Jackson National Life Insurance Company, et al., 18908-18915 [2010-8369]
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Federal Register / Vol. 75, No. 70 / Tuesday, April 13, 2010 / Notices
improvement is part of the consolidated
line item improvement process (CLIIP).
DATES: Comment period expires on May
13, 2010. Comments received after this
date will be considered, if it is practical
to do so, but the Commission is able to
ensure consideration only for comments
received on or before this date.
ADDRESSES: You may submit comments
by any one of the following methods.
Please include Docket ID NRC–2010–
0150 in the subject line of your
comments. Comments submitted in
writing or in electronic form will be
posted on the NRC website and on the
Federal rulemaking Web site
Regulations.gov. Because your
comments will not be edited to remove
any identifying or contact information,
the NRC cautions you against including
any information in your submission that
you do not want to be publicly
disclosed.
The NRC requests that any party
soliciting or aggregating comments
received from other persons for
submission to the NRC inform those
persons that the NRC will not edit their
comments to remove any identifying or
contact information, and therefore, they
should not include any information in
their comments that they do not want
publicly disclosed.
Federal Rulemaking Web site: Go to
https://www.regulations.gov and search
for documents filed under Docket ID
NRC–2010–0150. Address questions
about NRC dockets to Carol Gallagher
301–492–3668; e-mail
Carol.Gallagher@nrc.gov.
Mail comments to: Michael T. Lesar,
Chief, Rulemaking, Announcements and
Directives Branch (RADB), Division of
Administrative Services, Office of
Administration, Mail Stop: TWB–05–
B01M, U.S. Nuclear Regulatory
Commission, Washington, DC 20555–
0001, or by fax to RDB at 301–492–3446.
You can access publicly available
documents related to this notice using
the following methods:
NRC’s Public Document Room (PDR):
The public may examine and have
copied for a fee publicly available
documents at the NRC’s PDR, Room O1
F21, One White Flint North, 11555
Rockville Pike, Rockville, Maryland.
NRC’s Agencywide Documents Access
and Management System (ADAMS):
Publicly available documents created or
received at the NRC are available
electronically at the NRC’s Electronic
Reading Room at https://www.nrc.gov/
reading-rm/adams.html. From this page,
the public can gain entry into ADAMS,
which provides text and image files of
NRC’s public documents. If you do not
have access to ADAMS or if there are
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problems in accessing the documents
located in ADAMS, contact the NRC’s
PDR reference staff at 1–800–397–4209,
301–415–4737, or by e-mail to
pdr.resource@nrc.gov. The proposed
models for plant-specific adoption of
TSTF–514, Revision 1, are available
electronically under ADAMS Accession
Number ML093340364.
Federal Rulemaking Web site: Public
comments and supporting materials
related to this notice can be found at
https://www.regulations.gov by searching
on Docket ID: NRC–2010–0150.
FOR FURTHER INFORMATION CONTACT: Ms.
Michelle C. Honcharik, Senior Project
Manager, Licensing Processes Branch,
Mail Stop: O–12 D1, Division of Policy
and Rulemaking, Office of Nuclear
Reactor Regulation, U.S. Nuclear
Regulatory Commission, Washington,
DC, 20555–0001; telephone 301–415–
1774 or e-mail at
michelle.honcharik@nrc.gov.
SUPPLEMENTARY INFORMATION: TSTF–
514, Revision 1, is applicable to BWR
plants. The proposed changes revise the
STS to define a new time limit for
restoring inoperable RCS leakage
detection instrumentation to operable
status and establish alternate methods of
monitoring RCS leakage when one or
more required monitors are inoperable.
TS Bases changes that reflect the
proposed changes and more accurately
reflect the contents of the facility design
bases related to the operability of the
RCS leakage detection instrumentation
are included.
This notice provides an opportunity
for the public to comment on proposed
changes to the STS after a preliminary
assessment and finding by the NRC staff
that the agency will likely offer the
changes for adoption by licensees. This
notice solicits comment on proposed
changes to the STS, which if
implemented by a licensee will modify
the plant-specific TS. The NRC staff will
evaluate any comments received for the
proposed changes and reconsider the
changes or announce the availability of
the changes for adoption by licensees as
part of the CLIIP. Licensees opting to
apply for this TS change are responsible
for reviewing the NRC staff’s SE, and the
applicable technical justifications,
providing any necessary plant-specific
information, and assessing the
completeness and accuracy of their
license amendment request (LAR). The
NRC will process each amendment
application responding to the notice of
availability according to applicable NRC
rules and procedures.
The proposed changes do not prevent
licensees from requesting an alternate
approach or proposing changes other
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than those proposed in TSTF–514,
Revision 1. However, significant
deviations from the approach
recommended in this notice or the
inclusion of additional changes to the
license require additional NRC staff
review. This may increase the time and
resources needed for the review or
result in NRC staff rejection of the LAR.
Licensees desiring significant deviations
or additional changes should instead
submit an LAR that does not claim to
adopt TSTF–514, Revision 1.
Dated at Rockville, Maryland, this 5th day
of April 2010.
For the Nuclear Regulatory Commission.
Eric E. Bowman,
Acting Chief, Licensing Processes Branch,
Division of Policy and Rulemaking, Office
of Nuclear Reactor Regulation.
[FR Doc. 2010–8384 Filed 4–12–10; 8:45 am]
BILLING CODE 7590–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. IC–29205; File No. 812–13703]
Jackson National Life Insurance
Company, et al.
April 7, 2010.
AGENCY: The Securities and Exchange
Commission (‘‘Commission’’).
ACTION: Notice of application for an
order under Section 6(c) of the
Investment Company Act of 1940 (the
‘‘Act’’) granting exemptions from the
provisions of Sections 2(a)(32), 22(c)
and 27(i)(2)(A) of the Act and Rule 22c–
1 thereunder to permit the recapture of
contract enhancements applied to
purchase payments made under certain
deferred variable annuity contracts.
Jackson National Life
Insurance Company (‘‘Jackson
National’’), Jackson National Separate
Account—I (the ‘‘JNL Separate
Account’’), Jackson National Life
Insurance Company of New York (‘‘JNL
New York’’ and collectively with
Jackson National, the ‘‘Insurance
Companies,’’ and individually as made
appropriate by the context, an
‘‘Insurance Company’’), JNLNY Separate
Account I (the ‘‘JNLNY Separate
Account,’’ collectively with the JNL
Separate Account, the ‘‘Separate
Accounts,’’ and individually as made
appropriate by the context, a ‘‘Separate
Account’’) and Jackson National Life
Distributors LLC (‘‘Distributor,’’ and
collectively with the Insurance
Companies and the Separate Accounts,
‘‘Applicants’’).
SUMMARY OF APPLICATION: Applicants
seek an order under Section 6(c) of the
APPLICANTS:
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Act to exempt certain transactions from
the provisions of Sections 2(a)(32),
22(c), and 27(i)(2)(A) of the Act and
Rule 22c–1 thereunder, to the extent
necessary to permit the recapture, under
specified circumstances, of certain
contract enhancements applied to
purchase payments made under the
deferred variable annuity contracts
described herein that Jackson National
has issued and will issue through the
JNL Separate Account (the ‘‘JNL
Contracts’’) and that JNL New York has
issued and will issue through the
JNLNY Separate Account (the ‘‘JNLNY
Contracts,’’ and collectively with the
JNL Contracts, the ‘‘Contracts’’) as well
as other contracts that the Insurance
Companies may issue in the future
through their existing or future separate
accounts (‘‘Other Accounts’’) that are
substantially similar in all material
respects to the Contracts (‘‘Future
Contracts’’). Applicants also request that
the order being sought extend to any
other Financial Industry Regulatory
Authority (‘‘FINRA’’) member brokerdealer controlling or controlled by, or
under common control with, Jackson
National, whether existing or created in
the future, that serves as distributor or
principal underwriter for the Contracts
or Future Contracts (‘‘Affiliated BrokerDealers’’) and any successors in interest
to the Applicants.
FILING DATE: The application was filed
on September 24, 2009, and amended
on October 16, 2009; January 8, 2010;
February 24, 2010; and March 29, 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 29, 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 issues 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 Jackson National Life
Insurance Company, 1 Corporate Way,
Lansing, Michigan 48951, Attn:
Anthony L. Dowling, Esq.
FOR FURTHER INFORMATION CONTACT:
Ellen J. Sazzman, Senior Counsel, at
(202) 551–6762, or Harry Eisenstein,
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Branch Chief, at (202) 551–6795, Office
of Insurance Products, Division of
Investment Management.
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 an applicant using the
Company name box at https://
www.sec.gov/search/search.htm or by
calling (202) 551–8090.
Applicants’ Representations
1. Jackson National is a stock life
insurance company organized under the
laws of the state of Michigan in June
1961. Its legal domicile and principal
business address is 1 Corporate Way,
Lansing, Michigan 48951. Jackson
National is admitted to conduct life
insurance and annuity business in the
District of Columbia and all states
except New York. Jackson National is
ultimately a wholly owned subsidiary of
Prudential plc (London, England).
2. JNL New York is a stock life
insurance company organized under the
laws of the state of New York in July
1995. Its legal domicile and principal
address is 2900 Westchester Avenue,
Purchase, New York 10577. JNL New
York is admitted to conduct life
insurance and annuity business in
Delaware, Michigan, and New York. JNL
New York is ultimately a wholly owned
subsidiary of Prudential plc (London,
England).
3. The JNL Separate Account was
established by Jackson National on June
14, 1993, pursuant to the provisions of
Michigan law and the authority granted
under a resolution of Jackson National’s
Board of Directors. The JNLNY Separate
Account was established by JNL New
York on September 12, 1997, pursuant
to the provisions of New York law and
the authority granted under a resolution
of JNL New York’s Board of Directors.
Jackson National and JNL New York are
the depositors of their respective
Separate Accounts. Each of the Separate
Accounts meets the definition of a
‘‘separate account’’ under the federal
securities laws and each is registered
with the Commission as a unit
investment trust under the Act (File
Nos. 811–8664 and 811–8401,
respectively). JNL Separate Account and
JNLNY Separate Account will fund,
respectively, the variable benefits
available under the JNL Contracts and
the JNLNY Contracts. The registration
statements relating to the offering of the
Contracts were filed under the
Securities Act of 1933 (the ‘‘1933 Act’’)
(File Nos. 333–70472, 333–70384).
