Reviewing the Performance of Fixed and Variable Annuities
The Annuity Review is an in-depth report on the contractual provisions and investment performance of an annuity. Each annuity review evaluates four key areas.
Company Criteria: The assessment of the financial strength of the underwriting insurance company is based upon acceptable standards set forth by nationally known and accredited rating services.
Performance Analysis: RIC benchmarks the performance of both variable and fixed annuity contracts.
- Variable annuities achieve a return based upon market sub-account values less applicable sales, management and expense charges. First, hypothetical current values based on equivalent stock and bond allocations are determined. The bond index current value performance is the expected performance value for contracts that are not variable or equity indexed. The applicable weighting of current assets to the indices' current values is the expected performance for variable and equity indexed contracts. The performance ratio is a ratio of the actual accumulated value to the expected performance value of the comparative indices. RIC uses the performance ratio to categorize contract performance as "excellent," "out-perform," "comparable," "under-perform" or "poor."
- Fixed annuities perform according to the provisions and stated crediting within the annuity contract. RIC reviews this performance relative to the contract's contractual obligation. RIC takes the current Interest rate environment into account for this comparison.
Risk Assessment Category: This review component provides guidance as to the frequency of ongoing oversight for each annuity contract based upon the type of annuity, the accumulated value, the carrier, contract or investment performance and any noteworthy item identified by the analyst.
Investment Objective Criteria: This finding reports on the investment allocation objective of the trust and determines whether the annuity is meeting the stated objective. RIC also determines the life expectancy of the annuitant, the probability of annuitant survival to contract maturity and rates of return. Additionally, we compare the performance of the contract against the S&P Index and Dow Jones Bond historic performance.
Every Annuity Review is examined by an annuity analyst for accuracy and to add individually authored contract management observations for Trustee attention.
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