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Illinois Compiled Statutes

Information maintained by the Legislative Reference Bureau
Updating the database of the Illinois Compiled Statutes (ILCS) is an ongoing process. Recent laws may not yet be included in the ILCS database, but they are found on this site as Public Acts soon after they become law. For information concerning the relationship between statutes and Public Acts, refer to the Guide.

Because the statute database is maintained primarily for legislative drafting purposes, statutory changes are sometimes included in the statute database before they take effect. If the source note at the end of a Section of the statutes includes a Public Act that has not yet taken effect, the version of the law that is currently in effect may have already been removed from the database and you should refer to that Public Act to see the changes made to the current law.

INSURANCE
(215 ILCS 5/) Illinois Insurance Code.

215 ILCS 5/155.39

    (215 ILCS 5/155.39)
    Sec. 155.39. Vehicle protection products.
    (a) As used in this Section:
    "Administrator" means a third party other than the warrantor who is designated by the warrantor to be responsible for the administration of vehicle protection product warranties.
    "Incidental costs" means expenses specified in the vehicle protection product warranty incurred by the warranty holder related to the failure of the vehicle protection product to perform as provided in the warranty. Incidental costs may include, without limitation, insurance policy deductibles, rental vehicle charges, the difference between the actual value of the stolen vehicle at the time of theft and the cost of a replacement vehicle, sales taxes, registration fees, transaction fees, and mechanical inspection fees.
    "Vehicle protection product" means a protective chemical, substance, device, system, or service that is (i) installed on or applied to a vehicle and (ii) designed to prevent loss or damage to a vehicle from a specific cause. The term "vehicle protection product" shall include, without limitation, protective chemicals, alarm systems, body part marking products, steering locks, window etch products, pedal and ignition locks, fuel and ignition kill switches, and electronic, radio, and satellite tracking devices. "Vehicle protection product" does not include fuel additives, oil additives, or other chemical products applied to the engine, transmission, or fuel system of a motor vehicle.
    "Vehicle protection product warrantor" or "warrantor" means a person who is contractually obligated to the warranty holder under the terms of a vehicle protection product warranty. "Warrantor" does not include an authorized insurer.
    "Vehicle protection product warranty" means a written warranty by a vehicle protection product warrantor that (i) is included, for no separate and identifiable consideration, with the purchase of a vehicle protection product sold or offered for sale in this State and (ii) provides if the vehicle protection product fails to prevent loss or damage to a vehicle from a specific cause, that the warranty holder shall be paid specified incidental costs by the warrantor as a result of the failure of the vehicle protection product to perform pursuant to the terms of the warranty.
    "Warranty reimbursement insurance policy" means a policy of insurance issued to the vehicle protection product warrantor to pay on behalf of the warrantor all covered contractual obligations incurred by the warrantor under the terms and conditions of the insured vehicle protection product warranties sold by the warrantor. The warranty reimbursement insurance policy shall be issued by an insurer authorized to do business in this State that has filed its policy form with the Department.
    (a-5) A vehicle protection product warrantor's liabilities under a vehicle protection product warranty shall be covered by a warranty reimbursement insurance policy.
    (b) No vehicle protection product warranty sold or offered for sale in this State shall be subject to the provisions of this Code. Vehicle protection product warranties are express warranties and not insurance.
    Vehicle protection product warrantors and related vehicle protection product sellers and warranty administrators are not required to comply with and are not subject to any other provision of this Code.
    (c) This Section applies to all vehicle protection products sold or offered for sale prior to, on, or after the effective date of this amendatory Act of the 93rd General Assembly. The enactment of this Section does not imply that vehicle protection products should have been subject to regulation under this Code prior to the enactment of this Section. The changes made to this Section by this amendatory Act of the 100th General Assembly do not imply that vehicle protection products and vehicle protection product warranties should have been subject to regulation under this Code prior to this amendatory Act of the 100th General Assembly.
(Source: P.A. 100-272, eff. 1-1-18.)

215 ILCS 5/155.40

    (215 ILCS 5/155.40)
    Sec. 155.40. Auto insurance; application; false address.
    (a) An applicant for a policy of insurance that insures against any loss or liability resulting from or incident to the ownership, maintenance, or use of a motor vehicle shall not provide to the insurer to which the application for coverage is made any address for the applicant other than the address at which the applicant resides.
    (b) A person who knowingly violates this Section is guilty of a business offense. The penalty is a fine of not less than $1,001 and not more than $1,200.
(Source: P.A. 95-331, eff. 8-21-07.)

215 ILCS 5/155.41

    (215 ILCS 5/155.41)
    Sec. 155.41. Slave era policies.
    (a) The General Assembly finds and declares all of the following:
        (1) Insurance policies from the slavery era have been
    
discovered in the archives of several insurance companies, documenting insurance coverage for slaveholders for damage to or death of their slaves, issued by a predecessor insurance firm. These documents provide the first evidence of ill-gotten profits from slavery, which profits in part capitalized insurers whose successors remain in existence today.
        (2) Legislation has been introduced in Congress for
    
the past 10 years demanding an inquiry into slavery and its continuing legacies.
        (3) The Director of Insurance and the Department of
    
Insurance are entitled to seek information from the files of insurers licensed and doing business in this State, including licensed Illinois subsidiaries of international insurance corporations, regarding insurance policies issued to slaveholders by predecessor corporations. The people of Illinois are entitled to significant historical information of this nature.
    (b) The Department shall request and obtain information from insurers licensed and doing business in this State regarding any records of slaveholder insurance policies issued by any predecessor corporation during the slavery era.
    (c) The Department shall obtain the names of any slaveholders or slaves described in those insurance records, and shall make the information available to the public and the General Assembly.
    (d) Any insurer licensed and doing business in this State shall research and report to the Department with respect to any records within the insurer's possession or knowledge relating to insurance policies issued to slaveholders that provided coverage for damage to or death of their slaves.
    (e) Descendants of slaves, whose ancestors were defined as private property, dehumanized, divided from their families, forced to perform labor without appropriate compensation or benefits, and whose ancestors' owners were compensated for damages by insurers, are entitled to full disclosure.
(Source: P.A. 95-331, eff. 8-21-07.)

215 ILCS 5/155.42

    (215 ILCS 5/155.42)
    Sec. 155.42. Identity theft insurance consumer fact sheet. The Department shall develop an appropriate consumer fact sheet to be provided to consumers, either via the Department's website or by hard copy if requested, regarding identity theft insurance. The fact sheet shall include at a minimum, information on what is generally covered under identity theft insurance and on how to protect himself or herself from identity theft.
(Source: P.A. 96-167, eff. 1-1-10.)

215 ILCS 5/155.43

    (215 ILCS 5/155.43)
    Sec. 155.43. Misrepresentation of Senior-Specific Certification.
    (a) No insurance producer shall use a senior-specific certification or professional designation that indicates or implies in such a way as to mislead a purchaser or prospective purchaser that the insurance producer has a special certification or training in advising or servicing seniors in connection with the solicitation, sale, or purchase of a life insurance or annuity product or in the provision of advice as to the value of or the advisability of purchasing or selling a life insurance or annuity product, either directly or indirectly through publications, writings, or by issuing or promulgating analyses or reports related to a life insurance or annuity product.
    (b) "Use of senior-specific certifications or professional designations" includes, but is not limited to, all of the following:
        (1) Use of a certification or professional
    
designation by an insurance producer who has not actually earned or is otherwise ineligible to use such certification or designation.
        (2) Use of a nonexistent or self-conferred
    
certification or professional designation.
        (3) Use of a certification or professional
    
designation that indicates or implies a level of occupational qualifications obtained through education, training, or experience that the insurance producer using the certification or designation does not have.
        (4) Use of a certification or professional
    
designation that was obtained from a certifying or designating organization that:
            (i) is primarily engaged in the business of
        
instruction in sales or marketing;
            (ii) does not have reasonable standards or
        
procedures for assuring the competency of its certificate holders or designees;
            (iii) does not have reasonable standards or
        
procedures for monitoring and disciplining its certificate holders or designees for improper or unethical conduct; or
            (iv) does not have reasonable continuing
        
education requirements for its certificate holders or designees in order to maintain the certificate or designation.
    (c) There is a rebuttable presumption that a certifying or designating organization is not disqualified under this Section if the certification or designation issued from the organization does not primarily apply to sales or marketing and if the organization or the certification or designation in question has been accredited by any of the following entities:
        (i) the American National Standards Institute;
        (ii) the National Commission for Certifying Agencies;
    
or
        (iii) any organization included on the list
    
"Accrediting Agencies Recognized for Title IV Purposes" prepared by the United States Department of Education.
    (d) In determining whether a combination of words or an acronym standing for a combination of words constitutes a certification or professional designation indicating or implying that a person has a special certification or training in advising or servicing seniors, the Department of Insurance shall consider all of the following:
        (1) Use of one or more words, such as "senior",
    
"retirement", "elder", or like words combined with one or more words, such as "certified", "registered", "chartered", "advisor", "specialist", "consultant", "planner", or like words in the name of the certification or professional designation.
        (2) The manner in which the words listed in
    
paragraph (1) of subsection (b) are combined.
    (e) For purposes of this Section, a job title within an organization that is licensed or registered by a State or federal financial services regulatory agency is not a certification or professional designation, unless it is used in a manner that would confuse or mislead a reasonable consumer, if the job title indicates seniority or standing within the organization or specifies an individual's area of specialization within the organization. For purposes of this subsection (e), "financial services regulatory agency" includes, but is not limited to, an agency that regulates insurers, insurance producers, broker-dealers, investment advisers, or investment companies.
(Source: P.A. 97-527, eff. 8-23-11.)

215 ILCS 5/155.44

    (215 ILCS 5/155.44)
    Sec. 155.44. Financial requirements; large deductible agreements for workers' compensation insurance.
    (a) An insurer shall:
        (1) require full collateralization of the outstanding
    
obligations owed under a large deductible agreement by using one of the following methods:
            (A) a surety bond issued by a surety insurer
        
authorized to transact business by the Department and whose financial strength and size ratings from A.M. Best Company are not less than "A" and "V", respectively;
            (B) an irrevocable letter of credit issued by a
        
financial institution with an office physically located within the State and the deposits of which are federally insured; or
            (C) cash or securities held in trust by a third
        
party or by the insurer and subject to a trust agreement for the express purpose of securing the policyholder's obligation under a large deductible agreement, provided that if the assets are held by the insurer those assets are not commingled with the insurer's other assets; and
        (2) limit the size of the policyholder's obligations
    
under a large deductible agreement to no greater than 20% of the total net worth of the policyholder at each policy inception, as determined by an audited financial statement as of the most recently available fiscal year end.
    (b) As used in this Section, "insurer" means any insurer authorized to issue a workers' compensation policy covering risks located in this State that has an A.M. Best Company rating below "A-" and does not have at least $200,000,000 in surplus.
    (c) As used in this Section, "large deductible agreement" means any combination of one or more policies, endorsements, contracts, or security agreements which provide for the policyholder to bear the risk of loss of $100,000 or greater per claim or occurrence covered under a policy of workers' compensation insurance and which may be subject to the aggregate limit of policyholder reimbursement obligations.
    (d) Except when approved by the Director of Insurance, any insurer determined to be in a financially hazardous condition pursuant to Article XII 1/2 or XIII of this Code by the Director of Insurance in this State or the equivalent in any other state is prohibited from issuing or renewing a policy that includes a large deductible agreement.
    (e) This Section applies to large deductible agreements issued or renewed by any insurer on or after January 1, 2016.
(Source: P.A. 99-369, eff. 8-14-15.)

215 ILCS 5/155.45

    (215 ILCS 5/155.45)
    Sec. 155.45. Certificates of insurance.
    (a) In this Section:
        "Certificate of insurance" means a document prepared
    
by an insurer or insurance producer as evidence of property or casualty insurance coverage. "Certificate of insurance" does not include a policy of insurance, an insurance binder, a policy endorsement, or a motor vehicle insurance identification or information card.
        "Department" means the Department of Insurance.
        "Director" means the Director of Insurance.
        "Insurance producer" means a person required to be
    
licensed under the laws of this State to sell, solicit, or negotiate insurance.
        "Insurer" means a company, firm, partnership,
    
association, order, society, or system making any kind or kinds of insurance and shall include associations operating as Lloyds, reciprocal or inter-insurers, or individual underwriters.
        "Person" means any individual, aggregation of
    
individuals, trust, association, partnership, or corporation, or any affiliate thereof.
        "Property or casualty insurance" means the kinds of
    
insurance described in either or both Class 2 or Class 3 of Section 4 of this Code.
    (b) This Section applies to a certificate of insurance that is issued in connection with a contract related to property, operations, or risks located in this State, regardless of the location of the policyholder, insurer, insurance producer, or person that requests or requires the issuance of the certificate of insurance.
    (c) The use of a certificate of insurance form that is unfair, misleading, or deceptive or violates any law is an unfair and deceptive act or practice in the business of insurance under Article XXVI of this Code.
    (d) A certificate of insurance may not amend, extend, or alter the coverage provided under, or confer to a person any rights in addition to the rights expressly provided in, the policy of property or casualty insurance to which the certificate of insurance refers.
    (e) A person may not prepare, issue, request, or require the issuance of a certificate of insurance that:
        (1) contains false or misleading information
    
concerning the policy of property or casualty insurance to which the certificate of insurance refers; or
        (2) alters, amends, or extends the coverage provided
    
by the policy of property or casualty insurance to which the certificate of insurance refers.
    (f) A certificate of insurance may not contain a warranty that the policy of property or casualty insurance to which the certificate of insurance refers complies with the insurance or indemnification requirements of a contract. The inclusion of a contract number or contract description in a certificate of insurance does not warrant that the policy of property or casualty insurance to which the certificate of insurance refers complies with the insurance or indemnification requirements of the contract.
    (g) A person is not entitled to notice of, cancellation of, nonrenewal of, or a material change in a policy of property or casualty insurance unless the person has notice rights under the terms of the policy of property or casualty insurance or an endorsement to the policy. The terms and conditions of notice described in this subsection (g) are governed by the policy of property or casualty insurance or an endorsement to the policy and are not altered by a certificate of insurance.
    (h) A certificate of insurance or any other document that is prepared, issued, requested, or required in violation of this Section is void.
    (i) The Director may refer a matter to the Department of Financial and Professional Regulation for review pursuant to the rules of that department if the Director has reason to believe that a certificate of insurance form as described in subsection (c) of this Section has been provided by a financial institution.
    (j) The Director may examine and investigate the activities of a person that the Director reasonably believes has violated the provisions of this Section. The Director shall have the power to enforce the provisions of this Section and impose any authorized penalty or remedy as provided under Section 401 of this Code upon any person who violates the provisions of this Section.
    (k) The Department may adopt rules to implement the provisions of this Section.
(Source: P.A. 98-819, eff. 1-1-15.)

215 ILCS 5/155.46

    (215 ILCS 5/155.46)
    Sec. 155.46. Prohibition on denial of coverage or increase in premiums for living organ donors.
    (a) As used in this Section:
    "Human organ" means all or part of a human's liver, pancreas, kidney, intestine, lung, blood, plasma, skin, or bone marrow.
    "Living organ donor" means an individual who has donated all or part of a human organ and is not deceased.
    "Disability insurance policy" means a contract under which an entity promises to pay a person a sum of money if an illness or injury resulting in a disability prevents that person from working.
    "Life insurance policy" means a contract under which an entity promises to pay a designated beneficiary a sum of money upon the death of the insured.
    "Long-term care insurance policy" means a contract for which the only insurance protection provided under the contract is coverage of qualified long-term care services.
    (b) Notwithstanding any other provision of law, it is unlawful to refuse to insure, to refuse to continue to insure, to limit the amount, extent, or kind of coverage available for life insurance, disability insurance, or long-term care insurance to an individual, or to charge an individual a different rate for the same coverage, solely because of the individual's status as a living organ donor.
    (c) With respect to all other conditions, persons who are living organ donors shall be subject to the same standards of sound actuarial principles or actual or reasonably anticipated experience as are persons who are not organ donors.
(Source: P.A. 101-179, eff. 1-1-20.)

215 ILCS 5/155.47

    (215 ILCS 5/155.47)
    Sec. 155.47. Prohibited practices relating to substance use disorder treatment.
    (a) As used in this Section, "recovery support", "substance use disorder", and "treatment" have the meanings set forth in the Substance Use Disorder Act.
    (b) A company authorized to transact life insurance in this State may not, based solely on whether an individual has participated in a substance use treatment or recovery support program no less than 5 years before application:
        (1) deny coverage to the individual;
        (2) limit the amount, extent, or kind of coverage
    
available to the individual; or
        (3) charge the individual or a group to which the
    
individual belongs a rate that is different from the rate charged to other individuals or groups, respectively, for the same coverage, unless the charge is based on sound underwriting or actuarial principles reasonably related to actual or anticipated loss experience for a particular risk.
(Source: P.A. 102-107, eff. 1-1-22.)

215 ILCS 5/155.48

    (215 ILCS 5/155.48)
    Sec. 155.48. Prohibited practices relating to prescription for or obtainment of opioid antagonist.
    (a) As used in this Section, "opioid antagonist" means any drug that binds to opioid receptors and blocks or otherwise inhibits the effects of opioids acting on those receptors to reverse the effects of an opioid overdose.
    (b) A company authorized to transact life insurance in this State may not, based solely on whether an individual has been prescribed or has obtained through a standing order an opioid antagonist:
        (1) deny coverage to the individual;
        (2) limit the amount, extent, or kind of coverage
    
available to the individual; or
        (3) charge the individual or a group to which the
    
individual belongs a rate that is different from the rate charged to other individuals or groups, respectively, for the same coverage, unless the charge is based on sound underwriting or actuarial principles reasonably related to actual or anticipated loss experience for a particular risk.
(Source: P.A. 102-107, eff. 1-1-22.)

215 ILCS 5/155.49

    (215 ILCS 5/155.49)
    Sec. 155.49. Insurance company supplier diversity report.
    (a) Every company authorized to do business in this State or accredited by this State with assets of at least $50,000,000 shall submit a 2-page report on its voluntary supplier diversity program, or the company's procurement program if there is no supplier diversity program, to the Department. The report shall set forth all of the following:
        (1) The name, address, phone number, and email
    
address of the point of contact for the supplier diversity program for vendors to register with the program.
        (2) Local and State certifications the company
    
accepts or recognizes for minority-owned, women-owned, LGBT-owned, or veteran-owned business status.
        (3) On the second page, a narrative explaining the
    
results of the program and the tactics to be employed to achieve the goals of its voluntary supplier diversity program.
        (4) The voluntary goals for the calendar year for
    
which the report is made in each category for the entire budget of the company and the commodity codes or a description of particular goods and services for the area of procurement in which the company expects most of those goals to focus on in that year.
    Each company is required to submit a searchable report, in Portable Document Format (PDF), to the Department on or before April 1, 2024 and on or before April 1 every year thereafter.
    (b) For each report submitted under subsection (a), the Department shall publish the results on its Internet website for 5 years after submission. The Department is not responsible for collecting the reports or for the content of the reports.
    (c) The Department shall hold an annual insurance company supplier diversity workshop in July of 2024 and every July thereafter to discuss the reports with representatives of the companies and vendors.
    (d) The Department shall prepare a one-page template, not including the narrative section, for the voluntary supplier diversity reports.
    (e) The Department may adopt such rules as it deems necessary to implement this Section.
(Source: P.A. 103-426, eff. 8-4-23.)

215 ILCS 5/Art. IX.5

 
    (215 ILCS 5/Art. IX.5 heading)
ARTICLE IX 1/2. CREDIT LIFE AND CREDIT ACCIDENT AND HEALTH INSURANCE

215 ILCS 5/155.51

    (215 ILCS 5/155.51) (from Ch. 73, par. 767.51)
    Sec. 155.51. Purpose and scope.) (a) The purpose of this Article is to promote the public welfare by regulating credit life insurance and credit accident and health insurance. Nothing in this Article is intended to prohibit or discourage reasonable competition. The provisions of this Article are to be liberally construed.
    (b) All life insurance and all accident and health insurance sold, or otherwise made effective, in connection with loans or other credit transactions of less than 10 years duration is subject to this Article. Such insurance sold in connection with a loan or other credit transaction of 10 years duration or more is not subject to this Article.
(Source: P.A. 79-930.)

215 ILCS 5/155.52

    (215 ILCS 5/155.52) (from Ch. 73, par. 767.52)
    Sec. 155.52. Definitions.
    For the purpose of this Article:
    (a) "Credit life insurance" means insurance on the life of a debtor pursuant to or in connection with a specific loan or other credit transaction;
    (b) "Credit Accident and health insurance" means insurance on a debtor to provide indemnity for payments becoming due on a specific loan or other credit transaction while the debtor is a person with a disability as defined in the policy;
    (c) "Creditor" means the lender of money or vendor or lessor of goods, services, property, rights or privileges, for which payment is arranged through a credit transaction or any successor to the right, title or interest of any such lender, vendor or lessor, and an affiliate, associate or subsidiary of any of them or any director, officer or employee of any of them or any other person in any way associated with any of them;
    (d) "Debtor" means a borrower of money or a purchaser or lessee of goods, services, property, rights or privileges for which payment is arranged through a credit transaction;
    (e) "Indebtedness" means the total amount payable by a debtor to a creditor in connection with a loan or other credit transaction;
    (f) "Director" means the Director of Insurance of the State of Illinois.
(Source: P.A. 99-143, eff. 7-27-15.)

215 ILCS 5/155.53

    (215 ILCS 5/155.53) (from Ch. 73, par. 767.53)
    Sec. 155.53. Forms of credit life insurance and credit accident and health insurance.) Credit life insurance and credit accident and health insurance shall be issued only in the following forms:
    (a) Individual policies of life insurance issued to debtors on the term plan;
    (b) Individual policies of accident and health insurance issued to debtors on a term plan or disability benefit provisions in individual policies of credit life insurance;
    (c) Group policies of life insurance issued to creditors providing insurance upon the lives of debtors on the term plan;
    (d) Group policies of accident and health insurance issued to creditors on a term plan insuring debtors or disability benefit provisions in group credit life insurance policies to provide such coverage.
(Source: Laws 1959, p. 1140.)

215 ILCS 5/155.54

    (215 ILCS 5/155.54) (from Ch. 73, par. 767.54)
    Sec. 155.54. Amount of credit life insurance and credit accident and health insurance.) (a) Credit Life Insurance
    The amount of credit life insurance shall not exceed the initial indebtedness.
    Where an indebtedness is repayable in substantially equal installments, the amount of insurance shall at no time exceed the scheduled or actual amount of unpaid indebtedness, whichever is greater.
    (b) Credit Accident and Health Insurance
    The total amount of indemnity payable by credit accident and health insurance in the event of disability, as defined in the policy, shall not exceed the aggregate of the periodic scheduled unpaid installments of the indebtedness and the amount of each periodic indemnity payment shall not exceed the original indebtedness divided by the number of periodic installments.
(Source: P.A. 79-930.)

215 ILCS 5/155.55

    (215 ILCS 5/155.55) (from Ch. 73, par. 767.55)
    Sec. 155.55. Term of credit life insurance and credit accident and health insurance.
    The term of any credit life insurance or credit accident and health insurance shall, subject to acceptance by the insurer, commence on the date when the debtor becomes obligated to the creditor, or the date from which interest or finance charges accrue, if later, except that, where a group policy provides coverage with respect to existing obligations, the insurance on a debtor with respect to such indebtedness shall commence on the effective date of the policy. Where evidence of insurability is required and such evidence is furnished more than 30 days after the date when the debtor becomes obligated to the creditor, the term of the insurance may commence on the date on which the insurer determines the evidence to be satisfactory, and in such event there shall be an appropriate refund or adjustment of any charge to the debtor for insurance. The term of such insurance shall not extend more than 15 days beyond the scheduled maturity date of the indebtedness except when extended without additional cost to the debtor. If the indebtedness is discharged due to renewal or refinancing prior to the scheduled maturity date, the insurance in force shall be terminated before any new insurance may be issued in connection with the renewed or refinanced indebtedness. In all cases of termination prior to scheduled maturity, a refund shall be paid or credited as provided in Section 155.58.
(Source: Laws 1959, p. 1140.)

215 ILCS 5/155.56

    (215 ILCS 5/155.56) (from Ch. 73, par. 767.56)
    Sec. 155.56. Provisions of policies and certificates of insurance; disclosure to debtors. (a) All credit life insurance and credit accident and health insurance sold shall be evidenced by an individual policy, or in the case of group insurance by a certificate of insurance, which individual policy or group certificate of insurance shall be delivered to the debtor.
    (b) Each individual policy or group certificate of credit life insurance, and/or credit accident and health insurance shall, in addition to other requirements of law, set forth, the name and home office address of the insurer, and the identity by name or otherwise of the person or persons insured, the rate or amount of payment, if any, by the debtor separately for credit life insurance and credit accident and health insurance, a description of the amount, term and coverage including any exceptions, limitations or restrictions, and shall state that the benefits shall be paid to the creditor to reduce or extinguish the unpaid indebtedness and, wherever the amount of insurance may exceed the unpaid indebtedness, that any such excess shall be payable to a beneficiary, other than the creditor, named by the debtor or to his estate.
    (c) Said individual policy or group certificate of insurance shall be delivered to the insured debtor at the time the indebtedness is incurred except as hereinafter provided.
    (d) If said individual policy or group certificate of insurance is not delivered to the debtor at the time the indebtedness is incurred, a copy of the application for such policy or a notice of proposed insurance, signed by the debtor and setting forth the name and home office address of the insurer, the identity by name or otherwise of the person or persons insured, the rate or amount of payment by the debtor, if any, separately for credit life insurance and credit accident and health insurance, a description of the amount, term and coverage provided, shall be delivered to the debtor at the time such indebtedness is incurred. The copy of the application for, or notice of proposed insurance shall refer exclusively to insurance coverage, and shall be separate and apart from the loan, sale or other credit statement of account, instrument or agreement, unless the information required by this subsection is prominently set forth therein. Upon acceptance of the insurance by the insurer and within 30 days of the date upon which the indebtedness is incurred, the insurer shall cause the individual policy or group certificate of insurance to be delivered to the debtor. Said application or notice of proposed insurance shall state that upon acceptance by the insurer, the insurance shall become effective as provided in Section 155.55.
(Source: Laws 1959, p. 1140.)

215 ILCS 5/155.57

    (215 ILCS 5/155.57) (from Ch. 73, par. 767.57)
    Sec. 155.57. Filing, approval, and withdrawal of forms.
    (a) All policies, certificates of insurance, notices of proposed insurance, applications for insurance, endorsements, and riders delivered or issued for delivery in this State and the schedules of premium rates pertaining thereto shall be filed with the Director.
    (b) The Director shall within a reasonable time after the filing of any such policies, certificates of insurance, notices of proposed insurance, applications for insurance, endorsements, and riders, disapprove any such form if the benefits provided therein are not reasonable in relation to the premium charge, or if it contains provisions which are unjust, unfair, inequitable, misleading, deceptive, or encourage misrepresentation of the coverage, or are contrary to any provision of this Code or of any rule or regulation promulgated thereunder.
    (c) If the Director notifies the insurer that the form is disapproved, it is unlawful thereafter for such insurer to issue or use such form. In such notice, the Director shall specify the reason for his disapproval and state that a hearing will be granted within 20 days after request in writing by the insurer. No such policy, certificate of insurance, notice of proposed insurance, nor any application, endorsement of rider, shall be issued or used until after it has been so filed and the Director has given his prior written approval thereto.
    (d) The Director may at any time, after giving not less than 20 days prior written notice to the insurer, withdraw his approval of any such form on any ground set forth in subsection (b) above. The written notice of withdrawal shall state the reason for the action. The insurer may request a hearing within 10 days after receipt of the notice of withdrawal by giving the Director written notice of such request, together with a statement of its objections. The Director must then conduct a hearing in accordance with Sections 402 and 403. The withdrawal shall be stayed pending the issuance of the Director's orders following the hearing.
    However, if it appears to the Director that the continued use of any such policy, certificate of insurance, notice of proposed insurance, application for insurance, endorsement, or rider by an insurer is hazardous to its policyholders or the public, the Director may take such action as is prescribed by Section 401.1.
    (e) It is not lawful for the insurer to issue such forms or use them after the effective date of such withdrawal.
    (f) If a group policy of credit life insurance or credit accident and health insurance has been or is delivered in another state before or after October 1, 1975 (the effective date of Public Act 79-930), the insurer shall be required to file only the group certificate and notice of proposed insurance delivered or issued for delivery in this State as specified in subsections (b) and (d) of Section 155.57 of this Article and such forms shall be approved by the Director if they conform with the requirements so specified in said subsections and if the schedules of premium rates applicable to the insurance evidenced by such certificate or notice are not in excess of the insurer's schedules of premium rates filed with the Director; provided, however, the premium rate in effect on existing group policies may be continued until the first policy anniversary date following October 1, 1975 (the effective date of Public Act 79-930).
    (g) Any order or final determination of the Director under the provisions of this Section shall be subject to judicial review.
(Source: P.A. 100-863, eff. 8-14-18.)

215 ILCS 5/155.58

    (215 ILCS 5/155.58) (from Ch. 73, par. 767.58)
    Sec. 155.58. Premiums and refunds.
    (a) Each insurer issuing credit life insurance or credit accident and health insurance shall file with the Director its schedules of premium rates for use in connection with such insurance. Any insurer may revise such schedules from time to time, and shall file such revised schedules with the Director. No insurer shall issue any credit life insurance policy or credit accident and health insurance policy for which the premium rate exceeds that determined by the schedules of such insurer as then on file with the Director. The Director may require the filing of the schedule of premium rates for use in connection with and as a part of the specific policy filings as provided by Section 155.57.
    (b) Each individual policy, group certificate or notice of proposed insurance shall provide that in the event of termination of the insurance prior to the scheduled maturity date of the indebtedness, any refund of an amount paid by the debtor for insurance shall be paid or credited promptly to the person entitled thereto; provided, however, that the Director shall prescribe a minimum refund and no refund which would be less than such minimum need be made. The formula to be used in computing such refund shall be filed with and approved by the Director.
    (c) If a creditor requires a debtor to make any payment for credit life insurance or credit accident and health insurance and an individual policy or group certificate of insurance is not issued, the creditor shall immediately give written notice to such debtor and shall promptly make an appropriate credit to the account.
    (d) The amount charged to a debtor for credit life or credit health and accident insurance shall not exceed the premium charged by the insurer, as computed at the time the charge to the debtor is determined.
    (e) Nothing in this Article shall be construed to authorize any payments for insurance now prohibited under any statute, or rule thereunder, governing credit transactions.
(Source: Laws 1959, p. 1140.)

215 ILCS 5/155.59

    (215 ILCS 5/155.59) (from Ch. 73, par. 767.59)
    Sec. 155.59. Issuance of policies.
    All policies of credit life insurance and credit accident and health insurance shall be delivered or issued for delivery in this state only by an insurer authorized to do an insurance business herein, and shall be issued only through licensed agents or brokers.
(Source: Laws 1959, p. 1140.)

215 ILCS 5/155.60

    (215 ILCS 5/155.60) (from Ch. 73, par. 767.60)
    Sec. 155.60. Claims.
    (a) All claims shall be promptly reported to the insurer or its designated claim representative, and the insurer shall maintain adequate claim files. All claims shall be settled as soon as possible and in accordance with the terms of the insurance contract.
    (b) All claims shall be paid either by draft drawn upon the insurer or by check of the insurer to the order of the claimant to whom payment of the claim is due pursuant to the policy provisions, or upon direction of such claimant to one specified.
    (c) No plan or arrangement shall be used whereby any person, firm or corporation other than the insurer or its designated claim representative shall be authorized to settle or adjust claims. The creditor shall not be designated as claim representative for the insurer in adjusting claims; provided, that a group policyholder may, by arrangement with the group insurer, draw drafts or checks in payment of claims due to the group policyholder subjects to audit and review by the insurer.
(Source: Laws 1959, p. 1140.)

215 ILCS 5/155.61

    (215 ILCS 5/155.61) (from Ch. 73, par. 767.61)
    Sec. 155.61. Existing insurance-Choice of insurer.
    When credit life insurance or credit accident and health insurance is required as additional security for any indebtedness, the debtor shall, upon request to the creditor, have the option of furnishing the required amount of insurance through existing policies of insurance owned or controlled by him or of procuring and furnishing the required coverage through any insurer authorized to transact an insurance business within this state.
(Source: Laws 1959, p. 1140.)

215 ILCS 5/155.62

    (215 ILCS 5/155.62) (from Ch. 73, par. 767.62)
    Sec. 155.62. Enforcement.
    The Director may, issue such rules and regulations as he deems appropriate for the administration of this Article. Whenever the Director finds that there has been a violation of this Article or any rules or regulations issued pursuant thereto, and after written notice thereof and hearing given to the insurer or other person authorized or licensed by the Director, he shall set forth the details of his findings together with an order for compliance by a specified date. Such order shall be binding on the insurer and other person authorized or licensed by the Director on the date specified unless sooner withdrawn by the Director or a stay thereof has been ordered by a court of competent jurisdiction.
(Source: Laws 1959, p. 1140.)

215 ILCS 5/155.63

    (215 ILCS 5/155.63) (from Ch. 73, par. 767.63)
    Sec. 155.63. Judicial review.
    Any party to the proceeding affected by an order of the Director shall be entitled to judicial review by following the procedure set forth in Section 407 of the Illinois Insurance Code.
(Source: Laws 1959, p. 1140.)

215 ILCS 5/155.64

    (215 ILCS 5/155.64) (from Ch. 73, par. 767.64)
    Sec. 155.64. Penalties.
    In addition to any other penalty provided by law, any person who violates an order of the Director after it has become final, and while such order is in effect, shall, upon proof thereof to the satisfaction of the court, forfeit and pay to the State of Illinois a sum not to exceed $250.00 which may be recovered in a civil action, except that if such violation is found to be willful, the amount of such penalty shall be a sum not to exceed $1,000.00. The Director in his discretion, may revoke or suspend the license or certificate of authority of a person guilty of such violation. Such order for suspension or revocation shall be upon notice and hearing, and shall be subject to judicial review as provided in Section 155.63 of this Article.
(Source: Laws 1959, p. 1140.)

215 ILCS 5/155.65

    (215 ILCS 5/155.65) (from Ch. 73, par. 767.65)
    Sec. 155.65. Separability provision.
    If any provision of this Article, or the application of such provision to any person or circumstances, shall be held invalid, the remainder of the Article, and the application of such provision to any person or circumstances other than those as to which it is held invalid, shall not be affected thereby.
(Source: Laws 1959, p. 1140.)

215 ILCS 5/Art. X

 
    (215 ILCS 5/Art. X heading)
ARTICLE X. MERGER, CONSOLIDATION OR PLANS OF EXCHANGE

215 ILCS 5/156

    (215 ILCS 5/156) (from Ch. 73, par. 768)
    Sec. 156. Merger and consolidation permitted.
    (a) Upon complying with the provisions of this article, any domestic company, except a Lloyds, is hereby authorized and empowered to merge or consolidate with any domestic company or with any foreign or alien company, except a Lloyds if the surviving company meets the requirements for authorization to engage in the insurance business in this state and, if such merger or consolidation is authorized by the laws of the state or country under which such foreign or alien company is incorporated or organized.
    (b) The Director may permit the formation of a domestic stock company that is established for the sole purpose of merging or consolidating with an existing stock company simultaneously with the effectiveness of a division authorized by this Code. Upon request of the dividing company, the Director may waive the requirements of Section 131.8 of this Code. Each domestic stock company formed under this subsection shall be deemed to exist before a merger and division under this Section becomes effective, but solely for the purpose of being a party to such merger and division. The Director shall not require that such domestic stock company be licensed to transact insurance business in this state before such merger and division. All insurance policies, annuities, or reinsurance agreements allocated to such domestic stock company shall become the obligation of the domestic stock company that survives the merger simultaneously with the effectiveness of the merger and division. The plan of merger or consolidation shall be deemed to have been authorized and approved by such domestic stock company if the dividing company authorized and approved such plan. The certificate of merger shall state that it was approved by the domestic stock company formed under this subsection.
(Source: P.A. 100-1118, eff. 11-27-18.)

215 ILCS 5/156.1

    (215 ILCS 5/156.1) (from Ch. 73, par. 768.1)
    Sec. 156.1. Acquisition by exchange of stock permitted. Any domestic stock insurance company may adopt a plan of exchange of the outstanding stock of its stockholders for the consideration herein designated to be paid or provided by a corporation which acquires such stock, in the manner provided in this Article.
    The plan of exchange may provide that the acquiring corporation, as consideration for the stock of the domestic corporation, (1) transfer shares of its stock, or (2) transfer other securities issued by it, or (3) pay cash therefor, or (4) pay or provide other consideration, or (5) pay or provide any combination of the foregoing types of consideration.
    "Acquiring corporation", as used in this Article, means any stock insurance corporation incorporated under this Code or under prior laws of this State relating to the incorporation of domestic insurance corporations; any stock corporation incorporated under the "Business Corporation Act of 1983" or under prior laws of this State authorizing the establishment of business corporations; and any foreign or alien stock corporation qualified to do business in Illinois and registered by the corporation department; and any foreign or alien stock insurance company authorized to do business in Illinois.
(Source: P.A. 83-1362.)

215 ILCS 5/157

    (215 ILCS 5/157) (from Ch. 73, par. 769)
    Sec. 157. Powers of company not enlarged.
    Nothing in this article contained shall be construed to authorize any company to engage in any kind of insurance business not authorized by its articles of incorporation nor to authorize any foreign or alien company to engage in any kind of insurance business in this State not covered by its certificate of authority to do business in this State.
(Source: Laws 1937, p. 696.)

215 ILCS 5/158

    (215 ILCS 5/158) (from Ch. 73, par. 770)
    Sec. 158. Resolutions for merger or consolidation or adoption of a plan of exchange.     The Board of Directors, Trustees or other governing body of each domestic company desiring to merge or consolidate or to adopt a plan of exchange shall, by resolution, approve an agreement of merger or consolidation or plan of exchange, as the case may be, setting forth:
    (a) the names of the companies proposing to merge or consolidate or to adopt a plan of exchange, and the names of the states or countries under which each of the companies is incorporated or organized;
    (b) in the case of a merger, the name of the company into which they propose to merge, hereafter designated as the surviving company; in the case of a consolidation, the name of the company into which they propose to consolidate, hereafter designated as the new company, and the name of the state or country under the laws of which the new company is to be incorporated or organized;
    (c) the terms and conditions of the proposed merger or consolidation or plan of exchange, and the mode of carrying the same into effect;
    (d) the manner and basis of converting the shares of stock, if any, of each merging or consolidating company into shares, securities and obligations, if any are to be issued, of the surviving or new company as the case may be;
    (e) in the case of a merger, a statement of any changes in the articles of incorporation of the surviving company; in the case of consolidation, all the statements with respect to the new company required to be set forth in original articles of incorporation for a similar company formed under this Code; and
    (f) such other provisions with respect to the merger or consolidation or plan of exchange as are deemed necessary or advisable.
(Source: Laws 1967, p. 2406.)

