1. A. The minimum unearned premium reserve with respect to any contract is the pro rata unearned modal premium that applies to the premium period beyond the valuation date, with such premium determined on the basis of:

   (1) the valuation net modal premium on the contract reserve basis applying to the contract; or

   (2) the gross modal premium for the contract if no contract reserve applies.

2. B. However, in no event may the sum of the unearned premium and contract reserves for all contracts of the insurer subject to contract reserve requirements be less than the gross modal unearned premium reserve on all such contracts, as of the date of valuation. Such reserve shall never be less than the expected claims for the period beyond the valuation date represented by such unearned premium reserve, to the extent not provided for elsewhere.

[13.10.14.14 NMAC - Rp 13 NMAC 10.14.14, 10-1-03]