ILLUSTRATION A - Statement Regarding the Acquisition of Control of a Domestic Insurer
Current through Register Vol. 46, No. 15, April 8, 2022
Form A shall be used by an acquiring party required to file a statement with the Director pursuant to Section 131.5 of the Illinois Insurance Code. Subsequent amendments shall also be filed on Form A, but shall include on the top of the cover sheet "Amendment No. ____ to" and shall indicate the date of the amendment and not the date of the original filing. If the person being acquired is a "domestic insurer" solely because of the provisions of Section 131.4 of the Illinois Insurance Code, the name of the domestic insurer on the cover page shall be indicated as follows:
"ABC Insurance Company, a subsidiary of XYZ Holding Company."
This form is not to be used as a blank form to be filled in, but only as a guide in the preparation of the statement. The statement shall contain the numbers and captions of all items, but the text of the items may be omitted at the option of the acquiring party provided the answers are so prepared as to indicate to the reader the coverage of the items without the necessity of his or her referring to the text of the items or instructions. All instructions, whether appearing under the items of the form or elsewhere in the form, are to be omitted. Unless expressly provided otherwise within this Part, if any item is inapplicable or the answer is in the negative, a statement to that effect shall be made.
In addition to the information expressly required to be included in the statement, the Director may request such further material information, if any, as may be necessary to make the information contained in the statement not misleading. The person filing may also file such exhibits as it may desire in addition to those expressly required by the statement. The exhibits shall be so marked as to indicate clearly the subject matters to which they refer. Changes to the statement shall include on the top of the cover page the phrase: "Change No. (insert number) to" and shall indicate the date of the change and not the date of the original filing.
Information required need be given only insofar as it is known or reasonably available to the acquiring party. If any required information is unknown and not reasonably available to the acquiring party, either because obtaining the information would involve unreasonable effort or expense, or because it rests peculiarly within the knowledge of another person not affiliated with the acquiring party, the information may be omitted, subject to the following conditions:
When an item requires a summary or outline of the provisions of any document, only a brief statement shall be made as to the most important provisions of the document. In addition to that statement, the summary or outline may incorporate by reference particular parts of any exhibit and may be qualified in its entirety by the reference.
The acquiring party may file such exhibits as it may desire, in addition to those expressly required by the statement. The exhibits shall be marked to indicate clearly the subject matters to which they refer.
In any case in which two or more documents required to be filed as exhibits are identical in all respects except as to the parties to the document, the dates of execution, or other details, the acquiring party need file a copy of only one of the documents, with a schedule identifying the omitted documents and setting forth the details in which those documents differ from the documents a copy of which is filed. The Director may, at any time, in his or her discretion require the filing of copies of any omitted documents in order to verify that the omitted documents are identical to documents on file.
For purposes of the signature and certification required by Item 19 of the Form A, the applicant may be any person that is an acquiring party. If the applicant is a natural person, that person shall sign and certify in his or her individual capacity. If the applicant is other than a natural person, the signature and certification is to be provided only by an executive officer of the applicant.
Pursuant to Section 408 of the Illinois Insurance Code, the Director shall collect a fee for the filing of a statement of acquisition of a domestic insurance company. The Form A filing shall not be deemed complete until the Director has received the appropriate filing fee as required by Section 408.
INSTRUCTIONS FOR COMPLETION
NAME OF DOMESTIC INSURER
NAME OF ALL ACQUIRING PARTIES (APPLICANT)
Date: ____________ , 20_______
Name, Title and Address of Person to Whom Notices and Correspondence Concerning This Statement Should be Addressed:
State the name and address of the domestic insurer to which this application relates and a brief description of how control is to be acquired.
With respect to (1) the acquiring party if that person is an individual, and (2) all persons who are directors or executive officers of the acquiring party that will acquire direct control of the domestic insurer, if that acquiring party is not an individual, provide a biographical affidavit indicating the information requested in the form designated in 50 Ill. Adm. Code 913. Illustration A. On the biographical affidavit, include a third party background check.
