Cove Insight: RBC Insurance Announces 2024 SRIA Guaranteed Interest Rate
RBC has announced that the Smoothed Return Investment Account (SRIA) return for 2024 will increase to 3.25% from 3.00%.
The reference portfolio posted strong results at the end of 2022 to end the calendar year at -5.21% (the portfolio was at -11.26% as of August 31, 2022. In addition, positive returns to August 31, 2023, have led to an increase in the rate for 2024.
Note: Cove has been engaged in conversations with RBC about the appropriateness of the declared SRIA rate for 2023 and 2024 and the impact the excessive management fees have had on the SRRP returns. In a recent communication from Rino D’Onofrio, President and COO of RBC Insurance, he has indicated that:
We want you to know that we are carefully reviewing your concerns. This review will take some time. We trust you will understand that we will not be able to complete the review before our annual rate announcement, which would normally occur on November 1st for the following calendar year.
Accordingly, the rates for 2024 have been set using the same methodology as in prior years. However, we want you to know that if our review leads us to conclude that the rates should be higher, we will adjust the 2024 rates for impacted clients.
For more information on Cove’s conversation with RBC regarding this issue click here.
RBC Insurance SRIA Investment Account
The SRIA is an investment account option in certain RBCI Security Fund universal life insurance policies. Funds invested in the SRIA are managed on a discretionary basis by RBCI in an underlying portfolio (the “Reference Portfolio”). The investment objective is low volatility with a long-term focus targeting superior returns while minimizing the risk of capital loss. Actual returns in the Reference Portfolio are smoothed into the policy interest rate through a guaranteed calendar year interest rate announced prior to each calendar year.
The historic performance of the Smoothed Return Investment Portfolio is as follows:
As of August 31, 2023, the Reference Portfolio’s market value was $1.562 billion allocated as follows:
Reference Portfolio Asset Allocation
If you have questions, thoughts, or want to talk more about this topic with one of our advisors, you can book a meeting with us.