Prudential Variable Annuity Going to LPL E

[Diver4242]

My wife was sold a Prudential variable annuity back around 2012, with an income rider. It's been sitting. She received information a year or so ago that it was being sold to Fortitude RE (off-shore) but she never sent in her signature so I think it stayed at Pruco. Now she's received stuff in the mail from Pruco saying her policy is going to LPL E (I think the E stands for Enterprise) and she has the ability to opt-out, but Pruco is getting out of the business. It's pretty vague but says she could opt for another firm somehow. Paperwork is vague and doesn't discuss ability to surrender and/or roll over to an IRA whether in full or in part.

Has anyone else received this and have more info? She'll call the numbers for her old Prudential rep (who is being shifted over to LPL E unless they decide to go elsewhere) and the LPL E folks on Tuesday when business opens again. She's 64 so would likely retire soon and activate the income rider on this.

[Rex66]

They don’t need her signature to sell policies.

Most likely at this point they would prefer she didn’t activate the income rider but don’t really want to say that so they will say something that gives you the opinion you should not take them up on the rider you paid for.

[Stinky]

My wife was sold a Prudential variable annuity back around 2012, with an income rider. It's been sitting. She received information a year or so ago that it was being sold to Fortitude RE (off-shore) but she never sent in her signature so I think it stayed at Pruco. Now she's received stuff in the mail from Pruco saying her policy is going to LPL E (I think the E stands for Enterprise) and she has the ability to opt-out, but Pruco is getting out of the business. It's pretty vague but says she could opt for another firm somehow. Paperwork is vague and doesn't discuss ability to surrender and/or roll over to an IRA whether in full or in part.

Has anyone else received this and have more info? She'll call the numbers for her old Prudential rep (who is being shifted over to LPL E unless they decide to go elsewhere) and the LPL E folks on Tuesday when business opens again. She's 64 so would likely retire soon and activate the income rider on this.

You mention what appear to be two separate corporate transactions.

The first is when Prudential sold one of their insurance companies to Fortitude Re. This is an actual insurance company sale, so the affected policies should have stayed with the insurer that was sold. Here’s a press release from that time. https://www.investor.prudential.com/new ... fault.aspx

The second is the transfer of advisory services to LPL. It appears that this is not the actual sale of insurance policies - rather, a sale of advisor services. Here’s a press release.
https://news.prudential.com/latest-news ... fault.aspx

I don’t believe that either transaction would affect the policy and rider that your wife has. She should be able to get exactly the same guaranteed benefits as if the sales hadn’t take place.

She should call her agent or insurer that her benefits are unchanged.

[Rex66]

One other note

Non guaranteed items definitely do change with sales

And not to your benefit

[Harmanic]

She's 64 so would likely retire soon and activate the income rider on this.

Even if it is offshore, your state guarantee should protect you. If she bought this for the income rider, the last thing she wants to do is transfer or exit the annuity just before retirement as she would lose all the rider payments she has put into it over the past 12 years. It seems she has a clear plan in place when she bought the annuity and I don't see how this transfer of policy should change that.

[Harmanic]

One other note

Non guaranteed items definitely do change with sales

And not to your benefit

That is why the rider is so valuable in her case, as it is the guarantee. But that goes away if you change products or exit.

[Stinky]

She's 64 so would likely retire soon and activate the income rider on this.

Even if it is offshore, your state guarantee should protect you. If she bought this for the income rider, the last thing she wants to do is transfer or exit the annuity just before retirement as she would lose all the rider payments she has put into it over the past 12 years. It seems she has a clear plan in place when she bought the annuity and I don't see how this transfer of policy should change that.

While the ownership of the entity may have moved offshore, the legal entity almost certainly remains US based. So the state guaranty fund system still is in place.

[Diver4242]

She's 64 so would likely retire soon and activate the income rider on this.

Even if it is offshore, your state guarantee should protect you. If she bought this for the income rider, the last thing she wants to do is transfer or exit the annuity just before retirement as she would lose all the rider payments she has put into it over the past 12 years. It seems she has a clear plan in place when she bought the annuity and I don't see how this transfer of policy should change that.

While the ownership of the entity may have moved offshore, the legal entity almost certainly remains US based. So the state guaranty fund system still is in place.

