7256 Federal Register / Vol. 60, No. 25 / Tuesday, February 7, 1995 / Notices

9 15 U.S.C. 78f(b)(5) (1982).

10 15 U.S.C. 78s(b)(2) (1982).

11 17 CFR 200.30–3(a)(12) (1994).

1Applicants have agreed to amend this

application during the notice period to reflect that

the future contracts and contracts issued by future

separate accounts relying on the exemptive relief

requested here shall be materially similar to the

Contracts.

II. Discussion

The Commission finds that the

proposed rule change is consistent with

the requirements of the Act and the

rules and regulations thereunder

applicable to a national securities

exchange, and, in particular, the

requirements of Section 6(b)(5).9 In

particular, the Commission believes the

proposal is consistent with the Section

6(b)(5) requirement that the rules of an

exchange be designed to promote just

and equitable principles of trade and

not to permit unfair discrimination

between customers, issuers, brokers,

and dealers.

The Commission believes that

allowing inter-currency spread orders to

attain spread priority is appropriate for

several reasons. First, because the FCO

market is dominated by institutional

and corporate investors, the preemption

of public customer limit orders (a

concern of the Commission in the

context of equity and index options), is

unlikely. In this regard, the Commission

notes that the proposed changes are

applicable solely to the FCO market,

which is dominated by institutions and

sophisticated corporate investors. This

is in part due to the complex nature of

the instruments and the tremendous

size of the underlying currency markets.

Second, because inter-currency

spreads are currently executed as

contingency orders, and therefore more

susceptible to non-execution, the

Commission believes granting priority

to such orders will facilitate their

execution and, therefore, may lead to

more efficient quotes and tighter

spreads.

Third, the priority principles

applicable to inter-currency spreads

mirror the priority rules currently in

place for regular FCO spread orders. As

a result, an inter-currency spread may

be executed at a total net credit/debit

with one other participant, provided at

least one leg of the spread is executed

at a better price than the established bid

or offer for that contract and that no

option leg is executed at a price outside

of the established bid or offer for that

option contract. Accordingly, the

Commission believes that this change

will allow institutional and corporate

investors to better utilize sophisticated

trading techniques involving FCOs for

hedging and risk management purposes

without altering the existing priority

principles.

Finally, because the proposed

definition limits an inter-currency

spread to a maximum of two foreign

currencies, the Commission notes that

the logistical problems and confusion

attendant to the execution of orders

involving three or more foreign

currencies will be avoided.

It therefore is ordered, pursuant to

Section 19(b)(2) of the Act,10 that the

proposed rule change (SR–Phlx–94–23)

is approved.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.11

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 95–2908 Filed 2–6–95; 8:45 am]

BILLING CODE 8010–01–M

[Rel. No. IC–20875; File No. 812–9142]

First SunAmerica Life Insurance

Company, et al.

February 1, 1995.

AGENCY: Securities and Exchange

Commission (‘‘SEC’’ or the

‘‘Commission’’).

ACTION: Notice of application for an

order under the Investment Company

Act of 1940 (‘‘1940 Act’’).

APPLICANTS: First SunAmerica Life

Insurance Company (‘‘First

SunAmerica’’), FS Variable Annuity

Account Two (‘‘Separate Account’’), and

Vista Broker-Dealer Services, Inc.

(‘‘Vista’’).

RELEVANT 1940 ACT SECTIONS: Order

requested under Section 6(c) of the 1940

Act for exemptions from Sections 26(a)

and 27(c)(2) thereof.

SUMMARY OF APPLICATION: Applicants

seek an order to permit the deduction of

mortality, expense risk, and distribution

expense charges from the assets of the

Separate Account under certain variable

annuity contracts (‘‘Contracts’’) funded

through the Separate Account and

under materially similar contracts

(‘‘future contracts’’) funded in the future

through the Separate Account, and from

the assets of any other separate account

(‘‘future separate accounts’’) established

in the future by First SunAmerica in

connection with the issuance of

contracts that are materially similar to

the Contracts. 1

FILING DATE: The Application was filed

on August 3, 1994, and amended on

November 22, 1994, and December 20,

1994.

HEARING OR NOTIFICATION OF HEARING: An

order granting the application will be

issued unless the Commission orders a

hearing. Interested persons may request

a hearing on the application by writing

to the Secretary of the Commission and

serving the Applicants with a copy of

the request, personally or by mail.

