Federal Register / Vol. 60, No. 90 / Wednesday, May 10, 1995 / Notices 24957

the general purposes of the Act. Under

section 6(c), the SEC may exempt a

series of transactions from any provision

of the Act or any rule or regulation

thereunder if and to the extent that such

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 Act. Thus,

applicants request relief under sections

6(c) and 17(b) because they wish to

engage in a series of transactions rather

than a single transaction.

3. The Investing Funds will retain

their ability to invest their cash balances

directly into money market instruments

if they believe they can obtain a higher

return. Each of the Money Market Funds

has the right to discontinue selling

shares to any of the Investing Funds if

its board of trustees determines that

such sales would adversely affect the

portfolio management and operations of

such Money Market Fund. Therefore,

applicants believe that the proposal

satisfies the standards for relief.

4. Section 17(d) and rule 17d–1

prohibit an affiliated person of an

investment company, acting as

principal, from participating in or

effecting any transaction in connection

with any joint enterprise or joint

arrangement in which the investment

company participates. Each Investing

Fund, Janus Capital, and each of the

Money Market Funds could be

participants in a joint enterprise or other

joint arrangement within the meaning of

section 17(d)(1) and rule 17d–1.

5. Under rule 17d–1, the SEC may

permit a proposed joint transaction if

participation by a registered investment

company is consistent with the

provisions, policies, and purposes of the

Act, and not on a basis different from or

less advantageous than that of the other

participants. Applicants believe that the

proposal satisfies these standards.

6. Section 12(d)(1), as noted above,

sets certain limits on an investment

company’s ability to invest in the shares

of another company. The perceived

abuses section 12(d)(1) sought to

address include undue influence by an

acquiring fund over the management of

an acquired fund, layering of fees, and

complex structures. Applicants believe

that none of these concerns are

presented by the proposed transactions

and that the proposed transactions meet

the section 6(c) standards for relief.

Applicants’ Conditions

Applicants agree that the order

granting the requested relief will be

subject to the following conditions:

1. Shares of the Money Market Funds

sold to and redeemed from the Investing

Funds will not be subject to a sales load,

redemption fee, or distribution fee

under a plan adopted in accordance

with rule 12b–1.

2. Applicants will cause Janus Capital

and its affiliated persons to remit to the

respective Investing Fund, or waive, an

amount equal to the Reduction Amount.

Any of these fees remitted or waived

will not be subject to recoupment by

Janus Capital or its affiliated persons at

a later date.

3. For the purpose of determining any

amount to be waived and/or expenses to

be borne to comply with any Expense

Waiver, the adjusted fees for an

Investing Fund (gross fees minus

Expense Waiver) will be calculated

without reference to the amounts

waived or remitted pursuant to

condition 2. Adjusted fees then will be

reduced by the amount waived pursuant

to condition 2. If the amount waived

pursuant to condition 2 exceeds

adjusted fees, Janus Capital also will

reimburse the Investing Fund in an

amount equal to such excess.

4. Each of the Investing Funds will be

permitted to invest uninvested cash in,

and hold shares of, a Money Market

Fund only to the extent that the

Investing Fund’s aggregate investment

in such Money Market Fund does not

exceed the greater of 5% of the Investing

Fund’s total net assets or $2.5 million.

5. Each Investing Fund will vote its

shares of each Money Market Fund in

the same proportion as the votes of all

other shareholders of such Money

Market Funds entitled to vote on the

matter.

6. As shareholders of a Money Market

Fund, the Investing Funds will receive

dividends and bear their proportionate

share of expenses on the same basis as

other shareholders of such Money

Market Funds. A separate account will

be established in the shareholder

records of each of the Money Market

Funds for each of the Investing Funds.

For the SEC, by the Division of Investment

Management, pursuant to delegated

authority.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 95–11519 Filed 5–9–95; 8:45 am]

BILLING CODE 8010–01–M

[Rel. No. IC–21040; File No. 812–9338]

The Mutual Life Insurance Company of

New York, et al.

