2023 Illinois Compiled Statutes › Chapter 215 - INSURANCE › 215 ILCS 5/ - Illinois Insurance Code. › Article XIE - Special Purpose Reinsurance Vehicle Law

(215 ILCS 5/Art. XIE heading)
ARTICLE XIE.  
		Special Purpose Reinsurance Vehicle Law
(215 ILCS 5/179E-1)
Sec. 179E-1. 
		Short title. 
		This Article may be cited as the Special Purpose
Reinsurance Vehicle Law.
(Source: P.A. 92-124, eff. 7-20-01.)
(215 ILCS 5/179E-5)
Sec. 179E-5. 
		Purpose. 
		This Article is adopted to provide for the creation
of
Special
Purpose Reinsurance Vehicles ("SPRV") exclusively to facilitate the
securitization of one
or more ceding insurers' risk as a means of accessing alternative sources of
capital and
achieving the benefits of securitization.  Investors in fully funded insurance
securitization
transactions provide funds that are available to the SPRV to secure the
aggregate limit under
an SPRV contract that provides coverage against the occurrence of a triggering
event.  The
creation of SPRVs is intended to achieve greater efficiencies in conducting
insurance
securitizations, to diversify and broaden insurers' access to sources of risk
bearing capital,
and to make insurance securitization generally available on reasonable terms to
as many
U.S. insurers as possible.
Under the terms of the typical securities underlying an insurance
securitization
transaction, proceeds from the issuance of securities are repaid to the
investor on a specified
maturity date with interest or dividends unless a triggering event occurs.  The
insurance
securitization proceeds are available to pay the SPRV's obligations to the
ceding insurer if
the triggering event occurs, as well as being available to satisfy the SPRV's
obligation to
repay the insurance securitization investors if a triggering event does not
occur.  Insurance
securitization transactions have been performed by alien companies to utilize
efficiencies
available to those alien companies that are not currently available to domestic
companies.
This Article is adopted to allow more efficiency in conducting insurance
securitizations, to
allow ceding insurers easier access to alternative sources of risk
bearing capital,
and to promote the benefits of insurance securitization to U.S. insurers.
(Source: P.A. 92-124, eff. 7-20-01.)
(215 ILCS 5/179E-10)
Sec. 179E-10. 
		Exemption from insurance laws within limitations.
(a) An SPRV is subject to the following:
(1) Articles I, XII 1/2, XXIV, XXV (Sections 408 and     412 only), and XXVIII (except for Sections 445, 445.1, 445.2, 445.3, 445.4, and 445.5) of this Code; and
(2) Sections 132.1 through 134, 137 through 140,     155.01, 155.03, and 155.04 of this Code.
(b) No other provisions of this Code apply to an SPRV organized under this
Article,
except as otherwise provided in this Article.
(Source: P.A. 92-124, eff. 7-20-01.)
(215 ILCS 5/179E-15)
Sec. 179E-15. 
		Definitions. 
		For purposes of this Article, the following
terms have the indicated meanings:
"Aggregate limit" means the maximum sum payable to the ceding insurer under
an SPRV contract.
"Ceding insurer" means one or more insurers or reinsurers under common
control that enters into an SPRV contract with an SPRV.
"Control" (including the terms "controlling," "controlled by" and "under
common control with") means the possession, direct or indirect, of the power to
direct or cause the direction of the management and policies of a person,
whether through the ownership of voting securities, by contract other than a
commercial contract for goods or non-management services, or otherwise, unless
the power is the result of an official position with or corporate office held
by the person.  Control shall be presumed to exist if any person, directly or
indirectly, owns, controls, holds with the power to vote, or holds proxies
representing, 10% or more of the voting securities of any other person.  This
presumption may be rebutted by a showing that control does not, in fact, exist.
 Notwithstanding the foregoing, for purposes of this Article, the fact that an
SPRV exclusively provides reinsurance to a ceding insurer under an SPRV
contract shall not by itself be sufficient grounds for a finding that the SPRV
or the SPRV organizer or owner is controlled by or under common control with
the ceding insurer.
"Fair Value" means:
(1) as to cash, the amount thereof; and
(2) as to an asset other than cash:
(A) the amount at which that asset could be         bought or sold in a current transaction between arms-length, willing parties;
(B) quoted market price for the asset in active         markets should be used if available; and
(C) if quoted market prices are not available, a         value determined using the best information available considering values of like assets and other valuation methods, such as present value of future cash flows, historical value of the same or similar assets or comparison to values of other asset classes the value of which have been historically related to the subject asset.
"Fully funded" means that, with respect to an SPRV contract, the fair value
of the assets held in trust by or on behalf of the SPRV under the SPRV contract
on the date on which the SPRV contract is effected, equals or exceeds the
aggregate limit as defined in this Article.
"Indemnity trigger" means a transaction term by which the SPRV's obligation
to pay the ceding insurer for losses covered by an SPRV contract is triggered
by the ceding insurer incurring a specified level of losses.
