RILA revolution: SEC adopts tailored registration framework for RILAs and MVAs

This alert summarizes the most important aspects of the SEC rulemaking. It assumes a working knowledge of the RILA and MVA product designs. If needed, a helpful overview of how RILAs and MVAs generally work can be found in the Adopting Release, available here.

The new Form N-4 framework is a welcome and long-awaited regulatory overhaul. For decades, insurance companies in the RILA or MVA market have been navigating the complexities and burdens of registering securities on Form S-1 or Form S-3 – the SEC’s default registration forms under the Securities Act of 1933 (1933 Act), and the same registration forms used by public companies selling stocks and bonds. Foremost among the many ill-fitted aspects of the S-1/S-3 framework, RILA/MVA issuers are required to prepare GAAP financial statements (absent exemptive relief) as well as robust company-related disclosures (designed for investors in stocks or bonds, not purchasers of insurance contracts). The burdens associated with the S-1/S-3 framework are so complicating and resource-intensive for insurers that they have been a serious barrier to market entry and innovation, even as RILA sales ballooned in recent years. 

Fortunately, the new Form N-4 framework will largely eliminate these concerns, and in that sense, the new Form N-4 framework is indeed a revolution.

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If you have any questions about this Legal Briefing, please feel free to contact any of the attorneys listed or the Eversheds Sutherland attorney with whom you regularly work.