TITLE 50: INSURANCE
CHAPTER I: DEPARTMENT OF INSURANCE
SUBCHAPTER g: INSURANCE HOLDING COMPANY SYSTEMS
PART 655 PRIOR NOTIFICATION OF DIVIDENDS ON COMMON STOCK AND OTHER DISTRIBUTIONS

Section 655.10 Purpose

Section 655.20 Definitions

Section 655.30 Prior Notification of Dividends and Other Distributions

Section 655.40 Penalties

Section 655.50 Severability Provision

Section 655.ILLUSTRATION A Form D-2

Section 655.ILLUSTRATION A Form D-2

TITLE 50: INSURANCE
CHAPTER I: DEPARTMENT OF INSURANCE
SUBCHAPTER g: INSURANCE HOLDING COMPANY SYSTEMS
PART 655 PRIOR NOTIFICATION OF DIVIDENDS ON COMMON STOCK AND OTHER DISTRIBUTIONS
SECTION 655.10 PURPOSE

 

Section 655.10  Purpose

 

The purpose of this Part is to describe that information which shall be provided to the Director by a domestic company in order:

 

a)         to notify the Director of all dividends and distributions pursuant to Section 131.16 of the Illinois Insurance Code [215 ILCS 5/131.16]; and

 

b)         to notify the Director of all extraordinary dividends and distributions pursuant to Section 131.20a(2) of the Illinois Insurance Code [215 ILCS 5/131.20a(2)].

TITLE 50: INSURANCE
CHAPTER I: DEPARTMENT OF INSURANCE
SUBCHAPTER g: INSURANCE HOLDING COMPANY SYSTEMS
PART 655 PRIOR NOTIFICATION OF DIVIDENDS ON COMMON STOCK AND OTHER DISTRIBUTIONS
SECTION 655.20 DEFINITIONS

 

Section 655.20  Definitions

 

Terms found in this Part, other than those defined in this Section, have the meanings ascribed in Section 131.1 of the Insurance Code.

 

"Code" means the Illinois Insurance Code [215 ILCS 5].

 

"Department" means the Illinois Department of Insurance.

 

"Director" means the Director of the Illinois Department of Insurance.

 

"Executive officer" means any individual charged with active management and control in a senior executive capacity as described by the company's by-laws (including a president, senior vice president, treasurer, secretary, controller, and any other individual regardless of title performing functions the same as those performed by the foregoing officers).

 

(Source:  Amended at 41 Ill. Reg. 7586, effective June 19, 2017)

TITLE 50: INSURANCE
CHAPTER I: DEPARTMENT OF INSURANCE
SUBCHAPTER g: INSURANCE HOLDING COMPANY SYSTEMS
PART 655 PRIOR NOTIFICATION OF DIVIDENDS ON COMMON STOCK AND OTHER DISTRIBUTIONS
SECTION 655.30 PRIOR NOTIFICATION OF DIVIDENDS AND OTHER DISTRIBUTIONS

 

Section 655.30  Prior Notification of Dividends and Other Distributions

 

a)         Notice

 

1)         Ordinary Dividends.  Any domestic company required, pursuant to Code Section 131.16, to notify the Director of a dividend or other distribution to its shareholders shall notify the Director of the proposed dividend or distribution in writing within 5 business days following declaration and no less than 10 business days prior to payment.  The 10 day period shall begin the day the notice is received by the Department.  The notice shall be deemed incomplete unless all the information required by this Part has been included.

 

2)         Extraordinary Dividends or Other Extraordinary Distributions.  Any domestic company required, pursuant to Code Section 131.20a, to notify the Director of an extraordinary dividend or other extraordinary distribution to its shareholders shall notify the Director of the proposed dividend or distribution in writing within 5 business days following declaration and no less than 30 days prior to payment.  The 30 day period shall begin the day the notice is received by the Department.  The notice shall be deemed incomplete unless all the information required by this Part has been included in the notice.

 

3)         Proof of Receipt.  Certified Mail confirmation, confirmation from a commercial delivery service, or the date stamped upon the notice by the Department acknowledging receipt of the filing required by this Part shall serve as proof of the date of receipt of the filing.

 

b)         The domestic company shall provide to the Director the information required by, and in the format specified by, Illustration A, Form D-2.

 

c)         The notification shall be directed to the Deputy Director of the Financial-Corporate Regulatory Division of the Illinois Department of Insurance, Springfield, Illinois 62767.

 

d)         In the case of a proposed payment of extraordinary dividends pursuant to Code Section 131.20a, the Director may require supplemental information in addition to the information required by Illustration A, Form D-2. Supplemental information required by the Director may include but is not limited to:  a statement in narrative form of the effects of the proposed dividends on the company's most recent Management Discussion and Analysis; a statement of financial position; a statement of operations; a statement of cash flows; a statement of changes in capital and surplus accounts; a statement in schedule form of risk-based capital requirements; and a statement of significant trends in reinsurance programs, premium volume and/or mix, losses, benefits and general expenses.

 

e)         For the purposes of the Department's review of proposed dividend payments, the factors set forth in Code Section 131.20(2) are not intended to be an exhaustive list.  In determining the adequacy and reasonableness of an insurer's surplus, no single factor shall be controlling.  Instead, the Director will consider the net effect of all these factors plus any other factors bearing on the financial condition of the insurer.  In comparing the surplus maintained by other insurers, the Director will consider the extent to which each of the factors varies from company to company and, in determining the quality and liquidity of investments in subsidiaries, the Director will consider the individual subsidiary and may discount or disallow its valuation to the extent that the individual investments warrant.

