215 ILCS 150/25.1 — Illinois Code / Chapter 215 / Act 150 / Section 25.1
Section 25.1
Status: in_force

(215 ILCS 150/25.1) (from Ch. 148, par. 225.1) Sec. 25.1. (a) Any trust fund organized under this Act may reorganize itself as a mutual insurance company or a reciprocal in accordance with the provisions of this Section, provided that it has both (1) a net fund balance (surplus), reported on a basis consistent with that prescribed in Section 136 of the Illinois Insurance Code of (a) not less than that required of a newly organized mutual insurance company under Section 43 of the Illinois Insurance Code and authorized to write like lines of business, if the trust fund is reorganizing into a mutual insurance company, or (b) not less than that required of a newly organized reciprocal under Section 66 of the Illinois Insurance Code and Authorized to write like lines of business, if the trust fund is reorganizing into a reciprocal, and (2) an operating history of not less than 3 consecutive years after organizational approval of the trust fund by the Director of Insurance, during which period such trust fund shall have continuously provided non-assessable benefits or indemnification contracts to its beneficiaries. A trust fund reorganized as a mutual insurance company shall, after reorganization and notwithstanding any contrary provision of the Illinois Insurance Code, have the powers of a mutual insurance company organized under Article III of the Illinois Insurance Code together with continuing powers and authority granted trust funds pursuant to Section 6 of this Act. A trust fund reorganized as a reciprocal shall, after reorganization and notwithstanding any contrary provision of the Illinois Insurance Code, have the power of a reciprocal organized under Article IV of the Illinois Insurance Code together with continuing powers and authority granted trust funds pursuant to Section 6 of this Act. In addition, surplus amounts attributable to contribution certificates meeting the requirements of Section 14.1 of this Act and issued by a trust fund prior to reorganization as either a mutual insurance company or a reciprocal or by the successor mutual insurance company or reciprocal within a period of 5 years following reorganization, may be reported as surplus on the successor insurance company's or reciprocal's financial statements in a manner consistent with and subject to the terms of Section 14.1 of this Act. After expiration of such 5 year period, the provisions of Section 56 of the Illinois Insurance Code shall be applicable to a reorganized mutual insurance company or reciprocal, with regard to the accumulation of a guarantee fund. Except as provided in this subsection (a), this Act shall not be applicable to a reorganized mutual insurance company or reciprocal, and the mutual insurance company or reciprocal shall be subject to all otherwise applicable provisions of the Illinois Insurance Code. (b) The Trustees of any trust fund seeking to reorganize as a mutual insurance company shall adopt articles of incorporation and by-laws as shall be necessary to make the same conform to articles of incorporation and by-laws of a mutual insurance company, as provided under Article III of the Illinois Insurance Code. Duplicate originals of such articles and by-laws shall be delivered to the Director of Insurance, together with the financial statements, as required under subsection (d). The Director shall approve the articles and by-laws after a finding that they are consistent with the requirements applicable to companies organized under Article III of the Illinois Insurance Code, relating to domestic mutual companies, except as otherwise provided herein. Upon approval by the Director and the recordation of a certified copy of the articles of incorporation in the office of the recorder in the county where the principal office of the company is located, such company shall be subject to and entitled to the benefits of Article III of the Illinois Insurance Code. (c) (i) The trustees of any trust fund seeking to reorganize as a reciprocal shall, by resolution, approve a plan of reorganization setting forth (1) a proposed declaration of organization, as provided under Article IV of the Illinois Insurance Code; (2) a form of power of attorney designating a person, as defined in Section 2 of the Illinois Insurance Code, to act as attorney in fact on behalf of the beneficiaries of the trust fund in exchanging contracts of insurance after reorganization of the trust fund as a reciprocal, which form shall be consistent with the provisions of Article IV; (3) the terms and conditions of the proposed reorganization and the mode of carrying the same into effect; and (4) the manner and basis of assuming the assets and liabilities of the trust fund, including the benefit schedule theretofore issued by the trust fund, whether or not then in force. Duplicate originals of the plan of reorganization, as adopted by the trustees, shall be submitted to the Director of Insurance, together with such other documents as are necessary to satisfy the requirements of Article IV and the financial statements, as required under subsection (d) below. The Director shall approve the plan and the other documents upon finding each consistent with the requirements applicable to reciprocals organized under Article IV relating to domestic reciprocals, except as otherwise provided herein. (ii) Within 60 days after approval by the Director, the plan of reorganization and other documents, as approved by the Director, shall then be submitted by the trustees for approval by the beneficiaries of the trust fund at a regularly scheduled or special meeting of beneficiaries. Written or printed notice shall be given not less than 