Swiss Reinsurance Company Ltd, in the matter of an application by Swiss Reinsurance Company Ltd (No 2) [2019] FCA 2042

Legislative Framework 13 The transfer and amalgamation of insurance business occurs pursuant to Division 3A of Part III of the Insurance Act. 14 Section 17B(1) provides that no part of the insurance business of a general insurer may be transferred to another general insurer or amalgamated with the business of another general insurer except under a scheme confirmed by this Court. 15 Section 17E, which deals with an application to this Court for confirmation, is in the following terms: (1) Any of the bodies corporate affected by a scheme may apply to the Federal Court for confirmation of the scheme. (2) An application for confirmation must be made in accordance with the prudential standards. (3) APRA is entitled to be heard on an application. 16 The prudential standards referred to in s 17E(2) can be found in Prudential Standard GPS 410 Transfer and Amalgamation of Insurance Business for General Insurers (GPS 410). 17 APRA appeared at the confirmation hearing. Besides expressing certain reservations regarding the capital repatriation mechanism in the Scheme, to which I will return, counsel for APRA, Mr Claxton, indicated that APRA was otherwise satisfied that the orders sought by the applicant were appropriate. 18 Section 17F, which concerns the Court's discretion to confirm a scheme, relevantly provides as follows: (1) The Federal Court may: (a) confirm a scheme without modification; or (b) confirm the scheme subject to such modifications as it thinks appropriate; or (c) refuse to confirm the scheme. (1A) In deciding whether to confirm a scheme (with or without modifications), the Federal Court must have regard to: (a) the interests of the policyholders of a body corporate affected by the scheme; and (b) if a report relevant to all or part of the scheme has been filed with the Court under section 62ZI - that report; and (c) any other matter the Court considers relevant. 19 It is well-accepted that the Court is to look to the interests of the relevant policyholders of both the transferor and transferee insurers and consider whether implementation of the scheme will detrimentally affect them in a material way: see, for example, Re MDU Australian Insurance Co Pty Ltd [2008] FCA 490 at [7] per Emmett J; Re Westport Insurance Corporation (No 2) [2009] FCA 1598; 181 FCR 530 at 535 [32] per Lindgren J. Here, however, it should be noted that the transferee company SRALAU (as opposed to SRAL) has no existing policyholders. 20 It has also been noted in past applications which have similarly involved a scheme transfer between two Australian branches that it provides contextual assistance to understanding the impact of such a transfer on Australian policyholders to have regard to wider financial information pertaining to the financial position and risk profiles of any relevant foreign insurer beyond simply their branch operations in Australia: see Atradius Credit Insurance N.V., in the matter of Atradius Credit Insurance N.V. (No 2) [2016] FCA 1495 at [17]; W.R. Berkley Insurance (Europe) Limited, in the matter of Division 3A of Part III of the Insurance Act (1973) (No 3) [2016] FCA 1497 at [15]; AXIS Speciality Europe SE (Australia Branch), in the matter of AXIS Speciality Europe SE (Australia Branch) (No 2) [2017] FCA 276 at [13].

Evidence 21 At the confirmation hearing, the following affidavits were read in support of the application and are defined in these reasons as follows: (a) affidavit of Jeremy Challen sworn 17 October 2019 (Challen affidavit); (b) further supplementary affidavit of Andrew John Davidson sworn 17 October 2019 (Further Supplementary Davidson affidavit); (c) affidavit of Jenna Maureen Kidd affirmed 17 October 2019 (Kidd affidavit); (d) affidavit of Evelyn Chow affirmed 16 October 2019 (Chow affidavit); (e) affidavit of Andrew McInerney affirmed 17 October 2019 (McInerney affidavit) 22 Mr Challen has been employed by the applicant since 1 January 2015 and currently holds the position of Senior Legal Counsel at the applicant. Mr Davidson has been employed by the applicant since 17 January 1989 and has been a Senior Client Manager Australia and New Zealand at the applicant since October 2005. Ms Kidd has been employed by the applicant since 25 February 2019 as Legal Counsel in the applicant's Legal & Compliance Team. Ms Chow is a Fellow of the Institute of Actuaries of Australia and the appointed actuary for the applicant. Mr McInerney is a Fellow of the Institute of Actuaries of Australia and a principal at Finity Consulting Pty Ltd. 23 Three further transaction documents were tendered by the applicant: the BTA, the FFA and a Project Swiss Re Asia: Australia promissory note (Promissory Note). None of these documents was executed but each was said to in a final form approved by APRA, and therefore the form that would subsequently be entered into. 24 At the conclusion of the confirmation hearing, orders were made, the reasons for which will become apparent below, granting leave to the applicant to file and serve an affidavit about the execution arrangements with respect to the unexecuted transaction documents referred to in [23] and the arrangements regarding APRA's outstanding approval of the Scheme's capital repatriation mechanism. On 12 November 2019, the applicant filed a supplementary affidavit of Jeremy Challen sworn 12 November 2019 (Supplementary Challen affidavit), which addressed these arrangements.

