American Council of Life Insurers
Accounting Committee

December 13, 2002

Mr. Jonathon G. Katz
Secretary
Securities and Exchange Commission
450 Fifth Street, NW
Washington, DC 20549

Re: File No. S7-43-92 Proposed Rule: Conditions for Use of Non-GAAP Financial Measures

Dear Mr. Katz:

The Accounting Committee of the American Council of Life Insurers (ACLI) appreciates the opportunity to provide its comments on the proposed rule regarding the Conditions for Use of Non-GAAP Financial Measures. ACLI is the principal trade association of life insurance companies, representing 399 members that account for, in the aggregate, 75 percent of the assets of legal reserve life insurance companies in the United States.

As life insurance companies are among the largest institutional investors, we applaud the Securities and Exchange Commission's (the Commission) in their efforts to increase investors' understanding of the financial disclosures of public companies.

While we generally support the concept of the proposal, we are concerned about the impact of the proposed amended Item 10 of Regulation S-K on life insurance companies. Specifically, we are concerned that the proposal requires 8-K's to be filed with press releases and supplements, thus making them SEC filings. It would appear that this would prohibit life insurance companies from disclosing earnings per share calculations on "operating earnings"¹ in those documents. Thus a very useful and consistently applied measurement of ongoing earnings of a life insurance company will be discarded.

Industry analysts traditionally have considered operating earnings as the most important indicator of past and present performance of life insurance companies. For example, in looking at First Call estimates for life insurance companies, analysts only project operating income, with a footnote stating that realized capital gains and losses are excluded. As such, disclosing earnings per share based on operating earnings should not be prohibited under this proposed rule. Excluding this information, we believe, would serve to reduce the usefulness of the financial information available to investors.

At a minimum, we believe that life insurance companies should be permitted to present earnings per share on operating earnings as a disclosure, including a reconciliation to the most comparable GAAP financial measure. We request that the Commission strongly consider this change in an effort to improve the transparency and quality of disclosure of non-GAAP financial measures, especially as it relates to the life insurance industry.

We thank you for the opportunity to comment on the proposed rule.

Sincerely,

James F. Renz
Senior Accountant

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1	Life insurance industry analysts define operating earnings as net income before realized capital gains and losses.