GENB914705 PAC23 07 18 - Pru

Policyholder InformationThe proposed transfer of the businessof the Polish branch and certain otherhistoric overseas business

of

The Prudential AssuranceCompany Limited

to

Prudential InternationalAssurance plc

pursuant to

Part VII of the UK FinancialServices and MarketsAct 2000

2 Policyholder Information Booklet

Please share this information with anyone who has an interest in your policyOther people might be involved with your policy, for instance:

> Joint holders of your policy

> A transferee of the right of the insurance benefit under a policy

> A beneficiary – someone who might get a payment from the policy other than the policyholder

> A beneficial owner – someone who has a beneficial interest in the policy under anominee/trustee arrangement

> Someone who holds a power of attorney for a policyholder

If you need another copy of the booklet so you can share it with someone, just ask us for one.

You have the right to raise any concerns or object to this transferIt’s your right to tell us or the High Court about any worries you have. There’s information abouthow to do this in the answer to question 15 in Section B of this booklet.

If you receive this booklet on or after 11 December 2018, the High Court hearing will have alreadytaken place and concerns can no longer be raised to the High Court. However, please feel free tocontact us if you wish to discuss any concerns.

You can get in touch to ask us any questionsIf you have any questions that we haven’t answered in this booklet, please get in touch so we cananswer them for you. It will help us if you can tell us the reference number at the top of your letterwhen you get in touch.

> Write to us at Prudential WP Annuities, Sutherland House, Russell Way, Crawley,West Sussex RH10 1UH United Kingdom

> Call us on our helpline +44 (0)345 121 2513.Our lines are open from 9.00am to 5pm Monday to Friday, except on bank holidays.

> Email us on [email protected]

Prudential has reviewed its operations across Europe since the UK voted to leave the EuropeanUnion. These operations relate to the long-term insurance business sold by PAC Poland, PAC France,PAC Malta and by overseas branches of ELAS in Germany and Ireland which were transferred to PAC in 2007 (all defined below). Currently Prudential’s European operations are split across twocompanies, The Prudential Assurance Company Limited (PAC) and Prudential International Assuranceplc (PIA). Prudential has decided to consolidate all of its long term European business (excluding theUK) into one entity, PIA, which is based in Ireland.

If you have a policy with PAC through one of these PAC branches, your insurer will change to PIA.

We’ve included this booklet as a guide about the transfer for your information. If you’re worried aboutthe transfer, this booklet will tell you how to raise your concerns. If you have any questions that wehaven’t covered in this booklet, you can phone the helpline on +44 (0)345 121 2513.

Policyholder Information Booklet 3

Contents

Expected Timetable

Final Court Hearing to considerthe proposed transfer:

11 December 2018 (High Court of Justiceof England and Wales, Rolls Building,Fetter Lane, London EC4A 1NL)

Proposed date on which thetransfer becomes effective:

1 January 2019 at 00.01 hrs (GMT)(01:01 hrs (CET))

Expected Timetable 3

The terms we use in this booklet 4

A. Key Information about the Transfer 5

B. Questions and Answers 6

C. Summary of the Transfer 13

D. Summary of the Independent Expert’s Report 15

E. Legal notice of the Transfer 22


In this booklet, the following words andexpressions have the following meanings:

“Chief Actuary” the Chief Actuary of PAC is asenior actuary appointed to advise the PAC boardabout the risks which may affect its business

“ELAS” The Equitable Life Assurance Society

“FCA” the Financial Conduct Authority, theregulator responsible for the regulation offinancial markets and supervising the conductof financial services firms in the UK

“FSMA” the UK Financial Services and MarketsAct 2000

“Head of Actuarial Function” the Head ofActuarial Function of PIA is a senior actuaryappointed to advise the PIA board about therisks which may affect its business

“High Court” the High Court of Justice ofEngland and Wales, Rolls Building, Fetter Lane,London EC4A 1NL

“Independent Expert” Oliver Gillespie, aPrincipal of Milliman LLP and a Fellow of theInstitute and Faculty of Actuaries

“Independent Expert’s Report” the reporton the transfer made by the Independent Expertin accordance with section 109 of FSMA, asummary of which is contained at Section D ofthis booklet

“Notice of Transfer” the notice of theapplication to the High Court to make thistransfer. The notice is in Section E of this booklet

“PAC” The Prudential AssuranceCompany Limited

“PAC France” PAC’s branch in France, whichwas set up in 2000 and ceased writing newbusiness in 2003

“PAC Local European Business” the books oflong-term insurance business sold by PACPoland, PAC France, PAC Malta and by overseasbranches of ELAS in Germany and Ireland whichwere transferred to PAC in 2007

“PAC Malta” PAC’s branch in Malta, which wasset up in 1955 and ceased writing new businessin 1982

“PAC Poland” the Polish branch of PAC. Its fullname is The Prudential Assurance CompanyLimited Sp. z o.o. Oddział w Polsce

“PIA” Prudential International Assurance plc, awholly owned subsidiary of PAC

“PIA Poland” the Polish branch of PIA. Its fullname will be Prudential International Assuranceplc Spółka Akcyjna Oddział w Polsce

“PRA” the Prudential Regulation Authority, theregulator responsible for regulating andsupervising insurers and other financialinstitutions in the UK

“Prudential” Prudential plc and the companiesit owns, including PIA and PAC

“Scheme” the legal document setting outthe terms for the transfer of the PAC LocalEuropean Business of PAC to PIA. This is doneunder Part VII of FSMA

“Transfer Date” the date on which the businessis expected to transfer, i.e. 00.01 hrs (GMT)(01:01 hrs (CET)) on 1 January 2019

“With-Profits Actuary” the With-ProfitsActuary of PAC. They’re a senior actuary whoadvises PAC’s board on how to treat it’s with-profits policyholders fairly

“With-Profits Sub-Fund” the With-Profits Sub-Fund within PAC's long term insurance fund

The terms we use in this booklet

We’re transferring policies to keepthem running smoothlySince the UK voted to leave the European Union(EU), we at Prudential have reviewed how wework across the EU. To keep things runningsmoothly – for our policyholders and for us –we’re proposing to transfer some business outof the UK to Ireland. Specifically, we’re goingto transfer the local European life insurancebusiness of The Prudential Assurance CompanyLimited (PAC) (the PAC Local European Business)to Prudential International Assurance plc (PIA).