215 ILCS 5/159

    (215 ILCS 5/159) (from Ch. 73, par. 771)
    Sec. 159. Vote of shareholders and policyholders.
    (1) The agreement of merger or consolidation shall be submitted to a vote at a meeting of the shareholders, if any, of each domestic company and at a meeting of such policyholders of each domestic company, other than a fraternal benefit society, as are entitled to vote. The plan of exchange shall be submitted to a vote at a meeting of the shareholders of the company to be acquired. The meetings may be either annual, periodic or special. Written or printed notice shall be given not less than 20 days before each such meeting, either personally or by mail, to each shareholder of record and to each policyholder entitled to vote. If mailed, such notice is deemed to be delivered when deposited in the United States mail, with postage prepaid, addressed to the shareholder or policyholder, at his address as it appears on the records of the company. However, a domestic mutual company licensed in 2 or more States may give notice by publication in a newspaper of general circulation in the county in which the company has its principal office and in either of the two largest cities in each State in which the company shall be licensed to do business except as provided in paragraph (3). If the domestic mutual company is licensed in Illinois only, then such notice may be given by publication in a newspaper of general circulation in the 10 counties that have the largest concentration of its policyholders. Notice by publication as approved by the Director shall be published once weekly on 3 successive weeks, the last publication to be at least 20 days before such meeting and not more than 40 days before such meeting. Such notice, whether the meeting is annual, periodic or special, shall state the place, day, hour and purpose of the meeting. A copy or a summary of the agreement of merger or consolidation, or plan of exchange, as the case may be, shall be included in or enclosed with such notice. The shareholders or policyholders may vote in person or by proxy. Each shareholder entitled to vote at such meeting shall have one vote for each share of stock held by him. In the case of domestic companies other than fraternal benefit societies the affirmative vote of two-thirds of all outstanding shares, if any, and if policyholders are entitled to vote, two-thirds of the votes cast by such policyholders of each such company, as are represented at the meeting in person or by proxy, is necessary for the approval of any such agreement or plan.
    (2) In the event that a domestic fraternal benefit society is a party to the agreement of merger or consolidation, the board of managers, directors or trustees of such society shall submit the agreement to the supreme legislative and governing body of such society at any regular or special meeting thereof, provided a copy or summary of such agreement shall have been included in or enclosed with the notice of such meeting. Such notice shall be given as provided in the laws of the society for the convening of such supreme legislative and governing body in regular or special session, as the case may be. The affirmative votes of two-thirds of all members of such supreme legislative and governing body is necessary for the approval of the agreement.
    (3) The provisions of paragraph (1) relating to notice by publication shall not apply to a merger or consolidation between a mutual company and a stock company if the agreement provides that the stock company is the surviving company. In such case, notice either mailed or personal as provided by paragraph (1) shall be given to each shareholder of record and to each policyholder entitled to vote.
(Source: Laws 1968, p. 276.)

215 ILCS 5/160

    (215 ILCS 5/160) (from Ch. 73, par. 772)
    Sec. 160. Execution of agreement or plan of exchange by domestic company.
    Upon such approval of an agreement of merger or consolidation or plan of exchange it shall be executed by any domestic company party thereto by its president or a vice-president and secretary or an assistant secretary, or the executive officers corresponding thereto.
(Source: Laws 1967, p. 2406.)

215 ILCS 5/161

    (215 ILCS 5/161) (from Ch. 73, par. 773)
    Sec. 161. Approval and execution of agreement or plan of exchange by foreign or alien company.
    In the event that a foreign or alien company is a party to the agreement of merger or consolidation or plan of exchange, the agreement or plan shall be executed by the proper officers of such foreign or alien company when they are duly authorized thereto by such action on the part of the directors, shareholders, members, or policyholders of such foreign or alien company as may be required by the laws of the domiciliary state or country of such foreign or alien company.
(Source: Laws 1967, p. 2406.)

215 ILCS 5/162

    (215 ILCS 5/162) (from Ch. 73, par. 774)
    Sec. 162. Certificate of Merger or Consolidation or Plan of Exchange and Certificate of Approval.
    (1) Upon the execution of an agreement of merger or consolidation or plan of exchange, there shall be delivered to the Director:
        (a) two duplicate originals of the agreement or plan;
        (b) affidavits of officers of each of the companies
    
setting forth the facts necessary to show that all requirements of law with respect to notices to persons entitled to vote have been complied with;
        (c) certificates of the secretaries or assistant
    
secretaries or corresponding officers of each of the companies, in case of a merger or consolidation, or of the company to be acquired in case of a plan of exchange, certifying to the number of shares, if any, outstanding, the number of shares voted for and against such agreement or plan, and further in the case of a merger or consolidation (1) the number of policyholders represented at the meeting at which the agreement was considered, and (2) the number of votes cast by policyholders for and against such agreement or (3) in the case of a fraternal benefit society, the number of delegates of the supreme legislative or governing body, and the number of votes cast by the delegates for and against the agreement;
        (d) the certificates required by Section 171;
        (e) if the surviving or new company is a domestic
    
company and any foreign or alien company is a party to the merger or consolidation and the laws of the state or country under which such foreign or alien company is incorporated require approval of the merger or consolidation by an official of such state or country, a certificate of approval of such official; and
        (f) in case of consolidation where the new company is
    
a foreign or alien company, an instrument appointing the Director and his or her successor or successors in office, the attorney of such company for service of process, containing the same provisions and having the same effect as the instrument required of a foreign or alien company in order to be admitted to transact business in this State.
    In addition, the Director shall be provided, in substantially the same form, the information required under Article VIII 1/2 of this Code.
    (2) In case the surviving or new company is a domestic company, if the Director finds that:
        (a) the agreement of merger or consolidation is in
    
accordance with the provisions of this Article and not inconsistent with the laws and the Constitutions of this State and the United States;
        (b) the surviving or new company has complied with
    
all applicable provisions of this Code;
        (c) no reasonable objection exists to such merger or
    
consolidation; and
        (d) the standards established under Article VIII 1/2
    
are satisfied;
he or she shall approve the agreement. The provisions of any law with reference to age limits and medical examination shall be inoperative in so far as agreements of merger or consolidation are concerned. If the agreement of merger or consolidation be approved by the Director, he or she shall file the affidavits and certificates and one of the duplicate originals of the agreement in his or her office, endorse upon the other duplicate original his or her approval thereof, and deliver it, together with a certificate of merger or consolidation, as the case may be, to the surviving or new company. In the case of a consolidation, the Director shall also issue a certificate of authority to the new company.
    (3) In case the surviving or new company is a foreign or alien company, if the Director finds that:
        (a) the agreement of merger or consolidation is in
    
accordance with the provisions of this Article and not inconsistent with the laws and the Constitutions of this State and the United States;
        (b) the agreement of merger or consolidation provides
    
for the assumption by the new or surviving company of all the liabilities and obligations of the companies parties to the merger or consolidation and otherwise affords proper protection for creditors and policyholders and that such provisions are not inconsistent with the laws of the state or country of incorporation of such new or surviving company;
        (c) the surviving or new company has complied with
    
all applicable provisions of this Code;
        (d) no reasonable objection exists to such merger or
    
consolidation; and
        (e) the standards established under Article VIII 1/2
    
are satisfied;
he or she shall approve the agreement. If the agreement be approved by the Director, he or she shall file the affidavits and certificates and one of the duplicate originals of the agreement in his or her office, endorse upon the other duplicate original his or her approval thereof, and deliver it, together with a certificate of approval of the merger or consolidation, as the case may be, to the surviving or new company.
    (4) In the case of a plan of exchange, if the Director finds that the parties to the exchange have established that:
        (a) the plan, if effective, will not tend adversely
    
to affect the financial stability or management of any domestic company which is a party thereto or the general capacity or intention to continue the safe and prudent transaction of the insurance business of such domestic company or companies;
        (b) the interests of the policyholders and
    
shareholders of each domestic insurance company which is a party to the plan are protected;
        (c) the competence, experience and integrity of those
    
persons who would control the operation of the domestic company are such as to be in the best interests of the policyholders of such company to permit such exchange;
        (d) the terms and conditions of the plan are fair and
    
reasonable; and
        (e) the standards established under Article VIII 1/2
    
are satisfied;
he or she shall approve the plan of exchange. If the plan of exchange be approved by the Director, he or she shall file the affidavits and certificates and one of the duplicate originals of the plan of exchange in his or her office, endorse upon the other duplicate original his or her approval thereof, and deliver it, together with a certificate of approval of the plan of exchange to the domestic company.
    (5) If the Director refuses to approve the agreement of merger or consolidation, or plan of exchange, notice of such refusal, assigning the reasons therefor, shall be given in writing by the Director to each of the companies party thereto, within 60 days from the date of the delivery of such agreements or plan to him or her, and he or she shall grant any of such companies a hearing upon request. The hearing shall be held within 30 days of the Director's receipt of request for hearing. All persons to whom it is proposed to issue securities in such agreements or exchange shall have a right to appear. Within 30 days after the close of the hearing the Director shall approve or disapprove or place conditions precedent upon his or her approval of the merger or consolidation or plan by issuing a written order stating his or her determination and the reasons therefor.
(Source: P.A. 90-381, eff. 8-14-97.)

215 ILCS 5/163

    (215 ILCS 5/163) (from Ch. 73, par. 775)
    Sec. 163. Date merger or consolidation or plan of exchange effected.
    (1) If the surviving or new company is a domestic company, the merger or consolidation is effected upon the issuance of the certificate of merger or the certificate of consolidation, as the case may be.
    (2) If the surviving or new company is a foreign or alien company and the Director has issued a certificate of approval of the merger or consolidation, the date upon which the merger or consolidation is effected shall be determined by the laws of the state or country of incorporation or organization of the surviving or new company. However, the merger or consolidation shall in no event become effective in this State until a certificate of merger or consolidation, as the case may be, or other evidence that the merger or consolidation is effected is issued by the proper official of the state or country of incorporation or organization of the surviving or new company and is filed with and approved by the Director.
    (3) Notice of adoption of the plan and the approval thereof by the Director shall be delivered or mailed to each shareholder of record of the domestic insurance company to be acquired who was entitled to vote thereon and an affidavit of the secretary or assistant secretary of such company or of an officer of the company's transfer agent that such notice was given shall be filed with the Director. The plan shall become effective 10 days after receipt of the affidavit by the Director. A plan of exchange may be abandoned pursuant to any provisions for abandonment contained therein at any time, provided that notice of such abandonment shall be delivered or mailed to each such stockholder and filed with the Director prior to the termination of such 10 day period.
(Source: Laws 1967, p. 2406.)

215 ILCS 5/164

    (215 ILCS 5/164) (from Ch. 73, par. 776)
    Sec. 164. Removal of property of domestic, merged or consolidated company from this State.
    (1) If the surviving or new company shall be a foreign or alien company, no property of the domestic merged or consolidated company shall be removed from this State by reason of such merger or consolidation, prior to, nor shall title to such property vest in the surviving or new company until, the merger or consolidation shall become effective in this State as provided in section 163.
    (2) Any director or officer of any domestic company removing or permitting the removal of any property of company from this State in violation of this section, shall be guilty of a Class A misdemeanor.
(Source: P.A. 77-2699.)

215 ILCS 5/165

    (215 ILCS 5/165) (from Ch. 73, par. 777)
    Sec. 165. Recording of certificate of merger or consolidation. Within 15 days after such merger or consolidation has become effective, the surviving or new company shall file for record with the recorder of the county in which the principal office of any of the companies parties to the agreement is located in this State, the agreement of merger or consolidation, or copy thereof, certified by the Director, any certificate of approval issued by the Director, or copy thereof, certified by him and a certificate of merger or consolidation, as the case may be, or a copy thereof, certified by the Director, or by the official of the state or country that issued such certificate. The certificate of merger or consolidation, or a copy thereof so certified, shall also be recorded with the recorder of each other county in this State in which any of the companies parties to the agreement, shall have real property at the time of such merger or consolidation, the title to which will be transferred by the merger or consolidation.
(Source: P.A. 83-358.)

215 ILCS 5/166

    (215 ILCS 5/166) (from Ch. 73, par. 778)
    Sec. 166. Effect of merger or consolidation.
    (1) If the surviving or new company is a domestic company, when such merger or consolidation has been effected
    (a) the several companies parties to the agreement of merger or consolidation shall be a single company, which, in the case of a merger, shall be that company designated in the agreement of merger as the surviving company, and in the case of a consolidation, shall be the new company provided for in the agreement of consolidation;
    (b) the separate existence of all of the companies parties to the agreement of merger or consolidation, except the surviving company in the case of a merger, shall cease;
    (c) such surviving or new company shall have all of the rights, privileges, immunities and powers and shall be subject to all of the duties and liabilities granted or imposed by this Code;
    (d) such surviving or new company shall thereupon and thereafter possess all the rights, privileges, immunities, powers and franchises of a public as well as of a private nature, of each of the companies so merged or consolidated; and all property, real, personal and mixed, and all debts due on whatever account, including subscriptions to shares, assessments payable from members or policyholders, and all other choses in action and all and every other interest of, or belonging to or due to, each of the companies so merged or consolidated shall be deemed to be transferred to and vested in such surviving or new company without further act or deed; and the title to any real estate, or any interest therein, under the laws of this State vested in any of such companies shall not revert or be in any way impaired by reason of such merger or consolidation;
    (e) such surviving or new company shall thenceforth be responsible and liable for all the liabilities and obligations of each of the companies so merged or consolidated; any claim existing or action or proceeding pending by or against any of such companies may be prosecuted to judgment as if such merger or consolidation had not taken place, or such surviving or new company may be substituted in its place; neither the rights of creditors nor any liens upon the property of any of such companies shall be impaired by such merger or consolidation, but such liens shall be limited to the property upon which they were liens immediately prior to the time of such merger or consolidation, unless otherwise provided in the agreement of merger or consolidation; and
    (f) in case of a merger, the articles of incorporation of the surviving company shall be supplanted and superseded to the extent, if any, that any provision or provisions of such articles shall be restated in the agreement of merger as provided in section 158, and such articles of incorporation, shall be deemed to be thereby and to that extent amended; in case of a consolidation, the statements set forth in the agreement of consolidation as provided in section 158 shall be deemed to be articles of incorporation of the new company formed by such consolidation.
    (2) If the surviving or new company is a foreign or alien company, when such merger or consolidation has become effective in this State
    (a) the effect of the merger or consolidation shall be determined by the law of the state of incorporation or organization of such company;
    (b) the separate existence of all domestic companies parties to the plan of merger or consolidation shall cease;
    (c) all property, real, personal, and mixed, and all debts due on whatever account including subscriptions to shares, assessments payable from members or policyholders and all other choses in action and all and every other interest of or belonging to and due to each of the companies so merged or consolidated shall be taken and deemed to be transferred to and vested in such surviving or new company without further act or deed, and the title to any real estate, or any interest therein, shall not revert or be in any way impaired by reason of such merger or consolidation.
    (3) In the event of a merger or consolidation under this article, the surviving company or the consolidated company shall be considered as having the age of the oldest company which is a party to such merger or consolidation for the purpose of complying with requirements of the laws relating to age of company.
(Source: Laws 1937, p. 696.)

215 ILCS 5/167

    (215 ILCS 5/167) (from Ch. 73, par. 779)
    Sec. 167. Rights of dissenting shareholders of domestic company.
    (1) If a shareholder entitled to vote of (a) a domestic company which is a party to a merger or consolidation or (b) a domestic insurance company to be acquired under a plan of exchange files with such company, prior to or at the meeting of shareholders at which the agreement of merger or consolidation or plan of exchange is submitted to a vote, a written objection to such agreement or plan, and does not vote in favor thereof, and such shareholder, within 20 days after the merger or consolidation or plan of exchange has become effective in this State makes written demand on the surviving or new company or on the domestic insurance company to be acquired under a plan of exchange for payment of the fair value of his shares as of the day prior to the date on which the vote of shareholders was taken approving the merger or consolidation or plan of exchange, such surviving or new company or domestic insurance company shall pay to such shareholder upon surrender of his certificate or certificates representing such shares, the fair value thereof. Any shareholder who makes such objection and demand shall cease to be a shareholder and shall have no rights with respect to such shares except the right to receive payment therefor. If within 30 days after the effective date, the value of such shares is agreed upon between the shareholder and the surviving or new company or the domestic insurance company to be acquired under a plan of exchange, as the case may be, and such agreement is approved in writing by the Director, payment therefor shall be made within 90 days after the effective date. If within 30 days after the effective date the surviving or new company or the domestic insurance company to be acquired under a plan of exchange, as the case may be, and the shareholders do not so agree, or any agreement as to value is not approved in writing by the Director, either such company or the shareholder may, within 90 days after the effective date, petition the circuit court of the county in which the principal office of the surviving or new company or domestic insurance company is located, to appraise the value of such shares. In the event the surviving or new company has no office in this State, then such petition may be filed in the circuit court of the county in which the principal office of the company in which such shareholder holds shares was located, immediately prior to such merger or consolidation. A copy of the petition shall be delivered or mailed by registered mail to the Director within 5 days after the filing thereof and proof of such delivery or mailing shall be filed with the court. The Director has the right to appear through the Attorney General and be heard upon all questions and issues in the proceeding. The practice, procedure and judgment in the circuit court upon such petition shall be the same, so far as practicable, as that under the eminent domain laws in this State.
    (2) Payment of the appraised value of such shares shall be made within 60 days after the entry of the judgment or order finding such appraised value and the judgment shall be payable only upon and simultaneously with the surrender to the surviving or new company or the domestic insurance company to be acquired under a plan of exchange of the certificate or certificates representing such shares. The right of a dissenting shareholder to be paid the fair value of his shares as herein provided shall cease if and when the Director revokes the approval to the merger or consolidation, as provided in Section 168, or if the merger or consolidation or plan of exchange be abandoned.
    (3) Every shareholder who did not vote in favor of such merger or consolidation or plan of exchange and who does not object in writing and demand payment of the value of his shares at the time and in the manner aforesaid, or does not file a petition within the time herein limited, is conclusively presumed to have assented to such merger or consolidation or plan of exchange and shall be bound by the terms thereof.
    (4) All shares of dissenting shareholders so acquired by a domestic insurance company party to a plan of exchange shall be cancelled by the board of directors of such company upon the plan of exchange becoming effective or at any time thereafter, and the capital stock of the company shall be decreased in accordance with Section 33.
(Source: Laws 1937, p. 696.)

215 ILCS 5/168

    (215 ILCS 5/168) (from Ch. 73, par. 780)
    Sec. 168. Rights of dissenting policyholder of domestic company.
    (1) If not less than five per centum of all the policyholders in any domestic company who were entitled to vote with respect to any merger or consolidation and who did not vote in favor of such merger or consolidation at the meeting at which the agreement of merger or consolidation was adopted by the policyholders of such company, or if not less than five per centum of the members of any domestic fraternal benefit society party to a merger or consolidation shall file, at any time within thirty days after the agreement of merger or consolidation is effected, a petition with the Director for a hearing upon such agreement of merger or consolidation, the Director shall order a hearing upon said petition, fix the time and place of such hearing, and give written notice to the companies that are parties to the merger or consolidation, at least fifteen days before the date of such hearing. Any member or policyholder so petitioning may appear before the Director at such hearing, either in person or by an attorney, and be heard with reference to said agreement. If, upon such hearing being had, the Director finds that the interests of the members or policyholders, as the case may be, of such company are not properly protected, or if he finds that any reasonable objection exists to such agreement, he shall enter an order revoking the approval already given, and the agreement of merger or consolidation shall, thereupon, become null and void.
    (2) The Director shall have like power to revoke any approval of any such agreement if any officer, director or employee of any company party to such agreement shall, after reasonable notice, fail or refuse without reasonable cause to attend and testify at such hearing, or to produce any books or papers called for by said Director.
(Source: Laws 1937, p. 696.)

215 ILCS 5/169

    (215 ILCS 5/169) (from Ch. 73, par. 781)
    Sec. 169. Rights of dissenting shareholders and policyholders of foreign or alien company.
    The rights of any dissenting shareholder, member or policyholder of any foreign or alien company party to a merger or consolidation, shall be those afforded to such shareholder, member, or policyholder by the laws of the domiciliary state or country of such foreign or alien company.
(Source: Laws 1937, p. 696.)

215 ILCS 5/169.1

    (215 ILCS 5/169.1) (from Ch. 73, par. 781.1)
    Sec. 169.1. Effect of exchange under plan of exchange.
    (1) Upon a plan of exchange becoming effective, the exchange provided for therein is considered to have been consummated and each shareholder of the domestic stock insurance company acquired ceases to be a shareholder of such company. The ownership of all shares of the issued and outstanding stock of such company, except shares payment of the value of which is required to be made by such company under Section 167, vests in the acquiring corporation automatically without any physical transfer or deposit of certificates representing such shares. All shares payment of the value of which is required to be made by such company under Section 167 are considered no longer outstanding shares of such company. The acquiring corporation thereupon becomes the sole shareholder of such domestic stock insurance company and has all the rights, privileges, immunities and powers and, except as otherwise provided herein, is subject to all of the duties and liabilities to the extent provided by law of a shareholder of an insurance company organized under the laws of this State.
    (2) Certificates representing shares of the domestic insurance company to be acquired prior to the plan of exchange becoming effective, except certificates representing shares payment of the value of which is required under Section 167, shall after the plan of exchange becomes effective, represent (a) shares of the issued and outstanding capital stock or other securities issued by the acquiring corporations and (b) the right, if any, to receive cash or other consideration upon such terms as are specified in the plan of exchange. However, the plan of exchange may specify that all such certificates shall after the plan of exchange becomes effective represent only the right to receive shares of stock or other securities issued by the acquiring corporation, or cash or other consideration or any combination thereof upon such terms as are specified in the plan of exchange.
(Source: Laws 1967, p. 2406.)

215 ILCS 5/169.2

    (215 ILCS 5/169.2) (from Ch. 73, par. 781.2)
    Sec. 169.2. Acquiring and acquired corporations under a plan of exchange to be separate.
    The domestic stock insurance company acquired under a plan of exchange and the acquiring corporation are in all respects separate and distinct corporations, with neither corporation having any liability to the creditors or policyholders, if any, or shareholders of the other, for any acts or omissions of the officers, directors or shareholders of either or both of such corporations.
(Source: Laws 1967, p. 2406.)

215 ILCS 5/170

    (215 ILCS 5/170) (from Ch. 73, par. 782)
    Sec. 170. Transfer of deposits.
    (1) If the surviving or new company shall be a foreign or alien company and the laws of the state or country under which such surviving or new company is incorporated or organized shall require the maintenance with any official of such State or country of a deposit of the legal reserve on any policies, then the Director is authorized to deliver to the proper custodian of such deposits of such state or country any deposits theretofore made with the Director pertaining to policies of any of the merged or consolidated companies. If the surviving or new company shall be a domestic company into which has been merged or consolidated a foreign or alien company incorporated or organized in a state or country the laws of which require the maintenance with an official of a deposit of the legal reserve on any policies, then the Director is hereby authorized to receive from such official any deposit theretofore made with such official pertaining to the policies of any of the merged or consolidated companies.
    (2) Any surviving or new company shall, within 60 days after the transfer of such deposit, notify the holder of every policy secured by such transferred deposit, that the transfer has been made. The president or vice-president and secretary or assistant secretary of such company, or the executive officers corresponding thereto, shall within 30 days thereafter, file with the Director an affidavit of the fact that due notice to policyholders, as provided for herein, has been given. If a surviving or new company shall be a foreign or alien company, the Director shall require from such company, before transferring any deposit to any official of the state or country under the laws of which such foreign or alien company is incorporated or organized, a written agreement that notice of such transfer will be given to policyholders and that an affidavit with regard to such notice will be furnished to the Director as in this section provided.
    (3) In the event any deposit is to be maintained in this State by reason of this section, the amount thereof from time to time for each such policy shall be at least equal to the amount which would be required in the state where such deposit was theretofore maintained under the provisions of the law of such state in effect on the date the merger or consolidation was effected. The deposits so maintained in this State shall consist of securities of the kinds authorized for investment by Article VIII of this Code.
(Source: Laws 1959, p. 1431.)

215 ILCS 5/171

    (215 ILCS 5/171) (from Ch. 73, par. 783)
    Sec. 171. Certificates of fees and commissions paid.
    Whenever agreements of merger or consolidation or plans of exchange are filed with the Director, there shall also be filed a certificate executed by the president or a vice-president and attested by the secretary or an assistant secretary, or the executive officers corresponding thereto, and under the corporate seal of each of the companies party to the agreement of merger or consolidation or plan of exchange, verified by the affidavits of such officers, setting forth all fees, commissions or other compensations, or valuable considerations paid or to be paid, directly or indirectly, to any person in any manner securing, aiding, promoting or assisting in any such merger or consolidation or plan of exchange.
(Source: Laws 1967, p. 2406.)

215 ILCS 5/172

    (215 ILCS 5/172) (from Ch. 73, par. 784)
    Sec. 172. Payment of fees to officer or director prohibited.
    (1) No director or officer of any company party to a merger or consolidation or plan of exchange, except as fully expressed in the agreement of merger or consolidation or plan of exchange shall receive any fee, commission, other compensation or valuable consideration whatever, directly or indirectly for in any manner aiding, promoting or assisting in such merger or consolidation or plan of exchange.
    (2) Any person violating the provisions of this Section shall be guilty of a Class A misdemeanor.
(Source: P.A. 77-2699.)

215 ILCS 5/Art. XI

 
    (215 ILCS 5/Art. XI heading)
ARTICLE XI. REINSURANCE

215 ILCS 5/173

    (215 ILCS 5/173) (from Ch. 73, par. 785)
    Sec. 173. Reinsurance authorized.
    (a) Subject to the provisions of this Article, any domestic company may, by a reinsurance agreement, accept any part or all of any risks of the kind which it is authorized to insure and it may cede all or any part of its risks to another solvent company having the power to make such reinsurance. It may take credit for the reserves on such ceded risks to the extent reinsured subject to the exceptions provided in Sections 173.1 through 173.5.
    (b) The purpose of this Article is to protect the interest of insureds, claimants, ceding insurers, assuming insurers, and the public generally. The legislature hereby declares its intent is to ensure adequate regulation of insurers and reinsurers and adequate protection for those to whom they owe obligations. In furtherance of that State interest, the legislature hereby provides a mandate that upon the insolvency of a non-U.S. insurer or reinsurer that provides security to fund its U.S. obligations in accordance with this Article, the assets representing the security shall be maintained in the United States and claims shall be filed and valued by the state insurance official with regulatory oversight, and the assets shall be distributed in accordance with the insurance laws of the state in which the trust is domiciled that are applicable to the liquidation of domestic U.S. insurance companies. The legislature declares that the matters contained in this Article are fundamental to the business of insurance in accordance with 15 U.S.C Sections 1011 through 1012.
(Source: P.A. 90-381, eff. 8-14-97.)

215 ILCS 5/173.1

    (215 ILCS 5/173.1) (from Ch. 73, par. 785.1)
    Sec. 173.1. Credit allowed a domestic ceding insurer.
    (1) Except as otherwise provided under Article VIII 1/2 of this Code and related provisions of the Illinois Administrative Code, credit for reinsurance shall be allowed a domestic ceding insurer as either an admitted asset or a deduction from liability on account of reinsurance ceded only when the reinsurer meets the requirements of paragraph (A), (B), (B-5), (C), (C-5), (C-10), or (D) of this subsection (1). Credit shall be allowed under paragraph (A), (B), or (B-5) of this subsection (1) only as respects cessions of those kinds or classes of business in which the assuming insurer is licensed or otherwise permitted to write or assume in its state of domicile, or in the case of a U.S. branch of an alien assuming insurer, in the state through which it is entered and licensed to transact insurance or reinsurance. Credit shall be allowed under paragraph (B-5) or (C) of this subsection (1) only if the applicable requirements of paragraph (E) of this subsection (1) have been satisfied.
        (A) Credit shall be allowed when the reinsurance is
    
ceded to an assuming insurer that is authorized in this State to transact the types of insurance ceded and has at least $5,000,000 in capital and surplus.
        (B) Credit shall be allowed when the reinsurance is
    
ceded to an assuming insurer that is accredited as a reinsurer in this State. An accredited reinsurer is one that:
            (1) files with the Director evidence of its
        
submission to this State's jurisdiction;
            (2) submits to this State's authority to examine
        
its books and records;
            (3) is licensed to transact insurance or
        
reinsurance in at least one state, or in the case of a U.S. branch of an alien assuming insurer is entered through and licensed to transact insurance or reinsurance in at least one state;
            (4) files annually with the Director a copy of
        
its annual statement filed with the insurance department of its state of domicile and a copy of its most recent audited financial statement; and
            (5) maintains a surplus as regards policyholders
        
in an amount that is not less than $20,000,000 and whose accreditation has been approved by the Director.
        (B-5)(1) Credit shall be allowed when the reinsurance
    
is ceded to an assuming insurer that is domiciled in, or in the case of a U.S. branch of an alien assuming insurer is entered through, a state that employs standards regarding credit for reinsurance substantially similar to those applicable under this Code and the assuming insurer or U.S. branch of an alien assuming insurer:
            (a) maintains a surplus as regards policyholders
        
in an amount not less than $20,000,000; and
            (b) submits to the authority of this State to
        
examine its books and records.
        (2) The requirement of item (a) of subparagraph (1)
    
of paragraph (B-5) of this subsection (1) does not apply to reinsurance ceded and assumed pursuant to pooling arrangements among insurers in the same holding company system.
         (C)(1) Credit shall be allowed when the reinsurance
    
is ceded to an assuming insurer that maintains a trust fund in a qualified United States financial institution, as defined in paragraph (B) of subsection (3) of this Section, for the payment of the valid claims of its United States policyholders and ceding insurers, their assigns and successors in interest. The assuming insurer shall report to the Director information substantially the same as that required to be reported on the NAIC annual and quarterly financial statement by authorized insurers and any other financial information that the Director deems necessary to determine the financial condition of the assuming insurer and the sufficiency of the trust fund. The assuming insurer shall provide or make the information available to the ceding insurer. The assuming insurer may decline to release trade secrets or commercially sensitive information that would qualify as exempt from disclosure under the Freedom of Information Act. The Director shall also make the information publicly available, subject only to such reasonable objections as might be raised to a request pursuant to the Freedom of Information Act, as determined by the Director. The assuming insurer shall submit to examination of its books and records by the Director and bear the expense of examination.
        (2)(a) Credit for reinsurance shall not be granted
    
under this subsection unless the form of the trust and any amendments to the trust have been approved by:
            (i) the regulatory official of the state where
        
the trust is domiciled; or
            (ii) the regulatory official of another state
        
who, pursuant to the terms of the trust instrument, has accepted principal regulatory oversight of the trust.
        (b) The form of the trust and any trust amendments
    
also shall be filed with the regulatory official of every state in which the ceding insurer beneficiaries of the trust are domiciled. The trust instrument shall provide that contested claims shall be valid and enforceable upon the final order of any court of competent jurisdiction in the United States. The trust shall vest legal title to its assets in its trustees for the benefit of the assuming insurer's United States policyholders and ceding insurees and their assigns and successors in interest. The trust and the assuming insurer shall be subject to examination as determined by the Director.
        (c) The trust shall remain in effect for as long as
    
the assuming insurer has outstanding obligations due under the reinsurance agreements subject to the trust. No later than February 28 of each year the trustee of the trust shall report to the Director in writing the balance of the trust and a list of the trust's investments at the preceding year-end and shall certify the date of termination of the trust, if so planned, or certify that the trust will not expire prior to the next following December 31.
        No later than February 28 of each year, the assuming
    
insurer's chief executive officer or chief financial officer shall certify to the Director that the trust fund contains funds in an amount not less than the assuming insurer's liabilities (as reported to the assuming insurer by its cedent) attributable to reinsurance ceded by U.S. ceding insurers, and in addition, a trusteed surplus of no less than $20,000,000. In the event that item (a-5) of subparagraph (3) of this paragraph (C) applies to the trust, the assuming insurer's chief executive officer or chief financial officer shall then certify to the Director that the trust fund contains funds in an amount not less than the assuming insurer's liabilities (as reported to the assuming insurer by its cedent) attributable to reinsurance ceded by U.S. ceding insurers and, in addition, a reduced trusteed surplus of not less than the amount that has been authorized by the regulatory authority having principal regulatory oversight of the trust.
        (d) No later than February 28 of each year, an
    
assuming insurer that maintains a trust fund in accordance with this paragraph (C) shall provide or make available, if requested by a beneficiary under the trust fund, the following information to the assuming insurer's U.S. ceding insurers or their assigns and successors in interest:
            (i) a copy of the form of the trust agreement
        
and any trust amendments to the trust agreement pertaining to the trust fund;
            (ii) a copy of the annual and quarterly
        
financial information, and its most recent audited financial statement provided to the Director by the assuming insurer, including any exhibits and schedules thereto;
            (iii) any financial information provided to the
        
