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Carlo DiFlorio, the new head of the Securities and Exchange Commission’s (SEC) Office of Compliance Inspections and Examinations (OCIE), told attendees at the Insured Retirement Institute’s (IRI) annual government, regulatory, and compliance conference in Washington April 29, that of the 800 exams that the SEC has performed in the last year, 80 have been focused on the variable products area, with some of those cases being referred to the SEC’s enforcement division. Indeed, Amy Lynch, president of FrontLine Compliance, and a former SEC examiner, who also spoke at the IRI conference, says that the SEC is actually performing more variable product exams than FINRA. DiFlorio noted at the conference that the SEC is currently working with FINRA to update the two agencies’ 2008 joint report on effective practices for variable annuities. An updated report, he said, will be forthcoming.

Almost 40% fewer Americans expect to fully fund their IRAs this year than did in 2009, according to the results of a survey of 1,000 Americans released recently by Putnam Investments. Only one in seven (14%) survey respondents plan to fully fund their IRAs in 2010, versus 23% who fully funded an IRA in 2009. More than half of those who did not fund their IRA for 2009 said they either lacked the cash to invest or preferred to keep the cash available for other reasons, and another quarter were worried about market risk.

The Putnam survey also found that Americans are not planning to convert from traditional IRAs to Roth IRAs, in spite of a new tax law change that allows higher-income investors to perform Roth conversions. Only 14% of respondents were considering converting some or all of their traditional IRA assets to a Roth IRA either this year or next, Putnam says, with a majority (56%) saying they definitely would not convert.

AXA Equitable Life Insurance Company has added a Market Stabilizer Option to its variable universal life insurance product. “Using innovative upside caps and a downside buffer, the Market Stabilizer Option can help smooth the impact of equity volatility on a policy,” AXA Equitable says in a release. Along with providing a death benefit to protect beneficiaries, AXA Equitable says that “most variable life products offer the potential for policy growth through market exposure, since premiums are invested in variable portfolios.” Now, with the Market Stabilizer Option (MSO) on its Incentive Life Optimizer product, AXA Equitable says it offers both “policy growth potential and downside protection.” The MSO is a policy investment option “that offers a rate of return tied to the S&P 500 Price Return index, up to a growth cap. It also provides a downside buffer of up to 25% if there is a decline in the performance of the index. The growth cap and downside buffer work in tandem to capture a portion of the index’s upside potential while protecting policy values from the adverse effects of volatility.”


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