Scheme under Division 3A of Part III of the Insurance Act 1973 (Cth) Zurich Australian Insurance Limited (ABN 13 000 296 640) ( Seller ) Gordian RunOff Limited (ABN 11 052 179 647) ( Buyer ) King & Wood Mallesons Level 61 Governor Phillip Tower 1 Farrer Place Sydney NSW 2000 Australia T +61 2 9296 2000 F +61 2 9296 3999 DX 113 Sydney www.kwm.com 602-0023397
Scheme under Division 3A of Part III of the Insurance Act 1973 (Cth) Details Parties Seller and Buyer Seller Name Zurich Australian Insurance Limited ABN 13 000 296 640 Formed in Address Australia 5 Blue Street North Sydney NSW 2060 AUSTRALIA Buyer Name Gordian RunOff Limited ABN 11 052 179 647 Formed in Australia Address Level 9 220 George Street Sydney NSW 2000 AUSTRALIA Recitals A The Seller and the Buyer are each authorised under section 12 of the Insurance Act to carry on insurance business in Australia and must, at the date the Scheme is confirmed, each hold a licence granted under Part 7.1 of the Motor Accidents Compensation Act 1999 (Cth). B C This Scheme has been prepared under Division 3A of Part III of the Insurance Act to give effect to the terms of an agreement by which the Seller and the Buyer have agreed to transfer the Transferring Assets from the Seller to the Buyer, and the Buyer has agreed to assume the Transferring Liabilities. In particular, subject to the confirmation of this Scheme by the Court, the Seller has agreed to transfer, and the Buyer has agreed to accept and assume: the rights and benefits, and the claims, losses, liabilities and Costs of the Seller, under the Transferring Policies; the rights and benefits, and the claims, losses, liabilities and Costs of the Seller, under the Transferring Contracts; the Transferring Records; and the SND Obligations. If confirmed by the Court, this Scheme will become binding on all persons. Scheme under Division 3A of Part III of the Insurance Act 1973 (Cth) 1
D E The Buyer has engaged Geoff Atkins from Finity Consulting Pty Limited to prepare an actuarial report on which the Scheme is based ( Actuarial Report ). The Seller has engaged Kaise Stephan from Deloitte to prepare an actuarial report on the Scheme ( Second Actuarial Report ). Scheme under Division 3A of Part III of the Insurance Act 1973 (Cth) 2
Scheme under Division 3A of Part III of the Insurance Act 1973 (Cth) General terms 1 Definitions and interpretation 1.1 Definitions Unless the contrary intention appears, these meanings apply: ACT Sharing Agreement means the Deed Providing For The Sharing of Claims in the Australian Capital Territory and New South Wales entered into in or around 1990 between (on the one hand) certain of the compulsory third party insurers licensed under the Compensation Acts and (on the other hand) certain of the compulsory third party insurers licensed under the Road Transport (Third Party Insurance) Act 2008 (ACT) (and predecessor legislation) to provide for and regulate the sharing of claims involving motor vehicles insured under the laws of the Australian Capital Territory or New South Wales. Archived Files means the hard copy files and files contained on disks in relation to the Transferring Policies, in each case held in archive by or on behalf of the Seller. Business Day means a day on which banks are open for general banking business in Sydney, New South Wales, Australia and in Hamilton, Bermuda (not being a Saturday, Sunday or public holiday in either place). Cavello Bay means Cavello Bay Reinsurance Ltd, a company incorporated in Bermuda with company number 50158. Clearing House means the clearing house established and operated from time to time pursuant to clause 5.15 of the Insurance Industry Deed. Compensation Acts means (as applicable) the Motor Accidents Act 1988 (NSW), the Motor Accidents Compensation Act 1999 (NSW), the Motor Accidents (Lifetime Care and Support) Act 2006 (NSW) and the Motor Accident Injuries Act 2017 (NSW). Corporations Act means the Corporations Act 2001 (Cth). Costs means reasonably and properly incurred costs, charges and expenses, including those incurred in connection with advisers and any legal costs on a full indemnity basis. Court means the Federal Court of Australia. Court Confirmation means the Court having made an order confirming the Scheme in accordance with section 17F(1) of the Insurance Act, either without modifications or with modifications acceptable to the Seller and the Buyer (each acting reasonably). Court Confirmation Time means the date on which Court Confirmation is obtained. CTP Insurance Business means the New South Wales motor vehicle compulsory third party insurance (in run-off) business carried on by the Seller with the first policy being written in 1989 and the last policy being written in Scheme under Division 3A of Part III of the Insurance Act 1973 (Cth) 3
