DRAFT FEBRUARY 27, 2008
MARY E. THORNTON
DIRECT LINE: 202.383.0698
Internet: mary.thornton@sablaw.com
April __, 2008
VIA EDGAR TRANSMISSION
Alison White, Esq.
Office of Insurance Products
Division of Investment Management
Securities and Exchange Commission
100 F Street, N.E.
Washington, DC 20549
Re: Pre-Effective Amendments No. 2 to the
Registration Statements on Form N-6 for
Metropolitan Life Separate Account UL (File No. 333-147508) and
MetLife Investors USA Variable Life Account A (File No. 333-147509)
Dear Ms. White:
On behalf of Metropolitan Life Insurance Company ("MetLife") and MetLife
Investors USA Insurance Company ("MLI") (together, the "Companies"), attached
for your convenience is a courtesy copy of the prospectuses and statements of
additional information included in the Pre-Effective Amendments No. 2 (the
"Amendments") to the above captioned Registration Statements on Form N-6. The
Amendments were filed with the Commission on April __, 2008. The attached copies
have been marked to show changes from the original prospectuses and statements
of additional information included in the initial Registration Statements. In
the Amendments, the Companies have made changes in response to your comments,
have included financial statements and all required exhibits, have updated
certain information, and have made other stylistic and formatting changes.
Also, we are providing responses to the comments in your letters dated January
14, 2008. For your convenience, we are providing a single response to both
letters, inasmuch as the comments, with the one exception noted below, were
identical. Please note, however, that the comment
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April __, 2008
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number relates to the numbers set forth in your letter regarding Metropolitan
Life Separate Account UL. Each of your comments is set forth below followed by
the Companies' responses.
As noted in the transmittal letter that accompanied the Amendments, the
Companies and their principal underwriters are seeking acceleration of the
effectiveness of these registration statements to April 28, 2008, or as soon
thereafter as is reasonably practicable. (Copies of these acceleration requests
are enclosed.) Any assistance you and the Staff can provide to the Companies to
assist them in meeting this request would be very much appreciated.
1. General Comment
Comment: Please confirm that the contract name on the front cover page
of the prospectus will continue to be the same as the EDGAR
class identifier associated with the contract.
Response: The MetLife and MLI versions of the contracts will each be
known as Equity Advantage VUL, and this name will appear on
the front cover page of both prospectuses. To distinguish one
from the other, however, the EDGAR class identifiers for the
contracts are Equity Advantage VUL (MetLife) and Equity
Advantage VUL (MLI ).
2. Right to Examine Policy, pages 4 and 23-24
Comment: Please revise the disclosure to state that if a policy owner
returns his policy during the free-look period, he will
receive premiums paid or any amount required under state law
if that amount is greater than the surrender value of the
policy.
Response: The disclosure in the MLI prospectus has been revised so that
it exactly reflects prevailing state law (the disclosure in
the MetLife prospectus reflects New York law and has not been
changed). As revised, the disclosure now reads as follows:
"Depending on state law, we will refund either the premiums
you paid, or the Policy's cash value plus any charges that
were deducted from the premiums you paid." The Companies note
that Rule 6e-3(T) under the Investment Company Act of 1940
provides that an insurer is exempt from Section 27(f) so long
as the insurer permits the contract owner to withdraw from the
contract during a specified period (the "free look" period)
and the insurer refunds to the contract owner cash value plus
charges, "Provided, however, That if state law or the contract
so require, the redeeming contractholder shall receive a
refund of all payments made for such contract." The Companies
believe the fact that
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April __, 2008
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there is no "greater of" standard apparent in this rule is an
indication that the Commission did not determine it is
necessary to provide a "greater of" free look right to
variable contract owners generally. It is worth noting that
because the surrender charge is not imposed upon exercise of
the free look right, it would be virtually impossible for the
premiums paid to ever be less than the policy's "surrender
value."
3. Tax Benefits, page 5
Comment: Please disclose that the death benefit may be subject to
estate taxes.
Response: The Companies have added the following sentence at the end of
the Tax Benefits paragraph: "Death benefits may be subject to
estate taxes."
4. Supplemental Benefits and Riders, pages 5 and 36
Comment: We note your statement that the riders may not be available in
all states. Please note that any variations among the
jurisdictions in which the policy is offered and sold should
be disclosed in the prospectus.
