Insurance (No. 2) Act , 1983

1 Interpretation.

1.—(1) In this Act, except where the context otherwise requires—

“the Act of 1964” means the Insurance Act, 1964;

“an administrator” means a person appointed, whether under subsection (2) or (4) of section 2 of this Act, to perform the functions conferred on an administrator by this Act;

“authorisation” and “non-life insurance” have the meanings repectively assigned to them by the Regulations;

“body” means a body corporate or an unincorporated body of persons;

“the business”, in relation to an insurer, includes the business of managing investments and assets held by the insurer;

“company”, “contributory” and “director” have the meanings respectively assigned to them by the Companies Acts, 1963 to 1983;

“the court” means the High Court;

“functions” includes powers and duties and references to the performance of functions include references to the exercise of powers and the carrying out of duties;

“insurer” and “policy” have the meanings respectively assigned to them by the Act of 1964, as amended by this Act;

“policy holder”, in relation to an insurer, means a person (other than the insurer) who is a party to a policy issued by the insurer;

“the Regulations” means the European Communities (Non-Life Insurance) Regulations, 1976 (S.I. No. 115 of 1976).

(2) References to an administrator include, except where the context otherwise requires, references to an administrator provisionally appointed.

2 Appointment of administrators of insurers.

2.—(1) The Minister may present a petition to the court for an order for the administration of an insurer and the appointment of an administrator in relation to such insurer and may do so notwithstanding that there is or may be another remedy or course of action available to him in relation to such insurer.

(2) The court may, on such petition, in relation to an insurer, if it considers—

(a) that—

(i) the manner in which the business of the insurer is being or has been conducted has failed to make adequate provision for its debts, including contingent and prospective liabilities, or

(ii) the business of the insurer is being or has been so conducted as to jeopardise or prejudice the rights and interests of persons arising under policies issued by the insurer, or

(iii) the insurer has become unable to comply with the requirements of the Regulations in a material respect,

and

(b) that the making of such an order for administration and the appointment of an administrator would assist in the maintenance, in the public interest, of the proper and orderly regulation and conduct of non-life insurance business,

make an order for the administration of the insurer and appoint a person nominated by the Minister (who shall be known as and is in this Act referred to as “an administrator”) to perform, in relation to the insurer, the functions conferred on an administrator by this Act.

(3) An administrator shall take over the management of the business of the insurer and shall carry on that business as a going concern with a view to placing it on a sound commercial and financial footing and the administrator shall have in relation to the insurer all such powers as may be necessary for or incidental to his functions in relation to the insurer, including the sole authority over and direction of all officers and employees of the insurer.

(4) (a) At any time after the presentation of a petition for an order for the administration of an insurer, the court may, upon the ex parte application of the Minister and upon prima facie proof by affidavit or otherwise of one or more of the matters mentioned in subparagraph (i), (ii) or (iii) of section 2 (2) (a) of this Act and without advertisement or notice to any person, appoint such person as may be nominated by the Minister to act as administrator provisionally pending the appointment of an administrator under section 2 (2) of this Act.

(b) If no order for the administration of the insurer is made upon the petition, the appointment of the provisional administrator shall be annulled but he shall nevertheless be entitled to be paid out of the assets of the insurer all the costs, charges and expenses properly incurred by him as provisional administrator, including such sum as the court may fix for his remuneration, and may retain out of such assets the amount of such costs, charges and expenses:

Provided that any such annulment shall not invalidate any act or function done or performed by the provisional administrator.

(5) The administration of an insurer under this Act shall be deemed to have commenced at the time of the presentation of the petition for an order for administration.

(6) (a) If at any time no rules of court in respect of the making of an order for administration or the appointment of an administrator by the court under this Act are in force, the provisions of Order 74 of the Rules of the Superior Courts (S.I. No. 72 of 1962), shall, with any necessary modifications, but subject to paragraph (b) of this subsection and subsection (4) of this section, apply.

(b) (i) A petition for the administration of an insurer or the appointment of an administrator to an insurer shall be served only on the insurer, unless the court shall otherwise direct.

(ii) Upon the hearing of a petition for the administration of an insurer or the appointment of an administrator to an insurer, only the Minister and the insurer concerned shall be entitled to be heard unless the court shall otherwise direct.

(iii) The provisions of the said Order 74 shall not, in so far as they relate in the case of an official liquidator to the giving of security, the filing of accounts, the lodging of monies to a bank account or the fixing of the remuneration of the liquidator, apply to an administrator.

(c) Any rules of court amending or replacing the said Order 74 shall, in their application for the purposes of this Act, be subject to the provisions of paragraph (b) of this subsection and subsection (4) of this section.

