Section 1301. Admitted assets. 1302. Assets not admitted. 1303. Loss or claim reserves. 1304. Valuation reserves. 1305. Unearned premium reserves. 1306. Miscellaneous liabilities. 1307. Contingent liability for borrowings. 1308. Reinsurance, when permitted; effect on reserves. 1309. Insolvency of an insurer. 1310. Impairment of a stock insurer. 1311. Impairment of a mutual or reciprocal insurer. 1312. Trusteed surplus of alien insurers; impairment. 1313. Contents of advertisements and other public announcements concerning financial condition of insurers. 1314. Deposits; custody, beneficiaries, exchanges, inspection and income. 1315. Trusteed assets of alien insurers. 1316. Voluntary deposits. 1317. Release of deposits. 1318. Deposits, securities eligible. 1319. Deposits by foreign insurers. 1320. Deposits by alien insurers; statutory deposits. 1321. Commutation of reinsurance agreements. 1322. Risk-based capital for life and accident and health insurance companies. 1323. Issuance of capital notes by domestic life insurance companies. S 1301. Admitted assets. (a) In determining the financial condition of a domestic or foreign insurer or the United States branch of an alien insurer for the purposes of this chapter, there may be allowed as admitted assets of such insurer, unless otherwise specifically provided in this chapter, only the following assets owned by such insurer: (1) Cash, including legal tender or the equivalent in any office of such insurer or in transit under its control and the true balance of any deposit in a solvent bank, trust company or thrift institution. (2) Investments acquired or held in accordance with the applicable provisions of this chapter, and the income due or accrued thereon subject to paragraphs three through nine hereof as to dividends, interest, rents and accrued taxes paid. (3) Declared and unpaid dividends on shares, unless the amount has otherwise been allowed as an admitted asset. (4) Interest due or accrued upon a collateral loan in an amount not exceeding one year`s interest. (5) Interest due or accrued on any evidence of indebtedness (except a collateral loan) qualifying as an admitted asset which is not in default and is not valued on a basis including accrued interest. (6) Interest due or accrued on deposits in solvent banks and trust companies, and interest due or accrued on other admitted assets if the interest is in the superintendent`s judgment a collectible asset. (7) Interest due or accrued on any real estate mortgage loan which is an admitted asset, in an amount not exceeding the excess of the value of the property (less delinquent taxes) over the unpaid principal amount of the loan; but if any such interest is in default more than eighteen months, or is in default and any tax or installment thereof on the property are due and unpaid for more than eighteen months, no allowance shall be made for any unpaid interest on such loan. (8) Rent due or accrued on real property if not in arrears for more than three months. (9) The unaccrued portion of taxes paid prior to due date on real property acquired or used pursuant to paragraph five of subsection (a) of section one thousand four hundred four or paragraph four of subsection (a) of section one thousand four hundred five of this chapter, as the case may be. (10) Premium notes, policy loans and other policy assets and liens on policies, contracts or certificates of a life insurance company or fraternal benefit society, in an amount not exceeding the legal reserve and other policy liabilities carried on each individual contract; the net amount of uncollected and deferred premiums, considerations or assessments of a life insurance company or of a fraternal benefit society which carries the full mean tabular reserve liability; for a fraternal benefit society which does not carry such reserve liability, the net amount of uncollected premiums. (11) Premiums in course of collection, other than life insurance premiums, not more than ninety days past due, less commissions payable thereon. The foregoing limitation of ninety days shall not apply to: (i) premiums payable directly or indirectly by the United States government or any of its instrumentalities, (ii) reinsurance premiums payable by ceding insurers authorized to transact such business in this state, or (iii) reinsurance premiums payable which may be offset by amounts carried by the assuming insurer as liabilities for amounts due to the ceding insurer for unpaid losses or other mutual debts. However reinsurance premiums more than ninety days past due shall not be allowed in excess of ten per centum of the reinsurer`s total admitted assets as shown on its most recent annual statement on file in the office of the superintendent pursuant to section three hundred seven of this chapter. (12) Instalment premiums, other than life insurance premiums, as prescribed by regulation. (13) Notes and like written obligations, not past due, taken for premiums other than life insurance premiums, on policies permitted to be issued on such basis, to the extent of the unearned premium reserves carried thereon except as otherwise prescribed by regulation. (14) Reinsurance recoverable by a ceding insurer: (i) from an insurer authorized to transact such business in this state, except from a captive insurance company licensed pursuant to the provisions of article seventy of this chapter, in the full amount thereof; (ii) from an accredited reinsurer, as defined in subsection (a) of section one hundred seven of this chapter, to the extent allowed by the superintendent on the basis of the insurer`s compliance with the conditions of any applicable regulation; or (iii) from an insurer not so authorized or accredited or from a captive insurance company licensed pursuant to the provisions of article seventy of this chapter, in an amount not exceeding the liabilities carried by the ceding insurer for amounts withheld under a reinsurance treaty with such unauthorized insurer or captive insurance company licensed pursuant to the provisions of article seventy of this chapter as security for the payment of obligations thereunder if such funds are held subject to withdrawal by, and under the control of, the ceding insurer. Notwithstanding any other provision of this chapter, the superintendent may by regulation prescribe the conditions under which a ceding insurer may be allowed credit, as an asset or as a deduction from loss and unearned premium reserves, for reinsurance recoverable from an accredited reinsurer, an insurer not authorized in this state or a captive insurance company licensed pursuant to the provisions of article seventy of this chapter. (15) Amounts receivable by an assuming insurer for funds withheld by a ceding insurer under a reinsurance treaty, not exceeding the amounts carried by such assuming insurer as liabilities for unpaid losses and reserves under such contracts. (16) Amounts receivable under a funding agreement issued pursuant to section three thousand two hundred twenty-two of this chapter. (17) Deposits or equities recoverable from underwriting associations, syndicates and reinsurance funds, or from suspended banking institutions, to the extent deemed by the superintendent available for the payment of losses and claims and at values determined by him. (18) Electronic data processing apparatus and related equipment constituting a data processing, record keeping, or accounting system if the cost of each such system is fifty thousand dollars or more and provided that such cost shall be amortized in full over a period not to exceed ten years. (19) Aircraft if prior approval has been secured from the superintendent pursuant to standards prescribed by regulation, which shall include, but in his discretion, not be limited to the following: (A) there is a reasonable need shown to acquire the aircraft; (B) the purchase price is in keeping with the prevailing cost scales; (C) the purchase price shall not exceed a prescribed percentage of the acquiring insurer`s admitted assets; and (D) there shall be an orderly program of depreciation. (20) Amounts payable to the insurer from the property/casualty insurance security fund on behalf of insureds with medical malpractice insurance claims-made policies pursuant to subparagraph (G) of paragraph one of subsection (a) of section seven thousand six hundred three of this chapter. (21) Gross deferred tax assets, provided that such assets shall be deemed admitted to the extent provided by regulations promulgated by the superintendent in an amount not to exceed the sum of: (A) federal income taxes paid in prior years that can be recovered through loss carrybacks for existing temporary differences that reverse by the end of the subsequent calendar year; (B) the lesser of: (i) the amount of gross deferred tax assets after the application of subparagraph (A) of this paragraph expected to be realized within one year of the balance sheet date; or (ii) ten percent of the insurer`s statutory capital and surplus as required to be shown on its statutory balance sheet for its most recently filed statement with the superintendent adjusted to exclude any net deferred tax assets; and (C) the amount of gross deferred tax assets after application of subparagraphs (A) and (B) of this paragraph that can be offset against existing gross deferred tax liabilities. (22) Other assets, not inconsistent with the foregoing provisions, deemed by the superintendent available for the payment of losses and claims, at values determined by him. (b) Admitted assets may be allowed as deductions from corresponding liabilities, liabilities may be charged as deductions from assets, and deductions from assets may be charged as liabilities, in accordance with the form of annual statement applicable to such insurer as prescribed by the superintendent, or otherwise in his discretion. (c) The superintendent may by regulation prescribe the application of the provisions of this section. S 1302. Assets not admitted. (a) In addition to assets not admitted pursuant to section one thousand three hundred one of this article, the following shall not be allowed as admitted assets of a domestic or foreign insurer or the United States branch of an alien insurer in any determination of its financial condition: (1) Goodwill, trade names, agency plants and other like intangible assets. (2) Prepaid or deferred charges for expenses except as provided in paragraphs nine and twenty-one of subsection (a) of section one thousand three hundred one of this article, and commissions paid by the insurer. (3) Advances to officers (except policy loans), whether secured or not, and advances to employees, agents and other persons on personal security only. (4) Shares of such insurer, owned by it, or any equity therein or loans secured thereby, or any proportionate interest in such shares through the