[ Search ] [ Legislation ] [ Bill Summary ]
[ Home ] [ Back ] [ Bottom ]
| [ Introduced ] | [ Engrossed ] | [ Enrolled ] |
90_SB1728ham001
LRB9011450JSgcam01
1 AMENDMENT TO SENATE BILL 1728
2 AMENDMENT NO. . Amend Senate Bill 1728 on page 1 by
3 replacing lines 1 and 2 with the following:
4 "AN ACT concerning the regulation of insurers, amending
5 named Acts."; and
6 on page 1 by replacing line 6 with the following:
7 "changing Sections 35A-5, 35A-20, 35A-35, 86, 98, 102, 103,
8 107.06a, 107.26, 111, 121-2.08, 123C-1, 126.2, 143, 144, and
9 445 and adding Section 445a as follows:
10 (215 ILCS 5/35A-5)
11 Sec. 35A-5. Definitions. As used in this Article, the
12 terms listed in this Section have the meaning given herein.
13 "Adjusted RBC Report" means an RBC Report that has been
14 adjusted by the Director in accordance with subsection (e) of
15 Section 35A-10.
16 "Authorized control level RBC" means the number
17 determined under the risk-based capital formula in accordance
18 with the RBC Instructions.
19 "Company action level RBC" means the product of 2.0 and
20 the insurer's authorized control level RBC.
21 "Corrective Order" means an order issued by the Director
22 in accordance with Article XII 1/2 specifying corrective
-2- LRB9011450JSgcam01
1 actions that the Director determines are required.
2 "Domestic insurer" means any insurance company domiciled
3 in this State under Article II, Article III, Article III 1/2,
4 or Article IV.
5 "Foreign insurer" means any foreign or alien insurance
6 company licensed under Article VI that is not domiciled in
7 this State.
8 "Life, health, or life and health insurer" means an
9 insurance company that has authority to transact the kinds of
10 insurance described in either or both clause (a) or clause
11 (b) of Class 1 of Section 4 or a licensed property and
12 casualty insurer writing only accident and health insurance.
13 "Mandatory control level RBC" means the product of 0.70
14 and the insurer's authorized control level RBC.
15 "NAIC" means the National Association of Insurance
16 Commissioners.
17 "Negative trend" means, with respect to a life, health,
18 or life and health insurer, a negative trend over a period of
19 time, as determined in accordance with the trend test
20 calculation included in the RBC Instructions.
21 "Property and casualty insurer" means an insurance
22 company that has authority to transact the kinds of insurance
23 in either or both Class 2 or Class 3 of Section 4 or a
24 licensed insurer writing only insurance authorized under
25 clause (c) of Class 1, but does not include monoline mortgage
26 guaranty insurers, financial guaranty insurers, and title
27 insurers.
28 "RBC" means risk-based capital.
29 "RBC Instructions" means the RBC Report including
30 risk-based capital instructions adopted by the NAIC as those
31 instructions may be amended by the NAIC from time to time in
32 accordance with the procedures adopted by the NAIC.
33 "RBC level" means an insurer's company action level RBC,
34 regulatory action level RBC, authorized control level RBC, or
-3- LRB9011450JSgcam01
1 mandatory control level RBC.
2 "RBC Plan" means a comprehensive financial plan
3 containing the elements specified in subsection (b) of
4 Section 35A-15.
5 "RBC Report" means the risk-based capital report required
6 under Section 35A-10.
7 "Receivership" means conservation, rehabilitation, or
8 liquidation under Article XIII.
9 "Regulatory action level RBC" means the product of 1.5
10 and the insurer's authorized control level RBC.
11 "Revised RBC Plan" means an RBC Plan rejected by the
12 Director and revised by the insurer with or without the
13 Director's recommendations.
14 "Total adjusted capital" means the sum of (1) an
15 insurer's statutory capital and surplus and (2) any other
16 items that the RBC Instructions may provide.
17 (Source: P.A. 88-364; 89-97, eff. 7-7-95.)
18 (215 ILCS 5/35A-20)
19 Sec. 35A-20. Regulatory action level event.
20 (a) A regulatory action level event means any of the
21 following events:
22 (1) The filing of an RBC Report by the insurer that
23 indicates that the insurer's total adjusted capital is
24 greater than or equal to its authorized control level
25 RBC, but less than its regulatory action level RBC.
26 (2) The notification by the Director to an insurer
27 of an Adjusted RBC Report that indicates the event
28 described in paragraph (1), provided the insurer does not
29 challenge the Adjusted RBC Report under Section 35A-35.
30 (3) The notification by the Director to the insurer
31 that the Director has, after a hearing, rejected the
32 insurer's challenge under Section 35A-35 to an Adjusted
33 RBC Report that indicates the event described in
-4- LRB9011450JSgcam01
1 paragraph (1).
2 (4) The failure of the insurer to file an RBC
3 Report by the filing date, unless the insurer has
4 provided an explanation for the failure that is
5 satisfactory to the Director and has cured the failure
6 within 10 days after the filing date.
7 (5) The failure of the insurer to submit an RBC
8 Plan to the Director within the time period set forth in
9 subsection (c) of Section 35A-15.
10 (6) The notification by the Director to the insurer
11 that the insurer's RBC Plan or revised RBC Plan is, in
12 the judgment of the Director, unsatisfactory and that the
13 notification constitutes a regulatory action level event
14 with respect to the insurer, provided the insurer does
15 not challenge the determination under Section 35A-35.
16 (7) The notification by the Director to the insurer
17 that the Director has, after a hearing, rejected the
18 insurer's challenge under Section 35A-35 to the
19 determination made by the Director under paragraph (6).
20 (8) The notification by the Director to the insurer
21 that the insurer has failed to adhere to its RBC Plan or
22 Revised RBC Plan, but only if that failure has a
23 substantial adverse effect on the ability of the insurer
24 to eliminate the company action level event in accordance
25 with its RBC Plan or Revised RBC Plan and the Director
26 has so stated in the notification, provided the insurer
27 does not challenge the determination under Section
28 35A-35.
29 (9) The notification by the Director to the insurer
30 that the Director has, after a hearing, rejected the
31 insurer's challenge under Section 35A-35 to the
32 determination made by the Director under paragraph (8).
33 (b) In the event of a regulatory action level event, the
34 Director shall do all of the following:
-5- LRB9011450JSgcam01
1 (1) Require the insurer to prepare and submit an
2 RBC Plan or, if applicable, a Revised RBC Plan to the
3 Director within 45 days after the regulatory action level
4 event occurs or within 45 days after the Director
5 notifies the insurer that the Director has, after a
6 hearing, rejected its challenge under Section 35A-35 to
7 either an Adjusted RBC Report or a Revised RBC Plan.
8 However, if the insurer previously prepared and submitted
9 an RBC Plan or a Revised RBC Plan in accordance with any
10 provision of this Article, the Director may determine
11 that the previously prepared RBC Plan or Revised RBC Plan
12 satisfies the requirement of this subsection (b)(1).
13 (2) Perform any examination or analysis of the
14 assets, liabilities, and operations of the insurer,
15 including a review of its RBC Plan or Revised RBC Plan,
16 that the Director deems necessary.
17 (3) After the examination or analysis, issue a
18 Corrective Order specifying the corrective actions the
19 Director determines are required.
20 (c) In determining corrective actions, the Director may
21 take into account any factors the Director deems relevant
22 based upon the examination or analysis of the assets,
23 liabilities, and operations of the insurer including, but not
24 limited to, the results of any sensitivity tests undertaken
25 under the RBC Instructions. The regulatory action level event
26 shall be deemed sufficient grounds for the Director to issue
27 a Corrective Order in accordance with Article XII 1/2. The
28 Director shall have rights, powers, and duties with respect
29 to the insurer that are set forth in Article XII 1/2 and the
30 insurer shall be entitled to the protections afforded
31 insurers under Article XII 1/2. The insurer shall submit the
32 RBC Plan to the Director within 45 days after the regulatory
33 action level event occurs or within 45 days after the
34 Director notifies the insurer that the Director has, after a
-6- LRB9011450JSgcam01
1 hearing, rejected its challenge under Section 35A-35 to
2 either an Adjusted RBC Report or a Revised RBC Plan.
3 (d) The Director may retain actuaries, investment
4 experts, and other consultants necessary to review an
5 insurer's RBC Plan or Revised RBC Plan, examine or analyze
6 the assets, liabilities, and operations of the insurer, and
7 formulate the Corrective Order with respect to the insurer.
8 The fees, costs, and expenses related to the actuaries,
9 investment experts, and other consultants shall be borne by
10 the affected insurer or the party designated by the Director.
11 (Source: P.A. 88-364; 89-97, eff. 7-7-95.)
12 (215 ILCS 5/35A-35)
13 Sec. 35A-35. Hearings.
14 (a) An insurer has the right to an administrative
15 hearing with respect to any of the following:
16 (1) The notification by the Director to the insurer
17 of an Adjusted RBC Report.
18 (2) The notification by the Director to the insurer
19 that the insurer's RBC Plan or Revised RBC Plan is
20 unsatisfactory and that the notification constitutes a
21 regulatory action level event.
22 (3) The notification by the Director to the insurer
23 that the insurer has failed to adhere to its RBC Plan or
24 Revised RBC Plan and that the failure has a substantial
25 adverse effect on the ability of the insurer to eliminate
26 the company action level event in accordance with its RBC
27 Plan or Revised RBC Plan.
28 (4) The notification by the Director to the insurer
29 of a Corrective Order.
30 (b) At the administrative hearing, the insurer may
31 challenge any determination or action by the Director. The
32 insurer shall notify the Director of its request for a
33 hearing within 5 days after notification by the Director made
-7- LRB9011450JSgcam01
1 under subsection (a). Upon receipt of the insurer's request
2 for a hearing, the Director shall set a date for the hearing.
3 The hearing shall be held no fewer than 10 days and no more
4 than 30 days after the date of the insurer's request for the
5 hearing.
6 (Source: P.A. 88-364.)"; and
7 on page 5 by inserting immediately below line 33 the
8 following:
9 "(215 ILCS 5/107.06a) (from Ch. 73, par. 719.06a)
10 Sec. 107.06a. Organization under Illinois Insurance
11 Code.
12 (a) After December 31, 1997, a syndicate or limited
13 syndicate, except for a limited syndicate formed as a
14 partnership, may only be organized pursuant to Sections 7, 8,
15 10, 11, 12, 14, 14.1 (other than subsection (d) thereof), 15
16 (other than subsection (d) thereof), 18, 19, 20, 21, 22, 23,
17 25, 27.1, 28, 28.1, 28.2, 29, 30, 31, 32, 32.1, 33, and 35.1
18 and Article X of this Code, to carry on the business of a
19 syndicate, or limited syndicate under Article V-1/2 of this
20 Code; provided that such syndicate or limited syndicate is
21 admitted to the Illinois Insurance Exchange.
22 (b) After December 31, 1997, syndicates and limited
23 syndicates are subject to the following:
24 (1) Articles I, IIA, VIII, VIII 1/2, X, XI, XII,
25 XII 1/2, XIII, XIII 1/2, XXIV, XXV (Sections 408 and 412
26 only), and XXVIII (except for Sections 445, 445.1, 445.2,
27 445.3, 445.4, and 445.5) of this Code;
28 (2) Subsections (2) and (3) of Section 155.04 and
29 Sections 13, 132.1 through 140, 141a, 144, 155.01,
30 155.03, 378, 379.1, 393.1, 395, and 396 of this Code;
31 (3) the Reinsurance Intermediary Act; and
32 (4) the Producer Controlled Insurer Act.
33 (c) No other provision of this Insurance Code shall be
-8- LRB9011450JSgcam01
1 applicable to any such syndicate or limited syndicate except
2 as provided in this Article V-1/2.
3 (Source: P.A. 89-97, eff. 7-7-95; 90-499, eff. 8-19-97.)
4 (215 ILCS 5/107.26) (from Ch. 73, par. 719.26)
5 Sec. 107.26. Illinois Insurance Exchange Immediate
6 Access Security Association.
7 (a) There is created a non-profit corporation which
8 shall be known as the Illinois Insurance Exchange Immediate
9 Access Security Association and which shall be incorporated
10 under the General Not for Profit Corporation Act. All
11 syndicates shall be members of the Association as a condition
12 of their authority to transact business on the Exchange. The
13 Association shall be exempt from payment of all fees and all
14 taxes levied by this State or any of its subdivisions.
