Worldwide: Insurance Business Transfers

Last Updated: 13 July 2018
Article by Wendy Benjamin, Simon Harding, Andrew Harding, Michelle Brook, Daniel Healy and James Walsh
Most Read Contributor in Bermuda, October 2018

In the last 12 months we have advised a number of insurers seeking to restructure their European insurance businesses. This appears to be a result of the current geopolitical and regulatory landscape, as well as a buoyant insurance mergers and acquisitions market. We expect this trend to continue as Brexit draws closer.

In the UK, Part VII of the Financial Services and Markets Act 2000 permits the transfer of insurance business, subject to the sanction of the High Court, to a transferee located within the UK or EEA (a Part VII Transfer). Part VII Transfers are commonly used in restructurings of insurance businesses.

However, Jersey, Guernsey and the Isle of Man are not part of the UK or the EEA and so a Part VII Transfer may not apply to insurance business carried out on those Islands. As such, any insurer which has a presence in, or which has policyholders who are resident on these Islands, seeking to transfer policies to another insurance company will need to consider whether the approval of the local court will be required.

Each of the Islands have their own regime for transferring insurance business from one company to another by way of a court approved process, known as a "scheme", all of which are similar to, and can be done in conjunction with, a Part VII Transfer.

In many cases, a parallel scheme is often required. Therefore it is important that comprehensive due diligence is conducted to identify whether a parallel scheme will be needed at the earliest opportunity.

A summary of the law and process for the insurance business transfers specific to each Island is set out below. However, in all cases detailed legal advice should be obtained on whether a scheme will be required and the local regulator notified.


Any insurer carrying on insurance business in or from Jersey is required to hold a permit granted by the Jersey Financial Services Commission (the JFSC). The Insurance Business (Jersey) Law 1996 (the Jersey Insurance Law) requires a scheme to approve a transfer of insurance business from a permit holder. As such, a Part VII Transfer will not be effective to transfer the Jersey business, and a transfer of insurance business which is carried on in or from Jersey is very likely to require a scheme (we note that there are very limited circumstances in which a scheme may be avoided, for example all the relevant policies are novated with the consent of all policyholders).

Under the Jersey Insurance Law, to effect a scheme in Jersey the JFSC will need to be sent copies of the (i) the court application; (ii) a report of an independent actuary which comments specifically on the local transfer scheme; (iii) the scheme document; (iv) the policyholder communication documents; and (v) in certain cases, affidavits or witness statements on behalf of the insurer's directors.

In most cases, the process requires two court hearings: a Directions Hearing and a Sanctions Hearing. The purpose of the Directions Hearing is for the court to approve the notifications that will be sent out to policyholders. There will be a period of time between the Directions Hearing and the Sanctions Hearing for policyholders and other interested parties who feel they would be adversely affected by the transfer to make objections in writing to the transferor.

The purpose of the Sanctions Hearing is for the court to consider whether policyholders and other interested parties would be adversely affected by the scheme and whether, having considered that, the scheme as a whole is fair as between the different classes of persons affected.

Assuming all of the legal requirements have been followed and the JFSC supports the application, the Sanctions Hearing should be more of a formality. The court is also likely to take comfort if a Part VII Transfer has already been approved by the English courts.

Isle of Man

The conduct of insurance business in the Isle of Man is regulated by the Isle of Man Financial Services Authority (FSA) under the Insurance Act 2008 (IOM Act), as amended. The FSA may authorise Isle of Man domiciled insurers to carry on insurance business from the Isle of Man and may grant permits to overseas insurers to carry on insurance business in the Isle of Man.

The IOM Act contains a mechanism for the Isle of Man Court to sanction a scheme to transfer long term insurance business carried on by Isle of Man authorised insurers or permitholders in certain circumstances. There is no specific statutory requirement or mechanism in the Isle of Man for a scheme in respect of the transfer of general insurance business.

Portfolio transfers of long-term business involving an Isle of Man authorised insurer will require an Isle of Man scheme.