March 2016 and for the avoidance of doubt does not include any additional covers or add-ons sold alongside or to supplement any such compulsory third party insurance business. Electronic Records means the electronic records of the Seller relating to the Transferring Assets and Transferring Liabilities to be transferred from Seller to Buyer on the Final Migration Date (as defined in the Migration Agreement). Enstar Australia means Enstar Australia Limited (ACN 096 363 923). Framework Deed means the agreement dated 23 February 2018 between the Buyer, the Seller, Cavello Bay and Enstar Group Limited (a company incorporated in Bermuda with company number 30916) pursuant to which the Buyer and Seller have agreed to transfer the CTP Insurance Business. Insurance Act means the Insurance Act 1973 (Cth). Insurance Industry Deed has the meaning given in the Motor Accidents Compensation Act 1999 (NSW). Migration Agreement means the migration agreement dated 23 February 2018 between the Seller and Enstar Australia. Qld Sharing Agreement means the Deed Providing For The Sharing of Claims in Queensland and New South Wales dated 27 November 1990 between (on the one hand) certain of the compulsory third party insurers licensed under the Compensation Acts and (on the other hand) certain of the compulsory third party insurers licensed under the Motor Accidents Insurance Act 1994 (Qld) (and predecessor legislation) to provide for and regulate the sharing of claims involving motor vehicles insured under the laws of Queensland or New South Wales. Reinsurance Agreement means the reinsurance agreement dated 23 February 2018 between the Seller and Cavello Bay. Related Body Corporate has the meaning given in the Corporations Act. Seller Group means the Seller and its Related Bodies Corporate and Seller Group Member means any member of the Seller Group. Sharing Agreement has the meaning given in the Insurance Industry Deed. SND Obligations means from time to time monetary obligations and liabilities of the Seller: (d) (e) under the Sharing Agreement; to the Clearing House; under the Qld Sharing Agreement (including any claims settlement arrangement established under such agreement); under or in connection with the ACT Sharing Agreement (including any claims settlement arrangement established under such agreement); and without limitation of paragraphs to (d), otherwise under the Nominal Defendant scheme under the Compensation Acts including to the Nominal Defendant Fund established under the Compensation Acts, in each case relating to the CTP Insurance Business. Scheme under Division 3A of Part III of the Insurance Act 1973 (Cth) 4
Transfer Time means the time and date that the Court specifies as the commencement time and date of this Scheme. Transferring Assets means: the rights and benefits under the Transferring Policies; the rights and benefits under the Transferring Contracts; and the Transferring Records. Transferring Contracts means: (d) (e) the contract dated 20 September 2011 between the State Transit Authority of New South Wales and the Seller; the Reinsurance Agreement (excluding any accrued rights, obligations, claims or liabilities arising under the Reinsurance Agreement in connection with the performance of the Reinsurance Agreement before the Transfer Time which the Seller and Cavello Bay may have against each other); the Insurance Industry Deed; the ACT Sharing Agreement; the Qld Sharing Agreement; and (f) the custodian agreement titled Reinsurance Trust Deed dated 23 February 2018 between the Seller, Cavello Bay and NAB Trustee Services Limited (a company incorporated in Australia with ACN 618 250 874) as custodian. Transferring Liabilities means: all of the claims, losses, liabilities and Costs of the Seller of any kind under the Transferring Policies; all of the claims, losses, liabilities and Costs of the Seller of any kind under the Transferring Contracts; and the SND Obligations. Transferring Policies means all contracts of insurance issued, entered into or assumed by the Seller as insurer under the applicable Compensation Acts in the conduct of the CTP Insurance Business prior to the Transfer Time, the last period of insurance under which expired on 31 March 2017, including those contracts of insurance set out in the list of policies provided by the Seller to the Buyer in accordance with the terms of the Framework Deed, and any endorsements, extensions