215 ILCS 5/179A-20
2021 Illinois Compiled Statutes|Chapter 215 - INSURANCE|215 ILCS 5/ - Illinois Insurance Code.|Article XI 1/2 - Protected Cell Companies

Sec. 179A-20.     Use and operation of protected cells.(a) The protected cell  assets of any protected  cell may not be charged with liabilities arising out of any other business the  protected cell company may  conduct.  All contracts or other documentation reflecting protected cell  liabilities shall clearly indicate that only the  protected cell assets are available  for the satisfaction of those protected cell  liabilities.(b) The income, gains, and losses, realized or unrealized, from  protected cell  assets and protected cell  liabilities must be credited to or charged against the protected  cell without  regard to other  income, gains, or losses of the protected cell company, including income,  gains, or losses of  other protected  cells.  Amounts attributed to a protected cell and accumulations thereon may  be invested and  reinvested without regard to any requirements or limitations of Article VIII of  this Code  (Investments of Domestic Companies), and  the investments in a  protected cell or cells may not be taken into account in applying  the  investment limitations  otherwise applicable to the investments of the protected cell company.(c) Assets  attributed to a  protected  cell must be valued at  their market value on the date of valuation, or if there is no readily  available market, then as  provided in the contract or the rules or other written documentation applicable  to  the protected cell.(d) A protected cell company shall, in respect of any of its protected  cells,  engage in fully funded  indemnity-triggered insurance securitization to support in full the protected  cell exposures attributable to that protected cell. A  protected cell company  insurance securitization that is not  indemnity-triggered may qualify as an insurance securitization under the  terms of this Article only after the Director  adopts rules addressing the methods of:(i) funding of the portion of the risk  that is not indemnity based, (ii) accounting, and  disclosure, (iii) risk-based capital treatment, and (iv) assessing risk  associated with  such securitizations.  A protected cell company  insurance securitization that is not fully funded, whether  indemnity triggered or non-indemnity triggered, is prohibited.   Protected cell assets may be used to pay interest  or other  consideration on any outstanding debt or other obligation attributable to that  protected cell, and  nothing in this subsection shall be construed or interpreted to prevent a  protected cell company from  entering into a swap agreement or other transaction for the account of the  protected cell that has the effect of  guaranteeing such  interest or other consideration.(e) In all protected cell company  insurance  securitizations,  the  contracts or other documentation  effecting such transaction shall contain provisions identifying the protected  cell to which the  transaction will be attributed.  In addition, the contracts or other  documentation shall  clearly disclose that the  assets of that  protected cell, and only those assets, are available to pay the  obligations of  that  protected cell.  Notwithstanding the foregoing, and subject to the provisions of this Article  and any other  applicable law or rule, the failure to include such language in the contracts  or other documentation shall not  be used as the sole basis by creditors, reinsurers, or other claimants to  circumvent the provisions  of this Article.(f) A protected cell company may attribute to a  protected cell account only the insurance obligations relating to the protected  cell  company's general account.  A protected cell  may not issue insurance or reinsurance contracts directly to  policyholders or reinsureds or have any obligation to the policyholders or  reinsureds of the protected cell company's general account.(g) At the cessation of business of a protected cell, the  protected cell  company  shall voluntarily close out the protected cell account in accordance with a plan approved by the  Director.    (Source: P.A. 91-278, eff. 7-23-99; 92-74, eff. 7-12-01.)