NJ Capital NJ Surplus

Lines of Authority Requirements Requirements

___ Health $ 700,000 $2,800,000

___ Life and/or Annuities $1,000,000 $4,000,000

___ Life and/or Annuities and Health $1,530,000 $6,120,000

Domicile State's Surplus Requirement: ____________________

Does the applicant meet or exceed the minimum capital and surplus requirements?

___ Yes. Go to Question A3 - Risk Based Capital Level.

_________________________________________________

Go to Question A3 - Risk Based Capital Level.

A. CAPITAL & SURPLUS REQUIREMENTS (continued)

NJ Surplus

Lines of Authority Requirements

___ Health $3,000,000

___ Life and/or Annuities $4,000,000

___ Life and/or Annuities and Health $6,300,000

Domicile State's Surplus Requirement: ____________________

Does the applicant meet or exceed the minimum surplus requirement?

___ Yes. Go to Question A3 - Risk Based Capital Level.

_________________________________________________

Go to Question A3 - Risk Based Capital Level.

A. CAPITAL & SURPLUS REQUIREMENTS (continued)

(statement page 23, line 27, column 1)

Authorized Control Level RBC: $_______________________________

(statement page 23, line 28, column 1)

Total Adjusted Capital/Authorized Control Level: ____________%

Failure Levels

200% <= TAC < 250% of Authorized Control Level RBC and a negative trend

Company Action Level Event

150% <= TAC < 200% of Authorized Control Level RBC

Company Action Level Event

100% <= TAC < 150% of Authorized Control Level RBC

Regulatory Action Level Event

70% <= TAC < 100% of Authorized Control Level RBC

Authorized Control Level Event

0% <= TAC < 70% of Authorized Control Level RBC

Mandatory Control Level Event

Does the applicant's Total Adjusted Capital as a percentage of Authorized Control Level RBC exceed the above listed levels?

B. IRIS

C. FIVE YEARS CONTINUOUS CONTROL

Pursuant to N.J.S.A. 17B:27A-1, control is presumed to exist if any person, directly or indirectly, owns, controls, or holds with power to vote 10% or more of the voting securities. Has there been a change in control during the last five years?

D. FIVE YEARS CONTINUOUS, ACTIVE OPERATIONS

Has the applicant been continuously and actively engaged in the direct writing of insurance for the past five years?

E. DECREASE IN SURPLUS OVER FIVE YEARS

Has the applicant's surplus decreased over the last five years for reasons other than dividends to policyholders, reserve strengthening and increases in asset valuation reserve?

F. PROFITABILITY

The applicant must demonstrate that, during the last five years, it has generated a net gain from operations, after federal income taxes, (statement page 4, line 31) in three years, of which two of these profitable years must be the most recent years.

Please indicate your net gain from operations for each of the following years:

2005 ____________________________ <- Must be positive

2004 ____________________________ <- Must be positive

2003 ____________________________ one of these three

2002 ____________________________ remaining years

2001 ____________________________ must be positive.

Does the applicant meet or exceed the three out of five years profitability requirement?

G. MERGER WAIVER

The Commissioner may, upon the request of the applicant, on a case by case basis, waive the five year seasoning requirement mentioned in C, D, E, and F under the following circumstances pursuant to N.J.A.C. 11:2-1.4(a)5.iii(3):

The applicant meets all of the following criteria:

• is the surviving insurer of a merger or consolidation,

• at least one of the merged insurers was authorized in New Jersey to transact the same lines of authority as the applicant,

• has been actively engaged in insurance for five years,

• is currently in good standing, and

• and, must demonstrate a sound plan of operation in the opinion of the Commissioner.

Is the applicant claiming a waiver of the five years seasoning requirements based on a merger which satisfies the above outlined criteria?

H. CAPITAL AND SURPLUS GUARANTEE

The Commissioner may, upon the request of the applicant, on a case by case basis, waive the five year seasoning requirements mentioned above if the Board of Directors of an acceptable guarantor pass a resolution guaranteeing the applicant will meet New Jersey's minimum capital and surplus requirements during the first ten (10) years of its operations in this State.

A copy of the guarantee resolution in a form acceptable to the Department is enclosed for your information.

A guarantee and guarantor may be acceptable under the following circumstances pursuant to N.J.A.C. 11:2-1.4(a)5.iii(1),(2), and (4):

Case 1. The guarantor meets all of the following criteria:

• is the parent of the applicant and an insurer,

• was authorized in New Jersey for at least one (1) year,

• was in operation for five (5) years prior to its own admission to New Jersey,

• shall satisfy the Commissioner as to the soundness of its financial condition and methods of operation,

• secured admission by satisfying the above requirements, and

• has one of the following ratings from one of these companies:
  • Poor's ratings of AAA or AA+;

  • A.M. Best ratings of A++ or A+;

  • Moody's ratings of Aaa or Aa1;

  • Duff & Phelps ratings of AAA or AA+; or

  • Dun & Bradstreet evaluation acceptable to the Department.

  And the applicant meets all of the following criterion:

• is a wholly owned subsidiary of the guarantor.

• The guarantor meets all of the following criteria:
  • is the ultimate parent of the applicant,

  • is a non-insurance company,

  • the ultimate parent must be a US corporation,

  • has been actively engaged in business during the five (5) years prior to the application,

  • has a net worth, excluding investment in insurance or insurance related subsidiaries, of at least $25,000,000, and

  • has a Dun & Bradstreet evaluation acceptable to the Department or two (2) of the listed ratings from these companies:
    • has a Standard & Poor's ratings of AAA or AA+;
      
    • A.M. Best ratings of A++ or A+;
      
    • Moody's ratings of Aaa or Aa1; or
      
    • Duff & Phelps ratings of AAA or AA+.

  And the applicant meets all of the following criteria:
  • has completed three continuous years of operation without a change in control,

  • has had gains from operations in two of the three years,

  • has an examination report conducted by its state of domicile subsequent to its first two years of operation and this report is in accordance with Department standards, and

  • has demonstrated a sound plan of operations in the opinion of the Commissioner.

  
  Is the ten (10) year Capital and Surplus Guarantee being provided?
  ___ Yes. Under which Case?

  ___ Case 1. Go to Question I - Additional Items.

  ___ Case 2. Go to Question I - Additional Items.
  ___ Case 3. Go to Question I - Additional Items.
  ___ No. If the applicant neither meets the five year seasoning requirements nor meets the requirements for a merger waiver, and no Capital and Surplus Guarantee is being provided, then the applicant is ineligible for admission. Please try again at a later date.

  I. ADDITIONAL ITEMS REQUIRED