[Federal Register Volume 80, Number 76 (Tuesday, April 21, 2015)]
[Notices]
[Pages 22245-22249]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-09067]


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SECURITIES AND EXCHANGE COMMISSION

[Investment Company Act Release No. 31552; File No. 812-14302]


Voya Retirement Insurance and Annuity Company et al.; Notice of 
Application

April 15, 2015.

AGENCY: Securities and Exchange Commission (``SEC'' or ``Commission'').

ACTION: Notice of application for an order approving the substitution 
of certain securities pursuant to section 26(c) of the Investment 
Company Act of 1940, as amended (the ``1940 Act'' or ``Act'').

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    Applicants: Voya Retirement Insurance and Annuity Company (``Voya 
Retirement''), Voya Insurance and Annuity Company (``Voya Insurance''), 
ReliaStar Life Insurance Company of New York (``ReliaStar NY''), and 
Security Life of Denver Insurance Company (``Security Life'') (each a 
``Company'' and together, the ``Companies''), Variable Annuity Account 
B of Voya Retirement (``Voya Retirement B''), Variable Annuity Account 
I of Voya Retirement (``Voya Retirement I''), Separate Account B of 
Voya Insurance (``Voya Insurance B''), Separate Account EQ of Voya 
Insurance (``Voya Insurance EQ''), ReliaStar Life Insurance Company of 
New York Separate Account NY-B (``ReliaStar NY-B''), Security Life 
Separate Account A1 (``Security Life A1''), Security Life Separate 
Accounts S-A1 (``Security Life S-A1'') (each, an ``Account'' and

[[Page 22246]]

together, the ``Accounts'') and Voya Variable Portfolios, Inc. The 
Companies, the Accounts, and Voya Variable Portfolios, Inc. are 
collectively referred to herein as the ``Applicants.''
SUMMARY: Summary of Application: Applicants seek an order pursuant to 
section 26(c) of the 1940 Act, approving the substitution of shares 
issued by certain series of Voya Variable Portfolios, Inc. (the 
``Replacement Funds'') for shares of certain registered investment 
companies currently held by subaccounts of the Accounts (the ``Existing 
Funds''), to support certain variable annuity contracts (collectively, 
the ``Contracts'') issued by the Companies.

DATES: 
    Filing Date: The application was filed on April 29, 2014, and was 
amended and restated October 27, 2014, February 23, 2015 and March 31, 
2015.
    Hearing or Notification of Hearing: An order granting the 
application will be issued unless the Commission orders a hearing. 
Interested persons may request a hearing by writing to the Secretary of 
the Commission and serving the Applicants with a copy of the request, 
personally or by mail. Hearing requests should be received by the 
Commission by 5:30 p.m. on May 11, 2015 and should be accompanied by 
proof of service on the Applicants in the form of an affidavit or, for 
lawyers, a certificate of service. Pursuant to Rule 0-5 under the Act, 
hearing requests should state the nature of the writer's interest, any 
facts bearing upon the desirability of a hearing on the matter, the 
reason for the request, and the issues contested. Persons who wish to 
be notified of a hearing may request notification by writing to the 
Commission's Secretary.

ADDRESSES: Commission: Brent Fields, Secretary, SEC, 100 F Street, NE., 
Washington, DC 20549-1090. Applicants: J. Neil McMurdie, Esquire, 
Senior Counsel, Voya Financial Legal Services, One Orange Way, Windsor, 
CT 06095.

FOR FURTHER INFORMATION CONTACT:  Rochelle Kauffman Plesset, Senior 
Counsel, at (202) 551-6840, or Nadya Roytblat, Assistant Chief Counsel 
at (202) 551-0825 (Division of Investment Management, Chief Counsel's 
Office).

SUPPLEMENTARY INFORMATION: The following is a summary of the 
application. The complete application may be obtained via the 
Commission's Web site by searching for the file number, or for an 
Applicant using the Company name box, at http://www.sec.gov/search/search.htm, or by calling (202) 551-8090.