"Insolvency" or "insolvent" means that the SPRV is unable to pay its
obligations when they are due, unless those obligations are the subject of a
bona fide dispute.
"Non-indemnity trigger" means a transaction term by which the SPRV's
obligation to pay the ceding insurer under an SPRV contract arises from the
occurrence or existence of some event or condition other than the ceding
insurer incurring a specified level of losses under its insurance or
reinsurance contracts.
"Permitted investments" means those investments that meet the qualifications
set forth in Section 179E-85.
"Qualified U.S. financial institution" means, for purposes of meeting the
requirements of a  trustee under this Article, a financial institution that is
eligible to act as a fiduciary of a trust, and that is:
(1) organized or, in the case of a U.S. branch or     agency office of a foreign banking organization, licensed, under the laws of the United States or any state of the United States; and
(2) regulated, supervised, and examined by federal or     state authorities having regulatory authority over banks and trust companies.
"Special purpose reinsurance vehicle" or "SPRV" means an entity, domiciled in
and organized under the laws of this State, that has received a limited
certificate of authority from the Director under this Article exclusively for
the limited purpose of entering into and effectuating SPRV insurance
securitizations, SPRV contracts, and other related transactions permitted by
this Article.
"SPRV contract" means a contract between the SPRV and the ceding insurer
pursuant to which the SPRV agrees to pay the ceding insurer an agreed amount
upon the occurrence of a triggering event.
"SPRV insurance securitization" means a package of related risk transfer
instruments and facilitating administrative agreements by which proceeds are
obtained by an SPRV through the issuance of securities, which proceeds are held
in trust pursuant to the requirements of this Article to secure the obligations
of the SPRV under an SPRV contract with one or more ceding insurers, wherein
the SPRV's obligation to return the full initial investment to the holders of
those securities, pursuant to the transaction terms, is contingent upon those
funds not being used to pay the obligations of the SPRV to the ceding insurers
under the SPRV Contract.
"SPRV organizer" means one or more persons who have organized or intend to
organize an SPRV under authority obtained pursuant to Section 179E-20.
"SPRV securities" means the securities issued by an SPRV.
"Triggering event" means an event or condition that, if and when it occurs or
exists, obligates the SPRV to make a payment to the ceding insurer under the
provisions of an SPRV contract.
(Source: P.A. 92-124, eff. 7-20-01.)
(215 ILCS 5/179E-20)
Sec. 179E-20. 
		Limited certificate of authority.
(a) Within 30 days after receipt by the Director of a complete filing by the
prospective SPRV organizer for authority to form or acquire an SPRV, which
SPRV shall exist and operate expressly for the limited purposes set forth in
this
Article, the application shall be deemed approved and a limited certificate of
authority shall be issued, unless before the expiration of the 30-day period
the
Director approves or disapproves the application in writing.
A limited certificate of authority may not be issued unless the country or
state
of domicile of each ceding insurer has notified the Director in writing that
they have not disapproved the transaction.
A complete filing
of the
application must include the following:
(1) an affidavit verifying that each prospective SPRV     organizer the SPRV meets the requirements as set forth in this Article;
(2) a representation that the prospective SPRV     organizer intends to form an SPRV to operate in accordance with the requirements set forth in this Article;
(3) the proposed name of the subject SPRV;
(4) biographical descriptions of each SPRV organizer     setting forth their legal names, any names under which they have or are conducting their affairs, and any affiliations with other persons as defined in Article VIII 1/2, together with such other biographical information as the Director may request;
(5) the source and form of the minimum capital to be     contributed to the SPRV;
(6) any persons with which the SPRV is or, upon     formation, will be affiliated as defined in Article VIII 1/2;
(7) the names and biographical information of the     proposed members of the board of directors and principal officers of the SPRV, setting forth their legal names, any names under which they have or are conducting their affairs and any affiliations with other persons as defined in Article VIII 1/2, together with such other biographical information as the Director may request; and
(8) a plan of operation, consisting of a description     of the contemplated insurance securitization, the SPRV contract, and related transactions, which plan of operation must include:
(A) draft documentation or, at the discretion of         the Director, a written summary, of all material agreements that will be entered into to effectuate the insurance securitization and the related SPRV contract, including the names of the ceding insurers, the nature of the risks being assumed, and the maximum amounts, purpose, nature, and interrelationships of the various transactions required to effectuate the insurance securitization;
(B) the investment strategy of the  SPRV and a         representation that (i) the investment strategy complies with the investment requirements set forth in this Article and (ii) includes investment practices or other provisions to preserve asset values that will facilitate attainment of full funding during the term of the securitization with assets that can be monetized in response to a triggering event without a substantial loss in value;
(C) a description of the method by which losses         covered by the SPRV contract that may develop after the termination of the contract period are to be addressed under the provisions of the SPRV contract; and
(D) a representation that the trust agreement and         the trusts holding assets that secure the obligations of the SPRV under the SPRV contract  and the SPRV contract with the ceding insurers in connection with the contemplated insurance securitization will be structured in accordance with the requirements set forth in this Article.
