Commission if scheduled to be received on or prior to the date of scheduled debt service on the insured obligations. Such deposit shall be held by the insurer or held in trust for the benefit of the insurer or held in trust for the benefit of holders of the insured obligation whether in the form of debt service, sinking funds or other reserves pursuant to the bond indenture by a trustee acceptable to the Commission.\n\t\t\tFor the purpose of subsection C of this section, an insurer’s surplus to policyholders shall include the amount of any contingency or similar reserve established and maintained by the insurer pursuant to applicable law for the protection of insureds covered by financial guaranty insurance policies against the effect of excessive losses usually occurring during adverse economic cycles.","type":"section","prefixes":["D"],"prefix":"D","entire_prefix":"D","prefix_anchor":"D","level":1,"prior_prefix":"C","next_prefix":"E"},"4":{"id":240744,"text":"The limitation of risk prescribed in this section for any alien insurer shall apply only to the exposure to risk and the trusteed surplus of the alien insurer’s policyholders.","type":"section","prefixes":["E"],"prefix":"E","entire_prefix":"E","prefix_anchor":"E","level":1,"prior_prefix":"D","next_prefix":"F"},"5":{"id":240745,"text":"This section shall not apply to (i) life insurance, (ii) annuities, (iii) accident and sickness insurance, (iv) insurance of marine risks or marine protection and indemnity risks, (v) workers’ compensation or employers’ liability risks, or (vi) risks covered by title insurance.","type":"section","prefixes":["F"],"prefix":"F","entire_prefix":"F","prefix_anchor":"F","level":1,"prior_prefix":"E"}},"ancestry":[{"id":14221,"edition_id":1,"name":"Provisions of a General Nature","identifier":"2","label":"chapter","depth":2,"order_by":1,"parent_id":12698,"metadata":{},"date_created":"2026-06-26 03:47:20","date_modified":"2026-06-26 03:47:20","permalink":{"id":213095,"object_type":"structure","relational_id":14221,"identifier":"2","token":"38.2\/2","url":"\/38.2\/2\/","edition_id":1,"permalink":0,"preferred":1}},{"id":12698,"edition_id":1,"name":"Insurance","identifier":"38.2","label":"title","depth":1,"order_by":1,"parent_id":null,"metadata":{},"date_created":"2026-06-26 03:43:49","date_modified":"2026-06-26 03:43:49","permalink":{"id":210661,"object_type":"structure","relational_id":12698,"identifier":"38.2","token":"38.2","url":"\/38.2\/","edition_id":1,"permalink":0,"preferred":1}}],"structure_contents":[{"id":84875,"structure_id":14221,"section_number":"38.2-200","catch_line":"General powers of the Commission relative to insurance","url":"\/38.2-200\/","token":"38.2\/2\/38.2-200","metadata":false},{"id":70951,"structure_id":14221,"section_number":"38.2-201","catch_line":"Recommendations by Commission to General Assembly","url":"\/38.2-201\/","token":"38.2\/2\/38.2-201","metadata":false},{"id":71634,"structure_id":14221,"section_number":"38.2-202","catch_line":"Regulation of solicitation of proxies, consents and authorizations","url":"\/38.2-202\/","token":"38.2\/2\/38.2-202","metadata":false},{"id":66056,"structure_id":14221,"section_number":"38.2-203","catch_line":"Management and exclusive agency contracts subject to approval by Commission","url":"\/38.2-203\/","token":"38.2\/2\/38.2-203","metadata":false},{"id":86443,"structure_id":14221,"section_number":"38.2-204","catch_line":"Repealed","url":"\/38.2-204\/","token":"38.2\/2\/38.2-204","metadata":false},{"id":55426,"structure_id":14221,"section_number":"38.2-205.1","catch_line":"Temporary contracts of insurance permitted","url":"\/38.2-205.1\/","token":"38.2\/2\/38.2-205.1","metadata":false},{"id":77907,"structure_id":14221,"section_number":"38.2-206","catch_line":"Corporations as members of mutual insurers","url":"\/38.2-206\/","token":"38.2\/2\/38.2-206","metadata":false},{"id":78608,"structure_id":14221,"section_number":"38.2-207","catch_line":"Enforcement of right of subrogation in name of insured","url":"\/38.2-207\/","token":"38.2\/2\/38.2-207","metadata":false},{"id":66293,"structure_id":14221,"section_number":"38.2-208","catch_line":"Limitation