Changes to the Scottish Widows Group of companies
YOUR QUESTIONS ANSWERED
Proposed changes to our business
What are the proposals?
We’re proposing to simplify our business by reducing the number of life insurance companies within the Scottish Widows Group from eight to one. We intend to achieve this by transferring the life insurance business of seven companies into an eighth company in the Group, Clerical Medical Investment Group Limited.
At the same time, Clerical Medical Investment Group Limited will be renamed Scottish Widows Limited. Renaming is a separate process and is subject to Companies House approval. Its registered office address will be changed to 25 Gresham Street, London EC2V 7HN.
If approved by the High Court, the proposals are expected to come into effect from 31 December 2015.
Why are you doing this?
We believe that the proposals will make our business more efficient, will simplify our corporate structure and regulatory reporting requirements and will help us make better use of our resources, including capital.
Will a bonus or windfall payment be paid to policyholders under these proposals?
No. This is simply a re-organisation of the businesses within the Scottish Widows Group.
What companies are transferring and what is the legal process?
The entire long term business of:
- Scottish Widows plc
- Pensions Management (S. W. F.) Limited
- Scottish Widows Annuities Limited
- Scottish Widows Unit Funds Limited
- Halifax Life Limited
- Clerical Medical Managed Funds Limited
- St Andrew's Life Assurance plc
will be transferred to Clerical Medical Investment Group Limited. At the same time as the transfer, Clerical Medical Investment Group Limited will change its name to Scottish Widows Limited and its registered office will be changed to 25 Gresham Street, London EC2V 7HN. It will remain a subsidiary of Scottish Widows Group Limited, which will continue to be registered at 69 Morrison Street, Edinburgh EH3 8YF.
We’re required to undertake the transfer in accordance with a statutory process set out in Part VII of the Financial Services and Markets Act 2000. This requires us to make an application to the High Court to approve the transfers.
How policies are affected
How will I know if my policy is affected?
We’ll write to policyholders whose policies are affected. Details of the companies affected by the proposals are set out above.
Will affected policies be the same if the proposals go ahead?
Yes. There will be no changes to the features of affected policies or the branding that appears on our literature and correspondence. Existing policy numbers and terms and conditions will continue to apply.
Policyholders will retain their existing policy documents and these will be recognised by Scottish Widows Limited in the future.
What does this mean for payments to and from policies?
If the proposals are approved, payments will automatically become payable to and from Scottish Widows Limited. Policyholders do not need to take any action and there will be no change to the timings, amounts or frequency of any regular payments to or from policies, or changes to the dates of automated collections.
Will I still be able to make changes to my policy or take advantage of any options available under my policy?
Yes - subject to the terms and conditions of the policy, which are not changing as a result of these proposals.
How are with-profits and non-profit funds affected?
From the Effective Date, the transferring Scottish Widows With Profits Fund will be maintained as a separate and distinct with-profits fund in Scottish Widows Limited, alongside the Clerical Medical Investment Group With Profits Fund. The proposals will not result in any significant reduction in security for any policyholders, including those invested in the Scottish Widows With Profits Fund.
There will be some changes built into the Scheme which affect the Scottish Widows With Profits Fund, but they will have no significant impact on the day to day operation of the fund including its: policyholder payout methodologies; quality of customer service; capital protections; investment policy; Additional Account distribution; policyholder expenses and charges; and taxation. The changes to the fund’s operation being made are largely to reflect the implementation of the new Solvency II regulatory regime (European legislation which will introduce a number of important changes for how insurance companies manage their assets and liabilities) and to align governance to industry best practice. These changes would have been made irrespective of the business transfer and should not significantly alter policyholder security or benefit expectations. The Scottish Widows With Profits Fund Principles and Practices of Financial Management (PPFM) will be updated to reflect the changes should they go ahead. We anticipate that these updates will be minor. An updated version of the PPFM will be available from the library from the Effective Date.
