September 5, 2006
VIA U.S. MAIL AND FACSIMILE
Mary Jo Ardington
Counsel
Lincoln National Life Insurance Company
1300 South Clinton Street
P.O. Box 1110
Fort Wayne, Indiana 46802
Re: Lincoln New York Account N for Variable Annuities
Lincoln Life & Annuity Company of New York
Registration Statement on Form N-4 for
Individual Variable Annuity Contracts
File Nos. 333-135638, 811-9763
Dear Ms. Ardington:
The staff has reviewed the above-referenced registration
statement, which the Commission received on July 7, 2006. We have
given the registration statement a selective review based on the
representation in your letter dated July 7, 2006, that the
registration statement is substantially similar to a currently
effective registration for another Lincoln National Life Insurance
Company variable annuity contract, File Nos. 333-36304, 811-8517.
Based on our selective review, we have the following comments on
the
filing. (Page numbers refer to the courtesy copy.)
1. General Bonus Relief
Please explain to staff what relief the Commission has
granted
in regard to recapture of the bonus in this particular product
including the citation for the notice and order granting such
relief
and the basis for relying on such relief.
2. Multiple Prospectuses in a Single Registration Statement
The Registrant proposes to combine three contracts "with
different features, fees and charges" in one prospectus as part of
this registration statement. See June 16, 2006 Lincoln National
letter. Multiple prospectuses may be combined in a single
registration statement when the prospectuses described are
essentially identical. See Industry Comment Letter date November
3,
1995. For example, multiple prospectuses have been
used in a single registration statement when: (1) the
prospectuses
describe the same contract that is sold through different
distribution channels or (2) the prospectuses
describe contracts that differ only with respect to underlying
investment options. See also Investment Company Act Release 14575
(July 25, 1985) (50 FR 26145), which sets forth (at note 20) the
Commission`s position on multiple contract registration to
determine
whether separate registration of contracts under the Securities
Act
of 1933 would be appropriate. Please explain to staff the
Registrant`s basis for combining three new contracts with
different
features into one prospectus filed under this registration
statement.
3. Special Terms (p. 4)
Please explain to staff why "selling group individuals" has
been
included as a special term in this prospectus and how it is used
in
the registration statement.
4. Separate Account Annual Expenses Table (p. 5)
a. Please separately set out mortality and expense risk
charges
and administrative charges. See Form N-4, Item 3. Please make
this
same revision on p. 12 of the registration statement.
b. Please explain to staff why charges are described as "for
each subaccount."
5. Example (p. 10-11)
a. Please confirm to staff that the examples do not reflect
any
fee waivers or reimbursements. The examples may reflect only
contractual waivers for the duration of the contract and those
that
have also been disclosed in the Fund Operating Expenses table.
See
Form N-4, Item 3, and Investment Company Release No. 25802,
Footnote
15.
b. Please confirm to staff that the examples include the
most
expensive contract options including the bonus feature. Please
also
confirm to staff that with respect to the bonus feature, the fee
figures in the examples do not include any incremental increase
attributable to the additional amount that would be credited based
on
a $10,000 investment. See Form N-4, Item 3, Instruction 21.
6. Description of the Funds (pp. 15-18)
Please identify which investment options are funds of funds.
See Form N-4, Item 5(c).
7. Rider Charges (p. 21)
a. Please clarify when the SmartSecurity Advantage charge
terminates, i.e., when does the Registrant consider the
accumulation
period to end.
b. Please give an example to demonstrate how the
charge
for this rider is affected by bonus credits.
8. Purchase Payments (p. 25)
Please clarify how the Registrant may limit purchase payments
made to the contract.
9. Lincoln SmartSecurity Advantage -- Guaranteed Amount (p. 32)
a. Please clarify how purchase payments and bonus credits
increase the Guaranteed Amount. Please consider giving an
example.
b. Please clarify whether the phrase "we will restrict
purchase
payments . . ." means that the Registrant will not allow any
additional purchase payments to be made at all or just that the
payments will not increase the Guaranteed Amount.
c. Please revise the last sentence in the Guaranteed
Amount section to disclose that the cost of the Rider also
increases
when additional bonus credits are received.
10. Step-Ups of the Guaranteed Amount (pp. 32-33)
a. With respect to the Lincoln SmartSecurity Advantage - 1
Year
Automatic Step-up option, please disclose if a contractowner can
choose not to accept an automatic step-up in a particular year to
avoid increased charges.
b. Please clarify the statement at the bottom of p. 33 that
"if
you choose, we will administer this election automatically so that
a
new ten year period of step-ups will begin at the end of each
prior
step-up period." For example, how long is the step-up period
being
referred to and how often will a new ten year period begin? Does
this statement apply to only the 1 Year Automatic Step-up option?
Please also provide an example that uses years.
c. Please clarify the statement at the bottom of p. 33 that
a
contractowner elected step-up may cause a change in the percentage
charge for the benefit. Does the annual automatic step-up
pursuant
to the 1 Year Automatic Step-up option not result in an increase
in
the percentage charge? Please more clearly disclose the impact of
the automatic step-up pursuant to the 1 Year Automatic Step-up
option.
11. Maximum Withdrawal Amount (pp. 33-34)
a. Please clarify how the Maximum Annual Withdrawal amount
is
increased by additional purchase payments and bonus credits.
