Unit-linked policy holders see 45% losses

Unit-linked insurance has registered declines of as high as 45% since the start of the year, mainly in the wake of financial turmoil.

Most funds attached to unit-linked insurance have registered losses since the beginning of 2008, with the biggest drops being posted in the case of those with a high exposure to stocks, whose values have plunged during the financial crisis. The worst slumps were registered by Activ-Generali (-44.7%), Exponent-AIG Life (-40.4%), KD Maximus-KD Life (-37.8%), RON Practic 50-Aviva (-29.8%) and Interextra-Interamerican (-27.8%). Of the 43 analysed funds, 32 have registered declines since late last year until September, and only 11 have posted increases. However, insurers say these products are long-term ones and it is normal for the market to experience ups and downs over longer periods of at least 10 years. In the end, these investments prove to be profitable most of the time. It is important that insured people should not panic and redeem their policies, because they will get less money than they originally invested. Also, the crisis period may be the best for the acquisition of unit-linked insurance fund units because prices are low. Since the start of the year, unit-linked insurance that mainly invested in fixed-income securities, such as government bonds, bonds or banking deposits, has had positive results. The funds that boasted increases during this period are EUR Conservator-Aviva (0.62%), Verde-ING (0.81%), Albastru ING (1.26%), Intersafe-Interamerican (3.84%), Bond-ING (4.41%), RON Practic-Aviva (3.59%), Ronsafe-Interamerican (5.6%), Plus-AIG Life (5.83%), Leu Extra-Allianz Tiriac (5.85%), Leu Plus-Alliaz Tiriac (5.92%) and Confident-Generali (6.28%). In the same period, the Stock Exchange also reported significant decreases, but banking deposits became very attractive. Due to central bank policy, interest rates banks pay for RON savings have reached as high as 11%. ING Asigurari, the biggest player on the unit-linked insurance market, now holds assets worth around 835.5 million RON on this segment (230m euros), from 745m RON (238m euros) at the end of the first half of 2007.