2023 Illinois Compiled Statutes › Chapter 215 - INSURANCE › 215 ILCS 5/ - Illinois Insurance Code. › Article III - Domestic Mutual Companies

(215 ILCS 5/Art. III heading)
ARTICLE III.  
		DOMESTIC MUTUAL COMPANIES
(Article scheduled to be repealed on January 1, 2027)
(215 ILCS 5/36) (from Ch. 73, par. 648)
(Section scheduled to be repealed on January 1, 2027)
Sec. 36. 
		Scope of
Article. 
		This Article shall apply to all domestic mutual companies transacting or
being organized to transact any of the kinds of business enumerated in
Section 4.
(Source: Laws 1937, p. 696.)
(215 ILCS 5/37) (from Ch. 73, par. 649)
(Section scheduled to be repealed on January 1, 2027)
Sec. 37. 
		Name. 
		
		The corporate name of any company organized under this Article shall
contain the word "Mutual" and shall not be the same as, or deceptively
similar to, the name of any domestic company, or of any foreign or alien
company authorized to transact business in this State.
(Source: Laws 1937, p. 696.)
(215 ILCS 5/38) (from Ch. 73, par. 650)
(Section scheduled to be repealed on January 1, 2027)
Sec. 38. 
		Principal
office and place of business. 
The principal office of any company
organized under this Article shall be located in this State. Unless the
Director has approved otherwise, the principal place of business of any
company organized under this Article shall be located in this State.
(Source: P.A. 82-498.)
(215 ILCS 5/39) (from Ch. 73, par. 651)
(Section scheduled to be repealed on January 1, 2027)
Sec. 39. 
		Authorized
kinds of business.
(1) Companies may be organized under this Article either for the purpose
of transacting any of the kind or kinds of business enumerated in Class 1
of Section 4, or for the purpose of transacting any of the kind or kinds of
business enumerated in Classes 2 and 3 of that Section.
(2) A domestic company may, notwithstanding limitations otherwise
applicable, and provided it maintains books and records which account for
such business, engage directly in any of the following businesses: (a)
rendering investment advice; (b) rendering services related to the
functions involved in the operation of its insurance business including,
but not limited to, actuarial, loss prevention, safety engineering, data
processing, accounting, claims, appraisal and collection services; (c)
acting as administrative agent for a health or welfare program; (d) any
other business activity reasonably complementary or supplementary to its
insurance business; either to the extent necessarily or properly incidental
to the insurance business the company is authorized to do in this State or
to the extent approved by the Director and subject to any limitations he
may prescribe for the protection of the interests of the policyholders of
the company taking into account the effect of such business on the
company's existing insurance business and its surplus, the proposed
allocation of the estimated cost of such business and the risks inherent in
such business as well as relative advantages to the company and its
policyholders of conducting such business directly instead of through a
subsidiary.
(Source: P.A. 77-673.)
(215 ILCS 5/40) (from Ch. 73, par. 652)
(Section scheduled to be repealed on January 1, 2027)
Sec. 40. 
		Directors or trustees.
(1) After the date of incorporation, as
determined by Section 48, and until the first meeting of the members, the
incorporators shall have the powers and perform the duties ordinarily
possessed and exercised by a board of directors.
(2) Upon the issuance of a certificate of authority to a company
organized under this Article, the corporate powers shall be exercised by,
and its business and affairs shall be under the control of, a board of
directors or trustees composed of not less than 3 nor more than
21 natural persons who are members and who are at least 18
years of age and at least 3 of whom are residents and citizens of this
State.
After June 30, 2002, at least 20%, but not less than one,
of the directors of a company that is not subject to Section 131.20b
shall be persons who are not officers or employees of the company.  A person
convicted of a felony may not be a director, and all directors shall be of
good character and known professional, administrative, or business ability,
such
business ability to include a practical knowledge of insurance, finance, or
investment.
The first board of directors or trustees shall be elected at the
first meeting of the members, and all directors or trustees shall be
elected annually thereafter, except only as provided in subsection (3).
(3) The articles of incorporation may provide for the division of the
board into classes, as nearly equal in number as possible, and fix the term
of office for each class, but no term shall be for more than 3 years.
(4) Meetings of the board of directors or trustees, regular or special,
may be held either within or without the State. Meetings of the board of
directors or trustees shall be upon such notice as the by-laws may
prescribe. Attendance of a director or trustee at any meeting shall
constitute a waiver of notice of such meeting except where a director or
trustee attends the meeting for the express purpose of objecting to the
transaction of any business because the meeting is not lawfully called or
convened. Neither the business to be transacted at, nor the purpose of, any
regular or special meeting of the board of directors or trustees need be
specified in the notice or waiver of notice of such meeting, unless
expressly otherwise provided by this Code.  Unless specifically
prohibited by the articles of incorporation or by-laws, members of the
board of directors or of any committee of the board of directors may
participate in and act at any meeting of such board or committee through
the use of a conference telephone or other communications equipment by
means of which all persons participating in the meeting can hear each other.
Participation in such meeting shall constitute attendance and presence in
person at the meeting of the person or persons so participating.
Unless specifically prohibited by the articles of
incorporation or by-laws, members of the board of directors or of any
committee of the board of directors may take action without a meeting, if a
consent in writing setting forth the action so taken shall be signed by all
of the directors entitled to vote with respect to the subject matter
thereof, or by all of the members of such committee, as the case may be.
The consent shall be evidenced by one or more written approvals, each of
which sets forth the action taken and bears the signature of one or more
directors or committee members.  All approvals evidencing the consent shall
be filed in the company's corporate records.  The action taken shall be
effective when all of the directors, or members of the committee, have
approved the consent unless the consent specifies a different effective date.
(5) A company may indemnify any person in conformance with subsection
(7) of Section 10.
(Source: P.A. 92-140, eff. 7-24-01.)
(215 ILCS 5/41) (from Ch. 73, par. 653)
(Section scheduled to be repealed on January 1, 2027)
Sec. 41. 
		Executive
committee. 
		If the by-laws so provide, the board of directors or trustees, by a
resolution adopted by a majority of the whole board, may designate three or
more of their number to constitute an executive committee, which committee
shall, to the extent provided in the resolution or in the by-laws, have and
exercise, during the interim between the meetings of the board, all of the
authority of the board in the management of the company, but the
designation of such committee shall not relieve the board or any member
thereof of any responsibility imposed by law.
(Source: Laws 1937, p. 696.)
(215 ILCS 5/42) (from Ch. 73, par. 654)
(Section scheduled to be repealed on January 1, 2027)
Sec. 42. 
		By-laws.
(1) The incorporators shall adopt by-laws for the company which shall
not be altered, amended, or repealed prior to the issuance of a certificate
of authority to the company without the approval of the Director. The
by-laws shall provide that each policyholder of the company shall be a
member of the company and shall be entitled to one or more votes in person
or by proxy, based upon the amount of insurance in force, the number of
policies held or the amount of premium paid, as shall be stated in such
by-laws.
(2) After a certificate of authority is issued to the company, the power
to make, alter, amend or repeal by-laws shall be vested in the board of
directors or trustees unless reserved to the members by the articles of
incorporation.
(3) The by-laws of a mutual legal reserve life company shall provide for
a specific premium and that there shall be no assessment or contingent
liability on the part of the member.
(4) The by-laws of a mutual company other than life shall provide
(a) for a specific premium or premium deposit; and
(b) except as provided in section 55, for a     contingent liability of each member in an amount not less than one nor more than ten times the specific premium or premium deposit stated in the policy.
(Source: Laws 1937, p. 696.)
(215 ILCS 5/43) (from Ch. 73, par. 655)
(Section scheduled to be repealed on January 1, 2027)
Sec. 43. 
		Minimum surplus requirements.
(1) No company organized after
December 31, 1985 under this Article
may receive a certificate of authority from the Director to issue
policies or contracts of insurance until it has complied with the
requirements in respect of original surplus applicable to the class or
classes and clause or clauses of section 4 describing the kind or kinds
of insurance it is organized to write, as set forth in the following
table:
Life, Accident, Health and Legal Expense
(a) Class 1, Clauses (a), (b) or (c), a surplus of at     least $2,000,000; more than one clause, a surplus of at least $2,000,000.
Casualty, Fidelity and Surety
(b) Class 2, Clauses (a), (b), (c), (d), (g), (h),     (i) or (j), a surplus of at least $2,000,000; more than one clause, a surplus of at least $2,000,000.
Fire, Marine and Legal Expense
(c) Class 2, Clauses (e), (f), (k), (l) or Class 3,     any or all clauses or any combination thereof, a surplus of at least $1,000,000.
Multiple Line
(d) Class 2, any or all clauses other than those     specified in (c) above, and Class 3, any or all clauses, a surplus of at least $2,000,000.
Glass and Livestock and Domestic Animals
(e) Class 2, Clause (f) only or (k) only, $250,000;     provided any company to which this subparagraph is applicable shall not expose itself to any loss on any one risk in an amount exceeding $5,000.
