Principal Life Insurance Company, et al., Notice of Application, 15360-15363 [2016-06411]
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Federal Register / Vol. 81, No. 55 / Tuesday, March 22, 2016 / Notices
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
No written comments were either
solicited or received.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
The foregoing rule change has become
effective pursuant to section
19(b)(3)(A)(ii) of the Act.7
At any time within 60 days of the
filing of the proposed rule change, the
Commission summarily may
temporarily suspend such rule change if
it appears to the Commission that such
action is: (i) Necessary or appropriate in
the public interest; (ii) for the protection
of investors; or (iii) otherwise in
furtherance of the purposes of the Act.
If the Commission takes such action, the
Commission shall institute proceedings
to determine whether the proposed rule
should be approved or disapproved.
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
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Electronic Comments
• Use the Commission’s Internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rulecomments@sec.gov. Please include File
Number SR–NASDAQ–2016–037 on the
subject line.
Paper Comments
• Send paper comments in triplicate
to Secretary, Securities and Exchange
Commission, 100 F Street NE.,
Washington, DC 20549–1090.
All submissions should refer to File
Number SR–NASDAQ–2016–037. This
file number should be included on the
subject line if email is used. To help the
Commission process and review your
comments more efficiently, please use
only one method. The Commission will
post all comments on the Commission’s
Internet Web site (https://www.sec.gov/
rules/sro.shtml). Copies of the
submission, all subsequent
amendments, all written statements
with respect to the proposed rule
change that are filed with the
Commission, and all written
communications relating to the
proposed rule change between the
7 15
U.S.C. 78s(b)(3)(A)(ii).
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17:34 Mar 21, 2016
Commission and any person, other than
those that may be withheld from the
public in accordance with the
provisions of 5 U.S.C. 552, will be
available for Web site viewing and
printing in the Commission’s Public
Reference Room, 100 F Street NE.,
Washington, DC 20549 on official
business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of such
filing also will be available for
inspection and copying at the principal
offices of the Exchange. All comments
received will be posted without change;
the Commission does not edit personal
identifying information from
submissions. You should submit only
information that you wish to make
available publicly. All submissions
should refer to File Number SR–
NASDAQ–2016–037, and should be
submitted on or before April 12, 2016.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.8
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016–06338 Filed 3–21–16; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
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, March 24, 2016 at 2:00
p.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.
Chair White, as duty officer, voted to
consider the items listed for the Closed
Meeting in closed session.
The subject matter of the Closed
Meeting will be:
Institution and settlement of injunctive
actions;
Institution and settlement of
administrative proceedings;
Post Argument Discussion;
8 17
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Opinion; 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: March 17, 2016.
Brent J. Fields,
Secretary.
[FR Doc. 2016–06516 Filed 3–18–16; 11:15 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. IC–32030; File No. 812–14586]
Principal Life Insurance Company, et
al., Notice of Application
March 17, 2016.
Securities and Exchange
Commission (‘‘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 (the ‘‘Act’’).
AGENCY:
Applicants: Principal Life Insurance
Company (‘‘PLIC’’), Principal National
Life Insurance Company (‘‘PNL’’) (PLIC
and PNL are each an ‘‘Insurance
Company’’ and together, the ‘‘Insurance
Companies’’), Principal Life Insurance
Company Variable Life Separate
Account (‘‘PLIC Variable Life Separate
Account’’), and Principal National Life
Insurance Company Variable Life
Separate Account (‘‘PNL Variable Life
Separate Account’’) (PLIC Variable Life
Separate Account and PNL Variable Life
Separate Account are each a ‘‘Separate
Account’’ and together, the ‘‘Separate
Accounts’’).
Summary of Application: Applicants
seek an order pursuant to Section 26(c)
of the Act approving the substitution of
shares of Fidelity Variable Insurance
Products Fund V Government Money
Market Portfolio (the ‘‘Replacement
Fund’’) for shares of Principal Variable
Contracts Funds, Inc. Money Market
Account (the ‘‘Existing Fund’’) held by
the Separate Accounts to support
variable life insurance contracts (each, a
‘‘Contract’’ and collectively, the
‘‘Contracts’’) issued by the Insurance
Companies.
Filing Dates: The application was
filed on December 9, 2015, and
amended on February 29, 2016, March
8, 2016, and March 14, 2016.
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Federal Register / Vol. 81, No. 55 / Tuesday, March 22, 2016 / Notices
Hearing or Notification of Hearing: An
order granting the requested relief will
be issued unless the Commission orders
a hearing. Interested persons may
request a hearing by writing to the
Commission’s Secretary and serving
applicants with a copy of the request,
personally or by mail. Hearing requests
should be received by the Commission
by 5:30 p.m. on April 7, 2016, and
should be accompanied by proof of
service on applicants, in the form of an
affidavit or, for lawyers, a certificate of
service. Pursuant to Rule 0–5 under the
Act, hearing requests should state the
nature of the writer’s interest, any facts
bearing upon the desirability of a
hearing on the matter, 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 Commission’s Secretary.
