Full Text of HB2962 98th General Assembly
HB2962enr 98TH GENERAL ASSEMBLY |
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| 1 | | AN ACT concerning regulation.
| 2 | | Be it enacted by the People of the State of Illinois,
| 3 | | represented in the General Assembly:
| 4 | | Section 5. The Illinois Insurance Code is amended by | 5 | | changing Sections 131.1, 131.2, 131.3, 131.4, 131.5, 131.6, | 6 | | 131.8, 131.8a, 131.11, 131.12, 131.12a, 131.13, 131.14, | 7 | | 131.16, 131.17, 131.18, 131.19, 131.20, 131.20a, 131.20b, | 8 | | 131.21, 131.22, 131.23, 131.24, 131.26, 131.27, and 408.3 and | 9 | | by adding Sections 131.9a, 131.14a, 131.14b, 131.14c, 131.14d, | 10 | | 131.20c, 131.29, and 131.30 as follows:
| 11 | | (215 ILCS 5/131.1) (from Ch. 73, par. 743.1)
| 12 | | Sec. 131.1. Definitions. As used in this Article, the | 13 | | following terms have the respective
meanings set forth in this | 14 | | Section unless the context requires otherwise:
| 15 | | (a) An "affiliate" of, or person "affiliated" with, a | 16 | | specific person,
is a person that directly, or indirectly | 17 | | through one or more
intermediaries, controls, or is controlled | 18 | | by, or is under common control
with, the person specified.
| 19 | | (a-5) "Acquiring party" means such person by whom or on | 20 | | whose behalf the merger or other acquisition of control | 21 | | referred to in Section 131.4 is to be affected and any person | 22 | | that controls such person or persons. | 23 | | (a-10) "Associated person" means, with respect to an |
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| 1 | | acquiring party, (1) any beneficial owner of shares of the | 2 | | company to be acquired, owned, directly or indirectly, of | 3 | | record or beneficially by the acquiring party, (2) any | 4 | | affiliate of the acquiring party or beneficial owner, and (3) | 5 | | any other person acting in concert, directly or indirectly, | 6 | | pursuant to any agreement, arrangement, or understanding, | 7 | | whether written or oral, with the acquiring party or beneficial | 8 | | owner, or any of their respective affiliates, in connection | 9 | | with the merger, consolidation, or other acquisition of control | 10 | | referred to in Section 131.4 of this Code. | 11 | | (a-15) "Company" has the same meaning as "company" as | 12 | | defined in Section 2 of this Code, except that it does not | 13 | | include agencies, authorities, or instrumentalities of the | 14 | | United States, its possessions and territories, the | 15 | | Commonwealth of Puerto Rico, the District of Columbia, or a | 16 | | state or political subdivision of a state. | 17 | | (b) "Control" (including the terms "controlling", | 18 | | "controlled by" and
"under common control with") means the | 19 | | possession, direct or indirect, of
the power to direct or cause | 20 | | the direction of the management and policies
of a person, | 21 | | whether through the ownership of voting securities, the holding
| 22 | | of shareholders' or policyholders' proxies by
contract other | 23 | | than a commercial contract for goods or non-management
| 24 | | services, or otherwise, unless the power is solely the result | 25 | | of an
official position with or corporate office held by the | 26 | | person. Control is presumed
to exist if any person, directly or |
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| 1 | | indirectly, owns, controls, holds with
the power to vote, or | 2 | | holds shareholders' proxies representing 10% or
more of the | 3 | | voting securities of any other person, or holds or controls
| 4 | | sufficient policyholders' proxies to elect the majority of the | 5 | | board of
directors of the domestic company. This presumption | 6 | | may be rebutted by a
showing made in the manner as the Director | 7 | | may provide by rule. The Director
may determine, after
| 8 | | furnishing all persons in interest notice and opportunity to be | 9 | | heard and
making specific findings of fact to support such | 10 | | determination, that
control exists in fact, notwithstanding | 11 | | the absence of a presumption to
that effect.
| 12 | | (b-5) "Enterprise risk" means any activity, circumstance, | 13 | | event, or series of events involving one or more affiliates of | 14 | | a company that, if not remedied promptly, is likely to have a | 15 | | material adverse effect upon the financial condition or | 16 | | liquidity of the company or its insurance holding company | 17 | | system as a whole, including, but not limited to, anything that | 18 | | would cause the company's risk-based capital to fall into | 19 | | company action level as set forth in Article IIA of this Code | 20 | | or would cause the company to be in
hazardous financial | 21 | | condition as set forth in Article XII 1/2 of this Code. | 22 | | (b-10) "Exchange Act" means the Securities Exchange Act of | 23 | | 1934, as amended, together with the rules and regulations | 24 | | promulgated thereunder. | 25 | | (c) "Insurance holding company system" means two or more | 26 | | affiliated
persons, one or more of which is an insurance |
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| 1 | | company as defined in
paragraph (e) of Section 2 of this Code.
| 2 | | (d) (Blank). "Company" has the same meaning as "Company" as | 3 | | defined in Section 2
of this Code, except that it does not | 4 | | include agencies, authorities or
instrumentalities of the | 5 | | United States, its possessions and territories,
the | 6 | | Commonwealth of Puerto Rico, the District of Columbia or a | 7 | | State or
political subdivision of a State.
| 8 | | (d-5) "Non-operating holding company" is a general | 9 | | business corporation functioning solely for the purpose of | 10 | | forming, owning, acquiring, and managing subsidiary business | 11 | | entities and having no other business operations not related | 12 | | thereto. | 13 | | (d-10) "Own", "owned," or "owning" means shares (1) with | 14 | | respect to which a person
has title or to which a person's | 15 | | nominee, custodian, or other agent has title and which such
| 16 | | nominee, custodian, or other agent is holding on behalf of the | 17 | | person or (2) with respect to
which a person (A) has purchased | 18 | | or has entered into an unconditional contract, binding on both
| 19 | | parties, to purchase the shares, but has not yet received the | 20 | | shares, (B) owns a security
convertible into or exchangeable | 21 | | for the shares and has tendered the security for conversion or
| 22 | | exchange, (C) has an option to purchase or acquire, or rights | 23 | | or warrants to subscribe to, the shares and has exercised such | 24 | | option, rights, or warrants, or (D) holds a securities futures | 25 | | contract
to purchase the shares and has received notice that | 26 | | the position will be physically settled and is
irrevocably |
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| 1 | | bound to receive the underlying shares. To the extent that any
| 2 | | affiliates of the stockholder or beneficial owner are acting in | 3 | | concert with the stockholder or
beneficial owner, the | 4 | | determination of shares owned may include the effect of | 5 | | aggregating the
shares owned by the affiliate or affiliates. | 6 | | Whether shares constitute shares owned shall
be decided by the | 7 | | Director in his or her reasonable determination. | 8 | | (e) "Person" means an individual, a corporation, a limited | 9 | | liability company, a partnership, an
association, a joint stock | 10 | | company, a trust, an unincorporated
organization, any similar | 11 | | entity or any combination of the foregoing acting
in concert, | 12 | | but does not include any securities broker performing no more
| 13 | | than the usual and customary broker's function or joint venture
| 14 | | partnership exclusively engaged in owning, managing, leasing | 15 | | or developing
real or tangible personal property other than | 16 | | capital stock.
| 17 | | (e-5) "Policyholders' proxies" are proxies that give the | 18 | | holder the right to vote for the election of the directors and | 19 | | other corporate actions not in the day to day operations of the | 20 | | company. | 21 | | (f) (Blank). "Securityholder" of a specified person is one | 22 | | who owns any security
of such person, including common stock, | 23 | | preferred stock, debt obligations,
and any other security | 24 | | convertible into or evidencing the right to acquire
any of the | 25 | | foregoing.
| 26 | | (g) "Subsidiary" of a specified person is an affiliate |
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| 1 | | controlled by
such person directly, or indirectly through one | 2 | | or more intermediaries.
| 3 | | (h) "Voting Security" is a security which gives to the | 4 | | holder thereof
the right to vote for the election of directors | 5 | | and includes any security
convertible into or evidencing a | 6 | | right to acquire a voting security.
| 7 | | (i) (Blank). "Acquiring Party" means such person by whom or | 8 | | on whose
behalf the merger or other acquisition of control | 9 | | referred to in Section
131.4 is to be affected and any person | 10 | | that controls such person or persons.
| 11 | | (j) (Blank). "Policyholders' Proxies" are proxies which | 12 | | give the holder the right
to vote for the election of the | 13 | | directors and other corporate actions not
in the day-to-day | 14 | | operations of the company.
| 15 | | (k) (Blank). "Non-operating Holding Company" is a general | 16 | | business corporation
functioning solely for the purpose of | 17 | | forming, owning, acquiring and
managing subsidiary business | 18 | | entities and having no other business
operations not related | 19 | | thereto.
| 20 | | (Source: P.A. 84-805.)
| 21 | | (215 ILCS 5/131.2) (from Ch. 73, par. 743.2)
| 22 | | Sec. 131.2. Subsidiaries. A domestic company, either by | 23 | | itself or in cooperation with one or more persons, may organize | 24 | | or acquire one or more subsidiaries. The subsidiaries may | 25 | | conduct any kind of business or businesses and their authority |
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| 1 | | to do so shall not be limited by reason of the fact that they | 2 | | are subsidiaries of a domestic company. In addition to | 3 | | investments in common stock,
preferred stock, debt obligations | 4 | | and other securities of subsidiaries
permitted under all other | 5 | | sections of this Code, a domestic company, other
than a company | 6 | | subject to Articles XVIII or XIX, may also:
| 7 | | (a) invest, in common stock, preferred stock, debt | 8 | | obligations, and
other securities of one or more | 9 | | subsidiaries, amounts which do not exceed
the lesser of 10% | 10 | | of the company's assets or 50% of the company's surplus as
| 11 | | regards policyholders, but after such investments the | 12 | | company's surplus as
regards policyholders must be | 13 | | reasonable in relation to the company's
outstanding | 14 | | liabilities and adequate to its financial needs. In | 15 | | calculating
the amount of such investments, there must be | 16 | | included (i) total net monies
or other consideration | 17 | | expended and obligations assumed in the acquisition
or | 18 | | formation of a subsidiary, including all organizational | 19 | | expenses and
contributions to capital and surplus of the | 20 | | subsidiary whether or not
represented by the purchase of | 21 | | capital stock or issuance of other
securities, and (ii) all | 22 | | amounts expended in acquiring additional common
stock, | 23 | | preferred stock, debt obligations, and other securities, | 24 | | and all
contributions to the capital or surplus of a | 25 | | subsidiary subsequent to its
acquisition or formation;
| 26 | | (b) invest any amount in common stock, preferred stock, |
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| 1 | | debt obligations
and other securities of one or more direct | 2 | | subsidiaries
acting only as a non-operating holding | 3 | | company or engaged or organized
exclusively for the | 4 | | ownership and management of assets authorized as
| 5 | | investments for the company, provided that each
subsidiary | 6 | | agrees to limit its investments in any asset so that such
| 7 | | investments will not cause the amount of the total | 8 | | investment of the
company to exceed the amount the company | 9 | | could have invested in such asset.
For the purpose of this | 10 | | clause, "the total investment of the company" will
include | 11 | | (i) any direct investment by the company in an asset and | 12 | | (ii) the
company's proportionate share of any investment in | 13 | | such asset by any
direct subsidiary of the company, which | 14 | | must be calculated by multiplying the
amount of the | 15 | | subsidiary's investment by the percentage of the company's
| 16 | | ownership of such subsidiary;
| 17 | | (c) invest in common stock of one or more insurance | 18 | | corporation
subsidiaries any amount by which the investing | 19 | | company's capital and
surplus exceeds the minimum capital | 20 | | and surplus required of a new company
under Section 13 to | 21 | | qualify for a certificate of authority to write the
kind or | 22 | | kinds of insurance which the company is authorized to | 23 | | write, if
the company is a stock company, and if the | 24 | | company is other than a stock
company, the company may | 25 | | invest the amount by which the company's surplus
exceeds | 26 | | the minimum surplus required of a new company under Section |
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| 1 | | 43 or
66 to qualify for a certificate of authority to write | 2 | | the kind or kinds of
insurance which the company is | 3 | | authorized to write;
| 4 | | (d) with the approval of the Director, invest any | 5 | | greater amount in common
stock, preferred stock, debt | 6 | | obligations, or other securities of one or
more | 7 | | subsidiaries, but after such investment the company's | 8 | | surplus as
regards policyholders must be reasonable in | 9 | | relation to the company's
outstanding liabilities and | 10 | | adequate to its financial needs.
| 11 | | (Source: P.A. 85-1186.)
| 12 | | (215 ILCS 5/131.3) (from Ch. 73, par. 743.3)
| 13 | | Sec. 131.3.
