MAPFRE MSV Life p.l.c. declares 2020 bonuses

MAPFRE MSV Life p.l.c. has approved the bonus rates for With-Profits policies for the year ended 31 December 2020.

A Regular Bonus Rate of 1.50% was declared on the Company’s core products namely the Comprehensive Flexi Plan (regular and single premium policies), the Single Premium Plan and on the With-Profits options of the Investment Bond, Retirement Plan and the Personal Pension Plan. A Regular Bonus Rate of 1.40% was declared on the Comprehensive Life Plan (regular and single premium policies). The 2020 Regular Bonus Rates for these contracts represent a reduction of 1.35% from the 2019 declaration.

On the ‘Old Series’ Endowment and Whole Life policies, a Regular Bonus of 1% of the basic sum assured plus bonuses was declared. The 2020 Regular Bonus Rates for these contracts represent a reduction of 1.00% from the 2019 declaration.

In addition, for plans that have been in force for more than 10 years, the Board also announced the declaration of a Final Bonus in respect of Comprehensive Life Plans (Single and Regular Premium), Comprehensive Flexi Plans (Single and Regular Premium) and Single Premium Plans. For the Comprehensive Life Plan (Regular Premium) and Comprehensive Flexi Plan (Regular Premium), a Final Bonus of 1.25% has been declared for every year in force after the 10th year of the policy.

For Single Premium policies the Final Bonus is  expressed as a combination of a flat percentage plus an additional percentage for every year in force after the 10th year of the policy.

For the Single Premium Plan, Comprehensive Flexi Plan (Single Premium) and Comprehensive Life Plan (Single Premium), a flat Final Bonus Rate of 5.00% will be paid on the value of the policy account plus an additional percentage of 2.50 % for every year in force after the 10th year of the policy. Unless the Final Bonus rates change in the meantime, these Final Bonuses will be paid on the value of the Policy Account as at the date of death or maturity between 24 March 2021 and 31 March 2022.

The Board also approved a Regular Bonus of 1.40% on those Secure Growth policies which formed part of the portfolio of business transferred to MAPFRE MSV Life from Assicurazioni Generali S.p.A. during 2000. Finally, the Board also approved a Regular Bonus of 1.00% on the ALICO 78 policies and a Regular Bonus of 1.00% on the ALICO 66 policies which formed part of the portfolio of business transferred to MAPFRE MSV Life in 2011 from American Life Insurance Company (“ALICO”).

The MAPFRE MSV With-Profits Fund increased by 1.9% from €2.14 billion in 2019 to €2.18 billion at 31 December 2020.

The total investment return of the Fund amounted to €60.2 million, representing a strong recovery from the adverse impact on financial markets following the declaration of the COVID-19 virus as a pandemic in March 2020. This compares to a total investment return of €222.1 million in 2019.

Notwithstanding the prudent investment policy adopted by MAPFRE MSV Life, past performance is no guarantee for the future. Although MAPFRE MSV Life’s with-profits investments have generally provided policyholders with stable and satisfactory returns when compared with other similar investment products, in the light of the current uncertainty in the capital markets and the deepening of the low interest rate environment, investment returns could fluctuate further.

Fair value movements and investment returns impinge directly on the rates of bonuses declared by the Company. Regular Bonuses are therefore expected to vary over the lifetime of the policy whilst Final Bonuses are likely to be highly volatile and very dependent on the investment performance of the Company.

For investors, the year was characterised by sharp swings for stocks. March saw an upwards spike in volatility and a large drop in all major indices as the pandemic worsened. This was followed by a rally in April, and stocks reaching their previous highs by August. Both Developed market equities and Emerging Market group gained in Q4 as vaccine breakthroughs fostered hopes for normality.

Within this context, the MAPFRE MSV Life With-Profits Fund returned a net return of 3.00% which is considered to be a satisfactory performance within the context of the unprecedented global environment that characterised 2020.

The MAPFRE MSV Life With-Profits Fund

The money of MAPFRE MSV Life With-Profits policyholders is invested in the MAPFRE MSV Life With-Profits Fund. With assets under management of €2.18 billion and approximately 78,000 With-Profits policies in force, the MAPFRE MSV Life With-Profits Fund is one of the largest managed savings funds in Malta.

The size and strength of the Fund allow for investing in a very wide range of global assets. The objective of the MAPFRE MSV Life With-Profits Fund is to offer competitive long-term real returns by smoothing the peaks and troughs of day-to-day market movements whilst at the same time providing an underlying capital guarantee.

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 uncertain times, the benefits of smoothing and guarantees can provide advantages to With-Profits policyholders over other forms of investment.