The Insurers (Winding Up) (Scotland) Rules 2001

Rule 8

SCHEDULE 5 RULES FOR VALUING LONG-TERM POLICIES WHERE A STOP ORDER HAS BEEN MADE

1.  Subject to paragraphs 2 and 3, in valuing a policy Schedules 2, 3 or 4 shall apply according to the class of that policy as if those Schedules were herein repeated but with a view to a fresh valuation of each policy on appropriate assumptions in regard to all relevant factors and subject to the following modifications—

(a) references to the stop order shall be substituted for references to the liquidation date,

(b) in paragraph 4 of Schedule 2 for the words “whereby the policy holder can secure a guaranteed cash payment within the period of 12 months beginning with that date” there shall be substituted the words “to surrender the policy which can be exercised on that date”,

(c) paragraph 6(2) of Schedule 2 shall be deleted, and

(d) paragraph 1(2) of Schedule 3 shall be deleted.

2.—(1) This paragraph applies where the policy holder has a right conferred upon him under the terms of the policy or by the Industrial Assurance Acts to surrender the policy and that right is exercisable on the date of the stop order.

(2) Where this paragraph applies and the amount required at the date of the stop order to provide for the benefits payable upon surrender of the policy (on the assumption that the policy is surrendered on the date of the stop order) is greater than the value of the policy determined in accordance with paragraph 1, the value of the policy shall, subject to paragraph 3, be the said amount so required.

(3) Where any part of the surrender value is payable after the date of the stop order, sub-paragraph (2) shall apply but the value therein referred to shall be discounted at such rate of interest as the court may direct.

3.—(1) This paragraph applies in the case of a linked policy where—

(a) the terms of the policy include a guarantee that the amount assured will on maturity of the policy be worth a minimum amount calculable in money terms, or

(b) the terms of the policy include a right on the part of the policy holder to surrender the policy and a guarantee that the payment on surrender will be worth a minimum amount calculable in money terms and that right is exercisable on or after the date of the stop order.

(2) Where this paragraph applies the value of the policy shall be the greater of the following two amounts—

(a) the value the policy would have had at the date of the stop order had the policy been a non-linked policy, that is to say, had the linked liabilities provided by the policy not been so provided but the policy had otherwise been on the same terms, and

(b) the value the policy would have had at the date of the stop order had the policy not included any guarantees of payments on maturity or surrender worth a minimum amount calculable in money terms.