P.R. Laws tit. 26, § 519
(1) A local insurer of property, accidents, or guarantee insurance may, during the first five (5) natural years of its operations, subject to the dispositions set forth in subsections (2) and (3) of this section, maintain unearned premiums reserves in the following proportion of otherwise required reserves:
First complete natural year 50% Second complete natural year 60% Third complete natural year 70% Fourth complete natural year 80% Fifth complete natural year 90%
(2) From the third year onwards, none of the aforementioned reductions in the reserve shall be available for any natural year in which the expenses and disbursements of the insurer in the issuing and administration of insurance (which were not for boilers and machinery of elevators) performed by same, excluding paid losses, loss expense adjustments, investment expenses, dividends of policyholders, and contributions, exceeding the amount of:
(a) Forty percent (40%) of the net income of premiums during that year, after the deduction from same of the net reinsurance premiums earned in said year, plus
(b) all commissions for reinsurance received for reinsurance ceded by same.
(3) This section shall not apply to risks assumed by the insurer by means of reinsurance, whether by mass reinsurance or otherwise.
History —Ins. Code, added as § 5.040 on Mar. 22, 2003, No. 90, § 1.