Lighthouse Financial Services Company — The concept screening package tabled at Gate 0 on 05 February 2026, seeking release of the Stage 1 tranche to build a business case for a fixed indexed annuity. This is a point-in-time document. It records what was known and believed on the day, including things later found to be wrong.
Recommendation & decision sought
Recommendation: release $2,180,000 to develop a full business case for a non-registered fixed indexed annuity with an optional guaranteed lifetime withdrawal benefit rider, returning to Gate 1 in the second quarter.
Prepared by C. Tyrrell, NPD Programme Manager. Sponsor: G. Marchetti, Chief Product Officer.
1. What this gate is for
Gate 0 does not decide whether to build a product. It decides whether the concept is worth the cost of finding out. That distinction governs everything below, and it is the reason this package is short, thin on evidence, and heavy on judgement.
The Board is therefore not being asked to believe the numbers in §6. It is being asked whether the questions in §7 are worth $2,180,000 to answer.
2. The concept as screened
| Element | As proposed at this gate |
|---|---|
| Product | Single-premium deferred fixed indexed annuity — principal protected against index loss |
| Registration | Non-registered. No downside index participation, so the contract stays outside securities registration and inside the state insurance filing lane |
| Crediting strategies | Five proposed — a fixed account and four indexed structures |
| Living benefit | Optional guaranteed lifetime withdrawal benefit rider, charged explicitly |
| Target market | Pre-retirees and early retirees, roughly 55 to 70, seeking protected participation and a contractual income floor |
| Distribution | Existing independent marketing organisation relationships. No new channel |
| Filing route | Interstate Insurance Product Regulation Compact, with separate filings for non-Compact states |
| Jurisdictions | All states in which the carrier is licensed, including New York |
Two elements of this scope did not survive Gate 1. Both are noted in the reader's note at §10; neither was foreseen here, and this package is not retrofitted to pretend otherwise.
3. Must-meet criteria
Three, all answered yes. Screening must-meets test admissibility, not attractiveness — they capture the conditions under which spending Stage 1 money would be pointless.
| Must-meet | Answer | Basis |
|---|---|---|
| The concept falls within the carrier's licensed lines and existing product authority | Yes | Individual deferred annuity; the carrier writes this line today |
| No known regulatory prohibition on the structure in the target lane | Yes | Fixed indexed annuities are an established filed product class; Legal confirms no impediment |
| The concept does not require a capability the organisation has already decided not to build | Yes | Capped structures are hedgeable by the existing desk. This criterion exists because of Harborline — see §8 |
4. Scored assessment
| Criterion | Weight | Score | Weighted |
|---|---|---|---|
| Strategic fit with the annuity portfolio | 25% | 4 / 5 | 1.00 |
| Market attractiveness | 25% | 4 / 5 | 1.00 |
| Feasibility — can it be built and filed | 20% | 4 / 5 | 0.80 |
| Distribution appetite | 15% | 4 / 5 | 0.60 |
| Preliminary economics | 15% | 3 / 5 | 0.45 |
| Weighted total | 100% | — | 3.85 |
3.85 sits in the band supporting a straight GO. Notes on the two that matter:
- Distribution appetite scored 4. Partner interest in an index-linked product is documented and recent — it is the same appetite the previous concept was chasing. What is untested is appetite for this structure at this carrier's likely cap, which is a Stage 1 question (§7).
- Preliminary economics scored 3, and a 3 here is the expected result rather than a weakness. See §5.
5. Preliminary economics — and why they are preliminary
Indicative modelling on comparable in-force business suggests Year 1 premium in the region of $150M to $250M, average case size broadly consistent with the existing block, and a return above the carrier's hurdle rate with wide error bars in both directions.
Scoring preliminary economics a 3 rather than a 4 is deliberate. A 4 asserts the criterion meets the standard on evidence; there is no evidence here yet, and inflating the score would make the weighted total look like a stronger case than the Board actually has in front of it.
6. The questions Stage 1 is funded to answer
This is the operative section of the package. Stage 1 is not being funded to write a document; it is being funded to resolve the following, each of which becomes a Gate 1 must-meet or a scored criterion.
