[Federal Register Volume 65, Number 87 (Thursday, May 4, 2000)]
[Notices]
[Pages 25954-25962]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-11127]


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DEPARTMENT OF LABOR

Pension and Welfare Benefits Administration

[Application No. D-10789, et al.]


Proposed Exemptions; Fortis, Inc. Employees' Uniform Profit 
Sharing Plan (the Fortis Plan)

AGENCY: Pension and Welfare Benefits Administration, Labor.

ACTION: Notice of Proposed Exemptions.

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SUMMARY: This document contains notices of pendency before the 
Department of Labor (the Department) of proposed exemptions from 
certain of the prohibited transaction restrictions of the Employee 
Retirement Income Security Act of 1974 (the Act) and/or the Internal 
Revenue Code of 1986 (the Code).

Written Comments and Hearing Requests

    All interested persons are invited to submit written comments or 
request for a hearing on the pending exemptions, unless otherwise 
stated in the Notice of Proposed Exemption, within 45 days from the 
date of publication of this Federal Register Notice. Comments and 
requests for a hearing should state: (1) the name, address, and 
telephone number of the person making the comment or request, and (2) 
the nature of the person's interest in the exemption and the manner in 
which the person would be adversely affected by the exemption. A 
request for a hearing must also state the issues to be addressed and 
include a general description of the evidence to be presented at the 
hearing.

ADDRESSES: All written comments and request for a hearing (at least 
three copies) should be sent to the Pension and Welfare Benefits 
Administration, Office of Exemption Determinations, Room N-5649, U.S. 
Department of Labor, 200 Constitution Avenue, N.W., Washington, D.C. 
20210. Attention: Application No.__, stated in each Notice of Proposed 
Exemption. The applications for exemption and the comments received 
will be available for public inspection in the Public Documents Room of 
the Pension and Welfare Benefits Administration, U.S. Department of 
Labor, Room N-5638, 200 Constitution Avenue, N.W., Washington, D.C. 
20210.

Notice to Interested Persons

    Notice of the proposed exemptions will be provided to all 
interested persons in the manner agreed upon by the applicant and the 
Department within 15 days of the date of publication in the Federal 
Register. Such notice shall include a copy of the notice of proposed 
exemption as published in the Federal Register and shall inform 
interested persons of their right to comment and to request a hearing 
(where appropriate).

SUPPLEMENTARY INFORMATION: The proposed exemptions were requested in 
applications filed pursuant to section 408(a) of the Act and/or section 
4975(c)(2) of the Code, and in accordance with procedures set forth in 
29 CFR Part 2570, Subpart B (55 FR 32836, 32847, August 10, 1990). 
Effective December 31, 1978, section 102 of Reorganization Plan No. 4 
of 1978, 5 U.S.C. App. 1 (1996), transferred the authority of the 
Secretary of the Treasury to issue exemptions of the type requested to 
the Secretary of Labor. Therefore, these notices of proposed exemption 
are issued solely by the Department.
    The applications contain representations with regard to the 
proposed exemptions which are summarized below. Interested persons are 
referred to the applications on file with the Department for a complete 
statement of the facts and representations.

Fortis, Inc. Employees' Uniform Profit Sharing Plan (the Fortis 
Plan) Located in New York, New York

[Application Number D-10789]

Proposed Exemption

    The Department is considering granting an exemption under the 
authority of section 408(a) of the Act and section 4975 (c)(2) of the 
Code and in accordance with the procedures set forth in 29 CFR Part 
2570, Subpart B (55 FR 32826, 32847, August 10, 1990). If the exemption 
is granted, the restrictions of sections 406(a), 406(b)(1) and (2) of 
the Act and the sanctions resulting from the application of section 
4975 of the Code, by reason of section 4975(c)(1)(A) through (E) of the 
Code, shall not apply to: (1) The restoration payment (the Restoration 
Payment) by Fortis, a party in interest with respect to the Fortis Plan 
to the Fortis Plan with respect to a certain counterfeit certificate of 
deposit (the Plan CD); and (2) the potential future payment to Fortis 
of recapture payments (the Recapture Payments) made to the Fortis Plan 
pursuant to proceedings involving the issuer of the counterfeit CD.
    This exemption is subject to the following conditions:
    (A) The Restoration Payment consists of:
    (i) $501,125, an amount equal to the Plan CD's full face value at 
the time of the Plan CD's maturity; and
    (ii) An amount in cash which is equal to:
    (a) A 5.5% annual rate of return on the Plan CD's maturity value of 
$501,125 for the period beginning October 30, 1997 and ending on 
December 31, 1998; and
    (b) A rate of return on the amount described in (A)(ii)(a) above 
which is equal to the average annual rate of return of the Fortis Money 
Market Fund from January 1, 1999 until the date of

[[Page 25955]]

the Restoration Payment (i.e., the Interest Payment);
    (B) The Restoration Payment is a one-time transaction for cash;
    (C) The Fortis Plan pays no expenses with respect to the 
Restoration Payment;
    (D) The Fortis Plan retains any amount in excess of the Restoration 
Payment that it collects in its attempts to recover monies due under 
the Plan CD; and
    (E) Any Recapture Payments paid by the Fortis Plan to Fortis are 
limited to the amount of the Restoration Payment and are restricted 
solely to the amounts, if any recovered, by the Fortis Plan with 
respect to the counterfeit CD in litigation or otherwise.