Applicants' Representations

    1. Voya Retirement is the depositor of Voya Retirement B and Voya 
Retirement I. Voya Insurance is the depositor of Voya Insurance B and 
Voya Insurance EQ. ReliaStar NY is the depositor of ReliaStar NY-B. 
Security Life is the depositor of Security Life A1 and Security Life S-
A1. Each Company is an indirect, wholly-owned subsidiary of Voya 
Financial, Inc.\1\
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    \1\ Prior to September 1, 2014, Voya Retirement was known as ING 
Life Insurance and Annuity Company and Voya Insurance was known as 
ING USA Annuity and Life Insurance Company. Prior to April 7, 2014, 
Voya Financial, Inc. was known as ING U.S. Inc.
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    2. Each Account is a ``separate account'' as defined by Rule 0-1(e) 
under the 1940 Act and each is registered under the 1940 Act as a unit 
investment trust. Each of the respective Accounts is used by the 
Company for which it is a part to support the Contracts that it issues. 
Each Account is divided into subaccounts, each of which invests 
exclusively in shares of an Existing Fund or another registered open-
end management investment company. The application sets forth the 
registration statement file numbers for the Contracts and the Accounts.
    3. The Contracts are individual variable annuity contracts. Each of 
the prospectuses for the Contracts discloses that the issuing Company 
reserves the right, subject to Commission approval and compliance with 
applicable law, to substitute shares of another registered open-end 
management investment company for shares of a registered open-end 
management investment company held by a subaccount of an Account 
whenever the Company, in its judgment, determines that the investment 
in the registered open-end management investment company no longer 
suits the purpose of the Contract.
    4. Voya Variable Portfolios is an open-end management investment 
company of the series type that is registered with the Commission under 
the 1940 Act (File No. 811-05173).\2\ Shares of the series are 
registered under the Securities Act of 1933 (File No. 333-05173).
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    \2\ Effective May 1, 2014 Voya Variable Portfolios changed its 
name from ING Variable Portfolios, Inc. The names of the Replacement 
Funds were also changed as of this date to reflect the rebranding of 
the investment company.
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    5. Voya Investments LLC (``Voya Investments''), a registered 
investment adviser, has overall responsibility for the management of 
each Replacement Fund.\3\ Voya Investments delegates to a sub-adviser 
the responsibility for day-to-day management of the investments of each 
Replacement Fund, subject to Voya Investment's oversight.
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    \3\ Effective May 1, 2014, Voya Investments changed its name 
from ING Investments, LLC.
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    6. Applicants propose, as set forth below, to substitute shares of 
the Replacement Funds for shares of the Existing Funds 
(``Substitutions''):

 
------------------------------------------------------------------------
               Existing fund                      Replacement fund
------------------------------------------------------------------------
ClearBridge Variable Large Cap Value        Voya Russell Large Cap Value
 Portfolio- Class I.                         Index Portfolio- Class I.
Fidelity VIP Equity-Income Portfolio-       Voya Russell Large Cap Value
 Initial Class.                              Index Portfolio- Class I.
Fidelity VIP Equity-Income Portfolio-       Voya Russell Large Cap Value
 Service 2 Class.                            Index Portfolio- Class S.
Invesco VI Core Equity Fund- Class I......  Voya Russell Large Cap Index
                                             Portfolio- Class S.
Invesco VI American Franchise Fund- Class   Voya Russell Large Cap
 I.                                          Growth Index Portfolio-
                                             Class S.
Pioneer Equity Income VCT Portfolio- Class  Voya Russell Large Cap Value
 II.                                         Index Portfolio- Class S.
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    7. Applicants state that the investment objectives and investment 
policies of each Replacement Fund are similar to the corresponding 
Existing Fund, or each Replacement Fund's underlying portfolio 
construction and investment results are similar to those of the 
Existing Fund, and therefore the fundamental objectives, risk and 
performance expectations of those Contract Owners with interests in 
subaccounts of the Existing Funds will continue to be met after the 
Substitutions.
    8. The investment objectives of each Existing Fund and its 
corresponding Replacement Fund are set out below. Additional 
information for each Existing Fund and Replacement Fund, including 
principal investment strategies, principal risks and comparative 
performance history, can be found in the application.

[[Page 22247]]