15 (b) In the event of the entry of an Order of
16 Rehabilitation, Conservation, or Liquidation against a
17 syndicate pursuant to Section 107.08, the Association shall
18 establish a claims date, which shall be not later than one
19 year after the date of such Order, by which time all persons
20 having claims arising out of insurance obligations of the
21 syndicate must file their claim with the Association. The
22 Association shall give notice to all policyholders and other
23 persons who may have a claim against the syndicate as shown
24 by the syndicate's records. Such notice shall include the
25 date of the Order, the claims date established by the
26 Association and the procedure and form for filing a claim
27 with the Association. Within 60 days after the claims date,
28 The Association shall determine the syndicate's insurance
29 obligations liability based on all claims filed on or before
30 the claims date. The Association shall then pay all claims
31 for which an insurance obligation a liability exists from the
32 assets of the syndicate's trust or custodial account and
33 certificates of guaranty. In the event those assets are
-9- LRB9011450JSgcam01
1 insufficient to pay all claims in full, the Association shall
2 make payment pursuant to a plan approved by the court
3 entering the Order of Rehabilitation, Conservation, or
4 Liquidation. The Rehabilitator, Conservator, or Liquidator
5 shall be bound by any settlement made by the Association. Any
6 person not receiving full reimbursement for his claim from
7 the Association shall have a claim against the assets being
8 administered by the Rehabilitator, Conservator, or Liquidator
9 for the remaining amounts. In settling claims and subject to
10 limitations in this Section, the Association shall have the
11 same rights and duties of the insolvent syndicate as if the
12 syndicate had not become insolvent.
13 (c) The Association may delegate to such other person or
14 entity as it deems appropriate the performance of any duty
15 imposed on it by this Section.
16 (Source: P.A. 89-97, eff. 7-7-95; 89-206, eff. 7-21-95;
17 89-626, eff. 8-9-96.)
18 (215 ILCS 5/111) (from Ch. 73, par. 723)
19 Sec. 111. Conditions of issuance of certificate of
20 authority.
21 (1) Before a certificate of authority to transact
22 business in this State is issued to a foreign or alien
23 company, such company shall satisfy the Director that:
24 (a) the company is duly organized under the laws of
25 the state or country under whose laws it professes to be
26 organized and authorized to do the business it is
27 transacting or proposes to transact;
28 (b) its name is not the same as, or deceptively
29 similar to, the name of any domestic company, or of any
30 foreign or alien company authorized to transact business
31 in this State;
32 (c) if a company transacting business of the kind
33 or kinds enumerated in Class 1 of Section 4, it is not
-10- LRB9011450JSgcam01
1 engaging in practices in any state which if engaged in
2 this State, would constitute a violation of Section 237;
3 and it is not transacting any kinds of business other
4 than those enumerated in Class 1 of Section 4;
5 (d) if a stock company, it has a paid up capital
6 and surplus at least equal to the capital and original
7 surplus required by this Code for a domestic company
8 doing the same kind or kinds of business or, if a mutual
9 company or reciprocal, it has a surplus and provision for
10 contingent liability of policyholders, at least equal to
11 the original surplus and provision for contingent
12 liability of policyholders required for a similar
13 domestic company doing the same kind or kinds of
14 business, or, if a fraternal benefit society, it meets
15 the requirements prescribed in this Code for the
16 organization of a domestic company or society, or if a
17 Lloyds it meets the requirements of Article V;
18 (e) its funds are invested in accordance with the
19 laws of its domicile; and
20 (f) in the case of a stock company its minimum
21 capital and surplus and required reserves, or in the case
22 of a mutual company or a reciprocal proposing to issue
23 policies without contingent liability, its minimum
24 surplus and required reserves, or in the case of any
25 other company, all its funds, are invested in securities
26 or property which afford a degree of financial security
27 equal to that required for similar domestic companies,
28 provided that this clause shall not be construed as
29 requiring the application of limitations relating either
30 to the kind or amount of securities prescribed by this
31 Code for the investments of domestic companies.
32 (2) In determining whether an alien company complies
33 with the provisions of subsection (1) of this section the
34 Director shall consider only business transacted in the
-11- LRB9011450JSgcam01
1 United States, only the assets described in Section 60j and
2 only liabilities in connection with its United States
3 business.
4 (3) Before a certificate of authority is issued to a
5 foreign or alien company, other than a Lloyds, it shall
6 deposit with the Director securities which are authorized
7 investments for similar domestic companies under Section
8 126.11A(1), 126.11A(2), 126.24A(1), or 126.24A(2) of the
9 amount, if any, required of a domestic company similarly
10 organized and doing the same kind or kinds of business; or in
11 lieu of such deposit such foreign or alien company shall
12 satisfy the Director that it has on deposit with an official
13 of a state of the United States or a depositary designated or
14 authorized for such purpose by such official, authorized by
15 the law of such state to accept such deposit, securities of
16 at least a like amount, for the benefit and security of all
17 creditors, policyholders and policy obligations of such
18 company in the United States.
19 (4) Before issuing a certificate of authority to a
20 foreign or alien company, the Director may cause an
21 examination to be made of the condition and affairs of such
22 company.
23 (Source: P.A. 90-418, eff. 8-15-97.)
24 (215 ILCS 5/121-2.08) (from Ch. 73, par. 733-2.08)
25 Sec. 121-2.08. Transactions in this State involving
26 contracts of insurance issued to one or more industrial
27 insureds. For purposes of this Section "industrial insured"
28 is an insured:
29 (a) which procures the insurance of any risk or risks
30 other than life and annuity contracts by use of the services
31 of a full time employee acting as an insurance manager or
32 buyer or the services of a regularly and continuously
33 retained qualified insurance consultant;
-12- LRB9011450JSgcam01
1 (b) whose aggregate annual premiums for insurance on all
2 risks, except for life and accident and health insurance,
3 total at least $100,000 $50,000; and
4 (c) which either (i) has at least 25 full time
5 employees, (ii) has gross assets in excess of $3,000,000, or
6 (iii) has annual gross revenues in excess of $5,000,000.
7 (Source: P.A. 85-131.)
8 (215 ILCS 5/123C-1) (from Ch. 73, par. 735C-1)
9 Sec. 123C-1. Definitions. As used in this Article:
10 A. "Affiliate" or "Affiliated company" shall have the
11 meaning set forth in subsection (a) of Section 131.1 (and,
12 for purposes of such definition, the definitions of "control"
13 and "person", as set forth in subsections (b) and (e) of
14 Section 131.1, respectively, shall be applicable).
15 B. "Association" means any entity meeting the
16 requirements set forth in either of the following paragraphs
17 (1), (2) or (3):
18 (1) any organized association of individuals, legal
19 representatives, corporations (whether for profit or not
20 for profit), partnerships, trusts, associations, units of
21 government or other organizations, or any combination of
22 the foregoing, that has been in continuous existence for
23 at least one year, the member organizations of which
24 collectively:
25 (a) own, control, or hold with power to vote
26 (directly or indirectly) all of the outstanding
27 voting securities of an association captive
28 insurance company incorporated as a stock insurer;
29 or
30 (b) have complete voting control (directly or
31 indirectly) over an association captive insurance
32 company organized as a mutual insurer;
33 (2) any organized association of individuals, legal
-13- LRB9011450JSgcam01
1 representatives, corporations (whether for profit or not
2 for profit), partnerships, trusts, associations, units of
3 government or other organizations, or any combination of
4 the foregoing:
5 (a) whose member organizations are engaged in
6 businesses or activities similar or related with
7 respect to the liability of which such members are
8 exposed by virtue of any related, similar, or common
9 business, trade, product, services, premises, or
10 operations; and
11 (b) whose member organizations:
12 (i) directly or indirectly own or
13 control, and hold with power to vote, at least
14 80% of all of the outstanding voting securities
15 of an association captive insurance company
16 incorporated as a stock insurer; or
17 (ii) directly or indirectly have at least
18 80% of the voting control over an association
19 captive insurance company organized as a mutual
20 insurer; or
21 (3) any risk retention group, as defined in
22 subsection (11) of Section 123B-2, domiciled in this
23 State and organized under this Article; however,
24 beginning 6 months after the effective date of this
25 amendatory Act of 1995, a risk retention group shall no
26 longer qualify as an association under this Article.
27 Provided, however, that with respect to each of the
28 associations described in paragraphs (1), (2) and (3) above,
29 no member organization may (i) own, control, or hold with
30 power to vote in excess of 25% of the voting securities of an
31 association captive insurance company incorporated as a stock
32 insurer, or (ii) have more than 25% of the voting control of
33 an association captive insurance company organized as a
34 mutual insurer.
-14- LRB9011450JSgcam01
1 C. "Association captive insurance company" means any
2 company that insures risks of (i) the member organizations of
3 an association, and (ii) their affiliated companies.
4 D. "Captive insurance company" means any pure captive
5 insurance company, association captive insurance company or
6 industrial insured captive insurance company organized under
7 the provisions of this Article.
8 E. "Director" means the Director of the Department of
9 Insurance.
10 F. "Industrial insured" means an insured which (together
11 with its affiliates) at the time of its initial procurement
12 of insurance from an industrial insured captive insurance
13 company:
14 (1) has available to it advice with respect to the
15 purchase of insurance through the use of the services of
16 a full-time employee acting as an insurance manager or
17 buyer or the services of a regularly and continuously
18 retained qualified insurance consultant; and
19 (2) pays aggregate annual premiums in excess of
20 $100,000 $35,000 for insurance on all risks except
21 for life, accident and health; and
22 (3) either (i) has at least 25 full-time employees,
23 or (ii) has gross assets in excess of $3,000,000, or
24 (iii) has annual gross revenues in excess of $5,000,000.
25 G. "Industrial insured captive insurance company" means
26 any company that insures risks of industrial insureds that
27 are members of the industrial insured group, and their
28 affiliated companies.
29 H. "Industrial insured group" means any group of
30 industrial insureds that collectively:
31 (1) directly or indirectly (including ownership or
32 control through a company which is wholly owned by such
33 group of industrial insureds) own or control, and hold
34 with power to vote, all of the outstanding voting
-15- LRB9011450JSgcam01
1 securities of an industrial insured captive insurance
2 company incorporated as a stock insurer; or
3 (2) directly or indirectly (including control
4 through a company which is wholly owned by such group of
5 industrial insureds) have complete voting control over an
6 industrial insured captive insurance company organized as
7 a mutual insurer; provided, however, that no member
8 organization may (i) own, control, or hold with power to
9 vote in excess of 25% of the voting securities of an
10 industrial insured captive insurance company incorporated
11 as a stock insurer, or (ii) have more than 25% of the
12 voting control of an industrial insured captive insurance
13 company organized as a mutual insurer.
14 I. "Member organization" means any individual, legal
15 representative, corporation (whether for profit or not for
16 profit), partnership, association, unit of government, trust
17 or other organization that belongs to an association or an
18 industrial insured group.
19 J. "Parent" means a corporation, partnership, individual
20 or other legal entity that directly or indirectly owns,
21 controls, or holds with power to vote more than 50% of the
22 outstanding voting securities of a company.
23 K. "Personal risk liability" means liability to other
24 persons for (i) damage because of injury to any person, (ii)
25 damage to property, or (iii) other loss or damage, in each
26 case resulting from any personal, familial, or household
27 responsibilities or activities, but does not include legal
28 liability for damages (including costs of defense, legal
29 costs and fees, and other claims expenses) because of
30 injuries to other persons, damage to their property, or other
31 damage or loss to such other persons resulting from or
32 arising out of:
33 (i) any business (whether for profit or not for
34 profit), trade, product, services (including professional
-16- LRB9011450JSgcam01
1 services), premises, or operations; or
2 (ii) any activity of any state or local government,
3 or any agency or political subdivision thereof.
4 L. "Pure captive insurance company" means any company
5 that insures only risks of its parent or affiliated companies
6 or both.
7 M. "Unit of government" includes any state, regional or
8 local government, or any agency or political subdivision
9 thereof, or any district, authority, public educational
10 institution or school district, public corporation or other
11 unit of government in this State or any similar unit of
12 government in any other state.
13 (Source: P.A. 89-97, eff. 7-7-95.)
14 (215 ILCS 5/126.2)
15 Sec. 126.2. Definitions. For purposes of this Article:
16 A. "Acceptable collateral" means:
17 (1) As to securities lending transactions, and for
18 the purpose of calculating counterparty exposure amount,
19 cash, cash equivalents, letters of credit, direct
20 obligations of, or securities that are fully guaranteed
21 as to principal and interest by, the government of the
22 United States or any agency of the United States, or by
23 the Federal National Mortgage Association or the Federal
24 Home Loan Mortgage Corporation, and as to lending foreign
25 securities, sovereign debt rated 1 by the SVO;
26 (2) As to repurchase transactions, cash, cash
27 equivalents and direct obligations of, or securities that
28 are fully guaranteed as to principal and interest by, the
29 government of the United States or an agency of the
30 United States, or by the Federal National Mortgage
31 Association or the Federal Home Loan Mortgage
32 Corporation; and
33 (3) As to reverse repurchase transactions, cash and
-17- LRB9011450JSgcam01
1 cash equivalents.
