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Illinois Compiled Statutes
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INSURANCE (215 ILCS 5/) Illinois Insurance Code. 215 ILCS 5/178
(215 ILCS 5/178)
Sec. 178. (Repealed).
(Source: Laws 1937, p. 696. Repealed by P.A. 98-692, eff. 7-1-14; 98-969, eff. 1-1-15.)
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215 ILCS 5/179
(215 ILCS 5/179) (from Ch. 73, par. 791)
Sec. 179.
Payment of
fees to officer or director prohibited.
(1) No director or officer of any company, party to a reinsurance
agreement, except as fully expressed in the reinsurance agreement, shall
receive any fee, commission, other compensation or valuable consideration
whatever, directly or indirectly, for in any manner aiding, promoting or
assisting in the negotiation of such reinsurance agreement.
(2) Any person violating the provisions of this section shall be guilty
of a Class A misdemeanor.
(Source: P.A. 77-2699.)
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215 ILCS 5/179a
(215 ILCS 5/179a)
Sec. 179a.
Managing general agent prohibition.
(a) No managing general agent, as defined in Section 141a, shall receive any
compensation or remuneration for, or in any manner profit from, obtaining or
arranging reinsurance for a domestic company with respect to business
underwritten by that managing general agent.
(b) Any person violating the provisions of this Section is guilty of a Class
A misdemeanor.
(Source: P.A. 88-364.)
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215 ILCS 5/179b
(215 ILCS 5/179b)
Sec. 179b.
Reinsurance committee.
Each domestic company that cedes any
reinsurance must establish and maintain a reinsurance committee with not fewer
than 3 members, at least one of which must be a member of the company's board
of directors. The committee shall review and approve all treaty reinsurance
placements and review and approve guidelines for facultative placements for the
company, with the
exception of a reinsurance agreement in which the aggregate premium ceded in
any one year is
less than 1% of the company's annual gross written premium.
The committee shall give special attention to reinsurers' financial
strength and performance record.
(Source: P.A. 88-364.)
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215 ILCS 5/Art. XI.5
(215 ILCS 5/Art. XI.5 heading)
ARTICLE XI 1/2.
PROTECTED CELL COMPANIES
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215 ILCS 5/179A-1
(215 ILCS 5/179A-1)
Sec. 179A-1.
Short title.
This Article may be cited as the Protected Cell
Company
Law.
(Source: P.A. 91-278, eff. 7-23-99.)
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215 ILCS 5/179A-5
(215 ILCS 5/179A-5)
Sec. 179A-5.
Purpose.
This Article is adopted to provide a basis for the
creation of protected cells by a domestic insurer
as one means of accessing alternative sources of capital and achieving the
benefits of insurance securitization. Investors in fully funded insurance
securitization transactions provide funds that are available to pay the
insurer's insurance obligations or to repay the investors or both. The
creation of protected cells is intended to be a means to achieve more
efficiencies in conducting insurance securitizations.
Under the
terms of the typical debt instrument underlying an insurance securitization
transaction, prepaid
principal is repaid to the investor on a specified maturity date with interest,
unless a trigger event
occurs. The insurance securitization proceeds secure both the protected
cell company's insurance obligations if a trigger event occurs,
as well as the
protected cell company's obligation to repay the insurance
securitization investors if a trigger event
does not occur. Insurance securitization transactions have
been performed
through alien companies
in order to utilize efficiencies available to alien companies that are not
currently available to
domestic companies. This Article is adopted in order to create more
efficiency in conducting
insurance securitization,
to allow domestic companies easier access to alternative sources of capital,
and to promote the
benefits of insurance securitization generally.
(Source: P.A. 91-278, eff. 7-23-99; 92-74, eff. 7-12-01.)
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215 ILCS 5/179A-10
(215 ILCS 5/179A-10)
Sec. 179A-10.
Definitions.
"Domestic company" means an insurance company domiciled in the State of
Illinois.
"Fully funded" means that, with respect to any exposure attributed to a
protected cell, the market value of the protected cell assets, on the date on
which the insurance securitization is effected, equals or exceeds the maximum
possible exposure attributable to the protected cell with respect to those
exposures.
"General account" means the assets and liabilities of a protected cell
company
other than
protected cell assets and protected cell liabilities.
"Indemnity trigger" means a transaction term by which relief of
the issuer's
obligation to repay
investors is triggered by its incurring a specified level of
losses under its insurance or
reinsurance contracts.
"Market value" has the meaning given that term in Article VIII of
this Code
(Investments of Domestic Companies).
"Non-indemnity trigger" means a transaction term by which relief of the
issuer's obligation to repay investors is triggered solely by some event or
condition other than the individual protected cell company incurring a
specified level of losses under its insurance or reinsurance contracts.
