                                 CODE OF VIRGINIA

AUTHORIZED CONTROL LEVEL EVENT (§ 38.2-5505)

A. &#8220;Authorized Control Level Event&#8221; means any of the following
events:

   1. The filing of an RBC Report by the licensee which indicates that the
   licensee&#8217;s Total Adjusted Capital is greater than or equal to its
   Mandatory Control Level RBC but less than its Authorized Control Level RBC;

   2. The notification by the Commission to the licensee of an Adjusted RBC
   Report that indicates the event in subdivision A 1, provided the licensee does
   not challenge the Adjusted RBC Report under &#xA7; 38.2-5507;

   3. If, pursuant to &#xA7; 38.2-5507, the licensee challenges an Adjusted RBC
   Report that indicates the event in subdivision A 1, the notification by the
   Commission to the licensee that the Commission has, after a hearing, rejected
   the licensee&#8217;s challenge;

   4. The failure of the licensee to respond, in a manner satisfactory to the
   Commission, to a corrective order, provided the licensee has not challenged
   the corrective order under &#xA7; 38.2-5507; or

   5. If the licensee has challenged a corrective order under &#xA7; 38.2-5507
   and the Commission has, after a hearing, rejected the challenge or modified
   the corrective order, the failure of the licensee to respond, in a manner
   satisfactory to the Commission, to the corrective order subsequent to
   rejection or modification by the Commission.

B. In the event of an Authorized Control Level Event with respect to a licensee,
the Commission shall:

   1. Take such actions as are required under &#xA7; 38.2-5504 regarding a
   licensee with respect to which a Regulatory Action Level Event has occurred;
   or

   2. If the Commission deems it to be in the best interests of the policyholders
   and creditors of the licensee and of the public, take such actions as are
   necessary to cause the licensee to be placed under regulatory control under
   the provisions of Chapter 15 (&#xA7; 38.2-1500 et seq.). In the event the
   Commission takes such actions, the Authorized Control Level Event shall be
   deemed an indication of a hazardous financial condition which serves as
   sufficient grounds for the Commission to commence delinquency proceedings, and
   the receiver appointed in conjunction with such proceedings shall have the
   rights, powers and duties with respect to the licensee as are set forth in
   Chapter 15 or any order of liquidation, rehabilitation or conservation entered
   pursuant thereto. In the event the Commission takes actions under this
   subdivision pursuant to an Adjusted RBC Report, the licensee shall be entitled
   to such protections as are afforded to licensees under the appropriate
   provisions of this title pertaining to summary proceedings.

HISTORY: 1995, c. 789; 2000, c. 47.