Rebecca A. Malanga
Director, Corporate Counsel
The Prudential Life Insurance Company of America
1 Corporate Drive
Shelton, CT 06484
Tel. 203-402-1549
Fax. 215-784-8765
October 16, 2008
Ms. Sally Samuel, Esq.
Office of Insurance Products
Division of Investment Management
United States Securities and Exchange Commission
100 F Street, N.E.
Washington, D.C. 20549
Re: Prudential Annuities Life Assurance Corporation Separate Account B
("Registrant")
Prudential Annuities Life Assurance Corporation ("Depositor")
Pre-Effective Amendment No. 1 to Registration Statement on Form N-4
("Amendment")
File No. 333-152411; 811-5438
Dear Ms. Samuel:
On behalf of the above-named Registrant, we file this correspondence in order
to respond to comments provided by the staff of the Securities and Exchange
Commission ("the Staff") by telephone on October 14, 2008 in connection with
the above-referenced Amendment. Set forth below are each of the Staff's
comments, followed by the Registrant's response.
1. Staff Comment: Page 4: The staff requested that the Registrant state
that the tax charge is based on purchase payments and cross-reference
the Fees and Charges section of the Prospectus.
Our Response: The Prospectus has been revised accordingly.
2. Staff Comment: Page 5: In the Periodic Fees and Charges table, please
clarify whether the 2% fee for "The Beneficiary Continuation Only" is 2%
of the account value.
Our Response: The Prospectus has been revised accordingly to show that
the fee is 2% of account value.
3. Staff Comment: Pages 11-12: In the footnotes regarding the Underlying
Mutual Fund Portfolio Annual Expenses, please confirm that estimated
expenses (instead of actual expenses) are shown only for new funds.
Our Response: Estimated expenses are shown only for new or re-positioned
funds.
4. Staff Comment: Page 11: Please clarify the level of short sale expenses
disclosed in footnote 1 in connection with the AST OMA US Equity Alpha
Portfolio.
Our Response: Footnote 1 has been revised accordingly.
5. Staff Comment: Page 14: In the Expense Examples section, please remove
the expense examples for years 5 and 20 in the "If you do not surrender
your annuity" example. Also insert "N/A" into blank table sections.
Our Response: The Prospectus has been revised accordingly.
6. Staff Comment: Page 13: In the Expense Examples section, for example
calculations for the XT6 Annuity, please revised the tables to show
examples based on a $10,000 investment that is not increased to reflect
Purchase Credits.
Our Response: The Prospectus has been revised accordingly. The expense
calculations for XT6 have been revised accordingly, and Footnote 3 to
the table has been revised to disclose that the Purchase Credit is not
reflected in the examples.
7. Staff Comment: Page 16-17: Please change language stating "Please see
appendix G, I and J for more information on the proprietary asset
transfer formula" to state "Please see appendix G, I and J for more
information, including the proprietary asset transfer formula."
Our Response: The Prospectus has been revised accordingly.
8. Staff Comment: Page 77: Under "Other Important Considerations," please
do not refer to an "asset allocation model." Refer to "Group II:
Optional Allocation & Rebalancing Program," as it is called under
Investment Options. Revise this throughout the Prospectus.
Our Response: The Prospectus has been revised accordingly.
9. Staff Comment: Page H-2: In Appendix H on page H-2, please delete the
sentence at the bottom of the page that refers the reader to the annuity
contract for more information regarding annuities for sale in New York.
Our Response: The Prospectus has been revised accordingly.
Registrant has incorporated the above-mentioned changes into the Prospectus,
and these changes will be included in the Prospectus that will be filed
pursuant to Rule 497 of the Securities Act of 1933 ("Securities Act") after the
effective date of the Amendment. Registrant has previously filed a request for
acceleration of the Registration Statement pursuant to Rule 461 under the
Securities Act to October 17, 2008, or as soon thereafter as possible.
The Registrant represents as follows:
. 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.
We appreciate your attention to this filing. If you have any questions, please
do not hesitate to call the undersigned. Thank you.
Sincerely,
/s/ Rebecca A. Malanga
-----------------------------
Rebecca A. Malanga
SUMMARY OF CONTRACT FEES AND CHARGES
Below is a summary of the fees and charges for the Annuities. Some fees and
charges are assessed against each Annuity while others are assessed against
assets allocated to the Sub-accounts. The fees and charges that are assessed
against an Annuity include any applicable Contingent Deferred Sales Charge,
Transfer Fee, Tax Charge and Annual Maintenance Fee. The charges that are
assessed against the Sub-accounts are the Mortality and Expense Risk charge,
the charge for Administration of the Annuity, any applicable Distribution
Charge and the charge for certain optional benefits you elect. Certain
optional benefits deduct a charge from each Annuity based on a percentage of a
"protected value." Each underlying mutual fund portfolio assesses a fee for
investment management, other expenses and, with some mutual funds, a 12b-1
fee. The prospectus for each underlying mutual fund provides more detailed
information about the expenses for the underlying mutual funds.
The following tables provide a summary of the fees and charges you will pay if
you surrender your Annuity or transfer Account Value among investment options.
These fees and charges are described in more detail within this Prospectus.
