[Rev. 4/16/2014 11:37:33 AM]

[NAC-681B Revised Date: 4-14]

CHAPTER 681B - INSURANCE: ASSETS AND LIABILITIES

LIFE INSURANCE: ANNUAL OPINIONS AND SUPPORTING MEMORANDA OF QUALIFIED ACTUARIES

681B.100         Definitions.

681B.105         “Actuarial Standards Board” defined.

681B.110         “Annual statement” defined.

681B.115         “Appointed actuary” defined.

681B.120         “Asset adequacy analysis” defined.

681B.125         “Commissioner” defined.

681B.130         “Division” defined.

681B.135         “Fraternal benefit society” defined.

681B.140         “Insurer” defined.

681B.150         “Opinion of a qualified actuary” defined.

681B.155         “Qualified actuary” defined.

681B.160         Applicability.

681B.161         Adoption by reference of model regulation for valuation of life insurance policies.

681B.162         Adoption by reference of annuity tables to determine minimum standard of valuation for individual annuity or pure endowment contract.

681B.164         Adoption by reference of annuity table to determine minimum standard of valuation for group annuity or pure endowment contract.

681B.165         Opinions and supporting memoranda: Annual submission required; form of submission; extension of time for submission.

681B.170         Notice to Commissioner regarding appointed actuary.

681B.175         Requirements for asset adequacy analysis.

681B.180         Application of opinion to business in force on date of annual statement; determination of need for additional reserves; release of additional reserves.

681B.205         Opinion as to computation of reserves and related items: Contents.

681B.210         Opinion based on asset adequacy analysis: Contents.

681B.215         Supporting memorandum: Examination by Commissioner; requirements for preparation; review by qualified actuary; regulatory asset adequacy issues summary.

681B.220         Supporting memorandum: Contents.

681B.221         Regulatory asset adequacy issues summary: Contents.

681B.222         Adoption of new actuarial assumptions for new issues or claims not considered change of actuarial assumptions.

681B.223         Refusal to provide actuarial opinion; issuance of adverse or qualified actuarial opinion.

681B.224         Opinion of qualified actuary submitted by a foreign insurer: Requirements.

681B.225         Asset adequacy analysis: Aggregation of reserves and assets.

681B.230         Asset adequacy analysis: Allocation of assets.

681B.235         Asset adequacy analysis: Use of appropriate allocation of assets in amount of Interest Maintenance Reserve; disclosure of amount of assets used for Asset Valuation required.

681B.240         Asset adequacy analysis: Consideration of certain interest rate scenarios.

681B.245         Asset adequacy analysis: Retention of certain documentation required.

PROPERTY AND CASUALTY INSURANCE: ANNUAL OPINIONS OF QUALIFIED ACTUARIES

681B.250         Definitions.

681B.255         “Appointed actuary” defined.

681B.260         “Domiciliary commissioner” defined.

681B.265         “Property and casualty insurance company” defined.

681B.270         “Qualified actuary” defined.

681B.275         Annual submission of opinion required; form of submission; treatment as public document.

681B.280         Supporting document entitled “Actuarial Opinion Summary” required.

681B.285         Supporting document entitled “Actuarial Report” required; availability to Commissioner; review by actuary at expense of company in certain circumstances.

681B.290         Confidentiality of records.

REPORTS OF MATERIAL TRANSACTIONS

681B.300         Definitions.

681B.305         Filing of report.

681B.310         Information required to be disclosed in report of material acquisition or disposition of assets.

681B.315         Reporting of material acquisitions and dispositions of assets on nonconsolidated basis; exception.

681B.320         Exceptions for filing of report.

681B.325         Information required to be disclosed in report of material nonrenewal, cancellation or revision of agreement for ceded reinsurance or material new agreement for ceded reinsurance that affects in-force life insurance business of insurer.

681B.330         Reporting of material nonrenewals, cancellations or revisions of agreements for ceded reinsurance, and material new agreements for ceded reinsurance that affect in-force life insurance business of insurer, on nonconsolidated basis; exception.

681B.335         Restriction against assumption of reinsurance by certain insurers and certain other organizations.

RISK-BASED CAPITAL OF INSURERS

General Provisions

681B.400         Definitions.

681B.405         “Authorized control level” defined.

681B.410         “Company action level” defined.

681B.415         “Corrective order” defined.

681B.420         “Domestic insurer” defined.

681B.425         “Foreign insurer” defined.

681B.430         “Instructions relating to risk-based capital” defined.

681B.435         “Level of risk-based capital” defined.

681B.440         “Life and health insurer” defined.

681B.445         “Mandatory control level” defined.

681B.450         “Plan for risk-based capital” defined.

681B.455         “Property and casualty insurer” defined.

681B.460         “Regulatory action level” defined.

681B.465         “Report on risk-based capital” defined.

681B.470         “Total adjusted capital” defined.

681B.472         Instructions for reporting risk-based capital: Amendment.

Report on Risk-Based Capital

681B.475         Requirements for filing report.

681B.480         Formula for completion of report.

681B.485         Adjustment of report to correct inaccuracy.

Events Requiring Company Action

681B.490         Identification of events.

681B.495         Preparation and submission of plan for risk-based capital.

681B.500         Action on plan or revised plan for risk-based capital.

681B.505         Filing of copy of plan or revised plan for risk-based capital in other states.

Events Requiring Regulatory Action

681B.510         Identification of events.

681B.515         Preparation and submission of plan or revised plan for risk-based capital.

681B.520         Action by Commissioner; determination of need for corrective action.

681B.525         Consultants: Retention by Commissioner; payment of fees, costs and expenses.

Events Requiring Authorized Control

681B.530         Identification of events.

681B.535         Preparation and submission of plan or revised plan for risk-based capital.

681B.540         Action by Commissioner; taking of action pursuant to chapter 696B of NRS.

Events Requiring Mandatory Control

681B.545         Identification of events.

681B.550         Action by Commissioner; taking of action pursuant to chapter 696B of NRS.

Foreign Insurers

681B.555         Applicability.

681B.560         Submission of report on risk-based capital and copy of plan or revised plan for risk-based capital filed in another state.

681B.565         Filing of plan for risk-based capital under certain circumstances; failure to file.

681B.570         Application for appointment of Commissioner as receiver.

Miscellaneous Provisions

681B.575         Effective date of notice by Commissioner to insurer.

681B.580         Right of insurer to confidential administrative hearing to challenge certain actions of Commissioner.

681B.585         Confidentiality of information.

681B.590         Restrictions on disclosure of information.

681B.595         Use of information by Commissioner.

 

LIFE INSURANCE: ANNUAL OPINIONS AND SUPPORTING MEMORANDA OF QUALIFIED ACTUARIES

      NAC 681B.100  Definitions. (NRS 679B.130, 681B.110, 681B.120, 681B.210, 681B.220)  As used in NAC 681B.100 to 681B.245, inclusive, unless the context otherwise requires, the words and terms defined in NAC 681B.105 to 681B.155, inclusive, have the meanings ascribed to them in those sections.

     (Added to NAC by Comm’r of Insurance, eff. 5-23-96; A by R149-99, 1-27-2000; R146-12, 10-4-2013)

      NAC 681B.105  “Actuarial Standards Board” defined.  “Actuarial Standards Board” means the board established by the American Academy of Actuaries to develop and adopt the “Actuarial Standards of Practice.”

     (Added to NAC by Comm’r of Insurance, eff. 5-23-96)

      NAC 681B.110  “Annual statement” defined.  “Annual statement” has the meaning ascribed to it in NAC 686B.308.

     (Added to NAC by Comm’r of Insurance, eff. 5-23-96)

      NAC 681B.115  “Appointed actuary” defined. (NRS 679B.130, 681B.210, 681B.220, 681B.230)  “Appointed actuary” means a qualified actuary who is appointed or retained by the board of directors or its equivalent of an insurer or by an executive officer of the insurer, other than the qualified actuary, acting under the authority of the board of directors or its equivalent, to prepare the opinions required pursuant to NRS 681B.210 and 681B.220 and the supporting memorandum required pursuant to NRS 681B.230.

     (Added to NAC by Comm’r of Insurance, eff. 5-23-96; A by R146-12, 10-4-2013)

      NAC 681B.120  “Asset adequacy analysis” defined.  “Asset adequacy analysis” means an analysis of the assets of an insurer which complies with the provisions set forth in NAC 681B.175.

     (Added to NAC by Comm’r of Insurance, eff. 5-23-96)

      NAC 681B.125  “Commissioner” defined.  “Commissioner” has the meaning ascribed to it in NRS 679A.060.

     (Added to NAC by Comm’r of Insurance, eff. 5-23-96)

      NAC 681B.130  “Division” defined.  “Division” has the meaning ascribed to it in NRS 679A.085.

     (Added to NAC by Comm’r of Insurance, eff. 5-23-96)

      NAC 681B.135  “Fraternal benefit society” defined.  “Fraternal benefit society” has the meaning ascribed to it in NRS 695A.010.

     (Added to NAC by Comm’r of Insurance, eff. 5-23-96)

      NAC 681B.140  “Insurer” defined.  “Insurer” has the meaning ascribed to it in NRS 679A.100, and includes a fraternal benefit society.

     (Added to NAC by Comm’r of Insurance, eff. 5-23-96)

      NAC 681B.150  “Opinion of a qualified actuary” defined. (NRS 679B.130, 681B.210, 681B.220)  “Opinion of a qualified actuary” means:

     1.  The opinion of an appointed actuary as to the computation of reserves and related items of an insurer required pursuant to NRS 681B.210; or

     2.  The opinion of an appointed actuary as to the adequacy of the reserves and related actuarial items of an insurer based on an asset adequacy analysis required pursuant to NRS 681B.220.

     (Added to NAC by Comm’r of Insurance, eff. 5-23-96; A by R146-12, 10-4-2013)

      NAC 681B.155  “Qualified actuary” defined. (NRS 679B.130, 681B.210, 681B.220)  “Qualified actuary” means a person who:

     1.  Is a member in good standing of the American Academy of Actuaries;

     2.  Is qualified to sign a statement of actuarial opinion for annual statements of life and health insurers in accordance with the qualification standards set by the American Academy of Actuaries for an actuary signing such a statement;

     3.  Is familiar with the valuation requirements applicable to life and health insurers;

     4.  Has not been found by the Commissioner to have:

     (a) In the course of the person’s dealings as a qualified actuary, violated any provision of, or any obligation imposed by, the Nevada Insurance Code or any other law;

     (b) Been guilty of fraudulent or dishonest practices;

     (c) Demonstrated his or her incompetency, lack of cooperation or untrustworthiness to act as a qualified actuary;

     (d) Submitted to the Commissioner during the past 5 years an opinion of a qualified actuary or a supporting memorandum that the Commissioner rejected because it did not meet the standards set forth in NAC 681B.100 to 681B.245, inclusive, or the “Actuarial Standards of Practice” adopted by the Actuarial Standards Board; or

     (e) Resigned or been removed as an actuary within the past 5 years as a result of acts or omissions indicated in any adverse report on examination or because the person failed to adhere to generally acceptable actuarial standards; and

     5.  Has not failed to notify the Commissioner of the rejection by the insurance regulatory authority of any other state of a submitted opinion or supporting memorandum on grounds similar to those described in paragraph (d) of subsection 4.

