MetLife Insurance Company of Connecticut, et al., 16205-16211 [2010-7207]
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Federal Register / Vol. 75, No. 61 / Wednesday, March 31, 2010 / Notices
activity reports, small business week,
event announcements, and roundtable
discussion on small business issues.
FOR FURTHER INFORMATION CONTACT: The
meeting is open to the public however
advance notice of attendance is
requested. Anyone wishing to attend
and/or make a presentation to the
Region II Buffalo District Advisory
Council must contact Franklin J.
Sciortino, District Director, Buffalo
District Office by October 8, by fax or
email in order to be placed on the
agenda. Franklin J. Sciortino, District
Director, Buffalo District Office, U.S.
Small Business Administration, 540
Niagara Center, 130 S. Elmwood
Avenue, Buffalo, New York 14202;
telephone (716) 551–4301 or fax (716)
551–4418.
Additionally, if you need
accommodations because of a disability
or require additional information, please
contact Kelly Lotempio, BDS/PIO,
Buffalo District Office, U.S. Small
Business Administration, 540 Niagara
Center, 130 S. Elmwood Avenue,
Buffalo, New York 14202; telephone
(716) 551–4301, kelly.lotempio@sba.gov
or fax (716) 551–4418.
For more information, please visit our
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buffalo.
Meghan Burdick,
Deputy Chief of Staff/Committee Management
Officer.
[FR Doc. 2010–6816 Filed 3–30–10; 8:45 am]
BILLING CODE P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. IC–29190; File No. 812–13700]
MetLife Insurance Company of
Connecticut, et al.
March 25, 2010.
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AGENCY: Securities and Exchange
Commission (‘‘Commission’’).
ACTION: Notice of application for an
order pursuant to Section 26(c) of the
Investment Company Act of 1940 (the
‘‘Act’’) approving certain substitutions of
securities and an order of exemption
pursuant to Section 17(b) of the Act
from Section 17(a) of the Act.
Applicants: MetLife Insurance
Company of Connecticut (‘‘MetLife of
CT’’), MetLife of CT Separate Account
Eleven for Variable Annuities (‘‘Separate
Account Eleven’’), MetLife of CT
Separate Account QPN for Variable
Annuities (‘‘Separate Account QPN’’),
MetLife of CT Fund UL for Variable Life
Insurance (‘‘Fund UL’’), MetLife
Investors Insurance Company (‘‘MetLife
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Investors’’), MetLife Investors Variable
Annuity Account One (‘‘VA Account
One’’), MetLife Investors Variable Life
Account One (‘‘VL Account One’’),
MetLife Investors Variable Life Account
Eight (‘‘VL Account Eight’’), First
MetLife Investors Insurance Company
(‘‘First MetLife Investors’’), First MetLife
Investors Variable Annuity Account
One (‘‘First VA Account One’’), MetLife
Investors USA Insurance Company
(‘‘MetLife Investors USA’’), MetLife
Investors USA Separate Account A
(‘‘Separate Account A’’), Metropolitan
Life Insurance Company (‘‘MetLife’’),
Metropolitan Life Separate Account
DCVL (‘‘Separate Account DCVL’’),
Metropolitan Life Separate Account UL
(‘‘Separate Account UL’’), Security
Equity Separate Account Twenty-Six
(‘‘SE Separate Account Twenty-Six’’),
Security Equity Separate Account
Twenty-Seven (‘‘SE Separate Account
Twenty-Seven’’), Security Equity
Separate Account No. 13S (‘‘SE Separate
Account 13S’’), Security Equity Separate
Account No. 485 (‘‘SE Separate Account
485’’), General American Life Insurance
Company (‘‘General American’’)
(together with MetLife of CT, MetLife
Investors, First MetLife Investors,
MetLife Investors USA and MetLife, the
‘‘Insurance Companies’’), General
American Separate Account TwentyEight (‘‘GA Separate Account TwentyEight’’), General American Separate
Account Twenty-Nine (‘‘GA Separate
Account Twenty-Nine’’), (together with
Separate Account Eleven, Separate
Account QPN, Fund UL, VA Account
One, VL Account One, VL Account
Eight, First VA Account One, Separate
Account A, Separate Account DCVL,
Separate Account UL, SE Separate
Account Twenty-Six, SE Separate
Account Twenty-Seven, SE Separate
Account 13S, SE Separate Account 485
and GA Separate Account Twenty-Eight,
the ‘‘Separate Accounts’’), Met Investors
Series Trust (‘‘MIST’’) and Metropolitan
Series Fund, Inc. (‘‘Met Series Fund’’),
(together with MIST, the ‘‘Investment
Companies’’).
The Insurance Companies and the
Separate Accounts are referred to as the
‘‘Substitution Applicants.’’ The
Insurance Companies, the Separate
Accounts and the Investment
Companies are referred to as the
‘‘Section 17 Applicants.’’
SUMMARY: Summary of Application:
Applicants seek an order approving the
substitution of certain series of the
Investment Companies for shares of
series of other unaffiliated registered
investment companies held by the
Separate Accounts to fund certain group
and individual variable annuity
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16205
contracts and variable life insurance
policies issued by the Insurance
Companies (collectively, the
‘‘Contracts’’). The Section 17 Applicants
seek an order pursuant to Section 17(b)
of the Act to permit certain in-kind
transactions in connection with certain
of the Substitutions.
DATES: Filing Date: The application was
filed on September 21, 2009, and an
amended and restated application was
filed on March 23, 2010.
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 April 19, 2010, 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 issue contested. Persons
may request notification of a hearing by
writing to the Secretary of the
Commission.
ADDRESSES: Secretary, Securities and
Exchange Commission, 100 F Street,
NE., Washington, DC 20549–1090.
Applicants c/o Paul G. Cellupica, Chief
Counsel—Securities Regulation and
Corporate Services, MetLife Group, 1095
Avenue of the Americas, 40th Floor,
New York, NY 10036 and Robert N.
Hickey, Esq., Sullivan & Worcester LLP,
1666 K Street, NW., Washington, DC
20006.
FOR FURTHER INFORMATION CONTACT:
Alison T. White, Senior Counsel, or
Joyce 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
may be obtained via the Commission’s
Web site by searching for the file
number, or for an applicant using the
Company name box, at https://
www.sec.gov/search/search.htm, or by
calling (202) 551–8090.
SUPPLEMENTARY INFORMATION:
Applicants’ Representations
1. MetLife of CT is a stock life
insurance company organized in 1863
under the laws of Connecticut. MetLife
Investors is a stock life insurance
company organized on August 17, 1981
under the laws of Missouri. First
MetLife Investors is a stock life
insurance company organized on
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Federal Register / Vol. 75, No. 61 / Wednesday, March 31, 2010 / Notices
December 31, 1992 under the laws of
New York. MetLife Investors USA is a
stock life insurance company organized
on September 13, 1960 under the laws
of Delaware. MetLife is a stock life
insurance company organized in 1868
under the laws of New York. General
American is a stock life insurance
company organized in 1933 under the
laws of Missouri.
2. Separate Account Eleven, Fund UL,
VA Account One, VL Account One,
First VA Account One, Separate
Account A, Separate Account UL, SE
Separate Account Twenty-Six, SE
Separate Account Twenty-Seven,
Separate Account 13S, GA Separate
Account Twenty-Eight, and GA Separate
Account Twenty-Nine are registered
under the Act as unit investment trusts
for the purpose of funding the Contracts.
Security interests under the Contracts
have been registered under the
Securities Act of 1933.
3. Separate Account QPN is exempt
from registration under the Act. Security
interests under the Contracts have been
registered under the Securities Act of
1933.
4. VL Account Eight, Separate
Account DCVL and Separate Account
485 serve as separate account funding
vehicles for certain Contracts that are
exempt from registration under Section
4(2) of the Securities Act of 1933 and
Regulation D thereunder.
5. Although Separate Account QPN,
VL Account Eight, Separate Account
DCVL and Separate Account 485 are
exempt from registration under the Act,
they would be subject to the investment
limitations of Section 12 but for the
exclusion contained in Section
12(d)(1)(E) of the Act. To rely on such
exclusion, an investment company that
is not a registered investment company
must, among other things, agree to
refrain from substituting a security
unless the Commission approves the
substitution in the manner provided in
Section 26 of the Act.
6. MIST and Met Series Fund are each
registered under the Act as open-end
management investment companies of
the series type, and their securities are
registered under the Securities Act of
1933. Metlife Advisers, LLC serves as
investment adviser to MIST and Met
Series Fund.
7. The annuity contracts permit the
Insurance Companies to substitute
shares of one fund with shares of
another, including a fund of a different
registered investment company. The
prospectuses for the Contracts and the
Separate Accounts contain the
appropriate disclosures of this right.
8. Each Insurance Company, on its
behalf and on behalf of the Separate
Accounts proposes to make certain
substitutions of shares of 11 funds (the
‘‘Existing Funds’’) held in sub-accounts
of its respective Separate Accounts for
certain series (the ‘‘Replacement Funds’’)
of MIST and Met Series Fund.
9. The proposed substitutions are as
follows: (a) BlackRock Money Market
Portfolio for AIM V.I. Money Market
Fund and Legg Mason Western Asset
Variable Money Market Portfolio; (b)
RCM Technology Portfolio for AIM V.I.
Technology Fund and DWS Technology
VIP; (c) Oppenheimer Global Equity
Portfolio for DWS Global Opportunities
VIP; (d) Met/Artisan Mid Cap Value
Portfolio for Janus Aspen Perkins Mid
Cap Value Portfolio; (e) Met/Templeton
Growth Portfolio for Legg Mason
Batterymarch Variable Global Equity
Portfolio; (f) MetLife Stock Index
Portfolio for Legg Mason Batterymarch
S&P 500 Index Portfolio; (g) BlackRock
High Yield Portfolio for Pioneer High
Yield VCT Portfolio; (h) Lord Abbett
Growth and Income Portfolio for
Putnam VT Growth and Income Fund;
(i) Met/AIM Small Cap Growth Portfolio
for UIF Small Company Growth
Portfolio.
10. The following is a summary of the
investment objectives and policies of
each Existing Fund and its
corresponding Replacement Fund.
Additional information including asset
sizes, risk factors and comparative
performance history for each Existing
Fund and Replacement Fund can be
found in the Application.