If you have a with-profits policy that was transferred to Scottish Widows plc under the Demutualisation Scheme in 2000, the Demutualisation Scheme includes a number of safeguards. These are designed to protect with-profits policyholders’ interests, particularly in relation to the governance and investment policy of the With Profits Fund to which the transferred with-profits policies were allocated. The proposed new Scheme will preserve these, or equivalent, safeguards.
The Scheme also introduces a management action that may allow either with-profits fund to close or both to merge, if the size of the relevant (or either fund in the case of merger) with-profits fund falls below a certain monetary threshold in the future (which is not expected for around another 15 years or more). Such management actions cannot be taken unless the directors of Scottish Widows Limited obtain appropriate actuarial advice, including that of an independent actuary, and receive non-objection from the regulators (the PRA and the FCA). These protections aim to ensure that any affected policyholders will be treated fairly, should either fund close or both merge in the future. This is one of a number of management actions that could be considered in the future.
Also, on the Effective Date, the current non-profit funds and shareholder funds of Scottish Widows plc and the other transferring companies in the Group will immediately transfer to Clerical Medical Investment Group Limited and merge with the non-profit fund and shareholder funds of Clerical Medical Investment Group Limited respectively. Either on this date or at a later stage, depending on the date of the implementation of certain regulations, these funds will merge to form a single fund, which will be called the Combined Fund. At this point, Scottish Widows Limited will comprise the Combined Fund, the Scottish Widows With Profits Fund and the Clerical Medical Investment Group With Profits Fund.
Will the proposals affect the security of my benefits?
Policies will continue to be protected by capital which is held in the companies to help ensure that benefits are paid under a wide range of scenarios. The amount of this capital will continue to be set at a level significantly in excess of that required under the relevant regulations.
The proposals would result in the transfer of a number of books of business into a single entity, which will result in all of the attaching assets, risks and liabilities coming together. As a result, particular groups of policyholders will become more exposed to certain types of risk, and less exposed to others.
The Independent Expert, who is legally required to review the proposals, has considered these proposals and concluded that the security of benefits for any group of policyholders would not be “materially adversely affected” by them. In particular, he has considered the changes in the risks to which policyholders are exposed and discusses this in paragraphs 6.69 to 6.84 of his report, as well as explaining how this impacted his conclusions on the effect of the proposals on each of the groups of policyholders in Sections 7, 8 and 9.
The Independent Expert’s full report is available in the library.
The Independent Expert will continue to keep the proposals under review up until the date of the High Court hearing. He will also produce a supplementary report shortly before the court hearing which will be published in the library as soon as it is available.
Is there any change to my contact point if I wish to discuss my policy with someone?
No. Customers will continue to use the same contact details when getting in touch.
If you have a query about the proposed transfer specifically, you can call our dedicated team on 0800 151 2764 (or +44 131 203 3419 if you are calling from outside the UK).
I’ve received a letter but my policy is cancelled. Do I need to do anything?
If a policy is no longer in force and can’t be reinstated, customers don’t need to take any action and can ignore the mailing for that particular policy.
I’ve received more than one letter – what should I do?
Customers that hold more than one policy with any of the companies in the Scottish Widows Group may receive a separate letter for each policy. You should read each letter as you may need to consider different information depending on the policy it relates to.
My policy is jointly-owned. Have you written to all policyholders?
We’ve only written to the named customer we normally contact when dealing with your policy. If a policy is jointly owned, the recipient should make each joint policyholder aware of the proposals and their right to object.
Where a policy is set up under trust, we’ve written one letter addressed to all trustees for the policy. The recipient should make each individual trustee aware of the proposals and their right to object.
The approval process
Do I need to vote on the proposals?
No – the proposals are not subject to a vote. They do, however, need to be approved by the High Court. If any policyholder wishes to object to the proposals they have a right to do so.
Has any independent person reviewed the proposals?
