Considering the penalty, you might be better off removing only the 10% each year. Don't forget an 18.5% loss requires a 22.7% gain to overcome.
100-18.5 = 81.5
Going from 81.5 to 100 = 22.7% gain needed to break even on a 18.5% loss.
If I need to beat 22.7% + the original 4.75% , then maybe I would only take out 10% per year.
EDIT: Little blurb on possible tax liability of any 'earnings' in addition to your penalty.
Taxation of lump-sum distributions
Taking a lump-sum distribution of your annuity funds can have many consequences. If you make this election within the first few years after purchasing your annuity, you may be subject to surrender charges imposed by the issuer. In any case, the earnings portion of the distribution will be treated as ordinary income in the year you take the distribution. Also, keep in mind that a large lump-sum distribution could actually push you into a higher tax bracket, dramatically increasing your tax liability.