 
------------------------------------------------------------------------
             Existing fund                       Replacement fund
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ClearBridge Variable Large Cap Value     Voya Russell Large Cap Value
 Portfolio seeks long-term growth of      Index Portfolio seeks
 capital as its primary investment        investment results (before
 objective. Current income is a           fees and expenses) that
 secondary objective.                     correspond to the total return
                                          (which includes capital
                                          appreciation and income) of
                                          the Russell Top 200 Value
                                          Index.
Fidelity VIP Equity-Income Portfolio     Voya Russell Large Cap Value
 seeks reasonable income. The fund will   Index Portfolio seeks
 also consider the potential for          investment results (before
 capital appreciation. The fund's goal    fees and expenses) that
 is to achieve a yield which exceeds      correspond to the total return
 the composite yield on the securities    (which includes capital
 comprising the S&P 500 Index.            appreciation and income) of
                                          the Russell Top 200 Value
                                          Index.
Invesco VI Core Equity Fund seeks long-  Voya Russell Large Cap Index
 term growth of capital.                  Portfolio seeks investment
                                          results (before fees and
                                          expenses) that correspond to
                                          the total return (which
                                          includes capital appreciation
                                          and income) of the Russell Top
                                          200 Index.
Invesco VI American Franchise Fund       Voya Russell Large Cap Growth
 seeks capital growth..                   Index Portfolio seeks
                                          investment results (before
                                          fees and expenses) that
                                          correspond to the total return
                                          (which includes capital
                                          appreciation and income) of
                                          the Russell Top 200 Growth
                                          Index.
Pioneer Equity Income VCT Portfolio      Voya Russell Large Cap Value
 seeks current income and long-term       Index Portfolio seeks
 growth of capital from a portfolio       investment results (before
 consisting primarily of income           fees and expenses) that
 producing equity securities of U.S.      correspond to the total return
 corporations.                            (which includes capital
                                          appreciation and income) of
                                          the Russell Top 200 Value
                                          Index.
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    9. Applicants state that at the time of the Substitutions the 
overall fees and expenses of the Replacement Funds will be less than 
those assessed by the Existing Funds and that for two years following 
the effective date of the Substitutions (``Effective Date''), the net 
annual expenses of each of the Replacement Funds will not exceed the 
net annual expenses of each corresponding Existing Fund. The 
application sets forth the fees and expenses of each Existing Fund and 
its corresponding Replacement Fund in greater detail.
    10. Applicants state that by substituting unaffiliated funds with 
funds that are advised and subadvised by affiliates of the Companies, 
the principal purposes of the Substitutions would, among other things: 
(1) Help implement the Companies' overall business plan to make the 
Contracts more competitive (and thus more attractive to customers) and 
more efficient to administer and oversee; (2) provide the Companies 
with more influence over the administrative and management aspects of 
the funds offered through the Contracts, thereby reducing costs and 
customer confusion; (3) allow each Company the ability to react more 
quickly to the changes and problems it encounters in its oversight of 
the funds which are available in its Contracts; (4) allow the Companies 
to reduce costs by consolidating the administration of the Replacement 
Funds with its other funds; and (5) allow the Companies to respond to 
expense, performance and management matters that they have identified 
in their due diligence review of the funds available through the 
Contracts.
    11. Applicants represent that as of the Effective Date shares of 
the Existing Funds will be redeemed for cash. The Companies, on behalf 
of each Existing Fund subaccount of each relevant Account, will 
simultaneously place a redemption request with each Existing Fund and a 
purchase order with the corresponding Replacement Fund so that the 
purchase of Replacement Fund shares will be for the exact amount of the 
redemption proceeds. Thus, Contract values will remain fully invested 
at all times. The proceeds of such redemptions will then be used to 
purchase the appropriate number of shares of the applicable Replacement 
Fund.
    12. The Substitutions will take place at relative net asset value 
(in accordance with Rule 22c-1 under the 1940 Act) with no change in 
the amount of any Affected Contract Owner's contract value, cash value, 
accumulation value, account value or death benefit or in dollar value 
of his or her investment in the applicable Accounts. No brokerage 
commissions, fees or other remuneration will be paid by either the 
Existing Funds or the Replacement Funds or by Affected Contract Owners 
in connection with the Substitutions.
    13. The Affected Contract Owners will not incur any fees or charges 
as a result of the Substitutions nor will their rights or the 
Companies' obligations under the Contracts be altered in any way. The 
Companies or their affiliates will pay all expenses and transaction 
costs of the Substitutions, including legal and accounting expenses, 
any applicable brokerage expenses, and other fees and expenses. The 
Substitutions will not cause the Contract fees and charges currently 
being paid by Affected Contract Owners to be greater after the 
Substitutions than before the Substitutions. Moreover, the 
Substitutions will not impose any tax liability on Affected Contract 
Owners.
    14. As described in the application, after notification of the 
Substitution and for 30 days after the Effective Date, Affected 
Contract Owners may reallocate the subaccount value of an Existing Fund 
to any other investment option available under their Contract without 
incurring any administrative costs or transfer charges.
    15. All Affected Contract Owners affected by the Substitutions were 
notified of this application by means of supplements to the Contract 
prospectuses shortly after the date the application was first filed 
with the Commission. Among other information, the supplements informed 
Affected Contract Owners that beginning on the date of the supplements, 
the Companies will not exercise any rights reserved by them under the 
Contracts to impose restrictions or fees on transfers from an Existing 
Fund (other than restrictions related to frequent or disruptive 
transfers) until at least 30 days after the Effective Date.
    16. Following the date the order requested by this application is 
issued, but at least 30 days before the Effective Date, Affected 
Contract Owners will receive a ``Pre-Substitution Notice,'' consisting 
of a second supplement to the Contract prospectuses setting forth the 
intended Effective Date and advising Affected Contract Owners of their 
right, if they so choose, at any time during the period beginning 30 
days before the Effective Date through at least 30 days