Hearing requests must be received by

the SEC by 5:30 p.m. on February 27,

1995, and should be accompanied by

proof of service on the Applicants in the

form of an affidavit or, for lawyers, a

certificate of service. Hearing requests

should state the nature of the writer’s

interest, the reason for the request, and

the issues contested. Persons may

request notification of a hearing by

writing to the Secretary of the

Commission.

ADDRESSES: Secretary, SEC, 450 Fifth

Street, NW., Washington, DC 20549.

Applicants c/o Mark J. Mackey, Esq.,

Routier, Mackey and Johnson, P.C., 1700

K Street, NW., Suite 1003, Washington,

DC 20006.

FOR FURTHER INFORMATION CONTACT:

Patrice M. Pitts, Attorney, or Wendy

Finck Friedlander, Deputy Chief, Office

of Insurance Products, Division of

Investment Management, at (202) 942–

0670.

SUPPLEMENTARY INFORMATION: Following

is a summary of the application. The

complete application is available for a

fee from the Public Reference Branch of

the Commission.

Applicants’ Representations

1. First SunAmerica is a stock life

insurance company organized under the

laws of the State of New York. On May

24, 1994, First SunAmerica established

the Separate Account to fund variable

annuity contracts. The Separate

Account is registered under the 1940

Act as a unit investment trust. The

Separate Account and each of its

portfolios are administered and

accounted for as part of the general

business for First SunAmerica, but the

income, gains and losses of each

portfolio are credited to or charged

against the assets held in that portfolio

in accordance with the terms of the

Contracts, without regard to other

income, gains and losses of any other

portfolio or arising out of any other

business First SunAmerica may

conduct.

2. Vista is a broker-dealer registered

under the Securities Exchange Act of

1934, and is the distributor for the

Contracts.

3. The Contracts provide for

accumulation of contract values and

payments of annuity benefits on a fixed

and variable basis. The Contracts are
Federal Register / Vol. 60, No. 25 / Tuesday, February 7, 1995 / Notices 7257

available for retirement plans that do

not qualify for the special federal tax

advantages available under the Internal

Revenue Code (‘‘non-qualified plans’’)

and for retirement plans that do qualify

for the federal tax advantages available

under the Internal Revenue Code

(‘‘qualified plans’’). Purchase payments

under the Contracts may be made to the

general account of First SunAmerica

under the Contract’s fixed account

option (‘‘Fixed Account’’), to the

Separate Account, or allocated among

them. The minimum initial purchase

payment for a Contract is $5,000 for

non-qualified plans ($2,000 for qualified

plans). Additional purchase payments

may be made in amounts of at least $250

($100 in the case of an automatic

payment plan).

4. Initially, the Contracts will be

funded through six portfolios of the

Separate Account. Each portfolio invests

in assets in the shares of one of six

available series of Mutual Fund Variable

Annuity Trust (‘‘Trust’’): the Growth

and Income Portfolio; the Capital

Growth Portfolio; the International

Equity Portfolio; the Assist Allocation

Portfolio; the U.S. Treasury Income

Portfolio; and the Money Market

Portfolio. The Trust is register under the

1940 Act as a diversified, open-end,

management investment company.

Additional underlying funds may

become available in the future.

5. If the Contract owner dies during

the accumulation period, a death benefit

will be payable to the beneficiary upon

receipt by First SunAmercia of due

proof of death. The death benefit is

reduced by the premium tax incurred by

First SunAmerica, if any. If the Contract

owner is younger than age 70 at the date

of Contract issue, the death benefit is

equal to the greatest of: (i) The total

dollar amount of purchase payments

made prior to the death of the Contract

owner, reduced by any partial

withdrawals and partial annuitizations;

(ii) the Contract value at the end of the

valuation period during which due

proof of death (and an election of the

type of payment to the beneficiary) is

received by First SunAmerica; or (iii)

the Contract value at that anniversary of

the Contract issue date preceding the

date of death—increased by any

purchase payments made and reduced

by any partial withdrawals and partial

annuitizations since that anniversary—

which yields the greatest result. If the

Contract owner was at least age 70 on

the Contract issue date, the death

benefit will equal (ii) above.

