RE CHUBB LIFE INSURANCE COMPANY LTD AND ANOTHER

HCMP 1217/2023

[2024] HKCFI 3347

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 1217 OF 2023

_________________

_________________

________________

REASONS

________________

Introduction

1.  This is the hearing of the Petition presented on 31 July 2023 (“Petition”) by the 1^st Petitioner (“CLICL”) and the 2^nd Petitioner (“Chubb Life HK”) (“collectively “Petitioners”) whereby they seek an Order sanctioning the scheme referred to in the Petition to effect the proposed transfer, referred to below, from CLICL of its long term business to Chubb Life HK (“Scheme”) under s 24 of the Insurance Ordinance Cap. 41 (“Ordinance”).

2.  The Petition is supported by a number of affirmations filed on behalf of the Petitioners including inter alia (i) the Affirmations of Au Belinda Ming Yee (“Ms Au”), a director of CLICL and Chubb Life HK; (ii) the Affirmations of Nip Chun Kit (“Mr Nip”), the appointed actuary of CLICL and Chubb Life HK; (iii) the Reports of Ms Cindy Chou (“Ms Chou” or “IA”), the independent actuary, as well as her Affirmation.

3.  At the hearing, at which the Insurance Authority (“Authority”) attended to support the Scheme and no policyholders of the Petitioners attended to oppose the Scheme[1], this court granted the Order sought with reasons to be handed down later. These are the reasons.

Background

4.  CLICL is a company incorporated on 28 July 1976 under the laws of Bermuda is registered with the Bermuda Monetary Authority (“BMA”) under section 4 of the Insurance Act 1978 of Bermuda (“Bermuda Insurance Act”) as a Class E insurer which permits it to effect and carry on long term insurance business pursuant to the provisions of the Bermuda Insurance Act.

5.  CLICL, with effect from 31 August 1984, had been registered in Hong Kong as a non-Hong Kong company for the purposes of Part 11 of the former Companies Ordinance, Cap 32 (now Part 16 of the Companies Ordinance, Cap 622).

6.  CLICL is an insurer authorised under the Ordinance by the Authority to carry on long term business[2] (“Long Term Business”) in inter alia the following classes of Long Term Business as set out in Part 2 of Schedule 1 to the Ordinance (“Relevant Classes”) ie Class A (Life and annuity); Class C (Linked long term) and Class D (Permanent health).

7.  Chubb Life HK was incorporated in Hong Kong on 19 July 2005 under its former name “CIGNA Worldwide HK Life Company Limited”. Chubb Life HK is also authorised under the Ordinance to carry on long term business in the Relevant Classes. After the Acquisition referred to below, with effect from 27 October 2022, it changed its name to “Chubb Life Insurance Hong Kong Limited”.

8.  On 1 July 2022, Chubb International Investments Limited, a subsidiary of Chubb Limited and being part of the Chubb group of companies (“Chubb Group”) purchased the entire issued share capital of Chubb Life HK (“Acquisition”). Prior to the Acquisition, Chubb Life HK was a subsidiary of Cigna Corporation, the ultimate parent company of the Cigna group of companies (“Cigna Group”). On completion of the Acquisition, Chubb Life HK ceased to be a member of the Cigna Group and became a member of the Chubb Group.

Commercial rationale of the Scheme

9.  On completion of the Acquisition, CLICL and Chubb Life HK entered into a policy administration agreement as defined in the Scheme (“Policy Administration Agreement”) pursuant to which Chubb Life HK outsourced the administration of its Long Term Business to CLICL in order for this to be carried out in parallel with CLICL’s administration of its own Long Term Business.

10.  In order to consolidate the Long Term Business carried on by CLICL with the Long Term Business carried on by Chubb Life HK, the purpose of the Scheme is to transfer the CLICL Business (as defined in the Scheme) from CLICL to Chubb Life HK (“Proposed Transfer”).

