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2005 Illinois 215 ILCS 5/      Illinois Insurance Code. Article vVIII 1/2 - Insurance Holding Company Systems


      (215 ILCS 5/Art. VIII.5 heading)
ARTICLE VIII 1/2. INSURANCE HOLDING COMPANY SYSTEMS

    (215 ILCS 5/131.1) (from Ch. 73, par. 743.1)
    Sec. 131.1. Definitions. As used in this Article, the following terms have the respective meanings set forth in this Section unless the context requires otherwise:
    (a) An "affiliate" of, or person "affiliated" with, a specific person, is a person that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, the person specified.
    (b) "Control" (including the terms "controlling", "controlled by" and "under common control with") means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a person, whether through the ownership of voting securities, the holding of policyholders' proxies by contract other than a commercial contract for goods or non‑management services, or otherwise, unless the power is solely the result of an official position with or corporate office held by the person. Control is presumed to exist if any person, directly or indirectly, owns, controls, holds with the power to vote, or holds shareholders' proxies representing 10% or more of the voting securities of any other person, or holds or controls sufficient policyholders' proxies to elect the majority of the board of directors of the domestic company. This presumption may be rebutted by a showing made in the manner as the Director may provide by rule. The Director may determine, after furnishing all persons in interest notice and opportunity to be heard and making specific findings of fact to support such determination, that control exists in fact, notwithstanding the absence of a presumption to that effect.
    (c) "Insurance holding company system" means two or more affiliated persons, one or more of which is an insurance company as defined in paragraph (e) of Section 2 of this Code.
    (d) "Company" has the same meaning as "Company" as defined in Section 2 of this Code, except that it does not include agencies, authorities or instrumentalities of the United States, its possessions and territories, the Commonwealth of Puerto Rico, the District of Columbia or a State or political subdivision of a State.
    (e) "Person" means an individual, a corporation, a partnership, an association, a joint stock company, a trust, an unincorporated organization, any similar entity or any combination of the foregoing acting in concert, but does not include any securities broker performing no more than the usual and customary broker's function or joint venture partnership exclusively engaged in owning, managing, leasing or developing real or tangible personal property other than capital stock.
    (f) "Securityholder" of a specified person is one who owns any security of such person, including common stock, preferred stock, debt obligations, and any other security convertible into or evidencing the right to acquire any of the foregoing.
    (g) "Subsidiary" of a specified person is an affiliate controlled by such person directly, or indirectly through one or more intermediaries.
    (h) "Voting Security" is a security which gives to the holder thereof the right to vote for the election of directors and includes any security convertible into or evidencing a right to acquire a voting security.
    (i) "Acquiring Party" means such person by whom or on whose behalf the merger or other acquisition of control referred to in Section 131.4 is to be affected and any person that controls such person or persons.
    (j) "Policyholders' Proxies" are proxies which give the holder the right to vote for the election of the directors and other corporate actions not in the day‑to‑day operations of the company.
    (k) "Non‑operating Holding Company" is a general business corporation functioning solely for the purpose of forming, owning, acquiring and managing subsidiary business entities and having no other business operations not related thereto.
(Source: P.A. 84‑805.)

    (215 ILCS 5/131.2) (from Ch. 73, par. 743.2)
    Sec. 131.2. Subsidiaries. In addition to investments in common stock, preferred stock, debt obligations and other securities of subsidiaries permitted under all other sections of this Code, a domestic company, other than a company subject to Articles XVIII or XIX, may also:
    (a) invest, in common stock, preferred stock, debt obligations, and other securities of one or more subsidiaries, amounts which do not exceed the lesser of 10% of the company's assets or 50% of the company's surplus as regards policyholders, but after such investments the company's surplus as regards policyholders must be reasonable in relation to the company's outstanding liabilities and adequate to its financial needs. In calculating the amount of such investments, there must be included (i) total net monies or other consideration expended and obligations assumed in the acquisition or formation of a subsidiary, including all organizational expenses and contributions to capital and surplus of the subsidiary whether or not represented by the purchase of capital stock or issuance of other securities, and (ii) all amounts expended in acquiring additional common stock, preferred stock, debt obligations, and other securities, and all contributions to the capital or surplus of a subsidiary subsequent to its acquisition or formation;
    (b) invest any amount in common stock, preferred stock, debt obligations and other securities of one or more direct subsidiaries acting only as a non‑operating holding company or engaged or organized exclusively for the ownership and management of assets authorized as investments for the company, provided that each subsidiary agrees to limit its investments in any asset so that such investments will not cause the amount of the total investment of the company to exceed the amount the company could have invested in such asset. For the purpose of this clause, "the total investment of the company" will include (i) any direct investment by the company in an asset and (ii) the company's proportionate share of any investment in such asset by any direct subsidiary of the company, which must be calculated by multiplying the amount of the subsidiary's investment by the percentage of the company's ownership of such subsidiary;
    (c) invest in common stock of one or more insurance corporation subsidiaries any amount by which the investing company's capital and surplus exceeds the minimum capital and surplus required of a new company under Section 13 to qualify for a certificate of authority to write the kind or kinds of insurance which the company is authorized to write, if the company is a stock company, and if the company is other than a stock company, the company may invest the amount by which the company's surplus exceeds the minimum surplus required of a new company under Section 43 or 66 to qualify for a certificate of authority to write the kind or kinds of insurance which the company is authorized to write;
    (d) with the approval of the Director, invest any greater amount in common stock, preferred stock, debt obligations, or other securities of one or more subsidiaries, but after such investment the company's surplus as regards policyholders must be reasonable in relation to the company's outstanding liabilities and adequate to its financial needs.
(Source: P.A. 85‑1186.)

    (215 ILCS 5/131.3) (from Ch. 73, par. 743.3)
    Sec. 131.3. (1) Investments in common stock, preferred stock, debt obligations or other securities of subsidiaries made under Section 131.2 of this Article are subject to Sections 126.3, 126.4, 126.5, 126.6, 126.7, and 133 of this Code but are not subject to any other of the otherwise applicable restrictions or prohibitions contained in this Code applicable to such investments of a domestic company subject to this Code.
    (2) If a company ceases to control a subsidiary, it must dispose of any investment therein made under this section within 3 years from the time of the cessation of control or within such further time as the Director may prescribe, unless at any time after the investment is made, the investment meets the requirements for investment under any other section of this Code, and the company has notified the Director thereof.
(Source: P.A. 90‑418, eff. 8‑15‑97.)