May 4, 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: The Mutual Life Insurance

Company of New York (‘‘Mutual of New

York’’), MONY Life Insurance Company

of America (‘‘MONY’’, together with

Mutual of New York, the ‘‘Companies’’),

MONY Variable Account L (‘‘Account

L’’), MONY America Variable Account L

(‘‘MONY Account L’’), any other

separate account established by the

Companies in the future to support

flexible premium, single premium, or

scheduled premium variable life

insurance polices (the ‘‘Other

Accounts,’’ collectively, with Account L

and MONY Account L, the ‘‘Accounts’’)

and MONY Securities Corp.

RELEVANT 1940 ACT SECTIONS: Order

requested under Section 6(c) of the 1940

Act for exemptions from Section

27(c)(2) of the 1940 Act and Rules 6e–

2(c)(4)(v), 6e–3(T)(c)(4)(v), 6e–2(a)(2),

and 6e–2(b)(15) thereunder.

SUMMARY OF APPLICATION: Applicants

seek an order to permit them to deduct

from premiums received under certain

variable life insurance policies (the

‘‘Contracts’’) issued by the Accounts

and the Companies a charge that is

reasonable in relation to the Companies’

increased federal income tax burden

resulting from the Companies’ receipt of

such premiums in connection with the

Contracts. Applicants also seek an order

to permit any of the Accounts to derive

its assets from both flexible and

scheduled premium variable life

insurance policies and nevertheless to

qualify as a variable life insurance

separate account, with respect to single

premium or scheduled premium life

insurance policies, for the purposes of

Rule 6e–2.

FILING DATE: The application was filed

on November 23, 1994.

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 on this application by writing

to the Secretary of the SEC 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 30, 1995 and should

be accompanied by proof of service on

Applicants in the form of an affidavit or,

for lawyers, a certificate of service.

Hearing requests should state the nature

of the interest, the reason for the

request, and the issues contested.

Persons may request notification of a

hearing by writing to the Secretary of

the SEC.
24958 Federal Register / Vol. 60, No. 90 / Wednesday, May 10, 1995 / Notices

ADDRESSES: Secretary, Securities and

Exchange Commission, 450 Fifth Street,

N.W., Washington, D.C. 20549.

Applicants, Edward P. Bank, Vice

President and Deputy General Counsel,

The Mutual Life Insurance Company of

New York, 1740 Broadway, New York,

New York, 10019.

FOR FURTHER INFORMATION CONTACT:

Barbara J. Whisler, Senior Attorney, or

Wendy Friedlander, Deputy Chief, both

at (202) 942–0670, Office of Insurance

Products, Division of Investment

Management.

SUPPLEMENTARY INFORMATION: 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. Mutual of New York, a mutual life

insurance company organized under the

laws of New York in 1842, is the

depositor of Account L for purposes of

the 1940 Act. MONY, a stock life

insurance company organized under

Arizona law in 1969, is the depositor of

MONY Account L for purposes of the

1940 Act. Mutual of New York is the

issuer of Contracts which permit

allocation of premiums to Account L

and MONY is the issuer of Contracts

which permit allocation of premiums to

MONY Account L. Account L and

MONY Account L have twelve

subaccounts, not all of which are

available under the Contracts. Each

subaccount invests solely in a

corresponding portfolio of either the

MONY Series Fund, Inc., or the

Enterprise Accumulation Trust

(collectively, the ‘‘Funds’’). Each of the

Funds is an open-end diversified

management investment company

registered under the 1940 Act. The

Companies may elect to crate additional

subaccounts in the future. The Accounts

are, and will be registered with the

Commission as unit investment trusts.

2. MONY Securities Corp., a wholly

owned subsidiary of Mutual of New

York, is registered with the Commission

as a broker-dealer under the Securities

Exchange Act of 1934 and is a member

of the National Association of Securities

Dealers, Inc. MONY Securities Corp.

will be the principal underwriter of the

Contracts and may serve in the future as

the principal underwriter for Contracts

issued by the Other Accounts.

3. The Contracts are flexible premium

variable life insurance policies. The

Contracts issued by Account L and

MONY Account L will be, and the

Contracts issued by the Other Accounts

are expected to be, issued in reliance on

Rule 6e–3(T) under the 1940 Act.

