Federal Register / Vol. 86, No. 179 / Monday, September 20, 2021 / Notices 52209 

The burden for provision of the NCRP 

data will remain at the 2021 level of 14 

hours per respondent due to the fact 

that the survey is not changing for this 

approval, for a total of 700 hours 

annually for the 50 DOCs in 2022, 2023 

and 2024. 

Burden hours for PCCS records 

(NCRP–1E, NCRP–1F): There are 

currently 40 jurisdictions submitting 

PCCS data (35 DOCs and 5 parole 

supervising agencies), and BJS estimates 

that extraction and submission of both 

the PCCS entries and exits takes an 

average of 8 hours per jurisdiction. In 

2022–2024, BJS hope to recruit an 

additional 5 jurisdictions to submit 

NCRP PCCS data. For those 40 

supervising agencies currently 

responding, provision of the PCCS data 

in 2022–2024 will total 320 hours (8 

hours * 40 = 320 hours) annually. The 

total estimate for submission of PCCS 

for new jurisdictions in 2022–2024 is 

120 hours (24 hours * 5 = 120 hours). 

For new agencies, BJS assumes the 

initial submission will take about three 

times longer than established reporters 

to account for programming, questions, 

and submission. The total amount of 

time for all PCCS submissions annually 

is 440 hours. 

Burden hours for data review/followup consultations: Follow-up 

consultations with respondents are 

usually necessary while processing the 

data to obtain further information 

regarding the definition, completeness 

and accuracy of their report. The 

duration of these follow-up 

consultations will vary based on the 

number of record types submitted, so 

BJS has estimated an average of 3 hours 

per jurisdiction to cover all of the 

records (prison and/or PCCS) submitted. 

In 2022, BJS anticipates that one of the 

two parole supervising agencies not 

currently submitting PCCS data will 

begin to submit, so the number of 

jurisdictions requiring follow-up 

consultations is 51 (50 DOCs submitting 

at least the prison data, and one parole 

supervising agency submitting only 

PCCS data). This yields a total of 153 

hours of follow-up consultation after 

submission. This total estimate of 153 

hours for data review/follow-up 

consultations remains the same for 2023 

and 2024. 

Total burden hours for submitting 

NCRP data: BJS anticipates that the total 

annual burden for provision of all NCRP 

data across the jurisdictions will 

participate in 2022–2024 is anticipated 

to be 1,293 hours (700 hours for prison 

records, 440 hours for PCCS records, 

and 153 hours for follow-up 

consultation), or 25 hours per 

respondent. 

(6) An estimate of the total public 

burden (in hours) associated with the 

collection: There are an estimated 1,293 

total burden hours associated with this 

collection in 2022, 2023, and 2024. 

If additional information is required 

contact: Melody Braswell, Department 

Clearance Officer, United States 

Department of Justice, Justice 

Management Division, Policy and 

Planning Staff, Two Constitution 

Square, 145 N Street NE, 3E.405B, 

Washington, DC 20530. 

Dated: September 15, 2021. 

Melody Braswell, 

Department Clearance Officer for PRA, U.S. 

Department of Justice. 

[FR Doc. 2021–20260 Filed 9–17–21; 8:45 am] 

BILLING CODE 4410–18–P 

DEPARTMENT OF LABOR 

Employee Benefits Security 

Administration 

Proposed Exemptions From Certain 

Prohibited Transaction Restrictions 

AGENCY: Employee Benefits Security 

Administration, Labor. 

ACTION: Notice of proposed exemptions. 

SUMMARY: This document contains 

notices of pendency before the 

Department of Labor (the Department) of 

proposed exemptions from certain of the 

prohibited transaction restrictions of the 

Employee Retirement Income Security 

Act of 1974 (ERISA or the Act) and/or 

the Internal Revenue Code of 1986 (the 

Code). If granted, these proposed 

exemptions allow designated parties to 

engage in transactions that would 

otherwise be prohibited provided the 

conditions stated there in are met. This 

notice includes the following proposed 

exemptions: L–12008, Phillips 66 

Company; L–12021, Comcast 

Corporation. 

DATES: All interested persons are invited 

to submit written comments or requests 

for a hearing on the pending 

exemptions, unless otherwise stated in 

the Notice of Proposed Exemption, by 

November 4, 2021. 

ADDRESSES: All written comments and 

requests for a hearing should be sent to 

the Employee Benefits Security 

Administration (EBSA), Office of 

Exemption Determinations, Attention: 

Application No. D–12003 via email to eOED@dol.gov or online through the 

Federal eRulemaking Portal: http://

www.regulations.gov by the end of the 

scheduled comment period. The 

applications for exemption and the 

comments received will be available for 

public inspection in the Public 

Documents Room of the Employee 

Benefits Security Administration, U.S. 

Department of Labor, Room N–1515, 

200 Constitution Avenue, NW, 

Washington, DC 20210. See 

SUPPLEMENTARY INFORMATION below for 

additional information regarding 

comments. 

SUPPLEMENTARY INFORMATION: 

Comments 

In light of the current circumstances 

surrounding the COVID–19 pandemic 

caused by the novel coronavirus which 

may result in disruption to the receipt 

of comments by U.S. Mail or hand 

delivery/courier, persons are 

encouraged to submit all comments 

electronically and not to follow with 

paper copies. Comments should state 

the nature of the person’s interest in the 

proposed exemption and the manner in 

which the person would be adversely 

affected by the exemption, if granted. A 

request for a hearing can be requested 

by any interested person who may be 

adversely affected by an exemption. A 

request for a hearing must state: (1) The 

name, address, telephone number, and 

email address of the person making the 

request; (2) the nature of the person’s 

interest in the exemption and the 

manner in which the person would be 

adversely affected by the exemption; 

and (3) a statement of the issues to be 

addressed and a general description of 

the evidence to be presented at the 

hearing. The Department will grant a 

request for a hearing made in 

accordance with the requirements above 

where a hearing is necessary to fully 

explore material factual issues 

identified by the person requesting the 

hearing. A notice of such hearing shall 

be published by the Department in the 

Federal Register. The Department may 

decline to hold a hearing where: (1) The 

request for the hearing does not meet 

the requirements above; (2) the only 

issues identified for exploration at the 

hearing are matters of law; or (3) the 

factual issues identified can be fully 

explored through the submission of 

evidence in written (including 

electronic) form. 

Warning: All comments received will 

be included in the public record 

without change and may be made 

available online at http://

www.regulations.gov, including any 

personal information provided, unless 

the comment includes information 

claimed to be confidential or other 

information whose disclosure is 

restricted by statute. If you submit a 

comment, EBSA recommends that you 

include your name and other contact 

52210 Federal Register / Vol. 86, No. 179 / Monday, September 20, 2021 / Notices 

1The Department has considered exemption 

applications received prior to December 27, 2011 

under the exemption procedures set forth in 29 CFR 

part 2570, subpart B (55 FR 32836, 32847, August 

10, 1990). 

2This proposed exemption requires a qualified 

independent fiduciary to review the Reinsurance 

Arrangement to determine if Phillips 66 is deriving 

any benefits other than an increase in Spirit’s net 

income, such as a benefit from a further 

diversification of Spirit’s risks. Any such benefit(s) 

must be quantified to the extent possible, and the 

majority of all benefits to Phillips 66 from the 

Reinsurance Arrangement must ultimately be paid 

to fund Benefit Enhancements in the manner 

described below. 

3The Department notes that the Independent 

Fiduciary’s annual written report is essential to the 

Department’s tentative finding that this proposed 

exemption is, and will continue to be, in the 

interest and protective of the Plan and its 

participants and beneficiaries. The Independent 

Fiduciary must clearly, prudently and loyally 

determine whether Phillips 66 and its affiliates 

have complied with each term and condition of the 

exemption and include its finding in the report. The 

relief provided in this proposed exemption is 

conditioned upon the independent fiduciary’s 

compliance with this requirement. 

4The Department notes that availability of this 

exemption is subject to the express condition that 

the material facts and representations contained in 

application L–12008 are true and complete, and 

accurately describe all material terms of the 

transactions covered by the exemption. If there is 

any material change in a transaction covered by the 

exemption, or in a material fact or representation 

described in the application, the exemption will 

cease to apply as of the date of such change. 

5On March 7, 2012, Vermont issued Spirit a 

license to transact business as a single-parent 

captive insurance company. Vermont captive 

insurance law allows captive insurance companies 

to conduct reinsurance operations. In 2017, Spirit 

converted from a pure captive insurance company 

to a sponsored captive insurance company and 

formed 3P Capital Insurance Company IC, an 

incorporated protected cell of Spirit. 

information in the body of your 

comment, but DO NOT submit 

information that you consider to be 

confidential, or otherwise protected 

(such as Social Security number or an 

unlisted phone number) or confidential 

business information that you do not 

want publicly disclosed. However, if 

EBSA cannot read your comment due to 

technical difficulties and cannot contact 

you for clarification, EBSA might not be 

able to consider your comment. 

Additionally, the http://

www.regulations.gov website is an 

‘‘anonymous access’’ system, which 

means EBSA will not know your 

identity or contact information unless 

you provide it in the body of your 

comment. If you send an email directly 

to EBSA without going through http:// 

www.regulations.gov, your email 

address will be automatically captured 

and included as part of the comment 

that is placed in the public record and 

made available on the internet. 

Notice to Interested Persons 

Notice of the proposed exemptions 

will be provided to all interested 

persons in the manner agreed upon by 

the applicant and the Department, 

unless otherwise stated in the Notice of 

Proposed Exemption, within 15 days of 

the date of publication in the Federal 

Register. Such notice shall include a 

copy of the notice of proposed 

exemption as published in the Federal 

Register and shall inform interested 

persons of their right to comment and to 

request a hearing (where appropriate). 

The proposed exemptions were 

requested in applications filed pursuant 

to section 408(a) of the Act and/or 

section 4975(c)(2) of the Code, and in 

accordance with procedures set forth in 

29 CFR part 2570, subpart B (76 FR 

66637, 66644, October 27, 2011).1

Effective December 31, 1978, section 

102 of Reorganization Plan No. 4 of 

1978, 5 U.S.C. App. 1 (1996), transferred 

the authority of the Secretary of the 

Treasury to issue exemptions of the type 

requested to the Secretary of Labor. 

Therefore, these notices of proposed 

exemption are issued solely by the 

Department. 

The applications contain 

representations with regard to the 

proposed exemptions which are 

summarized below. Interested persons 

are referred to the applications on file 

with the Department for a complete 

statement of the facts and 

representations. 

Phillips 66 Company 

Located in Houston, TX 

[Application No. L–12008] 

Proposed Exemption 

The Department is considering 

granting an exemption under the 

authority of Section 408(a) of the 

Employee Retirement Security Act of 

1974, as amended (ERISA or the Act) to 

the Phillips 66 Group Life Insurance 

Plan (the Plan). As described in more 

detail below, under the proposed 

exemption, the Plan would enter into an 

insurance contract with an unrelated Arated insurance company (the Fronting 

Insurer) that would, in turn, enter into 

a reinsurance contract with Spirit 

Insurance Company (Spirit), an affiliate 

of Phillips 66 (the Reinsurance 

Arrangement). Under the Reinsurance 

Arrangement, Spirit would reinsure the 

Plan’s risks. Importantly, the Fronting 

Insurer would remain fully responsible 

for the Plan’s risks in the event that 

Spirit does not fulfill its contractual 

obligations to the Fronting Insurer. 

Phillips 66, through its ownership of 

Spirit, is expected to receive a net 

income increase from the Reinsurance 

Arrangement.2 To ensure that the 

majority of Spirit’s additional net 

income is passed through to the Plan 

and its participants and beneficiaries, 

this proposed exemption requires 

Phillips 66 to fund certain new Plan 

benefit enhancements (the Benefit 

Enhancements). Specifically, for every 

dollar increase in net income that Spirit 

(and indirectly, Phillips 66) receives 

from the Reinsurance Arrangement, 

Phillips 66 must pay at least $0.51 to 

fund Benefit Enhancements. 

