In the matter of The Prudential Assurance Company Limited and Rothesay Life Plc
The Court of Appeal has provided authoritative guidance on the approach to be adopted by courts when considering applications to sanction transfers of long-term insurance business under Part VII of the Financial Services and Markets Act 2000.
In March 2018, The Prudential Assurance Company (“PAC”) and Rothesay Life Plc (“Rothesay”) entered into a reinsurance transaction in relation to a £11.2 billion portfolio of annuities. It was anticipated that this would be followed by an insurance business transfer under Part VII. However, the High Court (Snowden J) refused to sanction the transfer. PAC and Rothesay appealed against this refusal.
This was the first occasion on which a sanction decision of the High Court has been the subject of a substantive appeal to the Court of Appeal. Given the significance of the issues for the insurance industry, the Association of British Insurers sought and obtained permission to intervene in the appeal.
In its judgment, the Court of Appeal has provided detailed guidance as to the correct approach to be adopted by courts on applications for sanction of insurance business transfer schemes. The Court has allowed the appeal, concluding that the Judge below had misdirected himself, and has remitted the question of whether the transfer should be sanctioned back to the High Court.