Ins 3.09(12)(d) (d) The loss reserves required by sub. (15) shall be reported in the underwriting and investment exhibit—unpaid losses and loss adjustment schedule of the annual statement.

Ins 3.09(12)(e) (e) Any property acquired pursuant to the exercise of the claim settlement option shall be valued net of encumbrances; and an aggregate amount of such property may be held as is permitted for nonlife insurer investments pursuant to s. 620.22 (5), Stats.

Ins 3.09(12)(f) (f) Expenses shall be recorded and reported in accordance with ss. Ins 6.30 and 6.31.

Ins 3.09(12)(g) (g) An insurer which writes mortgage guaranty insurance and any other class of insurance business shall establish a segregated account for mortgage guaranty insurance. An insurer which writes more than one class of mortgage guaranty insurance shall establish a segregated account for each class of mortgage guaranty insurance. An insurer which reinsures mortgage guaranty insurance and which writes or reinsures any other class of insurance business shall establish a segregated account or segregated trust for mortgage guaranty reinsurance. The classes of mortgage guaranty insurance are those types of insurance defined in:

Ins 3.09(12)(g)1. 1. Section Ins 6.75 (2) (i) 1. a. and c.; or

Ins 3.09(12)(g)2. 2. Section Ins 6.75 (2) (i) 1. b. and 2.; or

Ins 3.09(12)(g)3. 3. Section Ins 6.75 (2) (i) 1. d. and (j).

Ins 3.09(12)(h) (h) Each segregated account or segregated trust established to comply with par. (g) shall contain all of the following applicable reserves:

Ins 3.09(12)(h)1. 1. The loss reserves required by sub. (15).

Ins 3.09(12)(h)2. 2. The unearned premium reserve required by sub. (13) or (18).

Ins 3.09(12)(h)3. 3. The contingency reserve required by sub. (14) or (18) or any surplus required by the commissioner.

Ins 3.09(13) (13) Unearned premium reserve. Subject to sub. (8), a mortgage guaranty insurer shall compute and maintain an unearned premium reserve on policies in force as follows:

Ins 3.09(13)(a) (a) For premium plans on which the premium is paid annually, the unearned premium reserve shall be calculated on either an annual or monthly pro rata basis except that the portion of the first-year premium, excluding policy and other fees or similar charges, which exceeds twice the subsequent renewal premium rate, shall be considered a deferred risk premium. The deferred risk premium shall be contributed to and maintained in the unearned premium reserve until released as earned. The deferred risk premium shall be earned in accordance with the factors for a 10-year premium period in par. (b) or any other formula approved by the commissioner.

Ins 3.09(13)(b) (b) For premium plans on which the premium is paid in advance for periods of time greater than one year but less than 16 years, the unearned premium reserve shall be calculated by multiplying the premiums collected by the appropriate unearned premium factor from the table set forth below:

- See PDF for table

Ins 3.09 Note Note: For purposes of this calculation, premiums collected means either 90% of the premiums collected or the premium collected less a dollar amount or percentage amount approved by the commissioner to represent initial expenses of selling and issuing a new policy.

Ins 3.09(13)(c) (c) For premium plans on which the premium is paid in advance for periods of 16 years or more, the unearned premium reserve shall be calculated either by a method approved by the commissioner or by dividing the premium collected, as defined above in par. (b), into 2 parts. The first part shall be the amount which is equal to the premium collected for a 15-year premium and which shall be earned in the same manner as a 15-year premium. The second part is the remaining amount of premium in excess of the 15-year premium, which shall be earned pro rata over the remaining term of the premium.

Ins 3.09(14) (14) Contingency reserve.

Ins 3.09(14)(a) (a) Subject to sub. (8), a mortgage guaranty insurer shall make an annual contribution to the contingency reserve which in the aggregate shall be the greater of:

Ins 3.09(14)(a)1. 1. 50% of the net earned premium reported in the annual statement; or

Ins 3.09(14)(a)2. 2. The sum of:

Ins 3.09(14)(a)2.a. a. The policyholders position established under sub. (5) on residential buildings designed for occupancy by not more than four families divided by 7;

Ins 3.09(14)(a)2.b. b. The policyholders position established under sub. (5) on residential buildings designed for occupancy by 5 or more families divided by 5;

Ins 3.09(14)(a)2.c. c. The policyholders position established under sub. (5) on buildings occupied for industrial or commercial purposes divided by 3; and

Ins 3.09(14)(a)2.d. d. The policyholders position established under sub. (5) for leases divided by 10.

Ins 3.09(14)(b) (b) If the mortgage guaranty coverage is not expressly provided for in this section, the commissioner may establish a rate formula factor that will produce a contingency reserve adequate for the risk assumed.

Ins 3.09(14)(c) (c) The contingency reserve established by this subsection shall be maintained for 120 months. That portion of the contingency reserve established and maintained for more than 120 months shall be released and shall no longer constitute part of the contingency reserve.

Ins 3.09(14)(d) (d)

Ins 3.09(14)(d)1. 1. With the approval of the commissioner, withdrawals may be made from the contingency reserve when incurred losses and incurred loss expenses exceed the greater of either 35% of the net earned premium or 70% of the amount which par. (a) requires to be contributed to the contingency reserve in such year.