In the case of portfolio transfer of  long-term business to or from an Isle of Man permitholder, the IOM Act does not require an Isle of Man scheme but it does permit an Isle of Man scheme to be undertaken. In deciding whether or not to undertake an Isle of Man scheme, factors such as the governing law of the policies will need to be taken into consideration. If the parties decide not to undertake an Isle of Man scheme, the IOM Act requires the transferor to notify the FSA. The FSA may require the transferor to serve certain specified documents upon it or may direct the transferor to carry out an Isle of Man scheme and seek an order from the Isle of Man courts.

If a portfolio transfer is being undertaken and the only nexus with the Isle of Man is a handful of Isle of Man policyholders, an Isle of Man scheme would not be required, or indeed possible, but we would generally recommend notifying the FSA of the proposals.

If an Isle of Man scheme is required, the procedure is similar to the Jersey process as outlined above.


If the transferor or transferee is licenced by the Guernsey Finance Services Commission (the GFSC), the prior written consent of the GFSC is required before any portfolio transfer, whether 'long-term business' or 'general business' (each as defined under the Insurance Business (Bailiwick of Guernsey) Law, 2002 (the Guernsey Insurance Law)).

For other insurers, such as UK insurers pursuing transfers of general insurance business under Part VII, there is no requirement for GFSC consent to be obtained, and no other restrictions in Guernsey law apply. However, the transferor in such a case must satisfy itself that the English court's order will be effective to transfer any policies issued to Guernsey-resident policyholders. To the extent that any policies are governed by Guernsey law rather than English law, individual policyholder consent may be required.

However, a scheme will be required under the Guernsey Insurance Law if the transfer is of long-term business and either (i) the transferor or the transferee is licenced by the GFSC; (ii) any of the policies are written under Guernsey law; or (iii) any of the policies are issued to a person resident in the Bailiwick of Guernsey. A Part VII Transfer will not be effective to transfer long-term business conducted in Guernsey.

Failing to obtain the sanction of the Royal Court where it is required is a criminal offence. Note in the case of (ii) and (iii) above that the only requirement is for a "scheme" for the transfer of any policy written under Guernsey law or issued to a Bailiwick resident. There is no de minimis number of policies below which the requirement for the court's sanction does not apply. This means that life assurers pursuing Part VII transfers often also need to obtain the sanction of the Guernsey court. This is because, where a large portfolio is being transferred, it is common to find that a number of policies have been issued to Guernsey residents. It is important to ensure that the transferor's due diligence is designed to identify any Guernsey-resident policyholders at the earliest possible stage.

The classes of long-term business are (i) life and annuity; (ii) marriage and birth; (iii) linked long term; (iv) permanent health; (v) capital redemption; (vi) pension fund management; and (vii) credit life assurance.

The procedure for a Guernsey scheme is similar to the Jersey process as outlined above but there is no requirement for a Directions Hearing. The consent of the GFSC to the scheme is required. Where a parallel application under Part VII is being made, the GFSC will require evidence of the approval of the UK Prudential Regulation Authority (the "PRA") to the scheme, and may speak to the PRA to discuss the scheme. The court may not make an order until 42 days have elapsed following the publication of the notice. The court will consider the application at a Sanction Hearing.

The applicant will make submissions through its advocate. Any objectors to the scheme will be heard. The GFSC also has a right to appear. The court may not make an order sanctioning the scheme unless it is satisfied that the transferee is licensed to accept the business to be transferred; and the GFSC has certified that it has notified the transferor's regulator of the scheme, and that regulator has consented, or has not refused its consent within three months.

Notice of the court's order approving the scheme must be published in Guernsey, Alderney and Sark. The court's power is not limited to ordering the transfer of insurance contracts. It can also make ancillary orders, including for the transfer of other assets and liabilities of the transferor, or for the dissolution, without winding up, of the transferor.


A scheme is just one of the options available to insurance companies looking to restructure their businesses in the Crown Dependencies. However, where a Part VII Transfer (or equivalent) is being used, insurers need to be mindful if they have a presence in or policyholders resident in the Crown Dependencies. Although a scheme in each Island may seem like a large burden, the processes offer relative certainty and bear similarities to the Part VII Transfer process on which they are modelled.

Appleby regularly advises insurers across the Crown Dependencies on restructuring proposals for insurance businesses. The team has acted on a number of schemes across each of the Islands. For more information on restructuring insurance groups, please get in contact with one of the team members below.

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.

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Wendy Benjamin
Simon Harding
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