Global - Overview...February 2018; • Balanced Capital Strength 6 Index –developed in May 2018; • Franklin US Index - launched in November 2017; • PIMCO Global Optima Index

Global - Overview

© Copyright Structured Retail Products a division of Euromoney Global Limited 2018

Overview of the Global Market



Structured Product Market is growing +13%

Source: www.StructuredRetailProducts.com

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2.5

End of 2013 End of 2014 End of 2015 End of 2016 End of 2017 End of August2018*

Global Outstanding Volume – in USDbn


http://www.structuredretailproducts.com/


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100,000

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2014 2015 2016 2017 2018e

Sales volume by Region - in USDm

Europe MEA North America Latin America Asia Pacific International

North America: 25%Latin America: 22%Europe: 9%International: 8%Asia Pacific: 1%MEA: -1%



All these factors aligned perfectly…

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1 mo 3 mo 6 mo 1 yr 2 yr 3 yr 5 yr 7 yr 10 yr 20 yr 30 yr

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US Treasury Yield Curve Rates

Sep-18 Sep-17

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2014 2015 2016 2017 2018ytd

Global Average Annual Performance

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2018-Sep 2017 2016 2015 2014

S&P500 dividends

Source: www.StructuredRetailProducts.com and Yahoo Finance

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CBOE Volatility Index (VIX)



From whom can we learn?





In South Korea, yield is everything…


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2015 2016 2017 2018ytd

Outstanding Volume (USDm)

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2015 2016 2017 2018e

Sales Volume (USDm)

Autocallables, 52%

Credit Default, 7%

Others, 41%

Market share by Payoffs, 2018ytd


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Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 Jul-18 Aug-18

Correlation between average autocall coupon and sales is 0.13

Monthly Sales (KRWbn) - LHS Average Autocallable Coupon - RHS





Taiwan: If you are looking for long-term high-interest-rate markets


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2015 2016 2017 2018ytd


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2015 2016 2017 2018e

Sales Volume (USDm)

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Outstanding Volume in ZAR Products (USDm)

Outstanding Volume (USDm) ZARTWD






Sales Volume should finish 20% up mainly due to the performances


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2015 2016 2017 2018ytd


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Sales Volume (USDm)

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2014 2015 2016 2017 2018

Strategy and Prop Indices Market Share

Strategy Proprietary & Custom Indexes






US investors looking for yield with Reverse Convertibles on US stocks on Notes


340,000

350,000

360,000

370,000

380,000

390,000

400,000

2015 2016 2017 2018ytd


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2015 2016 2017 2018e

Sales Volume (USDm)

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25.00%

30.00%

35.00%

2011 2012 3013 2014 2015 2016 2017 2018ytd

Market Share of Autocallables in the USA

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20%

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60%

80%

2011 2012 3013 2014 2015 2016 2017 2018ytd

US Investors use structured products to sell volatility

Autocallable Reverse Convertibles



US Market-linked CD’s


Market-linked CD’s are the closer market to the Indexed Insurance products


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35,000

Outstanding Volume in MLCD's (USDm)

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60%

Market share of Proprietary Indices in MLCDs (%)

Enhanced Tracker

44%

Knock Out21%

Uncapped Call14%

Digital7%

Capped Call4%

Fixed Upside4%

Enhanced Tracker,

Knock Out4%

Market share by payoffs

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100% 100-120%120-140%140-160%160-180%180-200% >200%

Histogram of participation on MLCD's in 2018



Market-linked CD’s are the closer market to the Indexed Insurance products


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Participation rate vs. term



US Indexed Insurance Market



Recent Additions – 2017-2018:

• BlackRock iBLD Ascenda Index – launched in September 2018;

• GS Motif Aging of America Dynamic Balance Index – launched inAugust 2018;

• BlackRock iBLD Claria Index – designed specifically for annuities inFebruary 2018;

• Balanced Capital Strength 6 Index – developed in May 2018;

• Franklin US Index - launched in November 2017;

• PIMCO Global Optima Index - launched in October 2017;

• Janus SG Market Consensus Index - launched in May 2017;

• BNP Paribas Momentum Multi-Asset 5 Index - launched in January2017;