Response: Although this comment was provided in the letter regarding
Metropolitan Life Separate Account UL, the language actually
appears in the prospectus for the product to be issued by MLI.
The MetLife version of the product will be sold only in New
York and therefore the prospectus identifies only the riders
that are available in that state. However, the MLI prospectus
has been modified to identify all state variations of which
MLI is currently aware. The Companies will update the
prospectus disclosure to reflect any changes in the
availability of riders in future annual post-effective
amendments.
5. Transaction Fees, pages 7-8
Comment: a. Please add the policy re-issue/re-dating fee described at
the top of page 42 to the table.
Response: The Companies have determined not to impose a
re-issue/re-dating fee under any circumstances. Therefore, all
references to this fee have been deleted from the
prospectuses.
Comment: b. Please make it clear that the Surrender Charge and the
Partial Withdrawal Charge may be assessed simultaneously.
Alison White, Esq.
April __, 2008
Page 4 of 11
Response: Although the Companies have reserved the right to impose a
Partial Withdrawal Charge, they have no current intention of
doing so. Nevertheless, the Companies have added the following
footnote to the Fee Table: "If imposed, the Partial Withdrawal
Charge would be in addition to any Surrender Charge that is
imposed."
6. Cost of Insurance Charge, page 9
Comment: Please add a footnote describing the characteristics of an
individual subject to the minimum COI fee and an individual
subject to the maximum COI fee.
Response: Form N-6 only requires that the Fee Table disclose the minimum
and maximum COI fees and the COI fee applicable to a
representative insured. The range of COI fees shown in the Fee
Table reflects the universe of all possible insureds, which is
determined by the minimum and maximum issue ages and the
underwriting classes for the contract, as fully described in
the prospectus. The Companies believe that the characteristics
of the insureds at the upper and lower ends of the range would
be so unique as to be of no practical value to a prospective
purchaser. Moreover, given that this information is not
required by the Form, the Companies respectfully submit that
its inclusion is not warranted.
7. Policy Charge, pages 8-9
Comment: Please revise the table to show the maximum Policy Charge in
years 2+ as $9, so that the disclosure is consistent with the
disclosure on page 39.
Response: Given that no contract owner would pay a Policy Charge of $15
in the first Policy year and $9 thereafter, the Companies have
inserted two Policy Charge ranges in the Fee Table to
accurately reflect what contract owners will pay.
8. Annual Portfolio Operating Expenses, pages 12-14
Comment: a. Please update the footnotes in this section. In this
regard, please note that you may only reflect contractual
expense reimbursements and waivers in the table if they extend
a year beyond the date of the prospectus.
Response: The Companies have updated the footnotes.
Alison White, Esq.
April __, 2008
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Comment: b. If any of the American Funds are feeder funds, please
disclose this fact and confirm that the prospectuses for both
the master and the feeder will be included with the contract
prospectus.
Response: The products will not offer any feeder funds.
Comment: c. With respect to the fund of funds described in footnote (5)
on page 13, please disclose in this section whether any of the
underlying funds pays a 12b-1 fee to MetLife Investors USA
Insurance Company or any of its affiliates.
Response: The Companies have confirmed that no underlying fund pays a
12b-1 fee to MLI, MetLife, or any of their affiliates in
connection with their investments in the funds of funds
described in the prospectuses.
9. The Company, page 16
Comment: Please disclose to the staff whether there are any types of
guarantees or support agreements with third parties to support
the company's guarantees under the policy.
Response: There are no guarantees or support agreements with third
parties to support the Companies' guarantees under the policy,
other than standard reinsurance agreements referenced in Part
C of the registration statements.
10. Voting Rights, pages 20-21
Comment: Please disclose voting procedures and quorum requirements for
votes held by the separate account (i.e., requesting approval
to substitute underlying funds).
Response: The Companies have fully described the voting rights that
contract owners possess, and the procedures the Companies
follow in soliciting voting instructions and casting votes, as
provided under the Investment Company Act of 1940. The
Companies intend that any substitutions of underlying funds
would be effected solely on the basis of an SEC order. The
Companies do not intend to effect any substitution of an
underlying fund that would require contract owner approval.
Therefore, the Companies respectfully submit that adding
disclosure regarding voting procedures and
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April __, 2008
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quorum requirements for votes seeking approval of underlying
fund substitutions is not warranted.
11. Death Benefits, pages 26-29
Comment: Please specify which riders may impact the death benefit and
include a cross-reference to their description in the
prospectus.
