National Mutual Life Association of Australasia Limited, the application of National Mutual Life Association of Australasia Limited and AMP Life Limited (No 2) [2016] FCA 1591

GLEESON J: 1 The applicants applied under s 193 of the Life Insurance Act 1995 (Cth) ("Act") for an order under s 194 of the Act confirming a scheme prepared in accordance with Pt 9 of the Act to give effect to the transfer to the second applicant ("AMP Life") of the life insurance business of the first applicant ("NMLA") in Australia and New Zealand ("scheme"). 2 By s 193(3) of the Act, the Australian Prudential Regulation Authority ("APRA") was entitled to be heard on the application. At the hearing, Mr Claxton appeared on behalf of APRA and made submissions about APRA's process of reaching satisfaction concerning the scheme. 3 No party appeared at the hearing in opposition to the application. 4 After considering written submissions, hearing oral submissions on 7 December 2016 and considering supplementary evidence and submissions, I made an order confirming the scheme on 12 December 2016 together with ancillary orders. 5 These are my reasons for confirming the scheme.

BACKGROUND 6 On 5 October 2016, I made orders which dispensed with the requirement for distribution of the approved summary of the scheme, pursuant to s 191(2)(c) of the Act: National Mutual Life Association of Australasia Limited, the application of National Mutual Life Association of Australasia Limited and AMP Life Limited [2016] FCA 1219. That earlier judgment records the following matters about background to the scheme, and the scheme itself at [6] - [23]: [6] On 30 March 2011, AMP Limited ("AMP") merged with AXA Asia Pacific Holdings Limited under a scheme of arrangement under s 411 of the Corporations Act 2001 (Cth). As a consequence, NMLA became a wholly-owned subsidiary of AMP, and in turn, a related body corporate of AMP Life. NMLA and AMP Life are part of the AMP group of companies ("AMP Group"), the ultimate parent company of which is AMP. Under the existing arrangements, the boards of NMLA and AMP Life are composed of the same directors and meet concurrently. [7] Both NMLA and AMP Life are: (1) incorporated in Australia (on 12 August 1869 and 2 January 1998, respectively); (2) unlisted Australian public companies; (3) registered pursuant to the Act to carry on life insurance business in Australia; (4) licensed under the Insurance (Prudential Supervision) Act 2010 (NZ) to conduct insurance business in New Zealand; and (5) wholly owned subsidiaries of AMP. AMP [8] AMP is a top 20 ASX-listed company with approximately $140 billion in assets, and is an authorised non-operating holding company under s 28A of the Act. AMP and its subsidiaries employ approximately 5,500 people in Australia and New Zealand and has around 4 million customer relationships. NMLA [9] NMLA writes a range of life insurance products, including life risk insurance products and investment life insurance products. In particular, NMLA issues the following types of group and retail risk insurance products in both Australia and New Zealand: (1) income protection; (2) death; (3) terminal illness; (4) total and permanent disability; (5) trauma; and (6) disability income. [10] NMLA has six statutory funds which are structured as follows: Statutory fund Class of business Benefit type Key product groups Country 1 Ordinary and superannuation Participating and Non-Participating Wealth Protection, Annuities, Conventional, Investment Account, Investment Linked NZ Australia and New Zealand 2 Superannuation Non-Participating Investment Linked Australia 3 Ordinary Non-Participating Wealth Protection Taiwan 4 Superannuation Participating and Non-Participating Wealth Protection, Conventional, Investment Account Australia 5 Ordinary Non-Participating Investment Linked Australia 6 Superannuation Non-Participating Deferred Lifetime Annuity Australia

[11] As at 2 September 2016, there were approximately 350,706 NMLA policy owners in Australia and New Zealand (approximately 231,543 in Australia and approximately 119,163 in New Zealand). [12] NMLA also has a shareholders' fund ("NMLA shareholders' fund") which is maintained separately from its statutory funds. No life insurance business is conducted from the NMLA shareholders' fund. AMP Life [13] AMP Life currently writes a range of life insurance products, including risk insurance and life investment products. AMP Life also has some in-force participating capital guaranteed business. [14] AMP Life has three statutory funds which are structured as follows: Statutory fund Class of business Benefit type Key product groups Country 1 Ordinary Participating and Non-Participating Wealth Protection, Annuities, Conventional, Investment Account, Investment Linked Australia and New Zealand 2 Superannuation Non-Participating Investment Linked Australia 3 Ordinary Non-Participating Ordinary Investment Linked Australia

