Hartford's Variable Annuity (VA) Exchange Letter

Hartford Financial Services recently sent a letter on August 23, 2010 to existing customers who had purchased older variable annuities soliciting them to trade their old contract for a new one with “new features” through their “Personal Retirement Manager Exchange Program Opportunity”. Unfortunately, the letter was sent simultaneously to the policyholders and the financial advisers, without first informing the advisers. Hartford admitted the timing of the communication might have created some confusion for the customers and advisors. Not only was this letter a way for Hartford to circumvent its financial advisers in an attempt to entice their policyholders to swap their variable annuities, it also failed to adequately explain the benefits of the new contract to the customers or what they would be giving up by making such a switch. The obvious hope was for Hartford to be able to get out from under the older contracts with better benefits at the expense of their customers. Some of the older contracts like the Hartford Lifetime Income Builder II had generous guarantees that would be lost in a swap for a new product that does not have the same features. The end result of Hartford’s deceptive attempt to unload their more generous contracts is that such a move would be a benefit to only a very small group of customers, if any. New York, Iowa, Connecticut and others to follow are looking into taking action along with the Financial Industry Regulatory Authority (FINRA).

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