(215 ILCS 5/179E-30)
    Sec. 179E-30. Approved transactions and operation of SPRVs.
    (a) SPRVs authorized under this Article may at any given time enter into and effectuate SPRV contracts with one or more ceding insurers, provided that the SPRV contracts obligate the SPRV to indemnify the ceding insurer for losses and that contingent obligations of the SPRV under the SPRV contracts are securitized in full through a single SPRV insurance securitization and are fully funded and secured with assets held in trust in accordance with the requirements of this Article pursuant to agreements contemplated by this Article and invested in a manner that meets the criteria set forth in Section 179E-85 of this Article.
    (b) An SPRV may enter into such agreements with third parties and conduct such business as is necessary to fulfill its obligations and administrative duties incident to the insurance securitization and the SPRV contract. The agreements may include entering into swap agreements or other transactions that have the objective of leveling timing differences in funding up-front or ongoing transaction expenses or managing credit or interest rate risk of the investments in trust to assure that the assets held in trust will be sufficient to satisfy (i) payment or repayment of the securities issued pursuant to an insurance securitization transaction or (ii) the obligations of the SPRV under the SPRV contract. In fulfilling its function, the SPRV shall adhere to the following requirements and shall, to the extent of its powers, ensure that contracts obligating other parties to perform certain functions incident to its operations are substantively and materially consistent with the following requirements and guidelines:
        (1) An SPRV shall have a distinct name, which shall
include the designation "SPRV". The name of the SPRV may not be deceptively similar to, or likely to be confused with or mistaken for, any other existing business name registered in this State.
        (2) Unless otherwise provided in the plan of
operation, the principal place of business and office of any SPRV organized under this Article must be located in this State.
        (3) The assets of an SPRV must be preserved and
administered by or on behalf of the SPRV to satisfy the liabilities and obligations of the SPRV incident to the insurance securitization and other related agreements, including the SPRV contract.
        (4) Assets of the SPRV that are pledged to secure
obligations of the SPRV to a ceding insurer under an SPRV contract must be held in trust and administered by a qualified U.S. financial institution. The qualified U.S. financial institution may not control, be controlled by, or be under common control with, the SPRV or the ceding insurers.
        (5) The agreement governing any trust must create
one or more trust accounts into which all pledged assets must be deposited and held until distributed in accordance with the trust agreement. The pledged assets must be held by the trustee at the trustee's office in the United States and may be held in certificated or electronic form.
        (6) The provisions for withdrawal by ceding insurers
of assets from the trust shall be clean and unconditional, subject only to the following requirements:
            (A) the ceding insurer shall have the right to
withdraw assets from the trust account at any time, without notice to the SPRV, subject only to written notice to the trustee from the ceding insurer that funds in the amount requested are due and payable by the SPRV;
            (B) no other statement or document need be
presented in order to withdraw assets, except the ceding insurer may be required to acknowledge receipt of withdrawn assets;
            (C) the trust agreement must indicate that it is
not subject to any conditions or qualifications outside of the trust agreement;
            (D) the trust agreement may not contain
references to any other agreements or documents; and
            (E) no reference may be made to the fact that the
funds may represent reinsurance premiums or that the funds have been deposited for any specific purpose.
        (7) The trust agreement must be established for the
sole use and benefit of the ceding insurer at least to the full extent of the SPRV's obligations to the ceding insurer under the SPRV contract. If there is more than one ceding insurer, a separate trust agreement must be entered with each ceding insurer and a separate trust account must be maintained for each ceding insurer.
        (8) The trust agreement must provide for the trustee
            (A) receive assets and hold all assets in a safe
            (B) determine that all assets are in a form so
that the ceding insurer or the trustee, upon direction by the ceding insurer may, whenever necessary, negotiate any the assets, without consent or signature from the SPRV or any other person or entity;
            (C) furnish to the SPRV, the Director, and the
ceding insurer a statement of all assets in the trust account reported at fair value upon its inception and at intervals no less frequent than the end of each calendar quarter;
            (D) notify the SPRV and the ceding insurer,
within 10 days, of any deposits to or withdrawals from the trust account;
            (E) upon written demand of the ceding insurer,
immediately take any and all steps necessary to transfer absolutely and unequivocally all right, title, and interest in the assets held in the trust account to the ceding insurer and deliver physical custody of the assets to the ceding insurer; and
            (F) allow no substitutions or withdrawals of
assets from the trust account, except on written instructions from the ceding insurer.
