RE BLUE CROSS (ASIA-PACIFIC) LTD

HCMP 943/2022

[2022] HKCFI 2938

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 943 OF 2022

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R E A S O N S  F O R  J U D G M E N T

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1.  By Petition presented on 18 July 2022,Blue Cross (Asia Pacific) Insurance Limited (“Blue Cross”) and AIA Everest Life Company Limited[1] (“AIA Everest”) (together “Petitioners”), apply for sanction of the scheme dated 18 July 2022 (“Scheme”) for the transfer from Blue Cross of the whole of the long term business carried on in or from Hong Kong to AIA Everest under s.24 of the Insurance Ordinance (Cap. 41) (“Ordinance”). At the hearing, the court sanctioned the Scheme. These are the reasons for my judgment.

2.  As with other schemes of this nature, the application is supported by the affirmations made by (1) the senior executives of the Petitioners[2] and the appointed actuary of Blue Cross[3] who confirmed the facts and matters relevant to the application; (2) the solicitors of the Petitioners who dealt with publication and service of the Statutory Notice and Statutory Statement; and (3) the report and supplementary report of the Independent Actuary (“IA”)[4]. 

Background

3.  Blue Cross (the transferor) is a Hong Kong company.  Prior to its acquisition by AIA Holdings (Hong Kong) Limited (“AIA Holdings”), it was a wholly owned subsidiary of The Bank of East Asia, Limited (“BEA”).  It is authorised to carry on long term business of Class A (life and annuity); Class D (permanent health); Class G (retirement scheme management category I); and Class I (retirement scheme management category III) under Part 2 of Schedule 1 to the Ordinance, and all classes of general business.

4.  AIA Everest (the transferee) is a Hong Kong company.  Prior to its acquisition by AIA Company Limited (“AIA Company”), it was a wholly owned subsidiary of BEA.  It is authorised to carry on long term business of Class A (life and annuity); Class C (linked long term); Class D (permanent health) and Class I (retirement scheme management category III).

5.  The proposed transfer of the long term business formed part of the disposal of all the insurance business from the BEA group to the AIA group which involved the following transfers:

(1)  On 24 March 2021, it was agreed between the parties that (a) BEA would sell and transfer the entire issued share capital of AIA Everest to AIA Company; and (b) Blue Cross would sell and transfer all its long term business to AIA Everest.

(2)  On 1 September 2021, the sale of the shares of AIA Everest was completed whereupon AIA Everest became a company within the AIA group.

(3)  On 4 March 2022, AIA Holdings announced that it had agreed to acquire the entire issued share capital of Blue Cross from BEA.  The acquisition was completed on 26 August 2022 and since then, Blue Cross and AIA Everest have been companies within the AIA group.

(4)  The Scheme, if sanctioned and implemented, will transfer all the long term business from Blue Cross to AIA Everest.  Thereafter, Blue Cross will only carry on general business. 

6.  As at 30 June 2021, Blue Cross had 6,189 long term policies in force, which are Class A or Class D of long term business.

7.  The Scheme contains the following definitions:

(1)  “Business” is defined as “the long term business carried on by Blue Cross which shall comprise the Transferring Policies, the Transferring Assets and the Transferring Liabilities”.

(2)  “Transferring Policies” refer to (a) all long term business insurance policies underwritten by Blue Cross in or from Hong Kong under which any liability remains outstanding as at the Transfer Date, whether such insurance policies have been reinstated or have expired, lapsed, matured, surrendered, terminated or otherwise, including all proposals, applications, certificates, supplemental coverages, endorsements, riders and ancillary agreements in connection therewith; and (b) all proposals and applications for policy renewals and reinstatements received by Blue Cross but the processing of which has not been completed by Blue Cross prior to the Transfer Date (which shall be processed by AIA Everest after the Transfer Date).

(3)  “Transferring Assets” refer to (a) the property, assets or investments of Blue Cross as are attributable to the Transferring Policies wherever situated (including the assets held in or allocated to the Blue Cross Long Term Funds and any right, discretion, authority, power or benefit of Blue Cross under or by virtue of the Transferring Policies); (b) any rights, benefits and powers of Blue Cross under any reinsurance contracts (relating to the Transferring Policies) under which Blue Cross is reinsured; and (c)any intermediary agreement (including broker agreements and agent and agency agreements) to the extent they are attributable to the long term business of Blue Cross.

