Allianz Life Insurance Company of North America, et al; Notice of Application, 52939-52943 [2016-18913]
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Federal Register / Vol. 81, No. 154 / Wednesday, August 10, 2016 / Notices
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
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 the
filing also will be available for
inspection and copying at the principal
office 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–IEX–
2016–07, and should be submitted on or
before August 31, 2016.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.47
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016–18912 Filed 8–9–16; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. IC–32207; File No. 812–14580]
Allianz Life Insurance Company of
North America, et al; Notice of
Application
August 3, 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, as amended (‘‘Act’’) and an order
of exemption pursuant to section 17(b)
of the Act from section 17(a) of the Act.
AGENCY:
Allianz Life Insurance
Company of North America (‘‘Allianz
Life’’) and Allianz Life Insurance
Company of New York (‘‘Allianz NY’’)
(together the ‘‘Insurance Company
Applicants’’); their respective separate
accounts, Allianz Life Variable Account
A (‘‘Allianz Account A’’), Allianz Life
Variable Account B (‘‘Allianz Account
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APPLICANTS:
47 17
CFR 200.30–3(a)(12).
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B’’), and Allianz Life of NY Variable
Account C (‘‘Allianz Account C’’)
(collectively, the ‘‘Separate Accounts’’
and together with the Insurance
Company Applicants, the ‘‘Section 26
Applicants’’); and Allianz Variable
Insurance Products Trust (the ‘‘VIP
Trust’’ and collectively with the Section
26 Applicants, the ‘‘Section 17
Applicants’’).
SUMMARY OF APPLICATION: The
Applicants seek an order pursuant to
section 26(c) of the Act, approving the
substitution of shares issued by certain
investment portfolios of registered
investment companies (the ‘‘Target
Funds’’) for the shares of certain
investment portfolios of registered
investment companies (the ‘‘Destination
Funds’’), held by the Separate Accounts
to support certain variable life insurance
policies and variable annuity contracts
(the ‘‘Contracts’’) issued by Allianz Life
and Allianz NY (the ‘‘Substitutions’’).
The Section 17 Applicants seek an order
pursuant to section 17(b) of the Act
exempting them from section 17(a) of
the Act to the extent necessary to permit
them to engage in certain in-kind
transactions in connection with the
Substitutions.
FILING DATE: The application was filed
on November 16, 2015 and amended on
June 27, 2016.
HEARING OR NOTIFICATION OF HEARING: An
order granting the application will be
issued unless the Commission orders a
hearing. Interested persons may request
a hearing by writing to the Secretary of
the Commission and serving applicants
with a copy of the request, personally or
by mail. Hearing requests should be
received by the Commission by 5:30
p.m. on August 26, 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 requester’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 Commission’s Secretary.
ADDRESSES: Secretary, U.S. Securities
and Exchange Commission, 100 F
Street, NE., Washington, DC 20549–
1090. Applicants: Allianz Life Insurance
Company of North America, Allianz Life
Variable Account A, and Allianz Life
Variable Account B, 5701 Golden Hills
Dr., Minneapolis, MN 55416–1297;
Allianz Life Insurance Company of New
York, and Allianz Life of NY Variable
Account C, 28 Liberty Street, 38th Floor,
New York, NY 10005–1423; and Allianz
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52939
Variable Insurance Products Trust, 5701
Golden Hills Drive, Minneapolis, MN
55416–1297.
FOR FURTHER INFORMATION CONTACT:
Barbara T. Heussler, Senior Counsel, at
(202) 551–6990 or Mary Kay Frech,
Branch Chief, at (202) 551–6821 (Chief
Counsel’s Office, Division of Investment
Management).
SUPPLEMENTARY INFORMATION: The
following is a summary of the
application. The complete application
may be obtained via the Commission’s
Web site by searching for the file
number, or 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. Allianz Life is a stock life insurance
company organized under the laws of
the state of Minnesota. Allianz Life
offers fixed and variable annuities and
individual life insurance. Allianz Life is
licensed to do direct business in 49
states and the District of Columbia.
Allianz Life is an indirect, whollyowned subsidiary of Allianz SE., a
European stock corporation.
2. Allianz NY is a stock life insurance
company organized under the laws of
the state of New York. Allianz NY offers
fixed and variable annuities. Allianz NY
is licensed to do direct business in six
states, including New York and the
District of Columbia. Allianz NY is a
wholly-owned subsidiary of Allianz
Life, and an indirect, wholly-owned
subsidiary of Allianz SE.
3. Allianz Account A is a segregated
asset account of Allianz Life established
under Minnesota insurance laws.
Allianz Account A is used to fund
certain variable life insurance policies
issued by Allianz Life. Allianz Account
A is divided into a number of
subaccounts (each a ‘‘Subaccount’’),
each of which invests in and reflects the
investment performance of a specific
underlying registered investment
company or portfolio thereof (each an
‘‘Investment Option’’). Allianz Account
A is registered as a unit investment trust
under the Act.
4. Allianz Account B is a segregated
asset account of Allianz Life established
under Minnesota insurance laws.
Allianz Account B is used to fund
certain variable annuity contracts issued
by Allianz Life. Allianz Account B is
divided into a number of Subaccounts,
each of which invests in and reflects the
investment performance of a specific
Investment Option. Allianz Account B
is registered as a unit investment trust
under the Act.
5. Allianz Account C is a segregated
asset account of Allianz NY established
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under New York insurance laws.
Allianz Account C is used to fund
certain variable annuity contracts issued
by Allianz NY. Allianz Account C is
divided into a number of Subaccounts,
each of which invests in and reflects the
investment performance of a specific
Investment Option. Allianz Account C
is registered as a unit investment trust
under the Act.
6. Allianz Life and Allianz NY have
registration statements with the
Commission for Contracts sponsored by
the Separate Accounts that offer one or
more of the Target Funds as an
Investment Option. Under the Contracts,
the Insurance Company Applicants
reserve the right, subject to Commission
approval and compliance with
applicable laws, to substitute one of the
Investment Options with another
Investment Option after appropriate
notice. Moreover, the Contracts permit
the Insurance Company Applicants to
limit allocation of purchase payments to
one or more Subaccounts that invest in
an Investment Option. The prospectuses
or statements of additional information
for the Contracts also contain
appropriate disclosure of these rights.
7. Each Insurance Company
Applicant, on behalf of itself and its
Separate Account(s), proposes to
substitute shares of the Target Funds
that are held in Subaccounts of their
Separate Accounts with shares of the
corresponding Destination Funds, as
shown in the table below.
