We have a market-leading Insurance group. We advise many of the major players in the insurance sector and have been involved in some of the largest and most complex insurance work. The breadth of our practice encompasses a wide range of transactions from the multi-national to the purely domestic, covering diverse aspects including mergers and acquisitions, commercial contracts, risk transfer and regulatory advice.
Our Insurance group has partners with considerable specialist knowledge and experience. We advise on a variety of areas, including corporate, financial regulation, capital markets, strategic sourcing and insurance and reinsurance litigation. We provide a multi-disciplinary team of practitioners with a formidable blend of legal and regulatory expertise.
We advise on:
- asset and liability management
- bulk and other annuity transactions and the pensions buy out and buy in market
- capital raising and securitisations
- demutualisations, flotations, restructurings and other Part VII transfers
- distribution and outsourcing transactions
- insurance dispute resolution
- management of long-term insurance funds
- product structuring and design
- private and public M&A, joint ventures and closed fund deals
- risk transfer, including reinsurance, longevity swaps and other risk transfer techniques
- solvency, capital resources and other regulatory requirements
- structuring of insurance and reinsurance operations
- the implications of Solvency II for regulatory capital, group structures, governance arrangements and other strategic matters
Our key experience includes advising:
Allianz on its acquisition of Legal & General Insurance Limited.
Athora on the proposed acquisition of VIVAT N.V.’s life and asset management business from Anbang.
Aviva, Prudential and Standard Life on their Brexit planning including insurance business transfer schemes under Part VII of FSMA.
Brit, China Re, Direct Line and esure on their IPOs.
Delta Lloyd Levensverzekering on a longevity swap transaction with Reinsurance Group of America in respect of underlying longevity reserves of approximately EUR12 billion.
esure in connection with the £1.2 billion takeover offer made by Blue (BC) Bidco Limited, a wholly-owned subsidiary of funds advised by Bain Capital Private Equity, LP and its affiliates.
Legal & General on two deriskings of The Pearson Pension Plan for a combined value of in excess of £1 billion.
Marsh & McLennan on the £4.3 billion cash acquisition of Jardine Lloyd Thompson, one of the world’s leading providers of insurance, reinsurance and employee benefits related advice and brokerage.
Prudential on the proposed demerger of its UK & Europe business (M&G Prudential) from Prudential plc, resulting in two separately-listed companies
RSA Insurance Group on its issue of Floating Rate Perpetual Restricted Tier 1 Contingent Convertible Notes – the first public Solvency II compliant Restricted Tier 1 issuance by a UK insurer.
Standard Life on the sale of its capital-intensive insurance business to Phoenix group for a total consideration of £3.24 billion.
Zurich Insurance on the transfer of its pre-2007 UK legacy employers’ liability portfolio to Catalina London Limited by way of a reinsurance followed by a transfer of insurance business.
With the shape of any future deal with the EU for the financial services sector remaining unclear, insurance groups are putting in place contingency plans for a ‘hard’ Brexit.
The PRA has written to firms currently undertaking cross-border activities asking them to provide summaries of their plans by 14 July. It is, in particular, concerned that plans involving transfers of business must take into account potentially longer lead times on approving the transfers if a large volume of transactions are being undertaken at the same time.
Meanwhile, the FCA has issued a guidance consultation on its approach to insurance business transfers which is partly intended to streamline the process in view of the above concern.
Key considerations for existing business
Assuming loss of passporting rights on Brexit day, where insurers are currently operated out of a branch situated in the EU then either that branch business will have to be transferred to a company with an EU authorisation or the branch will have to obtain authorisation as a third country branch.
Where business has been transacted on a cross-border basis, the position will depend on the applicable law of the relevant jurisdiction. The expectation is that in most cases both sales and administration of policies will require authorisation and the business will therefore need to be transferred to an EU authorised entity or branch.
Groups establishing new EU subsidiaries may want to outsource some of the day to day running of the subsidiary’s insurance operations back to the UK. It is likely that there will be some limits to this, however. EIOPA is expected to publish guidance for national regulators on principles for authorisation and supervision in the light of Brexit. The European Securities and Markets Authority has already published an opinion on the same topic in relation to the sectors which it regulates. Principles sets out in the opinion include avoiding “letter-box” entities in the EU27 and imposing strict conditions on outsourcing and delegation to third countries.
Part VII transfers – FCA guidance consultation
On 15 May the FCA published a guidance consultation on its approach to the review of Part VII insurance business transfers. The intention is that this guidance will supplement, and not replace, that set out in Chapter 18 of the FCA’s Supervision Manual. In future, therefore, the published views of the regulators on insurance business transfers will be set out in three places:
(i) the PRA’s Statement of Policy on its approach to insurance business transfers
(ii) SUP 18
(iii) the FCA guidance, once finalised.
Key points covered in the guidance consultation include:
- disclosure of information regarding “connected transfers”
- the approach to previous schemes which may have terms inconsistent with current regulation
- notification requirements where the effective date of a scheme is changed
- reliance on applicants and third parties by the independent expert
- expectations of the independent expert’s report where outsourcing or reinsurance has been entered into in contemplation of the transfer
- loss of rights under the FSCS
- the definition of “policyholder”
- waivers of notification requirements.