SB1377 EnrolledLRB101 05283 SMS 50296 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 Director shall hold a public
12hearing if one is requested by the dividing company. A hearing
13conducted under this Section shall be conducted in accordance
14with Article 10 of the Illinois Administrative Procedure Act.
15    (b) The Director shall approve a plan of division unless
16the Director finds that:
17        (1) the interest of any class of policyholder or
18    shareholder of the dividing company will not be properly
19    protected;
20        (2) each new company created by the proposed division,
21    except a new company that is a nonsurviving party to a
22    merger pursuant to subsection (b) of Section 156, would be
23    ineligible to receive a license to do insurance business in

 

 

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

 

 

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

 

 

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1advance of its adoption or submission of a plan of division,
2shall be confidential and shall be subject to the same
3protection and treatment in accordance with Section 131.14d as
4documents and reports disclosed to or filed with the Director
5pursuant to Section 131.14b until such time, if any, as a
6notice of the hearing contemplated by subsection (a) is issued.
7    (g) From and after the issuance of a notice of the hearing
8contemplated by subsection (a), all business, financial, and
9actuarial information that the domestic stock company requests
10confidential treatment, other than the plan of division, shall
11continue to be confidential and shall not be available for
12public inspection and shall be subject to the same protection
13and treatment in accordance with Section 131.14d as documents
14and reports disclosed to or filed with the Director pursuant to
15Section 131.14b.
16    (h) All expenses incurred by the Director in connection
17with proceedings under this Section, including expenses for the
18services of any attorneys, actuaries, accountants, and other
19experts as may be reasonably necessary to assist the Director
20in reviewing the proposed division, shall be paid by the
21dividing company filing the plan of division. A dividing
22company may allocate expenses described in this subsection in a
23plan of division in the same manner as any other liability.
24    (i) If the Director approves a plan of division, the
25Director shall issue an order that shall be accompanied by
26findings of fact and conclusions of law.

 

 

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1    (j) The conditions in this Section for freeing one or more
2of the resulting companies from the liabilities of the dividing
3company and for allocating some or all of the liabilities of
4the dividing company shall be conclusively deemed to have been
5satisfied if the plan of division has been approved by the
6Director in a final order that is not subject to further
7appeal.
8(Source: P.A. 100-1118, eff. 11-27-18.)