Alabama § 27-5-11 - Limits of Risk.

§ 27-5-11. Limits of Risk.

(a) No insurer shall retain any risk on any one subject of insurance, whether located or to be performed in this state or elsewhere, in an amount exceeding 10 percent of its surplus to policyholders.

(b) A “subject of insurance,” for the purposes of this section, as to insurance against fire and hazards other than windstorm, earthquake, and other catastrophic hazards, includes all properties insured by the same insurer which are customarily considered by underwriters to be subject to loss or damage from the same fire or the same occurrence of such other hazard insured against.

(c) Reinsurance ceded as authorized by Section 27-5-12 shall be deducted in determining risk retained. As to surety risks, deduction shall also be made of the amount assumed by any established incorporated cosurety and the value of any security deposited, pledged or held subject to the surety’s consent and for the surety’s protection.

(d) As to alien insurers, this section shall relate only to risks and surplus to policyholders of the insurer’s United States branch.

(e) “Surplus to policyholders,” for the purposes of this section, in addition to the insurer’s capital and surplus, shall be deemed to include any voluntary reserves which are not required pursuant to law and shall be determined from the last sworn statement of the insurer on file with the commissioner or by the last report of examination of the insurer, whichever is the more recent at time of assumption of risk.

(f) This section shall not apply to life or disability insurance, title insurance, insurance of wet marine and transportation risks, workmen’s compensation insurance, employers’ liability coverages, nor to any policy or type of coverage as to which the maximum possible loss to the insurer is not readily ascertainable on issuance of the policy.

(g) Limits of risk as to newly formed domestic mutual insurers shall be as provided in Section 27-27-15.