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Illinois Compiled Statutes
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INSURANCE (215 ILCS 5/) Illinois Insurance Code. 215 ILCS 5/179A-20
(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
(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 | | shall extend only to the protected cell assets attributable to that protected cell, and the person shall, in respect of that obligation, be entitled to have recourse only to the protected cell assets attributable to that protected cell; and
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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
(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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