(2) Every company subject to this Article and organized on or after
June 28, 1965 must have and at all times maintain a minimum surplus
equal to 2/3 of the original surplus required for that particular
company at the time it was organized.  Any such company
organized prior to June 28, 1965 must have and at all times maintain a
minimum surplus equal to that which would have been required for that
particular company at the time it was issued a Certificate of Authority.
Any company which has added any clause or clauses must have and at all
times maintain minimum surplus not less than the minimum surplus requirement
applicable to the class or classes and clause or clauses of Section 4 at
the time that the additional clause or clauses are authorized. Any company
organized prior to October 1, 1972 must have and at all times maintain, in
addition to the minimum surplus required to be maintained by that
particular company, additional minimum surplus of not less than $300,000.
(3) Any company organized prior to January 1, 1986 and regulated under
this Article, in addition to the minimum surplus which is required by
paragraph (2) of this Section must have by December 31, 1986 and at all
times maintain until December 31, 1990 additional minimum surplus of $200,000.
(4) Provided, however, mutual companies organized prior to October 1, 1972
and authorized to engage only in insurance business as specified in Class
2(f) of Section 4 on an assessable basis shall not be required to establish
an additional minimum surplus as provided herein.
(5) Subsections (2) and (3) shall be applicable until December 31, 1990 for all
companies organized prior to January 1, 1986; thereafter, such
companies must have and maintain surplus as required by subsections (7) and (8).
(6) Every company subject to this Article and organized after December
31, 1985 under this Article must maintain minimum surplus applicable to the
class or classes and clause or clauses of Section 4 describing the kind or
kinds of insurance which it is authorized to write, as follows:
Life, Accident, Health and Legal Expense
(a) Class 1, Clauses (a), (b) or (c), a surplus of at     least $1,500,000; more than one clause, a surplus of at least $1,500,000.
Casualty, Fidelity and Surety
(b) Class 2, Clauses (a), (b), (c), (d), (g), (h),     (i) or (j), a surplus of at least $1,500,000; more than one clause, a surplus of at least $1,500,000.
Fire, Marine and Legal Expense
(c) Class 2, Clauses (e), (f), (k), (l) or Class 3,     any or all clauses or any combination thereof, a surplus of at least $700,000.
Multiple Line
(d) Class 2, any or all clauses other than those     specified in (c) above, and Class 3, any or all clauses, a surplus of at least $1,500,000.
Glass and Livestock and Domestic Animals
(e) Class 2, Clause (f) only or (k) only, $150,000;     provided any company to which this subparagraph is applicable shall not expose itself to any loss on any one risk in an amount exceeding $5,000.
(7) Any company organized  prior to January 1, 1986, regulated
under this Article must have by December 31, 1990, and thereafter maintain
until December 31, 1995, surplus not less than the minimum applicable to the class or
classes and clause or clauses of Section 4 describing the kind or kinds of
insurance which it is authorized to write, as follows:
Life, Accident, Health and Legal Expense
(a) Class 1, Clauses (a), (b) or (c), a surplus of at     least $1,200,000; more than one clause, a surplus of at least $1,200,000.
Casualty, Fidelity and Surety
(b) Class 2, Clauses (a), (b), (c), (d), (g), (h),     (i) or (j), a surplus of at least $1,200,000; more than one clause, a surplus of at least $1,200,000.
Fire, Marine and Legal Expense
(c) Class 2, Clauses (e), (f), (k), (l) or Class 3,     any or all clauses or any combination thereof, a surplus of at least $600,000.
Multiple Line
(d) Class 2, any or all clauses other than those     specified in (c) above, and Class 3, any or all clauses, a surplus of at least $1,200,000.
Glass and Livestock and Domestic Animals
(e) Class 2, Clause (f) only or (k) only, $100,000;     provided any company to which this subparagraph is applicable shall not expose itself to any loss on any one risk in an amount exceeding $5,000.
(8) Any company organized  prior to January 1, 1986, regulated
under this Article must have by December 31, 1995, and thereafter maintain
at all times, surplus not less than the minimum applicable to the class or
classes and clause or clauses of Section 4 describing the kind or kinds of
insurance which it is authorized to write, as follows:
Life, Accident, Health and Legal Expense
(a) Class 1, Clauses (a), (b) or (c), a surplus of at     least $1,500,000; more than one clause, a surplus of at least $1,500,000.
Casualty, Fidelity and Surety
(b) Class 2, Clauses (a), (b), (c), (d), (g), (h),     (i) or (j), a surplus of at least $1,500,000; more than one clause, a surplus of at least $1,500,000.
Fire, Marine and Legal Expense
(c) Class 2, Clauses (e), (f), (k), (l) or Class 3,     any or all clauses or any combination thereof, a surplus of at least $700,000.
Multiple Line
(d) Class 2, any or all clauses other than those     specified in (c) above, and Class 3, any or all clauses, a surplus of at least $1,500,000.
Glass and Livestock and Domestic Animals
(e) Class 2, Clause (f) only or (k) only, $150,000;     provided any company to which this subparagraph is applicable shall not expose itself to any loss on any one risk in an amount exceeding $5,000.
(9) The Director shall take action under Section 60 of this Code
against any company which fails to maintain the minimum
surplus required by this section. The words "minimum surplus" mean the
"surplus as regards policyholders", as it appears on the annual
statement of a mutual company on the usual and proper annual statement
form prescribed by the National Association of Insurance Commissioners.
(Source: P.A. 84-934.)
(215 ILCS 5/44) (from Ch. 73, par. 656)
(Section scheduled to be repealed on January 1, 2027)
Sec. 44. 
		Articles of incorporation. 
		Any one or more natural persons, at least one of whom is a resident of
Illinois, who desire to form a company under this Article, shall sign and
acknowledge before an officer authorized to take acknowledgments articles
of incorporation in duplicate. The articles shall set forth
(a) the corporate name;
(b) the location of its principal office;
(c) the period of duration, which may be perpetual;
(d) the class or classes of insurance business, as     provided in Section 4, in which it proposes to engage, and the kinds of insurance in each class it proposes to write;
(e) the name of the governing body of the company,     whether board of trustees or board of directors, and the number, the terms of office of and the manner of electing the members of the board; and
(f) such other provisions not inconsistent with law     as may be deemed by the incorporators to be necessary or advisable.
(Source: P.A. 84-502.)
(215 ILCS 5/45) (from Ch. 73, par. 657)
(Section scheduled to be repealed on January 1, 2027)
Sec. 45. 
		Documents to be delivered to Director by incorporators. 
		Upon the execution of the articles of incorporation, there shall be
delivered to the Director
(a) duplicate originals of the articles of     incorporation;
(b) a copy of the by-laws adopted by the     incorporators;
(c) 2 organization bonds, or the cash or securities,     provided for in Section 46;
(d) the form of guaranty fund agreements and of     guaranty capital shares, if any, as provided in Section 56 to be issued in connection with solicitation of surplus; and
(e) the form of escrow agreement for the deposit of     cash or securities.
(Source: P.A. 84-502.)
(215 ILCS 5/45.1) (from Ch. 73, par. 657.1)
(Section scheduled to be repealed on January 1, 2027)
Sec. 45.1. 
		Escrow agreements. 
		The company shall designate a bank or
trust company with whom it will enter into an escrow agreement, which
agreement shall state that the organization surplus shall be placed in
escrow and remain so, until an organization examination has been completed.
When the examination has been completed the escrow agent is authorized to
purchase securities for deposit as required by Section 53 and forward them
to the Director. The escrow agent is authorized to release the balance of
the escrowed funds to the company only upon notification that a Certificate
of Authority or similar documentation has been issued by the Director.
(Source: P.A. 84-502.)
(215 ILCS 5/46) (from Ch. 73, par. 658)
(Section scheduled to be repealed on January 1, 2027)
Sec. 46. 
		Organization bonds. 
		
		The incorporators shall deliver to the Director two bonds in the same
penalties and containing the same provisions, so far as applicable, as the
bonds required for the organization of a stock company by Section 16, for
the use and benefit of the State of Illinois and subscribers, members and
creditors, or in lieu of delivering such bonds, the incorporators may
deposit cash or securities of the same kind and amount on the same terms
and conditions, so far as applicable, as provided by said Section.
(Source: Laws 1937, p. 696.)
(215 ILCS 5/47) (from Ch. 73, par. 659)
(Section scheduled to be repealed on January 1, 2027)
Sec. 47. 
		Publication
of intention.
(1) Upon compliance with the provisions of Section 45, the
incorporators shall cause to be published in a newspaper of general
circulation in this State, in the county where the principal office of the
company is to be located, once each week for three consecutive weeks, a
notice setting forth
(a) their intent to form the company and the proposed     name thereof;
(b) the class or classes of insurance business in     which the company proposes to engage; and
(c) the address where its principal office shall be     located.
(2) Proof of such publication made by a certificate of the publisher or
his agent shall be delivered to the Director.
(Source: Laws 1937, p. 696.)
(215 ILCS 5/48) (from Ch. 73, par. 660)
(Section scheduled to be repealed on January 1, 2027)
Sec. 48. 
