A. No insurer shall, other than as stated in this section, retain any risk on any one subject of insurance, whether located or to be performed in this state or elsewhere, in an amount exceeding ten percent of its surplus to policyholders.

B. No domestic Lloyds plan insurer shall retain any risk on any one subject of insurance in an amount in excess of ten percent of the sum of its surplus as to policyholders plus additional liability assumed by individual underwriters in the articles of agreement and policies or contracts of insurance.

C. No insurer shall retain as to title insurance risk on any one subject of insurance in an amount exceeding fifty percent of its surplus as to policyholders. If the insurer also transacts other kinds of insurance, its "surplus as to policyholders" for the purposes of this subsection shall be such reasonable proportion of the insurer's general surplus as to policyholders as may be allocated to title insurance in relation to premium income or other reasonable basis approved by the superintendent.

D. A "subject of insurance" for the purposes of this section means the following:

(1) as to insurance covering damage or loss of real or personal property, all real or personal property insured by an insurer which could reasonably be subject to loss or damage from the same occurrence of an insured hazard; and

(2) as to all other types of insurance, all policies issued by the same insurer applicable to a single insured exposure or occurrence.

E. Reinsurance ceded as authorized by Section 59A-7-11 NMSA 1978 shall be deducted in determining risk retained; but as to surety risks reinsurance shall be allowed as a deduction only if such reinsurance is with an insurer authorized to transact such insurance in this state, and is in such form as to enable the obligee or beneficiary to maintain an action thereon against the reinsured jointly with the reinsurer, and upon recovering judgment against the reinsured to have recovery against the reinsurer for payment to the extent in which it may be liable under such reinsurance and in discharge thereof. As to surety risks, deduction shall also be made of the amount assumed by any authorized cosurety and the value of any security deposited, pledged or held subject to the surety's consent and for the surety's protection.

F. As to alien insurers, this section relates only to risks and surplus to policyholders of the insurer's United States branch.

G. "Surplus as to policyholders" for the purposes of this section, in addition to the insurer's paid-in capital stock, if any, and surplus, includes also any voluntary reserves which are not required by law, and shall be determined from the last sworn financial statement of the insurer on file with the insurance department, or by the last report of examination of the insurer, whichever is the more recent at time of assumption of risk.

H. This section does not apply to life or health insurance, annuities, insurance of wet marine and transportation risks, workers' compensation insurance, or employers' liability coverages.

History: Laws 1984, ch. 127, § 116; 1993, ch. 320, § 17.

The 1993 amendment, effective June 18, 1993, substituted "No insurer shall, other than as stated in this section" for "No stock, mutual, or reciprocal insurer shall, other than as to title insurance" in Subsection A; substituted Subsection D for former provisions, relating to "' a subject of insurance'"; substituted "Section 59A-7-11 NMSA 1978" for "Section 117 of this article" in Subsection E; and substituted "workers' compensation insurance, or employers' liability coverages" for "workmen's compensation insurance, employers' liability coverages or to any policy or type of coverage as to which the maximum possible loss to the insurer is not readily ascertainable on issuance of the policy" in Subsection H.

Am. Jur. 2d, A.L.R. and C.J.S. references. — 43 Am. Jur. 2d Insurance § 52.

Right of reinsurer to question the insurable interest or eligibility of beneficiary, 18 A.L.R. 1163.

Who may enforce liability of reinsurer, 35 A.L.R. 1341, 103 A.L.R. 1485.

Admissibility of polygraph or similar lie detector test results, or willingness to submit to test, on issues of coverage under insurance policy, or insurer's good-faith belief that claim was not covered, 7 A.L.R.5th 143.

44 C.J.S. Insurance § 15 et seq.