Illinois Compiled Statutes
215 ILCS 5/ - Illinois Insurance Code.
Article VIII - Investments Of Domestic Companies

(215 ILCS 5/Art. VIII heading)

 
(215 ILCS 5/124) (from Ch. 73, par. 736)
Sec. 124.
(Repealed).

(Source: P.A. 83-695. Repealed by P.A. 90-418, eff. 8-15-97.)
 
(215 ILCS 5/124.1) (from Ch. 73, par. 736.1)
Sec. 124.1.
(Repealed).

(Source: P.A. 86-1156. Repealed by P.A. 90-418, eff. 8-15-97.)
 
(215 ILCS 5/124.2) (from Ch. 73, par. 736.2)
Sec. 124.2.
(Repealed).

(Source: P.A. 89-97, eff. 7-7-95. Repealed by P.A. 90-418, eff. 8-15-97.)
 
(215 ILCS 5/124.3) (from Ch. 73, par. 736.3)
Sec. 124.3.
(Repealed).

(Source: P.A. 87-757. Repealed by P.A. 90-418, eff. 8-15-97.)
 
(215 ILCS 5/124.4) (from Ch. 73, par. 736.4)
Sec. 124.4.
(Repealed).

(Source: Laws 1963, p. 3139. Repealed by P.A. 90-418, eff. 8-15-97.)
 
(215 ILCS 5/124.5) (from Ch. 73, par. 736.5)
Sec. 124.5.
(Repealed).

(Source: Laws 1963, p. 3139. Repealed by P.A. 90-418, eff. 8-15-97.)
 
(215 ILCS 5/124.6) (from Ch. 73, par. 736.6)
Sec. 124.6.
(Repealed).

(Source: P.A. 83-695. Repealed by P.A. 90-418, eff. 8-15-97.)
 
(215 ILCS 5/124.7) (from Ch. 73, par. 736.7)
Sec. 124.7.
(Repealed).

(Source: P.A. 83-695. Repealed by P.A. 90-418, eff. 8-15-97.)
 
(215 ILCS 5/124.7a) (from Ch. 73, par. 736.7a)
Sec. 124.7a.
(Repealed).

(Source: P.A. 83-695. Repealed by P.A. 90-418, eff. 8-15-97.)
 
(215 ILCS 5/124.7b) (from Ch. 73, par. 736.7b)
Sec. 124.7b.
(Repealed).

(Source: P.A. 85-1186. Repealed by 90-418, eff. 8-15-97.)
 
(215 ILCS 5/124.7c) (from Ch. 73, par. 736.7c)
Sec. 124.7c.
(Repealed).

(Source: P.A. 83-695. Repealed by 90-418, eff. 8-15-97.)
 
(215 ILCS 5/124.8) (from Ch. 73, par. 736.8)
Sec. 124.8.
(Repealed).

(Source: P.A. 83-695. Repealed by 90-418, eff. 8-15-97.)
 
(215 ILCS 5/124.9) (from Ch. 73, par. 736.9)
Sec. 124.9.
(Repealed).

(Source: Laws 1963, p. 3139. Repealed by 90-418, eff. 8-15-97.)
 
(215 ILCS 5/124.9a) (from Ch. 73, par. 736.9a)
Sec. 124.9a.
(Repealed).

(Source: P.A. 83-695. Repealed by 90-418, eff. 8-15-97.)
 
(215 ILCS 5/124.10) (from Ch. 73, par. 736.10)
Sec. 124.10.
(Repealed).

(Source: P.A. 86-1156. Repealed by 90-418, eff. 8-15-97.)
 
(215 ILCS 5/124.10a) (from Ch. 73, par. 736.10a)
Sec. 124.10a.
(Repealed).

(Source: P.A. 86-1156. Repealed by 90-418, eff. 8-15-97.)
 
(215 ILCS 5/124.10b) (from Ch. 73, par. 736.10b)
Sec. 124.10b.
(Repealed).

(Source: P.A. 83-695. Repealed by 90-418, eff. 8-15-97.)
 
(215 ILCS 5/124.11) (from Ch. 73, par. 736.11)
Sec. 124.11.
(Repealed).

(Source: P.A. 83-695. Repealed by 90-418, eff. 8-15-97.)
 
(215 ILCS 5/124.12) (from Ch. 73, par. 736.12)
Sec. 124.12.
(Repealed).

(Source: Laws 1963, p. 3139. Repealed by 90-418, eff. 8-15-97.)
 
(215 ILCS 5/124.13) (from Ch. 73, par. 736.13)
Sec. 124.13.
(Repealed).

(Source: Laws 1963, p. 3139. Repealed by 90-418, eff. 8-15-97.)
 
(215 ILCS 5/124.13a) (from Ch. 73, par. 736.13a)
Sec. 124.13a.
(Repealed).

(Source: P.A. 83-695. Repealed by 90-418, eff. 8-15-97.)
 
(215 ILCS 5/124.13b) (from Ch. 73, par. 736.13b)
Sec. 124.13b.
(Repealed).

(Source: P.A. 83-695. Repealed by 90-418, eff. 8-15-97.)
 
(215 ILCS 5/124.13c) (from Ch. 73, par. 736.13c)
Sec. 124.13c.
(Repealed).

(Source: P.A. 83-695. Repealed by 90-418, eff. 8-15-97.)
 
(215 ILCS 5/124.13d) (from Ch. 73, par. 736.13d)
Sec. 124.13d.
(Repealed).

(Source: P.A. 83-695. Repealed by 90-418, eff. 8-15-97.)
 
(215 ILCS 5/124.13e) (from Ch. 73, par. 736.13e)
Sec. 124.13e.
(Repealed).

(Source: P.A. 83-695. Repealed by 90-418, eff. 8-15-97.)
 
(215 ILCS 5/124.14) (from Ch. 73, par. 736.14)
Sec. 124.14.
(Repealed).

(Source: Laws 1963, p. 3139. Repealed by 90-418, eff. 8-15-97.)
 
(215 ILCS 5/124.15) (from Ch. 73, par. 736.15)
Sec. 124.15.
(Repealed).

(Source: P.A. 83-695. Repealed by 90-418, eff. 8-15-97.)
 
(215 ILCS 5/124.17) (from Ch. 73, par. 736.17)
Sec. 124.17.
(Repealed).

(Source: P.A. 83-695. Repealed by 90-418, eff. 8-15-97.)
 
(215 ILCS 5/125a) (from Ch. 73, par. 737a)
Sec. 125a.
(Repealed).

(Source: P.A. 84-805. Repealed by 90-418, eff. 8-15-97.)
 
(215 ILCS 5/125b) (from Ch. 73, par. 737b)
Sec. 125b.
(Repealed).

(Source: P.A. 86-1156. Repealed by 90-418, eff. 8-15-97.)
 
(215 ILCS 5/125.1a) (from Ch. 73, par. 737.1a)
Sec. 125.1a.
(Repealed).

(Source: P.A. 83-695. Repealed by P.A. 90-418, eff. 8-15-97.)
 
(215 ILCS 5/125.2a) (from Ch. 73, par. 737.2a)
Sec. 125.2a.
(Repealed).

(Source: P.A. 83-695. Repealed by P.A. 90-418, eff. 8-15-97.)
 
(215 ILCS 5/125.2b) (from Ch. 73, par. 737.2b)
Sec. 125.2b.
(Repealed).

(Source: Laws 1963, p. 3139. Repealed by P.A. 90-418, eff. 8-15-97.)
 
(215 ILCS 5/125.2c) (from Ch. 73, par. 737.2c)
Sec. 125.2c.
(Repealed).

(Source: Laws 1963, p. 3139. Repealed by P.A. 90-418, eff. 8-15-97.)
 
(215 ILCS 5/125.2d) (from Ch. 73, par. 737.2d)
Sec. 125.2d.
(Repealed).

(Source: P.A. 76-710. Repealed by P.A. 90-418, eff. 8-15-97.)
 
(215 ILCS 5/125.2e) (from Ch. 73, par. 737.2e)
Sec. 125.2e.
(Repealed).

(Source: P.A. 77-34. Repealed by P.A. 90-418, eff. 8-15-97.)
 