    (215 ILCS 5/131.4) (from Ch. 73, par. 743.4)
    Sec. 131.4. Acquisition of control of or merger with domestic company. No person other than the issuer may make a tender for or a request or invitation for tenders of, or enter into an agreement to exchange securities for or acquire in the open market, or otherwise, any voting security of a domestic company or acquire policyholders' proxies of a domestic company for consideration if, after the consummation thereof, that person would, directly or indirectly, (or by conversion or by exercise of any right to acquire) be in control of the company, and no person may enter into an agreement to merge or consolidate with or otherwise to acquire control of a domestic company, unless the offer, request, invitation, or agreement is conditioned on receiving the approval of the Director based on Section 131.8 of this Article and no such acquisition of control or a merger with a domestic company may be consummated unless the Director has approved the transaction or granted an exemption. For purposes of this Section a domestic company includes any other person which controls a domestic company or holds or controls sufficient policyholders' proxies to elect the majority of the board of directors of the domestic company. Prior to the acquisition, the Director may conclude that a statement need not be filed by the acquiring party if the acquiring party demonstrates to the satisfaction of the Director that:
    (1) such transaction will not result in the change of control of the domestic company; or
    (2) the person which is subject to the acquisition has assets in excess of $1,000,000 and shareholders of record of 500 or more and its insurance business either directly or through its affiliates is an insignificant portion of its total business; or
    (3) the acquisition of, or attempt to acquire control of, such other person is subject to requirements in the jurisdiction of its domicile which are substantially similar to those contained in this Section and Sections 131.5 through 131.12; or
    (4) the control of the policyholders' proxies is being acquired solely by virtue of the holders official office and not as the result of any agreement or for any consideration.
    The purpose of this Section is to afford to the Director the opportunity to review acquisitions in order to determine whether or not the acquisition would be adverse to the interests of the existing and future policyholders of the company.
(Source: P.A. 86‑784.)

    (215 ILCS 5/131.5) (from Ch. 73, par. 743.5)
    Sec. 131.5. Statement‑Contents. In order to seek the approval of the Director pursuant to Section 131.8, the applicant must file a statement with the Director under oath or affirmation which contains as a minimum the following information:
    (1) The name and address of each acquiring party, and
    (a) if such person is an individual, his principal occupation and all offices and positions held during the past 5 years, and any conviction of crimes, other than minor traffic violations, during the past 10 years;
    (b) if such person is not an individual, a report of the nature of its business operations during the past 5 years or for such lesser period as the person and any predecessors thereof has been in existence; an informative description of the business intended to be conducted by the person and the person's subsidiaries; and a list of all individuals who are or who have been selected to become directors or executive officers of the person, or who perform or will perform functions appropriate to such positions. The list must include for each individual the information required by subsection (1)(a).
    (2) The source, nature and amount of the consideration used or to be used in effecting the merger, consolidation or other acquisition of control, a description of any transaction wherein funds were or are to be obtained for any such purpose, including any pledge of the company's own securities or the securities of any of its subsidiaries or affiliates, and the identity of persons furnishing such consideration. However, where a source of such consideration is a loan made in the lender's ordinary course of business, the identity of the lender must remain confidential, if the person filing the statement so requests.
    (3) Financial information as to the earnings and financial condition of each acquiring party for the preceding fiscal years of each acquiring party (or for such lesser period as the acquiring party and any predecessors thereof have been in existence) audited by an independent certified public accountant in accordance with generally accepted auditing standards and similar unaudited information for the second and third preceding fiscal years and as of a date not earlier than 90 days prior to the filing of the statement. If an acquiring party is an insurer which has been actively engaged in the business of insurance for 10 years, the financial information need not be audited, provided it is based on the annual statements of such acquiring person filed with the insurance department of the person's domiciliary state and is in accordance with the requirement of insurance or other accounting principles prescribed or permitted under the laws and regulations of such state.
    (a) When an applicant is controlled by an individual, financial information for that individual will not be required if the applicant is currently subject to the registration and reporting requirements of Section 12(g) of the Securities Exchange Act of 1934 or is an insurer which has been actively engaged in the business of insurance for a period in excess of 10 years;
    (b) When an individual as an acquiring party must file financial information under this paragraph such information need not be delivered to the company. However, such information shall be available if the Director holds a hearing pursuant to Section 131.8.
    (4) Any plans or proposals which each acquiring party may have to liquidate such company, to sell its assets or merge or consolidate it with any person, or to make any other material change in its business or corporate structure or management.
    (5) The number of shares of any security referred to in Section 131.4 which each acquiring party proposes to acquire, and the terms of the offer, request, invitation, agreement, or acquisition referred to in Section 131.4.
    (6) The amount of each class of any security referred to in Section 131.4 which is beneficially owned or concerning which there is a right to acquire beneficial ownership by each acquiring party.
    (7) A full description of any existing contracts, arrangements or understandings with respect to any security referred to in Section 131.4 in which any acquiring party is involved, including but not limited to transfer of any of the securities, joint ventures, loan or option arrangements, puts or calls, guarantees of loans, guarantees against loss or guarantees of profits, division of losses or profits, or the giving or withholding of proxies. The description must identify the persons with whom such contracts, arrangements or understandings have been entered into.
    (8) A description of the acquisition of any security or policyholders' proxy referred to in Section 131.4 during the 12 calendar months preceding the filing of the statement, by any acquiring party, including the dates of acquisition, names of the acquirors, and consideration paid or agreed to be paid therefor.
    (9) A description of any recommendations to acquire any security referred to in Section 131.4 made during the 12 calendar months preceding the filing of the statement, by any acquiring party, or by anyone based upon interviews or at the suggestion of such acquiring party.
    (10) Copies of all tender offers for, requests or invitations for tenders of, exchange offers for, and agreements to acquire or exchange any securities referred to in Section 131.4, and (if distributed) of additional soliciting material relating thereto.
    (11) The terms of any agreement, contract or understanding made with any broker‑dealer as to solicitation of securities referred to in Section 131.4 for tender, and the amount of any fees, commissions or other compensation to be paid to broker‑dealers with regard thereto.
    (12) Any additional information as the Director may by rule or regulation prescribe as necessary or appropriate for the protection of policyholders or in the public interest.
(Source: P.A. 84‑805.)

    (215 ILCS 5/131.6) (from Ch. 73, par. 743.6)
    Sec. 131.6. (1) If the person required to file the statement referred to in Section 131.5 is a partnership, limited partnership, syndicate or other group, the Director may require that the information be given with respect to each partner of such partnership or limited partnership, each member of such syndicate or group, and each person who controls such partner or member. If any partner, member or person is a corporation or the person required to file the statement referred to in Section 131.5 is a corporation, the Director may require that the information be given with respect to the corporation, each officer and director of the corporation, and each person who is directly or indirectly the beneficial owner of more than 10% of the outstanding voting securities of the corporation.
    (2) If any material change occurs in the facts set forth in the statement filed with the Director and sent to the company under Section 131.9, an amendment setting forth the change, together with copies of all documents and other material relevant to the change, must be filed with the Director and sent to the company within 2 business days after the person learns of the change.
(Source: P.A. 84‑805.)

    (215 ILCS 5/131.7) (from Ch. 73, par. 743.7)
    Sec. 131.7.
    If any offer, request, invitation, agreement or acquisition referred to in Section 131.4 is proposed to be made by means of a registration statement under the Securities Act of 1933 or in circumstances requiring the disclosure of similar information under the Securities Exchange Act of 1934, or under a state law requiring similar registration or disclosure, the person required to file the statement referred to in Section 131.4 may utilize such documents in furnishing the information called for by that statement.
(Source: P. A. 77‑673.)

