19 March 2012
The FSA issued its draft guidance and commentary on traded life policy investments on 28 November 2011, which led to the withdrawal of intended subscriptions and to redemption requests significantly above normal redemption levels. The Fund’s liquidity was not sufficient to meet such redemption requests in full and it was not reasonably practicable to realise or dispose of the Fund’s assets to satisfy such requests. As a result, the Fund’s board of directors decided to suspend the valuation of the net asset value of all classes of shares in each cell of the Fund and all dealings of such shares, as permitted in accordance with the Fund’s articles of incorporation and offering memorandum.
Since then, the Fund’s board of directors and the Fund’s Manager have been considering possible ways of restructuring the Fund once the FSA’s consultation exercise has concluded and the FSA has published its final guidance. The current thinking is that shareholders will be offered three options, although this remains subject to further investigation and advice and may be impacted by the contents of the FSA’s final guidance:
1. to continue to hold existing shares in cells in the continuing Fund, with some additional dealing restrictions (such as a lock-in period);
2. to exchange existing shares in cells in the Fund for shares in a run-off vehicle, where distributions will be made to shareholders as policies mature and proceeds are received; and
3. for those requiring immediate access to cash, the ability to sell their shares to institutional investors.
Further information will be provided to investors about this after the FSA has published its final guidance, which we hope will happen during April. As investors are aware, distributions are not being made during the period of suspension. We also intend to confirm arrangements for the distribution classes at that point.
As previously advised, the currency hedging arrangement was withdrawn last year following the FSA announcement and subsequent suspension of fund dealing. We will continue to explore alternative hedging arrangements and keep shareholders updated.
If you have any questions please call your usual EEA representative.