AG Insurance has launched AG Target+ 90 Global Select and AG Target+ USD Global Select in Belgium. Both products, which are wrapped as Class 23 life insurance contracts, are linked to the Stoxx Global Select 100 EUR Index and have a term of 10 years.

In recent months, the Belgian insurer has frequently issued two products linked to the same underlying simultaneously: one version denominated in US dollar offering full capital protection, and the other denominated in euros, protecting 90% of the nominal invested. "We offer the US dollar version as diversification on the existing product range and, given the interest rate difference between the US and the Eurozone, which is historically high, we offer both products on the same underlying," said Jan Bronselaer (pictured), team manager unit-linked, market development savings & invest at AG Insurance.

This offer is unique in the sense that AG Insurance is the first to create this product for Belgium's insurance market, and, according to Bronselaer, it allows the insurer to show its clients the clear difference in the financial terms between the two products at maturity. "For example, there is the difference in capital protection between the US dollar and euro version, while the participation level, at 180% for the dollar product versus 130% for the euro product, is significantly different too."

The issue is still in its subscription period, but for the previous product, AG Target+ Dynamic Deep Value, the dollar version, with sales of US$5.5m, proved a great success, according to Bronselaer. "There is a clear awareness among our clients that the dollar-denominated products offer excellent prospects."

AG Insurance predominately uses indices as underlyings for its structured product range, however, the insurer tends to shy away from blue-chip benchmarks, such as the Eurostoxx 50 or the domestic Bel 20, preferring to use smart beta indices.

The Stoxx Global Select 100 EUR Index fits in well within the variety of underlyings offered by the insurer, according to Bronselaer. "Whereas the Eurostoxx 50 represents the 50 most important stocks in the Economic and Monetary Union of the European Union, with a large weighting towards financial values, the Global Select comprises 100 stocks, from three regions, Europe, Asia and the US, where lower volatility means a higher weighting," said Bronselaer. "Since Europe makes up around 50% of the index, it works for us because of the emphasis we put on European stocks."

In previous products, the insurer had anticipated the attractive valuation of European equities by opting for the Dynamic Deep Value Europe index, while, with other issues, it has focused on durability or the impact of demographic changes, according to Bronselaer. "Of course always with an eye for an attractive return potential for our clients," said Bronselaer.

The duration of both products is 10 years, as is the case with most products distributed by AG Insurance. "For tax reasons, the term must be more than eight years, but yes, products that have a term of 10 years allow us to offer better yield prospects," he said. "The advantage, of course, is that the investment horizon for the client is very clear."

In December last year, AG Insurance changed the name of its product range from Protect+ to Target+, although the structure and financial terms of the products remains the same. "We think Target+ fits in better with the uniqueness of our structured products [offering]," said Bronselaer. "Clients are looking for an alternative for savings products and the combination of a higher return potential and a minimum repayment of the initial reserves, 90% or 100%, offer this alternative. The name Target+ for us is a powerful expression that combines these two elements."

AG Insurance issued 25 structured products with a combined sales volume of €325m in 2016. Of these, the Target+ series (eight products/€41m) was distributed via the insurer's own brokerage channel; the Post Optima series (four products/€21m) was distributed via the BPost Bank channel; and the Smart Invest Bon series (13 products/€262m) was distributed via the BNP Paribas Fortis channel.

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