SEC Company Response from PROTECTIVE LIFE INSURANCE CO (CIK 0000310826) — Mar 10, 2020
PROTECTIVE LIFE INSURANCE CO (CIK 0000310826)
Date: March 10, 2020 · CIK: 0000310826 · Accession: 0001104659-20-031369
AI Filing Summary & Sentiment
File numbers found in text: 333-235429
Referenced dates: February 7, 2020
Letter
ALYSON SAAD
Associate Counsel — AVP
Writer’s Direct Number: (205) 268-2984
Facsimile Number: (205) 268-3597
Toll-Free Number: (800) 627-0220
E-mail: alyson.saad@protective.com
March 10, 2020
VIA EDGAR Transmission
U.S. Securities and Exchange Commission
100 F Street, NE
Washington, DC 20549-8629
Re: Protective Life Insurance Company
Registration Statement on Form S-3
File No. 333-235429
Commissioners:
On behalf of Protective Life Insurance Company (the “Company”), we are transmitting for filing this Pre-Effective Amendment No. 1 (the “Amendment”) to the Registration Statement on Form S-3 (the “Registration Statement”) relating to certain individual single premium deferred index-linked annuity contracts (the “Contracts”) previously filed with the Securities and Exchange Commission (the “Commission”) under the Securities Act of 1933 on December 9, 2019.
We are also providing our responses to comments from the staff (the “Staff”) of the Commission on the Registration Statement received by counsel for the Company via correspondence dated February 7, 2020. The Amendment incorporates changes made in response to the Staff comments. For the Staff’s convenience, each Staff comment is set forth in full below, followed by the Company’s response.
General
1. Please confirm that all missing information, including all exhibits, will be filed in a pre- effective amendment to the registration statement. We may have further comments when you supply the omitted information.
Response: The Company confirms that all missing information, including financial statements, exhibits, and other required information is included in the Amendment.
2. Please clarify supplementally whether there are any types of guarantees or support agreements with third parties to support any Contract features or benefits, or whether the Company will be solely responsible for any benefits or features associated with the Contract.
Response: There are no guarantees or support agreements with third parties to support any of the Contract features or benefits. The Company is solely responsible for any benefits or features associated with the Contract.
3. Please update the prospectus, where appropriate, to reflect changes associated with the SECURE Act (e.g., required minimum distribution age).
Response: The Company has updated several sections of the prospectus to reflect changes associated with the SECURE Act.
4. In the Calculation of Registration Fee table on the facing sheet, it is not clear what footnote 1 to the Amount of Registration Fee column represents.
Response: Upon further consideration, the Company has determined that there is not a corresponding footnote to the footnote reference. For that reason, the Company has removed the footnote reference.
5. The staff notes that the prospectus is dense and hard to follow. Please revise in Plain English, utilizing headings, bullets and other formatting changes to enhance readability.
Response: The Company has revised the prospectus in accordance with Plain English standards.
6. We note that there are numerous formulas and calculations described in the prospectus. Please ensure that you provide clear examples for each calculation and formula, including providing examples of how net and gross withdrawals are calculated in the “Calculating Amounts Associated with a Withdrawal” disclosure on page 25.
Response: The Company has provided examples for each calculation and formula in the Prospectus. For examples of how net and gross withdrawals are calculated, we added language to the “Calculating Amounts Associated with a Withdrawal” section referring readers to Appendix specific examples in Appendix A.
Cover Page
7. Please streamline the Cover Page by only including disclosure of the key features and risks of the Contract. Other less important terms should be moved to the relevant sections of the prospectus (e.g., the information in the first three sentences of the second paragraph about payment procedures).
Response: The Company has complied with the Staff Comment and revised and streamlined the disclosure on the Cover Page of the prospectus.
8. In the first paragraph, please prominently disclose after the first sentence that no premiums beyond the initial premium will be accepted.
Response: The Company has complied with the Staff Comment.
9. To aid an investor’s understanding of the key information on the Cover Page, please avoid using defined terms, or at a minimum describe them, and provide some information about the nature of the Contract for context. For example, begin the third paragraph by stating something to the effect that: “You may allocate Purchase Payments to one or more of the index-linked investment options (each a Strategy) available under the Contract. Each Strategy is tied to a published index (Index) and has an applicable credit calculation method used to determine the rate of return (Crediting Method).”
Response: The Company has complied with the Staff Comment.
10. In the third paragraph, please state that a Strategy with a 0% floor will not be credited with negative Index Performance regardless of the amount of the negative Index Performance.
