ING Life Insurance and Annuity Company, et al; Notice of Application, 18634-18637 [2013-07012]
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Federal Register / Vol. 78, No. 59 / Wednesday, March 27, 2013 / Notices
3506(c)(2). That request elicited no
comments.
Information Collection Request (ICR)
Title: Evidence of Marital
Relationship, Living with Requirements.
OMB Control Number: 3220–0021.
Forms submitted: G–124, G–124a,
G–237, G–238, G–238a.
Type of request: Extension without
change of a currently approved
collection.
Affected public: Individuals or
Households.
Abstract: Under the RRA, to obtain a
benefit as a spouse of an employee
annuitant or as the widow(er) of the
deceased employee, an applicant must
submit information to be used to
determine if the marriage requirements
for such benefits have been met. The
collection contains information
supporting claimed common-law
marriage, termination of previous
marriages, and residency requirements.
Changes proposed: The RRB proposes
no changes to the forms in the
collection.
The burden estimate for the ICR is as
follows:
Annual
responses
Form No.
Time
(minutes)
Burden
(hours)
G–124 (In person) ...........................................................................................................
G–124 (By mail) ...............................................................................................................
G–124a ............................................................................................................................
G–237 (In person) ...........................................................................................................
G–237 (By mail) ...............................................................................................................
G–238 (In person) ...........................................................................................................
G–238 (By mail) ...............................................................................................................
G–238a ............................................................................................................................
125
75
300
75
75
150
150
150
15
20
10
15
20
3
5
10
31
25
50
19
25
8
13
25
Total ..........................................................................................................................
1,100
............................
196
Previous Requests for Comments: The
RRB has already published the initial
60-day notice (78 FR 3041 on January
15, 2013) required by 44 U.S.C.
3506(c)(2). That request elicited no
comments.
Additional Information or Comments:
Copies of the forms and supporting
documents can be obtained from Dana
Hickman at (312) 751–4981 or
Dana.Hickman@RRB.GOV.
Comments regarding the information
collection should be addressed to
Charles Mierzwa, Railroad Retirement
Board, 844 North Rush Street, Chicago,
Illinois 60611–2092 or
Charles.Mierzwa@RRB.GOV and to the
OMB Desk Officer for the RRB, Fax:
202–395–6974, Email address:
OIRA_Submission@omb.eop.gov.
Charles Mierzwa,
Chief of Information Resources Management.
[FR Doc. 2013–07014 Filed 3–26–13; 8:45 am]
BILLING CODE 7905–01–P
SECURITIES AND EXCHANGE
COMMISSION
mstockstill on DSK4VPTVN1PROD with NOTICES
ING Life Insurance and Annuity
Company, et al; Notice of Application
March 21, 2013.
Securities and Exchange
Commission (‘‘SEC’’ or ‘‘Commission’’).
ACTION: Notice of application for an
order approving the substitution of
certain securities pursuant to Section
26(c) of the Investment Company Act of
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18:10 Mar 26, 2013
Jkt 229001
ING Life Insurance and
Annuity Company (‘‘ING Life’’), ING
USA Annuity and Life Insurance
Company (‘‘ING USA’’), ReliaStar Life
Insurance Company of New York
(‘‘ReliaStar NY’’), and Security Life of
Denver Insurance Company (each a
‘‘Company’’ and together, the
‘‘Companies’’), Variable Annuity
Account B of ING Life Insurance and
Annuity Company, Variable Annuity
Account I of ING Life Insurance and
Annuity Company, Separate Account B
of ING USA Annuity and Life Insurance
Company, Separate Account EQ of ING
USA Annuity and Life Insurance
Company, ReliaStar Life Insurance
Company of New York Separate
Account NY–B, Security Life Separate
Account S–A1 (each, a ‘‘Separate
Account’’ and together, the ‘‘Separate
Accounts’’) and ING Investors Trust.
The Companies, the Separate Accounts,
and ING Investors Trust are collectively
referred to herein as the ‘‘Applicants.’’
APPLICANTS:
The
Applicants seek an order pursuant to
Section 26(c) of the 1940 Act, approving
the substitution of shares of the ING
Large Cap Growth Portfolio, a series of
the ING Investors Trust (the
‘‘Replacement Fund’’) for shares of the
Fidelity VIP Contrafund Portfolio, a
series of the Fidelity Variable Insurance
Products Fund II (the ‘‘Existing Fund’’),
held by the Separate Accounts to fund
certain variable annuity contracts
(collectively, the ‘‘Contracts’’) issued by
the Companies.
SUMMARY OF APPLICATION:
[Release No. IC–30431; File No. 812–14033]
AGENCY:
1940, as amended (the ‘‘1940 Act’’ or
‘‘Act’’).
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The application was filed
on May 14, 2012, and amended and
restated applications were filed on
November 16, 2012, January 22, 2013,
and March 18, 2013.
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 the
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 11, 2013, and
should be accompanied by proof of
service on the applicants in the form of
an affidavit or, for lawyers, a certificate
of service. Hearing requests should state
the nature of the requester’s interest, the
reason for the request, and the issues
contested. Persons who wish to be
notified of a hearing may request
notification by writing to the Secretary
of the Commission.
