Prudential PLC and Rothesay Holdco UK Ltd. are appealing a court ruling that prevented a £12 billion bulk annuity transfer between the two companies.
The High Court of England and Wales opted not to approve the transfer to Rothesay from Prudential in an Aug. 16 judgement, but gave both life insurers the option to appeal.
Rothesay in an emailed statement said it lodged its appeal with the Court of Appeal on Sept. 27 on the grounds that the High Court's judgment "contains material errors of law." The appeal itself is not likely to be heard by the court for "several months," Rothesay said.
Prudential did not issue a statement on the matter but a spokesman for M&G Prudential, the group's U.K. arm, confirmed via email that the company is appealing the High Court ruling. M&G Prudential is being spun off into a separately listed entity.
In its Aug. 16 ruling, the High Court said it had not approved the transfer partly because of the big difference between Prudential, which was established in 1848, and the relatively new Rothesay, which launched in 2007, and because of a reinsurance agreement between the two companies.
As part of the deal, Rothesay reinsured the annuity liabilities to be transferred so Prudential did not have to wait for the full transfer to get the economic benefits of the transaction. Justice Richard Snowden of the High Court of England and Wales in his ruling said the reinsurance arrangement achieved Prudential's commercial objective of releasing regulatory capital to support the demerger of M&G Prudential.