ownership by such insurer of an interest in another firm, corporation or business unit. (5) Tangible personal property, fixtures and printed matter except such as an insurer is permitted to hold pursuant to paragraph five of subsection (a) of section one thousand four hundred four of this chapter. (6) Items of bank credits representing checks, drafts or notes returned unpaid after the date of statement. (7) The amount, if any, by which the aggregate book value of investments as carried in the ledger assets of such insurer exceeds the aggregate value thereof as determined in accordance with the provisions of this chapter. (b) All non-admitted assets and all other assets of doubtful value or character included as ledger or non-ledger assets in any statement by an insurer to the superintendent, or in any examiner`s report to him, shall also be reported, to the extent of the value disallowed, as deductions from the gross assets of such insurer except where the superintendent permits a reserve to be carried among the liabilities of such insurer in lieu of any such deduction. S 1303. Loss or claim reserves. Every insurer shall, except as provided in section one thousand three hundred four of this article and subject to specific provisions of this chapter, maintain reserves in an amount estimated in the aggregate to provide for the payment of all losses or claims incurred on or prior to the date of statement, whether reported or unreported, which are unpaid as of such date and for which such insurer may be liable, and also reserves in an amount estimated to provide for the expenses of adjustment or settlement of such losses or claims. S 1304. Valuation reserves. Every insurer authorized under this chapter to transact the kinds of insurance specified in paragraph one, two or three of subsection (a) of section one thousand one hundred thirteen of this chapter shall, subject to specific provisions of this chapter, maintain: (a) reserves on all of its life insurance policies or certificates and annuity contracts in force, computed according to the applicable tables of mortality and rates of interest prescribed in this chapter; (b) reserves for disability benefits, including reserves for disabled lives whether reported or unreported, and for accidental death benefits; and (c) any additional reserves prescribed by the superintendent as necessary on account of such insurer`s policies, certificates and contracts. S 1305. Unearned premium reserves. (a) Every authorized insurer shall, except as to reserves required under section one thousand three hundred four of this article and subject to paragraph fourteen of subsection (a) of section one thousand three hundred one of this article and other specific provisions of this chapter, maintain reserves equal to the unearned portions of the gross premiums charged on unexpired or unterminated risks and policies. (b) (1) No deductions may be made from the gross premiums in force except for original premiums cancelled on risks terminated or reduced before expiration, or except for premiums paid or credited for risks reinsured with other solvent assuming insurers authorized to transact such business in this state. (2) Premiums charged for bulk or portfolio reinsurances assumed from other insurers shall be included as premiums in force on the basis of the original premiums and the original terms of the policies of the ceding insurer. (3) Reinsurance ceded to such an authorized assuming insurer may be deducted on the basis of original premiums and original terms except in the case of excess loss or catastrophe reinsurance which may be deducted only on the basis of actual reinsurance premiums and actual reinsurance terms. (c) (1) The liability for unearned premiums may be computed on the annual pro rata fraction basis applicable to the date of statement as prescribed by the superintendent. (2) If the annual pro rata fractions do not produce an adequate reserve, the superintendent may, in his discretion, require an insurer to calculate its unearned premium reserve upon the monthly pro rata fractional basis or, if necessary, on each respective risk from the date of the issuance of the policy, and as to premiums covering indefinite terms he may prescribe special regulations. (3) As to marine insurance, premiums on trip risks not terminated shall be deemed unearned and the superintendent may require a reserve to be carried thereon equal to one hundred percent of the premiums on trip risks written during the month ended as of the date of statement. (4) At least ninety percent of the gross amount of premium deposits on perpetual fire insurance risks shall be charged as a liability. (5) As to title insurance, unearned premium reserves shall be computed and maintained only as required by subsection (a) of section six thousand four hundred five of this chapter. S 1306. Miscellaneous liabilities. In addition to liabilities and reserves on contracts of insurance issued by it, every insurer shall be charged with the estimated amount of all its other liabilities, including taxes, expenses, other obligations due or accrued at the date of statement, and any special reserves required by the superintendent pursuant to the provisions of this chapter. S 1307. Contingent liability for borrowings. (a) Any domestic stock, mutual or co-operative insurance company or reciprocal insurer may, without pledging any of its assets, receive advances or borrow funds to: (1) conduct its business, (2) enable it to comply with any surplus requirement or make good any impairment or deficiency or other requirement of this chapter, (3) defray the reasonable expenses of its organization, (4) provide any fund to be voluntarily contributed to surplus, or (5) organize, acquire or invest in any subsidiaries authorized by this chapter. (b) Such borrowing may only be made upon an agreement that such moneys and such interest thereon as may be agreed upon, at a rate not exceeding the maximum rate provided in section 5-501 of the general obligations law, in effect at the time the agreement is executed, shall be repaid only out of free and divisible surplus of such insurer with the approval of the superintendent whenever, in his judgment, the financial condition of such insurer warrants. In the event of insolvency of a mutual or co-operative insurance company unearned premiums shall be deemed to be part of its free and divisible surplus. (c) Any sum so advanced or borrowed shall not be part of the legal liabilities of such insurer and shall not be a basis of any set-off but until repaid all statements published by such insurer or filed with the superintendent shall show, as a footnote, the amount then remaining unpaid. (d) No such insurance company or reciprocal insurer shall directly or indirectly make any agreement for any advance or borrowing pursuant to this section unless such agreement is in writing and shall have been approved by the superintendent as not unfair, misleading or contrary to law. S 1308. Reinsurance, when permitted; effect on reserves. (a) (1) Any authorized insurer, hereinafter called the "ceding insurer", may, subject to the limitations of this chapter, reinsure its risks and policy liabilities in any other assuming insurer with the effects herein prescribed. No prohibition or limitation in this chapter shall invalidate any reinsurance agreement as between the parties thereto. (2) (A) No credit shall be allowed, as an admitted asset or deduction from liability, to any ceding insurer for reinsurance ceded, renewed, or otherwise becoming effective after January first, nineteen hundred forty, unless: (i) the reinsurance shall be payable by the assuming insurer on the basis of the liability of the ceding insurer under the contracts reinsured without diminution because of the insolvency of the ceding insurer, and (ii) under the reinsurance agreement the liability for such reinsurance is assumed by the assuming insurer as of the same effective date. (B) Except as provided by subsection (a) of section four thousand one hundred eighteen of this chapter, no such credit shall be allowed any ceding insurer for reinsurance ceded, renewed, or otherwise becoming effective after September first, nineteen hundred fifty-two, unless the reinsurance agreement provides that payments by the assuming insurer shall be made directly to the ceding insurer or its liquidator, receiver or statutory successor, except where: (i) the agreement specifies another payee of such reinsurance in the event of the insolvency of the ceding insurer, or (ii) the assuming insurer with the consent of the direct insureds has assumed such policy obligations of the ceding insurer as its direct obligations to the payees under such policies, in substitution for the obligations of the ceding insurer to such payees. (3) Such reinsurance agreement may provide that the liquidator, receiver or statutory successor of an insolvent ceding insurer shall give written notice of the pendency of a claim against such insurer on the contract reinsured within a reasonable time after such claim is filed in the insolvency proceeding and that during the pendency of such claim any assuming insurer may investigate such claim and interpose, at its own expense, in the proceeding where such claim is to be adjudicated any defenses which it deems available to the ceding company, its liquidator, receiver or statutory successor. Such expense shall be chargeable subject to court approval against the insolvent ceding insurer as part of the expense of liquidation to the extent of a proportionate share of the benefit which may accrue to the ceding insurer solely as a result of the defense undertaken by the assuming insurer. Where two or more assuming insurers are involved in the same claim and a majority in interest elect to interpose defense to such claim, the expense shall be apportioned in accordance with the terms of the reinsurance agreement as though such expense had been incurred by the ceding company. (b) In determining the ceding insurer`s financial condition, if reinsurance is effected by the ceding insurer in any assuming insurer, the ceding insurer shall, in addition to any credit allowed against its loss reserves, and any reduction of reserves allowed pursuant to paragraph fourteen of subsection (a) of section one thousand three hundred one of this article for reinsurance recoverable from insurers not authorized in this state, receive credit for reinsurance effected with any assuming insurer authorized to do such business in this state, calculated as follows: (1) as to reinsurance of all or any part of any risk not specified in paragraph two hereof, by way of deduction from its unearned premium liability calculated in accordance with the provisions of section one thousand three hundred five of this article; or (2) as to reinsurance of all or any part of any life insurance