ING USA Annuity and Life Insurance Company, et al., Notice of Application, 24324-24327 [E8-9632]
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24324
Federal Register / Vol. 73, No. 86 / Friday, May 2, 2008 / Notices
SECURITIES AND EXCHANGE
COMMISSION
[Release No. IC–28256; File No. 812–13466]
ING USA Annuity and Life Insurance
Company, et al., Notice of Application
April 28, 2008.
The Securities and Exchange
Commission (‘‘Commission’’).
ACTION: Notice of application for an
order pursuant to Section 26(c) of the
Investment Company Act of 1940, as
amended (the ‘‘1940 Act’’) approving a
substitution of securities.
AGENCY:
ING USA Annuity and Life
Insurance Company and ReliaStar Life
Insurance Company of New York (each
a ‘‘Company’’ and together, the
‘‘Companies’’), Separate Account B of
ING USA Annuity and Life Insurance
Company, ReliaStar Life Insurance
Company of New York Separate
Account NY–B (each, an ‘‘Account’’ and
together, the ‘‘Accounts’’), and ING
Variable Portfolios, Inc. are collectively
referred to herein as the ‘‘Applicants.’’
SUMMARY OF APPLICATION: The
Applicants request an order, pursuant to
Section 26(c) of the 1940 Act, permitting
the substitution (‘‘Substitution’’) of
shares of the ING Russell Small Cap
Index Portfolio—Class S (the
‘‘Substitute Fund’’) for shares of
ProFund VP Small-Cap (the ‘‘Replaced
Fund’’).
FILING DATE: The Application was filed
on December 27, 2007 and amended and
restated on April 18, 2008.
HEARING OR NOTIFICATION OF HEARING: An
order granting the Application will be
issued unless the Commission orders a
hearing. Interested persons may request
a hearing by writing to the Secretary of
the Commission and serving Applicants
with a copy of the request, personally or
by mail. Hearing requests should be
received by the Commission by 5:30
p.m. on May 22, 2008, and should be
accompanied by proof of service on
Applicants, in the form of an affidavit
or, for lawyers, a certificate of service.
Hearing requests should state the nature
of the writer’s interest, the reason for the
request, and the issues contested.
Persons who wish to be notified of a
hearing may request notification by
writing to the Secretary of the
Commission.
ADDRESSES: Secretary, Securities and
Exchange Commission, 100 F Street,
NE., Washington, DC 20549–1090.
Applicants, J. Neil McMurdie, Counsel,
ING Americas U.S. Legal Services, One
Orange Way, C1S, Windsor, CT 06095.
FOR FURTHER INFORMATION CONTACT:
Alison White, Senior Counsel, or Joyce
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APPLICANTS:
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Jkt 214001
M. Pickholz, Branch Chief, Office of
Insurance Products, Division of
Investment Management, at (202) 551–
6795.
The
following is a summary of the
Application. The complete Application
is available for a fee from the Public
Reference Branch of the Commission,
100 F Street, NE., Room 1580,
Washington, DC 20549.
SUPPLEMENTARY INFORMATION:
Applicants’ Representations
1. Each of the Companies is an
indirect wholly owned subsidiary of
ING Groep, N.V. (‘‘ING’’). ING is a global
financial services holding company
based in The Netherlands which is
active in the field of insurance, banking
and asset management. As a result, each
Company likely would be deemed to be
an affiliate of the others.
2. ING USA Annuity and Life
Insurance Company (‘‘ING USA’’) is an
Iowa stock life insurance company
which was originally organized in 1973
under the insurance laws of Minnesota.
Through January 1, 2004 mergers, ING
USA’s operations include the business
of Equitable Life Insurance Company of
Iowa, United Life and Annuity
Insurance Company, and USG Annuity
and Life Company. Prior to January 1,
2004, ING USA was known as Golden
American Life Insurance Company. ING
USA is principally engaged in the
business of issuing life insurance and
annuities.
3. ReliaStar Life Insurance Company
of New York (‘‘ReliaStar NY’’) is a stock
life insurance company which was
incorporated under the laws of the State
of New York in 1917. Through an April
1, 2002 merger, ReliaStar NY’s
operations include the business of First
Golden American Life Insurance
Company of New York. ReliaStar NY is
principally engaged in the business of
issuing life insurance and annuities.
4. Each of the Accounts is a
segregated asset account of the
Company that is the depositor of such
Account, and is registered under the
1940 Act as a unit investment trust.
Each of the respective Accounts is used
by the Company of which it is a part to
support the Contracts that it issues.
5. Separate Account B of ING USA
Annuity and Life Insurance Company
(File No. 811–5626) was established by
Golden in 1988 under the laws of the
State of Minnesota.
6. ReliaStar Life Insurance Company
of New York Separate Account NY–B,
formerly Separate Account NY–B of
First Golden American Life Insurance
Company of New York (File No. 811–
7935), was established by First Golden
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in 1996 under the laws of the State of
New York.
7. The ING Russell Small Cap Index
Portfolio, a series of ING Variable
Portfolios, Inc., will be used as the
Substitute Fund.
8. ING Variable Portfolios, formerly
known as Aetna Variable Portfolios,
Inc., was organized as a Maryland
Corporation in 1996. ING Variable
Portfolios is registered under the 1940
Act as an open-end management
investment company (File No. 811–
07651).
