Athene Agility Annuity Review

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Introduction

In this article, we will discuss in-depth the Athene Agility Fixed Indexed Annuity. It is one of the most popular annuities of Athene. I have tried my best to provide an in-depth and unbiased analysis of this plan after extensive research and due diligence.

The Athene Agility Fixed Indexed Annuity was launched in June 2018 as an “all-rounder” annuity product and offers tenures of 7 and 10 years.

Fixed Index Annuities are contracts between the annuitant and an insurance company in which the insurance company promises to credit interest based on the performance of a certain stock market index. Fixed Index Annuities has an inbuilt feature of capital protection, so even if the index goes down, your principal will remain safe.

Annuities are complex products and many advisors try to missell them without properly understanding the needs of the buyer. Thus, it is very important that you should educate yourself on these products and not solely depend upon the annuity agent’s high-pressure sales pitch.

The review of the Athene Agility Fixed Indexed Annuity will be broken into multiple subcategories:

  • Product Description
  • Rates and Costs associated with this annuity
  • Riders
  • What makes this product stand out?
  • What I don’t like
  • Company Details
  • Conclusion

Product Description – Athene Agility Fixed Indexed Annuity

The Athene Agility is a Fixed Indexed Annuity (FIA) plan that offers the annuitant (annuity investor) an opportunity to earn a market index-linked return without having to incur the risk of market downside. It is a suitable plan for retirees or people who are approaching retirement and aim to grow and protect their retirement savings. This plan is also suitable for people who are looking for guaranteed lifetime income or plan to leave a legacy for their loved ones, in addition to protecting and growing their retirement savings.

Let’s have a look at the high-level fine print of Athene Agility Fixed Indexed Annuity and then we will discuss each point in detail.

Product NameAgility
Issuing CompanyAthene
AM Best RatingA (3rd of 16 ratings)
Tenure7 and 10 years
Maximum Issue Age80 Years (83 Years for the 7-year policy)
Minimum Initial Purchase Amount$10,000
Surrender Charge ScheduleVaries for different tenure policies
Crediting Period and Strategies1-year or 2-year point to point with participation rate or caps, or 1-year fixed with interest rate guaranteed. 
Plan TypesIRA, Roth IRA, Nonqualified Account, SEP IRA, SIMPLE IRA, 401(a).
IndexesBNP Paribas Multi-Asset Diversified 5 Index, NASDAQ FC Index, AI-Powered US Equity Index, S&P 500 Index.
Free WithdrawalsGreater of 10% of your initial premium or 10% of the annuity’s Accumulated Value; each year.
Death BenefitUpon the annuitant’s death, the beneficiary can either choose from (i) Accumulated Value (Lumpsum) or (ii) Benefit Base (paid of equally over a period that will not exceed 10 years)
RidersAll riders are free of cost and are automatically included in the policy.
Athene Agility Income and Death Benefit rider Athene Agility Enhanced Income Benefit rider
Surrender ValueGreater of Accumulated Value (less any withdrawal charges/MVA) and the Minimum Guaranteed Contract Value

The Athene Agility Fixed Indexed Annuity is almost identical for all policy tenures, except the crediting strategies and surrender charge schedule. For ease of discussion and better clarity, we will discuss the Athene Agility 10 Fixed Indexed Annuity for the rest of the article.

How does the Athene Agility 10 Fixed Indexed Annuity policy work?

Any annuitant (maximum age at the time of policy issue: 80) can purchase the Athene Agility 10 Fixed Indexed Annuity with a minimum initial purchase amount of $10,000; and in return, he will earn market index returns (calculated through a formula that we will discuss shortly), credited as per the chosen crediting period. Apart from the regular crediting period, there are various events that may trigger earnings credit: On free withdrawals; For a long-term care event or terminal illness or injury event; or when a death benefit is payable.

The Athene Agility 10 Fixed Indexed Annuity offers the annuitant to chose from one or more of the four indexes to determine his earnings crediting formula. Each of these indexes has two strategies each, and a fixed rate guaranteed interest strategy to choose from  (making a total of 9 strategy options). We will discuss each available index briefly:

  1. BNP Paribas Multi Asset Diversified 5 Index: The BNP Paribas Multi Asset Diversified 5 Index is a rules-based index that seeks to measure the performance of a diverse range of asset classes comprised of eight components (three equity futures index, three bond futures index and two commodities index. On a daily basis, the BNPP MAD 5 Index dynamically rebalances the weightings of the components according to a proprietary methodology that seeks to identify weights for the components that would have resulted in the Hypothetical Portfolio with the highest past returns.

