Illinois General Assembly - Illinois Compiled Statutes

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215 ILCS 5/179A-5

(215 ILCS 5/179A-5)

Sec. 179A-5.

Purpose.

This Article is adopted to provide a basis for the
creation of protected cells by a domestic insurer
as one means of accessing alternative sources of capital and achieving the
benefits of insurance securitization.  Investors in fully funded insurance
securitization transactions provide funds that are available to pay the
insurer's insurance obligations or to repay the investors or both.  The
creation of protected cells is intended to be a means to achieve more
efficiencies in conducting insurance securitizations.

Under the
terms of the typical debt instrument underlying an insurance securitization
transaction, prepaid
principal is repaid to the investor on a specified maturity date with interest,
unless a trigger event
occurs.  The insurance securitization proceeds secure both the protected
cell company's insurance obligations if a trigger event occurs,
as well as the
protected cell company's obligation to repay the insurance
securitization investors if a trigger event
does not occur. Insurance securitization transactions have
been performed
through alien companies
in order to utilize efficiencies available to alien companies that are not
currently available to
domestic companies.  This Article is adopted in order  to  create more
efficiency in conducting
insurance securitization,
to allow domestic companies easier access   to alternative sources of capital,
and to promote the
benefits of insurance securitization generally.

(Source: P.A. 91-278, eff. 7-23-99; 92-74, eff. 7-12-01.)