		Approval of
documents. 
The documents and papers so delivered to the Director may be approved or
disapproved by the Director and the incorporators are entitled to a hearing
in the same manner as provided in Section 18 in the case of documents
delivered for approval in connection with the organization of stock
companies. If the documents and papers so delivered are approved by the
Director, the Director must file in his office the bylaws, bond or securities
and one of the duplicate
originals of the articles of incorporation, and endorse upon the other
duplicate original his approval and the month, day and year of approval and
deliver it to the incorporators. The company is deemed to be fully
organized on the date of the approval of the articles of incorporation by
the Director, and that date is the date of incorporation of the company.
(Source: P.A. 82-498.)
(215 ILCS 5/49) (from Ch. 73, par. 661)
(Section scheduled to be repealed on January 1, 2027)
Sec. 49. 
		Recording
of articles of incorporation. 
The duplicate original of the articles of incorporation returned by the
Director shall be filed for record, within 15 days after it is
delivered to the company, in the office of the recorder of the
county where the principal office of the company is to be located.
(Source: P.A. 83-358.)
(215 ILCS 5/50) (from Ch. 73, par. 662)
(Section scheduled to be repealed on January 1, 2027)
Sec. 50. 
		Authority
to solicit subscriptions to surplus.
(1) Upon the approval of the articles of incorporation by the Director
he shall issue to the company a permit which shall expire at the end of two
years from its date, authorizing it to solicit subscriptions to surplus in
accordance with this Code and to do such other acts as may be necessary and
proper in order to complete its organization and to entitle it to receive a
certificate of authority to transact an insurance business.
(2) If the Director finds that any company in process of organization
has failed to comply with, or has violated any provision of the Code, he
may proceed against the company under Article XIII, and may after notice
and hearing revoke the permit issued to it under subsection (1) of this
Section.
(Source: Laws 1951, p. 1565.)
(215 ILCS 5/51) (from Ch. 73, par. 663)
(Section scheduled to be repealed on January 1, 2027)
Sec. 51. 
		Issuance of
certificate of authority. 
		When the Director has been notified that the company has the required
surplus as set forth in Section 43 of this Article as now and hereafter
amended, he shall conduct an examination of the company. If he finds that
the organization is complete and that all of the requirements of this Code
have been met he shall issue to such company a certificate of authority to
transact the kind or kinds of business specified therein. No company shall
transact any business of insurance in this State until it shall have
received such certificate of authority as herein prescribed nor any
business of insurance not specified in such certificate of authority.
(Source: Laws 1967, p. 1808.)
(215 ILCS 5/52) (from Ch. 73, par. 664)
(Section scheduled to be repealed on January 1, 2027)
Sec. 52. 
		Voluntary
surrender of articles of incorporation. 
		At any time prior to the issuance of the certificate of authority to the
company the articles of incorporation may be voluntarily surrendered and
the company dissolved by written agreement filed with the Director, signed
by a majority of the incorporators. Such surrender and dissolution shall
become effective only upon the approval thereof by the Director. The
Director shall approve the surrender of such articles of incorporation if
upon investigation he shall find that
(a) no insurance business has been transacted by the     company;
(b) all sums of money or securities, if any,     collected upon applications or subscriptions, have been returned to the applicants or subscribers; and
(c) all obligations of the company have been paid or     discharged.
(Source: Laws 1937, p. 696.)
(215 ILCS 5/53) (from Ch. 73, par. 665)
(Section scheduled to be repealed on January 1, 2027)
Sec. 53. Deposit.
(a) A company subject to the provisions of this Article shall make and
maintain with the Director for the protection of all creditors,
policyholders and policy obligations of the company, a deposit of
securities having a
fair market value equal to the minimum surplus required to be maintained
under Section 43.
The Director may release the required deposit of securities
upon receipt of
an order of a court having proper jurisdiction or
upon: (i)
certification by the company that it has no outstanding creditors,
policyholders, or policy obligations in effect and no plans to engage in the
business of insurance; (ii) receipt of a lawful resolution of the company's
board of directors effecting the surrender of its articles of incorporation for
administrative dissolution by the Director; and (iii) receipt of the name and
forwarding address for each of the final officers and directors of the company,
together with a plan of dissolution approved by the Director.
(b) All deposits by insurers subject to this Article must be limited to the following types:
(1) United States government bonds, notes, and bills     for which the full faith and credit of the government of the United States is pledged for the payment of principal and interest.
(2) United States public bonds and notes of any state     or of the District of Columbia, or Canadian public bonds and notes of any province thereof, for which the full faith and credit of the issuer has been pledged for the payment of principal and interest.
(3) United States and Canadian county, provincial,     municipal, and district bonds and notes for which the issuer has lawful authority to levy taxes or make assessments for the payment of principal and interest.
(4) Bonds and notes of any federal agency that are     guaranteed as to payment of principal and interest by the United States.
(5) International development bank bonds, bonds     issued by the State of Israel and sold through the Development Corporation for Israel or its successor entities, and notes issued, assumed, and guaranteed by the International Bank for Reconstruction and Development, the Inter-American Development Bank, the Asian Development Bank, the African Development Bank, or the International Finance Corporation.
(6) Corporate bonds and notes of any private     corporations that are not affiliates or subsidiaries of the insurer, which corporations are organized under the laws of the United States, Canada, any state, the District of Columbia, any territory or possession of the United States, or any province of Canada.
(7) Certificates of deposit.
(c) To be eligible for deposit under subsection (b), any bond or note must have the following characteristics:
(1) The bond or note must be interest-bearing or     interest-accruing, and the insurer must be the exclusive owner of the interest accruing thereon and entitled to receive the interest for its account.
(2) The issuer must be in a solvent financial     condition and the bond or note must not be in default.
(3) The bond, note, or debt of the issuing country     must be rated in one of the 4 highest classifications by an established, nationally recognized investment rating service or must have been given a rating of 1 by the Securities Valuation Office of the National Association of Insurance Commissioners.
(4) The market value of the bond or note must be     readily ascertainable or the value of the bond or note must be obtainable by the insurer or its custodian from the issuer's fiscal agent.
(5) The bond or note must be the direct obligation of     the issuer.
(6) The bond or note must be stated in United States     dollar denominations.
(7) The bond or note must be eligible for book-entry     form on the books of the Federal Reserve's book-entry system or in a depository trust clearing system or on the books of the issuer's transfer agent or evidenced by a certificate delivered to the insurer or its custodian.
(d) To be eligible for deposit under item (7) of subsection (b), a certificate of deposit must have the following characteristics:
(1) The certificate of deposit must be issued by a     bank, savings bank, or savings association that is organized under the laws of the United States, of this State, or of any other state and that has a principal office or branch office in this State that is authorized to receive deposits in this State.
(2) The certificate of deposit must be     interest-bearing and may not be issued in discounted form.
(3) The certificate of deposit must be issued for a     period of not less than one year.
(4) The issuing bank, savings bank, or savings     association must agree to the terms and conditions of the Director regarding the rights to the certificate of deposit and must have executed a written certificate of deposit agreement with the Director. The terms and conditions of the agreement shall include, but need not be limited to:
(A) Exclusive authorized signature authority for         the chief financial officer.
(B) An agreement to pay, without protest, the         proceeds of its certificate of deposit to the Director within 30 business days after presentation.
(C) A prohibition against levies, setoffs,         survivorship, or other conditions that might hinder the Director's ability to recover the full face value of a certificate of deposit.
(D) Instructions regarding interest payments,         renewals, taxpayer identification, and early withdrawal penalties.
(E) An agreement to be subject to the         jurisdiction of the courts of this State, or those of the United States that are located in this State, for the purposes of any litigation arising out of this Section.
(F) Such other conditions as the Director         requires.
(e) The Director may refuse to accept certain securities or refuse to accept the reported market value of certain securities offered pursuant to this Section in order to ensure that sufficient cash and securities are on hand to meet the purposes of the deposit. In making a refusal under this subsection (e), the guidelines for use of the Director may include, but need not be limited to, whether the market value of the securities cannot be readily ascertained and the lack of liquidity of the securities. Securities refused under this subsection (e) are not acceptable as deposits.
(f) All deposits required of a domestic insurer pursuant to the laws of another state, province, or country must be comprised of securities of the kinds required under subsection (b), having the characteristics required under subsections (c) and (d), and permitted by the laws of the other state, province, or country, except common stocks, mortgages or loans of any kind, real estate investment trust funds or programs, commercial paper, and letters of credit.
(Source: P.A. 98-110, eff. 1-1-14; 98-969, eff. 1-1-15.)
(215 ILCS 5/54) (from Ch. 73, par. 666)
(Section scheduled to be repealed on January 1, 2027)
Sec. 54. 
		Dividends.
(1) The board of directors or trustees of any company subject to the
provisions of this Article doing the kind or kinds of insurance business
described in Class 1 of Section 4 may declare dividends to its members.