Existing fund
Replacement fund
AIM V.I. Money Market Fund—seeks to provide as high a level of current income as is consistent with the preservation of capital and liquidity. The Fund invests only in high-quality U.S. dollar-denominated short term debt obligations.
AIM V.I. Technology Fund—seeks capital growth. The Fund normally
invests at least 80% of its assets in equity securities (principally common stocks) of issuers engaged primarily in technology-related industries.
BlackRock Money Market Portfolio—seeks a high level of current income consistent with preservation of capital. The Portfolio invests in
accordance with industry-standard requirements for money market
funds for the quality, maturity and diversification of investments.
RCM Technology Portfolio—seeks capital appreciation; no consideration is given to income. The Portfolio normally invests at least 80%
of its assets in common stocks of companies which utilize new, creative or different, or ‘‘innovative,’’ technologies to gain a strategic
competitive advantage in their industry, as well as companies that
provide and service those technologies.
RCM Technology Portfolio—seeks capital appreciation; no consideration is given to income.The Portfolio normally invests at least 80%
of its assets in common stocks of companies which utilize new, creative or different, or ‘‘innovative,’’ technologies to gain a strategic
competitive advantage in their industry, as well as companies that
provide and service those technologies.
Oppenheimer Global Equity Portfolio—seeks capital appreciation. The
Portfolio invests under normal circumstances at least 80% of its assets in equity securities (primarily common stock) of U.S. and foreign-based companies. The Portfolio can invest without limit in foreign securities and can invest in any country, including countries with
developed or emerging markets.
Met/Artisan Mid Cap Value Fund—seeks long term capital growth. The
Portfolio invests at least 80% of its net assets in the common stocks
of medium-sized companies.
DWS Technology VIP—seeks capital growth. Under normal circumstances, the Portfolio invests at least 80% of net assets in common stocks of companies in the technology sector.
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DWS Global Opportunities VIP—seeks above-average capital appreciation over the long term. The Portfolio invests at least 65% of total assets in common stocks and other equities of small companies
throughout the world (companies with market values similar to the
smallest 20% of the S&P Developed Small Cap Index).
Janus Aspen Perkins Mid Cap Value Portfolio—seeks capital appreciation. The Portfolio pursues its investment objective by investing primarily in common stocks selected for their capital appreciation potential.
Legg Mason Batterymarch Variable Global Equity Portfolio—seeks
long-term capital growth. Dividend income, if any, is a secondary
consideration. The Portfolio invests primarily in the common stock of
U.S. and non-U.S. issuers, particularly issuers located in countries
included in the Morgan Stanley Capital International World Index.
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Met/Templeton Growth Portfolio—seeks long-term capital growth.
Under normal market conditions, the Portfolio invests primarily in the
equity securities of companies with various market capitalizations located anywhere in the world, including emerging markets.
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Existing fund
Replacement fund
Legg Mason Batterymarch S&P 500 Index Fund—seeks investment results that, before expenses, correspond to the price and yield performance of the S&P 500 Index.
Legg Mason Western Asset Variable Money Market Portfolio—seeks to
maximize current income consistent with preservation of capital. The
Portfolio invests exclusively in high quality U.S. dollar denominated
short-term debt securities.
Pioneer High Yield VCT Portfolio—seeks to maximize total return
through a combination of income and capital appreciation. Normally,
the Portfolio invests at least 80% of its total assets in below investment grade high yield debt securities (junk bonds) and preferred
stocks.
MetLife Stock Index Portfolio—seeks to equal the performance of the
S&P 500 Index (before expenses).
Putnam VT Growth and Income Fund—seeks capital growth and current income. The Fund invests mainly in common stocks of U.S.
companies, with a focus on value stocks that offer the potential for
capital growth, current income, or both.
UIF Small Company Growth Portfolio—seeks long-term capital appreciation. The portfolio manager seeks long-term capital appreciation
by investing at least 80% of the Portfolio’s assets in growth-oriented
equity securities of small U.S. and foreign companies, including
emerging market securities.
11. The management fees, 12b–1 fees
(if applicable), other expenses and total
BlackRock Money Market Portfolio—seeks a high level of current income consistent with preservation of capital. The Portfolio invests in
accordance with industry-standard requirements for money market
funds for the quality, maturity and diversification of investments.
BlackRock High Yield Portfolio—seeks to maximize total return consistent with income generation and prudent investment. The Portfolio
will invest primarily in non-investment grade bonds with maturities of
ten years or less. The Portfolio will normally invest at least 80% of its
assets in high yield (‘‘junk’’) bonds, including convertible and preferred securities.
Lord Abbett Growth and Income Fund—seeks long-term growth of capital and income without excessive fluctuation in market value. The
Portfolio primarily purchases equity securities of large, seasoned,
U.S. and multinational companies that the portfolio manager believes
are undervalued.
Met/AIM Small Cap Growth Portfolio—seeks long-term growth of capital. The Portfolio invests normally at least 80% of its assets in securities of small-cap companies.
operating expenses for each Existing
and Replacement Fund are as follows:
Management
fees
(Percent)
New Fund: BlackRock Money Market Portfolio ...................
Old Fund: AIM V.I. Money Market Fund .............................
New Fund: RCM Technology Fund .....................................
Old Fund: AIM V.I. Technology Fund ..................................
New Fund: RCM Technology Fund .....................................
.32
.40
.88
.75
.88
Old Fund: DWS Technology VIP .........................................
New Fund: Oppenheimer Global Equity Portfolio ...............
.67
.53
Old Fund: DWS Global Opportunities VIP ..........................
New Fund: Met/Artisan Mid Cap Value Portfolio .................
.89
.82
Old Fund: Janus Aspen Perkins Mid Cap Value Portfolio ..
New Fund: Met/Templeton Growth Portfolio .......................
.77
.69
Old Fund: Legg Mason Batterymarch Variable Global Equity Portfolio ......................................................................
New Fund: BlackRock Money Market Portfolio ...................
Other expenses
(Percent)
Waiver/Reimbursement
(Percent)
Total expenses
(Percent)
........................
........................
........................
........................
.15
(.25)
.25
.25
(.50)
.25
.25
(.50)
.25
.25
(.50)
.02
.50
.08
.45
.08
.01
........................
........................
........................
........................
.33
.90
.96
1.20
1.11
.26
.11
........................
........................
1.18
.89
.28
.05
........................
........................
1.42
1.12
.36
.18
.04
.07
1.34
1.05
.75
.32
.25
.15
(.25)
.39
.02
.39
.01
1.00
.48
.45
.25
........................
........................
.05
.03
........................
.01
.50
.27
.25
.60
.16
.07
.02
........................
.59
.92
.65
.20
.25
(.50)
.25
.15
........................
1.05
.53
........................
.03
........................
.56
.48
........................
.10
........................
.58
.53
.25
(.50)
.03
........................
.81
Old Fund: Putnam VT Growth & Income Portfolio—Class
B .......................................................................................
New Fund: Met/AIM Small Cap Growth Portfolio ................
48
.86
.10
.04
........................
........................
.83
1.15
Old Fund: UIF Small Company Growth Portfolio ................
.92
.25
.25
(.50)
.35
.44
........................
1.71
Old Fund: Legg Mason Western Asset Variable Money
Market Portfolio ................................................................
New Fund: Met Life Stock Index Portfolio ...........................
Old Fund: Legg Mason Batterymarch S&P 500 Index Portfolio ...................................................................................
New Fund: BlackRock High Yield Portfolio .........................
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12b–1 fees
(Percent)
Old Fund: Pioneer High Yield VCT Portfolio .......................
New Fund: Lord Abbett Growth and Income Portfolio—
Class A .............................................................................
Old Fund: Putnam VT Growth & Income Portfolio—Class
IA ......................................................................................
New Fund: Lord Abbett Growth and Income Portfolio—
Class B .............................................................................
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12. MetLife Advisers, LLC is the
adviser of each of the Replacement
Funds. Each Replacement Fund
currently offers up to four classes of
shares, three of which, Class A, Class B
and Class E are involved in the
substitutions.
13. The Applicants believe the
substitutions will provide significant
benefits to Contract owners, including
improved selection of sub-advisers and
simplification of fund offerings through
the elimination of overlapping offerings.
14. As a result of the substitutions, the
number of investment options offered
under substantially all of the Contracts
will not change (currently ranges in
number from 3 to 122). For a limited
number of Contracts which currently
have at least 21 investment options
available, after the substitutions there
will be available at least 20 investment
options.
15. Those substitutions which replace
investment options advised by
investment advisers that are not
affiliated with the Substitution
Applicants with funds for which
MetLife Advisers, LLC acts as
investment adviser will permit each
adviser, under the Multi-Manager Order,
[IC–22824 (1997) and IC–23859 (1999)],
to hire, monitor and replace subadvisers as necessary to achieve optimal
performance.
16. Contract owners with sub-account
balances invested (through the separate
account) in shares of the Replacement
Funds, except for the Legg Mason
Batterymarch Variable Global Equity
Portfolio/Met/Templeton Growth
Portfolio, will have lower total expense
ratios taking into account fund expenses
and current fee waivers.
17. In the following substitutions, the
management fee and/or applicable Rule
12b–1 fee of the Replacement Fund are
either currently higher, or, at certain
management fee breakpoints, may be
higher than those of the respective
Existing Fund: Legg Mason Western
Asset Variable Money Market Portfolio/
BlackRock Money Market Portfolio; AIM
V. I. Technology Fund/RCM Technology
Portfolio; DWS Technology VIP/RCM
Technology Portfolio; DWS Global
Opportunities VIP/Oppenheimer Global
Equity Portfolio; Putnam VT Growth
and Income Portfolio/Lord Abbett
Growth and Income Portfolio; UIF Small
Company Growth Portfolio/Met/AIM
Small Cap Growth Portfolio; and Janus
Aspen Perkins Mid Cap Value Portfolio/
Met/Artisan Mid Cap Value Portfolio.
18. The Substitution Applicants
propose to limit Contract charges
attributable to Contract value invested
in the Replacement Funds following the
proposed substitutions to a rate that
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would offset the difference in the
expense ratio between each Existing
Fund’s net expense ratio and the net
expense ratio for the respective
Replacement Fund.
19. Except for the Legg Mason
Batterymarch Variable Global Equity
Portfolio/Met/Templeton Growth
Portfolio substitution where there is an
increase in net expenses after waivers of
0.05%, the substitutions will result in
decreased net expense ratios ranging
from 2 basis points to 57 basis points.
