ICP 6 Changes of Control and Portfolio Transfers

The supervisor assesses and decides on proposals:

  • to acquire significant ownership of, or an interest in, an insurer that results in a person (legal or natural), directly or indirectly, alone or with an associate, exercising control over the insurer; and
  • for portfolio transfers.

Introductory Guidance


6.0.1
The supervision of change of control and portfolio transfers supports supervisory objectives, in particular:
  • licensing regimes are not undermined by control being obtained or retained by those who would not get a licence ordinarily; and
  • insurers should continue to be held in corporate or other arrangements that allow them to be effectively supervised.

6.0.2
To assist in understanding the content of this ICP, it is emphasised that:
  • change of control extends beyond the immediate controlling interest, such as the ownership of equity in an insurer, and includes other actions that have the potential to change the exercise of control over the insurer;
  • change of control is relevant, both at the insurance legal entity and intermediate and ultimate beneficial owner levels;
  • change of control may take place in a variety of forms, such as mergers, acquisitions or (de)mutualisations;
  • control includes the exercise of influence over decisions such as those on strategic, operating, investing and financing policies of an insurer. It may also include the power to appoint or remove members, or otherwise influence the composition of, the Board or of Board committees;
  • control may be exercised by a person individually, or acting in concert with associates or others, and directly or indirectly through corporate structures or other mechanisms; and
  • significant owners and the transactions that determine or change control may be outside of a jurisdiction, but the impact on the ultimate control of the insurer in that jurisdiction means that they remain relevant to effective supervision of control.

6.0.3
Supervisory requirements and practices regarding change of control and portfolio transfers may vary, taking into account the nature, scale and complexity of the transactions and the risk posed to achievement of supervisory objectives. For example, portfolio transfers between reinsurers, internal restructuring transactions within a group that does not change the ultimate beneficial ownership of the entity, and demutualisation, are different types of transactions. Their nature may warrant different supervisory approaches and/or different levels of intensity of supervision.

6.0.4
There may be transactions where a portfolio transfer or a change of control is cross-border in nature. In such cases, the supervisor should coordinate and exchange information with the relevant supervisors (see ICP 3 Information Sharing and Confidentiality Requirements and ICP 25 Supervisory Cooperation and Coordination).