20 days before each such meeting, either personally or by mail, to each beneficiary of the trust fund. If mailed, such notice is deemed to be delivered when deposited in the United States mail, with postage prepaid, addressed to the beneficiary at his address as it appears on the records of the trust fund. Such notice shall state the place, day, hour and purpose of the meeting. A copy of the plan of reorganization shall be enclosed with such notice. Approval by beneficiaries shall require (1) the affirmative vote of 2/3 of all beneficiaries of the trust fund covered under benefit schedules in force at the date of the notice, voting in person or by proxy at the meeting, and (2) the execution by the beneficiaries voting in favor of the plan of the power of attorney proposed as a part of the plan. Each beneficiary entitled to vote shall have one vote regardless of the number of benefit schedules that may have been issued or contributions paid therefor. (iii) Within 10 days after approval by the beneficiaries, the trust fund, acting by and through its designated officers, shall certify to the Director such approval, appending to such certification a true and correct copy of the plan, as approved, the declaration of organization executed by the attorney-in-fact, and the form of the power of attorney, as executed, together with a list of the beneficiaries so approving and executing the power of attorney. The Director shall thereafter issue to the attorney-in-fact a certificate of authority, as provided in Section 73 of the Illinois Insurance Code, but only after the termination by the trust fund of all benefit schedules issued to beneficiaries who have declined to execute the power of attorney, which termination may be accomplished by the expiry, nonrenewal or cancellation of benefit schedules. Upon such termination, the trust fund, acting by and through its designated officers, shall so certify to the Director, and the date of such certification shall constitute the effective date of reorganization of the trust fund, being the date on which the reciprocal shall become the successor in interest to the trust fund and thenceforth be responsible and liable for all of the liabilities and obligations of the trust fund in accordance with the approved plan of reorganization, and the benefit schedules issued by the trust fund which then remain outstanding shall be deemed to have been issued by the reciprocal. All of the property, real, personal and mixed, and all other choses in action and all and every other interest of the trust fund upon the effective date of reorganization shall be deemed transferred to and vested in the reciprocal without further act or deed. The reciprocal shall thereupon be subject to and entitled to the benefits of Article IV of the Illinois Insurance Code and the trust fund shall thereafter cease to exist. (d) The Trustees of any such trust fund shall deliver to the Director of Insurance a statement of financial condition as of a date not more than 6 months prior to said date of delivery, prepared in accordance with Section 136 of the Illinois Insurance Code and certified by an independent public accountant as correctly stating the financial condition of such trust fund in accordance with the standards of said Section 136. The Director shall review such statement of financial condition and may, in his discretion, conduct an examination of such trust fund to determine its financial condition. Any such examination shall be commenced within 60 days after the date of delivery to the Director of such statement of financial condition. (e) In the case of a trust fund reorganizing into a mutual insurance company, provided that (i) such statement of financial condition shall reflect, and the Director is satisfied from the examination, if conducted, that a net fund balance (surplus) in an amount at least equal at the time of reorganization to that required of a newly organized company subject to Section 43 of the Illinois Insurance Code and writing like lines of business and (ii) the articles of incorporation and by-laws, as required by subsection (b), shall comply with the requirements of Article III of the Illinois Insurance Code, the Director of Insurance shall approve the reorganization and articles and by-laws within 60 days after receipt thereof, or within 60 days after the completion of any examination conducted by the Director, whichever date shall last occur, and shall issue a certificate of authority, as provided under Section 51 of the Illinois Insurance Code within 10 days after the receipt of evidence of recordation of the articles and by-laws. (f) In the case of a trust fund reorganizing into a reciprocal, provided that (i) the statement of financial condition shall reflect, and the Director is satisfied from the examination, if conducted, that a net fund balance (surplus) in an amount at least equal at the time of reorganization to that required of a newly organized reciprocal subject to Section 66 of the Illinois Insurance Code and writing like lines of business and (ii) the declaration of organization and other documents, as required by subsection (c), shall comply with the requirements of Article IV of the Illinois Insurance Code, the Director of Insurance shall approve the reorganization and declaration within 60 days after receipt thereof, or within 60 days after the completion of any examination conducted by the Director, whichever date shall last occur, and shall issue a certificate of authority, as provided under Section 73 of the Illinois Insurance Code within 10 days after the deposit with the Director by the reorganizing reciprocal of cash or securities as required by Section 74 of the Illinois Insurance Code. (Source: P.A. 90-381, eff. 8-14-97.)