        (9) The trust agreement must provide that at least 30
days, but not more than 45 days, before termination of the trust account, written notification of termination shall be delivered by the trustee to the ceding insurer.
        (10) The trust agreement may be made subject to and
governed by the laws of any state, in addition to the requirements for the trust as provided in this Article, provided that the state is disclosed in the plan of operation filed with and approved, or deemed approved, by the Director under Section 179E-20.
        (11) The trust agreement must prohibit invasion of
the trust corpus for the purpose of paying compensation to, or reimbursing the expenses of, the trustee.
        (12) The trust agreement must provide that the
trustee shall be liable for its own negligence, willful misconduct, or lack of good faith.
        (13) Notwithstanding the provisions of items (6)(C),
(6)(D), and (6)(E) of this subsection or item (14)(E) of this subsection, when a trust agreement is established in conjunction with an SPRV contract, then the trust agreement may provide that the ceding insurer must undertake to use and apply any amounts drawn upon the trust account, without diminution because of the insolvency of the ceding insurer or the SPRV, for the following purposes:
            (A) to pay or reimburse the ceding insurer
amounts due to the ceding insurer under the specific SPRV contract including, but not limited to, unearned premiums due to the ceding insurer, if not otherwise paid by the SPRV in accordance with the terms of the agreement; or
            (B) when the ceding insurer has received
notification of termination of the trust account, and when the SPRV's entire "obligations" under the specific SPRV contract remain unliquidated and undischarged 10 days prior to the termination date, to withdraw amounts equal to those obligations and deposit those amounts in a separate account, in the name of the ceding insurer, in any qualified U.S. financial institution, apart from its general assets, in trust for those uses and purposes specified in item (13)(A) of this subsection as may remain executory after the withdrawal and for any period after the termination date. "Obligations" within the meaning of this subsection may, without duplication, include:
                (i) losses and loss expenses paid by the
ceding insurer, but not recovered from the SPRV;
                (ii) reserves for losses reported and
                (iii) reserves for losses incurred but not
                (iv) reserves for loss expenses;
                (v) reserves for unearned premiums; and
                (vi) any other amounts that, together with
(iv), represent the aggregate limit remaining under the SPRV contract if the period of coverage or the agreed upon period of loss development has yet to expire.
        The provisions to be included in the trust agreement
pursuant to this item (13) may, in lieu thereof, be included in the underlying SPRV contract.
        (14) An SPRV contract must contain provisions that:
            (A) require the SPRV to enter into a trust
agreement specifying what recoverables or reserves, or both, the agreement is to cover and to establish a trust account for the benefit of the ceding insurer;
            (B) stipulate that assets deposited in the trust
account must be valued according to their current fair value, and may consist only of permitted investments;
            (C) require the SPRV, before depositing assets
with the trustee, to execute assignments, endorsements in blank, or transfer legal title to the trustee of all shares, obligations, or any other assets requiring assignments, in order that the ceding insurer, or the trustee upon the direction of the ceding insurer, may whenever necessary negotiate the assets without consent or signature from the SPRV or any other entity;
            (D) require that all settlements of account
between the ceding insurer and the SPRV be made in cash or its equivalent; and
            (E) stipulate that the SPRV and the ceding
insurer agree that the assets in the trust account, established under the provisions of the SPRV contract, may be withdrawn by the ceding insurer at any time, notwithstanding any other provisions in the SPRV contract, and shall be utilized and applied by the ceding insurer or any successor by operation of law of the ceding insurer, including (subject to the provisions of Section 179E-80), but without further limitation, any liquidator, rehabilitator, receiver, or conservator of the ceding insurer, without diminution because of insolvency on the part of the ceding insurer or the SPRV, only for the following purposes:
                (i) to transfer all of those assets into the
trust account for the benefit of the ceding insurer under the terms of the SPRV contract and in compliance with this Article; and
                (ii) to pay any other amounts the ceding
insurer claims are due under the SPRV contract.
