On March 22, MAPFRE MSV Life plc (MMSV) approved the bonus rates for With-Profits policies for the year ended December 31, 2023. The highlight of the bonus declaration is a regular bonus rate of 2.5% on the company’s core products. One of the key characteristics of a With Profits investment is that the bonus rate declared is net of tax in the hands of the policyholder.

The financial markets performance remains one of the key considerations in the annual bonus declaration decision. In 2023, mainstream asset classes in investment portfolios, namely fixed income and equities, contributed positively towards investment returns.

Equities recovered from their 2022 lows, mainly driven by better-than-expected economic readings, interest rate cuts expectations and positive market sentiment underpinned by technological innovation. Notwithstanding the positive contribution, high volatility characterised the fixed income market. Fixed income asset prices remained significantly below their 2022 opening levels.

Within this environment, the With-Profits Fund registered a positive return of 8.64% in 2023, partially recovering the negative performance of -13.1% in 2022. One of the With Profits Fund’s key characteristics is the smoothing of returns over time, thus eliminating the peaks and troughs of financial market movements. The regular bonus distribution for 2023 has been increased relative to 2022, reflecting the more favourable investment conditions during the year.

MAPFRE MSV Life plc declared a regular bonus rate of 2.5% on its 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 2.4% was declared on the Comprehensive Life Plan (regular and single premium policies). The 2023 regular bonus rates for these contracts represent an increase of 1.5% from the 2022 declaration.

On the ‘Old Series’ Endowment and Whole Life policies, a regular bonus of 2.0% of the basic sum assured plus bonuses was declared. The 2023 regular bonus rates for these contracts represent an increase of 1.00% from the 2022 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 Premium) and Single Premium Plans. A final bonus will 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), if applicable, 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 (left) 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 will 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 depending on the premium modality (that is whether by Single Premium or Regular Premium or Additional Top Up Premium):

Unless, at any time between May 1, 2024, and April 30, 2025, the final bonus rates above-mentioned are changed or are withdrawn by the company, 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 2.40% 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. The board also approved a regular bonus of 2% on the ALICO 78 policies and a regular bonus of 2% 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 to increase the interim regular bonus rate for 2024 from 1.0% to 1.5%. This rate may be reviewed at any point in time.

MAPFRE MSV Life CEO Etienne Sciberras, said: “This bonus declaration is testament to one of the key characteristics and benefits of investing in a With Profits policy, namely the smoothing of investment returns over the years. In terms of investment returns, 2023 was a good year with traditional asset classes contributing positively. The With-Profits Fund long-term investment philosophy, diversified asset allocation and active management enable the fund to capitalise on market opportunities.  This consistent investment approach allowed the fund to benefit from the equity market recovery and the company to declare a 2.5% regular bonus on our core products. This bonus is even more attractive when one considers that the policyholder is not subject to any further tax on this income.”

As regards the future, he said: “The economic outlook remains uncertain. While inflation has been coming down, it still remains above main central  banks’ target rate, hence increasing the risks of monetary policy mistakes within the backdrop of heightened geopolitical risk.  The unique characteristics of With-Profits policies, specifically the smoothing of investment returns and the capital guarantee at maturity or earlier in case of death, make this an attractive product for medium-  to long-term investors particularly during these uncertain times.”