October 7, 2008
VIA U.S. MAIL AND FACSIMILE
Karen Peddle, Esq.
Phoenix Life Insurance Company
One American Row
PO Box 5056
Hartford, CT 06102-5056
RE: PHL Variable Insurance Company:
PHL Variable Accumulation Account
Initial Registration Statement filed on Form N-4
File Nos. 811-08914 and 333-152905
Dear Ms. Peddle:
The staff reviewed the above-referenced initial registration
statement, which the Commission received on August 8, 2008. We
have
given the registration statement a full review. Based on our
review,
we have the following comments (page references are to the pages
in
the courtesy copy provided to the staff and Item references are to
the Item numbers set forth in Form N-4).
GENERAL
1. Please disclose to the staff whether there are any types of
guarantees (e.g., as to any of the company`s guarantees under the
contract or will the company will be primarily responsible for
paying
out on any guarantees associated with the contract) or support
agreements (e.g., pertaining to capitalization of the company)
with
third parties.
2. Please provide the file number for the registration statement
that represents the registration of the MVA under the Securities
Act
of 1933 and confirm that its current disclosure appropriate
reflects
the impact, if any, that the Premium Enhancement Recapture and its
relevant charges may have on the MVA.
FRONT COVER PAGE
3. Based on second to last paragraph, please revise the first
paragraph to include the offering of the contract pursuant to
"qualified plans." Item1(a)(iv).
4. Please clarify what additional information is provided in
Appendix A.
PROSPECTUS
5. Summary of Expenses (page 5)
a. In order to not obscure the information provided under
"Maximum
Annual Separate Account Expenses," please only disclose the
maximum
expenses and provide any current fees in a footnote to the table.
b. Please clarify the last sentence of the preamble under
"Optional
Benefit Fees," i.e., these are charges in addition to all
foregoing
charges.
c. The Premium Enhancement Fee Schedule indicates that a fee of
1.25% of a premium is charged against every premium received "for
the
number of years specified in the [s]chedule," i.e., on the nine
Contract Anniversaries following that premium payment. This
suggests
that each premium payment made is, over the course of the
following
nine contract anniversaries, reduced by more than ten percent. If
this is accurate, please note this either in the contract summary
or
highlight this in the beginning of the Premium Enhancement section
of
the prospectus.
Separately, it is unclear at what point in time a greater
percentage of a premium payment will be received as a Premium
Enhancement than will be paid out through a combination of
Enhancement Fee and Enhancement Recapture charges. Please explain
and address this issue with the staff.
d. The last sentence of the footnote to the Premium Enhancement
Fee
Schedule indicates that the fee is "reduced" if you surrender the
contract on a date other than a Contract Anniversary. Since the
fee
is deducted on an anniversary, it is unclear what the sentence is
intended to disclose, e.g., that the fee is also imposed on
surrender. Please clarify what is intended.
e. The caption for the Premium Enhancement Recapture Charge
Schedule labeled "Number of Contract Anniversaries" uses the
number
"9+." Please clarify what is intended. In addition, please
clarify
in a footnote whether this charge declines over time.
f. Please provide a footnote to the "Optional Benefit Fees"
table
to briefly describe the "Guaranteed Amount" and "Guaranteed
Annuitization Value" including what relationship, if any, these
amounts would have to contract value were the benefit to be
elected
on the date the contract was issued.
g. For consistency, in the preamble to the optional benefits
table,
please refer to the options as "optional living benefits" as was
done
in the first paragraph under "Optional Rider Charges" on page 12.
Please confirm that these options are consistently referenced as
such
throughout the prospectus.
h. Please disclose the range of premium taxes that may apply.
i. Expense Examples (page 9)
i. The preamble to the first set of expense examples notes the
expenses if an owner were to "surrender prior to the Maturity
Date,
or after the Maturity Date under Variable Annuity Payment Options
K
or L, or ...annuitize." This sentence is unclear and requires
clarification. First, payments received under a variable annuity
payment are understood as annuitizations not withdrawals and
should
be referred to as such. Second, there is ambiguity in the
prospectus
as to whether annuitizations trigger a surrender charge. The
preamble suggests that it does, as does a sentence in the first
paragraph in the Surrender Charges Section that notes that
surrender
charges will be waived for annuitizations for certain contracts.
However, the first sentence of that paragraph omits annuitizations
in
the list of actions that trigger surrender charges. Please revise
the prospectus to clarify these inconsistencies.
ii. Please confirm whether General Instruction 22 to Item 3 was
considered applicable or not and why.
iii. Please clarify whether the Premium Enhancement Fee is
incorporated into the examples.
6. Contract Summary (page 11)
a. Please revise the first paragraph on page 11 to state that
the
prospectus contains information about all of the material rights
and
features of the contract.
b. Please reconcile the second bullet point under "Withdrawals"
on
page 12 with the definition of "Free Withdrawal Amount" in the
glossary on page 3, i.e., "greater of" compared to ""plus the
greater
of."
c. In regard to the disclosure on pages 14 and 53 under "Free
Look
Period," and in last paragraph under "Ownership of the Contract`
on
page 54, please make it clear that upon exercise of the free-look,
the company will absorb the investment loss associated with the
bonus, i.e., such that the owner would have received the same
amount
he or she would have received had there been no bonus at all.
