99TH GENERAL ASSEMBLY
State of Illinois
2015 and 2016
HB0074

 

Introduced , by Rep. Lou Lang

 

SYNOPSIS AS INTRODUCED:
 
215 ILCS 5/53  from Ch. 73, par. 665

    Amends the Illinois Insurance Code. Makes a technical change in a Section concerning deposits of securities.


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A BILL FOR

 

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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 Section 53 as follows:
 
6    (215 ILCS 5/53)  (from Ch. 73, par. 665)
7    (Section scheduled to be repealed on January 1, 2017)
8    Sec. 53. Deposit.
9    (a) A company subject to the 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 having a fair market value
13equal to the minimum surplus required to be maintained under
14Section 43. The Director may release the required deposit of
15securities upon receipt of an order of a court having proper
16jurisdiction or upon: (i) certification by the company that it
17has no outstanding creditors, policyholders, or policy
18obligations in effect and no plans to engage in the business of
19insurance; (ii) receipt of a lawful resolution of the company's
20board of directors effecting the surrender of its articles of
21incorporation for administrative dissolution by the Director;
22and (iii) receipt of the name and forwarding address for each
23of the final officers and directors of the company, together

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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1include, but need not be limited to, whether the market value
2of the securities cannot be readily ascertained and the lack of
3liquidity of the securities. Securities refused under this
4subsection (e) are not acceptable as deposits.
5    (f) All deposits required of a domestic insurer pursuant to
6the laws of another state, province, or country must be
7comprised of securities of the kinds required under subsection
8(b), having the characteristics required under subsections (c)
9and (d), and permitted by the laws of the other state,
10province, or country, except common stocks, mortgages or loans
11of any kind, real estate investment trust funds or programs,
12commercial paper, and letters of credit.
13(Source: P.A. 98-110, eff. 1-1-14; 98-969, eff. 1-1-15.)