ADDRESSES: Brent J. Fields, Secretary,
U.S. Securities and Exchange
Commission, 100 F Street NE.,
Washington, DC 20549–1090;
Applicants: Britney Schnathorst,
Principal Life Insurance Company, The
Principal Financial Group, Des Moines,
Iowa 50392–0300.
FOR FURTHER INFORMATION CONTACT:
Laura J. Riegel, Senior Counsel, at (202)
551–6873, or Mary Kay Frech, Branch
Chief at (202) 551–6821 (Division of
Investment Management, Chief
Counsel’s Office).
SUPPLEMENTARY INFORMATION: The
following is a summary of the
application. The complete application
may be obtained via the Commission’s
Web site by searching for the file
number, or an applicant using the
Company name box, at https://
www.sec.gov/search/search.htm or by
calling (202) 551–8090.
Applicants’ Representations:
1. PLIC is a stock life insurance
company incorporated under the laws of
the state of Iowa. PLIC is authorized to
transact life insurance business in all
states of the United States and the
District of Columbia. PLIC is a whollyowned indirect subsidiary of Principal
Financial Group, Inc. (‘‘PFGI’’). PLIC is
the depositor and sponsor, as those
terms have been interpreted by the
Commission with respect to variable life
insurance separate accounts, of PLIC
Variable Life Separate Account. PLIC
established PLIC Variable Life Separate
Account as a separate account under
Iowa law on November 2, 1987.
2. PNL is a stock life insurance
company organized under the laws of
the state of Ohio. PNL is authorized to
transact life insurance business in the
District of Columbia and in all states in
the United States except New York. PNL
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is a wholly-owned indirect subsidiary of
PFGI. PNL is the depositor and sponsor
of PNL Variable Life Separate Account.
PNL established PNL Variable Life
Separate Account as a separate account
under Iowa law on November 28, 2007.
3. Each Separate Account is a
‘‘separate account’’ as defined in Rule
0–1(e) under the Act and is registered as
a unit investment trust under the Act.
Under Iowa law, the applicable
Insurance Company owns the assets of
the Separate Account attributable to the
Contracts through which interests in the
Separate Account are issued, but those
assets are held separately from all other
assets of the applicable Insurance
Company for the benefit of the owners
of the Contracts (each, a ‘‘Contract
Owner’’) and the persons entitled to
payment under the Contracts.
Consequently, the assets in each
Separate Account are not chargeable
with liabilities arising out of any other
business that the applicable Insurance
Company may conduct.
4. Each Separate Account is divided
into subaccounts. Each subaccount
invests exclusively in shares of a
corresponding underlying registered
open-end management investment
company. The applicable Separate
Account supports the respective
Contracts, and interests in the Separate
Account offered through such Contracts
have been registered under the
Securities Act of 1933 on Form N–6.
The application sets forth the
registration file numbers for the
respective Contracts under the
applicable Separate Account.
5. The Contracts are individual
flexible premium variable insurance
policies. Applicants state that, as
disclosed in the prospectuses for the
Contracts, the Insurance Companies
reserve the right, subject to Commission
approval and compliance with
applicable law, to substitute shares of
one registered open-end management
investment company for shares of
another registered open-end
management investment company held
by a subaccount of a Separate Account.
6. Principal Variable Contracts Funds,
Inc. (‘‘PVC’’) is organized as a Maryland
corporation and is registered as an openend management investment company
under the Act. PVC currently offers 37
series, including the Existing Fund.
Principal Management Corporation
(‘‘PMC’’), an investment adviser
registered under the Investment
Advisers Act of 1940 (the ‘‘Advisers
Act’’), provides investment advisory
services and certain corporate
administrative services to PVC and the
Existing Fund. Principal Global
Investors, an affiliate of PMC, is the sub-
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adviser for the Existing Fund and has
day-to-day responsibility for selecting
investments for the Existing Fund. The
Existing Fund served as the only
underlying money market investment
option for all of the Contracts until the
addition of the Replacement Fund
effective on February 6, 2016.
7. Fidelity Variable Insurance
Products Fund V (‘‘Fidelity VIP Fund
V’’) was created under a declaration of
trust under Massachusetts law and is
registered as an open-end management
investment company under the Act.
Fidelity VIP Fund V currently offers 32
series, including the Replacement Fund.
Fidelity Management & Research
Company (‘‘FMR’’), an investment
adviser registered under the Advisers
Act, serves as the investment adviser of
the Replacement Fund, with overall
responsibility for directing portfolio
investments and handling Fidelity VIP
Fund V’s business affairs. Fidelity
Investments Money Management, Inc.
(‘‘FIMM’’) and other affiliates of FMR
serve as sub-advisers to the
Replacement Fund, with FIMM having
day-to-day responsibility of choosing
investments for the Replacement Fund.
Effective December 1, 2015, the
fundamental concentration policy of the
Replacement Fund was modified in
such a manner as to enable it to operate
as a government money market fund.
