Archives: Articles

IssueM Articles

Wealth2k Enhances Income Illustration Software

Posted on October 6, 2010 by Editor Test -

Wealth2k, marketer of the Income For Life Model retirement income planning software, has introduced a new application that “allows advisors to dynamically create income strategies that blend time-segmentation of retirement assets with period certain and lifetime income elements including SPIAs and annuity income riders,” the Boston-area company reported.

“This software application addresses the need for an understandable, unifying structure that gives context to various investment products, including products that provide guaranteed income elements,” said Wealth2k founder David Macchia in a release.

Wealth2k has produced a 4-minute video explanation of the new illustration platform, which is being released as an upgrade to Wealth2k’s existing IncomeForLifeModel program. The video can be found at www.IncomeForLifeModel.com.

Within pre-set ranges, advisors can define financial assumptions including:

Dynamic time-segmentation (2-10 segments)
Segment duration
Segment-specific rate-of-return objectives
Segment-specific inflation assumptions and liquidation factors
Staged lifetime income benefits commencing in any year of the income plan.

Advisors may combine all their clients’ external sources of retirement income, including pensions and Social Security. The software will solve for a “floor” of guaranteed retirement income, and can incorporate external income sources in the “flooring” calculation.

Allianz Life Introduces First Inflation-Protected FIA Income Rider

Posted on October 6, 2010 by Editor Test -

Alliance Life’s MasterDex X fixed indexed annuity now offers a “Simple Income III” rider, which provides guaranteed lifetime income with optional inflation protection. According to the issuer, it is the first rider of its kind to offer adjustments for inflation.

Simple Income III offers level, indexed, or inflation-protected payments. Under the inflation option, payments rise with increases in the Consumer Price Index (CPI-U).

Inflation is the number one retirement risk, according to the 2009 Risks and Process of Retirement Survey Report from the Society of Actuaries. At an assumed average of 3% annual inflation, $100,000 loses 14% of its purchasing power in five years and 45% in 20 years, according to the issuer.

The CPI-U-linked payment option protects purchasing power throughout the first 20 years of income, up to 10% per year. For an extra annual fee of 60 basis points, the Simple Income III Rider also offers an 8% bonus added to the withdrawal value each year until income withdrawals begin or the client turns age 90, whichever comes first.

Allianz Life is a unit of Allianz SE, the 20th largest company in the world by revenues, according to the Fortune Global 500, August 2010.

Pacific Life Launches Its First SPIA

Posted on October 6, 2010 by Editor Test -

Encouraged by requests from its wholesalers and independent advisors, Pacific Life has introduced its first single-premium, immediate fixed annuity, called Pacific Income Provider.

“For many individuals, retirement plans were a primary source of retirement income, but once they retired they found themselves coming up short. In this new retirement reality, clients need multiple sources to provide guaranteed lifetime income,” states Christine Tucker, Pacific Life’s vice president of marketing, Retirement Solutions Division.

Pacific Income Provider offers 10 payment options, including Life with Cash Refund, which returns any remaining purchase amount to the beneficiary when the annuitant dies.

Clients may also opt for a Future Adjustment Option, which allows a one-time increase or decrease in income payments. For example, a client may delay taking Social Security until age 70 to maximize benefits. In this situation, the Future Adjustment Option may be elected to schedule a decrease in income payments starting at age 70. Alternately, clients can choose an Inflation Protection Option, which increases payments by 2%, 3% or 4% per year.

New marketing materials and additional information regarding Pacific Income Provider are available at PacificLife.com. Financial professionals can run multiple quotes through an enhanced illustration system to determine a payment option for their clients.

The Bucket

Posted on October 6, 2010 by Editorial Staff -

FPA to Offer InFRE Materials to Advisors

Under an alliance between Financial Planning Association(FPA) and the International Foundation for Retirement Education (InFRE), FPA members will have access to discounts on new retirement planning tools and resources. The assistance is benefit of the FPA Member Advantage Program.

FPA members now have access to discounted educational packages offered through the InFRE Retirement Resource Center (IRRC) on various topics within retirement planning, such as the Strategies for Managing Retirement Income Package, Certified Retirement Counselor(CRC) Program, “Managing Your Retirement Income” Educational Workshop and many more. CRC certificants and registrants will also receive discounts on FPA’s Virtual Learning Center archives and are eligible for a group membership program discount.

FPA members will receive 20 percent off the purchase price of InFRE retirement programs through October 31, 2010. After October 31, resources are available to FPA members for 15 percent off the purchase price.

The Principal Expands Online Library for Advisors

To attract retirement-minded advisors to its offerings, Principal Financial Grouphas launched a Retirement Education Portal that gives advisors access to an online library focused on retirement income planning and “tools and resources for overall retirement plan education.”

Financial professionals will be able to select materials based on number of years prior to retirement or by the stages of retirement planning. Resources include customizable education plans, meeting materials, and a new magazine called Education Edge.

The portal also gives financial professionals access to “local education personnel” who conduct group education meetings and one-on-one meetings with participants. The expanded portal is part of Principal’s Retirement Income Edge program.

Mutual of Omaha Says “Aha!” to Social Media

Mutual of Omaha, which sponsors a campaign that it calls “Life’s Aha Moments,” has launched an online survey inviting people to vote for their favorite aha moments of the year. The top vote getters will become commercials for the company’s 2011 national broadcast advertising campaign, which will debut early next year.

“Aha Moments” are the epiphanies that are the topic of the “uplifting” and “inspirational” stories that Mutual of Omaha has collected from the public. The company kicked off its sponsorship of life’s aha moments in February 2009 with national advertising, a website devoted to aha moments, and an online community through Facebook, Twitter and other social applications.

For more information on aha moments, visit http://www.mutualofomaha.com/aha.

The company recorded more than 1,000 such stories during a recent four-month, 25-city national tour. From those 1,000, the company selected 75 moments for the first round of voting, which began October 1 and concludes on October 15. Consumers will be able to view and vote for all of the eligible entries at http://ahamoment.com/vote.

Following the first round of voting, the top 25 vote getters will move into the final round of voting, which begins on October 18th and ends on October 31, 2010. The top-10 moments will become the company’s newest television ads. The website will also allow people to encourage others to vote by sharing their favorite moments via e-mail, Facebook, Twitter and other popular social media outlets.

Phoenix and AltiSure Launch ‘Secure Lifestyle’ Annuity Series

The Phoenix Companies, Inc., and The AltiSure Group, an annuity and life insurance design and distribution company, announced the launch of their co-developed Secure Lifestyle Annuity Series, which includes The Secure Lifestyle and the Secure Lifestyle Bonus fixed indexed annuities.

