We learned on Friday that the High Court blocked the ‘Part VII’ transfer of a £12bn annuity portfolio from Prudential to Rothesay. According to the judge, Justice Snowden, Rothesay was ‘a relatively new entrant without an established reputation in the business’, and that although its capital strength was as strong as that of Prudential, it ‘does not have the same capital management policies or backing of a large group with the resources . . . to support a business that carries its name’.
This decision is significant for a number of reasons, some of which we will have to leave until later. The main thing for now is that at least one part of the system is working. The PRA and the Independent Expert approved the transfer and saw no detriment to existing policyholders. But the judge saw detriment, and that was that.
Whether or not Rothesay’s capital position is as strong as Prudential is an interesting question we shall put aside for now.
In other news, the shares of American insurer GE dropped last week after Madoff whistleblower Harry Markopolos claimed a $38bn fraud. Although whether it is fraud, or merely insurance accounting, is always difficult to say.