Bulletin: LA000002

Dear Associates:

Louisiana has revised its maximum single risk retention statute which limits insurance risks to 10% of cash and invested assets. Therefore, Stewart Title Guaranty Company must obtain reinsurance on any single risk over $14,707,500.00 for the year 1992 in Louisiana.

Reinsurance must be obtained on ALL policies, Binders, Commitments or any other insuring form issued with a liability amount over Stewart Title Guaranty Company's statutory limitation of $14,707,500.00. If more than one policy or guarantee covers the same property and estate and these forms do not expressly include noncumulative liability language; the liability amounts of the policies must be added together to determine the total amount of liability on that parcel. Reinsurance must be obtained if the aggregate amount of your transaction is greater than Stewart Title Guaranty Company's 1992 statutory limitation of $14,707,500.00 (e.g., fee owner policy issued with a leasehold owner policy must be added together unless language so stating that the liability amount under one policy is automatically reduced pro tanto in the event of loss or damage under the other policy and vice versa.

Reinsurance is obtained by calling the Reinsurance Department located at the home office of Stewart Title Guaranty Company in Houston, Texas on the WATS line # (800) 729-1902 and asking for Leslee Sisk. A Reinsurance Questionnaire which needs to be filled out completely and sent directly to the Reinsurance Department along with your authorization to issue a large policy over your stated contract amount which should be approved by your appropriate Stewart Title Guaranty Company representative is available through the form reference at the end of this bulletin. If the amount is over your representative's authorization limit, the Reinsurance Department will see that the appropriate number of attorneys approve of the transaction before reinsurance is offered. In any event, if the transaction is over $14,707,500.00 you must obtain reinsurance department approval. Also, any pre-lim, commitment or pro-forma to be issued should be attached and sent in with the Reinsurance Questionnaire along with copies of the endorsements to be issued.

The Reinsurance Department will obtain a letter of commitment from its Reinsurer(s) on your transaction. This letter will suffice for closing the transaction as long as no changes occur on the risk of issuing and/or on the underwriting of the transaction. If this occurs or if any new endorsements are added, then the Reinsurer(s) need to be informed and to expressly commit to these added risks. Once the deal is closed and policies are issued, you must send in several copies of each policy issued directly to the Reinsurance Department in order for the Reinsurance Agreements to be issued and executed by the Reinsurer(s). A pre-billing invoice for reinsurance costs will be sent to you at the time reinsurance is committed to by the Reinsurer(s). If this is not paid by the time the Reinsurance Department receives copies of the policies, you will receive an invoice for your stated contract portion of this expense as soon as we receive the executed Agreements back from the Reinsurer(s).

NOTE: Reinsurance is not always obtainable. Do not commit to issuing a certain policy form or endorsements prior to obtaining reinsurance approval unless you have included an exception on your commitment and policy which subjects the issuance of the policy(s) to the obtaining of reinsurance. Do not forget that you will be responsible for the Reinsurance expense.

If you have any questions, please do not hesitate to call me.