(215 ILCS 5/125.2f) (from Ch. 73, par. 737.2f)
Sec. 125.2f.
(Repealed).

(Source: P.A. 83-695. Repealed by P.A. 90-418, eff. 8-15-97.)
 
(215 ILCS 5/125.2g) (from Ch. 73, par. 737.2g)
Sec. 125.2g.
(Repealed).

(Source: P.A. 87-575. Repealed by P.A. 90-418, eff. 8-15-97.)
 
(215 ILCS 5/125.3a) (from Ch. 73, par. 737.3a)
Sec. 125.3a.
(Repealed).

(Source: P.A. 83-695. Repealed by P.A. 90-418, eff. 8-15-97.)
 
(215 ILCS 5/125.4a) (from Ch. 73, par. 737.4a)
Sec. 125.4a.
(Repealed).

(Source: P.A. 83-695. Repealed by P.A. 90-418, eff. 8-15-97.)
 
(215 ILCS 5/125.4b) (from Ch. 73, par. 737.4b)
Sec. 125.4b.
(Repealed).

(Source: P.A. 86-1156. Repealed by P.A. 90-418, eff. 8-15-97.)
 
(215 ILCS 5/125.5b) (from Ch. 73, par. 737.5b)
Sec. 125.5b.
(Repealed).

(Source: P.A. 83-695. Repealed by P.A. 90-418, eff. 8-15-97.)
 
(215 ILCS 5/125.6a) (from Ch. 73, par. 737.6a)
Sec. 125.6a.
(Repealed).

(Source: P.A. 83-695. Repealed by P.A. 90-418, eff. 8-15-97.)
 
(215 ILCS 5/125.9a) (from Ch. 73, par. 737.9a)
Sec. 125.9a.
(Repealed).

(Source: P.A. 87-1090. Repealed by P.A. 90-418, eff. 8-15-97.)
 
(215 ILCS 5/125.9b) (from Ch. 73, par. 737.9b)
Sec. 125.9b.
(Repealed).

(Source: P.A. 87-108. Repealed by P.A. 90-418, eff. 8-15-97.)
 
(215 ILCS 5/125.9c)
Sec. 125.9c.
(Repealed).

(Source: P.A. 89-97, eff. 7-7-95. Repealed by 90-418, eff. 8-15-97.)
 
(215 ILCS 5/125.10a) (from Ch. 73, par. 737.10a)
Sec. 125.10a.
(Repealed).

(Source: P.A. 83-695. Repealed by P.A. 90-418, eff. 8-15-97.)
 
(215 ILCS 5/125.10c) (from Ch. 73, par. 737.10c)
Sec. 125.10c.
(Repealed).



(Source: P.A. 86-1156. Repealed by P.A. 90-418, eff. 8-15-97.)
 
(215 ILCS 5/125.10d) (from Ch. 73, par. 737.10d)
Sec. 125.10d.
(Repealed).

(Source: P.A. 83-695. Repealed by P.A. 90-418, eff. 8-15-97.)
 
(215 ILCS 5/125.11a) (from Ch. 73, par. 737.11a)
Sec. 125.11a.
(Repealed).

(Source: P.A. 86-1156. Repealed by P.A. 90-418, eff. 8-15-97.)
 
(215 ILCS 5/125.12a) (from Ch. 73, par. 737.12a)
Sec. 125.12a.
(Repealed).

(Source: P.A. 86-1156. Repealed by P.A. 90-418, eff. 8-15-97.)
 
(215 ILCS 5/125.12b) (from Ch. 73, par. 737.12b)
Sec. 125.12b.
(Repealed).



(Source: P.A. 86-1475. Repealed by P.A. 90-418, eff. 8-15-97.)
 
(215 ILCS 5/125.12c) (from Ch. 73, par. 737.12c)
Sec. 125.12c.
(Repealed).

(Source: P.A. 86-1156. Repealed by P.A. 90-418, eff. 8-15-97.)
 
(215 ILCS 5/125.14a) (from Ch. 73, par. 737.14a)
Sec. 125.14a.
(Repealed).

(Source: P.A. 86-1475. Repealed by P.A. 90-418, eff. 8-15-97.)
 
(215 ILCS 5/125.15a) (from Ch. 73, par. 737.15a)
Sec. 125.15a.
(Repealed).

(Source: P.A. 89-97, eff. 7-7-95. Repealed by P.A. 90-418, eff. 8-15-97.)
 
(215 ILCS 5/125.15b) (from Ch. 73, par. 737.15b)
Sec. 125.15b.
(Repealed).

(Source: P.A. 86-1156. Repealed by P.A. 90-418, eff. 8-15-97.)
 
(215 ILCS 5/125.16a) (from Ch. 73, par. 737.16a)
Sec. 125.16a.
(Repealed).

(Source: P.A. 86-1156. Repealed by P.A. 90-418, eff. 8-15-97.)
 
(215 ILCS 5/125.17a) (from Ch. 73, par. 737.17a)
Sec. 125.17a.
(Repealed).

(Source: P.A. 83-695. Repealed by P.A. 90-418, eff. 8-15-97.)
 
(215 ILCS 5/125.18a) (from Ch. 73, par. 737.18a)
Sec. 125.18a.
(Repealed).

(Source: P.A. 86-1156. Repealed by P.A. 90-418, eff. 8-15-97.)
 
(215 ILCS 5/125.18b) (from Ch. 73, par. 737.18b)
Sec. 125.18b.
(Repealed).

(Source: P.A. 83-695. Repealed by P.A. 90-418, eff. 8-15-97.)
 
(215 ILCS 5/125.19a) (from Ch. 73, par. 737.19a)
Sec. 125.19a.
(Repealed).

(Source: P.A. 83-695. Repealed by P.A. 90-418, eff. 8-15-97.)
 
(215 ILCS 5/125.20a) (from Ch. 73, par. 737.20a)
Sec. 125.20a.
(Repealed).

(Source: P.A. 83-695. Repealed by P.A. 90-418, eff. 8-15-97.)
 
(215 ILCS 5/125.21a) (from Ch. 73, par. 737.21a)
Sec. 125.21a.
(Repealed).

(Source: P.A. 85-1186. Repealed by P.A. 90-418, eff. 8-15-97.)
 
(215 ILCS 5/125.22a) (from Ch. 73, par. 737.22a)
Sec. 125.22a.
(Repealed).

(Source: P.A. 86-1156. Repealed by P.A. 90-418, eff. 8-15-97.)
 
(215 ILCS 5/125.23a) (from Ch. 73, par. 737.23a)
Sec. 125.23a.
(Repealed).

(Source: P.A. 83-695. Repealed by P.A. 90-418, eff. 8-15-97.)
 
(215 ILCS 5/125.24a) (from Ch. 73, par. 737.24a)
Sec. 125.24a.
(Repealed).

(Source: P.A. 83-695. Repealed by P.A. 90-418, eff. 8-15-97.)
 
(215 ILCS 5/Art. VIII Pt. 1 heading)

 
(215 ILCS 5/126.1)
Sec. 126.1.
Purpose and scope.
A. Purpose.
The purpose of this Article is to protect the interests of insureds by
promoting
insurer solvency and financial strength. This will be accomplished through the
application of investment standards that facilitate a reasonable balance of the
following objectives:
B. Scope.
This Article shall apply only to investments and investment practices of
domestic insurers and United States branches of alien insurers entered through
this State. This Article shall not apply to separate accounts of an insurer
except to the extent that the provisions of Article XIV 1/2 so provide.

(Source: P.A. 90-418, eff. 8-15-97.)
 
