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AIG Introduces an Index Annuity Amid Present Volatility

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American International Group, Inc.’s (AIG - Free Report) business, AIG Life & Retirement, recently rolled out an index annuity —AQR DynamiQ Allocation Index. This annuity has been conceived by AQR Indices, which is a subsidiary of AQR Capital Management. Further, the index annuity can be accessed only in the Power Protector Series of Index Annuities that is furnished by American General Life Insurance Company.

Notably, AQR Capital Management is primarily known for its diverse analytical research and indispensable knowledge about portfolio construction.AQR DynamiQ Allocation Index intends to create customized portfolios by expanding across multiple asset classes and geographic regions. Being the first index annuity designed by AQR, it also aims to generate higher consistent returns and strong risk management abilities.

The index annuity will also utilize AQR’s unique methodology and incorporate such assets in portfolios, which will have the ability to tide over any sort of market volatility. Further, index annuities generally provide a steady and lifetime source of income for retirees. Apart from this, index annuities provide guaranteed income based on the capabilities of paying claims of the issuing insurance company. They usually provide shield to the principal amount of its clients in case of any financial turmoil.

We believe the latest move by AIG Life & Retirement particularly bodes well as it comes at a time when the entire U.S. economy is grappling with financial woes. The current financial turmoil induced by the COVID-19 pandemic has only aggravated financial insecurities. Thereby, we believe that the new index annuity bodes well as it is likely to alleviate financial burden of retirees.

Prior to this annuity, AIG had introduced another index annuity last month—X5 Advantage—by collaborating with Annexus. The company has always been focused on offering long-term retirement benefits to retirees. This May, AIG Life & Retirement rolled out Legg Mason Quality Dividend Index that concentrates on high quality dividend paying stocks to generate greater and consistent returns amid market volatility. Such initiatives are likely to drive results for the company’s Life & Retirement segment going forward.

However, shares of this Zacks Rank #3 (Hold) insurer have lost 33.6% in a year compared with the industry’s decline of 15%. Nevertheless, we believe the company’s strong fundamentals are likely to drive its shares going forward.

Stocks to Consider

Some better-ranked stocks in the insurance space are Amerisafe, Inc. (AMSF - Free Report) , Brighthouse Financial, Inc. (BHF - Free Report) and American Equity Investment Life Holding Company (AEL - Free Report) , each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Amerisafe, Brighthouse and American Equity have a trailing four-quarter positive earnings surprise of 50.67%, 14.38% and 63.04%, respectively.

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