Summary of Facts and Representations

    1. Fortis, a diversified financial services company providing 
insurance and investment products, is a Nevada corporation, with its 
principal office located in New York, New York. Fortis is the sponsor 
of the Plan which is a profit sharing plan having approximately 12,000 
participants and approximately $366 million in assets as of May 11, 
1999.
    2. Interfinancial, Inc. (Interfinancial), a Georgia Corporation 
whose function is merely to hold the stock of subsidiary operating 
companies, is a subsidiary of Fortis. On August 31, 1998, 
Interfinancial acquired the John Alden Life Insurance Company (John 
Alden), the sponsor of the John Alden Employee Savings Incentive Plan 
(the Alden Plan), a defined contribution plan.
    Under the Alden Plan, participants could direct the investment of 
their accounts among various investment options selected by the John 
Alden Asset Management Company (JAAMCO), a subisidiary of John Alden.
    JAAMCO managed the investment of the Alden Plan assets. According 
to the Alden Plan's ``Policy and Procedures,'' the Money Market Fund 
was to consist of money market instruments such as bank certificates of 
deposits, commercial paper, and bonds. Portfolio managers were 
permitted to purchase CDs issued by pre-approved entities, which 
included Deutsche Bank.
    The Plan CD was a certificate of deposit offered to the Alden Plan 
by Charles Bradley McCoskey, a securities broker with Tri-Star 
Financial, a securities firm located in Houston, Texas. The Plan CD was 
represented as an obligation of the Deutsche Bank Argentina, S.A. to 
``Robert W. Hallock/Himmel & Grund LLC.'' Annexed to the Plan CD was an 
``Irrevocable Stock/Bond Power bearing the signature of ``Robert W. 
Hallock/Himmel & Grund LLC.'' The Plan CD had a 5.5% coupon and a 
maturity date of October 30, 1997. JAAMCO purchased, on behalf of the 
John Alden Money Market Fund, the Plan CD on January 10, 1997 for 
$475,403.75 and anticipated the receipt of $501,125 on October 30, 
1997, the Plan CD's maturity date. At the time of the purchase, the 
Plan CD comprised approximately 0.61% percent of the Alden Plan's 
assets.
    3. On May 5, 1997, the Securities Exchange Commission (SEC) issued 
a subpoena which demanded the production of the Plan CD. Subsequently, 
the SEC informed the Alden Plan that the Plan CD was counterfeit. The 
applicant represents that John Alden, on behalf of the Alden Plan, 
conducted an investigation and retained counsel to recoup the value of 
the Plan CD from the culpable parties. The applicant further represents 
that John Alden subsequently obtained a settlement judgment (the 
Settlement Judgment) against Robert W. Hallock for the recovery of 
monies due the Alden Plan under the Plan CD. The applicant represents 
that, despite the Settlement Judgment, the Alden Plan did not recover 
any of the monies due the Alden Plan under the Plan CD.
    The Alden Plan and the Fortis Plan merged on December 31, 1998. As 
a result, the Plan CD was transferred from the Alden Plan to the Fortis 
Plan and the portion of each Alden Plan participant's account allocated 
to the Plan CD was frozen. The applicant represents that Fortis, on 
behalf of the Fortis Plan, endeavored to recover the monies due the 
Fortis Plan. In this regard, the applicant represents that currently 
the Fortis Plan has not been successful in recovering any of the monies 
due the Fortis Plan as a result of the Fortis Plan's ownership of the 
Plan CD. The applicant represents, however, that in the event that the 
Fortis Plan recovers monies on the Plan CD which are in excess of the 
Plan CD's maturity value, the Fortis Plan will retain that excess 
amount. Accordingly, Fortis and the Fortis Plan have signed an 
agreement to this effect.
    4. The applicant proposes the Restoration Payment by Fortis to the 
Fortis Plan with respect to the Plan CD. The applicant proposes that 
the Restoration Payment include both a payment of the Plan CD's 
maturity value (the Maturity Value Payment) and a payment of interest 
(the Interest Payment). In this regard, the applicant states that the 
Plan CD had a face value of $501,125 as of its October 30, 1997 
maturity date. As a result, the applicant proposes that the Maturity 
Value Payment equal $501,125.
    The applicant proposes that the Interest Payment consist of two 
components. First, the Interest Payment equals a 5.5% annual rate of 
return on the maturity value amount for the period beginning October 
30, 1997 and ending on December 31, 1998. \1\
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    \1\ The applicant represents that the 5.5% annual rate is 
derived from the following: (1) The average rate of return on the 
John Alden Money Market Fund for 1998 was 5.483%; and (2) the 
average rate of return on the short-term funds within the John Alden 
Money Market Fund for 1998 was 5.46%.
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    Thereafter, from January 1, 1999 until the date of the Restoration 
Payment, the Interest Payment will equal the rate of return on the 
Fortis Money Market Fund.\2\
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    \2\ In this regard, the applicant states that when the Alden 
Plan merged into the Fortis Plan as of the end of December 31, 1998, 
the John Alden Money Market Fund (other than the Plan CD) was 
liquidated. Accordingly, the money market fund under the Fortis Plan 
became available.
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    5. In addition, the Recapture Payment shall consist of any monies 
recovered due on the Plan CD up to the Restoration Payment amount, of 
which the Fortis Plan will be required to refund these monies to 
Fortis. Specifically, the Recapture Payment would include any amount 
recovered up to the $501,125 plus the Interest Payment.
    6. The applicant represents that, in connection with Fortis' 
acquisition of John Alden, Fortis has discontinued John Alden's asset 
management operations. The applicant further notes that the portfolio 
manager responsible for the purchase of the Plan CD, his supervisor, 
and most John Alden employees, who might have knowledge about the Plan 
CD purchase, are no longer employed by any Fortis company.
    7. The applicant represents that the proposed transaction is 
feasible since it involves a one-time transaction for cash. 
Furthermore, the applicant represents that the proposed transaction is 
protective of the rights of participants and beneficiaries since the 
Restoration Payment would ensure that the Fortis Plan recovers the Plan 
CD's full maturity value despite the uncertainty of any recovery from 
the Settlement Judgment. Finally, the applicant represents that the 
proposed transaction is in the best interests of the Plan and its 
participants and beneficiaries since the Interest Payment enables the 
Fortis Plan to receive a rate of return on the Plan CD which is 
comparable to that which it would have received if the Plan CD had not 
been a counterfeit and the rate of return the money market funds (John 
Alden, 5.5% and the average annual return on Fortis) earned during the 
applicable time frames.

[[Page 25956]]

    8. The applicant represents that once the proposed transaction is 
consummated, the cash proceeds from the transaction will be allocated 
to the accounts of the affected participants, in accordance with their 
direction. The applicant further represents that the proposed 
transaction does not violate the requirements set forth in section 415 
of the Code.
    9. In summary, the applicant represents that the proposed 
transaction satisfies the statutory criteria for an exemption under 
section 408(a) and section 4975(c)(2) of the Code because:
    (A) The Restoration Payment consists of:
    (i) $501,125, an amount equal to the Plan CD's full face value at 
the time of the Plan CD's maturity; and
    (ii) An amount in cash which is equal to:
    (a) A 5.5% annual rate of return on the Plan CD's maturity value of 
$501,125 for the period beginning October 30, 1997 an ending on 
December 31, 1998; and
    (b) A rate of return on the amount described in (A)(ii)(a) above 
which is equal to the average annual rate of return of the Fortis Money 
Market Fund from January 1, 1999 until the date of the Restoration 
Payment (i.e., the Interest Payment);
    (B) The Restoration Payment is a one-time transaction for cash;
    (C) The Fortis Plan pays no expenses with respect to the 
Restoration Payment;
    (D) The Fortis Plan retains any amount in excess of the Restoration 
Payment that it collects in its attempts to recover monies due under 
the Plan CD; and
    (E) Any Recapture Payments paid by the Fortis Plan to Fortis are 
limited to the amount of the Restoration Payment and are restricted 
solely to the amounts, if any recovered, by the Fortis Plan with 
respect to the counterfeit CD in litigation or otherwise.

