Asset management strategy for the participating account
Participating account target range
Role of the dividend scale interest rate
The dividend scale interest rate is used to calculate the investment return portion of the dividends. We apply a smoothing technique to mitigate the impact of fluctuating returns of investments in the participating account on dividends paid. This method distributes investment gains and losses over several years to ensure the dividend scale interest rate remains stable. The dividend scale interest rate reflects recent smoothed returns as well as our forecasted average return of investments in the participating account as a way to limit volatility.
The dividend scale interest rate for the sub-account open to new sales is currently 6.3% and is applicable until June 30, 2027. The dividend scale interest rate is the factor that has the most impact on dividend amount, but other factors can also have an influence. Mortality, expenses, taxes paid and policy surrenders are factors considered when calculating dividends.
Solid financial performance
In addition to the smoothing technique used to mitigate annual fluctuations in credited dividends, the long-term stability of the dividend scale interest rate also depends on a robust portfolio mix12 that uses asset class diversification to reduce volatility.
* Private debt is both a form of fixed income and a subcategory of alternative investments. The type of private debt included in the portfolio gives it an expected return/risk profile closer to the other lines of the alternative investments block of the portfolio than to those in the fixed income block.
** Range adopted during the recent review of the strategic asset allocation.
12 Refer to the Investment Strategy for Participating Accounts brochure.