Yes. An Independent Expert has reviewed the proposals and written a report on how they are likely to affect policyholders. The Independent Expert, Mr. David Murray, is a Senior Actuary and Partner at Deloitte MCS Ltd. He is independent of the companies involved in the proposals and his appointment has been approved by the PRA, one of our regulators. The Independent Expert has concluded that:
“I am satisfied that the proposals will not have any material effect on the level of benefits payable to policyholders (including their reasonable expectations of the benefits that will be payable in the future).
In relation to the security of benefits, I have considered the expected solvency position, noting that it is expected to be well in excess of regulatory requirements immediately post-Scheme and that there are policies in place that aim to maintain that position in future. I note that the proposals will result in the transfer of a number of books of business into a single entity, so all of the attaching assets, risks and liabilities come together. Particular groups of policyholders will become relatively more exposed to certain types of risk, and relatively less exposed to others. I have paid close attention to the larger risks that transfer, and confirm that the attaching reserves and capital that back them also transfer. I am satisfied that these resources are sufficient in each case to cover an adverse scenario plus a significant margin, and have concluded that an adverse impact on the security of policyholder benefits is only possible in extremely remote scenarios. I am therefore satisfied that the transfer does not materially adversely affect the security of the benefits payable to policyholders.
I have considered whether the proposals retain the various protections and principles of the previously approved scheme of demutualisation and have concluded that this is the case.
I am also satisfied that the proposals will not have any impact on the quality of administration services or investment management, or any adverse tax effects.
I will continue to keep the proposals under review and will submit a supplementary report to the High Court shortly before the hearing to decide whether to approve the transfer, in which I will confirm whether my conclusions continue to hold.”
You can obtain a summary of the Independent Expert’s report, or a copy of his full report, from the library.
The Independent Expert will also produce a supplementary report shortly before the court hearing which will be published in the library as soon as it is available.
Will the proposals automatically go ahead?
No. The proposals will only go ahead if the Courts approve them. The High Court will only approve the changes if it is satisfied that the proposals are appropriate, fair to our policyholders and meet the legal requirements. To do this, it will consider the opinion of the Independent Expert and reports from our regulators, the PRA and the FCA. It will also consider objections received from policyholders.
The FCA, PRA and Independent Expert will keep the proposals under review up until the High Court hearing date.
Why is the approval of the High Court necessary?
The approval of the High Court is required by law, as transfers of insurance business by insurance companies are governed by the Financial Services and Markets Act 2000. This is an important protection for policyholders.
When and how will I know whether the High Court has approved the proposals?
Following the final High Court hearing, we will publish the High Court’s decision on this website.
What happens if the High Court doesn’t approve the proposals?
If the proposals aren’t approved, the transfer won’t go ahead and all policies will continue to be held by their current company.
How to raise an objection and how to find out more
Are documents relating to the proposals available to read?
Yes. Copies of all documents relating to the proposals are available in the library or can be requested by phone on 0800 151 2764 (or +44 131 203 3419 if you are calling from outside the UK), or by writing to us at:
Insurance Business Transfer Department
PO Box 28139
I have some other questions - who can I contact?
If you have any questions about the proposals, please see Contact us for details of the different ways to get in touch. If you’ve received a letter, please quote the reference number at the top of the letter during any correspondence with us.
If you have a general query about your policy which is not related to the transfer, please use the usual contact details shown in your policy documents.
Can I object to the proposals?
Yes. If having read the information available you wish to object to the proposals you have a right to do so. You can do this by contacting us before the date of the High Court hearing on 0800 151 2764 (or +44 131 203 3419 if you are calling from outside the UK) or by writing to us at the address below, setting out the reasons for your objection. We will then make your views known to the High Court and the Independent Expert.