None of Fidelity VIP Fund V, FMR,
FIMM, and other affiliates of FMR are
affiliated persons (or affiliated persons
of affiliated persons) of applicants or
PVC.
8. Applicants propose to substitute
Service Class Shares of the Replacement
Fund for Class 1 Shares of the Existing
Fund (the ‘‘Substitution’’) to support the
Contracts. Applicants represent that the
Replacement Fund is an appropriate
alternative for Contract Owners.
Applicants state that the Replacement
Fund and the Existing Fund each has an
investment objective to seek current
income as is consistent with
preservation of capital and liquidity. In
addition, while the principal investment
strategies of the Replacement Fund may
differ from those of the Existing Fund,
the goal of each fund is to maintain a
net asset value of $1.00 per share.
Applicants note that although the risk
profiles of the Replacement Fund and
the Existing Fund differ, applicants
believe that the Replacement Fund
entails less investment risk than the
Existing Fund. Additional information
about the Existing Fund and the
Replacement Fund, including
investment objectives, principal
investment strategies, principal risks
and performance history can be found
in the application.
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9. Applicants represent that the
proposed Substitution will result in a
decrease in overall expenses, which
benefits the Contract Owners. The
application sets forth the fees and
expenses of the appropriate class of the
Existing Fund with the corresponding
class of the Replacement Fund in greater
detail.
10. Applicants state the board of
directors of PVC voted to terminate the
Existing Fund and liquidate its assets
effective April 8, 2016. In light of the
impending liquidation and the
importance of offering a money market
fund investment option for the
Contracts, the applicants determined
that the Substitution is necessary and in
the best interest of Contract Owners.
11. Applicants represent that the
Substitution and the selection of the
Replacement Fund were not motivated
by any financial consideration paid or to
be paid to the Insurance Companies or
their affiliates by the Replacement
Fund, its adviser or underwriter, or their
affiliates.
12. Applicants state that as of the
effective date of the Substitution, April
8, 2016 (‘‘Substitution Date’’), shares of
the Existing Fund will be redeemed for
cash. The Insurance Companies, on
behalf of the Existing Fund subaccount
of the 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.
13. The Substitution will take place at
relative net asset value (in accordance
with Rule 22c–1 under the Act) with no
change in the amount of the Contract
value, cash value, accumulation value,
account value or death benefit or in
dollar value of the investment in the
applicable Separate Account. The
Insurance 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.
14. The rights or obligations of the
Insurance Companies under the
Contracts of those Contract Owners with
interests in the subaccount of the
Existing Fund (‘‘Affected Contract
Owners’’) will not be altered in any
way. The Substitution will in no way
alter the tax treatment of Affected
Contract Owners in connection with
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their Contracts, and no tax liability will
arise for Affected Contract Owners as a
result of the Substitution. The
Substitution also will not adversely
affect any riders under the Contracts. To
the extent a Contract offers living
benefits, death benefits, or other
guarantees, the value of any such
guarantee will not materially decrease
directly or indirectly as a result of the
Substitution.
15. Affected Contract Owners will be
permitted to make at least one transfer
of Contract value from the subaccount
investing in the Existing Fund (before
the Substitution Date) or the
Replacement Fund (after the
Substitution Date) to any other available
investment option under the Contract
without charge for a period beginning at
least 30 days before the Substitution
Date through at least 30 days following
the Substitution Date. Except as
described in any market timing/shortterm trading provisions of the relevant
prospectus, the Insurance Companies
will not exercise any right they may
have under the Contracts to impose
restrictions on transfers between the
subaccounts under the Contracts,
including limitations on the future
number of transfers, for a period
beginning at least 30 days before the
Substitution Date through at least 30
days following the Substitution Date.
16. All Contract Owners were notified
of this application by means of a
supplement to the Contract
prospectuses dated December 9, 2015.
Among other information regarding the
Substitution, the supplement informed
Affected Contract Owners of the right to
transfer Contract value from the
subaccount investing in the Existing
Fund (before the Substitution Date) or
the Replacement Fund (after the
Substitution Date) to any other available
investment option under the Contract
without charge. Additionally, a
prospectus for the Replacement Fund
was included with the supplement.
17. On March 9, 2016 (30 days before
the Substitution Date), Affected Contract
Owners were provided a ‘‘PreSubstitution Notice,’’ setting forth: (a)
the intended substitution of the Existing
Fund with the Replacement Fund; (b)
the intended Substitution Date (subject
to approval and order by the
Commission); and (c) information with
respect to transfers. In addition, the
Insurance Companies delivered a
prospectus for the Replacement Fund
with the Pre-Substitution Notice.
18. The Insurance Companies will
deliver to each Affected Contract Owner
within five (5) business days of the
Substitution Date, a written
confirmation, which will include
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confirmation that the Substitution was
carried out as previously notified, a
restatement of the information set forth
in the Pre-Substitution Notice, and
before and after account values.
