Exemption From Certain Prohibited Transaction Restrictions Involving Comcast Corporation (Comcast or the Applicant) Located in Philadelphia, PA, 54264-54269 [2022-19000]
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Federal Register / Vol. 87, No. 170 / Friday, September 2, 2022 / Notices
to continuation or recurrence of material
injury to an industry in the United
States within a reasonably foreseeable
time.2
Background
The Commission instituted this
review on September 1, 2021 (86 FR
49054) and determined on December 6,
2021 that it would conduct a full review
(86 FR 71916, December 20, 2021).
Notice of the scheduling of the
Commission’s review and of a public
hearing to be held in connection
therewith was given by posting copies
of the notice in the Office of the
Secretary, U.S. International Trade
Commission, Washington, DC, and by
publishing the notice in the Federal
Register on March 25, 2022 (87 FR
17103). The Commission conducted its
hearing on July 6, 2022. All persons
who requested the opportunity were
permitted to participate.
The Commission made this
determination pursuant to section
751(c) of the Act (19 U.S.C. 1675(c)). It
completed and filed its determination in
this review on August 29, 2022. The
views of the Commission are contained
in USITC Publication 5344 (August
2022), entitled Lemon Juice from
Argentina: Investigation No. 731–TA–
1105 (Second Review).
By order of the Commission.
Issued: August 29, 2022.
Katherine Hiner,
Acting Secretary to the Commission.
[FR Doc. 2022–18997 Filed 9–1–22; 8:45 am]
BILLING CODE 7020–02–P
DEPARTMENT OF LABOR
Employee Benefits Security
Administration
[Prohibited Transaction Exemption 2022–
03; Exemption Application No. L–12021]
Exemption From Certain Prohibited
Transaction Restrictions Involving
Comcast Corporation (Comcast or the
Applicant) Located in Philadelphia, PA
Employee Benefits Security
Administration, Labor.
ACTION: Notice of exemption.
AGENCY:
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Amy A. Karpel not participating.
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Mrs.
Blessed Chuksorji-Keefe of the
Department at (202) 693–8567. (This is
not a toll-free number.)
FOR FURTHER INFORMATION CONTACT:
On
September 20, 2021, the Department
published a notice of proposed
exemption in the Federal Register at 86
FR 52217, permitting: (1) the
reinsurance of risks; and (2) the receipt
of premiums by One Belmont in
connection with insurance contracts
sold by Prudential Insurance Company
(Prudential), or any successor Fronting
Insurer, to provide group term life
insurance benefits to participants in the
life insurance component (the Life
Insurance Component) of the Plan.
This exemption provides only the
relief specified in the text of the
exemption. It provides no relief from
violations of any law other the
prohibited transaction provisions of
ERISA expressly stated herein.
The Department makes the requisite
findings under ERISA Section 408(a)
based on adherence to all of the
conditions of the exemption.
Accordingly, affected parties should be
aware that the conditions incorporated
in this exemption are, taken as a whole,
necessary for the Department to grant
the relief requested by the Applicant.
Absent these or similar conditions, the
Department would not have granted this
exemption.
The Applicant requested an
individual exemption pursuant to
ERISA section 408(a) in accordance
with the procedures set forth in 29 CFR
part 2570, subpart B (76 FR 66637,
66644, October 27, 2011).
SUPPLEMENTARY INFORMATION:
Written Comments
This document contains a
notice of exemption issued by the
Department of Labor (the Department)
from certain of the prohibited
transaction restrictions of the Employee
Retirement Income Security Act of 1974
(ERISA or the Act) and/or the Internal
Revenue Code of 1986 (the Code). Under
SUMMARY:
2 Commissioner
the exemption, the Comcast Corporation
Comprehensive Health and Welfare
Benefit Plan (the Plan) will enter into an
insurance contract with an unrelated Arated insurance company (the Fronting
Insurer) that will, in turn, enter into a
reinsurance contract with One Belmont
Insurance Company (One Belmont), an
affiliate of Comcast (the Reinsurance
Arrangement). Under the Reinsurance
Arrangement, One Belmont will
reinsure the Plan’s risks.
In the proposed exemption, the
Department invited all interested
persons to submit written comments
and/or requests for a public hearing
with respect to the notice of proposed
exemption. All comments and requests
for a hearing were due to the
Department by November 4, 2021. The
Department received one written
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comment from the Applicant,1
discussed below, and three written
comments from members of the public.
Two of the public commenters were
against the proposed exemption and
shared the same general concern that
the exemption would allow Comcast to
own or control the entities that provide
healthcare services to its employees.2
The other public commenter expressed
a view that was unrelated to the
substance of the proposed exemption.
The Department did not receive any
requests for a public hearing from any
of the commenters.
Comments From the Applicant
I. Reinsurance Benefit
The Applicant notes that footnote 16
of the Summary of Facts and
Representations states: ‘‘According to
the Applicants, Prudential has agreed to
reduce the Plan’s basic life insurance
premiums by $375,000 in return for
transferring the Plan’s basic life
insurance risks to One Belmont. The
result is a cost savings to Comcast since
Comcast pays 100% of these
premiums.’’
The Applicant now represents,
however, that, upon further review, the
Reinsurance Arrangement will not
result in Prudential reducing the
premium amounts charged to Comcast
for the Life Insurance Component.
Those premium amounts are expected
to remain the same. The current rates
are guaranteed through December 31,
2023, as part of a three-year guarantee
period. The Plan has negotiated threeyear guarantee periods for several years.
Department’s Note: Although Comcast
will not save $375,000 per year in Plan
premium payments, as originally
expected, Comcast now expects One
Belmont will instead receive
approximately $375,000 in additional
earned income per year from the captive
arrangement. Under the terms of the
exemption, the net result is the same:
Plan participants must receive all the
financial benefits that Comcast derives
from the arrangement. This includes, as
described in Section III(a) of the
exemption, any premium savings to
Comcast from the captive reinsurance
arrangement, as well as any additional
earned income to One Belmont from the
arrangement.
1 At the Department’s request, the Applicant
submitted an additional written submission
clarifying its comment letter.
2 The Department notes that Prudential, the
‘‘fronting’’ insurer, is unrelated to Comcast and its
affiliates. The Department has clarified section III(l)
of this exemption to expressly provide that,
consistent with the Department’s intent, each
‘‘fronting’’ insurer may not be owned or controlled,
in whole or in part, by Comcast.
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Comcast requests that the references
throughout the exemption be modified
to reflect ‘‘expected earned income’’ or
‘‘earned income’’ rather than ‘‘premium
reduction’’ or ‘‘savings.’’
Department’s Response: The
Department declines to revise the
operative language of the exemption as
requested. The terms ‘‘earned income’’
or ‘‘expected earned income’’ do not
accurately describe the exemption’s
expressed intent to ensure that all
benefits generated from the captive
arrangement, not just additional earned
income, inure to the benefit of Plan
participants. Consistent with this intent,
the Department has changed the term
‘‘savings’’ to ‘‘benefits’’ in Section III(a)
and deleted the reference to ‘‘savings’’
in Section III(g)(9) (for consistency).
Further, the Department has not
changed the term ‘‘premium reduction’’
to ‘‘earned income’’ ‘‘or expected earned
income.’’ The term ‘‘premium
reduction,’’ as used in the exemption,
describes the requirement that Comcast
must reduce the participants’ portion of
the premium for the dental component
of the Plan by at least $375,000 each
year the reinsurance arrangement is in
effect. In this context, the term
‘‘premium reduction’’ more accurately
describes the Department’s intent than
‘‘earned income’’ or ‘‘expected earned
income.’’
II. Five-Year or Three-Year Look Back
Proposal
Section III(a) of the proposal states
that: ‘‘In the initial year and each
subsequent year of the captive
reinsurance arrangement, the
participants’ portion of the premium for
the dental component of the Plan (the
Dental Component) must be reduced by
at least $375,000. If Comcast’s savings
from the captive reinsurance
arrangement are greater than $375,000
in any year, Comcast must reduce the
participants’ portion of the Dental
Component’s premium by that greater
amount in the next subsequent year. If
Comcast or any of its affiliates
ultimately receive some other benefit in
connection with the captive insurance
arrangement, such as a tax reduction or
a profit or any benefit arising from a
further diversification of One Belmont’s
risks in connection with adding the
Plan-related insurance risks to One
Belmont’s other risks, participants in
the Dental Component must receive an
additional corresponding dollar-fordollar reduction to their portion of the
Dental Component’s premiums in the
subsequent year.’’
