Prudential: High Court Judgment on Proposed Transfer of Annuity Business

LONDON, England, Aug. 16 -- Prudential issued the following news release:

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- No Impact on Demerger of M&GPrudential from Prudential Expected Q4 2019

- Policyholder Benefits and Administration Unaffected

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The High Court of England and Wales ("the High Court") has declined to sanction the transfer of a portfolio of annuities from The Prudential Assurance Company Limited ("PAC"), a subsidiary of M&GPrudential, to Rothesay Life plc ("Rothesay Life").

As a result of this judgment, the current benefits, terms and conditions, and service for the policyholders covered by the proposed transfer are unaffected. We will be writing to relevant policyholders shortly.

In March 2018, PAC entered into an agreement with Rothesay Life to reinsure pound sterling12.0 billion of shareholder-backed annuity liabilities with the intention that this would be followed by a transfer of the business pursuant to Part VII of the Financial Services and Markets Act 2000.

This reinsurance arrangement remains in place and the High Court's judgment has no effect on the current capital position of PAC, which as at 30 June 2019 had an estimated Solvency II surplus of pound sterling 3.7 billion.

The High Court judgment also has no impact on the timetable for the demerger of M&GPrudential from Prudential plc, which is expected to complete in the fourth quarter of 2019.

We are disappointed by the High Court's decision. The Independent Expert, who was appointed to report to the High Court, concluded the transfer would have no material adverse effect on the security of benefits or the reasonable benefit expectations of our policyholders. PAC and Rothesay Life have been granted leave to appeal the judgment by the High Court.