This proposed exemption also would 

require Phillips 66 to delegate fiduciary 

oversight of the Plan to a qualified 

fiduciary that is independent of Phillips 

66 and its affiliates (the Independent 

Fiduciary). The exemption conditions 

require the Independent Fiduciary to 

approve the Reinsurance Arrangement 

in advance, ensure that the Reinsurance 

Arrangement is in the interest and 

protective of the Plan and its 

participants and beneficiaries, and 

submit annual and five-year ‘‘lookback’’ reports to the Department.3

Summary of Facts and 

Representations 4

The Parties 

1. Phillips 66. Phillips 66 is a 

multinational energy company 

headquartered in Houston, Texas that 

processes, transports, stores and markets 

fuel products. 

2. The Plan. The Plan is sponsored by 

Phillips 66 and provides life insurance, 

travel assistance, occupational 

accidental death, and accidental death 

and dismemberment benefits. As of 

December 31, 2019, the Plan covered 

more than 12,500 participants. 

3. Zurich Life Insurance Company. 

The Plan’s benefits are insured by 

Zurich American Life Insurance 

Company (hereinafter, either Zurich or 

the Fronting Insurer), which has 

received an ‘‘A’’ financial strength 

rating from A.M. Best Company (A.M. 

Best). Zurich is unrelated to Phillips 66 

and, per the conditions of the 

exemption, must remain so throughout 

the duration of the Reinsurance 

Arrangement. 

4. Spirit Insurance Company. Spirit is 

an insurance company that is 100 

percent owned by Phillips 66. Spirit 

currently writes Property Damage, 

Business Interruption, Excess Casualty, 

and Terrorism insurance policies for 

Phillips 66 and several of Phillips 66’s 

joint ventures. Spirit has received an 

‘‘A’’ financial strength rating from A.M. 

Best since its formation in 2012.5 For 

the fiscal year ending December 31, 

Federal Register / Vol. 86, No. 179 / Monday, September 20, 2021 / Notices 52211 

6This includes any benefit to Phillips 66 or a 

related party arising from a further diversification 

of Spirit’s risks in connection with the addition of 

the Plan’s employee benefit insurable risks to One 

Belmont’s other insurable risks. 

2018, Spirit reported earned premiums 

of $33.0 million and total assets of 

$285.2 million. 

The Prohibited Transaction 

Arrangement 

4. Phillips 66 intends to use Spirit to 

reinsure the Plan’s benefit claims under 

the Reinsurance Arrangement. The 

Reinsurance Arrangement would be 

structured as follows: (a) The Plan 

would enter into an insurance 

arrangement with Zurich to insure the 

Plan’s risks; and (b) Zurich would enter 

into a reinsurance agreement with 

Spirit, whereby Spirit would reinsure 

up to 100 percent of the Plan’s risks. 

In general terms, the Plan would make 

premium payments to Zurich, and 

Zurich would make corresponding 

payments to Spirit in an amount less 

than the premiums it is paid by the 

Plan. The difference between the 

premiums the Plan pays Zurich and the 

amounts Zurich pays Spirit comprises 

Zurich’s fee to Spirit. In return, Spirit 

would be responsible for administering 

the Plan participants’ benefit claims 

filed with Zurich. The Reinsurance 

Agreement between Zurich and Spirit 

would be ‘‘indemnity only,’’ which 

means that Zurich, as the Fronting 

Insurer, would maintain the 

responsibility to pay benefit claims to 

participants and beneficiaries in the 

event Spirit does not satisfy any of its 

contractual obligations to Zurich for any 

reason. 

Benefit to Phillips 66 

5. As noted in the Independent 

Fiduciary discussion below, Spirit (and 

Phillips 66 indirectly) expects to receive 

a $1,484,000 increase to its net income 

in the first year of the Reinsurance 

Arrangement. 

Department’s Note: The Department 

developed this proposed exemption 

based on the Applicant’s representation 

that Phillips 66 is not expected to 

receive any benefit from the 

Reinsurance Arrangement other than the 

net income increase described herein, 

which must be verified annually by the 

Independent Fiduciary. If Phillips 66 or 

a related party directly or indirectly 

receives any other benefit from the 

captive reinsurance arrangement, the 

benefit must be quantified by the 

Independent Fiduciary and included in 

the Primary Benefit Test described 

below.6 Consistent with this condition, 

the proposed exemption expressly 

prohibits Phillips 66 (or a related entity) 

from, among other things: (1) Using any 

participant-related data or information 

that is generated by (or derived from) 

the Reinsurance Arrangement in any 

manner that benefits Phillips 66 or a 

related entity; or (2) transferring any 

portion of Spirit’s reserves that are 

attributable to Plan participants’ 

contributions to Phillips 66 or a related 

entity. 

Benefit to the Plan 

6. As discussed in further detail 

below, Phillips 66 must pay all costs 

associated with providing the Benefit 

Enhancements in an amount that 

exceeds one-half of the sum of all direct 

or indirect benefits that Phillips 66 and 

any related party derives from the 

Reinsurance Arrangement. In other 

words, for every dollar that Phillips 66 

or a related party directly or indirectly 

benefits from the Reinsurance 

Arrangement, Phillips 66 must pay at 

least $0.51 toward Benefit 

Enhancements (the Primary Benefit 

Test). 

Department’s Note: Both the benefit to 

Phillips 66 and the cost to Phillips 66 

from the Reinsurance Arrangement are 

based on projections. Therefore, this 

proposed exemption requires an 

Independent Fiduciary to look back over 

successive five-year periods to 

determine whether the Primary Benefit 

Test has been met based on actual 

results. If the Independent Fiduciary 

finds that the Primary Benefit Test has 

not been met during a prior five-year 

period, Phillips 66 must immediately 

implement a prospective reduction to 

the participants’ portion of the Plan 

premiums in an amount that is 

sufficient to make up for the shortfall. 

The amount of the prospective 

reduction must include an additional 

payment of interest on the shortfall, at 

the Code’s federal underpayment rate 

set forth in Code section 6621(b). 

Further, Phillips 66 may not offset or 

reduce any benefits provided to Plan 

participants and beneficiaries in 

connection with its implementation of 

the captive reinsurance arrangement. 

Exemptive Relief and Analysis 

7. ERISA Analysis. Phillips 66 is a 

party in interest with respect to the Plan 

pursuant to ERISA section 3(14) (C), 

because it is an employer whose 

employees are covered by the Plan. In 

addition, the captive reinsurer, Spirit, is 

a party in interest with respect to the 

Plan pursuant to ERISA section 3(14)(G) 

because it is wholly owned by Phillips 

66. 

8. ERISA section 406(a) prohibits a 

wide variety of transactions between 

plans and parties in interest. For 

example, ERISA section 406(a)(l)(D) 

prohibits a plan fiduciary from causing 

a plan to engage in a transaction that 

results in the transfer of plan assets to 

a party in interest. The Reinsurance 

Arrangement would violate ERISA 

section 406(a)(1)(D), because it would 

result in Plan premium payments 

(which are plan assets) being indirectly 

transferred to Spirit who is a party in 

interest with respect to the Plan. 

9. ERISA section 406(b)(1) prohibits a 

fiduciary from dealing with plan assets 

for its own interest or own account, and 

ERISA section 406(b)(3) prohibits a 

fiduciary from receiving any 

consideration for the fiduciary’s 

personal account from any party dealing 

with the plan in connection with a 

transaction involving the plan’s assets. 

The Reinsurance Arrangement would 

violate ERISA sections 406(b)(1) and 

406(b)(3), because the plan fiduciary 

would cause Plan premiums to be paid 

to Zurich with knowledge that the 

premiums ultimately would be paid to 

Spirit. 

Description of Plan Benefit 

Enhancements 

10. In order to satisfy the Primary 

Benefit Test, Phillips 66 must fund the 

following Plan Benefit Enhancements: 

a. The New Care Advocacy Service 

Benefit. Participants and beneficiaries of 

the Plan must receive a New Care 

Advocacy Service Benefit at no 

additional cost. The Applicant 

represents that under the New Care 

Advocacy Service, master’s degree-level 

licensed social workers would seek out 

participants and beneficiaries in need of 

medical assistance, including those who 

have been diagnosed with a terminal or 

chronic illness and those managing a 

chronic condition that has confined 

them to their home or a rehabilitation 

center. Care Advocacy support services 

include providing participants with 

education and assistance regarding 

available community resources, 

scheduling and navigating doctor’s 

appointments, completing forms, and 

coordinating care between doctors and 

specialists. 

b. The Enhanced Funeral Concierge 

Service Benefit. The Plan currently 

provides a Funeral Concierge Service 

Benefit to participants. Under the 

conditions of the exemption, Phillips 66 

would extend the Funeral Concierge 

Service Benefit to cover participants’ 

and beneficiaries’ family members at no 

additional cost. The Applicant 

represents that participants and 

beneficiaries could use the Funeral 

Concierge Service Benefit to compare 

prices among funeral homes through the 

use of a nationwide database of funeral 

52212 Federal Register / Vol. 86, No. 179 / Monday, September 20, 2021 / Notices 

7ERISA section 410 provides, in part, that 

‘‘except as provided in ERISA sections 405(b)(1) 

and 405(d), any provision in an agreement or 

instrument which purports to relieve a fiduciary 

from responsibility or liability for any 

responsibility, obligation, or duty under this part 

[meaning Part 4 of Title I of ERISA] shall be void 

as against public policy.’’ 

8 Given that, among other things, some of the 

documents reviewed by the Independent Fiduciary 

were draft documents and/or documents that are no 

longer current, this proposed exemption requires 

the Independent Fiduciary to: Review the terms of 

the exemption; obtain and review all current 

objective, reliable, third-party documentation 

necessary to make the determinations required of 

the Independent Fiduciary under the exemption; 

and confirm in writing that all of the exemption 

terms and conditions have been met (or, due to 

timing requirements, can reasonably be expected to 

be met consistent with the terms of this proposed 

exemption). The Independent Fiduciary must send 

this written confirmation to the Department’s Office 

of Exemption Determinations at least 30 days before 

Phillips 66 engages in the Reinsurance 

Arrangement. The confirmation must include: 

Copies of each document relied on by the 

Independent Fiduciary; and the steps the 

Independent Fiduciary took to make its 

confirmation. 

9Zurich’s book of business indicates the take up 

is assessed through a pro-active review of claims 

home prices. Additionally, participants 

or their family members can receive 

assistance from licensed funeral home 

directors when negotiating funeral 

service pricing. 

c. The Enhanced Accelerated Death 

Benefit. The Plan currently provides an 

Accelerated Death Benefit that allows a 

terminally-ill participant with a life 

expectancy of 24 months or less to 

receive an accelerated life insurance 

benefit payment before death in an 

amount up to 50 percent of his or her 

total life insurance benefit amount. If 

this exemption is granted, the amount of 

the Plan’s Accelerated Death Benefit 

would increase from 50 percent to 80 

percent of a participant’s life insurance 

benefit amount. 

d. The Enhanced Accidental Death & 

Dismemberment Benefit. Under the Plan 

currently, if a participant suffers an 

injury resulting in Hemiplegia, the Plan 

will pay a benefit equal to 66 percent of 

the participant’s incurred losses from 

such injury. If the exemption is granted, 

the Plan would increase this payment 

from 66 percent to 75 percent of the 

participant’s incurred losses from such 

injury. 

e. The New Accidental Death & 

Dismemberment Benefit. Currently, the 

Plan does not provide an additional 

benefit to a participant’s beneficiary if 

the participant dies in an automobile 

accident while seated in an air bagprotected position after the air bag 

system deploys during an accident. If 

the exemption is granted, the Plan 

would pay an additional ten percent of 

the death benefit upon the occurrence of 

this event up to a maximum amount of 

$25,000. 

Further, the Plan currently does not 

cover costs associated with transporting 

a participant’s body from his or her 

place of death to a mortuary near the 

participant’s primary residence if the 

participant dies 100 miles or more from 

such residence. If this exemption is 

granted, the Plan would pay five percent 

of the AD&D policy coverage amount to 

cover the costs associated with 

transporting a deceased participant’s 

body to a mortuary near his or her 

primary residence up to a maximum 

benefit amount of $5,000. 

