Allstate Assurance Company, et al.; Notice of Application, 9083-9085 [2017-02181]
Download as PDF
<![CDATA[
Federal Register / Vol. 82, No. 21 / Thursday, February 2, 2017 / Notices
proceeding, pursuant to 39 U.S.C. 505
(Public Representative). Section II also
establishes comment deadline(s)
pertaining to each request.
The public portions of the Postal
Service’s request(s) can be accessed via
the Commission’s Web site (https://
www.prc.gov). Non-public portions of
the Postal Service’s request(s), if any,
can be accessed through compliance
with the requirements of 39 CFR
3007.40.
The Commission invites comments on
whether the Postal Service’s request(s)
in the captioned docket(s) are consistent
with the policies of title 39. For
request(s) that the Postal Service states
concern market dominant product(s),
applicable statutory and regulatory
requirements include 39 U.S.C. 3622, 39
U.S.C. 3642, 39 CFR part 3010, and 39
CFR part 3020, subpart B. For request(s)
that the Postal Service states concern
competitive product(s), applicable
statutory and regulatory requirements
include 39 U.S.C. 3632, 39 U.S.C. 3633,
39 U.S.C. 3642, 39 CFR part 3015, and
39 CFR part 3020, subpart B. Comment
deadline(s) for each request appear in
section II.
II. Docketed Proceeding(s)
1. Docket No(s).: MC2017–81 and
CP2017–107; Filing Title: Request of the
United States Postal Service to Add
Priority Mail Contract 289 to
Competitive Product List and Notice of
Filing (Under Seal) of Unredacted
Governors’ Decision, Contract, and
Supporting Data; Filing Acceptance
Date: January 26, 2017; Filing Authority:
39 U.S.C. 3642 and 39 CFR 3020.30 et
seq.; Public Representative: Erin
Mahagan; Comments Due: February 3,
2017.
This notice will be published in the
Federal Register.
Stacy L. Ruble,
Secretary.
[FR Doc. 2017–02163 Filed 2–1–17; 8:45 am]
mstockstill on DSK3G9T082PROD with NOTICES
BILLING CODE 7710–FW–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–79883; File No. SR–IEX–
2016–18]
Self-Regulatory Organizations;
Investors Exchange LLC; Notice of
Designation of a Longer Period for
Commission Action on Proposed Rule
Change To: (i) Amend Rules
11.190(a)(3) and 11.190(b)(8) To Modify
the Operation of the Primary Peg Order
Type; (ii) Amend Rule
11.190(h)(3)(C)(ii) and (D)(ii) Regarding
Price Sliding in Locked and Crossed
Markets To Simplify the Price Sliding
Process for Both Primary Peg Orders
and Discretionary Peg Orders Resting
on or Posting to the Order Book; and
(iii) Make Minor Housekeeping
Changes To Conform Certain
Terminology
January 26, 2017.
U.S.C. 78(s)(b)(1).
CFR 240.19b–4.
3 See Securities Exchange Act Release No. 79502
(December 7, 2016), 81 FR 90035 (December 13,
2016).
4 U.S.C. 78s(b)(2).
2 17
16:31 Feb 01, 2017
Jkt 241001
PO 00000
Frm 00029
Fmt 4703
disapproved. The 45th day after
publication of the notice for this
proposed rule change is January 27,
2017. The Commission is extending this
45-day time period.
The Commission finds it appropriate
to designate a longer period within
which to take action on the proposed
rule change so as to allow sufficient
time to consider the issues raised by the
proposal. Accordingly, the Commission,
pursuant to Section 19(b)(2) of the Act,5
designates March 13, 2017, as the date
by which the Commission shall either
approve or disapprove, or institute
proceedings to determine whether to
disapprove, the proposed rule change
(File No. SR–IEX–2016–18).
