Latham & Watkins has advised Rothesay Life Plc (Rothesay) on its successful appeal against the High Court’s August 2019 refusal to sanction a proposed £11.2 billion annuity book transfer from The Prudential Assurance Company Limited (PAC) to Rothesay under Part VII of the Financial Services and Markets Act 2000. The landmark case represents the first time an application under Part VII FSMA has been considered in detail by the Court of Appeal.
In March 2018, Rothesay and PAC entered into a reinsurance transaction covering a £12bn portfolio of annuities. It was expected that this would be followed by an insurance business transfer under Part VII FSMA. The transfer was subject to approval by the High Court. However, the Court declined to sanction the transfer. Rothesay and PAC appealed the decision in September 2019.
On 2 December 2020 the Court of Appeal overturned the High Court’s decision, ruling that the judge had misdirected himself on the appropriate legal test. The judgment represents the first detailed consideration of Part VII transfers by the Court of Appeal and is now the leading case for all future Part VII transfers of insurance business. The outcome of the appeal was so important to UK insurers – who routinely use the Part VII procedure to transfer books of business – that the Association of British Insurers (ABI) applied for, and was given, permission to intervene on behalf of the UK insurance industry.
Commenting on the judgment, London litigation & trial partner Jon Holland said: “This landmark decision will be welcomed by the entire UK insurance industry. The guidance set out by the Court of Appeal provides much needed clarity and certainty of outcome once the relevant regulatory hurdles have been crossed.”
Victoria Sander, London insurance M&A partner added: “This judgment is incredibly important to the insurance industry and other financial institutions that rely on the Part VII process to reorganise their businesses.”
The Latham team advised Rothesay on all aspects of the transaction and the appeal. The London litigation & trial team was led by partner Jon Holland and associates Alex Cox and Duncan Graves. Advice on the transfer of the annuity book was provided by London insurance M&A partner Victoria Sander and associate Jessica Corr.
As well as the ABI, the PRA, FCA and a number of the policyholders impacted by the transfer participated in the appeal.
To read more about the landmark ruling and its implications for the insurance industry, click here.