Finally, the Plan currently does not 

cover medical costs incurred by a 

participant who suffers third degree 

burns. If this exemption is granted, the 

Plan would pay a percentage of the 

principal sum based on the body area(s) 

and the percentage of the body surface 

affected. 

The Independent Fiduciary 

11. Kathleen Ely, FSA, MAAA, a 

Consulting Actuary with Milliman of 

Windsor, Connecticut will serve as the 

Plan’s Independent Fiduciary with 

respect to the Reinsurance Arrangement. 

Ms. Ely represents that she and 

Milliman are independent of all parties 

associated with the Reinsurance 

Arrangement, including Phillips 66, 

Spirit, and the Plan. In this regard, Ms. 

Ely represents that she and Milliman do 

not have: (a) An interest in any party 

involved in the Reinsurance 

Arrangement; (b) an ownership interest 

in Phillips 66, Spirit, or the Plan, nor 

are they directly or indirectly, 

controlled by, or under common control 

with them; and (c) any economic stake 

or financial interest that is contingent 

upon the implementation of the 

Reinsurance Arrangement. This 

exemption requires that no party related 

to this exemption request has, or will, 

indemnify Ms. Ely or Milliman, in 

whole or in part, for negligence and/or 

for any violation of state or federal law 

that may be attributable to the 

Independent Fiduciary in performing its 

duties under the captive reinsurance 

arrangement. In addition, no contract or 

instrument may purport to waive any 

liability under state or federal law for 

any such violation. 

Ms. Ely represents that Milliman’s 

gross income received from Phillips 66, 

Spirit, and the Plan is less than 0.1 

percent of Milliman’s gross annual 

income from all sources. Further, as a 

condition of the exemption, neither Ms. 

Ely nor Milliman would enter into any 

agreement or instrument that violates 

ERISA section 410 or section 2509.75– 

4 of the Department’s regulations.7

12. Independent Fiduciary Analysis. 

In the course of conducting a 

preliminary assessment of the merits of 

the Reinsurance Arrangement, Ms. Ely 

reviewed the following documents: (a) 

A draft application to the Department 

requesting exemptive relief; 8 (b) a 

memo dated July 11, 2019, from the 

Applicant’s representative, Spring 

Consulting Group, LLC (Spring 

Consulting), describing the Benefit 

Enhancements, including the funding of 

the Benefit Enhancements and the 

expected costs Phillips 66 would incur 

to provide the Benefit Enhancements; 

(c) a draft Employee Benefits Study 

prepared by Spring Consulting that 

details projected 2020 financial 

statement results for Spirit; (d) a 

Certificate of Authority from the 

Vermont Department of Banking, 

Insurance, Securities and Health Care 

Administration authorizing Spirit to 

transact business as a captive insurance 

company in Vermont; (e) a copy of 

Phillips 66’s Life and AD&D insurance 

certificates; (f) a draft of the Reinsurance 

Arrangement contract between Spirit 

and Zurich; (g) documentation of the 

pricing of the subject coverages, expense 

charges, and related underwriting 

information; (h) 2018 audited financial 

statements for Spirit; (i) a 2018 

Actuarial Opinion for Spirit; and (j) a 

declaration by Phillips 66 that the Plan 

would pay no commissions with respect 

to the Reinsurance Arrangement. 

Based on the foregoing, Ms. Ely 

completed two Independent Fiduciary 

Reports, dated November 15, 2019 and 

October 22, 2020. In the first report, Ms. 

Ely provided a preliminary assessment 

that, among other things, the Plan 

Benefit Enhancements would represent 

an immediate and objectively 

determined benefit to the Plan’s 

participants and beneficiaries. In the 

second Independent Fiduciary Report, 

Ms. Ely provided preliminary estimates 

with regard to the costs that Phillips 66 

would incur to fund the Benefit 

Enhancements, which are discussed 

below. 

(a) Care Advocacy Service. Ms. Ely 

estimated high-end and low-end 

potential ranges of costs for Phillips 66 

to provide the Care Advocacy Service. 

Ms. Ely relied upon information 

obtained from Zurich’s total book of 

business and experience for the highend estimate. Based upon its book of 

business, Zurich estimated that the cost 

to provide the Care Advocacy Service 

ranged from $200–$500 per hour and 

that, on average, a care advocate would 

spend 25 hours on a case. Zurich further 

estimated that two percent of Plan 

participants would use the service.9

Federal Register / Vol. 86, No. 179 / Monday, September 20, 2021 / Notices 52213 

reports to identify those individuals who may 

require assistance. Zurich then connects with those 

individuals to assess what types of service may be 

required. In addition, the employer’s HR 

department may bring employees in need of such 

assistance to Zurich’s attention. The service also is 

advertised at Phillips 66 benefits fairs and 

employee meetings whenever possible. 

10This research included data taken from: https:// 

www.hopkinsmedicine.org/health/wellness-andprevention/the-power-of-a-health-care-advocate; 

and https://www.verywellhealth.com/how-muchdoes-a-private-patient-advocate-cost-2614909. 

11 If the Primary Benefit Test has not been met 

and Phillips 66 seeks to terminate the captive 

reinsurance arrangement, the relief in the 

exemption will terminate at the end of the year in 

which the Primary Benefit Test was not met, as long 

as Plan participants receive a reduction in their 

portion of the Plan premium. The premium 

reduction amount must be at least equal to the 

amount by which the prior five-year Primary 

Benefit Test was not met, as verified by the 

Independent Fiduciary and reported to the 

Department as part of the Independent Fiduciary’s 

annual report. 

Based on the foregoing, Ms. Ely 

estimates that, assuming a cost of $200 

per hour for 25 hours, the annual 

estimated cost for Phillips 66 to provide 

the Care Advocacy Service would be 

$1.3 million ($200 * 25 * 2% * 13,000 

employees). 

Ms. Ely also researched non-Zurich 

data.10 Based on this data, Ms. Ely 

concluded that it would be reasonable 

to reduce the average number of hours 

spent on a case to 10 hours at a cost of 

$200 per hour. Under this formula, Ms. 

Ely estimates that the annual cost 

incurred by Phillips 66 to provide the 

Care Advocacy Service would be 

$520,000 ($2,000 * 2% * 13,000). Based 

on the foregoing, Ms. Ely concluded that 

$520,000 represents a reasonable lowend estimate for the cost to provide the 

Care Advocacy Service. 

(b) Funeral Concierge Services. Ms. 

Ely relied on information from Zurich’s 

book of business to estimate the cost for 

Phillips 66 to fund the additional 

Funeral Concierge Services to the Plan. 

Ms. Ely notes that Zurich estimated the 

cost to provide the Funeral Concierge 

Services would be $995 per use and that 

two percent of employees would use the 

service. Ms. Ely notes that, while 

Phillips 66 already provides the Funeral 

Concierge Benefit to Plan participants, it 

does not provide the benefit to 

participants’ family members. 

Therefore, Ms. Ely’s estimate only 

includes the additional costs that 

Phillips 66 would incur based on 

participants’ family members’ use of the 

benefit. Ms. Ely represents that a 

reasonable additional utilization 

estimate for participants’ family 

members would be two percent, which 

is in line with Zurich’s estimate. 

Assuming this two percent utilization 

rate, Ms. Ely estimated that the annual 

cost for Phillips 66 to provide the 

Funeral Concierge Benefit would be 

$258,700 ($995 * 2% * 13,000). 

(c) AD&D. Ms. Ely relied on data 

provided by Zurich to estimate the 

annual cost for Phillips 66 to provide 

the increased accelerated AD&D benefits 

and the new AD&D benefit. Ms. Ely 

notes that Zurich estimated that the 

aggregate cost of the increased 

accelerated death benefits would be 

$4.50 per employee per year, and the 

cost of the new AD&D benefit 

enhancement would be $6.11 per 

employee per year. Ms. Ely states that, 

assuming 13,000 eligible employees, the 

total estimated cost for Phillips 66 to 

fund these benefit enhancements would 

be $137,930 per year ($4.5 + $6.11 * 

13,000). 

13. The Primary Benefit Test: Ms. Ely 

states that a reasonable low-end 

estimate of the expected annual costs for 

Phillips 66 to fund the Benefit 

Enhancements would be $916,630. This 

includes $137,930 for accidental death 

benefit enhancements, $520,000 for Care 

Advocacy Service, and $258,700 for 

additional Funeral Concierge Services. 

Given that Spirit expects to realize a net 

income increase of $1,484,000 from the 

Reinsurance Arrangement, the estimated 

cost to fund the Benefit Enhancements 

represents 62 percent of the projected 

benefit that would inure to Phillips 66 

($916,630/$1,484,000). Thus, Ms. Ely 

preliminarily estimated that the Primary 

Benefit Test would be met in the initial 

year of the Reinsurance Arrangement. 

Department’s Note. Even though Ms. 

Ely’s prior findings suggest the 

conditions of this exemption will be 

met, those findings would not be 

current as of the effective date of this 

proposed exemption. Therefore, Ms. Ely 

must again engage in a prudent/loyal 

analysis in accordance with ERISA 

Section 404(a)(1)(A) and (B), to verify 

that she has reviewed the terms of the 

exemption and all of the necessary 

documents and evidence, and has 

concluded that: The majority of the net 

benefits from the proposed captive 

reinsurance arrangement can reasonably 

be expected to inure to the Plan; and all 

of the exemption’s other terms and 

conditions have been met (or, due to 

timing requirements, can reasonably be 

expected to be met consistent with the 

terms and conditions of the proposed 

exemption). This confirmation must be 

submitted to the Department’s Office of 

Exemption Determinations at least 30 

days before the Plan engages in the 

captive reinsurance arrangement. The 

confirmation must include copies of 

each document relied on by Milliman 

and the steps it took to make its 

confirmation. 

Further, the exemption requires the 

Independent Fiduciary to ‘‘look back’’ 

over successive five-year periods to 

determine whether the Primary Benefit 

Test has been met based on actual 

financial results and actual cost 

incurred by Phillips 66 to provide the 

Plan Benefit Enhancements rather than 

projections. The Independent Fiduciary 

must provide the Department with a 

written report of the actual costs and 

benefits, along with the underlying 

sources for such data. The Department 

notes that this information would be 

included in the public record. The 

Department is proposing this exemption 

based on its understanding that the 

Independent Fiduciary would be able to 

quantify the necessary information 

based on reliable and verifiable 

information, including audited 

financials and information obtained 

from the unrelated Fronting Insurer. The 

Department retains the right to propose 

a revocation or amendment to this 

exemption if it is unable to confirm the 

reliability of the underlying financial 

data supporting the Independent 

Fiduciary’s ‘‘look-back’’ findings. Any 

failure by the Department to propose a 

revocation or amendment to the 

exemption is not an endorsement or 

conclusion by the Department that the 

conditions of the exemption were, in 

fact, met. 

14. Benefit Enhancements 

Adjustment. Before the end of a fiveyear period, Phillips 66 may change 

Benefit Enhancements at its own 

expense to ensure that the Primary 

Benefit Test would be satisfied. The 

exemption requires any new Benefit 

Enhancement to be: (a) Widely available 

to Plan participants on an equal basis; 

and (b) approved, in advance, by the 

Independent Fiduciary, after the 

Independent Fiduciary has determined 

that each Benefit Enhancement is in the 

interest of the Plan’s participants and 

beneficiaries and widely available to 

them on an equal basis.11 A complete 

description of any new Benefit 

Enhancement and the Independent 

Fiduciary’s prior determination 

regarding why the new enhancement is 

in the interest of the Plan’s participants 

and beneficiaries must be included in 

the next annual Independent Fiduciary 

report submitted to the Department. 

Department’s Note. Notwithstanding a 

determination by the Independent 

Fiduciary that a Benefit Enhancement 

meets the terms of this exemption, the 

Department may propose to revoke or 

amend the exemption to the extent that, 

among other things, the Department 

determines that a Benefit Enhancement 

is not sufficiently protective or in the 

52214 Federal Register / Vol. 86, No. 179 / Monday, September 20, 2021 / Notices 

12Specifically, ERISA section 408(a) provides 

that the Department may not grant an exemption 

unless it finds that the exemption is 

administratively feasible, in the interests of the plan 

and it participants and beneficiaries, and protective 

of the rights of the plan participants and 

beneficiaries. 

interest of the Plan and its participants 

and beneficiaries. Any failure by the 

Department to propose to modify or 

revoke the exemption is not an 

endorsement or conclusion by the 

Department that the conditions of the 

exemption were, in fact, met. 