CONTINGENT DEFERRED SALES CHARGES FOR EACH ANNUITY /1/
AS Cornerstone
Yr. 1 Yr. 2 Yr. 3 Yr. 4 Yr. 5 Yr. 6 Yr. 7 Yr. 8
-----------------------------------------------
7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0%
-----------------------------------------------
XT6
For Annuities issued prior to November 20, 2006, the following schedule
applies:
Yr. 1 Yr. 2 Yr. 3 Yr. 4 Yr. 5 Yr. 6 Yr. 7 Yr. 8 Yr. 9 Yr. 10 Yr. 11+
--------------------------------------------------------------------
9.0% 9.0% 8.5% 8.0% 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 0.0%
--------------------------------------------------------------------
For Annuities issued on or after November 20, 2006 (subject to state
availability), the following schedule applies /2/:
Yr. 1 Yr. 2 Yr. 3 Yr. 4 Yr. 5 Yr. 6 Yr. 7 Yr. 8 Yr. 9 Yr. 10 Yr. 11+
--------------------------------------------------------------------
9.0% 9.0% 8.0% 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0%
--------------------------------------------------------------------
ASL II
There is no CDSC for this Annuity
1 The Contingent Deferred Sales Charges are assessed upon surrender or
withdrawal. The charge is a percentage of each applicable Purchase Payment
deducted upon surrender or withdrawal. The period during which a particular
percentage applies is measured from the Issue Date of the Annuity.
2 In jurisdictions that have not yet approved this schedule, the schedule for
Annuities issued prior to November 20, 2006 will apply.
---------------------------------------------------------
OTHER TRANSACTION FEES AND CHARGES
(assessed against each Annuity)
---------------------------------------------------------
FEE/CHARGE AS Cornerstone ASL II XT6
---------------------------------------------------------
Transfer Fee /1/
Maximum $15.00 $15.00 $15.00
Current $10.00 $10.00 $10.00
---------------------------------------------------------
Tax Charge /2/ 0% to 3.5% 0% to 3.5% 0% to 3.5%
---------------------------------------------------------
1 Currently, we deduct the fee after the 20/th/ transfer each Annuity Year.
We guarantee that the number of charge free transfers per Annuity Year will
never be less than 8.
2 The Tax Charge is assessed as a percentage of Purchase Payments. We reserve
the right to deduct the charge either at the time the tax is imposed, upon
a full surrender of the Annuity, or upon annuitization. See the subsection
"Tax Charge" under "Fees and Charges" in this Prospectus.
4
The following table provides a summary of the periodic fees and charges you
will pay while you own your Annuity, excluding the underlying mutual fund
Portfolio annual expenses. These fees and charges are described in more detail
within this Prospectus.
------------------------------------------------------------------------------------------------------
PERIODIC FEES AND CHARGES
(assessed against the Account Value)
------------------------------------------------------------------------------------------------------
FEE/CHARGE AS Cornerstone ASL II XT6
Annual Maintenance Fee /1/ Lesser of $35 or 2% of Lesser of $35 or 2% of Lesser of $35 or 2% of
Account Value /2/ Account Value /2/ Account Value
-----------------------------------------------------------------------
Beneficiary Continuation Lesser of $30 or 2% of Lesser of $30 or 2% of Lesser of $30 or 2% of
Option Only Account Value Account Value Account Value
------------------------------------------------------------------------------------------------------
ANNUAL FEES/CHARGES OF THE SUB-ACCOUNTS /3/
(assessed as a percentage of the daily net assets of the Sub-accounts)
------------------------------------------------------------------------------------------------------
FEE/CHARGE
Mortality & Expense Risk 1.00% 1.50% 0.50%
Charge /4/
------------------------------------------------------------------------------------------------------
Administration Charge /4/ 0.15% 0.15% 0.15%
------------------------------------------------------------------------------------------------------
Distribution Charge /5/ N/A N/A 1.00% in Annuity
Years 1-10
------------------------------------------------------------------------------------------------------
Settlement Service Charge /6/
Qualified 1.40% 1.40% 1.40%
Non-Qualified 1.00% 1.00% 1.00%
------------------------------------------------------------------------------------------------------
Total Annual Charges of the 1.15% 1.65% 1.65% in Annuity
Sub-accounts Years 1-10;
(excluding settlement service 0.65% in Annuity
charge) Years 11 and later
------------------------------------------------------------------------------------------------------
1 Assessed annually on the Annuity's anniversary date or upon surrender. For
beneficiaries who elect the non-qualified Beneficiary Continuation Option,
the fee is only applicable if Account Value is less than $25,000.
2 Only applicable if Account Value is less than $100,000. Fee may differ in
certain States.
3 These charges are deducted daily and apply to the Sub-accounts only.
4 The combination of the Mortality and Expense Risk Charge and Administration
Charge is referred to as the "Insurance Charge" elsewhere in this
Prospectus.
5 The Distribution Charge is 0.00% in Annuity Years 11+ for XT6.
6 The Mortality & Expense Risk Charge, the Administration Charge and the
Distribution Charge (if applicable) do not apply if you are a beneficiary
under the Beneficiary Continuation Option. The Settlement Service Charge
applies only if your beneficiary elects the Beneficiary Continuation
Option. The 1.00% and 1.40% charges set forth above are annual charges that
are assessed against the Account Value in the Sub-accounts.
