12586 Federal Register / Vol. 60, No. 44 / Tuesday, March 7, 1995 / Notices

Jr., Senior Counsel, Division of Market Regulation,

Commission (February 27, 1995).

4 15 U.S.C. 78q–1 (1988)

5 15 U.S.C. 78q–1(b)(3)(F) (1988)

6 15 U.S.C. 78q–1(a)(1) (1988)

7The Commission is expressing no opinion here

on the means that Philadep will use for the actual

physical destruction of any certificate or on the

related standards that may apply. These are

separate matters and are not part of this rule

proposal.

8 15 U.S.C. 78s(b)(2) (1988).

9 17 CFR 200.30–3(a)(12) (1994).

II. Discussion

The Commission believes that the

proposal is consistent with the Act and

particularly with Section 17A of the

Act.4 Section 17A(b)(3)(F) of the Act 5

requires that the rules of a clearing

agency be designed to safeguard the

funds and securities which are in the

custody or control of a clearing agency

or for which it is responsible.

Additionally, Section 17A(a)(1) of the

Act 6 directs the Commission to

encourage the reduction of unnecessary

costs by persons facilitating transactions

on behalf of investors.

These new procedures provide for the

implementation of a destruction policy

that will permit Philadep to eliminate

certain expired and worthless securities

certificates rather than maintain them in

its vault. As a result, Philadep expects

to reduce its administrative expenses

that are associated with storing such

certificates. The proposal also contains

numerous safeguards concerning the

selection of the securities certificates to

be destroyed, and the Commission

believes that the safeguards in question

are reasonably designed to reduce the

risk that Philadep will select for

destruction certificates for which the

warrants or rights have not expired.7

III. Conclusion

For the reasons discussed above, the

Commission believes that the proposal

is consistent with the requirements of

the Act, particularly those of Section

17A of the Act, and the rules and

regulations thereunder.

It is therefore ordered, pursuant to

Section 19(b)(2) of the Act,8 that the

above-mentioned proposed rule change

(File No. SR–Philadep–94–05) be, and

hereby is, approved.

For the Commission by the Division of

Market Regulation, pursuant to delegated

authority.9

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 95–5464 Filed 3–6–95; 8:45 am]

BILLING CODE 8010–01–M

[Rel. No. IC–20930; File No. 812–9410]

Jackson National Life Insurance

Company of Michigan, et al.

February 28, 1995.

AGENCY: Securities and Exchange

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

ACTION: Notice of Application for an

Order under the Investment Company

Act of 1940 (the ‘‘1940 Act’’).

APPLICANTS: Jackson National Life

Insurance Company of Michigan

(‘‘Company’’), Jackson Michigan

Separate Account–I (‘‘Separate

Account’’) and Jackson Financial

Services, Inc. (‘‘Distributor’’).

RELEVANT 1940 ACT SECTIONS: Order

requested under Section 6(c) of the 1940

Act granting exemptions from the

provisions of Sections 26(a)(C) and

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

SUMMARY OF APPLICATION: Applicants

seek an order permitting the deduction

of a mortality and expense risk charge

from the assets of the Separate Account

and other separate accounts established

by the Company in the future in

connection with the issuance and sale of

certain flexible premium variable

annuity contracts (‘‘Contracts’’) and any

contracts that are similar in all material

respects to the Contracts (‘‘Other

Contracts’’).

FILING DATE: The application was filed

on December 30, 1994. An amended

application was filed on February 24,

1995.

HEARING OR NOTIFICATION OF HEARING: An

order granting the application will be

issued unless the Commission orders a

hearing. Interested persons may request

a hearing by writing to the

Commission’s Secretary and servings

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 March 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 requester’s interest, the

reason for the request, and the issues

contested. Persons may request

notification of a hearing by writing to

the Commission’s Secretary.

ADDRESSES: Secretary, SEC, 450 5th

Street, NW., Washington, DC 20549.

Applicants, Mark J. Mackey, Esq.,

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

K Street, NW., Suite 1003, Washington,

DC 20006.