Ê The term includes a person who has been found by the Commissioner to have committed one or more of the actions described in subsection 4 and has subsequently been reinstated as a qualified actuary by the Commissioner, unless the person otherwise does not meet the definition of the term.

     (Added to NAC by Comm’r of Insurance, eff. 5-23-96; A by R146-12, 10-4-2013)

      NAC 681B.160  Applicability.

     1.  NAC 681B.100 to 681B.245, inclusive, apply to:

     (a) Each insurer offering life insurance doing business in this State; and

     (b) Each insurer who is authorized to reinsure life insurance, annuities or accident and health insurance business in this State.

     2.  Each opinion of a qualified actuary filed with the Office of the Commissioner after May 23, 1996, must comply with the provisions set forth in NAC 681B.100 to 681B.245, inclusive.

     (Added to NAC by Comm’r of Insurance, eff. 5-23-96)

      NAC 681B.161  Adoption by reference of model regulation for valuation of life insurance policies. (NRS 679B.130, 681B.110, 681B.120)  A life insurer doing business in this State shall use the Valuation of Life Insurance Policies Model Regulation adopted by the National Association of Insurance Commissioners on March 8, 1999, which is hereby adopted by reference. A copy of this publication may be purchased from the National Association of Insurance Commissioners, 120 West 12th Street, Suite 1100, Kansas City, Missouri 64105-1925, for $25 plus $3 for shipping and handling.

     (Added to NAC by Comm’r of Insurance by R149-99, eff. 1-27-2000)

      NAC 681B.162  Adoption by reference of annuity tables to determine minimum standard of valuation for individual annuity or pure endowment contract. (NRS 679B.130, 681B.110, 681B.120)

     1.  Except as otherwise provided in subsection 2, a life insurer doing business in this State shall use the “Annuity 2000 Mortality Table,” which is hereby adopted by reference, to determine the minimum standard of valuation for each individual annuity or pure endowment contract that the insurer issues to a person in this State on or after November 16, 1998. The “Annuity 2000 Mortality Table” is set forth on page 240 of volume XLVII of the Transactions of the Society of Actuaries (1995), and a copy of this publication may be obtained from the Society of Actuaries, 475 North Martingale Road, Schaumburg, Illinois 60173, or by telephone at (847) 706-3526, for the price of $55.

     2.  A life insurer doing business in this State shall use, without projection, the “1983 Table ‘a,’” which is hereby adopted by reference, to determine the minimum standard of valuation for an individual annuity or pure endowment contract that the insurer issues to a person in this State on or after November 16, 1998, if the individual annuity or pure endowment contract involves life contingencies and is issued to pay periodic benefits arising from the settlement of:

     (a) A claim arising out of a tort, including, without limitation, a claim for workers’ compensation, regardless of whether an action relating to the claim was commenced in a court of competent jurisdiction; or

     (b) A claim for long-term disability in which the claimant has elected to receive a temporary or life annuity in lieu of payments for continuing disability.

Ê The “1983 Table ‘a’” is set forth on page 454 of the 1982 Proceedings of the NAIC II, and a copy of this publication may be obtained from the National Association of Insurance Commissioners, NAIC-Publications, P.O. Box 87-7870, Kansas City, Missouri 64187-7870, or by telephone at (816) 374-7259, for the price of $180 plus $10 for shipping and handling.

     (Added to NAC by Comm’r of Insurance by R081-98, eff. 11-16-98)

      NAC 681B.164  Adoption by reference of annuity table to determine minimum standard of valuation for group annuity or pure endowment contract. (NRS 679B.130, 681B.110, 681B.120)

     1.  A life insurer doing business in this State shall use the “1994 Group Annuity Reserving Table,” which is hereby adopted by reference, to determine the minimum standard of valuation for each group annuity or pure endowment contract that the insurer issues to a group in this State on or after November 16, 1998. The “1994 Group Annuity Reserving Table” is set forth on pages 866-67 of volume XLVII of the Transactions of the Society of Actuaries (1995), and a copy of this publication may be obtained from the Society of Actuaries, 475 North Martingale Road, Schaumburg, Illinois 60173, or by telephone at (847) 706-3526, for the price of $55.

     2.  For the purposes of the “1994 Group Annuity Reserving Table,” the mortality rate for a person of age x in the year (1994 + n) must be calculated by using the following formula:

 

                        qx 1994+n = qx1994 (1 - AAx)n

 

where qx1994 and AAx are as specified in the “1994 Group Annuity Reserving Table.”

     (Added to NAC by Comm’r of Insurance by R081-98, eff. 11-16-98)

      NAC 681B.165  Opinions and supporting memoranda: Annual submission required; form of submission; extension of time for submission. (NRS 679B.130, 681B.210, 681B.220, 681B.230)

     1.  Every insurer shall annually submit the opinion of a qualified actuary required pursuant to NRS 681B.210.

     2.  Every insurer shall also annually submit the opinion of a qualified actuary based on an asset adequacy analysis required pursuant to NRS 681B.220 and prepare the supporting memorandum required pursuant to NRS 681B.230.

     3.  An insurer shall, in accordance with the Annual Statement Instructions for Life, Accident and Health Insurance Companies, as adopted by the National Association of Insurance Commissioners for the year in which the insurer files the statement, file with the National Association of Insurance Commissioners, and the insurance regulatory authority of any other required jurisdiction, a copy of each opinion of a qualified actuary submitted to the Commissioner pursuant to subsection 2.

     4.  Except as otherwise provided in this section, the opinion or opinions of a qualified actuary submitted pursuant to this section must be included on or attached to the first page of the annual statement for the insurer and must be entitled “Statement of Actuarial Opinion.”

     5.  The Commissioner may grant an extension of time for the submission of the opinion or opinions of a qualified actuary pursuant to this section. The request must be submitted in writing and be received by the Commissioner on or before the date established, pursuant to NRS 680A.270, for filing the annual statement of the insurer.

     (Added to NAC by Comm’r of Insurance, eff. 5-23-96; A by R146-12, 10-4-2013)

      NAC 681B.170  Notice to Commissioner regarding appointed actuary. (NRS 679B.130, 681B.210, 681B.220)

     1.  Each insurer required to submit an opinion of a qualified actuary pursuant to NRS 681B.210 or 681B.220 shall notify the Commissioner, in writing, of:

     (a) The name, title and manner of appointment or retention of each person appointed or retained by the insurer as an appointed actuary; and

     (b) If the appointed actuary is a consulting actuary, the name of the firm that he or she represents.

     2.  The insurer shall state in the notice required pursuant to subsection 1 that the person appointed as actuary is a qualified actuary.

     3.  Once notice is furnished pursuant to this section, no further notice is required with respect to the actuary, unless the actuary ceases to be appointed or retained as an appointed actuary or ceases to meet the requirements of a qualified actuary. The insurer shall timely notify the Commissioner, in writing, if the appointed actuary for the insurer ceases to be appointed or retained as an appointed actuary or ceases to meet the requirements of a qualified actuary. If any person appointed or retained as an appointed actuary replaces a previously appointed actuary, the notice must state that the appointed actuary is replacing the previously appointed actuary and give the reasons for the replacement.

     (Added to NAC by Comm’r of Insurance, eff. 5-23-96; A by R146-12, 10-4-2013)

      NAC 681B.175  Requirements for asset adequacy analysis.

     1.  An asset adequacy analysis must:

     (a) Conform to the “Actuarial Standards of Practice” adopted from time to time by the Actuarial Standards Board and any additional standards set forth in NAC 681B.100 to 681B.245, inclusive; and

     (b) Be based on the methods of analysis deemed appropriate by the Actuarial Standards Board.

     2.  The standards described in subsection 1 must be used to form the basis of the opinion of a qualified actuary required pursuant to NRS 681B.220.

     (Added to NAC by Comm’r of Insurance, eff. 5-23-96)

      NAC 681B.180  Application of opinion to business in force on date of annual statement; determination of need for additional reserves; release of additional reserves. (NRS 679B.130, 681B.210, 681B.220)

     1.  An opinion of a qualified actuary must apply to all business in force on the date of the annual statement regardless of when or where issued, including reserves included in Exhibits 5, 6 and 7 of the annual statement, claim liabilities listed in Part I of Exhibit 8 of the annual statement and equivalent items in the separate account statement or statements submitted with the annual statement.

     2.  If the appointed actuary determines from the asset adequacy analysis that a reserve should be held in addition to the aggregate reserve held by the insurer and calculated in accordance with the methods set forth in NRS 681B.130 and 681B.150, the insurer shall establish the additional reserve.

     3.  Additional reserves established under subsection 2 which are determined by a qualified actuary to be not necessary in subsequent years may be released. All amounts released must be disclosed in the opinion of a qualified actuary for the applicable year. The release of such reserves shall not be deemed an adoption of a lower standard of valuation.

     (Added to NAC by Comm’r of Insurance, eff. 5-23-96; A by R146-12, 10-4-2013)

      NAC 681B.205  Opinion as to computation of reserves and related items: Contents. (NRS 679B.130, 681B.210)

     1.  An opinion of a qualified actuary submitted pursuant to NRS 681B.210 must contain:

     (a) A paragraph which identifies the appointed actuary and lists his or her qualifications;

     (b) A paragraph which states that the opinion is rendered in accordance with NRS 681B.210 and this section and is not based on an asset adequacy analysis;

     (c) A paragraph which identifies the subjects on which the opinion is to be expressed and describes the scope of the appointed actuary’s work; and

     (d) A paragraph expressing the appointed actuary’s opinion.

     2.  The paragraph required pursuant to paragraph (c) of subsection 1 must contain a list of the items and amounts with respect to which the actuary is expressing an opinion. The list must include, without limitation:

     (a) Aggregate reserves and deposit funds for policies and contracts included in Exhibit 5 of the insurer’s annual statement;

     (b) Aggregate reserves and deposit funds for policies and contracts included in Exhibit 6 of the insurer’s annual statement;

     (c) Deposit funds, premiums, dividend and coupon accumulations and supplementary contracts not involving life contingencies included in Exhibit 7 of the insurer’s annual statement; and

     (d) Liability for the end of the year based on policy and contract claims, included in part I of Exhibit 8 of the insurer’s annual statement.

