A. All title insurers operating under the provisions of the New Mexico Title Insurance Law shall at all times establish and maintain, in addition to other reserves, a reserve against unpaid losses and a reserve against loss expense. Such reserves shall be calculated by making a careful estimate in each case of the loss and loss expense likely to be incurred by reason of every claim presented pursuant to notice, from or on behalf of the insured of a title defect in or lien or adverse claim against the title insured, that may result in a loss or cause expense to be incurred for the proper disposition of the claim.

B. The amounts so estimated may be revised from time to time as circumstances warrant, but shall be redetermined at least once each year.

C. The amounts set aside in such reserve in any year shall be deducted in determining the net profits for such year of any title insurer.