Almost 1.6 million policyholders in Standard Life, Europe's largest mutual life insurer, today voted overwhelming to back the demutualisation of the group. The vote will deliver an estimated average windfall of £1,700 to 2.4 million of its members.

The insurer needed 75 per cent support from those who voted. It got 98 per cent as 1,577,788 backed a special resolution to proceed with a flotation, with 32,474 voting against.

Sir Brian Stewart, the chairman of Standard Life, said: "We are delighted with this outcome. We have a clear and emphatic vote of confidence in our proposal to demutualise and float on the London Stock Exchange, and this decision is an excellent outcome for the future of Standard Life."

Standard Life will write to 5.2 million members, customers and employees on June 15 to launch the preferential offer, a discount on the expected market price of the shares. This offer is in addition to the windall for which some will qualify.

The windfall is to be paid out after the group starts trading on the London Stock Exchange at the end of July. If policyholders do not wish to hold the shares, Standard Life said there will be a mechanism to convert them to cash.

Standard Life is likely to raise just over £1 billion of new money from the flotation, the biggest for five years with a market value of between £4.8 billion and £5.5 billion.

It will be ranked as Britain's fifth largest quoted insurer.

Earlier today, Sandy Crombie, the chief executive, shrugged off fears the insurer could delay its offering, in the face of volatile market conditions which have put the brake on flotation plans for at least two other companies.

He said: "What matters to me is not market conditions today, but what investors say when I go out on roadshows. What really matters is the appetite of investors to support this IPO. You only delay an IPO if the cost of proceeding is bigger than the cost of delaying."

However, he added that he would give"really serious consideration" to a delay if market appetite was deemed to be below expectations.

Standard said in April it was pressing ahead with the flotation to raise £1.1 billion after rebuffing approaches from a string of parties in recent weeks, including an all-share merger.

A 112-page pack sent to its 4.3 million policyholders asked for support for the demutualisation on the grounds that Standard Life wanted to shift risk from members to shareholders, generate external funds and unlock hidden value.

Those eligible to vote were members holding a with-profits policy with Standard Life that was started before March 30 2004 and continuously invested since then.

Members whose policies matured after October 18 2005 may still get a windfall, but those whose policies ended before then are not entitled to any shares.

Earlier his month the insurer said sales of insurance worldwide jumped to £342 million during the first three months of the year compared with £320 million over the same period last year.

The group said that although the sales increase was dented by an expected decline in Germany, it was offset by steady sales of retirement and savings products in Canada and strong sales in Ireland.

Mr Crombie said Standard Life had made a strong start to 2006. He said: "The results for the first quarter demonstrate the success of our re-positioning. We made a decision to change our business mix, particularly within UK life and pensions, to place emphasis on writing investment-driven single premium business and products with lower new business strain."

Worldwide sales of single premium insurance leaped by 48 per cent to more than £1.85 billion and Standard Life Investments, which manages funds and savings on behalf of both individuals and City institutions, pushed up investment sales worldwide by 141 per cent in the first quarter to £2.5 billion - a record quarterly performance.

Sales for the investment management business in the UK jumped 134 per cent to £2.1 billion, with domestic mutual funds also bumping up sales by 282 per cent to £420 million.

For advice on whether to hold or sell your Standard Life shares read The Times Money section this Saturday