19. Applicants will not receive, for
three years from the Substitution Date,
any direct or indirect benefits from the
Replacement Fund, its adviser or
underwriter (or their affiliates), in
connection with assets attributable to
Contracts affected by the Substitution, at
a higher rate than they had received
from the Existing Fund, its adviser or
underwriter (or their affiliates),
including, without limitation, 12b–1
fees, shareholder service, administrative
or other service fees, revenue sharing, or
other arrangements.
Legal Analysis
1. 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
securities of a single issuer to receive
Commission approval before
substituting the securities held by the
trust. Section 26(c) provides that such
approval shall be granted by order of the
Commission if the evidence establishes
that the substitution is consistent with
the protection of investors and the
purposes of the Act.
2. Applicants submit that the
proposed Substitution meets the
standards set forth in Section 26(c) and
that, if implemented, the Substitution
would not raise any of the concerns
underlying that provision. Applicants
represent that the Substitution will
provide Contract Owners with a
comparable investment vehicle which
will not circumvent Contract Ownerinitiated decisions and the Insurance
Companies’ obligations under the
Contracts, and will enable Contract
Owners to continue to use the full range
of applicable Contract features as they
use today. Applicants further state that
the Replacement Fund and the Existing
Fund have essentially the same
investment objectives, the Replacement
Fund entails less investment risk than
the Existing Fund, and the proposed
Substitution will result in a decrease in
overall expenses, thereby benefiting
Contract Owners.
3. Applicants state that, as disclosed
in the prospectuses for the Contracts,
the Insurance Companies reserve the
right, subject to Commission approval,
to substitute shares of a registered openend management investment company
for shares of another registered openend held by a subaccount of a Separate
Account. Applicants determined that
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the Substitution is necessary and in the
best interests of Contract Owners in
light of the impending liquidation of the
Existing Fund and the importance of
offering a money market fund
investment option for the Contracts.
Applicants state that the board of
directors of PVC concluded that
converting the Existing Fund to a
government money market fund would
not be a feasible option and voted to
terminate the Existing Fund and
liquidate its assets effective April 8,
2016. The Insurance Companies submit
that the Replacement Fund should
substituted for the Existing Fund to
serve as the money market investment
option for all of the Contracts, as well
as for the Contract-related purposes for
which the Existing Fund is currently
used, so that Contract Owner-initiated
decisions and the Insurance Companies’
obligations under the Contracts are less
likely to be prevented.
4. Applicants also assert that the
Substitution does not entail any of the
abuses that Section 26(c) was designed
to prevent. Each Affected Contract
Owner has been advised of his right,
any time prior to the Substitution Date,
and for at least 30 days after the
Substitution Date, to reallocate account
value under the affected Contract
without any cost or limitation, or
otherwise withdraw or terminate his
interest in accordance with the terms
and conditions of his Contract.
Furthermore, Contract Owners will not
incur any additional tax liability or any
additional fees or expenses as a result of
the Substitution.
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Applicants’ Conditions:
Applicants agree that any order
granting the requested relief will be
subject to the following conditions:
1. The Substitution will not be
effected unless the Insurance
Companies determine that: (a) The
Contracts allow the substitution of
shares of registered open-end
investment companies in the manner
contemplated by the application; (b) the
Substitution can be consummated as
described in the application under
applicable insurance laws; and (c) any
regulatory requirements in each
jurisdiction where the Contracts are
qualified for sale have been complied
with to the extent necessary to complete
the Substitution.
2. The Insurance 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.
No fees or charges will be assessed to
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the Affected Contract Owners to effect
the Substitution.
3. The Substitution will be effected at
the relative net asset values of the
respective shares in conformity with
Section 22(c) of the Act and Rule 22c–
1 thereunder without the imposition of
any transfer or similar charges by
applicants. The Substitution will be
effected without change in the amount
or value of any Contracts held by
Affected Contract Owners.
4. The Substitution will in no way
alter the tax treatment of Affected
Contract Owners in connection with
their Contracts, and no tax liability will
arise for Affected Contract Owners as a
result of the Substitution.
5. The rights or obligations of the
Insurance Companies under the
Contracts of Affected Contract Owners
will not be altered in any way. The
Substitution will not adversely affect
any riders under the Contracts.
6. Affected Contract Owners will be
permitted to make at least one transfer
of Contract value from the subaccount
investing in the Existing Fund (before
the Substitution Date) or the
Replacement Fund (after the
Substitution Date) to any other available
investment option under the Contract
without charge for a period beginning at
least 30 days before the Substitution
Date through at least 30 days following
the Substitution Date. Except as
described in any market timing/shortterm trading provisions of the relevant
prospectus, the Insurance Companies
will not exercise any right they may
have under the Contracts to impose
restrictions on transfers between the
subaccounts under the Contracts,
including limitations on the future
number of transfers, for a period
beginning at least 30 days before the
Substitution Date through at least 30
days following the Substitution Date.
