Annexus Celebrates 20 Years of the Fixed Indexed Annuity with the Team That Started It All
March 26, 2015 by Business Wire
SCOTTSDALE, Ariz.–(BUSINESS WIRE)–Twenty years ago this February, Genesis Financial helped debut the first fixed indexed annuity when evolving financial technologies intersected with market volatility. Today, Genesis Financial continues to drive the evolution of the popular retirement product through their partnership with Scottsdale, Arizona-based Annexus®.
In February 1995, Keyport Life, with the help of Genesis Financial, introduced the first equity-linked indexed annuity, KeyIndex. 20 years later, Beacon Research reports total fixed indexed annuity (FIA) sales have eclipsed $47 billion annually. As importantly, Advantage Compendium reports the non-complaint percentage of FIA owners at 99.994%, placing FIAs among the most satisfying retirement, savings or investment products available.
Fixed indexed annuities were born in an economic environment that should be eerily familiar to the pre-retirees of today: falling bond yields combined with a rocky stock market. Genesis Financial developed the FIA to provide potential value above and beyond a minimum guarantee by linking it to the performance of an exterior index. The result has become a surprisingly customizable chassis that combines guarantees with the capability for growth.
That combination of promised security and growth potential continues to attract people today, along with the more-recent addition of a guaranteed lifetime withdrawal benefit, which expands the guarantee of the FIA to income that the investor cannot outlive.
Additional innovations included designs that remove the growth caps found in the older versions of fixed indexed annuities. “Before we introduced the crediting methodology referred to as the BalancedAllocation Strategy® with Athene®,” says Don Dady, managing co-founder of Annexus, a designer and distributor of next-generation fixed indexed annuities, “the products available in the industry largely capped the growth potential. We introduced, with the help of Genesis, uncapped designs that allowed consumers to realize much greater potential gain, although gains may be limited by other factors such as participation rates and spreads. When combined with an income rider, we were able to provide people planning for retirement a level of confidence and independence that many didn’t believe was possible.”
The larger FIA market broadened to include the addition of alternative indices.
The increasing pace of innovation and adoption by satisfied customers has led larger and more familiar carriers to step into the marketplace. One of the most recent entrants has been the Nationwide New Heights® Fixed Indexed Annuity.
“The FIA space continues to evolve at a really remarkable rate,” said Ron Shurts, co-founder of Annexus. “When a company as large as Nationwide enters the space and identifies Annexus as the right partner, it’s exciting. Together we’ve developed features in the Nationwide New Heights Fixed Index Annuity that provide people with greater flexibility for retirement income and legacy planning. The benefits that people planning for retirement see are real.”
The goal of each evolution in the fixed indexed annuity is to continue to provide people with a savings solution with principal security and attractive potential for growth. What innovations might be on the horizon?
“We’ve been thinking a lot about income and liquidity,” says Richard Kado, President of Genesis Financial and one of the architects of the original fixed indexed annuity. “The next generation of fixed products needs to be flexible for the changing needs of people planning for and in retirement.”
Mr. Kado and Genesis have been working actively in partnership with Annexus in developing cutting-edge retirement solutions.