Actuarial evidence 25 The bulk of the actuarial evidence in support of the application can be found in Ms Chow's actuarial report, which is annexed to the Chow affidavit. A peer review of Ms Chow's actuarial report was conducted by Mr Andrew McInerney in September 2019. A copy of Mr McInerney's peer review report is annexed to the McInerney affidavit. 26 Pages 10-19 of Ms Chow's actuarial report consider the existing business prior to the transfer under the Scheme for SRAU, SRAL and SRALAU. Pages 20-22 then discuss the business after the transfer.

SRAU 27 Page 12 of Ms Chow's actuarial report contains a summary of SRAU's balance sheet and capital position as at 31 December 2018 and 30 June 2019, as submitted to APRA. 28 As at 31 December 2018, SRAU had: (a) total assets of AUD 2,687 million, total liabilities of 2,121 million, resulting in net assets of AUD 566 million; (b) a solvency coverage ratio of 136%, with available capital of AUD 503 million, a Prudential Capital Amount of AUD 369 million, a target capital amount of AUD 539 million and an Internal Capital Buffer of AUD 170 million; and (c) target capital coverage of 93%, which fell within SRAU's target capital range of 90% to 110% of target capital. 29 As at 30 June 2019, SRAU had: (a) total assets of AUD 3,146 million, total liabilities of 2,552 million, resulting in net assets of AUD 594 million; (b) a solvency coverage ratio of 154%, with available capital of AUD 574 million, a Prudential Capital Amount of AUD 373 million, a target capital amount of AUD 543 million and an Internal Capital Buffer of AUD 170 million; and (c) target capital coverage of 106%, which fell within SRAU's target capital range of 90% to 110% of target capital. 30 Page 15 of Ms Chow's report contains a projected balance sheet and capital position for the years ending 31 December 2019, 31 December 2020 and 31 December 2021. Ms Chow states on the same page that the projected balance sheet and capital position are expected to remain strong in the 3-year projection period with potential for future capital repatriations in line with SRAU's capital management policy whereby surplus capital greater than 100% Target Capital is to be repatriated in the following financial year to the parent legal entity. 31 According to the three-year projection, SRAU will have, for the years ending 31 December 2019, 31 December 2020 and 31 December 2021 respectively: (a) total assets of AUD 2,600 million, AUD 2,507 million and AUD 2,407 million; (b) total liabilities of AUD 1,989 million, AUD 1,939 million and AUD 1,859 million; (c) net assets of AUD 611 million, AUD 568 million and AUD 548 million; (d) a solvency coverage ratio of 181%, 179% and 190%; (e) available capital of AUD 623 million, AUD 585 million and AUD 564 million; (f) a Prudential Capital Amount of AUD 343 million, AUD 327 million and AUD 297 million; (g) a target capital amount of AUD 513 million, AUD 497 million and AUD 467 million; (h) an Internal Capital Buffer of AUD 170 million, AUD 170 million and AUD 170 million; and (i) target capital coverage of 121%, 118% and 121%.

SRAL 32 SRAL's financial statements demonstrate that, for the financial year ending 31 December 2018, SRAL had total assets of SGD 8,314 million, gross written premiums of SGD 3,223 million and net premiums earned of SGD 1,717 million: see para 21 of the Challen affidavit. 33 Ms Chow explains at p 7 of the actuarial report that SRAL is regulated by the Monetary Authority of Singapore (MAS), which sets its own Capital Adequacy Requirement (CAR) with a minimum required ratio of 120%. Pages 7 and 19 respectively of Ms Chow's actuarial report indicate that: (a) For the financial year ending 31 December 2018, SRAL's CAR ratio was significantly above the minimum required ratio of 120%; and (b) SRAL is well capitalized under the MAS regulatory regime, with the CAR ratio as at 30 June 2019 being significantly above the minimum required ratio of 120%.

