Prudential Assurance Company Ltd (Prudential) and Rothesay Life plc (Rothesay) successfully overturned the English High Court's refusal to sanction the proposed transfer of a portfolio of annuities from Prudential to Rothesay. The Prudential/Rothesay case had already been distinguished by another English High Court judge in Re Legal and General Assurance Society Ltd and another  EWHC 2299 (Ch). We explained the reasoning behind this in our article on the case, see here.
On 2 December 2020, the Court of Appeal in England overturned the High Court judgment of Snowden J in the Prudential/Rothesay case. The Court of Appeal noted that there was a failure by the English High Court to give adequate weight to:
- the opinion of the independent expert with regards to the risk of Prudential or Rothesay needing future external support;
- the absence of objections from the regulator to the scheme; and
- the continuing future regulation of Rothesay.
The Court of Appeal also set out guidance on the approach a court should adopt when considering a Part VII application. It noted, inter alia, that it was necessary to identify the nature of the business being transferred and the underlying circumstances giving rise to the scheme and assess whether the transfer will give rise to a "material adverse effect" on policyholders.
The Court of Appeal also noted that a court, in considering a Part VII application, should not depart from the recommendations of the independent expert and the non-objections of the regulator unless there are significant and appropriate reasons to do so.
This ruling will be welcomed by the insurance industry as it provides clarity on the UK Part VII process. The matter will now be remitted back to the High Court where Prudential and Rothesay will have their application to transfer the portfolio of annuities renewed before the court.
Although the English Court of Appeal decision is not binding on the Irish courts, no doubt it will be of persuasive effect.
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