Section 1323. Issuance of capital notes by domestic life insurance companies

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

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