§ 179E-20 — Limited certificate of authority

Illinois § 179E-20

• Jurisdiction: Illinois
• Topic: REGULATION
• Ch. 215: INSURANCE
• Act 215 ILCS 5/: Illinois Insurance Code.
• Art.: Article XIE - Special Purpose Reinsurance Vehicle Law

Text

(a) Within 30 days after receipt by the Director of a complete filing by the prospective SPRV organizer for authority to form or acquire an SPRV, which SPRV shall exist and operate expressly for the limited purposes set forth in this Article, the application shall be deemed approved and a limited certificate of authority shall be issued, unless before the expiration of the 30-day period the Director approves or disapproves the application in writing. A limited certificate of authority may not be issued unless the country or state of domicile of each ceding insurer has notified the Director in writing that they have not disapproved the transaction. A complete filing of the application must include the following: (1) an affidavit verifying that each prospective SPRV organizer the SPRV meets the requirements as set forth in this Article; (2) a representation that the prospective SPRV organizer intends to form an SPRV to operate in accordance with the requirements set forth in this Article; (3) the proposed name of the subject SPRV; (4) biographical descriptions of each SPRV organizer setting forth their legal names, any names under which they have or are conducting their affairs, and any affiliations with other persons as defined in Article VIII 1/2, together with such other biographical information as the Director may request; (5) the source and form of the minimum capital to be contributed to the SPRV; (6) any persons with which the SPRV is or, upon formation, will be affiliated as defined in Article VIII 1/2; (7) the names and biographical information of the proposed members of the board of directors and principal officers of the SPRV, setting forth their legal names, any names under which they have or are conducting their affairs and any affiliations with other persons as defined in Article VIII 1/2, together with such other biographical information as the Director may request; and (8) a plan of operation, consisting of a description of the contemplated insurance securitization, the SPRV contract, and related transactions, which plan of operation must include: (A) draft documentation or, at the discretion of the Director, a written summary, of all material agreements that will be entered into to effectuate the insurance securitization and the related SPRV contract, including the names of the ceding insurers, the nature of the risks being assumed, and the maximum amounts, purpose, nature, and interrelationships of the various transactions required to effectuate the insurance securitization; (B) the investment strategy of the SPRV and a representation that (i) the investment strategy complies with the investment requirements set forth in this Article and (ii) includes investment practices or other provisions to preserve asset values that will facilitate attainment of full funding during the term of the securitization with assets that can be monetized in response to a triggering event without a substantial loss in value; (C) a description of the method by which losses covered by the SPRV contract that may develop after the termination of the contract period are to be addressed under the provisions of the SPRV contract; and (D) a representation that the trust agreement and the trusts holding assets that secure the obligations of the SPRV under the SPRV contract and the SPRV contract with the ceding insurers in connection with the contemplated insurance securitization will be structured in accordance with the requirements set forth in this Article. (b) The Director may not approve the application or issue a limited certificate of authority until he or she has found that the proposed plan of operation provides a reasonable expectation of a successful operation, based on the proposed SPRV organizer, directors, and officers being of known good character and that there is no good reason to believe that they are affiliated, directly or indirectly, through ownership, control, management, reinsurance transactions, or other insurance or business relations with any person or persons known to have been involved in the improper manipulation of assets, accounts or reinsurance. (c) Upon approval by the Director of the application and the issuance of a limited certificate of authority, the SPRV may be acquired or formed and, in accordance with the approved plan of operation, the SPRV may enter into contracts and conduct other activities within the parameters set forth in the filed plan of operation. (d) The limited certificate of authority so issued shall state that the SPRV's authorization to be involved in the business of reinsurance is limited to only the reinsurance activities that the SPRV is allowed to conduct under this Article. (e) The SPRV organizer must provide a complete set of the documentation of the insurance securitization to the Director upon closing of the transactions including, but not limited to, an opinion of legal counsel with respect to compliance with this and any other applicable laws as of the effective date of the transaction. Any material change of the SPRV's plan of operation described in items (1) through (8) of subsection (a) including, but not limited to, the issuance of new securities to continue the securitization activities of the SPRV under this Article after expiration and full satisfaction of the initial securitization transactions, requires prior approval of the Director, however, a change in the counterparty to swap transactions for an existing securitization as allowed under this Article shall not be deemed a material change. Any material change that is not disapproved by the Director in writing within 15 days after its submission shall be deemed approved.

Legislative History

(Source: P.A. 92-124, eff. 7-20-01.)