Pacific Life Insurance Company, et al; Notice of Application, 62716-62719 [2013-24604]
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Federal Register / Vol. 78, No. 204 / Tuesday, October 22, 2013 / Notices
Office Building, Washington, DC 20503,
or by sending an email to: Shagufta_
Ahmed@omb.eop.gov; and (ii) Thomas
Bayer, Director/Chief Information
Officer, Securities and Exchange
Commission, c/o Remi Pavlik-Simon,
100 F Street NE., Washington, DC 20549
or send an email to: PRA_Mailbox@
sec.gov. Comments must be submitted to
OMB within 30 days of this notice.
Dated: October 8, 2013.
Kevin M. O’Neill,
Deputy Secretary.
[FR Doc. 2013–24671 Filed 10–21–13; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. IC–30744; File No. 812–14141]
Pacific Life Insurance Company, et al;
Notice of Application
October 17, 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
1940, as amended (the ‘‘1940 Act’’).
AGENCY:
Pacific Life Insurance
Company (‘‘Pacific Life’’), Pacific Life’s
Separate Account A (‘‘Separate Account
A’’), Pacific Life’s Pacific Select Variable
Annuity Separate Account (‘‘Select VA
Account’’ and, together with Separate
Account A, the ‘‘Pacific Life Separate
Accounts’’), Pacific Life & Annuity
Company (‘‘PL&A’’), and PL&A’s
Separate Account A (‘‘PL&A Separate
Account A’’). Pacific Life, PL&A, and
the Separate Accounts are referred to
collectively as the ‘‘Applicants.’’ The
Pacific Life Separate Accounts and
PL&A Separate Account A are referred
to individually as a ‘‘Separate Account’’
and collectively as the ‘‘Separate
Accounts.’’ Pacific Life and PL&A are
referred to herein individually as an
‘‘Insurer’’ and collectively as the
‘‘Insurers.’’
SUMMARY OF APPLICATION: Each Insurer,
on behalf of itself and its Separate
Account(s), seeks an order pursuant to
Section 26(c) of the 1940 Act, approving
the substitution of Service Shares of the
Janus Aspen Balanced Portfolio, a series
of Janus Aspen Series (the
‘‘Replacement Portfolio’’), for Class B
shares of the AllianceBernstein VPS
Balanced Wealth Strategy Portfolio, a
series of the AllianceBernstein Variable
Product Series Fund, Inc. (the
‘‘Replaced Portfolio’’) (hereinafter, the
‘‘Proposed Substitution’’), under certain
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APPLICANTS:
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variable annuity contracts issued by the
Insurers (collectively, the ‘‘Contracts’’).
DATES: Filing Date: The application was
filed on March 29, 2013, and an
amended and restated application was
filed on September 25, 2013 and
October 2, 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 November 7, 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: Pacific Life Insurance
Company, Separate Account A of Pacific
Life Insurance Company, Pacific Select
Variable Annuity Separate Account of
Pacific Life Insurance Company, Pacific
Life & Annuity Company, and Pacific
Life & Annuity Company Separate
Account A, all located at 700 Newport
Center Drive, Newport Beach, CA
92660.
FOR FURTHER INFORMATION CONTACT:
Deborah D. Skeens, Senior Counsel, or
Michael L. Kosoff, Branch Chief,
Insured Investments Office, Division of
Investment Management, at (202) 551–
6795.
The
following is a summary of the
application. The complete application
may be obtained via the Commission’s
Web site by searching for the file
number, or for an applicant using the
Company name box, at https://
www.sec.gov/search/search.htm, or by
calling (202) 551–8090.
SUPPLEMENTARY INFORMATION:
Applicants’ Representations
1. The Insurers, on their own behalf
and on behalf of their respective
Separate Accounts, propose to
substitute Service Shares of the
Replacement Portfolio for Class B shares
of the Replaced Portfolio held by the
Separate Account to fund the Contracts.
Each Separate Account is divided into
subaccounts (each a ‘‘Subaccount,’’
collectively, the ‘‘Subaccounts’’). Each
Subaccount invests in the securities of
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a single portfolio of an underlying
mutual fund (‘‘Portfolio’’). Contract
owners (each a ‘‘Contract Owner’’ and
collectively, the ‘‘Contract Owners’’)
may allocate some or all of their
Contract value to one or more
Subaccounts that are available as
investment options under the Contracts.
2. Pacific Life is the depositor and
sponsor of the Pacific Life Separate
Accounts. PL&A is the depositor and
sponsor of PL&A Company Separate
Account A.
3. Each of the Separate Accounts is a
‘‘separate account’’ as defined by
Section 2(a)(37) of the 1940 Act and
each is registered under the 1940 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. The application sets forth the
registration statement file numbers for
the Contracts and the Separate
Accounts.
4. Each Insurer, on behalf of itself and
its Separate Account(s), proposes to
replace the Class B shares of the
Replaced Portfolio that are held in
Subaccounts of its Separate Account(s)
with Service Shares of the Replacement
Portfolio.
5. The Applicants state that the
Proposed Substitution involves moving
assets attributable to the Contracts from
the Replaced Portfolio managed by
AllianceBernstein L.P.