9. ING Investments, LLC (‘‘ING
Investments’’), an Arizona limited
liability company and an SEC registered
investment adviser, serves as the
investment adviser to each portfolio of
ING Variable Portfolios. ING
Investments maintains its offices at 7337
East Doubletree Ranch Road, Scottsdale,
Arizona 85258.
10. ING Investments, subject to the
direction of ING Variable Portfolios
Board of Directors (the ‘‘Board’’), will
have overall responsibility for the
management of the Substitute Fund.
ING Investments will provide all
investment advisory and portfolio
management services for the Substitute
Fund and assist in managing and
supervising all aspects of the general
day-to-day business activities and
operations of the Substitute Fund,
including custodial, transfer agency,
dividend disbursing, accounting,
auditing, compliance and related
services.
11. The ProFund VP Small-Cap, a
series of the ProFunds Trust, will be
replaced pursuant to any order issued
pursuant to this Application.
12. The terms and conditions,
including charges and expenses,
applicable to each Contract are
described in the registration statements
filed with the SEC for each. The
Contracts are issued as individual
variable annuity contracts. As each
Contract is structured, owners of the
Contract (each a ‘‘Contract Owner’’) may
select one or more of the investment
options available under the Contract by
allocating premiums and transferring
account value to that subaccount of the
relevant Account that corresponds to
the investment option desired.
Thereafter, the account value of the
Contract Owner will vary based on the
investment experience of the selected
subaccount(s). Generally, a Contract
Owner may, during the life of each
Contract, make unlimited transfers of
account values among the subaccounts
available under the Contract, subject to
any administrative and/or transfer fees
applicable under the Contracts and any
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limits related to frequent or disruptive
transfers.
13. The comparative fees and
expenses for each fund in this proposed
substitution are as follows:
In percent
Management
fees
Substitute Fund:
• ING Russell Small Cap Index Portfolio—
Class S ..........................................................
Replaced Fund:
• ProFund VP Small-Cap 1 ..............................
1 The
Distribution
(12b–1) fees
Other
expenses
Total annual
expenses
Expense
waivers
Net annual
expenses
0.33
0.25
0.23
0.81
1 0.11
0.70
0.75
0.25
0.56
1.56
....................
1.56
expense limits will continue through at least May 1, 2009.
14. With respect to the Replaced
Fund, the Applicants represent that the
investment objective and the investment
policies of the Substitute Fund are the
same as those of the Replaced Fund and
therefore the essential objectives and
risk expectations of those Contract
Owners with interests in subaccounts of
the Replaced Fund (individually, an
‘‘Affected Contract Owner’’ and,
collectively, ‘‘Affected Contract
Owners’’) will continue to be met after
the Substitution.
15. The expense ratios and total
return figures for each fund as of
September 30, 2007, are as follows:
In percent
Expense
ratio
Substitute Fund:
• ING Russell Small Cap Index Portfolio—Class S 2 ..........................................
Replaced Fund:
• ProFund VP Small-Cap 1 ..................................................................................
1 The
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2 This
1 Year
3 Years
5 Years
10 Years
0.70
................
................
................
................
1.56
¥2.21
4.88
13.97
................
expense limits will continue through at least May 1, 2009.
portfolio commenced operations on March 4, 2008. Therefore, annual performance information is not yet available.
16. Applicants will effect the
Substitution as soon as practicable
following the issuance of the requested
order. As of the Effective Date of the
Substitution, shares of the Replaced
Fund will be redeemed for cash. The
Companies, on behalf of the Replaced
Fund subaccount of each relevant
Account, will simultaneously place a
redemption request with the Replaced
Fund and a purchase order with the
Substitute Fund so that the purchase of
Substitute Fund shares will be for the
exact amount of the redemption
proceeds. Thus, Contract values will
remain fully invested at all times. The
proceeds of such redemptions will then
be used to purchase the appropriate
number of shares of the Substitute
Fund.
17. The Substitution will take place at
relative net asset value (in accordance
with Rule 22c–1 under the 1940 Act)
with no change in the amount of any
affected Contract owner’s contract
value, cash value, accumulation value,
account value or death benefit, or in the
dollar value of his or her investment in
the applicable Account. No brokerage
commissions, fees or other
remuneration will be paid by either the
Replaced Fund or the Substitute Fund
or by affected Contract owners in
connection with the Substitution. The
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Jkt 214001
transactions comprising the Substitution
will be consistent with the policies of
each investment company involved and
with the general purposes of the 1940
Act.
18. Affected Contract owners will not
incur any fees or charges as a result of
the Substitution nor will their rights or
the Companies’ obligations under the
Contracts be altered in any way. The
Companies or their affiliates will pay all
expenses and transaction costs of the
Substitution, including legal and
accounting expenses, any applicable
brokerage expenses, and other fees and
expenses. In addition, the Substitution
will not impose any tax liability on
affected Contract owners. The
Substitution will not cause the Contract
fees and charges currently being paid by
affected Contract owners to be greater
after the Substitution than before the
Substitution. Also, as described more
fully below, after notification of the
Substitution and for 30 days after the
Substitution, affected Contract owners
may reallocate to any other investment
options available under their Contract
the subaccount value of the Replaced
Fund without incurring any
administrative costs or allocation
(transfer) charges.
