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Keeping an eye on 151A

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When news of the SEC’s proposal to classify annuities as securities products hit in late June, it wasn’t news to the insurance and financial industries, but it delivered a wallop to the solar plexus, nonetheless.

As the smoke cleared and the clock ticked toward the Sep. 10 deadline on the comment period, industry professionals have been left to look for answers from outlets such as annuity organizations, insurance commissioners, marketing organizations and the like.

Thankfully, news and opinions on the issue has not been hard to come by. Here are some of the recent tidbits that we’ve picked up:

  • Lo and behold, Federal Reserve Chairman Ben Bernanke’s largest assets last year were held in two annuities: TIAA Traditional and CREF Stock Large Cap Blend. Both of the assets were valued between $500,001 and $1 million.
  • On July 30, TowerGroup, a Needham, Mass.-based research and advisory services firm that focuses on the financial services industry, released a detailed report that outlines the implications of the SEC proposal. The research from TowerGroup “finds that this proposal has far-reaching implications for the insurance companies and agents selling the products as well as for consumers, whom the proposal is primarily intended to protect.” TowerGroup says that while the proposal could cause “insurance companies issuing indexed annuities” to see a decline in sales, it would create “new opportunities for broker-dealer firms and insurance companies to issue and sell indexed annuities.”
  • “It’s business as usual,” for those selling, marketing and issuing annuities. As Karlan Tucker, CEO of Tucker Advisory Group, said in a release: “Whether the names and rules change, our carriers are going to continue to present cutting-edge products that we can market to a growing number of retirees.” Many within the industry echoed that sentiment.
  • “The SEC Chairman will be proven to be unfounded in his desire to grasp FIAs from the insurance industry. It appears he wants to hand FIAs over to what many will cite as Wall Street friends, securities’ marketing firms known as FINRA!” American Annuities Advocates.
  • If the SEC’s main reason for securitizing annuities is “abusive sales practices,” well, that “train has left the station,” according to Gary C. Bhojwani, president and CEO of Allianz Life Insurance Company of North America. He says better sales practices, emphasizing suitability and compliance, have “already been implemented by the more responsible carriers.”
  • “Besides giving their comments on the SEC’s Web site, agents can get involved by writing letters to and calling their industry associations, state insurance regulators, and congressmen,” says Chris Conklin, Insurance Insight Group.

For even more information on proposed rule 151A, attend Senior Market Advisor Expo 2008, August 20-22 where three insurance/securities commissioners will be on hand to discuss what this proposal really means for the future of your practice and answer your questions about this hot button issue. Click here to learn more.


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