Director by the assuming insurer that the Director has deemed necessary to determine the financial condition of the assuming insurer and the sufficiency of the trust fund;
            (iv) a copy of any annual and quarterly
        
financial information provided to the Director by the trustee of the trust fund maintained by the assuming insurer, including any exhibits and schedules thereto;
            (v) a copy of the information required to be
        
reported by the trustee of the trust to the Director under the provisions of this paragraph (C); and
            (vi) a written certification that the trust
        
fund consists of funds in trust in an amount not less than the assuming insurer's liabilities attributable to reinsurance liabilities (as reported to the assuming insurer by its cedent) attributable to reinsurance ceded by U.S. ceding insurers and, in addition, a trusteed surplus of not less than $20,000,000.
        (3) The following requirements apply to the following
    
categories of assuming insurer:
            (a) The trust fund for a single assuming insurer
        
shall consist of funds in trust in an amount not less than the assuming insurer's liabilities attributable to reinsurance ceded by U.S. ceding insurers, and in addition, the assuming insurer shall maintain a trusteed surplus of not less than $20,000,000, except as provided in item (a-5) of this subparagraph (3).
            (a-5) At any time after the assuming insurer has
        
permanently discontinued underwriting new business secured by the trust for at least 3 full years, the Director with principal regulatory oversight of the trust may authorize a reduction in the required trusteed surplus, but only after a finding, based on an assessment of the risk, that the new required surplus level is adequate for the protection of U.S. ceding insurers, policyholders, and claimants in light of reasonably foreseeable adverse loss development. The risk assessment may involve an actuarial review, including an independent analysis of reserves and cash flows, and shall consider all material risk factors, including, when applicable, the lines of business involved, the stability of the incurred loss estimates, and the effect of the surplus requirements on the assuming insurer's liquidity or solvency. The minimum required trusteed surplus may not be reduced to an amount less than 30% of the assuming insurer's liabilities attributable to reinsurance ceded by U.S. ceding insurers covered by the trust.
            (b)(i) In the case of a group including
        
incorporated and individual unincorporated underwriters:
                (I) for reinsurance ceded under reinsurance
            
agreements with an inception, amendment, or renewal date on or after January 1, 1993, the trust shall consist of a trusteed account in an amount not less than the respective underwriters' several liabilities attributable to business ceded by U.S. domiciled ceding insurers to any member of the group;
                (II) for reinsurance ceded under reinsurance
            
agreements with an inception date on or before December 31, 1992 and not amended or renewed after that date, notwithstanding the other provisions of this Act, the trust shall consist of a trusteed account in an amount not less than the group's several insurance and reinsurance liabilities attributable to business written in the United States; and
                (III) in addition to these trusts, the group
            
shall maintain in trust a trusteed surplus of which not less than $100,000,000 shall be held jointly for the benefit of the U.S. domiciled ceding insurers of any member of the group for all years of account.
            (ii) The incorporated members of the group shall
        
not be engaged in any business other than underwriting as a member of the group and shall be subject to the same level of solvency regulation and control by the group's domiciliary regulator as are the unincorporated members.
            (iii) Within 90 days after its financial
        
statements are due to be filed with the group's domiciliary regulator, the group shall provide to the Director an annual certification by the group's domiciliary regulator of the solvency of each underwriter member, or if a certification is unavailable, financial statements prepared by independent public accountants of each underwriter member of the group.
            (c) In the case of a group of incorporated
        
insurers under common administration, the group shall:
                (i) have continuously transacted an insurance
            
business outside the United States for at least 3 years immediately before making application for accreditation;
                (ii) maintain aggregate policyholders'
            
surplus of not less than $10,000,000,000;
                (iii) maintain a trust in an amount not less
            
than the group's several liabilities attributable to business ceded by United States domiciled ceding insurers to any member of the group pursuant to reinsurance contracts issued in the name of the group;
                (iv) in addition, maintain a joint trusteed
            
surplus of which not less than $100,000,000 shall be held jointly for the benefit of the United States ceding insurers of any member of the group as additional security for these liabilities; and
                (v) within 90 days after its financial
            
statements are due to be filed with the group's domiciliary regulator, make available to the Director an annual certification of each underwriter member's solvency by the member's domiciliary regulator and financial statements of each underwriter member of the group prepared by its independent public accountant.
        (C-5) Credit shall be allowed when the reinsurance is
    
ceded to an assuming insurer that has been certified by the Director as a reinsurer in this State and secures its obligations in accordance with the requirements of this paragraph (C-5).
            (1) In order to be eligible for certification,
        
the assuming insurer shall meet the following requirements:
                (a) the assuming insurer must be domiciled
            
and licensed to transact insurance or reinsurance in a qualified jurisdiction, as determined by the Director pursuant to subparagraph (3) of this paragraph (C-5);
                (b) the assuming insurer must maintain
            
minimum capital and surplus, or its equivalent, in an amount not less than $250,000,000 or such greater amount as determined by the Director pursuant to regulation; this requirement may also be satisfied by an association, including incorporated and individual unincorporated underwriters, having minimum capital and surplus equivalents (net of liabilities) of at least $250,000,000 and a central fund containing a balance of at least $250,000,000;
                (c) the assuming insurer must maintain
            
financial strength ratings from 2 or more rating agencies deemed acceptable by the Director; these ratings shall be based on interactive communication between the rating agency and the assuming insurer and shall not be based solely on publicly available information; each certified reinsurer shall be rated on a legal entity basis, with due consideration being given to the group rating where appropriate, except that an association, including incorporated and individual unincorporated underwriters, that has been approved to do business as a single certified reinsurer may be evaluated on the basis of its group rating; these financial strength ratings shall be one factor used by the Director in determining the rating that is assigned to the assuming insurer; acceptable rating agencies include the following:
                    (i) Standard & Poor's;
                    (ii) Moody's Investors Service;
                    (iii) Fitch Ratings;
                    (iv) A.M. Best Company; or
                    (v) any other nationally recognized
                
statistical rating organization;
                (d) the assuming insurer must agree to submit
            
to the jurisdiction of this State, appoint the Director as its agent for service of process in this State, and agree to provide security for 100% of the assuming insurer's liabilities attributable to reinsurance ceded by U.S. ceding insurers if it resists enforcement of a final U.S. judgment; and
                (e) the assuming insurer must agree to meet
            
applicable information filing requirements as determined by the Director, both with respect to an initial application for certification and on an ongoing basis.
            (2) An association, including incorporated and
        
individual unincorporated underwriters, may be a certified reinsurer. In order to be eligible for certification, in addition to satisfying the requirements of subparagraph (1) of this paragraph (C-5):
                (a) the association shall satisfy its minimum
            
capital and surplus requirements through the capital and surplus equivalents (net of liabilities) of the association and its members, which shall include a joint central fund that may be applied to any unsatisfied obligation of the association or any of its members, in the amounts specified in item (b) of subparagraph (1) of this paragraph (C-5);
                (b) the incorporated members of the
            
association shall not be engaged in any business other than underwriting as a member of the association and shall be subject to the same level of regulation and solvency control by the association's domiciliary regulator as are the unincorporated members; and
                (c) within 90 days after its financial
            
statements are due to be filed with the association's domiciliary regulator, the association shall provide to the Director an annual certification by the association's domiciliary regulator of the solvency of each underwriter member; or if a certification is unavailable, financial statements, prepared by independent public accountants, of each underwriter member of the association.
            (3) The Director shall create and publish a list
        
of qualified jurisdictions, under which an assuming insurer licensed and domiciled in such jurisdiction is eligible to be considered for certification by the Director as a certified reinsurer.
                (a) In order to determine whether the
            
domiciliary jurisdiction of a non-U.S. assuming insurer is eligible to be recognized as a qualified jurisdiction, the Director shall evaluate the appropriateness and effectiveness of the reinsurance supervisory system of the jurisdiction, both initially and on an ongoing basis, and consider the rights, benefits, and extent of reciprocal recognition afforded by the non-U.S. jurisdiction to reinsurers licensed and domiciled in the U.S. A qualified jurisdiction must agree in writing to share information and cooperate with the Director with respect to all certified reinsurers domiciled within that jurisdiction. A jurisdiction may not be recognized as a qualified jurisdiction if the Director has determined that the jurisdiction does not adequately and promptly enforce final U.S. judgments and arbitration awards. The costs and expenses associated with the Director's review and evaluation of the domiciliary jurisdictions of non-U.S. assuming insurers shall be borne by the certified reinsurer or reinsurers domiciled in such jurisdiction.
                (b) Additional factors to be considered in
            
determining whether to recognize a qualified jurisdiction include, but are not limited to, the following:
                    (i) the framework under which the
                
assuming insurer is regulated;
                    (ii) the structure and authority of the
                
domiciliary regulator with regard to solvency regulation requirements and financial surveillance;
                    (iii) the substance of financial and
                
operating standards for assuming insurers in the domiciliary jurisdiction;
                    (iv) the form and substance of financial
                
reports required to be filed or made publicly available by reinsurers in the domiciliary jurisdiction and the accounting principles used;
                    (v) the domiciliary regulator's
                
willingness to cooperate with U.S. regulators in general and the Director in particular;
                    (vi) the history of performance by
                
assuming insurers in the domiciliary jurisdiction;
                    (vii) any documented evidence of
                
substantial problems with the enforcement of final U.S. judgments in the domiciliary jurisdiction; and
                    (viii) any relevant international
                
standards or guidance with respect to mutual recognition of reinsurance supervision adopted by the International Association of Insurance Supervisors or its successor organization.
                (c) If, upon conducting an evaluation under
            
this paragraph with respect to the reinsurance supervisory system of any non-U.S. assuming insurer, the Director determines that the jurisdiction qualifies to be recognized as a qualified jurisdiction, the Director shall publish notice and evidence of such recognition in an appropriate manner. The Director may establish a procedure to withdraw recognition of those jurisdictions that are no longer qualified.
                (d) The Director shall consider the list of
            
qualified jurisdictions through the NAIC committee process in determining qualified jurisdictions. If the Director approves a jurisdiction as qualified that does not appear on the list of qualified jurisdictions, then the Director shall provide thoroughly documented justification in accordance with criteria to be developed under regulations.
                (e) U.S. jurisdictions that meet the
            
requirement for accreditation under the NAIC financial standards and accreditation program shall be recognized as qualified jurisdictions.
                (f) If a certified reinsurer's domiciliary
            
jurisdiction ceases to be a qualified jurisdiction, then the Director may suspend the reinsurer's certification indefinitely, in lieu of revocation.
            (4) If an applicant for certification has been
        
certified as a reinsurer in an NAIC accredited jurisdiction, then the Director may defer to that jurisdiction's certification and to the rating assigned by that jurisdiction if the assuming insurer submits a properly executed Form CR-1 and such additional information as the Director requires. Such assuming insurer shall be considered to be a certified reinsurer in this State but only upon the Director's assignment of an Illinois rating, which shall be made based on the requirements of subparagraph (5) of this paragraph (C-5). The following shall apply:
                (a) Any change in the certified reinsurer's
            
status or rating in the other jurisdiction shall apply automatically in Illinois as of the date it takes effect in the other jurisdiction. The certified reinsurer shall notify the Director of any change in its status or rating within 10 days after receiving notice of the change.
                (b) The Director may withdraw recognition of
            
the other jurisdiction's rating at any time and assign a new rating in accordance with subparagraph (5) of this paragraph (C-5).
                (c) The Director may withdraw recognition of
            
the other jurisdiction's certification at any time with written notice to the certified reinsurer. Unless the Director suspends or revokes the certified reinsurer's certification in accordance with item (c) of subparagraph (9) of this paragraph (C-5), the certified reinsurer's certification shall remain in good standing in Illinois for a period of 3 months, which shall be extended if additional time is necessary to consider the assuming insurer's application for certification in Illinois.
            (5) The Director shall assign a rating to each
        
certified reinsurer pursuant to rules adopted by the Department. Factors that shall be considered as part of the evaluation process include the following:
                (a) The certified reinsurer's financial
            
strength rating from an acceptable rating agency. Financial strength ratings shall be classified according to the following ratings categories:
                    (i) Ratings Category "Secure - 1"
                
corresponds to the highest level of rating given by a rating agency, including, but not limited to, A.M. Best Company rating A++; Standard & Poor's rating AAA; Moody's Investors Service rating Aaa; and Fitch Ratings rating AAA.
                    (ii) Ratings Category "Secure - 2"
                
corresponds to the second-highest level of rating or group of ratings given by a rating agency, including, but not limited to, A.M. Best Company rating A+; Standard & Poor's rating AA+, AA, or AA-; Moody's Investors Service ratings Aa1, Aa2, or Aa3; and Fitch Ratings ratings AA+, AA, or AA-.
                    (iii) Ratings Category "Secure - 3"
                
corresponds to the third-highest level of rating or group of ratings given by a rating agency, including, but not limited to, A.M. Best Company rating A; Standard & Poor's ratings A+ or A; Moody's Investors Service ratings A1 or A2; and Fitch Ratings ratings A+ or A.
                    (iv) Ratings Category "Secure - 4"
                
corresponds to the fourth-highest level of rating or group of ratings given by a rating agency, including, but not limited to, A.M. Best Company rating A-; Standard & Poor's rating A-; Moody's Investors Service rating A3; and Fitch Ratings rating A-.
                    (v) Ratings Category "Secure - 5"
                
corresponds to the fifth-highest level of rating or group of ratings given by a rating agency, including, but not limited to, A.M. Best Company ratings B++ or B+; Standard & Poor's ratings BBB+, BBB, or BBB-; Moody's Investors Service ratings Baa1, Baa2, or Baa3; and Fitch Ratings ratings BBB+, BBB, or BBB-.
                    (vi) Ratings Category "Vulnerable - 6"
                
corresponds to a level of rating given by a rating agency, other than those described in subitems (i) through (v) of this item (a), including, but not limited to, A.M. Best Company rating B, B-, C++, C+, C, C-, D, E, or F; Standard & Poor's ratings BB+, BB, BB-, B+, B, B-, CCC, CC, C, D, or R; Moody's Investors Service ratings Ba1, Ba2, Ba3, B1, B2, B3, Caa, Ca, or C; and Fitch Ratings ratings BB+, BB, BB-, B+, B, B-, CCC+, CCC, CCC-, or D.
                A failure to obtain or maintain at
            
least 2 financial strength ratings from acceptable rating agencies shall result in loss of eligibility for certification.
                (b) The business practices of the certified
            
reinsurer in dealing with its ceding insurers, including its record of compliance with reinsurance contractual terms and obligations.
                (c) For certified reinsurers domiciled in the
            
U.S., a review of the most recent applicable NAIC Annual Statement Blank, either Schedule F (for property and casualty reinsurers) or Schedule S (for life and health reinsurers).
                (d) For certified reinsurers not domiciled in
            
the U.S., a review annually of Form CR-F (for property and casualty reinsurers) or Form CR-S (for life and health reinsurers).
                (e) The reputation of the certified reinsurer
            
for prompt payment of claims under reinsurance agreements, based on an analysis of ceding insurers' Schedule F reporting of overdue reinsurance recoverables, including the proportion of obligations that are more than 90 days past due or are in dispute, with specific attention given to obligations payable to companies that are in administrative supervision or receivership.
                (f) Regulatory actions against the certified
            
reinsurer.
                (g) The report of the independent auditor on
            
the financial statements of the insurance enterprise, on the basis described in item (h) of this subparagraph (5).
                (h) For certified reinsurers not domiciled in
            
the U.S., audited financial statements (audited Generally Accepted Accounting Principles (U.S. GAAP) basis statement if available, audited International Financial Reporting Standards (IFRS) basis statements are allowed but must include an audited footnote reconciling equity and net income to U.S. GAAP basis or, with the permission of the Director, audited IFRS basis statements with reconciliation to U.S. GAAP basis certified by an officer of the company), regulatory filings, and actuarial opinion (as filed with the non-U.S. jurisdiction supervisor). Upon the initial application for certification, the Director shall consider the audited financial statements filed with its non-U.S. jurisdiction supervisor for the 3 years immediately preceding the date of the initial application for certification.
                (i) The liquidation priority of obligations
            
to a ceding insurer in the certified reinsurer's domiciliary jurisdiction in the context of an insolvency proceeding.
                (j) A certified reinsurer's participation in
            
any solvent scheme of arrangement, or similar procedure, that involves U.S. ceding insurers. The Director shall receive prior notice from a certified reinsurer that proposes participation by the certified reinsurer in a solvent scheme of arrangement.
            The maximum rating that a certified reinsurer may
        
be assigned shall correspond to its financial strength rating, which shall be determined according to subitems (i) through (vi) of item (a) of this subparagraph (5). The Director shall use the lowest financial strength rating received from an acceptable rating agency in establishing the maximum rating of a certified reinsurer.
            (6) Based on the analysis conducted under item
        
(e) of subparagraph (5) of this paragraph (C-5) of a certified reinsurer's reputation for prompt payment of claims, the Director may make appropriate adjustments in the security the certified reinsurer is required to post to protect its liabilities to U.S. ceding insurers, provided that the Director shall, at a minimum, increase the security the certified reinsurer is required to post by one rating level under item (a) of subparagraph (8) of this paragraph (C-5) if the Director finds that:
                (a) more than 15% of the certified
            
reinsurer's ceding insurance clients have overdue reinsurance recoverables on paid losses of 90 days or more that are not in dispute and that exceed $100,000 for each cedent; or
                (b) the aggregate amount of reinsurance
            
recoverables on paid losses that are not in dispute that are overdue by 90 days or more exceeds $50,000,000.
            (7) The Director shall post notice on the
        
Department's website promptly upon receipt of any application for certification, including instructions on how members of the public may respond to the application. The Director may not take final action on the application until at least 30 days after posting the notice required by this subparagraph. The Director shall publish a list of all certified reinsurers and their ratings.
            (8) A certified reinsurer shall secure
        
obligations assumed from U.S. ceding insurers under this subsection (1) at a level consistent with its rating.
                (a) The amount of security required in order
            
for full credit to be allowed shall correspond with the applicable ratings category:
                    Secure - 1: 0%.
                    Secure - 2: 10%.
                    Secure - 3: 20%.
                    Secure - 4: 50%.
                    Secure - 5: 75%.
                    Vulnerable - 6: 100%.
                (b) Nothing in this subparagraph (8) shall
            
prohibit the parties to a reinsurance agreement from agreeing to provisions establishing security requirements that exceed the minimum security requirements established for certified reinsurers under this Section.
                (c) In order for a domestic ceding insurer to
            
qualify for full financial statement credit for reinsurance ceded to a certified reinsurer, the certified reinsurer shall maintain security in a form acceptable to the Director and consistent with the provisions of subsection (2) of this Section, or in a multibeneficiary trust in accordance with paragraph (C) of this subsection (1), except as otherwise provided in this subparagraph (8).
                (d) If a certified reinsurer maintains a
            
trust to fully secure its obligations subject to paragraph (C) of this subsection (1), and chooses to secure its obligations incurred as a certified reinsurer in the form of a multibeneficiary trust, then the certified reinsurer shall maintain separate trust accounts for its obligations incurred under reinsurance agreements issued or renewed as a certified reinsurer with reduced security as permitted by this subsection or comparable laws of other U.S. jurisdictions and for its obligations subject to paragraph (C) of this subsection (1). It shall be a condition to the grant of certification under this paragraph (C-5) that the certified reinsurer shall have bound itself, by the language of the trust and agreement with the Director with principal regulatory oversight of each such trust account, to fund, upon termination of any such trust account, out of the remaining surplus of such trust any deficiency of any other such trust account. The certified reinsurer shall also provide or make available, if requested by a beneficiary under a trust, all the information that is required to be provided under the requirements of item (d) of subparagraph (2) of paragraph (C) of this subsection (1) to the certified reinsurer's U.S. ceding insurers or their assigns and successors in interest. The assuming insurer may decline to release trade secrets or commercially sensitive information that would qualify as exempt from disclosure under the Freedom of Information Act.
                (e) The minimum trusteed surplus requirements
            
provided in paragraph (C) of this subsection (1) are not applicable with respect to a multibeneficiary trust maintained by a certified reinsurer for the purpose of securing obligations incurred under this subsection, except that such trust shall maintain a minimum trusteed surplus of $10,000,000.
                (f) With respect to obligations incurred by a
            
certified reinsurer under this subsection (1), if the security is insufficient, then the Director may reduce the allowable credit by an amount proportionate to the deficiency and may impose further reductions in allowable credit upon finding that there is a material risk that the certified reinsurer's obligations will not be paid in full when due.
            (9)(a) In the case of a downgrade by a rating
        
agency or other disqualifying circumstance, the Director shall by written notice assign a new rating to the certified reinsurer in accordance with the requirements of subparagraph (5) of this paragraph (C-5).
            (b) If the rating of a certified reinsurer is
        
upgraded by the Director, then the certified reinsurer may meet the security requirements applicable to its new rating on a prospective basis, but the Director shall require the certified reinsurer to post security under the previously applicable security requirements as to all contracts in force on or before the effective date of the upgraded rating. If the rating of a certified reinsurer is downgraded by the Director, then the Director shall require the certified reinsurer to meet the security requirements applicable to its new rating for all business it has assumed as a certified reinsurer.
            (c) The Director may suspend, revoke, or
        
otherwise modify a certified reinsurer's certification at any time if the certified reinsurer fails to meet its obligations or security requirements under this Section or if other financial or operating results of the certified reinsurer, or documented significant delays in payment by the certified reinsurer, lead the Director to reconsider the certified reinsurer's ability or willingness to meet its contractual obligations. In seeking to suspend, revoke, or otherwise modify a certified reinsurer's certification, the Director shall follow the procedures provided in paragraph (G) of this subsection (1).
            (d) For purposes of this subsection (1), a
        
certified reinsurer whose certification has been terminated for any reason shall be treated as a certified reinsurer required to secure 100% of its obligations.
                (i) As used in this item (d), the term
            
"terminated" refers to revocation, suspension, voluntary surrender and inactive status.
                (ii) If the Director continues to assign a
            
higher rating as permitted by other provisions of this Section, then this requirement does not apply to a certified reinsurer in inactive status or to a reinsurer whose certification has been suspended.
            (e) Upon revocation of the certification of a
        
certified reinsurer by the Director, the assuming insurer shall be required to post security in accordance with subsection (2) of this Section in order for the ceding insurer to continue to take credit for reinsurance ceded to the assuming insurer. If funds continue to be held in trust, then the Director may allow additional credit equal to the ceding insurer's pro rata share of the funds, discounted to reflect the risk of uncollectibility and anticipated expenses of trust administration.
            (f) Notwithstanding the change of a certified
        
reinsurer's rating or revocation of its certification, a domestic insurer that has ceded reinsurance to that certified reinsurer may not be denied credit for reinsurance for a period of 3 months for all reinsurance ceded to that certified reinsurer, unless the reinsurance is found by the Director to be at high risk of uncollectibility.
            (10) A certified reinsurer that ceases to assume
        
new business in this State may request to maintain its certification in inactive status in order to continue to qualify for a reduction in security for its in-force business. An inactive certified reinsurer shall continue to comply with all applicable requirements of this subsection (1), and the Director shall assign a rating that takes into account, if relevant, the reasons why the reinsurer is not assuming new business.
            (11) Credit for reinsurance under this paragraph
        
(C-5) shall apply only to reinsurance contracts entered into or renewed on or after the effective date of the certification of the assuming insurer.
            (12) The Director shall comply with all reporting
        
and notification requirements that may be established by the NAIC with respect to certified reinsurers and qualified jurisdictions.
        (C-10)(1) Credit shall be allowed when the
    
reinsurance is ceded to an assuming insurer meeting each of the conditions set forth in this subparagraph.
            (a) The assuming insurer must have its head
        
office in or be domiciled in, as applicable, and be licensed in a reciprocal jurisdiction. As used in this paragraph (C-10), "reciprocal jurisdiction" means a jurisdiction that meets one of the following:
                (i) a non-U.S. jurisdiction that is subject
            
to an in-force covered agreement with the United States, each within its legal authority, or, in the case of a covered agreement between the United States and European Union, is a member state of the European Union; as used in this subitem, "covered agreement" means an agreement entered into pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act (31 U.S.C. 313 and 314) that is currently in effect or in a period of provisional application and addresses the elimination, under specified conditions, of collateral requirements as a condition for entering into any reinsurance agreement with a ceding insurer domiciled in this State or for allowing the ceding insurer to recognize credit for reinsurance;
                (ii) a U.S. jurisdiction that meets the
            
requirements for accreditation under the NAIC financial standards and accreditation program; or
                (iii) a qualified jurisdiction, as determined
            
by the Director pursuant to subparagraph (3) of paragraph (C-5) of subsection (1) of this Section, that is not otherwise described in subitem (i) or (ii) of this item and that meets certain additional requirements, consistent with the terms and conditions of in-force covered agreements, as specified by the Department by rule.
            (b) The assuming insurer must have and
        
maintain, on an ongoing basis, minimum capital and surplus, or its equivalent, calculated according to the methodology of its domiciliary jurisdiction, in an amount to be set forth by rule. If the assuming insurer is an association, including incorporated and individual unincorporated underwriters, it must have and maintain, on an ongoing basis, minimum capital and surplus equivalents (net of liabilities) calculated according to the methodology applicable in its domiciliary jurisdiction and a central fund containing a balance in amounts to be set forth by rule.
            (c) The assuming insurer must have and
        
maintain, on an ongoing basis, a minimum solvency or capital ratio, as applicable, that will be set forth by rule. If the assuming insurer is an association, including incorporated and individual unincorporated underwriters, it must have and maintain, on an ongoing basis, a minimum solvency or capital ratio in the reciprocal jurisdiction where the assuming insurer has its head office or is domiciled, as applicable, and is also licensed.
            (d) The assuming insurer must provide adequate
        
assurance to the Director, in a form specified by the Department by rule, as follows:
                (i) the assuming insurer must provide prompt
            
written notice and explanation to the Director if it falls below the minimum requirements set forth in items (b) or (c) of this subparagraph or if any regulatory action is taken against it for serious noncompliance with applicable law;
                (ii) the assuming insurer must consent in
            
writing to the jurisdiction of the courts of this State and to the appointment of the Director as agent for service of process; the Director may require that consent for service of process be provided to the Director and included in each reinsurance agreement; nothing in this subitem (ii) shall limit or in any way alter the capacity of parties to a reinsurance agreement to agree to alternative dispute resolution mechanisms, except to the extent such agreements are unenforceable under applicable insolvency or delinquency laws;
                (iii) the assuming insurer must consent in
            
writing to pay all final judgments obtained by a ceding insurer or its legal successor, whenever enforcement is sought, that have been declared enforceable in the jurisdiction where the judgment was obtained;
                (iv) each reinsurance agreement must include
            
a provision requiring the assuming insurer to provide security in an amount equal to 100% of the assuming insurer's liabilities attributable to reinsurance ceded pursuant to that agreement if the assuming insurer resists enforcement of a final judgment that is enforceable under the law of the jurisdiction in which it was obtained or a properly enforceable arbitration award, whether obtained by the ceding insurer or by its legal successor on behalf of its resolution estate; and
                (v) the assuming insurer must confirm that it
            
is not presently participating in any solvent scheme of arrangement which involves this State's ceding insurers and agree to notify the ceding insurer and the Director and to provide security in an amount equal to 100% of the assuming insurer's liabilities to the ceding insurer if the assuming insurer enters into such a solvent scheme of arrangement; the security shall be in a form consistent with the provisions of paragraph (C-5) of subsection (1) and subsection (2) and as specified by the Department by rule.
            (e) If requested by the Director, the assuming
        
insurer or its legal successor must provide, on behalf of itself and any legal predecessors, certain documentation to the Director, as specified by the Department by rule.
            (f) The assuming insurer must maintain a
        
practice of prompt payment of claims under reinsurance agreements pursuant to criteria set forth by rule.
            (g) The assuming insurer's supervisory
        
authority must confirm to the Director on an annual basis, as of the preceding December 31 or at the annual date otherwise statutorily reported to the reciprocal jurisdiction, that the assuming insurer complied with the requirements set forth in items (b) and (c) of this subparagraph.
            (h) Nothing in this subparagraph precludes an
        
assuming insurer from providing the Director with information on a voluntary basis.
        (2) The Director shall timely create and publish a
    
list of reciprocal jurisdictions.
            (a) The Director's list shall include any
        
reciprocal jurisdiction as defined under subitems (i) and (ii) of item (a) of subparagraph (1) of this paragraph, and shall consider any other reciprocal jurisdiction included on the list of reciprocal jurisdictions published through the NAIC committee process. The Director may approve a jurisdiction that does not appear on the NAIC list of reciprocal jurisdictions in accordance with criteria to be developed by rules adopted by the Department.
            (b) The Director may remove a jurisdiction from
        
the list of reciprocal jurisdictions upon a determination that the jurisdiction no longer meets the requirements of a reciprocal jurisdiction in accordance with a process set forth in rules adopted by the Department, except that the Director shall not remove from the list a reciprocal jurisdiction as defined under subitems (i) and (ii) of item (a) of subparagraph (1) of this paragraph. If otherwise allowed pursuant to this Section, credit for reinsurance ceded to an assuming insurer that has its home office or is domiciled in that jurisdiction shall be allowed upon removal of a reciprocal jurisdiction from this list.
        (3) The Director shall timely create and publish
    
a list of assuming insurers that have satisfied the conditions set forth in this paragraph and to which cessions shall be granted credit in accordance with this paragraph. The Director may add an assuming insurer to the list if a NAIC-accredited jurisdiction has added the assuming insurer to a list of assuming insurers or if, upon initial eligibility, the assuming insurer submits the information to the Director as required under item (d) of subparagraph (1) of this paragraph and complies with any additional requirements that the Department may impose by rule except to the extent that they conflict with an applicable covered agreement.
        (4) If the Director determines that an assuming
    
insurer no longer meets one or more of the requirements under this paragraph, the Director may revoke or suspend the eligibility of the assuming insurer for recognition under this paragraph in accordance with procedures set forth by rule.
            (a) While an assuming insurer's eligibility is
        
suspended, no reinsurance agreement issued, amended, or renewed after the effective date of the suspension qualifies for credit except to the extent that the assuming insurer's obligations under the contract are secured in accordance with subsection (2).
            (b) If an assuming insurer's eligibility is
        
revoked, no credit for reinsurance may be granted after the effective date of the revocation with respect to any reinsurance agreements entered into by the assuming insurer, including reinsurance agreements entered into before the date of revocation, except to the extent that the assuming insurer's obligations under the contract are secured in a form acceptable to the Director and consistent with the provisions of subsection (2).
        (5) If subject to a legal process of
    
rehabilitation, liquidation, or conservation, as applicable, the ceding insurer or its representative may seek and, if determined appropriate by the court in which the proceedings are pending, may obtain an order requiring that the assuming insurer post security for all outstanding ceded liabilities.
        (6) Nothing in this paragraph shall limit or in any
    
way alter the capacity of parties to a reinsurance agreement to agree on requirements for security or other terms in that reinsurance agreement except as expressly prohibited by this Section or other applicable law or regulation.
        (7) Credit may be taken under this paragraph only
    
for reinsurance agreements entered into, amended, or renewed on or after the effective date of this amendatory Act of the 102nd General Assembly and only with respect to losses incurred and reserves reported on or after the later of:
            (i) the date on which the assuming insurer has
        
met all eligibility requirements pursuant to subparagraph (1) of this paragraph; and
            (ii) the effective date of the new reinsurance
        
agreement, amendment, or renewal.
        This subparagraph does not alter or impair a ceding
    
insurer's right to take credit for reinsurance, to the extent that credit is not available under this paragraph, as long as the reinsurance qualifies for credit under any other applicable provision of this Section.
        (8) Nothing in this paragraph shall authorize an
    
assuming insurer to withdraw or reduce the security provided under any reinsurance agreement except as permitted by the terms of the agreement.
        (9) Nothing in this paragraph shall limit or in any
    
way alter the capacity of parties to any reinsurance agreement to renegotiate the agreement.
        (D) Credit shall be allowed when the reinsurance is
    
ceded to an assuming insurer not meeting the requirements of paragraph (A), (B), (B-5), (C), (C-5), or (C-10) of this subsection (1) but only with respect to the insurance of risks located in jurisdictions where that reinsurance is required by applicable law or regulation of that jurisdiction.
        (E) If the assuming insurer is not licensed to
    
transact insurance in this State or an accredited or certified reinsurer in this State, the credit permitted by paragraphs (B-5) and (C) of this subsection (1) shall not be allowed unless the assuming insurer agrees in the reinsurance agreements:
            (1) that in the event of the failure of the
        
assuming insurer to perform its obligations under the terms of the reinsurance agreement, the assuming insurer, at the request of the ceding insurer, shall submit to the jurisdiction of any court of competent jurisdiction in any state of the United States, will comply with all requirements necessary to give the court jurisdiction, and will abide by the final decision of the court or of any appellate court in the event of an appeal; and
            (2) to designate the Director or a designated
        
attorney as its true and lawful attorney upon whom may be served any lawful process in any action, suit, or proceeding instituted by or on behalf of the ceding company.
        This provision is not intended to conflict with or
    
override the obligation of the parties to a reinsurance agreement to arbitrate their disputes, if an obligation to arbitrate is created in the agreement.
        (F) If the assuming insurer does not meet the
    
requirements of paragraph (A), (B), (B-5), or (C-10) of this subsection (1), the credit permitted by paragraph (C) or (C-5) of this subsection (1) shall not be allowed unless the assuming insurer agrees in the trust agreements to the following conditions:
            (1) Notwithstanding any other provisions in the
        
trust instrument, if the trust fund is inadequate because it contains an amount less than the amount required by subparagraph (3) of paragraph (C) of this subsection (1) or if the grantor of the trust has been declared insolvent or placed into receivership, rehabilitation, liquidation, or similar proceedings under the laws of its state or country of domicile, the trustee shall comply with an order of the state official with regulatory oversight over the trust or with an order of a court of competent jurisdiction directing the trustee to transfer to the state official with regulatory oversight all of the assets of the trust fund.
            (2) The assets shall be distributed by and claims
        
shall be filed with and valued by the state official with regulatory oversight in accordance with the laws of the state in which the trust is domiciled that are applicable to the liquidation of domestic insurance companies.
            (3) If the state official with regulatory
        
oversight determines that the assets of the trust fund or any part thereof are not necessary to satisfy the claims of the U.S. ceding insurers of the grantor of the trust, the assets or part thereof shall be returned by the state official with regulatory oversight to the trustee for distribution in accordance with the trust agreement.
            (4) The grantor shall waive any rights otherwise
        
available to it under U.S. law that are inconsistent with the provision.
        (G) If an accredited or certified reinsurer ceases to
    
meet the requirements for accreditation or certification, then the Director may suspend or revoke the reinsurer's accreditation or certification.
            (1) The Director must give the reinsurer notice
        
and opportunity for hearing. The suspension or revocation may not take effect until after the Director's order on hearing, unless:
                (a) the reinsurer waives its right to hearing;
                (b) the Director's order is based on
            
regulatory action by the reinsurer's domiciliary jurisdiction or the voluntary surrender or termination of the reinsurer's eligibility to transact insurance or reinsurance business in its domiciliary jurisdiction or in the primary certifying state of the reinsurer under subparagraph (4) of paragraph (C-5) of this subsection (1); or
                (c) the Director finds that an emergency
            
requires immediate action and a court of competent jurisdiction has not stayed the Director's action.
            (2) While a reinsurer's accreditation or
        
certification is suspended, no reinsurance contract issued or renewed after the effective date of the suspension qualifies for credit except to the extent that the reinsurer's obligations under the contract are secured in accordance with subsection (2) of this Section. If a reinsurer's accreditation or certification is revoked, no credit for reinsurance may be granted after the effective date of the revocation, except to the extent that the reinsurer's obligations under the contract are secured in accordance with subsection (2) of this Section.
        (H) The following provisions shall apply concerning
    
concentration of risk:
            (1) A ceding insurer shall take steps to manage
        
its reinsurance recoverable proportionate to its own book of business. A domestic ceding insurer shall notify the Director within 30 days after reinsurance recoverables from any single assuming insurer, or group of affiliated assuming insurers, exceeds 50% of the domestic ceding insurer's last reported surplus to policyholders, or after it is determined that reinsurance recoverables from any single assuming insurer, or group of affiliated assuming insurers, is likely to exceed this limit. The notification shall demonstrate that the exposure is safely managed by the domestic ceding insurer.
            (2) A ceding insurer shall take steps to
        
diversify its reinsurance program. A domestic ceding insurer shall notify the Director within 30 days after ceding to any single assuming insurer, or group of affiliated assuming insurers, more than 20% of the ceding insurer's gross written premium in the prior calendar year, or after it has determined that the reinsurance ceded to any single assuming insurer, or group of affiliated assuming insurers, is likely to exceed this limit. The notification shall demonstrate that the exposure is safely managed by the domestic ceding insurer.
    (2) Credit for the reinsurance ceded by a domestic insurer to an assuming insurer not meeting the requirements of subsection (1) of this Section shall be allowed in an amount not exceeding the assets or liabilities carried by the ceding insurer. The credit shall not exceed the amount of funds held by or held in trust for the ceding insurer under a reinsurance contract with the assuming insurer as security for the payment of obligations thereunder, if the security is held in the United States subject to withdrawal solely by, and under the exclusive control of, the ceding insurer; or, in the case of a trust, held in a qualified United States financial institution, as defined in paragraph (B) of subsection (3) of this Section. This security may be in the form of:
        (A) Cash.
        (B) Securities listed by the Securities Valuation
    
Office of the National Association of Insurance Commissioners, including those deemed exempt from filing as defined by the Purposes and Procedures Manual of the Securities Valuation Office that conform to the requirements of Article VIII of this Code that are not issued by an affiliate of either the assuming or ceding company.
        (C) Clean, irrevocable, unconditional, letters of
    
credit issued or confirmed by a qualified United States financial institution, as defined in paragraph (A) of subsection (3) of this Section. The letters of credit shall be effective no later than December 31 of the year for which filing is being made, and in the possession of, or in trust for, the ceding company on or before the filing date of its annual statement. Letters of credit meeting applicable standards of issuer acceptability as of the dates of their issuance (or confirmation) shall, notwithstanding the issuing (or confirming) institution's subsequent failure to meet applicable standards of issuer acceptability, continue to be acceptable as security until their expiration, extension, renewal, modification, or amendment, whichever first occurs.
        (D) Any other form of security acceptable to the
    
Director.
    (3)(A) For purposes of paragraph (C) of subsection (2) of this Section, a "qualified United States financial institution" means an institution that:
        (1) is organized or, in the case of a U.S. office of
    
a foreign banking organization, licensed under the laws of the United States or any state thereof;
        (2) is regulated, supervised, and examined by U.S.
    
federal or state authorities having regulatory authority over banks and trust companies;
        (3) has been designated by either the Director or the
    
Securities Valuation Office of the National Association of Insurance Commissioners as meeting such standards of financial condition and standing as are considered necessary and appropriate to regulate the quality of financial institutions whose letters of credit will be acceptable to the Director; and
        (4) is not affiliated with the assuming company.
    (B) A "qualified United States financial institution" means, for purposes of those provisions of this law specifying those institutions that are eligible to act as a fiduciary of a trust, an institution that:
        (1) is organized or, in the case of the U.S. branch
    
or agency office of a foreign banking organization, licensed under the laws of the United States or any state thereof and has been granted authority to operate with fiduciary powers;
        (2) is regulated, supervised, and examined by federal
    
or state authorities having regulatory authority over banks and trust companies; and
        (3) is not affiliated with the assuming company,
    
however, if the subject of the reinsurance contract is insurance written pursuant to Section 155.51 of this Code, the financial institution may be affiliated with the assuming company with the prior approval of the Director.
    (C) Except as set forth in subparagraph (11) of paragraph (C-5) of subsection (1) of this Section as to cessions by certified reinsurers, this amendatory Act of the 100th General Assembly shall apply to all cessions after the effective date of this amendatory Act of the 100th General Assembly under reinsurance agreements that have an inception, anniversary, or renewal date not less than 6 months after the effective date of this amendatory Act of the 100th General Assembly.
    (D) The Department shall adopt rules implementing the provisions of this Article.
(Source: P.A. 102-578, eff. 7-1-22 (See Section 5 of P.A. 102-672 for effective date of P.A. 102-578).)

215 ILCS 5/173.2

    (215 ILCS 5/173.2) (from Ch. 73, par. 785.2)
    Sec. 173.2. Reserve credit for liability assumed.
    No credit shall be allowed as an admitted asset or as a deduction from liability, to any ceding company for reinsurance unless the reinsurance is payable by the assuming company on the basis of the liability of the ceding company under the contract or contracts reinsured without diminution because of the insolvency of the ceding company.
(Source: Laws 1965, p. 1077.)

215 ILCS 5/173.3

    (215 ILCS 5/173.3) (from Ch. 73, par. 785.3)
    Sec. 173.3. Payment by assuming company.
    (1) No such credit shall be allowed for reinsurance unless the reinsurance agreement provides that payments by the assuming company shall be made directly to the ceding company or to its liquidator, receiver, or statutory successor, except where the contract specifically provides another payee of such reinsurance in the event of the insolvency of the ceding company or where the assuming company with the consent of the direct insured or insureds has assumed such policy obligations of the ceding company to the payees under such policies and in substitution for the obligations of the ceding company to such payees.
    (2) Except as provided in this Section, no assuming company may pay or settle, or agree to pay or settle, any policy claim, or any portion thereof, directly to or with a policyholder of any ceding company if an Order of Rehabilitation or Liquidation has been entered against such ceding company.
(Source: P.A. 77-1329.)

215 ILCS 5/173.4

    (215 ILCS 5/173.4) (from Ch. 73, par. 785.4)
    Sec. 173.4. Assuming company may defend claims for insolvent ceding company.
    Such reinsurance agreement may provide that the liquidator or receiver of an insolvent ceding company shall give written notice of the pendency of a claim against the insolvent ceding company on the policy or bond reinsured within a reasonable time after such claim is filed in the insolvency proceeding and that during the pendency of such claim any assuming company may investigate such claim and interpose, at its own expense, in the proceeding where such claim is to be adjudicated any defense or defenses which it considers available to the ceding company or its liquidator or receiver. The expense thus incurred by the assuming company is chargeable against the insolvent ceding company as a part of the expense of liquidation to the extent of a proportionate share of the benefit which accrues to the ceding company solely as a result of the defense undertaken by the assuming company.
    Where two or more assuming companies are involved in the same claim and a majority in interest elect to interpose a defense to such claim, the expense shall be apportioned in accordance with the terms of the reinsurance agreement as though such expense had been incurred by the ceding company.
(Source: Laws 1965, p. 1077.)

215 ILCS 5/173.5

    (215 ILCS 5/173.5) (from Ch. 73, par. 785.5)
    Sec. 173.5. Crediting of commissions from cancellable reinsurance.
    Where the parties to a reinsurance contract cancel such contract within 90 days of its effective date without providing for a runoff of the reinsurance in force at the date of cancellation, credit for commission shall be allowed on the financial statement of the ceding company only for that amount of such commission as is actually earned. In the case of any cancellation of reinsurance contracts involving more than 20% of the ceding company's premiums in force, the ceding company shall notify the Director thereof in writing, stating the estimated amount of gross unearned premiums and return commissions involved.
(Source: Laws 1965, p. 1077.)