SRALAU 34 Page 19 of Ms Chow's actuarial report notes that, while SRALAU was authorised by APRA to carry on insurance business in Australia on 12 August 2019, SRALAU does not intend to write any new or renewal reinsurance business in 2019. As SRALAU has yet to commence carrying on any business, it has remained capitalised at $5,000,110 to comply with APRA's capital requirements in GPS 110. 35 As to SRALAU's expected financial and capital solvency positions following the transfer, Ms Chow stated the following at p 20 of the actuarial report: In respect of financial and capital solvency positions, SRALAU is expected to be effectively the same as SRAU pre-transfer. As a branch of SRAL, SRALAU is estimated to represent approximately 24% of SRAL's total net assets as at 1 January 2020. SRAL is expected to be well-capitalised with a MAS solvency position or CAR ratio being significantly above the minimum required ratio of 120%. Although SRALAU will represent a larger proportion of SRAL compared to SRAU as a proportion of SRZ…SRALAU is owned by the same ultimate parent which is the Swiss Re Group. The financial strength rating of SRAL is the same as SRZ and Swiss Re Group. 36 On the basis of this actuarial evidence, Mr Owens submitted that the position of policyholders from a financial security and solvency perspective will not be materially adversely affected by the transfer to SRALAU because: (a) the nature of the Scheme involves a wholesale transfer of one entity's business to another "empty" entity and therefore there will effectively be no change to the solvency coverage enjoyed by policyholders. (b) there will be no material impact on policyholder security because the financial condition of SRALAU post-transfer is effectively the same as that of SRAU pre-transfer. (c) APRA requires Australian branches to have available solely to Australian policyholders a dedicated pool of assets judged by APRA to be sufficient for the purpose of meeting Australian liabilities, which assets cannot be used to meet non-Australian liabilities without APRA's consent. (d) SRAL is expected to be well-capitalised, with its solvency ratio being well in excess of the minimum MAS requirement of 120%. (e) SRZ, of which SRAU is the Australian branch, and SRAL, of which SRALAU is the Australian branch, both ultimately derive support from the same parent company, SRL. Page 6 of Ms Chow's actuarial report indicates that SRL has been rated as financially strong by three rating agencies, as follows: (i) Standard & Poor's gave a rating of AA- (Very Strong) on 24 October 2018; (ii) Moody's gave a rating of Aa3 (Excellent) on 19 December 2017; and (iii) A.M. Best gave a rating of A+ (Superior) on 13 December 2018. As noted in the section of Ms Chow's actuarial report extracted above at [35], SRZ and SRAL share the same financial strength ratings as SRL. 37 Mr McInerney's peer review report includes, at pp 8-9, the following comments on SRALAU's financial security, which are consistent with Ms Chow's conclusion: When the transfer is completed, SRALAU will be in the same capital position as SRAU was on the day prior to the transfer (subject to a $0.1 million difference, which is immaterial). The actual 31 December 2019 figures will differ from the forecast, but the capital position of SRALAU on 1 January 2020 will be the same as the capital position of SRAU on 31 December 2019. The ICAAP is just as important as the current capital when considering financial security. Swiss Re has been a relatively active manager of capital in Australia, with annual additions and repatriations of capital to stay in line with its capital target… SRAU then has a Target Operating Range (TOR) of 90% to 110% of this capital target and has a track record of annual capital adjustments to be within the range. I understand that the approach of SRALAU will be unchanged and therefore equally sound. 38 At p 9 of the peer review report, Mr McInerney also considers the influence of parental support on the financial strength of the Australian branches, as follows: While the corporate structure within the Swiss Re Group is important for legal and regulatory purposes, in the marketplace insurance companies commercially buy their reinsurance from 'Swiss Re', not from SRAU based on its Australian capital. Market participants have full confidence that the financial security of the Australian branch is the same as the overall Swiss Re Group. The ratings of SRZ and SRAL, as core and highly strategic subsidiaries of the Swiss Re Group, are the same for each of the international rating agencies. SRAU and SRALAU both benefit from the same financial ratings. In addition, SRAU and SRALAU follow the same capital management policy as documented in both ICAAP's. Therefore, we have high confidence in the financial strength of SRAU and SRALAU.

Management, governance and operational structures 39 Ms Chow notes at p 21 of the actuarial report that the ANZ Reinsurance management team is to remain in place following the transfer, and that there will be no change to branch personnel under the transfer because all staff members will have updated employment contracts to reflect the transfer of operations from SRAU to SRALAU. 40 On that basis, Ms Chow concludes that the transfer will have no impact on the management, governance and operational structures. 41 Ms Chow's conclusion is affirmed by Mr McInerney at p 8 of the peer review report.