5
--------------------------------------------------------------------------------------------------
UNDERLYING MUTUAL FUND PORTFOLIO ANNUAL EXPENSES
(as a percentage of the average net assets of the underlying Portfolios)
--------------------------------------------------------------------------------------------------
For the year ended December 31, 2007
---------------------------------------------------
UNDERLYING PORTFOLIO Acquired Total
Portfolio Annual
Management Other Fees & Portfolio
Fee /4/ Expenses 12b-1 Fee Expenses /6/ Expenses
--------------------------------------------------------------------------------------------------
ProFund VP /18/ continued
Mid-Cap Growth 0.75% 0.70% 0.25% 0.00% 1.70%
Mid-Cap Value 0.75% 0.72% 0.25% 0.00% 1.72%
NASDAQ-100 0.75% 0.69% 0.25% 0.00% 1.69%
Oil & Gas 0.75% 0.71% 0.25% 0.00% 1.71%
Pharmaceuticals 0.75% 0.73% 0.25% 0.00% 1.73%
Precious Metals 0.75% 0.70% 0.25% 0.00% 1.70%
Real Estate 0.75% 0.73% 0.25% 0.00% 1.73%
Rising Rates Opportunity 0.75% 0.62% 0.25% 0.00% 1.62%
Semiconductor 0.75% 0.83% 0.25% 0.00% 1.83%
Short Mid-Cap 0.75% 0.78% 0.25% 0.00% 1.78%
Short NASDAQ-100 0.75% 0.71% 0.25% 0.00% 1.71%
Short Small-Cap 0.75% 0.66% 0.25% 0.00% 1.66%
Small-Cap Growth 0.75% 0.69% 0.25% 0.00% 1.69%
Small-Cap Value 0.75% 0.76% 0.25% 0.00% 1.76%
Technology 0.75% 0.72% 0.25% 0.00% 1.72%
Telecommunications 0.75% 0.72% 0.25% 0.00% 1.72%
U.S. Government Plus 0.50% 0.68% 0.25% 0.00% 1.43%
UltraBull 0.75% 0.68% 0.25% 0.00% 1.68%
UltraMid-Cap 0.75% 0.69% 0.25% 0.00% 1.69%
UltraNASDAQ-100 0.75% 0.69% 0.25% 0.00% 1.69%
UltraSmall-Cap 0.75% 0.73% 0.25% 0.00% 1.73%
Utilities 0.75% 0.72% 0.25% 0.00% 1.72%
--------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------
The Prudential Series Fund
SP International Growth Portfolio 0.85% 0.09% 0.00% 0.00% 0.94%
--------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------
Wells Fargo Variable Trust
Wells Fargo Advantage VT Equity Income Fund 0.55% 0.24% 0.25% 0.00% 1.04%
1 The Fund has entered into arrangements with the issuers of the variable
insurance products offering the Portfolios under which the Fund compensates
the issuers 0.10% for providing ongoing services to Portfolio shareholders
in lieu of the Fund providing such services directly to
shareholders. Amounts paid under these arrangements are included in "Other
Expenses." Subject to the expense limitations set forth below, for each
Portfolio of the Fund other than the Dynamic and Tactical Asset Allocation
Portfolios, 0.03% of the 0.10% administrative services fee is voluntarily
waived. The Dynamic and Tactical Asset Allocation Portfolios do not
directly pay any portion of the 0.10% administrative service fee. The
Acquired Portfolios in which the Dynamic and Tactical Asset Allocation
Portfolios invest, however, are subject to the administrative services
fee. With respect to the AST QMA US Equity Alpha Portfolio, "Other
Expenses" includes dividend expenses on short sales of 0.32% and interest
expenses on short sales of 0.15%. Our reference above to the Dynamic Asset
Allocation Portfolios refers to these portfolios: AST Aggressive Asset
Allocation, AST Balanced Asset Allocation, AST Capital Growth Asset
Allocation, and AST Preservation Asset Allocation. Our reference to the
Tactical Asset Allocation Portfolios refers to these portfolios: AST CLS
Growth Asset Allocation, AST CLS Moderate Asset Allocation, AST Horizon
Growth Asset Allocation, AST Horizon Moderate Asset Allocation, and AST
Niemann Capital Growth Asset Allocation.
2 Some of the Portfolios invest in other investment companies (the Acquired
Portfolios). For example, each Dynamic Asset Allocation Portfolio and
Tactical Asset Allocation Portfolio invests primarily in shares of other
Portfolios of Advanced Series Trust. Investors in a Portfolio indirectly
bear the fees and expenses of the Acquired Portfolios. The expenses shown
under "Acquired Portfolio Fees and Expenses" represent a weighted average
of the expense ratios of the Acquired Portfolios in which each Portfolio
invested during the year ended December 31, 2007. The Dynamic Asset
Allocation Portfolios and Tactical Asset Allocation Portfolios do not pay
any transaction fees when purchasing or redeeming shares of the Acquired
Portfolios. Our reference above to the Dynamic Asset Allocation Portfolios
refers to these portfolios: AST Aggressive Asset Allocation, AST Balanced
Asset Allocation, AST Capital Growth Asset Allocation, and AST Preservation
Asset Allocation. Our reference to the Tactical Asset Allocation Portfolios
refers to these portfolios: AST CLS Growth Asset Allocation, AST CLS
Moderate Asset Allocation, AST Horizon Growth Asset Allocation, AST Horizon
Moderate Asset Allocation, and AST Niemann Capital Growth Asset Allocation.
