Top offshore law firm ranking for Walkers' Private Capital & Trusts team
Top offshore law firm ranking for Walkers' Private Capital & Trusts team
Walkers' international Private Capital & Trusts team has been named in the highest tier by independent publisher eprivateclient for the sixth consecutive year.
Walkers increases top rankings in 2024 Chambers Global Guide
Walkers increases top rankings in 2024 Chambers Global Guide
Walkers, the international legal and professional services firm, continues to lead its market, according to the findings of the prestigious 2024 Chambers Global Guide to the world's leading lawyers and law
Celebrating 40 Years of Excellence in Legal Training
Celebrating 40 Years of Excellence in Legal Training

In a landmark celebration, Walkers commemorates four decades of unparalleled legal training through its esteemed Articled Clerk Training Programme. With an unwavering commitment to nurturing exceptional talent, Walkers proudly reflects on its legacy of shaping industry leaders through comprehensive and structured
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Looking ahead: The Bermuda insurance M&A horizon in 2024

2023 was a fairly gloomy year for global M&A activity and the insurance sector did not emerge unscathed, recording its lowest deals count since 20201. The good news, however, is that insurance M&A activity appears poised for a rebound in 2024 in light of an apparent stabilisation of global interest rates, lower levels of inflation, and a perceived correction in previously overinflated market valuations. Pent-up demand is expected to result in insurance companies and other industry participants focusing on strategic acquisitions although, with borrowing costs forecast to remain relatively high, many are predicting that this cohort will be primarily focused on "mid-size" transactions rather than mega-deals.

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With geopolitical tensions, climate change and high-profile cyber-attacks continuing to hit headlines, the insurance industry has increased its focus on managing risk. This has made InsurTech - especially where it provides solutions for mitigating risk - an attractive target for potential acquirers; and continued, fast-paced developments in artificial intelligence (AI) are also expected to drive insurance M&A activity as those active in the sector look to technological solutions to increase productivity and minimise costs.

Bermuda's role in international insurance

Bermuda has long been a global hub for insurance (and reinsurance) across the property and casualty, captive, life, pensions and annuity sectors, governed primarily by the Bermuda Insurance Act 1978 (as amended) (the "Insurance Act") and regulated by the Bermuda Monetary Authority (the "BMA").

As of 31 December, 2022, Bermuda’s total insurance assets accounted for US$1,634 billion2. In addition, Bermuda is a leading market for insurance-linked securities (ILS) products, including catastrophe bonds, with the total nominal value of ILS listed on the Bermuda Stock Exchange as at the end of 2023 being US$59.15 billion (representing 91% of global issuance)3.

With so much insurance activity going on, Bermuda has also become a hotbed of innovation for the market; and the BMA has established two innovation centres, the Regulatory Sandbox and the Innovation Hub, to help businesses develop new Insurtech products.

Bermuda insurance M&A

This short note provides an overview of some of the structuring options which might be available in the context of a proposed acquisition of a Bermuda insurance (or reinsurance) company.

Possible M&A structuring options

Statutory amalgamation or merger

In this process, two companies combine into one. Typically, the bidder incorporates a new subsidiary company in Bermuda ("BidCo") that amalgamates or merges with the target company ("Target"). In an amalgamation, BidCo and Target amalgamate into a single new company, continuing as one. In a merger, either BidCo or Target survives and absorbs the other, which ceases to exist.

This process can also happen between a company from Bermuda and a company from another country / territory. Depending on the laws and regulations, the newly formed company can either stay in Bermuda or move its base to another jurisdiction.

Generally, the decision to amalgamate or merge requires the approval of 75% of those shareholders voting at a special general meeting, with the quorum necessary for such meeting being at least two persons holding or representing by proxy more than one-third of the shares.

If a shareholder does not vote in favour of the amalgamation or merger and thinks the offer for their shares isn't fair, they have the right to challenge such valuation (although a dissentient shareholder has no statutory right to prevent the amalgamation or merger). The dissentient shareholder can take their case to the Bermuda court within a month of the shareholder meeting notice to have the fair value of their shares appraised. If the court decides the shares are worth more than what was offered, the acquirer must pay the difference.