    (215 ILCS 5/131.8) (from Ch. 73, par. 743.8)
    Sec. 131.8. (1) After the statement required by Section 131.5 has been filed, the Director must disapprove any merger, consolidation or other acquisition of control referred to in Section 131.4 unless the acquiring party demonstrates to the Director that:
    (a) After change of control the domestic company referred to in Section 131.4 would be able to satisfy the requirements for the issuance of a license to write the line or lines of insurance for which it is presently licensed;
    (b) the effect of the merger, consolidation or other acquisition of control would not substantially lessen competition in insurance in this State or not tend to create a monopoly therein. In applying the competitive standard in this paragraph:
    (i) the informational requirements of subsection (3)(a) and the standards of subsection (4)(b) of Section 131.12a shall apply,
    (ii) the merger or other acquisition shall not be disapproved if the acquiring party demonstrates that any of the situations meeting the criteria provided by subsection (4)(c) of Section 131.12a exist, and
    (iii) the Director may condition the approval of the merger or other acquisition on the removal of the basis of disapproval within a specified period of time;
    (c) the financial condition of any acquiring party is such as to not jeopardize the financial stability of the domestic company or not jeopardize the interests of its policyholders;
    (d) the plans or proposals which the acquiring party has to liquidate the domestic company, sell its assets or consolidate or merge it with any person, or to make any other material change in its business or corporate structure or management, are fair and reasonable to policyholders of such company; or
    (e) the competence, experience and integrity of those persons who would control the operation of the domestic company are such that it would be in the best interests of policyholders of such company and of the insurance buying public to permit the merger, consolidation or other acquisition of control.
    (2) The Director may hold a public hearing on any merger, consolidation or other acquisition of control referred to in Section 131.4 if the Director determines that the statement filed as required by Section 131.5 does not demonstrate compliance with the standards referred to in subsection (1), of this Section, or if he determines that such acquisition of control will adversely affect policyholders or the insurance buying public.
    (3) The public hearing referred to in subsection (2) must be held within 60 days after the statement required by Section 131.5 is filed, and at least 20 days' notice thereof must be given by the Director to the person filing the statement and to the domestic company. Not less than 12 days' notice of such hearing must be given by the person filing the statement to such other persons as may be designated by the Director and by the company to its securityholders. The Director must make a determination within 30 days after the conclusion of the hearing. At the hearing, the person filing the statement, the domestic company, any person to whom notice of the hearing was sent, and any other person whose interests may be affected thereby has the right to present evidence, examine and cross‑examine witnesses, and offer oral and written arguments and in connection therewith is entitled to conduct discovery proceedings in the same manner as is presently allowed in the Circuit Courts of this State. All discovery proceedings must be concluded not later than 3 days prior to the commencement of the public hearing.
(Source: P.A. 84‑805.)

    (215 ILCS 5/131.8a) (from Ch. 73, par. 743.8a)
    Sec. 131.8a. The Director may retain at the applicant's expense any attorneys, actuaries, accountants and other experts not otherwise a part of the Director's staff as may be reasonably necessary to assist in the conduct of financial or character examinations in conjunction with an acquisition proposed under Section 131.4. The applicant shall deposit with the Director cash, bonds or securities, acceptable to the Director, in a reasonable amount not to exceed $100,000, for purpose of securing the payment of any expert's cost.
(Source: P.A. 86‑753.)

    (215 ILCS 5/131.9) (from Ch. 73, par. 743.9)
    Sec. 131.9. All statements, amendments or other material filed under Section 131.5 must be delivered to the domestic company within 10 business days after the acquiring party has made the filing with the Director. The domestic company shall then send to its securityholders the summary of the proposed acquisition within 5 business days of such delivery. The notice shall contain an address where a copy of the statement filed with the Director can be obtained upon request. The expenses of the mailing and any requests for the statement and the mailing of the notice of hearing by the company required under subsection (2) of Section 131.8 must be borne by the person making the filing. As security for the payment of the expenses, the person may be required to file with the Director an acceptable bond or other deposit in an amount to be determined by the Director.
(Source: P.A. 84‑805.)

    (215 ILCS 5/131.10) (from Ch. 73, par. 743.10)
    Sec. 131.10. Sections 131.4 through 131.12 do not apply to:
    (1) any transaction which is subject to Article X of this Code dealing with merger, consolidation or plans of exchange;
    (2) any offer, request, invitation, agreement or acquisition which the Director by order exempts therefrom as (a) not having been made or entered into for the purpose and not having the effect of changing or influencing the control of a domestic company, or (b) as otherwise not comprehended within the purposes of Sections 131.4 through 131.12.
(Source: P.A. 80‑545.)

    (215 ILCS 5/131.11) (from Ch. 73, par. 743.11)
    Sec. 131.11.
    The following are violations of Sections 131.4 through 131.12:
    (1) the failure to file any statement, amendment, or other material required to be filed under Sections 131.4 or 131.5; or
    (2) the effectuation or any attempt to effectuate an acquisition of control of or merger or consolidation with, a domestic company unless the Director has given his approval thereto.
(Source: P. A. 77‑673.)

    (215 ILCS 5/131.12) (from Ch. 73, par. 743.12)
    Sec. 131.12.
    The courts of this State are hereby vested with jurisdiction over every person not resident, domiciled, or authorized to do business in this State who files a statement with the Director under Section 131.4, and over all actions involving such person arising out of violations of Sections 131.4, 131.5, 131.6, 131.9 or 131.11, and each such person is deemed to have performed acts equivalent to and constituting an appointment by such a person of the Director to be his true and lawful attorney upon whom may be served all lawful process in any action, suit or proceeding arising out of violations of Sections 131.4, 131.5, 131.6, 131.9 or 131.11. Copies of all such lawful process must be served on the Director and transmitted by registered or certified mail by the Director to such person at his last known address.
(Source: P. A. 77‑673.)

    (215 ILCS 5/131.12a) (from Ch. 73, par. 743.12a)
    Sec. 131.12a. Acquisitions involving insurers not otherwise covered.
    (1) Definitions. The following definitions shall apply for the purposes of this Section only:
    (a) "Acquisition" means any agreement, arrangement or activity the consummation of which results in a person acquiring directly or indirectly the control of another person or control of the insurance in force of another person, and includes but is not limited to the acquisition of voting securities, the acquisition of assets, the transaction of bulk reinsurance and the act of merging or consolidating.
    (b) An "involved insurer" includes an insurer which either acquires or is acquired, is affiliated with an acquirer or acquired or is the result of a merger.
 
