EWHC 3228 (Ch)
Lloyd's Insurance Co SA, Re: Judge confirms there is no roadblock to Lloyd's Brexit scheme
In preparation for Brexit, Lloyd's has established an authorised insurance company in Belgium ("LIC"), which will establish branches in other EEA countries and the UK. LIC will write all relevant business written in the EEA (ie business where the risk or policyholder is situated in the EEA) from 1 January 2019 onwards, and will reinsure that business with Lloyd's members. Lloyd's will also transfer all current relevant business with an EEA element for the years of account 1993 to 2018 to LIC, with reinsurance back to the Lloyd's market.
After the Council of Lloyd's passed an ordinary resolution authorising itself to act in connection with this Part VII transfer, a claim form was issued, seeking an order sanctioning the Part VII transfer.
In the present case, an order was sought giving some preliminary indications about how the claim might progress. Norris J was therefore required to consider to what extent the court could participate in the formulation of issues and in guiding the shape of the scheme which it will ultimately be asked to sanction. He concluded that he was not comfortable with giving "a provisional view", but would instead be prepared to express a view whether "the proposed courses of action are, even if agreed by the Regulators, obviously incapable of satisfying some criterion established by statute or authority. To put it in more picturesque terms, whether, even at this early stage in the journey, it is apparent that there is a roadblock".
He concluded that there was no such roadblock and he gave his view on the following issues:
(1) There was a "real prospect of an affirmative answer" to the question whether LIC could be said to be carrying on business at an EEA "establishment", even if much of the servicing activity is in fact carried on from London.
(2) With some revisions to the definition of "transferring policy", it will be possible to create sufficient certainty of concept to enable the proposed scheme to be workable.
(3) Even though the scheme employs a "splitting" of policies (with some risks transferred to LIC and some retained by syndicate members), that was not "obviously fatal".
(4) There was nothing so obviously wrong with the proposals that the court could not be satisfied that a transfer order would achieve a substantial purpose.
The judge further commented that it seemed likely that some form or dispensation in relation to notification to policyholders would be required.
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