(215 ILCS 5/126.2)
Sec. 126.2.
Definitions.
For purposes of this Article:
A. "Acceptable collateral" means:
B. "Acceptable private mortgage insurance" means insurance written by a
private insurer protecting a mortgage lender against loss occasioned by a
mortgage loan default and issued by a licensed mortgage insurance company, with
an SVO 1 designation or a rating issued by a nationally recognized statistical
rating organization equivalent to an SVO 1 designation, that covers losses to
an 80% loan-to-value ratio.
C. "Accident and health insurance" means protection which provides payment
of benefits for covered sickness or accidental injury, excluding credit
insurance, disability insurance, accidental death and dismemberment insurance
and long-term care insurance.
D. "Accident and health insurer" means a licensed life or health insurer or
health service corporation whose insurance premiums and required statutory
reserves for accident and health insurance constitute at least
95% of total premium considerations or total statutory required
reserves, respectively.
E. "Admitted assets" means assets defined by Section 3.1 of this Code
permitted to be reported as admitted assets on the statutory financial
statement of the insurer most recently required to be filed with the Director,
but excluding assets of separate accounts, the investments of which are not
subject to the provisions of this Article except to the extent that the
provisions of Article XIV 1/2 so provide.
F. "Affiliate" means, as to any person, another person that, directly or
indirectly through one or more intermediaries, controls, is controlled by, or
is under common control with the person.
G. "Asset-backed security" means a security or other instrument, excluding
shares in a mutual fund, evidencing an interest in, or the right to receive
payments from, or payable from distributions on, an asset, a pool of assets or
specifically divisible cash flows which are legally transferred to a trust or
another special purpose bankruptcy-remote business entity, on the following
conditions:
H. "Business entity" includes a sole proprietorship, corporation, limited
liability company, association, partnership, joint stock company, joint
venture, mutual fund, trust, joint tenancy or other similar form of business
organization, whether organized for profit or not for profit.
I. "Cap" means an agreement obligating the seller to make payments to the
buyer, with each payment based on the amount by which a reference price or
level or the performance or value of one or more underlying interests exceeds a
predetermined number, sometimes called the strike rate or strike price.
J. "Capital and surplus" means the sum of the capital and surplus of the
insurer required to be shown on the statutory financial statement of the
insurer most recently required to be filed with the Director.
K. "Cash equivalents" means short-term, highly rated and highly liquid
investments
or securities readily convertible to known amounts of cash without penalty and
so near maturity that they present insignificant risk of change in value. Cash
equivalents include government money market mutual funds and class one money
market mutual funds. For purposes of this definition:
L. "Class one bond mutual fund" means a mutual fund that at all times
qualifies for investment using the bond class one reserve factor under the
Purposes and Procedures of the Securities Valuation Office or any successor
publication.
M. "Class one money market mutual fund" means a money market mutual fund
that at all times qualifies for investment using the bond class one reserve
factor under the Purposes and Procedures of the Securities Valuation Office or
any successor publication.
N. "Code" means the Illinois Insurance Code.
O. "Collar" means an agreement to receive payments as the buyer of an
option, cap or floor and to make payments as the seller of a different option,
cap or floor.
P. "Commercial mortgage loan" means a mortgage loan, other than a
residential mortgage loan.
Q. "Construction loan" means a loan of less than 3 years in term,
made for financing the cost of construction of a building or other improvement
to real estate, that is secured by the real estate.
R. "Control" means the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of a person,
whether through the ownership of voting securities, by contract (other than a
commercial contract for goods or nonmanagement services), or otherwise, unless
the power is the result of an official position with or corporate office held
by the person. Control shall be presumed to exist if a person, directly or
indirectly, owns, controls, holds with the power to vote or holds proxies
representing 10% or more of the voting securities of another
person. This presumption may be rebutted by a showing that control does not
exist in fact. The Director may determine, after furnishing all interested
persons notice and an opportunity to be heard and making specific findings of
fact to support the determination, that control exists in fact, notwithstanding
the absence of a presumption to that effect.
S. "Counterparty exposure amount" means:
T. "Covered" means that an insurer owns or can immediately acquire, through
the exercise of options, warrants or conversion rights already owned, the
underlying interest in order to fulfill or secure its obligations under a call
option, cap or floor it has written, or has set aside, pursuant to a custodial
or escrow agreement, cash or cash equivalents with a market value equal to the
amount required to fulfill its obligations under a put option it has written,
in an income generation transaction.
U. "Credit tenant loan" means a mortgage loan which is made primarily in
reliance on the credit standing of a major tenant, structured with an
assignment of the rental payments to the lender with real estate pledged as
collateral in the form of a first lien.
V. (1) "Derivative instrument" means an agreement, option, instrument or a series or combination thereof:
W. "Derivative transaction" means a transaction involving the use of one or
more derivative instruments.
X. "Direct" or "directly," when used in connection with an obligation, means
the designated obligor is primarily liable on the instrument representing the
obligation.
Y. "Dollar roll transaction" means 2 simultaneous transactions with
settlement dates no more than 96 days apart, so that in one
transaction an insurer sells to a business entity, and in the other transaction
the insurer is obligated to purchase from the same business entity,
substantially similar securities of the following types:
Z. "Domestic jurisdiction" means the United States, Canada, any state, any
province of Canada or any political subdivision of any of the foregoing.
AA. "Equity interest" means any of the following that are not rated credit
instruments: common stock; preferred stock; trust certificate; equity
investment in an investment company other than a money market mutual fund or a
class one bond
mutual fund; investment in a common trust fund of a bank regulated by a federal
or state agency; an ownership interest in minerals, oil or gas, the rights to
which have been separated from the underlying fee interest in the real estate
where the minerals, oil or gas are located; instruments which are mandatorily,
or at the option of the issuer, convertible to equity; limited partnership
interests and those general partnership interests authorized under Section
126.5(D); member interests in limited liability companies; warrants or other
rights to
acquire equity interests that are created by the person that owns or would
issue the equity to be acquired; or instruments that would be rated credit
instruments except for the provisions of subsection RRR(2) of this Section.
BB. "Equivalent securities" means:
CC. "Floor" means an agreement obligating the seller to make payments to the
buyer in which each payment is based on the amount by which a predetermined
number, sometimes called the floor rate or price, exceeds a reference price, a
level, or the performance or value of one or more underlying interests.
DD. "Foreign currency" means a currency other than that of a domestic
jurisdiction.
EE. (1) "Foreign investment" means an investment in a foreign jurisdiction, or an investment in a person, real estate or asset domiciled in a foreign jurisdiction, that is substantially of the same type as those eligible for investment under this Article, other than under Sections 126.17 and 126.30. An investment shall not be deemed to be foreign if the issuing person, qualified primary credit source or qualified guarantor is a domestic jurisdiction or a person domiciled in a domestic jurisdiction, unless:
FF. "Foreign jurisdiction" means a jurisdiction other than a domestic
jurisdiction.
GG. "Forward" means an agreement (other than a future) to make or take
delivery of, or effect a cash settlement based on the actual or expected price,
level, performance or value of, one or more underlying interests.
HH. "Future" means an agreement, traded on a qualified exchange or qualified
foreign exchange, to make or take delivery of, or effect a cash settlement
based on the actual or expected price, level, performance or value of, one or
more underlying
interests and includes an insurance future.
II. "Government money market mutual fund" means a money market mutual fund
that at all times:
JJ. "Government sponsored enterprise" means a:
KK. "Guaranteed or insured," when used in connection with an obligation
acquired under this Article, means the guarantor or insurer has agreed to:
LL. "Hedging transaction" means:
MM. "High grade investment" means a rated credit instrument; rated 1, 2, P1,
P2, PSF1 or PSF2 by the SVO.
NN. "Income" means, as to a security, interest, accrual of discount,
dividends or other distributions, such as rights, tax or assessment credits,