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.6
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017–02186 Filed 2–1–17; 8:45 am]
On November 29, 2016, the Investors
Exchange LLC (‘‘Exchange’’) filed with
the Securities and Exchange
Commission (‘‘Commission’’), pursuant
to Section 19(b)(1) of the Securities
Exchange Act of 1934 (‘‘Act’’) 1 and Rule
19b–4 thereunder,2 a proposed rule
change to to: (i) Amend IEX Rules
(‘‘Rule(s)’’) 11.190(a)(3) and 11.190(b)(8)
to modify the operation of the primary
peg order type; (ii) amend Rule
11.190(h)(3)(C)(ii) and (D)(ii) regarding
price sliding in locked and crossed
markets to modify the price sliding
process for both primary peg orders and
discretionary peg orders resting on or
posting to the order book; and (iii) make
minor housekeeping changes to conform
certain terminology. The proposed rule
change was published for comment in
the Federal Register on December 13,
2016.3 The Commission received no
comment letters on the proposed rule
change.
Section 19(b)(2) of the Act 4 provides
that within 45 days of the publication of
notice of the filing of a proposed rule
change, or within such longer period up
to 90 days as the Commission may
designate if it finds such longer period
to be appropriate and publishes its
reasons for so finding, or as to which the
self-regulatory organization consents,
the Commission shall either approve the
proposed rule change, disapprove the
proposed rule change, or institute
proceedings to determine whether the
proposed rule change should be
1 15
VerDate Sep<11>2014
9083
Sfmt 4703
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. IC–32457; File No. 812–14149]
Allstate Assurance Company, et al.;
Notice of Application
January 27, 2017.
Securities and Exchange
Commission (‘‘SEC’’ or ‘‘Commission’’).
ACTION: Notice of Application for an
order pursuant to Section 6(c) of the
Investment Company Act of 1940, as
amended (the ‘‘1940 Act’’ or ‘‘Act’’),
exempting Allstate Assurance Company
Separate Account B from all provisions
of the Act, subject to certain conditions.
AGENCY:
Allstate Assurance
Company (the ‘‘Company’’) and Allstate
Assurance Company Separate Account
B (the ‘‘Separate Account,’’ and together
with the Company, the ‘‘Applicants’’).
SUMMARY OF APPLICATION: The
Applicants seek an order pursuant to
Section 6(c) of the 1940 Act, exempting
the Separate Account from all
provisions of the 1940 Act, subject to
certain conditions.
DATES: Filing Date: The application was
filed on April 12, 2013, and amended
and restated on February 18, 2014,
August 20, 2015 and November 21,
2016.
HEARING OR NOTIFICATION OF HEARING: An
order granting the application will be
issued unless the Commission orders a
hearing. Interested persons may request
APPLICANTS:
5 Id.
6 17
E:\FR\FM\02FEN1.SGM
CFR 200.30–3(a)(31).
02FEN1
9084
Federal Register / Vol. 82, No. 21 / Thursday, February 2, 2017 / Notices
mstockstill on DSK3G9T082PROD with NOTICES
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 February 21, 2017, and should
be accompanied by proof of service on
Applicants in the form of an affidavit or,
for lawyers, a certificate of service.
Hearing requests should state the nature
of the requester’s interest, the reason for
the request, and the issues contested.
Persons who wish to be notified of a
hearing may request notification by
writing to the Secretary of the
Commission.
ADDRESSES: Secretary, SEC, 100 F Street
NE., Washington, DC 20549–1090.
Applicants: Allstate Assurance
Company and Allstate Assurance
Company Separate Account B, 3100
Sanders Road, Suite J5B, Northbrook, IL
60062.
FOR FURTHER INFORMATION CONTACT:
Sally Samuel, Branch Chief, Disclosure
Review and Accounting Office, Division
of Investment Management, at (202)
551–6795.
SUPPLEMENTARY INFORMATION: The
following is a summary of the
application. The complete application
may be obtained via the Commission’s
Web site by searching for the file
number, or for an applicant using the
company name box, at https://
www.sec.gov/search/search.htm, or by
calling (202) 551–8090.