Substitution target fund
Destination fund
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1. Invesco V.I. International Growth Fund Series1 ..............................................
2. Oppenheimer Global Fund/VA Non-Service Shares .......................................
3. SP International Growth Portfolio Class II .......................................................
4. Templeton Foreign VIP Fund Class 1 .............................................................
Templeton Foreign VIP Fund Class 2 .................................................................
5. Alger MidCap Growth Portfolio Class 1 ...........................................................
6. Franklin Small-Mid Cap Growth VIP Fund Class 1 .........................................
Franklin Small-Mid Cap Growth VIP Fund Class 2 .............................................
7. Franklin Global Real Estate VIP Fund Class 1 ...............................................
Franklin Global Real Estate VIP Fund Class 2 ...................................................
8. Franklin High Income VIP Fund Class 1 .........................................................
Franklin High Income VIP Fund Class 2 ......................................................
9. Alger Capital Appreciation Portfolio Class 1 ...................................................
10. Alger Large Cap Growth Portfolio Class 1 ....................................................
11. Franklin Large Cap Growth VIP Fund Class 1 ..............................................
Franklin Large Cap Growth VIP Fund Class 2 .............................................
12. Invesco V.I. American Franchise Fund Series I ............................................
Invesco V.I. American Franchise Fund Series II ..........................................
13. Jennison Portfolio Class II .............................................................................
14. Davis VA Value Portfolio Class 1 ..................................................................
15. Franklin Growth and Income VIP Fund Class 1 ............................................
Franklin Growth and Income VIP Fund Class 2 ...........................................
16. Invesco V.I. Growth & Income Fund Series I ................................................
17. Invesco V.I. Core Equity Fund Series I .........................................................
18. JPMorgan Insurance Trust U.S. Equity Portfolio Class 1 .............................
19. Oppenheimer Main Street Fund/VA Class 1 .................................................
20. Alger Small Cap Growth Portfolio Class 1 ....................................................
21. Columbia Variable Portfolio—Select Smaller-Cap Value Fund Class 1 .......
22. Franklin Small Cap Value VIP Fund Class 1 ................................................
Franklin Small Cap Value VIP Fund Class 2 ...............................................
8. The Destination Funds are all series
of the VIP Trust, a Delaware statutory
trust registered as an open-end
management investment company
under the Act and whose shares are
registered under the Securities Act of
1933.
9. Shares of the VIP Trust are sold to
separate accounts of Allianz Life and
Allianz NY for the purpose of funding
the Contracts. The Destination Funds
are managed by Allianz Investment
Management LLC (‘‘AIM’’), an affiliate
of the Insurance Company Applicants.
AIM is registered as an investment
adviser under the Investment Advisers
Act of 1940.
10. The Insurance Company
Applicants state that the proposed
Substitutions are part of an ongoing
effort to make their Contracts more
attractive to existing and prospective
Contract owners and to make the
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International Index Fund Class 1.
International Index Fund Class 1.
International Index Fund Class 2.
International Index Fund Class 1.
International Index Fund Class 2.
Mid Cap Index Fund Class 1.
Mid Cap Index Fund Class 1.
Mid Cap Index Fund Class 2 .
Morgan Stanley Global Real Estate Fund Class 1.
Morgan Stanley Global Real Estate Fund Class 2.
Pyramis Total Bond Fund Class 1.
Pyramis Total Bond Fund Class 2.
Russell 1000 Growth Index Fund Class 1.
Russell 1000 Growth Index Fund Class 1.
Russell 1000 Growth Index Fund Class 1.
Russell 1000 Growth Index Fund Class 2.
Russell 1000 Growth Index Fund Class 1.
Russell 1000 Growth Index Fund Class 2.
Russell 1000 Growth Index Fund Class 2.
Russell 1000 Value Index Fund Class 1.
Russell 1000 Value Index Fund Class 1.
Russell 1000 Value Index Fund Class 2.
Russell 1000 Value Index Fund Class 1.
S&P 500 Index Fund Class 1.
S&P 500 Index Fund Class 1.
S&P 500 Index Fund Class 1.
Small Cap Stock Index Fund Class 1.
Small Cap Stock Index Fund Class 1.
Small Cap Stock Index Fund Class 1.
Small Cap Stock Index Fund Class 2.
Contracts more efficient to administer.
The Section 26 Applicants state that the
Substitutions are designed and intended
to simplify the menu of Investment
Options by eliminating certain
overlapping fund offerings that
duplicate one another by having
substantially similar investment
objectives, strategies and risks.
Additional information for each Target
Fund and the corresponding Destination
Fund, including investment objectives,
principal investment strategies,
principal risks, and performance can be
found in the application.
11. Applicants state that for all
Substitutions, the management fees and
total annual fund operating expenses of
each Destination Fund are lower than
those of the corresponding Target Fund.
The application sets forth the fees and
expenses of each Target Fund and its
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corresponding Destination Fund in
greater detail.
12. The proposed Substitutions will
be described in supplements to the
applicable prospectuses for the
Contracts filed with the Commission
(‘‘Supplements’’) and delivered to all
affected Contract owners at least 30 days
before the date the proposed
Substitution is effected (‘‘Substitution
Date’’). The Supplements will give
Contract owners notice of the respective
Insurance Company Applicant’s intent
to take the necessary actions, including
seeking the order requested by the
application, to substitute shares of the
Target Funds as described in the
application on the Substitution Date.
The Supplements also will advise
Contract owners that for at least thirty
(30) days before the Substitution Date,
Contract owners are permitted to
transfer all of or a portion of their
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Contract value out of any Subaccount
investing in a Target Fund to any other
available Subaccounts offered under
their Contract without any transfer
charge or limitation and 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.
13. The Section 26 Applicants will
send the Supplements to all existing
Contract owners. Prospective purchasers
and new purchasers of Contracts will be
provided with a Contract prospectus
and the Supplements, as well as
prospectuses and supplements for the
Destination Funds.
14. In addition to the Supplements
distributed to Contract owners, within
five (5) business days after the
Substitution Date, the Insurance
Company Applicants will send Contract
owners a written confirmation of the
completed proposed Substitutions in
accordance with rule 10b-10 under the
Securities Exchange Act of 1934. The
confirmation statement will include or
be accompanied by a statement that
reiterates the free transfer rights
disclosed in the Supplements. The
Insurance Company Applicants also
will send each Contract owner current
prospectuses for the Destination Funds
involved to the extent that they have not
previously received a copy.
