Ohio National Extends Buyout Offer over Controversial Variable Annuity Trailing Commissions
Amid a flurry of lawsuits over its decision to stop paying trailing commissions on some of its variable annuities, Ohio National Life Insurance Company is giving broker-dealers and registered representatives another month to consider its buyout offer, according to news reports.
Late last year, the annuity insurer announced it would stop paying trailing commissions on variable annuity contracts with guaranteed minimum income benefit riders in December.
At the time, Ohio National gave brokers the choice of surrendering or exchanging their contracts for extra cash, InvestmentNews writes. That offer was originally available from Nov. 12 to Feb. 11, but Ohio National has extended it to March 15, according to an SEC filing cited by the publication.
"This offer may provide an option to our contract owners that better fits their needs today," Ohio National spokeswoman Angela Meehan tells InvestmentNews. "Extending the offer date gives them additional time, if needed, to make that determination."
But Dennis Gallant, senior analyst at Aite Group, tells the publication Ohio National may be extending the offer because it wasn’t taken by as many brokers as it expected.
Ohio National is facing several lawsuits over its decision to stop paying trailing commissions on the annuities. This includes suits from two LPL Financial brokers and Commonwealth Financial Network, a complaint filed in federal court by UBS and an arbitration claim filed with Finra by Cetera Financial Group.
Variable annuity sales were down 3% in the fourth quarter of 2018 compared to the year prior, but rose 2%, to $100.1 billion, for the year overall compared to 2017, Limra Secure Retirement Institute says, according to FA magazine.
Meanwhile, total fixed annuity sales have reached a new record of $132 billion for the year, a 14% increase over 2017, the publication writes. Fixed annuity sales have beaten variable annuity sales for 10 of the last 12 quarters, Limra says, according to FA magazine.