VIA EDGAR AND OVERNIGHT MAIL
December 4, 2009
Mr. Jeffrey Foor
Division of Investment Management
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Variable Separate Account ("Registrant")
SunAmerica Annuity and Life Assurance Company ("Depositor")
Polaris Platinum III Variable Annuity
Post-Effective Amendment No. 1 and Amendment No. 2 on Form N-4
File Nos. 333-157199 and 811-03859
Dear Mr. Foor:
Thank you for your telephone calls on December 2, 2009 and December 4,
2009 during which you provided comments to Post-Effective Amendments No. 1 and 2
on Form N-4 filed on October 16, 2009 by Registrant and Depositor. We have
considered your comments and provide our responses below. Please note that we
have changed the marketing names of the features from "Lifetime Income Plus" to
"SunAmerica Income Plus" and from "Retirement Income Builder" to "SunAmerica
Income Builder" and use the revised marketing names to refer to the features
below.
1. Glossary, page 3
a. Comment - Please change the definition of "Variable Portfolios"
to reflect that variable portfolios are subaccounts of the
Separate Account.
Response - The definition of "Variable Portfolios" has been
revised in the Glossary as follows:
"VARIABLE PORTFOLIO(S) - The variable investment options
available under the contract. Each Variable Portfolio, which is a
subaccount of the Separate Account, invests in shares of one of
the Underlying Funds. Each Underlying Fund has its own investment
objective."
2. Highlights, page 4
a. Comment - Under the paragraph "Access to Your Money," please
clarify whether withdrawals taken in combination with negative
market activity or excess withdrawal activity would eliminate any
benefits or guarantees under the contract. If so, please state so
prominently.
Response - The following disclosure has been added under the
paragraph "Access to Your Money" in the Highlights section:
"You should consider the impact of Excess Withdrawals on the
Living Benefit you elect. Withdrawals in excess of the prescribed
amount can have a detrimental impact on the guaranteed benefit.
In addition, if an Excess Withdrawal reduces your contract value
to zero, your contract will terminate and no further benefits are
payable. Please see OPTIONAL LIVING BENEFITS below."
3. Fee Table, page 5
a. Comment - Please disclose that the contract maintenance fee is
assessed annually.
Response - Footnote 3 to the Fee Table has been revised as
follows:
"The contract maintenance fee is assessed annually and may be
waived if contract value is $50,000 or more."
4. Purchasing a Polaris Platinum III Variable Annuity, page 8
a. Comment - Please revise the subheader titled "Termination for
Fraud" to include misstatement as a basis for terminating the
contract.
Response - The subheader "Termination for Fraud" has been revised
to be "Termination of the Contract for Misstatement and/or
Fraud."
b. Comment - Please explain how a contract owner might determine
whether the broker-dealer may be deemed an agent of the insurance
company.
Response - We have added the following disclosure to the last
sentence of the first paragraph under the header "Allocation of
Purchase Payments":
"Please check with your financial representative to determine if
his/her broker-dealer has an agreement with the Company that
deems the broker-dealer an agent of the Company."
5. Voting Rights, page 20
a. Comment - Please remove the reference to compliance with rules in
the last sentence of Voting Rights.
Response - We have revised the last sentence of the paragraph
under Voting Rights as follows:
"Should we determine that we are no longer required to vote in
the manner described above, we will vote the shares in our own
right."
6. Optional Living Benefits, page 22+
a. Comment - Please clarify the summary in the introduction to the
living benefits and provide cross-reference to defined terms.
Please remove the term "high- level" in reference to the summary.
Response - In addition to removing the table on page 22, we have
revised the summary as well as added a glossary of Living Benefit
defined terms. Please see the attached Exhibit A.
b. Comment - Please clarify whether the Secure Value Account
described on page 23 is a fixed account.
Response - In addition to adding reference to the Secure Value
Account in the Fixed Account section on page 14, we have
clarified the disclosure of the Secure Value Account under "Are
there investment requirements if I elect SunAmerica Income Plus
and SunAmerica Income Builder?" as follows:
"We will allocate 10% of every Purchase Payment and spousal
continuation contribution, if applicable, to a Fixed Account
("Secure Value Account"). The Secure Value Account is only
available for investment with election of SunAmerica Income Plus
and SunAmerica Income Builder. "
The following disclosure has been added to page 14 under the
header "Fixed Accounts" as the second paragraph:
"If you elect SunAmerica Income Plus or SunAmerica Income
Builder, 10% of your investment is automatically allocated to a
Fixed Account known as the Secure Value Account. The Secure Value
Account is only available with election of these Living
Benefits."
c. Comment - Please explain the circumstance under which the VIX may
be substituted based on the Company's discretion.
