21230 Federal Register / Vol. 60, No. 83 / Monday, May 1, 1995 / Notices

11Telephone conversation between William R.

Stanley, Board of Governors, and Ari Burstein,

Division, Commission (April 11, 1995).

12 17 CFR 200.30–3(a)(12) (1994).

1The Commission previously has granted

NYLIAC, the Separate Accounts and NYLIFE

Securities exemptive relief to permit the deduction

of mortality and expense risk charges from the

assets of the Separate Accounts in connection with

the Policies. Rel. Nos. IC–19197 (Order) (Dec. 30,

1992) and IC–13592 (Notice) (Dec. 2, 1992); and IC–

13736 (Order) (Jan. 25, 1984) and IC–13592 (Notice)

(Oct. 21, 1983). NYLIFE Distributors was not a party

to such applications.

has concurred with the Commission’s

granting of accelerated approval.11

IV. Solicitation of Comments

Interested persons are invited to

submit written data, views, and

arguments concerning the foregoing.

Persons making written submissions

should file six copies thereof with the

Secretary, Securities and Exchange

Commission, 450 Fifth Street, NW.,

Washington, DC 20549. Copies of the

submission, all subsequent

amendments, all written statements

with respect to the proposed rule

change that are filed with the

Commission, and all written

communications relating to the

proposed rule change between the

Commission and any person, other than

those that may be withheld from the

public in accordance with the

provisions of 5 U.S.C. 552, will be

available for inspection and copying in

the Commission’s Public Reference

Section, 450 Fifth Street, NW.,

Washington, DC 20549. Copies of such

filing will also be available for

inspection and copying at the principal

office of PTC. All submissions should

refer to file number SR–PTC–95–03 and

should be submitted by May 22, 1995.

It is therefore ordered, pursuant to

section 19(b)(2) of the Act, that the

proposed rule change (File No. SR–

PTC–95–03) be and hereby is approved

on an accelerated basis through April

30, 1996.

For the Commission by the Division of

Market Regulation, pursuant to delegated

authority.12

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 95–10606 Filed 4–28–95; 8:45 am]

BILLING CODE 8010–01–M

[Rel. No. IC–21026; No. 812–9296]

New York Life Insurance Annuity Corp.

et al.

April 24, 1995.

AGENCY: The Securities and Exchange

Commission (‘‘Commission’’).

ACTION: Notice of Application for an

Order under the Investment Company

Act of 1940 (‘‘1940 Act’’).

APPLICANTS: New York Life Insurance

and Annuity Corporation (‘‘NYLIAC’’);

NYLIAC Variable Annuity Separate

Account I (‘‘NVA Account I’’), NYLIAC

Variable Annuity Separate Account II

(‘‘NVA Account II’’), NYLIAC MFA

Separate Account I (‘‘MFA Account I’’)

and NYLIAC MFA Separate Account II

(‘‘MFA Account II’’) (collectively,

‘‘Separate Accounts’’); and NYLIFE

Distributors, Inc. (‘‘NYLIFE

Distributors’’).

RELEVANT 1940 ACT SECTIONS: Order

requested under Section 6(c) granting

exemptions from the provisions of

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

1940 Act.

SUMMARY OF THE APPLICATION:

Applicants seek an order permitting the

deduction of mortality and expense risk

charges from the assets of the Separate

Accounts in connection with the

offering of certain single premium or

flexible premium variable annuity

contracts (‘‘Policies’’) and certain other

variable annuity contracts that are

substantially similar in all material

respects to the Policies (‘‘Other

Policies’’). Applicants also request that

the order permit the deduction of a

mortality and expense risk charge from

the assets of any other separate accounts

established in the future by NYLIAC in

connection with the offering of the

Other Policies.

FILING DATES: The Application was filed

on October 21, 1994 and amended on

March 29, 1995 and April 6, 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

should be received by the Commission

by 5:30 p.m., on May 19, 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 may request

notification of a hearing by writing to

the Commission’s Secretary.

ADDRESSES: Secretary, The Securities

and Exchange Commission, 450 Fifth

Street, NW., Washington, DC 20549.

Applicants, c/o A. Thomas Smith, III,

Esq., New York Life Insurance and

Annuity Corporation, 51 Madison

Avenue, New York, New York 10010.

FOR FURTHER INFORMATION CONTACT:

Yvonne M. Hunold, Assistant Special

Counsel, or Wendy Friendlander,

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 Commission’s Public

Reference Branch.

Applicants’ Representations

1. NYLIAC is a Delaware stock life

insurance company that is whollyowned by New York Life Insurance

Company (‘‘New York Life’’), a New

York mutual life insurance company.

