Jersey Unreported Judgments

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

[2017]JRC218

Royal Court

(Samedi)

29 December 2017

IN THE MATTER OF THE REPRESENTATION OF LCL ASSURANCE LIMITED (FIRST REPRESENTOR) AND LCL INTERNATIONAL LIFE ASSURANCE COMPANY LIMITED (SECOND REPRESENTOR)

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 the whole of the long term insurance business carried on from or within Jersey by LCL Assurance Limited ("the transferor") and LCL International Life Assurance Company Limited ("the transferee"). 

2.        The transfer of the business ("the scheme") is part of a wider arrangement which also involves a transfer 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.  It is intended that the scheme will come into effect simultaneously with the Isle of Man scheme becoming effective on 31^st December, 2017. 

3.        When deciding whether or not 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 at any earlier hearing had been complied with and secondly, whether the Jersey scheme would affect any policy holder. 

4.        In fact the requirements set out in Schedule 2 of the Law were modified by this Court in its order of 19^th October, 2017, in which the requirement for the service of a statement in accordance with paragraph 4(b) of Schedule 2 of the Insurance Law upon each of the policy holders and on each member of each of the transferor and transferee be dispensed with and, instead, that the transferor and transferee would use all reasonable endeavours to send the Communication Pack as defined in the representation to the Notified Policyholders also as defined in the representation. 

5.        We have the benefit of affidavits from Mr Jeffrey Boysie McPherson More which confirmed the usual requirements have been met. 

6.        Turning to the second aspect that falls to be considered, 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 Moore filed his initial report on 13^th September, 2017.  In his conclusions at paragraph 2.2 he identifies, inter alia, that:-

"... it is my opinion that the scheme:

Will not have 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 updated report from the same actuary, dated 6^th November, 2017, in which, at page 4, he confirms that "overall I do confirm that my conclusions 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 in a letter of 24^th November, 2017, from the Comptroller of Taxes that there are no Jersey tax implications for the policy holders arising as a result of the scheme. 

(v)       No policy holder has appeared before us to object to the scheme and counsel confirmed that no one has raised any concerns with the transferor or the transferee in connection with the scheme. 

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 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."

8.        Applying the approach in this case and for the reasons we have set out above we are satisfied that no one is adversely affected by the scheme.  Accordingly we approve it. 

Authorities

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

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