(2) The board of directors or trustees of any company subject to the
provisions of this article doing any of the kind or kinds of business
described in Classes 2 and 3 of Section 4 may from time to time fix and
determine the amount of dividends or of unabsorbed or unused premiums or
premium deposits to be returned to each policyholder, and may for such
purpose establish reasonable classifications or groupings of policyholders
and plans for the distribution of such refunds upon each general kind of
insurance or groups or classes thereof and may establish reasonable
territorial divisions upon policies expiring during a fixed period, after
retaining sufficient funds for the payment by the company of all
outstanding policy and other obligations.
(3) The declaration and payment of dividends by any company subject to
the provisions of this Article shall be subject to the following
conditions:
(a) No dividend shall be declared or paid at any time     except out of earned, as distinguished from contributed, surplus, nor when the surplus of the company is less than the surplus required in section 43 for the kind or kinds of insurance the company is authorized to write, nor when the payment of such dividend will reduce its surplus to less than such amount.
(b) No dividend shall be declared or paid contrary to     any restriction contained in the articles of incorporation.
(Source: P.A. 86-753.)
(215 ILCS 5/55) (from Ch. 73, par. 667)
(Section scheduled to be repealed on January 1, 2027)
Sec. 55. 
		Contingent
liability policy provisions. 
In cases where contingent liability of members is provided for, the
provision therefor shall be plainly stated in each policy with prominence
equal to the indemnifying clause. In addition, each such assessable policy,
other than an accident or health policy, issued or delivered in this State
insuring against the hazards included in Class 2, subparagraph (b) of
Section 4 after September 1, 1967 must have the following statement printed
in bold face on the face of the policy: "This is an assessable policy". If
a mutual company other than life has a surplus equal to the capital
and surplus required in Section 13, for a stock company transacting the
same kind or kinds of business, such company may issue policies without
contingent liability. Any such mutual company which shall have issued
policies without contingent liability after the acquisition of such surplus
may continue to do so as long as it maintains a surplus equal to the
capital and surplus of a stock company doing the same kind or kinds
of business, but no company may issue such policies except during such time
as it shall continue to have such a surplus, but any company which is,
immediately prior to July 1, 1965, issuing policies without contingent
liability, may continue to do so as long as it maintains a surplus equal in
amount to that which would have been required immediately prior to July 1,
1965. After July 18, 1967, no company subject to this Article may make,
levy or impose upon its members any assessment based on their contingent
liability unless ordered to do so by the Director under Section 60 of this Code.
(Source: P.A. 86-753.)
(215 ILCS 5/56) (from Ch. 73, par. 668)
(Section scheduled to be repealed on January 1, 2027)
Sec. 56. 
		Accumulation of guaranty fund or guaranty capital. 
		Any company
subject to the provisions of this Article, may provide for a surplus either
by accumulating a guaranty fund or a guaranty capital as follows:
(a) Guaranty fund.  It may accumulate a guaranty fund     by borrowing money at an interest rate either (1) at a fixed rate not exceeding the corporate base rate as reported by the largest bank (measured by assets) with its head office located in Chicago, Illinois, in effect on the first business day of the month in which the loan document is executed, plus 3% per annum or (2) at a variable rate equal to the corporate base rate determined on the first business day of each month during the term of the loan plus 2% per annum.  In no event shall the variable interest rate for any month exceed the initial rate for the loan or advance by more than 10% per annum.  The insurer shall elect at the time of execution of the loan or advance agreement whether the interest rate is to be fixed or floating for the term of the agreement.  An agreement issued after the insurer has received its Certificate of Authority shall first be approved by resolution of the Board of Directors and the Director.  The agreement shall provide that such loan and the interest thereon shall be repaid only out of the surplus of such company in excess of the greater of the original or minimum surplus required of such company by Section 43.  Such excess of surplus shall be calculated upon the fair market value of the assets of the company, and such guaranty loan fund shall constitute and be enforceable as a liability of the company only as against such excess of surplus. Any unpaid balance of such guaranty fund loan shall be reported in the annual statement to be filed with the Director.  Repayment of principal or payment of interest may be made only with the approval of the Director when he or she is satisfied that the financial condition of the company warrants that action, but approval may not be withheld if the company shall have and submit satisfactory evidence of surplus of not less than the amount stipulated in the repayment of principal or interest payment clause of the agreement.
(b) Guaranty capital.  It may in addition to any     advances provided for herein, establish and maintain a guaranty capital divided into shares having a par value of not more than $100 nor less than $5 each.  The guaranty capital shall be applied to the payment of losses only when the company has exhausted its assets in excess of unearned premium reserve and other liabilities; and when thus impaired the directors may make good the whole or any part of it by assessment on its policyholders as provided for in Section 60.  Said guaranty capital may, by vote of the board of directors of the company and the written consent of the Director be reduced or retired by any amount, provided that the net surplus of the company together with the remaining guaranty capital shall equal or exceed the amount of surplus required by Section 43, and due notice of such proposed action on the part of the company shall be published in a newspaper of general circulation, approved by the Director, not less than once each week for at least 4 consecutive weeks before such action is taken.  No company with a guaranty capital, which has ceased to do business, shall divide any part of its assets or guaranty capital among its shareholders unless it has paid or it has otherwise been released from its policy obligations.  The holders of the shares of such guaranty capital shall be entitled to interest either (1) at a fixed rate not exceeding the corporate base rate as reported by the largest bank (measured by assets) with its head office located in Chicago, Illinois, in effect on the first business day of the month in which the loan document is executed, plus 3% per annum or (2) at a variable rate equal to the corporate base rate determined on the first business day of each month during the term of the loan plus 2% per annum.  In no event shall the variable interest rate for any month exceed the initial rate for the loan or advance by more than 10% per annum.  The insurer shall elect at the time of issuance of the shares whether the interest rate is to be fixed or floating for the term of the agreement.  Such interest shall be payable from the surplus in excess of the surplus required of the company by Section 43.  In the event of dissolution and liquidation of such a company after the retirement of all outstanding obligations of the company, the holders of such shares of guaranty capital shall be entitled to a preferential right in the assets of such company equal to the par value of their share of such guaranty capital before any distribution to members.
(Source: P.A. 90-381, eff. 8-14-97; 91-357, eff. 7-29-99.)
(215 ILCS 5/57) (from Ch. 73, par. 669)
(Section scheduled to be repealed on January 1, 2027)
Sec. 57. 
		Amendment of articles of incorporation.
(1) A company subject to the provisions of this Article may amend its
articles of incorporation in any respect not in violation of law, but may
not amend such articles to insert any provision prohibited, or to delete
any provision required, in original articles of incorporation for a similar
domestic company organized under this Code except as otherwise provided in
Section 59.1 or 59.2 of this Code.
(2) Amendments to the articles of incorporation for the various classes
of companies shall be made in the following manner:
(a) Class 1. The board of directors or trustees shall     adopt a resolution setting forth the proposed amendment and directing that it be submitted to a vote of the policyholders at either an annual or special meeting. Written or printed notice shall be given to policyholders in the same manner as is required in the case of notices to shareholders of stock companies by Section 29. The proposed amendment shall be adopted upon receiving the affirmative vote of 2/3 of the policyholders present in person or by proxy at such meeting. Restated articles of incorporation setting forth the articles of incorporation as amended shall thereupon be executed in duplicate by the company or its president or vice president, and its secretary or assistant secretary, and duplicate originals of such restated articles of incorporation and an affidavit of the secretary of the company setting forth the facts to show that this section has been fully complied with shall be delivered to the Director.
(b) Classes 2 and 3. The board of directors or     trustees shall adopt the amendment and deliver to the Director duplicate original restated articles of incorporation setting forth the articles of incorporation as amended and a copy of the resolution of the board of directors or trustees adopting such an amendment certified to by the secretary of the company.
(3) The restated articles of incorporation of any company subject to the
provisions of this article so delivered to the Director may be approved or
disapproved by the Director in the same manner as the original articles of
incorporation. If approved, the Director shall place on file in his office all
of the documents so delivered to him except one of the duplicate originals of
the restated articles of incorporation, and shall endorse upon such duplicate
original his approval thereof and the month, day and year of such approval, and
deliver it to the company. The amendment shall be effective as of the date of
the approval thereof by the Director. Such duplicate original shall be filed
for record, within 15 days after it has been delivered to the company, in the
office of the recorder of the county where the principal office of the company
is located.
(Source: P.A. 90-810, eff. 1-6-99.)
(215 ILCS 5/58) (from Ch. 73, par. 670)
(Section scheduled to be repealed on January 1, 2027)
Sec. 58. 
		Governmental agencies and corporations may be members. 
		
		Any government or governmental agency, state or political subdivision
thereof, public or private corporation, board, association, estate, trustee
or fiduciary in this State or elsewhere, may make application, enter into
agreements for and hold policies or contracts in or with, and be a member
of, any domestic, foreign or alien mutual company subject to the provisions
of this Code. Any officer, representative, trustee, receiver or legal
representative of any such member or policyholder, shall be recognized as
acting for or on its behalf for the purpose of such contract or membership,
but shall not be personally liable upon such contract by reason of acting
in such representative capacity.
