215 ILCS 5/ Illinois Insurance Code.

(215 ILCS 5/59.2)

(Section scheduled to be repealed on January 1, 2027)

Sec. 59.2. Formation of mutual insurance holding company and conversion of mutual company to stock company.

(1) Definitions. For the purposes of this Section, the following terms shall have the meanings indicated:

(a) "Converted company" means an Illinois domiciled stock insurance company subject to the provisions of Article II, except as otherwise provided in this Section, that continues in existence after a reorganization under this Section in connection with the formation of a mutual holding company.

(b) "Converted mutual holding company" means the stock corporation into which a mutual holding company has been converted in accordance with Section 59.1 and subsection (13) of this Section.

(c) "Eligible member" means a member as of the date the board of directors adopts a plan of MHC conversion under this Section. For the conversion of a mutual holding company, "eligible member" means a member of the mutual holding company who is of record as of the date the mutual holding company board of directors adopts a plan of conversion under Section 59.1.

(d) "Intermediate holding company" means a corporation authorized to issue one or more classes of capital stock, the corporate purposes of which include holding directly or indirectly the voting stock of a converted company.

(e) "Member" means a person who, on the records of the mutual company and pursuant to its articles of incorporation or bylaws, is deemed to be a holder of a membership interest in the mutual company and shall also include a person or persons insured under a group policy, subject to the following conditions:

(i) the person is insured or covered under a group life policy or group annuity contract under which funds are accumulated and allocated to the respective covered persons;

(ii) the person has the right to direct the application of the funds so allocated;

(iii) the group policyholder makes no contribution to the premiums or deposits for the policy or contract; and

(iv) the mutual company has the names and addresses of the persons covered under the group life policy or group annuity contract.

On and after the effective date of a plan of MHC conversion under this Section, the term "member" shall mean a member of the mutual holding company created thereby.

(f) "Mutual holding company" or "MHC" means a corporation resulting from a reorganization of a mutual company under this Section. A mutual holding company shall be subject to the provisions of this Article and to any other provisions of this Code applicable to mutual companies, except as otherwise provided in this Section. The articles of incorporation of a mutual holding company shall include provisions setting forth the following:

(i) that it is a mutual holding company organized under this Article;

(ii) that the mutual holding company may hold not less than a majority of the shares of voting stock of a converted company or an intermediate holding company, which in turn holds directly or indirectly all of the voting stock of a converted company;

(iii) that it is not authorized to issue any capital stock except pursuant to a conversion in accordance with the provisions of Section 59.1 and subsection (13) of this Section;

(iv) that its members shall have the rights specified in this Section and in its articles of incorporation and bylaws; and

(v) that its assets shall be subject to inclusion in the estate of the converted company in any proceedings initiated by the Director against the converted company under Article XIII.

(g) "Mutual company" means for purposes of this Section a mutual life insurer or mutual property-casualty insurer that may convert pursuant to a plan of MHC conversion under this Section.

(h) "Plan of MHC conversion," or "plan" when used in this Section means a plan adopted pursuant to this Section by the board of directors of an Illinois domestic mutual company for the conversion of the mutual company into a direct or indirect stock subsidiary of a mutual holding company.

(i) "Policy" includes any group or individual insurance policy or contract issued by a mutual company, including an annuity contract. The term policy does not include a certificate of insurance issued in connection with a group policy or contract.

(j) "Policyholder" means the holder of a policy other than a reinsurance contract.

(2) Formation of mutual holding company and conversion of mutual company. A mutual company, upon approval of the Director, may reorganize by forming a mutual holding company and continue the corporate existence of the reorganizing mutual company as a stock insurance company in accordance with this Section. Upon effectiveness of a plan of MHC conversion, and without any further action:

(a) The mutual company shall become a stock corporation, the membership interests of the policyholders in the mutual company shall be deemed extinguished and all eligible members of the mutual company shall be and become members of the mutual holding company, in accordance with the articles of incorporation and bylaws of the mutual holding company and the applicable provisions of this Section and Article III; and

(b) all of the shares of the capital stock of the converted company shall be issued to the mutual holding company, which at all times shall own a majority of the shares of the voting stock of the converted company, except that either at the time of conversion, or at a later time with the approval of the Director, an intermediate holding company or companies may be created, so long as the mutual holding company at all times owns directly or indirectly a majority of the shares of the voting stock of the converted company.

(3) MHC membership interests.

(a) No member of a mutual holding company may transfer membership in the mutual holding company or any right arising from the membership.

(b) A member of a mutual holding company shall not, as a member, be personally liable for the acts, debts, liabilities, or obligations of the company.

(c) No assessments of any kind may be imposed upon the members of a mutual holding company by the directors or members, or because of any liability of any company owned or controlled by the mutual holding company or because of any act, debt, liability, or obligation of the mutual holding company itself.

(d) A membership interest in a domestic mutual holding company shall not constitute a security under any law of this State.

(4) Adoption of the plan of MHC conversion by the board of directors.

(a) A mutual company seeking to convert to a mutual holding company structure shall, by the affirmative vote of two-thirds of its board of directors, adopt a plan of MHC conversion consistent with the requirements of subsection (8) of this Section.

(b) At any time before approval of a plan by eligible members, the mutual company, by the affirmative vote of two-thirds of its board of directors, may amend or withdraw the plan of MHC conversion.

(5) Approval of the plan of MHC conversion by the Director.

