by borrowing money at an interest rate either (1) at a fixed rate not exceeding the corporate base rate as reported by the largest bank (measured by assets) with its head office located in Chicago, Illinois, in effect on the first business day of the month in which the loan document is executed, plus 3% per annum or (2) at a variable rate equal to the corporate base rate determined on the first business day of each month during the term of the loan plus 2% per annum. In no event shall the variable interest rate for any month exceed the initial rate for the loan or advance by more than 10% per annum. The insurer shall elect at the time of execution of the loan or advance agreement whether the interest rate is to be fixed or floating for the term of the agreement. An agreement issued after the insurer has received its Certificate of Authority shall first be approved by resolution of the Board of Directors and the Director. The agreement shall provide that such loan and the interest thereon shall be repaid only out of the surplus of such company in excess of the greater of the original or minimum surplus required of such company by Section 43. Such excess of surplus shall be calculated upon the fair market value of the assets of the company, and such guaranty loan fund shall constitute and be enforceable as a liability of the company only as against such excess of surplus. Any unpaid balance of such guaranty fund loan shall be reported in the annual statement to be filed with the Director. Repayment of principal or payment of interest may be made only with the approval of the Director when he or she is satisfied that the financial condition of the company warrants that action, but approval may not be withheld if the company shall have and submit satisfactory evidence of surplus of not less than the amount stipulated in the repayment of principal or interest payment clause of the agreement.

advances provided for herein, establish and maintain a guaranty capital divided into shares having a par value of not more than $100 nor less than $5 each. The guaranty capital shall be applied to the payment of losses only when the company has exhausted its assets in excess of unearned premium reserve and other liabilities; and when thus impaired the directors may make good the whole or any part of it by assessment on its policyholders as provided for in Section 60. Said guaranty capital may, by vote of the board of directors of the company and the written consent of the Director be reduced or retired by any amount, provided that the net surplus of the company together with the remaining guaranty capital shall equal or exceed the amount of surplus required by Section 43, and due notice of such proposed action on the part of the company shall be published in a newspaper of general circulation, approved by the Director, not less than once each week for at least 4 consecutive weeks before such action is taken. No company with a guaranty capital, which has ceased to do business, shall divide any part of its assets or guaranty capital among its shareholders unless it has paid or it has otherwise been released from its policy obligations. The holders of the shares of such guaranty capital shall be entitled to interest either (1) at a fixed rate not exceeding the corporate base rate as reported by the largest bank (measured by assets) with its head office located in Chicago, Illinois, in effect on the first business day of the month in which the loan document is executed, plus 3% per annum or (2) at a variable rate equal to the corporate base rate determined on the first business day of each month during the term of the loan plus 2% per annum. In no event shall the variable interest rate for any month exceed the initial rate for the loan or advance by more than 10% per annum. The insurer shall elect at the time of issuance of the shares whether the interest rate is to be fixed or floating for the term of the agreement. Such interest shall be payable from the surplus in excess of the surplus required of the company by Section 43. In the event of dissolution and liquidation of such a company after the retirement of all outstanding obligations of the company, the holders of such shares of guaranty capital shall be entitled to a preferential right in the assets of such company equal to the par value of their share of such guaranty capital before any distribution to members.