Policies and claims management practices 42 Page 21 of Ms Chow's actuarial report states that there will be no changes to the terms and conditions of current and prior policies issued by SRAU as a result of the transfer, with SRAU to be replaced by SRALAU as the reinsurer after the Scheme takes effect. 43 Ms Chow goes on to observe that policies and claims management operations will continue to be the same, with existing guidelines and procedures to be carried over unchanged, and SRALAU to rely on the same systems and tools upon which SRAU presently relies. 44 On that basis, Ms Chow concludes that policyholders and claimants will not be adversely impacted by the transfer, with no disruption of current services expected. 45 Ms Chow's conclusion is affirmed by Mr McInerney at p 8 of the peer review report.

Nature of business 46 Ms Chow states at p 21 of the actuarial report that the nature of business for SRALAU is the same as for SRAU, with the existing business strategy to remain in place, and that SRALAU's business plan for 2020-2021 is the same as that presented for those two years in SRAU's business plan for financial years 2019-2021. 47 Ms Chow's conclusion is affirmed by Mr McInerney at p 8 of the peer review report.

Retrocession arrangements 48 At p 21 of the actuarial report, Ms Chow observes that SRALAU's retrocession structure is consistent with SRAU's current retrocession structure, as reflected in the future business plan for 2020 and 2021. Ms Chow states that it is therefore expected that the volatility of SRALAU's net insurance liabilities after the transfer will be the same as that of SRAU before the transfer. 49 The Scheme will preserve the existing retrocession arrangements through a novation and substitution of the two original parties, SRAL and SRAU, with two new parties, SRZ and SRALAU, to those existing arrangements, which is proposed to be effected by way of a Deed of Novation and Substitution to take effect on and from the Effective Date. 50 Mr McInerney made, at p 9 of the peer review report, the following comments on the pre-transfer and post-transfer retrocession arrangements, which support Ms Chow's conclusion: At present the retrocession of SRAU is provided by SRAL (which is a subsidiary of SRZ). This arrangement is tightly within the group and meets relevant legal and prudential requirements. After the Transfer SRALAU will be a branch of SRAL. A company cannot have a retrocession treaty with itself. An integral part of the transaction, therefore, is that the retrocession will be novated to SRZ. In a sense, the roles of SRZ as reinsurer and SRAL as retrocessionaire are swapped. This essential element of the Transfer maintains the same security provided by the retrocession arrangements as exists at present.

Other matters 51 Ms Chow considers a range of other matters at p 22 of the actuarial report and concludes with respect to each of them that there will be no adverse impact on policyholders, which conclusions are affirmed by Mr McInerney at p 8 of the peer review report. These matters, and Ms Chow's findings, are as follows: (a) Collateral trust arrangements: the Collateral Trust Deed linked to the existing retrocession arrangements will be the subject of a separate Deed of Variation, Novation and Substitution to take effect on the Effective Date. (b) Credit and Surety business: all contracts classified under the Credit and Surety business will be the subjects of separate Deeds of Novation, which will provide for the transfer of the contracts from SRAU to SRALAU on and from the Effective Date. (c) Internal Capital Adequacy Assessment Process (ICAAP) and capital management: the ICAAP for SRALAU is essentially the same as that for SRAU except for the ownership of the branch being SRAL instead of SRZ, with SRALAU adhering to the same target capital framework as SRAU. (d) Risk management: there is no change to the Risk Management Statement and Risk Appetite Framework for SRALAU, with all related documents to reflect the new branch structure. (e) Impact on SRAU: there will be no remaining contractual obligations to the policyholders and claimants after the transfer is completed. (f) Impact on SRAL: SRAL will continue to grow as a result of the scheduled business transfers for the other Asian branches of SRZ, thereby diversifying its portfolio, and SRAL's risk profile will likely be less volatile as it becomes the parent of the Asian branches instead of being the retrocessionaire.

Conclusion 52 Ms Chow's ultimate conclusion on the Scheme can be found at p 23 of the actuarial report, as follows: The assessment shows that SRALAU business operations will be largely the same from the perspective of policyholders of SRAU. In addition, SRAL is financially strong and shares the same financial strength ratings as Swiss Re Group. SRALAU, therefore, continues to benefit from the strong financial strength ratings of SRAL and ultimately Swiss Re Group. Taking into considerations the outcomes of the above assessment, I conclude that…the interests of the policyholders of SRAU will not be adversely affected as a consequence of the transfer under the Scheme. 53 At p 8 of the peer review report, Mr McInerney opines that the methodology used by Ms Chow to assess the impact of the transfer on policyholders correctly addresses the interests of policyholders and that Ms Chow's conclusions are fully supported, given the information provided to her. Mr McInerney also states that there are not any other matters that he regards as relevant to the assessment of the transfer and which should have been addressed in Ms Chow's report. 54 Mr McInerney expressed his ultimate conclusion at p 9 of the peer review report as follows: In my opinion the actuarial report on the proposed Transfer is sound and on the basis of the information presented in that report, I concur with the opinion of [Ms Chow] that there is no material detriment or disadvantage to the policyholders of SRAU from the Transfer.

