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3/9/2010
Tuesday morning
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| One of the most vital areas of the Swiss financial markets
is the insurance industry. While Swiss banks are associated with
safety and conservative management, the insurance industry has
not had a single company failure in more than 130 years. This is
a record that surpasses even the steadiness of Swiss banks.
About twenty insurance companies compete in Switzerland.
All are financially sound and managed with an eye for safety and
high return. Usually, the two conditions -- safety and high
yield regarding investments -- are mutually exclusive. High
yield implies risk. Unlike the insurance industries in other
countries, however, insurance companies in Switzerland enjoy
unique tax advantages. Coupled with efficient and intelligent
management, Swiss insurance companies are able to offer a variety
of steady and productive investment opportunities.
Of all the investment options offered by Swiss insurance
companies, annuities provide excellent benefits and can be used
for as. |
| For variable annuities with a large stable of investment advisors, one
advantage is the opportunity for you to switch among different investment
sub accounts - often managed by entirely different money managers -
without any current tax consequence. This is an advantage if your
investment is not an IRA or other tax-qualified account AND you like having
access to, say, a dozen different mutual fund management companies, without
having to incur charges or tax on any switches. |
| Swiss annuities offer many advantages over annuities offered
in other countries. Annuities have, in fact, been offered since
the early 1970s, however, the financial markets have seen truly
impressive growth in the area of annuities during the last few
years. In the United States alone, the sales of annuities run
close to $50 billion every year.
Despite their growing popularity, many people remain
confused about annuities. Some think of them as being much the
same as a mutual fund. While annuities can offer similar rates
of returns, they have a major advantage -- annuities defer taxes
until retirement. Mutual funds do not. Further, annuities can
be set up in a way that once the investor begins to draw on the
funds, he or she will receive regular payments for life.
The costs for annuities are also different than the costs
for mutual funds. Because annuities are offered by insurance
companies, for most annuities, the investor does not have to pay
any commissions or front. |
| You write:
The illiquidity of variable annuities in general is a result of the fact that
whenever you are in need of money and would like to withdraw money from your
annuity account, you end up paying a pretty high fee to the insurance company. |
| JML: Youve hit the four primary benefits. Id add that Swiss
insurers are more fiscally stable than their U.S. counterparts,
in part because they are restricted by the Swiss Insurance
Commission to hold only the most conservative investments. As
you know,...no Swiss insurer has ever failed to meet its
obligations and not one has ever failed.
Ive personally helped design a new generation of annuities
that offer the insured a number of other unique advantages. For
one, unlike most annuities, ours are completely liquid. For
another, there is no up-front or back-end commission load -- the
sales fee of about 5% is deducted from dividends earned over the
first year. And, of course, the earnings accumulate free of any
Swiss or U.S. tax. In fact, the investor doesnt need to report
the annuity on his tax return. Finally, weve designed them so
that the funds may be switched between Swiss francs, U.S.
dollars, pound sterling and ECUs, so the account holder has the
flexibility to choo. |
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