(Source: Laws 1937, p. 696.)
(215 ILCS 5/59) (from Ch. 73, par. 671)
(Section scheduled to be repealed on January 1, 2027)
Sec. 59. 
		Reinsurance
agreements. 
		Unless the contract provides otherwise any reinsurance agreement
effected by any company subject to the provisions of this Article upon the
whole or any part of any risk shall be without contingent liability or
participation or membership.
(Source: Laws 1937, p. 696.)
(215 ILCS 5/59.1)
(Section scheduled to be repealed on January 1, 2027)
Sec. 59.1. Conversion to stock company.
(1) Definitions. For the purposes of this Section, the following terms shall
have the meanings indicated:
(a) "Eligible member" is a member as of the date the     mutual company's board of directors adopts a plan of conversion.  A person insured under a group policy is not an eligible member, unless:
(i) the person is insured or covered under a         group life policy or group annuity contract under which funds are accumulated and allocated to the respective covered persons;
(ii) the person has the right to direct the         application of the funds so allocated;
(iii) the group policyholder makes no         contribution to the premiums or deposits for the policy or contract; and
(iv) the mutual company has the names and         addresses of the persons covered under the group life policy or group annuity contract.
A person whose policy is issued after the board of     directors adopts the plan but before the plan's effective date is not an eligible member but shall have those rights set forth in subsection (10) of this Section.
(b) "Converted stock company" is an Illinois     domiciled stock company that converted from an Illinois domiciled mutual company under this Section.
(c) "Plan of conversion" or "plan" is a plan adopted     by an Illinois domestic mutual company's board of directors under this Section to convert the mutual company into an Illinois domiciled stock company.
(d) "Policy" includes an annuity contract.
(e) "Member" means a person who, on the records of     the mutual company and pursuant to its articles of incorporation or bylaws, is deemed to be a holder of a membership interest in the mutual company.
(2) Adoption of the plan of conversion by the board of directors.
(a) A mutual company seeking to convert to a stock     company shall, by the affirmative vote of two-thirds of its board of directors, adopt a plan of conversion consistent with the requirements of subsection (6) of this Section.
(b) At any time before approval of a plan by the     Director, the mutual company by the affirmative vote of two-thirds of its board of directors, may amend or withdraw the plan.
(3) Approval of the plan of conversion by the Director of Insurance.
(a) Required findings. After adoption by the mutual     company's board of directors, the plan shall be submitted to the Director for review and approval.  The Director shall approve the plan upon finding that:
(i) the provisions of this Section have been         complied with;
(ii) the plan will not prejudice the interests of         the members; and
(iii) the plan's method of allocating         subscription rights is fair and equitable.
(b) Documents to be filed.
(i) Prior to the members' approval of the plan, a         mutual company seeking the Director's approval of a plan shall file the following documents with the Director for review and approval:
(A) the plan of conversion, including the             independent evaluation of pro forma market value required by item (f) of subsection (6) of this Section;
(B) the form of notice required by item (b)             of subsection (4) of this Section for eligible members of the meeting to vote on the plan;
(C) any proxies to be solicited from eligible             members pursuant to subitem (ii) of item (c) of subsection (4) of this Section;
(D) the form of notice required by item (a)             of subsection (10) of this Section for persons whose policies are issued after adoption of the plan but before its effective date; and
(E) the proposed articles of incorporation             and bylaws of the converted stock company.
Once filed, these documents shall be approved or         disapproved by the Director within a reasonable time.
(ii) After the members have approved the plan,         the converted stock company shall file the following documents with the Director:
(A) the minutes of the meeting of the members             at which the plan was voted upon; and
(B) the revised articles of incorporation and             bylaws of the converted stock company.
(c) Consultant. The Director may retain, at the     mutual company's expense, any qualified expert not otherwise a part of the Director's staff to assist in reviewing the plan and the independent evaluation of the pro forma market value which is required by item (f) of subsection (6) of this Section.
(4) Approval of the plan by the members.
(a) Members entitled to notice of and to vote on the     plan. All eligible members shall be given notice of and an opportunity to vote upon the plan.
(b) Notice required. All eligible members shall be     given notice of the members' meeting to vote upon the plan.  A copy of the plan or a summary of the plan shall accompany the notice.  The notice shall be mailed to each member's last known address, as shown on the mutual company's records, within 45 days of the Director's approval of the plan.  The meeting to vote upon the plan shall not be set for a date less than 30 days after the date when the notice of the meeting is mailed by the mutual company.  If the meeting to vote upon the plan is held coincident with the mutual company's annual meeting of policyholders, only one combined notice of meeting is required.
(c) Vote required for approval.
(i) After approval by the Director, the plan         shall be adopted upon receiving the affirmative vote of at least two-thirds of the votes cast by eligible members.
(ii) Members entitled to vote upon the proposed         plan may vote in person or by proxy.  Any proxies to be solicited from eligible members shall be filed with and approved by the Director.
(iii) The number of votes each eligible member         may cast shall be determined by the mutual company's bylaws.  If the bylaws are silent, each eligible member may cast one vote.
(5) Adoption of revised articles of incorporation. Adoption of the revised
articles of incorporation of the converted stock company is necessary to
implement the plan and shall be governed by the applicable provisions of
Section 57 of this Code.  For a Class 1 mutual company, the members may adopt
the revised articles of incorporation at the same meeting at which the members
approve the plan.  For a Class 2 or 3 mutual company, the revised articles of
incorporation may be adopted solely by the board of directors or trustees, as
provided in Section 57 of this Code.
(5.5) Prior to the completion of a plan of conversion filed by a mutual
company with the Director, no person shall knowingly acquire, make any offer,
or make any announcement of an offer for any security issued or to be issued by
the converting mutual company in connection with its plan of conversion or for
any security issued or to be issued by any other company authorized in
item(c)(i) of subsection (6) of this Section and organized for purposes of
effecting the conversion, except in compliance with the maximum purchase
limitations imposed by item (i) of subsection (6) of this Section or the terms
of the plan of conversion as approved by the Director.
(6) Required provisions in a plan of conversion. The following provisions
shall be included in the plan:
(a) Reasons for conversion. The plan shall set forth     the reasons for the proposed conversion.
(b) Effect of conversion on existing policies.
(i) The plan shall provide that all policies in         force on the effective date of conversion shall continue to remain in force under the terms of those policies, except that any voting rights of the policyholders provided for under the policies or under this Code and any contingent liability policy provisions of the type described in Section 55 of this Code shall be extinguished on the effective date of the conversion.
(ii) The plan shall further provide that holders         of participating policies in effect on the date of conversion shall continue to have the right to receive dividends as provided in the participating policies, if any.
(iii) Except for a mutual company's participating         life policies, guaranteed renewable accident and health policies, and non-cancelable accident and health policies, the converted stock company may issue the insured a nonparticipating policy as a substitute for the participating policy upon the renewal date of a participating policy.
(c) Subscription rights to eligible members.
(i) The plan shall provide that each eligible         member is to receive, without payment, nontransferable subscription rights to purchase a portion of the capital stock of the converted stock company.  As an alternative to subscription rights in the converted stock company, the plan may provide that each eligible member is to receive, without payment, nontransferable subscription rights to purchase a portion of the capital stock of: (A) a corporation organized and owned by the mutual company for the purpose of acquiring or holding all the stock of the converted stock company; or (B) a stock insurance company owned by the mutual company into which the mutual company will be merged.
(ii) The subscription rights shall be allocated         in whole shares among the eligible members using a fair and equitable formula.  This formula may but need not take into account how the different classes of policies of the eligible members contributed to the surplus of the mutual company.
(d) Oversubscription. The plan shall provide a fair     and equitable means for the allocation of shares of capital stock in the event of an oversubscription to shares by eligible members exercising subscription rights received pursuant to item (c) of subsection (6) of this Section.
(e) Undersubscription. The plan shall provide that     any shares of capital stock not subscribed to by eligible members exercising subscription rights received under item (c) of subsection (6) of this Section shall be sold in a public offering through an underwriter.  If the number of shares of capital stock not subscribed by eligible members is so small or the additional time or expense required for a public offering of those shares would be otherwise unwarranted under the circumstances, the plan of conversion may provide for the purchase of the unsubscribed shares by a private placement or other alternative method approved by the Director that is fair and equitable to the eligible members.
(f) Total price of stock. The plan shall set the     total price of the capital stock equal to the estimated pro forma market value of the converted stock company based upon an independent evaluation by a qualified person.  The pro forma market value may be the value that is estimated to be necessary to attract full subscription for the shares as indicated by the independent evaluation.
(g) Purchase price of each share. The plan shall set     the purchase price of each share of capital stock equal to any reasonable amount that will not inhibit the purchase of shares by members.  The purchase price of each share shall be uniform for all purchasers except the price may be modified by the Director by reason of his consideration of a plan for the purchase of unsubscribed stock pursuant to item (e) of subsection (6) of this Section.
(h) Closed block of business for participating  life     policies of a Class 1 mutual company.