The Department’s Findings 

15. The Department has the authority 

under ERISA section 408(a) ERISA to 

grant exemptions from the prohibition 

transaction provisions of ERISA section 

406 if the Department finds that the 

transaction is in the interest and 

protective of the rights of the affected 

plan and its participants and 

beneficiaries, and is administratively 

feasible.12 The Department’s findings 

required under ERISA section 408(a) are 

discussed below. 

16. The Proposed Exemption is 

‘‘Protective of the Plan.’’ The 

Department has tentatively determined 

that the proposed exemption is 

protective of the rights of Plan 

participants and beneficiaries. In 

addition to the requirements described 

above, no commissions would be paid 

by the Plan with respect to the sale of 

any third party insurance contract and/ 

or any reinsurance contract, and 

Phillips 66 would only contract with 

insurers with a financial strength rating 

of ‘‘A’’ or better from A.M. Best 

Company or an equivalent rating from 

another rating company, in the year the 

contract is entered into. Further, for 

each taxable year, the gross premiums 

received by Spirit for benefit insurance 

provided to Phillips 66 and its 

employees with respect to which Spirit 

is a party in interest by reason of the 

relationship to Phillips 66 described in 

ERISA sections 3(14)(G), would not 

exceed 50 percent of the gross 

premiums received for all lines of its 

insurance business (i.e., benefit 

insurance and non-benefit insurance) in 

that taxable year. 

Ms. Ely, the Independent Fiduciary 

must review the Reinsurance 

Arrangement and confirm and 

determine: (a) The total economic 

benefit derived by Phillips 66 and its 

related parties from the Reinsurance 

Arrangement; (b) that the majority of the 

economic benefits derived by Phillips 

66 and related parties from the 

Reinsurance Arrangement were 

transferred to the Plan in the form of 

Benefit Enhancements and/or reduced 

premiums; (c) the Reinsurance 

Arrangement created real and 

substantial additional benefits for the 

Plan and its participants; (d) the 

Reinsurance Arrangement did not result 

in an offset or reduction in participants’ 

other benefits and was otherwise 

consistent with ERISA. Ms. Ely has 

confirmed that: (i) She has the requisite 

knowledge regarding the Reinsurance 

Arrangement to fulfill her duties under 

ERISA section 404 as a prudent and 

independent plan fiduciary; (ii) she will 

monitor the Reinsurance Arrangement 

throughout the duration of the 

exemption; and (iii) the Reinsurance 

Arrangement is consistent with ERISA, 

including the prudence and loyalty 

provisions of ERISA section 404. 

The exemption would require Ms. Ely 

to file annual certified reports to the 

Department, under penalty of perjury, 

confirming whether all terms and 

conditions of the exemption have been 

met. She must complete each report 

within six months from the end of the 

12-month period to which it relates (the 

first 12-month period begins on the 

effective date of the exemption). 

20. The Proposed Exemption is ‘‘In 

the Interest of the Plan.’’ The 

Department has tentatively determined 

that the proposed exemption would be 

in the Plan’s interest. Among other 

things, the Plan must receive the 

majority of the total benefit generated 

from the Reinsurance Arrangement, as 

verified by the Independent Fiduciary 

and reported to the Department. 

21. The Proposed Exemption is 

‘‘Administratively Feasible.’’ The 

Department has tentatively determined 

that the proposed exemption would be 

administratively feasible, because the 

proposed reinsurance arrangement is 

subject to robust annual reviews by Ms. 

Ely that must be filed with the 

Department’s Office of Exemption 

Determinations. 

22. Based on the conditions that are 

included in this proposed exemption, 

the Department has tentatively 

determined that the relief sought by the 

Applicant would satisfy the statutory 

requirements for an individual 

exemption under ERISA section 408(a). 

Proposed Exemption 

Section I. Definitions 

(a) An ‘‘affiliate’’ of Phillips 66 or 

Spirit includes: (1) Any person or entity 

who controls Phillips 66 or Spirit or is 

controlled by or under common control 

with Phillips 66 or Spirit; (2) Any 

officer, director, employee, relative, or 

partner with respect to Phillips 66 or 

Spirit; and (3) Any corporation or 

partnership of which the person in (2) 

of this paragraph is an officer, director, 

partner, or employee; 

(b) The term Benefit Enhancements 

means the following benefits, unless 

adjusted consistent with the terms of 

this proposed exemption: 

(i) The New Care Advocacy Service 

Benefit. Under this new benefit, master’s 

degree-level licensed social workers 

would proactively find participants 

needing specialized assistance, 

including those diagnosed with a 

terminal or chronic illness or who are 

managing a chronic condition that has 

confined them to their home or a 

rehabilitation center. Care Advocacy 

support service includes participant 

education and assistance with respect to 

available community resources, and 

assistance with scheduling and 

navigating doctor’s appointments, 

completing forms, and coordinating care 

with doctors and specialists. 

(ii) The Enhanced Funeral Concierge 

Service Benefit. Under this 

enhancement, the Plan would extend its 

existing Funeral Concierge Service 

Benefit to provide coverage for Plan 

participants’ family members. 

(iii) The Enhanced Accelerated Death 

Benefit. The Plan currently provides an 

Accelerated Death Benefit for a 

terminally-ill participants with life 

expectancy of 24 months or less to 

receive an accelerated life insurance 

benefit payment in advance of her death 

of up to 50 percent of the participant’s 

total life insurance benefit amount. 

Under this enhancement, the amount of 

the Accelerated Death Benefit would 

increase to 80 percent of a participant’s 

life insurance benefit. 

(iv) The Enhanced Accidental Death 

& Dismemberment Benefit. The Plan 

currently provides that if a participant 

suffers an injury resulting in 

Hemiplegia, the Plan would pay such 

participant a benefit equal to 66 percent 

of the participant’s incurred losses from 

such injury. Under this enhancement, 

the payment would increase to 75 

percent of the participant’s incurred 

losses from such injury. 

(v) The New Accidental Death & 

Dismemberment Benefit. Under the 

current terms of the Plan, if a 

participant dies in an automobile 

accident while seated in an air bagprotected position and such air bag 

system deployed during the accident, 

the Plan would not pay any additional 

benefit to the participant. Under this 

enhancement, the Plan would provide a 

new benefit that pays ten percent of the 

principal sum, up to $25,000, upon the 

occurrence of this event. 

Further, under the current terms of 

the Plan, if a participant dies 100 miles 

away from his or her primary place of 

Federal Register / Vol. 86, No. 179 / Monday, September 20, 2021 / Notices 52215 

residence, the Plan would not cover 

costs incurred to transport the 

participant’s body from the place of 

death to a mortuary near the 

participant’s primary residence. Under 

this enhancement, the Plan would 

provide a new benefit to participants 

covering up to five percent of the AD&D 

policy amount, up to a maximum of 

$5,000, of the cost associated with 

transporting the deceased participant’s 

body to a mortuary near her primary 

residence. Finally, the Plan currently 

does not cover medical costs incurred 

by a participant who suffers third degree 

burns. If this exemption is granted, the 

Plan would enhance the AD&D benefit 

by paying a percentage of the principal 

sum based on the body area(s) and the 

percentage of the body surface affected. 

(c) The term ‘‘control’’ means the 

power to exercise a controlling 

influence over the management or 

policies of a person other than an 

individual; and 

(d) The term ‘‘Independent Fiduciary’’ 

means a person who: 

(1) Is not Phillips 66 or an affiliate of 

Phillips 66 or Spirit and does not hold 

an ownership interest in Phillips 66, 

Spirit or their affiliates; 

(2) Was not a fiduciary with respect 

to the Plan before its appointment to 

serve as the Independent Fiduciary; 

(3) Has acknowledged in writing that: 

(i) It is a fiduciary and has agreed not 

to participate in any decision with 

respect to any transaction in which it 

has an interest that might affect its best 

judgment as a fiduciary; and 

(ii) Has appropriate technical training 

or experience to perform the services 

contemplated by the exemption; 

(4) For purposes of this definition, no 

organization or individual may serve as 

Independent Fiduciary for any fiscal 

year if the gross income received by 

such organization or individual from 

Phillips 66, Spirit, or their affiliates for 

that fiscal year exceeds two percent of 

such organization’s or individual’s gross 

income from all sources for the prior 

fiscal year. This provision also applies 

to a partnership or corporation of which 

such organization or individual is an 

officer, director, or 10 percent or more 

partner or shareholder and includes as 

gross income amounts received as 

compensation for services provided as 

an independent fiduciary under any 

prohibited transaction exemption 

granted by the Department; 

(5) No organization or individual that 

is an Independent Fiduciary and no 

partnership or corporation of which 

such organization or individual is an 

officer, director or ten percent or more 

partner or shareholder may acquire any 

property from, sell any property to, or 

borrow any funds from Phillips 66, 

Spirit, or their affiliates while the 

individual serves as an Independent 

Fiduciary. This prohibition would 

continue for a period of six months after 

either (1) the party ceases to be an 

Independent Fiduciary or (2) the 

Independent Fiduciary negotiates on 

behalf of the Plan during the period that 

such organization or the individual 

serves as an Independent Fiduciary; and 

(6) In the event a successor 

Independent Fiduciary is appointed to 

represent the interests of the Plan with 

respect to the subject transaction, no 

time should elapse between the 

resignation or termination of the former 

Independent Fiduciary and the 

appointment of the successor 

Independent Fiduciary. 

Section II. Proposed Transactions 

The exemption would provide relief 

from the prohibited transactions 

provisions of ERISA sections 

406(a)(1)(A), (D), and 406(b)(1) and 

(b)(3), and the excise tax imposed by 

Code section 4975(a) and (b) (due to the 

operation of parallel prohibited 

transaction provisions contained in 

Code section 4975(c)(1)(A), (D), (E), and 

(F)) with respect to: (1) The reinsurance 

of risks; and (2) the receipt of premiums 

by Spirit in connection with insurance 

contracts sold by Zurich (or any 

successor Fronting Insurer) to provide 

Group Term Life and Accidental Death 

and Dismemberment benefits to Plan 

participants. In order to receive such 

relief, the conditions in Section III must 

be met in conformance with the 

definitions set forth in Section I. 

Section III. Conditions 

(a) Phillips 66 must improve the Plan 

with Benefit Enhancements that are 

funded solely by Phillips 66 in 

compliance with (b) through (e) below; 

(b) For every dollar that Phillips 66 

and its related parties directly and 

indirectly benefit from the Captive 

Reinsurance arrangement, Phillips 66 

must pay at least $0.51 towards the 

Benefit Enhancements, as may be 

adjusted under condition (e) below (the 

Primary Benefit Test); 

(c) The Independent Fiduciary must 

determine whether the Primary Benefit 

Test has been met with respect to each 

successive five-year period covered by 

the exemption. The Independent 

Fiduciary must report its determinations 

as part of the Independent Fiduciary’s 

next annual report. For purposes of the 

initial five-year period, the Independent 

Fiduciary may test only the costs and 

benefits that inure to Phillips 66 during 

years two through five of the initial fiveyear period. 