or annuity or non-cancellable disability risk, by way of deduction from its reserve liability, in an amount not exceeding the reserve on the reinsured portion of such risk which the ceding insurer would have maintained if such portion had not been reinsured. (c) Nothing in this section shall be deemed to permit the ceding insurer to receive through the cession of all or any part of any risk any advantage whereby its unearned premium reserve, or the net amount of its valuation reserves, is reduced below the amount required by this chapter. (d) In determining its financial condition, any assuming insurer shall be charged: (1) in its unearned premium liability with an amount equal to the deduction specified in paragraph one of subsection (b) hereof, and (2) in its valuation reserve liability with an amount at least equal to the amount which it would be required to maintain in accordance with the provisions of this chapter if it were the direct insurer of such assumed risks on the basis specified in the reinsurance agreement. (e) (1) During any period of twelve consecutive months, without the superintendent`s permission: (A) no domestic insurer, except life, shall by any reinsurance agreement or agreements cede an amount of its insurance on which the total gross reinsurance premiums are more than fifty percent of the unearned premiums on the net amount of its insurance in force at the beginning of such period, and (B) no alien insurer, except life, shall by any reinsurance agreement or agreements, involving the withdrawal or transfer of any interest in any of its trusteed assets in the United States, cede an amount of its insurance on which the total gross reinsurance premiums are more than fifty percent of the unearned premiums on the net amount of its insurance in force in the United States, at the beginning of such period. (2) Paragraph one hereof shall not apply to reinsurance made in the ordinary course of business reinsuring specified individual risks under reinsurance agreements relating to current business. (3) If any agreement or agreements at any time effect reinsurance of substantially all of the net insurance in force of such ceding insurer, no credit by way of deduction pursuant to subsection (b) hereof shall be allowed to such ceding insurer, unless either: (A) the assuming insurer or insurers assume or have assumed the policy obligations of the ceding insurer as their direct obligations to the obligees under such policies and the provisions for cancellation, if any, of such reinsurance agreements have been approved by the superintendent, or (B) such reinsurance agreement or agreements were made under pooling arrangements between insurers associated in a group for underwriting purposes and were approved by the superintendent as not impairing the protection of policyholders of such ceding or assuming insurers. (f) (1) Unless the superintendent permits: (A) No domestic life insurance company shall (i) reinsure its whole risk on any individual life or joint lives, or (ii) reinsure a substantial portion of its life insurance in force. (B) No foreign or alien insurer shall reinsure its whole risk on any individual life or joint lives, written under a policy or contract delivered or issued for delivery in this state. (2) Any domestic life insurance company proposing to assume by reinsurance all or any part of the business in force, other than portions of individual risks, of any domestic, foreign or alien life insurance company, fraternal benefit society or other organization having outstanding policies or certificates of life insurance or accident and health insurance or annuity contracts shall make written application to the superintendent for permission to do so. If after due consideration the superintendent is satisfied that the proposed reinsurance will not prejudice the interests of the policyholders of either the applicant or the companies which are members of The Life Insurance Guaranty Corporation or of The Life Insurance Company Guaranty Corporation of New York, he shall grant the permission. (3) The superintendent, after notice to and an opportunity to be heard by all domestic life insurance companies, may issue and from time to time amend regulations establishing standards which tend to promote orderly growth and financial stability among the companies and otherwise effectuate the purposes of this subsection. (g) Any domestic life insurance company which has discontinued doing any new business in a foreign country may, with the permission of the superintendent, reinsure all or any part of its risks outstanding in such country in any solvent insurer authorized to transact business therein. Thereafter such life insurance company shall not be required to charge as liabilities the reserves and other liabilities pertaining to the reinsured risks. S 1309. Insolvency of an insurer. (a) Whenever the superintendent finds from a financial statement or report on examination that an authorized insurer is unable to pay its outstanding lawful obligations as they mature in the regular course of business, as shown by an excess of required reserves and other liabilities over admitted assets, or by its not having sufficient assets to reinsure all outstanding risks with other solvent authorized assuming insurers after paying all accrued claims owed, such insurer shall be deemed insolvent and the superintendent may proceed against it pursuant to the provisions of article seventy-four of this chapter. (b) If an insurer deemed insolvent pursuant to subsection (a) hereof is a foreign or alien insurer, the superintendent may also revoke or suspend its license to do business in this state. S 1310. Impairment of a stock insurer. (a) Whenever the superintendent finds from a financial statement, or a report on examination, of any domestic stock insurer that (i) the admitted assets are less than the aggregate amount of its liabilities and outstanding capital stock or (ii) the admitted assets of any such insurer which is required to maintain a minimum surplus to policyholders are less than the aggregate amount of its liabilities and the amount of its minimum surplus to policyholders, he shall determine the amount of the impairment and order the insurer to eliminate the impairment within such period as he designates, not more than ninety days from the service of the order. He may also order the insurer not to issue any new policies while the impairment exists. If the impairment as determined by the provisions of item (i) hereof equals or exceeds twenty-five percent of the insurer`s outstanding capital stock, or as determined by the provisions of item (i) or (ii) hereof is such that the insurer does not have the minimum capital or minimum surplus to policyholders required by this chapter, and if at the expiration of such designated period, such insurer has not satisfied the superintendent that such impairment has been eliminated, the superintendent may proceed against the insurer pursuant to the provisions of article seventy-four of this chapter on the ground that its condition is such that its further transaction of business will be hazardous to its policyholders or its creditors or the public. (b) If any foreign stock insurer authorized to do business in this state is found to be impaired, the superintendent may, after notice and hearing, order such insurer not to issue during such time as he prescribes any new policies in this state, and may, after notice and hearing, revoke its license to transact business in this state. S 1311. Impairment of a mutual or reciprocal insurer. (a) In this section "required surplus" includes any guaranty surplus or special contingent surplus or other specifically reserved surplus account of a domestic mutual insurer, a domestic reciprocal insurer or any other domestic insurer without capital stock, required by the provisions of this chapter to be maintained for any purpose, including: (i) issuance of non-assessable policies, (ii) payment of dividends, or (iii) transaction of business after a license has been issued by the superintendent. (b) Whenever the superintendent finds from a financial statement or report on examination that the total admitted assets of any insurer required to maintain such required surplus are less than the aggregate amount of its liabilities and required surplus, he shall determine the amount of such impairment and order the insurer or its attorney-in-fact to eliminate such impairment within such period he designates, not exceeding ninety days from service of such order. He may also by order prohibit such insurer, while such impairment exists, from: (1) issuing any non-assessable policies if its required surplus for the purpose of item (i) of subsection (a) hereof is impaired, or (2) paying dividends if its required surplus for the purpose of item (ii) of subsection (a) hereof is impaired, or (3) issuing new policies if its minimum surplus for the purpose of item (iii) of subsection (a) hereof is impaired. (c) If the impairment so determined is such that such insurer does not have the minimum surplus required for item (iii) of subsection (a) hereof, and if when such designated period expires the insurer has not satisfied the superintendent that such impairment has been eliminated, the superintendent may proceed against such insurer pursuant to the provisions of article seventy-four of this chapter on the ground that its further transaction of business will be hazardous to its policyholders, its creditors or the public. (d) If the required minimum surplus of any authorized foreign mutual or reciprocal insurer is found by the superintendent to be impaired, the superintendent may order such insurer not to issue during such time as he prescribes any new policies in this state, and may, after notice and hearing, revoke its license to do business in this state. S 1312. Trusteed surplus of alien insurers; impairment. (a) (1) In addition to other requirements of this chapter every authorized alien insurer shall, not later than the first day of March in each year, file with the superintendent a statement (herein called a "trusteed surplus statement"), on a form prescribed by him, showing at last year-end: (A) all its general state deposits, meaning assets within the United States deposited with officers of any state in trust for the security of all its policyholders, or policyholders and creditors, within the United States; (B) all its special state deposits, meaning assets within the United States deposited with officers of any state in trust for the security of its policyholders, or policyholders and creditors, in a particular state; (C) all its trusteed assets, meaning assets within the United States held by a trustee or trustees for the security of all its policyholders, or policyholders and creditors, within the United States; (D) if a life insurance