(‘‘AllianceBernstein’’) to a Replacement
Portfolio managed by Janus Capital
Management LLC (‘‘Janus Capital’’)
(each of Janus Capital and
AllianceBernstein, an ‘‘Investment
Adviser’’ and collectively, the
‘‘Investment Advisers’’). Each
Investment Adviser is responsible for
the day-to-day management of the assets
of the Replaced or Replacement
Portfolio, as the case may be. Neither
the Replaced nor Replacement Portfolio
employs a sub-adviser and neither
Portfolio operates under a manager-ofmanagers arrangement that, among other
things, would permit the Investment
Adviser to engage a new or additional
sub-adviser without the approval of the
Portfolio’s shareholders. The Applicants
state that the Investment Advisers are
not affiliates of the Insurers.
6. Applicants state that under the
Contracts, the Insurers reserve the right
to substitute, for the shares of a Portfolio
held in any Subaccount, the shares of
another Portfolio, shares of another
investment company or series of another
investment company, or another
investment vehicle. The prospectuses
for the Contracts include appropriate
disclosure of this reservation of right.
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7. The Applicants represent that the
investment objectives of the Replaced
and Replacement Portfolio are similar.
The investment objective of the
Replaced Portfolio is to maximize total
return consistent with its Investment
Adviser’s determination of reasonable
risk, whereas that of the Replacement
Portfolio is long-term capital growth,
consistent with preservation of capital
and balanced by current income. The
investment objectives of both Portfolios
include a growth component as well as
an income component. Additionally, the
Applicants state that the principal
investment strategies of the Replaced
and Replacement Portfolios are similar.
The principal investment strategies of
both Portfolios include investment in a
combination of equity and debt
securities. The Replaced Portfolio
targets a weighting of 60% equity
securities and 40% debt securities,
whereas the Replacement Portfolio
normally invests 35–65% of its assets in
equity securities and the remaining
assets in debt securities and cash
equivalents, with normally 25% of its
assets invested in fixed-income senior
securities. In addition, both Portfolios
may invest in securities of non-U.S.
issuers. The principal investment
strategies of the Replaced Portfolio also
include investment in fixed-income
securities with below investment grade
ratings (also called ‘‘junk’’ bonds),
which is not a principal investment
strategy of the Replacement Portfolio
though it may invest in such bonds. The
principal investment strategies of the
Replaced Portfolio include investments
in real estate investment trusts or
REITS, whereas the same is not true for
the Replacement Portfolio though it may
invest in REITs. The principal
investment strategies of the Replaced
Portfolio include entering into forward
commitments, the making of short sales
of securities or maintaining a short
position, and investments in rights or
warrants, none of which is a principal
investment strategy of the Replacement
Portfolio, though it may engage in short
sales and invest in securities on a
forward commitment basis, and invest
in warrants. The principal investment
strategies of the Replacement Portfolio
include investments in mortgage-backed
62717
and mortgage-related securities, which
are not a principal investment strategy
of the Replaced Portfolio, though it may
investment in mortgage-backed
securities. A comparison of the
investing strategies, risks, and
performance of the Replaced and
Replacement Portfolios is included in
the application.
8. The following table compares the
fees and expenses of the Replaced
Portfolio (Class B shares) and the
Replacement Portfolio (Service Shares)
as of the year ended December 31, 2012.
As described below, the management
fees of the Replaced Portfolio are subject
to breakpoints whereas the management
fees of the Replacement Portfolio are
not.1 In addition, as shown in the table
below, the 12b–1 fee of the Service Class
of the Replacement Portfolio is the same
as the 12b–1 fee of the Class B shares
of the Replaced Portfolio. In both cases,
the 12b–1 fee is the current maximum
permitted under the relevant plan.
Furthermore, as shown in the table
below, the annual operating expenses of
the Replacement Portfolio are lower
than those of the Replaced Portfolio.
PROPOSED SUBSTITUTION
Replaced portfolio
AllianceBernstein VPS wealth strategies portfolio
Class B/Service Class:
Management Fee ......
12b–1 Fee .................
Other Expenses ........
Total Gross Expenses
Expense Waiver/Reimbursement.
sroberts on DSK5SPTVN1PROD with FRONT MATTER
Total Net Expenses.
Replacement
portfolio
Janus Aspen
balanced
portfolio
.55 of 1% of the first $2.5 billion, .45 of 1% of the
excess over $2.5 billion up to $5 billion, and .40
of 1% of the excess over $5 billion.
0.25% ........................................................................
0.10% ........................................................................
0.90% ........................................................................
0.00 ...........................................................................
0.55%
0.25%
0.05%
0.85%
0.00
0.90% ........................................................................
0.85%
9. The Applicants state that the
performance for the Replacement
Portfolio is generally better than that of
the Replaced Portfolio for all periods
shown.
