The high court of England and Wales has blocked The Prudential Assurance Company (PAC) from transferring £12bn ($14.5bn, €13.1bn) worth of annuities to Rothesay Life.
The M&GPrudential subsidiary agreed to reinsure the liabilities to the life insurance firm in March 2018 and expected the deal to be completed by the end of 2019.
But the ruling on 16 August 2019 overturned Prudential’s plan, also knows as a Part VII transfer.
“We are disappointed by the High Court’s decision,” Prudential said.
“The independent expert, who was appointed to report to the high court, concluded the transfer would have no material adverse effect on the security of benefits or the reasonable benefit expectations of our policyholders.
“PAC and Rothesay Life have been granted leave to appeal the judgment by the high court.”
The firm also said that the decision will not impact the demerger of M&GPrudential from Prudential, and that the deal with Rothesay remains in place.
Didn’t see it coming
A spokesperson for Rothesay Life told International Adviser: “Rothesay Life and PAC entered into a reinsurance transaction with the expectation that this would be followed by an insurance business transfer under Part VII of the Financial Services and Markets Act 2000.
“The high court has however declined to sanction the transfer. Rothesay Life is disappointed by the high court’s decision. The terms of the transfer were reviewed by an independent expert, who was appointed to report to the high court, who concluded that it would not result in any material adverse effect on policyholders’ security or benefits.
“Additionally, neither the Prudential Regulation Authority nor the Financial Conduct Authority objected to the transfer. The reinsurance transaction agreements contain provisions to address this outcome and whilst it is not the preferred or optimal outcome for either party, it will not have a material impact on Rothesay Life as a whole.
“Rothesay Life and PAC are committed to a long-term relationship irrespective of the outcome of the proposed insurance business transfer.”