(a) Required findings. After adoption or amendment of the plan by the mutual company's board of directors, the plan of MHC conversion shall be submitted to the Director for review and approval. The Director shall hold a public hearing on the plan. The Director shall approve the plan upon finding that:

(i) the provisions of this Section have been complied with; and

(ii) the plan is fair and equitable as it relates to the interests of the members.

(b) Documents to be filed.

(i) Prior to the members' approval of the plan of MHC conversion, a mutual company seeking the Director's approval of a plan shall file the following documents with the Director for review and approval:

(A) the plan of MHC conversion;

(B) the form of notice required by item (b) of subsection (6) of this Section for eligible members to vote on the plan;

(C) any proxies to be solicited from eligible members and any other soliciting materials;

(D) the proposed articles of incorporation and bylaws of the mutual holding company, each intermediate holding company, if any, and the revised articles of incorporation and bylaws of the converted company.

Once filed, these documents shall be approved or disapproved by the Director within a reasonable time.

(ii) After the members have approved the plan, the converted company shall file the following documents with the Director:

(A) the minutes of the meeting of the members at which the plan of MHC conversion was voted upon; and

(B) the articles and bylaws of the mutual holding company and each intermediate holding company, if any, and the revised articles of incorporation and bylaws of the converted company.

(c) The Director's approval of a plan pursuant to this subsection (5) may be made conditional at the sole discretion of the Director whenever he determines that such conditions are reasonably necessary to protect policyholder interests. Such conditions may include, but shall not be limited to, limitations, requirements, or prohibitions as follows:

(i) prior approval of any acquisition or formation of affiliate entities of the MHC;

(ii) prior approval of the capital structure of any intermediate holding company or any changes thereto;

(iii) prior approval of any initial public offering or other issuance of equity or debt securities of an intermediate holding company or the converted company in a private sale or public offering;

(iv) prior approval of the expansion of the mutual holding company system into lines of business, industries, or operations not presented at the time of the conversion;

(v) limitations on dividends and distributions if the effect would be to reduce capital and surplus of the converted company, in addition to any limitations which may otherwise be authorized by law; and

(vi) limitations on the pledge, incumbrance, or transfer of the stock of the converted company.

(d) Consultant. The Director may retain, at the mutual company's expense, any qualified expert not otherwise a part of the Director's staff to assist in reviewing the plan of MHC conversion.

(6) Approval of the plan by the members.

(a) Members entitled to notice of and to vote on the plan. All eligible members shall be given notice of and an opportunity to vote upon the plan of MHC conversion.

(b) Notice required. All eligible members shall be given notice of the members' meeting to vote upon the plan of MHC conversion. The notice shall identify in reasonable detail the benefits and risks of the MHC conversion. A copy of the plan of MHC conversion or a summary of the plan, if so authorized by the Director, shall accompany the notice. If a summary of the plan accompanies the notice, a copy of the plan shall be made available without charge to any eligible member upon request. The notice shall state that approval by the Director does not constitute a recommendation that eligible members approve the plan. The notice shall be mailed to each member's last known address, as shown on the mutual company's records, within 45 days of the Director's approval of the plan. The meeting to vote upon the plan shall not be set for a date less than 60 days after the date when the notice of the meeting is mailed by the mutual company. If the meeting to vote upon the plan is held coincident with the mutual company's annual meeting of policyholders, only one combined notice of meeting is required.

(c) Vote required for approval.

(i) After approval by the Director, the plan of MHC conversion shall be adopted, at an annual or special meeting of policyholders at which a quorum is present, upon receiving the affirmative vote of at least two-thirds of the votes cast by eligible members.

(ii) Members entitled to vote upon the proposed plan may vote in person or by proxy. Any proxies to be solicited from eligible members, together with the related proxy statement and any other soliciting materials, shall be filed with and approved by the Director.

(iii) The number of votes each eligible member may cast shall be determined by the mutual company's bylaws. If the bylaws are silent, each eligible member may cast one vote.

(7) Adoption of articles of incorporation. Adoption of articles of incorporation for the mutual holding company, each intermediate holding company, if any, and revised articles of incorporation for the converted company is necessary to implement the plan of MHC conversion. Procedures for adoption or revision of such articles shall be governed by the applicable provisions of this Code or, in the case of an intermediate holding company, the business corporation law of the state in which the intermediate holding company is incorporated. For a Class I mutual company, the members may adopt revised articles of incorporation at the same meeting at which the members approve the plan. For a Class 2 or 3 mutual company, the articles of incorporation may be adopted solely by the board of directors or trustees, as provided in Section 57 of this Code.

(8) Required provisions in a plan of MHC conversion. The following provisions shall be included in the plan of MHC conversion:

(a) The plan shall set forth the reasons for the proposed conversion.

(b) Effect of MHC conversion on existing policies.

(i) The plan shall provide that all policies of the converted company in force on the effective date of conversion shall continue to remain in force under the terms of those policies, except that any voting or other membership rights of the policyholders provided for under the policies or under this Code and any contingent liability policy provisions of the type described in Section 55 of this Code shall be extinguished on the effective date of the conversion.

(ii) The plan shall further provide that holders of participating policies in effect on the date of conversion shall continue to have the right to receive dividends as provided in the participating policies, if any.

(iii) Except for a mutual company's life policies, guaranteed renewable accident and health policies, and non-cancelable accident and health policies, the converted stock company may issue the insured a nonparticipating policy as a substitute for the participating policy upon the renewal date of a participating policy.

