(a) An admitted surety insurer shall not become surety on any one undertaking, or accept reinsurance on such undertaking, when its liability thereon, in excess of the amount reinsured by it in an admitted insurer, amounts to more than ten percent of its capital and surplus as shown by its last statement on file in the office of the commissioner.

(b) In determining its liability on an undertaking for purposes of subdivision (a), an admitted insurer may reduce its liability by either or both of the following:

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(1) Deposits with the surety insurer, in a manner acceptable to the commissioner, or by conveyance to it in trust for its protection, of assets that would qualify as admitted assets.

(2) A clean and irrevocable letter of credit acceptable to the commissioner.

(Amended by Stats. 1991, Ch. 1020, Sec. 1.)