(d)(1) If the Primary Benefit Test has 

not been met with respect to a five-year 

period, Phillips 66 must reduce the 

participants’ portion of the Plan’s 

premium in the next consecutive year 

by an amount that is at least equal to the 

amount by which the prior five-year 

Primary Benefit Test was not met, plus 

an additional payment of interest on the 

shortfall, at the Code’s federal 

underpayment rate set forth in Code 

section 6621(b). The premium reduction 

must benefit all plan participants 

equally, be fully implemented during 

the course of the year following the last 

year of the five-year period to which it 

relates, and be verified by the 

Independent Fiduciary; (2) If the captive 

reinsurance arrangement is terminated 

before the end of a five-year period (a 

Shorter Term), and if the Primary 

Benefit Test has not been met during the 

Shorter Term, Phillips 66 must reduce 

the participants’ portion of the Plan’s 

premium in the following year by an 

amount at least equal to the amount by 

which the Shorter Term Primary Benefit 

Test was not met. The premium 

reduction must benefit all plan 

participants equally, be fully 

implemented during the course of the 

year following the last year of the 

Shorter Term, and be verified by the 

Independent Fiduciary. Relief in this 

proposed exemption does not extend to 

prohibited transactions described in this 

proposed exemption that occur during 

the Shorter Term unless the 

requirements in this subsection (d)(2) 

have been met. The Independent 

Fiduciary must ensure the premium 

reduction was properly implemented, 

notwithstanding that the captive 

reinsurance arrangement has already 

been terminated; 

(e) Phillips 66 may adjust the Benefit 

Enhancements to the Plan at any time, 

if such adjustment is approved in 

advance by the Independent Fiduciary 

after the Independent Fiduciary first 

determines that each adjusted Benefit 

Enhancement is in the interest of the 

Plan’s participants and beneficiaries and 

available to them on an equal basis. The 

cost incurred by Phillips 66 to fund the 

Benefit Enhancement may be used to 

determine whether the Primary Benefit 

Test has been met. A complete 

description of any new Benefit 

Enhancements and the Independent 

Fiduciary’s rationale and 

determinations regarding such 

enhancements must be included in the 

next Independent Fiduciary report 

submitted to the Department. 

(f) Spirit must: 

(1) Be a party in interest with respect 

to the Plan based on its affiliation with 

52216 Federal Register / Vol. 86, No. 179 / Monday, September 20, 2021 / Notices 

13Under ERISA section 3(14)(G), a corporation is 

a ‘‘party in interest’’ with respect to an employee 

benefit plan if 50 percent or more of the combined 

voting power of all classes of the corporation’s stock 

entitled to vote, or the total value of shares of all 

classes of stock of the corporation, is owned by an 

employer any of whose employees are covered by 

the employee benefit plan. 

Phillips 66 that is described in ERISA 

Section 3(14)(G); 13

(2) Be licensed to sell insurance or 

conduct reinsurance operations in the 

Vermont; 

(3) Have obtained a Certificate of 

Authority from the insurance 

commissioner of Vermont to transact 

business as a captive insurance 

company. Such certificate must not 

have been revoked or suspended; 

(4) Have undergone a financial 

examination (within the meaning of the 

law of its domiciliary State, Vermont) by 

the Insurance Commissioner of Vermont 

within five years before the end of the 

year preceding the year in which the 

reinsurance transaction occurred; 

(4) Have undergone, and continue to 

undergo, an examination by an 

independent certified public accountant 

for its last completed taxable year 

immediately before the taxable year of 

the Reinsurance Arrangement covered 

by this exemption; and 

(5) Be licensed to conduct reinsurance 

transactions by a state whose law 

requires that an actuarial review of 

reserves be conducted annually by an 

independent firm of actuaries and 

reported to the appropriate regulatory 

authority; 

(g) In each year of coverage provided 

by a Fronting Insurer, the formulae used 

by the Fronting Insurer to calculate 

premiums will be similar to formulae 

used by other insurers providing 

comparable life insurance coverage 

under similar programs. Furthermore, 

the premium charges calculated in 

accordance with the formulae will be 

reasonable and comparable to the 

premiums charged by the Fronting 

Insurer and its competitors with the 

same or a better financial strength rating 

providing the same coverage under 

comparable programs; 

(h) The Plan must pay no 

commissions with respect to the sale of 

such contracts or the Reinsurance 

Arrangement; 

(i) The Fronting Insurer must have a 

financial strength rating of ‘‘A’’ or better 

from A.M. Best Company (A.M. Best) or 

an equivalent rating from another rating 

agency; 

(j) The Reinsurance Arrangement 

between Spirit and Zurich or any 

successor Fronting Insurer must be 

indemnity insurance only. The 

arrangement must not relieve a Fronting 

Insurer from any responsibility or 

liability to the Plan, including liability 

that would result if Spirit fails to meet 

any of its contractual obligations to 

Zurich or any successor Fronting 

Insurer under the Reinsurance 

Arrangement; 

(k) Phillips 66 will not offset or 

reduce any benefits provided to Plan 

participants and beneficiaries in relation 

to its implementation of the Proposed 

Benefit Enhancements; 

(l) The Independent Fiduciary must: 

(1) In compliance with the fiduciary 

obligations of prudence and loyalty 

under ERISA Sections 404(a)(1)(A) and 

(B) (i) review the Reinsurance 

Arrangement and the terms of the 

exemption; (ii) obtain and review all 

current objective, reliable, third-party 

documentation necessary to make the 

determinations required of the 

Independent Fiduciary by the 

exemption; and (iii) confirm in writing 

that all of the exemption’s terms and 

conditions have been met (or, due to 

timing requirements, can reasonably be 

expected to be met consistent with the 

terms of this proposed exemption) and 

send this confirmation to the 

Department’s Office of Exemption 

Determinations at least 30 days before 

Phillips 66 engages in the Reinsurance 

Arrangement. The confirmation must 

include: Copies of each document relied 

on by the Independent Fiduciary and 

the steps the Independent Fiduciary 

took to make its confirmation; 

(2) Monitor, enforce and ensure 

compliance with all conditions of this 

exemption, in accordance with its 

obligations of prudence and loyalty 

under ERISA Sections 404(a)(1)(A) and 

(B), including all conditions and 

obligations imposed on any party 

dealing with the Plan, throughout the 

period during which Spirit’s assets are 

directly or indirectly used in connection 

with a transaction covered by this 

exemption. 

(3) Report any instance of noncompliance immediately to the 

Department’s Office of Exemption 

Determinations; 

(4) Take all appropriate actions to 

safeguard the interests of the Plan; 

(5) Review all contracts pertaining to 

the Reinsurance Arrangement, and any 

renewals of such contracts, to determine 

whether the requirements of this 

proposed exemption and the terms of 

Benefit Enhancements continue to be 

satisfied; 

(6) Submit an annual Independent 

Fiduciary Report to the Department 

certifying under penalty of perjury 

whether each term and condition of the 

proposed exemption is met over the 

applicable period. Each report must be: 

(i) Completed within six months after 

the end of the twelve-month period to 

which it relates (the first twelve-month 

period would begin on the effective date 

of the exemption grant); and (ii) 

submitted to the Department within 60 

days thereafter. The relevant report 

must include all of the objective data 

necessary to demonstrate that the 

Primary Benefit Test has been met; 

(o) Neither Phillips 66 nor any related 

entity may use participant-related data 

or information generated by or derived 

from the Reinsurance Arrangement in a 

manner that benefits Phillips 66 or a 

related entity; 

(p) No amount of Spirit’s reserves that 

are attributable to the Plan participants’ 

contributions may be transferred to 

Phillips 66 or a related party; 

(q) All the facts and representations 

set forth in the Summary of Facts and 

Representation must be true and 

accurate; and 

(r) No party related to this exemption 

request has or will, indemnify the 

Independent Fiduciary, in whole or in 

part, for negligence and/or for any 

violation of state or federal law that may 

be attributable to the Independent 

Fiduciary in performing its duties under 

the captive reinsurance arrangement. In 

addition, no contract or instrument may 

purport to waive any liability under 

state or federal law for any such 

violations. 

Effective Date: This proposed 

exemption would become effective on 

the date the Department publishes a 

grant notice in the Federal Register. 

Notice to Interested Persons 

Persons who may be interested in the 

publication of this notice in the Federal 

Register include Plan participants and 

beneficiaries. The Applicant will 

provide notification to such interested 

persons by electronic and first-class 

mail within fifteen (15) calendar days 

after the publication date of the Notice 

in the Federal Register. Such mailing 

will contain a copy of the Notice as it 

appears in the Federal Register on the 

date of publication and a copy of the 

Supplemental Statement required, by 29 

CFR 2570.43(b)(2), which will advise 

interested persons of their right to 

comment on the proposed exemption 

and request a hearing. 

The Department must receive all 

written comments and requests for a 

hearing no later than forty-five (45) days 

after the date the Notice is published in 

the Federal Register. 

All comments will be made available 

to the public. 

Warning: Please do not include any 

personally identifiable information 

(such as your name, address, or other 

Federal Register / Vol. 86, No. 179 / Monday, September 20, 2021 / Notices 52217 

14The Department notes that the independent 

fiduciary’s annual written report is essential to the 

Department’s tentative finding that this proposed 

exemption is, and will continue to be, in the 

interest and protective of the Plan and its 

participants and beneficiaries. Each report must 

clearly, prudently, and loyally determine whether 

Comcast and its affiliates have complied with each 

term and condition of the exemption. The 

exemption’s relief is conditioned on the 

independent fiduciary’s compliance with this 

requirement. 

15The Department notes that availability of this 

exemption, is subject to the express condition that 

the material facts and representations contained in 

application L–12021 are true and complete, and 

accurately describe all material terms of the 

transactions covered by the exemption. If there is 

any material change in a transaction covered by the 

exemption, or in a material fact or representation 

described in the application, the exemption will 

cease to apply to the covered transactions as of the 

date of such change. 

16According to the Applicants, Prudential has 

agreed to reduce the Plan’s basic life insurance 

premiums by $375,000 in return for transferring the 

Plan’s basic life insurance risks to One Belmont. 

The result is a cost savings to Comcast, since 

Comcast pays 100% of these premiums. 

17Based on the number of participants currently 

enrolled in the Plan’s Dental Component, that 

amount currently translates to $3.84 per participant 

per year in employee premium savings. 

contact information) or confidential 

business information that you do not 

want publicly disclosed. All comments 

may be posted on the internet and are 

retrievable by most internet search 

engines. 

Further Information Contact: Mr. 

Joseph Brennan of the Department, 

telephone (202) 693–8456. (This is not 

a toll-free number.) 

Comcast Corporation (Comcast) 

Located in Philadelphia, PA 

[Application No. L–12021] 

Proposed Exemption 

The Department is considering 

granting an exemption under the 

authority of section 408(a) of the 

Employee Retirement Income Security 

Act of 1974, as amended (ERISA), and 

in accordance with the procedures set 

forth in 29 CFR part 2570, subpart B (76 

FR 66637, 66644, October 27, 2011). As 

more fully explained below, this 

proposed exemption would allow an 

affiliate of Comcast, One Belmont 

Insurance Company, to reinsure the life 

insurance risks of the Comcast 

Corporation Comprehensive Health and 

Welfare Benefit Plan. Comcast expects 

to benefit by approximately $375,000 

per year from the proposed 

arrangement, and participants in the 

Plan’s Dental Component will receive at 

least a $375,000 yearly reduction in 

their portion of the premium payments. 

If Comcast benefits by more than 

$375,000 in a particular year (e.g., 

$500,000), participants in the Plan’s 

Dental Component will receive that 

same reduction ($500,000) in their 

premium payments in the subsequent 

plan year. This exemption requires, 

among other things, annual reports by a 

qualified, independent fiduciary, 

submitted to the Department of Labor 

confirming whether the requirements of 

the exemption have been met.14

Summary of Facts and 

Representations 15

The Applicants 

1. Comcast is an American 

telecommunications conglomerate 

headquartered in Philadelphia, 

Pennsylvania. Comcast wholly owns 

One Belmont Insurance Company (One 

Belmont), a captive insurance and 

reinsurance corporation regulated by the 

State of Vermont. One Belmont 

currently provides the following 

insurance coverage to Comcast and its 

subsidiaries: Workers compensation, 

general liability, automobile liability 

deductible reimbursement, production 

insurance, and international employee 

health & welfare benefits. As of 

December 31, 2019, One Belmont had 

total assets of $271,114,394 and gross 

written premiums of $50.0 million. 

