The variable annuity market saw a lot of changes in the second quarter, according to a report by John McCarthy, product manager of annuity solutions for Morningstar. Annuity carriers filed 182 changes in the second quarter, according to the report, although McCarthy said most of these changes were "low impact." In the first quarter, carriers filed just 97 changes, compared with 168 in the second quarter of 2012.
The most common changes were to the age bands on lifetime withdrawal benefits, but McCarthy said the "most significant changes" came from carriers trying to limit risk. For example, The Hartford reallocated assets and closed several contracts, according to McCarthy, and AXA announced a living benefit buyback offer. AXA also closed its Retirement Cornerstone 12.0 series.
The Hartford closed contracts in its Personal Retirement Manager and Leaders IV series of products in May, which McCarthy said "finalized Hartford's pullback from the VA market." The company also directed annuity owners who have the Lifetime Income Builder rider to reallocate by Oct. 4 or lose the benefit. Annuity holders will be required to have at least 40% of their assets in fixed income and a risk-based asset allocation model.
Fee Changes
Jackson National Life reduced the fee on its Freedom Flex series by 0.1% at the 5% annual step-up level. The company also added new step-up frequencies with quarterly 5%, 6% and 7% levels. Fees for the quarterly options are between 0.1% and 0.15% higher than the yearly step-ups.
Jackson National also raised the fee on Lifeguard Freedom 6 Net lifetime withdrawal benefit by 0.15% and lowered the withdrawal percentages by 0.5% for the 75-year-old age band and 1% for the 81-year-old age band.
Lincoln filed several changes, including lowering the lifetime withdrawal rate on its i4LIFE Advantage to 3.5% for a 65-year-old. Lincoln also made several changes to the Lifetime Income Advantage 2.0 funds. The firm added an age band and reduced the withdrawal rate for 55-year-olds to 3.5% on the single version. For the joint version, Lincoln added an age band and reduced the 65-year-old withdrawal rate to 4.5%. Lincoln increased the eligible age to 70 on a feature that doubles the withdrawal rate if the owner needs to be admitted to a nursing home.
Monumental Life consolidated age bands and raised the fee on its guaranteed lifetime withdrawal benefit by 0.25%.
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