(1) Investments in common stock, preferred | 14 | | stock, debt obligations or
other securities of subsidiaries | 15 | | made under Section 131.2 of this Article
are subject to | 16 | | Sections 126.3, 126.4, 126.5, 126.6, 126.7, and 133 of this | 17 | | Code
but are not subject to any other of the otherwise | 18 | | applicable restrictions or
prohibitions contained in this Code | 19 | | applicable to such investments of a
domestic
company subject to | 20 | | this Code.
| 21 | | (2) If a company ceases to control a subsidiary, it must | 22 | | dispose of any
investment therein made under this section | 23 | | within 3 years from the time of
the cessation of control or | 24 | | within such further time as the Director may
prescribe, unless | 25 | | at any time after the investment is made, the investment
meets |
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| 1 | | the requirements for investment under any other section of this | 2 | | Code,
and the company has notified the Director thereof.
| 3 | | (3) Whether any investment made pursuant to this Section | 4 | | meets the applicable requirements of this Section is to be | 5 | | determined before the investment is made by calculating the | 6 | | applicable investment limitations as though the investment had | 7 | | already been made, taking into account the then outstanding | 8 | | principal balance on all previous investments in debt | 9 | | obligations, and the value of all previous investments in | 10 | | equity securities as of the day they were made, net of any | 11 | | return of capital invested, not including dividends. | 12 | | (Source: P.A. 90-418, eff. 8-15-97.)
| 13 | | (215 ILCS 5/131.4) (from Ch. 73, par. 743.4)
| 14 | | Sec. 131.4. Acquisition of control of or merger with | 15 | | domestic company. | 16 | | (a) No person other than the issuer may make a tender for | 17 | | or a request or
invitation for tenders of, or enter into an | 18 | | agreement to exchange
securities for , or seek to acquire or | 19 | | acquire shareholders' proxies to vote or seek to acquire or | 20 | | acquire in the open market, or otherwise, any voting
security | 21 | | of a domestic company or acquire policyholders' proxies of a
| 22 | | domestic company or any entity that controls a domestic | 23 | | company, for consideration if, after the consummation thereof, | 24 | | that
person would, directly or indirectly, (or by conversion or | 25 | | by exercise of
any right to acquire) be in control of the |
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| 1 | | company, and no person may enter
into an agreement to merge or | 2 | | consolidate with or otherwise to acquire
control of a domestic | 3 | | company, unless the offer, request, invitation, or
agreement is | 4 | | conditioned on receiving the approval of the Director based on
| 5 | | Section 131.8 of this Article
and no such acquisition of | 6 | | control or a merger with a domestic
company may be consummated | 7 | | unless the person has filed with the Director and has sent to | 8 | | the company a statement containing the information required by | 9 | | Section 131.5 and the Director has approved the transaction
or | 10 | | granted an exemption. For purposes of this Section a
domestic | 11 | | company includes any other person which controls a domestic | 12 | | company
or holds or controls sufficient policyholders' proxies | 13 | | to elect the majority
of the board of directors of the domestic | 14 | | company. Prior to the acquisition,
the Director may conclude | 15 | | that a statement need not be filed by the
acquiring
party if | 16 | | the acquiring party demonstrates to the
satisfaction of the | 17 | | Director that:
| 18 | | (1) such transaction will not result in the change of | 19 | | control of the
domestic company; or
| 20 | | (2) (blank); the person which is subject to the | 21 | | acquisition has assets in excess
of $1,000,000 and | 22 | | shareholders of record of 500 or more and its insurance
| 23 | | business either directly
or through its affiliates is an | 24 | | insignificant portion of its total
business; or
| 25 | | (3) the acquisition of, or attempt to acquire control | 26 | | of, such other
person is subject to requirements in the |
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| 1 | | jurisdiction of its domicile which
are substantially | 2 | | similar to those contained in this Section and Sections
| 3 | | 131.5 through 131.12; or
| 4 | | (4) the control of the policyholders' proxies is being | 5 | | acquired solely
by virtue of the holders official office | 6 | | and not as the result of any agreement
or for any | 7 | | consideration.
| 8 | | The purpose of this Section is to afford to the | 9 | | Director the
opportunity to review acquisitions in order to | 10 | | determine whether or not the
acquisition would be adverse | 11 | | to the interests of the existing and future
policyholders | 12 | | of the company.
| 13 | | (b) For purposes of this Section, any controlling person of | 14 | | a domestic company seeking to divest its controlling interest | 15 | | in the domestic company in any manner shall file with the | 16 | | Director, with a copy to the company, confidential notice of | 17 | | its proposed divestiture at least 30 days prior to the | 18 | | cessation of control. The Director shall determine those | 19 | | instances in which the party or parties seeking to divest or to | 20 | | acquire a controlling interest in a company shall be required | 21 | | to file for and obtain approval of the transaction. The | 22 | | information shall remain confidential until the conclusion of | 23 | | the transaction unless the Director, in his or her discretion, | 24 | | determines that confidential treatment shall interfere with | 25 | | enforcement of this Section. If the statement referred to in | 26 | | subsection (a) of this Section is otherwise filed in connection |
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| 1 | | with the proposed divesture or related acquisition, this | 2 | | subsection (b) shall not apply. | 3 | | (c) For purposes of this Section, a domestic company shall | 4 | | include any person controlling a domestic company unless the | 5 | | person, as determined by the Director, is either directly or | 6 | | through its affiliates primarily engaged in business other than | 7 | | the business of insurance. For the purposes of this Section, | 8 | | "person" shall not include any securities broker holding, in | 9 | | the usual and customary broker's function, less than 20% of the | 10 | | voting securities of an insurance company or of any person that | 11 | | controls an insurance company. | 12 | | (Source: P.A. 86-784.)
| 13 | | (215 ILCS 5/131.5) (from Ch. 73, par. 743.5)
| 14 | | Sec. 131.5. Statement; contents Statement-Contents . In | 15 | | order to seek the approval of the
Director pursuant to Section | 16 | | 131.8, the applicant must file a statement
with the Director | 17 | | under oath or affirmation which contains as a minimum the
| 18 | | following information:
| 19 | | (1) The name and address of each acquiring party, and
| 20 | | (a) if such person is an individual, his principal | 21 | | occupation and all
offices and positions held during the past 5 | 22 | | years, and any conviction of
crimes, other than minor traffic | 23 | | violations, during the past 10 years;
| 24 | | (b) if such person is not an individual, a report of the | 25 | | nature of
its business operations during the past 5 years or |
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| 1 | | for such lesser period
as the person and any predecessors | 2 | | thereof has been in existence; an
informative description of | 3 | | the business intended to be conducted by the
person and the | 4 | | person's subsidiaries; and a list of all individuals who are
or | 5 | | who have been selected to become directors or executive | 6 | | officers of the
person, or who perform or will perform | 7 | | functions appropriate to such
positions. The list must include | 8 | | for each individual the information
required by subsection | 9 | | (1)(a).
| 10 | | (2) The source, nature and amount of the consideration used | 11 | | or to be
used in effecting the merger, consolidation or other | 12 | | acquisition of
control, a description of any transaction | 13 | | wherein funds were or are to be
obtained for any such purpose, | 14 | | including any pledge of the company's own
securities or the | 15 | | securities of any of its subsidiaries or affiliates,
and the | 16 | | identity of persons furnishing such
consideration. However, | 17 | | where a source of such consideration is a loan made
in the | 18 | | lender's ordinary course of business, the identity of the | 19 | | lender
must remain confidential, if the person filing the | 20 | | statement so requests.
| 21 | | (3) Financial information as to the earnings and financial | 22 | | condition of
each acquiring party for the preceding 5 fiscal | 23 | | years of each acquiring party
(or for such lesser period as the | 24 | | acquiring party and any predecessors thereof
have been in | 25 | | existence) audited by an independent
certified public | 26 | | accountant in accordance with generally accepted auditing
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| 1 | | standards and similar unaudited information for the second and | 2 | | third preceding
fiscal years and as of a date not earlier than | 3 | | 90 days prior to the filing
of the statement. If an acquiring | 4 | | party is an insurer which has been actively
engaged in the | 5 | | business of insurance for 10 years, the financial information
| 6 | | need not be audited, provided it
is based on the annual | 7 | | statements of such acquiring person filed with the
insurance | 8 | | department of the person's domiciliary state and is in | 9 | | accordance
with the requirement of insurance or other | 10 | | accounting principles prescribed
or permitted under the laws | 11 | | and regulations of such state.
| 12 | | (a) When an applicant is controlled by an individual, | 13 | | financial information
for that individual will not be required | 14 | | if the applicant is currently subject
to the registration and | 15 | | reporting requirements of Section 12(g) of the Securities
| 16 | | Exchange Act of 1934 or is an insurer which has been actively | 17 | | engaged in
the business of insurance for a period in excess of | 18 | | 10 years;
| 19 | | (b) When an individual as an acquiring party must file | 20 | | financial information
under this paragraph such information | 21 | | need not be delivered to the company.
However, such information | 22 | | shall be available if the Director holds a hearing
pursuant to | 23 | | Section 131.8.
| 24 | | (4) Any plans or proposals which each acquiring party may | 25 | | have to
liquidate such company, to sell its assets or merge or | 26 | | consolidate it with
any person, or to make any other material |
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| 1 | | change in its business or
corporate structure or management.
| 2 | | (5) The number of shares of any security referred to in | 3 | | Section 131.4
which each acquiring party proposes to acquire, | 4 | | and the terms of the offer,
request, invitation, agreement, or | 5 | | acquisition referred to in Section
131.4 , and a statement as to | 6 | | the method by which the fairness of the proposal was arrived .
| 7 | | (6) The amount of each class of any security referred to in | 8 | | Section
131.4 which is beneficially owned or concerning which | 9 | | there is a right to
acquire beneficial ownership by each | 10 | | acquiring party.
| 11 | | (7) A full description of any existing contracts, | 12 | | arrangements or
understandings with respect to any security | 13 | | referred to in Section 131.4 in
which any acquiring party is | 14 | | involved, including but not limited to
transfer of any of the | 15 | | securities, joint ventures, loan or option
arrangements, puts | 16 | | or calls, guarantees of loans, guarantees against loss
or | 17 | | guarantees of profits, division of losses or profits, or the | 18 | | giving or
withholding of proxies. The description must identify | 19 | | the persons with whom
such contracts, arrangements or | 20 | | understandings have been entered into.
| 21 | | (8) A description of the acquisition of any security
or | 22 | | policyholders' proxy referred to in Section
131.4 during the 12 | 23 | | calendar months preceding the filing of the statement,
by any | 24 | | acquiring party, including the dates of acquisition, names of | 25 | | the
acquiring parties acquirors , and consideration paid or | 26 | | agreed to be paid therefor.
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| 1 | | (9) A description of any recommendations to acquire any | 2 | | security
referred to in Section 131.4 made during the 12 | 3 | | calendar months preceding
the filing of the statement, by any | 4 | | acquiring party, or by anyone based
upon interviews or at the | 5 | | suggestion of such acquiring party.
| 6 | | (10) Copies of all tender offers for, requests or | 7 | | invitations for
tenders of, exchange offers for, and agreements | 8 | | to acquire or exchange any
securities referred to in Section | 9 | | 131.4, and (if distributed) of additional
soliciting material | 10 | | relating thereto.
| 11 | | (11) The terms of any agreement, contract or understanding | 12 | | made with , or proposed to be made with, any
broker-dealer as to | 13 | | solicitation of securities referred to in Section 131.4
for | 14 | | tender, and the amount of any fees, commissions or other | 15 | | compensation
to be paid to broker-dealers with regard thereto.
| 16 | | (12) Beginning July 1, 2014, an agreement by the person | 17 | | required to file the statement referred to in this Section | 18 | | 131.5 that the person will provide the annual report specified | 19 | | in Section 131.14b for so long as control exists. | 20 | | (13) Beginning July 1, 2014, an acknowledgement by the | 21 | | person required to file the statement referred to in this | 22 | | Section 131.5 that the person and all subsidiaries within its | 23 | | control in the insurance holding company system shall provide | 24 | | information to the Director upon request as necessary to | 25 | | evaluate enterprise risk to the company. | 26 | | (14) Any additional information as the Director may by rule |
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| 1 | | or
regulation prescribe as necessary or appropriate for the | 2 | | protection of
policyholders or in the public interest.
| 3 | | (15) With respect to each acquiring party, the following | 4 | | information: | 5 | | (A) the name and address of all associated persons and | 6 | | a detailed description of every agreement, arrangement, | 7 | | and understanding between the acquiring party and all | 8 | | associated persons in connection with the merger, | 9 | | consolidation, or other acquisition of control; | 10 | | (B) the class or series and number of shares of | 11 | | securities of the company that are directly or indirectly | 12 | | owned beneficially and of record by the acquiring party or | 13 | | the associated persons or both; and | 14 | | (C) a detailed description of each proxy, contract, | 15 | | arrangement, understanding, or relationship pursuant to | 16 | | which the acquiring party or the associated persons, or | 17 | | both, have a right to vote, or cause or direct the vote of, | 18 | | any securities of the company. | 19 | | (Source: P.A. 84-805.)
| 20 | | (215 ILCS 5/131.6) (from Ch. 73, par. 743.6)
| 21 | | Sec. 131.6.
(1) If the person required to file the | 22 | | statement referred to in Section
131.5 is a partnership, | 23 | | limited partnership, syndicate or other group, the
Director may | 24 | | require that the information be
given with respect to each | 25 | | partner of such partnership or limited
partnership, each member |
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| 1 | | of such syndicate or group, and each person who
controls such | 2 | | partner or member. If any partner, member or person is a
| 3 | | corporation or the person required to file the statement | 4 | | referred to in
Section 131.5 is a corporation, the Director may | 5 | | require that the
information be given with respect to the
| 6 | | corporation, each officer and director of the corporation, and | 7 | | each person
who is directly or indirectly the beneficial owner | 8 | | of more than 10% of the
outstanding voting securities of the | 9 | | corporation.
| 10 | | (2) If any material change occurs in the facts set forth in | 11 | | the
statement filed with the Director and sent to the company | 12 | | under Section 131.5
131.9 , an amendment setting forth the | 13 | | change, together with
copies of all documents and other | 14 | | material relevant to the change, must be
filed with the | 15 | | Director and sent to the company within 2 business days
after | 16 | | the person learns of the change.
| 17 | | (Source: P.A. 84-805.)
| 18 | | (215 ILCS 5/131.8) (from Ch. 73, par. 743.8)
| 19 | | Sec. 131.8.