FOR FURTHER INFORMATION CONTACT:

Mark C. Amorosi, Attorney, or Wendy

Finck Friedlander, Deputy Chief, at

(202) 942–0670, Office of Insurance

Products (Division of Investment

Management).

SUPPLEMENTARY INFORMATION: Following

is a summary of the application; the

complete application is available for a

fee from the Commission’s Public

Reference Branch.

Applicants’ Representations

1. The Company is a stock life

insurance company organized under the

laws of the State of Michigan in

September 1992. The Company is a

wholly-owned subsidiary of Jackson

National Life Insurance Company and

an indirect wholly-owned subsidiary of

Prudential Corporation plc, London,

England. The Company is currently

admitted to do business in Michigan.

2. The Separate Account was

established by the Company as a

separate account under the laws of

Michigan on June 14, 1993 as a funding

medium for variable annuity contracts.

The Separate Account meets the

definition of a ‘‘separate account’’ under

the federal securities laws and is

registered under the 1940 Act as a unit

investment trust. The application states

that the Company will establish for each

investment option offered under the

Contracts a Separate Account

subaccount (‘‘Portfolio’’) which will

invest solely in a specific corresponding

series of the JNL Series Trust or of some

other designated investment company

(the ‘‘Funds’’). JNL Series Trust is

registered as an open-end management

investment company under the 1940

Act.

3. The Distributor, a broker-dealer

registered under the Securities

Exchange Act of 1934 and a member of

the National Association of Securities

Dealers, Inc., will serve as the

distributor and principal underwriter

for the Contracts.

4. The Contracts are flexible premium

individual deferred variable annuity

contracts offered in connection with

retirement plans that may qualify for

favorable federal income tax treatment

(‘‘Qualified Contracts’’) or on a non-tax

qualified basis (‘‘Non-Qualified

Contracts’’). Interests in the Contracts

are registered under the Securities Act

of 1933. The Contracts provide for,

among other things: (a) Certain

minimum initial and subsequent

premium payments; (b) several annuity

payment options beginning on the

annuity date; and (c) the payment of a

death benefit where the annuitant dies

during the accumulation phase, which

is equal to the greater of the contract

value or premium payments (net of

withdrawals and premium taxes).

Where permitted by state law, the

Contract will also provide an enhanced
Federal Register / Vol. 60, No. 44 / Tuesday, March 7, 1995 / Notices 12587

death benefit determined by (1)

recomputing the standard death benefit

by accumulating the total dollar amount

of premiums made prior to the death of

the annuitant, minus the sum of the

total amount of withdrawals and

premium taxes incurred, annually at 5%

(4% if the annuitant was age 70 or older

on the issue date) to the date of death,

and (2) paying the greater of the amount

so determined and the contract value at

the seventh contract year, plus any

premiums made since that time and

before the death of the annuitant, minus

the total amount of partial withdrawals

and premium taxes incurred since the

seventh contract year, all accumulated

annually at 5% (4% if the annuitant was

age 70 of older on the issue date) to the

date of death. The amount determined

under (2) above will equal $0 if the

annuitant dies prior to the seventh

contract year.

5. Various fees and charges are

deducted under the Contracts. An

annual Contract Maintenance Charge of

$35 will be deducted prior to the

annuity date, and upon a full surrender

on any date other than a contract

anniversary, to reimburse the Company

for contract administration expenses. A

daily Administration Charge, equal to

an effective annual rate of 0.15% of the

net assets of each Portfolio in which the

contract owner has invested, will be

deducted prior to the annuity date. This

charge is designed to reimburse the

Company for administrative expenses

related to the Separate Account and the

issuance and maintenance of the

Contract. Currently, the Company

permits fifteen free transfers among the

Portfolios per contract year; however, a

$25 charge will be assessed on the

sixteenth and each subsequent transfer

within the contract year. The Company

does not expect a profit from these

charges. The Company represents that it

will monitor its administrative expenses

and the proceeds of these charges to

ensure compliance with Rule 26a–1

under the 1940 Act.

