BY repealing and reenacting, with amendments,
Article - Insurance
Section 5-1003
Annotated Code of Maryland
(1997 Volume and 1998 Supplement)

BY adding to

Article — Insurance

Section 5-1005

Annotated Code of Maryland

(1997 Volume and 1998 Supplement)

SECTION 1. BE IT ENACTED BY THE GENERAL ASSEMBLY OF
MARYLAND, That the Laws of Maryland read as follows:

Article - Insurance

5-1003.

(a) (1) Subject to [§ 5-10044 §§ 5-1004 AND 5-1005 of this subtitle AND
EXCEPT AS PROVIDED UNDER § 5-1005 OF THIS SUBTITLE, an insurer may not retain
a risk on any one subject of insurance, whether located or to be performed in the State
or outside of the State, in an amount exceeding 10% of the insurer's surplus to
policyholders.

(2) An insurer's surplus to policyholders shall be determined at the time
a risk is assumed from the more recent of:

(i) the last sworn statement of the insurer on file with the
Commissioner; or

(ii) the last examination report of the insurer.

(b) In determining the amount of risk retained by an insurer, a deduction shall
be made for reinsurance ceded by the insurer for which credit is allowed under §
5-904 of this title.

5-1005.

AN INSURER MAY NOT RETAIN A RISK ON ANY ONE SUBJECT OF FINANCIAL
GUARANTY INSURANCE RELATING TO A MUNICIPAL BOND IF THE AVERAGE ANNUAL
DEBT SERVICE EXCEEDS 10% OF THE INSURER'S CAPITAL AND SURPLUS TO
POLICYHOLDERS.

THE COMMISSIONER MAY ESTABLISH BY REGULATION LIMITS ON THE RISK
RETAINED BY AN INSURER FOR A SUBJECT OF FINANCIAL GUARANTY INSURANCE,
INCLUDING REQUIREMENTS FOR CONTINGENCY RESERVES USED IN DETERMINING
COMPLIANCE WITH THE APPLICABLE RISK LIMITS.

SECTION 2. AND BE IT FURTHER ENACTED, That this Act shall apply to all
policies in effect or issued on or after July 1, 1999.