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Portfolio transfers and other regulated transactions

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On 24 September 2020, Tijdschrift voor Verzekeringen / Bulletin des Assurances published a comprehensive contribution of Sandra Lodewijckx, Héloïse Fostier and Alexander Hamels on portfolio transfers and other regulated transactions, such as mergers, acquisitions and (other) strategic decisions. The journal published the contribution in the context of a thematic overview of the impact of the new Code of Companies and Associations on insurance business.

For a long period, few developments regarding this aspect of law occurred in Belgian law, case law and legal commentaries.  The Law of 13 March 2016 on the status and supervision of insurance and reinsurance undertakings (“Solvency II Law”) and the Articles 17 and 18 of the Law of 4 April 2014 on Insurance (“Insurance Law”) subject the transactions to a more comprehensive regulatory framework. Remarkable, the Belgian legislator did not only include the rules on portfolio transfers in the Solvency II Law but also in the Insurance Law. Therefore, both the National Bank of Belgium (“NBB”) and the Financial Services and Markets Authority (“FSMA”) carry out supervision, the former with regard to the admissibility of the transfer and the latter with regard to the binding nature of the transfer.

Furthermore, the NBB's Circular of 9 March 2018 on the procedure for transferring a portfolio of insurance or reinsurance agreements, replacing the outdated 1976 Circular, provides more details on the procedure to be followed.

The contribution discusses the applicable provisions on mergers, demergers, and acquisitions, portfolio transfers and (other) strategic decisions based on Article 102 of the Solvency II Law, which provides the following: 

"The National Bank of Belgium's prior consent is required for: 

1° the strategic decisions of an insurance or reinsurance undertaking; 

2° mergers involving an insurance or reinsurance undertaking, as well as demergers of insurance or reinsurance undertakings; 

3° the transfer of all or part of the business, including the total or partial transfer of a portfolio, involving the transfer of rights and obligations arising from insurance or reinsurance contracts.”

Furthermore, the contribution discusses complex international portfolio transfers, in particular the question of the competent supervisor and the applicable law in the context of Directive 2009/138/EC of the European Parliament and of the Council of 25 November 2009 on the taking-up and pursuit of the business of Insurance and Reinsurance (“Solvency II Directive”).

After analysis of each transaction and the scope of Article 102 of the Solvency II Law, the authors discuss the procedure in practice, in particular with regard to the procedural aspects, the duration, the content of the submission, the NBB’s analysis, the grounds for refusal and the applicable rules with regard to publicity and enforceability. While drafting this contribution, the authors have tried to provide practical recommendations to facilitate an efficient implementation of transactions and to draw the reader's attention to specific issues such as the possible accumulation of different rules.

However, it remains important to examine each transaction discussed in this contribution - often of considerable size - on a case-by-case basis. Indeed, one transaction will always differ from another. Therefore, it is impossible to anticipate all possible scenarios and essential to cooperate proactively with the competent authorities from the start of the project. The sooner a project is submitted to a supervisory authority, the more efficient the insurance or reinsurance undertaking can manage its strategic project planning, taking into account all applicable regulatory requirements.

The full article is available in Dossier 2020 of Tijdschrift van Verzekeringen / Bulletin des Assurances, entitled “Code des sociétés et des associations: impact en assurances - Het Wetboek van Vennootschappen en Verenigingen: gevolgen op het verzekeringswezen”, or via the website Assuropolis.