In a few states, the Hartford has informed some clients they can keep their existing investment options. Which ones? Darla Mercado has the details.
Insurance regulators in The Hartford Life & Annuity Insurance Co.'s home state of Connecticut has given the green light to the insurer's plan to force legacy variable annuity clients to switch to conservative investments. But it looks like the insurer's requirement won't apply to clients who resided in Connecticut when they bought their contracts.
In a June 21 filing with the Securities and Exchange Commission, the life insurer noted that variable annuity investors in a handful of states, including Connecticut, would not be subject to a series of new investment restrictions that were announced in May.
The insurer applied the restrictions to existing account balances in an array of contracts, including the Director M line of VAs. Certain clients with riders from the Lifetime Income Builder suite were told they needed to reallocate their investments into something more conservative.
Hartford's lineup of acceptable options includes funds that require a minimum 40% allocation to fixed income and a risk-based asset allocation model with a bond allocation that's upward of 40%. Customers who fail to act by Oct. 4 will lose their living benefit altogether, Hartford said in its previous filing.
But due to differences in the language of the original VA contracts in different states, clients in some locations won't be subject to these limitations — provided they were living in those states when they bought the contract, confirmed Hartford spokesman David Collins.
In fact, some clients in those states received notice erroneously that they would need to change their allocations. Hartford is rectifying the issue.
“After our initial communication to contract holders about changes to their annuity features, we determined that some of the contract holders received the investment restriction in error,” Mr. Collins said. “We are offering to restore the original allocations to any clients who may have made changes to their portfolios.”
Residents in Connecticut won't be subject to investment restrictions for the Principal First Preferred contract, Lifetime Income Builder II and the Lifetime Income Foundation, according to the June 21 filing.
New Jersey clients won't have investment restrictions for the Lifetime Income Builder, LIB II and Lifetime Income Foundation, per the SEC filing.
Meanwhile, residents in New York won't be subject to investment restrictions if they have Hartford's Lifetime Income Builder, LIB II, the Lifetime Income Builder Selects and the Lifetime Income Foundation features. Likewise, clients in Oregon won't be subject to investment restrictions for Hartford's Lifetime Income Builder, according to the filing.
Though regulators in Connecticut permitted the previous round of investment restrictions to go through, the department didn't have anything to do with the exemption of state residents from the restrictions.
“The Hartford has made no recent filing with the insurance department with regard to these changes,” said Donna Tommelleo, a spokeswoman with the Connecticut insurance department. “The previously approved forms had language that would have allowed such actions.”
