Athene Annuity & Life Company is a well-known provider of retirement savings solutions. It is one of the fastest-growing fixed indexed annuity writers in the business. With a strong capital basis and an efficient operating approach, their retail division aspires to be the fixed annuity market leader. They have a diverse range of fixed annuity solutions to fulfill the demands of consumers for both accumulation and retirement income.
How does Athene Annuity work?
Fixed indexed annuities are insurance products that give both downside market risk protection and growth potential by delivering a fixed interest rate for a set period of time, as well as the possibility of additional interest credits depending in part on the performance of a market index.
An FIA’s retirement savings are not invested directly in the stock market. Instead, interest credits change in response to one or more reference indices’ performance. When an index rises, the value of the annuity rises as well: Interest credits are applied to the portion of the annuity’s accumulated value that is allocated to that index’s crediting strategy. When the market falls, the interest rate falls to zero, but the annuity holder’s initial premiumas well as any previously credited interestremains intact. As a result, market downturns do not affect retirement funds.
While all FIAs have the same basic characteristicsthe ability to profit from market development without taking on the dangers of direct market participationthe specifics may differ. In terms of which benchmark indices they track, how often they calculate changes in the indices, how they determine crediting strategies, and what additional benefits they may provide, indexed annuities differ.
- What are the annuity’s underlying indices? While the S&P 500 is the benchmark for nearly half of all FIAs, others follow hybrid or alternative indexes meant to pursue specific strategies, such as noncorrelation to major stock indices and/or targeting specialist asset class groupings.
- How are index returns calculated in an annuity? Changes in the index from the beginning to the conclusion of a certain time, such as a month or year, can be calculated using FIAs. A point-to-point strategy is what it’s termed. Furthermore, the monitored return may include or exclude dividends (total return) or returns above the risk-free rate (excess return) (excess returns).
- What is the crediting strategy for the annuity? Interest credits in an FIA are usually calculated using a formula such as a cap (a maximum rate of return) or participation rate (the percentage of an index’s return credited to the annuity), or a percentage-based fee such as a spread. For example, if the benchmark index returns 8%, an FIA with a 4% cap will earn a 4% interest credit; an FIA with a 90% participation rate will receive a 7.2 percent interest credit; and an FIA with a 2% spread will receive a 6% interest credit.
- Is there a way to add more riders to the index? At an additional expense, clients can choose to add features to their annuity. Guaranteed lifetime income, liquidity alternatives, a premium bonus, and death benefits are all possible riders on FIAs.
FIAs in action
Consider a hypothetical FIA that employs the S&P 500 as its benchmark, a 50% participation rate, and a one-year point-to-point strategy to examine how these formulas convert into annuity returns:
Is an annuity a good investment?
In retirement, annuities can provide a steady income stream, but if you die too young, you may not get your money’s worth. When compared to mutual funds and other investments, annuities frequently have high fees. You can tailor an annuity to meet your specific needs, but you’ll almost always have to pay more or accept a lower monthly income.
What kind of company is Athene?
Athene Holding Ltd is a financial services firm that specializes in retirement savings solutions. Retirement savings products are issued, reinsured, and acquired by the company. The Retirement Services segment is where it operates.
What is the rating of Athene?
1 Credit ratings for Athene Annuity & Life Assurance Company, Athene Annuity and Life Company, Athene Annuity & Life Assurance Company of New York, and Athene Life Re Ltd. are based on A.M. Best, S&P, and Fitch’s assessment of an insurer’s ability to meet its ongoing insurance policy and contract obligations. S&P rating as of May 2021 (A+, 5th highest out of 21), A.M. Best rating as of August 2021 (A, 3rd highest out of 16), and Fitch rating as of March 2021 (A, 3rd highest out of 16). (A, 6th highest of 19). A.M. Best, S&P, and Fitch have given Athene Holding Ltd. credit ratings of bbb+/A-/BBB+, respectively.
Who owns Athene Annuity?
Athene’s total equity value is estimated to be around $11 billion as a result of the all-stock deal. Apollo owns roughly 35 percent of the outstanding Athene class A common shares, together with certain of its associated parties and employees. Based on the March 5 close, the amalgamated organization would have a pro forma market cap of $29 billion, making it eligible for inclusion in the S&P 500.
What does RMD friendly mean?
As a general guideline, at 70 1/2, it starts at 3.65% of the value of your IRA account on December 31st of the year before to the distribution. As you become older, the percentage amount increases. At the age of 80, the percentage is approximately 5.35 percent. (All figures are based on the most recent IRS tables.) For the previous 20-30 years, you have benefited from tax breaks on your money, and now the government wants to tax you. After you age 70 1/2, you must take out the appropriate amount every year or face a significant penalty. What happens if I invest my IRA or 401(k) in an annuity?
Many of them state explicitly that they are “RMD friendly.” That means that as long as you don’t go over your RMD, you can withdraw money every year without penalty, even if the RMD amount exceeds the contract’s withdrawal limits. Many annuities provide a 10% free withdrawal feature and are RMD friendly, which means that if your RMD ever surpasses the 10% free withdrawal provision, you may still take it without penalty. This is a positive development.
Let’s take a look at a few different types of annuities and how the Required Minimum Distribution might work:
Indexed Annuity with Income Rider (Hybrid Annuity): There are a few things going on in this scene. So try to keep up with me.
You are allowing your income account to grow throughout the “Roll-up Period.” The longer you wait for it to “Roll Up,” the bigger your Guaranteed Income will be in the end. If you start taking guaranteed income withdrawals before you become 70 1/2, the amount of your withdrawal should be enough to cover your RMD.
What is balanced allocation value?
The BAV is the larger of (1) the contract value plus any unrealized strategy profits (strategy earnings that have not yet been applied to the contract) or (2) the Return of Purchase Payment Guarantee amount, and it monitors daily variations in the strategy option.
What is a liquidity rider?
These riders provide for future modifications by allowing for the return of some or all premium contributions if the policy is relinquished within certain time frames stated in the policy’s contract.
Can you lose money in an annuity?
Variable annuities and index-linked annuities both have the potential to lose money to their owners. An instant annuity, fixed annuity, fixed index annuity, deferred income annuity, long-term care annuity, or Medicaid annuity, on the other hand, cannot lose money.
Long-term contracts
Annuities are long-term contracts that last anywhere from three to twenty years, and they come with penalties if you violate them. Annuities typically allow for penalty-free withdrawals. Penalties will be imposed if an annuitant withdraws more than the permissible amount.
Who should not buy an annuity?
If your Social Security or pension benefits cover all of your normal costs, you’re in poor health, or you’re looking for a high-risk investment, you shouldn’t buy an annuity.