Response - The VIX is proprietary intellectual property owned by
the Chicago Board of Options Exchange, which, in turn, has
contracted with Standard and Poor's Financial Services, LLC
("S&P") to license use of the VIX to third parties. We license
use of the VIX through an agreement with S&P. Should the VIX no
longer be created, compiled, published or made available for
license by the Chicago Board of Options Exchange or should our
agreement with S&P be terminated or not renewed, we would
substitute the VIX with another appropriate measure of market
volatility. However, the maximum and minimum fees will not change
for existing contracts as a result of us having to substitute the
VIX. We would notify existing contract owners should a
substitution be necessary. In addition, we would make a filing
pursuant to Rule 485(a) in order to substitute the VIX and/or
change the initial, maximum and minimum fees for prospective
contracts.
The contract endorsement provided to contract owners upon
election of these benefits contractually binds us to the initial
fee, quarterly fee increase, maximum fee and minimum fee that
will be charged for the life of the contract; therefore, the
Company has no discretion to change the fee beyond the stated
amounts.
We have replaced the reservations of rights language in the
prospectus pertaining to substitution of the VIX in our sole
discretion as follows:
"Should the VIX no longer be appropriate or available, we would
substitute the VIX with another measure of market volatility for
determining the fee. If we substitute the VIX, we will notify
you; however, the maximum and minimum annual fee rates described
in this prospectus are guaranteed for the life of your contract."
d. Comment - To the extent that the Income Credit can be more than
offset by the amount of fee, please add prominent disclosure.
Response - The availability of the Income Credit is a basis for
calculating the Income Base and not an additional bonus amount
allocated to contract value as with traditional bonus products.
Therefore, to disclose that the Income Credit would be more than
offset by the fee associated with the feature is inaccurate. We
currently disclose under "What is the fee for SunAmerica Income
Plus and SunAmerica Income Builder?" that the dollar amount of
the fee may increase as a result of an increase to the Income
Base. The current disclosure is as follows:
"An increase in the Income Base due to an adjustment to a higher
Anniversary Value, addition of an Income Credit, or subsequent
Eligible Purchase Payments may result in an increase to the
dollar amount of the fee."
e. Comment - Please explain the basis for including disclosure for
living benefits that are no longer offered in the Statement of
Additional Information ("SAI") instead of an appendix to the
prospectus.
Response - In an effort to streamline our prospectus disclosure
and to avoid any potential confusion by a prospective client who
is making a purchasing decision or an existing contract owner who
receives an updated prospectus annually, we take a layered
approach towards presenting living benefit disclosure by
including the current living benefit offering in the prospectus
and including disclosure for living benefits that are no longer
offered in the SAI. This presentation provides clarity to both
prospective clients regarding the current offering as of a
particular prospectus date and makes easily accessible to
existing contract owners disclosure applicable to their offering.
In addition, this presentation alleviates the delivery of
repetitive disclosure to existing contract owners annually that
does not change. Existing contract owners are provided a
prospectus at point-of-sale and contract endorsement at contract
issue which clearly describe the living benefit they have
elected. The parameters of the living benefit disclosed in a
point-of-sale prospectus and in the contract endorsement, once
elected, cannot change.
We include a reference in the Living Benefits section for
existing contract owners to request an SAI for disclosure
pertaining to the living benefit they elected. The SAI table of
contents listed in the back of the prospectus also clearly
reflects the living benefits disclosure applicable to contract
owners who purchased the contract prior to the current offering.
Free copies of an SAI are easily accessible by calling our
Annuity Service Center, mailing the SAI request coupon at the
back of the prospectus or viewing the SAI through the SEC's EDGAR
website.
We will add the Annuity Service Center phone number to the
disclosure in the Living Benefits section as well as state the
availability of the SAI on our website, as follows:
"Certain optional Living Benefits are no longer offered or have
changed since first being offered. If your contract was issued
with an optional Living Benefit prior to December 15, 2009,
please see the SAI for details regarding your Living Benefit. YOU
MAY REQUEST A FREE COPY OF THE SAI BY CALLING OUR ANNUITY SERVICE
CENTER AT (800) 445-7862 OR YOU MAY REQUEST OR VIEW THE SAI BY
VISITING OUR WEBSITE AT www.sunamerica.com."
7. Tandy Representations
Depositor and Registrant acknowledge 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; and
- The action of the Commission or the Staff, acting pursuant to
delegated authority, in declaring the filing effective, does not
relieve Depositor and Registrant from full responsibility for the
adequacy and accuracy of the disclosure in the filing; and
- Depositor and Registrant may not assert this action as a defense in
any proceeding initiated by the Commission or any other person under
the federal securities laws of the United States.