19. All affected Contract owners were
notified of the Substitution by means of
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supplements to the Contract
prospectuses shortly after the date the
Application was first filed with the
Commission. Among other information
regarding the Substitution, the
supplements informed affected Contract
owners that beginning on the date of the
first supplement the Companies would
not exercise any rights reserved by them
under the Contracts to impose
restrictions or fees on transfers from the
Replaced Fund (other than restrictions
related to frequent or disruptive
transfers) until at least 30 days after the
Effective Date of the Substitution.
Following the date the order requested
by the Application is issued, but before
the Effective Date, affected Contract
owners will receive a second
supplement to the Contract prospectus
setting forth the Effective Date and
advising affected Contract owners of
their right, if they so choose, at any time
prior to the Effective Date, to reallocate
or withdraw accumulated value in the
Replaced Fund subaccounts under their
Contracts or otherwise terminate their
interest therein in accordance with the
terms and conditions of their Contracts.
If affected Contract Owners reallocate
account value prior to the Effective Date
or within 30 days after the Effective
Date, there will be no charge for the
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reallocation of accumulated value from
the Replaced Fund subaccount and the
reallocation will not count as a transfer
when imposing any applicable
restriction or limit under the Contract
on transfers. The Companies will not
exercise any right they may have under
the Contracts to impose additional
restrictions or fees on transfers from the
Replaced Fund under the Contracts
(other than restrictions related to
frequent or disruptive transfers) for a
period of at least 30 days following the
Effective Date of the Substitution.
Additionally, all current Contract
Owners will be sent prospectuses of the
Substitute Fund before the Effective
Date.
20. Within five (5) business days after
the Effective Date, affected Contract
Owners will be sent a written
confirmation (‘‘Post-Substitution
Confirmation’’) indicating that shares of
the Replaced Fund have been redeemed
and that the shares of Substitute Fund
have been substituted. The PostSubstitution Confirmation will show
how the allocation of the Contract
Owner’s account value before and
immediately following the Substitution
has changed as a result of the
Substitution and detail the transactions
effected on behalf of the respective
affected Contract Owner because of the
Substitution.
Applicant’s Legal Analysis
1. Applicants represent that each of
the prospectuses for the Contracts
expressly discloses the reservation of
the Companies’ right, subject to
Commission approval and compliance
with applicable law, to substitute shares
of another open-end management
investment company for shares of an
open-end management investment
company held by a subaccount of an
Account.
2. Applicants state that the
Companies reserved this right of
substitution both to protect themselves
and their Contract owners in situations
where either might be harmed or
disadvantaged by circumstances
surrounding the issuer of the shares
held by one or more of its separate
accounts, and to afford the opportunity
to replace such shares where to do so
could benefit the Contract owners and
Companies.
3. Applicants maintain that Contract
Owners will be better served by the
proposed Substitution. Applicants
anticipate that the replacement of the
Replaced Fund will result in a Contract
that is administered and managed more
efficiently, and one that is more
competitive with other variable
products in both wholesale and retail
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17:17 May 01, 2008
Jkt 214001
markets. The Substitute Fund will be
managed according to the same
investment objective and policies as the
Replaced Fund. Moreover, the overall
expenses of the Substitute Fund are less
than those of the Replaced Fund.
4. Applicants anticipate that Contract
owners will be at least as well off with
the proposed array of subaccounts to be
offered after the proposed substitutions
as they have been with the array of
subaccounts offered before the
substitutions. The proposed
Substitution retains for Contract owners
the investment flexibility which is a
central feature of the Contracts. If the
proposed Substitution is carried out, all
Contract owners will be permitted to
allocate purchase payments and transfer
accumulated values and contract values
between and among the remaining
subaccounts as they could before the
proposed Substitution.
Applicant’s Conditions
1. The Substitute Fund has an
investment objective and investment
policies that are the same as the
investment objective and policies of the
Replaced Fund, so that the objective of
the Affected Contract Owners can
continue to be met.
2. For two years following the
implementation of the Substitution
described herein, the net annual
expenses of the Substitute Fund will not
exceed the net annual expenses of the
Replaced Fund immediately preceding
the Substitution. To achieve this
limitation, ING Investments will waive
fees or reimburse the Substitute Fund in
certain amounts to maintain expenses at
or below the limit. Any adjustments will
be made at least on a quarterly basis. In
addition, the Companies will not
increase the Contract fees and charges,
including asset based charges such as
mortality and expense risk charges
deducted from the Subaccounts, that
would otherwise be assessed under the
terms of the Contracts for a period of at
least two years following the
Substitution.
3. Affected Contract Owners may
reallocate amounts from the Replaced
Fund without incurring a reallocation
charge or limiting their number of future
reallocations, or withdraw amounts
under any Affected Contract or
otherwise terminate their interest
therein at any time prior to the Effective
Date and for a period of at least 30 days
following the Effective Date in
accordance with the terms and
conditions of such Contract. Any such
reallocation will not count as a transfer
when imposing any applicable
restriction or limit under the Contract
on transfers.
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4. The Substitution will be effected at
the net asset value of the respective
shares in conformity with Section 22(c)
of the 1940 Act and Rule 22c–1
thereunder, without the imposition of
any transfer or similar charge by
Applicants.