The BNP Paribas MAD 5 Index was created in January 2016 and targets a 5% annualized realized volatility. The 10 years hypothetical back-tested historical annual return as shown by BNP Paribas stands at 5.68% and the actual return since the index inception stands at 5.71%

  1. NASDAQ Fast Convergence Index: The NASDAQ Fast Convergence Index is powered by BofA and uses a proprietary technology that aims to reduce risk and increase performance by adapting faster to changing market conditions. It has a 107.95% exposure in the NASDAQ 100 TR Index (which contains 100 of the most prominent large-cap stocks). It is important to know that this index employs a performance control mechanism wherein a portion of the returns of the Nasdaq FC Index is capped at 4% for the preceding one-month period.

The NASDAQ FC Index was created in January 2020 and targets a 12.5% annualized realized volatility. The 10 years hypothetical back-tested historical annual return as shown by BofA stands at 9.39% and the actual return since the index inception stands at 12.2%. 

  1. HSBC AI-Powered US Equity Index: The HSBC AI-Powered US Equity Index (AiPEX) is an index developed by HSBC that uses IBM Watson’s AI engine to create a risk-controlled, excess return index comprised of approximately 250 U.S. publicly traded companies, adjusted monthly, that is intended to provide growth through a variety of market conditions.

The AiPEX Index was created in August 2019 and targets a 6% daily volatility. The 10 years hypothetical back-tested historical annual return as shown by HSBC stands at 6.41% and the actual return since the index inception stands at 5.1%

  1. S&P 500 Index: The S&P 500 index is one of the most popular and oldest indexes in the world. It tracks 500 large-cap publicly traded stocks listed in the United States. It is a reliable index and has often succeeded in the test of time. 

It is very important to note that the Athene Agility Fixed Indexed Annuity offers the S&P 500 index with caps in place, meaning that your interest-earning capacity is capped. These rates tend to change frequently; I will discuss more on the rates shortly. 

In my opinion, the NASDAQ Fast Convergence Index is an ideal index to choose from, as it offers an uncapped strategy with an above-average participation rate and back-tested returns are also higher compared to other indexes.

Note: In addition to allocating the funds in the following indexes, the annuitant also has an option to allocate funds at a fixed interest. These Fixed Rates tend to change from time to time. The Fixed Value Rate at the time of writing this article was 1.4%.

Rates and Costs associated with the Athene Agility Fixed Income Annuity

The earnings crediting formula

The earnings crediting formula is the most important part of this annuity discussion. It is important to know that we don’t simply get the index return credited to our annuity. There are a few rates and caps that the company has in place that affect our earnings. These rates tend to change over time, and the updated rates can always be checked on the company’s website. 

The formula to calculate the earnings credited is:

  • For Strategies with Participation: (Participation Rate % X Index Return) 
  • For Strategies with Caps: Index return over a given crediting period with a maximum potential of earning the cap rate

Let’s have a look at the Athene Agility 10 rate sheet (as of 06/04/2021) to understand how the earnings are determined.

The first thing to note is that we have four indexes and each index has 2 strategies. All in, we get to choose from a total of nine strategies (eight index-based and one fixed). The company displays three types of crediting strategies across these rates (Participation, Cap, and Fixed). The Participation rate (index allocation rate) and the strategy caps are the most important.

Let’s quickly go through the terminologies described by Athene:

  1. Participation rate (PR): Participation rate describes the annuitant’s participation percentage in a return of an index. For example, suppose the participation rate is 60%, and the index returned 10% over the agreed time. In that case, the annuitant will be eligible for only 60% of the return, i.e., 6%. 
  1. Cap rates: It means at what rate your interest-earning capacity is capped. For example, if an index returned 12% but the contract’s cap rate is 6%. In this situation, the annuitant will be eligible for an interest credit of 6% only. It doesn’t matter how much the index goes above the cap rate; the maximum interest that can be earned is the cap rate.
  1. Fixed account rates: If you opt for a fixed account rate, you simply earn the fixed rates for a particular period specified by the company before your policy beginning. These rates usually tend to be very low as compared to other fixed avenues such as CDs and MYGAs, so you should avoid fixed rates in a general scenario. The 1-year fixed-rate on this policy at the time of writing this article was 1.4%. 
  1. Bailout Feature: If Athene lowers the declared 1-Year Point-to-point Index Strategy Annual Cap Rate below the Bailout Cap Rate, you’ll have full access to your annuity’s Accumulated Value-free of any charges — for up to 30 days after the Contract Anniversary in which the Bailout Cap Rate was pierced. After the 30-day Bailout Window, all Withdrawal Charges and MVA will apply.