Applicants state that the Companies

will deduct 1.25% of each premium

payment to cover the Companies’

estimated cost for the federal income tax

treatment of deferred acquisition costs.

4. In the Omnibus Budget

Reconciliation Act of 1990, Congress

amended the Internal Revenue Code of

1986 (the ‘‘Code’’) by, among other

things, enacting Section 848 thereof.

Section 848 changed how a life

insurance company must compute its

itemized deductions from gross income

for federal income tax purposes. Section

848 requires an insurance company to

capitalize and amortize over a period of

ten years part of the company’s general

expenses for the current year. Under

prior law, these general expenses were

deductible in full from the current

year’s gross income.

5. The amount of deductions that

must be capitalized and amortized over

ten years rather than deducted in the

year incurred is based solely upon ‘‘net

premiums’’ received in connection with

certain types of insurance contracts.

Section 848 of the Code defines ‘‘net

premium’’ for a type of contract as gross

premiums received by the insurance

company on the contracts minus return

premiums and premiums paid by the

insurance company for reinsurance of

its obligations under such contracts.

Applicants state that the effect of

Section 848 is to accelerate the

realization of income from insurance

contracts covered by that Section, and,

accordingly, the payment of taxes on the

income generated by those contracts.

6. The amount of general deductions

that must be capitalized depends upon

the type of contract to which the

premiums received relate and varies

according to a schedule set forth in

Section 848. Applicants state that the

Contracts are ‘‘specified insurance

contracts’’ that fall into the category of

life insurance contracts, and under

Section 848, 7.7% of the year’s net

premiums received must be capitalized

and amortized.

7. Applicants state that the increased

tax burden on the Companies resulting

from Section 848 may be quantified as

follows: For each $10,000 of net

premiums received by the Companies

under the Contracts in a given year, the

Companies’ general deductions are

reduced by $731.50 or (a) $770 (7.7% of

$10,000) minus (b) $38.50 (one-half

year’s portion of the ten year

amortization). This leaves $731.50 ($770

minus $38.50) subject to taxation at the

corporate tax rate of 35%. This results

in an increase in tax for the current year

of $256.03 (.35 x $731.50). This increase

will be partially offset by deductions

that will be allowed during the next ten

years as a result of amortizing the

remainder of the $770 ($77 in each of

the following nine years and $38.50 in

the tenth year).

8. In the business judgment of the

Companies, a discount rate of 8% is

appropriate for use in calculating the

present value of the Companies’ future

tax deductions resulting from the

amortization described above.

Applicants state that the Companies

seek an after tax rate of return on the

investment of their capital of 8%. To the

extent that capital must be used by the

Companies to meet their increased

federal tax burden under Section 848

resulting from the receipt of premiums,

such capital is not available to the

Companies for investment. Thus,

Applicants argue, the cost of capital

used to satisfy the Companies’ increased

federal income tax burden under

Section 848 is, in essence, the

Companies’ after tax rate of return on

capital; and, accordingly, the rate of

return on capital is appropriate for use

in this present value calculation.

9. The Companies recognize that a

charge of 1.25%, or, a charge at any

level, could conceivably exceed the tax

burden if, in the future, the Companies’

corporate tax rate or targeted after tax

rate of return were reduced. The

Companies submit that, while it is

difficult to predict, with certainty,

whether or the extent to which the rate

will be reduced, a measure of comfort is

provided that the calculation of the

Companies’ increased tax burden

attributable to the receipt of premiums

will continue to be reasonable over

time, even if the corporate tax or the

targeted after tax rate of return

applicable to the Companies is reduced.

The Contracts provide that the

Companies can decrease the charge

under such circumstances. The

Companies undertake to monitor the tax

burden imposed on them and to reduce

the charge to the extent of any

significant decrease in the tax burden.

