Federal Register / Vol. 65, No. 26 / Tuesday, February 8, 2000 / Notices 6223

1Unless specifically noted, references to the BMA

Synthetic GIC refer to both types of Synthetic GIC

products that are offered to Plan investors by BMA.

Darby, E. H., Lustron House, (Lustron Houses

in Alabama, MPS) 321 Beverly, Florence,

00000127

Forks of Cypress Cemetery, 0.25 mi. N of

Jackson Rd., E side of Dowdy Rd., N of

Little Cypress Creek, Florence vicinity,

00000140

Madison County

Jude, George, House, 2132 Winchester Rd.,

Huntsville, 00000139

Montgomery County

Huntingdon College Campus Historic

District, 1500 E. Fairview Ave.,

Montgomery, 00000138

Perry County

Uniontown Historic District, Roughly

bounded by Tomasene St., Taylor St., East

Ave., and Green St., Uniontown, 00000137

Tuscaloosa County

Quayle, Margaret, Lustron House, (Lustron

Houses in Alabama, MPS) 27 Parkview Dr.,

Tuscaloosa, 00000126

ALASKA

Juneau Borough-Census Area

MacKinnon Apartments, 236 Third St.,

Juneau, 00000144

ARIZONA

Maricopa County

Ross, John M., House, 6722 N. Central Ave.,

Phoenix, 00000145

MASSACHUSETTS

Worcester County

Warren Public Library, Main St. at Bacon St.,

Warren, 00000146

MISSOURI

St. Louis Independent City

Jewel Box, Jct. of Wells Dr. and McKinley Dr.,

Forest Park, St. Louis, 00000147

MONTANA

Blaine County

Lodgepole Community Hall, Fort Belknap

Indian Community, Lodgepole, 00000148

A request for REMOVAL has been made for

the following resource:

PENNSYLVANIA

Greene County

Kent, Thomas, Jr., Farm 208 Laurel Run Rd.,

Waynesburg, 98000444

[FR Doc. 00–2745 Filed 2–7–00; 8:45 am]

BILLING CODE 4310–70–P

DEPARTMENT OF LABOR

Pension and Welfare Benefits

Administration

Prohibited Transaction Exemption

2000–05; Exemption Application No.

D–10542, et al.; Grant of Individual

Exemptions; Business Men’s

Assurance Company of America, et al.

AGENCY: Pension and Welfare Benefits

Administration, Labor.

ACTION: Grant of individual exemptions.

SUMMARY: This document contains

exemptions issued by the Department of

Labor (the Department) 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).

Notices were published in the Federal

Register of the pendency before the

Department of proposals to grant such

exemptions. The notices set forth a

summary of facts and representations

contained in each application for

exemption and referred interested

persons to the respective applications

for a complete statement of the facts and

representations. The applications have

been available for public inspection at

the Department in Washington, DC. The

notices also invited interested persons

to submit comments on the requested

exemptions to the Department. In

addition the notices stated that any

interested person might submit a

written request that a public hearing be

held (where appropriate). The

applicants have represented that they

have complied with the requirements of

the notification to interested persons.

No public comments and no requests for

a hearing, unless otherwise stated, were

received by the Department.

The notices of proposed exemption

were issued and the exemptions are

being granted solely by the Department

because, 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 proposed to the Secretary of

Labor.

Statutory Findings

In accordance with section 408(a) of

the Act and/or section 4975(c)(2) of the

Code and the procedures set forth in 29

CFR Part 2570, Subpart B (55 FR 32836,

32847, August 10, 1990) and based upon

the entire record, the Department makes

the following findings:

(a) The exemptions are

administratively feasible;

(b) They are in the interests of the

plans and their participants and

beneficiaries; and

(c) They are protective of the rights of

the participants and beneficiaries of the

plans.

Business Men’s Assurance Company of

America (BMA) Located in Kansas City,

MO

[Prohibited Transaction Exemption 2000–05;

Exemption Application No. D–10542]

Exemption

Section I. Covered Transactions

The restrictions of sections 406(a),

406(b)(1) and (b)(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 sales

and transfers of assets of an employee

benefit plan (the Plan) to BMA pursuant

to the terms of a benefit-responsive or a

non-benefit responsive synthetic

guaranteed investment contract (the

Benefit-Responsive BMA Synthetic GIC

or the Non-Benefit Responsive BMA

Synthetic GIC) entered into by the Plan

sponsor with BMA; 1

(2) Advances made by BMA to a Plan

in order to make unanticipated benefit

payments, if applicable, under a BenefitResponsive BMA Synthetic GIC; and (3)

the sweeping of interest and other

proceeds to BMA from a Plan’s

Contractholder Custodial Account

established under either a BenefitResponsive BMA Synthetic GIC or a

Non-Benefit Responsive BMA Synthetic

GIC. This exemption is subject to the

general conditions set forth below in

Section II.