[15] As at 15 June 2016, there were approximately 500,236 AMP Life policy owners (approximately 337,741 in Australia and approximately 162,495 in New Zealand). [16] AMP Life also has a shareholders' fund ("AMP Life shareholders' fund") which is maintained separately from its statutory funds. No life insurance business is conducted from the AMP Life shareholders' fund. New Zealand life insurance business [17] The New Zealand life insurance businesses of both NMLA and AMP Life are conducted through branches forming part of statutory funds established and maintained by NMLA and AMP Life, respectively, pursuant to the requirements of the Act. OVERVIEW OF SCHEME [18] NMLA will transfer its Australian and New Zealand life insurance business ("business") to AMP Life, which will involve the transfer of: (1) all of NMLA's contracts of life insurance referable to the business; (2) all of NMLA's liabilities under the contracts of life insurance referable to the business; and (3) certain business assets and liabilities of NMLA. [19] In substance, the scheme provides for the transfer of policies from one insurer within a group to another within the same group. Transfer agreement [20] On 20 September 2016, NMLA and AMP Life entered into a conditional transfer agreement by which AMP Life has agreed with NMLA to assume its liabilities in respect of contracts of insurance issued, entered into or assumed by NMLA in the course of its life insurance business in Australia and New Zealand ("transfer agreement"). The terms of the transfer agreement form part of the scheme. [21] It is not intended that the entirety of the NMLA portfolio be subject to the scheme. The life insurance business carried on by NMLA in Taiwan, which is a closed book, will not be transferred to AMP Life. This business is referable to NMLA's statutory fund no. 3. [22] The transfer agreement is conditional on: (1) confirmation of the scheme by this Court under Pt 9 of the Act; (2) approval from the New Zealand regulator, the Reserve Bank of New Zealand, in accordance with ss 44 and 53(2) of the Insurance (Prudential Supervision) Act 2010 (NZ); and (3) approval from the Treasurer of the Commonwealth of Australia (or other responsible Minister) in accordance with s 41 of the Insurance Acquisitions and Takeovers Act 1991 (Cth) ("IATA") to the effect that there is no objection to AMP Life acquiring the life insurance business of NMLA in Australia in New Zealand. [23] The Commonwealth Minister for Revenue and Financial Services has given the applicants written advice that she has made a "go-ahead decision" under s 41 of the IATA conditional on the Court's confirmation and the Reserve Bank of New Zealand approval … 7 By letter dated 7 December 2016, the Reserve Bank of New Zealand stated that the application under s 44 of the Insurance (Prudential Supervision) Act 2010 (NZ) has been assessed in accordance with ss 44 to 53 of that Act and, pursuant to s 49(1) of that Act, the Reserve Bank of New Zealand approves the transfer in accordance with the transfer agreement.

Scheme document 8 The scheme document is annexure A to the orders made on 12 December 2016.

Actuarial evidence 9 The scheme is based on an actuarial report dated 8 August 2016 ("appointed actuary's report") prepared by Anton Kapel, the appointed actuary of both of the applicants. Mr Kapel swore two affidavits, on 21 September 2016 and 30 November 2016. In the 21 September 2016 affidavit, Mr Kapel verified his belief in the truth and accuracy of the facts set out in in his appointed actuary's report and stated that he continued to hold the opinions expressed in that report. In the 30 November 2016 affidavit, Mr Kapel provided updates as to the capital positions of the applicants, which were first provided in the appointed actuary's report, and re-iterated his opinions stated in the appointed actuary's report in the light of information received and changed circumstances since the appointed actuary's report was prepared. 10 The applicants also engaged an independent actuary, John Nicholls of Willis Towers Watson, to prepare an independent actuarial report on the implications of the scheme for policy owners, based on the scheme document, the transfer agreement, and the information set out in Mr Kapel's report. In his report, Mr Nicholls expressed substantially the same opinions as Mr Kapel on the scheme. Mr Nicholls swore two affidavits, on 21 September 2016 and 1 December 2016. In the first affidavit, Mr Nicholls verified the truth and accuracy of the opinions expressed in his independent actuarial report. In the 1 December 2016 affidavit, Mr Nicholls confirmed the opinions stated in the independent actuarial report, taking into account information received and changed circumstances since that report was prepared. 11 The actuaries have considered the effect of the scheme on existing AMP Life policy owners, NMLA policy owners whose policies are proposed to be transferred to AMP Life under the scheme and NMLA policy owners whose policies are to remain with NMLA (being the policies referable to NMLA Statutory Fund No. 3). The actuaries provided comments and opinions on the effect of the scheme on each of these groups of policy owners' contractual benefits and other rights, their reasonable benefit expectations and their benefit security. 12 Both Mr Kapel and Mr Nicholls also confirmed that, based on a review of feedback from policy owners and updated actuarial information, nothing has come to their attention which affects the comments and conclusions expressed in their reports.

Appointed actuary's evidence 13 The applicants prepared the following summary of Mr Kapel's evidence, which I accept as accurate: Capital positions 2.1 The capital positions of each AMP Life and NMLA before and after the Scheme as at 30 June 2016 has been set out in the Appointed Actuary's Report and is summarised in the tables below: Table 1: AMP Life Capital Position as at 30 June 2016 Before the Scheme $m SF1 SF2 SF3 S/h Total AMPL Fund Par1 Non-Par Non-Par Non-Par Non-Par Capital Base 808 551 246 7 331 1,942 1,358 PCA 696 202 2 12 911 Surplus above PCA 662 45 5 319 1,031 PCA Coverage Ratio % 195% 122% 424% >1000% 213% After the Scheme $m SF1 SF2 SF3 S/h Total AMPL Fund Par Non-Par Non-Par Non-Par Non-Par Capital Base 1,065 1,017 281 13 430 2,806 2,082 PCA 1,019 228 3 11 1,261 Surplus above PCA 1,063 53 10 419 1,545 PCA Coverage Ratio % 204% 123% 460% >1000% 223%

[1 'Par' is an abbreviation for 'participating' and 'Non-Par' is an abbreviation for 'non-participating' as these terms are defined in Section 15 of the Life Act.] Table 2: NMLA Capital Position as at 30 June 2016 Before the Scheme $m SF1, SF2, SF4, SF5 & SF6 SF3 S/h Total NMLA Fund Par and Non-Par Non-Par Non-Par Capital Base 729 17 142 889 PCA 419 0 4 423 Surplus above PCA 312 16 138 466 PCA Coverage Ratio % 174% >1000% >1000% 210% After the Scheme $m SF1, SF2, SF4, SF5 & SF6 no longer in NMLA as they transfer to AMP Life Statutory Funds SF3 S/h Total NMLA Fund Non-Par Non-Par Capital Base 17 42 58 PCA 0 10 10 Surplus above PCA 16 32 48 PCA Coverage Ratio % >1000% 422% 585%