    (2) Scope.
    (a) Except as exempted in paragraph (b) of this subsection (2), this Section applies to any acquisition in which there is a change in control of an insurer authorized to do business in this State.
    (b) This Section shall not apply to the following:
        (i) an acquisition subject to approval or
    
disapproval by the Director pursuant to Section 131.8;
        (ii) a purchase of securities solely for investment
    
purposes so long as such securities are not used by voting or otherwise to cause or attempt to cause the substantial lessening of competition in any insurance market in this State. If a purchase of securities results in a presumption of control under subsection (b) of Section 131.1, it is not solely for investment purposes unless the commissioner of the insurer's state of domicile accepts a disclaimer of control or affirmatively finds that control does not exist and such disclaimer action or affirmative finding is communicated by the domiciliary commissioner to the Director of this State;
        (iii) the acquisition of a person by another person
    
when both persons are neither directly nor through affiliates primarily engaged in the business of insurance, if pre‑acquisition notification is filed with the Director in accordance with subsection (3)(a) of this Section, 30 days prior to the proposed effective date of the acquisition. However, such pre‑acquisition notification is not required for exclusion from this Section if the acquisition would otherwise be excluded from this Section by any other subparagraph of subsection (2)(b);
        (iv) the acquisition of already affiliated persons;
        (v) an acquisition if, as an immediate result of the
    
acquisition,
            (A) in no market would the combined market share
        
of the involved insurers exceed 5% of the total market,
            (B) there would be no increase in any market
        
share, or
            (C) in no market would the combined market share
        
of the involved insurers exceed 12% of the total market, and the market share increase by more than 2% of the total market.
        For the purpose of this subparagraph (b)(v),
    
"market" means direct written insurance premium in this State for a line of business as contained in the annual statement required to be filed by insurers licensed to do business in this State;
        (vi) an acquisition for which a pre‑acquisition
    
notification would be required pursuant to this Section due solely to the resulting effect on the ocean marine insurance line of business;
        (vii) an acquisition of an insurer whose domiciliary
    
commissioner affirmatively finds that such insurer is in failing condition; there is a lack of feasible alternative to improving such condition; the public benefits of improving such insurer's condition through the acquisition exceed the public benefits that would arise from not lessening competition; and such findings are communicated by the domiciliary commissioner to the Director of this State.

 
    (3) Pre‑acquisition Notification; Waiting Period. An acquisition covered by subsection (2) may be subject to an order pursuant to subsection (5) unless the acquiring person files a pre‑acquisition notification and the waiting period has expired. The acquired person may file a pre‑acquisition notification. The Director shall give confidential treatment to information submitted under this subsection in the same manner as provided in Section 131.22 of this Article.
    (a) The pre‑acquisition notification shall be in such form and contain such information as prescribed by the Director, which shall conform substantially to the form of notification adopted by the National Association of Insurance Commissioners relating to those markets which, under subsection (b)(v) of Section (2), cause the acquisition not to be exempted from the provisions of this Section. The Director may require such additional material and information as he deems necessary to determine whether the proposed acquisition, if consummated, would violate the competitive standard of subsection (4). The required information may include an opinion of an economist as to the competitive impact of the acquisition in this State accompanied by a summary of the education and experience of such person indicating his or her ability to render an informed opinion.
    (b) The waiting period required shall begin on the date of the receipt by the Director of a pre‑acquisition notification and shall end on the earlier of the 30th day after the date of such receipt, or termination of the waiting period by the Director. Prior to the end of the waiting period, the Director on a one time basis may require the submission of additional needed information relevant to the proposed acquisition, in which event the waiting period shall end on the earlier of the 30th day after the receipt of such additional information by the Director or termination of the waiting period by the Director.
 
    (4) Competitive Standard.
    (a) The Director may enter an order under subsection (5)(a) with respect to an acquisition if there is substantial evidence that the effect of the acquisition may be substantially to lessen competition in any line of insurance in this State or tend to create a monopoly therein or if the insurer fails to file adequate information in compliance with subsection (3).
    (b) In determining whether a proposed acquisition would violate the competitive standard of paragraph (a) of this subsection the Director shall consider the following:
        (i) any acquisition covered under subsection (2)
    
involving 2 or more insurers competing in the same market is prima facie evidence of violation of the competitive standards:
            (A) if the market is highly concentrated and the
        
involved insurers possess the following shares of the market:
               Insurer A                 Insurer B
                  4%                    4% or more
                 10%                    2% or more
                 15%                    1% or more
            (B) if the market is not highly concentrated and
        
the involved insurers possess the following shares of the market:
               Insurer A                 Insurer B
                  5%                    5% or more
                 10%                    4% or more
                 15%                    3% or more
                 19%                    1% or more
        A highly concentrated market is one in which the
    
share of the 4 largest insurers is 75% or more of the market. Percentages not shown in the tables are to be interpolated proportionately to the percentages that are shown. If more than 2 insurers are involved, exceeding the total of the 2 columns in the table is prima facie evidence of violation of the competitive standard in paragraph (a) of this subsection. For the purpose of this subparagraph, the insurer with the largest share of the market shall be deemed to be Insurer A.
        (ii) There is a significant trend toward increased
    
concentration when the aggregate market share of any grouping of the largest insurers in the market from the 2 largest to the 8 largest has increased by 7% or more of the market over a period of time extending from any base year 5‑10 years prior to the acquisition up to the time of the acquisition. Any acquisition covered under subsection (2) involving 2 or more insurers competing in the same market is prima facie evidence of violation of the competitive standard in paragraph (a) of this subsection if:
            (A) there is a significant trend toward
        
increased concentration in the market,
            (B) one of the insurers involved is one of the
        
insurers in a grouping of such large insurers showing the requisite increase in the market share, and
            (C) another involved insurer's market is 2% or
        
more.
        (iii) For the purpose of subsection (4)(b):
            (A) The term "insurer" includes any company or
        
group of companies under common management, ownership or control.
            (B) The term "market" means the relevant product
        
and geographic markets. In determining the relevant product and geographical markets, the Director shall give due consideration to, among other things, the definitions or guidelines, if any, promulgated by the National Association of Insurance Commissioners and to information, if any, submitted by parties to the acquisition. In the absence of sufficient information to the contrary, the relevant product market is assumed to be the direct written insurance premium for a line of business with such line being that used in the annual statement required to be filed by insurers doing business in this State and the relevant geographical market is assumed to be this State.
            (C) The burden of showing prima facie evidence
        
of violation of the competitive standard rests upon the Director.
        (iv) Even though an acquisition is not prima facie
    
violative of the competitive standard under subparagraph (b)(i) and (b)(ii) of this subsection the Director may establish the requisite anticompetitive effect based upon other substantial evidence. Even though an acquisition is prima facie violative of the competitive standard under subparagraphs (b)(i) and (b)(ii) of this subsection (4), a party may establish the absence of the requisite anticompetitive effect based upon other substantial evidence. Relevant factors in making a determination under this paragraph include, but are not limited to, the following: market shares, volatility of ranking of market leaders, number of competitors, concentration, trend of concentration in the industry, and ease of entry and exit into the market.
    (c) An order may not be entered under subsection (5)(a) if:
        (i) the acquisition will yield substantial economies
    
of scale or economies in resource utilization that cannot be feasibly achieved in any other way, and the public benefits which would arise from such economies exceed the public benefits which would arise from not lessening competition; or
        (ii) the acquisition will substantially increase the
    
availability of insurance, and the public benefits of such increase exceed the public benefits which would arise from not lessening competition.