We’re transferring policies to PIA, awholly owned subsidiary of PACWe’re transferring these policies from PAC to PIA:

> PAC Poland policies

> PAC France policies

> PAC Malta policies

> Policies written in Germany and Ireland thatwere transferred from the Equitable LifeAssurance Society (ELAS) in 2007 as part ofa wider transfer of business

PIA is incorporated and established in Ireland.It’s a public limited company that’s whollyowned by PAC. It’s authorised to carry on lifeassurance business by the Central Bank ofIreland, the Irish regulatory authorityresponsible for supervising Irish-authorisedinsurance undertakings.

The Independent Expert hasconcluded that your benefits willstay secureWe appointed an Independent Expert to reviewwhat the proposed transfer would mean forpolicyholders of PAC and PIA, and how it mightaffect them. This Independent Expert is anindependent consulting actuary and not an

employee of Prudential. Oliver Gillespie, aPrincipal of Milliman LLP, has been appointedfor this role. The PRA and the FCA haveapproved this appointment.

His report concluded that the transfer willnot have a material adverse effect on thesecurity of your benefits, your reasonableexpectations for your benefits, or on thestandards of administration, service,management or governance that apply toyour policy. You can see a summary of hisreport in Section D of this booklet.

We expect the transfer to take place on1 January 2019.

If you have a PAC Poland, PACFrance or PAC Malta policy or anELAS policy written in Germany orIreland, it will transfer to PIAIf the High Court approves the transfer, the PACLocal European Business will transfer to PIA. PIAwill then be the provider of all those policies.Nothing else about these policies will change –the terms and conditions will stay the same, andthe way the policies are run will be the same asbefore the transfer. Other PAC policies will remainin PAC as they aren’t part of the PAC LocalEuropean Business. The terms and conditions ofthese policies will stay the same, too.

If your policy is with PIA, it willstay with PIAPolicies that are already with PIA will stay withPIA. Nothing about these policies will change.

There’s more information inthis bookletYou’ll find Questions and Answers in Section B,the Summary of the Transfer in Section C, theSummary of the Independent Expert’s Report inSection D, and the Notice of Transfer in Section E.

A. Key Information about the Transfer



We’ve created a list of questions and answersabout the transfer that we think policyholdersmight find useful. The answers are general, sowhile they’re correct for most policyholders,there may be a few exceptions for individualcircumstances. If you have any questions thatwe haven’t covered in this booklet, you canphone the helpline on +44(0)345 121 2513.

1. Why have I been sent this booklet?We’re sending this pack to everyone whomight be affected by the transfer. It’s for yourinformation only.

We haven’t sent these packs to everyonewho may have an interest in your policy.If you think there’s anyone who should havethis booklet, please share this informationwith them. Alternatively, you can directthem to the documents online atwww.pru.co.uk/transfer.

2. What’s being proposed and why?Prudential has reviewed its operations acrossEurope since the UK voted to leave the EuropeanUnion (EU). Currently Prudential’s Europeanoperations are split across two companies, ThePrudential Assurance Company Limited (PAC)and Prudential International Assurance plc (PIA).Prudential has decided to consolidate all of itslong term European business (excluding the UK)into one entity, PIA, which is based in Ireland.

This change will allow us to operate moreefficiently and simplify how we manage thesepolicies. In addition, it will also ensure that thesepolicies can continue to run smoothly given thatpost-Brexit it might not be possible for PAC as aUK insurance company to operate in the sameway it has done previously within the EU.

Specifically, this is what PAC will be transferringto PIA:

> PAC Poland – we’ll transfer all policies of thePolish branch of PAC to a new Polish branchof PIA. This branch will be called PrudentialInternational Assurance plc Spólka AkcyjnaOddział w Polsce

> PAC France – we’ll transfer these policiesto PIA

> PAC Malta – we’ll transfer these policiesto PIA

> Policies written in Germany and Ireland thatwere transferred from the Equitable LifeAssurance Society (ELAS) to PAC in 2007 –we’ll transfer these policies to PIA

To make this transfer, we need to follow theprocess set out in the UK’s Financial Servicesand Markets Act 2000. Part of this process is toask the High Court for its approval. If itapproves, the transfer is expected to take placeon 1 January 2019.

3. I have an annuity with Prudential inIreland. How is my annuity affectedand what do I need to do now?We’re proposing to transfer your annuity to PIA,so your insurer will change. When your policywas transferred from ELAS to PAC in 2007, itwas included in a bonus series called the“Transferring Policies Bonus Series”. When yourpolicy transfers to PIA, it will need to be movedout of the Transferring Policies Bonus Series.This will have no impact on your benefits orbonuses, which will continue to be calculated by PAC in accordance with your terms andconditions and the approach it has taken before.We just need to make a small amendment to theterms of the 2007 transfer and PAC’s Principlesand Practices and Financial Management toreflect this change.

B. Questions and Answers

Apart from this, everything else about your annuitywill stay the same. The terms and conditions willstay the same, and your annuity will run in thesame way as now. Any payments you get willcontinue as they are now – you’ll get the sameamount as usual on the same day as usual.

For more information about how your annuitymay be affected, please look at question 11 andsection 4 of the Summary of the IndependentExpert’s Report in Section D of this booklet.

If, having read the information in this booklet,you have no questions or concerns about thetransfer we’re proposing, you don’t need todo anything. If you do have any questionsor concerns, you can contact the helpline on+44 (0)345 121 2513. Alternatively, you canraise concerns or object to the transfer at theHigh Court – there are details for how to do thisin question 15.

Both before and after the High Court approvesthe transfer, a notice of the transfer will bepublished in The Irish Times, The IrishIndependent and the Irish Gazette (Iris Oifigiúil).

4. Can you give me more informationabout PAC?PAC is The Prudential Assurance CompanyLimited. It’s part of the global Prudential group,which is based in the UK.

The main thing PAC does is look after long-terminsurance policies. These are made up of life,pension and annuity policies. PAC also reinsureslong-term policies that other companies sell.The policies PAC issues are mostly with-profits,and include non-linked and linked non-profitpolicies. PAC’s business is done mostly in theUK, but it also operates in Poland through itsPolish branch. PAC has also sold policiesthrough other branches in the past, including inFrance and Malta.

