Correspondence 0000931788-23-000086 from JACKSON NATIONAL LIFE INSURANCE CO (CIK 0000931788)
JACKSON NATIONAL LIFE INSURANCE CO (CIK 0000931788)
Date: Dec. 22, 2023 · CIK: 0000931788 · Accession: 0000931788-23-000086
AI Filing Summary & Sentiment
File numbers found in text: 333-272978
Letter
cdaresponsememocombined
MEMORANDUM
TO: Michael Kosoff, Esq.
Senior Special Counsel
Disclosure Review and Accounting Office Division of Investment Management
U. S. Securities and Exchange Commission
FROM: Alison Samborn, Esq.
Associate General Counsel, Insurance Legal
DATE: December 22, 2023
SUBJECT: Response to Comments for Initial Contingent Deferred Annuity Registration Filing, Form S-1, File No. 333-272978; Jackson National Life Insurance Company; Jackson National Separate Account I ("Registrant")
This memorandum is in response to the comments you provided via email on August 16, 2023, for the above referenced filing.
In the interest of convenience for the staff of the Securities and Exchange Commission, this memorandum provides our understanding of each of the specific comments, followed respectively by narrative responses (in bold).
The following comments and responses apply to the initial registration filing referenced above. Excerpted pages of the Statutory Prospectus, marked to show the changes discussed below, are attached and will be provided electronically. Page references in the responses are to the pdf page of the attached marked copy of the document. A pre-effective amendment to the above-referenced registration statement will subsequently be filed in response to the comments.
General
1.Please confirm that all missing information, including all exhibits and financial statements, will be filed in a pre-effective amendment to the registration statement. We may have comments on such portions when you complete them in any pre-effective amendment, on disclosures made in response to this letter, on information supplied supplementally, or on exhibits filed in any pre-effective amendment. Please plan accordingly.
Response: All missing information, including financial statements and all exhibits, will be filed in a pre-effective amendment to the registration statement.
2.Since the registration statement will go effective 135 days after the end of Jackson’s last fiscal year-end, interim financial statements as required by Rule 3-12 of Regulation S-X will need to be included in your pre-effective amendment.
Response: Any required interim financial statements will be included in a pre-effective amendment prior to going effective.
3.Please clarify supplementally whether there are any types of guarantees or support agreements with third parties to support any of Jackson’s obligations under the Certificate or whether Jackson will be solely responsible for any benefits or features associated with the Certificate.
Response: Jackson will be solely responsible for the financial benefits and guarantees associated with the Certificate.
4.The cover letter accompanying the registration statement states that the contingent deferred annuity (“CDA”) will be offered to members of AARP.
a.Please explain supplementally how AARP will be involved in the distribution and marketing of this product. For example, will AARP solicit its members and will its name be included in any marketing materials.
Response: AARP's role in distribution and marketing is limited to (1) license to use its brand in the product name and marketing materials, (2) access to its membership, and (3) the placement of advertisements on its website.
b.Please explain supplementally whether AARP provided any input on the operation of the CDA or the investment allocation requirements.
Response: AARP has not provided input on product design, pricing, or investment allocation requirements.
c.Please explain whether AARP has any association with the approved financial institutions. (For example, are they approved by AARP.)
Response: AARP has no association with, and will not be involved in the approval or disapproval of any of the approved financial institutions.
d.Please explain whether continuing AARP membership is required to own the CDA.
Response: Continuing AARP membership is not required to maintain ownership of the CDA. While the product will be marketed and sold exclusively to AARP members, a lapse in membership post-issue would not result in termination of the CDA certificate.
e.Please explain supplementally whether, for purposes of the Section 2(a)(11) of the Securities Act of 1933 (“Securities Act”), AARP should be considered an underwriter for the CDA.
Response: Jackson National Life Distributors LLC (CRD No. 40178) (“JNLD”), who will serve as principal underwriter, will be the only underwriter of the CDA and be responsible for reviewing and filing certain marketing materials related to the CDA with the Financial Industry Regulatory Authority, Inc. (“FINRA”) pursuant to FINRA Rule 2210. AARP will be licensing use of its brand, providing access to its membership, and allowing marketing materials about the CDA to be featured on its website. AARP will not be taking possession of any securities, and will not be distributing, soliciting, or recommending any securities to potential purchasers of the CDA. AARP will also not serve as the selling broker-dealer, will not hold any customer funds or securities, and will not open any brokerage customer accounts for any prospective purchasers of the CDA.
