On the go: The Court of Appeal has overturned a High Court ruling that blocked the transfer of £12bn of annuities from Prudential, now M&G, to Rothesay Life.
In a judgment published on Wednesday, the Court of Appeal rejected every one of the previous judge’s objections to the transfer, and therefore the High Court will now have to review the transaction.
An M&G spokesperson said: “We welcome the Court of Appeal’s judgment, which concluded that the original judge made errors in his approach to assessing whether the transfer should be allowed to go ahead.
“This means that the original decision will not stand, and the High Court will be asked to assess the proposed transfer again and make a new decision as to whether the transfer should be allowed to go ahead.”
In March 2018, Prudential announced its plan to sell £12bn of annuities to derisking expert Rothesay Life, covering 400,000 policies. But in August 2019, a High Court judge blocked the sale — otherwise known as a Part VII transfer — which raised concerns around other such deals in the annuities market in the future.
Mr Justice Snowden found Prudential had never mentioned to its clients that a transfer to another provider could occur.
He also found there was a fair degree of disparity between the two providers, which could impact clients, with Rothesay being “a relatively new entrant without an established reputation in the business”.
However, the Court of Appeal judges, Geoffrey Vos, Lord Justice Richards and Nicholas Patten, said the High Court had been “wrong” to find that there was a material disparity.
They also found the previous court had accorded too much weight to this argument, and instead the question should be whether there was a “material adverse effect” on the policyholders.
The judgment stated: “If the policyholders’ prospects of being paid are essentially the same with and without the scheme, it was hard to see how there could be any material adverse effect on the policyholders’ security of benefits caused by the scheme”.