of risks generally","url":"\/38.2-208\/","token":"38.2\/2\/38.2-208","metadata":false},{"id":71333,"structure_id":14221,"section_number":"38.2-209","catch_line":"Award of insured's attorney fees in certain cases","url":"\/38.2-209\/","token":"38.2\/2\/38.2-209","metadata":false},{"id":57078,"structure_id":14221,"section_number":"38.2-210","catch_line":"Loans to officers, directors, etc., prohibited","url":"\/38.2-210\/","token":"38.2\/2\/38.2-210","metadata":false},{"id":75678,"structure_id":14221,"section_number":"38.2-211","catch_line":"Other interests and payments to officers, directors, etc., prohibited","url":"\/38.2-211\/","token":"38.2\/2\/38.2-211","metadata":false},{"id":78879,"structure_id":14221,"section_number":"38.2-212","catch_line":"Certain compensation not prohibited","url":"\/38.2-212\/","token":"38.2\/2\/38.2-212","metadata":false},{"id":85199,"structure_id":14221,"section_number":"38.2-213","catch_line":"Violation of \u00a7 38.2-210 or \u00a7 38.2-211","url":"\/38.2-213\/","token":"38.2\/2\/38.2-213","metadata":false},{"id":74840,"structure_id":14221,"section_number":"38.2-214","catch_line":"Restrictions upon purchase and sale of equity securities of domestic stock insurers","url":"\/38.2-214\/","token":"38.2\/2\/38.2-214","metadata":false},{"id":64172,"structure_id":14221,"section_number":"38.2-215","catch_line":"Liability of president, chief executive officer or directors if insurance issued when insurer insolvent","url":"\/38.2-215\/","token":"38.2\/2\/38.2-215","metadata":false},{"id":66704,"structure_id":14221,"section_number":"38.2-216","catch_line":"Restrictions on removal or transfer of property and on reinsurance; penalty","url":"\/38.2-216\/","token":"38.2\/2\/38.2-216","metadata":false},{"id":81338,"structure_id":14221,"section_number":"38.2-217","catch_line":"When assets may not be distributed among stockholders","url":"\/38.2-217\/","token":"38.2\/2\/38.2-217","metadata":false},{"id":64490,"structure_id":14221,"section_number":"38.2-218","catch_line":"Penalties and restitution payments","url":"\/38.2-218\/","token":"38.2\/2\/38.2-218","metadata":false},{"id":73928,"structure_id":14221,"section_number":"38.2-219","catch_line":"Violations; procedure; cease and desist orders","url":"\/38.2-219\/","token":"38.2\/2\/38.2-219","metadata":false},{"id":63210,"structure_id":14221,"section_number":"38.2-220","catch_line":"Injunctions","url":"\/38.2-220\/","token":"38.2\/2\/38.2-220","metadata":false},{"id":78078,"structure_id":14221,"section_number":"38.2-221","catch_line":"Enforcement of penalties","url":"\/38.2-221\/","token":"38.2\/2\/38.2-221","metadata":false},{"id":86567,"structure_id":14221,"section_number":"38.2-221.1","catch_line":"Confidentiality of information","url":"\/38.2-221.1\/","token":"38.2\/2\/38.2-221.1","metadata":false},{"id":55819,"structure_id":14221,"section_number":"38.2-221.2","catch_line":"Treatment of confidential information pursuant to federal law","url":"\/38.2-221.2\/","token":"38.2\/2\/38.2-221.2","metadata":false},{"id":69354,"structure_id":14221,"section_number":"38.2-221.3","catch_line":"Confidentiality of applications and investigations","url":"\/38.2-221.3\/","token":"38.2\/2\/38.2-221.3","metadata":false},{"id":84985,"structure_id":14221,"section_number":"38.2-222","catch_line":"Appeals generally","url":"\/38.2-222\/","token":"38.2\/2\/38.2-222","metadata":false},{"id":87496,"structure_id":14221,"section_number":"38.2-223","catch_line":"Rules and regulations; orders","url":"\/38.2-223\/","token":"38.2\/2\/38.2-223","metadata":false},{"id":55846,"structure_id":14221,"section_number":"38.2-224","catch_line":"Procedures","url":"\/38.2-224\/","token":"38.2\/2\/38.2-224","metadata":false},{"id":59699,"structure_id":14221,"section_number":"38.2-225","catch_line":"Disposition of fines and penalties","url":"\/38.2-225\/","token":"38.2\/2\/38.2-225","metadata":false},{"id":81892,"structure_id":14221,"section_number":"38.2-226","catch_line":"Provisions of title not to apply to certain mutual aid