215 ILCS 5/174

    (215 ILCS 5/174) (from Ch. 73, par. 786)
    Sec. 174. Kinds of agreements requiring approval.
    (1) The following kinds of reinsurance agreements shall not be entered into by any domestic company unless such agreements are approved in writing by the Director:
        (a) Agreements of reinsurance of any such company
    
transacting the kind or kinds of business enumerated in Class 1 of Section 4, or as a Fraternal Benefit Society under Article XVII, a Mutual Benefit Association under Article XVIII, a Burial Society under Article XIX or an Assessment Accident and Assessment Accident and Health Company under Article XXI, cedes previously issued and outstanding risks to any company, or cedes any risks to a company not authorized to transact business in this State, or assumes any outstanding risks on which the aggregate reserves and claim liabilities exceed 20 percent of the aggregate reserves and claim liabilities of the assuming company, as reported in the preceding annual statement, for the business of either life or accident and health insurance.
        (b) Any agreement or agreements of reinsurance
    
whereby any company transacting the kind or kinds of business enumerated in either Class 2 or Class 3 of Section 4 cedes to any company or companies at one time, or during a period of six consecutive months more than twenty per centum of the total amount of its previously retained unearned premium reserve liability.
        (c) (Blank).
    (2) An agreement which is not disapproved by the Director within thirty days after its submission shall be deemed approved.
(Source: P.A. 98-969, eff. 1-1-15.)

215 ILCS 5/174.1

    (215 ILCS 5/174.1) (from Ch. 73, par. 786.1)
    Sec. 174.1. Kinds of Agreements Prohibited. No domestic stock company with less than $5,000,000 capital and surplus nor domestic mutual or reciprocal company with less than $5,000,000 surplus may assume as reinsurance any of the kind or kinds of businesses enumerated in Class 2 or Class 3 of Section 4 of this Code, except Class 2(a), and except for facultative reinsurance of specific risks and assumption of risks from companies subject to "An Act relating to local, mutual district, county and township insurance companies", approved March 13, 1936, as amended. If approval of the Director is obtained prior to the reinsurance assumption, this prohibition shall not apply to any company organized and authorized to do business in Illinois between July 1, 1981, and June 30, 1983, until January 1, 1989.
(Source: P.A. 84-671.)

215 ILCS 5/175

    (215 ILCS 5/175) (from Ch. 73, par. 787)
    Sec. 175. Conditions for approval.
    Any reinsurance agreement requiring the written approval of the Director under section 174 shall be approved by him if the terms thereof do not injuriously affect the rights of policyholders of any of the companies which are parties thereto. If the Director refuses to approve any such agreement, he shall grant the company a hearing upon request.
(Source: Laws 1965, p. 1077.)

215 ILCS 5/176

    (215 ILCS 5/176) (from Ch. 73, par. 788)
    Sec. 176. Pending actions.
    Whenever a company agrees to assume and carry out directly with the policyholder any of the policy obligations of the ceding company under a reinsurance agreement, any claim existing or action or proceeding pending arising out of such policy, by or against the ceding company with respect to such obligations may be prosecuted to judgment as if such reinsurance agreement had not been made, or the assuming company may be substituted in place of the ceding company.
(Source: Laws 1937, p. 696.)

215 ILCS 5/177

    (215 ILCS 5/177) (from Ch. 73, par. 789)
    Sec. 177. Transfer of deposits.
    The provisions of section 170 applicable to the transfer of deposits of legal reserves on policies of merged or consolidated companies shall apply to the transfer of deposits of such reserves of a ceding company in the case of a reinsurance agreement, and for the purposes of determining the conditions and requirements for such transfer the assuming company shall be regarded as a surviving or new company and the ceding company shall be regarded as a company that has been merged or consolidated.
(Source: Laws 1937, p. 696.)

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.)

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.)

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.)

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.)

215 ILCS 5/Art. XI.5

 
    (215 ILCS 5/Art. XI.5 heading)
ARTICLE XI 1/2. PROTECTED CELL COMPANIES

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.)

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.)

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.)

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
        (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.
    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.)

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.)

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
        (2) that obligation of the protected cell company
    
shall not extend to the protected cell assets of any other protected cell or the assets of the company's general account, and that person shall not, in respect of that obligation, be entitled to have recourse to the protected cell assets of any other protected cell or the assets of the company's general account.
    (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.)

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.)

215 ILCS 5/179A-35

    (215 ILCS 5/179A-35)
    Sec. 179A-35. No transaction of an insurance business. A protected cell insurance securitization shall not be deemed to be an insurance or reinsurance contract. An investor in a protected cell company insurance securitization shall not, by sole means of such investment, be deemed to be transacting an insurance business in this State. The underwriters or selling agents (and their partners, directors, officers, members, managers, employees, agents, representatives, and advisors) involved in a protected cell company insurance securitization shall not be deemed to be conducting an insurance or reinsurance agency, brokerage, intermediary, advisory, or consulting business by virtue of their activities in connection therewith.
(Source: P.A. 91-278, eff. 7-23-99; 92-74, eff. 7-12-01.)

215 ILCS 5/179A-40

    (215 ILCS 5/179A-40)
    Sec. 179A-40. Rules. The Director may promulgate reasonable rules as may be necessary to effectuate the purposes of this Article.
(Source: P.A. 91-278, eff. 7-23-99.)

215 ILCS 5/Art. XIE

 
    (215 ILCS 5/Art. XIE heading)
ARTICLE XIE. Special Purpose Reinsurance Vehicle Law

215 ILCS 5/179E-1

    (215 ILCS 5/179E-1)
    Sec. 179E-1. Short title. This Article may be cited as the Special Purpose Reinsurance Vehicle Law.
(Source: P.A. 92-124, eff. 7-20-01.)

215 ILCS 5/179E-5

    (215 ILCS 5/179E-5)
    Sec. 179E-5. Purpose. This Article is adopted to provide for the creation of Special Purpose Reinsurance Vehicles ("SPRV") exclusively to facilitate the securitization of one or more ceding insurers' risk as a means of accessing alternative sources of capital and achieving the benefits of securitization. Investors in fully funded insurance securitization transactions provide funds that are available to the SPRV to secure the aggregate limit under an SPRV contract that provides coverage against the occurrence of a triggering event. The creation of SPRVs is intended to achieve greater efficiencies in conducting insurance securitizations, to diversify and broaden insurers' access to sources of risk bearing capital, and to make insurance securitization generally available on reasonable terms to as many U.S. insurers as possible.
    Under the terms of the typical securities underlying an insurance securitization transaction, proceeds from the issuance of securities are repaid to the investor on a specified maturity date with interest or dividends unless a triggering event occurs. The insurance securitization proceeds are available to pay the SPRV's obligations to the ceding insurer if the triggering event occurs, as well as being available to satisfy the SPRV's obligation to repay the insurance securitization investors if a triggering event does not occur. Insurance securitization transactions have been performed by alien companies to utilize efficiencies available to those alien companies that are not currently available to domestic companies. This Article is adopted to allow more efficiency in conducting insurance securitizations, to allow ceding insurers easier access to alternative sources of risk bearing capital, and to promote the benefits of insurance securitization to U.S. insurers.
(Source: P.A. 92-124, eff. 7-20-01.)

215 ILCS 5/179E-10

    (215 ILCS 5/179E-10)
    Sec. 179E-10. Exemption from insurance laws within limitations.
    (a) An SPRV is subject to the following:
        (1) Articles I, XII 1/2, XXIV, XXV (Sections 408 and
    
412 only), and XXVIII (except for Sections 445, 445.1, 445.2, 445.3, 445.4, and 445.5) of this Code; and
        (2) Sections 132.1 through 134, 137 through 140,
    
155.01, 155.03, and 155.04 of this Code.
    (b) No other provisions of this Code apply to an SPRV organized under this Article, except as otherwise provided in this Article.
(Source: P.A. 92-124, eff. 7-20-01.)

215 ILCS 5/179E-15

    (215 ILCS 5/179E-15)
    Sec. 179E-15. Definitions. For purposes of this Article, the following terms have the indicated meanings:
    "Aggregate limit" means the maximum sum payable to the ceding insurer under an SPRV contract.
    "Ceding insurer" means one or more insurers or reinsurers under common control that enters into an SPRV contract with an SPRV.
    "Control" (including the terms "controlling," "controlled by" and "under common control with") means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a person, whether through the ownership of voting securities, by contract other than a commercial contract for goods or non-management services, or otherwise, unless the power is the result of an official position with or corporate office held by the person. Control shall be presumed to exist if any person, directly or indirectly, owns, controls, holds with the power to vote, or holds proxies representing, 10% or more of the voting securities of any other person. This presumption may be rebutted by a showing that control does not, in fact, exist. Notwithstanding the foregoing, for purposes of this Article, the fact that an SPRV exclusively provides reinsurance to a ceding insurer under an SPRV contract shall not by itself be sufficient grounds for a finding that the SPRV or the SPRV organizer or owner is controlled by or under common control with the ceding insurer.
    "Fair Value" means:
        (1) as to cash, the amount thereof; and
        (2) as to an asset other than cash:
            (A) the amount at which that asset could be
        
bought or sold in a current transaction between arms-length, willing parties;
            (B) quoted market price for the asset in active
        
markets should be used if available; and
            (C) if quoted market prices are not available, a
        
value determined using the best information available considering values of like assets and other valuation methods, such as present value of future cash flows, historical value of the same or similar assets or comparison to values of other asset classes the value of which have been historically related to the subject asset.
    "Fully funded" means that, with respect to an SPRV contract, the fair value of the assets held in trust by or on behalf of the SPRV under the SPRV contract on the date on which the SPRV contract is effected, equals or exceeds the aggregate limit as defined in this Article.
    "Indemnity trigger" means a transaction term by which the SPRV's obligation to pay the ceding insurer for losses covered by an SPRV contract is triggered by the ceding insurer incurring a specified level of losses.
    "Insolvency" or "insolvent" means that the SPRV is unable to pay its obligations when they are due, unless those obligations are the subject of a bona fide dispute.
    "Non-indemnity trigger" means a transaction term by which the SPRV's obligation to pay the ceding insurer under an SPRV contract arises from the occurrence or existence of some event or condition other than the ceding insurer incurring a specified level of losses under its insurance or reinsurance contracts.
    "Permitted investments" means those investments that meet the qualifications set forth in Section 179E-85.
    "Qualified U.S. financial institution" means, for purposes of meeting the requirements of a trustee under this Article, a financial institution that is eligible to act as a fiduciary of a trust, and that is:
        (1) organized or, in the case of a U.S. branch or
    
agency office of a foreign banking organization, licensed, under the laws of the United States or any state of the United States; and
        (2) regulated, supervised, and examined by federal or
    
state authorities having regulatory authority over banks and trust companies.
    "Special purpose reinsurance vehicle" or "SPRV" means an entity, domiciled in and organized under the laws of this State, that has received a limited certificate of authority from the Director under this Article exclusively for the limited purpose of entering into and effectuating SPRV insurance securitizations, SPRV contracts, and other related transactions permitted by this Article.
    "SPRV contract" means a contract between the SPRV and the ceding insurer pursuant to which the SPRV agrees to pay the ceding insurer an agreed amount upon the occurrence of a triggering event.
    "SPRV insurance securitization" means a package of related risk transfer instruments and facilitating administrative agreements by which proceeds are obtained by an SPRV through the issuance of securities, which proceeds are held in trust pursuant to the requirements of this Article to secure the obligations of the SPRV under an SPRV contract with one or more ceding insurers, wherein the SPRV's obligation to return the full initial investment to the holders of those securities, pursuant to the transaction terms, is contingent upon those funds not being used to pay the obligations of the SPRV to the ceding insurers under the SPRV Contract.
    "SPRV organizer" means one or more persons who have organized or intend to organize an SPRV under authority obtained pursuant to Section 179E-20.
    "SPRV securities" means the securities issued by an SPRV.
    "Triggering event" means an event or condition that, if and when it occurs or exists, obligates the SPRV to make a payment to the ceding insurer under the provisions of an SPRV contract.
(Source: P.A. 92-124, eff. 7-20-01.)

215 ILCS 5/179E-20

    (215 ILCS 5/179E-20)
    Sec. 179E-20. Limited certificate of authority.
    (a) Within 30 days after receipt by the Director of a complete filing by the prospective SPRV organizer for authority to form or acquire an SPRV, which SPRV shall exist and operate expressly for the limited purposes set forth in this Article, the application shall be deemed approved and a limited certificate of authority shall be issued, unless before the expiration of the 30-day period the Director approves or disapproves the application in writing. A limited certificate of authority may not be issued unless the country or state of domicile of each ceding insurer has notified the Director in writing that they have not disapproved the transaction. A complete filing of the application must include the following:
        (1) an affidavit verifying that each prospective SPRV
    
organizer the SPRV meets the requirements as set forth in this Article;
        (2) a representation that the prospective SPRV
    
organizer intends to form an SPRV to operate in accordance with the requirements set forth in this Article;
        (3) the proposed name of the subject SPRV;
        (4) biographical descriptions of each SPRV organizer
    
setting forth their legal names, any names under which they have or are conducting their affairs, and any affiliations with other persons as defined in Article VIII 1/2, together with such other biographical information as the Director may request;
        (5) the source and form of the minimum capital to be
    
contributed to the SPRV;
        (6) any persons with which the SPRV is or, upon
    
formation, will be affiliated as defined in Article VIII 1/2;
        (7) the names and biographical information of the
    
proposed members of the board of directors and principal officers of the SPRV, setting forth their legal names, any names under which they have or are conducting their affairs and any affiliations with other persons as defined in Article VIII 1/2, together with such other biographical information as the Director may request; and
        (8) a plan of operation, consisting of a description
    
of the contemplated insurance securitization, the SPRV contract, and related transactions, which plan of operation must include:
            (A) draft documentation or, at the discretion of
        
the Director, a written summary, of all material agreements that will be entered into to effectuate the insurance securitization and the related SPRV contract, including the names of the ceding insurers, the nature of the risks being assumed, and the maximum amounts, purpose, nature, and interrelationships of the various transactions required to effectuate the insurance securitization;
            (B) the investment strategy of the SPRV and a
        
representation that (i) the investment strategy complies with the investment requirements set forth in this Article and (ii) includes investment practices or other provisions to preserve asset values that will facilitate attainment of full funding during the term of the securitization with assets that can be monetized in response to a triggering event without a substantial loss in value;
            (C) a description of the method by which losses
        
covered by the SPRV contract that may develop after the termination of the contract period are to be addressed under the provisions of the SPRV contract; and
            (D) a representation that the trust agreement and
        
the trusts holding assets that secure the obligations of the SPRV under the SPRV contract and the SPRV contract with the ceding insurers in connection with the contemplated insurance securitization will be structured in accordance with the requirements set forth in this Article.
    (b) The Director may not approve the application or issue a limited certificate of authority until he or she has found that the proposed plan of operation provides a reasonable expectation of a successful operation, based on the proposed SPRV organizer, directors, and officers being of known good character and that there is no good reason to believe that they are affiliated, directly or indirectly, through ownership, control, management, reinsurance transactions, or other insurance or business relations with any person or persons known to have been involved in the improper manipulation of assets, accounts or reinsurance.
    (c) Upon approval by the Director of the application and the issuance of a limited certificate of authority, the SPRV may be acquired or formed and, in accordance with the approved plan of operation, the SPRV may enter into contracts and conduct other activities within the parameters set forth in the filed plan of operation.
    (d) The limited certificate of authority so issued shall state that the SPRV's authorization to be involved in the business of reinsurance is limited to only the reinsurance activities that the SPRV is allowed to conduct under this Article.
    (e) The SPRV organizer must provide a complete set of the documentation of the insurance securitization to the Director upon closing of the transactions including, but not limited to, an opinion of legal counsel with respect to compliance with this and any other applicable laws as of the effective date of the transaction. Any material change of the SPRV's plan of operation described in items (1) through (8) of subsection (a) including, but not limited to, the issuance of new securities to continue the securitization activities of the SPRV under this Article after expiration and full satisfaction of the initial securitization transactions, requires prior approval of the Director, however, a change in the counterparty to swap transactions for an existing securitization as allowed under this Article shall not be deemed a material change. Any material change that is not disapproved by the Director in writing within 15 days after its submission shall be deemed approved.
(Source: P.A. 92-124, eff. 7-20-01.)

215 ILCS 5/179E-25

    (215 ILCS 5/179E-25)
    Sec. 179E-25. Limited purpose of SPRV. This Article authorizes SPRVs to be created for the limited purpose of entering into insurance securitization transactions with investors and into related agreements to pay one or more ceding insurers agreed upon amounts under an SPRV contract upon the occurrence of triggering events related to the insurance business of the ceding insurer. An SPRV may not issue a contract for assumption of risk or indemnification of loss other than an SPRV contract as defined herein.
(Source: P.A. 92-124, eff. 7-20-01.)

215 ILCS 5/179E-30

    (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
    
to:
            (A) receive assets and hold all assets in a safe
        
place;
            (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
            
outstanding;
                (iii) reserves for losses incurred but not
            
reported;
                (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
    
to:
            (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.)

215 ILCS 5/179E-35

    (215 ILCS 5/179E-35)
    Sec. 179E-35. Powers.
    (a) An SPRV authorized under this Article shall have the necessary powers to enter into contracts and to conduct such other commercial activities as are necessary to fulfill the purposes of this Article. Those activities may include, but are not limited to, entering into SPRV contracts, issuing securities of the SPRV and complying with the terms thereof, entering into trust, swap, and other agreements as may be necessary to effectuate an insurance securitization in compliance with the limitations and pursuant to the authorities granted to the SPRV under this Article or the plan of operation approved or deemed approved by the Director.
    (b) An SPRV organized or doing business under this Article shall, by the name adopted by the SPRV, in law, be capable of suing or being sued, and may make or enforce contracts in relation to the business of the SPRV; may have and use a common seal, and in the name of the SPRV or by a trustee chosen by the board of directors, shall, in law, be capable of taking, purchasing, holding and disposing of real and personal property for carrying into effect the purposes of its organization; and may by its board of directors, trustees, officers, or managers, make by-laws and amendments thereto not inconsistent with the laws or the constitution of this State or of the United States, which by-laws shall define the manner of electing directors, trustees, or managers and officers of the SPRV, together with their qualifications and duties and fixing their term of office.
(Source: P.A. 92-124, eff. 7-20-01.)

215 ILCS 5/179E-40

    (215 ILCS 5/179E-40)
    Sec. 179E-40. Affiliation. Notwithstanding the provisions of Article VIII 1/2, the SPRV, the SPRV organizer, and subsequent debt or equity investors in SPRV securities shall not be deemed affiliates of the ceding insurer by virtue of the SPRV contract between the ceding insurer and the SPRV, the securities of the SPRV, or related agreements necessary to implement the SPRV insurance securitization. An SPRV may not be controlled by, may not control, and may not be under common control with any ceding insurer that is a party to an SPRV contract.
(Source: P.A. 92-124, eff. 7-20-01.)

215 ILCS 5/179E-45

    (215 ILCS 5/179E-45)
    Sec. 179E-45. Capitalization. An SPRV must have minimum initial capital of not less than $5,000. All of the initial capital must be received by the SPRV in cash. The minimum initial capital required and all other funds of the SPRV in excess of its minimum initial capital, including funds held in trust to secure the obligations of the SPRV pursuant to its obligations under the SPRV contracts, shall be invested as provided in Section 179E-85.
(Source: P.A. 92-124, eff. 7-20-01.)

215 ILCS 5/179E-50

    (215 ILCS 5/179E-50)
    Sec. 179E-50. Dividends. An SPRV may not declare or pay dividends in any form to its owners unless the dividends do not decrease the capital of the SPRV below $5,000, and after giving effect to the dividends, the assets of the SPRV, including assets held in trust pursuant to the terms of the insurance securitization, are sufficient to meet its obligations. Dividends may be declared by the board of directors of the SPRV if the declaration of dividends would not violate the provisions of this Article or jeopardize the fulfillment of the obligations of the SPRV or the trustee pursuant to the SPRV insurance securitization, the SPRV contract or any related transaction.
(Source: P.A. 92-124, eff. 7-20-01.)

215 ILCS 5/179E-55

    (215 ILCS 5/179E-55)
    Sec. 179E-55. Records and financial reports.
    (a) The records of the SPRV must be maintained in this State and must be available for examination by the Department. The Director shall have the right to examine the records of an SPRV at any time. No later than 5 months after the fiscal year end of the SPRV, the SPRV must file with the Director an audit by a certified public accounting firm of the financial statements of the SPRV and the trust accounts.
    (b) No later than March 1 of each year, an SPRV organized under this Article must file with the Director a statement of operations, including, but not limited to, a statement of income, a balance sheet, and a detailed listing of invested assets, including identification of assets held in trust to secure the SPRV's obligations under the SPRV contract, for the year ending the previous December 31. The statements shall be prepared in accordance with Section 136 of this Code on such forms and shall reveal such information as shall be required by the Director.
    (c) An SPRV must keep its books and records in a manner so that its financial condition, affairs, and operations can be ascertained, its financial statements filed with the Director can be readily verified, and its compliance with the provisions of this Article can be determined. An SPRV may cause any or all of the books or records to be photographed, reproduced on film, or stored and reproduced electronically.
    (d) All original books, records, documents, accounts, and vouchers, or reproductions of those items, must be preserved and kept available in this State for the purpose of examination and until authority to destroy or otherwise dispose of the records is secured from the Director. The original records may, however, be kept and maintained outside this State if, according to a plan adopted by the SPRV's board of directors and approved by the Director, it maintains other suitable records.
(Source: P.A. 92-124, eff. 7-20-01.)

215 ILCS 5/179E-60

    (215 ILCS 5/179E-60)
    Sec. 179E-60. Officers and directors.
    (a) The directors of an SPRV shall elect such officers they deem necessary to carry out the purposes of the SPRV pursuant to this Article. The provisions of Section 10 of this Code relating to the indemnification of officers and directors apply to and govern SPRVs organized under this Article.
    (b) An SPRV authorized to do business in this State must notify the Director of the appointment or election of any new officers or directors within 30 days after the appointment or election.
    (c) If, after notice and hearing afforded to the officer or director, and after a finding that the officer or director is incompetent or untrustworthy or of known bad character, the Director shall order the removal of the person. If the SPRV does not comply with a removal order within 30 days, the Director may suspend that SPRV's limited certificate of authority until such time as the order is complied with.
    (d) An SPRV may not make loans to any SPRV organizer, owner, director, officer, manager, or affiliate.
(Source: P.A. 92-124, eff. 7-20-01.)

215 ILCS 5/179E-65

    (215 ILCS 5/179E-65)
    Sec. 179E-65. Fees and taxes. The Director may charge fees to reimburse the Director for expenses and costs incurred by the Department incident to the examination of financial statements and review of the plan of operation and to reimburse other such activities of the Director related to the formation and ongoing operation of an SPRV. An SPRV is not be subject to State premium or other State taxes incidental to the operation of its business as long as the business remains within the limitations of this Article.
(Source: P.A. 92-124, eff. 7-20-01.)

215 ILCS 5/179E-70

    (215 ILCS 5/179E-70)
    Sec. 179E-70. Dissolution. An SPRV operating under this Article may be dissolved by a vote of its board of directors at any time after the Director has approved that action. A voluntary dissolution may not be effected or allowed until and unless all of the obligations of the SPRV pursuant to the insurance securitization have been fully and finally satisfied pursuant to their terms. In the case of voluntary dissolution, the disposition of the affairs of the SPRV (including the settlement of all outstanding obligations) shall be made by the officers or directors of the SPRV, and when the liquidation has been completed and a final statement, in acceptable form, filed with and approved, or deemed approved, by the Director, the provisions for voluntary dissolution under the laws of this State shall be followed to dissolve the SPRV.
(Source: P.A. 92-124, eff. 7-20-01.)

215 ILCS 5/179E-75

    (215 ILCS 5/179E-75)
    Sec. 179E-75. Conservation, rehabilitation, or liquidation.
    (a) The provisions of Articles XIII and XIII 1/2 apply to an SPRV, except to the extent modified in this Section.
    (b) Notwithstanding the provisions of Section 188 of this Code, the Director may apply by petition to the Circuit Court of Cook County, the Circuit Court of Sangamon County, or the circuit court of the county in which an SPRV has or last had its principal office for an order authorizing the Director to conserve, rehabilitate or liquidate an SPRV domiciled in this State solely on one or more of the following grounds:
        (1) there has been embezzlement, wrongful
    
sequestration, dissipation, or diversion of the assets of the SPRV intended to be used to pay amounts owed to the ceding insurer or the holders of SPRV securities; or
        (2) the SPRV is insolvent and the holders of a
    
majority in outstanding principal amount of each class of SPRV securities request or consent to conservation, rehabilitation, or liquidation under this Article.
    The court shall not grant relief under item (1) of this subsection unless, after notice and a hearing, the Director, who has the burden of proof, establishes by clear and convincing evidence that the relief should be granted.
    (c) Notwithstanding any contrary provision in this Code, the rules promulgated under this Code, or any other applicable law or rule, upon any order of conservation, rehabilitation, or liquidation of the SPRV, the receiver shall be bound to deal with the SPRV's assets and liabilities, in accordance with the requirements set forth in this Article.
    (d) With respect to amounts recoverable under an SPRV contract, the amount recoverable by the receiver may not be reduced or diminished as a result of the entry of an order of conservation, rehabilitation, or liquidation with respect to the ceding insurer notwithstanding any provisions to the contrary in the contracts or other documentation governing the SPRV insurance securitization.
    (e) Notwithstanding the provisions of Article XIII and XIII 1/2 of this Code, any application, petition, or temporary restraining order or injunction issued under those Articles, with respect to a ceding insurer shall not prohibit the transaction of any business by an SPRV, including any payment by an SPRV made pursuant to an SPRV security, or any action or proceeding against an SPRV or its assets.
    (f) Notwithstanding the provisions of Articles XIII and XIII 1/2 of this Code, the commencement of a summary proceeding or other interim proceeding commenced before a formal delinquency proceeding with respect to an SPRV, and any order issued by the court thereunder, shall not prohibit:
        (1) the payment by an SPRV made pursuant to an SPRV
    
security or SPRV contract; or
        (2) the SPRV from taking any action required to make
    
the payment.
    (g) Notwithstanding any other provision of Articles XIII and XIII 1/2 of this Code or other State law:
        (1) a receiver of a ceding insurer may not avoid a
    
non-fraudulent transfer by a ceding insurer to an SPRV of money or other property made pursuant to an SPRV contract; and
        (2) a receiver of an SPRV may not void a
    
non-fraudulent transfer by the SPRV of money or other property made to a ceding insurer pursuant to an SPRV contract or made to or for the benefit of any holder of an SPRV security on account of the SPRV security.
    (h) With the exception of the fulfillment of the obligations under an SPRV contract, and notwithstanding any other provisions of this Article or other law of this State to the contrary, the assets of an SPRV, including assets held in trust, may not be consolidated with or included in the estate of a ceding insurer in any delinquency proceeding against the ceding insurer under this Article for any purpose, including, without limitation, distribution to creditors of the ceding insurer.
    (i) Notwithstanding any other provision of this Article:
        (1) A domiciliary receiver of an SPRV domiciled in
    
another state shall be vested by operation of law with the title to all of the assets, property, contracts, and rights of action, and all of the books, accounts, and other records of the SPRV located in this State. The domiciliary receiver shall have the immediate right to recover all of the vested property, assets, and causes of action of the SPRV located in this State.
        (2) An ancillary proceeding may not be commenced or
    
prosecuted in this State against an SPRV domiciled in another state.
(Source: P.A. 92-124, eff. 7-20-01.)

215 ILCS 5/179E-80

    (215 ILCS 5/179E-80)
    Sec. 179E-80. SPRV not subject to guaranty funds, residual market, or similar arrangements.
    (a) An SPRV or the activities, assets, and obligations relating to the SPRV are not subject to the provisions of Articles XXXIII 1/2 and XXXIV of this Code, and an SPRV may not 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 an SPRV or the ceding insurer.
    (b) An SPRV may not be required to participate in residual market, FAIR plan, or other similar plans to provide insurance coverage, take out policies, assume risks, make capital contributions, pay or be otherwise obligated for assessments, surcharges, or fees, or otherwise support or participate in such plans or arrangements.
(Source: P.A. 92-124, eff. 7-20-01.)

215 ILCS 5/179E-85

    (215 ILCS 5/179E-85)
    Sec. 179E-85. Asset and investment limitations.
    (a) Assets of the SPRV held in trust to secure obligations under the SPRV contract must at all times be held in:
        (1) cash and cash equivalents;
        (2) securities listed by the Securities Valuation
    
Office of the NAIC and qualifying as admitted assets under statutory accounting convention in its state of domicile; and
        (3) any other form of security acceptable to the
    
Director.
    (b) An SPRV may enter into swap agreements or other transactions that have the objective of leveling timing differences in funding of up-front or ongoing transaction expenses or managing credit or interest rate risk of the investments in the trust to ensure that the investments are sufficient to assure payment or repayment of:
        (1) the securities (and related interest or principal
    
payments) issued pursuant to an SPRV insurance securitization transaction; or
        (2) the SPRV's obligations under the SPRV contract.
(Source: P.A. 92-124, eff. 7-20-01.)

215 ILCS 5/179E-90

    (215 ILCS 5/179E-90)
    Sec. 179E-90. Credit for reinsurance for the SPRV contract. An SPRV contract meeting the requirements under this Article shall be granted credit for reinsurance treatment or shall otherwise qualify as an asset or a reduction from liability for reinsurance ceded by a domestic insurer to an assuming insurer under Section 173.1 of this Code for the benefit of the ceding insurer, provided and only to the extent that (i) the fair value of the assets held in trust for the benefit of the ceding insurer equal or exceed the obligations due and payable to the ceding insurer by the SPRV under the SPRV contract, (ii) the assets are held in trust in accordance with the requirements set forth in this Article, (iii) the assets are administered in the manner and pursuant to arrangements as set forth in this Article, and (iv) the assets are held or invested in one or more of the forms allowed in Section 179E-85.
(Source: P.A. 92-124, eff. 7-20-01.)

215 ILCS 5/179E-95

    (215 ILCS 5/179E-95)
    Sec. 179E-95. Insurance securitization deemed not to be transaction of insurance business. The securities issued by the SPRV under an SPRV insurance securitization shall not be deemed to be insurance or reinsurance contracts. An investor in securities issued pursuant to an SPRV insurance securitization or any holder of those securities shall not, by sole means of the investment or holding, be deemed to be transacting an insurance business in this State. The underwriters or selling agents (and their partners, directors, officers, members, managers, employees, agents, representatives, and advisors) involved in an SPRV insurance securitization shall not be deemed to be conducting an insurance or reinsurance agency, brokerage, intermediary, advisory, or consulting business by virtue of their activities in connection therewith.
(Source: P.A. 92-124, eff. 7-20-01.)

215 ILCS 5/179E-100

    (215 ILCS 5/179E-100)
    Sec. 179E-100. Authority to adopt rules. The Director may promulgate rules necessary to effectuate the purposes of this Article. Any rules so promulgated will not affect any existing SPRV insurance securitization in effect at the time of the promulgation.
(Source: P.A. 92-124, eff. 7-20-01.)

215 ILCS 5/Art. XII

 
    (215 ILCS 5/Art. XII heading)
ARTICLE XII. DOMESTICATION OF
FOREIGN AND ALIEN COMPANIES

215 ILCS 5/180

    (215 ILCS 5/180) (from Ch. 73, par. 792)
    Sec. 180. Companies that may domesticate.
    (1) Any domestic, foreign, or alien stock company, mutual company, assessment legal reserve company, reciprocal, or fraternal benefit society, authorized or which may be authorized to do business in this State, may reorganize under the laws of this State (including a reorganization as a captive insurance company under the laws of this State), by complying with the provisions of this Article.
    (2) As used in this Article: "reorganize" means reorganize, reincorporate, or domesticate as an Illinois insurer; "reorganization" means reorganization, reincorporation, or domestication as an Illinois insurer; "reorganized company" means any company that has availed itself of the provisions of this Article, and the reorganization of which has been effected as in this Article provided; and "similar domestic company" means, in the case of an application for reorganization as a domestic captive insurance company, a domestic captive insurance company organized under Article VIIC.
(Source: P.A. 87-1216.)

215 ILCS 5/181

    (215 ILCS 5/181) (from Ch. 73, par. 793)
    Sec. 181. Articles of reorganization. (1) The board of directors, trustees or other governing body of any such company desiring to reorganize under this Article shall comply with all laws and requirements of its domiciliary state or country with reference to reorganization under the laws of another state or country.
    (2) Such board of directors, trustees or other governing body shall adopt a resolution approving articles of reorganization setting forth:
    (a) the name of the company; and if the name of the company upon reorganization is to be changed, the proposed name of the reorganized company;
    (b) the title of the act under which it was organized or incorporated;
    (c) the matters required to be set forth in original articles of incorporation of a similar domestic company;
    (d) that it shall be bound by all the terms and provisions of this Code, applicable to similar domestic companies organized or incorporated thereunder; and
    (e) such other particulars as are deemed necessary or advisable.
(Source: P.A. 86-632; 86-634; 86-1028.)

215 ILCS 5/182

    (215 ILCS 5/182) (from Ch. 73, par. 794)
    Sec. 182. Execution of articles.
    The articles of reorganization shall be executed in duplicate by the president or vice-president, and secretary or assistant secretary of the company, or the executive officers corresponding thereto, and shall be acknowledged and sworn to.
(Source: Laws 1937, p. 696.)

215 ILCS 5/183

    (215 ILCS 5/183) (from Ch. 73, par. 795)
    Sec. 183. Certificate of Reorganization - Date Reorganization Effected. (1) Upon the execution of the articles of reorganization there shall be delivered to the Director
    (a) two duplicate originals of the articles;
    (b) a copy of the resolution of the board of directors, trustees or other governing body, adopting said articles, duly certified by the secretary of the company or officer corresponding thereto;
    (c) information satisfactory to the Director that the company has complied with all the laws and requirements of the domiciliary state or country with reference to the proposed reorganization and the protection of policyholders; and
    (d) securities of the kind and amount, if any, required as a deposit of a similar domestic company doing the same kind or kinds of business proposed to be done by the reorganized company.
    (2) If the Director finds that the articles of reorganization are in accordance with the provisions of this Article, and that the company has complied with all provisions of this Code applicable to similar domestic companies, he shall approve the articles of reorganization and shall forthwith file one of the duplicate originals of the articles, together with the resolution and certificate of reorganization and certificate of authority, in his office, endorse upon the other duplicate original, his approval thereof, and deliver it together with a certificate of reorganization and a certificate of authority to the reorganized company. Upon such filing, the reorganization of the company shall be effected.
(Source: P.A. 85-131.)

215 ILCS 5/184

    (215 ILCS 5/184) (from Ch. 73, par. 796)
    Sec. 184. Recording Articles of Reorganization. The articles of reorganization, approved by the Director and returned to the reorganized company, shall be recorded in the office of the recorder in the county where the principal office of the reorganized company is to be located.
(Source: P.A. 85-131.)

215 ILCS 5/185

    (215 ILCS 5/185) (from Ch. 73, par. 797)
    Sec. 185. Board of directors, trustees, etc. to continue.
    The directors, trustees, or members of any other governing body of the company so reorganized, shall become the directors, trustees or members of the governing body of the reorganized company and shall hold office until their successors are elected or chosen in the manner provided therefor by the articles of reorganization.
(Source: Laws 1937, p. 696.)

215 ILCS 5/185.1

    (215 ILCS 5/185.1) (from Ch. 73, par. 797.1)
    Sec. 185.1. Effect of Reorganization.
    When the reorganization has been effected:
    (a) The articles of reorganization shall be the articles of incorporation of the reorganized company and said company shall continue in existence as, and thereafter be, a company of this State.
    (b) The reorganized company shall make its reports in accordance with the laws of this State and shall be subject to the exclusive regulation and supervision by the Department of Insurance of this State and shall be subject to regulation and supervision by the Insurance Departments of other states and countries as a foreign or alien company.
    (c) The reorganized company shall have all of the rights, privileges, immunities and powers and shall be subject to all of the duties and liabilities granted or imposed by this Code (except in the case of a domestic captive insurance company, which shall have all of the rights, privileges, immunities and powers and shall be subject to all of the duties and liabilities granted or imposed by Article VIIC of this Code).
    (d) The reorganized company shall thereupon and thereafter possess all the rights, privileges, immunities, powers and franchises of a public as well as a private nature, theretofore possessed by the company so reorganized. Without limiting the generality of the foregoing, (i) the agency appointments, licenses, certificates of authority and rates which are in existence at the time of the reorganization of such reorganized company takes effect shall continue in full force and effect; (ii) all property, real, personal and mixed, and all debts due on whatever account, including subscriptions to shares, assessments payable from members or policyholders, and all other choses in action, and all and every other interest of, or belonging to or due to the company so reorganized, shall be deemed to be transferred to and vested in the reorganized company without further act or deed; and (iii) the title to any real estate or any interest therein theretofore vested in the company so reorganized, shall not revert or be in any way impaired by reason of such reorganization.
    (e) The reorganized company shall thenceforth be responsible and liable for all the liabilities and obligations of the company so reorganized. Any claim existing, or action or proceeding pending by or against the company so reorganized, may be prosecuted to judgment as if such reorganization had not taken place, or such reorganized company may be substituted in its place. Neither the rights of creditors nor any liens upon the property of the company so reorganized, shall be impaired by such reorganization, but such liens shall be limited to the property upon which they were liens immediately prior to the reorganization, unless otherwise provided in the articles of reorganization.
(Source: P.A. 85-131.)

215 ILCS 5/185.2

    (215 ILCS 5/185.2) (from Ch. 73, par. 797.2)
    Sec. 185.2. Conversion to Foreign Insurer. Any domestic insurer may, upon the approval of the Director, transfer its domicile to any other state in which it is admitted to transact the business of insurance, and upon such a transfer shall cease to be a domestic insurer. The Director shall approve any such proposed transfer unless he shall determine such transfer is not in the interest of the policyholders of this State.
(Source: P.A. 85-131.)

