New FIA Index Designed for Rising Rate Environment – InsuranceNewsNet

InsuranceNewsNet — Your Industry. One Source.™

Sign in
  • Subscribe
  • About
  • Advertise
  • Contact
Home Now reading INN Weekly Newsletter Featured Story
Topics
    • Life Insurance
    • Annuity News
    • Health/Employee Benefits
    • Property and Casualty
    • Advisor News
    • Washington Wire
    • Regulation News
    • Sponsored Content
    • Webinars
    • Monthly Focus
  • INN Exclusives
  • NewsWires
  • Magazine
  • Free Newsletters
Sign in or register to be an INNsider.
  • INN Exclusives
  • NewsWires
  • Magazine
  • Free Newsletters
  • Insider
  • About
  • Advertise
  • Editorial Staff
  • Contact
  • Newsletters

Get Social

  • Facebook
  • Twitter
  • LinkedIn
INN Daily Newsletter Featured Story
INN Weekly Newsletter Featured Story RSS Get our newsletter
Order Prints
March 14, 2016 INN Weekly Newsletter Featured Story No comments
Share
Share
Tweet
Email

New FIA Index Designed for Rising Rate Environment

By Cyril Tuohy InsuranceNewsNet

The introduction of a new balanced index option for investors in the Allianz 360 and Allianz 222 fixed indexed annuity (FIA) product line will offer financial advisors options better suited to a rising interest rate environment.

The new index option, the PIMCO Tactical Balanced Index, is open to new Allianz 222 and 360 FIA contract holders, Allianz Life Insurance of North America announced recently.

Beginning May 3, the index will also be made available to new 365i and Signature 7 FIA contracts, said Matt Gray, vice president of product innovation for Allianz Life, which captured 27 percent of all FIA sales in 2014.

With $13 billion in FIA sales in 2014, Allianz Life is the No. 1 seller by far of FIAs in the U.S., according to Wink’s Sales and Market Report. In the hot-selling FIA segment, competitors are bound to pay close attention to the market leader.

“This is another tool in the bag to help producers depending on where producers think rates are going,” Gray said in an interview with InsuranceNewsNet last week.

PIMCO (Pacific Investment Management Co.) is owned by Allianz, the global German insurer, and describes the index as a tool to provide “a stable risk profile through constantly evolving equity and interest rate market environments.”

The Federal Reserve raised a benchmark interest rate by a quarter percent in December for the first time in nearly a decade and Federal Reserve Chair Jane Yellen has signaled the central bank will act to raise rates further this year as the unemployment rate falls and the economy improves.

With a slowly improving economy, many market watchers say the era of ultralow rates may have finally come to an end.

FIAs sold in record numbers last year and the category is far outpacing annuity industry sales averages, according to industry data.

FIA sales hit $54.5 billion last year, an increase of 13 percent compared to 2014, according to LIMRA Secure Retirement Institute data. The increase outpaced all fixed annuity sales, which rose 7 percent in 2015 compared to 2014, LIMRA data also show.

Separate data published by Wink’s report show 2014 indexed annuity sales reached $46.8 billion, an increase of 21.3 percent from 2013.

Innovation: Daily Adjustment in Duration Mechanics

Advisors find FIAs offer a good match for clients who like some expose to market gains in exchange for limiting exposure to market losses. Balanced indexes are used as a way to control the volatility of investments within the FIA.

Allianz 222 and 360 already offer investment allocations using a balanced index from Barclays. The PIMCO index offers a daily adjustment in the duration of the bond portion of the index, changing the duration mechanics, Gray said.

In rising rate environments, shorter bond durations give advisors more flexibility to maneuver. That represents a change from years of bond investment mechanics geared to helping advisors in a falling interest rate environment.

“So, if a rising rate situation is detrimental to a client, they (advisors) don't have a tool inside of anybody's FIA to address that so we thought it was important to offer a complementary strategy for them to do that,” Gray said.

The PIMCO index represents a diversification strategy to offer producers complementary choices” to help advisors “work with their clients and set them up for how they want to be positioned,” he added.