11.  CLICL and Chubb Life HK consider that the benefits of the Proposed Transfer will include:

(a) combining CLICL’s Long Term Business with Chubb Life HK’s Long Term Business thereby:

(i) avoiding duplication of insurance products, management, administration, servicing and cybersecurity monitoring of separate IT systems; and

(ii) improving the efficiency of policy servicing, accounting, audit, regulatory and actuarial compliance;

(b) removing the need for the Chubb Group to maintain two Authorised Insurers in Hong Kong thereby:

(i) simplifying Chubb Group’s corporate structure in Hong Kong;

(ii) achieving regulatory alignment and streamlining regulatory compliance by focussing this in Hong Kong (as Chubb Group’s Long Term Business in Hong Kong will be subject to the Hong Kong regulatory regime alone and not to Bermuda regulatory requirements that currently apply with respect to CLICL as a company incorporated in Bermuda) thereby removing the additional resources burden in managing different risk profiles and regulatory regimes;

(iii) avoiding duplication of risk management assessments including carrying out Own Risk and Solvency Assessments for both CLICL and Chubb Life HK;

(iv) creating greater synergies among Chubb Group companies in Hong Kong;

(c) enabling simpler, clearer and more transparent communications:

(i) with Transferring Policyholders (as defined in the Scheme), by removing any confusion arising out of the Chubb Group having two different Authorised Insurers carrying on Long Term Business in Hong Kong;

(ii) with Chubb Life HK Policyholders (as defined in the Scheme), as their Policies will be both held and administered by Chubb Life HK rather than held by Chubb Life HK and administered by CLICL under the Policy Administration Agreement;

(d) facilitating Chubb Group’s strategic plans for Chubb Life HK, as a company incorporated in Hong Kong, to take advantage of the Hong Kong Government’s efforts to enable Authorised Insurers to expand their Long Term Business into the Greater Bay Area.

Brief description of the Scheme

12.  The Scheme document (English and Chinese) consists of around 150 pages. The following is a brief description of some of the more important Clauses.

13.  The business to be transferred (“Transferring Business”) involves the proposed transfer of the “Transferring Assets”, the “Transferring Liabilities” and the “Transferring Policies” as defined in Clause 1.1 of the Scheme.

14.  As far as Transferring Policies are concerned, they are the Class A, Class C and Class D Policies:

(a) the names of the Transferring Policies are listed in Schedule 1 of the Scheme;

(b) which are underwritten by CLICL prior to 1 September 2023 as part of CLICL’s long term business carried on in or from Hong Kong;

(c) under which any liability remains outstanding at the Effective Date ie 1 December 2023 (“Effective Date”) whether the same have been reinstated, or have expired, lapsed, matured, surrendered or terminated; and

(d) including (i) all proposals or applications for Policies, certificates, supplemental coverages, endorsements, riders and ancillary agreements in connection therewith; (ii) all proposals or applications for renewal thereof received by CLICL before 1 July 2023 but which CLICL has not processed before 1 September 2023; and (iii) any benefit attributable thereto but recorded under a different or replacement Policy number.

15.  Pursuant to the Scheme:

(a) By Clauses 7.1 and 7.4 (i) the Transferring Assets shall be transferred to and vested in Chubb Life HK, (ii) each of the Transferring Liabilities shall be transferred to and become a liability of Chubb Life HK and shall cease to be a liability of CLICL.

(b) By Clause 9.1, all proceedings set out in Schedule 2 of the Scheme shall be continued or commenced by or against Chubb Life HK in substitution for CLICL.

(c) By Clause 10.3, all premiums, loan repayments (if any, and interest thereon) and other amounts received/receivable by CLICL (or its agents) in respect of any of the Transferring Policies on or after the Effective Date shall be payable to Chubb Life HK (or its agent(s)) after the Effective Date.

(d) By Clause 12, prior to 1 July 2023, Chubb Life HK shall establish (i) the Chubb Life HK New Life Fund and (ii) the Chubb Life HK New Linked Fund.