NYLIAC is licensed to sell life insurance

policies and annuity contracts in all 50

states and the District of Columbia.

2. The Separate Accounts were

established by NYLIAC as funding

vehicles for the Policies. Each Separate

Account has filed a registration

statement under the 1940 Act and the

Securities Act of 1933 (‘‘1933 Act’’).

Future Accounts established by NYLIAC

will be organized as unit investment

trusts and will file registration

statements under the 1940 Act and the

1933 Act.

3. The policies include flexible

premium variable annuity contracts

(‘‘NVA Policies’’) offered by NVA

Accounts I and II and single premium

and flexible premium variable annuity

contracts (‘‘MFA Policies’’) offered by

MFA Separate Accounts I and II.

Policies funded by NVA Account II and

MFA Account I are used in connection

with plans qualified under sections

401(a), 403(a), 403(b), 408 or 457 of the

Internal Revenue Code (‘‘Code’’).

Policies funded by NVA Account I and

MFA Account II are not offered in

connection with such qualified plans.

4. The investment divisions of the

Separate Accounts invest solely in

corresponding portfolios of New York

Life MFA Series Fund, Inc. (‘‘Fund’’), a

diversified open-end management

company registered under the 1940 Act.

Additional investment divisions may be

established in the future within the

Separate Accounts and may invest in

other portfolios of the Fund or in other

investments.

5. NYLIFE Distributors will replace

NYLIFE Securities, Inc. (‘‘NYLIFE

Securities’’) 1 as the principal underwriter of the Policies pursuant to an

agreement between NYLIAC, the

Separate Accounts and NYLIFE

Distributors. NYLIFE Distributors also

will serve as principal underwriter for

the Other Policies. NYLIFE Distributors

may enter into selling agreements with

other broker-dealers, including NYLIFE
Federal Register / Vol. 60, No. 83 / Monday, May 1, 1995 / Notices 21231

Securities. NYLIFE Securities and

NYLIFE Distributors are registered

under the Securities Exchange Act of

1934 as broker-dealers and are members

of the National Association of Securities

Dealers, Inc. The Policies currently are,

and will continue to be offered by

registered representatives of NYLIFE

Securities who are licensed NYLIAC

insurance agents. NYLIFE Securities

and NYLIFE Distributors are indirect

wholly-owned subsidiaries of New York

Life.

6. The Policies provide for the

payment of initial premium payments

and allow additional premium

payments prior to the annuity

commencement date. Policy owners

may direct the allocation of premium

payments, as well as accumulation or

policy value, among the investment

divisions and to the relevant NYLIAC

Fixed Accounts, which are part of

NYLIAC’s General Account. The

Policies also provide for the

accumulation of values on a variable

basis determined by the investment

experience of the Divisions selected for

the allocation of premium payments,

other than that amount allocated to the

relevant Fixed Account.

7. The Policies also provide for the

payment of a minimum death benefit

equal to the greater of: (a) Accumulation

value (in the case of NVA Policies) or

policy value (in the case of MFA

Policies, or (b) the sum of all premium

payments made less any partial

withdrawals and surrender charges, less

any rider premiums.

8. Various fees and charges are

deducted under the Policies. During the

accumulation period, NVA Policies are

subject to an annual Policy fee of the

lesser of $30 or 2% of the accumulation

value, and outstanding flexible

premium MFA Policies are subject to an

annual Policy fee of the lesser of $30 or

1% of Policy Value. The annual Policy

fee will be deducted on each Policy

Anniversary during the accumulation

period, or upon surrender of the Policies

if on that date the accumulation value

under NVA Policies, or policy value

under MFA Policies, is less than

$10,000.

9. All NVA Policies are subject to a

daily charge equal, on an annual basis,

to .10% of the net asset value of the

NVA Accounts, which will be deducted

to cover Policy administration expenses.

Other Policies that are substantially

similar in all material respects to the

NVA Policies may have a daily charge

not to exceed, on an annual basis, .15%

of the net asset value of the relevant

separate account to cover Policy

administration expenses. All

outstanding flexible premium MFA

Policies are subject to a daily charge

equal, on an annual basis, to .50% of the

net asset value of the MFA Accounts to

cover Policy administration expenses.

These daily and annual fees are

guaranteed for the life of the MFA

Policies and will not exceed the cost of

services to be provided over the life of

such Policies, in accordance with the

applicable provisions of Rule 26a–1

under the 1940 Act. Single Premium

MFA Policies are not subject to such

daily and annual administrative fees.

10. A charge for premium taxes

imposed by state law may be deducted

under the Policies, either: (i) When a

surrender or cancellation occurs, or (ii)

at the annuity commencement date or

the retirement date, as applicable.

