American Equity Investment Life Holding Company (NYSE: AEL), a leading
underwriter of fixed index annuities (FIAs), was successful in obtaining
a remand of Rule 151A adopted by the Securities and Exchange Commission
earlier this year. Rule 151A, which was to become effective in 2011,
expands the SEC’s jurisdiction to include regulatory oversight of FIAs
and would require sales agents of FIAs to have securities licenses as
well as insurance licenses. American Equity, along with a coalition of
industry participants, filed a lawsuit in the U.S. Court of Appeals for
the D.C. Circuit opposing Rule 151A on several grounds, including that
FIAs and sales agents are already extensively regulated under state law.
FIAs provide consumers with a guaranty of principal and minimum interest
comparable to other types of fixed annuities which are regulated solely
under state insurance law. FIAs also offer consumers the opportunity to
earn interest credits linked to a securities index without exposing
their contract value to market risk. In adopting Rule 151A, the SEC
asserted that the probability of earning contract gains above guaranteed
minimums was “investment risk” justifying federal oversight of the
products. In its ruling, the Court concluded that the SEC’s assessment
of “investment risk” was not unreasonable, and thus the SEC may choose
to regulate these products.
However, the Court also concluded that the SEC failed to fulfill its
legal obligation to analyze the effect of the rule upon “efficiency,
competition and capital formation.” The Rule was remanded to the SEC for
further consideration of this requirement. American Equity believes the
Rule will have a chilling effect on competition and that the efficiency
of the Rule which duplicates consumer protections already provided by
state insurance laws is questionable.
The future of Rule 151A remains uncertain. The remand to the SEC for
further consideration will add to a growing list of issues facing the
SEC, and whether addressing the flaws in Rule 151A will be given high
priority is unknown. At a time when the global financial crisis has
wiped out trillions of dollars of savings in the securities markets, the
focus may be on the issues contributing to those losses rather than on
regulating FIAs, which protected their holders from such losses.
American Equity will continue to oppose Rule 151A and to support the
efforts of the FIA coalition through any later phases of the regulatory
and judicial processes. In addition, American Equity strongly supports
the bills recently introduced in the U.S. House of Representative and
Senate to overturn Rule 151A.
ABOUT AMERICAN EQUITY
American Equity Investment Life Holding Company, through its
wholly-owned operating subsidiaries, is a full-service underwriter of a
broad line of annuity and insurance products with a primary emphasis on
the sale of fixed-rate and index annuities. The company’s headquarters
are located at 5000 Westown Parkway, West Des Moines, Iowa, 50266. The
mailing address of the company is: P.O. Box 71216, Des Moines, Iowa,
50325. For more information, visit our website www.american-equity.com.
American Equity Investment Life Holding Company
John M.
Matovina, CFO & Vice Chairman, 515-457-1813
jmatovina@american-equity.com
or
D.
J. Noble, Chairman, 515-457-1705
dnoble@american-equity.com
or
Julie
L. LaFollette, Director of Investor Relations, 515-273-3602
jlafollette@american-equity.com
or
Debra
J. Richardson, Chief Administrative Officer
& Executive Vice
President, 515-273-3551
drichardson@american-equity.com