warrants and distributions in kind.
OO. "Income generation transaction" means (1) a derivative transaction
involving the writing of covered call options, covered put options, covered
caps or covered floors that is intended to generate income or enhance return,
or (2) such other derivative transactions as may be specified to constitute
income generation transactions in rules adopted pursuant to Section
126.8.
PP. "Initial margin" means the amount of cash, securities or other
consideration initially required to be deposited to establish a futures
position.
QQ. "Insurance future" means a future relating to an index or pool that is
based on insurance-related items.
RR. "Insurance futures option" means an option on an insurance future.
SS. "Investment company" means an investment company as defined in Section
3(a) of the Investment Company Act of 1940 (15 U.S.C. 80a-1 et seq.), as
amended, and a person described in Section 3(c) of that Act.
TT. "Investment company series" means an investment portfolio of an
investment company that is organized as a series company and to which assets of
the investment company have been specifically allocated.
UU. "Investment practices" means transactions of the types described in
Section 126.16, 126.18, 126.29 or 126.31.
VV. "Investment subsidiary" means a subsidiary of an insurer engaged or
organized to engage exclusively in the ownership and management of assets
authorized as investments for the insurer if such subsidiary agrees to limit
its investment in any asset so that its investments will not cause the amount
of the total investment of the insurer to exceed any of the investment
limitations or avoid any other provisions of this Article applicable to the
insurer. As used in this subsection, the total investment of the insurer shall
include:
WW. "Investment strategy" means the techniques and methods used by an
insurer to meet its investment objectives, such as active bond portfolio
management, passive bond portfolio management, interest rate anticipation,
growth investing and value investing.
XX. "Letter of credit" means a clean, irrevocable and unconditional letter
of credit issued or confirmed by, and payable and presentable at, a financial
institution on the list of financial institutions meeting the standards for
issuing letters of credit under the Purposes and Procedures of the Securities
Valuation Office or any successor publication. To constitute acceptable
collateral for the purposes of Sections 126.16 and 126.29, a letter of credit
must have
an expiration date beyond the term of the subject transaction.
YY. "Limited liability company" means a business organization, excluding
partnerships and ordinary business corporations, organized or operating under
the laws of the United States or any state thereof that limits the personal
liability of investors to the equity investment of the investor in the business
entity.
ZZ. "Lower grade investment" means a rated credit instrument rated 4, 5, 6,
P4, P5, P6, PSF4, PSF5, or PSF6 by the SVO.
AAA. "Market value" means:
BBB. "Medium grade investment" means a rated credit instrument rated 3, P3,
or PSF 3 by the SVO.
CCC. "Money market mutual fund" means a mutual fund that meets the
conditions of 17 Code of Federal Regulations Par. 270.2a-7, under the
Investment Company Act of 1940 (15 U.S.C. 80a-1 et seq.), as amended or
renumbered.
DDD. "Mortgage loan" means an obligation secured by a mortgage, deed of
trust, trust deed or other consensual lien on real estate.
EEE. "Multilateral development bank" means an international development
organization of which the United States is a member.
FFF. "Mutual fund" means an investment company or, in the case of an
investment company that is organized as a series company, an investment company
series, that, in either case, is registered with the United States Securities
and Exchange Commission under the Investment Company Act of 1940 (15 U.S.C.
80a-1 et
seq.), as amended.
GGG. "NAIC" means the National Association of Insurance Commissioners.
HHH. "Obligation" means a bond, note, debenture, trust certificate including
an equipment trust certificate, production payment, negotiable bank certificate
of deposit, bankers' acceptance, credit tenant loan, loan secured by financing
net leases and other evidence of indebtedness for the payment of money (or
participations, certificates or other evidences of an interest in any of the
foregoing), whether constituting a general obligation of the issuer or payable
only out of certain revenues or certain funds pledged or otherwise dedicated
for payment.
III. "Option" means an agreement giving the buyer the right to buy or
receive (a "call option"), sell or deliver (a "put option"), enter into, extend
or terminate or effect a cash settlement based on the actual or expected price,
level, performance or value of one or more underlying interests and includes an
insurance futures option.
JJJ. "Person" means an individual, a business entity, a multilateral
development bank or a government or quasi governmental body, such as a
political subdivision or a government sponsored enterprise.
KKK. "Potential exposure" means the amount determined in accordance with the
NAIC Annual Statement Instructions.
LLL. "Preferred stock" means preferred, preference or guaranteed stock of a
business entity authorized to issue the stock, that has a preference in
liquidation over the common stock of the business entity.
MMM. "Qualified bank" means:
NNN. "Qualified business entity" means a business entity that is:
OOO. "Qualified clearinghouse" means a clearinghouse for, and subject to the
rules of, a
qualified exchange or a qualified foreign exchange, which provides clearing
services, including acting as a counterparty to each of the parties to a
transaction
such that the parties no longer have credit risk as to each other.
PPP. "Qualified exchange" means:
QQQ. "Qualified foreign exchange" means a foreign exchange, board of trade
or contract market located outside the United States, its territories or
possessions:
RRR. (1) "Rated credit instrument" means an obligation or other instrument which gives its holder a contractual right to receive cash or another rated credit instrument from another entity, if the instrument:
SSS. "Real estate" means:
TTT. "Replication transaction" means a derivative transaction that is
intended to replicate the performance of one or more assets that an insurer is
authorized to acquire under this Article. A derivative transaction that is
entered into as a hedging transaction shall not be considered a replication
transaction.
UUU. "Repurchase transaction" means a transaction in which an insurer
purchases securities from a business entity that is obligated to repurchase the
purchased securities or equivalent securities from the insurer at a specified
price, either
within a specified period of time or upon demand.
VVV. "Required liabilities" means total liabilities required to be reported
on the
statutory financial statement of the insurer most recently required to be filed
with the Director.
WWW. "Residential mortgage loan" means a loan primarily secured by a
mortgage on real estate improved with a one to four family residence.
XXX. "Reverse repurchase transaction" means a transaction in which an
insurer sells securities to a business entity and is obligated to repurchase
the sold securities or equivalent securities from the business entity at a
specified price, either within a specified period of time or upon demand.
YYY. "Secured location" means the contiguous real estate owned by one
person.
ZZZ. "Securities lending transaction" means a transaction in which
securities are loaned by an insurer to a business entity that is obligated to
return the loaned securities or equivalent securities to the insurer, either
within a specified period of time or upon demand.
AAAA. "Series company" means an investment company that is organized as a
series company, as defined in Rule 18f-2(a) adopted under the Investment
Company Act of 1940 (15 U.S.C. 80a-1 et seq.), as amended.
BBBB. "Sinking fund stock" means preferred stock that:
CCCC. "Special rated credit instrument" means a rated credit instrument that
is:
DDDD. "State" means a state, territory or possession of the United States of
America, the District of Columbia or the Commonwealth of Puerto Rico.
EEEE. "Substantially similar securities" means securities that meet all
criteria for substantially similar
securities
specified in the NAIC Accounting Practices
and Procedures
Manual, as amended, and in an amount that constitutes good delivery form as
determined from time to time by the PSA The Bond Market Trade Association.
FFFF. "Subsidiary" means, as to any person, an affiliate controlled by such
person, directly or indirectly through one or more intermediaries.
GGGG. "SVO" means the Securities Valuation Office of the NAIC or any
successor office established by the NAIC.
HHHH. "Swap" means an agreement to exchange or to net payments at one or
more times based on the actual or expected price, level, performance or value
of one or more underlying interests.
IIII. "Underlying interest" means the assets, liabilities, other interests
or a combination thereof underlying a derivative instrument, such as any one or
more securities, currencies, rates, indices, commodities or derivative
instruments.
JJJJ. "Unrestricted surplus" means the amount by which total admitted assets
exceed 125% of the insurer's required liabilities.
KKKK. "Warrant" means an instrument that gives the holder the right to
purchase an underlying financial instrument at a given price and time or at a
series of prices and times outlined in the warrant agreement. Warrants may be
issued alone or in connection with the sale of other securities, for example,
as part of a merger or recapitalization agreement, or to facilitate divestiture
of the securities of another business entity.

