SecProbe.io

CORRESP
1
filename1.htm

            Allianz Life Insurance Company of North America

            Erik Nelson

            Associate General Counsel, Senior Counsel

            Corporate Legal

            5701 Golden Hills Drive

            Minneapolis, MN  55416-1297

            Telephone:  763-765-7453

            Erik.Nelson@allianzlife.com

            www.allianzlife.com

  CORRESPONDENCE FILING

  April 13, 2023

  Mr. Mark Cowan, Senior Counsel

  Securities and Exchange Commission

  Division of Investment Management, Disclosure Review

  Office 100 F Street NE

  Washington, DC 20549-8626

        Re:

          Post-Effective Amendment No. 1 to the Form S-1 Registration Statement, Submitted December 16, 2022, File No. 333-264349 (Index Advantage® Income ADV Variable Annuity)

  Mr. Cowan:

  We received additional comments from you on April 5, 2023, with respect to Registrants’ above
    referenced Post-Effective Amendment No. 1 to the Form S-1 Registration Statement, filed on December 16, 2022. This correspondence responds to your comments. We will make conforming changes to the prospectus in both the Form S-1 and Form N-4
    Registration Statements in the next post-effective amendment to the above-referenced Registration Statement, as well as conforming changes, to the extent applicable, to other product prospectuses.

  April 5, 2023 PROSPECTUS COMMENTS

  ADDITIONS TO PRIOR COMMENTS

        1.

          Referring to Prior Comment #1 (prior prospectus comments, received February 14, 2023, are copied below along with the prior responses, for your reference), please also include on the cover the
            former names of the Index Options in the first Post-Effective Amendment after the change.

  Response:
    Revised as requested.

        2.

          Referring to Prior Comment #8 (below), please revise the definition of Income Percentage to clarify where current and historical information can be found.

  Response:
    Revised as requested.

        3.

          Referring to Prior Comment #9 (below), please revise the definition of Performance Lock to replace “Index Year” with “Term”. In our view Index Year is not the right term here. It is confusing in
            context of multi-year Terms since Performance Lock works to terminate the multi-year Term. This comment is repeated on the definition of Performance Lock on page 12 of the prospectus.

    1

  Response:  Revised as
    requested to replace “Index Year” with “Term”.

        4.

          Referring to Prior Comment #16 (below) on Risk Factors – Liquidity Risks. We think the added clarity as to the applicability of the Early Reallocation feature regarding current versus new
            Contracts would avoid confusion here (even if defined in the Glossary). We don't think investors should be expected to remember all this from the Glossary.

  Response:
    Revised as requested.

        5.

          Referring to Prior Comment #18 (below) on Risk Factors – Risks Associated with Performance Locks and Early Reallocations. In the first bullet please change “Year” in “the remainder of the Index
            Year” to "Term". In our view Index Year is not the right term here. It is confusing in context of multi-year Terms since Performance Lock works to terminate the multi-year Term.

  Response:
    Revised as requested.

        6.

          Referring to Prior Comment #20 (below) on Risk Factors – Risks Associated with Performance Locks and Early Reallocations. Please leave in language stating a locked Index Option will not receive
            a Performance Credit on the Term End Date from the second bullet.

  Response:
    Revised as requested to add back “on the Term End Date”.

        7.

          Referring to Prior Comment #21 (below) on Risk Factors – Risks Associated with Performance Locks and Early Reallocations.  We think the added clarity as to the ability to execute Performance
            Locks for the Index Protection Strategy(s) when the Daily Adjustment is zero regarding current versus new Contracts would avoid confusion here (even if defined in the Glossary). We don't think investors should be expected to remember all this
            from the Glossary.

  Response:
    Revised as requested.

        8.

          Referring to Prior Comment #24 (below) on Risk Factors – Changes to Trigger, Rates, Caps, and Participation Rates. We do not think the use of the term “Issue Date” is right in terms of the
            initial rates for Index Effective Dates within the guaranteed period. It should be based on the date rates are reviewed with the application. This comment is repeated in the second paragraph under RISKS ASSOCIATED WITH CHANGES TO TRIGGER RATES,
            CAPS, AND PARTICIPATION RATES, on page 33 of the prospectus.

  Response:
    Revised as requested to replace “Issue Date” with “date you signed your application.”

        9.

          Referring to Prior Comment #27 (below) on Purchasing the Contract – Allocation of Purchase Payments and Contract Value Transfers (see also Comment 8 above). We do not think the use of the term
            “Issue Date” is right in terms of the initial rates for Index Effective Dates within the guaranteed period. It should be based on the date rates are reviewed with the application.