[[Page 22248]]

following the Effective Date, to reallocate or withdraw accumulated 
value in the Existing Fund subaccounts under their Contracts or 
otherwise terminate their interest therein in accordance with the terms 
and conditions of their Contracts. If Affected Contract Owners 
reallocate account value during this 60 day period, there will be no 
charge for the reallocation of accumulated value from the Existing Fund 
subaccounts and the reallocation will not count as a transfer when 
imposing any applicable restriction or limit under the Contract on 
transfers. Additionally, all Affected Contract Owners will be sent 
prospectuses of the applicable Replacement Funds at least 30 days 
before the Effective Date.
    17. Within five (5) business days after the Effective Date, 
Affected Contract Owners will be sent a written confirmation, which 
will include confirmation that the Substitutions were carried out as 
previously notified, a restatement of the information set forth in the 
Pre-Substitution Notice and information showing how the allocation of 
the Affected Contract Owner's account value before and immediately 
following the Substitution has changed as a result of the 
Substitutions.

Legal Analysis

    1. Applicants request that the Commission issue an order pursuant 
to section 26(c) of the 1940 Act approving the Substitutions. Section 
26(c) requires the depositor of a registered unit investment trust 
holding the securities of a single issuer to obtain Commission approval 
before substituting the securities held by the trust. Section 26(c) 
requires the Commission to issue such an order if the evidence 
establishes that the substitution is consistent with the protection of 
investors and the purposes fairly intended by the policy and provisions 
of the 1940 Act.
    2. Applicants submit that the terms and conditions of the 
Substitutions meet the standards set forth in section 26(c) and assert 
that the replacement of an Existing Fund with the corresponding 
Replacement Fund is consistent with the protection of investors and the 
purposes fairly intended by the policy and provisions of the l940 Act. 
As described in the application, as of the Effective Date of the 
Substitution, the overall fees and expenses of each Replacement Fund 
will be less than those of the corresponding Existing Fund and for two 
years following the Effective Date, the net annual expenses of each 
Replacement Fund will not exceed the net annual expenses of the 
corresponding Existing Fund. Applicants further asset that each 
Replacement Fund has similar investment objectives and investment 
strategies as the corresponding Existing Fund, or each Replacement 
Fund's underlying portfolio construction and investment results are 
similar to those of the corresponding Existing Fund. Accordingly, 
Applicants believe that the fundamental investment objectives, risk and 
performance expectations of the Affected Contract Owners will continue 
to be met after the Substitutions.
    3. Applicants also maintain that Affected Contract Owners will be 
better served by the Substitutions. Applicants anticipate that the 
substitution of an Existing Fund with the corresponding Replacement 
Fund will result in a Contract that is administered and managed more 
efficiently, and one that is more competitive with other variable 
products. The rights of Affected Contract Owners and the obligations of 
the Companies under the Contracts will not be altered by the 
Substitutions. Affected Contract Owners will not incur any additional 
tax liability or any additional fees and expenses as a result of the 
Substitutions.
    4. Each of the prospectuses for the Contracts discloses that the 
issuing Company reserves the right, subject to Commission approval and 
compliance with applicable law, to substitute shares of another 
registered open-end management investment company for shares of an 
open-end management investment company held by a subaccount of an 
Account.
    5. Applicants also assert that the Substitutions do not entail any 
of the abuses that section 26(c) was designed to prevent. Unlike a 
traditional unit investment trust where a depositor could only 
substitute an investment security in a manner which permanently 
affected all the investors in the trust, the Contracts provide each 
Contract Owner with the right to exercise his or her own judgment and 
transfer account values into other subaccounts. Moreover, the Contracts 
will offer Affected Contract Owners the opportunity to transfer amounts 
out of the affected subaccounts into any of the remaining subaccounts 
without cost or other disadvantage. The Substitution, therefore, will 
not result in the type of costly forced redemptions that section 26(c) 
was designed to prevent. Applicants also maintain that the 
Substitutions are unlike the type of substitutions which section 26(c) 
was designed to prevent in that by purchasing a Contract, Contract 
Owners select much more than a particular registered management open-
end investment company in which to invest their account values. They 
also select the specific type of death benefit and other optional 
benefits as well as other rights and privileges set forth in the 
Contracts that will not be changed as a result of the Substitutions.