(1) After the statement required by Section | 20 | | 131.5 has been
filed, the Director shall approve must | 21 | | disapprove
any merger, consolidation or other acquisition of | 22 | | control referred to in
Section 131.4 unless the acquiring party | 23 | | demonstrates to
the Director finds that:
| 24 | | (a) after the After change of control , the domestic | 25 | | company referred to in
Section 131.4 would not be able to |
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| 1 | | satisfy the requirements for the issuance of
a license to | 2 | | write the line or lines of insurance for which it is | 3 | | presently
licensed;
| 4 | | (b) the effect of the merger, consolidation or other | 5 | | acquisition
of control would be not substantially to lessen | 6 | | competition in insurance in
this State or not tend to | 7 | | create a monopoly therein. In applying the
competitive
| 8 | | standard in this paragraph:
| 9 | | (i) the informational requirements of subsection | 10 | | (3)(a) and the standards
of subsection (4)(b) of | 11 | | Section 131.12a shall apply,
| 12 | | (ii) the merger or other acquisition shall not be | 13 | | found substantially to lessen competition in insurance | 14 | | in this State or tend to create a monopoly therein | 15 | | disapproved if the Director finds acquiring
party | 16 | | demonstrates that any of the situations meeting the | 17 | | criteria provided
by subsection (4)(c) of Section | 18 | | 131.12a exist, and
| 19 | | (iii) the Director may condition the approval of | 20 | | the merger or other acquisition
on the removal of the | 21 | | basis of disapproval within a specified period of time;
| 22 | | (c) the financial condition of any acquiring party is | 23 | | such as might to not
jeopardize the financial stability of | 24 | | the domestic company or not
jeopardize the interests of its | 25 | | policyholders;
| 26 | | (d) the plans or proposals which the acquiring party |
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| 1 | | has to liquidate
the domestic company, sell its assets or | 2 | | consolidate or merge it with any
person,
or to make any | 3 | | other material change in its business or corporate | 4 | | structure
or management, are unfair fair and unreasonable | 5 | | reasonable to
policyholders of such company and not in the | 6 | | public interest ; or
| 7 | | (e) the competence, experience and integrity of those | 8 | | persons who
would control the operation of the domestic | 9 | | company are such that it would
be in the best interests of | 10 | | policyholders of such company and of the
insurance buying | 11 | | public to permit the merger, consolidation or other
| 12 | | acquisition of control.
| 13 | | (2) The Director may hold a public hearing on any merger,
| 14 | | consolidation or other acquisition of control referred to in | 15 | | Section 131.4 if
the Director determines that the statement | 16 | | filed as required by
Section 131.5 does
not demonstrate | 17 | | compliance with the standards referred to in subsection (1), of
| 18 | | this Section, or if he determines that such acquisition of | 19 | | control is likely to be hazardous or prejudicial to the will
| 20 | | adversely affect policyholders or the insurance buying public.
| 21 | | (3) The public hearing referred to in subsection
(2) must | 22 | | be held within 60 days after the statement
required by Section | 23 | | 131.5 is filed, and at least 20 days'
notice thereof must be
| 24 | | given by the Director to the person filing the statement and to | 25 | | the domestic
company. Not less than 7 12 days' notice of such | 26 | | hearing must be given by the person
filing the statement to |
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| 1 | | such other persons as may be designated by the
Director and by | 2 | | the company to its shareholders securityholders . The Director | 3 | | must make
a determination within 60 30 days after the | 4 | | conclusion of the hearing. At the
hearing, the person filing | 5 | | the statement, the domestic company, any person to
whom notice | 6 | | of the hearing was sent, and any other person whose interests
| 7 | | may be affected thereby has the right to present evidence, | 8 | | examine and
cross-examine witnesses, and offer oral and written | 9 | | arguments and in connection
therewith is entitled to conduct | 10 | | discovery proceedings in the same manner as is
presently | 11 | | allowed in the Circuit Courts of this State. All discovery | 12 | | proceedings
must be concluded not later than 3 days prior to | 13 | | the commencement of the public hearing.
| 14 | | (4) If the proposed acquisition of control will require the | 15 | | approval of more than one state insurance commissioner, the | 16 | | public hearing referred to in subsection (2) of this Section | 17 | | may be held on a consolidated basis upon request of the person | 18 | | filing the statement referred to in Section 131.5 of this Code. | 19 | | Such person shall file the statement referred to in Section | 20 | | 131.5 of this Code with the National Association of Insurance | 21 | | Commissioners (NAIC) within 5 days after making the request for | 22 | | a public hearing. A commissioner may opt out of a consolidated | 23 | | hearing and shall provide notice to the applicant of the opt | 24 | | out within 10 days after the receipt of the statement referred | 25 | | to in Section 131.5 of this Code. A hearing conducted on a | 26 | | consolidated basis shall be public and shall be held within the |
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| 1 | | United States before the commissioners of the states in which | 2 | | the companies are domiciled. Such commissioners shall hear and | 3 | | receive evidence. A commissioner may attend such hearing in | 4 | | person or by telecommunication. | 5 | | (5) In connection with a change of control of a domestic | 6 | | company, any determination by the Director that the person | 7 | | acquiring control of the company shall be required to maintain | 8 | | or restore the capital of the company to the level required by | 9 | | the laws and regulations of this State shall be made not later | 10 | | than 60 days after the filing of the statement required by | 11 | | Section 131.5 of this Code. | 12 | | (Source: P.A. 84-805.)
| 13 | | (215 ILCS 5/131.8a) (from Ch. 73, par. 743.8a)
| 14 | | Sec. 131.8a.
The Director may retain at the applicant's | 15 | | expense any
attorneys,
actuaries, accountants and other | 16 | | experts not otherwise a part of the Director's
staff as may be | 17 | | reasonably necessary to assist in reviewing the conduct of | 18 | | financial
or character examinations in conjunction with an | 19 | | acquisition proposed under
Section 131.4. The applicant shall | 20 | | deposit with the Director cash, bonds
or securities, acceptable | 21 | | to the Director, in a reasonable amount not to
exceed $100,000, | 22 | | for purpose of securing the payment of any expert's cost.
| 23 | | (Source: P.A. 86-753.)
| 24 | | (215 ILCS 5/131.9a new) |
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| 1 | | Sec. 131.9a. Exemptions. Sections 131.4 through 131.12 do | 2 | | not apply to: | 3 | | (1) any transaction that is subject to Article X of | 4 | | this Code dealing with merger, consolidation, or plans of | 5 | | exchange; or | 6 | | (2) any offer, request, invitation, agreement, or | 7 | | acquisition that the Director by order exempts therefrom as
| 8 | | (A) not having been made or entered into for the purpose | 9 | | and not having the effect of changing or influencing the | 10 | | control of a domestic company or (B) otherwise not | 11 | | comprehended within the purposes of Sections 131.4 through | 12 | | 131.12.
| 13 | | (215 ILCS 5/131.11) (from Ch. 73, par. 743.11)
| 14 | | Sec. 131.11.
The following are violations of Sections 131.4 | 15 | | through 131.12:
| 16 | | (1) the failure to file any statement, amendment, or other | 17 | | material
required to be filed under Sections 131.4 or 131.5; or
| 18 | | (2) the effectuation or any attempt to effectuate an | 19 | | acquisition of
control of , divestiture of, or merger or | 20 | | consolidation with, a domestic company unless the
Director has | 21 | | given his approval thereto .
| 22 | | (Source: P.A. 77-673.)
| 23 | | (215 ILCS 5/131.12) (from Ch. 73, par. 743.12)
| 24 | | Sec. 131.12.
The courts of this State are hereby vested |
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| 1 | | with jurisdiction over every
person not resident, domiciled, or | 2 | | authorized to do business in this State
who files a statement | 3 | | with the Director under Section 131.4, and over all
actions | 4 | | involving such person arising out of violations of Sections | 5 | | 131.4,
131.5, 131.6, 131.9 or 131.11, and each such person is | 6 | | deemed to have
performed acts equivalent to and constituting an | 7 | | appointment by such a
person of the Director to be his true and | 8 | | lawful attorney upon whom may be
served all lawful process in | 9 | | any action, suit or proceeding arising out of
violations of | 10 | | Sections 131.4, 131.5, 131.6, 131.9 or 131.11. Copies of all
| 11 | | such lawful process must be served on the Director and | 12 | | transmitted by
registered or certified mail by the Director to | 13 | | such person at his last
known address.
| 14 | | (Source: P.A. 77-673.)
| 15 | | (215 ILCS 5/131.12a) (from Ch. 73, par. 743.12a)
| 16 | | Sec. 131.12a. Acquisitions involving companies insurers | 17 | | not otherwise covered.
| 18 | | (1) Definitions. The following definitions shall apply for | 19 | | the purposes
of this Section only:
| 20 | | (a) "Acquisition" means any agreement, arrangement or | 21 | | activity the
consummation
of which results in a person | 22 | | acquiring directly or indirectly the control
of another person | 23 | | or control of the insurance in force of another person,
and | 24 | | includes but is not limited to the acquisition of voting | 25 | | securities,
the acquisition of assets, the transaction of bulk |
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| 1 | | reinsurance and the act
of merging or consolidating.
| 2 | | (b) An "involved company insurer " includes a company an | 3 | | insurer which either acquires or
is acquired, is affiliated | 4 | | with an acquirer or acquired or is the result of a
merger.
| 5 | | (2) Scope.
| 6 | | (a) Except as exempted in paragraph (b) of this subsection | 7 | | (2), this Section
applies to any acquisition in which there is | 8 | | a change in control of a company an insurer
authorized to do | 9 | | business in this State.
| 10 | | (b) This Section shall not apply to the following:
| 11 | | (i) an acquisition subject to approval or disapproval | 12 | | by the Director
pursuant to Section 131.8;
| 13 | | (ii) a purchase of securities solely for investment | 14 | | purposes so long as
such securities are not used by voting | 15 | | or otherwise to cause or attempt
to cause the substantial | 16 | | lessening of competition in any insurance market
in this | 17 | | State. If a purchase of securities results in a presumption | 18 | | of
control under subsection (b) of Section 131.1, it is not | 19 | | solely for investment
purposes unless the commissioner of | 20 | | the company's insurer's state of domicile accepts
a | 21 | | disclaimer of control or affirmatively finds that control | 22 | | does not exist
and such disclaimer action or affirmative | 23 | | finding is communicated by the
domiciliary commissioner to | 24 | | the Director of this State;
| 25 | | (iii) the acquisition of a person by another person |
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| 1 | | when both persons
are neither directly nor through | 2 | | affiliates primarily engaged in the business
of insurance, | 3 | | if pre-acquisition notification is filed with the Director
| 4 | | in accordance with subsection (3)(a) of this Section, 30 | 5 | | days prior to the
proposed effective date of the | 6 | | acquisition. However, such pre-acquisition
notification is | 7 | | not required for exclusion from this Section if the | 8 | | acquisition
would otherwise be excluded from this Section | 9 | | by any other subparagraph
of subsection (2)(b);
| 10 | | (iv) the acquisition of already affiliated persons;
| 11 | | (v) an acquisition if, as an immediate result of the | 12 | | acquisition,
| 13 | | (A) in no market would the combined market share of | 14 | | the involved
companies insurers exceed 5% of the total | 15 | | market,
| 16 | | (B) there would be no increase in any market share, | 17 | | or
| 18 | | (C) in no market would the combined market share of | 19 | | the involved
companies insurers exceed 12% of the total | 20 | | market, and the market share increase by
more than 2% | 21 | | of the total market.
| 22 | | For the purpose of this subparagraph (b)(v), "market" | 23 | | means direct
written insurance premium in this State for a | 24 | | line of business as contained in
the annual statement | 25 | | required to be filed by companies insurers licensed to do | 26 | | business
in this State;
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| 1 | | (vi) an acquisition for which a pre-acquisition | 2 | | notification would be
required pursuant to this Section due | 3 | | solely to the resulting effect on
the ocean marine | 4 | | insurance line of business;
| 5 | | (vii) an acquisition of a company an insurer whose | 6 | | domiciliary commissioner
affirmatively finds that such | 7 | | company insurer is in failing condition; there is a lack
of | 8 | | feasible alternative to improving such condition; the | 9 | | public benefits of
improving such company's insurer's | 10 | | condition through the acquisition exceed the public
| 11 | | benefits that would arise from not lessening competition; | 12 | | and such findings are
communicated by the domiciliary | 13 | | commissioner to the Director of this State.
| 14 | | (3) Pre-acquisition Notification; Waiting Period. An | 15 | | acquisition
covered by subsection (2) may be subject to an | 16 | | order pursuant to subsection
(5) unless the acquiring person | 17 | | files a pre-acquisition notification and the
waiting period has | 18 | | expired. The acquired person may file a pre-acquisition
| 19 | | notification. The Director shall give confidential treatment | 20 | | to information
submitted under this subsection in the same | 21 | | manner as provided in Section
131.22 of this Article.
| 22 | | (a) The pre-acquisition notification shall be in such form | 23 | | and contain
such information as prescribed by the Director, | 24 | | which shall conform
substantially to the form of notification | 25 | | adopted by the National Association
of Insurance Commissioners |
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| 1 | | relating to those markets which, under subsection
(b)(v) of | 2 | | Section (2), cause the acquisition not to be exempted from the
| 3 | | provisions of this Section. The Director may require such | 4 | | additional material
and information as he deems necessary to | 5 | | determine whether the proposed
acquisition, if consummated, | 6 | | would violate the competitive standard of
subsection (4). The | 7 | | required information may include an opinion of an
economist as | 8 | | to the competitive impact of the acquisition in this State
| 9 | | accompanied by a summary of the education and experience of | 10 | | such person
indicating his or her ability to render an informed | 11 | | opinion.
| 12 | | (b) The waiting period required shall begin on the date of | 13 | | the receipt
by the Director of a pre-acquisition notification | 14 | | and shall end on the earlier
of the 30th day after the date of | 15 | | such receipt, or termination of the waiting
period by the | 16 | | Director. Prior to the end of the waiting period, the Director
| 17 | | on a one time basis may require the submission of additional | 18 | | needed information
relevant to the proposed acquisition, in | 19 | | which event the waiting period shall
end on the earlier of the | 20 | | 30th day after the receipt of such additional
information by | 21 | | the Director or termination of the waiting period by the
| 22 | | Director.
| 23 | | (4) Competitive Standard.
| 24 | | (a) The Director may enter an order under subsection (5)(a) | 25 | | with respect
to an acquisition if there is substantial evidence |
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| 1 | | that the effect of the
acquisition may be substantially to | 2 | | lessen competition in any line of insurance
in this State or | 3 | | tend to create a monopoly therein or if the company insurer | 4 | | fails
to file adequate information in compliance with | 5 | | subsection (3).
| 6 | | (b) In determining whether a proposed acquisition would | 7 | | violate the
competitive standard of paragraph (a) of this | 8 | | subsection the
Director shall consider the following:
| 9 | | (i) any acquisition covered under subsection (2) | 10 | | involving 2 or more
companies insurers competing in the | 11 | | same market is prima facie evidence of violation of
the | 12 | | competitive standards:
| 13 | | (A) if the market is highly concentrated and the | 14 | | involved companies insurers
possess the following | 15 | | shares of the market:
| 16 | | Company Insurer A Company Insurer B
| 17 | | 4% 4% or more
| 18 | | 10% 2% or more
| 19 | | 15% 1% or more
| 20 | | (B) if the market is not highly concentrated and | 21 | | the involved
companies insurers possess the following | 22 | | shares of the market:
| 23 | | Company Insurer A Company Insurer B
| 24 | | 5% 5% or more
| 25 | | 10% 4% or more
| 26 | | 15% 3% or more
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| 1 | | 19% 1% or more
| 2 | | A highly concentrated market is one in which the share | 3 | | of the 4 largest
companies insurers is 75% or more of the | 4 | | market. Percentages not shown in the tables
are to be | 5 | | interpolated proportionately to the percentages that are | 6 | | shown.
