Bill Text: IL SB3266 | 2011-2012 | 97th General Assembly | Introduced

---

Bill Title: Amends the Illinois Insurance Code. Provides that no domestic insurer shall acquire any investment respecting a foreign jurisdiction, or any investment denominated in the currency of that foreign jurisdiction, if that jurisdiction is designated as a state sponsor of terrorism by the United States Secretary of State pursuant to the federal Export Administration Act, the Arms Export Control Act, and the Foreign Assistance Act.

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Failed) 2013-01-08 - Session Sine Die [SB3266 Detail]

Download: Illinois-2011-SB3266-Introduced.html

---

97TH GENERAL ASSEMBLY State of Illinois 2011 and 2012 SB3266 Introduced 2/1/2012, by Sen. Jeffrey M. Schoenberg SYNOPSIS AS INTRODUCED:
215 ILCS 5/126.3
Amends the Illinois Insurance Code. Provides that no domestic insurer shall acquire any investment respecting a foreign jurisdiction, or any investment denominated in the currency of that foreign jurisdiction, if that jurisdiction is designated as a state sponsor of terrorism by the United States Secretary of State pursuant to the federal Export Administration Act, the Arms Export Control Act, and the Foreign Assistance Act.
LRB097 19799 NHT 65069 b
A BILL FOR
SB3266 LRB097 19799 NHT 65069 b
AN ACT concerning insurance.
Be it enacted by the People of the State of Illinois,
represented in the General Assembly:
Section 5. The Illinois Insurance Code is amended by
changing Section 126.3 as follows:
(215 ILCS 5/126.3)
Sec. 126.3. General investment qualifications.
A. Insurers may acquire, hold or invest in investments or
engage in investment practices as set forth in this Article.
Insurers may also acquire, hold or invest in investments not
conforming to the requirements of this Article that are not
otherwise prohibited by this Code. Investments not conforming
to this Article shall not be admitted assets unless they are
acquired under other authority of this Code.
B. Subject to subsection C of this Section, an insurer
shall not acquire or hold an investment as an admitted asset
unless at the time of acquisition it is:
(1) Eligible for the payment or accrual of interest or
discount (whether in cash or other forms of income or
securities), eligible to receive dividends or other
distributions or is otherwise income producing; or
(2) Acquired under Section 126.15B, 126.15C, 126.16,
126.18, 126.20, 126.28C, 126.29, 126.31, or 126.32 or under

SB3266 - 2 - LRB097 19799 NHT 65069 b
the authority of Sections of the Code other than this
Article.
C. An insurer may acquire or hold as admitted assets
investments that do not otherwise qualify as provided in this
Article if the insurer has not acquired them for the purpose of
circumventing any limitations contained in this Article, if the
insurer acquires the investments in the following
circumstances and the insurer complies with the provisions of
Sections 126.5 and 126.7 as to the investments:
(1) As payment on account of existing indebtedness or
in connection with the refinancing, restructuring or
workout of existing indebtedness, if taken to protect the
insurer's interest in that investment;
(2) As realization on collateral for indebtedness;
(3) In connection with an otherwise qualified
investment or investment practice, as interest on or a
dividend or other distribution related to the investment or
investment practice or in connection with the refinancing
of the investment, in each case for no additional or only
nominal consideration;
(4) Under a lawful and bona fide agreement of
recapitalization or voluntary or involuntary
reorganization in connection with an investment held by the
insurer; or
(5) Under a bulk reinsurance, merger or consolidation
transaction approved by the Director if the assets

SB3266 - 3 - LRB097 19799 NHT 65069 b
constitute admissible investments for the ceding, merged
or consolidated companies.
D. An investment or portion of an investment acquired by an
insurer under subsection C of this Section shall become a
nonadmitted asset 3 years (or 5 years in the case of mortgage
loans and real estate) from the date of its acquisition, unless
within that period the investment has become a qualified
investment under a Section of this Article other than
subsection C of this Section, but an investment acquired under
an agreement of bulk reinsurance, merger or consolidation may
be qualified for a longer period if so provided in the plan for
reinsurance, merger or consolidation as approved by the
Director. Upon application by the insurer and a showing that
the nonadmission of an asset held under subsection C of this
Section would injure the interests of the insurer, the Director
may extend the period for admissibility for an additional
reasonable period of time.
E. Except as provided in subsections F and H of this
Section, an investment shall qualify under this Article if, on
the date the insurer committed to acquire the investment or on
the date of its acquisition, it would have qualified under this
Article. For the purposes of determining limitations contained
in this Article, an insurer shall give appropriate recognition
to any commitments to acquire investments.
F. (1) An investment held as an admitted asset by an
insurer on the effective date of this amendatory Act of

SB3266 - 4 - LRB097 19799 NHT 65069 b
1997 which qualified immediately prior to the effective
date of this amendatory Act of 1997 shall remain qualified
as an admitted asset under this Article.
(2) Each specific transaction constituting an
investment practice of the type described in this Article
immediately prior to the effective date of this amendatory
Act of 1997 that was lawfully entered into by an insurer
and was in effect on the effective date of this amendatory
Act of 1997 shall continue to be permitted under this
Article until its expiration or termination under its
terms.
G. Unless otherwise specified, an investment limitation
computed on the basis of an insurer's admitted assets or
capital and surplus shall relate to the amount required to be
shown on the statutory balance sheet of the insurer most
recently required to be filed (annual or last quarter) with the
Director. Solely for purposes of computing any limitation under
this Article based upon admitted assets, the insurer shall
deduct from the amount of its admitted assets the amount of the
liability recorded on such statutory balance sheet for:
(1) The return of acceptable collateral received in a
reverse repurchase transaction or a securities lending
transaction;
(2) Cash received in a dollar roll transaction; and
(3) The amount reported as borrowed money in such
statutory balance sheet to the extent not included in

SB3266 - 5 - LRB097 19799 NHT 65069 b
paragraphs (1) and (2) of this subsection.
H. An investment qualified, in whole or in part, for
acquisition or holding as an admitted asset may be qualified or
requalified at the time of acquisition or a later date, in
whole or in part, under any other Section, if the relevant
conditions contained in the other Section are satisfied at the
time of qualification or requalification.
I. An insurer shall maintain documentation demonstrating
that investments were acquired in accordance with this Article,
and specifying the Section of this Article under which they
were acquired.
J. An insurer shall not enter into an agreement to purchase
securities in advance of their issuance for resale to the
public as part of a distribution of the securities by the
issuer or otherwise guarantee the distribution, except that an
insurer may acquire privately placed securities with
registration rights.
K. Notwithstanding the provisions of this Article, the
Director, for good cause, may order an insurer to nonadmit,
limit, dispose of, withdraw from or discontinue an investment
or investment practice in accordance with Article XXIV. The
authority of the Director under this subsection is in addition
to any other authority of the Director.
L. No domestic insurer shall acquire any investment
respecting a foreign jurisdiction, or any investment
denominated in the currency of that foreign jurisdiction, if

SB3266 - 6 - LRB097 19799 NHT 65069 b
that jurisdiction is designated as a state sponsor of terrorism
by the United States Secretary of State pursuant to Section
6(j) of the Export Administration Act, Section 40 of the Arms
Export Control Act, and Section 620A of the Foreign Assistance
Act.
(Source: P.A. 90-418, eff. 8-15-97.)