Affected policyholders' views 55 It was submitted by Mr Owens that the lack of objection to the Scheme by affected policyholders, having been given notice of the Scheme and afforded an adequate opportunity to comment upon it, is a further matter in favour of confirmation. 56 No one appeared at the confirmation hearing to oppose the application. Moreover, as stated above at [12], there had not been any indication, either before or after the hearing date was brought forward, that anyone had intended to appear.

APRA's views 57 Mr Owens accepted in written submissions that the Court should place great weight and reliance on the APRA's attitude to the Scheme and submitted that non-objection to the Scheme by APRA would be a matter from which the Court could draw significant comfort. 58 As stated at [17] above, Mr Claxton indicated at the confirmation hearing that APRA was satisfied that the orders sought by the applicant were appropriate, subject to certain reservations regarding the capital repatriation mechanism in the Scheme. 59 Clause 4 of the then-unexecuted FFA was in the following form: SRAU warrants that it will not effect the Capital Repatriation until the transfer of the Business in accordance with the BTA has been completed on the Effective Date and approval from the Australian Prudential Regulation Authority has been obtained in respect of the Capital Repatriation. 60 Mr Claxton explained that APRA was yet to grant the approval referred to in cl 4 of the FFA because there were a number of other agreements that were yet to be executed. I indicated that the Court would need to be told formally of that approval before making any orders to confirm the Scheme. It was in that context that the orders referred to at [24] above were made, and the Supplementary Challen affidavit was prepared and filed.

Execution of the transaction documents 61 At paras 11 and 12 of the Supplementary Challen affidavit, Mr Challen deposed that, on 28 October 2019, an amendment was made to cl 1 of the Promissory Note (Amended Promissory Note), following which the applicant emailed APRA and formally requested its approval of the Amended Promissory Note. Paragraph 13 of the Supplementary Challen affidavit indicates that APRA provided this formal approval on 29 October 2019. 62 At paras 14 and 16 of the Supplementary Challen affidavit, Mr Challen deposed that, on 1 November 2019, he arranged for the execution of the BTA, the FFA and the Amended Promissory Note as approved by APRA.

Approval of the capital repatriation mechanism 63 At para 17 of the Supplementary Challen affidavit, Mr Challen deposed that, on 4 November 2019, the applicant emailed APRA with a request for capital repatriation of the amount of AUD 589 million from the applicant to SRZ on 1 January 2020 (Capital Repatriation Request) and formally requested APRA's approval of the Capital Repatriation Request. 64 Paragraph 18 of the Supplementary Challen affidavit indicates that, on 7 November 2019, APRA sent to the applicant a letter in which APRA formally approved the repatriation of assets in Australia of AUD 534 million and advised that the applicant was entitled to repatriate the remaining amount of AUD 55 million, which represents the applicant's net profit (after tax) for the preceding four quarters, without APRA's approval.

Conclusion on actuarial evidence 65 The actuarial evidence, viewed together with the lack of any objection by affected policyholders or APRA, with the latter's approval of the Capital Repatriation Request having been given, provides a sound basis for the Court to be satisfied that the interests of policyholders are not detrimentally affected by the Scheme. I am so satisfied.