Section II. General Conditions

(a) The decision to enter into a BMA

Synthetic GIC is made on behalf of a

participating Plan in writing by a

fiduciary of such Plan which is

independent of BMA.

(b) Only Plans with total assets having

an aggregate market value of at least $50

million are permitted to purchase BMA

Synthetic GICs; provided however

that—

(1) In the case of two or more Plans

which are maintained by the same

employer, controlled group of

corporations or employee organization (i.e.,

the Related Plans), whose assets are

commingled for investment purposes in

a single master trust or any other entity

the assets of which are ‘‘plan assets’’

under 29 CFR 2510.3–101 (the Plan

Asset Regulation), which entity has

6224 Federal Register / Vol. 65, No. 26 / Tuesday, February 8, 2000 / Notices

purchased a BMA Synthetic GIC, the

foregoing $50 million requirement is

deemed satisfied if such trust or other

entity has aggregate assets which are in

excess of $50 million; provided that, if

the fiduciary responsible for making the

investment decision on behalf of such

master trust or other entity is not the

employer or an affiliate of the employer,

such fiduciary has total assets under its

management and control, exclusive of

the $50 million threshold amount

attributable to plan investment in the

commingled entity, which are in excess

of $100 million, or

(2) In the case of two or more Plans

which are not maintained by the same

employer, controlled group of

corporations or employee organization

(i.e., the Unrelated Plans), whose assets

are commingled for investment

purposes in a group trust or any other

form of entity the assets of which are

‘‘plan assets’’ under the Plan Asset

Regulation, which entity has purchased

a BMA Synthetic GIC, the foregoing $50

million requirement is deemed satisfied

if such trust or other entity has aggregate

assets which are in excess of $50

million (excluding the assets of any Plan

with respect to which the fiduciary

responsible for making the investment

decision on behalf of such group trust

or other entity or any member of the

controlled group of corporations

including such fiduciary is the

employer maintaining such Plan or an

employee organization whose members

are covered by such Plan). However, the

fiduciary responsible for making the

investment decision on behalf of such

group trust or other entity —

(i) Has full investment responsibility

with respect to Plan assets invested

therein, and

(ii) Has total assets under its

management and control, exclusive of

the $50 million threshold amount

attributable to Plan investment in the

commingled entity, which are in excess

of $100 million.

(c) Prior to the execution of a BMA

Synthetic GIC, the Plan fiduciary

receives a full and detailed written

disclosure of all material features

concerning the BMA Synthetic GIC,

including—

(1) A copy of the underlying

agreement for the BMA Synthetic GIC

and accompanying application, which

stipulate the relevant provisions of the

Contract, the applicable fees, if any, and

the rights and obligations of the parties;

(2) Investment Guidelines defining

the manner in which BMA will manage

the assets in the Contractholder

Custodial Account;

(3) A copy of the Custodial Agreement

between BMA, the Plan fiduciary and

the custodian (the Custodian); and

(4) Copies of the proposed exemption

and grant notice with respect to the

exemptive relief provided herein.

(d) Upon the selection by a Plan

fiduciary of a BMA Synthetic GIC, BMA

will supply the Plan fiduciary of a Plan

[including a Plan that provides for

participant investment selection (the

Section 404(c) Plan)], a summary of the

pertinent features of the documents

listed above in paragraphs (c)(1) through

(c)(3) of this Section II which the Plan

fiduciary, in its discretion, deems

appropriate for distribution to such

participant, to the extent necessary to

satisfy the requirements of section

404(c) of the Act.

(e) Subsequent to a Plan’s investment

in a BMA Synthetic GIC, the Plan

fiduciary will receive the following

ongoing disclosures regarding such

investment:

(1) A periodic report consisting of a

Contract Value Record Report, which

specifies the affected Plan’s BMA

Synthetic GIC Contract Value Record

balance for the prior period,

contributions, withdrawals [i.e.,

Scheduled Withdrawals (the Scheduled

Withdrawals) and, if applicable,

Unscheduled Withdrawals (the

Unscheduled Withdrawals)], interest

earned, and the current period’s ending

Contract Value Record balance; (The

time periods covered by the Contract

Value Record Report will be selected in

advance by the independent Plan

fiduciary and may be sent monthly,

quarterly or annually.)

