Proposed transfer of Scottish Equitable plc's annuity business

Transcription

1 Annuity Transfer Team, Edinburgh Park, Edinburgh EH12 9SE Our ref: LGAS1 019S240D Mr Andrew Sample Sample Street Sample Town Sample County SA1 1AS Phone: UK Freephone +44 (0) from overseas Web: aegon.co.uk/lgastransfer May 2017 Dear Policyholder Policy number: Pol_1 Proposed transfer of Scottish Equitable plc's annuity business AGN24_S_D12558_170517_SAMPLE_RLP_453221\000001\1\1of10\ Here s some important information about your annuity policy, please read it carefully. There s more information online at aegon.co.uk/lgastransfer. As part of a strategic review of our business, Aegon, the parent company of Scottish Equitable plc (Scottish Equitable) has decided to leave the annuity market. Aegon no longer sell traditional annuities and they haven t been a key market for Aegon since The decision to leave the annuity market entirely will allow Aegon to focus on the continued growth of its pre-retirement solutions. As a result of this review Scottish Equitable has agreed to sell and transfer part of its annuity business, including your policy above to Legal and General Assurance Society Limited (Legal and General). Legal and General is part of the Legal & General Group plc, which is one of the world s largest insurance and investment management companies managing over 900,000 annuities in payment and its senior management team has considerable experience and expertise in managing annuity business. Legal and General is authorised by the Prudential Regulation Authority (PRA) and regulated by the Financial Conduct Authority (FCA) and the PRA. You can find out more about Legal and General at legalandgeneral.com. At the time of the agreement to sell and transfer the annuity business to Legal and General, Scottish Equitable reinsured the annuity business with Legal and General. Further details of this reinsurance arrangement are included in the Questions and Answers below. The proposed transfer requires High Court approval and Scottish Equitable applied to the High Court on 10 May 2017 to formally transfer certain policies, including your policy above, from Scottish Equitable to Legal and General. You have the right to object to these proposals if you feel you may be disadvantaged. Details of how to do so are provided below. Summary of the proposals Scottish Equitable plc is proposing to transfer your annuity to a new provider, Legal and General Assurance Society Limited on 22 September If, having read the information in this letter you have any questions or concerns, or wish to object please contact us using any of the contact details above. The timing and amount of your annuity payments won t be affected by the transfer. Any contractual guarantees you have will continue, and the terms and conditions of your policy won t change as a result of the transfer. The proposals have been reviewed by an Independent Expert and his conclusions are summarised in this letter. You can get more detailed information about the transfer in this letter and at aegon.co.uk/lgastransfer. 1

2 AGN24_S_D12558_170517_SAMPLE_RLP_453221\000001\2\2of10\ If you have more than one annuity policy transferring to Legal and General, you ll receive more than one letter. Please read all letters carefully. Please share this letter and the Questions and Answers with anyone else who has an interest in your policy, for example if it s jointly owned, or if there are joint or contingent beneficiaries (e.g. a spouse) for an annuity, or if your policy has been assigned. Please also make them aware of their right to raise an objection. How the proposed transfer will affect you The transfer won t affect the terms and conditions of your annuity policy. There will be no changes to your annuity benefit levels, payment timings or frequency and the basis of any escalations that apply to your policy will stay the same. You won t need to make any changes or take any action in relation to your policy as a result of the transfer. If the transfer is approved: Legal and General will become the provider of your annuity policy and be responsible for making any payments due under the terms of your policy. Payments will continue to be made as before, including the timing and the amount of the payments due. Your policy will retain the same policy number, as above. Legal and General will become responsible for the servicing of your policy from the date of the transfer and they ll write to you with new contact details which you should use for all future correspondence or queries. If you do have any questions about any of the information in this letter, or your policy generally, you can still contact us until the transfer date. You ll see references to Legal and General on any correspondence, including payments, you ll get after the transfer date which is expected to be on 22 September Further information is provided in the Questions and Answers at the end of this letter. How you are protected The proposed transfer process protects policyholders in a number of ways to make sure that they re not materially adversely affected. The protections include: the appointment of an Independent Expert