I. Applicants’ Representations
1. The Separate Account was
established as a managed separate
account of the Company on August 21,
1967, for the purpose of funding certain
variable annuity contracts (the
‘‘Contracts’’). The Separate Account is
registered as an open-end management
investment company under the Act (File
No. 811–01525).
2. The Separate Account has retained
Provident Investment Management,
LLC, to serve as the investment adviser
to the Separate Account and The
Variable Annuity Life Insurance
Company and The Paul Revere Life
Insurance Company to provide
administrative services to the Separate
Account. A Board of Managers, a
majority of which consists of persons
who are independent of the Separate
Account within the meaning of the Act,
currently oversees the Separate
Account’s operations.
3. The Separate Account is one of two
investment options available under the
Contracts. The other investment option
under the Contracts is the Company’s
general account, which pays a fixed rate
of interest (‘‘Fixed Account’’). As of
VerDate Sep<11>2014
16:31 Feb 01, 2017
Jkt 241001
September 30, 2016, there were a total
of 125 individual Contract owners, only
47 of whom were invested in the
Separate Account. Contract owners may
transfer account assets between the
Fixed Account and the Separate
Account but only once every 12 months.
4. Redemptions have significantly
reduced the Separate Account’s assets
over the past decade and are likely to
continue notwithstanding any positive
investment performance that may result
in a net increase in the Separate
Account’s assets. As of September 30,
2016, the Separate Account had
approximately $800,000 in total net
assets.
5. The public offering of the Contracts
under the Securities Act of 1933
(‘‘Securities Act’’) was initially
registered in 1967 (File No. 2–27135).
The Company discontinued the sale of
new Contracts in 1984. Although the
Contracts allow Contract owners to
make additional contributions, the
Company has not received an additional
contribution under the Contracts since
November 2006, which was allocated to
the Fixed Account. No contributions or
transfers have been allocated to the
Separate Account since 2002. The
Company has no intention of offering
the Contracts to new purchasers, and
conducts no solicitation or marketing
activities with respect to the Contracts.
II. Applicants’ Legal Analysis
1. Applicants respectfully request that
the Commission, pursuant to Section
6(c) of the Act, issue an Order granting
an exemption from all provisions of the
Act, subject to the conditions set out in
Section III, below. Applicants believe,
based on the grounds set out in the
application, that the requested
exemption meets the standards of
Section 6(c) of the Act.
2. Section 6(c) of the Act authorizes
the Commission to ‘‘conditionally or
unconditionally exempt any person,
security, or transaction, or any class or
classes of persons, securities, or
transactions, from the provisions of [the
Act] or of any rule or regulation
thereunder, if and to the extent that
such exemption is necessary or
appropriate in the public interest and
consistent with the protection of
investors and the purposes fairly
intended by the policy and provisions of
[the Act.]’’
3. Applicants believe that the
requested exemption is appropriate in
the public interest and consistent with
the protection of investors and the
purposes fairly intended by the policy
and provisions of the Act. Section
3(c)(1) of the Act makes clear that
Congress intended to exclude from the
PO 00000
Frm 00030
Fmt 4703
Sfmt 4703
Act entities in which there is no
significant public interest.1 As noted
above, only 47 individual beneficial
owners are currently invested in the
Separate Account, well below the 100
person limit of Section 3(c)(1). In
addition, the Company discontinued the
sale of new Contracts in 1984. Likewise,
the Separate Account has not received
any additional Contract owner money in
over a decade. No salesperson is
engaged in any solicitation or marketing
activity with respect to the Contracts or
the Separate Account, and no
compensation is being paid for any such
activity. The Company has no intention
of offering the Contracts to new
purchasers, or encouraging any
investments in the Separate Account
and will not do so if the Order is
granted. Although the terms and
conditions of the Contracts permit
Contract owners to make future
allocations to or investments in the
Separate Account, Applicants assert that
the Separate Account’s historical
experience strongly suggests that the
likelihood of receiving any such
allocation or investment is remote.