(7) The administration of an insurer under this Act and the appointment of an administrator shall terminate—

(a) upon the making of an order for the winding up of the insurer concerned, or

(b) upon the making of an order for such termination by the court on the application of the Minister or the administrator, with the approval of the Minister, or

(c) upon the making of an order for such termination by the court in circumstances where it considers—

(i) that, if the administration is terminated—

(I) the business of the insurer concerned will be conducted in such manner as to make adequate provision for its debts, including contingent and prospective liabilities, and

(II) the business of the insurer concerned will not be so conducted as to jeopardise or prejudice the rights and interests of persons arising under policies issued by the insurer, and

(III) the business of the insurer is and will continue to be in all other respects on a sound commercial and financial footing, and

(IV) any debt due to the Insurance Compensation Fund has been or will be paid,

and

(ii) that it would be unjust and inequitable not to make the order.

(8) In any proceedings upon a petition presented under this Act, evidence that the matters set out in subsection (2) (a) of this section pertained in relation to an insurer at the close of the period to which the latest returns of such insurer to the Minister under the Insurance Acts, 1909 to 1983, or under the Regulations or the European Communities (Non-Life Insurance Accounts) Regulations, 1977 (S.I. No. 401 of 1977), upon any subsequent date shall be evidence unless the contrary is proved that such matters pertain in relation to the insurer at the time of the hearing of any such proceedings.

3 Power of administrator and court.

3.—(1) Subject to the provisions of this Act and, in particular, to the functions conferred on an administrator by section 2 of this Act—

(a) an administrator (whether appointed under subsection (2) or (4) of section 2 of this Act) shall as on and from his appointment have all the powers (including the power to sell the real and personal property and things in action of the insurer concerned) that he would have, and there shall apply in relation to him all the statutory provisions that would so apply, if he were a liquidator appointed by the court in respect of the insurer and (in a case where the insurer is not a company) the insurer were a company, and

(b) where an administrator stands appointed (whether under subsection (2) or (4) of section 2 of this Act), the court shall have under this Act all the powers that it would have if it had made a winding up order and appointed a liquidator in respect of the insurer concerned and (in a case where the insurer is not a company) the insurer were a company, and

(c) where a petition is presented to the court for an order for administration or the appointment of an administrator, the court shall thereupon have under this Act all the functions that it would have if a petition had been presented to it for the winding up of the insurer concerned,

and the provisions of the Companies Acts, 1963 to 1983, and any instruments made thereunder and, in particular, the provisions of those Acts and instruments relating to the winding up of companies by the court and to liquidators of companies shall apply and have effect accordingly in relation to the powers and functions aforesaid with the modifications specified in this subsection, in the Schedule to this Act and in any order under subsection (6) of this section and with any other necessary modifications:

Provided that, save as otherwise specified in this section—

(i) the business of the insurer concerned shall be continued without interruption as a going concern and no contract (including a contract of employment or service), policy, transaction, bank account or bank mandate, right, title, claim, debt, proceeding or obligation of the insurer or right, claim or proceeding against the insurer, shall be avoided, cancelled, stayed or otherwise affected by reason only of the order for administration or the appointment of the administrator or the application to the insurer of the provisions of the said Acts and instruments, and

(ii) the provisions of sections 131, 132, 159, 161, 218, 219 and 222, paragraphs (a) to (f) of section 228 and sections 231 (3), 234, 283, 284, 285, 291, 292, 302 and 306 of the Companies Act, 1963 (as amended), shall not apply.

(2) For so long as an administrator stands appointed under this Act, the following provisions shall have effect—

(a) no proceedings or resolution for the winding up of the insurer concerned shall be commenced or passed without the prior sanction of the court obtained under this section,

(b) no receiver over any part of the property or undertaking of the insurer shall be appointed without the prior sanction of the court obtained under this section,

(c) no petition for relief under section 205 of the Companies Act, 1963, shall be presented or proceeded with against the insurer except to the extent that such petition is grounded exclusively upon complaints as to the conduct of the affairs of the insurer or the exercise of the powers of the directors of the insurer prior to the appointment of the administrator,

(d) no attachment, sequestration, distress or execution shall be put into force against the property or effects of the insurer without the prior sanction of the court obtained under this section,

(e) the words “under administration” shall be used in relation to the name of the insurer in all circumstances in which the words “in liquidation” would fall to be used in relation to the name of a company being wound up by the court,

(f) the functions of the administrator may be performed by him with the assistance of persons appointed or employed by him for that purpose,

(g) all functions which are vested in the directors or in any committee of management of the insurer (whether by virtue of the memorandum or articles of association of the insurer or by law or otherwise) shall be performable only by the administrator and all such powers of the insurer as are exercisable by or with the sanction of a general meeting of the members of the insurer shall be exercisable only by the administrator and such exercise shall be subject to the sanction of the court,

(h) the administrator may apply to the court to determine any question arising in the course of the administration of the insurer, or for the exercise in relation to the insurer of all or any of the powers which the court may exercise under the Companies Acts, 1963 to 1983, upon the application to it of any member, contributory, creditor, director or liquidator of a company including those powers which a court may exercise in the winding up of a company,

(i) the administrator may resign or, upon the application of the Minister, be removed by the court for cause shown, and

(j) a vacancy in the office of administrator may be filled by the court upon the nomination of the Minister.