Response: The Company has added the recommended disclosure.
11. At the end of the last sentence of third paragraph, please add “at the end of a Strategy Term” so that it is clear that Strategies cannot be terminated during an active Term. Please also prominently disclose that this reservation allows the Company to reduce the number of Strategies from the current ten to three as early as the end of the first year Term.
Response: The Company revised the subject disclosure to reflect that the Company reserves the right to discontinue Strategies for renewal terms, but guarantees that the three Strategies noted would always be available. The Company believes the revised disclosure strikes an appropriate balance between informing purchasers of the Company’s right to discontinue Strategies without creating a misimpression that the Company has plans to discontinue Strategies that are currently available.
12. In the fourth paragraph, please clarify that the minimum 50% Participation Rate limits positive returns to 50% of the index’s returns.
Response: In an effort to streamline the Cover Page and focus on key information about the Contract, the Company has removed the subject paragraph from the Cover Page.
13. Please bold the most pertinent information regarding the Floor, Buffer, Cap, Market Value Adjustment and Withdrawal Charge.
Response: The Company has complied with the Staff Comment.
14. Please revise your disclosure of the Strategy Value in paragraphs 5 and 6 in plain English. In particular, please disclose how the Strategy Value is impacted by the Vesting Factor for withdrawals from a Strategy or a surrender of the Contract before the Strategy Maturity Date when the Index performance is positive and when it is negative. In particular, please clarify that gains and, to the extent applicable, protections against losses offered by the Buffer are prorated over time as to amounts withdrawn or a surrender of the Contract before a Strategy Maturity Date. The Summary and Risk Factor disclosure should be revised to address the same points.
Response: The Company has complied with the Staff Comment.
15. In the eighth paragraph, the Summary and elsewhere where the MVA Period is discussed, please highlight and make clear that the MVA applies to withdrawals (in excess of the annual Free Withdrawal Amount) and a surrender of the contract at all times, other than the 30 days prior to the end of the initial MVA Period and each subsequent one-year MVA Period.
Response: The Company has clarified throughout the prospectus that the MVA applies to withdrawals (in excess of the annual Free Withdrawal Amount) and a surrender of the Contract at all times, other than the 30 days prior to the end of the initial MVA Period and each subsequent one-year MVA Period.
16. In the eighth paragraph, please also state that the maximum withdrawal charge is 9% of the amount withdrawn, which includes any positive or negative MVA, and that a positive MVA increases the amount of the withdrawal charge.
Response: The Company has complied with the Staff Comment.
17. In the third sentence of the ninth paragraph, please add disclosure that the withdrawal charges could also reduce the Contract Value to less than the amount protected by any applicable Buffer(s) or Floor(s).
Response: In response to Staff Comment #7, the Company has removed the ninth paragraph on the Cover Page of the prospectus. The Company has added the disclosure recommended by the Staff to the sixth paragraph.
18. Please add Cover Page disclosure to the effect that “This Contract is not for you if you are looking for a short-term investment or if you plan to take withdrawals or surrender the Contract before the end of the withdrawal charge period, MVA Period and/or a Strategy Maturity Date.”
Response: The Company has added disclosure to the Cover Page of the prospectus in response to the Staff Comment which disclosure had been discussed with the Staff in a phone call with counsel for the Company on February 20, 2020.
Definitions, page 3
19. In the definition of Free Withdrawal Amount, please clarify whether the Free Withdrawal Amount is the Strategy Value on the date such withdrawal is made.
Response: The Company has confirmed and revised disclosure throughout the prospectus to clarify.
20. In the definition of the 60 Day Rate Lock Period, please clarify what the purpose of this period is.
Response: The Company has complied with the Staff Comment.
21. The definition of Strategy Value states that it represents a value of a Strategy “before application of the MVA,” however it also states that Strategy Value is the product of the Strategy Performance and the Strategy Base, which the prospectus defines as including the MVA.” Please clarify this inconsistency.
Response: The Company has modified the definition of “Strategy Base” in response to the Staff Comment to remove any inconsistency.
Summary, page 5
22. Please include in the Summary a listing of all Contract fees and charges.
Response: The Company has added a “Contract Charges and Fees” table to the Summary section of the prospectus.
23. Please include brief disclosure in the Summary about the Company’s rights to eliminate or substitute an index and how performance would be calculated upon substitution. Please also add disclosure about this Company right in the section entitled “Index and Index Performance.”