6. An annual contract administration

charge of $30 is charged against each

Contract. The amount of this charge is

guaranteed and cannot be increased.

This charge reimburses First

SunAmerica for expenses incurred in

establishing and maintaining records

relating to a Contract. The contract

administration charge will be assessed

on each anniversary of the Contract date

that occurs on or prior to the annuity

date. In the event that a total surrender

of Contract value is made, the charge

will be assessed as of the date of

surrender without proration. This

charge is not assessed during the

annuity period. The contract

administration charge is at cost with no

margin included for profit.

7. During the accumulation period,

amounts allocated to the Separate

Account may be transferred among the

portfolios and/or the Fixed Account.

Both before and after the annuity date,

Contract values may be transferred from

the Separate Account to the Fixed

Account. The first fifteen transactions

effecting such transfers in any Contract

year are permitted without the

imposition of a transfer fee. A transfer

fee of $25 is assessed on the sixteenth

and each subsequent transaction within

the Contract year. This fee will be

deducted from Contract values that

remain in the portfolio (or, where

applicable, the Fixed Account) from

which the transfer was made. If such

remaining Contract value is insufficient

to pay the transfer fee, then the fee will

be deducted from transferred Contract

values. The transfer is at cost with no

anticipation of profit.

8. Although there is a free withdrawal

amount that applies to the first

withdrawal during a contract year after

the first, a contingent deferred sales

charge (the ‘‘Withdrawal Charge’’) may

be imposed upon certain withdrawals.

Withdrawal Charges will vary in

amount depending upon the

contribution year of the purchase

payment at the time of withdrawal. The

Withdrawal Charge is deducted from

remaining Contract value so that the

actual reduction in Contract value as a

result of the withdrawal will be greater

than the withdrawal amount requested

and paid. So that all withdrawals are

allocated to purchase payments to

which the lowest Withdrawal Charge (if

any) applies, withdrawals will be

allocated first to investment income, if

any, which generally may be withdrawn

free of Withdrawal Charge, and then to

purchase payments on a first-in, firstout basis.

9. Earnings in a Contract owner’s

account, and purchase payments no

longer subject to the Withdrawal

Charge, may be withdrawn at any time

free of the Withdrawal Charge. There

also may be a free withdrawal amount

for the first withdrawal during a

Contract year after the first Contract

year. The additional free withdrawal

amount is equal to 10% of purchase

payments made more than one year

before the date of withdrawal that

remain subject to the Withdrawal

Charge and that have not previously

been withdrawn, less earnings in the

Contract owner’s account.

10. Any amounts withdrawn that

exceed the limits described about may

be subject to a Withdrawal Charge in

accordance with the table shown below.

WITHDRAWAL CHARGE TABLE

Contribution year 2

Applicable

withdrawal

charge

percentage

Zero .......................................... 6

First ........................................... 6

Second ...................................... 5

Third .......................................... 4

Fourth ....................................... 3

Fifth ........................................... 2

Sixth .......................................... 1

Seventh and later ..................... 0

2Applicants represent that, with respect to a

given purchase payment, a contribution year is

a year starting from the date of the purchase

payment in one calender year and ending on

the anniversary of such date in the succeeding

calendar years. The contribution year in which

a purchase payment is made is ‘‘contribution

year zero,’’ and subsequent contribution years

are successively numbered.

The Withdrawal Charge may be

reduced or waived in certain

circumstances, as described in the

prospectus for the Contracts.

11. First SunAmerica deducts a

distribution expense charge from each

portfolio of the Separate Account during

each valuation period that is equal, on

an annual basis, to 0.15% of the net

asset value of each portfolio. This

charge is designed to compensate First

SunAmerica for assuming the risk that

the cost of distributing the Contracts

will exceed the revenues from the

Withdrawal Charge. In no event will

this charge be increased. The

distribution expense charge is assessed

during both the accumulation period

and the annuity period; it is not applied

to Contract values allocated to the Fixed

Account.

12. Annuity payments will not be

affected by the mortality experience

(death rate) of (i) persons receiving such

payments or (ii) the general population.