10. In determining the after tax rate of

return used in arriving at the 8%

discount rate, Applicants state that the

Companies considered a number of

factors, including: market interest rates;

the Companies’ anticipated long term

growth rate; the risk level for this type

of business; inflation; and available

information about the rates of return

obtained by other life insurance

companies. The Companies represent

that such factors are appropriate factors

to consider in determining the

Companies’ cost of capital. Applicants

state that the Companies first project

their future growth rate based on the

sales projections, the current interest

rates, the inflation rate, and the amount
Federal Register / Vol. 60, No. 90 / Wednesday, May 10, 1995 / Notices 24959

of capital that the Companies can

provide to support such growth. The

Companies then use the anticipated

growth rate and the other factors

enumerated above to set a rate of return

on capital that equals or exceeds this

rate of growth. Of these other factors,

market interest rates, the acceptable risk

level, the surplus level required by

ratings agencies, and the inflation rate

receive significantly more weight than

information about the rates of return

obtained by other companies.

Applicants state that the Companies

seek to maintain a ratio of capital to

assets that is established based on the

Companies’ judgment of the risks

represented by various components of

the Companies’ assets and liabilities.

Applicants state that maintaining the

ratio of capital to assets is critical to

offering competitively priced products

and, as to the Companies, to

maintaining a competitive rating from

various rating agencies. Consequently,

Applicants state that the Companies’

capital should grow at least at the same

rate as do the Companies’ assets.

11. Applying the 8% discount rate,

and assuming a 35% corporate income

tax rate, the present value of the tax

effect of the increased deductions

allowable in the following ten years

amounts to a federal income tax savings

of $174.60. Thus, the present value of

the increased tax burden resulting from

the effect of Section 848 on each

$10,000 of net premiums received under

the Contracts is $81.43, i.e., $256.03

minus $174.60.

12. State premium taxes are

deductible in computing federal income

taxes. Thus, the Companies do not incur

incremental federal income tax when

they pass on state premium taxes to

owners of the Contracts. Conversely,

federal income taxes are not deductible

in computing the Companies’ federal

income taxes. To compensate the

Companies fully for the impact of

Section 848, therefore, it would be

necessary to allow them to impose an

additional charge that would make them

whole not only for the $81.43 additional

federal income tax burden attributable

to Section 848 but also for the federal

income tax on the additional $81.43

itself. This federal income tax can be

determined by dividing $81.43 by the

complement of the 35% federal

corporate income tax rate, i.e., 65%,

resulting in an additional charge of

$125.28 for each $10,000 of net

premiums, or 1.25%.

13. Based on prior experience, the

Companies expect that all of their

current and future deductions will be

fully taken. It is the Companies’

judgment that a charge of 1.25% would

reimburse them for the impact of

Section 848 on the Companies’ federal

income tax liabilities. Applicants

represent that the charge to be deducted

by the Companies pursuant to the relief

requested is reasonably related to the

increased federal income tax burden

under Section 848, taking into account

the benefit to the Companies’ of the

amortization permitted by Section 848,

and the use by the Companies’ of a

discount rate of 8% in computing the

future deductions resulting from such

amortization, such rate being the

equivalent of the Companies’ cost of

capital.

14. While the application states that

the Companies believe that a charge of

1.25% of premium payments would

reimburse them for the impact of

Section 848 (as currently written) on the

Companies’ federal income tax

liabilities, the application also states,

however, that the Companies believe

that they will have to increase this

charge if any future change in, or

interpretation of Section 848, or any

successor provision, results in an

increased federal income tax burden

due to the receipt of premiums. Such an

increase could result from a change in

the corporate federal income tax rate, a

change in the 7.7% figure, or a change

in the amortization period.

Applicants’ Legal Analysis

1. Applicants request an order of the

Commission pursuant to Section 6(c)

exempting them from the provisions of

Section 27(c)(2) of the 1940 Act and

Rules 6e–2(c)(4)(v) and 6e–3(T)(c)(4)(v)

thereunder to the extent necessary to

permit deductions to be made from

premium payments received in

connection with the Contracts. The

deductions would be in an amount that

is reasonable in relation to the

Companies’ increased federal income

tax burden related to the receipt of such

premiums. Applicants further request

an exemption from Rule 6e–3(T)(c)(4)(v)

of the 1940 Act to permit the proposed

deductions to be treated as other than

‘‘sales load’’ for the purposes of Section

27 of the 1940 Act and the exemptions

from various provisions of that Section

found in Rule 6e–3(T)(b)(13).