2.2 The 'Prescribed Capital Amount' (PCA) in the tables is the amount set by APRA as the minimum prudential amount of capital that should be held by a life insurance company in a statutory or shareholder fund as applicable. 2.3 Tables 1 and 2 show that if the Scheme had taken effect as at 30 June 2016, each of the AMP Life Statutory Funds, the AMP Life Shareholder Fund, Statutory Fund No. 3 and the NMLA Shareholder Fund would have had a PCA Coverage Ratio greater than 100%, which means that each of these funds would have met APRA's prudential capital requirements. In addition Mr Kapel noted that they would have had sufficient surplus to meet 'Target Surplus'. 2.4 On 28 October 2016, AMP Limited provided a market update on its Australian wealth protection business which included commentary on a trend of deteriorating experience, an expectation that best estimate assumptions will be strengthened, and the announcement of a quota share reinsurance agreement between AMP Life and Munich Re. Mr Kapel has noted that while not specifically detailed in the market update, AMP Limited injected $150m of capital into NMLA on 28 October 2016 in anticipation of the assumption changes. The injection initially was made into the NMLA Shareholder Fund, and a delegation of authority was approved by the NMLA Board on 27 October 2016 to allow the Managing Director of NMLA to approve appropriate capital transfers from the Shareholder Fund to the Statutory Funds to enable each fund to meet its Target Surplus requirement allowing for the anticipated assumption changes. 2.5 Mr Kapel is of the opinion that the further information outlined in the market update does not have any bearing on how the Scheme might impact the contractual benefits and other rights or reasonable benefit expectations of policy owners of AMP Life and NMLA. 2.6 Mr Kapel considered the subsequent events as outlined above and produced 'pro-forma' capital positions for AMP Life and NMLA as at 30 September 2016 by adjusting the capital positions to allow for the impacts of those events, assuming the Scheme takes effect as at that date. The 'pro-forma' capital positions for each of AMP Life and NMLA before and after the Scheme as at 30 September 2016 (as adjusted to allow for the impacts of the significant subsequent events) is summarised in the following tables. Table 3: AMP Life Pro-Forma Capital Position as at 30 September 2016 Before the Scheme $m SF1 SF2 SF3 S/h Total AMPL Fund Par Non-Par Non-Par Non-Par Non-Par Capital Base 832 499 252 7 681 2,271 1,331 PCA 692 209 2 13 915 Surplus above PCA 639 43 5 668 1,356 PCA Coverage Ratio % 192% 121% 415% >1000% 248% After the Scheme $m SF1 SF2 SF3 S/h Total AMPL Fund Par Non-Par Non-Par Non-Par Non-Par Capital Base 1,100 1,066 285 13 780 3,244 2,166 PCA 1,107 233 3 12 1,355 Surplus above PCA 1,059 52 10 768 1,889 PCA Coverage Ratio % 196% 122% 454% >1000% 239%

Table 4: NMLA Pro-Forma Capital Position as at 30 September 2016 Before the Scheme $m SF1, SF2, SF4, SF5 & SF6 SF3 S/h Total NMLA Fund Non-Par Non-Par Capital Base 807 16 128 953 PCA 485 0 4 490 Surplus above PCA 322 16 124 463 PCA Coverage Ratio % 166% >1000% >1000% 194% After the Scheme $m SF1, SF2, SF4, SF5 & SF6 no longer in NMLA as they transfer to AMP Life Statutory Funds SF3 S/h Total NMLA Fund Non-Par Non-Par Capital Base 16 28 45 PCA 0 10 10 Surplus above PCA 16 18 35 PCA Coverage Ratio % >1000% 283% 446%

