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May 2007 - Issue 65 |
Previous Issues |
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The Global Investor is a monthly
newsletter that covers global investment opportunities and
insurance for the expatriate community. This monthly
newsletter's goal is to inform the reader of what can and
cannot be done in the investment arena when living and
working in a foreign country. Whether it's personal
pension plans or disability insurance to protect your income
- Global Investments has the expertise to handle all the
expatriate investors' needs.
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 The Perfect Vista
' Vista ' is not just Microsoft's latest Windows software system. It is also Zurich International Life's (ZIL) offshore savings and pension plan, and has been a market leader in this sector for many years.
ZIL is undoubtedly the most 'international' company in the offshore life industry. It was one of the earliest entrants to the industry, establishing operations on the Isle of Man as Eagle Star (International Life) over 20 years ago, before becoming part of the Zurich Financial Services Group.
ZIL's business model is quite unusual, with a heavy focus on the Middle and Far East, including a strong Hong Kong presence. In The Middle East alone, Zurich has licensed operations in Abu Dhabi , Bahrain , Sharjah and Dubai , and it likewise holds full authorization in Hong Kong , Singapore , Sweden and Switzerland .
ZIL is a big market player in offshore insurance in terms of regular premium business. Vista is a unit-linked regular premium plan, widely regarded as the definitive product in its sector, marketed as a savings vehicle for financial planning purposes such as general savings, retirement or education fees. Individual Vista is accompanied by Corporate Vista and Magnus for group pension solutions.
Impressive range
ZIL's range of funds is one of the widest in its sector, with well in excess of 1000 funds available to Vista .
Vista 's investment proposition comprises a number of different fund ranges, including low-risk, managed and mirror funds.
The low-risk funds comprise money market funds, guaranteed accumulation (effectively deposit administration) funds and the Dynamic Growth Fund (an 80% capital-protected equity/cash fund). Annual management charges are 0.5% for guaranteed accumulation, 0.75% for money market and 1.8% for Dynamic Growth.
The managed funds comprise two sets of five risk-graded funds, one set being managed by Threadneedle, the other by BlackRock Merrill Lynch, both to consistent mandates. The range consists of Defensive, Cautious, Blue Chip, Performance and Adventurous funds. Funds are available in sterling, dollar and Euro denominations and have a management charge of 1.5% pa.
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| Gary Boal, managing director,Boal & Co |
| PROFILE |
| Actuaries Boal & Co lanunched the product comparison software lifeBase Offshore in1997. It provides analysis of offshore life products and has been used extensively by life companies. LifeBase Online brings LifeBase to professional IFAs. For further details,please register at www.lifebase.co.uk |
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| BENEFITS |
| Product |
Basic death benefit |
Additional life cover |
Critical illness |
Waiver of premium |
Permanent & total disability |
Hospitalization bbenefit |
Dismemberment benefit |
Spouse's benefit |
| -Zurich International Vista |
100% of unit value |
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| -American Int'l Assurance Capital Saver |
100% of unit value* |
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| -Friends Provident Int'l Premier/Premier Ultra |
100% of surrender value |
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| -General International Vision |
100% of unit value |
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| -Royal Skandia Managed Savings Account |
100% of unit value |
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| *Amount is reduced by any allocation bonus if death occurs during the first two years. Source: LifeBase, Boal & Co. |
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ZIL offers an automatic investment strategy (effectively lifestyling) depending upon the number of years to maturity, where the profile of managed funds is gradually switched from higher-risk to lower-risk funds as the plan gradually nears maturity.
The mirror funds form a range of approximately 100 external funds from selected investment managers, including:
- Aberdeen
- ABN Amro
- Allianz
- Baring
- Fidelity
- First State
- HSBC
- JF
- JP Morgan
- BlackRock Merrill Lynch
- Morgan Stanley
- Templeton
- Threadneedle
- UBS
Using the fund performance tools in LifeBase, we can see that past performance in dollars over the five years to 1 April, 2007, includes high-performing funds (see graph opposite).
