Section 4118. Limitation of risks; fidelity and surety; fire; hospital mutuals

(a) (1) In applying the limitation of section one thousand  one  hundred  fifteen  of  this  chapter to fidelity and surety risks the net
  amount of exposure on any one fidelity or surety risk shall,  except  as
  provided  in  paragraph  four  hereof, be deemed within the limit of ten
  percent if the company is protected in excess of that amount by:
    (A) reinsurance in a company authorized to write such business in this
  state  or  reinsurance  in  an  accredited  reinsurer,  as  defined   in
  subsection (a) of section one hundred seven of this chapter, which is in
  such  form as to enable the obligee or beneficiary to maintain an action
  thereon against the ceding insurer jointly with the assuming insurer or,
  where the commencement or prosecution  of  actions  against  the  ceding
  insurer  has been enjoined by any court of competent jurisdiction or any
  justice or judge thereof, against the assuming  insurer  alone,  and  to
  have  recovery  against  the  assuming  insurer  for  its  share  of the
  liability thereunder and in discharge thereof; or
    (B) the co-suretyship of any  other  company  authorized  to  do  such
  business in this state; or
    (C)  a deposit of property with it in pledge or conveyance of property
  to it in trust for its protection; or
    (D) a conveyance or mortgage of property for its protection; or
    (E) in case a suretyship or guaranty obligation was made on behalf  or
  on  account of a fiduciary holding property in a trust capacity, by such
  a deposit or other disposition of a portion of the property so  held  in
  trust  that no future sale, mortgage, pledge or other disposition can be
  made thereof except with the consent of  the  insurance  company  or  by
  decree or order of a court of competent jurisdiction.
    (2)  Notwithstanding the provisions of paragraph one hereof, a company
  may execute bonds of  the  kind  commonly  known  as  transportation  or
  warehousing  bonds  for  United  States  internal revenue taxes in a net
  amount not exceeding twenty percent of  its  surplus  to  policyholders,
  determined as provided in paragraph one hereof.
    (3)  In  determining  the  net amount of exposure on any one risk, the
  following  rules  shall  be  applicable  to  the  kinds  of  obligations
  hereinafter described:
    (A)  When the penalty of a suretyship obligation exceeds the amount of
  a judgment prescribed therein as appealed from and thereby  secured,  or
  exceeds the amount of the subject matter in controversy or of the estate
  in  the hands of the fiduciary for the performance of whose duties it is
  conditioned, the bond may be executed by  such  company  if  the  actual
  amount  of  the  judgment or the subject matter in controversy or estate
  not subject to supervision or control of the surety, is not in excess of
  a limitation of ten percent.
    (B) When the penalty of  a  suretyship  obligation  executed  for  the
  performance  of a contract exceeds the contract price, the latter amount
  shall be taken as the basis for estimating the limit of risk within  the
  meaning of this paragraph.
    (4)  In addition to any other limitation contained in this chapter, no
  authorized company shall  at  any  one  time  be  exposed  to  risks  on
  suretyship obligations guaranteeing the deposits of any single financial
  institution  in  an aggregate net amount in excess of ten percent of the
  surplus to policyholders of such  company,  determined  as  provided  in
  paragraph  one  hereof,  unless  it shall be protected in excess of that
  amount by security in accordance with the  provisions  of  subparagraphs
  (A), (B), (C) and (D) of paragraph one hereof.
    (b)  No insurer authorized to write fire insurance in this state shall
  expose itself to any loss on any one fire risk, whether located in  this
  state or elsewhere, in an amount exceeding ten percent of its surplus to

  policyholders,  except that in the case of risks adequately protected by
  automatic   sprinklers   or   risks   principally   of   non-combustible
  construction and occupancy such insurer may expose itself to any loss on
  any  one  risk in an amount not exceeding twenty-five percent of the sum
  of its unearned premium reserve and its surplus to policyholders.    Any
  risk  or portion of any risk reinsured in an assuming insurer authorized
  to write such business in this state or in an accredited  reinsurer,  as
  defined  in subsection (a) of section one hundred seven of this chapter,
  shall be deducted in determining the limitation of  risk  prescribed  in
  this subsection.
    (c)  A mutual property/casualty insurance company subject to paragraph
  two of subsection (a) of section four thousand one hundred seven of this
  article may be permitted to write coverage on any one risk in excess  of
  the  limitation  provided by section one thousand one hundred fifteen of
  this chapter, based upon criteria approved by the superintendent.