or amendments thereto, but excluding for the avoidance of doubt any contract of reinsurance and any policy of insurance under which a Seller Group Member and/or any of their respective officers, directors, employees or contractors are an insured. Transferring Records means the Archived Files, the Working Files and the Electronic Records Working Files means the working paper files relating to open claims arising under the Transferring Policies, which are in the possession of Zurich as at the earlier of the First Migration Date (as defined in the Migration Agreement) and the Final Migration Date (as defined in the Migration Agreement). Scheme under Division 3A of Part III of the Insurance Act 1973 (Cth) 5
1.2 General interpretation Headings and labels used for definitions are for convenience only and do not affect interpretation. Unless the contrary intention appears, in this Scheme: (d) (e) (f) (g) (h) (i) (j) (k) (l) (m) the singular includes the plural and vice versa; a reference to a document includes any agreement, deed or other legally enforceable arrangement created by it (whether the document is in the form of an agreement, deed or otherwise); a reference to a document also includes any variation, replacement or novation of it; the meaning of general words is not limited by specific examples introduced by including, for example, such as or similar expressions; a reference to person includes an individual, a body corporate, a partnership, a joint venture, an unincorporated association and an authority or any other entity or organisation; a reference to a particular person includes the person s executors, administrators, successors, substitutes (including persons taking by novation) and assigns; a reference to a time of day is a reference to Sydney, New South Wales time; a reference to dollars, $ or A$ is a reference to the currency of Australia; a reference to law includes common law, principles of equity and legislation (including regulations); a reference to any legislation includes regulations under it and any consolidations, amendments, re-enactments or replacements of any of them; a reference to regulations includes instruments of a legislative character under legislation (such as regulations, rules, by-laws, ordinances and proclamations); a reference to a group of persons is a reference to any 2 or more of them jointly and to each of them individually; and a reference to any thing (including an amount) is a reference to the whole and each part of it. 2 Conditions 2.1 Conditions This Scheme is subject to each of the following conditions having been satisfied: the Treasurer (or the Treasurer s delegate) providing all necessary approvals or consents required under the Insurance Acquisitions and Takeovers Act 1991 (Cth) on terms satisfactory to the Buyer, acting reasonably; and Scheme under Division 3A of Part III of the Insurance Act 1973 (Cth) 6
the Buyer obtaining a licence under Part 7.1 of the Motor Accidents Compensation Act 1999 (NSW) on terms satisfactory to the Buyer, acting reasonably, to permit the Buyer to acquire the Transferring Assets and to assume the Transferring Liabilities from the Seller in accordance with the Scheme (together Approvals ); and (d) the Court providing the Court Confirmation; and the Reinsurance Agreement not being terminated before the Court Confirmation Time. 3 Transfer of Transferring Assets and assumption of Transferring Liabilities 3.1 Transfer of Transferring Assets In accordance with the Framework Deed, the Seller s right, title and interest in, and all risk in relation to, the Transferring Assets will be transferred to and vested in the Buyer with effect from the Transfer Time without any further act or instrument. 3.2 Assumption of Transferring Liabilities In accordance with the Framework Deed, the Transferring Liabilities will be transferred to and assumed by the Buyer with effect from the Transfer Time without any further act or instrument. Accordingly, with effect from the Transfer Time: (d) (e) the Buyer will be substituted for the Seller in all Transferring Contracts as if the Buyer was, and at all times had been, a party in place of the Seller under the Transferring Contracts; the Buyer must pay, perform and discharge all Transferring Liabilities; the Seller will be released and discharged from all its obligations (actual or contingent) under the Transferring Policies and Transferring Contracts; the Seller will be released and discharged from the SND Obligations; and the Transferring Liabilities will cease to be liabilities of the Seller and will become liabilities of the Buyer. 4 Proceedings If any proceedings are pending or any proceedings are brought at or after the Transfer Time by or against the Seller in any court or tribunal in respect of the Transferring Assets or the Transferring Liabilities (including any proceedings arising by virtue of subrogation): (i) the proceedings will be continued by or against the Buyer (as the case may be); Scheme under Division 3A of Part III of the Insurance Act 1973 (Cth) 7
