Uncertainties surrounding the Brexit vote have inevitably led to major businesses anxiously considering their position in the UK. In a case on point, the High Court opened the way for one of the world’s largest insurance groups to relocate its European operations from London to Luxembourg.
One of the group’s subsidiaries, an English-registered company, ran a network of branches in 26 European countries from its London HQ and had total assets valued at around £16.7 billion. At any one time, the company had about 5.9 million consumer policies and 726,000 commercial policies in force, many of them in the UK. Its pan-European business model, however, depended on EU ‘passporting’ rights.
Given the uncertainty as to whether any Brexit deal struck between Britain and the EU would preserve those rights, the group had taken the view that it had no choice but to restructure its operations without delay, in order to ensure that it could continue to write new business and service its customers in mainland Europe.
In those circumstances, the group proposed to wind up the company and transfer its European and Swiss operations to a new company in Luxembourg. Another new company would be established in London to deal with the group’s UK business. The restructuring would take the form of a cross-border merger in order to maximise the prospects of the arrangement being recognised by EU member states.
In sanctioning the scheme under the Financial Services and Markets Act 2000, the Court found that it was entirely fair as regards different classes of policyholders and would not cause prejudice to any of them. The Court also certified that all necessary pre-merger requirements had been complied with. The decision opened the way for the group to seek final approval of the cross-border merger from the authorities in Luxembourg. The restructuring is due to take effect on 1 December 2018, in time for the UK’s departure from the EU in March 2019.