PAC is authorised and regulated by thePrudential Regulation Authority, and is alsoregulated by the Financial Conduct Authority.

5. Can you give more informationabout PIA?PIA is Prudential International Assurance plc.It’s a life assurance company that’s fully ownedby PAC and based in Ireland.

PIA is authorised and regulated by the CentralBank of Ireland, the Irish regulatory authoritythat’s responsible for supervising Irish-authorised insurance undertakings.

6. How will the transfer work?We’re following a process outlined in Part VIIof FSMA, called an insurance businesstransfer scheme:

> We’re writing to you to tell you what’s goingon, and giving you the opportunity to raiseany concerns you have. We’re doing this forall policyholders who may be affected bythis transfer.

> We’ve appointed an Independent Expert.His job is to review what the proposedtransfer will mean for policyholders, andhow it might affect them. There’s asummary of the Independent Expert’s reportin Section D.

> Regulators in the UK, Poland, France,Malta, Germany and Ireland are beingconsulted. The regulators we’re talkingto in the UK are the Prudential RegulationAuthority and the Financial ConductAuthority. In France, this is the Autorité decontrôle prudentiel et de résolution. InGermany, this is the Bundesanstalt fürFinanzdienstleistungsaufsicht. In Malta, theseare the Malta Financial Services Authorityand the Financial Services Tribunal. In Poland,this is the Komisja Nadzoru Finansowego,which is the Polish Financial SupervisionAuthority. In Ireland, the Central Bank ofIreland is being consulted.



> We’re going to the High Court to ask for itsapproval. We need to do this by law – it’sstandard procedure for a transfer like this toensure that the transfer is appropriate. TheHigh Court hearing is expected to take placein the UK in London on 11 December 2018.If the date or time changes we’ll post thenew details on our website – the webaddress is www.pru.co.uk/transfer.

You’ve got the right to be heard at the HighCourt hearing. If you’re concerned about thetransfer, please see the answer to question 15.

7. How will we protect the interests ofPIA and PAC policyholders?We’re following a process to make sure thatwe’re protecting your interests.

We’re publishing notices in the press, and we’rewriting to you to tell you what’s going on andgive you the opportunity to raise any concernsyou have. We’re doing this for policyholders whoare involved in this transfer. The transfer will notgo ahead unless it is approved by the High Court,which will consider concerns or objections raisedby policyholders and will not approve the transferunless it is appropriate to do so.

We’ve appointed an Independent Expert –Oliver Gillespie, a Principal of Milliman LLP. Hisjob is to review what the proposed transfer willmean for policyholders, and how it might affectthem. In particular, the Independent Expert haslooked into:

> How the transfer might affect the security ofyour contractual rights

> How the transfer might affect your benefitsand what you expect them to be

The Independent Expert has concluded that thetransfer will not have a material adverse effect onthe security of your benefits, your reasonable

expectations for your benefits, or on thestandards of administration, service, managementor governance that apply to your policy.

You can see a summary of his report in SectionD of this booklet. Or you can find a full report onour website www.pru.co.uk/transfer. TheIndependent Expert will also prepare asupplementary report prior to the High Courthearing to update his report. We’ll put it on ourwebsite shortly before the High Court hearingon 11 December 2018.

Regulators in the UK, Poland, France, Malta,Germany and Ireland are being consulted aboutthe transfer. The regulators we’re talking to inthe UK are the Prudential Regulation Authorityand the Financial Conduct Authority. In France,this is the Autorité de contrôle prudentiel et derésolution. In Germany, this is the Bundesanstaltfür Finanzdienstleistungsaufsicht. In Malta,these are the Malta Financial Services Authorityand the Financial Services Tribunal. In Poland,this is the Komisja Nadzoru Finansowego, whichis the Polish Financial Supervision Authority. InIreland, the Central Bank of Ireland is beingconsulted. We’ve taken their views on thistransfer into account and we’ll keep doing so upuntil the transfer.

8. How independent is theIndependent Expert?The Independent Expert has a duty to the HighCourt. The main purpose of his report is to helpthe High Court in deciding whether or not toapprove the transfer. The Independent Expert’sobligation to the High Court overrides anyobligations he has to anyone else (including toPAC or PIA), even if someone else is instructinghim or paying him.

The PRA and the FCA have approved theappointment of Oliver Gillespie as theIndependent Expert.

9. What does the Independent Expertmean by the transfer not having a‘material adverse effect’?The Independent Expert is an actuary. His job inthis case is actuarial analysis – to work out thepossible implications of a transfer like this byestimating how likely future events are. Thephrase ‘material adverse effect’ (or equivalent)reflects the standard terms used in the analysisof transfers like this, including by theIndependent Expert in his analysis. It meansthat it is very unlikely that this transfer will haveany negative impact on you and your policyand, if it does, it will not have a significantimpact. While they can’t be completely 100%certain, this is the judgement he’s making afteranalysing the situation.

Although the situation for most policyholders isthat they won’t be affected by the transfer, thismay not be the case for all policyholders. This isonly because outcomes for different groups ofpolicyholders may be slightly different, andthere are a range of possible outcomes for allpolicyholders. If a potential outcome is veryunlikely to happen and would not have asignificant impact, or is likely to happen but hasa very small impact, then it is not considered tomaterially adversely affect policyholders.

We can confirm that we haven’t identified anycircumstances in which policyholders are likely tobe materially adversely affected by this transfer.Whilst it is expected (although not certain) thataccess to the FSCS will be discontinued as aresult of this transfer and therefore your policywill no longer be covered by this scheme, theIndependent Expert has considered the effect ofthe transfer on the security of policyholders andhas concluded that no longer having access tothe FSCS would not have a material adverseeffect on the security of benefits of thepolicyholders of PAC, given the strength of PIA.For more information, please look at question 11of this booklet.

10. What do the PAC Chief Actuary,the PIA Head of Actuarial Functionand the PAC With-Profits Actuarythink of the transfer?The Chief Actuary of PAC and the Head ofActuarial Function of PIA have also consideredhow the transfer might affect policyholders.

