Public Act 103-0090
 
SB1494 EnrolledLRB103 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;
        (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.