Please
consider giving an example.
b. Please clarify the reference to "interest adjustment" at
the
middle of p. 34. Please clarify that withdrawals in excess of the
annual limit may also trigger an interest adjustment on the amount
taken out of the fixed account, and include the impact of such an
adjustment in the example.
c. Please clarify at the beginning of the example which
option
(5% or 7%) is being illustrated. Please explain how the initial
Maximum Annual Withdrawal Amount of $5000 was determined.
12. Lifetime Withdrawals (p. 34)
a. Please confirm to staff that there is no additional
charge
for the Lifetime Withdrawal feature.
b. Please clarify whether the Maximum Annual Withdrawal
amount
is guaranteed for the lifetime of the contractowner or some other
individual (e.g., insured).
c. Please confirm to staff that the "waiting period" does
not
apply to withdrawals except with respect to the application of the
Lifetime Withdrawal feature.
d. Please rephrase subparagraph 2) of the definition of
waiting
period to reflect a period of time until the contractowner
reaches
age 70.
e. In the paragraph that begins "If any withdrawal . . .",
please delete the last phrase beginning with "is available only .
.. .
.." for purposes of clarity and consistency with the following
sentence in the next paragraph.
f. In the second method to return to a lifetime payout after
withdrawal during the Waiting Period, the prospectus states that
resetting "may" reduce allowable withdrawals. Since the first
paragraph indicates that restoration occurs almost any time there
is
an increase in contract value, please clarify when this election
will
not decrease the Guaranteed Amount.
g. In the example, please clarify that the 1 Year Automatic
Step-Up option must be in effect. Please also specifically
describe
the conditions that the contractowner must satisfy before being
able
to reset the Maximum Annual Withdrawal amount. Please consider
giving two examples, one for each of the ways that the Maximum
Annual
Withdrawal amount can return to a lifetime payout after a
withdrawal,
as described at the bottom of p. 34.
13. Guaranteed Amount Annuity Payout Option (p. 35)
a. Please clarify how the Guaranteed Amount Annuity Payout
Option relates to the Lifetime Withdrawal option and to any more
traditional annuity options available under this contract. Please
give a reference to those other annuity options. Please also
clarify how payment under this option relates to the Maximum
Annual
Withdrawal amount as described in the third and fourth sentences
under this section heading.
b. Please explain when the contractowner chooses this option
and when the contractowner can begin receiving payments under this
option.
14. Death of a Contractowner (p. 35)
Please clarify under what circumstances the contract may be
continued after the death of the surviving spouse under the Joint
Life option as described in the middle of p. 36. Please
specifically
describe the circumstances under which it is better to choose to
continue the existing payout or to choose a new Single Life
option.
15. i4Life Advantage Charges and 4Later Advantage Charges (pp.
40,
46)
Please explain to staff how the charges for these riders as
shown at pp. 40, 46, are reflected in the fee tables on pp. 5-6.
16. Power of Attorney (Part C)
Please provide a Power of Attorney that relates specifically
to
the Securities Act of 1933 file number of the new registration
statement. See Rule 483(b) of the 1933 Act.
17. Financial Statements, Exhibits, and Other Information
Any financial statements, exhibits, and other required
disclosure not included in this registration statement must be
filed
in a pre-effective amendment to the registration statement.
18. Tandy Representations
We urge all persons who are responsible for the accuracy and
adequacy of the disclosure in the filings reviewed by the staff to
be
certain that they have provided all information investors require
for
an informed decision. Since the registrant is in possession of
all
facts relating to the registrant`s disclosure, it is responsible
for
the accuracy and adequacy of the disclosures it has made.
Notwithstanding our comments, in the event the registrant
requests acceleration of the effective date of the pending
registration statement, it should furnish a letter, at the time
of
such request, acknowledging that:
* should the Commission or the staff, acting pursuant to delegated
authority, declare the filing effective, it does not foreclose the
Commission from taking any action with respect to the filing;
* the action of the Commission or the staff, acting pursuant to
delegated authority, in declaring the filing effective, does not
relieve the registrant from its full responsibility for the
adequacy
and accuracy of the disclosure in the filing; and
* the registrant may not assert this action as defense in any
proceeding initiated by the Commission or any person under the
federal securities laws of the United States.
In addition, please be advised that the Division of
Enforcement
has access to all information you provide to the staff of the
Division of Investment Management in connection with our review of
your filing or in response to our comments on your filing.
We will consider a written request for acceleration of the
effective date of the registration statement as a confirmation
of
the fact that those requesting acceleration are
aware of their respective responsibilities.
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Please respond to these comments with a letter to me and a
pre-
effective amendment to the registration statement. If you believe
that you do not need to change
the registration statement in response to a comment, please
explain
your position in the letter.
Although we have completed our initial review of the
registration statement, it will be reviewed further after our
comments are resolved. Therefore, we reserve the right to comment
further on the registration statement and any amendments to it.
After we
have resolved all issues, the registrant and its underwriter must
both request acceleration of the effective date of the
registration
statement, as amended.
If you have any questions, please call me at (202) 551-6762.
My
facsimile number is (202) 772-9285. Mail or deliveries should be
addressed to the Securities & Exchange Commission, 100 F Street,
NE,
Washington, D.C. 20549-4644.
Sincerely,
Ellen J. Sazzman
Senior Counsel
Office of Insurance
Products
Mary Jo Ardington
Lincoln National Life Insurance Company
September 5, 2006
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