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Transfer of certainannuities fromThe Prudential AssuranceCompany Limited toRothesay Life Plc

Policyholder Circular

2 Policyholder Circular

This booklet is intended as a guide only and not a definitive statement of your rights.

Other people may have an interest in your policy, for example:

> beneficiaries (usually a spouse or dependant) to whom an annuity will continue to be paidafter the death of the main annuitant;

> a person acting under power of attorney;

> a trustee in sequestration or bankruptcy; or

> where you hold the policy as the trustee of a pension scheme, the members of the pension scheme.

Please draw the contents of this booklet to the attention of those other people. Further copies ofthis booklet may be obtained by contacting Prudential as shown below.

Contact usIf you have any questions not covered in this booklet you can contact us using the details below.If you have received a letter notifying you about the transfer, please quote the annuity policynumber shown on that letter.

Post: Write to us at Rothesay Life Transfer, Prudential, PO Box 3122, Lancing BN15 8GB

Phone: 0800 640 9164 or +44 203 755 9194 if calling from outside the UK. Our lines are openbetween 8.30am and 6pm, Monday to Friday, except on bank holidays. Calls are free from UKlandlines and mobile phones.

Secure Message: Send us a secure email from our website. Please visit pru.co.uk/prumail

Email: Email us directly at [email protected] (please note sending an email to thisaddress is not a secure method of communication; if you are including any personal or sensitiveinformation (such as your address) we suggest you use our secure email or one of the othermethods above).

Further information on the transfer is provided on our website, pru.co.uk/annuitytransfer

It is important that you read and understand the enclosed information. Onceyou have read the information, please consider whether you may beadversely affected or have any concerns. If you are satisfied with the proposedtransfer you don’t need to do anything else.

The proposed transfer will not impact the terms and conditions of your policy.

If you have concerns or consider you may be adversely affected or wish toobject to the proposed transfer, your options are set out in the answer toquestion 16 in Section B of this information pack. If you would like furtherinformation, please contact us directly as shown below.

Policyholder Circular

Policyholder Circular 3

Notification of any changes to these dates will be made on our website,pru.co.uk/annuitytransfer

Contents

Expected Timetable

First Court Hearing to presentthe scheme and proposals forpublic notification

31 January 2019

Policyholder notifications issued 4 February – 29 March 2019

End of the period for policyholdersto consider the impact of theproposed transfer and object ifappropriate to do so

10 June 2019

Final Court Hearing to consider theproposed transfer

10 June 2019 (High Court of Justice ofEngland and Wales)

14 June 2019 (Royal Court of Guernsey)

17 June 2019 (Royal Court of Jersey)

Proposed date on which the Schemebecomes effective

00:01am on 26 June 2019

Expected Timetable 3

Definitions 4

A. Key Information 6

B. Questions and Answers 7

C. Summary of the Transfer 16

D. Summary of the Independent Expert’s Report 19

E. Notice of Transfer 25


In this booklet, the following words and expressions have the following meanings:

“Chief Actuary” the Chief Actuary ofPrudential Assurance Company or RothesayLife, as the context requires, being a senioractuary appointed to advise the relevantinsurer’s Board of Directors about the riskswhich may affect its business;

“Court” the High Court of Justice of Englandand Wales and, where relevant, the Royal Courtof Guernsey or the Royal Court of Jersey;

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

“FSMA” the Financial Services and MarketsAct 2000;

“Guernsey” the Bailiwick of Guernsey

“Guernsey Law” the relevant sections of theInsurance Business (Bailiwick of Guernsey) Law,2002 (as amended) relating to the transfer ofinsurance business;

“Guernsey Scheme” the legal documentsetting out the terms of the transfer of policiesissued by Prudential Assurance Company to anyperson resident in Guernsey, to be carried outunder Guernsey Law;

“Jersey Law” the relevant sections of theInsurance Business (Jersey) Law 1996 relatingto the transfer of insurance business;

“Jersey Scheme” the legal document setting outthe terms of the transfer of policies issued byPrudential Assurance Company in, or fromwithin, Jersey, to be carried out under Jersey Law;

“Independent Expert” Nick Dumbreck, aPrincipal of Milliman LLP and a Fellow of theInstitute and Faculty of Actuaries. The mainpurpose of his role is to report to the HighCourt on the effects of the proposed transferon policyholders;

“Independent Expert Report” the reporton the terms of the Scheme made by theIndependent Expert in accordance withSection 109 of the FSMA;

“Long-Term Insurance Fund” the fundmaintained by Prudential Assurance Companyfor accounting purposes comprising all of thepolicies and assets relating to its long-terminsurance business;

“M&G Prudential” Prudential Group’s UK andEuropean savings and investments business

“Non-Profit Sub-Fund” the Non-Profit Sub-Fund maintained by Prudential AssuranceCompany for accounting purposes within itsLong-Term Insurance Fund and which containsnon-profit business (including unit-linked);

“Notice of Transfer” the notice of theapplication to the Court in respect of theScheme set out in Section E of this booklet;

Definitions

“Prudential Assurance Company” ThePrudential Assurance Company Limited, a whollyowned subsidiary of M&G Prudential whoseultimate parent company is Prudential plc;

“PRA” the Prudential Regulation Authority, theregulator responsible for supervising the waythat insurers and other financial institutionsmanage their business in the UK;

“Prudential” Prudential plc and its subsidiaries,including Prudential Assurance Company;

“Rothesay Life” Rothesay Life plc;

“Scheme” the legal document setting out theterms for the transfer of the business ofPrudential Assurance Company to RothesayLife under Part VII of FSMA;

"Shareholders' Fund" the property andliabilities of Prudential Assurance Company (asthe context may require) other than thoseattributable to or represented by its Long-TermInsurance Fund;

“Transfer Date” the date on which thebusiness is expected to transfer, i.e. 00:01amon 26 June 2019; and

“With-Profits Actuary” the With-ProfitsActuary of Prudential Assurance Company,being a senior actuary who advises PrudentialAssurance Company’s Board of Directors aboutthe fair treatment of its with-profits policyholders.


Definitions – continued


BackgroundIn March 2018, Prudential announced itsintention to demerge M&G Prudential, its UKand European savings and investmentsbusiness, and to list it as an independentcompany on the London Stock Exchange.

As an independent company, M&G Prudentialwill continue its transformation into a morecapital-efficient business, targeting growingdemand for comprehensive financial solutions.

In support of the plan for M&G Prudential todemerge from its parent company, Prudentialplc it is proposing that approximately 370,000annuity policies of Prudential AssuranceCompany be transferred to Rothesay Life bymeans of an insurance business transfer scheme(Scheme) under Part VII of FSMA. For a smallnumber of policies, where policyholders areresident in either Guernsey or Jersey, there willalso be equivalent insurance business transferschemes in Guernsey and Jersey.