 
    (5) Orders and Penalties:
        (a)(i) If an acquisition violates the standard of
    
this Section, the Director may enter an order
            (A) requiring an involved insurer to cease and
        
desist from doing business in this State with respect to the line or lines of insurance involved in the violation, or
            (B) denying the application of an acquired or
        
acquiring insurer for a license to do business in this State.
        (ii) Such an order shall not be entered unless there
    
is a hearing, notice of such hearing is issued prior to the end of the waiting period and not less than 15 days prior to the end of the waiting period and not less than 15 days prior to the hearing, and the hearing is concluded and the order is issued no later than 60 days after the end of the waiting period. Every order shall be accompanied by a written decision of the Director setting forth his findings of fact and conclusions of law.
        (iii) An order entered under this paragraph shall
    
not become final earlier than 30 days after it is issued, during which time the involved insurer may submit a plan to remedy the anticompetitive impact of the acquisition within a reasonable time. Based upon such plan or other information, the Director shall specify, if any, the conditions under and the time period during which the aspects of the acquisition causing a violation of the standards of this Section would be remedied and the order vacated or modified.
        (iv) An order pursuant to this paragraph shall not
    
apply if the acquisition is not consummated.
    (b) Any person who violates a cease and desist order of the Director under paragraph (a) and while such order is in effect may after notice and hearing and upon order of the Director be subject at the discretion of the Director to any one or more of the following:
        (i) a monetary penalty of not more than $10,000 for
    
every day of violation or
        (ii) suspension or revocation of such person's
    
license or both.
    (c) Any insurer or other person who fails to make any filing required by this Section and who also fails to demonstrate a good faith effort to comply with any such filing requirement shall be subject to a civil penalty of not more than $50,000.
 
    (6) Inapplicable Provisions. Subsections (2) and (3) of Section 131.23 and Section 131.25 do not apply to acquisitions covered under subsection (2).
(Source: P.A. 92‑16, eff. 6‑28‑01.)

    (215 ILCS 5/131.13) (from Ch. 73, par. 743.13)
    Sec. 131.13. Registration of companies. Every company which is authorized to do business in this State and which is a member of an insurance holding company system must register with the Director, except a foreign or alien company subject to registration requirements and standards adopted by statute or regulation in the jurisdiction of its domicile which are substantially similar to those contained in this section and Sections 131.14 through 131.19. Any company which is subject to registration under this section must register within 60 days after the effective date of this Article or 15 days after it becomes subject to registration, whichever is later, unless the Director for good cause shown extends the time for registration, and then within such extended time. The Director may require any authorized company which is a member of a holding company system which is not subject to registration under this section to furnish a copy of the registration statement or other information filed by such company with the insurance regulatory authority of its domiciliary jurisdiction.
    If upon review of the information filed pursuant to this Section and the information included in the annual statement filed pursuant to Section 136, the Director determines there is a potential for adverse economic impact due to substantial ownership of companies authorized to do business in this State by persons who are not citizens or residents of the United States or entities which are not organized or created under the laws of any state or territory of the United States, he shall report such determination along with any legislative recommendations to the General Assembly.
(Source: P.A. 84‑805.)

    (215 ILCS 5/131.14) (from Ch. 73, par. 743.14)
    Sec. 131.14. Every company subject to registration must file a registration statement in the form designated by the Director, which contains current information about:
    (1) the capital structure, general financial condition, ownership and management of the company and any person controlling the company;
    (2) the identity and relationship of every member of the insurance holding company system;
    (3) the following agreements in force, relationships subsisting, and transactions currently outstanding between such company and its affiliates:
    (a) loans, other investments, or purchases, sales or exchanges or securities of the affiliates by the company or of the company by its affiliates;
    (b) purchases, sales, or exchanges of assets;
    (c) transactions not in the ordinary course of business;
    (d) guarantees or undertakings for the benefit of an affiliate which result in an actual contingent exposure of the company's assets to liability, other than insurance contracts entered into in the ordinary course of the company's business;
    (e) all management and service contracts and all cost‑sharing arrangements, other than cost allocation arrangements based upon generally accepted accounting principles; and
    (f) reinsurance agreements;
    (g) any pledge of the company's own securities, securities of any subsidiary or affiliate, to secure a loan made to any member of the insurance holding company system; and
    (h) consolidated tax allocation agreements.
    (4) other matters concerning transactions between registered companies and any affiliates as may be included from time to time in any registration forms adopted or approved by the Director.
(Source: P.A. 84‑805.)

    (215 ILCS 5/131.15) (from Ch. 73, par. 743.15)
    Sec. 131.15. No information need be disclosed on the registration statement filed under Section 131.14 if the information is not material for the purposes of Sections 131.13 through 131.19. Unless the Director by rule, regulation or order provides otherwise, sales, purchases, exchanges, loans or extensions of credit, investments, or guarantees involving one‑half of one percent or less of a company's admitted assets as of the 31st day of December next preceding, are not deemed material for purposes of Sections 131.13 through 131.19.
(Source: P.A. 84‑805.)

    (215 ILCS 5/131.16) (from Ch. 73, par. 743.16)
    Sec. 131.16. Reporting material changes or additions; penalty for late registration statement.
    (1) Each registered company must keep current the information required to be included in its registration statement by reporting all material changes or additions on amendment forms designated by the Director within 15 days after the end of the month in which it learns of each change or addition, or within a longer time thereafter as the Director may establish. Any transaction which has been submitted to the Director pursuant to Section 131.20a need not be reported to the Director under this subsection; except each registered company must report all dividends and other distributions to shareholders within 5 business days following the declaration and no less than 10 business days prior to payment thereof.
    (2) On or before May 1 each year, each company subject to registration under this Article shall file a statement in a format as designated by the Director. This statement shall include information previously included in an amendment under subsection (1) of this Section, transactions and agreements submitted under Section 131.20a, and any other material transactions which are required to be reported.
    (3) Any company failing, without just cause, to file any registration statement as required in this Code shall be required, after notice and hearing, to pay a penalty of up to $1,000 for each day's delay, to be recovered by the Director of Insurance of the State of Illinois and the penalty so recovered shall be paid into the General Revenue Fund of the State of Illinois. The maximum penalty under this section is $50,000. The Director may reduce the penalty if the company demonstrates to the Director that the imposition of the penalty would constitute a financial hardship to the company.
(Source: P.A. 88‑364.)

    (215 ILCS 5/131.17) (from Ch. 73, par. 743.17)
    Sec. 131.17.
    (1) The Director must terminate the registration of any company which demonstrates that it no longer is a member of an insurance holding company system.
    (2) Two or more affiliated companies subject to registration hereunder may file a consolidated registration statement or consolidated reports amending their consolidated registration statement or their individual registration statements unless the Director requires a separate registration statement or report from each registered company.
    (3) A company which is authorized to do business in this State and which is part of an insurance holding company system may register on behalf of any affiliated company which is required to register under Section 131.13 and to file all information and material required to be filed under this Article unless the Director requires a separate registration by the affiliated company.
(Source: P. A. 77‑673.)

    (215 ILCS 5/131.18) (from Ch. 73, par. 743.18)
    Sec. 131.18.
Sections 131.13 through 131.19 do not apply to any company, information or transaction if and to the extent that the Director by rule, regulation, or order may exempt the same from Sections 131.13 through 131.19.
    Any requirement for the furnishing of financial statements of the insurance holding company system, or any member thereof, as part of or in connection with the registration statement filed under Section 131.14 shall not apply to any company which submits and maintains in effect in lieu thereof a guarantee or a bond acceptable to the Director in an amount equal to the capital and surplus of the company as shown on its most recent audited financial statements, payable to the Director for the benefit of the creditors, policyholders and stockholders of the company as their interests may appear. Such guarantee, if issued by a national bank, and such a bond, if issued by a licensed insurance company which is not a member of the insurance holding company system, in each case having capital and surplus in excess of $25,000,000, shall be deemed acceptable.
(Source: P.A. 77‑673.)

