Section 651.ILLUSTRATION A Statement Regarding the Acquisition of Control of a Domestic Insurer

Section 651.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)        Two complete paper copies and one electronic copy of each

statement, including exhibits and all other papers and documents filed as a

part of the statement, 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.  The unsigned

copy 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 that power of attorney or other authority shall

also be filed with the statement.

C.        Requirements as to Printing and Language

(1)        Statements shall be easily readable and suitable for review

and reproduction.  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.

authority, a copy of that power of attorney or other authority shall

also be filed with the statement.

C.        Requirements as to Printing and Language

(1)        Statements shall be easily readable and suitable for review

and reproduction.  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 are so prepared as to indicate to

the reader the coverage of the items without the necessity of 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.

E.         Additional Information and Exhibits

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

is Part, if any item is inapplicable or

the answer is in the negative, a statement to that effect shall be made.

E.         Additional Information and Exhibits

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.

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 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:

(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 of the documents.

(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 that person for the information.

G.        Incorporation by Reference

uments, together with the sources of the documents.

(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 that person for the information.

G.        Incorporation by Reference

(1)        Materials 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 any financial statement, annual

report, proxy statement, statement filed with a governmental authority, or any

other document may be incorporated by reference in answer or partial answer to

any item, provided the document or paper is filed as an exhibit to the

statement.  Excerpts of documents may be filed as exhibits if the documents are

extensive.  Documents currently on file with the Director that were filed

within 3 years need not be attached as exhibits.  References to information

contained in exhibits or in documents already on file shall clearly identify the

material and shall specifically indicate that the material is to be

incorporated by reference in answer to the item.  Material shall not be

incorporated by reference in any case in which the incorporation would render

the statement incomplete, unclear or confusing.

(3)        When an item requires a summary or outline of the provisions

of any document, only a brief statement shall be made as to the pertinent

provisions of the document.  In addition to the statement, the summary or

outline may incorporate by reference particular parts of any exhibit or

document currently on file with the Director that was filed within three years

and may be qualified in its entirety by that reference

es a summary or outline of the provisions

of any document, only a brief statement shall be made as to the pertinent

provisions of the document.  In addition to the statement, the summary or

outline may incorporate by reference particular parts of any exhibit or

document currently on file with the Director that was filed within three years

and may be qualified in its entirety by that reference.  In any case in which

two or more documents required to be filed as exhibits are substantially identical

in all material respects except as to the parties to the document, the dates of

execution, or other details, a copy of only one of the documents needs to be

filed, with a schedule identifying the omitted documents and setting forth the

material details in which those documents differ from the documents a copy of

which is filed.

H.        Summaries or Outlines of Documents

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.

I.          Additional Exhibits

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.

J.          Omission of Identical Documents

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

ich 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 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 five fiscal years (or for such lesser period

as the acquiring party and any predecessors shall have been in existence) and

similar unaudited information as of a date not earlier than 90 days prior to

the filing of the statement.

(2)        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.

L.        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, that person shall sign and certify in an

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.

M

on

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 an

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.

M.        Filing

Fee

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.

FORM

A

INSTRUCTIONS

FOR COMPLETION

COVER PAGE.

FORM

A

NAME

OF DOMESTIC INSURER

BY

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:

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

that party and any predecessors shall have been in existence.  Briefly describe

the business intended to be done by the acquiring party and the acquiring

party's subsidiaries.

f 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

that party and any predecessors 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 party.  Indicate in the chart or listing the percentage of voting

securities of each person that is owned or controlled by the acquiring party or

by any other person.  If control of any person is maintained other than by

ownership or control of voting securities, indicate the basis of that control.

As to each person specified in the 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 date

when commenced.

