MetLife maintains SEC indexed annuity Suit Regulation

20 March 2009

By Steven A. Morelli, editor

MetLife asked to file a brief in support of the Securities & Exchange Commission, the rule of indexation of pensions to treat the securities.

The carrier is to equate support for the Rule 151A of the SEC, with the support of federal regulation.

"The petition argues SEC Rule 151A, which divided between insurance companies by encouraging federal oversight and promoting the surveillance state, as was the case historically," said Group AITE behalf of MetLife. "Critics of federal oversight has stated that the SEC and Cox's arguments in favor of federal regulation to fight against the practice of sales were with sincerity."

The SEC adopted Rule 151A in December to regulate indexed annuities from the 12 January 2012. A hearing was scheduled on May 8 for a lawsuit brought by a group led by American Equity Investment Life Insurance Co. against the SEC. If section 151A is indexed annuity sellers will be required to have a securities license.

AITE Group senior analyst Doug Dannemiller, argues that there is little difference between the indexed annuities and variable annuities, which are already regulated by the SEC.

"Everyone can achieve the yield on the S & P 500, while investment in the selection of variable annuities are wider," said Dannemiller. "In practice for several years, both types were sold with guarantees of protection against market declines. In SEC regulated rents variables such guarantees have been called by the riders of life benefit and equity in 'State pensions of these guarantees were generally part of most contracts. The two are backed by a guarantee by the insurance coverage and to varying degrees. "

Supporters of regulating the status of indexed annuities say their safeguards are inherent in the product and the risk is borne by the insurer. In the case of variable annuity guarantees are in the rider and the risk is borne by the consumer.

Dannemiller said the problem has indexed annuity proves the need for federal control.

"The debate between the major financial institutions simply underlines the need to streamline the regulatory standards," said Dannemiller. "If the two regulatory regimes have the same standards and costs, this debate would be pointless - and consumers and investors would be better."


Several federal legislators have said, they offer a version of the federal regulation of insurance during this session of Congress. The idea is always proposed optional federal charter that would enable carriers and producers to choose the state or federal regulation. With the collapse of financial markets, however, many are asking the federal regulations without the state-based option.