    (215 ILCS 5/131.19) (from Ch. 73, par. 743.19)
    Sec. 131.19. Any person may file with the Director a disclaimer of affiliation with any authorized company or a disclaimer may be filed by a company or any member of an insurance holding company system. The disclaimer must fully disclose all material relationships and basis for affiliation between the person and the company as well as the basis for disclaiming the affiliation. After a disclaimer is filed, the company is relieved of any duty to register or report under Section 131.13 which may arise out of the company's relationship with the person unless and until the Director disallows the disclaimer. The Director may disallow such a disclaimer only after furnishing all parties in interest with notice and opportunity to be heard and after making specific findings of fact to support the disallowance.
(Source: P.A. 84‑805.)

    (215 ILCS 5/131.20) (from Ch. 73, par. 743.20)
    Sec. 131.20. Standards for transactions with affiliates; adequacy of surplus.
    (1) Material transactions with their affiliates by companies subject to registration are subject to the following standards:
        (a) the terms are fair and reasonable;
        (b) charges or fees for services performed are
    
reasonable;
        (c) expenses incurred and payment received must be
    
allocated to the insurer in conformity with customary insurance accounting practices consistently applied;
        (d) the books, accounts, and records of each party
    
must be so maintained as to clearly and accurately disclose the precise nature and details of the transactions, including accounting information necessary to support the reasonableness of the charges or fees to the respective parties; and
        (e) the company's surplus as regards policyholders
    
following any transactions with affiliates or dividends or distributions to securityholders or affiliates must be reasonable in relation to the company's outstanding liabilities and adequate to its financial needs.
    (2) For purposes of this Article, in determining whether a company's surplus as regards policyholders is reasonable in relation to the company's outstanding liabilities and adequate to its needs, the following factors, among others, may be considered:
        (a) the size of the company as measured by its
    
assets, capital and surplus, reserves, premium writings, insurance in force and other appropriate criteria;
        (b) the extent to which the company's business is
    
diversified among the several lines of insurance;
        (c) the number and size of risks insured in each
    
line of business;
        (d) the extent of the geographical dispersion of the
    
company's insured risks;
        (e) the nature and extent of the company's
    
reinsurance program;
        (f) the quality, diversification, and liquidity of
    
the company's investment portfolio;
        (g) the recent past and projected future trend in
    
the size of the company's surplus as regards policyholders;
        (h) the surplus as regards policyholders maintained
    
by companies comparable to the registrant in respect of the factors enumerated in this paragraph;
        (i) the adequacy of the company's reserves;
        (j) the quality of the company's earnings and the
    
extent to which the reported earnings include extraordinary items; and
        (k) the quality and liquidity of investments in
    
subsidiaries made under Section 131.2 or 131.3. The Director may discount any such investment or treat any such investment as a non‑admitted asset for purposes of determining the adequacy of surplus as regards policyholders whenever the investment so warrants.
(Source: P.A. 88‑364.)

    (215 ILCS 5/131.20a) (from Ch. 73, par. 743.20a)
    Sec. 131.20a. Prior notification of transactions; dividends and distributions.
    (1) (a) The following transactions between a domestic company and any person in its holding company system may not be entered into unless the company has notified the Director in writing of its intention to enter into such transaction at least 30 days prior thereto, or such shorter period as the Director may permit, and the Director has not disapproved it within such period:
        (i) Sales, purchases, exchanges of assets, loans or
    
extensions of credit, guarantees, investments, or any other transaction (A) that involves the transfer of assets from or liabilities to a company equal to or exceeding the lesser of 3% of the company's admitted assets or 25% of its surplus as regards policyholders as of the 31st day of December next preceding or (B) that is proposed when the domestic company is not eligible to declare and pay a dividend or other distribution pursuant to the provisions of Section 27.
        (ii) Loans or extensions of credit to any person
    
that is not an affiliate (A) that involve the lesser of 3% of the company's admitted assets or 25% of the company's surplus, each as of the 31st day of December next preceding, made with the agreement or understanding that the proceeds of such transactions, in whole or in substantial part, are to be used to make loans or extensions of credit to, to purchase assets of, or to make investments in, any affiliate of the company making such loans or extensions of credit or (B) that are proposed when the domestic company is not eligible to declare and pay a dividend or other distribution pursuant to the provisions of Section 27.
        (iii) Reinsurance agreements or modifications
    
thereto, including those agreements that may require as consideration the transfer of assets from an insurer to a nonaffiliate, if an agreement or understanding exists between the insurer and nonaffiliate that any portion of those assets will be transferred to one or more affiliates of the insurer.
        (iv) All management agreements, service contracts,
    
cost‑sharing arrangements, and any other contracts providing for the rendering of services on a regular systematic basis.
        (v) Any series of the previously described
    
transactions that are substantially similar to each other, that take place within any 180 day period, and that in total are equal to or exceed the lesser of 3% of the domestic insurer's admitted assets or 25% of its policyholders surplus, as of the 31st day of the December next preceding.
        (vi) Any other material transaction that the
    
Director by rule determines might render the company's surplus as regards policyholders unreasonable in relation to the company's outstanding liabilities and inadequate to its financial needs or may otherwise adversely affect the interests of the company's policyholders or shareholders.
    Nothing herein contained shall be deemed to authorize or permit any transactions that, in the case of an insurer not a member of the same holding company system, would be otherwise contrary to law.
    (b) Any transaction or contract otherwise described in paragraph (a) of this subsection that is between a domestic insurer and any person that is not its affiliate and that precedes or follows within 180 days or is concurrent with a similar transaction between that nonaffiliate and an affiliate of the domestic company and that involves amounts that are equal to or exceed the lesser of 3% of the domestic insurer's admitted assets or 25% of its surplus as regards policyholders at the end of the prior year may not be entered into unless the company has notified the Director in writing of its intention to enter into the transaction at least 30 days prior thereto or such shorter period as the Director may permit, and the Director has not disapproved it within such period.
    (c) A company may not enter into transactions which are part of a plan or series of like transactions with any person within the holding company system if the purpose of those separate transactions is to avoid the statutory threshold amount and thus avoid the review that would occur otherwise. If the Director determines that such separate transactions were entered into for such purpose, he may exercise his authority under subsection (2) of Section 131.24.
    (d) The Director, in reviewing transactions pursuant to paragraph (a), shall consider whether the transactions comply with the standards set forth in Section 131.20 and whether they may adversely affect the interests of policyholders.
    (e) The Director shall be notified within 30 days of any investment of the domestic insurer in any one corporation if the total investment in that corporation by the insurance holding company system exceeds 10% of that corporation's voting securities.
    (f) Except for those transactions subject to approval under other Sections of this Code, any such transaction or agreements which are not disapproved by the Director may be effective as of the date set forth in the notice required under this Section.
    (g) If a domestic insurer enters into a transaction described in this subsection without having given the required notification, the Director may cause the insurer to pay a civil forfeiture of not more than $250,000. Each transaction so entered shall be considered a separate offense.
    (2) No domestic company subject to registration under Section 131.13 may pay any extraordinary dividend or make any other extraordinary distribution to its securityholders until: (a) 30 days after the Director has received notice of the declaration thereof and has not within such period disapproved the payment, or (b) the Director approves such payment within the 30‑day period. For purposes of this subsection, an extraordinary dividend or distribution is any dividend or distribution of cash or other property whose fair market value, together with that of other dividends or distributions, made within the period of 12 consecutive months ending on the date on which the proposed dividend is scheduled for payment or distribution exceeds the greater of: (a) 10% of the company's surplus as regards policyholders as of the 31st day of December next preceding, or (b) the net income of the company for the 12‑month period ending the 31st day of December next preceding, but does not include pro rata distributions of any class of the company's own securities.
    Notwithstanding any other provision of law, the company may declare an extraordinary dividend or distribution which is conditional upon the Director's approval, and such a declaration confers no rights upon security holders until: (a) the Director has approved the payment of the dividend or distribution, or (b) the Director has not disapproved the payment within the 30‑day period referred to above.
(Source: P.A. 92‑140, eff. 7‑24‑01.)