Q1 — Will distribution partners commit volume in writing?
Interest is documented; commitment is not. Stage 1 must return written indications from named partners, not modelled volumes. Becomes a Gate 1 must-meet.
Q2 — Does the product clear the hurdle on a current capital charge?
The indicative return at §5 uses today's charge on an analogous product. Stage 1 must price the actual structure against the charge current at Gate 1. Becomes a Gate 1 must-meet.
Q3 — Can the guarantee be hedged with in-house capability?
Capped structures should be within the desk's existing capability, but the rider changes the exposure profile. Stage 1 must confirm rather than assume. Becomes a Gate 1 must-meet — a direct consequence of Harborline.
Q4 — What does the illustration engine actually support?
Five crediting strategies are proposed. Whether the incumbent engine can produce compliant hypothetical performance for all five, and at what build cost, is unknown.
Q5 — Where can this be filed, and how quickly?
The Compact route is assumed. Stage 1 must confirm the product falls under existing uniform standards, and must cost the non-Compact states separately — including whether they belong in a first launch at all.
Q6 — What is the competitive cap, and what floor would make this not worth doing?
Stage 1 must return a peer comparison and propose a floor below which the product should be repriced or stopped.
7. Risks visible at screening
Named here so the register does not begin at Gate 1 with risks that were foreseeable in February.
| Concern | Becomes |
|---|---|
| Option budget compresses; illustrated cap falls below competitive | R-03 |
| Filing review extends beyond the standard clock | R-01 |
| Non-Compact states approve on a different timetable | R-02 |
| Distribution partners deprioritise against competing launches | R-07 |
| Pricing actuary capacity is concentrated in one credentialed individual | R-10 |
8. What Harborline changed about this gate
The carrier's previous index-linked concept was cancelled at its Gate 1 six months before this screening. Three changes to the Gate 0 process came directly from it, and this package is the first to apply them.
| Harborline finding | Change applied here |
|---|---|
| Gate 0 scored feasibility on the ability to build, not to distribute | Distribution appetite is now a scored criterion in its own right, weighted 15% |
| A capability the organisation had effectively declined to acquire was not treated as disqualifying | Now a must-meet — the third criterion at §3 |
| Hedgeability was assessed late in Stage 1, after significant spend | Named as Q3 at §6 and pre-committed as a Gate 1 must-meet |
9. Outcome
| Item | Record |
|---|---|
| Must-meet | 3 of 3 passed |
| Weighted score | 3.85 — GO band |
| Outcome | GO carried 5–0 |
| Released | $2,180,000 — Stage 1 |
| Conditions | None |
| Return to Gate 1 | Second quarter, on the strength of §6 |
| Criteria fixed for Gate 1 | Recorded in the gate minute and reproduced in the Gate Decision Framework §8 |
10. Reader's note — where this led
Two of this gate's assumptions did not survive Gate 1
This section is an editorial addition, marked as such so the point-in-time record above stays intact. Everything above was written on 05 February 2026 and has not been revised.
| Screened here as | What happened |
|---|---|
| Five crediting strategies | Reduced to three at Gate 1 (condition GC-01), after Q4 established that the illustration engine could not support two of them at justifiable cost |
| All licensed states, including New York | New York removed from launch scope at Gate 1 (condition GC-02), after Q5 costed it separately |
Both changes came from questions this package identified and Stage 1 was funded to answer. That is the screening gate working, not failing: Q4 and Q5 were open questions in February and settled facts by June, and the cost of settling them was a fraction of the development tranche that would have been committed to the original scope.
11. Document control
| Version | Date | Change |
|---|---|---|
| 1.0 | 05 Feb 2026 | Tabled at Gate 0. Carried GO 5–0. |
| 1.1 | 11 Jun 2026 | Reader's note added at §10 following Gate 1. No content above §10 altered — the screening record stands as written. |
Prepared by C. Tyrrell, NPD Programme Manager and Chair of the Gate Review Board. Related: The Programme Story · Gate Decision Framework §7 · Gate 1 Business Case Package · Prior Concept Cancellation Record.