(215 ILCS 5/179A-20)
Sec. 179A-20.
Use and operation of protected cells.
(a) The protected cell
assets of any protected
cell may not be charged with liabilities arising out of any other business the
protected cell company may
conduct. All contracts or other documentation reflecting protected cell
liabilities shall clearly indicate that only the
protected cell assets are available
for the satisfaction of those protected cell
liabilities.
(b) The income, gains, and losses, realized or unrealized, from
protected cell
assets and protected cell
liabilities must be credited to or charged against the protected
cell without
regard to other
income, gains, or losses of the protected cell company, including income,
gains, or losses of
other protected
cells. Amounts attributed to a protected cell and accumulations thereon may
be invested and
reinvested without regard to any requirements or limitations of Article VIII of
this Code
(Investments of Domestic Companies), and
the investments in a
protected cell or cells may not be taken into account in applying
the
investment limitations
otherwise applicable to the investments of the protected cell company.
(c) Assets
attributed to a
protected
cell must be valued at
their market value on the date of valuation, or if there is no readily
available market, then as
provided in the contract or the rules or other written documentation applicable
to
the protected cell.
(d) A protected cell company shall, in respect of any of its protected
cells,
engage in fully funded
indemnity-triggered insurance securitization to support in full the protected
cell exposures attributable to that protected cell. A
protected cell company
insurance securitization that is not
indemnity-triggered may qualify as an insurance securitization under the
terms of this Article only after the Director
adopts rules addressing the methods of:(i) funding of the portion of the risk
that is not indemnity based, (ii) accounting, and
disclosure, (iii) risk-based capital treatment, and (iv) assessing risk
associated with
such securitizations. A protected cell company
insurance securitization that is not fully funded, whether
indemnity triggered or non-indemnity triggered, is prohibited.
Protected cell assets may be used to pay interest
or other
consideration on any outstanding debt or other obligation attributable to that
protected cell, and
nothing in this subsection shall be construed or interpreted to prevent a
protected cell company from
entering into a swap agreement or other transaction for the account of the
protected cell that has the effect of
guaranteeing such
interest or other consideration.
(e) In all protected cell company
insurance
securitizations,
the
contracts or other documentation
effecting such transaction shall contain provisions identifying the protected
cell to which the
transaction will be attributed. In addition, the contracts or other
documentation shall
clearly disclose that the
assets of that protected cell, and only those assets, are available to pay the
obligations of
that protected cell.
Notwithstanding the foregoing, and subject to the provisions of this Article
and any other
applicable law or rule, the failure to include such language in the contracts
or other documentation shall not
be used as the sole basis by creditors, reinsurers, or other claimants to
circumvent the provisions
of this Article.
(f) A protected cell company may attribute to a
protected cell account only the insurance obligations relating to the protected
cell
company's general account. A protected cell
may not issue insurance or reinsurance contracts directly to
policyholders or reinsureds or have any obligation to the policyholders or
reinsureds of the protected cell company's general account.
(g) At the cessation of business of a protected cell, the
protected cell
company
shall voluntarily close out the protected cell account in accordance with a plan approved by the
Director.
(Source: P.A. 91-278, eff. 7-23-99; 92-74, eff. 7-12-01.)
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(215 ILCS 5/179A-25)
Sec. 179A-25.
Reach of creditors and other claimants.
(a) Protected cell assets are available only to
the
creditors of the protected cell company
who are creditors in
respect of that protected cell and entitled, in conformity
with the provisions of
this Article, to have recourse to the protected cell assets attributable to
that protected cell. Protected cell assets
shall be absolutely protected from the creditors of the protected cell
company who are not
creditors in respect
of that protected cell and who, accordingly, are not
entitled
to have
recourse to the protected
cell assets attributable to that protected cell. Creditors with respect to a protected
cell shall not be entitled to
have recourse against the protected cell assets of other protected cells or the
assets of the
protected cell company's general account.
Protected cell assets are available only to creditors of a
protected cell company after all protected cell liabilities have been
extinguished or otherwise provided for in accordance with the plan of operation
relating to that protected cell.
(b) When an obligation of a protected cell company to a person arises from a
transaction, or is otherwise imposed, in
respect of a protected cell:
(1) that obligation of the protected cell company | ||
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(2) that obligation of the protected cell company | ||
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(c) When an obligation of a protected cell company relates solely to the
general
account, the
obligation of the protected cell company shall extend only to, and that
creditor shall, in
respect of that
obligation, be entitled to have recourse only to, the assets of the protected
cell company's general
account.
(d) The activities, assets, and obligations relating to a protected cell are not
subject to the provisions
of Article XXXIII1/2 (Illinois Life and Health Guaranty Association Law) or
Article XXXIV
(Illinois
Insurance Guaranty Fund), and neither a protected cell nor a protected cell
company shall be assessed by or
otherwise be required to
contribute to any guaranty fund or guaranty association in this State with
respect to the activities, assets, or obligations of a protected cell.
Nothing
in this subsection
shall affect the activities or obligations of a company's general account.
(e) In no event shall the establishment of one or more protected cells alone
constitute or be deemed
to be a fraudulent conveyance, an intent by the protected cell company to
defraud creditors,
or
the carrying out
of business by the protected cell company for any other fraudulent purpose.