Section 2(a)(11) of the Securities Act of 1933 (the “Securities Act”) defines an “underwriter” as any person who purchases securities from an issuer “with a view to…the distribution” of such security, or anyone whom “participates” in such activity. As noted above, AARP is not “purchasing” any securities from the issuer of the CDA, as it will not be taking possession of any securities or otherwise distributing any such securities. Further, we understand that AARP is not “participating” in the underwriting activities, since JNLD will be serving as the principal underwriter of the CDA and AARP will not be selling or soliciting with respect to the CDA. AARP's primary function – namely, to provide a license and access to its membership, as well as approve marketing to be placed on its website – are not within the scope or intended meaning of an “underwriter” in the Securities Act.
f.Please disclose in the prospectus AARP’s role with respect to the CDA, including any compensation it receives with respect to the marketing or sales of the CDA.
Response: We have added new disclosures in a subsection titled AARP.
Cover Page
5.Please include disclosure on the cover page that an investor should not purchase this CDA if the investor intends to take regular withdrawals in excess of the GAWA (or any RMDs) or does not intend to take periodic withdrawals.
Response: We have added this disclosure.
6.Please include disclosure on the cover page that the Certificate does not provide tax deferral benefits to Non-Qualified Accounts and provides no other tax benefit than that already provided under the Internal Revenue Code for Qualified Accounts, Traditional IRAs, SEP IRAs, and Roth IRAs.
Response: We have added this disclosure.
7.At the end of the second sentence of the bolded paragraph at the bottom of the cover page, please include a cross-reference to the “Key Facts” section of the prospectus.
Response: We have added this cross-reference.
Key Facts (p. 4)
8.Please make clear in the key facts and summary section that until an investor’s Account Value is reduced to zero, any withdrawals are a withdrawal of the investor’s own money from his/her Account. Payments are only paid by Jackson when Account Value drops to zero for any reason other than an Early or Excess Withdrawal.
Response: We have added these disclosures.
9.Please revise the final bullet to note in the first sentence that the tax consequences of owning the CDA are uncertain.
Response: We have added this disclosure.
Summary (p. 5)
10.The prospectus states that “[y]ou must provide us with the information we deem necessary, in our discretion, to monitor the investments in your Investment Portfolio.” Please clarify whether the investor needs to send information to Jackson or if it is the approved Financial Institution that transmits the information (with the consent of the investor).
Response: It is the investor's obligation to ensure that we receive the information necessary to monitor the Account. In practice, this obligation will be met by arranging to have the financial institution transmit that information to Jackson. The prospectus has been revised to add clarity.
11.In the penultimate sentence of the third paragraph, please clarify that payments will not be made until the Covered Person (or Youngest Covered Person, if applicable) reaches age 60.
Response: Respectfully, this is not an accurate statement. If the Account Value drops to zero for any reason other than Early Withdrawal, Excess Withdrawal, or election of the Conversion Option, Jackson would begin making GAWA payments to the owner. This is true even if the Covered Person (or youngest Covered Person) has not yet reached the minimum activation age of 60. In this scenario, as disclosed in the paragraph identified in this comment, we would treat the date the Account Value drops to zero as the Activation Date, and calculate the GAWA as though the owner were age 60 on that date. No revisions have been made in response to this comment.
12.In the subsection on investment restrictions, please clarify that the investment restrictions may change from time-to-time and that notice will be provided when a change occurs and when the investor may be required to reallocate his or her investments. Please also clarify how much time the investor has to take corrective action.
Response: Jackson does not intend to change allocation requirements of existing investment portfolios. Any changes would be made by adding a new investment portfolio and restricting new elections of existing investment portfolios. If we were to add a new investment portfolio and restrict new elections of existing investment portfolios, we would not force any investor out of their existing investment portfolios, so no reallocation would be required. No revisions have been made in response to this comment.
Certificate Charges (p. 7)
13.Please prominently state that the certificate fee is in addition to any fee the investor pays to a registered investment advisor and expenses that are deducted from the underlying funds’ assets, including management fees, distribution and/or service (12b-1) fees, and other expense. Please also add similar language to the Key Facts, Contract Overview, and Certificate Charge sections of the prospectus.