5. The Substitution will take place at
relative net asset value without change
in the amount or value of any Contract
held by Affected Contract Owners.
Affected Contract Owners will not incur
any fees or charges as a result of the
Substitution, nor will their rights or the
obligations of the Companies under
such Contracts be altered in any way.
6. No brokerage commissions, fees or
other remuneration will be paid by the
Replaced Fund or the Substitute Fund
or Affected Contract Owners in
connection with the Substitution.
7. The Substitution will not alter in
any way the annuity, life or tax benefits
afforded under the Contracts held by
any Affected Contract Owner.
8. The Companies will send to their
Affected Contract Owners within five
(5) business days of the Substitution a
written Post-Substitution Confirmation
which will include the before and after
account values (which will not have
changed as a result of the Substitution)
and detail the transactions effected on
behalf of the respective Affected
Contract Owner with regard to the
Substitution. With the Post-Substitution
Confirmations the Companies will
remind Affected Contract Owners that
they may reallocate amounts from the
Substitute Fund without incurring a
reallocation charge or limiting their
number of future reallocations for a least
30 days following the Effective Date in
accordance with the terms and
conditions of their Contract.
9. The Companies or their affiliates
will pay all expenses and transaction
costs of the Substitution, including legal
and accounting expenses, any
applicable brokerage expenses, and
other fees and expenses. In addition, the
Substitution will not impose any tax
liability on Affected Contract Owners.
10. Under the manager-of-managers
relief covering ING Variable Portfolios,
a vote of the shareholders is not
necessary to change a sub-adviser,
except for changes involving an
affiliated sub-adviser. Notwithstanding,
the Applicants agree not to change the
Substitute Fund’s sub-adviser without
first obtaining shareholder approval
after the Effective Date of the
Substitution of either (a) the sub-adviser
change or (b) the Applicants’ continued
ability to rely on their manager-ofmanager relief.
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11. The Commission shall have issued
an order approving the Substitution
under Section 26(c) of the 1940 Act.
12. A registration statement for the
Substitute Fund is effective and the
investment objectives and policies and
fees and expenses for the Substitute
Fund as described herein have been
implemented.
13. Each Affected Contract Owner
will have been sent a copy of (a) a
Contract prospectus supplement
informing shareholders of this
Application; (b) a prospectus for the
Substitute Fund, and (c) a second
supplement to the Contract prospectus
setting forth the Effective Date and
advising Affected Contract Owners of
their right to reconsider the Substitution
and, if they so choose, any time prior to
the Effective Date and for 30 days
thereafter, to reallocate or withdraw
amounts under their affected Contract or
otherwise terminate their interest
therein in accordance with the terms
and conditions of their Contract.
14. The Companies shall have
satisfied themselves, that (a) the
Contracts allow the substitution of
investment company shares in the
manner contemplated by the
Substitution and related transactions
described herein; (b) the transaction can
be consummated as described in this
Application under applicable insurance
laws; and (c) that any regulatory
requirements in each jurisdiction where
the Contracts are qualified for sale, have
been complied with to the extent
necessary to complete the transaction.
Conclusion
For the reasons and upon the facts set
forth above, Applicants submit that the
requested order meets the standards set
forth in Section 26(c) of the 1940 Act.
Applicants request an order of the
Commission, pursuant to Section 26(c)
of the 1940 Act, approving the
Substitutions.
For the Commission, by the Division of
Investment Management, pursuant to
delegated authority.
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E8–9632 Filed 5–1–08; 8:45 am]
BILLING CODE 8010–01–P
mstockstill on PROD1PC66 with NOTICES
SECURITIES AND EXCHANGE
COMMISSION
Sunshine Act Meeting
Notice is hereby given, pursuant to
the provisions of the Government in the
Sunshine Act, Pub. L. 94–409, that the
Securities and Exchange Commission
will hold an Open Meeting on Monday,
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17:17 May 01, 2008
Jkt 214001
May 5, 2008 at 10 a.m., in the
Auditorium, Room L–002.
The subject matter of the Open
Meeting will be:
1. The Commission will hear oral
argument on an appeal by Impax
Laboratories, Inc. from an initial
decision of an administrative law judge.
Impax, a Delaware corporation,
develops, manufactures, and distributes
pharmaceutical products. Impax’s
common stock is registered with the
Commission pursuant to Section 12(g)
of the Securities Exchange Act of 1934.
The law judge found that Impax had
violated Exchange Act Section 13(a) and
Exchange Act Rules 13a–1 and 13a–13
thereunder by failing to file its required
quarterly and annual reports for any
period after September 30, 2004. The
law judge revoked the registration of
Impax’s common stock.
Impax does not appeal the law judge’s
findings of violation. However, Impax
does appeal the sanction imposed by the
law judge.
Issues likely to be considered include
whether the protection of investors
requires revoking the Section 12(g)
registration of Impax’s common stock.
2. The Commission will also hear oral
argument on an appeal by Robert
Radano from an initial decision of an
administrative law judge barring him
from associating with any investment
adviser. The law judge based his
decision to impose a bar on Radano’s
having been enjoined from future
violations of (A) Sections 206(1) and
(2)—the antifraud provisions—of the
Investment Advisers Act, and (B)
Investment Advisers Act Section 203(f),
which prohibits investment advisers
from associating with a barred
individual. Issues likely to be
considered include whether it is in the
public interest to bar Radano from
association with any investment
adviser.
