Bulletin: SLS2024007

Dear Associates:

This bulletin advises you of the procedures and requirements of Stewart Title Guaranty Company (STGC) for requesting and obtaining reinsurance.

Reinsurance is the means by which a title insurance underwriter spreads the risk of loss to more than one underwriter. The underwriter requesting reinsurance - the offeror (the “Ceder”) - must obtain approval from another underwriter - the offeree (the “Reinsurer”) - and compensate the Reinsurer to accept some portion of the risk. Depending on the transaction, STGC may be a Ceder or a Reinsurer.

Reinsurance of a title insurance policy to be issued by STGC is offered, negotiated, and accepted solely through STGC’s Reinsurance Department. Issuing offices should never directly contact another underwriter’s reinsurance department or attempt to arrange reinsurance with another company.

Reinsurance of a policy to be issued by STGC may be required in any transaction; for example, at the request of a customer, or where a policy exceeds STGC’s self-imposed or state statutory single-risk retention limits. The latter amounts are updated annually.

In transactions where STGC is the Ceder, customers may occasionally request specific reinsurers and amounts of reinsurance. These are accommodated to the extent practicable. Issuing offices are not authorized on their own initiative to designate the reinsurer or determine the amount of reinsurance to be offered. These, as well as the cost of reinsurance (the payment to the reinsurer), are handled by the STGC Reinsurance Department. Requests made by issuing offices relating to amounts and reinsurers will be considered and accommodated where appropriate.

Reinsurance approval vs. Overlimits approval

Reinsurance approval is different from Overlimits approval. Overlimits approval is not a substitute for Reinsurance approval, and Reinsurance approval is not a substitute for Overlimits approval. If reinsurance is indicated, the policy will need both.

Overlimits approval is Stewart Title Guaranty Company’s determination regarding the requested title insurance. Overlimits approval from STGC is requested by submitting a Request for Approval to Issue Overlimits (Large) Policy of Extra Hazardous Coverage (the “Overlimits Form”) to Stewart Legal Services – by email to your STGC underwriter or to PolicyApprovalRequest@stewart.com. Overlimits approval is required before reinsurance can be requested.

Reinsurance approval is another underwriter’s determination regarding the requested title insurance and the cost to be paid to undertake that risk. Reinsurance approval is requested by submitting a request to the STGC Reinsurance Department. The approved Overlimits Form is part of the documentation (listed below) required to request and obtain reinsurance.

How to request reinsurance for your transaction

If you are requesting reinsurance, please send to the STGC Reinsurance Department at reinsure@stewart.com the following, before the closing:

(1) a copy of the completed, signed, and approved Overlimits Form;
(2) a copy of the commitment or preliminary report, and pro forma, if any;
(3) a complete description of the transaction, including noteworthy risks;
(4) a list of requested endorsements;
(5) an explanation of affirmative coverage(s), if any;
(6) if any ALTA form or other standardized form is modified or any other form is used, an explanation should accompany a copy of that form; and
(7) a copy of the approval of the Senior Underwriting Committee, including any conditions.

A request for reinsurance (also referred to as an offer) is made to the potential reinsurer by a Reinsurance Request prepared by the STGC Reinsurance Department. Offerees of reinsurance – the reinsurer – will require an opportunity to review the transaction thoroughly, and they may request additional information before making a determination regarding reinsurance. Each potential reinsurer has its own process, with varying time periods. Accordingly, if you believe that reinsurance may be required in a transaction, please contact the Reinsurance Department as early as possible. Please provide sufficient time for reinsurance review and approval by the potential reinsurer - preferably five (5) business days.

If reinsurance will be required but it is not yet obtained, all commitments issued prior to such determination must contain the following requirement in Schedule B:

"Acceptance of reinsurance satisfactory to the Company is required prior to closing."

Upon acceptance of STGC’s reinsurance offer, the reinsurer will send to the STGC Reinsurance Department a reinsurance acceptance letter (sometimes referred to as a Confirmation Letter). This letter is a binding agreement to reinsure that which was disclosed in the Ceder’s (STGC’s) offer.

There is a cost for reinsurance. The STGC Reinsurance Department will forward to the policy issuing office: (a) a copy of the acceptance letter, and (b) an invoice for the cost of the reinsurance, payable to Stewart Title Guaranty Company. An issuing office should not pay any reinsurer directly. Audit procedures require that the STGC Reinsurance Department receive the payment for the reinsurance and pay each reinsurer.

If there are any changes – to the requested policy or to any material aspect of the transaction – that occur subsequent to an initial request for reinsurance and before the closing, the policy issuing office must promptly advise the STGC Reinsurance Department. These must be disclosed to the reinsurer.

If the transaction cancels, please advise the Reinsurance Department so that they can cancel the offer for reinsurance.

After the transaction closes

After the closing, the policy issuing office must promptly forward to the Reinsurance Department: (a) a copy of all final title policies, including all endorsements, and (b) a separate payment for the cost of the reinsurance, which may be made by check to Stewart Title Guaranty Company, or by wire. The Reinsurance Department will forward these to the Reinsurer, and will arrange for the Reinsurance Agreement to be signed by STGC and the Reinsurer. Upon receipt of the fully executed Reinsurance Agreement, the Reinsurance Department will email copies of the Reinsurance Agreement to the policy issuing office for your file and for forwarding to the Insured.

Any changes to a policy after the closing require disclosure to and approval by the Reinsurer. These changes include, but are not limited to: date downs, modifications, changes in collateral, releases, endorsements, etc. You should not assume that the Reinsurer’s approval of post-closing changes will be automatic or without cost. Fees payable to a reinsurer for post-closing changes may range from a modest document review fee to a significant percentage of the original cost of the reinsurance.

All requested changes to a policy after closing must be submitted to the STGC Reinsurance Department for approval by the Reinsurer before such changes can be implemented. Please allow adequate time to obtain such reinsurance approval.

If you are requesting reinsurance or have questions relating to reinsurance, please contact Yeidy Rodriguez at 646-525-3539 or by email at reinsure@stewart.com.

If you have any questions relating to this or other bulletins, please contact a Stewart Title Guaranty Company underwriter.

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