                                 CODE OF VIRGINIA

MORTGAGE GUARANTY INSURANCE CONTINGENCY RESERVE (§ 38.2-1315)

A. To protect against the effect of adverse economic cycles, each insurer
transacting the business of mortgage guaranty insurance in this Commonwealth
shall establish and maintain a contingency reserve equal to fifty percent of its
earned premium.

B. Allocations to the contingency reserve shall be maintained for 120 months.
That portion of the contingency reserve that has been maintained for more than
120 months shall be released and shall no longer constitute part of the
contingency reserve and shall be allocated to surplus to policyholders.

C. Upon approval by the Commission, the contingency reserve shall be available
for loss payments only when the incurred losses in any one twelve-month period,
less any amounts already released from the contingency reserve during that
period, exceed thirty-five percent of the corresponding earned premium.

D. In the event of release of the contingency reserve for payment of losses, the
contributions required by subsection A of this section shall be treated on a
first-in-first-out basis.

E. Whenever the laws of any other state require a greater unearned premium
reserve than that set forth in &#xA7; 38.2-1312, the mortgage guaranty insurance
contingency reserve of mortgage guaranty insurers organized under the laws of
that state may be an amount that, when added to such unearned premium reserve,
will result in a reserve equal to the sum of the unearned premium reserve
required by &#xA7; 38.2-1312 and the contingency reserve required by this
section.

F. The authority of the Commission under &#xA7; 38.2-223 to issue rules and
regulations includes the authority to require that a greater reserve be
established for mortgage guaranty insurance on liens other than first liens.

HISTORY: 1973, c. 250, §§ 38.1-173.1, 38.1-173.2; 1981, c. 209; 1986, c. 562;
1989, c. 236; 2000, c. 46.