style of investing. Actively managed funds that follow the same
investment strategy can show different performance due to, among
other things, the ``skill'' of the manager of outperforming the
market (or any other benchmark). This skill is unobservable and
generally hard to measure, which makes comparisons across actively
managed funds difficult. In contrast, comparisons across index funds
that follow the same market index and that have passive investment
styles are based more on observable variables, such as fees, rather
than unobservable variables, such as managerial skill. In this
context, disclosure that is more salient with respect to these
observable variables may facilitate comparisons across index funds.
---------------------------------------------------------------------------

    The effect on competition between insurers could be limited,
however, to the extent variable contract investors continue to rely on
an agent to help them select and customize their variable contract(s)
and do not have access to broad comparisons of variable contracts
enabled by the Inline XBRL requirements at the time of sale or during
the free look period.\1124\ Agents generally only provide their
customers with a subset of the variable contracts available in the
general marketplace. Thus, while the product information in summary
prospectuses will facilitate comparison across products offered by the
agent, the effect will likely be limited to the agent's set of products
rather than to the broader market.
---------------------------------------------------------------------------

    \1124\ See IRI Fact Book, supra note 16, at 176.
---------------------------------------------------------------------------

    We recognize that any fixed costs of compliance with the new
requirements, including Inline XBRL requirements, could have a
relatively greater impact on small filers. However, the overall
magnitude of such costs, discussed in greater detail in Section V
below, and thus the magnitude of the associated competitive effects, is
expected to be modest.
    We also considered the potential impact of our position on
Alternative Disclosure Contracts on competition between insurers.
Above, we discussed the possibility that, because contracts that are
not Alternative Disclosure Contracts as of the effective date of the
final summary prospectus rules could not provide alternative
disclosures after such date, the Commission's position could cause
these insurers to experience future costs of disclosure obligations
that they may not have anticipated. The Commission's position thus may
place at a competitive advantage those insurers with a greater
proportion of contracts that may operate under the Commission
position.\1125\ We note, however, that Alternative Disclosure Contracts
are no longer offered for sale to the public and, therefore, do not
compete for investment by new investors. The competitive effect will be
limited to additional investment by existing investors in existing
Alternative Disclosure Contracts.
---------------------------------------------------------------------------

    \1125\ One commenter stated that our position on Alternative
Disclosure Contracts would create an advantage to insurance
companies with large existing bases of variable contract investors.
See Better Markets Comment Letter.
---------------------------------------------------------------------------

    Commenters stated that the Alternative Disclosure Contract
framework has enabled insurers to continually innovate and introduce
new products for investors.\1126\ One commenter indicated that in the
absence of the Alternative Disclosure Contract framework, insurers
would be less likely to innovate and offer new products which could, in
turn, limit investor choice and dampen competition among
insurers.\1127\ As discussed above, however, we generally believe that
all variable contract issuers should provide investors the same
information and be subject to the same liability standards.\1128\
---------------------------------------------------------------------------

    \1126\ See CAI Comment Letter; Brighthouse Comment Letter;
Transamerica Comment Letter.
    \1127\ See CAI Comment Letter.
    \1128\ See Section II.E.3.a.
---------------------------------------------------------------------------

    Finally, four commenters stated that our requirement to base
certain fee calculations in the Key Information Table on an assumed
account balance of $100,000 would put insurers offering variable
contracts at a competitive disadvantage to mutual funds which are
required to assume a $10,000 balance.\1129\ As we note above, $100,000
more closely approximates the current average value of a variable
annuity, and therefore we continue to believe that figure is more
likely to result in cost projections that align with actual investor
expectations and experience.\1130\
---------------------------------------------------------------------------

    \1129\ See supra note 132.
    \1130\ See supra note 133. We note also that while variable
contracts and mutual funds share certain characteristics, variable
contracts provide insurance benefits that mutual funds do not. See,
e.g., ``How is a Variable Annuity Different from a Mutual Fund?''
available at https://irionline.org/consumer-articles/how-is-a-variable-annuity-different-from-a-mutual-fund-. The insurance
benefits of variable contracts may limit competition between
variable contracts and mutual funds. The extent of competition
between insurers and mutual funds depends on the extent to which
investors view variable products and mutual funds as substitutes for
one another, even though variable contracts provide insurance
benefits that mutual funds do not.
---------------------------------------------------------------------------

    Capital Formation. As discussed in connection with the potential
effects of the rule on competition, if the rule increases the
efficiency of exchange in the variable contracts market, then we may
observe a change in investment in variable contracts. Greater
investment in variable contracts could lead to increased demand for
securities held by the portfolio companies that underlie the variable
contracts (or held directly by the separate account in the case of a
Form N-3 registrant).\1131\ The increased demand for securities could,
in turn, facilitate capital formation.\1132\ Diminished investment,
however, could lead to reduced demand for such securities. We expect
either of these effects to be small. We further note that to the extent
increased or decreased investment in variable contracts reflects
substitution from other investment vehicles, the effect on capital
formation will be attenuated.
---------------------------------------------------------------------------

    \1131\ This would be true to the extent funds invested in
variable contracts would not otherwise have been invested in
securities.
    \1132\ One commenter stated that summary disclosure could
facilitate capital formation by enabling consumers to understand the
role of variable life insurance and variable annuities in financial
and retirement security. See ACLI Comment Letter.
---------------------------------------------------------------------------

    The Inline XBRL requirements could increase the efficiency of
capital formation to the extent that making disclosures available in a
structured format reduces some of the information barriers that make it
costly for variable contract registrants to find new investors. Smaller
registrants in particular may benefit more from enhanced exposure to
investors. If reporting the disclosures in a structured format
increases the availability, or reduces the cost of collecting and
analyzing, key information about variable contracts, smaller variable
contract registrants may benefit from improved coverage by third-party
information providers and data aggregators.
    To the extent that the rule reduces costs for some variable
contract registrants, we expect reduced costs to increase the portion
of investor money that is retained as the investor's contract value,
rather than used to cover expenses, resulting, over time, in a net
positive effect on the level of capital invested through variable
contracts. Furthermore, to the extent that reductions in expenses have
a positive effect on the performance of variable

contracts and attract new investors or additional capital from existing
investors, the rule may result in greater capital formation. We expect
this effect to be small.

E. Reasonable Alternatives

1. Mandating Summary Prospectuses
    New rule 498A will provide registrants the option to use the
summary prospectus regime the rule establishes. Alternatively, we
considered mandating the use of summary prospectuses.\1133\ We expect
that use of summary prospectuses will provide net benefits to investors
because they are shorter, simpler, and designed to make salient the
most important variable contract terms. A mandatory regime would ensure
that those benefits are available to all investors, not just those who
have invested in variable contracts offered by insurers that would
elect to deliver summary prospectuses.\1134\
---------------------------------------------------------------------------

    \1133\ See supra note 42
    \1134\ As discussed above, we understand that some investors who
prefer statutory prospectuses may experience costs if they are given
summary prospectuses and need to request statutory prospectuses.
Under a mandatory regime, this cost would be borne by all investors
who prefer statutory prospectuses, not just those who have invested
in variable contracts offered by insurers that would elect to
deliver summary prospectuses. Regardless, as noted above, we believe
the number of investors who would prefer statutory prospectuses, as
well as the number of insurers that would not elect to deliver
summary prospectuses, to be a minority.
---------------------------------------------------------------------------

    We believe that insurers will only choose to rely on the optional
summary prospectus regime where they expect that the benefits will
outweigh the costs. While we believe that reliance on the summary
prospectus regime will yield cost savings for insurers, we acknowledge
that these cost savings will vary across insurers and there may be
insurers that do not expect benefits in excess of the expected costs of
relying on summary prospectuses. Registrants will likely assess the
relative benefit of using a summary prospectus based on the types of
products they offer and the length of their current prospectuses--as
well as the benefit of more concise disclosure to investors--when
evaluating whether to opt into the new layered disclosure regime.
Imposing a mandatory summary prospectus regime would entail imposing
net costs on these insurers.
    Based on our analysis of cost savings and other efficiencies above,
our expectation is that insurers offering variable contracts to new
investors will choose to use summary prospectuses. We believe that
making reliance on rule 498A optional will give insurers the
opportunity to gradually transition to the new summary prospectus
regime while minimizing disruption to their current registration and
business processes. Given our expectation that most insurers offering
variable contracts to new investors will chose to use summary
prospectuses, and the anticipated cost-savings and other efficiencies
available to insurers that rely on the rule, we do not at this time
believe a mandatory approach is necessary to achieve the goals of the
variable contract summary prospectus regime.
2. Summary Prospectuses Delivered With Statutory Prospectuses
    New rule 498A requires the variable contract statutory prospectus,
as well as the contract's SAI, to be publicly accessible, free of
charge, at a website address specified on the cover of the summary
prospectus. As we discuss above, investors who wish to use statutory
prospectuses as well as summary prospectuses will bear an additional
burden of accessing statutory prospectuses online. Alternatively, the
rule could require insurers to provide both summary and statutory
prospectuses together in paper or, if the investor has elected to
receive the document electronically, in electronic form. This
alternative would offer the benefit, for those investors choosing to
receive the documents in paper, that any investor wishing to use both
summary and statutory prospectuses in his or her decision making would
not be required to bear the additional burden of accessing statutory
prospectuses online.
    While providing both summary and statutory prospectuses together
would eliminate the necessity of those investors who wish to use both
summary and statutory prospectuses having to bear the burden of
accessing statutory prospectuses online, we have decided against this
alternative for two reasons. First, rather than reducing printing and
mailing costs, this alternative would create additional printing and
mailing costs. We believe that the increased printing and mailing costs
would cause few insurers to choose to provide both summary and
statutory prospectuses. Thus, de facto, the potential benefits of
layered disclosure would likely not be available to most investors.
    Second, summary prospectuses will provide investors with key
information relating to the contract's terms, benefits, and risks in a
concise and more reader-friendly document. We are concerned that
variable contract investors may not read or understand the disclosures
they currently receive. If investors were to receive both summary and
statutory prospectuses, the increase in materials received could lead
to potentially fewer investors reading either of the documents.\1135\
---------------------------------------------------------------------------

    \1135\ This effect is mitigated to the extent that investors
want to receive the additional disclosure. For example, those
investors who currently read statutory prospectuses in consideration
of their investment decisions may find the incremental burden
associated with receiving the additional disclosure in the form of
summary prospectuses to be small.
---------------------------------------------------------------------------

3. Contract-Specific Updating Summary Prospectuses
    The adopted variable contract summary prospectus regime requires
that the initial summary prospectus only describe a single contract
that the registrant currently offers for sale, but permits an updating
summary prospectus to describe more than one contract covered in the
statutory prospectus to which the updating summary prospectus relates.
Commenters supported the optionality to allow the updating summary
prospectus to include multiple contracts under the statutory prospectus
to which the summary prospectus relates.\1136\ As an alternative, we
considered requiring that the updating summary prospectus describe only
a single contract.
---------------------------------------------------------------------------

    \1136\ See supra note 344.
---------------------------------------------------------------------------

    An updating summary prospectus that describes solely the contract
held by an investor could be easier for that investor to consume than
an updating summary prospectus that describes more than one contract,
and therefore could be more beneficial to investors than the final
rule's approach. The magnitude of this increase in benefits depends on
the extent to which information about multiple contracts confuses
investors or causes investors not to read the information, which, in
turn, likely depends on the number of changes to contracts and the
number of different contracts that would be presented in the updating
summary prospectus.
    We acknowledge that this alternative would permit investors to
easily focus on key information on a single contract. However, we
believe this increase in benefits would be limited because, based on
our current understanding of variable contracts, there are a limited
number of changes to contracts in any given year, and many of those
changes (such as changes to the available portfolio companies or the
addition of new optional benefits) typically apply to similar contracts
in the same prospectus. Accordingly, although the section of the
updating prospectus that describes changes to the contracts will

cover multiple contracts, the number of changes concerning any
individual contract is expected to be relatively brief, thus minimizing
the amount of inapplicable information the investor would read.
    We do note that under this alternative, an insurer could limit the
costs associated with printing and mailing by only delivering those
updating summary prospectuses to an investor that holds the contracts
they describe. However, such a process would likely entail systems
upgrades and changes to back-office operations needed to tailor
mailings on an investor-by-investor basis.\1137\
---------------------------------------------------------------------------