4. The Distributor is a wholly owned
subsidiary of Jackson National and
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18909
serves as the distributor of the
Contracts. The Distributor is registered
with the Commission as a broker-dealer
under the Securities Exchange Act of
1934 (the ‘‘1934 Act’’) and is a member
of FINRA. The Distributor enters into
selling group agreements with affiliated
and unaffiliated broker-dealers. The
Contracts are sold by licensed insurance
agents, where the Contracts may be
lawfully sold, who are registered
representatives of broker-dealers that are
registered under the 1934 Act and are
members of FINRA.
5. The Contracts require a minimum
initial premium payment of $5,000 or
$10,000 under most circumstances
depending on the contract ($2,000 for a
qualified plan contract). Subsequent
payments may be made at any time
during the accumulation phase but
before the contract anniversary after the
owner’s 85th birthday. Each subsequent
payment must be at least $500 ($50
under an automatic payment plan).
Prior approval of the relevant Insurance
Company is required for aggregate
premium payments of over $1,000,000.
6. The Contracts permit owners to
accumulate contract values on a fixed
basis through allocations to one of six
fixed accounts (the ‘‘Fixed Accounts’’).
In addition, if the optional LifeGuard
Select Guaranteed Minimum
Withdrawal Benefit (‘‘GMWB’’) or the
optional LifeGuard Select with Joint
Option Guaranteed Minimum
Withdrawal Benefit (‘‘GMWB’’) is
elected in the JNL Contracts, automatic
transfers of an owner’s contract value
may be allocated to a fixed account
designated for these guaranteed
minimum withdrawal benefits (‘‘GMWB
Fixed Account’’).
7. The Contracts also permit owners
to accumulate contract values on a
variable basis, through allocations to
one or more of the sub-accounts, also
referred to as investment divisions, of
the Separate Accounts (the ‘‘Investment
Divisions,’’ collectively with the Fixed
Account and the GMWB Fixed Account,
the ‘‘Allocation Options’’). Under most
Contracts, 98 Investment Divisions
currently are expected to be offered
through the Separate Accounts but
additional Investment Divisions may be
offered in the future and some could be
eliminated or combined with other
Investment Divisions in the future.
Similarly, Future Contracts may offer
additional or different Investment
Divisions. Each Investment Division
will invest in shares of a corresponding
series (‘‘Series’’) of JNL Series Trust
(‘‘Trust’’) or JNL Variable Fund LLC
(‘‘Fund’’) (collectively the ‘‘Trust and
Fund’’). Not all Investment Divisions
may be available under every Contract.
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The Trust and Fund are open-end
management investment companies
registered under the Act and their
shares are registered under the 1933
Act.
8. Transfers among the Investment
Divisions are permitted. The first 15
transfers in a contract year are free;
subsequent transfers cost $25. Certain
transfers to, from and among the Fixed
Account Options are also permitted
during the Contracts’ accumulation
phase, but are subject to certain
adjustments and limitations. Dollar cost
averaging and rebalancing transfers are
offered at no charge and do not count
against the 15 free transfers permitted
each year. If the optional LifeGuard
Select GMWB or the optional LifeGuard
Select with Joint Option GMWB is
elected in the JNL Contracts, automatic
transfers may be required to and from
the GMWB Fixed Account according to
non-discretionary formulas. These
automatic transfers also do not count
against the 15 free transfers permitted
each year and are without charge.
9. If the owner dies during the
accumulation phase of the Contracts,
the beneficiary named by the owner is
paid a death benefit by the Insurance
Company. The Contracts’ base death
benefit, which applies unless an
optional death benefit has been elected,
is a payment to the beneficiary of the
greater of: (i) Contract value on the date
the Insurance Company receives proof
of death and completed claim forms
from the beneficiary or (ii) the total
premiums paid under that Contract
minus any prior withdrawals (including
any withdrawal charges, recapture
charges or other charges or adjustments
applicable to such withdrawals).
10. The owner of a JNL Contract may
be offered certain optional
endorsements (for various fees) that can
change the death benefit paid to the
beneficiary. First, an ‘‘Earnings
Protection Benefit Endorsement’’ is
offered to owners who are no older than
age 75 when their Contracts are issued.
Second, the owner of a JNL Contract
currently may be offered six optional
death benefits (state variations may
apply) that would replace the base death
benefit. The optional death benefits for
the JNL Contract include the following:
(i) A 5% Roll-Up death benefit, (ii) a 6%
Roll-Up death benefit, (iii) a Highest
Quarterly Anniversary Value Death
Benefit, (iv) a Combination 5% Roll-Up
and Highest Quarterly Anniversary
Value Death Benefit, (v) a Combination
6% Roll-Up and Highest Quarterly
Anniversary Value Death Benefit, and
(vi) a death benefit available only in
conjunction with the purchase of a
particular GMWB (LifeGuard Freedom 6
GMWB).
11. The owner of a JNLNY Contract
may also be offered certain optional
endorsements that can change the death
benefit paid to the beneficiary. The
owner of a JNLNY Contract may be
offered the following two optional death
benefits that would replace the base
death benefit: (i) A Highest Anniversary
Value Death Benefit which is the
greatest of the contract value on the date
JNL New York receives proof of death
and completed claim forms from the
beneficiary; or total net premiums since
the contract was issued; or the greatest
contract value on any contract
anniversary prior to the owner’s 81st
birthday, adjusted for any withdrawals
subsequent to that contract anniversary
(including any applicable withdrawal
charges, recapture charges, and other
charges or adjustments for such
withdrawals), plus any premium paid
subsequent to that contract anniversary;
and (ii) a death benefit available only in
conjunction with the purchase of the
LifeGuard Freedom 6 GMWB.
12. The Contracts offer fixed and
variable versions of the following four
types of annuity payment or ‘‘income
payment’’: Life income, joint and
survivor, life annuity with at least 120
or 240 monthly payments guaranteed to
be paid (although not guaranteed as to
amount if variable), and income for a
specified period of 5 to 30 years. The
Insurance Companies may also offer
other income payment options. The
Contracts may also offer an optional
Guaranteed Minimum Income Benefit
(‘‘GMIB’’) endorsement and various
GMWB optional endorsements.
13. All contract enhancements are
paid from the Insurance Company’s
general account assets. The contract
enhancement endorsements available
are the 2% Contract Enhancement
endorsement, 3% Contract
Enhancement endorsement, 4%
Contract Enhancement endorsement, or
5% Contract Enhancement
endorsement. However, the 5% Contract
Enhancement endorsement is not
available under the JNLNY Contracts. If
one of the optional contract
enhancement endorsements is elected,
the Insurance Company will add an
additional amount to the owner’s
contract value (a ‘‘Contract
Enhancement’’) for the initial premium
payment, and for each subsequent
premium payment received within the
first seven contract years (five contract
years for the 2% Contract Enhancement
endorsement). The actual Contract
Enhancement percentage applied to the
premium payment varies, depending
upon which Contract Enhancement
endorsement is elected and the contract
year in which the premium payment is
received as follows:
Contract year premium is received
0–1
1–2
2–3
3–4
4–5
5+
2% Contract Enhancement Endorsement
Contract Enhancement Percentage of the Premium Payment ...
2.00%
2.00%
1.25%
1.25%
0.50%
0%
Contract year premium is received
0–1
1–2
2–3
3–4
4–5
5–6
6–7
7+
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3% Contract Enhancement Endorsement
Contract Enhancement Percentage
of the Premium Payment .............
3.00%
3.00%
2.25%
2.00%
2.00%
1.00%
1.00%
0%
2.50%
1.25%
1.25%
0%
4% Contract Enhancement Endorsement
Contract Enhancement Percentage
of the Premium Payment .............
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2.50%
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Contract year premium is received
0–1
1–2
2–3
3–4
4–5
5–6
6–7
7+
5% Contract Enhancement Endorsement (not available under JNLNY Contracts)
Contract Enhancement Percentage
of the Premium Payment .............
5.00%
14. At issue, a Contract owner can
choose only one of the Contract
Enhancement endorsements. An owner
may not elect the 3%, 4%, or 5%
Contract Enhancement endorsement if
the 20% additional free withdrawal
endorsement is elected. The Insurance
Companies will allocate the Contract
Enhancement to the Fixed Accounts
and/or Investment Divisions in the same
proportion as the premium payment
allocation. Contract Enhancement
endorsements are available only to
owners 87 years old and younger.
15. There is an asset-based charge for
each of the Contract Enhancement
endorsements. The 2% Contract
Enhancement endorsement has a
0.395% charge that applies only for the
first five contract years, as opposed to
five years from the date of the premium
payment. The asset-based charges for
the other Contract Enhancement
endorsements apply only for the first
seven contract years, as opposed to
4.50%
3.75%
3.00%
seven years from the date of the
premium payment, and are 0.42%,
0.56%, and 0.695%, respectively, for the
3%, 4%, and 5% Contract Enhancement
endorsements. These charges will also
be assessed against any amounts that
Contract owners have allocated to the
Fixed Accounts, resulting in a lower
annual credited interest rate that would
apply to the Fixed Account if the
Contract Enhancement endorsement had
not been elected.
16. The Insurance Companies will
recapture all or a declining portion of
any Contract Enhancements by
imposing a recapture charge whenever
an owner: (i) Makes a total withdrawal
within the recapture charge period (up
to five years after a premium payment
in the case of the 2% Contract
Enhancement endorsement and up to
seven years after a premium payment in
the case of the other Contract
Enhancement endorsements) or a partial
withdrawal of corresponding premiums
2.25%
1.75%
1.00%
0%
within the recapture charge period in
excess of those permitted under the
Contracts’ free withdrawal provisions,
unless the withdrawal is made for
certain health-related emergencies
specified in the Contracts; (ii) elects to
receive payments under an income
option within the recapture charge
period; or (iii) returns the Contract
during the free-look period.
17. The amount of the recapture
charge varies, depending upon (i)
Which Contract Enhancement
endorsement is elected; (ii) the
corresponding declining amount of the
Contract Enhancement based on the
contract year when the premium
payment being withdrawn was received;
and (iii) when the charge is imposed
based on Completed Years since receipt
of the related premium. For Contracts
with the 2% or 3% Contract
Enhancement endorsement, the
recapture charge is as follows:
CONTRACT ENHANCEMENT RECAPTURE CHARGE
[as a percentage of the corresponding premium payment withdrawn if an optional Contract Enhancement endorsement is selected]
Completed years since receipt of premium
Contract year premium is received
0–1
1–2
2–3
3–4
4–5
5–6
6–7
7+
2% Contract Enhancement Endorsement
0–1 ...................................................
