Lifetime Income Limited - [2022] NZHC 810

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-A-TARA ROHE

CIV-2021-485-616

[2022] NZHC 810

UNDER Part 15 of the Companies Act 1993

IN THE MATTER

of an application for approval of a scheme of arrangement

BETWEEN

LIFETIME INCOME LIMITED

Applicant

Hearing: 12 April 2022

Counsel:

E B Moran for Applicant

L M McKeown for Interested Parties A V McArley and E C Mackay
R J B Fowler QC as Amicus Curiae

Judgment:

20 April 2022

REASONS JUDGMENT OF ELLIS J

[1] Lifetime Income Limited (LIL) is a licensed insurer and variable annuity provider, established in 2014. LIL is a wholly owned subsidiary of Retirement Income Group Limited (RIG).

[2] LIL has applied for orders approving a scheme of arrangement or compromise under s 236 of the Companies Act 1993. By way of summary, approval is sought to:

(a)sell the assets in a statutory fund (SF2) and repay LIL’s policyholders’ respective interests in those assets; and

(b)cancel the policies held by those policyholders.

RE LIFETIME INCOME LIMITED [2022] NZHC 810 [20 April 2022]

[3] The application was opposed by two of the affected policyholders. The remaining policyholders have taken no formal steps.

[4] On 14 April 2022 I issued a results judgment approving the proposed scheme, with reasons to follow. These are my reasons.

RIG and LIL

[5] RIG was founded in 2013 by Mr Ralph Stewart. Mr Stewart is a long-time participant in the financial services sector and has significant insurance experience. He says his intention was to create New Zealand’s first variable annuity product. In 2015 this product—called Lifetime Income—was launched. Lifetime Income is managed through two wholly owned subsidiaries of RIG: LIL and Lifetime Assets Management Limited (LAM). LAM is the investment management company and LIL manages the insurance component.

[6] As an investment management company, LAM is licensed by the Financial Markets Authority and is regulated under the Financial Markets Conduct Act 2013. It manages annuity customers’ assets invested in the Lifetime Income Fund (LIF).

[7] As an insurer, LIL is licensed by the Reserve Bank of New Zealand (the Bank) under the Insurance (Prudential Supervision) Act (IPSA).1 The Bank is charged by s 12 of the IPSA to undertake prudential supervision of licensed insurers.2

LIL’s acquisition of the Foundation Life business

[8] In November 2017 and March 2018, the Bank approved LIL’s acquisition of Foundation Life (NZ) Limited’s guarantee business.3 As of 7 April 2022, the business acquired by LIL comprised:

1      In 2015, the Bank granted LIL a variable annuity insurance licence under the IPSA. Pursuant to the licence, LIL is required to appoint an actuary to provide tri-annual financial condition reviews and an annual financial condition report, provide independently audited financial statements and obtain an independent credit rating.
2      Relevant provisions in the IPSA are discussed in more detail later in this judgment.
3      The acquired policies were originally issued by Government Life, which became Tower Life (NZ) Limited. Tower Life sold its run-off life business…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Lifetime Income Limited

Details

AGLC: Lifetime Income Limited [2022] NZHC 810
Case: [2022] NZHC 810
Decision Date: 20 April 2022

CaseChat Overview and Summary

The case involved an application by Lifetime Income Limited (LIL), a wholly owned subsidiary of Retirement Income Group Limited (RIG), for approval of a scheme of arrangement under s 236 of the Companies Act 1993. The application sought to sell the assets in a statutory fund (SF2) and repay LIL’s policyholders’ respective interests in those assets, and to cancel the policies held by those policyholders. The application was opposed by two policyholders, Mrs McArley and Mr Mackay, who did not want to receive a lump sum in lieu of their annual annuity payments. The key legal issues were whether the Court had discretion to approve the scheme, whether the scheme had been fairly put before the policyholders, whether it was fair and equitable, and whether the prudential supervisor’s approval was necessary. The Court found that the scheme was necessary due to LIL’s inability to meet increased capital requirements and the unsustainability of its business. The Court also found that the scheme had been fairly put before the policyholders, was fair and equitable, and that the prudential supervisor’s approval was not necessary. The Court approved the scheme, and orders were made approving the scheme of arrangement, binding it on LIL, its shareholders, policyholders, and any other necessary persons.

Orders