Athene Annuity and Life Company, a subsidiary of Athene Holdings, is marketing the Athene Agility, a new addition to its suite of fixed indexed annuity (FIA) products targeted at retirees. The new FIA offers a fixed crediting strategy as well as market-linked indexed options with protection from market downturns.
Agility comes in the form of a seven-year and a 10-year product with one and two-year market-linked versions offering exposure to a traditional market cap index -the S&P 500, as well as three risk control strategies -the Janus SG Market Consensus Index, BNP Paribas Multi Asset Diversified 5 Index and Morningstar Dividend Yield Focus Target Volatility 5 Index.
A spokesperson at Societe Generale said that the French bank is "focused on bringing innovation to the annuity market" through leveraging its "superior engineering and design capabilities".
"We are focused on annuity product development," said the SG official. "Volatility control products came to favour when rates were at all-time lows which put significant downward pressure on option budgets for fixed indexed annuities. Insurance companies wanted to offer attractive products and stable renewal rates to their customers."
Investors choosing the Janus SG Market Consensus Index-linked version will get 85% participation on the two-year performance point to point of the index or 50% on the one-year performance of the index.
The Janus SG Market Consensus Index seeks to capture the "wisdom of the crowd" to potentially outperform market benchmarks. The index strategy is systematic and rules-based, and features a performance engine designed by Janus Henderson based on analyst price targets and past dividends to select the stocks with the best growth potential among the largest US listed companies. The index also includes a volatility control mechanism with a 20% target to improve performance and stabilize the index, and a performance control gauge to improve the participation rate. However, the index has a 4% monthly cap. The index is an excess return strategy with Solactive as the calculating agent.
The product also offers the possibility to get exposure to the BNP Paribas Multi Asset Diversified 5 Index, an index launched in 2016 by the European bank, according to Alice Tellenne, vice president, Insurance structured products sales at BNP Paribas.
“This is a new product that leverages on the large success of the MAD5 index over the past 2 years,” said Tellenne, noting that the index allocates between equities, bonds and commodities as a way to avoid ‘putting all the eggs in one basket’. “We believe this is an index that can add significant value because it is built to extract performance in ‘all weathers’.”
The index also rebalances daily to be able to adapt quickly to the market, and the multi-asset story provides a useful complementary choice within the Agility product, as the other indices are equity-centric, said Tellenne. "It is volatility-controlled, as most of the FIA custom indices now, simply because they allow the carriers to offer uncapped participation rates and that makes these indices attractive," she said. "There are now more than 40 carriers in the US market using risk control indices in their annuities.“
The Department of Labor (DoL) fiduciary rule has been a big topic in the insurance market recently following the decision by the US Fifth Circuit Court of Appeals to vacate the ruling.
“Risk control indices continue to be in demand, either from banks or asset managers now, but their story has to be easily understood by advisors and end consumers," said Tellenne. “For us, it is very important and also why we offer so much marketing supports for our indices, including a public website."
The finalisation of the Department of Labour ruling will dictate the product pipelines for the remainder of the year," said the SG spokesperson.
Limra Secure Retirement Institute has reported that between 2015 and 2016, the number of annuity products linked to risk or volatility control indices has increased significantly and now represents 25% of fixed index annuities. Limra also reported that total fixed annuity sales increased in the fourth quarter of 2017, up two percent to $26.1bn. For the year, fixed annuity sales fell eight percent, to $107.9bn.
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