Note: This article was updated after initial publication to reflect information from Hedgeness about 2018 and 2019 data comparability.
Big U.S. variable annuity issuers might be using more similar expense structures for popular living benefits riders.
Hedgeness Inc., a Chicago-based financial services data analytics company, has included data supporting that possibility in a new batch of variable annuity living benefits rider rating data.
(Related: Unexpected Ways to Reduce RMDs, Optimize Retirement Cash Flow)
Hedgeness included 13 issuers in its latest rating table, up from seven last year.
The firm uses a proprietary formula to calculate expense and benefits figures.
For 2019, the overall expense charge levels ranged from 2.64% up to 3.61%, and the benefits value figures ranged from 18.49 up to 41.31.
For 2018, the range was 2.69% to 3.49% for expense charges, and 26.30 to 36.36 for benefits value figures.
We compared the median figures for benefits and riders for the companies with riders that appeared in both tables.
The median exchange charge level held steady at 3.24%, according to ThinkAdvisor calculations.
The median benefits level for the seven companies with riders that appeared in both tables increased to 37.01%. That’s up 25% from the 2018 median, 29.58%.
We also looked at how much the gaps between the highest and lowest values changed between 2018 and this year, for the seven companies with riders that appeared in both tables.
The gap between the highest expense figure and the lowest shrank to just 11% this year, from about 30% in 2018.
The gap between the highest benefits value figure and the lowest held steady at about 38%.
The figures appear to show that typical expense levels stayed about the same, but riders with especially high or low expense levels moved toward the median.
Typical benefits levels increased significantly, but companies made no obvious push to offer benefits that were more in line with what the other companies in the 2018 Hedgeness table were offering.
Resources
A link to the new Hedgeness variable annuity rating data is available here.
— Read Why That MYGA Rate Is So Hot, on ThinkAdvisor.
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