Jersey Unreported Judgments

Insurance - application to transfer long term insurance business from Zurich International Life Limited to LCL International Life Assurance Company Limited.

[2017]JRC219

Royal Court

(Samedi)

29 December 2017

Before     :

T. J. Le Cocq, Esq., Deputy Bailiff, and Jurats Nicolle and Pitman.

IN THE MATTER OF THE REPRESENTATION OF ZURICH INTERNATIONAL LIFE LIMITED AND LCL INTERNATIONAL LIFE ASSURANCE COMPANY 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 Representor.

judgment

the deputy bailiff:

1.        This is an application under Article 27 of, and Schedule 2 to, the Insurance Business (Jersey) Law 1996 ("the Law") to transfer certain long term insurance business carried on in or from Jersey by Zurich International Life Limited ("the transferor") to LCL International Life Assurance Company Limited ("the transferee"). 

2.        The transfer of the Jersey business ("the scheme") involves a similar transfer scheme in the Isle of Man.  The application to sanction the Isle of Man scheme was approved by the High Court of Justice in the Isle of Man on 28^th November, 2017. 

3.        It is intended that the scheme will come into effect simultaneously with the Isle of Man scheme on 31^st December, 2017. 

4.        When deciding whether to sanction a scheme of this nature the Court first considers whether the procedural requirements set out in Schedule 2 of the Law as modified by any earlier hearing had been complied with and secondly, whether the scheme would adversely affect any policy holder. 

5.        The requirements set out in Schedule 2 of the Law were in fact modified in this application by an order of the Court on 19^th October, 2017, in which the Court dispensed with service of a statement in accordance with paragraph 4(b) of Schedule 2 of the Law upon each of the policy holders and on each member of each of the transferor and the transferee and that the transferee should use "reasonable endeavours to send the Communication Pack, as defined in paragraph 6(c) of the said representation, to the Notified Policyholders, as defined in paragraph 6(f) in the said representation". 

6.        We have had the benefit of a number of affidavits and reports 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 19^th October, 2017, have been met.  We have had sight of the affidavit of Bo Larsen of 29^th November to this effect. 

7.        We now turn to the second aspect that falls to be considered in applications of this nature, namely whether or not the 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 Brian Morrissey, a partner in KPMG Ireland and a Fellow of the Society of Actuaries in Ireland filed his initial report on 13^th September, 2017.  In his conclusions he declares himself to be satisfied that the scheme will not have a material adverse effect on the security of benefits for any of the policy holders involved and will not have a material adverse effect on the reasonable benefit expectations of any of the policy holders involved. 

(ii)       A further supplemental report from the same actuary dated 6^th November, 2017.  In that report he confirms that "Overall, I can confirm that my conclusion set out in my report are not impacted in any way as a result of my review of this additional information".

(iii)      Confirmation from the Jersey Financial Services Commission that it has no objection to the scheme.  A representative of the Commission was in Court and was able to confirm that position to us. 

(iv)      Confirmation and correspondence from the Comptroller of Income Tax to the effect that there are no tax implications for the policy holders. 

(v)       No policy holder has appeared before us to object to the scheme and we have received confirmation through counsel that no one has raised any concerns with them in connection with the scheme. 

8.        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 25th April 1997 in which the Court cited with approval the dicta of Hoffman J in Re London Life Association Limited Chancery Division (21st 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 rejected 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 interest of different classes of persons affected."

9.        In applying that approach in this case for the reasons mentioned above we are satisfied that no one is adversely affected by the scheme.  The scheme is accordingly approved. 

Authorities

Norwich Union Insurance Society v Norwich Union Annuity and others 1997/81.

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