The Insurers (Reorganisation and Winding Up) Regulations 2004

Made: 12th February 2004

Laid before Parliament: 12th February 2004

Coming into force: 18th February 2004

The Treasury, being a government department designated for the purposes of section 2 (2) of the European Communities Act 1972 in relation to the insolvency of insurers, in exercise of the powers conferred by that section, hereby make the following Regulations:

PART I — GENERAL

Citation and Commencement

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These Regulations may be cited as the Insurers (Reorganisation and Winding Up) Regulations 2004, and come into force on 18th February 2004.

Interpretation

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• (1) In these Regulations—

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• “the 1986 Act” means the Insolvency Act 1986 ;

• “the 2000 Act” means the Financial Services and Markets Act 2000 ;

• “the 2006 Act” means the Companies Act 2006;

• “the 1989 Order” means the Insolvency (Northern Ireland) Order 1989 ;

• “administrator” has the meaning given by paragraph 13 of Schedule B1, or by paragraph 14 of Schedule B1 to the 1989 Order;

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• ...

• “claim” means a claim submitted by a creditor of a UK insurer in the course of—a winding up,an administration, ora voluntary arrangement,with a view to recovering his debt in whole or in part, and includes a proof within the meaning given in rule 1.2 of the Insolvency Rules, a proof of debt within the meaning given in Rule 4.079(4) of the Insolvency Rules (Northern Ireland) or in Scotland a claim made in accordance with rule 7.16 of the Insolvency (Scotland) (Receivership and Winding up) Rules 2018 (in relation to a winding up) or rule 3.105 of the Insolvency (Scotland) (Company Voluntary Arrangements and Administration) Rules 2018 (in relation to an administration);

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• “creditors' voluntary winding up” has the meaning given by section 90 of the 1986 Act or Article 76 of the 1989 Order;

• “debt”—in England and Wales and Northern Ireland—in relation to a winding up or administration of a UK insurer, has the meaning given by rule 14.1(3) of the Insolvency Rules or Article 5 of the 1989 Order, and in a case where a voluntary arrangement has effect in relation to a UK insurer, means a debt which would constitute a debt in relation to the winding up (not immediately preceded by an administration) of that insurer, except that in paragraph (c) of the definition of “relevant date” in rule 14.1(3) of the Insolvency Rules and in paragraph (1A) of Article 5 of the 1989 Order the reference to the date on which the company went into liquidation has effect as a reference to the date on which the voluntary arrangement had effect; in Scotland—in relation to a winding up of a UK insurer, shall be interpreted in accordance with rule 7.22 of the Insolvency (Scotland) (Receivership and Winding up) Rules 2018, and, in relation to an administration of a UK insurer, has the meaning given in rule 1.2 of the Insolvency (Scotland) (Company Voluntary Arrangements and Administration) Rules 2018,in a case where a voluntary arrangement has effect in relation to a UK insurer, means a debt which would constitute a debt in relation to the winding up (not immediately preceded by an administration) of that insurer, except that references in rule 7.22 of the Insolvency (Scotland) (Receivership and Winding up) Rules 2018 to the date on which the company went into liquidation have effect as a reference to the date on which the voluntary arrangement had effect;

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• “the FCA” means the Financial Conduct Authority;

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• “the Insolvency Rules” means the Insolvency (England and Wales) Rules 2016;

• “the Insolvency Rules (Northern Ireland)” means the Insolvency Rules (Northern Ireland) 1991 ;

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• “insurance claim” means any claim in relation to an insurance debt;

• “insurance creditor” means a person who has an insurance claim against a UK insurer (whether or not he has claims other than insurance claims against that insurer);

• “insurance debt” means a debt to which a UK insurer is, or may become liable, pursuant to a contract of insurance, to a policyholder or to any person who has a direct right of action against that insurer, and includes any premium paid in connection with a contract of insurance (whether or not that contract was concluded) which the insurer is liable to refund;

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• “officer”, in relation to a company, has the meaning given by section 1173(1) of the Companies Act 2006;

• ...

• “policyholder” has the meaning given by the Financial Services and Markets Act 2000 (Meaning of “Policy” and “Policyholder”) Order 2001 ;

• “the PRA” means the Prudential Regulation Authority;

• “PRA-authorised person” has the meaning given in section 2B of the 2000 Act;

• “registered society” means a society, other than a society registered as a credit union, which is—a registered society within the meaning given by section 1(1) of the Co-operative and Community Benefit Societies Act 2014; ora society registered or deemed to be registered under the Industrial and Provident Societies Act (Northern Ireland) 1969;

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• “Schedule B1” means Schedule B1 to the 1986 Act as inserted by section 248 of the Enterprise Act 2002 , unless specified otherwise;

• section 899 compromise or arrangement” means a compromise or arrangement sanctioned by the court in relation to a UK insurer under section 899 of the 2006 Act but does not include a compromise or arrangement falling within section 900 (powers of court to facilitate reconstruction or amalgamation) or Part 27 (mergers and divisions of public companies) of that Act;

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• “supervisor” has the meaning given by section 7 of the 1986 Act or Article 20 of the 1989 Order;

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• “UK insurer” means a person who has permission under Part IV of the 2000 Act to effect or carry out contracts of insurance, but does not include a person who, in accordance with that permission, carries on that activity exclusively in relation to reinsurance contracts;

• “voluntary arrangement” means a voluntary arrangement which has effect in relation to a UK insurer in accordance with section 4A of the 1986 Act or Article 17A of the 1989 Order; and

• “winding up” means—winding up by the court, ora creditors' voluntary winding up.