4. In addition, Applicants state that
Contract owners do not need the
protections afforded by the Act.
Applicants assert that Contract owners
are adequately protected by the fact that
their longstanding relationship with the
Company of over 30 years is established
by the terms and conditions of the
Contracts, which may not be changed
without Contract owner approval except
where permitted or required by
applicable law. The Contracts, among
other things, fix the fees and charges
(including management fees) associated
with the Separate Account, thus
distinguishing the Separate Account
from mutual funds whose expenses can
change periodically. The Contracts also
confer upon owners the right to receive
at least annually a statement (a)
reflecting the investment results for the
prior year, (b) listing the investments of
the Separate Account as of the date of
the statement, and (c) reflecting the
value of the accumulation units credited
to the Contracts. Moreover, after the
date of the Order requested by the
application, Applicants will provide
Contract owners with annual audited
financial statements of the Company
and the Separate Account pursuant to
proposed condition 5 described below.
In addition, the Contracts are governed
by and administered according to state
1 H.R. Rep. No. 96–1341 at 35 (1980); S. Rep. No.
96–958 at 20 (1980). (‘‘Section 3(c)(1) was intended
to exclude from the Act private companies in which
there is no significant public interest and which are
therefore not appropriate subjects of federal
regulation.’’)
E:\FR\FM\02FEN1.SGM
02FEN1
Federal Register / Vol. 82, No. 21 / Thursday, February 2, 2017 / Notices
mstockstill on DSK3G9T082PROD with NOTICES
insurance law, which requires that the
Company maintain in the Separate
Account assets with a value at least
equal to the reserves and other contract
liabilities with respect to the Separate
Account; that the income, gains and
losses, realized or unrealized, from
assets allocated to the Separate Account
be credited to or charged against the
Separate Account, without regard to
other income, gains or losses of the
Company; and that assets of the
Separate Account equal to the reserves
and other contract liabilities with
respect to the Separate Account not be
charged with liabilities arising out of
any other business the Company may
conduct. Furthermore, the requested
relief would be subject to the other
conditions described in Section III,
below.
5. Applicants state that there is very
little Contract owner interest in the
Separate Account. The last time a
premium was received under a Contract
was in November 2006, and the last
time a premium or transfer was
allocated to the Separate Account was
in 2002. The Separate Account’s assets
have been declining due to redemptions
over the past decade and are likely to
continue to decline as the result of
redemptions.
6. Applicants maintain that granting
the requested relief would enable
Applicants to avoid the difficulties of
trying to efficiently manage the Separate
Account in compliance with the
diversification and other requirements
of the Act as assets dwindle down to
zero. Further, Applicants assert that
granting the requested relief would
enable Applicants to avoid the
significant ongoing legal, accounting,
and other costs of maintaining a
registered investment company, which
costs currently exceed the amount of
revenues generated by the fees under
the Contracts.
7. Applicants submit that the relief is
consistent with the protection of
investors and the purposes fairly
intended by the policy and provisions of
the 1940 Act.
III. Conditions
Applicants consent to the following
conditions to any Order issued by the
Commission:
1. The Company will continue to be
responsible for satisfying all the
obligations to Contract owners as
specified under the terms of their
Contracts. In addition, promptly after
the issuance of the Notice of the
application, the Company will deliver a
written document to all Contract owners
that will state that the Notice has been
issued; that, consequently, after the
VerDate Sep<11>2014
16:31 Feb 01, 2017
Jkt 241001
order granting the relief requested in the
Notice is issued, certain legal
protections afforded to Contract owners
allocating assets to an investment
company registered under the Act no
longer apply to them; that, nevertheless,
the terms and conditions of such
Contracts have not changed; and that
the Company continues to be
responsible for satisfying all the
obligations to such Contract owners as
specified under the terms of their
Contracts. In the event a Contract owner
transfers money from the Fixed Account
to the Separate Account, the Company
and the Separate Account will notify
such transferring Contract owner that
the Separate Account is no longer a
Separate Account registered under the
Act and provide the Contract owner a
one-time opportunity to transfer the
money back into the Fixed Account
prior to the 12 month holding period
required by the Contracts. Any
subsequent transfer by the same
Contract owner from the Fixed Account
to the Separate Account will be subject
to the 12 month holding period required
by the Contracts.