(i) The plan shall provide that a Class 1 mutual         company's participating life policies in force on the effective date of the conversion shall be operated by the converted stock company for dividend purposes as a closed block of participating business except that any or all classes of group participating policies may be excluded from the closed block.
(ii) The plan shall establish one or more         segregated accounts for the benefit of the closed block of business and shall allocate to those segregated accounts enough assets of the mutual company so that the assets together with the revenue from the closed block of business are sufficient to support the closed block including, but not limited to, the payment of claims, expenses, taxes, and any dividends that are provided for under the terms of the participating policies with appropriate adjustments in the dividends for experience changes.  The plan shall be accompanied by an opinion of a qualified actuary or an appointed actuary who meets the standards set forth in the insurance laws or regulations for the submission of actuarial opinions as to the adequacy of reserves or assets.  The opinion shall relate to the adequacy of the assets allocated to the segregated accounts in support of the closed block of business.  The actuarial opinion shall be based on methods of analysis deemed appropriate for those purposes by the Actuarial Standards Board.
(iii) The amount of assets allocated to the         segregated accounts of the closed block shall be based upon the mutual company's last annual statement that is updated to the effective date of the conversion.
(iv) The converted stock company shall keep a         separate accounting for the closed block and shall make and include in the annual statement to be filed with the Director each year a separate statement showing the gains, losses, and expenses properly attributable to the closed block.
(v) Periodically, upon the Director's approval,         those assets allocated to the closed block as provided in subitem (ii) of item (h) of subsection (6) of this Section that are in excess of the amount of assets necessary to support the remaining policies in the closed block shall revert to the benefit of the converted stock company.
(vi) The Director may waive the requirement for         the establishment of a closed block of business if the Director deems it to be in the best interests of the participating policyholders of the mutual insurer to do so.
(i) Limitations on acquisition of control. The plan     shall provide that any one person or group of persons acting in concert may not acquire, through public offering or subscription rights, more than 5% of the capital stock of the converted stock company for a period of 5 years from the effective date of the plan except with the approval of the Director.  This limitation does not apply to any entity that is to purchase 100% of the capital stock of the converted company as part of the plan of conversion approved by the Director or to a purchase of stock by a tax-qualified employee benefit plan pursuant to subscription grants granted to that plan as authorized under item (b) of subsection (7) of this Section and to a purchase of unsubscribed stock pursuant to item (e) of subsection (6) of this Section.
(7) Optional provisions in a plan of conversion. The following provisions
may be included in the plan:
(a) Directors and officers subscription rights.
(i) The plan may provide that the directors and         officers of the mutual company shall receive, without payment, nontransferable subscription rights to purchase capital stock of the converted stock company or the stock of another corporation that is participating in the conversion plan as provided in subitem (i) of item (c) of subsection (6) of this Section. Those subscription rights shall be allocated among the directors and officers by a fair and equitable formula.
(ii) The total number of shares that may be         purchased under subitem (i) of item (a) of subsection (7) of this Section may not exceed 35% of the total number of shares to be issued in the case of a mutual company with total assets of less than $50 million or 25% of the total shares to be issued in the case of a mutual company with total assets of more than $500 million.  For mutual companies with total assets between $50 million and $500 million, the total number of shares that may be purchased shall be interpolated.
(iii) Stock purchased by a director or officer         under subitem (i) of item (a) of subsection (7) of this Section may not be sold within one year following the effective date of the conversion.
(iv) The plan may also provide that a director or         officer or person acting in concert with a director or officer of the mutual company may not acquire any capital stock of the converted stock company for 3 years after the effective date of the plan, except through a broker or dealer, without the permission of the Director.  That provision may not apply to prohibit the directors and officers from purchasing stock through subscription rights received in the plan under subitem (i) of item (a) of subsection (7) of this Section.
(b) Tax-qualified employee stock benefit plan. The     plan may allocate to a tax-qualified employee benefit plan nontransferable subscription rights to purchase up to 10% of the capital stock of the converted stock company or the stock of another corporation that is participating in the conversion plan as provided in subitem (i) of item (c) of subsection (6) of this Section.  That employee benefit plan shall be entitled to exercise its subscription rights regardless of the amount of shares purchased by other persons.
(8) Alternative plan of conversion. The board of directors may adopt a plan
of conversion that does not rely in whole or in part upon the issuance to
members of non-transferable subscription rights to purchase stock of the
converted stock company if the Director finds that the plan does not prejudice
the interests of the members, is fair and equitable, and is based upon an
independent appraisal of the market value of the mutual company by a qualified
person and a fair and equitable allocation of any consideration to be given
eligible members.  The Director may retain, at the mutual company's expense,
any qualified expert not otherwise a part of the Director's staff to assist in
reviewing whether the plan may be approved by the Director.
(9) Effective date of the plan. A plan shall become effective when the
Director has approved the plan, the members have approved the plan, and the
revised articles of incorporation have been adopted.
(10) Rights of members whose policies are issued after adoption of the plan
and before its effective date.
(a) Notice. All members whose policies are issued     after the proposed plan has been adopted by the board of directors and before the effective date of the plan shall be given written notice of the plan of conversion. The notice shall specify the member's right to rescind that policy as provided in item (b) of subsection (10) of this Section within 45 days after the effective date of the plan. A copy of the plan or a summary of the plan shall accompany the notice. The form of the notice shall be filed with and approved by the Director.
(b) Option to rescind. Any member entitled to receive     the notice described in item (a) of subsection (10) of this Section shall be entitled to rescind his or her policy and receive a full refund of any amounts paid for the policy or contract within 10 days after the receipt of the notice.
(11) Corporate existence.
(a) Upon the conversion of a mutual company to a     converted stock company according to the provisions of this Section, the corporate existence of the mutual company shall be continued in the converted stock company.  All the rights, franchises, and interests of the mutual company in and to every type of property, real, personal, and mixed, and things in action thereunto belonging, is deemed transferred to and vested in the converted stock company without any deed or transfer.  Simultaneously, the converted stock company is deemed to have assumed all the obligations and liabilities of the mutual company.
(b) The directors and officers of the mutual company,     unless otherwise specified in the plan of conversion, shall serve as directors and officers of the converted stock company until new directors and officers of the converted stock company are duly elected pursuant to the articles of incorporation and bylaws of the converted stock company.
(12) Conflict of interest. No director, officer, agent, or employee of the
mutual company or any other person shall receive any fee, commission, or other
valuable consideration, other than his or her usual regular salary and
compensation, for in any manner aiding, promoting, or assisting in the
conversion except as set forth in the plan approved by the Director. This
provision does not prohibit the payment of reasonable fees and compensation to
attorneys, accountants, and actuaries for services performed in the independent
practice of their professions, even if the attorney, accountant, or actuary is
also a Director of the mutual company.
(13) Costs and expenses. All the costs and expenses connected with a plan of
conversion shall be paid for or reimbursed by the mutual company or the
converted stock company except where the plan provides either for a holding
company to acquire the stock of the converted stock company or for the merger
of the mutual company into a stock insurance company as provided in subitem (i)
of item (c) of subsection (6) of this Section. In those cases, the acquiring
holding company or the stock insurance company shall pay for or reimburse all
the costs and expenses connected with the plan.
(14) Failure to give notice. If the mutual company complies substantially
and in good faith with the notice requirements of this Section, the mutual
company's failure to give any member or members any required notice does not
impair the validity of any action taken under this Section.
(15) Limitation of actions. Any action challenging the validity of or
arising out of acts taken or proposed to be taken under this Section
shall be commenced within 30 days after the effective date of the plan.
(Source: P.A. 98-755, eff. 7-16-14.)
(215 ILCS 5/59.2)
(Section scheduled to be repealed on January 1, 2027)
Sec. 59.2. 
		Formation of mutual insurance holding company
and conversion of mutual company to stock
company.
(1) Definitions.  For the purposes of this Section, the following terms
shall
have the meanings indicated:
(a) "Converted company" means an Illinois domiciled     stock insurance company subject to the provisions of Article II, except as otherwise provided in this Section, that continues in existence after a reorganization under this Section in connection with the formation of a mutual holding company.
(b) "Converted mutual holding company" means the     stock corporation into which a mutual holding company has been converted in accordance with Section 59.1 and subsection (13) of this Section.
(c) "Eligible member" means a member as of the date     the board of directors adopts a plan of MHC conversion under this Section.  For the conversion of a mutual holding company, "eligible member" means a member of the mutual holding company who is of record as of the date the mutual holding company board of directors adopts a plan of conversion under Section 59.1.
(d) "Intermediate holding company" means a     corporation authorized to issue one or more classes of capital stock, the corporate purposes of which include holding directly or indirectly the voting stock of a converted company.
(e) "Member" means a person who, on the records of     the mutual company and pursuant to its articles of incorporation or bylaws, is deemed to be a holder of a membership interest in the mutual company and shall also include a person or persons insured under a group policy, subject to the following conditions:
(i) the person is insured or covered under a         group life policy or group annuity contract under which funds are accumulated and allocated to the respective covered persons;
(ii) the person has the right to direct the         application of the funds so allocated;
(iii) the group policyholder makes no         contribution to the premiums or deposits for the policy or contract; and
(iv) the mutual company has the names and         addresses of the persons covered under the group life policy or group annuity contract.
