As an offshore investor, you can rest assured that all the offshore centres we work from are well regulated and secure.
All investments are held in the name of the company the investment has been placed with and therefore not covered by compensation schemes.
Investor protection schemes are regarded as a safety net for policyholders and allow them to claim compensation in the unlikely event that the life company becomes insolvent.
The availability and rules governing such schemes and specific rights for each policyholder vary from one jurisdiction to another, and are outlined below.
There are a number of regulatory measures in place to protect the policyholders of both Isle of Man and Irish life assurance companies.
Assets linked to Skandia’s policies are segregated from its business assets. The segregated assets are called the Long Term Business Fund (‘LTBF’). This means that the assets held in the LTBF must only be applied for the purposes of meeting liabilities of the policies issued by us. The appointed actuary has a statutory duty to protect the interests of the policyholders.
We currently write unit-linked business, where the you select the underlying assets of the policy. Therefore, there is always a close link between the value of the company’s assets and the liabilities to its policyholders. This is so that we can meet our obligation to pay encashment proceeds from the policy.
The nature of the single product type means our policyholders cannot be exposed to risks of other business lines, for example, investment guarantees or protection business.
Regulatory requirements and internal Old Mutual Group policies dictate how company capital, including the solvency margin, (the difference between what a company owns and what it owes) is invested. These set out very cautious criteria which require significant institutional and geographical diversification of deposits, meaning limited exposure to, for example, Irish banks and sovereign risks.
Investment risk associated with the underlying asset
Investor protection schemes do not cover the investment risk you choose to take in respect of your policy. These risks vary depending on the type of asset selected and can also include, for example, currency fluctuations, counterparty and emerging market risks.
You can elect to change the underlying assets within your policy to reflect your current risk appetite. The value of your investments will fluctuate daily and we cannot guarantee the amount you will receive as a return on the investment.
In addition, for Royal Skandia based on the Isle of Man:
The Isle of Man is an established international finance centre with a stable and independent legal, political and regulatory framework.
All life assurance companies based on the island are closely regulated by the Isle of Man Insurance and Pensions Authority, which controls this type of business and imposes detailed reporting requirements.
The Isle of Man has a statutory compensation scheme, the Life Assurance (Compensation of Policyholders) Regulations 1991, which provides policyholder protection for policies issued by all authorised life assurance companies based on the island.
You will be compensated if any life assurance company is unable to meet its liabilities. Under the compensation terms, policyholders, no matter where in the world they reside, will receive up to 90% of the policy value, less any contractual charges associated with the policy, with no upper monetary limit.
The Isle of Man enjoys full designated territory status under the United Kingdom Financial Services and Markets Act 2000, which means that the island's investor protection laws are regarded by the UK authorities as being at least as effective as those for the UK.
In addition, for Skandia Ireland based in Dublin:
European Union (EU)
The EU does not currently have any legislation governing investor compensation schemes for European insurers and there is no scheme currently in Ireland.
The Insurers (Reorganisation and Winding Up) Directive 2001 does provide specific guidance around policyholder assets, in the event of an insurer becoming insolvent.
Policyholders’ liabilities must be paid ahead of any other creditors of the insurer. Whilst this Directive is not a form of investor protection in the EU, it does give you some comfort in the unlikely event of the insolvency of an insurer occurring, because you will be treated as a preferential creditor, the only exception being the cost incurred when winding up the company.
UK Financial Services Compensation Scheme (‘FSCS’)
Skandia Life Ireland Limited (SLIL) policyholders, who were habitually resident in the UK, at the time of applying for a SLIL policy; and provided the policy commenced on or after the 1 December 2001, are covered by the UK FSCS.
Currently, 90% of the value of policy, at the time the ‘insurer’ (any insurance company that is part of the scheme, which would be all UK insurers and cross-border companies selling into the UK) goes into liquidation, is covered under the Scheme.
While we believe this interpretation to be correct, we cannot guarantee it. We cannot accept any responsibility for any action as a result of the information contained above.