215 ILCS 5/Art. XII.5

 
    (215 ILCS 5/Art. XII.5 heading)
ARTICLE XII 1/2. CORRECTIVE ORDERS

215 ILCS 5/186.1

    (215 ILCS 5/186.1) (from Ch. 73, par. 798.1)
    Sec. 186.1. Supervision by the Director. (1)If the Director determines that any domestic insurance company is operating in a manner, that could lead to, or is in, a financial condition, which if continued would make it hazardous to the public, and its policyholders, the Director may issue an order:
    (a) notifying the company and its Board of Directors of his determination and setting forth the specific deficiencies leading to the determination;
    (b) setting forth the specific action required or prohibited to correct the cited deficiencies; and
    (c) ordering the company to comply with the Director's order within such reasonable time as the Director shall prescribe.
    (2) Operation or financial condition deficiencies supporting the Director's determination under subsection (1) may include, but are not limited to, the following:
    (a) The company has failed to maintain a relationship of policyholder surplus to premium writings or policyholder surplus to claim and unearned premium reserves which provides a reasonable margin of safety for the policyholders considering the classes of insurance the company is writing.
    (b) The company's asset liquidity is not adequate to provide orderly payment of its obligations.
    (c) The company's current or projected net income is inadequate to meet its present or projected obligations.
    (d) The company has a history of claim reserve inadequacy which affects the reliability of its financial statements.
    (e) The company has failed to maintain adequate books and records or has otherwise conducted its insurance operation in a manner which impairs the Director's ability to determine its true financial condition.
    (3) If a company fails to comply with the Director's order issued pursuant to subsection (1) within the time prescribed for such compliance the Director may institute proceedings for the conservation, rehabilitation or liquidation of the company under Article XIII of this Code.
    (4)(a) The Director may require that the company prepare and file a plan to correct the deficiencies cited by the Director in his order within such time as the Director may prescribe. A corrective order may require, prohibit or permit certain acts subject to conditions including the Director's prior approval. The scope of a corrective order may relate to but shall not be limited to:
    (i) the disposition, recovery or mix of assets;
    (ii) the assumption or cession of reinsurance, including reinsurance of outstanding risks;
    (iii) lending and borrowing;
    (iv) investments;
    (v) restricting underwriting and marketing activities.
    (b) The Director may require that any company under such corrective order direct any certified public accountants, consulting actuary or financial consultant retained by the company to prepare for the Director such reports, accounting data and such other reports as the Director may reasonably require to assist in carrying out the responsibilities of the Director under this Section.
    (5)(a) Any company subject to an order under subsections (1) or (4) may request a hearing before the Director to review that order. Such request shall be made in writing within 10 days of the receipt of such order, shall state the company's objections to the order, and shall be addressed to the Director. Such hearing shall be convened not less than 10 days nor more than 20 days after receipt of the written request for hearing unless otherwise agreed to by the company. The Director shall make a final determination within 10 days after the conclusion of the hearing. The Director shall hold all hearings under this subsection privately in accordance with subsection (6) of this Section. The pendency of a hearing or pendency of the Director's final determination shall not stay the effect of the Director's order.
    (b) After the Director's final determination pursuant to any hearing under this subsection, any party to the proceedings whose interests are affected by the Director's final determination shall be entitled to judicial review of such final determination pursuant to the provisions of the "Administrative Review Law".
    Notwithstanding the availability of administrative remedies or judicial review under the "Administrative Review Law", a company which is subject to an order of the Director under this Section shall be entitled to immediate judicial review and injunctive relief in the Circuit Court of Cook County or the Circuit Court of Sangamon County upon satisfying the court:
    (i) that accepting the facts set forth in the order as true, the order is arbitrary or capricious;
    (ii) that the company's interests are substantially impaired by the order; and
    (iii) that the company will suffer permanent injury in the absence of immediate injunctive relief.
    (6) All administrative and judicial proceedings arising under this Article shall be held privately unless a public hearing is requested by the company, and all records of the company, and all records of the Department concerning the company, so far as they pertain to or are a part of the record of the proceedings, shall be and remain confidential, unless the company requests otherwise. Such records shall not be subject to public disclosure under "The Illinois Freedom of Information Act", certified December 27, 1983, as amended, or otherwise, nor shall such records be subject to subpoena by third parties, unless the company and Director consent to such disclosure or release under subpoena.
    (7) The powers vested in the Director by this Section are additional to any and all other powers and remedies vested in the Director by law, and nothing herein contained shall prohibit the Director from proceeding under any other applicable law or under this Section in conjunction with any other law.
(Source: P.A. 84-715.)

215 ILCS 5/186.2

    (215 ILCS 5/186.2) (from Ch. 73, par. 798.2)
    Sec. 186.2. (1) Any officer, manager, director, trustee, owner, employee, or agent of any insurer, or any other person with authority over or in charge of any segment of the company's affairs, shall cooperate with the Director in any proceeding under this Article or any investigation preliminary to the proceeding. The term "person" as used in this Section shall include any person who exercises control directly or indirectly over activities of the company through any holding company or other affiliate of the company. To "cooperate" shall include, but shall not be limited to, the following:
    (a) to reply promptly in writing to any inquiry from the Director of Insurance requesting such a reply; and
    (b) to make available to the Director any books, accounts, documents, or other records or information or property of or pertaining to the company and in such person's possession, custody or control.
    (2) No person shall obstruct or interfere with the Director in the conduct of any proceeding under Sections 186.1 and 186.2 or any investigation preliminary or incidental thereto.
    (3) This Section shall not be construed to abridge otherwise existing legal rights, including the right to contest any order issued under this Code.
    (4) Any person who obstructs or interferes with the Director in the conduct of any proceeding or investigation under this Article, or who violates any valid order issued under this Article shall be subject to civil forfeitures, fines or penalties pursuant to Sections 134, 149, 403A and 505.1 of this Code.
(Source: P.A. 84-715.)

215 ILCS 5/Art. XIII

 
    (215 ILCS 5/Art. XIII heading)
ARTICLE XIII. REHABILITATION, LIQUIDATION, CONSERVATION AND DISSOLUTION OF
COMPANIES

215 ILCS 5/187

    (215 ILCS 5/187) (from Ch. 73, par. 799)
    Sec. 187. Scope of Article.
    (1) This Article shall apply to every corporation, association, society, order, firm, company, partnership, individual, and aggregation of individuals to which any Article of this Code is applicable, or which is subject to examination, visitation or supervision by the Director under any provision of this Code or under any law of this State, or which is engaging in or proposing or attempting to engage in or is representing that it is doing an insurance or surety business, or is undertaking or proposing or attempting to undertake to provide or arrange for health care services as a health care plan as defined in subsection (7) of Section 1-2 of the Health Maintenance Organization Act, including the exchanging of reciprocal or inter-insurance contracts between individuals, partnerships and corporations in this State, or which is in the process of organization for the purpose of doing or attempting or intending to do such business, anything as to any such corporation, association, society, order, firm, company, partnership, individual or aggregation of individuals provided in this Code or elsewhere in the laws of this State to the contrary notwithstanding.
    (2) The word "company" as used in this Article includes all of the corporations, associations, societies, orders, firms, companies, partnerships, and individuals specified in subsections (1), (4), and (5) of this Section and agents, managing general agents, brokers, premium finance companies, insurance holding companies, and all other non-risk bearing entities or persons engaged in any aspect of the business of insurance on behalf of an insurer against which a receivership proceeding has been or is being filed under this Article, including, but not limited to, entities or persons that provide management, administrative, accounting, data processing, marketing, underwriting, claims handling, or any other similar services to that insurer, whether or not those entities are licensed to engage in the business of insurance in Illinois, if the entity or person is an affiliate of that insurer.
    (3) The word "court" shall mean the court before which the conservation, rehabilitation, or liquidation proceeding of the company is pending, or the judge presiding in such proceedings.
    (4) The word "affiliate" as used in this Article means a person that directly, or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with, the person specified.
    (5) The word "person" as used in this Article means an individual, an aggregation of individuals, a partnership, or a corporation.
    (6) The word "assets" as used in this Article includes all deposits and funds of a special or trust nature.
    (7) The words "receivership proceedings" mean any conservation, rehabilitation, liquidation, or ancillary receivership.
    (8) "Netting agreement", as used in this Article, means (a) a contract or agreement (including terms and conditions incorporated by reference therein), including a master agreement (which master agreement, together with all schedules, confirmations, definitions, and addenda thereto and transactions under any thereof, shall be treated as one netting agreement), that documents one or more transactions between the parties to the agreement for or involving one or more qualified financial contracts and that provides for the netting, liquidation, setoff, termination, acceleration, or close out under or in connection with one or more qualified financial contracts or present or future payment or delivery obligations or payment or delivery entitlements thereunder (including liquidation or close-out values relating to such obligations or entitlements) among the parties to the netting agreement; (b) any master agreement or bridge agreement for one or more master agreements described in paragraph (a) of this subsection (8); or (c) any security agreement or arrangement or other credit enhancement or guarantee or reimbursement obligation related to any contract or agreement described in paragraph (a) or (b) of this subsection (8); provided that any contract or agreement described in paragraphs (a) or (b) of this subsection (8) relating to agreements or transactions that are not qualified financial contracts shall be deemed to be a netting agreement only with respect to those agreements or transactions that are qualified financial contracts.
    (9) "Qualified financial contract" means any commodity contract, forward contract, repurchase agreement, securities contract, swap agreement, or any similar agreement that the Director determines by regulation, resolution, or order to be a qualified financial contract for the purposes of this Act.
        (a) "Commodity contract" means:
            (1) a contract for the purchase or sale of a
        
commodity for future delivery on, or subject to the rules of, a board of trade or contract market under the federal Commodity Exchange Act or a board of trade outside the United States;
            (2) an agreement that is subject to regulation
        
under Section 19 of the federal Commodity Exchange Act and that is commonly known to the commodities trade as a margin account, margin contract, leverage account, or leverage contract;
            (3) an agreement or transaction that is subject
        
to regulation under Section 4c(b) of the federal Commodity Exchange Act and that is commonly known to the commodities trade as a commodity option;
            (4) any combination of the agreements or
        
transactions referred to in this paragraph (a); or
            (5) any option to enter into an agreement or
        
transaction referred to in this paragraph (a).
        (b) "Forward contract", "repurchase agreement",
    
"securities contract", and "swap agreement" shall have the meanings set forth in the Federal Deposit Insurance Act, 12 U.S.C. 1821(e)(8)(D), as amended from time to time.
(Source: P.A. 96-1450, eff. 8-20-10.)

215 ILCS 5/188

    (215 ILCS 5/188) (from Ch. 73, par. 800)
    Sec. 188. Grounds for rehabilitation and liquidation of a domestic company or an unauthorized foreign or alien company. Whenever any domestic company or any unauthorized foreign or alien company:
        1. is insolvent;
        2. has failed or refused to submit its books, papers,
    
accounts, records or affairs to the reasonable inspection or examination of the Director or his actuaries, supervisors, deputies, or examiners;
        3. has concealed, removed, altered, destroyed or
    
failed to establish and maintain books, records, documents, accounts, vouchers and other pertinent material adequate for the determination of its financial condition by examination under Sections 132 through 132.7 or has failed to properly administer claims and to maintain claims records which are adequate for the determination of its outstanding claims liability;
        4. has failed or refused to observe an order of the
    
Director to make good within the time prescribed by law any deficiency, whenever its capital and minimum required surplus, if a stock company, or its required surplus, if a company other than stock, has become impaired;
        5. has, by articles of consolidation, contract of
    
reinsurance or otherwise, transferred or attempted to transfer its entire property or business not in conformity with this Code, or entered into any transaction the effect of which is to merge substantially its entire property or business in any other company without having first obtained the written approval of the Director under this Code;
        6. is found to be in such condition that its further
    
transaction of business would be hazardous to its policyholders, or to its creditors, or to the public;
        7. has violated its charter or any law of this State
    
or has exceeded or is exceeding its corporate powers;
        8. has an officer who has refused upon reasonable
    
demand to be examined under oath touching its affairs;
        9. is found to be in such condition that it could not
    
meet the requirements for organization and authorization as required by law, except as to the amount of the original surplus required of a stock company in Section 13, and except as to the amount of the surplus required of a mutual company in excess of the minimum surplus required by this Code to be maintained, or either an authorized control level event or a mandatory control level event as set forth in Article IIA exists;
        10. has ceased for the period of one year to transact
    
insurance business;
        11. has commenced, or has attempted to commence, any
    
voluntary liquidation or dissolution proceeding, or any proceeding to procure the appointment of a receiver, liquidator, rehabilitator, sequestrator, or a similar officer for itself;
        12. is a party, whether plaintiff or defendant in any
    
proceeding in which an application is made for the appointment of a receiver, custodian, liquidator, rehabilitator, sequestrator, or similar officer for such company or its property, or a receiver, custodian, liquidator, rehabilitator, sequestrator or similar officer, for such company or its property is appointed by any court, or such appointment is imminent;
        13. consents by a majority of its directors,
    
stockholders or members;
        14. has not organized and obtained a certificate
    
authorizing it to commence the transaction of its business within the period of time prescribed by the sections of this Code under which it is or proposes to be organized; or
        15. has failed or refused to pay any valid final
    
judgment within 30 days after the rendition thereof, or whenever it appears to the Director that any person has committed a violation of Article VIII 1/2 with the result described in Section 131.26,
sufficient grounds shall be deemed to exist for the commencement of rehabilitation or liquidation proceedings.
    With respect to a domestic company, the Director must report, and with respect to an unauthorized foreign or alien company, the Director may report any such case to the Attorney General of this State whose duty it shall be to apply forthwith by complaint on relation of the Director in the name of the People of the State of Illinois, as plaintiff, to the Circuit Court of Cook County, the Circuit Court of Sangamon County, or the circuit court of the county in which such company has, or last had its principal office, for an order to rehabilitate or liquidate the defendant company as provided in this Article, and for such other relief as the nature of the case and the interests of its policyholders, creditors, members, stockholders or the public may require.
    When, upon investigation, the Director finds that a company is engaged in any aspect of the business of insurance on behalf of or in association with any domestic insurance company, against which a receivership proceeding has been or is being filed under this Article, in a manner that appears to be detrimental to policyholders, creditors, members, shareholders, or the public, the Director may report such case to the Attorney General of this State, whose duty it is to apply forthwith by complaint on relation of the Director in the name of the People of the State of Illinois, as plaintiff, to the court in which the receivership proceeding is pending for an order to appoint the Director as receiver to assume control of the assets and operation of the company pending a complete investigation and determination of the rights of the policyholders, creditors, members, shareholders, and the general public.
(Source: P.A. 92-140, eff. 7-24-01.)

215 ILCS 5/188.1

    (215 ILCS 5/188.1) (from Ch. 73, par. 800.1)
    Sec. 188.1. Provisions for conservation of assets of a domestic, foreign, or alien company.
    (1) Upon the filing by the Director of a verified complaint alleging (a) that with respect to a domestic, foreign, or alien company, whether authorized or unauthorized, a condition exists that would justify a court order for proceedings under Section 188, and (b) that the interests of creditors, policyholders or the public will probably be endangered by delay, then the circuit court of Sangamon or Cook County or the circuit court of the county in which such company has or last had its principal office shall enter forthwith without a hearing or prior notice an order directing the director to take possession and control of the property, business, books, records, and accounts of the company, and of the premises occupied by it for the transaction of its business, or such part of each as the complaint shall specify, and enjoining the company and its officers, directors, agents, servants, and employees from disposition of its property and from transaction of its business except with the concurrence of the Director until the further order of the court. Copies of the verified complaint and the seizure order shall be served upon the company.
    (2) The order shall continue in force and effect for such time as the court deems necessary for the Director to ascertain the condition and situation of the company. On motion of either party or on its own motion, the court may from time to time hold such hearings as it deems desirable, and may extend, shorten, or modify the terms of, the seizure order. So far as the court deems it possible, the parties shall be given adequate notice of such hearings. As soon as practicable, the court shall vacate the seizure order or terminate the conservation proceedings of the company, either when the Director has failed to institute proceedings under Section 188 having a reasonable opportunity to do so, or upon an order of the court pursuant to such proceedings.
    (3) Entry of a seizure order under this section shall not constitute an anticipatory breach of any contract of the company.
    (4) The court may hold all hearings in conservation proceedings privately in chambers, and shall do so on request of any officer of the company proceeded against.
    (5) In conservation proceedings and judicial reviews thereof, all records of the company, other documents, and all insurance department files and court records and papers, so far as they pertain to and are a part of the record of the conservation proceedings, shall be and remain confidential except as is necessary to obtain compliance therewith, unless and until the court, after hearing arguments in chambers from the Director and the company, shall decide otherwise, or unless the company requests that the matter be made public.
    (6) Any person having possession of and refusing to deliver any of the property, business, books, records or accounts of a company against which a seizure order has been issued shall be guilty of a Class A misdemeanor.
(Source: P.A. 89-206, eff. 7-21-95.)

215 ILCS 5/188.2

    (215 ILCS 5/188.2)
    Sec. 188.2. Grounds for and provisions applicable to rehabilitation or liquidation of a domestic company that is a covered financial company under the federal Dodd-Frank Wall Street Reform and Consumer Protection Act.
    (a) The provisions of this Section apply in accordance with Title II of the federal Dodd-Frank Wall Street Reform and Consumer Protection Act, P.L. 111-203, with respect to an insurance company that is a covered financial company, as that term is defined under 12 U.S.C. 5381.
    (b) The Director may file a complaint for an order of rehabilitation or liquidation pursuant to Section 188 of this Code on any of the following grounds:
        (1) upon a determination and notification given by
    
the Secretary of the Treasury of the United States (in consultation with the President of the United States) that the insurance company is a financial company satisfying the requirements of 12 U.S.C. 5383(b), and the board of directors (or body performing similar functions) of the insurance company acquiesces or consents to the appointment of a receiver pursuant to 12 U.S.C. 5382(a)(1)(A)(i), with such consent to be considered as consent to an order of rehabilitation or liquidation;
        (2) upon an order of the United States District Court
    
for the District of Columbia under 12 U.S.C. 5382(a)(1)(A)(iv)(I) granting the petition of the Secretary of the Treasury of the United States concerning the insurance company under 12 U.S.C. 5382(a)(1)(A)(i); or
        (3) a petition by the Secretary of the Treasury of
    
the United States concerning the insurance company is granted by operation of law under 12 U.S.C. 5382(a)(1)(A)(v).
    (c) Notwithstanding any other provision in this Article, this Code, or any other law, after notice to the insurance company, the receivership court may grant an order on the complaint for rehabilitation or liquidation within 24 hours after the filing of a complaint pursuant to this Section.
    (d) If the receivership court does not make a determination on a complaint for rehabilitation or liquidation filed by the Director pursuant to this Section within 24 hours after its filing, then it shall be deemed granted by operation of law upon the expiration of the 24-hour period. At the time that an order is deemed granted under this Section, the provisions of Article XIII of this Code shall be deemed to be in effect, and the Director shall be deemed to be affirmed as receiver and have all of the applicable powers provided by this Code, regardless of whether an order has been entered. The receivership court shall expeditiously enter an order of rehabilitation or liquidation that:
        (1) is effective as of the date that it is deemed
    
granted by operation of law; and
        (2) conforms to the provisions for rehabilitation or
    
liquidation contained in Article XIII of this Code, as applicable.
    (e) Any order of rehabilitation or liquidation made pursuant to this Section shall not be subject to any stay or injunction pending appeal.
    (f) Nothing in this Section shall be construed to supersede or impair any other power or authority of the Director or the court under this Article or Code.
(Source: P.A. 98-136, eff. 8-2-13.)

215 ILCS 5/189

    (215 ILCS 5/189) (from Ch. 73, par. 801)
    Sec. 189. Injunction. The court shall have jurisdiction, upon, or at any time after the filing of the complaint to issue an injunction restraining such company and its officers, agents, directors, employees and all other persons from transacting any company business or disposing of its property until the further order of the court. The court may also restrain all persons, companies, and entities from bringing or further prosecuting all actions and proceedings at law or in equity or otherwise, whether in this State or elsewhere, against the company or its assets or property or the Director except insofar as those actions or proceedings arise in or are brought in the conservation, rehabilitation, or liquidation proceeding. The court may issue such other injunctions or enter such other orders as may be deemed necessary to prevent interference with the proceedings, or with the Director's possession and control or title, rights or interests as herein provided or to prevent interference with the conduct of the business by the Director, and may issue such other injunctions or enter such other orders as may be deemed necessary to prevent waste of assets or the obtaining, asserting, or enforcing of preferences, judgments, attachments, or other like liens, including common law retaining liens, or the making of any levy against such company or its property and assets while in the possession and control of the Director. The court may issue any other injunctions or enter any other orders that are necessary to protect enrollees in accordance with subsection (c) of Section 5-6 of the Health Maintenance Organization Act. Any injunction issued under this article may be served and enforced as in other civil proceedings, but no bond or other security shall be required of the plaintiff, either for costs or for any injunction. The provisions of this Section are subject to the exclusion set forth in subsection (o) of Section 204 of this Article.
(Source: P.A. 100-89, eff. 8-11-17.)

215 ILCS 5/190

    (215 ILCS 5/190) (from Ch. 73, par. 802)
    Sec. 190. Practice, hearing, order and appeal.
    (1) The defendant company shall appear within 10 days after the service of the summons as in this Article provided, exclusive of the day of service. If, on the return day of the summons the defendant shall enter its appearance in the action and apply for further time in which to answer, the court shall, upon request of the defendant, extend the time for answering for a period not to exceed 10 days from said return day. If the defendant fails to answer on the return day or within the time granted, or fails to appear, the court shall proceed to hear and determine the cause as herein provided.
    (2) The court, on the return day of the summons as originally fixed or extended hereunder, shall set the cause for hearing on some day not exceeding 20 days from the return day, or the extended return day as herein provided.
    (3) No motions or other pleadings, whether to dissolve, modify or continue any injunction or otherwise, shall be filed by, or permitted on behalf of the defendant prior to the filing of an answer to the complaint. All pleadings shall be filed within the time herein provided.
    (4) The pleadings and proceedings insofar as not otherwise regulated by this Article, shall be as in other civil proceedings.
    (5) Upon the hearing, at which the complaint and any exhibits filed therewith shall be received as prima facie evidence of the facts therein recited, the court shall enter an order either dismissing the complaint or finding that sufficient cause exists for rehabilitation or liquidation and directing the Director to take possession of the property, business and affairs of such company and to rehabilitate or liquidate the same as the case may be. The Director shall be responsible on his official bond for all assets coming into his possession.
    (6) An appeal, if taken from such order, shall be prosecuted on an expedited basis as provided for in such cases by Illinois Supreme Court Rule 307.
    (7) A claim for attorneys' fees incurred by the company in contesting its conservation, rehabilitation, or liquidation may be filed in the proceedings, and the claim may be allowed upon a showing that (i) the attorneys' fees incurred are reasonable; (ii) the board of directors of the company incurred such attorneys' fees based upon their best knowledge, information, and belief formed after reasonable inquiry indicating such contention is well grounded in fact and is warranted by existing law or a good faith argument of the extension, modification, or reversal of existing law; and (iii) the contention is not pursued for any improper purpose, including harassment, unnecessary delay in the proceedings, or waste of estate assets. Such claims, if allowed, shall be accorded a priority of distribution under paragraph (g) of subsection (1) of Section 205. This subsection (7) applies to all liquidation, rehabilitation, or conservation proceedings that are pending on the effective date of this amendatory Act of 1993 and to all future liquidation, rehabilitation, or conservation proceedings.
(Source: P.A. 88-297; 88-670, eff. 12-2-94; 89-206, eff. 7-21-95.)

215 ILCS 5/190.1

    (215 ILCS 5/190.1) (from Ch. 73, par. 802.1)
    Sec. 190.1. Appeal of order directing liquidation - special claims procedure.
    (1) Within 5 days of the effective date of this amendatory Act of 1982, or, if later, within 5 days after the filing of a notice of appeal of an order of liquidation, which order has not been stayed, the Director shall present for the circuit court's approval a plan for the continued performance of the defendant company's policy claims obligations, including the duty to defend insureds under liability insurance policies, during the pendency of an appeal. Such plan shall provide for the continued performance and payment of policy claims obligations in the normal course of events, notwithstanding the grounds alleged in support of the order of liquidation including the ground of insolvency. In the event the defendant company's financial condition will not, in the judgment of the Director, support the full performance of all policy claims obligations during the appeal pendency period, the plan may prefer the claims of certain policyholders and claimants over creditors and interested parties as well as other policyholders and claimants, as the Director finds to be fair and equitable considering the relative circumstances of such policyholders and claimants. The circuit court shall examine the plan submitted by the Director and if it finds the plan to be in the best interests of the parties, the circuit court shall approve the plan. No action shall lie against the Director or any of his deputies, agents, clerks, assistants or attorneys by any party based on preference in an appeal pendency plan approved by the circuit court.
    (2) The appeal pendency plan shall not supersede or affect the obligations of any insurance guaranty fund which under its own state law is required to pay covered claims obligations during the appeal pendency period.
(Source: P.A. 96-1000, eff. 7-2-10.)

215 ILCS 5/191

    (215 ILCS 5/191) (from Ch. 73, par. 803)
    Sec. 191. Title to property of company. The Director and his successor and successors in office shall be vested by operation of law with the title to all property, contracts, and rights of action of the company as of the date of the order directing rehabilitation or liquidation. The Director is entitled to immediate possession and control of all property, contracts, and rights of action of the company, and is further authorized and directed to remove any and all records and property of the company to the Director's possession and control or to such other place as may be convenient for the purposes of efficient and orderly administration of the rehabilitation or liquidation. All persons, companies, and entities shall immediately release their possession and control of any and all property, contracts, and rights of action of the company to the Director including, but not limited to, bank accounts and bank records, premium and related records, and claim, underwriting, accounting, and litigation files. The entry of an order of rehabilitation or liquidation creates an estate that comprises all of the liabilities and assets of the company. The filing or recording of such order in the office of the recorder or the Registrar of Titles in any county of this State shall impart the same notice that a deed, bill of sale or other evidence of title duly filed for record by such company would have imparted.
(Source: P.A. 89-206, eff. 7-21-95.)

215 ILCS 5/192

    (215 ILCS 5/192) (from Ch. 73, par. 804)
    Sec. 192. Duties of Director as rehabilitator; termination.
    (1) Upon the entry of an order directing rehabilitation, the Director shall immediately proceed to conduct the business of the company and take such steps towards removal of the causes and conditions which have made such proceedings necessary as may be expedient.
    (2) The Director is authorized to deal with the property and business of the company in his name as Director, or, if the Court shall so order, in the name of the company. The Director may, subject to the approval of the Court, sell or otherwise dispose of the real and personal property, or any part thereof, and sell or compromise all doubtful or uncollectible debts or claims owing to the company in any rehabilitation proceeding now pending or hereafter instituted, except that whenever the value of any real or personal property or the amount of any such debt owing to the company does not exceed $25,000, the Director may sell, dispose of, compromise, or compound the same upon such terms as the Director deems to be in the best interest of the company without obtaining approval of the court unless otherwise directed by the court. The Director may solicit contracts whereby a solvent company agrees to assume, in whole or in part, or upon a modified basis, the liabilities of a company in rehabilitation in a manner consistent with subsection (4) of Section 193 of this Code.
    (3) The Director may bring any action, claim, suit, or proceeding against any director or officer of the company or against any other person with respect to that person's dealings with the company including, but not limited to, prosecuting any action, claim, suit, or proceeding on behalf of the creditors, members, policyholders, or shareholders of the company. Nothing in this subsection shall be construed to affect the standing of the Illinois Insurance Guaranty Fund, the Illinois Life and Health Insurance Guaranty Association, or the Illinois Health Maintenance Organization Guaranty Association to sue or be sued under applicable law.
    (4) If at any time the Director finds that it is in the best interests of policyholders, creditors and the company to effect a plan of mutualization or rehabilitation, the Director may submit such plan to the court for its approval. Such plan, in addition to any other terms and provisions as may by the Director be deemed necessary or advisable, may include a provision imposing liens upon the net equities of policyholders of the company, and in the case of life companies, a provision imposing a moratorium upon the loan or cash surrender values of the policies, for such period and to such an extent as may be necessary. Notice of the hearing upon any such plan shall be given in the manner as may be fixed by the court and upon such hearing the court may either approve or disapprove the plan or modify it in such manner and to such extent as to the court shall seem appropriate.
    (5) Where in such proceedings the Court has entered an order for the filing of claims and it subsequently appears that the total amount of all allowable claims exceed the assets in the possession of the Rehabilitator, the Court may upon the application of the Director authorize a distribution of assets in accordance with the applicable provisions of Section 210. The Director may at such time apply under this Section for an order dissolving the company in accordance with the applicable provisions of Section 196.
    (6) If at any time the Director finds that the causes and conditions which made such proceeding necessary have been removed he may petition the court for an order terminating the conduct of the business by the Director and permitting such company to resume possession of its property and the conduct of its business and for a full discharge of all liability and responsibility of the Director. No order for the return to such company of its property and business shall be granted unless the court after a full hearing determines that the purposes of the proceeding have been fully accomplished.
(Source: P.A. 89-206, eff. 7-21-95; 90-381, eff. 8-14-97.)

215 ILCS 5/193

    (215 ILCS 5/193) (from Ch. 73, par. 805)
    Sec. 193. Duties of Director as liquidator; sales; reinsurance.
    (1) Upon the entry of an order directing liquidation, the Director shall immediately proceed to liquidate the property, business, and affairs of the company. The Director is hereby authorized to deal with the property, business, and affairs of the company in his name as Director, or, if the court shall so order, in the name of the company.
    (2) The Director may, subject to the approval of the court, sell or otherwise dispose of the real and personal property, or any part thereof, and sell or compromise all debts or claims owing to the company, except that whenever the value of any real or personal property or the amount of any debt owing to the company does not exceed $25,000, the Director may sell, dispose of, compromise, or compound the same upon such terms as the Director deems to be in the best interest of the company without obtaining approval of the court.
    (3) The Director may bring any action, claim, suit, or proceeding against any director or officer of the company or against any other person with respect to that person's dealings with the company including, but not limited to, prosecuting any action, claim, suit, or proceeding on behalf of the creditors, members, policyholders, or shareholders of the company. Nothing in this subsection shall be construed to affect the standing of the Illinois Insurance Guaranty Fund, the Illinois Life and Health Insurance Guaranty Association, or the Illinois Health Maintenance Organization Guaranty Association to sue or be sued under applicable law.
    (4) In order to preserve so far as possible the rights and interests of the policyholders of the company whose contracts were cancelled by the liquidation order and of such other creditors as may be possible, the Director may solicit a contract or contracts whereby a solvent company or companies will agree to assume in whole, or in part, or upon a modified basis, the liabilities owing to said former policyholders or creditors. The Director may, subject to Section 531.08(h) of this Code or Section 6-8 of the Health Maintenance Organization Act, cede or reinsure all or so much as may be necessary of the in-force business to another company using assets of the liquidated company to pay therefor in preference to satisfying other obligations or creditors. The Director may assign any rights or interests of the company to receive reinsurance proceeds for losses to the Illinois Life and Health Insurance Guaranty Association, the Illinois Health Maintenance Organization Guaranty Association or any similar organization in any other state. If, after a full hearing upon a petition filed by the Director, the court shall find that the Director endeavored to obtain the best contract for the benefit of said parties in interest, and if the said Director shall report to the court that he is ready and willing to enter into a contract and submit a copy thereof to the court, the court shall examine the procedure and acts of the Director, and if the court shall find that the best possible contract in the interests of said parties has been obtained and that it is best for the interests of said parties that said contract be entered into, the court shall by written order approve the acts of the Director and authorize him to execute said contract.
    (5) In recognition of the rights of policyholders whose "claims made" contracts were cancelled by the liquidation order, he may, in his discretion, permit such policyholders to purchase an extended discovery period which is subject to the limitations in this Article. The policyholder shall pay to the liquidator a premium which is appropriate for the rights purchased as determined by the liquidator and approved by the court. No extended discovery period purchased before or after the entry of the liquidation order shall extend the time to file claims as set by the court pursuant to Section 208 of this Code. Claims accruing by virtue of such extended discovery period shall be treated as any other claim under Article XXXIV of this Code, and shall be subject to the limitations, exclusions and conditions in the Illinois Insurance Guaranty Fund Act and in the laws governing similar organizations in other states.
    (6) The Director is authorized to cancel policies, bonds, and contracts of insurance subject to court approval.
    (7) All persons, companies, and entities shall immediately turn over to the Director all unearned premium that has been collected by or on behalf of the company and all earned premium owing the company unless otherwise directed in writing by the Director or by court order. Within 30 days of the date of a written request of the Director, those persons, companies, and entities shall submit affidavits verifying amounts collected by, on behalf of, or due and owing the company and further shall provide copies of all premium fund trust account information and such other applicable documentation as requested by the Director. Nothing in this subsection shall be construed to affect the rights of (i) the Illinois Life and Health Insurance Guaranty Association to collect premium under item (6) of Section 531.08 of this Code or (ii) the Illinois Health Maintenance Organization Guaranty Association to collect premium under item (11) of Section 6-8 of the Health Maintenance Organization Act.
    (8) The amount recoverable by the Director from a reinsurer shall not be reduced or diminished as a result of the entry of an order of liquidation notwithstanding any provision in the reinsurance contract or other such agreement. Payment made by a reinsurer to or on behalf of an insured of the company shall not diminish the reinsurer's obligation to the company except when the reinsurance agreement lawfully provides for payment to or on behalf of the company's insured by the reinsurer. All reinsurance contracts to which the company is a party, which do not contain the provisions required with respect to the obligation of a reinsurer in the event of insolvency of the reinsured to obtain credit for reinsurance or pursuant to other applicable statutes, shall contain or be construed to contain all of the following provisions:
        (a) Upon the entry of an order of liquidation and
    
notwithstanding the Director's failure to pay all or a portion of a claim, the reinsurance obligation shall be due and owing to the Director on the basis of claims allowed in the liquidation proceeding. The reinsurer shall submit the amounts due and owing directly to the company as ceding insurer or to the Director.
        (b) The Director shall give written notice or arrange
    
for the giving of written notice to reinsurers or their agents of the pendency of a claim against the company indicating the policy or bond reinsured within a reasonable time after the claim is filed. The reinsurer may interpose, at its own expense, in the proceeding where the claim is to be adjudicated, any defenses that it may deem available to the company or the Director.
(Source: P.A. 88-297; 89-206, eff. 7-21-95.)

215 ILCS 5/194

    (215 ILCS 5/194) (from Ch. 73, par. 806)
    Sec. 194. Rights and liabilities of creditors fixed upon liquidation.
    (a) The rights and liabilities of the company and of its creditors, policyholders, stockholders or members and all other persons interested in its assets, except persons entitled to file contingent claims, shall be fixed as of the date of the entry of the Order directing liquidation or rehabilitation unless otherwise provided by Order of the Court. The rights of claimants entitled to file contingent claims or to have their claims estimated shall be determined as provided in Section 209.
    (b) The Director may, within 2 years after the entry of an order for rehabilitation or liquidation or within such further time as applicable law permits, institute an action, claim, suit, or proceeding upon any cause of action against which the period of limitation fixed by applicable law has not expired at the time of filing of the complaint upon which the order is entered.
    (c) The time between the filing of a complaint for conservation, rehabilitation, or liquidation against the company and the denial of the complaint shall not be considered to be a part of the time within which any action may be commenced against the company. Any action against the company that might have been commenced when the complaint was filed may be commenced for at least 180 days after the complaint is denied.
(Source: P.A. 88-297; 89-206, eff. 7-21-95.)

215 ILCS 5/195

    (215 ILCS 5/195) (from Ch. 73, par. 807)
    Sec. 195. Borrowing on the pledge of assets.
    For the purpose of facilitating the rehabilitation, liquidation, conservation or dissolution provided for by this article, the Director may, subject to the approval of the court, borrow money and execute, acknowledge and deliver certificates of indebtedness upon such terms and entitled to such liens and priorities as may be fixed by the court, or notes or other evidence of indebtedness therefor and secure the repayment of the same by the mortgage, pledge, assignment, transfer in trust or hypothecation or any or all of the property whether real, personal or mixed of the company against which a proceeding has been brought under this article. Subject to the approval of the court, he shall also have power to take any and all other action necessary and proper to consummate any such loans and to provide for the repayment thereof. The Director shall incur no personal liability by virtue of any loan made pursuant to this section.
(Source: Laws 1937, p. 696.)

215 ILCS 5/196

    (215 ILCS 5/196) (from Ch. 73, par. 808)
    Sec. 196. Order of dissolution. If the company against whom the complaint for liquidation is filed is a corporation and the complaint prays for dissolution of such company, the court shall have jurisdiction either before or after final liquidation of the property, business and affairs of such company, after service of summons and complaint as above stated and a full hearing, to enter a judgment dissolving such company, and if an order of liquidation has been entered against a company, the court shall have jurisdiction, upon the petition of the Director, to enter an order dissolving the company. The court may likewise, regardless of whether an order of liquidation is sought or has been obtained, upon proper complaint or petition by the Director, order dissolution of a company where it has failed to qualify for a certificate of authority authorizing it to commence the transaction of its business, or where a company has no assets and no means for payment of liabilities.
(Source: P.A. 89-206, eff. 7-21-95.)

215 ILCS 5/197

    (215 ILCS 5/197) (from Ch. 73, par. 809)
    Sec. 197. Rights, powers, and duties ancillary to domiciliary proceeding.
     The rights, powers, and duties of the Director as conservator, rehabilitator, or liquidator, with reference to the assets of a foreign or alien company, whether authorized or unauthorized, shall be ancillary to the rights, powers and duties imposed upon any receiver or other person, if any, in charge of the property, business and affairs of such company in its domiciliary state or country.
(Source: P.A. 86-1154; 86-1156.)

215 ILCS 5/198

    (215 ILCS 5/198) (from Ch. 73, par. 810)
    Sec. 198. Service of summons and return.
    (1) Upon the filing of a complaint, summons shall forthwith issue, returnable in 3 days after its date, and a copy of the summons together with the complaint in any proceeding under this article shall be served upon the company named in such complaint by delivering the same to its president, vice president, secretary, treasurer, director, or to its managing agent, or if the company lack any of the aforesaid officers, or they cannot be found within the State, to the officer performing corresponding functions under another name; if it be a Lloyds, reciprocal or inter-insurance exchange, by delivering such summons and copy of the complaint to the duly designated attorney-in-fact.
    (2) When it is satisfactorily proved by the report of an examiner of the department made in accordance with the provisions of this Code, or by affidavit if anyone familiar with the facts, that the officers, directors, trustees or managing agents or members of any company named in said complaint upon whom service is required to be made as above provided, have, or if a Lloyds, reciprocal or inter-insurance exchange be named in the complaint, that the duly designated attorney-in-fact, has, departed from the State or keep themselves or himself concealed therein, or if such of the persons residing in this State and upon whom service is required to be made as above provided have resigned from their offices, or that service cannot be made immediately by the exercise of reasonable diligence, such service may be had by the mailing of a copy of the complaint and summons to the last known address of the company, or by publication in such form and in such manner as the court shall order.
(Source: Laws 1959, p. 1422.)