Moreover, there will be no increase in
Contract fees and expenses, including
mortality and expense risk fees and
administration and distribution fees
charged to the Separate Accounts as a
result of the substitutions.
20. The Substitution Applicants
believe that the Replacement Funds
have investment objectives, policies and
risk profiles that are either substantially
the same as, or sufficiently similar to,
the corresponding Existing Funds to
make those Replacement Funds
appropriate candidates as substitutes.
21. In addition, after the substitutions,
neither MetLife Advisers, LLC nor any
of their affiliates will receive
compensation from the charges to the
Separate Accounts related to the
Contracts or from Rule 12b–1 fees or
revenue sharing from the Replacement
Funds in excess of the compensation
currently received from the investment
advisers or distributors of the Existing
Funds.
22. The share classes of the
Replacement Funds are either identical
to or less than the share classes of the
Existing Funds with respect to the
imposition of Rule 12b–1 fees currently
imposed, except with respect to the
substitution of BlackRock Money
Market Portfolio for Legg Mason
Western Asset Variable Money Market
Portfolio.
23. Each MIST and Met Series Fund
Replacement Fund’s Class B and Class
E Rule 12b–1 fees can be raised to
0.50% of net assets by the Replacement
Fund’s Board of Directors/Trustees
without shareholder approval. However,
Met Series Fund and MIST represent
that Rule 12b–1 fees of the Class B and
Class E shares of the Replacement
Funds issued in connection with the
proposed substitutions will not be
raised above the current rate without
approval of a majority in interest of the
respective Replacement Funds’
shareholders after the substitutions.
24. The distributors of the Existing
Funds pay to the Insurance Companies,
or their affiliates, any 12b–1 fees
associated with the class of shares sold
to the Separate Accounts. Similarly, the
distributors for MIST and Met Series
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Fund will receive from the applicable
class of shares held by the Separate
Accounts Rule 12b–1 fees in the same
amount or a lesser amount than the
amount paid by the Existing Funds,
except as described above.
25. Further, in addition to any Rule
12b–1 fees, the investment advisers or
distributors of the Existing Funds pay
the Insurance Companies or one of their
affiliates from 0 to 43 basis points for
the Existing Funds’ classes of shares
involved in the substitutions. Following
the substitutions, these payments will
not be made on behalf of the
Replacement Funds. Rather, the
Insurance Companies or their affiliates
will have available both the 25 and 15
basis points in Rule 12b–1 fees from the
Replacement Funds (with respect to
Class B and Class E shares, respectively)
and, as owners of the Replacement
Funds’ adviser, profit distributions from
the adviser. These profits from
investment advisory fees may be more
or less than the fees being paid by the
Existing Funds.
Applicants’ Legal Analysis and
Conditions
1. The Substitution Applicants
request that the Commission issue an
order pursuant to Section 26(c) of the
Act approving the proposed
substitutions.
2. Applicants represent that the
Contracts permit the applicable
Insurance Company, subject to
compliance with applicable law, to
substitute shares of another investment
company for shares of an investment
company held by a sub-account of the
Separate Accounts. The prospectuses for
the Contracts and the Separate Accounts
contain appropriate disclosure of this
right.
3. By a supplement to the
prospectuses for the Contracts and the
Separate Accounts, each Insurance
Company has notified all owners of the
Contracts of its intention to take the
necessary actions, including seeking the
order requested by this Application, to
substitute shares of the funds as
described herein. The supplement has
advised Contract owners that from the
date of the supplement until the date of
the proposed substitution, owners are
permitted to make one transfer of
Contract value (or annuity unit
exchange) out of the Existing Fund subaccount to one or more other subaccounts without the transfer (or
exchange) being treated as one of a
limited number of permitted transfers
(or exchanges) or a limited number of
transfers (or exchanges) permitted
without a transfer charge. The
supplement also has informed Contract
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owners that the Insurance Company will
not exercise any rights reserved under
any Contract to impose additional
restrictions on transfers until at least 30
days after the proposed substitutions.
The supplement has also advised
Contract owners that for at least 30 days
following the proposed substitutions,
the Insurance Companies will permit
Contract owners affected by the
substitutions to make one transfer of
Contract value (or annuity unit
exchange) out of the Replacement Fund
sub-account to one or more other subaccounts without the transfer (or
exchange) being treated as one of a
limited number of permitted transfers
(or exchanges) or a limited number of
transfers (or exchanges) permitted
without a transfer charge.
4. The proposed substitutions will
take place at relative net asset value
with no change in the amount of any
Contract owner’s Contract value, cash
value, or death benefit or in the dollar
value of his or her investment in the
Separate Accounts.
5. The process for accomplishing the
transfer of assets from each Existing
Fund to its corresponding Replacement
Fund will be determined on a case-bycase basis. In most cases, it is expected
that the substitutions will be effected by
redeeming shares of an Existing Fund
for cash and using the cash to purchase
shares of the Replacement Fund. In
certain other cases, it is expected that
the substitutions will be effected by
redeeming the shares of an Existing
Fund in-kind; those assets will then be
contributed in-kind to the
corresponding Replacement Fund to
purchase shares of that Fund. All inkind redemptions from an Existing
Fund of which any of the Substitution
Applicants is an affiliated person will
be effected in accordance with the
conditions set forth in the Commission’s
no-action letter issued to Signature
Financial Group, Inc. (available
December 28, 1999).
6. Contract owners will not incur any
fees or charges as a result of the
proposed substitutions, nor will their
rights or an Insurance Company’s
obligations under the Contracts be
altered in any way. All expenses
incurred in connection with the
proposed substitutions, including
brokerage, legal, accounting, and other
fees and expenses, will be paid by the
Insurance Companies. In addition, the
proposed substitutions will not impose
any tax liability on Contract owners.
The proposed substitutions will not
cause the Contract fees and charges
currently being paid by existing
Contract owners to be greater after the
proposed substitutions than before the
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proposed substitutions. No fees will be
charged on the transfers made at the
time of the proposed substitutions
because the proposed substitutions will
not be treated as a transfer for the
purpose of assessing transfer charges or
for determining the number of
remaining permissible transfers in a
Contract year.
7. In addition to the prospectus
supplements distributed to owners of
Contracts, within five business days
after the proposed substitutions are
completed, Contract owners will be sent
a written notice informing them that the
substitutions were carried out and that
they may make one transfer of all
Contract value or cash value under a
Contract invested in any one of the subaccounts on the date of the notice to one
or more other sub-accounts available
under their Contract at no cost and
without regard to the usual limit on the
frequency of transfers from the variable
account options to the fixed account
options. The notice will also reiterate
that (other than with respect to ‘‘market
timing’’ activity) the Insurance Company
will not exercise any rights reserved by
it under the Contracts to impose
additional restrictions on transfers or to
impose any charges on transfers until at
least 30 days after the proposed
substitutions. The Insurance Companies
will also send each Contract owner
current prospectuses for the
Replacement Funds involved to the
extent that they have not previously
received a copy.
8. Each Insurance Company also is
seeking approval of the proposed
substitutions from any State insurance
regulators whose approval may be
necessary or appropriate.
9. The Substitution Applicants agree
that for those who were Contract owners
on the date of the proposed
substitutions, the Insurance Companies
will reimburse, on the last business day
of each fiscal period (not to exceed a
fiscal quarter) during the twenty-four
months following the date of the
proposed substitutions, those Contract
owners whose sub-account invests in
the Replacement Fund such that the
sum of the Replacement Fund’s net
operating expenses (taking into account
fee waivers and expense
reimbursements) and sub-account
expenses (asset-based fees and charges
deducted on a daily basis from subaccount assets and reflected in the
calculation of sub-account unit values)
for such period will not exceed, on an
annualized basis, the sum of the
Existing Fund’s net operating expenses
taking into account fee waivers and
expense reimbursements and subaccount expenses for fiscal year 2009,
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16209
except with respect to the AIM V.I.
Technology Fund/RCM Technology
Portfolio, DWS Technology VIP/RCM
Technology Portfolio, DWS Global
Opportunities VIP/Oppenheimer Global
Equity Portfolio, Janus Aspen Perkins
Mid Cap Value Portfolio/Met/Artisan
Mid Cap Value Portfolio, Legg Mason
Western Asset Variable Money Market
Portfolio/BlackRock Money Market
Portfolio, Putnam VT Growth and
Income Portfolio/Lord Abbett Growth
and Income Portfolio, and UIF Small
Company Growth Portfolio/Met/AIM
Small Cap Growth Portfolio
substitutions.
10. With respect to the AIM V.I.
Technology Fund/RCM Technology
Portfolio, DWS Technology VIP/RCM
Technology Portfolio, DWS Global
Opportunities VIP/Oppenheimer Global
Equity Portfolio, Janus Aspen Perkins
Mid Cap Value Portfolio/Met/Artisan
Mid Cap Value Portfolio, Legg Mason
Western Asset Variable Money Market
Portfolio/BlackRock Money Market
Portfolio, Putnam VT Growth and
Income Portfolio/Lord Abbett Growth
and Income Portfolio and UIF Small
Company Growth Portfolio/Met/AIM
Small Cap Growth Portfolio
substitutions, the reimbursement
agreement with respect to the
Replacement Fund’s operating expenses
and sub-account expenses, will extend
for the life of each Contract outstanding
on the date of the proposed
substitutions.
11. The Substitution Applicants
further agree that, except with respect to
the AIM V.I. Technology Fund/RCM
Technology Portfolio, DWS Technology
VIP/RCM Technology Portfolio, DWS
Global Opportunities VIP/Oppenheimer
Global Equity Portfolio, Janus Aspen
Perkins Mid Cap Value Portfolio/Met/
Artisan Mid Cap Value Portfolio, Legg
Mason Western Asset Variable Money
Market Portfolio/BlackRock Money
Market Portfolio, Putnam VT Growth
and Income Portfolio/Lord Abbett
Growth and Income Portfolio, and UIF
Small Company Growth Portfolio/Met/
AIM Small Cap Growth Portfolio
substitutions, the Insurance Companies
will not increase total separate account
charges (net of any reimbursements or
waivers) for any existing owner of the
Contracts on the date of the
substitutions for a period of two years
from the date of the substitutions.
