New York Laws
Article 13 - Assets and Deposits
1323 - Issuance of Capital Notes by Domestic Life Insurance Companies

(b) No such insurer shall issue capital notes pursuant to this section
unless the terms thereof shall have been approved by the superintendent
as not adverse to the interests of the insurer's policyholders.
(c) The insurer shall not pay or redeem the principal amount of any
capital notes, make any sinking fund payment or pay any interest on such
notes, and such principal, payment and interest shall not become due or
payable if, based on the preceding year-end annual statement filed with
the superintendent: (1) (A) the insurer's total adjusted capital is less
than such insurer's company action level RBC or (B) the insurer's total
adjusted capital is less than the product of 2.5 and its authorized
control level RBC and there is a negative trend, as determined in
accordance with section one thousand three hundred twenty-two of this
article or (2) the aggregate of all such payments or redemptions made
during the current calendar year would if made immediately prior to the
preceding year-end have caused (A) the insurer's total adjusted capital
to be less than such insurer's company action level RBC or (B) the
insurer's total adjusted capital at such time to be less than the
product of 2.5 and its authorized control level RBC and there is a
negative trend, as determined in accordance with section one thousand
three hundred twenty-two of this article. Notwithstanding the foregoing,
upon request by the insurer, the superintendent may approve, in whole or
in part, any such payment or redemption on the capital notes if and at
such time or times as in his judgment the financial condition of such
insurer warrants. The amount of such redemptions or payments of
principal amounts of any capital notes which cannot be made as the
result of the provisions of this subsection may accumulate at the rate
of interest of the capital notes.
(d) Capital notes issued pursuant to this section: (1) may provide (A)
for interest payments at fixed or adjustable rates, sinking fund
payments, and payments and redemptions of principal, in each case in
accordance with the terms of the capital note and without the prior
approval of the superintendent except to the extent that such approval
is required pursuant to this subsection or subsection (c) of this
section, (B) that such capital notes automatically become due and
payable in the event the insurer becomes subject to an order of
rehabilitation, liquidation or conservation granted pursuant to a
proceeding under article seventy-four of this chapter, and (C) for such
other features as the superintendent determines are appropriate for

capital notes issued by a life insurance company; and (2) shall provide
that if at the end of any calendar year the total amount of such
insurer's total adjusted capital (including the aggregate principal
amount of outstanding notes) is less than three times the aggregate
principal amount of outstanding notes, the superintendent may notify
such insurer that the financial condition of such insurer does not
warrant the payment or redemption or sinking fund payment, in whole or
in part, on the capital notes. Such action by the superintendent shall,
without any action on the part of the insurer or any other person,
automatically defer such payment or redemption until such time as the
superintendent finds that the financial condition warrants such payment
or redemption. The amount of such redemptions or payments of principal
amounts of any capital notes so deferred may accumulate at the rate of
interest of the capital notes.
(e) Capital notes issued pursuant to this section shall be considered
part of such insurer's total adjusted capital but shall not be
considered part of such insurer's surplus; provided, however, (1) that,
in the case of any capital note maturing fifteen years or less from the
year in which such capital note is issued, one-fifth of the aggregate
principal amount of such capital note shall be subtracted from total
adjusted capital in each year starting with the fifth year immediately
preceding the calendar year in which such capital note is scheduled to
mature; and (2) that, in the case of any capital note maturing more than
fifteen years from the year in which such capital note is issued;
one-tenth of the aggregate principal amount of such capital note shall
be subtracted from total adjusted capital in each year starting with the
tenth year immediately preceding the calendar year in which such capital
note is scheduled to mature, and further provided that, in no event
shall the amount included in total adjusted capital for any capital note
exceed the principal amount, at issue, of such outstanding capital note
less the aggregate of all sinking fund payments made on such capital
note. Such insurer shall be required to disclose the aggregate principal
amount of capital notes then outstanding as a liability on its financial
statements filed with the superintendent pursuant to this article.
(f) As used in this section, the terms "total adjusted capital",
"company action level RBC" and "authorized control level RBC" shall have
the same meanings as set forth with respect to such terms in section one
thousand three hundred twenty-two of this article.