2.7 Tables 3 and 4 show that if the Scheme had taken effect as at 30 September 2016, allowing for the subsequent events as outlined above, each of the AMP Life Statutory Funds, the AMP Life Shareholder Fund, NMLA Statutory Fund No. 3 and the NMLA Shareholder Fund would have had a PCA Coverage Ratio greater than 100%. In addition Mr Kapel noted that they would have had sufficient surplus to meet Target Surplus. 2.8 In its 28 October 2016 market announcement, AMP Limited noted that the reinsurance arrangement had the potential to release up to $500m of capital from AMP Life given the improvement in the capital position arising from the reinsurance arrangement. Whilst APRA has given approval to allow a capital return, there are currently no plans to make any such capital return prior to the Scheme taking effect. Nevertheless, Mr Kapel has confirmed that the PCA Coverage Ratio for AMP Life would remain greater than 100% even if such a capital return were made prior to the Scheme taking effect, based on the 30 September 2016 pro-forma results. Existing AMP Life Policy Owners 2.9 Mr Kapel has concluded that: (a) there will be no effect on the contractual benefits or other rights of Existing AMP Life Policy Owners arising from the Scheme. Mr Kapel has reached this conclusion as under the Scheme, there are no changes to the contractual policy terms or conditions for any existing AMP Life Policy owners; (b) there will be no adverse effect on the reasonable benefit expectations of Existing AMP Life Policy Owners arising from the Scheme; and (c) each of the Statutory Funds of AMP Life, and AMP Life as a whole, will be in a sound financial position immediately following the Scheme taking effect and there will be no adverse effects on the benefit security of Existing AMP Life Policy Owners as a result of the Scheme in any material respect. Transferring NMLA Policy Owners 2.10 Mr Kapel has concluded that: (a) there will be no effect on the contractual benefits or other rights of the Transferring NMLA Policy Owners arising from the Scheme. Mr Kapel has reached this conclusions as the only amendments proposed to the policies of Transferring NMLA Policy Owners are a procedural change to reflect the issuer of the policies and a change to the respective Statutory Fund to which those policies will be referable; (b) there will be no adverse effect on the reasonable benefit expectations of Transferring NMLA Policy Owners arising from the Scheme; and (c) each of the Statutory Funds of AMP Life to which Transferring NMLA Policy Owners will be transferred, and AMP Life as a whole, will be in a sound financial position immediately following the Scheme taking effect and there will be no adverse effects on the benefit security of Transferring NMLA Policy Owners in any material respect. Remaining NMLA Policy Owners 2.11 Mr Kapel has concluded that: (a) there will be no effect on the contractual benefits or other rights of Remaining NMLA Policy Owners in NMLA Statutory Fund No. 3 arising from the Scheme. Mr Kapel has reached this conclusion on the basis that no amendments are proposed to the policies of Remaining NMLA Policy Owners and that existing guarantees under the policies of the Remaining NMLA Policy Owners will continue to be provided by NMLA; (b) there will be no adverse effect on the reasonable benefit expectations of Remaining NMLA Policy Owners in Statutory Fund No. 3 arising from the Scheme; and (c) NMLA Statutory Fund No. 3, and NMLA as a whole, will be in a sound financial position immediately following the Scheme taking effect and there will be no adverse effects on the benefit security of Remaining NMLA Policy Owners in Statutory Fund No. 3 as a result of the Scheme in any material respect. (footnotes omitted, except where indicated otherwise)

Independent actuary's report 14 The applicants prepared the following summary of Mr Nicholl's evidence, which I accept as accurate: 3.1 Mr Nicholls has concluded that: (a) the Scheme will have no impact on the contractual benefits or other rights of the policy owners of NMLA and AMP Life. Mr Nicholls reached this conclusion on the basis that under the Scheme, there are no proposed changes to policy terms and conditions for any of NMLA's or AMP Life's business and AMP Life will honour undertakings given by NMLA at the time of its demutualisation which apply to NMLA policy owners which transfer to AMP Life under the Scheme; (b) the Scheme will not adversely affect the reasonable benefit expectations of either NMLA's or AMP Life's participating policy owners on the basis that there are no changes proposed under the Scheme to contract terms, benefits, premium rates, investment strategy, policy administration systems and other matters associated with the business; (c) the Scheme will not adversely affect the reasonable benefit expectations of the policy owners of other lines of business, including the Remaining NMLA Policy Owners; and (d) each of the Statutory Funds of NMLA and AMP Life, and NMLA and AMP Life each as a whole, will be in a sound financial position immediately following the Scheme taking effect, and the proposed Scheme will not adversely affect the security of NMLA's or AMP Life's policy owners' benefits in any material respect. (footnotes omitted)

Compliance with procedural requirements for scheme confirmation 15 Affidavits of the following persons were read as evidence of compliance with the procedural requirements for confirmation of the scheme: (1) Dean Thomas, Director Product Strategy and Services of AMP Services Limited. Mr Thomas has overall accountability and authority for the implementation of the scheme; (2) Pamela Madafiglio, partner of Minter Ellison and solicitor on the record for the applicants; (3) James Stanton, solicitor with Minter Ellison located at the firm's Sydney office; (4) Cassandra Heilbron, solicitor with Minter Ellison located at the firm's Brisbane office; (5) Danielle Snell, solicitor with Minter Ellison located at the firm's Melbourne office; (6) Caroline Hickey, solicitor with Minter Ellison located at the firm's Canberra office; (7) Jennifer Claire Solliss, solicitor with Minter Ellison located at the firm's Perth office; (8) Lhia-Clare Davis, solicitor with Minter Ellison located at the firm's Darwin office; (9) Paul Ian Doecke, solicitor with Minter Ellison located at the firm's Adelaide office; (10) Lisa Maree Rankin, solicitor with Minter Ellison located at the firm's Hobart office; (11) Timothy George Rawle Williams, partner of the law firm Chapman Tripp, based in Auckland, New Zealand; (12) Andrew Nicholas Crosbie Woods, partner of the law firm Chapman Tripp, based in Christchurch, New Zealand; (13) Michael William Woodbury, partner of the law firm Chapman Tripp, based in Wellington, New Zealand; and (14) Daniel Trent Bunoza, solicitor with Minter Ellison located at the firm's Sydney office and assisting Ms Madafiglio.