who reports on the effects of the transfer on policyholders a summary of the Independent Expert s conclusions is included later in this letter and his full report and a summary of the full report can be accessed online at aegon.co.uk/lgastransfer; ongoing review by our regulators, the FCA and the PRA, until the proposed transfer date; advance notification of the proposed transfer to affected policyholders (this letter); your right to object to the proposed transfer if you consider that you may be disadvantaged by the carrying out of the transfer; and High Court approval the transfer proposals will be heard at the High Court of Justice, Chancery Division, the Rolls Building, Fetter Lane, London EC4A 1NL on 30 August The Court will consider the views of policyholders, the Independent Expert and the regulators before reaching a decision on whether to approve the proposed transfer. In addition to the above protections, the Chief Actuary and the With-Profits Actuary of Scottish Equitable, together with the Chief Actuary and the With-Profits Actuary of Legal and General have each written their own reports on the effects of the proposed transfer on the companies and on policyholders. You can access their full reports at aegon.co.uk/lgastransfer. Details of the proposed transfer are contained in a legal document called the Scheme and we ve summarised key information about the Scheme in this letter and in the Questions and Answers below. A more detailed summary of the Scheme, including details of the transferring liabilities, continuity of proceedings and the approvals needed should the Scheme need to be modified in the future, can be found on our website as well as a copy of the full Scheme and other information relating to the Scheme. If the Scheme is approved by the Court, Legal and General will become the insurer in relation to your above policy and will become responsible for all administration and benefit payments in respect of the transferred policy from the transfer date. Scottish Equitable will no longer perform any role in relation to the transferred policy. 2

3 AGN24_S_D12558_170517_SAMPLE_RLP_453221\000001\3\3of10\ Legal and General will become data controller (the person who determines the purpose for which any personal data is processed) in place of Scottish Equitable in relation to the transferred business and consents and information given to Scottish Equitable will be deemed to have been given to Legal and General. The Scheme gives effect to the proposed transfer of all transferring policies, together with all rights and powers in relation to the transferring business. If the Court approves the Scheme, the transferring business of Scottish Equitable will transfer to Legal and General. It s expected that the proposed transfer will become effective at 11:59 p.m. on 22 September 2017 (the proposed transfer date). We ll update our website if this date changes. Independent Expert s Report As mentioned above, an Independent Expert, Mr Oliver Gillespie a Partner of Milliman LLP, has been appointed to report on the effects of the transfer on policyholders. The following is a summary of the conclusions from his report in relation to transferring policies: I have been appointed as the Independent Expert to report on the proposed transfer and my appointment has been approved by the UK financial services regulators; the Prudential Regulation Authority and the Financial Conduct Authority. I am a Fellow of the Institute and Faculty of Actuaries in the UK and a partner in Milliman LLP. I am an approved person on the Financial Services Register and I have fulfilled the role of Independent Expert in relation to a number of Part VII transfers that have subsequently been approved by the Court. I confirm that I do not have any direct or indirect interest in Scottish Equitable, Legal and General or any other related firms that could compromise my independence. The scope of my main report was agreed with the PRA and the FCA. In accordance with the regulations I need to consider how the different groups of policyholders are likely to be affected by the proposed transfer. In particular I need to consider the effect of the transfer on the security of the benefits under the affected policies and on the expectations of the Scottish Equitable and Legal and General policyholders in respect of their benefits, the standards of administration and service received and the management and governance that apply to their policies. The effect of the Scheme on the various groups of policies In Sections 7 to 12 of my main report I cover the effects of the proposed transfer on the affected policies. These are, respectively: the transferring Scottish Equitable policies, the non-transferring Scottish Equitable policies, and the Legal and General policies. For each group of policies I consider: The financial strength available to provide security for the benefits under the policies after the transfer compared to that currently available; Any change to the profile of risks to which the policies will be exposed as a result of the transfer; The effect of the transfer on the reasonable expectations of the policyholders in respect of