Scheme of arrangement

A scheme of arrangement is a formal procedure allowing a company (like the Target) to make a deal or compromise with its shareholders.

A takeover by way of a scheme requires a double layer of approval: (i) the affirmative vote of a majority representing 75% in value of shareholders and (ii) the sanction of the Bermuda Court. The shareholders can vote either in person or by proxy. Once approved, the terms of the takeover are binding on all shareholders, regardless of their individual votes.

Tender offer

In a tender offer, a bidder proposes to buy all the shares of the Target. This is a direct offer to the Target's shareholders.

Compulsory acquisition of the Target's shares by the bidder can happen in certain circumstances. If holders of at least 90% of the relevant shares of the Target accept the offer within four months, the bidder can, within the following two months, require the remaining shareholders to sell their shares for the offered terms – although dissentient shareholders may apply to the court to object to the transfer.

Alternatively, if the bidder secures 95% or more of the Target's shares, the bidder may give notice to the remaining shareholders of its intention to buy the remaining shares. A bidder's exercise of this mechanism will provide dissentient shareholders with the right to apply to the court within a month of such notice to have the fair value of their shares appraised.

Business transfer

As an alternative to acquiring the Target, a bidder might choose to acquire certain assets and liabilities of the Target. This is generally more complex than acquiring the Target itself as the transfer of certain assets and liabilities may require additional regulatory and other approvals (amongst other considerations) and not all of the assets and liabilities may be Bermuda situs.

Regulatory considerations

Where a Bermuda insurance (or reinsurance) company is proposed to be acquired, the BMA must first approve the transaction. This generally involves a material change application/notification under the Insurance Act. The application usually includes an updated business plan and a forecast of the surviving company’s solvency capital requirements.  However, other change of control requirements may also apply.

Walkers' Corporate and M&A Group and Insurance & Reinsurance Group

Our market-leading Corporate and M&A Group in London provides time-zone sensitive support to clients in the EMEA region across the full spectrum of corporate matters involving Bermuda law, as well as British Virgin Islands and Cayman Islands law.

Our Corporate and M&A Group works closely with our highly experienced and multidisciplinary Insurance and Reinsurance Group, which has deep industry knowledge covering the full scope of insurance matters, including alternative risk transfer and insurance-linked securities.

Our clients include many of the world's leading insurers and reinsurers, as well as private equity firms, investment funds and financial institutions active in the insurance sector, and we have garnered international recognition for the high calibre of service we bring to the full range of transactions and structures in the market.

Removal of the Cayman Islands from the EU AML List and UK AML List

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Following the removal of the Cayman Islands from the Financial Action Task Force's list of "jurisdictions under increased monitoring" in October 2023, on 12 December 2023, the European Commission adopted the Commission Delegated Regulation (EU) 2024/163 amending Delegated Regulation (EU) 2016/1675 as regards the deletion of the Cayman Islands and Jordan from the table in point I of the Annex (the "Regulation").  The Cayman Islands will be removed from the EU list of third-country jurisdictions which have strategic deficiencies in their anti-money laundering / countering financing of terrorism ("AML/CFT") regimes (the "EU AML List") on 7 February 2024 when the Regulation enters into force.

The Regulation states that the Cayman Islands has strengthened the effectiveness of its AML/CFT regime and addressed technical deficiencies to meet the commitments in its action plan on the strategic deficiencies identified by the Financial Action Task Force. The European Commission's assessment of the available information leads it to conclude that the Cayman Islands no longer has strategic deficiencies in its AML/CFT regime. It is therefore appropriate to delete the Cayman Islands from the table in point I of the Annex to Delegated Regulation (EU) 2016/1675. 

In addition, with effect from 5 December 2023, pursuant to the Money Laundering and Terrorist Financing (High-Risk Countries) (Amendment) (No. 2) Regulations 2023, the Cayman Islands has been removed from the UK list of high-risk countries for anti-money laundering and counter terrorist financing purposes (the "UK AML List"). 