(b) The Director may not approve the application or issue a limited
certificate
of authority until he or she has found that the proposed plan of operation
provides a
reasonable expectation of a successful operation, based on the proposed SPRV
organizer, directors, and officers being of known good character and that
there
is no good reason to believe that they are affiliated, directly or indirectly,
through
ownership, control, management, reinsurance transactions, or other insurance or
business relations with any person or persons known to have been involved in
the
improper manipulation of assets, accounts or reinsurance.
(c) Upon approval by the Director of the application and the issuance of a
limited certificate of authority, the SPRV may be acquired or formed and, in
accordance with the approved plan of operation, the SPRV may enter into
contracts
and conduct other activities within the parameters set forth in the filed plan
of
operation.
(d) The limited certificate of authority so issued shall state that the
SPRV's
authorization to be involved in the business of reinsurance is limited to only
the
reinsurance activities that the SPRV is allowed to conduct under this Article.
(e) The SPRV organizer must provide a complete set of the documentation
of
the
insurance securitization to the Director upon  closing of the transactions
including, but not
limited to, an opinion of legal counsel with respect to compliance with this
and any other
applicable laws as of the effective date of the transaction. Any material
change of the
SPRV's plan of operation described in  items (1) through (8) of subsection (a)
including, but
not limited to, the issuance of new securities to continue the securitization
activities of the
SPRV under this Article after expiration and full satisfaction of the initial
securitization
transactions, requires prior approval of the Director, however, a change in the
counterparty
to swap transactions for an existing securitization as allowed under this
Article shall not be
deemed a material change. Any material change that is not disapproved by the
Director in
writing within 15 days after its submission shall be deemed approved.
(Source: P.A. 92-124, eff. 7-20-01.)
(215 ILCS 5/179E-25)
Sec. 179E-25. 
		Limited purpose of SPRV. 
		This Article authorizes SPRVs to be
created for the limited purpose of entering into insurance securitization
transactions with
investors and into related agreements to pay one or more ceding insurers agreed
upon
amounts under an SPRV contract upon the occurrence of triggering events related
to the
insurance business of the ceding insurer. An SPRV may not issue a contract for
assumption
of risk or indemnification of loss other than an SPRV contract as defined
herein.
(Source: P.A. 92-124, eff. 7-20-01.)
(215 ILCS 5/179E-30)
Sec. 179E-30. 
		Approved transactions and operation of SPRVs.
(a) SPRVs authorized under this Article may at any given time enter into and
effectuate SPRV contracts with one or more ceding insurers, provided that the
SPRV
contracts obligate the SPRV to indemnify the ceding insurer for losses and that
contingent
obligations of the SPRV under the SPRV contracts are securitized in full
through a single
SPRV insurance securitization and are fully funded and secured with assets held
in trust in
accordance with the requirements of this Article pursuant to agreements
contemplated by
this Article and invested in a manner that meets the criteria set forth in
Section 179E-85 of
this Article.
(b) An SPRV may enter into such agreements with third parties and conduct
such business as is necessary to fulfill its obligations and administrative
duties
incident to the insurance securitization and the SPRV contract.  The agreements
may include entering into swap agreements or other transactions that have the
objective of leveling timing differences in funding up-front or ongoing
transaction
expenses or managing credit or interest rate risk of the investments
in trust to
assure that the assets held in trust will be sufficient to satisfy
(i) payment or
repayment of the securities issued pursuant to an insurance securitization
transaction or (ii) the obligations of the SPRV under the SPRV contract.  In
fulfilling
its function, the SPRV shall adhere to the following requirements and shall, to
the
extent of its powers, ensure that contracts obligating other parties to perform
certain
functions incident to its operations are substantively and materially
consistent with
the following requirements and guidelines:
(1) An SPRV shall have a distinct name, which shall     include the designation "SPRV".  The name of the SPRV may not be deceptively similar to, or likely to be confused with or mistaken for, any other existing business name registered in this State.
(2) Unless otherwise provided in the plan of     operation, the principal place of business and office of any SPRV organized under this Article must be located in this State.
(3) The assets of an SPRV must be preserved and     administered by or on behalf of the SPRV to satisfy the liabilities and obligations of the SPRV incident to the insurance securitization and other related agreements, including the SPRV contract.
(4) Assets of the SPRV that are pledged to secure     obligations of the SPRV to a ceding insurer under an SPRV contract must be held in trust and administered by a qualified U.S. financial institution.  The qualified U.S. financial institution may not control, be controlled by, or be under common control with, the SPRV or the ceding insurers.
(5) The agreement governing any  trust must create     one or more trust accounts into which all pledged assets must be deposited and held until distributed in accordance with the trust agreement.  The pledged assets must be held by the trustee at the trustee's office in the United States and may be held in certificated or electronic form.
