AXA Equitable was recently fined $20 Million by New York State Department of Financial Services, the largest fine against an insurance company according to the Wall Street Journal, for failing to adequately explain the changes it made to its variable annuity products after the financial crisis. Variable annuities offer guarantees of steady income for the lifetime of the annuity owner. After the financial crisis, many insurance companies redesigned their annuities by reducing the benefits participants would be entitled to and increasing the cost of the annuity in an attempt to “smooth fund returns” and reduce the risk to participants and the insurance company. These changes have the potential to limit participant gains. The $20 Million fine is the result of AXA Equitable’s failure to disclose the extent of the changes they made to their annuities, limiting New York’s ability to protect its consumers.
Did your Plan offer annuities before the Financial Crisis? Were changes to those annuities offered adequately disclosed?