Number of underlyings per sector as % of all unique underlyings being offered in indexedannuities

Total interest crediting strategies for all underlyings within each sector as % of all strategies












Global Trends


• Country & Regional Indices +20%

• Proprietary Indices +153%

• Strategy Indices +3%


2018 vs. 2017

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2013 2014 2015 2016 2017 2018ytd

Global Market Share of Equity Indices

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1.50%

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4.50%

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2013 2014 2015 2016 2017 2018

Strategy & Proprietary Indices

Equity Indices are replacing FX rates and other underlyings



Key Trends on underlyings

Growing:

• Eurostoxx 50, Hang Seng China Enterprises Index, S&P 500 +736%

• Eurostoxx 50, Hang Seng China Enterprises Index, Nikkei 225 +420%

• Eurostoxx 50, Hang Seng China Enterprises Index, Kospi 200 +93%


2018 vs. 2017

2015 2016 2017 2018ytd

Others 55.98% 66.46% 59.51% 59.98%

Certificate of Deposit Rate 91d 0.54% 1.17% 0.88% 1.15%

Gold 2.09% 3.37% 1.10% 1.24%

USD/MXN 0.01% 0.02% 0.97% 1.38%

Eurostoxx 50, Kospi 200, S&P 500 0.54% 1.34% 1.61% 1.88%

Eurostoxx 50, Hang Seng China Enterprises Index, Kospi 200 0.80% 0.27% 0.98% 1.88%

Unknown 0.92% 2.20% 2.60% 2.26%

Eurostoxx 50, Hang Seng China Enterprises Index, Nikkei 225 0.00% 0.08% 0.44% 2.30%

Kospi 200 1.87% 2.23% 2.49% 2.38%

FX Rate (Unspecified) 24.83% 10.30% 2.01% 2.53%

S&P 500 2.15% 3.93% 2.61% 3.02%

USD 3M Libor 0.01% 0.12% 16.36% 4.13%

Share Basket (Unspecified) 2.45% 2.54% 1.81% 4.30%

Eurostoxx 50, Hang Seng China Enterprises Index, S&P 500 2.76% 0.22% 0.57% 4.76%

Eurostoxx 50 5.04% 5.75% 6.06% 6.82%

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Global TOP 10 Underlyings

Falling:

• USD 3M Libor -75%

• Kospi 200 -4%




Survey Results

Source: SRP’s 2018 Indexed Insurance survey


Key trends and challenges

Source: SRP’s 2018 Indexed Insurance survey


Regulatory changes

Consumer education – ensuring Americans are

educated about the need for lifetime income and

really understand how the products work

Innovation

Hybrid products

Smart beta indices

Credit cycle and interest rates

Higher market volatility

Fighting stock market performance

Income benefits with lower cost

Shorter surrender periods

Set fees for life & flexibility to cancel

Trying to determine by what and when the

industry will be disrupted

What should we take from this conference?

1) TrendsNavigating a Mature Bull Market

Adviser Panel: Best Practices for Using Structured Products and Indexed Insurance

Global Market Overview: Insurance & Structured Products Recap

2) Innovation & Product IdeasProduct Development and Innovation in Annuities

Index Innovation in Capital Markets

In Conversation with leading Carriers

3) Distribution & EducationInsurance Solutions Distribution – Best Practices from each Channel

Is the Future of Advice Technologically Driven?

Growing the Pot: How can Index Annuities become Mainstream Products?


Thank you for your attention!

Copyright © 2018 Structured Retail Products Limited. All Rights Reserved.

Reproduction and distribution of this report in any form without prior written permission is strictly prohibited.

The information contained herein has been obtained from sources believed to be reliable. SRP disclaims all warranties as to the accuracy, completeness or adequacy of such information. Use of this report is at your

sole risk and SRP accept no responsibility for any problems or incidents arising from its use.

Tiago FernandesManaging Director

[email protected]

www.StructuredRetailProducts.com

Anita KirilovaResearch Analyst

[email protected]


Documents

Global - Overview...February 2018; • Balanced Capital Strength 6 Index –developed in May 2018; • Franklin US Index - launched in November 2017; • PIMCO Global Optima Index