12. With respect to the AIM V.I.
Technology Fund/RCM Technology
Portfolio, DWS Technology VIP/RCM
Technology Portfolio, DWS Global
Opportunities VIP/Oppenheimer Global
Equity Portfolio, Janus Aspen Perkins
Mid Cap Value Portfolio/Met/Artisan
Mid Cap Value Portfolio, Legg Mason
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Western Asset Variable Money Market
Portfolio/BlackRock Money Market
Portfolio, Putnam VT Growth and
Income Portfolio/Lord Abbett Growth
and Income Portfolio and UIF Small
Company Growth Portfolio/Met/AIM
Small Cap Growth Portfolio
substitutions, the agreement not to
increase the separate account charges
will extend for the life of each Contract
outstanding on the date of the proposed
substitutions.
13. In each case, the applicable
Insurance Companies believe that it is
in the best interests of the Contract
owners to substitute the Replacement
Fund for the Existing Fund. The
Insurance Companies believe that in
cases where the Replacement Fund has
a new sub-adviser, the new sub-adviser
will, over the long term, be positioned
to provide at least comparable
performance to that of the Existing
Fund’s sub-adviser.
14. The Substitution Applicants
anticipate that Contract owners will be
better off with the array of sub-accounts
offered after the proposed substitutions
than they have been with the array of
sub-accounts offered prior to the
substitutions.
15. The Substitution Applicants
submit that none of the proposed
substitutions is of the type that Section
26(c) was designed to prevent.
16. The Substitution Applicants
request an order of the Commission
pursuant to Section 26(c) of the Act
approving the proposed substitutions by
the Insurance Companies.
17. The Section 17 Applicants request
an order under Section 17(b) exempting
them from the provisions of Section
17(a) to the extent necessary to permit
the Insurance Companies to carry out
each of the proposed substitutions.
18. Section 17(a)(1) of the Act, in
relevant part, prohibits any affiliated
person of a registered investment
company, or any affiliated person of
such person, acting as principal, from
knowingly selling any security or other
property to that company. Section
17(a)(2) of the Act generally prohibits
the persons described above, acting as
principals, from knowingly purchasing
any security or other property from the
registered company.
19. Because shares held by a separate
account of an insurance company are
legally owned by the insurance
company, the Insurance Companies and
their affiliates collectively own of record
substantially all of the shares of MIST
and Met Series Fund. Therefore, MIST
and Met Series Fund and their
respective funds are arguably under the
control of the Insurance Companies
notwithstanding the fact that Contract
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19:40 Mar 30, 2010
Jkt 220001
owners may be considered the
beneficial owners of those shares held
in the Separate Accounts. If MIST and
Met Series Fund and their respective
funds are under the control of the
Insurance Companies, then each
Insurance Company is an affiliated
person or an affiliated person of an
affiliated person of MIST and Met Series
Fund and their respective funds. If
MIST and Met Series Fund and their
respective funds are under the control of
the Insurance Companies, then MIST
and Met Series Fund and their
respective funds are affiliated persons of
the Insurance Companies.
20. Regardless of whether or not the
Insurance Companies can be considered
to control MIST and Met Series Fund
and their respective funds, because the
Insurance Companies own of record
more than 5% of the shares of each of
them and are under common control
with each Replacement Fund’s
investment adviser, the Insurance
Companies are affiliated persons of both
MIST and Met Series Fund and their
respective funds. Likewise, their
respective funds are each an affiliated
person of the Insurance Companies.
21. The Insurance Companies,
through their separate accounts in the
aggregate own more than 5% of the
outstanding shares of the following
Existing Funds: Legg Mason
Batterymarch Variable Global Equity
Portfolio, Legg Mason Western Asset
Variable Money Market Portfolio, Legg
Mason Batterymarch S&P 500 Index
Portfolio, Pioneer High Yield VCT
Portfolio, UIF Small Company Growth
Portfolio. Therefore, each Insurance
Company is an affiliated person of those
funds.
22. Because the substitutions may be
effected, in whole or in part, by means
of in-kind redemptions and purchases,
the substitutions may be deemed to
involve one or more purchases or sales
of securities or property between
affiliated persons. The proposed
transactions may involve a transfer of
portfolio securities by the Existing
Funds to the Insurance Companies;
immediately thereafter, the Insurance
Companies would purchase shares of
the Replacement Funds with the
portfolio securities received from the
Existing Funds. Accordingly, as the
Insurance Companies and certain of the
Existing Funds listed above, and the
Insurance Companies and the
Replacement Funds, could be viewed as
affiliated persons of one another under
Section 2(a)(3) of the Act, it is
conceivable that this aspect of the
substitutions could be viewed as being
prohibited by Section 17(a).
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23. Section 17(b) of the Act provides
that the Commission may, upon
application, grant an order exempting
any transaction from the prohibitions of
Section 17(a) if the evidence establishes
that: (a) The terms of the proposed
transaction, including the consideration
to be paid or received, are reasonable
and fair and do not involve
overreaching on the part of any person
concerned; (b) the proposed transaction
is consistent with the policy of each
registered investment company
concerned, as recited in its registration
statement and records filed under the
Act; and (c) the proposed transaction is
consistent with the general purposes of
the Act.
24. The Section 17 Applicants submit
that for all the reasons stated above the
terms of the proposed in-kind purchases
of shares of the Replacement Funds by
the Insurance Companies, including the
consideration to be paid and received,
as described in this Application, are
reasonable and fair and do not involve
overreaching on the part of any person
concerned. The Section 17 Applicants
also submit that the proposed in-kind
purchases by the Insurance Companies
are consistent with the policies of: (a)
MIST and of its RCM Technology, Met/
Templeton Growth, BlackRock High
Yield, Lord Abbett Growth and Income
and Met/AIM Small Cap Growth
Portfolios; and (b) Met Series Fund and
of its BlackRock Money Market,
Oppenheimer Global Equity, Met/
Artisan Mid Cap Value and MetLife
Stock Index Portfolios, as recited in the
current registration statements and
reports filed by each under the Act.
Finally, the Section 17 Applicants
submit that the proposed substitutions
are consistent with the general purposes
of the Act.
25. To the extent that the in-kind
purchases by the Insurance Company of
the Replacement Funds’ shares are
deemed to involve principal
transactions among affiliated persons,
the procedures described below should
be sufficient to assure that the terms of
the proposed transactions are reasonable
and fair to all participants. The Section
17 Applicants maintain that the terms of
the proposed in-kind purchase
transactions, including the
consideration to be paid and received by
each fund involved, are reasonable, fair
and do not involve overreaching
principally because the transactions will
conform with all but one of the
conditions enumerated in Rule 17a–7.
The proposed transactions will take
place at relative net asset value in
conformity with the requirements of
Section 22(c) of the Act and Rule 22c–
1 thereunder with no change in the
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amount of any Contract owner’s contract
value or death benefit or in the dollar
value of his or her investment in any of
the Separate Accounts. Contract owners
will not suffer any adverse tax
consequences as a result of the
substitutions. The fees and charges
under the Contracts will not increase
because of the substitutions. Even
though the Separate Accounts, the
Insurance Companies, MIST and Met
Series Fund may not rely on Rule 17a–
7, the Section 17 Applicants believe that
the Rule’s conditions outline the type of
safeguards that result in transactions
that are fair and reasonable to registered
investment company participants and
preclude overreaching in connection
with an investment company by its
affiliated persons. In addition, as stated
above, the in-kind redemptions will
only be made in accordance with the
conditions set out in the Signature
Financial Group no-action letter
(December 29, 1999).
26. The boards of MIST and Met
Series Fund have adopted procedures,
as required by paragraph (e)(1) of Rule
17a–7, pursuant to which the series of
each may purchase and sell securities to
and from their affiliates. The Section 17
Applicants will carry out the proposed
Insurance Company in-kind purchases
in conformity with all of the conditions
of Rule 17a–7 and each series’
procedures thereunder, except that the
consideration paid for the securities
being purchased or sold may not be
entirely cash. Nevertheless, the
circumstances surrounding the
proposed substitutions will be such as
to offer the same degree of protection to
each Replacement Fund from
overreaching that Rule 17a–7 provides
to them generally in connection with
their purchase and sale of securities
under that Rule in the ordinary course
of their business. In particular, the
Insurance Companies (or any of their
affiliates) cannot effect the proposed
transactions at a price that is
disadvantageous to any of the
Replacement Funds. Although the
transactions may not be entirely for
cash, each will be effected based upon
(1) the independent market price of the
portfolio securities valued as specified
in paragraph (b) of Rule 17a–7, and (2)
the net asset value per share of each
fund involved valued in accordance
with the procedures disclosed in its
respective investment company
registration statement and as required
by Rule 22c–1 under the Act. No
brokerage commission, fee, or other
remuneration will be paid to any party
in connection with the proposed in kind
purchase transactions.
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19:40 Mar 30, 2010
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27. The sale of shares of Replacement
Funds for investment securities, as
contemplated by the proposed
Insurance Company in-kind purchases,
is consistent with the investment
policies and restrictions of the
Investment Companies and the
Replacement Funds because (a) the
shares are sold at their net asset value,
and (b) the portfolio securities are of the
type and quality that the Replacement
Funds would each have acquired with
the proceeds from share sales had the
shares been sold for cash. To assure that
the second of these conditions is met,
MetLife Advisers, LLC and the subadviser, as applicable, will examine the
portfolio securities being offered to each
Replacement Fund and accept only
those securities as consideration for
shares that it would have acquired for
each such fund in a cash transaction.
28. The Section 17 Applicants submit
that the proposed Insurance Company
in-kind purchases are consistent with
the general purposes of the Act as stated
in the Findings and Declaration of
Policy in Section 1 of the Act and that
the proposed transactions do not
present any of the conditions or abuses
that the Act was designed to prevent.
29. The Section 17 Applicants
represent that the proposed in-kind
purchases meet all of the requirements
of Section 17(b) of the Act and request
that the Commission issue an order
pursuant to Section 17(b) of the Act
exempting the Separate Accounts, the
Insurance Companies, MIST, Met Series
Fund and each Replacement Fund from
the provisions of Section 17(a) of the
Act to the extent necessary to permit the
Insurance Companies on behalf of the
Separate Accounts to carry out, as part
of the substitutions, the in-kind
purchase of shares of the Replacement
Funds which may be deemed to be
prohibited by Section 17(a) of the Act.
Conclusion
Applicants assert that for the reasons
summarized above that the proposed
substitutions and related transactions
meet the standards of Section 26(c) of
the Act and are consistent with the
standards of Section 17(b) of the Act
and that the requested orders should be
granted.