2. Section 6(c) of the 1940 Act

provides, in pertinent part, that the

Commission may, by order upon

application, conditionally or

unconditionally exempt any person,

security or transaction from any

provision of the 1940 Act if and to the

extent that such 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 the

provisions of the 1940 Act.

Section 27(c)(2) and Rules 6e–3(T)(c)(4)

and 6e–2(c)(4)(v)

1. Section 27(c)(2) of the 1940 Act

prohibits the sale of periodic payment

plan certificates unless the proceeds of

all payments (except such amounts as

are deducted for sales load) are held

under an indenture or agreement

containing in substance the provisions

required by Sections 26(a)(2) and

26(a)(3) of the 1940 Act. Certain

provisions of Rule 6e–3(T) provide a

range of exemptive relief for the offering

of flexible premium variable life

insurance policies such as the Contracts.

Rule 6e–3(T)(b)(13)(iii) provides, subject

to certain conditions, exemptions from

Section 27(c)(2) that include permitting

a payment of certain administrative fees

and expenses, the deduction of a charge

for certain mortality and expense risks,

and the ‘‘deduction of premium taxes

imposed by any State or other

governmental entity.’’

2. Rule 6e–2(c)(4)(v) defines ‘‘sales

load’’ charged on any payment as the

excess of the payment over certain

specified charges and adjustments,

including ‘‘a deduction approximately

equal to state premium taxes.’’ Rule 6e–

3(T)(c)(4)(v) defines ‘‘sales load’’

charged during a contract period as the

excess of any payments made during the

period over the sum of certain specified

charges and adjustments, including ‘‘a

deduction for and approximately equal

to state premium taxes.’’

3. Applicants submit that the

deduction for federal income tax

charges, proposed to be deducted in

connection with the Contracts, is akin to

a state premium tax charge in that it is

an appropriate charge related to the

Companies’ tax burden attributable to

premiums received. Thus, Applicants

submit that the proposed deduction be

treated as other than sales load, as is a

state premium tax charge, for purposes

of the 1940 Act.

4. Applicants argue that the requested

exemptions from Rules 6e–2(c)(4) and

6e–3(T)(c)(4) are necessary in

connection with Applicants’ reliance on

certain provisions of Rules 6e–2(b)(13)

and 6e–3(T)(b)(13), and particularly on

subparagraphs (b)(13)(i) of the Rules,

which provide exemptions from

Sections 27(a)(1) and 27(h)(1) of the

1940 Act. Issuers and their affiliates

may only rely on Rules 6e–2(b)(13)(i) or

6e–3(T)(b)(13)(i) if they meet the

respective Rule’s alternative limitations

on sales load as defined in Rules 6e–

2(c)(4) or Rule 6e–3(T)(c)(4). Applicants

state that, depending upon the load

structure of a particular Contract, these
24960 Federal Register / Vol. 60, No. 90 / Wednesday, May 10, 1995 / Notices

alternative limitations may not be met if

the deduction for the increase in an

issuer’s federal tax burden is included

in sales load. Although a deduction for

an insurance company’s increased

federal tax burden does not fall squarely

within any of the specified charges or

adjustments which are excluded from

the definition of ‘‘sales load’’ in Rules

6e–2(c)(4) and 6e–3(T)(c)(4), Applicants

state that they have found no public

policy reason for including these

deductions in ‘‘sales load’’.

5. The public policy that underlies

Rules 6e–2(b)(13)(i) and 6e–

3(T)(b)(13)(i), like that which underlies

Sections 27(a)(1) and 27(h)(1) of the

1940 Act, is to prevent excessive sales

loads from being charged in connection

with the sale of periodic payment plan

certificates. Applicants submit that the

treatment of a federal income tax charge

attributable to premium payments as

sales load would not in any way further

this legislative purpose because such a

deduction has no relation to the

payment of sales commissions or other

distribution expenses. Applicants state

that the Commission has concurred with

this conclusion by excluding deductions

for state premium taxes from the

definition of ‘‘sales load’’ in Rules 6e–

2(c)(4) and 6e–3(T)(c)(4).