LEGAL FRAMEWORK 16 The statutory regime for transfers and amalgamations of life insurance businesses is found in Pt 9 of the Act. Formal and procedural requirements are also provided for in the Life Insurance Regulations 1995 (Cth) ("Regulations"). 17 Section 190(1) of the Act provides that no part of the life insurance business of a life company may be transferred to another life company or amalgamated with the business of another life company except under a scheme confirmed by the Court. 18 By s 190(3) of the Act, a scheme must set out: (a) the terms of the agreement or deed under which the proposed transfer or amalgamation is to be carried out; and (b) particulars of any other agreement necessary to give effect to the scheme. 19 Section 191(2) of the Act provides: (2) An application for a confirmation of a scheme may not be made unless: (a) a copy of the scheme and any actuarial report on which the scheme is based have been given to APRA in accordance with the regulations; and (b) notice of intention to make the application has been published by the applicant in accordance with the regulations; and (c) an approved summary of the scheme has been given to every affected policy owner. 20 Section 191(5) empowers the Court to dispense with the need for compliance with para (2)(c) in relation to a particular scheme if it is satisfied that because of the nature of the scheme or the circumstances attending its preparation, it is not necessary that the paragraph be complied with. 21 Regulation 9.01 of the Regulations sets out the requirements in relation to documents to be lodged with APRA pursuant to s 191(2)(a). A copy of the scheme and each actuarial report on which the scheme is based must be given to APRA before a notice of intention to apply to the Court for confirmation is published in accordance with reg 9.02. 22 Regulation 9.02 sets out formal requirements in relation to a notice of intention published pursuant to s 191(2)(b). Essentially, reg 9.02 provides that: (1) a notice of intention to make the application for confirmation must be published in a form approved by APRA in the Commonwealth of Australia Government Notices Gazette and in at least one newspaper, approved by APRA, circulating in each State and Territory in which an affected policy owner is registered; (2) a notice of intention must state the place and times and period in which an affected policy owner may obtain a copy of the scheme; (3) the notice must be published before the scheme is released for public inspection under reg 9.02(4); and (4) a copy of the scheme must be open for public inspection from 9.00 am until 5.00 pm every day (except weekends and public holidays) for at least 15 days in an office of the applicant or another location approved by APRA in each State and Territory in which there is a register of life policies that includes the relevant policy of an affected policy owner. 23 Section 192 of the Act provides that where a copy of the scheme has been given to APRA for the purpose of para 191(2)(a), APRA may arrange for an independent actuary to make a written report on the scheme. APRA has elected not to obtain and independent actuarial report in the present case. 24 Section 193 of the Act provides: (1) Any of the companies affected by a scheme may apply to the Court for confirmation of the scheme. (2) An application for confirmation must be made in accordance with the regulations. (3) APRA is entitled to be heard on an application. 25 Regulation 9.03 provides that an application to the Court for confirmation of a scheme may be made no earlier than whichever is the later of: (a) the day after the day on which the period referred to in reg 9.02(4) relating to public inspection of scheme document ends; or (b) 15 days after the approved summary has been given to every affected policy owner (unless the Court dispenses with the need for compliance with s 191(2)(c) of the Act). 26 Under s 194 of the Act, the Court may: (1) confirm a scheme without modification; (2) confirm the scheme subject to such modifications as it thinks appropriate; or (3) refuse to confirm the scheme. 27 Section 194(2) provides relevantly: (2) In deciding whether to confirm a scheme (with or without modifications), the Court must have regard to: (a) the interests of the policy owners of a company affected by the scheme; and … (c) any other matter the Court considers relevant. 28 Section 195 provides for the effect of confirmation by the Court. When a scheme is confirmed, it becomes binding on all persons and it has effect in spite of anything in the constitution of any company affected by the scheme.

Discretion to confirm scheme 29 The Court's choice of which of the three powers conferred by s 194 to exercise must be made in light of the object of the Act which, as expressed in s 3(1) of the Act, is: … to protect the interest of the owners and prospective owners of life insurance policies in a manner consistent with the continued development of a viable, competitive and innovative life insurance industry. 30 There are two aspects to the protection of the interests of policy owners: (1) first, the procedural aspects in which the Court is concerned to see that the process undertaken has been properly executed in accordance with the requirements of the Act and the Regulations; and (2) secondly, there is a substantive aspect in which the Court is concerned to see that the scheme will not be prejudicial to the interests of policy owners and that the policy owners are properly safeguarded; that is, there is not likely to be any material detriment to policy owners affected by the scheme. 31 The question of whether policy owners would be adversely affected by the scheme is largely actuarial and involves the comparison of their contractual and other rights, their benefit security and their reasonable benefit expectations without the scheme being implemented, with what their position would be if the scheme were implemented. 32 In MDU Australian Insurance Company Pty Limited, in the matter of MDU Australian Insurance Company Pty Limited [2008] FCA 490, Emmett J identified, at [7], "[t]he critical consideration" as being whether relevant policyholders would be detrimentally affected by the implementation of the scheme. In QBE Insurance (Australia) Ltd, in the matter of Division 3A of Part III of the Insurance Act 1973 (Cth) & QBE Insurance (Australia) Ltd (No 2) [2016] FCA 288; (2016) 19 ANZ Insurance Cases 62-100 at [25], Allsop CJ observed that "the Court will ask whether the implementation of the scheme will materially detrimentally affect any of the relevant policyholders" (citing Lindgren J in Re Westport Insurance Corporation (No 2) [2009] FCA 1598; (2009) 181 FCR 530 at [32]).

Actuarial evidence 33 The actuarial evidence, summarised above, supports a conclusion that the scheme will not be prejudicial to the interests of any of the existing AMP Life policy owners, the transferring NMLA policy owners and the remaining NMLA policy owners. In the actuaries' opinions, there is no basis for thinking that there is likely to be any material detriment to policy owners affected by the scheme.