Insurance Business Transfer Department
PO Box 28139
Alternatively, you are entitled to attend the High Court hearing and express your views in person or send a representative on your behalf. The High Court hearing is scheduled for Thursday 26 November 2015 at 7 Rolls Buildings, Fetter Lane, London EC4A 1NL. If you wish to attend in person, it would help if you could write to us at the address at the top of the letter as soon as possible (and ideally no later than 20 November 2015) setting out the reasons for your concerns. However, you are still entitled to attend the hearing if you haven't contacted us in advance.
Alternatively, you can write to Herbert Smith Freehills LLP, the solicitors acting for us, at:
Herbert Smith Freehills LLP
If you have a policy which was transferred to Scottish Widows plc or Scottish Widows Annuities Limited under the Demutualisation Scheme in 2000, particularly a with-profits policy, you can object to the separate applications to the Court of Session. Similarly, if you have a policy which was transferred to Scottish Widows plc or Scottish Widows Annuities Limited under the 2004 Scheme, you can object to the further applications to the Court of Session (see "How the proposals affect you" section of the accompanying letter).
The applications will be advertised on or around 1 September 2015 in the Edinburgh Gazette and in two newspapers. Any policyholder who is concerned that the applications to the Court of Session may adversely affect them should seek independent legal advice and lodge written “Answers” (formal legal objections) with the Court of Session at Parliament House, Parliament Square, Edinburgh, EH1 1RQ within 42 days after the publication of the last of those advertisements.
The Court of Session may also consider written objections which are not in the form of Answers and/or allow an affected policyholder to appear at the Court of Session hearing in person. If any such policyholder wishes to make written objections, but not in the form of Answers, they should address them to the solicitors acting for us in relation to the Court of Session applications at:
Maclay Murray & Spens LLP
15 Lauriston Place
Reference – MBL/SCO/314/91
Jersey residents whose policies are managed by Scottish Widows plc, Scottish Widows Annuities Limited or Clerical Medical Investment Group Limited only
The court hearing for the approval of the Jersey scheme is expected to take place on 2 December 2015 at 9.30am at the Royal Court of Jersey, Royal Court House, Royal Square, St Helier, Jersey JE1 1JG.
If you intend to appear at the Jersey Court hearing, please notify us, or Mourant Ozannes, the advocates acting for us, in writing with details of your concerns as soon as possible and preferably by 20 November 2015. If you do not wish to attend the hearing, but do wish to have your written views considered by the Royal Court of Jersey, please make this clear to us and we can provide your written concerns on the Jersey scheme to the Royal Court of Jersey on your behalf.
You can see or obtain copies of the Representation and the full Independent Expert’s report up to and including the date of the Royal Court hearing. They are available for inspection or collection free of charge between the hours of 9am and 5pm from our Jersey advocates at the address below.
22 Grenville Street
Copies are also available from the library or by calling our helpline on 0800 151 2764 (or +44 131 203 3419 if you are calling from outside the UK).
The court hearing for the approval of the Guernsey scheme is expected to take place on 4 December 2015 at 9.30am at the Royal Court of Guernsey, The Royal Court House, St Peter Port, Guernsey GY1 2NZ.
If you intend to appear at the Guernsey Court hearing, please notify us, or Mourant Ozannes, the advocates acting for us, in writing with details of your concerns as soon as possible and preferably by 20 November 2015. If you do not wish to attend the hearing, but do wish to have your written views considered by the Royal Court of Guernsey, please make this clear to us and we can provide your written concerns on the Guernsey scheme to the Royal Court of Guernsey on your behalf.
You can see or obtain copies of the proposed application to the Royal Court of Guernsey and the full Independent Expert’s report up to and including the date of the Royal Court hearing. They are available for inspection or collection free of charge between the hours of 9am and 5pm from our Guernsey advocates at the address below.
1 Le Marchant Street
St Peter Port
Copies are also available from the library or by calling our helpline on 0800 151 2764 (or +44 131 203 3419 if you are calling from outside the UK).
Is the information available in Braille or audio format?
Yes. We can provide copies of the letter, Questions and Answers and supporting documentation in a number of formats if required. Please contact us for more information.