§ 1324. Risk-based capital for property/casualty insurance companies.
(a) Definitions. In this section:

(1) "Adjusted RBC report" means an RBC report which has been adjusted
by the superintendent in accordance with paragraph two 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 property/casualty
insurance company either incorporated or organized under any law of this
state or, in the case of a United States branch of an alien insurer,
entered into the United States through this state.

(4) "Foreign insurer" means any authorized property/casualty insurance
company either incorporated or organized under the laws of any state,
other than this state, or in the case of a United States branch of an
alien insurer, entered into the United States through any state other
than this state.

(5) "Property/casualty insurance company" means any property/casualty
insurance company or United States branch of an alien insurer licensed
under article forty-one of this chapter, any reciprocal insurer licensed
under article sixty-one of this chapter or any advance premium
corporation or assessment corporation organized and licensed under
article sixty-six of this chapter.

(6) "RBC" means risk-based capital.

(7) "RBC instructions" means the RBC report including risk-based
capital instructions in effect as of December thirty-first, two thousand
four as issued by the national association of insurance commissioners,
and 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;
and

(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. (1) This section shall apply to every
property/casualty insurance company, unless exempted under paragraph two
of this subsection.

(2) Except as set forth in subparagraph (C) of this paragraph, with
prior written approval, the superintendent may exempt from the
provisions of this section a non-stock domestic property/casualty
insurance company which:

(A)(i) Writes no direct business outside of this state;

(ii) Writes direct annual premiums of twenty million dollars or less;
and

(iii) Assumes reinsurance premiums in an amount that is less than five
percent of total direct premiums written; or

(B)(i) Has total direct premiums comprised of at least ninety percent
medical malpractice liability insurance, as that term is defined in
subsection (b) of section five thousand five hundred one of this
chapter;

(ii) Assumes reinsurance premiums in an amount that is less than five
percent of total direct premiums written; and

(iii) Writes ninety percent of its total direct premiums in this
state.

(C) The exemptions permitted under subparagraphs (A) and (B) of this
paragraph shall not apply to an insurer which:

(i) Is controlled by another insurer;

(ii) Owns or controls another insurer, unless the insurer that is
owned or controlled is subject to the provisions of this section,
section one thousand three hundred twenty-two or section one thousand
three hundred twenty-five of this article, as added by a chapter of the
laws of 2007, or a substantially similar provision in another
jurisdiction;

(iii) Is under common control of a person that controls another
insurer; or

(iv) Is a party to a pooling agreement wherein risks underwritten by
parties to the agreement are apportioned to the parties in a
predetermined manner.

(c) RBC reports. (1) Every domestic insurer shall, on or prior to each
March first (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) If a domestic insurer files an 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. An 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 an RBC report indicating that 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;

(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; or

(D) The filing by the insurer of an RBC report indicating that the
insurer has total adjusted capital that is greater than or equal to its
company action level RBC, but less than the product of three point zero
and its authorized control level RBC, and with a combined ratio greater
than one hundred twenty percent as determined in accordance with the
trend test calculation in the RBC instructions.

(2) If there is a company action level event, the domestic insurer
shall prepare and submit to the superintendent an RBC plan which:

(A) Identifies the conditions 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, liabilities, 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 an RBC
plan to the superintendent, the superintendent shall notify the insurer
whether the RBC plan is satisfactory or unsatisfactory.

(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.

(5) If there is a company action level event, the superintendent may
limit the premium writings of the insurer.

(6)(A) Every domestic insurer that files an 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 an 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 an 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 an RBC report, unless
the insurer provides the superintendent with a satisfactory explanation
for the failure or cures the failure within ten days after the filing
date;

(E) The failure of the insurer to timely submit an RBC plan or a
revised RBC plan to the superintendent;

(F) Notification by the superintendent that 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 or that the
insurer has failed to attain the amount of capital projected in the RBC
plan or revised RBC plan, and that the failure of either has a
substantial adverse effect on the insurer's ability to eliminate the
company 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 an RBC plan or, if
applicable, a revised RBC plan;

(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.

(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 an 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.

(6) If there is a regulatory action level event, the superintendent
may limit the premium writings of the insurer.

(f) Authorized control level event. (1) "Authorized control level
event" means, with respect to a domestic insurer:

(A) The filing by the insurer of an 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 an 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)(A) If there is a mandatory control level event, except as set
forth in subparagraph (B) of this paragraph, 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.

(B) The superintendent may forgo action set forth in subparagraph (A)
of this paragraph after the occurrence of a mandatory control level
event if:

(i) The insurer has demonstrated within a ninety day period that the
mandatory control level event will be eliminated under a plan approved
by the superintendent; or

(ii) No business is being written or renewed, any existing
policyholder obligations are being run-off under a plan approved by the
superintendent and the insurer meets the minimum capital and surplus as
otherwise required under this chapter.

(h) Hearings. (1) An 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 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 company 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, except
that the hearing, and any report resulting from such hearing, shall be
kept confidential in accordance with the provisions of paragraph one of
subsection (i) of this section.

(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; prohibition on announcements; prohibition on use
in rate making; excess of capital over the amount indicated in the RBC
report. (1) All RBC plans, revised RBC plans, results or reports of any
examination or analysis of an insurer performed pursuant to this
section, corrective orders filed with or issued by the superintendent
and any report resulting from a hearing held pursuant to subsection (h)
of this section 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.

(3) RBC instructions, RBC reports, adjusted RBC reports, RBC plans and
revised RBC plans shall not be used by the superintendent in determining
whether rates comply with standards set forth in this chapter and shall
not be considered or introduced as evidence in any hearing involving
such standards.

(4) An excess of capital over the amount produced by the RBC
requirements contained in this section is desirable in the business of
insurance. Accordingly, insurers should seek to maintain capital above
the RBC levels required by this section. Additional capital is used and
useful in the insurance business and helps to secure an insurer against
various risks inherent in, or affecting, the business of insurance and
not accounted for or only partially measured by the RBC requirements
contained in this section.

(j) Foreign insurers. (1) A foreign insurer shall, upon the written
request of the superintendent, submit to the superintendent an RBC
report, in the same form as required of a domestic insurer, as of the
end of the calendar year just ended by the later of:

(A) The date an 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 an RBC plan, the
superintendent may require the insurer to file an RBC plan, in the same
form as required of a domestic insurer, 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 an authorized control level event or 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.