Allianz Life Insurance Company of North America is marketing two new index variable annuity (IVA) products, Allianz Index Advantage ADV Variable Annuity and Allianz Index Advantage NF Variable Annuity.
The two new products which feature the Eurostoxx 50 as part of an underlying basket of indexes are modelled after the firm's flagship Allianz Index Advantage Variable Annuity which was launched in 2013, provide multiple ways to benefit from the balance of performance potential and level of protection, according to Matt Gray (pictured), senior vice president of product innovation at Allianz Life.
"Index Advantage NF and Index Advantage ADV have the same key features and benefits as the original product, and are being introduced to expand the market for the unique value proposition of growth potential with a level of downside protection," said Gray, adding that indexed variable annuities are a core component of Allianz's overall product mix. "IVAs represent a major part of our overall variable annuity sales - IVA sales rose by 118% in 2016 over 2015 hitting US$1.45bn."
Earlier this year, Allianz reported that fixed indexed annuities (FIA) sold in North America helped boost the firm's operating profit by 9.4% to €2.9bn (US$3.2bn) in the first quarter compared with the same period last year. The company reported that revenues rose 2.5% to €36.2bn in the period compared with the first quarter 2016.
With the new IVA product line-up Allianz Life is seeking to capitalize on the growing demand for IVAs and brings the 'well-received concept of upside potential' with some protection to a broader market of consumers. Allianz Index Advantage ADV is exclusively designed to fit within a fee-based portfolio, while Allianz Index Advantage NF, with no annual product fee on the index strategies, establishes another option for fee-sensitive clients.
Index Advantage ADV and Index Advantage NF both help clients reach long-term financial goals by offering the combination of variable options and three index options giving a balance between protection and performance potential. Both of these potential solutions also offer features including tax-deferred growth opportunities and a built-in death benefit.
The Index Performance Strategy and the Index Guard Strategy options offer exposure to a basket of equity indexes comprising the S&P 500, Russell 2000, Nasdaq-100 and Eurostoxx 50; while the Index Protection Strategy option is linked to the performance of the S&P 500.
According to Gray, despite the uncertainty caused by the impact of the Department of Labor (DoL) Fiduciary rules which has forced a number providers to review their product mix Allianz offering remains unscathed.
"We're confident our portfolio provides strong consumer value, with each product designed to meet specific retirement and/or legacy objectives," said Gray. "We have no intention of proactively managing our product mix based on DoL uncertainty, and are working with our distribution partners to meet any new requirements they may have."
Allianz will continue to leverage its proprietary, internally-developed hedge platform and its team of "highly qualified derivatives experts which has set Allianz apart in the index annuity market through innovation and minimized hedge costs", said Gray, noting that Allianz Investment Management "operates under very strict counterparty guidelines governed by local and global risk which allows us to only trade with the largest most reputable creditworthy investment banks".
The new IVAs are capital at risk products and 'as with any investment vehicle, are subject to risk, including possible loss of principal'.
"By offering Index Advantage ADV and Index Advantage NF, Allianz Life now has a suite of index variable annuity products that help balance risk and return, giving clients more options for building a solid retirement foundation," said Allianz Life chief distribution officer Tom Burns, in a statement. "These IVAs offer an opportunity to grow a client's retirement nest egg by being able to participate in market gains while still having a level of asset protection."
The launch of the new IVAs follows Allianz first foray into the fee-based fixed index annuity (FIA) segment with its Retirement Foundation ADV Annuity, a fee-based solution featuring principal protection and credited interest from market downturns, as well as a tax deferral and the potential to earn interest based on the performance of market indices. Retirement Foundation ADV offers an index-linked option offering exposure to the annual point-to-point performance with a cap on the S&P 500, Nasdaq 100, and Russell 2000 indices, as well as the Bloomberg Dynamic Balanced Index II, which was created by Allianz Life to use exclusively in its preferred annuities range.
According to SRP data, the top five providers of structured annuities in the US are American Equity (nine products), Allianz, Aviva, Jefferson Pilot Financial, and Midland National with seven apiece, and ING (six).
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