Currently, these taxes range up to 3.5%.

The Separate Accounts and the

investment divisions may bear charges

for federal income taxes, should such

taxes be incurred by NYLIAC in

connection with the operation of the

Separate Accounts. No transfer fee

currently is deducted under the NVA

Policies for the first twelve transfers

during any Policy Year or for transfers

between the investment divisions or to

the relevant Fixed Account prior to 30

days before the annuity commencement

date. NYLIAC reserves the right to

charge a $30 fee for each transfer in

excess of twelve per Policy Year to

compensate it for transfer administrative

expenses. MFA Policies currently

provide for unlimited transfers without

charge, although NYLIAC reserves the

right to limit the number of transfers

among MFA Divisions to no more than

four in any one Policy Year.

11. No sales charge currently is

deducted from Premium Payments

under the Policies. However, the

Policies are subject to a maximum 7%

contingent deferred sales load (‘‘CDSL’’)

of the amount of any surrender or

partial withdrawals when made during:

(a) The first three Policy Years under the

NVA Policies, declining by 1% per year

until reaching 0% in the tenth year; (b)

the first four Policy Years under

outstanding flexible premium MFA

Policies, declining by 1% per year until

reaching 0% in the eleventh year; and

(c) the first Policy Year under single

premium MFA Policies, declining by

1% per year until reaching 0% in the

eighth year. For NVA Policies and single

premium MFA Policies, up to 10% of

the Policies’ accumulation value or

Policy Value, respectively, at the time of

surrender can be withdrawn in any

Policy Year without a CDSL charge. The

total CDSL will not exceed 8.5% of the

premium payments under any Policy or

Future Policy.

12. The following exceptions apply to

the application of the CDSL: (a) For all

NVA Policies, the CDSL will only be

applied to any amounts withdrawn in

any Policy Year which, when aggregated

with any other withdrawals during such

Policy Year, exceed 10% of

accumulation value at the time of

surrender; and (b) for NVA Policies with

accumulated Premium Payments of

$100,000 or more, no CDSL charge will

be applied if either (i) the total amount

withdrawn in any Policy Year is 10% or

less of the accumulation value at the

time of surrender, or (ii) the amount

withdrawn is less than or equal to the

gain in the NVA Policy which is

measured as the accumulation value of

the Policy less accumulated Premium

Payments. In addition, no CDSL will be

applied if: (a) NYLIAC cancels an NVA

Policy; (b) proceeds are paid on the

death of the Owner or Annuitant; (c) an

income payment option is selected in

any Policy Year after the first Policy

Year; (d) an NVA Policy’s required

minimum distribution option is

selected; however, amounts withdrawn

under this option will count against

exception (a); (e) withdrawals are at age

591⁄2 or older if the Policy is taxqualified and if the NVA Policy was

acquired as a result of a transfer or

rollover of a NYLIAC tax-deferred

annuity policy; and (f) withdrawals are

made in accordance with the terms of

the Living Needs Benefit Rider or

Unemployment Benefit Rider.

13. Applicants represent that they are

relying on Rule 6c–8 under the 1940 Act

to deduct the CDSL. Other Policies that

are substantially similar in all material

respects to the MFA Policies will be

subject to a maximum CDSL of 7% of

the amount withdrawn or surrendered.

14. NYLIAC imposes charges as

compensation for bearing certain

mortality and expense risks under the

Policies. A daily charge equal to an

effective annual rate of 1.20% (of which

0.70% is allocable to mortality risks and

0.50% to expense risks) of the net asset

value of the NVA Accounts will be

imposed under the NVA Policies. A

daily charge equal to an effective annual

rate of 1.25% (of which .75% is

attributable to mortality risks and .50%

to expense risks) of the net asset value

of the MFA Accounts will be imposed

under the MFA Policies. The maximum

mortality and expense risk charge for

Other Policies that are substantially

similar in all material respects to the

NVA or MFA Policies will be equal, on

an annual basis, to 1.25% (of which

.75% would be attributable to mortality

risks and .50% to expense risks) of the

daily net asset value of the relevant

Separate Account. This charge may be a
21232 Federal Register / Vol. 60, No. 83 / Monday, May 1, 1995 / Notices

source of profit for NYLIAC which will

be added to its surplus and may be used

for, among other things, the payment of

distribution expenses.

15. The mortality risk borne by

NYLIAC arises from its obligation to

make annuity payments (determined in

accordance with the annuity tables and

other provisions contained in the

relevant Policy), where a life annuity is

selected, regardless of how long an

Annuitant may live. The mortality risk

under the Policy is the risk that, upon

selection of an annuity payment option

which has life contingencies,

Annuitants will live longer than

NYLIAC’s actuarial projections indicate,

resulting in higher than expected

income payments. NYLIAC is also

assuming a mortality risk as a result of

its promise to pay a minimum death

benefit under the Policies.