their benefits and the service standards; and The effect of the transfer on the management and governance applied to the policies. In addition to their regulatory solvency requirements, insurance companies in the UK typically have a capital policy adopted by the Board of Directors that provides for a capital management buffer to be maintained over and above the regulatory solvency requirement. The level of capital required by such a capital management policy and the restrictions placed on a company in respect of changing the capital policy provide further protections to policyholders. Scottish Equitable and Legal and General both have such policies. I summarise the key points of my analysis in Sections 7 to 12 of my main report, below. The transferring Scottish Equitable policies I am satisfied that the transfer will not have a material adverse effect on the financial strength available to support the security of the transferring Scottish Equitable policies because: 3

4 AGN24_S_D12558_170517_SAMPLE_RLP_453221\000001\4\4of10\ Although there are differences in the way that Scottish Equitable and Legal and General calculate some aspects of their regulatory solvency provisions, these will not lead to a material adverse impact upon the security of the benefits of the transferring policyholders. Although, after the transfer, the transferring policies will be subject to the Legal and General Capital Management Policy rather than the Scottish Equitable Capital Management Policy, this change will not have a material adverse effect on the security of their benefits. The financial strength of Legal and General (projected to reflect circumstances where the transfer has occurred) will be sufficient to provide a level of security for the transferring business that will mean that there will not be a material adverse effect on the security of the policyholders benefits under the transferring policies. The capital held by Legal and General after the transfer will be in accordance with the current regulatory solvency regime and the Legal and General Capital Management Policy and will reflect the risk profile of the company, its business and its risk concentrations. Although the transfer may lead to a change to the profile of risk exposures for the transferring business, I am satisfied this will not lead to a material adverse effect on the security of the benefits of the transferring policies. Legal and General and Scottish Equitable have carried out a comparison of the standards of administration and service that currently apply to the annuitants of Legal and General and Scottish Equitable. This review has focussed on key metrics such as call handling response times; member data update service levels; issuance of quotations; and the number of complaints. The conclusion of this review was that the level and quality of the service provided was broadly similar. The implementation of the proposed Scheme will not change: the terms and conditions of the transferring Scottish Equitable policies (except that the policies will become policies of Legal and General); and the level of income under the transferring Scottish Equitable policies or the dates on which this income is received. Therefore, I am satisfied that the transfer will not have a material adverse effect on the benefit expectations of the transferring Scottish Equitable policyholders. Legal and General currently has over 900,000 annuities in payment and its senior management team have considerable experience and expertise in managing annuity business and I am satisfied that the implementation of the Scheme will not have a material adverse effect on the standards of governance and management applicable to the transferring business. Conclusions I confirm that I have considered the issues affecting the policyholders of Scottish Equitable and of Legal and General as set out in Sections 7, 8, 9, 10, 11 and 12 of my main report and that I am satisfied that the transfer will not have a material adverse effect on: The security of the benefits of the policyholders of Scottish Equitable and Legal and General; The benefit expectations of the policyholders of Scottish Equitable and Legal and General; or The standards of service, administration, management and governance that apply to the Scottish Equitable and Legal and General policies. The Independent Expert will continue to keep the proposals under review and will submit a Supplementary Report to the High Court shortly before the final Court hearing which will reflect upon events, both company specific and in the wider market, since the date of the main report and whether those events have an effect on his conclusions regarding the proposed transfer. The Independent Expert s full report, as well as a detailed summary of the full report, is available online at aegon.co.uk/lgastransfer. It shows in much more detail how the Independent Expert has reached his conclusions. You can also request a copy by calling our helpline on UK Freephone or from overseas, by from annuitytransfer@aegon.co.uk or by writing to us at Aegon, Annuity Transfer Team, Edinburgh Park, Edinburgh EH12 9SE. 4