If more than 2 companies insurers are involved, | 7 | | exceeding the total of the 2 columns
in the table is prima | 8 | | facie evidence of violation of the competitive standard
in | 9 | | paragraph (a) of this subsection. For the purpose of this | 10 | | subparagraph,
the company insurer with the largest share of | 11 | | the market shall be deemed to be Company Insurer
A.
| 12 | | (ii) There is a significant trend toward increased | 13 | | concentration when
the aggregate market share of any | 14 | | grouping of the largest companies insurers in the
market | 15 | | from the 2 largest to the 8 largest has increased by 7% or | 16 | | more of
the market over a period of time extending from any | 17 | | base year 5-10 years
prior to the acquisition up to the | 18 | | time of the acquisition. Any acquisition
covered under | 19 | | subsection (2) involving 2 or more companies insurers | 20 | | competing in the
same market is prima facie evidence of | 21 | | violation of the competitive standard
in paragraph (a) of | 22 | | this subsection if:
| 23 | | (A) there is a significant trend toward increased | 24 | | concentration in the
market,
| 25 | | (B) one of the companies insurers involved is one | 26 | | of the companies insurers in a grouping
of such large |
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| 1 | | companies insurers showing the requisite increase in | 2 | | the market share, and
| 3 | | (C) another involved company's insurer's market is | 4 | | 2% or more.
| 5 | | (iii) For the purpose of subsection (4)(b):
| 6 | | (A) The term "company" "insurer" includes any | 7 | | company or group of
companies under common management, | 8 | | ownership or control.
| 9 | | (B) The term "market" means the relevant product | 10 | | and geographic
markets. In determining the relevant | 11 | | product and geographical markets, the
Director shall | 12 | | give due consideration to, among other things, the | 13 | | definitions
or guidelines, if any, promulgated by the | 14 | | National Association of Insurance
Commissioners and to | 15 | | information, if any, submitted by parties to the
| 16 | | acquisition. In the absence of sufficient information | 17 | | to the contrary, the
relevant product market is assumed | 18 | | to be the direct written insurance premium
for a line | 19 | | of business with such line being that used in the | 20 | | annual statement
required to be filed by companies | 21 | | insurers doing business in this State and the relevant
| 22 | | geographical market is assumed to be this State.
| 23 | | (C) The burden of showing prima facie evidence of | 24 | | violation of the
competitive standard rests upon the | 25 | | Director.
| 26 | | (iv) Even though an acquisition is not prima facie |
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| 1 | | violative of the
competitive standard under subparagraph | 2 | | (b)(i) and (b)(ii) of this subsection
the Director may | 3 | | establish the requisite anticompetitive effect based upon
| 4 | | other substantial evidence. Even though an acquisition is | 5 | | prima facie
violative of the competitive standard under | 6 | | subparagraphs (b)(i) and (b)(ii)
of this subsection (4), a | 7 | | party may establish the absence of the requisite
| 8 | | anticompetitive effect based upon other substantial | 9 | | evidence. Relevant factors
in making a determination under | 10 | | this paragraph include, but are not limited to,
the | 11 | | following: market shares, volatility of ranking of market | 12 | | leaders, number
of competitors, concentration, trend of | 13 | | concentration in the industry, and ease
of entry and exit | 14 | | into the market.
| 15 | | (c) An order may not be entered under subsection (5)(a) if:
| 16 | | (i) the acquisition will yield substantial economies | 17 | | of scale or economies
in resource utilization that cannot | 18 | | be feasibly achieved in any other way,
and the public | 19 | | benefits which would arise from such economies exceed the
| 20 | | public benefits which would arise from not lessening | 21 | | competition; or
| 22 | | (ii) the acquisition will substantially increase the | 23 | | availability of
insurance, and the public benefits of such | 24 | | increase exceed the public benefits
which would arise from | 25 | | not lessening competition.
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| 1 | | (5) Orders and Penalties:
| 2 | | (a)(i) If an acquisition violates the standard of this | 3 | | Section, the
Director may enter an order
| 4 | | (A) requiring an involved company insurer to cease | 5 | | and desist from doing
business in this State with | 6 | | respect to the line or lines of insurance involved
in | 7 | | the violation, or
| 8 | | (B) denying the application of an acquired or | 9 | | acquiring company insurer for a
license to do business | 10 | | in this State.
| 11 | | (ii) Such an order shall not be entered unless there is | 12 | | a hearing, notice
of such hearing is issued prior to the | 13 | | end of the waiting period and not
less than 15 days prior | 14 | | to the end of the waiting period and not less than
15 days | 15 | | prior to the hearing, and the hearing is concluded and the | 16 | | order
is issued no later than 60 days after the end of the | 17 | | waiting period. Every
order shall be accompanied by a | 18 | | written decision of the Director setting
forth his findings | 19 | | of fact and conclusions of law.
| 20 | | (iii) (Blank). An order entered under this paragraph | 21 | | shall not become final earlier
than 30 days after it is | 22 | | issued, during which time the involved insurer may
submit a | 23 | | plan to remedy the anticompetitive impact of the | 24 | | acquisition within
a reasonable time. Based upon such plan | 25 | | or other information, the Director
shall specify, if any, | 26 | | the conditions under and the time period during which
the |
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| 1 | | aspects of the acquisition causing a violation of the | 2 | | standards of this
Section would be remedied and the order | 3 | | vacated or modified.
| 4 | | (iv) An order pursuant to this paragraph shall not | 5 | | apply if the
acquisition is not consummated.
| 6 | | (b) Any person who violates a cease and desist order of the | 7 | | Director under
paragraph (a) and while such order is in effect | 8 | | may after notice and hearing
and upon order of the Director be | 9 | | subject at the discretion of the Director to
any one or more of | 10 | | the following:
| 11 | | (i) a monetary penalty of not more than $10,000 for | 12 | | every day of
violation or
| 13 | | (ii) suspension or revocation of such person's license | 14 | | or both .
| 15 | | (c) Any company insurer or other person who fails to make | 16 | | any filing required
by this Section and who also fails to | 17 | | demonstrate a good faith effort to
comply with any such filing | 18 | | requirement shall be subject to a civil penalty of
not more | 19 | | than $50,000.
| 20 | | (6) Inapplicable Provisions. Subsections (2) and (3) of | 21 | | Section 131.23 and
Section 131.25 do not apply to acquisitions | 22 | | covered under subsection (2).
| 23 | | (Source: P.A. 92-16, eff. 6-28-01 .)
| 24 | | (215 ILCS 5/131.13) (from Ch. 73, par. 743.13)
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| 1 | | Sec. 131.13. Registration of companies. Every company | 2 | | which is authorized to do business in this State and which
is a | 3 | | member of an insurance holding company system must register | 4 | | with the
Director, except a foreign or alien company subject to | 5 | | registration
requirements and standards adopted by statute or | 6 | | regulation in the
jurisdiction of its domicile which are | 7 | | substantially similar to those
contained in this section and | 8 | | Sections 131.14 through 131.20a 131.19 . Any company
which is | 9 | | subject to registration under this section must register within | 10 | | 60
days after the effective date of this Article or 15 days | 11 | | after it becomes
subject to registration, whichever is later, | 12 | | unless the Director for good
cause shown extends the time for | 13 | | registration, and then within such
extended time. The Director | 14 | | may require any authorized company which is a
member of a | 15 | | holding company system which is not subject to registration
| 16 | | under this section to furnish a copy of the registration | 17 | | statement or other
information filed by such company with the | 18 | | insurance regulatory authority
of its domiciliary | 19 | | jurisdiction.
| 20 | | If upon review of the information filed pursuant to this | 21 | | Section and
the information included in the annual statement | 22 | | filed pursuant to Section
136, the Director determines there is | 23 | | a potential for adverse economic impact
due to substantial | 24 | | ownership of companies authorized to do business in this
State | 25 | | by persons who are not citizens or residents of the United | 26 | | States
or entities which are not organized or created under the |
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| 1 | | laws of any state
or territory of the United States, he shall | 2 | | report such determination along
with any legislative | 3 | | recommendations to the General Assembly.
| 4 | | (Source: P.A. 84-805.)
| 5 | | (215 ILCS 5/131.14) (from Ch. 73, par. 743.14)
| 6 | | Sec. 131.14.
Every company subject to registration must | 7 | | file a registration statement on a
in the form and in a format | 8 | | prescribed designated by the Director, which shall contain the | 9 | | following contains current information
about :
| 10 | | (1) the capital structure, general financial condition, | 11 | | ownership and
management of the company and any person | 12 | | controlling the company;
| 13 | | (2) the identity and relationship of every member of the | 14 | | insurance holding company
system;
| 15 | | (3) the following agreements in force, relationships | 16 | | subsisting, and
transactions currently outstanding or that | 17 | | have occurred during the last calendar year between such | 18 | | company and its affiliates:
| 19 | | (a) loans, other investments, or purchases, sales or | 20 | | exchanges of or
securities of the affiliates by the company or | 21 | | of the company by its
affiliates;
| 22 | | (b) purchases, sales, or exchanges of assets;
| 23 | | (c) transactions not in the ordinary course of business;
| 24 | | (d) guarantees or undertakings for the benefit of an | 25 | | affiliate which
result in an actual contingent exposure of the |
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| 1 | | company's assets to
liability, other than insurance contracts | 2 | | entered into in the ordinary
course of the company's business;
| 3 | | (e) all management agreements, and service contracts , and | 4 | | all cost-sharing
arrangements , other than cost allocation | 5 | | arrangements based upon generally
accepted accounting | 6 | | principles ; and
| 7 | | (f) reinsurance agreements;
| 8 | | (f-5) dividends and other distributions to shareholders; | 9 | | (g) any pledge of the company's own securities, securities | 10 | | of any
subsidiary or controlling affiliate, to secure a loan | 11 | | made to any member of the
insurance holding company system; and
| 12 | | (h) consolidated tax allocation agreements ; .
| 13 | | (4) (blank); other matters concerning transactions between | 14 | | registered companies
and any affiliates as may be included from | 15 | | time to time in any registration
forms adopted or approved by | 16 | | the Director.
| 17 | | (5) financial statements of or within an insurance holding | 18 | | company system, including all affiliates, if requested by the | 19 | | Director; financial statements may include, but are not limited | 20 | | to, annual audited financial statements filed with the U.S. | 21 | | Securities and Exchange Commission (SEC) pursuant to the | 22 | | Securities Act of 1933, as amended, or the Securities Exchange | 23 | | Act of 1934, as amended; a company required to file financial | 24 | | statements pursuant to this paragraph (5) may satisfy the | 25 | | request by providing the Director with the most recently filed | 26 | | parent corporation financial statements that have been filed |
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| 1 | | with the SEC; | 2 | | (6) statements that the company's or its parent company's | 3 | | board of directors or a committee thereof oversees corporate | 4 | | governance and internal controls and that the company's | 5 | | officers or senior management have approved and implemented and | 6 | | continue to maintain and monitor corporate governance and | 7 | | internal controls; and | 8 | | (7) other matters concerning transactions between | 9 | | registered companies and any affiliates as may be included from | 10 | | time to time in any registration forms adopted or approved by | 11 | | the Director. | 12 | | (Source: P.A. 84-805.)