10. The Applicants state that the
Proposed Substitution is part of an
ongoing effort by the Insurers to make
their Contracts more attractive to
existing and prospective Contract
Owners. The Applicants believe the
Proposed Substitution will help to
accomplish these goals for the following
reasons: (1) The total annual operating
expenses (no expense waivers or
reimbursements) for the Replacement
Portfolio are lower than those of the
Replaced Portfolio; (2) the historical
performance of the Replacement
Portfolio is generally better than that of
the Replaced Portfolio; and (3) the
Proposed Substitution will facilitate the
ability of Contract Owners to elect
certain optional living benefit riders;
and (4) the Proposed Substitution will
simplify the Subaccount offerings under
the Contracts by eliminating an
overlapping Investment Option that
largely duplicates another Investment
Option with similar investment
objectives, principal investment
strategies, and principal risks.
11. The Applicants represent that the
Proposed Substitution will be described
in supplements to the applicable
prospectuses for the Contracts filed with
the Commission or in other
supplemental disclosure documents,
(collectively, ‘‘Supplements’’) and
delivered to all affected Contract
Owners at least 30 days before the date
the Proposed Substitution is effected
(the ‘‘Substitution Date’’). Each
Supplement will give the relevant
Contract Owners notice of the
1 The Applicants submit that the likelihood of the
Replaced Portfolio achieving a breakpoint reduction
in its management fee in the near future appears to
be remote given the asset levels of the Replaced
Portfolio at year end 2012.
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Federal Register / Vol. 78, No. 204 / Tuesday, October 22, 2013 / Notices
applicable Insurer’s intent to take the
necessary actions, including seeking the
order requested by the application, to
substitute shares of the Replaced
Portfolio as described in the application
on the Substitution Date. Each
Supplement also will advise Contract
Owners that from the date of the
Supplement until the Substitution Date,
Contract Owners are permitted to
transfer all of or a portion of their
Contract value out of any Subaccount
investing in the Replaced Portfolio
(‘‘Replaced Portfolio Subaccount’’) to
any other available Subaccounts offered
under their Contracts without the
transfer being counted as a transfer for
purposes of transfer limitations and fees
that would otherwise be applicable
under the terms of the Contracts. In
addition, each Supplement will (a)
instruct Contract Owners how to submit
transfer requests in light of the Proposed
Substitution; (b) advise Contract Owners
that any Contract value remaining in the
Replaced Portfolio Subaccount on the
Substitution Date will be transferred to
a Subaccount investing in the
Replacement Portfolio (‘‘Replacement
Portfolio Subaccount’’), and that the
Substitution will take place at relative
net asset value; (c) inform Contract
Owners that for at least thirty (30) days
following the Substitution Date, the
applicable Insurer will permit Contract
Owners to make transfers of Contract
value out of the Replacement Portfolio
Subaccount to any other available
Subaccounts offered under their
Contracts without the transfer being
counted as a transfer for purposes of
transfer limitations that would
otherwise be applicable under the terms
of the Contracts; and (d) inform Contract
Owners that, except as described in the
market timing limitations section of the
relevant prospectus, the applicable
Insurer will not exercise any rights
reserved by it under the Contracts to
impose additional restrictions on
transfers out of the Replacement
Portfolio Subaccount for at least thirty
(30) days after the Substitution Date.
12. The Proposed Substitution will
take place at the applicable Replaced
and Replacement Portfolios’ relative per
share net asset values determined on the
Substitution Date in accordance with
Section 22 of the 1940 Act and Rule
22c–1 thereunder. Accordingly, the
Applicants submit that the Proposed
Substitution will have no negative
financial impact on any Contract
Owner.
13. The Proposed Substitution will be
effected by having the Replaced
Portfolio Subaccount redeem its
Replaced Portfolio shares in cash and/
or in-kind (as determined by the
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21:08 Oct 21, 2013
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Investment Adviser to the Replaced
Portfolio) on the Substitution Date at net
asset value per share and purchase
shares of the Replacement Portfolio at
net asset value per share calculated on
the same date. In the event that the
Investment Adviser of the Replacement
Portfolio declines to accept, on behalf of
the Replacement Portfolio, any
securities redeemed in-kind by the
Replaced Portfolio, the Replaced
Portfolio shall instead provide cash
equal to the value of the declined
securities so that Contract Owners’
Contract values will not be adversely
impacted or diluted.
14. The Insurers or an affiliate thereof
will pay all expenses and transaction
costs reasonably related to the Proposed
Substitution, including all legal,
accounting, and brokerage expenses
relating to the Proposed Substitution,
the above described disclosure
documents, and this application. No
costs of the Proposed Substitution will
be borne directly or indirectly by
Contract Owners. Affected Contract
Owners will not incur any fees or
charges as a result of the Proposed
Substitution, nor will their rights or the
obligations of the Insurers under the
Contracts be altered in any way. The
Proposed Substitution will not cause the
fees and charges under the Contracts
currently being paid by Contract
Owners to be greater after the Proposed
Substitution than before the Proposed
Substitution. In addition, no transfer
charges will apply in connection with
the Proposed Substitution.
15. The Applicants represent that will
not receive, for three years from the date
of the Proposed Substitution, any direct
or indirect benefits from the
Replacement Portfolio, its adviser or
underwriter (or their affiliates), in
connection with assets attributable to
contracts affected by the Proposed
Substitution, at a higher rate than it had
received from the Replaced Portfolio, its
adviser or underwriter (or their
affiliates), including without limitation
12b-1 fees, revenue sharing, or other
arrangements; and the Proposed
Substitution and the selection of the
Replacement Portfolio were not
motivated by any financial
consideration paid or to be paid to the
Company or its affiliates by the
Replacement Portfolio, its adviser or
underwriter, or their affiliates.
