Re Prudential Annuities Ltd; Re Prudential Assurance Company Ltd (Internal material - CMS only)
The court considered an application concerning companies connected with Prudential UK, which dealt with, among other things, insurance in the United Kingdom. The application sought to respond to regulatory developments by transferring the entire long-term insurance business of Prudential Annuities Ltd (PAL) to the Prudential Assurance Company Ltd (PAC). The purpose of the transfer was to simplify the corporate structure of Prudential UK's business, and improve the flexibility and efficiency of capital management (see [17] of the judgment for the principal features of the scheme). The scheme concerned approximately 134,000 contracts of long-term insurance business, all of which were non-profit pension policies, and affected about 90,000 policyholders. It sought to give legal form to the economic reality already in existence. PAC and PAL applied for the scheme to be sanctioned.
The issue was whether the court should approve the scheme. In order for the scheme to be approved, under s 108 of the Financial Services and Markets Act 2000, a number of regulations had to be complied with. They were: the Financial Services and Markets Act 2000 (Control of Business Transfers) (Requirements on Applicants) Regulations 2001, SI 2001/3625; the Financial Services and Markets Act 2000 (Reinsurance Directive) Regulations 2007, SI 2007/3255; and the Financial Services and Markets Act 2000 (Control of Business Transfers) (Requirements on Applicants) (Amendment) Regulations 2008, SI 2008/1467. It was further necessary for formalities in ss 111(2) and 112 of the Act to be complied with. Consideration was given to the fact that, among other things, the two relevant regulators, the Prudential Regulatory Authority and the Financial Conduct Authority, had both considered the scheme and had not objected to it. A number of comments from individual policyholders were considered by the court, as well as a report compiled by an independent expert appointed under s 109 of the Act.
The application would be allowed.
On the evidence, all the relevant requirements of the regulations and the relevant formalities in s 111(2) of the Act had been complied with. The objections from the policyholders were not such that the policy should not be approved. On the evidence, and having regard to the reports of the independent expert, there would be no material change to the position of PAL or PAC policyholders by the scheme (see [31], [37], [49], [54] of the judgment).
The scheme would be sanctioned (see [54] of the judgment).
Allied Dunbar Assurance plc, Re [2005] All ER (D) 129 (Jan) applied; Re London Life Association Ltd 21 February 1989 (unreported) AXA Equity & Law Life Assurance Society plc and AXA Sun Life plc, Re [2001] All ER (D) 03 (Jan) considered.
Martin Moore QC (instructed by Hogan Lovells LLP) for PAL and PAC.
Nehali Shah for the Prudential Regulatory Authority.
