646.Under the predecessor legislation, there is a prohibition on the voluntary winding up of insurance companies carrying on long term, or life assurance, business.  The reason is that if such companies went into voluntary liquidation the rights of endowment policyholders would accrue, so that they would be entitled only to the current value of their policy, and not to the terminal bonuses they would expect if their policies ran on to the end of their term.  This section removes this absolute prohibition, but provides that voluntary winding up can only take place with the Authority’s prior permission.  This will allow the Authority to ensure that winding up will only proceed subject to arrangements being made to meet the legitimate expectations of policyholders.
Commentary on Sections Voluntary winding up Section 366: Insurers carrying on long-term business