At times, changes in Commission
priorities require alterations in the
scheduling of meeting items.
For further information and to
ascertain what, if any, matters have been
added, deleted or postponed, please
contact:
The Office of the Secretary at (202)
551–5400.
Dated: April 28, 2008.
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E8–9644 Filed 5–1–08; 8:45 am]
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24327
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–57713; File No. SR–BSE–
2008–28]
Self-Regulatory Organizations; Boston
Stock Exchange, Inc.; Notice of Filing
and Immediate Effectiveness of
Proposed Rule Change Regarding
Transfer of BOX Units From the
´
Montreal Exchange Inc. to MX US 2,
Inc.
April 25, 2008.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on April 22,
2008, the Boston Stock Exchange, Inc.
(‘‘BSE’’ or ‘‘Exchange’’) filed with the
Securities and Exchange Commission
(‘‘Commission’’) the proposed rule
change as described in Items I and II
below which Items have been
substantially prepared by the BSE. The
Exchange filed the proposal as a ‘‘noncontroversial’’ proposed rule change
pursuant to Section 19(b)(3)(A) of the
Act 3 and Rule 19b–4(f)(6) thereunder,4
which renders the proposal effective
upon filing with the Commission. The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange is submitting the
proposed rule change to the
Commission to amend the Fifth
Amended and Restated Operating
Agreement, dated January 26, 2005,
(‘‘BOX LLC Agreement’’), of the Boston
Options Exchange Group LLC (‘‘BOX
LLC’’), in connection with the transfer
´
by the Montreal Exchange Inc.,5 a
´
company incorporated in Quebec,
Canada (‘‘MX’’), of its 31.37%
ownership interest in BOX LLC to MX
U.S. 2, Inc. (‘‘MX US’’), a wholly-owned
U.S. subsidiary of MX.6 The text of the
proposed rule change is available at the
BSE, the Commission’s Public Reference
Room, and https://www.bostonstock.com.
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 15 U.S.C. 78s(b)(3)(A).
4 17 CFR 240.19b–4(f)(6).
5 The Montreal Exchange Inc. is also known in
´
´
French as the Bourse de Montreal Inc.
6 Capitalized terms not otherwise defined herein
shall have the meanings set forth in the BOX LLC
Agreement.
2 17
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]]>Agencies
[Federal Register Volume 73, Number 86 (Friday, May 2, 2008)]
[Notices]
[Pages 24324-24327]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E8-9632]
[[Page 24324]]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. IC-28256; File No. 812-13466]
ING USA Annuity and Life Insurance Company, et al., Notice of
Application
April 28, 2008.
AGENCY: The Securities and Exchange Commission (``Commission'').
ACTION: Notice of application for an order pursuant to Section 26(c) of
the Investment Company Act of 1940, as amended (the ``1940 Act'')
approving a substitution of securities.
-----------------------------------------------------------------------
Applicants: ING USA Annuity and Life Insurance Company and ReliaStar
Life Insurance Company of New York (each a ``Company'' and together,
the ``Companies''), Separate Account B of ING USA Annuity and Life
Insurance Company, ReliaStar Life Insurance Company of New York
Separate Account NY-B (each, an ``Account'' and together, the
``Accounts''), and ING Variable Portfolios, Inc. are collectively
referred to herein as the ``Applicants.''
Summary of Application: The Applicants request an order, pursuant to
Section 26(c) of the 1940 Act, permitting the substitution
(``Substitution'') of shares of the ING Russell Small Cap Index
Portfolio--Class S (the ``Substitute Fund'') for shares of ProFund VP
Small-Cap (the ``Replaced Fund'').
Filing Date: The Application was filed on December 27, 2007 and amended
and restated on April 18, 2008.
Hearing or Notification of Hearing: An order granting the Application
will be issued unless the Commission orders a hearing. Interested
persons may request a hearing by writing to the Secretary of the
Commission and serving Applicants with a copy of the request,
personally or by mail. Hearing requests should be received by the
Commission by 5:30 p.m. on May 22, 2008, and should be accompanied by
proof of service on Applicants, in the form of an affidavit or, for
lawyers, a certificate of service. Hearing requests should state the
nature of the writer's interest, the reason for the request, and the
issues contested. Persons who wish to be notified of a hearing may
request notification by writing to the Secretary of the Commission.
ADDRESSES: Secretary, Securities and Exchange Commission, 100 F Street,
NE., Washington, DC 20549-1090. Applicants, J. Neil McMurdie, Counsel,
ING Americas U.S. Legal Services, One Orange Way, C1S, Windsor, CT
06095.
FOR FURTHER INFORMATION CONTACT: Alison White, Senior Counsel, or Joyce
M. Pickholz, Branch Chief, Office of Insurance Products, Division of
Investment Management, at (202) 551-6795.
SUPPLEMENTARY INFORMATION: The following is a summary of the
Application. The complete Application is available for a fee from the
Public Reference Branch of the Commission, 100 F Street, NE., Room
1580, Washington, DC 20549.
Applicants' Representations
1. Each of the Companies is an indirect wholly owned subsidiary of
ING Groep, N.V. (``ING''). ING is a global financial services holding
company based in The Netherlands which is active in the field of
insurance, banking and asset management. As a result, each Company
likely would be deemed to be an affiliate of the others.