| 13 | | (215 ILCS 5/131.14a new) | 14 | | Sec. 131.14a. Summary filing. Every company subject to | 15 | | registration must file a summary outlining all items in the | 16 | | current registration statement representing changes from the | 17 | | prior registration statement. | 18 | | (215 ILCS 5/131.14b new) | 19 | | Sec. 131.14b. Enterprise risk filing. The ultimate | 20 | | controlling person of every company subject to registration | 21 | | shall also file an annual enterprise risk report. The report | 22 | | shall, to the best of the ultimate controlling person's | 23 | | knowledge and belief, identify the material risks within the | 24 | | insurance holding company system that could pose enterprise |
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| 1 | | risk to the company. The report shall be filed with the lead | 2 | | state commissioner of the insurance holding company system as | 3 | | determined by the procedures within the Financial Analysis | 4 | | Handbook adopted by the National Association of Insurance | 5 | | Commissioners. | 6 | | (215 ILCS 5/131.14c new) | 7 | | Sec. 131.14c. Violations. The failure to file a | 8 | | registration statement or any summary of the registration | 9 | | statement or enterprise risk filing required by this Article | 10 | | within the time specified for filing shall be a violation of | 11 | | this Article. | 12 | | (215 ILCS 5/131.14d new) | 13 | | Sec. 131.14d. Confidentiality. | 14 | | (a) Documents, materials, or other information in the | 15 | | possession or control of the Director that are obtained by, | 16 | | created by, or disclosed to the Director or any other person | 17 | | pursuant to Section 131.14b are recognized as being proprietary | 18 | | and to contain trade secrets. Disclosure of such documents, | 19 | | materials, or other information is recognized as damaging to | 20 | | the competitive position of the insurer whose confidential | 21 | | information is in the possession or control of the Director. | 22 | | All such documents, materials, or other information shall be | 23 | | confidential by law and privileged, shall not be subject to the | 24 | | Freedom of Information Act, shall not be subject to subpoena, |
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| 1 | | and shall not be subject to discovery or admissible in evidence | 2 | | in any private civil action. However, the Director is | 3 | | authorized to use such documents, materials, or other | 4 | | information in the furtherance of any regulatory or legal | 5 | | action brought as a part of the Director's official duties. The | 6 | | Director shall not otherwise disclose or make such documents, | 7 | | materials, or other information public without the prior | 8 | | written consent of the insurer. | 9 | | (b) An insurer whose documents, materials, or other | 10 | | information is in the possession or control of the Director or | 11 | | any other person pursuant to Section 131.14b of this Code and | 12 | | who is aggrieved by an actual or threatened disclosure of such | 13 | | documents, materials, or other information or by any violation | 14 | | of this Section, may commence proceedings, subject in the case | 15 | | of the Director to Article III of the Code of Civil Procedure, | 16 | | in any court of competent jurisdiction to prevent such | 17 | | disclosure or to enforce the provisions of this Section. | 18 | | (c) Neither the Director nor any person who received | 19 | | documents, materials, or other information relating to the | 20 | | report required by Section 131.14b of this Code, through | 21 | | examination or otherwise, while acting under the authority of | 22 | | the Director or with whom such documents, materials, or other | 23 | | information are shared pursuant to this Section, Section | 24 | | 131.14b or Section 131.20c of this Code shall be permitted or | 25 | | required to testify in any private civil action concerning any | 26 | | confidential documents, materials, or information subject to |
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| 1 | | subsection (a) of this Section. | 2 | | (d) Solely to assist in the performance of the Director's | 3 | | regulatory duties, the Director may do the following: | 4 | | (1) upon request, share documents, materials, or other | 5 | | information relating to the report required by Section | 6 | | 131.14b of this Code, including the confidential and | 7 | | privileged documents, materials, or information subject to | 8 | | subsection (a) of this Section, including proprietary and | 9 | | trade secret documents and materials with other state, | 10 | | federal, and international financial regulatory agencies, | 11 | | including members of any supervisory college as provided | 12 | | for in Section 131.20c of this Code, with the NAIC and with | 13 | | any third-party consultants designated by the Director, | 14 | | provided that the recipient agrees in writing to maintain | 15 | | the confidentiality and privileged status of the | 16 | | documents, materials, or other information relating to the | 17 | | report required by Section 131.14b of this Code and has | 18 | | verified in writing the legal authority to maintain | 19 | | confidentiality; and | 20 | | (2) receive documents, materials, or other information | 21 | | relating to the report required by Section 131.14b of this | 22 | | Code, including otherwise confidential and privileged | 23 | | documents, materials, or information, including | 24 | | proprietary and trade secret information or documents, | 25 | | from regulatory officials of other foreign or domestic | 26 | | jurisdictions, including members of any supervisory |
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| 1 | | college as defined in Section 131.20c of this Code, and | 2 | | from the NAIC, and shall maintain as confidential or | 3 | | privileged any documents, materials, or information | 4 | | received with notice or the understanding that it is | 5 | | confidential or privileged under the laws of the | 6 | | jurisdiction that is the source of the document, material, | 7 | | or information. | 8 | | (e) The Director shall enter into a written agreement with | 9 | | any member of a supervisory college as provided for in Section | 10 | | 131.20c of this Code, the International Association of | 11 | | Insurance Supervisors (IAIS), the NAIC, or any third-party | 12 | | consultant governing sharing and use of information provided | 13 | | pursuant to this Section. The agreement shall do the following: | 14 | | (1) specify procedures and protocols regarding the | 15 | | confidentiality and security of information shared with | 16 | | the member of a supervisory college, the IAIS, the NAIC, or | 17 | | the third-party consultant pursuant to this Section, | 18 | | including procedures and protocols for sharing by the | 19 | | member of a supervisory college, the IAIS, or the NAIC with | 20 | | international, federal, or state regulators; | 21 | | (2) specify that ownership of information shared with | 22 | | the member of a supervisory college, the IAIS, the NAIC, or | 23 | | the third-party consultant pursuant to this Section | 24 | | remains with the Director and that the member of a | 25 | | supervisory college's, the IAIS's, the NAIC's, or the | 26 | | third-party consultant's use of the information is subject |
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| 1 | | to the direction of the Director; | 2 | | (3) restrict the member of a supervisory college, the | 3 | | IAIS, the NAIC, or the third-party consultant from storing | 4 | | the information shared pursuant to this Section in a | 5 | | permanent database; | 6 | | (4) require notice to be given within 5 business days | 7 | | to an insurer whose confidential information, in the | 8 | | possession of the member of a supervisory college, the | 9 | | IAIS, the NAIC, or the third-party consultant pursuant to | 10 | | this Section, is subject to a request or subpoena to the | 11 | | member of a supervisory college, the IAIS, the NAIC, or the | 12 | | third-party consultant for disclosure or production; | 13 | | (5) require the member of a supervisory college, the | 14 | | IAIS, the NAIC, or the third-party consultant to consent to | 15 | | intervention by an insurer in any judicial or | 16 | | administrative action in which the member of a supervisory | 17 | | college, the IAIS, the NAIC, or the third-party consultant | 18 | | may be required to disclose confidential information about | 19 | | the insurer shared with the member of a supervisory | 20 | | college, the IAIS, the NAIC, or the third-party consultant | 21 | | pursuant to this Section; and | 22 | | (6) in the case of an agreement involving a third-party | 23 | | consultant, provide for the insurer's prior written | 24 | | consent to the sharing of information with that third-party | 25 | | consultant. | 26 | | (f) The sharing of information and documents by the |
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| 1 | | Director pursuant to this Section shall not constitute a | 2 | | delegation of regulatory authority or rulemaking, and the | 3 | | Director is solely responsible for the administration and | 4 | | execution of the provisions of this Section. An insurer whose | 5 | | confidential information is in the possession of the member of | 6 | | a supervisory college, the IAIS, the NAIC, or third-party | 7 | | consultant pursuant to this Section and who is aggrieved by an | 8 | | actual or threatened disclosure of confidential information, | 9 | | or by any violation of this Section, may commence proceedings | 10 | | in any court of competent jurisdiction to prevent such | 11 | | disclosure or to enforce the provisions of this Section. | 12 | | (g) No waiver of any applicable privilege or claim of | 13 | | confidentiality in the documents, proprietary and trade secret | 14 | | materials, or other information relating to the report required | 15 | | by Section 131.14b of this Section, shall occur as a result of | 16 | | disclosure of such documents, materials, or other information | 17 | | relating to the report required by Section 131.14b of this | 18 | | Section to the Director or as a result of sharing as authorized | 19 | | in this Section. | 20 | | (h) Documents, materials, or other information in the | 21 | | possession or control of a member of a supervisory college, the | 22 | | IAIS, the NAIC, or a third-party consultant pursuant to this | 23 | | Section shall be confidential by law and privileged, shall not | 24 | | be subject to the Freedom of Information Act, shall not be | 25 | | subject to subpoena, and shall not be subject to discovery or | 26 | | admissible in evidence in any private civil action.
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| 1 | | (215 ILCS 5/131.16) (from Ch. 73, par. 743.16)
| 2 | | Sec. 131.16. Reporting material changes or additions; | 3 | | penalty for late
registration statement. | 4 | | (1) Each registered company must keep current the | 5 | | information required to be
included in its registration | 6 | | statement by reporting all material changes
or additions on | 7 | | amendment forms designated by the Director within 15 days
after | 8 | | the end of the month in which it learns of each change or | 9 | | addition,
or within a longer time thereafter as the Director | 10 | | may establish. Any
transaction which has been submitted to the | 11 | | Director pursuant to Section
131.20a need not be reported to | 12 | | the Director under this subsection; except
each registered | 13 | | company must
report all dividends and other distributions to | 14 | | shareholders within 15 5
business days following the | 15 | | declaration and no less than 10 business days
prior to payment | 16 | | thereof .
| 17 | | (2) On or before May 1 each year, each company subject to | 18 | | registration
under this Article shall file a statement in a | 19 | | format as designated by
the Director. This statement shall | 20 | | include information previously included
in an amendment under | 21 | | subsection (1) of this Section, transactions and
agreements
| 22 | | submitted under Section 131.20a, and any other material | 23 | | transactions which
are required to be reported.
| 24 | | (2.5) Any person within an insurance holding company system | 25 | | subject to registration shall be required to provide complete |
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| 1 | | and accurate information to a company where the information is | 2 | | reasonably necessary to enable the company to comply with the | 3 | | provisions of this Article. | 4 | | (3) Any company failing, without just cause, to file any | 5 | | registration
statement , any summary of changes to a | 6 | | registration statement, or any Enterprise Risk Filing or any | 7 | | person within an insurance holding company system who fails to | 8 | | provide complete and accurate information to a company as | 9 | | required in this Code shall be required, after notice and | 10 | | hearing,
to pay a penalty of up to $1,000 for each day's delay, | 11 | | to be
recovered by the Director
of Insurance of the State of | 12 | | Illinois and the penalty so recovered shall
be paid into the | 13 | | General Revenue Fund of the State of Illinois. The maximum
| 14 | | penalty under this section is $50,000. The Director may reduce
| 15 | | the penalty if the company demonstrates to the Director that | 16 | | the imposition
of the penalty would constitute a financial | 17 | | hardship to the company.
| 18 | | (Source: P.A. 88-364.)
| 19 | | (215 ILCS 5/131.17) (from Ch. 73, par. 743.17)
| 20 | | Sec. 131.17.
(1) The Director must terminate the | 21 | | registration of any company which
demonstrates that it no | 22 | | longer is a member of an insurance holding company
system.
| 23 | | (2) The Director may require or allow 2 or more
affiliated | 24 | | companies subject to registration to file a consolidated | 25 | | registration statement. Two or more affiliated companies |
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| 1 | | subject to registration hereunder
may file a consolidated | 2 | | registration statement or consolidated reports
amending their | 3 | | consolidated registration statement or their individual
| 4 | | registration statements unless the Director requires a | 5 | | separate
registration statement or report from each registered | 6 | | company.
| 7 | | (3) A company which is authorized to do business in this | 8 | | State and which
is part of an insurance holding company system | 9 | | may register on behalf of
any affiliated company which is | 10 | | required to register under Section 131.13
and to file all | 11 | | information and material required to be filed under this
| 12 | | Article unless the Director requires a separate registration by | 13 | | the
affiliated company.
| 14 | | (Source: P.A. 77-673.)
| 15 | | (215 ILCS 5/131.18) (from Ch. 73, par. 743.18)
| 16 | | Sec. 131.18.
Sections 131.13 through 131.19 do not apply to | 17 | | any company, information ,
or transaction if and to the extent | 18 | | that the Director by rule, regulation,
or order may exempt the | 19 | | same from Sections 131.13 through 131.19.
| 20 | | Any requirement for the furnishing of financial statements | 21 | | of the
insurance holding company system, or any member thereof, | 22 | | as part of or in
connection with the registration statement | 23 | | filed under Section 131.14 shall
not apply to any company which | 24 | | submits and maintains in effect in lieu
thereof a guarantee or | 25 | | a bond acceptable to the Director in an amount equal
to the |
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| 1 | | capital and surplus of the company as shown on its most recent
| 2 | | audited financial statements, payable to the Director for the | 3 | | benefit of
the creditors, policyholders and stockholders of the | 4 | | company as their
interests may appear. Such guarantee, if | 5 | | issued by a national bank, and
such a bond, if issued by a | 6 | | licensed insurance company which is not a
member of the | 7 | | insurance holding company system, in each case having capital
| 8 | | and surplus in excess of $25,000,000, shall be deemed | 9 | | acceptable.
| 10 | | (Source: P.A. 77-673.)
| 11 | | (215 ILCS 5/131.19) (from Ch. 73, par. 743.19)
| 12 | | Sec. 131.19. Disclaimer of affiliation. Any person may file | 13 | | with the Director a disclaimer of affiliation
with any | 14 | | authorized company or a disclaimer may be filed by the a | 15 | | company or
any member of an insurance holding company system. | 16 | | The disclaimer shall must
fully disclose all material | 17 | | relationships and bases basis for affiliation between
the | 18 | | person and the company as well as the basis for disclaiming the
| 19 | | affiliation. A disclaimer of affiliation shall be deemed to | 20 | | have been granted unless the Director, within 30 days following | 21 | | receipt of a complete disclaimer, notifies the filing party | 22 | | that the disclaimer is disallowed. In the event of | 23 | | disallowance, the disclaiming party may request an | 24 | | administrative hearing, which shall be granted. The | 25 | | disclaiming party shall be relieved of its duty to register |
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| 1 | | under Section 131.13 of this Code if approval of the disclaimer | 2 | | has been granted by the Director or if the disclaimer is deemed | 3 | | to have been approved. After a disclaimer is filed, the company | 4 | | is relieved of any
duty to register or report under Section | 5 | | 131.13 which may arise out of the
company's relationship with | 6 | | the person unless and until the Director
disallows the | 7 | | disclaimer. The Director may disallow such a disclaimer only
| 8 | | after furnishing all parties in interest with notice and | 9 | | opportunity to be
heard and after making specific findings of | 10 | | fact to support the
disallowance.
| 11 | | (Source: P.A. 84-805.)
| 12 | | (215 ILCS 5/131.20) (from Ch. 73, par. 743.20)
| 13 | | Sec. 131.20. Standards for transactions with affiliates; | 14 | | adequacy of
surplus. | 15 | | (1) Transactions Material transactions with their | 16 | | affiliates by
companies subject to registration
are subject to | 17 | | the following standards:
| 18 | | (a) the terms are fair and reasonable;
| 19 | | (a-5) agreements for cost sharing services and | 20 | | management shall include such provisions as may be required | 21 | | by rules and regulations issued by the Director;
| 22 | | (b) charges or fees for services performed are | 23 | | reasonable;
| 24 | | (c) expenses incurred and payment received must be | 25 | | allocated to the
company insurer in conformity with |
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| 1 | | customary insurance accounting practices
consistently | 2 | | applied;
| 3 | | (d) the books, accounts, and records of each party must | 4 | | be
so
maintained
as to clearly and accurately disclose the | 5 | | precise nature and details of the
transactions, including | 6 | | accounting information necessary to support the
| 7 | | reasonableness of the charges or fees to the respective | 8 | | parties; and
| 9 | | (e) the company's surplus as regards policyholders | 10 | | following
any
transactions with affiliates or dividends or | 11 | | distributions to
securityholders or affiliates must be | 12 | | reasonable in
relation to the company's outstanding | 13 | | liabilities and adequate to meet its
financial needs.
