French and Belgian investors in PanEuroLife’s Focus Fund will receive a coupon of 16.24% and full capital return on the product’s third anniversary, the Luxembourg life company has announced.The capital-protected income product, which is linked to a basket of 30 shares, offered a fixed coupon of 5% per annum for the first two years of investment, and in subsequent years a variable coupon depending on the performance of the 20 worst performing shares in the basket.
An early maturity feature is activated as soon as the average of the annual coupons equals 7% or more. The product had a maximum maturity of eight years.
In a letter to investors, the company said the 20 worst performing shares out of the basket showed a positive performance of 14.96% compared with their initial value on 12 February 2004. Therefore, the policyholder will receive a coupon of {12.5 + (25% X 14.96%)}, which is 16.24% of the nominal value of the investment.
In November last year, PanEuroLife was sold by US insurer Nationwide to another US firm, JC Flowers, a private equity fund.
PanEuroLife currently manages a €3.5bn portfolio with a capitalisation close to €70m. The company administers 60,000 insurance contracts and says it has a capacity of up to 300,000. In December last year PanEuroLife’s chief executive, Tom Fraser told Luxembourg paper Wort he would like to triple turnover within the next five years.
In 2001 PanEurolife executives were accused of involvement in a large-scale money laundering operation between France and Luxembourg, when the company was owned by Axa between 1996 and 1999.
This product appears in Maturing Products (France, Belgium).
