Jersey Unreported Judgments

Insurance - application by the Representors for sanction of a scheme.

[2019]JRC240

Royal Court

(Samedi)

10 December 2019

Before     :

Sir Michael Birt, Commissioner, and Jurats Ronge and Christensen.

 

IN THE MATTER OF A REPRESENTATION OF THE EQUITABLE LIFE ASSURANCE SOCIETY AND UTMOST LIFE AND PENSIONS LIMITED. 

AND IN THE MATTER OF AN APPLICATION PURSUANT TO ARTICLE 27 OF AND SCHEDULE 2 TO THE INSURANCE BUSINESS (JERSEY) LAW, 1996

Advocate S. M. Gould for the Representors.

judgment

the commissioner:

1.        This is an application by the Representors for sanction of a scheme, which we shall refer to as the Jersey Scheme, to transfer certain long-term insurance business carried on in or from within Jersey by Equitable Life Assurance Society ("the transferor") to Utmost Life and Pensions Limited, ("the transferee") pursuant to Article 27 and Schedule 2 of the Insurance Business Jersey Law 1996. 

2.        The Jersey Scheme is part of an overall transfer of business which includes a transfer of UK business under the UK Scheme and of Guernsey business under the Guernsey Scheme.  Both the transferor and the transferee are authorised in the UK and Jersey to carry on the type of business which is being transferred. 

3.        The background is that, as is well known, since 2000 the transferor, which is a mutual society owned by its members, has been closed to new business and accordingly is in a state of solvent run-off.  As is made clear from the papers before us, this is leading to cost inefficiencies.  Conversely, the transferee is part of the Life Company Consolidation Group, a specialist life insurance group founded in 2013 with the aim of acquiring and managing life insurance business across the UK and Europe.  It will therefore be able to continue to administer the transferring policies without the cost inefficiencies which the transferor currently faces. 

4.        When considering an application under Article 27, the Court focuses on two main issues:

(i)        The Court must be satisfied that the procedural requirement set out in paragraph 4(a) to (d) of Schedule 2, subject to any modification by the Court of the requirements under paragraph 4(b), have been complied with.

(ii)       The Court must consider the merits of the scheme and in particular, consider whether the scheme and the implementation of the scheme would adversely affect policyholders and whether it is fair as between different classes of persons affected.  In doing so the Court applies the well-known dictum of Hoffmann J in the English case of in Re London Life Assurance (unreported 21st February 1989).  That dictum has been frequently cited in judgments of the Royal Court concerning transfers under the Insurance Business Law and we do not think it is necessary on this occasion to repeat it. 

5.        In relation to the procedural requirements, the Court made an order on 1^st August, 2019, modifying the requirements of paragraph 4(b) of Schedule 2.  We are satisfied from the affidavit evidence that the requirements of paragraph 4(a), (c) and (d), together with the requirements laid down by the Court in its order of the 1^st August, have been complied with.  Advocate Gould very properly drew to our attention one minor respect in which a document was not formally served on the JFSC but it has been sent to them thereafter and they are content with having received it in this manner. 

6.        As to the merits, the key consideration as always is the report which the Insurance Business Law requires from an independent actuary.  We have read that report, together with the supplemental report and we shall refer to the combined reports as "the Report".  The Report is very detailed but the key conclusions which we would refer to are as follows:

(i)        The scheme i.e. the Jersey, Guernsey and UK Schemes will not have a material adverse effect on the benefit expectation of the transferring policyholders. 

(ii)       The scheme will not have a material adverse effect on the benefit security of the transferring policyholders, the non-transferring policyholders or the transferor or the existing policyholders of the transferee. 

(iii)      The scheme will not have any effect on the quality of standards and administration experienced by policyholders. 

7.        Other matters we have considered are as follows:

(i)        The High Court of England and Wales and the Royal Court of Guernsey have approved their respective schemes.  In relation to the English scheme, there were a number of objections but these were addressed both by the independent actuary and by the High Court in giving its approval. 

(ii)       No Jersey policyholders have objected to the Jersey Scheme.

(iii)      The Comptroller of Taxes has confirmed that there are no Jersey tax implications for Jersey policyholders as a result of the scheme. 

(iv)      The Jersey Financial Services Commission, through its representative in court this morning, has confirmed that it has no objection or specific comment to make concerning the Jersey Scheme. 

8.        So, in all the circumstances, we are satisfied that no policyholder is materially adversely affected and that the scheme is fair overall.  We therefore give our sanction to the Jersey Scheme in accordance with the draft Act produced to us.

Authorities

Insurance Business Jersey Law 1996.

Re London Life Assurance (unreported 21st February 1989)