Section 2410.10  Purpose

The purpose of this Part is to implement Public Act 92-0075, which authorizes the Director to return any statutorily required deposit of securities to an insurance entity, in connection with the applicable administrative dissolution or withdrawal, where necessary to terminate the insurance entity’s existence. This Part sets forth the procedural and filing requirements insurance entities must follow when requesting administrative dissolution or withdrawal of their statutory deposit.  This process will help eliminate the uncertainty regarding the dissolution of insurance entities and release of their statutory deposits.

Section 2410.20  Applicability

This Part is applicable to domestic stock; domestic mutual; reciprocal; assessment legal reserve life; mutual benefit association; burial society; a health maintenance organization (HMO); a limited health service organization (LHSO); or farm mutual, fraternal benefit society or other entities that are granted articles of incorporation or chartered by the Illinois Department of Insurance.

Section 2410.30  Exemption

The requirements of this Part shall not apply to any duly appointed liquidator or receiver by order of a court of proper jurisdiction.

Section 2410.40  Definitions

Administrative Dissolution means the voluntary surrender by an insurance entity of its Certificate of Authority and cancellation of its Articles of Incorporation by the Director of the Illinois Department of Insurance, resulting in termination of the insurance entity’s existence.

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.

Insurance Entity, for purposes of this Part, means any domestic stock; domestic mutual; reciprocal; assessment legal reserve life; mutual benefit association; or burial society who possesses a certificate of authority issued by the Director pursuant to the Code [215 ILCS 5]; a health maintenance organization (HMO) who possesses a certificate of authority issued by the Director pursuant to Sections 2-1 and 2-2 of the Health Maintenance Act [125 ILCS 125/2-1 and 2-2] and a limited health maintenance organization (LHSO) who possesses a certificate of authority issued by the Director pursuant to Sections 2001 and 2002  of the Limited Health Service Organization Act [215 ILCS 130/2001 and 2002]; or farm mutual, fraternal benefit societies or other entities that are granted articles of incorporation or chartered by the Illinois Department of Insurance.

Section 2410.50  Initial Administrative Dissolution or Withdrawal Filing Requirements

The following documents must be filed by the insurance entity with the Director in order to initiate the administrative dissolution process:

a)         A written request for dissolution; or, in the case of an HMO or LHSO, a request for withdrawal of statutory deposit;

b)         Except in the case of a non-domestic HMO or LHSO, a plan of dissolution, as described in Section 2410.60 of this Part, which must be certified by an officer of the insurance entity; a non-domestic HMO or LHSO must submit a certified plan of withdrawal that includes the information described in Section 2410.60(a)(1), (2), (3), (5) and (6) with respect to its Illinois operations;

c)         An official written instrument in which an agreement or decision was made to dissolve the insurance entity, as follows:

1)         A lawful resolution of the Board of Directors of the insurance entity surrendering its Certificate of Authority and requesting cancellation of the Articles of Incorporation by the Director; or

2)         A lawful resolution from the governing body of a mutual benefit association, fraternal benefit society or burial society surrendering the insurance entity’s Certificate of Authority and requesting cancellation of the Articles of Incorporation; or

3)         A lawful resolution from the governing body of an HMO or an LHSO, surrendering its Certificate of Authority; or

4)         In the case of an HMO or LHSO, an administrative order issued by the governmental officer responsible for issuing the original organizational documents.

d)         Any other documentation or information requested by the Director.

Section 2410.60  Plan of Dissolution or Withdrawal of Statutory Deposit

a)         The Director must first approve the plan of dissolution before further action can be taken by the insurance entity to voluntarily dissolve.  The Director shall consider the following elements:

1)         The disposition of insurance contracts and claimant actions;

2)         The status of any pending litigation;

3)         The payment of corporate obligations;

4)         The intended disposition of assets, including the statutory deposit being held by the Director;

5)         The name and forwarding address for each of the final officers and/or directors; and

6)         The date on which the company terminated its last policy or contract obligation and the method(s) by which they were terminated.

b)         Upon the written approval of the Director, the insurance entity shall effectuate the plan of dissolution or withdrawal and meet the final filing requirements of Section 2410.70(a) of this Part before the statutory deposit may be released by the Director pursuant to Section 2410.70(b) of this Part.

Section 2410.70 Final Filing Requirements

a)         Once the plan of dissolution or withdrawal has been effectuated, the insurance entity shall submit the following documents to the Director:

1)         Certification of the completion of such portions of the plan as may be reasonably expected, pending release of the statutory security deposit and, except for an HMO or an LHSO, cancellation of the Articles of Incorporation;

2)         Certification that there are no outstanding creditors, policyholders, enrollees, certificate holders, or enrollee/member obligations in effect that will require the use or maintenance of the statutorily required deposit and that, if the insurance entity is an HMO or LHSO, it currently does not and has no plans to engage in the business of insurance in this State;

3)         Most current balance sheet; 

4)         Original Certificate of Authority and/or, except for an HMO or LHSO, Articles of Incorporation; or an Affidavit of the loss of the original documents, submitted by a final officer of the insurance entity;

5)         Agreement for Assumption of Liabilities, if any, signed by the party who is to receive the security deposit.

b)         At such time as the Director is satisfied that the plan of dissolution or withdrawal, as approved, has been carried out as far as may be reasonably expected, and the documents required in Section 2410.70(a) have been filed, the statutory deposit may be released in accordance with the direction given in a certified Board Resolution pursuant to 50 Ill. Adm. Code 904.20.

Section 2410.80  Administrative Dissolution

Upon receipt of the documents identified in Section 2410.70(a) of this Part, the Director may cause an insurance entity to be administratively dissolved, except in the case of an HMO or LHSO.