FOR FURTHER INFORMATION CONTACT: Mr. J. Martin Jara, telephone (202) 
219-8881. (This is not a toll-free number).

Canada Life Assurance Company (Canada Life) Located in Toronto, 
Ontario, Canada

[Application No. D-10790]

Proposed Exemption

    Based on the facts and representations set forth in the 
application, the Department is considering granting an exemption under 
the authority of section 408(a) of the Act and in accordance with the 
procedures set forth in 29 CFR Part 2570, Subpart B (55 FR 32836, 
32847, August 10, 1990).\3\
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    \3\ For purposes of this proposed exemption, reference to 
provisions of Title I of the Act, unless otherwise specified refer 
also to the corresponding provisions of the Code.
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Section I. Covered Transactions

    If the exemption is granted, the restrictions of section 406(a) of 
the Act and the sanctions resulting from the application of section 
4975 of the Code, by reason of section 4975(c)(1)(A) through (D) of the 
Code, shall not apply, effective November 4, 1999, to the (1) receipt 
of common shares (the Common Shares) of Canada Life Financial 
Corporation, the holding company for Canada Life (the Holding Company), 
or (2) the receipt of cash (the Cash) or policy credits (the Policy 
Credits), by or on behalf of any eligible policyholder (the Eligible 
Policyholder) of Canada Life which is an employee benefit plan (the 
Plan), subject to applicable provisions of the Act and/or the Code, 
other than a Plan established by Canada Life or an affiliate for its 
own employees (the Canada Life Plan), in exchange for such Eligible 
Policyholder's membership interest in Canada Life, in accordance with 
the terms of a conversion proposal (the Conversion Proposal) adopted by 
Canada Life and implemented under the insurance laws of Canada and the 
State of Michigan.
    This proposed exemption is subject to the conditions set forth 
below in Section II.

Section II. General Conditions

    (a) The Conversion Proposal was implemented in accordance with 
procedural and substantive safeguards that were imposed under the 
insurance laws of Canada and the State of Michigan and was subject to 
review and/or approval in Canada by the Office of the Superintendent of 
Financial Institutions (OSFI) and the Minister of Finance (the Canadian 
Minister of Finance) and, in the State of Michigan, by the Commissioner 
of Insurance (the Michigan Insurance Commissioner).
    (b) OSFI, the Canadian Finance Minister and the Michigan Insurance 
Commissioner reviewed the terms of the options that were provided to 
Eligible Policyholders of Canada Life as part of their separate reviews 
of the Conversion Proposal. In this regard, (1) OFSI (i) authorized the 
release of the Conversion Proposal and all information to be sent to 
Eligible Policyholders; (ii) oversaw each step of the conversion 
process (the Conversion); and (iii) made a final recommendation to the 
Canadian Finance Minister on the Conversion Proposal.
    (2) The Canadian Finance Minister, in his sole discretion, could 
consider such factors as (i) whether the Conversion Proposal was fair 
and equitable to Eligible Policyholders; (ii) whether the Conversion 
Proposal was in the best interests of the financial system in Canada; 
and (iii) if sufficient steps had been taken to inform Eligible 
Policyholders of the Conversion Proposal and of the special meeting on 
Conversion.
    (3) The Michigan Insurance Commissioner made a determination that 
the Conversion Proposal was (i) fair and equitable to all Eligible 
Policyholders and (ii) consistent with the requirements of Michigan 
law.
    (4) Both the Canadian Finance Minister and the Michigan Insurance 
Commissioner concurred on the terms of the Conversion Proposal.
    (c) Each Eligible Policyholder had an opportunity to vote to 
approve the Conversion Proposal after full written disclosure was given 
to the Eligible Policyholder by Canada Life.
    (d) One or more independent fiduciaries of a Plan that was an 
Eligible Policyholder received Common Shares, Cash or Policy Credits 
pursuant to the terms of the Conversion Proposal and neither Canada 
Life nor any of its affiliates exercised any discretion or provided 
``investment advice,'' as that term is defined in 29 CFR 2510.3-21(c), 
with respect to such acquisition.
    (e) After each Eligible Policyholder was allocated 100 Common 
Shares, additional consideration was allocated to such Eligible 
Policyholder who owned an eligible policy based on an actuarial formula 
that took into account such factors as the total cash value, the basic 
annual premium and the duration of such eligible policy. The actuarial 
formula was reviewed by the Canadian Finance Minister and the Michigan 
Insurance Commissioner.
    (f) All Eligible Policyholders that were Plans participated in the 
transactions on the same basis within their class groupings as other 
Eligible Policyholders that were not Plans.
    (g) No Eligible Policyholder paid or will pay any brokerage 
commissions or fees to Canada Life or its affiliates in connection with 
their receipt of Common Shares, in connection with the implementation 
of the secondary offering (the Share Sale Service) or the assisted 
sales program (the Assisted Sales Program).
    (h) All of Canada Life's policyholder obligations will remain in 
force and will not be affected by the Conversion Proposal.

[[Page 25957]]

Section III. Definitions

    For purposes of this proposed exemption:
    (a) The term ``Canada Life'' means The Canada Life Assurance 
Company and any affiliate of Canada Life as defined in paragraph (b) of 
this Section III.
    (b) An ``affiliate'' of Canada Life includes --
    (1) Any person directly or indirectly through one or more 
intermediaries, controlling, controlled by, or under common control 
with Canada Life; (For purposes of this paragraph, the term ``control'' 
means the power to exercise a controlling influence over the management 
or policies of a person other than an individual.) or
    (2) Any officer, director or partner in such person.
    (c) The term ``Eligible Policyholder'' means a policyholder who--
    (i) Was the owner of a voting policy at any time on April 2, 1998 
(the Eligibility Day);
    (ii) Became the owner of a voting policy, if the voting policy was 
applied for by that person before the Eligibility Day, and the 
application was received by Canada Life on or before the close of 
business on June 30, 1998; or
    (iii) Was the owner of a voting policy that lapsed before June 2, 
1998 and, where the policy terms provided that, as of June 2, 1998, the 
owner was entitled to request that the policy be reinstated, the policy 
was reinstated by the person who was the owner at the time the policy 
lapsed in accordance with its terms (without regard to when the right 
to reinstate expired) during the period which began on April 2, 1998 
and ended 90 days before the special meeting.
    (d) The term ``Policy Credit'' means --
    (1) For an individual life insurance policy with respect to which 
dividends may be paid, dividend deposits when the dividend deposit 
option has been selected under the policy and, in all other cases, 
dividend additions;
    (2) For in individual life insurance policy other than a policy 
with respect to which dividends may be paid, an increase in the fund 
value (to which no sales or surrender or similar charges will be 
applied);
    (3) For an individual deferred annuity policy with respect to which 
dividends may be paid, dividend additions;
    (4) For an individual deferred annuity policy other than a policy 
with respect to which dividends may be paid, an increase in 
accumulation value (to which no sales or surrender or similar charges 
will be applied); and
    (5) For a supplementary contract, settlement option or annuity in 
annuitization status, an increase in the periodic annuity payment 
amount. If the periodic annuity payment is on a life basis, the 
increase will be on a life annuity with cash refund basis.