    \1137\ We understand that the process involved in drafting and
printing an updating summary prospectus that only describes the
changes made to a single contract (and then distributing a tailored
updating summary prospectus to each investor based on their
particular contract) is quite complex. In contrast, the same process
with respect to the initial summary prospectus is relatively
straightforward since the document, which would only describe the
currently available contract, would be provided all new investors.
---------------------------------------------------------------------------

4. Do Not Provide Updating Summary Prospectuses
    We considered two closely related alternative approaches to the
final summary prospectus regime in which only initial contract
purchasers would receive a summary prospectus, and afterwards,
investors who make additional purchase payments or who reallocate
contract value would either (1) receive no updating summary prospectus
or (2) receive only a notice that the statutory prospectus is available
online. Such an alternative would likely yield larger cost savings for
insurers because insurers would not be required to produce, print, and
mail updating summary prospectuses and would instead incur only costs
associated with providing the initial summary prospectus when an
investor first purchases the contract or reallocates contract value.
    However, under either of these alternatives, investors would not
benefit from the ongoing layered disclosure provided by the updating
summary prospectus. As discussed above, the Commission believes that
the updating summary prospectus's brief description of any important
changes to the contract that occurred within the prior year will allow
investors to better focus their attention on new or updated information
relating to the contract. Relatedly, the updating summary prospectus
includes certain information required in the initial summary prospectus
that we consider most relevant to investors when considering additional
investment decisions, and investors would not have access to this
concise presentation of key information under either alternative.
5. Inline XBRL
    The amendments require variable contract registrants to file
certain information from statutory prospectuses with the Commission in
Inline XBRL. As an alternative, we considered allowing, but not
requiring, variable contract registrants to file the information in
Inline XBRL. Compared to the amendments, a fully voluntary Inline XBRL
program would lower costs for those filers, particularly filers that do
not already file information in Inline XBRL.\1138\ However, a voluntary
program would reduce the usability of the required data. If information
was not submitted by the registrant in a structured, machine-readable
format, investors and other data users who wish to instantly analyze,
aggregate, and compare the data would be required to incur the costs of
paying a third-party provider to manually rekey the data, review the
data for data quality problems during the duplication process, and
disseminate the data to the users. Alternatively, investors or data
users unwilling to pay a third-party provider would incur the time to
conduct that process themselves. In either scenario, the data would not
be usable in as timely a manner as if it were made machine-readable. In
addition, under a voluntary program, data that is not submitted in
Inline XBRL would not be validated in EDGAR. Validations are technical
restrictions that test for completeness of the data and that the data
is appropriately formatted. Validations enable the Commission to ensure
consistency of the data so that the disclosures can be immediately used
for aggregation, comparison, and analysis. Without validations, data
would likely be submitted inconsistently, thus decreasing the overall
data quality of the data submitted. Poor data quality reduces any data
user's ability to meaningfully analyze, aggregate, and compare data.
---------------------------------------------------------------------------

    \1138\ In expressing support for the availability of hardship
exemptions for Inline XBRL tagging, one commenter stated,
``Generally speaking, it could be helpful to conceive of a
transition from voluntary to mandated use, especially with respect
to smaller organizations for which implementation could potentially
be unduly burdensome.'' See Chemas Comment Letter.
---------------------------------------------------------------------------

    Under the amendments, filing the information in Inline XBRL will be
required for the Key Information Table, Fee Table, Principal Risks of
Investing in the Contract, Standard Death Benefits (for Form N-6),
Benefits Available Under the Contract (for Forms N-3 and N-4), Other
Benefits Available Under the Contract (for Form N-6), Portfolio
Companies Available Under the Contract (for Forms N-4 and N-6),
Investment Options Available Under the Contract (for Form N-3), and
Additional Information about Investment Options Available Under the
Contract (for Form N-3). The information required to be filed in Inline
XBRL largely parallels the information that is required of mutual funds
and ETFs, and we believe it is likely to be of greatest utility for
investors and others that seek to use the information in a structured
format to assist with decisions about variable products.
    As another alternative, we considered requiring variable contract
registrants to submit all, or a larger subset, of the information from
the statutory prospectus, rather than only the information covered by
the amendments, in Inline XBRL. Compared to the amendments, this
alternative would improve the timeliness and usability of the required
disclosures, but potentially impose additional costs on registrants. To
the extent that the other required disclosures in the affected forms
contain information that is more specific to individual registrants
without any comparability or aggregation utility, the benefits of
having those additional required disclosures in a structured format may
be lower than the more limited subset of disclosures required to be
filed in Inline XBRL under the amendments.
    Under the proposal, the Inline XBRL requirement would have applied
to all variable contracts. As discussed above, under the amendments,
the Inline XBRL requirement will not apply to contracts that are not
being sold to new investors.\1139\ One commenter who opposed the
requirement to tag such contracts stated, ``Inline XBRL is primarily
designed to help investors and other market participants compare
investments and decide which, if any, to buy. Applying the Inline XBRL
requirements to insurance contracts no longer being sold would impose
unnecessary costs and burdens on insurers without providing any benefit
to investors.'' \1140\ Other commenters emphasized the need for all
filers to structure disclosures in the Inline XBRL format, and noted
that comparability of information would be impaired if only some
products reported data in

structured format.\1141\ We agree that applying the Inline XBRL
requirements to contracts no longer being sold to new investors could
provide some additional benefit to investors by expanding the overall
comparability of variable contracts, however as discussed below, we
believe this additional benefit would be limited and would not justify
the additional tagging costs to filers because such contracts do not
represent potential investment targets for new investors.
---------------------------------------------------------------------------

    \1139\ See supra Section II.D.
    \1140\ See CAI Comment Letter.
    \1141\ See XBRL US Comment Letter; Better Markets Comment
Letter.
---------------------------------------------------------------------------

    Requiring filers to structure contracts that are not being sold to
new investors on an ongoing basis would impose additional costs on
filers each year, although we expect such costs would be limited. As
discussed in further detail below, a significant portion of the costs
to filers associated with the tagging requirement will be incurred the
first time a registration statement for the contract is filed.\1142\
Furthermore, prospectuses for contracts that become discontinued after
the effective date of the amendments are unlikely to materially change
from year to year.
---------------------------------------------------------------------------

    \1142\ See infra Section V.D.
---------------------------------------------------------------------------

    Existing investors in a contract that is not being sold to new
investors often consider various investment decisions that would likely
derive some benefit from analysis facilitated by Inline XBRL tagging.
For example, such investors may decide to make additional investments
in the contract, purchase different optional benefits available under
the contract, or reallocate value among the contract's investment
options. In addition, as discussed above, investors in a contract that
is not being sold to new investors may consider whether to accept a
buyout offer from their insurer or exchange their current contract for
a new contract with different optional benefits.\1143\ In such
instances, having their contract's disclosures available in structured
format could benefit investors by simplifying the comparison of their
current contract to other available contracts. However, these investors
would likely already be familiar with the disclosures in their
contracts, and would only need to compare those disclosures to the
disclosures in other currently offered contracts, which will be tagged
in Inline XBRL and therefore suitable for instant comparison and
analysis. Thus, the benefit to investors of tagging disclosures in
contracts that are not being offered to new investors is significantly
lower than the benefit to investors of tagging contracts that are being
offered to new investors. In addition, while Inline XBRL does
facilitate comparisons across reporting periods, investors would derive
a related benefit from the Inline XBRL tagging of contracts that are
not being sold to new investors only to the extent they find historical
information of what was formerly offered to be useful in their review
of currently offered products.
---------------------------------------------------------------------------

    \1143\ See supra Section II.D.
---------------------------------------------------------------------------

    The proposed amendments would have provided filers with an 18-month
transition period after the effective date of the amendments to give
registrants sufficient time to update their prospectuses and to prepare
new registration statements that comply with the amendments, including
with the Inline XBRL tagging requirement. As discussed in Section II.G
above, in a departure from the proposal, the new rule includes an
additional 12-month transition period for compliance with the Inline
XBRL tagging requirement. Compared to the proposed amendments, this
additional transition period will permit filers to defer Inline XBRL
compliance costs and may ease the transition for filers, particularly
smaller filers and filers that encounter challenges in acquiring
expertise and software solutions needed to prepare Inline XBRL
filings.\1144\ However, the longer transition period will also defer
the benefits of making the information available in a structured format
to investors in variable contracts.
---------------------------------------------------------------------------

    \1144\ As noted in Section IV.C.3 above, some evidence suggests
that, for operating companies, the costs of tagging in XBRL format
have decreased over time. See supra note 1107. To the extent this
trend applies to Inline XBRL tagging of variable contract
registration statements, providing an additional 12-month transition
period may impose lower initial tagging costs compared to the
proposal.
---------------------------------------------------------------------------

    As another alternative, we considered requiring the disclosures to
be filed in another structured format, such as the XBRL or XML format.
Compared to the Inline XBRL requirement, the use of the XBRL format
entails complete duplication of the data, which can adversely affect
the quality and usability of the structured data as well as the
efficiency and cost of preparation and review of the structured data.
Compared to the requirement to use Inline XBRL, the alternative to
requiring the use of XML could have resulted in lower costs for filers.
However, compared to the amendments, XML would have provided less
flexibility in tagging complex information as well as less extensive
data quality validation capabilities. In addition, neither the XBRL nor
XML options are human-readable. As a result, investors and other data
users would not have the benefits of having a document that is both
machine-readable and human-readable, or the benefits of using an inline
viewer when accessing the filing, such as enhanced search features,
filtering capabilities, and built-in definitional references. Investors
and other data users would have needed to access two different
documents to view and analyze the same data. Filers would also have
diminished data quality benefits. Because Inline XBRL embeds structured
data directly into an HTML document, filers will not need to review a
separate structured data document to identify and correct data quality
errors. Moreover, by using an Inline XBRL viewer, filers can more
easily identify discrepancies in their data before filing.
6. Alternatives to Form N-3, N-4, and N-6 Amendments
    The Commission is adopting amendments to Forms N-3, N-4, and N-6.
Collectively, these amendments are meant to update and enhance the
disclosures to investors in variable annuity contracts, and to
implement the summary prospectus regime.
    We considered adopting a subset of the amendments to the
registration forms. Fewer amendments to the registration forms could be
less costly for registrants, because registrants would be required to
make fewer changes to their disclosure. However, the adopted form
amendments also simplify certain current disclosure requirements, and
so the net economic effects of proposing only a subset of the
amendments depends on the particular subset of amendments. As described
in Section II.C above, we believe that the form amendments that we have
adopted promote investor understanding of variable contracts by
presenting information in a clear manner and by reflecting industry
developments. Requiring only a subset of these amendments could result
in less investor understanding relative to the understanding resulting
from the adopted amendments.
    Additionally, the Commission is adopting a new General Instruction
in each of Forms N-3, N-4, and N-6 to encourage the use of disclosure
effectiveness principles in variable contract disclosure. Specifically,
General Instruction C.3.(c) in each form encourages registrants to use,
as appropriate, question-and-answer presentations, tables, side-by-side
comparisons, captions, bullet points, numeric examples, illustrations
or similar presentation methods.\1145\ We considered mandating the use
of these

presentation methods. Investors might gain a clearer understanding of
the features and risks of variable contracts as a result. We are
concerned, however, that mandating a particular presentation method
(besides the presentation methods that the form amendments specifically
require) could provide less flexibility to registrants to describe
variable contracts in the manner they think is most appropriate.
Moreover, there could be a risk that mandating the use of certain
presentation methods could unintentionally obscure, or not clearly
explain, certain variable contract features and risks.
---------------------------------------------------------------------------