 

(Source:  Amended at 41 Ill. Reg. 7586, effective June 19, 2017)

TITLE 50: INSURANCE
CHAPTER I: DEPARTMENT OF INSURANCE
SUBCHAPTER g: INSURANCE HOLDING COMPANY SYSTEMS
PART 655 PRIOR NOTIFICATION OF DIVIDENDS ON COMMON STOCK AND OTHER DISTRIBUTIONS
SECTION 655.40 PENALTIES

 

Section 655.40  Penalties

 

Failure of a company to timely file the report required by this Part and Section 131.16 or 131.20a of the Illinois Insurance Code shall subject the company to the provisions of Section 131.16, 131.24 and 403A of the Illinois Insurance Code [215 ILCS 5/131.16, 131.24 and 403A].

TITLE 50: INSURANCE
CHAPTER I: DEPARTMENT OF INSURANCE
SUBCHAPTER g: INSURANCE HOLDING COMPANY SYSTEMS
PART 655 PRIOR NOTIFICATION OF DIVIDENDS ON COMMON STOCK AND OTHER DISTRIBUTIONS
SECTION 655.50 SEVERABILITY PROVISION

 

Section 655.50  Severability Provision

 

If any Section or portion of a Section of this Part or the applicability of that Section or portion of a Section to any person or circumstance is held invalid by a court, the remainder of the Part or the applicability of the provision to other persons or circumstances shall not be affected by that determination of invalidity.

 

(Source:  Added at 41 Ill. Reg. 7586, effective June 19, 2017)

Section 655.ILLUSTRATION A Form D-2

TITLE 50: INSURANCE
CHAPTER I: DEPARTMENT OF INSURANCE
SUBCHAPTER g: INSURANCE HOLDING COMPANY SYSTEMS
PART 655 PRIOR NOTIFICATION OF DIVIDENDS ON COMMON STOCK AND OTHER DISTRIBUTIONS
SECTION 655.ILLUSTRATION A FORM D-2

 

Section 655.ILLUSTRATION A   Form D-2

 

 

FORM D-2

 

 

 

 

GENERAL INSTRUCTIONS

 

 

 

Signature and Certification.

 

 

 

 

For purposes of filing the Form D-2, the signature and certification required by this Part shall be signed by an executive officer of the insurer.

 

 

 

 

 

 

PRIOR NOTICE OF DIVIDENDS ON COMMON

STOCK AND OTHER DISTRIBUTIONS

 

 

 

Filed with the Illinois Department of Insurance

 

 

 

 

By

 

 

 

 

 

 

 

 

Name of Domestic Company

 

 

 

 

On behalf of the Following Insurance Companies:

 

 

 

 

Name

Address

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Date

 

, 20

 

 

 

 

 

 

Name, Title, Address and Telephone Number of the Individual to Whom Notices and Correspondence Concerning this Request Should be Addressed:

 

 

 

 

 

 

 

 

 

 

Item 1. Type of Dividend or Distribution.

 

Identify the dividend or distribution as a dividend or other distribution subject to Code Section 131.16 or as an extraordinary dividend or other extraordinary distribution as defined in Code Section 131.20a(2).

 

Item 2. The amount of the dividend or other distribution and the date established for payment.  The proposed date must be consistent with requirements for receipt of notice by the Department, as specified in Section 655.30(a).

 

Item 3. A statement as to whether the dividend or other distribution is to be in cash or other property, and, if in property, a description of the property, its cost, statutory carrying value, and the fair market value of the property, together with an explanation of the basis for valuation.

 

Item 4. The amounts and payment dates of all dividends paid within the period of 12 consecutive months ending on the date fixed for payment of the proposed dividend for which notification is being given or approval is being sought.

 

Item 5. An illustration of the calculation of the extraordinary dividend limit set by Code Section 131.20a.  Dividends that have been or will be paid in other than cash shall be valued for the purposes of the calculation at the greater of market or statutory carrying value of the asset.

 

Item 6. If the notice is filed for an extraordinary dividend pursuant to Code Section 131.20a, the following items must also be included:

 

a)        A balance sheet and statement of income for the period intervening from the last annual statement filed with the Director and the end of the month preceding the month in which the prior notification of the dividend is submitted.  Indicate the amount of all unrealized capital gains included in unassigned funds.

 

b)        A brief statement as to the effect of the proposed dividend upon the insurer's surplus and the reasonableness of surplus in relation to the insurer's outstanding liabilities and the adequacy of surplus relative to the insurer's financial position.

 

c)        A calculation of the insurer's risk based capital level as of the most recently filed financial statement (quarterly or annual), adjusted to show the effect of the proposed dividend or other distribution.

 

Pursuant to the requirements of Code Section 131.16 (or Sections 131.6 and 131.20a, in the case of

extraordinary dividends),

 

has caused this

notice to be duly signed on its behalf in the City of

 

and State of

 

on the

 

day of

 

, 20

 

.

 

 

 

 

 

 

 

 

Name of Requesting Insurer

 

 

 

 

 

By

 

 

 

 

 

 

Type or print

 

 

 

(Name)

(Title)

 

 

 

 

 

 

Attest:

 

 

 

 

 

 

 

 

 

(Signature of Officer)

 

 

 

 

 

 

 

 

(Title)

 

 

 

 

 

CERTIFICATION

 

 

 

 

 

The undersigned deposes and says that he or she  had duly executed the attached notice dated

 

, 20

 

, for and on behalf of

 

; that he or she 

 

(Name of Insurer)

 

is the

 

of the company and that he or she  is familiar 

(Title of Officer)

with the instrument and its contents, and that the facts set forth in that instrument are true to the best of his or her knowledge, information and belief.

 

(Signature)

 

 

(Type or print name beneath)

 

 

(Source:  Amended at 41 Ill. Reg. 7586, effective June 19, 2017)