15. Each Substitution will take place
at the applicable Target and Destination
Funds’ relative per share net asset
values determined on the Substitution
Date in accordance with section 22 of
the Act and rule 22c–1 under the Act.
Accordingly, applicants state that the
proposed Substitutions will have no
negative financial impact on any
Contract owner. Each proposed
Substitution will be effected by having
each Target Fund Subaccount redeem
its Target Fund shares in cash and/or inkind on the Substitution Date at net
asset value per share and purchase
shares of the appropriate Destination
Fund at net asset value per share
calculated on the same date. The
process for accomplishing the transfer of
assets from each Target Fund to its
corresponding Destination Fund will be
determined on a case-by-case basis. In
some cases, it is expected that the
Substitutions will be effected by
redeeming shares of a Target Fund for
cash and using the cash to purchase
shares of the Destination Fund. In other
cases, it is expected that the
Substitutions will be effected by
redeeming the shares of a Target Fund
in-kind; those assets will then be
contributed in-kind to the
corresponding Destination Fund to
purchase shares of that fund.
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16. The Insurance Company
Applicants or an affiliate will pay all
expenses and transaction costs
reasonably related to the proposed
Substitutions. Applicants state that no
costs of the proposed Substitutions will
be borne directly or indirectly by
Contract owners. Contract owners will
not incur any fees or charges as a result
of the proposed Substitutions, nor will
their rights or the obligations of the
Insurance Company Applicants under
the Contracts be altered in any way.
Applicants state that the proposed
Substitutions will not cause the fees and
charges under the Contracts currently
being paid by Contract owners to be
greater after the proposed Substitutions
than before the proposed Substitutions.
17. The Section 26 Applicants further
agree that they will cause AIM, as the
manager of each Destination Fund, to
enter into a written contract with the
Destination Funds, whereby, during the
two (2) years following the Substitution
Date, the annual net operating expenses
of each Destination Fund will not
exceed, on an annualized basis, the
annual net operating expenses of any
corresponding Target Fund for fiscal
year 2015. The Section 26 Applicants
further agree that separate account
charges for any Contract owner on the
Substitution Date, will not be increased
at any time during the two year period
following the Substitution Date.
Legal Analysis
1. The Section 26 Applicants request
that the Commission issue an order
pursuant to section 26(c) of the Act
approving the proposed Substitutions.
Section 26(c) of the Act prohibits any
depositor or trustee of a unit investment
trust that invests exclusively in the
securities of a single issuer from
substituting the securities of another
issuer without the approval of the
Commission. 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 each of the
proposed Substitutions meet the
standards set forth in section 26(c) and
that, if implemented, the Substitutions
would not raise any of the concerns
underlying this provision. Applicants
state that each Destination Fund and its
corresponding Target Fund have
substantially similar investment
objectives, principal investment
strategies, and principal risks. The
applicants also state that the
management fees and total annual fund
operating expenses of each Destination
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52941
Fund are lower than those of the
corresponding Target Fund.
3. Applicants also assert that the
proposed Substitutions 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 state that the
proposed Substitutions, therefore, will
not result in the type of costly forced
redemptions that section 26(c) was
designed to guard against and are
consistent with the protection of
investors and the purposes fairly
intended by the Act.
4. The Section 17 Applicants request
that the Commission issue an order
pursuant to section 17(b) of the Act
exempting them from section 17(a) of
the Act to the extent necessary to permit
them to carry out the Substitutions by
redeeming shares issued by each
applicable Target Fund in-kind and
using the securities distributed as
redemption proceeds to purchase shares
issued by the applicable Destination
Funds (the ‘‘In-Kind Transactions’’).
5. Section 17(a)(1) of the Act prohibits
any affiliated person of a registered
investment company, or an affiliated
person of an affiliated person, acting as
principal, from selling any security or
other property to such registered
investment company. Section 17(a)(2) of
the Act prohibits any of the persons
described above, acting as principal,
from purchasing any security or other
property from such registered
investment company.
6. Applicants may be considered
affiliates of the Destination Funds based
upon the definition of ‘‘affiliated
person’’ in section 2(a)(3) of the Act.
The majority of the shares of each fund
of the VIP Trust are held by the Separate
Accounts. Because shares held by a
separate account of an insurance
company are legally owned by the
insurance company, Allianz Life and
Allianz NY and their affiliates
collectively own of record the majority
of the shares of each fund of the VIP
Trust, including the Destination Funds.
Further, AIM, an affiliated person of the
VIP Trust by virtue of section 2(a)(3)(E)
of the Act, is a wholly owned subsidiary
of Allianz Life. For these reasons, the
VIP Trust and the Destination Funds are
arguably under the control of Allianz
Life and Allianz NY notwithstanding
the fact that Contract owners may be
considered the beneficial owners of
those shares held in the Separate
Accounts. If the VIP Trust and the
Destination Funds are under the control
of Allianz Life and Allianz NY, then
each of Allianz Life and Allianz NY, or
any person controlling Allianz Life and
Allianz NY, or any person under
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common control with Allianz Life and
Allianz NY, is an affiliated person of the
VIP Trust and the Destination Funds.
Similarly, if the VIP Trust and the
Destination Funds are under the control
of Allianz Life and Allianz NY, then the
VIP Trust and the Destination Funds are
affiliated persons of Allianz Life and
Allianz NY, and of any persons that
control Allianz Life and Allianz NY or
are under common control with Allianz
Life and Allianz NY.
7. At the close of business on the
Substitution Date, the Insurance
Company Applicants will redeem shares
of each Target Fund either in-kind or in
cash, or a combination thereof, and use
the proceeds of such redemptions to
purchase shares of the corresponding
Destination Fund, with each
Subaccount of the applicable Separate
Account investing the proceeds of its
redemption from the Target Fund in the
corresponding Destination Fund. Thus,
the proposed transactions may involve a
transfer of portfolio securities by each
Target Fund to Allianz Life and Allianz
NY. Immediately thereafter, Allianz Life
and Allianz NY would purchase shares
of the corresponding Destination Fund
with the portfolio securities and/or cash
received from the applicable Target
Fund. This aspect of the Substitution
may be deemed to involve one or more
sales by Allianz Life or Allianz NY of
securities or other property to the
applicable Destination Fund, and could
therefore be viewed as being prohibited
by section 17(a) of the Act. Accordingly,
the Section 17 Applicants seek relief
from section 17(a) of the Act for the inkind purchases and sales of the
Destination Fund shares.