(6) The provisions for withdrawal by ceding insurers     of assets from the trust shall be clean and unconditional, subject only to the following requirements:
(A) the ceding insurer shall have the right to         withdraw assets from the trust account at any time, without notice to the SPRV, subject only to written notice to the trustee from the ceding insurer that funds in the amount requested are due and payable by the SPRV;
(B) no other statement or document need be         presented in order to withdraw assets, except the ceding insurer may be required to acknowledge receipt of withdrawn assets;
(C) the trust agreement must indicate that it is         not subject to any conditions or qualifications outside of the trust agreement;
(D) the trust agreement may not contain         references to any other agreements or documents; and
(E) no reference may be made to the fact that the         funds may represent reinsurance premiums or that the funds have been deposited for any specific purpose.
(7) The trust agreement must be established for the     sole use and benefit of the ceding insurer at least to the full extent of the SPRV's obligations to the ceding insurer under the SPRV contract. If there is more than one ceding insurer, a separate trust agreement must be entered with each ceding insurer and a separate trust account must be maintained for each ceding insurer.
(8) The trust agreement must provide for the trustee     to:
(A) receive assets and hold all assets in a safe         place;
(B) determine that all assets are in a form so         that the ceding insurer or the trustee, upon direction by the ceding insurer may, whenever necessary, negotiate any the assets, without consent or signature from the SPRV or any other person or entity;
(C) furnish to the SPRV, the Director, and the          ceding insurer a statement of all assets in the trust account reported at fair value upon its inception and at intervals no less frequent than the end of each calendar quarter;
(D) notify the SPRV and the ceding insurer,         within 10 days, of any deposits to or withdrawals from the trust account;
(E) upon written demand of the ceding insurer,         immediately take any and all steps necessary to transfer absolutely and unequivocally all right, title, and interest in the assets held in the trust account to the ceding insurer and deliver physical custody of the assets to the ceding insurer; and
(F) allow no substitutions or withdrawals of         assets from the trust account, except on written instructions from the ceding insurer.
(9) The trust agreement must provide that at least 30     days, but not more than 45 days, before termination of the trust account, written notification of termination shall be delivered by the trustee to the ceding insurer.
(10) The trust agreement may be made subject to and     governed by the laws of any state, in addition to the requirements for the trust as provided in this Article, provided that the state is disclosed in the plan of operation filed with and approved, or deemed approved, by the Director under Section 179E-20.
(11) The trust agreement must prohibit invasion of     the trust corpus for the purpose of paying compensation to, or reimbursing the expenses of, the trustee.
(12) The trust agreement must provide that the     trustee shall be liable for its own negligence, willful misconduct, or lack of good faith.
(13) Notwithstanding the provisions of items (6)(C),     (6)(D), and (6)(E) of this subsection or item (14)(E) of this subsection, when a trust agreement is established in conjunction with an SPRV contract, then the trust agreement may provide that the ceding insurer must undertake to use and apply any amounts drawn upon the trust account, without diminution because of the insolvency of the ceding insurer or the SPRV, for the following purposes:
(A) to pay or reimburse the ceding insurer         amounts due to the ceding insurer under the specific SPRV contract including, but not limited to, unearned premiums due to the ceding insurer, if not otherwise paid by the SPRV in accordance with the terms of the agreement; or
(B) when the ceding insurer has received         notification of termination of the trust account, and when the SPRV's entire "obligations" under the specific SPRV contract remain unliquidated and undischarged 10 days prior to the termination date, to withdraw amounts equal to those obligations and deposit those amounts in a separate account, in the name of the ceding insurer, in any qualified U.S. financial institution, apart from its general assets, in trust for those uses and purposes specified in item (13)(A) of this subsection as may remain executory after the withdrawal and for any period after the termination date.  "Obligations" within the meaning of this subsection may, without duplication, include:
(i) losses and loss expenses paid by the             ceding insurer, but not recovered from the SPRV;
(ii) reserves for losses reported and             outstanding;
(iii) reserves for losses incurred but not             reported;
(iv) reserves for  loss expenses;
(v) reserves for unearned premiums; and
(vi) any other amounts that, together with             (iv), represent the aggregate limit remaining under the SPRV contract if the period of coverage or the agreed upon period of loss development has yet to expire.
The provisions to be included in the trust agreement     pursuant to this item (13) may, in lieu thereof, be included in the underlying SPRV contract.