(iv) The plan shall provide that a Class I mutual company's participating life policies in force on the effective date of the conversion shall be operated by the converted company for dividend purposes as a closed block of participating business except that any or all classes of group participating policies may be excluded from the closed block. The plan shall establish one or more segregated accounts for the benefit of the closed block of business and shall allocate to those segregated accounts enough assets of the mutual company so that the assets together with the revenue from the closed block of business are sufficient to support the closed block including, but not limited to, the payment of claims, expenses, taxes, and any dividends that are provided for under the terms of the participating policies with appropriate adjustments in the dividends for experience changes. The plan shall be accompanied by an opinion of a qualified actuary or an appointed actuary who meets the standards set forth in the insurance laws or regulations for the submission of actuarial opinions as to the adequacy of reserves or assets. The opinion shall relate to the adequacy of the assets allocated to the segregated accounts in support of the closed block of business. The actuarial opinion shall be based on methods of analysis deemed appropriate for those purposes by the Actuarial Standards Board. The amount of assets allocated to the segregated accounts of the closed block shall be based upon the mutual company's last annual statement that is updated to the effective date of the conversion. The converted stock company shall keep a separate accounting for the closed block and shall make and include in the annual statement to be filed with the Director each year a separate statement showing the gains, losses, and expenses properly attributable to the closed block. Periodically, upon the Director's approval, those assets allocated to the closed block as provided herein that are in excess of the amount of assets necessary to support the remaining policies in the closed block shall revert to the benefit of the converted company. The Director may waive the requirement for the establishment of a closed block of business if the Director deems it to be in the best interests of the participating policyholders of the mutual company to do so.

(c) The plan shall set forth the requirements for granting membership interests to future policyholders of the converted company.

(d) The plan shall include information sufficient to demonstrate that the financial condition of the converted company will not be diminished by the plan of MHC conversion.

(e) The plan shall include a description of any current proposal to issue shares of an intermediate holding company or the converted company to the public or to other persons who are not direct or indirect subsidiaries of the mutual holding company.

(f) The plan shall include the identity of the proposed officers and directors of the mutual holding company and each intermediate holding company, if any, together with such other biographical information as the Director may request.

(g) The plan shall include such other information as the Director may request or may prescribe by rule.

(9) Effective date of the plan of MHC conversion. A plan shall become effective when the Director has approved the plan, the members have approved the plan and the articles of incorporation of the mutual holding company, each intermediate holding company, if any, and the revised articles of incorporation of the converted company have been adopted and filed with the Director.

(10) Corporate existence.

(a) Upon the conversion of a mutual company to a converted company according to the provisions of this Section, the corporate existence of the mutual company shall be continued in the converted company with the original date of incorporation of the mutual company. All the rights, franchises, and interests of the mutual company in and to every type of property, real, personal, and mixed, and things in action thereunto belonging, is deemed transferred to and vested in the converted company without any deed or transfer. Simultaneously, the converted company is deemed to have assumed all the obligations and liabilities of the mutual company.

(b) The directors and officers of the mutual company, unless otherwise specified in the plan of conversion shall serve as directors and officers of the converted company until new directors and officers of the converted company are duly elected pursuant to the articles of incorporation and bylaws of the converted company.

(11) Regulation and authority of mutual holding company.

(a) A mutual holding company shall have the same powers granted to domestic mutual companies and be subject to the same requirements and provisions of Article III and any other provisions of this Code applicable to mutual companies that are not inconsistent with the provisions of this Section, provided however that a mutual holding company shall not have the authority to transact insurance pursuant to Section 39(1).

(b) Neither the mutual holding company nor any intermediate holding company shall issue or reinsure policies of insurance.

(c) A mutual holding company may enter into an affiliation agreement or a merger agreement either at the time of conversion, or at some later time with the approval of the Director, with any mutual insurance company authorized to do business in this State or another mutual holding company. Any such merger agreement may authorize members of the mutual insurance company or other mutual holding company to become members of the mutual holding company. Any such affiliation agreement or merger agreement shall be subject to the insurance laws of this State relating to such transactions entered into by a domestic mutual company.

(d) The assets of the MHC shall be held in trust, under such arrangements and on such terms as the Director may approve, for the benefit of the policyholders of the converted company. Any residual rights of the MHC in such assets or any assets of the MHC determined not to be held in trust shall be subject to a lien in favor of the policyholders of the converted company under such terms as the Director may approve. Upon conversion of the mutual holding company as provided for in subsection (13) of this Section, such assets shall be released from trust in accordance with the plan of conversion approved by the Director.

(12) Diversion of business to affiliates. Without prior approval of the Director, neither the converted company nor any other person affiliated with or controlling the converted company shall divert business from the converted company to any insurance company affiliate if the purpose or effect would be to significantly reduce the number of members of the mutual holding company.

(13) Conversion of mutual holding company. A mutual holding company created pursuant to this Section may reorganize by complying with the applicable provisions of Section 59. For purposes of effecting a conversion under that Section, the mutual holding company shall be deemed a "mutual company" and the converted mutual holding company shall be deemed a "converted stock company," as such terms are defined in Section 59.1.

(14) Conflict of interest. No director, officer, agent, or employee of the mutual company or any other person shall receive any fee, commission, or other valuable consideration, other than his or her usual regular salary and compensation, for in any manner aiding, promoting, or assisting in the conversion except as set forth in the plan of MHC conversion approved by the Director. This provision does not prohibit the payment of reasonable fees and compensation to attorneys, accountants, and actuaries for services performed in the independent practice of their professions, even if the attorney, accountant, or actuary is also a director of the mutual company.

(15) Costs and expenses. All the costs and expenses connected with a plan of MHC conversion shall be paid for or reimbursed by the mutual company or the converted company.