16. The expense risk borne by

NYLIAC under the Policy is the risk that

the charges for administrative expenses,

which are guaranteed for the life of the

Policies, may be insufficient to cover the

actual costs of issuing and

administering the Policies.

Applicants’ Legal Analysis

1. Applicants request an order under

Section 6(c) granting exemptions from

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

1940 Act to permit the deduction from

the assets of the Separate Accounts and

the Future Accounts of mortality and

expense risk charges under the Policies

or Other Policies, as appropriate.

2. 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.

3. Sections 26(a)(2)(C) and 27(c)(2) of

the 1940 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.

4. Applicants submit that their

request for an order that applies to

Other Policies offered by the Separate

Accounts and by Future Accounts is

appropriate in the public interest

because it would promote

competitiveness in the variable annuity

policy market by eliminating the need

for NYLIAC to file redundant exemptive

applications, thereby reducing its

administrative expenses and

maximizing the efficient use of its

resources. Investors would not receive

any benefit or additional protection by

requiring NYLIAC to repeatedly seek

exemptive relief with respect to the

same issues addressed in this

Application.

5. Applicants represent that the

mortality and expense risk charges

under the NVA Policies and MFA

Policies are within the range of industry

practice for comparable variable annuity

contracts. This representation is based

upon Applicants’ analysis of publicly

available information about similar

industry products, taking into

consideration such factors as current

charge levels, the manner in which

charges are imposed, the presence of

charge levels or annuity rate guarantees

and the markets in which the Policies

will be offered. Applicants state that

NYLIAC will maintain at its

headquarters and make available to the

Commission, upon request, a

memorandum outlining the

methodology underlying this

representation.

Similarly, prior to making available

any Other Policies, Applicants will

represent that the mortality and expense

risk charges under any such Other

Policies will be within the range of

industry practice for comparable

variable annuity contracts. NYLIAC will

maintain at its headquarters and make

available to the Commission, upon

request, a memorandum outlining the

methodology underlying such

representation.

6. Applicants acknowledge that, if a

profit is realized from the mortality and

expense risk charge under the Policies,

all or a portion of such profit may be

available to pay distribution expenses

not reimbursed by the CDSC. NYLIAC

has concluded that there is a reasonable

likelihood that the proposed

distribution financing arrangements will

benefit the Separate Accounts and the

Policy Owners. NYLIAC will keep at its

headquarters and make available to the

Commission, upon request, a

memorandum setting forth the basis for

this representation. In addition,

NYLIAC will keep at its headquarters

and make available to the Commission,

upon request, a memorandum setting

forth the basis for the same

representation with respect to Other

Policies offered by the Separate

Accounts and by Future Accounts.

8. Applicants represent that the

Separate Account and any Future

Account will invest only in underlying

funds that have undertaken to have a

board of directors/trustees, a majority of

whom are not interested persons of any

such fund, as defined in the 1940 Act,

formulate and approve any plan under

Rule 12b–1 under the 1940 Act to

finance distribution expenses.

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

to deduct the mortality and expense risk

charge under the Policies, or under

Other Policies, offered by the Separate

Account or by Future Accounts are

necessary and appropriate in the public

interest and consistent with the

protection of investors and the policies

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. 95–10608 Filed 4–28–95; 8:45 am]

BILLING CODE 8010–01–M

DEPARTMENT OF TRANSPORTATION

Aviation Proceedings; Agreements

Filed During the Week Ended April 21,

1995

The following Agreements were filed

with the Department of Transportation

under the provisions of 49 U.S.C. 412

and 414. Answers may be filed within

21 days of date of filing.

Docket Number: 50297

Date filed: April 18, 1995.

Parties: Members of the International Air

Transport Association.

Subject: Request For Interim Approval of

Amendment To The Provisions For The

Conduct Of IATA Traffic Conferences.

The amendment was adopted by the IATA

Executive Committee at its 159th meeting.

The amendment involves Article VI,

Paragraph 9 of the Provisions and reads as

follows (new text underlined):

One-third of the representatives of the

voting Members of a Tariff Conference, and

one-fifth of the representatives of the voting

Members of a Services Conference or Agency

Conference which have nominated an

Accredited Representative to such

Conference, or their respective designated

alternates acting in their place and stead,

shall constitute the quorum at any meeting of

the Traffic Conference concerned: (* * *)

(remainder of paragraph 9 unchanged)

Docket Number: 50298

Date filed: April 18, 1995.