ADDRESSES: Secretary, SEC, 100 F Street
NE., Washington, DC 20549–1090.
Applicants: J. Neil McMurdie, Esquire,
ING Americas U.S. Legal Services, One
Orange Way, C2N, Windsor, CT 06095.
FOR FURTHER INFORMATION CONTACT:
Jeffrey Foor, Senior Counsel, or Joyce M.
Pickholz, Branch Chief, Insured
Investments Office, Division of
Investment Management, at (202) 551–
6795.
SUPPLEMENTARY INFORMATION: The
following is a summary of the
application. The complete application
may be obtained via the Commission’s
Web site by searching for the file
number, or for an applicant using the
FILING DATE:
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Company name box, at https://
www.sec.gov/search/search.htm, or by
calling (202) 551–8090.
Applicants’ Representations
1. The Companies, on their own
behalf and on behalf of their respective
separate accounts, propose to substitute
shares of the Replacement Fund for
shares of the Existing Fund held by the
Separate Accounts to fund the
Contracts.
2. ING Life is the depositor of Variable
Annuity Account B of ING Life
Insurance and Annuity Company and
Variable Annuity Account I of ING Life
Insurance and Annuity Company. ING
USA is the depositor of Separate
Account B of ING USA Annuity and
Life Insurance Company and Separate
Account EQ of ING USA Annuity and
Life Insurance Company. ReliaStar NY
is the depositor of ReliaStar Life
Insurance Company of New York
Separate Account NY–B. Security Life
of Denver Insurance Company is the
depositor of Security Life Separate
Account S–A1.
3. Each of Variable Annuity Account
B of ING Life Insurance and Annuity
Company, Variable Annuity Account I
of ING Life Insurance and Annuity
Company, Separate Account B of ING
USA Annuity and Life Insurance
Company, Separate Account EQ of ING
USA Annuity and Life Insurance
Company, ReliaStar Life Insurance
Company of New York Separate
Account NY–B, and Security Life
Separate Account S–A1 is a ‘‘separate
account’’ as defined by Rule 0–1(e)
under the Act and each is registered
under the Act as a unit investment trust
for the purpose of funding the Contracts.
Security interests under the Contracts
have been registered under the
Securities Act of 1933. Each Separate
Account is divided into subaccounts,
each of which invests exclusively in
shares of the Existing Fund or another
open-end management investment
company. The application sets forth the
registration statement file numbers for
the Contracts and the Separate
Accounts.
4. ING Investors Trust and Fidelity
Variable Insurance Products Fund II are
registered open-end management
investment companies of the series type
(File Number 811–05629 and 811–
05511, respectively).
5. Overall management services to the
Replacement Fund are provided by
Directed Services, LLC, a registered
investment adviser and an indirect
wholly owned subsidiary of ING Groep,
N.V.1 The Replacement Fund is subadvised by ING Investment Management
Co.
6. The Contracts are individual
variable annuity contracts. Each of the
Contracts permit the issuing Company
to substitute shares of one open-end
management investment company with
shares of another, subject to
Commission approval and compliance
with applicable law. The prospectuses
for the Contracts and the Separate
Accounts contain disclosures of this
right. The Contracts which offer the
Existing Fund as an investment option
are registered in the Form N–4
Registration Statements listed in section
II.B. of the application.
7. Although not articulated exactly
the same way, the investment objectives
of the Existing Fund and the
Replacement Fund are similar and the
principle investment strategies of each
portfolio are substantially similar. The
ING Large Cap Growth Portfolio seeks
long-term capital growth while the
Fidelity VIP Contrafund Portfolio seeks
long-term capital appreciation. Both
portfolios invest primarily in common
stocks of large-cap U.S. companies, with
an emphasis on earnings growth as a
criterion for investment. A comparison
of the investing strategies and risks of
the Existing Fund and the Replacement
Fund is included in the application.
The following table compares the fees
and expenses of the Existing Fund and
the Replacement Fund as of December
31, 2012:
Management
fees
(percent)
Distribution
(12b–1) fees
(percent)
Administrative
service fee
(percent)
0.55
0.00
0.10
0.02
0.67
2 ¥0.07
0.60
0.56
0.00
........................
0.08
0.64
....................
0.64
0.55
0.25
0.10
0.02
0.92
1 ¥0.07
0.85
0.56
0.25
........................
0.08
0.89
....................
0.89
Replacement Fund:
• ING Large Cap Growth Portfolio—Class I .........................
Existing Fund:
• Fidelity VIP Contrafund Portfolio—Initial Class ..................
Replacement Fund:
• ING Large Cap Growth Portfolio—Class S ........................
Existing Fund:
• Fidelity VIP Contrafund Portfolio—Service Class 2 ...........
