739. As used in this article, these terms shall have the following
meanings:
(a) "Adjusted RBC Report" means a Risk-Based Capital (RBC) report
that has been adjusted by the commissioner in accordance with
subdivision (c) of Section 739.2.
(b) "Corrective Order" means an order issued by the commissioner
specifying corrective actions that the commissioner has determined
are required.
(c) "Domestic insurer" means any life or health insurer or
property and casualty insurer organized in this state.
(d) "Foreign insurer" means any life or health insurer or property
and casualty insurer that is licensed to do business in this state
but is not domiciled in this state.
(e) "Life or health insurer" means any admitted insurer issuing
insurance subject to Part 2 (commencing with Section 10110) of
Division 2, or a licensed property and casualty insurer writing only
disability insurance.
(f) "NAIC" means the National Association of Insurance
Commissioners.
(g) "Negative trend" means, with respect to a life or health
insurer, a negative trend over a period of time, as determined in
accordance with the "Trend Test Calculation" included in the RBC
Instructions defined in subdivision (i).
(h) "Property and casualty insurer" means any admitted insurer
writing insurance as described in Section 102, 103, 105, 107, 108,
109, 110, 111, 112, 113, 114, 115, 116, 118, 119.5, 119.6, or 120,
but does not include monoline mortgage guaranty insurers, financial
guaranty insurers, or title insurers.
(i) "RBC Instructions" means the RBC Report, including risk-based
capital instructions adopted by the NAIC, and as the RBC Instructions
may be amended by the NAIC from time to time in accordance with the
procedures adopted by the NAIC.
(j) "RBC Level" means an insurer's Company Action Level RBC,
Regulatory Action Level RBC, Authorized Control Level RBC, or
Mandatory Control Level RBC where:
(1) "Company Action Level RBC" means, with respect to any insurer,
the product of 2.0 and its Authorized Control Level RBC.
(2) "Regulatory Action Level RBC" means the product of 1.5 and its
Authorized Control Level RBC.
(3) "Authorized Control Level RBC" means the number determined
under the risk-based capital formula in accordance with the RBC
Instructions.
(4) "Mandatory Control Level RBC" means the product of .70 and the
Authorized Control Level RBC.
(k) "RBC Plan" means a comprehensive financial plan containing the
elements specified in subdivision (b) of Section 739.3. If the
commissioner rejects the RBC Plan, and it is revised by the insurer,
with or without the commissioner's recommendation, the plan shall be
called the "Revised RBC Plan."
(l) "RBC Report" means the report required in Section 739.2.
(m) "Total Adjusted Capital" means the sum of:
(1) An insurer's statutory capital and surplus.
(2) Other items, if any, that the RBC Instructions may provide.
739.2. (a) Every domestic insurer shall, on or prior to each March
15 (the "filing date"), prepare and submit to the commissioner 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, every domestic insurer shall file
its RBC Report:
(1) With the NAIC in accordance with the RBC Instructions.
(2) With the insurance commissioner in any state in which the
insurer is authorized to do business, if the insurance commissioner
has notified the insurer of its request in writing, in which case the
insurer shall file its RBC Report not later than the later of:
(A) Fifteen days from the receipt of notice to file its RBC Report
with that state.
(B) The filing date.
(b) A life or health insurer's RBC shall be determined in
accordance with the formula set forth in the RBC Instructions. The
formula shall take into account, and may adjust for the covariance
between, the following:
(1) The risk with respect to the insurer's assets.
(2) The risk of adverse insurance experience with respect to the
insurer's liabilities and obligations.
(3) The interest rate risk with respect to the insurer's business.
(4) All other business risks and such other relevant risks as are
set forth in the RBC Instructions.
In each case, these shall be determined by applying the factors in
the manner set forth in the RBC Instructions.
(c) A property and casualty insurer's RBC shall be determined in
accordance with the formula set forth in the RBC Instructions. The
formula shall take into account and may adjust for the covariance
between the following:
(1) Asset risk.
(2) Credit risk.
(3) Underwriting risk.
(4) All other business risks and any other relevant risks as are
set forth in the RBC Instructions.
(d) An excess of capital over the amount produced by the
risk-based capital requirements contained in this article and the
formulas, schedules, and instructions referenced in this article is
desirable in the business of insurance. Accordingly, insurers shall
seek to maintain capital above the RBC levels required by this
article. 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 risk-based capital
requirements contained in this article.
(e) If a domestic insurer files an RBC Report that in the judgment
of the commissioner is inaccurate, then the commissioner 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.
739.3. (a) "Company Action Level Event" means any of the following
events:
(1) The filing of an RBC Report by an insurer that indicates any
of the following:
(A) 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) If a life or health insurer, the insurer has Total Adjusted
Capital that is greater than or equal to its Company Action Level RBC
but less than the product of its Authorized Control Level RBC and
2.5, and has a negative trend.
(C) If a property and casualty insurer, the insurer has Total
Adjusted Capital that is greater than or equal to its Company Action
Level RBC but less than the product of its Authorized Control Level
RBC and 3.0, and triggers the trend test determined in accordance
with the trend test calculation included in the Property and Casualty
RBC instructions.
(2) The notification by the commissioner to the insurer of an
Adjusted RBC Report that indicates the event in subparagraph (A) or
(B) of paragraph (1), provided that the insurer does not challenge
the Adjusted RBC Report under Section 739.7.
(3) If the insurer challenges an Adjusted RBC Report that
indicates the event in subparagraph (A) or (B) of paragraph (1) under
Section 739.7, the notification by the commissioner to the insurer
that the commissioner has, after a hearing, rejected the insurer's
challenge.
(b) In the event of a Company Action Level Event, the insurer
shall prepare and submit to the commissioner a comprehensive
financial plan, which shall do all of the following:
(1) Identify the conditions in the insurer that contribute to the
Company Action Level Event.
(2) Contain proposals of corrective actions that the insurer
intends to take and would be expected to result in the elimination of
the Company Action Level Event.
(3) Provide 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, capital, or surplus, or a combination.
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.
(4) Identify the key assumptions impacting the insurer's
projections and the sensitivity of the projections to the
assumptions.
(5) Identify the quality of, and problems associated with, the
insurer's business, including, but not limited to, its assets,
anticipated business growth and associated surplus strain,
extraordinary exposure to risk, mix of business, and use of
reinsurance in each case, if any.
(c) The RBC Plan shall be submitted as follows:
(1) Within 45 days of the Company Action Level Event.
(2) If the insurer challenges an Adjusted RBC Report pursuant to
Section 739.7, within 45 days after notification to the insurer that
the commissioner has, after a hearing, rejected the insurer's
challenge.
(d) Within 60 days after the submission by an insurer of an RBC
Plan to the commissioner, the commissioner shall notify the insurer
whether the RBC Plan shall be implemented or is, in the judgment of
the commissioner, unsatisfactory. If the commissioner determines that
the RBC Plan is unsatisfactory, the notification to the insurer
shall set forth the reasons for the determination, and may set forth
proposed revisions that will render the RBC Plan satisfactory, in the
judgment of the commissioner. Upon notification from the
commissioner, the insurer shall prepare a Revised RBC Plan, which may
incorporate by reference revisions proposed by the commissioner, and
shall submit the Revised RBC Plan to the commissioner as follows:
(1) Within 45 days after the notification from the commissioner.
(2) If the insurer challenges the notification from the
commissioner under Section 739.7, within 45 days after a notification
to the insurer that the commissioner has, after a hearing, rejected
the insurer's challenge.
(e) In the event of a notification by the commissioner to an
insurer that the insurer's RBC Plan or Revised RBC Plan is
unsatisfactory, the commissioner may, at his or her discretion,
subject to the insurer's right to a hearing under Section 739.7,
specify in the notification that the notification constitutes a
Regulatory Action Level Event.
(f) Every domestic insurer that files an RBC Plan or Revised RBC
Plan with the commissioner shall file a copy of the RBC Plan or
Revised RBC Plan with the insurance commissioner in any state in
which the insurer is authorized to do business if both of the
following apply:
(1) That state has an RBC provision substantially similar to
subdivision (a) of Section 739.8.
(2) The insurance commissioner of that state has notified the
insurer of its request for the filing in writing, in which case the
insurer shall file a copy of the RBC Plan or Revised RBC Plan in that
state no later than the later of:
(A) Fifteen days after the receipt of notice to file a copy of its
RBC Plan or Revised RBC Plan with the state.
(B) The date on which the RBC Plan or Revised RBC Plan is filed
under subdivision (c) of Section 739.7.
739.4. (a) "Regulatory Action Level Event" means, with respect to
any insurer, any of the following events:
(1) The filing of an RBC Report by the insurer that indicates 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.
(2) The notification by the commissioner to an insurer of an
Adjusted RBC Report that indicates the event in paragraph (1),
provided the insurer does not challenge the Adjusted RBC Report under
Section 739.7.
(3) If the insurer challenges an Adjusted RBC Report that
indicates the event in paragraph (1) under Section 739.7, the
notification by the commissioner to the insurer that the commissioner
has, after a hearing, rejected the insurer's challenge.
