Allianz Life to raise roll-up rates on VA rider

Rate climbs to 6%, from 5%, for riders issued after Oct. 15

Oct 2, 2012 @ 4:02 pm

By Darla Mercado

variable annuity, allianz, VIX, Treasuries
+ Zoom

Allianz Life Insurance Co. of North America is raising the roll-up rate on its Income Protector variable annuity rider, citing better-than-expected capital markets.

In a filing with the Securities and Exchange Commission today, the insurer said it will increase the annual rate at which clients' benefit base grows to 6%, from 5%. The benefit base, which isn't an actual pool of money that VA customers can use, is a value that's used to calculate income withdrawals in connection with the Income Protector rider.

Chief distribution officer Tom Burns explained that the equity market's volatility index and rates on the 10-year Treasury are more accommodating than originally expected, allowing Allianz to bump up rates at a time when many of its competitors are pulling back. The company set a parameter of 30 for the CBOE Volatility Index (VIX) and a downward limit of approximately 1% to 1.5% for the yield on 10-year U.S. Treasury notes.

These days, the VIX is trading in the mid-teens, while 10-year Treasuries are yielding around 1.63%.

Allianz plans to tell reps about the change Oct. 12, Mr. Burns said.

To be sure, the low-rate environment has led to a lot of changes in the VA space, including at Allianz. On Sept. 17, the insurer stopped taking additional purchase payments into a number of its older VA contracts, including the Allianz High Five, High Five L, Valuemark II, Alterity and Rewards contracts. Legacy Vision contracts that were issued before Aug. 17, 2009, were also subject to the Sept. 17 purchase payment limit.

The carrier's executives are confident that rates will rise in the future but hope that it doesn't spark unreasonable product competition in the VA space.

“Rates will rise again at some point,” said Eric Thomes, senior vice president of sales at Allianz. “But we hope the VA arms race doesn't return.”

0
Comments

What do you think?

View comments

Recommended for you

Sponsored financial news

Featured video

INTV

Help special needs families get started on a lifetime of planning

Managing editor Christina Nelson talks with special projects editor Liz Skinner about specialists who say any adviser can and should get the financial ball rolling for people in this community.

Video Spotlight

Are Your Clients Prepared For Market Downturns?

Sponsored by Prudential

Recommended Video

Path to growth

Latest news & opinion

HighTower faces pressure to let investors cash out

After an IPO planned for last year didn't happen, the company could opt to satisfy its backers with a sale.

Jerry Schlichter's fee lawsuits have left an indelible mark on the 401(k) industry

After a decade of litigation, fees are lower and retirement plans are more transparent. But have the lawsuits gone too far?

10 best financial adviser jokes

How many financial advisers does it take to screw in a lightbulb?

With margins crashing, broker-dealers look to merge: report

Increased regulation is straining profit margins among broker-dealers, sending many of them into the arms of their bigger brethren.

Hackers may have profited from SEC breach

The hack of the agency's Edgar filing system occurred in 2016, but the regulator didn't conclude until last month that the cybercriminals may have used their bounty to make illicit trades.

X

Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print