Article on Rates of Returns of Life Insurers in The Sunday Times

Article on Rates of Returns of Life Insurers in The Sunday Times
(17 September 2006)
We have received some queries about an article on the returns of participating policies which was published in The Sunday Times on 17 September 2006. Written by Lorna Tan, it is entitled, "What you see may not be what you get". This paper addresses any concerns you may have arising from the article.

The article contains highly misleading information.

1. The journalist quoted the "Insurance Commissioner's Report" as the source of information. This is not true. The Monetary Authority of Singapore (MAS) has not published such figures since 2000 (probably because these figures had been misquoted in the past).

2. In the MAS reports prior to 2000, it was clearly stated that the net rate of return included net interest and did not take into account any profit or loss on the realisation or revaluation of assets. As such, these figures do not represent the actual investment performance of our insurance funds, where gains from equities and other asset classes form an important part of the overall return.

The journalist did not include this important point in her report and wrongly used these rates as investment rates of return of Par funds.

3. The net rate of return shown in the MAS reports (i.e. prior to 2000) was the aggregate net rate for all life insurance funds (i.e. Par fund plus non-Par fund plus Investment-linked fund, where applicable) of an insurer. It was not the net rate for the Par fund.

The aggregate net rate for all insurance funds is obviously not the same as the net rate for the Par fund.


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Source: Great Eastern Website