    \1145\ See supra note 597.
---------------------------------------------------------------------------

    Also, we are adopting a requirement that the Key Information Table
include cross-references to the location in the statutory prospectus
where the subject matter is described in greater detail (and that
cross-references in electronic versions of the summary prospectus and/
or statutory prospectus should link directly to the location in the
statutory prospectus where the subject matter is discussed in more
detail, or should provide a means of facilitating access to that
information through equivalent methods or technologies). As an
alternative to this instruction, we considered requiring that, where a
topic is summarized in the statutory prospectus and is discussed in
more detail elsewhere in the statutory prospectus, the summarized topic
must include a cross-reference (and a hyperlink in electronic document
versions) to the location in the statutory prospectus where the topic
is discussed in more detail. This alternative requirement would make
use of the layered disclosure approach that underlies the rulemaking
proposal in a manner that could make information in the prospectus more
accessible to investors and leverage technology in a way that could
further assist investors in navigating the prospectus. We believe,
however, that adding additional cross-references and hyperlinks would
increase costs for insurers and could lead to greater uncertainty among
registrants about where cross-references and hyperlinks are required
(i.e., whether a topic is summarized in one part of the prospectus and
then discussed in more detail later could be viewed as a subjective
determination). Further, the benefits of cross-references and
hyperlinks might be limited, given that rule 498A will require
electronic versions of the statutory prospectus to include a table of
contents that would allow the reader to move directly between it and
the related sections of the document.
7. Requiring All Variable Contracts (Including Eligible Contracts) To
Prepare Updated Registration Statements and Deliver Statutory or
Summary Prospectuses
    Instead of permitting Eligible Contracts to operate under the
Commission position, we considered requiring issuers of all contracts
to prepare updated registration statements and comply with either the
current standard prospectus delivery requirements or the optional
summary prospectus regime. In this scenario, investors in Eligible
Contracts would receive the statutory prospectus or the optional
updating summary prospectuses, while continuing to have access (either
upon request or online, under the summary prospectus regime) to
financial statements. As explained in detail above, the optional
summary prospectus regime, if relied on, provides significant
additional benefits for investors in terms of facilitating the review
and understanding of available disclosures.\1146\ At the same time, the
optional summary prospectus regime also permits insurers to satisfy
delivery obligations for the underlying company prospectuses by making
those documents available online, which could create a burden for
investors who prefer to use those prospectuses when making allocation
decisions and who would have been sent those documents as part of the
Alternative Disclosures.
---------------------------------------------------------------------------

    \1146\ See supra Section IV.C.1.a.i.(a).
---------------------------------------------------------------------------

    With respect to the impact on insurers, under this alternative,
issuers of Eligible Contracts could incur significant costs to update
their registration statements under the new form requirements, most of
which have not been updated for many years.\1147\ These costs could
vary, including based on the period of time since the insurer had last
updated the relevant registration statement. In addition, insurers
would bear the ongoing costs associated with maintaining an effective
registration statement and sending investors documents under the
current standard prospectus delivery requirements or the optional
summary prospectus regime. We expect these costs would exceed the costs
associated with providing investors with the Alternative Disclosures or
modernized alternative disclosures particularly when combined with
electronic delivery of underlying portfolio company prospectuses.
---------------------------------------------------------------------------

    \1147\ See supra Section II.E.2.
---------------------------------------------------------------------------

    On balance, given the burdens associated with preparing an updated
registration statement and compliance with either standard prospectus
delivery requirements or the optional summary prospectus regime,
Eligible Contracts may operate in the manner discussed above.\1148\
---------------------------------------------------------------------------

    \1148\ See supra Section II.E.
---------------------------------------------------------------------------

8. Alternative Approaches to Discontinued Contracts
    The Commission is declining to extend its position to contracts
that are not Eligible Contracts. For Eligible Contracts, the Commission
position will allow insurers to choose whether to provide Alternative
Disclosures or modernized alternative disclosures.\1149\
---------------------------------------------------------------------------

    \1149\ See supra Section II.E.3. Alternatively, issuers of
currently discontinued contracts could choose to begin using the
summary prospectus framework.
---------------------------------------------------------------------------

    We considered and received comment on two alternative approaches;
each alternative approach could have been implemented only on a going
forward basis or for all contracts, including Eligible Contracts.\1150\
For Method 1, under which each approach would be applied only on a
going forward basis for contracts that become discontinued in the
future, we analyze the costs and benefits of each approach relative to
the adopted summary prospectus framework. For Method 2, under which
each approach would also be applied to Eligible Contracts, we analyze
the costs and benefits of each approach relative to the options under
Commission position. In addition to these economic impacts to existing
contracts, the costs and benefits of these approaches could also affect
the development of new variable contracts in the future. For example,
to the extent that an approach represents additional costs/cost savings
associated with a variable contract relative to the adopted rule, these
alternative approaches could result in higher/lower fees and charges
for future variable contracts. Similarly, these relative costs and
benefits may affect insurers' willingness to develop and offer new
variable products.
---------------------------------------------------------------------------

    \1150\ See supra note 939.
---------------------------------------------------------------------------

    For the reasons described above, the Commission is declining to
adopt either alternative and believes that it will benefit from further
study and data regarding the potential cost savings and other burden
reductions under Approach 2.\1151\ We welcome input from the public as
we undertake this further study.
---------------------------------------------------------------------------

    \1151\ See supra Section II.E.4.
---------------------------------------------------------------------------

a. Approach 1
    Approach 1 would codify existing practices under the Staff Letters
with

certain modifications.\1152\ The Commission could have implemented
Approach 1 only on a going forward basis (Method 1) or for all
contracts, including Eligible Contracts (Method 2).
---------------------------------------------------------------------------

    \1152\ See Proposing Release, supra note 6, at Section II.C.
---------------------------------------------------------------------------

i. Method 1
    New rule 498A and Approach 1 would require generally the same
information to be delivered to investors. For example, Approach 1 would
require insurers of discontinued contracts to deliver an annual notice
to investors that contains information substantially similar to that
included in an updating summary prospectus under 498A. In addition,
under both frameworks, portfolio company prospectuses and shareholder
reports would be delivered to all investors but insurers could satisfy
portfolio company prospectus delivery requirements by making the
portfolio company prospectuses available online and delivering them to
investors upon request. As a result, we do not believe that Approach 1
would have a substantial effect on the costs incurred by insurers
associated with preparing and delivering disclosures to investors in
contracts that become discontinued in the future.
    The summary prospectus framework is a layered disclosure regime,
however, with a contract's current statutory prospectus (and certain
other information) available online and delivered upon request. This
additional information would not be available to investors under
Approach 1. Unlike the summary prospectus framework, Approach 1 would
also allow issuers of certain contracts that become discontinued in the
future to cease maintaining an updated registration statement.\1153\ As
a result, investors also would not have access to the more detailed
information that would be included in an updated registration statement
under the summary prospectus framework but not in the materials
delivered to investors or available upon request under Approach 1.
Under Approach 1 issuers of certain contracts that become discontinued
in the future would face lower costs relative to the summary prospectus
framework because they would not be required to maintain an updated
registration statement for the duration of the contract.
---------------------------------------------------------------------------

    \1153\ Id.
---------------------------------------------------------------------------

    As a further consequence, under Approach 1 the liability provisions
available under the federal securities laws would not apply to the same
extent as under the current variable contract prospectus delivery
regime and under the summary prospectus regime for registrants that
choose to rely on rule 498A. The loss of these liability protections
represents a potential cost to investors in contracts that may become
discontinued in the future.
ii. Method 2
    The Commission could also choose to apply Approach 1 not only to
future discontinued contracts but to all contracts, including Eligible
Contracts. Under the Commission position, insurers of Eligible
Contracts may choose whether to provide Alternative Disclosures or
modernized alternative disclosures. Issuers of Eligible Contracts who
elect to utilize modernized alternative disclosures may provide
investors a notice containing information comparable to that in an
updating summary prospectus and post the portfolio company
prospectuses, statutory prospectus, SAI, and shareholder reports online
in lieu of mailing these materials to investors. This is similar to
Approach 1 and therefore, where insurers elect to utilize modernized
alternative disclosures, we do not believe that investors or insurers
in those contracts would realize additional costs or benefits
associated with preparing and delivering disclosures under Approach 1.
    In contrast, issuers of Eligible Contracts who elect to provide
Alternative Disclosures under the Commission position would face
additional costs under Approach 1 associated with providing an annual
notice to investors. This cost may be mitigated by savings on printing
and mailing costs resulting from Approach 1's option to provide
portfolio company prospectuses and updated financial statements by
posting them on a website. However, investors in these contracts would
benefit by receiving the additional information included in the annual
notice they would be provided under Approach 1 but would not receive as
part of the Alternative Disclosures.
b. Approach 2
    Approach 2 would require that insurers maintain an updated
registration statement, but would allow financial statements to be
forward incorporated by reference into the registration
statement.\1154\ The Commission could have implemented Approach 2 only
on a going forward basis (Method 1) or for all contracts, including
Eligible Contracts (Method 2).
---------------------------------------------------------------------------

    \1154\ See Proposing Release, supra note 6, at Section II.C.
---------------------------------------------------------------------------

i. Method 1
    Under Approach 2, the documents insurers would prepare and deliver
to investors are similar to those that are prepared and delivered in
the summary prospectus framework. As a result, we do not believe that
Approach 2 would have a substantial effect on the costs incurred by
insurers associated with preparing and delivering disclosures to
investors in contracts that become discontinued in the future. Like the
summary prospectus framework, Approach 2 would require issuers of
discontinued contracts to maintain a current registration statement and
to make the statutory prospectus and SAI available online. However,
Approach 2 would only require insurers to file post-effective
amendments to update their registration statements when there are
material changes to the offering, and would allow forward incorporation
by reference of updated financial statements in the registration
statement. This approach could reduce costs for issuers of future
discontinued contracts to the extent that it reduced the number of
post-effective amendments compared to the summary prospectus framework.
    For investors in contracts that may become discontinued in the
future, the disclosures that would be delivered to them under Approach
2 are similar to those they will receive under the adopted summary
prospectus framework. Further, because the summary prospectus framework
and Approach 2 would both require insurers to maintain an updated
registration statement for the life of the contract, investors in
future discontinued contracts under both frameworks would have access
to the more detailed information included in the updated registration
statement.
ii. Method 2
    The Commission could also choose to apply Approach 2 not only to
future discontinued contracts but to all contracts, including Eligible
Contracts. If the Commission chose to apply Approach 2 to all
contracts, insurers issuing Eligible Contracts would likely face
additional costs relative to the Commission position. Issuers of
Eligible Contracts who choose to provide modernized alternative
disclosures under the Commission position would face similar costs
associated with preparing and delivering disclosures to investors under
Approach 2, but these insurers would incur an additional cost to bring
their registration statement up to date. Insurers who choose instead to

provide Alternative Disclosures under the Commission position would
similarly incur costs under Approach 2 to bring their registration
statement up to date, as well as the additional cost of providing the
notice document. However, Approach 2's option to post portfolio company
statements and updated financial statements on a website would likely
mitigate these additional costs to insurers that would otherwise opt to
provide Alternative Disclosures under the Commission position.
    Under Approach 2, investors in all Eligible Contracts would benefit
from the liability protections of the federal securities laws, which
they would not receive under either option under the Commission
position. Investors who would receive Alternative Disclosures under the
Commission position would further benefit from the disclosures provided
in the annual notice they would receive under Approach 2.