company, the amount of its policy loans to policyholders within the United States, not exceeding the amount of the legal reserve required on each such policy; (E) all its reserves and other liabilities arising out of policies or obligations issued, assumed or incurred in the United States; and (F) such further information as may be necessary to apply the provisions of this section. (2) In determining the net amount of the insurer`s liabilities in the United States, a deduction may be made: (i) for reinsurance on losses with authorized insurers, less unpaid reinsurance premiums, with a schedule showing by companies the amount deducted, and (ii) for unearned premiums on agents` balances or uncollected premiums not more than ninety days past due. Any liability on an asset not considered in such statement may be applied against such asset. (3) No credit shall be allowed in such statement for any special state deposit held for the exclusive benefit of policyholders, or policyholders and creditors, of any particular state except as an offset against the liabilities of such alien insurer in such state. (4) The accrued interest at date of statement on assets deposited with states and trustees shall be allowed in such statement, where such interest is collected by the states or trustees. (b) (1) Such trusteed surplus statement shall be signed and verified by the United States manager, attorney-in-fact, or a duly empowered assistant United States manager, of the alien insurer. The items of securities and other property held under trust deeds shall be certified to by the United States trustee or trustees. The superintendent may at any time require a further statement of the same kind and of such date as he may determine. (2) Every report on examination of the United States branch of an alien insurer shall include a trusteed surplus statement as of the date of examination in addition to the general statement of the financial condition of such United States branch. (c) (1) The aggregate value of the insurer`s general state deposits and trusteed assets less the aggregate net amount of all of its liabilities and reserves in the United States as determined in accordance with this section shall be known as its "trusteed surplus" in the United States. Whenever it appears to the superintendent from any such statement or any report that an alien insurer`s trusteed surplus is reduced below the greater of the minimum capital required of, or the minimum surplus to policyholders required to be maintained by, a domestic insurer licensed to transact the same kinds of insurance, he shall determine the amount of such impairment and order the insurer, through its United States manager or attorney, to eliminate such impairment within such period as he designates, not more than ninety days from service of the order. He may also by order revoke or suspend such insurer`s license or prohibit it from issuing new policies in the United States while such impairment exists. (2) If at the expiration of such designated period such insurer has not satisfied the superintendent that such impairment has been eliminated, the superintendent may proceed against such insurer pursuant to the provisions of article seventy-four of this chapter as an insurer whose condition is such that its further transaction of business in the United States will be hazardous to its policyholders, its creditors or the public in the United States. S 1313. Contents of advertisements and other public announcements concerning financial condition of insurers. (a) (1) Except as provided in subsection (g) hereof or permitted by regulation, every advertisement or other public announcement published, issued or distributed in this state by any domestic or foreign insurer, a subsidiary thereof, a holding company or controlled person as defined by section one thousand five hundred one of this chapter, or by any agent of any of the foregoing, purporting to make known the insurer`s separate financial condition, shall show the amount of its admitted assets, liabilities and reserves required or permitted by law, and its surplus to policyholders, and shall correspond with its last verified statement (annual or quarterly, at its option) made to the superintendent. Such surplus to policyholders shall show the amount of the insurer`s paid up capital stock, if any. (2) The provisions of paragraph one hereof shall not apply to an advertisement or other public announcement showing only the insurer`s capital paid up, or its surplus and capital, if any, separately or combined, but such items shall not be in excess of the corresponding items shown on the insurer`s last verified statement (annual or quarterly, at its option) made to the superintendent. (b) (1) Every advertisement or other public announcement, published, issued or distributed in this state by any alien insurer doing business in this state, a subsidiary thereof, a holding company or controlled person as defined by section one thousand five hundred one of this chapter, or by any agent of any of the foregoing, purporting to make known the separate financial condition of the insurer, shall show as assets only its admitted assets held by its United States branch, its liabilities and reserves required by law, and its surplus to policyholders in the United States, and shall correspond with the insurer`s last verified statement (annual or quarterly, at its option) made to the superintendent. Such surplus to policyholders shall show the amount of the statutory deposit of such United States branch. (2) Notwithstanding the provisions of paragraph one hereof, any authorized life insurance company or fraternal benefit society organized under the laws of Canada or any province thereof may use in its advertising in this state a statement of its complete financial condition, in addition to its statement of admitted assets and liabilities in the United States, if a similar domestic insurer is permitted by the laws of Canada or the provinces thereof in which it does an insurance business to advertise therein its complete financial condition on a corresponding basis. (c) No statement of separate financial condition shall be published, issued or distributed as provided in subsection (a) or (b) hereof unless it or a footnote clearly shows the amount of securities, included in admitted assets, which are pledged as collateral for any loan or guaranty, or which are otherwise not available to pay losses and claims or are not held to protect the insurer`s policyholders or creditors. (d) No insurer doing business in this state nor any subsidiary thereof, or holding company or controlled person as defined in section one thousand five hundred one of this chapter nor any agent of any of the foregoing, shall in any advertisement or other public announcement make any statement or communication to the effect that the insurer has, or expects to have, reinsurance by any named assuming insurer not authorized to do such reinsurance business in this state, or to the effect that the insurer`s policies are guaranteed wholly or partly by any other person, insurer or institution. (e) Nothing in this section shall apply to reports issued to shareholders or government agencies or instrumentalities by a holding company or controlled person as defined in section one thousand five hundred one of this chapter or prohibit any supplemental reference concerning an insurer`s separate financial condition on the basis of actual market values of its securities or the inclusion of supplemental factual information with respect to the separate financial condition of such insurer in a report issued by such insurer to its shareholders or policyholders. (f) Advertisements and other public announcements directed primarily at calling the attention of policyholders or prospective policyholders to an insurer and containing a statement of the separate financial condition of the holding company system shall also contain a statement of the separate financial condition of the insurer which shall comply with this section. (g) Consolidated financial statements of an authorized insurer and any of its subsidiaries may be used only to the extent authorized by the superintendent or required by any government agency or instrumentality. S 1314. Deposits; custody, beneficiaries, exchanges, inspection and income.(a) (1) The superintendent shall be the official custodian of all deposits of securities required or authorized by the provisions of this chapter, unless otherwise specifically provided by law. He shall keep the same in a safe place provided by the state or in custody for his account with a bank, trust company or national bank in this state which may be designated by the depositing insurer, subject to the approval of the superintendent. (2) All such securities shall be held by the superintendent, in trust, without preference or priority to any beneficiary entitled to share therein, for the security of the depositing insurer`s policyholders within the United States, its territories and possessions, except that securities deposited by an alien insurer shall be held in trust for the security of the policyholders and creditors of the depositing insurer within the United States, its territories and possessions. (3) Such securities may be registered in the name of the superintendent as such trustee or, at the option of the depositing insurer, may be in bearer form. (4) "Policyholders" as used in this chapter in any provision relating to beneficiaries of deposits includes all persons having a legal or equitable right against the depositing insurer or the insured arising out of an insurance or annuity contract. "Depositing insurer" as used in this chapter includes any lawful successor in interest to such insurer. (b) The depositing insurer shall not assign or otherwise transfer all or any part of its interest in any such deposit, without the approval of the superintendent, and any such transfer, whether voluntary or by operation of law, without such approval, shall be void. The superintendent may approve transfer of all of the depositing insurer`s residuary interest in such deposit if with his approval the transferee assumes all liabilities of the transferor to the beneficiaries of such deposit. (c) No judgment creditor or other claimant may levy upon any deposit or part thereof. Upon the making of an order by a court of competent jurisdiction for the liquidation, rehabilitation or conservation of any depositing insurer, the deposit and the income therefrom shall be transferred to the superintendent as liquidator, rehabilitator or conservator. (d) All deposits of securities held by the superintendent which were made pursuant to any prior insurance law shall be deemed to be held in compliance with the provisions of this chapter, for the purposes for which such deposits were originally made. (e) The