2 B. "Acceptable private mortgage insurance" means
3 insurance written by a private insurer protecting a mortgage
4 lender against loss occasioned by a mortgage loan default and
5 issued by a licensed mortgage insurance company, with an SVO
6 1 designation or a rating issued by a nationally recognized
7 statistical rating organization equivalent to an SVO 1
8 designation, that covers losses to an 80% loan-to-value
9 ratio.
10 C. "Accident and health insurance" means protection
11 which provides payment of benefits for covered sickness or
12 accidental injury, excluding credit insurance, disability
13 insurance, accidental death and dismemberment insurance and
14 long-term care insurance.
15 D. "Accident and health insurer" means a licensed life
16 or health insurer or health service corporation whose
17 insurance premiums and required statutory reserves for
18 accident and health insurance constitute at least 95% of
19 total premium considerations or total statutory required
20 reserves, respectively.
21 E. "Admitted assets" means assets defined by Section 3.1
22 of this Code permitted to be reported as admitted assets on
23 the statutory financial statement of the insurer most
24 recently required to be filed with the Director, but
25 excluding assets of separate accounts, the investments of
26 which are not subject to the provisions of this Article
27 except to the extent that the provisions of Article XIV 1/2
28 so provide.
29 F. "Affiliate" means, as to any person, another person
30 that, directly or indirectly through one or more
31 intermediaries, controls, is controlled by, or is under
32 common control with the person.
33 G. "Asset-backed security" means a security or other
34 instrument, excluding shares in a mutual fund, evidencing an
-18- LRB9011450JSgcam01
1 interest in, or the right to receive payments from, or
2 payable from distributions on, an asset, a pool of assets or
3 specifically divisible cash flows which are legally
4 transferred to a trust or another special purpose
5 bankruptcy-remote business entity, on the following
6 conditions:
7 (1) The trust or other business entity is
8 established solely for the purpose of acquiring specific
9 types of assets or rights to cash flows, issuing
10 securities and other instruments representing an interest
11 in or right to receive cash flows from those assets or
12 rights, and engaging in activities required to service
13 the assets or rights and any credit enhancement or
14 support features held by the trust or other business
15 entity; and
16 (2) The assets of the trust or other business
17 entity consist solely of interest bearing obligations or
18 other contractual obligations representing the right to
19 receive payment from the cash flows from the assets or
20 rights. However, the existence of credit enhancements,
21 such as letters of credit or guarantees, or support
22 features such as swap agreements, shall not cause a
23 security or other instrument to be ineligible as an
24 asset-backed security.
25 H. "Business entity" includes a sole proprietorship,
26 corporation, limited liability company, association,
27 partnership, joint stock company, joint venture, mutual fund,
28 trust, joint tenancy or other similar form of business
29 organization, whether organized for profit or not for profit.
30 I. "Cap" means an agreement obligating the seller to
31 make payments to the buyer, with each payment based on the
32 amount by which a reference price or level or the performance
33 or value of one or more underlying interests exceeds a
34 predetermined number, sometimes called the strike rate or
-19- LRB9011450JSgcam01
1 strike price.
2 J. "Capital and surplus" means the sum of the capital
3 and surplus of the insurer required to be shown on the
4 statutory financial statement of the insurer most recently
5 required to be filed with the Director.
6 K. "Cash equivalents" means short-term, highly rated and
7 highly liquid investments or securities readily convertible
8 to known amounts of cash without penalty and so near maturity
9 that they present insignificant risk of change in value. Cash
10 equivalents include government money market mutual funds and
11 class one money market mutual funds. For purposes of this
12 definition:
13 (1) "Short-term" means investments with a remaining
14 term to maturity of 90 days or less; and
15 (2) "Highly rated" means an investment rated "P-1"
16 by Moody's Investors Service, Inc., or "A-1" by Standard
17 and Poor's division of The McGraw Hill Companies, Inc. or
18 its equivalent rating by a nationally recognized
19 statistical rating organization recognized by the SVO.
20 L. "Class one bond mutual fund" means a mutual fund that
21 at all times qualifies for investment using the bond class
22 one reserve factor under the Purposes and Procedures of the
23 Securities Valuation Office or any successor publication.
24 M. "Class one money market mutual fund" means a money
25 market mutual fund that at all times qualifies for investment
26 using the bond class one reserve factor under the Purposes
27 and Procedures of the Securities Valuation Office or any
28 successor publication.
29 N. "Code" means the Illinois Insurance Code.
30 O. "Collar" means an agreement to receive payments as
31 the buyer of an option, cap or floor and to make payments as
32 the seller of a different option, cap or floor.
33 P. "Commercial mortgage loan" means a mortgage loan,
34 other than a residential mortgage loan.
-20- LRB9011450JSgcam01
1 Q. "Construction loan" means a loan of less than 3 years
2 in term, made for financing the cost of construction of a
3 building or other improvement to real estate, that is secured
4 by the real estate.
5 R. "Control" means the possession, directly or
6 indirectly, of the power to direct or cause the direction of
7 the management and policies of a person, whether through the
8 ownership of voting securities, by contract (other than a
9 commercial contract for goods or nonmanagement services), or
10 otherwise, unless the power is the result of an official
11 position with or corporate office held by the person. Control
12 shall be presumed to exist if a person, directly or
13 indirectly, owns, controls, holds with the power to vote or
14 holds proxies representing 10% or more of the voting
15 securities of another person. This presumption may be
16 rebutted by a showing that control does not exist in fact.
17 The Director may determine, after furnishing all interested
18 persons notice and an opportunity to be heard and making
19 specific findings of fact to support the determination, that
20 control exists in fact, notwithstanding the absence of a
21 presumption to that effect.
22 S. "Counterparty exposure amount" means:
23 (1) The amount of credit risk attributable to a
24 derivative instrument entered into with a business entity
25 other than through a qualified exchange, qualified
26 foreign exchange, or cleared through a qualified
27 clearinghouse ("over-the-counter derivative instrument").
28 The amount of credit risk equals:
29 (a) The market value of the over-the-counter
30 derivative instrument if the liquidation of the
31 derivative instrument would result in a final cash
32 payment to the insurer; or
33 (b) Zero if the liquidation of the derivative
34 instrument would not result in a final cash payment
-21- LRB9011450JSgcam01
1 to the insurer.
2 (2) If over-the-counter derivative instruments are
3 entered into under a written master agreement which
4 provides for netting of payments owed by the respective
5 parties, and the domicile of the counterparty is either
6 within the United States or if not within the United
7 States, within a foreign jurisdiction listed in the
8 Purposes and Procedures of the Securities Valuation
9 Office as eligible for netting, the net amount of credit
10 risk shall be the greater of zero or the net sum of:
11 (a) The market value of the over-the-counter
12 derivative instruments entered into under the
13 agreement, the liquidation of which would result in
14 a final cash payment to the insurer; and
15 (b) The market value of the over-the-counter
16 derivative instruments entered into under the
17 agreement, the liquidation of which would result in
18 a final cash payment by the insurer to the business
19 entity.
20 (3) For open transactions, market value shall be
21 determined at the end of the most recent quarter of the
22 insurer's fiscal year and shall be reduced by the market
23 value of acceptable collateral held by the insurer or
24 placed in escrow by one or both parties.
25 T. "Covered" means that an insurer owns or can
26 immediately acquire, through the exercise of options,
27 warrants or conversion rights already owned, the underlying
28 interest in order to fulfill or secure its obligations under
29 a call option, cap or floor it has written, or has set aside,
30 pursuant to a custodial or escrow agreement, cash or cash
31 equivalents with a market value equal to the amount required
32 to fulfill its obligations under a put option it has written,
33 in an income generation transaction.
34 U. "Credit tenant loan" means a mortgage loan which is
-22- LRB9011450JSgcam01
1 made primarily in reliance on the credit standing of a major
2 tenant, structured with an assignment of the rental payments
3 to the lender with real estate pledged as collateral in the
4 form of a first lien.
5 V. (1) "Derivative instrument" means an agreement,
6 option, instrument or a series or combination thereof:
7 (a) To make or take delivery of, or assume or
8 relinquish, a specified amount of one or more
9 underlying interests, or to make a cash settlement
10 in lieu thereof; or
11 (b) That has a price, performance, value or
12 cash flow based primarily upon the actual or
13 expected price, level, performance, value or cash
14 flow of one or more underlying interests.
15 (2) Derivative instruments include options,
16 warrants used in a hedging transaction and not attached
17 to another financial instrument, caps, floors, collars,
18 swaps, forwards, futures and any other agreements,
19 options or instruments substantially similar thereto or
20 any series or combination thereof and any agreements,
21 options or instruments permitted under rules adopted
22 under Section 126.8. Derivative instruments shall not
23 include an investment authorized by Sections 126.11
24 through 126.17, 126.19 and 126.24 through 126.30.
25 W. "Derivative transaction" means a transaction
26 involving the use of one or more derivative instruments.
27 X. "Direct" or "directly," when used in connection with
28 an obligation, means the designated obligor is primarily
29 liable on the instrument representing the obligation.
30 Y. "Dollar roll transaction" means 2 simultaneous
31 transactions with settlement dates no more than 96 days
32 apart, so that in one transaction an insurer sells to a
33 business entity, and in the other transaction the insurer is
34 obligated to purchase from the same business entity,
-23- LRB9011450JSgcam01
1 substantially similar securities of the following types:
2 (1) Asset-backed securities issued, assumed or
3 guaranteed by the Government National Mortgage
4 Association, the Federal National Mortgage Association or
5 the Federal Home Loan Mortgage Corporation or their
6 respective successors; and
7 (2) Other asset-backed securities referred to in
8 Section 106 of Title I of the Secondary Mortgage Market
9 Enhancement Act of 1984 (15 U.S.C. 77r1), as amended.
10 Z. "Domestic jurisdiction" means the United States,
11 Canada, any state, any province of Canada or any political
12 subdivision of any of the foregoing.
13 AA. "Equity interest" means any of the following that
14 are not rated credit instruments: common stock; preferred
15 stock; trust certificate; equity investment in an investment
16 company other than a money market mutual fund or a class one
17 bond mutual fund; investment in a common trust fund of a bank
18 regulated by a federal or state agency; an ownership interest
19 in minerals, oil or gas, the rights to which have been
20 separated from the underlying fee interest in the real estate
21 where the minerals, oil or gas are located; instruments which
22 are mandatorily, or at the option of the issuer, convertible
23 to equity; limited partnership interests and those general
24 partnership interests authorized under Section 126.5(D);
25 member interests in limited liability companies; warrants or
26 other rights to acquire equity interests that are created by
27 the person that owns or would issue the equity to be
28 acquired; or instruments that would be rated credit
29 instruments except for the provisions of subsection RRR(2) of
30 this Section.
31 BB. "Equivalent securities" means:
32 (1) In a securities lending transaction, securities
33 that are identical to the loaned securities in all
34 features including the amount of the loaned securities,
-24- LRB9011450JSgcam01
1 except as to certificate number if held in physical form,
2 but if any different security shall be exchanged for a
3 loaned security by recapitalization, merger,
4 consolidation or other corporate action, the different
5 security shall be deemed to be the loaned security;
6 (2) In a repurchase transaction, securities that
7 are identical to the purchased securities in all features
8 including the amount of the purchased securities, except
9 as to the certificate number if held in physical form; or
10 (3) In a reverse repurchase transaction, securities
11 that are identical to the sold securities in all features
12 including the amount of the sold securities, except as to
13 the certificate number if held in physical form.
14 CC. "Floor" means an agreement obligating the seller to
15 make payments to the buyer in which each payment is based on
16 the amount by which a predetermined number, sometimes called
17 the floor rate or price, exceeds a reference price, a level,
18 or the performance or value of one or more underlying
19 interests.
20 DD. "Foreign currency" means a currency other than that
21 of a domestic jurisdiction.
22 EE. (1) "Foreign investment" means an investment in a
23 foreign jurisdiction, or an investment in a person, real
24 estate or asset domiciled in a foreign jurisdiction, that
25 is substantially of the same type as those eligible for
26 investment under this Article, other than under Sections
27 126.17 and 126.30. An investment shall not be deemed to
28 be foreign if the issuing person, qualified primary
29 credit source or qualified guarantor is a domestic
30 jurisdiction or a person domiciled in a domestic
31 jurisdiction, unless:
32 (a) The issuing person is a shell business
33 entity; and
34 (b) The investment is not assumed, accepted,
-25- LRB9011450JSgcam01
1 guaranteed, or insured or otherwise backed by a
2 domestic jurisdiction or a person, that is not a
3 shell business entity, domiciled in a domestic
4 jurisdiction.
