MINISTER FOR ECONOMIC DEVELOPMENT
PHOENIX LIFE - TRANSFER SCHEME
1 THE ISSUE
1.1 Under the provisions of the Insurance Business (Jersey) Law 1996 (the “Insurance Law”), when an insurance company holding a permit under that law wishes to transfer its assets and liabilities to another insurance company a Formal Transfer Scheme (the “Scheme”) must be produced for the approval of the Royal Court. The law provides for the Scheme to be reviewed by the Minister, and for the Minister to make such representations to the court as it considers desirable.
1.2 It is proposed that the long-term insurance assets and liabilities of Britannic Assurance plc (“Britannic”) and Phoenix Life and Pensions Limited (“PLP”) be transferred to Phoenix Life Limited (“Phoenix”).
1.3 The purpose of this Paper is to set out the background to the proposal and to recommend that the Minister informs the Commission that he has no objections or observations to make in respect of the Scheme.
2 BACKGROUND
2.1 The Background to this proposal is set out in sections 3 and 4 of the annex to this paper, which was prepared by David Hart of the Financial Services Commission.
2.2 In summary, the purpose of the scheme is to rationalise aspects of the current structure of Resolution plc, the ultimate holding company of (among others) Britannic, PLP and Phoenix. The rationalisation is expected to lead to simplified corporate structure which will offer administrative savings and improvements in solvency margins.
2.3 The Commission has carried out a review of the documentation intended to effect the Scheme, and has noted the contents of an actuarial report into the same. The Commission is of the view that, according to the terms of the Scheme, the expectations of policyholders will not be adversely affected by the proposed transfer which is, in all material respects, fair to all eligible members and policyholders.
2.4 It should also be noted that, as is often the case with schemes of this type, the Royal Court will be asked to consider derogations from the provisions of the Insurance Law in relation to the manner in which policy holders are to be notified of the proposals and the information which will, at first instance, be sent to policyholders.
3 ISSUE AND RECOMMENDATION
3.1 It is recommended that the Minister accepts the observations of the Commission and agree that, should the opinion of the Minister be sought by the Royal Court, a representative of the Commission be asked to inform the Court that the Minister has no objections or comments to make in relation to the proposed Scheme.
3.2 The Minister is also requested to note the derogations from the Law that will be sought by Britannic, PLP and Phoenix (as set out in paragraph 4.5 of the Annex) and to confirm that he has no objections or comments to make in that regard.
PAUL DE GRUCHY
Director, Finance Industry Development
24 July 2006
Annex
JFSC Paper of 14 July 2006