Statement of Particulars of the proposed transfer of business
Red Sands Insurance Company (Europe) Limited (the “Company”) proposes to transfer its Czech, Hungarian, Polish and Slovakian General Business Class 1 Accident and Class 2 Sickness policies of insurance to Red Sands Life Assurance Company (Europe) Limited (the “Transferee”), a company incorporated in Gibraltar (the “Transfer”).
This Statement of Particulars explains what business will be transferred to the Transferee, when the Transfer is proposed to take place and why the Company and the Transferee have agreed to the Transfer.
The Transfer is subject to approval by the regulatory authority in Gibraltar, the Gibraltar Financial Services Commission.
This document sets out the particulars of the proposed Transfer.
Who are Red Sands Insurance Company (Europe) Limited and Red Sands Life Assurance Company (Europe) Limited?
The Transferee is a private company incorporated and governed by the laws of Gibraltar. The company was incorporated on 19 June 2008 under registered number 101001. The company's registered office is Level 3, Ocean Village Business Centre, 23 Ocean Village Promenade, Gibraltar. The Transferee applied to the Gibraltar Financial Services Commission on 31 August 2018 for permissions to effect and carry out contracts of general insurance in General Business Class 1 Accident and Class 2 Sickness on a Freedom of Services basis in Poland, Hungary, Czech Republic and Slovakia. The Transferee and the Company are part of the same group and have the same parent company Red Sands Group Holdings Limited. The Transferee has an SCR coverage ratio of 152% as at 30 June 2018.
The Company is a private limited company incorporated and governed by the laws of Gibraltar. The Company was incorporated on 27 February 2003 under number 87598. The Company's registered office is Level 3, Ocean Village Business Centre, 23 Ocean Village Promenade, Gibraltar. The Company is authorised by the Gibraltar Financial Services Commission to carry on insurance business pursuant to the Financial Services (Insurance Companies) Act of Gibraltar. It is authorised to effect and carry out contracts of general insurance in General Business Class 1 Accident and Class 2 Sickness on a Freedom of Services basis in Poland, Hungary, Czech Republic and Slovakia.
The limited reinsurance contracts applying to the Transferring Policies will also be transferred to the Transferee (the “Transferring Reinsurance Contracts”).
All of the assets and liabilities and rights and obligations of the Company in respect of the Transferring Policies will also transfer to the Transferee at the same time.
Why is the transfer happening?
We are proposing the Transfer as a result of the UK’s decision (which also includes Gibraltar) to leave the European Union (commonly known as “Brexit”). As a consequence of Brexit, a likely scenario (also known as a “Hard Brexit”) is that the Company will lose its rights under European Union law to continue to do insurance business across the European single market. These rights under European Union law are known as “passporting rights”. There have been concerns that following a Hard Brexit the Company will not be able to continue to service policyholders and claimants across Europe in line with applicable regulatory rules.
In the absence of clarity, and following consultation with the Company’s Regulator (the Gibraltar Financial Services Commission) on appropriate Brexit contingency plans, we are therefore implementing the Transfer in anticipation of the UK (and consequently Gibraltar) leaving the European Union in order to ensure we can continue to service policyholders and claimants after Brexit. It aims to have minimal impact on policyholders and will mean that the Company will not be dependent on grandfathering or transitional arrangements being agreed between the UK and the European Union (even if this is extended to Gibraltar).
Consequently, we are proposing to effect the Transfer to Red Sands Life Assurance Company (Europe) Limited, incorporated in Gibraltar (which is currently part of the European Union) and authorised by and subject to the supervision of the Gibraltar Financial Services Commission. However, it is envisaged that the Transferee will re-domicile to Malta subject to the approval of the Maltese Financial Services Authority, which would allow it to remain incorporated in a European Union jurisdiction in the event of a Hard Brexit.
In the Company’s opinion there is no material prejudice to any of Company’s policyholders and whilst we do not therefore envisage any objection to the proposed transfer, the alternative if the transfer is not approved would be for the Company to continue to make claims payments under policies issued by the Company, which as explained above, we are concerned may not be possible in the event of a Hard Brexit.
When would the proposed transfer happen?
If the proposal is approved by the Gibraltar Financial Services Commission, then we expect the transfer to take place on 4 February 2019.
How will the transfer be effected?
As mentioned above, the proposed transfer is subject to regulatory approval from the Gibraltar Financial Services Commission. The Company will transfer the Transferring Policies to the Transferee. An application to the Gibraltar Financial Services Commission has already been submitted. The business will be transferred pursuant to Part II of Schedule 10 of the Financial Services (Insurance Companies) Act 1987 (as amended) of Gibraltar. The Transfer will be effected by the execution of an “Instrument of Transfer” (“the Instrument”) under the Laws of Gibraltar. The Instrument will secure the continuation of the terms and conditions of the policies, and the rights and obligations of the policyholders. Therefore, any legal proceedings commenced by or against the Company will be continued by or against the Transferee and as from the effective date of the Transfer, all policies will be underwritten by the Transferee.
Will my policy be affected?
If the proposals are approved then there will be no changes to the premiums, benefits, and terms and conditions of any of the Transferring Policies.
We are not making any changes to how a policy is administered as part of the proposed transfer to the Transferee; the Transferring Policies will continue to be serviced by the same entity in each of the relevant jurisdictions:
Czech Republic - 4Life Direct Insurance Services s.r.o.
Valid claims will therefore continue to be paid although the party liable to make payment will be the Transferee, rather than the Company as the entity that originally issued the policy.
Any costs involved in the Transfer will be met by the Company.
Whilst there will be no material change to the way in which policyholders or those with an interest in a Company policy will be treated, all policyholders or those with an interest in a Company policy have the legal right (but are not obliged) to object or make representations about the proposed transfer to the Financial Services Commission in Gibraltar. How to do this is explained below.
How to find further information about the transfer
Whilst you do not need to take any action, if you have questions regarding the transfer you can write to:
What should you do if you have an objection to the transfer?
The Transfer is conditional upon the receipt of approval from the Gibraltar Financial Services Commission. Every policyholder has the legal right to object or make representations about this proposed transfer to the Gibraltar Financial Services Commission. If they wish to do so, they should write explaining the reasons why to The Gibraltar Financial Services Commission, Insurance Division at Suite 3, Ground Floor, Atlantic Suites, Europort Avenue, Gibraltar or by email to email@example.com, up until the 25 December 2018. The Gibraltar Financial Services Commission can also be contacted by telephone (+350) 200 40283, by fax (+350) 200 40282, and their website address is www.fsc.gi The Gibraltar Financial Services Commission will not make a decision on the application until after considering such representations and will publish their decision thereafter.
A copy of this ‘Statement of Particulars’ of the proposed transfer (“the Particulars”) is available for inspection at Level 3, Ocean Village Business Centre, 23 Ocean Village Promenade, Gibraltar between the hours of 0930 and 1700, from Monday to Friday up until the 25 December 2018. A copy of the Particulars may also be obtained free of charge by going to the following website address www.redsands.gi, alternatively, by emailing firstname.lastname@example.org.
ACTUARIAL FUNCTION HOLDER REPORT ON THE PROPOSED TRANSFER
The report of the actuarial function holder in respect of the proposed transfer may be found here.