Application of Sompo Japan Insurance Inc. under the Insurance Act 1973 (Cth) (No 2)

Sompo Japan Insurance Inc. applied to the court for the confirmation of a scheme for the transfer of insurance business from Nipponkoa Insurance Company Limited to Sompo Japan Insurance Inc. The dispute involved the transfer of general insurance business between insurers within the same corporate group. The primary legal issues the court had to decide were whether the transfer scheme complied with the Insurance Act 1973 (Cth) and whether the transfer of reinsurance contracts was appropriate.

The court considered the report of Mr Perkins, who provided evidence regarding the solvency ratios of both insurers before and after the transfer. Although the solvency ratios would decrease, the court was satisfied that Sompo's solvency ratio would remain relatively high compared to other direct insurers in the industry. Mr Perkins also noted that the transfer would not result in any discrimination between policyholders and would ensure continuity of cover, including reinsurance. The court further considered the operational impact of the transfer, which would be minimal as Sompo and Nipponkoa are jointly managed by Allianz, and the merged branch would be subject to the same prudential regulation.

The court confirmed the scheme for the transfer of insurance business without modification and ordered the transfer of all of Nipponkoa's reinsurance to Sompo. The court also ordered Sompo to pay the costs of the Australian Prudential Regulation Authority as agreed, or if agreement cannot be reached, as assessed.