V. Paperwork Reduction Act

    New rule 498A will result in new ``collection of information''
requirements within the meaning of the Paperwork Reduction Act of 1995
(``PRA'').\1155\ In addition, the new rule and other amendments will
impact the collections of information under Form N-3, Form N-4, Form N-
6, and Mutual Fund Interactive Data (which will be retitled as
``Investment Company Interactive Data'') within the meaning of the
PRA.\1156\
---------------------------------------------------------------------------

    \1155\ 44 U.S.C. 3501-3520.
    \1156\ We recently issued a release that, among other things,
proposed to retitle the ``Mutual Fund Interactive Data'' information
collection as ``Investment Company Interactive Data.'' See Closed-
End Offering Reform Release, supra note 18.
---------------------------------------------------------------------------

    The titles for the existing collections of information are: (1)
``Form N-3, Registration Statement under the Securities and Investment
Co. Acts for Insurance Co. Separate Accounts Issuing Variable Annuity
Contracts'' (OMB Control No. 3235-0316); (2) ``Form N-4, Registration
Statement under the Securities and Investment Co. Acts for Insurance
Co. Separate Accounts Issuing Variable Annuity Contracts'' (OMB Control
No. 3235-0318); (3) ``Form N-6 under the Investment Company Act of 1940
and the Securities Act of 1933, Registration Statement of Variable Life
Insurance Separate Accounts Registered as Unit Investment Trusts'' (OMB
Control No. 3235-0503); and ``Mutual Fund Interactive Data'' (OMB
Control No. 3235-0642) (re-titled as ``Investment Company Interactive
Data''). The title for the new collection of information under rule
498A is ``Summary Prospectus for Variable Annuity and Variable Life
Insurance Contracts.'' \1157\ The Commission is submitting these
collections of information to the Office of Management and Budget
(``OMB'') for review in accordance with 44 U.S.C. 3507(d) and 5 CFR
1320.11. An agency may not conduct or sponsor, and a person is not
required to respond to, a collection of information unless it displays
a currently valid control number.
---------------------------------------------------------------------------

    \1157\ As discussed above, we are adopting minor revisions to
Form N-14. See supra note 587 and accompanying text. However, such
changes do not impact the form's existing collection of information
(titled ``Form N-14, Registration Statement under the Securities Act
of 1933'' (OMB Control No. 3235-0337)).
---------------------------------------------------------------------------

    We published notice soliciting comments on the collection of
information requirements in the Proposing Release and submitted the
proposed collections of information to OMB for review in accordance
with 44 U.S.C. 3507(d) and 5 CFR 1320.11. We received two comments that
discussed our estimates of burdens and costs associated with certain
collection of information requirements under the proposal.\1158\ We
address these comments below, along with a discussion generally of the
collection of information burdens and costs associated with new rule
498A and where applicable, the existing collections of information.
---------------------------------------------------------------------------

    \1158\ See Broadridge Comment Letter; Memorandum from the
Division of Investment Management re: May 29, 2019 meeting with
representatives of the Committee of Annuity Insurers (including
attachments), available at https://www.sec.gov/comments/s7-23-18/s72318-5604687-185508.pdf. (``CAI Presentation Materials'').
---------------------------------------------------------------------------

    The amendments to Forms N-3, N-4, and N-6 update and enhance the
required disclosures provided to variable contract investors. For
example, the amendments require registrants to summarize certain key
information about the contract at the beginning of the prospectus, as
well as update the presentation of fee information and require
additional information about standard and optional benefits that a
contract may offer. They also standardize presentation requirements to
make the information more accessible to retail investors, while
retaining key elements of the disclosure that is available today.
    In addition, we are amending Forms N-3, N-4, and N-6, along with
certain rules that effectuate the Commission's requirements regarding
the use of Inline XBRL format for the submission of certain required
disclosures \1159\ in variable contract statutory prospectuses. These
amendments are intended to harness technology to allow investors
(directly and through their investment professionals), data
aggregators, financial analysts, Commission staff, and other data users
to efficiently analyze and compare the available information about
variable contracts.
---------------------------------------------------------------------------

    \1159\ We are amending rules 485 and 497 of Regulation C (OMB
Control No. 3235-0074), which describes the procedures to be
followed in preparing and filing registration statements with the
Commission, and rules 11 and 405 of Regulation S-T (OMB Control No.
3235-0424), which specifies the requirements that govern the
electronic submission of documents. The additional collection of
information burden that will result from these changes, as well as
the burdens that we estimate will result from the amendments to the
General Instructions of Forms N-3, N-4, and N-6, are included in our
estimates for the ``Investment Company Interactive Data'' collection
of information.
---------------------------------------------------------------------------

    New rule 498A permits a person to satisfy its prospectus delivery
obligations under the Securities Act for a variable contract by
providing a summary prospectus to investors and making the statutory
prospectus available online. The rule also will consider a person to
have met its prospectus delivery obligations for any portfolio
companies associated with a variable contract if these prospectuses are
posted online. Pursuant to the rule, registrants using a summary
prospectus also are required to send these documents to investors upon
request.
    Finally, the amendments to rule 497 provide the requirements for
filing summary prospectuses with the Commission and for submitting
information to the Commission in Inline XBRL format. These amendments
do not constitute a separate collection of information under rule 497.
The burden required by these amendments is part of the collection of
information under new rule 498A, and for filings of Interactive Data
Files, are part of the ``Investment Company Interactive Data''
collection of information.

A. Form N-3

    Form N-3 is the form used by separate accounts offering variable
annuity contracts that are organized as management investment companies
to register under the Investment Company Act and/or to register and
offer their securities under the Securities Act. Form N-3 contains
collection of information requirements. Compliance with the disclosure
requirements of Form N-3 is mandatory. Responses to the disclosure
requirements are not confidential.
    Form N-3 generally imposes two types of reporting burdens on
investment companies: (1) The burden of preparing and filing the
initial registration statement; and (2) the burden of preparing and
filing post

effective amendments to a previously effective registration statement.
The hour and cost burden estimates for preparing and filing initial
registration statements and post-effective amendments on Form N-3 are
based on the Commission's experience with the contents of the form. The
number of burden hours and cost may vary depending on, among other
things, the complexity of the filing and whether preparation of the
form is performed by internal staff or outside counsel. We currently
estimate for Form N-3 a total of 2,518 internal burden hours, with a
total annual external cost burden of $164,144.\1160\
---------------------------------------------------------------------------

    \1160\ These estimates are included in Form N-3's current
information collection, which was approved in July 2019 and reflects
the adoption of certain form amendments associated with rule 30e-3
under the Investment Company Act. See Investment Company Shareholder
Reports Release, supra note 19.
     We currently estimate that registrants spend 922.7 internal
burden hours per investment option to prepare and file an initial
registration statement on Form N-3, and 156.2 internal burden hours
per investment option for each post-effective amendment. We also
estimate that Form N-3 registrants spend $24,873 in external costs
per investment option for each initial filing, and $10,259 per
investment option for each post-effective amendment.
---------------------------------------------------------------------------

    We are adopting amendments to Form N-3 to update and enhance the
disclosures to investors in variable annuity contracts, and to
implement the new summary prospectus regime. We are amending certain
disclosures that Form N-3 currently requires with respect to the
separate account's investment objectives and risks, management of the
registrant, investment advisory and other services, portfolio managers,
and brokerage allocation and other practices. In addition, amended Form
N-3 requires certain new disclosures regarding, among other things: The
Key Information Table, an overview of the contract, principal risks,
optional benefits, loans, and the Appendix of available investment
options. We are also reducing or eliminating certain disclosures
currently required by the form, such as the AUV tables.\1161\
---------------------------------------------------------------------------

    \1161\ See supra Section II.C.2.e.
---------------------------------------------------------------------------

    The table below summarizes the estimated adjustments to the Form N-
3 collection of information from the proposed amendments,\1162\ the
estimated adjustments to the Form N-3 collection of information from
the final amendments, and the final PRA estimates for internal and
external burdens associated with amended Form N-3:
---------------------------------------------------------------------------

    \1162\ As part of these estimates, Commission staff estimated
that there would be no initial filings and eight post-effective
amendments on Form N-3 per year, and further estimated that these
filings would be made by five registrants covering an average of
three investment options per filing. See Proposing Release, supra
note 6, at Section IV.A for more detail regarding the proposed
estimates.

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[GRAPHIC] [TIFF OMITTED] TR01MY20.006

[GRAPHIC] [TIFF OMITTED] TR01MY20.007

Changes to Burden Estimates Resulting From Final Amendments
    We did not receive public comment on our proposed PRA estimates for
the amendments to Form N-3, which we are adopting largely as proposed.
With one exception, we generally believe the modifications to the
proposed amendments in the aggregate do not result in changes to our
proposed estimates of the effect of the amendments on the current
burdens. We believe, however, that registrants will experience a
reduction in internal hourly burdens due to the elimination of the
requirement to provide AUV tables and are reducing the estimated hourly
burden to prepare and file a post-effective amendment by 5 hours per
investment option.\1163\ We are also revising our estimates to reflect
current figures for the number of Form N-3 registration statements
filed annually and updated internal wage rates,\1164\ as set forth in
the table above.
---------------------------------------------------------------------------

    \1163\ We assume that removing the requirement to disclose AUV
tables will largely impact the internal burdens associated with
post-affective amendments (certain initial filings may provide AUV
tables, but the form currently and as amended generally requires AUV
tables in all post-effective amendments).
    \1164\ The $269 wage rate reflects current estimates of the
blended hourly rate for an in-house compliance attorney ($365) and
intermediate accountant ($172), which is derived from SIFMA's
Management & Professional Earnings in the Securities Industry 2013
(modified to account for an 1,800-hour work year; multiplied by 5.35
to account for bonuses, firm size, employee benefits and overheard,
and adjusted for inflation).
    The Proposing Release estimates were based on a blended hourly
rate for an in-house compliance attorney and a senior programmer.
Because we believe an intermediate accountant is more likely to
assist in the preparation of a registration statement than a senior
programmer, the wage rate estimate reflects this change in
professional positions.
---------------------------------------------------------------------------

    Initial registration statements. As proposed, we estimate that the
amendments will result in the following changes to the internal hours
and external cost burdens:
     For disclosures that are not related to the contract's
investment options, an additional 1.7 hours per initial registration
statement.\1165\
---------------------------------------------------------------------------

    \1165\ We estimate, as proposed, that the amendments to Form N-3
will increase the burden of preparing an initial registration
statement by 5 hours per investment option per filing, which
amortized over 3 years equals 1.7 hours annually (5 hours + 0 hours
+ 0 hours)/3 years = 1.7 hours per year (we assume 0 hours in years
2 and 3 because after year 1, the registrant will prepare and file
post effective amendments)). As Commission staff estimates that no
initial registration statements will be filed on Form N-3 in the
next 3 years, we continue to estimate a 0 hour burden for initial
registration statement filings.