5 Do I need to do anything? Please make sure you understand what the proposals mean for you by reading this letter and the Questions and Answers below. You can see copies of all the documents we publish on our website, at our offices at the address at the top of this letter, or request a copy free of charge. If you have any queries or concerns about the proposals you can contact us using any of the details above. When writing to us, it would help if you could provide your full name, policy number and the reference noted at the top of this letter. If you re satisfied with the proposed transfer you don t need to do anything else. If the proposed transfer is approved, we ll publish confirmation on our website after the transfer date. Legal and General will also write to you after the transfer has completed. Objections? If, having read the information available, you feel you may be disadvantaged by the proposed transfer, you have the right to object. If you wish to object, it would be helpful if you could let us know and explain the reasons for your objection when you contact us. We ll acknowledge and reply in writing to all objections we receive. We ll also submit copies of all policyholder objections to the Court which will consider them and the Scheme on 30 August You can, if you wish, choose to present your views to Court yourself. You can also choose to be represented at Court if you prefer. As a result of the legal requirements relating to the transfer of insurance business carried on, in, or from within Jersey and policies issued to residents of the Bailiwick of Guernsey and/or written under Guernsey law, there are similar schemes to transfer such business in those jurisdictions. Please contact us for more information if you think you may hold a policy affected by the scheme in Jersey or the Bailiwick of Guernsey and haven t received a separate notification about your Jersey or Bailiwick of Guernsey policy by 30 June If you re satisfied that you understand the transfer proposals and don t have any concerns or objections then you don t need to do anything further. If you need a copy of this letter in braille, audio or large print, please contact the helpline on UK Freephone or from overseas. Yours sincerely AGN24_S_D12558_170517_SAMPLE_RLP_453221\000001\5\5of10\ Stephen McGee Chief Financial Officer Scottish Equitable plc Aegon is a brand name of Scottish Equitable plc. Scottish Equitable plc, registered office: Edinburgh Park, Edinburgh EH12 9SE. Registered in Scotland (No ). Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Financial Services Register number An Aegon company. 5

6 AGN24_S_D12558_170517_SAMPLE_RLP_453221\000001\6\6of10\ Questions and Answers 1. Who is Aegon? Aegon has been the brand name of Scottish Equitable since Aegon is a multinational life insurance, pensions and investment company and is the ultimate parent company of Scottish Equitable. 2. Who is Legal and General Assurance Society Limited? Legal and General Assurance Society Limited is part of the Legal & General Group plc, which is one of the world s largest insurance and investment management companies, managing the investments of around 4% of FTSE 100 companies. It is a UK regulated insurer and you can find out more about them at legalandgeneral.com. The Independent Expert has also concluded: Legal and General Assurance Society Limited currently has over 900,000 annuities in payment and its senior management team has considerable experience and expertise in managing annuity business and I am satisfied that the implementation of the Scheme will not have a material adverse effect on the standards of governance and management applicable to the transferring business. 3. Why is Scottish Equitable doing this? As part of a strategic review of our business, Aegon, the parent company of Scottish Equitable has decided to leave the annuity market as annuities haven t been a key market for Aegon since 2010, and its decision to leave the annuity market entirely will allow Aegon to focus on the continued growth of its pre-retirement solutions. As a result of this review Scottish Equitable has agreed to sell and transfer part of its annuity business, including your policy above to Legal and General. You have the right to object to these proposals if you feel you may be disadvantaged. Details of how to do so are provided in Question 16, below. We re also intending to transfer other annuity policies to Rothesay Life plc under an unrelated and separate scheme shortly before the Legal and General Scheme. If you have a policy transferring to Rothesay Life plc, or you are a with-profits policyholder you may have already received a letter from us about the proposed transfer of Scottish Equitable s other annuity policies to Rothesay Life plc. 4. What changes will I see? Your policy is currently provided by Scottish Equitable. If the transfer is approved, your policy will transfer to Legal and General and they ll become your policy provider. Legal and General will write to you after the transfer with new contact details for any policy enquiries you might have. You ll also see the name and brand of Legal and General in any documents sent on to you by Legal and General after the