associations","url":"\/38.2-226\/","token":"38.2\/2\/38.2-226","metadata":false},{"id":66567,"structure_id":14221,"section_number":"38.2-226.1","catch_line":"Expired","url":"\/38.2-226.1\/","token":"38.2\/2\/38.2-226.1","metadata":false},{"id":84770,"structure_id":14221,"section_number":"38.2-226.2","catch_line":"Provisions of title not applicable to certain long-term care health plans","url":"\/38.2-226.2\/","token":"38.2\/2\/38.2-226.2","metadata":false},{"id":84912,"structure_id":14221,"section_number":"38.2-226.3","catch_line":"Expired","url":"\/38.2-226.3\/","token":"38.2\/2\/38.2-226.3","metadata":false},{"id":62181,"structure_id":14221,"section_number":"38.2-227","catch_line":"Public policy regarding punitive damages","url":"\/38.2-227\/","token":"38.2\/2\/38.2-227","metadata":false},{"id":68082,"structure_id":14221,"section_number":"38.2-228","catch_line":"Proof of future financial responsibility","url":"\/38.2-228\/","token":"38.2\/2\/38.2-228","metadata":false},{"id":62523,"structure_id":14221,"section_number":"38.2-229","catch_line":"Immunity from liability","url":"\/38.2-229\/","token":"38.2\/2\/38.2-229","metadata":false},{"id":84512,"structure_id":14221,"section_number":"38.2-230","catch_line":"Distributions by nonstock corporation","url":"\/38.2-230\/","token":"38.2\/2\/38.2-230","metadata":false},{"id":69255,"structure_id":14221,"section_number":"38.2-231","catch_line":"Notice of cancellation, refusal to renew, reduction in coverage or increase in premium of certain liability insurance policies","url":"\/38.2-231\/","token":"38.2\/2\/38.2-231","metadata":false},{"id":82223,"structure_id":14221,"section_number":"38.2-232","catch_line":"Notice of lapse or pending lapse of certain life and accident and sickness insurance policies","url":"\/38.2-232\/","token":"38.2\/2\/38.2-232","metadata":false},{"id":84169,"structure_id":14221,"section_number":"38.2-233","catch_line":"Credit involuntary unemployment insurance; credit property insurance; disclosure and readability","url":"\/38.2-233\/","token":"38.2\/2\/38.2-233","metadata":false},{"id":57202,"structure_id":14221,"section_number":"38.2-234","catch_line":"Release of information","url":"\/38.2-234\/","token":"38.2\/2\/38.2-234","metadata":false},{"id":69385,"structure_id":14221,"section_number":"38.2-235","catch_line":"Liability insurance; carbon monoxide exclusions","url":"\/38.2-235\/","token":"38.2\/2\/38.2-235","metadata":false},{"id":80448,"structure_id":14221,"section_number":"38.2-236","catch_line":"Notice of settlement payment","url":"\/38.2-236\/","token":"38.2\/2\/38.2-236","metadata":false},{"id":83795,"structure_id":14221,"section_number":"38.2-237","catch_line":"Provider complaints","url":"\/38.2-237\/","token":"38.2\/2\/38.2-237","metadata":false}],"previous_section":{"id":78608,"structure_id":14221,"section_number":"38.2-207","catch_line":"Enforcement of right of subrogation in name of insured","url":"\/38.2-207\/","token":"38.2\/2\/38.2-207","metadata":false},"next_section":{"id":71333,"structure_id":14221,"section_number":"38.2-209","catch_line":"Award of insured's attorney fees in certain cases","url":"\/38.2-209\/","token":"38.2\/2\/38.2-209","metadata":false},"metadata":false,"official_url":"https:\/\/law.lis.virginia.gov\/vacode\/38.2-208\/","history_text":"

The record of this law\u2019s original creation isn\u2019t available online. It has been modified 4 times. Those modifications are cataloged by \u201cThe Acts of Assembly,\u201d a state publication, by year and chapter. Those modifications that can be read on the General Assembly\u2019s website will be linked accordingly. Those modifications are as follows: in 1952, chapter 317; in 1986, chapter 562; in 1987, chapter 353; in 1988, chapter 554.