(4)  “Transferring Liabilities”refer to all liabilities of Blue Cross as at the Transfer Date attributable to the Transferring Policies including (a)the liabilities and obligations (whether present, future or contingent), and any current or pending complaints, legal proceedings or other dispute resolution proceedings under or in relation to the Transferring Policies and associated liabilities, for the avoidance of doubt, including liabilities (including fines, penalties, damages and compensation due to policy holders) for mis-selling or non-compliance of Blue Cross; (b) any liabilities or obligations of Blue Cross under any reinsurance contracts (relating to the Transferring Policies) under which Blue Cross is reinsured; and (c) any intermediary agreements (including broker agreements and agent and agency agreements) to the extent they are attributable to the long term business of Blue Cross but excluding the Excluded Liabilities[5].

(5)  “Transfer Date”is the time and date on which the Scheme shall become effective, namely at 00:01 a.m.  (HKT) on such date as the Petitioners may decide, which shall be within 90 days after the order sanctioning the Scheme (clause 12.1).

8.  The Scheme provides that on and with effect from the Transfer Date:

(1)  Each of the Transferring Assets, Transferring Liabilities and Transferring Policies shall be transferred to AIA Everest (clauses 3-5).

(2)  Any proceedings by or against Blue Cross in relation to the Transferring Assets, Transferring Liabilities and Transferring Policies shall be continued by or against AIA Everest, in substitution for Blue Cross (clause 8.1).

(3)  AIA Everest shall establish the New AIA Everest Class A Sub-Fund, and the New AIA Everest Class D Sub-Fund (clause 9.1).

(4)  The Transferring Policies, Transferring Assets and Transferring Liabilities will be allocated to the New AIA Everest Class A and Class D Sub-Funds (clauses 9.2 to 9.6).

(5)  All premiums, loan repayments and other amounts received or receivable by Blue Cross in respect of the Transferring Policies shall be payable to AIA Everest (clause 10.1).

(6)  Blue Cross and AIA Everest shall bear the costs of the Scheme out of their own respective funds (clause 11.1).

(7)  Save for amendments to correct manifest error, the Scheme can only be modified with the approval of the court (clause 13).

9.  Prior to commencement of these proceedings, the Petitioners had provided drafts of the Petition, the Scheme, the IA Report, the Statutory Statement and the Statutory Notice and other supporting documents to the Insurance Authority (“Authority”) and have incorporated its comments in the documents.

Applicable Principles

10.  Section 24(2) of the Ordinance makes clear that the court shall not determine an application unless (1) the Petition is accompanied by a report from the IA; and (2) the requirements of s.24(3) have been complied with.  The requirements stipulated in s.24(3) are:

(1)  Publication of the Statutory Notice (s.24(3)(a));

(2)  The sending of the Statutory Statement (setting out the terms of the scheme, and a summary of the report(s) of the IA) to policyholders and every member of the insurers, except where the court has otherwise directed (s.24(3)(b));

(3)  Service of the petition, the report(s) of the IA and the Statutory Statement on the Authority at least 21 days before the determination of the petition (s.24(3)(c)); and

(4)  That copies of the petition and the report(s) of the IA be open to inspection at offices in Hong Kong of the insurers for a period of not less than 21 days beginning with the date of the first publication of the Statutory Notice (s.24(3)(d)).

11.  The principles governing an application for sanction of a scheme for transfer of long term insurance business are well established.  As stated in the skeleton submissions of Mr Victor Dawes SC (leading Ms Natalie So), counsel for the Petitioners:

(1)  The Ordinance confers an absolute discretion on the court whether or not to sanction a scheme, and the discretion must be exercised by giving due recognition to the commercial judgement entrusted by the company’s constitution to its directors.

(2)  The court is concerned with whether a policyholder, employee or other interested person or any group of them will be adversely affected by the scheme.