Applicants' Conditions

    Applicants agree that any order of the Commission granting the 
requested relief will be subject to the following conditions:
    1. The Substitutions will not be effected unless the Companies 
determine that: (a) The Contracts allow the substitution of shares of 
registered open-end investment companies in the manner contemplated by 
the application; (b) the Substitutions can be consummated as described 
in the application under applicable insurance laws; and (c) any 
regulatory requirements in each jurisdiction where the Contracts are 
qualified for sale have been complied with to the extent necessary to 
complete the Substitutions.
    2. The Companies or their affiliates will pay all expenses and 
transaction costs of the Substitutions, including legal and accounting 
expenses, any applicable brokerage expenses and other fees and 
expenses. No fees or charges will be assessed to the Contract Owners to 
effect the Substitutions.
    3. The Substitutions will be effected at the relative net asset 
values of the respective shares in conformity with section 22(c) of the 
1940 Act and Rule 22c-1 thereunder without the imposition of any 
transfer or similar charges by Applicants. The Substitutions will be 
effected without change in the amount or value of any Contracts held by 
Affected Contract Owners.
    4. The Substitutions will in no way alter the tax treatment of 
Affected Contract Owners in connection with their Contracts, and no tax 
liability will arise for Affected Contract Owners as a result of the 
Substitutions.
    5. The rights or obligations of the Companies under the Contracts 
of Affected Contract Owners will not be altered in any way. The 
Substitutions will not adversely affect any riders under the Contracts.
    6. Affected Contract Owners will be permitted to make at least one 
transfer of Contract value from the subaccount investing in the 
Existing Fund (before the Effective Date) or the Replacement Fund 
(after the Effective Date) to any other available investment option 
under the Contract without charge for a period beginning at least 30 
days before the Effective Date through at least 30 days following the 
Effective Date. Except as described in any market timing/short-term 
trading provisions of the relevant

[[Page 22249]]

prospectus, the Company will not exercise any right it may have under 
the Contract to impose restrictions on transfers between the 
subaccounts under the Contracts, including limitations on the future 
number of transfers, for a period beginning at least 30 days before the 
Effective Date through at least 30 days following the Effective Date.
    7. All Affected Contract Owners will be notified, at least 30 days 
before the Effective Date about: (a) The intended substitution of 
Existing Funds with the Replacement Funds; (b) the intended Effective 
Date; and (c) information with respect to transfers as set forth in 
Condition 6 above. In addition, the Companies will also deliver, at 
least 30 days before the Effective Date a prospectus for each 
applicable Replacement Fund.
    8. Companies will deliver to each Affected Contract Owner within 
five (5) business days of the Effective Date a written confirmation 
which will include: (a) A confirmation that the Substitutions were 
carried out as previously notified; (b) a restatement of the 
information set forth in the Pre-Substitution Notice; and (c) before 
and after account values.
    9. After the Effective Date Applicants agree not to change a 
Replacement Fund's sub-adviser without first (a) obtaining shareholder 
approval of the sub-adviser change or (b) Voya Variable Portfolios Inc. 
determining that it can continue to rely on its manager-of-managers 
exemptive order.
    10. For two years following the Effective Date the net annual 
expenses of each Replacement Fund will not exceed the net annual 
expenses of the corresponding Existing Fund as of the Fund's most 
recent fiscal year. To achieve this limitation, the Replacement Fund's 
investment adviser will waive fees or reimburse the Replacement Fund in 
certain amounts to maintain expenses at or below the limit. Any 
adjustments will be made at least on a quarterly basis. In addition, 
the Companies will not increase the Contract fees and charges including 
asset based charges such as mortality expense risk charges deducted 
from the subaccounts that would otherwise be assessed under the terms 
of the Contracts for a period of at least two years following the 
Effective Date.

    For the Commission, by the Division of Investment Management, 
under delegated authority.
Brent J. Fields,
Secretary.
[FR Doc. 2015-09067 Filed 4-20-15; 8:45 am]
 BILLING CODE 8011-01-P