(16) Failure to give notice. If the mutual company complies substantially and in good faith with the notice requirements of this Section, the mutual company's failure to give any member or members any required notice does not impair the validity of any action taken under this Section.

(17) Limitation of actions. Any action challenging the validity of or arising out of acts taken or proposed to be taken under this Section shall be commenced within 30 days after the effective date of the plan of MHC conversion.

(Source: P.A. 90-810, eff. 1-6-99.)

(215 ILCS 5/60) (from Ch. 73, par. 672)

(Section scheduled to be repealed on January 1, 2027)

Sec. 60. Procedure when insufficient assets are possessed by company.

(1) Whenever the Director finds that the admitted assets of a company subject to the provisions of this Article are less than the aggregate of (a) its liabilities and (b) the minimum surplus required to be maintained by Section 43, he must notify the company in writing of the amount of such impairment and require that such impairment must be removed within such period, which shall not be less than 30 nor more than 90 days, as he may designate. Unless otherwise allowed by the Director, the company must discontinue the issuance of new or renewal policies while such impairment exists. If the contracts issued by the company contain a provision for a contingent liability, the Director may order the board of directors or trustees of the company to levy an assessment for the purpose of removing such impairment against each member in accordance with the terms of his policy. If the Director finds that the company will remove the impairment or a part thereof from sources other than an assessment, he may permit a reduction in the amount of the assessment to the extent of the sum so to be obtained. No member is liable for an assessment unless notified of the company's claim therefor within one year after the termination of the policy whether by expiration, cancellation or otherwise. Nothing contained in this paragraph may be construed to limit or restrict the authority of any liquidator, conservator or rehabilitator acting under Article XIII or XIII 1/2 of this Act.

(2) If policies containing provisions for a contingent liability are outstanding, and the company fails to levy an assessment within 20 days from the date of an order, or if the impairment is not removed within the period specified in the Director's notice, the company shall be deemed insolvent and the Director may cancel the company's certificate of authority and shall proceed against it in accordance with Article XIII.

(3) If, while the impairment exists, any officer, director, or trustee of the company renews, issues or delivers or causes to be renewed, issued or delivered any policy, contract or certificate of insurance unless otherwise allowed by the Director, and the fact of such impairment is known to the officer, director, or trustee of the company, such officer, director, or trustee shall be guilty of a business offense and may be fined not less than $200 and not more than $5,000 for each offense.

(4) Nothing in this Section prohibits, while such impairment exists, any such officer, director, trustee, agent or employee from issuing or renewing a policy of insurance when an insured or owner exercises an option granted to him under an existing policy to obtain new, renewed or converted insurance coverage.

(Source: P.A. 82-498.)

(215 ILCS 5/Art. III.5 heading) ARTICLE III 1/2. ALIEN COMPANIES

(215 ILCS 5/60a) (from Ch. 73, par. 672a)

Sec. 60a. Alien companies; Illinois State of entry.

(1) An alien company may use Illinois as a state of entry to transact insurance in the United States by obtaining a certificate of authority pursuant to Section 111 and maintaining in this State a deposit of assets in trust in accordance with the provisions of Section 60b.

(2) A United States branch of an alien company that uses Illinois as a state of entry to transact insurance in the United States shall be considered a domestic company, and as such shall be subject to all applicable provisions of this Code. Transactions between the United States branch and the home office of an alien company shall not be subject to the provisions of Section 131.20 and subsection (1) of Section 131.20a, but remittances of profits of the United States branch to the home office of an alien company shall be considered dividends subject to the requirements of subsection (2) of Section 131.20a.

(Source: P.A. 89-97, eff. 7-7-95.)

(215 ILCS 5/60b) (from Ch. 73, par. 672b)

Sec. 60b. Alien companies; Illinois trusteed assets.

(1) An alien company may not use Illinois as a state of entry to transact insurance in the United States unless it maintains in this State a deposit of assets in trust for the benefit of policyholders in the United States, which assets shall be its "Trusteed Assets". The United States branch of an alien company shall maintain Trusteed Assets at least equal to (a) the sum of (i) its minimum capital and surplus, and (ii) the amount of its liabilities to policyholders, net of reinsurance for which credit is allowed pursuant to Article XI, as reflected in its most recent financial statement on file with the Director, minus (b) the sum of (i) the amount of all of its general state deposits (including all interest accrued and due and payable to the holder of the deposit), (ii) the amount of its special state deposits (including all interest accrued and due and payable to the holder of the deposit), (iii) the amount of its reinsurance recoverable on paid losses (where such reinsurance is the type for which credit would be allowed pursuant to Article XI), (iv) the amounts of its notes and bills receivable, taken for premiums; (v) with respect to a company authorized to write the kinds of insurance specified in Classes 2 and 3 of Section 4 of this Code, the amount of its agents' balances and uncollected premiums; and (vi) the amount of its funds held by or deposited with reinsureds.

(2) Only those assets that qualify as authorized investments as provided in Article VIII (and in Sections 131.2 and 131.3) shall be included in an alien company's Trusteed Assets.

(Source: P.A. 88-45; 89-97, eff. 7-7-95.)

(215 ILCS 5/60c) (from Ch. 73, par. 672c)

Sec. 60c. Requirements and contents of trust agreement. Trust agreements governing Trusteed Assets required by Section 60b shall satisfy the following conditions:

(1) Legal title to the Trusteed Assets shall be vested in the trustee or trustees, and their successors lawfully appointed, in trust for the benefit and security of policyholders of the alien company in the United States.