The imminent removal of the Cayman Islands from the EU AML List and the removal of the Cayman Islands from the UK AML List are significant milestones in, and evidence of, the Cayman Islands' commitment to AML/CFT.  It also means that relevant financial institutions subject to the UK AML/CFT regime or the EU AML/CFT regime will no longer need to apply enhanced customer due diligence measures to business relationships and transactions involving the Cayman Islands. 

Furthermore, on the removal of the Cayman Islands from the EU AML List, EU financial institutions will no longer be prohibited, pursuant to Article 4 of the EU Securitisation Regulation, from establishing new securitisation special purpose entities in the Cayman Islands. 

Enforcement of arbitral awards: Bermuda, BVI, Cayman Islands, Guernsey, Irish and Jersey law

As the use of arbitration as a means of dispute resolution has grown in popularity, there has been a marked increase in the need for arbitral awards to be recognised and enforced in offshore jurisdictions.

The international legal regime for the recognition and enforcement of arbitral awards is based on the Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958 (the "New York Convention").  This is complemented by the UNCITRAL Model Law for Arbitration (the "UNCITRAL Model Law"), which seeks to streamline the procedure and conduct of arbitrations between states, including those which are signatories to the New York Convention. 

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All of the key offshore jurisdictions are parties to the New York Convention and have adopted the UNCITRAL Model Law into domestic law, albeit with some modifications, meaning that enforcement of foreign arbitral awards in those territories will often be straightforward. 

Where the New York Convention applies, the offshore court may only refuse to grant an order for the recognition and enforcement of an arbitral award if they are satisfied that one or more of the following circumstances apply:

  1. that a party to the arbitration agreement was under some form of incapacity;
  2. the arbitration agreement was not valid;
  3. a party was not given proper notice of the appointment of the arbitrator or of the arbitration proceedings or was otherwise unable to present their case;
  4. the award deals with a difference not falling within the terms of the arbitration agreement or contains decisions on matters that are beyond its scope;
  5. the composition of the panel or the arbitral procedure was not in accordance with the agreement of the parties or the law of the country where the arbitration took place; or
  6. the award is not yet binding on the parties or has been set aside or suspended by a competent authority;
  7. the award is in respect of a matter which is not arbitrable under the laws of the jurisdiction where enforcement is sought; or
  8. enforcing the award would be contrary to public policy in the jurisdiction where enforcement is sought.

In the case of an award from a non-New York Convention jurisdiction, the court may refuse to grant an order for the recognition or enforcement of an arbitral award for the same reasons and additionally if for any other reason the court considers it just to do so. 

Once an award has been recognised by a court in the relevant offshore jurisdiction, it can be enforced in the same manner as a judgment or order of the local court.

Cayman Inspectorship Under the Microscope

In the matter of Avivo Group (Cause No. FSD 145 of 2022 (RPJ)), Walkers, instructing Ms Clare Stanley KC of Wilberforce Chambers, acted as Cayman Islands counsel to Avivo Group (the "Company") in respect of its successful opposition to Agricultural Development Fund's ("ADF") motion for the appointment of inspectors pursuant to Section 64 of the Cayman Islands Companies Act (as amended) (the "Companies Act").

On 16 December 2022, the Honourable Justice Parker handed down his decision, which, given the paucity of Cayman Islands case law authorities regarding the exercise of Section 64 of the Companies Act, provides useful guidance on the principles to be applied by the Grand Court of the Cayman Islands (the "Cayman Court") in determining whether it is appropriate to make an order for the appointment of inspectors for the purposes of examining the affairs of a company.

