Subject: S7-14-08

July 2, 2008

Good Afternoon,

I wanted to share with you my comments regarding the proposal to regulate indexed annuities under the SEC, and why I staunchly oppose this.

According to the SEC, purchasers of fixed index annuities (FIA) are “exposed to a significant investment risk—i.e., the volatility of the underlying securities index”. This is patently false. FIA’s are a great alternative to traditional securities because they are NOT subject to the same volatility as a security because they insure you will not lose your deposited premiums, and most guarantee a minimum of interest in the 1%-2% interest range.

All “investments” are subject to volatility in their specific market. Take housing for example. Home values were growing 5% - 10% a year for the early part of this decade, so many people bought homes as investments. Now prices are falling and those investors are losing money. Based on the premise of the SEC’s desire to regulate FIA’s, should the SEC regulate housing too? At least when you invest in FIA’s, you are guaranteed not to lose money.

I certainly understand the complaint that indexed annuity sales reps are mis-representing the product, but that is not justification to regulate those sales through the SEC. The training requirements for fixed Indexed annuities should be handled at the state licensing level just as it is for all other fixed life and annuity products. The US treasury department recently enacted regulation requiring anti-money laundering training simply to sell term life insurance. My question is, does the fact that some people will use term life insurance to launder money mean that everyone should have to have a securities license? No, it does not.

Requiring a securities license to sell FIA’s will not result in a better product. It will result in fewer products with less competition and will be bad for the consumer. It will result in thousands of dollars having to be paid by quality producers to get a securities license and pay the steep E&O insurance premiums. If you want to enact required training to sell FIA’s I would support that, but to try and regulate a fixed product where you are guaranteed not to lose money would be bad for the consumer and the agents who sell these products. Thank you.

Michael Jolly, IT Director
American Brokerage Company