7. All Affected Contract Owners will
be notified, at least 30 days before the
Substitution Date about: (a) The
intended substitution of the Existing
Fund with the Replacement Fund; (b)
the intended Substitution Date; and (c)
information with respect to transfers as
set forth in Condition 6 above. In
addition, the Insurance Companies will
deliver to all Affected Contract Owners,
at least thirty (30) days before the
Substitution Date, a prospectus for the
Replacement Fund.
8. The Insurance Companies will
deliver to each Affected Contract Owner
within five (5) business days of the
Substitution Date a written confirmation
which will include: (a) A confirmation
that the Substitution was carried out as
previously notified; (b) a restatement of
the information set forth in the Pre-
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15363
Substitution Notice; and (c) before and
after account values.
9. Applicants will not receive, for
three years from the Substitution Date,
any direct or indirect benefits from the
Replacement Fund, its adviser or
underwriter (or their affiliates), in
connection with assets attributable to
Contracts affected by the Substitution, at
a higher rate than they had received
from the Existing Fund, its adviser or
underwriter (or their affiliates),
including without limitation 12b–1 fees,
shareholder service, administrative or
other service fees, revenue sharing, or
other arrangements.
For the Commission, by the Division of
Investment Management, under delegated
authority.
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016–06411 Filed 3–21–16; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–77388; File No. SR–NYSE–
2016–21]
Self-Regulatory Organizations; New
York Stock Exchange LLC; Notice of
Filing and Immediate Effectiveness of
Proposed Rule Change Adopting a
Decommission Extension Fee for
Receipt of the NYSE BBO and NYSE
Trades Market Data Products
March 17, 2016.
Pursuant to Section 19(b)(1) 1 of the
Securities Exchange Act of 1934 (the
‘‘Act’’) 2 and Rule 19b–4 thereunder,3
notice is hereby given that, on March 8,
2016, New York Stock Exchange LLC
(‘‘NYSE’’ or the ‘‘Exchange’’) filed with
the Securities and Exchange
Commission (the ‘‘Commission’’) the
proposed rule change as described in
Items I, II, and III below, which Items
have been prepared by the selfregulatory organization. The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to adopt a
Decommission Extension Fee for receipt
of the NYSE BBO and NYSE Trades
market data products. The proposed
rule change is available on the
Exchange’s Web site at www.nyse.com,
at the principal office of the Exchange,
1 15
U.S.C. 78s(b)(1).
U.S.C. 78a.
3 17 CFR 240.19b–4.
2 15
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]]>Agencies
[Federal Register Volume 81, Number 55 (Tuesday, March 22, 2016)]
[Notices]
[Pages 15360-15363]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-06411]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. IC-32030; File No. 812-14586]
Principal Life Insurance Company, et al., Notice of Application
March 17, 2016.
AGENCY: Securities and Exchange Commission (``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 (the ``Act'').
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Applicants: Principal Life Insurance Company (``PLIC''), Principal
National Life Insurance Company (``PNL'') (PLIC and PNL are each an
``Insurance Company'' and together, the ``Insurance Companies''),
Principal Life Insurance Company Variable Life Separate Account (``PLIC
Variable Life Separate Account''), and Principal National Life
Insurance Company Variable Life Separate Account (``PNL Variable Life
Separate Account'') (PLIC Variable Life Separate Account and PNL
Variable Life Separate Account are each a ``Separate Account'' and
together, the ``Separate Accounts'').
Summary of Application: Applicants seek an order pursuant to
Section 26(c) of the Act approving the substitution of shares of
Fidelity Variable Insurance Products Fund V Government Money Market
Portfolio (the ``Replacement Fund'') for shares of Principal Variable
Contracts Funds, Inc. Money Market Account (the ``Existing Fund'') held
by the Separate Accounts to support variable life insurance contracts
(each, a ``Contract'' and collectively, the ``Contracts'') issued by
the Insurance Companies.
Filing Dates: The application was filed on December 9, 2015, and
amended on February 29, 2016, March 8, 2016, and March 14, 2016.
[[Page 15361]]
Hearing or Notification of Hearing: An order granting the requested
relief will be issued unless the Commission orders a hearing.
Interested persons may request a hearing by writing to the Commission's
Secretary and serving applicants with a copy of the request, personally
or by mail. Hearing requests should be received by the Commission by
5:30 p.m. on April 7, 2016, and should be accompanied by proof of
service on applicants, in the form of an affidavit or, for lawyers, a
certificate of service. Pursuant to Rule 0-5 under the Act, hearing
requests should state the nature of the writer's interest, any facts
bearing upon the desirability of a hearing on the matter, 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
Commission's Secretary.
ADDRESSES: Brent J. Fields, Secretary, U.S. Securities and Exchange
Commission, 100 F Street NE., Washington, DC 20549-1090; Applicants:
Britney Schnathorst, Principal Life Insurance Company, The Principal
Financial Group, Des Moines, Iowa 50392-0300.
FOR FURTHER INFORMATION CONTACT: Laura J. Riegel, Senior Counsel, at
(202) 551-6873, or Mary Kay Frech, Branch Chief at (202) 551-6821
(Division of Investment Management, Chief Counsel's Office).
