FWD Life Insurance Company (Bermuda) Limited (“FWD” or “We”) issues participating policies, which offer the policyholders (“You”) with dividend/bonus benefits that are not guaranteed. Dividend/bonus includes annual dividend, terminal dividend, reversionary bonus and special bonus.
Through the dividend/bonus declaration, you participate in the financial performance of the participating products. The financial performance of participating products covers the experience and future outlook of a number of factors, including but not limited to:
- Investment return;
- Claims experience.
FWD reviews the dividend/bonus at least annually based on our dividend policy. The dividend/bonus could be adjusted if the financial performance is different from the expectation, and as a result the actual declared dividend/bonus may be different from the benefit illustrations. FWD may also deduct as appropriate any cost and expense to support the policy benefits (such as charges to support guarantee) which will be reflected in the actual declared dividend/bonus.
The dividend/bonus recommendation is reviewed and approved by our Board of Directors (the “Board”), with written declaration by the Chairman of the Board, an Independent Non-Executive Director and the Appointed Actuary on due regard to our dividend policy as well as the principle of fair treatment of customers.
The current year and projected dividend/bonus would be communicated to you at least annually. Any changes in the current year and projected dividend/bonus will be reflected in the policy annual statement.
Financial performance is unforeseeable. To facilitate your financial planning, we have a smoothing process aiming to deliver a more stable dividend/bonus payouts during the policy term.
When the financial performance is better (worse) than expected, we may hold back a portion of the gains (losses), which will be passed back to you over the future years to ensure a more stable dividend/bonus payouts. Due to the variation of features and benefits of different products, different levels of smoothing may also be applied.
Consistent with the nature of insurance contracts, we also group similar policies together to pool the risks amongst a larger number of policyholders to provide diversification benefits, which help to stabilize the financial performance (and hence the dividend/bonus payouts).
To maintain the fairness between policyholders, we may also separate different generations of policies of the same product into different buckets with different dividend/bonus scales, with an aim to more closely reflect the underlying financial performance. As a result, the frequency and magnitude of the dividend/bonus adjustments may vary among different products and buckets. In general, the adjustments on dividend/bonus are more frequent and significant for products with higher risk profile.