2. ING USA Annuity and Life Insurance Company (``ING USA'') is an
Iowa stock life insurance company which was originally organized in
1973 under the insurance laws of Minnesota. Through January 1, 2004
mergers, ING USA's operations include the business of Equitable Life
Insurance Company of Iowa, United Life and Annuity Insurance Company,
and USG Annuity and Life Company. Prior to January 1, 2004, ING USA was
known as Golden American Life Insurance Company. ING USA is principally
engaged in the business of issuing life insurance and annuities.
3. ReliaStar Life Insurance Company of New York (``ReliaStar NY'')
is a stock life insurance company which was incorporated under the laws
of the State of New York in 1917. Through an April 1, 2002 merger,
ReliaStar NY's operations include the business of First Golden American
Life Insurance Company of New York. ReliaStar NY is principally engaged
in the business of issuing life insurance and annuities.
4. Each of the Accounts is a segregated asset account of the
Company that is the depositor of such Account, and is registered under
the 1940 Act as a unit investment trust. Each of the respective
Accounts is used by the Company of which it is a part to support the
Contracts that it issues.
5. Separate Account B of ING USA Annuity and Life Insurance Company
(File No. 811-5626) was established by Golden in 1988 under the laws of
the State of Minnesota.
6. ReliaStar Life Insurance Company of New York Separate Account
NY-B, formerly Separate Account NY-B of First Golden American Life
Insurance Company of New York (File No. 811-7935), was established by
First Golden in 1996 under the laws of the State of New York.
7. The ING Russell Small Cap Index Portfolio, a series of ING
Variable Portfolios, Inc., will be used as the Substitute Fund.
8. ING Variable Portfolios, formerly known as Aetna Variable
Portfolios, Inc., was organized as a Maryland Corporation in 1996. ING
Variable Portfolios is registered under the 1940 Act as an open-end
management investment company (File No. 811-07651).
9. ING Investments, LLC (``ING Investments''), an Arizona limited
liability company and an SEC registered investment adviser, serves as
the investment adviser to each portfolio of ING Variable Portfolios.
ING Investments maintains its offices at 7337 East Doubletree Ranch
Road, Scottsdale, Arizona 85258.
10. ING Investments, subject to the direction of ING Variable
Portfolios Board of Directors (the ``Board''), will have overall
responsibility for the management of the Substitute Fund. ING
Investments will provide all investment advisory and portfolio
management services for the Substitute Fund and assist in managing and
supervising all aspects of the general day-to-day business activities
and operations of the Substitute Fund, including custodial, transfer
agency, dividend disbursing, accounting, auditing, compliance and
related services.
11. The ProFund VP Small-Cap, a series of the ProFunds Trust, will
be replaced pursuant to any order issued pursuant to this Application.
12. The terms and conditions, including charges and expenses,
applicable to each Contract are described in the registration
statements filed with the SEC for each. The Contracts are issued as
individual variable annuity contracts. As each Contract is structured,
owners of the Contract (each a ``Contract Owner'') may select one or
more of the investment options available under the Contract by
allocating premiums and transferring account value to that subaccount
of the relevant Account that corresponds to the investment option
desired. Thereafter, the account value of the Contract Owner will vary
based on the investment experience of the selected subaccount(s).
Generally, a Contract Owner may, during the life of each Contract, make
unlimited transfers of account values among the subaccounts available
under the Contract, subject to any administrative and/or transfer fees
applicable under the Contracts and any
[[Page 24325]]
limits related to frequent or disruptive transfers.
13. The comparative fees and expenses for each fund in this
proposed substitution are as follows:
----------------------------------------------------------------------------------------------------------------
In percent
-----------------------------------------------------------------------------------
Total
Management Distribution Other annual Expense Net annual
fees (12b-1) fees expenses expenses waivers expenses
----------------------------------------------------------------------------------------------------------------
Substitute Fund:
ING Russell 0.33 0.25 0.23 0.81 \1\ 0.11 0.70
Small Cap Index
Portfolio--Class S.....
Replaced Fund:
ProFund VP 0.75 0.25 0.56 1.56 ........... 1.56
Small-Cap \1\..........
----------------------------------------------------------------------------------------------------------------
\1\ The expense limits will continue through at least May 1, 2009.
14. With respect to the Replaced Fund, the Applicants represent
that the investment objective and the investment policies of the
Substitute Fund are the same as those of the Replaced Fund and
therefore the essential objectives and risk expectations of those
Contract Owners with interests in subaccounts of the Replaced Fund
(individually, an ``Affected Contract Owner'' and, collectively,
``Affected Contract Owners'') will continue to be met after the
Substitution.
15. The expense ratios and total return figures for each fund as of
September 30, 2007, are as follows:
----------------------------------------------------------------------------------------------------------------
In percent
------------------------------------------------------
Expense
ratio 1 Year 3 Years 5 Years 10 Years
----------------------------------------------------------------------------------------------------------------
Substitute Fund:
ING Russell Small Cap Index Portfolio--Class 0.70 ......... ......... ......... .........
S \2\...............................................
Replaced Fund:
ProFund VP Small-Cap \1\.................... 1.56 -2.21 4.88 13.97 .........