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 1940 Act approving
the Proposed Substitution. Section 26(c)
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of the 1940 Act makes it unlawful for
any depositor or trustee of a registered
unit investment trust holding the
security of a single issuer to substitute
another security for such security unless
the Commission approves the
substitution. Section 26(c) requires the
Commission to issue an order approving
a substitution if the evidence establishes
that it is consistent with the protection
of investors and the purposes fairly
intended by the policy and provisions of
the 1940 Act.
2. Applicants assert that the terms and
conditions of the Proposed Substitution
are consistent with the principles and
purposes of Section 26(c) and do not
entail any of the abuses that Section
26(c) is designed to prevent. Applicants
further submit that the Proposed
Substitution will not result in the type
of costly forced redemption that Section
26(c) was intended to guard against and,
for the following reasons, are consistent
with the protection of investors and the
purposes fairly intended by the 1940
Act:
(1) The costs reasonably related to the
Proposed Substitution will be borne by
the applicable Insurer or an affiliate and
will not be borne by Contract Owners.
No charges will be assessed to the
Contract Owners to effect the Proposed
Substitution.
(2) The Proposed Substitution will be
effected, in all cases, at the relative net
asset values of the shares of the
Replaced and Replacement Portfolios,
without the imposition of any transfer
or similar charge and with no change in
the amount of any Contract Owner’s
Contract value.
(3) The Proposed Substitution will not
cause the fees and charges under the
Contracts currently being paid by
Contract Owners to be greater after the
Proposed Substitution than before the
Proposed Substitution, and will result
in Contract Owners’ Contract values
being allocated to Subaccounts that
invest in the Replacement Portfolio,
which has lower total expenses than the
Replaced Portfolio. Any changes in the
charges for optional living benefit riders
would be independent of the Proposed
Substitution.
(4) All affected Contract Owners will
be given notice of the Proposed
Substitution prior to the Substitution
Date and will have an opportunity to
reallocate their Contract value among
other available Subaccounts, including
Subaccounts investing in the
Replacement Portfolio, without the
imposition of any charge or limitation
(unless such transfers are made in
connection with market timing or other
disruptive trading activity), thereby
minimizing the likelihood of being
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invested through a Subaccount in an
undesired Portfolio.
(5) The Proposed Substitution will in
no way alter the insurance benefits to
Contract Owners or the contractual
obligations of the Insurers.
(6) The Proposed Substitution will in
no way alter the tax treatment of
Contract Owners in connection with
their Contracts, and no tax liability will
arise for Contract Owners as a result of
the Proposed Substitution.
(7) The Proposed Substitution will not
adversely affect existing Contract
Owners who elected optional living
benefit riders and allocated Contract
value to Subaccounts investing in the
Replaced Portfolio since the
Replacement Portfolio is an allowable
Investment Option for use with such
riders.
Conclusion
For the reasons and upon the facts set
forth above and in the application, the
Applicants submit that the Proposed
Substitution meets the standards of
Section 26(c) of the 1940 Act and
respectfully request that the
Commission issue an order of approval
pursuant to Section 26(c) of the 1940
Act and that such order be made
effective as soon as possible.
For the Commission, by the Division of
Investment Management, under delegated
authority.
Kevin M. O’Neill,
Deputy Secretary.
Commissioner Aguilar, as duty
officer, voted to consider the items
listed for the Closed Meeting in a closed
session.
The subject matter of the Closed
Meeting will be: Institution and
settlement of injunctive actions;
institution and settlement of
administrative proceedings;
adjudicatory matters; amicus
consideration; and other matters relating
to enforcement proceedings.
At times, changes in Commission
priorities require alterations in the
scheduling of meeting items.
For further information and to
ascertain what, if any, matters have been
added, deleted or postponed, please
contact the Office of the Secretary at
(202) 551–5400.
Dated: October 17, 2013.
Elizabeth M. Murphy,
Secretary.
[FR Doc. 2013–24776 Filed 10–18–13; 11:15 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–70596; File No. SR–OCC–
2013–806]
Self-Regulatory Organizations; The
Options Clearing Corporation; Notice
of Filing of Advance Notice of and No
Objection to The Options Clearing
Corporation’s Proposal To Enter a New
Credit Facility Agreement
[FR Doc. 2013–24604 Filed 10–21–13; 8:45 am]
October 2, 2013.
BILLING CODE 8011–01–P
Notice is hereby given that, on
September 12, 2013, The Options
Clearing Corporation (‘‘OCC’’) filed an
advance notice with the Securities and
Exchange Commission (‘‘Commission’’)
pursuant to Section 806(e) of Title VIII
of the Dodd-Frank Wall Street Reform
and Consumer Protection Act,1 entitled
the Payment, Clearing, and Settlement
Supervision Act of 2010 (‘‘Clearing
Supervision Act’’), and Rule 19b–
4(n)(1)(i) of the Securities Exchange Act
of 1934 (‘‘Exchange Act’’).2 The advance
notice is described in Items I, II, and III
below, which Items have been prepared
by OCC. The Commission is publishing
this notice to solicit comments from
SECURITIES AND EXCHANGE
COMMISSION
sroberts on DSK5SPTVN1PROD with FRONT MATTER
Sunshine Act Meeting
Notice is hereby given, pursuant to
the provisions of the Government in the
Sunshine Act, Public Law 94–409, that
the Securities and Exchange
Commission will hold a Closed Meeting
on Thursday, October 24, 2013 at 11:00
a.m.
