Jersey Unreported Judgments

[2011]JRC192

Royal Court

(Samedi)

30 September 2011

Before     :

M. C. St. J. Birt, Esq., Bailiff, and Jurats Le Cornu and Marett-Crosby.

 

IN THE MATTER OF REPRESENTATION OF ROYAL LONDON 360 LIMITED AND ROYAL LONDON 360 INSURANCE COMPANY LIMITED

AND IN THE MATTER OF AN APPLICATION PURSUANT TO ARTICLE 27 OF THE SECOND SCHEDULE TO THE INSURANCE BUSINESS (JERSEY) LAW 1996

Advocate M. P. Cushing for the Representor.

judgment

the bailiff:

1.        This is an application under Article 27 and Schedule 2 of the Insurance Business (Jersey) Law 1996 for approval of a scheme of transfer of Jersey long term insurance business from Royal London 360 Limited to Royal London 360 Insurance Company Limited.  It is supplemental to a scheme which was sanctioned by the High Court of the Isle of Man back in 2009 and relates in fact to only thirty three policies.  Both companies are ultimately subsidiaries of the Royal London Mutual Insurance Society Limited. 

2.        The test to be applied by the Court in such cases is well established.  First, we must be satisfied that the procedural requirements of the 1996 Law have been complied with.  We have received affidavit evidence and we are satisfied that they have been complied with. 

3.        Secondly, the Court must consider whether the scheme is fair and whether policy holders may be adversely affected.  There has been a helpful elaboration of the approach in such cases in the case of Re Axa Equity and Law Life Assurance Society plc; Re Axa Sun Life plc [2001] 2 BCLC 447 and we would take the opportunity of transposing what Evans-Lombe J said in that case into the Jersey context so that in our judgment the principles to be applied in such cases are as follows:-

(i)        The 1996 Law confers an absolute discretion on the Court whether or not to sanction a scheme but this is a discretion which must be exercised by giving due recognition to the commercial judgment entrusted by the company's constitution to its directors;

(ii)       The Court is concerned whether a policy holder, employee, or other interested person or any group of them will be adversely affected by the scheme;

(iii)      This is primarily a matter of actuarial judgment involving a comparison of the security and reasonable expectations of policy holders without the scheme with what would result if the scheme were implemented.  For the purposes of this comparison the 1996 Law assigns an important role to the independent actuary to whose report the Court will give close attention;

(iv)      The Jersey Financial Services Commission, by reason of its regulatory powers, can also be expected to have the necessary material and expertise to express an informed opinion on whether policy holders are likely to be adversely affected.  Again the Court will pay close attention to any views expressed by the JFSC;

(v)       That individual policy holders and groups of policy holders may be adversely affected does not mean that the scheme has to be rejected by the Court.  The fundamental question is whether the scheme as a whole is fair as between the interests of the different classes of persons affected;

(vi)      It is not the function of the Court to produce what, in its view, is the best possible scheme as between different schemes all of which the Court may deem fair.  It is the company's directors' choice which to pursue;

(vii)     Under the same principle the details of the scheme are not a matter for the Court provided that the scheme as a whole is found to be fair.  Thus the Court will not amend the scheme because it thinks that individual provisions could be improved upon. 

4.        Applying those principles we are satisfied that the scheme should be approved.  We summarise our reasons as follows:-

(i)        There is a report from the Independent actuary.  He prepared a report for the original scheme and has now prepared an updated report.  We have read his conclusions and it is quite clear that he is satisfied that no policy holder will be adversely affected. 

(ii)       The JFSC raises no objection to the scheme. 

(iii)      The Isle of Man Court has approved the scheme as a whole and the Jersey scheme is simply a part of that and is on the same terms. 

(iv)      No policy holder has objected. 

5.        In all the circumstances we approve the scheme and we make an order in the terms of the draft produced to us. 

Authorities

Insurance Business (Jersey) Law 1996.

Re Axa Equity and Law Life Assurance Society plc; Re Axa Sun Life plc [2001] 2 BCLC 447.