<\/p>","references":[{"id":68651,"section_number":"38.2-1203","catch_line":"What laws applicable to reciprocals; compliance with \u00a7 38.2-208","order_by":null,"url":"\/38.2-1203\/"},{"id":83888,"section_number":"38.2-2403","catch_line":"Limitation of liability on risks","order_by":null,"url":"\/38.2-2403\/"},{"id":54093,"section_number":"38.2-2404","catch_line":"Limit when penalty of bond exceeds actual exposure to risk","order_by":null,"url":"\/38.2-2404\/"}],"refers_to":[{"id":80624,"section_number":"38.2-1316.1","catch_line":"Definitions","order_by":null,"url":"\/38.2-1316.1\/"}],"permalink":{"id":213129,"object_type":"law","relational_id":66293,"identifier":"38.2-208","token":"38.2\/2\/38.2-208","url":"\/38.2-208\/","edition_id":1,"permalink":0,"preferred":1},"url":"\/38.2-208\/","token":"38.2\/2\/38.2-208","dublin_core":{"Title":"Limitation of risks generally","Type":"Text","Format":"text\/html","Identifier":"\u00a7 38.2-208","Relation":"Code of Virginia"},"html":"\n\t\t\t\t\t\t

A.<\/span> Except as otherwise provided in this title, no insurer<\/span> transacting business in this Commonwealth shall expose itself to any loss on any one risk or hazard in an amount exceeding ten percent of its surplus to policyholders<\/span>. Any risk or portion of any risk reinsured by an insurer<\/span> meeting standards of solvency equal to those set forth in Article 3.1 (§ 38.2-1316.1<\/a> et seq.) of Chapter 13 shall be deducted in determining the limitation of risk prescribed in this section. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

B.<\/span> For the purpose of this section, the surplus to policyholders<\/span> shall be determined from (i) the insurer<\/span>’s last sworn statement filed with the Commission<\/span> or (ii) the Commission<\/span>’s last report of examination, whichever is more recent at the time the risk is assumed. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

C.<\/span> For the purpose of this section, any one risk or hazard (i) in the case of municipal bond insurance<\/span> shall mean average annual debt service<\/span> of insured obligations backed by a single revenue source, provided that the insurance policy does not require any accelerated payment of principal by the insurer<\/span> upon the event of default<\/span> and (ii) in the case of all other kinds of financial guaranty insurance<\/span> shall mean the insured unpaid principal with respect to obligations for any one entity, except that any risk or hazard shall be defined by revenue source, if the insured risk or hazard is payable from a specified revenue source or adequately secured by loan obligations or other assets<\/span>. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

D.<\/span> As used in subsection C above:\n\t\t\t“Municipal bond insurance<\/span>” means a kind of financial guaranty insurance<\/span> providing insurance against loss by reason of nonpayment of principal, interest or other payment obligations pursuant to the terms of municipal bonds<\/span>.\n\t\t\t“Municipal bond” means any security, or other instrument under which a payment obligation is created, issued by or on behalf of, or payable or guaranteed by, the United States<\/span>, Canada, a state<\/span>, a province of Canada, a municipality or political subdivision of any of the foregoing, or any public agency or instrumentality thereof, or by any other entity provided that such security is eligible for issuance by one of the foregoing.\n\t\t\t“Average annual debt service<\/span>” means the amount of insured unpaid principal and interest on an obligation multiplied by the number of such insured obligations, assuming that each obligation represents a $1,000 par value, divided by the amount equal to the aggregate life of all such obligations.\n\t\t\t“Financial guaranty insurance<\/span>” means insurance against loss by reason of the failure of any obligor on any debt instrument or other monetary obligation, including common or preferred stock or capital leases, to pay when due principal, interest, premium, dividend, or purchase price of or on such instrument or obligation, or a fee in connection therewith, when such failure is the result of a financial default<\/span> or insolvency, regardless of whether such obligation is incurred directly or as a guarantor by or on behalf of another obligor that has also defaulted.