Canada's Cannex Financial Exchanges has rolled out a new set of annuity comparison tools - Cannex VA Analysis and Cannex FIA Analysis. The new tools have been developed on a new patent pending comparative illustration platform aimed at enabling financial institutions and advisors to assess and compare annuities with various product designs and guarantees on a quantitative basis.

The new tools calculate both the guaranteed and projected performance of annuity contracts and riders across different product providers using a common illustrative framework combining financial and actuarial modeling through a simulation process (i.e., Monte Carlo analysis).

The tools have been designed to support advisors with their annuity recommendations and are compliant with US Finra suitability requirements and the DoL fiduciary standard. Sales & marketing materials specific to each annuity product are also available through the new platform.

'Providing a consistent approach to calculating the economic value of an annuity transaction for individuals is key to helping advisors recommend products that meet their clients' specific needs,' said Gary Baker, president, Cannex USA.

The Cannex VA and FIA Analysis tools incorporate the use of both traditional illustration methods as well as a present value analysis that takes into account changes in cash flow in a product over the course of a lifetime in retirement. This analysis can be used to sort and rank annuities by different components of a contract, depending upon the needs or objectives of the client. The platform can also integrate other planning and guidance tools used in the profiling process.

'Since annuities are developed and structured to meet specific client needs, it was important that these tools highlight the potential performance of their various benefits, as well as fees, which are crucial to clients' decision-making process,' said Tamiko Toland, head of annuity research at Cannex.  'The applications can also be leveraged by insurance companies as part of the product development process to test the competitiveness of new product concepts.'    

The VA and FIA Analysis tools currently list annuities from more than 25 leading carriers in the market. Financial institutions have already started implementing these applications, which are available to both retail and institutional distribution channels.

Fixed indexed annuity (FIA) sales were US$13.7bn in the third quarter of 2017, a 9% decline compared with the third quarter 2016, according to Limra Secure Retirement Institute's Q3 2017 report. The Limra report also found that in the first nine months of 2017, FIA sales were US$42.9bn, down 9% compared to 2016. The institute is forecasting FIA sales to decline close to 10% in 2017, compared with 2016 sales results.

The newest addition to the FIA segment came from BNP Paribas at the beginning of October when the French bank licensed the newly developed BNP Paribas Momentum Multi Asset 5 Index, to underlie the FlexMark Select Series single premium deferred index annuities, Legacy Marketing Group's custom-designed proprietary fixed indexed annuity (FIA) series.

Other proprietary indices in the FIA market includes the Bloomberg Barclays Aggregate Bond Index, Barclays Global Trailblazer Index the Barclays Aggregate Bond Index, as well as the ML All Convertibles Investment Grade, Citi Dynamic Asset Selector 5 Excess Return Index, and several JP Morgan indices including the JP Morgan Efficiente, JP Morgan Mozaic Fixed Income Index and JP Morgan Meridian Index.

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