On and after the effective date of a plan of MHC     conversion under this Section, the term "member" shall mean a member of the mutual holding company created thereby.
(f) "Mutual holding company" or "MHC" means a     corporation resulting from a reorganization of a mutual company under this Section.  A mutual holding company shall be subject to the provisions of this Article and to any other provisions of this Code applicable to mutual companies, except as otherwise provided in this Section.  The articles of incorporation of a mutual holding company shall include provisions setting forth the following:
(i) that it is a mutual holding company organized         under this Article;
(ii) that the mutual holding company may hold not         less than a majority of the shares of voting stock of a converted company or an intermediate holding company, which in turn holds directly or indirectly all of the voting stock of a converted company;
(iii) that it is not authorized to issue any         capital stock except pursuant to a conversion in accordance with the provisions of Section 59.1 and subsection (13) of this Section;
(iv) that its members shall have the rights         specified in this Section and in its articles of incorporation and bylaws; and
(v) that its assets shall be subject to inclusion         in the estate of the converted company in any proceedings initiated by the Director against the converted company under Article XIII.
(g) "Mutual company" means for purposes of this     Section a mutual life insurer or mutual property-casualty insurer that may convert pursuant to a plan of MHC conversion under this Section.
(h) "Plan of MHC conversion," or "plan" when used in     this Section means a plan adopted pursuant to this Section by the board of directors of an Illinois domestic mutual company for the conversion of the mutual company into a direct or indirect stock subsidiary of a mutual holding company.
(i) "Policy" includes any group or individual     insurance policy or contract issued by a mutual company, including an annuity contract. The term policy does not include a certificate of insurance issued in connection with a group policy or contract.
(j) "Policyholder" means the holder of a policy other     than a reinsurance contract.
(2) Formation of mutual holding company and conversion of mutual company.  A
mutual company, upon approval of the Director, may reorganize by forming a
mutual holding company and continue the corporate existence of the reorganizing
mutual company as a stock insurance company in accordance with this Section.
Upon effectiveness of a plan of MHC conversion, and without any further action:
(a) The mutual company shall become a stock     corporation, the membership interests of the policyholders in the mutual company shall be deemed extinguished and all eligible members of the mutual company shall be and become members of the mutual holding company, in accordance with the articles of incorporation and bylaws of the mutual holding company and the applicable provisions of this Section and Article III; and
(b) all of the shares of the capital stock of the     converted company shall be issued to the mutual holding company, which at all times shall own a majority of the shares of the voting stock of the converted company, except that either at the time of conversion, or at a later time with the approval of the Director, an intermediate holding company or companies may be created, so long as the mutual holding company at all times owns directly or indirectly a majority of the shares of the voting stock of the converted company.
(3) MHC membership interests.
(a) No member of a mutual holding company may     transfer membership in the mutual holding company or any right arising from the membership.
(b) A member of a mutual holding company shall not,     as a member, be personally liable for the acts, debts, liabilities, or obligations of the company.
(c) No assessments of any kind may be imposed upon     the members of a mutual holding company by the directors or members, or because of any liability of any company owned or controlled by the mutual holding company or because of any act, debt, liability, or obligation of the mutual holding company itself.
(d) A membership interest in a domestic mutual     holding company shall not constitute a security under any law of this State.
(4) Adoption of the plan of MHC conversion by the board of directors.
(a) A mutual company seeking to convert to a mutual     holding company structure shall, by the affirmative vote of two-thirds of its board of directors, adopt a plan of MHC conversion consistent with the requirements of subsection (8) of this Section.
(b) At any time before approval of a plan by eligible     members, the mutual company, by the affirmative vote of two-thirds of its board of directors, may amend or withdraw the plan of MHC conversion.
(5) Approval of the plan of MHC conversion by the Director.
(a) Required findings.  After adoption or amendment     of the plan by the mutual company's board of directors, the plan of MHC conversion shall be submitted to the Director for review and approval. The Director shall hold a public hearing on the plan. The Director shall approve the plan upon finding that:
(i) the provisions of this Section have been         complied with; and
(ii) the plan is fair and equitable as it relates         to the interests of the members.
(b) Documents to be filed.
(i) Prior to the members' approval of the plan of         MHC conversion, a mutual company seeking the Director's approval of a plan shall file the following documents with the Director for review and approval:
(A) the plan of MHC conversion;
(B) the form of notice required by item (b)             of subsection (6) of this Section for eligible members to vote on the plan;
(C) any proxies to be solicited from eligible             members and any other soliciting materials;
(D) the proposed articles of incorporation             and bylaws of the mutual holding company, each intermediate holding company, if any, and the revised articles of incorporation and bylaws of the converted company.
Once filed, these documents shall be approved or         disapproved by the Director within a reasonable time.
(ii) After the members have approved the plan,         the converted company shall file the following documents with the Director:
(A) the minutes of the meeting of the members             at which the plan of MHC conversion was voted upon; and
(B) the articles and bylaws of the mutual             holding company and each intermediate holding company, if any, and the revised articles of incorporation and bylaws of the converted company.
(c) The Director's approval of a plan pursuant to     this subsection (5) may be made conditional at the sole discretion of the Director whenever he determines that such conditions are reasonably necessary to protect policyholder interests.  Such conditions may include, but shall not be limited to, limitations, requirements, or prohibitions as follows:
(i) prior approval of any acquisition or         formation of affiliate entities of the MHC;
(ii) prior approval of the capital structure of         any intermediate holding company or any changes thereto;
(iii) prior approval of any initial public         offering or other issuance of equity or debt securities of an intermediate holding company or the converted company in a private sale or public offering;
(iv) prior approval of the expansion of the         mutual holding company system into lines of business, industries, or operations not presented at the time of the conversion;
(v) limitations on dividends and distributions if         the effect would be to reduce capital and surplus of the converted company, in addition to any limitations which may otherwise be authorized by law; and
(vi) limitations on the pledge, incumbrance, or         transfer of the stock of the converted company.
(d) Consultant.  The Director may retain, at the     mutual company's expense, any qualified expert not otherwise a part of the Director's staff to assist in reviewing the plan of MHC conversion.
(6) Approval of the plan by the members.
(a) Members entitled to notice of and to vote on the     plan.  All eligible members shall be given notice of and an opportunity to vote upon the plan of MHC conversion.
(b) Notice required.  All eligible members shall be     given notice of the members' meeting to vote upon the plan of MHC conversion. The notice shall identify in reasonable detail the benefits and risks of the MHC conversion. A copy of the plan of MHC conversion or a summary of the plan, if so authorized by the Director, shall accompany the notice. If a summary of the plan accompanies the notice, a copy of the plan shall be made available without charge to any eligible member upon request.  The notice shall state that approval by the Director does not constitute a recommendation that eligible members approve the plan. The notice shall be mailed to each member's last known address, as shown on the mutual company's records, within 45 days of the Director's approval of the plan. The meeting to vote upon the plan shall not be set for a date less than 60 days after the date when the notice of the meeting is mailed by the mutual company.  If the meeting to vote upon the plan is held coincident with the mutual company's annual meeting of policyholders, only one combined notice of meeting is required.
(c) Vote required for approval.
(i) After approval by the Director, the plan of         MHC conversion shall be adopted, at an annual or special meeting of policyholders at which a quorum is present, upon receiving the affirmative vote of at least two-thirds of the votes cast by eligible members.
(ii) Members entitled to vote upon the proposed         plan may vote in person or by proxy.  Any proxies to be solicited from eligible members, together with the related proxy statement and any other soliciting materials, shall be filed with and approved by the Director.
(iii) The number of votes each eligible member         may cast shall be determined by the mutual company's bylaws.  If the bylaws are silent, each eligible member may cast one vote.
(7) Adoption of articles of incorporation.  Adoption of articles of
incorporation for the mutual holding company, each intermediate holding
company, if any, and revised articles of incorporation for the converted
company is necessary to implement the plan of MHC conversion.  Procedures for
adoption or revision of such articles shall be governed by the applicable
provisions of this Code or, in the case of an intermediate holding company, the
business corporation law of the state in which the intermediate
holding company is incorporated.  For a Class I mutual
company, the members may
adopt revised articles of incorporation at the same meeting at which the
members approve the plan.  For a Class 2 or 3 mutual company, the articles of
incorporation may be adopted solely by the board of directors or trustees, as
provided in Section 57 of this Code.
(8) Required provisions in a plan of MHC conversion.  The following
provisions shall be included in the plan of MHC conversion:
(a) The plan shall set forth the reasons for the     proposed conversion.
(b) Effect of MHC conversion on existing policies.
(i) The plan shall provide that all policies of         the converted company in force on the effective date of conversion shall continue to remain in force under the terms of those policies, except that any voting or other membership rights of the policyholders provided for under the policies or under this Code and any contingent liability policy provisions of the type described in Section 55 of this Code shall be extinguished on the effective date of the conversion.
