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2 February 2009
Clerical Medical With-Profits Bonus Announcement 2009
Investment return of -12.4%, compared to a record - 31.3% in the FTSE 100
Some Market Value Reductions (MVRs) added or increased
A 25-year £50 a month mortgage endowment will pay £33,346
A 20-year £200 a month personal pension will pay £83,427
Paul Turnbull, chief actuary, said:
"We saw extraordinary economic conditions in 2008 which seriously affected industries and companies all around the
world. Global stock markets saw record falls over the year with the FTSE 100 reducing by 31.3%, making 2008 the worst
year since records began in 1984. We also saw a decline in property values over the year. This has all proved to be a
significant factor in the overall performance of our With-Profits Fund resulting in a drop in value of 12.4% over 2008."
"In the second half of the year, Clerical Medical has had to reduce final bonuses, smoothing in the poor performance of 2008.
Regular bonuses are reduced for most policies. This reflects a downward trend in with-profits bonuses across the industry.
It also demonstrates prudent fund management to ensure that no-one gets more than their fair share of the fund."
Mortgage Endowment Policies – Regular Premium1
This shows the effect of recent bonus announcements for a Clerical Medical mortgage endowment plan for a male aged 29 paying
£50 per month over a 25 year term.
| Cash Value in 2008(one year before maturity) |
Maturity Value (after bonus announcements) |
| £32,857 |
£33,346 |
Equity Backing Ratio
During 2008, Clerical Medical decided to reduce the fund's exposure to equities and property. We feel that this is a prudent
move when markets are like they are and will help to give the fund, and our investors, some protection against any further
market falls. The proportion of equities and property held for the benefit of with-profits policyholders was approximately
57% compared to 67% at the end of 2007.
Clerical Medical Press Office:
Tel: 01422 333829 Fax: 01422 333007
Website:
www.clericalmedical.co.uk - media zone
Notes for editors
Full details of the current bonus and MVR rates on our website at www.clericalmedical.co.uk
1. Past performance is not necessarily a guide to future performance.
2. The ultimate value of a with-profits policy depends on the level of future bonuses and cannot be guaranteed. A MVR may apply.
The element of final bonus is not guaranteed. Investors may not get back the amount originally invested.
3. Bonus Rates are normally reviewed on 1 February and 1 August, but we may need to change at other times of the year if investment
conditions change significantly. We reviewed final bonus rates and MVR rates in October and November 2008, following sharp falls
in stock markets.
4. Regular bonus, also known as a reversionary bonus, is the amount normally added to a with-profits policy each year. Final bonus,
also known as the terminal bonus, can be added to a policy when it pays out and can vary depending on a number of factors and is
not guaranteed.
5. Market value reduction or MVR is an adjustment, which can be applied to those who leave the with-profits fund before their policies
mature or on other dates when guarantees do not apply. It ensures that all policyholders receive a fair share of the fund’s assets.
As and when fund performance improves and stock markets become more stable, we will aim to reduce MVRs accordingly.
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