The Secure Lifestyle Annuity Series offers two benefits: 1) The Safety Growth Strategy, a new interest crediting method, and 2) The Guaranteed Income and Family Wealth Transfer Benefit (GIFT), which combines guaranteed lifetime withdrawals with an enhanced death benefit for one charge.

“With the Safety Growth Strategy, a client can benefit from the positive return of the S&P 500 in excess of 5%,” said Philip K. Polkinghorn, senior executive vice president, business development at Phoenix.

The product’s GIFT Benefit is an optional rider that offers clients guaranteed lifetime withdrawals and an enhanced death benefit with a 6% compound annual rollup in one package. Clients can maximize their income opportunity by deferring the start of withdrawals under their Guaranteed Lifetime Withdrawal Benefit (GLWB), while remaining protected by the enhanced death benefit until the beginning of the guaranteed withdrawals under the GLWB rider.

“If the client defers the start of withdrawals for 12 years, the income benefit base used to calculate the annual GLWB amount will grow to more than triple the original premium with the Secure LifeStyle Bonus Annuity,” said Niju Vaswani, president of AltiSure.

The 10% premium bonus offered with the Secure LifeStyle Bonus Annuity boosts the initial account value by 10% of the original premium at contract issue. A percentage of the premium bonus and its earnings vest each year during the surrender charge period. All interest is credited on the entire account value including the premium bonus. Generally, products that do not offer bonuses have higher credited interest rates, participation rates and caps.

Optional riders such as the GIFT Benefit involve a fee calculated as a percentage of the benefit base that is deducted from the contract value. There are surrender charges during the first 10 years.

AllianceBernstein Acquires Alternative Investments Group from SunAmerica

As part of its expansion into alternative investments, AllianceBernstein L.P. has acquired a group at SunAmerica that manages a portfolio of hedge fund and private equity fund investments.

“We are pleased to add to our alternative investment capabilities this exceptional hedge fund and private equity fund investment team,” said AllianceBernstein Chairman and CEO Peter Kraus. “Marc Gamsin and his SunAmerica Alternative Investments colleagues have built an outstanding platform.”

“We’ve admired AllianceBernstein’s superb investment research for many years, and we’re thrilled to become a part of this respected, global institution, while maintaining our long-standing SunAmerica relationship,” Gamsin said.

Madoff’s Unsolved Mysteries

Posted on October 4, 2010 by Edward Jay Epstein -

The black hole into which Bernie Madoff pumped a still unaccounted-for $7.9 billion grew even darker on September 26 with the death of 84-year-old Los Angeles investment advisor Stanley Chais, one of only two potential witnesses to the laundering of these mystery funds.

Both Chais and another Madoff associate, Jeffry Picower, had been charged in separate fraud suits by the SEC in 2009. The government hoped they would help expose the “labyrinth of interrelated international funds, institutions, and entities of almost unparalleled complexity and breadth” into which the money vanished, as a bankruptcy trustee described it.

But neither case will ever come to trial. In two of the greatest disappearing acts in financial history, Chais died 10 days ago of a rare blood disease and Picower drowned in his own swimming pool in Florida last October, after an apparent heart attack at age 67. Each had known Madoff for 30 years or more, long before he began his Ponzi scheme.

Both men had enjoyed special access to Madoff’s operation. According to the SEC complaint, Picower was told in advance of Madoff’s monthly profit “targets,” or the amounts with which Madoff planned to pad Picower’s accounts. With this knowledge, Picower or his assistant could request higher or lower “profits” for various accounts.

Moreover, to amplify Picower’s fictional profits to accommodate this siphoning off, Madoff extended him so much fictional credit that his accounts had, according to the bankruptcy trustee’s analysis, a “negative net cash balance of approximately $6 billion at the time of Madoff’s arrest.”

Picower collaborated by faxing Madoff backdated letters to support fabricated trades, some of which reportedly earned profits as high as 550%. As a result, Picower was able to withdraw over $2.4 billion just between 2002 and 2008.

Like Picower, Chais worked closely with Madoff. (His name came up first on Madoff’s office speed dial.) According to the SEC complaint, Chais withdrew $1.15 billion from 60 accounts for himself, family members, and corporations in which he held interests, from funds into which he consolidated his clients’ money, and from other entities. Madoff enabled him to justify such massive withdrawals by crediting him with inexplicably high phantom profits, with some accounts earning over 300% a year.

Together, Picower and Chais withdrew a total of $7.9 billion between 1995 and 2008 from the phantom profits that Madoff allocated to them, according to the reckoning of the bankruptcy trustee.

Why were such staggering notional profits systematically credited to the Picower and Chais accounts and then systematically and purposefully siphoned out of these accounts? Were Picower and Chais following instructions in re-depositing the billions that they withdrew?

All Ponzi schemes need an exit strategy. Unfortunately, with the deaths of Picower and Chais, we may never unravel the secret of where that money ended up.

Craig Israelsen’s Seven Percent Solution

Posted on October 4, 2010 by Russell Wild -

If your clients want to enjoy a retirement of 30 years, and they estimate that they’ll need, oh, $50,000 a year to live on, how big a portfolio will they need if they want a reasonable assurance that they won’t run out of money?

The conventional answer would be $1,250,000 (allowing for an annual withdrawal rate of four percent).

Craig Israelsen’s answer would be $714,285 (allowing for an annual withdrawal rate of seven percent).

If you buy into the conventional wisdom, and think Israelsen is either a dreamer or a fool, destined to run out of money if he dares take his own advice, you should look at his extensive and impressive number crunching. It’s all in his new book, 7Twelve: A Diversified Investment Portfolio with a Plan (Wiley, 2010).

Israelsen, who teaches personal finance at Brigham Young University and writes regularly for various financial journals, told RIJ that even if he were to retire today, at age 51, with a life expectancy of 35 years, he would feel “pretty comfortable” taking a seven percent initial withdrawal rate and adjusting that each year for inflation—provided he had two years worth of cash to turn so that he didn’t have to withdraw from the nest egg portfolio in a down market. “If I don’t have cash in reserve, then a 5% withdrawal rate is safer.”

His confidence comes from the power of a well-diversified portfolio, exactly the kind of portfolio he outlines in 7Twelve.

The “7” refers to seven core asset classes; the “twelve” refers to 12 different funds used to represent those core asset classes. Put them all together, and rebalance regularly, Israelsen said, and you have something “vastly superior and more resilient” than the typical 60% U.S. stock/40% aggregate bond portfolio from which the common wisdom dictates you mustn’t tap more than four percent a year.