| 14 | | (2) For purposes of this Article, in determining whether a | 15 | | company's
surplus as regards policyholders is reasonable in | 16 | | relation to the company's
outstanding liabilities and adequate | 17 | | to meet its needs, the following factors,
among others, may be | 18 | | considered:
| 19 | | (a) the size of the company as measured by its assets, | 20 | | capital and
surplus, reserves, premium writings, insurance | 21 | | in force and other
appropriate criteria;
| 22 | | (b) the extent to which the company's business is | 23 | | diversified among the
several lines of insurance;
| 24 | | (c) the number and size of risks insured in each line | 25 | | of business;
| 26 | | (d) the extent of the geographical dispersion of the |
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| 1 | | company's insured
risks;
| 2 | | (e) the nature and extent of the company's reinsurance | 3 | | program;
| 4 | | (f) the quality, diversification, and liquidity of the | 5 | | company's
investment portfolio;
| 6 | | (g) the recent past and projected future trend in the | 7 | | size of the
company's investment portfolio surplus as | 8 | | regards policyholders ;
| 9 | | (h) the surplus as regards policyholders maintained by | 10 | | companies
comparable to the registrant in respect of the | 11 | | factors enumerated in this
paragraph;
| 12 | | (i) the adequacy of the company's reserves;
| 13 | | (j) the quality of the company's earnings and the | 14 | | extent to which
the reported earnings include | 15 | | extraordinary items; and
| 16 | | (k) the quality and liquidity of investments in | 17 | | affiliates subsidiaries
made under
Section 131.2 or 131.3 . | 18 | | The Director may discount any such
investment or
treat any | 19 | | such investment as a non-admitted asset for purposes of
| 20 | | determining the adequacy of surplus as regards | 21 | | policyholders whenever the
investment so warrants.
| 22 | | (Source: P.A. 88-364.)
| 23 | | (215 ILCS 5/131.20a) (from Ch. 73, par. 743.20a)
| 24 | | Sec. 131.20a. Prior notification of transactions; | 25 | | dividends and
distributions. |
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| 1 | | (1) (a) The following transactions listed in items (i) | 2 | | through (vii) involving between a domestic
company and any | 3 | | person in its insurance holding company system , including | 4 | | amendments or modifications (other than termination) of | 5 | | affiliate agreements previously filed pursuant to this | 6 | | Section, which are subject to any materiality standards | 7 | | contained in this Section, may not be entered
into unless the | 8 | | company has notified the Director in writing of its
intention | 9 | | to enter into such transaction at least 30 days prior thereto, | 10 | | or
such shorter period as the Director may permit, and the | 11 | | Director has not
disapproved it within such period . The notice | 12 | | for amendments or modifications (other than termination) shall | 13 | | include the reasons for the change and the financial impact on | 14 | | the domestic company. Informal notice shall be reported, within | 15 | | 30 days after a termination of a previously filed agreement, to | 16 | | the Director for determination of the type of filing required, | 17 | | if any. :
| 18 | | (i) Sales, purchases, exchanges of assets, loans or | 19 | | extensions of credit,
guarantees, investments, or any | 20 | | other transaction , except dividends, (A) that involves the
| 21 | | transfer of assets from or liabilities to a company (A) | 22 | | equal to or exceeding the
lesser of 3% of the
company's | 23 | | admitted assets or 25% of its surplus as regards
| 24 | | policyholders as
of the 31st day of December next preceding | 25 | | or (B) that is proposed when the
domestic
company is not | 26 | | eligible to declare and pay a dividend or other |
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| 1 | | distribution
pursuant to the provisions of Section 27.
| 2 | | (ii) Loans or extensions of credit to any person that | 3 | | is not an
affiliate (A) that involve the lesser of 3% of | 4 | | the company's
admitted assets
or 25% of the company's | 5 | | surplus, each as of the 31st day of December next
| 6 | | preceding, made with the agreement or understanding that | 7 | | the proceeds of
such transactions, in whole or in | 8 | | substantial part, are to be used to make
loans or | 9 | | extensions of credit to, to purchase assets of, or to make
| 10 | | investments in, any affiliate of the company making such | 11 | | loans or extensions of
credit or (B) that are proposed when | 12 | | the domestic company is not eligible to
declare and
pay a | 13 | | dividend or other distribution pursuant to the provisions | 14 | | of
Section 27.
| 15 | | (iii) Reinsurance agreements or modifications thereto, | 16 | | including all reinsurance pooling agreements, reinsurance | 17 | | agreements in which the reinsurance premium or a change in | 18 | | the company's liabilities, or the projected reinsurance | 19 | | premium or a change in the company's liabilities in any of | 20 | | the next 3 years, equals or exceeds 5% of the company's | 21 | | surplus as regards policyholders, as of the 31st day of | 22 | | December next preceding, including those
agreements that | 23 | | may require as consideration the transfer of assets from a | 24 | | company an
insurer to a nonaffiliate, if an agreement or | 25 | | understanding exists between the
company insurer and | 26 | | nonaffiliate that any portion of those assets will be |
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| 1 | | transferred
to one or more affiliates of the company | 2 | | insurer .
| 3 | | (iv) All management agreements ; , service contracts, | 4 | | other than agency contracts; tax allocation agreements;
| 5 | | all reinsurance allocation agreements related to
| 6 | | reinsurance agreements required to be filed under this
| 7 | | Section; and all cost-sharing
arrangements , and any other | 8 | | contracts providing for the rendering of services
on a | 9 | | regular systematic basis .
| 10 | | (v) Direct or indirect acquisitions or investments in a | 11 | | person that controls the company, or in an affiliate of the | 12 | | company, in an amount which, together with its present | 13 | | holdings in such investments, exceeds 2.5% of the company's | 14 | | surplus as regards policyholders. Direct or indirect | 15 | | acquisitions or investments in subsidiaries acquired | 16 | | pursuant to Section 131.2 of this Article (or authorized | 17 | | under any other Section of this Code), or in non-subsidiary | 18 | | insurance affiliates that are subject to the provisions of | 19 | | this Article, are exempt from this requirement. | 20 | | (vi) Any series of the previously described | 21 | | transactions that are
substantially similar to each other, | 22 | | that take place within any 180 day period,
and that in | 23 | | total are equal to or exceed the lesser of 3% of the | 24 | | domestic
company's insurer's
admitted assets or 25% of its | 25 | | policyholders surplus, as of the 31st day of the
December | 26 | | next preceding.
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| 1 | | (vii) (vi) Any other material transaction that the
| 2 | | Director by rule determines
might render the company's | 3 | | surplus as regards policyholders
unreasonable in
relation | 4 | | to the company's outstanding liabilities and inadequate to | 5 | | its
financial needs or may otherwise adversely affect the | 6 | | interests of the
company's policyholders or shareholders.
| 7 | | Nothing herein contained shall be deemed to authorize or | 8 | | permit any
transactions that, in the case of a company an | 9 | | insurer not a member of the same holding
company system, would | 10 | | be otherwise contrary to law.
| 11 | | (b) Any transaction or contract otherwise described in | 12 | | paragraph (a) of this
subsection that is between a domestic | 13 | | company insurer and any person that is not its
affiliate and | 14 | | that precedes or follows within 180 days or is concurrent with | 15 | | a
similar transaction between that nonaffiliate and an | 16 | | affiliate of the domestic
company and that involves amounts | 17 | | that are equal to or exceed the lesser of 3%
of the domestic | 18 | | company's insurer's admitted assets or 25% of its surplus as | 19 | | regards
policyholders at the end of the prior year may not be | 20 | | entered into unless the
company has notified the Director in | 21 | | writing of its intention to enter into the
transaction at least | 22 | | 30 days prior thereto or such shorter period as the
Director | 23 | | may permit, and the Director has not disapproved it within such
| 24 | | period.
| 25 | | (c) A company may not enter into transactions which are | 26 | | part of
a plan
or series of like transactions with any person |
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| 1 | | within the holding company
system if the purpose of those | 2 | | separate transactions is to avoid the
statutory threshold | 3 | | amount and thus avoid the review that would occur
otherwise. If | 4 | | the Director determines that such separate transactions were
| 5 | | entered into for such purpose, he may
exercise his authority | 6 | | under subsection (2) of Section 131.24.
| 7 | | (d) The Director, in reviewing transactions pursuant to | 8 | | paragraph (a),
shall consider whether the transactions comply | 9 | | with the standards set forth in
Section 131.20 and whether they | 10 | | may adversely affect the interests of
policyholders.
| 11 | | (e) The Director shall be notified within 30 days of any | 12 | | investment of the
domestic company insurer in any one | 13 | | corporation if the total investment in that
corporation by the | 14 | | insurance holding company system exceeds 10% of that
| 15 | | corporation's voting securities.
| 16 | | (f) Except for those transactions subject to approval
under | 17 | | other
Sections
of this Code,
any such transaction or agreements | 18 | | which are not disapproved by the
Director may be effective as | 19 | | of the date set forth in the notice required
under this | 20 | | Section.
| 21 | | (g) If a domestic company insurer enters into a transaction | 22 | | described in this
subsection without having given the required | 23 | | notification, the Director may
cause the company insurer to pay | 24 | | a civil forfeiture of not more than $250,000. Each
transaction | 25 | | so entered shall be considered a separate offense.
| 26 | | (2) No domestic company subject to registration under |
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| 1 | | Section 131.13 may
pay any extraordinary dividend or make any | 2 | | other extraordinary distribution
to its shareholders | 3 | | securityholders until: (a) 30 days after the Director has | 4 | | received
notice of the declaration thereof and has not within | 5 | | such period
disapproved the payment, or (b) the Director | 6 | | approves such payment within
the 30-day period. For purposes of | 7 | | this subsection, an extraordinary
dividend or distribution is | 8 | | any dividend or distribution of cash or other
property whose | 9 | | fair market value, together with that of other dividends or
| 10 | | distributions, made within the period of 12 consecutive months | 11 | | ending on the
date on which the proposed dividend is scheduled | 12 | | for payment or
distribution exceeds the greater of: (a) 10% of | 13 | | the company's
surplus as regards policyholders as of the 31st | 14 | | day of December next
preceding, or (b) the net income of the | 15 | | company for the 12-month period ending the 31st day
of December | 16 | | next preceding, but does not include pro rata distributions of
| 17 | | any class of the company's own securities.
| 18 | | Notwithstanding any other provision of law, the company may | 19 | | declare an
extraordinary dividend or distribution which is | 20 | | conditional upon the
Director's approval, and such a | 21 | | declaration confers no rights upon
security holders until: (a) | 22 | | the Director has approved the payment of the
dividend or | 23 | | distribution, or (b) the Director has not disapproved the
| 24 | | payment within the 30-day period referred to above.
| 25 | | (Source: P.A. 92-140, eff. 7-24-01.)
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| 1 | | (215 ILCS 5/131.20b)
| 2 | | Sec. 131.20b. Controlled companies insurers ; management; | 3 | | directors.
| 4 | | (1) Notwithstanding the control of a domestic company | 5 | | insurer by any person, the
officers and directors of the | 6 | | company insurer shall not thereby be relieved of any
obligation | 7 | | or liability to which they would otherwise be subject by law, | 8 | | and
the company insurer shall be managed so as to assure its | 9 | | separate operating identity
consistent with this Article VIII | 10 | | 1/2 of this Code .
| 11 | | (2) Nothing in this Section shall preclude a domestic | 12 | | company insurer from having or
sharing a common management or a | 13 | | cooperative or joint use of personnel,
property,
or services | 14 | | with one or more affiliated persons under arrangements meeting | 15 | | the
standards and requirements of Sections 131.20 and 131.20a.
| 16 | | (3) Not After June 30, 2002, not less than one-third of the | 17 | | directors of a
domestic company, and not less than one-third of | 18 | | the members of each committee of the board of directors of any | 19 | | domestic company, insurer that is a member of an insurance | 20 | | holding company system shall
be persons who are not officers or | 21 | | employees of the company insurer or of any entity
controlling, | 22 | | controlled by, or under common control with the company insurer | 23 | | and who
are not beneficial owners of a controlling interest in | 24 | | the voting stock of the
company insurer or any such entity. At | 25 | | least one such person shall be included in any
quorum for the | 26 | | transaction of business at any meeting of the board of |
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| 1 | | directors
or any committee thereof.
| 2 | | (3.5) The board of directors of a domestic company or | 3 | | ultimate controlling company shall establish one or more | 4 | | committees comprised solely of directors who are not officers | 5 | | or employees of the company or of any entity controlling, | 6 | | controlled by, or under common control with the company and who | 7 | | are not beneficial owners of a controlling interest in the | 8 | | voting stock of the company or any such entity. The committee | 9 | | or committees shall have responsibility for nominating | 10 | | candidates for director for election by shareholders or | 11 | | policyholders, evaluating the performance of officers deemed | 12 | | to be principal officers of the company, and recommending to | 13 | | the board of directors the selection and compensation of the | 14 | | principal officers. | 15 | | (4) Subsections Subsection (3) and (3.5) of this Section do | 16 | | does not apply to a domestic company insurer if
the ultimate | 17 | | controlling company or the person entity controlling the | 18 | | company, such as a company, a mutual insurance holding company, | 19 | | or a publicly held corporation, has a board of directors and | 20 | | committees thereof that meet the requirements of subsections | 21 | | (3) and (3.5) with respect to such controlling entity or are | 22 | | subject to and meet the
requirements of the corporate | 23 | | governance rules of a national securities exchange, such as the | 24 | | New
York Stock Exchange, or an inter-dealer quotation system, | 25 | | such as the National Association of
Securities Dealers | 26 | | Automatic Quotation the insurer, whether directly or through an |
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| 1 | | intermediate
subsidiary, has a board of directors composed in | 2 | | accordance with that
subsection .
| 3 | | (5) (Blank). Subsection (3) of this Section does not apply | 4 | | to a domestic insurer if
the ultimate controlling party of the | 5 | | domestic insurer is a corporation whose
equity securities or | 6 | | equivalent instruments are listed on the New York Stock
| 7 | | Exchange.