8. The Section 17 Applicants submit
that the terms of the proposed In-Kind
Transactions, including the
consideration to be paid and received,
are reasonable and fair, and do not
involve overreaching on the part of any
person concerned because: (1) the
proposed In-Kind Transactions will not
adversely affect or dilute the interests of
Contract owners; and (2) the proposed
In-Kind Transactions will comply with
the conditions set forth in rule 17a–7
under the Act, other than the
requirement relating to cash
consideration. Even though the
proposed In-Kind Transactions will not
comply with the cash consideration
requirement of paragraph (a) of rule
17a–7, the terms of the proposed InKind Transactions will offer to the
relevant Target and Destination Funds
the same degree of protection from
overreaching that rule 17a–7 generally
provides in connection with the
purchase and sale of securities under
that rule in the ordinary course of
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business. In particular, the Section 17
Applicants cannot effect the proposed
In-Kind Transactions at a price that is
disadvantageous to either a Target Fund
or a Destination Fund, and the proposed
In-Kind Transactions will not occur
absent an exemptive order from the
Commission.
9. The Section 17 Applicants also
submit that the proposed In-Kind
Transactions are, or will be, consistent
with the policies of each Target Fund
and corresponding Destination Fund as
stated in their respective registration
statements and reports filed with the
Commission. Finally, the Section 17
Applicants submit that the proposed InKind Transactions are consistent with
the general purposes of the Act.
Applicants’ Conditions
The Section 26 Applicants agree that
any order granting the requested relief
will be subject to the following
conditions:
1. The proposed Substitutions will
not be effected unless the Insurance
Company Applicants 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
proposed Substitutions 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 proposed
Substitutions.
2. The Insurance Company Applicants
or their affiliates will pay all expenses
and transaction costs of the proposed
Substitutions, including legal and
accounting expenses, any applicable
brokerage expenses and other fees and
expenses. No fees or charges will be
assessed to the Contract owners to effect
the proposed Substitutions.
3. The proposed Substitutions 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 the Section 26 Applicants.
The proposed Substitutions will be
effected without change in the amount
or value of any Contracts held by
affected Contract owners.
4. The proposed Substitutions 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 proposed
Substitutions.
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5. The rights or obligations of the
Insurance Company Applicants under
the Contracts of affected Contract
owners will not be altered in any way.
The proposed Substitutions will not
adversely affect any riders under the
Contracts since each of the Destination
Funds is an allowable Investment
Option for use with such riders.
6. Affected Contract owners will be
permitted to make at least one transfer
of Contract value from the Subaccount
investing in the Target Fund (before the
Substitution Date) or the Destination
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
Company Applicants will not exercise
any right it may have under the Contract
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 Target Funds with
the Destination Funds; (b) the intended
Substitution Date; and (c) information
with respect to transfers as set forth in
Condition 6 above. In addition,
Insurance Company Applicants will
deliver to all affected Contract owners,
at least 30 days before the Substitution
Date, a prospectus for each applicable
Destination Fund.
8. Insurance Company Applicants
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 proposed
Substitutions were carried out as
previously notified; (b) a restatement of
the information set forth in the
Supplements; and (c) before and after
account values.
9. The Section 26 Applicants will
cause AIM, as the Manager of each
Destination Fund, to enter into a written
contract with the Destination Funds,
whereby, during the two (2) years
following the Substitution Date, the
annual net operating expenses of each
Destination Fund will not exceed, on an
annualized basis, the annual net
operating expenses of any
corresponding Target Fund for fiscal
2015. The Section 26 Applicants further
agree that separate account charges for
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10AUN1
Federal Register / Vol. 81, No. 154 / Wednesday, August 10, 2016 / Notices
any Contract owner on the Substitution
Date will not be increased at any time
during the two year period following the
Substitution Date.
For the Commission, by the Division of
Investment Management, under delegated
authority.
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016–18913 Filed 8–9–16; 8:45 am]
BILLING CODE 8011–01–P
SOCIAL SECURITY ADMINISTRATION
[Docket No. SSA 2016–0026]
Privacy Act of 1974, as Amended;
Computer Matching Program (SSA/
Department of Defense (DoD), Defense
Manpower Data Center (DMDC))—
Match Number 1004
AGENCY:
Social Security Administration
(SSA).
Notice of a renewal of an
existing computer matching program
that will expire on September 14, 2016.
ACTION:
In accordance with the
provisions of the Privacy Act, as
amended, this notice announces a
renewal of an existing computer
matching program that we are currently
conducting with DoD.
DATES: We will file a report of the
subject matching program with the
Committee on Homeland Security and
Governmental Affairs of the Senate; the
Committee on Oversight and
Government Reform of the House of
Representatives; and the Office of
Information and Regulatory Affairs,
Office of Management and Budget
(OMB). The matching program will be
effective as indicated below.
ADDRESSES: Interested parties may
comment on this notice by either
telefaxing to (410) 966–0869 or writing
to the Acting Executive Director, Office
of Privacy and Disclosure, Office of the
General Counsel, Social Security
Administration, 617 Altmeyer Building,
6401 Security Boulevard, Baltimore, MD
21235–6401. All comments received
will be available for public inspection at
this address.
FOR FURTHER INFORMATION CONTACT: The
Acting Executive Director, Office of
Privacy and Disclosure, Office of the
General Counsel, as shown above.
SUPPLEMENTARY INFORMATION:
mstockstill on DSK3G9T082PROD with NOTICES
SUMMARY:
A. General
The Computer Matching and Privacy
Protection Act of 1988 (Public Law
(Pub. L.) 100–503), amended the Privacy
Act (5 U.S.C. 552a) by describing the
VerDate Sep<11>2014
17:34 Aug 09, 2016
Jkt 238001
conditions under which computer
matching involving the Federal
government could be performed and
adding certain protections for persons
applying for, and receiving, Federal
benefits. Section 7201 of the Omnibus
Budget Reconciliation Act of 1990 (Pub.
L. 101–508) further amended the
Privacy Act regarding protections for
such persons.
