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California Law (Last Updated: March 4, 2014) |
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Insurance Code - INS |
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Division 2. CLASSES OF INSURANCE |
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Part 4. MISCELLANEOUS CASUALTY INSURANCES |
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Chapter 1. Surety Insurers on Reserve Basis; Capital Requirements and Permitted Insurances |
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ARTICLE 5. Financial Guaranty Insurance |
Section 12119.
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Policy forms and any amendments thereto shall be filed with the commissioner within 30 days after their use in this state by the financial guaranty insurance corporation.
(a) (1) Every policy shall provide that, in the event of a payment default or insolvency of the obligor, there shall be no acceleration of the payments required to be made under the policy with respect to guarantied obligations except at the option of the financial guaranty insurance corporation.
(2) Notwithstanding paragraph (1), the following provisions apply:
(A) A policy may insure amounts payable under a credit default swap or interest rate, currency, or other swap upon a credit event or termination event if the expected amount payable on an accelerated basis in respect of any individual obligation referenced by a credit default swap or in the aggregate under an interest rate, currency, or other swap does not exceed the single risk limits prescribed in subdivision (e) of Section 12115.
(B) A policy insuring a credit default swap referencing an obligation shall be treated as if the insurer had directly insured the referenced obligation for all other purposes of this article, including, without limitation, contingency reserve requirements, except that the currency of amounts owed under the credit default swap, rather than the currency of the obligations referenced by the credit default swap, shall apply for purposes of determining whether the obligation is a permissible guaranty under subdivision (b) of Section 12112.
(b) Every policy shall contain a statement that in the event the insurer were to become insolvent, any claims arising under a policy of financial guaranty insurance are excluded from coverage by the California Insurance Guaranty Association, established pursuant to Article 15.2 (commencing with Section 1063) of Chapter 1 of Part 2 of Division 1.
(c) The commissioner may prescribe additional minimum policy provisions determined by the commissioner to be necessary or appropriate to protect policyholders, claimants, obligees, or indemnitees.