b'TABLE OF CONTENTSrestructuring mechanisms. The basis for thisthe companies after a restructuring transaction is position is two-fold. First, given that LTCcompleted. Beyond the financial aspects, the White business has long-tail liabilities, there isPaper supports standardized requirements for all substantial uncertainty with respect to insurerIBT or CD transactions that include court approval reserve requirements when LTC business isfor the transaction, use of independent experts to transferred through an IBT or CD transaction.evaluate the restructuring plans, and notice to all Second, LTC policyholders generally fall into aaffected stakeholders, which would include category of individuals who may find it muchstakeholders rights to submit written comments more challenging to assert their rights in a courtand to attend a public hearing to address the proceeding than a corporate entity. These tworeasonableness of the transaction. concerns, according to the White Paper, make LTC business inappropriate for transfer pursuantCompletion of the First CD Transaction to IBT or CD legislation.and Approval of the Second IBT4. Jurisdictional Considerations On March 29, 2021, the Illinois Department of Given statutory differences among states, theInsurance (IDOI) approved the division of eight White Paper raises concerns that IBT and CDoperating subsidiaries of Allstate Insurance transactions may not receive recognition or beCompany (Allstate). Allstates Plans of enforceable in states that have not adoptedDivision filed with the IDOI involved, as the initial statutes authorizing such restructuring activity.step, the division of each Illinois-domiciled insurer One likely area of cross-jurisdictional issues is ininto a surviving insurer and a new Illinois-the context of insurer insolvency. Following andomiciled insurer, each holding a portion of the IBT or CD transaction, if the assuming insurer isassets, liabilities and contracts of the dividing insolvent and the original insurer is still financiallyinsurer. The new insurer received certain Michigan sound, a state court may fail to recognize orautomobile insurance policies. In step two of the enforce the restructuring transaction absencetransaction, the eight new companies merged into state legislation requiring it to do so, particularlythree companies pursuant to the Illinois merger if recognition or enforcement would harmstatute, so that there was one insurer for each of policyholders in that state.the Allstate, Esurance and Encompass brands to To address such jurisdictional issues, the Whitecarry on the Michigan legacy automobile Paper supports broad standardization of IBT andinsurance business. As required by the Illinois CD CD legislation. On the financial front, the Workingstatute, the IDOI held a public hearing at which Group created its own Restructuring MechanismsAllstate corporate officers testified, along with an Subgroup to explore best practices pertaining toindependent financial expert. The public was also financial matters such as reserves and capital andgiven an opportunity to file comments, questions long-term liquidity, as well as criteria for monitoringand objections with the IDOI, but none were filed. MAYER BROWN |81'