  Response:
    Revised as requested to replace “Issue Date” with “date you signed your application.”

        10.

          Referring to Prior Comment #35 (below) on Valuing Your Contract – Performance Locks and Early Reallocations (see also Comment 7 above). We think the added clarity as to the ability to execute
            Performance Locks for the Index Protection Strategy(s) when the Daily Adjustment is

    2

  zero regarding current versus new Contracts would avoid confusion here (even if defined in the Glossary). We don't think investors should be
    expected to remember all this from the Glossary.

  Response:
    Revised as requested to clarify that the prohibition on executing Performance Locks for the Index Protection Strategies when the Daily Adjustment is zero does not apply to Contracts issued before May 1, 2023.

        11.

          Referring to Prior Comment #37 (below) on Valuing Your Contract – Performance Locks and Early Reallocations (see also Comment 4 above). We think the added clarity as to the applicability of the
            Early Reallocation feature regarding current versus new Contracts would avoid confusion here (even if defined in the Glossary). We don't think investors should be expected to remember all this from the Glossary.

  Response:
    Revised as requested to clarify that the Early Reallocation is not permitted for contracts issued before May 1, 2023.

  COVER PAGE

        12.

          Referring to the following sentence in the first full paragraph on page 2 of the prospectus, please reconcile other disclosure in the prospectus with this maximum loss from a negative Daily
            Adjustment:  “The maximum potential loss from a negative Daily Adjustment is: -99% for the Index Precision Strategy and Index Performance Strategy, and -35% for the Index Guard Strategy.”

  Response:
    The prospectus is revised as requested to replace various references to the potential loss resulting from the Daily Adjustment with the sentence quoted above.

        13.

          Specify the distributor on the cover.

  Response:
    Revised as requested.

  IMPORTANT INFORMATION YOU SHOULD CONSIDER ABOUT THE CONTRACT

        14.

          Referring to the first bullet in FEES AND EXPENSES, Charges for Early Withdrawals, on page 15 of the prospectus. Please change “it cannot result in a total loss of -100%” consistent with what is
            on the cover regarding maximum loss due to the Daily Adjustment.

  Response:
    Revised as requested to replace this with “The maximum potential loss from a negative Daily Adjustment is: -99% for the Index Precision Strategy and Index Performance Strategy, and -35% for the Index Guard Strategy.”

        15.

          Referring to the fifth bullet in RISKS, Not a Short-Term Investment, on page 17 of the prospectus, please insert “Income Payment” as follows:

  We apply a Daily Adjustment if before the Term End Date you take a full or partial withdrawal, annuitize
    the Contract, take Income Payments, execute a Performance Lock, we pay a death benefit, or we deduct Contract fees, expenses, or investment advisory fees that you authorize your
    Financial Professional’s firm to receive from the Contract.

  Response:
    Revised as requested.

    3

  RISK OF NEGATIVE RETURNS

        16.

          Add the following (from page 29 of the prospectus) to the cover, if not already there:  “Such losses will be greater if you take a withdrawal that is subject to a negative MVA, or is a deduction
            of Contract fees, expenses, or investment advisory fees that you authorize your Financial Professional’s firm to receive from the Contract.”

  Response:
    Revised as requested.

        17.

          Add the following (from page 30 of the prospectus) to the cover:

  In extreme circumstances the Daily Adjustment could result in a loss beyond the protection of the Buffer
    or Floor, but it cannot result in a total loss of -100%. Such losses will be greater if the amount withdrawn is also subject to a negative MVA, or is a deduction of Contract fees, expenses, or investment advisory fees that you authorize your Financial
    Professional’s firm to receive from the Contract.

  Response:
    Revised as requested.

  RISKS ASSOCIATED WITH SUBSTITUTION OF AN INDEX AND LIMITATION ON FURTHER INVESTMENTS

        18.

          Referring to the fourth bullet on page 32 of the prospectus regarding substitutions the Company deems necessary. Please delete this bullet point. We do not think other companies have this
            ability and the first three bullets cover most circumstances when the Index should be substituted.

  Response:
    We briefly note the following:

        •

          The Company’s right to substitute an Index when it determines “in its sole discretion” that such substitution is necessary is a contractual right reserved to the Company in the policy form,
            which was subject to the review and approval of the Company’s state insurance regulators.