1–2 ...................................................
2–3 ...................................................
3–4 ...................................................
4–5 ...................................................
5–6 ...................................................
6–7 ...................................................
7+ .....................................................
2%
2%
1.25%
1.25%
.50%
0%
0%
0%
2%
1.25%
1.25%
.50%
0%
0%
0%
0%
1.25%
1.25%
.50%
0%
0%
0%
0%
0%
1.25%
.50%
0%
0%
0%
0%
0%
0%
.50%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
2%
1%
1%
0%
0%
0%
0%
0%
1%
1%
0%
0%
0%
0%
0%
0%
1%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
sroberts on DSKD5P82C1PROD with NOTICES
3% Contract Enhancement Endorsement
0–1 ...................................................
1–2 ...................................................
2–3 ...................................................
3–4 ...................................................
4–5 ...................................................
5–6 ...................................................
6–7 ...................................................
7+ .....................................................
3%
3%
2%
2%
2%
1%
1%
0%
18. Following are recapture charges
for JNL Contracts having the 4% or 5%
Contract Enhancement endorsement.
The 4% Contract Enhancement
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3%
2%
2%
2%
1%
1%
0%
0%
2%
2%
1.25%
1%
1%
0%
0%
0%
2%
2%
1%
1%
0%
0%
0%
0%
Recapture Charge schedule applicable to
JNLNY Contracts is provided later in
this notice. The 5% Contract
Enhancement Recapture Charge
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schedule is not applicable to JNLNY
Contracts because the 5% Contract
Enhancement endorsement is not
available under the JNLNY Contracts.
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Completed years since receipt of
premium
Contract year premium is received
0–1
1–2
2–3
3–4
4–5
5–6
6–7
7+
4% Contract Enhancement Endorsement (not applicable to JNLNY Contracts)
0–1 ...................................................
1–2 ...................................................
2–3 ...................................................
3–4 ...................................................
4–5 ...................................................
5–6 ...................................................
6–7 ...................................................
7+ .....................................................
4%
4%
2.50%
2.50%
2.50%
1.25%
1.25%
0%
4%
2.50%
2.50%
2.50%
1.25%
1.25%
0%
0%
2.50%
2.50%
2%
1.25%
1.25%
0%
0%
0%
2.50%
2.50%
1.25%
1.25%
0%
0%
0%
0%
2.50%
1.25%
1.25%
0%
0%
0%
0%
0%
1.25%
1.25%
0%
0%
0%
0%
0%
0%
1.25%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
1%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
5% Contract Enhancement Endorsement (not available under JNLNY Contracts)
sroberts on DSKD5P82C1PROD with NOTICES
0–1 ...................................................
1–2 ...................................................
2–3 ...................................................
3–4 ...................................................
4–5 ...................................................
5–6 ...................................................
6–7 ...................................................
7+ .....................................................
4.50%
3.75%
3.25%
2.75%
2%
1.25%
1%
0%
19. A ‘‘Completed Year’’ is the
succeeding twelve months from the date
on which the Insurance Companies
receive a premium payment. Completed
Years specify the years from the date of
receipt of the premium and do not refer
to contract years. If the premium receipt
date is on the issue date of the Contract
then Completed Year 0–1 does not
include the first contract anniversary.
The first contract anniversary begins
Completed Year 1–2 and each
successive contract anniversary. The
first contract year (contract year 0–1)
starts on the issue date and extends to,
but does not include, the first contract
anniversary. Subsequent contract years
start on an anniversary date and extend
to, but do not include, the next
anniversary date. If the premium receipt
date is other than the issue date or a
subsequent contract anniversary, there
is no correlation of the contract
anniversary date and Completed Years.
For example, if the issue date is January
15, 2010 and a premium payment is
received on February 28, 2010, then,
although the first contract anniversary is
January 15, 2011, the end of Competed
Year 0–1 for that premium payment
would be February 27, 2011, and
February 28, 2011 begins Completed
Year 1–2.
20. The recapture charge percentage
will be applied to the corresponding
premium reflected in the amount
withdrawn or the amount applied to
income payments that remain subject to
a recapture charge. The corresponding
premium is determined by treating
amounts withdrawn as withdrawals first
of earnings, which bear no charge, and
then purchase payments (oldest
purchase payments first). The amount
VerDate Nov<24>2008
17:33 Apr 12, 2010
Jkt 220001
3.75%
3.25%
2.75%
2%
1.25%
1%
0%
0%
3.25%
2.75%
2%
1.25%
1%
0%
0%
0%
2.75%
2%
1.25%
1%
0%
0%
0%
0%
recaptured will be taken from the
Investment Divisions and the Fixed
Account (and the GMWB Fixed
Account, if applicable) in the proportion
their respective values bear to the
contract value. The dollar amount
recaptured will never exceed the dollar
amount of the Contract Enhancement
added to the Contract. Recapture
charges will be applied upon electing to
commence income payments, even in a
situation where the withdrawal charge
is waived.
21. The Insurance Companies do not
assess the recapture charge on any
payments paid out as: Death benefits;
withdrawals of earnings; withdrawals
taken under the free withdrawal
provisions, which allow for free
withdrawals of up to 20% of remaining
premium, less earnings (where a
withdrawal is taken that exceeds the
free withdrawal amount, the recapture
charge is imposed only on the excess
amount above the free withdrawal
amount); withdrawals necessary to
satisfy the required minimum
distribution of the Internal Revenue
Code (if the withdrawal requested
exceeds the required minimum
distribution, the recapture charge will
not be waived on the required minimum
distribution); if permitted by the
owner’s state, withdrawals of up to
$250,000 from the JNL Separate
Account, the Fixed Account or the
GMWB Fixed Account in connection
with the owner’s terminal illness or if
the owner needs extended hospital or
nursing home care as provided in the
Contract (this recapture charge waiver is
not available under the JNLNY
Contracts); or if permitted by the
owner’s state, withdrawals of up to 25%
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2%
1.25%
1%
0%
0%
0%
0%
0%
1.25%
1%
0%
0%
0%
0%
0%
0%
(12.5% for each of two joint owners) of
contract value from the JNL Separate
Account, the Fixed Account, or the
GMWB Fixed Account in connection
with certain serious medical conditions
specified in the Contract (this recapture
charge waiver is not available under the
JNLNY Contracts).
22. The contract value will reflect any
gains or losses attributable to a Contract
Enhancement described above. Contract
Enhancements, and any gains or losses
attributable to a Contract Enhancement
will be considered earnings under the
Contract for tax purposes and for
purposes of calculating free withdrawal
amounts.
23. The JNL Contracts have a ‘‘freelook’’ period of ten days (twenty days for
JNLNY Contracts) after the owner
receives the Contract (or any longer
period required by state law). Contract
value (or premiums paid, as may be
required by state law), less the full
amount of any Contract Enhancement(s)
is returned upon exercise of free-look
rights by an owner. Therefore, 100% of
the Contract Enhancement will be
recaptured under all circumstances if an
owner returns the Contract during the
free-look period, but any gain or loss on
investments of the Contract
Enhancement would be retained by the
owner. The dollar amount recaptured
will never exceed the dollar amount of
the Contract Enhancement added to the
Contract. A withdrawal charge will not
be assessed upon exercise of free look
rights.
24. The withdrawal charges shown in
the table below apply to differing
versions of the JNL Contracts. The
withdrawal charge schedules applicable
to the JNLNY Contracts are provided
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13APN1
18913
Federal Register / Vol. 75, No. 70 / Tuesday, April 13, 2010 / Notices
later in this notice. The amount of the
withdrawal charge depends upon when
the charge is imposed based on the
Completed Years since the receipt of the
related premium as follows:
WITHDRAWAL CHARGE (AS A PERCENTAGE OF PREMIUM PAYMENTS) NOT APPLICABLE TO JNLNY CONTRACTS
Completed years since receipt of
premium
0–1
Withdrawal Charge (Base Withdrawal Charge Schedule for Offerings under File Nos. 333–
70472 and 333–132128) ..............
Withdrawal Charge (Base Withdrawal Charge Schedule for Offering under File No. 333–
119656) ........................................
Withdrawal Charge if Five-Year Period is elected (Optional Five-Year
Withdrawal Charge Schedule for
Offerings under File No. 333–
70472) ..........................................
Withdrawal Charge if Four-Year Period is elected (Optional FourYear Withdrawal Charge Schedule for Offering under File No.
333–132128) ................................
1–2
2–3
3–4
4–5
5–6
6–7
7+
8.5%
8%
7%
6%
5%
4%
2%
0
8
8
7
6
0
0
0
0
8
7
6
4
2
0
0
0
8
7
5.5
3.5
0
0
0
0
25. The Insurance Companies do not
assess the withdrawal charge on any
payments paid out as: Death benefits;
election to begin income payments after
the first contract year under JNL
Contracts and after 13 months from the
issue date under JNLNY Contracts;
cancellation of the Contract upon
exercise of free look rights by an owner;
withdrawals of earnings; withdrawals
taken under the free withdrawal
provision, which allows for free
withdrawals up to 20% of remaining
premium, less earnings (where a
withdrawal is taken that exceeds the
free withdrawal amount, the withdrawal
charge is imposed only on the excess
amount above the free withdrawal
amount); withdrawals necessary to
satisfy the required minimum
distribution of the Internal Revenue
Code (if the withdrawal requested
exceeds the required minimum
distribution, the withdrawal charge will
not be waived on the required minimum
distribution); if permitted by the
owner’s state law, withdrawals of up to
$250,000 from the Investment Divisions,
Fixed Account, or GMWB Fixed
Account of the Contracts in connection
with the terminal illness of the owner of
a Contract, or in connection with
extended hospital or nursing home care
for the owner (this withdrawal charge
waiver is not available under JNLNY
Contracts); and if permitted by the
owner’s state, withdrawals of up to 25%
(12.5% each for two joint owners) of
contract value from the Investment
Divisions, Fixed Account, or GMWB
Fixed Account of the Contracts in
connection with certain serious medical
conditions specified in the Contract
(this withdrawal charge waiver is not
available under JNLNY Contracts).
