Hartford Financial Services Group Inc. is offering to pay some clients to give up retirement products as Chief Executive Officer Liam McGee works to reduce risks tied to stock market declines and free up capital.

Holders of some variable annuities, which guarantee payouts, would be offered cash to give up the contracts, McGee says. The offer will be made to holders representing 45% of the Hartford, Conn.-based company’s net amount at risk on the contracts, he says.

“You will see us take actions to accelerate the reduction of our annuity book,” says McGee, 58. “One area of focus is on our contract-holder initiatives, such as this enhanced surrender value option.”

Insurers are scaling back from variable annuities as low interest rates and stock market declines weigh on their profits. MetLife Inc., the largest seller of the contracts last year, said Oct. 31 that sales fell by 46% in the third quarter as it cut benefits. Axa SA’s Axa Equitable and Aegon NV’s Transamerica said this year they are offering to pay clients to reduce risks tied to variable-annuity guarantees.

“We are making this offer because high market volatility, declines in the equity markets and the low interest-rate environment make continuing to provide the Lifetime Income Builder II rider costly to us,” Hartford says in a filing with the U.S. Securities and Exchange Commission. “We would gain a financial benefit because we would no longer incur the cost of maintaining expensive reserves for the guarantees.”

McGee is divesting life-insurance operations to focus Hartford on property-casualty coverage, after pressure from billionaire investor John Paulson to simplify the company and boost the share price. The stock has rallied 35% this year after dropping 39% in 2011.

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