(Source: P.A. 90-418, eff. 8-15-97; 90-794, eff. 8-14-98.)
 
(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:
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:
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 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.
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:
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.

(Source: P.A. 90-418, eff. 8-15-97.)
 
(215 ILCS 5/126.4)
Sec. 126.4.
Authorization of investments by the board of directors.
A. Within 3 months after the effective date of this amendatory Act of 1997,
an insurer's board of directors shall adopt a written plan for acquiring
and holding investments and for engaging in investment practices that specifies
guidelines as to the quality, maturity and diversification of investments and
other specifications including investment strategies intended to assure that
the investments and investment practices are appropriate for the business
conducted by the insurer, its liquidity needs and its capital and surplus. The
board shall review and assess the insurer's technical investment and
administrative capabilities and expertise before
adopting a written plan concerning an investment strategy or investment
practice.
B. Investments acquired and held under this Article shall be acquired and
held under the supervision and direction of the board of directors of the
insurer. The board of directors shall evidence by formal resolution, at least
annually, that it has determined whether all investments have been made in
accordance with delegations, standards, limitations and investment objectives
prescribed by the board or a committee of the board charged with the
responsibility to direct its investments.
C. On no less than a quarterly basis, and more often if deemed appropriate,
an insurer's board of directors or committee of the board of directors shall:
D. In discharging its duties under this Section, the board of directors
shall require that records of any authorizations or approvals, other
documentation as the board may require and reports of any action taken under
authority delegated under the plan referred to in subsection A of this Section
shall be made available on a regular basis to the board of directors.
E. In discharging their duties under this Section, the directors of an
insurer shall perform their duties in good faith and with that degree of care
that ordinarily prudent individuals in like positions would use under similar
circumstances.
F. If an insurer does not have a board of directors, all references to the
board of directors in this Article shall be deemed to be references to the
governing body of the insurer having authority equivalent to that of a board of
directors.

(Source: P.A. 90-418, eff. 8-15-97.)
 
(215 ILCS 5/126.5)
Sec. 126.5.
Prohibited investments.
An insurer shall not, directly or indirectly:
A. Invest in an obligation or security or make a guarantee for the benefit
of or in favor of an officer or director of the insurer, except as provided in
Section 126.6;
B. Invest in an obligation or security, make a guarantee for the benefit of
or in favor of, or make other investments in a business entity of which 10% or
more of the voting securities or equity interests are owned
directly or indirectly by
or for the benefit of one or more officers or directors of the insurer, except
pursuant to a transaction entered into in compliance with Section 131.20a of
this Code or provided in Section 126.6;
C. Engage on its own behalf or through one or more affiliates in a
transaction or
series of transactions designed to evade the prohibitions of this Article;
D. (1) Invest in a partnership as a general partner, except that an insurer may make an investment as a general partner:
E. Invest in or lend its funds upon the security of shares of its own stock,
except as authorized by other provisions of this Code. However, no such shares
shall be admitted assets of the insurer.

(Source: P.A. 90-418, eff. 8-15-97.)
 
(215 ILCS 5/126.6)
Sec. 126.6.
Loans to officers and directors.
A. (1) Except as provided in Section 126.6B, an insurer shall not directly
or indirectly, unless it has notified the Director in writing of its intention
to enter into the transaction at least 30 days prior thereto, or any shorter
period as the Director may permit, and the Director has not disapproved it
within that period:
(2) For purposes of this Section, an officer or director shall not be
deemed to have a financial interest by reason of an interest that is held
directly or indirectly through the ownership of equity interests representing
less than 2% of all outstanding equity interests issued by a person that is a
party to the transaction, or solely by reason of that individual's position as
a director or officer of a person that is a party to the transaction.
(3) This subsection does not permit an investment that is prohibited by
Section 126.5.
(4) This subsection does not apply to a transaction between an insurer and
any of its subsidiaries or affiliates that is entered into in compliance with
Section 131.20a of this Code, other than a transaction between an insurer
and its officer or director.
B. An insurer may make, without the prior written approval of the Director:
(Source: P.A. 90-418, eff. 8-15-97.)
 
(215 ILCS 5/126.7)
Sec. 126.7.
Valuation of investments.
For the purposes of this Article, the value or amount of an investment acquired
or held, or an investment practice engaged in, under this Article, unless
otherwise specified in this Code, shall be the value at which assets of an
insurer are required to be reported for statutory accounting purposes as
determined in accordance with procedures prescribed in published accounting and
valuation standards of the NAIC, including the Purposes and Procedures of the
Securities
Valuation Office, the Valuation of Securities manual, the Accounting Practices
and Procedures
manual, the Annual Statement Instructions or any successor valuation procedures
officially adopted by the
NAIC. The Director shall promulgate rules for determining and calculating
values to be used in financial statements submitted to the Department for
investments not subject to published National Association of Insurance
Commissioners valuation standards.

(Source: P.A. 90-418, eff. 8-15-97.)
 
(215 ILCS 5/126.8)
Sec. 126.8.
Rules.
The Director may, in accordance with Section 401 of this Code, promulgate
rules implementing the provisions of this Article.

(Source: P.A. 90-418, eff. 8-15-97.)
 
(215 ILCS 5/Art. VIII Pt. 2 heading)

 
(215 ILCS 5/126.9)
Sec. 126.9.
Applicability.
This Part shall apply to the investments and investment practices of
companies authorized to transact business under Class 1 of Section 4 of this
Code and other companies whose investments and investment practices are
regulated as life insurers under this Code, subject to the provisions of
Section 126.1B.

(Source: P.A. 90-418, eff. 8-15-97.)
 
(215 ILCS 5/126.10)
Sec. 126.10.

General 3% diversification, medium and lower grade
investments, and Canadian investments.
A. General 3% diversification.
B. Medium and lower grade investments.
C. Canadian investments.
(Source: P.A. 90-418, eff. 8-15-97.)
 
(215 ILCS 5/126.11)
Sec. 126.11.
Rated credit instruments.
Subject to the limitations of subsection F of this Section, an insurer may
acquire rated credit instruments:
A. Subject to the limitations of Section 126.10B, but not to the limitations
of Section 126.10A, except for that of subsection (4) of Section 126.10A, an
insurer may acquire rated credit instruments issued, assumed, guaranteed, or
insured by:
B. (1) Subject to the limitations of Section 126.10B, but not to the limitations of Section 126.10A, an insurer may acquire rated credit instruments issued, assumed, guaranteed, or insured by:
C. (1) Subject to the limitations of Section 126.10B, but not to the limitations of Section 126.10A, an insurer may acquire rated credit instruments, excluding asset-backed securities:
D. Subject to the limitations of Section 126.10, an insurer may acquire
preferred stocks that are not foreign investments and that meet the
requirements of rated credit instruments if, as a result of and after giving
effect to the investment:
E. Subject to the limitations of Section 126.10, in addition to those
investments eligible under subsections A, B, C and D of this Section, an
insurer may acquire rated credit instruments that are not foreign investments.
F. An insurer shall not acquire special rated credit instruments under this
Section if, as a result of and after giving effect to the investment, the
aggregate amount of special rated credit instruments then held by the insurer
would exceed 5% of its admitted assets. The Director may, by
rule, identify certain special rated credit instruments that will be
exempt from the limitation imposed by this subsection.

(Source: P.A. 90-418, eff. 8-15-97.)
 
(215 ILCS 5/126.12)
Sec. 126.12. Insurer investment pools.
A. An insurer may acquire investments in investment pools that:
B. For an investment in an investment pool to be qualified under this
Article, the investment pool shall not:
C. The limitations of Section 126.10A shall not apply to an insurer's
investment in an investment pool, however an insurer shall not acquire an
investment in an investment pool under this Section if, as a result of and
after giving effect to the investment, the aggregate amount of investments then
held by the insurer under this Section:
D. For an investment in an investment pool to be qualified under this
Article, the manager of the investment pool shall:
E. The pooling agreement for each investment pool shall be in writing and
shall provide that:
F. Except for
the
formation of the investment pool, transactions and
between a domestic insurer and an affiliated insurer
investment pool shall not be subject to the requirements of Section
131.20a of this Code.

(Source: P.A. 100-201, eff. 8-18-17.)
 
(215 ILCS 5/126.13)
Sec. 126.13.
Equity interests.
A. Subject to the limitations of Section 126.10, an insurer may acquire
directly
or indirectly through an investment subsidiary, equity interests in business
entities organized under the laws of any domestic jurisdiction.
B. An insurer shall not acquire directly or indirectly through an investment
subsidiary an investment under this Section if, as a result of and after giving
effect
to the investment, the aggregate amount of investments then held by the insurer
under this Section would exceed 20% of its admitted assets or, except for
mutual
funds, the amount of equity interests then held by the insurer that are not
listed on
a qualified exchange would exceed 5% of its admitted assets. An
accident and health insurer shall not be subject to this Section but shall be
subject to the same aggregate limitation on equity interests as a property and
casualty insurer under Section 126.26 and also to the provisions of Section
126.22 of this Article.
C. An insurer shall not acquire under this Section any investments that the
insurer may acquire under Section 126.15.
D. An insurer shall not short sell equity interests unless the insurer
covers the short sale by owning the equity interest or an unrestricted right to
the equity interest exercisable within 6 months of the short sale.

