Fund Closure - OFS International Balanced Broker Funds

We wrote to policyholders on 5 March 2015 providing advance notice that we would be formally closing the suspended OFS International broker funds in April 2015. The broker funds have been suspended for a long period of time due to pricing issues of the 2 underlying funds (managed by PCP) that the broker funds link to. As the underlying funds are now in liquidation we took the decision to close the broker funds, without value, and remove these from policies in order to allow policyholders to have full access to any remaining value they hold in other funds. 

When a RL360 regular savings policy holds a suspended fund the policy effectively becomes frozen meaning that the policy owner is restricted from carrying out certain transactions on their policy. This includes switching between funds, taking part withdrawals, viewing a current valuation or fully surrendering any residual value in a policy. By removing the suspended fund these restrictions are removed. 

The closure of the broker funds is now complete and the funds have been removed from policies. We will now retain a ledger of holdings of each policyholder as at 21 April 2015 and should PCP advise that they have received any proceeds back from the liquidating assets we will request immediate redemption. We will then allocate those proceeds back to investors. 

The effect of the fund closures 

Once the funds were removed, policies fell under one of the following: 

• Policy value above our permitted policy minimum*. These policies remain active on our system. Policyholders can now exercise all servicing options under their policy including fund switches, withdrawals or a surrender of the residual value.
• Policy value below our permitted policy minimum*. In line with policy Terms and Conditions, these policies have been automatically surrendered without the deduction of any surrender penalties, and the proceeds are waiting to be paid out.
• Policy with no value left. These policies have lapsed without value.

* Policy minimums: GBP2,500 / USD4,000 / EUR4,000 / HKD30,000 / JPY425,000. 

Letters have been issued to policyholders, with copies sent to their servicing adviser. The content of the letters depended on which of the above scenarios the policy fell into. Sample letters can be viewed opposite. 

What is the probability of recoveries from the underlying PCP funds? 

We are reliant on receiving updates from the Administrators of PCP funds on the progress of the liquidation, but as previously advised the outcome does not look favourable. 

However, should we receive any distribution payments from PCP we will pay out those distributions to investors by way of cheque to the investor's last known address. It is therefore vitally important that both existing and past policyholder's continue to inform us should they change their correspondence address to ensure we are able to communicate with them on this matter. 

To read the fund updates previously issued in regard to this matter click on the links below: 

5 March 2015 click here. 

11 July 2013 click here.