Other
expenses
(percent)
Total annual
expenses
(percent)
Expense
waivers
(percent)
Net annual
expenses
(percent)
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8. By means of supplements to the
prospectuses for the Contracts, all
owners of the Contracts affected by the
substitutions were notified of the
application to substitute shares of the
funds as described herein. Among other
1 As part of a restructuring plan approved by the
European Commission, ING has agreed to separate
its banking and insurance businesses by 2013. ING
intends to achieve this separation by divestment of
its insurance and investment management
operations, including the Companies. ING has
announced that it will explore all options for
implementing the separation including one or more
initial public offerings, sales, or a combination
thereof. On November 10, 2010, ING announced
that ING and its U.S. insurance affiliates, including
the Companies, are preparing for a base case of an
initial public offering (‘‘IPO’’) of its U.S.-based
insurance and investment management affiliates,
including DSL.
2 Directed Services LLC, the adviser, is
contractually obligated to limit expenses to 0.60
and 0.85 for Class I and Class S shares, respectively,
through May 1, 2014; the obligation does not extend
to interest, taxes, brokerage commissions, Acquired
Fund Fees and Expenses, and extraordinary
expenses. This obligation will automatically renew
for one-year terms unless it is terminated by the
Portfolio or the adviser upon written notice within
90 days of the end of the current term or upon
termination of the management agreement and is
subject to possible recoupment by the adviser
within three years. The amount of the Portfolio’s
expenses to be waived, reimbursed or recouped by
Directed Services LLC is shown under the heading
‘‘Expense Waivers.’’
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Federal Register / Vol. 78, No. 59 / Wednesday, March 27, 2013 / Notices
information regarding the Substitution,
the supplements informed affected
Contract Owners that beginning on the
date of the supplements the Companies
will not exercise any rights reserved by
them under the Contracts to impose
restrictions or fees on transfers from the
Existing Fund (other than restrictions
related to frequent or disruptive
transfers) until at least 30 days after the
effective date of the Substitution.
Following the date the order requested
by this application is issued, but before
the effective date, affected Contract
Owners will receive a second
supplement to the Contract
prospectuses setting forth the effective
date and advising affected Contract
Owners of their right, if they so choose,
at any time prior to the effective date,
to reallocate or withdraw accumulated
value in the Existing Fund subaccounts
under their Contracts or otherwise
terminate their interest therein in
accordance with the terms and
conditions of their Contracts. If affected
Contract Owners reallocate account
value prior to the effective date or
within 30 days after the effective date,
there will be no charge for the
reallocation of accumulated value from
the Existing Fund subaccount and the
reallocation will not count as a transfer
when imposing any applicable
restriction or limit under the Contract
on transfers. Additionally, all current
Contract Owners will be sent
prospectuses of the Replacement Fund
before the effective date.
9. The proposed substitution will take
place at relative net asset value with no
change in the amount of any affected
Contract owner’s contract value, cash
value, accumulation value, account
value or death benefit or in dollar value
of his or her investment in the Separate
Accounts.
10. Shares of the Existing Fund will
be redeemed for cash. The Companies,
on behalf of the Existing Fund
subaccount of each relevant Separate
Account, will simultaneously place a
redemption request with the Existing
Fund and a purchase order with the
Replacement Fund so that the purchase
of Replacement Fund shares will be for
the exact amount of the redemption
proceeds. Thus, Contract values will
remain fully invested at all times. The
proceeds of such redemptions will then
be used to purchase the appropriate
number of shares of the Replacement
Fund. Initial Class shares of the Existing
Fund will be substituted for Class I
shares of the Replacement Fund, while
Service Class 2 shares of the Existing
Fund will be substituted for Class S
shares of the Replacement Fund.
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11. The affected Contract Owners will
not incur any fees or charges as a result
of the Substitution nor will their rights
or the Companies’ obligations under the
Contracts be altered in any way. The
Companies or their affiliates will pay all
expenses and transaction costs of the
Substitution, including legal and
accounting expenses, any applicable
brokerage expenses, and other fees and
expenses. The Substitution will not
cause the Contract fees and charges
currently being paid by affected
Contract Owners to be greater after the
Substitution than before the
Substitution. Moreover, affected
Contract Owners will not incur any
additional tax liability as a result of the
Substitution. Also, as described in the
application, after notification of the
Substitution and for 30 days after the
effective date, affected Contract Owners
may reallocate the subaccount value of
the Existing Fund to any other
investment option available under their
Contract without incurring any
administrative costs or allocation
(transfer) charges.
12. In addition to the prospectus
supplements distributed to owners of
Contracts, within five business days
after the proposed substitution is
completed, Contract Owners will be
sent a written confirmation informing
them that shares of the Existing Fund
have been redeemed and that the shares
of Replacement Fund have been
substituted. The confirmation will show
how the allocation of the Contract
Owner’s account value before and
immediately following the Substitution
has changed as a result of the
Substitution and detail the transactions
effected on behalf of the respective
Contract Owner because of the
Substitution.
13. The Applicants state that Contract
Owners will be better served by the
proposed Substitution for many reasons.
The Applicants state that the
Substitution is a part of the Companies’
overall business plan to make the
Contracts more competitive (and thus
more attractive to customers) and more
efficient to administer and oversee. The
Substitution will replace an unaffiliated
fund with a fund that is advised and
sub-advised by affiliates of the
Companies. Additionally, the
Replacement Fund will only be
available through variable insurance
products offered by the Companies or
their affiliated insurance companies.