(3)  The above is a primarily a matter of actuarial judgment involving a comparison of the security and reasonable expectations of policyholders without the scheme, with what would be the result if the scheme were to be implemented.  The Ordinance assigns an important role to the IA, to whose report the court will give close attention.

(4)  The court will pay close attention to any views expressed by the Authority, which is expected to be able to express informed opinions on whether policyholders would be adversely affected.

(5)  The fundamental question is whether the scheme as a whole is fair as between the interests of the different classes of persons affected.  It is not the court’s function to produce what is, in its view, the best possible scheme. 

(6)  As such, that individual policyholders or groups thereof may be adversely affected does not mean the scheme has to be rejected.  Similarly, the details of the scheme are not a matter for the court provided that the whole scheme is found to be fair.

(Re Prudential Assurance Company Ltd [2014] 1 HKLRD 433, §18, per Godfrey Lam J (as he then was) which referred to Re AXA Equity and Law Life Assurance Society Plc[2001] 2 BCLC 447, 468E-469B)

12.  The court will consider the contractual rights and reasonable expectations of transferring policyholders before the scheme is implemented, and compare that with the likely effect and result on such rights and expectations if the scheme is implemented especially where, as here, the purpose of the scheme is to advance a commercial purpose of the transferor (and transferee) with no corresponding benefit to the transferring policyholders (Re Transamerica Life Insurance Company[2013] 2 HKLRD 871, §47; Re Zürich Lebensversicherungs-Gesellschaft AG (also known as Zurich Life Insurance Company Ltd)[2021] HKCFI 2447, §14).

13.  Section 25 of the Ordinance empowers the court to make provision for inter alia the transfer to the transferee company of the undertaking, property and liabilities of the transferor company, the continuation by or against the transferee company of any legal proceedings pending by or against the transferor company, and such incidental, consequential or supplementary matters as are necessary to secure that the scheme shall be fully and effectively carried out.

Statutory Requirements

14.  At the hearing of the summons for directions on 5 August 2022, the Petitioners sought directions on service and publication of the Statutory Notice and the Statutory Statement (in the forms approved by the court) with a view to comply with the requirements stipulated in s.24(3) of the Ordinance. 

15.  The Petitioners proposed to dispense with (1) the requirement to send the Statutory Statement to all other long term policy holders of Blue Cross and all the existing long term policy holders of AIA Everest on the ground that although they are not holders of the Transferring Policies (and hence will not be affected by the Scheme), the sending of the Statutory Statement to such holders will only create unnecessary confusion; and (2) the requirement to set out the full terms of the Scheme in the Statutory Statement and in substitution thereof, a summary of the terms of the Scheme. 

16.  It was appropriate to make the directions sought given that the purpose of s.24(3) is to bring the Scheme and the proceedings to the attention of the Transferring Policyholders and inform them of the right to make enquiries with the Petitioners, obtain documents and attend the hearing at which the court will consider whether to sanction the Scheme if they wish to do so.  It was not necessary for the Petitioners to send the Statutory Statement to all other holders whose policies will not be transferred under the Scheme.  The directions are set out in Schedule 1 to this Judgment. 

17.  The statutory requirements under s.24 of the Ordinance have been complied with:

(1)  S.24(2): The Petition is supported by the IA Report dated 18 July 2022 and the Supplementary IA Report dated 22 August 2022. The latter was prepared on the basis of updated financial information available as at 31 May 2022, and other significant events post-IA Report.[6]

(2)  S.24(3)(a): The Statutory Notice was published on 19 August 2022 in the Gazette (in both English and Chinese), SCMP in English, and Hong Kong Economic Times in Chinese.[7]

(3)  S.24(3)(b): The Statutory Statement was sent to (a) BEA and AIA Company (the sole shareholder of Blue Cross and AIA Everest respectively) at their registered addresses; and (b) the holders of the Transferring Policies at their last known addresses.[8]

(4)  S.24(3)(c): Copies of the Statutory Statements, the Petition (annexed with the Scheme) and the IA Report were served on the Authority on 22 July 2022.[9]  A copy of the Supplementary IA Report was served on the Authority on 23 August 2022.[10]

