Kansas Statutes 40-2c03. Determination of risk-based capital
(a) A life and health insurer‘s RBC shall be determined in accordance with the formula set forth in the RBC instructions. The formula shall take into account and may adjust for the covariance between:
(1) The risk with respect to the insurer’s assets;
Terms Used In Kansas Statutes 40-2c03
- Assets: (1) The property comprising the estate of a deceased person, or (2) the property in a trust account.
- Interest rate: The amount paid by a borrower to a lender in exchange for the use of the lender's money for a certain period of time. Interest is paid on loans or on debt instruments, such as notes or bonds, either at regular intervals or as part of a lump sum payment when the issue matures. Source: OCC
- Liabilities: The aggregate of all debts and other legal obligations of a particular person or legal entity.
- Life and health insurer: means any insurance company licensed under article 4 or 5 ofchapter 40 of the Kansas Statutes Annotated, and amendments thereto, or a licensed property and casualty insurer writing only accident and health insurance. See Kansas Statutes 40-2c01
- Property and casualty insurer: means any insurance company licensed under articles 9, 10, 11, 12, 12a, 15 or 16 ofchapter 40 of the Kansas Statutes Annotated, and amendments thereto, but does not include monoline mortgage guaranty insurers, financial guaranty insurers and title insurers. See Kansas Statutes 40-2c01
- RBC: means risk-based capital. See Kansas Statutes 40-2c01
- RBC instructions: means the risk-based capital instructions promulgated by the NAIC that are in effect on December 31, 2022, or any later version promulgated by the NAIC as may be adopted by the commissioner under Kan. See Kansas Statutes 40-2c01
(2) the risk of adverse insurance experience with respect to the insurer’s liabilities and obligations;
(3) the interest rate risk with respect to the insurer’s business; and
(4) all other business risks and such other relevant risks as are set forth in the RBC instructions;
determined in each case by applying the factors in the manner set forth in the RBC instructions.
(b) A property and casualty insurer‘s RBC shall be determined in accordance with the formula set forth in the RBC instructions. The formula shall take into account and may adjust for the covariance between:
(1) Asset risk;
(2) credit risk;
(3) underwriting risk; and
(4) all other business risks and such other relevant risks as are set forth in the RBC instructions;
determined in each case by applying the factors in the manner set forth in the RBC instructions.
(c) An excess of capital over the amount produced by the risk-based capital requirements contained in this act and the formulas, schedules and instructions referenced in this act is desirable in the business of insurance. Accordingly, insurers should seek to maintain capital above the RBC levels required by this act. Additional capital is used and 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 act.