We would love to hear from you. Click on the ‘Contact Us’ link to the right and choose your favorite way to reach-out!

wscdsdc

media/speaking contact

Jamie Johnson

business contact

Victoria Peterson

Contact Us

855.ask.wink

Close [x]
pattern

Industry News

Categories

  • Industry Articles (22,088)
  • Industry Conferences (2)
  • Industry Job Openings (3)
  • Moore on the Market (492)
  • Negative Media (144)
  • Positive Media (73)
  • Sheryl's Articles (827)
  • Wink's Articles (376)
  • Wink's Inside Story (284)
  • Wink's Press Releases (129)
  • Blog Archives

  • December 2024
  • November 2024
  • October 2024
  • September 2024
  • August 2024
  • July 2024
  • June 2024
  • May 2024
  • April 2024
  • March 2024
  • February 2024
  • January 2024
  • December 2023
  • November 2023
  • October 2023
  • September 2023
  • August 2023
  • July 2023
  • June 2023
  • May 2023
  • April 2023
  • March 2023
  • February 2023
  • January 2023
  • December 2022
  • November 2022
  • October 2022
  • September 2022
  • August 2022
  • July 2022
  • June 2022
  • May 2022
  • April 2022
  • March 2022
  • February 2022
  • January 2022
  • December 2021
  • November 2021
  • October 2021
  • September 2021
  • August 2021
  • July 2021
  • June 2021
  • May 2021
  • April 2021
  • March 2021
  • February 2021
  • January 2021
  • December 2020
  • November 2020
  • October 2020
  • September 2020
  • August 2020
  • July 2020
  • June 2020
  • May 2020
  • April 2020
  • March 2020
  • February 2020
  • January 2020
  • December 2019
  • November 2019
  • October 2019
  • September 2019
  • August 2019
  • July 2019
  • June 2019
  • May 2019
  • April 2019
  • March 2019
  • February 2019
  • January 2019
  • December 2018
  • November 2018
  • October 2018
  • September 2018
  • August 2018
  • July 2018
  • June 2018
  • May 2018
  • April 2018
  • March 2018
  • February 2018
  • January 2018
  • December 2017
  • November 2017
  • October 2017
  • September 2017
  • August 2017
  • July 2017
  • June 2017
  • May 2017
  • April 2017
  • March 2017
  • February 2017
  • January 2017
  • December 2016
  • November 2016
  • October 2016
  • September 2016
  • August 2016
  • July 2016
  • June 2016
  • May 2016
  • April 2016
  • March 2016
  • February 2016
  • January 2016
  • December 2015
  • November 2015
  • October 2015
  • September 2015
  • August 2015
  • July 2015
  • June 2015
  • May 2015
  • April 2015
  • March 2015
  • February 2015
  • January 2015
  • December 2014
  • November 2014
  • October 2014
  • September 2014
  • August 2014
  • July 2014
  • June 2014
  • May 2014
  • April 2014
  • March 2014
  • February 2014
  • January 2014
  • December 2013
  • November 2013
  • October 2013
  • September 2013
  • August 2013
  • July 2013
  • June 2013
  • May 2013
  • April 2013
  • March 2013
  • February 2013
  • January 2013
  • December 2012
  • November 2012
  • October 2012
  • September 2012
  • August 2012
  • July 2012
  • June 2012
  • May 2012
  • April 2012
  • March 2012
  • February 2012
  • January 2012
  • December 2011
  • November 2011
  • October 2011
  • September 2011
  • August 2011
  • July 2011
  • June 2011
  • May 2011
  • April 2011
  • March 2011
  • February 2011
  • January 2011
  • December 2010
  • November 2010
  • October 2010
  • September 2010
  • August 2010
  • July 2010
  • June 2010
  • May 2010
  • April 2010
  • March 2010
  • February 2010
  • January 2010
  • December 2009
  • November 2009
  • October 2009
  • August 2009
  • June 2009
  • May 2009
  • April 2009
  • March 2009
  • November 2008
  • September 2008
  • May 2008
  • February 2008
  • August 2006
  • Hartford reports pick up in VA surrender rate

    May 7, 2012 by Darla Mercado

    In-force VA block lapse rate jumped by nearly 50% after Hartford announced it would leave annuity biz; many contracts in the money

    By Darla Mercado

    May 7, 2012

    More variable annuity customers have been surrendering their variable annuities at The Hartford Financial Services Group Inc. since the company announced in late March that it is exiting the business

    During the first quarter, the annualized lapse rate — the rate at which customers surrender their variable annuities — for Hartford’s U.S.-based VA block was about 14%, Christopher J. Swift, the insurer’s chief finance officer, said during an earnings call last week. But in April, following the company’s announcement, annualized lapse rates were running at 20%, David N. Levenson, the insurer’s president of wealth management, said during the May 3 call. This figure “is to be expected, given the company’s action to suspend new sales,” according to a report by FBR Capital Markets on Hartford’s first quarter results.

    “It’s too soon to judge whether lapses will remain at these levels, but if they do, it will accelerate the runoff of the VA book,” Mr. Swift.

    Financial advisers who sold variable annuities in the pre-crisis days know that their clients generally have access to richer living benefits at lower prices. These legacy variable annuities tend to have the added benefit of being “in the money” — where the value of the withdrawal or income benefit attached to the annuity is actually worth more than the value of the VA account.

    In fact, 40% to 50% of the lapsed VA contracts from The Hartford were in the money, Mr. Levenson said.

    Analysts note that when insurers drop a line of business, clients will drop their products, even if the benefits attached to them are better than what’s available in the marketplace.

    Some of the policies were allowed to lapse because VA holders erroneously believed that their annuities would no longer be honored after their carrier exited the business. Others were concerned about what would happen to their fees now that there’s no more new VA money flowing into Hartford.

    Brokers might use The Hartford’s exit from the business as an opportunity to nudge clients into new annuities elsewhere, via a 1035 exchange.

    “In any event, when a company gets out of the business, you see a pickup in surrenders — appropriately or not — and that looks like what’s happening with Hartford,” said Andrew S. Kligerman, a managing director at UBS Securities LLC.

    He added that given the size of Hartford’s business, its exit from VAs is playing out differently than what other smaller players, such as Genworth Financial Inc., experienced when they left the business.

    Given insurers’ renewed focus on VA risk management, the new annuities probably won’t have the same attractive guarantees and will likely be more expensive than the old products. Further, clients who exited previous policies while they’re “in the money” lose their accrued living benefits and start a new surrender period in their new contract.

    After backing out of the VA business, carriers strive for a careful balance in lapse rates. If more clients than expected hold on to their variable annuity and tap their living benefit, it could cost the insurer even more money. ING Groep NV, for instance, took a 1.1 billion euro charge in the fourth quarter of 2011 after adjusting its lapse assumptions for its closed VA block in the U.S.

    At the same time, if too many clients surrender in a given period, carriers have to write down the liability attached to the VA block sooner than expected, which hurts profitability, analysts said.

    Hartford spokesman David Potter did not immediately provide comment.

    Originally Posted at Investment News by Darla Mercado.

    Categories: Industry Articles
    currency