(2) The agreement shall provide for substitution of a new trustee or trustees, subject to the Director's approval.

(3) All Trusteed Assets shall at all times be maintained as a trust fund separate and distinct from all other assets.

(4) The trustee or trustees shall maintain a record at all times sufficient to identify the assets of the trust.

(5) Withdrawal of or from the Trusteed Assets shall be made only as provided in Section 60d.

(Source: P.A. 85-1373.)

(215 ILCS 5/60d) (from Ch. 73, par. 672d)

Sec. 60d. Withdrawal of Trusteed Assets. (1) The trust agreement shall provide that no withdrawals of Trusteed Assets shall be made by the alien company or permitted by the trustee or trustees without the prior approval of the Director, except as follows:

(a) Any or all income, earnings, dividends, or interest accumulations of the Trusteed Assets may be paid over to the United States branch of the alien company upon request of the company or its manager, provided that no withdrawal shall be made that reduces the Trusteed Assets below the amount required by Section 60b.

(b) For the purpose of substituting other assets authorized for investment by Article VIII and at least equal in value (as reflected in the most recent financial statement on file with the Director) to those being withdrawn, if such withdrawal is requested in writing by the alien company's (i) United States manager or (ii) other United States representative pursuant to general or specific written authority previously given or delegated by the alien company's board of directors or other similar governing body, and a copy of such authority has been filed with the trustee or trustees.

(c) For the purpose of making deposits required by law in any state for the protection of the alien company's policyholders in the United States. The trustee or trustees shall transfer any assets so withdrawn, and in the amount so required to be deposited in the other state, directly to the depository required to receive such deposit in such other state.

(d) For the payment of obligations due from the United States branch of the alien company to policyholders in the United States, provided that no withdrawal shall be made that reduces the Trusteed Assets below the amount required by Section 60b.

(e) For the purpose of withdrawing any amount of the Trusteed Assets in excess of the amount required by Section 60b, as determined by the alien company's then most current annual statement on file with the Director.

(f) For the purpose of transferring the Trusteed Assets to an appointed liquidator, conservator, or rehabilitator pursuant to the order of a court of competent jurisdiction.

(2) If at any time the alien company becomes insolvent, or if its Trusteed Assets are less than required under Section 60b, the Director shall in writing order the trustee to suspend the right of the alien company or any other person to withdraw assets as otherwise authorized under paragraphs (a), (b), (c), (d) and (e) of subsection (1); and the trustee shall comply with such order until otherwise ordered by the Director.

(Source: P.A. 85-1373.)

(215 ILCS 5/60e) (from Ch. 73, par. 672e)

Sec. 60e. Domestication of Alien Company; definitions. As used in Sections 60e through 60i:

(1) "Domestication" means the reorganization of the United States branch of an alien company as the result of which a domestic company shall succeed to all the business and assets and assume all the liabilities of the United States branch of the alien company.

(2) "United States branch" means the business unit through which business is transacted within the United States by an alien company and the assets and liabilities of such insurer within the United States pertaining to such business.

(3) "Domestic Company" means a stock or mutual insurer incorporated under the laws of this State.

(Source: P.A. 85-1373.)

(215 ILCS 5/60f) (from Ch. 73, par. 672f)

Sec. 60f. Domestication procedure. (1) Upon compliance with Sections 60e through 60i, any alien company authorized to do business in this State may, with the prior written approval of the Director, domesticate its United States branch by entering into an agreement in writing with a domestic company providing for the acquisition by the domestic company of all of the assets and the assumption of all of the liabilities of the United States branch.

(2) The acquisition of assets and assumption of liabilities of the United States branch by the domestic company shall be effected by filing with the Director an instrument of transfer and assumption in form satisfactory to the Director and executed by the alien company and the domestic company.

(Source: P.A. 85-1373.)

(215 ILCS 5/60g) (from Ch. 73, par. 672g)

Sec. 60g. Domestication agreement; authorization; execution. (1) The domestication agreement referred to in Section 60f shall be authorized, adopted, approved, signed, and acknowledged by the alien company in accordance with the laws of the country under which it is organized.

(2) In the case of a domestic company, the domestication agreement shall be approved, adopted, and authorized by its board of directors and executed by its president or any vice president and attested by its secretary or assistant secretary under its corporate seal.

(Source: P.A. 85-1373.)

(215 ILCS 5/60h) (from Ch. 73, par. 672h)

Sec. 60h. Director's approval of domestication agreement. An executed counterpart of the domestication agreement, together with certified copies of the corporate proceedings of the domestic company and the alien company, approving, adopting and authorizing the execution of the domestication agreement, shall be submitted to the Director for approval. The Director shall thereupon consider the agreement, and, if the Director finds that the same is in accordance with the provisions hereof and that the interests of policyholders of the United States branch of the alien insurer and of the domestic company are not materially adversely affected, the Director shall approve the domestication agreement and authorize the consummation thereof in compliance with the provisions of Section 60i. The Director shall approve or disapprove the domestication agreement within 60 days after it is submitted to the Director.

(Source: P.A. 85-1373.)