(Source: P.A. 91-278, eff. 7-23-99; 92-74, eff. 7-12-01.)
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(215 ILCS 5/179A-30)
Sec. 179A-30.
Rehabilitation and liquidation of
protected cell companies.
(a) Notwithstanding any contrary
provision in this Code, the rules promulgated
under this Code, or any
other applicable law or rule, upon any order of rehabilitation, conservation,
or
liquidation of a protected cell company, the receiver shall be
bound
to deal with the
protected cell company's assets and liabilities, including protected cell
assets and protected
cell liabilities, in
accordance with the requirements set forth in this Article.
(b) With respect to amounts recoverable under a protected cell company insurance securitization, the amount
recoverable by the
receiver shall not be reduced or diminished as a result of the entry of an
order of rehabilitation,
conservation, or
liquidation with respect to the protected cell company notwithstanding any
provisions to the
contrary in the contracts or other documentation governing the protected cell company
insurance securitization.
(Source: P.A. 91-278, eff. 7-23-99; 92-74, eff. 7-12-01.)
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(215 ILCS 5/179A-35)
Sec. 179A-35.
No transaction of an insurance business.
A protected cell insurance securitization shall not
be deemed to be an
insurance or reinsurance contract. An investor in a protected cell company
insurance securitization shall not, by
sole means of such investment, be deemed to be transacting an insurance
business in this State. The underwriters or selling agents (and their
partners, directors, officers, members, managers, employees, agents,
representatives, and advisors) involved in a protected cell company insurance
securitization shall not be deemed to be conducting an insurance or reinsurance
agency, brokerage, intermediary, advisory, or consulting business by virtue of
their activities in connection therewith.
(Source: P.A. 91-278, eff. 7-23-99; 92-74, eff. 7-12-01.)
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(215 ILCS 5/179A-40)
Sec. 179A-40.
Rules.
The Director may promulgate
reasonable rules as may be necessary to effectuate the purposes of this
Article.
(Source: P.A. 91-278, eff. 7-23-99.)
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(215 ILCS 5/Art. XIE heading) ARTICLE XIE.
Special Purpose Reinsurance Vehicle Law
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(215 ILCS 5/179E-1)
Sec. 179E-1.
Short title.
This Article may be cited as the Special Purpose
Reinsurance Vehicle Law.
(Source: P.A. 92-124, eff. 7-20-01.)
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(215 ILCS 5/179E-5)
Sec. 179E-5.
Purpose.
This Article is adopted to provide for the creation
of
Special
Purpose Reinsurance Vehicles ("SPRV") exclusively to facilitate the
securitization of one
or more ceding insurers' risk as a means of accessing alternative sources of
capital and
achieving the benefits of securitization. Investors in fully funded insurance
securitization
transactions provide funds that are available to the SPRV to secure the
aggregate limit under
an SPRV contract that provides coverage against the occurrence of a triggering
event. The
creation of SPRVs is intended to achieve greater efficiencies in conducting
insurance
securitizations, to diversify and broaden insurers' access to sources of risk
bearing capital,
and to make insurance securitization generally available on reasonable terms to
as many
U.S. insurers as possible.
Under the terms of the typical securities underlying an insurance
securitization
transaction, proceeds from the issuance of securities are repaid to the
investor on a specified
maturity date with interest or dividends unless a triggering event occurs. The
insurance
securitization proceeds are available to pay the SPRV's obligations to the
ceding insurer if
the triggering event occurs, as well as being available to satisfy the SPRV's
obligation to
repay the insurance securitization investors if a triggering event does not
occur. Insurance
securitization transactions have been performed by alien companies to utilize
efficiencies
available to those alien companies that are not currently available to domestic
companies.
This Article is adopted to allow more efficiency in conducting insurance
securitizations, to
allow ceding insurers easier access to alternative sources of risk
bearing capital,
and to promote the benefits of insurance securitization to U.S. insurers.
(Source: P.A. 92-124, eff. 7-20-01.)
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(215 ILCS 5/179E-10)
Sec. 179E-10.
Exemption from insurance laws within limitations.
(a) An SPRV is subject to the following:
(1) Articles I, XII 1/2, XXIV, XXV (Sections 408 and | ||
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(2) Sections 132.1 through 134, 137 through 140, | ||
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(b) No other provisions of this Code apply to an SPRV organized under this
Article,
except as otherwise provided in this Article.
(Source: P.A. 92-124, eff. 7-20-01.)
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(215 ILCS 5/179E-15)
Sec. 179E-15.
Definitions.
For purposes of this Article, the following
terms have the indicated meanings:
"Aggregate limit" means the maximum sum payable to the ceding insurer under
an SPRV contract.
"Ceding insurer" means one or more insurers or reinsurers under common
control that enters into an SPRV contract with an SPRV.
"Control" (including the terms "controlling," "controlled by" and "under
common control with") means the possession, direct or indirect, of the power to
direct or cause the direction of the management and policies of a person,
whether through the ownership of voting securities, by contract other than a
commercial contract for goods or non-management services, or otherwise, unless
the power is the result of an official position with or corporate office held
by the person. Control shall be presumed to exist if any person, directly or
indirectly, owns, controls, holds with the power to vote, or holds proxies
representing, 10% or more of the voting securities of any other person. This
presumption may be rebutted by a showing that control does not, in fact, exist.
