Strategy Spotlight

Comparing Manager Pooled Stable Value & Insurance Separate Account Stable Value Products

When determining the optimal stable value product for their plans, plan sponsors and their advisors often compare insurance company products, such as Insurance Separate Account Stable Value Products, which are also called Separate Account Guaranteed Investment Contracts (SAGIC), to Managed Pooled Stable Value Funds (Pooled Funds). On the surface, SAGICs appear to offer an attractive alternative to Pooled Funds but a closer look is warranted.

Determining the Best Fit for Your Plan

In our previous article we suggested paying close attention to three attributes when evaluating Pooled Funds and Insurance General Accounts (GIC): Transparency, Credit Exposure and Exit Provisions. While SAGICs have improved on the GIC structure product in two of these three attributes, they don’t always provide the same level of Transparency and Exit Provisions as Pooled Funds. SAGICs are typically structured as a group annuity contract issued by the insurance provider much like GICs. As such, plans do not have an ownership interest in the underlying assets and have direct credit exposure to the insurance company provider.

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The information contained herein may not be an exhaustive overview of the varying structures differences. A plan should fully evaluate each structure type and make their own determination as to the appropriate structure for their plan.

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