2. Comcast sponsors the Comcast 

Corporation Comprehensive Health and 

Welfare Benefit Plan (the Plan), which 

provides eligible employees with 

medical, life insurance, dental, 

disability, death benefits and other 

welfare benefits. As of December 31, 

2020, the Plan provided benefits to 

approximately 110,657 active 

participants. Comcast provides life 

insurance and death benefits to eligible 

employees through the Life Insurance 

and Death Benefit Plan, which is a 

component of the Plan (the Life 

Insurance Component). Benefits of the 

Life Insurance Component include basic 

life insurance, for which Comcast pays 

one hundred percent (100%) of the 

premium cost, and optional 

(supplemental) group term life 

insurance benefits, for which employees 

pay one hundred percent (100%) of the 

premium cost. The Plan also has a 

dental component (the Dental 

Component), for which Comcast pays 

60% of the premium cost. 

3. The basic and optional 

(supplemental) life insurance benefits 

provided under the Life Insurance 

Component are insured by the 

Prudential Insurance Company 

(Prudential), which is unrelated to 

Comcast and its affiliates. Prudential 

recently received an ‘‘A+’’ financial 

strength rating from A.M. Best 

Company. 

4. The Applicants are requesting an 

exemption that would permit One 

Belmont to reinsure the basic and 

optional (supplemental) life insurance 

provided under the Plan’s Life 

Insurance Component. As described 

below, the proposed exemption is 

subject to a number of conditions, each 

of which must be verified by a qualified, 

independent fiduciary (the Independent 

Fiduciary). Among other things, the 

Independent Fiduciary must submit an 

annual report in which, in accordance 

with ERISA Sections 404(a)(1)(A) and 

(B), it prudently and loyally determines 

that the Applicants have met the terms 

of the exemption, including the 

requirement that the Plan’s Dental 

Component has received all the 

financial benefits and cost savings 

associated with the reinsurance 

arrangement that would otherwise have 

gone to the Applicants. 

5. The arrangement is expected to 

generate an annual financial benefit to 

Comcast. In particular, Comcast 

currently anticipates that the 

arrangement will result in $375,000 

annual cost savings, as compared to the 

current benefit structure.16 Therefore, 

the proposed exemption requires 

Comcast to provide participants in the 

Plan’s Dental Component with at least 

an annual aggregate $375,000 reduction 

in their portion of the premium for the 

Plan’s Dental Component, without any 

offsetting change or reduction in 

employee benefits.17

6. Comcast states that reducing the 

premiums of the Plan’s Dental 

Component would benefit a higher 

percentage of Plan participants than 

would benefit from reducing the 

premiums paid by Plan participants for 

supplemental life insurance. Comcast 

states that 85% of Plan participants 

participate in the Plan’s Dental 

Component, while only 35% of Plan 

participants who contribute towards the 

supplemental life insurance offered by 

the Plan. 

7. In no event may the reduction in 

the participants’ portion of the Dental 

Component’s premium be less than the 

amount that Comcast or any of its 

affiliates ultimately benefits from the 

captive reinsurance arrangement. 

Further, Comcast must continue to 

contribute no less than 60% of the 

Dental Component’s premiums after the 

captive reinsurance arrangement takes 

effect. 

8. If this proposed exemption is 

granted, Prudential will continue to be 

the ‘‘fronting’’ insurer for the basic and 

optional (supplemental) group term life 

insurance. Prudential will contract with 

One Belmont for One Belmont to 

52218 Federal Register / Vol. 86, No. 179 / Monday, September 20, 2021 / Notices 

18Under ERISA section 3(14)(G), a corporation is 

a ‘‘party in interest’’ with respect to an employee 

benefit plan if 50% or more of the combined voting 

power of all classes of the corporation’s stock 

entitled to vote, or the total value of shares of all 

classes of stock of the corporation, is owned by an 

employer any of whose employees are covered by 

the employee benefit plan. 

19ERISA section 410 provides, in relevant part, 

that ‘‘except as provided in [ERISA] sections 

405(b)(1) and 405(d), any provision in an agreement 

or instrument which purports to relieve a fiduciary 

from responsibility or liability for any 

responsibility, obligation, or duty under this part 

[meaning Part 4 of Title I of ERISA] shall be void 

as against public policy.’’ 

provide reinsurance coverage for 90% of 

the risks insured with Prudential (up to 

$1,500,000 in coverage for each 

individual employee under the Plan). 

This captive reinsurance agreement 

between Prudential and One Belmont 

will be ‘‘indemnity only,’’ which means 

that Prudential will not be relieved of 

any of its liabilities with respect to 

benefits provided under the Plan’s Life 

Insurance Component, even if One 

Belmont is unable or unwilling in any 

way to satisfy its contractual obligations 

to Prudential. 

9. Comcast and its affiliates, including 

One Belmont, may not retain any profit, 

tax or other benefit from the captive 

reinsurance arrangement. If Comcast or 

any of its affiliates ultimately receive a 

tax, profit or other benefit in connection 

with the captive reinsurance 

arrangement, including any benefit 

arising from a further diversification of 

One Belmont’s risks in connection with 

adding the Insurance Component’s risks 

to One Belmont’s other risks Comcast 

must ensure, and the Independent 

Fiduciary must verify, that participants 

in the Plan’s Dental Component receive 

a corresponding dollar-for-dollar 

additional reduction to their portion of 

the premiums. For example, if 

Comcast’s savings from the captive 

reinsurance arrangement for a year is 

$375,000, and One Belmont realizes a 

$25,000 net income increase from the 

captive reinsurance arrangement in that 

same year, the Plan’s participants must 

receive a $400,000 reduction in their 

portion of the Plan’s Dental Component 

premium in the following year. Comcast 

may not offset or reduce any employee 

benefits in connection with this 

premium reduction. 

ERISA Analysis 

11. Comcast is a party in interest with 

respect to the Plan pursuant to ERISA 

section 3(14)(C), because it is an 

employer whose employees are covered 

by the Plan. In addition, the captive 

reinsurer, One Belmont, is a party in 

interest with respect to the Plan 

pursuant to ERISA section 3(14)(G) 

because it is 100% owned by the 

Comcast.18

12. ERISA section 406(a) prohibits a 

wide variety of transactions between 

plans and parties in interest. For 

example, ERISA section 406(a)(l)(D) 

prohibits a plan fiduciary from causing 

a plan to engage in a transaction that 

results in the transfer of plan assets to 

a party in interest. The proposed captive 

reinsurance arrangement would violate 

ERISA section 406(a)(1)(D), because it 

would result in the Plan’s premium 

payments (which are plan assets) being 

indirectly transferred to One Belmont, 

which is a party in interest with respect 

to the Plan. 

13. ERISA section 406(b)(1) prohibits 

a fiduciary from dealing with plan 

assets for its own interest or own 

account. The proposed captive 

reinsurance arrangement would violate 

ERISA section 406(b)(1), because the 

plan fiduciary would cause the Life 

Insurance Component’s premiums to be 

paid to Prudential with knowledge that 

corresponding payments ultimately 

would be paid to One Belmont, and 

Comcast may benefit from a 

diversification of One Belmont’s risks. 

14. Comcast must fund the reserves 

that will be established by One Belmont 

for the reinsurance arrangement. This 

amount is estimated to be $180,000 for 

the first year. Comcast will be fully and 

solely responsible for funding any 

future reserves required in connection 

with the captive reinsurance 

arrangement. In this respect, Comcast 

may not pass along the cost of funding 

the reserves to the Plan or its 

participants. 

15. In connection with this exemption 

request, the Applicants engaged 

Milliman Actuarial Services (Milliman) 

to act as the independent fiduciary (the 

Independent Fiduciary) on behalf of the 

Plan to evaluate, and if appropriate, 

approve or reject the subject 

transactions. Milliman is responsible for 

the prudent and loyal review and 

analysis of the proposed transactions on 

the Plan’s behalf and for providing a 

written opinion as to whether the 

arrangement complies with the 

Department’s requirements for an 

administrative exemption. Milliman 

must have access to the captive 

insurance company’s financial 

statements, which will show premiums, 

claims, reserves and other relevant 

financial items, and Milliman must use 

this information to determine ongoing 

savings and any other benefits to the 

Applicants that result from the 

reinsurance transaction. In addition, 

Milliman must: (1) Review all contracts 

(and any renewal of such contracts) of 

the reinsurance of risks and the receipt 

of premiums therefrom by One Belmont 

and determine that the requirements of 

the exemption continue to be satisfied; 

and (2) quantify (in dollars) all savings 

and other benefits that Comcast receives 

from the proposed captive reinsurance 

arrangement, and ensure that the Plan’s 

participants receive a corresponding 

benefit, at Comcast’s expense, in the 

manner described above. 

16. Milliman represents that it has 

extensive experience overseeing captive 

reinsurance arrangements. Milliman 

represents that it does not have, and has 

not previously had, any relationship 

with any party in interest (including any 

affiliates thereof) engaging in the 

proposed transactions. Milliman does 

not have any financial interest with 

respect to their work as an independent 

fiduciary regarding this proposed 

transaction, or the captive reinsurance 

arrangement, apart from the express fees 

paid for their work as an independent 

fiduciary for the Plan. Gross income 

received by Milliman from Comcast, 

One Belmont, or Prudential for this 

fiscal year is less than 0.1% of 

Milliman’s gross annual income from all 

sources. Under this exemption, the gross 

income Milliman receives from 

Comcast, One Belmont and Prudential 

in a fiscal year must not exceed two 

percent of Milliman’s gross annual 

income from all sources for that year. As 

a condition of the exemption, neither 

Milliman nor any of its representatives 

will enter into any agreement or 

instrument that violates the prohibitions 

on exculpatory provisions in ERISA 

section 410 or the Department’s 

regulation relating to indemnification of 

fiduciaries at 29 CFR 2509.75–4.19

Finally, Comcast and its related parties 

have not, and will not, indemnify 

Milliman, in whole or in part, for 

negligence and/or for any violations of 

state or federal law that may be 

attributable to Milliman performing its 

duties under the captive reinsurance 

arrangement. In addition, no contract or 

instrument may purport to waive any 

liability under state or federal law for 

any such violations. 

17. In connection with the 

transactions that are the subject of this 

proposed exemption, Milliman 

represents that it has, among other 

things, in full accordance with its 

prudence and loyalty obligations under 

ERISA sections 404(a)(1)(A) and (B): (a) 

Reviewed a draft of Comcast’s 

application for an administrative 

exemption that was submitted to the 

Department; (b) conferred with 

Comcast’s representative to discuss the 

transactions involved in the reinsurance 

arrangement; (c) conducted such other 

Federal Register / Vol. 86, No. 179 / Monday, September 20, 2021 / Notices 52219 

20Specifically, ERISA section 408(a) provides 

that the Secretary of Labor may not grant an 

exemption unless the Secretary finds that the 

exemption is administratively feasible, in the 

interests of the plan and it participants and 

beneficiaries, and protective of the rights of the plan 

participants and beneficiaries of such plan. 

due diligence reviews as were prudent 

to determine that the conditions of the 

proposed exemption would be met, 

including the premiums to be paid by 

the Life Insurance Component for the 

proposed coverage. 

Department’s Note. If the Department 

grants an exemption, Milliman’s 

findings would not be current as of the 

exemption’s effective date. Therefore, as 

a condition of the exemption, Milliman 

must engage in another analysis of the 

proposed transactions in full accordance 

with ERISA Section 404(a)(1)(A) and 

(B). As part of this analysis, Milliman 

must review the terms of the exemption 

and verify that it has concluded based 

on its review of all of the relevant 

documents and evidence that all of the 

exemption’s terms and conditions have 

been met (or, due to timing 

requirements, can reasonably expected 

to be met consistent with the time 

requirements set forth in this proposed 

exemption)). Milliman must document 

the basis for its conclusions in a written 

report submitted to the Department’s 

Office of Exemption Determinations at 

least 30 days before the Plan engages in 

the reinsurance arrangement. The report 

must include copies of all documents 

and evidence Milliman relied on when 

conducting its review. 

