With effect from 1st April 2025, 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 saw a recovery in equity markets, albeit predominantly driven and concentrated in a number of large US stocks which subsequently saw a correction at the end of 2024 and the beginning of 2025. 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 and October 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 has remained positive and MMSV has, once again, adjusted the level of MVR applied.
- Comprehensive Life Plans (Regular Premium) remain MVR free.
- All Contracts that have been in force for less than three years are MVR free.
- Single Premium Plans and top-up contributions, which have been in force for at least 10 years remain MVR free. The MVR rates for Single Premium contracts in force between six and nine years inclusive have been reduced.
- MVRs on regular premium contracts in force between 3 and nine years are unchanged.
The MMSV With Profits Fund is invested in a diversified range of assets including mainstream equities, fixed interest and property. In 2024, mainstream asset classes in investment portfolios, namely fixed income and equities, contributed positively towards investment returns.
The beginning of 2025 saw the new US administration coming into power, bringing growing uncertainty about the impact of the US administration’s policy agenda on the global economy and capital markets. In the first quarter of 2025, the US equity market experienced a correction whilst the European equities delivered a better performance on the expectations that infrastructure and defense spending will reignite the German economy, resulting in the divergence between the two markets. The same divergence followed in fixed income markets. In the US, fixed income yields fell following the tariff uncertainty policy whilst the yields on the EU government bonds when up on the expectations of increased spending, leading to capital losses in European fixed income assets.
2025 started the year on a difficult note and it is expected to remain challenging until the tariffs and geopolitical uncertainty, including the Ukraine and Middle East conflicts, are resolved which will take time further fueling market volatility.
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.
Elvira Lopez de Lara Merida
Chief Executive Officer