SUPPLEMENTARY INFORMATION: The following is a summary of the
application. The complete application may be obtained via the
Commission's Web site by searching for the file number, or an applicant
using the Company name box, at https://www.sec.gov/search/search.htm or
by calling (202) 551-8090.
Applicants' Representations:
1. PLIC is a stock life insurance company incorporated under the
laws of the state of Iowa. PLIC is authorized to transact life
insurance business in all states of the United States and the District
of Columbia. PLIC is a wholly-owned indirect subsidiary of Principal
Financial Group, Inc. (``PFGI''). PLIC is the depositor and sponsor, as
those terms have been interpreted by the Commission with respect to
variable life insurance separate accounts, of PLIC Variable Life
Separate Account. PLIC established PLIC Variable Life Separate Account
as a separate account under Iowa law on November 2, 1987.
2. PNL is a stock life insurance company organized under the laws
of the state of Ohio. PNL is authorized to transact life insurance
business in the District of Columbia and in all states in the United
States except New York. PNL is a wholly-owned indirect subsidiary of
PFGI. PNL is the depositor and sponsor of PNL Variable Life Separate
Account. PNL established PNL Variable Life Separate Account as a
separate account under Iowa law on November 28, 2007.
3. Each Separate Account is a ``separate account'' as defined in
Rule 0-1(e) under the Act and is registered as a unit investment trust
under the Act. Under Iowa law, the applicable Insurance Company owns
the assets of the Separate Account attributable to the Contracts
through which interests in the Separate Account are issued, but those
assets are held separately from all other assets of the applicable
Insurance Company for the benefit of the owners of the Contracts (each,
a ``Contract Owner'') and the persons entitled to payment under the
Contracts. Consequently, the assets in each Separate Account are not
chargeable with liabilities arising out of any other business that the
applicable Insurance Company may conduct.
4. Each Separate Account is divided into subaccounts. Each
subaccount invests exclusively in shares of a corresponding underlying
registered open-end management investment company. The applicable
Separate Account supports the respective Contracts, and interests in
the Separate Account offered through such Contracts have been
registered under the Securities Act of 1933 on Form N-6. The
application sets forth the registration file numbers for the respective
Contracts under the applicable Separate Account.
5. The Contracts are individual flexible premium variable insurance
policies. Applicants state that, as disclosed in the prospectuses for
the Contracts, the Insurance Companies reserve the right, subject to
Commission approval and compliance with applicable law, to substitute
shares of one registered open-end management investment company for
shares of another registered open-end management investment company
held by a subaccount of a Separate Account.
6. Principal Variable Contracts Funds, Inc. (``PVC'') is organized
as a Maryland corporation and is registered as an open-end management
investment company under the Act. PVC currently offers 37 series,
including the Existing Fund. Principal Management Corporation
(``PMC''), an investment adviser registered under the Investment
Advisers Act of 1940 (the ``Advisers Act''), provides investment
advisory services and certain corporate administrative services to PVC
and the Existing Fund. Principal Global Investors, an affiliate of PMC,
is the sub-adviser for the Existing Fund and has day-to-day
responsibility for selecting investments for the Existing Fund. The
Existing Fund served as the only underlying money market investment
option for all of the Contracts until the addition of the Replacement
Fund effective on February 6, 2016.
7. Fidelity Variable Insurance Products Fund V (``Fidelity VIP Fund
V'') was created under a declaration of trust under Massachusetts law
and is registered as an open-end management investment company under
the Act. Fidelity VIP Fund V currently offers 32 series, including the
Replacement Fund. Fidelity Management & Research Company (``FMR''), an
investment adviser registered under the Advisers Act, serves as the
investment adviser of the Replacement Fund, with overall responsibility
for directing portfolio investments and handling Fidelity VIP Fund V's
business affairs. Fidelity Investments Money Management, Inc.
(``FIMM'') and other affiliates of FMR serve as sub-advisers to the
Replacement Fund, with FIMM having day-to-day responsibility of
choosing investments for the Replacement Fund. Effective December 1,
2015, the fundamental concentration policy of the Replacement Fund was
modified in such a manner as to enable it to operate as a government
money market fund. None of Fidelity VIP Fund V, FMR, FIMM, and other
affiliates of FMR are affiliated persons (or affiliated persons of
affiliated persons) of applicants or PVC.
8. Applicants propose to substitute Service Class Shares of the
Replacement Fund for Class 1 Shares of the Existing Fund (the
``Substitution'') to support the Contracts. Applicants represent that
the Replacement Fund is an appropriate alternative for Contract Owners.
Applicants state that the Replacement Fund and the Existing Fund each
has an investment objective to seek current income as is consistent
with preservation of capital and liquidity. In addition, while the
principal investment strategies of the Replacement Fund may differ from
those of the Existing Fund, the goal of each fund is to maintain a net
asset value of $1.00 per share. Applicants note that although the risk
profiles of the Replacement Fund and the Existing Fund differ,
applicants believe that the Replacement Fund entails less investment
risk than the Existing Fund. Additional information about the Existing
Fund and the Replacement Fund, including investment objectives,
principal investment strategies, principal risks and performance
history can be found in the application.