depositing insurer may from time to time exchange for any deposited securities other securities eligible under the provisions of this chapter if in the opinion of the superintendent the aggregate value of such deposit will not be thereby reduced below the amount required by law. (f) So long as the depositing insurer shall continue solvent and shall comply with the laws of this state applicable to it, the superintendent shall permit it to collect and dispose of the income on deposited securities. (g) (1) No exchange, release or other transfer of deposited securities, or any interest therein, shall be valid unless: (i) countersigned by a member of the state tax commission or a person designated for such purpose by such commission, and (ii) requested by the depositing insurer. Except for a transfer for redemption or refunding, the depositing insurer`s request must be evidenced in such manner as the superintendent requires. (2) The department of taxation and finance and the department of insurance shall each keep a book with entries showing the name of the insurer for whose account such transfer is made by the superintendent, the name of the transferee unless made in blank, and the par value of the securities transferred. (3) Within five days after countersigning and entering the same, the commissioner of taxation and finance shall advise by mail the insurer from whose account such transfer is made, of the kind and amount of security transferred. (h) Every depositing insurer shall, at least once during each calendar year, cause such securities to be examined by some person duly authorized in writing. Such person shall, at the request of the superintendent, execute a certificate stating the result of such examination.
S 1315. Trusteed assets of alien insurers. (a) Whenever a licensed alien insurer is required or permitted by this chapter to deposit assets with a trustee or trustees for the security of its policyholders and creditors in the United States, such assets shall be known as "trusteed assets". All trusteed assets shall be continuously kept within the United States and the trusteed assets of a licensed alien insurer entered through this state shall be continuously kept in this state. The deed of trust and all amendments thereto shall be authenticated in such form and manner as the superintendent may prescribe and shall not be effective unless approved by him. If he finds a deed of trust or its amendments: (i) are sufficient in form and in conformity with law, (ii) the trustee or trustees are eligible as such, and (iii) the deed of trust is adequate to protect the interests of the beneficiaries of the trust, he shall give his approval. If he finds, after reasonable notice to and hearing of the insurer, that the requisites for the approval no longer exist, he may withdraw such approval. (b) The trustee or trustees of all trusts created after nineteen hundred thirty-nine shall be solvent banks or trust companies deemed by the superintendent suitable for such purpose. (c) All trusts of trusteed assets existing before nineteen hundred forty shall be continued in accordance with the terms of the instruments creating them, if not inconsistent with this section. If the trustees of any trust created before nineteen hundred forty are individuals, and their number is reduced to less than three, by death, resignation or otherwise, the superintendent shall require substitution for such trustees of one or more banks or trust companies deemed by him suitable for such purpose. If the superintendent finds, after reasonable notice to and hearing of such alien insurer, that a deed of trust executed before nineteen hundred forty is inadequate to protect the interests of the beneficiaries of such trust, he shall require the execution of a new or amended deed of trust in conformity with the requirements of this section. (d) The superintendent may from time to time approve modifications of, or variations in, any deed of trust, which in his judgment are not prejudicial to the interests of the people of this state. (e) (1) Such deed of trust shall contain provisions which: (A) vest legal title to trusteed assets in the trustees, and their successors lawfully appointed, in trust for the security of all policyholders and creditors of the alien insurer within the United States; (B) provide for substitution of a new trustee or trustees in case of a vacancy by death, resignation or otherwise, subject to approval of the superintendent; (C) require that all trusteed assets shall be at all times maintained as a trust fund separate and distinct from all other assets; and (D) require that the trustee or trustees shall continuously maintain a record at all times sufficient to identify the assets of such fund. (2) Such deed of trust may provide that income, earnings, dividends or interest accumulations of the assets of such fund may be paid over to the United States manager of such alien insurer, upon his or its request. (3) Such deed of trust shall provide, in substance, that no withdrawals of assets, other than income as above specified, shall be made or permitted by the trustee or trustees without the approval of the superintendent except to: (A) make deposits required by law in any state for the security or benefit of all policyholders, or policyholders and creditors, of such alien insurer in the United States; (B) substitute other assets permitted by law and at least equal in value to those withdrawn, upon the specific written direction of the United States manager or an assistant United States manager when duly empowered and acting pursuant to either general or specific written authority previously given or delegated by the board of directors; or (C) transfer such assets to an official liquidator or rehabilitator pursuant to an order of a court of competent jurisdiction. (f) Upon withdrawal of trusteed assets deposited in another state in which such insurer is authorized to do business, it shall be sufficient if the deed of trust requires similar written approval of the insurance supervising official of such state in lieu of approval of the superintendent. In all such cases the alien insurer shall notify the superintendent in writing of the nature and extent of such withdrawal. (g) The superintendent may from time to time: (i) make examinations of the trusteed assets of any authorized alien insurer at the insurer`s expense and (ii) require the trustee or trustees to file a statement, in such form as he may prescribe, certifying the assets of such trust fund and the amounts thereof. Refusal or neglect of any trustee to comply with the foregoing requirements shall be ground for the revocation of such insurer`s license or the liquidation of its United States branch. (h) In the case of a Canadian life insurance company or a Canadian fraternal benefit society, the provisions of this section applicable to a United States manager refer to the president, vice-president, secretary or treasurer of the company at its home office in Canada or to any officer of the society elected by its supreme governing body, when duly empowered and authorized for such purpose. S 1316. Voluntary deposits. The superintendent may receive from any authorized insurer a deposit required by or pursuant to the laws of another state as a prerequisite to doing business in such other state, and may also receive from any insurer any additions to its deposits which are reasonably necessary to maintain the aggregate value of such deposit at least equal to the amount required. S 1317. Release of deposits. (a) (1) In this section, "release of deposits" means the transfer and delivery by the superintendent of deposited securities to the depositing insurer at its request, or to a person designated by it in writing, without substitution of other securities. The superintendent may require authentication or proof of such request, or of such designation, in such form and manner as he may prescribe. (2) No depositing insurer shall be entitled to a total or partial release of its deposited securities except as specified in this section. (3) No total or partial release of a deposit, made in good faith by the superintendent, shall impose any personal liability upon him. (b) If the superintendent finds that the aggregate market value of the required deposit of any insurer doing business in this state exceeds one hundred five per centum of the amount required of such insurer by the laws of this state, he may release securities of such deposit, having a value not greater than the amount of such excess, but the par value of the securities remaining on deposit shall not be less than the amount required by the provisions of this chapter. (c) If the superintendent finds that all or any part of any voluntary deposit of any insurer is no longer required to comply with the laws of this or any other state, he may to such extent release such deposit. (d) If the superintendent finds that the aggregate market value of the required deposit of any insurer exceeds two hundred per centum of the total amount of its outstanding accrued and contingent liabilities assumed, or covering persons or risks located, within the United States, and that such insurer has ceased to do any new business within the United States, he may release securities of such deposit having a value not greater than the excess. (e) In making any findings required by this section the superintendent may make such examination or other investigation of the affairs of such insurer as he deems expedient, and may require a statement subscribed by two principal officers of such insurer and affirmed by them as true under the penalties of perjury as to any facts therein. S 1318. Deposits, securities eligible. (a) Except as otherwise provided in this chapter, every deposit made with the superintendent shall be in the securities specified in paragraphs one and two of subsection (b) of section one thousand four hundred two of this chapter, estimated at an amount not exceeding their current market value, but their total par value shall not be less than the amount required. (b) Such deposit made by a foreign insurer may be in like securities of its home state if similar domestic insurers doing business in such state are permitted to deposit therein like securities of this state. (c) If the aggregate market value of the securities on deposit shall fall below the required amount, the superintendent may require the depositing insurer to deposit sufficient additional securities of like character. S 1319. Deposits by foreign insurers. (a) Every foreign insurer doing business in this state shall keep on deposit with the superintendent, or with the state officer of its home state designated by law for such purpose, the same amount of securities which a like domestic insurer transacting the same kinds of insurance is required to deposit with the