Cal. INS § 12114
This is the official text of Cal. INS § 12114, part of California’s Insurance Code — regulates insurance companies and the insurance policies sold in California.
Not legal advice. This page reproduces the official text of a government statute for reference only. Laws change, and how a statute applies depends on your specific facts. For advice about your situation, consult a licensed attorney in your state.
Official statutory text
(a) An insurer may insure obligations enumerated in subparagraphs (A), (B), and (C) of paragraph (1) of subdivision (b) of Section 12112 that are not investment grade so long as at least 95 percent of the insurer’s total net liability on the kinds of obligations enumerated in those subparagraphs is investment grade.
(b) The financial guaranty insurance corporation shall at all times maintain capital, surplus, and contingency reserve in the aggregate no less than the sum of the following:
(1) 0.3333 percent of the total net liability under guaranties of municipal bonds and utility first mortgage obligations.
(2) 0.6666 percent of the total net liability under guaranties of investment grade asset-backed securities.
(3) 1.0 percent of the total net liability under guaranties, secured by collateral or having a term of seven years or less of:
(A) Investment grade industrial development bonds, and
(B) Other investment grade obligations.
(4) 1.5 percent of the total net liability under guaranties of other investment grade obligations.
(5) 2.0 percent of the total net liability under guaranties of:
(A) Noninvestment grade consumer debt obligations, and
(B) Noninvestment grade asset-backed securities.
(6) 3.0 percent of the total net liability under guaranties of noninvestment grade obligations secured by first mortgages on commercial real estate and having loan-to-value ratios of 80 percent or less.
(7) 5.0 percent of the total net liability under guaranties of other noninvestment grade obligations.
(8) If the amount of collateral required by paragraph (3) of subdivision (b) is no longer maintained, that proportion of the obligation insured which is not so collateralized shall be subject to the aggregate limits specified in paragraph (4) of subdivision (b).
(9) Additional surplus determined by the commissioner to be adequate to support the writing of surety insurance and credit insurance if the financial guaranty insurance corporation has been authorized to transact surety insurance and credit insurance as authorized by Section 12102.
(c) Whenever the reserves for outstanding credit insurance losses or loss expenses or any insurer licensed in this state to transact financial guaranty insurance are determined by the commissioner to be inadequate, he or she shall require the insurer to maintain additional reserves.
(b) The financial guaranty insurance corporation shall at all times maintain capital, surplus, and contingency reserve in the aggregate no less than the sum of the following:
(1) 0.3333 percent of the total net liability under guaranties of municipal bonds and utility first mortgage obligations.
(2) 0.6666 percent of the total net liability under guaranties of investment grade asset-backed securities.
(3) 1.0 percent of the total net liability under guaranties, secured by collateral or having a term of seven years or less of:
(A) Investment grade industrial development bonds, and
(B) Other investment grade obligations.
(4) 1.5 percent of the total net liability under guaranties of other investment grade obligations.
(5) 2.0 percent of the total net liability under guaranties of:
(A) Noninvestment grade consumer debt obligations, and
(B) Noninvestment grade asset-backed securities.
(6) 3.0 percent of the total net liability under guaranties of noninvestment grade obligations secured by first mortgages on commercial real estate and having loan-to-value ratios of 80 percent or less.
(7) 5.0 percent of the total net liability under guaranties of other noninvestment grade obligations.
(8) If the amount of collateral required by paragraph (3) of subdivision (b) is no longer maintained, that proportion of the obligation insured which is not so collateralized shall be subject to the aggregate limits specified in paragraph (4) of subdivision (b).
(9) Additional surplus determined by the commissioner to be adequate to support the writing of surety insurance and credit insurance if the financial guaranty insurance corporation has been authorized to transact surety insurance and credit insurance as authorized by Section 12102.
(c) Whenever the reserves for outstanding credit insurance losses or loss expenses or any insurer licensed in this state to transact financial guaranty insurance are determined by the commissioner to be inadequate, he or she shall require the insurer to maintain additional reserves.
Status: in_force · Read it on the official government site
Need a lawyer in California?
Find a California lawyer
About this page: Statute text is reproduced from official government publishers via the
Open US Law dataset
(Vaquill AI, snapshot v2026.08, CC BY 4.0). Primary legislative text like this is public domain under the government-edicts doctrine
(Georgia v. Public.Resource.Org, 2020). We link every section back to its official source so you can verify it independently.