Section 205.30 Definitions

Section 205

Section 205.30  Definitions

a)         Municipal Bond Insurance – insurance or reinsurance against

financial loss by reason of nonpayment of principal, interest or other payment

obligations pursuant to the terms of municipal bonds as defined in subsection

(b) hereof.

b)         Municipal Bond – any security (or other instrument under which

a payment obligation is created) issued by or on behalf of, or payable or

guaranteed by a state, territory or possession of the United States of America,

a municipality, or a political subdivision of any of the foregoing, or by any

public agency or instrumentality thereof.

c)         Contingency Reserve – an additional premium reserve

established for the protection of insureds covered by policies insuring

municipal bonds against the effect of excessive losses occurring during adverse

economic cycles.

d)         Cumulative Net Liability – the insured unpaid principal and

insured unpaid interest due or to become due covered by in-force policies of

municipal bond insurance, reduced by the appropriate allowance for acceptable

reinsurance.

e)         Average Annual Debt Service – in respect to any issue or part

thereof of municipal bonds covered by an in-force policy, the product of the

total insured, unpaid principal and insured, unpaid interest thereon times the

number of such bonds (assuming that each $1,000 of par value represents one

bond), divided by an amount equal to the aggregate life (in years) of such

bonds (assuming that each $1,000 of par value represents one bond); i.e.:

(Unpaid

Principal + Unpaid Interest) x (Number of Bonds)

(Number

of Bond Years)

f)         Industrial Revenue Bonds – municipal bonds issued primarily to

finance property for use in a trade or business and without a substantial

public purpose, and backed by a revenue source other than a governmental unit

described in the definition of municipal bonds above

ar value represents one bond); i.e.:

(Unpaid

Principal + Unpaid Interest) x (Number of Bonds)

(Number

of Bond Years)

f)         Industrial Revenue Bonds – municipal bonds issued primarily to

finance property for use in a trade or business and without a substantial

public purpose, and backed by a revenue source other than a governmental unit

described in the definition of municipal bonds above.

g)         Insurer – includes a company engaged in the reinsurance of

municipal bonds unless the text provides otherwise.