Correspondence 0001104659-22-119482 from AUL AMERICAN UNIT TRUST (CIK 0000856341)
AUL AMERICAN UNIT TRUST (CIK 0000856341)
Date: Nov. 16, 2022 · CIK: 0000856341 · Accession: 0001104659-22-119482
AI Filing Summary & Sentiment
File numbers found in text: 811-05929
Letter
VIA EDGAR Division of Investment Management Washington, D.C. 20549-4644 Re: AUL American Unit Trust (the “Separate Account”) SEC File Nos. 033-31375 and 811-05929 Registration Statement on Form N-4 relating to AUL American Unit Trust (the “Registration Statement”)
Dear Mr. Williams:
This letter responds to the comments you provided to Sean McGoff, Devon Roberson, and me via telephone on July 5, 2022, with respect to your review of the Registration Statement on Form N-4 filed on May 11, 2022, by the Separate Account with the U.S. Securities and Exchange Commission (“SEC”). The Registration Statement was filed under the Securities Act of 1933, as amended (the “1933 Act”), and the Investment Company Act of 1940, as amended (the “1940 Act”) for the purpose of submitting for SEC staff review certain changes to the Registration Statement made in light of recently adopted rule and form changes (i.e., new Rule 498A and Form N-4 amendments). We have reproduced your comments below, followed by the Registrants’ responses. Capitalized terms have the meanings attributed to such terms in the Registration Statement.
GENERAL
1. Comment: Where a comment is made with regard to disclosure in one location of the Registration Statement, it is applicable to all similar disclosure appearing elsewhere in the Registration Statement. Please ensure that corresponding changes are made to all similar disclosure. The Depositor and its management are responsible for accuracy and adequacy of the disclosure notwithstanding any comment, review, action or inaction by the Staff.
Response: The Depositor has incorporated this comment and acknowledges this statement.
FRONT COVER PAGE
2. Comment: Please amend the disclosure on the cover page that reads “AUL of the company” to instead read as “AUL or the company”
Response: The Depositor has incorporated this comment.
3. Comment: The seventh paragraph on the cover page states: “Upon cancellation, you will receive either a full refund of the amount you paid with your application or your total Contract value.” Please reconcile this statement with later disclosure that indicates investors will receive a full refund in all states.
Response: The Depositor has incorporated this comment.
4. Comment: Please delete disclosure that states the Prospectus will be accompanied by a current Prospectus for each Fund being considered.
Response: The Depositor has incorporated this comment.
PROSPECTUS
Definitions of Terms
5. Comment: Please delete the definition of “Class” if such term is not used in the prospectus.
Response: The Depositor has incorporated this comment.
6. Comment: Please revise the definition of Depositor to make clear that the Depositor is American United Life Insurance Company.
Response: The Depositor has incorporated this comment.
7. Comment: The use of the terms Fund and Fund Company throughout the document are confusing. Sometimes they appear to be used interchangeably to refer to the subaccount investment options under the Contracts. Please consider whether a specific definition (i.e., Fund) is needed to refer to the trusts of which the Portfolios are series.
Response: The Depositor has amended the definitions and language in the Prospectus to reduce confusion.
8. Comment: Please delete the definition of “Platform Charge” if such term is not used in the prospectus.
Response: The Depositor has incorporated this comment.
9. Comment: Please revise the definition of “Registrant” to make clear that the Registrant is AUL American Unit Trust.
Response: The Depositor has incorporated this comment.
10. Comment: Please consider whether the defined terms Statutory Prospectus and Summary Prospectus are necessary.
Response: The Depositor respectfully declines to make this change as it believes the defined terms may be helpful to the reader.
Table of Contents
11. Comment: Please move the Table of Contents to either the outside front, inside front, or outside back cover page of the Prospectus, as required by Rule 481(c). Currently, the Definitions of Terms section precedes the Table of Contents.
Response: The Depositor has incorporated this comment.
12. Comment: Please move the legend appearing at the bottom of the Table of Contents to the front cover page. See Rule 481(b).
