News Publication date July 23, 2019

News release 23 July 2019

You may remember that in June 2018 Utmost Life and Pensions (then known as Reliance Life) announced that we had reached an agreement to acquire the Equitable Life Assurance Society. Over the past year we have been working hard on the legal and regulatory process we need to follow to accomplish this, a process known as a Part VII Insurance Business transfer.

We are very pleased to confirm that today we received High Court approval for the next major step in the transfer process, which is permission to write formally to the Utmost Life and Pensions policyholders to give them full details of the transfer and explain what it means for them.

As a result, we will shortly begin to issue letters to all our policyholders providing them with this information. At the same time we will make a number of key documents available for review on our website.

We will also have a dedicated helpline and email account available to provide support and guidance to our policyholders. Full details of these can be found in the letters we will shortly be sending.

Find out more about a Part VII insurance business transfer

What is a Part VII Transfer?

A Part VII Transfer is a UK court approved legal process to transfer insurance or banking businesses from one entity to another. The name of the process comes from Part VII of the Financial Services and Markets Act 2000 (FSMA) and it is governed by the High Court of England and Wales. The transfer allows the assets and liabilities to be transferred including the insurance policies of policyholders. In this case the transfer is from Equitable Life to Utmost Life and Pensions.

Between April 2013 and March 2018 there have been 76 Part VII Insurance Transfers approved by the High Court.

Who is involved in the Part VII process?

The main parties involved are Equitable Life (the transferor) and Utmost Life and Pensions (the transferee), their lawyers, the court, policyholders, the PRA (Prudential Regulation Authority) and the FCA (Financial Conduct Authority), and a person appointed as the Independent Expert.

A key requirement of the Part VII process is to ensure policyholders are protected. To support this an Independent Expert is appointed to review the terms of the proposed transfer to consider the impacts on policyholders and other key stakeholders. The Independent Expert is not an advisor to anyone involved in the Part VII transfer and must have the necessary skills to be able to assess the effect of the transfer, typically they are an actuary. The Independent Experts appointment is subject to approval by the PRA and the FCA. The Independent Expert prepares a report on the impacts which forms part of the court process and is directly answerable to the Court.

The PRA and the FCA act jointly through a memorandum of understanding to oversee the process and ensure that all regulatory requirements are met by the parties to the transfer. For insurance transfers the PRA will lead the process. This control can extend to preparing reports on the transfer or attending the court hearings. The PRA will determine what is required for each individual insurance transfer. The regulatory process will include reviewing the documentary information on the scheme transfer presented in the prescribed PRA format, approval of the Independent Expert, meeting with the promoters of the scheme to discuss the proposal and the approach for how it will be achieved and giving approval to the scheme. The regulators will be concerned with impacts on policyholders, on-going regulatory requirements, competition considerations, how any objections are dealt with and the communications strategy.

Steps in the Part VII transfer process

  • Planning

The initial planning tries to foresee any obstacles and engage with stakeholders to plan out the transfer. Timeframes for the Part VII can take anywhere from 6 months to 2 years to complete.

  • Preparation

The transfer scheme needs to be designed, work is done to ensure solvency levels after the transfer will be satisfactory and a significant number of documents are drafted including the scheme document, witness statements from the company directors and communications and advertisements about the transfer. The Independent Expert will assess the scheme and impacts on policyholders and prepare their report for the court. All of which will be reviewed by the regulators.

  • Preliminary court hearing

The preliminary court hearing is also known as the directions hearing and is where the scheme of transfer is presented along with the other transfer documents and statements including the report from the Independent Expert and with the plan to notify policyholders of the transfer. This can include requests for waivers to communicate to all policyholders where some are untraceable for example. Approval from the directions hearing allows for the next steps in the transfer to proceed.

  • Period for publicity and objections

Following the directions hearing the scheme documents are made public and policyholders from both companies and other stakeholders are communicated with about the proposed transfer. The communications will also detail how they can object to the transfer and when the final court hearing will take place.

  • Final court hearing

The final court hearing or sanctions hearing is when the court is asked to approve the transfer and the court would consider any objections raised by stakeholders or the public.

  • Transfer completion

If the approval from the court is given to the transfer, it will take place on an agreed date.

In the Equitable – Utmost transfer this is planned for 1st January 2020, at which point all Equitable Life policyholders subject to the scheme of transfer would transfer to Utmost Life and Pensions.

  • Jersey and Guernsey Schemes

As Equitable Life has a small number of policies that were issued as part of the business carried on by Equitable Life in or from within Jersey or Guernsey, there is a requirement for separate schemes to be approved by the Royal Courts in both these jurisdictions.

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