# 50 Ill. Adm. Code 205.40: Section 205.40 Requirements

> Illinois · Regulations · In force

URL: https://www.frixlaw.com/law-library/statutes/STATE_IL_IAC_T50_P205_S205_40

## Section

- **Citation:** 50 Ill. Adm. Code 205.40
- **Heading:** Section 205.40 Requirements
- **Jurisdiction:** Illinois
- **Kind:** Regulations
- **Status:** In force
- **Text as of:** August 14, 2026
- **Source:** Compiled text
- **Location:** Illinois Administrative Code / Title 50 INSURANCE / CHAPTER I: DEPARTMENT OF INSURANCE / Part 205 MUNICIPAL BOND INSURANCE / Section 205.40 Requirements

## Text

Section 205
Section 205.40  Requirements
a)         Any direct insurer issuing contracts insuring municipal bonds
must:
1)         be authorized to write the kinds of business defined in Class
2(g) and 2(h) of Section 4 of the Illinois Insurance Code (Ill. Rev. Stat.
1985, ch. 73, par. 616), and
2)         have a policyholders' surplus and contingency reserve of not
less than $50,000,000 as shown by its last annual statement on file with the
Director.
b)         Any insurer issuing contracts insuring municipal bonds shall
establish a contingency reserve which shall consist of allocations of sums
representing fifty percent (50%) of the earned premiums on policies insuring
municipal bonds.  Allocations to such reserve made during each calendar year
shall be maintained for a period of at least 240 months, except that
withdrawals may be made by the company in any year and to the extent that the
actual incurred losses on policies insuring municipal bonds exceed thirty-five
percent (35%) of the earned premiums thereon or, notwithstanding the foregoing,
withdrawals may be made by the company in any year and to the extent that the
contingency reserve equals or exceeds one half of one percent (½%) of the
cumulative net liability.  No such release shall be made without written notice
to the Director.

## Nearby sections

- [50 Ill. Adm. Code 205.10 Section 205.10  Authority](https://www.frixlaw.com/law-library/statutes/STATE_IL_IAC_T50_P205_S205_10.md)
- [50 Ill. Adm. Code 205.20 Section 205.20  Purpose](https://www.frixlaw.com/law-library/statutes/STATE_IL_IAC_T50_P205_S205_20.md)
- [50 Ill. Adm. Code 205.30 Section 205.30  Definitions](https://www.frixlaw.com/law-library/statutes/STATE_IL_IAC_T50_P205_S205_30.md)
- [50 Ill. Adm. Code 205.40 Section 205.40  Requirements](https://www.frixlaw.com/law-library/statutes/STATE_IL_IAC_T50_P205_S205_40.md)
- [50 Ill. Adm. Code 205.50 Section 205.50  Limitations and Restrictions](https://www.frixlaw.com/law-library/statutes/STATE_IL_IAC_T50_P205_S205_50.md)
- [50 Ill. Adm. Code 205.60 Section 205.60  Financial Statements](https://www.frixlaw.com/law-library/statutes/STATE_IL_IAC_T50_P205_S205_60.md)
- [50 Ill. Adm. Code 205.70 Section 205.70  Reinsurance](https://www.frixlaw.com/law-library/statutes/STATE_IL_IAC_T50_P205_S205_70.md)
- [50 Ill. Adm. Code 205.80 Section 205.80  Collateral Security](https://www.frixlaw.com/law-library/statutes/STATE_IL_IAC_T50_P205_S205_80.md)
- [50 Ill. Adm. Code 205.90 Section 205.90  Applicability of Other Laws](https://www.frixlaw.com/law-library/statutes/STATE_IL_IAC_T50_P205_S205_90.md)

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Source: Frix Law Library, https://www.frixlaw.com/law-library/statutes/STATE_IL_IAC_T50_P205_S205_40. Check the current official text before relying on it. Not legal advice.