Response: We have added these disclosures.
Certificate Overview (p. 8)
14.Please state in the overview that subsequent Contributions are only permitted in the first Certificate Year only.
Response: We have added this disclosure.
15.Please state in the Investment Requirements row that any withdrawals must be taken pro-rata from all underlying funds in the Investment Portfolio.
Response: We have added this disclosure.
16.Please clarify what is included in incidental charges (e.g., brokerage fees).
Response: We have revised this disclosure.
Risk Factors (pp. 9-11)
17.Please disclose that the Certificate is not a short-term investment. The Certificate is designed as a long-term investment and to provide lifetime withdrawal benefits to protect investors from outliving the assets in the Account.
Response: We have added this disclosure to an existing risk factor.
18.The risk disclosure states that a “Step-Up to your GWB does not guarantee an increase in your GAWA.” It appears that if a Step-Up increases an investor’s GWB, but not the GAWA, the impact of the Step-Up is to increase fees with little or no additional benefit to the investor. If this is accurate, please include language to this effect.
Response: We have incorporated this revision.
19.The prospectus states that “[i]t is important to note that all withdrawals from your Account (including GAWA withdrawals) make it less likely that future Step-Ups to your GWB (if any) will increase your GAWA.” Please add “and certificate charges” to the first parenthetical.
Response: We have incorporated this revision.
20.The disclosure states that if Jackson removes an approved Financial Institution, the investor must move his/her Account to an approved Financial Institution. Please explain supplementally whether there are any assurances that there will always be Financial Institutions available and licensed to do business in the investor’s state
Response: We are targeting large, national financial institutions for this purpose, and can assure there will always be at least one financial institution available and licensed to do business in an investor's state.
State Variations (p. 12)
21.The disclosure regarding state variations appears to be duplicated on both pages 17 and 34. Please consolidate these sections.
Response: We have deleted one of the duplicate sections.
Guaranteed Minimum Withdrawal Benefit (pp. 12-13)
22.The prospectus states that there are no guarantees that the GAWA will be sufficient to cover any individual’s particular needs and, even with Step-Ups, may not keep pace with inflation. Please add this disclosure to the Risk Factors section of the prospectus.
Response: We have incorporated this revision.
23.In the paragraph beginning “The GWB can never be more than $10 million”, please include, to the extent accurate, that the GWB will be reduced on a dollar-for-dollar basis for each GAWA withdrawal and for the payment of the Certificate Charge.
Response: Withdrawals to pay the Certificate Charge are covered under the Annual Fee Allowance and do not reduce the GWB. No revisions were made in response to this comment.
24.The prospectus states that Jackson may prospectively change the GAWA % and that this will be disclosed in a prospectus supplementally. Please explain supplementally how Jackson intends to supplement the prospectus. For example, does Jackson intend to file a post-effective amendment or make a filing pursuant to rule 424 under the Securities Act.
Response: Jackson proposes to utilize 424 supplement filings to provide notice of changed GAWA%. Any new GAWA% would impact new applicants/purchasers only. The 424 supplement would be inserted into the prospectus for new sales and posted with the prospectus only for reference.
25.The prospectus states that “the actual GAWA % applicable to your Certificate will be reflected in your Certificate Data Pages.” Please also clarify that the GAWA % will not change for the life of the Certificate.
Response: We have incorporated this revision.
26.The Proportional Reduction Factor formula on page 16 does not appear to match the formula used in Example 5 of Appendix A. While the results appear to be the same, for consistency, please use the same methodology in both the prospectus narrative and the examples.
Response: We have incorporated this revision.
Divorce Before Activation Date (p. 14)
27.If upon divorce, the Account is divided between former spouses, the prospectus states that “[t]he Certificate Owner may request the Certificate to be reissued as one or two new Certificates. All requirements for a new sale of a Certificate would apply, including redetermination of the GMWB values. Please clarify if the new Certificates will be subject to the then-currently offered GAWA percentage.
Response: Reissued Certificates would be subject to then-currently offered GAWA percentages. The language in this section has been revised to provide more clarity on this point.
Divorce After Activation Date (p. 14)
28.Please clarify whether the two payees includes both former spouses.
Response: The disclosure covers any request to divide payments between multiple payees, including both former spouses.