\n\t\t\tFor the purposes of subsection C of this section, the amount of insured unpaid 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 rating categories by a securities rating agency recognized by the Commission<\/span>, or (iii) the stated amount of an unconditional, irrevocable letter of credit issued or confirmed by a bank or trust company<\/span> that (a) is a member of the federal reserve system or chartered by any state<\/span> or (b) is organized and existing under the laws<\/span> of a foreign country, has been licensed as a branch or agency by any state<\/span> or the federal government and is rated in the two highest major rating categories by a securities ratings agency recognized by the Commission<\/span> or (c) is otherwise acceptable to the Commission<\/span> or (iv) a conveyance or mortgage of real property, or (v) the scheduled cash flow from obligations rated in the four highest major rating categories by a securities rating agency recognized by the Commission<\/span> if scheduled to be received on or prior to the date of scheduled debt service on the insured obligations. Such deposit shall be held by the insurer<\/span> or held in trust for the benefit of the insurer<\/span> or held in trust for the benefit of holders of the insured obligation whether in the form of debt service, sinking funds or other reserves pursuant to the bond indenture by a trustee acceptable to the Commission<\/span>.\n\t\t\tFor the purpose of subsection C of this section, an insurer<\/span>’s surplus to policyholders<\/span> shall include the amount of any contingency or similar reserve established and maintained by the insurer<\/span> pursuant to applicable law<\/span> for the protection of insureds covered by financial guaranty insurance<\/span> policies against the effect of excessive losses usually occurring during adverse economic cycles. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

E.<\/span> The limitation of risk prescribed in this section for any alien insurer<\/span> shall apply only to the exposure to risk and the trusteed surplus of the alien insurer<\/span>’s policyholders. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

F.<\/span> This section shall not apply to (i) life insurance, (ii) annuities, (iii) accident and sickness insurance, (iv) insurance of marine risks or marine protection and indemnity risks, (v) workers’ compensation or employers’ liability risks, or (vi) risks covered by title insurance. <\/i><\/a><\/p><\/section>","plain_text":" CODE OF VIRGINIA\n\nLIMITATION OF RISKS GENERALLY (\u00a7 38.2-208)\n\nA. Except as otherwise provided in this title, no insurer transacting business\nin this Commonwealth shall expose itself to any loss on any one risk or hazard\nin an amount exceeding ten percent of its surplus to policyholders. Any risk or\nportion of any risk reinsured by an insurer meeting standards of solvency equal\nto those set forth in Article 3.1 (§ 38.2-1316.1 et seq.) of Chapter 13\nshall be deducted in determining the limitation of risk prescribed in this\nsection.\n\nB. For the purpose of this section, the surplus to policyholders shall be\ndetermined from (i) the insurer’s last sworn statement filed with the\nCommission or (ii) the Commission’s last report of examination, whichever\nis more recent at the time the risk is assumed.\n\nC. For the purpose of this section, any one risk or hazard (i) in the case of\nmunicipal bond insurance shall mean average annual debt service of insured\nobligations backed by a single revenue source, provided that the insurance\npolicy does not require any accelerated payment of principal by the insurer upon\nthe event of default and (ii) in the case of all other kinds of financial\nguaranty insurance shall mean the insured unpaid principal with respect to\nobligations for any one entity, except that any risk or hazard shall be defined\nby revenue source, if the insured risk or hazard is payable from a specified\nrevenue source or adequately secured by loan obligations or other assets.