The Head of Actuarial Function of PIA isconfident that:

> The security of PIA policyholders’ policieswill not be materially adversely affected bythe transfer

> The reasonable expectations of PIApolicyholders for their policies won’t bematerially adversely affected by the transfer

The Chief Actuary of PAC is confident that:

> The security of PAC policyholders’ policieswon’t be materially adversely affected bythe transfer

> The reasonable expectations of PACpolicyholders for their policies won’t bematerially adversely affected by the transfer

The PAC With-Profits Actuary has reviewedthe impact of the proposed transfer on thePAC with-profits policyholders. The actuary isconfident that the transfer won’t have anymaterial adverse effect on either the securityor the reasonable benefit expectations ofPAC’s with-profits policyholders. The PACWith-Profits Actuary is also confident that thetransfer is consistent with the fair treatment ofPAC’s with-profits policyholders.



11. Will transferring my policy from aUK-based company (PAC) to an Irish-based company (PIA) affect howsecure my policy is in the future?PAC and PIA are subject to harmonised EUinsurance regulations which govern the amountof capital PAC and PIA are required to hold tosupport their insurance businesses. Bothcompanies have strong solvency ratios, whichmeans they hold similarly high proportions ofcapital to support their insurance businesses.

As a UK-based insurer, PAC participates in aUK scheme called the Financial ServicesCompensation Scheme (FSCS). If an insurerhas insufficient assets to meet claims orbecomes insolvent, the FSCS may paycompensation to the policyholder. PACpolicyholders who fulfill the eligibility criteriaof the applicable rules currently have access tothe FSCS.

Your policy will be transferred to PIA, a whollyowned subsidiary of PAC, incorporated andestablished in Ireland. It is expected that accessto the FSCS will be discontinued as a result ofthis transfer and therefore your policy will nolonger be covered by this scheme.

Ireland, where PIA is incorporated, currentlydoes not have any statutory compensationscheme. Irish solvency rules (based onEuropean-wide principles established underthe Solvency II directive) are aimed atprotecting policyholders as creditors in theevent of insolvency of an Irish insurancecompany. Although these rules do not providethe same sort of protection as FSCS, they areintended to limit the need for policyholders toseek compensation from a scheme similar tothe FSCS.

Furthermore, PIA is well regulated inaccordance with Irish and EU law, and mustfollow rules set at an EU level about the amountof capital it is required to hold to support itsinsurance business. PIA is also well capitalisedwhich means that it is unlikely that it willbecome unable to meet its claims.

The Independent Expert has considered theeffect of the transfer on the security ofpolicyholders and has concluded that no longerhaving access to the FSCS would not lead to amaterial adverse effect on the security ofbenefits of the policyholders of PAC, given thestrength of PIA.

This is covered in section 4 of the Summary ofthe Independent Expert’s Report in Section D ofthis booklet. You can see the full report onwww.pru.co.uk/transfer.

12. Will the proposed transferimpact my ability to access anombudsman service?Following the transfer, in circumstances wherePAC currently refers policyholders to the UKFinancial Ombudsman Service (FOS), PIA wouldrefer those policyholders to the Irish FinancialServices Ombudsman (FSO). Although youwould no longer have access to the FOS, youwould be able to pursue complaints through theFSO, where the complaints procedures arebroadly similar to those for the FOS.

The Independent Expert has concluded that thetransfer would have no material adverse effecton the rights of the transferring policyholders inrelation to their access to the services of afinancial ombudsman.

13. How much is the transfer costing,and who’s paying for it? We’re not publishing how much this transfer iscosting because it’s commercially sensitive. But we can tell you that you won’t be payinganything extra and none of the costs of thetransfer will have an impact on the benefits orbonuses of existing policyholders.

14. Why have you only written to menow, when it’s close to the High Courthearing and when you’ve beenplanning this for so long?To make this transfer process fair and smooth,we’ve been following a process outlined inFSMA. This process also tells us when tocontact policyholders. The timing of our writingto you is also in keeping with similar insurancebusiness transfers.

We’ve also followed guidance from ourregulators in the UK – the PRA and the FCA –about the time between writing to policyholdersand the hearing on 11 December 2018.

15. What if I have concerns about thetransfer or I think I’ll be adverselyaffected?If you’re concerned about the transfer or wish toobject to it, you can say so. You can call or writeto us to tell us about your concerns. If you tell usabout your concerns, we’ll look at them andpass them on to the regulators, the IndependentExpert and the High Court. The High Court willconsider your concerns or objection when it’sdeciding whether to approve the transfer.

You can write to the High Court at the RollsBuilding, Fetter Lane, London EC4A 1NL, or youcan appear in person or via a legalrepresentative at the hearing on 11 December2018. If the date or time changes we’ll post thenew details on our website at

www.pru.co.uk/transfer. You can makerepresentations to the High Court via us. If youwant to do so, please let us know as soon aspossible in writing, and by 7 December 2018.This is so we can make sure we have time topass your representations to the High Court.

You can ring the helpline on +44 (0)345 121 2513for more information about how to makerepresentations to the High Court.

16. What happens next?The next thing to happen in this process is theHigh Court hearing on 11 December 2018.This is when the High Court will tell us whetheror not it approves the transfer. If the High Courtapproves it, we expect the transfer to take placeon 1 January 2019.

17. Who do I contact forinformation about my policyafter the transfer’s happened?You should use the details you’d use now – they’renot changing either. For a reminder of what theseare, go to www.pru.co.uk/transfer.

18. Why have I been sent more thanone pack?If we’ve sent you more than one pack, it mightbe because you’ve got more than one policywith us. We’ve tried to make sure that peoplewho have more than one policy with us only getone pack, but in some cases we might not havebeen able to. We’re sorry if we’ve sent youmore than one.


19. How do I get more informationabout the transfer?Go to www.pru.co.uk/transferto download:

> The full Scheme document

> The full Independent Expert’s Report

> Reports from the Chief Actuary of PAC, theHead of Actuarial Function of PIA and theWith-Profits Actuary of PAC

You can also ask for copies of these documentsby writing to us at Prudential WP Annuities,Sutherland House, Russell Way, Crawley, WestSussex RH10 1UH, United Kingdom or callingus on our helpline at +44 (0)345 121 2513.When you’re getting in touch, it will help us ifyou can quote the reference number at the topof the letter we sent with this booklet.

