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Part VII Business Transfers – “ Equitas – a case study”

Part VII Business Transfers – “ Equitas – a case study”. 10 November 2009. Agenda. Section 1 » Part VII Transfers – The Process - Mary Gavigan Section 2 » Legal Challenges - Philip Hertz Section 3 » Preparing the ground - Gregory Overton

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Part VII Business Transfers – “ Equitas – a case study”

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  1. Part VII Business Transfers –“Equitas – a case study” 10 November 2009 Proprietary & Confidential Property of Navigant Consulting, Inc., PwC & Clifford Chance

  2. Agenda Section 1 » Part VII Transfers – The Process - Mary Gavigan Section 2 » Legal Challenges - Philip Hertz Section 3 » Preparing the ground - Gregory Overton Section 4 » Role of the Independent Expert - Allan Kaufman Section 5 » Questions Proprietary & Confidential Property of Navigant Consulting, Inc., PwC & Clifford Chance

  3. Part VII Business Transfers –The Process Section 1 Proprietary & Confidential Property of Navigant Consulting, Inc., PwC & Clifford Chance

  4. Part VII Business Transfers – A Reminder • What are Part VII’s • The Equitas’ Part VII • Benefits: • Reinsurance moves with underlying policies • Finality • Role of FSA Proprietary & Confidential Property of Navigant Consulting, Inc., PwC & Clifford Chance

  5. Structure Pre-Transfer Policyholders Names ERL EL Claims handling by RMSL NICO Proprietary & Confidential Property of Navigant Consulting, Inc., PwC & Clifford Chance

  6. Structure Post-Transfer Policyholders EIL ERL EL Claims handling by RMSL NICO Proprietary & Confidential Property of Navigant Consulting, Inc., PwC & Clifford Chance

  7. Legal Challenges Section 2 Proprietary & Confidential Property of Navigant Consulting, Inc., PwC & Clifford Chance

  8. Legal Issues • Amendments to legislation • The overall requirement – policyholder no worse off • Claims v Names v EIL • Insolvency priority • US Issues • Security • Credit for reinsurance Proprietary & Confidential Property of Navigant Consulting, Inc., PwC & Clifford Chance

  9. Preparing the Ground Section 3 Proprietary & Confidential Property of Navigant Consulting, Inc., PwC & Clifford Chance

  10. Preparing the Ground First step Scale of the book of business to be transferred Communications with policyholder Transaction design Constructing the argument Proprietary & Confidential Property of Navigant Consulting, Inc., PwC & Clifford Chance

  11. Role of the Independent Expert Section 4 Proprietary & Confidential Property of Navigant Consulting, Inc., PwC & Clifford Chance

  12. Role of the Independent Expert (IE) • Appointment approved by FSA • Reports to the Court • Considers all groups of affected policyholders • Impact on other stakeholders • Report filed in Court • Supplementary report Proprietary & Confidential Property of Navigant Consulting, Inc., PwC & Clifford Chance

  13. IE’s Role in the Equitas Part VII Analysis assuming no Equitas insolvency • Claims handling • Credit for reinsurance • Regulation • External outwards reinsurance Proprietary & Confidential Property of Navigant Consulting, Inc., PwC & Clifford Chance

  14. IE’s Role in the Equitas Part VII Analysis considering risk of Equitas insolvency • Policyholder security before and after transfer • Types of policyholders • Liability and coverage models • Recovery rate from names • Mortality • Fragmentation • Lloyd’s obligations • NICO security • Trust funds Proprietary & Confidential Property of Navigant Consulting, Inc., PwC & Clifford Chance

  15. Questions Section 5 Proprietary & Confidential Property of Navigant Consulting, Inc., PwC & Clifford Chance

  16. Contact Details Allan Kaufman 020 7398 3831 allan.kaufman@navigantconsulting.com Mary Gavigan, Director • 020 7469 1119 mary.gavigan@navigantconsulting.com Philip Hertz • 020 7006 1666 philip.hertz@cliffordchance.com Gregory Overton, Director 020 7583 5000 gregory.l.overton@uk.pwc.com Proprietary & Confidential Property of Navigant Consulting, Inc., PwC & Clifford Chance

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