Federal Register / Vol. 60, No. 90 / Wednesday, May 10, 1995 / Notices 24953

payments of the proceeds of the sale of

the Notes to the Branch would be made

to this account, and the payments by

Issuer or the Branch to the Noteholders

would be made from this account by

appropriate debits or credits,

respectively. The Issuing and Paying

Agency Agreement states that the

Branch will have exclusive control over

the account, and the sole right of

withdrawal of funds therefrom. At the

moment the proceeds from the sale of

the Notes are deposited in the Branch’s

account at a commercial bank, the

Noteholder would have a right of action

against BV under his or her security

interest in the Deposit and, therefore,

the Noteholder’s security interest in the

Deposit would attach.

7. BV, in connection with the offering

of the Notes, would submit to the

jurisdiction of any state or federal court

in the Borough of Manhattan in the City

of New York, and would appoint Issuer

as agent to accept any process which

may be served in any suit, action, or

proceeding brought against BV based

upon its obligations to Issuer. Such

consent to jurisdiction and such

appointment of an authorized agent to

accept service of process would be

irrevocable until all amounts due and to

become due with respect to outstanding

Deposits and all outstanding obligations

of BV to Issuer have been paid.

Applicants’ Legal Analysis

1. Without exemptive relief, Issuer

may be an investment company, as

defined in section 3(a) of the Act. Rule

3a–5 states that a finance subsidiary will

not be considered an investment

company under section 3(a), provided

the subsidiary meets certain

requirements. Applicants believe that

Issuer would meet the requirements of

rule 3a–5, except that the Notes and any

other debt securities and non-voting

preferred stock which Issuer may issue

in the future would not be guaranteed

in a technical sense by BV, as required

by subparagraphs (a)(1) and (a)(3) of the

rule. Instead, BV would provide the

functional equivalent of a guarantee.

Applicants believe that the entitlement

of the Noteholders to receive payment

by the Branch of the Deposit

corresponding to the Notes in case of

failure of Issuer to pay the Notes upon

maturity would be the substantial

equivalent of a guarantee. Applicants

represent that the business and fiscal

considerations behind BV’s desire to use

Issuer as a financing vehicle to sell the

Notes in the United States in no way

impinge upon the public policy

concerns, such as investor protection,

that underlie the Act.

Applicants’ Conditions

Applicants agree that any order

granting the requested relief shall be

subject to the following conditions:

1. BV will state expressly in the

Deposit Agreement that the obligations

of the Branch to the Issuer and the

Noteholders are BV’s own obligations.

2. If the Issuer fails to pay a Note in

accordance with its terms, the Deposit

Agreement will entitle the Noteholder to

receive payment from the Branch.

Noteholders will have a direct cause of

action against BV in the event of any

default in payment of the Notes.

For the Commission, by the Division of

Investment Management, pursuant to

delegated authority.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 95–11514 Filed 5–9–95; 8:45 am]

BILLING CODE 8010–01–M

[Rel. No. IC–21039; File No. 812–9288]

Companion Life Insurance Company,

et al.

May 3, 1995.

AGENCY: U.S. Securities and Exchange

Commission (‘‘SEC’’).

ACTION: Notice of application for

exemption under the Investment

Company Act of 1940 (the ‘‘Act’’).

APPLICANTS: Companion Life Insurance

Company (‘‘Companion Life’’),

Companion Life Separate Account C

(the ‘‘Separate Account’’) and Mutual of

Omaha Investor Services, Inc. (‘‘Mutual

of Omaha’’).

RELEVANT 1940 ACT SECTIONS: Order

requested under Section 6(c) for

exemptions from Sections 26(a)(2)(C)

and 27(c)(2).

SUMMARY OF APPLICATION: An order is

sought exempting Applicants and

principal underwriters of certain

flexible payment deferred variable

annuity contracts (the ‘‘Policies’’) to the

extent necessary to permit the payment

to Companion Life of a mortality and

expense risk charge from the assets of

the Separate Account under the

Policies.

FILING DATE: The application was filed

on October 17, 1994 and amended and

restated on April 4, 1995.

HEARING OR NOTIFICATION OF HEARING: An

order granting the application will be

issued unless the SEC orders a hearing.

Interested persons may request a

hearing by writing to the SEC’s

Secretary and serving Applicants with a

copy of the request, personally or by

mail. Hearing requests should be

received by the SEC 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 writer’s interest, 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 SEC’s Secretary.

ADDRESSES: Secretary, SEC, 450 Fifth

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

Applicants, Companion Life Insurance

Company, 401 Theodore Fremd Avenue,

Rye, New York 10580–1493.