The legal process to effect the transfer (seequestion 9 on page 9) requires the appointmentof an independent expert (who is not anemployee of Prudential or Rothesay Life) toreport on the likely effects of the proposedtransfer on the policyholders of PrudentialAssurance Company and Rothesay Life. NickDumbreck, a partner of Milliman LLP, has beenappointed as the Independent Expert for thistransfer and reports to the Courts. The PRA hasapproved this appointment (in consultation withthe FCA). The Independent Expert’s full reportconsiders in detail the effects of the proposedtransfer on all policyholders and sets out howeach conclusion has been reached. In his report,the Independent Expert has concluded thatneither the security of policyholder benefits northe reasonable benefit expectations of the

policyholders of Prudential Assurance Companyand Rothesay Life will be materially adverselyaffected by the proposed transfer. Theconclusions of the Independent Expert inrelation to the Scheme (as summarised inSection D of this booklet) apply equally to theproposed transfers in Guernsey and Jersey.

Effect of the Proposed Transferon Prudential AssuranceCompany policiesSubject to the approval of the Courts, theannuity policies which Prudential AssuranceCompany is proposing to transfer will betransferred to Rothesay Life and with immediateeffect from the Transfer Date, Rothesay Life willbe the provider of those annuity policies.

The terms and conditions of the transferredpolicies issued by Prudential AssuranceCompany will not change in any other respectas a result of the proposed transfer.

Although Rothesay Life will be responsiblefor the transferred policies from the TransferDate, in order to minimise any disruption,Rothesay Life and Prudential AssuranceCompany have agreed that PrudentialAssurance Company will, for a period of time,continue to provide administration servicesregarding the transferred policies.

Further InformationFurther information can be found within thisbooklet as follows:

A. Key Information

Section B Questions and Answers

Section C Summary of the Transfer

Section DSummary of the IndependentExpert’s Report

Section E Notice of Transfer


The following are answers to common questionswhich policyholders of Prudential AssuranceCompany and Rothesay Life may have about theproposed transfer of the annuity business fromPrudential Assurance Company to Rothesay Life.The answers are general in nature and there maybe exceptions to some of the answers.

1. What is being proposed?Prudential Assurance Company is proposing totransfer approximately 370,000 annuity policiesto Rothesay Life using a Scheme under Part VII ofFSMA and, for policies where the policyholdersare resident in Guernsey or policies that are partof the business carried on in or from withinJersey, schemes of transfer in Guernsey underGuernsey Law and in Jersey under Jersey Law.

Subject to Court approval, the transfer isexpected to take place on the Transfer Date.The High Court Hearing is expected to takeplace on 10 June 2019 and Court hearings toseek approval in Guernsey and Jersey areexpected to take place on 14 June 2019 and17 June 2019 respectively.

2. Why is Prudential transferring partof its annuity business?This transfer is being proposed as a part ofM&G Prudential’s plans to demerge from itsparent company.

3. How is my annuity affected?If your annuity policy is transferring to RothesayLife you will have received notification by letter.On the Transfer Date, your policy will betransferred to Rothesay Life who will becomeresponsible for providing your benefits.

However, in order to minimise any disruption,Prudential Assurance Company will continue tocarry out the administration services for thetransferred policies, on behalf of Rothesay Life,for a period of time.

The terms and conditions of your annuity policywill not change as a result of the proposedtransfer. Any annuity payments will continue tobe made as before, including the amount and thetiming of the payments due and, if your policyincludes an element of escalation, payments willcontinue to change as they have previously done.

The Independent Expert has reviewed theimplementation of the transfer and concludedthat he is satisfied that the transfer will not havea material effect on the service standards andgovernance applicable to the transferringpolicyholders.

If you have more than one annuity policy withPrudential Assurance Company, it is possiblethat not all of your annuity policies will transferto Rothesay Life. Policies which do not transfer,will remain with Prudential Assurance Companyand there will be no change to the terms andconditions or the way Prudential AssuranceCompany administers those policies. Only thepolicies designated as transferring on thenotification letter sent to policyholders willtransfer. If you are in doubt, you can contactPrudential Assurance Company (see page 2 forcontact details).You can also check whetheryour annuity policy will transfer to Rothesay Lifeor remain with Prudential Assurance Companyby entering your full annuity policy number onour website at pru.co.uk/annuitytransfer

B. Questions and Answers

4. Is my policy safe/will I loseany benefits?As stated in the answer to question 3, the termsand conditions of your policy will not change as aresult of the transfer, whether your policy willtransfer to Rothesay Life or remain withPrudential Assurance Company. In addition, theIndependent Expert has concluded that theimplementation of the Scheme will not have amaterial adverse effect on the security of benefitsor the reasonable benefit expectations of thepolicyholders of Prudential Assurance Company.For more information about the IndependentExpert’s conclusions, see question 10.

5. Are all of Prudential AssuranceCompany’s annuities transferring toRothesay Life?No. Prudential Assurance Company is onlytransferring part of its annuity business.

6. Why has only one or some of mypolicies with Prudential AssuranceCompany transferred to RothesayLife and not others?The annuity policies that make up thetransferring portfolio were selected on the basisof the suitability of individual annuity policies fortransfer, rather than by selecting on the basis ofindividual policyholders. Therefore somepolicyholders will have an annuity policy orpolicies that transfer to Rothesay Life as well asan annuity policy or policies that remain withPrudential Assurance Company. The transferringpolicies are all non-profit annuity policiescovering a wide mix of types of business. Policieswhich are not being transferred include othernon-profit annuity policies and all with-profitannuities. Similarly all of Prudential AssuranceCompany’s non-annuity business will remainwith Prudential Assurance Company.

Therefore if you have more than one annuitypolicy with Prudential Assurance Company, it ispossible that not all of your policies will transferto Rothesay Life. Only the policies designated astransferring on the notification letter sent topolicyholders will transfer. If you are in doubt,you can call us. The contact details are on page 2of this booklet.

You can also check whether your annuity policywill transfer to Rothesay Life or remain withPrudential Assurance Company by enteringyour full annuity policy number on our websiteat pru.co.uk/annuitytransfer

7. Can you give me more informationon Rothesay Life?Rothesay Life is a UK insurance companyauthorised by the Prudential Regulation Authorityand regulated by the Financial Conduct Authorityand the Prudential Regulation Authority.

Rothesay Life was established in 2007 and hasgrown to be one of the largest specialist annuityproviders in the UK market, with over £37bn ofassets under management and insuring theannuities of over 750,000 individuals.

Rothesay Life has three substantial institutionalshareholders, Blackstone, GIC andMassachusetts Mutual Life Insurance Company,which provide the company with long termsupport for its growth and development.

Rothesay Life is a member of the PensionsAdministration Standards Association (PASA),an independent body dedicated to improvingstandards in pensions administration.

You can find out more about their business andhistory here: rothesaylife.com/about-us


8. Can you give me more informationon Prudential Assurance Company?Prudential Assurance Company is a leading lifeinsurer and pensions provider in the UK.Prudential Assurance Company’s ultimateparent company is Prudential plc.

Prudential Assurance Company’s UK insuranceoperations provide a range of financial productsand services including annuities, corporate andindividual pensions, with-profits bonds andinvestment products. Prudential AssuranceCompany is authorised and regulated by thePRA, and is also regulated by the FCA.

In August 2017, Prudential plc announced that itwas combining two business units within thePrudential Group, Prudential UK and its assetmanager, M&G, to form a combined businesscalled M&G Prudential.

