The SEC staff has issued a no-action letter allowing retroactive payment of filing fees in connection with variable annuities funding certain tax-qualified pension or profit-sharing plans or governmental plans. The letter covers cases where the variable annuity is registered under the Securities Act of 1933, but the insurance company separate account supporting the variable annuity has not been registered under the Investment Company Act of 1940, in reliance on the registration exclusion Section 3(c)(11) thereof.
Until now, 1933 Act filing fees in connection with this type of variable annuity have had to be paid in advance, based on estimates of the dollar amount of variable annuity sales. Thus, careful monitoring has been necessary to assure that sales do not exceed the specified amount registered. By contrast, in connection with variable annuities supported by separate accounts that are registered under the 1940 Act, the 1933 Act filing fees are paid pursuant to 1940 Act Rule 24f-2, once a year on an after-the-sale basis. Thus, the worry of “over sales” is eliminated. Rule 24f-2 also permits redemptions to be “netted” against sales during a given year, thus reducing fees due.
Under the no-action letter, dated February 26, 2009, 1933 Act filing fees in connection with the types of variable annuities covered by the letter can be paid in reliance on Rule 24f-2 substantially as if the separate account involved was 1940 Act registered. Moreover, we have informally confirmed with the SEC staff that, where the facts are the same in all material respects, other insurance company issuers also may rely on the February no-action letter.
This no-action letter raises the question whether the staff might also agree to similar retroactive filing fee payment procedures for other types of insurance products registered under the 1933 Act, but not the 1940 Act, such as market value adjustment contracts, so-called “synthetic” annuities and fixed indexed annuities.