The insurer offered residential and small business borrowers cover on their mortgage rate against future interest rate rises.
A statement from the firm said: "After failing to find replacement solvency funding MarketGuard Insurance has ceased to write new business and will be entering a solvent runoff.
"The business model means that all risk is fully hedged and all future claims on existing policies will be met in full."
The runoff will be managed by Quest Insurance Management in Gibraltar and overseen by the Gibraltarian regulator the Financial Services Commission.
Chris Taylor, former chief executive of MarketGuard, said: "I continue to believe that simple insurance policies, like those we invented at MarketGuard, will replace complex bank structured products and perhaps the fixed rate remortgage in the future.
"However with the interest rate, remortgage, and venture capital markets in unparalleled times and distributors so wary of departing from their core I fear consumers may have to wait a little longer before competition of this type emerges."