9. How will the transfer be carried out?The transfer will be carried out using a Schemeunder Part VII of FSMA and (for policies wherethe policyholders are resident in Guernsey orwhere they are part of the business carried onin or from within Jersey) schemes in Guernseyand Jersey under Guernsey Law or Jersey Law,which will require approval by the Courts.The Court hearings to consider the proposedtransfer are expected to take place for the UKat the Rolls Building on 10 June 2019, forGuernsey at the Royal Court of Guernsey on14 June 2019, and for Jersey at the Royal Courtof Jersey on 17 June 2019. These dates aresubject to change. Any updates in this regardwill be published on our website,pru.co.uk/annuitytransfer

You may attend the Court hearings and expressyour views in person or via a representative.Please note that if you wish to be representedby legal counsel at the UK Court hearing thenhe or she would need to have appropriate rights

of audience to appear in the High Court inLondon. You may also call or write to us settingout details of any concerns or objections youmay have. Any objections raised with us will bepassed on to the Courts, our regulators and theIndependent Expert. We recommend that youcall or write to us with any concerns orobjections you may have about the proposedtransfer, even if you intend to appear in Court inperson, as the objections we receive will beprovided to our regulators, the IndependentExpert and to the Courts.

If you do have any concerns or objectionsor consider you may be adversely affected,you are advised to read the answer toQuestion 16 below.

10. How will the interests of PrudentialAssurance Company and RothesayLife policyholders be protected?The process we are following is designed toensure that the interests of all policyholders areprotected. This includes engaging with ourpolicyholders through press advertising and thismailing so that they are kept informed about ourproposals and can raise any concerns orobjections they may have. The proposedtransfer is subject to approval by the Courts,which will only approve the transfer if it isappropriate to do so.

The process requires an independent expert tobe appointed to report to the Courts on thepossible impact of the transfer on policyholders.The Independent Expert has considered theterms of the Scheme and how the differentgroups of policyholders are likely to be affectedby the Scheme and, in particular:

> the effect of the Scheme on the security ofthe Prudential Assurance Company andRothesay Life policyholders’ contractualrights; and



> the likely effects of the Scheme on thebenefit expectations of the policyholdersof Prudential Assurance Company andRothesay Life.

The Independent Expert has concluded that theimplementation of the Scheme will not have amaterial adverse effect on:

> The security of benefits of thepolicyholders of Prudential AssuranceCompany and Rothesay Life, including thetransferring policyholders;

> The reasonable benefit expectations of thepolicyholders of Prudential AssuranceCompany and Rothesay Life, including thetransferring policyholders; or

> The service standards and governanceapplicable to Prudential AssuranceCompany and Rothesay Life policies,including the transferring policyholders.

A summary of his report is provided inSection D of this booklet. The full report isavailable to download on our website,pru.co.uk/annuitytransfer. The IndependentExpert will also prepare a supplementary reportthat will also be available on our website shortlybefore the High Court hearing on 10 June 2019.

In addition we have consulted with ourregulators, the FCA and the PRA. We havetaken their views on our proposals into accountand will continue to do so until the transferbecomes effective.

Prudential Assurance Company and RothesayLife aim to treat all customers fairly and ensurethat their reasonable expectations are met.

11. What other information is availableand how do I obtain that information?If you would like more detailed information onthe proposed transfer then the followingdocuments can be downloaded from ourwebsite pru.co.uk/annuitytransfer:

> The full Scheme document;

> The report of Prudential AssuranceCompany’s Chief Actuary;

> The report of the Prudential AssuranceCompany’s With-Profits Actuary; and

> The full report of the Independent Expert

Alternatively, you can request copies of thosedocuments by contacting us using the contactdetails on page 2. When writing or callingplease quote your annuity policy number.

You can also find information about RothesayLife, including the report of the RothesayLife Chief Actuary on their websiterothesaylife.com/prudential-transaction

Between the hours of 9am and 5.30pmMonday to Friday, you can inspect or obtaincopies (free of charge) of the IndependentExpert's Report and the Application to the RoyalCourt of Guernsey from the offices of MourantOzannes at Royal Chambers, St Julian's Avenue,St Peter Port GY1 4HP, Guernsey.

Between the hours of 9am and 5.15pm Mondayto Friday, you can inspect or obtain copies (freeof charge) of the Independent Expert's Reportand the Representation to the Royal Court ofJersey from the offices of Mourant Ozannes,22 Grenville St, St Helier JE4 8PX, Jersey.

12. What do the Prudential AssuranceCompany Chief Actuary and thePrudential Assurance CompanyWith-Profits Actuary consider theimpact of the proposed transfer tobe on Prudential AssuranceCompany’s policyholders?The Prudential Assurance Company ChiefActuary’s conclusions on the impacts onpolicyholders transferring to Rothesay Life:

> The Prudential Assurance Company ChiefActuary has considered the effect of theproposed transfer on the PrudentialAssurance Company’s transferringpolicyholders and is satisfied that thesecurity and reasonable benefit expectationsof Prudential Assurance Company’stransferring policyholders will not bematerially adversely affected by the transfer.

The Prudential Assurance Company ChiefActuary’s conclusions on the impacts onpolicyholders remaining with PrudentialAssurance Company:

> The Prudential Assurance Company ChiefActuary has considered the effect of theproposed transfer on the remainingPrudential Assurance Companypolicyholders and is satisfied that thesecurity and reasonable benefitexpectations of the remaining PrudentialAssurance Company policyholders (in allsub-funds) will not be materially adverselyaffected by the transfer.

The Prudential Assurance Company With-Profits Actuary’s conclusions on the impacts onwith-profits policyholders of PrudentialAssurance Company:

> The Prudential Assurance Company With-Profits Actuary has reviewed the impact ofthe proposed transfer on the with-profitspolicyholders of Prudential AssuranceCompany and is satisfied that the proposedscheme will not result in any materialadverse effect on either the security or thereasonable benefit expectations of thewith-profits policyholders of PrudentialAssurance Company.

13. What does the Rothesay Life ChiefActuary consider the impact of theproposed transfer to be on RothesayLife policyholders?Rothesay Life’s Chief Actuary has reviewed theimpact of the proposed transfer on RothesayLife policyholders and concluded that:

> the security of the current policyholders ofRothesay Life is not likely to be adverselyaffected as a result of the proposed transfer;

> the reasonable benefit expectations of thecurrent policyholders of Rothesay Life arenot likely to be adversely affected as aresult of the proposed transfer; and

> the administrative arrangements applicableto the policyholders of Rothesay Life arenot likely to be adversely affected as aresult of the proposed transfer.

14. What does the term ‘not materiallyadversely affected’ used by theIndependent Expert mean?The phrase “not materially adversely affected”means any potential impact is very unlikely tohappen and does not have a significant impact,or is likely to happen but has a very small impact.

Assessing the potential impact of events such asthe proposed transfer is ultimately a matter ofjudgement involving the estimation of thelikelihood and impact of future possible events.



The way in which the Independent Expert hasexpressed his conclusions regarding thepotential impact of the transfer, particularly asregards policyholders' security and benefitexpectations, acknowledges the uncertainty thatis inevitably involved in any such analysis.