transfer date. If you have more than one policy with Aegon that pays you an income, you may initially see a minor change to the level of your tax deductions as your tax code is calculated by and advised to Legal and General by HMRC. Any change in the amount of tax deducted will be balanced by the end of the tax year (5 April 2018), although Legal and General aim to resolve any such changes in a short period after the transfer. Following the end of each tax year (starting from the year ending on 5 April 2018), your P60 form(s) will be sent to you from Legal and General. You may still receive P60 form(s) from Scottish Equitable if you have other policies that are not transferring. The proposed transfer won t change: the way your policy works or product features; any payments you receive under the terms of your policy, their timing or frequency; the terms and conditions of your policy or any contractual guarantees; and the tax status of your policy. 6

7 AGN24_S_D12558_170517_SAMPLE_RLP_453221\000001\7\7of10\ 5. Will I receive any payment as a result of the transfer? No, this isn t a stock market flotation or release of surplus funds such as a re-attribution. No new shares will be issued to existing shareholders or made available for general sale. 6. Is my policy safe? / Will I lose any benefits? Following a detailed financial review, the Independent Expert is satisfied that there will be no material adverse effect on the security of your benefits as a result of the transfer. There won t be any change to the terms and conditions of your policy or the benefits you receive. You may already be familiar with the Legal & General brand as Legal and General Assurance Society Limited is part of the Legal & General Group plc, which is one of the world s largest insurance and investment management companies. It is a UK regulated insurer and you can find out more about them at legalandgeneral.com. In the highly unlikely event that Legal and General became insolvent and was unable to meet its liabilities, your annuity would be protected by the Financial Services Compensation Scheme (FSCS), which if it was unable to transfer the policy to a new, solvent, insurance company, would itself pay compensation to policyholders of 100% of the policy value with no upper limit. 7. Why is there a reinsurance arrangement? When Scottish Equitable agreed the terms of the sale of the transferring business with Legal and General, a reinsurance arrangement was put in place to achieve the economic benefits and transfer the liabilities and risk before the formal transfer of the business. The transfer makes permanent the economic benefit and risk reassignment without the need for the reinsurance arrangement. If the proposed transfer isn t approved by the Court this reinsurance arrangement will remain in place. 8. Do I have a vote on the transfer? As the transfer is subject to Court approval, it s not open to a vote of policyholders or interested parties. As set out in your letter, if you feel you may be disadvantaged by the transfer you have the right to object to the transfer taking place and for this objection to be heard before the Court. If the Court approves the transfer, the transferring business will transfer to Legal and General. 9. I no longer have a policy with Scottish Equitable so why are you writing to me? We ve made every effort to only write to customers who have active policies. If your policy is no longer in force then our proposals will no longer apply to you. 10. Is this a merger? It s not a 'merger' of companies, but a transfer of business from Scottish Equitable to Legal and General. 11. Why is there a Court hearing? The UK insurance business transfer process is governed by Part VII of the Financial Services and Markets Act The transfer can only be approved by the Court. The Court will consider the opinion of the Independent Expert, the regulators and views of policyholders before reaching its decision. 12. I m not a policyholder so why are you writing to me? We re writing to all our affected customers, as required by the Court, to inform them of our proposals and to outline the process we re following. The definition of a customer includes policyholders, trustees, assignees, and attorneys under a Power of Attorney, of a policy. 13. How do I find out more about this proposal? You can read the full and summary version of the Scheme document, the full and summary version of the Independent Expert s report and the reports of the Chief Actuary and With-Profits Actuary of Scottish Equitable and access the report of the Chief Actuary of Legal and General at aegon.co.uk/lgastransfer. 7