superintendent. (b) Such securities shall be of the same character required or permitted by section one thousand three hundred eighteen of this article, except that such an insurer may, in the discretion of the superintendent, receive credit for a deposit with its home state consisting of bonds and mortgages, or deeds of trust, on improved unencumbered real property located in its home state or in this state worth fifty per centum more than the amount loaned thereon. (c) The superintendent shall be furnished with the certificate of such state officer of the insurer`s home state under his hand and official seal that he holds such securities in trust and on deposit for the benefit of all policyholders or all the policyholders and creditors of such insurer. Such certificate shall list the securities so held and their par or face value. S 1320. Deposits by alien insurers; statutory deposits. (a) No alien insurer authorized to do an insurance business in this state shall do such business unless it shall have securities deposited (for the benefit of all its policyholders, or all its policyholders and creditors, in the United States) with the superintendent or with proper state officers of other states, or held as trusteed assets, in an amount at least equal to one hundred fifty per centum of the capital required to be maintained by a domestic stock insurer licensed to do the same kinds of insurance. In any event the deposit with the superintendent shall at least equal: (1) if such insurer is licensed in this state to do only one kind of insurance, five hundred thousand dollars; (2) if such insurer is licensed in this state to do two or more kinds of insurance, an amount equal to the lesser of the capital required to be maintained by a domestic stock insurer licensed to do the same kinds of insurance, or one million dollars. (b) Notwithstanding the foregoing, any alien insurer initially licensed to do an insurance business in this state prior to July first, nineteen hundred eighty-two shall have securities deposited or held as trusteed assets, as provided in subsection (a) hereof in an amount at least equal to fifty percent of the deposit requirements applicable to an alien insurer initially authorized to do an insurance business in this state on or after July first, nineteen hundred eighty-two. (c) Any licensed alien insurer may make additional deposits with the superintendent in order to comply with this section or section one thousand three hundred twelve of this article. (d) In any financial statement of a United States branch of any such alien insurer the item corresponding to capital stock of a domestic stock corporation shall be termed its "statutory deposit" and shall be in an amount equal to the deposit required to comply with the provisions of subsection (a) or (b) hereof. S 1321. Commutation of reinsurance agreements. (a) If the superintendent finds that a domestic insurer or a United States branch of an alien insurer entered through this state is impaired or insolvent within the meaning of this chapter, the superintendent may permit such insurer to utilize commutations of reinsurance agreements to eliminate the impairment or insolvency, provided that such commutations are approved by the superintendent in accordance with standards prescribed by regulation. (b) For purposes of this section, commutation of a reinsurance agreement is the elimination of all present and future obligations between the parties, arising from the reinsurance agreement, in exchange for a current consideration. (c) Nothing herein contained shall preclude the superintendent from proceeding against such insurer under any other provision of this chapter. S 1322. Risk-based capital for life and accident and health insurance companies. (a) Definitions. In this section: (1) "Adjusted RBC report" means a RBC report which has been adjusted by the superintendent in accordance with paragraph three of subsection (c) of this section. (2) "Corrective order" means an order issued by the superintendent specifying corrective actions which the superintendent has determined are required. (3) "Domestic insurer" means any authorized life insurance company or accident and health insurance company incorporated or organized under any law of this state. (4) "Foreign insurer" means any authorized life insurance company or accident and health insurance company incorporated or organized under the laws of any state, other than this state. (5) "Negative trend" means a negative trend over a period of time, as determined in accordance with the "trend test calculation" included in the RBC instructions defined in paragraph seven of this subsection. (6) "RBC" means risk-based capital. (7) "RBC instructions" means the RBC report including risk-based capital instructions, which in addition to any other matter which may be required to be stated therein, either by law or by the superintendent pursuant to law, shall conform substantially to the form of the report and instructions adopted from time to time for such purpose by, or by the authority of, the National Association of Insurance Commissioners, together with such additions, omissions or modifications, similarly adopted from time to time, as may be approved by the superintendent. (8) "RBC level" means an insurer`s company action level RBC, regulatory action level RBC, authorized control level RBC, or mandatory control level RBC where: (A) "Company action level RBC" means the product of 2.0 and the insurer`s authorized control level RBC; (B) "Regulatory action level RBC" means the product of 1.5 and the insurer`s authorized control level RBC; (C) "Authorized control level RBC" means the number determined under the risk-based capital formula in accordance with the RBC instructions; (D) "Mandatory control level RBC" means the product of .70 and the insurer`s authorized control level RBC. (9) "RBC plan" means a comprehensive financial plan containing the elements specified in paragraph two of subsection (d) of this section. If the superintendent rejects the RBC plan, and it is revised by the insurer, with or without the superintendent`s recommendation, the plan shall be called the "Revised RBC plan." (10) "RBC report" means the report required in subsection (c) of this section. (11) "Total adjusted capital" means the sum of: (A) An insurer`s statutory capital and surplus; and (B) Such other items, if any, as the RBC instructions may provide. (b) Applicability. This section shall apply to every authorized life insurance company and accident and health insurance company. (c) RBC reports. (1) Every domestic insurer shall, on or prior to each March fifteenth (the "filing date"), prepare and submit to the superintendent a report of its RBC levels as of the end of the calendar year just ended, in a form and containing such information as is required by the RBC instructions. In addition, the insurer shall file the RBC report: (A) With the National Association of Insurance Commissioners in accordance with the RBC instructions; and (B) With the insurance commissioner in any state in which the insurer is authorized to do business, upon the written request of the insurance commissioner. The insurer shall file the RBC report by the later of: (i) The filing date; or (ii) Fifteen days after the date of the request. (2) An insurer`s RBC shall be determined in accordance with the formula set forth in the RBC instructions. The formula shall be determined in each case by applying the factors in the manner set forth in the RBC instructions, and shall take into account (and may adjust for the covariance between): (A) The risk with respect to the insurer`s assets; (B) The risk of adverse insurance experience with respect to the insurer`s liabilities and obligations; (C) The interest rate risk with respect to the insurer`s business; and (D) All other business risks and such other relevent risks as are set forth in the RBC instructions. (3) If a domestic insurer files a RBC report which the superintendent determines is inaccurate, then the superintendent shall adjust the RBC report to correct the inaccuracy and shall notify the insurer of the adjustment. The notice shall contain a statement of the reason for the adjustment. A RBC report as so adjusted is referred to as an "Adjusted RBC report." (d) Company action level event. (1) "Company action level event" means, with respect to a domestic insurer: (A) The filing by the insurer of a RBC report indicating that: (i) The insurer`s total adjusted capital is greater than or equal to its regulatory action level RBC but less than its company action level RBC; or (ii) (I) The insurer has total adjusted capital which is greater than or equal to its company action level RBC but less than the product of 2.5 and its authorized control level RBC; and (II) there is a negative trend; (B) The notification by the superintendent to the insurer of an adjusted RBC report that indicates the occurrence of an event described in item (i) or (ii) of subparagraph (A) of this paragraph, provided the insurer does not challenge the adjusted RBC report under subsection (h) of this section; or (C) If, under subsection (h) of this section, the insurer challenges an adjusted RBC report that indicates the occurrence of an event described in item (i) or (ii) of subparagraph (A) of this paragraph, the notification by the superintendent to the insurer that the superintendent has, after a hearing, rejected the insurer`s challenge. (2) If there is a company action level event, the domestic insurer shall prepare and submit to the superintendent a RBC plan which: (A) Identifies the conditions in the insurer which contribute to the company action level event; (B) Contains proposals of corrective actions which the insurer intends to take and would be expected to result in the elimination of the company action level event; (C) Provides projections of the insurer`s financial results in the current year and at least the four succeeding years, both in the absence of proposed corrective actions and giving effect to the proposed corrective actions, including projections of statutory operating income, net income, and capital and surplus. The projections for both new and renewal business may include separate projections for each major line of business and separately identify each significant income, expense and benefit component; (D) Identifies the key assumptions impacting the insurer`s projections and the sensitivity of the projections to the assumptions; and (E) Identifies the quality of, and problems associated with, the insurer`s business, including its assets, anticipated business growth and associated surplus strain, extraordinary exposure to risk, mix of business and use of reinsurance. (3) The RBC plan shall be submitted within forty-five days after the occurrence of the company action level event. (4) (A) Within