Conversion Option (p. 15)
29.Please clarify if this annuitization option is part of this CDA or whether it is an exchange into a separate immediate annuity. If the former, please describe the annuity options available u
Show Raw Text
CORRESP
1
filename1.htm
cdaresponsememocombined
MEMORANDUM
TO: Michael Kosoff, Esq.
Senior Special Counsel
Disclosure Review and Accounting Office Division of Investment Management
U. S. Securities and Exchange Commission
FROM: Alison Samborn, Esq.
Associate General Counsel, Insurance Legal
DATE: December 22, 2023
SUBJECT: Response to Comments for Initial Contingent Deferred Annuity Registration Filing, Form S-1, File No. 333-272978; Jackson National Life Insurance Company; Jackson National Separate Account I ("Registrant")
This memorandum is in response to the comments you provided via email on August 16, 2023, for the above referenced filing.
In the interest of convenience for the staff of the Securities and Exchange Commission, this memorandum provides our understanding of each of the specific comments, followed respectively by narrative responses (in bold).
The following comments and responses apply to the initial registration filing referenced above. Excerpted pages of the Statutory Prospectus, marked to show the changes discussed below, are attached and will be provided electronically. Page references in the responses are to the pdf page of the attached marked copy of the document. A pre-effective amendment to the above-referenced registration statement will subsequently be filed in response to the comments.
General
1.Please confirm that all missing information, including all exhibits and financial statements, will be filed in a pre-effective amendment to the registration statement. We may have comments on such portions when you complete them in any pre-effective amendment, on disclosures made in response to this letter, on information supplied supplementally, or on exhibits filed in any pre-effective amendment. Please plan accordingly.
Response: All missing information, including financial statements and all exhibits, will be filed in a pre-effective amendment to the registration statement.
2.Since the registration statement will go effective 135 days after the end of Jackson’s last fiscal year-end, interim financial statements as required by Rule 3-12 of Regulation S-X will need to be included in your pre-effective amendment.
Response: Any required interim financial statements will be included in a pre-effective amendment prior to going effective.
3.Please clarify supplementally whether there are any types of guarantees or support agreements with third parties to support any of Jackson’s obligations under the Certificate or whether Jackson will be solely responsible for any benefits or features associated with the Certificate.
Response: Jackson will be solely responsible for the financial benefits and guarantees associated with the Certificate.
4.The cover letter accompanying the registration statement states that the contingent deferred annuity (“CDA”) will be offered to members of AARP.
a.Please explain supplementally how AARP will be involved in the distribution and marketing of this product. For example, will AARP solicit its members and will its name be included in any marketing materials.
Response: AARP's role in distribution and marketing is limited to (1) license to use its brand in the product name and marketing materials, (2) access to its membership, and (3) the placement of advertisements on its website.
b.Please explain supplementally whether AARP provided any input on the operation of the CDA or the investment allocation requirements.
Response: AARP has not provided input on product design, pricing, or investment allocation requirements.
c.Please explain whether AARP has any association with the approved financial institutions. (For example, are they approved by AARP.)
Response: AARP has no association with, and will not be involved in the approval or disapproval of any of the approved financial institutions.
d.Please explain whether continuing AARP membership is required to own the CDA.
Response: Continuing AARP membership is not required to maintain ownership of the CDA. While the product will be marketed and sold exclusively to AARP members, a lapse in membership post-issue would not result in termination of the CDA certificate.
e.Please explain supplementally whether, for purposes of the Section 2(a)(11) of the Securities Act of 1933 (“Securities Act”), AARP should be considered an underwriter for the CDA.
Response: Jackson National Life Distributors LLC (CRD No. 40178) (“JNLD”), who will serve as principal underwriter, will be the only underwriter of the CDA and be responsible for reviewing and filing certain marketing materials related to the CDA with the Financial Industry Regulatory Authority, Inc. (“FINRA”) pursuant to FINRA Rule 2210. AARP will be licensing use of its brand, providing access to its membership, and allowing marketing materials about the CDA to be featured on its website. AARP will not be taking possession of any securities, and will not be distributing, soliciting, or recommending any securities to potential purchasers of the CDA. AARP will also not serve as the selling broker-dealer, will not hold any customer funds or securities, and will not open any brokerage customer accounts for any prospective purchasers of the CDA.
