Investment funds that are attached to unit-linked life insurance registered a range of results in the first three months of this year (Q1), from 19.9% in losses, to 9.4% in yields, after the majority of funds dropped into the red.
The global financial crisis and declines on the local stock exchange brought losses for more than half of the investment funds attached to unit-linked insurance.
Unit-linked life insurance policies invested the bulk of premiums in funds managed by the insurance company or by an external manager, with a very small portion of the premium covering the risks insured. The client takes on the risks, and can derive a loss, or make a profit from the investment.
The biggest first quarter loss was experienced by Activ (- 19.9%), a fund managed by Generali Asigurari, followed by Exponent (-18.8%), a fund managed by AIG Life, and KD Optimus (-16.1%), a fund KD Life continues to invest in.
"The performance of these funds is linked with what happened globally at the end of last year and the beginning of this year, especially in the case of funds which invest the bulk of capital in shares. However, these are short-term evolutions, but an investor in unit-linked insurance policies has to start thinking long-term," explains Tudor Moldovan, general manager of Generali.
He believes the fluctuations of fund units are not a long-term problem. "If one were to look at the history of any stock exchange index, one would see that there are periods of decline, however in the long run, the trend is positive," added Moldovan.
The head of Generali believes that the trend experienced by unit-linked funds has been prompted by investors' lack of confidence in the local stock exchange, as well as by global unrest.
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