---------------------------------------------------------------------------

     For disclosures related to the contract's investment
options, an additional 2 hours per investment option per initial
registration statement.\1166\
---------------------------------------------------------------------------

    \1166\ We estimate, as proposed, that the amendments to Form N-3
will require an additional 6 hours per investment option per initial
filing, which amortized over 3 years equals 2 hours annually on a
per investment option basis: (6 hours + 0 hours + 0 hours)/3 years =
2 hours per year. We assume 0 hours in years 2 and 3 because after
year 1, the registrant will prepare and file post effective
amendments.
---------------------------------------------------------------------------

     We estimate no change to the external cost burden due to
the amendments.
     Unrelated to the amendments, we estimate an external cost
burden of $20,300 per initial registration statement to provide
disclosures other than those related to the contract's investment
options, and an additional $8,291 per investment option per initial
registration statement to provide disclosures that are related to the
contract's investment options. This reflects a change in our
methodology regarding how to calculate burdens attributable to
investment options.\1167\
---------------------------------------------------------------------------

    \1167\ We currently estimate the external cost to prepare and
file an initial registration statement on Form N-3 is $24,873 per
investment option. See supra note 1160.
     As discussed in the Proposing Release, in our most recently
approved PRA submission, we estimated that a registrant with
multiple investment options would experience a burden of complying
with the requirements of Form N-3 that is proportional to the number
of investment options that the registrant offers. See supra note 6
at n.777. Since many of the disclosure requirements of Form N-3 do
not depend on the number of investment options offered by the
registrant, we are revising our approach to estimate an incremental
burden per investment option (as opposed to a burden that is
proportional to the number of investment options that the registrant
offers). Pursuant to this change in methodology, we estimate the
cost to prepare and file an initial registration statement on Form
N-3 will be $24,873 for disclosures not related to the contract's
investment options, and an additional $8,291 per investment option
(or \1/3\ of the cost to provide non-investment option-related
disclosures) to provide disclosures related to each investment
option: $24,873/3 = $8,291. As we estimate no initial registration
statements will be filed on Form N-3, we continue to estimate $0 in
external costs for initial registration statement filings.
---------------------------------------------------------------------------

    Post-effective amendments. As proposed, we estimate that the
amendments will result in the following changes to the internal hours
and external cost burdens:
     For disclosures that are not related to the contract's
investment options, a one-time burden of 20 hours per registration
statement the first time the registration statement is amended and an
ongoing burden of an additional 5 hours per registration statement per
year thereafter. Amortizing these burdens over a three-year period
results in an estimated average annual burden of 10 hours per initial
registration statement.\1168\
---------------------------------------------------------------------------

    \1168\ (20 hours in year 1 + 5 hours in year 2 + 5 hours in year
3)/3 years = 10 hours per year.
---------------------------------------------------------------------------

     For disclosures related to the contract's investment
options other than the AUV table requirement, a one-time burden of 6
hours per investment option the first time the registration statement
is amended by post-effective amendment. Subsequently, we estimate an
ongoing burden of 1.5 hours per investment option per post-effective
amendment. Amortizing these burdens over a three-year period results in
an estimated average annual burden of 3 hours per investment option to
prepare and file a post-effective amendment.\1169\
---------------------------------------------------------------------------

    \1169\ (6 hours in year 1 + 1.5 hours in year 2 + 1.5 hours in
year 3)/3 years = 3 hours per year.
---------------------------------------------------------------------------

     For elimination of the AUV table requirement, we estimate
a reduction in the annual hour burden of 5 hours per investment option
per year. Adding this reduction to the burden increases discussed in
the prior bullet point results in a net reduction of 2 hours per
investment option per year for disclosures related to the contract's
investment options.
     We estimate no change to the external cost burden due to
the amendments.
     Unrelated to the amendments, we estimate an external cost
burden of $10,259 per post-effective amendment to update disclosures
not related to investment options, and an additional $3,420 per
investment option per post-effective amendment to update disclosures
that are related to the contract's investment options. This reflects a
change in our methodology regarding how to calculate burdens
attributable to investment options.\1170\
---------------------------------------------------------------------------

    \1170\ See supra note 1167 (regarding change in methodology). We
currently estimate $10,259 per investment option for each post-
effective amendment. See supra note 1160.
---------------------------------------------------------------------------

    In the aggregate, we estimate the total annual hour burden to
comply with amended Form N-3 to be 2,836 hours,\1171\ at an average
time cost of $762,884.\1172\ We also estimate the total external cost
burden to comply with amended Form N-3 to be $123,114.\1173\ These
estimates reflect the change in our methodology for estimating burdens
attributable to investment options, the increase in estimated burdens
associated with the amendments, the increase in the estimated average
number of investment options per Form N-3 registration statement from
two to three investment options, and current estimates for the number
of post-effective amendments filed annually.
---------------------------------------------------------------------------

    \1171\ 0 initial registration statements + ((156.2 hours
(current burden per post-effective amendment) + (10 hours for
amendments not related to investment options / 3 investment options)
+ (3 hours per investment option for amendments related to
investment options other than elimination of AUV table
requirement)--(5 hours per investment option for elimination of the
AUV table requirement)) x 3 investment options per post-effective
amendment x 6 post-effective amendments = 2,836 hours.
    \1172\ 2,836 hours x $269/hour = $762,884.
    \1173\ 0 initial registration statements + ($10,259 per post-
effective amendment to update disclosures not related to investment
options + ($3,420 per investment option to update disclosures
related to investment options x 3 investment options)) x 6 post-
effective amendments = $123,114.
---------------------------------------------------------------------------

B. Form N-4

    Form N-4 is the form used by separate accounts offering variable
annuity contracts that are organized as unit investment trusts to
register under the Investment Company Act and/or to register and offer
their securities under the Securities Act. Form N-4 contains collection
of information requirements. Compliance with the disclosure
requirements of Form N-4 is mandatory. Responses to the disclosure
requirements are not confidential.
    Form N-4 generally imposes two types of reporting burdens on
investment companies: (1) The burden of preparing and filing the
initial registration statement; and (2) the burden of preparing and
filing post effective amendments to a previously effective registration
statement. The hour and cost burden estimates for preparing and filing
initial registration statements and post-effective amendments on Form
N-4 are based on the Commission's experience with the contents of the
form. The number of burden hours and cost may vary depending on, among
other things, the complexity of the filing and whether preparation of
the form is performed by internal staff or outside counsel. We
currently estimate for Form N-4 a total of 271,914 internal burden
hours, with a total annual external cost burden of $32,111,916.\1174\
---------------------------------------------------------------------------

    \1174\ These estimates are included in Form N-4's current
information collection, which was approved in July 2019 and reflects
the adoption of certain form amendments associated with rule 30e-3
under the Investment Company Act.
     We currently estimate that on a per filing basis, registrants
spend 278.5 internal burden hours to prepare and file an initial
registration statement on Form N-4, and 197.25 internal burden hours
for each post-effective amendment. We also estimate that registrants
incur $23,013 in external costs for initial filings and $21,813 for
post-effective amendments. As discussed below, we are adjusting some
of these estimates.
---------------------------------------------------------------------------

    We are adopting amendments to Form N-4 to update and enhance the
disclosures to investors in variable annuity contracts, and to
implement the new summary prospectus regime. We

are amending certain disclosure requirements that Form N-4 currently
requires. In addition, amended Form N-4 requires certain new
disclosures regarding, among other things: The Key Information Table,
an overview of the contract, principal risks, optional benefits, loans,
and the Appendix of available portfolio companies. We are also reducing
or eliminating certain disclosures currently required by the form, such
as the AUV tables.
    The table below summarizes the estimated adjustments to the Form N-
4 collection of information from the proposed amendments,\1175\ the
estimated adjustments to the Form N-4 collection of information from
the final amendments, and the final PRA estimates for internal and
external burdens associated with amended Form N-4:
---------------------------------------------------------------------------

    \1175\ As part of these estimates, Commission staff estimated
that there would be 35 initial filings and 1,326 post-effective
amendments on Form N-4 per year. See Proposing Release, supra note
6, at Section IV.B for more detail regarding the proposed estimates.

---------------------------------------------------------------------------

[GRAPHIC] [TIFF OMITTED] TR01MY20.008

Changes to Baseline Burden Estimates
    We received one comment regarding our proposed estimates for
internal burdens and external costs associated with the current burdens
associated with preparing and filing a post-effective amendment.\1176\
The estimates that were submitted were in some respects higher, and in
others lower,

than our proposed estimates.\1177\ In light of the commenter's
estimates, and because variable annuity contracts registered on Form N-
4 today tend to offer greater numbers of portfolio companies and
optional benefits than variable annuity contracts offered in the past,
we believe that certain of our current estimates may be too low.
Therefore, we are adjusting the baseline current estimates (before the
effect of the amendments we are adopting) for certain burdens and costs
associated with Form N-4,\1178\ as follows:
---------------------------------------------------------------------------

    \1176\ See CAI Presentation Materials supra note 1158. These
estimates were supplied to illustrate the disparity between the
burdens associated with filing a post-effective amendment compared
to the reduced burdens for registrants that rely on the Great-West
no-action letters. Because only Form N-4 and N-6 filers have
received Great-West no-action relief, we assume the commenter's
estimates only concern amendments filed on those forms.
    \1177\ See supra notes 6 and 1176. The commenter estimated that
``based on information provided by certain members, internal
business and legal teams spend approximately 310 hours in connection
with the update of a single active registration statement'' with
associated ``soft costs'' (internal costs) of $25,000 and ``hard
costs'' described as ``outside counsel, auditor, typesetting and
mailing,'' estimated to be an average of $170,000.''
     Our current estimates for Form N-4 are based on previously
approved estimates that assume a registrant's in-house staff spends
197.25 internal burden hours to prepare and file a post-effective
amendment (for an internal cost of $56,019 per filing based on the
$284 wage rate used in the most-recently approved PRA (July 2019)),
with external costs (e.g., outside counsel, independent auditors,
consultants) of $21,813 for each filing. See supra note 1174.
     We note that the commenter's estimates for external costs
include typesetting and printing and mailing, while our estimates
for our registration forms do not because the forms do not impose a
delivery requirement. The obligation to deliver a prospectus is
imposed by Section 5(b)(2) of the Securities Act. See United States
v. Wunder, 919 F.2d 34, 38 (6th Cir. 1990) (``The Paperwork
Reduction Act therefore, does not apply to the statutory
requirement, but only to the forms themselves.'').
    \1178\ See supra note 1174.
---------------------------------------------------------------------------

     We are increasing our estimate to prepare and file an
initial registration statement from 278.5 hours to 800 hours per
filing; \1179\
---------------------------------------------------------------------------

    \1179\ We are also increasing this estimate for consistency with
the currently approved estimates for initial registration statements
on Form N-3 (922.7 hours per investment option per filing) and Form
N-6 (770.25 hours per filing).
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     We are increasing our estimate to prepare and file a post-
effective amendment from 197.25 hours to 227.25 per filing; and
     We are increasing our estimate of the external cost to
prepare and file an initial registration statement from $23,013 to
$40,000 per filing.
Changes to Burden Estimates Resulting From Final Amendments
    With one exception, we generally believe the modifications to the
proposed amendments in the aggregate do not result in changes to our
proposed estimates of the effect of the amendments on the current
burdens. We believe, however, that registrants will experience a
reduction in internal hourly burdens due to the elimination of the
requirement to provide AUV tables and are reducing the estimated hourly
burden to prepare and file a post-effective amendment by 30 hours
(reducing the adjusted estimated hourly burden from 227.25 hours to
197.25 hours per filing).\1180\ Our revised estimates also reflect
updated data for the number of Form N-4 initial registration statements
and post-effective amendments filed annually, and revised internal wage
rates,\1181\ as set forth in the table above.
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    \1180\ As with Form N-3, we assume that removing the requirement
to disclose AUV tables will largely impact the internal burdens
associated with post-affective amendments (certain initial filings
may provide AUV tables, but the form currently and as amended
generally requires AUV tables in all post-effective amendments). See
supra note 1163.
    \1181\ See supra note 1164 (providing revised internal wage rate
estimates for purposes of preparing and filing reports on Form N-3,
and that apply equally to Form N-4).
---------------------------------------------------------------------------

    Initial registration statements. As proposed, we estimate that the
amendments will result in the following changes to the internal hours
and external cost burdens:
     We estimate that, on a net basis, the amendments to Form
N-4 will increase the burden of preparing and filing an initial
registration statement by 5 hours per filing. Amortizing this burden
over a three-year period results in an estimated average annual burden
of 1.7 hours per initial registration statement.
     We estimate no change to the external cost burden for
these amendments.
    Post-effective amendments. As proposed, we estimate that the
amendments will result in the following changes to the internal hours
and external cost burdens:
     We estimate a one-time burden of an additional 20 hours
per registration statement the first time the registration statement is
amended by post-effective amendment following adoption of the
amendments. Subsequently, we estimate an ongoing burden of an
additional 5 hours per registration statement to prepare and file a
post-effective amendment. Amortizing these burdens over a three-year
period results in an estimated average annual burden of an additional
10 hours per registration statement to prepare and file a post-
effective amendment.
     We estimate no change to the external cost burden for
these amendments.
    In the aggregate, we estimate the total annual hour burden to
comply with amended Form N-4 to be 300,937 hours,\1182\ at an average
time cost of $80,952,053.\1183\ We also estimate the total external
cost burden to comply with amended Form N-4 to be $30,342,168.\1184\
These estimates reflect the increase in estimated burdens associated
with the amendments, adjustments to certain per filing estimates, and
current estimates for the number of filings on Form N-4.
---------------------------------------------------------------------------