sixty days after the submission by an insurer of a RBC plan to the superintendent, the superintendent shall notify the insurer whether the RBC plan is satisfactory, unsatisfactory, or unacceptable. (B) If the RBC plan is satisfactory, the insurer shall implement it. (C) If the RBC plan is unsatisfactory, the notification to the insurer shall set forth the reasons for the determination, and may set forth proposed revisions which will render the RBC plan satisfactory to the superintendent. Upon notification from the superintendent, the insurer shall prepare a revised RBC plan, which may incorporate by reference any revisions proposed by the superintendent, and shall submit the revised RBC plan to the superintendent: (i) Within forty-five days after the notification from the superintendent; or (ii) If, under subsection (h) of this section, the insurer challenges the notification from the superintendent, within forty-five days after a notification to the insurer that the superintendent has, after a hearing, rejected the insurer`s challenge. (D) If the RBC plan is unacceptable because it does not adequately address all of the elements specified in paragraph two of this subsection, the notification to the insurer shall set forth the reasons for the determination and shall state that the notification constitutes a regulatory action level event. (5) (A) Every domestic insurer that files a RBC plan or revised RBC plan with the superintendent shall file a copy with the insurance commissioner of any state in which the insurer is authorized to do business, upon the written request of the insurance commissioner, if the state has a RBC provision substantially similar to paragraph one of subsection (i) of this section. (B) The insurer shall file a copy of the RBC plan or revised RBC plan in that state by the later of: (i) The date on which the RBC plan or revised RBC plan is filed under paragraph three or four of this subsection; or (ii) Fifteen days after the date of the request. (e) Regulatory action level event. (1) "Regulatory action level event" means, with respect to a domestic insurer: (A) The filing by the insurer of a RBC report indicating that the insurer`s total adjusted capital is greater than or equal to its authorized control level RBC but less than its regulatory action level RBC; (B) The notification by the superintendent to the insurer of an adjusted RBC report that indicates the occurrence of an event described in subparagraph (A) of this paragraph, provided the insurer does not challenge the adjusted RBC report under subsection (h) of this section; (C) If, under subsection (h) of this section, the insurer challenges an adjusted RBC report that indicates the occurrence of an event described in subparagraph (A) of this paragraph, the notification by the superintendent to the insurer that the superintendent has, after a hearing, rejected the insurer`s challenge; (D) The failure of the insurer to timely file a RBC report, unless the insurer provides the superintendent with a satisfactory explanation for the failure and cures the failure within ten days after the filing date; (E) The failure of the insurer to timely submit a RBC plan or a revised RBC plan to the superintendent; (F) Notification by the superintendent that the RBC plan is unacceptable or the revised RBC plan is unsatisfactory, provided the insurer does not challenge the determination under subsection (h) of this section; (G) If, under subsection (h) of this section, the insurer challenges a determination by the superintendent under subparagraph (F) of this paragraph, the notification by the superintendent to the insurer that the superintendent has, after a hearing, rejected the challenge; (H) Notification by the superintendent to the insurer that the insurer has failed to adhere to its RBC plan or revised RBC plan, and that the failure has a substantial adverse effect on the insurer`s ability to eliminate the regulatory action level event, provided the insurer does not challenge the determination under subsection (h) of this section; or (I) If, under subsection (h) of this section, the insurer challenges a determination by the superintendent under subparagraph (H) of this paragraph, the notification by the superintendent to the insurer that the superintendent has, after a hearing, rejected the challenge. (2) If there is a regulatory action level event, the superintendent shall: (A) Require the insurer to prepare and submit a RBC plan or, if applicable, a revised RBC plan, unless the RBC plan is unacceptable (in which case the superintendent may require a revised RBC plan) or the revised RBC plan has already been submitted; (B) Perform such examination or analysis as the superintendent deems necessary of the assets, liabilities and operations of the insurer, including a review of the RBC plan or revised RBC plan; and (C) Subsequent to the examination or analysis, issue a corrective order. (3) In determining corrective actions, the superintendent may take into account such factors as are deemed relevant, based upon the superintendent`s examination or analysis of the assets, liabilities and operations of the insurer, including the results of any sensitivity tests undertaken pursuant to the RBC instructions. (4) The RBC plan or revised RBC plan shall be submitted: (A) Within forty-five days after the occurrence of the regulatory action level event; or (B) If, under subsection (h) of this section, the insurer challenges the superintendent`s determination that a RBC plan is unsatisfactory, within forty-five days after notification to the insurer that the superintendent has, after a hearing, rejected the insurer`s challenge. (5) The superintendent may retain actuaries, investment experts and other consultants as the superintendent deems necessary to review the insurer`s RBC plan or revised RBC plan, examine or analyze the assets, liabilities and operations of the insurer, and formulate the corrective order. The fees, costs and expenses relating to consultants shall be borne by the affected insurer as directed by the superintendent. (f) Authorized control level event. (1) "Authorized control level event" means, with respect to a domestic insurer: (A) The filing by the insurer of a RBC report indicating that the insurer`s total adjusted capital is greater than or equal to its mandatory control level RBC but less than its authorized control level RBC; (B) The notification by the superintendent to the insurer of an adjusted RBC report that indicates the occurrence of an event described in subparagraph (A) of this paragraph, provided the insurer does not challenge the adjusted RBC report under subsection (h) of this section; (C) If, under subsection (h) of this section, the insurer challenges an adjusted RBC report that indicates the occurrence of an event described in subparagraph (A) of this paragraph, notification by the superintendent to the insurer that the superintendent has, after a hearing, rejected the insurer`s challenge; (D) The failure of the insurer to respond, in a manner satisfactory to the superintendent, to a corrective order, provided the insurer has not challenged the corrective order under subsection (h) of this section; or (E) If, under subsection (h) of this section, the insurer challenges a corrective order and the superintendent, after a hearing, rejects the challenge or modifies the corrective order, the failure of the insurer to respond, in a manner satisfactory to the superintendent, to the corrective order subsequent to rejection or modification by the superintendent. (2) If there is an authorized control level event, the superintendent shall take such actions as are: (A) Required under subsection (e) of this section regarding an insurer with respect to which a regulatory action level event has occurred; or (B) Necessary to cause the insurer to be placed under rehabilitation or liquidation under article seventy-four of this chapter. (g) Mandatory control level event. (1) "Mandatory control level event" means, with respect to a domestic insurer: (A) The filing by the insurer of a RBC report, indicating that the insurer`s total adjusted capital is less than its mandatory control level RBC; (B) Notification by the superintendent to the insurer of an adjusted RBC report that indicates the occurrence of an event described in subparagraph (A) of this paragraph, provided the insurer does not challenge the adjusted RBC report under subsection (h) of this section; or (C) If, under subsection (h) of this section, the insurer challenges an adjusted RBC report that indicates the occurrence of an event described in subparagraph (A) of this paragraph, notification by the superintendent to the insurer that the superintendent has, after a hearing, rejected the insurer`s challenge. (2) If there is a mandatory control level event, the superintendent shall take such actions as are necessary to cause the insurer to be placed under rehabilitation or liquidation under article seventy-four of this chapter. However, the superintendent may forgo action for up to ninety days after the occurrence of a mandatory control level event if the superintendent determines that there is a reasonable expectation that the mandatory control level event may be eliminated within the period. (h) Hearings. (1) A domestic insurer shall have the right to a hearing upon notification to the insurer by the superintendent; (A) Of an adjusted RBC report; (B) That the insurer`s RBC plan is unsatisfactory or unacceptable or the revised RBC plan is unsatisfactory; (C) That the insurer has failed to adhere to its RBC plan or revised RBC plan and that the failure has a substantial adverse effect on the ability of the insurer to eliminate the regulatory action level event; or (D) Of a corrective order. (2) If a hearing is requested within five days after the superintendent gives a notification specified in paragraph one of this subsection, the superintendent shall give notice and a hearing in accordance with the provisions of article three of this chapter. (3) The superintendent shall set a date for the hearing, which date shall be no less than ten nor more than thirty days after the date of the insurer`s hearing request. (i) Confidentiality and prohibition on announcements. (1) All RBC reports and adjusted RBC reports (to the extent the information therein is not required to be set forth in a publicly available annual statement schedule), RBC plans, revised RBC plans, results or report of any examination or analysis of an insurer performed pursuant hereto, and corrective orders filed with or issued by the superintendent contain information that may be damaging to the insurer if made available to its competitors, and shall be confidential and not made public or subject to subpoena, except to the extent the superintendent finds release of information necessary to protect