With effect from 1st October 2024, MAPFRE MSV Life (MMSV) has adjusted the level of Market Value Reduction (MVR) on With Profits surrender transactions.
The application of a Market Value Reduction became necessary in August 2022 due to the significant fall in the values across the mainstream asset classes during the first half of 2022 and prevailing market uncertainty. Since then, we have seen a recovery in equity markets, albeit predominantly driven and concentrated in a number of large US stocks. However, bond yields remain significantly above the 2022 levels as global Central banks remain focused on taming inflation.
MAPFRE MSV Life has regularly reviewed market performance affecting the MMSV With Profits (WP) Fund to monitor the ongoing appropriateness of MVRs. Adjustments were made in August 2023 following a market upturn, and again in April 2024 given the further improvements in the returns on the WP Fund and relatively stable volatility outlook at the time. More recently the fund performance continued to improve and MMSV has, once again, adjusted the level of MVR applied.
- Comprehensive Life Plans (Regular Premium) remain MVR free.
- Single Premium Plans and top-up contributions, which have been inforce for at least 10 years remain MVR free. The MVR rates for contracts in force between two and four years inclusive have been reduced.
- MVRs have been removed on the other regular premium plans which have been in force for at least 10 years. Rates of MVR have been reduced at all other durations and no longer apply to Child Savings Plans that have been in force for less than 2 years.
- Reduced MVRs have been applied on the remaining plans.
The MMSV With Profits Fund is invested in a diversified range of assets including mainstream equities, fixed interest and property assets. In 2024, mainstream asset classes in investment portfolios, namely fixed income and equities, contributed positively towards investment returns. Equities continued to underpin the positive returns in 2024, mainly driven by resilient economic data, interest rate cuts expectations and solid earnings figures. On the other hand, fixed income assets continued to exhibit significant volatility. Whereas the first half of the year was challenging for this asset class due to sticky inflation and lower expected Western central banks rate cuts compared to the beginning of the year, August proved to be a positive month for fixed income following concerns about the economic outlook leading investors to increase further rate cuts expectations thus pushing yields lower. These positive developments are being reflected in the revised lower MVRs.
We will continue to monitor financial markets and their impact on the MMSV With Profits Fund and will update MVR accordingly to maintain fairness between the policyholders who leave their policy in force until maturity and those who choose to surrender their policy prior to the policy maturity date.
Etienne Sciberras
Chief Executive Officer