Therefore, the Applicants believe the
Board of the Replacement Fund will
have greater sensitivity to the needs of
Contract Owners. As the Substitution
will provide the Companies with more
influence over the administrative
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aspects of the funds offered through the
Contracts, the Applicants assert that the
Substitution will reduce costs related to
unanticipated or off-cycle
communications and mailings to
Contract Owners. Further, the
Companies have an on-going fund due
diligence process through which they
select, evaluate and monitor the funds
available through the Contracts. The
Applicants state that this process
contributes to the Companies’ ability to
offer competitive products and services
and assist their customers in meeting
their financial goals while permitting
the Companies to respond to expense,
performance and management matters
that they have identified in their due
diligence reviews. The Applicants
believe another benefit of the
Substitution is that the Replacement
Fund employs substantially similar
principal investment strategies and
resources to fulfill its investment
objective while providing a decrease in
Total Net Expenses for shareholders of
the Existing Fund. In addition, the
Applicants note that for Contract
Owners affected by the Substitution, the
Companies will not exercise any rights
reserved by them under the Contracts to
impose restrictions or fees on transfers
from the Existing Fund (other than
restrictions related to frequent or
disruptive transfers) until at least 30
days after the effective date of the
Substitution.
14. For these reasons, and the reasons
discussed in more detail in the
application, the Applicants assert that
the Substitution is consistent with the
protection of investors and the purposes
fairly intended by the policy and
provisions of the 1940 Act.
Legal Analysis and Conditions
Section 26(c) Relief
1. The Applicants request that the
Commission issue an order pursuant to
Section 26(c) of the Act approving the
proposed substitution. Section 26(c) of
the Act requires the depositor of a
registered unit investment trust holding
the securities of a single issuer to obtain
Commission approval before
substituting the securities held by the
trust.
2. Each of the prospectuses for the
Contracts expressly discloses that the
issuing Company reserves the right,
subject to compliance with applicable
law, to substitute shares of another
open-end management investment
company for shares of an open-end
management investment company held
by a subaccount of a Separate Account.
Applicants maintain that Contract
Owners will be better served by the
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proposed Substitution. Applicants
anticipate that the replacement of the
Existing Fund will result in a Contract
that is administered and managed more
efficiently, and one that is more
competitive with other variable
products. As described in the
application, the Replacement Fund will
be managed according to similar
investment objectives and policies as
the Existing Fund. Moreover, the overall
net fees of the Replacement Fund are
less than those of the Existing Fund.
3. Applicants assert that the proposed
substitution is not of the type that
Section 26(c) was designed to prevent.
Unlike traditional unit investment trusts
where a depositor could only substitute
an investment security in a manner
which permanently affected all the
investors in the trust, the Contracts
provide each Contract owner with the
right to exercise his or her own
judgment and transfer Contract or cash
values into other subaccounts.
Moreover, the Contracts will offer
Contract owners the opportunity to
transfer amounts out of the affected
subaccounts into any of the remaining
subaccounts without cost or other
disadvantage. The proposed
Substitution, therefore, will not result in
the type of costly forced redemptions
that Section 26(c) was designed to
prevent. Applicants maintain that the
proposed Substitution also is unlike the
type of substitution which Section 26(c)
was designed to prevent in that by
purchasing a Contract, Contract owners
select much more than a particular
investment company in which to invest
their account values. They also select
the specific types of insurance coverage
offered by the various Companies under
the Contracts as well as numerous other
rights and privileges set forth in each
Contract.
4. The Applicants agree that for two
years following the implementation of
the Substitution described herein, the
net annual expenses of the Replacement
Fund will not exceed the net annual
expenses of the Existing Fund as of
December 31, 2012 (net annual expenses
will not exceed 0.64% for the ING Large
Cap Growth Portfolio—Class I, and
0.89% for Class S). To achieve this
limitation, DSL will waive fees or
reimburse the Replacement Fund in
certain amounts to maintain expenses at
or below the limit. Any adjustments will
be made at least on a quarterly basis. In
addition, the Companies will not
increase the Contract fees and charges,
including asset based charges such as
mortality and expense risk charges
deducted from the Subaccounts that
would otherwise be assessed under the
terms of the Contracts for a period of at
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least two years following the
Substitution.
5. Under the manager-of-managers
relief granted to the ING Investors Trust,
a vote of the shareholders is not
necessary to change a sub-adviser,
except for changes involving an
affiliated sub-adviser. Notwithstanding,
after the effective date of the
Substitutions the Applicants agree not
to change the Replacement Fund’s subadviser without first obtaining
shareholder approval of either (1) the
sub-adviser change or (2) the parties
continued ability to rely on their
manager-of-managers relief.
6. The Applicants submit that the
proposed substitution meets the
standards set forth in Section 26(c) and
assert that the replacement of the
Existing Fund with the Replacement
Fund is consistent with the protection
of investors and the purposes fairly
intended by the policy and provisions of
the 1940 Act.