Views of APRA and affected policyholders 34 On behalf of APRA, Mr Claxton expressed the view that APRA had conducted a rigorous process of examination of the scheme including analysis of the scheme documentation and the actuarial reports, and meetings with both the appointed actuary and the independent actuary. APRA was satisfied that each of the affected statutory funds will be in a very good position if the scheme were to be confirmed by the Court. 35 The applicants' evidence was that, as at 27 November 2016, they had received the following enquiries or requests from policy owners and financial advisers by phone, email, in person at the physical inspection locations or the online feedback facility: (1) 18 requests to receive a copies of documents relating to the scheme; (2) 1,358 calls to the call centre; (3) 373 emails sent to the dedicated email addresses; (4) 6 enquiries through online feedback; and (5) 58 letters posted to the applicants' mailing addresses in response to correspondence received in relation to the scheme. 36 Six policy owners informed the applicants that they proposed to attend the confirmation hearing, but none attended court on 7 December 2016. 37 The applicants submitted that the objections or complaints raised by policy owners were either not relevant to the scheme or not material to the determination that the Court was asked to make. Accordingly, the applicants submitted that the objections or complaints did not give rise to any substantive basis that should cause the Court to refuse to confirm the scheme. 38 Mr Claxton informed the Court that APRA was also satisfied that policyholders were given a sufficient opportunity to have a say about the proposed scheme. APRA staff considered all of the material recording complaints about the proposed scheme and there was nothing in that material that caused APRA to change its position in relation to the confirmation of the scheme. 39 In his second affidavit, Mr Kapel gave evidence that he had reviewed the material recording complaints and objections from policyholders and there was nothing in that material which affected the opinions, comments and conclusions expressed in his actuarial report. Mr Nicholls gave similar evidence in his second affidavit. 40 The applicants were represented by senior legal practitioners, in particular, Mr Jackman SC and Ms Madafiglio. In the light of the evidence of the actuaries and APRA's submissions, and in the absence of any appearance at court from any policyholder who might have wished to object to confirmation of the scheme, I accept the submissions made on behalf of the applicants set out at [37] above.

Compliance with s 190(3) 41 Section 190(3) of the Act provides that a scheme must set out: (a) the terms of the agreement or deed under which the proposed transfer or amalgamation is to be carried out; and (b) particulars of any other agreement necessary to give effect to the scheme. 42 The agreement under which the proposed transfer is to be carried out is the transfer agreement. 43 On behalf of the applicants, Mr Jackman SC submitted that s 190(3)(a) was satisfied by cl 2(b) of the scheme document, which provides that the terms of the transfer agreement form part of the scheme. The transfer agreement was not physically attached to the scheme. 44 The Macquarie Dictionary Online defines "set out" to mean, relevantly: (a) to arrange; or (b) to state or explain methodically. 45 There is nothing in the legislation which indicates to me that the words "set out" should not be given their ordinary and current meaning, as set out above: cf. Pearce DC and Geddes RS, Statutory Interpretation in Australia, (8th ed, LexisNexis Butterworths, 2014) at 154-156. The scheme document is a document which a court is empowered to "confirm" under s 194(1). Confirmation has significant legal consequences. Nothing in the legislation suggests that the exercise of the power of confirmation would be assisted by an interpretation of "set out" that would permit less information to be included (physically) in the scheme than would be included if the ordinary and current meaning is applied. 46 In addition, the applicants provided a table which identified various terms of the transfer agreement that are expressly reflected in the scheme document. 47 Although not satisfied that cl 2(b) of the scheme document satisfied the requirements of s 190(3)(a), I was satisfied that other provisions of the scheme document explained methodically the terms of the transfer agreement sufficiently for the purpose of s 190(3)(a). I reached that satisfaction by considering the scheme document together with the transfer agreement and a table prepared by the applicants' lawyers which compared the terms of the scheme document with the terms of the transfer agreement.

Compliance with s 191(2)(a) and reg 9.01 48 By s 191(2)(a), an application for confirmation of a scheme may not be made unless a copy of the scheme and any actuarial report on which the scheme is based has been given to APRA in accordance with the regulations. 49 Regulation 9.01 provides: For the purposes of paragraph 191(2)(a) of the Act, a copy of: (a) the scheme; and (b) each actuarial report on which the scheme is based; must be given to APRA before a notice of intention to apply to the Court for confirmation of the scheme is published in accordance with regulation 9.02. 50 The actuarial report on which the scheme is based is the appointed actuary's report. 51 The scheme document and the appointed actuary's report were provided to APRA in August 2016, as well as the independent actuary's report, before the publication of the notice of intention.

Compliance with s 191(2)(b) and reg 9.02 52 By s 191(2)(b), an application for confirmation of a scheme may not be made unless notice of intention to make the application has been published by the applicant in accordance with the regulations. The relevant regulation is 9.02, summarised above. 53 By letter dated 13 September 2016, APRA approved the form of notice of intention to make the application for confirmation of the scheme. The form of the notice satisfies the requirements of reg 9.02(2). 54 The notice of intention was published in the Commonwealth of Australia Government Notices Gazette on 7 October 2016. 55 For reg 9.02(1)(b), APRA approved the list of newspapers submitted by the applicants in their 8 August 2016 letter to APRA. 56 Mr Thomas gave evidence that, in accordance with reg 9.02(4), from 10 October 2016 up to and including 2 November 2016, the scheme documents were made available for public inspection between 9:00 am and 5:00 pm, Monday to Friday at each of the public inspection locations specified in the notice of intention. Those locations were offices of Minter Ellison in each of the capital cities of the states and territories of Australia, except for Tasmania. In Tasmania, the location was the office of Dobson Mitchell Allport. In New Zealand, the relevant locations were offices of Chapman Tripp in Auckland, Wellington and Christchurch. As APRA approved the notice of intention, I infer that APRA also approved those locations as the locations at which the scheme documents were made available for public inspection for the purposes of reg 9.02(4)(b). 57 These facts demonstrate that the notice of intention was published before the scheme is released for public inspection under reg 9.02(4), as required by reg 9.02(3). 58 Accordingly, I am satisfied that there has been compliance with reg 9.02.

