NY Ins L § 1323 (2021)
2021 New York Laws ISC - Insurance Article 13 - Assets and Deposits 1323 - Issuance of Capital Notes by Domestic Life Insurance Companies

§   1323.  Issuance  of  capital  notes  by  domestic  life  insurance companies. (a) A domestic life insurance company may at any time or from time to time  issue  capital  notes  pursuant  to  this  section  in  an aggregate  principal amount not exceeding (1) twenty-five percent of its total adjusted capital (including  the  aggregate  principal  amount  of outstanding  notes)  as of the end of the immediately preceding calendar year, less (2) the aggregate  principal  amount  of  outstanding  notes; provided,  however,  that  capital  notes  shall  not  be  issued for an aggregate principal amount which would  cause  the  aggregate  principal amount  of  all  such insurer's capital notes scheduled to mature in any calendar year to exceed five percent, or the aggregate principal  amount of  all  such  insurer's  capital notes scheduled to mature in any three consecutive calendar years to exceed twelve percent,  of  the  insurer's total  adjusted  capital  as of the end of the calendar year immediately preceding the issuance of such  capital  notes.  For  purposes  of  this section,  outstanding  notes  shall  include  the  outstanding aggregate principal amount of capital notes issued pursuant to  this  section  and the  outstanding  aggregate  principal  amount of advances or borrowings incurred pursuant to section one thousand three hundred  seven  of  this article.  (b) No such insurer shall issue capital notes pursuant to this section unless  the terms thereof shall have been approved by the superintendent as not adverse to the interests of the insurer's policyholders.  (c) The insurer shall not pay or redeem the principal  amount  of  any capital notes, make any sinking fund payment or pay any interest on such notes,  and such principal, payment and interest shall not become due or payable if, based on the preceding year-end annual statement filed  with the superintendent: (1) (A) the insurer's total adjusted capital is less than  such insurer's company action level RBC or (B) the insurer's total adjusted capital is less than the product  of  2.5  and  its  authorized control  level  RBC  and  there  is  a  negative trend, as determined in accordance with section one thousand three hundred  twenty-two  of  this article  or  (2)  the aggregate of all such payments or redemptions made during the current calendar year would if made immediately prior to  the preceding  year-end have caused (A) the insurer's total adjusted capital to be less than such insurer's company  action  level  RBC  or  (B)  the insurer's  total  adjusted  capital  at  such  time  to be less than the product of 2.5 and its authorized control  level  RBC  and  there  is  a negative  trend,  as  determined in accordance with section one thousand three hundred twenty-two of this article. Notwithstanding the foregoing, upon request by the insurer, the superintendent may approve, in whole or in part, any such payment or redemption on the capital notes if  and  at such  time  or  times as in his judgment the financial condition of such insurer  warrants.  The  amount  of  such  redemptions  or  payments  of principal  amounts  of  any  capital  notes  which cannot be made as the result of the provisions of this subsection may accumulate at  the  rate of interest of the capital notes.  (d) Capital notes issued pursuant to this section: (1) may provide (A) for  interest  payments  at  fixed  or  adjustable  rates,  sinking fund payments, and payments and redemptions of principal,  in  each  case  in accordance  with  the  terms  of  the capital note and without the prior approval of the superintendent except to the extent that  such  approval is  required  pursuant  to  this  subsection  or  subsection (c) of this section, (B) that  such  capital  notes  automatically  become  due  and payable  in  the  event  the  insurer  becomes  subject  to  an order of rehabilitation,  liquidation  or  conservation  granted  pursuant  to  a proceeding  under article seventy-four of this chapter, and (C) for such other features as the  superintendent  determines  are  appropriate  for  capital  notes issued by a life insurance company; and (2) shall provide that if at the end of  any  calendar  year  the  total  amount  of  such insurer's  total  adjusted  capital  (including  the aggregate principal amount  of  outstanding  notes)  is  less than three times the aggregate principal amount of outstanding notes,  the  superintendent  may  notify such  insurer  that  the  financial  condition  of such insurer does not warrant the payment or redemption or sinking fund payment, in  whole  or in  part, on the capital notes. Such action by the superintendent shall, without any action on the part of  the  insurer  or  any  other  person, automatically  defer  such  payment or redemption until such time as the superintendent finds that the financial condition warrants such  payment or  redemption.  The amount of such redemptions or payments of principal amounts of any capital notes so deferred may accumulate at the  rate  of interest of the capital notes.  (e)  Capital notes issued pursuant to this section shall be considered part  of  such  insurer's  total  adjusted  capital  but  shall  not  be considered  part of such insurer's surplus; provided, however, (1) that, in the case of any capital note maturing fifteen years or less from  the year  in  which  such capital note is issued, one-fifth of the aggregate principal amount of such capital note shall  be  subtracted  from  total adjusted  capital  in each year starting with the fifth year immediately preceding the calendar year in which such capital note is  scheduled  to mature; and (2) that, in the case of any capital note maturing more than fifteen  years  from  the  year  in  which  such capital note is issued; one-tenth of the aggregate principal amount of such capital  note  shall be subtracted from total adjusted capital in each year starting with the tenth year immediately preceding the calendar year in which such capital note  is  scheduled  to  mature,  and further provided that, in no event shall the amount included in total adjusted capital for any capital note exceed the principal amount, at issue, of such outstanding capital  note less  the  aggregate  of  all sinking fund payments made on such capital note. Such insurer shall be required to disclose the aggregate principal amount of capital notes then outstanding as a liability on its financial statements filed with the superintendent pursuant to this article.  (f) As used in this  section,  the  terms  "total  adjusted  capital", "company action level RBC" and "authorized control level RBC" shall have the same meanings as set forth with respect to such terms in section one thousand three hundred twenty-two of this article.