RILA Lessons Learned: Closing the Books on the Initial N-4 Conversion Cycle

Overview

After the conclusion of the initial Form N-4 RILA conversion cycle, topics have emerged from issuers converted prior the May 1, 2026 required date. Drawing insights from variable product issuers who potentially may also offer RILAs, more than half of those polled in a recent webinar confirmed having a registered RILA, and nearly half of all RILA issuers have already transitioned to Form N-4. But the process hasn’t been without challenges. From navigating amended disclosure requirements, filing hurdles and confronting outdated EDGAR systems and fragmented data sources, early adopters have faced a complex and evolving landscape. This blog takes a closer look at the challenges, innovations, and takeaways from the inaugural cycle — and what it all means for those still considering their entry into the RILA market.

When evaluating the RILA market, we looked at variable product issuers as a benchmark for current and future activity. When questioning a group of webinar attendees, over 50% acknowledged they had a registered RILA, with just below 50% of issuers that offer a RILA having already converted to Form N-4. When those issuers who have converted to the new form were asked what challenges were encountered during the conversion, the answers were relatively balanced:

33% – transitioning to amended Form N-4
30% – navigating SEC filing issues
19% – meeting website hosting requirements
18% – addressing unexpected disclosure updates due to SEC comments

For the balance of issuers, approximately 58% stated they currently haven’t launched a RILA and don’t have a determined launch date.

Disclosure and Filing Issues

Among the issues encountered since RILA issuers were permitted to convert to Form N-4 on September 23, 2024, are:

Staff requests to spread risk disclosure more liberally across the prospectus than what was mandated by the form, including the following:
- Contract Adjustment related risk disclosure
  - Effect of contract adjustments on downside limits
  - Noting potential for 100% loss with MVAs on the cover page
  - Effect of periodic deductions on Contract Adjustments
  - Identifying transactions triggering contract adjustment on the cover page
- RILA related risk disclosures
  - Minimum limits on loss for each type of downside limit
  - Risks when only one option is guaranteed to be available
  - Noting loss limits can result in higher losses of multiple periods
  - Risks if substituted indices not substantially similar
- Other RILA related disclosures
  - Factors to consider in choosing among crediting strategies
  - Combination contracts with grandfathered discontinued variable contracts

Filing challenges due to the EDGAR system not being updated
- Form N-VPFS
- Form 24F-2
- Template Filings
- XBRL

Product Innovations and Possible Further Steps

The most recent update season also saw certain innovations in RILA products being brought to market.

One was a dual direction investment option that offered both an absolute value trigger and cap that is set above the trigger rate. Another innovation was offering an aggregate floor that limited losses across multiple crediting periods.

In the future, we hope the Commission and its staff will consider other actions to facilitate product innovation in this important space.

Examples include:

Relief to allow written communications without prospectus delivery
Allowing e-Delivery of Prospectuses
Amending FINRA Rule 2210 to allow hypothetical return disclosures
Amending Form N-6 for Registered Indexed Universal Life
Updates to EDGAR system to avoid filing errors experienced in 2025
Providing more flexibility in notifying investors of changes to terms in indexed investment options

Dealing with Disparate Sources of Annuity Data

A theme that continually arose is the concern of annuity leaders around the fragmented nature of annuity data, which is often scattered across different systems such as policy administration, CRM, and actuarial platforms. The data continued within differing systems creates significant challenges in achieving a unified and accurate view of annuitant information.

The data challenge intensifies when issuers attempt to enter new markets, such as the RILA space, due to RILAs representing distribution channels with unique complexities that differentiate them from traditional annuities. Although early entrants into the RILA market are showing promising results and attracting increased interest from other issuers, the path to entry is not without obstacles.

Issuers are attempting to tackle the difficulty of connecting their existing systems and adapting to the different standards and contractual nuances inherent to RILAs. The intricacies of these contracts require an adaptable data infrastructure, a challenge many current systems are not equipped to handle.

Toppan Merrill is ready to help

Toppan Merrill continues to carefully follow SEC regulatory changes. We have simple and straightforward platform solutions to help you manage the SEC requirements from end to end.

If you have questions about the rule changes, would like to discuss recent experiences or would like assistance, the experts at Toppan Merrill can help. We also offer a range of additional resources so filers have the information to meet their regulatory compliance needs. Contact us today!

Guy Stanzione - Director, SEC Compliance Services

Guy Stanzione provides deep insight on the Securities Act of 1933, the Investment Company Act of 1940 and SEC regulatory compliance, as well as investment company solutions for regulatory document preparation, filing and distribution including Tailored Shareholder Reports. Leveraging more than 40 years of financial services, shareholder communication, printing and compliance service expertise he is a vital resource for financial services professionals navigating the complexities and pace of SEC regulatory changes .

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