1. Case Study on Change in Control
IAIS-ASSAL Training Seminar
Lisbon, Portugal, April Makoto Okubo – Member of Secretariat
International Association of Insurance Supervisors (IAIS)

2. Case Study on Change in Control
ICP 8: Change in Control
The supervisory authority approves or rejects proposals to acquire significant ownership or any other interest in an insurer that results in that person, directly or indirectly, alone or with an associate, exercising control over the insurer.
The supervisory authority approves the portfolio transfer or merger of insurance business
Case Study on Change in Control
April 2006
Makoto Okubo

3. Case Study on Change in Control
ICP 8: Change in Control
Essential criteria
the term “control” be defined in legislation
potential controlling owners apply for approval for the acquisition, or change in control, of the insurers
supervisory authority approvals any significant increase in shareholders above the predetermined control levels in an insurer
same requirements for the intermediate or ultimate beneficial owners that are outside the jurisdiction where insurer is incorporated
Case Study on Change in Control
April 2006
Makoto Okubo

4. Case Study on Change in Control
ICP 8: Change in Control
Essential criteria
must be satisfied to meet licensing criteria, and suitability of persons will apply to prospective owners
the structures of financial groups containing potential controlling owners of insurers to be sufficiently transparent to avoid the hindrance of supervision
Requirements for financial and non-financial resources
Advanced Criteria
upon request insurers provide supervisory authority with information on shareholders or any other person directly or indirectly exercising control
Case Study on Change in Control
April 2006
Makoto Okubo

5. Case Study on Change in Control
Outline of Case Study
Proposed acquisition of Merlion Life by Unity Group
Country X – country profile; the life insurance industry
Merlion Life – company profile; its weaknesses; Merlion Bank’s decision to divest Merlion Life
Unity Group – group profile; application to acquire Merlion Life; business plan
Key concerns from policyholders protection point of view
Regulations of Country X
Case Study on Change in Control
April 2006
Makoto Okubo

6. Case Study on Change in Control
Group Work
Activity 1
Small group discussion on case study.
Complete Task 1:
Identify any concerns on the proposed acquisition, including its future impact on Merlion Life’s existing policyholders, the ongoing financial condition, any abnormal aspects of the proposed business plan
Discuss Task 2:
Propose necessary steps to be taken with respect to the concerns identified
Case Study on Change in Control
April 2006
Makoto Okubo

7. Case Study on Change in Control
Group Work
Activity 2
Interview senior management of Unity Group to raise and clarify any concerns
Activity 3:
Complete Task 2:
Propose necessary steps to be taken with respect to the concerns identified
Complete Task 3:
Discuss whether or not to approve the application and why
Activity 4:
Each small group to present their recommendation
Case Study on Change in Control
April 2006
Makoto Okubo

8. International Association of Insurance Supervisors (IAIS)
Questions and Answers
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This case study was originally developed by Monetary Authority of Singapore (MAS) and modified by the IAIS to be used in regional seminars.
Case Study on Change in Control
April 2006
Makoto Okubo