666                                 Laws of Maryland                         [Ch. 482

(5) In applying the limitation of the risk under any provision of
this section to alien insurers, such provision shall be deemed to refer
to the exposure of risk and to the surplus to policyholders of the
United States Branch of such alien insurer.

(b) Limitation of Fidelity and Surety Risks.

(1)  In applying the limitation of subsection (a) to fidelity and
surety risks, the net amount of exposure on any one fidelity or surety
risk shall, except as provided in paragraph (A), be deemed within
the limit of ten per cent if such company is protected in excess of
that amount by:

(A)  reinsurance complying with the requirements of subsection
(a) (2), which is in such form as to enable the obligee or beneficiary
to maintain an action thereon against the ceding insurer jointly
with the assuming insurer or, where the commencement or pros-
ecution of actions against the ceding insurer has been enjoined by
any court of competent jurisdiction against the assuming insurer
alone, and to have recovery against such assuming insurer for its
share of the liability thereunder and in discharge thereof; or

(B)  the co-suretyship of any other surety company authorized to
do such business in this state; or

(C)   a deposit of property with it in pledge or conveyance of
property to it in trust for its protection; or

(D)  a conveyance or mortgage of property for its protection; or

(E) in case a suretyship or guaranty obligation was made on behalf
or on account of a fiduciary holding property in a trust capacity,
by such a deposit or other disposition of a portion of the property so
held in trust that no future sale, mortgage pledge or other disposition
can be made thereof except with the consent of such insurance
company or by decree or order of a court of competent jurisdiction.

(2)  Notwithstanding the limitation prescribed in paragraph (1)
any such company may execute bonds of the kind commonly known
as transportation or warehousing bonds for United States internal
revenue taxes in a net amount not exceeding twenty per cent of its
surplus to policyholders, determined as provided in paragraph (1).

(3) In determining the net amount of exposure on any one such
risk, the following rules shall be applicable to the kinds of obligations
hereinafter described:

(A)   When the penalty of a suretyship obligation exceeds the
amount of a judgment prescribed therein as appealed from and there-
by secured, or exceeds the amount of the subject matter in con-
troversy or of the estate in the hands of the fiduciary for the per-
formance of whose duties it is conditioned, the bond may be executed
by such company if the actual amount of the judgment or the subject
matter in controversy or estate not subject to supervision or control
of the surety is not in excess of such limitation of ten per cent.

(B)  When the penalty of a suretyship obligation executed for the
performance of a contract exceeds the contract price, the latter
amount shall be taken as the basis for estimating the limit of risk
within the meaning of this section.