Zurich American Life Insurance Company is offering to buy back some of its annuity contracts.
The offer affects holders of Farmers Variable Annuity I contracts with in-force guaranteed retirement income benefit riders, or GRIB riders.
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A consumer can qualify for the buy back offer by either surrendering an eligible annuity or exchanging it for an annuity from a life insurer not affiliated with Zurich American, the company says.
Zurich American says it will make the offer available from today through Oct. 31, to consumers who bought their Farmers Variable Annuity I contracts with the GRIB riders after April 30, 2000.
Zurich American says it will pay Farmers Variable Annuity I contract holders who sell back their annuities a price equal to the contract value, minus the value of any outstanding loans, along with an enhancement amount.
Holders under 75 who sell back their annuities can get an enhancement amount equal to at least 20% of the contract value.
Holders ages 75 to 80 can get an enhancement amount equal to 15% of the contract value.
Holders ages 80 and older are not eligible for an enhancement amount.
Zurich American says in the offer announcement that it is making the offer partly because it believes some annuity holders' needs may have changed over time, and partly because it wants to exit this segment of the variable annuity business, to ease some of the capital constraints associated with that business.
"If you accept the buy back offer, we may gain a financial benefit because, for example, the capital we hold against future adverse events can be released on the acceptance of the buy back offer, and we will no longer bear the cost of hedging against market downturns," the company says.
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