Shadow Shares are deferred cash commissions which are linked to the uplift in the value of Partner’s Group Holdings share price, rather than actual shares in the company.
The size of the deferred commission pay-out is linked to the quality of each qualifying tranche of business, with significant pay-out enhancements for higher persistency outcomes.
“We believe this scheme will drive positive outcomes for the industry by encouraging advisers, who entrust their clients to Partners Life because of our outstanding value proposition, to work even harder to retain and review those clients well into the future,” managing director Naomi Ballantyne says.
“We believe this will be attractive to both new and existing advisers by further rewarding them for high quality, persistent business. This is a solution where everyone benefits as the adviser will see both the value of their own asset base increase and participate in the share performance experienced by Partners’ shareholders, while our business value is enhanced through the high quality of business written.”
Under the scheme one shadow share is allocated for every $20 of qualifying API issued and will require a minimum book persistency of 85%, but significantly enhanced bonuses are being paid for increased persistency under the new scheme.
Another difference from the original scheme is that only premiums for non-medical risk benefits will be included, given the proportionately higher profit margins achieved for risk benefits.
The pay-out price will be linked to the listed share price of Partners and will occur sometime between three to five years following the allocation date, depending on when an IPO (or equivalent event) occurs.
Given the scheme is being launched in July rather than at the start of this financial year, Partners is offering double allocations for business written between July 17 and October 31 to maximize the opportunity for its advisers.
Partners says the first scheme has been very successful in attracting and retaining high quality business, with its lapse rate being below that of the market average as reported by the FSC, despite being in the peak exposure period for lapses.
Pay-outs have, so far, been made in respect of the first two years’ tranches.
With Blackstone’s recent investment in Partners Life, and the prospect of an IPO in the next three to five years, the company feels now is an ideal time to launch a further Shadow Share Scheme.
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