(4) The failure of the insurer to file an RBC Report by the filing
date, unless the insurer has provided an explanation for such
failure that is satisfactory to the commissioner and has cured the
failure within 10 days after the filing date.
(5) The failure of the insurer to submit an RBC Plan to the
commissioner within the time period set forth in subdivision (c) of
Section 739.3.
(6) Notification by the commissioner to the insurer of the
following:
(A) The RBC Plan or revised RBC Plan submitted by the insurer is,
in the judgment of the commissioner, unsatisfactory.
(B) That notification constitutes a Regulatory Action Level Event
with respect to the insurer, provided the insurer has not challenged
the determination under Section 739.7.
(7) If the insurer challenges a determination by the commissioner
under paragraph (6) pursuant to Section 739.7, the notification by
the commissioner to the insurer that the commissioner has, after a
hearing, rejected such challenge.
(8) Notification by the commissioner to the insurer that the
insurer has failed to adhere to its RBC Plan or Revised RBC Plan, but
only if such failure has a substantial adverse effect on the ability
of the insurer to eliminate the Regulatory Action Level Event in
accordance with its RBC Plan or Revised RBC Plan and the commissioner
has so stated in the notification, provided the insurer has not
challenged the determination under Section 739.7.
(9) If the insurer challenges a determination by the commissioner
under paragraph (8) pursuant to Section 739.7, the notification by
the commissioner to the insurer that the commissioner has, after a
hearing, rejected the challenge, unless the failure of the insurer to
adhere to its RBC Plan or Revised RBC Plan has no substantial
adverse effect on the ability of the insurer to eliminate the
Regulatory Action Level Event with respect to the insurer.
(b) In the event of a Regulatory Action Level Event the
commissioner shall do all of the following:
(1) Require the insurer to prepare and submit an RBC Plan or, if
applicable, a Revised RBC Plan.
(2) Perform such examination or analysis as the commissioner deems
necessary of the assets, liabilities, and operations of the insurer,
including a review of its RBC Plan or Revised RBC Plan.
(3) Subsequent to the examination or analysis, issue a corrective
order specifying such corrective actions as the commissioner shall
determine are required.
(c) In determining corrective actions, the commissioner may take
into account such factors as are deemed relevant with respect to the
insurer based upon the commissioner's examination or analysis of the
assets, liabilities, and operations of the insurer, including, but
not limited to, the results of any sensitivity tests undertaken
pursuant to the RBC Instructions. The RBC Plan or Revised RBC Plan
shall be submitted as follows:
(1) Within 45 days after the occurrence of the Regulatory Action
Level Event.
(2) If the insurer challenges an Adjusted RBC Report pursuant to
Section 739.7 and the challenge is not in the judgment of the
commissioner frivolous, within 45 days after the notification to the
insurer that the commissioner has, after a hearing, rejected the
insurer's challenge.
(3) If the insurer challenges a Revised RBC Plan under Section
739.7, within 45 days after notification to the insurer that the
commissioner has, after a hearing, rejected the insurer's challenge.
(d) The commissioner may retain actuaries and investment experts
and other consultants as may be necessary in the judgment of the
commissioner 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 with respect to the
insurer. The fees, costs, and expenses relating to consultants shall
be borne by the affected insurer or such other party as directed by
the commissioner.
739.5. (a) "Authorized Control Level Event" means any of the
following events:
(1) The filing of an RBC Report by the insurer that indicates 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.
(2) The notification by the commissioner to the insurer of an
Adjusted RBC Report that indicates the event in paragraph (1),
provided the insurer does not challenge the Adjusted RBC Report under
Section 739.7.
(3) If the insurer challenges an Adjusted RBC Report that
indicates the event in paragraph (1) under Section 739.7,
notification by the commissioner to the insurer that the commissioner
has, after a hearing, rejected the insurer's challenge.
(4) The failure of the insurer to respond, in a manner
satisfactory to the commissioner, to a Corrective Order, provided the
insurer has not challenged the Corrective Order under Section 739.7.
(5) If the insurer has challenged a Corrective Order under Section
739.7 and the commissioner has, after a hearing, rejected the
challenge or modified the Corrective Order, the failure of the
insurer to respond, in a manner satisfactory to the commissioner, to
the Corrective Order subsequent to rejection or modification by the
commissioner.
(b) In the event of an Authorized Control Level Event with respect
to an insurer, the commissioner shall do the following:
(1) Take such actions as are required under Section 739.4
regarding an insurer with respect to which a Regulatory Action Level
Event has occurred.
(2) If the commissioner deems it to be in the best interests of
the policyholders and creditors of the insurer and of the public,
take such actions as are necessary to cause the insurer to be placed
under regulatory control under Article 14 (commencing with Section
1010), Article 14.3 (commencing with Section 1064.1), Article 14.5
(commencing with Section 1065.1), and Article 15.5 (commencing with
Section 1077). In the event the commissioner takes those actions, the
Authorized Control Level Event shall be deemed sufficient grounds
for the commissioner to take that action, and the commissioner shall
have the rights, powers, and duties with respect to the insurer as
are set forth in those provisions. In the event the commissioner
takes actions under this paragraph pursuant to an Adjusted RBC
Report, the insurer shall be entitled to such protections as are
afforded to insurers under the provisions pertaining to summary
proceedings.
(c) In the event of an Authorized Control Level Event with respect
to the State Compensation Insurance Fund, the commissioner shall
also issue a report to the Governor, the President pro Tempore of the
Senate, and the Speaker of the Assembly setting forth the conditions
that exist.
(d) Upon a determination of the commissioner that an Authorized
Control Level Event has occurred, the Governor, in consultation with
the Legislature, may replace the President of the State Compensation
Insurance Fund and appoint a recovery administrator. The recovery
administrator shall be responsible for developing a plan of recovery
for the State Compensation Insurance Fund, and for implementing the
plan. The recovery administrator shall be a person who, through
professional credentials or job experience, or both, has a
demonstrated understanding of insurance law, insurer finances,
experience in the rehabilitation of insurance companies, claims
administration, and any other factors as are needed to create and
execute a plan of recovery. The cost of the recovery administrator
shall be borne by the State Compensation Insurance Fund. The
administration shall remain until the commissioner conveys to the
Governor his or her opinion that the fund has improved its finances
to the extent that it is no longer at the Authorized Control Level or
above, at which point the Governor may dismiss the recovery
administrator and appoint a new President of the State Compensation
Insurance Fund. During the time that the recovery administrator is
acting, the board of the State Compensation Insurance Fund shall act
in an advisory capacity to the recovery administrator and the
Governor.
739.6. (a) "Mandatory Control Level Event" means any of the
following events:
(1) The filing of an RBC Report that indicates that the insurer's
Total Adjusted Capital is less than its Mandatory Control Level RBC.
(2) Notification by the commissioner to the insurer of an Adjusted
RBC Report that indicates the event in paragraph (1), provided the
insurer does not challenge the Adjusted RBC Report under Section
739.7.
(3) If the insurer challenges an Adjusted RBC Report that
indicates the event in paragraph (1) under Section 739.7,
notification by the commissioner to the insurer that the commissioner
has, after a hearing, rejected the insurer's challenge.
(b) (1) With respect to a life or health insurer, in the event of
a Mandatory Control Level Event, the commissioner shall take actions
as are necessary to cause the insurer to be placed under regulatory
control under Article 14 (commencing with Section 1010), Article 14.3
(commencing with Section 1064.1), Article 14.5 (commencing with
Section 1065.1), and Article 15.5 (commencing with Section 1077). In
that event, the Mandatory Control Level Event shall be deemed
sufficient grounds for the commissioner to take action under those
acts, and the commissioner shall have the rights, powers, and duties
with respect to the insurer as are set forth therein. In the event
the commissioner takes actions pursuant to an Adjusted RBC Report,
the insurer shall be entitled to protections as are afforded to
insurers under those provisions. Notwithstanding any of the
foregoing, the commissioner may forego action for up to 90 days after
the Mandatory Control Level Event if he or she finds there is a
reasonable expectation that the Mandatory Control Level Event may be
eliminated within the 90-day period.
(2) With respect to a property and casualty insurer, the
commissioner shall take those actions as are necessary to place the
insurer under regulatory control, or, in the case of an insurer which
is writing no business and that is running-off its existing
business, may allow the insurer to continue its runoff under the
supervision of the commissioner. In either event, the Mandatory
Control Level Event shall be deemed sufficient grounds for the
commissioner to take action and the commissioner shall have the
rights, powers, and duties with respect to the insurer as are set
forth in Article 14 (commencing with Section 1010). If the
commissioner takes actions pursuant to an Adjusted RBC Report, the
insurer shall be entitled to the protections of Article 14
(commencing with Section 1010) pertaining to summary proceedings.
Notwithstanding any of the foregoing, the commissioner may forego
action for up to 90 days after the Mandatory Control Level Event if
the commissioner finds there is a reasonable expectation that the
Mandatory Control Level Event may be eliminated within the 90-day
period.
(3) In the event of a Mandatory Control Level Event with respect
to the State Compensation Insurance Fund, the commissioner shall also
issue a report to the Governor, the President pro Tempore of the
Senate, and the Speaker of the Assembly setting forth the conditions
that exist.
