21018 Federal Register / Vol. 60, No. 82 / Friday, April 28, 1995 / Notices

[Release No. IC–21025; 812–9198]

Integrity Life Insurance Company, et al.

April 24, 1995.

AGENCY: Securities and Exchange

Commission (the ‘‘SEC’’ or the

‘‘Commission’’).

ACTION: Notice of application for

exemption under the Investment

Company Act of 1940 (the ‘‘1940 Act’’).

APPLICANTS: Integrity Life Insurance

Company (‘‘Integrity’’), National

Integrity Life Insurance Company

(‘‘National Integrity’’) (Integrity and

National Integrity shall be referred to

hereinafter as the ‘‘Companies’’),

Integrity Life Insurance Company

Separate Account III (the ‘‘Integrity

Separate Account’’), National Integrity

Life Insurance Company Separate

Account III (the ‘‘National Integrity

Separate Account’’) (the Integrity

Separate Account and the National

Integrity Separate Account shall be

referred to collectively hereinafter as the

‘‘Separate Accounts’’), and Integrity

Financial Services (‘‘IFS’’).

RELEVANT 1940 ACT SECTIONS: Order

requested under Section 6(c) of the 1940

Act for exemptions from Sections

26(a)(2)(C) and 27(c)(2) thereof.

SUMMARY OF APPLICATION: Applicants

seek an order to permit the deduction of

a mortality and expense risk charge

from the assets of the Separate Accounts

under certain flexible premium variable

annuity contracts (the ‘‘Contracts’’) and

under any materially similar contracts

offered in the future by such Separate

Accounts (the ‘‘Future Contracts’’) or

from the assets of any other separate

account established by either of the

Companies in the future to support

variable annuity contracts which are

materially similar to the Contracts, and

for which any National Association of

Securities Dealers, Inc. (‘‘NASD’’)

member broker-dealer other than IFS—

which is wholly-owned by the ARM

Financial Group, Inc. and registered

with the Commission under the

Securities Exchange Act of 1934—may

in the future serve as the principal

underwriter.

FILING DATES: The application was filed

on August 24, 1994, and amended on

March 31, 1995.

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

Commission’s Secretary and serving

applicants with a copy of the request,

personally or by mail. Hearing requests

must be received by the Commission by

5:30 p.m. on May 19, 1995, and must be

accompanied by proof of service on

Applicants in the form of an affidavit or,

for lawyers, a certificate of service.

Hearing requests must state the nature

of the writer’s interest, the reason for the

request, and the issues contested.

Persons may request notification of a

hearing by writing to the Commission’s

Secretary.

ADDRESSES: Secretary, SEC, 450 Fifth

Street NW., Washington, DC 20549.

Applicants: c/o Jorden Burt & Berenson,

1025 Thomas Jefferson Street NW., Suite

400 East, Washington, DC 20007–0805,

Attention: Michael Berenson, Esq.

FOR FURTHER INFORMATION CONTACT:

Joseph G. Mari, Senior Special Counsel,

or Patrice M. Pitts, Special Counsel,

Office of Insurance Products, Division of

Investment Management, at (202) 942–

0670.

SUPPLEMENTARY INFORMATION: The

following is a summary of the

application. The complete application is

available for a fee from the

Commission’s Public Reference Branch.

Applicants’ Representations

1. Integrity was organized in 1966 as

an Arizona stock life insurance

company and has redomesticated as an

Ohio stock life insurance company.

National Integrity was organized in 1968

as a New York stock life insurance

company. Each of the Companies is

principally engaged in offering life

insurance policies and annuity

contracts. National Integrity is a

subsidiary of Integrity and both

Companies are indirectly wholly-owned

by The ARM Financial Group, Inc., an

insurance holding company. The ARM

Financial Group, Inc. is a holding

company in the business of owning and

managing life insurance companies that

specialize in the design, marketing, and

management of accumulation products.

2. The Integrity Separate Account is a

distinct investment account of Integrity,

and the National Integrity Separate

Account is a distinct investment

account of National Integrity. Each of

the Separate Accounts acts as a funding

vehicle for the Contracts.

3. Each Separate Account invests

solely in the Schabacker Select Fund

(the ‘‘Portfolio’’), currently the only

investment portfolio of United Services

Insurance Funds (‘‘USIF’’), a diversified,

open-end management investment

company that has filed a registration

statement with the SEC under the 1940

Act. The Portfolio primarily invests in a

broad range of other open-end and

closed-end investment companies

(‘‘underlying funds’’). An investor in the

Portfolio may have the option of

investing directly in the underlying

funds, rather than indirectly through the

Portfolio which will duplicate some

operating expenses. As a result of this

duplication of expenses, an investor not

only will bear the investor’s

proportionate share of the expenses of

the Portfolio, including operation costs

and management fees, but also will

indirectly share in a portion of similar

expenses of the underlying funds. The

shares of the Portfolio are purchased by

each Company for the Company’s

Separate Account at net asset value,

without a sales load.