Conclusion
For the reasons and upon the facts set
forth above and in the application, the
Applicants assert that the requested
order meets the standards set forth in
Section 26(c) of the Act and should
therefore, be granted.
For the Commission, by the Division of
Investment Management, under delegated
authority.
Kevin M. O’Neill,
Deputy Secretary.
[FR Doc. 2013–07012 Filed 3–26–13; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–69210; File No. SR–MIAX–
2013–12]
Self-Regulatory Organizations; Miami
International Securities Exchange LLC;
Notice of Filing of a Proposed Rule
Change Relating to Obvious Errors in
Limit or Straddle States
March 22, 2013.
Pursuant to the provisions of Section
19(b)(1) of the Securities Exchange Act
of 1934 (the ‘‘Act’’) 1 and Rule 19b–4
thereunder,2 notice is hereby given that,
on March 22, 2013, Miami International
Securities Exchange LLC (‘‘MIAX’’ or
‘‘Exchange’’) filed with the Securities
and Exchange Commission (‘‘SEC’’ or
‘‘Commission’’) a proposed rule change
as described in Items I, II and III below,
which Items have been prepared by the
self-regulatory orgnaization. The
1 15
2 17
PO 00000
U.S.C. 78s(b)(1).
CFR 240.19b–4.
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18637
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange is filing a proposal to
amend Exchange Rule 530, Limit UpLimit Down (‘‘LULD’’), and to amend
Exchange Rule 521, Obvious and
Catastrophic Errors to provide for how
the Exchange proposes to treat
erroneous options transactions in
response to the Plan to Address
Extraordinary Market Volatility
Pursuant to Rule 608 of Regulation
NMS, as it may be amended from time
to time (the ‘‘Plan’’).
The text of the proposed rule change
is provided in Exhibit 5. The text of the
proposed rule change is also available
on the Exchange’s Web site at https://
www.miaxoptions.com/filter/wotitle/
rule_filing, at MIAX’s principal office,
and at the Commission’s Public
Reference Room.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
Exchange included statements
concerning the purpose of and basis for
the proposed rule change and discussed
any comments it received on the
proposed rule change. The text of these
statements may be examined at the
places specified in Item IV below. The
Exchange has prepared summaries, set
forth in sections A, B, and C below, of
the most significant aspects of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The purpose of the proposed rule
change is to amend MIAX Rules 530 and
521 to provide for how the Exchange
proposes to treat erroneous options
transactions in response to the Plan.
Background
Since May 6, 2010, when the markets
experienced excessive volatility in an
abbreviated time period, i.e., the ‘‘flash
crash,’’ the equities exchanges and The
Financial Industry Regulatory Authority
(‘‘FINRA’’) have implemented marketwide measures designed to restore
investor confidence by reducing the
potential for excessive market volatility.
Among the measures adopted include
pilot plans for stock-by-stock trading
pauses, related changes to the equities
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]]>Agencies
[Federal Register Volume 78, Number 59 (Wednesday, March 27, 2013)]
[Notices]
[Pages 18634-18637]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-07012]
=======================================================================
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SECURITIES AND EXCHANGE COMMISSION
[Release No. IC-30431; File No. 812-14033]
ING Life Insurance and Annuity Company, et al; Notice of
Application
March 21, 2013.
AGENCY: Securities and Exchange Commission (``SEC'' or ``Commission'').
ACTION: Notice of application for an order approving the substitution
of certain securities pursuant to Section 26(c) of the Investment
Company Act of 1940, as amended (the ``1940 Act'' or ``Act'').
-----------------------------------------------------------------------
APPLICANTS: ING Life Insurance and Annuity Company (``ING Life''), ING
USA Annuity and Life Insurance Company (``ING USA''), ReliaStar Life
Insurance Company of New York (``ReliaStar NY''), and Security Life of
Denver Insurance Company (each a ``Company'' and together, the
``Companies''), Variable Annuity Account B of ING Life Insurance and
Annuity Company, Variable Annuity Account I of ING Life Insurance and
Annuity Company, Separate Account B of ING USA Annuity and Life
Insurance Company, Separate Account EQ of ING USA Annuity and Life
Insurance Company, ReliaStar Life Insurance Company of New York
Separate Account NY-B, Security Life Separate Account S-A1 (each, a
``Separate Account'' and together, the ``Separate Accounts'') and ING
Investors Trust. The Companies, the Separate Accounts, and ING
Investors Trust are collectively referred to herein as the
``Applicants.''
SUMMARY OF APPLICATION: The Applicants seek an order pursuant to
Section 26(c) of the 1940 Act, approving the substitution of shares of
the ING Large Cap Growth Portfolio, a series of the ING Investors Trust
(the ``Replacement Fund'') for shares of the Fidelity VIP Contrafund
Portfolio, a series of the Fidelity Variable Insurance Products Fund II
(the ``Existing Fund''), held by the Separate Accounts to fund certain
variable annuity contracts (collectively, the ``Contracts'') issued by
the Companies.
FILING DATE: The application was filed on May 14, 2012, and amended and
restated applications were filed on November 16, 2012, January 22,
2013, and March 18, 2013.
