The insurance industry yesterday pulled out of a rescue plan for holders of Baldwin-United annuities, thus reducing the amount annuitants are likely to recover from the bankrupt company.

Metropolitan Life Insurance Co. announced that the insurance industry's Baldwin-United plan cannot be put into effect because certain essential conditions were not met by a Dec. 1 deadline. Fifty insurance companies had pledged to add $50 million to the $138 million already contributed by the 14 securities firms that sold the annuities.

After Baldwin declared bankruptcy, the Arkansas and Indiana insurance commissioners who have taken over Baldwin's annuity companies developed a plan based on more than $3 billion in assets of other Baldwin companies. That arrangement would offer the 165,000 annuity holders a 5.5 percent annual target return, but would not guarantee that rate.

Because the annuity holders originally were promised a minimum of 7.5 percent annual interest for 3 1/2 years by Baldwin, some of them initiated legal action against the brokers who sold the product. These brokers then pledged $138 million.

To protect the industry's image, the insurance companies then offered $50 million more toward the amount (in addition to Baldwin's $3 billion) that Metropolitan considered necessary to reach a goal of a guaranteed rate of between 4.3 and 5.9 percent, depending on which company sold the policy.

It was that effort that collapsed yesterday. Metropolitan said the plan could not be put into effect because there were insufficient assets unencumbered by potential tax and other claims that could be transferred to Metropolitan by Dec. 1.

"Our chief concern in making this statement is the interest of the policyholders," said John J. Creedon, president of Metropolitan. "We think that it is in their interests to know that we do not believe a solution is near."

He indicated the industry would be willing to reconsider the plan but only if all parties could agree within a short time.

The policy holders are now scheduled to be paid according to the 5.5 percent target rate devised by the insurance commissioners, plus whatever they get from the brokerges involved.