Last week, AIG Life & Retirement launched the new AB All Market Index that was developed exclusively for AIG’s Power Select Index Annuities by AllianceBernstein (AB). According to a recent Wealth Advisor article, the multi-asset index will be distributed primarily through Market Synergy Group (MSG).
The AB All Market Index is not available for direct investment, similar to other indexes in an index annuity, but the performance directly contributes to the determination of the interest earned in an annuity. The goal of the AB All Market Index is to stabilize returns through a “systematic allocation process based on risk and momentum.”
Here’s how it works. A strategic allocation is constructed, attempting to balance risk equally among the Index’s growth and defensive assets. Then, a proprietary momentum strategy is used to adjust exposures, overweighting assets that are on an uptrend while underweighting those with poor performance. Three different “momentum signals” are used to assist in the movement of assets.
“We are excited to offer consumers a new index that combines AllianceBernstein’s global asset management expertise with our tradition of annuity innovation and design,” said Senior Vice President of Individual Retirement Pricing and Product Development at AIG, Bryan Pinsky. “By using asset classes not commonly found in most index strategies, such as currency-hedged global bonds, and combining them with a dynamic allocation across ten US equity sectors, this new index has the potential to generate solid risk-adjusted performance.”
“With the AB All Market Index, consumers have an opportunity to increase their portfolio diversification, while also benefiting from a dynamic momentum strategy that can adapt to changing market conditions,” stated Stuart Davies, CFA, Co-Head of the AB Custom Alternative Solutions team for AB. “The Index is constructed using tools and processes that are robust and well-tested. Additionally, the design and mechanics of the Index give it the flexibility needed to help deliver results in all types of markets.”
Additionally, AIG has also introduced a new enhanced income benefit in its Power Select Plus Income Index Annuity, known as a confinement rider. This rider will allow consumers to receive up to 200% of their maximum annual withdrawal amount if they are confined to a qualified facility, like a nursing home for a minimum of 90 days. This new confinement rider is automatically included with all guaranteed living benefit riders at no additional cost and can last for five years or until depletion of the contract value. While the enhanced income has no negative impact on the riders’ benefits, other restrictions and limitations may apply.
The AB All Market Index is now available solely in the Power Select Index Annuities issued by American General Life Insurance Company.
Written by Rachel Summit