Comcast requests that this section be
modified to allow for a five-year lookback in which to calculate and apply
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any additional earned income over
$1,875,000 to reduce the dental
premiums (i.e., any amount above the
$375,000 per year over a five-year
period that Comcast is already expected
to receive from the arrangement and
required to pass on to participants in the
form of reduced premiums). Comcast
states that it is ‘‘concerned that the
current structure of the proposed
exemption, which could involve
adjustments to participant contribution
amounts each year, introduces the
potential for significant fluctuations in
participant dental premium amounts
over time.’’ Comcast states that such a
period will help it ‘‘smooth fluctuations
in participant contribution amounts
over time.’’
Comcast requests that if the
Department is not agreeable to a fiveyear lookback period, the exemption be
modified to allow for a three-year
rolling lookback period. Comcast states
that a three-year rolling lookback would
allow Comcast to assess over a threeyear period whether any additional
earnings above $125,000 (the $375,000
guaranteed minimum amount over a
three-year period) must be credited
against participant contributions on an
annual basis (subject to the timing
request discussed below). Comcast
argues that this three-year rolling
lookback would mitigate any significant
lag between the calculation of the extra
earning income and crediting the
earnings against participant
contributions to the Dental Component
and this methodology will allow
Comcast to achieve more consistent
pricing to soften the impact of
fluctuations on participant
contributions.
Department’s Response: The
Department declines to make either of
the Applicant’s requested revisions. The
Department developed the conditions of
the exemption to ensure that
participants will benefit from all earned
income and other benefits that are
generated by the reinsurance
arrangement. A five or three-year period
is excessive for participants to receive
additional premium reductions. Among
other things, a multi-year period would
deprive Plan participants who leave
Comcast’s employment before the end of
the period of the benefits of further
premium reduction. Consistent with
this view, the exemption requires
Comcast to calculate One Belmont’s
earned income from the reinsurance
arrangement on an annual basis.
However, the Department acknowledges
that Comcast may have legitimate
concerns regarding the amount of time
it needs to properly reduce participants’
premium payments by such amount and
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has agreed to additional timing
considerations, as discussed
immediately below.
III. Timing of Use of Benefits and
Independent Fiduciary Report
Comcast represents that it is not
feasible for the Independent Fiduciary
to provide their review of the
documents within six months after the
end of the prior year. The Applicant
also claims that applying the extra
earned income (amounts above the
guaranteed $375,000) to offset the
Dental premiums for the immediately
subsequent plan year (which is a
calendar year) may be very difficult
because of the time it takes for the
insurance carrier to report year-end
information and for the Independent
Fiduciary to calculate the earned
income to be applied to the Dental
premium. The Applicant points to
timing constraints that may make it
difficult to share the extra earned
income in the next year as required by
the proposed exemption. In particular,
the Applicant states that the experience
results for the life insurance for the
prior year are provided in May/June of
the subsequent year; final premium and
employee contribution rates are set no
later than the end of July; One Belmont
receives its audited financial statement
in mid-July, at the earliest, and therefore
the Independent Fiduciary cannot begin
review until mid-July or later. The
Applicant claims these timing
constraints will make it impossible to
apply any additional earnings above
$375,000 against participant
contributions for the following Plan year
in a process overseen by the
Independent Fiduciary.
The Applicant therefore requests that
the Independent Fiduciary be required
to complete its report within one year
after the 12-month period to which it
relates and submit the report to the
Department within four months
thereafter.
Department’s Response: Section III(a)
of the exemption has been revised to: (a)
reflect a two-year ‘‘make whole’’ period;
(b) require the Plan to receive interest
on amounts Comcast owes the Plan at a
rate equal to underpayments established
in Internal Revenue Code section
6621(b); and (c) more clearly describes
the term ‘‘benefits.’’
Section III(a) now reads, ‘‘In the
initial year and each subsequent year of
the captive reinsurance arrangement,
the participant’s portion of the premium
for the dental component of the Plan
(the Dental Component) must be
reduced by at least $375,000. The
Independent Fiduciary must determine
whether Comcast earned a financial
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benefit in excess of $375,000 per year
and must report its determination as
part of the Independent Fiduciary’s
annual report. Benefits include, but are
not limited to, increased earned income,
increased savings, a tax reduction or a
profit or any benefit arising from a
further diversification of One Belmont’s
risks in connection with adding Planrelated insurance risks to One Belmont’s
other risks. If Comcast’s benefit from the
arrangement exceeds $375,000 per year
in any year (the Excess Benefit),
Comcast must further reduce the
participants’ portion of the dental
component of the Plan’s (the Dental
Plan’s) premium no later than two years
after the end of the year in which the
Excess Benefit was earned by an amount
that is at least equal to the Excess
Benefit plus an additional payment of
interest on the Excess Benefit at the
Code’s federal underpayment rate
established in Internal Revenue Code
section 6621(b). The interest on the
Excess Benefit must be calculated for
the period from the end of the plan year
the Excess Benefit was earned through
the start of the Plan year in which the
Excess Benefit is applied to reduce the
participants’ portion of the Dental Plan’s
premiums. The premium reduction
must benefit all Dental Plan participants
equally and must be verified by the
Independent Fiduciary.’’
The Department is not persuaded that
the Independent Fiduciary needs four
additional months to submit its
completed report to the Department,
and so has not made the requested
revision.
IV. Dental Premium Split
In paragraph 7 of the Summary of
Facts and Representations, the
Department stated: ‘‘In no event may the
reduction in the participants’ portion of
the Dental Component’s premium be
less than the amount Comcast or any of
its affiliates ultimately benefits from the
captive reinsurance arrangement.
Further, Comcast must continue to
contribute no less than 60% of the
Dental Component’s premiums after the
captive reinsurance arrangement takes
effect.’’
In its comment letter, Comcast
requests that the Department not require
a specific level of premium split for the
Dental Component. Comcast argues that
locking-in the split between employer
and employee premium contribution
amounts is unnecessary to make the
captive reinsurance arrangement
protective of the participants and in
their best interest. Comcast claims that
such a requirement would severely
constrain future offerings under the
Dental Component and deter Comcast,
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as settlor, from offering options that
otherwise provide greater benefits even
though employees would be willing to
pay more for those benefits.
Comcast notes that its application
stated that the dental payment
percentage split between Comcast and
its employees was ‘‘approximately’’
60/40. Comcast explains that the Plan
offers three different dental benefit
options with three different premium
splits. Comcast employees are offered a
Dental Maintenance Organization
(DMO) option and a Preferred Provider
Organization (PPO) option while NBCU
(Comcast’s affiliate) employees are
offered only a PPO dental option.
Comcast states that because its primary
goal is keeping the dollar amount of
employee contributions consistent
across the two companies, the Company
contribution varies between 55% and
62%.
Comcast urged the Department to rely
on the Independent Fiduciary’s annual
review to evaluate compliance with the
exemption.
Department’s Response: The
Department is revising the exemption by
removing the requirement that Comcast
maintain a specific level of premium
contribution to the dental component.
However, the Department remains
concerned that the value of the benefits
provided to the Dental Component
through the captive reinsurance
arrangement could be lessened through
offsetting reductions to other benefits
provided to Comcast’s employees.
The Department notes that it is the
responsibility of the Independent
Fiduciary to monitor, enforce, and
ensure compliance with all the
conditions of the exemption. This
includes Section III(k) of the exemption,
which provides that, ‘‘Comcast will not
evade the condition in Section III(a) by
offsetting or reducing any benefits
provided to Comcast employees to
defray the costs, expenses, or
obligations of complying with this
exemption.’’
To that end, Section III(g)(8) of the
exemption has been revised to require
the Independent Fiduciary to
specifically confirm in its annual report
whether Section III(k) has been met and
to describe the steps it took in reaching
this confirmation.
V. Commission
Section III(b) of the proposed
exemption states that: ‘‘No commissions
are paid by the Plan with respect to the
direct sale of such contracts or the
reinsurance thereof . . .’’
