Insurance par funds hold steady in 2020, but policyholders should reset expectations
Insurers cite challenges of a low-rate environment; short-term fluctuations in equity markets trading at rich valuations; and growing shift to ESG factors in investing
LIFE insurers generally posted lower investment returns in their life funds in 2020. Most, however, are opting to maintain bonus rates for participating (or par) policies, providing yet another instance of the "smoothing'' process at work in traditional par insurance.
The compilation for this column is based on returns filed by five insurers. Others such as Manulife and TM Asia were not available as at press time.
Based on available disclosures so far, Prudential has indicated a reduction in terminal bonus rates for "some'' whole life policies. In 2020 its life fund reported returns of 5.65 per cent, compared to 12.26 per cent in 2019.
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