Annuity Providers Seek Rule 22e-3T Provision
Copyright 2009 Euromoney Institutional Investor PLCAll Rights Reserved Defined Contribution & Savings Plan Alert
January 19, 2009
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Annuity Providers Seek Rule 22e-3T Provision
Insurance firms selling variable annuities want the Securities and Exchange Commission to make a provision for them in a money market fund rule passed after the financial crisis hit money funds in September.
The Committee of Annuity Insurers contends that variable annuities with underlying money funds are being negatively impacted by Rule 22e-3T, which allows money funds to suspend a shareholder's right to redeem shares while it liquidates. The insurers are asking the SEC to allow them to withhold requested payments on any portion of a customer's annuity contract in which assets are tied up in a money fund being liquidated.
"Insurance companies generally may not suspend the right of variable annuity contract holders to surrender their contracts or withdraw cash value from them," according to a letter sent by the committee.
Stephen Roth, partner at Sutherland Asbill & Brennan and attorney for the insurers, said he believes lack of a provision for annuities in the bill was an oversight because the SEC had acted so quickly. After the Treasury Department set up a guarantee program for money funds last fall, the SEC followed it immediately by passing Rule 22e-3T to enable participants in the program to liquidate without violating a rule suspending shareholder right of redemption.
February 3, 2009
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