Comcast clarified in its comment
letter ‘‘that Prudential does pay a
supplemental commission in
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connection with the sale of the direct
life insurance coverage and will
continue to pay this supplemental
commission as reflected on the Plan’s
Form 5500. The cost of this
supplemental commission is wholly
borne by Prudential and the Plan itself
does not pay any separate commission
in connection with the purchase of the
direct insurance and does not pay a
commission in connection with the
reinsurance coverage either.’’
Department’s Response: The
Department notes Comcast’s
clarification. Comcast’s Form 5500 lists
the commission recipient as ‘‘American
Benefits & Compensation Systems, Inc.’’
located in New York, NY. Prudential
confirmed that ‘‘this continues to be the
entity to whom the commission is
payable and that it believes Alliant
owns the entity.’’
VI. Status of One Belmont as a Comcast
Affiliate
The Department noted in paragraph 1
of the Summary of Facts and
Representations of the proposed
exemption that ‘‘Comcast wholly owns
One Belmont Insurance Company. . . .’’
In its comment letter, Comcast stated
that it ‘‘is more accurate to state that
One Belmont is a wholly owned
subsidiary of Comcast Corporation.’’
The Department has made certain
other minor changes to the wording of
the exemption, including renumbering
some of the exemption’s sections, for
clarity and consistency.
The complete application file (L–
12021) is available for public inspection
in the Public Disclosure Room of the
Employee Benefits Security
Administration, Room N–1515, U.S.
Department of Labor, 200 Constitution
Avenue NW, Washington, DC 20210.
For a more complete statement of the
facts and representations supporting the
Department’s decision to grant this
exemption, refer to the notice of
proposed exemption published on
September 20, 2021, at 86 FR 52217.
Accordingly, after considering the
entire record developed in connection
with the Applicant’s exemption
application and comment letter, the
Department has determined to grant the
exemption described below.
General Information
The attention of interested persons is
directed to the following:
(1) The fact that a transaction is the
subject of an exemption under ERISA
Section 408(a) does not relieve a
fiduciary or other party in interest from
certain requirements of other ERISA
provisions, including any prohibited
transaction provisions to which the
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exemption does not apply and the
general fiduciary responsibility
provisions of ERISA Section 404, which,
among other things, require a fiduciary
to discharge his or her duties respecting
the plan solely in the interest of the
plan’s participants and beneficiaries and
in a prudent fashion in accordance with
ERISA Section 404(a)(1)(B).
(2) As required by ERISA Section
408(a), the Department hereby finds that
the exemption is: (a) administratively
feasible; (b) in the interests of affected
plans and of their participants and
beneficiaries; and (c) protective of the
rights of participants and beneficiaries
of such plans.
(3) This exemption is supplemental
to, and not in derogation of, any other
ERISA provisions, including statutory or
administrative exemptions and
transitional rules. Furthermore, the fact
that a transaction is subject to an
administrative or statutory exemption is
not dispositive of determining whether
the transaction is in fact a prohibited
transaction.
(4) The availability of this exemption
is subject to the express condition that
the material facts and representations
contained in the application accurately
describe all material terms of the
transactions that are the subject of the
exemption.
Accordingly, the following exemption
is granted under the authority of ERISA
Section 408(a), and in accordance with
the procedures set forth in 29 CFR part
2570, subpart B (76 FR 66637, 66644,
October 27, 2011):
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Exemption
Section I. Definitions
(a) An ‘‘affiliate’’ of Comcast
Corporation or One Belmont includes:
(1) Any person or entity who controls
Comcast or One Belmont or is
controlled by or under common control
with Comcast or One Belmont; (2) Any
officer, director, employee, relative, or
partner with respect to Comcast or One
Belmont; and (3) Any corporation or
partnership of which the person in (2)
of this paragraph is an officer, director,
partner, or employee;
(b) The term ‘‘control’’ means the
power to exercise a controlling
influence over the management or
policies of a person other than an
individual;
(c) The term ‘‘Independent Fiduciary’’
means a person who:
(1) Is not an affiliate of Comcast or
One Belmont and does not hold an
ownership interest in Comcast or One
Belmont or their affiliates;
(2) Is not a fiduciary with respect to
the Plan before its appointment to serve
as the Independent Fiduciary;
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(3) Has acknowledged in writing that
it:
(i) is a fiduciary with respect to the
Plan and has agreed not to participate in
any decision regarding any transaction
in which it has an interest that might
affect its best judgment as a fiduciary;
and
(ii) has appropriate technical training
or experience to perform the services
contemplated by the exemption;
(4) has not entered into any agreement
or instrument that violates the
prohibitions on exculpatory provisions
in ERISA section 410 or the
Department’s regulations relating to
indemnification of fiduciaries at 29 CFR
2509.75–4.
(5) For purposes of this definition, no
organization or individual may serve as
Independent Fiduciary for any fiscal
year if the gross income received by
such organization or individual from
Comcast, One Belmont, or their affiliates
for that fiscal year exceeds two percent
(2%) of such organization’s or
individual’s gross income from all
sources for the prior fiscal year. This
provision also applies to a partnership
or corporation of which such
organization or individual is an officer,
director, or 10 percent (10%) or more
partner or shareholder, and includes as
gross income amounts received as
compensation for services provided as
an independent fiduciary under any
prohibited transaction exemption
granted by the Department; and
(6) No organization or individual that
is an Independent Fiduciary and no
partnership or corporation of which
such organization or individual is an
officer, director, or ten percent (10%) or
more partner or shareholder may
acquire any property from, sell any
property to, or borrow any funds from
Comcast, One Belmont, or their affiliates
while serving as an Independent
Fiduciary. This prohibition will
continue for a period of six months
after: (i) the party ceases to be an
Independent Fiduciary; and/or (ii) the
Independent Fiduciary negotiates any
transaction on behalf of the Plan during
the period that the organization or
individual serves as an Independent
Fiduciary.
Section II. Covered Transactions
The restrictions of ERISA Sections
406(a)(1)(D) and 406(b)(1) will not apply
to: (1) the reinsurance of risks; and (2)
the receipt of premiums therefrom by
One Belmont in connection with
insurance contracts sold by Prudential
(or any successor Fronting Insurer
meeting the requirements of this
exemption) to provide group term life
insurance benefits to Plan participants
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in the Life Insurance Component of the
Plan. In order to receive such relief, the
conditions in Section II must be met in
conformance with the definitions set
forth in Section I.
Section III. Conditions
(a) In the initial year and each
subsequent year of the captive
reinsurance arrangement, the
participant’s portion of the premium for
the dental component of the Plan (the
Dental Component) must be reduced by
at least $375,000, with no offset or
reduction to other benefits Comcast
provides to its employees. The
Independent Fiduciary must determine
whether Comcast Corporation
(including One Belmont and any
affiliate or any person or entity related
to Comcast Corporation (hereinafter,
collectively, Comcast) earned a financial
benefit in excess of $375,000 per year
and must report its determination as
part of the Independent Fiduciary’s
annual report. Financial benefits
include, but are not limited to,
increased earned income, increased
savings, a tax reduction or a profit or
any benefit arising from a further
diversification of One Belmont’s risks in
connection with adding Plan-related
insurance risks to One Belmont’s other
risks. If Comcast’s benefit from the
arrangement exceeds $375,000 per year
in any year (the Excess Benefit),
Comcast must further reduce the
participants’ portion of the dental
component of the Plan’s (the Dental
Plan’s) premium no later than two years
after end of the year in which the Excess
Benefit was earned, by an amount that
is at least equal to the Excess Benefit,
plus an additional interest payment on
the Excess Benefit at the Internal
Revenue Code’s federal underpayment
rate established in Code section 6621(b).
The interest on the Excess Benefit must
be calculated for the period from the
end of the Plan year the Excess Benefit
was earned through the start of the plan
year in which the Excess Benefit is
applied to participant dental premiums.
The premium reduction must benefit all
Dental Plan participants equally and
must be verified by the Independent
Fiduciary.