(2) A periodic Market Value

Statement, which is supplied by the

Custodian on a quarterly basis, that

specifies the prior period’s ending

market value for the assets in the

Contractholder Custodial Account,

contributions made by the Plan sponsor

to the BMA Synthetic GIC after the

initial deposit, Scheduled Withdrawals

and, if applicable, Unscheduled

Withdrawals, any fees paid to BMA,

investment income, realized capital

gains and/or losses from sales, changes

in unrealized appreciation of assets, the

current period’s ending market value

and rate of return, and a summary of

transactions; and

(3) Upon request from the Custodian

(i.e., not more often than quarterly), a

portfolio listing. (The reports referred to

in paragraphs (e)(1)–(e)(3) of this

Section II will be made available to the

Plan fiduciary, which, in turn, will

provide copies to participants in a

Section 404(c) Plan upon request, to the

extent the Plan fiduciary deems it

necessary.)

(f) Each BMA Synthetic GIC

specifically provides an objective

method for determining the fair market

value of the securities owned by the

Plan pursuant to such GIC.

(g) Each BMA Synthetic GIC has a

predefined, fixed maturity date selected

by the Plan fiduciary and agreed to by

BMA.

(h) In the event BMA sells assets from

a Plan’s Contractholder Custodial

Account to BMA’s general account or to

an affiliate during the term of the BMA

Synthetic GIC or at such GIC’s maturity,

the transaction is—

(1) Effected for cash;

(2) The sales price of the security is

equal to the fair market value of such

asset as of the close of business on the

date of the sale, as determined by

independent sources; and

(3) The Plan incurs no brokerage or

transaction costs in connection with the

transaction.

(i) BMA maintains books and records

of each BMA Synthetic GIC transaction

for a period of six years. Such books and

records are subject to annual audit by

independent, certified public

accountants.

For a more complete statement of the

facts and representations supporting

this exemption, refer to the notice of

proposed exemption published on

December 17, 1999 at 64 FR 70732.

FOR FURTHER INFORMATION CONTACT: Ms.

Jan D. Broady of the Department,

telephone (202) 219–8881. (This is not

a toll-free number.)

John Hancock Mutual Life Insurance

Company (John Hancock) Located in

Boston, MA

[Prohibited Transaction Exemption 2000–06;

Exemption Application No. D–10718]

Exemption

Section I. Covered Transactions

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

to the (1) receipt of common stock of

John Hancock Financial Services, Inc.,

the holding company for John Hancock

(the Holding Company), or (2) the

receipt of cash or policy credits, by or

on behalf of any eligible policyholder

(the Eligible Policyholder) of John

Hancock which is an employee benefit

plan (the Plan), subject to applicable

provisions of the Act and/or the Code,

other than certain Eligible Policyholders

which are Plans maintained by John

Hancock or an affiliate for their own

employees (the John Hancock Plans), in

exchange for such Eligible

Federal Register / Vol. 65, No. 26 / Tuesday, February 8, 2000 / Notices 6225

Policyholder’s membership interest in

John Hancock, in accordance with the

terms of a plan of reorganization (the

Plan of Reorganization) adopted by John

Hancock and implemented pursuant to

Chapter 175 of the Massachusetts

General Laws.

In addition, the restrictions of section

406(a)(1)(E) and (a)(2) and section

407(a)(2) of the Act shall not apply to

the receipt or holding, by the John

Hancock Plans, of employer securities

in the form of excess Holding Company

stock, in accordance with the terms of

the Plan of Reorganization.

This exemption is subject to the

conditions set forth below in Section II.

Section II. General Conditions

(a) The Plan of Reorganization is

implemented in accordance with

procedural and substantive safeguards

that are imposed under Massachusetts

Insurance Law and is subject to review

and supervision by the Massachusetts

Commissioner of Insurance (the

Commissioner).

(b) The Commissioner reviews the

terms of the options that are provided to

Eligible Policyholders of John Hancock

as part of such Commissioner’s review

of the Plan of Reorganization, and

determines, after the hearing, whether

the Plan of Reorganization conforms to

the requirements of chapter 175, section

19E of the Massachusetts General Laws

and whether the Plan is prejudicial to

the Eligible Policyholders of John

Hancock or the insuring public. The

Superintendent may object to the Plan

of Reorganization if he or she finds that

it is not fair and equitable to New York

Eligible Policyholders.

(c) As part of their determinations,

both the Commissioner and the

Superintendent concur on the terms of

the Plan of Reorganization.