(e) By Clauses 13.1 and 13.2, on and with effect from the Effective Date, the Transferring Policies, Transferring Assets, Transferring Liabilities shall be allocated to the Chubb Life HK New Life Fund and the Chubb Life HK New Linked Fund as set up.

(f) By Clauses 16.3 and 16.4, save for any modifications, variations or amendments to this Scheme to correct manifest errors etc, the Scheme shall only be modified, varied or amended with the consent of this court.

(g) By Clause 17.1, CLICL will bear all costs and expenses related to the Independent Actuary. Save as aforesaid, all costs in relation to the preparation of the Scheme, its presentation of the Petition for sanction, and the implementation of the transfer of the Business under the Scheme will be borne by Chubb Life HK from its shareholders’ fund.

16.  As is usual in this sort of applications, in the present case, the Petitioners had regular discussions with, and sought comments from, the Authority on the Proposed Transfer as set out in the Scheme and related matters (including the terms of reference for the Independent Actuary (“IA”), the terms of the Scheme, the form of the IA’s Report and the contents of the Statutory Statement). The Authority’s comments on those documents as at the date of this Petition have been incorporated into those documents.

17.  In its skeleton submissions, the Authority confirms that drafts of the Petition, the Scheme, the Report of the IA viz Ms Cindy Chou dated 25 July 2023 (“IA Report”), the Statutory Statement and other supporting documents were provided to the Authority for comments prior to the presentation of the Petition.

Deliberation

The statutory framework

18.  The relevant parts of s 24 of the Ordinance provide as follows.

“24. Sanction of Court of First Instance for transfer of long term business

(1) Where it is proposed to carry out a scheme under which the whole or part of the long term business carried on in Hong Kong by an authorized insurer (the transferor company) is to be transferred to another insurer (the transferee company) the transferor company or transferee company may apply to the Court of First Instance, by petition, for an order sanctioning the scheme. (Amended 12 of 2015 s. 2)

(2) The Court of First Instance shall not determine an application under this section unless the petition is accompanied by a report on the terms of the scheme by an independent actuary and the Court of First Instance is satisfied that the requirements of subsection (3) have been complied with.

(3) The requirements referred to in subsection (2) are—

(a) that a notice has been published in the Gazette and, except where the Court of First Instance has otherwise directed, in an English language newspaper and a Chinese language newspaper (being in each case a newspaper specified in a list of newspapers approved by the Chief Secretary for Administration for the purposes of this section) stating that the application has been made and giving the address of the offices at which, and the period for which, copies of the documents mentioned in paragraph (d) will be available as required by that paragraph; (Amended 34 of 1988 s. 4; 44 of 1990 s. 5; L.N. 362 of 1997)

(b) except where the Court of First Instance has otherwise directed, that a statement—

(i) setting out the terms of the scheme; and

(ii) containing a summary of the report mentioned in ubsection (2) sufficient to indicate the opinion of the actuary on the likely effects of the scheme on the long term policy holders of the insurers concerned,

has been sent to each of those policy holders and to every member of those insurers;

(c) that a copy of the petition, of the report mentioned in subsection (2) and of any statement sent out under paragraph (b) has been served on the [Insurance] Authority and that a period of not less than 21 days has elapsed since the date of service; (Amended 12 of 2015 s. 2)

(d) that copies of the petition and of the report mentioned in subsection (2) have been open to inspection at offices in Hong Kong of the insurers concerned or their representatives for a period of not less than 21 days beginning with the date of the first publication of a notice in accordance with paragraph (a).

(4) Each of the insurers concerned shall furnish a copy of the petition and of the report mentioned in subsection (2) to any person who asks for one at any time before an order sanctioning the scheme is made on the petition.

…

(6) The Court of First Instance shall not make an order sanctioning the scheme unless it is satisfied that the transferee company is, or immediately after the making of the order will be, authorized to carry on any long term business to be transferred under the scheme.” (emphasis added)

19.  Those requirements underlined above are mandatory conditions for the sanction by the court. Once the mandatory conditions are met, the court may in its absolute discretion sanction the scheme.