26. The JNLNY Contracts are identical
to the JNL Contracts in the operation of
Contract Enhancements, Contract
Enhancement charges, and Contract
Enhancement recapture charges except
that: (1) The 5% Contract Enhancement
endorsement is not available under the
JNLNY Contracts, (2) the recapture
charge waivers for terminal illness and
specified medical conditions are not
available under JNLNY Contracts, and
(3) the recapture charges for the 4%
Contract Enhancement endorsement are
1% less for JNLNY Contracts in certain
years than in the JNL Contracts, as
indicated in the table below:
Contract year premium is received
Completed years since receipt of
premium
0–1
1–2
2–3
3–4
4–5
5–6
6–7
7+
sroberts on DSKD5P82C1PROD with NOTICES
4% Contract Enhancement Recapture Charge for JNLNY Contracts
0–1 ...................................................
1–2 ...................................................
2–3 ...................................................
3–4 ...................................................
4–5 ...................................................
5–6 ...................................................
6–7 ...................................................
7+ .....................................................
3%
3%
2.50%
2.50%
2.50%
1.25%
1.25%
0%
27. The withdrawal charges
applicable to the JNLNY Contracts differ
VerDate Nov<24>2008
17:33 Apr 12, 2010
Jkt 220001
3%
2.50%
2.50%
2.50%
1.25%
1.25%
0%
0%
2.50%
2.50%
2%
1.25%
1.25%
0%
0%
0%
2.50%
2.50%
1.25%
1.25%
0%
0%
0%
0%
from the withdrawal charges applicable
to the JNL Contracts. The withdrawal
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2.50%
1.25%
1.25%
0%
0%
0%
0%
0%
1.25%
1.25%
0%
0%
0%
0%
0%
0%
1.25%
0%
0%
0%
0%
0%
0%
0%
charges of the JNLNY Contracts are as
follows:
E:\FR\FM\13APN1.SGM
13APN1
0%
0%
0%
0%
0%
0%
0%
0%
18914
Federal Register / Vol. 75, No. 70 / Tuesday, April 13, 2010 / Notices
WITHDRAWAL CHARGE
[as a percentage of premium payments]
Completed years since receipt of
premium
sroberts on DSKD5P82C1PROD with NOTICES
Withdrawal Charge (Base Withdrawal Charge Schedule for Offerings under File No. 333–70384)
Withdrawal Charge (Base Withdrawal Charge Schedule for Offerings under File No. 333–
119659) ........................................
Withdrawal Charge if Five-Year Period is elected (Optional Five-Year
Withdrawal Charge Schedule for
Offerings under File No. 333–
70384) ..........................................
0–1
17:33 Apr 12, 2010
Jkt 220001
2–3
3–4
4–5
5–6
6–7
7+
7%
6%
5%
4%
3%
2%
1%
0
7%
6%
5%
4%
0
0
0
0
6.5%
5%
3%
2%
1%
0
0
0
Applicants’ Legal Analysis
1. Applicants state that Section 6(c) of
the Act authorizes the Commission to
exempt any person, security or
transaction, or any class or classes of
persons, securities or transactions from
the provisions of the Act and the rules
promulgated thereunder if and to the
extent that such exemption is necessary
or appropriate in the public interest and
consistent with the protection of
investors and the purposes fairly
intended by the policy and provisions of
the Act. Applicants request that the
Commission, pursuant to Section 6(c) of
the Act, grant the exemptions requested
below with respect to the Contracts and
any Future Contracts funded by the
Separate Accounts or Other Accounts
that are issued by the Insurance
Companies and underwritten or
distributed by the Distributor or
Affiliated Broker-Dealers. Applicants
undertake that Future Contracts funded
by the Separate Accounts or Other
Accounts, in the future, will be
substantially similar in all material
respects to the Contracts. Applicants
believe that the requested exemptions
are appropriate in the public interest
and consistent with the protection of
investors and the purposes fairly
intended by the policy and provisions of
the Act.
2. Applicants state that Section 27 of
the Act regulates and imposes certain
restrictions on the sales of periodic
payment plan certificates issued by any
registered investment company.
Subsection (i) of Section 27 of the Act
provides that Section 27 does not apply
to any registered separate account
funding variable insurance contracts, or
to the sponsoring insurance company
and principal underwriter of such
account, except as provided in
paragraph (2) of the subsection.
Paragraph (2) provides that it shall be
unlawful for such a separate account or
VerDate Nov<24>2008
1–2
sponsoring insurance company to sell a
contract funded by the registered
separate account unless such contract is
a redeemable security. Section 2(a)(32)
defines ‘‘redeemable security’’ as any
security, other than short-term paper,
under the terms of which the holder,
upon presentation to the issuer, is
entitled to receive approximately his
proportionate share of the issuer’s
current net assets, or the cash equivalent
thereof.
3. Applicants submit that the
recapture of the Contract Enhancement
in the circumstances set forth in the
Application would not deprive an
owner of his or her proportionate share
of the issuer’s current net assets. A
Contract owner’s interest in the amount
of the Contract Enhancement allocated
to his or her contract value upon the
Insurance Companies’ receipt of a
premium payment is not fully vested
until five or seven complete years
following a premium payment. Until or
unless the amount of any Contract
Enhancement is vested, the Insurance
Companies retain the right and interest
in the Contract Enhancement amount,
although not in the earnings attributable
to that amount. Thus, Applicants urge
that when one of the Insurance
Companies recaptures any Contract
Enhancement, it is simply retrieving its
own assets, and because a Contract
owner’s interest in the Contract
Enhancement is not vested, the Contract
owner has not been deprived of a
proportionate share of the Separate
Account’s assets, i.e., a share of the
Separate Account’s assets proportionate
to the Contract owner’s contract value.
4. In addition, Applicants represent
that it would be patently unfair to allow
a Contract owner exercising the freelook privilege to retain the Contract
Enhancement amount under a Contract
that has been returned for a refund after
a period of only a few days. If the
PO 00000
Frm 00132
Fmt 4703
Sfmt 4703
Insurance Companies could not
recapture the Contract Enhancement,
individuals could purchase a Contract
with no intention of retaining it and
simply return it for a quick profit.
Furthermore, Applicants state that the
recapture of the Contract Enhancement
relating to withdrawals and to income
payments within the first five or seven
contract years is designed to protect the
Insurance Companies against Contract
owners not holding the Contract for a
sufficient time period. This recapture of
the Contract Enhancement would
provide the Insurance Companies with
sufficient time to recover the cost of the
Contract Enhancement and to avoid the
financial detriment that would result
from a shorter recapture period.
5. Applicants represent that it is not
administratively feasible to track the
Contract Enhancement amount in the
Separate Accounts after the Contract
Enhancement(s) is applied.
Accordingly, the asset-based charges
applicable to the Separate Accounts will
be assessed against the entire amounts
held in the Separate Accounts,
including any Contract Enhancement
amounts. As a result, the aggregate
asset-based charges assessed will be
higher than those that would be charged
if the Contract owner’s contract value
did not include any Contract
Enhancement.
6. Applicants submit that the
provisions for recapture of any Contract
Enhancement under the Contracts do
not violate Sections 2(a)(32) and
27(i)(2)(A) of the Act. Sections 26(e) and
27(i) were added to the Act to
implement the purposes of the National
Securities Markets Improvement Act of
1996 and Congressional intent. The
application of a Contract Enhancement
to premium payments made under the
Contracts should not raise any questions
as to compliance by the Insurance
Companies with the provisions of
E:\FR\FM\13APN1.SGM
13APN1
sroberts on DSKD5P82C1PROD with NOTICES
Federal Register / Vol. 75, No. 70 / Tuesday, April 13, 2010 / Notices
Section 27(i). However, to avoid any
uncertainty as to full compliance with
the Act, Applicants request an order
providing an exemption from Sections
2(a)(32) and 27(i)(2)(A), to the extent
deemed necessary, to permit the
recapture of the Contract Enhancements
under the circumstances described
herein and in the Application, without
the loss of relief from Section 27
provided by Section 27(i).
7. Applicants state that Section 22(c)
of the Act authorizes the Commission to
make rules and regulations applicable to
registered investment companies and to
principal underwriters of, and dealers
in, the redeemable securities of any
registered investment company to
accomplish the same purposes as
contemplated by Section 22(a). Rule
22c–1 under the Act prohibits a
registered investment company issuing
any redeemable security, a person
designated in such issuer’s prospectus
as authorized to consummate
transactions in any such security, and a
principal underwriter of, or dealer in,
such security, from selling, redeeming,
or repurchasing any such security
except at a price based on the current
net asset value of such security which
is next computed after receipt of a
tender of such security for redemption
or of an order to purchase or sell such
security.
8. Applicants state that it is possible
that someone might view the Insurance
Companies’ recapture of the Contract
Enhancements as resulting in the
redemption of redeemable securities for
a price other than one based on the
current net asset value of the Separate
Accounts. Applicants contend,
however, that the recapture of the
Contract Enhancement does not violate
Rule 22c–1. The recapture of some or all
of the Contract Enhancement does not
involve either of the evils that Section
22(c) and Rule 22c–1 were intended to
eliminate or reduce as far as reasonably
practicable, namely: (i) The dilution of
the value of outstanding redeemable
securities of registered investment
companies through their sale at a price
below net asset value or repurchase at
a price above it, and (ii) other unfair
results, including speculative trading
practices. To effect a recapture of a
Contract Enhancement, the Insurance
Companies will redeem interests in a
Contract owner’s contract value at a
price determined on the basis of the
current net asset value of the JNL and
JNLNY Separate Accounts. The amount
recaptured will be less than or equal to
the amount of the Contract
Enhancement that the Insurance
Companies paid out of its general
account assets. Although Contract
VerDate Nov<24>2008
17:33 Apr 12, 2010
Jkt 220001
owners will be entitled to retain any
investment gains attributable to the
Contract Enhancement and to bear any
investment losses attributable to the
Contract Enhancement, the amount of
such gains or losses will be determined
on the basis of the current net asset
values of the Separate Accounts. Thus,
no dilution will occur upon the
recapture of the Contract Enhancement.