| 8 | | (6) A company may make application to the Director for a | 9 | | waiver from the requirements of this Section, if the company's | 10 | | annual direct written and assumed premium, excluding premiums | 11 | | reinsured with the Federal Crop Insurance Corporation and | 12 | | Federal Flood Program, is less than $300,000,000. A company may | 13 | | also make application to the Director for a waiver from the | 14 | | requirements of this Section based upon unique circumstances. | 15 | | The Director may consider various factors, including, but not | 16 | | limited to, the type of business entity, volume of business | 17 | | written, availability of qualified board members, or the | 18 | | ownership or organizational structure of the entity. | 19 | | (Source: P.A. 92-140, eff. 7-24-01.)
| 20 | | (215 ILCS 5/131.20c new) | 21 | | Sec. 131.20c. Supervisory colleges. | 22 | | (a) With respect to any company registered under Section | 23 | | 131.13 of this Code, and in accordance with subsection (c) of | 24 | | this Section, the Director shall also have the power to | 25 | | participate in a supervisory college for any domestic company |
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| 1 | | that is part of an insurance holding company system with | 2 | | international operations in order to determine compliance by | 3 | | the company with this Article. The powers of the Director with | 4 | | respect to supervisory colleges include, but are not limited | 5 | | to: | 6 | | (1) initiating the establishment of a supervisory | 7 | | college; | 8 | | (2) clarifying the membership and participation of | 9 | | other supervisors in the supervisory college; | 10 | | (3) clarifying the functions of the supervisory | 11 | | college and the role of other regulators, including the | 12 | | establishment of a group-wide supervisor; | 13 | | (4) coordinating the ongoing activities of the | 14 | | supervisory college, including planning meetings, | 15 | | supervisory activities, and processes for information | 16 | | sharing; and | 17 | | (5) establishing a crisis management plan. | 18 | | (b) Each registered company subject to this Section shall | 19 | | be liable for and shall pay the reasonable expenses of the | 20 | | Director's participation in a supervisory college in | 21 | | accordance with subsection (c) of this Section, including | 22 | | reasonable travel expenses. For purposes of this Section, a | 23 | | supervisory college may be convened as either a temporary or | 24 | | permanent forum for communication and cooperation between the | 25 | | regulators charged with the supervision of the company or its | 26 | | affiliates, and the Director may establish a regular assessment |
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| 1 | | to the company for the payment of these expenses. | 2 | | (c) In order to assess the business strategy, financial | 3 | | position, legal and regulatory position, risk exposure, risk | 4 | | management, and governance processes, and as part of the | 5 | | examination of individual companies in accordance with Section | 6 | | 131.21 of this Code, the Director may participate in a | 7 | | supervisory college with other regulators charged with | 8 | | supervision of the company or its affiliates, including other | 9 | | state, federal, and international regulatory agencies. The | 10 | | Director may enter into agreements in accordance with Section | 11 | | 131.22 of this Code providing the basis for cooperation between | 12 | | the Director and the other regulatory agencies and the | 13 | | activities of the supervisory college. Nothing in this Section | 14 | | shall delegate to the supervisory college the authority of the | 15 | | Director to regulate or supervise the company or its affiliates | 16 | | within its jurisdiction.
| 17 | | (215 ILCS 5/131.21) (from Ch. 73, par. 743.21)
| 18 | | Sec. 131.21. Examination.
| 19 | | (1) Subject to the limitation contained in this section and | 20 | | in addition
to the powers which the Director has under Sections | 21 | | 132 through 132.7 and
401 through 403
of this Code relating to | 22 | | the examination of companies, the Director shall have the power | 23 | | to examine any company registered under Section 131.13 of this | 24 | | Code and its affiliates to ascertain the financial condition of | 25 | | the company, including the enterprise risk to the company by |
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| 1 | | the ultimate controlling party, or by any entity or combination | 2 | | of entities within the insurance holding company system, or by | 3 | | the insurance holding company system on a consolidated basis. | 4 | | also
has the power to order any company registered under | 5 | | Section 131.13 to
produce such records, books, or other | 6 | | information papers in the possession
of the company or its | 7 | | affiliates as are reasonably necessary to ascertain the
| 8 | | financial condition of such company or to determine compliance | 9 | | with this
Article. In the event the
company fails to comply | 10 | | with the order, the Director has the power to
examine the | 11 | | affiliates to obtain such information.
| 12 | | (1.5) The Director may order any company registered under | 13 | | Section 131.13 of this Code to produce such records, books, or | 14 | | other information papers in the possession of the company or | 15 | | its affiliates as are reasonably necessary to determine | 16 | | compliance with this Article. To determine compliance with this | 17 | | Article, the Director may order any company registered under | 18 | | Section 131.13 of this Code to produce information not in the | 19 | | possession of the company if the company can obtain access to | 20 | | such information pursuant to contractual relationships, | 21 | | statutory obligations, or other methods. In the event the | 22 | | company cannot obtain the information requested by the | 23 | | Director, the company shall provide the Director a detailed | 24 | | explanation of the reason that the company cannot obtain the | 25 | | information and the identity of the holder of the information. | 26 | | Whenever the Director determines that the detailed explanation |
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| 1 | | is without merit, the Director may require, after notice and | 2 | | hearing, the company to pay a penalty of up to $1,000 for each | 3 | | day's delay, or may suspend or revoke the company's license. | 4 | | (2) The Director may retain at the registered company's | 5 | | expense any
attorneys, actuaries, accountants and other | 6 | | experts not otherwise a part of
the Director's staff as may be | 7 | | reasonably necessary to assist in the
conduct of the | 8 | | examination under subsection (1). Any
persons so retained are
| 9 | | under the direction and control of the Director and may act in | 10 | | a purely
advisory capacity.
| 11 | | (3) Each registered company producing for examination | 12 | | records, books and
papers under subsection (1.5) (1) is liable | 13 | | for and must pay
the expense of the
examination in accordance | 14 | | with Section 408 of this Code.
| 15 | | (4) The Director may retain at the registered company's | 16 | | expense any attorneys, actuaries,
accountants, and other | 17 | | experts not otherwise a part of the Director's staff as may be | 18 | | reasonably
necessary to assist in the conduct of the | 19 | | examination under subsection (1) of this Section. Any persons | 20 | | so
retained are under the direction and control of the Director | 21 | | and may act in a purely advisory
capacity. | 22 | | (5) In the event the company fails to comply with an order, | 23 | | the Director shall have the power to examine the affiliates to | 24 | | obtain the information. The Director shall also have the power | 25 | | to issue subpoenas, to administer oaths, and to examine under | 26 | | oath any person for purposes of determining compliance with |
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| 1 | | this Section. Upon the failure or refusal of any person to obey | 2 | | a subpoena, the Director may petition a court of competent | 3 | | jurisdiction and, upon proper showing, the court may enter an | 4 | | order compelling the witness to appear and testify or produce | 5 | | documentary evidence. Failure to obey the court order shall be | 6 | | punishable as contempt of court. Every person shall be obliged | 7 | | to attend as a witness at the place specified in the subpoena, | 8 | | when subpoenaed, anywhere within the State. He or she shall be | 9 | | entitled to the same fees and mileage, if claimed, as a witness | 10 | | in the Circuit Court, which fees, mileage, and actual expense, | 11 | | if any, necessarily incurred in securing the attendance of | 12 | | witnesses, and their testimony, shall be itemized and charged | 13 | | against, and be paid by, the company being examined. | 14 | | (Source: P.A. 89-97, eff. 7-7-95.)
| 15 | | (215 ILCS 5/131.22) (from Ch. 73, par. 743.22)
| 16 | | Sec. 131.22. Confidential treatment. | 17 | | (a) Documents, materials, or other information in the | 18 | | possession or control of the Department that are obtained by or | 19 | | disclosed to the Director or any other person in the course of | 20 | | an examination or investigation made pursuant to this Article | 21 | | and all information reported pursuant to this Article shall be | 22 | | confidential by law and privileged, shall not be subject to the | 23 | | Illinois Freedom of Information Act, shall not be subject to | 24 | | subpoena, and shall not be subject to discovery or admissible | 25 | | in evidence in any private civil action. However, the Director |
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| 1 | | is authorized to use the documents, materials, or other | 2 | | information in the furtherance of any regulatory or legal | 3 | | action brought as a part of the Director's official duties. The | 4 | | Director shall not otherwise make the documents, materials, or | 5 | | other information public without the prior written consent of | 6 | | the company to which it pertains unless the Director, after | 7 | | giving the company and its affiliates who would be affected | 8 | | thereby prior written notice and an opportunity to be heard, | 9 | | determines that the interest of policyholders, shareholders, | 10 | | or the public shall be served by the publication thereof, in | 11 | | which event the Director may publish all or any part in such | 12 | | manner as may be deemed appropriate. | 13 | | (b) Neither the Director nor any person who received | 14 | | documents, materials, or other information while acting under | 15 | | the authority of the Director or with whom such documents, | 16 | | materials, or other information are shared pursuant to this | 17 | | Article shall be permitted or required to testify in any | 18 | | private civil action concerning any confidential documents, | 19 | | materials, or information subject to subsection (a) of this | 20 | | Section. | 21 | | (c) In order to assist in the performance of the Director's | 22 | | duties, the Director: | 23 | | (1) may share documents, materials, or other | 24 | | information, including the confidential and privileged | 25 | | documents, materials, or information subject to subsection | 26 | | (a) of this Section, with other state, federal, and |
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| 1 | | international regulatory agencies, with the NAIC and its | 2 | | affiliates and subsidiaries, and with state, federal, and | 3 | | international law enforcement authorities, including | 4 | | members of any supervisory college allowed by this Article, | 5 | | provided that the recipient agrees in writing to maintain | 6 | | the confidentiality and privileged status of the document, | 7 | | material, or other information, and has verified in writing | 8 | | the legal authority to maintain confidentiality; | 9 | | (1.5) notwithstanding paragraph (1) of this subsection | 10 | | (c), may only share confidential and privileged documents, | 11 | | material, or information reported pursuant to Section | 12 | | 131.14b with commissioners of states having statutes or | 13 | | regulations substantially similar to subsection (a) of | 14 | | this Section and who have agreed in writing not to disclose | 15 | | such information; | 16 | | (2) may receive documents, materials, or information, | 17 | | including otherwise confidential and privileged documents, | 18 | | materials, or information from the NAIC and its affiliates | 19 | | and subsidiaries and from regulatory and law enforcement | 20 | | officials of other foreign or domestic jurisdictions, and | 21 | | shall maintain as confidential or privileged any document, | 22 | | material, or information received with notice or the | 23 | | understanding that it is confidential or privileged under | 24 | | the laws of the jurisdiction that is the source of the | 25 | | document, material, or information; any such documents,
| 26 | | materials, or information, while in the Director's |
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| 1 | | possession, shall not be subject to the
Illinois Freedom of | 2 | | Information Act and shall not be subject to subpoena; and | 3 | | (3) shall enter into written agreements with the NAIC | 4 | | governing sharing and use of information provided pursuant | 5 | | to this Article consistent with this subsection (c) that | 6 | | shall
(i)
specify procedures and protocols regarding the | 7 | | confidentiality and security of information shared with | 8 | | the NAIC and its affiliates and subsidiaries pursuant to | 9 | | this Article, including procedures and protocols for | 10 | | sharing by the NAIC with other state, federal, or | 11 | | international regulators;
(ii)
specify that ownership of | 12 | | information shared with the NAIC and its affiliates and | 13 | | subsidiaries pursuant to this Article remains with the | 14 | | Director and the NAIC's use of the information is subject | 15 | | to the direction of the Director;
(iii)
require prompt | 16 | | notice to be given to a company whose confidential | 17 | | information in the possession of the NAIC pursuant to this | 18 | | Article is subject to a request or subpoena to the NAIC for | 19 | | disclosure or production; and
(iv)
require the NAIC and its | 20 | | affiliates and subsidiaries to consent to intervention by a | 21 | | company in any judicial or administrative action in which | 22 | | the NAIC and its affiliates and subsidiaries may be | 23 | | required to disclose confidential information about the | 24 | | company shared with the NAIC and its affiliates and | 25 | | subsidiaries pursuant to this Article. | 26 | | (d) The sharing of documents, materials, or information by |
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| 1 | | the Director pursuant to this Article shall not constitute a | 2 | | delegation of regulatory authority or rulemaking, and the | 3 | | Director is solely responsible for the administration, | 4 | | execution, and enforcement of the provisions of this Article. | 5 | | (e) No waiver of any applicable privilege or claim of | 6 | | confidentiality in the documents, materials, or information | 7 | | shall occur as a result of disclosure to the Director under | 8 | | this Section or as a result of sharing as authorized in | 9 | | subsection (c) of this Section. | 10 | | (f) Documents, materials, or other information in the | 11 | | possession or control of the NAIC pursuant to this Article | 12 | | shall be confidential by law and privileged, shall not be | 13 | | subject to the Illinois Freedom of Information Act, shall not | 14 | | be subject to subpoena, and shall not be subject to discovery | 15 | | or admissible in evidence in any private civil action. All | 16 | | information, documents, and copies thereof obtained by or | 17 | | disclosed
to the Director or any other person in the course of | 18 | | an examination
or investigation made under
Section 131.21 and | 19 | | all information submitted under Sections 131.13 or 131.20a
and | 20 | | all personal financial statement information submitted under | 21 | | Section
131.5 must be given confidential treatment and is not
| 22 | | subject to
subpoena and may not be made public by the Director | 23 | | or any other person, without the prior written consent of
the | 24 | | company to which it pertains unless the Director, after giving | 25 | | the
company and its affiliates who would be affected thereby | 26 | | notice and
opportunity to be heard, determines that the |
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| 1 | | interests of policyholders,
shareholders or the public will be | 2 | | served by the publication thereof in
which event he may publish | 3 | | all or any part thereof in such manner as he may
deem | 4 | | appropriate.
| 5 | | Nothing contained in this Section shall prevent or be | 6 | | construed as
prohibiting the Director from disclosing such | 7 | | information to the insurance
department of any other state or | 8 | | county or to law enforcement officials of this
or any other | 9 | | state or agency of the federal government at any time upon the
| 10 | | written agreement of the entity receiving the information to | 11 | | hold that
information confidential and in a manner consistent | 12 | | with this Code.
| 13 | | (Source: P.A. 88-364.)
| 14 | | (215 ILCS 5/131.23) (from Ch. 73, par. 743.23)
| 15 | | Sec. 131.23.