2. The Company will continue to be
responsible for maintaining records of
the values under each owner’s Contract,
providing quarterly statements and
transaction confirmations to Contract
owners, and all other administrative
functions in connection with the
Separate Account. As in the past, the
Company may retain one or more
administrators to provide such services,
but the Company will remain ultimately
responsible therefor.
3. The Separate Account will at all
times continue to be operated in the
manner contemplated by Rule 0–1(e)(1)
and (2) under the Act. Specifically:
(a) The Separate Account will
continue to be an account established
and maintained by an insurance
company pursuant to the laws of a state
or territory of the United States under
which income, gains and losses,
whether or not realized, from assets
allocated to the Separate Account are, in
accordance with the Contracts, credited
to or charged against the Separate
Account without regard to other
income, gains or losses of the insurance
company,
(b) the Separate Account shall be
legally segregated and the assets of the
Separate Account will, at the time
during the year that adjustments in the
reserves are made, have a value at least
equal to the Company’s reserves and
other contract liabilities with respect to
the Separate Account, and, at all other
times, will have a value approximately
equal to or in excess of such reserves
and liabilities, and
PO 00000
Frm 00031
Fmt 4703
Sfmt 9990
9085
(c) that portion of the Separate
Account’s assets having a value equal to
such reserves and contract liabilities
will not be chargeable with liabilities
arising out of any other business that the
Company may conduct.
4. The Company and the Separate
Account will operate in compliance
with applicable state insurance law,
including but not limited to filing
annual audited financial statements of
the Company and the Separate Account
with the insurance department of the
Company’s domiciliary state.
5. The Company will provide Contract
owners invested in the Separate
Account with copies of the annual
audited financial statements of the
Company and the Separate Account.
6. The Company and the Separate
Account will not solicit additional
contributions from Contract owners, or
resume the sale of Contracts, and will
not use the Separate Account to issue
any other annuity contracts that would
require the Separate Account to be
registered under the Act unless so
registered. In addition, the Company
and the Separate Account will not
solicit transfers from the Fixed Account
into the Separate Account. Furthermore,
the Separate Account will not be used
for any other business other than as a
funding vehicle for the Contracts.
7. The Separate Account will reregister under the Act should the
number of beneficial owners invested in
the Separate Account exceed 100.
8. The Separate Account will
continue to create, maintain and keep
current the books and records as set
forth in Rules 31a–1 and 31a–2 under
the Act for the periods specified by
these Rules.
IV. Conclusion
For the reasons and upon the facts set
forth above and in the application,
Applicants submit that their exemptive
request meets the standards set out in
Section 6(c) of the Act and that the
Commission, therefore, should grant the
requested Order.
For the Commission, by the Division of
Investment Management, pursuant to
delegated authority.
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017–02181 Filed 2–1–17; 8:45 am]
BILLING CODE 8011–01–P
E:\FR\FM\02FEN1.SGM
02FEN1
]]>Agencies
[Federal Register Volume 82, Number 21 (Thursday, February 2, 2017)]
[Notices]
[Pages 9083-9085]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-02181]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. IC-32457; File No. 812-14149]
Allstate Assurance Company, et al.; Notice of Application
January 27, 2017.
AGENCY: Securities and Exchange Commission (``SEC'' or ``Commission'').
ACTION: Notice of Application for an order pursuant to Section 6(c) of
the Investment Company Act of 1940, as amended (the ``1940 Act'' or
``Act''), exempting Allstate Assurance Company Separate Account B from
all provisions of the Act, subject to certain conditions.