(14) An SPRV contract
must contain provisions
that:
(A) require the SPRV to enter into a  trust         agreement specifying what recoverables or reserves, or both, the agreement is to cover and to establish a trust account for the benefit of the ceding insurer;
(B) stipulate that assets deposited in the trust         account must be valued according to their current fair value, and may consist only of permitted investments;
(C) require the SPRV, before depositing assets         with the trustee, to execute assignments, endorsements in blank, or transfer legal title to the trustee of all shares, obligations, or any other assets requiring assignments, in order that the ceding insurer, or the trustee upon the direction of the ceding insurer, may whenever necessary negotiate the assets without consent or signature from the SPRV or any other entity;
(D) require that all settlements of account         between the ceding insurer and the SPRV be made in cash or its equivalent; and
(E) stipulate that the SPRV and the ceding         insurer agree that the assets in the trust account, established under the provisions of the SPRV contract, may be withdrawn by the ceding insurer at any time, notwithstanding any other provisions in the SPRV contract, and shall be utilized and applied by the ceding insurer or any successor by operation of law of the ceding insurer, including (subject to the provisions of Section 179E-80), but without further limitation, any liquidator, rehabilitator, receiver, or conservator of the ceding insurer, without diminution because of insolvency on the part of the ceding insurer or the SPRV, only for the following purposes:
(i) to transfer all of those assets into  the             trust account for the benefit of  the ceding insurer under the terms of the SPRV contract and in compliance with this Article; and
(ii) to pay any other amounts the ceding             insurer claims are due under the SPRV contract.
(15) The SPRV contract entered into by the SPRV may     contain provisions that give the SPRV the right to seek approval from the ceding insurer to withdraw from the trust all or part of the assets contained in it and transfer the assets to the SPRV, provided that:
(A) at the time of the withdrawal, the SPRV         replaces the withdrawn assets with other qualified assets having a fair value equal to the fair value of the assets withdrawn and that meet the requirements of Section 179E-85; and
(B) after the withdrawals and transfer, the fair         value of the assets in trust  securing the obligations of the SPRV under the SPRV contract is no less than an amount needed to satisfy the fully funded requirement of the SPRV contract. The ceding insurer shall be the sole judge as to the application of these provisions, but shall not unreasonably nor arbitrarily withhold its approval.
(16) The investors in the SPRV must agree, and be     contractually obligated to so do, that any obligation to repay principal, interest, or dividends on the securities issued by the SPRV shall be reduced upon the occurrence of a triggering event, to the extent that the assets of the SPRV held in trust for the benefit of the ceding insurer are remitted to the ceding insurer in fulfillment of the obligations of the SPRV under the SPRV contract.
(17) Assets held by an SPRV in trust must be valued     at their fair value.
(18) The proceeds from the sale of securities by the     SPRV to investors must be deposited with the trustee as contemplated by this Article, and must be held or invested by the trustee in accordance with the requirements of Section 179E-85.
(19) An SPRV organized under this Article, may engage     only in fully funded indemnity triggered SPRV contracts to support in full the ceding insurers' exposures assumed by the SPRV, except that an SPRV may engage in an SPRV contract that is non-indemnity triggered after the Director, in accordance with the authority granted under Section 179E-100 of this Article, adopts rules addressing the treatment of the portion of the risk that is not indemnity based, including accounting, disclosure, risk-based capital treatment, and the manner in which risks associated with the non-indemnity based SPRV contract may be evaluated and managed. An SPRV may not at any time enter into an SPRV contract that is not fully funded, whether indemnity triggered or non-indemnity triggered.  Assets of the SPRV may be used to pay interest or other consideration on any outstanding debt or other obligation of the SPRV, and nothing in this item shall be construed or interpreted to prevent an SPRV from entering into a swap agreement or other transaction that has the effect of guaranteeing interest or other consideration.
(20) The contracts or other documentation relating to     an SPRV insurance securitization must contain provisions identifying the SPRV that will enter into the special purpose reinsurance securitization. The contracts or other documentation must clearly disclose that the assets of the SPRV, and only those assets, are available to pay the obligations of that SPRV. Notwithstanding the foregoing, and subject to the provisions of this Article and any other applicable law or rule, the failure to include this language in the contracts or other documentation may not be used as the sole basis by creditors, reinsurers, or other claimants to circumvent the provisions of this Article.
(21) Under no circumstances may an SPRV be authorized     to:
(A) issue or otherwise administer primary         insurance policies;
(B) have any obligation to the policyholders or         reinsureds of the ceding insurer;
(C) enter into an SPRV contract with a person         that is not licensed or otherwise authorized to conduct the business of insurance or reinsurance in at least its state or country of domicile; or
(D) assume or retain exposure to insurance or         reinsurance losses for its own account that is not initially fully funded by proceeds from an SPRV securitization that meets the requirements of this Article.
(22) At the cessation of business of an SPRV the     limited certificate of authority granted by the Director shall expire and the SPRV shall no longer be authorized to conduct activities under this Article unless and until a new certificate of authority is issued pursuant to a new filing in accordance with Section 179E-20.
(23) It is unlawful for an SPRV to loan or otherwise     invest, or place any of its assets in custody, trust, or under management with, or to borrow money or receive a loan from (other than by issuance of the securities pursuant to an SPRV insurance securitization), or advance from, anyone convicted of a felony, anyone who is untrustworthy or of known bad character, or anyone convicted of a criminal offense involving the conversion or misappropriation of fiduciary funds or insurance accounts, theft, deceit, fraud, misrepresentation, or corruption.
(Source: P.A. 92-124, eff. 7-20-01.)
(215 ILCS 5/179E-35)
Sec. 179E-35. 
		Powers.