FOR FURTHER INFORMATION CONTACT:

Edward P. Macdonald, Staff Attorney, or

Wendy Friedlander, Deputy Chief, 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 SEC’s Public Reference

Branch.

Applicant’s Representations

1. Companion life is a stock life

insurance company, incorporated under

the laws of the State of New York on

June 3, 1949, and engaged in the sale of

life insurance and annuity policies in

New York State. It is also licensed in

New Jersey and Connecticut but does

not currently do business in these states.

Companion Life, a wholly-owned

subsidiary of United of Omaha Life

Insurance Company, is the depositor of

the Separate Account.

2. The Separate Account was

established by Companion Life as a

separate investment account, on

February 18, 1994, under the laws of the

State of New York to serve as the

funding medium for the Policies. The

Separate Account currently has nine

subaccounts (the ‘‘Subaccounts’’) and is

registered under the Act as a unit

investment trust. Each Subaccount

invests in a corresponding portfolio of

an underlying management investment

company (‘‘Fund’’). Each Fund is

registered under the Act as an open-end,

management investment company and

its shares are registered under the

Securities Act of 1933.

3. Mutual of Omaha serves as

distributor and principal underwriter

for the Policies. It is registered with the

SEC as a broker-dealer and is a member

of the National Association of Securities

Dealers, Inc. (‘‘NASD’’). Broker-dealers

other than Mutual of Omaha may also

serve as distributors and principal

underwriters of the Policies, to the

extent the Policies are sold through

alternate distribution channels. Any
24954 Federal Register / Vol. 60, No. 90 / Wednesday, May 10, 1995 / Notices

1Applicants will file an amendment during the

notice period to add these numbers.

such other broker-dealer will be

registered under the Securities

Exchange Act of 1934 as a broker-dealer

and will be a member of the NASD.

4. The Policies may be purchased on

a non-tax qualified basis (‘‘NonQualified Policies’’) or they may be

purchased and used in connection with

retirement plans that qualify for special

federal tax treatment under Sections

401, 403, 408 or 457 of the Internal

Revenue Code (‘‘Qualified Policies’’).

The Policies require a minimum initial

purchase payment of at least $5,000,

and subsequent purchase payments

must be at least $500. An owner can

allocate purchase payments to one or

more Subaccounts or to a fixed account

option. which is part of Companion

Life’s general account.

5. An owner can transfer

accumulation value from one

Subaccount of the Separate Account to

another, or from the Separate Account

to the fixed account within certain

limits. The minimum amount which

may be transferred is the lesser of $500

or the entire Subaccount value. If the

Subaccount value remaining after a

transfer is less than $500, Companion

Life reserves the right, at its discretion,

either to deny the transfer request or to

include that amount as part of the

transfer. Transfers out of a Subaccount

currently may be made as often as the

owner wishes, subject to the mimimum

amount specified above. Companion

Life reserves the right to otherwise limit

or restrict transfers in the future or to

eliminate the transfer privilege.

Companion Life also reserves the right

to restrict transfers from the Separate

Account to the fixed account of amounts

previously transferred from the fixed

account, for a period of time determined

by Companion Life.

6. A death benefit is available under

the Policy. If an owner dies prior to age

76, the death benefit will equal the

greatest of (a) the accumulation value

(without deduction of a withdrawal

charge) as of the end of the valuation

period during which due proof of death

and an election of payout option is

received by Companion Life’s service

office, less any charge for applicable

premium taxes; (b) the sum of net

purchase payments less partial

withdrawals; or (c) in the eighth Policy

year and later, the accumulation value

as of the most recent 7-year Policy

anniversary, less any amounts

subsequently withdrawn and less any

charge for applicable premium taxes. If

any owner dies upon, or after age 76, the

death benefit will equal the larger of (a)

and (b) above.

7. On the last evaluation date of each

Policy year prior to the annuity starting

date and upon a complete surrender,

Companion Life deducts from the

accumulation value an annual fee of $30

to reimburse it for administrative

expenses relating to the Policies. The fee

will be deducted from each Subaccount

based on the proportion that the

accumulation value in each account

bears to the total accumulation value.

This charge is guaranteed not to

increase for the duration of the Policy.

Applicants represent that this charge

will be deducted in reliance on Rule

26a–1 under the Act and represents

reimbursement only for administrative

costs expected to be incurred over the

life of the Policy. Companion Life does

not anticipate any profit from this

charge.

8. Companion Life does not deduct a

sales charge at the time of investment.