Describe any plans or proposals that the acquiring party may have to liquidate the insurer, to sell its assets to or merge it with any other persons, or to make any other material change in its business operations or corporate structure or management. Describe any operational changes that may occur as a result of any integration of the insurer's operations with the operation of the applicant or any of its affiliates. For purposes of this Item, a change in business operations or corporate structure or management shall be deemed material when it is likely that a reasonable corporate officer would attach importance to the change, considering the overall impact of the change on the corporation.
State the number of shares of the insurer's voting securities or number of policyholder proxies that the acquiring party, its affiliates and any person listed in Item 3 plan to acquire or control, and the terms of the offer, request, invitation, agreement or acquisition, and a statement as to the method by which the fairness of the proposal was arrived.
State the amount of the insurer's voting securities that is beneficially owned or concerning which there is a right to acquire beneficial ownership by the acquiring party, its affiliates or any person listed in Item 3. State the number of policyholder proxies currently controlled or concerning which there is a right to acquire control of by the acquiring party, its affiliates or any person listed in Item 3.
Describe any acquisition of any voting securities or control of policyholder's proxies of the insurer during the 12 calendar months preceding the filing of this Statement by the acquiring party, its affiliates or any person listed in Item 3. Include in the description the dates of purchase acquisition, the names of the acquires, and the consideration paid or agreed to be paid.
Describe any recommendations to purchase any voting security or policyholder's proxies of the insurer made during the 12 calendar months preceding the filing of this statement by the acquiring party, its affiliates or any person listed in Item 3, or by anyone based upon interviews or at the suggestion of the acquiring party, its affiliates or any person listed in Item 3.
Describe the terms of any agreement, contract or understanding made with any broker-dealer as to solicitation of voting securities of the insurer for tender, and the amount of any fees, commissions or other compensation to be paid to broker-dealers with regard to the solicitation.
The annual financial statements of the applicant shall be accompanied by the certificate of an independent public accountant to the effect that those statements present fairly the financial position of the applicant and the results of its operations for the year then ended, in conformity with generally accepted accounting principles or with requirements of insurance or other accounting principles prescribed or permitted under law. If the applicant is an insurer that is actively engaged in the business of insurance, the financial statements need not be certified, provided they are based on the Annual Statement of the person filed with the insurance department of the person's domiciliary state and are in accordance with the requirements of insurance or other accounting principles prescribed or permitted under the laws and regulations of that state.
Describe how the domestic company 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 after the change of control.
Describe how the effect of the change of control would not substantially lessen competition or tend to create a monopoly in insurance in Illinois. Refer to the competitive standards as set forth in Section 131.12 a(4) of the Insurance Code. If these standards would apply, provide information outlined in 50 Ill. Adm. Code 653. Illustration A. The optional expert opinion referred to in Part 653 is also optional under this Part.
Briefly outline the financial condition of each acquiring party to demonstrate that the financial condition would not jeopardize the financial stability of the domestic company or the interest of its policyholders. For purposes of this Item, each acquiring party shall submit information regarding its financial condition as affecting the financial stability of a domestic insurer when a corporate officer could reasonably believe that the fiscal integrity of the domestic insurer would be affected by the financial condition of the acquiring party.
Provide a statement that specifies the method by which the fairness of the terms of the offer, request, invitation, agreement or acquisition in relationship to the value of the domestic company was determined.
Briefly outline facts that would tend to show that the plans or proposals that 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 the policyholders of the domestic company. Briefly outline any intended business relationship between the company to be acquired and the acquiring party or any affiliate of the acquiring party. For purposes of this Item, a change in business operations or corporate structure or management shall be deemed material when it is likely that a reasonable corporate officer would attach importance to the change considering the overall impact of the change on the corporation.
Briefly describe the competence, experience and integrity of those persons who would manage the operation of the domestic company so as to show that the change of control would not be adverse to the policyholders of the domestic company and of the insurance buying public.
After the acquisition of control occurs, the applicant shall agree to provide the annual report specified in Section 131.14 b of the Code.
Signature and Certification shall be in the following form:
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