Applicants also submit that the second
harm that Rule 22c–1 was designed to
address, namely, speculative trading
practices calculated to take advantage of
backward pricing, will not occur as a
result of the recapture of the Contract
Enhancement. Because neither of the
harms that Rule 22c–1 was meant to
address is found in the recapture of the
Contract Enhancement, Rule 22c–1
should not apply to any Contract
Enhancement. However, to avoid any
uncertainty as to full compliance with
Rule 22c–1, Applicants request an order
granting an exemption from the
provisions of Rule 22c–1 to the extent
deemed necessary to permit them to
recapture the Contract Enhancement
under the Contracts.
9. Applicants submit that extending
the requested relief to encompass Future
Contracts and Other Accounts is
appropriate in the public interest
because it promotes competitiveness in
the variable annuity market by
eliminating the need to file redundant
exemptive applications prior to
introducing new variable annuity
contracts. Investors would receive no
benefit or additional protection by
requiring Applicants to repeatedly seek
exemptive relief that would present no
issues under the Act not already
addressed in the Application.
10. Applicants submit, for the reasons
stated herein, that their exemptive
request meets the standards set out in
Section 6(c) of the Act, namely, that the
exemptions requested are appropriate in
the public interest and consistent with
the protection of investors and the
purposes fairly intended by the policy
and provisions of the Act and that,
therefore, the Commission should grant
the requested order.
For the Commission, by the Division of
Investment Management, pursuant to
delegated authority.
Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010–8369 Filed 4–12–10; 8:45 am]
BILLING CODE 8011–01–P
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18915
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–61860; File No. 4–597]
Program for Allocation of Regulatory
Responsibilities Pursuant to Rule 17d–
2; Notice of Filing of Proposed Plan for
the Allocation of Regulatory
Responsibilities Between EDGA
Exchange, Inc. and the Financial
Industry Regulatory Authority, Inc.
April 7, 2010.
Pursuant to Section 17(d) of the
Securities Exchange Act of 1934
(‘‘Act’’),1 and Rule 17d–2 thereunder,2
notice is hereby given that on April 2,
2010, EDGA Exchange, Inc. (‘‘EDGA’’)
and the Financial Industry Regulatory
Authority, Inc. (‘‘FINRA’’) (together with
EDGA, the ‘‘Parties’’) filed with the
Securities and Exchange Commission
(‘‘Commission’’) a plan for the allocation
of regulatory responsibilities, dated
March 31, 2010 (the ‘‘17d–2 Plan’’). The
Commission is publishing this notice to
solicit comments on the 17d–2 Plan
from interested persons.
I. Introduction
Section 19(g)(1) of the Act,3 among
other things, requires every selfregulatory organization (‘‘SRO’’)
registered as either a national securities
exchange or registered national
securities association to examine for,
and enforce compliance by, its members
and persons associated with its
members with the Act, the rules and
regulations thereunder, and the SRO’s
own rules, unless the SRO is relieved of
this responsibility pursuant to Section
17(d) 4 or Section 19(g)(2) 5 of the Act.
Without this relief, the statutory
obligation of each individual SRO could
result in a pattern of multiple
examinations of broker-dealers that
maintain memberships in more than one
SRO (‘‘common members’’). Such
regulatory duplication would add
unnecessary expenses for common
members and their SROs.
Section 17(d)(1) of the Act 6 was
intended, in part, to eliminate
unnecessary multiple examinations and
regulatory duplication.7 With respect to
a common member, Section 17(d)(1)
authorizes the Commission, by rule or
order, to relieve an SRO of the
1 15
U.S.C. 78q(d).
CFR 240.17d–2.
3 15 U.S.C. 78s(g)(1).
4 15 U.S.C. 78q(d).
5 15 U.S.C. 78s(g)(2).
6 15 U.S.C. 78q(d)(1).
7 See Securities Act Amendments of 1975, Report
of the Senate Committee on Banking, Housing, and
Urban Affairs to Accompany S. 249, S. Rep. No. 94–
75, 94th Cong., 1st Session 32 (1975).
2 17
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]]>Agencies
[Federal Register Volume 75, Number 70 (Tuesday, April 13, 2010)]
[Notices]
[Pages 18908-18915]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-8369]
=======================================================================
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. IC-29205; File No. 812-13703]
Jackson National Life Insurance Company, et al.
April 7, 2010.
AGENCY: The Securities and Exchange Commission (``Commission'').
ACTION: Notice of application for an order under Section 6(c) of the
Investment Company Act of 1940 (the ``Act'') granting exemptions from
the provisions of Sections 2(a)(32), 22(c) and 27(i)(2)(A) of the Act
and Rule 22c-1 thereunder to permit the recapture of contract
enhancements applied to purchase payments made under certain deferred
variable annuity contracts.
-----------------------------------------------------------------------
APPLICANTS: Jackson National Life Insurance Company (``Jackson
National''), Jackson National Separate Account--I (the ``JNL Separate
Account''), Jackson National Life Insurance Company of New York (``JNL
New York'' and collectively with Jackson National, the ``Insurance
Companies,'' and individually as made appropriate by the context, an
``Insurance Company''), JNLNY Separate Account I (the ``JNLNY Separate
Account,'' collectively with the JNL Separate Account, the ``Separate
Accounts,'' and individually as made appropriate by the context, a
``Separate Account'') and Jackson National Life Distributors LLC
(``Distributor,'' and collectively with the Insurance Companies and the
Separate Accounts, ``Applicants'').
SUMMARY OF APPLICATION: Applicants seek an order under Section 6(c) of
the
[[Page 18909]]
Act to exempt certain transactions from the provisions of Sections
2(a)(32), 22(c), and 27(i)(2)(A) of the Act and Rule 22c-1 thereunder,
to the extent necessary to permit the recapture, under specified
circumstances, of certain contract enhancements applied to purchase
payments made under the deferred variable annuity contracts described
herein that Jackson National has issued and will issue through the JNL
Separate Account (the ``JNL Contracts'') and that JNL New York has
issued and will issue through the JNLNY Separate Account (the ``JNLNY
Contracts,'' and collectively with the JNL Contracts, the
``Contracts'') as well as other contracts that the Insurance Companies
may issue in the future through their existing or future separate
accounts (``Other Accounts'') that are substantially similar in all
material respects to the Contracts (``Future Contracts''). Applicants
also request that the order being sought extend to any other Financial
Industry Regulatory Authority (``FINRA'') member broker-dealer
controlling or controlled by, or under common control with, Jackson
National, whether existing or created in the future, that serves as
distributor or principal underwriter for the Contracts or Future
Contracts (``Affiliated Broker-Dealers'') and any successors in
interest to the Applicants.
Filing Date: The application was filed on September 24, 2009, and
amended on October 16, 2009; January 8, 2010; February 24, 2010; and
March 29, 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 29, 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
issues 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 Jackson National Life
Insurance Company, 1 Corporate Way, Lansing, Michigan 48951, Attn:
Anthony L. Dowling, Esq.
FOR FURTHER INFORMATION CONTACT: Ellen J. Sazzman, Senior Counsel, at
(202) 551-6762, or Harry Eisenstein, Branch Chief, at (202) 551-6795,
Office of Insurance Products, Division of Investment Management.
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 an applicant
using the Company name box at https://www.sec.gov/search/search.htm or
by calling (202) 551-8090.
Applicants' Representations
1. Jackson National is a stock life insurance company organized
under the laws of the state of Michigan in June 1961. Its legal
domicile and principal business address is 1 Corporate Way, Lansing,
Michigan 48951. Jackson National is admitted to conduct life insurance
and annuity business in the District of Columbia and all states except
New York. Jackson National is ultimately a wholly owned subsidiary of
Prudential plc (London, England).
2. JNL New York is a stock life insurance company organized under
the laws of the state of New York in July 1995. Its legal domicile and
principal address is 2900 Westchester Avenue, Purchase, New York 10577.
JNL New York is admitted to conduct life insurance and annuity business
in Delaware, Michigan, and New York. JNL New York is ultimately a
wholly owned subsidiary of Prudential plc (London, England).
3. The JNL Separate Account was established by Jackson National on
June 14, 1993, pursuant to the provisions of Michigan law and the
authority granted under a resolution of Jackson National's Board of
Directors. The JNLNY Separate Account was established by JNL New York
on September 12, 1997, pursuant to the provisions of New York law and
the authority granted under a resolution of JNL New York's Board of
Directors. Jackson National and JNL New York are the depositors of
their respective Separate Accounts. Each of the Separate Accounts meets
the definition of a ``separate account'' under the federal securities
laws and each is registered with the Commission as a unit investment
trust under the Act (File Nos. 811-8664 and 811-8401, respectively).
JNL Separate Account and JNLNY Separate Account will fund,
respectively, the variable benefits available under the JNL Contracts
and the JNLNY Contracts. The registration statements relating to the
offering of the Contracts were filed under the Securities Act of 1933
(the ``1933 Act'') (File Nos. 333-70472, 333-70384).
4. The Distributor is a wholly owned subsidiary of Jackson National
and serves as the distributor of the Contracts. The Distributor is
registered with the Commission as a broker-dealer under the Securities
Exchange Act of 1934 (the ``1934 Act'') and is a member of FINRA. The
Distributor enters into selling group agreements with affiliated and
unaffiliated broker-dealers. The Contracts are sold by licensed
insurance agents, where the Contracts may be lawfully sold, who are
registered representatives of broker-dealers that are registered under
the 1934 Act and are members of FINRA.
5. The Contracts require a minimum initial premium payment of
$5,000 or $10,000 under most circumstances depending on the contract
($2,000 for a qualified plan contract). Subsequent payments may be made
at any time during the accumulation phase but before the contract
anniversary after the owner's 85th birthday. Each subsequent payment
must be at least $500 ($50 under an automatic payment plan). Prior
approval of the relevant Insurance Company is required for aggregate
premium payments of over $1,000,000.
6. The Contracts permit owners to accumulate contract values on a
fixed basis through allocations to one of six fixed accounts (the
``Fixed Accounts''). In addition, if the optional LifeGuard Select
Guaranteed Minimum Withdrawal Benefit (``GMWB'') or the optional
LifeGuard Select with Joint Option Guaranteed Minimum Withdrawal
Benefit (``GMWB'') is elected in the JNL Contracts, automatic transfers
of an owner's contract value may be allocated to a fixed account
designated for these guaranteed minimum withdrawal benefits (``GMWB
Fixed Account'').