18. For the duration of the captive 

reinsurance arrangement, Milliman 

must: (a) Monitor, enforce and ensure 

compliance with all conditions of the 

exemption, including all conditions and 

obligations imposed on any party 

dealing with the Plan, throughout the 

period during which One Belmont’s 

assets are directly or indirectly used in 

connection with a transaction covered 

by this exemption; (b) report any 

instance of non-compliance 

immediately to the Department’s Office 

of Exemption Determinations; (c) 

monitor the transactions covered by the 

exemption on a continuing basis, to 

ensure the transactions remain in the 

interest of the Plan; and (d) take all 

appropriate actions to safeguard the 

interests of the Plan and its participants 

and beneficiaries. Milliman must also 

review all contracts and agreements 

(and any renewal of such contracts) 

relevant to the captive reinsurance 

arrangement and exemption. 

19. Additionally, Milliman must file 

annual certified reports to the 

Department, under penalty of perjury, 

confirming that all of the terms and 

conditions of the exemption have been 

met and explaining the bases for that 

conclusion. 

20. In the initial year of this proposed 

transaction, there will be an immediate 

and objectively determined benefit in 

the form of reduced employee 

contributions for the Dental Component 

of the Plan in the amount of $375,000. 

Milliman must ensure that all 

participants in the Plan’s Dental 

Component will receive: The premium 

savings they are entitled to under the 

exemption; and the full amount of any 

other benefit Comcast receives from the 

proposed arrangement. The Department 

retains the right to propose a revocation 

or amendment to this exemption if it is 

unable to confirm the reliability of the 

underlying financial data supporting the 

Independent Fiduciary’s ‘‘look-back’’ 

findings. The Department notes that its 

failure to revoke an exemption is not an 

endorsement or conclusion that the 

conditions of the exemption are, in fact, 

met. 

21. In addition to the protections and 

conditions discussed above, this 

proposed exemption requires, and 

Milliman must verify that: (a) Neither 

the Plan nor any plan participant pays 

any commissions with respect to the 

direct insurance agreement between 

Comcast and Prudential and the 

reinsurance agreement between 

Prudential and One Belmont; (b) the 

formula used by Prudential, or any 

successor insurer, to calculate 

premiums will be similar to the formula 

used by other insurers providing 

comparable coverage under similar 

programs that are not captive reinsured; 

(c) the premium charged to the Life 

Insurance Component will be 

reasonable and comparable to the 

premiums charged by the insurer and its 

competitors with the same or a better 

financial strength rating providing the 

same coverage under comparable 

insurance programs that are not captive 

reinsured; (d) the Life Insurance 

Component will only contract with 

insurers with a financial strength rating 

of ‘‘A’’ or better from A. M. Best; (e) the 

Plan pays no more than adequate 

consideration with respect to insurance 

that is part of the captive reinsurance 

arrangement covered by the proposed 

exemption and (f) the captive 

reinsurance arrangement between the 

insurer and One Belmont will be 

indemnity reinsurance only (i.e., the 

Fronting Insurer will not be relieved of 

any liability to the Plan should the 

reinsurer be unable or unwilling for any 

reason to cover any liability arising from 

the reinsurance arrangement). 

22. This proposed exemption 

expressly prohibits Comcast (or a 

related entity) from using any 

participant-related data or information 

that is generated by (or derived from) 

the proposed captive reinsurance 

arrangement in any manner that benefits 

Comcast or a related entity. Comcast 

may not reduce or offset any benefits 

provided to Plan participants and 

beneficiaries in connection with its 

implementation of the proposed captive 

reinsurance arrangement. Further, all 

expenses associated with the exemption 

and the exemption application, 

including any payment to the 

Independent Fiduciary, must be paid by 

Comcast and not the Plan. 

The Department’s Findings 

23. The Department has the authority 

under ERISA section 408(a) to grant an 

exemption from the prohibition 

transaction provisions of ERISA section 

406 if the Department finds that the 

transaction is in the interest and 

protective of the rights of the affected 

plan and its participants and 

beneficiaries, and is administratively 

feasible.20 The Department’s findings 

required under ERISA section 408(a) 

with respect the proposed captive 

reinsurance arrangement are discussed 

below. 

24. The Proposed Exemption is 

‘‘Administratively Feasible.’’ The 

Department has tentatively determined 

that the proposed exemption would be 

administratively feasible, because the 

proposed captive reinsurance 

arrangement is subject to robust annual 

reviews by Milliman that must be filed 

with the Department’s Office of 

Exemption Determinations. 

25. The Proposed Exemption is ‘‘In 

the Interests of the Plan.’’ The 

Department has tentatively determined 

that the proposed exemption would be 

in the interest of the Plan because, 

among other things, 100% of the benefit 

to Comcast from the proposed captive 

reinsurance arrangement must be 

transferred to participants in the Plan’s 

Dental Component by reducing their 

premiums in an amount equal to any 

and all cost savings and benefits 

Comcast derives from the proposed 

captive reinsurance arrangement. At no 

point during the proposed captive 

reinsurance arrangement will the 

aggregate benefit to the Plan’s 

participants in the Dental Component be 

less than $375,000 per year, and 

Comcast may not contribute less than 

60% towards the premium for the Plan’s 

Dental Component after entering into 

the proposed reinsurance arrangement. 

26. The Proposed Exemption is 

‘‘Protective of the Plan.’’ The 

Department has tentatively determined 

that the proposed exemption is 

52220 Federal Register / Vol. 86, No. 179 / Monday, September 20, 2021 / Notices 

protective of the rights of the Plan 

participants and beneficiaries because, 

among other things: (a) The premium 

charged to the Life Insurance 

Component will be reasonable and 

comparable to the premiums charged by 

the insurer and its competitors with the 

same or a better financial strength rating 

providing the same coverage under 

comparable insurance programs that are 

not captive reinsured; (b) the Life 

Insurance Component will only contract 

with insurers with a financial strength 

rating of ‘‘A’’ or better from A. M. Best; 

(c) the Plan pays no more than adequate 

consideration with respect to insurance 

that is part of the captive reinsurance 

arrangement covered by the proposed 

exemption; and (d) the reinsurance 

arrangement between the insurer and 

One Belmont will be indemnity 

reinsurance only (i.e., the Fronting 

Insurer will not be relieved of any 

liability to the Plan should the reinsurer 

become unable or unwilling for any 

reason to cover any liability arising from 

the reinsurance arrangement). 

Summary 

27. Based on Comcast satisfying the 

conditions described above, the 

Department has tentatively determined 

that the relief sought by Comcast 

satisfies the statutory requirements for 

an exemption under ERISA section 

408(a). 

Proposed Exemption 

The relief described in Section II of 

this proposed exemption is conditioned 

upon adherence to the material facts 

and representations described herein 

and as presented to the Department by 

Comcast, as well as satisfaction of the 

Definitions in Section I and the 

Conditions in Section III. 

Section I. Definitions 

(a) An ‘‘affiliate’’ of Comcast or One 

Belmont includes: (1) Any person who 

controls the person or is controlled by 

or under common control with Comcast 

or One Belmont; (2) Any officer, 

director, employee, relative, or partner 

in Comcast or One Belmont; and (3) Any 

corporation or partnership of which the 

person in (2) of this paragraph is an 

officer, director, partner, or employee; 

(b) The term ‘‘control’’ means the 

power to exercise a controlling 

influence over the management or 

policies of a person other than an 

individual; 

(c) The term ‘‘Independent Fiduciary’’ 

means a person who: 

(1) Is not an affiliate of Comcast or 

One Belmont and does not hold an 

ownership interest in Comcast or One 

Belmont or their affiliates; 

(2) Is not a fiduciary with respect to 

the Plan before its appointment to serve 

as the Independent Fiduciary; 

(3) Has acknowledged in writing that 

it: 

(i) Is a fiduciary with respect to the 

plan and has agreed not to participate in 

any decision regarding any transaction 

in which it has an interest that might 

affect its best judgment as a fiduciary; 

and 

(ii) has appropriate technical training 

or experience to perform the services 

contemplated by the exemption; 

(4) has not entered into any agreement 

or instrument that violates the 

prohibitions on exculpatory provisions 

in ERISA section 410 or the 

Department’s regulation relating to 

indemnification of fiduciaries at 29 CFR 

2509.75–4. 

(5) For purposes of this definition, no 

organization or individual may serve as 

Independent Fiduciary for any fiscal 

year if the gross income received by 

such organization or individual from 

Comcast, One Belmont or their affiliates 

for that fiscal year exceeds two percent 

(2%) of such organization’s or 

individual’s gross income from all 

sources for the prior fiscal year. This 

provision also applies to a partnership 

or corporation of which such 

organization or individual is an officer, 

director, or 10 percent (10%) or more 

partner or shareholder, and includes as 

gross income amounts received as 

compensation for services provided as 

an independent fiduciary under any 

prohibited transaction exemption 

granted by the Department; and 

(6) No organization or individual that 

is an Independent Fiduciary and no 

partnership or corporation of which 

such organization or individual is an 

officer, director or ten percent (10%) or 

more partner or shareholder may 

acquire any property from, sell any 

property to, or borrow any funds from 

Comcast or One Belmont or their 

affiliates while serving as an 

Independent Fiduciary. This prohibition 

will continue for a period of six months 

after: The party ceases to be an 

Independent Fiduciary; and/or the 

Independent Fiduciary negotiates any 

transaction on behalf of the Plan during 

the period that the organization or 

individual serves as an Independent 

Fiduciary. 

Section II: Covered Transactions 

If this proposed exemption is granted, 

the restrictions of ERISA sections 

406(a)(1)(D) and 406(b)(1) will not apply 

to the reinsurance of risks and the 

receipt of premiums therefrom by One 

Belmont Insurance Company, an 

affiliate of Comcast Corporation 

(Comcast), in connection with insurance 

contracts sold by Prudential Insurance 

Company (Prudential), or any successor 

fronting insurer meeting the 

requirements of this proposed 

exemption (a Fronting Insurer), to 

provide group term life insurance 

benefits to participants in the life 

insurance component (the Life 

Insurance Component) of the Comcast 

Corporation Comprehensive Health and 

Welfare Benefit Plan (the Plan). 

Section III. Conditions 

(a) In the initial year and each 

subsequent year of the captive 

reinsurance arrangement, the 

participants’ portion of the premium for 

the dental component of the Plan (the 

Dental Component) must be reduced by 

at least $375,000. If Comcast’s savings 

from the captive reinsurance 

arrangement are greater than $375,000 

in any year, Comcast must reduce the 

participants’ portion of the Dental 

Component’s premium by that greater 

amount in the next subsequent year. If 

Comcast or any of its affiliates 

ultimately receive some other benefit in 

connection with the captive insurance 

arrangement, such as a tax reduction or 

a profit or any benefit arising from a 

further diversification of One Belmont’s 

risks in connection with adding the 

Insurance Component’s risks to One 

Belmont’s other risks, participants in 

the Dental Component must receive an 

additional corresponding dollar-fordollar reduction to their portion of the 

Dental Component’s premiums in the 

subsequent year. 

(b) No commissions are paid by the 

Plan with respect to the direct sale of 

such contracts or the reinsurance 

thereof; 

(c) In the initial year and in 

subsequent years of coverage provided 

by a Fronting Insurer, the formulae used 

by the Fronting Insurer to calculate 

premiums will be similar to formulae 

used by other insurers providing 

comparable life insurance coverage 

under similar programs that are not 

captive reinsured. Furthermore, the 

premium charges calculated in 

accordance with the formulae will be 

reasonable and will be comparable to 

the premiums charged by the Fronting 

Insurer and its competitors with the 

same or a better financial strength rating 

providing the same coverage under 

comparable programs that are not 

captive reinsured; 

(d) Comcast is solely and fully 

responsible for funding One Belmont’s 

reserves with respect to the reinsurance 

arrangement covered by this proposed 

exemption; 

(e) One Belmont: 

Federal Register / Vol. 86, No. 179 / Monday, September 20, 2021 / Notices 52221 

(1) Is a party in interest with respect 

to the Plan by reason of a stock or 

partnership affiliation with Comcast 

that is described in ERISA section 

3(14)(E) or (G); 

(2) Is licensed to sell insurance or 

conduct reinsurance operations in at 

least one State as such term is defined 

in ERISA section 3(10); 

(3) Has obtained a Certificate of 

Authority from the state of Vermont, its 

domiciliary state, that has neither been 

revoked nor suspended; 

(4) (A) Has undergone and shall 

continue to undergo an examination by 

an independent certified public 

accountant for its last completed taxable 

year immediately before the taxable year 

of the reinsurance transaction covered 

by this exemption; or 

(B) Has undergone a financial 

examination (within the meaning of the 

law of Vermont) by the Commissioner of 

Banking, Insurance, Securities and 

Health Care Administration of the State 

of Vermont within five (5) years before 

the end of the year preceding the year 

in which the reinsurance transaction 

occurred; and 

(5) Is licensed to conduct reinsurance 

transactions under Vermont law, which 

requires an actuarial review of reserves 

to be conducted annually by an 

independent firm of actuaries and 

reported to the appropriate regulatory 

authority; 

(f) The Plan retained and will 

continue to retain an independent, 

qualified fiduciary or successor to such 

fiduciary, as defined in Section I(c), (the 

Independent Fiduciary) to analyze the 

transactions covered by this proposed 

exemption, and render an opinion that 

the requirements of this exemption have 

been satisfied; 

(g) The Independent Fiduciary must, 

in full accordance with its obligations of 

prudence and loyalty under ERISA 

sections 404(a)(1)(A) and (B), review the 

terms of the exemption, engage in a 

prudent and loyal analysis of the 

covered transactions, and verify that 

based on its review of all relevant 

documents and evidence, it has 

concluded that all of the exemption’s 

terms and conditions have been met (or 

can be reasonably be expected to be met 

consistent with the time requirements 

set forth in this proposed exemption). 