EFFECTIVE DATE: If granted, this proposed exemption will be effective 
as of November 4, 1999.

Summary of Facts and Representations

    1. Canada Life, Canada's oldest domestic life insurer, was 
established in 1847 and incorporated in 1849 by a Special Act of the 
Canadian Parliament. In 1962, Canada Life became a mutual life 
insurance company and it remained that way until November 4, 1999, 
which is the effective date (the Effective Date) of the Conversion 
transaction described herein. Canada Life is currently headquartered at 
330 University Avenue, Toronto, Ontario, Canada. It is subject to the 
Insurance Companies Act of Canada (ICA) as well as the regulatory 
authority of OSFI. Currently, Canada Life is rated by national ratings 
firms as follows: Duff & Phelps, AA+; Moody's Investors Service, Aa3; 
Standard & Poor's, AA; and A.M. Best Company, AA+. During 1998, Canada 
Life had total assets under administration of $47.4 billion and $2.7 
billion in policyholders' equity.
    Although Canada Life's principal place of business in the United 
States is 6201 Powers Ferry Road, N.W., Atlanta, Georgia, it uses the 
State of Michigan as its port of entry for its operations in the United 
States. Therefore, Canada Life is also subject to the insurance laws of 
the State of Michigan and to regulation within the United States, by 
the Michigan Department of Insurance (the Michigan Insurance Bureau).
    2. Canada Life carries on its insurance business in Canada and 
internationally through branch operations in the United States, the 
United Kingdom and Ireland. In addition, Canada Life serves over 8 
million people under individual and group contracts in these areas. 
Moreover, Canada Life provides life insurance, health insurance, 
property and automobile insurance, investment management and related 
services through various subsidiaries located in Canada and worldwide. 
The insurance business that Canada Life carries on directly in Canada 
and through its international branch operations includes the sale of 
individual and group life, disability, health and dental insurance, 
annuities and pension products.
    3. As a mutual life insurance company, Canada Life had no issued or 
outstanding capital stock. Instead, Canada Life's ``products'' included 
policies entitling holders to participate in its profits (the 
Participating Policies) as well as other policies that did not 
generally so entitle the holders (the Non-Participating Policies). 
Aside from the contractual right to receive policy benefits (i.e., 
payment under the terms of the policy), the holders of Participating 
Policies (the Participating Policyholders) possessed certain other 
rights with respect to, and interests in, Canada Life as a mutual 
company, including the right to vote at Canada Life meetings.\4\ In 
addition, Participating Policyholders had the right to receive bonuses 
or policyholder dividends when declared by Canada Life's Board of 
Directors and an inchoate right to participate in Conversion benefits 
(the Conversion Benefits). Further, if Canada Life was liquidated, the 
Participating Policyholders would be entitled to share in the insurer's 
residual assets after all claims assessed against the insurer had been 
satisfied in full.
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    \4\ Voting rights included the right to vote on such matters as 
the review and approval of Canada Life's annual financial 
statements, the election of directors, the appointment of Canada 
Life's auditors and the approval of certain fundamental changes, 
including the Conversion.
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    4. Canada Life's Participating Policies included, without 
limitation, policies that qualified for tax-favored status in the 
United States, such as policies issued as tax-deferred annuities under 
section 403(b) of the Code and individual retirement annuities under 
section 408(b) of the Code. In addition, the Participating Policies 
covered, without limitation, certain tax-exempt entities in the United 
States such as tax-qualified retirement plans within the meaning of 
section 401(a) of the Code. Participating Policyholders included 
individuals, corporations, trusts and other persons who were residents 
for tax purposes in Canada, the United States, the United Kingdom, 
Ireland and elsewhere.

The Decision To Demutualize

    5. On April 2, 1998, Canada Life issued a press release stating 
that its Board of Directors had requested the insurer's management to 
develop a plan to convert Canada Life from a mutual life insurance 
company to a publicly-traded stock company, whose Common Shares are 
listed on the Toronto Stock Exchange and the Montreal Stock Exchange, 
through a process known as ``demutualization.'' Canada Life believed 
that as a result of the flexibility offered by the stock company 
structure and the access to capital markets, it would be in a position 
to enhance its market leadership, financial strength and strategic 
position. Moreover, the

[[Page 25958]]

insurer could aggressively pursue opportunities for growth, thereby 
providing greater protection to policyholders.
    In November 1998, a bill was introduced in the Canadian Parliament 
to amend the ICA to set forth the statutory rules allowing the 
demutualization of Canadian mutual life insurance companies with assets 
in Canada of CDN $7.5 billion or more. When the bill was introduced, 
the Canadian Department of Finance reported that each of Canada's four 
large mutual life insurance companies had already announced its 
intention to develop demutualization plans in order to improve the 
efficiency and competitiveness of their companies through increased 
flexibility to access capital, to gain greater market scrutiny and to 
achieve a better understood corporate structure. Therefore, on March 
13, 1999, the Canadian Government enacted the ICA amendments permitting 
the demutualization of large Canadian mutual life insurance companies. 
The Canadian Department of Finance subsequently released ``Mutual 
Company (Life Insurance) Conversion Regulations'' (the Conversion 
Regulations) which became effective on March 12, 1999 and implemented 
the new legislation.
    On November 4, 1999, Canada Life demutualized. As a result of the 
Conversion, Canada Life became a stock insurer and a subsidiary of 
Canada Life Financial Corporation, a newly-formed holding company. The 
reorganization provided economic value to Eligible Policyholders in the 
form of shares of stock of the Holding Company (i.e., the Common 
Shares), Cash or Policy Credits, in exchange for their respective 
ownership rights (the Ownership Rights) in Canada Life.
    6. Therefore, Canada Life requests an administrative exemption from 
the Department that would cover the receipt of Common Shares, Policy 
Credits or Cash by Eligible Policyholders which are trusteed and non-
trusteed Plans, other than Canada Life Plans,\5\ in exchange for their 
mutual membership interests in Canada Life. If granted, the proposed 
exemption would be effective as of November 4, 1999, the Effective Date 
of the Conversion.
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    \5\ Canada Life determined that the Canada Life Plans were not 
Eligible Policyholders. Therefore, these Plans did not receive any 
consideration as a result of Canada Life's Conversion.
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    Canada Life represents that it is not a party in interest with 
respect to a Plan policyholder merely because it has issued an 
insurance policy to such Plan. However, Canada Life represents that 
both it and its affiliates have provided a variety of fiduciary and 
other services to Plans which are also Canada Life policyholders. 
Canada Life further represents that the provision of such services to 
Plan policyholders causes it to be a party in interest with respect to 
such Plans under section 3(14)(A) and (B) of the Act or the related 
``derivative'' provisions of this section.
    The proposed exemption includes a requirement that all Eligible 
Policyholders that were Plans participated in the transactions on the 
same basis within their class groupings as other Eligible Policyholders 
that were not Plans. Thus, Canada Life did not treat Plan policyholders 
any differently from non-Plan policyholders within their respective 
class groupings.