7. The Contracts also permit owners to accumulate contract values
on a variable basis, through allocations to one or more of the sub-
accounts, also referred to as investment divisions, of the Separate
Accounts (the ``Investment Divisions,'' collectively with the Fixed
Account and the GMWB Fixed Account, the ``Allocation Options''). Under
most Contracts, 98 Investment Divisions currently are expected to be
offered through the Separate Accounts but additional Investment
Divisions may be offered in the future and some could be eliminated or
combined with other Investment Divisions in the future. Similarly,
Future Contracts may offer additional or different Investment
Divisions. Each Investment Division will invest in shares of a
corresponding series (``Series'') of JNL Series Trust (``Trust'') or
JNL Variable Fund LLC (``Fund'') (collectively the ``Trust and Fund'').
Not all Investment Divisions may be available under every Contract.
[[Page 18910]]
The Trust and Fund are open-end management investment companies
registered under the Act and their shares are registered under the 1933
Act.
8. Transfers among the Investment Divisions are permitted. The
first 15 transfers in a contract year are free; subsequent transfers
cost $25. Certain transfers to, from and among the Fixed Account
Options are also permitted during the Contracts' accumulation phase,
but are subject to certain adjustments and limitations. Dollar cost
averaging and rebalancing transfers are offered at no charge and do not
count against the 15 free transfers permitted each year. If the
optional LifeGuard Select GMWB or the optional LifeGuard Select with
Joint Option GMWB is elected in the JNL Contracts, automatic transfers
may be required to and from the GMWB Fixed Account according to non-
discretionary formulas. These automatic transfers also do not count
against the 15 free transfers permitted each year and are without
charge.
9. If the owner dies during the accumulation phase of the
Contracts, the beneficiary named by the owner is paid a death benefit
by the Insurance Company. The Contracts' base death benefit, which
applies unless an optional death benefit has been elected, is a payment
to the beneficiary of the greater of: (i) Contract value on the date
the Insurance Company receives proof of death and completed claim forms
from the beneficiary or (ii) the total premiums paid under that
Contract minus any prior withdrawals (including any withdrawal charges,
recapture charges or other charges or adjustments applicable to such
withdrawals).
10. The owner of a JNL Contract may be offered certain optional
endorsements (for various fees) that can change the death benefit paid
to the beneficiary. First, an ``Earnings Protection Benefit
Endorsement'' is offered to owners who are no older than age 75 when
their Contracts are issued. Second, the owner of a JNL Contract
currently may be offered six optional death benefits (state variations
may apply) that would replace the base death benefit. The optional
death benefits for the JNL Contract include the following: (i) A 5%
Roll-Up death benefit, (ii) a 6% Roll-Up death benefit, (iii) a Highest
Quarterly Anniversary Value Death Benefit, (iv) a Combination 5% Roll-
Up and Highest Quarterly Anniversary Value Death Benefit, (v) a
Combination 6% Roll-Up and Highest Quarterly Anniversary Value Death
Benefit, and (vi) a death benefit available only in conjunction with
the purchase of a particular GMWB (LifeGuard Freedom 6 GMWB).
11. The owner of a JNLNY Contract may also be offered certain
optional endorsements that can change the death benefit paid to the
beneficiary. The owner of a JNLNY Contract may be offered the following
two optional death benefits that would replace the base death benefit:
(i) A Highest Anniversary Value Death Benefit which is the greatest of
the contract value on the date JNL New York receives proof of death and
completed claim forms from the beneficiary; or total net premiums since
the contract was issued; or the greatest contract value on any contract
anniversary prior to the owner's 81st birthday, adjusted for any
withdrawals subsequent to that contract anniversary (including any
applicable withdrawal charges, recapture charges, and other charges or
adjustments for such withdrawals), plus any premium paid subsequent to
that contract anniversary; and (ii) a death benefit available only in
conjunction with the purchase of the LifeGuard Freedom 6 GMWB.
12. The Contracts offer fixed and variable versions of the
following four types of annuity payment or ``income payment'': Life
income, joint and survivor, life annuity with at least 120 or 240
monthly payments guaranteed to be paid (although not guaranteed as to
amount if variable), and income for a specified period of 5 to 30
years. The Insurance Companies may also offer other income payment
options. The Contracts may also offer an optional Guaranteed Minimum
Income Benefit (``GMIB'') endorsement and various GMWB optional
endorsements.
13. All contract enhancements are paid from the Insurance Company's
general account assets. The contract enhancement endorsements available
are the 2% Contract Enhancement endorsement, 3% Contract Enhancement
endorsement, 4% Contract Enhancement endorsement, or 5% Contract
Enhancement endorsement. However, the 5% Contract Enhancement
endorsement is not available under the JNLNY Contracts. If one of the
optional contract enhancement endorsements is elected, the Insurance
Company will add an additional amount to the owner's contract value (a
``Contract Enhancement'') for the initial premium payment, and for each
subsequent premium payment received within the first seven contract
years (five contract years for the 2% Contract Enhancement
endorsement). The actual Contract Enhancement percentage applied to the
premium payment varies, depending upon which Contract Enhancement
endorsement is elected and the contract year in which the premium
payment is received as follows:
----------------------------------------------------------------------------------------------------------------
Contract year premium is received
-----------------------------------------------------------------------
0-1 1-2 2-3 3-4 4-5 5+
----------------------------------------------------------------------------------------------------------------
2% Contract Enhancement Endorsement
----------------------------------------------------------------------------------------------------------------
Contract Enhancement Percentage of the 2.00% 2.00% 1.25% 1.25% 0.50% 0%
Premium Payment........................
----------------------------------------------------------------------------------------------------------------
Contract year premium is received
-----------------------------------------------------------------------------------------------
0-1 1-2 2-3 3-4 4-5 5-6 6-7 7+
--------------------------------------------------------------------------------------------------------------------------------------------------------
3% Contract Enhancement Endorsement
--------------------------------------------------------------------------------------------------------------------------------------------------------
Contract Enhancement Percentage of the Premium Payment.. 3.00% 3.00% 2.25% 2.00% 2.00% 1.00% 1.00% 0%
--------------------------------------------------------------------------------------------------------------------------------------------------------
4% Contract Enhancement Endorsement
--------------------------------------------------------------------------------------------------------------------------------------------------------
Contract Enhancement Percentage of the Premium Payment.. 4.00% 4.00% 3.00% 2.50% 2.50% 1.25% 1.25% 0%
--------------------------------------------------------------------------------------------------------------------------------------------------------
[[Page 18911]]
5% Contract Enhancement Endorsement (not available under JNLNY Contracts)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Contract Enhancement Percentage of the Premium Payment.. 5.00% 4.50% 3.75% 3.00% 2.25% 1.75% 1.00% 0%
--------------------------------------------------------------------------------------------------------------------------------------------------------
14. At issue, a Contract owner can choose only one of the Contract
Enhancement endorsements. An owner may not elect the 3%, 4%, or 5%
Contract Enhancement endorsement if the 20% additional free withdrawal
endorsement is elected. The Insurance Companies will allocate the
Contract Enhancement to the Fixed Accounts and/or Investment Divisions
in the same proportion as the premium payment allocation. Contract
Enhancement endorsements are available only to owners 87 years old and
younger.
15. There is an asset-based charge for each of the Contract
Enhancement endorsements. The 2% Contract Enhancement endorsement has a
0.395% charge that applies only for the first five contract years, as
opposed to five years from the date of the premium payment. The asset-
based charges for the other Contract Enhancement endorsements apply
only for the first seven contract years, as opposed to seven years from
the date of the premium payment, and are 0.42%, 0.56%, and 0.695%,
respectively, for the 3%, 4%, and 5% Contract Enhancement endorsements.
These charges will also be assessed against any amounts that Contract
owners have allocated to the Fixed Accounts, resulting in a lower
annual credited interest rate that would apply to the Fixed Account if
the Contract Enhancement endorsement had not been elected.
16. The Insurance Companies will recapture all or a declining
portion of any Contract Enhancements by imposing a recapture charge
whenever an owner: (i) Makes a total withdrawal within the recapture
charge period (up to five years after a premium payment in the case of
the 2% Contract Enhancement endorsement and up to seven years after a
premium payment in the case of the other Contract Enhancement
endorsements) or a partial withdrawal of corresponding premiums within
the recapture charge period in excess of those permitted under the
Contracts' free withdrawal provisions, unless the withdrawal is made
for certain health-related emergencies specified in the Contracts; (ii)
elects to receive payments under an income option within the recapture
charge period; or (iii) returns the Contract during the free-look
period.
17. The amount of the recapture charge varies, depending upon (i)
Which Contract Enhancement endorsement is elected; (ii) the
corresponding declining amount of the Contract Enhancement based on the
contract year when the premium payment being withdrawn was received;
and (iii) when the charge is imposed based on Completed Years since
receipt of the related premium. For Contracts with the 2% or 3%
Contract Enhancement endorsement, the recapture charge is as follows:
Contract Enhancement Recapture Charge
[as a percentage of the corresponding premium payment withdrawn if an optional Contract Enhancement endorsement is selected]
--------------------------------------------------------------------------------------------------------------------------------------------------------
Completed years since receipt of premium
Contract year premium is received -----------------------------------------------------------------------------------------------
0-1 1-2 2-3 3-4 4-5 5-6 6-7 7+
--------------------------------------------------------------------------------------------------------------------------------------------------------
2% Contract Enhancement Endorsement
--------------------------------------------------------------------------------------------------------------------------------------------------------
0-1..................................................... 2% 2% 1.25% 1.25% .50% 0% 0% 0%
1-2..................................................... 2% 1.25% 1.25% .50% 0% 0% 0% 0%
2-3..................................................... 1.25% 1.25% .50% 0% 0% 0% 0% 0%
3-4..................................................... 1.25% .50% 0% 0% 0% 0% 0% 0%
4-5..................................................... .50% 0% 0% 0% 0% 0% 0% 0%
5-6..................................................... 0% 0% 0% 0% 0% 0% 0% 0%
6-7..................................................... 0% 0% 0% 0% 0% 0% 0% 0%
7+...................................................... 0% 0% 0% 0% 0% 0% 0% 0%
--------------------------------------------------------------------------------------------------------------------------------------------------------
3% Contract Enhancement Endorsement
--------------------------------------------------------------------------------------------------------------------------------------------------------
0-1..................................................... 3% 3% 2% 2% 2% 1% 1% 0%
1-2..................................................... 3% 2% 2% 2% 1% 1% 0% 0%
2-3..................................................... 2% 2% 1.25% 1% 1% 0% 0% 0%
3-4..................................................... 2% 2% 1% 1% 0% 0% 0% 0%
4-5..................................................... 2% 1% 1% 0% 0% 0% 0% 0%
5-6..................................................... 1% 1% 0% 0% 0% 0% 0% 0%
6-7..................................................... 1% 0% 0% 0% 0% 0% 0% 0%
7+...................................................... 0% 0% 0% 0% 0% 0% 0% 0%
--------------------------------------------------------------------------------------------------------------------------------------------------------
18. Following are recapture charges for JNL Contracts having the 4%
or 5% Contract Enhancement endorsement. The 4% Contract Enhancement
Recapture Charge schedule applicable to JNLNY Contracts is provided
later in this notice. The 5% Contract Enhancement Recapture Charge
schedule is not applicable to JNLNY Contracts because the 5% Contract
Enhancement endorsement is not available under the JNLNY Contracts.