Injunctions; prohibitions against voting | 16 | | securities; sequestration of
voting securities.
(1) Whenever | 17 | | it appears to the Director that any company or any
director, | 18 | | officer, employee or agent thereof has committed or is about to
| 19 | | commit a violation of this Article or of any rule, regulation, | 20 | | or order
issued by the Director hereunder, the Director may | 21 | | apply to the Circuit
Court for the county in which the | 22 | | principal office of the company is
located or to the Circuit | 23 | | Court for Sangamon County for an order enjoining
the company or | 24 | | the director, officer, employee or agent thereof from
violating | 25 | | or continuing to violate this Article or any rule, regulation |
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| 1 | | or
order, and for any other equitable relief as the nature of | 2 | | the case and the
interests of the company's policyholders, | 3 | | creditors or the
public may require. In any proceeding, the | 4 | | validity of the rule, regulation
or order alleged to have been | 5 | | violated may be determined by the Court.
| 6 | | (2) No security or shareholder's or policyholder's proxy | 7 | | which is the subject of any agreement or arrangement
regarding | 8 | | acquisition, or which is acquired or to be acquired, in
| 9 | | contravention of this Article or of any rule, regulation or | 10 | | order issued by
the Director hereunder may be voted at any | 11 | | shareholders' securityholders' meeting, or may be
counted for | 12 | | quorum purposes, and any action of shareholders | 13 | | securityholders' requiring the
affirmative vote of a | 14 | | percentage of securities shall may be taken as though such
| 15 | | securities (including securities that may be voted pursuant to | 16 | | such proxies) were not issued and outstanding; but no action | 17 | | taken at any such
meeting may be invalidated by the voting of | 18 | | such securities or proxies , unless the
action would materially | 19 | | affect control of the company or unless any court
of this State | 20 | | has so ordered. If the Director has reason to
believe that any | 21 | | security or shareholder's or policyholder's proxy of the | 22 | | company has been or is about to be
acquired in contravention of | 23 | | this Article or of any rule, regulation or
order issued by the | 24 | | Director hereunder the company or the Director may
apply to the | 25 | | Circuit Court for Sangamon County or to the Circuit Court for
| 26 | | the county in which the company has its principal place of |
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| 1 | | business (a) to
enjoin the further pursuit or use of any offer, | 2 | | request, invitation,
agreement or acquisition made in | 3 | | contravention of Sections 131.4 through
131.12 or any rule, | 4 | | regulation, or order issued by the Director thereunder;
(b) to | 5 | | enjoin the voting of any security or proxy so acquired; (c) to | 6 | | void any vote
of such security or proxy already cast at any | 7 | | meeting of shareholders securityholders ; and (d) for
any other | 8 | | equitable relief as the nature of the case and the interests of
| 9 | | the company's policyholders, creditors, or the public may
| 10 | | require.
| 11 | | (3) In any case where a person has acquired or is proposing | 12 | | to acquire
any voting securities or shareholder's or | 13 | | policyholder's proxy in violation of this Article or any rule, | 14 | | regulation
or order issued by the Director hereunder, the | 15 | | Circuit Court for Sangamon
County or the Circuit Court for the | 16 | | county in which the company has its
principal place of business | 17 | | may, on such notice as the court deems
appropriate, upon the | 18 | | application of the company or the Director seize or
sequester | 19 | | any voting securities or shareholder's or policyholder's proxy | 20 | | of the company owned directly or indirectly
by such person, and | 21 | | issue any orders with respect thereto as may be
appropriate to | 22 | | effectuate this Article. Notwithstanding any other
provisions | 23 | | of law, for the purposes of this Article, the situs of the
| 24 | | ownership of the securities of domestic companies is deemed to | 25 | | be in this
State.
| 26 | | (4) If the Director has reason to believe that any |
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| 1 | | shareholders' or policyholders' proxies
have been or are about | 2 | | to be acquired in contravention of this Article or
of any rule, | 3 | | regulations or order issued by the Director hereunder, the
| 4 | | Director may apply to the Circuit Court for Sangamon County or | 5 | | to the Circuit
Court for the county in which the company has | 6 | | its principal place of business
(a) to enjoin further pursuit | 7 | | or use of any offer, request, invitation,
agreement or | 8 | | acquisition made in contravention of Section 131.4 through
| 9 | | 131.12 and (b) for any other equitable relief as the nature of | 10 | | the case
and the interests of the company's policyholders, | 11 | | creditors or the public may require.
| 12 | | (Source: P.A. 84-805.)
| 13 | | (215 ILCS 5/131.24) (from Ch. 73, par. 743.24)
| 14 | | Sec. 131.24. Sanctions.
| 15 | | (1) Every director or officer of an insurance
holding | 16 | | company system who knowingly violates, participates in, or | 17 | | assents
to, or who knowingly permits any of the officers or | 18 | | agents of the
company to engage in transactions or make | 19 | | investments which have not been
properly filed or approved or | 20 | | which violate this Article, shall pay, in
their individual | 21 | | capacity, a civil forfeiture of not more than $100,000
per | 22 | | violation, after notice and hearing before the Director. In | 23 | | determining
the amount of the civil forfeiture, the Director | 24 | | shall take into account the
appropriateness of the forfeiture | 25 | | with respect to the gravity of the
violation, the history of |
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| 1 | | previous violations, and such other matters as
justice may | 2 | | require.
| 3 | | (2) Whenever it appears to the Director determines that any | 4 | | company subject to this
Article or any director, officer, | 5 | | employee or agent thereof has engaged in
any transaction or | 6 | | entered into a contract which is subject to Section
131.20, and | 7 | | any one of Sections 131.16, 131.20a, 141, 141.1, or 174 of this
| 8 | | Code and which would not have been approved had such
approval | 9 | | been requested or would have been disapproved had required | 10 | | notice
been given, the Director may order the company to cease | 11 | | and
desist immediately any further activity under that | 12 | | transaction or contract.
After notice and hearing the Director | 13 | | may also order (a) the company to void
any such contracts and | 14 | | restore the status quo if such action is in the best
interest | 15 | | of the policyholders or the public, and (b) any affiliate of | 16 | | the
company, which has received from the company dividends, | 17 | | distributions,
assets, loans, extensions of credit, | 18 | | guarantees, or investments in
violation of any such Section, to | 19 | | immediately repay, refund or restore to
the company such | 20 | | dividends, distributions, assets, extensions of credit,
| 21 | | guarantees or investments.
| 22 | | (3) Whenever it appears to the Director determines that any | 23 | | company or any
director, officer, employee or agent thereof has | 24 | | committed a willful
violation of this Article, the Director may | 25 | | cause criminal proceedings to
be instituted in the Circuit | 26 | | Court for the county in which the principal
office of the |
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| 1 | | company is located or in the Circuit Court of Sangamon or
Cook | 2 | | County against such company or the responsible director, | 3 | | officer,
employee or agent thereof. Any company which willfully | 4 | | violates this
Article commits a business offense and may be | 5 | | fined up to $500,000. Any individual
who willfully
violates | 6 | | this Article commits a Class 4 felony and may be fined in his
| 7 | | individual capacity not more than
$500,000 or be imprisoned for | 8 | | not less than one year nor more
than
3 years, or both.
| 9 | | (4) Any officer, director, or employee of an insurance | 10 | | holding company
system who willfully and knowingly subscribes | 11 | | to or makes or causes to be
made any false statements or false | 12 | | reports or false filings with the intent
to deceive the | 13 | | Director in the performance of his duties under this
Article, | 14 | | commits a Class 3 felony and upon conviction thereof, shall be
| 15 | | imprisoned for not less than 2 years nor more than
5 years or | 16 | | fined $500,000 or both. Any fines imposed shall be
paid by
the | 17 | | officer, Director, or employee
in his individual capacity.
| 18 | | (5) Whenever the Director determines that any person has | 19 | | committed a violation of Section 131.14b of this Code which | 20 | | prevents the full understanding of the enterprise risk to the | 21 | | company by affiliates or by the insurance holding company | 22 | | system, the violation may serve as an independent basis, after | 23 | | an opportunity for a hearing, for disapproving dividends or | 24 | | distributions and for placing the company under an order of | 25 | | supervision in accordance with Article XII 1/2 of this Code. | 26 | | (Source: P.A. 93-32, eff. 7-1-03.)
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| 1 | | (215 ILCS 5/131.26) (from Ch. 73, par. 743.26)
| 2 | | Sec. 131.26. Revocation, suspension, or non-renewal of | 3 | | company's license. Whenever it appears to the Director | 4 | | determines that any person has committed a
violation of this | 5 | | Article which makes the continued operation of a company
| 6 | | contrary to the interests of policyholders or the public, the | 7 | | Director may,
after notice and hearing suspend, revoke or | 8 | | refuse to renew the company's
license or authority to do | 9 | | business in this State for such a period as the Director he | 10 | | finds
is required for the protection of policyholders or the | 11 | | public. Any such
determination must be accompanied by specific | 12 | | findings of fact and
conclusions of law.
| 13 | | (Source: P.A. 77-673.)
| 14 | | (215 ILCS 5/131.27) (from Ch. 73, par. 743.27)
| 15 | | Sec. 131.27. Judicial review. | 16 | | (1) Any order or decision made,
issued or executed by the | 17 | | Director under this Article whereby any person
or company is | 18 | | aggrieved is subject to review
by the Circuit Court of
Sangamon | 19 | | County or the Circuit Court of Cook County .
| 20 | | The Administrative Review Law, as now or hereafter amended, | 21 | | and the rules
adopted pursuant
thereto, applies to and governs | 22 | | all proceedings for review of final
administrative decisions of | 23 | | the Director provided for in this Section. The
term | 24 | | "administrative decision" is defined as in Section 3-101 of the |
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| 1 | | Code
of Civil Procedure.
| 2 | | (2) The filing of an appeal pursuant to this Section shall | 3 | | stay the application of any rule, regulation, order, or other | 4 | | action of the Director to the appealing party unless the court, | 5 | | after giving the party notice and an opportunity to be heard, | 6 | | determines that a stay would be detrimental to the interest of | 7 | | policyholders, shareholders, creditors, or the public. | 8 | | (3) Any person aggrieved by any failure of the Director to | 9 | | act or make a determination required by this Article may | 10 | | petition the circuit courts of Sangamon County or Cook County | 11 | | for a writ in the nature of a mandamus or a peremptory mandamus | 12 | | directing the Director to act or make a determination. | 13 | | (Source: P.A. 82-783.)
| 14 | | (215 ILCS 5/131.29 new) | 15 | | Sec. 131.29. Rulemaking power.
The Director may adopt such | 16 | | administrative rules as are necessary to implement the | 17 | | provisions of this Article. | 18 | | (215 ILCS 5/131.30 new) | 19 | | Sec. 131.30. Conflict with other laws.
This Article | 20 | | supersedes all laws and parts of laws of this State | 21 | | inconsistent with this Code with respect to matters covered by | 22 | | this Code.
| 23 | | (215 ILCS 5/408.3) (from Ch. 73, par. 1020.3)
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| 1 | | Sec. 408.3. Insurance Financial Regulation Fund; uses. The | 2 | | monies
deposited into the Insurance Financial
Regulation Fund | 3 | | shall be used only for (i) payment of the expenses of the
| 4 | | Department, including related administrative expenses, | 5 | | incurred in
analyzing, investigating and examining the | 6 | | financial condition or control
of insurance companies and other | 7 | | entities licensed or seeking to be
licensed by the Department, | 8 | | including the collection, analysis and
distribution of | 9 | | information on insurance premiums, other income, costs and
| 10 | | expenses, and (ii) to pay internal costs and expenses of the | 11 | | Interstate
Insurance Receivership Commission allocated to this | 12 | | State and authorized and
admitted companies doing an insurance | 13 | | business in this State under Article X of
the Interstate | 14 | | Receivership Compact. All distributions and payments from the
| 15 | | Insurance Financial Regulation Fund shall be subject to | 16 | | appropriation as
otherwise provided by law for
payment of such | 17 | | expenses.
| 18 | | Sums appropriated under clause (ii) of the preceding | 19 | | paragraph shall be
deemed to satisfy, pro tanto, the | 20 | | obligations of insurers doing business in
this
State under | 21 | | Article X of the Interstate Insurance Receivership Compact.
| 22 | | Nothing in this Code shall prohibit the General Assembly | 23 | | from
appropriating funds from the General Revenue Fund to the | 24 | | Department for the
purpose of administering this Code.
| 25 | | No fees collected pursuant to Section 408 of this Code | 26 | | shall be used
for the regulation of pension funds or activities |
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| 1 | | by the Department in the
performance of its duties under | 2 | | Article 22 of the Illinois Pension Code.
| 3 | | If at the end of a fiscal year the balance in the Insurance | 4 | | Financial
Regulation Fund which remains unexpended or | 5 | | unobligated exceeds the amount
of funds that the Director may | 6 | | certify is needed for the purposes
enumerated in this Section, | 7 | | then the General Assembly may appropriate that
excess amount | 8 | | for purposes other than those enumerated in this Section.
| 9 | | Moneys in the Insurance Financial Regulation Fund may be | 10 | | transferred to the Professions Indirect Cost Fund, as | 11 | | authorized under Section 2105-300 of the Department of | 12 | | Professional Regulation Law of the Civil Administrative Code of | 13 | | Illinois.
| 14 | | (Source: P.A. 94-91, eff. 7-1-05.)
| 15 | | Section 97. Severability. The provisions of this Act are | 16 | | severable under Section 1.31 of the Statute on Statutes.
| 17 | | Section 99. Effective date. This Act takes effect January | 18 | | 1, 2014, except that Section 131.14b of the Illinois Insurance | 19 | | Code takes effect July 1, 2014.
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