Regulatory Supervision

    7. The various steps of the Conversion were subject to the approval 
of Canada Life's Board of Directors, the OSFI, the Canadian Finance 
Minister, the Michigan Insurance Commissioner, and other regulatory 
authorities in the United Kingdom and Ireland. In pertinent part, the 
Conversion Regulations required that the conversion of a mutual life 
insurance company be implemented in accordance with a detailed proposal 
that sets forth the terms and means of effecting the demutualization. 
In accordance with this requirement, on July 8, 1999, Canada Life's 
Board of Directors formally adopted the Conversion Proposal which 
permitted Canada Life to demutualize and convert into a stock life 
insurance company pursuant to section 237 et seq. of the ICA, the 
Conversion Regulations and the terms of such Proposal.
    Also, on July 8, 1999, Canada Life provided to OSFI, which had 
oversight responsibility for the entire demutualization process, a 
draft of the Conversion Proposal for review. OSFI reviewed and 
commented on the Conversion Proposal and, on July 16, 1999, authorized 
the Board to vote on the Conversion Proposal and to send Eligible 
Policyholders notice of a special meeting to consider such Proposal.
    On September 16, 1999, the special meeting of Eligible 
Policyholders was held in Toronto, Ontario, Canada. Approximately 
388,000 Eligible Policyholders were entitled to vote on the Conversion 
Proposal. Of this total, approximately 40,000 Eligible Policyholders 
resided in the United States and less than one percent of the Eligible 
Policyholders were Plans. When the vote was tallied, more than 99.1 
percent of the Eligible Policyholders who voted on the Conversion 
Proposal voted to approve such Proposal.\6\ Following the special 
meeting, the Directors of Canada Life applied to the Canadian Finance 
Minister for approval of the Conversion Proposal and issuance of 
Letters Patent to effect the Conversion.
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    \6\ Under the ICA, the Conversion Proposal must be approved by 
the Eligible Policyholders, each of whom is entitled to one vote 
irrespective of the number or size of Policies held.
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    Canadian law did not require that the Canadian Finance Minister 
make any particular findings in deciding whether to approve the 
Conversion Proposal. Therefore, approval was entirely within the 
discretion of such Minister. However, the Canadian Finance Minister, in 
deciding to approve the Conversion Proposal, could consider such 
factors as (a) whether the Conversion Proposal was fair and equitable 
to policyholders; (b) whether the Conversion Proposal was in the best 
interest of the financial system in Canada; and (c) whether sufficient 
steps had been taken to inform policyholders of the Conversion Proposal 
and of the special meeting on the Conversion.
    8. Because Canada Life operates in the United States through its 
U.S. branch under the Michigan State of Entry Statute, the laws of 
Michigan regarding demutualization (the Michigan Demutualization Law) 
were also applicable to Canada Life's demutualization. The requirements 
of Michigan Demutualization Law are similar to those of the ICA and the 
Conversion Regulations. Among other things, the Statute provides that 
the Conversion Proposal be submitted to the Michigan Insurance 
Commissioner prior to a vote by Canada's Eligible Policyholders. In 
addition, the Michigan Demutualization Law states that the Conversion 
Proposal cannot become effective without the approval of the Michigan 
Insurance Commissioner following a public hearing and it cannot be 
amended without the prior approval of such Commissioner.
    The Michigan Insurance Commissioner was authorized to retain, and 
did retain, independent legal and actuarial advisers to assist in 
reviewing the Conversion Proposal. Under the Michigan Demutualization 
Law, the Michigan Insurance Commissioner could approve or disapprove 
the Conversion Proposal within 90 days after its submission, and could 
not approve it unless he found the Conversion Proposal did not 
prejudice the interests of its members, was fair and equitable, and was 
not inconsistent with the purpose and intent of the Michigan 
Demutualization Law. If

[[Page 25959]]

approved, the Conversion would take effect as of the Effective Date 
specified in the Conversion Proposal.
    In accordance with Michigan law, on or about July 26, 1999, Canada 
Life mailed notice of the public hearing to all U.S. resident Eligible 
Policyholders. The Michigan Insurance Bureau also published notice of 
the hearing in the Wall Street Journal on August 5, 1999 as well as in 
three newspapers that are published in different areas of the State of 
Michigan on August 7, 1999. Then, on August 23, 1999, the Michigan 
Insurance Bureau conducted a public hearing with respect to the 
Conversion Proposal. Finally, on September 3, 1999, the Michigan 
Insurance Commissioner approved the Conversion Proposal.

The Transaction

    9. As noted above, the Conversion Proposal provided for Canada Life 
to demutualize and convert to a stock life insurance company under 
section 237 et seq. of the ICA, the Conversion Regulations and the 
terms of the Conversion Proposal. To this end, in advance of the 
Conversion, Canada Life incorporated the Holding Company in Canada 
under the ICA as a new stock holding company. Thus, in accordance with 
section 5.03 of the Conversion Proposal, the following transactions, 
among others, occurred on November 4, 1999, the Effective Date of the 
Conversion:

    <bullet> Change in Business Structure. Canada Life ceased to be 
a mutual life insurance company and became a life insurance company 
with Common Shares under the ICA. The policyholders of Canada Life 
ceased to have any rights with respect to or any interest in Canada 
Life as a mutual life insurance company and the Eligible 
Policyholders were entitled to receive Conversion Benefits.
    <bullet> Issuance of Common Shares to the Holding Company. 
Canada Life issued 160 million Common Shares to the Holding Company.
    <bullet> Issuance of Consideration to Eligible Policyholders. 
The Holding Company issued Common Shares to Eligible Policyholders 
and made Cash payments to other Eligible Policyholders. In addition, 
Canada Life issued Policy Credits to Eligible Policyholders in 
accordance with the allocation and distribution rules set forth in 
the Conversion Proposal.
    <bullet> Sale and Cancellation of Common Share and Preferred 
Share (the Preferred Share) by the Holding Company. At the time the 
Holding Company was initially capitalized, it issued one Preferred 
Share and one Common Share to Canada Life in exchange for CDN$10 
million and CDN$1, respectively. However at the time of the 
Conversion, the amount of capital was repaid to Canada Life by the 
Holding Company and the Preferred Share and the Common Share were 
canceled. Under Canada law, Canada Life was required to capitalize 
the Holding Company with at least CDN$10 million. Therefore, Canada 
Life received the Preferred Share in exchange for the CDN$10 million 
capital contribution to help ensure that the repayment of the 
capital to Canada Life at the time of the demutualization would not 
be a taxable event in Canada.