The seven core asset classes and 12 specific funds recommended for the portfolio are as follows (core asset classes are in bold, specific funds in regular type)

U.S. Stock (Large-company, mid-cap, and small)
Non-U.S. Stock (Developed nations and emerging market)
Real Estate
Resources (Natural-resource stocks and diversified commodities)
U.S. Bonds (Aggregate and Treasury inflation-protected securities)
Non-U.S. Bonds
Cash

Although Israelsen allows for the use of actively managed funds, he prefers index funds, and the book gives specific examples of index funds you can use—both mutual funds and exchange-traded funds.

The ideal mix of funds, per Israelsen, depends on whether you’re still young or getting a bit older. For young, “early accumulation” investors, he recommends a portfolio with perfectly equal allocations (8 1/3% of your total pie in each of the 12 funds). That would give you two-thirds equity and one-third fixed-income.

For older, “late accumulation” investors and investors already in retirement, he recommends somewhat higher allocations to inflation-protected securities and cash, with everything else getting equal measure. Whatever your portfolio mix happens to be, Israelsen recommends yearly rebalancing by selling leaders and buying laggards.

Back-testing shows that such a portfolio, properly managed, would have survived all rolling 25-year periods in recent history with yearly withdrawals as high as 7.5% (with a 3% annual inflation bump). Even with yearly withdrawals of 10%, the 7Twelve portfolio would have survived 94% of all rolling 25-year periods since 1970. (Yes, even the hellish 2008 market freefall.) In contrast, a typical 60/40 vanilla stock-and-bond portfolio would have survived 94% percent of all 25-year periods with a 7.5% withdrawal rate and 63% with a 10% withdrawal rate. (An all-stock or all-bond portfolio would have fared considerably worse at either withdrawal rate.)

As for average annualized returns, the 7Twelve portfolio, in the 10-year period that ended in December 2009, earned 7.8% with a standard deviation of 15.1. That compares quite favorably with large-cap stocks (-1.0% return, standard deviation of 20.9) or an aggregate bond portfolio (6.3% return, standard deviation of 3.12).

Israelsen designed the 7Twelve portfolio, he says, to exploit the enormous power of diversification, but also to please more traditional advisors and investors, who might shy away from anything too complex or foreign. He has no objection to advisors tinkering with the basic recipe; in fact, he does so himself. “This is a work in progress,” he said. Including less traditional asset classes, such as emerging-market bonds and small-cap international stocks, might even add muscle to the mix, he says.

The power of Israelsen’s 7Twelve portfolio, and the high withdrawal rate that it promises, deserve serious attention. This new model for diversification could make retirement a whole lot easier for a whole lot of people.

Russell Wild is a fee-only financial advisor based in Allentown, PA, and the writer of many books, including most recently, One Year to an Organized Financial Life (Da Capo Lifelong Books, 2009).

A Fortune in Reversals

Posted on October 4, 2010 by Kerry Pechter -

Here’s a true story.

Six years ago, a 74-year-old woman died suddenly. Her grieving husband couldn’t bear to live in the two-bedroom condo they’d shared since they became empty-nesters two decades before. A newer, sunnier condo in a nearby development appealed to his need for change.

The new condo with its glittery granite counters seemed beyond his means. But by selling the old condo, putting two-thirds down on the new one and using a reverse mortgage to pay off the balance of his new 30-year mortgage, he was able to trade up and still live mortgage free.

This man, who happens to be my father, doesn’t exactly fit the reverse-mortgage stereotype. He’s not a destitute widow determined to die in the family home. He’s an attorney who spent “not wisely but too well” for most of his life and retired with lots of home equity but not quite enough savings.

My father’s experience came to mind recently during a conversation with Jeff Lewis, chairman of Generation Mortgage Company (a unit of New York-based Guggenheim Partners that writes about $100 million worth of federally-insured Home Equity Conversion Mortgages a month), who tried to convince me that reverse mortgages aren’t just for the poor and the desperate.

Reverse mortgages will undoubtedly be a piece of the retirement income puzzle for many Boomers, but they’re still stuck with a shady reputation. That comes partly from the sector’s unregulated youth. It also comes from the fact that, like life-contingent annuities, reverse mortgages “smell of death.” Death, in the guise of mortality tables, hovers over the calculation of the payout, just as it does with SPIAs. It’s as if the Grim Reaper joins the attorney, broker and borrower at the big mahogany table on closing day.

Lewis tries to dispel that stigma. And, since his company is one of the few reverse mortgage firms trying to sell jumbo reverse mortgages, which means loans that are based on more than $625,500 worthy of equity and are not government guaranteed, he also tries to sell the idea that “equity release,” as the British call reverse mortgages, is good even for the wealthy.

Only six percent of Americans plan to use reverse mortgages. But “this shouldn’t be a niche product,” Lewis told RIJ. He doesn’t claim that reverse mortgages are cheap (the interest on jumbo loans can be above 8%), or that it’s easy for people to relinquish control over what may be their single most valuable asset, or even that reverse mortgages represent a windfall to the borrower. He does argue fairly persuasively, however, that they can quickly make more onerous obligations go away.

For instance, Sandwich Generation members who are making their parents’ mortgage payments could theoretically eliminate that expense with a reverse mortgage while keeping the parents in their home.

“I was talking to bankers at the Federal Home Loan Bank recently,” Lewis said. “Their demographic is 40-something and 50-something. I asked, ‘How many of you have a parent with a reverse mortgage?’ No one raised his hand. Then I asked, ‘How many of you are sending money to a parent to help pay for their home?’ Three quarters raised their hands. I said, ‘You’re buying your parent’s house over time. What’s your cost of money?’”

He also touts HECMs for short-term use. When set up as lines of credit, he said, reverse mortgages can make more sense than conventional home equity lines of credit. For instance, a 70-year-old person with a paid-for home worth $400,000 might qualify for (net of $15,000 in fees) a $235,000 line of credit whose unspent balance earns interest and which can’t be revoked or changed if home values fall, as they have since 2008. (The money can also be taken as a lump sum or income stream, or some combination thereof.)

But most of the people who use HECMs are, in fact, desperate. A ton of high-interest credit card debt has followed them into retirement, and using a reverse mortgage line of credit instead of tax-deferred savings to pay off the balance on the cards can be the lesser of two evils. “Most clients are using reverse mortgages to make other problems go away,” Lewis said.

This week, it got cheaper to set up a HECM line of credit when the Housing and Urban Development department announced the new “HECM Saver.” With a HECM Saver, seniors can’t borrow as much as they can under the standard HECM. (The difference is 10-18%.) But, because the loan is smaller, the upfront mortgage insurance premium drops to just 0.01% of the loan amount, from 2%.

Both HECM Saver and HECM Standard borrowers must pay an ongoing annual MIP of 1.25%, assessed monthly. On the HECM Standard loan, that represents an increase from the previous charge of just 0.5% per year; the hike reflects the expected continued weakness in home values. But seniors can get a bigger HECM Standard loan under the new rules, because the higher insurance premium allows lenders to use rates as low as 5%.