The annuity rates may not be changed

under the Contract. First SunAmerica

deducts a mortality risk charge from the

Separate Account for assuming the risks

that: (i) The life expectancy of an

annuitant will be greater than that

assumed in the guaranteed annuity

purchase rates; (ii) the Withdrawal
7258 Federal Register / Vol. 60, No. 25 / Tuesday, February 7, 1995 / Notices

Charge may be waived in the event of

the death of the owner; and (iii) the

death benefit must be provided before

the annuity date. The charge is

deducted from each portfolio of the

Separate Account during each valuation

period at an annual rate of 0.90% of the

net asset value of each portfolio. If the

mortality risk charge is insufficient to

cover the actual costs of assuming the

mortality risks, First SunAmerica will

bear the loss; if the charge proves more

than sufficient, the excess will be a gain

to First SunAmerica. To the extent First

SunAmerica realizes any gain, those

amounts may be used at its discretion—

including to offset losses experienced

when the mortality risk charge is

insufficient. The mortality risk charge

may not be increased under the

Contract.

13. First SunAmerica bears the risk

that the contract administration charge

will be insufficient to cover the cost of

administering the Contracts. For

assuming this expense risk, First

SunAmerica deducts an expense risk

charge form the Separate Account

during each valuation period at an

annual rate of 0.35% of the net asset

value of each portfolio. If the expense

risk charge is insufficient to cover the

actual cost of administering the

Contracts, First SunAmerica will bear

the loss; if the charge is more than

sufficient, the excess will be a gain to

First SunAmerica. To the extent First

SunAmerica realizes any gain, those

amounts may be used at its discretion—

including to offset losses when the

expense risk charge is insufficient. The

expense risk charge may not be

increased under the Contract.

14. Applicants represent that the

aggregate amount of any Withdrawal

Charges imposed and distribution

expense charges paid will never exceed

9% of purchase payments previously

made, and that First SunAmerica will

monitor each owner’s account for the

purpose of ensuring that this limitation

is not exceeded. Applicants undertake

to include in the prospectus forming

part of the registration statement for the

Contracts statements describing the

purpose of the distribution expense

charge, and statements that the staff of

the Commission deems such charge to

constitute a deferred sales charge.

Applicants undertake to abide by the

representations and undertaking set

forth in this paragraph relating to the

distribution expense charge in

connection with any future contracts, as

well as materially similar contracts

funded through future separate

accounts, relying on the requested

order.

Applicants’ Legal Analysis

1. Applicants hereby request that the

Commission, under Section 6(c) of the

1940 Act, grant exemptions from

Section 26(a)(2) and 27(a)(2) thereof to

the extent necessary to permit the

deduction of mortality and expense risk

charges and a distribution expense

charge: (i) From the Separate Account

under the Contracts and under any

future contracts; and (ii) from the assets

of any future separate accounts which

offer contracts materially similar to the

Contracts.

2. Pursuant to Section 6(c) of the Act,

the Commission may, by order upon

application, conditionally or

unconditionally exempt any person,

security, or transaction, or any class or

classes of persons, securities or

transactions, from any provision or

provisions of the 1940 Act or from any

rule or regulation thereunder, if and to

the extent that such exemption is

necessary or appropriate in the public

interest and consistent with the

protection of investors and the purposes

fairly intended by the policy and

provisions of the 1940 Act.

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

1940 Act require, among other things,

that all payments received under a

periodic payment plan certificate sold

by a registered unit investment trust,

any depositor thereof or underwriter

therefor, be held by a qualified bank as

trustee or custodian, under

arrangements which prohibit any

payment to the depositor or principal

underwriter except for the payment of a

fee, not exceeding such reasonable

amount as the Commission may

prescribe, for bookkeeping and other

administrative services.

4. Applicants believe that extending

the requested relief to the future

contracts, as well as to materially

similar contracts funded through future

separate accounts, is appropriate in the

public interest and consistent with the

protection of investors and the purposes

fairly intended by the policy and

provisions of the 1940 Act. Applicants

submit that such an order would

promote competitiveness in the variable

annuity contract market by eliminating

the need for First SunAmerica to file

redundant exemptive applications,

thereby reducing First SunAmerica’s

administrative expenses and

maximizing the efficient use of First

SunAmerica’s resources. The delay and

expense involved in having to seek

exemptive relief repeatedly would

impair the First SunAmerica’s ability

effectively to take advantage of business

opportunities as they arise. Applicants

further submit that the requested relief

is consistent with the purposes of the

1940 Act and the protection of investors

for the same reasons. Applicants submit

that if First SunAmerica were required

repeatedly to seek exemptive relief with

respect to the issues addressed in this

application, investors would not receive

any benefit or additional protection

thereby.