Notwithstanding the foregoing, for purposes of this Article, the fact that an
SPRV exclusively provides reinsurance to a ceding insurer under an SPRV
contract shall not by itself be sufficient grounds for a finding that the SPRV
or the SPRV organizer or owner is controlled by or under common control with
the ceding insurer.
"Fair Value" means:
(1) as to cash, the amount thereof; and
(2) as to an asset other than cash:
(A) the amount at which that asset could be | ||
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(B) quoted market price for the asset in active | ||
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(C) if quoted market prices are not available, a | ||
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"Fully funded" means that, with respect to an SPRV contract, the fair value
of the assets held in trust by or on behalf of the SPRV under the SPRV contract
on the date on which the SPRV contract is effected, equals or exceeds the
aggregate limit as defined in this Article.
"Indemnity trigger" means a transaction term by which the SPRV's obligation
to pay the ceding insurer for losses covered by an SPRV contract is triggered
by the ceding insurer incurring a specified level of losses.
"Insolvency" or "insolvent" means that the SPRV is unable to pay its
obligations when they are due, unless those obligations are the subject of a
bona fide dispute.
"Non-indemnity trigger" means a transaction term by which the SPRV's
obligation to pay the ceding insurer under an SPRV contract arises from the
occurrence or existence of some event or condition other than the ceding
insurer incurring a specified level of losses under its insurance or
reinsurance contracts.
"Permitted investments" means those investments that meet the qualifications
set forth in Section 179E-85.
"Qualified U.S. financial institution" means, for purposes of meeting the
requirements of a trustee under this Article, a financial institution that is
eligible to act as a fiduciary of a trust, and that is:
(1) organized or, in the case of a U.S. branch or | ||
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(2) regulated, supervised, and examined by federal or | ||
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"Special purpose reinsurance vehicle" or "SPRV" means an entity, domiciled in
and organized under the laws of this State, that has received a limited
certificate of authority from the Director under this Article exclusively for
the limited purpose of entering into and effectuating SPRV insurance
securitizations, SPRV contracts, and other related transactions permitted by
this Article.
"SPRV contract" means a contract between the SPRV and the ceding insurer
pursuant to which the SPRV agrees to pay the ceding insurer an agreed amount
upon the occurrence of a triggering event.
"SPRV insurance securitization" means a package of related risk transfer
instruments and facilitating administrative agreements by which proceeds are
obtained by an SPRV through the issuance of securities, which proceeds are held
in trust pursuant to the requirements of this Article to secure the obligations
of the SPRV under an SPRV contract with one or more ceding insurers, wherein
the SPRV's obligation to return the full initial investment to the holders of
those securities, pursuant to the transaction terms, is contingent upon those
funds not being used to pay the obligations of the SPRV to the ceding insurers
under the SPRV Contract.
"SPRV organizer" means one or more persons who have organized or intend to
organize an SPRV under authority obtained pursuant to Section 179E-20.
"SPRV securities" means the securities issued by an SPRV.
"Triggering event" means an event or condition that, if and when it occurs or
exists, obligates the SPRV to make a payment to the ceding insurer under the
provisions of an SPRV contract.
(Source: P.A. 92-124, eff. 7-20-01.)
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(215 ILCS 5/179E-20)
Sec. 179E-20.
Limited certificate of authority.
(a) Within 30 days after receipt by the Director of a complete filing by the
prospective SPRV organizer for authority to form or acquire an SPRV, which
SPRV shall exist and operate expressly for the limited purposes set forth in
this
Article, the application shall be deemed approved and a limited certificate of
authority shall be issued, unless before the expiration of the 30-day period
the
Director approves or disapproves the application in writing.
A limited certificate of authority may not be issued unless the country or
state
of domicile of each ceding insurer has notified the Director in writing that
they have not disapproved the transaction.
A complete filing
of the
application must include the following:
(1) an affidavit verifying that each prospective SPRV | ||
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(2) a representation that the prospective SPRV | ||
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(3) the proposed name of the subject SPRV;
(4) biographical descriptions of each SPRV organizer | ||
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(5) the source and form of the minimum capital to be | ||
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(6) any persons with which the SPRV is or, upon | ||
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(7) the names and biographical information of the | ||
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(8) a plan of operation, consisting of a description | ||
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(A) draft documentation or, at the discretion of | ||
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(B) the investment strategy of the SPRV and a | ||
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(C) a description of the method by which losses | ||
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(D) a representation that the trust agreement and | ||
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(b) The Director may not approve the application or issue a limited
certificate
of authority until he or she has found that the proposed plan of operation
provides a
reasonable expectation of a successful operation, based on the proposed SPRV
organizer, directors, and officers being of known good character and that
there
is no good reason to believe that they are affiliated, directly or indirectly,
through
ownership, control, management, reinsurance transactions, or other insurance or
business relations with any person or persons known to have been involved in
the
improper manipulation of assets, accounts or reinsurance.
(c) Upon approval by the Director of the application and the issuance of a
limited certificate of authority, the SPRV may be acquired or formed and, in
accordance with the approved plan of operation, the SPRV may enter into
contracts
and conduct other activities within the parameters set forth in the filed plan
of
operation.
(d) The limited certificate of authority so issued shall state that the
SPRV's
authorization to be involved in the business of reinsurance is limited to only
the
reinsurance activities that the SPRV is allowed to conduct under this Article.