    10. Following the Conversion, all policies generally remained in 
force as policies of Canada Life, and all policy premiums, benefits, 
values, guarantees, or other policy obligations remained unchanged, 
except that policies credited with Policy Credits were enhanced by such 
Credits. Dividends would continue to be declared with respect to the 
Participating Policies at the discretion of Canada Life's Board of 
Directors. Accordingly, the Conversion would not adversely affect the 
contractual rights of any Participating Policyholder whose former 
ownership rights in the mutual insurer were extinguished.
    11. Most Eligible Policyholders, including Eligible Policyholders 
that were Plans covered under the provisions of the Act, initially 
received Conversion Benefits in the form of Common Shares issued by the 
Holding Company.\7\ Fewer than 10 percent of the Eligible Policyholders 
received Conversion Benefits in the form of Cash or Policy Credits.
---------------------------------------------------------------------------

    \7\ However, as noted herein, Eligible Policyholders residing 
outside Canada could elect to sell their Common Shares in an initial 
public offering (the IPO) under the Share Sale Service Program which 
was offered contemporaneously with the Conversion.
---------------------------------------------------------------------------

    Section 8.02(a) of the Conversion Proposal provides that Eligible 
Policyholders which are not residents of the United States, the United 
Kingdom, Canada or Ireland, as well as governments or agents thereof, 
would be entitled to receive Cash distributions from Canada Life as a 
result of its Conversion. In addition, under section 8.02(b) of the 
Conversion Proposal, certain individuals which are Eligible 
Policyholders in the United States with certain tax-qualified 
retirement contracts would be credited with Policy Credits. 
Specifically, Policy Credits would be posted to each Eligible 
Policyholder in the United States whose Participating Policy was--

    <bullet> An individual retirement annuity policy within the 
meaning of section 408(b) of the Code or a tax sheltered annuity 
policy within the meaning of section 403(b) of the Code;
    <bullet> An individual retirement annuity policy that had been 
issued directly to the Plan participant pursuant to a plan qualified 
under section 401(a) of the Code or pursuant to a Plan described in 
section 403(a) of the Code;
    <bullet> An individual life insurance policy that had been 
issued directly to the plan qualified under section 401(a) of the 
Code; or

    Also, included within the category entitled to receive Policy 
Credits were custodial accounts under section 403(b)(7) of the Code and 
retirement accounts under section 403(b)(9) of the Code.
    Further, Policy Credits were posted to each Eligible Policyholder 
with respect to whom Canada Life's Board of Directors determined that 
the receipt of Conversion Benefits in the form of Cash or Common Shares 
would be disadvantageous for such Eligible Policyholder, provided that 
such Eligible Policyholder received notification of such determination. 
Eligible Policyholders holding certain tax-qualified retirement 
contracts ending after April 2, 1998 and before the Conversion, 
received Common Shares and could elect to sell those shares in the 
IPO.\8\
---------------------------------------------------------------------------

    \8\ Consistent with sections 1 and 4(1)(e)(i) of the Conversion 
Regulations, the Conversion Proposal generally provides that the 
policyholder eligible to participate in the distribution of Common 
Shares, Cash or Policy Credits resulting from the Conversion 
Proposal is the ``owner'' of any policy shall generally be 
determined on the basis of the records of Canada Life. Canada Life 
further represents that an insurance or annuity policy that provides 
benefits under an employee benefit plan, typically designates the 
employer that sponsors the plan, or a trustee acting on behalf of 
the plan, as the owner of the policy. In regard to insurance or 
annuity policies that designate the employer or trustee as owner of 
the policy, Canada Life represents that it was required under the 
foregoing provisions of Canadian Law and the Conversion Proposal to 
make distributions resulting from such Plan to the employer or 
trustee as owner of the policy.
    In general, it is the Department's view that, if an insurance 
policy (including an annuity contract) is purchased with assets of 
an employee benefit plan, including participant contributions, and 
if there exist any participants covered under the plan (as defined 
at 29 CFR 2510.3-3) at the time when Canada Life incurred the 
obligation to distribute Common Shares, Cash or Policy Credits, then 
such consideration would constitute an asset of such plan. Under 
these circumstances, the appropriate plan fiduciaries must take all 
necessary steps to safeguard the assets of the plan in order to 
avoid engaging in a violation of the fiduciary responsibility 
provisions of the Act.
---------------------------------------------------------------------------

    12. The aggregate amount of Conversion Benefits provided to 
Eligible Policyholders in the Conversion and the allocation of such 
Benefits among Eligible Policyholders was determined by an actuary 
employed by Canada Life. The total amount of Conversion Benefits 
received by each Eligible Policyholder varied and took into account 
such factors as the basic annual premium, the duration and the total 
cash value of the relevant Participating Policy, but included a fixed 
component equal to the value of 100 Common Shares.
    Pursuant to the ICA, the Conversion Proposal was accompanied by an

[[Page 25960]]

opinion prepared by the actuary for Canada Life and an opinion prepared 
by an independent actuary to the effect that the allocation of benefits 
to Eligible Policyholders in the Conversion was fair and equitable to 
Eligible Policyholders. The Common Shares, Cash or Policy Credits 
distributed in the Conversion had a fair market value equal to the fair 
market value of the Ownership Rights that ceased in connection with the 
Conversion.
    13. Approximately 57 percent of Canada Life's Eligible 
Policyholders were Canadian residents, 9 percent were United States 
residents, 20 percent were residents of the United Kingdom and 14 
percent were residents of Ireland. While United States residents 
constituted roughly 9 percent of the total number of Eligible 
Policyholders, Canada Life projected that United States citizens would 
receive roughly 18 percent of the total Common Shares and other 
Conversion Benefits that were distributed by Canada Life.\9\
---------------------------------------------------------------------------