However, a withdrawal charge may be

deducted upon surrender or partial

withdrawal of purchase payments. A

withdrawal charge also may be

deducted upon the election of certain

annuity options. Withdrawal charges are

not deducted upon the payment of a

death benefit or, under Qualified

Policies, any refund of contributions

paid in excess of the owner’s deductible

amounts. The withdrawal charge equals

a specified percentage of the purchase

payment withdrawn. The withdrawal

charge is calculated by multiplying the

percentages specified in the table below

by the amount of purchase payments

withdrawn. The number of years since

the date of the purchase payment being

withdrawn will determine the

withdrawal charge percentage that will

apply to that purchase payment.

Years since receipt of purchase

payment

Applicable withdrawal

charge

percentage

1 .................................................... 7

2 .................................................... 6

3 .................................................... 5

4 .................................................... 4

5 .................................................... 3

6 .................................................... 2

7 .................................................... 1

8 and later .................................... 0

Each Policy year, up to 10% of all

purchase payments, less any prior

withdrawals, may be withdrawn

without the imposition of the

withdrawal charge. Purchase payments

surrendered or withdrawn in excess of

this 10% amount will be assessed the

withdrawal charge.

9. Companion Life does not anticipate

that the withdrawal charge will generate

sufficient revenues to pay the cost of

distributing the Policies. If these charges

are insufficient to cover the expenses of

distributing the Policies, the deficiency

will be met from the general account

assets of Companion Life, which may

include amounts derived from the

charge for mortality and expense risks.

10. Companion Life deducts a daily

administrative charge to compensate it

for expenses it incurs in the

administration of the Policies and the

separate Account. The charge is

deducted from the assets of the Separate

Account at an annual rate of 0.15%, and

is guaranteed not to increase.

Companion Life represents that this

charge will be deducted to reliance on

Rule 26a–1 under the Act and

represents reimbursement only for

administrative costs expected to be

incurred over the life of the Policy.

Companion Policy does not expect to

make a profit from this charge.

11. Companion Life imposes an

annual charge of 1.25% on the net assets

of the Separate Account to compensate

it for bearing certain mortality and

expense risks in connection with the

Policies. Of that amount .95% is

attributable to the mortality risk, and

.30%1 is attributable to the expense risk.

Companion Life guarantees that this

charge will never exceed an annual rate

of 1.25%. If the morality and expense

risk charges under the Policies are

insufficient to cover actual costs and

assumed risks, the loss will be borne by

Companion Life. Conversely, if the

charge is more than sufficient to cover

such costs, any excess will be profit to

Companion Life. Companion Life

currently anticipates a profit from this

charge.

12. The mortality risk borne by

Companion Life arises from its

contractual obligation to make annuity

payments regardless of how long all

annuitants or any individual annuitant

may live. This undertaking assures that

neither an annuitant’s own longevity,

nor an improvement in general life

expectancy, will adversely affect the

periodic annuity payments that a payee

will receive under a Policy. Companion

Life also incurs a mortality risk in

connection with the death benefit

guarantee. There is no extra charge for

this guarantee.

13. The expense risk assumed by

Companion Life is the risk that its actual

administrative costs will exceed the

amount recovered from the

administrative charge, the transfer fee (if

imposed), the processing fee (if

imposed) and the annual Policy fee.

14. Companion Life will deduct a

charge for premium taxes, currently
Federal Register / Vol. 60, No. 90 / Wednesday, May 10, 1995 / Notices 24955

1All existing investment companies that

presently intend to rely on the requested order are

named as applicants.

ranging up to 3.5% on annuity policies

issued by insurance companies. In

addition, other government units within

a state may levy such taxes.

15. Companion Life imposes a $10

transfer fee to any transfer in excess of

12 per Policy year. Companion Life

deducts the transfer fee from the amount

transferred. No charge will be imposed

on transfers from the fixed account and

transfers made in connection with the

dollar cost averaging program do not

count toward the 12 free transfers per

year limit. Applicants represent that this

charge will be deducted in reliance on

Rule 26a–1 and represents

reimbursement only for administrative

costs expected to be incurred in

processing transfers over the life of the

Policies. Companion Life does not

anticipate any profit from this charge.

Applicant’s Legal Analysis

1.Section 6(c) of the Act authorizes

the Commission to grant an exemption

from any provision, rule or regulation of

the Act to the extent that it is necessary

or appropriate in the public interest and

consist with the protection of investors

and the purposes fairly intended by the

Policy and provisions of the Act.

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

Act, in relevant part, prohibit a

registered unit investment trust, its

depositor or principal underwriter, from

selling periodic payment plan

certificates unless the proceeds of all

payments, other than sales loads, are

deposited with a qualified bank and

held under arrangements which prohibit

any payment to the depositor or

principal underwriter except a

reasonable fee, as the Commission may

prescribe, for performing bookkeeping

and other administrative duties

normally performed by the bank itself.