Procedural Requirements 66 Section 17C(2) of the Insurance Act contains the procedural requirements that must be satisfied before an application for confirmation is made. These requirements are supplemented by the prudential standards contained in GPS 410 and partly modified by the dispensation orders made by the Court on 5 September 2019 (referred to above at [3]), which were relevantly in the following terms: 1. The need for the applicant to comply with section 17C(2)(c) of the Insurance Act 1973 (Cth) (Insurance Act) be dispensed with provided that the applicant complies with Orders 2 through to 8 below. 2. The applicant, before the Scheme is released for public inspection under Order 5 below, cause a copy of the summary of the Scheme in a form first to be approved by the Australian Prudential Regulation Authority and which is to include a statement that the Scheme documentation referred to in Order 4 below is available for inspection and download at the website referred to in Order 4 below (Approved Summary) to be sent by pre-paid post or email to: a. each of the policyholders identified in the Policyholder Register as described in paragraph 8 of the Supplementary Affidavit of Andrew John Davidson affirmed on 16 August 2019 (Supplementary Affidavit) in the manner described at paragraph 33(a) of the Affidavit of Andrew John Davidson affirmed on 14 August 2019 (Davidson Affidavit); b. each of the brokers identified in Annexure A annexed to these Orders in the manner described at paragraph 33(b) of the Davidson Affidavit; and c. each of the direct insurance policyholders identified through the process described in the Davidson Affidavit and the Supplementary Affidavit, and listed in Annexure B to these Orders; to the address identified by the process described in the Davidson Affidavit and Supplementary Affidavit. 3. The applicant, before the Scheme is released for public inspection under Order 5 below, cause a copy of the Notice of Intention to make the application in a form first to be approved by APRA as required under APRA Prudential Standard GPS 410 Transfer and Amalgamation of Insurance Business for General Insurers (April 2018) (the Approved Notice), as described in the Davidson Affidavit to be published in the following publications: (a) the Government Gazette; and (b) The Australian, being a newspaper circulating in each State and Territory in which an affected policyholder resides; and (c) The Australian Financial Review; and (d) The New Zealand Herald, being a newspaper circulating in New Zealand; and (e) The Insurer, a global insurance trade magazine. 4. The applicant cause links to copies of the Scheme, Approved Summary, Approved Notice and the actuarial report prepared in relation to the Scheme to be placed on its website https://www.swissre.com/australia_newzealand/, such links to be available to the public from before the Scheme is released for public inspection under Order 5 below until the date of the hearing by the Court for the confirmation of the Scheme. 5. The applicant make a copy of the Scheme, Approved Summary, Approved Notice and the actuarial report prepared in relation to the Scheme available for public inspection from 9:00am to 5:00pm (local time) every day (except weekends and public holidays), for a period of at least 15 days at locations first to be approved by APRA in each State and Territory in which an affected policyholder resides. 6. The applicant provide a copy of the Scheme, Approved Summary, Approved Notice and the actuarial report prepared in relation to the Scheme on request to any affected policyholder free of charge. 7. The applicant provide a copy of the Approved Summary by post to each of the APRA-authorised general insurers listed on APRA's Register of General Insurance that has not been identified as an affected policyholder. 8. The applicant provide a copy of the Approved Summary to any new policyholders with their policy documentation for any new policies that are issued by the applicant after the policyholder notification process set out in Order 2 has been completed until the effective date of the Scheme. 67 Before I turn to consider these matters, it is appropriate to raise one other procedural matter. Clause 2(b) of the BTA contains a condition precedent which provides that the agreement will have no effect unless and until the Treasurer of the Commonwealth of Australia, or a permitted delegate, approves or otherwise confirms that they have no objection to the acquisition by SRALAU of the Business, as defined in the BTA, under s 41 of the Insurance Acquisitions and Takeovers Act 1991 (Cth) (IATA). At para 12 of the Further Supplementary Davidson affidavit, Mr Davidson deposes that the applicant, on 27 September 2019 and 3 October 2019, provided to APRA the notices required to be given under s 38 of the IATA and formally requested a go-ahead decision under s 41(1) of the IATA in respect of the trigger proposals under ss 36(a), 36(d) and 36(e) of the IATA. Mr Davidson indicates that the applicant was advised on 17 October 2019 that the Treasurer had made the decision not to object to the acquisition under the IATA. 68 The applicant has also put on evidence to demonstrate its compliance with s 17C(2), GPS 410 and Orders 2 to 8 of the dispensation orders. This evidence was contained in the Further Supplementary Davidson affidavit and the Kidd affidavit.

