HARTFORD, Conn. (AP)—In a bid to cut down on risk, Hartford Financial Services Group Inc. has offered some of its annuity clients cash for their contracts.
Shedding variable annuities would help Hartford reduce risk because the financial contracts pay out according to market performance, but often include guarantees of minimum payouts. That means declining stock markets can put a cash pinch on insurance companies that wrote too many of the policies.
“We are making this offer because high market volatility, declines in the equity markets and the low interest rate environment make continuing to provide the Lifetime Income Builder II rider costly to us,” Hartford said in a Securities and Exchange Commission filing on Thursday.
CEO Liam McGee said during a conference call on Friday that the offer will be made to annuity holders that make up almost 45 percent of the net amount at risk on the contracts.
The insurer also said Thursday that for the three months ended Sept. 30, it earned $401 million, or 83 cents per share, up from $60 million, or 11 cents per share, in the prior-year period. The company had $7 million in catastrophe losses in the most recent quarter, down from $60 million a year ago.