Response: Only three riders have any bearing on the death benefit (i.e.,
the Accelerated Death Benefit Rider, the Accidental Death
Benefit Rider, and the Option to Purchase Additional Insurance
Coverage Rider). The Companies have added the following
disclosure to "Death Proceeds Payable."
"Certain riders may have an impact on the amount of death
proceeds payable under the Policy. See "Additional Benefits by
Rider" for a description of the Accelerated Death Benefit
Rider, the Accidental Death Benefit Rider and the Option to
Purchase Additional Insurance Coverage Rider."
12. Reduction in Face Amount, pages 28-29
Comment: If true, please disclose that a reduction in the face amount
may be subject to a partial withdrawal fee.
Response: A reduction in the face amount will not be subject to a
partial withdrawal fee.
13. Surrenders and Partial Withdrawals, pages 29-30
Comment: a. Please include examples showing: (a) the calculation of
cash surrender value for a contract surrendered during the
first Policy year, including the impact of Surrender Charges,
Coverage Expense Charges and Policy Charges; (b) the
calculation of the death benefit, face amount and cash
surrender value of a contract subject to a partial withdrawal
during the second Policy year; (c) the calculation of a face
amount reduction due to a partial withdrawal occurring 12
months after a face amount increase; and (d) the impact of a
partial surrender on rider benefits.
Response: (a) The Contracts are designed to be long-term investments and
the pricing of the product is based on the assumption the
contract owners will hold
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April __, 2008
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their contracts long-term. Consequently, if a contract owner
were to surrender his or her contract in the first Policy
year, in almost every instance, the surrender charge alone
would be greater than the contract's cash value, so that the
cash surrender value would be zero. Under these circumstances,
the Companies do not feel an example showing the calculation
would be of any benefit to prospective purchasers. Instead,
the Companies have inserted the following disclosure: "The
Policies are designed to be long-term investments. As a
result, you should be aware that if you surrender your Policy
in the first Policy year, the Surrender Charge is likely to
exceed the cash value of your Policy and you will receive no
proceeds upon surrender." (b) The Companies have included two
examples showing the effect of a partial withdrawal in the
second Policy year: the first example shows a partial
withdrawal of 10% of the cash surrender value, and the second
example shows a partial withdrawal of 20% of the cash
surrender value. These examples are set forth in Appendix A
attached. (c) The Companies believe that the likelihood of a
face amount reduction due to a partial withdrawal occurring
within 12 months of a face amount increase is so remote as to
render an example of little value to a prospective purchaser.
Therefore, the Companies would prefer not to include such an
example. (d) A partial surrender will have no direct impact on
rider benefits.
Comment: b. Please disclose the impact of any riders on surrenders or
partial withdrawals.
Response: The Companies do not anticipate that riders would have any
impact on surrenders or partial withdrawals.
14. American Funds Monitoring Policy, page 31
Comment: Please update the disclosure concerning the status of your
ability to impose the American Funds' Monitoring Policy.
Response: The Companies are now able to impose the American Funds'
Monitoring Policy. The disclosure has been updated
accordingly.
15. Portfolio Redemption Fees, page 31
Comment: Please disclose the potential that the portfolios will assess
a redemption fee in a footnote to the Transaction Fees table.
Alison White, Esq.
April __, 2008
Page 8 of 11
Response: The Companies have added the following footnote: "The
Portfolios in which the Investment Divisions invest may impose
a redemption fee on shares held for a relatively short
period."
16. Additional Benefits By Rider, pages 35-36
Comment: Please clarify at the beginning of this section whether any of
the riders are mutually exclusive, how ma[n]y of the riders
may be concurrently elected by a contract owner, and any
negative consequences to having more than one rider in effect
at the same time.
Response: The Companies have added the following disclosure at the
beginning of this section:
"You may not elect both the Option to Purchase Long-Term Care
Insurance Rider and the Options to Purchase Additional
Insurance Coverage Rider. In addition, you may not elect both
the Waiver of Monthly Deduction Rider and the Waiver of
Specified Premium Rider."
17. Acceleration of Death Benefit Rider, p. 36
Comment: Please explain the concepts of discounting and present valuing
in plain English and include an example of the calculation of
the death benefit under the rider. In addition, please
disclose the minimum and maximum interest rates you will use
in determining the benefit.