    \1182\ For initial registration statements: 30 initial filings x
(as adjusted 800 hours per filing + 1.7 hours under amendments) =
24,051 hours. For post-effective amendments: 1,336 post-effective
amendments x (197.25 hours current per filing burden + 10 hours
under amendments) = 276,886 hours. 24,051 hours + 276,886 hours =
300,937 hours.
    \1183\ 300,937 hours x $269/hour = $80,952,053.
    \1184\ For initial registration statements: 30 initial filings x
$40,000 per filing (as adjusted external cost per filing) =
$1,200,000. For post-effective amendments: 1,336 post-effective
amendments x $21,813 (current external cost per filing) =
$29,142,168. $1,200,000 + $29,142,168 = $30,342,168.
---------------------------------------------------------------------------

C. Form N-6

    Form N-6 is the form used by separate accounts organized as unit
investment trusts that offer variable life insurance contracts to
register under the Investment Company Act and/or to register and offer
their securities under the Securities Act. Form N-6 contains collection
of information requirements. Compliance with the disclosure
requirements of Form N-6 is mandatory. Responses to the disclosure
requirements are not confidential.
    Form N-6 generally imposes two types of reporting burdens on
investment companies: (1) The burden of preparing and filing the
initial registration statement; and (2) the burden of preparing and
filing post-effective amendments to a previously effective registration
statement. The hour and cost burden estimates for preparing and filing
initial registration statements and post-effective amendments on Form
N-6 are based on the Commission's experience with the contents of the
form. The number of burden hours and cost may vary depending on, among
other things, the complexity of the filing and whether preparation of
the form is performed by internal staff or outside counsel. We
currently estimate for Form N-6 a total of 31,987 internal burden
hours, with a total annual external cost burden of $3,816,692.\1185\
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    \1185\ Form N-6's current information collection, which was
approved in July 2019, reflects the adoption of certain form
amendments associated with rule 30e-3 under the Investment Company
Act.
     We currently estimate that on a per filing basis, registrants
spend 770.25 internal burden hours to prepare and file an initial
registration statement on Form N-6, and 67.5 internal burden hours
for each post-effective amendment. We also estimate that Form N-6
registrants spend $26,169 in external costs per initial filing, and
$9,493 per post-effective amendment. As discussed below, we are
adjusting some of these estimates.

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    We are adopting amendments to Form N-6 to update and enhance the
disclosures to investors in variable life insurance contracts, and to
implement the new summary prospectus regime. We are amending certain
disclosures that Form N-6 currently requires. In addition, amended Form
N-6 requires certain new disclosures regarding, among other things: The
Key Information Table, an overview of the contract, principal risks,
optional benefits, loans, lapse, and the Appendix of available
portfolio companies. We are also reducing certain disclosures currently
required by the form.
    The table below summarizes the estimated adjustments to the Form N-
6 collection of information from the proposed amendments,\1186\ the
estimated adjustments to the Form N-6 collection of information from
the final amendments, and the final PRA estimates for internal and
external burdens associated with amended Form N-6:
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    \1186\ As part of these estimates, Commission staff estimated
that there would be eight initial filings and 380 post-effective
amendments on Form N-6 per year. See Proposing Release, supra note
6, at Section IV.C for more detail regarding the proposed estimates.

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[GRAPHIC] [TIFF OMITTED] TR01MY20.009

Changes to Baseline Burden Estimates
    We did not receive public comment on our PRA estimates for the
amendments to Form N-6, which we are adopting largely as proposed.
However, in light of the comment we received regarding estimated
burdens associated with preparing and filing a post-effective amendment
on Form N-4,\1187\ and because variable life insurance

contracts registered on Form N-6 today tend to offer greater numbers of
portfolio companies and optional benefits than variable life insurance
contracts offered in the past, we believe that certain of our estimates
may be too low. Therefore, we are adjusting the baseline current
estimates (before the effect of the amendments we are adopting) for
certain burdens and costs associated with Form N-6,\1188\ as follows:
---------------------------------------------------------------------------

    \1187\ See supra notes 1176-1177 and accompanying text.
    \1188\ See supra note 1185.
---------------------------------------------------------------------------

     We are increasing our estimate to prepare and file a post-
effective amendment from 67.5 hours to 150 hours per filing;\1189\
---------------------------------------------------------------------------

    \1189\ Due to differences in the products and the respective
form requirements associated with each, we estimate the burden hours
associated with preparing a post-effective amendment for a
registrant on Form N-6 to be approximately \2/3\ of the burden hours
associated with preparing a post-effective amendment for a
registrant on Form N-4. As discussed above, we have revised our
baseline estimate of the burdens associated with preparing a post-
effective amendment for a registrant on Form N-4 to 227.5 hours. See
Section V.B supra.
---------------------------------------------------------------------------

     We are increasing our estimate of the external cost to
prepare and file an initial registration statement from $26,169 to
$40,000 per filing; \1190\ and
---------------------------------------------------------------------------

    \1190\ We estimate the external costs to prepare and file an
initial registration statement on Form N-6 to be roughly equivalent
to those associated with preparing and filing an initial
registration statement on Form N-4. As discussed above, we have
increased our baseline estimate of the external costs associated
with preparing and filing an initial registration statement on Form
N-4 to $40,000 per filing. See Section V.B supra.
---------------------------------------------------------------------------

     We are increasing our estimate of the external cost to
prepare and file a post-effective amendment from $9,493 to $20,000 per
filing.\1191\
---------------------------------------------------------------------------

    \1191\ We are increasing this estimate to be roughly equivalent
to the same burden associated with preparing and filing a post-
effective amendment on Form N-4. See Section V.B supra.
---------------------------------------------------------------------------

Changes to Burden Estimates Resulting From Final Amendments
    We believe that the modifications to the proposed amendments in the
aggregate do not result in changes to our proposed estimates of the
effect of the amendments on the current burdens. Our revised estimates,
however, reflect updated data for the number of Form N-6 initial
registration statements and post-effective amendments filed annually,
and revised internal wage rates,\1192\ as set forth in the table above.
---------------------------------------------------------------------------

    \1192\ See supra note 1164 (providing revised internal wage rate
estimates for purposes of preparing and filing reports on Form N-3,
and that apply equally to Form N-6).
---------------------------------------------------------------------------

    Initial registration statements. As proposed, we estimate that the
amendments will result in the following changes to the internal hours
and external cost burdens:
     We estimate that, on a net basis, the amendments to Form
N-6 will increase the burden of preparing and filing an initial
registration statement by 4 hours per filing. Amortizing this burden
over a three-year period results in an estimated average annual burden
of 1 hour per initial registration statement.
     We estimate no change to the external cost burden for
these amendments.
    Post-effective amendments. As proposed, we estimate that the
amendments will result in the following changes to the internal hours
and external cost burdens:
     We estimate a one-time burden of an additional 15 hours
per registration statement the first time the registration statement is
amended by post-effective amendment following adoption of the
amendments. Subsequently, we estimate an ongoing burden of an
additional 4 hours per registration statement to prepare and file a
post-effective amendment. Amortizing these burdens over a three-year
period results in an estimated average annual burden of an additional 8
hours per registration statement to prepare and file a post-effective
amendment.
     We estimate no change to the external cost burden for
these amendments.
    In the aggregate, we estimate the total annual hour burden to
comply with amended Form N-6 to be 65,123 hours,\1193\ at an annual
time cost of $17,518,087.\1194\ We also estimate the total external
cost burden to comply with amended Form N-6 to be $7,840,000.\1195\
These estimates reflect the increase in estimated burdens associated
with the amendments, adjustments to certain per filing estimates, and
current estimates for the annual number of filings on Form N-6.
---------------------------------------------------------------------------

    \1193\ For initial registration statements: 7 initial filings x
(770.25 hours current burden + 1 hour under amendments) = 5,399
hours. For post-effective amendments: 378 post-effective amendments
x (150 hours (as adjusted per filing) + 8 hours under amendments) =
59,724 hours. 5,399 + 59,724 = 65,123 hours.
    \1194\ 65,123 hours x $269/hour = $17,518,087.
    \1195\ For initial registration statements: 7 initial filings x
$40,000 (as adjusted external cost per filing) = $280,000. For post-
effective amendments: 378 post-effective amendments x $20,000 (as
adjusted external cost per filing) = $7,560,000. $280,000 +
$7,560,000 = $7,840,000.
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D. Investment Company Interactive Data

    Generally as proposed,\1196\ we are amending the General
Instructions of Forms N-3, N-4, and N-6, rules 485 and 497 under the
Securities Act, and rules under Regulation S-T,\1197\ to require the
use of Inline XBRL format for the submission of certain required
disclosures in variable contract statutory prospectuses. Specifically,
registrants will submit the following information in Inline XBRL format
in registration statements or post-effective amendments regarding
contracts being sold to new investors, as well as in forms of
prospectuses filed pursuant to rule 497(c) or 497(e) under the
Securities Act for such contracts that include information that varies
from the registration statement:
---------------------------------------------------------------------------

    \1196\ See supra Section II.D for a discussion on how the
adopted amendments differ from the proposal.
    \1197\ See supra note 1159.
---------------------------------------------------------------------------

     Form N-3 registrants: information provided in response to
Items 2, 4, 5, 11, 18, and 19 of Form N-3;
     Form N-4 registrants: information provided in response to
Items 2, 4, 5, 10 and 17 of Form N-4; and
     Form N-6 registrants: information provided in response to
Items 2, 4, 5, 10, 11 and 18 of Form N-6.
    The title of the collection of information affected by these
amendments is ``Mutual Fund Interactive Data,'' which we are re-titling
as ``Investment Company Interactive Data.'' Compliance with these
disclosure requirements is mandatory, and responses are not
confidential.
    The amendments generally impose two types of reporting burdens on
variable contracts being sold to new investors: (1) The burden of
submitting certain information in Inline XBRL to the Commission in
registration statements or post-effective amendments filed on Form N-3,
Form N-4, and Form N-6; and (2) the burden of submitting certain
information in Inline XBRL to the Commission in forms of prospectuses
filed pursuant to rule 497(c) or 497(e) under the Securities Act that
include information that varies from the registration statement. We
currently estimate a total annual hour burden of 178,803 hours for this
collection of information, and a total annual external cost burden of
$10,000,647.\1198\
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    \1198\ These estimates are referenced in the most-recent
information collection submission, reflecting the Commission's 2018
adoption of amendments to require the use of Inline XBRL format for
the submission of mutual fund risk/return summary information. See
Inline XBRL Adopting Release, supra note 892.
---------------------------------------------------------------------------

    The tables below summarize the proposed estimates included in the
Proposing Release \1199\ and the final PRA estimates for internal and
external

burdens associated with the structured data requirements for Forms N-3,
N-4, and N-6.
---------------------------------------------------------------------------

    \1199\ See Proposing Release, supra note 6, at Section IV.D for
more detail regarding the proposed estimates.
[GRAPHIC] [TIFF OMITTED] TR01MY20.010

[GRAPHIC] [TIFF OMITTED] TR01MY20.011

    We did not receive public comment on our proposed PRA estimates for
the burdens and costs associated with requiring variable contract
registrants to use Inline XBRL to tag certain information in the
specified variable contract filings. We continue to estimate the same
burdens and costs associated with structured data requirements as
proposed.\1200\ As reflected in the table above, we are revising our
estimates to reflect current figures for the number of registration
statements and rule 497 filings annually filed on Forms N-3, N-4, and
N-6, and updated internal wage rates.\1201\
---------------------------------------------------------------------------