3 Prudential Investments LLC and AST Investment Services, Inc. have
voluntarily agreed to waive a portion of their management fee and/or limit
total expenses (expressed as an annual percentage of average daily
net assets) for certain Portfolios of the Fund. These arrangements, which
are set forth as follows, may be discontinued or otherwise modified at any
time. AST American Century Strategic Allocation: 1.25%; AST Cohen & Steers
Realty: 1.45%; AST Goldman Sachs Concentrated Growth: 0.86%; AST Goldman
Sachs Mid-Cap Growth: 1.12%; AST High Yield: 0.88%; AST JPMorgan
International Equity: 1.01%; AST International Value: 1.50%; AST Large-Cap
Value: 1.20%; AST Lord Abbett Bond-Debenture: 0.88%; AST MFS Global
Equity: 1.18%; AST MFS Growth: 1.35%; AST Marsico Capital Growth: 1.35%;
AST Mid-Cap Value: 1.45%; AST Money Market: 0.56%; AST Neuberger Berman
Mid-Cap Growth: 1.25%; AST Neuberger Berman Mid-Cap Value: 1.25%; AST PIMCO
Total Return Bond: contractual Portfolio expense limit 1.05%, which can be
discontinued or modified only by amending the contract; AST PIMCO Limited
Maturity Bond: 1.05%; AST T. Rowe Price Asset Allocation: 1.25%; AST T.
Rowe Price Natural Resources: 1.35%; AST International Growth: 1.75%.
11
EXPENSE EXAMPLES
These examples are intended to help you compare the cost of investing in one
Prudential Annuities Annuity with the cost of investing in other Prudential
Annuities and/or other variable annuities.
Below are examples for each Annuity showing what you would pay in expenses at
the end of the stated time periods had you invested $10,000 in the Annuity and
your investment has a 5% return each year.
The examples reflect the following fees and charges for each Annuity as
described in "Summary of Contract Fees and Charges":
. Insurance Charge
. Distribution Charge (if applicable)
. Contingent Deferred Sales Charge (when and if applicable)
. Annual Maintenance Fee
. The maximum combination of optional benefit charges
The examples also assume the following for the period shown:
. You allocate all of your Account Value to the Sub-account with the
maximum total annual operating expenses, and those expenses remain the
same each year*
. For each charge, we deduct the maximum charge rather than the current
charge
. You make no withdrawals of Account Value
. You make no transfers, or other transactions for which we charge a fee
. No tax charge applies
. You elect the Lifetime Five Income Benefit, the Highest Daily Value
Death Benefit and the Enhanced Beneficiary Protection Death Benefit
(which are the maximum combination of optional benefit charges)
Amounts shown in the examples are rounded to the nearest dollar.
* Note: Not all portfolios offered as Sub-accounts may be available depending
on optional benefit selection, the applicable jurisdiction and selling firm.
THE EXAMPLES ARE ILLUSTRATIVE ONLY - THEY SHOULD NOT BE CONSIDERED A
REPRESENTATION OF PAST OR FUTURE EXPENSES OF THE UNDERLYING MUTUAL FUNDS OR
THEIR PORTFOLIOS - ACTUAL EXPENSES WILL BE LESS THAN THOSE SHOWN IF YOU ELECT
A DIFFERENT COMBINATION OF OPTIONAL BENEFITS THAN INDICATED IN THE EXAMPLES OR
IF YOU ALLOCATE ACCOUNT VALUE TO ANY OTHER AVAILABLE SUB-ACCOUNTS.
Expense Examples are provided as follows: 1) if you surrender the Annuity at
the end of the stated time period; 2) if you annuitize at the end of the
stated time period; and 3) if you do not surrender your Annuity. A table of
accumulation values appears in Appendix A to this Prospectus.
If you surrender your annuity at the end of the applicable time period: /1/
1 yr 3 yrs 5 yrs 10 yrs
-------------------------------------------
AS Cornerstone $1,213 $2,185 N/A N/A
-------------------------------------------
ASL II $632 $1,869 $3,074 $5,944
-------------------------------------------
XT6/ 3/ $1,496 $2,637 $3,650 $6,040
-------------------------------------------
If you annuitize your annuity at the end of the applicable time period: /2/
1 yr 3 yrs 5 yrs 10 yrs
-----------------------------------------
AS Cornerstone N/A $1,735 N/A N/A
-----------------------------------------
ASL II $632 $1,869 $3,074 $5,944
-----------------------------------------
XT6 /3/ N/A N/A $3,074 $5,944
-----------------------------------------
13
If you do not surrender your annuity:
1 yr 3 yrs 5 yrs 10 yrs
-----------------------------------------
AS Cornerstone $583 $1,735 N/A N/A
-----------------------------------------
ASL II $632 $1,869 $3,074 $5,944
-----------------------------------------
XT6 /3/ $632 $1,869 $3,074 $5,944
-----------------------------------------
1 There is no CDSC for ASL II. See "Summary of Contract Fees and Charges" for
the CDSC schedule for each Annuity.