20. What will happen to my personaldata once you’ve made the transfer,and who will administer it? When your policy transfers to PIA, so will yourpersonal data. This means that your personaldata will be looked after by PIA. Its registeredoffice is at Montague House, Adelaide Road,Dublin 2, Ireland.

The way your personal data is looked after won’tchange. Your data will be looked after with thesame standards of protection and security as arecurrently applied.

You have the right to access the personalinformation that PIA holds about you. Thisdoesn’t cost you anything. By law you can alsoask to have your data deleted (if we don’t needit for your active policy or corrected.

We understand how important it is to look afteryour personal information. It’s one of ourfundamental responsibilities to make sure thatwe protect all the information you give us.



1. Transfer of the businessSubject to the approval of the Court, the wholebusiness of PAC Poland, PAC France, PAC Maltaand the ELAS German and Irish Business willtransfer from PAC to PIA. This is defined in theScheme as the "Transferred Business". Thismeans that PIA will be the insurer andresponsible for the Transferred Policies insteadof PAC. PIA will take over responsibility formaking payments under the Transferred Policiesand paying claims and other monies due to theholders of Transferred Policies.

The final Court hearing is scheduled for11 December 2018 and the Scheme is expectedto become effective on 1 January 2019. Suchtime and date is defined in the Scheme as the"Transfer Date". Unless the transfer occursbefore 1 March 2019 (or a later date, if allowedby the Court), the Scheme will lapse.

If the Scheme is approved by the Court, PIA willacquire all of the rights, benefits and powers ofPAC in relation to the Transferred Policies. Theholders of Transferred Policies will be entitled tothe same rights against PIA in respect of theirpolicies as they currently have against PAC.

Any contracts between PAC and a third partyrelating to the Transferred Business will alsotransfer so that they will become agreementsbetween PIA and the third party. Any judicial,quasi-judicial, administrative, regulatory,arbitration or other proceedings or applications(including any complaint or claim to anyombudsman) whether pending, current orfuture by, against or in relation to and/or inrespect of to which PAC is a party (or, in thecase of future proceedings, PIA would be a

party but for the Scheme) concerning or inconnection with the Transferred Business shallbe continued or commenced by, against or inrelation to PIA. Any judgment, settlement, orderor award obtained by or against PAC, to theextent that it relates to any part of theTransferred Business, and which is not fullysatisfied before the Transfer Date (or theapplicable Subsequent Transfer Date), shallbecome enforceable by or against PIA.

For so long as the relevant PAC ReinsuranceAgreement remains in force, PIA will determineannual, final and any other discretionarybonuses in respect of the Transferred Policiesand, in respect of the Transferred Policies ofPAC France, apply market value reductions inaccordance with the bonus rates andmethodology for calculating market valuereductions notified to it by PAC. PAC willdetermine the applicable bonus rates andmethodology for calculating market valuereductions referable to the reinsured with-profits business to be notified to PIA in a mannerthat is consistent with the terms and conditionsof the Transferred Policies and with theapproach it has taken before the Transfer Datein respect of such Transferred Policies and,where PAC makes any changes to themethodologies it uses for calculating bonusrates or market value reductions or takes anyother actions referable to the reinsured with-profits business, it shall do so in a manner whichis no less favourable (directly or indirectly) tothe beneficiaries of such Transferred Policiesthan would have been the case if theTransferred Policies had continued to be writtendirectly by PAC.

C. Summary of the Transfer

This summary sets out the key details of the Scheme and its effect on theTransferred Policies. In this summary, capitalised terms shall have the meaningsgiven to them in paragraph 1.1 of the Scheme document.

PAC shall, where applicable, continue to applythe principles of financial management set out inSchedule 2 to the ELAS Scheme to the ELASGerman and Irish Business pursuant to and insatisfaction of its obligations under the relevantPAC Reinsurance Agreement as if the policiescomprised in the ELAS German and IrishBusiness remained part of the TransferringAnnuities Bonus Series.

PIA will succeed to all rights, liabilities andobligations of PAC in respect of personal datarelating to the Transferred Business and willbecome the data controller of such information.PIA will also be under the same duty to respectthe confidentiality and privacy of that information.

2. Other mattersIf the Court approves or imposes anymodification of or addition to the Scheme (orany further condition or provision affecting theScheme) prior to its sanction of the Scheme,PAC and PIA may consent to it for and on behalfof the parties to the Scheme and all otherpersons concerned.

After the sanction of the Scheme, PIA mayapply to Court for consent to amend its terms.If PIA makes such an application: (i) the CBIand the PRA and the FCA shall be notified ofand have the right to be heard at the Courthearing; and (ii) PIA must obtain a certificatefrom an independent actuary confirming that inhis opinion the proposed amendment will notadversely affect the interests (including thesecurity or benefit expectations) of PIApolicyholders, including the former PACpolicyholders or PAC policyholders. Minorand/or technical amendments will not requirethe sanction of the Court; however, the CBI,the PRA and the FCA must be given notice ofthem and confirm they do not object.

3. Independent expert's reportIn order to help the Court to understand howthe transfer could affect Policyholders, a reporton the transfer by an Independent Expert isrequired under Section 109 of the FinancialServices and Markets Act 2000. The PrudentialRegulation Authority must approve theappointment of the Independent Expert (havingconsulted with the Financial Conduct Authority)and the form of his report.

Oliver Gillespie, a Fellow of the Institute andFaculty of Actuaries, has been appointed asthe Independent Expert. A summary of theIndependent Expert's report is included inthis document.

4. Costs and expensesPAC and PIA have shared the costs in relation tothe preparation and carrying into effect of thisScheme in accordance with the allocations setout in the Scheme.



Prepared by: Oliver Gillespie, FIA

1. IntroductionPrudential Assurance Company Limited (“PAC”)is a proprietary company, whose shares arewholly owned by Prudential plc (an internationalfinancial services group) and whose principalactivity is long-term insurance business.

As at 31 December 2017, PAC had over£229 billion of assets under management andover 6.5 million policyholders.

