Section 851.ILLUSTRATION A   Statement Regarding the Acquisition of Control of a Domestic Insurer

 

FORM A

GENERAL INSTRUCTIONS

 

A.        Use of Form A

            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."

 

B.         Number of Copies – Signatures

 

(1)        Four complete copies of each statement including exhibits and all other papers and documents filed as a part thereof, shall be filed with the Director.

 

(2)        At least one copy of each statement filed with the Director shall be manually signed in the manner prescribed by this form.  Unsigned copies shall contain the same information as in the manually signed copy.  If the signature of any person is affixed pursuant to a power of attorney or other similar authority, a copy of such power of attorney or other authority shall also be filed with the statement.

 

C.        Requirements as to Printing and Language

 

(1)        All copies of any filed statements, papers or documents shall be clear, readable and suitable for photocopying.  Debits in credit categories and credits in debit categories shall be designated in a manner other than color so as to be distinguishable on photocopies.

 

(2)        Statements shall be in the English language and monetary values shall be stated in United States currency.  If any exhibit or other paper or document filed with a statement is in a foreign language, it shall be accompanied by a translation into the English language and any monetary values shown in a foreign currency shall be converted into United States currency.  Monetary conversions in the financial statement shall be made as of the date of the financial statement.  Other required conversions shall be made as of the date stated on the Form A cover page.

 

D.        Preparation of Statement

            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 thereto are so prepared as to indicate to the reader the coverage of the items without the necessity of his referring to the text of the items or instructions thereto.  All instructions, whether appearing under the items of the form or elsewhere therein, are to be omitted.  Unless expressly provided otherwise within this Part, if any item is inapplicable or the answer thereto is in the negative, an statement to that effect shall be made.

 

E.         Additional Information

            In addition to the information expressly required to be included in the statement, there may at the option of the acquiring party be added such further material information, if any, as may be necessary to make the information contained therein not misleading.

 

F.         Information Unknown or Not Available

            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 the obtaining thereof 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:

 

(1)        The acquiring party shall give such information on the subject as it possesses or can acquire without unreasonable effort or expense including but not limited to impossibility or the loss or destruction of documents, together with the sources thereof.

 

(2)        The acquiring party shall include a statement either showing that unreasonable effort or expense would be involved or indicating the absence of any affiliation with the person within whose knowledge the information rests and stating the result of a request made to such person for the information.

 

G.        Incorporation by Reference

 

(1)        Matters required by any item of this statement may be incorporated by reference in answer or partial answer to any other item.

 

(2)        Information contained in a statement filed pursuant to the Federal Securities Act of 1933 (15 U.S.C. 77a et seq.) the Federal Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.) or a state law requiring registration or disclosure and information contained in any financial statement, annual report, proxy statement or any other document may be incorporated by reference in any answer or partial answer to any item or items of this Statement, provided such information meets the requirements of this statement.  A copy of such incorporation documents shall be included as an exhibit to Form A.

 

(3)        Material incorporated by reference shall be clearly identified in the reference.  An express statement that the specified matter is incorporated by reference shall be made at the particular place in the statement where the information is required.  Matter shall not be incorporated by reference in any case where such incorporation would render the statement incomplete, unclear or confusing.

 

H.        Summaries or Outlines of Documents

            Where 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 such statement, the summary or outline may incorporate by reference particular parts of any exhibit and may be qualified in its entirety by such reference.

 

I.          Additional Exhibits

            The acquiring party may file such exhibits as it may desire, in addition to those expressly required by the statement.  Such exhibits shall be so marked as to indicate clearly the subject matters to which they refer.

 

J.          Omission of Identical Documents

            In any case where two or more documents required to be filed as exhibits are identical in all respects except as to the parties thereto, the dates of execution, or other details, the acquiring party need file a copy of only one of such documents, with a schedule identifying the omitted documents and setting forth the details in which such documents differ from the documents a copy of which is filed.  The Director may at any time in his discretion require the filing of copies of any omitted documents in order to verify that the omitted documents are identical to documents on file.

 

K.        Financial Statements

 

(1)        The financial statements included as exhibits are to be audited by an independent certified public accountant in accordance with generally accepted auditing standards and are to contain financial information presented in accordance with generally accepted accounting principles for each acquiring party for the preceding fiscal year (or for such lesser period as such acquiring party and any predecessors thereof shall have been in existence) 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.

 

(2)        If an acquiring party is an insurer, which has been actively engaged in the business of insurance for the previous 10 years, the financial statements need not be audited, provided they are based on the annual statement of such 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 law and regulations of such state.

 

(3)        If the acquiring party is controlled by an individual, the individual's financial information will not be required provided that the acquiring party is currently subject to the registration and reporting requirements of Section 12 (g) of the Securities Exchange Act of 1934 (15 U.S.C. 77b et seq., 1985) or is an insurer which has been actively engaged in the business of insurance for the previous ten years.