215 ILCS 5/199

    (215 ILCS 5/199) (from Ch. 73, par. 811)
    Sec. 199. Removal of proceedings to Sangamon or Cook county.
    In the event an order is entered directing liquidation, rehabilitation or conservation, the Director may remove the property and assets of the company to the county of Sangamon or to the county of Cook. In the event of such removal or contemplated removal the court shall upon proper petition showing the necessity therefor, filed by the Director, order the clerk of the court wherein such proceeding was commenced to make a full transcript of the petition for removal and the order thereon and to transmit the same together with all papers theretofore filed in the cause, to the Clerk of the Circuit Court of the county of Sangamon or to the Clerk of the Circuit Court of the county of Cook, as the case may be, and the proceeding shall thereafter be conducted in the same manner as if it had been commenced in the county to which the cause is transferred.
(Source: Laws 1965, p. 3563.)

215 ILCS 5/200

    (215 ILCS 5/200) (from Ch. 73, par. 812)
    Sec. 200. Examinations. The pendency of any proceeding under this Article shall in no way affect the power and authority of the Director to conduct any examination provided for in Sections 132 through 132.7, in connection with the business, conduct or affairs of the company sought to be liquidated, rehabilitated or conserved.
    An annual audit of any business having assets of more than $500,000 which is under liquidation or rehabilitation pursuant to this Act shall be performed by an independent outside certified public accountant, who is currently engaged in the conduct of audits under the Illinois State Auditing Act. The cost of this audit shall be paid by the Director out of the assets of the business being liquidated or rehabilitated.
    An annual audit of any special deputy appointed under Section 202 shall be conducted by an independent, outside certified public accountant performing the audits provided for in the preceding paragraph. The cost of this audit shall be allocated among the estates of the companies in conservation, rehabilitation, or liquidation on the basis of allocation methods established by the Director. The Illinois Auditor General may, at his option, participate in the audit of any special deputy.
    Copies of all audits prepared under this Section shall be promptly provided after completion to the Governor, to the Illinois Auditor General, and to the majority and minority leaders of the Senate and the House of Representatives.
(Source: P.A. 89-97, eff. 7-7-95.)

215 ILCS 5/201

    (215 ILCS 5/201) (from Ch. 73, par. 813)
    Sec. 201. Who may apply for appointment of receiver or liquidator.) No order or judgment enjoining, restraining or interfering with the prosecution of the business of any company, or for the appointment of a temporary or permanent receiver, rehabilitator or liquidator of a domestic company, or receiver or conservator of a foreign or alien company, shall be made or granted otherwise than upon the complaint of the Director represented by the Attorney General as provided in this article, except in an action by a judgment creditor or in proceedings supplementary thereto after notice that a final judgment has been entered and that the judgment creditor intends to file a complaint praying for any of the relief in this section mentioned, has been served upon the Director at least 30 days prior to the filing of such complaint by such judgment creditor.
(Source: P.A. 84-546.)

215 ILCS 5/202

    (215 ILCS 5/202) (from Ch. 73, par. 814)
    Sec. 202. Appointment of special deputies; employees and professional advisors; contracts; qualified immunity.
    (a) For the purpose of assisting the Director in the performance of the Director's duties under Articles VII, XIII, and XIII 1/2 of this Code, the Director has authority to appoint one or more special deputies as the Director's agent or agents, and clerks, assistants, attorneys, and other personnel as the Director may deem necessary and to delegate to each such person authority to assist the Director as the Director may consider appropriate. The compensation of each special deputy, clerk, assistant, attorney, and other designated personnel shall be fixed and paid by the Director. The Director shall also have the authority to retain and pay attorneys, actuaries, accountants, consultants, and such other persons as the Director may deem necessary and appropriate. The Director shall fix the rate of compensation of these attorneys, actuaries, accountants, consultants, and other persons subject to the approval of the court. The Director, however, has the authority to fix, without the approval of the court, the rate of compensation of attorneys, actuaries, accountants, consultants, and other persons that he considers necessary and appropriate if the Director determines that the projected expenditure for professional fees to each such person will not exceed $20,000 per company in any calendar year.
    (b) The special deputies may enter into leases or contracts for the procurement of real or personal property, and on such terms and conditions as the Director may deem necessary or advisable for the purpose of performing the Director's duties under Articles VII, XIII, and XIII 1/2 of this Code. Any such lease or contract that requires an aggregate expenditure in excess of $150,000 shall be subject to the approval of the court before which is pending the delinquency proceeding of the estate of the company on whose behalf the lease or contract is entered into. In the event that the lease or contract is entered into on behalf of 2 or more companies, the delinquency proceedings of the 2 or more companies shall be consolidated for the sole purpose of obtaining approval of the lease or contract from the court before which is pending the delinquency proceeding of the estate of the company that, in the judgment of the Director at the time of application for approval, is to bear the largest portion of the amounts to be expended under the lease or contract under the allocation methods established by the Director under subsection (c)(1) of this Section.
    (c) (1) The compensation of the persons appointed by the Director and the attorneys, actuaries, accountants, consultants, and other persons retained by the Director, the payments under the leases or contracts described in subsection (b) of this Section, and all other expenses of taking possession of the property and the administration of the company and its property shall be paid (i) out of the funds or assets of the company on whose behalf the compensation, payments, or expenses were incurred or (ii) in the event that the compensation, payments, or expenses were, in the judgment of the Director, incurred in behalf of 2 or more companies, out of the assets of those companies on the basis of allocation methods established by the Director.
    (2) Notwithstanding the foregoing provisions of this subsection (c), the salary of the special deputies, together with the salaries or fees of those clerks, assistants, attorneys, actuaries, accountants, consultants, or other persons appointed or retained by the Director under this Section, and the other expenses of taking possession of the property and the administration of the company and its property, may be paid out of amounts appropriated to the Department of Insurance. Any amounts paid under this Section from appropriated funds shall be repaid to the State treasury from any available funds or assets of the company on whose behalf the expenses were incurred, subject to the approval of the court before which is pending the delinquency proceeding of the company.
    (d) (1) For each calendar quarter or other period as the court may determine, the Director shall file with the court before which is pending the delinquency proceeding of each company in liquidation or rehabilitation a report for the period reflecting the company's (i) cash and invested assets held by the Director at the beginning of the period, (ii) cash receipts, (iii) cash disbursements for payments of salaries, compensation, professional fees, and all other expenses of administration of the company and its property, (iv) all other cash disbursements, and (v) cash and invested assets held by the Director at the end of the period; provided that the report need not be filed more than once for each calendar year if the cash and invested assets of the company are less than $250,000. For each such period, the Director shall file with the court a similar report for each company in conservation, except that this report shall reflect only those cash disbursements for payments of salaries, compensation, professional fees, and all other expenses of the administration of the company and its property.
    (2) No party to the proceedings may object to any aspect of that report unless the basis of the party's objection is set forth in a motion filed with the court not later than 30 days after the filing of the report. In the event that objections to the report are filed, the Director shall have 15 days to file a response to the objections, and a hearing on the matter shall be held at the earliest possible date consistent with the schedule of the court. Any hearing on objections shall be limited solely to the specific objections raised in the original motion.
    (e) (1) For purposes of this subsection (e):
    "Receiver" means the Director in his or her capacity as the liquidator, rehabilitator, or conservator of a company in liquidation, rehabilitation, or conservation.
    "Director as trustee" means the Director when appointed as trustee under this Article.
    "Employees" means all present and former special deputies appointed by the Director and all persons that the Director or special deputies may appoint or employ or may have appointed or employed to assist in the liquidation, rehabilitation, or conservation of a company. "Employees" shall not include any attorneys, accountants, auditors, or other professional persons or firms (or their employees) who are retained as independent contractors by either the Director or by any special deputy appointed under this Section.
    "Advisors" means all persons that the Director may appoint or may have appointed under Section 202.1.
    (2) If a cause of action is commenced against the receiver, the Director as trustee, employees, or advisors, either personally or in their official capacity, alleging property damage, property loss, personal injury, or other civil liability arising out of any act, error, or omission of the receiver, the Director as trustee, employees, or advisors committed within the scope of their duties or employment involving a company in liquidation, rehabilitation, or conservation, the receiver, the Director as trustee, employees, or advisors shall be indemnified out of the assets of the company for all expenses, attorneys' fees, judgments, settlements, decrees, fines, penalties, or amounts paid in satisfaction of or incurred in the defense of the cause of action unless it is determined upon a final adjudication on the merits that the act, error, or omission of the receiver, the Director as trustee, employees, advisors, or the court giving rise to the claim was not within the scope of his or her duties or employment or was caused by intentional, wilful, or wanton misconduct. Any payments out of the assets of the company under this subsection (e) shall be subject to the prior approval of the court before which is pending the delinquency proceeding of the company.
    The court shall be entitled to indemnification under Section 2 of the Representation and Indemnification of State Employees Act.
    Attorneys' fees and expenses incurred in defending an action against the receiver, the Director as trustee, employees, or advisors for which indemnity is available under this part (2) may, upon the approval of the receiver and the court before which is pending the delinquency proceeding of the company, be paid from the assets of the company's estate in advance of the final disposition of the action upon receipt of an undertaking by or on behalf of the receiver, the Director as trustee, employees, or advisors to pay that amount, if it shall ultimately be determined upon a final adjudication on the merits that he or she is not entitled to be indemnified under this part (2).
    Any indemnification, expense payments, and attorneys' fees from the company's assets for actions against the receiver, the Director as trustee, employees, or advisors under this part (2) shall be considered an administrative expense of the estate.
    In the event of actual or threatened litigation against the receiver, the Director as trustee, employees, or advisors for which indemnity is available under this part (2), a reasonable amount of funds, which in the judgment of the Director may be needed to provide indemnity, may be segregated and reserved from the assets of the company as security for the payment of indemnity until all applicable statutes of limitations shall have run and all actual or threatened actions against the receiver, the Director as trustee, employees, or advisors have been completely and finally resolved.
    (3) Nothing contained or implied in this subsection (e) shall operate, or be construed or applied, to deprive the Director, receiver, the Director as trustee, the company's estate, any employee, any advisor or the court of any defense, claim, or right of immunity heretofore available.
(Source: P.A. 88-297; 89-206, eff. 7-21-95.)

215 ILCS 5/202.1

    (215 ILCS 5/202.1) (from Ch. 73, par. 814.1)
    Sec. 202.1. The Director may, with the approval of the court, appoint an Advisory Committee, consisting of policyholders, claimants, or other creditors, including Guaranty Funds and Guaranty Associations, should the Director deem it necessary to the proper performance of his responsibilities under this Article and Article XIII 1/2. The Committee shall serve at the pleasure of the Director and shall serve without compensation other than reimbursement for travel and per diem living expenses incurred in attending committee meetings. No other committees of any nature shall be appointed by the Director or the court in any proceeding conducted under this Article and Article XIII 1/2.
(Source: P.A. 86-1155; 86-1156.)

215 ILCS 5/203

    (215 ILCS 5/203) (from Ch. 73, par. 815)
    Sec. 203. Exemption from filing fees.
    The Director shall not be required to pay any fee to any public officer for filing, recording or in any manner authenticating any paper or instrument relating to any proceeding under this article, nor for services rendered by any public officer for serving any process; but such fees and costs may be taxed as costs against the defendant in the suit by order of the court and paid to such public officer.
(Source: Laws 1937, p. 696.)

215 ILCS 5/204

    (215 ILCS 5/204) (from Ch. 73, par. 816)
    Sec. 204. Prohibited and voidable transfers and liens.
    (a)(1) A preference is a transfer of any of the property of a company to or for the benefit of a creditor, for or on account of an antecedent debt, made or suffered by the company within 2 years before the filing of a complaint under this Article, the effect of which may be to enable the creditor to obtain a greater percentage of this debt than another creditor of the same class would receive.
    (2) Any preference may be avoided by the Director as rehabilitator, liquidator, or conservator if:
        (A) the company was insolvent at the time of the
    
transfer; and
        (B) the transfer was made within 4 months before the
    
filing of the complaint; or the creditor receiving it was (i) an officer, or any employee or attorney or other person who was in fact in a position of comparable influence in the company to an officer whether or not that person held such a position, (ii) any shareholder holding, directly or indirectly, more than 5% of any class of any equity security issued by the company, or (iii) any other person, firm, corporation, association, or aggregation of individuals with whom the company did not deal at arm's length.
    (3) Where the preference is voidable, the Director as rehabilitator, liquidator, or conservator may recover the property or, if it has been converted, its value from any person who has received or converted the property; except where a bona fide purchaser or lienor has given less than fair equivalent value, the purchaser or lienor shall have a lien upon the property to the extent of the consideration actually given. Where a preference by way of lien or security title is voidable, the court may on due notice order the lien or title to be preserved for the benefit of the estate, in which event the lien or title shall pass to the Director as rehabilitator or liquidator.
    (b)(1) A transfer of property other than real property shall be deemed to be made or suffered when it becomes so far perfected that no subsequent lien obtainable by legal or equitable proceedings on a simple contract could become superior to the rights of the transferee.
    (2) A transfer of real property shall be deemed to be made or suffered when it becomes so far perfected that no subsequent bona fide purchaser from the company could obtain rights superior to the rights of the transferee.
    (3) A transfer that creates an equitable lien shall not be deemed to be perfected if there are available means by which a legal lien could be created.
    (4) A transfer not perfected before the filing of a complaint shall be deemed to be made immediately before the filing of the complaint.
    (5) The provisions of this subsection apply whether or not there are or were creditors who might have obtained liens or persons who might have become bona fide purchasers.
    (c) For purposes of this Section:
        (1) A lien obtainable by legal or equitable
    
proceedings upon a simple contract is one arising in the ordinary course of the proceedings upon the entry or docketing of a judgment or decree, or upon attachment, garnishment, execution, or like process, whether before, upon, or after judgment or decree and whether before or upon levy. It does not include liens that, under applicable law, are given a special priority over other liens that are prior in time.
        (2) A lien obtainable by legal or equitable
    
proceedings could become superior to the rights of a transferee, or a purchaser could obtain rights superior to the rights of a transferee within the meaning of subsection (b) of this Section, if such consequences would follow only from the lien or purchase itself, or from the lien or purchase followed by any step wholly within the control of the respective lienholder or purchaser, with or without the aid of ministerial action by public officials. A lien could not, however, become superior and a purchase could not create superior rights for the purpose of subsection (b) of this Section through any acts subsequent to an obtaining of the lien or subsequent to a purchase that requires the agreement or concurrence of any third party or that requires any further judicial action or ruling.
    (d) A transfer of property for or on account of a new and contemporaneous consideration which is deemed under subsection (b) of this Section to be made or suffered after the transfer because of delay in perfecting it does not thereby become a transfer for or on account of an antecedent debt if any acts required by the applicable law to be performed in order to perfect the transfer as against liens or bona fide purchasers' rights are performed within 21 days or any period expressly allowed by the law, whichever is less. A transfer to secure a future loan, if the loan is actually made, or a transfer that becomes security for a future loan, shall have the same effect as a transfer for or on account of a new and contemporaneous consideration.
    (e) If any lien deemed voidable under part (2) of subsection (a) of this Section has been dissolved by the furnishing of a bond or other obligation, the surety on which has been indemnified directly or indirectly by the transfer of or the creation of a lien upon any property of a company before the filing of a complaint under this Article, the indemnifying transfer or lien shall also be deemed voidable.
    (f) The property affected by any lien deemed voidable under subsections (a) and (e) of this Section shall be discharged from the lien, and that property and any of the indemnifying property transferred to or for the benefit of a surety shall pass to the Director as rehabilitator or liquidator, except that the court may, on due notice, order any such lien to be preserved for the benefit of the estate and the court may direct that such conveyance be executed as may be proper or adequate to evidence the title of the Director as rehabilitator or liquidator.
    (g) The court shall have summary jurisdiction over any proceeding by the Director as rehabilitator, liquidator, or conservator to hear and determine the rights of any parties under this Section. Reasonable notice of any hearings in the proceeding shall be given to all parties in interest, including the obligee of a releasing bond or other life obligation. Where an order is entered for the recovery of indemnifying property in kind or for the avoidance of an indemnifying lien, the court, upon application of any party in interest, shall in the same proceeding ascertain the value of the property or lien, and if the value is less than the amount for which the property is indemnity or than the amount of the lien, the transferee or lienholder may elect to retain the property or lien upon payment of its value, as ascertained by the court, to the Director as rehabilitator, liquidator, or conservator, within such reasonable times as the court shall fix.
    (h) The liability of the surety under the releasing bond or other similar obligation shall be discharged to the extent of the value of the indemnifying property recovered or the indemnifying lien nullified and avoided by the Director as rehabilitator, liquidator, or conservator. Where the property is retained under subsection (g) of this Section, the liability shall be discharged to the extent of the amount paid to the Director as rehabilitator, liquidator, or conservator.
    (i) If a creditor has been preferred and thereafter in good faith gives the company further credit without security of any kind, for property which becomes a part of the company's estate, the amount of the new credit remaining unpaid at the time of the petition may be set off against the preference which would otherwise be recoverable from the creditor.
    (j) If a company shall, directly or indirectly, within 4 months before the filing of a complaint under this Article, or at any time in contemplation of such a proceeding, pay money or transfer property to any attorney for services rendered or to be rendered, the transactions may be examined by the court on its own motion or shall be examined by the court on petition of the Director as rehabilitator, liquidator, or conservator and shall be held valid only to the extent of a reasonable amount to be determined by the court, and the excess may be recovered by the Director as rehabilitator, liquidator, or conservator for the benefit of the estate provided that where the attorney is in a position of influence in the company or an affiliate thereof payment of any money or the transfer of any property to the attorney for services rendered or to be rendered shall be governed by item (B) of part (2) of subsection (a) of this Section.
    (k)(1) An officer, director, manager, employee, shareholder, member, subscriber, attorney, or other person acting on behalf of the company who knowingly participates in giving any preference when that officer, director, manager, employee, shareholder, member, subscriber, attorney, or other person has reasonable cause to believe the company is or is about to become insolvent at the time of the preference shall be personally liable to the Director as rehabilitator, liquidator, or conservator for the amount of the preference. There is a reasonable cause to so believe if the transfer was made within 4 months before the date of filing of the complaint.
    (2) A person receiving any property from the company or the benefit thereof as a preference voidable under subsection (a) of this Section shall be personally liable therefor and shall be bound to account to the Director as rehabilitator, liquidator, or conservator.
    (3) Nothing in this Section shall prejudice any other claim by the Director as rehabilitator, liquidator, or conservator against any person.
    (l) For purposes of this Section, the company is presumed to have been insolvent on and during the 4 month period immediately preceding the date of the filing of the complaint.
    (m) The Director as rehabilitator, liquidator, or conservator may not avoid a transfer under this Section to the extent that the transfer was:
        (A) Intended by the company and the creditor to or
    
for whose benefit the transfer was made to be a contemporaneous exchange for new value given to the company, and was in fact a substantially contemporaneous exchange; or
        (B) In payment of a debt incurred by the company in
    
the ordinary course of business or financial affairs of the company and the transferee; made in the ordinary course of business or financial affairs of the company and the transferee; and made according to ordinary business terms;
        (C) In the case of a transfer by a company where the
    
Director has determined that an event described in Section 35A-25 or 35A-30 has occurred, specifically approved by the Director in writing pursuant to this subsection, whether or not the company is in receivership under this Article. Upon approval by the Director, such a transfer cannot later be found to constitute a prohibited or voidable transfer based solely upon a deviation from the statutory payment priorities established by law for any subsequent receivership; or
        (D) Of money or other property arising under or
    
in connection with any Federal Home Loan Bank security agreement or any pledge, security, collateral or guarantee agreement, or any other similar arrangement or credit enhancement relating to a Federal Home Loan Bank security agreement.
    (n) The Director as rehabilitator, liquidator, or conservator may avoid any transfer of or lien upon the property of a company that the estate of the company or a policyholder, creditor, member, or stockholder of the company may have avoided, and the Director as rehabilitator, liquidator, or conservator may recover and collect the property so transferred or its value from the person to whom it was transferred unless the property was transferred to a bona fide holder for value before the filing of the complaint. The Director as rehabilitator, liquidator, or conservator shall be deemed a creditor for purposes of pursuing claims under the Uniform Fraudulent Transfer Act.
    (o) Notwithstanding any provision of this Article to the contrary, a Federal Home Loan Bank shall not be stayed, enjoined, or prohibited from exercising or enforcing any right or cause of action regarding collateral pledged under any security agreement or any pledge, security, collateral or guarantee agreement, or any other similar arrangement or credit enhancement relating to a Federal Home Loan Bank security agreement.
(Source: P.A. 100-89, eff. 8-11-17.)

215 ILCS 5/205

    (215 ILCS 5/205) (from Ch. 73, par. 817)
    Sec. 205. Priority of distribution of general assets.
    (1) The priorities of distribution of general assets from the company's estate is to be as follows:
        (a) The costs and expenses of administration,
    
including, but not limited to, the following:
            (i) The reasonable expenses of the Illinois
        
Insurance Guaranty Fund, the Illinois Life and Health Insurance Guaranty Association, and the Illinois Health Maintenance Organization Guaranty Association and of any similar organization in any other state, including overhead, salaries, and other general administrative expenses allocable to the receivership (administrative and claims handling expenses and expenses in connection with arrangements for ongoing coverage), but excluding expenses incurred in the performance of duties under Section 547 or similar duties under the statute governing a similar organization in another state. For property and casualty insurance guaranty associations that guaranty certain obligations of any member company as defined by Section 534.5, expenses shall include, but not be limited to, loss adjustment expenses, which shall include adjusting and other expenses and defense and cost containment expenses. The expenses of such property and casualty guaranty associations, including the Illinois Insurance Guaranty Fund, shall be reimbursed as prescribed by Section 545, but shall be subordinate to all other costs and expenses of administration, including the expenses reimbursed pursuant to subparagraph (ii) of this paragraph (a).
            (ii) The expenses expressly approved or ratified
        
by the Director as liquidator or rehabilitator, including, but not limited to, the following:
                (1) the actual and necessary costs of
            
preserving or recovering the property of the insurer;
                (2) reasonable compensation for all services
            
rendered on behalf of the administrative supervisor or receiver;
                (3) any necessary filing fees;
                (4) the fees and mileage payable to witnesses;
                (5) unsecured loans obtained by the receiver;
            
and
                (6) expenses approved by the conservator or
        
rehabilitator of the insurer, if any, incurred in the course of the conservation or rehabilitation that are unpaid at the time of the entry of the order of liquidation.
        Any unsecured loan falling under item (5) of
    
subparagraph (ii) of this paragraph (a) shall have priority over all other costs and expenses of administration, unless the lender agrees otherwise. Absent agreement to the contrary, all other costs and expenses of administration shall be shared on a pro-rata basis, except for the expenses of property and casualty guaranty associations, which shall have a lower priority pursuant to subparagraph (i) of this paragraph (a).
        (b) Secured claims, including claims for taxes and
    
debts due the federal or any state or local government, that are secured by liens perfected prior to the filing of the complaint.
        (c) Claims for wages actually owing to employees for
    
services rendered within 3 months prior to the date of the filing of the complaint, not exceeding $1,000 to each employee unless there are claims due the federal government under paragraph (f), then the claims for wages shall have a priority of distribution immediately following that of federal claims under paragraph (f) and immediately preceding claims of general creditors under paragraph (g).
        (d) Claims by policyholders, beneficiaries, and
    
insureds, under insurance policies, annuity contracts, and funding agreements, liability claims against insureds covered under insurance policies and insurance contracts issued by the company, claims of obligees (and, subject to the discretion of the receiver, completion contractors) under surety bonds and surety undertakings (not to include mortgage or financial guaranty, or other forms of insurance offering protection against investment risk), claims by principals under surety bonds and surety undertakings for wrongful dissipation of collateral by the insurer or its agents, and claims incurred during any extension of coverage provided under subsection (5) of Section 193, and claims of the Illinois Insurance Guaranty Fund, the Illinois Life and Health Insurance Guaranty Association, the Illinois Health Maintenance Organization Guaranty Association, and any similar organization in another state as prescribed in Section 545. For purposes of this Section, "funding agreement" means an agreement whereby an insurer authorized to write business under Class 1 of Section 4 of this Code may accept and accumulate funds and make one or more payments at future dates in amounts that are not based upon mortality or morbidity contingencies.
        (e) Claims by policyholders, beneficiaries, and
    
insureds, the allowed values of which were determined by estimation under paragraph (b) of subsection (4) of Section 209.
        (f) Any other claims due the federal government.
        (g) All other claims of general creditors not falling
    
within any other priority under this Section including claims for taxes and debts due any state or local government which are not secured claims and claims for attorneys' fees incurred by the company in contesting its conservation, rehabilitation, or liquidation.
        (h) Claims of guaranty fund certificate holders,
    
guaranty capital shareholders, capital note holders, and surplus note holders.
        (i) Proprietary claims of shareholders, members, or
    
other owners.
    Every claim under a written agreement, statute, or rule providing that the assets in a separate account are not chargeable with the liabilities arising out of any other business of the insurer shall be satisfied out of the funded assets in the separate account equal to, but not to exceed, the reserves maintained in the separate account under the separate account agreement, and to the extent, if any, the claim is not fully discharged thereby, the remainder of the claim shall be treated as a priority level (d) claim under paragraph (d) of this subsection to the extent that reserves have been established in the insurer's general account pursuant to statute, rule, or the separate account agreement.
    For purposes of this provision, "separate account policies, contracts, or agreements" means any policies, contracts, or agreements that provide for separate accounts as contemplated by Section 245.21.
    To the extent that any assets of an insurer, other than those assets properly allocated to and maintained in a separate account, have been used to fund or pay any expenses, taxes, or policyholder benefits that are attributable to a separate account policy, contract, or agreement that should have been paid by a separate account prior to the commencement of receivership proceedings, then upon the commencement of receivership proceedings, the separate accounts that benefited from this payment or funding shall first be used to repay or reimburse the company's general assets or account for any unreimbursed net sums due at the commencement of receivership proceedings prior to the application of the separate account assets to the satisfaction of liabilities or the corresponding separate account policies, contracts, and agreements.
    To the extent, if any, reserves or assets maintained in the separate account are in excess of the amounts needed to satisfy claims under the separate account contracts, the excess shall be treated as part of the general assets of the insurer's estate.
    (2) Within 120 days after the issuance of an Order of Liquidation with a finding of insolvency against a domestic company, the Director shall make application to the court requesting authority to disburse funds to the Illinois Insurance Guaranty Fund, the Illinois Life and Health Insurance Guaranty Association, the Illinois Health Maintenance Organization Guaranty Association, and similar organizations in other states from time to time out of the company's marshaled assets as funds become available in amounts equal to disbursements made by the Illinois Insurance Guaranty Fund, the Illinois Life and Health Insurance Guaranty Association, the Illinois Health Maintenance Organization Guaranty Association, and similar organizations in other states for covered claims obligations on the presentation of evidence that such disbursements have been made by the Illinois Insurance Guaranty Fund, the Illinois Life and Health Insurance Guaranty Association, the Illinois Health Maintenance Organization Guaranty Association, and similar organizations in other states.
    The Director shall establish procedures for the ratable allocation and distribution of disbursements to the Illinois Insurance Guaranty Fund, the Illinois Life and Health Insurance Guaranty Association, the Illinois Health Maintenance Organization Guaranty Association, and similar organizations in other states. In determining the amounts available for disbursement, the Director shall reserve sufficient assets for the payment of the expenses of administration described in paragraph (1)(a) of this Section. All funds available for disbursement after the establishment of the prescribed reserve shall be promptly distributed. As a condition to receipt of funds in reimbursement of covered claims obligations, the Director shall secure from the Illinois Insurance Guaranty Fund, the Illinois Life and Health Insurance Guaranty Association, the Illinois Health Maintenance Organization Guaranty Association, and each similar organization in other states, an agreement to return to the Director on demand funds previously received as may be required to pay claims of secured creditors and claims falling within the priorities established in paragraphs (a), (b), (c), and (d) of subsection (1) of this Section in accordance with such priorities.
    (3) The changes made in this Section by this amendatory Act of the 100th General Assembly apply to all liquidation, rehabilitation, or conservation proceedings that are pending on the effective date of this amendatory Act of the 100th General Assembly and to all future liquidation, rehabilitation, or conservation proceedings.
    (4) The provisions of this Section are severable under Section 1.31 of the Statute on Statutes.
(Source: P.A. 100-410, eff. 8-25-17; 101-652, eff. 1-1-23.)

215 ILCS 5/205.1

    (215 ILCS 5/205.1)
    Sec. 205.1. Policyholder collateral, deductible reimbursements, and other policyholder obligations.
    (a) Any collateral held by, for the benefit of, or assigned to the insurer or the Director as rehabilitator or liquidator to secure the obligations of a policyholder under a deductible agreement shall not be considered an asset of the estate and shall be maintained and administered by the Director as rehabilitator or liquidator as provided in this Section and notwithstanding any other provision of law or contract to the contrary.
    (b) If the collateral is being held by, for the benefit of, or assigned to the insurer or subsequently the Director as rehabilitator or liquidator to secure obligations under a deductible agreement with a policyholder, subject to the provisions of this Section, the collateral shall be used to secure the policyholder's obligation to fund or reimburse claims payment within the agreed deductible amount.
    (c) If a claim that is subject to a deductible agreement and secured by collateral is not covered by any guaranty association or the Illinois Insurance Guaranty Fund and the policyholder is unwilling or unable to take over the handling and payment of the non-covered claims, the Director as rehabilitator or liquidator shall adjust and pay the non-covered claims utilizing the collateral but only to the extent the available collateral after allocation under subsection (d), is sufficient to pay all outstanding and anticipated claims. If the collateral is exhausted and the insured is not able to provide funds to pay the remaining claims within the deductible after all reasonable means of collection against the insured have been exhausted, the Director's obligation to pay such claims from the collateral as the rehabilitator or liquidator terminates, and the remaining claims shall be claims against the insurer's estate subject to complying with other provisions in this Article for the filing and allowance of such claims. When the liquidator determines that the collateral is insufficient to pay all additional and anticipated claims, the liquidator may file a plan for equitably allocating the collateral among claimants, subject to court approval.
    (d) To the extent that the Director as rehabilitator or liquidator is holding collateral provided by a policyholder that was obtained to secure a deductible agreement and to secure other obligations of the policyholder to pay the insurer, directly or indirectly, amounts that become assets of the estate, such as reinsurance obligations under a captive reinsurance program or adjustable premium obligations under a retrospectively rated insurance policy where the premium due is subject to adjustment based upon actual loss experience, the Director as rehabilitator or liquidator shall equitably allocate the collateral among such obligations and administer the collateral allocated to the deductible agreement pursuant to this Section. With respect to the collateral allocated to obligations under the deductible agreement, if the collateral secured reimbursement obligations under more than one line of insurance, then the collateral shall be equitably allocated among the various lines based upon the estimated ultimate exposure within the deductible amount for each line. The Director as rehabilitator or liquidator shall inform the guaranty association or the Illinois Insurance Guaranty Fund that is or may be obligated for claims against the insurer of the method and details of all the foregoing allocations.
    (e) Regardless of whether there is collateral, if the insurer has contractually agreed to allow the policyholder to fund its own claims within the deductible amount pursuant to a deductible agreement, either through the policyholder's own administration of its claims or through the policyholder providing funds directly to a third party administrator who administers the claims, the Director as rehabilitator or liquidator shall allow such funding arrangement to continue and, where applicable, will enforce such arrangements to the fullest extent possible. The funding of such claims by the policyholder within the deductible amount will act as a bar to any claim for such amount in the liquidation proceeding, including but not limited to any such claim by the policyholder or the third party claimant. The funding will extinguish both the obligation, if any, of any guaranty association or the Illinois Insurance Guaranty Fund to pay such claims within the deductible amount, as well as the obligations, if any, of the policyholder or third party administrator to reimburse the guaranty association or the Illinois Insurance Guaranty Fund. No charge of any kind shall be made by the Director as rehabilitator or liquidator against any guaranty association or the Illinois Insurance Guaranty Fund on the basis of the policyholder funding of claims payment made pursuant to the mechanism set forth in this subsection.
    (f) If the insurer has not contractually agreed to allow the policyholder to fund its own claims within the deductible amount, to the extent a guaranty association or the Illinois Insurance Guaranty Fund is required by applicable state law to pay any claims for which the insurer would be or would have been entitled to reimbursement from the policyholder under the terms of the deductible agreement and to the extent the claims have not been paid by a policyholder or third party, the Director as rehabilitator or liquidator shall promptly bill the policyholder for such reimbursement and the policyholder will be obligated to pay such amount to the Director as rehabilitator or liquidator for the benefit of the guaranty association or the Illinois Insurance Guaranty Fund that paid such claims. Neither the insolvency of the insurer, nor its inability to perform any of its obligations under the deductible agreement, shall be a defense to the policyholder's reimbursement obligation under the deductible agreement. When the policyholder reimbursements are collected, the Director as rehabilitator or liquidator shall promptly reimburse the guaranty association or the Illinois Insurance Guaranty Fund for claims paid that were subject to the deductible. If the policyholder fails to pay the amounts due within 60 days after such bill for such reimbursements is due, the Director as rehabilitator or liquidator shall use the collateral to the extent necessary to reimburse the guaranty association or the Illinois Insurance Guaranty Fund, and, at the same time, may pursue other collections efforts against the policyholder. If more than one guaranty association or the Illinois Insurance Guaranty Fund has a claim against the same collateral and the available collateral (after allocation under subsection (d)), along with billing and collection efforts, are together insufficient to pay each guaranty association or the Illinois Insurance Guaranty Fund in full, then the Director as rehabilitator or liquidator will pro-rate payments to each guaranty association or the Illinois Insurance Guaranty Fund based upon the relationship the amount of claims each guaranty association or the Illinois Insurance Guaranty Fund has paid bears to the total of all claims paid by such guaranty association or the Illinois Insurance Guaranty Fund.
    (g) Director's duties and powers as rehabilitator or liquidator.
        (1) The Director as rehabilitator or liquidator is
    
entitled to deduct from reimbursements owed to guaranty associations or the Illinois Insurance Guaranty Fund or collateral to be returned to a policyholder reasonable actual expenses incurred in fulfilling the responsibilities under this provision, not to exceed 3% of the collateral or the total deductible reimbursements actually collected by the Director as rehabilitator or liquidator.
        (2) With respect to claim payments made by any
    
guaranty association or the Illinois Insurance Guaranty Fund, the Director as rehabilitator or liquidator shall promptly provide the court, with a copy to the guaranty associations or the Illinois Insurance Guaranty Fund, with a complete report of the Director's deductible billing and collection activities as rehabilitator or liquidator including copies of the policyholder billings when rendered, the reimbursements collected, the available amounts and use of collateral for each policyholder, and any pro-ration of payments when it occurs. If the Director as rehabilitator or liquidator fails to make a good faith effort within 120 days of receipt of claims payment reports to collect reimbursements due from a policyholder under a deductible agreement based on claim payments made by one or more guaranty associations or the Illinois Insurance Guaranty Fund, then after such 120 day period such guaranty associations or the Illinois Insurance Guaranty Fund may pursue collection from the policyholders directly on the same basis as the Director as rehabilitator or liquidator, and with the same rights and remedies, and will report any amounts so collected from each policyholder to the Director as rehabilitator or liquidator. To the extent that guaranty associations or the Illinois Insurance Guaranty Fund pay claims within the deductible amount, but are not reimbursed by either the Director as rehabilitator, liquidator, or conservator under this Section or by policyholder payments from the guaranty associations' or the Illinois Insurance Guaranty Fund's own collection efforts, the guaranty association or the Illinois Insurance Guaranty Fund shall have a claim in the insolvent insurer's estate for such un-reimbursed claims payments.
        (3) The Director as rehabilitator or liquidator shall
    
periodically adjust the collateral being held as the claims subject to the deductible agreement are run-off, provided that adequate collateral is maintained to secure the entire estimated ultimate obligation of the policyholder plus a reasonable safety factor, and the Director as rehabilitator or liquidator shall not be required to adjust the collateral more than once a year. The guaranty associations or the Illinois Insurance Guaranty Fund shall be informed of all such collateral reviews, including but not limited to the basis for the adjustment. Once all claims covered by the collateral have been paid and the Director as rehabilitator or liquidator is satisfied that no new claims can be presented, the Director as rehabilitator or liquidator will release any remaining collateral to the policyholder.
    (h) The Illinois Circuit Court having jurisdiction over the liquidation proceedings shall have jurisdiction to resolve disputes arising under this provision.
    (i) Nothing in this Section is intended to limit or adversely affect any right the guaranty associations or the Illinois Insurance Guaranty Fund may have under applicable state law to obtain reimbursement from certain classes of policyholders for claims payments made by such guaranty associations or the Illinois Insurance Guaranty Fund under policies of the insolvent insurer, or for related expenses the guaranty associations or the Illinois Insurance Guaranty Fund incur.
    (j) This Section applies to all receivership proceedings under Article XIII that either (1) commence on or after the effective date of this amendatory Act of the 93rd General Assembly or (2) are on file or open on the effective date of this amendatory Act of the 93rd General Assembly and in which an Order of Liquidation is entered on or after May 1, 2004. However, this Section applies to rehabilitation proceedings only to the extent that guaranty associations are required to pay claims and does not apply to receivership proceedings in which only an order of conservation has been entered.
    (k) For purposes of this Section, a "deductible agreement" is any combination of one or more policies, endorsements, contracts, or security agreements, which provide for the policyholder to bear the risk of loss within a specified amount per claim or occurrence covered under a policy of insurance, and may be subject to the aggregate limit of policyholder reimbursement obligations. This Section shall not apply to first party claims, or to claims funded by a guaranty association or the Illinois Insurance Guaranty Fund in excess of the deductible unless subsection (e) above applies. The term "non-covered claim" shall mean a claim that is subject to a deductible agreement and is not covered by a guaranty association or the Illinois Insurance Guaranty Fund.
(Source: P.A. 93-1028, eff. 8-25-04; 94-248, eff. 7-19-05.)

215 ILCS 5/206

    (215 ILCS 5/206) (from Ch. 73, par. 818)
    Sec. 206. Set-offs or counterclaims.
    In all cases of mutual debts or mutual credits between the company and another person, such credits and debts shall be set off or counterclaimed and the balance only shall be allowed or paid, provided, however, that no set-off or counterclaim shall be allowed in favor of any person where
    (a) the obligation of the company to such person was purchased by or transferred to such person with a view of its being used as a set-off or counterclaim, or
    (b) the obligation of such person is to pay an assessment levied against the members or subscribers of any company which issued assessable policies, or to pay a balance upon a subscription to the shares of a stock company.
    No set-off shall be allowed in favor of an insurance agent or broker against his account with the company, for the unearned portion of the premium on any cancelled policy, unless that policy was cancelled prior to the entry of the Order of Liquidation or Rehabilitation, and unless the unearned portion of the premium on that cancelled policy was refunded or credited to the assured or his representative prior to the entry of the Order of Liquidation or Rehabilitation.
(Source: Laws 1967, p. 789.)