“This is for smart people, not just destitute people,” Lewis said. “Most people, when they do it, love it. There’s an emotional aspect to the resistance. You have a lot of older people who have always looked at their house as a savings bank, not like an ATM, and a reverse mortgage goes against that mindset. It feels a little like a stigma to them.

“But it comes down to, would you rather have the money or not? The reality is that, in the aggregate, Baby Boomers don’t have enough money in liquid retirement accounts to support themselves in their old age. With a reverse mortgage, they can buy 20 years of peace of mind.”

SunAmerica Offers Two New Lifetime Income Options

Posted on September 29, 2010 by Editor Test -

SunAmerica, the Los Angeles-based insurer whose corporate tagline is “The Retirement Specialist,” has added the following two new lifetime income benefits to its variable annuities:

SunAmerica Income Plus 6% Income Option 2. It offers up to 7% annual withdrawals as early as age 65 for investors who want income immediately. The original SunAmerica Income Plus 6% (Income Option 1) will continue to offer 6% withdrawals as early as age 45.

SunAmerica Income Builder 8% Income Option 2. This option provides 8% guaranteed income base growth for up to 12 years, or up to 6.5% annual withdrawals as early as age 65.

The two new guaranteed minimum withdrawal benefits (GMWBs), were added to SunAmerica’s Polaris Variable Annuities. to help address investors’ increasing demand for income flexibility and income guarantees.

Income Plus 6% locks in the greater of investment gains or an annual income credit of up to 6% on contract anniversaries during the first 12 years. Income Builder 8% locks in the greater of investment gains or an income credit of 8% in each year withdrawals are not taken during the first 12 years. After the first 12 years, investors can continue to lock in investment gains annually for lifetime income with either feature.

To ensure guaranteed lifetime income continues even if a contract’s value is completely depleted due to market volatility and/or withdrawals taken within the feature’s parameters, both features include a Protected Income Payment. The Protected Income Payment provides clients with 4% or 3% of their income base annually for life, depending on the feature and income option elected, as well as the age at the time of the first withdrawal.

Gorilla Marketing

Posted on September 28, 2010 by Editor Test -

When big companies seek the mantle of thought-leadership, they usually enlist experts at top universities and think tanks. But AXA-Equitable Life has been extracting thought leadership from mere passersby on the sidewalks of New York City and the boardwalks of the New Jersey Shore.

You might call it a form of Gorilla Marketing, given that AXA’s mascot is the 800-lb gorilla.

To be sure, the insurer has done all the usual thought-leadership stuff. It commissioned a Retirement in America Survey of consumers and economists. It hosted a retirement event featuring Paul Volcker. Its chairman and CEO, Kip Condron, co-hosted a business show on Bloomberg TV.

But one day in July, Director of External Affairs Discretion Winter asked, “We don’t hear a lot about what real people are doing. We need to make it less about institutions and more about people.”

Armed with a borrowed Flip Video camcorder, three AXA External Affairs staffers buttonholed various types of people on “Wall Street and Main Street.” Near AXA’s headquarters in Manhattan, and at a New Jersey beach town, they interviewed men and women in suits and in T-shirts, white-haired retirees and young professionals, an ex-schoolteacher, an ex-pipefitter and more.

The approach was journalistic, the questions direct: How did you prepare/are you preparing for retirement? What does financial independence mean to you? And if you could start over, what would you do differently?

Survey statistics suddenly became faces. A well-tanned retired schoolteacher with a gold necklace said she started working with an advisor at a young age and felt financially secure. A youngish New Yorker, already retired and looking very relaxed, said he made some smart investments in his 30s and was teaching his adult kids to do the same.

Others were more rueful. In New York, a rangy, unmarried man in shirtsleeves, not unlike Spalding Grey, said he’d “taken a big financial hit a couple of years ago” and now hoped to meet a wealthy woman. A working class couple on the boardwalk said that, in hindsight, they wouldn’t have had four children: the cost of cars, weddings and divorces devastated their savings. A 72-year-old retired pipefitter, sporting a beard and a baseball cap, said he works part-time as a parking lot attendant to make ends meet.

According to an AXA release, “The unrehearsed stories these individuals tell about themselves underscore the gap between hope and reality—about savings, retirement age, retirement income needs, and lifestyle adjustments. A secondary recurring theme is what can happen without adequate financial preparation and guidance.

“AXA Equitable’s ‘Retirement Reality Show’ video series complements the company’s ongoing research and thought leadership programs on the issues surrounding retirement and serves as a platform for taking the public’s pulse on financial risks and preparedness. The purpose of the series is to learn firsthand what real retirement savers and retirees are thinking and doing.”

“Listening to real people is crucial to understanding how the market upheaval of the past few years has rattled their confidence in their ability to retire at all,” said Chris Winans, senior vice president, External Affairs, at AXA-Equitable Life. “It’s one more way we can make sure our products answer today’s financial protection needs.”

So far, AXA has posted three “Retirement Reality Show” videos with a man-on-the-street premise on its YouTube Channel and on its thought leadership webpage, The Source. The response on YouTube has been modest—only a few hundred hits in a medium where a clip like “Charlie Bit Me and It Really Hurt” gets millions. But the videos have been surprisingly popular among the career force and wholesalers, who post them on their client-facing homepages or use DVDs of the clips in presentations.

“That’s been a spontaneous, unanticipated development,” said Winter. “They’re asking, ‘How can I use this? Can I give it to my clients?” Yet AXA-Equitable’s approach to new media has been anything but random. Winans’ staff holds regular meetings on social media, and they talk about social media issues in broader marketing meetings. “We’re gaining comfort with the space,” she said.

More videos are planned but the project is open-ended. “We won’t always be doing man-on-the-street projects,” said Winter, who did the voice-over narration for the clips. “But this complements our traditional research. It’s a way for us to validate what we think we know.”

French Fight to Retire at 60

Posted on September 28, 2010 by Editor Test -

Strikes and protests by a reported one million workers against French President Nicolas Sarkozy’s plans to raise the country’s retirement age to 62 from 60 disrupted most of France’s air and rail services last week, according to press reports.

Traffic was snarled in France’s cities, with fewer than half of the Paris Metro’s lines working normally, according to the RATP public transit network. About half of France’s long-distance trains were canceled, according to the SNCF state-run rail system. Limited train disruptions were expected to continue Friday.

The House of Representatives in the French Parliament has already approved the change. The strikes and protests were aimed at pre-empting the Senate’s debate of the amendments, scheduled for October 5.

On September 7, more than 2.5 million workers marched throughout the country as France’s largest union groups called a 24-hour strike protesting proposed cuts to their nation’s version of Social Security. There were some 220 protests, according to the CGT, the country’s leading union federation.

