Affected market: Insurance and pension funding
On the basis of the information available to it, the OFT has decided that the completed transaction between Unum Limited and Swiss Life (UK) plc does not qualify for investigation under the mergers provisions of the Enterprise Act 2002 (the Act), because the transaction does not lead to two enterprises ceasing to be distinct, as defined in section 26 of the Act. A relevant merger situation has, therefore, not been created.
The reasons for concluding that the transaction between Unum and Swiss Life will not lead to two enterprises ceasing to be distinct are summarised as follows:
- The arrangements are limited to the reinsurance and administration of group income protection (GIP) claims only. The agreements do not involve the transfer to Unum of the Swiss Life GIP, group life (GL), group critical illness (GCI) businesses or policies.
- The transaction does not involve the transfer of existing Swiss Life policies or renewal rights. Customers will continue to make premium payments to Swiss Life.
- Swiss Life will remain primarily liable to the policyholders.
- Swiss Life has notified policyholders that Claims Services International Ltd ([note 1]) (CSI) will be responsible for the administration of existing claims. However, customers with an employee wishing to submit a new claim will continue to contact Swiss Life in the first instance. Swiss Life will then use its GIP policy records to check that a claim is technically eligible (ie the individual is covered by a valid policy) before passing the claim to CSI.
- No Swiss Life assets or liabilities will be transferred to Unum, save to the extent that the economic effect of the reinsurance agreement will be to transfer claims liabilities and related reserves to Unum.
- Unum has confirmed that no Swiss Life employees will be transferred to Unum under any of the agreements.
- Under the arrangements Swiss Life will retain all policy records.
- Unum will have full control over the administration of the claims, but will have no control over the terms of the GIP policies themselves. This means that Unum will, in particular, be unable to depart from or amend the existing terms and conditions of the policies.
- Only limited information relating to GIP claims and closed GIP claims will be exchanged. The parties state that any data received by CSI from Swiss Life in addition to that provided to all bidders competing for renewal business will be purely administrative, and will be irrelevant to the quotation formulation. No details relating to current and previous premium rates, risk profiles, profitability assessments or renewal dates will be passed to Unum by Swiss Life.
- Unum will have no access to information relating to the GIP policies, other than certain limited information about those Swiss Life GIP policies under which claims have been or are in the future made. This information will be limited to the data that is necessary for CSI to establish that a claim is valid under a particular policy and to manage and pay the claim, as agent for Swiss Life. Swiss Life will continue to make the important initial decisions as to claims eligibility.
- All information relating to Swiss Life claims that is to be transferred under the arrangements will be provided to CSI. Under the reinsurance agreement, Unum is only permitted to use such information for the purposes of administering the claims. This information will not be available to Unum's financial underwriters or sales team.
- The agreements do not contain any restrictive covenants preventing Swiss Life from writing GIP, GCI or GL policies in the UK.
- In relation to the Network Partner agreement, Swiss Life will not be obliged to offer pooled business through Unum, nor will Unum have an obligation to quote for such business. In addition, under the Network Partner agreement:
no employees will transfer to Unum from Swiss Life
no existing policies will be transferred
no assets or liabilities will be transferred and
there will be no transfer of customer records of existing Swiss Life clients.
- A wholly owned subsidiary of Unum, responsible for its claims handling function.