Jersey Unreported Judgments

Insurance - application to transfer business.

[2016]JRC052

Royal Court

(Samedi)

1 March 2016

Before     :		T. J. Le Cocq, Esq., Deputy Bailiff, and Jurats Grime and Ramsden
Between	The Equitable Life Assurance Society		First Representor
And	Canada Life Limited		Second Representor

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

Advocate S. M. Gould for the Representor.

judgment

the deputy bailiff:

1.        This is an application under Article 27 of Schedule 2 of the Insurance Business (Jersey) Law 1996 ("the Law") to transfer certain long-term insurance business carried on in or from within Jersey by the Equitable Life Assurance Society ("the Transferor") to Canada Life Limited ("the Transferee"). 

2.        The transfer of the Jersey business ("the Jersey Scheme") is part of a wider scheme for the transfer of certain insurance business in a number of jurisdictions.  The UK scheme, of which the Jersey Scheme is a part, was approved by the High Court of England and Wales pursuant to Section 111 of the Financial Services and Markets Act 2000 on the 8^th February, 2016.  The Guernsey scheme, which is also part of the overall transfer of business, has yet to be put before the Royal Court of Guernsey. 

3.        When deciding whether to sanction a scheme such as the Jersey Scheme the Court first considers whether the procedural requirements set out in Schedule 2 of the Law as modified at any earlier hearing have been complied with and secondly whether the Jersey Scheme would adversely affect any policy holder (see In the matter of National Provident Life Limited [2015] JRC 108 citing with approval in the matter of the Representation of Royal London CIS Limited in the Royal London Mutual Insurance Society Limited [2014] JRC 249.) 

4.        The requirements set out in Schedule 2 of the Law were modified by this Court in its order of 20^th October, 2015, in which the Court dispensed with the requirements under paragraph 4(b) of the Schedule and ordered that the Transferor should use "reasonable endeavours to circulate the policy holder pack, as defined by paragraph 6d of the representation to the persons described therein".

5.        We have had the benefit of a number of affidavits in support of this application and we are satisfied that the procedural requirements set out in Schedule 2, as modified by the directions of the Court on 20^th October, 2015, have been met.  

6.        Turning to the second aspect that falls to be considered, namely whether or not the Jersey Scheme would adversely affect any policy holder, we have had regard to the following:-

(i)        The report of the independent actuary.  The Independent actuary, Mr Nick Drumbeck, filed his initial report on 7^th October, 2015.  It is clear from the introduction to that report, paragraph 1.6, that his report covers the Jersey Scheme and he, in his conclusions, declares himself satisfied that the implementation of the scheme would not have any material adverse effect on the security of benefits of the policy holders of the Transferor and Transferee; the reasonable benefit expectations of the policy holders of the Transferor and Transferee; or the service standards and governance applicable to the Transferor and the Transferee's policies.  He declares himself satisfied that the Scheme is equitable to all classes and generations of the Transferor and Transferee's policy holders. 

(ii)       A further supplemental report from the same actuary dated 29^th January, 2016, expressing satisfaction in the same terms. 

(iii)      Confirmation from the Jersey Financial Services Commission that it has no objection to the Scheme.  Helpfully a representative of the Commission was in court and was able to confirm that position to us. 

(iv)      The confirmation in a letter dated 27^th November, 2015, from the Comptroller of Taxes to the effect that there are no Jersey tax implications for the Jersey policy holders arising as a result of the Scheme. 

(v)       No policy holder has appeared before us to object to the Jersey Scheme and the Representors confirm through counsel that no one has raised any concerns with them in connection with the Jersey Scheme.  

(vi)      The Scheme has, as we have stated above, already been approved by the High Court. 

7.        The approach taken by this Court when considering whether or not to sanction the Scheme for the transfer under the Law was that set out in Norwich Union Insurance Society v Norwich Union Annuity and others (1997/81 Jersey Unreported 25^th April, 1997) in which the Court cited with approval the dicta of Hoffmann J in Re London Life Association Limited Chancery Division (21^st February, 1989) where in an unreported judgment of the High Court of England and Wales the learned judge set out these principles:-

"Although the statutory discretion is unfettered, it must be exercised according to principles which give due recognition to the commercial judgment entrusted by the company's constitution to its board. The court in my judgment is concerned in the first place with whether a policy holder, employee or other person would be 'adversely affected' by the scheme in the sense that it appears likely to leave him worse off than if there had been no scheme. It does not however follow that any scheme which leaves someone adversely affected must be rejected. For example, as we shall see one scheme which might have been adopted in this case would have adversely affected London Life's employees because they would have become redundant. But such a scheme might nevertheless have been confirmed by the court. In the end the question is whether the scheme as a whole is fair as between the interests of different classes of persons affected."

8.        We have applied that approach in this case and in the light of the matters that we have set out above we are satisfied that no one is adversely affected by the Jersey Scheme. 

9.        During the course of the application the Representors asked for a very minor amendment to the Jersey Scheme which does not appear to us to have any material consequence.  Accordingly we grant leave to amend the Jersey Scheme in the manner requested and we sanction the Jersey Scheme as amended and we order that copies of the Jersey Scheme be filed with the Jersey Financial Services Commission within ten days or within such further period as the Commission shall allow. 

Authorities

Insurance Business (Jersey) Law 1996.

Financial Services and Markets Act 2000.

In the matter of National Provident Life Limited [2015] JRC 108.

Representation of Royal London CIS Limited in the Royal London Mutual Insurance Society Limited [2014] JRC 249.

Norwich Union Insurance Society v Norwich Union Annuity and others 1997/081.

Re London Life Association Limited Chancery Division (21st February 1989)