(e) The SPRV organizer must provide a complete set of the documentation
of
the
insurance securitization to the Director upon closing of the transactions
including, but not
limited to, an opinion of legal counsel with respect to compliance with this
and any other
applicable laws as of the effective date of the transaction. Any material
change of the
SPRV's plan of operation described in items (1) through (8) of subsection (a)
including, but
not limited to, the issuance of new securities to continue the securitization
activities of the
SPRV under this Article after expiration and full satisfaction of the initial
securitization
transactions, requires prior approval of the Director, however, a change in the
counterparty
to swap transactions for an existing securitization as allowed under this
Article shall not be
deemed a material change. Any material change that is not disapproved by the
Director in
writing within 15 days after its submission shall be deemed approved.
(Source: P.A. 92-124, eff. 7-20-01.)
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(215 ILCS 5/179E-25)
Sec. 179E-25.
Limited purpose of SPRV.
This Article authorizes SPRVs to be
created for the limited purpose of entering into insurance securitization
transactions with
investors and into related agreements to pay one or more ceding insurers agreed
upon
amounts under an SPRV contract upon the occurrence of triggering events related
to the
insurance business of the ceding insurer. An SPRV may not issue a contract for
assumption
of risk or indemnification of loss other than an SPRV contract as defined
herein.
(Source: P.A. 92-124, eff. 7-20-01.)
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(215 ILCS 5/179E-30)
Sec. 179E-30.
Approved transactions and operation of SPRVs.
(a) SPRVs authorized under this Article may at any given time enter into and
effectuate SPRV contracts with one or more ceding insurers, provided that the
SPRV
contracts obligate the SPRV to indemnify the ceding insurer for losses and that
contingent
obligations of the SPRV under the SPRV contracts are securitized in full
through a single
SPRV insurance securitization and are fully funded and secured with assets held
in trust in
accordance with the requirements of this Article pursuant to agreements
contemplated by
this Article and invested in a manner that meets the criteria set forth in
Section 179E-85 of
this Article.
(b) An SPRV may enter into such agreements with third parties and conduct
such business as is necessary to fulfill its obligations and administrative
duties
incident to the insurance securitization and the SPRV contract. The agreements
may include entering into swap agreements or other transactions that have the
objective of leveling timing differences in funding up-front or ongoing
transaction
expenses or managing credit or interest rate risk of the investments
in trust to
assure that the assets held in trust will be sufficient to satisfy
(i) payment or
repayment of the securities issued pursuant to an insurance securitization
transaction or (ii) the obligations of the SPRV under the SPRV contract. In
fulfilling
its function, the SPRV shall adhere to the following requirements and shall, to
the
extent of its powers, ensure that contracts obligating other parties to perform
certain
functions incident to its operations are substantively and materially
consistent with
the following requirements and guidelines:
(1) An SPRV shall have a distinct name, which shall | ||
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(2) Unless otherwise provided in the plan of | ||
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(3) The assets of an SPRV must be preserved and | ||
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(4) Assets of the SPRV that are pledged to secure | ||
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(5) The agreement governing any trust must create | ||
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(6) The provisions for withdrawal by ceding insurers | ||
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(A) the ceding insurer shall have the right to | ||
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(B) no other statement or document need be | ||
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(C) the trust agreement must indicate that it is | ||
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(D) the trust agreement may not contain | ||
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(E) no reference may be made to the fact that the | ||
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(7) The trust agreement must be established for the | ||
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(8) The trust agreement must provide for the trustee | ||
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(A) receive assets and hold all assets in a safe | ||
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(B) determine that all assets are in a form so | ||
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(C) furnish to the SPRV, the Director, and the | ||
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(D) notify the SPRV and the ceding insurer, | ||
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(E) upon written demand of the ceding insurer, | ||
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(F) allow no substitutions or withdrawals of | ||
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(9) The trust agreement must provide that at least 30 | ||
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(10) The trust agreement may be made subject to and | ||
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(11) The trust agreement must prohibit invasion of | ||
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(12) The trust agreement must provide that the | ||
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(13) Notwithstanding the provisions of items (6)(C), | ||
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(A) to pay or reimburse the ceding insurer | ||
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(B) when the ceding insurer has received | ||
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(i) losses and loss expenses paid by the | ||
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(ii) reserves for losses reported and | ||
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(iii) reserves for losses incurred but not | ||
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(iv) reserves for loss expenses;
(v) reserves for unearned premiums; and
(vi) any other amounts that, together with | ||
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The provisions to be included in the trust agreement | ||
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(14) An SPRV contract
must contain provisions
that:
(A) require the SPRV to enter into a trust | ||
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(B) stipulate that assets deposited in the trust | ||
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(C) require the SPRV, before depositing assets | ||
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(D) require that all settlements of account | ||
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(E) stipulate that the SPRV and the ceding | ||
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(i) to transfer all of those assets into the | ||
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(ii) to pay any other amounts the ceding | ||
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(15) The SPRV contract entered into by the SPRV may | ||
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(A) at the time of the withdrawal, the SPRV | ||
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(B) after the withdrawals and transfer, the fair | ||
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(16) The investors in the SPRV must agree, and be | ||
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(17) Assets held by an SPRV in trust must be valued | ||
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(18) The proceeds from the sale of securities by the | ||
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(19) An SPRV organized under this Article, may engage | ||
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(20) The contracts or other documentation relating to | ||
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(21) Under no circumstances may an SPRV be authorized | ||
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(A) issue or otherwise administer primary | ||
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(B) have any obligation to the policyholders or | ||
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(C) enter into an SPRV contract with a person | ||
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(D) assume or retain exposure to insurance or | ||
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(22) At the cessation of business of an SPRV the | ||
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(23) It is unlawful for an SPRV to loan or otherwise | ||
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(Source: P.A. 92-124, eff. 7-20-01 .)