For the Commission, by the Division of
Investment Management pursuant to
delegated authority.
Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010–7207 Filed 3–30–10; 8:45 am]
BILLING CODE 8011–01–P
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16211
SECURITIES AND EXCHANGE
COMMISSION
[Investment Company Act Release No.
29191; File No. 812–13694]
MCG Capital Corporation; Notice of
Application
March 25, 2010.
AGENCY: Securities and Exchange
Commission (‘‘Commission’’).
ACTION: Notice of an application for an
order under section 23(c)(3) of the
Investment Company Act of 1940 (the
‘‘Act’’) for an exemption from section
23(c) of the Act.
SUMMARY: Summary of the Application:
MCG Capital Corporation (the
‘‘Applicant’’), requests an order to
amend a prior order (the ‘‘Prior Order’’) 1
that permits the Applicant to issue
restricted shares of its common stock
(‘‘Restricted Stock’’) to Applicant’s
employees and non-employee directors
(‘‘Participants’’) pursuant to the MCG
Capital Corporation 2006 Employee
Restricted Stock Plan and the MCG
Capital Corporation 2006 Non-Employee
Director Restricted Stock Plan (together,
the ‘‘Plans’’).2 Applicant seeks to amend
the Prior Order in order to engage in
certain transactions, provided for in the
MCG Capital Corporation Second
Amended and Restated 2006 Employee
Restricted Stock Plan and the MCG
Capital Corporation Second Amended
and Restated Non-Employee Director
Restricted Stock Plan (together, the
‘‘Amended Plans’’) that may constitute
purchases by the Applicant of its own
securities within the meaning of section
23(c) of the Act.
DATES: Filing Dates: The application was
filed on September 4, 2009 and
amended on January 19, 2010 and
March 16, 2010.
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
Commission’s Secretary and serving
applicant with a copy of the request,
personally or by mail. Hearing requests
should be received by the Commission
by 5:30 p.m. on April 19, 2010, and
should be accompanied by proof of
service on applicant, 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
1 MCG Capital Corporation, Investment Company
Act Release Nos. 27258 (Mar. 8, 2006) (notice) and
27280 (Apr. 4, 2006) (order).
2 The Plans were each amended and restated on
April 23, 2008.
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]]>Agencies
[Federal Register Volume 75, Number 61 (Wednesday, March 31, 2010)]
[Notices]
[Pages 16205-16211]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-7207]
=======================================================================
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SECURITIES AND EXCHANGE COMMISSION
[Release No. IC-29190; File No. 812-13700]
MetLife Insurance Company of Connecticut, et al.
March 25, 2010.
AGENCY: Securities and Exchange Commission (``Commission'').
ACTION: Notice of application for an order pursuant to Section 26(c) of
the Investment Company Act of 1940 (the ``Act'') approving certain
substitutions of securities and an order of exemption pursuant to
Section 17(b) of the Act from Section 17(a) of the Act.
-----------------------------------------------------------------------
Applicants: MetLife Insurance Company of Connecticut (``MetLife of
CT''), MetLife of CT Separate Account Eleven for Variable Annuities
(``Separate Account Eleven''), MetLife of CT Separate Account QPN for
Variable Annuities (``Separate Account QPN''), MetLife of CT Fund UL
for Variable Life Insurance (``Fund UL''), MetLife Investors Insurance
Company (``MetLife Investors''), MetLife Investors Variable Annuity
Account One (``VA Account One''), MetLife Investors Variable Life
Account One (``VL Account One''), MetLife Investors Variable Life
Account Eight (``VL Account Eight''), First MetLife Investors Insurance
Company (``First MetLife Investors''), First MetLife Investors Variable
Annuity Account One (``First VA Account One''), MetLife Investors USA
Insurance Company (``MetLife Investors USA''), MetLife Investors USA
Separate Account A (``Separate Account A''), Metropolitan Life
Insurance Company (``MetLife''), Metropolitan Life Separate Account
DCVL (``Separate Account DCVL''), Metropolitan Life Separate Account UL
(``Separate Account UL''), Security Equity Separate Account Twenty-Six
(``SE Separate Account Twenty-Six''), Security Equity Separate Account
Twenty-Seven (``SE Separate Account Twenty-Seven''), Security Equity
Separate Account No. 13S (``SE Separate Account 13S''), Security Equity
Separate Account No. 485 (``SE Separate Account 485''), General
American Life Insurance Company (``General American'') (together with
MetLife of CT, MetLife Investors, First MetLife Investors, MetLife
Investors USA and MetLife, the ``Insurance Companies''), General
American Separate Account Twenty-Eight (``GA Separate Account Twenty-
Eight''), General American Separate Account Twenty-Nine (``GA Separate
Account Twenty-Nine''), (together with Separate Account Eleven,
Separate Account QPN, Fund UL, VA Account One, VL Account One, VL
Account Eight, First VA Account One, Separate Account A, Separate
Account DCVL, Separate Account UL, SE Separate Account Twenty-Six, SE
Separate Account Twenty-Seven, SE Separate Account 13S, SE Separate
Account 485 and GA Separate Account Twenty-Eight, the ``Separate
Accounts''), Met Investors Series Trust (``MIST'') and Metropolitan
Series Fund, Inc. (``Met Series Fund''), (together with MIST, the
``Investment Companies'').
The Insurance Companies and the Separate Accounts are referred to
as the ``Substitution Applicants.'' The Insurance Companies, the
Separate Accounts and the Investment Companies are referred to as the
``Section 17 Applicants.''
SUMMARY: Summary of Application: Applicants seek an order approving the
substitution of certain series of the Investment Companies for shares
of series of other unaffiliated registered investment companies held by
the Separate Accounts to fund certain group and individual variable
annuity contracts and variable life insurance policies issued by the
Insurance Companies (collectively, the ``Contracts''). The Section 17
Applicants seek an order pursuant to Section 17(b) of the Act to permit
certain in-kind transactions in connection with certain of the
Substitutions.
DATES: Filing Date: The application was filed on September 21, 2009,
and an amended and restated application was filed on March 23, 2010.
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 April 19, 2010, 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
issue contested. Persons may request notification of a hearing by
writing to the Secretary of the Commission.
ADDRESSES: Secretary, Securities and Exchange Commission, 100 F Street,
NE., Washington, DC 20549-1090. Applicants c/o Paul G. Cellupica, Chief
Counsel--Securities Regulation and Corporate Services, MetLife Group,
1095 Avenue of the Americas, 40th Floor, New York, NY 10036 and Robert
N. Hickey, Esq., Sullivan & Worcester LLP, 1666 K Street, NW.,
Washington, DC 20006.
FOR FURTHER INFORMATION CONTACT: Alison T. 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 may be obtained via the
Commission's Web site by searching for the file number, or for an
applicant using the Company name box, at https://www.sec.gov/search/search.htm, or by calling (202) 551-8090.
Applicants' Representations
1. MetLife of CT is a stock life insurance company organized in
1863 under the laws of Connecticut. MetLife Investors is a stock life
insurance company organized on August 17, 1981 under the laws of
Missouri. First MetLife Investors is a stock life insurance company
organized on
[[Page 16206]]
December 31, 1992 under the laws of New York. MetLife Investors USA is
a stock life insurance company organized on September 13, 1960 under
the laws of Delaware. MetLife is a stock life insurance company
organized in 1868 under the laws of New York. General American is a
stock life insurance company organized in 1933 under the laws of
Missouri.
2. Separate Account Eleven, Fund UL, VA Account One, VL Account
One, First VA Account One, Separate Account A, Separate Account UL, SE
Separate Account Twenty-Six, SE Separate Account Twenty-Seven, Separate
Account 13S, GA Separate Account Twenty-Eight, and GA Separate Account
Twenty-Nine are registered under the Act as unit investment trusts for
the purpose of funding the Contracts. Security interests under the
Contracts have been registered under the Securities Act of 1933.
3. Separate Account QPN is exempt from registration under the Act.
Security interests under the Contracts have been registered under the
Securities Act of 1933.
4. VL Account Eight, Separate Account DCVL and Separate Account 485
serve as separate account funding vehicles for certain Contracts that
are exempt from registration under Section 4(2) of the Securities Act
of 1933 and Regulation D thereunder.
5. Although Separate Account QPN, VL Account Eight, Separate
Account DCVL and Separate Account 485 are exempt from registration
under the Act, they would be subject to the investment limitations of
Section 12 but for the exclusion contained in Section 12(d)(1)(E) of
the Act. To rely on such exclusion, an investment company that is not a
registered investment company must, among other things, agree to
refrain from substituting a security unless the Commission approves the
substitution in the manner provided in Section 26 of the Act.
6. MIST and Met Series Fund are each registered under the Act as
open-end management investment companies of the series type, and their
securities are registered under the Securities Act of 1933. Metlife
Advisers, LLC serves as investment adviser to MIST and Met Series Fund.
7. The annuity contracts permit the Insurance Companies to
substitute shares of one fund with shares of another, including a fund
of a different registered investment company. The prospectuses for the
Contracts and the Separate Accounts contain the appropriate disclosures
of this right.
8. Each Insurance Company, on its behalf and on behalf of the
Separate Accounts proposes to make certain substitutions of shares of
11 funds (the ``Existing Funds'') held in sub-accounts of its
respective Separate Accounts for certain series (the ``Replacement
Funds'') of MIST and Met Series Fund.
9. The proposed substitutions are as follows: (a) BlackRock Money
Market Portfolio for AIM V.I. Money Market Fund and Legg Mason Western
Asset Variable Money Market Portfolio; (b) RCM Technology Portfolio for
AIM V.I. Technology Fund and DWS Technology VIP; (c) Oppenheimer Global
Equity Portfolio for DWS Global Opportunities VIP; (d) Met/Artisan Mid
Cap Value Portfolio for Janus Aspen Perkins Mid Cap Value Portfolio;
(e) Met/Templeton Growth Portfolio for Legg Mason Batterymarch Variable
Global Equity Portfolio; (f) MetLife Stock Index Portfolio for Legg
Mason Batterymarch S&P 500 Index Portfolio; (g) BlackRock High Yield
Portfolio for Pioneer High Yield VCT Portfolio; (h) Lord Abbett Growth
and Income Portfolio for Putnam VT Growth and Income Fund; (i) Met/AIM
Small Cap Growth Portfolio for UIF Small Company Growth Portfolio.
