introduced a new annuity product Monday that targets investors nearing retirement who are trying to shore up their assets after a painful bear market.
The MetLife Growth and Guaranteed Income (MGGI) variable annuity is distributed exclusively through Fidelity and is the only deferred variable annuity with a living benefit sold through the company. It's being marketed to investors who are either retired or preparing for retirement.
Investors fund the annuity using a portion of their existing retirement savings, including tax-deferred accounts like IRAs or employer-sponsored accounts such as a 401(k) plans. There is a $50,000 minimum investment.
Starting at age 59 1/2, the annuity provides an annual withdrawal benefit that's guaranteed for the holder's life. It includes a death benefit that allows individuals to leave assets to their beneficiaries.
Backed by MetLife, MGGI serves as a Fidelity-managed "fund of funds" that invests in more than 30 mutual funds for an asset allocation that's 60% equities, 35% fixed income and 5% money market portfolios.
"Given what investors experienced over the last year, I think they understand much more viscerally today the value of guarantees," says Jon J. Skillman, president of Fidelity Investments Life Insurance. "When you see the value of your retirement accounts shrink by maybe 50%, you begin to appreciate the comfort and security, at least for a certain portion of your assets, of a guaranteed income stream for as long as you live without any danger that it will ever go down."
In a MetLife/Harris Interactive poll conducted in September, 68% said they are placing a greater importance on protecting their portfolios against market losses than on participating in stock market gains.
The asset allocation for the MGGI annuity was designed to strike a compromise between growth and security.
"We know in talking to our customers that they have become more conservative," Skillman says. "The concept of protecting the downside is much more top-of-mind that it was just a year or a year-and-a-half ago."
That prevailing mood is creating new interest in variable annuities, retirement vehicles that had once fallen out of favor over concerns about poor returns and the unscrupulous methods of some who sold them. But the dwindling of traditional income sources, such as pensions, and lingering uncertainties about Social Security are prompting retirees to seek alternatives.
"The variable annuity industry and these products have not always had the highest reputations," Skillman say, adding that companies will regain investors' confidence by proving they're sensitive to demands for low-cost options that are transparent.
"We want it to be straightforward for an individual to understand them and the role they play in their investment portfolio," he says.
-- Reported by Joe Mont in Boston