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We aim to maximise returns for policyholders by the careful selection of investments. We do this by striking a balance between financial security and investment risk. We review our investments and strategy regularly as market conditions can change quickly.
Our investment strategy is also dependent on the financial position of the with-profits fund. This means taking into account a range of factors such as:
- The value of guarantees already given to policyholders.
- How much we need to keep in cash, or in investments that can be easily sold, in order to meet claims in the near future.
The with-profits fund is invested in a mix of shares (often called equities), fixed interest investments (often called Gilts or Bonds), cash and property. The fund also uses ‘derivatives’ as an efficient way of quickly changing the investments in the fund or to reduce risks. Derivatives can be, for example, the right to buy or sell assets, such as shares, at a pre-agreed price on a specific date.
There were significant falls in the stock market from 2000 through to 2003. During this time Pearl reduced its target investment in equity type investments (shares and property) to around 25% of the fund. We did this in order to safeguard our ability to pay the guaranteed amounts promised by our policies.
However, as a result of improvements in financial conditions, from July 2005 Pearl increased the amount invested in equity type investments to a target of 45% of the asset shares of the with-profits policies. From 1 January 2007 this target was further increased to 50%.
To find out more about Pearl Group, you can visit the website at www.pearlgrouplimited.co.uk.
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