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(215 ILCS 5/179E-35)
Sec. 179E-35.
Powers.
(a) An SPRV authorized under this Article shall have the necessary
powers to enter
into contracts and to conduct such other commercial activities as are necessary
to fulfill the
purposes of this Article. Those activities may include, but are not limited
to, entering into
SPRV contracts, issuing securities of the SPRV and complying with the terms
thereof,
entering into trust, swap, and other agreements as may be necessary to
effectuate an
insurance securitization in compliance with the limitations and pursuant to the
authorities
granted to the SPRV under this Article or the plan of operation approved or
deemed
approved by the Director.
(b) An SPRV organized or doing business under this Article shall, by the
name
adopted by the SPRV, in law, be capable of suing or being sued, and may make or
enforce
contracts in relation to the business of the SPRV; may have and use a common
seal, and in
the name of the SPRV or by a trustee chosen by the board of directors, shall,
in law, be
capable of taking, purchasing, holding and disposing of real and personal
property for
carrying into effect the purposes of its organization; and may by its board of
directors,
trustees, officers, or managers, make by-laws and amendments thereto not
inconsistent with
the laws or the constitution of this State or of the United States, which
by-laws shall define
the manner of electing directors, trustees, or managers and officers of the
SPRV, together
with their qualifications and duties and fixing their term of office.
(Source: P.A. 92-124, eff. 7-20-01.)
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(215 ILCS 5/179E-40)
Sec. 179E-40.
Affiliation.
Notwithstanding the provisions
of Article
VIII 1/2, the SPRV, the SPRV organizer, and subsequent debt or equity
investors in SPRV
securities shall not be deemed affiliates of the ceding insurer by virtue of
the SPRV contract
between the ceding insurer and the SPRV, the securities of the SPRV, or related
agreements
necessary to implement the SPRV insurance securitization.
An SPRV may not be controlled by, may not control, and may not be under common
control with any ceding insurer that is a party to an SPRV contract.
(Source: P.A. 92-124, eff. 7-20-01.)
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(215 ILCS 5/179E-45)
Sec. 179E-45.
Capitalization.
An SPRV must have minimum initial capital of
not
less than $5,000. All of the initial capital must be received by the SPRV in
cash. The
minimum initial capital required and all other funds of the SPRV in excess of
its minimum
initial capital, including funds held in trust to secure the obligations of the
SPRV pursuant to
its obligations under the SPRV contracts, shall be invested as provided in
Section 179E-85.
(Source: P.A. 92-124, eff. 7-20-01.)
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(215 ILCS 5/179E-50)
Sec. 179E-50.
Dividends.
An SPRV may not declare or pay dividends in any
form
to its owners unless the dividends do not decrease the capital of the SPRV
below $5,000,
and after giving effect to the dividends, the assets of the SPRV, including
assets held in trust
pursuant to the terms of the insurance securitization, are sufficient to meet
its obligations.
Dividends may be declared by the board of directors of the SPRV if the
declaration of
dividends would not violate the provisions of this Article or jeopardize the
fulfillment of the
obligations of the SPRV or the trustee pursuant to the SPRV insurance
securitization, the
SPRV contract or any related transaction.
(Source: P.A. 92-124, eff. 7-20-01.)
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(215 ILCS 5/179E-55)
Sec. 179E-55.
Records and financial reports.
(a) The records of the SPRV must be maintained in this State and must be
available
for examination by the Department. The Director shall have the right to
examine the
records of an SPRV at any time. No later than 5 months after the fiscal year
end of the
SPRV, the SPRV must file with the Director an audit by a certified public
accounting firm
of the financial statements of the SPRV and the trust accounts.
(b) No later than March 1 of each year, an SPRV organized under this Article
must
file with the Director a statement of operations, including, but not limited
to, a statement of
income, a balance sheet, and a detailed listing of invested assets, including
identification of
assets held in trust to secure the SPRV's obligations under the SPRV contract,
for the year
ending the previous December 31. The statements shall be prepared in
accordance with
Section 136 of this Code on such forms and shall reveal such information as
shall be
required by the Director.
(c) An SPRV must keep its books and records in a manner so that its
financial
condition, affairs, and operations can be ascertained, its financial statements
filed with the
Director can be readily verified, and its compliance with the provisions of
this Article can be
determined. An SPRV may cause any or all of the books or records to be
photographed,
reproduced on film, or stored and reproduced electronically.
(d) All original books, records, documents, accounts, and vouchers, or
reproductions
of those items, must be preserved and kept available in this State for the
purpose of
examination and until authority to destroy or otherwise dispose of the records
is secured
from the Director. The original records may, however, be kept and maintained
outside this
State if, according to a plan adopted by the SPRV's board of directors and
approved by the
Director, it maintains other suitable records.