----------------------------------------------------------------------------------------------------------------
\1\ The expense limits will continue through at least May 1, 2009.
\2\ This portfolio commenced operations on March 4, 2008. Therefore, annual performance information is not yet
available.
16. Applicants will effect the Substitution as soon as practicable
following the issuance of the requested order. As of the Effective Date
of the Substitution, shares of the Replaced Fund will be redeemed for
cash. The Companies, on behalf of the Replaced Fund subaccount of each
relevant Account, will simultaneously place a redemption request with
the Replaced Fund and a purchase order with the Substitute Fund so that
the purchase of Substitute Fund shares will be for the exact amount of
the redemption proceeds. Thus, Contract values will remain fully
invested at all times. The proceeds of such redemptions will then be
used to purchase the appropriate number of shares of the Substitute
Fund.
17. The Substitution will take place at relative net asset value
(in accordance with Rule 22c-1 under the 1940 Act) with no change in
the amount of any affected Contract owner's contract value, cash value,
accumulation value, account value or death benefit, or in the dollar
value of his or her investment in the applicable Account. No brokerage
commissions, fees or other remuneration will be paid by either the
Replaced Fund or the Substitute Fund or by affected Contract owners in
connection with the Substitution. The transactions comprising the
Substitution will be consistent with the policies of each investment
company involved and with the general purposes of the 1940 Act.
18. Affected Contract owners will not incur any fees or charges as
a result of the Substitution nor will their rights or the Companies'
obligations under the Contracts be altered in any way. The Companies or
their affiliates will pay all expenses and transaction costs of the
Substitution, including legal and accounting expenses, any applicable
brokerage expenses, and other fees and expenses. In addition, the
Substitution will not impose any tax liability on affected Contract
owners. The Substitution will not cause the Contract fees and charges
currently being paid by affected Contract owners to be greater after
the Substitution than before the Substitution. Also, as described more
fully below, after notification of the Substitution and for 30 days
after the Substitution, affected Contract owners may reallocate to any
other investment options available under their Contract the subaccount
value of the Replaced Fund without incurring any administrative costs
or allocation (transfer) charges.
19. All affected Contract owners were notified of the Substitution
by means of supplements to the Contract prospectuses shortly after the
date the Application was first filed with the Commission. Among other
information regarding the Substitution, the supplements informed
affected Contract owners that beginning on the date of the first
supplement the Companies would not exercise any rights reserved by them
under the Contracts to impose restrictions or fees on transfers from
the Replaced Fund (other than restrictions related to frequent or
disruptive transfers) until at least 30 days after the Effective Date
of the Substitution. Following the date the order requested by the
Application is issued, but before the Effective Date, affected Contract
owners will receive a second supplement to the Contract prospectus
setting forth the Effective Date and advising affected Contract owners
of their right, if they so choose, at any time prior to the Effective
Date, to reallocate or withdraw accumulated value in the Replaced Fund
subaccounts under their Contracts or otherwise terminate their interest
therein in accordance with the terms and conditions of their Contracts.
If affected Contract Owners reallocate account value prior to the
Effective Date or within 30 days after the Effective Date, there will
be no charge for the
[[Page 24326]]
reallocation of accumulated value from the Replaced Fund subaccount and
the reallocation will not count as a transfer when imposing any
applicable restriction or limit under the Contract on transfers. The
Companies will not exercise any right they may have under the Contracts
to impose additional restrictions or fees on transfers from the
Replaced Fund under the Contracts (other than restrictions related to
frequent or disruptive transfers) for a period of at least 30 days
following the Effective Date of the Substitution. Additionally, all
current Contract Owners will be sent prospectuses of the Substitute
Fund before the Effective Date.
20. Within five (5) business days after the Effective Date,
affected Contract Owners will be sent a written confirmation (``Post-
Substitution Confirmation'') indicating that shares of the Replaced
Fund have been redeemed and that the shares of Substitute Fund have
been substituted. The Post-Substitution Confirmation will show how the
allocation of the Contract Owner's account value before and immediately
following the Substitution has changed as a result of the Substitution
and detail the transactions effected on behalf of the respective
affected Contract Owner because of the Substitution.
Applicant's Legal Analysis
1. Applicants represent that each of the prospectuses for the
Contracts expressly discloses the reservation of the Companies' right,
subject to Commission approval and compliance with applicable law, to
substitute shares of another open-end management investment company for
shares of an open-end management investment company held by a
subaccount of an Account.
2. Applicants state that the Companies reserved this right of
substitution both to protect themselves and their Contract owners in
situations where either might be harmed or disadvantaged by
circumstances surrounding the issuer of the shares held by one or more
of its separate accounts, and to afford the opportunity to replace such
shares where to do so could benefit the Contract owners and Companies.
3. Applicants maintain that Contract Owners will be better served
by the proposed Substitution. Applicants anticipate that the
replacement of the Replaced Fund will result in a Contract that is
administered and managed more efficiently, and one that is more
competitive with other variable products in both wholesale and retail
markets. The Substitute Fund will be managed according to the same
investment objective and policies as the Replaced Fund. Moreover, the
overall expenses of the Substitute Fund are less than those of the
Replaced Fund.
