P.R. Laws tit. 26, § 4504
(1) An “insurer action level event” means any of the following events:
(a) The filing by an insurer of a risk-based capital report indicating that:
(i) The adjusted capital of the insurer is greater than or equal to the regulatory action level, but lesser than the insurer action level, or
(ii) if a life or disability insurer, except for health maintenance organizations; the insurer has an adjusted capital greater than or equal to the insurer action level, but less than the product of its authorized control level multiplied by 3.0 and, furthermore, a negative trend is observed.
(iii) if a property and casualty insurer, the insurer has an adjusted capital greater than or equal to the insurer action level, but less than the product of its authorized control level multiplied by 3.0 and it triggers the trend test determined in accordance with the instructions included in the Risk-Based Capital (RBC) Model Act of the National Association of Insurance Commissioners (NAIC) for property and casualty insurers.
(b) Notice by the Commissioner to the insurer of a revised risk based capital report indicating one of the events listed under clause (a) of this subsection, provided the insurer does not object the revised report under § 4508 of this title.
(c) Notice by the Commissioner to the insurer of the determination of the former against the objection to the revised risk based capital report reflecting one of the events listed under clause (a) of this subsection, presented by the insurer under § 4508 of this title.
(2) If an insurer action level event were to take place, the insurer shall prepare and submit before the Commissioner, a risk based capital plan that:
(a) Identifies the conditions which propitiated the insurer action level event;
(b) includes the corrective actions that the insurer intends to implement with the purpose of eliminating the insurer action level event;
(c) provides projections of the financing results of the insurer for the year in course and for the upcoming four (4) years, under two (2) settings—assuming that corrective actions are implemented and assuming that they are not. These projections shall also include projections in terms of requirements of capital and surplus, if any, provided in the Code. Projections for a new business as well as for a renewal may include separate projections for each main line of operation according to its annual report on the total operations and identify separately each significant component of income, expenses and profits;
(d) identifies the key assumptions that have an impact on the insurer’s projections and the extent to which these have an impact on projections, and
(e) identifies the quality of the operations of the insurer and the problems associated therewith, including but not limited to: its assets, the projected growth of the business, and the impact of such a growth on the surplus, the exposure to risks due to extraordinary events, the diversification of the lines of business, and the use of reinsurance, if any.
(3) The risk based capital plan shall be submitted:
(a) Within the term of forty-five (45) days as of the date on which the insurer action level event takes place, or
(b) within the term of forty-five (45) days as of the date of notice to the insurer by the Commissioner of his/her determination against the objection to the revised risk based capital report submitted by the insurer under § 4508 of this title.
(4) The Commissioner shall notify the insurer within the term of sixty (60) days as of the date of submission by the insurer of the risk based capital report, if in his/her judgment said plan can be implemented or if, on the contrary, the same is unsatisfactory. In those cases in which the Commissioner determines that the risk based capital plan submitted by the insurer is not satisfactory, the Commissioner shall so notify to the insurer and state the reasons for his/her determination, and he/she may propose recommendations with the purpose of redress the deficiencies of the plan. The insurer who receives such a notice from the Commissioner shall prepare a revised risk based capital plan, into which any of the revisions proposed by the Commissioner may be incorporated by reference. The insurer shall submit said revised plan before the consideration of the Commissioner:
(a) Within the term of forty-five (45) days as of the date of notice by the Commissioner, or
(b) within the term of forty-five (45) days as of the date of notice to the insurer by the Commissioner of his/her determination against the objection lodged by the insurer under § 4508 of this title.
(5) In those cases in which the Commissioner notifies to an insurer that the risk based capital plan or the revised plan is not satisfactory, the Commissioner, in his/her discretion and subject to the right of the insurer to object said determination under § 4508 of this title, may specify on said notice that the same constitutes a regulatory action level event.
(6) Any local insurer that submits before the Commissioner a risk based capital plan or a revised plan, shall also present a copy of such a plan before the Insurance Commissioner of the any states in which the insurer is authorized to underwrite insurance if:
(a) The state has a provision on risk based capital that is substantially similar to § 4509(1) of this title, and
(b) the Insurance Commissioner of said state has required in writing that said insurer submit said plan.
(7) In those cases in which the conditions listed in the preceding subsection (6) of this section concur, the insurer shall submit before the Commissioner of said state, a copy of the risk based capital plan or the revised plan, as pertinent, by the later date between:
(a) Fifteen (15) days as of the date of receipt of the notice whereby the Commissioner of said state requires the plan to be submitted, or
(b) the date on which the risk based capital plan or the revised plan is submitted pursuant to subsections (3) and (4) of this section.
History —Ins. Code, added as § 45.040 on Mar. 18, 2008, No. 32, § 1, eff. 1 year after Mar. 18, 2008; Sept. 25, 2012, No. 266, § 1; July 24, 2013, No. 85, § 1.