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Market Value Reduction (MVR)

Market Value Reductions (MVRs)

In times of extreme volatility, such as late 2008 and early 2009, we have to protect our policy holders and the value of the fund. In such circumstances, if stated in your policy terms, we would do this by applying a Market Value Reduction (MVR) to the value of your investment.

The purpose of this is to ensure the amount we pay out to you (for example through withdrawals or switches) is not too high compared to the underlying value of the investments.

The lower cash-in value will be a better reflection of what the investments have actually earned over the investment period. If we took no action, the cost would fall to our other policyholders who remain invested in the fund, which is unfair to them.

MVRs are an extreme measure for volatile situations, and the last time we had one in place was 2009. The chart below shows the volatility in the UK stock market over the last 10 years as a comparison to the extreme situation in which the MVR was applied by Wesleyan on the With Profits Fund.

We have not seen it necessary to apply the MVR since, despite other significant falls, such as in 2012 or nearly 2016 when the stock market dropped 21% in just 9 months.

This is due to the financial strength we believe our With Profits Fund has.

FTSE 100 2007-2017

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