    \1200\ Although in a change from the proposal contracts not
being sold to new investors are excluded from the Inline XBRL
requirement, for purposes of these estimates we are assuming on a
conservative basis that all contracts are subject to the
requirement.
    \1201\ The $348 wage rate reflects current estimates of the
blended hourly rate for an in-house compliance attorney ($365) and
senior programmer ($331), which is derived from SIFMA's Management &
Professional Earnings in the Securities Industry 2013 (modified to
account for an 1,800 hour work year; multiplied by 5.35 to account
for bonuses, firm size, employee benefits and overheard; and
adjusted for inflation).
---------------------------------------------------------------------------

Internal Hour Burden
    We estimate, as proposed, that registrants that file on Forms N-3,
N-4, and N-6 will require approximately 18 burden hours of in-house
personnel time to tag and submit the required disclosure information in
Inline XBRL format for each post-effective amendment \1202\ in the
first year, and the same task in subsequent years will require
approximately 12 hours for each post-effective amendment.\1203\ With
respect to Form N-3 registrants, we estimate an additional burden of 2
hours per investment option to tag and submit the required disclosure
information for each post-effective amendment. Therefore, we estimate
the average annual burden over a three-year period for each post-
effective amendment filed on Form N-3 will be 20 hours,\1204\ and for
those filed on Forms N-4 and N-6, 14 hours.\1205\ We further estimate
that the burden for each rule 497 filing will be 25% of that, or 3.5
hours per response.\1206\
---------------------------------------------------------------------------

    \1202\ We are not including estimates for Form N-3 initial
registration statements, as none have been filed in the past three
years.
    \1203\ Our estimates are based on our prior experience with
Inline XBRL. See, e.g., Inline XBRL Adopting Release, supra note
892. We are largely following the same approach to estimating hourly
burdens for variable contracts as in the context of mutual funds in
the Inline XBRL Adopting Release.
    \1204\ (18 hours for the first submission + 12 hours for the
second submission + 12 hours for the third submission)/3 years) + (2
hours per investment option x 3 investment options) = 20 hours.
    \1205\ (18 hours for the first submission + 12 hours for the
second submission + 12 hours for the third submission)/3 years = 14
hours.
    \1206\ Because rule 497 filings are typically 1-3 pages in
length, we estimate the burden will be only 25% of the burden
associated with tagging the relevant disclosures in a full
registration statement filing.
---------------------------------------------------------------------------

    We also estimate, as proposed, a weighted burden average of
approximately 3 responses per year per registrant to file initial and
post-effective registration statements and rule 497 filings, based on
weighting the burden for each rule 497 filing as 25% of the burden of a
post-effective amendment filing, averaging the burden for each form
equally, and estimating (based on a survey by Commission staff of
filings made pursuant to rule 497) that 75% of rule 497 filings by

registrants on each form will contain data that would be required to be
submitting in Inline XBRL format.\1207\
---------------------------------------------------------------------------

    \1207\ For Form N-3, we estimate a burden of 1.6 responses per
year. This estimate is based on the following calculation: ((0
initial registration statements + 6 post-effective amendments) + (18
rule 497 filings x 75% of which will contain data that will need to
be tagged x 25% weighted burden))/6 Form N-3 registrants =
approximately 1.6 responses per year per registrant.
    For Form N-4, we estimate a burden of 4.9 responses per year.
This estimate is based on the following calculation: ((30 initial
registration statements + 1,336 post-effective amendments) + (3,896
rule 497 filings x 75% of which will contain data that will need to
be tagged x 25% weighted burden))/426 Form N-4 registrants =
approximately 4.9 responses per year per registrant.
     For Form N-6, we estimate a burden of 2.3 responses per year.
This estimate is based on the following calculation: ((7 initial
registration statements + 378 post-effective amendments) + (1,130
rule 497 filings x 75% of which will contain data that will need to
be tagged x 25% weighted burden))/244 Form N-6 registrants =
approximately 2.4 responses per year per registrant.
    Overall, we estimate approximately 3 responses per year. This
estimate is based upon the following calculation: (1.6 responses per
N-3 registrant + 4.9 responses per N-4 registrant + 2.4 responses
per N-6 registrant)/3 = 3 responses per year.
---------------------------------------------------------------------------

    As reflected in the table above, we estimate that in the aggregate,
adoption of the Inline XBRL requirements will result in 360 burden
hours annually for Form N-3 registrants, with a collective internal
cost burden of $125,280, to tag and submit the required Form N-3
disclosure information in Inline XBRL.\1208\ We estimate 17,892 burden
hours annually for Form N-4 registrants (with an internal cost burden
of $6,226,416),\1209\ and 10,248 burden hours annually for Form N-6
registrants (with an internal cost burden of $3,566,304) to tag and
submit the required disclosures in Inline XBRL.\1210\
---------------------------------------------------------------------------

    \1208\ 6 Form N-3 registrants x 3 responses per year per
registrant x (14 hours per registrant + (2 hours per investment
option x 3 investment options per registrant)) = 360 burden hours/
year. The internal time cost equivalent is calculated by multiplying
the total hour burden (360 hours) by the estimated hourly wage of
$348 (updated to reflect inflation) = $125,280.
    \1209\ 426 Form N-4 registrants x 3 responses per year per
registrant x 14 hours per registrant = 17,892 burden hours/year. The
internal time cost equivalent of is calculated by multiplying the
total hour burden (17,892 hours) by the estimated hourly wage of
$348 = $6,226,416.
    \1210\ 244 Form N-6 registrants x 3 responses per year per
registrant x 14 hours per registrant = 10,248 burden hours/year. The
internal time cost equivalent is calculated by multiplying the total
hour burden (10,248 hours) by the estimated hourly wage of $348 =
$3,566,304.
---------------------------------------------------------------------------

External Cost Burden
    Compliance with the Inline XBRL requirements is expected to entail
certain external costs, such as for software and/or the services of
consultants and filing agents. For Form N-4 and Form N-6 registrants,
we estimate, as proposed, an external cost burden of $900 per
registrant for the cost of goods and services purchased to comply with
the proposed Inline XBRL requirements.\1211\ For Form N-3 registrants,
we estimate, as proposed, an additional cost of $300 per investment
option for the cost of goods and services purchased to comply with the
Inline XBRL requirements for an estimated external cost burden of
$1,800 per registrant.\1212\
---------------------------------------------------------------------------

    \1211\ This estimate is based on the estimated average external
cost burden associated with the Inline XBRL preparation expenses for
mutual funds and ETFs. See Inline XBRL Adopting Release, supra note
892.
    \1212\ $900 per registrant + (3 investment options per
registrant x $300 per investment option) = $1,800 per Form N-3
registrant.
---------------------------------------------------------------------------

Aggregate Burdens for Form N-3, N-4, and N-6 Registrants
    We estimate that the new Inline XBRL requirements for Form N-3, N-
4, and N-6 registrants will result in 28,500 internal burden hours
annually,\1213\ with a collective internal time cost of approximately
$9,918,000.\1214\ We therefore estimate the aggregate total hour burden
for the collection of information to be 207,303 hours as a result of
the amendments.\1215\ We estimate the aggregate external cost burden
under the new Inline XBRL requirements for Form N-3, N-4, and N-6
registrants to be approximately $613,800.\1216\ We therefore estimate
the aggregate total external cost burden for the collection of
information will be $10,614,447 as a result of the final
amendments.\1217\ These estimates include the additional internal
burdens and external costs associated with the final amendments that
will require variable contracts to use Inline XBRL to tag certain
specified disclosures in their registration statements and rule 497
filings.
---------------------------------------------------------------------------

    \1213\ 360 burden hours for Form N-3 registrants + 17,892 burden
hours for Form N-4 registrants + 10,248 burden hours for Form N-6
registrants = 28,500 hours.
    \1214\ 28,500 hours x $348/hour = $9,918,000.
    \1215\ 178,803 hours (current internal burden estimate for
Mutual Fund Interactive Data (retitled as Investment Company
Interactive Data)) + 28,500 burden hours due to new Inline XBRL
requirements for variable contracts = 207,303 total burden hours.
    \1216\ (6 Form N-3 registrants x ($900 per registrant + ($300
per investment option x 3 investment options))) + (426 Form N-4
registrants x $900 per registrant) + (244 Form N-6 registrants x
$900 per registrant) = $613,800.
    \1217\ $10,000,647 (current external cost estimate for Mutual
Fund Interactive Data (retitled as Investment Company Interactive
Data)) + $613,800 external costs due to new Inline XBRL requirements
for variable contracts = $10,614,447.
---------------------------------------------------------------------------

E. Rule 498A

    New rule 498A contains collection of information requirements. The
likely respondents to this information collection are variable annuity
and variable life insurance separate accounts registered or registering
with the Commission.\1218\ Under rule 498A, use of the summary
prospectus is voluntary, but the rule's requirements are mandatory for
variable annuity and variable life insurance separate accounts that
elect to send or give a summary prospectus in reliance upon rule 498A.
The information provided under rule 498A will not be kept confidential.
---------------------------------------------------------------------------

    \1218\ Rule 498A can be broadly relied upon by any person to
satisfy prospectus delivery obligations under Section 5(b)(2) under
the Securities Act for a variable contract or portfolio company.
However, we expect the hour and cost burdens of the rule (i.e., to
create and file initial and updating summary prospectuses and to
make certain documents available online and to distribute them upon
request) will generally be borne by registrants. We base this
expectation in part on the fact that our amendments require
prospectuses and summary prospectuses to include the website address
where the documents required to be posted online are located, and
contact information to call or email to obtain paper copies of those
documents, and we expect registrants to list their own website and
their own contact information to satisfy these requirements, as
opposed to directing investors to various financial intermediaries
who may be involved in distributing those contracts.
---------------------------------------------------------------------------

    The summary prospectus is voluntary, so the percentage of variable
annuity and variable life insurance separate accounts that will choose
to utilize it is uncertain. Given this uncertainty, we have assumed
that 90% of registrants will choose to use a summary prospectus under
rule 498A.\1219\
---------------------------------------------------------------------------

    \1219\ Given expressed industry support for layered disclosure
with summary prospectuses, our estimate that approximately 93% of
mutual funds currently use summary prospectuses (see supra note 21),
and our anticipation that the rule will provide costs savings to
insurers, we believe it is appropriate to assume that 90% of
insurers will choose to use summary prospectuses. This differs from
the estimate of 95% in the Proposing Release which was based on
available data at the time. See Proposing Release, supra note 6, at
Section IV.E.
---------------------------------------------------------------------------

    The table below summarizes the proposed estimates included in the
Proposing Release \1220\ and the final PRA estimates for internal and
external burdens associated with rule 498A for Forms N-3, N-4, and N-6:
---------------------------------------------------------------------------

    \1220\ See Proposing Release, supra note 6, at Section IV.E for
more detail regarding the proposed estimates.