We will file all revisions and all relevant exhibits and financial statements in
a post-effective amendment to the registration statement on or about December
15, 2009. If you have any further questions, please contact me at 310-772-6545.
Very truly yours,
/s/ Manda Ghaferi
-------------------------
Manda Ghaferi
Assistant General Counsel
VIA EDGAR AND OVERNIGHT MAIL
December 10, 2009
Mr. Jeffrey Foor
Division of Investment Management
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Variable Separate Account ("Registrant")
SunAmerica Annuity and Life Assurance Company ("Depositor")
Polaris Platinum III Variable Annuity
Post-Effective Amendment No. 1 and Amendment No. 2 on Form N-4
File Nos. 333-157199 and 811-03859
Dear Mr. Foor:
Thank you for your telephone call on December 9, 2009 during which you
provided additional comments to Post-Effective Amendments No. 1 and 2 on Form
N-4 filed on October 16, 2009 by Registrant and Depositor. We have considered
your comments and provide our responses below in addition to the responses we
provided in our letter dated December 4, 2009.
1. Optional Living Benefits, page 22+
a. Comment - Please provide further clarification as to whether the
Income Credit can be more than offset by the amount of fee. In
addition, please disclose clearly that the increase in the Income
Base due to the addition of an Income Credit could result in an
increase to the dollar amount of the fee.
Response - Earlier product designs had a more one to one
relationship between the product's bonus and the fee.
Specifically bonus products offered an upfront bonus, and
typically an investor would pay more in annual fees. GMWB
features with Income Credits offer a less linear relationship
between the bonus and the fee. In our product design, the Income
Credit is only one of many design components used to determine
the starting point for the feature's fee. Other items that
contribute to the investor's insured income such as the
withdrawal percentages, the ability to capture maximum
anniversary values, the number of covered lives - serve to
determine the feature's fee. In the first year, the fee rate is
guaranteed not to change and all events that increase the Income
Base, including the addition of an Income Credit, if applicable,
will increase the dollar amount of the fee. However, after the
first year, the fee rate calculation may increase or decrease
based on the non-discretionary formula tied to the VIX Index.
Therefore, the addition of an Income Credit to the Income Base
may not result in an increase in the dollar amount of the fee if
the fee rate is lowered - even if an Income Credit increases the
Income Base. Therefore, we could not definitely state that the
availability of an Income Credit results in a higher fee rate or
is more than offset by the fee.
We have revised the third paragraph under "What is the fee for
SunAmerica Income Plus and SunAmerica Income Builder?" to address
the Staff's concern:
"An increase in the Income Base due to an adjustment to a higher
Anniversary Value or subsequent Eligible Purchase Payments may
result in an increase to the dollar amount of the fee. The
addition of an Income Creidt may also increase the dollar amount
of the fee, and in certain instances, the value of the Income
Credits may be offset by the amount of fees paid."
b. Comment - Under "Overview of Living Benefits" please add to the
description of the summary of the living benefits that there are
investment requirements with election of these riders.
Response - We have added the following sentence under the
description of the SunAmerica Income Plus and SunAmerica Income
Builder Living Benefits:
"You must invest in accordance with the investment requirements.
Please see "Are there investment requirements if I elect
SunAmerica Income Plus or SunAmerica Income Builder?" below."
c. Comment - Also under "Overview of Living Benefits" please change
"may" to "will" in the second sentence that reads "As long as you
take these withdrawals within the parameters of the Living
Benefit, you may receive a guaranteed income stream for life..."
Response - We have revised the 2nd sentence under "Overview of
Living Benefits" as follows:
"As long as you take these withdrawals within the parameters of
the Living Benefit, you will be entitled to receive a guaranteed
income stream for life even if the entire contract value has been
reduced to zero."
In addition, we have reviewed the entire Optional Living Benefits
section for similar instances where the word "will" is more
accurate than "may" and we have made this change where
appropriate.
d. Comment - The Staff continues to believe the disclosure for
living benefits that are no longer available for election should
be moved into an appendix in the prospectus rather than the
Statement of Additional Information.
Response - We have removed the disclosure for discontinued
benefits from the SAI into an appendix of the prospectus.
2. Tandy Representations
Depositor and Registrant acknowledge 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; and
- The action of the Commission or the Staff, acting pursuant to
delegated authority, in declaring the filing effective, does not
relieve Depositor and Registrant from full responsibility for the
adequacy and accuracy of the disclosure in the filing; and
- Depositor and Registrant may not assert this action as a defense in
any proceeding initiated by the Commission or any other person under
the federal securities laws of the United States.
We will file all revisions and all relevant exhibits and financial statements in
a post-effective amendment to the registration statement on or about December
15, 2009. If you have any further questions, please contact me at 310-772-6545.
Very truly yours,
Manda Ghaferi
Assistant General Counsel