(5)  S.24(3)(d): Copies of the Petition and the IA Report were made open for inspection at the offices of Blue Cross and AIA Everest from 19 August 2022, whereas copies of the Statutory Statements and the Supplementary IA Report were made open for inspection from 23 August 2022, both until the sanction hearing of the Petition.[11]

(6)  S.24(4): Copies of the Petition, the IA Report and the Supplementary IA Report were made available to any person who asked for the same.[12]

18.  In addition, the Petitioners posted copies of the Petition (annexed with the Scheme) and the IA Report on their websites on 19 August 2022, and copies of the Statutory Statements and Supplementary IA Report on 23 August 2022, and maintain such posting until the substantive hearing of the Petition.[13]

Exercise of Discretion

19.  So far as the contractual rights and reasonable expectations of the Transferring Policyholders before and after the Scheme are concerned, the court relies heavily on the opinions of the IA.  For the purpose of preparing his reports, the IA was given access to a whole array of documents[14] and had unrestricted access to, and held discussions with, various representatives of the Petitioners.[15]

20.  In summary, the IA opined that:

(1)  The Scheme would not have a materially adverse effect on the reasonable expectations of the long term policyholders of either of the Petitioners in particular the Transferring Policyholders, with regards to benefits level of service.

(2)  The Scheme would not have a materially adverse effect on the financial security of the long term policyholders of both the Petitioners in particular the Transferring Policyholders.

(3)  The Scheme provides sufficient safeguards to ensure that it would operate in the manner presented to the court.

(4)  His opinion remained unchanged after considering the relevant developments post-IA Report.

21.  The IA’s findings may be summarised as follows. 

22.  First, in relation to the effect on benefit expectations of Transferring Policyholders, the IA observed that:

(1)  The Petitioners confirmed they do not expect to make any changes to the management practice of the participating business that may materially affect the level of discretionary benefits received by the Transferring Policyholders following implementation of the Scheme.  AIA Everest’s practice of reviewing policyholder dividend rates periodically would remain unchanged.[16]

(2)  The Scheme would provide a robust control on the dividend recommendation process to ensure fair treatment of customers.[17]

(3)  The policy loan interest rate would continue to be reviewed periodically under the Scheme, in line with Blue Cross’ practice.[18]

(4)  After implementation of the Scheme, the assets backing the liabilities from the Transferring Policies would be managed by the same AIA Group’s in-house asset manager as AIA Everest’s investment portfolio[19], which managed over HK$ 1,256 billion of assets as at 31 December 2021 (more than 10 times larger than the assets under the management and advice of the external asset manager of Blue Cross prior to the proposed transfer).  There would not be significant change to investment policy after the proposed transfer.[20]

(5)  There would be no significant change of strategic asset allocation in relation to the proposed transfer after it is implemented, and the Business would be managed separately from AIA Everest’s existing assets.[21]

(6)  Given the number of Transferring Policies relative to that of AIA Hong Kong (which replaces Blue Cross as the entity providing operational functions), it is expected the Scheme would not lead to increases in unit costs charged to Transferring Policyholders due to economies of scale and synergies achieved upon transfer.[22]

(7)  The costs and expenses incurred in relation to the Scheme would not lead to increase in unit costs charged to the policyholders, or decrease the dividend levels payable to the policyholders.[23]

(8)  There would be no change to policy terms and conditions of those policies in-force as a result of the Scheme.[24]

23.  For the above reasons, the IA concluded there are sufficient safeguards for the Transferring Policyholders who are entitled to discretionary benefits and that they would not be treated in a materially adverse manner upon implementation of the Scheme.[25]  As for guaranteed benefits, the contractual rights of the Transferring Policyholders would remain the same after the Scheme is implemented[26].