[[Page 15362]]
9. Applicants represent that the proposed Substitution will result
in a decrease in overall expenses, which benefits the Contract Owners.
The application sets forth the fees and expenses of the appropriate
class of the Existing Fund with the corresponding class of the
Replacement Fund in greater detail.
10. Applicants state the board of directors of PVC voted to
terminate the Existing Fund and liquidate its assets effective April 8,
2016. In light of the impending liquidation and the importance of
offering a money market fund investment option for the Contracts, the
applicants determined that the Substitution is necessary and in the
best interest of Contract Owners.
11. Applicants represent that the Substitution and the selection of
the Replacement Fund were not motivated by any financial consideration
paid or to be paid to the Insurance Companies or their affiliates by
the Replacement Fund, its adviser or underwriter, or their affiliates.
12. Applicants state that as of the effective date of the
Substitution, April 8, 2016 (``Substitution Date''), shares of the
Existing Fund will be redeemed for cash. The Insurance Companies, on
behalf of the Existing Fund subaccount of the 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.
13. The Substitution will take place at relative net asset value
(in accordance with Rule 22c-1 under the Act) with no change in the
amount of the Contract value, cash value, accumulation value, account
value or death benefit or in dollar value of the investment in the
applicable Separate Account. The Insurance 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.
14. The rights or obligations of the Insurance Companies under the
Contracts of those Contract Owners with interests in the subaccount of
the Existing Fund (``Affected Contract Owners'') will not be altered in
any way. The Substitution will in no way alter the tax treatment of
Affected Contract Owners in connection with their Contracts, and no tax
liability will arise for Affected Contract Owners as a result of the
Substitution. The Substitution also will not adversely affect any
riders under the Contracts. To the extent a Contract offers living
benefits, death benefits, or other guarantees, the value of any such
guarantee will not materially decrease directly or indirectly as a
result of the Substitution.
15. Affected Contract Owners will be permitted to make at least one
transfer of Contract value from the subaccount investing in the
Existing Fund (before the Substitution Date) or the Replacement Fund
(after the Substitution Date) to any other available investment option
under the Contract without charge for a period beginning at least 30
days before the Substitution Date through at least 30 days following
the Substitution Date. Except as described in any market timing/short-
term trading provisions of the relevant prospectus, the Insurance
Companies will not exercise any right they may have under the Contracts
to impose restrictions on transfers between the subaccounts under the
Contracts, including limitations on the future number of transfers, for
a period beginning at least 30 days before the Substitution Date
through at least 30 days following the Substitution Date.
16. All Contract Owners were notified of this application by means
of a supplement to the Contract prospectuses dated December 9, 2015.
Among other information regarding the Substitution, the supplement
informed Affected Contract Owners of the right to transfer Contract
value from the subaccount investing in the Existing Fund (before the
Substitution Date) or the Replacement Fund (after the Substitution
Date) to any other available investment option under the Contract
without charge. Additionally, a prospectus for the Replacement Fund was
included with the supplement.
17. On March 9, 2016 (30 days before the Substitution Date),
Affected Contract Owners were provided a ``Pre-Substitution Notice,''
setting forth: (a) the intended substitution of the Existing Fund with
the Replacement Fund; (b) the intended Substitution Date (subject to
approval and order by the Commission); and (c) information with respect
to transfers. In addition, the Insurance Companies delivered a
prospectus for the Replacement Fund with the Pre-Substitution Notice.
18. The Insurance Companies will deliver to each Affected Contract
Owner within five (5) business days of the Substitution Date, a written
confirmation, which will include confirmation that the Substitution was
carried out as previously notified, a restatement of the information
set forth in the Pre-Substitution Notice, and before and after account
values.
19. Applicants will not receive, for three years from the
Substitution Date, any direct or indirect benefits from the Replacement
Fund, its adviser or underwriter (or their affiliates), in connection
with assets attributable to Contracts affected by the Substitution, at
a higher rate than they had received from the Existing Fund, its
adviser or underwriter (or their affiliates), including, without
limitation, 12b-1 fees, shareholder service, administrative or other
service fees, revenue sharing, or other arrangements.
Legal Analysis
1. 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 securities of a single issuer to receive
Commission approval before substituting the securities held by the
trust. Section 26(c) provides that such approval shall be granted by
order of the Commission if the evidence establishes that the
substitution is consistent with the protection of investors and the
purposes of the Act.
2. Applicants submit that the proposed Substitution meets the
standards set forth in Section 26(c) and that, if implemented, the
Substitution would not raise any of the concerns underlying that
provision. Applicants represent that the Substitution will provide
Contract Owners with a comparable investment vehicle which will not
circumvent Contract Owner-initiated decisions and the Insurance
Companies' obligations under the Contracts, and will enable Contract
Owners to continue to use the full range of applicable Contract
features as they use today. Applicants further state that the
Replacement Fund and the Existing Fund have essentially the same
investment objectives, the Replacement Fund entails less investment
risk than the Existing Fund, and the proposed Substitution will result
in a decrease in overall expenses, thereby benefiting Contract Owners.