I think you're right, Fortitude RE owns the policy and this is just the Pruco advisor part that's moving over to LPL now, that's why she can opt out of the advisor part I guess. We need to know who she would call to ask questions about the policy. We'll get our answers Tuesday and report back.

One thing on the state "bailout funds" though. Our calls and research have told us that there is no actual "fund" for most (all?) states, they simply try to find another insurer to pick up the policy in the event of default. The new insurer would only have to insure up to the state limits, rather than the original policy amount if that's higher.

[ddlatham]

Have you learned anything more about this? My mother-in-law has an annuity with Pruco (subsidiary of Prudential) and has also received a letter indicating that Pruco will "transfer its client accounts and Financial Professionals to LPL E. In so doing, Pruco will also resign as broker-dealer of record and substitute LPL E as your new broker-dealer of record for your positions held directly at the product sponsor."

[Diver4242]

Have you learned anything more about this? My mother-in-law has an annuity with Pruco (subsidiary of Prudential) and has also received a letter indicating that Pruco will "transfer its client accounts and Financial Professionals to LPL E. In so doing, Pruco will also resign as broker-dealer of record and substitute LPL E as your new broker-dealer of record for your positions held directly at the product sponsor."

Yes, it seems that simply my wife's annuity wasn't in one of the lots sold off by pruco to the offshore fortitude re, so it's still with pruco (until they do!). The annuity stays there for now.

What's happening is Prudential is getting out of investment advising and those same advisors also handle annuities, so it's all going to lpl. Your salesperson/advisor has the option to go to lpl or find a new job.

You can opt in to stay with them, or an lpl replacement if they bail, or opt out and do any annuity questions or maintenance at Prudential directly, but you won't get any advice in that case, just customer service. It's a bigger deal if they are managing your investments, but she just has the annuity.

We'll likely opt out because the advisor was very misleading in selling the annuity in the first place, hard to reach, and basically worthless after receiving their commission. We don't want another layer or risk their screwups if we need something done.

[Harmanic]

basically worthless after receiving their commission.

You are what they literally call a "dead asset." This is how an insurance company instructs its agents to promote 1035 churning. "It's [the annuity the client bought already] existing. It's working for them [the end customer] but it's not doing anything for you [the agent who is seeking commissions]." Square brackets added. The quote is from an insurance rep presentation to agents.

[Mike S]

An annuity is only as sound as the insurance company issuing it. Financial strength and being able to meet financial obligations to policyholders is very important. Independent organizations such as A. M. Best, Standard & Poor’s, Moody’s, Fitch Ratings and others publish financial ratings. The ratings used by these agencies represent the organization’s opinions of an insurance company’s financial condition and its ability to meet its obligations to policyholders.


Agency LPL Prudential
Moodys Baa3 Aa3
S&P BBB- AA-

Does Prudential have the right to transfer custodianship to a company with a much lower credit rating?? In Florida, where I live, there is no guaranty coverage for variable annuities. What are our options? I am concerned about LPL, their recent lawsuits, and lack of controls. All these documents I have received are so vague - appreciate any advice.

[Stinky]

An annuity is only as sound as the insurance company issuing it. Financial strength and being able to meet financial obligations to policyholders is very important. Independent organizations such as A. M. Best, Standard & Poor’s, Moody’s, Fitch Ratings and others publish financial ratings. The ratings used by these agencies represent the organization’s opinions of an insurance company’s financial condition and its ability to meet its obligations to policyholders.


Agency LPL Prudential
Moodys Baa3 Aa3
S&P BBB- AA-

Does Prudential have the right to transfer custodianship to a company with a much lower credit rating?? In Florida, where I live, there is no guaranty coverage for variable annuities. What are our options? I am concerned about LPL, their recent lawsuits, and lack of controls. All these documents I have received are so vague - appreciate any advice.

LPL is not an insurance company. They won’t (and legally can’t) take over your variable annuity. Prudential (or whatever insurance company) will remain the insurer standing behind your VA.

I expect that the reason that variable annuities are not covered under the guaranty association are because the assets backing your policy are housed in a legally segregated “separate account”. In the extremely unlikely event of Prudential not fully performing on its policy obligations, the assets backing your VA should be sheltered for your benefit. (However, any ancillary riders like guaranteed death or withdrawal benefit are insured by the general account of the insurer, and would fall under guaranty association coverage).