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 the 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 11, 2013, and should be accompanied by
proof of service on the applicants in the form of an affidavit or, for
lawyers, a certificate of service. Hearing requests should state the
nature of the requester's interest, the reason for the request, and the
issues contested. Persons who wish to be notified of a hearing may
request notification by writing to the Secretary of the Commission.
ADDRESSES: Secretary, SEC, 100 F Street NE., Washington, DC 20549-1090.
Applicants: J. Neil McMurdie, Esquire, ING Americas U.S. Legal
Services, One Orange Way, C2N, Windsor, CT 06095.
FOR FURTHER INFORMATION CONTACT: Jeffrey Foor, Senior Counsel, or Joyce
M. Pickholz, Branch Chief, Insured Investments Office, Division of
Investment Management, at (202) 551-6795.
SUPPLEMENTARY INFORMATION: The following is a summary of the
application. The complete application may be obtained via the
Commission's Web site by searching for the file number, or for an
applicant using the
[[Page 18635]]
Company name box, at https://www.sec.gov/search/search.htm, or by
calling (202) 551-8090.
Applicants' Representations
1. The Companies, on their own behalf and on behalf of their
respective separate accounts, propose to substitute shares of the
Replacement Fund for shares of the Existing Fund held by the Separate
Accounts to fund the Contracts.
2. ING Life is the depositor of Variable Annuity Account B of ING
Life Insurance and Annuity Company and Variable Annuity Account I of
ING Life Insurance and Annuity Company. ING USA is the depositor of
Separate Account B of ING USA Annuity and Life Insurance Company and
Separate Account EQ of ING USA Annuity and Life Insurance Company.
ReliaStar NY is the depositor of ReliaStar Life Insurance Company of
New York Separate Account NY-B. Security Life of Denver Insurance
Company is the depositor of Security Life Separate Account S-A1.
3. Each of Variable Annuity Account B of ING Life Insurance and
Annuity Company, Variable Annuity Account I of ING Life Insurance and
Annuity Company, Separate Account B of ING USA Annuity and Life
Insurance Company, Separate Account EQ of ING USA Annuity and Life
Insurance Company, ReliaStar Life Insurance Company of New York
Separate Account NY-B, and Security Life Separate Account S-A1 is a
``separate account'' as defined by Rule 0-1(e) under the Act and each
is registered under the Act as a unit investment trust for the purpose
of funding the Contracts. Security interests under the Contracts have
been registered under the Securities Act of 1933. Each Separate Account
is divided into subaccounts, each of which invests exclusively in
shares of the Existing Fund or another open-end management investment
company. The application sets forth the registration statement file
numbers for the Contracts and the Separate Accounts.
4. ING Investors Trust and Fidelity Variable Insurance Products
Fund II are registered open-end management investment companies of the
series type (File Number 811-05629 and 811-05511, respectively).
5. Overall management services to the Replacement Fund are provided
by Directed Services, LLC, a registered investment adviser and an
indirect wholly owned subsidiary of ING Groep, N.V.\1\ The Replacement
Fund is sub-advised by ING Investment Management Co.
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\1\ As part of a restructuring plan approved by the European
Commission, ING has agreed to separate its banking and insurance
businesses by 2013. ING intends to achieve this separation by
divestment of its insurance and investment management operations,
including the Companies. ING has announced that it will explore all
options for implementing the separation including one or more
initial public offerings, sales, or a combination thereof. On
November 10, 2010, ING announced that ING and its U.S. insurance
affiliates, including the Companies, are preparing for a base case
of an initial public offering (``IPO'') of its U.S.-based insurance
and investment management affiliates, including DSL.
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6. The Contracts are individual variable annuity contracts. Each of
the Contracts permit the issuing Company to substitute shares of one
open-end management investment company with shares of another, subject
to Commission approval and compliance with applicable law. The
prospectuses for the Contracts and the Separate Accounts contain
disclosures of this right. The Contracts which offer the Existing Fund
as an investment option are registered in the Form N-4 Registration
Statements listed in section II.B. of the application.
7. Although not articulated exactly the same way, the investment
objectives of the Existing Fund and the Replacement Fund are similar
and the principle investment strategies of each portfolio are
substantially similar. The ING Large Cap Growth Portfolio seeks long-
term capital growth while the Fidelity VIP Contrafund Portfolio seeks
long-term capital appreciation. Both portfolios invest primarily in
common stocks of large-cap U.S. companies, with an emphasis on earnings
growth as a criterion for investment. A comparison of the investing
strategies and risks of the Existing Fund and the Replacement Fund is
included in the application.
The following table compares the fees and expenses of the Existing
Fund and the Replacement Fund as of December 31, 2012:
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\2\ Directed Services LLC, the adviser, is contractually
obligated to limit expenses to 0.60 and 0.85 for Class I and Class S
shares, respectively, through May 1, 2014; the obligation does not
extend to interest, taxes, brokerage commissions, Acquired Fund Fees
and Expenses, and extraordinary expenses. This obligation will
automatically renew for one-year terms unless it is terminated by
the Portfolio or the adviser upon written notice within 90 days of
the end of the current term or upon termination of the management
agreement and is subject to possible recoupment by the adviser
within three years. The amount of the Portfolio's expenses to be
waived, reimbursed or recouped by Directed Services LLC is shown
under the heading ``Expense Waivers.''