The phrase “not materially adversely affected”(or equivalent) reflects the standard terms usedby actuaries in this type of analysis, including bythe Independent Expert in his analysis of thisparticular transfer. Since it is never possible tobe absolutely certain what the outcome offuture events will be, actuaries have chosen toexpress their judgements in terms of what theyexpect to happen. Similarly, because theoutcomes for different groups of policyholdersmay be slightly different as a result of thetransfer, and there will also be a range ofpossible outcomes for all policyholders, theyhave chosen to frame their conclusions using amateriality threshold. If a potential impact is veryunlikely to happen and does 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 are content that wehave not identified any circumstances wherebenefits of Prudential Assurance Company orRothesay Life policyholders are likely to bematerially adversely affected.

15. What happens next? Notices in relation to the application to theCourt for sanction of the Scheme will bepublished in the London, Edinburgh, Belfast andIrish Gazettes, and widely in the UK nationalpress. A notice will also be published in gazettesin Jersey and Guernsey in respect of theapplications to the Royal Court of Jersey and theRoyal Court of Guernsey respectively.

The Court hearings to consider the proposedtransfer are expected to take place as follows:

Notification of any changes to these dateswill be made on our website,pru.co.uk/annuitytransfer

16. What if I have any concerns aboutthis transfer or if I consider that I maybe adversely affected?If you feel you may be adversely affected by theproposed transfer, you have the right to object.You can present your views either to Prudentialor make representations to the Courts.

We recommend that you call or write to us withany concerns or objections you may have aboutthe proposed transfer, or if you intend to makerepresentations to the Courts. You can contactus using the contact details that are on page 2of this booklet. We will acknowledge yourobjection. The correspondence we receive, andthe transcripts of any objections raised bytelephone, will be provided to our regulatorsand the Independent Expert as well as to theCourts. The Courts will then consider them indeciding whether it is appropriate to approvethe proposed transfer.

Country/Dependency Court Address Date

UnitedKingdom

Rolls Building,Fetter Lane, LondonEC4A 1NL

10 June2019

Guernsey

Royal Court ofGuernsey, RoyalCourt House,St Peter Port,Guernsey GY1 2PB

14 June2019

Jersey

Royal Court of Jersey,Royal Court House,Royal Square, StHelier, Jersey JE1 1BA

17 June2019

If you wish to make representations to the UKCourt directly, you can do so by writing to TheHigh Court of Justice, Chancery List Office, RollsBuilding, Fetter Lane, London EC4A 1NL. Youshould clearly refer to the transfer of annuitiesbetween The Prudential Assurance CompanyLimited and Rothesay Life plc.

Anyone making representations directly toPrudential is asked to inform us as soon aspracticable, to ensure that we receive yourrepresentations in sufficient time to allow us tosubmit them to the Courts.

If you believe you may be adversely affected bythe proposed schemes in Jersey or Guernsey,you have the right to be heard, in person or viaan Advocate at the hearing of the Royal Court ofJersey and/or the Royal Court of Guernsey, asappropriate. Anyone wishing to make arepresentation about the transfer in Jersey orGuernsey in person or by an Advocate is askedto call or write to us as soon as practicable,stating that their representation relates to thescheme in Jersey and/or Guernsey. Furtherdetails on how you can do this can also beprovided by the helpline (details of which are onpage 2 of this booklet).

17. If the Court approves the transferam I able to opt out?No, if the transfer is approved by the Court thenall policies in scope of the transfer will transferto Rothesay Life.

18. What if the High Court of Justice ofEngland and Wales does not approvethe transfer? If the High Court of Justice of England andWales does not approve the Scheme, thetransfer will not take place and all policies willremain with Prudential Assurance Company. Inthis event, we will update our websiteimmediately and begin the process to write tothe policyholders to inform them.

19. What if the Guernsey or JerseyCourts do not approve the transfer?If the Royal Court of Guernsey does notapprove the Guernsey Scheme, any policiesissued to Guernsey residents will not transferand will be retained by Prudential AssuranceCompany (and reinsured to Rothesay Life) untilsuch date (if any) as the Guernsey Schemebecomes effective. Similarly, if the Royal Courtof Jersey does not approve the Jersey Scheme,any policies which constitute insurance businesscarried on by Prudential Assurance Company inor from within Jersey will not transfer and will beretained by Prudential Assurance Company(and reinsured to Rothesay Life) until such date(if any) as the Jersey Scheme becomes effective.

20. How independent is theIndependent Expert?The main purpose of the report produced by theIndependent Expert is to assist the Courts indeciding whether or not to approve theScheme. As a consequence of his role, theIndependent Expert owes a duty to the Courtsin each jurisdiction. These duties represent anextremely serious obligation for theIndependent Expert and override any obligationto any person from whom they have receivedinstructions or by whom they are paid. Inaddition, the appointment of the IndependentExpert has been considered by our regulatorsand Mr. Dumbreck’s appointment to act as theIndependent Expert has been formallyapproved by the PRA. Each of these factorsshould provide substantial reassurance aboutthe independence of the Independent Expert.



21. With a large number of annuitiesbeing transferred out of PrudentialAssurance Company, will thesecurity of my non-transferringPrudential Assurance Companypolicy be adversely affected?The Independent Expert has concluded that theimplementation of the Scheme will not have amaterial adverse effect on the security ofbenefits or the reasonable benefit expectationsof the non-transferring policyholders ofPrudential Assurance Company.

His full report is available to download onour website, pru.co.uk/annuitytransferand a summary of the report is in section Dof this booklet.

22. Who is paying for the transfer?Policyholders will not bear any of the costsassociated with the transfer of business fromPrudential Assurance Company to Rothesay Life.

Costs associated with the Scheme that areattributable to Prudential Assurance Companywill be met from Prudential AssuranceCompany’s shareholder funds and not bypolicyholders or Prudential AssuranceCompany’s with-profits funds.

23. Do I have a vote on the transfer?The legal process to carry out the transfercontains various safeguards to ensure that theinterests of affected parties are protected.However, it does not require the proposals to beput to a vote by policyholders or shareholders.

The Courts will only sanction the transfer if theproposals are appropriate, including whetherthey are fair as a whole as between the interestsof the affected parties. Policyholders have theright to object to the transfer. The process toraise an objection is outlined in the answer toquestion 16.

24. Will I receive a payment as a resultof the Transfer?There will be no additional payments or specialpolicy bonuses to any policyholders as a resultof the proposed transfer.

25. Why have you only written to menow, so close to the final CourtHearing when the proposals havebeen progressed for some time? The timing of our communication topolicyholders is consistent with usual practicefor business transfers of this nature and therequirements of the legal processes we arefollowing. In particular, the amount of timebetween our mailing to policyholders and thefinal hearing in the UK is consistent withguidance issued by our regulators in the UK, thePRA and the FCA, and the expectation of theCourts and regulators of Jersey and Guernsey.

26. Why have I received more thanone pack?As far as possible, we have tried to identifyindividuals who hold more than onetransferring policy with Prudential AssuranceCompany so that we only send them one packof information. Unfortunately, there are somecircumstances where this has not been possibleand therefore some policyholders may receivemore than one pack.

Please accept our apologies if you have receivedmore than one pack of information.