Response: The Company has complied with the Staff Comment.
24. Please disclose in the Summary that the price return indexes do not reflect dividends and how that impacts Index Performance. In the Index reference on page 7, please revise to indicate that the MCI EAFE Index is the price return index.
Response: The Company has revised the disclosure in both sections of the prospectus in response to the Staff Comment.
25. In the third paragraph, in clauses 1 and 2, please change the reference from “date” to “Start Date” as Strategies can only start on the first and third Wednesday of each month.
Response: The Company has revised the reference to “Start Date”.
26. At clause 2 in the third paragraph, please also prominently state that this means that the Company will initiate a Strategy even if not all premiums listed in the application have been received, so long as the “minimum” Purchase Payment amount is received. Please specify the minimum amount, and provide appropriate Risk Factor disclosure.
Response: The Company has added the disclosure in Summary recommended by the Staff.
27. In the first sentence of the fourth paragraph’s discussion of crediting interest based on Strategies, please add a reference to reductions in Strategy Value also.
Response: The Company has revised the disclosure to include a reference to reductions in Strategy Value.
28. In the last sentence of the fifth paragraph, please disclose when and how Owners are notified of the Strategy Elements for each Strategy prior to the initial Start Date and for renewal Terms.
Response: Disclosure has been added to identify when and how Owners are notified of the Strategy Elements for each Strategy prior to the initial Start Date and for renewal Terms.
29. In the last sentence of the seventh paragraph, please explain in plain English what the “Participation Rate for Downside Protection is 100%” means. This conflicts with other disclosure in the prospectus that the Participation Rate only applies to positive performance.
Response: The Company has removed this sentence from the prospectus to clarify that the Participation Rate only applies to positive performance.
30. In the eighth paragraph, please clarify the disclosure in the first sentence beginning “the Participation Rate and Cap will never be less…” since from other disclosure it appears that the minimum Participation Rate and Cap are guaranteed for the life of the Contract, even for new Strategies.
Response: The Company has revised the first sentence in the eighth paragraph to clarify the minimum Participation Rate and minimum Cap are guaranteed for the life of the Contract, even for new Strategies.
31. In the eighth paragraph’s discussion of the three Strategies, please consider why there is a need to potentially have two “0” Floor options when the Company is only offering three Strategies.
Response: In response to the Staff Comment, the Company has determined to guarantee that the following Strategy options will be available under the Contract: (i) a Strategy with a 0% Floor (the Default Strategy), (ii) a Strat
Show Raw Text
CORRESP 1 filename1.htm ALYSON SAAD Associate Counsel — AVP Writer’s Direct Number: (205) 268-2984 Facsimile Number: (205) 268-3597 Toll-Free Number: (800) 627-0220 E-mail: alyson.saad@protective.com March 10, 2020 VIA EDGAR Transmission U.S. Securities and Exchange Commission 100 F Street, NE Washington, DC 20549-8629 Re: Protective Life Insurance Company Registration Statement on Form S-3 File No. 333-235429 Commissioners: On behalf of Protective Life Insurance Company (the “Company”), we are transmitting for filing this Pre-Effective Amendment No. 1 (the “Amendment”) to the Registration Statement on Form S-3 (the “Registration Statement”) relating to certain individual single premium deferred index-linked annuity contracts (the “Contracts”) previously filed with the Securities and Exchange Commission (the “Commission”) under the Securities Act of 1933 on December 9, 2019. We are also providing our responses to comments from the staff (the “Staff”) of the Commission on the Registration Statement received by counsel for the Company via correspondence dated February 7, 2020. The Amendment incorporates changes made in response to the Staff comments. For the Staff’s convenience, each Staff comment is set forth in full below, followed by the Company’s response. General 1. Please confirm that all missing information, including all exhibits, will be filed in a pre- effective amendment to the registration statement. We may have further comments when you supply the omitted information. Response: The Company confirms that all missing information, including financial statements, exhibits, and other required information is included in the Amendment. 2. Please clarify supplementally whether there are any types of guarantees or support agreements with third parties to support any Contract features or benefits, or whether the Company will be solely responsible for any benefits or features associated with the Contract. Response: There are no guarantees or support agreements with third parties to support any of the Contract features or benefits. The Company is solely responsible for any benefits or features associated with the Contract. 3. Please update the prospectus, where appropriate, to reflect changes associated with the SECURE Act (e.g., required minimum distribution age). Response: The Company has updated several sections of the prospectus to reflect changes associated with the SECURE Act. 4. In the Calculation of Registration Fee table on the facing sheet, it is not clear what footnote 1 to the Amount of Registration Fee column represents. Response: Upon further consideration, the Company has determined that there is not a corresponding footnote to the footnote reference. For that reason, the Company has removed the footnote reference. 