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Total
Management Distribution Administrative Other annual Expense Net annual
fees (12b-1) fees service fee expenses expenses waivers expenses
(percent) (percent) (percent) (percent) (percent) (percent) (percent)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Replacement Fund:
ING Large Cap Growth Portfolio--Class I.... 0.55 0.00 0.10 0.02 0.67 \2\ -0.07 0.60
Existing Fund:
Fidelity VIP Contrafund Portfolio--Initial 0.56 0.00 .............. 0.08 0.64 ........... 0.64
Class..............................................
Replacement Fund:
ING Large Cap Growth Portfolio--Class S.... 0.55 0.25 0.10 0.02 0.92 \1\ -0.07 0.85
Existing Fund:
Fidelity VIP Contrafund Portfolio--Service 0.56 0.25 .............. 0.08 0.89 ........... 0.89
Class 2............................................
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8. By means of supplements to the prospectuses for the Contracts,
all owners of the Contracts affected by the substitutions were notified
of the application to substitute shares of the funds as described
herein. Among other
[[Page 18636]]
information regarding the Substitution, the supplements informed
affected Contract Owners that beginning on the date of the supplements
the Companies will not exercise any rights reserved by them under the
Contracts to impose restrictions or fees on transfers from the Existing
Fund (other than restrictions related to frequent or disruptive
transfers) until at least 30 days after the effective date of the
Substitution. Following the date the order requested by this
application is issued, but before the effective date, affected Contract
Owners will receive a second supplement to the Contract prospectuses
setting forth the effective date and advising affected Contract Owners
of their right, if they so choose, at any time prior to the effective
date, to reallocate or withdraw accumulated value in the Existing Fund
subaccounts under their Contracts or otherwise terminate their interest
therein in accordance with the terms and conditions of their Contracts.
If affected Contract Owners reallocate account value prior to the
effective date or within 30 days after the effective date, there will
be no charge for the reallocation of accumulated value from the
Existing Fund subaccount and the reallocation will not count as a
transfer when imposing any applicable restriction or limit under the
Contract on transfers. Additionally, all current Contract Owners will
be sent prospectuses of the Replacement Fund before the effective date.
9. The proposed substitution will take place at relative net asset
value with no change in the amount of any affected Contract owner's
contract value, cash value, accumulation value, account value or death
benefit or in dollar value of his or her investment in the Separate
Accounts.
10. Shares of the Existing Fund will be redeemed for cash. The
Companies, on behalf of the Existing Fund subaccount of each relevant
Separate Account, will simultaneously place a redemption request with
the Existing Fund and a purchase order with the Replacement Fund so
that the purchase of Replacement Fund shares will be for the exact
amount of the redemption proceeds. Thus, Contract values will remain
fully invested at all times. The proceeds of such redemptions will then
be used to purchase the appropriate number of shares of the Replacement
Fund. Initial Class shares of the Existing Fund will be substituted for
Class I shares of the Replacement Fund, while Service Class 2 shares of
the Existing Fund will be substituted for Class S shares of the
Replacement Fund.
11. The affected Contract Owners will not incur any fees or charges
as a result of the Substitution nor will their rights or the Companies'
obligations under the Contracts be altered in any way. The Companies or
their affiliates will pay all expenses and transaction costs of the
Substitution, including legal and accounting expenses, any applicable
brokerage expenses, and other fees and expenses. The Substitution will
not cause the Contract fees and charges currently being paid by
affected Contract Owners to be greater after the Substitution than
before the Substitution. Moreover, affected Contract Owners will not
incur any additional tax liability as a result of the Substitution.
Also, as described in the application, after notification of the
Substitution and for 30 days after the effective date, affected
Contract Owners may reallocate the subaccount value of the Existing
Fund to any other investment option available under their Contract
without incurring any administrative costs or allocation (transfer)
charges.
12. In addition to the prospectus supplements distributed to owners
of Contracts, within five business days after the proposed substitution
is completed, Contract Owners will be sent a written confirmation
informing them that shares of the Existing Fund have been redeemed and
that the shares of Replacement Fund have been substituted. The
confirmation will show how the allocation of the Contract Owner's
account value before and immediately following the Substitution has
changed as a result of the Substitution and detail the transactions
effected on behalf of the respective Contract Owner because of the
Substitution.