20.  As submitted by Mr Dawes SC in his skeleton submissions at section E, which this court agrees, this court is satisfied on the evidence that the mandatory conditions above, as well as this court’s directions dated 20 September 2023 (“Directions”), have been complied with.

21.  In particular, for additional notification requirements beyond s 24(3)(b):

(a) Pursuant to para 4 of the Directions, text messages were sent to 129,042 persons at their last known mobile telephone numbers to inform them that a Policyholder Information Pack would be sent to them on or before 8 Oct 2023, bearing in mind 39,802 persons falling within §2(b)-(g) of the Directions did not provide mobile telephone numbers on the relevant registers.

(b) Pursuant to para 5 of the Directions, the Petitioners further sent the Policyholder Information Pack by registered mail to 70,827 persons who did not have a valid email address on the relevant register by 20 November 2023.

(c) Pursuant to para 6 of the Directions, in the process of classifying policyholders/applicants as “uncontactable”, the Petitioners were to make reasonable efforts to communicate with the relevant individual to confirm how the Statutory Statement could be sent thereto. By 20 November 2023, the Petitioners managed to obtain updated contact details for 30 such recipients and duly sent the Policyholder Information Pack to them by ordinary mail; they further delivered 10 Policyholder Information Packs by personal delivery after packs sent out by registered mail were returned.

22.  In its skeleton submissions, the Authority is also satisfied that the Directions and the relevant statutory requirements under s 24 have been complied with. The Authority also confirms that in compliance with section 24(3)(c), copies of the Statutory Statements, the Petition (with the Scheme annexed thereto), the IA Report and the Supplementary Report of the IA (“Supp IA Report”) have all been served on it.

Principles on the exercise of discretion

23.  The guiding principles for the exercise of that discretion can be found in Re Prudential Assurance Company Ltd [2014] 1 HKLRD 433 at [18] G Lam J (as he then was) quoting Evans-Lombe J in Re AXA Equity and Law Life Assurance Society Plc [2001] 2 BCLC 447, 468E-496B[3]. They are summarised below in the present context under the Hong Kong legal framework.

24.  First, the Ordinance confers an absolute discretion on the court whether or not to sanction a scheme, but this discretion must be exercised by giving due recognition to the commercial judgment entrusted by the company’s constitution to its directors.

25.  Second, 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.

26.  Third, this is 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.

27.  Fourth, the Authority, with its principal function to regulate and supervise the insurance industry for the promotion of the general stability of the insurance industry and for the protection of existing and potential policy holders and with the powers to perform that function under ss 4A and 4B of the Ordinance, are expected to have the necessary material and expertise to express an informed opinion on whether policyholders are likely to be adversely affected. The Court will also pay close attention to any views expressed by the Authority.

28.  Fifth, the fundamental question is whether the scheme as a whole is fair as between the interests of the different classes of persons affected. That individual policyholders or groups thereof may be adversely affected does not mean the scheme has to be rejected.

29.  Sixth, it is not the court’s function to produce what is, in its view, the best possible scheme.

30.  Seventh, under the sixth principle, the details of the scheme are not a matter for the court provided that the whole scheme is found to be fair. Thus, the court will not amend the scheme because it thinks that individual provisions could be improved upon.

31.  Eighth, the court, in arriving at its conclusion, should first determine what the contractual rights and reasonable expectations of policyholders were before the scheme was promulgated and then compare those with the likely result on the rights and expectations of policyholders if the scheme is put into effect.