-----------------------------------------------------------------------
Applicants: Allstate Assurance Company (the ``Company'') and Allstate
Assurance Company Separate Account B (the ``Separate Account,'' and
together with the Company, the ``Applicants'').
Summary of Application: The Applicants seek an order pursuant to
Section 6(c) of the 1940 Act, exempting the Separate Account from all
provisions of the 1940 Act, subject to certain conditions.
DATES: Filing Date: The application was filed on April 12, 2013, and
amended and restated on February 18, 2014, August 20, 2015 and November
21, 2016.
Hearing or Notification of Hearing: An order granting the application
will be issued unless the Commission orders a hearing. Interested
persons may request
[[Page 9084]]
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 February
21, 2017, and should be accompanied by proof of service on Applicants
in the form of an affidavit or, for lawyers, a certificate of service.
Hearing requests should state the nature of the requester's interest,
the reason for the request, and the issues contested. Persons who wish
to be notified of a hearing may request notification by writing to the
Secretary of the Commission.
ADDRESSES: Secretary, SEC, 100 F Street NE., Washington, DC 20549-1090.
Applicants: Allstate Assurance Company and Allstate Assurance Company
Separate Account B, 3100 Sanders Road, Suite J5B, Northbrook, IL 60062.
FOR FURTHER INFORMATION CONTACT: Sally Samuel, Branch Chief, Disclosure
Review and Accounting Office, Division of Investment Management, at
(202) 551-6795.
SUPPLEMENTARY INFORMATION: The following is a summary of the
application. The complete application may be obtained via the
Commission's Web site by searching for the file number, or for an
applicant using the company name box, at https://www.sec.gov/search/search.htm, or by calling (202) 551-8090.
I. Applicants' Representations
1. The Separate Account was established as a managed separate
account of the Company on August 21, 1967, for the purpose of funding
certain variable annuity contracts (the ``Contracts''). The Separate
Account is registered as an open-end management investment company
under the Act (File No. 811-01525).
2. The Separate Account has retained Provident Investment
Management, LLC, to serve as the investment adviser to the Separate
Account and The Variable Annuity Life Insurance Company and The Paul
Revere Life Insurance Company to provide administrative services to the
Separate Account. A Board of Managers, a majority of which consists of
persons who are independent of the Separate Account within the meaning
of the Act, currently oversees the Separate Account's operations.
3. The Separate Account is one of two investment options available
under the Contracts. The other investment option under the Contracts is
the Company's general account, which pays a fixed rate of interest
(``Fixed Account''). As of September 30, 2016, there were a total of
125 individual Contract owners, only 47 of whom were invested in the
Separate Account. Contract owners may transfer account assets between
the Fixed Account and the Separate Account but only once every 12
months.
4. Redemptions have significantly reduced the Separate Account's
assets over the past decade and are likely to continue notwithstanding
any positive investment performance that may result in a net increase
in the Separate Account's assets. As of September 30, 2016, the
Separate Account had approximately $800,000 in total net assets.
5. The public offering of the Contracts under the Securities Act of
1933 (``Securities Act'') was initially registered in 1967 (File No. 2-
27135). The Company discontinued the sale of new Contracts in 1984.
Although the Contracts allow Contract owners to make additional
contributions, the Company has not received an additional contribution
under the Contracts since November 2006, which was allocated to the
Fixed Account. No contributions or transfers have been allocated to the
Separate Account since 2002. The Company has no intention of offering
the Contracts to new purchasers, and conducts no solicitation or
marketing activities with respect to the Contracts.
II. Applicants' Legal Analysis
1. Applicants respectfully request that the Commission, pursuant to
Section 6(c) of the Act, issue an Order granting an exemption from all
provisions of the Act, subject to the conditions set out in Section
III, below. Applicants believe, based on the grounds set out in the
application, that the requested exemption meets the standards of
Section 6(c) of the Act.
