Re Fairmead Insurance: High Court sanctions Allianz Part VII transfer despite policyholder objections

The High Court has sanctioned an intra-group transfer of four general insurance businesses to Allianz Insurance plc, rejecting objections from policyholders and confirming a wide power to order incidental transfers from non-insurance companies.

Mr Justice Richards gave judgement in Re Fairmead Insurance Ltd [2026] EWHC 2644 (BP) on 16 October 2026, setting out reasons for orders made on 5 October. The scheme under Part VII of the Financial Services and Markets Act 2000 moves the businesses of Fairmead Insurance, Highway Insurance Company, Liverpool Victoria Insurance Company and Trafalgar Insurance into Allianz Insurance plc, which had technical provisions of about £1.83bn at 31 March 2026. The largest transferor, Liverpool Victoria Insurance Company, had net technical provisions above £1bn.

A lift and drop within one group

The scheme is not a rescue. Its proponents expect operational and regulatory capital efficiencies, with a dividend of up to £130m hoped for from the UK subgroup, alongside greater risk diversification. It is a "lift and drop" arrangement, leaving policy terms and administration unchanged while moving assets and liabilities. For that reason the judge confined his stakeholder analysis to policyholders and reinsurers.

The independent expert concluded that the scheme would have no material adverse effect on policyholders' benefit expectations, security of benefits or service. The Financial Conduct Authority considered it within the range of reasonable and fair schemes, and the Prudential Regulation Authority raised no objection.

Jurisdiction and discretion

The requirement to notify every policyholder had been waived by an earlier order, though about six million packages were sent. The judge held that the PRA's solvency certificate, given "on the basis of the information provided to it", satisfied the statute. Parliament, he said, was not requiring the regulator to act as an auditor and re-verify every figure.

Applying the Court of Appeal's guidance in Re Prudential Assurance Company Ltd, he treated the expert and regulators' views as carrying full weight, while testing the reasoning. He noted that three transferors had higher solvency capital ratios than the 148% projected for the transferee. The expert explained why raw percentages mislead: 100% already protects against a one-in-200-year event, the transferee uses a more risk-sensitive internal model, and pooling risks in one entity aids diversification. The judge tested the diversification point with a simple hypothetical of mutually exclusive risks and was satisfied it had a sound statistical basis.

The objections

There were 123 written objections and three oral. The oral objectors had largely experienced difficulty with individual claims, and the judge said he could not adjudicate those disputes. Nor had they shown that the scheme itself would cause a material adverse effect, particularly where the same teams would handle claims. Alleged systemic failings were unsupported by evidence and at odds with the regulators' assessments. Any data protection liabilities would transfer with the business.

The themes in the written objections fared no better. Increased market share was irrelevant within a single group. Concern about loss of mutual status was a misconception, since Liverpool Victoria Insurance Company had never been mutual. Notification at renewal, the volume of paperwork, mailing errors and the expert's payment by the transferee did not amount to material adverse effects. The judge acknowledged that most of the benefit of the dividend would go to shareholders, but said that, with no stakeholder shown to be worse off, this was no reason to refuse sanction.

Ancillary transfer from a service company

The judge also ordered a transfer of assets and liabilities from Liverpool Victoria General Insurance Group, which supports non-insurance policy benefits such as replacement vehicles, to another Allianz service company. As neither is a transferor or transferee under section 105, the power had to come from section 112(1)(d). Following Re Barclays Bank plc [2018] EWHC 2868 (Ch), he held it extends to such transfers. Following Re Norwich Union Linked Life Assurance Ltd and Re Alliance & Leicester plc, "necessary" means something between indispensable and desirable. The order spared negotiating with about 115 service providers and protected continuity of service. No counterparty had objected, and the order was made.