The Securities and Exchange Commission should cut away some of the unnecessary regulation still tying issuers of registered index-linked annuities and some other life and annuity products in knots, an issuer group says.
A team of lawyers at Eversheds Sutherland is trying to help the issuer group, the Committee of Annuity Insurers, get attention for a list of pleas the group sent to SEC Chairman Paul Atkins in April.
One is to free RILA contracts from the kind of advertising regulations that would apply to efforts by a nonprofit like Kaiser Permanente or a mutual insurer like New York Life sell stock to the public through an initial public offering.
The SEC once required RILA issuers to use the same complicated form that an IPO organizer uses to introduce RILA contracts. In 2022, Congress required the SEC to let RILAs use a much simpler registration form, Form N-4. The SEC implemented the RILA registration form regulations about a year ago.
But the SEC still applies IPO-type advertising requirements to RILA ads, and not to ads for traditional variable annuities, the Committee of Annuity Insurers reps told the SEC.
The SEC requires that an issuer must deliver a physical prospectus to advertise a RILA but imposes no such requirement for a traditional variable annuity, the reps said.
For an issuer that wants to offer a RILA, rather than a traditional variable annuity, "the difference in regulation has severe, negative impacts on the ability to advertise," the Committee of Annuity Insurers reps said.
Another problem is that the SEC is still requiring an IPO-level registration process for some relatively new types of life and annuity products, such as contingent deferred annuities, or efforts to attach income spigots to ordinary diversified individual investment portfolios, and registered index-linked universal life insurance policies, or RILU life policies, the reps said.
For RILUs, requiring an IPO-like registration process "imposes ill-fitted and unnecessarily burdensome disclosure requirements," the reps said.
Credit: Diego M. Radzinschi/ALM
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