7. Financial Highlights (page 14)
Please clarify that because no contracts have been sold as of
a
certain date that no financial highlights have been provided.
8. The Variable Accumulation Annuity (page 15)
a. Please insert "fixed" in lieu of "guaranteed" in the last
sentence of the opening paragraph.
b. Given there are only two optional living benefits available
under the contract, please be consistent when identifying
allocation
restrictions associated with them. For example, in the first full
bullet point on page 17, just refer to the GMAB rather than a
benefit
"other than the GMIB." Also, rather than obscure similar
disclosure
in the first paragraph under "MVA" on page 20, please provide a
"Note" as was provided under "GIA" on page 19.
9. Please bold the second sentence in the first full paragraph
on
page 19. Item 5(d).
10. Please disclose the actual surrender charges in the fuller
discussion of the charge on page 23.
11. Premium Enhancement (page 27)
a. Please revise the fifth and sixth paragraphs to make it clear
that no premium recapture charge will occur until appropriate
exemptive relief has been obtained from the Commission.
b. Please provide a caption to the premium enhancement chart on
page 28 to make it clear that the higher premium enhancements
shown
only apply under certain circumstances and in the last paragraph
on
page 28, clarify what "calculated normally" means including the
actual premium enhancement amount to be awarded.
c. Please disclose that the registrant expects to make a profit
from higher charges imposed on contracts that receive a premium
enhancement and in addition to stating that there may be
circumstances in which a contract owner may be worse off for
having
received a premium enhancement, please include a description of
those
circumstances.
d. Please disclose exactly how the recapture amount will be
calculated including examples. Please also provide an example of
how
the Premium Enhancement is calculated when the Net Cumulative
Premium
Payment crosses into a new threshold.
e. Although this section attempts to describe in full the
interaction of the premium enhancement feature with all other
relevant features of the contract (e.g., fourth paragraph under
"Premium Enhancement" on page 27 regarding death benefits), please
note that the section should include all relevant interactions of
the
premium enhancement with other features of the contract
For example, the second paragraphs under the surrender charge
waivers
on page 24 where additional disclosure regarding premium
enhancements
has been provided or the calculation of living benefits on pages
34-
36. Note in the former, this section could cross-reference the
additional disclosure, and in the latter, this section could
provide
the additional disclosure along with appropriate cross-references
on
pages 34-36. In any case,
12. The prospectus offers the option of several asset allocation
programs. The AllianceBernstein strategy and the Phoenix Dynamic
Asset Allocation Series appear to engage in dynamic rebalancing,
but
no information is provided as to what opt in or opt out options
are
available nor do they indicate who serves as an investment adviser
on
these strategies. Please revise the prospectus to clarify these
ambiguities.
13. Guaranteed Minimum Income Benefit (GMIB) (page 35)
a. Please supplement the description of the Guaranteed
Annuitization Value with examples of how each of the four elements
of
the formula are calculated when either clause (i) or clause (ii)
are
used.
b. Please revise the Guaranteed Annuitization Value Reduction to
note that withdrawals may be reflected as a reduction of the
Guaranteed Annuitization Value on more than a dollar for dollar
basis
if the withdrawal exceeds a specified limit, and include an
example
of how this provision affects the determination of the value.
c. The prospectus notes that the Effective Annual Rate will be
"reset to 0%" under certain circumstances. Please note in the
section on the calculation of the Guaranteed Annuitization Value
that
the effective annual rate used to increase the value may be
adversely
affected depending on the amount of contract value in the GIA.
d. In the "Important Information regarding the GMIB" disclosure
on
page 38, please disclose if applicable, that the minimum monthly
fixed annuity payment amount under the GMIB may be less than the
annuity payment amount under the contract even if the guaranteed
annuitization value is greater than contract value.
14. Internet, Interactive Voice Response and Telephone Transfers
(page 17)
Please note absence of disclosure regarding batch transfer
instructions from registered representatives for multiple owners.
15. In "Valuation Date" on page 52, please provide, if
applicable,
information regarding the administrator as required by Item 5(f).
16. Please confirm that the "Federal Income Taxes" section
beginning
on page 54 and the legal proceedings disclosure beginning on page
68
are current.
STATEMENT OF ADDITIONAL INFORMATION
17. Please note absence of option L from disclosure under
"Variable
Annuity Payments" on page 8.
PART C
18. With regard to the registrant, please provide disclosure in
response to Item 27.
19. 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 a 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.
*****************************************
Responses to these comments should be made in a letter to the
staff and in 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 indicate that in the
letter and explain your position.
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 that the effective date of the registration statement
be
accelerated.
If you have any questions, you are welcome to call me at
(202)
551-6767. Mail or deliveries should include all nine digits of the
following zip code: 20549-4644, and our facsimile number is (202)
772-9285.
Sincerely,
Sonny Oh
Attorney
Office of Insurance Products
Karen Peddle, Esq.
Phoenix Life Insurance Company
October 7, 2008
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