24.  Second, as regards the effect on financial security of the Transferring Policyholders:

(1)  Although the Scheme would have the effect of reducing the solvency ratio of AIA Everest as at 31 December 2021 from 206% (pre-Scheme) to 201% (post-Scheme), the level is still above the regulatory minimum requirement (150%).  In the event that the solvency ratio deteriorates further, various management actions will be considered by AIA Everest (with the support of its parent company) in accordance with its capitalisation policy.[27]

(2)  The IA explained at the hearing that the reduction in solvency ratio post-Scheme is attributed to the fact that the consideration payable by AIA Everest to Blue Cross for the Business would remain asset of Blue Cross and would not be transferred under the Scheme. 

(3)  As regards management actions to improve AIA Everest’s solvency ratio, the IA pointed to the fact that during the first 5 months in 2022, AIA Everest had, in line with its capitalisation policy, increased the solvency ratio from 206% to 271% so as to counter (a) the increase in interest rates in the first 5 months in 2022; and (b) the adverse equity market performance during the same period[28].

(4)  In any event, the difference (if any) in the management of capital between Blue Cross and AIA Everest would not have a materially adverse impact on the Transferring Policyholders in light of AIA Everest’s endeavours to take management actions to improve its solvency ratio where it is appropriate to do so.[29]

(5)  AIA Everest would comply with regulatory capital requirement and follow operational targets commensurate with its risk profile, and the approach taken would not be altered as a result of the Scheme.[30]

(6)  AIA Everest’s risk profile remained largely unchanged in 2021.  No additional risk exposure resulting from the Scheme which may prejudice the financial security of Transferring Policyholders has been identified.[31]

(7)  AIA Everest confirmed it had no intention to make significant change to the investment policy currently adopted by Blue Cross for the Transferring Assets after the Scheme.[32]

(8)  The overall risk management frameworks of the Petitioners on regulatory compliance and maintaining sufficient level of capital to withstand adverse market conditions are broadly comparable.[33]

25.  On the above bases, the IA concluded that the Scheme would have no material adverse effect on financial security of the Transferring Policyholders, and would unlikely expose them to new risks of significance.  They would be protected by the financial strength of AIA Everest after the Scheme is implemented.[34]

26.  Third, as to other considerations, the IA considered that the other operational areas (including the levels of service provided) would not have any material adverse impact on the Transferring Policyholders, and that the Scheme would provide sufficient safeguards to ensure it would operate as presented.[35]  In particular, AIA Everest has committed to provide at least the same levels of service as Blue Cross; and has set up a dedicated hotline and service team to provide services to the Transferring Policyholders (as well as existing AIA Everest policyholders).[36]

27.  Fourth, in relation to the existing policyholders of AIA Everest, the IA opined that the Scheme would not have any material adverse impact on them, whether in respect of reasonable expectations or financial security.[37]

28.  Lastly, the IA considered that the approach of communicating with the Transferring Policyholders is reasonable, and the documents provided to them are sufficient in explaining the material effects of the proposed transfer[38].

29.  As stated in the Supplementary IA Report, having considered  the updated financial position of the Petitioners as at 31 May 2022 and the various developments after 18 July 2022, the IA concluded that his conclusions in the IA Report remained unchanged.[39]

30.  The appointed actuary of Blue Cross opined that the Scheme should not have a material adverse effect on the reasonable expectations with regard to benefits and levels of service and the financial security of existing and non-transferring policyholders, as well as the Transferring Policyholders.[40]

31.  The Authority has been involved in reviewing and providing comments on the draft documents including the Scheme.[41]  The Authority has no objection to the Scheme or the order sought by the Petitioners. 

32.  As at 13 September 2022, the Petitioners received 19 enquiries from the Transferring Policyholders all of which have been answered without any further request or issue.[42]  Other than these enquiries, no complaint or objection has been received by the Petitioners in respect of the Scheme.[43]

Conclusion

33.  It is an appropriate case where the court should exercise its discretion to sanction the Scheme given that:

(1)  as a matter of actuarial judgment, the Scheme has no material adverse effect on the Transferring Policyholders, or other policyholders of the Petitioners as neither the reasonable benefit expectations nor financial security thereof will be adversely affected, which is a significant consideration for the court (Re AXA (Hong Kong) Life Insurance Company Limited, HCMP 1647/2012, 16 October 2012, §19, per Barma J (as he then was));

(2)  the transfer of the Business is an intra-group transfer between Blue Cross and AIA Everest, whose ultimate parent company is the same, and the Transferring Policyholders remain protected by the strength of the AIA group after implementation of the Scheme; and

(3)  a fair balance is struck between the interests of different classes of persons affected. 

