Domestic Stock Company Division Law FAQs

An applicant must file a Plan of Division with the Illinois Department of Insurance.

The proposed Plan of Division must include all relevant details about the proposed Division, including, but not limited to, the name of the Dividing Company; names of the Resulting Companies created by the proposed Division and their respective proposed organizational documents; how Assets and Liabilities (including but not limited to Capital and Surplus) will be allocated between or among the Resulting Companies; the manner of distributing Shareholder interests in the New Companies to the Dividing Company and/or other owners; and a reasonable description of the Liabilities, including Policy Liabilities, and items of Capital, Surplus, or other Assets that the Dividing Company proposes to allocate to each Resulting Company, including specifying the reinsurance contract, reinsurance coverage obligations, and related claims that are applicable to the policies. (See 215 ILCS 5/35B-15(b))

No. A hearing is only required if the Director of Insurance deems it to be in the public interest or if it is requested by the Dividing Company. (See 215 ILCS 5/35B-25)

The Division Law applies to all lines of insurance business.

No. The Division Law applies only to Illinois Domestic Stock Companies.

The Division Law contains provisions that protect the confidentiality of information submitted to the Department in connection with a Division transaction. For example, 215 ILCS 5/35B-25 states in pertinent part:

(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 (Enterprise Risk Filing) until such time, if any, as a notice of the hearing is issued.

(g) From and after the issuance of a notice of the hearing 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.

Other provisions of the Illinois Insurance Code may provide additional protection against disclosure.

To approve a Plan of Division the Director must find that each New Company, except a New Company that is a non-surviving party to a merger, is eligible to receive a license to do insurance business in Illinois. (See 215 ILCS 5/35B-25(b)- (2))

The Director must also find that each New Company, except a New Company that is a non-surviving party to a merger that will be a member of the Illinois Life and Health Insurance Guaranty Association and that will have policy liabilities allocated to it will be licensed to do insurance business in each state where such policies were written by the Dividing Company. (See 215 ILCS 5/35B-25(b)-(2.5))

No. Allocation of a Policy or other Liability will not affect the rights of a policyholder, except that those rights are available only against the Resulting Company responsible for the Policy or Liability. (See 215 ILCS 5/35B-40(h)(1))

No. Allocation of a Policy or other Liability will not release or reduce the obligation of a reinsurer, surety, or guarantor of the Policy or Liability. (See 215 ILCS 5/35B-40(h)(2))

The Department has no plans to promulgate rules at this time. (See 215 ILCS 5/35B-50)