6. Applicants assert that the source for

the definition of ‘‘sales load’’ found in

the Rules supports this analysis.

Applicants state that the Commission’s

intent in adopting such provisions was

to tailor the general terms of Section

2(a)(35) of the 1940 Act to variable life

insurance contracts. Just as the

percentage limits of Sections 27(a)(1)

and 27(h)(1) depend on the definition of

‘‘sales load’’ in Section 2(a)(35) for their

efficacy, the percentage limits in Rules

6e–2(b)(13)(i) and 6e–3(T)(b)(13)(i)

depend on Rules 6e–2(c)(4) and 6e–

3(T)(c)(4), respectively, which do not

depart, in principle, from Section

2(a)(35).

7. Section 2(a)(35) excludes

deductions from premiums for ‘‘issue

taxes’’ from the definition of ‘‘sales

load’’ under the 1940 Act. Applicants

submit that this suggests that it is

consistent with the policies of the 1940

Act to exclude from the definition of

‘‘sales load’’ in Rules 6e–2 and 6e–3(T)

deductions made to pay an insurance

company’s costs attributable to its tax

obligations. Section 2(a)(35) also

excludes administrative expenses or

fees that are ‘‘not properly chargeable to

sales or promotional activities.’’

Applicants argue that this suggests that

the only deductions intended to fall

within the definition of ‘‘sales load’’ are

those that are properly chargeable to

such activities. Because the proposed

deductions will be used to compensate

the Companies for their increased

federal income tax burden attributable

to the receipt of premiums, and are not

properly chargeable to sales or

promotional activities, this language in

Section 2(a)(35) is another indication

that not treating such deductions as

‘‘sales load’’ is consistent with the

policies of the 1940 Act.

8. Applicants assert that the terms of

the relief requested with respect to

Contracts to be issued through the

Accounts are consistent with the

standards enumerated in Section 6(c) of

the 1940 Act. Without the requested

relief, the Companies would have to

request and obtain exemptive relief for

each Contract to be issued through one

of the Other Accounts. Applicants state

that such additional requests for

exemptive relief would present no

issues under the 1940 Act not already

addressed in this request for exemptive

relief.

9. Applicants assert that the requested

relief is appropriate in the public

interest because it would promote

competitiveness in the variable life

insurance market by eliminating the end

for the Companies to file redundant

exemptive applications, thereby

reducing administrative expenses and

maximizing efficient use of resources.

The delay and expense involved in

having to seek repeated exemptive relief

would impair the ability of the

Companies to take advantage fully of

business opportunities as those

opportunities arise. Additionally,

Applicants state that the requested relief

is consistent with the purposes of the

1940 Act and the protection of investors

for the same reasons. If the Companies

were required to seek exemptive relief

repeatedly with respect to the same

issues addressed in this application,

investors would not receive any benefit

or additional protection thereby and

might be disadvantaged as a result of

increased overhead expenses for the

Companies.

Conditions for Relief

1. Applicants represent that the

Companies will monitor the

reasonableness of the charge to be

deducted by the Companies pursuant to

the requested exemptive relief.

2. Applicants represent that the

registration statement for each Contract

under which the charge referenced in

paragraph one of this section is

deducted will: (i) Disclose the charge;

(ii) explain the purpose of the charge;

and (iii) state that the charge is

reasonable in relation to the Companies’

increased federal income tax burden

under Section 848 resulting from the

receipt of premiums.

3. Applicants represent that the

registration statement for each Contract

under which the charge referenced in

paragraph one of this section is

deducted will contain as an exhibit an

actuarial opinion as to: (i) The

reasonableness of the charge in relation

to the Companies’ increased federal

income tax burden under Section 848

resulting from the receipt of premiums;

(ii) the reasonableness of the after tax

rate of return that is used in calculating

such charge; and (iii) the

appropriateness of the factors taken into

account by the Companies in

determining the after tax rate of return.