 

L.         Notice and Summary Statement

            A copy of the Notice and Summary Statement to be provided to shareholders pursuant to Section 131.9 of the Illinois Insurance Code (Ill. Rev. Stat. 1985, ch. 73, par. 743.9) shall be filed as an exhibit.  This statement should contain the Introduction verbatim and at a minimum the following:

 

Introduction:  On_____, 19__, (Name of Acquiring Party) filed with the Director of the Illinois Department of Insurance a Form A statement regarding the acquisition of control of (Name of Domestic Insurer.)  Such Form A statement was filed pursuant to the provision of Article VIII½ of the Illinois Insurance Code and the Regulations promulgated thereunder.  A copy of the Form A statement has been delivered to (Name of Domestic Insurer.)  Under Article VIII½ the acquisition of control of (Name of Domestic Insurer) requires the approval of the Director of the Illinois Department of Insurance and under that Article the acquisition of 10% or more of the voting securities of (Name of Domestic Insurer) would be presumed to be the acquisition of control of (Name of Domestic Insurer).

 

Article VIII ½ of the Illinois Insurance Code requires that (Name of Domestic Insurer) send to its securityholders notice of such Form A statement and a summary of the information contained therein.  This Summary Statement constitutes such notice and summary of the Form A statement filed by (Name of Acquiring Party) regarding the acquisition of control of (Name of Domestic Insurer).

 

Insurer and Method of Acquisition:  State the name and address of the domestic insurer to which this statement relates.  Briefly describe how control is to be acquired and the considerations used or to be used in effecting the acquisition of control.  Be sure to state the number of shares of the insurer's voting securities which the acquiring party plans to acquire.

 

Identity of the Acquiring Party:  State the name and address of the acquiring party seeking to acquire control over the insurer:  If the acquiring party is not an individual, state the nature of its business operations.  Briefly describe the business intended to be done by the acquiring party and the acquiring party's subsidiaries.

 

Future Plans for Insurer:  Briefly described any plans or proposals which the acquiring party may have to liquidate such insurer, to sell its assets or to merge it with any other persons, or to make any other material change in its business operations or corporate structure or management. For purposes of this instruction a change in business operations or corporate structure or management shall be deemed material where it is likely that a reasonable corporate officer would attach importance to the change considering the overall impact of the change on the corporation.

 

Contracts, Arrangements, or Understanding with Respect to Voting Securities of the Insurer:  Give a brief description of any contracts, arrangements or understandings with respect to any voting security of the insurer in which the acquiring party, its affiliates or any persons identified as being associated with the acquiring party in Item 3 below is involved.

 

Financial Stability:  Briefly outline the financial condition of each acquiring party.  The outline shall contain current information as to assets, liabilities, net worth and operational results.

 

The statement must contain a notice that a copy of the entire Form A as filed with the Director of the Illinois Department of Insurance may be obtained free of cost by contacting:

 

Name:

Title:

Name of Company:

Street:

City, State & Zip Code:

 

M.       Signature and Certification

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, then that person shall sign and certify in their individual capacity.  If the applicant is other than a natural person then the signature and certification is to be provided only by an executive officer of the applicant.

 

N.        Filing Fee

Pursuant to Section 408 of the Illinois Insurance Code (Ill. Rev. Stat. 1985, ch. 73, par. 1020), 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.

 

FORM A

INSTRUCTIONS FOR COMPLETION

 

COVER PAGE.

 

FORM A

 

 

NAME OF DOMESTIC INSURER

BY

 

 

NAME OF ALL ACQUIRING PARTIES (APPLICANT)

 

Date:		, 19

 

 

Name, Title and Address of Person to Whom Notices and Correspondence Concerning This Statement Should be Addressed:

 

 

 

 

ITEM 1.           Insurer and Method of Acquisition

 

            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.

 

ITEM 2.           Identity and Background of the Acquiring Party

 

(a)        State the name and address of the acquiring party seeking to acquire control over the insurer.

 

(b)        If the acquiring party is not an individual, state the nature of its business operations for the past five years or for such lesser period as such person and any predecessors thereof shall have been in existence.  Briefly describe the business intended to be done by the acquiring party and the acquiring party's subsidiaries.

 

(c)        Furnish a chart or listing presenting the identities of and interrelationships among, the acquiring party and all affiliates of the acquiring. No affiliate need be identified if its total assets are equal to less than ½ of 1 percent of the total assets of the ultimate controlling person affiliated with the acquiring party.  Indicate in such chart or listing the percentage of voting securities of each such person which is owned or controlled by the acquiring party or by any other such person.  If control of any person is maintained other than by ownership or control of voting securities, indicate the basis of such control.  As to each person specified in such chart or listing indicate the type of organization (e.g. – corporation, trust, partnership) and the state or other jurisdiction of domicile.  If court proceedings looking toward a reorganization or liquidation are pending with respect to any such person, indicate which person, and set forth the title of the court, nature  of proceedings and the date when commenced.

 

ITEM 3.           Identity and Background of Individuals Associated with the Acquiring Party

            With respect to (1) the acquiring party if such person is an individual, and (2) all persons who are directors or executive officers of the acquiring party which will acquire direct control of the domestic insurer, if such acquiring party is not an individual, provide a biographical affidavit indicating the information requested and in the form designated in 50 Ill. Adm. Code 913 ILLUSTRATION 1.