PAC currently has long-term business acrossEurope (in addition to its business in the UK):

> Poland: This business is written under afreedom of establishment passport in thePAC Poland Branch.

> France: This business was written under afreedom of establishment passport. ThePAC France Branch closed to new businessin 2003 but remains open.

> Malta: This business was written by PAC inthe PAC Malta Branch whilst operating withauthorisation as a third country insuranceundertaking in Malta and is currentlyserviced under a freedom of servicespassport. The PAC Malta Branch was closedto new business in 1982 but remains open.

> Germany and Ireland: This business waswritten by the German and Irish branches ofThe Equitable Life Assurance Society(“ELAS”) and was transferred in to PAC in2007 via a Part VII transfer. It is servicedunder a freedom of services passport.

Prudential International Assurance plc (“PIA”)is a proprietary company, domiciled andauthorised in Ireland whose shares are whollyowned by PAC, and whose principal activity islong-term insurance business.

As at 31 December 2017, PIA had over£6.5 billion of assets under management and47,692 policyholders.

PIA currently has two lines of business:

> Single premium ‘off-shore’ bonds writtenthrough PIA and sold to UK nationals inthe UK and Europe which include awith-profits option (if selected by thepolicyholder) where returns are providedthrough a reinsurance arrangement withthe PAC with-profits funds.

> Single premium ‘on-shore’ bonds writtenthrough the PIA UK Branch to high networth UK nationals and non-UK nationalsseeking the tax and estate planningadvantages offered by an on-shore bond.

2. The proposed SchemeIn order to allow more efficient operation and tosimplify the management of its long-termbusiness across Europe, Prudential plc wishes toconsolidate all of its long-term business writtenin Europe (excluding the UK) into one entity:PIA. Although not a primary motivation, thetransfer has been structured so as to ensure thatthe PAC policies written through establishmentsin Europe (excluding the UK) can continuelawfully to be administered and serviced in theevent that the UK were to leave the EU.

If the proposed Scheme were to beimplemented, the existing PAC long-termbusiness in Poland, France, Malta, Ireland andGermany would be transferred to PIA. Thisbusiness is collectively known as the “transferringpolicies” or the “transferring business”.

The total policyholder liabilities proposed tobe transferred, amounted to £74 million as at31 December 2017.

D. Summary of the Independent Expert’s Report


With the exception of the PAC Poland business,all of the transferring blocks of business are nowclosed to new business.

The transfer is expected to be presented to theCourt for its Directions Hearing on 9 July 2018and for a Final Hearing on 11 December 2018If approved by the Court, the Scheme wouldbecome operative on 1 January 2019 (the“Effective Date”).

3. My considerations with respect tothe proposed Scheme The key points to consider in respect of eachgroup of policyholders affected by the proposedScheme are the likely changes (if any) to thefollowing, as a result of the implementation ofthe proposed Scheme:

> The security of benefits under thepolicies. This is derived from the financialstrength available to provide security for thebenefits for each group of policies under theappropriate risk appetite statements andcapital policy applicable and includes thestrength provided by the reinsurancearrangements and by the support from theparent company, where relevant.

> The regulatory regime to which thepolicies will be subject.

> The profile of risks to which thepolicies are exposed.

> The reasonable expectations ofthe policyholders in respect oftheir benefits.This includes the likelyeffects of the transfer on the standards of administration, service, management and governance applied to each group of policies.

In my main report I consider the effects of theproposed Scheme on the transferring PACpolicies in Section 8, on the existing PIA policiesin Section 9, and on the non-transferring PACpolicies in Section 10, and I summarise thesesections below.

4. The effects of the proposedScheme on the transferring policiesI analyse the effects of the implementation ofthe proposed Scheme on the transferringpolicies of PAC in Section 8 of my main report.

The effects of the Scheme on the security ofbenefits under the transferring policiesCurrently, the transferring policies derive theirsecurity of benefits from being part of PAC andthe associated financial strength under the PACrisk appetite statements, the strength of PAC’sreinsurance arrangements and support providedto PAC from the parent (Prudential plc).

In addition, the transferring policyholders arecurrently protected under the UK’s statutory‘fund of last resort’ the Financial ServicesCompensation Scheme (the “FSCS”). In theevent that PAC were to become insolvent andunable to meet its obligations to policyholders,100% of any benefits that would have beenclaimed from the insurer would be coveredunder the FSCS.

The implementation of the proposed Schemewould mean that PAC would cease to have adefined contractual obligation under thetransferring policies and that these obligationswould be transferred to PIA. As the analysis inSection 8 of my main report shows, if the Schemewere to be implemented I am satisfied that:

> There would be no material adverse effecton the security of benefits due to thereliance on the financial strength of PIA(rather than PAC) and the associated riskappetite statements;

> The reinsurance arrangements in placewould provide security of benefits byplacing contractual obligations on PAC andSwiss Re (the reinsurers of PIA’s business ifthe Scheme were to be implemented) andthe termination conditions set out in thereinsurance arrangements mean thatpolicyholders’ security would be protectedin the event of a subsequent termination ofthe reinsurance agreement; and

> Considerable security is derived fromhaving PAC as its parent as in all but themost extreme scenarios PAC would providesupport to PIA if and when required.

If the Scheme were to be implemented, it islikely (although not certain) that thetransferring policies would no longer becovered under the FSCS.

Analysis has been carried out into the likelihoodof a scenario where PIA would be unable tomeet its obligations to policyholders and thisindicates that:

> The likelihood of such a scenario occurringis less than 0.03% over a one year timehorizon; and

> The main drivers of such a scenario relate toeither the default of PAC in respect of itsobligations under the reinsurancearrangements, or the failure of PAC toprovide support as the parent of PIA, andthe likelihood of these events remains loweven over a 10 year time horizon.

Taking all of this together, in summary,I am satisfied that, if the Scheme were tobe implemented:

> There would not be a material adverseeffect on the security of the benefits of thetransferring policies as a result of their beingpart of PIA after the Scheme rather thanPAC as currently; and

> Although the implementation of the Schememay mean that the coverage provided bythe FSCS would cease, the loss of the FSCScoverage for the transferring policyholderswould not lead to a material adverse effecton the security of their benefits.

