Bulletin: SLS2024007

Dear Associates:

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

Reinsurance is the means by which a title insurance underwriter accepts the primary risk of loss under the policy and transfers a portion of the risk to one or more other underwriters. It is different from coinsurance, where more than one underwriter shares the primary risk.

In reinsurance, the underwriter requesting reinsurance - the offeror (the “Ceder”) - must obtain approval from another underwriter - the offeree (the “Reinsurer”) - and compensate the Reinsurer for accepting some portion of the risk. Depending on the transaction, STG may be a Ceder or a Reinsurer.

Reinsurance of a title insurance policy to be issued by STG is offered to another underwriter solely by and through the STG Reinsurance Department. Issuing offices should not directly contact another underwriter’s reinsurance department or attempt to arrange reinsurance with another underwriter.

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

In transactions where STG is the Ceder, customers may occasionally request specific reinsurers and amounts of reinsurance. Issuing offices are not authorized 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 solely by the STG Reinsurance Department. However, requests made by issuing offices relating to amounts and reinsurers will be considered and accommodated when appropriate.

Reinsurance placement vs. Overlimits approval

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

Overlimits approval is STG’s determination regarding the requested coverage under the title insurance policy. Overlimits approval is requested by submitting a “Request for Approval to Issue Overlimits (Large) Policy of Extra Hazardous Coverage” to Stewart Legal Services – by email to your STG underwriter or to PolicyApprovalRequest@stewart.com. Overlimits approval is required before reinsurance can be requested from another underwriter, and may require review and approval by the STG Senior Underwriting Committee. 

Placement of reinsurance requires two conditions: (A) the offer by the STG Reinsurance Department to another underwriter, and (B) the acceptance by the reinsuring underwriter of the risk. The reinsuring underwriter will make their own determination regarding the requested title insurance coverage and the cost to be paid to accept that risk.

How to request reinsurance for your transaction

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

(1)  a copy of the Request for Approval to Issue Overlimits (Large) Policy of Extra Hazardous Coverage;
(2)  a copy of the Overlimits approval, including any conditions;
(3)  a copy of the commitment or preliminary report, and pro forma, if any;
(4)  a complete description of the transaction, including noteworthy risks;
(5)  a list of requested endorsements;
(6)  an explanation of affirmative coverage(s), if any;
(7)  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
(8)  if the file required approval by the STG Senior Underwriting Committee, provide a copy of that approval, including any conditions.

The STG Reinsurance Department will prepare an Offer of Reinsurance and send it to a potential reinsurer. The potential 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 involve the STG Reinsurance Department as early as possible. Please provide sufficient time for the offer to be prepared by the STG Reinsurance Department, and for the potential reinsurer to review and approve reinsurance - preferably five (5) business days. As a reminder, the offer of reinsurance can only be made after the file is approved by STG.

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:

"Reinsurance satisfactory to the Company is required prior to closing."

If the reinsuring underwriter accepts STG’s offer of reinsurance, the reinsuring underwriter will send to the STG 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 STG’s offer.

There is a cost for reinsurance, which must be paid to the reinsurer. Prior to the closing, the STG Reinsurance Department will forward to the policy issuing office:

(a) a copy of the acceptance letter from the reinsurer, and

(b) an invoice for the cost of the reinsurance, payable to Stewart Title Guaranty Company.

Audit procedures require that the STG Reinsurance Department receive the payment for the reinsurance and pay each reinsurer. An issuing office cannot pay any reinsurer directly.

Changes before the closing

If there are any changes – to the requested policy or to any material aspect of the transaction, including endorsements – subsequent to an initial offer of reinsurance and before the closing, the policy issuing office must promptly advise the STG Reinsurance Department. These must be disclosed to the reinsurer, and accepted by the reinsurer.

If the transaction is canceled, please advise the STG Reinsurance Department so that they can withdraw the offer of reinsurance.

After the transaction closes

After the closing, the policy issuing office must promptly forward to the STG Reinsurance Department:

(a) a copy of all final title policies, including all endorsements, and

(b) a separate payment for the cost of the reinsurance, by check payable to Stewart Title Guaranty Company, or by wire to Stewart Title Guaranty Company.

The STG Reinsurance Department will forward these to the reinsurer, and will arrange for a Reinsurance Agreement to be signed by STG and the reinsurer. The file is not complete until the STG Reinsurance Department has received all policies and payments, and all parties have signed the Reinsurance Agreement.

Upon receipt of the fully executed Reinsurance Agreement, the STG Reinsurance Department will email copies of the Reinsurance Agreement to the policy issuing office for your file and for forwarding to the Insured.

Post-policy matters

Any changes to a reinsured 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. Issuing offices should not assume that the reinsurer will automatically approve post-closing changes. In addition, there may be a 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 changes to a policy after closing must be sent to the STG Reinsurance Department and submitted to the reinsurer for their approval before such changes can be implemented by the issuing office. Please allow adequate time to obtain such reinsurance approval.

If you are requesting reinsurance or have questions relating to reinsurance, please contact Yeidy Rodriguez, Reinsurance Administrator, 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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