(Bloomberg News) 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 said Thursday in an interview. The offer will be made to holders representing 45 percent of the Hartford, Connecticut-based company's net amount at risk on the contracts, he said.

Hartford is "examining every single possibility we can reasonably consider to accelerate the runoff of the book," McGee, 58, said on a conference call with analysts. "There's no stone that's being left unturned."

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 percent 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 said in a filing Thursday 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."

MetLife, Paulson

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 31 percent this year after dropping 39 percent in 2011.

In August, Christopher Giovanni, an analyst at Goldman Sachs Group Inc., asked whether McGee had considered paying customers to give up annuity guarantees.

McGee responded that Hartford was exploring the possibility, and added that "there is no evidence yet that actually consumers will make that trade."

Friday, Giovanni returned to the subject, asking whether customers will give up their contracts.

"When we look at the offer that we're making, we do think this will be attractive," Beth Bombara, who leads Hartford's life runoff operations, including the annuity business, said on the call. "So we do expect to see some take rate as it relates to this program once it's launched."

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