As insurers continue to prepare themselves for the
implementation of Solvency II, there has been a significant
increase in the number of insurance portfolio transfers between
insurance and reinsurance companies under the Assurance Companies
Act 1909 and the Insurance Act 1989. The main reasoning
for this appears to be an attempt by insurers to integrate their
core insurance and reinsurance businesses and potentially to
separate unwanted portfolios of business for future sale.
We have also seen an increase in non-insurance business
transfers and mergers, for example, transfers to other European
jurisdictions in conjunction with provisions implemented under the
EC Mergers Directive. In this article, we briefly discuss the
process of transferring a book of Irish insurance business
underwritten and the various methods of transferring or merging
non-insurance businesses.
Transfer of insurance business concluded in
Ireland
In order to transfer an insurance business, section 13 of the
Assurance Companies Act 1909 and section 36 of the Insurance Act
1989 together require that an application for court sanction is
made by the transferring insurer to the Irish High Court.
Usually, this takes place after the parties to the transfer have
agreed the terms of a scheme of transfer and (if necessary) have
entered into a conditional transfer agreement related
thereto. Both the European Communities (Life Assurance)
Framework Regulations 1994 and the European Communities (Non-Life
Insurance) Regulations 1994 require that the Irish High Court
sanction any scheme of assignment or transfer of insurance business
concluded in Ireland.
The High Court will not sanction a proposed transfer unless
certain pre-conditions are met. The consent of the Central
Bank of Ireland (the "Central Bank") as the relevant
Irish supervisory authority is required. Before the Central
Bank will give its consent, it is required to consult with and
obtain the consent of the supervisory authorities of each and every
state in the EEA, in which any direct risks written by the
transferor and which are to be included in the transfer were
underwritten.
It is important to note that the process set out under the
Assurance Companies Act 1909 and the Insurance Act 1989 is the sole
method of transferring a portfolio of insurance business of an
insurance company to another insurance company.
Transfers and mergers of financial
businesses
Various methods regarding the transfer and merger of
financial businesses (other than insurance companies) exist under
Irish legislation. These procedures differ from the two most
common ways in which businesses come together - acquisition of the
shares or assets of one company by another - in one key respect -
namely that they allow the parties to merge the assets and/or
liabilities of two separate entities onto one balance sheet,
without the need to novate and/or assign contracts from one entity
to the other. In practice, this can be a very significant
logistical benefit in using these procedures. The extent to which
that facility is available depends on the type of merger and entity
involved.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
Specific Questions relating to this article should be addressed directly to the author.
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