Rules 6e–2(a)(2) and 6e–2(b)(15)

1. Applicants also request that the

Commission, pursuant to Section 6(c) of

the 1940 Act, grant exemptions from

Rules 6e–2(a)(2) and 6e–2(b)(15) to the

extent necessary to permit the Accounts

to issue flexible premium variable life

insurance policies under Rule 6e–3(T)

without the Accounts losing the ability

to rely on Rule 6e–2 with regard to

single premium and scheduled

premium variable life insurance policies

issued by the Accounts.

2. Rules 6e–2(a)(2), in effect, requires

that separate accounts such as the

Accounts derive their assets, other than

advances by the life insurance company,

‘‘solely from the sale of variable life

insurance contracts’’ as that term is

defined in the Rule. Rule 6e–2 defines

a variable life insurance contract

differently than Rule 6e–3(T) defines a

flexible premium life insurance

contract. Thus, Applicants note, a

separate account that funds single

premiums and scheduled premium

variable life insurance contracts and

flexible premium life insurance

contracts would not be deemed to have

its assets derived solely from the sale of

‘‘variable life insurance contracts.’’

Additionally, Applicants note that the

exemptions afforded by Rules 6e–

2(b)(15) are available only with respect

to the ‘‘variable life insurance separate

accounts’’ contemplated by Rule 6e–2,

i.e., separate accounts that fund only

scheduled premium variable life

insurance contracts.

3. Applicants argue that no policy

reason would justify prohibiting the use

of the same Account as a funding

vehicle for Contracts relying on Rule

6e–2 and Rule 6e–3(T). Applicants

represent that the interests of flexible

payment variable life policyholders and

scheduled payment variable life

policyholders and the regulatory

frameworks of Rules 6e–2 and 6e–3(T)

are sufficiently parallel that the use of
Federal Register / Vol. 60, No. 90 / Wednesday, May 10, 1995 / Notices 24961

the same separate account to fund both

types of policies should not prejudice

the owners of any of the Contracts.

Applicants also argue that the increased

pooling, diversification, and economies

of scale realized from the use of an

Account should benefit the owners of

the Contracts.

4. Applicants believe that the terms of

the relief with respect to Contracts

funded by Account L, MONY Account

L or the Other Accounts are consistent

with the standards enumerated in

Section 6(c) of the 1940 Act. Without

the requested relief, Applicants state

that they would have to request and

obtain exemptive relief in connection

with the Contracts to the extent

required. Any such additional requests

for exemption, Applicants submit,

would present no issues under the 1940

Act not already addressed in the

application.

5. Applicants submit that the

requested relief from Rules 6e–2(a)(2)

and 6e–2(b)(15) is appropriate in the

public interest because the relief will

promote competitiveness in the variable

life insurance market by eliminating the

need for the Companies to file

redundant exemptive applications,

thereby reducing the Companies’

administrative expenses and

maximizing the efficient use of

resources. Applicants argue that the

delay and expense involved in having to

repeatedly seek exemptive relief would

impair the ability of the Companies to

take advantage effectively of business

opportunities as those opportunities

arise. Applicants further submit that the

requested relief is consistent with the

purposes of the 1940 Act and the

protection of investors for the same

reasons. Thus, Applicants believe that

the requested exemptions are

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.

Conclusion

Applicants submit that, for the

reasons and upon the facts set forth

above, the requested exemptions from

Section 27(c)(2) of the 1940 Act and

Rules 6e–2(c)(4)(v), 6e–3(T)(c)(4)(v), 6e–

2(a)(2) and 6e–2(b)(15) thereunder to: (a)

permit the Companies to deduct 1.25%

of premium payments under the

Contracts; and (b) to permit any of the

Accounts to derive its assets from

flexible premium, single premium and

scheduled premium variable life

insurance policies, and to nevertheless

qualify as a variable life insurance

separate account for the purposes of

Rule 6e–2, meet the standards set forth

in Section 6(c) of the 1940 Act. In this

regard, Applicants assert that granting

the relief requested in the application

would be 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.