     3.  Upon request, the Commissioner will provide guidelines for language that will satisfy the provisions of this section.

     (Added to NAC by Comm’r of Insurance, eff. 5-23-96; A by R146-12, 10-4-2013)

      NAC 681B.210  Opinion based on asset adequacy analysis: Contents. (NRS 679B.130, 681B.220)

     1.  A statement of actuarial opinion based on an asset adequacy analysis submitted pursuant to NRS 681B.220 must contain:

     (a) A paragraph which identifies the appointed actuary and lists his or her qualifications;

     (b) A paragraph which identifies the subjects on which the opinion is expressed and describes the scope of the appointed actuary’s work, including a tabulation which:

          (1) Delineates the reserves and related actuarial items which have been analyzed for asset adequacy;

          (2) Delineates the method of analysis; and

          (3) Identifies the reserves and related actuarial items covered by the opinion which have not been analyzed;

     (c) A paragraph which describes those areas, if any, where the appointed actuary has deferred to other experts in developing data, procedures or assumptions, including, but not limited to, anticipated cash flows from currently owned assets, including variations in cash flows according to economic scenarios;

     (d) A supporting statement prepared by each expert consulted pursuant to paragraph (c);

     (e) A paragraph which expresses the appointed actuary’s opinion with respect to the adequacy of the supporting assets to mature the liabilities;

     (f) If the actuary determines that it is necessary to qualify his or her opinion, a paragraph which contains the qualification;

     (g) If it is necessary for the appointed actuary to disclose an inconsistency in the method of analysis or basis of asset allocation used in a previous opinion with that used in the opinion, a paragraph which contains the disclosure;

     (h) If it is necessary for the appointed actuary to disclose whether additional reserves required as of the date of a previous opinion are released as of the date of the current opinion and the extent of the release, a paragraph which contains the disclosure; and

     (i) If the appointed actuary wishes to add a brief description of the assumptions which form the basis for the actuarial opinion, a paragraph which contains the description.

     2.  The paragraph required pursuant to paragraph (b) of subsection 1 must include, without limitation:

     (a) Aggregate reserves and deposit funds for policies and contracts included in Exhibit 5 of the insurer’s annual statement;

     (b) Aggregate reserves and deposit funds for policies and contracts included in Exhibit 6 of the insurer’s annual statement;

     (c) Deposit funds, premiums, dividend and coupon accumulations and supplementary contracts not involving life contingencies included in Exhibit 7 of the insurer’s annual statement; and

     (d) Liability for the end of the current year based on policy and contract claims included in Part I of Exhibit 8 of the insurer’s annual statement.

     3.  Upon request, the Commissioner will provide guidelines for language that will satisfy the provisions of this section.

     (Added to NAC by Comm’r of Insurance, eff. 5-23-96; A by R146-12, 10-4-2013)

      NAC 681B.215  Supporting memorandum: Examination by Commissioner; requirements for preparation; review by qualified actuary; regulatory asset adequacy issues summary. (NRS 679B.130, 681B.230)

     1.  Except as otherwise provided in this section, the supporting memorandum required pursuant to NRS 681B.230 must be made available for examination by the Commissioner upon his or her request. The memorandum will be returned to the insurer after it is examined by the Commissioner and will not be considered a record of the Division or filed with the Commissioner.

     2.  In preparing the memorandum, the appointed actuary may rely on, and include as a part of the memorandum, memoranda prepared and signed by other qualified actuaries. Each memorandum prepared and signed by another actuary must contain a statement that the actuary who prepared the memorandum is a qualified actuary.

     3.  If the Commissioner engages a qualified actuary to review the opinion of another qualified actuary pursuant to NRS 681B.230, the review will be directed and controlled by the Commissioner. The actuary engaged by the Commissioner will have the authority provided to an examiner pursuant to NRS 679B.230 to 679B.300, inclusive, for the purposes of obtaining data from the insurer. The work papers and documentation of the reviewing actuary will be retained by the Commissioner. All information provided by the insurer to the reviewing actuary and included in the work papers shall be deemed material provided by the insurer to the Commissioner and must be kept confidential in the same manner as material provided by the insurer to the Commissioner pursuant to NRS 679B.230 to 679B.300, inclusive. The reviewing actuary must not be an employee of a consulting firm involved with the preparation of any previous memorandum or opinion for the insurer submitted pursuant to NRS 681B.210, 681B.220 or 681B.230 for the current year or any of the immediately preceding 3 years.

     4.  The appointed actuary who prepares the supporting memorandum required pursuant to NRS 681B.230 shall prepare a regulatory asset adequacy issues summary that includes the information required by NAC 681B.221. A domestic insurer shall, unless the Commissioner grants an extension of time, submit the regulatory asset adequacy issues summary to the Commissioner not later than March 15 of the year following the year for which the supporting memorandum is prepared. A foreign insurer shall make the regulatory asset adequacy issues summary available for examination by the Commissioner upon his or her request. Except as otherwise provided in NRS 681B.260, the regulatory asset adequacy issues summary must be kept confidential to the same extent and under the same conditions as the supporting memorandum.

     (Added to NAC by Comm’r of Insurance, eff. 5-23-96; A by R146-12, 10-4-2013)

      NAC 681B.220  Supporting memorandum: Contents. (NRS 679B.130, 681B.230)

     1.  A supporting memorandum provided pursuant to NRS 681B.230 must conform to the “Actuarial Standards of Practice” adopted from time to time by the Actuarial Standards Board and any additional standards set forth in NAC 681B.100 to 681B.245, inclusive, and demonstrate that the asset adequacy analysis has been performed in accordance with the provisions of NAC 681B.175. The memorandum must specify:

     (a) For reserves:

          (1) The product descriptions, including market description, underwriting and other aspects of a risk profile, and the specific risks the appointed actuary deems significant;

          (2) The source of liability in force;

          (3) The reserve method and basis;

          (4) The investment reserves;

          (5) The reinsurance arrangements;

          (6) Each guarantee, whether express or implied, made by the general account in support of benefits provided through a separate account or under a separate account policy or contract and the methods used by the appointed actuary to provide for the guarantee in the asset adequacy analysis; and

          (7) The documentation of the assumptions used by the qualified actuary to test reserves for:

               (I) Lapse rates, including both base and excess rates;

               (II) Interest crediting rate strategy;

               (III) Mortality;

               (IV) Policyholder dividend strategy;

               (V) Competitor or market interest rate;

               (VI) Annuitization rates;

               (VII) Commissions and expenses; and

               (VIII) Morbidity.

Ê The documentation of the assumptions must be such that an actuary reviewing the actuarial memorandum could form a conclusion as to the reasonableness of the assumptions.

     (b) For assets:

          (1) The portfolio descriptions, including a risk profile disclosing the quality, distribution and types of assets;

          (2) The investment and disinvestment assumptions;

          (3) The source of asset data;

          (4) The asset valuation bases; and

          (5) The documentation of the assumptions made for:

               (I) Default costs;

               (II) Bond call function;

               (III) Mortgage prepayment function;

               (IV) Determination of market value for assets sold pursuant to a disinvestment strategy; and

               (V) Determination of yield on assets acquired through an investment strategy.

Ê The documentation of the assumptions must be such that an actuary reviewing the actuarial memorandum could form a conclusion as to the reasonableness of the assumptions.

     (c) The analysis basis, including:

          (1) The methodology;

          (2) The rationale for inclusion or exclusion of different blocks of business and the manner in which pertinent risks were analyzed;

          (3) The rationale for degree of rigor in analyzing different blocks of business, including, without limitation, the level of materiality used to determine how rigorously to analyze different blocks of business;

          (4) The criteria for determining asset adequacy, including, without limitation, the precise basis for determining if assets are adequate to cover reserves under moderately adverse conditions or other conditions as specified in the applicable standards of actuarial practice; and

          (5) Whether the effect of federal income taxes was considered and the method of treating reinsurance in the asset adequacy analysis.

     (d) A summary of any material change in method, procedure or assumptions from the immediately preceding asset adequacy analysis.

     (e) A summary of results.

     (f) A conclusion or conclusions.

     2.  The memorandum must include the following statement:

 

Actuarial methods, considerations and analyses used in the preparation of this memorandum conform to the appropriate “Actuarial Standards of Practice” adopted by the Actuarial Standards Board, which standards form the basis for this memorandum.

 

     (Added to NAC by Comm’r of Insurance, eff. 5-23-96; A by R146-12, 10-4-2013)

      NAC 681B.221  Regulatory asset adequacy issues summary: Contents. (NRS 679B.130, 681B.230)

     1.  The regulatory asset adequacy issues summary required pursuant to NAC 681B.215 must include, without limitation:

     (a) Descriptions of the scenarios tested, including, without limitation, whether those scenarios are stochastic or deterministic and the sensitivity testing done relative to those scenarios. If negative ending surplus results under certain tests in the aggregate, the description of those tests must include the amount of additional reserve as of the valuation date which, if held, would eliminate the negative aggregate surplus values. For the purposes of this paragraph, ending surplus values must be determined by:

          (1) Extending the projection period until the in-force and associated assets and liabilities at the end of the projection period are immaterial; or

          (2) Adjusting the surplus amount at the end of the projection period by an amount that appropriately estimates the value that can reasonably be expected to arise from the assets and liabilities remaining in force.

     (b) A discussion of the extent to which the appointed actuary uses assumptions in the current asset adequacy analysis that are materially different than the assumptions used in the previous asset adequacy analysis.

     (c) The amount of reserves and the identity of the product lines that had been subjected to asset adequacy analysis in the previous opinion but were not subjected to analysis in the current opinion.

     (d) Comments on any interim results that were of significant concern to the appointed actuary, such as the impact of an insufficiency of assets to support the payment of benefits and expenses or the establishment of statutory reserves during one or more interim periods.

     (e) The methods used by the actuary to recognize the impact of reinsurance on the insurer’s cash flows, including both assets and liabilities, under each of the scenarios tested.

     (f) An explanation of whether the actuary is satisfied that all options, whether explicit or embedded, in any asset or liability, including, but not limited to, those affecting cash flows embedded in fixed income securities and equity-like features in any investments, have been appropriately considered in the asset adequacy analysis.

     2.  The regulatory asset adequacy issues summary must contain the name of the insurer for which the summary is prepared and must be signed and dated by the appointed actuary rendering the actuarial opinion.

     (Added to NAC by Comm’r of Insurance by R146-12, eff. 10-4-2013)

      NAC 681B.222  Adoption of new actuarial assumptions for new issues or claims not considered change of actuarial assumptions. (NRS 679B.130, 681B.210, 681B.220)  The adoption for new issues or new claims or other new liabilities of an actuarial assumption that differs from a corresponding assumption used for prior new issues or new claims or other new liabilities is not considered to be a change in actuarial assumptions for the purposes of NRS 681B.210 and 681B.220.

