Ins 3.08(3)(a)(a) “Annual statement” means the fire and casualty annual statement form specified in s. Ins 7.02, Forms 22-010 and 22-011.

Ins 3.08(3)(b)(b) “Contingency reserve” means a reserve established for the protection of policyholders covered by policies insuring municipal bonds against the effect of excessive losses occurring during adverse economic cycles.

Ins 3.08(3)(c)(c) “Cumulative net liability” means one-third of one percent of the insured unpaid principal and insured unpaid interest covered by in-force policies of municipal bond insurance.

Ins 3.08(3)(d)(d) “Municipal bonds” means securities which are issued by or on behalf of or are paid or guaranteed by:

Ins 3.08(3)(d)3.3. Any agency, authority or corporate or other instrumentality of any one or more of the foregoing, or which are guaranteed by any of the foregoing.

Ins 3.08(3)(e)(e) “Municipal bond insurance” means a type of surety insurance authorized by s. Ins 6.75 (2) (g) which is limited to the guaranteeing of the performance and obligations of municipal bonds.

Ins 3.08(3)(f)(f) “Municipal bond insurer” means an insurer which issues municipal bond insurance.

Ins 3.08(3)(g)(g) “Total net liability” means the average annual amount due, net of reinsurance, for principal and interest on the insured amount of any one issue of municipal bonds.

Ins 3.08(3)(h)(h) “Person” means any individual, corporation for profit or not for profit, association, partnership or any other legal entity.

Ins 3.08(3)(i)(i) “Policyholders’ surplus” means an insurer’s net worth, the difference between its assets and liabilities, as reported in its annual statement.

Ins 3.08(4)(4) Minimum capital or permanent surplus. The minimum capital or permanent surplus of a municipal bond insurer shall be $2 million for an insurer first authorized to do business in Wisconsin on or before January 1, 1984, or the amount required by statute or administrative order after that date for other municipal bond insurers.

Ins 3.08(5)(a)(a) Policies of municipal bond insurance shall be issued only to provide coverage on bonds of the type defined in sub. (3) (d).

Ins 3.08(5)(b)(b) A municipal bond insurer may not have total net liability in respect to any one issue of municipal bonds in excess of an amount representing 10% of its policyholders’ surplus.

Ins 3.08(5)(c)(c) A municipal bond insurer may not have outstanding cumulative net liability, under in-force policies of municipal bond insurance, in an amount which exceeds the sum of:

Ins 3.08(5)(d)(d) A municipal bond insurer may not have more than 25% of the principal amount which it has insured represented by the principal amount of municipal bonds issued primarily to finance property for use in a trade or business carried on by any person other than a governmental unit, and secured by a pledge of payments to be made by the person or of revenues to be derived from the trade or business.

Ins 3.08(6)(6) Premium. The total consideration charged for municipal bond insurance policies, including policy and other fees or similar charges, shall be considered premium and shall be subject to the reserve requirements of subs. (8) and (9).

Ins 3.08(7)(a)(a) The financial condition and operations of a municipal bond insurer shall be reported on the annual statement.

Ins 3.08(7)(b)(b) The total contingency reserve required by sub. (9) shall be reported as a liability in the annual statement. This liability may be reported as unpaid losses or other appropriately labeled write-in item. Appropriate entries shall be made in the underwriting and investment exhibit—statement of income of the annual statement. The change in contingency reserve for the year shall be reported in the annual statement as a reduction of or a deduction from underwriting income. If the contingency reserve is recorded as a loss liability, the change in the reserve shall be excluded from loss development similar to fidelity and surety losses incurred but not reported.

Ins 3.08(7)(c)(c) A municipal bond insurer shall compute and maintain adequate case basis loss reserves to be reported in the underwriting and investment exhibit, unpaid losses and loss adjustment expenses, of the annual statement. The method used to determine the loss reserve shall accurately reflect loss frequency and loss severity and shall include components for claims reported and unpaid, and for claims incurred but not reported, provided:

Ins 3.08(7)(c)2.2. If the amount of insured principal and interest on a defaulted issue of municipal bonds which is due and payable over the period of the next 3 years exceeds 10% of a municipal bond insurer’s capital, surplus and contingency reserve, its case basis reserve so established shall be supported by a report from a qualified independent source.

Ins 3.08(8)(8) Unearned premium reserve. A municipal bond insurer shall compute and maintain an unearned premium reserve on an annual or on a monthly pro rata basis on all unexpired coverage, except that in the case of premiums paid more than one year in advance, the premium shall be earned proportionally with the expiration of exposure except as provided under sub. (12).