2. Section 6(c) of the Act authorizes the Commission to
``conditionally or unconditionally exempt any person, security, or
transaction, or any class or classes of persons, securities, or
transactions, from the provisions of [the Act] or of any rule or
regulation thereunder, if and to the extent that such exemption is
necessary or appropriate in the public interest and consistent with the
protection of investors and the purposes fairly intended by the policy
and provisions of [the Act.]''
3. Applicants believe that the requested exemption is appropriate
in the public interest and consistent with the protection of investors
and the purposes fairly intended by the policy and provisions of the
Act. Section 3(c)(1) of the Act makes clear that Congress intended to
exclude from the Act entities in which there is no significant public
interest.\1\ As noted above, only 47 individual beneficial owners are
currently invested in the Separate Account, well below the 100 person
limit of Section 3(c)(1). In addition, the Company discontinued the
sale of new Contracts in 1984. Likewise, the Separate Account has not
received any additional Contract owner money in over a decade. No
salesperson is engaged in any solicitation or marketing activity with
respect to the Contracts or the Separate Account, and no compensation
is being paid for any such activity. The Company has no intention of
offering the Contracts to new purchasers, or encouraging any
investments in the Separate Account and will not do so if the Order is
granted. Although the terms and conditions of the Contracts permit
Contract owners to make future allocations to or investments in the
Separate Account, Applicants assert that the Separate Account's
historical experience strongly suggests that the likelihood of
receiving any such allocation or investment is remote.
---------------------------------------------------------------------------
\1\ H.R. Rep. No. 96-1341 at 35 (1980); S. Rep. No. 96-958 at 20
(1980). (``Section 3(c)(1) was intended to exclude from the Act
private companies in which there is no significant public interest
and which are therefore not appropriate subjects of federal
regulation.'')
---------------------------------------------------------------------------
4. In addition, Applicants state that Contract owners do not need
the protections afforded by the Act. Applicants assert that Contract
owners are adequately protected by the fact that their longstanding
relationship with the Company of over 30 years is established by the
terms and conditions of the Contracts, which may not be changed without
Contract owner approval except where permitted or required by
applicable law. The Contracts, among other things, fix the fees and
charges (including management fees) associated with the Separate
Account, thus distinguishing the Separate Account from mutual funds
whose expenses can change periodically. The Contracts also confer upon
owners the right to receive at least annually a statement (a)
reflecting the investment results for the prior year, (b) listing the
investments of the Separate Account as of the date of the statement,
and (c) reflecting the value of the accumulation units credited to the
Contracts. Moreover, after the date of the Order requested by the
application, Applicants will provide Contract owners with annual
audited financial statements of the Company and the Separate Account
pursuant to proposed condition 5 described below. In addition, the
Contracts are governed by and administered according to state
[[Page 9085]]
insurance law, which requires that the Company maintain in the Separate
Account assets with a value at least equal to the reserves and other
contract liabilities with respect to the Separate Account; that the
income, gains and losses, realized or unrealized, from assets allocated
to the Separate Account be credited to or charged against the Separate
Account, without regard to other income, gains or losses of the
Company; and that assets of the Separate Account equal to the reserves
and other contract liabilities with respect to the Separate Account not
be charged with liabilities arising out of any other business the
Company may conduct. Furthermore, the requested relief would be subject
to the other conditions described in Section III, below.
5. Applicants state that there is very little Contract owner
interest in the Separate Account. The last time a premium was received
under a Contract was in November 2006, and the last time a premium or
transfer was allocated to the Separate Account was in 2002. The
Separate Account's assets have been declining due to redemptions over
the past decade and are likely to continue to decline as the result of
redemptions.
6. Applicants maintain that granting the requested relief would
enable Applicants to avoid the difficulties of trying to efficiently
manage the Separate Account in compliance with the diversification and
other requirements of the Act as assets dwindle down to zero. Further,
Applicants assert that granting the requested relief would enable
Applicants to avoid the significant ongoing legal, accounting, and
other costs of maintaining a registered investment company, which costs
currently exceed the amount of revenues generated by the fees under the
Contracts.