(d) Each Eligible Policyholder has an

opportunity to vote to approve the Plan

of Reorganization after full written

disclosure is given to the Eligible

Policyholder by John Hancock.

(e) One or more independent

fiduciaries of a Plan that is an Eligible

Policyholder receives Holding Company

stock, cash or policy credits pursuant to

the terms of the Plan of Reorganization

and neither John Hancock nor any of its

affiliates exercises any discretion or

provides ‘‘investment advice,’’ as that

term is defined in 29 CFR 2510.3–21(c),

with respect to such acquisition.

(f) After each Eligible Policyholder is

allocated 17 shares of Holding Company

stock, additional consideration is

allocated to Eligible Policyholders who

own participating policies based on

actuarial formulas that take into account

each participating policy’s contribution

to the surplus of John Hancock which

formulas have been approved by the

Commissioner.

(g) With respect to a John Hancock

Plan, where the consideration may be in

the form of Holding Company stock an

independent Plan fiduciary—

(1) Determines whether the Plan of

Reorganization is in the best interest of

the John Hancock Plans and their

participants and beneficiaries.

(2) Votes at the special meeting of

Eligible Policyholders on the proposal

to approve or not to approve the Plan of

Reorganization.

(3) If the vote is to approve the Plan

or Reorganization,

(i) Decides whether the affected John

Hancock Plan should receive Holding

Company stock or cash (should the

latter option be available) and instructs

the appropriate Plan trustee to receive

such consideration on behalf of the

affected John Hancock Plan;

(ii) Monitors, on behalf of the affected

John Hancock Plan, the acquisition and

holding of the shares of any Holding

Company stock received;

(iii) Makes determinations on behalf

of the John Hancock Plan with respect

to voting and the continued holding of

the shares of Holding Company stock

received by such Plan; and

(iv) Disposes of any Holding Company

stock held by the John Hancock Plan

which exceeds the limitation of section

407(a)(2) of the Act as reasonably as

practicable but in no event later than six

months year following the effective date

of the demutualization;

(v) Takes all actions that are necessary

and appropriate to safeguard the

interests of the John Hancock Plans; and

(vi) Provides the Department with a

complete and detailed final report as it

relates to the John Hancock Plans prior

to the effective date of the

demutualization.

(h) All Eligible Policyholders that are

Plans participate in the transactions on

the same basis within their class

groupings as other Eligible

Policyholders that are not Plans.

(i) No Eligible Policyholder pays any

brokerage commissions or fees in

connection with their receipt of Holding

Company stock or in connection with

the implementation of the commissionfree sales and purchase programs.

(j) All of John Hancock’s policyholder

obligations remain in force and are not

affected by the Plan of Reorganization.

Section III. Definitions

For purposes of this exemption:

(a) The term ‘‘John Hancock’’ means

The John Hancock Mutual Life

Insurance Company and any affiliate of

John Hancock as defined in paragraph

(b) of this Section III.

(b) An ‘‘affiliate’’ of John Hancock

includes—

(1) Any person directly or indirectly

through one or more intermediaries,

controlling, controlled by, or under

common control with John Hancock.

(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.)

(2) Any officer, director or partner in

such person, and

(3) Any corporation or partnership of

which such person is an officer, director

or a 5 percent partner or owner.

(c) The term ‘‘Eligible Policyholder’’

means a policyholder whose name

appears on the conversion date on John

Hancock’s records as the owner of a

policy under which there is a right to

vote and which, on both the December

31 immediately preceding the

conversion date an the date the John

Hancock’s Board of Directors first votes

to convert to stock form, is in full force

for its full basic benefits with no unpaid

premiums or consideration at the

expiration of any applicable grace

period, or which is being continued

under a nonforfeiture benefit and

continues to be eligible for participation

in John Hancock’s annual distribution of

divisible surplus.

(d) The term ‘‘policy credit’’ means (i)

for an individual or joint participating

whole life insurance policy, the

crediting of paid-up additions which

will increase the cash value and death

benefit of the policy; and (ii) for all

other individual or joint life policies

and annuities, (x) if the policy or

contract has a defined account value, an

increase in the account value, or, (y) if

the policy or contract does not have a

defined account value, the crediting of

dividends left on deposit under the

policy or contract.

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 (the Notice) that

was published on October 22, 1999 at 64

FR 57136.

Written Comments

The Department received 45 written

comments with respect to the proposed

exemption. Forty-four of the comments

were submitted by Eligible

Policyholders and one comment was

submitted by John Hancock.

