Keyport Life Insurance Co. is developing a variable immediate annuity that would allow buyers to allocate assets in several payout channels - as investment bankers stream payouts when securitizing mortgages or college loans.

"We want to customize the allocation of assets in order to optimize income for each phase of an annuitant's retirement," said Philip Polkinghorn, president of the Boston-based insurer. "We want to segment the portfolio, so that the assets will be segmented by time horizons and then allocated by segment."

The reason for creating such an instrument, according to Mr. Polkinghorn, is to deal with market volatility - both up and down - and its effect on payout for retirees.

"Some annuity holders get upset if the payments are too high," Mr. Polkinghorn said. "For a lot of people, their income needs are related more to inflation, and if the market is really climbing, they'd prefer the payments to go up at a less high rate than the market, so that they can have the rest of the growth for a rainy day."

Longer lifespans and earlier retirements, Mr. Polkinghorn said, are the main reasons for this annuity. "Fifty percent of us will live longer than life expectancy," he said.

"When it comes time to take an income, you need to figure out how to make it all work," Mr. Polkinghorn said.

Though Bureau of Labor Statistics figures show the percentage of all employed Americans age 55 to 64 went from 53% in 1980 to 54% in 1995, the statistics also show that growth of women in the labor force "is masking early retirement statistics among males," he said. The percent of employed males between ages 55 and 64 has been declining steadily - from 69% to 62% during the time period - while among women, it rose from 40% in 1980 to 47% in 1995.

This annuity, which has not yet been named, will be aimed at pre-retirees and retirees of low to moderate income, who keep their IRA accounts at banks, and their 401(k) and mutual fund money with broker-dealers. Keyport currently does 60% of its distribution through banks, and the remaining 40% is through broker-dealers. Mr. Polkinghorn is excited about the potential on the bank side. "Banks have a lot of IRA money, so it's a natural fit," he said. "Also, most working people have direct deposit, and it would be nice to access some of that money," he said.

Keyport Life is a subsidiary of Liberty Financial Companies of Boston, and has more than $17 billion in variable, fixed, and indexed annuity assets under management.

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