5 (2) For purposes of this definition:
6 (a) "Shell business entity" means a business
7 entity having no economic substance, except as a
8 vehicle for owning interests in assets issued, owned
9 or previously owned by a person domiciled in a
10 foreign jurisdiction;
11 (b) "Qualified guarantor" means a guarantor
12 against which an insurer has a direct claim for full
13 and timely payment, evidenced by a contractual right
14 for which an enforcement action can be brought in a
15 domestic jurisdiction; and
16 (c) "Qualified primary credit source" means
17 the credit source to which an insurer looks for
18 payment as to an investment and against which an
19 insurer has a direct claim for full and timely
20 payment, evidenced by a contractual right for which
21 an enforcement action can be brought in a domestic
22 jurisdiction.
23 FF. "Foreign jurisdiction" means a jurisdiction other
24 than a domestic jurisdiction.
25 GG. "Forward" means an agreement (other than a future)
26 to make or take delivery of, or effect a cash settlement
27 based on the actual or expected price, level, performance or
28 value of, one or more underlying interests.
29 HH. "Future" means an agreement, traded on a qualified
30 exchange or qualified foreign exchange, to make or take
31 delivery of, or effect a cash settlement based on the actual
32 or expected price, level, performance or value of, one or
33 more underlying interests and includes an insurance future.
34 II. "Government money market mutual fund" means a money
-26- LRB9011450JSgcam01
1 market mutual fund that at all times:
2 (1) Invests only in obligations issued, guaranteed,
3 or insured by the federal government of the United States
4 or collateralized repurchase agreements composed of these
5 obligations; and
6 (2) Qualifies for investment without a reserve
7 under the Purposes and Procedures of the Securities
8 Valuation Office or any successor publication.
9 JJ. "Government sponsored enterprise" means a:
10 (1) Governmental agency; or
11 (2) Corporation, limited liability company,
12 association, partnership, joint stock company, joint
13 venture, trust or other entity or instrumentality
14 organized under the laws of any domestic jurisdiction to
15 accomplish a public policy or other governmental purpose.
16 KK. "Guaranteed or insured," when used in connection
17 with an obligation acquired under this Article, means the
18 guarantor or insurer has agreed to:
19 (1) Perform or insure the obligation of the obligor
20 or purchase the obligation; or
21 (2) Be unconditionally obligated until the
22 obligation is repaid to maintain in the obligor a minimum
23 net worth, fixed charge coverage, stockholders' equity or
24 sufficient liquidity to enable the obligor to pay the
25 obligation in full.
26 LL. "Hedging transaction" means:
27 (1) A derivative transaction that is entered into
28 and maintained to reduce:
29 (a) the risk of a change in the value, yield,
30 price, cash flow, or quantity of assets or
31 liabilities that the insurer has acquired or
32 incurred or anticipates acquiring or incurring; or
33 (b) the currency exchange rate risk or the
34 degree of exposure as to assets or liabilities that
-27- LRB9011450JSgcam01
1 the insurer has acquired or incurred or anticipates
2 acquiring or incurring; or
3 (2) Such other derivative transactions as may be
4 specified to constitute hedging transactions in rules
5 adopted pursuant to Section 126.8.
6 MM. "High grade investment" means a rated credit
7 instrument; rated 1, 2, P1, P2, PSF1 or PSF2 by the SVO.
8 NN. "Income" means, as to a security, interest, accrual
9 of discount, dividends or other distributions, such as
10 rights, tax or assessment credits, warrants and distributions
11 in kind.
12 OO. "Income generation transaction" means (1) a
13 derivative transaction involving the writing of covered call
14 options, covered put options, covered caps or covered floors
15 that is intended to generate income or enhance return, or (2)
16 such other derivative transactions as may be specified to
17 constitute income generation transactions in rules adopted
18 pursuant to Section 126.8.
19 PP. "Initial margin" means the amount of cash,
20 securities or other consideration initially required to be
21 deposited to establish a futures position.
22 QQ. "Insurance future" means a future relating to an
23 index or pool that is based on insurance-related items.
24 RR. "Insurance futures option" means an option on an
25 insurance future.
26 SS. "Investment company" means an investment company as
27 defined in Section 3(a) of the Investment Company Act of 1940
28 (15 U.S.C. 80a-1 et seq.), as amended, and a person
29 described in Section 3(c) of that Act.
30 TT. "Investment company series" means an investment
31 portfolio of an investment company that is organized as a
32 series company and to which assets of the investment company
33 have been specifically allocated.
34 UU. "Investment practices" means transactions of the
-28- LRB9011450JSgcam01
1 types described in Section 126.16, 126.18, 126.29 or 126.31.
2 VV. "Investment subsidiary" means a subsidiary of an
3 insurer engaged or organized to engage exclusively in the
4 ownership and management of assets authorized as investments
5 for the insurer if such subsidiary agrees to limit its
6 investment in any asset so that its investments will not
7 cause the amount of the total investment of the insurer to
8 exceed any of the investment limitations or avoid any other
9 provisions of this Article applicable to the insurer. As used
10 in this subsection, the total investment of the insurer shall
11 include:
12 (1) Direct investment by the insurer in an asset;
13 and
14 (2) The insurer's proportionate share of an
15 investment in an asset by an investment subsidiary of the
16 insurer, which shall be calculated by multiplying the
17 amount of the subsidiary's investment by the percentage
18 of the insurer's ownership interest in the subsidiary.
19 WW. "Investment strategy" means the techniques and
20 methods used by an insurer to meet its investment objectives,
21 such as active bond portfolio management, passive bond
22 portfolio management, interest rate anticipation, growth
23 investing and value investing.
24 XX. "Letter of credit" means a clean, irrevocable and
25 unconditional letter of credit issued or confirmed by, and
26 payable and presentable at, a financial institution on the
27 list of financial institutions meeting the standards for
28 issuing letters of credit under the Purposes and Procedures
29 of the Securities Valuation Office or any successor
30 publication. To constitute acceptable collateral for the
31 purposes of Sections 126.16 and 126.29, a letter of credit
32 must have an expiration date beyond the term of the subject
33 transaction.
34 YY. "Limited liability company" means a business
-29- LRB9011450JSgcam01
1 organization, excluding partnerships and ordinary business
2 corporations, organized or operating under the laws of the
3 United States or any state thereof that limits the personal
4 liability of investors to the equity investment of the
5 investor in the business entity.
6 ZZ. "Lower grade investment" means a rated credit
7 instrument rated 4, 5, 6, P4, P5, P6, PSF4, PSF5, or PSF6 by
8 the SVO.
9 AAA. "Market value" means:
10 (1) As to cash and letters of credit, the amounts
11 thereof; and
12 (2) As to a security as of any date, the price for
13 the security on that date obtained from a generally
14 recognized source or the most recent quotation from such
15 a source or, to the extent no generally recognized source
16 exists, the price for the security as determined in good
17 faith by the insurer, plus accrued but unpaid income
18 thereon to the extent not included in the price as of
19 that date.
20 BBB. "Medium grade investment" means a rated credit
21 instrument rated 3, P3, or PSF 3 by the SVO.
22 CCC. "Money market mutual fund" means a mutual fund that
23 meets the conditions of 17 Code of Federal Regulations Par.
24 270.2a-7, under the Investment Company Act of 1940 (15 U.S.C.
25 80a-1 et seq.), as amended or renumbered.
26 DDD. "Mortgage loan" means an obligation secured by a
27 mortgage, deed of trust, trust deed or other consensual lien
28 on real estate.
29 EEE. "Multilateral development bank" means an
30 international development organization of which the United
31 States is a member.
32 FFF. "Mutual fund" means an investment company or, in
33 the case of an investment company that is organized as a
34 series company, an investment company series, that, in either
-30- LRB9011450JSgcam01
1 case, is registered with the United States Securities and
2 Exchange Commission under the Investment Company Act of 1940
3 (15 U.S.C. 80a-1 et seq.), as amended.
4 GGG. "NAIC" means the National Association of Insurance
5 Commissioners.
6 HHH. "Obligation" means a bond, note, debenture, trust
7 certificate including an equipment trust certificate,
8 production payment, negotiable bank certificate of deposit,
9 bankers' acceptance, credit tenant loan, loan secured by
10 financing net leases and other evidence of indebtedness for
11 the payment of money (or participations, certificates or
12 other evidences of an interest in any of the foregoing),
13 whether constituting a general obligation of the issuer or
14 payable only out of certain revenues or certain funds pledged
15 or otherwise dedicated for payment.
16 III. "Option" means an agreement giving the buyer the
17 right to buy or receive (a "call option"), sell or deliver (a
18 "put option"), enter into, extend or terminate or effect a
19 cash settlement based on the actual or expected price, level,
20 performance or value of one or more underlying interests and
21 includes an insurance futures option.
22 JJJ. "Person" means an individual, a business entity, a
23 multilateral development bank or a government or quasi
24 governmental body, such as a political subdivision or a
25 government sponsored enterprise.
26 KKK. "Potential exposure" means the amount determined in
27 accordance with the NAIC Annual Statement Instructions.
28 LLL. "Preferred stock" means preferred, preference or
29 guaranteed stock of a business entity authorized to issue the
30 stock, that has a preference in liquidation over the common
31 stock of the business entity.
32 MMM. "Qualified bank" means:
33 (1) A national bank, state bank or trust company
34 that at all times is no less than adequately capitalized
-31- LRB9011450JSgcam01
1 as determined by standards adopted by United States
2 banking regulators and that either is regulated by state
3 banking laws or is a member of the Federal Reserve
4 System; or
5 (2) A bank or trust company incorporated or
6 organized under the laws of a country other than the
7 United States that is regulated as a bank or trust
8 company by that country's government or an agency thereof
9 and that at all times is no less than adequately
10 capitalized as determined by the standards adopted by
11 international banking authorities.
12 NNN. "Qualified business entity" means a business entity
13 that is:
14 (1) An issuer of obligations or preferred stock
15 that are rated 1 or 2 by the SVO or an issuer of
16 obligations, preferred stock or derivative instruments
17 that are rated the equivalent of 1 or 2 by the SVO or by
18 a nationally recognized statistical rating organization
19 recognized by the SVO; or
20 (2) A primary dealer in United States government
21 securities, recognized by the Federal Reserve Bank of New
22 York; or.
23 (3) With respect to securities lending arrangements
24 under Sections 126.16 and 126.29, an affiliate of an
25 entity that is a qualified business entity pursuant to
26 paragraph (1) or (2) of this subsection NNN, whose
27 arrangement with the insurer is guaranteed by the
28 affiliated entity that is a qualified business entity
29 under paragraph (1) or (2).
30 OOO. "Qualified clearinghouse" means a clearinghouse
31 for, and subject to the rules of, a qualified exchange or a
32 qualified foreign exchange, which provides clearing services,
33 including acting as a counterparty to each of the parties to
34 a transaction such that the parties no longer have credit
-32- LRB9011450JSgcam01
1 risk as to each other.
2 PPP. "Qualified exchange" means:
3 (1) A securities exchange registered as a national
4 securities exchange, or a securities market regulated
5 under the Securities Exchange Act of 1934 (15 U.S.C. 78
6 et seq.), as amended;
7 (2) A board of trade or commodities exchange
8 designated as a contract market by the Commodity Futures
9 Trading Commission or any successor thereof;
10 (3) Private Offerings, Resales and Trading through
11 Automated Linkages (PORTAL);
12 (4) A designated offshore securities market as
13 defined in Securities Exchange Commission Regulation S,
14 17 C.F.R. Part 230, as amended; or
15 (5) A qualified foreign exchange.
16 QQQ. "Qualified foreign exchange" means a foreign
17 exchange, board of trade or contract market located outside
18 the United States, its territories or possessions:
19 (1) That has received regulatory comparability
20 relief under Commodity Futures Trading Commission (CFTC)
21 Rule 30.10 (as set forth in Appendix C to Part 30 of the
22 CFTC's Regulations, 17 C.F.R. Part 30);
23 (2) That is, or its members are, subject to the
24 jurisdiction of a foreign futures authority that has
25 received regulatory comparability relief under CFTC Rule
26 30.10 (as set forth in Appendix C to Part 30 of the
27 CFTC's Regulations, 17 C.F.R. Part 30) as to futures
28 transactions in the jurisdiction where the exchange,
29 board of trade or contract market is located; or
30 (3) Upon which foreign stock index futures
31 contracts are listed that are the subject of no-action
32 relief issued by the CFTC's Office of General Counsel,
33 provided that an exchange, board of trade or contract
34 market that qualifies as a "qualified foreign exchange"
-33- LRB9011450JSgcam01
1 only under this subsection shall only be a "qualified
2 foreign exchange" as to foreign stock index futures
3 contracts that are the subject of no-action relief.