        •

          The disclosure describes the circumstances under which Allianz Life may exercise that discretion. We note that the portion of the 4th bullet beginning “It is our policy that …” was originally
            added in response to a prior Staff comment given to the Company on June 17, 2021, on the Index Advantage Income ADV prospectus.

        •

          We are aware of competitors that have similar reserved rights. For example, Equitable Life Insurance Company (see, e.g., File No. 333-253036) and Brighthouse Life Insurance Company (see, e.g.,
            File No. 333-233240) reserve similar discretion for index substitutions (for example, “[w]e have the right to substitute an alternative index prior to Segment Maturity if . . . at our sole discretion we determine that our use of such Indices
            should be discontinued . . . .”).

        •

          Once issued, a Contract may be expected to continue for many decades. The Company must maintain flexibility to respond to future unanticipated events. The current disclosure describes the known
            types of events that might require a substitution, but the disclosure cannot foreclose the possibility of other events that cannot be foreseen.

    4

  By follow-up communication on April 7, 2023, you requested that this bullet point be revised as
    follows:

  we determine in our sole discretion that the substitution is necessary. It is our policy that we will exercise this discretion only to respond as we deem necessary due to unanticipated events outside of our
    direct control. This might include other events similar to those listed above, other changes to the Index (such as name or ownership changes) that legally may be considered a substitution or
        that do not align with our business strategy or values, or a breach by the Index provider of the Index intent or performance expectations.

  Response:
    The bullet point is revised as requested.

        19.

          Referring to the first paragraph following the bullet points on page 32 of the prospectus, insert “(as if it was the Term End Date)” as follows:

  If we substitute an Index during a Term we will combine the return of the previously available
    substituted Index from the Term Start Date to the substitution date (as if it was the Term End Date) with the return of the new Index from the substitution date to the Term End Date.

  Response:
    The Company believes that the proposed addition is not accurate and could lead to confusion among contract owners. In the event of a mid-term Index substitution, the combination of the return of the two Indexes does not function like a Term End Date.

  By follow-up communication on April 7, 2023, you requested that we confirm that the
    Company uses the closing Index value of the old Index as of the date of substitution.

  We confirm that the Company would use the closing Index value of the old Index as of
    the date of substitution.

        20.

          Referring to the seventh paragraph on page 33 of the prospectus, should “Cap and” be added in the next sentence, too, and throughout? Are there Index Options that have Cap and Participation
            Rate?

  Response:
    Upon review, the addition of “Cap and” was not needed and is deleted in each place that it appeared, as follows:  “If you execute a Performance Lock you may be able to request an Early Reallocation and begin a new Index Option with a new Term Start
    Date and a new Trigger Rate, Cap, or Cap and Participation Rate before the next Index Anniversary.”

  INVESTMENT ADVISORY FEES

        21.

          Referring to the first paragraph on page 36 of the prospectus, leave the following sentence in:  “Contracts issued before May 1, 2023, allowed you to provide us with alternate instructions for
            deductions of investment advisory fees as detailed in Appendix G.”

  Response:
    Revised as requested.

        22.

          Insert “proportionately” in the following sentence on page 37 of the prospectus, as indicated:  “These deductions also reduce the following proportionately
              by the percentage of Contract

    5

  Value withdrawn: Charge Base, Index Option Base, Index Option Value, and Variable Account Value.”

  Response:
    Revised as requested.

  VALUING YOUR CONTRACT

        23.

          Referring to the first bullet of the shadowed box on page 48 of the prospectus, insert “at end of Term” in the following sentence, as indicated:  “The maximum potential loss from negative Index
            Returns at end of Term is: -90% with a 10% Buffer; -80% with a 20% Buffer; and -10% with the Floor.”

  Response:
    The sentence is revised as follows: “The maximum potential loss from negative Index Returns negative Performance
        Credit is: -90% with a 10% Buffer; -80% with a 20% Buffer; and -10% with the Floor.”

        24.

          In the second paragraph under DAILY ADJUSTMENT, on page 60 of the prospectus, consider inserting “MVA-Free Withdrawals” in this sentence as follows:  “The Daily Adjustment can affect the amounts
            available for withdrawal, Performance Locks, annuitization, payment of the death benefit, and the Contract Value used to determine MVA-Free Withdrawals, the Income Payments,
            Charge Base, contract maintenance charge, and investment advisory fees you authorize your Financial Professional’s firm to receive  from the Contract.”

  Response:
    “MVA-Free Withdrawals” does not work in this context, because the term is defined to include “withdrawals you take under the free withdrawal pri