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

(215 ILCS 5/Art. III heading)

 
(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(Section scheduled to be repealed on January 1, 2027)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(Section scheduled to be repealed on January 1, 2027)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(Section scheduled to be repealed on January 1, 2027)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(Section scheduled to be repealed on January 1, 2027)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
(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:


(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:


(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:


(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:


(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
(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
(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
(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
(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:
(c) To be eligible for deposit under subsection (b), any bond or note must have the following characteristics:
(d) To be eligible for deposit under item (7) of subsection (b), a certificate of deposit must have the following characteristics:
(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:
(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:
(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:
(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:
(2) Adoption of the plan of conversion by the board of directors.
(3) Approval of the plan of conversion by the Director of Insurance.
(4) Approval of the plan by the members.
(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:
(7) Optional provisions in a plan of conversion. The following provisions
may be included in the plan:
(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.
(11) Corporate existence.
(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:
(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:
(3) MHC membership interests.
(4) Adoption of the plan of MHC conversion by the board of directors.
(5) Approval of the plan of MHC conversion by the Director.
(6) Approval of the plan by the members.
(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:
(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.
(11) Regulation and authority of mutual holding company.
(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.)

Structure Illinois Compiled Statutes