French budget director Eric Woerth cited the possible increase in the retirement age as one of the ways to tackle a spiraling public pension deficit, expected to be €10bn by the end of 2010. Other measures have already been introduced, such as increasing the contribution period from 40 to 41.5 by the end of the decade.

President Sarkozy announced plans earlier this year to tackle the country’s growing pension deficit, with estimates predicting it will grow to between €72bn and €115bn by 2050 according to the Conseil d’Orientation des Retraites (COR). COR recently suggested increasing the contribution period to 43.5 years by 2050 for those who wish to draw the maximum state pension.

Even at 62, France would have one of the lowest retirement ages in Europe. Neighboring Germany has decided to bump the retirement age from 65 to 67. The U.S. Social Security system is also gradually raising its retirement age to 67.

Obama Signs Partial Annuitization Law

Posted on September 28, 2010 by Editor Test -

Here’s the text of Section 2113 of H.R. 5297, which takes effect January 1, in its entirety:

SEC. 2113. SPECIAL RULES FOR ANNUITIES RECEIVED FROM ONLY A PORTION OF A CONTRACT.

(a) In General- Subsection (a) of section 72 of the Internal Revenue Code of 1986 is amended to read as follows:

‘(a) General Rules for Annuities-

‘(1) INCOME INCLUSION- Except as otherwise provided in this chapter, gross income includes any amount received as an annuity (whether for a period certain or during one or more lives) under an annuity, endowment, or life insurance contract.

‘(2) PARTIAL ANNUITIZATION- If any amount is received as an annuity for a period of 10 years or more or during one or more lives under any portion of an annuity, endowment, or life insurance contract–

‘(A) such portion shall be treated as a separate contract for purposes of this section,

‘(B) for purposes of applying subsections (b), (c), and (e), the investment in the contract shall be allocated pro rata between each portion of the contract from which amounts are received as an annuity and the portion of the contract from which amounts are not received as an annuity, and

‘(C) a separate annuity starting date under subsection (c)(4) shall be determined with respect to each portion of the contract from which amounts are received as an annuity.’.

(b) Effective Date- The amendment made by this section shall apply to amounts received in taxable years beginning after December 31, 2010.

Quote of the Week

Posted on September 28, 2010 by Editor Test -

The Bucket

Posted on September 28, 2010 by Editorial Staff -

WealthVest To Distribute LifeYield’s Tax-Efficiency Software

LifeYield, LLC’s tax-efficient retirement income planning software will be distributed by Wealthvest Marketing, a provider of guaranteed products and practice management services for independent advisors, the two companies announced.

LifeYield builds a web-based, unified managed household (UMH) solution, LifeYield ROI, which suggests the most tax efficient sequence to grow and withdraw assets across multiple taxable and tax advantaged accounts while automating time consuming tasks.

WealthVest distributes guaranteed accumulation and income solutions for 13 product managers, offers coaching and practice management events through 44 field consultants.

Vanguard TDFs Increase International Equity Exposure

Vanguard plans to simplify the construction of its Target Retirement Funds and certain other funds-of-funds by replacing their three underlying international portfolios with a single broad international stock index fund. Vanguard will also increase the overall international equity exposure of these funds.

Assets in the funds’ current international component funds—Vanguard European Stock Index Fund, Vanguard Pacific Stock Index Fund and Vanguard Emerging Markets Stock Index Fund—will be moved to Vanguard Total International Stock Index Fund. The transition will occur in the coming months in the 12 Vanguard Target Retirement Funds and three Vanguard Managed Payout Funds.

Under the simplified approach, most of the Target Retirement Funds will comprise three broad index funds. Target Retirement Funds with target dates greater than five years from the current year will offer allocations constructed using only three funds: Vanguard Total Stock Market Index Fund, Vanguard Total Bond Market II Index Fund, and Vanguard Total International Stock Index Fund.

The use of Vanguard Total International Stock Index Fund offers better representation of the international equity markets. The fund’s benchmark, which Vanguard recently announced will change to the MSCI All Country World ex USA Investable Market Index, provides broad coverage of developed and emerging countries across the capitalization spectrum, including international small-cap companies, as well as Canada.

Vanguard also plans to increase the international equity exposure of Vanguard Target Retirement Funds, Vanguard LifeStrategy Funds, and Vanguard STAR Fund from about 20% to about 30% of the equity allocations. The exposure to domestic equities in these funds will be reduced, so that the overall allocation of stocks and bonds remains the same.

New Global Bond Product from ING

ING Investment Management Americas has launched the ING Global Bond Collective Trust Fund for institutional investors. The strategy combines fundamental and quantitative analysis of investments in more than 20 countries. The strategy has a 5 star rating from Morningstar and has been a top decile performer since inception according to PSN (1).

“We believe that there will be considerable opportunity in global bonds over the next years and that this asset class will continue to provide favorable results over a market cycle,” said Erica Evans, senior vice president and head of the U.S. Institutional Business at ING Investment Management.

The ING Global Bond Collective Trust Fund tracks the Barclays Capital Global Aggregate Bond Index by investing sovereign debt, corporates, emerging markets, high yield and mortgage-backed securities.

The strategy employs three main tools: duration and yield curve, active currency management and broad sector rotation. Currency markets provide a liquid means to capitalize on opportunities in various types of economic environments and to manage the risk profile of the fund more precisely.

“The U.S. represents less than half of the global bond market, and there are significant opportunities in fixed income investing in other parts of the world. Global bonds have provided an effective approach to broadening and diversifying portfolios and yet the category still has historically been under-utilized by many investors,” said Michael Mata, Senior Portfolio Manager for the Global Bond strategy.

Two MassMutual Execs to Lecture at TRAU

Two senior executives from MassMutual’s Retirement Services Division have been named founding lecturers of The Retirement Advisor University (TRAU), a newly-created certification program specifically for defined contribution retirement plan advisors offered by the UCLA Anderson School of Management Executive Education. Completion of the certification program results in the designation C(k)P.

The two executives are Elaine Sarsynski, executive vice president of MassMutual’s Retirement Services Division and chairman and CEO of MassMutual International LLC and Hugh O’Toole, senior vice president and head of sales and client management for MassMutual’s Retirement Services Division.

Sarsynski will give her first lecture on Sept. 29 and it will focus on Distinguishing Yourself in the Competitive Landscape of the Retirement Plan Industry. O’Toole’s lecture will take place in December and will focus on How to Develop & Implement Results-Driven Participant Education.

