The Board of Directors of MSV Life this week approved a resolution whereby differential rates of Regular Bonuses were declared in respect of with-profits plans held with MSV Life for the year ending 31 December 2011.
These amounted to 2.25 per cent for the MSV Comprehensive Life Plan (regular and single premium policies), 2.45 per cent in respect of the MSV Comprehensive Flexi Plan (regular and single premium policies), 2.45 per cent under the MSV Single Premium Plan and 2.45 per cent under the with-profits options of the MSV Investment Bond and of the MSV Retirement Plan. On the ‘Old Series’ Endowment and Whole Life policies, a Regular Bonus of 2.2 per cent of the basic sum assured plus bonuses was declared.
The board approved a Regular Bonus of 2.45 per cent on those Secure Growth policies, which formed part of the portfolio of business transferred to MSV Life from Assicurazioni Generali SpA during 2000.
Finally, the board also approved a Regular Bonus of 1.75 per cent on the Alico 78 policies and a Regular Bonus of 2 per cent on the Alico 66 polices which formed part of the portfolio of business transferred to MSV Life in 2011 from American Life Insurance Company.
Group chairman Roderick Chalmers commented, “During 2011, client demand for MSV Life with-profits products remained buoyant, reflecting the sustained popularity of these products as savings instruments which offer potential for a tax efficient, stable, medium to long-term capital growth. The most important factor that affects bonus rates on with-profits investments is the underlying performance of the funds invested.
“The bonus philosophy of MSV Life is centred on its ability to pay supportable bonus rates in the medium term. In keeping with industry practice, we therefore aim to smooth returns under our with-profits policies over the lifetime of the policies. Smoothing entails establishing reserves from certain favourable years to compensate for unfavourable investment returns in certain other years during the lifetime of the policy.”
Mr Chalmers added, “The investment strategy of MSV Life is to hold a diversified range of assets to help reduce the investment risk that arises from holding any single type of asset. Our asset and currency mix, geographical spread and the quality of our assets mean that we are well placed to capture an upturn in investment markets.”
Chief executive officer David G. Curmi explained, “In a year of continued market turmoil, MSV Life with-profits products delivered a modest after tax return while protecting policyholders from the extremes of market volatility. With-profits investments provide investors with important capital guarantees, which we are able to increase each year through the allocation of bonuses. We have reduced the rate by which we increase the guarantees during 2011 to reflect the prospective uncertainty in the market, the fragile economic outlook and the prevailing ultra-low interest rate environment. Through the annual bonus declaration MSV Life has added €19.5m to clients’ policy values, and during 2011 paid €36m on maturing policies.
“With-profits policyholders are not liable to pay any personal or capital gains tax on bonuses declared since the Exit Tax is paid by the company on surrenders and maturities. Since 1995 investors in the MSV Life with-profits fund have received an average annual bonus of 4.81 per cent after tax.
“Our wider message is that MSV Life policyholders have the added confidence of knowing they hold a safe, time-tested and tax-efficient investment through participation in the MSV Life with-profits fund, a conservative and diversified portfolio of assets that embraces a robust investment management process and which has delivered consistent returns that compare well with those achieved from alternative investments that offer the same level of risk.”