215 ILCS 5/206.1

    (215 ILCS 5/206.1)
    Sec. 206.1. Qualified financial contracts.
    (a) Notwithstanding any other provision of this Article, including any other provision of this Article permitting the modification of contracts, or other law of a state, no person shall be stayed or prohibited from exercising:
        (1) a contractual right to cause the termination,
    
liquidation, acceleration, or close out of obligations under or in connection with any netting agreement or qualified financial contract with an insurer because of:
            (A) the insolvency, financial condition, or
        
default of the insurer at any time, provided that the right is enforceable under an applicable law other than this Code; or
            (B) the commencement of a formal delinquency
        
proceeding under this Code;
        (2) any right under a pledge, security, collateral,
    
reimbursement or guarantee agreement or arrangement, any other similar security agreement or arrangement, or other credit enhancement relating to one or more netting agreements or qualified financial contracts;
        (3) subject to any provision of Section 206 of this
    
Article, any right to set off or net out any termination value, payment amount, or other transfer obligation arising under or in connection with one or more qualified financial contracts where the counterparty or its guarantor is organized under the laws of the United States or a state or a foreign jurisdiction approved by the Securities Valuation Office of the National Association of Insurance Commissioners as eligible for netting; or
        (4) if a counterparty to a master netting agreement
    
or a qualified financial contract with an insurer subject to a proceeding under this Article terminates, liquidates, closes out or accelerates the agreement or contract, then damages shall be measured as of the date or dates of termination, liquidation, close out, or acceleration; the amount of a claim for damages shall be actual direct compensatory damages calculated in accordance with subsection (f) of this Section.
    (b) Upon termination of a netting agreement or qualified financial contract, the net or settlement amount, if any, owed by a nondefaulting party to an insurer against which an application or petition has been filed under this Code shall be transferred to or on the order of the receiver for the insurer, even if the insurer is the defaulting party, notwithstanding any walkaway clause in the netting agreement or qualified financial contract.
    For the purposes of this subsection (b), the term "walkaway clause" means a provision in a netting agreement or a qualified financial contract that, after calculation of a value of a party's position or an amount due to or from one of the parties in accordance with its terms upon termination, liquidation, or acceleration of the netting agreement or qualified financial contract, either does not create a payment obligation of a party or extinguishes a payment obligation of a party in whole or in part solely because of the party's status as a nondefaulting party. Any limited 2-way payment or first method provision in a netting agreement or qualified financial contract with an insurer that has defaulted shall be deemed to be a full 2-way payment or second method provision as against the defaulting insurer. Any such property or amount shall, except to the extent that it is subject to one or more secondary liens or encumbrances or rights of netting or setoff, be a general asset of the insurer.
    (c) In making any transfer of a netting agreement or qualified financial contract of an insurer subject to a proceeding under this Code, the receiver shall either:
        (1) transfer to one party (other than an insurer
    
subject to a proceeding under this Article) all netting agreements and qualified financial contracts between a counterparty or any affiliate of the counterparty and the insurer that is the subject of the proceeding, including:
            (A) all rights and obligations of each party
        
under each netting agreement and qualified financial contract; and
            (B) all property, including any guarantees or
        
other credit enhancement, securing any claims of each party under each netting agreement and qualified financial contract; or
        (2) transfer none of the netting agreements,
    
qualified financial contracts, rights, obligations, or property referred to in paragraph (1) of this subsection (c) (with respect to the counterparty and any affiliate of the counterparty).
    (d) If a receiver for an insurer makes a transfer of one or more netting agreements or qualified financial contracts, then the receiver shall use its best efforts to notify any person who is party to the netting agreements or qualified financial contracts of the transfer by 12:00 noon (the receiver's local time) on the business day following the transfer. For the purposes of this subsection (d), "business day" means a day other than a Saturday, Sunday, or any day on which either the New York Stock Exchange or the Federal Reserve Bank of New York is closed.
    (e) Notwithstanding any other provision of this Article, a receiver may not avoid a transfer of money or other property arising under or in connection with a netting agreement or qualified financial contract (or any pledge, security, collateral, or guarantee agreement or any other similar security arrangement or credit support document relating to a netting agreement or qualified financial contract) that is made before the commencement of a formal delinquency proceeding under this Article.
    (f) The following provisions shall apply concerning disaffirmance and repudiation:
        (1) In exercising the rights of disaffirmance or
    
repudiation of a receiver with respect to any netting agreement or qualified financial contract to which an insurer is a party, the receiver for the insurer shall either:
            (A) disaffirm or repudiate all netting agreements
        
and qualified financial contracts between a counterparty or any affiliate of the counterparty and the insurer that is the subject of the proceeding; or
            (B) disaffirm or repudiate none of the netting
        
agreements and qualified financial contracts referred to in subparagraph (A) (with respect to the person or any affiliate of the person).
        (2) Notwithstanding any other provision of this
    
Article, any claim of a counterparty against the estate arising from the receiver's disaffirmance or repudiation of a netting agreement or qualified financial contract that has not been previously affirmed in the liquidation or immediately preceding a conservation or rehabilitation case shall be determined and shall be allowed or disallowed as if the claim had arisen before the date of the filing of the petition for liquidation or, if a conservation or rehabilitation proceeding is converted to a liquidation proceeding, as if the claim had arisen before the date of the filing of the petition for conservation or rehabilitation. The amount of the claim shall be the actual direct compensatory damages determined as of the date of the disaffirmance or repudiation of the netting agreement or qualified financial contract. The term "actual direct compensatory damages" does not include punitive or exemplary damages, damages for lost profit or lost opportunity, or damages for pain and suffering, but does include normal and reasonable costs of cover or other reasonable measures of damages utilized in the derivatives, securities, or other market for the contract and agreement claims.
    (g) The term "contractual right", as used in this Section, includes any right set forth in a rule or bylaw of a derivatives clearing organization, as defined in the Commodity Exchange Act; a multilateral clearing organization, as defined in the Federal Deposit Insurance Corporation Improvement Act of 1991; a national securities exchange; a national securities association; a securities clearing agency; a contract market designated under the Commodity Exchange Act; a derivatives transaction execution facility registered under the Commodity Exchange Act; or a board of trade, as defined in the Commodity Exchange Act or in a resolution of the governing board thereof and any right, whether or not evidenced in writing, arising under statutory or common law or under law merchant or by reason of normal business practice.
    (h) The provisions of this Section shall not apply to persons who are affiliates of the insurer that is the subject of the proceeding.
    (i) All rights of counterparties under this Article shall apply to netting agreements and qualified financial contracts entered into on behalf of the general account or separate accounts if the assets of each separate account are available only to counterparties to netting agreements and qualified financial contracts entered into on behalf of that separate account.
(Source: P.A. 96-1450, eff. 8-20-10.)

215 ILCS 5/207.1

    (215 ILCS 5/207.1) (from Ch. 73, par. 819.1)
    Sec. 207.1. Contingent Liability Policies.
    Upon the entry of an order of liquidation any provision in the policies of a company providing for a contingent liability of the policyholders shall become void.
(Source: P.A. 76-715.)

215 ILCS 5/208

    (215 ILCS 5/208) (from Ch. 73, par. 820)
    Sec. 208. Time to file claims.
    (1) When in a liquidation, rehabilitation, or conservation proceeding against an insurer under this Article an order has been entered for the filing of claims, all persons who may have claims against such insurer shall present the same to the Liquidator, Rehabilitator or Conservator, as the case may be, at a place specified in the notice for filing of claims within such time as may be fixed by order of the Court. The Director shall notify all persons who may have claims against such insurer as disclosed by its books and records, to present the same to him within the time as fixed. The last date for the filing of proof of claim shall be specified in the notice. Such notice shall be given in a manner determined by the Court. The Director shall also cause a notice specifying the last day for filing of claims to be published once a week for three consecutive weeks in a newspaper published in the county where such proceedings are pending and in such other newspapers as he may deem advisable.
    (2) Proofs of claim on good cause shown may be filed after the date specified, but except as provided in subsection (3), no such claim shall share in the distribution of assets until all allowed claims proofs of which have been filed before said date, have been paid in full.
    (3) The Director may deem proofs of claim filed after the date specified as timely filed when the claimant shows to the Director's reasonable satisfaction that (i) the claimant had no actual knowledge of the date before it had passed, (ii) a proof of claim was not sent to the claimant until after the date had passed, and (iii) the Director knew of the claimant's existence and correct address before the date had passed. Any such claim shall share in the distribution of assets under Section 205.
(Source: P.A. 88-297.)

215 ILCS 5/209

    (215 ILCS 5/209) (from Ch. 73, par. 821)
    Sec. 209. Proof and allowance of claims.
    (1) The following provisions shall apply concerning proof and allowance of claims:
        (a) Proof of claim shall consist of a statement
    
signed by the claimant or on behalf of the claimant that includes all of the following that are applicable:
            (i) the particulars of the claim including the
        
consideration given for it;
            (ii) the identity and amount of the security on
        
the claim;
            (iii) the payments made on the debt, if any;
            (iv) that the sum claimed is justly owing and
        
that there is no setoff, counterclaim, or defense to the claim;
            (v) any right of priority of payment or other
        
specific right asserted by the claimant;
            (vi) the name and address of the claimant and the
        
attorney, if any, who represents the claimant; and
            (vii) the claimant's social security or federal
        
employer identification number.
        (b) The Director may require that a prescribed form
    
be used and may require that other information and documents be included.
        (c) At any time the Director may require the claimant
    
to present information or evidence supplementary to that required under paragraph (a) and may take testimony under oath, require production of affidavits or depositions, or otherwise obtain additional information or evidence.
    (2) Whenever a claim is based upon a document, the document, unless lost or destroyed, shall be filed with the proof of claim. If the document is lost or destroyed, a statement of that fact and of the circumstances of the loss or destruction shall be included in the proof of claim. A claim may be allowed even if contingent or unliquidated as of the date fixed by the court pursuant to subsection (a) of Section 194 if it is filed in accordance with this subsection. Except as otherwise provided in subsection (7), a proof of claim required under this Section must identify a known loss or occurrence.
    (3) Upon the liquidation, rehabilitation, or conservation of any company which has issued policies insuring the lives of persons, the Director shall, within a reasonable time, after the last day set for the filing of claims, make a list of the persons who have not filed proofs of claim with him and whose rights have not been reinsured, to whom it appears from the books of the company, there are owing amounts on such policies and he shall set opposite the name of each person such amount so owing to such person. The Director shall incur no personal liability by reason of any mistake in such list. Each person whose name shall appear upon said list shall be deemed to have duly filed prior to the last day set for filing of claims a proof of claim for the amount set opposite his name on said list.
    (4)(a) When a Liquidation, Rehabilitation, or Conservation Order has been entered in a proceeding against an insurer under this Code, any insured under an insurance policy shall have the right to file a contingent claim. The Court at the time of the entry of the Order of Liquidation, Rehabilitation or Conservation shall fix the final date for the liquidation of insureds' contingent claims, but in no event shall said date be more than 3 years after the last day fixed for the filing of claims, provided, such date may be extended by the Court on petition of the Director should the Director determine that such extension will not delay distribution of assets under Section 210. Such a contingent claim shall be allowed if such claim is liquidated and the insured claimant presents evidence of payment of such claim to the Director on or before the last day fixed by the Court.
    (b) When an insured has been unable to liquidate its claim under paragraph (a) of this subsection (4), the insured may have its claim allowed by estimation if (i) it may be reasonably inferred from the proof presented upon the claim that a claim exists under the policy; (ii) the insured has furnished suitable proof, unless the court for good cause shown shall otherwise direct, that no further valid claims against the insurer arising out of the cause of action other than those already presented can be made, and (iii) the total liability of the insurer to all claimants arising out of the same act shall be no greater than its total liability would be were it not in liquidation, rehabilitation, or conservation.
    (5) The obligation of the insurer, if any, to defend or continue the defense of any claim or suit under a liability insurance policy shall terminate on the entry of the Order of Liquidation, Rehabilitation or Conservation, except during the appeal of an Order of Liquidation as provided by Section 190.1 or, unless upon the petition of the Director, the court directs otherwise. Insureds may include in contingent claims reasonable attorneys fees for services rendered subsequent to the date of Liquidation, Rehabilitation or Conservation in defense of claims or suits covered by the insured's policy provided such attorneys fees have actually been paid by the assured and evidence of payment presented in the manner required for insured's contingent claims.
    (6) When a liquidation, rehabilitation, or conservation order has been entered in a proceeding against an insurer under this Code, any person who has a cause of action against an insured of the insurer under an insurance policy issued by the insurer shall have the right to file a claim in the proceeding, regardless of the fact that the claim may be contingent, and the claim may be allowed by estimation (a) if it may be reasonably, inferred from proof presented upon the claim that the claimant would be able to obtain a judgment upon the cause of action against the insured; and (b) if the person has furnished suitable proof, unless the court for good cause shown shall otherwise direct, that no further valid claims against the insurer arising out of the cause of action other than those already presented can be made, and (c) the total liability of the insurer to all claimants arising out of the same act shall be no greater than its total liability would be were it not in liquidation, rehabilitation, or conservation.
    (7) Contingent or unliquidated general creditors' and ceding insurers' claims that are not made absolute and liquidated by the last day fixed by the court pursuant to subsection (4) may be determined and allowed by estimation. Any such estimate shall be based upon an actuarial evaluation made with reasonable actuarial certainty or upon another accepted method of valuing claims with reasonable certainty and, with respect to ceding insurers' claims, may include an estimate of incurred but not reported losses.
    (7.5) (a) The estimation and allowance of the loss development on a known loss or occurrence shall trigger a reinsurer's obligation to pay pursuant to its reinsurance contract with the insolvent company, provided that the allowance is made in accordance with paragraph (b) of subsection (4) or subsection (6). The Director shall have the authority to exercise all available remedies on behalf of the insolvent company to marshal these reinsurance recoverables.
    (b) That portion of any estimated and allowed contingent claim that is attributable to claims incurred but not reported to the insolvent company's reinsured shall not be billable to the insolvent company's reinsurers, except to the extent that (A) such claims develop into known losses or occurrences and become billable under paragraph (a) of this subsection or (B) the reinsurance contract specifically provides for the payment of such losses or reserves.
    (c) Notwithstanding any other provision of this Code, the liquidator may negotiate a voluntary commutation and release of all obligations arising from reinsurance contracts or other agreements.
    (8) No judgment against such an insured or an insurer taken after the date of the entry of the liquidation, rehabilitation, or conservation order shall be considered in the proceedings as evidence of liability, or of the amount of damages, and no judgment against an insured or an insurer taken by default, or by collusion prior to the entry of the liquidation order shall be considered as conclusive evidence in the proceeding either of the liability of such insured to such person upon such cause of action or of the amount of damages to which such person is therein entitled.
    (9) The value of securities held by secured creditors shall be determined by converting the same into money according to the terms of the agreement pursuant to which such securities were delivered to such creditors, or by such creditors and the Director by agreement, or by the court, and the amount of such value shall be credited upon the claims of such secured creditors and their claims allowed only for the balance.
    (10) Claims of creditors or policyholders who have received preferences voidable under Section 204 or to whom conveyances or transfers, assignments or incumbrances have been made or given which are void under Section 204, shall not be allowed unless such creditors or policyholders shall surrender such preferences, conveyances, transfers, assignments or incumbrances.
    (11)(a) When the Director denies a claim or allows a claim for less than the amount requested by the claimant, written notice of the determination and of the right to object shall be given promptly to the claimant or the claimant's representative by first class mail at the address shown on the proof of claim. Within 60 days from the mailing of the notice, the claimant may file his written objections with the Director. If no such filing is made on a timely basis, the claimant may not further object to the determination.
    (b) Whenever objections are filed with the Director and he does not alter his determination as a result of the objection and the claimant continues to object, the Director shall petition the court for a hearing as soon as practicable and give notice of the hearing by first class mail to the claimant or his representative and to any other persons known by the Director to be directly affected, not less than 10 days before the date of the hearing.
    (12) The Director shall review all claims duly filed in the liquidation, rehabilitation, or conservation proceeding, unless otherwise directed by the court, and shall make such further investigation as he considers necessary. The Director may compound, compromise, or in any other manner negotiate the amount for which claims will be recommended to the court. Unresolved disputes shall be determined under subsection (11).
    (13)(a) The Director shall present to the court reports of claims reviewed under subsection (12) with his recommendations as to each claim.
    (b) The court may approve or disapprove any recommendations contained in the reports of claims filed by the Director, except that the Director's agreements with claimants shall be accepted as final by the court on claims settled for $10,000 or less.
    (14) The changes made in this Section by this amendatory Act of 1993 apply to all liquidation, rehabilitation, or conservation proceedings that are pending on the effective date of this amendatory Act of 1993 and to all future liquidation, rehabilitation, or conservation proceedings, except that the changes made to the provisions of this Section by this amendatory Act of 1993 shall not apply to any company ordered into liquidation on or before January 1, 1982.
    (15) The changes made in this Section by this amendatory Act of the 93rd General Assembly do not apply to any company ordered into liquidation on or before January 1, 2004.
(Source: P.A. 96-1450, eff. 8-20-10.)

215 ILCS 5/210

    (215 ILCS 5/210) (from Ch. 73, par. 822)
    Sec. 210. Distribution of assets; priorities; unpaid dividends.
    (1) Any time after the last day fixed for the filing of proofs of claims in the liquidation of a company, the court may, upon the application of the Director authorize him to declare out of the funds remaining in his hands, one or more dividends upon all claims allowed in accordance with the priorities established in Section 205.
    (2) Where there has been no adjudication of insolvency, the Director shall pay all allowed claims in full in accordance with the priorities set forth in Section 205. The director shall not be chargeable for any assets so distributed to any claimant who has failed to file a proper proof of claim before such distribution has been made.
    (3) When subsequent to an adjudication of insolvency, pursuant to Section 208, a surplus is found to exist after the payment in full of all allowed claims falling within the priorities set forth in paragraphs (a), (b), (c), (d), (e), (f) and (g) of subsection (1) of Section 205 and which have been duly filed prior to the last date fixed for the filing thereof, and after the setting aside of a reserve for all additional costs and expenses of the proceeding, the court shall set a new date for the filing of claims. After the expiration of the new date, all allowed claims filed on or before said new date together with all previously allowed claims falling within the priorities set forth in paragraphs (h) and (i) of subsection (1) of Section 205 shall be paid in accordance with the priorities set forth in Section 205.
    (4) Dividends remaining unclaimed or unpaid in the hands of the Director for 6 months after the final order of distribution may be by him deposited in one or more savings and loan associations, State or national banks, trust companies or savings banks to the credit of the Director, whomsoever he may be, in trust for the person entitled thereto, but no such person shall be entitled to any interest upon such deposit. All such deposits shall be entitled to priority of payment in case of the insolvency or voluntary or involuntary liquidation of the depositary on an equality with any other priority given by the banking law. Any such funds together with interest, if any, paid or credited thereon, remaining and unclaimed in the hands of the Director in Trust after 2 years shall be presumed abandoned and reported and delivered to the State Treasurer and become subject to the provisions of the Revised Uniform Unclaimed Property Act.
(Source: P.A. 100-22, eff. 1-1-18.)

215 ILCS 5/211.1

    (215 ILCS 5/211.1)
    Sec. 211.1. Termination of proceedings.
    (a) When all assets justifying the expense of collection and distribution have been marshaled and distributed under this Code, the Director as liquidator shall petition the court to terminate the liquidation proceedings and to close the estate. The court may grant such other relief as may be appropriate, including a full discharge of all liability and responsibility of the liquidator, a reservation of assets for administrative expenses incurred in the closing of the estate, and the maintenance and destruction of records.
    (b) Subject to the approval of the court, after the completion of all postclosure activities for which moneys were reserved, the Director is authorized to destroy company records and documents notwithstanding any other applicable statutes and any remaining reserved assets that are provided for in subsection (a) and that may not be practicably or economically distributed to claimants shall be deposited into a segregated account to be known as the Closed Estate Fund Trust Account. The Director may use moneys held in the account for paying the administrative expenses of companies subject to this Article that lack sufficient assets to allow the Director to perform his duties and obligations under this Article. An annual audit of the Closed Estate Fund Trust Account shall be performed in accordance with Section 200 of this Code regardless of its balance.
    (c) The Director may petition the court to reopen the proceedings for good cause shown, including the marshaling of additional assets, and the court may enter such other orders as may be deemed appropriate.
(Source: P.A. 88-297; 89-206, eff. 7-21-95.)

215 ILCS 5/212.1

    (215 ILCS 5/212.1)
    Sec. 212.1. Subpoena and document production. The court shall have jurisdiction, upon, or at any time after the filing of the complaint, upon the petition of the Director to subpoena witnesses and compel their attendance, administer oaths, examine any person under oath and compel any person to subscribe to his or her testimony after it has been correctly reduced to writing, and to require the production of any books, papers, records, or other documents.
(Source: P.A. 88-297.)

215 ILCS 5/213.5

    (215 ILCS 5/213.5)
    Sec. 213.5. Severability. The provisions of this Article are severable under Section 1.31 of the Statute on Statutes.
(Source: P.A. 89-206, eff. 7-21-95.)

215 ILCS 5/221

    (215 ILCS 5/221) (from Ch. 73, par. 833)
    Sec. 221. Continuation of existing proceedings. Every proceeding heretofore commenced under "An Act in relation to delinquent insurance companies, associations and societies," approved June 26, 1925, as from time to time amended, which is repealed by this Code shall be continued as if said Act had not been repealed, but assessments against members or subscribers of any company which has issued assessable policies or contracts of insurance may be made in accordance with Section 193.
(Source: P.A. 83-333.)

215 ILCS 5/Art. XIII.5

 
    (215 ILCS 5/Art. XIII.5 heading)
ARTICLE XIII 1/2. UNIFORM PROVISIONS FOR LIQUIDATION

215 ILCS 5/221.1

    (215 ILCS 5/221.1) (from Ch. 73, par. 833.1)
    Sec. 221.1. Definitions.
    For the purposes of Sections 221.1 to 221.10, both inclusive, the following terms have the following meanings;
    (1) "Reciprocal State" means a state wherein:
    (a) it is provided by law that the insurance supervisory or other administrative agency of the state shall conduct or wind up the affairs of delinquent companies under judicial supervision and shall be vested with title to all of the assets of any domestic company against which a delinquency proceeding has been commenced, and
    (b) in substance and effect the provisions of Sections 221.1 to 221.10, both inclusive are in force.
    (2) "Insurer" means any person, firm, corporation, association, or aggregation of persons doing or proposing to do an insurance business and subject to the insurance supervisory authority of, or to liquidation, rehabilitation, reorganization or conservation by, the commissioner of insurance or equivalent insurance supervisory official of the state.
    (3) "Delinquency proceeding" means any proceeding commenced against an insurer for the purpose of liquidating, rehabilitating, reorganizing or conserving such insurer.
    (4) "Domiciliary state" means the state in which an insurer is incorporated or organized or, in the case of an insurer incorporated or organized in a foreign country, the state in which such insurer, having become authorized to do business in such state has, at the commencement of delinquency proceedings the largest amount of its trusteed assets and deposits for the benefit of its policy holder or policy holders and creditors in the United States; and "domiciliary insurer" means an insurer in its domiciliary state.
    (5) "Ancillary state" means any state other than a domiciliary state.
    (6) "General Assets" means all property, real or personal, not specifically mortgaged, pledged, deposited as security or otherwise encumbered, and as to such specifically encumbered property the term includes all in excess of the amount necessary to discharge the sum or sums secured.
    (7) "Preferred claim" means any claim with respect to which the law of a state or of the United States accords priority of payment from the general assets of the insurer.
    (8) "Special deposit claim" means any claims secured generally by a deposit of a fund or property or bond which deposit has been made to secure the payment of all claims of a particular description or all claims of persons resident in a particular state. The term does not include claims which are secured by deposit for the benefit or protection of all claimants against the insurer in the United States.
    (9) "Secured claim" means any claim secured individually by mortgage, trust, deed, pledge, deposit as security, escrow or otherwise. The term also includes claims which prior to the commencement of delinquency proceedings in the state of the insurer's domicile have become liens upon specific assets by reason of judicial process.
    (10) "State" means any state or territory of the United States, and the District of Columbia.
    (11) "Foreign country" means territory outside of any state, as defined.
    (12) "Receiver" means receiver, liquidator, rehabilitator or conservator as the context may require.
    In addition to and notwithstanding any other provisions of law, this Article shall apply to the administration by the Director of the affairs of delinquent domestic companies with respect to matters affecting or related to reciprocal states, and shall also apply to matters affecting or related to this State in the administration by the Director of the affairs of delinquent companies domiciled in reciprocal states and authorized to transact business in this State.
(Source: Laws 1941, vol. 1, p. 832.)

215 ILCS 5/221.2

    (215 ILCS 5/221.2) (from Ch. 73, par. 833.2)
    Sec. 221.2. Ancillary delinquency proceedings.
    After the commencement of delinquency proceedings in a reciprocal state against an insurer domiciliary in such state, a court of competent jurisdiction in this State shall on the petition of the Director of Insurance of this State appoint such Director of Insurance as ancillary receiver in this State of such insurer. The Director of Insurance shall file such petition (a) if he finds that there are sufficient assets of such insurer located in this State to justify the appointment of an ancillary receiver or (b) if 10 or more persons resident in a state having claims against such insurer file a petition or petitions in writing with the Director requesting the appointment of such ancillary receiver. As ancillary receiver the Director shall have the right to sue for and reduce to possession the assets of such insurer in this State, and, subject to the rights of the domiciliary receiver, he shall have the same powers and be subject to the same duties with respect to such assets, as are possessed by a receiver of a domiciliary insurer under the laws of this State. The domiciliary receiver of an insurer domiciled in a reciprocal state shall, except as to special deposits and security on secured claims pursuant to Section 221.7, be vested by operation of law with the title to all of the assets, property, contracts, agents' balances, and all of the books, accounts and other records of the insurer located in this State; and shall have the immediate right to recover balances due from resident agents and to obtain possession of any books and records of the insurer found in this State.
(Source: P.A. 89-206, eff. 7-21-95.)

215 ILCS 5/221.3

    (215 ILCS 5/221.3) (from Ch. 73, par. 833.3)
    Sec. 221.3. Filing and proving of claims of non-residents against delinquent domiciliary insurers.
    In any delinquency proceeding begun in this state against a domiciliary insurer of this state, claimants residing in a reciprocal ancillary state may file claims either with the ancillary receiver, if any, or with the domiciliary receiver. All such claims must be filed on or before the last date fixed for the filing of claims in the domiciliary delinquency proceedings.
    In any such proceeding controverted claims belonging to claimants residing in ancillary states may either (a) be proved in this state as provided by law, or (b) if ancillary proceedings have been commenced in such ancillary state, may be proved in such ancillary proceedings. In the event a claimant elects to prove his claim in ancillary proceedings, and, if notice of the claim and opportunity to appear and be heard is afforded the domiciliary receiver of this state, such claim, when allowed by the court in the ancillary state, shall be accepted in this state as final and conclusive as to its amount, and shall also be accepted as final and conclusive as to its priority, if any, as against special deposits or other security located within the ancillary state.
(Source: Laws 1941, vol. 1, p. 832.)

215 ILCS 5/221.4

    (215 ILCS 5/221.4) (from Ch. 73, par. 833.4)
    Sec. 221.4. Proof of claims of residents in connection with delinquency proceedings in other states.
    If a delinquency proceeding is commenced in a reciprocal state against an insurer domiciliary in such state, claimants against such insurer who reside within this State may file claims either with the ancillary receiver, if any, appointed in this State or with the domiciliary receiver. All such claims must be filed on or before the last date fixed for the filing of claims in the domiciliary delinquency proceeding.
    In any such proceeding controverted claims belonging to claimants residing in this State may either (a) be proved in the domiciliary state as provided by the law of such state, or (b) if ancillary proceedings have been commenced in this State, be proved in such ancillary proceedings. In the event that any such claimant elects to prove his claim in this State, he shall file his claim with the ancillary receiver in the manner provided by the law of this State for the proving of claims against domiciliary insurers, and he shall give, or cause to be given, at least 40 days prior to the date of hearing, notice to the receiver in the domiciliary state, either by mail or otherwise in writing that such claim is being made to such ancillary receiver and the nature and the amount thereof. The domiciliary receiver shall be entitled to appear or to be represented in any proceeding in this State involving the adjudication of the claim. The allowance of the claim by the courts of this State shall be final and conclusive both as to its amount and also as to its priority, if any, against special deposits or other security located within this State.
(Source: P.A. 89-206, eff. 7-21-95.)

215 ILCS 5/221.5

    (215 ILCS 5/221.5) (from Ch. 73, par. 833.5)
    Sec. 221.5. Priority of preferred claims.
    In any delinquency proceeding against a domiciliary insurer of this state, claims owing to residents of ancillary reciprocal states shall be deemed preferred claims if, and only if, like claims are preferred under the laws of this state. All such claims whether owing to residents or non-residents shall be given equal priority of payment from general assets. No law of an ancillary state providing for preferred claims against the general assets of insurers shall be recognized as against the assets of delinquent domiciliary insurers of this state regardless of where such assets may be located.
    In any delinquency proceeding against an insurer domiciliary in a reciprocal state, claims owing to residents of this state shall be preferred if, and only if, like claims are preferred by the laws of such other state.
(Source: Laws 1941, vol. 1, p. 832.)

215 ILCS 5/221.6

    (215 ILCS 5/221.6) (from Ch. 73, par. 833.6)
    Sec. 221.6. Priority of special deposit claims.
    The owners of special deposit claims against an insurer for which a receiver has been appointed in a delinquency proceeding in this or any reciprocal state shall be given priority against their several special deposits in accordance with the provisions of the statutes requiring the creation and maintenance of such special deposits. If there be a deficiency in any such special deposit so that the claims secured thereby are not fully discharged therefrom, the claimants may share in the general assets, but such sharing shall be deferred until general creditors, and also claimants against other special deposits who have received a small percentage from their respective special deposits, have been paid percentages of their claims equal to the percentage paid from such special deposit, it being the purpose and intent of this provision to equalize to this extent the advantage gained by the security provided by such special deposits.
(Source: Laws 1941, vol. 1, p. 832.)

215 ILCS 5/221.7

    (215 ILCS 5/221.7) (from Ch. 73, par. 833.7)
    Sec. 221.7. Priority of secured claims.
    The owner of a secured claim against an insurer for which a receiver has been appointed in a delinquency proceeding in this or any reciprocal state may surrender his security and file his claim as a general creditor, or such secured claim may be discharged by resort to the security, in which case the deficiency, if any, shall be treated as a claim against the general assets of the insurer on the same basis as claims of unsecured creditors. If the amount of the deficiency has been adjudicated in ancillary proceedings as provided in this Article, that amount shall be conclusive; otherwise the amount of such deficiency shall be ascertained and determined in the delinquency proceeding in the domiciliary state of such insurer.
(Source: P.A. 89-206, eff. 7-21-95.)

215 ILCS 5/221.8

    (215 ILCS 5/221.8) (from Ch. 73, par. 833.8)
    Sec. 221.8. Right of domiciliary receiver to residium of assets of insurers domiciled in ancillary states.
    The ancillary receiver of assets in this State of insurers domiciliary in reciprocal states and subject to delinquency proceedings therein shall, as soon as practicable, arrange the liquidation or other disposition of special deposit claims and secured claims proved in the ancillary proceedings in this State, and all remaining assets, after payment of expenses he shall promptly transfer to the domiciliary receiver.
    The domiciliary receiver of a reciprocal state may sue the ancillary receiver of this State in the courts of this State for the purpose of collecting or obtaining any assets of the insurer to which he or she may be entitled under the laws of this State, and, if no ancillary receiver be appointed in this State, such domiciliary receiver may collect or reduce to possession, in this State, and may sue in the courts of this State to obtain, any assets of such delinquent insurer located in this State, to which he or she may be entitled under the laws of this State.
(Source: P.A. 89-206, eff. 7-21-95.)

215 ILCS 5/221.9

    (215 ILCS 5/221.9) (from Ch. 73, par. 833.9)
    Sec. 221.9. Attachment and garnishment of assets.
    In the event of the commencement of delinquency proceedings in any reciprocal state no action or proceeding in the nature of an attachment, garnishment, execution or otherwise, shall be commenced in the courts of this state against such delinquent insurer or its assets.
(Source: Laws 1941, vol. 1, p. 832.)

215 ILCS 5/221.10

    (215 ILCS 5/221.10) (from Ch. 73, par. 833.10)
    Sec. 221.10. Declaration of purpose.
    The purpose of Sections 221.1 to 221.10, both inclusive is to promote uniformity in the liquidation, rehabilitation, reorganization or conservation of insurers doing business in more than one state. It is intended that Sections 221.1 to 221.10, both inclusive shall be liberally construed to the end that so far as possible the assets of such insurers shall be equally and uniformly conserved in all states, and that claimants against such insurers shall receive equal and uniform treatment irrespective of residence or the place of the acts or contracts upon which their claims are based. The provisions of Sections 221.1 to 221.10, both inclusive shall be effective only with respect to this state and other states in which (a) it is provided by law that only the Insurance Commissioner or equivalent supervisory official of the State shall be vested with title to the assets of, and shall wind up the affairs of, delinquent insurers under judicial supervision; and (b) in substance and effect the provisions of Sections 221.1 to 221.10, both inclusive, are in force. The provisions of Sections 221.1 to 221.10, both inclusive, insofar as applicable to any insurer incorporated or organized in a foreign country, shall apply only to the assets, liabilities and business of such insurer within the several states.
(Source: Laws 1941, vol. 1, p. 832.)

215 ILCS 5/221.11

    (215 ILCS 5/221.11) (from Ch. 73, par. 833.11)
    Sec. 221.11. Proceedings governed by Civil Practice Law and Supreme Court Rules.) The rules of practice, the course and method of procedure in circuit courts as established by the Civil Practice Law and Supreme Court Rules and any amendments thereto are adopted for the purposes of this Article except where other procedures or rules are in this Article expressly provided. Appeals may be taken as in other civil cases.
(Source: P.A. 82-783.)

215 ILCS 5/221.12

    (215 ILCS 5/221.12) (from Ch. 73, par. 833.12)
    Sec. 221.12. Sections 211, 212, 213, 214, 215, 216, 217, 218, 219 and 220, each inclusive, are repealed; provided, however, that every proceeding heretofore commenced under such sections shall be continued as though such sections had not been repealed.
(Source: Laws 1941, vol. 1, p. 832.)

215 ILCS 5/221.13

    (215 ILCS 5/221.13) (from Ch. 73, par. 833.13)
    Sec. 221.13. Uniformity of interpretation.
    Sections 221.1 to 221.12 each inclusive, of this Article shall be so interpreted and construed as to effectuate their general purpose to make uniform the law of those states that enact the Uniform Reciprocal Liquidation Act.
(Source: Laws 1941, vol. 1, p. 832.)

215 ILCS 5/Art. XIV

 
    (215 ILCS 5/Art. XIV heading)
ARTICLE XIV. LEGAL RESERVE LIFE INSURANCE

215 ILCS 5/222

    (215 ILCS 5/222) (from Ch. 73, par. 834)
    Sec. 222. Scope of article.
    This article shall apply to all stock and mutual legal reserve life companies, and to the extent provided in section 281 to assessment legal reserve life companies, authorized to transact in this State the kind or kinds of business described in Class 1 of section 4.
(Source: Laws 1937, p. 696.)