4 RRR. (1) "Rated credit instrument" means an obligation
5 or other instrument which gives its holder a contractual
6 right to receive cash or another rated credit instrument
7 from another entity, if the instrument:
8 (a) Is rated or required to be rated by the
9 SVO;
10 (b) In the case of an instrument with a
11 maturity of 397 days or less, is issued, guaranteed,
12 or insured by an entity that is rated by, or another
13 instrument of such entity is rated by, the SVO or by
14 a nationally recognized statistical rating
15 organization recognized by the SVO;
16 (c) In the case of an instrument with a
17 maturity of 90 days or less, the instrument has been
18 issued, assumed, accepted, guaranteed, or insured by
19 a qualified bank;
20 (d) Is a share of a class one bond mutual
21 fund; or
22 (e) Is a share of a money market mutual fund.
23 (2) However, "rated credit instrument" does not
24 mean:
25 (a) An instrument that is mandatorily, or at
26 the option of the issuer, convertible to an equity
27 interest; or
28 (b) A security that has a par value and whose
29 terms provide that the issuer's net obligation to
30 repay all or part of the security's par value is
31 determined by reference to the performance of an
32 equity, a commodity, a foreign currency or an index
33 of equities, commodities, foreign currencies or
34 combinations thereof.
-34- LRB9011450JSgcam01
1 SSS. "Real estate" means:
2 (1) (a) Real property;
3 (b) Interests in real property, such as
4 leaseholds, minerals and oil and gas that have not
5 been separated from the underlying fee interest;
6 (c) Improvements and fixtures located on or in
7 real property; and
8 (d) The seller's equity in a contract
9 providing for a deed of real estate.
10 (2) As to a mortgage on a leasehold estate, real
11 estate shall include the leasehold estate only if it has
12 an unexpired term (including renewal options exercisable
13 at the option of the lessee) extending beyond the
14 scheduled maturity date of the obligation that is secured
15 by a mortgage on the leasehold estate by a period equal
16 to at least 20% of the original term of the obligation or
17 10 years, whichever is greater.
18 TTT. "Replication transaction" means a derivative
19 transaction that is intended to replicate the performance of
20 one or more assets that an insurer is authorized to acquire
21 under this Article. A derivative transaction that is entered
22 into as a hedging transaction shall not be considered a
23 replication transaction.
24 UUU. "Repurchase transaction" means a transaction in
25 which an insurer purchases securities from a business entity
26 that is obligated to repurchase the purchased securities or
27 equivalent securities from the insurer at a specified price,
28 either within a specified period of time or upon demand.
29 VVV. "Required liabilities" means total liabilities
30 required to be reported on the statutory financial statement
31 of the insurer most recently required to be filed with the
32 Director.
33 WWW. "Residential mortgage loan" means a loan primarily
34 secured by a mortgage on real estate improved with a one to
-35- LRB9011450JSgcam01
1 four family residence.
2 XXX. "Reverse repurchase transaction" means a
3 transaction in which an insurer sells securities to a
4 business entity and is obligated to repurchase the sold
5 securities or equivalent securities from the business entity
6 at a specified price, either within a specified period of
7 time or upon demand.
8 YYY. "Secured location" means the contiguous real estate
9 owned by one person.
10 ZZZ. "Securities lending transaction" means a
11 transaction in which securities are loaned by an insurer to a
12 business entity that is obligated to return the loaned
13 securities or equivalent securities to the insurer, either
14 within a specified period of time or upon demand.
15 AAAA. "Series company" means an investment company that
16 is organized as a series company, as defined in Rule 18f-2(a)
17 adopted under the Investment Company Act of 1940 (15 U.S.C.
18 80a-1 et seq.), as amended.
19 BBBB. "Sinking fund stock" means preferred stock that:
20 (1) Is subject to a mandatory sinking fund or
21 similar arrangement that will provide for the redemption
22 (or open market purchase) of the entire issue over a
23 period not longer than 40 years from the date of
24 acquisition; and
25 (2) Provides for mandatory sinking fund
26 installments (or open market purchases) commencing not
27 more than 10.5 years from the date of issue, with the
28 sinking fund installments providing for the purchase or
29 redemption, on a cumulative basis commencing 10 years
30 from the date of issue, of at least 2.5% per year of the
31 original number of shares of that issue of preferred
32 stock.
33 CCCC. "Special rated credit instrument" means a rated
34 credit instrument that is:
-36- LRB9011450JSgcam01
1 (1) An instrument that is structured so that, if it
2 is held until retired by or on behalf of the issuer, its
3 rate of return, based on its purchase cost and any cash
4 flow stream possible under the structure of the
5 transaction, may become negative due to reasons other
6 than the credit risk associated with the issuer of the
7 instrument; however, a rated credit instrument shall not
8 be a special rated credit instrument under this
9 subsection if it is:
10 (a) A share in a class one bond mutual fund;
11 (b) An instrument, other than an asset-backed
12 security, with payments of par value fixed as to
13 amount and timing, or callable but in any event
14 payable only at par or greater, and interest or
15 dividend cash flows that are based on either a fixed
16 or variable rate determined by reference to a
17 specified rate or index;
18 (c) An instrument, other than an asset-backed
19 security, that has a par value and is purchased at a
20 price no greater than 110% of par;
21 (d) An instrument, including an asset-backed
22 security, whose rate of return would become negative
23 only as a result of a prepayment due to casualty,
24 condemnation or economic obsolescence of collateral
25 or change of law;
26 (e) An asset-backed security that relies on
27 collateral that meets the requirements of
28 subparagraph (b) of this paragraph, the par value of
29 which collateral:
30 (i) Is not permitted to be paid sooner
31 than one half of the remaining term to maturity
32 from the date of acquisition;
33 (ii) Is permitted to be paid prior to
34 maturity only at a premium sufficient to
-37- LRB9011450JSgcam01
1 provide a yield to maturity for the investment,
2 considering the amount prepaid and reinvestment
3 rates at the time of early repayment, at least
4 equal to the yield to maturity of the initial
5 investment; or
6 (iii) Is permitted to be paid prior to
7 maturity at a premium at least equal to the
8 yield of a treasury issue of comparable
9 remaining life; or
10 (f) An asset-backed security that relies on
11 cash flows from assets that are not prepayable at
12 any time at par, but is not otherwise governed by
13 subparagraph (e) of this paragraph, if the
14 asset-backed security has a par value reflecting
15 principal payments to be received if held until
16 retired by or on behalf of the issuer and is
17 purchased at a price no greater than 105% of such
18 par amount.
19 (2) An asset-backed security that:
20 (a) Relies on cash flows from assets that are
21 prepayable at par at any time;
22 (b) Does not make payments of par that are
23 fixed as to amount and timing; and
24 (c) Has a negative rate of return at the time
25 of acquisition if a prepayment threshold assumption
26 is used with such prepayment threshold assumption
27 defined as either:
28 (i) Two (2) times the prepayment
29 expectation reported by a recognized, publicly
30 available source as being the median of
31 expectations contributed by broker dealers or
32 other entities, except insurers, engaged in the
33 business of selling or evaluating such
34 securities or assets. The prepayment
-38- LRB9011450JSgcam01
1 expectation used in this calculation shall be,
2 at the insurer's election, the prepayment
3 expectation for pass-through securities of the
4 Federal National Mortgage Association, the
5 Federal Home Loan Mortgage Corporation, the
6 Government National Mortgage Association, or
7 for other assets of the same type as the assets
8 that underlie the asset- backed security, in
9 either case with a gross weighted average
10 coupon comparable to the gross weighted average
11 coupon of the assets that underlie the
12 asset-backed security; or
13 (ii) Another prepayment threshold
14 assumption specified by the Director by rule
15 promulgated under Section 126.8.
16 (3) For purposes of subparagraph 2 of this
17 subsection, if the asset-backed security is purchased in
18 combination with one or more other asset-backed
19 securities that are supported by identical underlying
20 collateral, the insurer may calculate the rate of return
21 for these specific combined asset-backed securities in
22 combination. The insurer must maintain documentation
23 demonstrating that such securities were acquired and are
24 continuing to be held in combination.
25 DDDD. "State" means a state, territory or possession of
26 the United States of America, the District of Columbia or the
27 Commonwealth of Puerto Rico.
28 EEEE. "Substantially similar securities" means
29 securities that meet all criteria for substantially similar
30 securities specified in the NAIC Accounting Practices and
31 Procedures Manual, as amended, and in an amount that
32 constitutes good delivery form as determined from time to
33 time by the PSA The Bond Market Trade Association.
34 FFFF. "Subsidiary" means, as to any person, an affiliate
-39- LRB9011450JSgcam01
1 controlled by such person, directly or indirectly through one
2 or more intermediaries.
3 GGGG. "SVO" means the Securities Valuation Office of the
4 NAIC or any successor office established by the NAIC.
5 HHHH. "Swap" means an agreement to exchange or to net
6 payments at one or more times based on the actual or expected
7 price, level, performance or value of one or more underlying
8 interests.
9 IIII. "Underlying interest" means the assets,
10 liabilities, other interests or a combination thereof
11 underlying a derivative instrument, such as any one or more
12 securities, currencies, rates, indices, commodities or
13 derivative instruments.
14 JJJJ. "Unrestricted surplus" means the amount by which
15 total admitted assets exceed 125% of the insurer's required
16 liabilities.
17 KKKK. "Warrant" means an instrument that gives the
18 holder the right to purchase an underlying financial
19 instrument at a given price and time or at a series of prices
20 and times outlined in the warrant agreement. Warrants may be
21 issued alone or in connection with the sale of other
22 securities, for example, as part of a merger or
23 recapitalization agreement, or to facilitate divestiture of
24 the securities of another business entity.
25 (Source: P.A. 90-418, eff. 8-15-97.)
26 (215 ILCS 5/143) (from Ch. 73, par. 755)
27 Sec. 143. Policy forms.
28 (1) Life, accident and health. No company transacting
29 the kind or kinds of business enumerated in Classes 1 (a), 1
30 (b) and 2 (a) of Section 4 shall issue or deliver in this
31 State a policy or certificate of insurance or evidence of
32 coverage, attach an endorsement or rider thereto, incorporate
33 by reference bylaws or other matter therein or use an
-40- LRB9011450JSgcam01
1 application blank in this State until the form and content of
2 such policy, certificate, evidence of coverage, endorsement,
3 rider, bylaw or other matter incorporated by reference or
4 application blank has been filed with and approved by the
5 Director and the appropriate filing fee under Section 408 has
6 been paid, except that any such endorsement or rider that
7 unilaterally reduces benefits and is to be attached to a
8 policy subsequent to the date the policy is issued must be
9 filed with, reviewed, and formally approved by the Director
10 prior to the date it is attached to a policy issued or
11 delivered in this State. It shall be the duty of the
12 Director to withhold approval of any such policy,
13 certificate, endorsement, rider, bylaw or other matter
14 incorporated by reference or application blank filed with him
15 if it contains provisions which encourage misrepresentation
16 or are unjust, unfair, inequitable, ambiguous, misleading,
17 inconsistent, deceptive, contrary to law or to the public
18 policy of this State, or contains exceptions and conditions
19 that unreasonably or deceptively affect the risk purported to
20 be assumed in the general coverage of the policy. In all
21 cases the Director shall approve or disapprove any such form
22 within 60 days after submission unless the Director extends
23 by not more than an additional 30 days the period within
24 which he shall approve or disapprove any such form by giving
25 written notice to the insurer of such extension before
26 expiration of the initial 60 days period. The Director shall
27 withdraw his approval of a policy, certificate, evidence of
28 coverage, endorsement, rider, bylaw, or other matter
29 incorporated by reference or application blank if he
30 subsequently determines that such policy, certificate,
31 evidence of coverage, endorsement, rider, bylaw, other
32 matter, or application blank is misrepresentative, unjust,
33 unfair, inequitable, ambiguous, misleading, inconsistent,
34 deceptive, contrary to law or public policy of this State, or
-41- LRB9011450JSgcam01
1 contains exceptions or conditions which unreasonably or
2 deceptively affect the risk purported to be assumed in the
3 general coverage of the policy or evidence of coverage.