Of the Eligible Policyholder

comments received, fourteen

commenters said they were in favor of

the exemption and urged the

Department to approve it. Six

commenters requested information that

6226 Federal Register / Vol. 65, No. 26 / Tuesday, February 8, 2000 / Notices

was pertinent to their insurance

policies, but was not germane to the

exemption request. Twenty-four

commenters expressed their objection to

the exemption for various reasons,

which could be categorized in the

following areas: (a) the effect of John

Hancock’s demutalization on

policyholder benefits; (b) risks inherent

in the demutualization; (c) the lack of

benefits to Plan participants if the

exemption is granted; and (d) whether

the formula utilized by John Hancock to

determine the amount of consideration

to be allocated to Eligible Policyholders

was adequate.

John Hancock’s comment requested

clarification to the Notice. The comment

also sought to expand upon the

description of the transactions described

therein.

Discussed below are the substantive

comments that were submitted by the

Eligible Policyholders as well as John

Hancock’s responses to the issues raised

in comment letters. Also discussed is

John Hancock’s comment and the

Department’s responses to specific areas

of technical clarification in the

operative language and definitions of

the Notice and the Summary of Facts

and Representations (the Summary).

Eligible Policyholder Comments

Sixteen commenters questioned the

effect of John Hancock’s demutalization

on a policyholder’s benefits or taxexempt status. In response these

comments, John Hancock represents

that the concerns of the policyholders

have been addressed in the Policyholder

Information Statement which was sent

to all Eligible Policyholders. According

to John Hancock, the document clearly

states that the conversion of the

company to a stock company will not

reduce the benefits, values, guarantees

or dividend rights of any policy, nor

adversely affect any grandfathering or

special tax status of any policy.

Also in connection with the effect of

the demutualization on existing

policyholder benefits, another

commenter asserted that two

representations made by John Hancock

in the proposed exemption were false.

First, the commenter noted that on page

57139 of the Summary, the second

para graph of Representation 6 states

that—

John Hancock believes these consequences of

the conversion will benefit all of its

policyholders. John Hancock further explains

that its insurance policies will remain in

force and policyholders will be entitled to

receive the benefits under their policies and

contracts to which they would have been

entitled if the Plan of Reorganization had not

been adopted.

Second, the commenter noted that on

page 57141 of the Summary, paragraph

(h) of Representation 13 states that—

The Plan of Reorganization will not change

premiums or reduce policy benefits, values,

guarantees or other policy obligations of John

Hancock to its policyholders and

contractholders.

The commenter believed that, as a

result of the demutualization, John

Hancock’s proposed changes to

products and services offered under its

health insurance program would

constitute an unlawful termination of its

group insurance policy which was not

authorized under such policy. The

commenter also argued that these

material breaches would have severe

consequences and an adverse effect

upon its organization.

In response to this comment, John

Hancock explains that it sold its group

benefit operations to the Unicare Life

and Health Insurance Company

(Unicare) and the sale was structured as

a reinsurance transaction so that John

Hancock would still be the insurer of

record until the next renewal of the

contract. John Hancock explains that the

correspondence between Unicare and

the commenter stems from an attempt

by Unicare to modify its product line

with respect to its association business

(i.e., business sold to associations on

behalf of many employers within the

association). John Hancock

acknowledges that Unicare is attempting

to standardize its product mix for this

type of business for the next contract

cycle. In any event, John Hancock states

that ongoing discussions between

Unicare and the commenter do not

relate to the demutualization and that

John Hancock’s statement in the Plan of

Reorganization and Policyholder

Information Statement regarding no

changes to existing contracts as a result

of the demutualization are entirely

accurate. Further, John Hancock points

out that none of the changes to the

commenter’s policy, if implemented,

would be as a result of, or caused by the

Plan of Reorganization.

Four commenters described the

increased risk that would be caused by

John Hancock’s conversion to a stock

company. However, in response to these

commenters, John Hancock asserts that

the policyholders lacked an

understanding of the transaction and

had every right to be heard at the

hearing that was held on November 17,

1999.

Still another commenter suggested

that there would be ‘‘no possible benefit

to Plan participants’’ if the exemption is

granted. In response to this commenter,

John Hancock asserts that the

policyholder’s notion is incorrect

inasmuch as Eligible Policyholders that

are Plans will receive Holding Company

stock, cash or policy credits in exchange

for their illiquid membership interests

in John Hancock.

Finally, a commenter expressed

concern about the adequacy of the

formula utilized by John Hancock to

determine the amount of consideration

to be allocated to Eligible Policyholders.

Based on prior experience with another

insurance company demutualization,

the commenter questioned John

Hancock’s characterization of certain

investment contracts as

‘‘nonparticipating’’ as well as the

resulting allocation formula.