(Source: P.A. 90-418, eff. 8-15-97.)
 
(215 ILCS 5/126.14)
Sec. 126.14.
Tangible personal property under lease.
A. (1) Subject to the limitations of Section 126.10, an insurer may acquire
tangible personal property or
equity interests therein located or used wholly or in part within a domestic
jurisdiction either directly or indirectly through limited partnership
interests and general partnership interests not otherwise prohibited by
Section 126.5D, joint ventures, stock of an investment subsidiary or
membership interests in a limited liability company, trust certificates, or
other similar instruments.
(2) Investments acquired under paragraph (1) of this subsection shall be
eligible only if:
B. The insurer shall compute the amount of each investment under this
Section on the basis of the out of pocket purchase price and applicable related
expenses paid by the insurer for the investment, net of each borrowing made to
finance the purchase price and expenses, to the extent the borrowing is without
recourse to the insurer.
C. An insurer shall not acquire directly or indirectly through an investment
subsidiary an investment under this Section if, as a result of and after giving
effect to the investment, the aggregate amount of all investments then held by
the insurer under this Section would exceed:
D. For purposes of determining compliance with the limitations of Section
126.10, investments acquired by an insurer under this Section shall be
aggregated with those acquired under Section 126.11, and each lessee of the
property under a lease referred to in this Section shall be deemed the issuer
of an obligation in the amount of the investment of the insurer in the property
determined as provided in subsection B of this Section.
E. Nothing in this Section is applicable to tangible personal property lease
arrangements between an insurer and its subsidiaries and affiliates under a
cost sharing arrangement or agreement permitted under Section
131.20a(1)(a)(iv).

(Source: P.A. 90-418, eff. 8-15-97.)
 
(215 ILCS 5/126.15)
Sec. 126.15.
Mortgage loans and real estate.
A. Mortgage loans.
B. Income producing real estate.
C. Real estate for the accommodation of business.
An insurer may acquire, manage, and dispose of real estate for the convenient
accommodation of the insurer's (which may include its affiliates) business
operations, including home office, branch office and field office operations.
D. Quantitative limitations.
(Source: P.A. 90-418, eff. 8-15-97.)
 
(215 ILCS 5/126.16)
Sec. 126.16.

Securities lending and repurchase, reverse repurchase, and
dollar roll transactions.
An insurer may enter into securities lending, repurchase, reverse repurchase,
and dollar roll transactions with business entities, subject to the following
requirements:
A. The insurer's board of directors shall adopt a written plan that is
consistent with
the requirements of the written plan in Section 126.4A that specifies
guidelines and objectives to be followed, such as:
B. The insurer shall enter into a written agreement for all transactions
authorized in this Section other than dollar roll transactions. The written
agreement shall require that each transaction terminate no more than one year
from its inception or upon
the earlier demand of the insurer. The agreement shall be with the business
entity counterparty, but for securities lending transactions, the agreement may
be with an agent acting on behalf of the insurer, if the agent is a qualified
business entity, and if the agreement:
C. Cash received in a transaction under this Section shall be invested in
accordance with this Article and in a manner that recognizes the liquidity
needs of the transaction or used by the insurer for its general corporate
purposes. For so long as the transaction remains outstanding, the insurer, its
agent or custodian shall
maintain, as to acceptable collateral received in a transaction under this
Section, either physically or through the book entry systems of the Federal
Reserve, Depository Trust Company, Participants Trust Company or other
securities depositories approved by the Director:
D. The limitations of Sections 126.10 and 126.17 shall not apply to the
business entity counterparty exposure created by transactions under this
Section. For purposes of calculations made to determine compliance with this
subsection, no effect will be
given to the insurer's future obligation to resell securities, in the case of a
repurchase transaction, or to repurchase securities, in the case of a reverse
repurchase transaction. An insurer shall not enter into a transaction under
this Section if, as a result of and after giving effect to the transaction:
E. In a dollar roll transaction, the insurer shall receive cash in an amount
at least equal to the market value of the securities transferred by the insurer
in the transaction as of the transaction date.
F. The Director may promulgate reasonable rules for investments
and transactions under this Section including, but not limited to, rules
which impose financial solvency standards, valuation standards, and
reporting requirements.

(Source: P.A. 90-418, eff. 8-15-97.)
 
(215 ILCS 5/126.17)
Sec. 126.17.
Foreign investments and foreign currency exposure.
A. Subject to the limitations of Section 126.10, an insurer may acquire
directly or indirectly through an investment subsidiary, foreign investments,
or engage in investment practices with persons of or in foreign jurisdictions,
of substantially the same types as those that an insurer is permitted to
acquire under this Article, other than of the type permitted under Section
126.12, if, as a result and after giving effect to the investment:
B. Subject to the limitations of Section 126.10, an insurer may acquire
investments, or engage in investment practices denominated in foreign
currencies, whether or not they are foreign investments acquired under
subsection A of this Section, or additional foreign currency exposure as a
result of the termination or expiration of a hedging transaction with respect
to investments denominated in a foreign currency, if, as a result of and after
giving effect to the transaction:
C. In addition to investments permitted under subsections A and B of this
Section, an insurer that is authorized to do business in a foreign
jurisdiction, and that has outstanding insurance, annuity or reinsurance
contracts on lives or risks resident or located in that foreign jurisdiction
and denominated in foreign currency of that jurisdiction, may acquire foreign
investments respecting that foreign jurisdiction, and may acquire investments
denominated in the currency of that jurisdiction, subject to the limitations of
Section 126.10. However, investments made under this subsection in obligations
of foreign governments, their political subdivisions and government sponsored
enterprises shall not be subject to the limitations of Section 126.10 if those
investments carry an SVO rating of 1 or 2. The aggregate amount of investments
acquired by the insurer under this subsection shall not exceed the
greater of:
D. In addition to investments permitted under subsections A and B of this
Section, an insurer that is not authorized to do business in a foreign
jurisdiction, but which has outstanding insurance, annuity or reinsurance
contracts on lives or risks resident or located in that foreign jurisdiction
and denominated in foreign currency of that jurisdiction, may acquire foreign
investments respecting that foreign jurisdiction, and may acquire investments
denominated in the currency of that jurisdiction subject to the limitations of
Section 126.10. However, investments made under this subsection in obligations
of foreign governments, their political subdivisions and government sponsored
enterprises shall not be subject to the limitations of Section 126.10 if those
investments carry an SVO rating of 1 or 2. The
aggregate amount of investments acquired by the insurer under this subsection
shall not exceed 105% of the amount of its reserves, net of reinsurance,
and other obligations under the contracts on lives or risks resident or located
in the foreign jurisdiction.
E. Investments acquired under this Section shall be aggregated with
investments of
the same types made under all other Sections of this Article, and in a similar
manner, for purposes of determining compliance with the limitations, if any,
contained in the other Sections. Investments in obligations of foreign
governments, their political subdivisions and government sponsored enterprises
of these persons, except for those exempted under subsections C and D of this
Section, shall be subject to the limitations of Section 126.10.

(Source: P.A. 90-418, eff. 8-15-97.)
 
(215 ILCS 5/126.18)
Sec. 126.18.
Derivative transactions.
An insurer may, directly or
indirectly through an investment subsidiary, engage in derivative transactions
under this Section under the following conditions:
A. General conditions.
B. Limitations on hedging transactions.
An insurer may enter into hedging transactions under this Section if, as a
result of and after giving effect to the transaction:
C. Limitations on income generation transactions.
An insurer may enter into the following types of income generation
transactions subject to the quantitative limits of subsection C(5):
D. Counterparty exposure.
An insurer shall include all counterparty exposure amounts in determining
compliance with the limitations of Section 126.10.
E. Additional transactions.
Pursuant to rules promulgated under Section 126.8, the Director may approve
additional transactions involving the use of derivative instruments in excess
of the limits of subsection B of this Section or for other risk management
purposes.