34.  The order sanctioning the Scheme is in the following terms:

(1)  Pursuant to section 25 of the Ordinance (using the definitions in the Scheme), all other contracts, rights, obligations and commitments of Blue Cross with respect to the Transferring Policies and Business or otherwise relating to its undertaking, property or liabilities as specified in the Scheme shall, on and from the Transfer Date, be transferred to and vested in AIA Everest.

(2)  The Petitioners shall post the Order dated 5 August 2022 (together with Annexures 1 and 2 thereto), the Petition, the Independent Actuary’s Report dated 18 July 2022 (together with the Erratum dated 4 August 2022), the Supplementary Report dated 22 August 2022, and this Order (together with the Scheme) on the websites of Blue Cross and AIA Everest at www.bluecross.com.hk/en/important-notices/bclife-portfolio-transfer and www.aia.com.hk/en/help-and-support/individuals/aia-everest.html, and maintain that posting until the Transfer Date.

(3)  There be liberty to apply for the purpose of modification of the Scheme under Clause 13 of the Scheme or the purposes set out in Section 25 of the Ordinance.

(4)  The Petitioners do pay the costs of the Authority in relation to the Petition, to be taxed on a common fund basis if not agreed.

Schedule 1

1.  AIA Everest and Blue Cross shall by 19 August 2022, pursuant to section 24(3)(a) of the Insurance Ordinance (Cap. 41 of the Laws of Hong Kong, the “Ordinance”), publish a notice (the “Statutory Notice”):

(1)  in the Government of the Hong Kong Special Administrative Region Gazette in both English and Chinese;

(2)  in the South China Morning Post in English; and

(3)  in the Hong Kong Economic Times (香港經濟日報) in Chinese.

2.  AIA Everest and Blue Cross shall by 23 August 2022, pursuant to section 24(3)(b) of the Ordinance and for the reasons set out in the Petition, send by ordinary mail (if located in Hong Kong) or by ordinary air mail (if located outside Hong Kong) the relevant statement in both English and Chinese (the “Statutory Statement”) , to:

(1)  The Bank of East Asia, Limited (“BEA”) (being the sole shareholder of Blue Cross as at the date of the Summons for Directions) and AIA Company Limited (being the sole shareholder of AIA Everest) at each of their respective registered addresses; and

(2)  The following long term policy holders of Blue Cross:

(i)    each Transferring Policyholder (as defined in the Petition) whose Transferring Policy(ies) (as defined in the Petition) is/are in force as at 30 June 2021:

(A)  For 402 long term mortgage life policies among such Transferring Policies, the Statutory Statement will be sent to the holders of such policies.

(B)  Where such policies are held by BEA, the Statutory Statement will be sent to BEA as the policy holder of such policies, and a copy of the Statutory Statement will also be provided to each of the relevant life insureds, with a cover letter explaining why they receive a copy of the Statutory Statement, to inform them of the Proposed Transfer (as defined in the Petition).

(C)  Where such policies are held directly in the name of the insureds, the Statutory Statement will be sent directly to each of the insureds.

(ii)   each Transferring Policyholder whose Transferring Policy(ies) has/have expired, terminated, matured or surrendered as at 30 June 2022 but who has/have claims or payments outstanding under such policy(ies) or from whom a notice of claim has been received by Blue Cross;

(iii)  each Transferring Policyholder whose Transferring Policy(ies) has/have lapsed as at 30 June 2022, and where such policy(ies) is/are still capable of being reinstated under a reinstatement option (if any) under the policy(ies) (with the period for exercise of such reinstatement option (the “Reinstatement Period”), for most of the Transferring Policy(ies) being 1 year from the lapse date, with the exception of (A) Transferring Policy(ies) sold through call centres or telemarketing channels in which case the Reinstatement Period shall be 6 months from the lapse date and (B) Transferring Policy(ies) of the insurance product ‘Marathon Life II - Endowment @96’ in which case the Reinstatement Period shall be 5 years from the lapse date); and

(iv)  each Transferring Policyholder whose Transferring Policy(ies) has/have lapsed within 7 years as at 30 June 2022, and where such policy(ies) include(s) a reinstatement option but the Reinstatement Period is not stated specifically under the policy(ies),

at each of such Transferring Policyholder’s last known address.

