Public Act 103-0090
SB1494 EnrolledLRB103 25196 BMS 51537 b SB1494 Enrolled LRB103 25196 BMS 51537 b
SB1494 Enrolled LRB103 25196 BMS 51537 b
AN ACT concerning regulation.
Be it enacted by the People of the State of Illinois,
represented in the General Assembly:
Section 5. The Illinois Insurance Code is amended by
changing Sections 35B-25 and 35B-30 as follows:
(215 ILCS 5/35B-25)
Sec. 35B-25. Plan of division approval.
(a) A division shall not become effective until it is
approved by the Director after reasonable notice and a public
hearing, if the notice and hearing are deemed by the Director
to be in the public interest. Any decision by the Director on
whether or not to hold a public hearing on either a plan of
division or an amended plan of division may be made
independently by the Director. The Director shall hold a
public hearing if one is requested by the dividing company. A
hearing conducted under this Section shall be conducted in
accordance with Article 10 of the Illinois Administrative
Procedure Act.
(b) The Director shall approve a plan of division unless
the Director finds that:
(1) the interest of any class of policyholder or
shareholder of the dividing company will not be properly
protected;
SB1494 Enrolled LRB103 25196 BMS 51537 b
(2) each new company created by the proposed division,
except a new company that is a nonsurviving party to a
merger pursuant to subsection (b) of Section 156, would be
ineligible to receive a license to do insurance business
in this State pursuant to Section 5;
(2.5) each new company created by the proposed
division, except a new company that is a nonsurviving
party to a merger pursuant to subsection (b) of Section
156, that will be a member insurer of the Illinois Life and
Health Insurance Guaranty Association and that will have
policy liabilities allocated to it will not be licensed to
do insurance business in each state where such policies
were written by the dividing company;
(3) the proposed division violates a provision of the
Uniform Fraudulent Transfer Act;
(4) the division is being made for purposes of
hindering, delaying, or defrauding any policyholders or
other creditors of the dividing company;
(5) one or more resulting companies will not be
solvent upon the consummation of the division; or
(6) the remaining assets of one or more resulting
companies will be, upon consummation of a division,
unreasonably small in relation to the business and
transactions in which the resulting company was engaged or
is about to engage.
(c) In determining whether the standards set forth in
paragraph (3) of subsection (b) have been satisfied, the
Director shall only apply the Uniform Fraudulent Transfer Act
to a dividing company in its capacity as a resulting company
and shall not apply the Uniform Fraudulent Transfer Act to any
dividing company that is not proposed to survive the division.
(d) In determining whether the standards set forth in
paragraphs (3), (4), (5), and (6) of subsection (b) have been
satisfied, the Director may consider all proposed assets of
the resulting company, including, without limitation,
reinsurance agreements, parental guarantees, support or keep
well agreements, or capital maintenance or contingent capital
agreements, in each case, regardless of whether the same would
qualify as an admitted asset as defined in Section 3.1.
(e) In determining whether the standards set forth in
paragraph (3) of subsection (b) have been satisfied, with
respect to each resulting company, the Director shall, in
applying the Uniform Fraudulent Transfer Act, treat:
(1) the resulting company as a debtor;
(2) liabilities allocated to the resulting company as
obligations incurred by a debtor;
(3) the resulting company as not having received
reasonably equivalent value in exchange for incurring the
obligations; and
(4) assets allocated to the resulting company as
remaining property.
(f) All information, documents, materials, and copies
thereof submitted to, obtained by, or disclosed to the
Director in connection with a plan of division or in
contemplation thereof, including any information, documents,
materials, or copies provided by or on behalf of a domestic
stock company in advance of its adoption or submission of a
plan of division, shall be confidential and shall be subject
to the same protection and treatment in accordance with
Section 131.22 as documents and reports disclosed to or filed
with the Director pursuant to subsection (a) of Section
131.14b until such time, if any, as a notice of the hearing
contemplated by subsection (a) is issued.
(g) From and after the issuance of a notice of the hearing
contemplated by subsection (a), all business, financial, and
actuarial information that the domestic stock company requests
confidential treatment, other than the plan of division, shall
continue to be confidential and shall not be available for
public inspection and shall be subject to the same protection
and treatment in accordance with Section 131.22 as documents
and reports disclosed to or filed with the Director pursuant
to subsection (a) of Section 131.14b.
(h) All expenses incurred by the Director in connection
with proceedings under this Section, including expenses for
the services of any attorneys, actuaries, accountants, and
other experts as may be reasonably necessary to assist the
Director in reviewing the proposed division, shall be paid by
the dividing company filing the plan of division. A dividing
company may allocate expenses described in this subsection in
a plan of division in the same manner as any other liability.
