# Safety of Irish Life Funds?



## Fourteen (30 Mar 2011)

I have just invested a large amount with Irish Life in an AVC, how safe is this now in the light of current events?


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## farmerette (30 Mar 2011)

Fourteen said:


> I have just invested a large amount with Irish Life in an AVC, how safe is this now in the light of current events?


 

irish life sell an awfull lot of funds which are dogs , i wouldnt invest with them regardless of how healthy the bank was


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## Duke of Marmalade (30 Mar 2011)

Fourteen said:


> I have just invested a large amount with Irish Life in an AVC, how safe is this now in the light of current events?


Current events make no difference at all. Irish Life will *NEVER* go bust. Part of the reason is that any losses on your AVC will be passed straight through to you. Your safety depends on your investments not on Irish Life.


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## Fourteen (31 Mar 2011)

thanks for replying


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## Complainer (10 Apr 2011)

Duke of Marmalade said:


> Current events make no difference at all. Irish Life will *NEVER* go bust. Part of the reason is that any losses on your AVC will be passed straight through to you. Your safety depends on your investments not on Irish Life.



Are you sure that this is the case for all their funds, Duke? What about the [broken link removed] where the value of the investment is guaranteed not to drop?


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## Duke of Marmalade (11 Apr 2011)

Complainer said:


> Are you sure that this is the case for all their funds, Duke? What about the [broken link removed] where the value of the investment is guaranteed not to drop?


I was overgeneralising. Life companies do take some risks, for example in providing life assurance protection. But it is extremely controlled, not in the same league as the mismatch between a bank's deposit liabilities and its loan assets. 

There is nothing in the present crisis to prevent policyholders feeling as safe (and righly so) as they always have been with life assurance policies. And most important of all is to note that the problems in Permanent TSB have no implications for the security of Irish Life policyholders.


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## Complainer (11 Apr 2011)

Thanks for the clarification, Duke. I'd be interested to hear your views on QL on this thread.


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## Duke of Marmalade (11 Apr 2011)

Complainer said:


> Thanks for the clarification, Duke. I'd be interested to hear your views on QL on this thread.


_Complainer_, the link in that thread is to an article last November. I have no familiarity with Quinn Life. It appears to be losing money, basically because it is not writing enough business to cover its expenses. As far as policyholder safety is concerned, I would expect there to be no issue as the regulatory requirements of a life company are much stronger than how it reports profits.


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## Rory Gillen (5 May 2011)

You may be referring to counterparty risk - in which case there is a risk with all life funds of the Irish Insurance companies. In general, but not in all cases, life funds are the assets of the company and the company provides the unit holder with a promise to deliver the returns that the assets in the fund delivers. But if the life company goes bust, then the fund's assets are not necessarily secure because they are not separate to the company. Perhaps in reality what would happen is that a life company that fails would be bailed out by the government similar to the banks. 

Investment companies and ETFs do not carry this type of counterparty risk and, in my view, are superior investment fund vehicles in that regard.


Rory Gillen


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## Complainer (5 May 2011)

Rory Gillen said:


> Investment companies and ETFs do not carry this type of counterparty risk and, in my view, are superior investment fund vehicles in that regard.


What kind of investment companies do you mean? Could you give some examples?


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## Rory Gillen (6 May 2011)

An investment company is literally a company vehicle that owns a portfolio of stocks. Where as CRH owns building plants, quarries and aggregates, an investment company simply owns stocks or other financial assets. As a company, it too must have a board of directors, must comply with the companies act, have an annual audit, publish interim & annual reports etc. As a separate company listed on the stock exchange, there is no counterparty risk. The company (or fund) exists in its own right and the owners of shares in the investment companies have part ownership in the underlying portfolio.

There are over 350 investment companies listed on the London Stock Exchange covering every asset class. Best fund vehicle, in my view, once you know your way around - but ETFs have considerable merit also. I provide analysis of both types (but not Irish unit-linked funds) on my website www.investrcentre.com, which is subscription based but you can get our Free Weekly Email to get a measure of the service.

Rory Gillen


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## Complainer (6 May 2011)

Thanks for the clarification. Are there any Irish investment companies? Are investors taking on currency risk and costs by investing in UK companies?


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## Rory Gillen (13 May 2011)

There are no Irish investment companies. Investment companies listed on the London Stock Exchange cover all asset classes and geographic regions - so the currency exposure depends on what fund you buy. If you buy a UK listed investment company that owns US shares, then you largely have dollar exposure even if the fund is quoted in sterling. 

Rory Gillen


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