5. The staff notes that the prospectus is dense and hard to follow. Please revise in Plain English, utilizing headings, bullets and other formatting changes to enhance readability. Response: The Company has revised the prospectus in accordance with Plain English standards. 6. We note that there are numerous formulas and calculations described in the prospectus. Please ensure that you provide clear examples for each calculation and formula, including providing examples of how net and gross withdrawals are calculated in the “Calculating Amounts Associated with a Withdrawal” disclosure on page 25. Response: The Company has provided examples for each calculation and formula in the Prospectus. For examples of how net and gross withdrawals are calculated, we added language to the “Calculating Amounts Associated with a Withdrawal” section referring readers to Appendix specific examples in Appendix A. Cover Page 7. Please streamline the Cover Page by only including disclosure of the key features and risks of the Contract. Other less important terms should be moved to the relevant sections of the prospectus (e.g., the information in the first three sentences of the second paragraph about payment procedures). Response: The Company has complied with the Staff Comment and revised and streamlined the disclosure on the Cover Page of the prospectus. 2 8. In the first paragraph, please prominently disclose after the first sentence that no premiums beyond the initial premium will be accepted. Response: The Company has complied with the Staff Comment. 9. To aid an investor’s understanding of the key information on the Cover Page, please avoid using defined terms, or at a minimum describe them, and provide some information about the nature of the Contract for context. For example, begin the third paragraph by stating something to the effect that: “You may allocate Purchase Payments to one or more of the index-linked investment options (each a Strategy) available under the Contract. Each Strategy is tied to a published index (Index) and has an applicable credit calculation method used to determine the rate of return (Crediting Method).” Response: The Company has complied with the Staff Comment. 10. In the third paragraph, please state that a Strategy with a 0% floor will not be credited with negative Index Performance regardless of the amount of the negative Index Performance. Response: The Company has added the recommended disclosure. 11. At the end of the last sentence of third paragraph, please add “at the end of a Strategy Term” so that it is clear that Strategies cannot be terminated during an active Term. Please also prominently disclose that this reservation allows the Company to reduce the number of Strategies from the current ten to three as early as the end of the first year Term. Response: The Company revised the subject disclosure to reflect that the Company reserves the right to discontinue Strategies for renewal terms, but guarantees that the three Strategies noted would always be available. The Company believes the revised disclosure strikes an appropriate balance between informing purchasers of the Company’s right to discontinue Strategies without creating a misimpression that the Company has plans to discontinue Strategies that are currently available. 12. In the fourth paragraph, please clarify that the minimum 50% Participation Rate limits positive returns to 50% of the index’s returns. Response: In an effort to streamline the Cover Page and focus on key information about the Contract, the Company has removed the subject paragraph from the Cover Page. 13. Please bold the most pertinent information regarding the Floor, Buffer, Cap, Market Value Adjustment and Withdrawal Charge. Response: The Company has complied with the Staff Comment. 3 14. Please revise your disclosure of the Strategy Value in paragraphs 5 and 6 in plain English. In particular, please disclose how the Strategy Value is impacted by the Vesting Factor for withdrawals from a Strategy or a surrender of the Contract before the Strategy Maturity Date when the Index performance is positive and when it is negative. In particular, please clarify that gains and, to the extent applicable, protections against losses offered by the Buffer are prorated over time as to amounts withdrawn or a surrender of the Contract before a Strategy Maturity Date. The Summary and Risk Factor disclosure should be revised to address the same points. Response: The Company has complied with the Staff Comment. 15. In the eighth paragraph, the Summary and elsewhere where the MVA Period is discussed, please highlight and make clear that the MVA applies to withdrawals (in excess of the annual Free Withdrawal Amount) and a surrender of the contract at all times, other than the 30 days prior to the end of the initial MVA Period and each subsequent one-year MVA Period. Response: The Company has clarified throughout the prospectus that the MVA applies to withdrawals (in excess of the annual Free Withdrawal Amount) and a surrender of the Contract at all times, other than the 30 days prior to the end of the initial MVA Period and each subsequent one-year MVA Period. 