3. Applicants state that, as disclosed in the prospectuses for the
Contracts, the Insurance Companies reserve the right, subject to
Commission approval, to substitute shares of a registered open-end
management investment company for shares of another registered open-end
held by a subaccount of a Separate Account. Applicants determined that
[[Page 15363]]
the Substitution is necessary and in the best interests of Contract
Owners in light of the impending liquidation of the Existing Fund and
the importance of offering a money market fund investment option for
the Contracts. Applicants state that the board of directors of PVC
concluded that converting the Existing Fund to a government money
market fund would not be a feasible option and voted to terminate the
Existing Fund and liquidate its assets effective April 8, 2016. The
Insurance Companies submit that the Replacement Fund should substituted
for the Existing Fund to serve as the money market investment option
for all of the Contracts, as well as for the Contract-related purposes
for which the Existing Fund is currently used, so that Contract Owner-
initiated decisions and the Insurance Companies' obligations under the
Contracts are less likely to be prevented.
4. Applicants also assert that the Substitution does not entail any
of the abuses that Section 26(c) was designed to prevent. Each Affected
Contract Owner has been advised of his right, any time prior to the
Substitution Date, and for at least 30 days after the Substitution
Date, to reallocate account value under the affected Contract without
any cost or limitation, or otherwise withdraw or terminate his interest
in accordance with the terms and conditions of his Contract.
Furthermore, Contract Owners will not incur any additional tax
liability or any additional fees or expenses as a result of the
Substitution.
Applicants' Conditions:
Applicants agree that any order granting the requested relief will
be subject to the following conditions:
1. The Substitution will not be effected unless the Insurance
Companies determine that: (a) The Contracts allow the substitution of
shares of registered open-end investment companies in the manner
contemplated by the application; (b) the Substitution can be
consummated as described in the application under applicable insurance
laws; and (c) any regulatory requirements in each jurisdiction where
the Contracts are qualified for sale have been complied with to the
extent necessary to complete the Substitution.
2. The Insurance 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. No fees or charges will be assessed to the Affected
Contract Owners to effect the Substitution.
3. The Substitution will be effected at the relative net asset
values of the respective shares in conformity with Section 22(c) of the
Act and Rule 22c-1 thereunder without the imposition of any transfer or
similar charges by applicants. The Substitution will be effected
without change in the amount or value of any Contracts held by Affected
Contract Owners.
4. The Substitution will in no way alter the tax treatment of
Affected Contract Owners in connection with their Contracts, and no tax
liability will arise for Affected Contract Owners as a result of the
Substitution.
5. The rights or obligations of the Insurance Companies under the
Contracts of Affected Contract Owners will not be altered in any way.
The Substitution will not adversely affect any riders under the
Contracts.
6. Affected Contract Owners will be permitted to make at least one
transfer of Contract value from the subaccount investing in the
Existing Fund (before the Substitution Date) or the Replacement Fund
(after the Substitution Date) to any other available investment option
under the Contract without charge for a period beginning at least 30
days before the Substitution Date through at least 30 days following
the Substitution Date. Except as described in any market timing/short-
term trading provisions of the relevant prospectus, the Insurance
Companies will not exercise any right they may have under the Contracts
to impose restrictions on transfers between the subaccounts under the
Contracts, including limitations on the future number of transfers, for
a period beginning at least 30 days before the Substitution Date
through at least 30 days following the Substitution Date.
7. All Affected Contract Owners will be notified, at least 30 days
before the Substitution Date about: (a) The intended substitution of
the Existing Fund with the Replacement Fund; (b) the intended
Substitution Date; and (c) information with respect to transfers as set
forth in Condition 6 above. In addition, the Insurance Companies will
deliver to all Affected Contract Owners, at least thirty (30) days
before the Substitution Date, a prospectus for the Replacement Fund.
8. The Insurance Companies will deliver to each Affected Contract
Owner within five (5) business days of the Substitution Date a written
confirmation which will include: (a) A confirmation that the
Substitution was carried out as previously notified; (b) a restatement
of the information set forth in the Pre-Substitution Notice; and (c)
before and after account values.
9. Applicants will not receive, for three years from the
Substitution Date, any direct or indirect benefits from the Replacement
Fund, its adviser or underwriter (or their affiliates), in connection
with assets attributable to Contracts affected by the Substitution, at
a higher rate than they had received from the Existing Fund, its
adviser or underwriter (or their affiliates), including without
limitation 12b-1 fees, shareholder service, administrative or other
service fees, revenue sharing, or other arrangements.
For the Commission, by the Division of Investment Management,
under delegated authority.
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-06411 Filed 3-21-16; 8:45 am]
BILLING CODE 8011-01-P