Section 2(a)(11) of the Securities Act of 1933 (the “Securities Act”) defines an “underwriter” as any person who purchases securities from an issuer “with a view to…the distribution” of such security, or anyone whom “participates” in such activity. As noted above, AARP is not “purchasing” any securities from the issuer of the CDA, as it will not be taking possession of any securities or otherwise distributing any such securities. Further, we understand that AARP is not “participating” in the underwriting activities, since JNLD will be serving as the principal underwriter of the CDA and AARP will not be selling or soliciting with respect to the CDA. AARP's primary function – namely, to provide a license and access to its membership, as well as approve marketing to be placed on its website – are not within the scope or intended meaning of an “underwriter” in the Securities Act.
f.Please disclose in the prospectus AARP’s role with respect to the CDA, including any compensation it receives with respect to the marketing or sales of the CDA.
Response: We have added new disclosures in a subsection titled AARP.
Cover Page
5.Please include disclosure on the cover page that an investor should not purchase this CDA if the investor intends to take regular withdrawals in excess of the GAWA (or any RMDs) or does not intend to take periodic withdrawals.
Response: We have added this disclosure.
6.Please include disclosure on the cover page that the Certificate does not provide tax deferral benefits to Non-Qualified Accounts and provides no other tax benefit than that already provided under the Internal Revenue Code for Qualified Accounts, Traditional IRAs, SEP IRAs, and Roth IRAs.
Response: We have added this disclosure.
7.At the end of the second sentence of the bolded paragraph at the bottom of the cover page, please include a cross-reference to the “Key Facts” section of the prospectus.
Response: We have added this cross-reference.
Key Facts (p. 4)
8.Please make clear in the key facts and summary section that until an investor’s Account Value is reduced to zero, any withdrawals are a withdrawal of the investor’s own money from his/her Account. Payments are only paid by Jackson when Account Value drops to zero for any reason other than an Early or Excess Withdrawal.
Response: We have added these disclosures.
9.Please revise the final bullet to note in the first sentence that the tax consequences of owning the CDA are uncertain.
Response: We have added this disclosure.
Summary (p. 5)
10.The prospectus states that “[y]ou must provide us with the information we deem necessary, in our discretion, to monitor the investments in your Investment Portfolio.” Please clarify whether the investor needs to send information to Jackson or if it is the approved Financial Institution that transmits the information (with the consent of the investor).
Response: It is the investor's obligation to ensure that we receive the information necessary to monitor the Account. In practice, this obligation will be met by arranging to have the financial institution transmit that information to Jackson. The prospectus has been revised to add clarity.
11.In the penultimate sentence of the third paragraph, please clarify that payments will not be made until the Covered Person (or Youngest Covered Person, if applicable) reaches age 60.
Response: Respectfully, this is not an accurate statement. If the Account Value drops to zero for any reason other than Early Withdrawal, Excess Withdrawal, or election of the Conversion Option, Jackson would begin making GAWA payments to the owner. This is true even if the Covered Person (or youngest Covered Person) has not yet reached the minimum activation age of 60. In this scenario, as disclosed in the paragraph identified in this comment, we would treat the date the Account Value drops to zero as the Activation Date, and calculate the GAWA as though the owner were age 60 on that date. No revisions have been made in response to this comment.
12.In the subsection on investment restrictions, please clarify that the investment restrictions may change from time-to-time and that notice will be provided when a change occurs and when the investor may be required to reallocate his or her investments. Please also clarify how much time the investor has to take corrective action.
Response: Jackson does not intend to change allocation requirements of existing investment portfolios. Any changes would be made by adding a new investment portfolio and restricting new elections of existing investment portfolios. If we were to add a new investment portfolio and restrict new elections of existing investment portfolios, we would not force any investor out of their existing investment portfolios, so no reallocation would be required. No revisions have been made in response to this comment.
Certificate Charges (p. 7)
13.Please prominently state that the certificate fee is in addition to any fee the investor pays to a registered investment advisor and expenses that are deducted from the underlying funds’ assets, including management fees, distribution and/or service (12b-1) fees, and other expense. Please also add similar language to the Key Facts, Contract Overview, and Certificate Charge sections of the prospectus.
Response: We have added these disclosures.
Certificate Overview (p. 8)
14.Please state in the overview that subsequent Contributions are only permitted in the first Certificate Year only.