Commissioners, Counsel to the
Commissioners, the Secretary to the
Commission, and recording secretaries
will attend the Closed Meeting. Certain
staff members who have an interest in
the matters also may be present.
The General Counsel of the
Commission, or her designee, has
certified that, in her opinion, one or
more of the exemptions set forth in 5
U.S.C. 552b(c)(3), (5), (7), 9(B) and (10)
and 17 CFR 200.402(a)(3), (5), (7), 9(ii)
and (10), permit consideration of the
scheduled matter at the Closed Meeting.
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21:08 Oct 21, 2013
Jkt 232001
1 Dodd-Frank Wall Street Reform and Consumer
Protection Act, Public Law 111–203, 124 Stat. 1376
(2010). OCC was designated as a systemically
important financial market utility by the Financial
Stability Oversight Council on July 18, 2012. See
Financial Stability Oversight Council 2012 Annual
Report, Appendix A, https://www.treasury.gov/
initiatives/fsoc/Documents/
2012%20Annual%20Report.pdf. Therefore, OCC is
required to comply with Title VIII of the DoddFrank Wall Street Reform and Consumer Protection
Act.
2 17 CFR 240.19b–4(n)(1)(i).
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62719
interested persons, and to provide
notice that the Commission has no
objection to the changes set forth in the
advance notice and authorizes OCC to
implement those changes earlier than 60
days after the filing of the advance
notice.
I. Clearing Agency’s Statement of the
Terms of Substance of the Advance
Notice
In connection with a change to its
operations (the ‘‘Change’’), OCC
proposes to replace its credit facility
with a new credit facility, which is
designed to be used to meet obligations
of OCC arising out of the default or
suspension of a clearing member of
OCC, in anticipation of a potential
default by a clearing member or as a
result of the insolvency of any bank or
clearing organization doing business
with OCC.
II. Clearing Agency’s Statement of the
Purpose of, and Statutory Basis for, the
Advance Notice
In its filing with the Commission,
OCC included statements concerning
the purpose of and basis for the
proposed change and discussed any
comments it received, if any, on the
advance notice. The text of these
statements may be examined at the
places specified in Item IV below. OCC
has prepared summaries, set forth in
sections A and B below, of the most
significant aspects of these statements.
A. Clearing Agency’s Statement of the
Purpose of, and Statutory Basis for, the
Advance Notice
(i) Description of Change
The Change involves the replacement
of a credit facility that OCC maintains
for the purposes of meeting obligations
arising out of the default or suspension
of a clearing member or the failure of a
bank or securities or commodities
clearing organization to perform its
obligations due to its bankruptcy,
insolvency, receivership or suspension
of operations. OCC’s existing credit
facility (the ‘‘Existing Facility’’) was
implemented on October 11, 2012
through the execution of a Credit
Agreement among OCC, JPMorgan
Chase Bank, N.A. (‘‘JPMorgan’’), as
administrative agent, and the lenders
that are parties to the agreement from
time to time, which provides short-term
secured borrowings in an aggregate
principal amount of $2 billion and may
be increased to $3 billion.
The Existing Facility is set to expire
on October 10, 2013 and OCC is
therefore currently negotiating the terms
of a new credit facility (the ‘‘New
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]]>Agencies
[Federal Register Volume 78, Number 204 (Tuesday, October 22, 2013)]
[Notices]
[Pages 62716-62719]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-24604]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. IC-30744; File No. 812-14141]
Pacific Life Insurance Company, et al; Notice of Application
October 17, 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'').
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Applicants: Pacific Life Insurance Company (``Pacific Life''), Pacific
Life's Separate Account A (``Separate Account A''), Pacific Life's
Pacific Select Variable Annuity Separate Account (``Select VA Account''
and, together with Separate Account A, the ``Pacific Life Separate
Accounts''), Pacific Life & Annuity Company (``PL&A''), and PL&A's
Separate Account A (``PL&A Separate Account A''). Pacific Life, PL&A,
and the Separate Accounts are referred to collectively as the
``Applicants.'' The Pacific Life Separate Accounts and PL&A Separate
Account A are referred to individually as a ``Separate Account'' and
collectively as the ``Separate Accounts.'' Pacific Life and PL&A are
referred to herein individually as an ``Insurer'' and collectively as
the ``Insurers.''
Summary of Application: Each Insurer, on behalf of itself and its
Separate Account(s), seeks an order pursuant to Section 26(c) of the
1940 Act, approving the substitution of Service Shares of the Janus
Aspen Balanced Portfolio, a series of Janus Aspen Series (the
``Replacement Portfolio''), for Class B shares of the AllianceBernstein
VPS Balanced Wealth Strategy Portfolio, a series of the
AllianceBernstein Variable Product Series Fund, Inc. (the ``Replaced
Portfolio'') (hereinafter, the ``Proposed Substitution''), under
certain variable annuity contracts issued by the Insurers
(collectively, the ``Contracts'').