Response: The Depositor has incorporated this comment.
Key Information Table — Important Information You Should Consider About the Policy (pages 9-10)
13. Comment: Please supplementally confirm that the Key Information Table cross-references in the electronic versions of the summary and statutory Prospectuses will link directly to the location in the statutory Prospectus where the subject matter is discussed in greater detail, or will provide a means of facilitating access to that information through equivalent methods or technologies. Instruction 1(b) to Item 2.
Response: Confirmed.
Fees And Expenses
—Charges for Early Withdrawals
14. Comment: Please revise to state the maximum applicable charge for early withdrawal is 8% without including the free out allowance in the calculation.
Response: The Depositor has incorporated this comment.
15. Comment: Please revise to disclose the market value adjustment.
Response: The Depositor has incorporated this comment.
—Transaction Charges
16. Comment: Please provide a brief narrative description of the transaction charges applicable to the contracts. Instruction 2 to Item 2.
Response: The Depositor has incorporated this comment.
—Ongoing Fees and Expenses (annual charges)
17. Comment: Please add the legend required by Instruction 2(c) to Item 2.
Response: The Depositor has incorporated this comment.
18. Comment: Please confirm that the maximum charge for optional benefits of 0.20% is accurate. The Staff notes that the prospectus later discloses a fee of 1% for managed account services.
Response: The Depositor has incorporated this comment.
—Lowest and Highest Annual Cost Table
19. Comment: Please confirm that the highest annual cost of $3,320 includes all optional benefits, including the 1% charge for managed account services.
Response: The Depositor has revised the disclosure to incorporate this comment.
Risks
—Risk of Loss
20. Comment: Please change the defined term “policy” to “contract” here and throughout as applicable.
Response: The Depositor has incorporated this comment.
—Risks Associated with Investment Accounts
21. Comment: Please revise the first sentence to read as follows: “An investment in the Contract is subject to the risk of poor investment performance and can vary depending on the performance of the investment options available under the Contract (e.g. Fund Companies), that each investment option including any the Fixed Account and/or the Stable Value Account investment option will have its own unique risks, and that the investor should review these investment options before making an investment decision.”
Response: The Depositor has incorporated this comment.
—Insurance Company Risks
22. Comment: In this section and throughout, where it is noted that the obligations of the Fixed Account are part of the Company’s General Account, or similarly, are subject to AUL’s claims paying ability, please also reference the SVA.
Response: The Depositor has incorporated this comment.
23. Comment: Please indicate how investors can request financial strength ratings from the Company (e.g., via a toll-free telephone number, or via a website link more specific than the Company’s homepage).
Response: The Depositor has incorporated this comment.
Restrictions
—Investments
24. Comment: Please specify the limit on the amount a Participant can transfer from the Fixed Account within a Policy Year. If applicable, please also include a discussion of the SVA.
Response: The Depositor has incorporated this comment.
Conflicts of Interest
—Exchanges
25. Comment: Where the word contract is used as defined term throughout, change to contract with lowercase “c”.
Response: The Depositor has incorporated this comment.
Overview of the Policy (pages 11-13)
26. Comment: The legend instructions to Item 3 require registrants to provide a concise description of the contracts’ purpose, phases, and features and requests that detailed explanation be avoided. Please consider revising this section accordingly, concisely providing the information required by Item 3.
Response: The Depositor has revised this disclosure in response to this comment.
The Variable Account and the Funds
27. Comment: Please prominently disclose that additional information about each Portfolio Company is provided in an appendix to the prospectus and provide a cross-reference to the appendix. Please see Item 3(b).
Response: The Depositor has incorporated this comment.
Contributions
28. Comment: Please indicate how a Participant will know what type of contract he or she has. Similarly, disclose how a Participant will know which death benefit he or she has or if they have the fixed account or stable value account options.
Response: The Depositor has incorporated this comment.
