US insurance and financial services provider Nationwide has entered the US fee-based fixed indexed annuity segment with its Nationwide Summit fixed indexed annuity, the first FIA in its lineup targeted at Registered Investment Advisors (RIAs) and fee-based advisors.
Nationwide Summit offers capital preservation and a participation on the performance of the JP Morgan Mozaic Index (USD).
There has been a growing market demand for alternatives to help hedge the risk of traditional portfolios managed by RIAs and fee-based advisors, according to Mike Morrone, associate vice president of fixed annuity product strategy at Nationwide.
'In today's low-interest rate environment, the fee-based Summit FIA with the JP Morgan Mozaic Index (USD) offers a powerful accumulation opportunity with no downside market risk,' said Morrone.
According to Nationwide, the new product is currently the only fee-based FIA offering access to the JP Morgan Mozaic Index (USD) which through its 18 years of live and back-tested performance would have provided a 5.35% compound annual return with 78% less volatility than the S&P 500 Price Index. Nationwide Summit also includes the S&P 500 Price Index and a fixed account option.
'Nationwide is committed to helping RIAs and financial advisors meet a variety of their clients' needs,' said Eric Henderson, Nationwide senior vice president of life insurance and annuities. 'We're excited to be on the leading edge of a new market and help shift the risk-return profile of clients' portfolios.'
The fee-based Summit is exclusively available through the Annexus network of independent distribution companies, and a provider of fixed indexed annuities and indexed universal life insurance (IUL) in the US.
SRP data shows that the Nationwide Group marketed in 2005 the Clear Horizon index annuity, an open-ended cliquet structure linked to the S&P 500 Composite Stock Index.
The most used indices in the US annuities market are the S&P 500 (featured in 82 of the 84 annuities listed) and the Nasdaq 100 (which features in 16 annuities), while proprietary indices from investment banks such as the Bloomberg Barclays Aggregate Bond Index(11) and the ML All Convertibles Investment Grade (two) also appear in a number of products, according to SRP data.
This is the second time this year a JP Morgan index has been featured in a fixed index annuity in the US market following Voya Financial's launch in February of its Voya Journey Index Annuity, a structured retirement product providing investors a 'two stage' interest-crediting approach linked to the JP Morgan Meridian Index and Citi Dynamic Asset Selector 5 Excess Return Index.
There are over 1,300 structured products featuring JP Morgan indices in the US including 53 products linked to the JP Morgan Mozaic Fixed Income Index.
There are 84 structured annuities listed on SRP's US database, mostly linked to the S&P 500 (which is featured on 82 of the annuities listed) and the Nasdaq 100 (which features on 16 annuities). There are also a number of proprietary indices from investment banks in the annuities segment such as the Barclays Aggregate Bond Index (11) and the ML All Convertibles Investment Grade (two). The most popular payoff in this segment is the cliquet as every product has usually averaging between indices, and capped calls.
According to SRP data, the top five providers of structured annuities in the US are American Equity (nine), Allianz, Aviva, Jefferson Pilot Financial, and Midland National with seven apiece, and ING (six).
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