27. How does the transfer affectPrudential Assurance Company’spast business review of annuities inresponse to the FCA’s ThematicReview of Annuity Sales Practice?In October 2016, the FCA announced thefindings of its Thematic Review of Annuity SalesPractices (“TRASP”), which assessed whetherfirms provided new annuity customers with

sufficient information about enhanced annuitiesat the point of sale. As a result of TRASP, a smallnumber of firms, including Prudential AssuranceCompany, were asked by the FCA to review allnon-advised sales from July 2008 and provideredress where appropriate.

Consequently, Prudential Assurance Companyis conducting a Past Business Review in relationto the sale of certain annuities (“TRASP PBR”).If your policy is due to be reviewed byPrudential Assurance Company as part of theTRASP PBR, but the review has not beencompleted by the Transfer Date, PrudentialAssurance Company will continue to reviewyour policy and will ensure that you receive anyredress to which you are entitled.

28. Who do I contact for informationabout my policy after the transferhas happened?Rothesay Life will be responsible for thetransferred policies from the Transfer Date.However, in order to minimise any disruption,Rothesay Life and Prudential AssuranceCompany have agreed that PrudentialAssurance Company will, for a period of time,continue to provide administration servicesregarding the transferred policies. Some contactdetails will change and Rothesay Life will let youknow what they are shortly after the Transferhas happened.

29. What should I do now?You should carefully read and consider theinformation in this booklet and theaccompanying letter.

Once you have done that, you should considerwhether you think you may be adversely affectedby the proposed transfer or have any concerns.If you do consider you may be adversely affectedor have other concerns, your options are set outin the answer to Question 16 above.

If you are satisfied with the proposed transferyou don’t need to do anything else.

If you would like more detailed information onthe proposed transfer, you can download thefollowing documents from our website,pru.co.uk/annuitytransfer:

> The Policyholder Pack (containing thesummary of the Independent Expert’sReport, Summary of the Scheme, Q&Aand the legal notice);

> The report of the Independent Expert,plus any supplementary reports;

> The reports of the Prudential AssuranceCompany Chief Actuary and the PrudentialAssurance Company With-Profits Actuary,plus any supplementary reports;

> The full Scheme document; and

> The documentation for the Jerseyand Guernsey insurance businesstransfer schemes.

Alternatively, you can request copies of thosedocuments or ask questions by contacting ususing the contact details on page 2. Whenwriting or calling please quote your annuitypolicy number.

The report from the Chief Actuary of RothesayLife is also available on Rothesay Life’s website,rothesaylife.com/prudential-transaction.



1. IntroductionAs part of a strategic review of its business, PAChas agreed to transfer part of its annuity businessto Rothesay Life (the Transferred Business)under a Court sanctioned insurance businesstransfer scheme (the Scheme). The TransferredBusiness comprises a specific group of immediateand deferred annuities. This document providesa summary of the key terms of the proposedtransfer (the Transfer). If you require furtherinformation, more detail can be found by readingthe Scheme document in full and the report of anindependent expert who confirmed that in hisopinion the Transfer will not have a materialadverse effect on the security of benefits,reasonable benefit expectations or servicestandards and governance, of policyholders ofPAC or Rothesay Life. Both of these are availableon our website pru.co.uk/annuitytransfer.

2. Effect Of The Transfer On PoliciesTransferring To Rothesay LifeIf the Transfer goes ahead, Rothesay Life willbecome the provider in relation to your policyand will be responsible for administering it andfor making payments under it, instead of PAC.In order to minimise the impact on transferringpolicyholders, PAC and Rothesay Life haveagreed to enter into a transitional servicesagreement where PAC will carry out theadministration for the transferring policyholdersfor a period of time after the Transfer. TheTransfer will, however, not affect the terms andconditions of your policy other than asnecessary to replace references to PAC (and itsgroup) with Rothesay Life (and its group). If

your policy is transferred, you will be entitled tothe same rights with Rothesay Life under yourpolicy as you had with PAC. You will also seechanges in the branding from PAC to RothesayLife in future communications.

Your policy may be subject to PAC’s review ofthe sale of non-advised annuities. PAC willcontinue to be responsible for conducting thisreview in relation to your policy whether or notthe Transfer goes ahead. If that reviewconcludes that you are entitled to redress, yourannuity income may be increased. For moreinformation about PAC’s review of the sale ofnon-advised annuities, please refer to question19 in the Policyholder Circular which is availableon our website pru.co.uk/annuitytransfer.

After the Transfer, Rothesay Life will beresponsible for making any payments due underthe terms of your policy. Any annuity paymentswill continue to be made as before, including inrelation to the timing and the amount of thepayments due. No additional action is requiredon your part in relation to payments due fromRothesay Life (for example, you do not need toinform your bank).

3. How The Transfer Will BeImplementedThe transfer of the Transferred Business toRothesay Life is to be carried out under section111(1) of the Financial Services and Markets Act2000 (the Act). The Transfer will not proceedunless an order sanctioning the Scheme is givenby the High Court of Justice of England andWales (the Court).

C. Summary of the Transfer

Summary of the Terms of the Transfer of the Business of the PrudentialAssurance Company Limited (PAC) to Rothesay Life Plc (Rothesay Life)

4. Court Approval Of The TransferIf the Court approves the Scheme, theTransferred Business will transfer from PAC toRothesay Life.

It is expected that the Transfer will becomeeffective at 00:01 BST on 26 June 2019 (theTransfer Date). This date may be subject tochange with the Court’s consent.

5. The Business To Be TransferredOn the Transfer Date, all rights, benefits,obligations and liabilities of PAC in respect ofthe Transferred Business (unless specificallyexcluded) will transfer to Rothesay Life. Areinsurance agreement has already been put inplace with Rothesay Life under which the futurerisks and obligations relating to the TransferredBusiness were fully reinsured to Rothesay Life(unless specifically excluded), and theinvestment assets backing these liabilities weretransferred from PAC to Rothesay Life at the timethis reinsurance agreement was entered into.

As the assets held in respect of the TransferredBusiness have already been transferred by PACto Rothesay Life, they do not need to betransferred under the Scheme. The reinsurancecontracts relating to certain policies comprised inthe Transferred Business will be transferred onthe Transfer Date, along with the documents, filesand other records in relation to the TransferredBusiness held by or on behalf of PAC.

6. Excluded Policies And ExcludedLiabilitiesIf for any reason we are unable to transfer anypolicy or group of policies intended to betransferred on the Transfer Date, these willcontinue to be reinsured under the existingreinsurance agreement between PAC andRothesay Life (with such amendments as PACor Rothesay Life may agree) and will not betransferred to Rothesay Life.

Certain assets and liabilities related to theTransferred Business are excluded from theTransfer and will not transfer to Rothesay Lifeunder the Scheme. PAC will indemnify RothesayLife in respect of any such excluded assets orexcluded liabilities. These excluded liabilitiesinclude liabilities arising from the ThematicReview of Annuity Sales Practices conducted bythe FCA, unless otherwise agreed betweenRothesay Life and PAC. If you are affected by theThematic Review of Annuity Sales Practices, youwill receive more information from Prudentialabout how the Transfer affects that process.

7. Continuity Of ProceedingsAny proceedings by or against PAC in relation tothe Transferred Business (including any futureproceedings not yet begun) will be continued byor against Rothesay Life after the Transfer Date.Rothesay Life will be entitled to any and alldefences, claims, counterclaims, rights of set-offand any other rights that PAC would have had.