The Death Benefit
29. Comment: Notwithstanding the general Item 3 comment above, please also summarize any available optional benefits and loan provisions available under the contract in response to
Item 3(c). Include, if applicable, that investors will incur an additional fee for selection of an additional benefit.
Response: The Depositor has incorporated this comment.
30. Comment: The second sentence reads: “Generally, the amount of the death benefit is equal to the Vested portion of the Participant’s Account value minus any outstanding loan balances and any due and unpaid charges on those loans.” Please delete “generally” from the beginning of this sentence or disclose any exceptions.
Response: The Depositor has revised the disclose to clarify that in contracts with a guaranteed minimum death benefit, the amount of the death benefit is the greater of the Participant’s Account Value as of the date the death benefit is calculated or the guaranteed minimum death benefit.
Annuity Options
31. Comment: Notwithstanding the general Item 3 comment above, please state, if applicable, that annuitization will provide a stream of income payments but will also prevent additional withdrawals and terminate death benefits.
Response: The Depositor has incorporated this comment.
Asset Charge
32. Comment: Please clarify the first sentence, which states “each Investment Account of the Variable Account.”
Response: The Depositor has removed this disclosure in response to Comment 26.
Ten-Day Free Look
33. Comment: The second sentence states a contract owner will receive a full refund if the contract is canceled during the free look period. Please reconcile this statement with earlier disclosure that indicates investors will receive a full refund of the amount paid or the total contract value.
Response: The Depositor has incorporated this comment.
Expense Table (pages 14-15)
34. Comment: Please revise the tables and their accompanying legends to conform to the format presented in Item 4 of amended Form N-4. For example, “transaction expenses” should be listed first, followed by “annual contract expenses,” followed by “annual portfolio company expenses.” Here, the transaction expenses and contract expense appear to be consolidated and do not appear to match the format required by the Form. Please revise accordingly, including the narrative explanations provided in Item 4.
Response: The Depositor has incorporated this comment.
35. Comment: Please include the market value adjustment charge in the expense table.
Response: The Depositor respectfully declines to incorporate this comment. The market value adjustment will be charged if there is a withdrawal or cancellation of the Contract. The market value adjustment can be positive or negative, and thus a maximum guaranteed charge cannot be disclosed because it does not exist. See Form N-4, Item 4, Instruction 5.
36. Comment: Please replace the footnotes to the table with concise explanations and cross references to where in the prospectus the reader can find more information. For example, in footnote 1, the first and last sentences can remain, along with a cross reference to where the reader can find additional information.
Response: The Depositor has incorporated this comment.
37. Comment: Notwithstanding the general comment to tailor footnotes, in footnote 3, please remove references to the free out amount from the Item 3 disclosure of surrender charges. A cross reference to the withdrawal charges section can provide access to this information.
Response: The Depositor has incorporated this comment.
38. Comment: Please revise footnote 3 to provide further information regarding the 5% withdrawal charge, including an explanation of how a contract can have no participant account, as well as the basis under Rule 6c-10 for charge a withdrawal charge in perpetuity.
Response: The Depositor has incorporated this comment. The Depositor has removed references to the withdrawal charge being charged in perpetuity.
39. Comment: In footnote 9, please clarify what the brokerage window is, including whether there are any specific brokerage window funds, and if in Appendix A, how fees and expenses are deducted.
Response: The Depositor has incorporated this comment.
40. Comment: In footnote 11, please confirm the maximum guaranteed charge is in fact listed in the table. This disclosure suggests that the maximum charge may not be listed as required by Instruction 5 to Item 4, as it says plans over $20 million must contact AUL to find the fee.
Response: The Depositor has revised the disclosure to incorporate this comment.
Total Fund Annual Operating Expenses
41. Comment: Please strike acquired fund fees and expenses from the legend and delete the footnote.
Response: The Depositor has incorporated this comment.
Example
42. Comment: Please ensure that when the example is recalculated, it is based on a $100,000 investment instead of $10,000.
Response: The Depositor confirms that the recalculated example is based on a $100,000 investment.
