215 ILCS 5/126.22
2021 Illinois Compiled Statutes|Chapter 215 - INSURANCE|215 ILCS 5/ - Illinois Insurance Code.|Article VIII - Investments Of Domestic Companies

Sec. 126.22.     Reserve requirements.A. Reserve requirements.(1) Subject to all  other limitations and      requirements of this  Article, a property  and casualty insurer shall maintain an amount at least equal to the lesser of $250,000,000 or 100% of  adjusted loss  reserves and  loss adjustment expense reserves, 100% of adjusted unearned premium reserves and 100% of statutorily required policy and contract reserves in:(a) Cash and cash equivalents;(b) High and medium grade investments that         qualify under Sections 126.24 or 126.25;(c) Equity interests that qualify under Section         126.26 and that are traded on a qualified exchange;(d) Investments of the type set forth in Section         126.30 if the investments are rated in the highest generic rating category by a nationally recognized statistical rating organization recognized by the SVO for rating foreign jurisdictions and if any foreign currency exposure is effectively hedged through the maturity date of the investments;(e) Qualifying investments of the type set forth         in subparagraphs (b), (c) or (d) of this paragraph that are acquired under Section 126.32;(f) Interest and dividends receivable on         qualifying investments of the type set forth in subparagraphs (a) through (e) of this subsection; or(g) Reinsurance recoverable on paid losses.(2) Reserve Requirement Amount:(a) For purposes of determining the amount of         assets to be maintained under this subsection, the calculation of adjusted loss reserves and loss adjustment expense reserves, adjusted unearned premium reserves and statutorily required policy and contract reserves shall be based on the amounts reported as of the most recent annual or quarterly statement date.(b) Adjusted loss reserves and loss adjustment         expense reserves shall be equal to the sum of the amounts derived from the following calculations:(i) The result of each amount reported by the             insurer as losses and loss adjustment expenses unpaid for each accident year for each individual line of business; multiplied by(ii) The discount factor that is applicable             to the line of business and accident year published by the Internal Revenue Service under Internal Revenue Code Section 846 (26 U.S.C.  846), as amended, for the calendar year that corresponds to the most recent annual statement of the insurer; minus(iii) Accrued retrospective premiums             discounted by an average discount factor. The discount factor shall be calculated by dividing the losses and loss adjustment expenses unpaid after discounting (the product of Items (i) and (ii) in this subparagraph) by loss and loss adjustment expense reserves before discounting Item (i) of this subparagraph.(iv) For purposes of these calculations, the             losses and loss adjustment expenses unpaid shall be determined net of anticipated salvage and subrogation, and gross of any discount for the time value of money or tabular discount.(c) Adjusted unearned premium reserves shall be         equal to the result of the following calculation:(i) The amount reported by the insurer as             unearned premium reserves; minus(ii) The admitted asset amounts reported by             the insurer as:(I) Premiums in and agents' balances in                 the course of collection, accident and health premiums due and unpaid and uncollected premiums for accident and health premiums;(II) Premiums, agents' balances and                 installments booked but deferred and not yet due;(III) Bills receivable, taken for                 premium; and(IV) Equities and deposits in pools and                 associations.(d) Statutorily required policy and contract         reserves shall also include contingency reserves required for mortgage guaranty insurers, municipal bond insurers, and other financial guaranty insurers.B. Monitoring and reporting.  A property and casualty insurer shall supplement its annual statement with a  reconciliation and summary of its assets and reserve requirements as required  in subsection A of this Section. A reconciliation and summary showing that an  insurer's assets as required in subsection A of this Section are greater than  or equal to its undiscounted reserves referred to in subsection A of this  Section shall be sufficient to satisfy this requirement. Upon prior  notification, the Director  may  require an insurer to submit such a reconciliation and summary with any  quarterly  statement filed during the calendar year.C. Notification requirements and mandatory safeguards.  If a property and casualty insurer's assets and reserves do not comply with  subsection A of this Section, the insurer shall notify the Director immediately  of the amount by which the reserve requirements exceed the annual statement  value of the qualifying assets, explain why the deficiency exists and within 30  days of the date of the notice propose a plan of action to remedy the  deficiency.D. Authority of the Director.(1) If the Director determines that an insurer is not     in compliance with subsection A of this Section, the Director shall require the insurer to eliminate the condition causing the noncompliance within a specified time from the date the notice of the Director's requirement is mailed or delivered to the insurer.(2) If an insurer fails to comply with the Director's     requirement under paragraph (1) of this subsection, the insurer is deemed to be in hazardous financial condition, and the Director shall take one or more of the actions authorized by law as to insurers in hazardous financial condition.E. An insurer subject to this Section must comply with the requirements of  this Section after December 31, 1997.    (Source: P.A. 90-418, eff. 8-15-97.)