Middlesea Valletta Life increases bonus rates

The Middlesea Valletta Life (MSV) board has approved the reversionary bonuses on policyholders' with-profits investments in MSV for the year ending December 31, 2004.

Comprehensive life policies receive 3.75% (Single and Regular Premium Policies); Comprehensive Flexi Plan, 4% (Single and regular Premium Policies); MSV Single Premium Plan, 4.1%; and MSV Investment Bond, 4.1% on the with-profits option of the product.

MSV chairman Roderick D.E. Chalmers said: "The most important factor that affects bonus rates on with-profits investments is the underlying investment performance of the funds invested. The investment strategy of MSV is to hold a diversified range of assets to help reduce the investment risk that arises from holding any single type of asset.

"Our asset and currency mix, geographical spread and asset quality mean that we are well placed to capture an upturn in investment markets. During 2004 MSV registered an improvement in investment returns, which has enabled us to increase the bonus rates to our with-profits policyholders while safeguarding the capital invested."

On the 'Old Series' Endowment and Whole of Life policies, a Reversionary Bonus of 2% of the basic sum assured plus bonuses was declared.

Although no terminal bonus has been declared for policies on claims arising out of death or maturity this year, any terminal bonus declared on the "Old Series" policies accumulated over previous years to date, shall remain payable on such claims occurring this year.

Furthermore, the board also approved a reversionary bonus of 3.25% on the Secure Growth policies that were part of the portfolio of business transferred from Assicurazioni Generali SpA.

Mario C. Grech, deputy chairman and CEO, said: "During last year we experienced a strong demand for savings products. With-profits policies are valuable investment instruments because in addition to the lump sum at maturity they can provide life insurance protection, which is rarely available with other forms of regular savings plans.

"Furthermore, with-profits policyholders are not liable to pay any personal or capital gains tax on bonuses declared by the company since an Exit Tax is paid by the company on surrenders and maturities.

"Similarly dependants will not be liable to any tax if they receive payment under a with-profits policy by virtue of the premature death of the life assured.

"We aim to smoothen returns under our with-profits policies over the term of the policy. Smoothening holds back part of the profits in some years, so that returns to policyholders can be higher than would otherwise be the case in other years when investment returns are lower.

"Notwithstanding the prudent investment policy adopted by MSV, past performance is no guarantee for the future, and, in the light of uncertainties that surround the capital markets, the investment return may fluctuate positively as well as negatively. Fluctuations in investment returns impinge directly on the rates of bonuses declared by MSV. Reversionary bonus rates are therefore likely to vary over the lifetime of a policy."

MSV is committed to continue to focus on product innovation to fulfil the evolving demands of its customers. MSV's strategy is to offer its customers innovative products that offer the highest long-term returns commensurate with an acceptable level of risk and backed by high-quality service.

MSV will shortly be sending policy account and bonus statements to all policyholders holding with-profits investments with the company.