43. Comment: Please ensure the example assumes maximum separate account charges and all optional benefits
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CORRESP 1 filename1.htm 1900 K Street NW Washington, DC 20006-1110 +1 202 261 3300 Main +1 202 261 3333 Fax www.dechert.com COREY F. ROSE corey.rose@dechert.com +1 202 261 3314 Direct +1 202 261 3158 Fax November 16, 2022 VIA EDGAR Matthew S. Williams U.S. Securities and Exchange Commission Division of Investment Management 100 F Street, NE Washington, D.C. 20549-4644 Re: AUL American Unit Trust (the “Separate Account”) SEC File Nos. 033-31375 and 811-05929 Registration Statement on Form N-4 relating to AUL American Unit Trust (the “Registration Statement”) Dear Mr. Williams: This letter responds to the comments you provided to Sean McGoff, Devon Roberson, and me via telephone on July 5, 2022, with respect to your review of the Registration Statement on Form N-4 filed on May 11, 2022, by the Separate Account with the U.S. Securities and Exchange Commission (“SEC”). The Registration Statement was filed under the Securities Act of 1933, as amended (the “1933 Act”), and the Investment Company Act of 1940, as amended (the “1940 Act”) for the purpose of submitting for SEC staff review certain changes to the Registration Statement made in light of recently adopted rule and form changes (i.e., new Rule 498A and Form N-4 amendments). We have reproduced your comments below, followed by the Registrants’ responses. Capitalized terms have the meanings attributed to such terms in the Registration Statement. GENERAL 1. Comment: Where a comment is made with regard to disclosure in one location of the Registration Statement, it is applicable to all similar disclosure appearing elsewhere in the Registration Statement. Please ensure that corresponding changes are made to all similar disclosure. The Depositor and its management are responsible for accuracy and adequacy of the disclosure notwithstanding any comment, review, action or inaction by the Staff. Response: The Depositor has incorporated this comment and acknowledges this statement. FRONT COVER PAGE 2. Comment: Please amend the disclosure on the cover page that reads “AUL of the company” to instead read as “AUL or the company” Response: The Depositor has incorporated this comment. 3. Comment: The seventh paragraph on the cover page states: “Upon cancellation, you will receive either a full refund of the amount you paid with your application or your total Contract value.” Please reconcile this statement with later disclosure that indicates investors will receive a full refund in all states. Response: The Depositor has incorporated this comment. 4. Comment: Please delete disclosure that states the Prospectus will be accompanied by a current Prospectus for each Fund being considered. Response: The Depositor has incorporated this comment. PROSPECTUS Definitions of Terms 5. Comment: Please delete the definition of “Class” if such term is not used in the prospectus. Response: The Depositor has incorporated this comment. 6. Comment: Please revise the definition of Depositor to make clear that the Depositor is American United Life Insurance Company. Response: The Depositor has incorporated this comment. 7. Comment: The use of the terms Fund and Fund Company throughout the document are confusing. Sometimes they appear to be used interchangeably to refer to the subaccount investment options under the Contracts. Please consider whether a specific definition (i.e., Fund) is needed to refer to the trusts of which the Portfolios are series. Response: The Depositor has amended the definitions and language in the Prospectus to reduce confusion. 2 8. Comment: Please delete the definition of “Platform Charge” if such term is not used in the prospectus. Response: The Depositor has incorporated this comment. 9. Comment: Please revise the definition of “Registrant” to make clear that the Registrant is AUL American Unit Trust. Response: The Depositor has incorporated this comment. 10. Comment: Please consider whether the defined terms Statutory Prospectus and Summary Prospectus are necessary. Response: The Depositor respectfully declines to make this change as it believes the defined terms may be helpful to the reader. Table of Contents 11. Comment: Please move the Table of Contents to either the outside front, inside front, or outside back cover page of the Prospectus, as required by Rule 481(c). Currently, the Definitions of Terms section precedes the Table of Contents. Response: The Depositor has incorporated this comment. 