Illinois General Assembly - Full Text of SB1494
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Full Text of SB1494  103rd General Assembly




SB1494 EnrolledLRB103 25196 BMS 51537 b

1    AN ACT concerning regulation.
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
4    Section 5. The Illinois Insurance Code is amended by
5changing Sections 35B-25 and 35B-30 as follows:
6    (215 ILCS 5/35B-25)
7    Sec. 35B-25. Plan of division approval.
8    (a) A division shall not become effective until it is
9approved by the Director after reasonable notice and a public
10hearing, if the notice and hearing are deemed by the Director
11to be in the public interest. Any decision by the Director on
12whether or not to hold a public hearing on either a plan of
13division or an amended plan of division may be made
14independently by the Director. The Director shall hold a
15public hearing if one is requested by the dividing company. A
16hearing conducted under this Section shall be conducted in
17accordance with Article 10 of the Illinois Administrative
18Procedure Act.
19    (b) The Director shall approve a plan of division unless
20the Director finds that:
21        (1) the interest of any class of policyholder or
22    shareholder of the dividing company will not be properly
23    protected;



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



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



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1thereof submitted to, obtained by, or disclosed to the
2Director in connection with a plan of division or in
3contemplation thereof, including any information, documents,
4materials, or copies provided by or on behalf of a domestic
5stock company in advance of its adoption or submission of a
6plan of division, shall be confidential and shall be subject
7to the same protection and treatment in accordance with
8Section 131.22 as documents and reports disclosed to or filed
9with the Director pursuant to subsection (a) of Section
10131.14b until such time, if any, as a notice of the hearing
11contemplated by subsection (a) is issued.
12    (g) From and after the issuance of a notice of the hearing
13contemplated by subsection (a), all business, financial, and
14actuarial information that the domestic stock company requests
15confidential treatment, other than the plan of division, shall
16continue to be confidential and shall not be available for
17public inspection and shall be subject to the same protection
18and treatment in accordance with Section 131.22 as documents
19and reports disclosed to or filed with the Director pursuant
20to subsection (a) of Section 131.14b.
21    (h) All expenses incurred by the Director in connection
22with proceedings under this Section, including expenses for
23the services of any attorneys, actuaries, accountants, and
24other experts as may be reasonably necessary to assist the
25Director in reviewing the proposed division, shall be paid by
26the dividing company filing the plan of division. A dividing



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1company may allocate expenses described in this subsection in
2a plan of division in the same manner as any other liability.
3    (i) If the Director approves a plan of division, the
4Director shall issue an order that shall be accompanied by
5findings of fact and conclusions of law.
6    (j) The conditions in this Section for freeing one or more
7of the resulting companies from the liabilities of the
8dividing company and for allocating some or all of the
9liabilities of the dividing company shall be conclusively
10deemed to have been satisfied if the plan of division has been
11approved by the Director in a final order that is not subject
12to further appeal.
13    (k) If a dividing company amends its plan of division at
14any time before the plan of division becomes effective,
15including after the Director's approval of the plan or after
16any hearing has been conducted under this Section, then the
17dividing company shall file the amended plan of division for
18approval by the Director pursuant to the provisions of this
19Section. If the Director has already issued an order approving
20the dividing company's previous plan of division under
21subsection (i), then that order shall not be rescinded by the
22Director's subsequent disapproval of an amended plan.
23        (1) If a hearing is conducted on the amended plan of
24    division after the Director has approved a previous plan
25    of division, then the hearing shall not be considered a
26    rehearing or a reopening of any hearing conducted on the



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1    previous plan. Nothing in this Section shall prohibit the
2    dividing company from requesting a rehearing or reopening
3    of any hearing conducted on any disapproved plan of
4    division, amended or otherwise.
5        (2) Whether under direct review or in a hearing, the
6    Director may rely on information already submitted or
7    developed in connection with the previous plan of
8    division, as well as any findings of fact or conclusions
9    of law if a hearing has been conducted or an approval order
10    has been issued on the previous plan, to the extent the
11    information, findings, or conclusions remain relevant to
12    the amended plan of division, and the Director shall
13    collect any other information necessary to make a
14    determination under subsection (b).
15        (3) The fee assessed under Section 408 for filing a
16    plan of division shall not apply to the filing of an
17    amended plan of division, but subsection (h) shall apply
18    to all proceedings related to the amended plan.
19(Source: P.A. 101-549, eff. 1-1-20; 102-394, eff. 8-16-21;
20102-578, eff. 7-1-22 (See Section 5 of P.A. 102-672 for
21effective date of P.A. 102-578).)
22    (215 ILCS 5/35B-30)
23    Sec. 35B-30. Certificate of division.
24    (a) After a plan of division has been adopted and
25approved, an officer or duly authorized representative of the



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1dividing company shall sign a certificate of division.
2    (b) The certificate of division shall set forth:
3        (1) the name of the dividing company;
4        (2) a statement disclosing whether the dividing
5    company will survive the division;
6        (3) the name of each new company that will be created
7    by the division;
8        (4) the kinds of insurance business enumerated in
9    Section 4 that the new company will be authorized to
10    conduct;
11        (5) the date that the division is to be effective,
12    which shall not be more than 90 days after the dividing
13    company has filed the certificate of division with the
14    recorder, with a concurrent copy to the Director;
15        (6) a statement that the division was approved by the
16    Director in accordance with Section 35B-25, including the
17    date when approval was served on the dividing company;
18        (7) a statement that the dividing company provided, no
19    later than 10 business days after the dividing company
20    filed the plan of division with the Director, reasonable
21    notice to each reinsurer that is party to a reinsurance
22    contract that is applicable to the policies included in
23    the plan of division;
24        (8) if the dividing company will survive the division,
25    an amendment to its articles of incorporation or bylaws
26    approved as part of the plan of division;



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1        (9) for each new company created by the division, its
2    articles of incorporation and bylaws, provided that the
3    articles of incorporation and bylaws need not state the
4    name or address of an incorporator; and
5        (10) a reasonable description of the capital, surplus,
6    other assets and liabilities, including policy
7    liabilities, of the dividing company that are to be
8    allocated to each resulting company.
9    (c) The articles of incorporation and bylaws of each new
10company must satisfy the requirements of the laws of this
11State, provided that the documents need not be signed or
12include a provision that need not be included in a restatement
13of the document.
14    (d) A certificate of division is effective when filed with
15the recorder, with a concurrent copy to the Director, as
16provided in this Section or on another date specified in the
17plan of division, whichever is later, provided that a
18certificate of division shall become effective not more than
1990 days after it is filed with the recorder. A division is
20effective when the relevant certificate of division is
22    (e) If the dividing company files an amended plan of
23division with the Director after a certificate of division has
24been filed for a previous plan, then the dividing company
25shall file a certificate of stay with the recorder, with a
26concurrent copy to the Director. The certificate of stay shall



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1identify the certificate of division being stayed and the date
2on which the amended plan of division was filed with the
3Director. If the Director issues an order on the amended plan,
4or if the dividing company withdraws the amended plan before
5an order is issued, then the dividing company shall file an
6amended certificate of division pursuant to this Section.
7Nothing in this subsection (e) shall allow a dividing company
8to amend its plan of division under Section 35B-15 on or after
9the effective date specified in a certificate of division that
10is active or that has been stayed.
11(Source: P.A. 102-775, eff. 5-13-22.)
12    Section 99. Effective date. This Act takes effect upon
13becoming law.