Third-party guarantors of the liabilities of a long-term insurer
may be released if the insurer's long-term business is
transferred to a new insurer using section 25 of Bermuda's
Insurance Act 1978 (“Insurance
Act”).
Overview of section 25
Section 25 of the Insurance Act (“Section
25”) provides for the jurisdiction of the Supreme
Court of Bermuda (“Supreme Court”) to
sanction schemes for the transfer of long-term business from one
insurer to another (“long-term business transfer
scheme” or “transfer
scheme”). The section is a longstanding feature of
Bermuda's insurance legislation and is similar to provisions
found in the insurance legislation of many other jurisdictions.
When sanctioned, a long-term business transfer scheme transfers the
primary legal liability of the transferor insurer to its
policyholders to the transferee, giving the transferor complete
legal and economic finality. As well as the sanction of the Supreme
Court, the procedure requires
