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in force July 1, 1899, be and the same is hereby amended so as to read as follows: § 12a. That in determining the condition of any corporation, Company, association or aggregation of individuals transacting any business of casualty insurance in this State, whether organized within or without this State, the Department of Trade and Commerce, herein called “Department” shall charge as liabilities all outstanding indebtedness and the premium reserve on policies in force equal to the unearned portions of the gross premiums charged for covering the risks computed on each respective risk from the date of issuance of the policy; provided, however, that this bill shall not apply to any such corporation, company or association operating in this State under the provisions of an Act entitled, “An Act to incorporate companies to do the business of life or accident insurance of this State and of other states doing business in this State, and to repeal a certain Act therein named, and providing and fixing the punishment for violation of the provisions thereof,” approved June 22, 1893, in force July 1, 1893. There shall also be charged as a liability to each such corporation, company, association or aggregation of individuals which has issued any policy of liability, workmen’s compensation or other casualty insurance, additional reserves which shall be fully adequate to meet all liabilities not otherwise provided for and shall be computed in a manner and on a basis conforming as nearly as may be practicable to the general practice throughout the United States, as far as the same shall be prescribed or approved by the Department. Except as otherwise ordered, the liability for such additional reserves shall be determined and charged as follows: 1. For all liability suits being defended under policies written more than : (a) Ten years prior to the date as of which the statement is made, one thousand five hundred dollars for each suit. (b) Five and less than ten years prior to the date as of which the statement is made, one thousand dollars for each suit. (c) Three and less than five years prior to the date as of which the statement is made, eight hundred and fifty dollars for each suit. 2. For all liability policies written during the three years immediately preceding the date as of which the statement is made, such reserve shall be sixty per centum of the earned liability premiums of each of such three years less all loss and loss expense payments made under liability policies written in the corresponding years; but in any event, such reserve shall, for the first of such three years, be not less than seven hundred and fifty dollars for each outstanding liability suit on said year's policies. 3. For all compensation claims under policies written more than three years prior to the date as of which the statement is made, the present values at four per centum interest of the determined and the estimated future payments. 4. For all compensation claims under policies written in the three years immediately preceding the date as of which the statement is made, such reserve shall be sixty-five per centum of the earned compensation premiums of each of such three years, less all loss and loss expense payments made in connection with such claims under policies written in the corresponding years; but in any event in the case of the first year of any such three-year period such reserve shall not be less than the present value at four per centum interest of the determined and the estimated unpaid compensation claims under policies written during such year. 5. The term “earned premiums” as used herein shall include gross premiums charged on all policies written, including all determined excess and additional premiums on policies cancelled, and less unearned premiums on policies in force, and in case of companies or associations or aggregations of individuals transacting business upon the participating plan, less any portion of the premium so charged which is returned or credited to policy-holders, a schedule of which return or credit has been filed with and has not been disapproved by the Department. 6. The term “compensation” as used in this Act shall relate to all insurances effected by virtue of statutes providing compensation to employees for personal injuries irrespective of fault of the employer. The term “liability” shall relate to all insurance, except compensation in urance, against loss or damage from accident to or injuries suffered by an employee or other person and for which the insurer is liable. 7. The terms “loss payments” and “loss expense payments” as used herein shall include all payments to claimants, including payments for medical and surgical attendance, legal expenses, salaries and expenses of investigators, adjusters and field men, rents, stationery, telegraph and telephone charges, postage, salaries and expenses of office employees, home office expenses, and all other payments made on account of claims, whether such payments shall be allocated to specific claims or unallocated. 8. All unallocated liability loss expense payments made in a given calendar year subsequent to the first four years in which an insurer has been issuing liability policies shall be distributed as follows: Thirtyfive per centum shall be charged to the policies written in that year, forty per centum to the policies written in the preceding year, ten per centum to the policies written in the second year preceding, ten per centum to the policies written in the third year preceding and five per centum to the policies written in the fourth year preceding, and such payments made in each of the first four calendar years in which an insurer issues liability policies shall be distributed as follows: In the first calendar year one hundred per centum shall be charged to the policies written in that year, in the second calendar year fifty per centum shall be charged to the policies written in that year and fifty per centum to the policies written in the preceding year, in the third calendar year forty per centum shall be charged to the policies written in that year, forty per centum to the policies written in the preceding year, and twenty per centum to the policies written in the second year preceding, and in the fourth calendar year thirty-five per centum shall be charged to the policies written in that year, forty per centum of the policies written in the preceding year, fifteen per centum to the policies written in the second year preceding, and ten percentum to the policies written in the third year preceding, and a schedule showing such distribution shall be included in the annual statement. 9. All unallocated compensation loss expense payments made in a given calendar year subsequent to the first three years in which an insurer has been issuing compensation policies shall be distributed as follows: Forty per centum shall be charged to the policies written in that year, forty-five per centum to the policies written in the preceding year, ten per centum to the policies written in the second year preceding and five per centum to the policies written in the third year preceding, and such payments made in each of the first three calendar years in which an insurer issues compensation policies shall be distributed as follows:. In the first calendar year one hundred per centum shall be charged to the policies written in that year, in the second calendar year fifty per centum shall be charged to the policies written in that year and fifty per centum to the policies written in the preceding year, in the third calendar year forty-five per centum shall be charged to the policies written in that year, forty-five per centum to the policies written in the preceding year and ten per centum to the policies written in the second year preceding, and a schedule showing such distribution shall he included in the annual statement. 10. Whenever, in the judgment of the Department, the liability or compensation loss reserves of any insurer under its supervision, calculated in accordance with the foregoing provisions, are inadequate, the Department may, in its discretion, require such insurer to maintain reserves based upon estimated individual claims. 11. Each insurer that writes liability or compensation policies shall include in the annual statement required by law a schedule of its experience thereunder in such form as the Department may prescribe. § 2. The title of said Act shall be amended to read as follows: “An Act concerning the business of casualty insurance.” APPROVED June 30, 1919. CONSOLIDATION AND REINSURANCE. Words and phrases defined. § 9. Between resident and non

resident companies. Authority outlined. § 10. Adjustment of State deposits.

