NAFA, Milwaukee, makes that point in a comment letter submitted to the
Commodity Futures Trading Commission (CFTC) and the U.S. Securities and Exchange
Commission (SEC) in a response to joint SEC-CFTC efforts to develop the
definitions needed to implement the swaps provisions of the Dodd-Frank Wall
Street Reform and Consumer Protection Act of 2010.

NAFA’s understanding of the proposed definitions is that a fixed annuity
would be defined as a “swap,” or a “security-based swap” or “security-based swap
agreement,” and therefore subject to SEC regulation, NAFA President Kim O’Brien
says in the letter

An amendment to the Dodd-Frank Act sponsored by Sen. Tom Harkin, D-Iowa, made
it clear that fixed annuities are excluded from federal regulation, including
regulation by the SEC, and that the products should be regulated by state
insurance regulators, O’Brien says.

NAFA believes the proposed swaps definitions would classify a fixed annuity
as a swap or security-based swap because, under the proposed swaps definitions,
any insurance or annuity product that does not come within the exclusions set
forth in the proposed rule is defined as a swap, O’Brien says.

NAFA believes an appropriate approach, consistent with congressional intent,
would be to treat fixed annuities as insurance arrangements that are not swaps
unless they fail to meet criteria set forth in Section 3(a)(8) of the Securities
Act of 1933, O’Brien says.

Instead of presuming that “you are a swap until proven insurance,” the
operative presumption should be “you are insurance until proven a swap, O’Brien
says.