Part VII insurance business transfers—evidencing foreign recognition risks (Re Mercantile Indemnity Company Ltd and others)
Restructuring & Insolvency analysis: The court approved a Part VII insurance business transfer consolidating intra-group non-life run-off business. The Court of Appeal’s guidance in Re Prudential Assurance Co Ltd, emphasising that the approach to approval will depend on the nature of the business being transferred, was followed. Earlier life insurance authorities, such as Re London Life and Re Axa Equity, were not applied. An important issue was the recognition of the scheme in the USA, as some transferring policies were governed by US law. The court confirmed that ‘certainty’ of foreign recognition is unnecessary, but credible evidence of likely recognition is required. That evidence should be compliant with CPR 35 and should be provided especially where recognition is uncertain or is critical to the effectiveness of the scheme. Although independent expert evidence on US law was not provided, the court accepted the evidence before it, albeit with reservations. Written by Ololade Saromi, barrister at Five Paper.