ITEM 3.          Identity and Background of Individuals Associated with

the Acquiring Party

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 which shall include, but not be

limited to, the following information:  identifying information; affiant's

identifying and contact information; affiant's educational, residential and

employment history; affiant's professional, business and technical licenses and

memberships; a complete history of affiant's fidelity bonding; affiant's criminal

charges and convictions; civil, regulatory, a

avit which shall include, but not be

limited to, the following information:  identifying information; affiant's

identifying and contact information; affiant's educational, residential and

employment history; affiant's professional, business and technical licenses and

memberships; a complete history of affiant's fidelity bonding; affiant's criminal

charges and convictions; civil, regulatory, administrative and disciplinary

actions in affiant's individual or corporate capacity; a complete history of

affiant's bankruptcy, insolvency, liens and foreclosures in an individual or

corporate capacity; affiant's consent to release background reports to the

Department and consent for third parties to cooperate in the gathering of

background information; and affiant's and affiant's immediate family's equity

holdings in any entity subject to insurance regulation. The Department will

accept the biographical affidavit, and any supplement to that affidavit, that

is obtained from the website of the National Association of Insurance

Commissioners (NAIC) or the Department.  On the biographical affidavit, include

a third party background check.

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 funds or other consideration 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,

and copies of all agreements relating to the transaction.

ion 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,

and copies of all agreements relating to the transaction.

(b)        An explanation of the criteria used in determining the nature

and amount of the 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, the acquiring party must specifically request that the

identity be kept confidential.  However, that 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 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.

ITEM 6

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.

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 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.

ITEM 7.          Ownership of Voting Securities or Control of

Policyholder Proxies

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.

ITEM 8.          Contracts, Arrangements or Understandings with Respect

to Voting Securities or Policyholder Proxies of the Insurer

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 are 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

shall identify the persons with whom the contracts, arrangements or

understandings have been entered.

(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 related soliciting

material, 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 the description the dates of purchase acquisition, the names of

the acquirers, and the consideration paid or agreed to be paid.

ITEM 10

oxies

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 acquirers, and the consideration paid or agreed to be paid.

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 to the solicitation.

ITEM 12.        Financial

Statements and Exhibits

(a)        Financial

statements, exhibits and three-year financial projections of the insurers 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, that information need not

be delivered to the domestic company, but shall be physically available at a

hearing proceeding.

hibits and three-year financial projections of the insurers 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, that information need not

be delivered to the domestic company, but shall be physically available at a

hearing proceeding.

(b)        The

financial statements shall include the annual financial statements of the

persons identified in Item 2(a) for the preceding five fiscal years (or for

such lesser period as the applicant and its affiliates and any predecessors

shall have been in existence), and similar unaudited information as of a date

not earlier than 90 days prior to the filing of the statement.  The statements

may be prepared on either an individual basis, or, unless the Director

otherwise requires, on a consolidated basis if consolidated statements are

prepared in the usual course of business.

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.

ITEM 13

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.

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 653.Illustration

A.  The optional expert opinion referred to in Part 653 is also optional under

this Part.

ITEM 15.        Financial Stability

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.

ITEM 16.        Reasonableness of the Terms

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.

ITEM 17

sonably 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

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.

ITEM 17.        Plans for Material Change in the Domestic Company

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.

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.        Statement

that Enterprise Risk Management Information Will Be Provided

After the

acquisition of control occurs, the applicant shall agree to provide the annual

report specified in Section 131.14b of the Code.

ITEM 20.        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

that Enterprise Risk Management Information Will Be Provided

After the

acquisition of control occurs, the applicant shall agree to provide the annual

report specified in Section 131.14b of the Code.

ITEM 20.        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 651,

has caused this application to

be duly signed

Name of Applicant

on its

behalf in the City of

and State

of

,

on the

day of

,

20

.

Name of Applicant

BY

(Name)

(Title)

Attest:

(Signature of Officer)

(Title)

CERTIFICATION

The undersigned deposes and

says that the undersigned had duly executed the attached application

dated

,  20

, for and

on behalf of

,

(Name of Applicant)

that

the undersigned is the

of that

company, and that the undersigned

(Title of Officer)

is authorized

to execute and file the application. Deponent further acknowledges familiarity with

the application and the contents of the application, and that the facts in the

application are true to the best of the undersigned's knowledge, information

and belief.

Signature

(Type

or Print Name Beneath)