In response to this comment, John

Hancock asserts that only

‘‘participating’’ contractholders will be

eligible for both the fixed and variable

components of compensation, with the

variable component being dependent on

the policy’s contribution to the surplus

of the insurer, both historically and

prospectively. John Hancock notes that

the fixed component will be based upon

a policy’s voting interest while the

variable component will be given in

respect of a policy’s contribution to the

insurer’s surplus. John Hancock further

notes that only participating policies

will have rights to divisible surplus and

these views are consistent with the

approach taken in insurance company

demutualizations that have occurred in

the United States over the past decade.

John Hancock explains that while the

commenter may represent Plans that

have non-participating policies with

John Hancock, these Plans may have

contracts with another insurer that are

deemed participating. Although many of

the features of the contracts may be

similar, John Hancock explains that the

difference in the participating status of

the contracts is paramount for purposes

of determining eligibility for the fixed

component.

John Hancock’s Comments

1. Insurance Regulator Roles. On page

57136 of the Notice, paragraphs (b) and

(c) of the General Conditions describe

the respective roles of the Massachusetts

Insurance Commissioner and the New

York Superintendent of Insurance with

respect to John Hancock’s Plan of

Reorganization. John Hancock states

that these paragraphs are not entirely

clear. In the case of Massachusetts, John

Hancock points out that the

Commissioner must determine, after the

hearing, whether the Plan of

Reorganization conforms to the

requirements of chapter 175, section

19E of the Massachusetts General Laws

and whether the Plan is prejudicial to

Federal Register / Vol. 65, No. 26 / Tuesday, February 8, 2000 / Notices 6227

the policyholders of John Hancock or

the insuring public. John Hancock also

points out that the Superintendent may

object to the Plan of Reorganization if he

finds that it is not fair and equitable to

New York Eligible Policyholders.

Paragraph (c) of Section II states that

both the Commissioner and the

Superintendent must concur on the

terms of the Plan of Reorganization.

However, John Hancock states that

while it is true that both regulators must

be satisfied that the Plan of

Reorganization meets the appropriate

statutory standard, there is no formal

process in which they ‘‘concur on the

terms of the Plan of Reorganization.’’

In response to these comments, the

Department has revised paragraphs (b)

and (c) of Section II to read as follows:

(b) The Commissioner reviews the terms of

the options that are provided to Eligible

Policyholders of John Hancock as part of

such Commissioner’s review of the Plan of

Reorganization, and determines, after the

hearing, whether the Plan of Reorganization

conforms to the requirements of chapter 175,

section 19E of the Massachusetts General

Laws and whether the Plan is prejudicial to

the Eligible Policyholders of John Hancock or

the insuring public. The Superintendent may

object to the Plan of Reorganization if he or

she finds that it is not fair and equitable to

New York Eligible Policyholders.

(c) As part of their determinations, both the

Commissioner and the Superintendent

concur on the terms of the Plan of

Reorganization.

John Hancock also wishes to

acknowledge that there are differences

between the statutory language

describing the Commissioner’s standard

of review and those of the

Superintendent. As noted above, the

Massachusetts standard requires the

Commissioner to find whether the

Reorganization Plan is ‘‘prejudicial to

the Eligible Policyholders of John

Hancock or the insuring public.’’ John

Hancock believes the Massachusetts

standard is broader because it focuses

not only on ‘‘the eligible policyholders’’

of the demutualizing company but also

on ‘‘the insuring public.’’ In contrast,

John Hancock explains that the New

York standard requires the

Superintendent to find that the

transaction is ‘‘fair and equitable’’ to

New York policyholders of the insurer

and can, therefore, be viewed somewhat

more narrowly than the Massachusetts

standard.

John Hancock represents that it sees

no substantive difference between the

‘‘not prejudicial’’ concept and the ‘‘fair

and equitable concept.’’ In John

Hancock’s view, the phrase ‘‘not

prejudicial’’ implies ‘‘fairness.’’ From

John Hancock’s past experience, it

believes the Commissioner also shares

this view.

2. John Hancock Plans. On pages

57136 and 57141 of the Notice,

paragraph (g)(3)(i) of Section II of the

General Conditions and Representation

11 of the Summary, indicate that an

independent fiduciary ‘‘receives such

consideration on behalf of the affected

John Hancock Plan.’’ John Hancock

wishes to clarify that while U.S. Trust

Company, N.A. (U.S. Trust), the

independent fiduciary for the John

Hancock Plans, will make the decision

as to what each Plan receives, the

consideration, itself, is received by the

Plan trustee based on the instructions of

the independent fiduciary.

