SB1718 EngrossedLRB098 10029 RPM 40188 b

1    AN ACT concerning regulation.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4    Section 5. The Illinois Insurance Code is amended by
5changing Sections 26 and 53 as follows:
 
6    (215 ILCS 5/26)  (from Ch. 73, par. 638)
7    (Section scheduled to be repealed on January 1, 2017)
8    Sec. 26. Deposit.
9    (a) A company subject to the provisions of this Article
10shall make and maintain with the Director for the protection of
11all creditors, policyholders and policy obligations of the
12company, a deposit of securities which are authorized
13investments under Section 126.11A(1), 126.11A(2), 126.24A(1),
14or 126.24A(2) having a fair market value equal to the minimum
15capital and surplus required to be maintained under Section 13.
16The Director may release the required deposit of securities
17upon receipt of an order of a court having proper jurisdiction
18or upon: (i) certification by the company that it has no
19outstanding creditors, policyholders, or policy obligations in
20effect and no plans to engage in the business of insurance;
21(ii) receipt of a lawful resolution of the company's board of
22directors effecting the surrender of its articles of
23incorporation for administrative dissolution by the Director;

 

 

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1and (iii) receipt of the name and forwarding address for each
2of the final officers and directors of the company, together
3with a plan of dissolution approved by the Director.
4    (b) All deposits by insurers subject to this Article must
5be limited to the following types:
6        (1) United States government bonds, notes, and bills
7    for which the full faith and credit of the government of
8    the United States is pledged for the payment of principal
9    and interest.
10        (2) United States public bonds and notes of any state
11    or of the District of Columbia, or Canadian public bonds
12    and notes of any province thereof, for which the full faith
13    and credit of the issuer has been pledged for the payment
14    of principal and interest.
15        (3) United States and Canadian county, provincial,
16    municipal, and district bonds and notes for which the
17    issuer has lawful authority to levy taxes or make
18    assessments for the payment of principal and interest.
19        (4) Bonds and notes of any federal agency that are
20    guaranteed as to payment of principal and interest by the
21    United States.
22        (5) International development bank bonds, bonds issued
23    by the State of Israel and sold through the Development
24    Corporation for Israel or its successor entities, and notes
25    issued, assumed, and guaranteed by the International Bank
26    for Reconstruction and Development, the Inter-American

 

 

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1    Development Bank, the Asian Development Bank, the African
2    Development Bank, or the International Finance
3    Corporation.
4        (6) Corporate bonds and notes of any private
5    corporations that are not affiliates or subsidiaries of the
6    insurer, which corporations are organized under the laws of
7    the United States, Canada, any state, the District of
8    Columbia, any territory or possession of the United States,
9    or any province of Canada.
10        (7) Certificates of deposit.
11    (c) To be eligible for deposit under subsection (b), any
12bond or note must have the following characteristics:
13        (1) The bond or note must be interest-bearing or
14    interest-accruing, and the insurer must be the exclusive
15    owner of the interest accruing thereon and entitled to
16    receive the interest for its account.
17        (2) The issuer must be in a solvent financial condition
18    and the bond or note must not be in default.
19        (3) The bond, note, or debt of the issuing country must
20    be rated in one of the 4 highest classifications by an
21    established, nationally recognized investment rating
22    service or must have been given a rating of 1 by the
23    Securities Valuation Office of the National Association of
24    Insurance Commissioners.
25        (4) The market value of the bond or note must be
26    readily ascertainable or the value of the bond or note must

 

 

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1    be obtainable by the insurer or its custodian from the
2    issuer's fiscal agent.
3        (5) The bond or note must be the direct obligation of
4    the issuer.
5        (6) The bond or note must be stated in United States
6    dollar denominations.
7        (7) The bond or note must be eligible for book-entry
8    form on the books of the Federal Reserve's book-entry
9    system or in a depository trust clearing system or on the
10    books of the issuer's transfer agent or evidenced by a
11    certificate delivered to the insurer or its custodian.
12    (d) To be eligible for deposit under item (7) of subsection
13(b), a certificate of deposit must have the following
14characteristics:
15        (1) The certificate of deposit must be issued by a
16    bank, savings bank, or savings association that is
17    organized under the laws of the United States, of this
18    State, or of any other state and that has a principal
19    office or branch office in this State that is authorized to
20    receive deposits in this State.
21        (2) The certificate of deposit must be
22    interest-bearing and may not be issued in discounted form.
23        (3) The certificate of deposit must be issued for a
24    period of not less than one year.
25        (4) The issuing bank, savings bank, or savings
26    association must agree to the terms and conditions of the