3.  The sending of the relevant Statutory Statement to all other long term policy holders of Blue Cross (other than those set out in paragraph 2(2) above and all the existing long term policy holders of AIA Everest be dispensed with.

4.  Once the forms of the Statutory Statements are finalised, copies thereof be filed with the Court under cover of further affirmation(s), with any amendments marked up to show the revisions (if any) made.

5.  The setting out of the full terms of the Scheme (as defined in the Petition) in the Statutory Statements be dispensed with, and that a summary of the terms of the Scheme be set out in the Statutory Statements in place of such full terms.

6.  AIA Everest and Blue Cross shall, pursuant to section 24(3)(c) of the Ordinance, serve copies of the Statutory Statements, the Petition (having annexed thereto a copy of the Scheme), the report on the terms of the Scheme by an independent actuary (“Independent Actuary’s Report”) and the Supplementary Report (as defined in the Petition) on the Insurance Authority, at least 21 days prior to the substantive hearing of the Petition.

7.  AIA Everest and Blue Cross shall, pursuant to section 24(3)(d) of the Ordinance, make copies of the Statutory Statements, the Petition (in English only) (having annexed thereto a copy of the Scheme (in both English and Chinese)), the Independent Actuary's Report (in both English and Chinese), and the Supplementary Report (in both English and Chinese) open for inspection at the offices of Blue Cross located at 29th Floor, BEA Tower, Millennium City 5, 418 Kwun Tong Road, Kwun Tong, Kowloon, Hong Kong and AIA Everest located at 12th Floor, AIA Financial Centre, 712 Prince Edward Road East, Kowloon, Hong Kong from 9 a.m. to 5:30 p.m. on normal business days (Monday to Friday (except public holidays)) for not less than 21 days from 23 August 2022; and AIA Everest and Blue Cross shall maintain a register of the names of persons who inspect the documents.

8.  AIA Everest and Blue Cross (as the case may be) shall, pursuant to section 24(4) of the Ordinance, furnish copies of the Petition (in English only) (having annexed thereto a copy of the Scheme (in both English and Chinese)), the Independent Actuary's Report (in both English and Chinese), and the Supplementary Report (in both English and Chinese) free of charge to any person who asks for one at any time before an order sanctioning the Scheme is made on the Petition.

9.  AIA Everest and Blue Cross shall post the Statutory Statements, the Petition (in English only) (having annexed thereto a copy of the Scheme (in both English and Chinese)), the Independent Actuary's Report (in both English and Chinese), and the Supplementary Report (in both English and Chinese) on the websites of AIA Everest at www.aia.com.hk/en/help-and-support/individuals/aia-everest.html and Blue Cross at www.bluecross.com.hk/en/important-notices/bclife-portfolio-transfer by 23 August 2022 and maintain such posting until the end of the substantive hearing of the Petition.

10.  The Petition be fixed for argument on 19 September 2022 at 2:30 p.m. with 2 hours reserved.

11.  All costs in relation to the preparation of the Scheme and its presentation to the Court for sanction and all other professional fees related thereto shall, whether or not the Scheme is sanctioned by the Court and takes effect, be paid by AIA Everest (from its shareholders’ fund), Blue Cross (advanced from its general business net assets and such amount will be compensated by the consideration received by Blue Cross for the Proposed Transfer), and their respective affiliates in such manner as may be agreed between Blue Cross and AIA Everest, and shall not be borne by the funds maintained by Blue Cross or AIA Everest pursuant to the Ordinance in respect of their respective long term business or the long term policy holders thereof.

12.  The Joint Petitioners shall bear the costs of the Insurance Authority in relation to this application to be taxed if not agreed.