Illinois Compiled Statutes 215 ILCS 5 Illinois Insurance Code. Section 131.20

    (215 ILCS 5/131.20) (from Ch. 73, par. 743.20)

    Sec. 131.20. Standards for transactions with affiliates; adequacy of surplus.

    (1) Transactions with their affiliates by companies subject to registration are subject to the following standards:

        (a) the terms are fair and reasonable;

        (a-5) agreements for cost sharing services and

    management shall include such provisions as may be required by rules and regulations issued by the Director;

        (b) charges or fees for services performed are

    reasonable;

        (c) expenses incurred and payment received must be

    allocated to the company in conformity with customary insurance accounting practices consistently applied;

        (d) the books, accounts, and records of each party

    must be so maintained as to clearly and accurately disclose the precise nature and details of the transactions, including accounting information necessary to support the reasonableness of the charges or fees to the respective parties; and

        (e) the company's surplus as regards policyholders

    following any transactions with affiliates or dividends or distributions to securityholders or affiliates must be reasonable in relation to the company's outstanding liabilities and adequate to meet its financial needs.

    (2) For purposes of this Article, in determining whether a company's surplus as regards policyholders is reasonable in relation to the company's outstanding liabilities and adequate to meet its needs, the following factors, among others, may be considered:

        (a) the size of the company as measured by its

    assets, capital and surplus, reserves, premium writings, insurance in force and other appropriate criteria;

        (b) the extent to which the company's business is

    diversified among several lines of insurance;

        (c) the number and size of risks insured in each line

    of business;

        (d) the extent of the geographical dispersion of the

    company's insured risks;

        (e) the nature and extent of the company's

    reinsurance program;

        (f) the quality, diversification, and liquidity of

    the company's investment portfolio;

        (g) the recent past and projected future trend in the

    size of the company's investment portfolio;

        (h) the surplus as regards policyholders maintained

    by companies comparable to the registrant in respect of the factors enumerated in this paragraph;

        (i) the adequacy of the company's reserves;

        (j) the quality of the company's earnings and the

    extent to which the reported earnings include extraordinary items; and

        (k) the quality and liquidity of investments in

    affiliates. The Director may discount any such investment or treat any such investment as a non-admitted asset for purposes of determining the adequacy of surplus as regards policyholders whenever the investment so warrants.

(Source: P.A. 98-609, eff. 1-1-14.)

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Last modified: February 18, 2015