The head of a major index annuity manufacturer says regulators have been hinting for years that they were going to turn their attention to index annuities.
Now that the U.S. Securities and Exchange Commission is starting to act, “I think there are too many folks acting like this is a surprise,” says Gary Bhojwani, chief executive of Allianz Life Insurance Company of North America, Golden Valley, Minn., a unit of Allianz S.E., Munich, Germany.
“I’m all for getting these issues out of the way sooner rather than later,” he says.
The SEC has developed a draft rule, Rule 151A under the federal Securities Act of 1933, that would define index annuities as securities rather than as insurance products.
The draft of the rule was approved for release June 25, and comments are due Sept. 10.
“We’re convinced the product is an insurance product, not a security,” Bhojwani says. “We think it’s a black and white issue.”
But, either way, index annuities should continue to have a bright future, because of demographic and other trends, he says.