(b) No commissions are paid by the
Plan with respect to the direct sale of
such contracts or the reinsurance
thereof;
(c) In the initial year and in
subsequent years of coverage provided
by a Fronting Insurer, the formulae used
by the Fronting Insurer to calculate
premiums must be similar to formulae
used by other insurers providing
comparable life insurance coverage
under similar programs that are not
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captive reinsured. Furthermore, the
premium charges calculated in
accordance with the formulae must be
reasonable and must be comparable to
the premiums charged by the Fronting
Insurer and its competitors with the
same or a better financial strength rating
providing the same coverage under
comparable programs that are not
captive reinsured;
(d) Comcast is solely and fully
responsible for funding One Belmont’s
reserves with respect to the reinsurance
arrangement covered by this exemption;
(e) One Belmont:
(1) Is a party in interest with respect
to the Plan by reason of a stock or
partnership affiliation with Comcast
that is described in ERISA section
3(14)(E) or (G); 3
(2) Is licensed to sell insurance or
conduct reinsurance operations in at
least one State as such term is defined
in ERISA section 3(10);
(3) Has obtained a Certificate of
Authority from the state of Vermont, its
domiciliary state, that has neither been
revoked nor suspended;
(4) (A) Has undergone and shall
continue to undergo an examination by
an independent certified public
accountant for its last completed taxable
year immediately before the taxable year
of the reinsurance transaction covered
by this exemption; or
(B) Has undergone a financial
examination (within the meaning of the
law of Vermont) by the Commissioner of
Banking, Insurance, Securities and
Health Care Administration of the State
of Vermont within five (5) years before
the end of the year preceding the year
in which the reinsurance transaction
occurred; and
(5) Is licensed to conduct reinsurance
transactions under Vermont law, which
requires an actuarial review of reserves
to be conducted annually by an
independent firm of actuaries and
reported to the appropriate regulatory
authority;
(f) The Plan retained and will
continue to retain an independent,
qualified fiduciary or successor to such
fiduciary, as defined in Section I(c), (the
Independent Fiduciary) to analyze the
transactions covered by this exemption,
and render an opinion that all of the
requirements of this exemption have
been satisfied;
(g) The Independent Fiduciary must:
3 Under ERISA section 3(14)(G), a corporation is
a ‘‘party in interest’’ with respect to an employee
benefit plan if 50 percent or more of the combined
voting power of all classes of the corporation’s stock
entitled to vote, or the total value of shares of all
classes of stock of the corporation, is owned by an
employer any of whose employees are covered by
the employee benefit plan.
VerDate Sep<11>2014
16:40 Sep 01, 2022
Jkt 256001
(1) In full accordance with its
obligations of prudence and loyalty
under ERISA sections 404(a)(1)(A) and
(B), (i) review the terms of the
exemption, (ii) engage in a prudent and
loyal analysis of the covered
transactions, and (iii) verify that based
on its review of all relevant documents
and evidence, it has concluded that all
of the exemption’s terms and conditions
have been met (or can be reasonably be
expected to be met consistent with the
time requirements set forth in this
exemption). This conclusion must be
documented in a written report
submitted to the Department’s Office of
Exemption Determinations at least 30
days before the Plan engages in a
transaction covered by the exemption.
The report must include copies of each
document relied on by the Independent
Fiduciary and discuss the basis for its
conclusion;
(2) Monitor, enforce and ensure
compliance with all conditions of this
exemption, including all conditions and
obligations imposed on any party
dealing with the Plan, throughout the
period during which One Belmont’s
assets are directly or indirectly used in
connection with a transaction covered
by this exemption;
(3) Report any instance of noncompliance immediately to the
Department’s Office of Exemption
Determinations;
(4) Monitor the transactions described
in the exemption on a continuing basis
to ensure the transactions remain in the
interest of the Plan;
(5) Take all appropriate actions to
safeguard the interests of the Plan;
(6) Review all contracts pertaining to
the Reinsurance Arrangement, and any
renewals of such contracts, to determine
whether the requirements of this
exemption continue to be satisfied;
(7) Determine that the Reinsurance
Arrangement is in no way detrimental to
the Plan and its participants and
beneficiaries;
(8) Confirm in its annual report (and
describe the steps taken to confirm) that
(i) the Plan’s Dental Component has
received all the financial benefits
associated with the captive reinsurance
arrangement that otherwise would have
been retained by Comcast or a party
related to Comcast, and (ii) Comcast has
not reduced or offset any participant
benefits in relation to its
implementation and maintenance of the
reinsurance arrangement as required by
section III(k), including a reduction in
premium contributions to the dental
component or other benefits Comcast
provides to it employees;
(9) Provide an annual report to the
Department, certifying Under penalty of
PO 00000
Frm 00082
Fmt 4703
Sfmt 4703
perjury that each term and condition of
this exemption is satisfied and setting
forth the bases for the certification. Each
report must be completed and submitted
to the Department within twelve months
after the end of the twelve-month period
to which it relates (the first twelvemonth period begins on the first day of
the implementation of the captive
reinsurance arrangement covered by this
exemption);
(h) Comcast and its related parties
have not, and will not, indemnify the
Independent Fiduciary, in whole or in
part, for negligence and/or for any
violations of state or federal law that
may be attributable to the Independent
Fiduciary in performing its duties under
the captive reinsurance arrangement. In
addition, no contract or instrument will
purport to waive any liability under
state or federal law for any such
violations.
(i) Neither Comcast nor a related
entity may use participant-related data
or information generated by, or derived
from, the Reinsurance Arrangement in a
manner that benefits Comcast or a
related entity;
(j) All the facts and representations set
forth in the Summary of Facts and
Representations are true and accurate;
(k) Comcast will not evade the
condition in Section III(a) by offsetting
or reducing any benefits provided to
Comcast employees to defray the costs,
expenses, or obligations of complying
with this exemption;
(l) The Plan will only contract with a
Fronting Insurer that is unrelated to
Comcast, and that has a financial
strength rating of ‘‘A’’ or better from
A.M. Best. For purposes of this
provision, the term ‘‘unrelated’’ means
that the Fronting Insurer is not owned
or controlled by Comcast in whole or in
part;
(m) The Plan must pay no more than
adequate consideration with respect to
insurance that is part of the captive
reinsurance arrangement covered by the
exemption;
(n) In the event a successor
Independent Fiduciary is appointed to
represent the interests of the Plan with
respect to the subject transaction, no
time shall elapse between the
resignation or termination of the former
Independent Fiduciary and the
appointment of the successor
Independent Fiduciary; and
(o) All expenses associated with the
exemption and the exemption
application, including any payment to
the Independent Fiduciary, must be
paid by Comcast and not the Plan.
Effective Date: This exemption will be
in effect on the date that this grant
E:\FR\FM\02SEN1.SGM
02SEN1
Federal Register / Vol. 87, No. 170 / Friday, September 2, 2022 / Notices
notice is published in the Federal
Register.
Signed at Washington, DC.
George C. Cosby,
Director, Office of Exemption Determinations,
Employee Benefits Security Administration,
U.S. Department of Labor.
[FR Doc. 2022–19000 Filed 9–1–22; 8:45 am]
BILLING CODE 4510–29–P
OFFICE OF SCIENCE AND
TECHNOLOGY POLICY
Request for Information; Equitable
Data Engagement and Accountability
Office of Science and
Technology Policy (OSTP).
ACTION: Notice of request for
information (RFI).
AGENCY:
The White House Office of
Science and Technology Policy (OSTP),
on behalf of the Subcommittee on
Equitable Data of the National Science
and Technology Council, requests
information on how Federal agencies
can better support collaboration with
other levels of government, civil society,
and the research community around the
production and use of equitable data.
This RFI will support Federal equitable
data efforts described in the Executive
Order on Advancing Racial Equity and
Support for Underserved Communities
Through the Federal Government (E.O.
13985), including the Vision for
Equitable Data issued to the President
in April 2022.
DATES: Interested persons and
organizations are invited to submit
comments on or before 5 p.m. ET,
October 3, 2022.
ADDRESSES: You may submit comments
by any of the following methods:
• Email: equitabledata@ostp.eop.gov,
include Engagement and Accountability
RFI in the subject line of the message.
Email submissions should be machinereadable [PDF, Word] and should not be
copy-protected.
• Mail: Attn: NSTC Subcommittee on
Equitable Data, Office of Science and
Technology Policy, Eisenhower
Executive Office Building, 1650
Pennsylvania Ave. NW, Washington, DC
20504.
Instructions: Response to this RFI is
voluntary. Respondents may answer as
many or as few questions as they wish.