2 If you own XT6, you may not annuitize in the first Three (3) Annuity Years;
if you own AS Cornerstone you may not annuitize in the first Annuity Year.
3 XT6 Annuities purchased prior to November 20, 2006 are subject to a
different CDSC schedule. Expense example calculations for XT6 Annuities are
not adjusted to reflect the Purchase Credit. If the Purchase Credit were
reflected in the calculations, expenses would be higher.
For information relating to accumulation unit values pertaining to the
Sub-accounts, please see Appendix A - Condensed Financial Information About
Separate Account B.
14
The "Maximum Age for Initial Purchase" applies to the oldest owner as of the
day we would issue the annuity. If the annuity is to be owned by an entity,
the maximum age applies to the annuitant as of the day we would issue the
annuity. The availability and level of protection of certain optional benefits
may also vary based on the age of the owner or annuitant on the issue date of
the annuity, the date the benefit is elected, or the date of the owner's
death. Please see the section entitled "Living Benefit Programs" and "Death
Benefit" for additional information on these benefits.
We may allow you to purchase an annuity with an amount lower than the "Minimum
Initial Purchase Payment" if you establish an electronic funds transfer that
would allow you to meet the minimum requirement within one year.
You may make additional payments of at least $100 into your annuity at any
time, subject to maximums allowed by us and as provided by law.
After you purchase your annuity you will have usually ten days to examine it
and cancel it if you change your mind for any reason. The period of time and
the amount returned to you varies by law. You must cancel your contract in
writing.
See "What Are the Requirements for Purchasing One of the Annuities" for more
detail.
Where should I invest my money? With the help of your financial advisor, you
choose where to invest your money within the annuity. You may choose from a
variety of investment options ranging from conservative to aggressive. These
investment options participate in mutual fund investments that are kept in a
separate account from our other general assets. Although you may recognize
some of the names of the money managers, these investment options are designed
for variable annuities and are not the same mutual funds available to the
general public. You can decide on a mix of investment options that suit your
goals. Or, you can choose one of our investment options that participates in
several mutual funds according to a specified goal such as balanced asset
allocation, or capital growth asset allocation. Each of the underlying mutual
funds is described by its own prospectus, which you should read carefully.
There is no assurance that any investment option will meet its investment
objective.
For ASL II and XT6, you may also allocate money to a fixed rate account that
earns interest guaranteed by our general assets. We also offer programs to
help discipline your investing, such as dollar cost averaging or automatic
rebalancing.
See "Investment Options," and "Managing your Account Value."
How can I receive income from my annuity? You can receive income by taking
withdrawals or electing annuity payments. If you take withdrawals, you should
plan them carefully, because withdrawals may be subject to tax, and may be
subject to a surrender charge (discussed below). You may withdraw up to 10% of
your investment each year without being subject to a surrender charge. You may
take withdrawals until your account value is depleted.
Instead of withdrawals, you may elect to receive annuity payments over your
lifetime, also called "annuitization". This option may appeal to those who
worry about outliving their account value through withdrawals. If you elect to
receive annuity payments, you convert your account value into a stream of
future payments. This means in most cases you no longer have an account value
and therefore cannot make withdrawals. We offer different types of annuity
options to meet your needs, and you can trade off the benefits and costs that
make sense for you. For example, some of our annuity options allow for
withdrawals, and some provide a death benefit, while others guarantee payments
for life without a death benefit or the ability to make withdrawals.
See "Access to Account Value."
Options for Guaranteed Lifetime Withdrawals. We offer several optional
benefits for an additional fee that guarantee your ability to take withdrawals
for life as a percentage of a guaranteed benefit base, even after your account
value falls to zero. These benefits may appeal to you if you wish to maintain
flexibility and control over your account value (instead of converting it to
an annuity stream) and want the assurance of predictable income for life. If
you withdraw more than the allowable amount during any year, your future level
of guaranteed withdrawals decreases.
As part of these benefits you are required to invest only in certain permitted
investment options. Some of the benefits utilize a proprietary asset transfer
formula to help protect the account value in periods of negative account
performance. The proprietary formula monitors your account value on a daily
basis and transfers portions into and out of a fixed investment when
necessary. Please see Appendix G, I, and J for more information, including the
proprietary asset transfer formula.
These benefits contain detailed provisions, so please see the following
sections of the prospectus for complete details:
.. Highest Daily Lifetime Seven
.. Spousal Highest Daily Lifetime Seven
.. Highest Daily Lifetime Seven with Lifetime Income Accelerator
.. Highest Daily Lifetime Seven with Beneficiary Income Option
16
.. Spousal Highest Daily Lifetime Seven with Beneficiary Income Option
.. Highest Daily Lifetime Five (not available with AS Cornerstone)
.. Lifetime Five
.. Spousal Lifetime Five
.. Guaranteed Minimum Withdrawal Benefit (not a lifetime benefit)
Options for Guaranteed Accumulation. We offer several optional benefits for an
additional fee that guarantee your account value to a certain level after a
period of years. As part of these benefits you are required to invest only in
certain permitted investment options. These benefits utilize a proprietary
asset transfer formula to help protect the account value in periods of
negative account performance. The proprietary formula monitors your account
value on a daily basis and transfers portions into and out of a fixed
investment when necessary. Please see Appendix G, I, and J for more
information, including the proprietary asset transfer formula.