10. The following is a summary of the investment objectives and
policies of each Existing Fund and its corresponding Replacement Fund.
Additional information including asset sizes, risk factors and
comparative performance history for each Existing Fund and Replacement
Fund can be found in the Application.
------------------------------------------------------------------------
Existing fund Replacement fund
------------------------------------------------------------------------
AIM V.I. Money Market Fund--seeks to BlackRock Money Market
provide as high a level of current Portfolio--seeks a high level
income as is consistent with the of current income consistent
preservation of capital and liquidity. with preservation of capital.
The Fund invests only in high-quality The Portfolio invests in
U.S. dollar-denominated short term accordance with industry-
debt obligations. standard requirements for
money market funds for the
quality, maturity and
diversification of
investments.
AIM V.I. Technology Fund--seeks capital RCM Technology Portfolio--seeks
growth. The Fund normally invests at capital appreciation; no
least 80% of its assets in equity consideration is given to
securities (principally common stocks) income. The Portfolio normally
of issuers engaged primarily in invests at least 80% of its
technology-related industries. assets in common stocks of
companies which utilize new,
creative or different, or
``innovative,'' technologies
to gain a strategic
competitive advantage in their
industry, as well as companies
that provide and service those
technologies.
DWS Technology VIP--seeks capital RCM Technology Portfolio--seeks
growth. Under normal circumstances, capital appreciation; no
the Portfolio invests at least 80% of consideration is given to
net assets in common stocks of income.The Portfolio normally
companies in the technology sector. invests at least 80% of its
assets in common stocks of
companies which utilize new,
creative or different, or
``innovative,'' technologies
to gain a strategic
competitive advantage in their
industry, as well as companies
that provide and service those
technologies.
DWS Global Opportunities VIP--seeks Oppenheimer Global Equity
above-average capital appreciation Portfolio--seeks capital
over the long term. The Portfolio appreciation. The Portfolio
invests at least 65% of total assets invests under normal
in common stocks and other equities of circumstances at least 80% of
small companies throughout the world its assets in equity
(companies with market values similar securities (primarily common
to the smallest 20% of the S&P stock) of U.S. and foreign-
Developed Small Cap Index). based companies. The Portfolio
can invest without limit in
foreign securities and can
invest in any country,
including countries with
developed or emerging markets.
Janus Aspen Perkins Mid Cap Value Met/Artisan Mid Cap Value Fund--
Portfolio--seeks capital appreciation. seeks long term capital
The Portfolio pursues its investment growth. The Portfolio invests
objective by investing primarily in at least 80% of its net assets
common stocks selected for their in the common stocks of medium-
capital appreciation potential. sized companies.
Legg Mason Batterymarch Variable Global Met/Templeton Growth Portfolio--
Equity Portfolio--seeks long-term seeks long-term capital
capital growth. Dividend income, if growth. Under normal market
any, is a secondary consideration. The conditions, the Portfolio
Portfolio invests primarily in the invests primarily in the
common stock of U.S. and non-U.S. equity securities of companies
issuers, particularly issuers located with various market
in countries included in the Morgan capitalizations located
Stanley Capital International World anywhere in the world,
Index. including emerging markets.
[[Page 16207]]
Legg Mason Batterymarch S&P 500 Index MetLife Stock Index Portfolio--
Fund--seeks investment results that, seeks to equal the performance
before expenses, correspond to the of the S&P 500 Index (before
price and yield performance of the S&P expenses).
500 Index.
Legg Mason Western Asset Variable Money BlackRock Money Market
Market Portfolio--seeks to maximize Portfolio--seeks a high level
current income consistent with of current income consistent
preservation of capital. The Portfolio with preservation of capital.
invests exclusively in high quality The Portfolio invests in
U.S. dollar denominated short-term accordance with industry-
debt securities. standard requirements for
money market funds for the
quality, maturity and
diversification of
investments.
Pioneer High Yield VCT Portfolio--seeks BlackRock High Yield Portfolio--
to maximize total return through a seeks to maximize total return
combination of income and capital consistent with income
appreciation. Normally, the Portfolio generation and prudent
invests at least 80% of its total investment. The Portfolio will
assets in below investment grade high invest primarily in non-
yield debt securities (junk bonds) and investment grade bonds with
preferred stocks. maturities of ten years or
less. The Portfolio will
normally invest at least 80%
of its assets in high yield
(``junk'') bonds, including
convertible and preferred
securities.
Putnam VT Growth and Income Fund--seeks Lord Abbett Growth and Income
capital growth and current income. The Fund--seeks long-term growth
Fund invests mainly in common stocks of capital and income without
of U.S. companies, with a focus on excessive fluctuation in
value stocks that offer the potential market value. The Portfolio
for capital growth, current income, or primarily purchases equity
both. securities of large, seasoned,
U.S. and multinational
companies that the portfolio
manager believes are
undervalued.
UIF Small Company Growth Portfolio-- Met/AIM Small Cap Growth
seeks long-term capital appreciation. Portfolio--seeks long-term
The portfolio manager seeks long-term growth of capital. The
capital appreciation by investing at Portfolio invests normally at
least 80% of the Portfolio's assets in least 80% of its assets in
growth-oriented equity securities of securities of small-cap
small U.S. and foreign companies, companies.
including emerging market securities.
------------------------------------------------------------------------
11. The management fees, 12b-1 fees (if applicable), other expenses
and total operating expenses for each Existing and Replacement Fund are
as follows:
----------------------------------------------------------------------------------------------------------------
Management Waiver/
fees 12b-1 fees Other expenses Reimbursement Total expenses
(Percent) (Percent) (Percent) (Percent) (Percent)
----------------------------------------------------------------------------------------------------------------
New Fund: BlackRock Money Market .32 .............. .02 .01 .33
Portfolio......................
Old Fund: AIM V.I. Money Market .40 .............. .50 .............. .90
Fund...........................
New Fund: RCM Technology Fund... .88 .............. .08 .............. .96
Old Fund: AIM V.I. Technology .75 .............. .45 .............. 1.20
Fund...........................
New Fund: RCM Technology Fund... .88 .15 .08 .............. 1.11
(.25)
Old Fund: DWS Technology VIP.... .67 .25 .26 .............. 1.18
New Fund: Oppenheimer Global .53 .25 .11 .............. .89
Equity Portfolio............... (.50)
Old Fund: DWS Global .89 .25 .28 .............. 1.42
Opportunities VIP..............
New Fund: Met/Artisan Mid Cap .82 .25 .05 .............. 1.12
Value Portfolio................ (.50)
Old Fund: Janus Aspen Perkins .77 .25 .36 .04 1.34
Mid Cap Value Portfolio........
New Fund: Met/Templeton Growth .69 .25 .18 .07 1.05
Portfolio...................... (.50)
Old Fund: Legg Mason .75 .25 .39 .39 1.00
Batterymarch Variable Global
Equity Portfolio...............
New Fund: BlackRock Money Market .32 .15 .02 .01 .48
Portfolio...................... (.25)
Old Fund: Legg Mason Western .45 .............. .05 .............. .50
Asset Variable Money Market
Portfolio......................
New Fund: Met Life Stock Index .25 .............. .03 .01 .27
Portfolio......................
Old Fund: Legg Mason .25 .20 .16 .02 .59
Batterymarch S&P 500 Index
Portfolio......................
New Fund: BlackRock High Yield .60 .25 .07 .............. .92
Portfolio...................... (.50)
Old Fund: Pioneer High Yield VCT .65 .25 .15 .............. 1.05
Portfolio......................
New Fund: Lord Abbett Growth and .53 .............. .03 .............. .56
Income Portfolio--Class A......
Old Fund: Putnam VT Growth & .48 .............. .10 .............. .58
Income Portfolio--Class IA.....
New Fund: Lord Abbett Growth and .53 .25 .03 .............. .81
Income Portfolio--Class B...... (.50)
Old Fund: Putnam VT Growth & 48 .25 .10 .............. .83
Income Portfolio--Class B......
New Fund: Met/AIM Small Cap .86 .25 .04 .............. 1.15
Growth Portfolio............... (.50)
Old Fund: UIF Small Company .92 .35 .44 .............. 1.71
Growth Portfolio...............
----------------------------------------------------------------------------------------------------------------
[[Page 16208]]
12. MetLife Advisers, LLC is the adviser of each of the Replacement
Funds. Each Replacement Fund currently offers up to four classes of
shares, three of which, Class A, Class B and Class E are involved in
the substitutions.
13. The Applicants believe the substitutions will provide
significant benefits to Contract owners, including improved selection
of sub-advisers and simplification of fund offerings through the
elimination of overlapping offerings.
14. As a result of the substitutions, the number of investment
options offered under substantially all of the Contracts will not
change (currently ranges in number from 3 to 122). For a limited number
of Contracts which currently have at least 21 investment options
available, after the substitutions there will be available at least 20
investment options.
15. Those substitutions which replace investment options advised by
investment advisers that are not affiliated with the Substitution
Applicants with funds for which MetLife Advisers, LLC acts as
investment adviser will permit each adviser, under the Multi-Manager
Order, [IC-22824 (1997) and IC-23859 (1999)], to hire, monitor and
replace sub-advisers as necessary to achieve optimal performance.
16. Contract owners with sub-account balances invested (through the
separate account) in shares of the Replacement Funds, except for the
Legg Mason Batterymarch Variable Global Equity Portfolio/Met/Templeton
Growth Portfolio, will have lower total expense ratios taking into
account fund expenses and current fee waivers.
17. In the following substitutions, the management fee and/or
applicable Rule 12b-1 fee of the Replacement Fund are either currently
higher, or, at certain management fee breakpoints, may be higher than
those of the respective Existing Fund: Legg Mason Western Asset
Variable Money Market Portfolio/BlackRock Money Market Portfolio; AIM
V. I. Technology Fund/RCM Technology Portfolio; DWS Technology VIP/RCM
Technology Portfolio; DWS Global Opportunities VIP/Oppenheimer Global
Equity Portfolio; Putnam VT Growth and Income Portfolio/Lord Abbett
Growth and Income Portfolio; UIF Small Company Growth Portfolio/Met/AIM
Small Cap Growth Portfolio; and Janus Aspen Perkins Mid Cap Value
Portfolio/Met/Artisan Mid Cap Value Portfolio.