(a) An SPRV authorized under this Article shall have the necessary
powers to enter
into contracts and to conduct such other commercial activities as are necessary
to fulfill the
purposes of this Article.  Those activities may include, but are not limited
to, entering into
SPRV contracts, issuing securities of the SPRV and complying with the terms
thereof,
entering into trust, swap, and other agreements as may be necessary to
effectuate an
insurance securitization in compliance with the limitations and pursuant to the
authorities
granted to the SPRV under this Article or the plan of operation approved or
deemed
approved by the Director.
(b) An SPRV organized or doing business under this Article shall, by the
name
adopted by the SPRV, in law, be capable of suing or being sued, and may make or
enforce
contracts in relation to the business of the SPRV; may have and use a common
seal, and in
the name of the SPRV or by a trustee chosen by the board of directors, shall,
in law, be
capable of taking, purchasing, holding and disposing of real and personal
property for
carrying into effect the purposes of its organization; and may by its board of
directors,
trustees, officers, or managers, make by-laws and amendments thereto not
inconsistent with
the laws or the constitution of this  State or of the United States, which
by-laws shall define
the manner of electing directors, trustees, or managers and officers of the
SPRV, together
with their qualifications and duties and fixing their term of office.
(Source: P.A. 92-124, eff. 7-20-01.)
(215 ILCS 5/179E-40)
Sec. 179E-40. 
		Affiliation. 
		Notwithstanding the provisions
of Article
VIII 1/2, the SPRV, the SPRV organizer, and subsequent debt or equity
investors in SPRV
securities shall not be deemed affiliates of the ceding insurer by virtue of
the SPRV contract
between the ceding insurer and the SPRV, the securities of the SPRV, or related
agreements
necessary to implement the SPRV insurance securitization.
An SPRV may not be controlled by, may not control, and may not be under common
control with any ceding insurer that is a party to an SPRV contract.
(Source: P.A. 92-124, eff. 7-20-01.)
(215 ILCS 5/179E-45)
Sec. 179E-45. 
		Capitalization. 
		An SPRV must have minimum initial capital of
not
less than $5,000.  All of the initial capital must be received by the SPRV in
cash.  The
minimum initial capital required and all other funds of the SPRV in excess of
its minimum
initial capital, including funds held in trust to secure the obligations of the
SPRV pursuant to
its obligations under the SPRV contracts, shall be invested as provided in
Section 179E-85.
(Source: P.A. 92-124, eff. 7-20-01.)
(215 ILCS 5/179E-50)
Sec. 179E-50. 
		Dividends. 
		An SPRV may not declare or pay dividends in any
form
to its owners unless the dividends do not decrease the capital of the SPRV
below $5,000,
and after giving effect to the dividends, the assets of the SPRV, including
assets held in trust
pursuant to the terms of the insurance securitization, are sufficient to meet
its obligations.
Dividends may be declared by the board of directors of the SPRV if the
declaration of
dividends would not violate the provisions of this Article or jeopardize the
fulfillment of the
obligations of the SPRV or the trustee pursuant to the SPRV insurance
securitization, the
SPRV contract or any related transaction.
(Source: P.A. 92-124, eff. 7-20-01.)
(215 ILCS 5/179E-55)
Sec. 179E-55. 
		Records and financial reports.
(a) The records of the SPRV must be maintained in this State and must be
available
for examination by the Department.  The Director shall have the right to
examine the
records of an SPRV at any time.  No later than 5 months after the fiscal year
end of the
SPRV, the SPRV must file with the Director an audit by a certified public
accounting firm
of the financial statements of the SPRV and the trust accounts.
(b) No later than March 1 of each year, an SPRV organized under this Article
must
file with the Director a statement of operations, including, but not limited
to, a statement of
income, a balance sheet, and a detailed listing of invested assets, including
identification of
assets held in trust to secure the SPRV's obligations under the SPRV contract,
for the year
ending the previous December 31.  The statements shall be prepared in
accordance with
Section 136 of this Code on such forms and shall reveal such information as
shall be
required by the Director.
(c) An SPRV must keep its books and records in a manner so that its
financial
condition, affairs, and operations can be ascertained, its financial statements
filed with the
Director can be readily verified, and its compliance with the provisions of
this Article can be
determined. An SPRV may cause any or all of the books or records to be
photographed,
reproduced on film, or stored and reproduced electronically.
(d) All original books, records, documents, accounts, and vouchers, or
reproductions
of those items, must be preserved and kept available in this State for the
purpose of
examination and until authority to destroy or otherwise dispose of the records
is secured
from the Director. The original records may, however, be kept and maintained
outside this
State if, according to a plan adopted by the SPRV's board of directors and
approved by the
Director, it maintains  other suitable records.
(Source: P.A. 92-124, eff. 7-20-01.)
(215 ILCS 5/179E-60)
Sec. 179E-60. 
		Officers and directors.
(a) The directors of an SPRV shall elect such officers they deem necessary
to
carry
out the purposes of the SPRV pursuant to this Article.  The provisions of
Section 10 of this
Code relating to the indemnification of officers and directors apply to and
govern SPRVs
organized under this Article.