DATES: Filing Date: The application was filed on March 29, 2013, and an
amended and restated application was filed on September 25, 2013 and
October 2, 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 November 7, 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: Pacific Life Insurance Company, Separate Account A of
Pacific Life Insurance Company, Pacific Select Variable Annuity
Separate Account of Pacific Life Insurance Company, Pacific Life &
Annuity Company, and Pacific Life & Annuity Company Separate Account A,
all located at 700 Newport Center Drive, Newport Beach, CA 92660.
FOR FURTHER INFORMATION CONTACT: Deborah D. Skeens, Senior Counsel, or
Michael L. Kosoff, 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 Company name box, at https://www.sec.gov/search/search.htm, or by calling (202) 551-8090.
Applicants' Representations
1. The Insurers, on their own behalf and on behalf of their
respective Separate Accounts, propose to substitute Service Shares of
the Replacement Portfolio for Class B shares of the Replaced Portfolio
held by the Separate Account to fund the Contracts. Each Separate
Account is divided into subaccounts (each a ``Subaccount,''
collectively, the ``Subaccounts''). Each Subaccount invests in the
securities of a single portfolio of an underlying mutual fund
(``Portfolio''). Contract owners (each a ``Contract Owner'' and
collectively, the ``Contract Owners'') may allocate some or all of
their Contract value to one or more Subaccounts that are available as
investment options under the Contracts.
2. Pacific Life is the depositor and sponsor of the Pacific Life
Separate Accounts. PL&A is the depositor and sponsor of PL&A Company
Separate Account A.
3. Each of the Separate Accounts is a ``separate account'' as
defined by Section 2(a)(37) of the 1940 Act and each is registered
under the 1940 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. The application sets forth
the registration statement file numbers for the Contracts and the
Separate Accounts.
4. Each Insurer, on behalf of itself and its Separate Account(s),
proposes to replace the Class B shares of the Replaced Portfolio that
are held in Subaccounts of its Separate Account(s) with Service Shares
of the Replacement Portfolio.
5. The Applicants state that the Proposed Substitution involves
moving assets attributable to the Contracts from the Replaced Portfolio
managed by AllianceBernstein L.P. (``AllianceBernstein'') to a
Replacement Portfolio managed by Janus Capital Management LLC (``Janus
Capital'') (each of Janus Capital and AllianceBernstein, an
``Investment Adviser'' and collectively, the ``Investment Advisers'').
Each Investment Adviser is responsible for the day-to-day management of
the assets of the Replaced or Replacement Portfolio, as the case may
be. Neither the Replaced nor Replacement Portfolio employs a sub-
adviser and neither Portfolio operates under a manager-of-managers
arrangement that, among other things, would permit the Investment
Adviser to engage a new or additional sub-adviser without the approval
of the Portfolio's shareholders. The Applicants state that the
Investment Advisers are not affiliates of the Insurers.
6. Applicants state that under the Contracts, the Insurers reserve
the right to substitute, for the shares of a Portfolio held in any
Subaccount, the shares of another Portfolio, shares of another
investment company or series of another investment company, or another
investment vehicle. The prospectuses for the Contracts include
appropriate disclosure of this reservation of right.
[[Page 62717]]
7. The Applicants represent that the investment objectives of the
Replaced and Replacement Portfolio are similar. The investment
objective of the Replaced Portfolio is to maximize total return
consistent with its Investment Adviser's determination of reasonable
risk, whereas that of the Replacement Portfolio is long-term capital
growth, consistent with preservation of capital and balanced by current
income. The investment objectives of both Portfolios include a growth
component as well as an income component. Additionally, the Applicants
state that the principal investment strategies of the Replaced and
Replacement Portfolios are similar. The principal investment strategies
of both Portfolios include investment in a combination of equity and
debt securities. The Replaced Portfolio targets a weighting of 60%
equity securities and 40% debt securities, whereas the Replacement
Portfolio normally invests 35-65% of its assets in equity securities
and the remaining assets in debt securities and cash equivalents, with
normally 25% of its assets invested in fixed-income senior securities.
In addition, both Portfolios may invest in securities of non-U.S.
issuers. The principal investment strategies of the Replaced Portfolio
also include investment in fixed-income securities with below
investment grade ratings (also called ``junk'' bonds), which is not a
principal investment strategy of the Replacement Portfolio though it
may invest in such bonds. The principal investment strategies of the
Replaced Portfolio include investments in real estate investment trusts
or REITS, whereas the same is not true for the Replacement Portfolio
though it may invest in REITs. The principal investment strategies of
the Replaced Portfolio include entering into forward commitments, the
making of short sales of securities or maintaining a short position,
and investments in rights or warrants, none of which is a principal
investment strategy of the Replacement Portfolio, though it may engage
in short sales and invest in securities on a forward commitment basis,
and invest in warrants. The principal investment strategies of the
Replacement Portfolio include investments in mortgage-backed and
mortgage-related securities, which are not a principal investment
strategy of the Replaced Portfolio, though it may investment in
mortgage-backed securities. A comparison of the investing strategies,
risks, and performance of the Replaced and Replacement Portfolios is
included in the application.
