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: Phoenix Life Insurance Company:
Phoenix Life Variable Accumulation Account
Initial Registration Statement filed on Form N-4
File Nos. 811-03488 and 333-153048
Dear Ms. Peddle:
The staff reviewed the above-referenced initial registration
statement, which the Commission received on August 15, 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 6)
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. In footnote 3 on page 9, please provide a cross-reference to
the
fuller discussion of the Optional Reset.
g. In footnote 4 on page 9, please clarify the reference to the
"benefit base" and expand the disclosure to better explain the
relationship between these values and Contract Value particularly
on
the issue date.
h. 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 14.
Please confirm that these options are consistently referenced as
such
throughout the prospectus.
i. Please disclose the range of premium taxes that may apply.
j. In the fund fee table on page 10, please insert "Total" in
lieu
of "Gross" in the first line item of the table.
k. Expense Examples (page 11)
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 13)
a. Please revise the first paragraph on page 13 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 14 with the definition of "Free Withdrawal Amount" in the
glossary on page 4, i.e., "greater of" compared to ""plus the
greater
of."
c. Please note absence of disclosure regarding New York GMWB 5 &
7
under "Optional Rider Charges" on page 14.
d. In regard to the disclosure on pages 15 and 57 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 15)
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 16)
Please insert "fixed" in lieu of "guaranteed" in the last
sentence of the opening paragraph.
9. Phoenix and the Separate Account (page 18)
a. Please retain the last deleted sentence in the second
paragraph.
Item 5(a)(iii).
b. Please reconcile the deletion of disclosure regarding the MVA
on
page 19 with the fact that an MVA is offered as an investment
choice
through the contract.
10. Rather than obscure disclosure similar to that provided in
the
"Note" under "GIA" on page 21, please provide a corresponding
"Note"
under "MVA" on the same page.
11. Deductions and Charges (page24)
a. In the discussion regarding the charges for the New York GMWB
5
& 7 on page 24, please make it clear that electing this option
will
foreclose election of either of the two remaining living benefit
options as was provided in the discussion of the charges for the
GMAB
and GMIB.
b. Please expand the discussion regarding the New York GMWB 5 &
7
charges on page 24 to explain the impact of the Optional Reset
referenced in footnote 3 on page 9.
c. Please disclose the actual surrender charges in the fuller
discussion of the charge on page 25.
12. Premium Enhancement (page 29)
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 30 to make it clear that the higher premium enhancements
shown
only apply under certain circumstances and in the last paragraph
Preceding "Premium Enhancement Restrictions" on page 30, 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 29 regarding death benefits and
certain
optional 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 pages 25 and 26 where additional disclosure regarding premium
enhancements has been provided or the calculation of living
benefits
on pages 35-41. 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 35-41.
13. 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.
14. Guaranteed Minimum Income Benefit (GMIB) (page 37)
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 39, 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.
15. New York GMWB 5/ New York GMWB 7 (available for New York
contracts where the owner is age 54 or younger on the rider date)
(page 40)
a. Please add disclosure regarding restrictions on
investing
as was provided for the description of the GMAB in the paragraph
preceding "Guaranteed Amount" on page 35.
b. In the third paragraph under "Effect of Withdrawals on
Benefit Amount" on page 40, please add disclosure as to the risks
of
taking withdrawals exceeding the Withdrawal Limit relative to
those
that do not. Please include a further discussion on the impact of
taking withdrawals exceeding the Withdrawal Limit depending on the
relation between Benefit Amount and Contract Value. Please include
examples in Appendix C of the impact of excessive withdrawals when
Contract Value is less than the Benefit Amount
c. On page 41, please explain exactly how the Optional
Reset
works including disclosure that reflects the fee disclosure in
footnote 3 on page 9, i.e., that even if the fee goes p upon
reset,
that fee will not exceed the maximum, 1.00%, set forth in the fee
table.
16. Internet, Interactive Voice Response and Telephone Transfers
(page 46)
Please note absence of disclosure regarding batch transfer
instructions from registered representatives for multiple owners.
17. In "Valuation Date" on page 56, please provide, if
applicable,
information regarding the administrator as required by Item 5(f).
18. Please confirm that the "Federal Income Taxes" section
beginning
on page 57 and the legal proceedings disclosure beginning on page
72
are current.
19. Please confirm relevance of Appendix B for this filing.
PART C
20. With regard to the registrant, please provide disclosure in
response to Item 27.
21. 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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