4 If a previously approved policy, certificate, evidence of
5 coverage, endorsement, rider, bylaw or other matter
6 incorporated by reference or application blank is withdrawn
7 for use, the Director shall serve upon the company an order
8 of withdrawal of use, either personally or by mail, and if by
9 mail, such service shall be completed if such notice be
10 deposited in the post office, postage prepaid, addressed to
11 the company's last known address specified in the records of
12 the Department of Insurance. The order of withdrawal of use
13 shall take effect 30 days from the date of mailing but shall
14 be stayed if within the 30-day period a written request for
15 hearing is filed with the Director. Such hearing shall be
16 held at such time and place as designated in the order given
17 by the Director. The hearing may be held either in the City
18 of Springfield, the City of Chicago or in the county where
19 the principal business address of the company is located. The
20 action of the Director in disapproving or withdrawing such
21 form shall be subject to judicial review under the
22 Administrative Review Law.
23 This subsection shall not apply to riders or endorsements
24 issued or made at the request of the individual policyholder
25 relating to the manner of distribution of benefits or to the
26 reservation of rights and benefits under his life insurance
27 policy.
28 (2) Casualty, fire, and marine. The Director shall
29 require the filing of all policy forms issued or delivered by
30 any company transacting the kind or kinds of business
31 enumerated in Classes 2 (except Class 2 (a)) and 3 of Section
32 4. In addition, he may require the filing of any generally
33 used riders, endorsements, certificates, application blanks,
34 and other matter incorporated by reference in any such policy
-42- LRB9011450JSgcam01
1 or contract of insurance along with the appropriate filing
2 fee under Section 408. Companies that are members of an
3 organization, bureau, or association may have the same filed
4 for them by the organization, bureau, or association. If the
5 Director shall find from an examination of any such policy
6 form, rider, endorsement, certificate, application blank, or
7 other matter incorporated by reference in any such policy so
8 filed that it (i) violates any provision of this Code, (ii)
9 contains inconsistent, ambiguous, or misleading clauses, or
10 (iii) contains exceptions and conditions that will
11 unreasonably or deceptively affect the risks that are
12 purported to be assumed by the policy, he shall order the
13 company or companies issuing these forms to discontinue their
14 use. Nothing in this subsection shall require a company
15 transacting the kind or kinds of business enumerated in
16 Classes 2 (except Class 2 (a)) and 3 of Section 4 to obtain
17 approval of these forms before they are issued nor in any way
18 affect the legality of any policy that has been issued and
19 found to be in conflict with this subsection, but such
20 policies shall be subject to the provisions of Section 442.
21 (3) This Section shall not apply (i) to surety contracts
22 or fidelity bonds, (ii) to policies issued to an industrial
23 insured as defined in Section 121-2.08 except for workers'
24 compensation policies, nor (iii) to riders or endorsements
25 prepared to meet special, unusual, peculiar, or extraordinary
26 conditions applying to an individual risk.
27 (Source: P.A. 87-1090; 88-313.)"; and
28 on page 8 by replacing lines 13 and 14 with the following:
29 "(215 ILCS 5/445) (from Ch. 73, par. 1057)
30 Sec. 445. Surplus line.
31 (1) Surplus line defined; surplus line insurer
32 unauthorized company requirements. Surplus line insurance is
33 insurance on an Illinois risk of the kinds specified in
-43- LRB9011450JSgcam01
1 Classes 2 and 3 of Section 4 of this Code procured from an
2 unauthorized company or a domestic surplus line insurer as
3 defined in Section 445a after the insurance producer
4 representing the insured or the surplus line producer is
5 unable, after diligent effort, to procure said insurance from
6 companies which are authorized to transact business in this
7 State other than domestic surplus line insurers as defined in
8 Section 445a.
9 Insurance producers may procure surplus line insurance
10 only if licensed as a surplus line producer under this
11 Section and may procure that insurance only from an
12 unauthorized company or from a domestic surplus line insurer
13 as defined in Section 445a:
14 (a) that based upon information available to the
15 surplus line producer has a policyholders surplus of not
16 less than $15,000,000 determined in accordance with
17 accounting rules that are applicable to authorized
18 companies; and
19 (b) that has standards of solvency and management
20 that are adequate for the protection of policyholders;
21 and
22 (c) where an unauthorized company does not meet the
23 standards set forth in (a) and (b) above, a surplus line
24 producer may, if necessary, procure insurance from that
25 company only if prior written warning of such fact or
26 condition is given to the insured by the insurance
27 producer or surplus line producer.
28 (2) Surplus line producer; license. Any licensed
29 producer who is a resident of this State may be licensed as a
30 surplus line producer upon:
31 (a) passing a written examination. The examination
32 shall reasonably test the knowledge of the applicant
33 concerning the surplus line law and the responsibilities
34 assumed by a surplus line producer thereunder. The
-44- LRB9011450JSgcam01
1 examination provided for by this Section shall be
2 conducted under rules and regulations prescribed by the
3 Director. The Director may administer the examination or
4 may make arrangements, including contracting with an
5 outside testing service, for administering such
6 examinations. Any charges assessed by the Director or
7 the testing service for administering such examinations
8 shall be paid directly by the individual applicants.
9 Each applicant required to take an examination shall, at
10 the time of request for examination, enclose with the
11 application a non-refundable $10 application fee payable
12 to the Director plus an examination administration fee.
13 If the Director administers the examination, the
14 application fee and examination administration fee shall
15 be combined and made payable to the Director. If the
16 Director designates an outside testing service to
17 administer the examination, the applicant shall make a
18 separate examination administration fee remittance
19 payable to the designated testing service for the total
20 fees the testing service charges for each of the various
21 services being requested by the applicant. An applicant
22 who fails to appear for the examination as scheduled, or
23 appears but fails to pass, shall not be entitled to any
24 refund, and shall be required to submit a new request for
25 examination together with all the requisite fees before
26 being rescheduled for another examination at a later
27 date;
28 (b) payment of an annual license fee of $200; and
29 (c) procurement of the surety bond required in
30 subsection (4) of this Section.
31 Each surplus line producer so licensed shall keep a
32 separate account of the business transacted thereunder which
33 shall be open at all times to the inspection of the Director
34 or his representative.
-45- LRB9011450JSgcam01
1 The examination requirement in (a) above shall not apply
2 to insurance producers who were licensed under the Illinois
3 surplus line law or individuals designated to act for a
4 partnership, association or corporation licensed under the
5 Illinois surplus line law on February 27, 1985.
6 (3) Taxes and reports.
7 (a) Surplus line tax and penalty for late payment.
8 Each surplus line producer shall file with the
9 Director on or before February 1 and August 1 of each
10 year a report in the form prescribed by the Director on
11 all surplus line insurance procured from unauthorized
12 insurers during the preceding 6 month period ending
13 December 31 or June 30 respectively, and on the filing of
14 such report shall pay to the Director for the use and
15 benefit of the State a sum equal to 3% of the gross
16 premiums less returned premiums upon all surplus line
17 insurance procured or cancelled during the preceding 6
18 months.
19 Any surplus line producer who fails to pay the full
20 amount due under this subsection is liable, in addition
21 to the amount due, for such penalty and interest charges
22 as are provided for under Section 412 of this Code. The
23 Director, through the Attorney General, may institute an
24 action in the name of the People of the State of
25 Illinois, in any court of competent jurisdiction, for the
26 recovery of the amount of such taxes and penalties due,
27 and prosecute the same to final judgment, and take such
28 steps as are necessary to collect the same.
29 (b) Fire Marshal Tax.
30 Each surplus line producer shall file with the
31 Director on or before March 31 of each year a report in
32 the form prescribed by the Director on all fire insurance
33 procured from unauthorized insurers subject to tax under
34 Section 12 of the Fire Investigation Act and shall pay to
-46- LRB9011450JSgcam01
1 the Director the fire marshal tax required thereunder.
2 (c) Taxes and fees charged to insured. The taxes
3 imposed under this subsection and the countersigning fees
4 charged by the Surplus Line Association of Illinois may
5 be charged to and collected from surplus line insureds.
6 (4) Bond. Each surplus line producer, as a condition to
7 receiving a surplus line producer's license, shall execute
8 and deliver to the Director a surety bond to the People of
9 the State in the penal sum of $20,000, with a surety which is
10 authorized to transact business in this State, conditioned
11 that the surplus line producer will pay to the Director the
12 tax, interest and penalties levied under subsection (3) of
13 this Section.
14 (5) Submission of documents to Surplus Line Association
15 of Illinois. Each surplus line producer shall submit every
16 insurance contract issued under his or her license to the
17 Surplus Line Association of Illinois for recording and
18 countersignature. The insurance contracts submitted shall
19 set forth:
20 (a) the name of the insured;
21 (b) the description and location of the insured
22 property or risk;
23 (c) the amount insured;
24 (d) the gross premiums charged or returned;
25 (e) the name of the unauthorized insurer or
26 domestic surplus line insurer as defined in Section 445a
27 from whom coverage has been procured company;
28 (f) the kind or kinds of insurance procured; and
29 (g) amount of premium subject to tax required by
30 Section 12 of the Fire Investigation Act.
31 Proposals, endorsements and other documents which
32 are incidental to the insurance but which does not affect
33 the premium charged are exempted from countersignature.
34 The submission of insuring contracts to the Surplus
-47- LRB9011450JSgcam01
1 Line Association of Illinois constitutes a certification
2 by the surplus line producer or by the insurance producer
3 who presented the risk to the surplus line producer for
4 placement as a surplus line risk that after diligent
5 effort the required insurance could not be procured from
6 companies which are authorized to transact business in
7 this State other than domestic surplus line insurers as
8 defined in Section 445a and that such procurement was
9 otherwise in accordance with the surplus line law.
10 (6) Countersignature required. It shall be unlawful for
11 an insurance producer to deliver any unauthorized company
12 insurance contract or domestic surplus line insurer contract
13 unless such insurance contract is countersigned by the
14 Surplus Line Association of Illinois.
15 (7) Inspection of records. Each surplus line producer
16 shall maintain separate records of the business transacted
17 under his or her license, which records shall be open at all
18 times for inspection by the Director and by the Surplus Line
19 Association of Illinois.
20 (8) Violations and penalties. The Director may suspend
21 or revoke or refuse to renew a surplus line producer license
22 for any violation of this Code. In addition to or in lieu of
23 suspension or revocation, the Director may subject a surplus
24 line producer to a civil penalty of up to $1,000 for each
25 cause for suspension or revocation. Such penalty is
26 enforceable under subsection (5) of Section 403A of this
27 Code.
28 (9) Director may declare insurer company ineligible. If
29 the Director determines that the further assumption of risks
30 might be hazardous to the policyholders of an unauthorized
31 insurer company, the Director may order the Surplus Line
32 Association of Illinois not to countersign insurance
33 contracts evidencing insurance in such insurer company and
34 order surplus line producers to cease procuring insurance
-48- LRB9011450JSgcam01
1 from such insurer company.
2 (10) Service of process upon Director. All insurance
3 contracts delivered under this Section from unauthorized
4 insurers shall contain a provision designating the Director
5 and his successors in office the true and lawful attorney of
6 the insurer company upon whom may be served all lawful
7 process in any action, suit or proceeding arising out of such
8 insurance and further designate the surplus line producer or
9 other resident of this State an agent of the unauthorized
10 insurer company to which a copy of such process shall be
11 forwarded by the Director for delivery to the insurer
12 company. Service of process made upon the Director to be
13 valid hereunder must state the name of the insured, the name
14 of the unauthorized insurer company and identify the contract
15 of insurance. The Director at his option is authorized to
16 forward a copy of the process to the Surplus Line Association
17 of Illinois for delivery to the surplus line producer or
18 other designated resident of this State or the Director may
19 deliver the process to the unauthorized insurer company by
20 other means which he considers to be reasonably prompt and
21 certain.
22 (11) The Illinois Surplus Line law does not apply to
23 insurance of property and operations of railroads or aircraft
24 engaged in interstate or foreign commerce, insurance of
25 vessels, crafts or hulls, cargoes, marine builder's risks,
26 marine protection and indemnity, or other risks including
27 strikes and war risks insured under ocean or wet marine forms
28 of policies.
29 (12) Surplus line insurance procured under this Section,
30 including insurance procured from a domestic surplus line
31 insurer, is not subject to the provisions of the Illinois
32 Insurance Code other than Sections 123, 123.1, 401, 401.1,
33 402, 403, 403A, 408, 412, 445, 445.1, 445.2, 445.3, 445.4,
34 and all of the provisions of Article XXXI to the extent that
-49- LRB9011450JSgcam01
1 the provisions of Article XXXI are not inconsistent with the
2 terms of this Act.
