On 18 March 2022, MAPFRE MSV Life p.l.c. approved the bonus rates for With-Profits policies for the year ended 31 December 2021.
A Regular Bonus Rate of 2.00% 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 1.90% was declared on the Comprehensive Life Plan (regular and single premium policies). The 2021 Regular Bonus Rates for these contracts represent an increase of 0.50% from the 2020 declaration.
On the ‘Old Series’ Endowment and Whole Life policies, a Regular Bonus of 1.5% of the basic sum assured plus bonuses was declared. The 2021 Regular Bonus Rates for these contracts represent an increase of 0.50% from the 2020 declaration.
In addition, 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. A final bonus shall be payable subject to the following eligibility criteria:
- For plans where fixed premiums are contracted to be paid at regular intervals throughout the selected term of the plan (“Regular Premium”), a final bonus will be payable as a percentage of the said plan’s policy account as at either the maturity date of the plan or date of death of life assured, if earlier, as outlined in the table below and provided that the plan has been in force for more than 10 years.
- For those plans where a one-time contribution is made upon the commencement of the plan (“Initial Contribution”/”Single Premium”), a final bonus will be payable as a percentage of the said plan’s policy account as at either the maturity date of the plan or date of death of life assured, if earlier, as outlined in the table below and provided, that the plan has been in force for more than 10 years.
- In those cases where additional non-contractual top-up contributions have been made on any one of the above plans (“Additional Top Up Premiums”), a separate final bonus will be calculated and paid on the value of the policy account of each Additional Top Up Premium, provided that the said Additional Top Up Premium was made more than 10 years before the maturity date of the plan or the date of death of the life assured, if earlier. Provided further that the percentage of the Final Bonus granted in respect of each Additional Top Up Premium will vary according to the length of investment in the With-Profits Fund of each top up contribution.
Since Final Bonuses are likely to be highly volatile and very dependent on the investment performance of the With Profits Fund, the Company is under no obligation to pay such declared Final Bonus. Whether said final bonus is paid or not shall be determined by the Company upon the date of maturity of the plan or death of the life assured, if earlier.
Final bonus rates which are applicable to the different plans are shown in the table below depending on the premium modality (that is whether by Single Premium or Regular Premium or Additional Top Up Premium):
| Plan Type The adjacent percentages shall apply to the eligible policy account/s of the plan (depending on the modality of the premium payment) as at date of maturity or death of life assured, if earlier. | Flat Rate % | Rate for every year that the plan remains in force after the 10th year of the payment of the relevant premium(s) |
|---|---|---|
| Single Premium Plan (Initial Contribution made more than 10 years prior to date of maturity or death) | 9.0% | 0.00% |
| Comprehensive Life Plan (Single Premium) Initial Contribution made more than 10 years prior to date of maturity or death) | 0.0% | 2.50% |
| Comprehensive Life Plan (Regular Premium) (Policies in force more than 10 years prior to date of maturity or death) | 0.0% | 0.50% |
| Comprehensive Life Plan (Additional Top Up Premiums on above plans) (Where additional top up was invested more than 10 years prior to date of maturity or death) | 0.0% | 2.50% |
| Comprehensive Flexi Plan (Single Premium) (Initial Contribution made more than 10 years prior to date of maturity or death) | 10.0% | 1.50% |
| Comprehensive Flexi Plan (Regular Premium) (Policies in force more than 10 years prior to date of maturity or death) | 7.5% | 0.25% |
| Comprehensive Flexi Plan (Additional Top Up Premiums on above plans) (Where additional top up was invested more than 10 years prior to date of maturity or death) | 10.0% | 1.50% |
Unless, at any time between the 1 April 2022 and 31 March 2023 the Final Bonus rates above-mentioned are changed or are withdrawn by the Company, as above-mentioned, this schedule of Final Bonus rates will be paid in accordance with the terms and conditions of the relevant plan.
The Board approved a Regular Bonus of 1.90% 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. The Board also approved a Regular Bonus of 1.25% on the ALICO 78 policies and a Regular Bonus of 1.25% 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”).
Finally, as part of the Bonus Declaration decision, the Board approved a revised Interim Regular Bonus Rate for 2022 of 1%. It is to be noted that this rate may be reviewed at any point in time.
The MAPFRE MSV With-Profits Fund increased by 4.1% from €2.19 billion 31 December 2020 to €2.28 billion at 31 December 2021. The total investment return of the Fund amounted to €101.4 million, representing a further recovery from the adverse impact on financial markets following the declaration of the COVID-19 virus as a pandemic in 2020. This compares to a total investment return of €60.2 million in 2020.
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, investment returns could fluctuate especially in times of uncertainty, as currently being witnessed due to inflationary and geopolitical risk following the outbreak of the war in Ukraine. 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 at the time of the maturity of the plan or at the time of the death of the life assured, and therefore the final bonuses above-mentioned or any one or more of them may still be reduced or withdrawn altogether by the Company at such time that the plan matures or upon the death of the life assured, as the case may be, as has already been explained above.
The CEO of MAPFRE MSV Life, Mr. Etienne Sciberras stated, “The year 2021 was characterized by a strong economic recovery as global economies continued to open up on renewed hope driven by the success of the vaccination programmes and the easing of COVID-19 restrictions. Governments maintained their fiscal support and Central Banks‘ monetary policy remained accommodative. This backdrop served as a tailwind for risky assets with major global equity indices reaching an all-time high notwithstanding that the markets became more volatile in the last quarter of the year as the Omicron variant emerged, inflation continued to gain traction and Central banks started to prepare the markets for a return to interest rate normalization. The latter led fixed income securities to underperform as investors started to price in a number of interest rate increases.”
Within this context, the MAPFRE MSV Life With-Profits Fund returned a net return of 4.40% which is considered to be a satisfactory performance within this economic and financial context.
Commenting on the outlook for the future, Etienne Sciberras said, “The war in Ukraine and the increasing inflation concerns are impinging on the economic growth forecast and the level of uncertainty in the financial markets. In the first months of 2022, the uncertain outcome of the conflict between Russia and Ukraine contributed to increased volatility in the equity markets. On the other hand, as inflation readings continued to climb, further exacerbated by the spike in commodity prices, the market expectation of more aggressive interest rate tightening also increased. Central Banks around the world have a very difficult task of balancing the negative impact on growth resulting from adopting a more aggressive interest rate tightening and not tightening enough which would then increase the risk of spiralling inflation. Asset diversification remains fundamental especially given the current uncertain times.
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 €2.28 billion and over 80,000 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.
With-Profits policies contain four important features that are not generally found in other comparable investments. Firstly, the amount invested, after product charges, is guaranteed to be repaid on maturity or death if it occurs earlier. Secondly, Regular Bonuses are added to the investment each year, provided that they are declared. Once paid, Regular Bonuses are guaranteed and cannot be withdrawn. Thirdly, a Final Bonus may be paid at maturity of the plan or death of the life assured, whichever is the earlier, depending on the performance of the Fund upon said date and provided that the policy is kept for a certain number of years and in respect of the premium that would have been paid for a certain number of years, both of which are determined by the Company from time to time at the time that a Final Bonus is declared, if any, and lastly With-Profits policies are tax efficient.
MAPFRE MSV Life p.l.c. (C-15722) is authorised by the Malta Financial Services Authority (MFSA) to carry on long term business under the Insurance Business Act. MAPFRE MSV Life p.l.c. is regulated by the MFSA.
Tax treatment depends on individual circumstances and is based on current tax legislation which may change in the future. Investment returns can go down as well as up and the past is not necessarily a guide to future performance. Changes in the rate of exchange of currencies may also affect the value of investments.
