AIG Introduces New Blended Index in the Power Series of Index Annuities®
April 7, 2015 by Business Wire
The ML Strategic Balanced Index™ seeks to provide a stable return in changing market environments by dynamically blending equity and fixed income indices
HOUSTON–(BUSINESS WIRE)– American International Group, Inc. (NYSE: AIG) is pleased to announce the recent launch of a new index for use in select contracts in the Power Series of Index Annuities®. These annuities provide an attractive combination of principal protection, growth potential and lifetime income. They are issued by American General Life Insurance Company (AGL), a member company of AIG.
“With the uncertainties in today’s markets, many consumers are looking for retirement saving strategies that can provide more stable interest over time,” said Bryan Pinsky, Senior Vice President, Individual Retirement Products, AIG Consumer Insurance. “The ML Strategic Balanced Index™ in our Power Series of Index Annuities offers a potential solution. It uses a systematic, rules-based process to adjust exposures among equity, fixed income and cash, and help stabilize returns in unpredictable markets.”
The ML Strategic Balanced Index™ blends the S&P 500® Index (without dividends), which is widely regarded as the standard for measuring equity performance, with the Merrill Lynch 10-Year Treasury Futures Total Return Index™, which is used as a proxy for the fixed income market. The non-discretionary process eliminates the impact that emotions may have on allocation decisions, making the process objective and transparent.
Volatility is also monitored on a daily basis and allocations may be shifted to cash when short-term volatility rises above a certain level and from cash when volatility falls. During highly volatile markets, up to 100% of the ML Strategic Balanced Index™ may be allocated to cash to help protect against market downturns.
“This dynamic mix of equities, fixed income and cash offers upside potential while smoothing out volatility,” said Mike Treske, Executive Vice President and Chief Distribution Officer at AIG Financial Distributors. “It can be especially attractive to individuals who want more growth potential than traditional fixed income investments, but don’t want to take on the risk of investing directly in the equity market.”1
In addition to the other Power Series index interest crediting options, individuals can now choose from two strategies that earn interest based in part on the performance of the ML Strategic Balanced Index™. There is no cap on the annual interest; however, these accounts have spreads (declared percentages) that will reduce the amount of interest earned per year.
“Indices that blend multiple asset classes are increasingly popular in the index annuity space,” said Treske. “We think this new index will help us increase our share of the growing index annuity market, and provide us with new opportunities to achieve our goal of being the premier provider of protection, investment and income solutions needed for financial and retirement security.”
The ML Strategic Balanced Index™ was developed by Bank of America Merrill Lynch (BofA Merrill), and AGL currently has an exclusive license to use the index for U.S. fixed index annuities and life products. BofA Merrill is one of the world’s leading financial institutions.
Annuities are issued by American General Life Insurance Company (AGL),
2727-A Allen Parkway, Houston, Texas 77019.
Contract Numbers: Power Series of Index Annuities Modified Single Premium Deferred Fixed Index Annuities, Contract Number AG-800 (12/12) and AG-801 (12/12).
Rider Form Numbers: Market Value Adjustment (MVA) Rider, Form Number AGE-8000 (12/12); Premium Enhancement Rider, Form Number AGE-8001 (12/12); Lifetime Income Plus (Formal Name: Optional Guaranteed Living Benefit Rider), Form Number AGE-8002 (9/13); Annual Point-to-Point Index Interest Account Rider, Form Number AGE-8003 (12/12); Monthly Point-to-Point Additive Index Interest Account Rider, Form Number AGE-8005 (12/12); Terminal Illness Rider, Form Number AGE-8007 (12/12); Extended Care Rider, Form Number AGE-8008 (12/12); Activities of Daily Living Rider, Form Number AGE-8009 (12/12); Periodic Average Index Interest Account Rider, Form Number AGE-8024 (9/13); and Annual Point-to-Point and 2-Year Point-to-Point Interest Account Riders, Form Number AGE-8028 (4/14)
The underwriting risks, financial and contractual obligations and support functions associated with products issued by American General Life Insurance Company (AGL) are its responsibility. AGL does not solicit business in the state of New York. Product and features may not be available in all states and may vary by state.
Federal and state income tax laws are complex and subject to change. Please keep in mind that AGL and their distributors and representatives may not give tax, accounting or legal advice. Any tax statements in this material are not intended to suggest the avoidance of U.S. federal, state or local tax penalties. Such discussions generally are based upon the American General Life Insurance Company’s understanding of current tax rules and interpretations. Tax laws are subject to legislative modification, and while many such modifications will have only a prospective application, it is important to recognize that a change could have a retroactive effect as well. Individuals should consult their tax professional for information regarding their particular situation.
Index annuities are not a direct investment in the stock market. They are long-term insurance products with guarantees backed by the claims-paying ability of the issuing insurance company. They provide the potential for interest to be credited based in part on the performance of the specified index, without the risk of loss of premium due to market downturns or fluctuations. Index annuities may not be suitable or appropriate for all individuals.
