Insurance capital funds of Commercial Union Poland Life Insurance Company achieved excellent results in 2003 thanks to accurate projections.
Insurance capital funds of Commercial Union Poland Life Insurance Company achieved excellent results in 2003 thanks to accurate projections.
At the beginning of last year, CU fund managers relied heavily on the scenario of economic growth and stock market boom. Their expectations were very accurately fulfilled, thus the money entrusted by the clients of CU Life was significantly multiplied.
CU fund managers expect 2004 to be good for the Polish economy and anticipates further growth in the stock market, though repetition of 2003 investment performance seems unlikely. The total asset value of all funds exceeded zloty 6.5 bn (Ł 1bn)at the end of 2003.
From 1 January 2004 CU adjusted the funds’ trading names to the requirements of the new insurance act and introduced two new funds – Money-Market Fund and Eurobalanced Fund.Excellent investment results
2003 was very good for the stock market. CU fund managers took full advantage of this development, which brought excellent return rates for share funds: CU – Index-Tracker Fund (43.2%) and Growth Fund (61%).
Very high return rates were also achieved by mixed funds: Balanced Fund (18.8%) and International Fund (29.6%). The safest funds – Guaranteed Fund and Stable Growth Fund – achieved competitive profits to alternative safe investment instruments.
Return rates of CU Life insurance capital funds for 31.12.2003 [%]
| Fund | 1 year | 3 years | 5 years | 10 years |
|---|---|---|---|---|
| Guaranteed | 6.2 | 32.7 | 66.2 | 398.4 |
| Stable Growth (Strategic up to 31.12.2003) | 6.3 | 42.4 | 81.9 | - |
| Balanced (Active up to 31.12.2003) | 18.8 | 42.9 | 102.8 | - |
| International | 29.6 | 1.3 | 26.6 | - |
| CU – Index-Tracker Fund | 43.2 | 25.3 | - | - |
| Growth Fund | 61.0 | 72.6 | - | - |
| WIG (Warsaw Stock Exchange index) | 44.9 | 16.7 | 62.7 | 62.4 |
| Inflation (CPI) | 1.8 | 6.3 | 26.8 | 191.6 |
"Very good investment returns are the result of accurate evaluation of economic trends and relying on a stock market boom at the beginning of 2003. The appropriate selection of companies also affected the results. For instance, last year 22 companies with capitalisation exceeding zloty 100m (Ł14.6 m) brought a profit of over 100% compared with the WIG index growth of 45%, and 11 similar companies brought losses on investment in their shares. Our selection of companies turned out to be very accurate, thus the profits of CU Life funds are very attractive compared to the stock exchange index and the results of our competitors," said Marek Przybylski, general manager of CU Investment Management, the company managing assets of CU Life funds.
CU fund managers expect further stock exchange growth in 2004. "Projected economic growth and improving situation in the corporate sector should bring higher profitability of companies listed on the Warsaw Stock Exchange. At the same time we expect an increase in average earnings per share (EPS) of 30% in the present year and 15% in 2005. Thus share pricing based on future expected profits does not indicate overvaluation of shares and therefore the risk of a very deep correction is small – forecasts Marek Przybylski. Stability of economic growth in the world, particularly in the US economy, is a substantial risk factor. As is the sentiment in the American stock exchanges which indirectly affects investors in Poland. This year we can also expect new interesting share offerings in Poland," adds Marek Przybylski.
Changed names
In compliance with the provisions of the new insurance act which came into force on 1 January 2004, CU changed the fund names offered to life insurance clients. Now the company uses exclusively the name: "insurance capital fund". Also from 1 January of this year CU Life changed the names of three funds which have been available to customers for many years:
- Optimal Fund changed the name to Guaranteed Fund Plus
- Strategic Fund changed the name to Stable Growth Fund
- Active Fund changed the name to Balanced Fund
"The new names more fully and accurately represent the investment profile of the funds. They are also better adjusted to the naming adopted by Polish insurance capital funds market and unit trusts in recent years," said Zbigniew Andrzejewski, CU Life deputy general manager. From the beginning of 2004 the company, according to law, publishes values of its life funds units by placing special announcements in the national daily newspaper Gazeta Prawna.
New funds
From the new year CU Life also expanded its offer of insurance capital funds by launching two new funds: Money-Market Fund and Eurobalanced Fund.
Money-Market Fund has a low-risk fund investing mainly in money-market financial instruments which can also buy corporate bonds. The investment objective of the fund is to obtain similar results to other safe forms of investments. The model structure of assets: 95% money market debt instruments (min 80%, max 100%), 5% long-term fixed interest bonds (min 0%, max 20%).
Eurobalanced Fund invests mainly in bonds and shares denominated in euro or currencies of other EU countries. The investments can be direct or indirect – through unit trusts or investment certificates. The most important risk factors are: market interest rates, situation on stock exchanges in European countries, as well as the exchange rate of zloty to euro and other EU currencies.
"We have been expanding our offer of life funds with the development of Polish financial market and increasing client sophistication. In 1992 we offered the first Guaranteed Fund on the Polish market. In 1997 – balanced funds and in 2000 – equity funds. We underline as always that CU Life funds are long-term investment instruments. By long-terms savings vehicles we consider those which are tailored for a dozen or so or tens of years and which include equities. Experience of highly developed countries shows that long-term investments in equities usually bring higher profit than investments in bonds," emphasised Zbigniew Andrzejewski.
After introducing changes and expanding its offer, CU Life offers nine insurance capital funds (listed in order of increasing expected return rate and risk level)):
- Money-Market Fund
- Guaranteed Fund
- Guaranteed Fund Plus
- Stable Growth Fund
- Balanced Fund
- Eurobalanced Fund
- International Fund
- CU – Index-Tracker Fund
- Growth Fund
The Guaranteed Fund Plus is offered exclusively in "Perspektywa" individual life insurance which does not allow investments in the Guaranteed Fund. For remaining individual unit-linked life insurance products customers have a selection of eight funds (apart from the Guaranteed Fund Plus).
Customers of group unit-linked life insurance have a choice of six funds: Guaranteed, Stable Growth, Balanced, International, CU – Index-Tracker Fund and Growth Fund.
CU Life also offers four insurance capital funds for customers creating employee pension plans (PPE) within Bonus group investment life insurance: PPE Bond Fund, PPE Stable Growth Fund (the money entrusted by the customers is already invested in these funds) and also PPE Balanced Fund and PPE Equity Fund.
For further information please contact:
Graýyna Goslings, Director of Corporate Communications of CU Poland Group, tel: + 48 22 557 40 93, fax: + 48 22 557 40 26, e-mail: bohdan_bialorucki@cu.com.pl. Additional information about Commercial Union Poland can be found also on http://www.cu.com.pl