97TH GENERAL ASSEMBLY
State of Illinois
2011 and 2012
SB3266

 

Introduced 2/1/2012, by Sen. Jeffrey M. Schoenberg

 

SYNOPSIS AS INTRODUCED:
 
215 ILCS 5/126.3

    Amends the Illinois Insurance Code. Provides that no domestic insurer shall acquire any investment respecting a foreign jurisdiction, or any investment denominated in the currency of that foreign jurisdiction, if that jurisdiction is designated as a state sponsor of terrorism by the United States Secretary of State pursuant to the federal Export Administration Act, the Arms Export Control Act, and the Foreign Assistance Act.


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A BILL FOR

 

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1    AN ACT concerning insurance.
 
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 126.3 as follows:
 
6    (215 ILCS 5/126.3)
7    Sec. 126.3. General investment qualifications.
8    A. Insurers may acquire, hold or invest in investments or
9engage in investment practices as set forth in this Article.
10Insurers may also acquire, hold or invest in investments not
11conforming to the requirements of this Article that are not
12otherwise prohibited by this Code. Investments not conforming
13to this Article shall not be admitted assets unless they are
14acquired under other authority of this Code.
15    B. Subject to subsection C of this Section, an insurer
16shall not acquire or hold an investment as an admitted asset
17unless at the time of acquisition it is:
18        (1) Eligible for the payment or accrual of interest or
19    discount (whether in cash or other forms of income or
20    securities), eligible to receive dividends or other
21    distributions or is otherwise income producing; or
22        (2) Acquired under Section 126.15B, 126.15C, 126.16,
23    126.18, 126.20, 126.28C, 126.29, 126.31, or 126.32 or under

 

 

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1    the authority of Sections of the Code other than this
2    Article.
3    C. An insurer may acquire or hold as admitted assets
4investments that do not otherwise qualify as provided in this
5Article if the insurer has not acquired them for the purpose of
6circumventing any limitations contained in this Article, if the
7insurer acquires the investments in the following
8circumstances and the insurer complies with the provisions of
9Sections 126.5 and 126.7 as to the investments:
10        (1) As payment on account of existing indebtedness or
11    in connection with the refinancing, restructuring or
12    workout of existing indebtedness, if taken to protect the
13    insurer's interest in that investment;
14        (2) As realization on collateral for indebtedness;
15        (3) In connection with an otherwise qualified
16    investment or investment practice, as interest on or a
17    dividend or other distribution related to the investment or
18    investment practice or in connection with the refinancing
19    of the investment, in each case for no additional or only
20    nominal consideration;
21        (4) Under a lawful and bona fide agreement of
22    recapitalization or voluntary or involuntary
23    reorganization in connection with an investment held by the
24    insurer; or
25        (5) Under a bulk reinsurance, merger or consolidation
26    transaction approved by the Director if the assets

 

 

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1    constitute admissible investments for the ceding, merged
2    or consolidated companies.
3    D. An investment or portion of an investment acquired by an
4insurer under subsection C of this Section shall become a
5nonadmitted asset 3 years (or 5 years in the case of mortgage
6loans and real estate) from the date of its acquisition, unless
7within that period the investment has become a qualified
8investment under a Section of this Article other than
9subsection C of this Section, but an investment acquired under
10an agreement of bulk reinsurance, merger or consolidation may
11be qualified for a longer period if so provided in the plan for
12reinsurance, merger or consolidation as approved by the
13Director. Upon application by the insurer and a showing that
14the nonadmission of an asset held under subsection C of this
15Section would injure the interests of the insurer, the Director
16may extend the period for admissibility for an additional
17reasonable period of time.
18    E. Except as provided in subsections F and H of this
19Section, an investment shall qualify under this Article if, on
20the date the insurer committed to acquire the investment or on
21the date of its acquisition, it would have qualified under this
22Article. For the purposes of determining limitations contained
23in this Article, an insurer shall give appropriate recognition
24to any commitments to acquire investments.
25    F.  (1) An investment held as an admitted asset by an
26    insurer on the effective date of this amendatory Act of

 

 

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1    1997 which qualified immediately prior to the effective
2    date of this amendatory Act of 1997 shall remain qualified
3    as an admitted asset under this Article.
4        (2) Each specific transaction constituting an
5    investment practice of the type described in this Article
6    immediately prior to the effective date of this amendatory
7    Act of 1997 that was lawfully entered into by an insurer
8    and was in effect on the effective date of this amendatory
9    Act of 1997 shall continue to be permitted under this
10    Article until its expiration or termination under its
11    terms.
12    G. Unless otherwise specified, an investment limitation
13computed on the basis of an insurer's admitted assets or
14capital and surplus shall relate to the amount required to be
15shown on the statutory balance sheet of the insurer most
16recently required to be filed (annual or last quarter) with the
17Director. Solely for purposes of computing any limitation under
18this Article based upon admitted assets, the insurer shall
19deduct from the amount of its admitted assets the amount of the
20liability recorded on such statutory balance sheet for:
21        (1) The return of acceptable collateral received in a
22    reverse repurchase transaction or a securities lending
23    transaction;
24        (2) Cash received in a dollar roll transaction; and
25        (3) The amount reported as borrowed money in such
26    statutory balance sheet to the extent not included in

 

 

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1    paragraphs (1) and (2) of this subsection.
2    H. An investment qualified, in whole or in part, for
3acquisition or holding as an admitted asset may be qualified or
4requalified at the time of acquisition or a later date, in
5whole or in part, under any other Section, if the relevant
6conditions contained in the other Section are satisfied at the
7time of qualification or requalification.
8    I. An insurer shall maintain documentation demonstrating
9that investments were acquired in accordance with this Article,
10and specifying the Section of this Article under which they
11were acquired.
12    J. An insurer shall not enter into an agreement to purchase
13securities in advance of their issuance for resale to the
14public as part of a distribution of the securities by the
15issuer or otherwise guarantee the distribution, except that an
16insurer may acquire privately placed securities with
17registration rights.
18    K. Notwithstanding the provisions of this Article, the
19Director, for good cause, may order an insurer to nonadmit,
20limit, dispose of, withdraw from or discontinue an investment
21or investment practice in accordance with Article XXIV. The
22authority of the Director under this subsection is in addition
23to any other authority of the Director.
24    L. No domestic insurer shall acquire any investment
25respecting a foreign jurisdiction, or any investment
26denominated in the currency of that foreign jurisdiction, if

 

 

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1that jurisdiction is designated as a state sponsor of terrorism
2by the United States Secretary of State pursuant to Section
36(j) of the Export Administration Act, Section 40 of the Arms
4Export Control Act, and Section 620A of the Foreign Assistance
5Act.
6(Source: P.A. 90-418, eff. 8-15-97.)