As insurers continue to prepare themselves for the implementation of Solvency II, there has been a significant increase in the number of insurance portfolio transfers between insurance and reinsurance companies under the Assurance Companies Act 1909 and the Insurance Act 1989. The main reasoning for this appears to be an attempt by insurers to integrate their core insurance and reinsurance businesses and potentially to separate unwanted portfolios of business for future sale.
We have also seen an increase in non-insurance business transfers and mergers, for example, transfers to other European jurisdictions in conjunction with provisions implemented under the EC Mergers Directive. In this article, we briefly discuss the process of transferring a book of Irish insurance business underwritten and the various methods of transferring or merging non-insurance businesses.
Transfer of insurance business concluded in Ireland
In order to transfer an insurance business, section 13 of the Assurance Companies Act 1909 and section 36 of the Insurance Act 1989 together require that an application for court sanction is made by the transferring insurer to the Irish High Court. Usually, this takes place after the parties to the transfer have agreed the terms of a scheme of transfer and (if necessary) have entered into a conditional transfer agreement related thereto. Both the European Communities (Life Assurance) Framework Regulations 1994 and the European Communities (Non-Life Insurance) Regulations 1994 require that the Irish High Court sanction any scheme of assignment or transfer of insurance business concluded in Ireland.
The High Court will not sanction a proposed transfer unless certain pre-conditions are met. The consent of the Central Bank of Ireland (the "Central Bank") as the...