32.  It is important to bear in mind that (i) a scheme under s 24 of the Ordinance, once sanctioned by the court, will become binding on the transferor company, the transferee company and the policyholders affected by the transfer. So far as the policyholders are concerned, there will be a change in the identity of the insurer and other consequential changes in the rights and obligations as between the insurer and the policyholders; (ii) under s 24 of the Ordinance, the consent of the policyholders, or a designated majority of them, is not a statutory requirement, albeit they are entitled to be heard on the petition under s 24 (5) if they allege they would be adversely affected by the carrying out of the scheme: Re Transamerica Life Insurance Company [2013] 2 HKLRD 871 at [46] per DHCJ Linda Chan (as she then was).

33.  Where the purpose of the scheme is to advance a commercial purpose or benefit for the transferor company and there is no or, if this court may add, minimal corresponding benefit to the policyholders, the court would be particularly vigilant in considering the contractual rights and reasonable expectations of policyholders before the scheme was promulgated and compare those with the likely result on the rights and expectations of policyholders if the scheme is put into effect. Due regard should be given to the objections raised by the policyholders and the opinion of the independent actuary: Re Transamerica Life Insurance Company at [47].

Exercise of the court’s discretion – the IA’s 2 reports and the IA’s affirmation

34.  Ms Chou, the IA, in preparing both the IA Report and the Supp IA Report dated 25 July and 4 September 2023, had access to all relevant documentary evidence provided by the Petitioners.

35.  In the IA Report, Ms Chou’s opinion was that:

(a) The Scheme would not adversely affect (i) the contractual benefits or rights; (ii) the reasonable benefit expectations; (iii) the financial security; and (iv) the expected level of services of either the Transferring Policyholders or the Chubb Life HK Policyholders in any respect.

(b) The Scheme provided sufficient safeguards to ensure it operated as presented.

36.  First, in relation to contractual benefits or rights, according to the Scheme, there is no intended change to the terms and structures which define existing contractual benefits and other rights of the Transferring Policyholders. Chubb Life HK has also indicated its commitment to continue servicing the Transferring Policyholders on the same contractual terms after the Transfer.[4]

37.  Second, as to the reasonable benefit expectations of Transferring Policyholders:

(a) There is no change expected to the principles or practice by which the participating Transferring Policies are managed (including the management of any discretionary aspects of the relevant participating fund). The dividend recommendations will also continue to be assessed according to the existing Policy Dividend Distribution Declaration Policy for the participating Transferring Policies separately, and there is no material change to such policy (or the rules and management of bonus distribution) as a result of the Scheme.[5]

(b) Even though there is no plan of change at the moment, if there is any intention to revise the policyholder dividend policy, the Petitioners will have to comply with the relevant guidelines issued by the Authority, which include inter alia demonstrating how consistency can be fulfilled should the dividend mechanism be changed materially.[6]

(c) Insofar as universal life products are concerned, there are no planned changes to the crediting rate setting methodology and its governance structure. There is no change in the Scheme to the product or premium rates for Transferring Policies relating to such products.[7]

38.  Third, as to financial security:

(a) The Petitioners have the same internal target ratio as well as the same governance process required for approval for capital injection.[8]

(b) Based on a 3-year projection after the Proposed Transfer, Chubb Life HK’s solvency ratio of the combined entities under the Hong Kong Risk-Based Capital basis stays above 110% of its internal capital target and 100% of the regulatory minimum capital requirement.[9]

(c) the trend of the projection indicates that for 2023 onwards, the Transferring Policyholders’ solvency position will improve and benefit from the increased solvency ratio after the Proposed Transfer under the newly-combined entity.[10]

(d) The financial projections also indicates that Chubb Life HK’s income will be sufficient to meet the increased capital demand for all scenarios mapped out at Table 6.5, except for the medium-term inflationary scenario (where capital injection will be required to maintain the regulatory required solvency ratio).[11] Having said that, Chubb Life HK’s financial flexibility for capital injection is the same as that of CLICL’s, as the requirements and decision-process for capital injection continue to apply as part of the Chubb Group internal control.[12]

(e) The Transferring Policyholders will also benefit from a greater level of total surplus level which gives more certainty and security to the protection of their benefits.[13]