Thus, it is very important to check rates before choosing your preferred index.

Out of all these indexes, I prefer the NASDAQ FC index the most because of its decent back-tested returns, a good real performance, and a relatively high index allocation rate offered by the company.

Surrender Charge

Should your needs change unexpectedly and you need to take an excess withdrawal (a withdrawal that is above the free withdrawal amount available in a given contract year) you may be entitled to access additional monies; although certain charges and penalties may apply. Any amount withdrawn in excess of the remaining free withdrawal amount is subject to a Surrender Charge. Below is the Surrender Charge schedule for Athene Agility 10.

Completed Contract Years1234567891010+
Surrender Charge %9%9%8%7%6%5%4%3%2%1%0%

In case you need to surrender your policy, a Market Value Adjustment (MVA) will be applied to the portion of the withdrawal or surrender that exceeds the free withdrawal amount during the withdrawal charge period.

Note that this surrender charge schedule is only valid for the Athene Agility 10 product for select states. For complete details about each state, you may visit the product’s rate card here.

The surrender charge schedule is different for the different tenure of annuities. For a quick comparison of surrender charges across different products of Athene, you may visit their fixed indexed annuities product page here.

The surrender charge of Athene Agility fixed indexed annuity is pretty much in line with all the other annuity issuers.

Contract/Administrative Charge

The Athene Agility Fixed Income Annuity levies no annual contract or administrative fees

Riders

Riders are one of the main highlights of the Athene Agility Fixed Income Annuity. The Athene Agility Fixed Income Annuity comes with several riders that are automatically attached to the policy and are free from any fixed or variable costs.

The Athene Agility 10 FIA comes with the following riders:

  1. Income and Death benefit rider: The free Income and Death benefit rider is most useful for people who are not sure about how things will work in their retirement. 
  • The income component of this rider helps the annuitant to have a stream of lifetime guaranteed income. The amount of the guaranteed lifetime income is based on the benefit base. 

The benefit base is calculated as:

Initial Premium + Benefit Base Bonus (Currently, 25%) + Benefit Base Interest Credits (Currently, 175% of the dollar interest amount credited on each strategy period) – Withdrawals from the annuity. 

A good thing about this rider is that the benefit base will continue to grow by 175% of the dollar interest credited even after the guaranteed income stream begins. 

Now, the Lifetime Income is calculated as:

Benefit Base X Lifetime Income Withdrawal Percentage

The lifetime income withdrawal percentage is based on how later you begin your lifetime income withdrawals and whether you opt for single-life or joint withdrawals. The latest lifetime income percentages of the Athene Agility FIA can be accessed here.

  • The death component of the rider helps you to leave a legacy for your beneficiaries. Upon your death, your beneficiaries have an option to choose either your annuity’s full Accumulated Value in a lump sum or the Benefit Base, paid out equally over a period not to exceed 10 years.
  1. Enhanced Income Benefit Rider: If you are ever confined to a Qualified Care Facility, such as a nursing home, your maximum lifetime income withdrawal amount will be doubled until your accumulated value is reduced to zero. Although, you must keep in mind that to qualify for this rider, you must be confined to a Qualified Care Facility for 180 out of the last 250 days. 
  1. Confinement and Terminal Illness Waiver: This no-fee rider is automatically included for owners providing them a Confinement and Terminal Illness benefit.

Confinement Waiver: After the first contract year, an annuitant can withdraw up to 100% of the contract’s accumulated value if he is confined to a Qualified nursing home. No withdrawal charge or MVA apply if the owner qualifies for this benefit. Diagnosis must occur after the contract is issued and written proof with supporting documentation is required from a qualified physician.

Terminal Illness Waiver: After the first contract year, an annuitant can withdraw up to 100% of the contract’s accumulated value if he is diagnosed with a terminal illness. No withdrawal charge or MVA apply if the owner qualifies for this benefit. Diagnosis must occur after the contract is issued and written proof with supporting documentation is required from a qualified physician.

What makes this product stand out?

The Athene Agility Fixed Indexed Annuity offers some of the features that not many fixed indexed annuities offer. The ones that I like the most are:

  1. All riders are free 

As discussed above, Athene Agility Fixed Indexed Annuity offers all riders (Income and Death benefit rider, Enhanced Income Benefit Rider, and Terminal Illness Waiver) absolutely free of any fixed or variable cost. We rarely see an annuity that automatically provides all the riders free of cost.