     (Added to NAC by Comm’r of Insurance by R146-12, eff. 10-4-2013)

      NAC 681B.223  Refusal to provide actuarial opinion; issuance of adverse or qualified actuarial opinion. (NRS 679B.130, 681B.210, 681B.220)

     1.  If an appointed actuary is unable to form an opinion as to whether the reserves and related actuarial items held in support of the policies and contracts specified by the Commissioner satisfy the conditions set forth in NRS 681B.210 or 681B.220, the appointed actuary shall refuse to issue a statement of actuarial opinion.

     2.  If an appointed actuary’s opinion as to whether the reserves and related actuarial items held in support of the policies and contracts specified by the Commissioner satisfy the conditions set forth in NRS 681B.210 or 681B.220 is adverse or qualified, the appointed actuary shall issue an adverse or qualified actuarial opinion explicitly stating the reasons for the opinion.

     (Added to NAC by Comm’r of Insurance by R146-12, eff. 10-4-2013)

      NAC 681B.224  Opinion of qualified actuary submitted by a foreign insurer: Requirements. (NRS 679B.130, 681B.110, 681B.210, 681B.220, 681B.240)

     1.  The Commissioner may accept the opinion of a qualified actuary submitted by a foreign insurer that is based on the laws and regulations of the state in which the insurer is domiciled if:

     (a) The Commissioner determines that the opinion satisfies the requirements of NRS 681B.240; or

     (b) The opinion includes a statement that the reserves and related actuarial items meet the requirements of the laws and regulations of the state in which the insurer is domiciled and are at least as great as the minimum aggregate amounts required by the laws and regulations of this State or an alternative statement approved by the Commissioner. Upon request, the Commissioner will provide guidelines for language that will satisfy the provisions of this subsection.

     2.  The Commissioner may reject the opinion of a qualified actuary submitted by a foreign insurer pursuant to subsection 1 or NRS 681B.240 and require the insurer to submit the opinion of a qualified actuary that is based on the laws and regulations of this State.

     3.  If a foreign insurer required to submit the opinion of a qualified actuary pursuant to subsection 2 is unable to provide the opinion within 60 days after the request, or such other period determined by the Commissioner after consultation with the insurer, the Commissioner may engage an independent actuary at the expense of the insurer to prepare and submit the opinion.

     (Added to NAC by Comm’r of Insurance by R146-12, eff. 10-4-2013)

      NAC 681B.225  Asset adequacy analysis: Aggregation of reserves and assets.

     1.  For the purpose of performing an asset adequacy analysis, the reserves and assets of an insurer may be aggregated by:

     (a) Aggregating the reserves and related actuarial items and the supporting assets for different products or lines of business before analyzing the adequacy of the combined assets to mature the combined liabilities; or

     (b) Aggregating the results of an asset adequacy analysis of one or more products or lines of business, the reserves for which prove through analysis to be redundant, with the results of one or more products or lines of business, the reserves for which prove through analysis to be deficient.

     2.  If the reserves and assets are aggregated pursuant to paragraph (a) of subsection 1, the appointed actuary must be satisfied that the assets held in support of the reserves and related actuarial items aggregated are managed in such a manner that the cash flows from the aggregated assets are available to help mature the liabilities from the blocks of business that have been aggregated.

     3.  If the reserves and assets are aggregated pursuant to paragraph (b) of subsection 1, the appointed actuary must be satisfied that the results of the asset adequacy analysis for the various products or lines of business for which the results are aggregated are:

     (a) Developed using consistent economic scenarios; or

     (b) Subject to mutually independent risks. The results of an asset adequacy analysis are subject to mutually independent risks if the likelihood of events impacting the adequacy of the assets supporting the redundant reserves is completely unrelated to the likelihood of events impacting the adequacy of the assets supporting the deficient reserves.

     4.  If the reserves and assets of an insurer are aggregated, the actuary shall:

     (a) Disclose in his or her opinion that the reserves were aggregated on the basis of one of the methods described in this section; and

     (b) Describe the aggregation in the supporting memorandum.

     (Added to NAC by Comm’r of Insurance, eff. 5-23-96)

      NAC 681B.230  Asset adequacy analysis: Allocation of assets.

     1.  When performing an asset adequacy analysis, an appointed actuary shall analyze only those assets held in support of the specified reserves. A particular asset or portion thereof supporting a group of specified reserves cannot support any other group of specified reserves. An asset may be allocated over several groups of specified reserves. Except as otherwise provided in NAC 681B.235, the assets held in support of the reserves must not exceed the value of the specified reserves on the annual statement. If the method of asset allocation is not consistent from year to year, the extent of its inconsistency must be described in the supporting memorandum.

     2.  As used in this section, “specified reserves” means those reserves which are the subject of the asset adequacy analysis.

     (Added to NAC by Comm’r of Insurance, eff. 5-23-96)

      NAC 681B.235  Asset adequacy analysis: Use of appropriate allocation of assets in amount of Interest Maintenance Reserve; disclosure of amount of assets used for Asset Valuation required.

     1.  An appropriate allocation of assets in the amount of the Interest Maintenance Reserve, whether positive or negative, must be used in any asset adequacy analysis. Analysis of risks regarding asset default may include an appropriate allocation of assets supporting the Asset Valuation Reserve. Assets supporting the Asset Valuation Reserve may not be applied for any other risks with respect to the adequacy of reserves. Analysis of these and other risks may include assets supporting other mandatory or voluntary reserves available to the extent those assets are not used for risk analysis and to support reserves.

     2.  The amount of the assets used for the Asset Valuation Reserve must be disclosed in the Table of Reserves and Liabilities of the opinion of the qualified actuary submitted pursuant to NRS 681B.220 and in the supporting memorandum provided pursuant to NRS 681B.230. The method used for selecting particular assets or allocated portions of assets must be disclosed in the supporting memorandum.

     (Added to NAC by Comm’r of Insurance, eff. 5-23-96)

      NAC 681B.240  Asset adequacy analysis: Consideration of certain interest rate scenarios.

     1.  When performing an asset adequacy analysis, the appointed actuary shall consider in the analysis the effect of the following interest rate scenarios:

     (a) Level with no deviation;

     (b) Uniformly increasing over 10 years at 0.5 percent per year and then level;

     (c) Uniformly increasing at 1 percent per year over 5 years and then uniformly decreasing at 1 percent per year to the original level at the end of 10 years and then level;

     (d) An immediate increase of 3 percent and then level;

     (e) Uniformly decreasing over 10 years at 0.5 percent per year and then level;

     (f) Uniformly decreasing at 1 percent per year over 5 years and then uniformly increasing at 1 percent per year to the original level at the end of 5 years and then level; and

     (g) An immediate decrease of 3 percent and then level.

     2.  For the scenarios described in subsection 1 and any other scenarios which are used, projected interest rates for a 5-year treasury note need not be reduced beyond the point where the 5-year treasury note yield would be at not more than 50 percent of its initial level.

     3.  The beginning interest rates may be based on:

     (a) Interest rates on the valuation date for new investments which are similar to recent investments allocated to support the product being tested; or

     (b) An outside index of assets, such as treasury yields, of the appropriate length on a date close to the valuation date.

     4.  The method used to determine the beginning yield curve and associated interest rates must be specifically defined. The beginning yield curve and associated interest rates must be consistent for all interest rate scenarios.

     (Added to NAC by Comm’r of Insurance, eff. 5-23-96)

      NAC 681B.245  Asset adequacy analysis: Retention of certain documentation required.  An appointed actuary shall, after performing an asset adequacy analysis, retain on file, for not less than 7 years, documentation sufficient to enable another person to determine the procedures followed, the analyses performed, the bases for assumptions and the results obtained when the asset adequacy analysis was performed.

     (Added to NAC by Comm’r of Insurance, eff. 5-23-96)

PROPERTY AND CASUALTY INSURANCE: ANNUAL OPINIONS OF QUALIFIED ACTUARIES

      NAC 681B.250  Definitions. (NRS 679B.130, 679B.137, 680A.270, 681B.050)  As used in NAC 681B.250 to 681B.290, inclusive, unless the context otherwise requires, the words and terms defined in NAC 681B.255 to 681B.270, inclusive, have the meanings ascribed to them in those sections.

     (Added to NAC by Comm’r of Insurance by R072-10, eff. 12-16-2010)

      NAC 681B.255  “Appointed actuary” defined. (NRS 679B.130, 679B.137, 680A.270, 681B.050)  “Appointed actuary” means a qualified actuary who is appointed or retained by a property and casualty insurance company to prepare the opinion and supporting documents required by NAC 681B.275 to 681B.290, inclusive.

     (Added to NAC by Comm’r of Insurance by R072-10, eff. 12-16-2010)

      NAC 681B.260  “Domiciliary commissioner” defined. (NRS 679B.130, 679B.137, 680A.270, 681B.050)  “Domiciliary commissioner” means the Commissioner of Insurance or similar officer of the state in which a property and casualty insurance company is domiciled.

     (Added to NAC by Comm’r of Insurance by R072-10, eff. 12-16-2010)

      NAC 681B.265  “Property and casualty insurance company” defined. (NRS 679B.130, 679B.137, 680A.270, 681B.050)  “Property and casualty insurance company” means an insurance company authorized to write:

     1.  Casualty insurance as defined in NRS 681A.020;

     2.  Marine and transportation insurance or wet marine and transportation insurance as defined in NRS 681A.050;

     3.  Property insurance as defined in NRS 681A.060; or

     4.  Surety insurance as defined in NRS 681A.070.

     (Added to NAC by Comm’r of Insurance by R072-10, eff. 12-16-2010)

      NAC 681B.270  “Qualified actuary” defined. (NRS 679B.130, 679B.137, 680A.270, 681B.050)  “Qualified actuary” means a person who meets the qualification requirements for actuaries set forth in the standards of the American Academy of Actuaries or a successor organization approved by the Commissioner.

     (Added to NAC by Comm’r of Insurance by R072-10, eff. 12-16-2010)

      NAC 681B.275  Annual submission of opinion required; form of submission; treatment as public document. (NRS 679B.130, 679B.137, 680A.270, 681B.050)  Every property and casualty insurance company doing business in this State, unless otherwise exempted by the domiciliary commissioner, shall annually submit the opinion of an appointed actuary entitled “Statement of Actuarial Opinion.” This opinion must be filed in accordance with the Annual Statement Instructions: Property and Casualty, as adopted by the National Association of Insurance Commissioners for the year in which the property and casualty insurance company files the opinion and must be treated as a public document.