2. Applicants request exemptions

from Sections 25(a)(2)(C) and 27(c)(2) of

the Act to the extent necessary to permit

the deduction of a charge of 1.25% from

the assets of the Separate Account to

compensate Companion Life for the

assumption of mortality and expense

risks. Applicants assert that the

requested exemptions are necessary and

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.

3. Applicants request that the relief

sought herein also apply to a class

consisting of broker-dealers who may, in

the future, act as principal underwriters

of the Policies. Applicants believe that

the terms of the relief requested with

respect to future underwriters issuing

the Policies are consistent with the

standards enumerated in Section 6(c) of

the Act. The requested relief would

promote competitiveness in the variable

annuity market by eliminating the need

for Companion Life to file redundant

exemptive applications for each new

principal underwriter that distributes

the Policies it issues, thereby reducing

its administrative expenses and

maximizing the efficient use of its

resources. The delay and expense

involved in having to repeatedly seek

exemptive relief would impair

Companion Life’s ability to effectively

take advantage of business opportunities

as they arise and investors would not

receive any benefit or additional

protection thereby. Indeed, they might

be disadvantaged as a result of

Companion Life’s increased overhead

expenses. Thus, Applicants believe that

the requested exemption is 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.

4. Applicants submit that Companion

Life is entitled to reasonable

compensation for its assumption of

mortality and expense risks. Applicants

represent that the charge of 1.25% on an

annual basis under the Policies made for

mortality and expense risks is consistent

with the protection of investors because

it is a reasonable and proper insurance

charge. Companion Life represents that

the charge of 1.25% for mortality and

expense risks is within the range of

industry practice with respect to

comparable annuity products. This

representation is based upon an analysis

of publicly available information about

similar industry products, taking into

consideration such factors as current

charge levels, the existence of charge

level guarantees, guaranteed annuity

rates. Companion Life will maintain at

its administrative office, available to the

Commission, a memorandum setting

forth in detail the products analyzed in

the course of, and the methodology and

results of, the comparative survey.

5. Applicants acknowledge that the

proceeds of the withdrawal charges may

be insufficient to cover all costs relating

to the distribution of the Policies.

Applicants also acknowledge that, if a

profit is realized from the mortality and

expense risk charge, all or a portion of

such profit may be viewed by the

Commission as being offset by

distribution expenses not reimbursed by

the sales charge. Companion Life has

concluded that there is a reasonable

likelihood that the proposed

distribution financing arrangements will

benefit the Separate Account and the

Policy owners. The basis for such

conclusion is set forth in a

memorandum which will be maintained

by Companion Life at its administrative

offices and will be available to the

Commission. Companion Life also

represents that the Separate Account

will only invest in management

investment companies which undertake,

in the event any such company adopts

a plan under Rule 12b–1 to finance

distribution expenses, to have a board of

directors (or trustees), a majority of

whom are not interested persons of the

company as defined in the Act,

formulate and approve any such plan

under Rule 12b–1.

Conclusion

For the reasons set forth above,

Applicants represent that the

exemptions requested are necessary and

appropriate in the public interest and

consistent with the protection of

investors and purposes fairly intended

by the Policy and provisions of the Act.

For the Commission, by the Division of

Investment Management, pursuant to

delegated authority.

Margaret M. McFarland,

Deputy Secretary.

[FR Doc. 95–11444 Filed 5–9–95; 8:45 am]

BILLING CODE 8010–01–M

[Rel. No. IC–21042; 812–9564]

Janus Investment Fund, et al.; Notice

of Application

May 4, 1995.

AGENCY: Securities and Exchange

Commission (‘‘SEC’’).

ACTION: Notice of application for

exemption under the Investment

Company Act of 1940 (the ‘‘Act’’).

APPLICANTS: Janus Investment Fund and

Janus Aspen Series (collectively, the

‘‘Trusts’’), all existing and future series

of the foregoing investment companies,

Janus Capital Corporation (‘‘Janus

Capital’’), and any other registered

investment companies that now or in

the future are advised by Janus Capital

or an entity controlling, controlled by,

or under common control with Janus

Capital.1

RELEVANT ACT SECTIONS: Order requested

under section 6(c) for an exemption

from section 12(d)(1)(A)(ii), under

sections 6(c) and 17(b) for an exemption

from section 17(a), and under rule 17d–

1 to permit certain transactions in

accordance with section 17(d) and rule

17d–1.

SUMMARY OF APPLICATION: Applicants

seek an order that would permit certain