4. The board of directors of each of

the Companies may, in the future,

establish additional subaccounts within

the same Separate Account

(‘‘Subaccounts’’), which may invest in

other portfolios of USIF as and when

such portfolios are registered, or in

other investments. Each Company may,

in the future, establish other contracts

which are funded by the Company’s

Separate Account and which are

materially similar to the Contracts. In

addition, each Company may, in the

future, establish other separate accounts

which issue contracts which are

materially similar to the Contracts.

5. IFS, a wholly-owned subsidiary of

The ARM Financial Group, Inc. which

is registered as a broker-dealer under the

Securities Exchange Act of 1934, is the

distributor of the Contracts.

6. The Contracts are intended to be

used in connection with retirement

plans that qualify for Federal tax

advantages and for plans that do not so

qualify. The Contracts are flexible

premium variable annuity contracts

which provide for an initial

contribution and allow for additional

contributions at any time before the

annuity payments begin, as long as the

annuitant is living and subject to certain

limitations.

7. No sales load is deducted from the

initial contribution or any additional

contributions, and there are no sales

charges imposed upon withdrawals.

8. The Contracts are subject to an

annual maintenance fee of $35 which

will be deducted on the last business

day of each Contract year. The annual

maintenance fee will be waived in any

year that the account value of the

Contract is $50,000 or more on the last

business day of the Contract year.

9. Prior to the retirement date, an

administrative charge equal to 0.15%

annually of the net asset value of the

Separate Account of each Company is

assessed daily and will be deducted

from the accumulation unit value of the

Contract. The administrative charge is

intended to cover the Company’s

ongoing administrative expenses. This

charge and the annual maintenance fee
Federal Register / Vol. 60, No. 82 / Friday, April 28, 1995 / Notices 21019

1Applicants represent that, during the notice

period, the application will be amended to reflect

this representation.

will not in the aggregate exceed the cost

of services to be provided over the life

of the Contract defined in accordance

with the applicable standards in Rule

26a–1 under the 1940 Act. The

deductions for the administrative charge

and annual maintenance fee represent

reimbursement for the costs expected to

be incurred by each Company over the

life of the Contract for issuing and

maintaining each Contract and the

Company’s Separate Account.

10. The Contract owner will pay

premium taxes, where such taxes are

imposed by state law, and which taxes

currently range up to 3.5%. These taxes

will be deducted from the account value

or contributions, as incurred by each

Company. Any other taxes levied by any

government entity regarding the

Contracts or the Separate Accounts will

be paid by each of the Companies.

11. Each Company will impose a

charge as compensation for bearing

certain mortality and expense risks

under the Contract. The annual charge

is assessed daily and is based on the net

asset value of each Separate Account.

The annual mortality and expense risk

charge will not exceed an effective

annual rate of 0.50% of the net asset

value of each Separate Account, where

0.40% is allocated to the mortality risk

and 0.10% is allocated to the expense

risk. Likewise, for Future Contracts, the

annual mortality and expense risk

charge will not exceed an effective

annual rate of 0.50% of the net asset

value of the Separate Account

attributable to such contracts, where

0.40% is allocated to the mortality risk

and 0.10% is allocated to the expense

risk.

12. The mortality risk borne by each

Company under the Contract arises from

the Company’s obligation to make

annuity payments regardless of how

long an annuitant may live. Each

Company also assumes mortality risk as

a result of death benefits which may be

paid under the Contract and which

guarantee a minimum payment in the

event that the annuitant dies prior to the

annuity date. The expense risk borne by

each Company under the Contract is the

risk that the charges for administrative

expenses, which charges are guaranteed

for the life of the Contract, may be

insufficient to cover the actual costs of

issuing and administering the Contract.

13. If the mortality and expense risk

charges deducted are insufficient to

cover the actual cost of the mortality

and expense risk, each Company will

bear the loss. Conversely, if the

mortality and expense risk charges

deducted exceed the costs, the excess

will be added to each Company’s

surplus and will be used for any lawful

purpose, including any shortfalls on the

costs of distributing the Contracts.1

Applicants’ Legal Analysis and

Conditions

1. Section 6(c) of the 1940 Act

authorizes the Commission, by order

upon application, to conditionally or

unconditionally grant an exemption

from any provision, rule or regulation of

the 1940 Act to the extent that the

exemption is necessary or appropriate

in the public interest and consistent

with the protection of investors and the

purposes fairly intended by the policy

and provisions of the 1940 Act.