The effects of the Scheme on the profileof risks to which the transferring policiesare exposedIf the proposed Scheme were to beimplemented, the transferring PAC policieswould be directly exposed to the risk profile of a different company that has written differentbusiness, through different distributionchannels, to policyholders with differentdemographic profiles.

Although implementation of the proposedScheme would result in a change to the riskexposures of the transferring policies, the typesof risk exposures are likely to be similar and itshould be noted that:

> The Solvency II regime has beenimplemented consistently across the UKand Ireland;

> The SCR calculated in accordance with theSolvency II regime will reflect the riskexposures of the relevant company;

> The capital held in PIA comfortably exceedsthe required SCR; and

> The capital held in PIA exceeds the levelrequired under the PIA RA Statement.

I am satisfied that any change in risk profile wouldnot have a material adverse effect on the securityof the benefits of the transferring policies.



The effect of the Scheme on the benefitexpectations of the transferring policyholdersIf the proposed Scheme were to be implemented,there would be no change to the following:

> The terms and conditions of the transferringpolicies (except that the policies wouldbecome policies of PIA);

> The charges that apply to thetransferring policies;

> The operation of the PAC with-profits funds;

> The PAC with-profits fund upon which anytransferring policy depends for its benefits;

> The derivation of the bonuses grantedto, or any Market Value Reduction(“MVR”) to be applied to, the transferringwith-profits policies;

> The range of funds to which the transferringunit-linked policies would have access;

> The management of the unit-linked funds inrespect of investment objectives, chargestaken, the tax charged to the unit funds, andunit pricing; or

> The number of or type of units held by thetransferring policyholders as a result of theimplementation of the proposed Scheme.

If the proposed Scheme were to be implemented,reinsurance arrangements would be set upbetween PIA and PAC in respect of thetransferring with-profits business and thesereinsurance arrangements would ensure thatthe transferring with-profits policies would nobe treated any differently to the other policiesin the appropriate with-profits fund and I amsatisfied that the implementation of the Schemewould not have a material adverse effect on thebenefit expectations of the transferring with-profits policies.

The transferring unit-linked and non-profitbusiness is currently subject to the managementand governance of PAC and would, if the Schemeis implemented, be subject to the managementand governance of PIA and I am satisfied that theScheme would not have a material adverse effecton the benefit expectations of the transferringunit-linked and non-profit policies.

Although the administration and servicing of thetransferring policies would be outsourced,under CBI rules, PIA will retain ultimateresponsibility for the administration andservicing of the transferring policies.

I am satisfied that the implementation of theScheme would not have a material adverseeffect on the benefit expectations of thetransferring policyholders or on the levels andstandards of administration and service thatwould apply to the transferring policies.

5. The effects of the proposed Schemeon the existing policies of PIAI analyse the effects of the implementation ofthe proposed Scheme on the existing policies ofPIA in Section 9 of my main report.

The effect of the Scheme on the security ofbenefits of the existing PIA policiesAs at 31 December 2017, the transferringbusiness consisted of approximately 47,000policies and £74 million of liabilities and PIA had47,692 policyholders and over £6.5 billion ofassets under management and therefore atunder 1.2% by liabilities as at 31 December 2017the business being transferred in to PIA is smallcompared to the existing business of PIA.

If the Scheme were to be implemented, theexisting PIA policies would continue to bepolicies of PIA and there would be no change tothe structure of PIA, the Solvency II regime, thecalculation of the technical provisions and SCRfor PIA, or to the PIA risk appetite.

I am satisfied that the implementation of theproposed Scheme would not lead to a materialadverse effect on the security of benefits for theexisting PIA policies.

The effect of the Scheme on the profile of risksto which the existing PIA policies are exposedIf the Scheme were to be implemented, therange of risks to which the existing PIA businesswould be exposed would change. However itshould be noted that the business beingtransferred in to PIA is small compared to theexisting business of PIA, the SCR of PIA wouldreflect the risk exposures of PIA in accordancewith Solvency II, and the risk exposure of PIAwould be less concentrated than currently.

I am satisfied that the change in the profile ofrisks to which the existing PIA policies areexposed would not have a material adverseeffect on the security of the benefits of theexisting PIA policies.

The effect of the Scheme on the expectationsof the existing PIA policyholders in respect oftheir benefitsIf the Scheme were to be implemented, therewould be no change to the terms and conditions,the governance, the management, theadministration, the servicing, or the investmentmanagement of the existing PIA policies.

I am satisfied that the implementation of theScheme would not have a material adverseeffect on the reasonable benefit expectationsof the existing PIA policyholders or on thestandards of administration, service,management and governance that apply tothe existing PIA business.

6. The effects of the proposedScheme on the non-transferringpolicies of PACI analyse the effects of the implementation ofthe proposed Scheme on the existing policies ofPIA in Section 9 of my main report.

The effect of the Scheme on the security ofbenefits of the non-transferring PAC policiesAs at 31 December 2017, the transferringbusiness consisted of approximately 47,000policies and £74 million of liabilities and PAChad over 6.5 million policyholders and over£229 billion of assets under management andtherefore the business to be transferred out is,at less than 0.05% of the total liabilities,immaterial in the context of the PAC business.

I am satisfied that the transfer would have nomaterial effect on the security of the remainingbusiness of PAC.

The effect of the Scheme on the profile ofrisks to which the non-transferring PACbusiness is exposed I am satisfied that the transfer out of lessthan 0.05% of the liabilities of PAC would nothave a material adverse effect on the profile ofrisks to which the non-transferring PAC policiesare exposed.

The effect of the Scheme on the expectationsof the non-transferring PAC policyholders inrespect of their benefitsIf the Scheme were to be implemented, therewould be no change to the terms and conditions,the governance, the management, theadministration, the servicing, or the investmentmanagement of the non-transferring PAC policies.

I am satisfied that the implementation of theScheme would not have a material adverseeffect on the reasonable benefit expectations ofthe non-transferring PAC policyholders or onthe standards of administration, service,management and governance that apply to thenon-transferring PAC business.



7. The fair treatment of policyholdersI analyse the effects of the implementation ofthe proposed Scheme on the fair treatment ofcustomers in Section 11 of my main report.