The creator of TRAU, Fred Barstein, founder and CEO of the 401kExchange, said, “The mission of The Retirement Advisor University at UCLA Executive Education is to empower financial professionals focused on the defined contribution and 401(k) industry with the qualifications and skill sets necessary to deliver on the promise of a secure retirement for plan sponsors and participants.” says Fred Barstein, founder and CEO, 401kExchange and creator of TRAU™.

Ascensus and PacLife in 401(k) Co-Venture

Ascensus and Pacific Life have teamed up to offer a new program to address the needs of small business retirement plan sponsors—fee disclosure, diversified investment options, and cost-effectiveness.

The Pacific Life Keystone Program combines the Portfolio Optimization Funds, offered through Pacific Life Funds, and Ascensus, Inc. provides an employer-sponsored 401(k) plan for small businesses.

“Through this relationship, Ascensus and Pacific Life have developed a powerful retirement plan solution. Small businesses will benefit from the combination of our proven industry expertise, high-quality investment options and tailored approach,” states Mike Narkoff, senior vice president, Sales at Ascensus.

The Keystone Program provides fee transparency, investment flexibility, and a simplified implementation process. The program offers access to Portfolio Optimization Funds—five target-risk funds that range from conservative to aggressive. In addition, plan sponsors may choose from a variety of other investment options to ensure that they receive a plan tailored to the individual needs of their participants.

Fed Charts a Course for “QE2”

Posted on September 28, 2010 by Editor Test -

Federal Reserve officials are considering new tactics for the purchase of long-term U.S. Treasury securities. Rather than announce massive bond purchases with a finite end, as in 2009, they are weighing a more open-ended, smaller-scale program, the Wall Street Journal reported yesterday.

The Fed hasn’t yet committed to stepping up its bond purchases. After its meeting last week, the Fed’s policy committee said it was “prepared” to take new steps if needed. A move to resume the purchases would be a big step for the Fed, which just a few months ago was talking about how to reduce its portfolio.

A decision on whether to buy more bonds depends on incoming data about economic growth and inflation; if the economy picks up steam, officials might decide no action is needed.

From March 2009 to March 2010, the Fed bought $1.7 trillion worth of Treasury and mortgage-backed securities. Researchers at the New York Fed estimate that the program reduced long-term interest rates by between 0.3 percentage point and 1 full percentage point.

Under the alternative approach gaining favor inside the Fed, it would announce purchases of a much smaller amount for some brief period and leave open the question of whether it would do more, a decision that would turn on how the economy is doing. This would give officials more flexibility in the face of an uncertain recovery.

Economists at Goldman Sachs estimate the Fed will purchase at least another $1 trillion in securities, pushing long-term interest rates down by a further 0.25 percentage point.

The Goldman economists estimate that an open-ended, small-scale approach would have less impact on bond markets than a large one-time approach, because investors wouldn’t be certain about whether such a program would continue.

“The more you commit to large amount of purchases up front, the bigger effect you’re going to get,” says Jan Hatzius, Goldman’s chief economist.

A leading public proponent of a baby-step approach is James Bullard, a 20-year Fed veteran who has been president of the St. Louis Federal Reserve Bank since 2008.

Under a small-scale approach, Mr. Bullard says, the Fed might announce some still-undecided target for bond buying—say $100 billion or less per month. It would then decide at each meeting whether more purchases were needed, based on whether “we’re making progress toward our mandate of maximum sustainable employment and inflation at our implicit inflation target.”

Cog-nomics and B-Finance: What’s the Dif?

Posted on September 27, 2010 by Leigh Caldwell -

Cognitive economics is not yet a widely used phrase, though Italian economist Marco Novarese and I have been using it as a name for a more microfounded version of what’s typically called behavioral economics. So I’ll explain how I use the term.

The first difference is between “economics” and “finance.” The more fundamental distinction is between “cognitive” and “behavioral.” Cognitive is about how we think, while behavioral is about what we do.

Economics, very broadly, is the study of how resources are allocated (by individuals, and across society). Cognitive economics, on the other hand, looks at what is actually going on within an individual’s mind when he or she makes that choice.

A cognitive economist asks, for instance: What is the internal structure of their decision-making? What are the influences on it? How does information enter the mind and how is it processed? What form do preferences take internally, and how are all those processes expressed in our behavior?

Finance, by contrast, specifically focuses on investment and the value of financial instruments. Behavioral finance focuses on the phenomena of how people behave. For example, what will they do (on average) when faced with a given choice between two ways of paying for something?

I would also distinguish between the way that behavioral finance is practiced, and what cognitive economists do. Behavioral finance is an experiment-driven field. BF people mostly start from the framework of classical economics and do experiments to find out where real behavior differs from the classical assumptions of rationality.

BF is quite practical in one sense. It helps us imagine the ways that people might behave when confronted with a given situation. However it does not make good predictions about how they will behave. Generally it will rely on experiments to distinguish among the different possible behavior modes.

Cognitive economists start at a lower level, from a microfounded model of how people make decisions, and work upwards theoretically, to develop a self-consistent model of large-scale economic behavior. It should ultimately be able to explain or predict behavior from a minimal set of base data.

In some ways this is the same goal as classical economics, but cognitive economics offers a richer and more accurate microfoundation leading to more powerful and better micro and macroeconomic predictions.

The difference between the two disciplines is like the difference between engineering and physics. Behavioral finance is like engineering: Engineers know some of the rules about how objects behave, and they can use those rules to design and test new implementations of existing inventions, and fix things that have already been built.

Cognitive economics is like physics: Physicists know the underlying theory of how things work, and they can use that to explain how existing inventions operate, and to work out how to create new ones.

Leigh Caldwell is a London-based mathematician who specializes in behavioral economics and the economics of information. He is chief executive of Inon. He also heads Intellectual Business, a new think tank, and writes the blog, Knowing and Making.

Maine Squeeze

Posted on September 27, 2010 by Joseph A. Tomlinson, CFP -

Maine is one of 14 states whose teachers, firefighters, police officers, forest rangers, game wardens, and snowplow crews earn state pensions instead of participating in Social Security. But some of the lawmakers up in Augusta want to change that.

They propose that newly hired state employees participate in a hybrid pension consisting of Social Security and a reduced form of the current state pension. These lawmakers worry about the inequity of the current system: Like most defined benefit plans, it rewards long-service employees but does not provide adequate benefits or portability for those with shorter service.

A merger with Social Security would make the system fairer. But it would also increase pension costs at a time when Maine has a big unfunded pension liability. Its shortfall totals about $4.5 billion, or about one-third of the total pension liability. For many other states the situation is much worse; nationwide, the states’ unfunded liability is about $1 trillion.

Maine follows strict actuarial standards and has been paying down its liability, but the financial crisis created an especially tight fiscal environment. Any proposal that might increase pension costs would likely meet political resistance.