(ii) (iii) the parties agree to take all necessary action to effect a change of the name of the party in those proceedings from the Seller to the Buyer; and any judgement, determination or order in any such proceedings with have effect as between the Buyer and the Seller as if such judgement, determination or order had been made for or against the Buyer. 5 Consequences of the transfer of the Transferring Policies 5.1 Rights and obligations of policyholders and insureds This Scheme will not change the terms of any Transferring Policy, or affect any claim in respect of any Transferring Policy, issued by the Seller other than that, at and from the Transfer Time, the Buyer will be substituted for the Seller in all Transferring Policies as if the Buyer was, and at all times had been, the insurer under the Transferring Policies. Policyholders (and any person claiming through or under them) will continue to have the same rights, benefits and liabilities under or in respect of any Transferring Policy or claim but, at and from the Transfer Time, with the Buyer as the insurer in place of the Seller as if: (i) (ii) the proposals and applications with respect to the Transferring Policies had been made to (and accepted by) the Buyer instead of the Seller; and the Transferring Policies had been entered into and underwritten by the Buyer. At and from the Transfer Time, the change in insurer from the Seller to the Buyer will automatically result in the following: (i) (ii) (iii) all outstanding claims-related rights and liabilities of the Seller in respect of the Transferring Policies will be transferred to the Buyer such that any claims arising under or in connection with any Transferring Policy underwritten by the Seller must be made against the Buyer; any policyholder under a Transferring Policy or other person who has a claim on or obligation to the Seller under or in respect of a Transferring Policy will have the same claim on or obligation to the Buyer in substitution for their claim on or obligation to the Seller, irrespective of when such claim or obligation arose; and the Buyer will be entitled to enforce all rights and remedies which but for this Scheme would have been enforceable by the Seller under or in respect of the Transferring Policies (including any claims by way of subrogation, contribution and any other recoveries related directly or indirectly to any Transferring Policy). 5.2 Authorities At and from the Transfer Time, all directions, authorities, mandates and instructions given to the Seller to use, disclose or obtain information in the course of carrying on the CTP Insurance Business (including personal information within Scheme under Division 3A of Part III of the Insurance Act 1973 (Cth) 8
the meaning of the Privacy Act 1988 (Cth)) are deemed to be given to the Buyer instead of the Seller. 5.3 No new contracts of insurance No new contract of insurance will be created as a result of this Scheme. 6 Indemnity If this Scheme does not, with effect from the Transfer Time: (i) (ii) transfer all of the Transferring Assets to the Buyer; and/or result in the Buyer assuming all of the Transferring Liabilities, then the Buyer indemnifies the Seller, as to 100 cents in the dollar, for all liability and loss of the Seller under or in respect of the relevant Transferring Assets and/or Transferring Liabilities. The Buyer s obligations under clause 6 of this Scheme are primary to and not excess of or contributing with any obligation or liability of any other person to indemnify the Seller in respect of the Transferring Assets and Transferring Liabilities. 7 Implementation The Buyer and the Seller must do all things reasonably necessary or desirable to give effect to this Scheme. This Scheme will become effective at and from the Transfer Time. 8 Governing law and jurisdiction The law in force in New South Wales, Australia governs this Scheme and, to the extent the law permits, all matters in connection with this Scheme including any non-contractual matters. The parties submit to the non-exclusive jurisdiction of the courts of that place. Scheme under Division 3A of Part III of the Insurance Act 1973 (Cth) 9