California Insurance Code 12460-12464
12460. When a director of a mortgage insurer relies in good faith on a balance sheet or profit and loss statement of the insurer, his acts done in good faith are deemed to conform to the provisions of this article if both the following conditions are present: (a) On the basis of such balance sheet or statement such acts so conform. (b) The correctness of the balance sheet or statement is established by one of the following: (1) It is represented to him to be correct by the president of the insurer or the insurer's officer having charge of, or supervision of, the insurer's accounts. (2) It is certified to be correct and according to the books of the insurer by a public accountant or firm of public accountants who were selected with reasonable care. 12461. Every mortgage insurer shall create and maintain an insurance surplus which, when fully made up, is equal in amount to twenty-five per cent of the then existing capital paid in. 12462. All or any of the insurance surplus may be paid in by contributions from stockholders. 12463. Whenever its insurance surplus is not fully made up, every mortgage insurer shall annually transfer to that surplus either at least ten per cent of its net profits for the preceding year or such lesser sum as will result in fully paying up that surplus. 12464. The insurance surplus must be maintained as a further security to the holders of mortgage policies issued by the insurer. If at any time such surplus is impaired by reason of a loss, the amount of the impairment shall be restored in the manner provided for its accumulation.
