DRAFT MARCH 26, 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 and provided orally on March 21, 2008. For your convenience, we are
providing a single response to
Alison White, Esq.
April __, 2008
Page 2 of 11
both letters, inasmuch as the comments, with the one exception noted below, were
identical. Please note, however, that the comment number relates to the numbers
set forth in your letter regarding Metropolitan Life Separate Account UL (Item
21 relates to the oral comment provided on March 21, 2008). 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
Alison White, Esq.
April __, 2008
Page 3 of 11
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 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.
Alison White, Esq.
April __, 2008
Page 4 of 11
Comment: b. Please make it clear that the Surrender Charge and the
Partial Withdrawal Charge may be assessed simultaneously.
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.
Alison White, Esq.
April __, 2008
Page 5 of 11
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.
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).
Alison White, Esq.
April __, 2008
Page 6 of 11
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 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":
"Riders that can have an effect on the amount of death proceeds
payable are the Accelerated Death Benefit Rider, the Accidental
Death Benefit Rider and the Options to Purchase Additional
Insurance Coverage Rider. (See "Additional Benefits by
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
Alison White, Esq.
April __, 2008
Page 7 of 11
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 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 an example showing the effect of taking a partial
withdrawal of 20% of the Policy's cash surrender value in the
second Policy year. The example is 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.
Alison White, Esq.
April __, 2008
Page 8 of 11
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.
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:
"There is no limit on the number of riders you can add to your
Policy. However, you may not elect both the Option to Purchase
Long-Term Care Insurance Rider and the Options to Purchase
Additional Insurance Coverage Rider, nor may you elect both the
Waiver of Monthly Deduction Rider and the Waiver of Specified
Premium Rider."
In addition, the Companies do not believe there are any
negative consequences to having more than one rider in effect
at the same time.
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 allows a Policy
Owner to accelerate payment of all or part of the Policy's
death benefit if the insured is terminally ill. In
calculating the Accelerated Death Benefit, we assume that
death occurs one year
Alison White, Esq.
April __, 2008
Page 9 of 11
from the date of claim and we discount the future death
benefit 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 Policy Owner must accelerate at least $20,000, but not
more than the greater of $250,000 or 10% of the death
benefit. As an example, if a Policy Owner accelerated the
death benefit of a Policy with a face amount of
$1,000,000, the maximum amount that could be accelerated
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. (Not available in Pennsylvania or Puerto Rico.)
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
21. Fee Table - Current Cost of Insurance Charges
Comment: Please explain the basis for including the "Current Charge"
column for cost of insurance charges in the "Periodic Charges
Other Than Portfolio Operating Expenses" table.
Response: Instruction 1(f) to Item 3 of Form N-6 specifically permits
current charges to be shown in the fee table, as well as the
required maximum. More specifically, this instruction states:
"The Registrant may disclose the current charge, in addition to
the maximum charge, if the disclosure of the current charge is
no more prominent than, and does not obscure or impede
understanding of, the disclosure of the maximum charge." This
instruction allowing current charges to be shown in the fee
table itself (as opposed to a footnote) was added by the
Commission Staff specifically in response to commenters'
concerns that placing current charge information in a footnote
would not adequately disclose variations between current and
guaranteed charges and that disclosing only the guaranteed
charge may significantly overstate the amount of a charge. See
"Registration Form for Insurance Company Separate Accounts
Registered as Unit Investment Trust that Offer Variable Life
Insurance Policies," Rel. No. 33-8088 (Apr. 12, 2002).
The Companies assert that the current charges are not more
prominent than the maximum charges and do not believe showing
the current charges in any way obscures or impedes
understanding of the maximum charges. In fact, the Companies
believe it is more helpful to investors to show both current,
as well as maximum, charges.
It is the standard, if not universal, practice in the industry
to include columns in the fee table to show both guaranteed and
current cost of insurance charges (both for the minimum and
maximum range, as well as for the representative insured). The
Companies have followed this approach in all of their variable
life insurance prospectuses on Form N-6 (as well as those of
their affiliates) since the Form was initially adopted.
You also noted that the representative insured charges should
be shown at current levels, instead of maximum. Because the
Form is silent as to the level of charges to use for the
representative insured, we think the better view is that such
charges much be reflected at least at guaranteed levels, and
that current levels may also be reflected as permitted by the
instruction cited above.
Alison White, Esq.
April __, 2008
Page 12 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,
Mary E. Thornton
cc: John E. Connolly, Jr., Esq.
APPENDIX A - PARTIAL WITHDRAWAL EXAMPLES
EXAMPLE. The following example assumes that a Policy Owner withdraws, in the
first month of the second Policy year, 20% of the cash surrender value of a
Policy. The insured under the Policy is assumed to be the representative insured
shown in the fee table on page A-8 of the prospectus. As shown in the fee table,
the Surrender Charge for that insured is $14.00 per $1,000 of Policy face
amount. The Policy is assumed to have the other assumed characteristics shown
below:
Face Amount: $300,000
Death Benefit Option Level (Option A)
Cash Value: $ 11,718
Surrender Charge: $ 4,200($14.00 x $300,000/1,000)
--------
Cash Surrender Value: $ 7,518
x 20%
--------
Withdrawal Amount $ 1,504
The first 10% of cash surrender value, or $752, can be withdrawn free of
surrender charge. The remaining $752 withdrawn is subject to a portion of the
Policy's Surrender Charge--based on the ratio that such excess withdrawal amount
bears to the Policy's face amount less the Surrender Charge, as shown in the
formula below:
Withdrawal Amount in
Excess of Free Withdrawal
Surrender x --------------------------------- = Surrender Charge
Charge Face Amount less Surrender Charge on Withdrawal
$752
$4,200 x --------------------------------- = $11
$300,000 - $4,200
Because the Policy has a level death benefit, the withdrawal will cause a dollar
for dollar reduction in the Policy's face amount, so that the cash value and the
face amount will both be reduced by the $1,504 withdrawal and by the $11
Surrender Charge. The overall impact of the withdrawal on Policy values would
therefore be as follows:
Face Amount before Withdrawal $300,000
Withdrawal - 1,504
Surrender Charge on Withdrawal - 11
--------
Face Amount after Withdrawal $298,485
Surrender Charge before Withdrawal $ 4,200
Surrender Charge on Withdrawal - 11
--------
Surrender Charge after Withdrawal $ 4,189
Cash Value before Withdrawal $ 11,718
Withdrawal - 1,504
Surrender Charge on Withdrawal - 11
--------
Cash Value after Withdrawal $ 10,203
Surrender Charge after Withdrawal - 4,189
--------
Cash Surrender Value after Withdrawal $ 6,014