16. In the eighth paragraph, please also state that the maximum withdrawal charge is 9% of the amount withdrawn, which includes any positive or negative MVA, and that a positive MVA increases the amount of the withdrawal charge. Response: The Company has complied with the Staff Comment. 17. In the third sentence of the ninth paragraph, please add disclosure that the withdrawal charges could also reduce the Contract Value to less than the amount protected by any applicable Buffer(s) or Floor(s). Response: In response to Staff Comment #7, the Company has removed the ninth paragraph on the Cover Page of the prospectus. The Company has added the disclosure recommended by the Staff to the sixth paragraph. 18. Please add Cover Page disclosure to the effect that “This Contract is not for you if you are looking for a short-term investment or if you plan to take withdrawals or surrender the Contract before the end of the withdrawal charge period, MVA Period and/or a Strategy Maturity Date.” Response: The Company has added disclosure to the Cover Page of the prospectus in response to the Staff Comment which disclosure had been discussed with the Staff in a phone call with counsel for the Company on February 20, 2020. 4 Definitions, page 3 19. In the definition of Free Withdrawal Amount, please clarify whether the Free Withdrawal Amount is the Strategy Value on the date such withdrawal is made. Response: The Company has confirmed and revised disclosure throughout the prospectus to clarify. 20. In the definition of the 60 Day Rate Lock Period, please clarify what the purpose of this period is. Response: The Company has complied with the Staff Comment. 21. The definition of Strategy Value states that it represents a value of a Strategy “before application of the MVA,” however it also states that Strategy Value is the product of the Strategy Performance and the Strategy Base, which the prospectus defines as including the MVA.” Please clarify this inconsistency. Response: The Company has modified the definition of “Strategy Base” in response to the Staff Comment to remove any inconsistency. Summary, page 5 22. Please include in the Summary a listing of all Contract fees and charges. Response: The Company has added a “Contract Charges and Fees” table to the Summary section of the prospectus. 23. Please include brief disclosure in the Summary about the Company’s rights to eliminate or substitute an index and how performance would be calculated upon substitution. Please also add disclosure about this Company right in the section entitled “Index and Index Performance.” Response: The Company has complied with the Staff Comment. 24. Please disclose in the Summary that the price return indexes do not reflect dividends and how that impacts Index Performance. In the Index reference on page 7, please revise to indicate that the MCI EAFE Index is the price return index. Response: The Company has revised the disclosure in both sections of the prospectus in response to the Staff Comment. 25. In the third paragraph, in clauses 1 and 2, please change the reference from “date” to “Start Date” as Strategies can only start on the first and third Wednesday of each month. Response: The Company has revised the reference to “Start Date”. 5 26. At clause 2 in the third paragraph, please also prominently state that this means that the Company will initiate a Strategy even if not all premiums listed in the application have been received, so long as the “minimum” Purchase Payment amount is received. Please specify the minimum amount, and provide appropriate Risk Factor disclosure. Response: The Company has added the disclosure in Summary recommended by the Staff. 27. In the first sentence of the fourth paragraph’s discussion of crediting interest based on Strategies, please add a reference to reductions in Strategy Value also. Response: The Company has revised the disclosure to include a reference to reductions in Strategy Value. 28. In the last sentence of the fifth paragraph, please disclose when and how Owners are notified of the Strategy Elements for each Strategy prior to the initial Start Date and for renewal Terms. Response: Disclosure has been added to identify when and how Owners are notified of the Strategy Elements for each Strategy prior to the initial Start Date and for renewal Terms. 29. In the last sentence of the seventh paragraph, please explain in plain English what the “Participation Rate for Downside Protection is 100%” means. This conflicts with other disclosure in the prospectus that the Participation Rate only applies to positive performance. Response: The Company has removed this sentence from the prospectus to clarify that the Participation Rate only applies to positive performance. 30. In the eighth paragraph, please clarify the disclosure in the first sentence beginning “the Participation Rate and Cap will never be less…” since from other disclosure it appears that the minimum Participation Rate and Cap are guaranteed for the life of the Contract, even for new Strategies. Response: The Company has revised the first sentence in the eighth paragraph to clarify the minimum Participation Rate and minimum Cap are guaranteed for the life of the Contract, even for new Strategies. 31. In the eighth paragraph’s discussion of the three Strategies, please consider why there is a need to potentially have two “0” Floor options when the Company is only offering three Strategies. Response: In response to the Staff Comment, the Company has determined to guarantee that the following Strategy options will be available under the Contract: (i) a Strategy with a 0% Floor (the Default Strategy), (ii) a Strat