(215 ILCS 5/60i) (from Ch. 73, par. 672i)

Sec. 60i. Consummation of domestication; transfer of assets and deposits. (1) Upon the filing with the Director of a certified copy of the instrument of transfer and assumption pursuant to which a domestic company succeeds to the business and assets of the United States branch of an alien company and assumes all its liabilities, the domestication of the United States branch shall be deemed to be effective; and thereupon all the rights, franchises, and interests of the United States branch in and to every species of property, real, personal, and mixed, and things in actions thereunder belonging shall be deemed as transferred to and vested in the domestic company, and simultaneously therewith the domestic company shall be deemed to have assumed all of the liabilities of the United States branch. The domestic company shall be considered as having the age as the oldest of the 2 parties to the domestication agreement for purposes of complying with the requirements of laws relating to age of company.

(2) All deposits of the United States branch held by the Director, or by state officers or other state regulatory agencies pursuant to requirements of state laws, shall be deemed to be held as security for the satisfaction by the domestic company of all liabilities to policyholders within the United States assumed from the United States branch; and such deposits shall be deemed to be assets of the domestic company and shall be reported as such in the annual financial statements and other reports which the domestic company may be required to file. Upon the ultimate release by any such state officer or agency of any such deposits, the securities and cash constituting such released deposit shall be delivered and paid over to the domestic company as the lawful successor in interest to the United States branch.

(3) Contemporaneously with the consummation of the domestication of the United States branch, the Director shall direct the trustee, if any, of the U. S. branch's Trusteed Assets to transfer and deliver to the domestic company all assets, if any, held by such trustee.

(Source: P.A. 85-1373.)

(215 ILCS 5/60j) (from Ch. 73, par. 672j)

Sec. 60j. Trustees of alien companies. (1) The directors of an alien company may appoint citizens or corporations of the United States as its trustees to hold funds and assets in trust for the benefit of the policyholders and creditors of the company in the United States. A certified copy of the record of such appointment and of the deed of trust, approved by the Director, shall be filed with him.

(2) The Director may examine such trustee and any officers and agents, books and papers thereof, with respect to the affairs of such alien company in the same manner as he may examine officers, agents, books, papers and affairs of companies.

(3) The funds and assets so held by such trustees shall, with the deposits otherwise made by the United States branch of the alien company in the United States together with loans in connection with its policies to policyholders, and all other funds and assets held by the United States branch of the alien company in the United States, constitute the assets of the company for the purpose of making its financial statements required by this Code. For purposes of making financial statements required by this Code, the liabilities of an alien company shall be limited to only those liabilities incurred in connection with its United States business.

(4) In applying the risk limitations as provided in Section 144 or any limit on premium volume, the Director shall calculate such limitations based solely on the alien company's assets in the United States that, pursuant to subsection (3) of this Section, constitute the assets of the company for purposes of making its financial statements required by this Code and its surplus as regards policyholders as reflected in the most recent financial statement on file with the Director.

(Source: P.A. 85-1373.)

(215 ILCS 5/Art. IV heading) ARTICLE IV. RECIPROCALS (Article scheduled to be repealed on January 1, 2027)

(215 ILCS 5/61) (from Ch. 73, par. 673)

(Section scheduled to be repealed on January 1, 2027)

Sec. 61. Scope of Article.

(1) This Article shall apply to all reciprocals transacting or being organized to transact any of the kinds of business specified in this Article.

(2) As used in this Article the word "subscriber" shall mean the participant or policyholder. The word "attorney-in-fact" shall mean the representative of the subscribers. The word "reciprocal" shall mean the organization or group of all the subscribers. The word "governmental reciprocal" shall mean a reciprocal in which all subscribers are governmental entities, including, but not limited to, federal, State, territorial, commonwealth, and local governments and agencies, subdivisions, departments, joint ventures, partnerships, and consortia of these governments.

(Source: P.A. 88-364.)

(215 ILCS 5/62) (from Ch. 73, par. 674)

(Section scheduled to be repealed on January 1, 2027)

Sec. 62. Authority to exchange contracts. Individuals, partnerships and corporations of this State are hereby authorized to exchange reciprocal or inter-insurance contracts with each other or with individuals, partnerships and corporations of other states and countries, in accordance with the provisions of this Code and not otherwise. All insurance contracts so exchanged shall be executed by an attorney-in-fact duly authorized and acting for the subscribers.

(Source: Laws 1937, p. 696.)

(215 ILCS 5/63) (from Ch. 73, par. 675)

(Section scheduled to be repealed on January 1, 2027)

Sec. 63. Name. The name or designation under which contracts are to be exchanged shall include the words "Reciprocal" or "Inter-Insurance Exchange" or be supplemented by the following words immediately below the name or designation under which such contracts are exchanged: "A Reciprocal" or "An Inter-Insurance Exchange." Such name or designation shall not be the same as or deceptively similar to the name or designation adopted by any other domestic company or any foreign or alien company authorized to transact business in this State.

(Source: Laws 1937, p. 696.)

(215 ILCS 5/64) (from Ch. 73, par. 676)

(Section scheduled to be repealed on January 1, 2027)

Sec. 64. Principal office. The principal office of the attorney-in-fact of a domestic reciprocal shall be maintained in this State, at such place as may be designated by the subscribers in the power of attorney or other authority under which insurance is to be effected or exchanged.

(Source: Laws 1937, p. 696.)

(215 ILCS 5/65) (from Ch. 73, par. 677)

(Section scheduled to be repealed on January 1, 2027)

Sec. 65. Authorized kinds of business. A reciprocal may be authorized to exchange contracts covering any or all of the kinds of insurance enumerated in Classes 2 and 3 of Section 4.

(Source: Laws 1951, p. 605.)

(215 ILCS 5/66) (from Ch. 73, par. 678)

(Section scheduled to be repealed on January 1, 2027)

Sec. 66. Minimum surplus requirements.