8. Data ProtectionFrom the Transfer Date, Rothesay Life willbecome the data controller in place of PAC inrelation to the Transferred Business (except incircumstances in which PAC continues to usepersonal data for the purposes of payment ofany TRASP Liability (as defined in the Scheme),in which case Rothesay Life and PAC shall bothbe separate (and not joint) data controllers)),and consents and information given to PAC willbe deemed to have been given to Rothesay Life.

9. Mandates And Other InstructionsFrom the Transfer Date, any mandates,including direct debits, standing orders or otherinstructions or authorities, payable to or fromPAC in respect of the Transferred Business willbe payable to or from Rothesay Life instead.



11. Objections If you feel you may be adversely affected by theproposed transfer, you have the right to objectand to present your views to Court. You can alsochoose to be represented by a representative atCourt if you prefer. Please note that if you wishto be represented by legal counsel at the UKCourt hearing then he or she would need tohave appropriate rights of audience to appear atthe High Court in London.

If you do wish to object, you can contact PAC’sdedicated Freephone helpline 0800 640 9164, (or+44 203 755 9194 if calling from outside the UK),email PAC at [email protected] orwrite to PAC at: PO Box 3122, Prudential, LancingBN15 8GB. PAC will acknowledge, in writing, allobjections they receive. PAC will submit details ofall objections received before the final courthearing to the Court, which will consider theScheme and all objections from affected personsat the final Court hearing. Details of objectionsreceived will also be provided to the independentexpert and our regulators.

12. Guernsey and Jersey This summary applies equally to the equivalentschemes in Guernsey and Jersey, although inthe context of those schemes:

> the transfer will be carried out pursuant tothe Insurance Business (Bailiwick ofGuernsey) Law, 2002 and the InsuranceBusiness (Jersey) Law 1996;

> the relevant court will be the Royal Courtof Guernsey and the Royal Court of Jersey;and

> the relevant regulator will be the GuernseyFinancial Services Commission and theJersey Financial Services Commission.

10. Amendment Of The SchemeThe Scheme provides that it may be amendedby application to the Court, provided that thePrudential Regulation Authority (the PRA) andFinancial Conduct Authority (the FCA) havebeen notified of the application and a certificateis obtained from an independent expert who isapproved by the PRA (having consulted withthe FCA), confirming that in his opinion (havingconsidered the proposed amendments in theround), the proposed amendments to theScheme will not have a material adverse effecton the Policyholders of the Transferee, includingby reference to: (i) the effect of the proposedamendments to the Scheme on the security ofthose Policyholders’ contractual rights, includingthe likelihood and potential effects of theinsolvency of the Transferee; or (ii) the likelyeffects of the proposed amendments to theScheme on matters such as investmentmanagement, new business strategy,administration, governance, expense levels andvaluation bases in so far as they may affect (x)the security of those Policyholders’ contractualrights; (y) level of service provided to thosePolicyholders; or (z) the reasonable benefitexpectations of those Policyholders; and (iii) thecost and tax effects of the proposedamendments to the Scheme, including in so faras they may affect the security of thosePolicyholders’ contractual rights or theirreasonable benefit expectations, and, takingaccount of any relevant regulatory guidanceapplicable to modifications of insurancebusiness transfer schemes under Part VII of theAct (or its successors).


Background I have been instructed by The PrudentialAssurance Company Limited (“PAC”)1 andRothesay Life plc (“Rothesay”) to report to theHigh Court of Justice of England and Wales (the“Court”) on the terms of the proposed transferof certain non-profit annuity insurance businessof PAC (“the transferring policies”) toRothesay. The transfer will be effected by meansof a scheme of transfer (the “Scheme”) inaccordance Part VII of the Financial Services andMarkets Act 2000. Subject to Court approval,the date on which the transfer takes place (“thetransfer date”) is expected to be 26 June 2019.

On 14 March 2018, Rothesay entered into anagreement to acquire the transferring policiesfrom PAC. While the formal transfer of thetransferring policies to Rothesay requires thesanction of the Court, PAC and Rothesay agreedthat 100% of PAC’s economic interest in the risksand rewards of the transferring policies shouldbe transferred to Rothesay in the meantime2.This was achieved by putting in place areinsurance agreement between PAC andRothesay (“the Reinsurance Agreement”).Under the Reinsurance Agreement, Rothesaymust reimburse PAC for all benefit paymentsmade to holders of the transferring policies3

unless and until the transferring policies areformally transferred to Rothesay under theScheme, after which Rothesay will make thepayments directly. There are a number ofpolicies that are covered by the ReinsuranceAgreement which are not transferring policies.

These policies which will instead remainreinsured to Rothesay after the transfer date.

I am a Fellow of the Institute and Faculty ofActuaries in the UK and a partner of MillimanLLP. I have fulfilled the role of IndependentExpert for over 20 insurance business transfersthat have been approved by the Court. I confirmthat I do not have any direct or indirect interestin PAC, Rothesay or any other related firms thatcould compromise my independence.

My assessment of the effect of the transfer hasbeen informed by the financial positions of PACand Rothesay at 30 June 2018, the most recentdate at which both sets of financial results areavailable at the time of writing.

This is a summary of my full report dated21 January 2019. Please refer to my full report(which is available from the PAC and Rothesaywebsites) for the scope of my work and myconclusions, and the reliances, limitations andstandards applying to my work. The full reportand this summary do not provide financial orother advice to individual policyholders.

Before the final Court Hearing I will prepare afurther report (the “Supplementary Report”)to provide an update on my conclusionsregarding the effect of the proposed transfer onthe different groups of policyholders in light ofany significant events arising after my full reporthas been finalised. The Supplementary Reportwill include information on the financial positionof the companies at 31 December 2018.

D. Summary of the Independent Expert’s Report

1 PAC is a UK insurance company and is the primary European insurance entity of the Prudential plc group.2 With effect from 1 April 2018 for deferred annuities and 1 July 2018 for annuities in payment.3 With the exception of differences in payments to policyholders that arise through differences between PAC’s and

Rothesay’s commutation factors.

The effect of the transfer ontransferring policies of PAC

Benefit security Transferring PAC policyholders will betransferred from a very large, long establishedcompany with a familiar brand name to asmaller, less well-known company founded onlytwelve years ago. However, the security ofpolicyholders’ benefits depends primarily onfactors other than the size and age of thecompany, and in reviewing the transfer I haveconsidered, among other things:

Solvency cover: If the proposed transfer hadtaken place on 30 June 2018, the level of coverfor regulatory solvency requirements4 wouldhave been lower in Rothesay post-transfer thanthat in PAC pre-transfer. However, PAC’ssolvency cover decreased from 14 December2018 due to the transfer of the legal ownershipof PAC’s Hong Kong subsidiaries to PrudentialCorporation Asia, reversing the relativepositions of the two companies.

Capital policies: PAC and Rothesay havecapital policies aimed at maintaining solvencycover5 within an appropriate range. I havereviewed the capital policies of both companiesand have concluded that they are of broadlycomparable strength. At 30 June 2018 thesolvency cover of each company exceeded theupper end of the target range set by itsrespective Board, and this would also have beenthe case after the transfer if it had taken place onthat date. Each company is free to distribute toits shareholders any surplus capital which is not

ring-fenced or expected to be needed by thebusiness, and this means that additional securityprovided by solvency cover in excess of thetarget range may be temporary.