The Privacy Act, as amended,
regulates the use of computer matching
by Federal agencies when records in a
system of records are matched with
other Federal, State, or local government
records. It requires Federal agencies
involved in computer matching
programs to:
(1) Negotiate written agreements with
the other agency or agencies
participating in the matching programs;
(2) Obtain approval of the matching
agreement by the Data Integrity Boards
of the participating Federal agencies;
(3) Publish notice of the computer
matching program in the Federal
Register;
(4) Furnish detailed reports about
matching programs to Congress and
OMB;
(5) Notify applicants and beneficiaries
that their records are subject to
matching; and
(6) Verify match findings before
reducing, suspending, terminating, or
denying a person’s benefits or
payments.
B. SSA Computer Matches Subject to
the Privacy Act
We have taken action to ensure that
all of our computer matching programs
comply with the requirements of the
Privacy Act, as amended.
Glenn Sklar,
Acting Executive Director, Office of Privacy
and Disclosure, Office of the General Counsel.
Notice of Computer Matching Program,
SSA with the Department of Defense
(DoD)
A. PARTICIPATING AGENCIES:
52943
eligibility/entitlement factors and other
relevant information. We obtain
additional information as necessary
before making any determinations of
eligibility/payment or entitlement/
benefit amounts or adjustments thereto.
With respect to military retirement
payments to SSI recipients and SVB
beneficiaries who are retired members
of the Uniformed Services or their
survivors, we will accomplish this task
by computer matching with DoD/
DMDC.
C. AUTHORITY FOR CONDUCTING THE MATCHING
PROGRAM:
The legal authority for this exchange
is sections 806(b) and 1631(e)(1)(B) and
(f) of the Social Security Act (Act) (42
U.S.C. 1006(b) and 1383(e)(1)(B) and
(f)). Our legal authority to disclose data
to DoD/DMDC is section 1106(a) of the
Act (42 U.S.C. 1306(a)) and the Privacy
Act of 1974 (5 U.S.C. 552a(b)(3)).
D. CATEGORIES OF RECORDS AND PERSONS
COVERED BY THE MATCHING PROGRAM:
We will provide DoD/DMDC with an
electronic query file. Upon receipt of the
electronic file, DoD/DMDC will perform
a computer match using all nine digits
of the Social Security Number against
the DMDC database. These records
include retired members of the
Uniformed Services (not including
Public Health) and their survivors
entitled to Survivor Benefits.
E. INCLUSIVE DATES OF THE MATCHING PROGRAM:
The effective date of this matching
program is September 14, 2016 provided
that the following notice periods have
lapsed: 30 days after publication of this
notice in the Federal Register and 40
days after notice of the matching
program is sent to Congress and OMB.
The matching program will continue for
18 months from the effective date and,
if both agencies meet certain conditions,
it may extend for an additional 12
months thereafter.
[FR Doc. 2016–18989 Filed 8–9–16; 8:45 am]
BILLING CODE 4191–02–P
SSA and DoD.
B. PURPOSE OF THE MATCHING PROGRAM:
The purpose of this matching
agreement is to establish the terms,
conditions, and safeguards under which
DoD will conduct computer matching
with the Social Security Administration
(SSA) to verify information provided to
SSA by recipients, and applicants
thereof, of Supplemental Security
Income (SSI) payments; and
beneficiaries of Special Veterans
Benefits (SVB) benefits, and applicants
thereof. The SSI and SVB recipient/
beneficiary provides information about
PO 00000
Frm 00134
Fmt 4703
Sfmt 4703
DEPARTMENT OF STATE
[Public Notice: 9654]
Notice of Meeting of the Cultural
Property Advisory Committee
There will be a meeting of the
Cultural Property Advisory Committee
(‘‘the Committee’’) October 25–27, 2016,
at the United States Department of State,
Harry S. Truman Building, 2201 C Street
NW. (Marshall Center), and State Annex
5, 2200 C Street NW., Washington, DC.
The Committee’s responsibilities are
E:\FR\FM\10AUN1.SGM
10AUN1
]]>Agencies
[Federal Register Volume 81, Number 154 (Wednesday, August 10, 2016)]
[Notices]
[Pages 52939-52943]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-18913]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. IC-32207; File No. 812-14580]
Allianz Life Insurance Company of North America, et al; Notice of
Application
August 3, 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, as amended (``Act'') and an order of exemption
pursuant to section 17(b) of the Act from section 17(a) of the Act.
-----------------------------------------------------------------------
Applicants: Allianz Life Insurance Company of North America (``Allianz
Life'') and Allianz Life Insurance Company of New York (``Allianz NY'')
(together the ``Insurance Company Applicants''); their respective
separate accounts, Allianz Life Variable Account A (``Allianz Account
A''), Allianz Life Variable Account B (``Allianz Account B''), and
Allianz Life of NY Variable Account C (``Allianz Account C'')
(collectively, the ``Separate Accounts'' and together with the
Insurance Company Applicants, the ``Section 26 Applicants''); and
Allianz Variable Insurance Products Trust (the ``VIP Trust'' and
collectively with the Section 26 Applicants, the ``Section 17
Applicants'').
Summary of Application: The Applicants seek an order pursuant to
section 26(c) of the Act, approving the substitution of shares issued
by certain investment portfolios of registered investment companies
(the ``Target Funds'') for the shares of certain investment portfolios
of registered investment companies (the ``Destination Funds''), held by
the Separate Accounts to support certain variable life insurance
policies and variable annuity contracts (the ``Contracts'') issued by
Allianz Life and Allianz NY (the ``Substitutions''). The Section 17
Applicants seek an order pursuant to section 17(b) of the Act exempting
them from section 17(a) of the Act to the extent necessary to permit
them to engage in certain in-kind transactions in connection with the
Substitutions.
Filing Date: The application was filed on November 16, 2015 and amended
on June 27, 2016.
Hearing or Notification of Hearing: An order granting the application
will be issued unless the Commission orders a hearing. Interested
persons may request a hearing by writing to the Secretary of the
Commission and serving applicants with a copy of the request,
personally or by mail. Hearing requests should be received by the
Commission by 5:30 p.m. on August 26, 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 requester'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
Commission's Secretary.
ADDRESSES: Secretary, U.S. Securities and Exchange Commission, 100 F
Street, NE., Washington, DC 20549-1090. Applicants: Allianz Life
Insurance Company of North America, Allianz Life Variable Account A,
and Allianz Life Variable Account B, 5701 Golden Hills Dr.,
Minneapolis, MN 55416-1297; Allianz Life Insurance Company of New York,
and Allianz Life of NY Variable Account C, 28 Liberty Street, 38th
Floor, New York, NY 10005-1423; and Allianz Variable Insurance Products
Trust, 5701 Golden Hills Drive, Minneapolis, MN 55416-1297.