You may have read or heard about Maine’s pension problems. Unfortunately, much of the reporting on this topic has been off-target or just plain wrong. Headlines like, “Maine eyes Social Security for Pension Bailout,” are misleading. Maine’s interest in Social Security arises from its desire for a fairer system, not from its need to solve an unfunded liability problem.

One might question the wisdom of placing new state employees under Social Security, given the concerns about the federal program’s future. Some might even regard Maine’s interest in Social Security as “seeking rescue on a leaky lobster boat.” But the story is more complex than that.

The Maine Pension System

Maine’s existing defined-benefit offers 2% of final-average-pay for each year of service, plus annual cost-of-living adjustments, or COLAs. The standard retirement age for an unreduced pension is 62. Employees contribute 7.65% of pay, and those who work for 40 years can retire on close to 80% of their final salaries. But only 20% of employees earn 25 or more years of benefits, and just 50% fulfill the five-year vesting period. Many employees who leave the system before retiring opt out of it. They can withdraw their personal contributions—but forfeit any contributions by the state.

Because the system provides so little for most employees, the state can fully fund the plan with current contributions of only about 5.5% of payroll. These contributions may fluctuate depending on the plan’s experience.

State Senator Peter Mills, the strongest advocate for bringing in Social Security, has described the current system as “immoral.” “It takes younger people and feeds off them,” he said. “You can withdraw from teaching at age 40 and realize you’ve got nothing to look ahead to for your old age.”

By “backloading” payouts, many state and local pension plans encourage long tenures, discourage mobility and motivate participants to creatively boost income during their final years. Since teachers can earn extra pay by coaching sports, for example, you’ll often see elderly coaches warming the benches at high school sports events.

Adding Social Security to a state pension plan would reduce backloading, because the Social Security portion of the retirement program is based on inflation-adjusted career average earnings, not on final pay. Putting Maine state employees under Social Security, as most states do, would provide a more portable pension for shorter-service employees. With workers changing jobs more frequently today than a generation ago, portability is increasingly important.

Solving the Problem

In 2009, the Maine legislature created a task force to study ways to combine its pension with Social Security. To include all existing employees in such a revamped system would be financially and logistically impractical, so the task force focused on future hires. The task force included pension system stakeholders, consulting actuaries, and Sandy Matheson, the then-new director of the Maine Public Employees Retirement System (MainePERS). Matheson came from Washington State, where she had worked in both executive management and benefits management.

The team ruled out a defined contribution option, saying that DC plans typically “do not adequately assist individuals with retirement readiness or act as a retention incentive.” They did not recommend a specific defined benefit option, leaving the state legislature to weigh alternatives.

One of the defined benefit options would combine Social Security with a DB pension with an annual accrual rate of only 1% instead of 2%. This plan would also require the state and the employees to each pay about 9% of income, with each paying 6.2% to Social Security. Such a plan would raise payouts for shorter service employees, lower payouts for longer-service employees, and raise replacement rates for lower-paid workers.

With total costs of around 18% of payroll, such a plan would cost four to five percentage points more than the current plan. The higher costs would only apply to new hires, and the added expense would phase in over time.

A question worth considering is whether Maine could provide the same benefit structure without merging with Social Security. What if all contributions were kept in-state and invested in risky assets? (This argument will be familiar to those who remember Social Security “privatization.”)

Indeed, the state might be able to earn a higher return than Social Security. Technically, the current state pension plan has an assumed rate of return of 7.75%. The real rate of return of a national pay-as-you-go pension system like Social Security roughly equals the real growth rate of national income. Social Security actuaries expect a real growth rate of 3% in the near term, declining to 2.1% after 2050. If we assume an inflation rate of 2%, that’s a nominal Social Security return of 4% to 5%, well below the assumed nominal 7.75% rate for the state pension plan.

But this is not an apples-to-apples comparison. The state pension plan invests 75% of its assets in equities, which are much riskier than the special Treasury bonds that Social Security buys. Indeed, a major benefit from splicing the state pension onto Social Security would be risk reduction.

Integration with Social Security offers additional benefits as well. It would facilitate mobility between private sector and public sector jobs, because the state’s contributions to Social Security would be fully portable. It would eliminate the impact of Social Security’s Windfall Elimination Provision and Government Pension Offset on individuals who spend part of their working lives outside Social Security, and help couples optimize Social Security benefits through coordinated claiming strategies. Social Security also provides ancillary benefits for spouses, surviving family members, and for disability.

Prospects for reform

Social Security faces its own set of problems, however, such as the immensity of the Baby Boomer cohort relative to the number of active workers and rising longevity. Sixty percent of working adults don’t believe they’ll collect Social Security at all, according to a recent USA Today/Gallup poll.

But the situation may not be so dire. The Center for Retirement Research at Boston College recently calculated that a payroll tax hike to 14.4% from the current 12.4% (combined employer and employee contributions) would keep the system solvent for 75 more years.

It’s hard to assess the prospects for integrating Social Security into Maine’s pension. This is an election year, and many new faces, including a new governor, will be in Augusta come January 2011. The new government will have to write a budget for fiscal 2012-2013, and that means dealing with the unfunded pension liability. Even though the additional costs of merging the current pension system with Social Security would be phased in gradually, it will still be difficult to build support for any reforms that raise costs, regardless of the merits.

My prediction: Maine will eventually bring Social Security into its pension system, but not for several years. On the other hand, the people of Maine have a tradition of doing what’s right, even when it’s not easy. So change may occur sooner rather than later.

Joseph A. Tomlinson is an actuary and financial planner in Greenville, Me. He can be reached at [email protected].

The Bucket

Posted on September 22, 2010 by Editorial Staff -

Prudential Acquisition of AIG Japanese Units Discussed

The American International Group may be close to a deal to sell two Japanese life insurance units, AIG Start Life and AIG Edison Life, to Prudential Financial for at least $4 billion, the New York Times reported. If completed, the deal would help AIG pay back its $130 billion taxpayer-financed bailout.

Talks are continuing and may still fall apart, sources cautioned.

The insurer’s chief executive, Robert H. Benmosche, had previously said that the firm planned to keep the two units. Prudential Financial and A.I.G. began talks last year, but they fell apart. They resumed talks this year. A.I.G. has already lined up the sales of other units as it seeks to pare down its operations to worldwide casualty and property insurance and domestic life insurance.

It is planning on holding an initial public offering for American International Assurance, after failing to complete a deal with Britain’s Prudential Plc, which is unrelated to Prudential Financial. It has also agreed to sell another life insurance unit, the American Life Insurance Company, and a consumer lending business, American General Finance.

But A.I.G. has hit bumps in its road to pay back taxpayers. The talks with Prudential of Britain fell apart amid shareholder opposition, and the Taiwanese government recently moved to block the sale of another A.I.G. life insurance unit, Nan Shan.