13. The Applicants state that Contract Owners will be better served
by the proposed Substitution for many reasons. The Applicants state
that the Substitution is a part of the Companies' overall business plan
to make the Contracts more competitive (and thus more attractive to
customers) and more efficient to administer and oversee. The
Substitution will replace an unaffiliated fund with a fund that is
advised and sub-advised by affiliates of the Companies. Additionally,
the Replacement Fund will only be available through variable insurance
products offered by the Companies or their affiliated insurance
companies. Therefore, the Applicants believe the Board of the
Replacement Fund will have greater sensitivity to the needs of Contract
Owners. As the Substitution will provide the Companies with more
influence over the administrative aspects of the funds offered through
the Contracts, the Applicants assert that the Substitution will reduce
costs related to unanticipated or off-cycle communications and mailings
to Contract Owners. Further, the Companies have an on-going fund due
diligence process through which they select, evaluate and monitor the
funds available through the Contracts. The Applicants state that this
process contributes to the Companies' ability to offer competitive
products and services and assist their customers in meeting their
financial goals while permitting the Companies to respond to expense,
performance and management matters that they have identified in their
due diligence reviews. The Applicants believe another benefit of the
Substitution is that the Replacement Fund employs substantially similar
principal investment strategies and resources to fulfill its investment
objective while providing a decrease in Total Net Expenses for
shareholders of the Existing Fund. In addition, the Applicants note
that for Contract Owners affected by the Substitution, the Companies
will not exercise any rights reserved by them under the Contracts to
impose restrictions or fees on transfers from the Existing Fund (other
than restrictions related to frequent or disruptive transfers) until at
least 30 days after the effective date of the Substitution.
14. For these reasons, and the reasons discussed in more detail in
the application, the Applicants assert that the Substitution is
consistent with the protection of investors and the purposes fairly
intended by the policy and provisions of the 1940 Act.
Legal Analysis and Conditions
Section 26(c) Relief
1. The Applicants request that the Commission issue an order
pursuant to Section 26(c) of the Act approving the proposed
substitution. Section 26(c) of the Act requires the depositor of a
registered unit investment trust holding the securities of a single
issuer to obtain Commission approval before substituting the securities
held by the trust.
2. Each of the prospectuses for the Contracts expressly discloses
that the issuing Company reserves the right, subject to compliance with
applicable law, to substitute shares of another open-end management
investment company for shares of an open-end management investment
company held by a subaccount of a Separate Account. Applicants maintain
that Contract Owners will be better served by the
[[Page 18637]]
proposed Substitution. Applicants anticipate that the replacement of
the Existing Fund will result in a Contract that is administered and
managed more efficiently, and one that is more competitive with other
variable products. As described in the application, the Replacement
Fund will be managed according to similar investment objectives and
policies as the Existing Fund. Moreover, the overall net fees of the
Replacement Fund are less than those of the Existing Fund.
3. Applicants assert that the proposed substitution is not of the
type that Section 26(c) was designed to prevent. Unlike traditional
unit investment trusts where a depositor could only substitute an
investment security in a manner which permanently affected all the
investors in the trust, the Contracts provide each Contract owner with
the right to exercise his or her own judgment and transfer Contract or
cash values into other subaccounts. Moreover, the Contracts will offer
Contract owners the opportunity to transfer amounts out of the affected
subaccounts into any of the remaining subaccounts without cost or other
disadvantage. The proposed Substitution, therefore, will not result in
the type of costly forced redemptions that Section 26(c) was designed
to prevent. Applicants maintain that the proposed Substitution also is
unlike the type of substitution which Section 26(c) was designed to
prevent in that by purchasing a Contract, Contract owners select much
more than a particular investment company in which to invest their
account values. They also select the specific types of insurance
coverage offered by the various Companies under the Contracts as well
as numerous other rights and privileges set forth in each Contract.
4. The Applicants agree that for two years following the
implementation of the Substitution described herein, the net annual
expenses of the Replacement Fund will not exceed the net annual
expenses of the Existing Fund as of December 31, 2012 (net annual
expenses will not exceed 0.64% for the ING Large Cap Growth Portfolio--
Class I, and 0.89% for Class S). To achieve this limitation, DSL will
waive fees or reimburse the Replacement Fund in certain amounts to
maintain expenses at or below the limit. Any adjustments will be made
at least on a quarterly basis. In addition, the Companies will not
increase the Contract fees and charges, including asset based charges
such as mortality and expense risk charges deducted from the
Subaccounts that would otherwise be assessed under the terms of the
Contracts for a period of at least two years following the
Substitution.
5. Under the manager-of-managers relief granted to the ING
Investors Trust, a vote of the shareholders is not necessary to change
a sub-adviser, except for changes involving an affiliated sub-adviser.
Notwithstanding, after the effective date of the Substitutions the
Applicants agree not to change the Replacement Fund's sub-adviser
without first obtaining shareholder approval of either (1) the sub-
adviser change or (2) the parties continued ability to rely on their
manager-of-managers relief.
6. The Applicants submit that the proposed substitution meets the
standards set forth in Section 26(c) and assert that the replacement of
the Existing Fund with the Replacement Fund is consistent with the
protection of investors and the purposes fairly intended by the policy
and provisions of the 1940 Act.
Conclusion
For the reasons and upon the facts set forth above and in the
application, the Applicants assert that the requested order meets the
standards set forth in Section 26(c) of the Act and should therefore,
be granted.
For the Commission, by the Division of Investment Management,
under delegated authority.
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-07012 Filed 3-26-13; 8:45 am]
BILLING CODE 8011-01-P