• (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (3) In these Regulations, references to the general law of insolvency of the United Kingdom include references to every provision made by or under the 1986 Act or the 1989 Order; and in relation to friendly societies or to registered societies references to the law of insolvency or to any provision of the 1986 Act or the 1989 Order are to that law as modified by the Friendly Societies Act 1992 or by the Co-operative and Community Benefit Societies Act 2014 or the Industrial and Provident Societies Act (Northern Ireland) 1969 (as the case may be).

• (4) References in these Regulations to a “contract of insurance” must be read with—

• (a) section 22 of the 2000 Act;

• (b) any relevant order made under that section; and

• (c) Schedule 2 to that Act,

but for the purposes of these Regulations a contract of insurance does not include a reinsurance contract.

• (5) Functions imposed or falling on the FCA or the PRA by or under these Regulations shall be deemed to be functions under the 2000 Act.

Scope

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For the purposes of these Regulations, neither the Society of Lloyd’s nor the persons specified in section 316(1) of the 2000 Act are UK insurers.

PART II — INSOLVENCY MEASURES AND PROCEEDINGS: JURISDICTION IN RELATION TO INSURERS

Prohibition against winding up etc. EEA insurers in the United Kingdom

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Schemes of arrangement: EEA insurers

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Reorganisation measures and winding up proceedings in respect of EEA insurers effective in the United Kingdom

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Confirmation by the court of a creditors' voluntary winding up

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PART III — MODIFICATIONS OF THE LAW OF INSOLVENCY: NOTIFICATION AND PUBLICATION

Modifications of the law of insolvency

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The general law of insolvency has effect in relation to UK insurers subject to the provisions of this Part.

Notification of relevant decision to the FCA and, if the insurer is a PRA-authorised person, the PRA

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• (1) Where on or after 3rd March 2004 the court makes a decision, order or appointment of any of the following kinds—

• (a) an administration order under paragraph 13 of Schedule B1 , or paragraph 14 of Schedule B1 to the 1989 Order;

• (b) a winding up order under section 125 of the 1986 Act or Article 105 of the 1989 Order;

• (c) the appointment of a provisional liquidator under section 135(1) of the 1986 Act or Article 115(1) of the 1989 Order;

• (d) an interim order under paragraph 13(1)(d) of Schedule B1 or paragraph 14(1)(d) of Schedule B1 to the 1989 Order;

• (e) a decision to reduce the value of one or more of the insurer’s contracts, in accordance with section 377 of the 2000 Act,

it must immediately inform the FCA and, if the insurer is a PRA-authorised person, the PRA, or cause the FCA and, if the insurer is a PRA-authorised person, the PRA to be informed of the decision, order or appointment which has been made.

• (2) Where a decision with respect to the approval of a voluntary arrangement has effect, and the arrangement which is the subject of that decision is a qualifying arrangement, the supervisor must forthwith inform the FCA and, if the insurer is a PRA-authorised person, the PRA of the arrangement.

• (3) Where a liquidator is appointed as mentioned in section 100 of the 1986 Act, paragraph 83 of Schedule B1, paragraph 84 of Schedule B1 to the 1989 Order or Article 86 of the 1989 Order (appointment of liquidator in a creditors' voluntary winding up), the liquidator must inform the FCA and, if the insurer is a PRA-authorised person, the PRA forthwith of his appointment.

• (4) Where in the case of a members' voluntary winding up, section 95 of the 1986 Act (effect of company’s insolvency) or Article 81 of the 1989 Order applies, the liquidator must inform the FCA and, if the insurer is a PRA-authorised person, the PRA forthwith that he is of that opinion.

• (6) Paragraphs (1), (2) and (3) do not require the FCA to be informed in any case where the FCA was represented at all hearings in connection with the application in relation to which the decision, order or appointment is made.

• (6A) Paragraphs (1), (2) and (3) do not require the PRA to be informed in any case where the PRA was represented at all hearings in connection with the application in relation to which the decision, order or appointment is made.

• (7) For the purposes of paragraph (2), a “qualifying arrangement” means a voluntary arrangement which—

• (a) varies the rights of creditors as against the insurer and is intended to enable the insurer, and the whole or any part of its undertaking, to survive as a going concern; or

• (b) includes a realisation of some or all of the assets of the insurer and distribution of the proceeds to creditors, with a view to terminating the whole or any part of the business of that insurer.