(b) An SPRV authorized to do business in this State must notify the Director
of
the
appointment or election of any new officers or directors within 30 days after
the
appointment or election.
(c) If, after notice and hearing afforded to the officer or director, and
after
a finding
that the officer or director is incompetent or untrustworthy or of known bad
character, the
Director shall order the removal of the person. If the SPRV does not comply
with a removal
order within 30 days, the Director may suspend that SPRV's limited certificate
of authority
until such time as the order is complied with.
(d) An SPRV may not make loans to any SPRV organizer, owner, director,
officer, manager, or affiliate.
(Source: P.A. 92-124, eff. 7-20-01.)
(215 ILCS 5/179E-65)
Sec. 179E-65. 
		Fees and taxes. 
		The Director may charge fees to reimburse
the
Director for expenses and costs incurred by the Department incident to the
examination of
financial statements and review of the plan of operation and to reimburse other
such
activities of the Director related to the formation and ongoing operation of an
SPRV. An
SPRV is not be subject to State premium or other State taxes incidental to the
operation of
its business as long as the business remains within the limitations of this
Article.
(Source: P.A. 92-124, eff. 7-20-01.)
(215 ILCS 5/179E-70)
Sec. 179E-70. 
		Dissolution. 
		An SPRV operating under this Article may be
dissolved
by a vote of its board of directors at any time after the Director has approved
that action.  A
voluntary dissolution may not be effected or allowed until and unless all of
the obligations
of the SPRV pursuant to the insurance securitization have been fully and
finally satisfied
pursuant to their terms.  In the case of voluntary dissolution, the disposition
of the affairs of
the SPRV (including the settlement of all outstanding obligations) shall be
made by the
officers or directors of the SPRV, and when the liquidation has been completed
and a final
statement, in acceptable form, filed with and approved, or deemed approved, by
the
Director, the provisions for voluntary dissolution under the laws of this State
shall be
followed to dissolve the SPRV.
(Source: P.A. 92-124, eff. 7-20-01.)
(215 ILCS 5/179E-75)
Sec. 179E-75. 
		Conservation, rehabilitation, or liquidation.
(a) The provisions of Articles XIII and XIII 1/2 apply to an SPRV, except
to
the
extent modified in this Section.
(b) Notwithstanding the provisions of Section 188 of this Code, the Director
may
apply by petition to the Circuit Court of Cook County, the Circuit Court of
Sangamon
County, or the circuit court of the county in which an SPRV has or last had its
principal
office for an order authorizing the Director to conserve, rehabilitate or
liquidate an
SPRV domiciled in
this State solely on one or more of the following grounds:
(1) there has been embezzlement, wrongful     sequestration, dissipation, or diversion of the assets of the SPRV intended to be used to pay amounts owed to the ceding insurer or the holders of SPRV securities; or
(2) the SPRV is insolvent and the holders of a     majority in outstanding principal amount of each class of SPRV securities request or consent to conservation, rehabilitation, or liquidation under this Article.
The court shall not grant relief under item (1) of this subsection
unless, after notice
and a hearing, the Director, who has the burden of proof, establishes by clear
and
convincing evidence that the relief should be granted.
(c) Notwithstanding any contrary provision in this Code, the rules
promulgated
under this Code, or any other applicable law or rule, upon any order of
conservation,
rehabilitation, or liquidation of the SPRV, the receiver shall be bound to deal
with the
SPRV's assets and liabilities, in accordance with the requirements set forth in
this Article.
(d) With respect to amounts recoverable under an SPRV contract, the amount
recoverable by the receiver may not be reduced or diminished as a result of the
entry of an
order of conservation, rehabilitation, or liquidation with respect to the
ceding insurer
notwithstanding any provisions to the contrary in the contracts or other
documentation
governing the SPRV insurance securitization.
(e) Notwithstanding the provisions of Article XIII and XIII 1/2 of this
Code, any
application, petition, or temporary restraining order or injunction issued
under those
Articles, with respect to a ceding insurer shall not prohibit the transaction
of any business by
an SPRV, including any payment by an SPRV made pursuant to an SPRV security, or
any
action or proceeding against an SPRV or its assets.
(f) Notwithstanding the provisions of Articles XIII and XIII 1/2 of this
Code, the
commencement of a summary proceeding or other interim proceeding commenced
before a
formal delinquency proceeding with respect to an SPRV, and any order issued by
the court
thereunder, shall not prohibit:
(1) the payment by an SPRV made pursuant to an SPRV     security or SPRV contract; or
(2) the SPRV from taking any action required to make     the payment.
(g) Notwithstanding any other provision of Articles XIII and XIII 1/2 of
this Code or
other State law:
(1) a receiver of a ceding insurer may not avoid a     non-fraudulent transfer by a ceding insurer to an SPRV of money or other property made pursuant to an SPRV contract; and
(2) a receiver of an SPRV may not void a     non-fraudulent transfer by the SPRV of money or other property made to a ceding insurer pursuant to an SPRV contract or made to or for the benefit of any holder of an SPRV security on account of the SPRV security.