Section 17C(2)(a): Provision of Scheme to APRA in accordance with GPS 410 69 Section 17C(2)(a) requires a copy of the scheme for which confirmation is sought and any actuarial report on which the scheme is based to have been given to APRA in accordance with the prudential standards. Paragraphs 5 and 6 of GPS 410 make clear that these documents must be provided to APRA before the relevant notice of intention to apply to the Court for confirmation of the scheme is published, and before any approved summary of the scheme is given to each affected policyholder. 70 Paragraphs 8 and 9 of the Further Supplementary Davidson Affidavit record that various versions of the following draft documents were provided by the applicant to APRA between August 2019 and October 2019: (a) the draft scheme document; (b) the draft summary of the Scheme; (c) the draft notice of intention to apply for confirmation of the Scheme; (d) Ms Chow's actuarial report; (e) Mr McInerney's peer review report; and (f) a draft copy of the agreement pursuant to which the applicant and SRALAU proposed to effect the Scheme. 71 Mr Davidson deposes at paras 10 and 11 that the applicant emailed APRA on 6 September 2019 to request formally its approval of the final summary of the Scheme and the final notice of intention, which approval was given by APRA on 9 September 2019. 72 At paras 16-19 of the Further Supplementary Davidson Affidavit, Mr Davidson states that the applicant's policyholder register was updated and finalised, and template notification letters prepared, for the mail-out required by Dispensation Order 2. Each of the letters contained the stipulated statement that the Scheme and associated documentation would be published on the Swiss Re website. 73 Mr Davidson confirms at para 40 that, as at 17 October 2019, 99% of identified policyholders in the final policyholder register and the direct insurance policyholders list, and 100% of brokers on the final broker list were confirmed as having been mailed a copy of the approved summary of the Scheme.

Section 17C(2)(b): Publication of notice of intention to make application in accordance with GPS 410 74 Section 17C(2)(b) requires a notice of intention to make the confirmation application to have been published by the applicant in accordance with the prudential standards. Paragraphs 9 and 11 of GPS 410 provide as follows: 9. The insurer must publish the notice of intention in a form approved by APRA: (a) in the Government Gazette; and (b) in one or more newspapers, approved by APRA, circulating in each State and Territory in which an affected policyholder resides. 10. The notice must, at a minimum: (a) state the places, dates and times that an affected policyholder may obtain a copy of the scheme and any associated documentation; and (b) give the address of each place at which a copy of the scheme and any associated documentation may be obtained. 11. The notice must be published before the scheme is released for public inspection under paragraph 16. 75 Dispensation Order 3 lists several other publications in which the notice of intention was required to be published. 76 At paras 43 and 44 of the Further Supplementary Davidson affidavit, Mr Davidson deposes that the applicant arranged, on 9 September 2019, for the notice of intention to be published on 17 September 2019 in the relevant publications, from all of which confirmation of publication was received on 17 September 2019. 77 Mr Owens drew the Court's attention to a typographical error in the wording of the notice of intention that was published in the specified publications. The notice contained the following sentence: Should the Scheme be confirmed by the Court, SRAU will be substituted for SRALAU under policies issued or underwritten by SRAU. 78 For this statement to have been correct, the first two acronyms should have been swapped to read "SRALAU will be substituted for SRAU". 79 Mr Owens accepted that this was a regrettable error but submitted that this did not constitute a reason to refuse confirmation on the basis that the meaning of the notice would still have been clear and that APRA had approved the form of the notice prior to publication. 80 I am satisfied that, when viewed in context, the purpose and meaning of the notice was clear, notwithstanding the error.

Section 17C(2)(c): Provision of Scheme to affected policyholders 81 Section 17C(2)(c) requires an approved summary of the Scheme to have been given to every affected policyholder. As explained above at [3], the dispensation orders made on 5 September 2019 waived this requirement on the condition that the other steps referred to in those orders were taken.

Publication of links to Scheme documents on Swiss Re website 82 Dispensation Order 4 requires the applicant to make available to the public on its website links to the Scheme documents from before the Scheme is released for public inspection until the date of the confirmation hearing. 83 Paragraphs 47 and 48 of the Further Supplementary Davidson affidavit indicate that the Scheme documents were available for public viewing on the Swiss Re website from 8:30am on 17 September 2019 until the confirmation hearing on 23 October 2019, with the exception of the period between 3:53pm on 15 October 2019 and 11:00am on 17 October 2019, during which time the Scheme documents were mistakenly removed from the webpage due to an internal direction. 84 Mr Owens again acknowledged the error as regrettable but submitted that the extent of non-compliance was limited and did not provide a reason for the Court to refuse to confirm the Scheme. 85 At the confirmation hearing, Mr Owens tendered a schedule which showed the number of times, both before and after the period of non-compliance, that the various links on the Swiss Re website had been clicked. That document indicates that, over the entire period that the links were publically available, there was a total of 24 unique clicks across all of the Scheme documents, 10 of which occurred after the links were restored to the Swiss Re website on 17 October 2019. 86 In this context, I am satisfied that the misunderstanding that led to the Scheme documents not being publically available for approximately 31 hours in a period of about 5 weeks did not amount to non-compliance of sufficient gravity to justify the Court refusing to confirm the Scheme on that basis.