 

 

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1    Director regarding the rights to the certificate of deposit
2    and must have executed a written certificate of deposit
3    agreement with the Director. The terms and conditions of
4    the agreement shall include, but need not be limited to:
5            (A) Exclusive authorized signature authority for
6        the chief financial officer.
7            (B) An agreement to pay, without protest, the
8        proceeds of its certificate of deposit to the Director
9        within 30 business days after presentation.
10            (C) A prohibition against levies, setoffs,
11        survivorship, or other conditions that might hinder
12        the Director's ability to recover the full face value
13        of a certificate of deposit.
14            (D) Instructions regarding interest payments,
15        renewals, taxpayer identification, and early
16        withdrawal penalties.
17            (E) An agreement to be subject to the jurisdiction
18        of the courts of this State, or those of the United
19        States that are located in this State, for the purposes
20        of any litigation arising out of this Section.
21            (F) Such other conditions as the Director
22        requires.
23    (e) The Director may refuse to accept certain securities or
24refuse to accept the reported market value of certain
25securities offered pursuant to this Section in order to ensure
26that sufficient cash and securities are on hand to meet the

 

 

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1purposes of the deposit. In making a refusal under this
2subsection (e), the guidelines for use of the Director may
3include, but need not be limited to, whether the market value
4of the securities cannot be readily ascertained and the lack of
5liquidity of the securities. Securities refused under this
6subsection (e) are not acceptable as deposits.
7    (f) All deposits required of a domestic insurer pursuant to
8the laws of another state, province, or country must be
9comprised of securities of the kinds required under subsection
10(b), having the characteristics required under subsections (c)
11and (d), and permitted by the laws of the other state,
12province, or country, except common stocks, mortgages or loans
13of any kind, real estate investment trust funds or programs,
14commercial paper, and letters of credit.
15(Source: P.A. 92-75, eff. 7-12-01.)
 
16    (215 ILCS 5/53)  (from Ch. 73, par. 665)
17    (Section scheduled to be repealed on January 1, 2017)
18    Sec. 53. Deposit.
19    (a) A company subject to the provisions of this Article
20shall make and maintain with the Director for the protection of
21all creditors, policyholders and policy obligations of the
22company, a deposit of securities which are authorized
23investments under Section 126.11A(1), 126.11A(2), 126.24A(1),
24or 126.24A(2) having a fair market value equal to the minimum
25surplus required to be maintained under Section 43. The

 

 

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1Director may release the required deposit of securities upon
2receipt of an order of a court having proper jurisdiction or
3upon: (i) certification by the company that it has no
4outstanding creditors, policyholders, or policy obligations in
5effect and no plans to engage in the business of insurance;
6(ii) receipt of a lawful resolution of the company's board of
7directors effecting the surrender of its articles of
8incorporation for administrative dissolution by the Director;
9and (iii) receipt of the name and forwarding address for each
10of the final officers and directors of the company, together
11with a plan of dissolution approved by the Director.
12    (b) All deposits by insurers subject to this Article must
13be limited to the following types:
14        (1) United States government bonds, notes, and bills
15    for which the full faith and credit of the government of
16    the United States is pledged for the payment of principal
17    and interest.
18        (2) United States public bonds and notes of any state
19    or of the District of Columbia, or Canadian public bonds
20    and notes of any province thereof, for which the full faith
21    and credit of the issuer has been pledged for the payment
22    of principal and interest.
23        (3) United States and Canadian county, provincial,
24    municipal, and district bonds and notes for which the
25    issuer has lawful authority to levy taxes or make
26    assessments for the payment of principal and interest.