4. Applicants anticipate that Contract owners will be at least as
well off with the proposed array of subaccounts to be offered after the
proposed substitutions as they have been with the array of subaccounts
offered before the substitutions. The proposed Substitution retains for
Contract owners the investment flexibility which is a central feature
of the Contracts. If the proposed Substitution is carried out, all
Contract owners will be permitted to allocate purchase payments and
transfer accumulated values and contract values between and among the
remaining subaccounts as they could before the proposed Substitution.
Applicant's Conditions
1. The Substitute Fund has an investment objective and investment
policies that are the same as the investment objective and policies of
the Replaced Fund, so that the objective of the Affected Contract
Owners can continue to be met.
2. For two years following the implementation of the Substitution
described herein, the net annual expenses of the Substitute Fund will
not exceed the net annual expenses of the Replaced Fund immediately
preceding the Substitution. To achieve this limitation, ING Investments
will waive fees or reimburse the Substitute Fund in certain amounts to
maintain expenses at or below the limit. Any adjustments will be made
at least on a quarterly basis. In addition, the Companies will not
increase the Contract fees and charges, including asset based charges
such as mortality and expense risk charges deducted from the
Subaccounts, that would otherwise be assessed under the terms of the
Contracts for a period of at least two years following the
Substitution.
3. Affected Contract Owners may reallocate amounts from the
Replaced Fund without incurring a reallocation charge or limiting their
number of future reallocations, or withdraw amounts under any Affected
Contract or otherwise terminate their interest therein at any time
prior to the Effective Date and for a period of at least 30 days
following the Effective Date in accordance with the terms and
conditions of such Contract. Any such reallocation will not count as a
transfer when imposing any applicable restriction or limit under the
Contract on transfers.
4. The Substitution will be effected at the net asset value of the
respective shares in conformity with Section 22(c) of the 1940 Act and
Rule 22c-1 thereunder, without the imposition of any transfer or
similar charge by Applicants.
5. The Substitution will take place at relative net asset value
without change in the amount or value of any Contract held by Affected
Contract Owners. Affected Contract Owners will not incur any fees or
charges as a result of the Substitution, nor will their rights or the
obligations of the Companies under such Contracts be altered in any
way.
6. No brokerage commissions, fees or other remuneration will be
paid by the Replaced Fund or the Substitute Fund or Affected Contract
Owners in connection with the Substitution.
7. The Substitution will not alter in any way the annuity, life or
tax benefits afforded under the Contracts held by any Affected Contract
Owner.
8. The Companies will send to their Affected Contract Owners within
five (5) business days of the Substitution a written Post-Substitution
Confirmation which will include the before and after account values
(which will not have changed as a result of the Substitution) and
detail the transactions effected on behalf of the respective Affected
Contract Owner with regard to the Substitution. With the Post-
Substitution Confirmations the Companies will remind Affected Contract
Owners that they may reallocate amounts from the Substitute Fund
without incurring a reallocation charge or limiting their number of
future reallocations for a least 30 days following the Effective Date
in accordance with the terms and conditions of their Contract.
9. The Companies or their affiliates will pay all expenses and
transaction costs of the Substitution, including legal and accounting
expenses, any applicable brokerage expenses, and other fees and
expenses. In addition, the Substitution will not impose any tax
liability on Affected Contract Owners.
10. Under the manager-of-managers relief covering ING Variable
Portfolios, a vote of the shareholders is not necessary to change a
sub-adviser, except for changes involving an affiliated sub-adviser.
Notwithstanding, the Applicants agree not to change the Substitute
Fund's sub-adviser without first obtaining shareholder approval after
the Effective Date of the Substitution of either (a) the sub-adviser
change or (b) the Applicants' continued ability to rely on their
manager-of-manager relief.
[[Page 24327]]
11. The Commission shall have issued an order approving the
Substitution under Section 26(c) of the 1940 Act.
12. A registration statement for the Substitute Fund is effective
and the investment objectives and policies and fees and expenses for
the Substitute Fund as described herein have been implemented.
13. Each Affected Contract Owner will have been sent a copy of (a)
a Contract prospectus supplement informing shareholders of this
Application; (b) a prospectus for the Substitute Fund, and (c) a second
supplement to the Contract prospectus setting forth the Effective Date
and advising Affected Contract Owners of their right to reconsider the
Substitution and, if they so choose, any time prior to the Effective
Date and for 30 days thereafter, to reallocate or withdraw amounts
under their affected Contract or otherwise terminate their interest
therein in accordance with the terms and conditions of their Contract.
14. The Companies shall have satisfied themselves, that (a) the
Contracts allow the substitution of investment company shares in the
manner contemplated by the Substitution and related transactions
described herein; (b) the transaction can be consummated as described
in this Application under applicable insurance laws; and (c) that any
regulatory requirements in each jurisdiction where the Contracts are
qualified for sale, have been complied with to the extent necessary to
complete the transaction.
Conclusion
For the reasons and upon the facts set forth above, Applicants
submit that the requested order meets the standards set forth in
Section 26(c) of the 1940 Act. Applicants request an order of the
Commission, pursuant to Section 26(c) of the 1940 Act, approving the
Substitutions.
For the Commission, by the Division of Investment Management,
pursuant to delegated authority.
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E8-9632 Filed 5-1-08; 8:45 am]
BILLING CODE 8010-01-P