[[Page 18912]]
--------------------------------------------------------------------------------------------------------------------------------------------------------
Contract year premium is received
Completed years since receipt of premium -----------------------------------------------------------------------------------------------
0-1 1-2 2-3 3-4 4-5 5-6 6-7 7+
--------------------------------------------------------------------------------------------------------------------------------------------------------
4% Contract Enhancement Endorsement (not applicable to JNLNY Contracts)
--------------------------------------------------------------------------------------------------------------------------------------------------------
0-1..................................................... 4% 4% 2.50% 2.50% 2.50% 1.25% 1.25% 0%
1-2..................................................... 4% 2.50% 2.50% 2.50% 1.25% 1.25% 0% 0%
2-3..................................................... 2.50% 2.50% 2% 1.25% 1.25% 0% 0% 0%
3-4..................................................... 2.50% 2.50% 1.25% 1.25% 0% 0% 0% 0%
4-5..................................................... 2.50% 1.25% 1.25% 0% 0% 0% 0% 0%
5-6..................................................... 1.25% 1.25% 0% 0% 0% 0% 0% 0%
6-7..................................................... 1.25% 0% 0% 0% 0% 0% 0% 0%
7+...................................................... 0% 0% 0% 0% 0% 0% 0% 0%
--------------------------------------------------------------------------------------------------------------------------------------------------------
5% Contract Enhancement Endorsement (not available under JNLNY Contracts)
--------------------------------------------------------------------------------------------------------------------------------------------------------
0-1..................................................... 4.50% 3.75% 3.25% 2.75% 2% 1.25% 1% 0%
1-2..................................................... 3.75% 3.25% 2.75% 2% 1.25% 1% 0% 0%
2-3..................................................... 3.25% 2.75% 2% 1.25% 1% 0% 0% 0%
3-4..................................................... 2.75% 2% 1.25% 1% 0% 0% 0% 0%
4-5..................................................... 2% 1.25% 1% 0% 0% 0% 0% 0%
5-6..................................................... 1.25% 1% 0% 0% 0% 0% 0% 0%
6-7..................................................... 1% 0% 0% 0% 0% 0% 0% 0%
7+...................................................... 0% 0% 0% 0% 0% 0% 0% 0%
--------------------------------------------------------------------------------------------------------------------------------------------------------
19. A ``Completed Year'' is the succeeding twelve months from the
date on which the Insurance Companies receive a premium payment.
Completed Years specify the years from the date of receipt of the
premium and do not refer to contract years. If the premium receipt date
is on the issue date of the Contract then Completed Year 0-1 does not
include the first contract anniversary. The first contract anniversary
begins Completed Year 1-2 and each successive contract anniversary. The
first contract year (contract year 0-1) starts on the issue date and
extends to, but does not include, the first contract anniversary.
Subsequent contract years start on an anniversary date and extend to,
but do not include, the next anniversary date. If the premium receipt
date is other than the issue date or a subsequent contract anniversary,
there is no correlation of the contract anniversary date and Completed
Years. For example, if the issue date is January 15, 2010 and a premium
payment is received on February 28, 2010, then, although the first
contract anniversary is January 15, 2011, the end of Competed Year 0-1
for that premium payment would be February 27, 2011, and February 28,
2011 begins Completed Year 1-2.
20. The recapture charge percentage will be applied to the
corresponding premium reflected in the amount withdrawn or the amount
applied to income payments that remain subject to a recapture charge.
The corresponding premium is determined by treating amounts withdrawn
as withdrawals first of earnings, which bear no charge, and then
purchase payments (oldest purchase payments first). The amount
recaptured will be taken from the Investment Divisions and the Fixed
Account (and the GMWB Fixed Account, if applicable) in the proportion
their respective values bear to the contract value. The dollar amount
recaptured will never exceed the dollar amount of the Contract
Enhancement added to the Contract. Recapture charges will be applied
upon electing to commence income payments, even in a situation where
the withdrawal charge is waived.
21. The Insurance Companies do not assess the recapture charge on
any payments paid out as: Death benefits; withdrawals of earnings;
withdrawals taken under the free withdrawal provisions, which allow for
free withdrawals of up to 20% of remaining premium, less earnings
(where a withdrawal is taken that exceeds the free withdrawal amount,
the recapture charge is imposed only on the excess amount above the
free withdrawal amount); withdrawals necessary to satisfy the required
minimum distribution of the Internal Revenue Code (if the withdrawal
requested exceeds the required minimum distribution, the recapture
charge will not be waived on the required minimum distribution); if
permitted by the owner's state, withdrawals of up to $250,000 from the
JNL Separate Account, the Fixed Account or the GMWB Fixed Account in
connection with the owner's terminal illness or if the owner needs
extended hospital or nursing home care as provided in the Contract
(this recapture charge waiver is not available under the JNLNY
Contracts); or if permitted by the owner's state, withdrawals of up to
25% (12.5% for each of two joint owners) of contract value from the JNL
Separate Account, the Fixed Account, or the GMWB Fixed Account in
connection with certain serious medical conditions specified in the
Contract (this recapture charge waiver is not available under the JNLNY
Contracts).
22. The contract value will reflect any gains or losses
attributable to a Contract Enhancement described above. Contract
Enhancements, and any gains or losses attributable to a Contract
Enhancement will be considered earnings under the Contract for tax
purposes and for purposes of calculating free withdrawal amounts.
23. The JNL Contracts have a ``free-look'' period of ten days
(twenty days for JNLNY Contracts) after the owner receives the Contract
(or any longer period required by state law). Contract value (or
premiums paid, as may be required by state law), less the full amount
of any Contract Enhancement(s) is returned upon exercise of free-look
rights by an owner. Therefore, 100% of the Contract Enhancement will be
recaptured under all circumstances if an owner returns the Contract
during the free-look period, but any gain or loss on investments of the
Contract Enhancement would be retained by the owner. The dollar amount
recaptured will never exceed the dollar amount of the Contract
Enhancement added to the Contract. A withdrawal charge will not be
assessed upon exercise of free look rights.
24. The withdrawal charges shown in the table below apply to
differing versions of the JNL Contracts. The withdrawal charge
schedules applicable to the JNLNY Contracts are provided
[[Page 18913]]
later in this notice. The amount of the withdrawal charge depends upon
when the charge is imposed based on the Completed Years since the
receipt of the related premium as follows:
Withdrawal Charge (as a Percentage of Premium Payments) Not Applicable to JNLNY Contracts
--------------------------------------------------------------------------------------------------------------------------------------------------------
Completed years since receipt of premium 0-1 1-2 2-3 3-4 4-5 5-6 6-7 7+
--------------------------------------------------------------------------------------------------------------------------------------------------------
Withdrawal Charge (Base Withdrawal Charge Schedule for 8.5% 8% 7% 6% 5% 4% 2% 0
Offerings under File Nos. 333-70472 and 333-132128)....
Withdrawal Charge (Base Withdrawal Charge Schedule for 8 8 7 6 0 0 0 0
Offering under File No. 333-119656)....................
Withdrawal Charge if Five-Year Period is elected 8 7 6 4 2 0 0 0
(Optional Five-Year Withdrawal Charge Schedule for
Offerings under File No. 333-70472)....................
Withdrawal Charge if Four-Year Period is elected 8 7 5.5 3.5 0 0 0 0
(Optional Four-Year Withdrawal Charge Schedule for
Offering under File No. 333-132128)....................
--------------------------------------------------------------------------------------------------------------------------------------------------------
25. The Insurance Companies do not assess the withdrawal charge on
any payments paid out as: Death benefits; election to begin income
payments after the first contract year under JNL Contracts and after 13
months from the issue date under JNLNY Contracts; cancellation of the
Contract upon exercise of free look rights by an owner; withdrawals of
earnings; withdrawals taken under the free withdrawal provision, which
allows for free withdrawals up to 20% of remaining premium, less
earnings (where a withdrawal is taken that exceeds the free withdrawal
amount, the withdrawal charge is imposed only on the excess amount
above the free withdrawal amount); withdrawals necessary to satisfy the
required minimum distribution of the Internal Revenue Code (if the
withdrawal requested exceeds the required minimum distribution, the
withdrawal charge will not be waived on the required minimum
distribution); if permitted by the owner's state law, withdrawals of up
to $250,000 from the Investment Divisions, Fixed Account, or GMWB Fixed
Account of the Contracts in connection with the terminal illness of the
owner of a Contract, or in connection with extended hospital or nursing
home care for the owner (this withdrawal charge waiver is not available
under JNLNY Contracts); and if permitted by the owner's state,
withdrawals of up to 25% (12.5% each for two joint owners) of contract
value from the Investment Divisions, Fixed Account, or GMWB Fixed
Account of the Contracts in connection with certain serious medical
conditions specified in the Contract (this withdrawal charge waiver is
not available under JNLNY Contracts).
