Bill Text: IL SB1718 | 2013-2014 | 98th General Assembly | Amended

NOTE: There are more recent revisions of this legislation. Read Latest Draft

---

Bill Title: Amends the Illinois Insurance Code. Provides that subject to the restrictions provided in the Article concerning life and health insurers, an insurer may invest in bonds, notes, warrants, and other securities not in default that are the direct obligations of the government of any foreign country that is a member of the Organisation for Economic Co-operation and Development (OECD) and for which the full faith and credit of such government has been pledged for the payment of principal and interest, provided that (i) the debt of the issuing country has been rated as investment grade for at least 10 years immediately before the time of acquiring the obligations by at least 2 of the major ratings agencies, including Moody's Investors Service, Standard & Poor's Rating Services, Fitch Rating, and the Securities Valuation Office of the National Association of Insurance Commissioners and (ii) the issuing country has not defaulted and has met its payment obligations in a timely manner on all similar obligations for a period of at least 30 years immediately before the time of acquiring the obligations.

Spectrum: Bipartisan Bill

Status: (Passed) 2013-08-27 - Public Act . . . . . . . . . 98-0571 [SB1718 Detail]

Download: Illinois-2013-SB1718-Amended.html

---

Sen. Ira I. Silverstein

Filed: 3/12/2013

09800SB1718sam001 LRB098 10029 RPM 42759 a
AMENDMENT TO SENATE BILL 1718
AMENDMENT NO. ______. Amend Senate Bill 1718 by replacing
everything after the enacting clause with the following:
"Section 5. The Illinois Insurance Code is amended by
changing Section 26 as follows:
(215 ILCS 5/26) (from Ch. 73, par. 638)
(Section scheduled to be repealed on January 1, 2017)
Sec. 26. Deposit.
(a) A company subject to the provisions of this Article
shall make and maintain with the Director for the protection of
all creditors, policyholders and policy obligations of the
company, a deposit of securities which are authorized
investments under Section 126.11A(1), 126.11A(2), 126.24A(1),
or 126.24A(2) having a fair market value equal to the minimum
capital and surplus required to be maintained under Section 13.
The Director may release the required deposit of securities

09800SB1718sam001 - 2 - LRB098 10029 RPM 42759 a
upon receipt of an order of a court having proper jurisdiction
or upon: (i) certification by the company that it has no
outstanding creditors, policyholders, or policy obligations in
effect and no plans to engage in the business of insurance;
(ii) receipt of a lawful resolution of the company's board of
directors effecting the surrender of its articles of
incorporation for administrative dissolution by the Director;
and (iii) receipt of the name and forwarding address for each
of the final officers and directors of the company, together
with a plan of dissolution approved by the Director.
(b) All deposits by insurers subject to this Article must
be limited to the following types:
(1) United States government bonds, notes, and bills
for which the full faith and credit of the government of
the United States is pledged for the payment of principal
and interest.
(2) United States public bonds and notes of any state
or of the District of Columbia, or Canadian public bonds
and notes of any province thereof, for which the full faith
and credit of the issuer has been pledged for the payment
of principal and interest.
(3) United States and Canadian county, provincial,
municipal, and district bonds and notes for which the
issuer has lawful authority to levy taxes or make
assessments for the payment of principal and interest.
(4) Bonds and notes of any federal agency that are

09800SB1718sam001 - 3 - LRB098 10029 RPM 42759 a
guaranteed as to payment of principal and interest by the
United States.
(5) International development bank bonds, bonds issued
by the State of Israel and sold through the Development
Corporation for Israel or its successor entities, and notes
issued, assumed, and guaranteed by the International Bank
for Reconstruction and Development, the Inter-American
Development Bank, the Asian Development Bank, the African
Development Bank, or the International Finance
Corporation.
(6) Corporate bonds and notes of any private
corporations that are not affiliates or subsidiaries of the
insurer, which corporations are organized under the laws of
the United States, Canada, any state, the District of
Columbia, any territory or possession of the United States,
or any province of Canada.
(7) Certificates of deposit.
(c) To be eligible for deposit under subsection (b), any
bond or note must have the following characteristics:
(1) The bond or note must be interest-bearing or
interest-accruing, and the insurer must be the exclusive
owner of the interest accruing thereon and entitled to
receive the interest for its account.
(2) The issuer must be in a solvent financial condition
and the bond or note must not be in default.
(3) The bond, note, or debt of the issuing country must

09800SB1718sam001 - 4 - LRB098 10029 RPM 42759 a
be rated in one of the 4 highest classifications by an
established, nationally recognized investment rating
service or must have been given a rating of 1 by the
Securities Valuation Office of the National Association of
Insurance Commissioners.
(4) The market value of the bond or note must be
readily ascertainable or the value of the bond or note must
be obtainable by the insurer or its custodian from the
issuer's fiscal agent.
(5) The bond or note must be the direct obligation of
the issuer.
(6) The bond or note must be stated in United States
dollar denominations.
(7) The bond or note must be eligible for book-entry
form on the books of the Federal Reserve's book-entry
system or in a depository trust clearing system or on the
books of the issuer's transfer agent or evidenced by a
certificate delivered to the insurer or its custodian.
(d) To be eligible for deposit under item (7) of subsection
(b), a certificate of deposit must have the following
characteristics:
(1) The certificate of deposit must be issued by a
bank, savings bank, or savings association that is
organized under the laws of the United States, of this
State, or of any other state and that has a principal
office or branch office in this State that is authorized to

09800SB1718sam001 - 5 - LRB098 10029 RPM 42759 a
receive deposits in this State.
(2) The certificate of deposit must be
interest-bearing and may not be issued in discounted form.
(3) The certificate of deposit must be issued for a
period of not less than one year.
(4) The issuing bank, savings bank, or savings
association must agree to the terms and conditions of the
Director regarding the rights to the certificate of deposit
and must have executed a written certificate of deposit
agreement with the Director. The terms and conditions of
the agreement shall include, but need not be limited to:
(A) Exclusive authorized signature authority for
the chief financial officer.
(B) An agreement to pay, without protest, the
proceeds of its certificate of deposit to the Director
within 30 business days after presentation.
(C) A prohibition against levies, setoffs,
survivorship, or other conditions that might hinder
the Director's ability to recover the full face value
of a certificate of deposit.
(D) Instructions regarding interest payments,
renewals, taxpayer identification, and early
withdrawal penalties.
(E) An agreement to be subject to the jurisdiction
of the courts of this State, or those of the United
States that are located in this State, for the purposes

09800SB1718sam001 - 6 - LRB098 10029 RPM 42759 a
of any litigation arising out of this Section.
(F) Such other conditions as the Director
requires.
(e) The Director may refuse to accept certain securities or
refuse to accept the reported market value of certain
securities offered pursuant to this Section in order to ensure
that sufficient cash and securities are on hand to meet the
purposes of the deposit. In making a refusal under this
subsection (e), the guidelines for use of the Director may
include, but need not be limited to, whether the market value
of the securities cannot be readily ascertained and the lack of
liquidity of the securities. Securities refused under this
subsection (e) are not acceptable as deposits.
(f) All deposits required of a domestic insurer pursuant to
the laws of another state, province, or country must be
comprised of securities of the kinds required under subsection
(b), having the characteristics required under subsections (c)
and (d), and permitted by the laws of the other state,
province, or country, except common stocks, mortgages or loans
of any kind, real estate investment trust funds or programs,
commercial paper, and letters of credit.
(Source: P.A. 92-75, eff. 7-12-01.)".