Regulation 9.03 59 Regulation 9.03 provides relevantly: (1) For the purposes of subsection 193(2) of the Act, an application to the Court for confirmation of a scheme may be made no earlier than whichever is the later of: (a) the day after the day on which the period referred to in subregulation 9.02(4) ends; or (b) unless the Court dispenses with the need for compliance with paragraph 191(2)(c) of the Act - 15 days after the approved summary of the scheme has been given to every affected policy owner under that paragraph. 60 As appears above, the public inspection period under reg 9.02(4) ended on 2 November 2016. 61 Regulation 9.03(1)(b) does not apply because the Court dispensed with the need for compliance with s 191(2)(c) of the Act. 62 Accordingly, the application for confirmation of the scheme did not contravene reg 9.03.

Compliance with 5 October 2016 orders 63 On 5 October 2016, I ordered that the requirements of s 191(2)(c) of the Act be dispensed with in relation to the scheme provided that the applicants comply with order 3 made on that day. Order 3 set out a detailed notification program addressing the following matters: (1) Publication (orders 3(a) to (c)); (2) Webpages and email (orders 3(d) to (g)); (3) Mail out (orders 3(h) to (k)); (4) Public inspection (order 3(l)); (5) Call centre (orders 3(m) and (n)); and (6) Other notification (orders 3(o) to (q)).

Publication (orders 3(a) to (c)) 64 Order 3(a) required the applicants, on or shortly after 7 October 2016, to publish the notice of intention to make the application to the Court for confirmation of the scheme, in terms of annexure A to the originating application, in the Commonwealth Government Notices Gazette. 65 The applicants complied with order 3(a) by the publication of the notice of intention in the Commonwealth of Australia Government Notices Gazette on 7 October 2016. 66 Order 3(b) required the applicants, on or shortly after 8 October 2016, to publish the notice of intention in the newspapers approved by APRA as listed in annexure B to the originating application. 67 Order 3(c) required the applicants, on or shortly after 8 October 2016, to publish an advertisement about the scheme substantially in the form of annexure C to the originating application in the front section of the same newspapers referred in order 3(b). 68 Mr Thomas's 30 November 2016 affidavit verified compliance with orders 3(b) and 3(c) by publication of the advertisements and the notice of intention on 8 October 2016.

Webpages and email (orders 3(d) to (g)); 69 Order 3(d) required the applicants, from on or shortly after 8 October 2016 (but not before the notice of intention had been published in both the Commonwealth of Australia Government Notices Gazette and the relevant newspapers) up to and including the effective date as defined in the scheme documents, to make a copy of the following documents available for viewing and download on the dedicated webpages www.amp.com.au/transfer and www.amp.co.nz/transfernz: (1) the notice of intention; (2) the scheme document in the form of annexure E to the application; (3) the scheme summary; (4) the appointed actuary's report dated 8 August 2016; and (5) the independent actuarial report dated 2 September 2016. 70 The "effective date" is defined in the scheme document to mean 1 January 2017 or such other date that this Court may specify as the commencement date of the scheme, should the scheme be confirmed by the Court. 71 Mr Thomas gave evidence to verify compliance with order 3(d) in his 30 November 2016 affidavit. 72 Order 3(e) required the applicants, from on or shortly after 8 October 2016 up to and including the effective date, to include links to the dedicated webpages www.amp.com.au/transfer and www.amp.co.nz/transfernz webpages on: (1) the websites of AMP Group: www.amp.com.au and amp.co.nz; and (2) "My AMP" (an online customer portal used by the applicants' customers). 73 Mr Thomas gave evidence to verify compliance with order 3(e) in his 30 November 2016 affidavit. 74 In addition, Mr Thomas gave the following evidence: In addition to the above links, the Applicants also included links to the Webpages in the form of a 'tile' on each of the Websites, being an image or banner in a prominent position on the Websites. The tile on the Australian Website (www.amp.com.au) was available for a period of 3 weeks between 5 October 2016 and 31 October 2016. The tile on the New Zealand Website was available between 8 October 2016 and 14 November 2016. 75 By order 3(f), the applicants were required, from on or shortly after 8 October 2016 up to and including the date of the confirmation hearing of the scheme, to establish dedicated email addresses in both Australia and New Zealand as specified in the notice of intention to receive enquiries about the scheme. 76 Mr Thomas gave evidence to verify compliance with order 3(f). As at 27 November 2016, 373 emails had been sent to the dedicated email addresses. 77 By order 3(g), the applicants were required, from on or shortly after 8 October 2016 up to and including the date of the confirmation hearing, to establish an online feedback facility on the webpage www.amp.co.nz/transfernz to receive enquiries about the scheme. 78 Mr Thomas gave evidence to verify compliance with order 3(g). As at 27 November 2016, six online feedback forms had been submitted through the facility.

