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Unit Linked Products

Unit Linked Products. Yannis Vasilatos November 2013. Definition. Types of U L products. Main qualities of U L products. Act as a vehicle of regular savings for the purpose of building a personal pension fund.

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Unit Linked Products

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  1. Unit Linked Products Yannis Vasilatos November 2013

  2. Definition

  3. Types of U L products

  4. Main qualities of U L products • Act as a vehicle of regular savings for the purpose of building a personal pension fund. • Flexible risk profile, tailored to the personal risk appetite of the policy owner. • Allow individuals with low available funds to invest in sophisticated investment/financial tools. • Regular premium UL products have an inherent mechanism to absorb the effect of market volatility. • Level of transparency on the performance of each policy is higher compared to traditional insurance products.

  5. Main trends and opportunities • UL products are leading products in life insurance. • UL individual pension markets are continuously growing in Europe. • After the 2008 financial turmoil, when UL policies‘ surrender phenomenon registered a historical peak, the investment linked insurance policies were the first to benefit from the financial markets recovery during 2010 and later. • In 2010, UL premiums covered over 62% of total life insurance premiums growing by 53% vs. 2009. • In 2011, UL insurance GWP grew by about 18.5%, vs. 4.3% growth for the Life market overall. • UL life insurance line represents now a 40% share of the entire C.E.E. life market. • Strong customers’ demand for guarantees within UL products. EUROPE

  6. Country examples United Kingdom Romania Italy Poland France

  7. The Greek market experience • U L products introduced in 1994. • Launching was strong to be followed by a long period of volatility before nearing maturity. • Proved resilient during current financial crisis. • Today UL products represent 21% of Life market GWP vs. 25% in 2008. • Drove growth of the institutional investors market, adding depth to asset portfolios with long term investment horizon. • Main challenges related to delays in properly training sales associates and building the right tools to educate customers.

  8. Focus areas Action to further analyze and investigate the consumer trends on UL products will be taken, mainly by cross-sectoral analysis under the auspices of the Joint Committee of the European Supervisory Authorities (ESAs)

  9. Managing challenges • Taxation for policyholders, company taxes, investment assets • Regulatory controls on capital, reserves, transparency • Financial reporting under IFRS, local GAAP

  10. Market evolution – new horizons Low interest rates prevail globally affecting returns Guaranteed returns become very expensive to offer Consumers get more educated every day Other industries are copying UL products Managing risk is our business

  11. Thank you

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