§ 26.1-03.1-02 — Risk-based capital reports

North Dakota § 26.1-03.1-02

• Jurisdiction: North Dakota
• Title 26.1: Insurance
• Ch. 26.1-03.1: Risk-Based Capital Reports

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2. "Corrective order" means an order issued by the commissioner specifying corrective
actions that the commissioner has determined are required.
3. "Domestic insurer" means any insurer domiciled in this state, except a county mutual
insurance company.
4. "Foreign insurer" means any insurer that is licensed to do business in this state under
chapter 26.1-11 but is not domiciled in this state.
5. "Fraternal benefit society" means any insurer licensed under chapter 26.1-15.1.
6. "Life or health insurer" means any licensed life or health insurer or a licensed property
and casualty insurer writing only accident and health insurance.
7. "Negative trend" means, with respect to a life or health insurer or a fraternal benefit
society, negative trend over a period of time, as determined in accordance with the
trend test calculation included in the life or fraternal risk-based capital instructions.
8. "Property and casualty insurer" means any insurer licensed under chapter 26.1-05 or
26.1-11 but does not include monoline mortgage guaranty insurers, financial guaranty
insurers, and title insurers.
9. "Risk-based capital instructions" means the risk-based capital report, including
risk-based capital instructions adopted by the national association of insurance
commissioners, as such risk-based capital instructions may be amended by the
national association of insurance commissioners from time to time in accordance with
the procedures adopted by the national association of insurance commissioners.
10. "Risk-based capital level" means an insurer's company action level risk-based capital,
regulatory action level risk-based capital, authorized control level risk-based capital, or
mandatory control level risk-based capital where:
a. "Authorized control level risk-based capital" means the number determined under
the risk-based capital formula in accordance with the risk-based capital
instructions.
b. "Company action level risk-based capital" means, with respect to any insurer, the
product of two and its authorized control level risk-based capital.
c. "Mandatory control level risk-based capital" means the product of seventy
hundredths and the authorized control level risk-based capital.
d. "Regulatory action level risk-based capital" means the product of one and
one-half and its authorized control level risk-based capital.
11. "Risk-based capital plan" means a comprehensive financial plan containing the
elements specified in subsection 2 of section 26.1-03.1-03. If the commissioner rejects
the risk-based capital plan, and it is revised by the insurer, with or without the
commissioner's recommendation, the plan must be called the "revised risk-based
capital plan".
12. "Risk-based capital report" means the report required in section 26.1-03.1-02.
13. "Total adjusted capital" means the sum of:
a. An insurer's statutory capital and surplus as determined in accordance with
statutory accounting applicable to the annual financial statements required to be
filed under section 26.1-03-07; and
b. Such other items, if any, as the risk-based capital instructions may provide.
26.1-03.1-02. Risk-based capital reports.
1. On or prior to each March first, every domestic insurer shall prepare and submit to the
commissioner a report of its risk-based capital levels as of the end of the calendar year

just ended, in a form and containing any information required by the risk-based capital
instructions. In addition, every domestic insurer shall file its risk-based capital report:
a. With the national association of insurance commissioners in accordance with the
risk-based capital instructions; and
b. With the insurance commissioner in any state in which the insurer is authorized to
do business, if the insurance commissioner has notified the insurer of its request
in writing, in which case the insurer shall file its risk-based capital report not later
than the later of:
(1) Fifteen days from the receipt of notice to file its risk-based capital report with
that state; or
(2) The filing date.
2. A life and health insurer's or fraternal benefit society's risk-based capital must be
determined in accordance with the formula set forth in the risk-based capital
instructions. The formula must take into account, and may adjust for the covariance
between, the following factors determined in each case by applying the factors in the
manner set forth in the risk-based capital instructions:
a. The risk with respect to the insurer's assets;
b. The risk of adverse insurance experience with respect to the insurer's liabilities
and obligations;
c. The interest rate risk with respect to the insurer's business; and
d. All other business risks and any other relevant risks as are set forth in the
risk-based capital instructions.
3. A property and casualty insurer's risk-based capital must be determined in accordance
with the formula set forth in the risk-based capital instructions. The formula must take
into account, and may adjust for the covariance between, the following factors
determined in each case by applying the factors in the manner set forth in the risk-
based capital instructions:
a. Asset risk;
b. Credit risk;
c. Underwriting risk; and
d. All other business risks and any other relevant risks as are set forth in the
risk-based instructions.
4. An excess of capital over the amount produced by the risk-based capital requirements
contained in this chapter and the formulas, schedules, and instructions referenced in
this chapter is desirable in the business of insurance. Accordingly, insurers should
seek to maintain capital above the risk-based capital levels required by this chapter.
Additional capital is used and is useful in the insurance business and helps to secure
an insurer against various risks inherent in, or affecting, the business of insurance and
not accounted for or only partially measured by the risk-based capital requirements
contained in this chapter.
5. If a domestic insurer files a risk-based capital report that in the judgment of the
commissioner is inaccurate, then the commissioner shall adjust the risk-based capital
report to correct the inaccuracy and notify the insurer of the adjustment. The notice
must contain a statement of the reason for the adjustment. A risk-based capital report
so adjusted is referred to as an adjusted risk-based capital report.