Response: We have added this disclosure.
15.Please state in the Investment Requirements row that any withdrawals must be taken pro-rata from all underlying funds in the Investment Portfolio.
Response: We have added this disclosure.
16.Please clarify what is included in incidental charges (e.g., brokerage fees).
Response: We have revised this disclosure.
Risk Factors (pp. 9-11)
17.Please disclose that the Certificate is not a short-term investment. The Certificate is designed as a long-term investment and to provide lifetime withdrawal benefits to protect investors from outliving the assets in the Account.
Response: We have added this disclosure to an existing risk factor.
18.The risk disclosure states that a “Step-Up to your GWB does not guarantee an increase in your GAWA.” It appears that if a Step-Up increases an investor’s GWB, but not the GAWA, the impact of the Step-Up is to increase fees with little or no additional benefit to the investor. If this is accurate, please include language to this effect.
Response: We have incorporated this revision.
19.The prospectus states that “[i]t is important to note that all withdrawals from your Account (including GAWA withdrawals) make it less likely that future Step-Ups to your GWB (if any) will increase your GAWA.” Please add “and certificate charges” to the first parenthetical.
Response: We have incorporated this revision.
20.The disclosure states that if Jackson removes an approved Financial Institution, the investor must move his/her Account to an approved Financial Institution. Please explain supplementally whether there are any assurances that there will always be Financial Institutions available and licensed to do business in the investor’s state
Response: We are targeting large, national financial institutions for this purpose, and can assure there will always be at least one financial institution available and licensed to do business in an investor's state.
State Variations (p. 12)
21.The disclosure regarding state variations appears to be duplicated on both pages 17 and 34. Please consolidate these sections.
Response: We have deleted one of the duplicate sections.
Guaranteed Minimum Withdrawal Benefit (pp. 12-13)
22.The prospectus states that there are no guarantees that the GAWA will be sufficient to cover any individual’s particular needs and, even with Step-Ups, may not keep pace with inflation. Please add this disclosure to the Risk Factors section of the prospectus.
Response: We have incorporated this revision.
23.In the paragraph beginning “The GWB can never be more than $10 million”, please include, to the extent accurate, that the GWB will be reduced on a dollar-for-dollar basis for each GAWA withdrawal and for the payment of the Certificate Charge.
Response: Withdrawals to pay the Certificate Charge are covered under the Annual Fee Allowance and do not reduce the GWB. No revisions were made in response to this comment.
24.The prospectus states that Jackson may prospectively change the GAWA % and that this will be disclosed in a prospectus supplementally. Please explain supplementally how Jackson intends to supplement the prospectus. For example, does Jackson intend to file a post-effective amendment or make a filing pursuant to rule 424 under the Securities Act.
Response: Jackson proposes to utilize 424 supplement filings to provide notice of changed GAWA%. Any new GAWA% would impact new applicants/purchasers only. The 424 supplement would be inserted into the prospectus for new sales and posted with the prospectus only for reference.
25.The prospectus states that “the actual GAWA % applicable to your Certificate will be reflected in your Certificate Data Pages.” Please also clarify that the GAWA % will not change for the life of the Certificate.
Response: We have incorporated this revision.
26.The Proportional Reduction Factor formula on page 16 does not appear to match the formula used in Example 5 of Appendix A. While the results appear to be the same, for consistency, please use the same methodology in both the prospectus narrative and the examples.
Response: We have incorporated this revision.
Divorce Before Activation Date (p. 14)
27.If upon divorce, the Account is divided between former spouses, the prospectus states that “[t]he Certificate Owner may request the Certificate to be reissued as one or two new Certificates. All requirements for a new sale of a Certificate would apply, including redetermination of the GMWB values. Please clarify if the new Certificates will be subject to the then-currently offered GAWA percentage.
Response: Reissued Certificates would be subject to then-currently offered GAWA percentages. The language in this section has been revised to provide more clarity on this point.
Divorce After Activation Date (p. 14)
28.Please clarify whether the two payees includes both former spouses.
Response: The disclosure covers any request to divide payments between multiple payees, including both former spouses.
Conversion Option (p. 15)
29.Please clarify if this annuitization option is part of this CDA or whether it is an exchange into a separate immediate annuity. If the former, please describe the annuity options available u