The company sold some €1.638 bn (£1.4bn) worth of single-premium bonds last year, up from €1.06bn in 2011. At the end of April, sales for the year that began in January were approaching €700m.
The main reason, according to Stephen Whyburd, La Mondiale’s London-based representative, was because investors “are crying out for higher cash returns”, which he says they are able to get, via the bond, by accessing the main fund of French parent AGR2 La Mondiale.
The so-called AG2R La Mondiale Guaranteed Fund has assets under management of more than €40bn, offers a guaranteed rate of return, and is unavailable through the offshore bonds of La Mondiale’s competitors.
Another reason for the La Mondiale bond’s appeal, Whyburd added, is investor concern over the soundness of Europe’s commercial banks, particularly if the savings they are looking to find a home for exceed the current, EU-mandated depositor protection scheme maximum in Europe of €100,000. (The average La Mondiale single premium bond investment last year was €2m.)
Curiously, for mainly historic and geographic reasons, most of La Mondiale’s sales till now have not been into the UK market, although Whyburd says this could be about to change.
“At the moment, the [La Mondiale offshore bond] business is mainly from the French-speaking European markets”, though a “sizeable percentage of the buyers” are UK residents who are in the process of moving to France or elsewhere on the continent permanently, and have had the bond recommended to them by their adviser, Whyburd said.
“They tend to be retiring to France or Spain, and are looking for a secure source of income, but with the option to withdraw their money at any time, should they need to.
“Last year the fund returned 3.3% gross [in sterling terms] to investors, which is around double what they would have received from most other forms of instant access secure savings account.” (Investors may also access the fund in euros and dollars.)
The La Mondiale offshore bond’s attractiveness to UK advisers has been helped by the introduction of the Retail Distribution Review, which bans commissions, Whyburd added, since La Mondiale has never offered advisers commission for selling it.