These benefits contain detailed provisions, so please see the following
sections of the prospectus for complete details:
.. Guaranteed Return Option Plus (not available with AS Cornerstone)
.. Guaranteed Return Option (not available with AS Cornerstone)
.. Guaranteed Return Option Plus 2008
.. Highest Daily Guaranteed Return Option
Other Guaranteed Options. We also offer the following options. Please see the
corresponding section in the prospectus for complete details:
.. Guaranteed Minimum Income Benefit: This option guarantees a rate of
accumulation of your purchase payments over a period of years for use with
converting your account value into an annuity stream (also called
"annuitization").
.. Guaranteed Minimum Withdrawal Benefit: This option guarantees up to a
certain percentage of the account value to be withdrawn annually until the
original investment is returned even if the account value reaches zero.
What happens to my annuity upon death? You may name a beneficiary to receive
the proceeds of your annuity upon your death. Your annuity must be distributed
within the time periods required by the tax laws. Each of our annuities offers
a basic death benefit. The basic death benefit provides your beneficiaries
with the greater of your purchase payments less all proportional withdrawals
or your value in the annuity at the time of death.
We also offer a number of optional death benefits for an additional charge:
.. Enhanced Beneficiary Protection Death Benefit: Offers the basic death
benefit plus 40% of "growth" under your annuity as defined later in this
prospectus.
.. Highest Anniversary Value Death Benefit: Offers the greater of the basic
death benefit and a highest anniversary value of the annuity.
.. Combination 5% Roll-up and Highest Anniversary Value Death Benefit: Offers
the greatest of the basic death benefit, the highest anniversary value
death benefit described above, and a value assuming 5% growth of your
investment adjusted for withdrawals.
.. Highest Daily Value Death Benefit: Offers the greater of the basic death
benefit and a highest daily value of the annuity.
Each death benefit has certain age restrictions. Please see the "Death
Benefit" section of the Prospectus for more information.
HOW DO I RECEIVE CREDITS?
With XT6, we apply a "Credit" to your annuity each time you make a purchase
payment during the first six (6) years. The amount of the Credit depends on
the year during which the Purchase Payment is made:
ANNUITY YEAR CREDIT
--------------------
1 6.50%
2 5.00%
3 4.00%
4 3.00%
5 2.00%
6 1.00%
7+ 0.00%
--------------------
Please note that during the first 10 years, the total asset-based charges on
the XT6 annuity are higher than many of our other annuities. In addition, the
Contingent Deferred Sales Charge (CDSC) on the XT6 annuity is higher and is
deducted for a longer period of time as compared to our other annuities. We
may take back Credits applied within 12 months of death or a medically-related
surrender. We may also take back Credits if you return your Annuity under the
"free-look" provision.
Please see the section entitled "Managing Your Account Value" for more
information.
17
fixed, periodic payments until the remainder of the Protected Value is
paid, at which time the rider terminates. The fixed, periodic payments
will each be equal to the Protected Annual Withdrawal Amount, except for
the last payment which may be equal to the remaining Protected Value. We
will determine the duration for which periodic payments will continue by
dividing the Protected Value by the Protected Annual Withdrawal Amount.
You will not have the right to make additional Purchase Payments or
receive the remaining Protected Value in a lump sum. You can elect the
frequency of payments, subject to our rules then in effect.
. If the death benefit under your Annuity becomes payable before you have
received all of your Protected Value in the form of withdrawals from
your Annuity, your Beneficiary has the option to elect to receive the
remaining Protected Value as an alternate death benefit payout in lieu
of the amount payable under any other death benefit provided under your
Annuity. The remaining Protected Value will be payable in the form of
fixed, periodic payments. Your beneficiary can elect the frequency of
payments, subject to our rules then in effect. We will determine the
duration for which periodic payments will continue by dividing the
Protected Value by the Protected Annual Withdrawal Amount. The Protected
Value is not equal to the Account Value for purposes of the Annuity's
other death benefit options. The GMWB program does not increase or
decrease the amount otherwise payable under the Annuity's other death
benefit options. Generally, the GMWB program would be of value to your
Beneficiary only when the Protected Value at death exceeds any other
amount available as a death benefit.
. If you elect to begin receiving annuity payments before you have
received all of your Protected Value in the form of withdrawals from
your Annuity, an additional annuity payment option will be available
that makes fixed annuity payments for a certain period, determined by
dividing the Protected Value by the Protected Annual Withdrawal Amount.
If you elect to receive annuity payments calculated in this manner, the
assumed interest rate used to calculate such payments will be 0%, which
is less than the assumed interest rate on other annuity payment options
we offer. This 0% assumed interest rate results in lower annuity
payments than what would have been paid if the assumed interest rate was
higher than 0%. You can also elect to terminate the GMWB program and
begin receiving annuity payments based on your then current Account
Value (not the remaining Protected Value) under any of the available
annuity payment options.
Other Important Considerations
. Withdrawals under the GMWB program are subject to all of the terms and
conditions of your Annuity, including any CDSC and MVA that may apply.