739.7. Upon any of the events described in subdivision (a), (b),
(c), or (d), the insurer shall have the right to a departmental
hearing, on the record, at which the insurer may challenge any
determination or action by the commissioner. The insurer shall notify
the commissioner of its request for a hearing within five days after
the notification by the commissioner under subdivision (a), (b),
(c), or (d). Upon receipt of the insurer's request for a hearing, the
commissioner shall set a date for the hearing, which date shall be
no less than 10 nor more than 30 days after the date of the insurer's
request.
(a) Notification to an insurer by the commissioner of an Adjusted
RBC Report.
(b) Notification to an insurer by the commissioner that:
(1) The insurer's RBC Plan or Revised RBC Plan is unsatisfactory.
(2) That notification constitutes a Regulatory Action Level Event
with respect to the insurer.
(c) Notification to any insurer by the commissioner that the
insurer has failed to adhere to its RBC Plan or Revised RBC Plan and
that such failure has a substantial adverse effect on the ability of
the insurer to eliminate the Company Action Level Event with respect
to the insurer in accordance with its RBC Plan or Revised RBC Plan.
(d) Notification to an insurer by the commissioner of a Corrective
Order with respect to the insurer.
739.8. (a) All RBC Reports, to the extent the information within
those reports is not required to be set forth in a publicly available
annual statement schedule, and RBC Plans, including the results or
report of any examination or analysis of an insurer performed
pursuant to those plans, and any Corrective Order issued by the
commissioner pursuant to examination or analysis, with respect to any
domestic insurer or foreign insurer, that are filed with the
commissioner constitute information that might be damaging to the
insurer if made available to its competitors, and therefore shall be
kept confidential by the commissioner. This information shall not be
made public or be subject to subpoena, other than by the commissioner
and then only for the purpose of enforcement actions taken by the
commissioner pursuant to this chapter or any other provision of the
insurance laws of this state.
(b) It is the judgment of the Legislature that the comparison of
an insurer's Total Adjusted Capital to any of its RBC Levels is a
regulatory tool that may indicate the need for possible corrective
action with respect to the insurer, and is not intended as a means to
rank insurers generally. Therefore, except as otherwise required
under this article, the making, publishing, disseminating,
circulating, or placing before the public, or causing, 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, by
any insurer, agent, broker, or other person engaged in any manner in
the insurance business would be misleading and is therefore
prohibited; provided, however, that if any materially false statement
with respect to the comparison regarding an insurer's Total Adjusted
Capital to its RBC Levels (or any of them) or an inappropriate
comparison of any other amount to the insurers' RBC Levels is
published in any written publication and the insurer is able to
demonstrate to the commissioner with substantial proof the falsity of
such statement, or the inappropriateness, as the case may be, then
the insurer may publish an announcement in a written publication if
the sole purpose of the announcement is to rebut the materially false
statement.
(c) It is the further judgment of the Legislature that the RBC
Instructions, RBC Reports, Adjusted RBC Reports, RBC Plans, and
Revised RBC Plans are intended solely for use by the commissioner in
monitoring the solvency of insurers and the need for possible
corrective action with respect to insurers, and shall not be used by
the commissioner for ratemaking nor considered or introduced as
evidence in any rate proceeding, nor used by the commissioner to
calculate or derive any elements of an appropriate premium level or
rate of return for any line of insurance that an insurer or any
affiliate is authorized to write. This subdivision does not affect
the validity of any action taken before its effective date.
739.9. (a) The provisions of this article are supplemental to any
other provisions of the laws of this state, and shall not preclude or
limit any other powers or duties of the commissioner under such
laws.
(b) The commissioner may adopt reasonable rules necessary for the
implementation of this article.
(c) The commissioner may exempt from the application of this
article any domestic property and casualty insurer that does all of
the following:
(1) Writes direct business only in this state.
(2) Writes direct annual premiums of five million dollars
($5,000,000) or less.
(3) Assumes no reinsurance in excess of 5 percent of direct
premiums written.
739.10. (a) Any foreign insurer shall, upon the written request of
the commissioner, submit to the commissioner an RBC Report as of the
end of the calendar year just ended the later of:
(1) The date an RBC Report would be required to be filed by a
domestic insurer under this chapter.
(2) Fifteen days after the request is received by the foreign
insurer.
Any foreign insurer shall, at the written request of the
commissioner, promptly submit to the commissioner a copy of any RBC
Plan that is filed with the insurance commissioner of any other
state.
(b) In the event of a Company Action Level Event or Regulatory
Action Level Event with respect to any foreign insurer as determined
under the RBC statute applicable in the state of domicile of the
insurer, or, if no RBC provision is in force in that state, under the
provisions of this chapter, if the insurance commissioner of the
state of domicile of the foreign insurer fails to require the foreign
insurer to file an RBC Plan in the manner specified under the RBC
statute, or, if no RBC provision is in force in the state, under
Section 739.3, the commissioner may require the foreign insurer to
file an RBC Plan with the commissioner. In such event, the failure of
the foreign insurer to file an RBC Plan with the commissioner shall
be grounds to order the insurer to cease and desist from writing new
insurance business in this state.
(c) In the event of a Mandatory Control Level Event with respect
to any foreign insurer, if no domiciliary receiver has been appointed
with respect to the foreign insurer under the rehabilitation and
liquidation statute applicable in the state of domicile of the
foreign insurer, the commissioner may make application to the
superior court with respect to the liquidation of property of foreign
insurers found in this state, and the occurrence of the Mandatory
Control Level Event shall be considered adequate grounds for the
application.
739.11. If any provision of this article, or the application
thereof to any person or circumstance, is held invalid, such
determination shall not affect the provisions or applications of this
article that can be given effect without the invalid provision or
application, and to that end the provisions of this article are
severable.
739.12. (a) All notices by the commissioner to an insurer that may
result in regulatory action hereunder shall be effective upon
dispatch if transmitted by registered or certified mail, or in the
case of any other transmission shall be effective upon the insurer's
receipt of such notice.
(b) Copies of all notices from the commissioner to the State
Compensation Insurance Fund under this article shall be sent to the
Governor.
739. As used in this article, these terms shall have the following
meanings:
(a) "Adjusted RBC Report" means a Risk-Based Capital (RBC) report
that has been adjusted by the commissioner in accordance with
subdivision (c) of Section 739.2.
(b) "Corrective Order" means an order issued by the commissioner
specifying corrective actions that the commissioner has determined
are required.
(c) "Domestic insurer" means any life or health insurer or
property and casualty insurer organized in this state.
(d) "Foreign insurer" means any life or health insurer or property
and casualty insurer that is licensed to do business in this state
but is not domiciled in this state.
(e) "Life or health insurer" means any admitted insurer issuing
insurance subject to Part 2 (commencing with Section 10110) of
Division 2, or a licensed property and casualty insurer writing only
disability insurance.
(f) "NAIC" means the National Association of Insurance
Commissioners.
(g) "Negative trend" means, with respect to a life or health
insurer, a negative trend over a period of time, as determined in
accordance with the "Trend Test Calculation" included in the RBC
Instructions defined in subdivision (i).
(h) "Property and casualty insurer" means any admitted insurer
writing insurance as described in Section 102, 103, 105, 107, 108,
109, 110, 111, 112, 113, 114, 115, 116, 118, 119.5, 119.6, or 120,
but does not include monoline mortgage guaranty insurers, financial
guaranty insurers, or title insurers.
(i) "RBC Instructions" means the RBC Report, including risk-based
capital instructions adopted by the NAIC, and as the RBC Instructions
may be amended by the NAIC from time to time in accordance with the
procedures adopted by the NAIC.
(j) "RBC Level" means an insurer's Company Action Level RBC,
Regulatory Action Level RBC, Authorized Control Level RBC, or
Mandatory Control Level RBC where:
(1) "Company Action Level RBC" means, with respect to any insurer,
the product of 2.0 and its Authorized Control Level RBC.
(2) "Regulatory Action Level RBC" means the product of 1.5 and its
Authorized Control Level RBC.
(3) "Authorized Control Level RBC" means the number determined
under the risk-based capital formula in accordance with the RBC
Instructions.
(4) "Mandatory Control Level RBC" means the product of .70 and the
Authorized Control Level RBC.
(k) "RBC Plan" means a comprehensive financial plan containing the
elements specified in subdivision (b) of Section 739.3. If the
commissioner rejects the RBC Plan, and it is revised by the insurer,
with or without the commissioner's recommendation, the plan shall be
called the "Revised RBC Plan."
(l) "RBC Report" means the report required in Section 739.2.
(m) "Total Adjusted Capital" means the sum of:
(1) An insurer's statutory capital and surplus.
(2) Other items, if any, that the RBC Instructions may provide.
739.2. (a) Every domestic insurer shall, on or prior to each March
15 (the "filing date"), prepare and submit to the commissioner 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, every domestic insurer shall file
its RBC Report:
(1) With the NAIC in accordance with the RBC Instructions.
(2) With the insurance commissioner in any state in which the
insurer is authorized to do business, if the insurance commissioner
has notified the insurer of its request in writing, in which case the
insurer shall file its RBC Report not later than the later of:
(A) Fifteen days from the receipt of notice to file its RBC Report
with that state.