(ii) The plan shall further provide that holders         of participating policies in effect on the date of conversion shall continue to have the right to receive dividends as provided in the participating policies, if any.
(iii) Except for a mutual company's life         policies, guaranteed renewable accident and health policies, and non-cancelable accident and health policies, the converted stock company may issue the insured a nonparticipating policy as a substitute for the participating policy upon the renewal date of a participating policy.
(iv) The plan shall provide that a Class I mutual         company's participating life policies in force on the effective date of the conversion shall be operated by the converted company for dividend purposes as a closed block of participating business except that any or all classes of group participating policies may be excluded from the closed block.  The plan shall establish one or more segregated accounts for the benefit of the closed block of business and shall allocate to those segregated accounts enough assets of the mutual company so that the assets together with the revenue from the closed block of business are sufficient to support the closed block including, but not limited to, the payment of claims, expenses, taxes, and any dividends that are provided for under the terms of the participating policies with appropriate adjustments in the dividends for experience changes. The plan shall be accompanied by an opinion of a qualified actuary or an appointed actuary who meets the standards set forth in the insurance laws or regulations for the submission of actuarial opinions as to the adequacy of reserves or assets.  The opinion shall relate to the adequacy of the assets allocated to the segregated accounts in support of the closed block of business.  The actuarial opinion shall be based on methods of analysis deemed appropriate for those purposes by the Actuarial Standards Board.  The amount of assets allocated to the segregated accounts of the closed block shall be based upon the mutual company's last annual statement that is updated to the effective date of the conversion.  The converted stock company shall keep a separate accounting for the closed block and shall make and include in the annual statement to be filed with the Director each year a separate statement showing the gains, losses, and expenses properly attributable to the closed block.  Periodically, upon the Director's approval, those assets allocated to the closed block as provided herein that are in excess of the amount of assets necessary to support the remaining policies in the closed block shall revert to the benefit of the converted company.  The Director may waive the requirement for the establishment of a closed block of business if the Director deems it to be in the best interests of the participating policyholders of the mutual company to do so.
(c) The plan shall set forth the requirements for     granting membership interests to future policyholders of the converted company.
(d) The plan shall include information sufficient to     demonstrate that the financial condition of the converted company will not be diminished by the plan of MHC conversion.
(e) The plan shall include a description of any     current proposal to issue shares of an intermediate holding company or the converted company to the public or to other persons who are not direct or indirect subsidiaries of the mutual holding company.
(f) The plan shall include the identity of the     proposed officers and directors of the mutual holding company and each intermediate holding company, if any, together with such other biographical information as the Director may request.
(g) The plan shall include such other information as     the Director may request or may prescribe by rule.
(9) Effective date of the plan of MHC conversion.  A plan shall become
effective when the Director has approved the plan, the members have approved
the plan and the articles of incorporation of the mutual holding company, each
intermediate holding company, if any, and the revised articles of incorporation
of the converted company have been adopted and filed with the Director.
(10) Corporate existence.
(a) Upon the conversion of a mutual company to a     converted company according to the provisions of this Section, the corporate existence of the mutual company shall be continued in the converted company with the original date of incorporation of the mutual company.  All the rights, franchises, and interests of the mutual company in and to every type of property, real, personal, and mixed, and things in action thereunto belonging, is deemed transferred to and vested in the converted company without any deed or transfer.  Simultaneously, the converted company is deemed to have assumed all the obligations and liabilities of the mutual company.
(b) The directors and officers of the mutual company,     unless otherwise specified in the plan of conversion shall serve as directors and officers of the converted company until new directors and officers of the converted company are duly elected pursuant to the articles of incorporation and bylaws of the converted company.
(11) Regulation and authority of mutual holding company.
(a) A mutual holding company shall have the same     powers granted to domestic mutual companies and be subject to the same requirements and provisions of Article III and any other provisions of this Code applicable to mutual companies that are not inconsistent with the provisions of this Section, provided however that a mutual holding company shall not have the authority to transact insurance pursuant to Section 39(1).
(b) Neither the mutual holding company nor any     intermediate holding company shall issue or reinsure policies of insurance.
(c) A mutual holding company may enter into an     affiliation agreement or a merger agreement either at the time of conversion, or at some later time with the approval of the Director, with any mutual insurance company authorized to do business in this State or another mutual holding company.  Any such merger agreement may authorize members of the mutual insurance company or other mutual holding company to become members of the mutual holding company.  Any such affiliation agreement or merger agreement shall be subject to the  insurance laws of this State relating to such transactions entered into by a domestic mutual company.
(d) The assets of the MHC shall be held in trust,     under such arrangements and on such terms as the Director may approve, for the benefit of the policyholders of the converted company.  Any residual rights of the MHC in such assets or any assets of the MHC determined not to be held in trust shall be subject to a lien in favor of the policyholders of the converted company under such terms as the Director may approve.  Upon conversion of the mutual holding company as provided for in subsection (13) of this Section, such assets shall be released from trust in accordance with the plan of conversion approved by the Director.
(12) Diversion of business to affiliates.  Without prior approval of the
Director, neither the converted company nor any other person affiliated with or
controlling the converted company shall divert business from the converted
company to any insurance company affiliate if the purpose or effect would be to
significantly reduce the number of members of the mutual holding company.
(13) Conversion of mutual holding company.  A mutual holding company created
pursuant to this Section may reorganize by complying with the applicable
provisions of Section 59.  For purposes of effecting a conversion under that
Section, the mutual holding company shall be deemed a "mutual company" and
the converted mutual holding company shall be deemed a "converted stock
company," as such terms are defined in Section 59.1.
(14) Conflict of interest.  No director, officer, agent, or employee of the
mutual company or any other person shall receive any fee, commission, or other
valuable consideration, other than his or her usual regular salary and
compensation, for in any manner aiding, promoting, or assisting in the
conversion except as set forth in the plan of MHC conversion approved by the
Director.  This provision does not prohibit the payment of reasonable fees and
compensation to attorneys, accountants, and actuaries for services performed in
the independent practice of their professions, even if the attorney,
accountant, or actuary is also a director of the mutual company.
(15) Costs and expenses.  All the costs and expenses connected with a plan
of MHC conversion shall be paid for or reimbursed by the mutual company or the
converted company.
(16) Failure to give notice.  If the mutual company complies substantially
and in good faith with the notice requirements of this Section, the mutual
company's failure to give any member or members any required notice does not
impair the validity of any action taken under this Section.
(17) Limitation of actions.  Any action challenging the validity of or
arising out of acts taken or proposed to be taken under this Section shall be
commenced within 30 days after the effective date of the plan of MHC
conversion.
(Source: P.A. 90-810, eff. 1-6-99.)
(215 ILCS 5/60) (from Ch. 73, par. 672)
(Section scheduled to be repealed on January 1, 2027)
Sec. 60. 
		Procedure
when insufficient assets are possessed by company.
(1) Whenever the Director finds that the admitted assets of a company
subject to the provisions of this Article are less than the aggregate of
(a) its liabilities and (b) the minimum surplus required to be maintained
by Section 43, he must notify the company in writing of the amount of such
impairment and require that such impairment must be removed within such
period, which shall not be less than 30 nor more than 90 days, as he may
designate. Unless otherwise allowed by the Director, the company must
discontinue the issuance of new or renewal
policies while such impairment exists. If the contracts issued by the
company contain a provision for a contingent liability, the Director may
order the board of directors or trustees of the company to levy an
assessment for the purpose of removing such impairment against each member
in accordance with the terms of his policy. If the Director finds that the
company will remove the impairment or a part thereof from sources other
than an assessment, he may permit a reduction in the amount of the
assessment to the extent of the sum so to be obtained. No member is liable
for an assessment unless notified of the company's claim therefor within
one year after the termination of the policy whether by expiration,
cancellation or otherwise. Nothing contained in this paragraph may be
construed to limit or restrict the authority of any liquidator, conservator
or rehabilitator acting under Article XIII or XIII 1/2 of this Act.
(2) If policies containing provisions for a contingent liability are
outstanding, and the company fails to levy an assessment within 20 days
from the date of an order, or if the impairment is not removed within the
period specified in the Director's notice, the company shall be deemed
insolvent and the Director may cancel the company's certificate of
authority and shall proceed against it in accordance with Article XIII.
(3) If, while the impairment exists, any officer, director, or trustee
of the company renews, issues or delivers or causes to be renewed, issued
or delivered any policy, contract or certificate of insurance unless otherwise
allowed by the Director, and the fact
of such impairment is known to the officer, director, or trustee of the
company, such officer, director, or trustee shall be guilty of a business
offense and may be fined not less than $200 and not more than $5,000 for
each offense.
(4) Nothing in this Section prohibits, while such impairment exists, any
such officer, director, trustee, agent or employee from issuing or renewing
a policy of insurance when an insured or owner exercises an option granted
to him under an existing policy to obtain new, renewed or converted
insurance coverage.
(Source: P.A. 82-498.)