The application of Zurich Insurance Company

[2003] FCA 1519

FEDERAL COURT OF AUSTRALIA

The application of Zurich Insurance Company [2003] FCA 1519

INSURANCE – approval of scheme of transfer – compliance with legislative requirements.

THE APPLICATION OF ZURICH INSURANCE COMPANY AND CONVERIUM LIMITED

N 1670 of 2003

HELY J
5 DECEMBER 2003
SYDNEY

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	N 1670 OF 2003

BETWEEN:	THE APPLICATION OF ZURICH INSURANCE COMPANY AND CONVERIUM LIMITED APPLICANTS
JUDGE:	HELY J
DATE OF ORDER:	5 DECEMBER 2003
WHERE MADE:	SYDNEY

THE COURT ORDERS THAT:

1.The scheme for the transfer of the Australian insurance business of Zurich Insurance Company to Converium Limited, a copy of which is Exhibit KTW1 to the affidavit Kenneth Thomas Watson, sworn on 29 October 2003, be confirmed. 

2.The applicants pay the Australian Prudential Regulatory Authority’s costs of the proceedings.

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

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	N 1670 OF 2003

BETWEEN: THE APPLICATION OF ZURICH INSURANCE COMPANY AND CONVERIUM LIMITED
APPLICANTS

JUDGE:	HELY J
DATE:	5 DECEMBER 2003
PLACE:	SYDNEY

REASONS FOR JUDGMENT

HELY J:

1. The applicant seeks confirmation, pursuant to s 17F of the Insurance Act 1973 (‘the Act’) of a Scheme for the transfer of the Australian insurance business of Zurich Insurance Company (‘Zurich’) to Converium Limited (‘Converium’). 

2. I am satisfied as to the following matters.  First, that a copy of the Scheme and the actuarial report on which the Scheme is based has been given to Australian Prudential Regulatory Authority (‘APRA’) in accordance with the Prudential Standards.  Second, a notice of intention to make this application has been published by the applicants, in accordance with the Prudential Standards.  Third, that an approved summary of the Scheme has been given to every affected policy holder.  I am therefore satisfied that the requirements of s 17C(2) of the Act have been met.

3. The Scheme is based upon an actuarial report of Mr Gregory Clive Taylor of 28 October 2003.  The approved summary of the Scheme records that in his actuarial report on the Scheme, Mr Taylor has expressed the opinions that: 

   (a)no material detriment or disadvantage to Converium policy holders is likely to result from the Scheme; 

   (b)adopting a criterion of materiality relating to returns to Zurich policy holders on the contingency of an insolvency of Converium, no material detriment or disadvantage to Zurich policy holders is likely to result from the Scheme;  and

   (c)after the transfer of liabilities and assets pursuant to the Scheme, the Zurich policy holders will be adequately protected in terms of the criteria by which policy holder protection is measured financially under the Act, as Converium will continue to meet the minimum capital requirements under the Act. 

   I am also satisfied that the application for confirmation has been made in accordance with the Prudential Standard GPS410. 

4. APRA has appeared on the hearing of the application by its legal adviser.  APRA has no objection to the applicants proceeding to seek a confirmation of the Scheme from the Court.  APRA has not required a report from an independent actuary under s 17D of the Act, from which I conclude that APRA is satisfied with the provisions of Mr Taylor’s report. 

5. No notification has been received from any policy holder in opposition to the Scheme. 

6. Counsel for the applicants, Mr Hollo, has helpfully prepared a detailed set of written submissions which summarise all of the evidence and relates it back to the provisions of the Act and to the Prudential Standards, indicating where the evidence is to be found of compliance with each particular statutory provision and with each particular Prudential Standard.  I will direct that this very helpful document remain with the papers and, essentially, I accept the submissions contained in it. 

7. I therefore order that the Scheme for the transfer of the Australian insurance business of Zurich to Converium, a copy of which is Exhibit KTW1 to the affidavit of Kenneth Thomas Watson, sworn on 29 October 2003, be confirmed.  I will also order that the applicants pay APRA’s costs of the proceedings. 

I certify that the preceding seven (7) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Hely.

Associate:

Dated:             19  December 2003

Counsel for the Applicants:	Mr R Hollo
Solicitor for the Applicants:	Minter Ellison
Solicitor for Australian Prudential Regulatory Authority:	Australian Government Solicitor
Date of Hearing:	5 December 2003
Date of Judgment:	5 December 2003