At a time when many variable annuity providers have been simplifying and streamlining their products, Axa Equitable Life Insurance Co., in New York, is heading in the other direction. The company’s new Retirement Cornerstone variable annuity is essentially two annuities in one package.

“We’ve seen over the last year a lot of takeaways in the variable annuity space,” said Steve Mabry, senior vice president of annuity product development at Axa Equitable. “We wanted a whole new design concept.” The annuity includes two distinct accounts, or “sleeves.” One caters to investors’ desire to maximize their investment performance, while the other is designed to protect their assets. Retirement Cornerstone provides a wide range of investment choices for investors to try to recoup some of their losses from the market crash, while using a lifetime income guarantee to protect a portion of their assets, Mabry said.

Axa Equitable’s new hybrid product appears to be unique, said Doug Dannemiller, a senior analyst at research firm Aite Group. The closest existing annuities to it might be those that have a variable annuity sleeve and a fixed annuity sleeve, he said. The company is “playing to the different elements advisors like,” Dannemiller said.

Indeed, advisors prefer to have lots of investments to choose from, and Retirement Cornerstone’s long-term accumulation account gives them that, he said. It offers some 90 investment portfolios from between 20 and 25 asset managers. The offerings include a wide range of investments including sector funds covering areas like energy, biotech and real estate, Mabry said.

Consumers, on the other hand, like guarantees, Dannemiller said. And those guarantees are available within the product’s downside protection account. It provides a guaranteed income benefit option that invests in asset allocation and index portfolios. The account also provides a hedge against rising interest rates. Its “roll-up” rate allows the account’s income benefit to increase as interest rates climb. The rate is declared annually at a percentage point above an average of the 10-year Treasury rate. It is applied to the benefit base, which is used to calculate the guaranteed minimum income.

The initial rate of 5% can rise as far as 8%, but will not fall below 4%, according to the company. The downside protection account offers 11 investment options in the form of index and asset allocation funds, Mabry said. Investors will work with their advisors to determine the best way to split assets between the two sleeves, he said.

Among the other features of Retirement Cornerstone are tax-free transfers among investment portfolios and the ability to sweep cash tax-free from the long-term accumulation account into the downside income protection account.

From Axa Equitable’s perspective, Retirement Cornerstone appears to have a risk management advantage. The number and types of investments within the protected portfolio give the company “a better handle on what the investor has guaranteed, and therefore the ability to manage or hedge that risk very tightly,” Dannemiller said. That is in line with the industry’s current focus on setting the appropriate price for the market protections provided within variable annuities, he added. The base contract for Retirement Cornerstone costs 130 basis points of assets, and the guarantee costs 80 basis points, according to Mabry. Expenses related to the investments themselves are an additional layer, he said.

AXA Equitable’s new product comes at a time when variable annuity providers are doing lots of tinkering with their offerings and in some cases coming out with new products.

Earlier this year, Sun Life Financial Distributors Inc., in Boston, eliminated several versions of its living benefits. And, MetLife Inc. introduced a simplified variable annuity over the summer that it dubbed the Simple Solution Variable Annuity.

Driving much of the change is the strain that the market crash put on providers of the guaranteed income riders. In response, many of those providers have eliminated guarantees or raised their prices. Some have speculated that those changes have weakened the demand for variable annuities. Second-quarter figures from research firm Kehrer-Limra showed that variable annuity sales rose 17% in the quarter compared with the first quarter. That was well behind the 55.9% gain posted by mutual funds. The disparity is striking because sales of the two products usually move in tandem.

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