18. The Substitution Applicants propose to limit Contract charges
attributable to Contract value invested in the Replacement Funds
following the proposed substitutions to a rate that would offset the
difference in the expense ratio between each Existing Fund's net
expense ratio and the net expense ratio for the respective Replacement
Fund.
19. Except for the Legg Mason Batterymarch Variable Global Equity
Portfolio/Met/Templeton Growth Portfolio substitution where there is an
increase in net expenses after waivers of 0.05%, the substitutions will
result in decreased net expense ratios ranging from 2 basis points to
57 basis points. Moreover, there will be no increase in Contract fees
and expenses, including mortality and expense risk fees and
administration and distribution fees charged to the Separate Accounts
as a result of the substitutions.
20. The Substitution Applicants believe that the Replacement Funds
have investment objectives, policies and risk profiles that are either
substantially the same as, or sufficiently similar to, the
corresponding Existing Funds to make those Replacement Funds
appropriate candidates as substitutes.
21. In addition, after the substitutions, neither MetLife Advisers,
LLC nor any of their affiliates will receive compensation from the
charges to the Separate Accounts related to the Contracts or from Rule
12b-1 fees or revenue sharing from the Replacement Funds in excess of
the compensation currently received from the investment advisers or
distributors of the Existing Funds.
22. The share classes of the Replacement Funds are either identical
to or less than the share classes of the Existing Funds with respect to
the imposition of Rule 12b-1 fees currently imposed, except with
respect to the substitution of BlackRock Money Market Portfolio for
Legg Mason Western Asset Variable Money Market Portfolio.
23. Each MIST and Met Series Fund Replacement Fund's Class B and
Class E Rule 12b-1 fees can be raised to 0.50% of net assets by the
Replacement Fund's Board of Directors/Trustees without shareholder
approval. However, Met Series Fund and MIST represent that Rule 12b-1
fees of the Class B and Class E shares of the Replacement Funds issued
in connection with the proposed substitutions will not be raised above
the current rate without approval of a majority in interest of the
respective Replacement Funds' shareholders after the substitutions.
24. The distributors of the Existing Funds pay to the Insurance
Companies, or their affiliates, any 12b-1 fees associated with the
class of shares sold to the Separate Accounts. Similarly, the
distributors for MIST and Met Series Fund will receive from the
applicable class of shares held by the Separate Accounts Rule 12b-1
fees in the same amount or a lesser amount than the amount paid by the
Existing Funds, except as described above.
25. Further, in addition to any Rule 12b-1 fees, the investment
advisers or distributors of the Existing Funds pay the Insurance
Companies or one of their affiliates from 0 to 43 basis points for the
Existing Funds' classes of shares involved in the substitutions.
Following the substitutions, these payments will not be made on behalf
of the Replacement Funds. Rather, the Insurance Companies or their
affiliates will have available both the 25 and 15 basis points in Rule
12b-1 fees from the Replacement Funds (with respect to Class B and
Class E shares, respectively) and, as owners of the Replacement Funds'
adviser, profit distributions from the adviser. These profits from
investment advisory fees may be more or less than the fees being paid
by the Existing Funds.
Applicants' Legal Analysis and Conditions
1. The Substitution Applicants request that the Commission issue an
order pursuant to Section 26(c) of the Act approving the proposed
substitutions.
2. Applicants represent that the Contracts permit the applicable
Insurance Company, subject to compliance with applicable law, to
substitute shares of another investment company for shares of an
investment company held by a sub-account of the Separate Accounts. The
prospectuses for the Contracts and the Separate Accounts contain
appropriate disclosure of this right.
3. By a supplement to the prospectuses for the Contracts and the
Separate Accounts, each Insurance Company has notified all owners of
the Contracts of its intention to take the necessary actions, including
seeking the order requested by this Application, to substitute shares
of the funds as described herein. The supplement has advised Contract
owners that from the date of the supplement until the date of the
proposed substitution, owners are permitted to make one transfer of
Contract value (or annuity unit exchange) out of the Existing Fund sub-
account to one or more other sub-accounts without the transfer (or
exchange) being treated as one of a limited number of permitted
transfers (or exchanges) or a limited number of transfers (or
exchanges) permitted without a transfer charge. The supplement also has
informed Contract
[[Page 16209]]
owners that the Insurance Company will not exercise any rights reserved
under any Contract to impose additional restrictions on transfers until
at least 30 days after the proposed substitutions. The supplement has
also advised Contract owners that for at least 30 days following the
proposed substitutions, the Insurance Companies will permit Contract
owners affected by the substitutions to make one transfer of Contract
value (or annuity unit exchange) out of the Replacement Fund sub-
account to one or more other sub-accounts without the transfer (or
exchange) being treated as one of a limited number of permitted
transfers (or exchanges) or a limited number of transfers (or
exchanges) permitted without a transfer charge.
4. The proposed substitutions will take place at relative net asset
value with no change in the amount of any Contract owner's Contract
value, cash value, or death benefit or in the dollar value of his or
her investment in the Separate Accounts.
5. The process for accomplishing the transfer of assets from each
Existing Fund to its corresponding Replacement Fund will be determined
on a case-by-case basis. In most cases, it is expected that the
substitutions will be effected by redeeming shares of an Existing Fund
for cash and using the cash to purchase shares of the Replacement Fund.
In certain other cases, it is expected that the substitutions will be
effected by redeeming the shares of an Existing Fund in-kind; those
assets will then be contributed in-kind to the corresponding
Replacement Fund to purchase shares of that Fund. All in-kind
redemptions from an Existing Fund of which any of the Substitution
Applicants is an affiliated person will be effected in accordance with
the conditions set forth in the Commission's no-action letter issued to
Signature Financial Group, Inc. (available December 28, 1999).
6. Contract owners will not incur any fees or charges as a result
of the proposed substitutions, nor will their rights or an Insurance
Company's obligations under the Contracts be altered in any way. All
expenses incurred in connection with the proposed substitutions,
including brokerage, legal, accounting, and other fees and expenses,
will be paid by the Insurance Companies. In addition, the proposed
substitutions will not impose any tax liability on Contract owners. The
proposed substitutions will not cause the Contract fees and charges
currently being paid by existing Contract owners to be greater after
the proposed substitutions than before the proposed substitutions. No
fees will be charged on the transfers made at the time of the proposed
substitutions because the proposed substitutions will not be treated as
a transfer for the purpose of assessing transfer charges or for
determining the number of remaining permissible transfers in a Contract
year.
7. In addition to the prospectus supplements distributed to owners
of Contracts, within five business days after the proposed
substitutions are completed, Contract owners will be sent a written
notice informing them that the substitutions were carried out and that
they may make one transfer of all Contract value or cash value under a
Contract invested in any one of the sub-accounts on the date of the
notice to one or more other sub-accounts available under their Contract
at no cost and without regard to the usual limit on the frequency of
transfers from the variable account options to the fixed account
options. The notice will also reiterate that (other than with respect
to ``market timing'' activity) the Insurance Company will not exercise
any rights reserved by it under the Contracts to impose additional
restrictions on transfers or to impose any charges on transfers until
at least 30 days after the proposed substitutions. The Insurance
Companies will also send each Contract owner current prospectuses for
the Replacement Funds involved to the extent that they have not
previously received a copy.
8. Each Insurance Company also is seeking approval of the proposed
substitutions from any State insurance regulators whose approval may be
necessary or appropriate.
9. The Substitution Applicants agree that for those who were
Contract owners on the date of the proposed substitutions, the
Insurance Companies will reimburse, on the last business day of each
fiscal period (not to exceed a fiscal quarter) during the twenty-four
months following the date of the proposed substitutions, those Contract
owners whose sub-account invests in the Replacement Fund such that the
sum of the Replacement Fund's net operating expenses (taking into
account fee waivers and expense reimbursements) and sub-account
expenses (asset-based fees and charges deducted on a daily basis from
sub-account assets and reflected in the calculation of sub-account unit
values) for such period will not exceed, on an annualized basis, the
sum of the Existing Fund's net operating expenses taking into account
fee waivers and expense reimbursements and sub-account expenses for
fiscal year 2009, except with respect to the AIM V.I. Technology Fund/
RCM Technology Portfolio, DWS Technology VIP/RCM Technology Portfolio,
DWS Global Opportunities VIP/Oppenheimer Global Equity Portfolio, Janus
Aspen Perkins Mid Cap Value Portfolio/Met/Artisan Mid Cap Value
Portfolio, Legg Mason Western Asset Variable Money Market Portfolio/
BlackRock Money Market Portfolio, Putnam VT Growth and Income
Portfolio/Lord Abbett Growth and Income Portfolio, and UIF Small
Company Growth Portfolio/Met/AIM Small Cap Growth Portfolio
substitutions.
10. With respect to the AIM V.I. Technology Fund/RCM Technology
Portfolio, DWS Technology VIP/RCM Technology Portfolio, DWS Global
Opportunities VIP/Oppenheimer Global Equity Portfolio, Janus Aspen
Perkins Mid Cap Value Portfolio/Met/Artisan Mid Cap Value Portfolio,
Legg Mason Western Asset Variable Money Market Portfolio/BlackRock
Money Market Portfolio, Putnam VT Growth and Income Portfolio/Lord
Abbett Growth and Income Portfolio and UIF Small Company Growth
Portfolio/Met/AIM Small Cap Growth Portfolio substitutions, the
reimbursement agreement with respect to the Replacement Fund's
operating expenses and sub-account expenses, will extend for the life
of each Contract outstanding on the date of the proposed substitutions.
11. The Substitution Applicants further agree that, except with
respect to the AIM V.I. Technology Fund/RCM Technology Portfolio, DWS
Technology VIP/RCM Technology Portfolio, DWS Global Opportunities VIP/
Oppenheimer Global Equity Portfolio, Janus Aspen Perkins Mid Cap Value
Portfolio/Met/Artisan Mid Cap Value Portfolio, Legg Mason Western Asset
Variable Money Market Portfolio/BlackRock Money Market Portfolio,
Putnam VT Growth and Income Portfolio/Lord Abbett Growth and Income
Portfolio, and UIF Small Company Growth Portfolio/Met/AIM Small Cap
Growth Portfolio substitutions, the Insurance Companies will not
increase total separate account charges (net of any reimbursements or
waivers) for any existing owner of the Contracts on the date of the
substitutions for a period of two years from the date of the
substitutions.