        (15) The SPRV contract entered into by the SPRV may
contain provisions that give the SPRV the right to seek approval from the ceding insurer to withdraw from the trust all or part of the assets contained in it and transfer the assets to the SPRV, provided that:
            (A) at the time of the withdrawal, the SPRV
replaces the withdrawn assets with other qualified assets having a fair value equal to the fair value of the assets withdrawn and that meet the requirements of Section 179E-85; and
            (B) after the withdrawals and transfer, the fair
value of the assets in trust securing the obligations of the SPRV under the SPRV contract is no less than an amount needed to satisfy the fully funded requirement of the SPRV contract. The ceding insurer shall be the sole judge as to the application of these provisions, but shall not unreasonably nor arbitrarily withhold its approval.
        (16) The investors in the SPRV must agree, and be
contractually obligated to so do, that any obligation to repay principal, interest, or dividends on the securities issued by the SPRV shall be reduced upon the occurrence of a triggering event, to the extent that the assets of the SPRV held in trust for the benefit of the ceding insurer are remitted to the ceding insurer in fulfillment of the obligations of the SPRV under the SPRV contract.
        (17) Assets held by an SPRV in trust must be valued
at their fair value.
        (18) The proceeds from the sale of securities by the
SPRV to investors must be deposited with the trustee as contemplated by this Article, and must be held or invested by the trustee in accordance with the requirements of Section 179E-85.
        (19) An SPRV organized under this Article, may engage
only in fully funded indemnity triggered SPRV contracts to support in full the ceding insurers' exposures assumed by the SPRV, except that an SPRV may engage in an SPRV contract that is non-indemnity triggered after the Director, in accordance with the authority granted under Section 179E-100 of this Article, adopts rules addressing the treatment of the portion of the risk that is not indemnity based, including accounting, disclosure, risk-based capital treatment, and the manner in which risks associated with the non-indemnity based SPRV contract may be evaluated and managed. An SPRV may not at any time enter into an SPRV contract that is not fully funded, whether indemnity triggered or non-indemnity triggered. Assets of the SPRV may be used to pay interest or other consideration on any outstanding debt or other obligation of the SPRV, and nothing in this item shall be construed or interpreted to prevent an SPRV from entering into a swap agreement or other transaction that has the effect of guaranteeing interest or other consideration.
        (20) The contracts or other documentation relating to
an SPRV insurance securitization must contain provisions identifying the SPRV that will enter into the special purpose reinsurance securitization. The contracts or other documentation must clearly disclose that the assets of the SPRV, and only those assets, are available to pay the obligations of that SPRV. Notwithstanding the foregoing, and subject to the provisions of this Article and any other applicable law or rule, the failure to include this language in the contracts or other documentation may not be used as the sole basis by creditors, reinsurers, or other claimants to circumvent the provisions of this Article.
        (21) Under no circumstances may an SPRV be authorized
            (A) issue or otherwise administer primary
insurance policies;
            (B) have any obligation to the policyholders or
reinsureds of the ceding insurer;
            (C) enter into an SPRV contract with a person
that is not licensed or otherwise authorized to conduct the business of insurance or reinsurance in at least its state or country of domicile; or
            (D) assume or retain exposure to insurance or
reinsurance losses for its own account that is not initially fully funded by proceeds from an SPRV securitization that meets the requirements of this Article.
        (22) At the cessation of business of an SPRV the
limited certificate of authority granted by the Director shall expire and the SPRV shall no longer be authorized to conduct activities under this Article unless and until a new certificate of authority is issued pursuant to a new filing in accordance with Section 179E-20.
        (23) It is unlawful for an SPRV to loan or otherwise
invest, or place any of its assets in custody, trust, or under management with, or to borrow money or receive a loan from (other than by issuance of the securities pursuant to an SPRV insurance securitization), or advance from, anyone convicted of a felony, anyone who is untrustworthy or of known bad character, or anyone convicted of a criminal offense involving the conversion or misappropriation of fiduciary funds or insurance accounts, theft, deceit, fraud, misrepresentation, or corruption.
(Source: P.A. 92-124, eff. 7-20-01.)