The Securities and Exchange Commission has cleared the way for underwriters of variable annuities to try out simplified prospectuses, mirroring a move made last year for mutual fund companies.

In response to a request from the National Association for Variable Annuities, an industry trade group, the SEC on Tuesday approved a one-year trial of the simplified, or profile, prospectus.

The SEC will use the test to evaluate whether profile prospectuses should become permanent supplements to current prospectuses or perhaps even replace them as offering documents for variable annuities.

"These are complicated investments and the disclosure is often lengthy and complex," said Heidi Stam, associate director for investment management at the SEC. "We see this as an important step in identifying ways we can better communicate the features of this type of investment to average investors."

Variable annuities are tax-deferred investment contracts that also provide modest insurance benefits. Their returns fluctuate depending on the value of securities, often mutual funds, that make up their investment portfolios.

To participate in the trial, underwriters will have to conform to SEC guidelines that require the profile prospectus to include information on 11 key items, including investment options, expenses, tax treatment, withdrawal procedures, performance, and death benefit.

In addition, companies that try the profile will collect data on consumer reactions. The SEC is also considering performing its own focus- group testing, as it has for mutual funds, Ms. Stam said. Information from the tests would be used to evaluate whether to make the slimmed-down prospectuses standard issue.

"We have about a dozen companies that ... have stated their intention to use the profile and conduct the necessary research to assist the SEC with its determination of the usefulness of profile," said Mark J. Mackey, president of the variable annuity trade group.

Ideally, Mr. Mackey said, the association would like to see the shortened prospectus replace the standard one.

By describing the most important features of variable annuities plainly and concisely, a profile prospectus will help salespeople explain the product and ultimately boost sales, several executives said.

Banks in particular stand to benefit if the one-year experiment proves successful and the SEC approves general use of streamlined prospectuses for variable annuities.

"The complexity of the products and the way disclosure is required to be presented has limited banks' embracing variable annuities," said John A Graf, an executive vice president at Western National Corp., a leading annuity underwriter based in Houston,. "To the extent that you can make the product simpler in the eyes of the consumer, the banks will find it much easier to sell," he said.

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