On 15 March 2013, the Irish High Court approved a transfer of insurance business from an Irish insurer to an insurer outside the European Economic Area. In the first decision of its kind, the Irish High Court sanctioned a scheme of arrangement under s.201 of the Companies Act 1963 to transfer the insurance and reinsurance business of the Bermudian branch of Chartis Excess Limited, an Irish authorised non-life insurance company, to the Bermuda authorised insurer American International Reinsurance Company Ltd, another AIG Group Company. The decision of the Irish High Court represents a ground-breaking development and opens up the opportunity, depending on the circumstances, for other insurers and/or reinsurers to replicate this process.
Scheme of Arrangement
A scheme of arrangement is a compromise or arrangement between a company and its members or creditors (including policyholders) or any class of them. The Irish procedure is governed by section 201 of the Companies Act 1963 (as amended) of Ireland and is equivalent to the procedure under Part 26 of the UK Companies Act 2006. If approved by the Court, a scheme of arrangement is binding on the company and all creditors affected. Court approval is conditional upon, among other matters, a vote approving the arrangement by a majority in number representing not less than 75% in value of the creditors affected present and voting in person or by proxy at court ordered meetings or, where appropriate, separate votes of classes of those creditors.
The scheme of arrangement between Chartis Excess and the holders of policies written through its Bermudian branch was approved by the requisite majorities and is to be effective from 1 April 2013.