Response: The Companies have revised the disclosure as follows:
ACCELERATION OF DEATH BENEFIT RIDER, which provides for
an accelerated payment of all or part of the Policy's
"Eligible Proceeds" if the insured is determined to be
terminally ill. Assuming the Policy has no other riders,
the Eligible Proceeds are equal to the Policy's death
benefit. In calculating the Accelerated Death Benefit,
we assume that death occurs one year from the date of
claim and we discount the future Eligible Proceeds using
an interest rate not to exceed the greater of (1) the
current yield on 90-day Treasury bills, and (2) the
maximum policy loan interest rate under the Policy. The
minimum amount of Eligible Proceeds you may apply to the
Accelerated Death Benefit
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April __, 2008
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is $20,000, and the maximum is the greater of $250,000
or 10% of the Eligible Proceeds.
As a example, if the death benefit of a policy with a
face amount of $1,000,000 were accelerated, the maximum
amount that could be applied to the Accelerated Death
Benefit would be $250,000. Assuming an interest rate of
6%, the present value of the benefit would be $235,849.
If we exercised our reserved right to impose a $150
processing fee, the benefit payable would be $235,849
less $150, or $235,699.
18. Surrender Charge, pages 38-39
Comment: Please specify what is provided in consideration for the
Surrender Charge. In this regard, we note that the policy has
a front-end load, as well as a surrender charge.
Response: The prospectuses clearly describe on page A-[36] the services
and benefits the Companies provide, the costs and expenses
they incur, and the risks they assume in exchange for the
charges and deductions they make under the contracts,
including the Surrender Charge. The prospectuses further
disclose that the amount of a charge may not necessarily
correspond to the costs of the services and benefits implied
by the name of the charge or that are associated with the
particular policy. The Companies respectfully submit that this
disclosure, in conjunction with the Companies' representations
in the registration statements as to the reasonableness of its
fees and charges, is adequate disclosure.
19. Personalized Illustrations, page SAI-5
Comment: Please state, as you do in the prospectus, that each
illustration in excess of one per year may be subject to a $25
fee.
Response: The Companies have added this disclosure to the Statements of
Additional Information.
Alison White, Esq.
April __, 2008
Page 10 of 11
20. Tandy Comment
Comment: 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 fund and
its management are in possession of all facts relating to the
fund's disclosure, they are responsible for the accuracy and
adequacy of the disclosures they have made.
Notwithstanding our comments, in the event the fund 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 fund from
its full responsibility for the adequacy and
accuracy of the disclosure in the filing; and
- the fund 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. We will act on the request
and, pursuant to delegated authority, grant acceleration of
the effective date.
Response: Each Company attached as correspondence with its Amendment a
letter to the staff acknowledging the Tandy Comment (copies of
the Companies' letters are attached herewith).
Alison White, Esq.
April __, 2008
Page 11 of 11
* * *
We hope you find these responses satisfactory. If you have any questions or
further comments, please call the undersigned at 202.383.0698.
Sincerely,
/s/ Mary E. Thornton
Mary E. Thornton
cc: John E. Connolly, Jr., Esq.
APPENDIX A - PARTIAL WITHDRAWAL EXAMPLES
The following examples show the effect of a partial withdrawal, in the first
month of the second Policy year, from a Policy with a face amount of $300,000,
cash value of $11,718, a surrender charge of $4,200, and a level death benefit
(Option A). The examples assume the Policy Owner withdraws 10% and 20% of the
Policy's cash surrender value.
WITHDRAWAL OF 10% OF CASH SURRENDER VALUE
Cash Surrender Value $ 7,518
Withdrawal $ 751
Surrender Charge $ 0
BEFORE WITHDRAWAL AFTER WITHDRAWAL
----------------- ----------------
Death Benefit $300,000 $299,249
Face Amount $300,000 $299,249
Surrender Charge $ 4,200 $ 4,200
Cash Surrender Value $ 7,518 $ 6,767
WITHDRAWAL OF 20% OF CASH SURRENDER VALUE
Cash Surrender Value $ 7,518
Withdrawal $ 1,503
Surrender Charge $ 11
BEFORE WITHDRAWAL AFTER WITHDRAWAL
----------------- ----------------
Death Benefit $300,000 $298,486
Face Amount $300,000 $298,486
Surrender Charge $ 4,200 $ 4,189
Cash Surrender Value $ 7,518 $ 6,015