     (Added to NAC by Comm’r of Insurance by R072-10, eff. 12-16-2010)

      NAC 681B.280  Supporting document entitled “Actuarial Opinion Summary” required. (NRS 679B.130, 679B.137, 680A.270, 681B.050)  Each opinion required by NAC 681B.275 must be supported by a document entitled “Actuarial Opinion Summary” prepared by the appointed actuary of the property and casualty insurance company. This summary must be filed with the Commissioner in accordance with the appropriate instructions adopted by the National Association of Insurance Commissioners:

     1.  Annually by every property and casualty insurance company domiciled in this State that is required to submit an opinion pursuant to NAC 681B.275; and

     2.  Upon request of the Commissioner by a property and casualty insurance company licensed by, but not domiciled in, this State.

     (Added to NAC by Comm’r of Insurance by R072-10, eff. 12-16-2010)

      NAC 681B.285  Supporting document entitled “Actuarial Report” required; availability to Commissioner; review by actuary at expense of company in certain circumstances. (NRS 679B.130, 679B.137, 680A.270, 681B.050)  Each opinion required by NAC 681B.275 must be supported by a document entitled “Actuarial Report” prepared by the appointed actuary of the property and casualty insurance company in accordance with the Annual Statement Instructions: Property and Casualty, as adopted by the National Association of Insurance Commissioners for the year in which the property and casualty insurance company files the opinion. This report and all underlying work papers must be made available to the Commissioner upon his or her request. If a property and casualty insurance company fails to provide a supporting Actuarial Report or work papers at the request of the Commissioner or the Commissioner determines that the supporting Actuarial Report or work papers provided by the company are otherwise unacceptable to the Commissioner, the Commissioner may engage a qualified actuary at the expense of the company to review the opinion and the basis for the opinion and prepare the supporting Actuarial Report or work papers.

     (Added to NAC by Comm’r of Insurance by R072-10, eff. 12-16-2010)

      NAC 681B.290  Confidentiality of records. (NRS 679B.130, 679B.137, 680A.270, 681B.050)

     1.  If submitted with the express condition that they remain confidential, all documents filed pursuant to NAC 681B.280 and 681B.285, and any other materials provided by a property and casualty insurance company to the Commissioner in connection therewith, must be kept confidential by the Commissioner, are privileged, are not open to the public and are not subject to subpoena.

     2.  Neither the Commissioner nor any person who received documents, other materials or information contained therein while acting under the authority of the Commissioner is permitted or required to testify in any private civil action concerning any documents, other materials or information contained therein made confidential pursuant to this section.

     3.  The provisions of this section shall not be construed to limit the Commissioner’s authority:

     (a) To release documents or other materials to the Actuarial Board for Counseling and Discipline or its successor organization if the documents or other materials are required for the purpose of professional disciplinary proceedings and the Actuarial Board for Counseling and Discipline establishes procedures satisfactory to the Commissioner for preserving the confidentiality of the documents or other materials; or

     (b) To use the documents or other materials or information contained therein in furtherance of any regulatory or legal action brought as part of the Commissioner’s official duties.

     (Added to NAC by Comm’r of Insurance by R072-10, eff. 12-16-2010)

REPORTS OF MATERIAL TRANSACTIONS

      NAC 681B.300  Definitions. (NRS 679B.130, 681B.280)  For the purposes of NRS 681B.280 and NAC 681B.300 to 681B.335, inclusive:

     1.  “Acquisition” includes every purchase, lease, exchange, merger, consolidation, succession or other means except the construction or development of real property by or for the reporting insurer or the acquisition of materials for that purpose.

     2.  “Disposition” includes every sale, lease, exchange, merger, consolidation, mortgage, hypothecation, assignment for the benefit of creditors or otherwise, abandonment, destruction or other disposition.

     3.  An acquisition or the aggregate of any series of related acquisitions during any 30-day period, or a disposition or the aggregate of any series of related dispositions during any 30-day period, is “material” if it is nonrecurring and not in the ordinary course of business and involves more than 5 percent of the insurer’s total admitted assets as reported in its most recent statutory statement filed with the Commissioner of Insurance of the insurer’s state of domicile.

     4.  A nonrenewal, cancellation or revision of an agreement for ceded reinsurance, and a new agreement for ceded reinsurance that affects the in-force life insurance business of an insurer, is “material” if it affects:

     (a) For property and casualty business, including accident and health business when written as casualty business:

          (1) More than 50 percent of the insurer’s total ceded written premium; or

          (2) More than 50 percent of the insurer’s total ceded indemnity and loss adjustment reserves.

     (b) For life, annuity, accident and health business, more than 50 percent of the total reserve credit taken for business ceded, on an annualized basis, as indicated in the insurer’s most recent annual statement filed with the Commissioner.

     5.  For property and casualty business or life, annuity, accident or health business, a revision of an agreement for ceded reinsurance, and a new agreement for ceded reinsurance that affects the in-force life insurance business of an insurer, is “material” if:

     (a) An authorized reinsurer representing more than 10 percent of a total cession is replaced by one or more unauthorized reinsurers; or

     (b) Previously established requirements for collateral have been reduced or waived for one or more unauthorized reinsurers representing collectively more than 10 percent of a total cession.

     (Added to NAC by Comm’r of Insurance, eff. 6-28-96; A by R024-02, 5-31-2002)

      NAC 681B.305  Filing of report. (NRS 679B.130, 681B.280)

     1.  Except as otherwise provided in NAC 681B.320, every insurer domiciled in this State shall file a report with the Commissioner of Insurance disclosing:

     (a) Material acquisitions and dispositions of assets;

     (b) Material nonrenewals, cancellations or revisions of agreements for ceded reinsurance; and

     (c) Material new agreements for ceded reinsurance that affect the in-force life insurance business of the insurer,

Ê unless the material acquisitions and dispositions of assets, the material nonrenewals, cancellations or revisions of agreements for ceded reinsurance, or the material new agreements for ceded reinsurance have been submitted to the Commissioner for review, approval or information pursuant to any provision of title 57 of NRS, regulations adopted pursuant to that title or other requirements.

     2.  The report must be filed within 15 days after the end of the calendar month in which the acquisition, disposition, nonrenewal, cancellation, revision or new agreement occurs.

     3.  Except as otherwise provided in subsection 4, the insurer shall file a complete copy of the report, including any exhibits or other attachments, with the National Association of Insurance Commissioners at 2301 McGee Street, Suite 800, Kansas City, Missouri 64108-2604. The copy of the report must be treated as confidential and is not subject to subpoena as provided in NRS 681B.280.

     4.  An insurer domiciled in this State that is not licensed or otherwise authorized to transact insurance in another state is not required to comply with the provisions of subsection 3.

     (Added to NAC by Comm’r of Insurance, eff. 6-28-96; A by R024-02, 5-31-2002)

      NAC 681B.310  Information required to be disclosed in report of material acquisition or disposition of assets.  The following information must be disclosed in a report of a material acquisition or disposition of assets:

     1.  The date of the close of the transaction;

     2.  The manner of acquisition or disposition;

     3.  A description of the assets involved;

     4.  The nature and amount of the consideration given or received;

     5.  The purpose of, or reason for, the transaction;

     6.  The manner by which the amount of consideration was determined;

     7.  Any gain or loss recognized or realized as a result of the transaction; and

     8.  The name of any person from whom the assets were acquired or to whom the assets were disposed of.

     (Added to NAC by Comm’r of Insurance, eff. 6-28-96)

      NAC 681B.315  Reporting of material acquisitions and dispositions of assets on nonconsolidated basis; exception.  An insurer shall report material acquisitions and dispositions of assets on a nonconsolidated basis unless the insurer is part of a consolidated group of insurers which uses a pooling arrangement or 100-percent reinsurance agreement that affects the solvency and integrity of the reserves of the insurer and the insurer ceded substantially all of its direct and assumed business to the pool. An insurer is deemed to have ceded substantially all of its direct and assumed business to a pool if the insurer has less than $1,000,000 total direct plus assumed written premiums during any calendar year that are not subject to the pooling arrangement, and the net income of the business not subject to the pooling arrangement represents less than 5 percent of the capital and surplus of the insurer.

     (Added to NAC by Comm’r of Insurance, eff. 6-28-96)

      NAC 681B.320  Exceptions for filing of report.  An insurer is not required to file a report pursuant to NAC 681B.300 to 681B.335, inclusive, if:

     1.  For property and casualty business, including accident and health business written by a property and casualty insurer, the total ceded written premium represents, on an annualized basis, less than 10 percent of its total written premiums for direct and assumed business; or

     2.  For life, annuity and accident and health business, the total reserve credit taken for business ceded represents, on an annualized basis, less than 10 percent of the statutory requirement for reserves before any cession.

     (Added to NAC by Comm’r of Insurance, eff. 6-28-96)

      NAC 681B.325  Information required to be disclosed in report of material nonrenewal, cancellation or revision of agreement for ceded reinsurance or material new agreement for ceded reinsurance that affects in-force life insurance business of insurer. (NRS 679B.130, 681B.280)  The following information must be disclosed in any report of a material nonrenewal, cancellation or revision of an agreement for ceded reinsurance, or a material new agreement for ceded reinsurance that affects the in-force life insurance business of the insurer:

     1.  The effective date of the nonrenewal, cancellation, revision or new agreement;

     2.  A description of the transaction with an identification of the initiator thereof;

     3.  The purpose of, or reason for, the transaction; and

     4.  If applicable, the identity of replacement reinsurers.

     (Added to NAC by Comm’r of Insurance, eff. 6-28-96; A by R024-02, 5-31-2002)

      NAC 681B.330  Reporting of material nonrenewals, cancellations or revisions of agreements for ceded reinsurance, and material new agreements for ceded reinsurance that affect in-force life insurance business of insurer, on nonconsolidated basis; exception. (NRS 679B.130, 681B.280)  An insurer shall report all material nonrenewals, cancellations or revisions of agreements for ceded reinsurance, and all material new agreements for ceded reinsurance that affect the in-force life insurance business of the insurer, on a nonconsolidated basis unless the insurer is part of a consolidated group of insurers which uses a pooling arrangement or 100-percent reinsurance agreement that affects the solvency and integrity of the reserves of the insurer and the insurer ceded substantially all of its direct and assumed business to the pool. An insurer is deemed to have ceded substantially all of its direct and assumed business to a pool if the insurer has less than $1,000,000 total direct plus assumed written premiums during any calendar year that are not subject to the pooling arrangement, and the net income of the business not subject to the pooling arrangement represents less than 5 percent of the capital and surplus of the insurer.