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| 5-year performance of top Vista funds |
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| Baring |
Eastern Europe |
| HSBC |
Indian Equity |
| Morgan Stanley |
European Property |
| Threadneedle |
European Smaller Cos |
| Threadneedle |
Lat Am Growth |
| HSBC |
Chinese Equity |
| JF |
Asean |
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| |0 |
|100 |
|200 |
|300 |
|400 |
|500 |
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%growth |
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Source: LifeBase, Boal & Co |
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| Key Points |
ZIL has a heavy focus on the Middle and Far East, with a particularly strong presence in Hong Kong.
It is a big player in the offshore market for regular premium business through Vista , its savings and pension plan.
ZIL offers a range of up to 100 external funds, one of the widest ranges in the sector. |
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| Account Features |
| Company |
Product |
Underlying charge(% pa) |
Year 15 value |
| -Skandia Ireland |
European Savings/Pension Account exp 30 June '07 (Special Offer) |
1.5 |
£ 75,946 |
| -Friends Provident Int'l (Branch) |
Guernsey International Pension Plan |
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£ 75,767 |
| -Zurich International |
Vista (III) (Internal Fund Investments) |
0 |
£ 71,448 |
| -Royal Skandia |
Managed Pension Account (RoW) |
1.5 |
£ 71,192 |
| -Skandia Ireland |
European Pension Account |
1.5 |
£ 71,192 |
| -Royal Skandia |
Managed Pension Account (Hong Kong, Far East, South America) |
1.5 |
£ 69,119 |
| -Friends Provident International |
Premier Ultra (Row) |
1.5 |
£ 68,890 |
| -Friends Provident International |
Premier |
1.5 |
£ 67,673 |
| -Hansard Europe |
Retirement Programme |
1.5 |
£ 67,350 |
| -Zurich International |
Vista (III) (Mirror Fund Investments) |
1.5 |
£ 67,331 |
| -Hansard International |
Universal Retirement Programme |
1.5 |
£ 67,271 |
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Design and Charges
Like many offshore savings plans, Vista has an initial unit charging structure, where premiums during the initial period (18 months) are allocated to initial units that carry an additional annual charge (4% pa). All units, including initial units, have no bid/offer spread.
The percentage of premium allocated to units increases with premium size, through Gold, Silver and Bronze bonuses which kick in at monthly premiums of $750, $1,250 and $2,000 respectively. Taking the example of a 15 - year plan, the allocation increases from a standard 100% to 107.5%, 122.5% and 137.5% of premium for Bronze, Silver and Gold respectively.
Vista 's design is relatively clean, transparent and less complicated than some other products in its peer group. A summary of the charges is outlined in the table opposite.
Using LifeBase's projections suite, it is possible to see how these charges compare against other products when it comes to projected maturity values. The Account Features table shows the results for one example, a 15-year savings plan with a premium of £300 pm.
Vista has been a market-leading savings/pension plan for many years. The wide range of good-performing funds; clean, transparent design; competitive charges and features; the widest range of optional risk rider benefits; and the excellent multi-currency flexibility all provide a clear rationale for Vista 's success. |
Charges for Zurich 's Vista
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| Allocation rates: Year 1 ($Premium pm) |
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$300-$749 = 100%
$750-$1,249 = 100% + (0.5% x term)
$1,250-$1,999 = 100% + (1.5% x term)
$2,000 plus = 100% + (2.5% x term)
Year 2 onwards = 100% |
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| Initial contribution period: 18 months |
| Bid/offer spread: Nil |
| Initial unit/establishment charges: |
4% pa deducted monthly. The charge is deducted for the lower of the premium term or 25 years. |
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| Annual management charge: 0.75% pa of unit value |
| External/underlying fund charges: 0.5% - 2.5% |
| Policy fee: $7.50 pm |
| Loyalty bonus: N/A |
| Surrender penalties: Nil value during the first 18 months |
| Paid-up penalties: |
Plan cannot be made paid-up in first 18 months. Thereafter it can be made paid-up for up to three years without penalty. If paid-up period extends beyond three years the surrender penalty applies.
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Please contact Global Investments for more information
on Tel. (+66-2) 662-2009 or e-mail at info@globalinv.org.
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2007