5. Applicants assert that the aggregate

of the mortality and expense risk

charges, 1.25%, is reasonable in relation

to the risks assumed by First

SunAmerica under the Contracts and

reasonable in amount, as determined by

industry practice with respect to

comparable annuity products.

Applicants state that these

determinations are based on their

analysis of publicly available

information about similar industry

practices, taking into consideration such

factors as current charge levels and

benefits provided, the existence of

expense charge guarantees, and

guaranteed annuity rates. First

SunAmerica undertakes to maintain at

its home office, and make available to

the Commission upon request, a

memorandum detailing the

methodology used in making these

determinations.

6. Similarly, before relying on any

exemptive relief granted herein with

respect to any future contracts or any

materially similar contracts funded

through future separate accounts,

Applicants will determine that the

mortality and expense risk charges

under any such contracts will be

reasonable in relation to the risks

assumed by First SunAmerica and

reasonable in amount, as determined by

industry practice with respect to

comparable annuity products. First

SunAmerica will maintain at its home

office, and make available to the

Commission upon request, a

memorandum detailing the

methodology used in making these

determinations.

7. First SunAmerica submits that

there is a reasonable likelihood that the

Separate Account’s distribution

financing arrangement will benefit the

Separate Account and its investors. First

SunAmerica represents that it will

maintain and make available to the

Commission upon request a

memorandum setting forth the basis for

such conclusion. Similarly, before

relying on any exemptive relief granted

herein with respect to any future

contracts or to any materially similar

contracts issued by future separate

accounts, Applicants will determine

that there is a reasonable likelihood that

the distribution financing arrangement

will benefit the Separate Account (or
Federal Register / Vol. 60, No. 25 / Tuesday, February 7, 1995 / Notices 7259

future separate accounts) and its (or

their) investors. First SunAmerica will

maintain and make available to the

Commission upon request a

memorandum setting forth the basis for

such determination.

8. First SunAmerica further represents

that the assets of the Separate Account

and any future separate accounts that

rely on the requested order will be

invested only in management

investment companies that undertake,

in the event they should adopt a plan

for financing distribution expenses

pursuant to Rule 12b-1 under the 1940

Act, to have such plan formulated and

approved by their board of directors, the

majority of whom are not ‘‘interested

persons’’ of the management investment

company within the meaning of Section

2(a)(19) of the 1940 Act.

Conclusion

Applicants submit that for the reasons

and upon the facts set forth above, the

exemptions from Sections 26(a)(2) and

27(c)(2) of the 1940 Act to the extent

necessary to permit the deduction of

mortality, expense risk, and distribution

expense charges from the assets of the

Separate Account under the Contracts

and under any future contracts, and

from the assets of any future separate

accounts offering contracts which are

materially similar to the Contracts, meet

the statutory standards of Section 6(c) of

the 1940 Act. Accordingly, the

Applicants assert that the requested

exemptions are necessary or appropriate

in the public interest and consistent

with the protection of investors and the

purposes fairly intended by the policy

and provisions of the 1940 Act.

For the Commission, by the Division of

investment Management, pursuant to

delegated authority.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 95–2975 Filed 2–6–95; 8:45 am]

BILLING CODE 8010–01–M

[Rel. No. IC–20873; No. 812–8854]

Golden American Life Insurance

Company, et al.

January 31, 1995.

AGENCY: Securities and Exchange

Commission (‘‘SEC’’ or ‘‘Commission’’).

ACTION: Notice of Application for an

Order under the Investment Company

Act of 1940 (‘‘1940 Act’’).

APPLICANTS: Golden American Life

Insurance Company (‘‘Golden

American’’), Separate Account A of

Golden American (‘‘Account A’’), Any

Other Separate Account Established By

Golden American In The Future To

Support Variable Life Insurance

Contracts Issued by Golden American

(‘‘Future Accounts’’), and Directed

Services, Inc. (‘‘DSI’’).

