Illinois General Assembly - Illinois Compiled Statutes

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215 ILCS 5/141.2

(215 ILCS 5/141.2) (from Ch. 73, par. 753.2)

Sec. 141.2.

Grounds
for disapproval.

The Director must disapprove any such management contract or service
agreement if, at any time, he finds:

(1) that the service or management charges are based upon criteria
unrelated either to the managed company's profits or to the reasonable
customary and usual charges for such services or are based on factors
unrelated to the value of such services to the company; or

(2) that management personnel or other employees of the insurance
company are to be performing management functions and receiving any
remuneration therefor through the management or service contract in
addition to the compensation by way of salary received directly from the
insurance company for their services; or

(3) that the contract would transfer substantial control of the company
or any of the powers vested in the board of directors, by statute, articles
of incorporation or by-laws, or substantially all of the basic functions of
the insurance company management; or

(4) that the contract contains provisions which would be clearly
detrimental to the best interests of policyholders, stockholders or members
of the company; or

(5) that the officers and directors of the management firm are of known
bad character or have been affiliated, directly or indirectly, through
ownership, control, management, reinsurance transactions or other insurance
or business relations with any person or persons known to have been
involved in the improper manipulation of assets, accounts or reinsurance.

If the Director disapproves of any management contract or service
agreement, notice of such action shall be given to the company assigning
the reasons therefor in writing. The Director shall grant any party to the
contract a hearing upon request according to Article XXIV of this Code.

(Source: P.A. 77-1040.)