In the Matter of Zurich Insurance Public Limited Company

Under Part VII of the Financial Services and Markets Act 2000, an insurance business transfer scheme should be sanctioned where the statutory requirements are met and the court considers it appropriate in all the circumstances.

The central practical question is whether the transfer will have a material adverse effect on policyholders. Policyholders need not establish that the transfer will benefit them. The court may rely on a properly prepared independent expert’s assessment, considered alongside the regulators’ views, the communications process and any objections. Objections must be assessed by reference to the scheme and its impact on policyholders.

Zurich Insurance Public Limited Company and Zurich Insurance Company Ltd applied under section 111(1) of the Financial Services and Markets Act 2000 for sanction of an insurance business transfer scheme. The scheme transferred most of ZIP’s UK branch insurance business to ZIC’s UK branch, principally because Brexit had ended ZIP’s relevant passporting rights.

The court considered the independent expert’s reports, the reports of the PRA and FCA, policyholder objections, the notification process, the transferee’s authorisation and the required regulatory certificates. The central issue was whether the statutory requirements were satisfied and whether the scheme should be sanctioned.

1. The scheme was sanctioned. The court was satisfied that the statutory requirements under Part VII of the Financial Services and Markets Act 2000 had been complied with and that sanction was appropriate in all the circumstances.

2. Following and applying the approach in Re Prudential Assurance Company Ltd [2020] EWCA Civ 1626, the key question was whether the transfer would have a material adverse effect on policyholders. It was unnecessary to show that the transfer would be beneficial; absence of material adverse effect was sufficient.

3. The independent expert had properly undertaken her task and provided a persuasive and rational basis for concluding that transferring, existing and remaining policyholders would not suffer material adverse effects. Her analysis addressed capital and solvency, ultimate capital, adverse scenarios, service levels and access to the FSCS and FOS.

4. The court considered the objections individually. Concerns about the companies’ legal status, communications, policy identification, transfer of liabilities, Brexit, data processing, claims administration, premiums, the independent expert’s appointment and the time available to consider the materials did not provide sufficient grounds to refuse sanction.

5. The court was also satisfied that the scheme had a reasonable commercial rationale, had been properly explained, that policyholders had been appropriately notified, that ZIC’s UK branch had the necessary authorisation, and that the certificates required under Schedule 12 of the Financial Services and Markets Act 2000 had been obtained.

First-instance decision. No earlier appellate history is stated in the judgment.