12. Comment: Please move the legend appearing at the bottom of the Table of Contents to the front cover page. See Rule 481(b). Response: The Depositor has incorporated this comment. Key Information Table — Important Information You Should Consider About the Policy (pages 9-10) 13. Comment: Please supplementally confirm that the Key Information Table cross-references in the electronic versions of the summary and statutory Prospectuses will link directly to the location in the statutory Prospectus where the subject matter is discussed in greater detail, or will provide a means of facilitating access to that information through equivalent methods or technologies. Instruction 1(b) to Item 2. Response: Confirmed. 3 Fees And Expenses —Charges for Early Withdrawals 14. Comment: Please revise to state the maximum applicable charge for early withdrawal is 8% without including the free out allowance in the calculation. Response: The Depositor has incorporated this comment. 15. Comment: Please revise to disclose the market value adjustment. Response: The Depositor has incorporated this comment. —Transaction Charges 16. Comment: Please provide a brief narrative description of the transaction charges applicable to the contracts. Instruction 2 to Item 2. Response: The Depositor has incorporated this comment. —Ongoing Fees and Expenses (annual charges) 17. Comment: Please add the legend required by Instruction 2(c) to Item 2. Response: The Depositor has incorporated this comment. 18. Comment: Please confirm that the maximum charge for optional benefits of 0.20% is accurate. The Staff notes that the prospectus later discloses a fee of 1% for managed account services. Response: The Depositor has incorporated this comment. —Lowest and Highest Annual Cost Table 19. Comment: Please confirm that the highest annual cost of $3,320 includes all optional benefits, including the 1% charge for managed account services. Response: The Depositor has revised the disclosure to incorporate this comment. 4 Risks —Risk of Loss 20. Comment: Please change the defined term “policy” to “contract” here and throughout as applicable. Response: The Depositor has incorporated this comment. —Risks Associated with Investment Accounts 21. Comment: Please revise the first sentence to read as follows: “An investment in the Contract is subject to the risk of poor investment performance and can vary depending on the performance of the investment options available under the Contract (e.g. Fund Companies), that each investment option including any the Fixed Account and/or the Stable Value Account investment option will have its own unique risks, and that the investor should review these investment options before making an investment decision.” Response: The Depositor has incorporated this comment. —Insurance Company Risks 22. Comment: In this section and throughout, where it is noted that the obligations of the Fixed Account are part of the Company’s General Account, or similarly, are subject to AUL’s claims paying ability, please also reference the SVA. Response: The Depositor has incorporated this comment. 23. Comment: Please indicate how investors can request financial strength ratings from the Company (e.g., via a toll-free telephone number, or via a website link more specific than the Company’s homepage). Response: The Depositor has incorporated this comment. Restrictions —Investments 24. Comment: Please specify the limit on the amount a Participant can transfer from the Fixed Account within a Policy Year. If applicable, please also include a discussion of the SVA. 5 Response: The Depositor has incorporated this comment. Conflicts of Interest —Exchanges 25. Comment: Where the word contract is used as defined term throughout, change to contract with lowercase “c”. Response: The Depositor has incorporated this comment. Overview of the Policy (pages 11-13) 26. Comment: The legend instructions to Item 3 require registrants to provide a concise description of the contracts’ purpose, phases, and features and requests that detailed explanation be avoided. Please consider revising this section accordingly, concisely providing the information required by Item 3. Response: The Depositor has revised this disclosure in response to this comment. The Variable Account and the Funds 27. Comment: Please prominently disclose that additional information about each Portfolio Company is provided in an appendix to the prospectus and provide a cross-reference to the appendix. Please see Item 3(b). Response: The Depositor has incorporated this comment. Contributions 28. Comment: Please indicate how a Participant will know what type of contract he or she has. Similarly, disclose how a Participant will know which death benefit he or she has or if they have the fixed account or stable value account options. Response: The Depositor has incorporated this comment. The Death Benefit 29. Comment: Notwithstanding the general Item 3 comment above, please also summarize any available optional benefits and loan provisions available under the contract in response to 6 Item 3(c). Include, if applicable, that investors will incur an additional fee for selection of an additional benefit. Response: The Depositor has incorporated this comment. 