These riders are of immense value to the people who are not sure about how things will work out during their retirement, proving them a host of benefits including income and death benefits.

  1. Higher Free Withdrawal Rate

The Athene Agility Fixed Indexed Annuity has a free withdrawal rate of greater than 10% of the initial premium or 10% of the annuity’s Accumulated Value; each year. This rate of 10% is higher than what we see in typical accumulation annuities that generally offer only 7% of the contract’s value as free withdrawals.

The higher free withdrawal rate offers more liquidity and flexibility to the annuitant.

  1. Option of Uncapped Strategies

Caps on the equity indexing strategies are a bummer! Strategies with Caps should not be considered as true indexing strategies, because these Caps limit the earning potential of an index big time. If I choose a good index but it has a Cap of say 4%; then essentially I am settling for 4% right from the beginning; so why should it be called “indexing” strategy in the first place?

But, the good thing with the Athene Agility Fixed Indexed Annuity is that it provides uncapped strategies for many indexes like BNPP MAD 5 Index, NASDAQ FC Index, and the AiPEX Index. Uncapped strategies are a true way of taking an upside exposure of an index. Although, Participation rates still apply to these indexes.

What I don’t like

This product is generally good on all fronts, still, there are some features that I don’t like about this annuity.

  1. Caps on the S&P 500 Index: The rate sheet mentions that both the S&P 500 strategies are capped. The 1-year point-to-point S&P 500 Index strategy has an even low cap (just 3% during the time this article was written). The S&P 500 is the most popular index in the world, and I believe that the annuitant should be given a decent opportunity to participate in the S&P 500 index.
  1. No minimum guaranteed income rate: In case you need to surrender your policy, your contract value will not be considered for any minimum guaranteed income rate (MGIR). You will only be eligible for your contract’s surrender value, losing the time value after your last interest crediting period. Many of the policies offer an MGIR of 0.5-1% in case you need to surrender your policy. 
  1. Average Realistic return expectations: You might have known by now that this is an all-rounder policy that offers both growth and protection. As an all-rounder policy, the realistic return expectations are pretty average. It is not the best policy for someone who is looking only for growth and accumulation.

Company Details

You must always keep in mind that, unlike CDs, annuities are not guaranteed by the Federal Deposit Insurance Corporation (FDIC) or any other federal insurance agency. An annuity’s “guarantee” is only as strong as the insurance company that issues the annuity, so it is always important to assess the issuing company before buying an annuity.

Athene Annuity and Life Company

Athene Annuity and Life Company have been in the business since 2009. It is one of the largest providers of fixed and fixed indexed annuities in the US for many years and has been regularly been in the top ten Fixed Indexed Annuity Sales.

It is rated as follows by the rating agencies:

Rating AgencyRating
AM Best A (3rd of 16 ratings)
FitchA (6th of 19 ratings)
S&PA+ (5th of 21 ratings)

Athene Annuity and Life Company have managed to maintain decent ratings for many years. It is considered to be strong and stable financially. In 2020, the company paid out nearly $12.6 billion in claims. As of year-end 2020, some of the other financial highlights for Athene Annuity include its:

  • $36.7 billion in total sales / direct written premium
  • $18.7 billion of a total stockholders’ equity
  • $1.24 billion in net operating income
  • $202.8 billion in total assets

Thus, going by the operating history and financial numbers, we can safely gauge that you can trust your savings with Athene Annuity and Life Company.

Conclusion

With the advancement in healthcare and technology, an average American today is living longer than ever. So, it’s very important to have a stream of income that can grow safely, steadily and have the ability to provide a fixed guaranteed income during the retirement years. This not only helps you to mitigate the risk of outliving your income but also ensures that you continue to live a decent life even in your retirement.

The Athene Agility 10 is one such annuity that helps you grow your savings with much less risk. Through its Fixed Income Annuity and free riders, It offers principal protection, and the opportunity to participate risk-free in the market index, and providing a stream of guaranteed income, and even legacy planning!

If you are considering buying a Fixed Income Annuity that works on all fronts, the Athene Agility FIA is an ideal product to look after. Although, you must keep in mind that this is an all-rounder annuity and may not be the best suited for people who are exclusively looking for growth and accumulation, and your realistic return expectations should be average!

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Nikhil is an experienced finance professional with five years of experience in public and private equity research. He is the founder of the global financial research and analytics firm, Alliance Knowledge Partners. Throughout his career, he has consulted a large number of boutique and institutional investors to achieve their investment goals. He is a graduate in commerce and holds the CFA designation. Nikhil is a professional Chess player and likes to write on finance and business.

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