The Hartford Financial Services Group Inc. will offer a buyback of its old fixed annuities.
The insurer has been working toward shrinking the size of its legacy annuity block since March 2012, back when it announced that it would exit the business. In the fall of that year, The Hartford announced it would offer a number of its variable-annuity clients an enhanced account value in exchange for giving up their guaranteed minimum withdrawal benefit — a feature that raises income benefit payments, depending on the contract's market performance.
It looks like fixed-annuity clients will be receiving an opportunity to turn in their contracts, too.
Pending regulatory approval, beginning in March, Hartford will make enhanced-surrender offers to clients with the CRC Select (Series 1) and Saver Plus fixed-annuity contracts, company spokesman Thomas Hambrick confirmed Friday. Unlike a variable annuity, these fixed annuities credit a fixed annual rate of interest. These contracts generally have a minimum guaranteed renewal rate of 3%.
There are about 90,000 contracts involved in Hartford's fixed-annuity buyout offer, and they were sold between 1993 and 2010.
Clients will be offered an account value enhancement of 1% to 2%. The offer will be equal to the net surrender value of the contract with surrender charges waived, plus an account value bonus based on the length of time between the date of the offer and the contract's renewal date.
“We do not expect that this offer will be appropriate for every contract holder, but we do expect that it will be for some,” Mr. Hambrick wrote in an e-mail.