26. The JNLNY Contracts are identical to the JNL Contracts in the
operation of Contract Enhancements, Contract Enhancement charges, and
Contract Enhancement recapture charges except that: (1) The 5% Contract
Enhancement endorsement is not available under the JNLNY Contracts, (2)
the recapture charge waivers for terminal illness and specified medical
conditions are not available under JNLNY Contracts, and (3) the
recapture charges for the 4% Contract Enhancement endorsement are 1%
less for JNLNY Contracts in certain years than in the JNL Contracts, as
indicated in the table below:
--------------------------------------------------------------------------------------------------------------------------------------------------------
Contract year premium is received
Completed years since receipt of premium -----------------------------------------------------------------------------------------------
0-1 1-2 2-3 3-4 4-5 5-6 6-7 7+
--------------------------------------------------------------------------------------------------------------------------------------------------------
4% Contract Enhancement Recapture Charge for JNLNY Contracts
--------------------------------------------------------------------------------------------------------------------------------------------------------
0-1..................................................... 3% 3% 2.50% 2.50% 2.50% 1.25% 1.25% 0%
1-2..................................................... 3% 2.50% 2.50% 2.50% 1.25% 1.25% 0% 0%
2-3..................................................... 2.50% 2.50% 2% 1.25% 1.25% 0% 0% 0%
3-4..................................................... 2.50% 2.50% 1.25% 1.25% 0% 0% 0% 0%
4-5..................................................... 2.50% 1.25% 1.25% 0% 0% 0% 0% 0%
5-6..................................................... 1.25% 1.25% 0% 0% 0% 0% 0% 0%
6-7..................................................... 1.25% 0% 0% 0% 0% 0% 0% 0%
7+...................................................... 0% 0% 0% 0% 0% 0% 0% 0%
--------------------------------------------------------------------------------------------------------------------------------------------------------
27. The withdrawal charges applicable to the JNLNY Contracts differ
from the withdrawal charges applicable to the JNL Contracts. The
withdrawal charges of the JNLNY Contracts are as follows:
[[Page 18914]]
Withdrawal Charge
[as a percentage of premium payments]
--------------------------------------------------------------------------------------------------------------------------------------------------------
Completed years since receipt of premium 0-1 1-2 2-3 3-4 4-5 5-6 6-7 7+
--------------------------------------------------------------------------------------------------------------------------------------------------------
Withdrawal Charge (Base Withdrawal Charge Schedule for 7% 6% 5% 4% 3% 2% 1% 0
Offerings under File No. 333-70384)....................
Withdrawal Charge (Base Withdrawal Charge Schedule for 7% 6% 5% 4% 0 0 0 0
Offerings under File No. 333-119659)...................
Withdrawal Charge if Five-Year Period is elected 6.5% 5% 3% 2% 1% 0 0 0
(Optional Five-Year Withdrawal Charge Schedule for
Offerings under File No. 333-70384)....................
--------------------------------------------------------------------------------------------------------------------------------------------------------
Applicants' Legal Analysis
1. Applicants state that Section 6(c) of the Act authorizes the
Commission to exempt any person, security or transaction, or any class
or classes of persons, securities or transactions from the provisions
of the Act and the rules promulgated thereunder if and to the extent
that such exemption is necessary or appropriate in the public interest
and consistent with the protection of investors and the purposes fairly
intended by the policy and provisions of the Act. Applicants request
that the Commission, pursuant to Section 6(c) of the Act, grant the
exemptions requested below with respect to the Contracts and any Future
Contracts funded by the Separate Accounts or Other Accounts that are
issued by the Insurance Companies and underwritten or distributed by
the Distributor or Affiliated Broker-Dealers. Applicants undertake that
Future Contracts funded by the Separate Accounts or Other Accounts, in
the future, will be substantially similar in all material respects to
the Contracts. Applicants believe that the requested exemptions are
appropriate in the public interest and consistent with the protection
of investors and the purposes fairly intended by the policy and
provisions of the Act.
2. Applicants state that Section 27 of the Act regulates and
imposes certain restrictions on the sales of periodic payment plan
certificates issued by any registered investment company. Subsection
(i) of Section 27 of the Act provides that Section 27 does not apply to
any registered separate account funding variable insurance contracts,
or to the sponsoring insurance company and principal underwriter of
such account, except as provided in paragraph (2) of the subsection.
Paragraph (2) provides that it shall be unlawful for such a separate
account or sponsoring insurance company to sell a contract funded by
the registered separate account unless such contract is a redeemable
security. Section 2(a)(32) defines ``redeemable security'' as any
security, other than short-term paper, under the terms of which the
holder, upon presentation to the issuer, is entitled to receive
approximately his proportionate share of the issuer's current net
assets, or the cash equivalent thereof.
3. Applicants submit that the recapture of the Contract Enhancement
in the circumstances set forth in the Application would not deprive an
owner of his or her proportionate share of the issuer's current net
assets. A Contract owner's interest in the amount of the Contract
Enhancement allocated to his or her contract value upon the Insurance
Companies' receipt of a premium payment is not fully vested until five
or seven complete years following a premium payment. Until or unless
the amount of any Contract Enhancement is vested, the Insurance
Companies retain the right and interest in the Contract Enhancement
amount, although not in the earnings attributable to that amount. Thus,
Applicants urge that when one of the Insurance Companies recaptures any
Contract Enhancement, it is simply retrieving its own assets, and
because a Contract owner's interest in the Contract Enhancement is not
vested, the Contract owner has not been deprived of a proportionate
share of the Separate Account's assets, i.e., a share of the Separate
Account's assets proportionate to the Contract owner's contract value.
4. In addition, Applicants represent that it would be patently
unfair to allow a Contract owner exercising the free-look privilege to
retain the Contract Enhancement amount under a Contract that has been
returned for a refund after a period of only a few days. If the
Insurance Companies could not recapture the Contract Enhancement,
individuals could purchase a Contract with no intention of retaining it
and simply return it for a quick profit. Furthermore, Applicants state
that the recapture of the Contract Enhancement relating to withdrawals
and to income payments within the first five or seven contract years is
designed to protect the Insurance Companies against Contract owners not
holding the Contract for a sufficient time period. This recapture of
the Contract Enhancement would provide the Insurance Companies with
sufficient time to recover the cost of the Contract Enhancement and to
avoid the financial detriment that would result from a shorter
recapture period.
5. Applicants represent that it is not administratively feasible to
track the Contract Enhancement amount in the Separate Accounts after
the Contract Enhancement(s) is applied. Accordingly, the asset-based
charges applicable to the Separate Accounts will be assessed against
the entire amounts held in the Separate Accounts, including any
Contract Enhancement amounts. As a result, the aggregate asset-based
charges assessed will be higher than those that would be charged if the
Contract owner's contract value did not include any Contract
Enhancement.
6. Applicants submit that the provisions for recapture of any
Contract Enhancement under the Contracts do not violate Sections
2(a)(32) and 27(i)(2)(A) of the Act. Sections 26(e) and 27(i) were
added to the Act to implement the purposes of the National Securities
Markets Improvement Act of 1996 and Congressional intent. The
application of a Contract Enhancement to premium payments made under
the Contracts should not raise any questions as to compliance by the
Insurance Companies with the provisions of
[[Page 18915]]
Section 27(i). However, to avoid any uncertainty as to full compliance
with the Act, Applicants request an order providing an exemption from
Sections 2(a)(32) and 27(i)(2)(A), to the extent deemed necessary, to
permit the recapture of the Contract Enhancements under the
circumstances described herein and in the Application, without the loss
of relief from Section 27 provided by Section 27(i).
7. Applicants state that Section 22(c) of the Act authorizes the
Commission to make rules and regulations applicable to registered
investment companies and to principal underwriters of, and dealers in,
the redeemable securities of any registered investment company to
accomplish the same purposes as contemplated by Section 22(a). Rule
22c-1 under the Act prohibits a registered investment company issuing
any redeemable security, a person designated in such issuer's
prospectus as authorized to consummate transactions in any such
security, and a principal underwriter of, or dealer in, such security,
from selling, redeeming, or repurchasing any such security except at a
price based on the current net asset value of such security which is
next computed after receipt of a tender of such security for redemption
or of an order to purchase or sell such security.
8. Applicants state that it is possible that someone might view the
Insurance Companies' recapture of the Contract Enhancements as
resulting in the redemption of redeemable securities for a price other
than one based on the current net asset value of the Separate Accounts.
Applicants contend, however, that the recapture of the Contract
Enhancement does not violate Rule 22c-1. The recapture of some or all
of the Contract Enhancement does not involve either of the evils that
Section 22(c) and Rule 22c-1 were intended to eliminate or reduce as
far as reasonably practicable, namely: (i) The dilution of the value of
outstanding redeemable securities of registered investment companies
through their sale at a price below net asset value or repurchase at a
price above it, and (ii) other unfair results, including speculative
trading practices. To effect a recapture of a Contract Enhancement, the
Insurance Companies will redeem interests in a Contract owner's
contract value at a price determined on the basis of the current net
asset value of the JNL and JNLNY Separate Accounts. The amount
recaptured will be less than or equal to the amount of the Contract
Enhancement that the Insurance Companies paid out of its general
account assets. Although Contract owners will be entitled to retain any
investment gains attributable to the Contract Enhancement and to bear
any investment losses attributable to the Contract Enhancement, the
amount of such gains or losses will be determined on the basis of the
current net asset values of the Separate Accounts. Thus, no dilution
will occur upon the recapture of the Contract Enhancement. Applicants
also submit that the second harm that Rule 22c-1 was designed to
address, namely, speculative trading practices calculated to take
advantage of backward pricing, will not occur as a result of the
recapture of the Contract Enhancement. Because neither of the harms
that Rule 22c-1 was meant to address is found in the recapture of the
Contract Enhancement, Rule 22c-1 should not apply to any Contract
Enhancement. However, to avoid any uncertainty as to full compliance
with Rule 22c-1, Applicants request an order granting an exemption from
the provisions of Rule 22c-1 to the extent deemed necessary to permit
them to recapture the Contract Enhancement under the Contracts.
9. Applicants submit that extending the requested relief to
encompass Future Contracts and Other Accounts is appropriate in the
public interest because it promotes competitiveness in the variable
annuity market by eliminating the need to file redundant exemptive
applications prior to introducing new variable annuity contracts.
Investors would receive no benefit or additional protection by
requiring Applicants to repeatedly seek exemptive relief that would
present no issues under the Act not already addressed in the
Application.
10. Applicants submit, for the reasons stated herein, that their
exemptive request meets the standards set out in Section 6(c) of the
Act, namely, that the exemptions requested are appropriate in the
public interest and consistent with the protection of investors and the
purposes fairly intended by the policy and provisions of the Act and
that, therefore, the Commission should grant the requested order.
For the Commission, by the Division of Investment Management,
pursuant to delegated authority.
Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-8369 Filed 4-12-10; 8:45 am]
BILLING CODE 8011-01-P