215 ILCS 5/223

    (215 ILCS 5/223) (from Ch. 73, par. 835)
    Sec. 223. Director to value policies - Legal standard of valuation.
    (1) For policies and contracts issued prior to the operative date of the Valuation Manual, the Director shall annually value, or cause to be valued, the reserve liabilities (hereinafter called reserves) for all outstanding life insurance policies and annuity and pure endowment contracts of every life insurance company doing business in this State, except that in the case of an alien company, such valuation shall be limited to its United States business. In calculating such reserves, he may use group methods and approximate averages for fractions of a year or otherwise. In lieu of the valuation of the reserves herein required of any foreign or alien company, he may accept any valuation made, or caused to be made, by the insurance supervisory official of any state or other jurisdiction when such valuation complies with the minimum standard provided in this Section.
    The provisions set forth in this subsection (1) and in subsections (2), (3), (4), (5), (6), and (7) of this Section shall apply to all policies and contracts, as appropriate, subject to this Section issued prior to the operative date of the Valuation Manual. The provisions set forth in subsections (8) and (9) of this Section shall not apply to any such policies and contracts.
    For policies and contracts issued on or after the operative date of the Valuation Manual, the Director shall annually value, or cause to be valued, the reserve liabilities (reserves) for all outstanding life insurance contracts, annuity and pure endowment contracts, accident and health contracts, and deposit-type contracts of every company issued on or after the operative date of the Valuation Manual. In lieu of the valuation of the reserves required of a foreign or alien company, the Director may accept a valuation made, or caused to be made, by the insurance supervisory official of any state or other jurisdiction when the valuation complies with the minimum standard provided in this Section.
    The provisions set forth in subsections (8) and (9) of this Section shall apply to all policies and contracts issued on or after the operative date of the Valuation Manual.
    Any such company which adopts at any time a standard of valuation producing greater aggregate reserves than those calculated according to the minimum standard provided under this Section may adopt a lower standard of valuation, with the approval of the Director, but not lower than the minimum herein provided, however, that, for the purposes of this subsection, the holding of additional reserves previously determined by the appointed actuary to be necessary to render the opinion required by subsection (1a) shall not be deemed to be the adoption of a higher standard of valuation. In the valuation of policies the Director shall give no consideration to, nor make any deduction because of, the existence or the possession by the company of
        (a) policy liens created by any agreement given or
    
assented to by any assured subsequent to July 1, 1937, for which liens such assured has not received cash or other consideration equal in value to the amount of such liens, or
        (b) policy liens created by any agreement entered
    
into in violation of Section 232 unless the agreement imposing or creating such liens has been approved by a Court in a proceeding under Article XIII, or in the case of a foreign or alien company has been approved by a court in a rehabilitation or liquidation proceeding or by the insurance official of its domiciliary state or country, in accordance with the laws thereof.
    (1a) This subsection shall become operative at the end of the first full calendar year following the effective date of this amendatory Act of 1991.
        (A) General.
            (1) Prior to the operative date of the Valuation
        
Manual, every life insurance company doing business in this State shall annually submit the opinion of a qualified actuary as to whether the reserves and related actuarial items held in support of the policies and contracts specified by the Director by regulation are computed appropriately, are based on assumptions that satisfy contractual provisions, are consistent with prior reported amounts and comply with applicable laws of this State. The Director by regulation shall define the specifics of this opinion and add any other items deemed to be necessary to its scope.
            (2) The opinion shall be submitted with the
        
annual statement reflecting the valuation of reserve liabilities for each year ending on or after December 31, 1992.
            (3) The opinion shall apply to all business in
        
force including individual and group health insurance plans, in form and substance acceptable to the Director as specified by regulation.
            (4) The opinion shall be based on standards
        
adopted from time to time by the Actuarial Standards Board and on additional standards as the Director may by regulation prescribe.
            (5) In the case of an opinion required to be
        
submitted by a foreign or alien company, the Director may accept the opinion filed by that company with the insurance supervisory official of another state if the Director determines that the opinion reasonably meets the requirements applicable to a company domiciled in this State.
            (6) For the purpose of this Section, "qualified
        
actuary" means a member in good standing of the American Academy of Actuaries who meets the requirements set forth in its regulations.
            (7) Except in cases of fraud or willful
        
misconduct, the qualified actuary shall not be liable for damages to any person (other than the insurance company and the Director) for any act, error, omission, decision or conduct with respect to the actuary's opinion.
            (8) Disciplinary action by the Director against
        
the company or the qualified actuary shall be defined in regulations by the Director.
            (9) A memorandum, in form and substance
        
acceptable to the Director as specified by regulation, shall be prepared to support each actuarial opinion.
            (10) If the insurance company fails to provide a
        
supporting memorandum at the request of the Director within a period specified by regulation or the Director determines that the supporting memorandum provided by the insurance company fails to meet the standards prescribed by the regulations or is otherwise unacceptable to the Director, the Director may engage a qualified actuary at the expense of the company to review the opinion and the basis for the opinion and prepare the supporting memorandum as is required by the Director.
            (11) Any memorandum in support of the opinion,
        
and any other material provided by the company to the Director in connection therewith, shall be kept confidential by the Director and shall not be made public and shall not be subject to subpoena, other than for the purpose of defending an action seeking damages from any person by reason of any action required by this Section or by regulations promulgated hereunder; provided, however, that the memorandum or other material may otherwise be released by the Director (a) with the written consent of the company or (b) to the American Academy of Actuaries upon request stating that the memorandum or other material is required for the purpose of professional disciplinary proceedings and setting forth procedures satisfactory to the Director for preserving the confidentiality of the memorandum or other material. Once any portion of the confidential memorandum is cited by the company in its marketing or is cited before any governmental agency other than a state insurance department or is released by the company to the news media, all portions of the confidential memorandum shall be no longer confidential.
        (B) Actuarial analysis of reserves and assets
    
supporting those reserves.
            (1) Every life insurance company, except as
        
exempted by or under regulation, shall also annually include in the opinion required by paragraph (A)(1) of this subsection (1a), an opinion of the same qualified actuary as to whether the reserves and related actuarial items held in support of the policies and contracts specified by the Director by regulation, when considered in light of the assets held by the company with respect to the reserves and related actuarial items including, but not limited to, the investment earnings on the assets and the considerations anticipated to be received and retained under the policies and contracts, make adequate provision for the company's obligations under the policies and contracts including, but not limited to, the benefits under and expenses associated with the policies and contracts.
            (2) The Director may provide by regulation for a
        
transition period for establishing any higher reserves which the qualified actuary may deem necessary in order to render the opinion required by this Section.
    (1b) Actuarial Opinion of Reserves after the Operative Date of the Valuation Manual.
        (A) General.
            (1) Every company with outstanding life insurance
        
contracts, accident and health insurance contracts, or deposit-type contracts in this State and subject to regulation by the Director shall annually submit the opinion of the appointed actuary as to whether the reserves and related actuarial items held in support of the policies and contracts are computed appropriately, are based on assumptions that satisfy contractual provisions, are consistent with prior reported amounts, and comply with applicable laws of this State. The Valuation Manual shall prescribe the specifics of this opinion, including any items deemed to be necessary to its scope.
            (2) The opinion shall be submitted with the
        
annual statement reflecting the valuation of such reserve liabilities for each year ending on or after the operative date of the Valuation Manual.
            (3) The opinion shall apply to all policies and
        
contracts subject to paragraph (B) of this subsection (1b), plus other actuarial liabilities as may be specified in the Valuation Manual.
            (4) The opinion shall be based on standards
        
adopted from time to time by the Actuarial Standards Board or its successor and on additional standards as may be prescribed in the Valuation Manual.
            (5) In the case of an opinion required to be
        
submitted by a foreign or alien company, the Director may accept the opinion filed by that company with the insurance supervisory official of another state if the Director determines that the opinion reasonably meets the requirements applicable to a company domiciled in this State.
            (6) Except in cases of fraud or willful
        
misconduct, the appointed actuary shall not be liable for damages to any person (other than the insurance company and the Director) for any act, error, omission, decision, or conduct with respect to the appointed actuary's opinion.
            (7) Disciplinary action by the Director against
        
the company or the appointed actuary shall be defined by the Director by rule.
            (8) A memorandum, in a form and substance as
        
specified in the Valuation Manual and acceptable to the Director, shall be prepared to support each actuarial opinion.
            (9) If the insurance company fails to provide a
        
supporting memorandum at the request of the Director within a period specified in the Valuation Manual or the Director determines that the supporting memorandum provided by the insurance company fails to meet the standards prescribed by the Valuation Manual or is otherwise unacceptable to the Director, the Director may engage a qualified actuary at the expense of the company to review the opinion and the basis for the opinion and prepare the supporting memorandum as is required by the Director.
        (B) Every company with outstanding life insurance
    
contracts, accident and health insurance contracts, or deposit-type contracts in this State and subject to regulation by the Director, except as exempted in the Valuation Manual, shall also annually include in the opinion required by subparagraph (1) of paragraph (A) of this subsection (1b), an opinion of the same appointed actuary as to whether the reserves and related actuarial items held in support of the policies and contracts specified in the Valuation Manual, when considered in light of the assets held by the company with respect to the reserves and related actuarial items, including, but not limited to, the investment earnings on the assets and the considerations anticipated to be received and retained under the policies and contracts, make adequate provision for the company's obligations under the policies and contracts, including, but not limited to, the benefits under and expenses associated with the policies and contracts.
    (2) This subsection shall apply to only those policies and contracts issued prior to the operative date of Section 229.2 (the Standard Non-forfeiture Law).
        (a) Except as otherwise in this Article provided, the
    
legal minimum standard for valuation of contracts issued before January 1, 1908, shall be the Actuaries or Combined Experience Table of Mortality with interest at 4% per annum and for valuation of contracts issued on or after that date shall be the American Experience Table of Mortality with either Craig's or Buttolph's Extension for ages under 10 and with interest at 3 1/2% per annum. The legal minimum standard for the valuation of group insurance policies under which premium rates are not guaranteed for a period in excess of 5 years shall be the American Men Ultimate Table of Mortality with interest at 3 1/2% per annum. Any life company may, at its option, value its insurance contracts issued on or after January 1, 1938, in accordance with their terms on the basis of the American Men Ultimate Table of Mortality with interest not higher than 3 1/2% per annum.
        (b) Policies issued prior to January 1, 1908, may
    
continue to be valued according to a method producing reserves not less than those produced by the full preliminary term method. Policies issued on and after January 1, 1908, may be valued according to a method producing reserves not less than those produced by the modified preliminary term method hereinafter described in paragraph (c). Policies issued on and after January 1, 1938, may be valued either according to a method producing reserves not less than those produced by such modified preliminary term method or by the select and ultimate method on the basis that the rate of mortality during the first 5 years after the issuance of such contracts respectively shall be calculated according to the following percentages of rates shown by the American Experience Table of Mortality:
            (i) first insurance year 50% thereof;
            (ii) second insurance year 65% thereof;
            (iii) third insurance year 75% thereof;
            (iv) fourth insurance year 85% thereof;
            (v) fifth insurance year 95% thereof.
        (c) If the premium charged for the first policy year
    
under a limited payment life preliminary term policy providing for the payment of all premiums thereon in less than 20 years from the date of the policy or under an endowment preliminary term policy, exceeds that charged for the first policy year under 20 payment life preliminary term policies of the same company, the reserve thereon at the end of any year, including the first, shall not be less than the reserve on a 20 payment life preliminary term policy issued in the same year at the same age, together with an amount which shall be equivalent to the accumulation of a net level premium sufficient to provide for a pure endowment at the end of the premium payment period, equal to the difference between the value at the end of such period of such a 20 payment life preliminary term policy and the full net level premium reserve at such time of such a limited payment life or endowment policy. The premium payment period is the period during which premiums are concurrently payable under such 20 payment life preliminary term policy and such limited payment life or endowment policy.
        (d) The legal minimum standard for the valuations of
    
annuities issued on and after January 1, 1938, shall be the American Annuitant's Table with interest not higher than 3 3/4% per annum, and all annuities issued before that date shall be valued on a basis not lower than that used for the annual statement of the year 1937; but annuities deferred 10 or more years and written in connection with life insurance shall be valued on the same basis as that used in computing the consideration or premiums therefor, or upon any higher standard at the option of the company.
        (e) The Director may vary the standards of interest
    
and mortality as to contracts issued in countries other than the United States and may vary standards of mortality in particular cases of invalid lives and other extra hazards.
        (f) The legal minimum standard for valuation of
    
waiver of premium disability benefits or waiver of premium and income disability benefits issued on and after January 1, 1938, shall be the Class (3) Disability Table (1926) modified to conform to the contractual waiting period, with interest at not more than 3 1/2% per annum; but in no event shall the values be less than those produced by the basis used in computing premiums for such benefits. The legal minimum standard for the valuation of such benefits issued prior to January 1, 1938, shall be such as to place an adequate value, as determined by sound insurance practices, on the liabilities thereunder and shall be such that the value of the benefits under each and every policy shall in no case be less than the value placed upon the future premiums.
        (g) The legal minimum standard for the valuation of
    
industrial policies issued on or after January 1, 1938, shall be the American Experience Table of Mortality or the Standard Industrial Mortality Table or the Substandard Industrial Mortality Table with interest at 3 1/2% per annum by the net level premium method, or in accordance with their terms by the modified preliminary term method hereinabove described.
        (h) Reserves for all such policies and contracts may
    
be calculated, at the option of the company, according to any standards which produce greater aggregate reserves for all such policies and contracts than the minimum reserves required by this subsection.
    (3) This subsection shall apply to only those policies and contracts issued on or after January 1, 1948 or such earlier operative date of Section 229.2 (the Standard Non-forfeiture Law) as shall have been elected by the insurance company issuing such policies or contracts.
        (a) Except as otherwise provided in subsections (4),
    
(6), and (7), the minimum standard for the valuation of all such policies and contracts shall be the Commissioners Reserve valuation method defined in paragraphs (b) and (f) of this subsection and in subsection 5, 3 1/2% interest for such policies issued prior to September 8, 1977, 5 1/2% interest for single premium life insurance policies and 4 1/2% interest for all other such policies issued on or after September 8, 1977, and the following tables:
            (i) The Commissioners 1941 Standard Ordinary
        
Mortality Table for all Ordinary policies of life insurance issued on the standard basis, excluding any disability and accidental death benefits in such policies, for such policies issued prior to the operative date of subsection (4a) of Section 229.2 (Standard Non-forfeiture Law); and the Commissioners 1958 Standard Ordinary Mortality Table for such policies issued on or after such operative date but prior to the operative date of subsection (4c) of Section 229.2 provided that for any category of such policies issued on female risks all modified net premiums and present values referred to in this Section may, prior to September 8, 1977, be calculated according to an age not more than 3 years younger than the actual age of the insured and, after September 8, 1977, calculated according to an age not more than 6 years younger than the actual age of the insured; and for such policies issued on or after the operative date of subsection (4c) of Section 229.2, (i) the Commissioners 1980 Standard Ordinary Mortality Table, or (ii) at the election of the company for any one or more specified plans of life insurance, the Commissioners 1980 Standard Ordinary Mortality Table with Ten-Year Select Mortality Factors, or (iii) any ordinary mortality table adopted after 1980 by the NAIC and approved by regulations promulgated by the Director for use in determining the minimum standard of valuation for such policies.
            (ii) For all Industrial Life Insurance policies
        
issued on the standard basis, excluding any disability and accidental death benefits in such policies--the 1941 Standard Industrial Mortality Table for such policies issued prior to the operative date of subsection 4 (b) of Section 229.2 (Standard Non-forfeiture Law); and for such policies issued on or after such operative date the Commissioners 1961 Standard Industrial Mortality Table or any industrial mortality table adopted after 1980 by the NAIC and approved by regulations promulgated by the Director for use in determining the minimum standard of valuation for such policies.
            (iii) For Individual Annuity and Pure Endowment
        
contracts, excluding any disability and accidental death benefits in such policies--the 1937 Standard Annuity Mortality Table--or, at the option of the company, the Annuity Mortality Table for 1949, Ultimate, or any modification of either of these tables approved by the Director.
            (iv) For Group Annuity and Pure Endowment
        
contracts, excluding any disability and accidental death benefits in such policies--the Group Annuity Mortality Table for 1951, any modification of such table approved by the Director, or, at the option of the company, any of the tables or modifications of tables specified for Individual Annuity and Pure Endowment contracts.
            (v) For Total and Permanent Disability Benefits
        
in or supplementary to Ordinary policies or contracts for policies or contracts issued on or after January 1, 1966, the tables of Period 2 disablement rates and the 1930 to 1950 termination rates of the 1952 Disability Study of the Society of Actuaries, with due regard to the type of benefit, or any tables of disablement rates and termination rates adopted after 1980 by the NAIC and approved by regulations promulgated by the Director for use in determining the minimum standard of valuation for such policies; for policies or contracts issued on or after January 1, 1961, and prior to January 1, 1966, either such tables or, at the option of the company, the Class (3) Disability Table (1926); and for policies issued prior to January 1, 1961, the Class (3) Disability Table (1926). Any such table shall, for active lives, be combined with a mortality table permitted for calculating the reserves for life insurance policies.
            (vi) For Accidental Death benefits in or
        
supplementary to policies--for policies issued on or after January 1, 1966, the 1959 Accidental Death Benefits Table or any accidental death benefits table adopted after 1980 by the NAIC and approved by regulations promulgated by the Director for use in determining the minimum standard of valuation for such policies; for policies issued on or after January 1, 1961, and prior to January 1, 1966, any of such tables or, at the option of the company, the Inter-Company Double Indemnity Mortality Table; and for policies issued prior to January 1, 1961, the Inter-Company Double Indemnity Mortality Table. Either table shall be combined with a mortality table permitted for calculating the reserves for life insurance policies.
            (vii) For Group Life Insurance, life insurance
        
issued on the substandard basis and other special benefits--such tables as may be approved by the Director.
        (b) Except as otherwise provided in paragraph (f) of
    
subsection (3), subsection (5), and subsection (7) reserves according to the Commissioners reserve valuation method, for the life insurance and endowment benefits of policies providing for a uniform amount of insurance and requiring the payment of uniform premiums shall be the excess, if any, of the present value, at the date of valuation, of such future guaranteed benefits provided for by such policies, over the then present value of any future modified net premiums therefor. The modified net premiums for any such policy shall be such uniform percentage of the respective contract premiums for such benefits that the present value, at the date of issue of the policy, of all such modified net premiums shall be equal to the sum of the then present value of such benefits provided for by the policy and the excess of (A) over (B), as follows:
            (A) A net level annual premium equal to the
        
present value, at the date of issue, of such benefits provided for after the first policy year, divided by the present value, at the date of issue, of an annuity of one per annum payable on the first and each subsequent anniversary of such policy on which a premium falls due; provided, however, that such net level annual premium shall not exceed the net level annual premium on the 19 year premium whole life plan for insurance of the same amount at an age one year higher than the age at issue of such policy.
            (B) A net one year term premium for such benefits
        
provided for in the first policy year.
        For any life insurance policy issued on or after
    
January 1, 1987, for which the contract premium in the first policy year exceeds that of the second year with no comparable additional benefit being provided in that first year, which policy provides an endowment benefit or a cash surrender value or a combination thereof in an amount greater than such excess premium, the reserve according to the Commissioners reserve valuation method as of any policy anniversary occurring on or before the assumed ending date, defined herein as the first policy anniversary on which the sum of any endowment benefit and any cash surrender value then available is greater than such excess premium, shall, except as otherwise provided in paragraph (f) of subsection (3), be the greater of the reserve as of such policy anniversary calculated as described in the preceding part of this paragraph (b) and the reserve as of such policy anniversary calculated as described in the preceding part of this paragraph (b) with (i) the value defined in subpart A of the preceding part of this paragraph (b) being reduced by 15% of the amount of such excess first year premium, (ii) all present values of benefits and premiums being determined without reference to premiums or benefits provided for by the policy after the assumed ending date, (iii) the policy being assumed to mature on such date as an endowment, and (iv) the cash surrender value provided on such date being considered as an endowment benefit. In making the above comparison, the mortality and interest bases stated in paragraph (a) of subsection (3) and in subsection (6) shall be used.
        Reserves according to the Commissioners reserve
    
valuation method for (i) life insurance policies providing for a varying amount of insurance or requiring the payment of varying premiums, (ii) group annuity and pure endowment contracts purchased under a retirement plan or plan of deferred compensation, established or maintained by an employer (including a partnership or sole proprietorship) or by an employee organization, or by both, other than a plan providing individual retirement accounts or individual retirement annuities under Section 408 of the Internal Revenue Code, as now or hereafter amended, (iii) disability and accidental death benefits in all policies and contracts, and (iv) all other benefits, except life insurance and endowment benefits in life insurance policies and benefits provided by all other annuity and pure endowment contracts, shall be calculated by a method consistent with the principles of this paragraph (b), except that any extra premiums charged because of impairments or special hazards shall be disregarded in the determination of modified net premiums.
        (c) In no event shall a company's aggregate reserves
    
for all life insurance policies, excluding disability and accidental death benefits be less than the aggregate reserves calculated in accordance with the methods set forth in paragraphs (b), (f), and (g) of subsection (3) and in subsection (5) and the mortality table or tables and rate or rates of interest used in calculating non-forfeiture benefits for such policies.
        (d) In no event shall the aggregate reserves for all
    
policies, contracts, and benefits be less than the aggregate reserves determined by the appointed actuary to be necessary to render the opinion required by subsection (1a).
        (e) Reserves for any category of policies, contracts
    
or benefits as established by the Director, may be calculated, at the option of the company, according to any standards which produce greater aggregate reserves for such category than those calculated according to the minimum standard herein provided, but the rate or rates of interest used for policies and contracts, other than annuity and pure endowment contracts, shall not be higher than the corresponding rate or rates of interest used in calculating any nonforfeiture benefits provided for therein.
        (f) If in any contract year the gross premium charged
    
by any life insurance company on any policy or contract is less than the valuation net premium for the policy or contract calculated by the method used in calculating the reserve thereon but using the minimum valuation standards of mortality and rate of interest, the minimum reserve required for such policy or contract shall be the greater of either the reserve calculated according to the mortality table, rate of interest, and method actually used for such policy or contract, or the reserve calculated by the method actually used for such policy or contract but using the minimum standards of mortality and rate of interest and replacing the valuation net premium by the actual gross premium in each contract year for which the valuation net premium exceeds the actual gross premium. The minimum valuation standards of mortality and rate of interest referred to in this paragraph (f) are those standards stated in subsection (6) and paragraph (a) of subsection (3).
        For any life insurance policy issued on or after
    
January 1, 1987, for which the gross premium in the first policy year exceeds that of the second year with no comparable additional benefit provided in that first year, which policy provides an endowment benefit or a cash surrender value or a combination thereof in an amount greater than such excess premium, the foregoing provisions of this paragraph (f) shall be applied as if the method actually used in calculating the reserve for such policy were the method described in paragraph (b) of subsection (3), ignoring the second paragraph of said paragraph (b). The minimum reserve at each policy anniversary of such a policy shall be the greater of the minimum reserve calculated in accordance with paragraph (b) of subsection (3), including the second paragraph of said paragraph (b), and the minimum reserve calculated in accordance with this paragraph (f).
        (g) In the case of any plan of life insurance which
    
provides for future premium determination, the amounts of which are to be determined by the insurance company based on then estimates of future experience, or in the case of any plan of life insurance or annuity which is of such a nature that the minimum reserves cannot be determined by the methods described in paragraphs (b) and (f) of subsection (3) and subsection (5), the reserves which are held under any such plan shall:
            (i) be appropriate in relation to the benefits
        
and the pattern of premiums for that plan, and
            (ii) be computed by a method which is consistent
        
with the principles of this Standard Valuation Law, as determined by regulations promulgated by the Director.
    (4) Except as provided in subsection (6), the minimum standard of valuation for individual annuity and pure endowment contracts issued on or after the operative date of this subsection, as defined herein, and for all annuities and pure endowments purchased on or after such operative date under group annuity and pure endowment contracts shall be the Commissioners Reserve valuation methods defined in paragraph (b) of subsection (3) and subsection (5) and the following tables and interest rates:
        (a) For individual single premium immediate annuity
    
contracts, excluding any disability and accidental death benefits in such contracts, the 1971 Individual Annuity Mortality Table, any individual annuity mortality table adopted after 1980 by the NAIC and approved by regulations promulgated by the Director for use in determining the minimum standard of valuation for such contracts, or any modification of those tables approved by the Director, and 7 1/2% interest.
        (b) For individual and pure endowment contracts other
    
than single premium annuity contracts, excluding any disability and accidental death benefits in such contracts, the 1971 Individual Annuity Mortality Table, any individual annuity mortality table adopted after 1980 by the NAIC and approved by regulations promulgated by the Director for use in determining the minimum standard of valuation for such contracts, or any modification of those tables approved by the Director, and 5 1/2% interest for single premium deferred annuity and pure endowment contracts and 4 1/2% interest for all other such individual annuity and pure endowment contracts.
        (c) For all annuities and pure endowments purchased
    
under group annuity and pure endowment contracts, excluding any disability and accidental death benefits purchased under such contracts, the 1971 Group Annuity Mortality Table, any group annuity mortality table adopted after 1980 by the NAIC and approved by regulations promulgated by the Director for use in determining the minimum standard of valuation for such annuities and pure endowments, or any modification of those tables approved by the Director, and 7 1/2% interest.
    After September 8, 1977, any company may file with the Director a written notice of its election to comply with the provisions of this subsection after a specified date before January 1, 1979, which shall be the operative date of this subsection for such company; provided, a company may elect a different operative date for individual annuity and pure endowment contracts from that elected for group annuity and pure endowment contracts. If a company makes no election, the operative date of this subsection for such company shall be January 1, 1979.
    (5) This subsection shall apply to all annuity and pure endowment contracts other than group annuity and pure endowment contracts purchased under a retirement plan or plan of deferred compensation, established or maintained by an employer (including a partnership or sole proprietorship) or by an employee organization, or by both, other than a plan providing individual retirement accounts or individual retirement annuities under Section 408 of the Internal Revenue Code, as now or hereafter amended.
    Reserves according to the Commissioners annuity reserve method for benefits under annuity or pure endowment contracts, excluding any disability and accidental death benefits in such contracts, shall be the greatest of the respective excesses of the present values, at the date of valuation, of the future guaranteed benefits, including guaranteed nonforfeiture benefits, provided for by such contracts at the end of each respective contract year, over the present value, at the date of valuation, of any future valuation considerations derived from future gross considerations, required by the terms of such contract, that become payable prior to the end of such respective contract year. The future guaranteed benefits shall be determined by using the mortality table, if any, and the interest rate, or rates, specified in such contracts for determining guaranteed benefits. The valuation considerations are the portions of the respective gross considerations applied under the terms of such contracts to determine nonforfeiture values.
    (6)(a) Applicability of this subsection. The interest rates used in determining the minimum standard for the valuation of
        (A) all life insurance policies issued in a
    
particular calendar year, on or after the operative date of subsection (4c) of Section 229.2 (Standard Nonforfeiture Law),
        (B) all individual annuity and pure endowment
    
contracts issued in a particular calendar year ending on or after December 31, 1983,
        (C) all annuities and pure endowments purchased in a
    
particular calendar year ending on or after December 31, 1983, under group annuity and pure endowment contracts, and
        (D) the net increase in a particular calendar year
    
ending after December 31, 1983, in amounts held under guaranteed interest contracts
shall be the calendar year statutory valuation interest rates, as defined in this subsection.
        (b) Calendar Year Statutory Valuation Interest Rates.
            (i) The calendar year statutory valuation
        
interest rates shall be determined according to the following formulae, rounding "I" to the nearest .25%.
                (A) For life insurance,
                    I = .03 + W (R1 - .03) + W/2 (R2 - .09).
                (B) For single premium immediate annuities
            
and annuity benefits involving life contingencies arising from other annuities with cash settlement options and from guaranteed interest contracts with cash settlement options,
                    I = .03 + W (R - .03) or with prior
                
approval of the Director I = .03 + W (Rq - .03).
            For the purposes of this subparagraph (i), "I"
        
equals the calendar year statutory valuation interest rate, "R" is the reference interest rate defined in this subsection, "R1" is the lesser of R and .09, "R2" is the greater of R and .09, "Rq" is the quarterly reference interest rate defined in this subsection, and "W" is the weighting factor defined in this subsection.
                (C) For other annuities with cash settlement
            
options and guaranteed interest contracts with cash settlement options, valued on an issue year basis, except as stated in (B), the formula for life insurance stated in (A) applies to annuities and guaranteed interest contracts with guarantee durations in excess of 10 years, and the formula for single premium immediate annuities stated in (B) above applies to annuities and guaranteed interest contracts with guarantee durations of 10 years or less.
                (D) For other annuities with no cash
            
settlement options and for guaranteed interest contracts with no cash settlement options, the formula for single premium immediate annuities stated in (B) applies.
                (E) For other annuities with cash settlement
            
options and guaranteed interest contracts with cash settlement options, valued on a change in fund basis, the formula for single premium immediate annuities stated in (B) applies.
            (ii) If the calendar year statutory valuation
        
interest rate for any life insurance policy issued in any calendar year determined without reference to this subparagraph differs from the corresponding actual rate for similar policies issued in the immediately preceding calendar year by less than .5%, the calendar year statutory valuation interest rate for such life insurance policy shall be the corresponding actual rate for the immediately preceding calendar year. For purposes of applying this subparagraph, the calendar year statutory valuation interest rate for life insurance policies issued in a calendar year shall be determined for 1980, using the reference interest rate defined for 1979, and shall be determined for each subsequent calendar year regardless of when subsection (4c) of Section 229.2 (Standard Nonforfeiture Law) becomes operative.
        (c) Weighting Factors.
            (i) The weighting factors referred to in the
        
formulae stated in paragraph (b) are given in the following tables.
                (A) Weighting Factors for Life Insurance.
GuaranteeWeighting
DurationFactors
(Years)
10 or less.50
More than 10, but not more than 20.45
More than 20.35
                For life insurance, the guarantee duration is
            
the maximum number of years the life insurance can remain in force on a basis guaranteed in the policy or under options to convert to plans of life insurance with premium rates or nonforfeiture values or both which are guaranteed in the original policy.
                (B) The weighting factor for single premium
            
immediate annuities and for annuity benefits involving life contingencies arising from other annuities with cash settlement options and guaranteed interest contracts with cash settlement options is .80.
                (C) The weighting factors for other annuities
            
and for guaranteed interest contracts, except as stated in (B) of this subparagraph (i), shall be as specified in tables (1), (2), and (3) of this subpart (C), according to the rules and definitions in (4), (5) and (6) of this subpart (C).
                    (1) For annuities and guaranteed interest
                
contracts valued on an issue year basis.
GuaranteeWeighting Factor
Durationfor Plan Type
(Years) A    B   C
5 or less.........................80  .60 .50
More than 5, but not
more than 10.......................75  .60 .50
More than 10, but not
more than 20.......................65  .50 .45
More than 20.......................45  .35 .35
                    (2) For annuities and guaranteed interest
                
contracts valued on a change in fund basis, the factors shown in (1) for Plan Types A, B and C are increased by .15, .25 and .05, respectively.
                    (3) For annuities and guaranteed interest
                
contracts valued on an issue year basis, other than those with no cash settlement options, which do not guarantee interest on considerations received more than one year after issue or purchase, and for annuities and guaranteed interest contracts valued on a change in fund basis which do not guarantee interest rates on considerations received more than 12 months beyond the valuation date, the factors shown in (1), or derived in (2), for Plan Types A, B and C are increased by .05.
                    (4) For other annuities with cash
                
settlement options and guaranteed interest contracts with cash settlement options, the guarantee duration is the number of years for which the contract guarantees interest rates in excess of the calendar year statutory valuation interest rate for life insurance policies with guarantee durations in excess of 20 years. For other annuities with no cash settlement options, and for guaranteed interest contracts with no cash settlement options, the guarantee duration is the number of years from the date of issue or date of purchase to the date annuity benefits are scheduled to commence.
                    (5) The plan types used in the above
                
tables are defined as follows.
                    Plan Type A is a plan under which the
                
policyholder may not withdraw funds, or may withdraw funds at any time but only (a) with an adjustment to reflect changes in interest rates or asset values since receipt of the funds by the insurance company, (b) without such an adjustment but in installments over 5 years or more, or (c) as an immediate life annuity.
                    Plan Type B is a plan under which the
                
policyholder may not withdraw funds before expiration of the interest rate guarantee, or may withdraw funds before such expiration but only (a) with an adjustment to reflect changes in interest rates or asset values since receipt of the funds by the insurance company, or (b) without such adjustment but in installments over 5 years or more. At the end of the interest rate guarantee, funds may be withdrawn without such adjustment in a single sum or installments over less than 5 years.
                    Plan Type C is a plan under which the
                
policyholder may withdraw funds before expiration of the interest rate guarantee in a single sum or installments over less than 5 years either (a) without adjustment to reflect changes in interest rates or asset values since receipt of the funds by the insurance company, or (b) subject only to a fixed surrender charge stipulated in the contract as a percentage of the fund.
                    (6) A company may elect to value
                
guaranteed interest contracts with cash settlement options and annuities with cash settlement options on either an issue year basis or on a change in fund basis. Guaranteed interest contracts with no cash settlement options and other annuities with no cash settlement options shall be valued on an issue year basis. As used in this Section, "issue year basis of valuation" refers to a valuation basis under which the interest rate used to determine the minimum valuation standard for the entire duration of the annuity or guaranteed interest contract is the calendar year valuation interest rate for the year of issue or year of purchase of the annuity or guaranteed interest contract. "Change in fund basis of valuation", as used in this Section, refers to a valuation basis under which the interest rate used to determine the minimum valuation standard applicable to each change in the fund held under the annuity or guaranteed interest contract is the calendar year valuation interest rate for the year of the change in the fund.
        (d) Reference Interest Rate. The reference interest
    
rate referred to in paragraph (b) of this subsection is defined as follows.
            (A) For all life insurance, the reference
        
interest rate is the lesser of the average over a period of 36 months, and the average over a period of 12 months, with both periods ending on June 30, or with prior approval of the Director ending on December 31, of the calendar year next preceding the year of issue, of Moody's Corporate Bond Yield Average - Monthly Average Corporates, as published by Moody's Investors Service, Inc.
            (B) For single premium immediate annuities and
        
for annuity benefits involving life contingencies arising from other annuities with cash settlement options and guaranteed interest contracts with cash settlement options, the reference interest rate is the average over a period of 12 months, ending on June 30, or with prior approval of the Director ending on December 31, of the calendar year of issue or year of purchase, of Moody's Corporate Bond Yield Average - Monthly Average Corporates, as published by Moody's Investors Service, Inc.
            (C) For annuities with cash settlement options
        
and guaranteed interest contracts with cash settlement options, valued on a year of issue basis, except those described in (B), with guarantee durations in excess of 10 years, the reference interest rate is the lesser of the average over a period of 36 months and the average over a period of 12 months, ending on June 30, or with prior approval of the Director ending on December 31, of the calendar year of issue or purchase, of Moody's Corporate Bond Yield Average-Monthly Average Corporates, as published by Moody's Investors Service, Inc.
            (D) For other annuities with cash settlement
        
options and guaranteed interest contracts with cash settlement options, valued on a year of issue basis, except those described in (B), with guarantee durations of 10 years or less, the reference interest rate is the average over a period of 12 months, ending on June 30, or with prior approval of the Director ending on December 31, of the calendar year of issue or purchase, of Moody's Corporate Bond Yield Average-Monthly Average Corporates, as published by Moody's Investors Service, Inc.
            (E) For annuities with no cash settlement options
        
and for guaranteed interest contracts with no cash settlement options, the reference interest rate is the average over a period of 12 months, ending on June 30, or with prior approval of the Director ending on December 31, of the calendar year of issue or purchase, of Moody's Corporate Bond Yield Average-Monthly Average Corporates, as published by Moody's Investors Service, Inc.
            (F) For annuities with cash settlement options
        
and guaranteed interest contracts with cash settlement options, valued on a change in fund basis, except those described in (B), the reference interest rate is the average over a period of 12 months, ending on June 30, or with prior approval of the Director ending on December 31, of the calendar year of the change in the fund, of Moody's Corporate Bond Yield Average-Monthly Average Corporates, as published by Moody's Investors Service, Inc.
            (G) For annuities valued by a formula based on
        
Rq, the quarterly reference interest rate is, with the prior approval of the Director, the average within each of the 4 consecutive calendar year quarters ending on March 31, June 30, September 30 and December 31 of the calendar year of issue or year of purchase of Moody's Corporate Bond Yield Average-Monthly Average Corporates, as published by Moody's Investors Service, Inc.
        (e) Alternative Method for Determining Reference
    
Interest Rates. In the event that the Moody's Corporate Bond Yield Average-Monthly Average Corporates is no longer published by Moody's Investors Services, Inc., or in the event that the NAIC determines that Moody's Corporate Bond Yield Average-Monthly Average Corporates as published by Moody's Investors Service, Inc. is no longer appropriate for the determination of the reference interest rate, then an alternative method for determination of the reference interest rate, which is adopted by the NAIC and approved by regulations promulgated by the Director, may be substituted.
    (7) Minimum Standards for Accident and Health (Disability, Accident and Sickness) Insurance Contracts. The Director shall promulgate a regulation containing the minimum standards applicable to the valuation of health (disability, sickness and accident) plans which are issued prior to the operative date of the Valuation Manual. For accident and health (disability, accident and sickness) insurance contracts issued on or after the operative date of the Valuation Manual, the standard prescribed in the Valuation Manual is the minimum standard of valuation required under subsection (1).
    (8) Valuation Manual for Policies Issued On or After the Operative Date of the Valuation Manual.
        (a) For policies issued on or after the operative
    
date of the Valuation Manual, the standard prescribed in the Valuation Manual is the minimum standard of valuation required under subsection (1), except as provided under paragraphs (e) or (g) of this subsection (8).
        (b) The operative date of the Valuation Manual is
    
January 1 of the first calendar year following the first July 1 when all of the following have occurred:
            (i) The Valuation Manual has been adopted by the
        
NAIC by an affirmative vote of at least 42 members, or three-fourths of the members voting, whichever is greater.
            (ii) The Standard Valuation Law, as amended by
        
the NAIC in 2009, or legislation including substantially similar terms and provisions, has been enacted by states representing greater than 75% of the direct premiums written as reported in the following annual statements submitted for 2008: life, accident and health annual statements; health annual statements; or fraternal annual statements.
            (iii) The Standard Valuation Law, as amended by
        
the NAIC in 2009, or legislation including substantially similar terms and provisions, has been enacted by at least 42 of the following 55 jurisdictions: the 50 states of the United States, American Samoa, the American Virgin Islands, the District of Columbia, Guam, and Puerto Rico.
        (c) Unless a change in the Valuation Manual specifies
    
a later effective date, changes to the Valuation Manual shall be effective on January 1 following the date when the change to the Valuation Manual has been adopted by the NAIC by an affirmative vote representing:
            (i) at least three-fourths of the members of the
        
NAIC voting, but not less than a majority of the total membership; and
            (ii) members of the NAIC representing
        
jurisdictions totaling greater than 75% of the direct premiums written as reported in the following annual statements most recently available prior to the vote in subparagraph (i) of this paragraph (c): life, accident and health annual statements; health annual statements; or fraternal annual statements.
        (d) The Valuation Manual must specify all of the
    
following:
            (i) Minimum valuation standards for and
        
definitions of the policies or contracts subject to subsection (1). Such minimum valuation standards shall be:
                (A) the Commissioners reserve valuation
            
method for life insurance contracts, other than annuity contracts, subject to subsection (1);
                (B) the Commissioners annuity reserve
            
valuation method for annuity contracts subject to subsection (1); and
                (C) minimum reserves for all other policies
            
or contracts subject to subsection (1).
            (ii) Which policies or contracts or types of
        
policies or contracts are subject to the requirements of a principle-based valuation in paragraph (a) of subsection (9) and the minimum valuation standards consistent with those requirements.
            (iii) For policies and contracts subject to a
        
principle-based valuation under subsection (9):
                (A) Requirements for the format of reports to
            
the Director under subparagraph (iii) of paragraph (b) of subsection (9), and which shall include information necessary to determine if the valuation is appropriate and in compliance with this Section.
                (B) Assumptions shall be prescribed for risks
            
over which the company does not have significant control or influence.
                (C) Procedures for corporate governance and
            
oversight of the actuarial function, and a process for appropriate waiver or modification of such procedures.
            (iv) For policies not subject to a
        
principle-based valuation under subsection (9), the minimum valuation standard shall either:
                (A) be consistent with the minimum standard
            
of valuation prior to the operative date of the Valuation Manual; or
                (B) develop reserves that quantify the
            
benefits and guarantees and the funding associated with the contracts and their risks at a level of conservatism that reflects conditions that include unfavorable events that have a reasonable probability of occurring.
            (v) Other requirements, including, but not
        
limited to, those relating to reserve methods, models for measuring risk, generation of economic scenarios, assumptions, margins, use of company experience, risk measurement, disclosure, certifications, reports, actuarial opinions and memorandums, transition rules, and internal controls.
            (vi) The data and form of the data required under
        
subsection (10) of this Section, with whom the data must be submitted, and may specify other requirements, including data analyses and the reporting of analyses.
        (e) In the absence of a specific valuation
    
requirement or if a specific valuation requirement in the Valuation Manual is not, in the opinion of the Director, in compliance with this Section, then the company shall, with respect to such requirements, comply with minimum valuation standards prescribed by the Director by rule.
        (f) The Director may engage a qualified actuary, at
    
the expense of the company, to perform an actuarial examination of the company and