PIMCO’s Tactical Balanced Index will be offered only through Allianz FIAs until Dec. 31, 2020, when the exclusivity deal runs out.

After that, other insurers selling FIAs will be able to use the index under terms agreed to with PIMCO.

InsuranceNewsNet Senior Writer Cyril Tuohy has covered the financial services industry for more than 15 years. Cyril may be reached at [email protected].

© Entire contents copyright 2016 by InsuranceNewsNet.com Inc. All rights reserved. No part of this article may be reprinted without the expressed written consent from InsuranceNewsNet.com.

Older

Talk About Taxes Without Sounding Like A Math Teacher

Newer

A Proven Process for Finding Quality Prospects

Advisor News

  • Social Security: celebrate independence with Social Security
  • XML Financial Group merges with Samson Wealth Management Group
  • Teach your clients effective strategies for today’s retirement
  • Consumers are pulling back on spending. They're also tapping savings and taking on debt.
  • Banks announce dividend plansTruist, Wells Fargo, Bank of America announce dividend hike plans
More Advisor News

Annuity News

  • Investors Heritage Life launches Heritage Growth Advantage FIA
  • Bobby Bonilla, king of the annuity owners
  • Winning $300 million Powerball ticket purchased in Middlebury
  • Sammons names Kevin Mechtley to newly created product innovation role
  • Athene completes pension group annuity deal with Lockheed Martin
Sponsor
More Annuity News

Health/Employee Benefits News

  • Companies could face hurdles covering abortion travel costs
  • Health coverage negotiations continue between UMMC, Blue Cross Blue Shield
  • Why the main antiviral medicine for COVID may be underused
  • Aetna drops prior authorization for most cataract surgeries
  • Despite recession fears, employers look to enhance benefits in 2023
More Health/Employee Benefits News

Life Insurance

  • Wisconsin seeks policyholders of insolvent Time Insurance Co. products
  • 4 things to know about the return of premium life insurance
  • Murdaugh, Curtis Smith hit with new SC grand jury indictments
  • Foresters Financial boosts UL crediting rate to 4.75%
  • Protective Life releases 2021 sustainability report
More Life Insurance

- Presented By -

How to Write For InsuranceNewsNet

Find out how you can submit content for publishing on our website.
View Guidelines

FEATURED OFFERS

It’s time for John Hancock Insurance • See how our cutting-edge solutions can help you grow your life insurance business. Get to know us.
Grow your life insurance business with John Hancock • It’s time to see how our cutting-edge solutions can help you and your clients get to know us.

Press ReleasesAll press releases

  • iPipeline® Provides Advisors Excel with Unified Path Toward Accessing Core Data Analytics in Financial Services
  • iPipeline® Adds Speed of Underwriting to Quote Engine with Ethos to Deliver Insurance to Agents in Minutes
  • National Life Will Host Annual Investor Call
  • RFP #T01622
  • OneAmerica Commits $1 Million Toward Financial Literacy
Add your Press Release >

Topics

  • Life Insurance
  • Annuity News
  • Health/Employee Benefits
  • Property and Casualty
  • Advisor News
  • Washington Wire
  • Regulation News
  • Sponsored Content
  • Webinars
  • Monthly Focus

Top Sections

  • Life Insurance
  • Annuity News
  • Health/Employee Benefits News
  • Property and Casualty News
  • AdvisorNews
  • Washington Wire
  • Insurance Webinars

Our Company

  • About
  • Editorial Staff
  • Magazine
  • Write for INN
  • Advertise
  • Contact

Sign up for our FREE e-Newsletter!

Get breaking news, exclusive stories, and money- making insights straight into your inbox.

select Newsletter Options
Facebook Linkedin Twitter
© 2022 InsuranceNewsNet.com, Inc. All rights reserved.
  • Terms & Conditions
  • Privacy Policy
  • AdvisorNews

Sign in with your INNsider Account

Not registered? Become an INNsider.