     (Added to NAC by Comm’r of Insurance, eff. 6-28-96; A by R024-02, 5-31-2002)

      NAC 681B.335  Restriction against assumption of reinsurance by certain insurers and certain other organizations.  NAC 681B.300 to 681B.330, inclusive, do not authorize the assumption of reinsurance under Title 57 of NRS by an insurer for home protection other than a casualty insurer, a fraternal benefit society, a health maintenance organization, a plan for dental care, a corporation for hospital, medical or dental service, or a prepaid limited health service organization.

     (Added to NAC by Comm’r of Insurance, eff. 6-28-96)

RISK-BASED CAPITAL OF INSURERS

General Provisions

      NAC 681B.400  Definitions. (NRS 679B.130, 681B.290)  As used in NAC 681B.400 to 681B.595, inclusive, unless the context otherwise requires, the words and terms defined in NAC 681B.405 to 681B.470, inclusive, have the meanings ascribed to them in those sections.

     (Added to NAC by Comm’r of Insurance by R088-97, eff. 3-19-98; A by R024-02, 5-31-2002)

      NAC 681B.405  “Authorized control level” defined. (NRS 679B.130, 681B.290)  “Authorized control level” means the level of risk-based capital calculated pursuant to the instructions relating to risk-based capital.

     (Added to NAC by Comm’r of Insurance by R088-97, eff. 3-19-98)

      NAC 681B.410  “Company action level” defined. (NRS 679B.130, 681B.290)  “Company action level” means the level of risk-based capital calculated by multiplying 2 times the authorized control level of risk-based capital.

     (Added to NAC by Comm’r of Insurance by R088-97, eff. 3-19-98)

      NAC 681B.415  “Corrective order” defined. (NRS 679B.130, 681B.290)  “Corrective order” means an order issued by the Commissioner that specifies the corrective actions which the Commissioner has determined are necessary to correct a problem relating to the level of risk-based capital of an insurer.

     (Added to NAC by Comm’r of Insurance by R088-97, eff. 3-19-98)

      NAC 681B.420  “Domestic insurer” defined. (NRS 679B.130, 681B.290)  “Domestic insurer” means an insurance company domiciled in this State.

     (Added to NAC by Comm’r of Insurance by R088-97, eff. 3-19-98)

      NAC 681B.425  “Foreign insurer” defined. (NRS 679B.130, 681B.290)  “Foreign insurer” means an insurance company which is authorized to do business in this State pursuant to title 57 of NRS, but which is not domiciled in this State.

     (Added to NAC by Comm’r of Insurance by R088-97, eff. 3-19-98)

      NAC 681B.430  “Instructions relating to risk-based capital” defined. (NRS 679B.130, 681B.290)  “Instructions relating to risk-based capital” means the instructions for reporting risk-based capital adopted by the National Association of Insurance Commissioners, as those instructions existed on January 1, 1997, and any amendments to those instructions that the Commissioner may from time to time determine are appropriate for use in this State pursuant to NRS 681B.290 and NAC 681B.472.

     (Added to NAC by Comm’r of Insurance by R088-97, eff. 3-19-98; A by R024-02, 5-31-2002)

      NAC 681B.435  “Level of risk-based capital” defined. (NRS 679B.130, 681B.290)  “Level of risk-based capital” means the level of risk-based capital of an insurer that is calculated pursuant to the instructions relating to risk-based capital.

     (Added to NAC by Comm’r of Insurance by R088-97, eff. 3-19-98)

      NAC 681B.440  “Life and health insurer” defined. (NRS 679B.130, 681B.290)  “Life and health insurer” includes:

     1.  A domestic or foreign insurer authorized pursuant to chapter 680A of NRS to offer health insurance or life insurance, or both; and

     2.  A licensed property and casualty insurer that writes only accident and health insurance.

     (Added to NAC by Comm’r of Insurance by R088-97, eff. 3-19-98)

      NAC 681B.445  “Mandatory control level” defined. (NRS 679B.130, 681B.290)  “Mandatory control level” means the level of risk-based capital calculated by multiplying 0.7 times the authorized control level of risk-based capital.

     (Added to NAC by Comm’r of Insurance by R088-97, eff. 3-19-98)

      NAC 681B.450  “Plan for risk-based capital” defined. (NRS 679B.130, 681B.290)  “Plan for risk-based capital” means a comprehensive financial plan, including revisions, if any, by the Commissioner, that contains the elements specified in NAC 681B.495.

     (Added to NAC by Comm’r of Insurance by R088-97, eff. 3-19-98)

      NAC 681B.455  “Property and casualty insurer” defined. (NRS 679B.130, 681B.290)  “Property and casualty insurer” means a domestic or foreign insurer authorized pursuant to chapter 680A of NRS to offer property or casualty insurance. The term does not include a monoline mortgage guaranty insurer, financial guaranty insurer, title insurer, or a property and casualty insurer that qualifies as a life and health insurer pursuant to NAC 681B.440.

     (Added to NAC by Comm’r of Insurance by R088-97, eff. 3-19-98)

      NAC 681B.460  “Regulatory action level” defined. (NRS 679B.130, 681B.290)  “Regulatory action level” means the level of risk-based capital calculated by multiplying 1.5 times the authorized control level of risk-based capital.

     (Added to NAC by Comm’r of Insurance by R088-97, eff. 3-19-98)

      NAC 681B.465  “Report on risk-based capital” defined. (NRS 679B.130, 681B.290)  “Report on risk-based capital” means the report on risk-based capital required by NAC 681B.475.

     (Added to NAC by Comm’r of Insurance by R088-97, eff. 3-19-98)

      NAC 681B.470  “Total adjusted capital” defined. (NRS 679B.130, 681B.290)  “Total adjusted capital” means the sum of:

     1.  An insurer’s statutory capital and surplus as determined in the annual financial statements required to be filed pursuant to NRS 680A.265; and

     2.  Such other items as the instructions relating to risk-based capital require to be included.

     (Added to NAC by Comm’r of Insurance by R088-97, eff. 3-19-98)

      NAC 681B.472  Instructions for reporting risk-based capital: Amendment. (NRS 679B.130, 681B.290)

     1.  If the instructions for reporting risk-based capital adopted by the National Association of Insurance Commissioners are amended, the amended instructions shall be deemed to have been determined by the Commissioner in accordance with NRS 681B.290 to be appropriate for use in this State, effective 10 days after the date on which the amended instructions are published, unless the Commissioner determines that the amended instructions are not appropriate for use in this State. If the Commissioner determines that the amended instructions are not appropriate for use in this State, the Commissioner will:

     (a) Post a notice of disapproval at the largest public library in each county, the State Library and Archives, the Grant Sawyer Office Building located at 555 East Washington Avenue, Las Vegas, Nevada, and all offices of the Division; and

     (b) Send a notice to each person included on the mailing list that the Division is required to maintain pursuant to paragraph (e) of subsection 1 of NRS 233B.0603.

     2.  If the Commissioner determines that an amended version of the instructions for reporting risk-based capital adopted by the National Association of Insurance Commissioners is not appropriate for use in this State, the version of the instructions for reporting risk-based capital that was most recently adopted by the Commissioner by regulation pursuant to NRS 681B.290 or deemed appropriate for use in this State pursuant to this section will continue in effect.

     (Added to NAC by Comm’r of Insurance by R024-02, eff. 5-31-2002)

Report on Risk-Based Capital

      NAC 681B.475  Requirements for filing report. (NRS 679B.130, 681B.290)

     1.  A report filed by a domestic or foreign insurer pursuant to NRS 681B.290 must be in such form and contain such information as is required by the instructions relating to risk-based capital.

     2.  The insurer shall file its report on risk-based capital with:

     (a) The Commissioner;

     (b) The National Association of Insurance Commissioners, in accordance with the instructions relating to risk-based capital; and

     (c) The Insurance Commissioner or chief regulatory officer for insurance of each state in which the insurer is authorized to do business, if the Insurance Commissioner or chief regulatory officer for insurance of that state requests such a report from the insurer. Upon receiving such a request, the insurer shall file its report on risk-based capital pursuant to this paragraph not later than 15 days after the date on which it received the request or not later than the filing date set forth by the laws of the requesting state, whichever occurs later.

     (Added to NAC by Comm’r of Insurance by R088-97, eff. 3-19-98)

      NAC 681B.480  Formula for completion of report. (NRS 679B.130, 681B.290)  The report on risk-based capital of an insurer must be completed in accordance with the formula set forth in the instructions relating to risk-based capital.

     (Added to NAC by Comm’r of Insurance by R088-97, eff. 3-19-98)

      NAC 681B.485  Adjustment of report to correct inaccuracy. (NRS 679B.130, 681B.290)  If an insurer files a report on risk-based capital that, in the judgment of the Commissioner, is inaccurate, the Commissioner will adjust the report on risk-based capital to correct the inaccuracy and notify the insurer of the adjustment.

     (Added to NAC by Comm’r of Insurance by R088-97, eff. 3-19-98)

Events Requiring Company Action

      NAC 681B.490  Identification of events. (NRS 679B.130, 681B.290)

     1.  The following constitute events that require company action:

     (a) The filing by an insurer of a report on risk-based capital which indicates that:

          (1) The total adjusted capital of the insurer is greater than or equal to its regulatory action level of risk-based capital but less than its company action level of risk-based capital; or

          (2) For a life and health insurer, the total adjusted capital of the insurer has a negative trend and is greater than or equal to its company action level of risk-based capital but less than the product of 2.5 times its authorized control level of risk-based capital; or

     (b) Notification by the Commissioner to an insurer that the Commissioner has adjusted a report on risk-based capital of the insurer in accordance with NAC 681B.485 and that the adjusted report indicates a situation described in paragraph (a), except that if the insurer challenges the adjustment pursuant to NAC 681B.580, the event that requires company action is the notification by the Commissioner to the insurer that the Commissioner has, after a hearing, rejected the challenge of the insurer.

     2.  As used in this section, “negative trend” means a negative trend over a period, as determined in accordance with the “Trend Test” calculation included in the instructions relating to risk-based capital.

     (Added to NAC by Comm’r of Insurance by R088-97, eff. 3-19-98)

      NAC 681B.495  Preparation and submission of plan for risk-based capital. (NRS 679B.130, 681B.290)

     1.  If an event that requires company action occurs, the insurer shall prepare and submit to the Commissioner a plan for risk-based capital which:

     (a) Identifies the conditions that contributed to the event which requires company action.

     (b) Contains proposals for corrective actions that the insurer will take which are expected to result in the elimination of the event.

     (c) Provides projections for financial results of the insurer, including projections of new and renewal business, operating income, net income, and capital and surplus, for the current year and at least the next 4 succeeding years, both in the absence of the proposed corrective actions and if the proposed corrective actions are carried out. The projections for both new and renewal business may include separate projections for each major line of business written by the insurer and identify separately each significant component of income, expenses and benefits.

