Morrison Foerster
August 5, 2010

Please see our Hot Topics for more on this subject.

Morrison Foerster
July 6, 2010

Please see our Hot Topics for more on Dodd-Frank Bill.

Morrison & Foerster
December 18, 2009

Please see our Hot Topics for more on this subject. 

Morgan Lewis
August 3, 2009

Please see our Hot Topics for more on this subject. 

Goodwin Procter
July 28, 2009

Please see our Hot Topics for more on this subject.  

Sullivan & Cromwell
July 27, 2009

Please see our Hot Topics for more on this subject. 

FINAL RULES RELEASE

Indexed Annuities and Certain Other Insurance Contracts

On January 8, 2009, the SEC published a new rule that clarifies the status of indexed annuities (insurance products where payments to purchasers are, or can be, based on the performance of a securities index) under the federal securities laws. The objective of new Rule 151A under the Securities Act of 1933 is to make sure that investors that purchase insurance products that are ultimately securities-like in nature get the benefit of the US securities laws. The new rule flows from a fundamental reassessment of indexed annuities which have not historically been treated as securities. This reassessment “hinges upon a familiar concept: the allocation of risk;” with the SEC effectively determining that indexed annuities, which have “many of the same risks and rewards that investors assume when investing their money in mutual funds, variable annuities, and other securities,” are in fact securities.

Therefore, Rule 151A will require all insurance companies that issue equity indexed annuities to register those annuities as securities under the Securities Act and to sell them pursuant to a prospectus. The rule will also require any insurance agent that sells these annuities to pass FINRA tests and become a registered representative associated with a broker-dealer.

As proposed this rule would become effective January 12, 2011 and it will apply prospectively, ie to indexed annuities contracts issued on or after the effective date.

Please see our Hot Topics for more on this subject.

Dewey & LeBoeuf
December 29, 2008

K&L Gates
Investment Management Alert
December 23, 2008

Please see our Hot Topics for more on this subject.

Morrison & Foerster
December 19, 2008
This Update reviews the SEC’s recently approved Rule 151A under the Securities Act which will give the SEC the authority to regulate certain indexed annuity products issued on or after January 12, 2011. From that date, covered indexed annuity will have to be registered with the SEC as securities and sold via a prospectus by insurance agents registered with the Financial Industry Regulatory Authority (“FINRA”) as broker-dealers.

Please see our Hot Topics for more on this subject.

Morgan Lewis
December 18, 2008
This Alert reviews the SEC’s adoption of Rule 151A under the Securities Act. Rule 151A would require all insurance companies that issue equity index annuities (or “EIAs,” ie annities that contemplate the payment of annual interest based on a specified securities index) to register those annuities as securities under the Securities Act and to sell them pursuant to a prospectus. As proposed this rule would become effective January 12, 2011. The rule would also require any insurance agent that sells these annuities to pass FINRA tests and become a registered representative associated with a broker-dealer. The Alert notes that the rule is likely to face legal challenges and that “the lengthy transition period is intended to allow EIA issuers the time necessary to implement the significant changes in their operations that the new rule requires.”

Indexed Annuities and Certain Other Insurance Contracts

The Securities and Exchange Commission is extending its comment period for (i)  proposed new Rule 151A regarding equity index annuity contracts under the Securities Act and (ii) proposed new Rule 12h-7 under the Exchange Act that would exempt insurers deemed to have issued a security from becoming reporting companies, in each case until November 17, 2008.

Dechert has done a useful summary of these proposed rules. 

Please see our Hot Topics for more on this subject.

Please see our Hot Topics for more on this subject.