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[GRAPHIC] [TIFF OMITTED] TR01MY20.012

[GRAPHIC] [TIFF OMITTED] TR01MY20.013

[GRAPHIC] [TIFF OMITTED] TR01MY20.014

    The only public comment we received regarding our PRA estimates for
proposed rule 498A discussed estimated external costs associated with
printing and mailing initial and summary prospectuses pursuant to the
proposed rule.\1223\ As discussed below, in response to this comment,
we are adjusting our estimates for external costs. In all other
respects, we generally believe the modifications to the proposed rule
in the aggregate do not result in changes to our proposed estimates of
the burdens associated with the rule unrelated to printing and mailing
the summary prospectuses. Therefore, we are not otherwise adjusting our
proposed estimates, except to reflect estimates for printing and
mailing costs, and revised estimates for the number of variable
contract registrants and internal wage rates.
---------------------------------------------------------------------------

    \1221\ The Proposing Release included an aggregate estimate of
17,359 hours, which reflected a mathematical error. The table
includes the corrected calculation based on the estimates in the
Proposing Release.
    \1222\ The Proposing Release included an aggregate estimated
time cost equivalent of $5,565,971, which reflected a mathematical
error relating to the estimated total annual burden hours. The table
includes the corrected calculation based on the estimates in the
Proposing Release.
    \1223\ See Broadridge Comment Letter.
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Preparation of Initial Summary Prospectus and Updating Summary
Prospectus
Internal Hour Burden
    We did not receive any comments on our proposed estimates
associated with the internal burdens to prepare and file initial and
updating summary prospectuses. We continue to estimate that for
registrants that choose to rely upon rule 498A, a one-time collective
burden of 40 hours per registration statement to prepare and file both
a new initial summary prospectus and a new updating summary prospectus
for offerings on Forms N-4 or N-6.\1224\ In addition, we estimate an
ongoing collective burden of 10 hours per registration statement during
each subsequent year for the registrant to prepare and file updates of
the initial summary prospectus and updating summary prospectus for
offerings on Forms N-4 or N-6. For offerings on Form N-3, we estimate a
one-time collective burden of 40 hours per registration statement to
prepare and file both a new initial summary prospectus and a new
updating summary prospectus, plus a further burden of 12 hours per
contract investment option. Subsequently, we estimate an ongoing
collective burden of 10 hours per registration statement that would be

incurred each following year to prepare and file updates of summary
prospectuses, plus a further burden of 3 hours per investment option.
As previously discussed, we estimate that each registration statement
filed on Form N-3 will include three investment options.
---------------------------------------------------------------------------

    \1224\ We are aware that more than one prospectus may be filed
as part of a registration statement, but we do not have data
regarding how many registration statements currently include more
than one prospectus. For purposes of this analysis we assume one
prospectus is filed per registration statement.
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    Because the PRA estimates represent the average burden over a three
year period, we estimate, as proposed, the average annual hour burden
per registration statement to prepare and file initial and updating
summary prospectuses to be 20 hours for filings on Form N-4 or N-
6,\1225\ and 38 hours for filings on Form N-3.\1226\
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    \1225\ ((40 hours in year 1) + (10 hours in year 2) + (10 hours
in year 3))/3 years = 20 hours per year.
    \1226\ (((40 hours + (12 hours per investment option x 3
investment options) in year 1) + (10 hours + (3 hours per investment
option x 3 investment options in year 2) + (10 hours + (3 hours per
investment option x 3 investment options) in year 3))/3 years = 38
hours per year.
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External Cost Burden
    Registrants may also bear external costs to prepare and update the
initial and updating summary prospectuses, such as the services of
independent auditors and outside counsel. However, any external costs,
such as for outside counsel and auditors, that may be associated with
preparing and updating the initial summary prospectus as an exhibit to
a registration statement will be reflected in the external costs
associated with those registration statements.
    For registrants that choose to rely upon rule 498A, we continue to
estimate a one-time collective external cost burden of $10,000 per
registration statement to prepare both a new initial summary prospectus
and a new updating summary prospectus for offerings on Forms N-4 or N-
6. In addition, we estimate an ongoing collective burden of $2,500 per
registration statement during each subsequent year for the registrant
to prepare updates of the initial summary prospectus and updating
summary prospectus for offerings on Forms N-4 or N-6. For offerings on
Form N-3, we estimate a one-time collective burden of $10,000 per
registration statement to prepare and file both a new initial summary
prospectus and a new updating summary prospectus, plus a further burden
of $3,000 per contract investment option. Subsequently, we estimate an
ongoing collective burden of $2,500 per registration statement during
each following year to prepare and file updates of summary
prospectuses, plus a further burden of $750 per investment option. As
discussed above, we estimate that each registration statement filed on
Form N-3 will include three investment options.
    Because the PRA estimates represent the average burden over a
three-year period, we estimate that the average annual cost burden to
prepare and file initial and updating summary prospectuses will be
$5,000 per filing on Forms N-4 and N-6.\1227\ For Form N-3, we estimate
the average annual cost burden per registration statement to prepare
and update initial and updating summary prospectuses will be
$9,500.\1228\
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    \1227\ (($10,000 in year 1) + ($2,500 in year 2) + ($2,500 in
year 3))/3 years = $5,000 per year.
    \1228\ ((($10,000 to prepare new initial and updating summary
prospectuses + ($3,000 per investment option x 3 investment options)
in year 1) + ($2,500 + ($750 per investment option x 3 investment
options)) in year 2) + ($2,500 + ($750 per investment option x 3
investment options) in year 3)/3 = $9,500 per year.
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Aggregate Burdens for Preparing and Filing Summary Prospectuses
    As discussed above, in light of our consideration of a comment
received on our printing and mailing estimates, we have revised our
estimate of related external costs which was $3,469,875 in the
proposal. We now estimate the aggregate annual hour burden to prepare
and file initial and updating summary prospectuses for offerings on
Forms N-3, N-4, and N-6 will be 12,265 hours,\1229\ at an internal cost
equivalent of $3,299,285.\1230\ We also estimate the aggregate annual
external costs associated with preparing and filing summary
prospectuses to be $3,066,300.\1231\
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    \1229\ This estimate, which assumes 90% reliance on the rule, is
based on the following: ((38 hours x 6 registrants on Form N-3 =
228) + (20 hours x 426 registrants on Form N-4 = 8,520) + (20 hours
x 244 registrants on Form N-6 = 4,880)) x 90% = 12,265 hours.
    \1230\ 12,265 hours x $269 per hour = $3,299,285.
    \1231\ (($9,500 x 6 registrants on Form N-3 = $57,000) + ($5,000
x 426 registrants on Form N-4 = $2,130,000) + ($5,000 x 244
registrants on Form N-6 = $1,220,000)) x 90% = $3,066,300.
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Online Availability of Contract Statutory Prospectus and Certain Other
Documents Relating to the Contract
    Registrants that choose to rely on rule 498A are required to make
certain documents relating to the contract available online, including
a variable contract's initial summary prospectus, updating summary
prospectus, statutory prospectus, and SAI for contracts registered on
Forms N-3, N-4, or N-6, and the contract's most recent annual and semi-
annual reports to shareholders under rule 30e-1 in the case of a
variable annuity contract registered under Form N-3. We received no
comments on this aspect of the proposal, and continue to estimate, as
proposed, the average burden to comply with the website posting
requirements to be 2 hours per set of documents associated with a
single registration statement, both in the first year and annually
thereafter.\1232\ Registrants must also provide these documents upon
request. We estimate, as proposed, that the average annual costs
associated with printing and mailing these documents upon request to be
collectively $500 for all specified contract documents associated with
a single registrant.\1233\
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    \1232\ Separate account registrants are generally larger
entities, and therefore, based on our experience with these
registrants, we assume that all separate account registrants already
have their own website and will not experience any burdens
associated with developing a website.
    \1233\ Because we do not have specific data regarding cost of
printing and mailing the documents that must be provided on request,
for purposes of our analysis we continue to estimate, as proposed,
$500 per year to collectively print and mail upon request all of the
specified contract documents associated with a single registrant.
Investors could also request to receive these documents
electronically. We estimate that there will be negligible external
costs associated with emailing electronic copies of these documents.
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    In total, we estimate the annual burden to comply with the website
posting requirements of the rule for documents relating to variable
contracts will be 1,217 hours,\1234\ at an internal cost equivalent of
$301,816.\1235\ We also estimate the aggregate annual external costs
associated with printing and mailing these documents upon request to be
$304,200.\1236\
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    \1234\ This estimate, which assumes 90% reliance on the rule, is
based on the following: 2 hours per registrant x (6 registrants on
Form N-3 + 426 registrants on Form N-4 + 244 registrants on Form N-
6) x 90% = 1,217 hours.
    \1235\ 1,217 hours x $248 per hour = $301,816.
    \1236\ $500 per registrant x (6 registrants on Form N-3 + 426
registrants on Form N-4 + 244 registrants on Form N-6) x 90% =
$304,200.
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Online Availability of Portfolio Company Statutory Prospectuses and
Certain Other Documents Relating to Portfolio Companies
    Registrants on Forms N-4 and N-6 that choose to rely on the new
delivery option for portfolio company prospectuses are also required to
post online the portfolio company's summary prospectus, statutory
prospectus, SAI, and most recent annual and semi-annual shareholder
reports.\1237\ We received no comments

on this aspect of the proposal. Accordingly, we estimate, as proposed,
the average burden to comply with the website posting requirements to
be 2 hours per set of documents associated with a single registration
statement, both in the first year and annually thereafter. Because
registrants may incur external costs in connection with the requirement
to provide these documents upon investor request, we estimate, as
proposed, the average annual costs associated with printing and mailing
these documents upon request to be collectively $500 for all specified
portfolio company documents associated with a single registrant.\1238\
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    \1237\ The obligation to post these documents online will fall
upon the party that has the prospectus delivery obligation for the
portfolio company prospectus. For purposes of this PRA analysis, we
assume that delivery of portfolio company prospectuses will be done
by registrants, rather than portfolio companies or financial
intermediaries such as broker-dealers. In some situations, portfolio
company documents may already be posted online, such as in the case
of portfolio companies that already use summary prospectuses and
therefore are subject to the document posting requirements of rule
498. However, for purposes of this PRA, we still assume that the
registrant will bear the burden of posting those documents since we
expect the registrant will repost those documents to make them
available on a single website. See supra note 1218.
    \1238\ As previously noted, investors could also request to
receive these documents electronically. We estimate that there will
be negligible external costs associated with emailing electronic
copies of these documents.
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    In total, we estimate the annual burden to comply with the website
posting requirements of the rule for documents relating to portfolio
companies will be 1,206 hours,\1239\ at an internal cost equivalent of
$299,088.\1240\ We estimate that the aggregate annual external costs
associated with printing and mailing these documents upon request will
be $301,500.\1241\
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    \1239\ This estimate, which assumes 90% reliance on the rule, is
based on the following: 2 hours per registrant x (426 registrants on
Form N-4 + 244 registrants on Form N-6) x 90% = 1,206 hours.
    \1240\ 1,206 hours x $248/hour = $299,088.
    \1241\ This estimate, which assumes 90% reliance on the rule, is
based on the following: $500 per registrant x (426 registrants on
Form N-4 + 244 registrants on Form N-6) x 90% = $301,500. For
purposes of this PRA analysis and based upon our experience, we
assume the burden of emailing these documents will be outsourced to
third-party service providers and therefore included within these
external cost estimates.
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Printing and Mailing Summary Prospectuses
    In the Proposing Release, the Commission did not estimate any costs
associated with printing and mailing the initial and updating summary
prospectuses. In response to the Commission's general request for
comments on our PRA estimates, one commenter provided an estimate of $8
million for total costs to print and mail initial and updating summary
prospectuses annually.\1242\ We received no other comments in this
regard. Based on the commenter's methodology (updated to reflect new
estimates for new and existing contracts, which the commenter used as
the basis for estimating the number of summary prospectuses delivered
each year), we estimate the external cost for registrants to print and
mail the summary prospectuses to be $10,038,200 annually.\1243\
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    \1242\ See Broadridge Comment Letter. Because this commenter's
estimates assumed the inclusion of portfolio company prospectuses,
it appears to only contemplate the costs associated summary
prospectuses for Forms N-4 and N-6 (Form N-3 does not offer
underlying portfolio companies).
     The commenter's figures, which rely on estimates in the
Economic Analysis section of the Proposing Release for the number of
new and existing contracts likely to use the summary prospectus
option, see supra note 6, n.698 and accompanying text, assume that
700,000 initial summary prospectuses and 13 million updating summary
prospectuses will be printed and mailed annually, with an estimated
unit cost of $1.20 (first-class) for each initial summary
prospectus, and $0.55 (bulk rate) for each updating summary
prospectus.
    \1243\ The commenter's estimates assume that each new and
existing contract is a proxy for a single new and existing investor,
which conflicts with our understanding that each contract may have
many investors (new and existing). However, lacking other specific
data upon which to estimate printing and mailing costs associated
with summary prospectuses, we apply the commenter's methodology for
purposes of this PRA analysis (updated to reflect revised estimates
for the number of initial and existing contracts likely to use a
summary prospectus). See supra note 1077 and accompanying text.
Calculated as follows: Initial summary prospectuses ($1.20 unit cost
x 986,000 new contracts (initial mailings)) = $1,183,200) + updating