(1) No reciprocal may after December 31, 1985 receive a certificate of authority from the Director to exchange contracts under this Article in the name of the subscribers until it has complied with the requirements in respect of original surplus applicable to the class or classes and clause or clauses of section 4 describing the kind or kinds of insurance it seeks to exchange, as set forth in the following table: Casualty, Fidelity and Surety (a) Class 2, Clauses (a), (b), (c), (d), (g), (h), (i) or (j), a surplus of at least $2,000,000; more than one clause, a surplus of at least $2,000,000.

Fire and Marine (b) Class 2, Clauses (e), (f), (k) or (l) or Class 3, any or all clauses or any combination thereof, a surplus of at least $1,000,000.

Multiple Line (c) Class 2, any or all clauses other than those specified in (b) above, and Class 3, any or all clauses, a surplus of at least $2,000,000.

Glass and Livestock and Domestic Animals (d) Class 2, Clause (f) only or (k) only $250,000; provided any reciprocal to which this subparagraph is applicable shall not expose itself to any loss on any one risk in any amount exceeding $5,000.

(2) Every reciprocal subject to this Article issued a certificate of authority on or after June 28, 1965 must have and at all times maintain a minimum surplus in an amount equal to 2/3 of the original surplus required for that particular company at the time it was organized. Any such reciprocal organized prior to June 28, 1965 must have and at all times maintain admitted assets in excess of all liabilities in an amount not less than the minimum amount of advance cash deposits or surplus which was required for that particular reciprocal at the time it was issued a certificate of authority. Any reciprocal which has added any clause or clauses must have and at all times maintain minimum surplus not less than the minimum surplus requirement applicable to the class or classes and clause or clauses of section 4 at the time that the additional clause or clauses are authorized. Any reciprocal organized prior to October 1, 1972 must have and at all times maintain, in addition to the minimum surplus required to be maintained by that particular reciprocal, additional minimum surplus of not less than $300,000.

(3) Any company organized prior to January 1, 1986 and regulated under this Article, in addition to the minimum surplus which is required by paragraph (2) of this Section must have by December 31, 1986 and at all times maintain until December 31, 1990 additional minimum surplus of $200,000.

(4) Subsections (2) and (3) shall be applicable until December 31, 1990 for all reciprocals organized prior to January 1, 1986, thereafter, such reciprocals must have and maintain surplus as required by subsections (6) and (7).

(5) Every reciprocal subject to this Article and organized after December 31, 1985 must have and maintain at all times minimum surplus applicable to the class or classes and clause or clauses of Section 4 describing the kind or kinds of insurance which it is authorized to write, as follows: Casualty, Fidelity and Surety (a) Class 2, Clauses (a), (b), (c), (d), (g), (h) or (i), a surplus of at least $1,500,000; more than one clause, a surplus of at least $1,500,000.

Fire, Marine and Legal Expense (b) Class 2, Clauses (e), (f), (k), (l) or Class 3, any or all clauses or any combination thereof, a surplus of at least $700,000.

Multiple Line (c) Class 2, any or all clauses other than those specified in (b) above, and Class 3, any or all clauses, a surplus of at least $1,500,000.

Glass and Livestock and Domestic Animals (d) Class 2, Clause (f) only or (k) only, $150,000; provided no reciprocal to which this subparagraph is applicable shall not expose itself to any loss on any one risk in an amount exceeding $5,000.

(6) Any reciprocal subject to this Article and organized prior to January 1, 1986 must have by December 31, 1990, and thereafter maintain until December 31, 1995, minimum surplus applicable to the class or classes and clause or clauses of Section 4 describing the kind or kinds of insurance which it is authorized to write, as follows: Casualty, Fidelity and Surety (a) Class 2, Clauses (a), (b), (c), (d), (g), (h), (i) or (j), a surplus of at least $1,200,000; more than one clause, a surplus of at least $1,200,000.

Fire, Marine and Legal Expense (b) Class 2, Clauses (e), (f), (k), (1) or Class 3, any or all clauses or any combination thereof, a surplus of at least $600,000.

Multiple Line (c) Class 2, any or all clauses other than those specified in (b) above, and Class 3, any or all clauses, a surplus of at least $1,200,000.

Glass and Livestock and Domestic Animals (d) Class 2, Clause (f) only or (k) only, $100,000; provided no reciprocal to which this subparagraph is applicable shall not expose itself to any loss on any one risk in an amount exceeding $5,000.

(7) Any reciprocal subject to this Article and organized prior to January 1, 1986 must have by December 31, 1995 and thereafter maintain at all times minimum surplus applicable to the class or classes and clause or clauses of Section 4 describing the kind or kinds of insurance which it is authorized to write, as follows: Casualty, Fidelity and Surety (a) Class 2, Clauses (a), (b), (c), (d), (g), (h), (i) or (j), a surplus of at least $1,500,000; more than one clause, a surplus of at least $1,500,000.

Fire, Marine and Legal Expense (b) Class 2, Clauses (e), (f), (k), (l) or Class 3, any or all clauses or any combination thereof, a surplus of at least $700,000.

Multiple Line (c) Class 2, any or all clauses other than those specified in (b) above, and Class 3, any or all clauses, a surplus of at least $1,500,000.

Glass and Livestock and Domestic Animals (d) Class 2, Clause (f) only or (k) only, $150,000; provided no reciprocal to which this subparagraph is applicable shall not expose itself to any loss on any one risk in the amount exceeding $5,000.