(f) There is no change to the reserving methods and valuation bases of the policy reserves according to the Scheme, which continue to be subject to Hong Kong regulatory requirements.[14]

(g) The same risk management and monitoring process currently applicable will also apply after the Proposed Transfer.[15]

(h) In light of the conclusions on the solvency ratios, Ms Chou concluded that the financial securities of the Transferring Policyholders will not be materially adversely affected by the Scheme.[16]

39.  Fourth, as to expected levels of customer services, Chubb Life HK has confirmed there is no such expected change, as the support will be provided by the same personnel currently handling operations for both Petitioners under the Policy Administration Agreement. Such employees will be offered employment with Chubb Life HK with terms that are unchanged.[17] Therefore, Ms Chou considered the Scheme to have no material effect on the Transferring Policyholders as to matters such as response times to customer enquiries, claim settlement.[18]

40.  In summary, Ms Chou concluded that the Scheme is unlikely to expose the Transferring Policyholders to new risks of significance, they will continue to be protected, and aspects relating to capital, investment and risk management are not materially adversely impacted by the Scheme.[19]

41.  As to Chubb Life HK Policyholders, Ms Chou opined that:

(a) There was no intended change to the terms and structures defining existing contractual benefits and other rights of them.[20]

(b) As to reasonable benefit expectations, Chubb Life HK has confirmed there is no material change to the Reversionary Bonus Declaration Policy for 2023 as a result of the Scheme; nor any changes intended to its management/governance structure in place. There will also be no significant change to existing principles/method for the determination of non-guaranteed bonuses and other discretionary benefits.[21]

(c) As the assets backing the participating insurance liabilities of existing policyholders will be segregated from those of the Transferring Policies, the Proposed Transfer is not expected to have any material impact on such assets backing the liabilities.[22]

(d) Given that there is no change in procedure in determining the valuation methodology and assumptions of policy reserved as a result of the Scheme, Ms Chou indicated she had no reason to believe the Scheme would lead to a materially adverse impact on the financial security of existing Chubb Life HK Policyholders.[23]

(e) Although the existing policyholders’ solvency position experiences a decrease in solvency ratio under the combined entity, the reason for this is that Chubb Life HK assumes no new business in its existing policyholders’ solvency ratio projection beyond 2023, such that there is a deceasing required capital base in the projection. In any event, the Transferring Policies portfolio is about three times larger than the Chubb Life HK’s existing portfolio, and so the solvency ratio on the combined basis will be appropriately weighted.[24]

(f) After the Proposed Transfer, Chubb Life HK Policyholders would benefit from a greater level of total surplus which gives more certainty and security to the protection of their benefits.[25]

(g) Ms Chou also confirmed that the proposed approach to communicating with the recipients as defined in para 9.2 of the IA Report, such as the current and expired policyholders of CLICL or the Chubb Life HK policyholders, as endorsed in the Directions was reasonable, and that the documents provided should help explain the material effects of the Proposed Transfer.[26]

42.  In her Supp IA Report at paras 2.33 and 4.1, Ms Chou confirmed that none of the developments as of 30 June 2023, as compared to the information available as at 31 December 2022 in her IA Report, affected her conclusions in it. Ms Chou was also of the opinion that she remained satisfied as to the conclusions in her IA Report after considering relevant developments.

43.  In Ms Chou’s first affirmation dated 17 November 2023 (“Chou 1”), she said she had, inter alia, considered the developments relevant to the Scheme since 30 June 2023 in order to assess whether these would have any impact on her conclusions in the IA Report and the Supp IA Report. In particular, Ms Chou had considered the number of Transferring Policies and the number of Chubb Life HK Policies as at 31 December 2022, 30 June 2023 and 30 September 2023 respectively and compared the statutory reserves for those respective policies.

(a) Ms Chou noted that the number of Transferring Policies and total statutory reserves have decreased as of 30 September 2023 (compared to 30 June 2023), attributable to CLICL ceasing to accept new applications for insurance policies after 30 June 2023.