    (215 ILCS 5/131.20b)
    Sec. 131.20b. Controlled insurers; management; directors.
    (1) Notwithstanding the control of a domestic insurer by any person, the officers and directors of the insurer shall not thereby be relieved of any obligation or liability to which they would otherwise be subject by law, and the insurer shall be managed so as to assure its separate operating identity consistent with Article VIII 1/2 of this Code.
    (2) Nothing in this Section shall preclude a domestic insurer from having or sharing a common management or a cooperative or joint use of personnel, property, or services with one or more affiliated persons under arrangements meeting the standards and requirements of Sections 131.20 and 131.20a.
    (3) After June 30, 2002, not less than one‑third of the directors of a domestic insurer that is a member of an insurance holding company system shall be persons who are not officers or employees of the insurer or of any entity controlling, controlled by, or under common control with the insurer and who are not beneficial owners of a controlling interest in the voting stock of the insurer or any such entity. At least one such person shall be included in any quorum for the transaction of business at any meeting of the board of directors or any committee thereof.
    (4) Subsection (3) of this Section does not apply to a domestic insurer if the entity controlling the insurer, whether directly or through an intermediate subsidiary, has a board of directors composed in accordance with that subsection.
    (5) Subsection (3) of this Section does not apply to a domestic insurer if the ultimate controlling party of the domestic insurer is a corporation whose equity securities or equivalent instruments are listed on the New York Stock Exchange.
(Source: P.A. 92‑140, eff. 7‑24‑01.)

    (215 ILCS 5/131.21) (from Ch. 73, par. 743.21)
    Sec. 131.21. Examination.
    (1) Subject to the limitation contained in this section and in addition to the powers which the Director has under Sections 132 through 132.7 and 401 through 403 of this Code relating to the examination of companies, the Director also has the power to order any company registered under Section 131.13 to produce such records, books, or other information papers in the possession of the company or its affiliates as are reasonably necessary to ascertain the financial condition of such company or to determine compliance with this Article. In the event the company fails to comply with the order, the Director has the power to examine the affiliates to obtain such information.
    (2) The Director may retain at the registered company's expense any attorneys, actuaries, accountants and other experts not otherwise a part of the Director's staff as may be reasonably necessary to assist in the conduct of the examination under subsection (1). Any persons so retained are under the direction and control of the Director and may act in a purely advisory capacity.
    (3) Each registered company producing for examination records, books and papers under subsection (1) is liable for and must pay the expense of the examination in accordance with Section 408 of this Code.
(Source: P.A. 89‑97, eff. 7‑7‑95.)

    (215 ILCS 5/131.22) (from Ch. 73, par. 743.22)
    Sec. 131.22. Confidential treatment. All information, documents, and copies thereof obtained by or disclosed to the Director or any other person in the course of an examination or investigation made under Section 131.21 and all information submitted under Sections 131.13 or 131.20a and all personal financial statement information submitted under Section 131.5 must be given confidential treatment and is not subject to subpoena and may not be made public by the Director or any other person, without the prior written consent of the company to which it pertains unless the Director, after giving the company and its affiliates who would be affected thereby notice and opportunity to be heard, determines that the interests of policyholders, shareholders or the public will be served by the publication thereof in which event he may publish all or any part thereof in such manner as he may deem appropriate.
    Nothing contained in this Section shall prevent or be construed as prohibiting the Director from disclosing such information to the insurance department of any other state or county or to law enforcement officials of this or any other state or agency of the federal government at any time upon the written agreement of the entity receiving the information to hold that information confidential and in a manner consistent with this Code.
(Source: P.A. 88‑364.)

    (215 ILCS 5/131.23) (from Ch. 73, par. 743.23)
    Sec. 131.23. Injunctions; prohibitions against voting securities; sequestration of voting securities. (1) Whenever it appears to the Director that any company or any director, officer, employee or agent thereof has committed or is about to commit a violation of this Article or of any rule, regulation, or order issued by the Director hereunder, the Director may apply to the Circuit Court for the county in which the principal office of the company is located or to the Circuit Court for Sangamon County for an order enjoining the company or the director, officer, employee or agent thereof from violating or continuing to violate this Article or any rule, regulation or order, and for any other equitable relief as the nature of the case and the interests of the company's policyholders, creditors or the public may require. In any proceeding, the validity of the rule, regulation or order alleged to have been violated may be determined by the Court.
    (2) No security which is the subject of any agreement or arrangement regarding acquisition, or which is acquired or to be acquired, in contravention of this Article or of any rule, regulation or order issued by the Director hereunder may be voted at any securityholders' meeting, or may be counted for quorum purposes, and any action of securityholders' requiring the affirmative vote of a percentage of securities may be taken as though such securities were not issued and outstanding; but no action taken at any such meeting may be invalidated by the voting of such securities, unless the action would materially affect control of the company or unless any court of this State has so ordered. If the Director has reason to believe that any security of the company has been or is about to be acquired in contravention of this Article or of any rule, regulation or order issued by the Director hereunder the company or the Director may apply to the Circuit Court for Sangamon County or to the Circuit Court for the county in which the company has its principal place of business (a) to enjoin the further pursuit or use of any offer, request, invitation, agreement or acquisition made in contravention of Sections 131.4 through 131.12 or any rule, regulation, or order issued by the Director thereunder; (b) to enjoin the voting of any security so acquired; (c) to void any vote of such security already cast at any meeting of securityholders; and (d) for any other equitable relief as the nature of the case and the interests of the company's policyholders, creditors, or the public may require.
    (3) In any case where a person has acquired or is proposing to acquire any voting securities in violation of this Article or any rule, regulation or order issued by the Director hereunder, the Circuit Court for Sangamon County or the Circuit Court for the county in which the company has its principal place of business may, on such notice as the court deems appropriate, upon the application of the company or the Director seize or sequester any voting securities of the company owned directly or indirectly by such person, and issue any orders with respect thereto as may be appropriate to effectuate this Article. Notwithstanding any other provisions of law, for the purposes of this Article, the situs of the ownership of the securities of domestic companies is deemed to be in this State.
    (4) If the Director has reason to believe that any policyholders' proxies have been or are about to be acquired in contravention of this Article or of any rule, regulations or order issued by the Director hereunder, the Director may apply to the Circuit Court for Sangamon County or to the Circuit Court for the county in which the company has its principal place of business (a) to enjoin further pursuit or use of any offer, request, invitation, agreement or acquisition made in contravention of Section 131.4 through 131.12 and (b) for any other equitable relief as the nature of the case and the interests of the company's policyholders, creditors or the public may require.
(Source: P.A. 84‑805.)

