Participating policies allows policyholders to share in the divisible surplus of the Company via dividend mechanism. The dividend scales are adjusted based on the Company's actual experience relating to its relevant product group, including but not limited to investment return including any market value gains and losses, investment outlook, direct and indirect expenses, claim and lapse experience. If the experience is more favorable than expected, the dividends to be paid will be increased and vice versa.
The Company aims to ensure a fair sharing of divisible surplus between policyholders and shareholders, and among different groups of policyholders. At least annually, the Company will review and determine the amount of dividend to be declared to policyholders. Smoothing1 will also be considered when determining the scale of dividends to be distributed in order to provide a more stable return to the policyholders. With the above in mind, the appointed actuary will then submit a report to advise the Board on the recommendation of dividends and to obtain Board’s approval.
In general, special dividends may be more volatile than annual dividends as market value fluctuations are largely reflected in the adjustment to special dividends. Under some circumstances, the non-guaranteed dividends may be zero.
Annual dividends paid can be left with the Company to accumulate with interest. The interest rate (Dividend Accumulation Rate) credited is based on market conditions and investment performance. This interest rate is not guaranteed and will be determined by the Company from time to time.