aia - revision of crediting rates for aia platinum legacy series

we have just received this memo from aia:

we would like to inform u that in view of the current interest rate environment, aia will be revising the crediting rates for aia platinum legacy series from october 04, 2011.

us treasury yields have dropped significantly since end-dec 2010 and to all-time lows for majority of the benchmark treasuries. such movements are triggered by risk aversion and flight-to-quality flows on the back of rising concerns over the developed nations' growth momentum, eurozone debt crisis and financial health of the european banks.

over the period from 31 december 2010 to 16 september 2011, 10-year and 30-year treasury yields moved by -1.248% and -1.022% respectively. over the period from 16 may 2011 to 16 september 2011, 10-year and 30-year treasury yields moved by -1.099% and -0.959% respectively.

revised crediting rates:

for aia platinum legacy and aia platinum legacy preserver, the current crediting rates of 4.75% and 4.20% respectively will be effective on or before october 03, 2011.

but the revised crediting rates of 4.50% and 4.00% for aia platinum legacy and aia platinum legacy preserver respectively will be effective on or after october 04, 2011.

and for all scheduled premiums and top-ups on or after september 21, 2011 the revised crediting rates will apply.



my comments:

it is probably inevitable that due to the current interest rate environment, aia will have to revise the crediting rates. i suspect this may be so for other insurers as well.

but aia has been generous in allowing proposals submitted before october 04, 2011 with an extension of the payment of premiums and the other condition being the policy must be incepted on or before november 30, 2011 to enjoy the previous crediting rates.