(Source: P.A. 90-418, eff. 8-15-97.)
 
(215 ILCS 5/126.19)
Sec. 126.19.
Policy loans.
A life insurer may lend to a policyholder on the security of the cash
surrender value of the
policyholder's policy a sum not exceeding the legal reserve that the insurer is
required to
maintain on the policy.

(Source: P.A. 90-418, eff. 8-15-97.)
 
(215 ILCS 5/126.20)
Sec. 126.20.
Additional investment authority.
A. Solely for the purpose of acquiring investments that exceed the
quantitative limitations of Sections 126.10 through 126.17, an insurer may
acquire under this subsection an investment, or engage in investment practices
described in Section 126.16, but an insurer shall not acquire an investment, or
engage in investment practices described in Section 126.16, under this
subsection if, as a result of and after giving effect to the transaction:
B. (1) In addition to the authority provided under subsection A of this Section, an insurer may acquire under this subsection an investment of any kind, or engage in investment practices described in Section 126.16, that are not specifically prohibited by this Article, without regard to the categories, conditions, standards or other limitations of Sections 126.10 through 126.17 if, as a result of and after giving effect to the transaction, the aggregate amount of investments then held under this subsection would not exceed the lesser of:
C. In addition to the investments acquired under subsections A and B of this
Section, an insurer may acquire under this subsection an investment of any
kind, or engage in investment practices described in Section 126.16, that are
not specifically prohibited by this Article without regard to any limitations
of Sections 126.10 through 126.17 if:
D. Under this Section, an insurer shall not acquire or engage in an
investment practice prohibited under Section 126.5 or an investment that is a
derivative transaction.

(Source: P.A. 90-418, eff. 8-15-97.)
 
(215 ILCS 5/Art. VIII Pt. 3 heading)

 
(215 ILCS 5/126.21)
Sec. 126.21.
Applicability.
This Part 3 shall apply to the investments and investment practices of
property and
casualty insurers authorized to transact the kinds of insurance in either or
both Class 2 or Class 3
of Section 4 of this Code, subject to the provisions of Section 126.1B.

(Source: P.A. 90-418, eff. 8-15-97.)
 
(215 ILCS 5/126.22)
Sec. 126.22.
Reserve requirements.
A. Reserve requirements.
B. Monitoring and reporting.
A property and casualty insurer shall supplement its annual statement with a
reconciliation and summary of its assets and reserve requirements as required
in subsection A of this Section. A reconciliation and summary showing that an
insurer's assets as required in subsection A of this Section are greater than
or equal to its undiscounted reserves referred to in subsection A of this
Section shall be sufficient to satisfy this requirement. Upon prior
notification, the Director
may
require an insurer to submit such a reconciliation and summary with any
quarterly
statement filed during the calendar year.
C. Notification requirements and mandatory safeguards.
If a property and casualty insurer's assets and reserves do not comply with
subsection A of this Section, the insurer shall notify the Director immediately
of the amount by which the reserve requirements exceed the annual statement
value of the qualifying assets, explain why the deficiency exists and within 30
days of the date of the notice propose a plan of action to remedy the
deficiency.
D. Authority of the Director.
E. An insurer subject to this Section must comply with the requirements of
this Section after December 31, 1997.

(Source: P.A. 90-418, eff. 8-15-97.)
 
(215 ILCS 5/126.23)
Sec. 126.23.

General 5% diversification, medium and lower grade
investments, and Canadian investments.
A. General 5% diversification.
B. Medium and lower grade investments.
C. Canadian investments.
(Source: P.A. 90-418, eff. 8-15-97.)
 
(215 ILCS 5/126.24)
Sec. 126.24.
Rated credit instruments.
Subject to the limitations of subsection F of this Section, an insurer may
acquire rated credit instruments:
A. Subject to the limitations of Section 126.23B, but not to the limitations
of Section 126.23A except for the limitation of subsection (4) of Section
126.23A, an insurer may acquire rated credit instruments issued, assumed,
guaranteed, or insured by:
D. Subject to the limitations of Section 126.23, an insurer may acquire
preferred stocks that are not foreign investments and that meet the
requirements of rated credit instruments if, as a result of and after giving
effect to the investment:
E. Subject to the limitations of Section 126.23 in addition to those
investments eligible under subsections A, B, C and D of this Section, an
insurer may acquire rated credit instruments that are not foreign investments.
F. An insurer shall not acquire special rated credit instruments under this
Section if, as a result of and after giving effect to the investment, the
aggregate amount of special rated credit instruments then held by the insurer
would exceed 5% of its admitted assets. The Director may, by rule, identify
certain special rated credit instruments that are exempt from the limitation
imposed by this subsection.

(Source: P.A. 90-418, eff. 8-15-97.)
 
(215 ILCS 5/126.25)
Sec. 126.25. Insurer investment pools.
A. An insurer may acquire investments in investment pools that:
B. For an investment in an investment pool to be qualified under this
Article, the investment pool shall not:
C. The limitations of Section 126.23A shall not apply to an insurer's
investment in an investment pool, however an insurer shall not acquire an
investment in an investment pool under this Section if, as a result of and
after giving effect to the investment, the aggregate amount of investments then
held by the insurer under this Section:
D. For an investment in an investment pool to be qualified under this
Article, the manager of the investment pool shall:
E. The pooling agreement for each investment pool shall be in writing and
shall provide that:
F. Except for the formation of the investment pool, transactions between a
domestic insurer and an affiliated insurer
investment pool shall not be subject to the requirements of Section
131.20a of this Code.

(Source: P.A. 100-201, eff. 8-18-17.)
 
(215 ILCS 5/126.26)
Sec. 126.26.
Equity Interests.
A. Subject to the limitations of Section 126.23, an insurer may acquire
directly, or indirectly through an investment subsidiary, equity interests in
business entities organized under the laws of any domestic jurisdiction.
B. An insurer shall not acquire directly, or indirectly through an
investment
subsidiary, an investment under this Section if, as a result of and after
giving effect
to the investment, the aggregate amount of investments then held by the insurer
under this Section would exceed the greater of 25% of its
admitted assets or 100% of its surplus as regards
policyholders.
C. An insurer shall not acquire under this Section any investments that the
insurer
may acquire under Section 126.28.
D. An insurer shall not short sell equity interests unless the insurer
covers the short
sale by owning the equity interest or an unrestricted right to the equity
interest
exercisable within 6 months of the short sale.

(Source: P.A. 90-418, eff. 8-15-97.)
 
(215 ILCS 5/126.27)
Sec. 126.27.
Tangible personal property under lease.
A. (1) Subject to the limitations of Section 126.23, an
insurer may acquire tangible personal property or
equity interests therein located or used wholly or in part within a domestic
jurisdiction either directly or indirectly through limited partnership
interests and general partnership interests not otherwise prohibited by
Section 126.5D, joint ventures, stock of an investment subsidiary or
membership interests in a limited liability company, trust certificates, or
other similar instruments.
B. The insurer shall compute the amount of each investment under this
Section on the
basis of the out of pocket purchase price and applicable related expenses paid
by the insurer for the investment, net of each borrowing made to finance the
purchase price and expenses, to the extent the borrowing is without recourse to
the insurer.
C. An insurer shall not acquire directly or indirectly through an investment
subsidiary an investment under this Section if, as a result of and after giving
effect to the investment, the aggregate amount of all investments then held by
the insurer under this Section would exceed:
D. For purposes of determining compliance with the limitations of Section
126.23, investments acquired by an insurer under this Section shall be
aggregated with those acquired under Section 126.24, and each lessee of the
property under a lease referred to in this Section shall be deemed the issuer
of an obligation in the amount of the investment of the insurer in the property
determined as provided in subsection B of this Section.
E. Nothing in this Section is applicable to tangible personal property lease
arrangements between an insurer and its subsidiaries and affiliates under a
cost sharing arrangement or agreement permitted under Section 131.20a(1)(a)(iv)
of this Code.

(Source: P.A. 90-418, eff. 8-15-97.)
 