30. Comment: The second sentence reads: “Generally, the amount of the death benefit is equal to the Vested portion of the Participant’s Account value minus any outstanding loan balances and any due and unpaid charges on those loans.” Please delete “generally” from the beginning of this sentence or disclose any exceptions. Response: The Depositor has revised the disclose to clarify that in contracts with a guaranteed minimum death benefit, the amount of the death benefit is the greater of the Participant’s Account Value as of the date the death benefit is calculated or the guaranteed minimum death benefit. Annuity Options 31. Comment: Notwithstanding the general Item 3 comment above, please state, if applicable, that annuitization will provide a stream of income payments but will also prevent additional withdrawals and terminate death benefits. Response: The Depositor has incorporated this comment. Asset Charge 32. Comment: Please clarify the first sentence, which states “each Investment Account of the Variable Account.” Response: The Depositor has removed this disclosure in response to Comment 26. Ten-Day Free Look 33. Comment: The second sentence states a contract owner will receive a full refund if the contract is canceled during the free look period. Please reconcile this statement with earlier disclosure that indicates investors will receive a full refund of the amount paid or the total contract value. Response: The Depositor has incorporated this comment. 7 Expense Table (pages 14-15) 34. Comment: Please revise the tables and their accompanying legends to conform to the format presented in Item 4 of amended Form N-4. For example, “transaction expenses” should be listed first, followed by “annual contract expenses,” followed by “annual portfolio company expenses.” Here, the transaction expenses and contract expense appear to be consolidated and do not appear to match the format required by the Form. Please revise accordingly, including the narrative explanations provided in Item 4. Response: The Depositor has incorporated this comment. 35. Comment: Please include the market value adjustment charge in the expense table. Response: The Depositor respectfully declines to incorporate this comment. The market value adjustment will be charged if there is a withdrawal or cancellation of the Contract. The market value adjustment can be positive or negative, and thus a maximum guaranteed charge cannot be disclosed because it does not exist. See Form N-4, Item 4, Instruction 5. 36. Comment: Please replace the footnotes to the table with concise explanations and cross references to where in the prospectus the reader can find more information. For example, in footnote 1, the first and last sentences can remain, along with a cross reference to where the reader can find additional information. Response: The Depositor has incorporated this comment. 37. Comment: Notwithstanding the general comment to tailor footnotes, in footnote 3, please remove references to the free out amount from the Item 3 disclosure of surrender charges. A cross reference to the withdrawal charges section can provide access to this information. Response: The Depositor has incorporated this comment. 38. Comment: Please revise footnote 3 to provide further information regarding the 5% withdrawal charge, including an explanation of how a contract can have no participant account, as well as the basis under Rule 6c-10 for charge a withdrawal charge in perpetuity. Response: The Depositor has incorporated this comment. The Depositor has removed references to the withdrawal charge being charged in perpetuity. 39. Comment: In footnote 9, please clarify what the brokerage window is, including whether there are any specific brokerage window funds, and if in Appendix A, how fees and expenses are deducted. 8 Response: The Depositor has incorporated this comment. 40. Comment: In footnote 11, please confirm the maximum guaranteed charge is in fact listed in the table. This disclosure suggests that the maximum charge may not be listed as required by Instruction 5 to Item 4, as it says plans over $20 million must contact AUL to find the fee. Response: The Depositor has revised the disclosure to incorporate this comment. Total Fund Annual Operating Expenses 41. Comment: Please strike acquired fund fees and expenses from the legend and delete the footnote. Response: The Depositor has incorporated this comment. Example 42. Comment: Please ensure that when the example is recalculated, it is based on a $100,000 investment instead of $10,000. Response: The Depositor confirms that the recalculated example is based on a $100,000 investment. 43. Comment: Please ensure the example assumes maximum separate account charges and all optional benefits