PART IIRegulation of Insurance Companies
Assets and liabilities of long term business
20Allocations to policy holders
(1)Section 25 of the 1974 Act shall be amended as follows.
(2)For subsections (1) and (2) there shall be substituted—
“(1)Where in the case of an insurance company to which this Part of this Act applies—
(a)there is an established surplus in which long term policy holders of any category are eligible to participate, and
(b)an amount has been allocated to policy holders of that category in respect of a previously established surplus in which policy holders of that category were eligible to participate,
the company shall not by virtue of section 24(2) above transfer or otherwise apply assets representing any part of the surplus mentioned in paragraph (a) above unless the company has either allocated to policy holders of that category in respect of that surplus an amount not less than the relevant minimum, or complied with the requirements of subsection (3) below and made to those policy holders any allocation of which notice is given under paragraph (a) of that subsection.
(2)Subject to subsections (6) and (7) below, the relevant minimum is the amount represented by the formula
where—
a is the last previously established surplus in respect of which an amount was allocated to policy holders of the category in question ;
b is the amount so allocated ; and
c is the surplus referred to in subsection (1)(a).”.
(3)In subsection (3)(a) after the words " to make " there shall be inserted the words " no allocation or ".
(4)In subsection (6)—
(a)for the words " that surplus " there shall be substituted the words " the next established surplus in respect of which an amount is allocated to eligible policy holders generally "; and
(b)after the words " any surplus " there shall be added the words " in respect of which such an allocation is made "; and
(c)the words " made in anticipation of it" shall cease to have effect.
(5)After subsection (7) there shall be added—
“(8)For the purposes of subsection (1) above policy holders shall be taken to be eligible to participate in an established surplus in any case where they would be eligible to participate in a later established surplus representing it if it were carried forward unappropriated.”.