October 2007

The applicability of solvent schemes of arrangement to German portfolios 

The two articles by Dr Schnepp and Ms Janzen which appeared in the July 2007 editions of Versicherungswirtschaft on whether solvent schemes of arrangement are effective under German and EU law made a powerful case for casting doubt on the validity of such schemes under German law. This article will examine the arguments put forward by Dr Schnepp and Ms Janzen from both a commercial and legal standpoint.

Download (pdf)

June 2007

In anticipation of the publication of the draft Solvency II framework directive in Summer 2007, this In-Focus provides an overview of the process towards the new regulatory regime for the insurance industry, which is expected to become effective by 2010. On release of the draft directive, we will prepare and circulate a special guide on its impact.

Introduction
In Spring 2007 the Committee of European Insurance and Occupational Pensions Supervisors (CEIOPS) launched its third round of quantitive impact study (QIS III) in relation to Solvency II. By way of consultation with the insurance industry, QIS III will look at the potential effects, on both insurance undertakings and groups of undertakings, of CEIOPS' latest proposals for the assessment of technical provisions and for the calculation of a solvency capital requirement (SCR) and a minimum capital requirement (MCR).

Download (pdf)

October 2006

Solvent Schemes - WFUM: the story so far...

The handing down of the English High Court's judgment in the convening application for the Wills Faber (Underwriting) Management Limited ("WFUM") schemes on 9 June 2006 ([2006] EWHC 1335 Ch) marked the latest stage in the judicial examination of solvent schemes of arrangement. The detailed judgment provided clarity on the current view the English courts are taking in resolving certain issues arising between insurance companies and their policyholders and cedants (i.e. re-insureds) (together referred to as "policyholders" herein) in the context of solvent schemes of arrangement.

May 2006

Solvent schemes of arrangement - the creditor's viewpoint

When an insurer or reinsurer implements a solvent scheme of arrangement its creditors lose their continued cover. They will receive compensation (the estimated amount of their current and future claims on the policy), but is that enough?

Many creditors have questioned the fairness of having their policies compulsorily commuted in circumstances where their insurer or reinsurer is still solvent. Such questioning - particularly by policyholders in the US - resulted last year in the first legal challenge to a solvent scheme - Re British Aviation Insurance Company in which, among other matters, the fairness of such a scheme was brought into question and the Court did not permit the scheme to go ahead. Consideration of schemes generally focuses on the company implementing the scheme, this note, however, will assess schemes from the creditors' perspective.

Download (pdf)

April 2006

Solvent schemes of arrangement - the policy holder's viewpoint

When an insurer or reinsurer implements a solvent scheme of arrangement its policyholders lose their continued cover. They will receive compensation (the estimated amount of their current and future claims on the policy), but is that enough?

Many creditors have questioned the fairness of having their policies compulsorily commuted in circumstances where their insurer or reinsurer is still solvent. Such questioning - particularly by policyholders in the US - resulted last year in the first legal challenge to a solvent scheme - Re British Aviation Insurance Company in which, among other matters, the fairness of such a scheme was brought into question and the Court did not permit the scheme to go ahead. Consideration of schemes generally focuses on the company implementing the scheme, this note, however, will assess schemes from the policyholders' perspective.

Download (pdf)

March 2006

Solvent Schemes of Arrangement: one class of insurance creditor or two?

The decision of Lindsay J. on 27th March in Re NRG Victory Reinsurance Limited [2006] EWHC 679 (Ch) deals with the vexed question of whether there should be one or two classes of insurance creditor for the purposes of convening creditor meetings in a solvent scheme of arrangement under section 425 of the Companies Act 1985. This issue has been the subject of much comment in the market after the decision of the High Court in the earlier case Re British Aviation Insurance Co. Limited [2005] EWHC 1621 (Ch).