8 AGN24_S_D12558_170517_SAMPLE_RLP_453221\000001\8\8of10\ You can also request copies of all the documents by calling our dedicated helpline on UK Freephone or from overseas; us at annuitytransfer@aegon.co.uk; or write to us at Aegon, Annuity Transfer Team, Edinburgh Park, Edinburgh EH12 9SE. If writing to us, it would help if you could provide your full name, policy number and the reference noted at the top of this letter. 14. What is the Scheme? The Scheme is the legal document that, if approved, gives effect to the proposed transfer. The Scheme requires the approval of the Court. As it s a detailed technical document, we ve summarised certain key features in this letter but there s also a more complete summary on our website. If the Scheme needs amending or changing in the future, the changes would require consultation with the FCA and PRA, and a certificate would need to be obtained from an Independent Expert confirming that in their opinion, the proposed amendment will not materially adversely affect fair treatment of policyholders, their benefits or policy servicing arrangements. The Scheme also provides that it may be amended without application to the Court where the amendment is considered to be minor and/or technical, or where the amendment is necessary in order, a change to the date of transfer, provided that the PRA and the FCA have been notified of the amendment and have not objected. It s not expected that the date of the transfer will need to change. Certain assets and liabilities related to the Transferred Business are excluded from the Transfer (such as tax reliefs for the Transferor and liability for fraud of the Transferor) and will not transfer to Legal and General under the Scheme. Scottish Equitable will indemnify Legal and General in respect of any such excluded assets or excluded liabilities. Certain liabilities that may arise from the Transferred Business (such as penalties and fines, liabilities for breach of policy terms and any mis-selling liabilities) are retained by Scottish Equitable until 18 months after the Transfer Date (in the case of policies where the policyholder took financial advice prior to the purchase) or are retained by Scottish Equitable until 6 years after the Transfer Date (in the case of other policies) except where Legal and General provides a notice to Scottish Equitable of such liabilities during the 18 month or 6 year period (as applicable), meaning that they would not transfer under the Scheme. Any proceedings by or against Scottish Equitable in relation to the Transferred Business (including any future proceedings not yet begun) will be continued by or against Legal and General after the Transfer Date. 15. Who do I contact with questions about my policy? If you do have any questions about any of the information in this letter, or your policy generally, you can still contact us until the transfer date (22 September 2017). Legal and General will become responsible for the servicing of your policy from the date of the transfer and they ll write to you with new contact details which you should use for all future correspondence or queries. All enquiries and concerns in respect of the transferred business should be directed to Legal and General after the Transfer Date. 16. Do I need to do anything? If, having read the information available, you re satisfied with the transfer proposals you don t need to do anything further. You don t need to do anything else in relation to payments due from Legal and General (for example, you don t need to inform your bank). If you have more than one annuity policy transferring to Legal and General you may get more than one letter. Please read all letters carefully as not all policies are impacted in the same way. Please share this letter and Questions and Answers with anyone else who has an interest in your policy, for example if it s jointly owned, or if there are joint or contingent beneficiaries (e.g. a spouse) for an annuity, or if your policy has been assigned. Please also make them aware of their right to raise an objection. 8

9 If you feel you may be disadvantaged by the proposed transfer, you have the right to object. If you wish to object, it would be helpful if you could let us know. You can contact us using any of the details above. It would help the process if you could explain the reasons for your objection when you contact us. We ll acknowledge and reply in writing to all objections we receive. We ll also submit copies of all policyholder objections to the Court which will consider them and the Scheme on 30 August You can if you wish choose to present your views to Court yourself or choose to be represented at Court if you prefer. As a result of the legal requirements relating to the transfer of insurance business carried on, in, or from within Jersey and policies issued to residents of the Bailiwick of Guernsey and/or written under Guernsey law, there are similar schemes to transfer such business in those jurisdictions. Please contact us for more information if you think you may hold a policy affected by the scheme in Jersey or the Bailiwick of Guernsey and haven t received a separate notification about your Jersey or Bailiwick of Guernsey policy by 30 June If you re satisfied that you understand the transfer proposals and don t have any concerns or objections then you don t need to do anything further. AGN24_S_D12558_170517_SAMPLE_RLP_453221\000001\9\9of10\ Aegon is a brand name of Scottish Equitable plc. Scottish Equitable plc, registered office: Edinburgh Park, Edinburgh EH12 9SE. Registered in Scotland (No ). Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Financial Services Register number An Aegon company Aegon UK plc 9