Public inspection of the Scheme documents 87 Paragraph 16 of GPS 410 is in the following terms: A copy of the scheme must be open for public inspection from 9.00 a.m. until 5.00 p.m. every day (except weekends and public holidays), for a period of at least 15 days, at: (a) an office of the insurer; or (b) another location approved by APRA in writing, in each state and Territory in which an affected policyholder resides. 88 Dispensation Order 5 was expressed in similar terms. 89 Paragraphs 11-15 of the Kidd affidavit explain the steps that were taken by the applicant in preparation for the public inspection period, which ran from 18 September 2019 to 15 October 2019 inclusive, excluding public holidays (Inspection Period). A location in each state and territory had been designated to host the public inspections (Inspection Sites). APRA approved these arrangements on 9 September 2019. 90 Ms Kidd deposes at para 16 that no one attended any of the Inspection Sites during the Inspection Period, with the exception of a senior analyst from APRA who attended the Inspection Site in Sydney on 19 September 2019 and who did not request to inspect any copies of the Scheme documents. 91 Mr Davidson notes at para 52 of the Further Supplementary Davidson affidavit that, between 10 September 2019 and 3 October 2019, the applicant's Client Management team received a total of 27 enquiries regarding the Scheme. Mr Owens stated at the confirmation hearing that none of these enquiries was oppositional and each was dealt with appropriately.

Provision of copy of Scheme free of charge upon request 92 Pursuant to s 17C(4) of the Insurance Act, an affected policyholder is entitled, upon request, to be provided with one copy of the Scheme free of charge. 93 Further, Dispensation Order 6 requires the applicant to provide a copy of the Scheme, the approved summary of the Scheme, the approved notice of intention and the actuarial report prepared in relation to the Scheme on request to any affected policyholder free of charge. 94 Mr Davidson deposes at para 51 of the Further Supplementary Davidson affidavit that, as at 17 October 2019, the applicant had received no requests for a copy of the Scheme documents.

Provision of copy of Approved Summary to APRA-authorised general insurers 95 Dispensation Order 7 requires the applicant to provide a copy of the approved summary of the Scheme by post to each of the APRA-authorised general insurers listed on APRA's Register of General Insurance that has not been identified as an affected policyholder. 96 Mr Davidson describes at paras 54-56 of the Further Supplementary Davidson affidavit the steps taken in preparation for the mail-out, including the preparation of an APRA-Authorised General Insurers List and a template letter. Mr Davidson deposes at paras 57-58 that 53 envelopes containing a copy of the summary of the Scheme and a covering letter were sent by registered post on 9 September 2019 to the APRA-authorised general insurers listed on the APRA-Authorised General Insurers List. 97 At paras 59-60, Mr Davidson notes that, between 9 September 2019 and 16 October 2019, 5 of the 53 envelopes were returned with incorrect address details, following which 4 of the 5 returned envelopes were re-addressed and resent by registered post between 12 and 30 September 2019. The fifth returned envelope was re-sent via email on 1 October 2019. As at 17 October 2019, no further envelopes had been returned to the applicant.

Provision of copy of Approved Summary to new policyholders 98 Dispensation Order 8 requires the applicant to provide a copy of the approved summary of the Scheme to any new policyholders not caught by the policyholder notification process required by Dispensation Order 2. 99 Mr Davidson deposes at para 62 of the Further Supplementary Davidson affidavit that, on or around 15 September 2019, he directed the implementation of a new manual process by which emails based on the form of the template emails sent to overseas policyholders and brokers as part of the applicant's compliance with Dispensation Order 2 were sent to the new policyholders and new brokers of the applicant. These emails would attach a copy of the summary of the Scheme together with the policy documentation and be sent for any new policies issued by the applicant from 10 September 2019 until the Effective Date. During that period, Mr Davidson explains that he has been, and will be, notified of any new policyholders via a weekly report.

Disposition 100 On the basis of the evidence before the Court and in particular the actuarial evidence presented to the Court, and the evidence of the applicant's substantial compliance with the procedural requirements in the Insurance Act, GPS 410 and the Court's dispensation orders made on 5 September 2019, I am satisfied that the Scheme should be confirmed without modification pursuant to s 17F(1)(a) of the Insurance Act. 101 At the confirmation hearing, the applicant handed up proposed short minutes of order for the confirmation of the Scheme. I will only add that a copy of the Scheme is to be annexed to the orders made. So amended, I will make those orders. I certify that the preceding one hundred and one (101) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Chief Justice Allsop.