FOR FURTHER INFORMATION CONTACT: Barbara T. Heussler, Senior Counsel,
at (202) 551-6990 or Mary Kay Frech, Branch Chief, at (202) 551-6821
(Chief Counsel's Office, Division of Investment Management).
SUPPLEMENTARY INFORMATION: The following is a summary of the
application. The complete application may be obtained via the
Commission's Web site by searching for the file number, or 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. Allianz Life is a stock life insurance company organized under
the laws of the state of Minnesota. Allianz Life offers fixed and
variable annuities and individual life insurance. Allianz Life is
licensed to do direct business in 49 states and the District of
Columbia. Allianz Life is an indirect, wholly-owned subsidiary of
Allianz SE., a European stock corporation.
2. Allianz NY is a stock life insurance company organized under the
laws of the state of New York. Allianz NY offers fixed and variable
annuities. Allianz NY is licensed to do direct business in six states,
including New York and the District of Columbia. Allianz NY is a
wholly-owned subsidiary of Allianz Life, and an indirect, wholly-owned
subsidiary of Allianz SE.
3. Allianz Account A is a segregated asset account of Allianz Life
established under Minnesota insurance laws. Allianz Account A is used
to fund certain variable life insurance policies issued by Allianz
Life. Allianz Account A is divided into a number of subaccounts (each a
``Subaccount''), each of which invests in and reflects the investment
performance of a specific underlying registered investment company or
portfolio thereof (each an ``Investment Option''). Allianz Account A is
registered as a unit investment trust under the Act.
4. Allianz Account B is a segregated asset account of Allianz Life
established under Minnesota insurance laws. Allianz Account B is used
to fund certain variable annuity contracts issued by Allianz Life.
Allianz Account B is divided into a number of Subaccounts, each of
which invests in and reflects the investment performance of a specific
Investment Option. Allianz Account B is registered as a unit investment
trust under the Act.
5. Allianz Account C is a segregated asset account of Allianz NY
established
[[Page 52940]]
under New York insurance laws. Allianz Account C is used to fund
certain variable annuity contracts issued by Allianz NY. Allianz
Account C is divided into a number of Subaccounts, each of which
invests in and reflects the investment performance of a specific
Investment Option. Allianz Account C is registered as a unit investment
trust under the Act.
6. Allianz Life and Allianz NY have registration statements with
the Commission for Contracts sponsored by the Separate Accounts that
offer one or more of the Target Funds as an Investment Option. Under
the Contracts, the Insurance Company Applicants reserve the right,
subject to Commission approval and compliance with applicable laws, to
substitute one of the Investment Options with another Investment Option
after appropriate notice. Moreover, the Contracts permit the Insurance
Company Applicants to limit allocation of purchase payments to one or
more Subaccounts that invest in an Investment Option. The prospectuses
or statements of additional information for the Contracts also contain
appropriate disclosure of these rights.
7. Each Insurance Company Applicant, on behalf of itself and its
Separate Account(s), proposes to substitute shares of the Target Funds
that are held in Subaccounts of their Separate Accounts with shares of
the corresponding Destination Funds, as shown in the table below.
------------------------------------------------------------------------
Substitution target fund Destination fund
------------------------------------------------------------------------
1. Invesco V.I. International Growth AZL International Index Fund
Fund Series1. Class 1.
2. Oppenheimer Global Fund/VA Non- AZL International Index Fund
Service Shares. Class 1.
3. SP International Growth Portfolio AZL International Index Fund
Class II. Class 2.
4. Templeton Foreign VIP Fund Class 1... AZL International Index Fund
Class 1.
Templeton Foreign VIP Fund Class 2...... AZL International Index Fund
Class 2.
5. Alger MidCap Growth Portfolio Class 1 AZL Mid Cap Index Fund Class
1.
6. Franklin Small-Mid Cap Growth VIP AZL Mid Cap Index Fund Class
Fund Class 1. 1.
Franklin Small-Mid Cap Growth VIP Fund AZL Mid Cap Index Fund Class 2
Class 2. .
7. Franklin Global Real Estate VIP Fund AZL Morgan Stanley Global Real
Class 1. Estate Fund Class 1.
Franklin Global Real Estate VIP Fund AZL Morgan Stanley Global Real
Class 2. Estate Fund Class 2.
8. Franklin High Income VIP Fund Class 1 AZL Pyramis Total Bond Fund
Class 1.
Franklin High Income VIP Fund Class AZL Pyramis Total Bond Fund
2. Class 2.
9. Alger Capital Appreciation Portfolio AZL Russell 1000 Growth Index
Class 1. Fund Class 1.
10. Alger Large Cap Growth Portfolio AZL Russell 1000 Growth Index
Class 1. Fund Class 1.
11. Franklin Large Cap Growth VIP Fund AZL Russell 1000 Growth Index
Class 1. Fund Class 1.
Franklin Large Cap Growth VIP Fund AZL Russell 1000 Growth Index
Class 2. Fund Class 2.
12. Invesco V.I. American Franchise Fund AZL Russell 1000 Growth Index
Series I. Fund Class 1.
Invesco V.I. American Franchise Fund AZL Russell 1000 Growth Index
Series II. Fund Class 2.
13. Jennison Portfolio Class II......... AZL Russell 1000 Growth Index
Fund Class 2.
14. Davis VA Value Portfolio Class 1.... AZL Russell 1000 Value Index
Fund Class 1.
15. Franklin Growth and Income VIP Fund AZL Russell 1000 Value Index
Class 1. Fund Class 1.
Franklin Growth and Income VIP Fund AZL Russell 1000 Value Index
Class 2. Fund Class 2.
16. Invesco V.I. Growth & Income Fund AZL Russell 1000 Value Index
Series I. Fund Class 1.
17. Invesco V.I. Core Equity Fund Series AZL S&P 500 Index Fund Class
I. 1.
18. JPMorgan Insurance Trust U.S. Equity AZL S&P 500 Index Fund Class
Portfolio Class 1. 1.
19. Oppenheimer Main Street Fund/VA AZL S&P 500 Index Fund Class
Class 1. 1.
20. Alger Small Cap Growth Portfolio AZL Small Cap Stock Index Fund
Class 1. Class 1.
21. Columbia Variable Portfolio--Select AZL Small Cap Stock Index Fund
Smaller-Cap Value Fund Class 1. Class 1.
22. Franklin Small Cap Value VIP Fund AZL Small Cap Stock Index Fund
Class 1. Class 1.