Risk exposures: Differences in the risks to whicheach fund is exposed may lead to differences inthe variability of solvency cover as financial andother conditions change, and it is also necessaryto take account of any such differences.

Based on my review of all the relevant factors,I am satisfied that the transfer will not have amaterial adverse impact on the security ofbenefits of the transferring policies.

Reasonable expectations oftransferring policyholders The transferring policies are all non-profitannuities6 and therefore, in my view,policyholders’ reasonable expectations inrespect of their policies are principally that:

> They receive their income as guaranteedunder the policy, on the dates specified,from the point of purchase;

> The administration, management, andgovernance of the policies are in line withthe contractual terms of the policies; and

> The standards of service received after thetransfer are at least as good as those theycurrently receive.

No changes are proposed to the terms andconditions of the transferring policies, and sothe contractual benefits will be unchanged bythe Scheme.


4 The UK insurance regulations specify minimum levels of capital that an insurer must hold based upon the risks that theinsurer has written.

5 The capital that an insurer holds expressed as a percentage of the minimum level permitted by regulations.6 All transferring policies are in-payment annuities with the exception of a very small number of deferred annuity policies.

Holders of some of the transferring policies areable to elect to commute some or all of thecontractual benefits of their policy in certainlimited circumstances7; that is, the policyholderor contingent beneficiary may choose to forgosome or all of their annuity income in return fora lump sum payment. The amount of lump sumreceived is, in almost all cases, at the discretionof the insurer (subject to the overridingrequirement to treat customers fairly), and isdetermined by a commutation factor8 thatdepends on the insurer’s estimate of the lifeexpectancy of the customer, as well asprevailing market conditions (in particular thelevel of long-term interest rates). PAC is in theprocess of implementing a change to itscommutation factors which will, by and large,result in the factors reducing. I have receivedanalysis from PAC and Rothesay showing that,while PAC’s commutation factors (after theplanned change) may be higher or lower thanthose of Rothesay depending on the features ofthe policy, the two sets of factors will not differmaterially. I have provided more details on thisaspect in my full report and I will provide anupdate in my Supplementary Report.

Since October 2018, the administration andservicing of all of PAC’s annuity business(including the transferring policies) has beencarried out by Tata Consultancy Services (“TCS”)and Diligenta, its UK subsidiary. Subject toputting in place a suitable transitional servicesagreement, after the transfer date, PAC will

continue to provide administration and servicing(undertaken by TCS on its behalf) to Rothesayfor 12 to 24 months after the transfer date, whichmeans that no changes to administration orservice standards are expected as a result of thetransfer during this period. While this transitionalservices agreement is in place, there is no reasonto expect that administration and servicestandards will differ from those that thetransferring business would have received if theScheme had not been implemented. After theterms of the transitional services agreement,Rothesay would either have a direct relationshipwith TCS/Diligenta or the administration wouldmigrate to a service provider of Rothesay’schoice. Rothesay already managesapproximately 380,000 non-profit annuitiesand administers these via outsourcingagreements. I have reviewed the target servicestandards for these policies and I consider theservice standards to be reasonable. I have noreason to believe that the future outsourcingarrangements for the transferring policiesorganised by Rothesay will result in materiallydifferent service standards from those applicableto Rothesay’s existing non-profit annuities. I willcomment on the outcome of the discussionssurrounding the Transitional Services Agreementin my Supplementary Report. However,assuming that a suitable Transitional ServicesAgreement is put in place, I am satisfied that theimplementation of the Scheme will not result in amaterial adverse impact on service standardsapplicable to Transferring Policies.


7 For the in-payment annuities, these circumstances comprise:• a situation in which a pension sharing order has been issued; or• a situation where the benefits of a contingent beneficiary are small enough to qualify for trivial commutation

following the death of the main policyholder.8 A commutation factor is the lump sum received by the policyholder for each £1 p.a. of pension income forgone. For

example, a commutation factor of 20 means that the policyholder would receive a £20 lump sum for each £1 p.a. ofpension forgone.


Following the transfer, the transferring policieswill be managed by Rothesay and subject to thegovernance of the Rothesay Board of Directors.As noted above, Rothesay currently manageslarge volumes of non-profit annuity business,and is therefore experienced in themanagement and governance of such business.

After the Transfer Date it will be necessary touse Rothesay’s Pay As You Earn (“PAYE”)reference for transferring policies. For someholders of transferring policies, this may triggera change in their PAYE tax code, either at ordirectly after the Transfer Date. Rothesay andPAC are liaising with HMRC to establish the bestapproach to minimise any inconvenience foraffected policyholders. I will comment furtheron this aspect in my Supplementary Report.

In October 2016, the Financial ConductAuthority (the “FCA”) announced the findingsof its Thematic Review of Annuity SalesPractices (“TRASP”) which assessed whetherfirms had provided new annuity customers withsufficient information about the availability ofenhanced annuities9 at the point of sale. As aresult of TRASP a number of firms, includingPAC, were asked by the FCA to review all non-advised annuity sales10 since July 2008 andprovide compensation where appropriate. PACis currently conducting this review.

Depending on the outcome of the TRASP review,PAC may need to make lump sum compensationpayments and/or augment the level of annuitypayments for certain policies, including some ofthe transferring policies. The planned processesfor reviewing and, where appropriate, providing

TRASP compensation after the transfer have beendesigned with the aim that a transferringpolicyholder’s experience would be the same asthat of a non-transferring policyholder of PAC.Therefore, transferring policyholders should notexperience a delay in receiving any compensationdue as a result of the implementation of theScheme, nor will the amount of compensationthey receive be affected.

Conclusions for transferring policies I am satisfied that the implementation of theScheme will not have a material adverse effect on:

> The security of benefits under thetransferring policies;

> The reasonable expectations of thetransferring PAC policyholders; or

> The service standards and governanceapplicable to the transferring policies.

The effect of the transfer on non-transferring policies of PAC

Benefit security If the proposed transfer had taken place on30 June 2018, there would have been animprovement to PAC’s financial strength as aresult of the transfer. However, thisimprovement would be relatively small as PAChas already transferred the risks and rewardsassociated with the transferring policies toRothesay through the Reinsurance Agreement,and so has already realised most of the financialbenefits of the transfer.

9 An annuity sold to an individual in poorer than average health, which pays out a higher annuity amount to reflect theirlower life expectancy relative to a healthy individual.

10 When a customer does not receive financial advice when purchasing an annuity, it is called a 'non-advised annuity sale'.

The proposed transfer will not lead to anymaterial change in the risk appetite11 or capitalpolicy in accordance with which PAC ismanaged, and PAC’s ability to comply with itscapital policy will not be materially affected bythe transfer.

Reasonable expectations of non-transferring PAC policyholders No changes will be made to the terms andconditions of non-transferring policies in PACas a result of the transfer. Furthermore, therewill be no change to the operation of PAC andthe governance of non-transferring PAC policieswill continue to be the responsibility of thePAC Board of Directors and, in the case ofwith-profits policyholders (none of which willtransfer to Rothesay), the role of the PACWith-Profits Committee will be unchanged.