This conclusion must be documented in 

a written report submitted to the 

Department’s Office of Exemption 

Determinations at least 30 days before 

the Plan engages in a transaction 

covered by the exemption. The report 

must include copies of each document 

relied on by the Independent Fiduciary 

and discuss the bases for its conclusion; 

(3) Monitor, enforce and ensure 

compliance with all conditions of this 

exemption, including all conditions and 

obligations imposed on any party 

dealing with the Plan, throughout the 

period during which One Belmont’s 

assets are directly or indirectly used in 

connection with a transaction covered 

by this exemption; 

(4) Report any instance of noncompliance immediately to the 

Department’s Office of Exemption 

Determinations; 

(5) Monitor the transactions described 

in the exemption on a continuing basis, 

to ensure the transactions remain in the 

interest of the Plan; 

(6) Take all appropriate actions to 

safeguard the interests of the Plan; 

(7) Review all contracts pertaining to 

the Reinsurance Arrangement, and any 

renewals of such contracts, to determine 

whether the requirements of this 

proposed exemption continue to be 

satisfied; 

(8) Determine that the Reinsurance 

Arrangement is in no way detrimental to 

the Plan and its participants and 

beneficiaries; 

(9) Confirm that the Plan’s Dental 

Component has received all the 

financial benefits and cost savings 

associated with the proposed captive 

reinsurance arrangement that otherwise 

would have been retained by Comcast or 

a party related to Comcast; 

(10) Provide an annual report to the 

Department, under penalty of perjury, 

certifying that each term and condition 

of this exemption is satisfied and setting 

forth the bases for the certification. Each 

report must be: (i) Completed within six 

months after the end of the twelve 

month period to which it relates (the 

first twelve month period begins on the 

first day of the implementation of the 

captive reinsurance arrangement 

covered by this proposed exemption); 

and (ii) submitted to the Department 

within six months thereafter; 

(h) Comcast and its related parties 

have not, and will not, indemnify the 

Independent Fiduciary, in whole or in 

part, for negligence and/or for any 

violations of state or federal law that 

may be attributable to the Independent 

Fiduciary in performing its duties under 

the captive reinsurance arrangement. In 

addition, no contract or instrument will 

purport to waive any liability under 

state or federal law for any such 

violations. 

(i) Neither Comcast nor a related 

entity may use participant-related data 

or information generated by, or derived 

from, the Reinsurance Arrangement, in 

a manner that benefits Comcast or a 

related entity; 

(j) All the facts and representations set 

forth in the Summary of Facts and 

Representation are true and accurate; 

(k) Comcast will not offset or reduce 

any benefits provided to Plan 

participants and beneficiaries in 

connection with its implementation of 

the captive reinsurance arrangement; 

(l) The Plan will only contract with a 

Fronting Insurer with a financial 

strength rating of ‘‘A’’ or better from 

A.M. Best; 

(m) The Plan pays no more than 

adequate consideration with respect to 

insurance that is part of the captive 

reinsurance arrangement covered by the 

proposed exemption; 

(n) In the event a successor 

Independent Fiduciary is appointed to 

represent the interests of the Plan with 

respect to the subject transaction, no 

time shall elapse between the 

resignation or termination of the former 

Independent Fiduciary and the 

appointment of the successor 

Independent Fiduciary; and 

(o) All expenses associated with the 

exemption and the exemption 

application, including any payment to 

the Independent Fiduciary, must be 

paid by Comcast and not the Plan. 

Effective Date: The proposed 

exemption is effective as of the date a 

final exemption is published in the 

Federal Register. 

Notice to Interested Persons 

Persons who may be interested in the 

publication of this notice in the Federal 

Register include Plan participants and 

beneficiaries. The Applicants will 

provide notification to such interested 

persons by electronic and first-class 

mail within fifteen (15) calendar days 

after the date the Notice is published in 

the Federal Register. Such mailing will 

contain a copy of the Notice as it 

appears in the Federal Register on the 

publication date and a copy of the 

Supplemental Statement required by 29 

CFR 2570.43(b)(2) that advises 

interested persons of their right to 

comment on the proposed exemption 

and request a hearing. 

The Department must receive all 

written comments and requests for a 

hearing no later than forty-five (45) days 

after publication date of the date of the 

Notice in the Federal Register. 

All comments will be made available 

to the public. 

Warning: Please do not include any 

personally identifiable information 

(such as your name, address, or other 

contact information) or confidential 

business information that you do not 

want publicly disclosed. All comments 

may be posted on the internet and are 

52222 Federal Register / Vol. 86, No. 179 / Monday, September 20, 2021 / Notices 

retrievable by most internet search 

engines. 

Further Information Contact: Blessed 

Chuksorji-Keefe of the Department, 

telephone (202) 693–8567 (This is not a 

toll-free number.) 

General Information 

The attention of interested persons is 

directed to the following: 

(1) The fact that a transaction is the 

subject of an exemption under section 

408(a) of the Act and/or section 

4975(c)(2) of the Code does not relieve 

a fiduciary or other party in interest or 

disqualified person from certain other 

provisions of the Act and/or the Code, 

including any prohibited transaction 

provisions to which the exemption does 

not apply and the general fiduciary 

responsibility provisions of section 404 

of the Act, which, among other things, 

require a fiduciary to discharge his 

duties respecting the plan solely in the 

interest of the participants and 

beneficiaries of the plan and in a 

prudent fashion in accordance with 

section 404(a)(1)(b) of the Act; nor does 

it affect the requirement of section 

401(a) of the Code that the plan must 

operate for the exclusive benefit of the 

employees of the employer maintaining 

the plan and their beneficiaries; 

(2) Before an exemption may be 

granted under section 408(a) of the Act 

and/or section 4975(c)(2) of the Code, 

the Department must find that the 

exemption is administratively feasible, 

in the interests of the plan and of its 

participants and beneficiaries, and 

protective of the rights of participants 

and beneficiaries of the plan; 

(3) The proposed exemptions, if 

granted, will be supplemental to, and 

not in derogation of, any other 

provisions of the Act and/or the Code, 

including statutory or administrative 

exemptions and transitional rules. 

Furthermore, the fact that a transaction 

is subject to an administrative or 

statutory exemption is not dispositive of 

whether the transaction is in fact a 

prohibited transaction; and 

(4) The proposed exemptions, if 

granted, will be subject to the express 

condition that the material facts and 

representations contained in each 

application are true and complete, and 

that each application accurately 

describes all material terms of the 

transaction which is the subject of the 

exemption. 

Signed at Washington, DC. 

G. Christopher Cosby, 

Acting Director, Office of Exemption 

Determinations, Employee Benefits Security 

Administration, U.S. Department of Labor. 

[FR Doc. 2021–20237 Filed 9–17–21; 8:45 am] 

BILLING CODE 4510–29–P 

DEPARTMENT OF LABOR 

Employment and Training 

Administration 

Notice of a Change in Status of the 

Extended Benefit (EB) Program for 

New Mexico 

AGENCY: Employment and Training 

Administration, Labor. 

ACTION: Notice. 

This notice announces a change in 

benefit period eligibility under the EB 

program that has occurred since the 

publication of the last notice regarding 

the States’ EB status: 

• The beginning date for New 

Mexico’s High Unemployment Period 

(HUP) was July 4, 2021, and statutorily 

once a state begins a HUP it must 

remain ‘‘on’’ for 13-weeks. During the 

mandatory 13-week ‘‘on’’ period, the 

Bureau of Labor Statistics released data 

which showed the seasonally-adjusted 

total unemployment rate for New 

Mexico falling below the 8.0 percent 

threshold necessary to remain ‘‘on’’ a 

HUP in EB. As such, the HUP for New 

Mexico will end on October 2, 2021 and 

beginning October 3, 2021, the 

maximum potential entitlement for 

claimants in EB in New Mexico will 

decrease from 20 weeks to 13 weeks. 

The trigger notice covering state 

eligibility for the EB program can be 

found at: http://ows.doleta.gov/ 

unemploy/claims_arch.as. 

Information for Claimants 

The duration of benefits payable in 

the EB program, and the terms and 

conditions on which they are payable, 

are governed by the Federal-State 

Extended Unemployment Compensation 

Act of 1970, as amended, and the 

operating instructions issued to the 

states by the U.S. Department of Labor. 

In the case of a state beginning an EB 

period, the State Workforce Agency will 

furnish a written notice of potential 

entitlement to each individual who has 

exhausted all rights to regular benefits 

and is potentially eligible for EB (20 

CFR 615.13 (c) (1)). 

Persons who believe they may be 

entitled to EB, or who wish to inquire 

about their rights under the program, 

should contact their State Workforce 

Agency. 

FOR FURTHER INFORMATION CONTACT: U.S. 

Department of Labor, Employment and 

Training Administration, Office of 

Unemployment Insurance Room S– 

4524, Attn: Thomas Stengle, 200 

Constitution Avenue NW, Washington, 

DC 20210, telephone number (202) 693– 

2991 (this is not a toll-free number) or 

by email: Stengle.Thomas@dol.gov. 

Signed in Washington, DC. 

Lenita Jacobs-Simmons, 

Acting Assistant Secretary, Labor. 

[FR Doc. 2021–20238 Filed 9–17–21; 8:45 am] 

BILLING CODE 4510–FW–P 

DEPARTMENT OF LABOR 

Employment and Training 

Administration 

Notice of a Change in Status of the 

Extended Benefit (EB) Program for the 

District of Columbia 

AGENCY: Employment and Training 

Administration, Labor. 

ACTION: Notice. 

This notice announces a change in 

benefit period eligibility under the EB 

program that has occurred since the 

publication of the last notice regarding 

the District of Columbia’s EB status: 

• Based in the language in the 

District’s law which conditioned the 

applicability of the Total 

Unemployment Rate (TUR) trigger on 

full Federal funding resulted in an ‘‘off’’ 

indicator for the District of Columbia for 

the week ending August 21, 2021. This 

will end any payable period associated 

with the TUR trigger for the District of 

Columbia on September 11, 2021. 

The trigger notice covering state 

eligibility for the EB program can be 

found at: http://ows.doleta.gov/ 

unemploy/claims_arch.as. 

Information for Claimants 

The duration of benefits payable in 

the EB program, and the terms and 

conditions on which they are payable, 

are governed by the Federal-State 

Extended Unemployment Compensation 

Act of 1970, as amended, and the 

operating instructions issued to the 

states by the U.S. Department of Labor. 

In the case of a state beginning an EB 

period, the State Workforce Agency will 

furnish a written notice of potential 

entitlement to each individual who has 

exhausted all rights to regular benefits 

and is potentially eligible for EB (20 

CFR 615.13(c)(1)). 

Persons who believe they may be 

entitled to EB, or who wish to inquire 

about their rights under the program,