. Withdrawals made while the GMWB program is in effect will be treated,
for tax purposes, in the same way as any other withdrawals under your
Annuity.
. The GMWB program does not directly affect your Annuity's Account Value
or Surrender Value, but any withdrawal will decrease the Account Value
by the amount of the withdrawal. If you surrender your Annuity, you will
receive the current Surrender Value, not the Protected Value.
. You can make withdrawals from your Annuity while your Account Value is
greater than zero without purchasing the GMWB program. The GMWB program
provides a guarantee that if your Account Value declines due to market
performance, you will be able to receive your Protected Value in the
form of periodic benefit payments.
. We currently limit the Sub-accounts in which you may allocate Account
Value if you participate in this benefit. Moreover, if you are invested
in prohibited investment options and seek to acquire the benefit, we
will ask you to reallocate to permitted investment options as a
prerequisite to acquiring the benefit. Should we prohibit access to any
investment option, any transfers required to move Account Value to
eligible investment options will not be counted in determining the
number of free transfers during an Annuity Year. We may also require
that you allocate your Account Value according to an Optional Allocation
& Rebalancing Program, which is described in the section entitled
"Investment Options" in this prospectus.
Election of the Program
Currently, the GMWB program can only be elected at the time that you purchase
your Annuity. In the future, we may offer existing Annuity Owners the option
to elect the GMWB program after the Issue Date of their Annuity. If you elect
the GMWB program after the Issue Date of your Annuity, the program will be
effective as of the next anniversary date. Your Account Value as of such
anniversary date will be used to calculate the initial Protected Value and the
initial Protected Annual Withdrawal Amount.
We reserve the right to restrict the maximum amount of Protected Value that
may be covered under the GMWB program under this Annuity or any other
annuities that you own that are issued by Prudential Annuities or its
affiliated companies.
Termination of the Program
The program terminates automatically when your Protected Value reaches zero
based on your withdrawals. You may terminate the program at any time by
notifying us. If you terminate the program, any guarantee provided by the
benefit will terminate as of the date the termination is effective. The
program terminates upon your surrender of your Annuity, upon due proof of
death (unless your surviving spouse elects to continue your Annuity and the
GMWB program or your Beneficiary elects to receive the amounts payable under
the GMWB program in lieu of the death benefit) or upon your election to begin
receiving annuity payments.
The charge for the GMWB program will no longer be deducted from your Account
Value upon termination of the program.
77
affected by negative investment performance, it is unlikely that the
purchase of the GMIB will result in your receiving larger annuity payments
than if you had not purchased GMIB. This is because the assumptions that we
use in computing the GMIB, such as the annuity purchase rates, (which
include assumptions as to age-setbacks and assumed interest rates), are
more conservative than the assumptions that we use in computing annuity
payout options outside of GMIB. Therefore, you may generate higher income
payments if you were to annuitize a lower Account Value at the current
annuity purchase rates, than if you were to annuitize under the GMIB with a
higher Protected Value than your Account Value but, at the annuity purchase
rates guaranteed under the GMIB. The GMIB program does not directly affect
an Annuity's Account Value, Surrender Value or the amount payable under
either the basic Death Benefit provision of the Annuity or any optional
Death Benefit provision. If you surrender your Annuity, you will receive
the current Surrender Value, not the Protected Income Value. The Protected
Income Value is only applicable if you elect to begin receiving annuity
payments under one of the GMIB annuity options after the waiting period.
.. Each Annuity offers other annuity payment options that you can elect which
do not impose an additional charge, but which do not offer to guarantee a
minimum value on which to make annuity payments.
.. Where allowed by law, we reserve the right to limit subsequent Purchase
Payments if we determine, at our sole discretion, that based on the timing
of your Purchase Payments and withdrawals, your Protected Income Value is
increasing in ways we did not intend. In determining whether to limit
Purchase Payments, we will look at Purchase Payments which are
disproportionately larger than your initial Purchase Payment and other
actions that may artificially increase the Protected Income Value. For
example, if you withdraw a substantial amount from your Annuity and within
a short period of time you send us an additional Premium Payment for the
same amount, we may not accept such Premium Payment.
.. We currently limit the Sub-accounts in which you may allocate Account Value
if you participate in this benefit. Moreover, if you are invested in
prohibited investment options and seek to acquire the benefit, we will ask
you to reallocate to permitted investment options as a prerequisite to
acquiring the benefit. Should we prohibit access to any investment option,
any transfers required to move Account Value to eligible investment options
will not be counted in determining the number of free transfers during an
Annuity Year. We may also require that you allocate your Account Value
according to an Optional Allocation & Rebalancing Program, which is
described in the section entitled "Investment Options" in this prospectus.
.. If you change the Annuitant after the effective date of the GMIB program,
the period of time during which we will apply the 5% annual growth rate may
be changed based on the age of the new Annuitant. If the new Annuitant
would not be eligible to elect the GMIB program based on his or her age at
the time of the change, then the GMIB program will terminate.
.. Annuity payments made under the GMIB program are subject to the same tax
treatment as any other annuity payment.
.. At the time you elect to begin receiving annuity payments under the GMIB
program or under any other annuity payment option we make available, the
protection provided by an Annuity's basic Death Benefit or any optional
Death Benefit provision you elected will no longer apply.