The Department concurs with this

comment and has revised paragraph

(g)(3)(i) of Section II and the second

sentence of Representation 11 by adding

the phrase ‘‘* * * and instructs the

appropriate Plan trustee to receive such

consideration on behalf of the affected

John Hancock Plan’’ after the

parenthetical.

3. Definition of ‘‘Policy Credit.’’ On

page 57137 of the Notice, in Section

III(d) of the Definitions, the term ‘‘policy

credit’’ is defined as follows:

* * * (1) for an individual or joint

ordinary life insurance policy, an increase to

the paid-up dividend addition value, and (2)

for all other individual or joint life policies

and annuities, (i) if the policy or contract has

a defined account value, an increase in the

account value, or

(ii) if the policy or contract does not have a

defined account value, an increase to the

dividend accumulation fund.

John Hancock concedes that this

definition is generally correct. However,

it does not correspond exactly with the

definition of the term in John Hancock’s

final Plan of Reorganization which

defines the term as follows:

‘‘Policy Credit’’ means (i) for an individual or

joint participating whole life insurance

policy, the crediting of paid-up additions

which will increase the cash value and death

benefit of the policy, and (ii) for all other

individual or joint life policies and annuities,

(x) if the policy or contract has a defined

account value, an increase in the account

value, or, (y) if the policy or contract does not

have a defined account value, the crediting

of dividends left on deposit under the policy

or contract.

For the sake of conformity with John

Hancock’s final Plan of Reorganization,

the Department has revised the

definition of the term ‘‘policy credit,’’

accordingly.

4. Holding Company Formation. On

page 57138 of the Notice, in

Representation 4 of the Summary, the

third sentence of paragraph three states

that the Holding Company will own 100

percent of two new holding companies

being established to own existing

subsidiaries of John Hancock and most

other foreign insurance subsidiaries.

John Hancock states that this sentence

should be deleted as this aspect of its

reorganization is no longer

contemplated. In response to this

change, the Department has deleted this

sentence from the Summary.

5. Date of Demutualization. On page

57139 of the Notice, in Representation

5 of the Summary, the second sentence

of paragraph (b) states that John

Hancock’s expected date of

demutualization will occur during early

February 2000. John Hancock wishes to

clarify that the actual date of its

demutualization will occur on February

1, 2000.

6. Risk-Based Capital Ratio Formula.

On page 57139 of the Notice, in

Representation 5 of the Summary,

paragraph (c) states, in part, that the

Holding Company will contribute cash

raised in the initial public offering to

John Hancock in an amount at least

equal to the amount required for John

Hancock to maintain a risk-based capital

ratio of not less than 200 percent

following the payment and crediting of

cash and establishment of reserves for

policy credits called for by the Plan of

Reorganization. John Hancock

represents that the 200 percent riskbased capital ratio formula was revised

at the request of the Commissioner

during her informal review of the draft

Plan of Reorganization and was

subsequently incorporated into the final

Plan of Reorganization. John Hancock

explains that the Commissioner

required the change to a more

complicated formula in order to

maximize the amount of IPO proceeds

that would be available to be

contributed to the insurer and used to

fund distributions of cash to

policyholders who do not elect Holding

Company stock. Because its risk-based

capital ratio is in excess of 200 percent,

John Hancock states that the old formula

would have permitted more IPO

proceeds to be retained by the Holding

Company.

Therefore, in accordance with the

formula revision, John Hancock requests

that Representation 5(c) be modified to

read as follows:

(c) Contribution to the Capital of John

Hancock. Following the transactions

described above, the Holding Company will

contribute cash raised in the IPO (after the

payment of transaction expenses and the

retention of a certain amount by the Holding

Company, as permitted under both the old

and the new formulas) to John Hancock,

which shall apply substantially all such

6228 Federal Register / Vol. 65, No. 26 / Tuesday, February 8, 2000 / Notices

proceeds to fund cash and policy credit

consideration to policyholders.

The Department concurs with this

change and has made the requested

modification to the Summary. The

Department also wishes to note that

while both formulas would allow the

Holding Company to retain a certain

amount of cash raised in the IPO, under

the new formula, more cash will be

contributed by the Holding Company to

John Hancock.

