Manulife returned $26.7 billion to our customers in the form of insurance claims, cash surrender values
, annuity payments and other benefits.
Because some of the new UL products at that time veered toward investment vehicles -- with cash surrender values
-- and away from traditional definitions of life insurance, the federal government stepped in with the Deficit Reduction Act of 1984 (DEFRA).
The present quarter includes a USD6.7m expense associated with decreases in cash surrender values
of company-owned life insurance policies.
Its concern was that once the cash surrender values
in the policies funding these agreements exceeded the sum of the premiums paid, the policy owners had access to untaxed funds.
(5d) Likewise, the Tax Court has held that the cash surrender values
of paid-up additions are not constructively received by the policyholder.
This kept the cash surrender values
from increasing, which limited the amount of life insurance that could be purchased from the cash value.
The company said that the current quarter includes a USD3.6m (USD0.08 per share) decrease in the cash surrender values
of company-owned life insurance (COLI) policies, while the corresponding prior-year quarter included a USD3.7m (USD0.08 per share) increase in COLI policies.
Holders of life insurance policies with cash surrender values
would be notified of that amount on an annual basis according to legislation introduced by Assemblyman Arthur J.
With cash value insurance the excess of net premiums paid (i.e., the premiums paid less dividends declared, if any) over the increase in cash surrender values
is considered an insurance expense.
in BOLT Assets ($ Thousands) Cash Surrender Values
of BOLI in Force Bank Molding % Rank Company Assets 2008 2007 Change 1 Bank Of America $1,173,478 $20,886 $16,760 24.6 2 Wachovia 808,575 14,851 13,677 8.6 3 JPMorgan Chase 1,642,862 13,684 13,074 4.7 4 Citigroup 2,199,848 7,626 3,325 129.3 5 Wells Fargo 595,221 5,553 4,523 22.8 6 U.S.
* The annual $15,000 premiums for the first 20 years produce similar projected cash surrender values
in the CAUL and SGUL illustrations.
Surrender of the policy within the first five to 10 years may result in considerable loss since cash surrender values
reflect the insurance company's recovery of sales commissions and initial policy expenses.