(B) The filing date.
(b) A life or health insurer's RBC shall be determined in
accordance with the formula set forth in the RBC Instructions. The
formula shall take into account, and may adjust for the covariance
between, the following:
(1) The risk with respect to the insurer's assets.
(2) The risk of adverse insurance experience with respect to the
insurer's liabilities and obligations.
(3) The interest rate risk with respect to the insurer's business.
(4) All other business risks and such other relevant risks as are
set forth in the RBC Instructions.
In each case, these shall be determined by applying the factors in
the manner set forth in the RBC Instructions.
(c) A property and casualty insurer's RBC shall be determined in
accordance with the formula set forth in the RBC Instructions. The
formula shall take into account and may adjust for the covariance
between the following:
(1) Asset risk.
(2) Credit risk.
(3) Underwriting risk.
(4) All other business risks and any other relevant risks as are
set forth in the RBC Instructions.
(d) An excess of capital over the amount produced by the
risk-based capital requirements contained in this article and the
formulas, schedules, and instructions referenced in this article is
desirable in the business of insurance. Accordingly, insurers shall
seek to maintain capital above the RBC levels required by this
article. 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 risk-based capital
requirements contained in this article.
(e) If a domestic insurer files an RBC Report that in the judgment
of the commissioner is inaccurate, then the commissioner 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.
739.3. (a) "Company Action Level Event" means any of the following
events:
(1) The filing of an RBC Report by an insurer that indicates any
of the following:
(A) 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) If a life or health insurer, the insurer has Total Adjusted
Capital that is greater than or equal to its Company Action Level RBC
but less than the product of its Authorized Control Level RBC and
2.5, and has a negative trend.
(C) If a property and casualty insurer, the insurer has Total
Adjusted Capital that is greater than or equal to its Company Action
Level RBC but less than the product of its Authorized Control Level
RBC and 3.0, and triggers the trend test determined in accordance
with the trend test calculation included in the Property and Casualty
RBC instructions.
(2) The notification by the commissioner to the insurer of an
Adjusted RBC Report that indicates the event in subparagraph (A) or
(B) of paragraph (1), provided that the insurer does not challenge
the Adjusted RBC Report under Section 739.7.
(3) If the insurer challenges an Adjusted RBC Report that
indicates the event in subparagraph (A) or (B) of paragraph (1) under
Section 739.7, the notification by the commissioner to the insurer
that the commissioner has, after a hearing, rejected the insurer's
challenge.
(b) In the event of a Company Action Level Event, the insurer
shall prepare and submit to the commissioner a comprehensive
financial plan, which shall do all of the following:
(1) Identify the conditions in the insurer that contribute to the
Company Action Level Event.
(2) Contain proposals of corrective actions that the insurer
intends to take and would be expected to result in the elimination of
the Company Action Level Event.
(3) Provide 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, capital, or surplus, or a combination.
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.
(4) Identify the key assumptions impacting the insurer's
projections and the sensitivity of the projections to the
assumptions.
(5) Identify the quality of, and problems associated with, the
insurer's business, including, but not limited to, its assets,
anticipated business growth and associated surplus strain,
extraordinary exposure to risk, mix of business, and use of
reinsurance in each case, if any.
(c) The RBC Plan shall be submitted as follows:
(1) Within 45 days of the Company Action Level Event.
(2) If the insurer challenges an Adjusted RBC Report pursuant to
Section 739.7, within 45 days after notification to the insurer that
the commissioner has, after a hearing, rejected the insurer's
challenge.
(d) Within 60 days after the submission by an insurer of an RBC
Plan to the commissioner, the commissioner shall notify the insurer
whether the RBC Plan shall be implemented or is, in the judgment of
the commissioner, unsatisfactory. If the commissioner determines that
the RBC Plan is unsatisfactory, the notification to the insurer
shall set forth the reasons for the determination, and may set forth
proposed revisions that will render the RBC Plan satisfactory, in the
judgment of the commissioner. Upon notification from the
commissioner, the insurer shall prepare a Revised RBC Plan, which may
incorporate by reference revisions proposed by the commissioner, and
shall submit the Revised RBC Plan to the commissioner as follows:
(1) Within 45 days after the notification from the commissioner.
(2) If the insurer challenges the notification from the
commissioner under Section 739.7, within 45 days after a notification
to the insurer that the commissioner has, after a hearing, rejected
the insurer's challenge.
(e) In the event of a notification by the commissioner to an
insurer that the insurer's RBC Plan or Revised RBC Plan is
unsatisfactory, the commissioner may, at his or her discretion,
subject to the insurer's right to a hearing under Section 739.7,
specify in the notification that the notification constitutes a
Regulatory Action Level Event.
(f) Every domestic insurer that files an RBC Plan or Revised RBC
Plan with the commissioner shall file a copy of the RBC Plan or
Revised RBC Plan with the insurance commissioner in any state in
which the insurer is authorized to do business if both of the
following apply:
(1) That state has an RBC provision substantially similar to
subdivision (a) of Section 739.8.
(2) The insurance commissioner of that state has notified the
insurer of its request for the filing in writing, in which case the
insurer shall file a copy of the RBC Plan or Revised RBC Plan in that
state no later than the later of:
(A) Fifteen days after the receipt of notice to file a copy of its
RBC Plan or Revised RBC Plan with the state.
(B) The date on which the RBC Plan or Revised RBC Plan is filed
under subdivision (c) of Section 739.7.
739.4. (a) "Regulatory Action Level Event" means, with respect to
any insurer, any of the following events:
(1) The filing of an RBC Report by the insurer that indicates 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.
(2) The notification by the commissioner to an insurer of an
Adjusted RBC Report that indicates the event in paragraph (1),
provided the insurer does not challenge the Adjusted RBC Report under
Section 739.7.
(3) If the insurer challenges an Adjusted RBC Report that
indicates the event in paragraph (1) under Section 739.7, the
notification by the commissioner to the insurer that the commissioner
has, after a hearing, rejected the insurer's challenge.
(4) The failure of the insurer to file an RBC Report by the filing
date, unless the insurer has provided an explanation for such
failure that is satisfactory to the commissioner and has cured the
failure within 10 days after the filing date.
(5) The failure of the insurer to submit an RBC Plan to the
commissioner within the time period set forth in subdivision (c) of
Section 739.3.
(6) Notification by the commissioner to the insurer of the
following:
(A) The RBC Plan or revised RBC Plan submitted by the insurer is,
in the judgment of the commissioner, unsatisfactory.
(B) That notification constitutes a Regulatory Action Level Event
with respect to the insurer, provided the insurer has not challenged
the determination under Section 739.7.
(7) If the insurer challenges a determination by the commissioner
under paragraph (6) pursuant to Section 739.7, the notification by
the commissioner to the insurer that the commissioner has, after a
hearing, rejected such challenge.
(8) Notification by the commissioner to the insurer that the
insurer has failed to adhere to its RBC Plan or Revised RBC Plan, but
only if such failure has a substantial adverse effect on the ability
of the insurer to eliminate the Regulatory Action Level Event in
accordance with its RBC Plan or Revised RBC Plan and the commissioner
has so stated in the notification, provided the insurer has not
challenged the determination under Section 739.7.
(9) If the insurer challenges a determination by the commissioner
under paragraph (8) pursuant to Section 739.7, the notification by
the commissioner to the insurer that the commissioner has, after a
hearing, rejected the challenge, unless the failure of the insurer to
adhere to its RBC Plan or Revised RBC Plan has no substantial
adverse effect on the ability of the insurer to eliminate the
Regulatory Action Level Event with respect to the insurer.
(b) In the event of a Regulatory Action Level Event the
commissioner shall do all of the following:
(1) Require the insurer to prepare and submit an RBC Plan or, if
applicable, a Revised RBC Plan.
(2) Perform such examination or analysis as the commissioner deems
necessary of the assets, liabilities, and operations of the insurer,
including a review of its RBC Plan or Revised RBC Plan.
(3) Subsequent to the examination or analysis, issue a corrective
order specifying such corrective actions as the commissioner shall
determine are required.
(c) In determining corrective actions, the commissioner may take
into account such factors as are deemed relevant with respect to the
insurer based upon the commissioner's examination or analysis of the
assets, liabilities, and operations of the insurer, including, but
not limited to, the results of any sensitivity tests undertaken
pursuant to the RBC Instructions. The RBC Plan or Revised RBC Plan
shall be submitted as follows:
(1) Within 45 days after the occurrence of the Regulatory Action
Level Event.
(2) If the insurer challenges an Adjusted RBC Report pursuant to
Section 739.7 and the challenge is not in the judgment of the
commissioner frivolous, within 45 days after the notification to the
insurer that the commissioner has, after a hearing, rejected the
insurer's challenge.
(3) If the insurer challenges a Revised RBC Plan under Section
739.7, within 45 days after notification to the insurer that the
commissioner has, after a hearing, rejected the insurer's challenge.
(d) The commissioner may retain actuaries and investment experts
and other consultants as may be necessary in the judgment of the
commissioner 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 with respect to the
insurer. The fees, costs, and expenses relating to consultants shall
be borne by the affected insurer or such other party as directed by
the commissioner.