     (d) Identifies the key assumptions impacting the projections of the insurer and the sensitivity of those projections to the assumptions made by the insurer.

     (e) Identifies the quality of, and problems associated with, the business of the insurer, including, but not limited to, its assets, its anticipated business growth and associated strain on its surplus, any extraordinary exposure to risk, its mix of business and its use of reinsurance, if any.

     2.  The plan for risk-based capital must be submitted not later than 45 days after the date on which the event that requires company action occurs.

     (Added to NAC by Comm’r of Insurance by R088-97, eff. 3-19-98)

      NAC 681B.500  Action on plan or revised plan for risk-based capital. (NRS 679B.130, 681B.290)

     1.  Not later than 60 days after the date on which an insurer submits a plan for risk-based capital to the Commissioner pursuant to NAC 681B.495 or a revised plan for risk-based capital pursuant to this section, the Commissioner will notify the insurer as to whether the plan or revised plan for risk-based capital, as appropriate, may be carried out as proposed or whether the plan is unsatisfactory. If the Commissioner determines that the plan or revised plan for risk-based capital is unsatisfactory, the notification will set forth the reasons for that determination and may include proposed revisions which would make the plan or revised plan satisfactory.

     2.  Upon receiving notification from the Commissioner that its plan or revised plan for risk-based capital is unsatisfactory, the insurer shall prepare a new revised plan, which may incorporate by reference any revision proposed by the Commissioner. The insurer shall submit the new revised plan to the Commissioner not later than 45 days after the date on which the insurer received the notification, except that if, pursuant to NAC 681B.580, the insurer challenges the determination by the Commissioner that the plan is unsatisfactory, the insurer shall submit the new revised plan to the Commissioner not later than 45 days after the date on which the insurer is notified that the Commissioner has, after a hearing, rejected the challenge of the insurer.

     3.  Subject to the right of the insurer to a hearing pursuant to NAC 681B.580, the Commissioner will, if he or she deems it to be necessary, specify in the notification to an insurer that the plan or revised plan for risk-based capital is unsatisfactory and that the notification constitutes an event which requires regulatory action.

     (Added to NAC by Comm’r of Insurance by R088-97, eff. 3-19-98)

      NAC 681B.505  Filing of copy of plan or revised plan for risk-based capital in other states. (NRS 679B.130, 681B.290)

     1.  Each domestic insurer that files a plan or revised plan for risk-based capital with the Commissioner pursuant to NAC 681B.495 and 681B.500 shall file a copy of the plan or revised plan, as appropriate, with the Insurance Commissioner or chief regulatory officer for insurance in each state in which the domestic insurer is authorized to do business if:

     (a) The Insurance Commissioner or chief regulatory officer for insurance of that state has notified the domestic insurer, in writing, of his or her request that the domestic insurer file a copy of its plan or revised plan with that Insurance Commissioner or chief regulatory officer for insurance; and

     (b) That state has enacted a provision which provides that:

          (1) Except as otherwise provided by the laws of that state, information contained in a report on risk-based capital or a plan or revised plan for risk-based capital:

               (I) Is confidential and must not be made available to the general public; and

               (II) Is not subject to a subpoena other than a subpoena issued by a court of competent jurisdiction, or by the Insurance Commissioner or chief regulatory officer for the sole purpose of enforcing an action taken by the Insurance Commissioner or chief regulatory officer against the insurer pursuant to the laws of that state relating to the regulation of insurance;

          (2) The result or report of any examination or analysis of an insurer performed pursuant to the requirements of that state relating to the reporting of risk-based capital and any corrective order issued by the Insurance Commissioner or chief regulatory officer are confidential; and

          (3) Any requirement of confidentiality does not apply to any information contained in a report on risk-based capital of an insurer if that information is otherwise included or required to be included in an annual statement of the insurer that is available to the general public.

     2.  The domestic insurer shall file a copy of its plan or revised plan for risk-based capital, as appropriate, pursuant to this section not later than:

     (a) Fifteen days after it receives notice from the Insurance Commissioner or chief regulatory officer for insurance of the requesting state to file a copy of the plan or revised plan for risk-based capital; or

     (b) The date on which the plan or revised plan for risk-based capital must be filed in this State pursuant to NAC 681B.495 and 681B.500,

Ê whichever is later.

     (Added to NAC by Comm’r of Insurance by R088-97, eff. 3-19-98)

Events Requiring Regulatory Action

      NAC 681B.510  Identification of events. (NRS 679B.130, 681B.290)  The following constitute events that require regulatory action:

     1.  The filing by an insurer of a report on risk-based capital which indicates that the total adjusted capital of the insurer is equal to or greater than its authorized control level of risk-based capital but less than its regulatory action level of risk-based capital;

     2.  Notification by the Commissioner to an insurer that the Commissioner has adjusted a report on risk-based capital of the insurer in accordance with NAC 681B.485 and that the adjusted report indicates a situation described in subsection 1, except that if the insurer challenges the adjustment pursuant to NAC 681B.580, the event that requires regulatory action is the notification by the Commissioner to the insurer that the Commissioner has, after a hearing, rejected the challenge of the insurer;

     3.  Failure of an insurer to file a report on risk-based capital by the filing date, unless the insurer has provided an explanation satisfactory to the Commissioner for its failure to file the report timely and has cured the failure within 10 days after the prescribed filing date;

     4.  Failure of an insurer to submit a required plan or revised plan for risk-based capital within the time prescribed in NAC 681B.495 and 681B.500;

     5.  Notification by the Commissioner to an insurer that a plan or revised plan for risk-based capital submitted pursuant to NAC 681B.495 or 681B.500, as appropriate, is unsatisfactory in the judgment of the Commissioner and that the notification constitutes an event that requires regulatory action, except that if the insurer, pursuant to NAC 681B.580, challenges the determination of the Commissioner that the plan or revised plan for risk-based capital is unsatisfactory, the event that requires regulatory action is the notification by the Commissioner to the insurer that the Commissioner has, after a hearing, rejected the challenge of the insurer; or

     6.  Notification by the Commissioner to an insurer that the Commissioner has determined that the insurer has failed to adhere to its plan or revised plan for risk-based capital submitted pursuant to NAC 681B.495 or 681B.500, as appropriate, and that the failure has had a substantial adverse effect on the ability of the insurer to eliminate the event that requires company action in accordance with its plan or revised plan for risk-based capital, except that if the insurer challenges the determination pursuant to NAC 681B.580, the event that requires regulatory action is the notification by the Commissioner to the insurer that the Commissioner has, after a hearing, rejected the challenge of the insurer.

     (Added to NAC by Comm’r of Insurance by R088-97, eff. 3-19-98)

      NAC 681B.515  Preparation and submission of plan or revised plan for risk-based capital. (NRS 679B.130, 681B.290)  If an event that requires regulatory action occurs, the insurer shall prepare and submit to the Commissioner a plan or revised plan for risk-based capital, as appropriate. The plan or revised plan for risk-based capital must be submitted not later than 45 days after the date on which the event that requires regulatory action occurred.

     (Added to NAC by Comm’r of Insurance by R088-97, eff. 3-19-98)

      NAC 681B.520  Action by Commissioner; determination of need for corrective action. (NRS 679B.130, 681B.290)

     1.  If an event that requires regulatory action occurs, the Commissioner will:

     (a) Perform such examinations and analyses of the assets, liabilities and operations of the insurer, including a review of the plan or revised plan for risk-based capital of the insurer, as he or she determines are necessary; and

     (b) If the Commissioner performs an examination or analysis pursuant to paragraph (a) and determines that corrective action is necessary, issue a corrective order that specifies such corrective action as he or she determines is necessary.

     2.  In determining whether any corrective action is necessary, the Commissioner will take into account such factors with respect to the insurer as the Commissioner determines are relevant, based on the examination or analysis, or both, conducted by the Commissioner of the assets, liabilities and operation of the insurer, including, but not limited to, the results of any sensitivity tests undertaken pursuant to the instructions relating to risk-based capital.

     (Added to NAC by Comm’r of Insurance by R088-97, eff. 3-19-98)

      NAC 681B.525  Consultants: Retention by Commissioner; payment of fees, costs and expenses. (NRS 679B.130, 681B.290)

     1.  The Commissioner will retain such actuaries, investment experts and other consultants as he or she determines are necessary to:

     (a) Review the plan or revised plan for risk-based capital, as appropriate, submitted by the insurer pursuant to NAC 681B.515 after the occurrence of an event that requires regulatory action;

     (b) Examine or analyze the assets, liabilities and operations of the insurer; and

     (c) Formulate the necessary corrective actions that need to be included in a corrective order, if any.

     2.  The reasonable fees, costs and expenses relating to the retention of actuaries, investment experts and other consultants must be paid by the insurer under examination and by any person referred to in subsection 1, 2 or 5 of NRS 679B.240 who is associated with the insurer, as directed by the Commissioner.

     (Added to NAC by Comm’r of Insurance by R088-97, eff. 3-19-98)

Events Requiring Authorized Control

      NAC 681B.530  Identification of events. (NRS 679B.130, 681B.290)  The following constitute events that require authorized control:

     1.  The filing by an insurer of a report on risk-based capital which indicates that the total adjusted capital of the insurer is equal to or greater than its mandatory control level of risk-based capital but less than its authorized control level of risk-based capital;

     2.  Notification by the Commissioner to an insurer that the Commissioner has adjusted a report on risk-based capital of the insurer in accordance with NAC 681B.485 and that the adjusted report on risk-based capital indicates a situation described in subsection 1, except that if the insurer challenges the adjustment pursuant to NAC 681B.580, the event that requires authorized control is the notification by the Commissioner to the insurer that the Commissioner has, after a hearing, rejected the challenge of the insurer; or

     3.  Failure of an insurer to respond to a corrective order in a manner satisfactory to the Commissioner, except that if the insurer challenges the corrective order pursuant to NAC 681B.580 and the Commissioner has, after a hearing, rejected the challenge of the insurer or modified the corrective order, the event that requires authorized control is the failure of the insurer to respond, in a manner satisfactory to the Commissioner, to the corrective order after the rejection of the challenge of the insurer or the modification of the corrective order by the Commissioner.

     (Added to NAC by Comm’r of Insurance by R088-97, eff. 3-19-98)

      NAC 681B.535  Preparation and submission of plan or revised plan for risk-based capital. (NRS 679B.130, 681B.290)  If an event that requires authorized control occurs, the insurer shall prepare and submit to the Commissioner a plan or revised plan for risk-based capital, as appropriate. The plan or revised plan for risk-based capital must be submitted not later than 45 days after the date on which the event that requires authorized control occurred.