    (215 ILCS 5/131.24) (from Ch. 73, par. 743.24)
    Sec. 131.24. Sanctions.
    (1) Every director or officer of an insurance holding company system who knowingly violates, participates in, or assents to, or who knowingly permits any of the officers or agents of the company to engage in transactions or make investments which have not been properly filed or approved or which violate this Article, shall pay, in their individual capacity, a civil forfeiture of not more than $100,000 per violation, after notice and hearing before the Director. In determining the amount of the civil forfeiture, the Director shall take into account the appropriateness of the forfeiture with respect to the gravity of the violation, the history of previous violations, and such other matters as justice may require.
    (2) Whenever it appears to the Director that any company subject to this Article or any director, officer, employee or agent thereof has engaged in any transaction or entered into a contract which is subject to Section 131.20, and any one of Sections 131.16, 131.20a, 141, 141.1, or 174 of this Code and which would not have been approved had such approval been requested or would have been disapproved had required notice been given, the Director may order the company to cease and desist immediately any further activity under that transaction or contract. After notice and hearing the Director may also order (a) the company to void any such contracts and restore the status quo if such action is in the best interest of the policyholders or the public, and (b) any affiliate of the company, which has received from the company dividends, distributions, assets, loans, extensions of credit, guarantees, or investments in violation of any such Section, to immediately repay, refund or restore to the company such dividends, distributions, assets, extensions of credit, guarantees or investments.
    (3) Whenever it appears to the Director that any company or any director, officer, employee or agent thereof has committed a willful violation of this Article, the Director may cause criminal proceedings to be instituted in the Circuit Court for the county in which the principal office of the company is located or in the Circuit Court of Sangamon or Cook County against such company or the responsible director, officer, employee or agent thereof. Any company which willfully violates this Article commits a business offense and may be fined up to $500,000. Any individual who willfully violates this Article commits a Class 4 felony and may be fined in his individual capacity not more than $500,000 or be imprisoned for not less than one year nor more than 3 years, or both.
    (4) Any officer, director, or employee of an insurance holding company system who willfully and knowingly subscribes to or makes or causes to be made any false statements or false reports or false filings with the intent to deceive the Director in the performance of his duties under this Article, commits a Class 3 felony and upon conviction thereof, shall be imprisoned for not less than 2 years nor more than 5 years or fined $500,000 or both. Any fines imposed shall be paid by the officer, Director, or employee in his individual capacity.
(Source: P.A. 93‑32, eff. 7‑1‑03.)

    (215 ILCS 5/131.25) (from Ch. 73, par. 743.25)
    Sec. 131.25. Receivership. Whenever it appears to the Director that any person has committed a violation of this Article which so impairs the financial condition of a domestic company as to threaten insolvency or make the further transaction of business by it hazardous to its policyholders, creditors or the public, then the Director may proceed against the company under Article XIII of this Code.
(Source: P.A. 83‑749.)

    (215 ILCS 5/131.25a) (from Ch. 73, par. 743.25a)
    Sec. 131.25a. Recovery upon order of liquidation or rehabilitation of domestic insurer.
    (a) If an order for liquidation or rehabilitation of a domestic insurer has been entered, the receiver shall have the right subject to the limitations set forth in subsections (b) and (c) of this Section to recover on behalf of the insurer any or all of the following made during the 3 years before the filing of the petition for liquidation, conservation, or rehabilitation:
        (1) From any parent corporation, holding company,
    
person, or affiliate who otherwise controlled the insurer, the amount of distributions, other than distributions of shares of the same class, paid by the insurer on its capital stock.
        (2) From any director, officer, or employee, the
    
amount of any payment in the form of a bonus, termination settlement, or extraordinary lump sum salary adjustment made by the insurer or a subsidiary.
    (b) No distribution shall be recoverable if the parent or affiliate shows that the distribution or payment was lawful and reasonable when paid and that the insurer did not know and reasonably could not have known that the distribution might adversely affect the ability of the insurer to fulfill its contractual obligations.
    (c) The maximum amount recoverable under this Section shall be the amount in excess of all other available assets of the impaired or insolvent insurer needed to pay the contractual obligations of that insurer and reimburse any guaranty funds.
    (d) Any person who was a parent corporation, holding company, or who otherwise controlled the insurer or affiliate at the time the distributions were paid shall be liable up to the amount of distributions the person received. Any person who otherwise controlled the insurer at the time the distributions were declared shall be liable up to the amount of distributions the person would have received had the distributions been paid immediately. If 2 or more persons are liable with respect to the same distributions, they shall be jointly and severally liable.
    (e) To the extent any person liable under subsection (d) is insolvent or otherwise fails to pay claims due, its parent corporations, holding company, or person who otherwise controlled it at the time the distribution was paid shall be jointly and severally liable for any resulting deficiency in the amount recovered.
(Source: P.A. 87‑1090.)

    (215 ILCS 5/131.26) (from Ch. 73, par. 743.26)
    Sec. 131.26. Revocation, suspension, or non‑renewal of company's license.
    Whenever it appears to the Director that any person has committed a violation of this Article which makes the continued operation of a company contrary to the interests of policyholders or the public, the Director may, after notice and hearing suspend, revoke or refuse to renew the company's license or authority to do business in this State for a period as he finds is required for the protection of policyholders or the public. Any such determination must be accompanied by specific findings of fact and conclusions of law.
(Source: P. A. 77‑673.)

    (215 ILCS 5/131.27) (from Ch. 73, par. 743.27)
    Sec. 131.27. Judicial review. (1) Any order or decision made, issued or executed by the Director under this Article whereby any person or company is aggrieved is subject to review by the Circuit Court of Sangamon County.
    The Administrative Review Law, as now or hereafter amended, and the rules adopted pursuant thereto, applies to and governs all proceedings for review of final administrative decisions of the Director provided for in this Section. The term "administrative decision" is defined as in Section 3‑101 of the Code of Civil Procedure.
(Source: P.A. 82‑783.)

    (215 ILCS 5/131.28) (from Ch. 73, par. 743.28)
    Sec. 131.28. Separability of provisions.
    If any provisions of this Article or the application thereof to any person or circumstances is held invalid, the invalidity does not affect other provisions or applications of this Article which can be given effect without the invalid provision or application, and for this purpose the provisions of this Article are separable.
(Source: P. A. 77‑673.)
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