Election of the Program
Currently, the GMIB program can only be elected at the time that you purchase
your Annuity. The Annuitant must be age 75 or less as of the effective date of
the GMIB program. In the future, we may offer existing Annuity Owners the
option to elect the GMIB program after the Issue Date of their Annuity. If you
elect the GMIB program after the Issue Date of your Annuity, the program will
be effective as of the date of election. Your Account Value as of that date
will be used to calculate the Protected Income Value as of the effective date
of the program.
Termination of the Program
The GMIB program cannot be terminated by the Owner once elected. The GMIB
program automatically terminates as of the date your Annuity is fully
surrendered, on the date the Death Benefit is payable to your Beneficiary
(unless your surviving spouse elects to continue your Annuity), or on the date
that your Account Value is transferred to begin making annuity payments. The
GMIB program may also be terminated if you designate a new Annuitant who would
not be eligible to elect the GMIB program based on his or her age at the time
of the change.
Upon termination of the GMIB program we will deduct the charge from your
Account Value for the portion of the Annuity Year since the prior anniversary
of the Annuity's Issue Date (or the Issue Date if in the first Annuity Year).
Charges under the Program
Currently, we deduct a charge equal to 0.50% per year of the average Protected
Income Value for the period the charge applies. Because the charge is
calculated based on the average Protected Income Value, it does not increase
or decrease based on changes to the Annuity's Account Value due to market
performance. The dollar amount you pay each year will increase in any year the
Protected Income Value increases, and it will decrease in any year the
Protected Income Value decreases due to withdrawal, irrespective of whether
your Account Value increases or decreases.
The charge is deducted annually in arrears each Annuity Year on the
anniversary of the Issue Date of an Annuity. We deduct the amount of the
charge pro-rata from the Account Value allocated to the Sub-accounts and the
Fixed Allocations. No MVA will apply to Account Value deducted from a Fixed
Allocation. If you surrender your Annuity, begin receiving annuity payments
under the GMIB program or any other annuity payment option we make available
during an Annuity Year, or the GMIB program terminates, we will deduct the
charge for the portion of the Annuity Year since the prior anniversary of the
Annuity's Issue Date (or the Issue Date if in the first Annuity Year).
81
ASL II NY AS Cornerstone NY
-------------------------------------------------------------------------------------------------------------------------------
Optional Living Benefits (for an GRO/GRO Plus, GRO Plus 2008, Highest Daily GRO, GRO Plus
additional cost)/2/ Highest Daily GRO, Guaranteed 2008, GMWB, GMIB, Lifetime
Minimum Withdrawal Benefit, Five, Spousal Lifetime Five,
(GMWB), Guaranteed Minimum Highest Daily Lifetime Seven,
Income Benefit (GMIB), Lifetime Spousal Highest Daily Lifetime
Five, Spousal Lifetime Five, Seven (Highest Daily GRO, and
Highest Daily Lifetime Five, GRO Plus 2008 pending New
Highest Daily Lifetime Seven, York Department of Insurance
Spousal Highest Daily Lifetime approval)
Seven (Highest Daily GRO, and
GRO Plus 2008 pending New
York Department of Insurance
approval)
-------------------------------------------------------------------------------------------------------------------------------
Annuity Rewards/3/ No Available after initial CDSC
period
-------------------------------------------------------------------------------------------------------------------------------
Annuitization Options Fixed option only Annuity date Fixed option only Annuity date
cannot exceed the first day of the cannot exceed the first day of the
calendar month following calendar month following
Annuitant's 90/th/ birthday. The Annuitant's 90/th/ birthday. The
maximum Annuity Date is based maximum Annuity Date is based
on the first Owner or Annuitant to on the first Owner or Annuitant
reach the maximum age, as to reach the maximum age, as
indicated in your Annuity. indicated in your Annuity.
-------------------------------------------------------------------------------------------------------------------------------
XTra Credit SIX NY
--------------------------------------------------------------------------------------
Optional Living Benefits (for an Highest Daily GRO, GRO Plus
additional cost)/2/ 2008, GMWB, GMIB, Lifetime
Five, Spousal Lifetime Five,
Highest Daily Lifetime Five,
Highest Daily Lifetime Seven,
Spousal Highest Daily Lifetime
Seven (Highest Daily GRO, and
GRO Plus 2008 pending New
York Department of Insurance
approval)
--------------------------------------------------------------------------------------
Annuity Rewards/3/ Available after initial CDSC
period
--------------------------------------------------------------------------------------
Annuitization Options Fixed option only Annuity date
cannot exceed the first day of the
calendar month following
Annuitant's 90/th/ birthday. The
maximum Annuity Date is based
on the first Owner or Annuitant to
reach the maximum age, as
indicated in your Annuity.
--------------------------------------------------------------------------------------
(1)For more information on these benefits, refer to the "Death Benefit"
section in the Prospectus.
(2)For more information on these benefits, refer to the "Living Benefit
Programs" section in the Prospectus.
(3)The Annuity rewards benefit offers Owners an ability to increase the
guaranteed death benefit so that the death benefit will at least equal the
Annuity's Account Value on the effective date of the Annuity Rewards
benefits, if the terms of the Annuity Rewards benefit are met.
H-2