Skip to Content

Insurers and Underlying Funds Sprint to Finalize Delivery Procedures for Tailored Shareholder Reports
May 09, 2024

Variable contract issuers and underlying funds are charging toward the finish line to finalize procedures for delivering upcoming semiannual “tailored” shareholder reports. The reports in this new format must be concise (e.g., three-page “trifold” brochures) and provide just the essential information about a single portfolio (or class of a portfolio). More detailed information must be provided online, and the reports
themselves must be mailed (or emailed, if the contract owner consents).

Different procedural frameworks have emerged for delivering the tailored shareholder reports and fulfilling a series of website posting and other collateral requirements. Frameworks have differed depending on variables such as whether certain contracts have been “discontinued” or “Great-Wested” and how insurers and underlying funds have allocated their various relevant delivery and website posting responsibilities.

In January, the SEC staff issued FAQs on tailored shareholder reports, several of which are pertinent to variable contract issuers.

  • As noted above, detailed fund information that historically has appeared in shareholder reports must instead now be posted online. The SEC staff advised that such information could appear on either a variable contract issuer’s website or an underlying fund’s website, but noted some important practical implementation issues to consider.
  • The staff advised that, where a variable contract investor has allocated contract value to multiple underlying funds, the individual shareholder reports of each of these funds could be bound, stapled, or stitched together for transmission to the investor, subject to certain conditions.
  • The staff outlined several practices for effective email delivery of tailored shareholder reports. While the staff did not specifically address email procedures for variable contract issuers, this guidance should be equally applicable to variable contract issuers.

Hopefully, all insurers and underlying funds will be able to take a final “victory lap” after developing effective tailored shareholder report compliance procedures. Funds, and to the extent applicable, insurance companies, generally must implement the new disclosure, transmission, website posting, and related requirements with respect to shareholder reports for the period ending June 30, 2024, which will be transmitted by the end of August 2024.
Authored By
Image: W. Thomas Conner
W. Thomas Conner
Related Practices
Life, Annuity, and Retirement Solutions
Related Industries
Life, Annuity, and Retirement Solutions Securities & Investment Companies
©2024 Carlton Fields, P.A. Carlton Fields practices law in California through Carlton Fields, LLP. Carlton Fields publications should not be construed as legal advice on any specific facts or circumstances. The contents are intended for general information and educational purposes only, and should not be relied on as if it were advice about a particular fact situation. The distribution of this publication is not intended to create, and receipt of it does not constitute, an attorney-client relationship with Carlton Fields. This publication may not be quoted or referred to in any other publication or proceeding without the prior written consent of the firm, to be given or withheld at our discretion. To request reprint permission for any of our publications, please use our Contact Us form via the link below. The views set forth herein are the personal views of the author and do not necessarily reflect those of the firm. This site may contain hypertext links to information created and maintained by other entities. Carlton Fields does not control or guarantee the accuracy or completeness of this outside information, nor is the inclusion of a link to be intended as an endorsement of those outside sites.

Disclaimer

The information on this website is presented as a service for our clients and Internet users and is not intended to be legal advice, nor should you consider it as such. Although we welcome your inquiries, please keep in mind that merely contacting us will not establish an attorney-client relationship between us. Consequently, you should not convey any confidential information to us until a formal attorney-client relationship has been established. Please remember that electronic correspondence on the internet is not secure and that you should not include sensitive or confidential information in messages. With that in mind, we look forward to hearing from you.