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Shareholder transfers - 12-13%

A

Aldo008

Member
Hi,

Can someone please explain why shareholders get 12-13% of surplus on reversionary bonus declaration in a 90:10 fund?

My understanding is that:
- policyholders' addition to benefits, from the bonus, is valued on the supervisory basis and so this places a higher value on the bonus.
- therefore the shareholder also gets a higher bonus now.

But policyholders will actually only get 87-88% of the bonus.

Also, why this is fair between policyholders and shareholders?

Thanks.
 
Your first question: I think the answer is in "But policyholders will actually only get 87-88% of the bonus" of your text.

Second question:
"Fairness" in this case is how it is interpretated.

If interpreted to the letter of the rules, using supervisory basis, which leads more than the 10%, is not inappropriate.

However in substance/principle, fairness is arguable since more than the required percentage of 10% is being allocated to shareholders.

Hope it helps.
 
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