101ST GENERAL ASSEMBLY
State of Illinois
2019 and 2020
HB4372

 

Introduced 1/29/2020, by Rep. Thaddeus Jones

 

SYNOPSIS AS INTRODUCED:
 
215 ILCS 5/35B-25

    Amends the Illinois Insurance Code. In provisions concerning approval of a plan of division of a domestic stock company, removes language limiting the requirements of notice and a public hearing to situations in which the Director of Insurance deems them to be in the public interest or occasions where a public hearing is requested by the dividing company. Requires the Director to hold a public hearing regarding the plan of division. Provides that the dividing company shall give notice of the filing of the plan of division and of the date of the hearing to all policyholders and to each guaranty association and guaranty fund of which the dividing company is a member. Removes a provision that allows the use of proposed assets to support a determination of solvency or adequacy of assets of the new companies created by the division, and a provision treating business, financial, and actuarial information as confidential in order to allow a domestic stock company to make that information available for public inspection.


LRB101 16385 BMS 65763 b

 

 

A BILL FOR

 

HB4372LRB101 16385 BMS 65763 b

1    AN ACT concerning regulation.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4    Section 5. The Illinois Insurance Code is amended by
5changing Section 35B-25 as follows:
 
6    (215 ILCS 5/35B-25)
7    Sec. 35B-25. Plan of division approval.
8    (a) A division shall not become effective until it is
9approved by the Director after reasonable notice and a public
10hearing, if the notice and hearing are deemed by the Director
11to be in the public interest. The dividing company shall give
12notice of the filing of a plan of division and of the date of
13the hearing to all policyholders and to each guaranty
14association and guaranty fund of which the dividing company is
15a member. The Director shall hold a public hearing if one is
16requested by the dividing company. A hearing conducted under
17this Section shall be conducted in accordance with Article 10
18of the Illinois Administrative Procedure Act.
19    (b) The Director shall approve a plan of division unless
20the Director finds that:
21        (1) the interest of any class of policyholder or
22    shareholder of the dividing company will not be properly
23    protected;

 

 

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1        (2) each new company created by the proposed division,
2    except a new company that is a nonsurviving party to a
3    merger pursuant to subsection (b) of Section 156, would be
4    ineligible to receive a license to do insurance business in
5    this State pursuant to Section 5;
6        (2.5) each new company created by the proposed
7    division, except a new company that is a nonsurviving party
8    to a merger pursuant to subsection (b) of Section 156, that
9    will be a member insurer of the Illinois Life and Health
10    Insurance Guaranty Association and that will have policy
11    liabilities allocated to it will not be licensed to do
12    insurance business in each state where such policies were
13    written by the dividing company;
14        (3) the proposed division violates a provision of the
15    Uniform Fraudulent Transfer Act;
16        (4) the division is being made for purposes of
17    hindering, delaying, or defrauding any policyholders or
18    other creditors of the dividing company;
19        (5) one or more resulting companies will not be solvent
20    upon the consummation of the division; or
21        (6) the remaining assets of one or more resulting
22    companies will be, upon consummation of a division,
23    unreasonably small in relation to the business and
24    transactions in which the resulting company was engaged or
25    is about to engage.
26    (c) In determining whether the standards set forth in

 

 

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1paragraph (3) of subsection (b) have been satisfied, the
2Director shall only apply the Uniform Fraudulent Transfer Act
3to a dividing company in its capacity as a resulting company
4and shall not apply the Uniform Fraudulent Transfer Act to any
5dividing company that is not proposed to survive the division.
6    (d) In determining whether the standards set forth in
7paragraphs (3) and , (4), (5), and (6) of subsection (b) have
8been satisfied, the Director may consider all proposed assets
9of the resulting company, including, without limitation,
10reinsurance agreements, parental guarantees, support or keep
11well agreements, or capital maintenance or contingent capital
12agreements, in each case, regardless of whether the same would
13qualify as an admitted asset as defined in Section 3.1.
14    (e) In determining whether the standards set forth in
15paragraph (3) of subsection (b) have been satisfied, with
16respect to each resulting company, the Director shall, in
17applying the Uniform Fraudulent Transfer Act, treat:
18        (1) the resulting company as a debtor;
19        (2) liabilities allocated to the resulting company as
20    obligations incurred by a debtor;
21        (3) the resulting company as not having received
22    reasonably equivalent value in exchange for incurring the
23    obligations; and
24        (4) assets allocated to the resulting company as
25    remaining property.
26    (f) All information, documents, materials, and copies

 

 

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1thereof submitted to, obtained by, or disclosed to the Director
2in connection with a plan of division or in contemplation
3thereof, including any information, documents, materials, or
4copies provided by or on behalf of a domestic stock company in
5advance of its adoption or submission of a plan of division,
6shall be confidential and shall be subject to the same
7protection and treatment in accordance with Section 131.14d as
8documents and reports disclosed to or filed with the Director
9pursuant to Section 131.14b until such time, if any, as a
10notice of the hearing contemplated by subsection (a) is issued.
11    (g) (Blank). From and after the issuance of a notice of the
12hearing contemplated by subsection (a), all business,
13financial, and actuarial information that the domestic stock
14company requests confidential treatment, other than the plan of
15division, shall continue to be confidential and shall not be
16available for public inspection and shall be subject to the
17same protection and treatment in accordance with Section
18131.14d as documents and reports disclosed to or filed with the
19Director pursuant to Section 131.14b.
20    (h) All expenses incurred by the Director in connection
21with proceedings under this Section, including expenses for the
22services of any attorneys, actuaries, accountants, and other
23experts as may be reasonably necessary to assist the Director
24in reviewing the proposed division, shall be paid by the
25dividing company filing the plan of division. A dividing
26company may allocate expenses described in this subsection in a

 

 

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1plan of division in the same manner as any other liability.
2    (i) If the Director approves a plan of division, the
3Director shall issue an order that shall be accompanied by
4findings of fact and conclusions of law.
5    (j) The conditions in this Section for freeing one or more
6of the resulting companies from the liabilities of the dividing
7company and for allocating some or all of the liabilities of
8the dividing company shall be conclusively deemed to have been
9satisfied if the plan of division has been approved by the
10Director in a final order that is not subject to further
11appeal.
12(Source: P.A. 100-1118, eff. 11-27-18; 101-549, eff. 1-1-20.)