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MEDIA RELEASE NSW Investment Club This statement has been issued to clarify media reports regarding Dr Peter Keller, Biofeedback Research Australia Pty Ltd and Coneview Pty Ltd and legal action initiated against AXA Asia Pacific in respect of insurance bond policies. The 217 person "NSW Investment Club", managed by Dr Peter Keller, is a group of policyholders who have each purchased a Prosperity Bond policy in the period since August 1999. The Club, comprising sophisticated private investors, had been taking advantage of a feature in the product’s structure and pricing mechanism, which had the effect of enhancing their return in a manner not contemplated in the design of the product. Under the special terms and conditions of the policy there was a waiver of switching costs that enabled switching between portfolios within the product at no cost. In our statement of defence and cross-claim AXA has alleged that Dr Keller and his companies failed to disclose particular information and that there was a breach of their duty of disclosure under the Insurance Contracts Act. AXA acted once it was confirmed the NSW Investment Club was using the arbitrage opportunity to its benefit, and in a way which was at the expense of other investors who were using the product as it had been originally designed. AXA wrote on Wednesday to all members of the NSW Investment Club offering a settlement which would essentially see each NSW Investment Club member earn a 12 per cent per annum return for the period up until 16 October 2000 and 6 per cent per annum return on the offer from then until 2 February 2001. The cost of this adjustment will be born by AXA Asia Pacific, not the other policyholders. Other policyholders in the product will not been impacted by the actions of the NSW Investment Club. In the year ending 30 September 2000, AXA Asia Pacific took an appropriate provision in its accounts to cover the costs of this action. The amount is immaterial in respect of the Group’s earnings and shareholders’ funds. AXA Asia Pacific will vigorously defend the action brought against it by Dr Peter Keller. -o0o- |