Corebridge Joins the Registered Index-Linked Annuity Market

What You Need to Know

Corebridge was once part of AIG.
It has about $390 billion in assets.
The indexes at the heart of the crediting rate maximization strategies are the S&P 500 and the Nasdaq-100.

Corebridge Financial has answered the question about whether it’s interested in the hot market for registered index-linked annuities: Sure.

The Houston-based company today introduced its own RILA, through a contract written by its American General Life Insurance Co. subsidiary.

The new contract includes access to a feature that can “lock and credit a rate based on actual S&P 500 index performance on the day the preset growth target is reached,” the company says.

Once a contract holder locks in gains, the holder will get a guaranteed higher, fixed rate of interest until the next contract anniversary, the company says.

The contract also offers holders access to 19 other strategies for maximizing the crediting rate. The strategies are tied to the performance of S&P 500 and the Nasdaq-100 indexes.

What it means: For financial professionals with relationships with Corebridge, the new RILA will make it easier to sell Corebridge annuities.

For clients with mixed feelings about the economy, the contract will provide another way to reflect their uncertainty in their portfolios.

For annuity strategists, the product launch may raise the question: Are RILAs so popular that new players should try to focus on some other, quieter niche, like the market for traditional variable annuities?

RILAs: A registered index-linked annuity gives the holder to tie the rate of the return to the performance of a stock index or other investment-market indicator.

Because the issuer registers the product with the U.S. Securities and Exchange Commission, it can expose the holder to the risk of loss of principal.

When the issuer ties the credit rate to the performance of an investment index, that means the issuer can manage the product market risk using derivatives based on that index, rather than having to cobble together hedging arrangements based on instruments without such a well-tailored fit.

The characteristics mean that issuers can choose how much market risk they accept, charge directly for whatever level of protection they provide, and pass much or all of the market risk they take to counterparties.

U.S. RILA sales increased to about $60 billion in the first half, up 25% from the first half of 2023.