In summary, Parker J derived the following non-exhaustive principles to be applicable to the exercise to be undertaken by the Cayman Court when considering an application for the appointment of inspectors pursuant to Section 64 of the Companies Act:

  1. the appointment of inspectors will not be made "as of right" upon the application of a dissentient shareholders (see In re Mercantile Finance), nor is it appropriate for an examination to be ordered "merely to satisfy disgruntled shareholders that there is no legitimate cause for complaint";

  2. whether it is appropriate to appoint inspectors will depend upon the facts of the particular case: "the determination by the [Cayman] Court as to whether the facts in a particular case are sufficiently serious to warrant such an order and whether the [Cayman] Court should exercise its discretion to appoint inspectors is a particularly fact-sensitive issue, which will vary depending on the circumstances";

  3. the appointment of inspectors is "a serious step" and the Cayman Court should "balance the competing interests of the parties and exercise its discretion in a principled way". Parker J noted that the appointment of inspectors can have serious reputational implications on the company and the applicant will need to show they have a "good reason" for requiring an investigation;

  4. an order for the appointment of inspectors (on a contested basis) should only be made where there is "a strong likelihood, well founded on a solid and substantial basis, of serious misconduct and/or mismanagement, or concealment" relating to the conduct, management and/or operation of the company based on "undisputed facts". A mere “feeling” that something is wrong or that there might be something that is dishonest or improper will not suffice; and

  5. relevant considerations will include whether:
  • the applicant has sought an explanation (of the issues the subject of the proposed inspection) from the directors of the company and such explanation has not been forthcoming and/or the directors have concealed facts from the shareholders;
  • the application is being pursued for a genuine reason (i.e. not for a collateral or improper purpose);
  • some useful object will be achieved by the appointment of inspectors; and
  • the applicant has some other available remedy.
A fuller analysis of the scope and application of Section 64 of the Companies Act and Parker J's instructive judgment will be forthcoming.

Tales from the Oriente: the first appointment of restructuring officers in the Cayman Islands

Walkers acted as Cayman Islands counsel to Oriente Group Limited (the "Company”) in respect of its successful petition for the appointment of Mr Kenneth Fung of FTI Consulting (Hong Kong) Limited, Mr Andrew Morrison and Mr David Griffin of FTI Consulting (Cayman) Ltd as joint restructuring officers (the "Joint Restructuring Officers") pursuant to Section 91B of the Cayman Islands Companies Act (as amended), being the first petition under the new restructuring officer regime, which came into force on 31 August 2022.


The Company is the parent company of a group (the "Group") which operates a leading financial technology platform providing alternative sources of credit to traditional retail banks for the unbanked and underbanked population of Southeast Asia, with more than 8 million registered users. The Group's performance was significantly affected by the impact of the COVID-19 pandemic on the Southeast Asian economy and the platforms' users, which resulted in a substantial increase in non-performing (consumer) loans, as well as other factors impacting the global capital markets and investor community including, but not limited to, US-China tensions, the Russia-Ukraine war and interest rate increases by central banks.

Notwithstanding the Company engaging in discussions with its creditors regarding a proposed restructuring of its financial liabilities (as well as more broadly, the restructuring of certain Group liabilities due to third party lenders) from at least May 2022, on 20 September 2022, upon the expiry of the deadline for payment under two statutory demands dated 29 August 2022, two creditors (the "Objecting Creditors") presented a petition to the Grand Court of the Cayman Islands (the "Grand Court") (which was served on the Company on 27 September 2022) seeking, amongst other things, the winding up of the Company on the grounds that the Company is unable to pay its debts as defined in Section 93(a) of the Companies Act and is therefore insolvent (the "Winding Up Petition").

On 21 October 2022, the Company presented a petition to the Grand Court seeking the appointment of the Joint Restructuring Officers pursuant to Section 91B of the Companies Act on the grounds that the Company: (i) is unable to pay its debts as defined in Section 93(a) of the Companies Act and is therefore insolvent; and (ii) intends to present a compromise or arrangement to its creditors (or classes thereof) pursuant to Section 86 and/or 91I of the Companies Act, the law of a foreign country or by way of consensual restructuring (the "RO Petition").

Immediately before the hearing of the RO Petition, the Company was made aware that, notwithstanding the automatic stay on the commencement or continuation of proceedings upon the presentation of the RO Petition pursuant to Section 91G of the Companies Act (as discussed further below), on 10 November 2022, the Objecting Creditors presented a petition to the High Court of the Hong Kong Special Administrative Region (the "Hong Kong Court") seeking, amongst other things, the winding up of the Company (on substantially similar grounds advanced in the Winding Up Petition) (the "Hong Kong Winding Up Petition").


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