     (Added to NAC by Comm’r of Insurance by R088-97, eff. 3-19-98)

      NAC 681B.540  Action by Commissioner; taking of action pursuant to chapter 696B of NRS. (NRS 679B.130, 681B.290)

     1.  If an event that requires authorized control occurs, the Commissioner will:

     (a) Take such actions as he or she determines are necessary to cure the event that requires authorized control, including, without limitation, any action authorized by NAC 681B.520 and 681B.525 with respect to an event that requires regulatory action; or

     (b) If the Commissioner determines it to be in the best interests of the general public and of the policyholders and creditors of the insurer, take such actions as he or she determines are necessary to place the insurer under the regulatory control of the Commissioner pursuant to chapter 696B of NRS.

     2.  An event that requires authorized control is a sufficient ground for the Commissioner to take action pursuant to chapter 696B of NRS, and the Commissioner has the rights, powers and duties as are set forth in that chapter. If the Commissioner takes action pursuant to this section in response to an adjusted report on risk-based capital, the insurer is entitled to such protections as are afforded to an insurer pursuant to the provisions of chapter 696B of NRS pertaining to summary proceedings.

     (Added to NAC by Comm’r of Insurance by R088-97, eff. 3-19-98)

Events Requiring Mandatory Control

      NAC 681B.545  Identification of events. (NRS 679B.130, 681B.290)  The following constitute events that require mandatory control:

     1.  The filing by an insurer of a report on risk-based capital which indicates that the total adjusted capital of the insurer is less than its mandatory control level of risk-based capital; or

     2.  Notification by the Commissioner to an insurer that the Commissioner has adjusted a report on risk-based capital of the insurer in accordance with NAC 681B.485 and that the adjusted report on risk-based capital indicates a situation described in subsection 1, except that if the insurer challenges the adjustment pursuant to NAC 681B.580, the event that requires mandatory control is the notification by the Commissioner to the insurer that the Commissioner has, after a hearing, rejected the challenge of the insurer.

     (Added to NAC by Comm’r of Insurance by R088-97, eff. 3-19-98)

      NAC 681B.550  Action by Commissioner; taking of action pursuant to chapter 696B of NRS. (NRS 679B.130, 681B.290)

     1.  Except as otherwise provided in this section, if an event that requires mandatory control occurs:

     (a) If the insurer is a life and health insurer, the Commissioner will take such actions as he or she determines are necessary to place the insurer under the regulatory control of the Commissioner pursuant to chapter 696B of NRS.

     (b) If the insurer is a property and casualty insurer, the Commissioner:

          (1) Will take such actions as he or she determines are necessary to place the insurer under the regulatory control of the Commissioner pursuant to chapter 696B of NRS; or

          (2) May, if the property and casualty insurer is allowing its existing business in this State to expire and is not marketing or writing additional business in this State, allow the insurer to continue the termination of its business in this State under the supervision of the Commissioner.

     2.  An event that requires mandatory control is a sufficient ground for the Commissioner to take action pursuant to chapter 696B of NRS, and the Commissioner has the rights, powers and duties as are set forth in that chapter. If the Commissioner takes action pursuant to this section, the insurer is entitled to such protections as are afforded to an insurer pursuant to the provisions of chapter 696B of NRS pertaining to summary proceedings. The Commissioner may delay taking action pursuant to this section for not more than 90 days after the occurrence of the event that requires mandatory control if the Commissioner reasonably determines that the conditions which created the event will be eliminated during that period.

     (Added to NAC by Comm’r of Insurance by R088-97, eff. 3-19-98)

Foreign Insurers

      NAC 681B.555  Applicability. (NRS 679B.130)  NAC 681B.560, 681B.565 and 681B.570 apply only to foreign insurers that are domiciled in a state which has requirements for reporting risk-based capital.

     (Added to NAC by Comm’r of Insurance by R088-97, eff. 3-19-98)

      NAC 681B.560  Submission of report on risk-based capital and copy of plan or revised plan for risk-based capital filed in another state. (NRS 679B.130)

     1.  Upon the written request of the Commissioner, a foreign insurer shall submit to the Commissioner a report of its level of risk-based capital as of the end of the immediately preceding calendar year. The report on risk-based capital must be in such form and contain such information as is required by the instructions relating to risk-based capital, and must be submitted not later than:

     (a) The date on which a domestic insurer must file its report on risk-based capital in this State; or

     (b) Fifteen days after the date on which the foreign insurer receives the request from the Commissioner,

Ê whichever is later.

     2.  Upon the written request of the Commissioner, a foreign insurer shall forthwith submit to the Commissioner a copy of any plan or revised plan for risk-based capital that the foreign insurer has filed with the Insurance Commissioner or chief regulatory officer for insurance of any other state in which the foreign insurer is transacting the business of insurance.

     (Added to NAC by Comm’r of Insurance by R088-97, eff. 3-19-98)

      NAC 681B.565  Filing of plan for risk-based capital under certain circumstances; failure to file. (NRS 679B.130)

     1.  The Commissioner may require a foreign insurer to file a plan for risk-based capital with the Commissioner if an event that requires company action, regulatory action or authorized control occurs to the foreign insurer:

     (a) As determined pursuant to the laws of the state in which the foreign insurer is domiciled if:

          (1) That state has enacted laws that provide for the filing of a plan for risk-based capital if such an event occurs; and

          (2) The Insurance Commissioner or chief regulatory officer for insurance of that state fails to require the insurer to file a plan for risk-based capital in the manner required by those laws; or

     (b) As determined pursuant to NAC 681B.400 to 681B.595, inclusive, if the state in which the foreign insurer is domiciled has not enacted any provisions that provide for the determination of such an event or require the filing of a plan for risk-based capital if such an event occurs.

     2.  Failure by a foreign insurer to file a plan for risk-based capital as required pursuant to this section is a sufficient ground for the Commissioner to order the foreign insurer to cease and desist from writing new business in this State.

     (Added to NAC by Comm’r of Insurance by R088-97, eff. 3-19-98)

      NAC 681B.570  Application for appointment of Commissioner as receiver. (NRS 679B.130)  If an event that requires mandatory control occurs to a foreign insurer and a domiciliary receiver has not been appointed in accordance with the laws relating to rehabilitation and liquidation of the state in which the foreign insurer is domiciled, if any, the Commissioner may, pursuant to the provisions of chapter 696B of NRS relating to the liquidation of property of a foreign insurer, apply to a court of competent jurisdiction to appoint the Commissioner as receiver.

     (Added to NAC by Comm’r of Insurance by R088-97, eff. 3-19-98)

Miscellaneous Provisions

      NAC 681B.575  Effective date of notice by Commissioner to insurer. (NRS 679B.130, 681B.290)  A notice by the Commissioner to an insurer made in accordance with NAC 681B.400 to 681B.595, inclusive, is effective:

     1.  Upon dispatch if the notice is sent by registered or certified mail; or

     2.  Upon receipt by the insurer if the notice is sent in any other manner.

     (Added to NAC by Comm’r of Insurance by R088-97, eff. 3-19-98)

      NAC 681B.580  Right of insurer to confidential administrative hearing to challenge certain actions of Commissioner. (NRS 233B.050, 679B.130, 681B.290)  An insurer has the right to a confidential administrative hearing before the Division, on the record, subject to the provisions of NRS 679B.310 to 679B.370, inclusive, at which the insurer may challenge:

     1.  Any adjustment to the report on risk-based capital made by the Commissioner pursuant to NAC 681B.485;

     2.  The determination by the Commissioner that the plan or revised plan for risk-based capital of the insurer is unsatisfactory, if the Commissioner has specified pursuant to NAC 681B.500 that the notification of that determination constitutes an event that requires regulatory action;

     3.  Any determination by the Commissioner that the insurer has failed to adhere to its plan or revised plan for risk-based capital, if the failure has a substantial adverse effect on the ability of the insurer to eliminate an event that requires company action; or

     4.  Any corrective order issued by the Commissioner pursuant to NAC 681B.400 to 681B.595, inclusive.

     (Added to NAC by Comm’r of Insurance by R088-97, eff. 3-19-98)

      NAC 681B.585  Confidentiality of information. (NRS 679B.130, 679B.190)

     1.  An insurer may include in its report on risk-based capital and its plan or revised plan for risk-based capital an express statement that the information contained in the report or plan is, and should remain, confidential. If such a statement is included in the report or plan, the Commissioner will classify the information contained in the report or plan as confidential.

     2.  The result or report of any examination or analysis of an insurer performed, and any corrective order issued by the Commissioner, during the course of an investigation of the insurer pursuant to NAC 681B.400 to 681B.595, inclusive, are confidential.

     3.  The provisions of this section do not apply to any information contained in a report on risk-based capital of an insurer if that information is otherwise included or required to be included in an annual statement of the insurer that is available to the general public.

     (Added to NAC by Comm’r of Insurance by R088-97, eff. 3-19-98)

      NAC 681B.590  Restrictions on disclosure of information. (NRS 679B.130, 681B.290)

     1.  An insurer, agent, broker or other person transacting insurance in this State shall not make, publish, disseminate, circulate or place before the general public, or directly or indirectly cause to be made, published, disseminated, circulated or placed before the general public:

     (a) In a newspaper, magazine or other publication, notice, circular, pamphlet, letter or poster;

     (b) Over any radio or television station, or other electronic medium; or

     (c) In any advertisement, announcement or statement that contains an assertion,

Ê any representation or statement relating to the level of risk-based capital of an insurer.

     2.  If any statement that is materially false or otherwise inappropriate with respect to a comparison regarding the total adjusted capital of an insurer, or if an inappropriate comparison of any other amount to the insurer’s level of risk-based capital, is published in any written publication and the insurer presents proof satisfactory to the Commissioner of the falsity or inappropriateness of the statement or comparison, the insurer may publish an announcement in a written publication for the sole purpose of rebutting the materially false or inappropriate statement or comparison.

     (Added to NAC by Comm’r of Insurance by R088-97, eff. 3-19-98)

      NAC 681B.595  Use of information by Commissioner. (NRS 679B.130, 681B.290)

     1.  The Commissioner will use the instructions relating to risk-based capital and any report, adjusted report, or plan or revised plan for risk-based capital submitted to the Commissioner or in his or her possession pursuant to NAC 681B.400 to 681B.595, inclusive, only to monitor the solvency of insurers transacting insurance in this State and to determine the need for corrective action with respect to the solvency of those insurers.

     2.  Unless otherwise authorized by specific statute, the Commissioner will not:

     (a) Use any information contained in the instructions relating to risk-based capital or any report, adjusted report, plan or revised plan in making or determining rates for insurers transacting insurance in this State;

     (b) Consider or introduce such information as evidence in any rate proceeding; or

     (c) Use such information 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 of the insurer is authorized to write.

     (Added to NAC by Comm’r of Insurance by R088-97, eff. 3-19-98)