(8) The Director shall take action under Section 83 of this Code against any reciprocal which fails to maintain the minimum surplus required by this section. The words "minimum surplus" mean the "surplus as regards policyholders" as it appears on the annual statement of a reciprocal company on the usual and proper annual statement form prescribed by the National Association of Insurance Commissioners.

(Source: P.A. 85-293.)

(215 ILCS 5/67) (from Ch. 73, par. 679)

(Section scheduled to be repealed on January 1, 2027)

Sec. 67. Power of attorney. The power of attorney or other authority of the attorney-in-fact under which contracts of insurance are to be exchanged pursuant to this Article shall set forth

(a) the address of the principal office of the attorney-in-fact;

(b) that the attorney-in-fact is authorized to accept service of process on behalf of the reciprocal and to appoint the Director and his successor or successors in office the true and lawful attorney of such reciprocal for the service of process in actions upon contracts exchanged;

(c) the amount to be deducted from advance deposits to be paid to the attorney-in-fact and the items of expense, in addition to losses, to be paid by the reciprocal;

(d) a provision for a cash deposit;

(e) except as provided in Section 75, a provision for a contingent several liability of each subscriber in an amount of not less than one nor more than ten times the cash deposit stated in the contract; and

(f) such other provisions not inconsistent with law as may be deemed necessary or advisable.

(Source: Laws 1937, p. 696.)

(215 ILCS 5/68) (from Ch. 73, par. 680)

(Section scheduled to be repealed on January 1, 2027)

Sec. 68. Declaration of organization. The attorney-in-fact of subscribers who desire to form a reciprocal under this Article shall sign and acknowledge, before an officer authorized to take acknowledgments, a declaration of organization in duplicate. When the attorney-in-fact is a corporation, the declaration shall be acknowledged by an officer thereof. The declaration shall set forth

(a) the name of the attorney-in-fact and the name or designation under which contracts are to be exchanged;

(b) the location of the principal office of the attorney-in-fact;

(c) the class or classes of insurance, as provided in Section 65, which it proposes to effect or exchange and the kinds of insurance in each class to be effected or exchanged;

(d) such other provisions not inconsistent with law which may be deemed by the attorney-in-fact or subscribers to be necessary or advisable.

(Source: Laws 1937, p. 696.)

(215 ILCS 5/69) (from Ch. 73, par. 681)

(Section scheduled to be repealed on January 1, 2027)

Sec. 69. Documents to be delivered to Director. Upon the execution of a declaration of organization, there shall be delivered to the Director

(a) duplicate originals of the declaration of organization;

(b) a copy of the power of attorney of the attorney-in-fact under or by virtue of which such insurance is to be effected or exchanged;

(c) an instrument authorizing service of process on the Director provided for in Section 77;

(d) 2 organization bonds, or the cash or securities, provided for in Section 70;

(e) the form of guaranty fund agreements and of guaranty capital shares, if any, as provided in Section 76 to be issued in connection with solicitation of surplus; and

(f) the form of escrow agreement for the deposit of cash or securities.

(Source: P.A. 84-502.)

(215 ILCS 5/69.1) (from Ch. 73, par. 681.1)

(Section scheduled to be repealed on January 1, 2027)

Sec. 69.1. Escrow agreements. The company shall designate a bank or trust company with whom it will enter into an escrow agreement, which agreement shall state that the organization surplus shall be placed in escrow and remain so, until an organization examination has been completed. When the exam has been completed the escrow agent is authorized to purchase securities for deposit as required by Section 74 and forward them to the Director. The escrow agent is authorized to release the balance of the escrow funds to the company only upon notification that a Certificate of Authority or similar documentation has been issued by the Director.

(Source: P.A. 84-502.)

(215 ILCS 5/70) (from Ch. 73, par. 682)

(Section scheduled to be repealed on January 1, 2027)

Sec. 70. Organization bonds. The attorney-in-fact shall deliver to the Director two bonds in the same penalties and containing the same provisions, so far as applicable, as the bonds required for the organization of a stock company by Section 16 for the use and benefit of the State of Illinois, subscribers and creditors, or in lieu of delivering such bonds, the attorney-in-fact may deposit cash or securities of the same kind and amount and on the same terms and conditions, so far as applicable, as provided by said Section.

(Source: Laws 1937, p. 696.)

(215 ILCS 5/71) (from Ch. 73, par. 683)

(Section scheduled to be repealed on January 1, 2027)

Sec. 71. Approval of documents. The documents and papers so delivered to the Director may be approved or disapproved by the Director, and the attorney-in-fact is entitled to a hearing, in the same manner as provided in Section 18 in the case of documents delivered for approval in connection with the organization of stock companies. If the documents and papers so delivered are approved by the Director he must file in his office the power of attorney, forms of policies and applications, bonds or securities and one of the duplicate originals of the declaration of organization, and endorse upon the other duplicate original his approval and the month, day and year of approval and deliver it to the attorney-in-fact. Upon the date of approval of the declaration of organization by the Director, the reciprocal is deemed to be organized.

(Source: P.A. 77-747.)

(215 ILCS 5/72) (from Ch. 73, par. 684)

(Section scheduled to be repealed on January 1, 2027)

Sec. 72. Authority to solicit subscriptions to surplus. Upon the approval of the declaration of organization by the Director, he shall issue to the attorney-in-fact a permit, which shall expire at the end of two years from its date, authorizing him to solicit subscriptions to surplus in accordance with this Code and to do such other acts as may be necessary and proper in order to complete its organization and to entitle it to receive a certificate of authority to transact an insurance business.

(Source: Laws 1951, p. 1565.)