12. With respect to the AIM V.I. Technology Fund/RCM Technology
Portfolio, DWS Technology VIP/RCM Technology Portfolio, DWS Global
Opportunities VIP/Oppenheimer Global Equity Portfolio, Janus Aspen
Perkins Mid Cap Value Portfolio/Met/Artisan Mid Cap Value Portfolio,
Legg Mason
[[Page 16210]]
Western Asset Variable Money Market Portfolio/BlackRock Money Market
Portfolio, Putnam VT Growth and Income Portfolio/Lord Abbett Growth and
Income Portfolio and UIF Small Company Growth Portfolio/Met/AIM Small
Cap Growth Portfolio substitutions, the agreement not to increase the
separate account charges will extend for the life of each Contract
outstanding on the date of the proposed substitutions.
13. In each case, the applicable Insurance Companies believe that
it is in the best interests of the Contract owners to substitute the
Replacement Fund for the Existing Fund. The Insurance Companies believe
that in cases where the Replacement Fund has a new sub-adviser, the new
sub-adviser will, over the long term, be positioned to provide at least
comparable performance to that of the Existing Fund's sub-adviser.
14. The Substitution Applicants anticipate that Contract owners
will be better off with the array of sub-accounts offered after the
proposed substitutions than they have been with the array of sub-
accounts offered prior to the substitutions.
15. The Substitution Applicants submit that none of the proposed
substitutions is of the type that Section 26(c) was designed to
prevent.
16. The Substitution Applicants request an order of the Commission
pursuant to Section 26(c) of the Act approving the proposed
substitutions by the Insurance Companies.
17. The Section 17 Applicants request an order under Section 17(b)
exempting them from the provisions of Section 17(a) to the extent
necessary to permit the Insurance Companies to carry out each of the
proposed substitutions.
18. Section 17(a)(1) of the Act, in relevant part, prohibits any
affiliated person of a registered investment company, or any affiliated
person of such person, acting as principal, from knowingly selling any
security or other property to that company. Section 17(a)(2) of the Act
generally prohibits the persons described above, acting as principals,
from knowingly purchasing any security or other property from the
registered company.
19. Because shares held by a separate account of an insurance
company are legally owned by the insurance company, the Insurance
Companies and their affiliates collectively own of record substantially
all of the shares of MIST and Met Series Fund. Therefore, MIST and Met
Series Fund and their respective funds are arguably under the control
of the Insurance Companies notwithstanding the fact that Contract
owners may be considered the beneficial owners of those shares held in
the Separate Accounts. If MIST and Met Series Fund and their respective
funds are under the control of the Insurance Companies, then each
Insurance Company is an affiliated person or an affiliated person of an
affiliated person of MIST and Met Series Fund and their respective
funds. If MIST and Met Series Fund and their respective funds are under
the control of the Insurance Companies, then MIST and Met Series Fund
and their respective funds are affiliated persons of the Insurance
Companies.
20. Regardless of whether or not the Insurance Companies can be
considered to control MIST and Met Series Fund and their respective
funds, because the Insurance Companies own of record more than 5% of
the shares of each of them and are under common control with each
Replacement Fund's investment adviser, the Insurance Companies are
affiliated persons of both MIST and Met Series Fund and their
respective funds. Likewise, their respective funds are each an
affiliated person of the Insurance Companies.
21. The Insurance Companies, through their separate accounts in the
aggregate own more than 5% of the outstanding shares of the following
Existing Funds: Legg Mason Batterymarch Variable Global Equity
Portfolio, Legg Mason Western Asset Variable Money Market Portfolio,
Legg Mason Batterymarch S&P 500 Index Portfolio, Pioneer High Yield VCT
Portfolio, UIF Small Company Growth Portfolio. Therefore, each
Insurance Company is an affiliated person of those funds.
22. Because the substitutions may be effected, in whole or in part,
by means of in-kind redemptions and purchases, the substitutions may be
deemed to involve one or more purchases or sales of securities or
property between affiliated persons. The proposed transactions may
involve a transfer of portfolio securities by the Existing Funds to the
Insurance Companies; immediately thereafter, the Insurance Companies
would purchase shares of the Replacement Funds with the portfolio
securities received from the Existing Funds. Accordingly, as the
Insurance Companies and certain of the Existing Funds listed above, and
the Insurance Companies and the Replacement Funds, could be viewed as
affiliated persons of one another under Section 2(a)(3) of the Act, it
is conceivable that this aspect of the substitutions could be viewed as
being prohibited by Section 17(a).
23. Section 17(b) of the Act provides that the Commission may, upon
application, grant an order exempting any transaction from the
prohibitions of Section 17(a) if the evidence establishes that: (a) The
terms of the proposed transaction, including the consideration to be
paid or received, are reasonable and fair and do not involve
overreaching on the part of any person concerned; (b) the proposed
transaction is consistent with the policy of each registered investment
company concerned, as recited in its registration statement and records
filed under the Act; and (c) the proposed transaction is consistent
with the general purposes of the Act.
24. The Section 17 Applicants submit that for all the reasons
stated above the terms of the proposed in-kind purchases of shares of
the Replacement Funds by the Insurance Companies, including the
consideration to be paid and received, as described in this
Application, are reasonable and fair and do not involve overreaching on
the part of any person concerned. The Section 17 Applicants also submit
that the proposed in-kind purchases by the Insurance Companies are
consistent with the policies of: (a) MIST and of its RCM Technology,
Met/Templeton Growth, BlackRock High Yield, Lord Abbett Growth and
Income and Met/AIM Small Cap Growth Portfolios; and (b) Met Series Fund
and of its BlackRock Money Market, Oppenheimer Global Equity, Met/
Artisan Mid Cap Value and MetLife Stock Index Portfolios, as recited in
the current registration statements and reports filed by each under the
Act. Finally, the Section 17 Applicants submit that the proposed
substitutions are consistent with the general purposes of the Act.
25. To the extent that the in-kind purchases by the Insurance
Company of the Replacement Funds' shares are deemed to involve
principal transactions among affiliated persons, the procedures
described below should be sufficient to assure that the terms of the
proposed transactions are reasonable and fair to all participants. The
Section 17 Applicants maintain that the terms of the proposed in-kind
purchase transactions, including the consideration to be paid and
received by each fund involved, are reasonable, fair and do not involve
overreaching principally because the transactions will conform with all
but one of the conditions enumerated in Rule 17a-7. The proposed
transactions will take place at relative net asset value in conformity
with the requirements of Section 22(c) of the Act and Rule 22c-1
thereunder with no change in the
[[Page 16211]]
amount of any Contract owner's contract value or death benefit or in
the dollar value of his or her investment in any of the Separate
Accounts. Contract owners will not suffer any adverse tax consequences
as a result of the substitutions. The fees and charges under the
Contracts will not increase because of the substitutions. Even though
the Separate Accounts, the Insurance Companies, MIST and Met Series
Fund may not rely on Rule 17a-7, the Section 17 Applicants believe that
the Rule's conditions outline the type of safeguards that result in
transactions that are fair and reasonable to registered investment
company participants and preclude overreaching in connection with an
investment company by its affiliated persons. In addition, as stated
above, the in-kind redemptions will only be made in accordance with the
conditions set out in the Signature Financial Group no-action letter
(December 29, 1999).
26. The boards of MIST and Met Series Fund have adopted procedures,
as required by paragraph (e)(1) of Rule 17a-7, pursuant to which the
series of each may purchase and sell securities to and from their
affiliates. The Section 17 Applicants will carry out the proposed
Insurance Company in-kind purchases in conformity with all of the
conditions of Rule 17a-7 and each series' procedures thereunder, except
that the consideration paid for the securities being purchased or sold
may not be entirely cash. Nevertheless, the circumstances surrounding
the proposed substitutions will be such as to offer the same degree of
protection to each Replacement Fund from overreaching that Rule 17a-7
provides to them generally in connection with their purchase and sale
of securities under that Rule in the ordinary course of their business.
In particular, the Insurance Companies (or any of their affiliates)
cannot effect the proposed transactions at a price that is
disadvantageous to any of the Replacement Funds. Although the
transactions may not be entirely for cash, each will be effected based
upon (1) the independent market price of the portfolio securities
valued as specified in paragraph (b) of Rule 17a-7, and (2) the net
asset value per share of each fund involved valued in accordance with
the procedures disclosed in its respective investment company
registration statement and as required by Rule 22c-1 under the Act. No
brokerage commission, fee, or other remuneration will be paid to any
party in connection with the proposed in kind purchase transactions.
27. The sale of shares of Replacement Funds for investment
securities, as contemplated by the proposed Insurance Company in-kind
purchases, is consistent with the investment policies and restrictions
of the Investment Companies and the Replacement Funds because (a) the
shares are sold at their net asset value, and (b) the portfolio
securities are of the type and quality that the Replacement Funds would
each have acquired with the proceeds from share sales had the shares
been sold for cash. To assure that the second of these conditions is
met, MetLife Advisers, LLC and the sub-adviser, as applicable, will
examine the portfolio securities being offered to each Replacement Fund
and accept only those securities as consideration for shares that it
would have acquired for each such fund in a cash transaction.
28. The Section 17 Applicants submit that the proposed Insurance
Company in-kind purchases are consistent with the general purposes of
the Act as stated in the Findings and Declaration of Policy in Section
1 of the Act and that the proposed transactions do not present any of
the conditions or abuses that the Act was designed to prevent.
29. The Section 17 Applicants represent that the proposed in-kind
purchases meet all of the requirements of Section 17(b) of the Act and
request that the Commission issue an order pursuant to Section 17(b) of
the Act exempting the Separate Accounts, the Insurance Companies, MIST,
Met Series Fund and each Replacement Fund from the provisions of
Section 17(a) of the Act to the extent necessary to permit the
Insurance Companies on behalf of the Separate Accounts to carry out, as
part of the substitutions, the in-kind purchase of shares of the
Replacement Funds which may be deemed to be prohibited by Section 17(a)
of the Act.
Conclusion
Applicants assert that for the reasons summarized above that the
proposed substitutions and related transactions meet the standards of
Section 26(c) of the Act and are consistent with the standards of
Section 17(b) of the Act and that the requested orders should be
granted.
For the Commission, by the Division of Investment Management
pursuant to delegated authority.
Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-7207 Filed 3-30-10; 8:45 am]
BILLING CODE 8011-01-P