(3) (a) If the court so declares, the administrator shall not be bound, or shall be bound only to the extent or in the manner specified in the declaration, by any rule, regulation or other provision of the insurer concerned (whether contained in the memorandum or articles of association of the insurer or in any other document relating to the constitution of the insurer or in any agreement or in any other document whatsoever) restricting or defining the classes or categories of persons to whom the insurer may issue policies or the terms upon which it may issue policies.

(b) A declaration under this subsection (including this paragraph) may be varied or annulled by the court, and—

(i) if the declaration is so varied, the administrator concerned shall be bound by the rule, regulation or other provision concerned, as the case may be, in accordance with the said declaration as so varied, and

(ii) if the declaration is annulled, the administrator shall be bound by the rule, regulation or other provision concerned, as the case may be.

(4) (a) The costs and expenses of the performance of the functions of an administrator appointed under this Act and his remuneration shall be paid, and the administrator shall be entitled to be indemnified in respect thereof and to retain the same from time to time, out of the revenue of the business of the insurer or the proceeds of the realisation of the assets (including investments) or other funds available to the insurer,

(b) the court shall, from time to time on the application of the administrator, by order fix the amount or the basis of calculation of the amount of the costs, expenses and remuneration of the administrator and such order may extend to a period prior to the date of the making of the order, and

(c) the administrator shall within six weeks of each anniversary of his appointment (or at such other times as the court may direct) deliver to the court a summary of the sums received or retained by him in each year for the costs and expenses of the administration and for his remuneration.

(5) A provision of the Companies Act, 1963, specified in column (2) of the Schedule to this Act at any reference number shall apply and have effect, for the purposes of subsection (1) of this section, with the modifications specified in column (3) of that Schedule at that reference number.

(6) (a) Without prejudice to the generality of subsection (1) of this section, the Minister may, for the purpose of giving full effect to the application by that subsection of the provisions of the Companies Acts, 1963 to 1983, and any instruments made thereunder, by order modify the provisions of the said Acts or any rules or other instruments made thereunder or any rules of court relating thereto in their application under and for the purposes of this Act if he considers it necessary or appropriate to do so to facilitate the performance of the functions of an administrator appointed under this Act.

(b) The Minister may by order revoke or amend an order made under this subsection including this paragraph.

4 Bodies connected with insurers.

4.—(1) The court may, in relation to a body connected with an insurer, on application to it by the administrator (whether appointed under subsection (2) or (4) of section 2 of this Act), if it considers—

(a) that—

(i) the affairs of that body are being conducted, or are likely to be conducted, in a manner which is calculated or likely to jeopardise or prejudice the interests of the insurer or of the creditors or policy holders of the insurer, or

(ii) it is expedient, for the purpose of preserving the assets (including the investments) of the insurer or of safe guarding the interests of the insurer, its creditors or policy holders, that the carrying on of the business of that body or the exercise of the powers of its directors or management should be curtailed or regulated in any particular respect, or

(iii) having regard to the relationship between the insurer and that body, any part of the property or undertaking of the body should be preserved or controlled,

and

(b) that, to do so would be just and equitable and would, by facilitating and contributing to the safeguarding of the interests of the insurer or of the creditors or policy holders of the insurer, assist in the maintenance, in the public interest, of the proper and orderly regulation and conduct of non-life insurance business,

make such order as it thinks fit (including an order conferring powers on the administrator in relation to the affairs of that body) whether directing or prohibiting any act or restraining, cancelling or varying any agreement or transaction or the exercise of any power.

(2) Without prejudice to the generality of the foregoing, the court may, if it thinks fit, by order—

(a) appoint the administrator of an insurer to be a receiver and manager of all or any part of the property and assets of the connected body concerned and confer upon him such powers in that behalf as the court may think fit and specify in the order, including power to carry on the business of the body,

(b) appoint such additional directors or other members of the committee of management of the connected body as the administrator may nominate, notwithstanding any provision or restriction to the contrary contained in the articles of association of the connected body, or otherwise contained in its rules or constitution,

(c) provide that the exercise of the functions of the directors, secretary and other officers of the connected body engaged in its management shall be subject to the direct control of the administrator.