7. Applicants submit that the relief is consistent with the
protection of investors and the purposes fairly intended by the policy
and provisions of the 1940 Act.
III. Conditions
Applicants consent to the following conditions to any Order issued
by the Commission:
1. The Company will continue to be responsible for satisfying all
the obligations to Contract owners as specified under the terms of
their Contracts. In addition, promptly after the issuance of the Notice
of the application, the Company will deliver a written document to all
Contract owners that will state that the Notice has been issued; that,
consequently, after the order granting the relief requested in the
Notice is issued, certain legal protections afforded to Contract owners
allocating assets to an investment company registered under the Act no
longer apply to them; that, nevertheless, the terms and conditions of
such Contracts have not changed; and that the Company continues to be
responsible for satisfying all the obligations to such Contract owners
as specified under the terms of their Contracts. In the event a
Contract owner transfers money from the Fixed Account to the Separate
Account, the Company and the Separate Account will notify such
transferring Contract owner that the Separate Account is no longer a
Separate Account registered under the Act and provide the Contract
owner a one-time opportunity to transfer the money back into the Fixed
Account prior to the 12 month holding period required by the Contracts.
Any subsequent transfer by the same Contract owner from the Fixed
Account to the Separate Account will be subject to the 12 month holding
period required by the Contracts.
2. The Company will continue to be responsible for maintaining
records of the values under each owner's Contract, providing quarterly
statements and transaction confirmations to Contract owners, and all
other administrative functions in connection with the Separate Account.
As in the past, the Company may retain one or more administrators to
provide such services, but the Company will remain ultimately
responsible therefor.
3. The Separate Account will at all times continue to be operated
in the manner contemplated by Rule 0-1(e)(1) and (2) under the Act.
Specifically:
(a) The Separate Account will continue to be an account established
and maintained by an insurance company pursuant to the laws of a state
or territory of the United States under which income, gains and losses,
whether or not realized, from assets allocated to the Separate Account
are, in accordance with the Contracts, credited to or charged against
the Separate Account without regard to other income, gains or losses of
the insurance company,
(b) the Separate Account shall be legally segregated and the assets
of the Separate Account will, at the time during the year that
adjustments in the reserves are made, have a value at least equal to
the Company's reserves and other contract liabilities with respect to
the Separate Account, and, at all other times, will have a value
approximately equal to or in excess of such reserves and liabilities,
and
(c) that portion of the Separate Account's assets having a value
equal to such reserves and contract liabilities will not be chargeable
with liabilities arising out of any other business that the Company may
conduct.
4. The Company and the Separate Account will operate in compliance
with applicable state insurance law, including but not limited to
filing annual audited financial statements of the Company and the
Separate Account with the insurance department of the Company's
domiciliary state.
5. The Company will provide Contract owners invested in the
Separate Account with copies of the annual audited financial statements
of the Company and the Separate Account.
6. The Company and the Separate Account will not solicit additional
contributions from Contract owners, or resume the sale of Contracts,
and will not use the Separate Account to issue any other annuity
contracts that would require the Separate Account to be registered
under the Act unless so registered. In addition, the Company and the
Separate Account will not solicit transfers from the Fixed Account into
the Separate Account. Furthermore, the Separate Account will not be
used for any other business other than as a funding vehicle for the
Contracts.
7. The Separate Account will re-register under the Act should the
number of beneficial owners invested in the Separate Account exceed
100.
8. The Separate Account will continue to create, maintain and keep
current the books and records as set forth in Rules 31a-1 and 31a-2
under the Act for the periods specified by these Rules.
IV. Conclusion
For the reasons and upon the facts set forth above and in the
application, Applicants submit that their exemptive request meets the
standards set out in Section 6(c) of the Act and that the Commission,
therefore, should grant the requested Order.
For the Commission, by the Division of Investment Management,
pursuant to delegated authority.
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-02181 Filed 2-1-17; 8:45 am]
BILLING CODE 8011-01-P
