1. Treatment of financial guaranty insurance companies as qualifying insurance corporations under passive foreign investment company rules (a) In general Section 1297(f)(3) of the Internal Revenue Code of 1986 is amended by adding at the end the following new subparagraph: (C) Special rules for financial guaranty insurance companies (i) In general Notwithstanding subparagraphs (A)(ii) and (B), the applicable insurance liabilities of a financial guaranty insurance company shall include its unearned premium reserves if— (I) such company is prohibited under generally accepted accounting principles from reporting on its applicable financial statements reserves for losses and loss adjustment expenses with respect to a financial guaranty insurance or reinsurance contract except to the extent that losses and loss adjustment expenses are expected to exceed the unearned premium reserves on the contract, (II) the applicable financial statement of such company reports financial guaranty exposure of at least 15-to-1 or State or local bond exposure of at least 9-to-1 (8-to-1 in the case of a taxable year of such company which ends on or before December 31, 2018), and (III) such company includes in its insurance liabilities only its unearned premium reserves relating to insurance written or assumed that is within the single risk limits set forth in subsection (D) of section 4 of the Financial Guaranty Insurance Guideline (modified by using total shareholder’s equity as reported on the applicable financial statement of the company rather than aggregate of the surplus to policyholders and contingency reserves). (ii) Application of alternative facts and circumstances test A financial guaranty insurance company shall be treated as satisfying the requirements of paragraph (2)(B). (iii) Financial guaranty insurance company For purposes of this subparagraph, the term financial guaranty insurance company means any insurance company the sole business of which is writing or reinsuring financial guaranty insurance (as defined in