Franklin Small Cap Value VIP Fund AZL Small Cap Stock Index Fund
Class 2. Class 2.
------------------------------------------------------------------------
8. The Destination Funds are all series of the VIP Trust, a
Delaware statutory trust registered as an open-end management
investment company under the Act and whose shares are registered under
the Securities Act of 1933.
9. Shares of the VIP Trust are sold to separate accounts of Allianz
Life and Allianz NY for the purpose of funding the Contracts. The
Destination Funds are managed by Allianz Investment Management LLC
(``AIM''), an affiliate of the Insurance Company Applicants. AIM is
registered as an investment adviser under the Investment Advisers Act
of 1940.
10. The Insurance Company Applicants state that the proposed
Substitutions are part of an ongoing effort to make their Contracts
more attractive to existing and prospective Contract owners and to make
the Contracts more efficient to administer. The Section 26 Applicants
state that the Substitutions are designed and intended to simplify the
menu of Investment Options by eliminating certain overlapping fund
offerings that duplicate one another by having substantially similar
investment objectives, strategies and risks. Additional information for
each Target Fund and the corresponding Destination Fund, including
investment objectives, principal investment strategies, principal
risks, and performance can be found in the application.
11. Applicants state that for all Substitutions, the management
fees and total annual fund operating expenses of each Destination Fund
are lower than those of the corresponding Target Fund. The application
sets forth the fees and expenses of each Target Fund and its
corresponding Destination Fund in greater detail.
12. The proposed Substitutions will be described in supplements to
the applicable prospectuses for the Contracts filed with the Commission
(``Supplements'') and delivered to all affected Contract owners at
least 30 days before the date the proposed Substitution is effected
(``Substitution Date''). The Supplements will give Contract owners
notice of the respective Insurance Company Applicant's intent to take
the necessary actions, including seeking the order requested by the
application, to substitute shares of the Target Funds as described in
the application on the Substitution Date. The Supplements also will
advise Contract owners that for at least thirty (30) days before the
Substitution Date, Contract owners are permitted to transfer all of or
a portion of their
[[Page 52941]]
Contract value out of any Subaccount investing in a Target Fund to any
other available Subaccounts offered under their Contract without any
transfer charge or limitation and 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.
13. The Section 26 Applicants will send the Supplements to all
existing Contract owners. Prospective purchasers and new purchasers of
Contracts will be provided with a Contract prospectus and the
Supplements, as well as prospectuses and supplements for the
Destination Funds.
14. In addition to the Supplements distributed to Contract owners,
within five (5) business days after the Substitution Date, the
Insurance Company Applicants will send Contract owners a written
confirmation of the completed proposed Substitutions in accordance with
rule 10b-10 under the Securities Exchange Act of 1934. The confirmation
statement will include or be accompanied by a statement that reiterates
the free transfer rights disclosed in the Supplements. The Insurance
Company Applicants also will send each Contract owner current
prospectuses for the Destination Funds involved to the extent that they
have not previously received a copy.
15. Each Substitution will take place at the applicable Target and
Destination Funds' relative per share net asset values determined on
the Substitution Date in accordance with section 22 of the Act and rule
22c-1 under the Act. Accordingly, applicants state that the proposed
Substitutions will have no negative financial impact on any Contract
owner. Each proposed Substitution will be effected by having each
Target Fund Subaccount redeem its Target Fund shares in cash and/or in-
kind on the Substitution Date at net asset value per share and purchase
shares of the appropriate Destination Fund at net asset value per share
calculated on the same date. The process for accomplishing the transfer
of assets from each Target Fund to its corresponding Destination Fund
will be determined on a case-by-case basis. In some cases, it is
expected that the Substitutions will be effected by redeeming shares of
a Target Fund for cash and using the cash to purchase shares of the
Destination Fund. In other cases, it is expected that the Substitutions
will be effected by redeeming the shares of a Target Fund in-kind;
those assets will then be contributed in-kind to the corresponding
Destination Fund to purchase shares of that fund.
16. The Insurance Company Applicants or an affiliate will pay all
expenses and transaction costs reasonably related to the proposed
Substitutions. Applicants state that no costs of the proposed
Substitutions will be borne directly or indirectly by Contract owners.
Contract owners will not incur any fees or charges as a result of the
proposed Substitutions, nor will their rights or the obligations of the
Insurance Company Applicants under the Contracts be altered in any way.
Applicants state that the proposed Substitutions will not cause the
fees and charges under the Contracts currently being paid by Contract
owners to be greater after the proposed Substitutions than before the
proposed Substitutions.
17. The Section 26 Applicants further agree that they will cause
AIM, as the manager of each Destination Fund, to enter into a written
contract with the Destination Funds, whereby, during the two (2) years
following the Substitution Date, the annual net operating expenses of
each Destination Fund will not exceed, on an annualized basis, the
annual net operating expenses of any corresponding Target Fund for
fiscal year 2015. The Section 26 Applicants further agree that separate
account charges for any Contract owner on the Substitution Date, will
not be increased at any time during the two year period following the
Substitution Date.
Legal Analysis
1. The Section 26 Applicants request that the Commission issue an
order pursuant to section 26(c) of the Act approving the proposed
Substitutions. Section 26(c) of the Act prohibits any depositor or
trustee of a unit investment trust that invests exclusively in the
securities of a single issuer from substituting the securities of
another issuer without the approval of the Commission. 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 each of the proposed Substitutions meet
the standards set forth in section 26(c) and that, if implemented, the
Substitutions would not raise any of the concerns underlying this
provision. Applicants state that each Destination Fund and its
corresponding Target Fund have substantially similar investment
objectives, principal investment strategies, and principal risks. The
applicants also state that the management fees and total annual fund
operating expenses of each Destination Fund are lower than those of the
corresponding Target Fund.
3. Applicants also assert that the proposed Substitutions 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 state that the proposed Substitutions, therefore, will not
result in the type of costly forced redemptions that section 26(c) was
designed to guard against and are consistent with the protection of
investors and the purposes fairly intended by the Act.
4. The Section 17 Applicants request that the Commission issue an
order pursuant to section 17(b) of the Act exempting them from section
17(a) of the Act to the extent necessary to permit them to carry out
the Substitutions by redeeming shares issued by each applicable Target
Fund in-kind and using the securities distributed as redemption
proceeds to purchase shares issued by the applicable Destination Funds
(the ``In-Kind Transactions'').