3 (Source: P.A. 88-627, eff. 9-9-94.)
4 (215 ILCS 5/445a new)
5 Sec. 445a. Domestic surplus line insurer.
6 (a) A domestic insurer possessing policyholder surplus
7 of at least $15,000,000 may pursuant to a resolution by its
8 board of directors, and with the written approval of the
9 Director, be designated as a "domestic surplus line insurer".
10 (b) A domestic surplus line insurer may only insure in
11 this State an Illinois risk procured from a surplus line
12 producer pursuant to Section 445 of this Code.
13 (c) A domestic surplus line insurer must agree not to
14 issue a policy designed to satisfy the financial
15 responsibility requirements of the Illinois Vehicle Code, the
16 Workers' Compensation Act, or the Workers' Occupational
17 Diseases Act. A domestic surplus line insurer is not subject
18 to the provisions of Articles XXXIII, XXXIII 1/2, XXXIV,
19 XXXVIIIA, Section 468, or Section 478.1 of this Code.
20 Section 10. The Dental Service Plan Act is amended by
21 changing Section 35 as follows:
22 (215 ILCS 110/35) (from Ch. 32, par. 690.35)
23 Sec. 35. Investments; reserves; deficiencies.
24 (a) The funds of any dental service plan corporation may
25 be invested only in accordance with the requirements provided
26 by law for the investment of funds of life insurance
27 companies.
28 (b) As an allocation of net worth, each dental service
29 plan corporation shall maintain a special contingent reserve.
30 The special contingent reserve for a corporation that is
31 beginning operations shall be equal to 5% of its net earned
-50- LRB9011450JSgcam01
1 subscription revenue for dental care services through
2 December 31st of the year in which it is certified, but in no
3 event less than that $100,000. In subsequent years, unless
4 waived by the Director, the corporation shall accumulate
5 additions to the contingent reserve in an amount which is
6 equal to 2% of its net earned subscription revenue for each
7 calendar year. For purposes of this Section, "net earned
8 subscription revenue" means premium minus reinsurance
9 expenses. Maintenance of the contingent reserve requires
10 that net worth equals or exceeds the contingent reserve at
11 any balance sheet date. The special contingent reserve shall
12 be provided in cash and securities in combination and form
13 acceptable to the Director.
14 (c) Additional accumulations under Section 35(b) will no
15 longer be required when at such time that the total special
16 contingent reserve required by Section 35(b) is equal to or
17 greater than 5% of the corporation's average annual net
18 earned subscription revenue for the corporation's preceding 2
19 two calendar years. Additional accumulations under
20 subsection (b) of this Section shall no longer be required
21 when the total special contingent reserve required by
22 subsection (b) of this Section is equal to $1,500,000.
23 (d) A deficiency in meeting amounts required in
24 subsection (b) Section 6(b) or (c) of this Section will
25 require, upon notice from the Director, (1) filing of a plan
26 for correction of the deficiency, acceptable to the Director,
27 within 20 days from receipt of notice, and (2) correction of
28 the deficiency within a reasonable time, not to exceed 60
29 days from receipt of notice unless an extension of time is
30 granted by the Director. Such a deficiency will be deemed an
31 impairment, and failure to correct the deficiency in the
32 prescribed time shall be grounds for rehabilitation,
33 liquidation, conservation, or dissolution pursuant to Section
34 38.
-51- LRB9011450JSgcam01
1 (Source: P.A. 84-209; revised 2-25-98.)
2 Section 15. The Employee Leasing Company Act is amended
3 by changing Sections 10, 15, 20, 25, 30, 40, and 50 and
4 adding Section 56 as follows:
5 (215 ILCS 113/10)
6 Sec. 10. Applicability. This Act applies to all lessors
7 and insurers conducting business in this State and to
8 policies issued, renewed, or delivered after the effective
9 date of this amendatory Act of 1998.
10 (Source: P.A. 90-499, eff. 1-1-98.)
11 (215 ILCS 113/15)
12 Sec. 15. Definitions. In this Act:
13 "Department" means the Illinois Department of Insurance.
14 "Employee leasing arrangement" means a contractual an
15 arrangement, including long-term temporary arrangements
16 whereby a lessor obligates itself to perform specified
17 employer responsibilities as to leased employees including
18 the securing of workers' compensation insurance. For
19 purposes of this Act, "employee leasing arrangement" does not
20 include "temporary help arrangement". under contract or
21 otherwise, whereby one business or other entity leases all or
22 a majority number of its workers from another business.
23 Employee leasing arrangements include, but are not limited
24 to, full service employee leasing arrangements, long-term
25 temporary arrangements, and any other arrangement that
26 involves the allocation of employment responsibilities among
27 2 or more entities. For purposes of this Act, "employee
28 leasing arrangement" does not include arrangements to provide
29 temporary help service. "Temporary help service" means a
30 service whereby an organization hires its own employees and
31 assigns them to clients for a finite time period to support
-52- LRB9011450JSgcam01
1 or supplement the client's work force in special work
2 situations such as employee absences, temporary skill
3 shortages, and seasonal workloads.
4 "Leased employee" or "worker" means a person performing
5 services for a lessee under an employee leasing arrangement.
6 "Lessee" or "client company" means an entity that obtains
7 any all or part of its work force from another entity through
8 an employee leasing arrangement or that employs the services
9 of an entity through an employee leasing arrangement.
10 "Lessor" or "employee leasing company" means an entity
11 that leases any of its workers grants a written lease to a
12 lessee through an employee leasing arrangement.
13 "Long-term temporary arrangement" means an arrangement
14 where one company leases all or a majority number of workers
15 employees from one company are leased to another for a period
16 in excess of 6 months or consecutive periods equal to or
17 greater than one year.
18 "Premium subject to dispute" means the insured has
19 provided a written notice of dispute of the premium to the
20 insurer or service carrier, has initiated any applicable
21 proceeding for resolving these disputes as prescribed by law
22 or rating organization rule, or has initiated litigation
23 regarding the premium dispute. The insured must have
24 detailed the specific areas of dispute and provided an
25 estimate of the premium the insured believes to be correct.
26 The insured must have paid any undisputed portion of the
27 bill.
28 "Residual market mechanism" means the residual market
29 mechanism as defined in Section 468 of the Illinois Insurance
30 Code.
31 "Temporary help arrangement" means a service whereby an
32 organization hires its own employees and assigns them to
33 clients for a finite time period to support or supplement the
34 client's work force in special work situations such as, but
-53- LRB9011450JSgcam01
1 not limited to, employee absences, temporary skill shortages,
2 seasonal workloads, and special assignments and projects.
3 (Source: P.A. 90-499, eff. 1-1-98.)
4 (215 ILCS 113/20)
5 Sec. 20. Registration.
6 (a) A lessor shall register with the Department prior to
7 becoming a qualified self-insured for workers' compensation
8 or becoming eligible to be issued a workers' compensation and
9 employers' liability insurance policy. An employee leasing
10 company may not engage in business in this State without
11 first registering with the Department. A corporation,
12 partnership, sole proprietorship, or other business entity
13 that provides staff, personnel, or employees to be employed
14 in this State to other businesses pursuant to a lease
15 arrangement or agreement shall, before becoming eligible to
16 be issued any policy of workers' compensation insurance,
17 register with the Department. The registration shall:
18 (1) identify the name of the lessor;
19 (2) identify the address of the principal place of
20 business of the lessor and the address of each office it
21 maintains within this State;
22 (3) include the lessor's taxpayer or employer
23 identification number;
24 (4) include a list by jurisdiction of each and
25 every name that the lessor has operated under in the
26 preceding 5 years including any alternative names and
27 names of predecessors and, if known, successor business
28 entities;
29 (5) include a list of the officers and directors of
30 the lessor and employee leasing company or its
31 predecessors, successors, or alter egos in the preceding
32 5 years; and
33 (6) include a $500 fee for the registration and
-54- LRB9011450JSgcam01
1 each annual renewal thereafter.
2 Amounts received as registration fees shall be deposited
3 into the Insurance Producer Administration Fund. list of each
4 and every cancellation or nonrenewal of workers' compensation
5 insurance that has been issued to the lessor or any
6 predecessor in the preceding 5 years. The list shall include
7 the policy or certificate number, name of insurer or other
8 provider of coverage, date of cancellation, and reason for
9 cancellation. If coverage has not been cancelled or
10 nonrenewed, the registration shall include a sworn affidavit
11 signed by the chief executive officer of the lessor attesting
12 to that fact.
13 Each employee leasing company registrant shall pay to the
14 Department upon initial registration, and upon each renewal
15 annually thereafter, a registration fee of $500.
16 Each employee leasing company shall maintain accounting
17 and employment records relating to all employee leasing
18 activities for a minimum of 3 calendar years.
19 (b) (Blank) Any lessor of employees whose workers'
20 compensation insurance has been terminated within the past 5
21 years in any jurisdiction due to a determination that an
22 employee leasing arrangement was being utilized to avoid
23 premium otherwise payable by lessees shall be ineligible to
24 register with the Department or to remain registered, if
25 previously registered.
26 (c) Lessors registering Persons filing registration
27 statements pursuant to this Section shall notify the
28 Department within 30 days as to any changes in any
29 information provided pursuant to this Section.
30 (d) The Department shall maintain a list of those
31 lessors of employees who are satisfactorily registered with
32 the Department.
33 (e) The Department may prescribe any forms that are
34 necessary to promote the efficient administration of this
-55- LRB9011450JSgcam01
1 Section.
2 (f) Any lessor of employees that was doing business in
3 this State prior to enactment of this Act shall register with
4 the Department within 60 days of the effective date of this
5 Act.
6 (Source: P.A. 90-499, eff. 1-1-98.)
7 (215 ILCS 113/25)
8 Sec. 25. Record keeping and reporting requirement.
9 (a) A lessor shall maintain accounting and employment
10 records relating to all employee leasing arrangements for a
11 minimum of 4 calendar years. A lessor shall maintain the
12 address of each office it maintains in this State, at its
13 principal place of business.
14 (b) A lessor shall maintain sufficient information in a
15 manner consistent with a licensed rating organization's data
16 submission requirements to permit the rating organization
17 licensed under Section 459 of the Illinois Insurance Code to
18 calculate an experience modification factor for the lessee.
19 (c) Upon written request of a lessee with an annual
20 payroll attributed to it in excess of $200,000, the lessor
21 shall provide the lessee's experience modification factor to
22 the lessee within 30 days of the request.
23 (d) Upon request of a lessee with an annual payroll
24 attributed to it of less than $200,000, the lessor shall
25 provide the loss information required to be maintained by
26 this Section to the lessee within 30 days of the request.
27 (e) Nothing in this Section shall preclude a licensed
28 rating organization from calculating the experience
29 modification factor for each lessee nor an insurer from
30 maintaining and furnishing on behalf of the lessor, such
31 information as required by this Section. A lessor shall
32 maintain and furnish once every 12 months or in the event of
33 a termination of the employee leasing arrangement sufficient
-56- LRB9011450JSgcam01
1 information to the insurer, who shall submit such information
2 to permit the calculation of an experience modification
3 factor by a rating organization licensed under Section 459 of
4 the Illinois Insurance Code for each lessee. This
5 information shall be submitted in a manner consistent with a
6 licensed rating organization's data submission requirements
7 and shall include but not be limited to the following:
8 (1) the lessee's corporate name, or operating name
9 if not a corporation, and address;
10 (2) the lessee's taxpayer or employer
11 identification number;
12 (3) the lessee's risk identification number;
13 (4) a listing of all leased employees associated
14 with each lessee, the applicable classification code, and
15 payroll; and
16 (5) claims information grouped by lessee and any
17 other information necessary to permit the calculation of
18 an experience modification factor for each lessee.
19 (f) (b) In the event that a lessee's experience
20 modification factor exceeds the lessor's experience
21 modification factor by 50% at the inception of the employee
22 leasing arrangement, the lessee's experience modification
23 factor shall be utilized to calculate the premium or costs
24 charged to the lessee for workers' compensation coverage for
25 a period of 2 years. Thereafter, the premium charged by the
26 insurer insurance company for inclusion of a lessee under a
27 lessor's policy may be calculated on the basis of the
28 lessor's experience modification factor.
29 (Source: P.A. 90-499, eff. 1-1-98.)
30 (215 ILCS 113/30)
31 Sec. 30. Responsibility for policy issuance and
32 continuance.
