(a) (1) Unless otherwise established in accordance with paragraphs (2) and (3) of this subsection, the amount of the minimum financial security benchmark for an insurer shall be the greater of:

(A) The authorized control level risk-based capital applicable to the insurer as set forth by Code Section 33-56-3 less the asset valuation reserve and voluntary investment reserves as defined by the valuation procedures in Code Section 33-10-14; or

(B) The minimum capital and surplus required by this title for maintenance of an insurer's certificate of authority.

(2) The Commissioner may, in accordance with the factors in paragraph (2) of subsection (b) of this Code section, establish by order a minimum financial security benchmark to apply to a specific insurer provided it is not less than the amount determined by paragraph (1) of this subsection.

(3) The Commissioner may establish by regulation a minimum financial security benchmark that is a multiple of authorized control level risk-based capital to apply to any class of insurers provided the amount established by the regulation is not less than the amount determined in paragraph (1) of this subsection.

(b) The Commissioner shall determine the amount of surplus that shall constitute an insurer's minimum financial security benchmark, as an amount that will provide reasonable security against contingencies affecting the insurer's financial position that are not fully covered by reserves or by reinsurance.

(1) The Commissioner shall consider the risks of the following types of contingencies:

(A) Increases in the frequency or severity of losses beyond the levels contemplated by the rates charged;

(B) Increases in expenses beyond those contemplated by the rates charged;

(C) Decreases in the value of or the return on invested assets below those planned on;

(D) Changes in economic conditions that would make liquidity more important than contemplated and would force untimely sale of assets or prevent timely investments;

(E) Currency devaluation to which the insurer may be subject; and

(F) Any other contingencies the Commissioner can identify that may affect the insurer's operations.

(2) In determining an insurer's minimum financial security benchmark under this subsection, the Commissioner shall take into account the following factors:

(A) The most reliable information available as to the magnitude of the various risks under paragraph (1) of this subsection;

(B) The extent to which the risks in paragraph (1) of this subsection are independent of each other or are related, and whether any dependency is direct or inverse;

(C) The insurer's recent history of profits or losses;

(D) The extent to which the insurer has provided protection against the contingencies in other ways than the establishment of surplus, including redundancy of premiums, adjustability of contracts under their terms, investment valuation reserves whether voluntary or mandatory, appropriate reinsurance, the use of conservative actuarial assumptions to provide a margin of security, reserve adjustments in recognition of previous rate inadequacies, contingency or catastrophe reserves, diversification of assets and underwriting risks;

(E) Independent judgments of the soundness of the insurer's operations, as evidenced by the ratings of reliable professional financial reporting services; and

(F) Any other relevant factors.

(3) An insurer subject to the provisions of this article shall invest and maintain invested funds not less in amount than the minimum financial security benchmark only in the following:

(A) Cash;

(B) Certificates of deposit or similar certificates or evidences of deposit in banks and trust companies to the extent that the certificates or deposits are insured by the Federal Deposit Insurance Corporation;

(C) Savings accounts, certificates of deposit, or similar certificates or evidences of deposit in savings and loan associations and building and loan associations to the extent that the same are insured by the Savings Association Insurance Fund of the Federal Deposit Insurance Corporation;

(D) Bonds, notes, warrants, and other evidences of indebtedness which are direct obligations of the government of the United States of America or for which the full faith and credit of the government of the United States of America is pledged for the payment of principal and interest;

(E) Loans guaranteed as to principal and interest by the government of the United States of America, or by any agency or instrumentality of the government of the United States of America, to the extent of such guaranty;

(F) Bonds, notes, warrants, and other securities not in default which are the direct obligations of any domestic jurisdiction, or for which the full faith and credit of such domestic jurisdiction has been pledged for the payment of principal and interest;

(G) The obligations of any county, any incorporated city, town, or village, any school district, water district, sewer district, road district, or any special district, or any other political subdivision or public authority of any state, territory, or insular possession of the United States, or of the District of Columbia, or of the Canadian cities having a population of over 25,000 according to the most recent official census, which has not defaulted for a period of 120 days in the payment of interest upon, or for a period of more than one year in the payment of principal of, any of its bonds, notes, warrants, certificates of indebtedness, securities, or any other interest-bearing obligation during the five years immediately preceding the acquisition of the investment;

(H) Bonds, notes, or other evidences of indebtedness, in addition to those eligible corporate bonds and debentures, which are secured by first mortgages on real estate situated within a domestic jurisdiction, or purchase money mortgages or like securities received upon the sale or exchange of real property acquired; provided, however, that not more than 45 percent in the case of life insurers, and not more than 25 percent in the case of nonlife insurers, of the minimum financial security benchmark may be made up of such investments;

(I) High-grade investments in corporate bonds and debentures having a remaining maturity of five years or less; and

(J) Any other investment not otherwise prohibited by this article that is considered exempt from risk-based capital requirements pursuant to Code Section 33-56-2 in accordance with risk-based capital instructions adopted by the National Association of Insurance Commissioners and adopted by regulation promulgated by the Commissioner or as otherwise prescribed by regulation promulgated by the Commissioner.