Rider charge management criteria

Rider charge management criteria

Allianz is committed to offering you sustainable fixed index annuity benefits and guarantees in any economic environment. This is why, in extremely challenging economic conditions, we may change our rider charges on inforce business to maintain (and potentially improve) product benefits and guarantees.

Making a change to a rider charge after contract issue is not taken lightly and is not completely at our discretion. We will consider changing our rider charges only if one of the criteria below is met. If one of them is met, the charge may be increased in one of the following two calendar years. We also maintain the discretion to not change the rider charge if one of the criterion is met. We chose these criteria because they are related to the performance of the assets we use to meet our fixed index annuities’ guarantees. Please note that none of the thresholds we have established for these criteria have been met historically.

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Annual average U.S. 10-year Treasury rate

Current rate as of 2023 - 3.96%

Criteria threshold – less than 0.50%

All-time historic low – 0.89%
StocksStocks

Calendar-year corporate bond downgrades

Current rate as of 2023 - 7.35%

Criteria threshold – greater than 25.00%

All-time historic high – 19.13%
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Calendar-year investment-grade corporate bond defaults

Current rate as of 2023 - 0.06%

Criteria threshold – greater than 0.50%

All-time historic high – 0.42%

Questions about these criteria?

Quick links

U.S. 10-year Treasury rate

Corporate bonds

Investment-grade corporate bonds

What products and riders do these criteria apply to?

These criteria will be monitored for the Allocation Charge rider on the Allianz 222® Annuity, Allianz Accumulation Advantage® Annuity, and Allianz Accumulation Advantage+™ Annuity as well as the allocation charge on the Allianz Benefit Control® Annuity. These criteria will also be monitored for the rider charge on Allianz 360™ Annuity.

U.S. 10-year Treasury rate

What is the U.S. 10-year Treasury rate?

The 10-year Treasury bond rate is used as a benchmark to gauge the long-term U.S. interest rate environment.

Why did you choose annual average U.S. 10-year Treasury rate as a criterion?

The yield the investments in our general account return generally moves with the 10-year Treasury rate. If the 10-year Treasury rate is low, the yield we’re able to earn is also likely to be low. This in turn impacts the level of benefits we can support.

When does the annual average U.S. 10-year Treasury rate matter to my contract?

We maintain the discretion to change the rider charge if the annual average U.S. 10-year Treasury rate for the calendar year is less than 0.50%. Please note: The average U.S. 10-year treasury rate for the calendar year 2020 was not used to make any change to the rider charge on any of our contracts.

Corporate bonds

What are corporate bond downgrades?

A corporate bond is a debt security issued by a corporation and then sold to investors. A corporate bond is downgraded when its credit rating is lowered by one of the credit rating agencies. If a corporate bond is downgraded, it reflects an increased likelihood that the bond issuer will not be able to meet the bond’s obligations.

Why did you choose corporate bond downgrades as a criterion?

We chose this criterion because a significant portion of our general-account assets is invested in corporate bonds. In general, a bond’s value decreases if it is downgraded, and there is an increased likelihood the bond issuer will default. High levels of corporate bond downgrades could impact the performance of our investments and therefore the sustainable level of benefits we can offer.

When do corporate bond downgrades matter to my contract?

We maintain the discretion to change the rider charge when corporate bond downgrades for the calendar year exceed 25%.

Investment-grade corporate bonds

What are investment-grade corporate bond defaults?

An investment-grade bond is a debt security that has a credit rating of BBB- or higher from Standard and Poor’s. Investment-grade bonds are considered to have a relatively low risk of default. The default percentage is measured as the number of investment-grade bond issuers that default compared to the number of investment-grade bond issuers at the beginning of the year. A bond defaults if its issuer fails to make an interest or principal payment it promised to bondholders.

Why did you choose investment-grade corporate bond defaults as a criterion?

We chose this because a significant portion of our general account assets is invested in investment-grade bonds. If investment-grade bond defaults are high, it could impact the performance of our investments and therefore the sustainable level of benefits we are able to offer.

When do investment-grade corporate bond defaults matter to my contract?

We maintain the discretion to change the rider charge when investment-grade corporate bond defaults for the calendar year exceed 0.50%.

Sustainability in any economic environment

No one can predict future economic environments. As a leader in the fixed index annuity industry, we think it’s important to offer you FIA benefits that are sustainable in any economic environment. Having the flexibility to make adjustments during extreme economic environments allows us to continue to offer sustainable product benefits to you. 

Fixed index annuities (FIAs) are designed to help you meet your long-term retirement needs by offering principal protection from market downturns, tax deferral, and a death benefit for your beneficiaries. And because they’re long-term financial vehicles, it’s important to work with an insurer that is committed to honoring its guarantees.

Products are issued by Allianz Life Insurance Company of North America, PO Box 59060, Minneapolis, MN 55459-0060. (C54370-MVA, R95316-01-MVA, R95374-MVA, R95352-MVA, C64237-MVA, R95581-MVA, C64997-MVA)

Guarantees are backed by the financial strength and claims-paying ability of Allianz Life Insurance Company of North America.

Product and feature availability may vary by state and broker/dealer.