New York Life Launches Participant-Ed Plan Called “MyLifeNow”

New York Life Retirement Plan Services has introduced a new participant program called MyLifeNow, designed to “engage participants by taking the guesswork out of retirement planning by providing simple, personal suggestions that help participants make progress one step at a time,” according to a release.

Among the elements in the MyLifeNow program are a new participant enrollment program and a new website, to be launched fourth quarter 2010, all encouraging participants to take simple steps today.

“Traditional education and communication models don’t work. Asking participants to deprive themselves now, to reap benefits at some point in the future, doesn’t resonate. We need to be empowering, not overwhelming,” said Deanna Garen, managing director of strategic marketing at New York Life.

Sponsors can review participant behavior through reporting metrics that track and benchmark progress as participants move through a continuum of action steps suggested by New York Life. MyLifeNow suggests that participants enroll in their retirement savings plan, increase their deferral rate, or diversify their assets.

New York Life Retirement Plan Services, a division of New York Life Investments, administers over $35.3 billion in bundled retirement plans and manages over $3.12 billion in defined contribution investment only assets as of June 30, 2010.

Senate Approves Partial Annuitization

A provision that would make it easier for people to annuitize a portion of their non-qualified annuity contracts, rather than the whole thing, was part of a small-business lending bill that has now passed the U.S. Senate, A.M. Best reported.

The provision would allow those holding annuities outside retirement plans “to annuitize a portion of their annuity contract while allowing the remaining amount to grow tax-deferred,” said Frank Keating, president and CEO of the American Council of Life Insurers, in a statement.

The bill, HR 5297, which passed the Senate by a vote of 61-38, resembles an earlier version passed by the House of Representatives, and reflects an idea that has been around for a while. “This is something that has been proposed before,” said Whit Cornman, an ACLI spokesman, citing work by Sens. John Kerry, D-MA, Max Baucus, D-MT, and Rep. Earl Pomeroy, D-ND.

It’s unclear, however, whether differences between the House and Senate versions of the bill will be resolved before the November elections. According to Congress’ Joint Committee on Taxation, the annuities provision would generate revenue of $956 million over ten years, from 2011 to 2020.

Symetra Life Reorganizes, Hires Guilbert from Aviva North America

Symetra Life named Dan Guilbert as executive vice president in charge of its Retirement Division as part of a new organizational structure. Currently serving as chief risk officer of Aviva North America, Guilbert will join Symetra November 1 and report to Symetra president and CEO Tom Marra.

Under the new organizational structure, a division has been created for each core business, retirement solutions, life insurance and group insurance, with each led by an executive vice president.

Guilbert, an actuary who spent 14 years at The Hartford Life earlier in his career, will have profit-and-loss responsibility for all annuity, 403(b) and structured settlement products. He will oversee the Retirement Services and Income Annuities departments, and lead the division’s strategy work, product design and innovation, product marketing, market research, service and operations.

New Home Equity Rules Praised

The Coalition for Independent Seniors (CIS) has praised the September 21 U.S. Department of Housing and Urban Development (HUD) announcement regarding new Home Equity Conversion Mortgage (HECM) Program products. In statement, CIS said:

“HUD’s new HECM ‘Saver’ product and the updated ‘Standard’ product offer seniors and consumers needed flexibility and financially beneficial options for utilizing their equity wealth. The ‘Standard’ will provide an increase in proceeds to borrowers under 90 and the ‘Saver’ will lower costs through reduced upfront Mortgage Insurance Premium. So, whether seniors are seeking higher proceeds or upfront cost savings the Home Equity Conversion Mortgage has gotten better for them.

“The new products will boost economic power for America’s seniors by making more equity value available through the HECM program, will lower upfront loan costs and offer more flexibility to consumers. HUD’s announcement is welcome news in an economy where both capital and credit are scarce and for a market where seniors are looking for options that maximize their equity.”

FRC and Blue Frog Solutions Ink Data Licensing, Distribution Deal

Financial Research Corporation (FRC), a market research firm serving the asset management industry, and Blue Frog Solutions, a provider of order management and compliance solutions for the life insurance and annuity industry, have announced a data licensing and distribution agreement.

Through this arrangement, Blue Frog, based in Pompano Beach, Fla., will supply specialized data on variable annuity contracts and riders to FRC for distribution to FRC clients. Blue Frog’s data set provides a view of all legally available product component, volume, and funding information for variable annuity products and rider profiles in the United States.

FRC will also provide the analytical tools for end-users to develop customized research. Additionally, FRC will itself use the variable annuity data supplied by Blue Frog to create syndicated research reports and analyses of market trends and product movements. Under the agreement, FRC will also provide custom research to Blue Frog or Blue Frog clients.

“Industry players and others in the annuity space [will] have a single source for comprehensive and timely data,” said Bruce Fador, Financial Research Corporation CEO. “This data provides insurance companies, advisors, and other organizations with market and product information that can be used to conduct comprehensive analyses of the competitive landscape in the variable annuity market.”

To date, more than $16 billion in deposits have been processed through Blue Frog’s AFFIRM platform, the company said in a release. Blue Frog’s products include Affirm for Annuities, AFFIRM for Life, I-Relay and Policy Box.

Quote of the Week

Posted on September 22, 2010 by Editor Test -

FRC and Blue Frog Ink Data Distribution Deal

Posted on September 22, 2010 by Editor Test -

Lincoln Financial Group Acquires Treasury Warrants

Posted on September 22, 2010 by Editor Test -

Lincoln Financial Group announced it has bought back at 2.9 million of the 13 million common stock warrants that it issued to the U.S. Treasury Department in 2009 in connection with the Treasury’s investment in the company under the Capital Repurchase Program.

The company paid $16.60 per warrant at an auction held by the Treasury. The warrants have an exercise price of $10.92 and expire on July 10, 2019. The transaction is expected to close today, September 22, 2010.

This “reflects our confidence in the strength of our balance sheet and the long-term value of the franchise,” said Dennis R. Glass, Lincoln’s president and CEO. “This investment was also an opportunity to reduce future dilution to our shareholders at an attractive price.”

Lincoln Financial Group is the marketing name for Lincoln National Corporation and its affiliates. With headquarters in the Philadelphia region, the companies of Lincoln Financial Group had assets under management of $140 billion as of June 30, 2010.

Mutual of Omaha Says “Aha!” to Social Media

Phoenix and AltiSure Launch ‘Secure Lifestyle’ Annuity Series

AllianceBernstein Acquires Alternative Investments Group from SunAmerica

New Global Bond Product from ING

Ascensus and PacLife in 401(k) Co-Venture

New York Life Launches Participant-Ed Plan Called “MyLifeNow”

Data Connection