HDI-Gerling Australia Insurance Company Pty Limited, in the matter of HDI-Gerling Australia Insurance Company Pty Limited (ABN 16 069 085 196) (No 2)

The case involved an application by HDI-Gerling Australia Insurance Company Pty Limited for confirmation of the transfer of its insurance and reinsurance businesses to the Australian branch of HDI-Gerling Industrie Versicherung AG, both companies being part of the same corporate group. The Australian High Court was tasked with determining the legality and appropriateness of the scheme under the Insurance Act 1973 (Cth). The primary legal issue was whether the transfer scheme complied with the requirements of the Act and if the court should exercise its discretion to confirm the scheme. Additionally, the court needed to consider whether the transfer of the loss deposit account, which is crucial for ensuring the financial stability of the businesses post-transfer, was appropriately managed.

The court examined the actuarial evidence provided, which detailed the risks and reinsurance arrangements within the Talanx Group, highlighting that the Australian subsidiary's underwriting risks were fully reinsured within the group. The court noted the importance of the loss deposit account, which contained funds deposited by the reinsurer against reinsurance liabilities. The evidence indicated that while there was a planned transfer of $12 million from the Australian subsidiary's loss deposit account to the Branch, an additional $10 million would be provided from a separate account to ensure the total amount reached approximately $22 million. This was deemed necessary to meet the minimum capital requirements post-transfer.

Upon considering the evidence and the views of APRA, the court concluded that the scheme should be confirmed, subject to certain conditions. The confirmation was conditional on the transfer of the loss deposit account being completed and verified by specific deadlines. The court also noted that if the conditions were not met by the stipulated dates, the orders would have no effect. The final orders confirmed the transfer scheme, required the transfer of all reinsurance and related rights, and set conditions for the transfer of the loss deposit account. The Australian subsidiary was also instructed to cease displaying a notice on the Talanx Group website and to pay the costs of APRA.