7. Time Frame For Eligible

Policyholder Submission of Election

Form. On page 57140 of the Notice, the

first paragraph of Representation 10 of

the Summary states, in pertinent part,

that an Eligible Policyholder will be

entitled to receive Holding Company

stock if such Policyholder affirmatively

elects, on a form provided to such

Eligible Policyholder that has been

properly completed and received by

John Hancock prior to the date of the

special policyholder meeting, a

preference to receive stock. John

Hancock notes that the time within

which an Eligible Policyholder may

submit the election form, indicating a

preference to receive shares of Holding

Company stock, has been extended until

December 31, 1999.

8. Role of U.S. Trust. On pages 57136

and 57141 of the Notice, Section

II(g)(3)(ii) and (iii) and Representation

11 of the Summary describe the role of

U.S. Trust, the independent fiduciary

for the John Hancock Plans in

connection with the demutualization.

Specifically, U.S. Trust will vote and

make elections (i.e., stock or cash)

which are available to the John Hancock

Plans under the Plan of Reorganization.

However, once the demutualization is

completed, John Hancock represents

that U.S. Trust will have an ongoing role

only with respect to those John Hancock

Plans which continue to hold Holding

Company stock that is in excess of the

limitations of section 407(a) of the Act.

Thus, once the stock holdings of an

affected John Hancock Plan are brought

within the 10 percent limit, which must

occur within six months of the effective

date of the demutualization, John

Hancock explains that the retention of

U.S. Trust will no longer be required.

The Department concurs with John

Hancock’s understanding with respect

to the retention of U.S. Trust following

the demutualization.

For further information regarding the

comments and other matters discussed

herein, interested persons are

encouraged to obtain copies of the

exemption application file (Exemption

Application No. D–10718) the

Department is maintaining in this case.

The complete application file, as well as

all supplemental submissions received

by the Department, are made available

for public inspection in the Public

Documents Room of the Pension and

Welfare Benefits Administration, Room

N–5638, U.S. Department of Labor, 200

Constitution Avenue, N.W.,

Washington, D.C. 20210.

Accordingly, after giving full

consideration to the entire record,

including the written comments, the

Department has decided to grant the

exemption subject to the modifications

and clarifications described above.

FOR FURTHER INFORMATION CONTACT: Ms.

Jan D. Broady of the Department,

telephone (202) 219–8881. (This is not

a toll-free number.)

Cassano’s Inc. 401(k) Plan and Trust

(the Plan) Located in Dayton, Ohio

[Prohibited Transaction Exemption 2000–07;

Exemption Application Number D–10734]

Exemption

The restrictions of sections 406(a),

406(b)(1) and (b)(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 the sale (the

Sale) of an improved parcel of real

property (the Property) by the Plan to

Cassano’s, Inc. (Cassano’s), a party in

interest and disqualified person with

respect to the Plan, provided that the

following conditions are met:

(a) The Sale is a one-time transaction

for cash;

(b) The terms and conditions of the

Sale are at least as favorable to the Plan

as those obtainable in an arm’s length

transaction with an unrelated party;

(c) The Plan receives the greater of

$155,500 or the fair market value of the

Property as of the date of the Sale;

(d) The Plan is not required to pay

any commissions, costs or other

expenses in connection with the Sale;

and

(e) Cassano’s files Form 5330 with the

Internal Revenue Service (the Service)

and pays certain excise taxes with

respect to the past prohibited leasing of

the Property within 90 days of the date

this notice granting this exemption is

published in the Federal Register.

For a more complete statement of the

facts and representations supporting the

Department’s decision to grant this

exemption, refer to notice of proposed

exemption published on November 9,

1999 at 64 FR 61134

FOR FURTHER INFORMATION CONTACT: Mr.

J. Martin Jara, 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 to which the exemptions

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) These exemptions are

supplemental to and not in derogation

of, any other provisions of the Act and/

or the Code, including statutory or

administrative exemptions and

transactional 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

(3) The availability of these

exemptions is subject to the express

condition that the material facts and

representations contained in each

application accurately describes all

material terms of the transaction which

is the subject of the exemption.

Signed at Washington, D.C., this 3rd day of

Febraury, 2000.

Ivan Strasfeld,

Director of Exemption Determination,

Pension and Welfare Benefits Administration,

U.S. Department of Labor.

[FR Doc. 00–2858 Filed 2–7–00; 8:45 am]

BILLING CODE 4510–29–P

DEPARTMENT OF LABOR

Pension and Welfare Benefits

Administration

Exemption Application No. D–10384;

Deutsche Bank AG, et al. (Deutsche

Bank)

AGENCY: Pension and Welfare Benefits

Administration, Labor (the Department).

ACTION: Notice of technical correction.

On February 1, 2000, the Department

published in the Federal Register (65

FR 4843) a notice of proposed

exemption for Deutsche Bank which