Withdrawals may be subject to withdrawal charges. Withdrawals may also be subject to federal and/or state income taxes. An additional 10% federal tax may apply if individuals make withdrawals or surrender their annuity before age 59½.
The ML Strategic Balanced Index™ (the “Index”) embeds an annual index cost in the calculations of the change in index value. This “embedded index cost” will reduce any change in index value, and it funds certain operational and licensing costs for the Index. Since it will affect the return of the Index, it may also impact the amount of interest credited to an index annuity or life product; however, it is not a fee paid by you or received by American General Life Insurance Company (AGL). AGL’s licensing relationship with Merrill Lynch, Pierce, Fenner & Smith Incorporated for use of the ML Strategic Balanced Index and for use of certain service marks includes AGL’s purchase of financial instruments for purposes of meeting its interest crediting obligations. Some portion of those instruments will, or may be, purchased from Merrill Lynch, Pierce, Fenner & Smith Incorporated or its affiliates.
Merrill Lynch, Pierce, Fenner & Smith Incorporated and its affiliates (“BofA Merrill Lynch”) indices and related information, the name “BofA Merrill Lynch”, and related trademarks, are intellectual property licensed from BofA Merrill Lynch, and may not be copied, used, or distributed without BofA Merrill Lynch’s prior written approval. The products of licensee American General Life Insurance Company have not been passed on as to their legality or suitability, and are not regulated, issued, endorsed, sold, guaranteed, or promoted by BofA Merrill Lynch. BOFA MERRILL LYNCH MAKES NO WARRANTIES AND BEARS NO LIABILITY WITH RESPECT TO ANY INDEX, ANY RELATED INFORMATION, ITS TRADEMARKS, OR THE PRODUCT(S) (INCLUDING WITHOUT LIMITATION, ITS QUALITY, ACCURACY, SUITABILITY AND/OR COMPLETENESS).
The Index is the property of Merrill Lynch, Pierce, Fenner & Smith Incorporated, which has contracted with S&P Opco, LLC (a subsidiary of S&P Dow Jones Indices LLC) to calculate and maintain the Index. The Index is not sponsored by S&P Dow Jones Indices or its affiliates or its third party licensors (collectively, “S&P Dow Jones Indices”). S&P Dow Jones Indices will not be liable for any errors or omissions in calculating the Index. “Calculated by S&P Dow Jones Indices” and the related stylized mark(s) are service marks of S&P Dow Jones Indices and have been licensed for use by Merrill Lynch, Pierce, Fenner & Smith Incorporated.
The S&P 500® Index is a product of S&P Dow Jones Indices LLC (“SPDJI”), and has been licensed for use by American General Life Insurance Company and affiliates. Standard & Poor’s,® S&P,® and S&P 500® are registered trademarks of Standard & Poor’s Financial Services LLC (“S&P”); Dow Jones® is a registered trademark of Dow Jones Trademark Holdings LLC (“Dow Jones”); and these trademarks have been licensed for use by SPDJI and sublicensed for certain purposes by American General Life Insurance Company and affiliates. American General Life Insurance Company and affiliates’ products are not sponsored, endorsed, sold or promoted by SPDJI, Dow Jones, S&P, or their respective affiliates, and none of such parties make any representation regarding the advisability of purchasing such product(s) nor do they have any liability for any errors, omissions, or interruptions of the S&P 500® Index.
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AIG Consumer Insurance represents a group of companies offering insurance, retirement and investment services. AIG Consumer Insurance and AGL are part of the American International Group, Inc. (AIG) family of financial services companies. Not all products are available in all firms.
American International Group, Inc. (AIG) is a leading international insurance organization serving customers in more than 130 countries. AIG companies serve commercial, institutional, and individual customers through one of the most extensive worldwide property-casualty networks of any insurer. In addition, AIG companies are leading providers of life insurance and retirement services in the United States. Products or services may not be available in all countries, and coverage is subject to actual policy language. AIG common stock is listed on the New York Stock Exchange and the Tokyo Stock Exchange.
Not FDIC or NCUA/NCUSIF Insured
May Lose Value • No Bank or Credit Union Guarantee
Not a Deposit • Not Insured by any Federal Government Agency
I5461PR1 (4/15)
1 Diversification does not guarantee a profit nor does it protect against loss. Index annuities, equities and traditional fixed income investments such as bonds have different objectives and are subject to different risk and tax considerations. Index annuities are long-term retirement savings vehicles with tax deferral and guarantees backed by the claims-paying ability of the issuing insurance company. Withdrawals from index annuities may be subject to federal and/or state income taxes. Equities may provide higher growth potential than other investments, but they are subject to risk, including the possible loss of principal. Bonds can provide regular income, but they are sensitive to interest rate changes and credit and default risk. Equity and bond gains may be taxed as ordinary income or capital gains. Please consult a financial professional for information concerning your particular situation.
American International Group, Inc.
Linda Malamut, 310-772-6533
linda.malamut@aig.com
Source: American International Group, Inc.