6. The Company will pay applicable

premium taxes when due and reserves

the right to deduct the amount of the tax

either from premiums as they are

received or deduct the tax at a later date

as permitted or required by applicable

law.

7. No sales charge is deducted from

premium payments. However, certain

full or partial surrenders will be subject

to a maximum 7% contingent deferred

sales charge (‘‘Withdrawal Charge’’),

which will be imposed on a declining

basis during the first seven contract

years after payment of the premium

being withdrawn. The Withdrawal

Charge will compensate the Company

for expenses relating to the distribution

and sale of the Contracts. For purposes

of computing the Withdrawal Charge,

withdrawals will be allocated first to

investment income, and then to

premiums on a first-in, first-out basis so

that all withdrawals are allocated to

premiums to which the lowest (if any)

Withdrawal Charge applies. No

Withdrawal Charge may be applied to

that portion of the first withdrawal in

the contract year equal to 10% of

premiums that remain subject to the

Withdrawal Charge, less earnings in the

contract owner’s account. The Company

may also waive the Withdrawal Charge

under other circumstances permitted

under the 1940 Act.

To the extent that the Withdrawal

Charge is insufficient to cover all sales

and distribution expenses, the Company

may use any of its corporate assets,

including potential profit which may

arise from the mortality and expense

risk charge, to make up any difference.

8. Shares of the Fund are sold to the

Separate Account at net asset value. The

Fund pays its investment adviser a fee

for managing its investments and

business affairs. The Fund is

responsible for all of its other expenses.

9. A daily charge equal to an effective

annual rate of 1.25% of the value of the

net assets in the Separate Account will

be deducted to compensate the

Company for bearing certain mortality

and expense risks under the Contracts.

Of that amount, approximately 1.02% is

for mortality risks and approximately

0.23% is for expense risks.

10. The mortality risk arises from the

Company’s contractual obligations: (1)

To make annuity payments (determined

in accordance with the annuity tables

and other provisions provided in the

Contracts) regardless of how long any

individual annuitant or all annuitants

may live, (2) to waive the Withdrawal

Charge in the event of the death of the

annuitant, and (3) to provide both a

standard and an enhanced death benefit

prior to the annuity date. The portion of

the total mortality risk charge

attributable to the Company’s assuming

the first two of those three risks and

providing a standard death benefit is

0.90%; the balance of 0.12% is assessed

for providing the enhanced death

benefit. Applicants represent that the

mortality risk charge may not be

increased under the Contract.

11. The expense risk assumed by the

Company is the risk that the Company’s

actual administrative costs will exceed

the amount recovered through the

administrative and policy maintenance

charges. If the expense risk charge is

insufficient to cover the actual cost of

administering the Contracts and the

Separate Account, the Company will

bear the loss.

Applicants’ Legal Analysis

1. Section 6(c) of the 1940 Act

authorizes the Commission to grant an

exemption from any provision, rule or

regulation of the 1940 Act to the extent

that it 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. Section

26(a)(2)(C) and 27(c)(2) of the 1940 Act,

in relevant part, prohibit a registered

unit investment trust, its depositor or

principal underwriter, from selling

periodic payment plan certificates

unless the proceeds of all payments,

other than sales loads, are deposited

with a qualified bank and held under

arrangements which prohibit any

payment to the depositor or principal

underwriter except a reasonable fee, as

the Commission may prescribe, for

performing bookkeeping and other

administrative duties normally

performed by the bank itself.

2. Applicant request exemptions from

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

1940 Act to the extent necessary to

permit the deduction of the 1.25%

charge from the assets of the Separate

Account to compensate the Company

for the assumption of mortality and

expense risks. Applicants further

request that such exemptive relief

extend to contracts that are similar in all

material respects to the Contracts which

may be issued in the future by the

Separate Account or any other separate

account established by the Company.