• (8) An administrator, supervisor or liquidator who fails without reasonable excuse to comply with paragraph (2), (3), or (4) (as the case may be) commits an offence and is liable on summary conviction to a fine not exceeding level 3 on the standard scale.

Notification of relevant decision to EEA regulators

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Publication of voluntary arrangement, administration order, winding up order or scheme of arrangement

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Notification to creditors: winding up proceedings

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• (1) When a relevant order or appointment is made, or a relevant decision is taken, in relation to a UK insurer on or after 20th April 2003, the appointed officer must as soon as is reasonably practicable—

• (a) notify all known creditors of that insurer in writing of—

• (i) the matters mentioned in paragraph (4), and

• (ii) the matters mentioned in paragraph (5); and

• (b) notify all known insurance creditors of that insurer in writing of the matters mentioned in paragraph 6,

in any case.

• (2) The appointed officer may comply with the requirement in paragraph (1)(a)(i) and the requirement in paragraph (1)(a)(ii) by separate notifications.

• (3) For the purposes of this regulation—

• (a) “relevant order” means—

• (i) an administration order made under section 8 of the 1986 Act before 15th September 2003, or made on or after that date under paragraph 13 of Schedule B1 in the prescribed circumstances or under paragraph 14 of Schedule B1 to the 1989 Order in the prescribed circumstances,

• (ii) a winding up order under section 125 of the 1986 Act (powers of the court on hearing a petition) or Article 105 of the 1989 Order (powers of High Court on hearing of petition),

• (iii) the appointment of a liquidator in accordance with section 138 of the 1986 Act (appointment of a liquidator in Scotland), and

• (iv) an order appointing a provisional liquidator in accordance with section 135 of that Act or Article 115 of the 1989 Order;

• (b) “relevant appointment” means the appointment of a liquidator as mentioned in section 100 of the 1986 Act or Article 86 of the 1989 Order (appointment of liquidator in a creditors' voluntary winding up); and

• (c) “relevant decision” means a decision as a result of which a qualifying voluntary arrangement has effect.

• (4) The matters which must be notified to all known creditors in accordance with paragraph (1)(a)(i) are as follows—

• (a) that a relevant order or appointment has been made, or a relevant decision taken, in relation to the UK insurer; and

• (b) the date from which that order, appointment or decision has effect.

• (5) The matters which must be notified to all known creditors in accordance with paragraph (1)(a)(ii) are as follows—

• (a) if applicable, the date by which a creditor must submit his claim in writing;

• (b) the matters which must be stated in a creditor’s claim;

• (c) details of any category of debt in relation to which a claim is not required;

• (d) the person to whom any such claim or any observations on a claim must be submitted; and

• (e) the consequences of any failure to submit a claim by any specified deadline.

• (6) The matters which must be notified to all known insurance creditors, in accordance with paragraph (1)(b), are as follows—

• (a) the effect which the relevant order, appointment or decision will, or is likely, to have on the kind of contract of insurance under, or in connection with, which that creditor’s insurance claim against the insurer is founded; and

• (b) the date from which any variation (resulting from the relevant order or relevant decision) to the risks covered by, or the sums recoverable under, that contract has effect.

• (7) ... Where a creditor is notified in accordance with paragraph (1)(a)(ii), the notification must be headed with the words “Invitation to lodge a claim: time limits to be observed” ...

• (8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (9) The obligation under paragraph (1)(a)(ii) may be discharged by sending a form of proof in accordance with ... Rule 4.080 of the Insolvency Rules (Northern Ireland) in cases where those rules apply, provided that the form of proof complies with paragraph (7) or (8) (whichever is applicable).

• (10) The prescribed circumstances are where the administrator includes in the statement required under rule 3.3 of the Insolvency Rules or under Rule 2.003 of the Insolvency Rules (Northern Ireland) a statement to the effect that the objective set out in paragraph 3(1)(a) of Schedule B1 or in paragraph 4(1)(a) of Schedule B1 to the 1989 Order is not reasonably likely to be achieved.

• (11) Where, after the appointment of an administrator, the administrator concludes that it is not reasonably practicable to achieve the objective specified in paragraph 3(1)(a) of Schedule B1 or in paragraph 4(1)(a) of Schedule B1 to the 1989 Order, he shall inform the court, the FCA and, if the insurer is a PRA-authorised person, the PRA in writing of that conclusion and upon so doing the order by which he was appointed shall be a relevant order for the purposes of this regulation and the obligation under paragraph (1) shall apply as from the date on which he so informs the court, the FCA and, if the insurer is a PRA-authorised person, the PRA.

• (12) An appointed officer commits an offence if he fails without reasonable excuse to comply with an applicable requirement under this regulation, and is liable on summary conviction to a fine not exceeding level 3 on the standard scale.

• (13) For the purposes of this regulation—

• (a) “appointed officer” means—

• (i) in the case of a relevant order falling within paragraph (3)(a)(i) or a relevant appointment falling within paragraph (3)(b)(i), the administrator,