(i) If the Director approves a plan of division, the
Director shall issue an order that shall be accompanied by
findings of fact and conclusions of law.
(j) The conditions in this Section for freeing one or more
of the resulting companies from the liabilities of the
dividing company and for allocating some or all of the
liabilities of the dividing company shall be conclusively
deemed to have been satisfied if the plan of division has been
approved by the Director in a final order that is not subject
to further appeal.
(k) If a dividing company amends its plan of division at
any time before the plan of division becomes effective,
including after the Director's approval of the plan or after
any hearing has been conducted under this Section, then the
dividing company shall file the amended plan of division for
approval by the Director pursuant to the provisions of this
Section. If the Director has already issued an order approving
the dividing company's previous plan of division under
subsection (i), then that order shall not be rescinded by the
Director's subsequent disapproval of an amended plan.
(1) If a hearing is conducted on the amended plan of
division after the Director has approved a previous plan
of division, then the hearing shall not be considered a
rehearing or a reopening of any hearing conducted on the
previous plan. Nothing in this Section shall prohibit the
dividing company from requesting a rehearing or reopening
of any hearing conducted on any disapproved plan of
division, amended or otherwise.
(2) Whether under direct review or in a hearing, the
Director may rely on information already submitted or
developed in connection with the previous plan of
division, as well as any findings of fact or conclusions
of law if a hearing has been conducted or an approval order
has been issued on the previous plan, to the extent the
information, findings, or conclusions remain relevant to
the amended plan of division, and the Director shall
collect any other information necessary to make a
determination under subsection (b).
(3) The fee assessed under Section 408 for filing a
plan of division shall not apply to the filing of an
amended plan of division, but subsection (h) shall apply
to all proceedings related to the amended plan.
(Source: P.A. 101-549, eff. 1-1-20; 102-394, eff. 8-16-21;
102-578, eff. 7-1-22 (See Section 5 of P.A. 102-672 for
effective date of P.A. 102-578).)
(215 ILCS 5/35B-30)
Sec. 35B-30. Certificate of division.
(a) After a plan of division has been adopted and
approved, an officer or duly authorized representative of the
dividing company shall sign a certificate of division.
(b) The certificate of division shall set forth:
(1) the name of the dividing company;
(2) a statement disclosing whether the dividing
company will survive the division;
(3) the name of each new company that will be created
by the division;
(4) the kinds of insurance business enumerated in
Section 4 that the new company will be authorized to
conduct;
(5) the date that the division is to be effective,
which shall not be more than 90 days after the dividing
company has filed the certificate of division with the
recorder, with a concurrent copy to the Director;
(6) a statement that the division was approved by the
Director in accordance with Section 35B-25, including the
date when approval was served on the dividing company;
(7) a statement that the dividing company provided, no
later than 10 business days after the dividing company
filed the plan of division with the Director, reasonable
notice to each reinsurer that is party to a reinsurance
contract that is applicable to the policies included in
the plan of division;
(8) if the dividing company will survive the division,
an amendment to its articles of incorporation or bylaws
approved as part of the plan of division;
(9) for each new company created by the division, its
articles of incorporation and bylaws, provided that the
articles of incorporation and bylaws need not state the
name or address of an incorporator; and
(10) a reasonable description of the capital, surplus,
other assets and liabilities, including policy
liabilities, of the dividing company that are to be
allocated to each resulting company.
(c) The articles of incorporation and bylaws of each new
company must satisfy the requirements of the laws of this
State, provided that the documents need not be signed or
include a provision that need not be included in a restatement
of the document.
(d) A certificate of division is effective when filed with
the recorder, with a concurrent copy to the Director, as
provided in this Section or on another date specified in the
plan of division, whichever is later, provided that a
certificate of division shall become effective not more than
90 days after it is filed with the recorder. A division is
effective when the relevant certificate of division is
effective.
(e) If the dividing company files an amended plan of
division with the Director after a certificate of division has
been filed for a previous plan, then the dividing company
shall file a certificate of stay with the recorder, with a
concurrent copy to the Director. The certificate of stay shall
identify the certificate of division being stayed and the date
on which the amended plan of division was filed with the
Director. If the Director issues an order on the amended plan,
or if the dividing company withdraws the amended plan before
an order is issued, then the dividing company shall file an
amended certificate of division pursuant to this Section.
Nothing in this subsection (e) shall allow a dividing company
to amend its plan of division under Section 35B-15 on or after
the effective date specified in a certificate of division that
is active or that has been stayed.
(Source: P.A. 102-775, eff. 5-13-22.)
Section 99. Effective date. This Act takes effect upon
becoming law.