739.5. (a) "Authorized Control Level Event" means any of the
following events:
(1) The filing of an RBC Report by the insurer that indicates 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.
(2) The notification by the commissioner to the insurer of an
Adjusted RBC Report that indicates the event in paragraph (1),
provided the insurer does not challenge the Adjusted RBC Report under
Section 739.7.
(3) If the insurer challenges an Adjusted RBC Report that
indicates the event in paragraph (1) under Section 739.7,
notification by the commissioner to the insurer that the commissioner
has, after a hearing, rejected the insurer's challenge.
(4) The failure of the insurer to respond, in a manner
satisfactory to the commissioner, to a Corrective Order, provided the
insurer has not challenged the Corrective Order under Section 739.7.
(5) If the insurer has challenged a Corrective Order under Section
739.7 and the commissioner has, after a hearing, rejected the
challenge or modified the Corrective Order, the failure of the
insurer to respond, in a manner satisfactory to the commissioner, to
the Corrective Order subsequent to rejection or modification by the
commissioner.
(b) In the event of an Authorized Control Level Event with respect
to an insurer, the commissioner shall do the following:
(1) Take such actions as are required under Section 739.4
regarding an insurer with respect to which a Regulatory Action Level
Event has occurred.
(2) If the commissioner deems it to be in the best interests of
the policyholders and creditors of the insurer and of the public,
take such actions as are necessary to cause the insurer to be placed
under regulatory control under Article 14 (commencing with Section
1010), Article 14.3 (commencing with Section 1064.1), Article 14.5
(commencing with Section 1065.1), and Article 15.5 (commencing with
Section 1077). In the event the commissioner takes those actions, the
Authorized Control Level Event shall be deemed sufficient grounds
for the commissioner to take that action, and the commissioner shall
have the rights, powers, and duties with respect to the insurer as
are set forth in those provisions. In the event the commissioner
takes actions under this paragraph pursuant to an Adjusted RBC
Report, the insurer shall be entitled to such protections as are
afforded to insurers under the provisions pertaining to summary
proceedings.
(c) In the event of an Authorized Control Level Event with respect
to the State Compensation Insurance Fund, the commissioner shall
also issue a report to the Governor, the President pro Tempore of the
Senate, and the Speaker of the Assembly setting forth the conditions
that exist.
(d) Upon a determination of the commissioner that an Authorized
Control Level Event has occurred, the Governor, in consultation with
the Legislature, may replace the President of the State Compensation
Insurance Fund and appoint a recovery administrator. The recovery
administrator shall be responsible for developing a plan of recovery
for the State Compensation Insurance Fund, and for implementing the
plan. The recovery administrator shall be a person who, through
professional credentials or job experience, or both, has a
demonstrated understanding of insurance law, insurer finances,
experience in the rehabilitation of insurance companies, claims
administration, and any other factors as are needed to create and
execute a plan of recovery. The cost of the recovery administrator
shall be borne by the State Compensation Insurance Fund. The
administration shall remain until the commissioner conveys to the
Governor his or her opinion that the fund has improved its finances
to the extent that it is no longer at the Authorized Control Level or
above, at which point the Governor may dismiss the recovery
administrator and appoint a new President of the State Compensation
Insurance Fund. During the time that the recovery administrator is
acting, the board of the State Compensation Insurance Fund shall act
in an advisory capacity to the recovery administrator and the
Governor.
739.6. (a) "Mandatory Control Level Event" means any of the
following events:
(1) The filing of an RBC Report that indicates that the insurer's
Total Adjusted Capital is less than its Mandatory Control Level RBC.
(2) Notification by the commissioner to the insurer of an Adjusted
RBC Report that indicates the event in paragraph (1), provided the
insurer does not challenge the Adjusted RBC Report under Section
739.7.
(3) If the insurer challenges an Adjusted RBC Report that
indicates the event in paragraph (1) under Section 739.7,
notification by the commissioner to the insurer that the commissioner
has, after a hearing, rejected the insurer's challenge.
(b) (1) With respect to a life or health insurer, in the event of
a Mandatory Control Level Event, the commissioner shall take actions
as are necessary to cause the insurer to be placed under regulatory
control under Article 14 (commencing with Section 1010), Article 14.3
(commencing with Section 1064.1), Article 14.5 (commencing with
Section 1065.1), and Article 15.5 (commencing with Section 1077). In
that event, the Mandatory Control Level Event shall be deemed
sufficient grounds for the commissioner to take action under those
acts, and the commissioner shall have the rights, powers, and duties
with respect to the insurer as are set forth therein. In the event
the commissioner takes actions pursuant to an Adjusted RBC Report,
the insurer shall be entitled to protections as are afforded to
insurers under those provisions. Notwithstanding any of the
foregoing, the commissioner may forego action for up to 90 days after
the Mandatory Control Level Event if he or she finds there is a
reasonable expectation that the Mandatory Control Level Event may be
eliminated within the 90-day period.
(2) With respect to a property and casualty insurer, the
commissioner shall take those actions as are necessary to place the
insurer under regulatory control, or, in the case of an insurer which
is writing no business and that is running-off its existing
business, may allow the insurer to continue its runoff under the
supervision of the commissioner. In either event, the Mandatory
Control Level Event shall be deemed sufficient grounds for the
commissioner to take action and the commissioner shall have the
rights, powers, and duties with respect to the insurer as are set
forth in Article 14 (commencing with Section 1010). If the
commissioner takes actions pursuant to an Adjusted RBC Report, the
insurer shall be entitled to the protections of Article 14
(commencing with Section 1010) pertaining to summary proceedings.
Notwithstanding any of the foregoing, the commissioner may forego
action for up to 90 days after the Mandatory Control Level Event if
the commissioner finds there is a reasonable expectation that the
Mandatory Control Level Event may be eliminated within the 90-day
period.
(3) In the event of a Mandatory Control Level Event with respect
to the State Compensation Insurance Fund, the commissioner shall also
issue a report to the Governor, the President pro Tempore of the
Senate, and the Speaker of the Assembly setting forth the conditions
that exist.
739.7. Upon any of the events described in subdivision (a), (b),
(c), or (d), the insurer shall have the right to a departmental
hearing, on the record, at which the insurer may challenge any
determination or action by the commissioner. The insurer shall notify
the commissioner of its request for a hearing within five days after
the notification by the commissioner under subdivision (a), (b),
(c), or (d). Upon receipt of the insurer's request for a hearing, the
commissioner shall set a date for the hearing, which date shall be
no less than 10 nor more than 30 days after the date of the insurer's
request.
(a) Notification to an insurer by the commissioner of an Adjusted
RBC Report.
(b) Notification to an insurer by the commissioner that:
(1) The insurer's RBC Plan or Revised RBC Plan is unsatisfactory.
(2) That notification constitutes a Regulatory Action Level Event
with respect to the insurer.
(c) Notification to any insurer by the commissioner that the
insurer has failed to adhere to its RBC Plan or Revised RBC Plan and
that such failure has a substantial adverse effect on the ability of
the insurer to eliminate the Company Action Level Event with respect
to the insurer in accordance with its RBC Plan or Revised RBC Plan.
(d) Notification to an insurer by the commissioner of a Corrective
Order with respect to the insurer.
739.8. (a) All RBC Reports, to the extent the information within
those reports is not required to be set forth in a publicly available
annual statement schedule, and RBC Plans, including the results or
report of any examination or analysis of an insurer performed
pursuant to those plans, and any Corrective Order issued by the
commissioner pursuant to examination or analysis, with respect to any
domestic insurer or foreign insurer, that are filed with the
commissioner constitute information that might be damaging to the
insurer if made available to its competitors, and therefore shall be
kept confidential by the commissioner. This information shall not be
made public or be subject to subpoena, other than by the commissioner
and then only for the purpose of enforcement actions taken by the
commissioner pursuant to this chapter or any other provision of the
insurance laws of this state.
(b) It is the judgment of the Legislature that the comparison of
an insurer's Total Adjusted Capital to any of its RBC Levels is a
regulatory tool that may indicate the need for possible corrective
action with respect to the insurer, and is not intended as a means to
rank insurers generally. Therefore, except as otherwise required
under this article, the making, publishing, disseminating,
circulating, or placing before the public, or causing, 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, by
any insurer, agent, broker, or other person engaged in any manner in
the insurance business would be misleading and is therefore
prohibited; provided, however, that if any materially false statement
with respect to the comparison regarding an insurer's Total Adjusted
Capital to its RBC Levels (or any of them) or an inappropriate
comparison of any other amount to the insurers' RBC Levels is
published in any written publication and the insurer is able to
demonstrate to the commissioner with substantial proof the falsity of
such statement, or the inappropriateness, as the case may be, then
the insurer may publish an announcement in a written publication if
the sole purpose of the announcement is to rebut the materially false
statement.