    \9\ The differences between the relative numbers of Eligible 
Policyholders residing in each country and the estimated percentages 
of total Conversion Benefits to be distributed to Eligible 
Policyholders who resided in each covered country were attributed by 
Canada Life to the fact that Conversion Benefits were allocated in 
part based on such factors as the type, duration, face amount and 
cash surrender value of an eligible policy, and not simply on a per 
capita basis.
---------------------------------------------------------------------------

    14. In connection with the Conversion, the Holding Company held an 
IPO of Common Shares to Canadian investors and a private placement of 
Common Shares to large institutional investors located in the United 
States and elsewhere. The Common Shares were offered at an initial 
share price of CDN$17.50 per share.
    The private placement involved the sale by certain underwriters 
(the Underwriters), which were unrelated to Canada Life and its 
affiliates, to the investors (the Investors) of Common Shares the 
Underwriters had purchased previously from Eligible Policyholders who 
resided outside of Canada and who had elected to sell their Common 
Shares for Cash. Such purchases occurred at the initial share price of 
CDN$17.50 per share. In addition, the private placement involved the 
sale by the Underwriters to the Investors of newly-issued Common Shares 
(the Primary Shares) the Underwriters had purchased from the Holding 
Company in a primary offering (the Primary Offering).
    The proceeds of the IPO were (a) initially paid to Eligible 
Policyholders who were eligible to receive a cash payment pursuant to 
section 8.03(b) of the Conversion Proposal and contributed by the 
Holding Company to Canada Life in an amount sufficient to enable Canada 
Life to credit Policy Credits; (b) then retained by the Holding Company 
in an amount sufficient to recoup the costs incurred by the Holding 
Company in purchasing Common Shares from Canadian Eligible 
Policyholders who elected to sell their Common Shares; and (c) finally 
retained by the Holding Company or contributed by the Holding Company 
to Canada Life to help defray the costs of conversion or to provide 
additional working capital.
    The Primary Offering enabled the Holding Company to ensure that a 
proper market and price for the trading of Common Shares would develop 
and create an active trading profile for those shares. As soon as 
practicable after the IPO, the Holding Company paid cash and Canada 
Life posted Policy Credits to Eligible Policyholders who were entitled 
to receive Cash or Policy Credits in accordance with the Conversion 
Proposal.
    15. As stated in Representation 14, Eligible Policyholders residing 
outside Canada who were issued Common Shares in the Conversion could 
elect, prior to the demutualization, to sell all of their Common Shares 
for cash to the Underwriters immediately upon issuance through the 
Share Sale Service which was established by Canada Life and run 
concurrently with the IPO.\10\ The Share Sale Service ended shortly 
after the closing date of the demutualization and the IPO. Such 
Eligible Policyholders were referred to as ``Electing Policyholders,'' 
and the Common Shares they elected to sell were referred to as 
``Electing Shares.'' Electing Policyholders residing outside Canada had 
their Electing Shares (the Resale Shares) sold for cash to the 
Underwriters who, in turn, sold them to the Investors through the IPO 
procedure described above. The Holding Company paid all of the 
Underwriters' fees associated with the Underwriters' purchase of the 
Common Shares from Eligible Policyholders through the Share Sales 
Service Program or the sale of such Common Shares to the Investors in 
the Primary Offering.\11\
---------------------------------------------------------------------------

    \10\ Conversely, Canadian Eligible Policyholders electing to 
receive cash could sell their Common Shares to the Holding Company.
    \11\ Canada Life concluded that no portion of the fees it paid 
to the Underwriters should be treated for Canadian tax purposes as a 
dividend to policyholders who elected to sell their Common Shares in 
the IPO. As a result, Canada Life did not believe there would be any 
Canadian withholding tax due in connection with its payment of the 
Underwriter fees. Canada Life also represented that it would not 
seek reimbursement from U.S. Eligible Policyholders for any Canadian 
withholding tax that ultimately might be imposed with respect to its 
payment of the Underwriter fees.
---------------------------------------------------------------------------

    16. As noted above, the Common Shares that were sold in the IPO 
consisted of both the Resale Shares and the Primary Shares. For this 
purpose, the Holding Company determined the maximum number of Common 
Shares to be sold to the Underwriters and in the IPO (the IPO Shares). 
In the event that the number of Electing Shares exceeded the number of 
IPO shares, the shares of Electing Policyholders were to be repurchased 
by the Holding Company (in the case of Canadian Electing Policyholders) 
and sold to Underwriters (in the case of non-Canadian Electing 
Policyholders) in ascending order, from those Common Shares held by 
Electing Policyholders holding the smallest number of Common Shares to 
those holding the greatest number of Common Shares until the total 
number of IPO Shares is reached. Any Electing Shares not sold in 
connection with the Conversion and IPO were retained by the Electing 
Policyholders and confirmation of Common Share ownership was sent to 
those Electing Policyholders.
    17. Canada Life represents that in addition to the Share Sale 
Service, it currently is offering the Assisted Sales Program to 
Eligible Policyholders who received Common Shares in the 
demutualization and who do not have pre-existing brokerage accounts to 
which such Common Shares can be transferred. The Assisted Sales Program 
commenced on December 6, 1999 for Canadian Eligible Policyholders and 
was implemented in the United States on January 4, 2000 for United 
States Eligible Policyholders. Canada Life anticipates that the 
Assisted Sales Program will continue for up to two years from the 
Effective Date although it may be discontinued at any time.
    The Assisted Sales Program is designed to provide an Eligible 
Policyholder, who has received Common Shares in book entry or 
certificated form, an opportunity to sell such Common Shares after the 
demutualization so that the policyholder will not have to find a stock 
broker. Under the Assisted Sales Program, sales will take place in 
Canada through Montreal Trust Company of Canada (Montreal Trust), the 
Holding Company's transfer agent, and in the United States, through 
EquiServe Trust Company, N.A. of Jersey City, New Jersey (Equi-Serve 
Trust), an agent of Montreal Trust. Both Montreal Trust and Equi-Serve 
Trust are not related to Canada Life or its affiliates.
    For United States Eligible Policyholders, Equi-Serve Trust will 
collect all required shareholder request forms and provide the 
information to Montreal Trust on a daily basis. A bulk order will be 
placed each day by a

[[Page 25961]]

Canadian broker, as per Montreal Trust's instructions, to sell the 
Common Shares on The Toronto Stock Exchange. The Common Shares will be 
sold at the average price paid for such shares on the date of the 
sale.\12\ Although the United States Eligible Policyholder will be 
required to pay a one-time administration fee of $25 to Equi-Serve 
Trust, such Eligible Policyholder will not be charged any brokerage 
commissions or other fees.
---------------------------------------------------------------------------

