The annuity designer has combined independent academic research, a timer-based S&P 500 strategy and an actively managed mutual fund to broaden the investment choices available through indexed annuities.
Annexus is looking to broaden the investment strategies available in fixed indexed annuities (FIAs) and registered index-linked annuities (RILAs), with recent product development spanning diversified multi-asset portfolios, a new approach to S&P 500 exposure and the use of actively managed mutual funds as annuity payoffs.
An index only matters to us if it improves the client’s outcome inside a real insurance contract - Tom Haines
The US annuity designer’s approach reflects a focus on how investment strategies perform within an insurance contract, where the cost of hedging and the stability of renewal rates can be as important as the underlying index performance.
“An index only matters to us if it improves the client’s outcome inside a real insurance contract,” said Tom Haines, executive vice president of capital markets and index solutions at Annexus.
The company’s work with Athene, Société Générale (SG), S&P Dow Jones Indices (S&P DJI), Capital Group and Nationwide illustrates three different routes to that objective.
Academic diversification
In the FIA market, Annexus and Athene have developed the BCA 2.0 Academic Portfolio, bringing together independent financial economists and their respective research and indices. The intention is to create a portfolio with a broader range of strategy approaches than one built around a single index or investment philosophy.
The team of Annexus and partners at the SRP Americas Awards 2026 in Scottsdale, Arizona on 23 September 2026 with Tom Haines second from left.
“The objective was to give clients one portfolio that is more consistent and more diversified than any single strategy can be on its own,” said Haines, adding that the academic partners remain independent of one another and of any single entity, each contributing their own research and index to the portfolio.
“This is intended to avoid the concentration of ideas that can arise when several strategies are developed within one investment organisation.
“That independence is the source of the diversification: the portfolio is not one house view expressed several ways, but several distinct views combined in one allocation,” he said.
The portfolio is designed to combine different research, implementation methods and asset allocations. Haines points to its performance in 2026, when strength in commodities and international markets, alongside weakness in bonds, provided sources of exposure beyond the US equity market. The portfolio also participated in the growth of US equities driven by artificial intelligence-related companies.
According to Haines, the rationale for diversification extends beyond asset classes as the approach also needs to account for differences in research assumptions, implementation and investment horizons.
Timer-based approach
The second strand of the FIA strategy is the S&P 500 Distance Stabilizer Index, developed with Société Générale and S&PDJI and launched in September 2025.
The S&P 500 remains a central reference point for annuity products, but the structure of FIAs can make it difficult for policyholders to capture the index’s performance over the life of a contract. Caps and participation rates are generally subject to renewal and may change, while the cost of options used to hedge exposure can rise with volatility and interest rates or lower dividend expectations.
Live performance and renewal-rate stability, not back-tests, will decide which strategies last - Tom Haines
Haines argues that this can leave a gap between the performance of the underlying benchmark and the returns ultimately credited to policyholders.
“The major challenge is implementation,” he said. “A FIA client owns a contract that spans many index segment terms, and for the vast majority of products the cap or participation rate on renewal is not guaranteed.”
Volatility-control and risk-control strategies have been used to address some of the hedging and renewal-rate challenges. However, Haines said approaches applied to a single index can struggle in choppy markets or sharp V-shaped recoveries, potentially reducing participation in a rebound after an initial period of market weakness.
The Distance Stabilizer uses Société Générale’s timer strategy expertise, which dates back to 2007. Rather than forecasting volatility from recent historical returns, the index sets a volatility budget for the S&P 500 and uses an automatic reset process to reallocate during volatile markets.
The methodology uses hundreds of timers with different horizons, some of which reset daily, with the aim of reducing path dependency. Annexus said the approach is intended to support more stable renewal rates while maintaining exposure to the S&P 500.
The index is available across Annexus FIAs. Haines said it is designed to provide a stable S&P 500 allocation within the product structures and claims it has delivered the strongest rolling one-year live performance among S&P 500 FIA strategies since launch.
Active management
The third area of development is the use of active management within RILAs. Annexus, Capital Group and Nationwide have incorporated Capital Group’s The Growth Fund of America into Nationwide’s Defined Protection Annuity (DPA) 2.0.
The strategy combines a defined floor on the downside with upside participation linked to an actively managed mutual fund rather than a passive market-capitalisation benchmark such as the S&P 500 or Nasdaq-100.
Haines describes the Nationwide product as the only US RILA, to Annexus’s knowledge, to offer floor strategies exclusively. He also describes the Growth Fund of America as the first actively managed 1940 Act mutual fund to be offered as a RILA payoff.
“The inclusion of an active fund gives advisers and clients another way to access equity-market performance while retaining the product’s defined downside floor,” Haines said, pointing to Capital Group’s long-standing investment approach and the fund’s live performance record, which dates back to its inception in December 1973.
“The client still has a defined floor on the downside, but the upside participation is tied to an active manager rather than to the rules of a passive benchmark,” he added.
“The use of active management is also part of a wider effort to expand the range of strategies available through insurance products.”
Nationwide and Annexus subsequently launched Nationwide New Heights IUL II, an indexed universal life (IUL) policy that includes strategies linked to the Growth Fund of America and the S&P 500 Distance Stabilizer Index. The companies describe it as the first IUL policy to offer a strategy linked to an actively managed mutual fund.
Implementation and live performance
Despite the different approaches, Haines said Annexus applies the same considerations when selecting or developing strategies for FIAs and RILAs: an academic or economic foundation, a forward-looking design, genuine diversification, renewal-rate stability and the ability to implement the strategy within an insurance product.
The last point is particularly important. A strategy must be hedgeable by the insurer and its bank partners, supported by the carrier’s administrative and trading systems and capable of being clearly disclosed to advisers and clients. RILA products also require the relevant regulatory filings with the SEC, alongside state insurance department reviews.
“An index that looks strong in a back-test but is expensive or unstable to hedge will see its rates cut, and the client will never capture that performance,” said Haines.
The product development process can take up to a year, he added, involving legal, actuarial and administrative technology work as well as adviser education. “The insurer needs systems capable of supporting the contract throughout its life, while the investment methodology must be sufficiently transparent to explain to clients.”
The direction of travel for Haines is towards more innovation in crediting strategies and the use of actively managed fund structures alongside established benchmarks and index-based approaches with live performance and renewal-rate stability becoming increasingly important in assessing new strategies, rather than reliance on back-tested results.
“Live performance and renewal-rate stability, not back-tests, will decide which strategies last,” he said.