§ 58-12-11. Company action level event.
§ 58‑12‑11. Company action level event.
(a) "Companyaction level event" means any of the following events:
(1) The filing of a risk‑basedcapital report by an insurer that indicates that:
a. The insurer's totaladjusted capital is greater than or equal to its regulatory action level risk‑basedcapital but less than its company action level risk‑based capital, if theinsurer is a property or casualty insurer or a health organization; or
b. The insurer hastotal adjusted capital that is greater than or equal to its company actionlevel risk‑based capital but less than the product of its authorizedcontrol level risk‑based capital and 2.5 and has a negative trend, if theinsurer is a life or health insurer.
(2) The notification bythe Commissioner to the insurer of an adjusted risk‑bases capital reportthat indicates the event in sub‑subdivision (1)a. or b. of thissubsection if the insurer does not challenge the adjusted risk‑basedcapital report under G.S. 58‑12‑30.
(3) If the insurerchallenges an adjusted risk‑based capital report that indicates the eventin sub‑subdivision (1)a. or b. of this subsection under G.S. 58‑12‑30,the notification by the Commissioner to the insurer that the Commissioner hasrejected the insurer's challenge.
(b) In the event of a companyaction level event, the insurer shall prepare and submit to the Commissioner acomprehensive financial plan that:
(1) Identifies theconditions in the insurer that contribute to the company action level event.
(2) Contains proposalsof corrective actions that the insurer intends to take and would be expected toresult in the elimination of the company action level event.
(3) Provides forecastsof the insurer's financial results in the current year and at least the foursucceeding years, both in the absence of proposed corrective actions and givingeffect to the proposed corrective actions, including forecasts of statutoryoperating income, net income, capital, or surplus (the forecasts for both newand renewal business should include separate forecasts for each major line ofbusiness and separately identify each significant income, expense, and benefitcomponent). For a health organization, the forecasted financial results shallbe for the current year and at least two succeeding years and shall includestatutory balance sheets, operating income, net income, capital and surplus,and risk‑based capital levels.
(4) Identifies the keyassumptions affecting the insurer's forecasts and the sensitivity of theforecasts to the assumptions.
(5) Identifies the qualityof, and problems associated with, the insurer's business, including its assets,anticipated business growth and associated surplus strain, extraordinaryexposure to risk, mix of business, and use of reinsurance in each case, if any.
(c) The risk‑basedcapital plan shall be submitted:
(1) Within 45 days afterthe company action level event; or
(2) If the insurerchallenges an adjusted risk‑based capital report pursuant to G.S. 58‑12‑30,within 45 days after notification to the insurer that the Commissioner hasrejected the insurer's challenge.
(d) Within 60 daysafter the submittal by an insurer of a risk‑based capital plan to theCommissioner, the Commissioner shall notify the insurer whether the risk‑basedcapital plan shall be implemented or is, in the judgment of the Commissioner,unsatisfactory. If the Commissioner determines the risk‑based capitalplan is unsatisfactory, the notification to the insurer shall set forth thereasons for the determination, and may set forth proposed revisions that willrender the risk‑based capital plan satisfactory, in the judgment of theCommissioner. Upon notification from the Commissioner, the insurer shallprepare a revised risk‑based capital plan, which may incorporate byreference any revisions proposed by the Commissioner, and shall submit therevised risk‑based capital plan to the Commissioner:
(1) Within 45 days afternotification from the Commissioner; or
(2) If the insurerchallenges the notification from the Commissioner under G.S. 58‑12‑30,within 45 days after a notification to the insurer that the Commissioner hasrejected the insurer's challenge.
(e) In the event of anotification by the Commissioner to an insurer that the insurer's risk‑basedcapital plan or revised risk‑based capital plan is unsatisfactory, theCommissioner may, subject to the insurer's right to a hearing under G.S. 58‑12‑30,specify in the notification that the notification constitutes a regulatoryaction level event.
(f) Every domesticinsurer that files a risk‑based capital plan or revised risk‑basedcapital plan with the Commissioner shall file a copy of the risk‑basedcapital plan or revised risk‑based capital plan with the insuranceregulator in any state in which the insurer is authorized to do business if:
(1) That state has a risk‑basedcapital provision substantially similar to G.S. 58‑12‑21(a); and
(2) The insuranceregulator of that state has notified the insurer of its request for the filingin writing, in which case the insurer shall file a copy of the risk‑basedcapital plan or revised risk‑based capital plan in that state no laterthan the later of:
a. Fifteen days afterthe receipt of notice to file a copy of its risk‑based capital plan orrevised risk‑based capital plan with the state; or
b. The date on whichthe risk‑based capital plan or revised risk‑based capital plan isfiled under subsection (c) or (d) of this section. (1993 (Reg. Sess., 1994), c.678, s. 1; 1995, c. 193, s. 21; c. 318, s. 5; 2001‑223, ss. 12.5, 12.6.)