 

ITEM 4.           Nature, Source and Amount of Consideration

 

(a)        Describe the nature, source and amount of funds or other considerations used or to be used in effecting the acquisition of control. If any part of the same is represented or is to be represented by funds or other consideration borrowed or otherwise obtained for the purpose of acquiring, holding, or trading securities, furnish a description of the transaction, including any pledge of the acquiring party's own securities or the securities of any of its subsidiaries or affiliates or securities of the domestic company to be acquired, the names of the parties thereto, and copies of all agreements relating thereto.

 

(b)        An explanation of the criteria used in determining the nature and amount of such consideration. Nature as used in this subsection means form of consideration, such as but not limited to, cash, debentures and their terms.

 

(c)        If the source of the consideration is a loan made in the lender's ordinary course of business and if the acquiring party wishes the identity to remain confidential, he must specifically request that the identity be kept confidential.  However, such identity may be disclosed to other Insurance Departments, provided they agree to observe the confidentiality.

 

ITEM 5.           Future Plans for Insurer

 

            Describe any plans or proposals which the acquiring party may have to liquidate such 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 which may occur as a result of any integration of such 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 where it is likely that a reasonable corporate officer would attach importance to the change considering the overall impact of the change on the corporation.

 

ITEM 6.           Voting Securities or Policyholder Proxies To Be Acquired or Controlled

 

            State the number of shares of the insurer's voting securities or number of policyholder proxies which 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.

 

ITEM 7.           Ownership of Voting Securities or Control of Policyholder Proxies

 

            State the amount of the insurer's voting securities which 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.

 

ITEM 8.           Contracts, Arrangements, or Understandings with Respect to Voting Securities or Policyholder Proxies of the Insurer

 

a)         Give a description of any contracts, arrangements or understandings with respect to any voting security or policyholder proxy of the insurer in which the acquiring party, its affiliates or any persons listed in Item 3 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.  Such description shall identify the persons with whom such contracts, arrangements or understandings have been entered into.

 

b)         Copies of all tender offers for, request or invitations for tenders of, exchange offers for, and agreements to acquire or exchange any voting securities of the insurer, and (if distributed) of additional soliciting material relating thereto, shall be filed as exhibits.

 

ITEM 9.           Recent Acquisition of Voting Securities or Policyholders Proxies

 

            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 such description the dates of purchase acquisition, the names of the acquirers, and the consideration paid or agreed to be paid therefor.

 

ITEM 10.         Recent Recommendations to Acquire

 

            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.

 

ITEM 11.         Agreements with Brokers-Dealers

 

            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 thereto.

 

ITEM 12.         Financial Statements and Exhibits

 

            Financial statements and exhibits shall be attached to this statement as an appendix, but list under this item the financial statements and exhibits so attached.  However, when an individual as the acquiring party must file financial information such information need not be delivered to the domestic company, but shall be physically available at a hearing proceeding.

 

ITEM 13.         Licensing Requirements

 

            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.

 

ITEM 14.         Effect of Change of Control Upon Competition

 

            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 131.12a(4) of the Insurance Code.  If these standards would apply, provide information outlined in 50 Ill. Adm. Code 853.ILLUSTRATION A.  The optional expert opinion referred to in Part 853 is also optional under this Part.

 

ITEM 15.         Financial Stability

 

            Briefly outline the financial condition of each acquiring party so as to demonstrate that such 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.

 

ITEM 16.         Reasonableness of the Terms

 

            Briefly outline any facts which would tend to show that the terms of the offer, request, invitation, agreement or acquisition are fair in relationship to the value of the domestic company.

 

ITEM 17.         Plans for Material Change in the Domestic Company

 

            Briefly outline facts which would tend to show that 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 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 where it is likely that a reasonable corporate officer would attach importance to the change considering the overall impact of the change on the corporation.

 

ITEM 18.         Qualifications of the Managing Persons

 

            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.

 

ITEM 19.         Signature and Certification

 

            Signature and Certification shall be in the following form:

 

Pursuant to the requirements of Section 131.5 of the Illinois Insurance Code and 50 Ill. Adm. Code 851,

 

 

				Name of Applicant
has caused this application to be duly signed on its behalf in the City of
and State of		, on the			day of				, 19		.
				Name of Applicant
BY
				(Name)				(Title)

 

 

 

 

Attest:

 

 

 

(Signature of Officer)

(Title)

 

 

CERTIFICATION

 

The undersigned deposes and says that he had duly executed the attached application dated
	, 19		, for and on behalf of
			that he is the			of such
(Name of Applicant)					(Title of Officer)

company, and that he is authorized to execute and file such instrument. Deponent further says that he is familiar with such instrument and the contents thereof, and that the facts therein set forth are true to the best of his knowledge, information and belief.

 

 

 

 

Signature
(Type or Print Name Beneath)

 

 

(Source:  Amended at 10 Ill. Reg. 17125, effective October 1, 1986)