§ 1 § 2 § 3. Limitations. § 11. Certificate of costs filed with § 4. Submission of proposition. Director of Trade and Commerce. § 5. Voting—requisites. § 12. Compensations. § 6. Certified copy, etc. filed with Director of Trade and Com- $ 13. Penalties. merce—approval required. § 14. Pending actions. $ 7. Resident fire and casualty companies. § 15. Repeal.

$ 8. Resident fraternal benefit companies.

(House, BILL No. 527. APPROVED JUNE 28, 1919.) AN ACT relating to the consolidation and reinsurance of insurance companies, associations and societies. SECTION 1. Be it enacted by the People of the State of Illinois, represented in the General Assembly: That the word “company” when used in this Act shall include any corporation, association or society authorized to transact the business of insurance on the stock, mutual, stock and mutual, assessment or fraternal plan; the word “member” shall mean the insured under a policy or certificate issued by any company other than a purely stock company; the words “stock company” shaft mean a company whose directors are elected by the stockholders alone; the words “stock and mutual company” shall mean a company whose directors are elected by its stockholders and policy-holders; the words “mutual company” shall mean a company all of whose directors are elected by its policy-holders; a “resident companv” shall mean a company incorporated in this State; a “non-resident company” shall mean a company incorporated in some other state or territory of the United States; a “consolidated company” shall mean a company formed by the consolidation of two or more other companies; a “reinsured company” shall mean a company which reinsures its risks, in whole or in part, in another company; a “reinsuring company” shall mean a company which accepts, by transfer to itself, the risks, in whole or in part, of another company. § 2. Upon complying with the provisions of this Act, any resident company is hereby authorized and empowered to: (1) Consolidate with any other resident company: (2) Reinsure its risks, in whole or in part, with any other resident company; (3) Reinsure the risks, in whole or in part, of any other resident company; (4) Consolidate with any non-resident company which is authorized to engage in the insurance business in this State if such consolidation is authorized by the laws of the state or territory in which such non-resident company is organized; (5) Reinsure its risks in whole or in part with any non-resident company which is authorized to engage in the insurance business in this State: (6) Reinsure the risks in whole or in part of any non-resident company. § 3. Nothing in this Act contained shall be construed to enlarge the charter power of any insurance company, nor to authorize any insurance company to engage in any kind of insurance business not authorized by its charter, nor to authorize any non-resident insurance company to engage in any kind of insurance business in this State not covered by its certificate of authority to do business in this State; but nothing in this Act contained shall prevent any life company from reinsuring all or any portion of an individual risk in any insurance Company authorized to transact business in this State and receiving credit for the reserve on any such reinsured portion, nor prevent any other company from reinsuring all or any portion of an individual risk in any insurance company, in the manner as is now or may hereafter be authorized by law, and receiving credit for the reserve on any such reinsured portion. § 4. When any resident company shall propose to enter into articles of consolidation or a contract of reinsurance with any other company, the board of directors, trustees, or other governing body. shall submit the question of such consolidation or reinsurance to the stockholders or members, or both, as the case may be, of such com: pany, at any regular, annual or periodic meeting thereof, provided a full, true and correct copy of such proposed contract shall, together with notice, stating the time, place and purposes for such meeting shall be delivered personally, or deposited in the post office at least thirty days prior to the time fixed for such meeting, addressed to each stockholder, or member, or both, as the case may be, at his last post

office address appearing on the records of the company. Or a special

meeting may be called by the board of directors, trustees or other governing body, or a majority thereof, by delivering to each stockholder, or member, or both a copy of such proposed contract, together with a thirty days’ notice, as provided for in the submission of such question of consolidation, merger or reinsurance at any regular an: nual or periodic meeting. 5. At any such meeting of the stockholders or members, of both, as the case may be, held pursuant to notice, or specially called. for the purpose of entering into any such articles of consolidation of contract of reinsurance, the stockholders or members may vote in per son or by proxy, each stockholder to be entitled to one vote for each share of stock held by him and each member to one vote for each one thousand dollars of insurance held by him: Provided, however, that each member holding less than one thousand dollars of insurance shall be entitled to one vote; and votes representing two-thirds of all the stock in the case of purely stock companies, or two-thirds of all the stock, if any, and of two-thirds of all the votes cast by members reresented at the meeting in person or by proxy in the case of other companies, shall be necessary for the adoption of such proposed articles of consolidation or contract of reinsurance. In the case of a consolidation the articles thereof shall contain the proposed charter of articles of association of the consolidated company, and such other par. ticulars as may be necessary to explain and make manifest the objects and purposes of the consolidated company and the manner in which it is to be conducted; and the approval of such articles of consolidation shall constitute an approval of such proposed charter of articles of association. § 6. Upon the adoption of the articles of consolidation or contract of reinsurance, as provided for herein, said proposed articles of consolidation or contract of reinsurance shall be duly executed by the president and attested by the secretary, or the executive officers coresponding thereto, under the corporate seal of each of the consolidating or contracting companies, and thereupon a certified copy of such articles of consolidation or contract of reinsurance, together with a otificate of its adoption, as provided for herein, verified by the as: fidavits of such officers and under the scal of each of said companies. shall be submitted to the Director of Trade and Commerce for his approval. The Director of Trade and Commerce shall thereupon con: sider such articles of consolidation or contract of reinsurance, and if satisfied that the same is in accordance with the provisions of this Act.

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