8. The following table compares the fees and expenses of the
Replaced Portfolio (Class B shares) and the Replacement Portfolio
(Service Shares) as of the year ended December 31, 2012. As described
below, the management fees of the Replaced Portfolio are subject to
breakpoints whereas the management fees of the Replacement Portfolio
are not.\1\ In addition, as shown in the table below, the 12b-1 fee of
the Service Class of the Replacement Portfolio is the same as the 12b-1
fee of the Class B shares of the Replaced Portfolio. In both cases, the
12b-1 fee is the current maximum permitted under the relevant plan.
Furthermore, as shown in the table below, the annual operating expenses
of the Replacement Portfolio are lower than those of the Replaced
Portfolio.
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\1\ The Applicants submit that the likelihood of the Replaced
Portfolio achieving a breakpoint reduction in its management fee in
the near future appears to be remote given the asset levels of the
Replaced Portfolio at year end 2012.
Proposed Substitution
----------------------------------------------------------------------------------------------------------------
Replaced portfolio Replacement portfolio
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AllianceBernstein VPS
wealth strategies Janus Aspen balanced portfolio
portfolio
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Class B/Service Class:
Management Fee............ .55 of 1% of the first 0.55%
$2.5 billion, .45 of
1% of the excess over
$2.5 billion up to $5
billion, and .40 of
1% of the excess over
$5 billion.
12b-1 Fee................. 0.25%................. 0.25%
Other Expenses............ 0.10%................. 0.05%
Total Gross Expenses...... 0.90%................. 0.85%
Expense Waiver/ 0.00.................. 0.00
Reimbursement.
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Total Net Expenses.... 0.90%................. 0.85%
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9. The Applicants state that the performance for the Replacement
Portfolio is generally better than that of the Replaced Portfolio for
all periods shown.
10. The Applicants state that the Proposed Substitution is part of
an ongoing effort by the Insurers to make their Contracts more
attractive to existing and prospective Contract Owners. The Applicants
believe the Proposed Substitution will help to accomplish these goals
for the following reasons: (1) The total annual operating expenses (no
expense waivers or reimbursements) for the Replacement Portfolio are
lower than those of the Replaced Portfolio; (2) the historical
performance of the Replacement Portfolio is generally better than that
of the Replaced Portfolio; and (3) the Proposed Substitution will
facilitate the ability of Contract Owners to elect certain optional
living benefit riders; and (4) the Proposed Substitution will simplify
the Subaccount offerings under the Contracts by eliminating an
overlapping Investment Option that largely duplicates another
Investment Option with similar investment objectives, principal
investment strategies, and principal risks.
11. The Applicants represent that the Proposed Substitution will be
described in supplements to the applicable prospectuses for the
Contracts filed with the Commission or in other supplemental disclosure
documents, (collectively, ``Supplements'') and delivered to all
affected Contract Owners at least 30 days before the date the Proposed
Substitution is effected (the ``Substitution Date''). Each Supplement
will give the relevant Contract Owners notice of the
[[Page 62718]]
applicable Insurer's intent to take the necessary actions, including
seeking the order requested by the application, to substitute shares of
the Replaced Portfolio as described in the application on the
Substitution Date. Each Supplement also will advise Contract Owners
that from the date of the Supplement until the Substitution Date,
Contract Owners are permitted to transfer all of or a portion of their
Contract value out of any Subaccount investing in the Replaced
Portfolio (``Replaced Portfolio Subaccount'') to any other available
Subaccounts offered under their Contracts without the transfer being
counted as a transfer for purposes of transfer limitations and fees
that would otherwise be applicable under the terms of the Contracts. In
addition, each Supplement will (a) instruct Contract Owners how to
submit transfer requests in light of the Proposed Substitution; (b)
advise Contract Owners that any Contract value remaining in the
Replaced Portfolio Subaccount on the Substitution Date will be
transferred to a Subaccount investing in the Replacement Portfolio
(``Replacement Portfolio Subaccount''), and that the Substitution will
take place at relative net asset value; (c) inform Contract Owners that
for at least thirty (30) days following the Substitution Date, the
applicable Insurer will permit Contract Owners to make transfers of
Contract value out of the Replacement Portfolio Subaccount to any other
available Subaccounts offered under their Contracts without the
transfer being counted as a transfer for purposes of transfer
limitations that would otherwise be applicable under the terms of the
Contracts; and (d) inform Contract Owners that, except as described in
the market timing limitations section of the relevant prospectus, the
applicable Insurer will not exercise any rights reserved by it under
the Contracts to impose additional restrictions on transfers out of the
Replacement Portfolio Subaccount for at least thirty (30) days after
the Substitution Date.
12. The Proposed Substitution will take place at the applicable
Replaced and Replacement Portfolios' relative per share net asset
values determined on the Substitution Date in accordance with Section
22 of the 1940 Act and Rule 22c-1 thereunder. Accordingly, the
Applicants submit that the Proposed Substitution will have no negative
financial impact on any Contract Owner.