(b) She also noted that the number of Chubb Life HK Policies of Chubb Life HK has increased as of 30 September 2023 (compared to 30 June 2023), owing to Chubb Life HK starting to accept new applications for insurance policies from 1 July 2023. On the other hand, the total statutory reserve remained similar to the position as of 30 June 2023.

(c) The solvency position of CLICL changed from 360% to 320% from to 30 September 2023 owing to interest rate increase, whereas the solvency position of Chubb Life HK increased slightly from 459% to 468% over the same period. Both solvency levels are higher than the 150% required.

44.  In short, Ms Chou was satisfied none of the developments affected her conclusions in the IA Report or Supp IA Report.

Exercise of the court’s discretion – the Stance of the Authority

45.  In its skeleton submissions, the Authority’s position is stated as follows.

46.  First, the Authority is satisfied that the relevant statutory requirements under s 24 of the Ordinance and the terms of the Directions have been duly complied with by the Petitioners.

47.  Second, having perused and considered the IA Report and the Supp IA Report, the Authority does not have further comments on Mr Dawes SC’s summary of their contents.

48.  Third, the Authority is given to understand that 820 enquiries were received in relation to the Proposed Transfer, 816 of which have been closed according to para 38 of the 4th Affirmation of Ms Au (“Au 4”). As to the remaining 4 enquiries, whilst 3 of them have indicated an intention to appear at the Petition hearing, only 1 viz Chubb Life HK Policyholder No. 778, Mr Goman Chong (“Mr Chong”) has indicated an intention to oppose. This court notes that submissions have been made in Mr Dawes SC’s skeleton submissions which address Mr Chong’s grounds of opposition.

49.  Pending further evidence from the Petitioners and the final submissions to be made on their behalf at the Petition hearing and submissions (if any) from Mr Chong, the Authority maintains a neutral stance to the areas of concerns expressed by Mr Chong.

50.  In conclusion, the Authority had no objection to the Scheme. Mr Chong did not appear at the hearing.

Exercise of the court’s discretion – objection from of Mr Chong

51.  Since Mr Chong did not come forward at the hearing to explain his opposition to the Petition, this court will deal with his so-called objections very briefly.

52.  As summarised in Mr Dawes SC’s skeleton submissions, Mr Chong has sent an email dated 7 November 2023 stating that he “intent [sic] to appear at the Hong Kong Petition hearing in the Hong Kong Court and the Bermuda Court, to object to the Schemes”. His so-called “independent reasons / area of concerns that may be presented in front of the court” are summarised as follows.

(a) There is no legal advice or support to client in order to understand any risk or disadvantage of the proposal.

(b) There is no independent legal opinion available.

(c) There are multiple sanctions on Hong Kong imposed by the US Government, and a new bill calling for additional sanctions. Some Think Tank in the US also propose additional sanctions. This may affect Hong Kong’s financial industry in the future.

(d) Servicing more policies requires more resources, which may affect existing policies’ level of service.

(e) There has been no study of legal risk and consequences which may pose disadvantage to “the operation”.

(f) The characterisation of the terms of the Bermuda Scheme being “in all material respects” the same as the present Scheme in Hong Kong is “obviously subjective, opinionated and in fact implying there is a difference between the two”.

(g) Moving long term policies from a jurisdiction and regulator to another impose legal risks in the long run which may not be obvious at present.

(h) The reports “claimed as independent reports” (presumably referring to the IA’s reports) are “funded by the parties that are in favor of approving the proposed transaction”.

53.  It can be seen from the above that the so-called ”Independent reasons” for objection to the Scheme are not serious, are bare assertions unsupported by evidence, and are pure speculations. As submitted by Mr Dawes SC, Mr Chong’s concerns can all be adequately addressed, particularly when the Court considers the IA’s detailed analyses in her 2 reports. Mr Dawes SC submits, and this court agrees, that Mr Chong’s objections do not justify the Court’s refusal of sanction in the present case.