(h) With the exception of the fulfillment of the obligations under an SPRV
contract,
and notwithstanding any other provisions of this Article or other law of this
State to the
contrary, the assets of an SPRV, including assets held in trust, may not be
consolidated with
or included in the estate of a ceding insurer in any delinquency proceeding
against the
ceding insurer under this Article for any purpose, including, without
limitation, distribution
to creditors of the ceding insurer.
(i) Notwithstanding any other provision of this Article:
(1) A domiciliary receiver of an SPRV domiciled in     another state shall be vested by operation of law with the title to all of the assets, property, contracts, and rights of action, and all of the books, accounts, and other records of the SPRV located in this State.  The domiciliary receiver shall have the immediate right to recover all of the vested property, assets, and causes of action of the SPRV located in this State.
(2) An ancillary proceeding may not be commenced or     prosecuted in this State against an SPRV domiciled in another state.
(Source: P.A. 92-124, eff. 7-20-01.)
(215 ILCS 5/179E-80)
Sec. 179E-80. 
		
		SPRV not subject to guaranty funds, residual market, or
similar
arrangements.
(a) An SPRV or the activities, assets, and obligations relating to the SPRV
are
not
subject to the provisions of Articles XXXIII 1/2 and XXXIV of this Code, and
an SPRV may
not be assessed by or otherwise be required to contribute to any guaranty fund
or guaranty
association in this State with respect to the activities, assets, or
obligations of an SPRV or
the ceding insurer.
(b) An SPRV may not be required to participate in residual market, FAIR
plan, or
other similar plans to provide insurance coverage, take out policies, assume
risks, make
capital contributions, pay or be otherwise obligated for assessments,
surcharges, or fees, or
otherwise support or participate in such plans or arrangements.
(Source: P.A. 92-124, eff. 7-20-01.)
(215 ILCS 5/179E-85)
Sec. 179E-85. 
		Asset and investment limitations.
(a) Assets of the SPRV held in trust to secure obligations under the SPRV
contract
must at all times be held in:
(1) cash and cash equivalents;
(2) securities listed by the Securities Valuation     Office of the NAIC and qualifying as admitted assets under statutory accounting convention in its state of domicile; and
(3) any other form of security acceptable to the     Director.
(b) An SPRV may enter into swap agreements or other transactions that have
the
objective of leveling timing differences in funding of up-front or ongoing
transaction
expenses or managing credit or interest rate risk of the investments in the
trust to ensure that
the investments are sufficient to assure payment or repayment of:
(1) the securities (and related interest or principal     payments) issued pursuant to an SPRV insurance securitization transaction; or
(2) the SPRV's obligations under the SPRV contract.
(Source: P.A. 92-124, eff. 7-20-01.)
(215 ILCS 5/179E-90)
Sec. 179E-90. 
		Credit for reinsurance for the SPRV contract. 
		An SPRV contract meeting the requirements under this Article shall be
granted credit for reinsurance treatment or shall otherwise qualify as an asset
or a reduction
from liability for reinsurance ceded by a domestic insurer to an assuming
insurer under
Section 173.1 of this Code for the benefit of the ceding insurer, provided and
only to the
extent that (i) the fair value of the assets held in trust for the benefit of
the ceding insurer
equal or exceed the obligations due and payable to the ceding insurer by the
SPRV under the
SPRV contract, (ii) the assets are held in trust in accordance with the
requirements set forth
in this Article, (iii)  the assets are administered in the manner and pursuant
to arrangements
as set forth in this Article, and (iv) the assets are held or invested in one
or more of the
forms allowed in Section 179E-85.
(Source: P.A. 92-124, eff. 7-20-01.)
(215 ILCS 5/179E-95)
Sec. 179E-95. 
		
		Insurance securitization deemed not to be transaction of
insurance
business. The securities issued by the SPRV under an SPRV insurance
securitization shall
not be deemed to be insurance or reinsurance contracts. An investor in
securities issued
pursuant to an SPRV insurance securitization or any holder of those securities
shall not, by
sole means of the investment or holding, be deemed to be transacting an
insurance business
in this State. The underwriters or selling agents (and their partners,
directors, officers,
members, managers, employees, agents, representatives, and advisors) involved
in an SPRV
insurance securitization shall not be deemed to be conducting an insurance or
reinsurance
agency, brokerage, intermediary, advisory, or consulting business by virtue of
their activities
in connection therewith.
(Source: P.A. 92-124, eff. 7-20-01.)
(215 ILCS 5/179E-100)
Sec. 179E-100. 
		Authority to adopt rules. 
		The Director may promulgate rules
necessary to effectuate the purposes of this Article.  Any rules so promulgated
will not
affect any existing SPRV insurance securitization in effect at the time of the
promulgation.
(Source: P.A. 92-124, eff. 7-20-01.)