215 ILCS 150/14.1 — Illinois Code / Chapter 215 / Act 150 / Section 14.1
Section 14.1
Status: in_force

(215 ILCS 150/14.1) (from Ch. 148, par. 214.1) Sec. 14.1. Contribution Certificate. A trust fund may issue contribution certificates, evidencing a contingent obligation to repay amounts advanced to the trust fund, for the purpose of obtaining funds to defray the expenses of organization, or providing surplus funds to the trust fund, or for any purpose required by its business, subject to the following provisions: (a) Any such contribution certificate shall be evidenced by a written agreement providing that payments of principal and accrued interest may be made only out of the trust fund's net fund balance (surplus) in excess of that stipulated in the agreement. Any such agreement shall, at a minimum, provide that repayments of principal or payments of accrued interest shall be made only to the extent that trust fund assets exceed the sum of (i) all trust fund liabilities (including but not limited to reserves for losses, reinsurance payables, unpaid production and general expenses, unpaid taxes, loans and advances, but excluding principal and interest obligations evidenced by contribution certificates issued pursuant to this Section) plus (ii) the then outstanding unpaid principal balance evidenced by contribution certificates and, if the trust fund is reorganizing or has reorganized as a mutual insurance company or a reciprocal (inter-insurance exchange) pursuant to Section 25.1 of this Act, an amount equal to the amount of capital and surplus required of a newly organized insurer to write like lines of business pursuant to Section 43 of the Illinois Insurance Code if a mutual insurance company, or pursuant to Section 66 of the Illinois Insurance Code if a reciprocal. Any such agreement may contain repayment terms and conditions which are more restrictive than those provided herein. (b) In the financial statement of a trust fund required to be filed pursuant to Section 14 of this Act or which may be published or distributed by the issuing trust fund, the outstanding and unpaid principal balance on contribution certificates may be reported as part of the trust fund's net fund balance (surplus) and that portion of the accrued but unpaid interest on contribution certificates which is in excess of the amount permitted to be paid by the trust fund pursuant to subsection (a) need not be reported as a liability of the trust fund, provided that the financial statement shall contain an appropriate footnote identifying the essential terms of repayment of the contribution certificates and the amount thereof then unpaid together with any accrued but unpaid interest thereon. (c) Any agreement evidencing contribution certificates shall be filed with and approved by the Director of Insurance prior to its effective date. The Director shall approve any such agreement which complies with the provisions of this Section 14.1 provided that the terms of repayment are reasonable and the interest rate provided therein is not excessive. A rate of not more than 2% above the prevailing prime bank rate, either fixed as of the effective date of the agreement or floating during the term of the agreement, shall not be considered excessive. (d) The repayment of principal and the payment of accrued interest on contribution certificates by a trust fund shall be subject to approval by the Director of Insurance. (Source: P.A. 86-847.)