13. The Proposed Substitution will be effected by having the
Replaced Portfolio Subaccount redeem its Replaced Portfolio shares in
cash and/or in-kind (as determined by the Investment Adviser to the
Replaced Portfolio) on the Substitution Date at net asset value per
share and purchase shares of the Replacement Portfolio at net asset
value per share calculated on the same date. In the event that the
Investment Adviser of the Replacement Portfolio declines to accept, on
behalf of the Replacement Portfolio, any securities redeemed in-kind by
the Replaced Portfolio, the Replaced Portfolio shall instead provide
cash equal to the value of the declined securities so that Contract
Owners' Contract values will not be adversely impacted or diluted.
14. The Insurers or an affiliate thereof will pay all expenses and
transaction costs reasonably related to the Proposed Substitution,
including all legal, accounting, and brokerage expenses relating to the
Proposed Substitution, the above described disclosure documents, and
this application. No costs of the Proposed Substitution will be borne
directly or indirectly by Contract Owners. Affected Contract Owners
will not incur any fees or charges as a result of the Proposed
Substitution, nor will their rights or the obligations of the Insurers
under the Contracts be altered in any way. The Proposed Substitution
will not cause the fees and charges under the Contracts currently being
paid by Contract Owners to be greater after the Proposed Substitution
than before the Proposed Substitution. In addition, no transfer charges
will apply in connection with the Proposed Substitution.
15. The Applicants represent that will not receive, for three years
from the date of the Proposed Substitution, any direct or indirect
benefits from the Replacement Portfolio, its adviser or underwriter (or
their affiliates), in connection with assets attributable to contracts
affected by the Proposed Substitution, at a higher rate than it had
received from the Replaced Portfolio, its adviser or underwriter (or
their affiliates), including without limitation 12b-1 fees, revenue
sharing, or other arrangements; and the Proposed Substitution and the
selection of the Replacement Portfolio were not motivated by any
financial consideration paid or to be paid to the Company or its
affiliates by the Replacement Portfolio, its adviser or underwriter, or
their affiliates.
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 1940 Act approving the Proposed
Substitution. Section 26(c) of the 1940 Act makes it unlawful for any
depositor or trustee of a registered unit investment trust holding the
security of a single issuer to substitute another security for such
security unless the Commission approves the substitution. Section 26(c)
requires the Commission to issue an order approving a substitution if
the evidence establishes that it is consistent with the protection of
investors and the purposes fairly intended by the policy and provisions
of the 1940 Act.
2. Applicants assert that the terms and conditions of the Proposed
Substitution are consistent with the principles and purposes of Section
26(c) and do not entail any of the abuses that Section 26(c) is
designed to prevent. Applicants further submit that the Proposed
Substitution will not result in the type of costly forced redemption
that Section 26(c) was intended to guard against and, for the following
reasons, are consistent with the protection of investors and the
purposes fairly intended by the 1940 Act:
(1) The costs reasonably related to the Proposed Substitution will
be borne by the applicable Insurer or an affiliate and will not be
borne by Contract Owners. No charges will be assessed to the Contract
Owners to effect the Proposed Substitution.
(2) The Proposed Substitution will be effected, in all cases, at
the relative net asset values of the shares of the Replaced and
Replacement Portfolios, without the imposition of any transfer or
similar charge and with no change in the amount of any Contract Owner's
Contract value.
(3) The Proposed Substitution will not cause the fees and charges
under the Contracts currently being paid by Contract Owners to be
greater after the Proposed Substitution than before the Proposed
Substitution, and will result in Contract Owners' Contract values being
allocated to Subaccounts that invest in the Replacement Portfolio,
which has lower total expenses than the Replaced Portfolio. Any changes
in the charges for optional living benefit riders would be independent
of the Proposed Substitution.
(4) All affected Contract Owners will be given notice of the
Proposed Substitution prior to the Substitution Date and will have an
opportunity to reallocate their Contract value among other available
Subaccounts, including Subaccounts investing in the Replacement
Portfolio, without the imposition of any charge or limitation (unless
such transfers are made in connection with market timing or other
disruptive trading activity), thereby minimizing the likelihood of
being
[[Page 62719]]
invested through a Subaccount in an undesired Portfolio.
(5) The Proposed Substitution will in no way alter the insurance
benefits to Contract Owners or the contractual obligations of the
Insurers.
(6) The Proposed Substitution will in no way alter the tax
treatment of Contract Owners in connection with their Contracts, and no
tax liability will arise for Contract Owners as a result of the
Proposed Substitution.
(7) The Proposed Substitution will not adversely affect existing
Contract Owners who elected optional living benefit riders and
allocated Contract value to Subaccounts investing in the Replaced
Portfolio since the Replacement Portfolio is an allowable Investment
Option for use with such riders.
Conclusion
For the reasons and upon the facts set forth above and in the
application, the Applicants submit that the Proposed Substitution meets
the standards of Section 26(c) of the 1940 Act and respectfully request
that the Commission issue an order of approval pursuant to Section
26(c) of the 1940 Act and that such order be made effective as soon as
possible.
For the Commission, by the Division of Investment Management,
under delegated authority.
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-24604 Filed 10-21-13; 8:45 am]
BILLING CODE 8011-01-P