PAC intends to seek waivers from the regulatoryrequirements to send a written notice to thepolicyholders of PAC that would not betransferred under the Scheme on the basis thatthe cost of such a mailing would bedisproportionate relative to the benefits to thenon-transferring policyholders of PAC.

I am satisfied that the proposed approach tocommunication with policyholders, includingthe application for the waiver, is fair andreasonable, and that the information containedin the notification to policyholders adequatelydescribes the proposals to policyholders.

The costs of the Scheme would be splitbetween PAC and PIA, with the costs allocatedto PAC being divided between the shareholdersand the with-profits funds. As the primarymotivation for the Scheme is to simplify themanagement and increase the operationalefficiency in respect of the non-UK Europeanoperations of Prudential plc and any efficienciesand reductions in ongoing costs would reducethe costs charged to the with-profits funds, I amsatisfied that it is reasonable to charge some ofthe Scheme costs to the PAC with-profits fundsand I am satisfied that the approach of PIA andPAC to the allocation of the costs of the Schemeis reasonable.

8. My other considerations arisingfrom the schemeIn Section 12 of my main report I cover a rangeof other considerations in respect of theproposed Scheme and I summarise the mostsignificant of these below.

The exit of the UK from the EU – “Brexit”The exit of the UK from the EU could lead toconsiderable disruption in the market forfinancial services across Europe and thereremains considerable uncertainty as to exactlywhat form exit might ultimately take.

That said, if the Scheme were to be implemented,I am satisfied that in most scenarios in which theUK does exit from the EU, the transferringbusiness would be in a better position than thescenario where the UK exits the EU and theScheme had not been implemented.

The restructuring of Prudential plc and thesale of part of the UK annuity portfolioIn August 2017, Prudential plc announced that itwas combining two businesses within thePrudential group, Prudential UK & Europe andits asset manager, M&G, to form a combinedbusiness called M&G Prudential.

In March 2018, Prudential plc announced arestructuring and a transaction with RothesayLife plc to transfer a portion of the PAC non-profit annuity business.

As set out in Section 12 of my main report, I amsatisfied that neither the restructuring ofPrudential plc nor the reinsurance arrangementwith Rothesay will have any effect on theconclusions reached.

9. My conclusionsI confirm that I have considered the issuesaffecting the policyholders of PAC and PIAseparately, as set out in Sections 8, 9, 10, 11and 12 of my main report, and that I do notconsider further subdivisions (other than thosein my main report) to be necessary.

I am satisfied that the implementation of theScheme would not have a material adverseeffect on:

> The security of the benefits under thepolicies of PIA and PAC;

> The reasonable expectations of thepolicyholders of PIA and PAC with respectto their benefits; or

> The standards of administration, service,management and governance that apply tothe PIA and PAC policies.

I am satisfied that the Scheme is equitableto all classes and generations of PIA andPAC policyholders.

Oliver Gillespie June 2018 Fellow of the Institute and Faculty of Actuaries



IN THE HIGH COURT OF JUSTICE No: CR-2018-002674CHANCERY DIVISIONBUSINESS AND PROPERTY COURTSOF ENGLAND AND WALES

IN THE MATTER OF THE PRUDENTIAL ASSURANCE COMPANY LIMITED

-and-

IN THE MATTER OF PRUDENTIAL INTERNATIONAL ASSURANCE plc

-and-

IN THE MATTER OF THE FINANCIAL SERVICES AND MARKETS ACT 2000

NOTICE IS HEREBY GIVEN that on 2 July 2018 The Prudential Assurance Company Limited ("PAC") andPrudential International Assurance plc ("PIA") applied to the High Court of Justice of England and Walesfor an Order under section 111(1) of the Financial Services and Markets Act 2000 (the "Act") sanctioninga scheme (the "Scheme") providing for the transfer to PIA of the business of PAC’s Polish branch (andcertain other overseas legacy business, being policies written by PAC in Malta and France and policieswritten by the Equitable Life Assurance Company in Germany and Ireland which were transferred toPAC in 2007) (together the "Business") and for the making of ancillary provisions in connection with theScheme under sections 112 and 112A of the Act.

The proposed transfer will result in the Business which is currently being carried on by PAC being carriedon by PIA. If the Scheme is sanctioned, it is expected to come into effect on 1 January 2019.

Copies of the report on the terms of the Scheme prepared by an Independent Expert in accordance withsection 109(1) of the Act, a statement setting out the terms of the Scheme and containing a summary ofthe Independent Expert’s report, and a copy of the full Scheme document, may be obtained free ofcharge by contacting Prudential using the telephone number or addresses set out below, from the dateof publication of this notice until the date on which the application is heard by the Court. These andother documents relating to the Scheme (including sample copies of the communication topolicyholders) are also available on Prudential's website at www.pru.co.uk/transfer.

E. Legal notice of the Transfer

All questions or concerns relating to the proposed transfer should be referred to Prudential using thefollowing telephone number or address:

Phone: +44 (0)345 121 2513

Post: Prudential WP Annuities, Sutherland House, Russell Way, Crawley, West Sussex RH10 1UH,United Kingdom

Email: [email protected]

The application is expected to be heard at the Rolls Building, Fetter Lane, London EC4A 1NL on 11 December 2018. Any person (including any employee of PAC or PIA) who thinks that he or she may be adversely affected by the carrying out of the Scheme may attend the hearing and express theirviews either in person or by Counsel. It would be helpful if anyone wishing to attend could give noticeof such intention to Prudential before 7 December 2018, setting out the grounds of their objection orwhy they consider they may be adversely affected, by calling the above number or writing to theaddress above. Any person who does not intend to attend the Court hearing but wishes to makerepresentations about the Scheme or considers that they may be adversely affected shouldcommunicate their views to Prudential by calling the above number or writing to the address above,preferably before 7 December 2018.

Slaughter and May

Solicitors to The Prudential Assurance Company Limited and Prudential International Assurance plc


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"Prudential" is a trading name of The Prudential Assurance Company Limited, which is registered in England andWales. This name is also used by other companies within the Prudential Group. Registered office at LaurencePountney Hill, London EC4R 0HH. Registered number 15454. Authorised by the Prudential Regulation Authorityand regulated by the Financial Conduct Authority and the Prudential Regulation Authority.

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