MSV Life announced that the Board of Directors of MSV Group 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 2012. These amounted to 2.90% for the MSV Comprehensive Life Plan (regular and single premium policies), 3.10% in respect of the MSV Comprehensive Flexi Plan (regular and single premium policies), 3.10% under the MSV Single Premium Plan and 3.10% 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% of the basic sum assured plus bonuses was declared.
In addition the Board also approved the declaration of a Final Bonus in respect of the Comprehensive Life Plan (single and regular premium) and the Comprehensive Flexi Plan (single and regular premium) policies that have been in force for more than 10 years. The Final Bonus will be paid on claims payable as a result of death or maturity between 1 January 2013 and the next bonus declaration, at a rate of 0.75% for every year after the 10th year of the policy. This final bonus will be paid on the value of the Policy Account as at the date of death or maturity.
The Board also approved a Regular Bonus of 3.10% on those Secure Growth policies which formed part of the portfolio of business transferred to MSV Life from Assicurazioni Generali S.p.A. during 2000. Finally the Board also approved a Regular Bonus of 1.75% on the Alico 78 policies and a Regular Bonus of 2.0% on the Alico 66 polices which formed part of the portfolio of business transferred to MSV Life in 2011 from American Life Insurance Company (“ALICO”).
The Chairman of MSV Life, Frederick Mifsud Bonnici, stated, “MSV’s investment portfolio performed well in 2012 with all asset classes delivering positive returns. In relative terms, risk assets outperformed risk-free assets with both global equities and corporate bonds outperforming cash and government bonds by a considerable margin. By the end of the year MSV’s total investments almost reached the €1.2 billion mark.”
Mr. Mifsud Bonnici added, “during 2012, MSV policyholders have benefitted from the asset diversification and geographical spread of MSV’s investment portfolio which was well placed to capture the strong recovery of the international capital markets and which we have in turn reflected in our bonus declaration for 2012.”
The Chief Executive Officer of MSV Life, David G. Curmi, stated, “with profits investments combine a balanced asset mix with smoothing of investment returns and underlying guarantees. This means that with profits investments remain a good choice for investors seeking steady growth from a spread of investments over the longer term with some downside protection. In these uncertain times the benefits of smoothing and guarantees can provide advantages to with profits policyholders over other forms of investment.”
Mr. Curmi added, “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 With Profits Fund have received an average annual bonus of 4.70% after tax.”
Mr. Curmi concluded, “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 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.”
The Company stated that the weak economic outlook suggests that the euro-zone still faces some very considerable challenges in 2013. Furthermore the low interest rate environment is expected to continue as central banks around the world are committed to maintaining their monetary easing posture for some time in the future in an effort to improve liquidity conditions and boost economic activities in their respective economies.
Notwithstanding the prudent investment policy adopted by MSV Life, past performance is no guarantee for the future. Fair value movements and lower investment returns impinge directly on bonus rates declared by MSV Life which are expected to vary over the lifetime of with profits investments.