2. Sections 26(a)(2) and 27(c)(2) of the

1940 Act, in pertinent part, prohibit a

registered unit investment trust, and any

depositor or underwriter thereof, from

selling periodic payment plan

certificates unless the proceeds of all

payments are deposited with a qualified

trustee or custodian and are held under

arrangements which prohibit any

payment to the depositor or principal

underwriter except for a fee, not

exceeding such reasonable amounts as

the Commission may prescribe, for

performing bookkeeping and other

administrative services.

3. Applicants request an order under

Section 6(e) exempting them from

Sections 26(a)(2)(C) and 27(c)(2) of the

1940 Act to the extent necessary to

permit the deduction of a mortality and

expense risk charge from the assets of

the Separate Account funding the

Contracts and Future Contracts.

Applicants also request that the order

permit the deduction of a mortality and

expense risk charge from the assets of

any other separate account established

by either of the Companies in the future

to support variable annuity contracts

which are materially similar to the

Contracts, and for which any NASD

member broker-dealer other than IFS

may in the future serve as the principal

underwriter. Any such future principal

underwriter will be wholly-owned,

directly or indirectly, by the ARM

Financial Group, Inc., and be registered

with the Commission under the

Securities Exchange Act of 1934.

4. Applicants submit that the

requested relief is appropriate in the

public interest because such an order

would promote competitiveness in the

variable annuity contract market by

eliminating the need for the Companies

to file redundant exemptive

applications, which reduces each

Company’s resources. Applicants

further submit that investors would not

receive any benefit or additional

protection by the Company being

required repeatedly to seek exemptive

relief regarding the same issues

addressed in this application.

5. Applicants represent that the

mortality and expense risk charges

under the Contracts are within the range

of industry practice for comparable

variable annuity contracts. Applicants

base this representation on their review

of publicly available information

regarding the aggregate level of the

mortality and expense risk charges

under variable annuity contracts

currently being offered in the insurance

industry which are comparable to the

Contracts. In this regard, Applicants

have taken into consideration such

factors as current charge levels, the

manner in which charges are imposed,

the presence of charge-level or annuityrate guarantees, and the markets in

which the Contracts will be offered.

Applicants will maintain and make

available to the Commission upon

request a memorandum setting forth in

detail the products analyzed in the

course of, and the methodology and

results of, the comparative survey.

6. Similarly, prior to making available

any Future Contracts and prior to

making available any materially similar

contracts through other separate

accounts established by either of the

Companies in the future, Applicants

will represent that the mortality and

expense risk charges under any such

contracts will be within the range of

industry practice for comparable

contracts. Applicants will maintain and

make available to the Commission upon

request a memorandum setting forth in

detail the products analyzed in the

course of, and the methodology and

results of, the comparative survey.

7. The Contracts do not provide for a

sales charge to cover the costs incurred

in distributing the Contracts, and there

are no sales charges imposed upon

surrender or partial withdrawal of a

Contract. Applicants represent that the

costs related to the distribution of the

Contracts will be paid from the assets of

the general account of the Company,

which amounts will be derived in part

from gains from operations regarding

the Contracts and from the mortality

and expense risk charge. Each Company

has concluded that there is a reasonable

likelihood that the distribution

financing arrangement being used in

connection with the Contracts and the

Future Contracts will benefit the

Company’s Separate Account and the

Contract owners. The Companies will

maintain and make available to the

Commission upon request a
21020 Federal Register / Vol. 60, No. 82 / Friday, April 28, 1995 / Notices

memorandum setting forth the basis for

this representation.

8. Applicants further represent that

each Separate Account, and other

separate accounts established in the

future, will invest only in underlying

funds which have undertaken to have a

board of directors/trustees, a majority of

whom are not interested persons of any

such funds, formulate and approve any

plan under Rule 12b–1 under the 1940

Act to finance distribution expenses.

Applicants’ Conclusion

Applicants assert that, for the reasons

and upon the facts set forth above, the

requested exemptions from Sections

26(a)(2)(C) and 27(c)(2) of the 1940 Act

are necessary and appropriate in the

public interest and consistent with the

protection of investors and the purposes

fairly intended by the policies and

provisions of the 1940 Act.

For the Commission, by the Division of

Investment Management, under delegated

authority.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 95–10483 Filed 4–27–95; 8:45 am]

BILLING CODE 8010–01–M

DEPARTMENT OF STATE

[Public Notice 2191]

Notice Convening an Accountability

Review Board for the Attack on the

Consulate Shuttle Bus in Karachi in

Which Two Americans Were Killed

Pursuant to section 301 of the

Omnibus Diplomatic Security and

Antiterrorism Act of 1986 (22 U.S.C.

4831 et seq.), I have determined that the

March 8, 1995, terrorist attack on the

Consulate shuttle bus in Karachi,

Pakistan, involved loss of life related to

a U.S. mission abroad. Therefore, I am

convening an Accountability Review

Board, as required by that statute, to

examine the facts and circumstances of

the attack and report to me such

findings and recommendations as it

deems appropriate, in keeping with the

attached mandate.