Each individual or institution is
requested to submit only one response.
Electronic responses must be provided
as attachments to an email rather than
a link. Please identify your answers by
responding to a specific question or
topic if possible. Comments of seven
lotter on DSK11XQN23PROD with NOTICES1
SUMMARY:
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16:40 Sep 01, 2022
Jkt 256001
pages or fewer (3,500 words) are
requested; longer responses will not be
considered. Responses should include
the name of the person(s) or
organization(s) filing the response.
Responses containing references,
studies, research, and other empirical
data that are not widely published
should include copies of or electronic
links to the referenced materials.
Responses containing profanity,
vulgarity, threats, or other inappropriate
language or content will not be
considered.
Any information obtained from this
RFI is intended to be used by the
Government on a non-attribution basis
for planning and strategy development.
OSTP will not respond to individual
submissions. A response to this RFI will
not be viewed as a binding commitment
to develop or pursue the project or ideas
discussed. This RFI is not accepting
applications for financial assistance or
financial incentives.
Comments submitted in response to
this notice are subject to the Freedom of
Information Act (FOIA). No business
proprietary information, copyrighted
information, or personally identifiable
information should be submitted in
response to this RFI. Please be aware
that comments submitted in response to
this RFI, including the submitter’s
identification (as noted above), may be
posted, without change, on OSTP’s or
another Federal website or otherwise
released publicly.
FOR FURTHER INFORMATION CONTACT:
Denice Ross, U.S. Chief Data Scientist,
at equitabledata@ostp.eop.gov or 202–
456–6121.
SUPPLEMENTARY INFORMATION: As part of
the President’s Executive Order on
Advancing Racial Equity and Support
for Underserved Communities Through
the Federal Government (E.O. 13985),
the Administration convened a Federal
Equitable Data Working Group to study
existing Federal data collection policies,
programs, and infrastructure to identify
inadequacies and provide
recommendations that lay out a strategy
for increasing data available for
measuring equity and representing the
diversity of the American people.
In its final report in April 2022—
Vision for Equitable Data—the Equitable
Data Working Group emphasized the
need for the Federal government to use
equitable data to (1) encourage diverse
collaborations across levels of
government, civil society, and the
research community and (2) be
accountable to the American public. By
equitable data, we mean data that allow
for rigorous assessment of the extent to
which government programs and
PO 00000
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54269
policies yield consistently fair, just, and
impartial treatment of all individuals,
including those who have been
historically underserved, marginalized,
and adversely affected by persistent
poverty and inequality. Equitable data
can illuminate opportunities for targeted
actions that will result in demonstrably
improved outcomes for underserved
communities. One key characteristic of
equitable data is that it is disaggregated
by demographic information (e.g., race,
ethnicity, gender, language spoken,
etc.), geographic information (e.g., rural/
urban), or other variables, enabling
insights on disparities in access to, and
outcomes from, government programs,
policies, and services.
Durable, equitable data infrastructure
requires fostering collaborations across
all levels of government, as well as with
a diverse community of external
organizations to advance outcomes for
underserved communities. Constructing
such infrastructure will likely require
new incentives and pathways, including
to ensure greater data sharing and
capacity building across different levels
of government and to broaden the
research community involved in
producing and analyzing equitable data.
Furthermore, providing tools that
allow civil society organizations and
communities to use and visualize
Federal data and chart government’s
progress toward equitable outcomes is
crucial for strengthening accountability
and credibility with the American
public. Such tools can encourage
community participation in government
equity efforts, but these tools must be
designed and administered in ways that
meet community members where they
are in terms of data analysis capacity
and resources. These tools should
ideally enable members of the public to
easily find meaningful and actionable
data about the well-being of their
communities and the services provided
to them.
In this notice, the White House OSTP
is providing an opportunity for
members of the public to provide
perspectives on how to best to
encourage collaborations between the
Federal government and (a) state, local,
territorial, and Tribal governments; (b)
researchers and research institutions;
and (c) local communities that facilitate
producing, accessing, and using
equitable data.
Responses to this Request for
Information (RFI) will be used to inform
the development of case studies, best
practices, and new strategies for Federal
agencies, including establishing:
(1) mutually beneficial collaborations
between Federal agencies and other
levels of government, civil society, and
E:\FR\FM\02SEN1.SGM
02SEN1
]]>Agencies
[Federal Register Volume 87, Number 170 (Friday, September 2, 2022)]
[Notices]
[Pages 54264-54269]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-19000]
=======================================================================
-----------------------------------------------------------------------
DEPARTMENT OF LABOR
Employee Benefits Security Administration
[Prohibited Transaction Exemption 2022-03; Exemption Application No. L-
12021]
Exemption From Certain Prohibited Transaction Restrictions
Involving Comcast Corporation (Comcast or the Applicant) Located in
Philadelphia, PA
AGENCY: Employee Benefits Security Administration, Labor.
ACTION: Notice of exemption.
-----------------------------------------------------------------------
SUMMARY: This document contains a notice of exemption issued by the
Department of Labor (the Department) from certain of the prohibited
transaction restrictions of the Employee Retirement Income Security Act
of 1974 (ERISA or the Act) and/or the Internal Revenue Code of 1986
(the Code). Under the exemption, the Comcast Corporation Comprehensive
Health and Welfare Benefit Plan (the Plan) will enter into an insurance
contract with an unrelated A-rated insurance company (the Fronting
Insurer) that will, in turn, enter into a reinsurance contract with One
Belmont Insurance Company (One Belmont), an affiliate of Comcast (the
Reinsurance Arrangement). Under the Reinsurance Arrangement, One
Belmont will reinsure the Plan's risks.
FOR FURTHER INFORMATION CONTACT: Mrs. Blessed Chuksorji-Keefe of the
Department at (202) 693-8567. (This is not a toll-free number.)
SUPPLEMENTARY INFORMATION: On September 20, 2021, the Department
published a notice of proposed exemption in the Federal Register at 86
FR 52217, permitting: (1) the reinsurance of risks; and (2) the receipt
of premiums by One Belmont in connection with insurance contracts sold
by Prudential Insurance Company (Prudential), or any successor Fronting
Insurer, to provide group term life insurance benefits to participants
in the life insurance component (the Life Insurance Component) of the
Plan.
This exemption provides only the relief specified in the text of
the exemption. It provides no relief from violations of any law other
the prohibited transaction provisions of ERISA expressly stated herein.
The Department makes the requisite findings under ERISA Section
408(a) based on adherence to all of the conditions of the exemption.
Accordingly, affected parties should be aware that the conditions
incorporated in this exemption are, taken as a whole, necessary for the
Department to grant the relief requested by the Applicant. Absent these
or similar conditions, the Department would not have granted this
exemption.
The Applicant requested an individual exemption pursuant to ERISA
section 408(a) in accordance with the procedures set forth in 29 CFR
part 2570, subpart B (76 FR 66637, 66644, October 27, 2011).
Written Comments
In the proposed exemption, the Department invited all interested
persons to submit written comments and/or requests for a public hearing
with respect to the notice of proposed exemption. All comments and
requests for a hearing were due to the Department by November 4, 2021.
The Department received one written comment from the Applicant,\1\
discussed below, and three written comments from members of the public.
Two of the public commenters were against the proposed exemption and
shared the same general concern that the exemption would allow Comcast
to own or control the entities that provide healthcare services to its
employees.\2\ The other public commenter expressed a view that was
unrelated to the substance of the proposed exemption. The Department
did not receive any requests for a public hearing from any of the
commenters.
---------------------------------------------------------------------------
\1\ At the Department's request, the Applicant submitted an
additional written submission clarifying its comment letter.
\2\ The Department notes that Prudential, the ``fronting''
insurer, is unrelated to Comcast and its affiliates. The Department
has clarified section III(l) of this exemption to expressly provide
that, consistent with the Department's intent, each ``fronting''
insurer may not be owned or controlled, in whole or in part, by
Comcast.
---------------------------------------------------------------------------
Comments From the Applicant
I. Reinsurance Benefit
The Applicant notes that footnote 16 of the Summary of Facts and
Representations states: ``According to the Applicants, Prudential has
agreed to reduce the Plan's basic life insurance premiums by $375,000
in return for transferring the Plan's basic life insurance risks to One
Belmont. The result is a cost savings to Comcast since Comcast pays
100% of these premiums.''