5. Section 17(a)(1) of the Act prohibits any affiliated person of a
registered investment company, or an affiliated person of an affiliated
person, acting as principal, from selling any security or other
property to such registered investment company. Section 17(a)(2) of the
Act prohibits any of the persons described above, acting as principal,
from purchasing any security or other property from such registered
investment company.
6. Applicants may be considered affiliates of the Destination Funds
based upon the definition of ``affiliated person'' in section 2(a)(3)
of the Act. The majority of the shares of each fund of the VIP Trust
are held by the Separate Accounts. Because shares held by a separate
account of an insurance company are legally owned by the insurance
company, Allianz Life and Allianz NY and their affiliates collectively
own of record the majority of the shares of each fund of the VIP Trust,
including the Destination Funds. Further, AIM, an affiliated person of
the VIP Trust by virtue of section 2(a)(3)(E) of the Act, is a wholly
owned subsidiary of Allianz Life. For these reasons, the VIP Trust and
the Destination Funds are arguably under the control of Allianz Life
and Allianz NY notwithstanding the fact that Contract owners may be
considered the beneficial owners of those shares held in the Separate
Accounts. If the VIP Trust and the Destination Funds are under the
control of Allianz Life and Allianz NY, then each of Allianz Life and
Allianz NY, or any person controlling Allianz Life and Allianz NY, or
any person under
[[Page 52942]]
common control with Allianz Life and Allianz NY, is an affiliated
person of the VIP Trust and the Destination Funds. Similarly, if the
VIP Trust and the Destination Funds are under the control of Allianz
Life and Allianz NY, then the VIP Trust and the Destination Funds are
affiliated persons of Allianz Life and Allianz NY, and of any persons
that control Allianz Life and Allianz NY or are under common control
with Allianz Life and Allianz NY.
7. At the close of business on the Substitution Date, the Insurance
Company Applicants will redeem shares of each Target Fund either in-
kind or in cash, or a combination thereof, and use the proceeds of such
redemptions to purchase shares of the corresponding Destination Fund,
with each Subaccount of the applicable Separate Account investing the
proceeds of its redemption from the Target Fund in the corresponding
Destination Fund. Thus, the proposed transactions may involve a
transfer of portfolio securities by each Target Fund to Allianz Life
and Allianz NY. Immediately thereafter, Allianz Life and Allianz NY
would purchase shares of the corresponding Destination Fund with the
portfolio securities and/or cash received from the applicable Target
Fund. This aspect of the Substitution may be deemed to involve one or
more sales by Allianz Life or Allianz NY of securities or other
property to the applicable Destination Fund, and could therefore be
viewed as being prohibited by section 17(a) of the Act. Accordingly,
the Section 17 Applicants seek relief from section 17(a) of the Act for
the in-kind purchases and sales of the Destination Fund shares.
8. The Section 17 Applicants submit that the terms of the proposed
In-Kind Transactions, including the consideration to be paid and
received, are reasonable and fair, and do not involve overreaching on
the part of any person concerned because: (1) the proposed In-Kind
Transactions will not adversely affect or dilute the interests of
Contract owners; and (2) the proposed In-Kind Transactions will comply
with the conditions set forth in rule 17a-7 under the Act, other than
the requirement relating to cash consideration. Even though the
proposed In-Kind Transactions will not comply with the cash
consideration requirement of paragraph (a) of rule 17a-7, the terms of
the proposed In-Kind Transactions will offer to the relevant Target and
Destination Funds the same degree of protection from overreaching that
rule 17a-7 generally provides in connection with the purchase and sale
of securities under that rule in the ordinary course of business. In
particular, the Section 17 Applicants cannot effect the proposed In-
Kind Transactions at a price that is disadvantageous to either a Target
Fund or a Destination Fund, and the proposed In-Kind Transactions will
not occur absent an exemptive order from the Commission.
9. The Section 17 Applicants also submit that the proposed In-Kind
Transactions are, or will be, consistent with the policies of each
Target Fund and corresponding Destination Fund as stated in their
respective registration statements and reports filed with the
Commission. Finally, the Section 17 Applicants submit that the proposed
In-Kind Transactions are consistent with the general purposes of the
Act.
Applicants' Conditions
The Section 26 Applicants agree that any order granting the
requested relief will be subject to the following conditions:
1. The proposed Substitutions will not be effected unless the
Insurance Company Applicants 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 proposed
Substitutions 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 proposed
Substitutions.
2. The Insurance Company Applicants or their affiliates will pay
all expenses and transaction costs of the proposed Substitutions,
including legal and accounting expenses, any applicable brokerage
expenses and other fees and expenses. No fees or charges will be
assessed to the Contract owners to effect the proposed Substitutions.
3. The proposed Substitutions 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 the Section 26 Applicants. The proposed
Substitutions will be effected without change in the amount or value of
any Contracts held by affected Contract owners.
4. The proposed Substitutions 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 proposed Substitutions.
5. The rights or obligations of the Insurance Company Applicants
under the Contracts of affected Contract owners will not be altered in
any way. The proposed Substitutions will not adversely affect any
riders under the Contracts since each of the Destination Funds is an
allowable Investment Option for use with such riders.
6. Affected Contract owners will be permitted to make at least one
transfer of Contract value from the Subaccount investing in the Target
Fund (before the Substitution Date) or the Destination 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 Company
Applicants will not exercise any right it may have under the Contract
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 Target Funds with the Destination Funds; (b) the intended
Substitution Date; and (c) information with respect to transfers as set
forth in Condition 6 above. In addition, Insurance Company Applicants
will deliver to all affected Contract owners, at least 30 days before
the Substitution Date, a prospectus for each applicable Destination
Fund.
8. Insurance Company Applicants 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
proposed Substitutions were carried out as previously notified; (b) a
restatement of the information set forth in the Supplements; and (c)
before and after account values.
9. The Section 26 Applicants will cause AIM, as the Manager of each
Destination Fund, to enter into a written contract with the Destination
Funds, whereby, during the two (2) years following the Substitution
Date, the annual net operating expenses of each Destination Fund will
not exceed, on an annualized basis, the annual net operating expenses
of any corresponding Target Fund for fiscal 2015. The Section 26
Applicants further agree that separate account charges for
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any Contract owner on the Substitution Date will not be increased at
any time during the two year period following the Substitution Date.
For the Commission, by the Division of Investment Management,
under delegated authority.
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-18913 Filed 8-9-16; 8:45 am]
BILLING CODE 8011-01-P