the public. (2)(A) The comparison of an insurer`s total adjusted capital to any of its RBC levels is a regulatory tool which may indicate the need for possible corrective action with respect to the insurer, and is not intended as a means to rank insurers generally, and the use of the information to rank insurers may be misleading to the general public. (B) Except as otherwise required under the provisions of this section, no authorized insurer, licensed insurance agent, licensed insurance broker, or any person on behalf of the insurer, agent or broker, or any other person licensed pursuant to this chapter shall, make, publish, disseminate, circulate or place before the public, or cause, directly or indirectly, to be made, published, disseminated, circulated or placed before the public, in a newspaper, magazine or other publication, or in the form of a notice, circular, pamphlet, letter or poster, or over any radio or television station, or in any other way, an advertisement, announcement or statement containing an assertion, representation or statement with regard to the RBC Levels of any insurer, or of any component derived in the calculation. (C) Notwithstanding subparagraph (B) of this paragraph, if a materially false or inappropriate statement, comparing an insurer`s total adjusted capital or other amount to one or more of its RBC levels, is published in a written publication, and the insurer is able to demonstrate to the superintendent the falsity or inappropriateness of the statement, then the insurer may publish an announcement in a written publication to rebut the statement. (j) Foreign insurers. (1) A foreign insurer shall, upon the written request of the superintendent, submit to the superintendent a RBC report as of the end of the calendar year just ended by the later of: (A) The date a RBC report would be required to be filed by a domestic insurer under this section; or (B) Fifteen days after the date of the request. (2) A foreign insurer shall, upon the written request of the superintendent, within five days, submit to the superintendent a copy of its RBC plan or revised RBC plan that is filed with the insurance commissioner of any other state. (3) (A) If there is a company action level event, regulatory action level event, or authorized control level event, and the insurance commissioner of the state of incorporation or organization of the insurer does not require the insurer to file a RBC plan, the superintendent may require the insurer to file an RBC plan with the superintendent within forty-five days of the superintendent`s notification. (B) If the RBC plan is unsatisfactory or if the insurer fails to timely file the RBC plan with the superintendent, the superintendent may order the insurer not to issue any new insurance policies or contracts in this state. (4) If there is a mandatory control level event, the superintendent may make application under article seventy-four of this chapter. (k) Notices. Unless a later date is specified, any notice by the superintendent to an insurer under this section which may result in regulatory action hereunder shall be effective upon delivery, except that, if the notice is mailed, it shall be effective three days after it is mailed. (l) Phase-in provision. For RBC reports required to be filed in nineteen hundred ninety-four with respect to calendar year nineteen hundred ninety-three, the following requirements shall apply to the provisions of subsections (d), (e), (f) and (g) of this section: (1) In the event of a company action level event with respect to a domestic insurer, the superintendent shall take no regulatory action hereunder. (2) In the event of an regulatory action level event under subparagraph (A), (B) or (C) of paragraph one of subsection (e) of this section the superintendent shall take the actions required under subsection (d) of this section. (3) In the event of an regulatory action level event under subparagraph (D), (E), (F), (G), (H) or (I) of paragraph one of subsection (e) of this section or an authorized control level event, the superintendent shall take the actions required under subsection (e) of this section with respect to the insurer. (4) In the event of a mandatory control level event with respect to an insurer, the superintendent shall take the actions required under subsection (f) of this section with respect to the insurer. S 1323. Issuance of capital notes by domestic life insurance companies. (a) A domestic life insurance company may at any time or from time to time issue capital notes pursuant to this section in an aggregate principal amount not exceeding (1) twenty-five percent of its total adjusted capital (including the aggregate principal amount of outstanding notes) as of the end of the immediately preceding calendar year, less (2) the aggregate principal amount of outstanding notes; provided, however, that capital notes shall not be issued for an aggregate principal amount which would cause the aggregate principal amount of all such insurer`s capital notes scheduled to mature in any calendar year to exceed five percent, or the aggregate principal amount of all such insurer`s capital notes scheduled to mature in any three consecutive calendar years to exceed twelve percent, of the insurer`s total adjusted capital as of the end of the calendar year immediately preceding the issuance of such capital notes. For purposes of this section, outstanding notes shall include the outstanding aggregate principal amount of capital notes issued pursuant to this section and the outstanding aggregate principal amount of advances or borrowings incurred pursuant to section one thousand three hundred seven of this article. (b) No such insurer shall issue capital notes pursuant to this section unless the terms thereof shall have been approved by the superintendent as not adverse to the interests of the insurer`s policyholders. (c) The insurer shall not pay or redeem the principal amount of any capital notes, make any sinking fund payment or pay any interest on such notes, and such principal, payment and interest shall not become due or payable if, based on the preceding year-end annual statement filed with the superintendent: (1) (A) the insurer`s total adjusted capital is less than such insurer`s company action level RBC or (B) the insurer`s total adjusted capital is less than the product of 2.5 and its authorized control level RBC and there is a negative trend, as determined in accordance with section one thousand three hundred twenty-two of this article or (2) the aggregate of all such payments or redemptions made during the current calendar year would if made immediately prior to the preceding year-end have caused (A) the insurer`s total adjusted capital to be less than such insurer`s company action level RBC or (B) the insurer`s total adjusted capital at such time to be less than the product of 2.5 and its authorized control level RBC and there is a negative trend, as determined in accordance with section one thousand three hundred twenty-two of this article. Notwithstanding the foregoing, upon request by the insurer, the superintendent may approve, in whole or in part, any such payment or redemption on the capital notes if and at such time or times as in his judgment the financial condition of such insurer warrants. The amount of such redemptions or payments of principal amounts of any capital notes which cannot be made as the result of the provisions of this subsection may accumulate at the rate of interest of the capital notes. (d) Capital notes issued pursuant to this section: (1) may provide (A) for interest payments at fixed or adjustable rates, sinking fund payments, and payments and redemptions of principal, in each case in accordance with the terms of the capital note and without the prior approval of the superintendent except to the extent that such approval is required pursuant to this subsection or subsection (c) of this section, (B) that such capital notes automatically become due and payable in the event the insurer becomes subject to an order of rehabilitation, liquidation or conservation granted pursuant to a proceeding under article seventy-four of this chapter, and (C) for such other features as the superintendent determines are appropriate for capital notes issued by a life insurance company; and (2) shall provide that if at the end of any calendar year the total amount of such insurer`s total adjusted capital (including the aggregate principal amount of outstanding notes) is less than three times the aggregate principal amount of outstanding notes, the superintendent may notify such insurer that the financial condition of such insurer does not warrant the payment or redemption or sinking fund payment, in whole or in part, on the capital notes. Such action by the superintendent shall, without any action on the part of the insurer or any other person, automatically defer such payment or redemption until such time as the superintendent finds that the financial condition warrants such payment or redemption. The amount of such redemptions or payments of principal amounts of any capital notes so deferred may accumulate at the rate of interest of the capital notes. (e) Capital notes issued pursuant to this section shall be considered part of such insurer`s total adjusted capital but shall not be considered part of such insurer`s surplus; provided, however, (1) that, in the case of any capital note maturing fifteen years or less from the year in which such capital note is issued, one-fifth of the aggregate principal amount of such capital note shall be subtracted from total adjusted capital in each year starting with the fifth year immediately preceding the calendar year in which such capital note is scheduled to mature; and (2) that, in the case of any capital note maturing more than fifteen years from the year in which such capital note is issued; one-tenth of the aggregate principal amount of such capital note shall be subtracted from total adjusted capital in each year starting with the tenth year immediately preceding the calendar year in which such capital note is scheduled to mature, and further provided that, in no event shall the amount included in total adjusted capital for any capital note exceed the principal amount, at issue, of such outstanding capital note less the aggregate of all sinking fund payments made on such capital note. Such insurer shall be required to disclose the aggregate principal amount of capital notes then outstanding as a liability on its financial statements filed with the superintendent pursuant to this article. (f) As used in this section, the terms "total adjusted capital", "company action level RBC" and "authorized control level RBC" shall have the same meanings as set forth with respect to such terms in section one thousand three hundred twenty-two of this article.