Aviva USA plans to oppose a proposed rule that would require federal oversight of its bread-and-butter product, equity-indexed annuities, A.M. Best Co. reported on Monday.

The U.S. Securities & Exchange Commission (SEC) in June issued a proposed rule that could redefine many of these annuities as securities rather than insurance products. If implemented, the change could have tremendous negative impact on several indexed-annuity writers, according to Best. Aviva USA, which is building a headquarters in West Des Moines, is the No. 1 seller of equity-indexed annuities, with $1.2 billion in annual sales.

"We continue to believe the products are not securities and those products should continue to be regulated by the state insurance departments as they always have," said Mark Hammond, regional finance director for Aviva North America. Aviva plans to participate in the comment period for the proposed rule, Hammond said.

The performance of equity-indexed annuities is tied to the performance of underlying securities, and the annuities guarantee a minimum return to investors. The SEC wants to more closely regulate these products to address complaints of unsuitable sales to seniors, who may unknowingly lock up their savings in long-term investments subject to high surrender charges.

Hammond declined to comment on how many of Aviva USA's insurance agents also are registered representatives, or licensed to sell securities. But he said the company is in a position to "ensure that both from a product perspective, as well as from our distribution's perspective, that we will be ready to comply with the terms of that rule if and when it's released in its final form."

Aviva USA's life insurance and annuities sales, up approximately 28 percent in the first half of 2008, were a strong point in an otherwise weak first two quarters for London-based Aviva plc. Nearly all of Aviva USA's products are equity-indexed annuities and equity-indexed life insurance policies. Aviva USA posted an after-tax loss of $68 million for the first six months of 2008 due to investment losses resulting from market volatility, the company said.