(c) It is the further judgment of the Legislature that the RBC
Instructions, RBC Reports, Adjusted RBC Reports, RBC Plans, and
Revised RBC Plans are intended solely for use by the commissioner in
monitoring the solvency of insurers and the need for possible
corrective action with respect to insurers, and shall not be used by
the commissioner for ratemaking nor considered or introduced as
evidence in any rate proceeding, nor used by the commissioner to
calculate or derive any elements of an appropriate premium level or
rate of return for any line of insurance that an insurer or any
affiliate is authorized to write. This subdivision does not affect
the validity of any action taken before its effective date.
739.9. (a) The provisions of this article are supplemental to any
other provisions of the laws of this state, and shall not preclude or
limit any other powers or duties of the commissioner under such
laws.
(b) The commissioner may adopt reasonable rules necessary for the
implementation of this article.
(c) The commissioner may exempt from the application of this
article any domestic property and casualty insurer that does all of
the following:
(1) Writes direct business only in this state.
(2) Writes direct annual premiums of five million dollars
($5,000,000) or less.
(3) Assumes no reinsurance in excess of 5 percent of direct
premiums written.
739.10. (a) Any foreign insurer shall, upon the written request of
the commissioner, submit to the commissioner an RBC Report as of the
end of the calendar year just ended the later of:
(1) The date an RBC Report would be required to be filed by a
domestic insurer under this chapter.
(2) Fifteen days after the request is received by the foreign
insurer.
Any foreign insurer shall, at the written request of the
commissioner, promptly submit to the commissioner a copy of any RBC
Plan that is filed with the insurance commissioner of any other
state.
(b) In the event of a Company Action Level Event or Regulatory
Action Level Event with respect to any foreign insurer as determined
under the RBC statute applicable in the state of domicile of the
insurer, or, if no RBC provision is in force in that state, under the
provisions of this chapter, if the insurance commissioner of the
state of domicile of the foreign insurer fails to require the foreign
insurer to file an RBC Plan in the manner specified under the RBC
statute, or, if no RBC provision is in force in the state, under
Section 739.3, the commissioner may require the foreign insurer to
file an RBC Plan with the commissioner. In such event, the failure of
the foreign insurer to file an RBC Plan with the commissioner shall
be grounds to order the insurer to cease and desist from writing new
insurance business in this state.
(c) In the event of a Mandatory Control Level Event with respect
to any foreign insurer, if no domiciliary receiver has been appointed
with respect to the foreign insurer under the rehabilitation and
liquidation statute applicable in the state of domicile of the
foreign insurer, the commissioner may make application to the
superior court with respect to the liquidation of property of foreign
insurers found in this state, and the occurrence of the Mandatory
Control Level Event shall be considered adequate grounds for the
application.
739.11. If any provision of this article, or the application
thereof to any person or circumstance, is held invalid, such
determination shall not affect the provisions or applications of this
article that can be given effect without the invalid provision or
application, and to that end the provisions of this article are
severable.
739.12. (a) All notices by the commissioner to an insurer that may
result in regulatory action hereunder shall be effective upon
dispatch if transmitted by registered or certified mail, or in the
case of any other transmission shall be effective upon the insurer's
receipt of such notice.
(b) Copies of all notices from the commissioner to the State
Compensation Insurance Fund under this article shall be sent to the
Governor.
739. As used in this article, these terms shall have the following
meanings:
(a) "Adjusted RBC Report" means a Risk-Based Capital (RBC) report
that has been adjusted by the commissioner in accordance with
subdivision (c) of Section 739.2.
(b) "Corrective Order" means an order issued by the commissioner
specifying corrective actions that the commissioner has determined
are required.
(c) "Domestic insurer" means any life or health insurer or
property and casualty insurer organized in this state.
(d) "Foreign insurer" means any life or health insurer or property
and casualty insurer that is licensed to do business in this state
but is not domiciled in this state.
(e) "Life or health insurer" means any admitted insurer issuing
insurance subject to Part 2 (commencing with Section 10110) of
Division 2, or a licensed property and casualty insurer writing only
disability insurance.
(f) "NAIC" means the National Association of Insurance
Commissioners.
(g) "Negative trend" means, with respect to a life or health
insurer, a negative trend over a period of time, as determined in
accordance with the "Trend Test Calculation" included in the RBC
Instructions defined in subdivision (i).
(h) "Property and casualty insurer" means any admitted insurer
writing insurance as described in Section 102, 103, 105, 107, 108,
109, 110, 111, 112, 113, 114, 115, 116, 118, 119.5, 119.6, or 120,
but does not include monoline mortgage guaranty insurers, financial
guaranty insurers, or title insurers.
(i) "RBC Instructions" means the RBC Report, including risk-based
capital instructions adopted by the NAIC, and as the RBC Instructions
may be amended by the NAIC from time to time in accordance with the
procedures adopted by the NAIC.
(j) "RBC Level" means an insurer's Company Action Level RBC,
Regulatory Action Level RBC, Authorized Control Level RBC, or
Mandatory Control Level RBC where:
(1) "Company Action Level RBC" means, with respect to any insurer,
the product of 2.0 and its Authorized Control Level RBC.
(2) "Regulatory Action Level RBC" means the product of 1.5 and its
Authorized Control Level RBC.
(3) "Authorized Control Level RBC" means the number determined
under the risk-based capital formula in accordance with the RBC
Instructions.
(4) "Mandatory Control Level RBC" means the product of .70 and the
Authorized Control Level RBC.
(k) "RBC Plan" means a comprehensive financial plan containing the
elements specified in subdivision (b) of Section 739.3. If the
commissioner rejects the RBC Plan, and it is revised by the insurer,
with or without the commissioner's recommendation, the plan shall be
called the "Revised RBC Plan."
(l) "RBC Report" means the report required in Section 739.2.
(m) "Total Adjusted Capital" means the sum of:
(1) An insurer's statutory capital and surplus.
(2) Other items, if any, that the RBC Instructions may provide.
739.2. (a) Every domestic insurer shall, on or prior to each March
15 (the "filing date"), prepare and submit to the commissioner 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, every domestic insurer shall file
its RBC Report:
(1) With the NAIC in accordance with the RBC Instructions.
(2) With the insurance commissioner in any state in which the
insurer is authorized to do business, if the insurance commissioner
has notified the insurer of its request in writing, in which case the
insurer shall file its RBC Report not later than the later of:
(A) Fifteen days from the receipt of notice to file its RBC Report
with that state.
(B) The filing date.
(b) A life or health insurer's RBC shall be determined in
accordance with the formula set forth in the RBC Instructions. The
formula shall take into account, and may adjust for the covariance
between, the following:
(1) The risk with respect to the insurer's assets.
(2) The risk of adverse insurance experience with respect to the
insurer's liabilities and obligations.
(3) The interest rate risk with respect to the insurer's business.
(4) All other business risks and such other relevant risks as are
set forth in the RBC Instructions.
In each case, these shall be determined by applying the factors in
the manner set forth in the RBC Instructions.
(c) A property and casualty insurer's RBC shall be determined in
accordance with the formula set forth in the RBC Instructions. The
formula shall take into account and may adjust for the covariance
between the following:
(1) Asset risk.
(2) Credit risk.
(3) Underwriting risk.
(4) All other business risks and any other relevant risks as are
set forth in the RBC Instructions.
(d) An excess of capital over the amount produced by the
risk-based capital requirements contained in this article and the
formulas, schedules, and instructions referenced in this article is
desirable in the business of insurance. Accordingly, insurers shall
seek to maintain capital above the RBC levels required by this
article. 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 risk-based capital
requirements contained in this article.
(e) If a domestic insurer files an RBC Report that in the judgment
of the commissioner is inaccurate, then the commissioner 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.
739.3. (a) "Company Action Level Event" means any of the following
events:
(1) The filing of an RBC Report by an insurer that indicates any
of the following:
(A) 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) If a life or health insurer, the insurer has Total Adjusted
Capital that is greater than or equal to its Company Action Level RBC
but less than the product of its Authorized Control Level RBC and
2.5, and has a negative trend.
(C) If a property and casualty insurer, the insurer has Total
Adjusted Capital that is greater than or equal to its Company Action
Level RBC but less than the product of its Authorized Control Level
RBC and 3.0, and triggers the trend test determined in accordance
with the trend test calculation included in the Property and Casualty
RBC instructions.
(2) The notification by the commissioner to the insurer of an
Adjusted RBC Report that indicates the event in subparagraph (A) or
(B) of paragraph (1), provided that the insurer does not challenge
the Adjusted RBC Report under Section 739.7.
(3) If the insurer challenges an Adjusted RBC Report that
indicates the event in subparagraph (A) or (B) of paragraph (1) under
Section 739.7, the notification by the commissioner to the insurer
that the commissioner has, after a hearing, rejected the insurer's
challenge.
(b) In the event of a Company Action Level Event, the insurer
shall prepare and submit to the commissioner a comprehensive
financial plan, which shall do all of the following:
(1) Identify the conditions in the insurer that contribute to the
Company Action Level Event.
(2) Contain proposals of corrective actions that the insurer
intends to take and would be expected to result in the elimination of
the Company Action Level Event.
(3) Provide 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, capital, or surplus, or a combination.
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.
(4) Identify the key assumptions impacting the insurer's
projections and the sensitivity of the projections to the
assumptions.