(215 ILCS 5/126.28)
Sec. 126.28.
Mortgage loans and real estate.
A. Mortgage loans.
(1) Subject to the limitations of Section 126.23, an insurer may acquire,
either directly or indirectly through limited partnership interests and general
partnership interests not otherwise prohibited by Section 126.5D, joint
ventures, stock of an investment subsidiary or membership interests in a
limited liability company, trust certificates, or other similar instruments,
obligations secured by mortgages on real estate situated within a domestic
jurisdiction, but a mortgage loan which is secured by other than a first lien
shall not be acquired under this subsection (1) unless the insurer is the
holder of the first lien. The obligations held by the insurer and any
obligations with an equal lien priority, shall not, at the time of acquisition
of the obligation, exceed:
B. Income producing real estate.
C. Real estate for the accommodation of business.
An insurer may acquire, manage, and dispose of real estate for the convenient
accommodation of the insurer's (which may include its affiliates) business
operations, including home office, branch office and field office operations.
D. Quantitative limitations.
(Source: P.A. 90-418, eff. 8-15-97.)
 
(215 ILCS 5/126.29)
Sec. 126.29.

Securities lending and repurchase, reverse repurchase, and
dollar roll transactions. An insurer may enter into securities lending,
repurchase, reverse repurchase, and dollar roll transactions with business
entities, subject to the following requirements:
A. The insurer's board of directors shall adopt a written plan that is
consistent with the requirements of the written plan in Section 126.4A that
specifies guidelines and objectives to be followed, such as:
B. The insurer shall enter into a written agreement for all transactions
authorized in this Section other than dollar roll transactions. The written
agreement shall require that each transaction terminate no more than one year
from its inception or upon the earlier demand of the insurer. The agreement
shall be with the business entity counterparty, but for securities lending
transactions, the agreement may be with an agent acting on behalf of the
insurer, if the agent is a qualified business entity, and if the agreement:
C. Cash received in a transaction under this Section shall be invested in
accordance with this Article and in a manner that recognizes the liquidity
needs of the transaction or used by the insurer for its general corporate
purposes. For so long as the transaction remains outstanding, the insurer, its
agent or custodian shall maintain, as to acceptable collateral received in a
transaction under this Section, either physically or through the book entry
systems of the Federal Reserve, Depository Trust Company, Participants Trust
Company or other securities depositories approved by the Director:
D. The limitations of Sections 126.23 and 126.30 shall not apply to the
business entity
counterparty exposure created by transactions under this Section. For purposes
of calculations made to determine compliance with this subsection, no effect
will
be given to the insurer's future obligation to resell securities, in the case
of a repurchase transaction, or to repurchase securities, in the case of a
reverse repurchase transaction. An insurer shall not enter into a transaction
under this Section if, as a result of and after giving effect to the
transaction:
E. In a dollar roll transaction, the insurer shall receive cash in an amount
at least equal to the market value of the securities transferred by the insurer
in the transaction as of the transaction date.
F. The Director may promulgate reasonable rules for investments
and transactions under this Section including, but not limited to, rules
which impose financial solvency standards, valuation standards, and
reporting requirements.

(Source: P.A. 90-418, eff. 8-15-97.)
 
(215 ILCS 5/126.30)
Sec. 126.30.
Foreign investments and foreign currency exposure.
A. Subject to the limitations of Section 126.23, an insurer may acquire
directly or indirectly through an investment subsidiary, foreign investments,
or engage in investment practices with persons of or in foreign jurisdictions,
of substantially the same types as those that an insurer is permitted to
acquire under this Article, other than of the type permitted under Section
126.25, if, as a result and after giving effect to the investment:
B. Subject to the limitations of Section 126.23, an insurer may acquire
investments, or engage in investment practices denominated in foreign
currencies, whether or not they are foreign investments acquired under
subsection A of this Section, or additional foreign currency exposure as a
result of the termination or expiration of a hedging transaction with respect
to investments denominated in a foreign currency, if, as a result of and after
giving effect to the transaction:
However, an investment shall not be considered denominated in a
foreign currency if the acquiring insurer enters into one or more contracts in
transactions permitted under Section 126.31 in which the business entity
counterparty agrees to exchange, or grants to the insurer the option to
exchange, all payments made on the foreign currency denominated
investment (or amounts equivalent to the payments that are or will be due
to the insurer in accordance with the terms of such investment) for United
States currency during the period the contract or contracts are in effect to
insulate the insurer against loss caused by diminution of the value of
payments owed to the insurer due to future changes in currency exchange
rates.
C. In addition to investments permitted under subsections A and B of this
Section, an insurer that is authorized to do business in a foreign
jurisdiction, and that has outstanding insurance, annuity or reinsurance
contracts on lives or risks resident or located in that foreign jurisdiction
and denominated in foreign currency of that jurisdiction, may acquire foreign
investments respecting that foreign jurisdiction, and may acquire investments
denominated in the currency of that jurisdiction, subject to the limitations of
Section 126.23. However, investments made under this subsection in obligations
of foreign governments, their political subdivisions and government sponsored
enterprises shall not be subject to the limitations of Section 126.23 if those
investments carry an SVO rating of 1 or 2. The aggregate amount of investments
acquired by the insurer under this subsection shall not exceed the
greater of:
D. In addition to investments permitted under subsections A and B of this
Section, an insurer that is not authorized to do business in a foreign
jurisdiction but which has outstanding insurance, annuity or reinsurance
contracts on lives or risks resident or located in a foreign jurisdiction and
denominated in foreign currency of that jurisdiction, may acquire foreign
investments respecting that foreign jurisdiction, and may acquire investments
denominated in the currency of that jurisdiction subject to the limitations set
forth of Section 126.24. However, investments made under this subsection in
obligations of foreign governments, their political subdivisions and government
sponsored enterprises shall not be subject to the limitations of Section 126.23
if those investments carry an SVO rating of 1 or 2. The aggregate amount of
investments acquired by the insurer under this subsection shall not exceed 105%
of the amount of its reserves, net of reinsurance, and other obligations under
the contracts on risks resident or located in the foreign
jurisdiction.
E. Investments acquired under this Section shall be aggregated with
investments of the same types made under all other Sections of this Article,
and in a similar manner, for purposes of determining compliance with the
limitations, if any, contained in the other Sections. Investments in
obligations of foreign governments, their political subdivisions and government
sponsored enterprises of these persons, except for those exempted under
subsections C and D of this Section, shall be subject to the limitations of
Section 126.23.

(Source: P.A. 90-418, eff. 8-15-97; 91-357, eff. 7-29-99.)
 
(215 ILCS 5/126.31)
Sec. 126.31.
Derivative transactions.
An insurer may, directly or indirectly through an investment subsidiary,
engage in derivative transactions under this Section under the following
conditions:
A. General conditions.
B. Limitations on hedging transactions.
An insurer may enter into hedging transactions under this Section if, as a
result of and after giving effect to the transaction:
C. Limitations on income generation transactions.
An insurer may enter into the following types of income generation
transactions subject to the quantitative limits of subsection C(4):
D. Counterparty exposure.
An insurer shall include all counterparty exposure amounts in determining
compliance with the limitations of Section 126.23.
E. Additional transactions.
Pursuant to rules promulgated under Section 126.8, the Director may
approve additional transactions involving the use of derivative instruments in
excess of the limits of subsection B of this Section or for other risk
management purposes.

(Source: P.A. 90-418, eff. 8-15-97.)
 
(215 ILCS 5/126.32)
Sec. 126.32.
Additional investment authority.
A. Under this Section, an insurer may acquire investments or engage in
investment practices of any kind that are not specifically prohibited by
Section 126.5 and are not derivative instruments without regard to any
limitation in Sections 126.23 through 126.30, but an insurer shall not acquire
an investment or engage in an investment practice under this Section if, as a
result of and after giving effect to the transaction, the aggregate amount of
the investments then held by the insurer under this Section would exceed the
greater of:
B. An insurer shall not acquire any investment or engage in any investment
practice under subsection A(2) of this Section if, as a result of and after
giving effect to the transaction the aggregate amount of all investments in any
one person then held by the insurer under that subsection would exceed 5% of
its admitted assets.

(Source: P.A. 90-418, eff. 8-15-97.)

Structure Illinois Compiled Statutes