33 (a) When a workers' compensation policy written to cover
-57- LRB9011450JSgcam01
1 leased employees is issued to the lessor employee leasing
2 company as the named insured, the lessee client company shall
3 be identified thereon by the attachment of an appropriate
4 endorsement indicating that the policy provides coverage for
5 leased employees in accordance with Illinois law. The
6 endorsement shall, at a minimum, provide for the following:
7 (1) Coverage under the endorsement policy shall be
8 limited to the named insured's employees leased to the
9 lessees.
10 (2) The experience of the employees leased to the
11 particular lessee shall be separately maintained by the
12 lessor as provided in Section 25.
13 (3) Cancellation of the policy shall not affect the
14 rights and obligations of the named insured as an
15 employee leasing company with respect to any other
16 workers' compensation and employers' liability policy
17 issued to the named insured.
18 (b) (Blank). The insurer of the lessor may take all
19 reasonable steps to ascertain exposure under the policy and
20 collect the appropriate premium through the following
21 procedures:
22 (1) complete description of the lessor's
23 operations;
24 (2) periodic reporting of the covered lessee's
25 payroll, classifications, experience rating modification
26 factors, and jurisdictions with exposure. This reporting
27 must be supplemented by a submission of Internal Revenue
28 Service Form 941 or its equivalent to the carrier on a
29 quarterly basis;
30 (3) physical inspection of the client company
31 premises;
32 (4) audit of the lessor's operations; and
33 (5) any other reasonable measures to determine the
34 appropriate premium.
-58- LRB9011450JSgcam01
1 (c) The lessor shall notify the insurer or a licensed
2 rating organization 30 days prior to the effective date of
3 termination or immediately upon notification of cancellation
4 by the lessor of an employee leasing arrangement with the
5 lessee in order to allow sufficient time to calculate an
6 experience modification factor for the lessee.
7 (d) The insurer lessor shall provide proof of workers'
8 compensation insurance to the lessor and to each applicable
9 lessee within 30 days of the coverage being effected or
10 changed effective date. Notice of any coverage changes shall
11 be provided to the lessor and to each lessee within 30 days
12 of the effective date of the change.
13 (e) Calculation of a lessor's or lessee's premium shall
14 be done in accordance with the insurer's Nothing in this Act
15 shall limit an insurer from utilizing schedule credits,
16 debits, or other rating manual plans filed with the
17 Department for calculation of a lessor's or lessee's premium.
18 (Source: P.A. 90-499, eff. 1-1-98.)
19 (215 ILCS 113/40)
20 Sec. 40. Insurer or service carrier audit. Insurers
21 shall audit policies issued through the residual market
22 pursuant to Section 30 of this Act within 90 days of the
23 policy effective date and may conduct quarterly audits
24 thereafter. Insurers may audit policies issued through the
25 voluntary market within 90 days of the policy effective date
26 and shall conduct audits during the normal course of business
27 thereafter. The purpose of the audit will be to determine
28 whether all classifications, experience modification factors,
29 and estimated payroll utilized with respect to the
30 development of the premium charged to the lessor are
31 appropriate.
32 (Source: P.A. 90-499, eff. 1-1-98.)
-59- LRB9011450JSgcam01
1 (215 ILCS 113/50)
2 Sec. 50. Grounds for removal of eligibility; order;
3 hearing; review.
4 (a) Any registration issued under this Act may be
5 revoked or an application for registration may be denied if
6 the Director finds that the lessor or applicant:
7 (1) has willfully violated any provision of this
8 Act or any rule promulgated by the Director;
9 (2) has intentionally made a material misstatement
10 in the application for a registration;
11 (3) has obtained or attempted to obtain a
12 registration through misrepresentation or fraud;
13 (4) has misappropriated or converted to his own, or
14 improperly withheld, money required to be held in a
15 fiduciary capacity;
16 (5) has used fraudulent, coercive, or dishonest
17 practices, or has demonstrated incompetence,
18 untrustworthiness, or financial irresponsibility;
19 (6) has been, within the past 3 years, convicted of
20 a felony, unless the person demonstrates to the Director
21 sufficient rehabilitation to warrant the public trust;
22 (7) has failed to appear without reasonable cause
23 or excuse in response to a subpoena lawfully issued by
24 the Director;
25 (8) has had its registration or license suspended
26 or revoked or its application denied in any other state,
27 district, territory, or province; Any registration issued
28 under this Act may be revoked or an application for
29 registration may be denied, if the Director finds that
30 the lessor or applicant;
31 (1) has willfully violated any provision of the Act
32 or any rule or regulation promulgated by the Director;
33 (b) (a) When the Director of Insurance has cause to
34 believe that grounds for the refusal, denial, or revocation
-60- LRB9011450JSgcam01
1 removal of a registration registrant's eligibility under this
2 Section exists, the Director he or she shall issue an order
3 to the lessor employee leasing company stating the grounds
4 upon which the refusal, denial, or revocation removal is
5 based. The order shall be sent to the lessor employee
6 leasing company by certified or registered mail. The lessor
7 employee leasing company may in writing request a hearing in
8 writing within 30 days of the mailing receipt of the order.
9 If no written request is received by the Director made, the
10 order shall be final upon the expiration of the 30 days.
11 (c) (b) If the lessor employee leasing company requests
12 a hearing pursuant to this Section, the Director shall issue
13 a written notice of hearing sent to the lessor employee
14 leasing company by certified or registered mail stating the
15 following:
16 (1) a specified time for the hearing, which may not
17 be less than 20 days nor more than 30 days after the
18 mailing receipt of the notice of hearing; and
19 (2) a specific place for the hearing, which may be
20 either in the city of Springfield or Chicago or in the
21 county where the lessor's employee leasing company's
22 principal place of business is located.
23 (d) (c) After the hearing, or upon the failure of the
24 lessor employee leasing company to appear at the hearing, the
25 Director of Insurance shall take such action as is deemed
26 advisable on written findings that shall be served on the
27 lessor employee leasing company. The action of the Director
28 of Insurance shall be subject to review under and in
29 accordance with the Administrative Review Law.
30 (Source: P.A. 90-499, eff. 1-1-98.)
31 (215 ILCS 113/56 new)
32 Sec. 56. Rulemaking authority. The Director shall have
33 the authority to promulgate rules to enforce this Act.
-61- LRB9011450JSgcam01
1 (215 ILCS 113/35 rep.)
2 (215 ILCS 113/55 rep.)
3 Section 20. The Employee Leasing Company Act is amended
4 by repealing Sections 35 and 55.
5 Section 25. The Farm Mutual Insurance Company Act of
6 1986 is amended by changing Sections 4 and 12 as follows:
7 (215 ILCS 120/4) (from Ch. 73, par. 1254)
8 Sec. 4. Definition of Admitted Assets. Admitted assets
9 shall include those investments permitted under Section 12 of
10 this Act and in addition thereto, only the following:
11 (1) Cash funds held in the company's office and under
12 the company's control.
13 (2) Interest due and accrued on bonds, certificates of
14 deposit and other investments permitted by this Act that are
15 not in default.
16 (3) Dividends declared and unpaid on mutual funds,
17 common stock, and preferred stock, permitted by this Act.
18 (4) (3) Amounts recoverable from solvent insurance
19 companies licensed to do business in this State.
20 (5) (4) Tax refunds due from the United States or the
21 State of Illinois.
22 (6) (5) Premiums receivable on policies not over 90 days
23 past due. The due date of the premium shall be considered to
24 be the first day of the coverage period for which the premium
25 is payable.
26 (Source: P.A. 88-364.)
27 (215 ILCS 120/12) (from Ch. 73, par. 1262)
28 Sec. 12. Investments. Without the prior approval of the
29 Director, the funds of any company operating under or
30 regulated by the provisions of this Act, shall be invested
31 only in the following:
-62- LRB9011450JSgcam01
1 (1) Direct obligations of the United States of
2 America, or obligations of agencies or instrumentalities
3 of the United States to the extent guaranteed or insured
4 as to the payment of principal and interest by the United
5 States of America;
6 (2) Bonds which are direct, general obligations of
7 the State of Illinois;
8 (3) Bonds which are direct, general obligations of
9 political subdivisions of the State of Illinois, subject
10 to the following conditions:
11 (a) Maximum of 5% of admitted assets in any
12 one political subdivision;
13 (b) Maximum of 30% 35% of admitted assets in
14 all political subdivisions in the aggregate;
15 (4) Bonds that are obligations of the Federal
16 National Mortgage Association subject to a maximum
17 investment of 10% of admitted assets in the aggregate;
18 (5) Bonds that are obligations of the Federal Home
19 Loan Mortgage Corporation subject to a maximum investment
20 of 10% of admitted assets in the aggregate;
21 (6) Mutual funds subject to the following
22 conditions:
23 (a) Maximum of 3% of policyholders' surplus in
24 any one balanced or growth mutual fund that invests
25 in common stock;
26 (b) Maximum of 5% of admitted assets in any
27 one bond or income mutual fund or any one
28 non-governmental money market mutual fund;
29 (c) Maximum of 10% of admitted assets in any
30 one governmental money market mutual fund;
31 (d) Maximum of 25% of admitted assets in all
32 mutual funds in the aggregate;
33 (7) Common stock and preferred stock subject to the
34 following conditions:
-63- LRB9011450JSgcam01
1 (a) Common stock and preferred stock shall be
2 traded on the New York Stock Exchange or the
3 American Stock Exchange or listed on the National
4 Association of Securities Dealers Automated
5 Quotation (NASDAQ) system;
6 (b) Maximum of 3% of policyholders' surplus in
7 excess of $400,000 in any one common stock or
8 preferred stock issuer provided that the net
9 unearned premium reserve does not exceed
10 policyholders' surplus;
11 (8) Investments authorized under subdivision (a) of
12 item (6) and subdivision (a) of item (7) of this Section
13 shall not in the aggregate exceed 10% of policyholders'
14 surplus;
15 (9) (4) Funds on deposit in solvent banks and
16 savings and loan associations which are insured by
17 qualify for insurance with the Federal Deposit Insurance
18 Corporation; however, the uninsured portion of funds held
19 in any one such bank or association shall not exceed 5%
20 of the company's policyholders' surplus;
21 (5) Funds on deposit with savings and loan
22 associations, provided that all funds invested in such
23 associations are insured by the Federal Deposit Insurance
24 Corporation;
25 (10) (6) Real estate for home office building
26 purposes, provided that such investments are approved by
27 the Director of Insurance on the basis of a showing by
28 the company that the company has adequate assets
29 available for such investment and that the proposed
30 acquisition does not exceed the reasonable normal value
31 of such property.
32 An investment that qualified under this Section at the
33 time it was acquired by the company shall continue to qualify
34 under this Section.
-64- LRB9011450JSgcam01
1 Investments permitted under this Section shall be
2 registered in the name of the company and under its direct
3 control or shall be held in a custodial account with a bank
4 or trust company that is qualified to administer trusts in
5 Illinois under the Corporate Fiduciary Act and that has an
6 office in Illinois. However, securities may be held in
7 street form and in the custody of a licensed dealer for a
8 period not to exceed 30 days.
9 Notwithstanding the provisions of this Act, the Director
10 may, after notice and hearing, order a company to limit or
11 withdraw from certain investments or discontinue certain
12 investments or investment practices to the extent the
13 Director finds those investments or investment practices
14 endanger the solvency of the company.
15 (Source: P.A. 88-364.)
16 Section 30. The Voluntary Health Services Plans Act is
17 amended by changing Section 20 as follows:
18 (215 ILCS 165/20) (from Ch. 32, par. 614)
19 Sec. 20. The funds of any health services plan
20 corporation shall be handled in accordance with the following
21 rules:
22 (a) All loans made to original capital of the
23 corporation may be repayable only out of earned surplus.
24 (b) The funds of the corporation may be invested in
25 accordance with the requirements provided by law for the
26 investment of funds of life insurance companies and may also
27 be invested in equipment of the corporation provided such
28 investment in equipment shall not exceed more than 30% of the
29 total admitted assets. The value of such equipment shall be
30 depreciated at a rate as rapidly as is provided under the
31 Internal Revenue Code.
32 (c) Every health services plan corporation, after its
-65- LRB9011450JSgcam01
1 first fiscal year of doing business, shall accumulate and
2 maintain a special contingent reserve over and above its
3 reserves and liabilities at the rate of 2% annually of its
4 subscription income net of reinsurance so long as the special
5 contingent reserve does not exceed 8% of its annual net
6 income for the preceding 12 month period. Additional
7 accumulations shall no longer be required at such time that
8 the total special contingent reserve is equal to $1,500,000.
9 (Source: P.A. 81-1203.)
10 Section 99. Effective date. This Act takes effect upon
11 becoming law except that Section 25 takes effect January 1,
12 1999.".