(Source: P.A. 92-124, eff. 7-20-01.)
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(215 ILCS 5/179E-60)
Sec. 179E-60.
Officers and directors.
(a) The directors of an SPRV shall elect such officers they deem necessary
to
carry
out the purposes of the SPRV pursuant to this Article. The provisions of
Section 10 of this
Code relating to the indemnification of officers and directors apply to and
govern SPRVs
organized under this Article.
(b) An SPRV authorized to do business in this State must notify the Director
of
the
appointment or election of any new officers or directors within 30 days after
the
appointment or election.
(c) If, after notice and hearing afforded to the officer or director, and
after
a finding
that the officer or director is incompetent or untrustworthy or of known bad
character, the
Director shall order the removal of the person. If the SPRV does not comply
with a removal
order within 30 days, the Director may suspend that SPRV's limited certificate
of authority
until such time as the order is complied with.
(d) An SPRV may not make loans to any SPRV organizer, owner, director,
officer, manager, or affiliate.
(Source: P.A. 92-124, eff. 7-20-01.)
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(215 ILCS 5/179E-65)
Sec. 179E-65.
Fees and taxes.
The Director may charge fees to reimburse
the
Director for expenses and costs incurred by the Department incident to the
examination of
financial statements and review of the plan of operation and to reimburse other
such
activities of the Director related to the formation and ongoing operation of an
SPRV. An
SPRV is not be subject to State premium or other State taxes incidental to the
operation of
its business as long as the business remains within the limitations of this
Article.
(Source: P.A. 92-124, eff. 7-20-01.)
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(215 ILCS 5/179E-70)
Sec. 179E-70.
Dissolution.
An SPRV operating under this Article may be
dissolved
by a vote of its board of directors at any time after the Director has approved
that action. A
voluntary dissolution may not be effected or allowed until and unless all of
the obligations
of the SPRV pursuant to the insurance securitization have been fully and
finally satisfied
pursuant to their terms. In the case of voluntary dissolution, the disposition
of the affairs of
the SPRV (including the settlement of all outstanding obligations) shall be
made by the
officers or directors of the SPRV, and when the liquidation has been completed
and a final
statement, in acceptable form, filed with and approved, or deemed approved, by
the
Director, the provisions for voluntary dissolution under the laws of this State
shall be
followed to dissolve the SPRV.
(Source: P.A. 92-124, eff. 7-20-01.)
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(215 ILCS 5/179E-75)
Sec. 179E-75.
Conservation, rehabilitation, or liquidation.
(a) The provisions of Articles XIII and XIII 1/2 apply to an SPRV, except
to
the
extent modified in this Section.
(b) Notwithstanding the provisions of Section 188 of this Code, the Director
may
apply by petition to the Circuit Court of Cook County, the Circuit Court of
Sangamon
County, or the circuit court of the county in which an SPRV has or last had its
principal
office for an order authorizing the Director to conserve, rehabilitate or
liquidate an
SPRV domiciled in
this State solely on one or more of the following grounds:
(1) there has been embezzlement, wrongful | ||
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(2) the SPRV is insolvent and the holders of a | ||
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The court shall not grant relief under item (1) of this subsection
unless, after notice
and a hearing, the Director, who has the burden of proof, establishes by clear
and
convincing evidence that the relief should be granted.
(c) Notwithstanding any contrary provision in this Code, the rules
promulgated
under this Code, or any other applicable law or rule, upon any order of
conservation,
rehabilitation, or liquidation of the SPRV, the receiver shall be bound to deal
with the
SPRV's assets and liabilities, in accordance with the requirements set forth in
this Article.
(d) With respect to amounts recoverable under an SPRV contract, the amount
recoverable by the receiver may not be reduced or diminished as a result of the
entry of an
order of conservation, rehabilitation, or liquidation with respect to the
ceding insurer
notwithstanding any provisions to the contrary in the contracts or other
documentation
governing the SPRV insurance securitization.
(e) Notwithstanding the provisions of Article XIII and XIII 1/2 of this
Code, any
application, petition, or temporary restraining order or injunction issued
under those
Articles, with respect to a ceding insurer shall not prohibit the transaction
of any business by
an SPRV, including any payment by an SPRV made pursuant to an SPRV security, or
any
action or proceeding against an SPRV or its assets.
(f) Notwithstanding the provisions of Articles XIII and XIII 1/2 of this
Code, the
commencement of a summary proceeding or other interim proceeding commenced
before a
formal delinquency proceeding with respect to an SPRV, and any order issued by
the court
thereunder, shall not prohibit:
(1) the payment by an SPRV made pursuant to an SPRV | ||
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(2) the SPRV from taking any action required to make | ||
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(g) Notwithstanding any other provision of Articles XIII and XIII 1/2 of
this Code or
other State law:
(1) a receiver of a ceding insurer may not avoid a | ||
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(2) a receiver of an SPRV may not void a | ||
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(h) With the exception of the fulfillment of the obligations under an SPRV
contract,
and notwithstanding any other provisions of this Article or other law of this
State to the
contrary, the assets of an SPRV, including assets held in trust, may not be
consolidated with
or included in the estate of a ceding insurer in any delinquency proceeding
against the
ceding insurer under this Article for any purpose, including, without
limitation, distribution
to creditors of the ceding insurer.