I have appointed former Ambassador

Jane Coon as chairperson of the board.

She will be assisted by former

Ambassador Peter Sebastian, former

Ambassador Peter Moffat, Mr. James

Higham, and Mr. George Murphy. Mr.

Douglas Watson will act as Executive

Secretary. The members will bring to

their deliberations distinguished

backgrounds in government service and

private life.

I have asked the Board to submit its

conclusions and recommendations to

the Secretary within sixty days of its

first meeting, unless the Chairperson

determines a need for additional time.

Appropriate action will be taken and

reports submitted to Congress on any

recommendations made by the board.

Anyone with information relevant to

the board’s examination of this incident

should contact the board promptly on

(202) 647–9403.

Strobe Talbott,

Deputy Secretary of State.

[FR Doc. 95–10438 Filed 4–27–95; 8:45 am]

BILLING CODE 4710–10–M

[Public Notice 2196]

Bureau of Consular Affairs; Visa Office

Meeting of U.S. Government

Regulators and Outside Interested

Parties; Notice

SUMMARY: Pursuant to a Presidential

directive, agencies of the U.S.

government are convening meetings of

the government regulators with

representatives of groups whose

activities are so regulated. The Visa

Office of the State Department will hold

such a meeting on May 23, 1995.

FOR FURTHER INFORMATION CONTACT:

Stephen K. Fischel, Chief, Legislation

and Regulations Division, Visa Office,

Department of State, Washington, D.C.

20522–0113; (PHONE) (202) 663–1204;

(FAX) ( 202) 663–3898.

DATES: Interested parties are requested

to communicate with the Visa Office by

letter addressed to Stephen K. Fischel,

Chief, Legislation and Regulations

Division, Visa Office, (phone) (202)

663–1204; (FAX) ( 202) 663–3898 to

make reservations for the meeting.

SUPPLEMENTARY INFORMATION: The

purpose of the meeting is to discuss

means of establishing better

communication between those

performing the visa function and

interested parties. Additionally, as the

Visa Office is in the process of preparing

regulations to revamp the immigrant

visa form under section 222(a) of the

Immigration and Nationality Act

pursuant to section 205 of the

Immigration and Nationality Technical

Corrections Act of 1994, Pub. L. 103–

416, comments will be solicited from

the participants in this regard. Persons

interested in attending the meeting

should FAX or telephone the Visa Office

two weeks prior to the meeting to

indicate their interest in attending. A

letter confirming your interest in

participating in the meeting, addressed

to Stephen K. Fischel, Chief, Legislation

and Regulations Division, Visa Office,

Department of State, Washington, D.C.

20522–0113; (phone) (202) 663–1204;

(FAX); (202) 663–3898, must be

received two weeks prior to the meeting

to make reservations for the meeting.

Letters may be faxed to ensure timely

receipt. The Visa Office will confirm

your participation and provide the time

and location of the meeting. The

number of representatives per group

will be determined by the number of

persons responding to this notice.

Dated: April 24, 1995.

Mary A. Ryan,

Assistant Secretary for Consular Affairs.

[FR Doc. 95–10500 Filed 4–27–95; 8:45 am]

BILLING CODE 4710–06–P

DEPARTMENT OF TRANSPORTATION

Federal Aviation Administration

Approval of Noise Compatibility

Program; General Mitchell

International Airport Milwaukee, WI

AGENCY: Federal Aviation

Administration, DOT.

ACTION: Notice.

SUMMARY: The Federal Aviation

Administration (FAA) announces its

findings on the noise compatibility

program submitted by Milwaukee

County under the provisions of title I of

the Aviation Safety and Noise

Abatement Act of 1979 (Pub. L. 96–193)

and 14 CFR part 150. These findings are

made in recognition of the description

of federal and nonfederal

responsibilities in Senate Report No.

96–52 (1980). On September 23, 1994

the FAA determined that the noise

exposure maps submitted by Milwaukee

County under part 150 were in

compliance with applicable

requirements. On March 22, 1995, the

Administrator approved the General

Mitchell International Airport noise

compatibility program. Most of the

recommendations of the program were

approved.

EFFECTIVE DATE: The effective date of the

FAA’s approval of the General Mitchell

International Airport noise

compatibility program is March 22,

1995.

FOR FURTHER INFORMATION CONTACT:

William J. Flanagan, Federal Aviation

Administration, Airports District Office,

room 102, 6020 28th Avenue South,

Minneapolis, Minnesota 55450, (612)

725–4463. Documents reflecting this

FAA action may be reviewed at this

location.

SUPPLEMENTARY INFORMATION: This

notice announces that the FAA has

given its overall approval to the noise

compatibility program for General