(5) Identify the quality of, and problems associated with, the
insurer's business, including, but not limited to, its assets,
anticipated business growth and associated surplus strain,
extraordinary exposure to risk, mix of business, and use of
reinsurance in each case, if any.
(c) The RBC Plan shall be submitted as follows:
(1) Within 45 days of the Company Action Level Event.
(2) If the insurer challenges an Adjusted RBC Report pursuant to
Section 739.7, within 45 days after notification to the insurer that
the commissioner has, after a hearing, rejected the insurer's
challenge.
(d) Within 60 days after the submission by an insurer of an RBC
Plan to the commissioner, the commissioner shall notify the insurer
whether the RBC Plan shall be implemented or is, in the judgment of
the commissioner, unsatisfactory. If the commissioner determines that
the RBC Plan is unsatisfactory, the notification to the insurer
shall set forth the reasons for the determination, and may set forth
proposed revisions that will render the RBC Plan satisfactory, in the
judgment of the commissioner. Upon notification from the
commissioner, the insurer shall prepare a Revised RBC Plan, which may
incorporate by reference revisions proposed by the commissioner, and
shall submit the Revised RBC Plan to the commissioner as follows:
(1) Within 45 days after the notification from the commissioner.
(2) If the insurer challenges the notification from the
commissioner under Section 739.7, within 45 days after a notification
to the insurer that the commissioner has, after a hearing, rejected
the insurer's challenge.
(e) In the event of a notification by the commissioner to an
insurer that the insurer's RBC Plan or Revised RBC Plan is
unsatisfactory, the commissioner may, at his or her discretion,
subject to the insurer's right to a hearing under Section 739.7,
specify in the notification that the notification constitutes a
Regulatory Action Level Event.
(f) Every domestic insurer that files an RBC Plan or Revised RBC
Plan with the commissioner shall file a copy of the RBC Plan or
Revised RBC Plan with the insurance commissioner in any state in
which the insurer is authorized to do business if both of the
following apply:
(1) That state has an RBC provision substantially similar to
subdivision (a) of Section 739.8.
(2) The insurance commissioner of that state has notified the
insurer of its request for the filing in writing, in which case the
insurer shall file a copy of the RBC Plan or Revised RBC Plan in that
state no later than the later of:
(A) Fifteen days after the receipt of notice to file a copy of its
RBC Plan or Revised RBC Plan with the state.
(B) The date on which the RBC Plan or Revised RBC Plan is filed
under subdivision (c) of Section 739.7.
739.4. (a) "Regulatory Action Level Event" means, with respect to
any insurer, any of the following events:
(1) The filing of an RBC Report by the insurer that indicates 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.
(2) The notification by the commissioner to an insurer of an
Adjusted RBC Report that indicates the event in paragraph (1),
provided the insurer does not challenge the Adjusted RBC Report under
Section 739.7.
(3) If the insurer challenges an Adjusted RBC Report that
indicates the event in paragraph (1) under Section 739.7, the
notification by the commissioner to the insurer that the commissioner
has, after a hearing, rejected the insurer's challenge.
(4) The failure of the insurer to file an RBC Report by the filing
date, unless the insurer has provided an explanation for such
failure that is satisfactory to the commissioner and has cured the
failure within 10 days after the filing date.
(5) The failure of the insurer to submit an RBC Plan to the
commissioner within the time period set forth in subdivision (c) of
Section 739.3.
(6) Notification by the commissioner to the insurer of the
following:
(A) The RBC Plan or revised RBC Plan submitted by the insurer is,
in the judgment of the commissioner, unsatisfactory.
(B) That notification constitutes a Regulatory Action Level Event
with respect to the insurer, provided the insurer has not challenged
the determination under Section 739.7.
(7) If the insurer challenges a determination by the commissioner
under paragraph (6) pursuant to Section 739.7, the notification by
the commissioner to the insurer that the commissioner has, after a
hearing, rejected such challenge.
(8) Notification by the commissioner to the insurer that the
insurer has failed to adhere to its RBC Plan or Revised RBC Plan, but
only if such failure has a substantial adverse effect on the ability
of the insurer to eliminate the Regulatory Action Level Event in
accordance with its RBC Plan or Revised RBC Plan and the commissioner
has so stated in the notification, provided the insurer has not
challenged the determination under Section 739.7.
(9) If the insurer challenges a determination by the commissioner
under paragraph (8) pursuant to Section 739.7, the notification by
the commissioner to the insurer that the commissioner has, after a
hearing, rejected the challenge, unless the failure of the insurer to
adhere to its RBC Plan or Revised RBC Plan has no substantial
adverse effect on the ability of the insurer to eliminate the
Regulatory Action Level Event with respect to the insurer.
(b) In the event of a Regulatory Action Level Event the
commissioner shall do all of the following:
(1) Require the insurer to prepare and submit an RBC Plan or, if
applicable, a Revised RBC Plan.
(2) Perform such examination or analysis as the commissioner deems
necessary of the assets, liabilities, and operations of the insurer,
including a review of its RBC Plan or Revised RBC Plan.
(3) Subsequent to the examination or analysis, issue a corrective
order specifying such corrective actions as the commissioner shall
determine are required.
(c) In determining corrective actions, the commissioner may take
into account such factors as are deemed relevant with respect to the
insurer based upon the commissioner's examination or analysis of the
assets, liabilities, and operations of the insurer, including, but
not limited to, the results of any sensitivity tests undertaken
pursuant to the RBC Instructions. The RBC Plan or Revised RBC Plan
shall be submitted as follows:
(1) Within 45 days after the occurrence of the Regulatory Action
Level Event.
(2) If the insurer challenges an Adjusted RBC Report pursuant to
Section 739.7 and the challenge is not in the judgment of the
commissioner frivolous, within 45 days after the notification to the
insurer that the commissioner has, after a hearing, rejected the
insurer's challenge.
(3) If the insurer challenges a Revised RBC Plan under Section
739.7, within 45 days after notification to the insurer that the
commissioner has, after a hearing, rejected the insurer's challenge.
(d) The commissioner may retain actuaries and investment experts
and other consultants as may be necessary in the judgment of the
commissioner 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 with respect to the
insurer. The fees, costs, and expenses relating to consultants shall
be borne by the affected insurer or such other party as directed by
the commissioner.
739.5. (a) "Authorized Control Level Event" means any of the
following events:
(1) The filing of an RBC Report by the insurer that indicates 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.
(2) The notification by the commissioner to the insurer of an
Adjusted RBC Report that indicates the event in paragraph (1),
provided the insurer does not challenge the Adjusted RBC Report under
Section 739.7.
(3) If the insurer challenges an Adjusted RBC Report that
indicates the event in paragraph (1) under Section 739.7,
notification by the commissioner to the insurer that the commissioner
has, after a hearing, rejected the insurer's challenge.
(4) The failure of the insurer to respond, in a manner
satisfactory to the commissioner, to a Corrective Order, provided the
insurer has not challenged the Corrective Order under Section 739.7.
(5) If the insurer has challenged a Corrective Order under Section
739.7 and the commissioner has, after a hearing, rejected the
challenge or modified the Corrective Order, the failure of the
insurer to respond, in a manner satisfactory to the commissioner, to
the Corrective Order subsequent to rejection or modification by the
commissioner.
(b) In the event of an Authorized Control Level Event with respect
to an insurer, the commissioner shall do the following:
(1) Take such actions as are required under Section 739.4
regarding an insurer with respect to which a Regulatory Action Level
Event has occurred.
(2) If the commissioner deems it to be in the best interests of
the policyholders and creditors of the insurer and of the public,
take such actions as are necessary to cause the insurer to be placed
under regulatory control under Article 14 (commencing with Section
1010), Article 14.3 (commencing with Section 1064.1), Article 14.5
(commencing with Section 1065.1), and Article 15.5 (commencing with
Section 1077). In the event the commissioner takes those actions, the
Authorized Control Level Event shall be deemed sufficient grounds
for the commissioner to take that action, and the commissioner shall
have the rights, powers, and duties with respect to the insurer as
are set forth in those provisions. In the event the commissioner
takes actions under this paragraph pursuant to an Adjusted RBC
Report, the insurer shall be entitled to such protections as are
afforded to insurers under the provisions pertaining to summary
proceedings.
(c) In the event of an Authorized Control Level Event with respect
to the State Compensation Insurance Fund, the commissioner shall
also issue a report to the Governor, the President pro Tempore of the
Senate, and the Speaker of the Assembly setting forth the conditions
that exist.
(d) Upon a determination of the commissioner that an Authorized
Control Level Event has occurred, the Governor, in consultation with
the Legislature, may replace the President of the State Compensation
Insurance Fund and appoint a recovery administrator. The recovery
administrator shall be responsible for developing a plan of recovery
for the State Compensation Insurance Fund, and for implementing the
plan. The recovery administrator shall be a person who, through
professional credentials or job experience, or both, has a
demonstrated understanding of insurance law, insurer finances,
experience in the rehabilitation of insurance companies, claims
administration, and any other factors as are needed to create and
execute a plan of recovery. The cost of the recovery administrator
shall be borne by the State Compensation Insurance Fund. The
administration shall remain until the commissioner conveys to the
Governor his or her opinion that the fund has improved its finances
to the extent that it is no longer at the Authorized Control Level or
above, at which point the Governor may dismiss the recovery
administrator and appoint a new President of the State Compensation
Insurance Fund. During the time that the recovery administrator is
acting, the board of the State Compensation Insurance Fund shall act
in an advisory capacity to the recovery administrator and the
Governor.
