A justice of the UK Companies Court, Chancery Division, recently approved over the objections of policyholder Axa Corporate Solutions Assurance, a scheme under Part 7 of the UK Financial Services & Markets Act 2000 for the transfer of certain insurance business from Sompo Japan Insurance Inc. to Transfercom Ltd. The scheme involved a transfer of predominantly reinsurance contracts made between 1981 and 2003. The contracts suffered from exposure to the September 11, 2001 terrorist attacks and an airplane crash that occurred later that year, and were in run-off since 2003. In sanctioning the scheme, the justice relied heavily on an expert report and determined that the scheme would be fair to the companies’ respective shareholders and the various underlying policyholders. The justice considered, among other factors, the composition of the business to be transferred, the strength of Transfercom and its parent company, National Indemnity Company, the manner in which Transfercom would fund the run-off of the business, and the overall impact on the security of the underlying policyholders that would result from the transfer. In the Matter of Sompo Japan Insurance Inc., [2011] EWHC 260 (Cos. Ct. Feb. 16, 2011).
This post written by Michael Wolgin.