"Protected cell" means an identified pool of assets and liabilities of a
domestic company
segregated and insulated by means of this Article from the remainder of the
company's assets
and liabilities.
"Protected cell account" means a specifically identified bank or custodial
account established by
a protected cell company for the purpose of segregating the
protected cell assets of
one protected cell from the protected cell assets of other protected cells and
from the assets of the
protected cell company's general account.
"Protected cell assets" means all assets, contract rights, and general
intangibles identified with and attributable to
a
specific protected cell
of a protected cell company.
"Protected cell company" means a domestic company that has one or more
protected cells.
"Protected cell company insurance securitization"
means the issuance of debt instruments, the proceeds from which support the
exposures attributed to the protected cell, by a protected cell company where
repayment of principal or interest, or both, to investors pursuant to the
transaction terms is contingent upon the occurrence or nonoccurrence of an
event with respect to which the protected cell company is exposed to loss under
insurance or reinsurance contracts it has issued.
"Protected cell liabilities" means all liabilities and other obligations
identified with and
attributable to a specific
protected cell of a protected cell company.
(Source: P.A. 91-278, eff. 7-23-99; 92-74, eff. 7-12-01.)
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215 ILCS 5/179A-15
(215 ILCS 5/179A-15)
Sec. 179A-15.
Establishment of protected cells.
(a) A domestic company may,
with the prior written approval by the Director of a
plan of operation
submitted by the domestic company with respect to each protected cell,
establish one or more
protected cells in connection with an insurance securitization. Upon the
written approval by the Director of the plan of
operation, which shall
include, but not be limited to, the specific business and investment
guidelines
of the protected
cell, the protected cell company may, in accordance with the approved plan
of operation,
attribute to the
protected cell insurance obligations with
respect to
its insurance
business and obligations relating to the insurance securitization and
assets to fund those obligations. A protected cell shall have
its own distinct name
or designation, which shall include the words "protected cell". The protected
cell company
shall transfer all
assets attributable to a protected cell to one or more separately established
and identified
protected cell accounts bearing the name or designation of that protected cell.
Protected cell
assets shall be held in the protected cell accounts for the purpose of
satisfying the obligations of
that protected cell.
(b) All attributions of assets and
liabilities between a protected
cell and the general account shall be in accordance
with the
plan
of operation approved by the Director. No
other
attribution of assets or
liabilities may be made by a protected cell company
between the
protected cell company's general account and its
protected cells.
Any attribution of assets and
liabilities between the general account and a protected cell
or from investors in the form of principal on a debt instrument
issued by a
protected cell company shall be in cash or in readily marketable securities
with
established market values.
(c) The creation of a protected cell does not create, in respect of that
protected cell, a legal person
separate from the protected cell company. Amounts attributed to a protected
cell under this
Article, including
assets transferred to a protected cell account, are owned by the protected
cell company and
the protected cell company may
not be, nor hold itself out to be, a trustee with respect to those protected
cell assets of that
protected cell account. Notwithstanding the foregoing, the company may allow
for a security
interest to attach to protected cell assets or a protected cell account when in
favor of a creditor of
the protected cell and otherwise allowed under applicable law.
(d) This Article shall not be construed to prohibit the protected cell
company from
contracting with or
arranging for an investment advisor, commodity trading advisor, or other third
party to manage
the protected cell assets of a protected cell, provided that all remuneration,
expenses, and other
compensation of the third party advisor or manager are payable from the
protected cell assets of
that protected cell and not from the protected cell assets of other protected
cells or the assets of
the protected cell company's general account.
(e) A protected cell company shall
establish
administrative and
accounting procedures necessary to properly identify the one or more
protected cells of the
protected cell company and the protected cell assets and protected cell
liabilities
attributable to the protected cells. It shall be
the duty of the directors of a protected cell company to:
(1) keep protected cell assets and protected cell | | liabilities separate and separately identifiable from the assets and liabilities of the protected cell company's general account; and
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(2) keep protected cell assets and protected cell
| | liabilities attributable to one protected cell separate and separately identifiable from protected cell assets and protected cell liabilities attributable to other protected cells.
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If this Section is violated,
the remedy of tracing shall
be
applicable to protected cell assets when commingled with protected cell assets
of other protected
cells or the assets of the protected cell company's general account.
The remedy of tracing shall not be construed as an exclusive remedy.
(f) The protected cell company shall, when
establishing a protected cell, attribute to the protected cell assets with a
value at least equal to the reserves and other insurance liabilities attributed
to that protected cell.
(Source: P.A. 91-278, eff. 7-23-99; 92-74, eff. 7-12-01.)
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