AEL
#<UNK>, it's <UNK>.
Are you referring to the renewal rate adjustments.
Those renewal rate adjustments are on pass, so to speak, and they will not be rescinded or adjusted.
I think we've said on several other occasions, in response to questions about those, that the competitive factors don't extend down into renewal rate activity.
While that may sometimes show up in conversations with agents as they see how different carriers treat their policyholders on renewal, and I think even with our adjustments, we've treated ours awfully well relative to what we hear about how they may have been treated by some other carriers.
But that's not really a big question in the competitive landscape, unlike comparisons of rates for new sales opportunities.
One thing we want to point out, <UNK>, is that the coinsurance treaty that Eagle has with the team was scheduled to drop to 50%, effective January 1, and that's what's happened.
So that has dropped from 80% to 50% as part of the agreed-upon terms in the agreement.
And you mentioned MIGA at the tail end of your question.
MIGAs at American Equity have never been part of our strategy.
They've been an accommodation to agents who are selling fixed-index annuities, and if a particular agent had a customer policyholder who wanted a MIGA policy, we wanted to at least have a policy available for that agent to place with us, as opposed to forcing them to go to a competitor.
MIGA policies are very rate sensitive and so the tenants of agent loyalty and relationships disappear in the MIGA space.
It's just not one were interested in being in because the only way you really do have long-term success is kind of almost always having the highest rate.
And the coinsurance percentage on MIGA stays at 80%.
It's just on the FIA business it drops to 50%.
This is <UNK>.
We think by adding MVAs to our FIAs it certainly won't put us at the top of the heap but it'll get us closer.
Instead of being 90 to 100 basis points on a cap, we think that we can get maybe 25 basis points or 35 basis points closer to the top.
So at that point, our producers will start remembering the value that we provide in excellent customer service and renewal rates and all this other stuff that we've built the Company on.
So that's a plus there.
On the income part, on the guaranteed lifetime income part, as you look at the competition today, we're about, on an income basis, 80% of the number one income company, but we're about 98% of the company that would be ranked number two.
So there's a big cluster of us that are pretty close and our guaranteed income and there's an outlier company that's way above everybody else.
We think we can put together a new lifetime income benefit rider for our FIA products that can kind of, maybe take us a little closer to the top of the cluster, so to speak, but we're not to be anywhere closer to the outlier company.
And the reason I talk about that is, if you look at us and rank us in the cluster, we might be ranked fifth or sixth or even seventh as far as a guaranteed income.
But it's in a very close pack, so people that run these comparisons, they will see us show up and we're ranked fifth or sixth.
If we can make little tweaks here and there, and show up second or third, we can be selected more frequently, obviously, than when you rank fifth or sixth.
No, we've been ---+ all the price testing we've done is looking at consistent profit measures with what existing products have.
It's certainly affecting the smaller firms, in that they can't ---+ they don't have the infrastructure to be a financial institution, and when you look at the IMO exception, it's very, very few IMOs that will even qualify for the IMO exemption.
So the way I look at it is that these smaller firms you know have to make a decision, either get out of the FIA business or consolidate with the larger IMOs out there that do have the infrastructure and that has a capability to be an FI.
It's unfortunate in that the DOL rule is almost turning the FIA business into a monopoly because there's going to be fewer and fewer IMOs if the rule goes through that have the ability to be financial institution than currently exist today.
We're going from hundreds of IMOs down to maybe, I don't know, 5 to 10 that could be an FI.
Hey, <UNK>, you said M&A opportunity from AEL ---+
But we don't own any now so what's your ---+.
It's not really part of our business plan would be to be owning IMOs.
I think we still are on the path that we don't want to own production.
And where the consolidation and the potential for M&A really happens, it's for the larger IMOs who do qualify for FI.
They either have the potential where they might be acquiring smaller firms or having striking agreements where somehow that production is rolling up underneath them and they're acting as the FI and they're getting paid for the ---+
I don't think I can put a finger on that statistic.
We have ---+ our persistency is usually good with our Gold Eagle members, as far as retaining them from one year to the next, but I don't know of any numbers I can point directly to the DOL about.
<UNK>, agents wouldn't leave, they might start producing and that obviously would catch our radar.
And our guys monitor production activity from sources in that and don't hesitate to pick up the phone to call people.
But I certainly haven't heard any commentary.
I doubt <UNK> has either about ---+ we've got these agents that are no longer producing for us.
Our top 5 IMOs are responsible for about 52% of our sales and our top 10 are responsible for 78% of our sales.
Some of that commentary to me, that's just kind of evidence the DOL's lack of knowledge of what our products are in all that but ---+ financial ---+ the ability to adjust rates during the surrender period is part of natural product design.
We've said repeatedly that particularly on index annuities, our pricing sets an option budget at the start or at the time a product is issued, and we buy a 10-year bond or whatever it is, to fund whatever rates we can offer.
But the indexed terms are going to be influenced in subsequent periods by what's going on in the market because option prices are dictated by market volatility and other factors.
So while we might have to change our caps and participation rates, it's going to be because of factors that are not necessarily ---+ that are outside of our control.
So, I think, as I read that, one example of not having a very good grasp of what the product is and how it's designed, the policyholders have lots of options and the companies do to.
So it's part of overall product structure.
MVAs, your question on MVAs is in effect doesn't happen during the operation of the product.
It happens when somebody elects to surrender or receive cash outflows prior to the expiration of the surrender period.
