ROANOKE TIMES 
                      Copyright (c) 1997, Roanoke Times

DATE: Wednesday, February 12, 1997           TAG: 9702120073
SECTION: BUSINESS                 PAGE: B-6  EDITION: METRO 
DATELINE: NEW YORK
SOURCE: Associated Press

SEC PROBES INSURERS REGULATORS LOOK AT ANNUITY SALES

In a reminder that regulators are more closely scrutinizing insurance companies, the Securities and Exchange Commission on Tuesday confirmed it is examining sales of variable annuities.

The SEC, which regulates insurance companies' sales of securities, said it mailed letters to a number of insurers asking for details about their sales practices. The letter, dated Dec. 12, was signed by Lori A. Richards, director of the SEC's office of compliance inspections, and William R. McLucas, director of the division of enforcement.

Richards said her office conducts routine inspections of all entities, including insurance companies, that sell investment products, to make sure their ``sales practices are appropriate and the firms are adequately supervising the sale of these products.''

An annuity is an insurance company contract in which a client invests a lump sum and receives regular benefit payments over a period of years, usually after retirement. It is a popular way to defer taxes on income.

In a variable annuity, premium payments can be invested in a variety of stock, bond and money-market mutual funds, at the policyholder's direction.

Richards would not comment on whether the most recent probe is related to other investigations of insurance company sales practices, or what the letters had turned up so far.

Ken Vest, a spokesman for the American Council of Life Insurance, said the SEC sent out 14 letters and withdrew one, and that all remaining 13 recipients were responding to the SEC's request for information.

The request for information comes at a time when some of the nation's largest insurers have been fined for fraudulent sales practices.

Last July, Prudential Insurance Co. of America admitted to fraudulent sales pitches including so-called ``churning,'' or the replacement of one policy with another solely for the benefit of the insurance agent who earns a commission on the second sale. Prudential paid a $35 million fine and is negotiating in federal court on additional compensation to policyholders.

Prudential officials said the SEC had conducted a ``routine review last year'' of its sales practices without fining the company.

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