SB2513 Summary

• Replaces Illinois Insurance Code Section 59.1 governing conversion of mutual property and casualty insurance companies to stock insurance companies, effective January 1, 2017.

• Requires two-thirds board approval and Director approval of conversion plan; eligible members must vote and approve plan by two-thirds majority at member meeting held 45+ days after notice.

• Establishes mandatory plan provisions including: reasons for conversion, continuation of existing policies, extinguishment of member voting rights and surplus-sharing rights, and allocation of nontransferable subscription rights to eligible members to purchase converted company stock.

• Requires qualified independent expert valuation of converted stock company; eligible members must receive subscription rights allowing them collectively to purchase 100% of stock (excluding employee benefit plans and surplus note holders); provides redemption option for members who don't exercise subscription rights.

• Imposes conflict-of-interest restrictions: directors/officers cannot acquire company stock for 3 years post-conversion except through broker or with Director approval; sets 5% individual shareholder purchase limits; prohibits stock repurchases by company for 2 years; limits director/officer stock sales to 1 year post-conversion.