FEDERAL COURT OF AUSTRALIA

ANZ Life Assurance Company Limited (ABN 63 008 425 652) and ING Life Limited (ABN 33 009 657 176) [2005] FCA 806

INSURANCE – life insurance – scheme for transfer of life insurance business between insurers confirmed

Life Insurance Act 1995 (Cth), Pt 9, ss 190, 191, s 193(2), s 194, s 195

Life Insurance Regulations 1995 (Cth)

ANZ Life Assurance Company Limited and ING Life Limited [2005] FCA 596, related

ANZ LIFE ASSURANCE COMPANY LIMITED (ABN 63 008 425 652) AND ING LIFE LIMITED (ABN 33 009 657 176)

NSD 463 OF 2005

GYLES J

17 JUNE 2005

SYDNEY

THE COURT ORDERS THAT:

1.      Pursuant to s 194 of the Life Insurance Act 1995 (Cth), the scheme, which is in the form of the document a copy of which is Annexure ‘B’ to the Affidavit of John Daniel Slack and Christine Margaret Brownfield declared and affirmed 24 March 2005 and filed herein, for the transfer of the Australian life insurance business of ANZ Life Assurance Company limited to ING Life Limited, be confirmed.

2.      The costs of the Australian Prudential Regulation Authority in these proceedings be paid by the applicants, provided such costs are agreed or, if agreement cannot be reached, such costs are to be assessed.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

REASONS FOR JUDGMENT

1                     This is an application pursuant to Pt 9 of the Life Insurance Act 1995 (Cth) (the Act) seeking confirmation of a scheme whereby the Australian life insurance business of ANZ Life Assurance Company Limited (ANZ) is transferred to ING Life Limited (ING). 

2                     Section 190, so far as is relevant, provides:

‘(1)      No part of the life insurance business of a life company may be:

(a)       transferred to another life company; or

(b)       amalgamated with the business of another life company;

except under a scheme confirmed by the Court.

…

(3)       A scheme must set out:

(a)       the terms of the agreement or deed under which the proposed transfer or amalgamation is to be carried out; and

(b)       particulars of any other arrangements necessary to give effect to the scheme.’

3                     Section 191 deals with the steps to be taken before application for confirmation and it is supplemented by requirements in the Life Insurance Regulations 1995 (Cth) (the Regulations).  Broadly speaking, they deal with giving of notice of the scheme to affected policy owners and the Australian Prudential and Regulatory Authority (APRA).  On 3 May 2005 I made interlocutory orders including granting relief from some of the obligations on certain terms (ANZ Life Assurance Company Limited and ING Life Limited [2005] FCA 596).  I am satisfied that all of the requirements of the Act and Regulations (including those relating to the application imposed by s 193(2)) prior to and in relation to the making of the application have been complied with.

4                     The issue is whether the scheme should be confirmed with or without modification.  The Court has an unfettered discretion pursuant to s 194.  Confirmation is no formality.  The effect of confirmation is set out in s 195 which provides:

‘When a scheme is confirmed:

(a)     it becomes binding on all persons; and

(b)     it has effect in spite of anything in the constitution of any company affected by the scheme; and

(c)      the company on whose application the scheme was confirmed must cause a copy of the scheme to be lodged at an office of ASIC in every State and Territory in which a company affected by the scheme carried on business.’

5                     It should be noted that the statutory scheme does not provide for meetings of policyholders to approve the scheme or for the consent of policyholders to be otherwise obtained.  It may be that in an appropriate case the Court could make confirmation conditional upon some such procedure.

6                     There is now a reasonable number of previous cases in which schemes of this type have been confirmed.  I need not refer to what has been said about the applicable principles in particular circumstances.  It is clear that the primary matter for consideration is the interests of both sets of policyholders.  The interests of the policyholders of ANZ are most directly affected as there is, in effect, a compulsory novation of contract.  In most cases the terms of the contract remain the same, although there are variations in relation to a few types of contract.  However, the policyholders of ING are also potentially affected, as that company is taking on the liabilities associated with the new transferred policyholders. 

7                     I am satisfied that the interests of neither set of policyholders would be adversely affected by confirmation of the scheme.  In coming to that view I have been much assisted by the comprehensive submissions of counsel that no doubt incorporate the preparation of his instructing solicitors.  I will not burden these reasons by repeating all of those submissions.  Nor will I reproduce the detail of the scheme itself.  I was invited to, and did, give particular consideration to the following:

(1)        The general provisions of the Act designed to protect the interests of policyholders quite apart from the provisions of Pt 9.

(2)        The manner in which the scheme is effected, in particular, the means by which the backing of each type of policy by the statutory fund is not affected in practice.  I should add in this connection that I was satisfied that the changes to the contractual terms in the limited classes of policy to which I have referred would not be to the disadvantage of the affected policyholders.

(3)        The joint actuarial report by the Appointed Actuary of ANZ and the Appointed Actuary of ING, particularly taking into account their respective statutory responsibilities.

(4)        The actuarial report prepared by Tillinghast Towers Perrin as independent actuaries. 

(5)        The role played by APRA pursuant to the Act generally and in relation to Pt 9 in particular.  APRA has appeared in the proceeding and has no objection to confirmation of the scheme.

I also note that no affected policyholder and no other person has appeared to oppose confirmation.

8                     Orders as asked will be made.

Associate:

Dated:              17 June 2005