AIG's Unit to Launch an Index Annuity Solution for Retirees

American International Group, Inc.’s AIG business, AIG Life & Retirement, recently announced collaboration with Annexus. The latter primarily provides innovative retirement solutions across the United States.

With Annexus, AIG Life & Retirement will launch an index annuity solution — X5 Advantage. Aimed at catering to the diverse range of retirement needs, the new solution will feature exclusive indices developed by two renowned asset managers PIMCO and Morgan Stanley Investment Management.

Notably, X5 Advantage will be issued by American General Life Insurance Company, which is AIG’s member. The same product will be presented through a distribution network of several Annexus-contracted independent distribution companies.

As part of its features, the new solution will provide a steady and lifetime source of income for the retirees and also offer enough scope for increasing their income. If a person remains restricted to a nursing home or other qualified facility, X5 advantage will offer a confinement benefit of doubling the annual income of its members. The benefit, however, can be availed after a period of 10 years. The solution is also equipped with an enhanced death benefit.

AIG has constantly undertaken efforts to boost distribution network and provide enhanced solutions for its clients. In January 2020, AIG Life & Retirement introduced AB All Market Index. Primarily developed for AIG’s Power Select Index Annuities, this multi-asset index facilitated portfolio diversification for its clients.

We believe such initiatives are likely to drive results for the company’s Life & Retirement segment going forward. However, adjusted revenues in this segment declined 1% year over year to $4.2 billion in the first quarter.

The latest move by AIG Life & Retirement to launch X5 Advantage comes at a time when the entire U.S. economy is grappling with low interest rates. Index annuities provide guaranteed income based on the capabilities of paying claims of the issuing insurance company. Not only this, these annuities generally provide shield to the principal amount of its clients in case of any financial turmoil.

However, shares of this Zacks Rank #3 (Hold) insurer have lost 45.7% in a year compared with the industry’s decline of 24.8%. Nevertheless, we believe that the company’s strong fundamentals are likely to drive performance in the days ahead.

Stocks to Consider

Some better-ranked stocks in the insurance space are The Allstate Corporation ALL, American Equity Investment Life Holding Company AEL and Amerisafe, Inc. AMSF, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Allstate, American Equity and Amerisafe surpassed estimates in the last reported quarters by 13.46%, 45.22 % and 20.55%, on average, respectively.

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