Theresa M. Brunsman The Union Central

Assistant Counsel Life Insurance Company
(513) 674-5259 1876 Waycross Road
(513) 595-2918 Fax PO Box 40888
Cincinnati, Ohio 45240

Law and Corporate Relations

June 19, 2000

VIA ELECTRONIC MAIL

Jonathan G. Katz, Secretary
U.S. Securities and Exchange Commission
450 Fifth Street, N.W., Washington, D.C. 20549-0609
rule-comments@sec.gov

Re: File Number S7-11-00; Use of Electronic Media

Dear Secretary Katz:

I would like to submit the following comments concerning the use of electronic media in the securities marketplace. To paraphrase the disclaimer issued by SEC staff members when they speak at industry conferences, the opinions expressed are strictly my own and do not necessarily reflect those of my company, its affiliated broker-dealer or investment adviser, its agents, or any other party.

I would like to start with a matter that is not identified in your request for comments. I am concerned about the use of "electronic signatures", specifically that the development of Internet transactions using electronic signatures may lead to direct Internet selling of variable annuities and variable life insurance products. I understand that new legislation has been given to the President for his signature creating new opportunities for contracts to be consummated with encrypted, electronic "signatures". While this may be a convenience for multi-party contracts when the parties are participating in a deal closing from different parts of the world, I am concerned that issuers of variable insurance products will try to apply the new technology to the sale of our industry's products. I can envision websites like those that currently offer quotes and online sales of term life insurance expanding to include variable annuities. Variable products are complex, and the NASD rules concerning suitability contemplate the direct involvement of a trained professional. Without the personal involvement of a registered representative of a broker-dealer, I believe that compliance will become confusing, with the responsibility for determining if a transaction is suitable shifting between the broker-dealer in traditional sales cases and the issuer of the products in direct online sales.

In response to your request for comments, I feel that, for the segment of the investing public that has consented to electronic delivery, a single notice stating the dates on which certain materials will always be available on the company website (for example, check on or after May 1 of each year for an updated prospectus, September 30 for a semiannual report, and March 1 for an annual report) would be adequate. I would suggest adding the same "notice" to quarterly account statements, or confirmations, or annual policy statements, to reinforce the regular posting dates of such materials. Because the regular delivery of these materials is a large financial burden on the insurance industry, shifting to electronic delivery of these materials for even a portion of the owners could result in lower administrative costs for the products.

I do not believe that issuers should be able to differentiate between purchasers as to administrative charges, so any savings should be passed along to both paper recipients and electronic recipients. I feel that, with an electronic offering, the issuer should not be able to charge extra fees to a participant requesting paper. There are many reasons why a person might want a paper copy of offering literature, including portability and flexibility as to opportunities to read the materials. As you pointed out in your release, printing from the Internet or printing a downloaded document can result in a written product that is difficult to read. This difficulty in transferring electronically delivered materials to paper will persist, in my opinion, because of the range of computers and printers in use.

However, I think the argument stated above collapses concerning materials that are not created and delivered on a regular cycle. For example, proxies should be delivered either in paper format, or by a special electronic mail notice to the owner of the security that has the proxy attached or guides the owner to the website where the proxy can be viewed and downloaded or printed. Eventually, I expect that mutual fund issuers and variable product issuers will automate their computer systems so that owners can vote online, which should streamline the tabulation process.

I believe that the SEC should continue to guard the interests of investors who do not participate in the world of electronic commerce. Many owners of variable insurance products are older Americans who, in studies conducted by the AARP, have expressed wariness about doing business over the Internet due to privacy concerns. While it is worthwhile to continue examining these issues as the world continues to change, I hope that you will continue to provide protection to those who do not participate in the Internet revolution.

Sincerely yours,

Theresa M. Brunsman
Assistant Counsel