The Applicant now represents, however, that, upon further review,
the Reinsurance Arrangement will not result in Prudential reducing the
premium amounts charged to Comcast for the Life Insurance Component.
Those premium amounts are expected to remain the same. The current
rates are guaranteed through December 31, 2023, as part of a three-year
guarantee period. The Plan has negotiated three-year guarantee periods
for several years.
Department's Note: Although Comcast will not save $375,000 per year
in Plan premium payments, as originally expected, Comcast now expects
One Belmont will instead receive approximately $375,000 in additional
earned income per year from the captive arrangement. Under the terms of
the exemption, the net result is the same: Plan participants must
receive all the financial benefits that Comcast derives from the
arrangement. This includes, as described in Section III(a) of the
exemption, any premium savings to Comcast from the captive reinsurance
arrangement, as well as any additional earned income to One Belmont
from the arrangement.
[[Page 54265]]
Comcast requests that the references throughout the exemption be
modified to reflect ``expected earned income'' or ``earned income''
rather than ``premium reduction'' or ``savings.''
Department's Response: The Department declines to revise the
operative language of the exemption as requested. The terms ``earned
income'' or ``expected earned income'' do not accurately describe the
exemption's expressed intent to ensure that all benefits generated from
the captive arrangement, not just additional earned income, inure to
the benefit of Plan participants. Consistent with this intent, the
Department has changed the term ``savings'' to ``benefits'' in Section
III(a) and deleted the reference to ``savings'' in Section III(g)(9)
(for consistency).
Further, the Department has not changed the term ``premium
reduction'' to ``earned income'' ``or expected earned income.'' The
term ``premium reduction,'' as used in the exemption, describes the
requirement that Comcast must reduce the participants' portion of the
premium for the dental component of the Plan by at least $375,000 each
year the reinsurance arrangement is in effect. In this context, the
term ``premium reduction'' more accurately describes the Department's
intent than ``earned income'' or ``expected earned income.''
II. Five-Year or Three-Year Look Back Proposal
Section III(a) of the proposal states that: ``In the initial year
and each subsequent year of the captive reinsurance arrangement, the
participants' portion of the premium for the dental component of the
Plan (the Dental Component) must be reduced by at least $375,000. If
Comcast's savings from the captive reinsurance arrangement are greater
than $375,000 in any year, Comcast must reduce the participants'
portion of the Dental Component's premium by that greater amount in the
next subsequent year. If Comcast or any of its affiliates ultimately
receive some other benefit in connection with the captive insurance
arrangement, such as a tax reduction or a profit or any benefit arising
from a further diversification of One Belmont's risks in connection
with adding the Plan-related insurance risks to One Belmont's other
risks, participants in the Dental Component must receive an additional
corresponding dollar-for-dollar reduction to their portion of the
Dental Component's premiums in the subsequent year.''
Comcast requests that this section be modified to allow for a five-
year look-back in which to calculate and apply any additional earned
income over $1,875,000 to reduce the dental premiums (i.e., any amount
above the $375,000 per year over a five-year period that Comcast is
already expected to receive from the arrangement and required to pass
on to participants in the form of reduced premiums). Comcast states
that it is ``concerned that the current structure of the proposed
exemption, which could involve adjustments to participant contribution
amounts each year, introduces the potential for significant
fluctuations in participant dental premium amounts over time.'' Comcast
states that such a period will help it ``smooth fluctuations in
participant contribution amounts over time.''
Comcast requests that if the Department is not agreeable to a five-
year lookback period, the exemption be modified to allow for a three-
year rolling lookback period. Comcast states that a three-year rolling
lookback would allow Comcast to assess over a three-year period whether
any additional earnings above $125,000 (the $375,000 guaranteed minimum
amount over a three-year period) must be credited against participant
contributions on an annual basis (subject to the timing request
discussed below). Comcast argues that this three-year rolling lookback
would mitigate any significant lag between the calculation of the extra
earning income and crediting the earnings against participant
contributions to the Dental Component and this methodology will allow
Comcast to achieve more consistent pricing to soften the impact of
fluctuations on participant contributions.
Department's Response: The Department declines to make either of
the Applicant's requested revisions. The Department developed the
conditions of the exemption to ensure that participants will benefit
from all earned income and other benefits that are generated by the
reinsurance arrangement. A five or three-year period is excessive for
participants to receive additional premium reductions. Among other
things, a multi-year period would deprive Plan participants who leave
Comcast's employment before the end of the period of the benefits of
further premium reduction. Consistent with this view, the exemption
requires Comcast to calculate One Belmont's earned income from the
reinsurance arrangement on an annual basis. However, the Department
acknowledges that Comcast may have legitimate concerns regarding the
amount of time it needs to properly reduce participants' premium
payments by such amount and has agreed to additional timing
considerations, as discussed immediately below.
III. Timing of Use of Benefits and Independent Fiduciary Report
Comcast represents that it is not feasible for the Independent
Fiduciary to provide their review of the documents within six months
after the end of the prior year. The Applicant also claims that
applying the extra earned income (amounts above the guaranteed
$375,000) to offset the Dental premiums for the immediately subsequent
plan year (which is a calendar year) may be very difficult because of
the time it takes for the insurance carrier to report year-end
information and for the Independent Fiduciary to calculate the earned
income to be applied to the Dental premium. The Applicant points to
timing constraints that may make it difficult to share the extra earned
income in the next year as required by the proposed exemption. In
particular, the Applicant states that the experience results for the
life insurance for the prior year are provided in May/June of the
subsequent year; final premium and employee contribution rates are set
no later than the end of July; One Belmont receives its audited
financial statement in mid-July, at the earliest, and therefore the
Independent Fiduciary cannot begin review until mid-July or later. The
Applicant claims these timing constraints will make it impossible to
apply any additional earnings above $375,000 against participant
contributions for the following Plan year in a process overseen by the
Independent Fiduciary.
The Applicant therefore requests that the Independent Fiduciary be
required to complete its report within one year after the 12-month
period to which it relates and submit the report to the Department
within four months thereafter.
Department's Response: Section III(a) of the exemption has been
revised to: (a) reflect a two-year ``make whole'' period; (b) require
the Plan to receive interest on amounts Comcast owes the Plan at a rate
equal to underpayments established in Internal Revenue Code section
6621(b); and (c) more clearly describes the term ``benefits.''
Section III(a) now reads, ``In the initial year and each subsequent
year of the captive reinsurance arrangement, the participant's portion
of the premium for the dental component of the Plan (the Dental
Component) must be reduced by at least $375,000. The Independent
Fiduciary must determine whether Comcast earned a financial
[[Page 54266]]
benefit in excess of $375,000 per year and must report its
determination as part of the Independent Fiduciary's annual report.
Benefits include, but are not limited to, increased earned income,
increased savings, a tax reduction or a profit or any benefit arising
from a further diversification of One Belmont's risks in connection
with adding Plan-related insurance risks to One Belmont's other risks.
If Comcast's benefit from the arrangement exceeds $375,000 per year in
any year (the Excess Benefit), Comcast must further reduce the
participants' portion of the dental component of the Plan's (the Dental
Plan's) premium no later than two years after the end of the year in
which the Excess Benefit was earned by an amount that is at least equal
to the Excess Benefit plus an additional payment of interest on the
Excess Benefit at the Code's federal underpayment rate established in
Internal Revenue Code section 6621(b). The interest on the Excess
Benefit must be calculated for the period from the end of the plan year
the Excess Benefit was earned through the start of the Plan year in
which the Excess Benefit is applied to reduce the participants' portion
of the Dental Plan's premiums. The premium reduction must benefit all
Dental Plan participants equally and must be verified by the
Independent Fiduciary.''
The Department is not persuaded that the Independent Fiduciary
needs four additional months to submit its completed report to the
Department, and so has not made the requested revision.
IV. Dental Premium Split
In paragraph 7 of the Summary of Facts and Representations, the
Department stated: ``In no event may the reduction in the participants'
portion of the Dental Component's premium be less than the amount
Comcast or any of its affiliates ultimately benefits from the captive
reinsurance arrangement. Further, Comcast must continue to contribute
no less than 60% of the Dental Component's premiums after the captive
reinsurance arrangement takes effect.''