(i) Notwithstanding any other provision of this Article:
(1) A domiciliary receiver of an SPRV domiciled in | ||
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(2) An ancillary proceeding may not be commenced or | ||
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(Source: P.A. 92-124, eff. 7-20-01.)
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(215 ILCS 5/179E-80)
Sec. 179E-80.
SPRV not subject to guaranty funds, residual market, or
similar
arrangements.
(a) An SPRV or the activities, assets, and obligations relating to the SPRV
are
not
subject to the provisions of Articles XXXIII 1/2 and XXXIV of this Code, and
an SPRV may
not be assessed by or otherwise be required to contribute to any guaranty fund
or guaranty
association in this State with respect to the activities, assets, or
obligations of an SPRV or
the ceding insurer.
(b) An SPRV may not be required to participate in residual market, FAIR
plan, or
other similar plans to provide insurance coverage, take out policies, assume
risks, make
capital contributions, pay or be otherwise obligated for assessments,
surcharges, or fees, or
otherwise support or participate in such plans or arrangements.
(Source: P.A. 92-124, eff. 7-20-01.)
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(215 ILCS 5/179E-85)
Sec. 179E-85.
Asset and investment limitations.
(a) Assets of the SPRV held in trust to secure obligations under the SPRV
contract
must at all times be held in:
(1) cash and cash equivalents;
(2) securities listed by the Securities Valuation | ||
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(3) any other form of security acceptable to the | ||
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(b) An SPRV may enter into swap agreements or other transactions that have
the
objective of leveling timing differences in funding of up-front or ongoing
transaction
expenses or managing credit or interest rate risk of the investments in the
trust to ensure that
the investments are sufficient to assure payment or repayment of:
(1) the securities (and related interest or principal | ||
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(2) the SPRV's obligations under the SPRV contract.
(Source: P.A. 92-124, eff. 7-20-01.)
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(215 ILCS 5/179E-90)
Sec. 179E-90.
Credit for reinsurance for the SPRV contract.
An SPRV contract meeting the requirements under this Article shall be
granted credit for reinsurance treatment or shall otherwise qualify as an asset
or a reduction
from liability for reinsurance ceded by a domestic insurer to an assuming
insurer under
Section 173.1 of this Code for the benefit of the ceding insurer, provided and
only to the
extent that (i) the fair value of the assets held in trust for the benefit of
the ceding insurer
equal or exceed the obligations due and payable to the ceding insurer by the
SPRV under the
SPRV contract, (ii) the assets are held in trust in accordance with the
requirements set forth
in this Article, (iii) the assets are administered in the manner and pursuant
to arrangements
as set forth in this Article, and (iv) the assets are held or invested in one
or more of the
forms allowed in Section 179E-85.
(Source: P.A. 92-124, eff. 7-20-01.)
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(215 ILCS 5/179E-95)
Sec. 179E-95.
Insurance securitization deemed not to be transaction of
insurance
business. The securities issued by the SPRV under an SPRV insurance
securitization shall
not be deemed to be insurance or reinsurance contracts. An investor in
securities issued
pursuant to an SPRV insurance securitization or any holder of those securities
shall not, by
sole means of the investment or holding, be deemed to be transacting an
insurance business
in this State. The underwriters or selling agents (and their partners,
directors, officers,
members, managers, employees, agents, representatives, and advisors) involved
in an SPRV
insurance securitization shall not be deemed to be conducting an insurance or
reinsurance
agency, brokerage, intermediary, advisory, or consulting business by virtue of
their activities
in connection therewith.
(Source: P.A. 92-124, eff. 7-20-01.)
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(215 ILCS 5/179E-100)
Sec. 179E-100.
Authority to adopt rules.
The Director may promulgate rules
necessary to effectuate the purposes of this Article. Any rules so promulgated
will not
affect any existing SPRV insurance securitization in effect at the time of the
promulgation.
(Source: P.A. 92-124, eff. 7-20-01.)
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(215 ILCS 5/Art. XII heading) ARTICLE XII.
DOMESTICATION OF
FOREIGN AND ALIEN COMPANIES
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(215 ILCS 5/180) (from Ch. 73, par. 792)
Sec. 180.
Companies that may domesticate.
(1) Any domestic, foreign, or alien stock company, mutual company,
assessment legal reserve company, reciprocal, or fraternal benefit
society, authorized or which may be authorized to do business in this
State, may reorganize under the laws of this State (including a
reorganization as a captive insurance company under the laws of this
State), by complying with the provisions of this Article.
(2) As used in this Article: "reorganize" means reorganize, reincorporate,
or domesticate as an Illinois insurer; "reorganization" means reorganization,
reincorporation, or domestication as an Illinois insurer; "reorganized company"
means any company that has availed itself of the provisions of this Article,
and the reorganization of which has been effected as in this Article provided;
and "similar domestic company" means, in the case of an application for
reorganization as a domestic captive insurance company, a domestic captive
insurance company organized under Article VIIC.
(Source: P.A. 87-1216.)
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(215 ILCS 5/181) (from Ch. 73, par. 793)
Sec. 181.
Articles of reorganization.
(1) The board of directors, trustees or other governing body of any such
company desiring to reorganize under this Article shall comply with all
laws and requirements of its domiciliary state or country with reference to
reorganization under the laws of another state or country.