Mail out (orders 3(h) to (k)) 79 Order 3(h) required the applicants, between 10 October 2016 and 12 October 2016 (or shortly after), to send, by regular pre-paid post, the scheme summary to all NMLA policy owners who are owners of policies issued by NMLA in Australia and New Zealand up to and including 5 October 2016, except for policy owners for whom NMLA has no record of a current mailing address. 80 Mr Thomas gave evidence to verify compliance with order 3(h), by mail-outs between 10 and 13 October 2016. In Australia a total of 216,234 "mail out packs", comprising the scheme summary and a covering letter, were sent. In New Zealand, 102,541 mail out packs were sent but this figure appears to include some packs sent to former addresses of policyholders in cases where there was no record of a current mailing address. 81 Order 3(i) required the applicants, for persons who become NMLA policy owners in Australia on and from 6 October 2016 up to and including 25 days prior to the date of the confirmation hearing, to send, by regular pre-paid post, the scheme summary in their welcome pack to those policy owners, in accordance with NMLA's normal operating procedures, within two business days (or shortly after) of NMLA accepting that policy owner's application for cover. 82 For persons who become NMLA policy owners in New Zealand on and from 6 October 2016 up to and including 25 days prior to the date of the confirmation hearing, order 3(j) required the applicants to provide the scheme summary to those policy owners in accordance with NMLA's normal operating procedures, by regular pre-paid post with their joining documentation or by email within two business days (or shortly after) of NMLA accepting that policy owner's application for cover. 83 There was substantial compliance with these orders. 84 The date that was 25 days prior to the date of the confirmation period was 12 November 2016. Welcome packs including the scheme summary were sent out to 2,192 new policy owners pursuant to order 3(i). Joining documentation packs including the scheme summary were sent out to 219 new policy owners pursuant to order 3(j). 85 In a small number of cases, new policy owners received a copy of the scheme summary separately from their welcome pack or joining documentation pack. I accept that this different mode of drawing the scheme to the attention of those new policy owners, while not in strict compliance with the orders, does not affect the conclusion that there was substantial compliance with orders 3(i) and (j). 86 Order 3(k) provided that, in the event that posted material referred to in orders 3(h) to (j) was returned undelivered up to and including 25 days prior to the date of the confirmation hearing, to the extent reasonably practicable, the applicants were required to follow the "Part 9 Returned Mail Procedure" for the posted material referred to in 3(h) above and follow the "Standard Returned Mail Procedure" for posted material referred to in 3(i) and 3(j) above, to identify a new mailing address for the relevant policy owner and, if identified following that procedure, re-send the scheme summary to that new address. 87 Mr Thomas proved the applicants' compliance with order 3(k). Pursuant to this order, 681 policy orders (being 502 policy owners in Australia and 179 policy owners in New Zealand) were sent a mail-out pack to an address located following the Part 9 Returned Mail Procedure. 88 There was no cause to follow the Standard Returned Mail Procedure because none of the material posted pursuant to orders 3(i) and (j) was returned as undeliverable.

Public inspection 89 Order 3(l) duplicates the requirement of reg 9.02(4). I have found above that the applicants complied with reg 9.02(4).

Call centre (orders 3(m) and (n)) 90 By order 3(m), the applicants were required, from on or before 10 October 2016 up to and including the date of the confirmation hearing, to establish a call centre to handle calls about the scheme made to the dedicated toll free phone numbers in Australia and New Zealand as specified in the notice of intention. 91 Mr Thomas's 30 November 2016 affidavit verified compliance with order 3(m). 92 Order 3(n) required the applicants to train call centre staff to handle calls to the call centre relating to the scheme. 93 Mr Thomas's 30 November 2016 affidavit verified compliance with order 3(n).

Other notification (orders 3(o) to (q)) 94 Order 3(o) required the applicants on request, from on or shortly after 8 October 2016, until the date of the confirmation hearing, as soon as reasonably practicable, to provide a copy of the scheme documents to NMLA Policy Owners and AMP Life Policy Owners free of charge. 95 Mr Thomas's 30 November 2016 affidavit verified compliance with order 3(o). 96 Order 3(p) required the applicants, on or shortly after 6 October 2016, to communicate the scheme to AMP Group's licensed advisers and independent advisers in the applicants' next publication of the applicants' newsletters to advisers in Australia and New Zealand by email, in substantially the form of annexure D to the originating application. 97 Mr Thomas gave evidence that the newsletter was sent to internal advisers in Australia, and to both internal and external advisers in New Zealand on 6 October 2016. In Australia, the applicants communicated the scheme to external advisers by the newsletter published on 11 October 2016, as that was the next newsletter in accordance with the applicants' business as usual procedures. I accept that these publications complied with order 3(p). 98 The newsletters were sent to a total of 12,725 advisers, being 11,511 advisers in Australia and 1,214 advisers in New Zealand. 99 Order 3(q) required the applicants, from on or shortly after 8 October 2016 up to and including the effective date, to include product disclosure statement updates in relation to the scheme on the webpage www.amp.com.au/pdsupdates. 100 Mr Thomas verified that there has been compliance with this order since 10 October 2016. I am satisfied that this amounts to substantial compliance with order 3(q).

Conclusion 101 I was satisfied that the implementation of the scheme will not detrimentally affect any of the relevant policyholders. 102 I was satisfied that the applicants complied with all of the relevant legislative requirements. 103 Taking into account all of the matters I have set out above, I was satisfied that the scheme should be confirmed without modification. I certify that the preceding one hundred and three (103) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gleeson.