Wednesday, April 15, 2009

MetLife Maintains SEC Regulation of Indexed Annuities

Insurer MetLife Inc. (MET), a leading seller of annuities, and a group of securities regulators and the state have asked a court to enforce the U.S. Securities and Exchange Commission, rule processing as equity indexed annuities securities rather than insurance products.

Index annuities should be regulated by federal laws on securities, such as variable annuities, for example MetLife, the North American Securities Administrators Association, or NASAA and AARP Foundation, a nonprofit organization representing the interests of people aged 50 and over, in a petition filed Friday, the Court of Appeals for the District of Columbia.

MetLife, which does not issue indexed annuities, but they sell variable annuities, and other parties say that there is no substantive reason for the indexation of pensions to be regulated differently than under variable annuity of securities laws. Consumers could be harmed by misleading-indexed annuity sales practices, and regulation of indexed annuities under the federal law, in addition to the state insurance law, to submit to stronger and more uniform standards they say.

Indexed annuities are linked to the performance of stock indexes, but are generally sold by insurance agents. They are currently subject to state regulation. However, under the new rule, which was adopted in December, indexed annuities issued on or after 12 January 2011, would need to register with the commission and could not be sold through independent brokers.

The memory supports the SEC in a case arising from a complaint filed in January by a group of insurance and marketing companies to challenge the rule. The lawsuit was filed by American Equity Investment Life Insurance Co. (AEL), BHC Marketing, Midland National Life Insurance Co., National Western Life Insurance Co. (NWLI), OM Financial Life Insurance Co. and Tucker Advisory Group Inc. She since been consolidated with another filed by the National Association of Insurance Commissioners, a group of state insurance regulators, and the National Conference of Insurance Legislators or state legislators.

Wendy Carlson, President and CEO of American Equity Investment Life Insurance., Said that the last parts of the deposit of memory have conflicting interests. MetLife sells variable annuities, AARP has an affiliation with New York Life Insurance Co. and NASAA is a group of regulators, which seeks to extend its jurisdiction, "she says.

AARP Product brand NY Life is a fixed immediate annuity products, and not a variable annuity, "said Richard Hisey, president of AARP Financial Inc. AARP for its role in memory, Hisey said," The current economic environment and that affects how the insurers have put extra emphasis on this general issue. "

NASAA Rex Staples General Counsel challenged the statement that the group seeks to expand its jurisdiction. "What we are trying to do is ensure that something that is clearly guaranteed under the law is, in fact, considered a security," he said.

In short, the parties argue that indexed annuities are key characteristics of securities, including the management of investment risks by investors, and they are marked as being a means for investors to participate in the market Securities gains - characteristics shared by different variables. " Sellers of variable annuities are at a disadvantage, since the indexed annuity sellers operate under a different set of rules that are "less complete, less uniform and less consistently applied," he said.

In addition, indexed annuities are "extremely complicated because of their complex investment formulas and hidden costs", but are sold to investors shortly, he said. Deceptive and misleading sales practices that take advantage of this complexity "are too often used to sell products, the brief said.

State insurance regulation of these products is insufficient by itself to protect the investors of the complexity, risks and aggressive marketing tactics involved in securities, such as indexed annuities, "says the brief. "In general, insurance regulators are not available to them the equivalent of disclosure requirements, the adequacy of standards and measures against fraud in the securities laws," he said.

Moreover, their approach to implementation varies considerably, says the memory.

The strong anti-fraud and relevance of standards that were part of securities regulation for decades to deter abuses, and the compulsory registration of titles rents increasing the amount of information available to investors, he says. (The Wll Streets Journal)

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