    \12\ Because a United States Eligible Policyholder will receive 
the average price paid for the Common Shares on the date of the 
sale, Canada Life represents that the price may not correspond 
exactly to the price quoted in the newspaper or elsewhere. 
Therefore, within 7 business days of the receipt of an Eligible 
Policyholder's properly completed documents (i.e., the sales request 
form, taxpayer identification number and certification form, and the 
share ownership statement or share certificate), Equi-Serve Trust 
will mail the United States Eligible Policyholder a check in U.S. 
dollars, made out in the names of all owners. In addition, the 
Eligible Policyholder will receive a statement showing the amount of 
the check, the average price paid for the Common Shares in Canadian 
dollars converted to U.S. dollars, the administration charge 
deducted and any applicable withholding tax. The amount of Canadian 
dollars will be converted to U.S. dollars at the wholesale Interbank 
rate in effect at the time of the sale.
---------------------------------------------------------------------------

    18. Under the ICA, Canada Life is required to maintain two separate 
accounts--a Participating Policyholder Account and a Shareholder 
Account. The Participating Policyholder Account must have sufficient 
capital to provide reasonable assurance that the contractual 
obligations and the reasonable expectations of the Participating 
Policyholders will be satisfied and to provide capital for ongoing 
sales of Participating Policies. The Shareholder Account entitles 
Canada Life's shareholders to receive dividends. The ICA also limits 
the transfer of funds to the Shareholder Account from the Participating 
Policyholder Account.
    For individual Participating Policies that pay experience-based 
policy dividends, Canada Life has established a Closed Block, as 
defined in the Conversion Proposal, for the purpose of giving 
reasonable assurances to the holders of such Participating Policies 
that, after the Effective Date, assets will be available to meet 
contractual obligations with respect to such Participating Policies and 
to meet the reasonable expectations of the holders of such 
Participating Policies regarding future dividends, as experience 
justifies. The establishment of the Closed Block will not alter, 
diminish, reduce or in any way modify or amend the terms or provisions 
of the Participating Policies included therein.
    For policyholder dividend purposes only, Canada Life is operating 
the Closed Block as a closed block of participating business for the 
benefit of Participating Policies included therein. A block of assets 
in Canada Life's Participating Account has been allocated to the Closed 
Block sub-account. Assets allocated to the Closed Block will continue 
to be assets owned by Canada Life in its general account, subject to 
the same liabilities (in the same priority) to which other assets in 
its general account are subject.
    As of the Effective Date, Canada Life cannot make any transfers 
from the Closed Block, except as is necessary to pay the guaranteed 
benefits and experience dividends in respect of the Participating 
Policies for which the Closed Block is being maintained. Although under 
certain circumstances, the Closed Block may be terminated, Canada Life 
must ensure that assets that are allocated to the Closed Block be used 
to provide for guaranteed benefits, policyholders' reasonable dividend 
expectations, and expenses and taxes relating to Participating Policies 
for which such account is being maintained.
    Under the ICA, Participating Policyholders have rights upon 
completion of the Conversion that are accorded to participating 
policyholders of a stock life insurance company in Canada. Such rights 
include the right to elect at least one-third of the directors of 
Canada and the right to receive policy dividends that are declared.
    18. In summary, it is represented that the transactions satisfied 
or will satisfy the statutory criteria for an exemption under section 
408(a) of the Act because:
    (a) The Conversion Proposal was implemented pursuant to stringent 
procedural and substantive safeguards imposed under Canadian and 
Michigan law, will not require any ongoing supervision by the 
Department.
    (b) One or more independent Plan fiduciaries had an opportunity to 
determine whether to vote to approve the Conversion Proposal and will 
be responsible for all such decisions that were permitted under the 
Conversion regarding the form of consideration to be received in return 
for Ownership Rights.
    (c) Eligible Policyholders that were Plans were permitted to 
acquire Common Shares, Cash, or Policy Credits in exchange for, and in 
extinguishment of, their Ownership Rights in Canada Life and no 
Eligible Policyholder has paid or will pay any brokerage commissions or 
fees to Canada Life or its affiliates in connection with the receipt of 
Common Shares, the implementation of the Share Sale Service or the 
Assisted Sales Program.
    (d) Neither Canada Life nor its affiliates exercised discretion 
with respect to voting on the Conversion Proposal or with respect to 
any election to be made by any Eligible Policyholder which was a Plan, 
nor did they provide ``investment advice'' as that term is defined in 
29 CFR 2510.3-21(c) with respect to any election made by such Plan 
policyholder.
    (e) The Conversion Proposal will not change premiums or reduce 
policy benefits, values, guarantees or other policy obligations of 
Canada Life to its policyholders.

FOR FURTHER INFORMATION CONTACT: Ms. Jan D. Broady of the Department, 
telephone (202) 219-8881. (This is not a toll-free number.)

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 section 408(a) of the Act and/or section 4975(c)(2) of the Code 
does not relieve a fiduciary or other party in interest or disqualified 
person from certain other provisions of the Act and/or the Code, 
including any prohibited transaction provisions to which the exemption 
does not apply and the general fiduciary responsibility provisions of 
section 404 of the Act, which, among other things, require a fiduciary 
to discharge his duties respecting the plan solely in the interest of 
the participants and beneficiaries of the plan and in a prudent fashion 
in accordance with section 404(a)(1)(b) of the Act; nor does it affect 
the requirement of section 401(a) of the Code that the plan must 
operate for the exclusive benefit of the employees of the employer 
maintaining the plan and their beneficiaries;
    (2) Before an exemption may be granted under section 408(a) of the 
Act and/or section 4975(c)(2) of the Code, the Department must find 
that the exemption is administratively feasible, in the interests of 
the plan and of its participants and beneficiaries, and protective of 
the rights of participants and beneficiaries of the plan;
    (3) The proposed exemptions, if granted, will be supplemental to, 
and not in derogation of, any other provisions of the Act and/or the 
Code, 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 whether the 
transaction is in fact a prohibited transaction; and
    (4) The proposed exemptions, if granted, will be subject to the 
express condition that the material facts and

[[Page 25962]]

representations contained in each application are true and complete, 
and that each application accurately describes all material terms of 
the transaction which is the subject of the exemption.

    Signed at Washington, DC, this 1st day of May, 2000.
Ivan Strasfeld,
Director of Exemption Determinations, Pension and Welfare Benefits 
Administration, Department of Labor.
[FR Doc. 00-11127 Filed 5-3-00; 8:45 am]
BILLING CODE 4510-29-P