For the Commission, by the Division of

Investment Management, pursuant to

delegated authority.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 95–11513 Filed 5–9–95; 8:45 am]

BILLING CODE 8010–01–M

SOCIAL SECURITY ADMINISTRATION

1994–95 Advisory Council on Social

Security; Meeting

AGENCY: Social Security Administration.

ACTION: Notice of public meeting.

SUMMARY: In accordance with the

Federal Advisory Committee Act, this

notice announces a meeting of the

1994–95 Advisory Council on Social

Security (the Council).

DATES: Friday, May 19, 1995, 9:00 a.m.

to 5:00 p.m. and Saturday, May 20,

1995, 9:00 a.m. to 3:00 p.m.

ADDRESSES: National Rural Electric

Cooperative Association, 1800

Massachusetts Avenue, N.W.,

Washington, D.C. 20036, (202) 857–

9500.

FOR FURTHER INFORMATION CONTACT: By

mail—Dan Wartonick, 1994–95

Advisory Council on Social Security,

Suite 705, 1825 Connecticut Avenue,

NW, Washington, DC 20009; By

telephone—(202) 482–7117; By

telefax—(202) 482–7123.

SUPPLEMENTARY INFORMATION:

I. Purpose

Under section 706 of the Social

Security Act (the Act), the Secretary of

Health and Human Services (the

Secretary) appoints the Council every 4

years. The Council examines issues

affecting the Social Security Old-Age,

Survivors, and Disability Insurance

(OASDI) programs, as well as the

Medicare program and impacts on the

Medicaid program, which were created

under the Act.

In addition, the Secretary has asked

the Council specifically to address the

following:

• social Security financing issues,

including developing recommendations

for improving the long-range financial

status of the OASDI programs;

• General program issues such as the

relative equity and adequacy of Social

Security benefits for persons at various

income levels, in various family

situations, and various age cohorts,

taking into account such factors as the

increased labor force participation of

women, lower marriage rates, increased

likelihood of divorce, and higher

poverty rates of aged women.

In addressing these topics, the

Secretary suggested that the Council

may wish to analyze the relative roles of

the public and private sectors in

providing retirement income, how

policies in both sectors affect retirement

decisions and the economic status of the

elderly, and how the disability

insurance program provisions and the

availability of health insurance and

health care costs affect such matters.

The Council is composed of 12

members in addition to the chairman:

Robert Ball, Joan Bok, Ann Combs,

Edith Fierst, Gloria Johnson, Thomas

Jones, George Kourpias, Sylvester

Schieber, Gerald Shea, Marc Twinney,

Fidel Vargas, and Carolyn Weaver. The

chairman is Edward Gramlich.

The Council met previously on June

24–25 (59 FR 30367), July 29, 1994 (59

FR 35942), September 29–30 (59 FR

47146), October 21–22 (59 FR 51451),

November 18–19 ( 59 FR 55272),

January 27 (60 FR 3416), February 10–

11 (60 FR 5433), March 8–9 (60 FR

10091), March 10–11 (60 FR 10090) and

April 21–22 (60 FR 18419).

II. Agenda

The following topics will be

presented and discussed:

• Options for ensuring the long-term

financing of the Social Security

program;

• Changes to Social Security benefits

to ensure relative equity and adequacy;

and

• Relative roles of the public and

private sectors in providing retirement

income.

The meeting is open to the public to

the extent that space is available.

Interpreter services for persons with

hearing impairments will be provided.

A transcript of the meeting will be

available to the public on an at-cost-of

duplication basis. The transcript can be

ordered from the Executive Director of

the Council.

(Catalog of Federal Domestic Assistance

Program Nos. 93.802, Social Security—

Disability Insurance; 93.803, Social

Security—Retirement Insurance; 93.805,

Social Security—Survivors Insurance.)

Dated: May 2, 1995.

David C. Lindeman,

Executive Director, 1994–95 Advisory Council

on Social Security.

[FR Doc. 95–11428 Filed 5–9–95; 8:45 am]

BILLING CODE 4190–29–P