RELEVANT 1940 ACT SECTIONS: Order

requested under section 6(c) granting

exemptions from the provisions of

Sections 26(a)(2)(C), 27(c)(1) and

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

paragraphs (b)(1), (b)(12)(i), (b)(13)(iv)

and (c)(4)(v) of Rule 6e–2 and of Rule

6e–3(T), and from Rule 22c–1

thereunder.

SUMMARY OF APPLICATION: Applicant

request an order that would permit them

to deduct a charge from premium

payments to compensate Golden

American for its increased federal tax

burden resulting from the application of

Section 848 of the Internal Revenue

Code of 1986, as amended, to the receipt

of such payments under certain variable

life insurance contracts. Applicants also

propose to deduct the charge on a

deferred basis from contract cash value,

with the balance of any unrecovered

amount being deducted upon surrender.

FILING DATE: The application was filed

on February 23, 1994.

HEARING OR NOTIFICATION OF HEARING: An

order granting the Application will be

issued unless the Commission orders a

hearing. Interested persons may request

a hearing by writing to the

Commission’s Secretary and serving

Applicants with a copy of the request,

personally or by mail. Hearing requests

should be received by the Commission

by 5:30 p.m. on February 27, 1995, and

should be accompanied by proof of

service on Applicants in the form of an

affidavit or, for lawyers, a certificate of

service. Hearing requests should state

the nature of the requestor’s interest, the

reason for the request, and the issues

contested. Persons may request

notification of a hearing by writing to

the Secretary of the Commission.

ADDRESSES: Secretary, Securities and

Exchange Commission, 450 5th Street,

NW., Washington, DC 20549.

Applicants: c/o Golden American, 280

Park Avenue, New York, New York

10017.

FOR FURTHER INFORMATION CONTACT:

Yvonne M. Hunold, Senior Counsel, or

Wendy F. Friedlander, Deputy Chief, at

(202) 942–0670, Office of Insurance

Products (Division of Investment

Management).

SUPPLEMENTARY INFORMATION: The

following is a summary of the

application; the complete application is

available for a fee from the

Commission’s Public Reference Branch.

Applicant’s Representations

1. Golden American is a stock life

insurance company and an indirect

subsidiary of Bankers Trust Company

(‘‘Bankers’’).

2. Account A is a separate account

established by Golden American and

registered under the 1940 Act as a unit

investment trust. Each of Account A’s

10 divisions invests in a corresponding

portfolio of The GCG Trust (‘‘GCG

Trust’’), a registered open-end

management company. Account A is,

and any Future Account will be, used to

fund certain variable life insurance

contracts issued by Golden American,

including the GoldenSelect VLI and

GoldenSelect VL10 Contracts

(‘‘Contracts’’). A registration statement

to register the Contracts under the

Securities Act of 1933 has been filed

with the Commission. Applicants state

that the Contracts will be issued in

reliance on the applicable provisions of

either Rule 6e–2 or Rule 6e–3(T).

3. DSI, the principal underwriter for

the Contracts, is an indirect whollyowned subsidiary of Bankers and an

affiliate of Golden American. DSI is a

registered broker-dealer under the

Securities Exchange Act of 1934 and a

member of the National Association of

Securities Dealers, Inc.

4. Applicants propose to deduct a

charge to reimburse Golden American

for the increase in its federal income

taxes resulting from the application of

Section 848 of the Internal Revenue

Code of 1986 (‘‘Code’’), as amended, to

the receipt of premium payments under

the Contracts. The charge will be

reasonably related to Golden American’s

increased federal tax burden. The charge

will be deducted either from (a)

premiums received, or (b) Contract cash

value on a deferred basis in a series of

equal periodic installments, with the

balance of any unrecovered amount to

be deducted upon early surrender of a

Contract. The deduction will be the

same notwithstanding the manner in

which it is deducted.

5. The Omnibus Budget

Reconciliation Act of 1990 (‘‘OBRA

1990’’), amending Section 848 of the

Code, requires life insurance companies

of capitalize and amortize over ten years

certain general expenses for the current

year. Prior law allowed these expenses

to be deducted in full from the current

year’s gross income. Section 848, as

amended, effectively accelerates the

realization of income from specified

contracts and, consequently, the

payment of taxes on that income. Taking

into account the time value of money,

Section 848 increases the insurance

company’s tax burden because the