(2) Such board of directors, trustees or other governing body shall
adopt a resolution approving articles of reorganization setting forth:
(a) the name of the company; and if the name of the company upon
reorganization is to be changed, the proposed name of the reorganized
company;
(b) the title of the act under which it was organized or incorporated;
(c) the matters required to be set forth in original articles of
incorporation of a similar domestic company;
(d) that it shall be bound by all the terms and provisions of this Code,
applicable to similar domestic companies organized or incorporated
thereunder; and
(e) such other particulars as are deemed necessary or advisable.
(Source: P.A. 86-632; 86-634; 86-1028.)
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(215 ILCS 5/182) (from Ch. 73, par. 794)
Sec. 182.
Execution
of articles.
The articles of reorganization shall be executed in duplicate by the
president or vice-president, and secretary or assistant secretary of the
company, or the executive officers corresponding thereto, and shall be
acknowledged and sworn to.
(Source: Laws 1937, p. 696.)
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(215 ILCS 5/183) (from Ch. 73, par. 795)
Sec. 183.
Certificate of Reorganization - Date Reorganization Effected.
(1) Upon the execution of the articles of reorganization there shall be
delivered to the Director
(a) two duplicate originals of the articles;
(b) a copy of the resolution of the board of directors, trustees or
other governing body, adopting said articles, duly certified by the
secretary of the company or officer corresponding thereto;
(c) information satisfactory to the Director that the company has
complied with all the laws
and requirements of the domiciliary state or country with
reference to the proposed reorganization and the protection of
policyholders; and
(d) securities of the kind and amount, if any, required as a deposit of
a similar domestic company doing the same kind or kinds of business
proposed to be done by the reorganized company.
(2) If the Director finds that the articles of reorganization are in
accordance with the provisions of this Article, and that the company has
complied with all provisions of this Code applicable to similar domestic
companies, he shall approve the articles of reorganization and shall forthwith file
one of the duplicate originals of the articles, together with the
resolution and certificate of reorganization and certificate of
authority, in his office, endorse upon the other duplicate
original, his approval thereof, and deliver it together with a certificate
of reorganization and a certificate of authority to the reorganized
company. Upon such filing, the reorganization of the company shall be effected.
(Source: P.A. 85-131.)
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(215 ILCS 5/184) (from Ch. 73, par. 796)
Sec. 184.
Recording Articles of Reorganization.
The articles of reorganization, approved by the Director and returned to
the reorganized company, shall be recorded in the office of the recorder
in the county where the principal office of the reorganized company
is to be located.
(Source: P.A. 85-131.)
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(215 ILCS 5/185) (from Ch. 73, par. 797)
Sec. 185.
Board of
directors, trustees, etc. to continue.
The directors, trustees, or members of any other governing body of the
company so reorganized, shall become the directors, trustees or members of
the governing body of the reorganized company and shall hold office until
their successors are elected or chosen in the manner provided therefor by
the articles of reorganization.
(Source: Laws 1937, p. 696.)
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(215 ILCS 5/185.1) (from Ch. 73, par. 797.1)
Sec. 185.1.
Effect of Reorganization.
When the reorganization has been effected:
(a) The articles of reorganization shall be the articles of
incorporation of the reorganized company and said company shall continue
in existence as, and thereafter
be, a company of this State.
(b) The reorganized company shall make its reports in accordance with
the laws of this State and shall be subject to the exclusive regulation and
supervision by the Department of Insurance of this State and shall be subject
to regulation
and supervision by the Insurance Departments of other states and countries
as a foreign or alien company.
(c) The reorganized company shall have all of the rights, privileges,
immunities and powers and shall be subject to all of the duties and
liabilities granted or imposed by this Code
(except in the case of a domestic captive insurance company, which
shall have all of the rights, privileges, immunities and powers and shall
be subject to all of the duties and liabilities granted or imposed by
Article VIIC of this Code).
(d) The reorganized company shall thereupon and thereafter possess all
the rights, privileges, immunities, powers and franchises of a public as
well as a private nature, theretofore possessed by the company so
reorganized. Without limiting the generality of the foregoing, (i) the
agency appointments, licenses, certificates of authority and rates which
are in existence at the time of the reorganization of such reorganized
company takes effect shall continue in full force and effect;
(ii) all property, real, personal and mixed, and all debts due
on whatever account, including subscriptions to shares, assessments payable
from members or policyholders, and all other choses in action, and all and
every other interest of, or belonging to or due to the company so
reorganized, shall be deemed to be transferred to and vested in the
reorganized company without further act or deed; and (iii) the title to any
real estate or any interest therein theretofore vested in the company so
reorganized, shall not revert or be in any way impaired by reason of such
reorganization.
(e) The reorganized company shall thenceforth be responsible and liable
for all the liabilities and obligations of the company so reorganized. Any
claim existing, or action or proceeding pending by or against the company
so reorganized, may be prosecuted to judgment as if such reorganization had
not taken place, or such reorganized company may be substituted in its
place. Neither the rights of creditors nor any liens upon the property of
the company so reorganized, shall be impaired by such reorganization, but
such liens shall be limited to the property upon which they were liens
immediately prior to the reorganization, unless otherwise provided in the
articles of reorganization.
(Source: P.A. 85-131.)
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