In its comment letter, Comcast requests that the Department not
require a specific level of premium split for the Dental Component.
Comcast argues that locking-in the split between employer and employee
premium contribution amounts is unnecessary to make the captive
reinsurance arrangement protective of the participants and in their
best interest. Comcast claims that such a requirement would severely
constrain future offerings under the Dental Component and deter
Comcast, as settlor, from offering options that otherwise provide
greater benefits even though employees would be willing to pay more for
those benefits.
Comcast notes that its application stated that the dental payment
percentage split between Comcast and its employees was
``approximately'' 60/40. Comcast explains that the Plan offers three
different dental benefit options with three different premium splits.
Comcast employees are offered a Dental Maintenance Organization (DMO)
option and a Preferred Provider Organization (PPO) option while NBCU
(Comcast's affiliate) employees are offered only a PPO dental option.
Comcast states that because its primary goal is keeping the dollar
amount of employee contributions consistent across the two companies,
the Company contribution varies between 55% and 62%.
Comcast urged the Department to rely on the Independent Fiduciary's
annual review to evaluate compliance with the exemption.
Department's Response: The Department is revising the exemption by
removing the requirement that Comcast maintain a specific level of
premium contribution to the dental component. However, the Department
remains concerned that the value of the benefits provided to the Dental
Component through the captive reinsurance arrangement could be lessened
through offsetting reductions to other benefits provided to Comcast's
employees.
The Department notes that it is the responsibility of the
Independent Fiduciary to monitor, enforce, and ensure compliance with
all the conditions of the exemption. This includes Section III(k) of
the exemption, which provides that, ``Comcast will not evade the
condition in Section III(a) by offsetting or reducing any benefits
provided to Comcast employees to defray the costs, expenses, or
obligations of complying with this exemption.''
To that end, Section III(g)(8) of the exemption has been revised to
require the Independent Fiduciary to specifically confirm in its annual
report whether Section III(k) has been met and to describe the steps it
took in reaching this confirmation.
V. Commission
Section III(b) of the proposed exemption states that: ``No
commissions are paid by the Plan with respect to the direct sale of
such contracts or the reinsurance thereof . . .''
Comcast clarified in its comment letter ``that Prudential does pay
a supplemental commission in connection with the sale of the direct
life insurance coverage and will continue to pay this supplemental
commission as reflected on the Plan's Form 5500. The cost of this
supplemental commission is wholly borne by Prudential and the Plan
itself does not pay any separate commission in connection with the
purchase of the direct insurance and does not pay a commission in
connection with the reinsurance coverage either.''
Department's Response: The Department notes Comcast's
clarification. Comcast's Form 5500 lists the commission recipient as
``American Benefits & Compensation Systems, Inc.'' located in New York,
NY. Prudential confirmed that ``this continues to be the entity to whom
the commission is payable and that it believes Alliant owns the
entity.''
VI. Status of One Belmont as a Comcast Affiliate
The Department noted in paragraph 1 of the Summary of Facts and
Representations of the proposed exemption that ``Comcast wholly owns
One Belmont Insurance Company. . . .'' In its comment letter, Comcast
stated that it ``is more accurate to state that One Belmont is a wholly
owned subsidiary of Comcast Corporation.''
The Department has made certain other minor changes to the wording
of the exemption, including renumbering some of the exemption's
sections, for clarity and consistency.
The complete application file (L-12021) is available for public
inspection in the Public Disclosure Room of the Employee Benefits
Security Administration, Room N-1515, U.S. Department of Labor, 200
Constitution Avenue NW, Washington, DC 20210. For a more complete
statement of the facts and representations supporting the Department's
decision to grant this exemption, refer to the notice of proposed
exemption published on September 20, 2021, at 86 FR 52217.
Accordingly, after considering the entire record developed in
connection with the Applicant's exemption application and comment
letter, the Department has determined to grant the exemption described
below.
General Information
The attention of interested persons is directed to the following:
(1) The fact that a transaction is the subject of an exemption
under ERISA Section 408(a) does not relieve a fiduciary or other party
in interest from certain requirements of other ERISA provisions,
including any prohibited transaction provisions to which the
[[Page 54267]]
exemption does not apply and the general fiduciary responsibility
provisions of ERISA Section 404, which, among other things, require a
fiduciary to discharge his or her duties respecting the plan solely in
the interest of the plan's participants and beneficiaries and in a
prudent fashion in accordance with ERISA Section 404(a)(1)(B).
(2) As required by ERISA Section 408(a), the Department hereby
finds that the exemption is: (a) administratively feasible; (b) in the
interests of affected plans and of their participants and
beneficiaries; and (c) protective of the rights of participants and
beneficiaries of such plans.
(3) This exemption is supplemental to, and not in derogation of,
any other ERISA provisions, including statutory or administrative
exemptions and transitional rules. Furthermore, the fact that a
transaction is subject to an administrative or statutory exemption is
not dispositive of determining whether the transaction is in fact a
prohibited transaction.
(4) The availability of this exemption is subject to the express
condition that the material facts and representations contained in the
application accurately describe all material terms of the transactions
that are the subject of the exemption.
Accordingly, the following exemption is granted under the authority
of ERISA Section 408(a), and in accordance with the procedures set
forth in 29 CFR part 2570, subpart B (76 FR 66637, 66644, October 27,
2011):
Exemption
Section I. Definitions
(a) An ``affiliate'' of Comcast Corporation or One Belmont
includes: (1) Any person or entity who controls Comcast or One Belmont
or is controlled by or under common control with Comcast or One
Belmont; (2) Any officer, director, employee, relative, or partner with
respect to Comcast or One Belmont; and (3) Any corporation or
partnership of which the person in (2) of this paragraph is an officer,
director, partner, or employee;
(b) The term ``control'' means the power to exercise a controlling
influence over the management or policies of a person other than an
individual;
(c) The term ``Independent Fiduciary'' means a person who:
(1) Is not an affiliate of Comcast or One Belmont and does not hold
an ownership interest in Comcast or One Belmont or their affiliates;
(2) Is not a fiduciary with respect to the Plan before its
appointment to serve as the Independent Fiduciary;
(3) Has acknowledged in writing that it:
(i) is a fiduciary with respect to the Plan and has agreed not to
participate in any decision regarding any transaction in which it has
an interest that might affect its best judgment as a fiduciary; and
(ii) has appropriate technical training or experience to perform
the services contemplated by the exemption;
(4) has not entered into any agreement or instrument that violates
the prohibitions on exculpatory provisions in ERISA section 410 or the
Department's regulations relating to indemnification of fiduciaries at
29 CFR 2509.75-4.
(5) For purposes of this definition, no organization or individual
may serve as Independent Fiduciary for any fiscal year if the gross
income received by such organization or individual from Comcast, One
Belmont, or their affiliates for that fiscal year exceeds two percent
(2%) of such organization's or individual's gross income from all
sources for the prior fiscal year. This provision also applies to a
partnership or corporation of which such organization or individual is
an officer, director, or 10 percent (10%) or more partner or
shareholder, and includes as gross income amounts received as
compensation for services provided as an independent fiduciary under
any prohibited transaction exemption granted by the Department; and
(6) No organization or individual that is an Independent Fiduciary
and no partnership or corporation of which such organization or
individual is an officer, director, or ten percent (10%) or more
partner or shareholder may acquire any property from, sell any property
to, or borrow any funds from Comcast, One Belmont, or their affiliates
while serving as an Independent Fiduciary. This prohibition will
continue for a period of six months after: (i) the party ceases to be
an Independent Fiduciary; and/or (ii) the Independent Fiduciary
negotiates any transaction on behalf of the Plan during the period that
the organization or individual serves as an Independent Fiduciary.
Section II. Covered Transactions
The restrictions of ERISA Sections 406(a)(1)(D) and 406(b)(1) will
not apply to: (1) the reinsurance of risks; and (2) the receipt of
premiums therefrom by One Belmont in connection with insurance
contracts sold by Prudential (or any successor Fronting Insurer meeting
the requirements of this exemption) to provide group term life
insurance benefits to Plan participants in the Life Insurance Component
of the Plan. In order to receive such relief, the conditions in Section
II must be met in conformance with the definitions set forth in Section
I.