739.6. (a) "Mandatory Control Level Event" means any of the
following events:
(1) The filing of an RBC Report that indicates that the insurer's
Total Adjusted Capital is less than its Mandatory Control Level RBC.
(2) Notification by the commissioner to the insurer of an Adjusted
RBC Report that indicates the event in paragraph (1), provided the
insurer does not challenge the Adjusted RBC Report under Section
739.7.
(3) If the insurer challenges an Adjusted RBC Report that
indicates the event in paragraph (1) under Section 739.7,
notification by the commissioner to the insurer that the commissioner
has, after a hearing, rejected the insurer's challenge.
(b) (1) With respect to a life or health insurer, in the event of
a Mandatory Control Level Event, the commissioner shall take actions
as are necessary to cause the insurer to be placed under regulatory
control under Article 14 (commencing with Section 1010), Article 14.3
(commencing with Section 1064.1), Article 14.5 (commencing with
Section 1065.1), and Article 15.5 (commencing with Section 1077). In
that event, the Mandatory Control Level Event shall be deemed
sufficient grounds for the commissioner to take action under those
acts, and the commissioner shall have the rights, powers, and duties
with respect to the insurer as are set forth therein. In the event
the commissioner takes actions pursuant to an Adjusted RBC Report,
the insurer shall be entitled to protections as are afforded to
insurers under those provisions. Notwithstanding any of the
foregoing, the commissioner may forego action for up to 90 days after
the Mandatory Control Level Event if he or she finds there is a
reasonable expectation that the Mandatory Control Level Event may be
eliminated within the 90-day period.
(2) With respect to a property and casualty insurer, the
commissioner shall take those actions as are necessary to place the
insurer under regulatory control, or, in the case of an insurer which
is writing no business and that is running-off its existing
business, may allow the insurer to continue its runoff under the
supervision of the commissioner. In either event, the Mandatory
Control Level Event shall be deemed sufficient grounds for the
commissioner to take action and the commissioner shall have the
rights, powers, and duties with respect to the insurer as are set
forth in Article 14 (commencing with Section 1010). If the
commissioner takes actions pursuant to an Adjusted RBC Report, the
insurer shall be entitled to the protections of Article 14
(commencing with Section 1010) pertaining to summary proceedings.
Notwithstanding any of the foregoing, the commissioner may forego
action for up to 90 days after the Mandatory Control Level Event if
the commissioner finds there is a reasonable expectation that the
Mandatory Control Level Event may be eliminated within the 90-day
period.
(3) In the event of a Mandatory Control Level Event with respect
to the State Compensation Insurance Fund, the commissioner shall also
issue a report to the Governor, the President pro Tempore of the
Senate, and the Speaker of the Assembly setting forth the conditions
that exist.
739.7. Upon any of the events described in subdivision (a), (b),
(c), or (d), the insurer shall have the right to a departmental
hearing, on the record, at which the insurer may challenge any
determination or action by the commissioner. The insurer shall notify
the commissioner of its request for a hearing within five days after
the notification by the commissioner under subdivision (a), (b),
(c), or (d). Upon receipt of the insurer's request for a hearing, the
commissioner shall set a date for the hearing, which date shall be
no less than 10 nor more than 30 days after the date of the insurer's
request.
(a) Notification to an insurer by the commissioner of an Adjusted
RBC Report.
(b) Notification to an insurer by the commissioner that:
(1) The insurer's RBC Plan or Revised RBC Plan is unsatisfactory.
(2) That notification constitutes a Regulatory Action Level Event
with respect to the insurer.
(c) Notification to any insurer by the commissioner that the
insurer has failed to adhere to its RBC Plan or Revised RBC Plan and
that such failure has a substantial adverse effect on the ability of
the insurer to eliminate the Company Action Level Event with respect
to the insurer in accordance with its RBC Plan or Revised RBC Plan.
(d) Notification to an insurer by the commissioner of a Corrective
Order with respect to the insurer.
739.8. (a) All RBC Reports, to the extent the information within
those reports is not required to be set forth in a publicly available
annual statement schedule, and RBC Plans, including the results or
report of any examination or analysis of an insurer performed
pursuant to those plans, and any Corrective Order issued by the
commissioner pursuant to examination or analysis, with respect to any
domestic insurer or foreign insurer, that are filed with the
commissioner constitute information that might be damaging to the
insurer if made available to its competitors, and therefore shall be
kept confidential by the commissioner. This information shall not be
made public or be subject to subpoena, other than by the commissioner
and then only for the purpose of enforcement actions taken by the
commissioner pursuant to this chapter or any other provision of the
insurance laws of this state.
(b) It is the judgment of the Legislature that the comparison of
an insurer's Total Adjusted Capital to any of its RBC Levels is a
regulatory tool that may indicate the need for possible corrective
action with respect to the insurer, and is not intended as a means to
rank insurers generally. Therefore, except as otherwise required
under this article, the making, publishing, disseminating,
circulating, or placing before the public, or causing, 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, by
any insurer, agent, broker, or other person engaged in any manner in
the insurance business would be misleading and is therefore
prohibited; provided, however, that if any materially false statement
with respect to the comparison regarding an insurer's Total Adjusted
Capital to its RBC Levels (or any of them) or an inappropriate
comparison of any other amount to the insurers' RBC Levels is
published in any written publication and the insurer is able to
demonstrate to the commissioner with substantial proof the falsity of
such statement, or the inappropriateness, as the case may be, then
the insurer may publish an announcement in a written publication if
the sole purpose of the announcement is to rebut the materially false
statement.
(c) It is the further judgment of the Legislature that the RBC
Instructions, RBC Reports, Adjusted RBC Reports, RBC Plans, and
Revised RBC Plans are intended solely for use by the commissioner in
monitoring the solvency of insurers and the need for possible
corrective action with respect to insurers, and shall not be used by
the commissioner for ratemaking nor considered or introduced as
evidence in any rate proceeding, nor used by the commissioner to
calculate or derive any elements of an appropriate premium level or
rate of return for any line of insurance that an insurer or any
affiliate is authorized to write. This subdivision does not affect
the validity of any action taken before its effective date.
739.9. (a) The provisions of this article are supplemental to any
other provisions of the laws of this state, and shall not preclude or
limit any other powers or duties of the commissioner under such
laws.
(b) The commissioner may adopt reasonable rules necessary for the
implementation of this article.
(c) The commissioner may exempt from the application of this
article any domestic property and casualty insurer that does all of
the following:
(1) Writes direct business only in this state.
(2) Writes direct annual premiums of five million dollars
($5,000,000) or less.
(3) Assumes no reinsurance in excess of 5 percent of direct
premiums written.
739.10. (a) Any foreign insurer shall, upon the written request of
the commissioner, submit to the commissioner an RBC Report as of the
end of the calendar year just ended the later of:
(1) The date an RBC Report would be required to be filed by a
domestic insurer under this chapter.
(2) Fifteen days after the request is received by the foreign
insurer.
Any foreign insurer shall, at the written request of the
commissioner, promptly submit to the commissioner a copy of any RBC
Plan that is filed with the insurance commissioner of any other
state.
(b) In the event of a Company Action Level Event or Regulatory
Action Level Event with respect to any foreign insurer as determined
under the RBC statute applicable in the state of domicile of the
insurer, or, if no RBC provision is in force in that state, under the
provisions of this chapter, if the insurance commissioner of the
state of domicile of the foreign insurer fails to require the foreign
insurer to file an RBC Plan in the manner specified under the RBC
statute, or, if no RBC provision is in force in the state, under
Section 739.3, the commissioner may require the foreign insurer to
file an RBC Plan with the commissioner. In such event, the failure of
the foreign insurer to file an RBC Plan with the commissioner shall
be grounds to order the insurer to cease and desist from writing new
insurance business in this state.
(c) In the event of a Mandatory Control Level Event with respect
to any foreign insurer, if no domiciliary receiver has been appointed
with respect to the foreign insurer under the rehabilitation and
liquidation statute applicable in the state of domicile of the
foreign insurer, the commissioner may make application to the
superior court with respect to the liquidation of property of foreign
insurers found in this state, and the occurrence of the Mandatory
Control Level Event shall be considered adequate grounds for the
application.
739.11. If any provision of this article, or the application
thereof to any person or circumstance, is held invalid, such
determination shall not affect the provisions or applications of this
article that can be given effect without the invalid provision or
application, and to that end the provisions of this article are
severable.
739.12. (a) All notices by the commissioner to an insurer that may
result in regulatory action hereunder shall be effective upon
dispatch if transmitted by registered or certified mail, or in the
case of any other transmission shall be effective upon the insurer's
receipt of such notice.
(b) Copies of all notices from the commissioner to the State
Compensation Insurance Fund under this article shall be sent to the
Governor.