The non-transferring policies in PAC willcontinue to be administered under the samearrangements and will therefore not experienceany change to service standards as a result ofthe transfer.

The Scheme will have no effect on the benefitspayable under policies remaining in PAC.

Conclusions for non-transferring policies

I am satisfied that the implementation of theScheme will not have a material effect on:

> The security of benefits under non-transferring policies in PAC;

> The reasonable benefit expectations ofnon-transferring policyholders of PAC; or

> The service standards and governanceapplicable to non-transferring policiesof PAC.

The effect of the transfer onRothesay policies

Benefit security Based on the financial information I havereceived as at 30 June 2018, there will be nomaterial change to the financial strength ofRothesay as a result of the transfer as PAC hasalready transferred the risks and rewardsassociated with the transferring policies toRothesay through the Reinsurance Agreement.

Rothesay’s existing business consists solely ofannuities in payment and deferred annuities,and while the Reinsurance Agreementsignificantly increased the volume of business inRothesay, it did not materially change the natureof the risks to which its policies are exposed(principally longevity risk12 and credit risk13). Asthe risks on the transferring policies havealready been passed to Rothesay through theReinsurance Agreement, the transfer itself willnot add to these risks.

The proposed transfer will not lead to anymaterial change in the risk appetite or capitalpolicy in accordance with which Rothesay ismanaged, and Rothesay’s ability to comply withits capital policy will not be materially affectedby the transfer.


11 Risk appetite is the amount and type of risk that an organisation is willing to take in order to meet its strategic objectives12 Longevity risk is the risk of an adverse financial impact arising from annuity policyholders living longer than expected13 Credit risk is the risk of losses arising from a loan made to a third party. A loss may arise from failure of the counterparty

to make payments when due. A loss may also arise because the market considers the likelihood of the counterpartydefaulting has increased, and so the value at which the loan may be traded falls.

Reasonable expectations of existingRothesay policyholders The transfer will not alter the terms andconditions of existing policies in Rothesay.

The transfer will not lead to any changes to theservicing and administration arrangements forexisting Rothesay policies, and no change isexpected to service standards for these policiesas a result of the Scheme.

The governance of the existing policies willcontinue to be the responsibility of the RothesayBoard of Directors.

I am satisfied that the implementation of theScheme will not have a material effect on:

> The security of benefits of thepolicyholders of Rothesay;

> The reasonable expectations of thepolicyholders of Rothesay; or

> The service standards and governanceapplicable to the policyholders of Rothesay.

Overall Conclusions I am satisfied that the implementation of theScheme will not have a material adverse effect on:

> The security of benefits of thepolicyholders of PAC and Rothesay;

> The reasonable benefit expectations of thepolicyholders of PAC and Rothesay; or

> The service standards and governanceapplicable to the PAC and Rothesay policies.

I am also satisfied that the Scheme is equitableto all classes and generations of PAC andRothesay policyholders.

The Independent Expert’s full report is availableonline at pru.co.uk/annuitytransfer. It shows inmuch more detail how the Independent Experthas reached his conclusions. You can alsorequest a copy by post, by calling PAC’s helplineon 0800 640 9164 or +44 203 755 9194 if callingfrom outside the UK, or by writing to PAC atRothesay Life Transfer, Prudential, PO Box 3122,Lancing BN15 8GB.



IN THE HIGH COURT OF JUSTICE CR-2018-003686BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALESCOMPANIES COURT (ChD)

IN THE MATTER OF THE PRUDENTIAL ASSURANCE COMPANY LIMITED

-and-

IN THE MATTER OF ROTHESAY LIFE PLC

-and-

IN THE MATTER OF THE FINANCIAL SERVICES AND MARKETS ACT 2000

NOTICE IS HEREBY GIVEN that on 22 January 2019 The Prudential Assurance Company Limited("PAC") and Rothesay Life Plc ("Rothesay Life") applied to the High Court of Justice of England andWales (the “Court”), pursuant to section 107(1) of the Financial Services and Markets Act 2000 (the"Act"), for an Order under section 111(1) of the Act sanctioning an insurance business transferscheme (the "Scheme") for the transfer to Rothesay Life of certain long-term insurance businesscarried on by PAC (the "Transferring Business") and for the making of ancillary orders in connectionwith the implementation of the Scheme under section 112 of the Act.

If the Scheme is sanctioned by the Court, it will result in the transfer to Rothesay Life of all thecontracts, property, assets and liabilities comprising the Transferring Business and accordingly, unlessotherwise provided for in the Scheme, payments in respect of the policies comprising the TransferringBusiness shall, upon the transfer becoming effective, be dealt with by Rothesay Life.

The availability to policyholders of recourse to the Financial Services Compensation Scheme and FinancialOmbudsman Service will not change as a result of the Scheme. Therefore, policyholders of PAC andRothesay Life who are currently protected by the Financial Services Compensation Scheme and/or haverecourse to the Financial Ombudsman Service will continue to have such protection or recourse.

Copies of the report on the terms of the Scheme prepared by an Independent Expert in accordance withsection 109 of the Act (the "Independent Expert's Report"), copies of the letters sent to policyholders,a statement setting out the terms of the Scheme and a summary of the Independent Expert's Report, andcopies of the Scheme document itself can be obtained from pru.co.uk/annuitytransfer and copies canalso be requested free of charge by contacting PAC using the telephone number or address set outbelow from the date of publication of this notice until the date on which the application is heard by theCourt. These documents, other documents relating to the Scheme (including other actuarial reports anda Questions and Answers document) and any further news about the Scheme will be posted on thiswebsite which can be checked for updates.

E. Notice of Transfer


Any questions or concerns relating to the proposed transfer should be referred to PAC using thefollowing telephone number, email or postal address:

Transferor contact detailsBy post: Prudential, PO Box 3122, Lancing BN15 9GB

By email: [email protected]

PAC telephone: 0800 640 9164

PAC overseas telephone: +44 203 755 9194

The application is due to be heard at the Rolls Building, Fetter Lane, London EC4A 1NL on 10 June 2019.If approved by the Court, it is currently proposed that the Scheme will take effect at 00:01 BST on26 June 2019.

Any person who claims that he or she would be adversely affected by the carrying out ofthe Scheme has a right to attend the hearing and express their views either in person orthrough a representative. Please note that if any person wishes to be represented by legalcounsel at the UK Court hearing then he or she would need to have appropriate rights ofaudience to appear at the High Court in London.

Any person intending to attend is requested (but is not obliged) to give notice of such intention assoon as possible and preferably at least five business days before the hearing on 10 June 2019, settingout their grounds of objection to PAC by calling the above number or by writing to the address aboveor to the solicitors named below.

Any person who claims that they will be adversely affected by the Scheme but does not intend toattend the hearing may also make representations about the Scheme by giving notice of suchrepresentations, as soon as possible and preferably at least five business days before the hearing on10 June 2019, by calling the above number or by writing to the address above or to the solicitorsnamed below.

Allen & Overy LLPOne Bishops SquareLondon E1 6AD

Ref: 0041553-0000037

Solicitors to PAC

GEN

M96

4601

01/

2019

"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.

genm964601 01 19 - pru · post: write to us at rothesay life transfer, prudential, po box 3122,...

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