Section III. Conditions
(a) In the initial year and each subsequent year of the captive
reinsurance arrangement, the participant's portion of the premium for
the dental component of the Plan (the Dental Component) must be reduced
by at least $375,000, with no offset or reduction to other benefits
Comcast provides to its employees. The Independent Fiduciary must
determine whether Comcast Corporation (including One Belmont and any
affiliate or any person or entity related to Comcast Corporation
(hereinafter, collectively, Comcast) earned a financial benefit in
excess of $375,000 per year and must report its determination as part
of the Independent Fiduciary's annual report. Financial benefits
include, but are not limited to, increased earned income, increased
savings, a tax reduction or a profit or any benefit arising from a
further diversification of One Belmont's risks in connection with
adding Plan-related insurance risks to One Belmont's other risks. If
Comcast's benefit from the arrangement exceeds $375,000 per year in any
year (the Excess Benefit), Comcast must further reduce the
participants' portion of the dental component of the Plan's (the Dental
Plan's) premium no later than two years after end of the year in which
the Excess Benefit was earned, by an amount that is at least equal to
the Excess Benefit, plus an additional interest payment on the Excess
Benefit at the Internal Revenue Code's federal underpayment rate
established in Code section 6621(b). The interest on the Excess Benefit
must be calculated for the period from the end of the Plan year the
Excess Benefit was earned through the start of the plan year in which
the Excess Benefit is applied to participant dental premiums. The
premium reduction must benefit all Dental Plan participants equally and
must be verified by the Independent Fiduciary.
(b) No commissions are paid by the Plan with respect to the direct
sale of such contracts or the reinsurance thereof;
(c) In the initial year and in subsequent years of coverage
provided by a Fronting Insurer, the formulae used by the Fronting
Insurer to calculate premiums must be similar to formulae used by other
insurers providing comparable life insurance coverage under similar
programs that are not
[[Page 54268]]
captive reinsured. Furthermore, the premium charges calculated in
accordance with the formulae must be reasonable and must be comparable
to the premiums charged by the Fronting Insurer and its competitors
with the same or a better financial strength rating providing the same
coverage under comparable programs that are not captive reinsured;
(d) Comcast is solely and fully responsible for funding One
Belmont's reserves with respect to the reinsurance arrangement covered
by this exemption;
(e) One Belmont:
(1) Is a party in interest with respect to the Plan by reason of a
stock or partnership affiliation with Comcast that is described in
ERISA section 3(14)(E) or (G); \3\
---------------------------------------------------------------------------
\3\ Under ERISA section 3(14)(G), a corporation is a ``party in
interest'' with respect to an employee benefit plan if 50 percent or
more of the combined voting power of all classes of the
corporation's stock entitled to vote, or the total value of shares
of all classes of stock of the corporation, is owned by an employer
any of whose employees are covered by the employee benefit plan.
---------------------------------------------------------------------------
(2) Is licensed to sell insurance or conduct reinsurance operations
in at least one State as such term is defined in ERISA section 3(10);
(3) Has obtained a Certificate of Authority from the state of
Vermont, its domiciliary state, that has neither been revoked nor
suspended;
(4) (A) Has undergone and shall continue to undergo an examination
by an independent certified public accountant for its last completed
taxable year immediately before the taxable year of the reinsurance
transaction covered by this exemption; or
(B) Has undergone a financial examination (within the meaning of
the law of Vermont) by the Commissioner of Banking, Insurance,
Securities and Health Care Administration of the State of Vermont
within five (5) years before the end of the year preceding the year in
which the reinsurance transaction occurred; and
(5) Is licensed to conduct reinsurance transactions under Vermont
law, which requires an actuarial review of reserves to be conducted
annually by an independent firm of actuaries and reported to the
appropriate regulatory authority;
(f) The Plan retained and will continue to retain an independent,
qualified fiduciary or successor to such fiduciary, as defined in
Section I(c), (the Independent Fiduciary) to analyze the transactions
covered by this exemption, and render an opinion that all of the
requirements of this exemption have been satisfied;
(g) The Independent Fiduciary must:
(1) In full accordance with its obligations of prudence and loyalty
under ERISA sections 404(a)(1)(A) and (B), (i) review the terms of the
exemption, (ii) engage in a prudent and loyal analysis of the covered
transactions, and (iii) verify that based on its review of all relevant
documents and evidence, it has concluded that all of the exemption's
terms and conditions have been met (or can be reasonably be expected to
be met consistent with the time requirements set forth in this
exemption). This conclusion must be documented in a written report
submitted to the Department's Office of Exemption Determinations at
least 30 days before the Plan engages in a transaction covered by the
exemption. The report must include copies of each document relied on by
the Independent Fiduciary and discuss the basis for its conclusion;
(2) Monitor, enforce and ensure compliance with all conditions of
this exemption, including all conditions and obligations imposed on any
party dealing with the Plan, throughout the period during which One
Belmont's assets are directly or indirectly used in connection with a
transaction covered by this exemption;
(3) Report any instance of non-compliance immediately to the
Department's Office of Exemption Determinations;
(4) Monitor the transactions described in the exemption on a
continuing basis to ensure the transactions remain in the interest of
the Plan;
(5) Take all appropriate actions to safeguard the interests of the
Plan;
(6) Review all contracts pertaining to the Reinsurance Arrangement,
and any renewals of such contracts, to determine whether the
requirements of this exemption continue to be satisfied;
(7) Determine that the Reinsurance Arrangement is in no way
detrimental to the Plan and its participants and beneficiaries;
(8) Confirm in its annual report (and describe the steps taken to
confirm) that (i) the Plan's Dental Component has received all the
financial benefits associated with the captive reinsurance arrangement
that otherwise would have been retained by Comcast or a party related
to Comcast, and (ii) Comcast has not reduced or offset any participant
benefits in relation to its implementation and maintenance of the
reinsurance arrangement as required by section III(k), including a
reduction in premium contributions to the dental component or other
benefits Comcast provides to it employees;
(9) Provide an annual report to the Department, certifying Under
penalty of perjury that each term and condition of this exemption is
satisfied and setting forth the bases for the certification. Each
report must be completed and submitted to the Department within twelve
months after the end of the twelve-month period to which it relates
(the first twelve-month period begins on the first day of the
implementation of the captive reinsurance arrangement covered by this
exemption);
(h) Comcast and its related parties have not, and will not,
indemnify the Independent Fiduciary, in whole or in part, for
negligence and/or for any violations of state or federal law that may
be attributable to the Independent Fiduciary in performing its duties
under the captive reinsurance arrangement. In addition, no contract or
instrument will purport to waive any liability under state or federal
law for any such violations.
(i) Neither Comcast nor a related entity may use participant-
related data or information generated by, or derived from, the
Reinsurance Arrangement in a manner that benefits Comcast or a related
entity;
(j) All the facts and representations set forth in the Summary of
Facts and Representations are true and accurate;
(k) Comcast will not evade the condition in Section III(a) by
offsetting or reducing any benefits provided to Comcast employees to
defray the costs, expenses, or obligations of complying with this
exemption;
(l) The Plan will only contract with a Fronting Insurer that is
unrelated to Comcast, and that has a financial strength rating of ``A''
or better from A.M. Best. For purposes of this provision, the term
``unrelated'' means that the Fronting Insurer is not owned or
controlled by Comcast in whole or in part;
(m) The Plan must pay no more than adequate consideration with
respect to insurance that is part of the captive reinsurance
arrangement covered by the exemption;
(n) In the event a successor Independent Fiduciary is appointed to
represent the interests of the Plan with respect to the subject
transaction, no time shall elapse between the resignation or
termination of the former Independent Fiduciary and the appointment of
the successor Independent Fiduciary; and
(o) All expenses associated with the exemption and the exemption
application, including any payment to the Independent Fiduciary, must
be paid by Comcast and not the Plan.
Effective Date: This exemption will be in effect on the date that
this grant
[[Page 54269]]
notice is published in the Federal Register.
Signed at Washington, DC.
George C. Cosby,
Director, Office of Exemption Determinations, Employee Benefits
Security Administration, U.S. Department of Labor.
[FR Doc. 2022-19000 Filed 9-1-22; 8:45 am]
BILLING CODE 4510-29-P