 

 

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1        (4) Bonds and notes of any federal agency that are
2    guaranteed as to payment of principal and interest by the
3    United States.
4        (5) International development bank bonds, bonds issued
5    by the State of Israel and sold through the Development
6    Corporation for Israel or its successor entities, and notes
7    issued, assumed, and guaranteed by the International Bank
8    for Reconstruction and Development, the Inter-American
9    Development Bank, the Asian Development Bank, the African
10    Development Bank, or the International Finance
11    Corporation.
12        (6) Corporate bonds and notes of any private
13    corporations that are not affiliates or subsidiaries of the
14    insurer, which corporations are organized under the laws of
15    the United States, Canada, any state, the District of
16    Columbia, any territory or possession of the United States,
17    or any province of Canada.
18        (7) Certificates of deposit.
19    (c) To be eligible for deposit under subsection (b), any
20bond or note must have the following characteristics:
21        (1) The bond or note must be interest-bearing or
22    interest-accruing, and the insurer must be the exclusive
23    owner of the interest accruing thereon and entitled to
24    receive the interest for its account.
25        (2) The issuer must be in a solvent financial condition
26    and the bond or note must not be in default.

 

 

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1        (3) The bond, note, or debt of the issuing country must
2    be rated in one of the 4 highest classifications by an
3    established, nationally recognized investment rating
4    service or must have been given a rating of 1 by the
5    Securities Valuation Office of the National Association of
6    Insurance Commissioners.
7        (4) The market value of the bond or note must be
8    readily ascertainable or the value of the bond or note must
9    be obtainable by the insurer or its custodian from the
10    issuer's fiscal agent.
11        (5) The bond or note must be the direct obligation of
12    the issuer.
13        (6) The bond or note must be stated in United States
14    dollar denominations.
15        (7) The bond or note must be eligible for book-entry
16    form on the books of the Federal Reserve's book-entry
17    system or in a depository trust clearing system or on the
18    books of the issuer's transfer agent or evidenced by a
19    certificate delivered to the insurer or its custodian.
20    (d) To be eligible for deposit under item (7) of subsection
21(b), a certificate of deposit must have the following
22characteristics:
23        (1) The certificate of deposit must be issued by a
24    bank, savings bank, or savings association that is
25    organized under the laws of the United States, of this
26    State, or of any other state and that has a principal

 

 

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1    office or branch office in this State that is authorized to
2    receive deposits in this State.
3        (2) The certificate of deposit must be
4    interest-bearing and may not be issued in discounted form.
5        (3) The certificate of deposit must be issued for a
6    period of not less than one year.
7        (4) The issuing bank, savings bank, or savings
8    association must agree to the terms and conditions of the
9    Director regarding the rights to the certificate of deposit
10    and must have executed a written certificate of deposit
11    agreement with the Director. The terms and conditions of
12    the agreement shall include, but need not be limited to:
13            (A) Exclusive authorized signature authority for
14        the chief financial officer.
15            (B) An agreement to pay, without protest, the
16        proceeds of its certificate of deposit to the Director
17        within 30 business days after presentation.
18            (C) A prohibition against levies, setoffs,
19        survivorship, or other conditions that might hinder
20        the Director's ability to recover the full face value
21        of a certificate of deposit.
22            (D) Instructions regarding interest payments,
23        renewals, taxpayer identification, and early
24        withdrawal penalties.
25            (E) An agreement to be subject to the jurisdiction
26        of the courts of this State, or those of the United

 

 

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1        States that are located in this State, for the purposes
2        of any litigation arising out of this Section.
3            (F) Such other conditions as the Director
4        requires.
5    (e) The Director may refuse to accept certain securities or
6refuse to accept the reported market value of certain
7securities offered pursuant to this Section in order to ensure
8that sufficient cash and securities are on hand to meet the
9purposes of the deposit. In making a refusal under this
10subsection (e), the guidelines for use of the Director may
11include, but need not be limited to, whether the market value
12of the securities cannot be readily ascertained and the lack of
13liquidity of the securities. Securities refused under this
14subsection (e) are not acceptable as deposits.
15    (f) All deposits required of a domestic insurer pursuant to
16the laws of another state, province, or country must be
17comprised of securities of the kinds required under subsection
18(b), having the characteristics required under subsections (c)
19and (d), and permitted by the laws of the other state,
20province, or country, except common stocks, mortgages or loans
21of any kind, real estate investment trust funds or programs,
22commercial paper, and letters of credit.
23(Source: P.A. 92-75, eff. 7-12-01.)