\n\nD. As used in subsection C above:\n\t\t\t“Municipal bond insurance” means a kind of financial guaranty\ninsurance providing insurance against loss by reason of nonpayment of principal,\ninterest or other payment obligations pursuant to the terms of municipal bonds.\n\t\t\t“Municipal bond” means any security, or other instrument under\nwhich a payment obligation is created, issued by or on behalf of, or payable or\nguaranteed by, the United States, Canada, a state, a province of Canada, a\nmunicipality or political subdivision of any of the foregoing, or any public\nagency or instrumentality thereof, or by any other entity provided that such\nsecurity is eligible for issuance by one of the foregoing.\n\t\t\t“Average annual debt service” means the amount of insured unpaid\nprincipal and interest on an obligation multiplied by the number of such insured\nobligations, assuming that each obligation represents a $1,000 par value,\ndivided by the amount equal to the aggregate life of all such obligations.\n\t\t\t“Financial guaranty insurance” means insurance against loss by\nreason of the failure of any obligor on any debt instrument or other monetary\nobligation, including common or preferred stock or capital leases, to pay when\ndue principal, interest, premium, dividend, or purchase price of or on such\ninstrument or obligation, or a fee in connection therewith, when such failure is\nthe result of a financial default or insolvency, regardless of whether such\nobligation is incurred directly or as a guarantor by or on behalf of another\nobligor that has also defaulted.\n\t\t\tFor the purposes of subsection C of this section, the amount of insured\nunpaid principal shall be reduced by the amount of deposit of (i) cash, or (ii)\nthe market value of obligations rated in the four highest major rating\ncategories by a securities rating agency recognized by the Commission, or (iii)\nthe stated amount of an unconditional, irrevocable letter of credit issued or\nconfirmed by a bank or trust company that (a) is a member of the federal reserve\nsystem or chartered by any state or (b) is organized and existing under the laws\nof a foreign country, has been licensed as a branch or agency by any state or\nthe federal government and is rated in the two highest major rating categories\nby a securities ratings agency recognized by the Commission or (c) is otherwise\nacceptable to the Commission or (iv) a conveyance or mortgage of real property,\nor (v) the scheduled cash flow from obligations rated in the four highest major\nrating categories by a securities rating agency recognized by the Commission if\nscheduled to be received on or prior to the date of scheduled debt service on\nthe insured obligations. Such deposit shall be held by the insurer or held in\ntrust for the benefit of the insurer or held in trust for the benefit of holders\nof the insured obligation whether in the form of debt service, sinking funds or\nother reserves pursuant to the bond indenture by a trustee acceptable to the\nCommission.\n\t\t\tFor the purpose of subsection C of this section, an insurer’s surplus\nto policyholders shall include the amount of any contingency or similar reserve\nestablished and maintained by the insurer pursuant to applicable law for the\nprotection of insureds covered by financial guaranty insurance policies against\nthe effect of excessive losses usually occurring during adverse economic cycles.\n\nE. The limitation of risk prescribed in this section for any alien insurer shall\napply only to the exposure to risk and the trusteed surplus of the alien\ninsurer’s policyholders.\n\nF. This section shall not apply to (i) life insurance, (ii) annuities, (iii)\naccident and sickness insurance, (iv) insurance of marine risks or marine\nprotection and indemnity risks, (v) workers’ compensation or\nemployers’ liability risks, or (vi) risks covered by title insurance.\n\nHISTORY: Code 1950, \u00a7\u00a7 38-167, 38-168; 1952, c. 317, \u00a7 38.1-32; 1986, c. 562;\n1987, c. 353; 1988, c. 554.","edition":{"id":1,"name":"2025","slug":"2025","date_created":"2026-06-21 22:39:22","date_modified":"2026-06-21 22:39:22","current":1,"order_by":1,"last_import":null}}