Applicants assert that the requested

exemptions are necessary and

appropriate in the public interest and

consistent with the protection of

investors and the purposes fairly

intended by the policy and provisions of

the 1940 Act.

3. The Company represents that the

1.25% mortality and expense risk

charge is reasonable in relation to the

risks assumed by the Company under

the Contracts and within the range of

industry practice for comparable

annuity contracts. This representation is

based upon the Company’s analysis of

publicly available information about

comparable industry products, taking

into consideration such factors as

current charge levels and benefits

provided, the existence of expense level

guarantees and guaranteed annuity

rates. The Company represents that it

will maintain at its home office, a

memorandum, available to the

Commission, setting forth in detail the

products analyzed in the course of, and
12588 Federal Register / Vol. 60, No. 44 / Tuesday, March 7, 1995 / Notices

the methodology and results of, its

comparative review.

4. Applicants acknowledge that, if a

profit is realized from the mortality and

expense risk charge, all or a portion of

such profit may be available to pay

distribution expenses not reimbursed by

the Withdrawal Charge. The Company

represents that there is a reasonable

likelihood that the proposed

distribution financing arrangements will

benefit the Separate Account and

contract owners. The Company

represents that the basis for conclusion

is set forth in memorandum which will

be maintained at its home office and

will be available to the Commission

upon request.

5. Applicants assert that the terms of

the future relief requested wit respect to

any Other Contracts are consistent with

the standards set forth in Section 6(c) of

the 1940 Act. Applicants submit that, if

the Company were to repeatedly seek

exemptive relief with respect to the

same issues addressed in this

application, investors would not receive

additional protection or benefit.

Applicants assert that the requested

relief is appropriate in the public

interest because the relief will promote

competitiveness in the variable annuity

market by eliminating the need for the

filing of redundant exemptive

applications, thereby reducing

administrative expenses and

maximizing efficient use of resources.

Applicants represent that both the delay

and the expense of repeatedly seeking

exemptive relief would impair the

Company’s ability to effectively take

advantage of business opportunities as

they arise.

6. The Company also represents that

the Separate Account or future separate

accounts will invest only in

management investment companies

which undertake, in the event they

should adopt a plan under Rule 12b–1

of the 1940 Act to finance distribution

expenses, to have a board of directors or

trustees, a majority of whom are not

‘‘interested persons’’ of the Company

within the meaning of Section 2(a)(19)

of the 1940 Act, formulate and approve

any such plan.

Conclusion

For the reasons set forth above,

Applicants represent that the

exemptions requested are necessary and

appropriate in the public interest and

consistent with the protection of

investors and 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. 95–5463 Filed 3–6–95; 8:45 am]

BILLING CODE 8010–01–M

SELECTIVE SERVICE SYSTEM

Forms Submitted to the Office of

Management and Budget for Extension

of Clearance

The following forms, to be used only

in the event that inductions into the

armed services are resumed, have been

submitted to the Office of Management

and Budget (OMB) for the extension of

clearance in compliance with the

Paperwork Reduction Act (44 U.S.

Chapter 35):

SSS–254

Title: Application for Voluntary Induction.

Purpose: Is used to apply for voluntary

induction into the Armed Services.

Respondents: Registrants or nonregistrants

who have attained the age of 17 years, who

have not attained the age of 26 years and who

have not completed his active duty obligation

under the Military Selective Service Act.

Frequency: One-time.

Burden: The reporting burden is twelve

minutes or less per individual.

SSS–350

Title: Registrant Travel Reimbursement

Request.

Purpose: Is used to request reimbursement

for expenses incurred when traveling to or

from a Military Entrance Processing Station

in compliance with an official order issued

by the Selective Service System.

Respondents: All registrants required to

travel to or from a Military Entrance

Processing Station at their own expense.

Frequency: One-time.

Burden: The reporting burden is ten

minutes or less per request.

Copies of the above identified forms

can be obtained upon written request to

Selective Service System, Reports

Clearance Officer, 1515 Wilson

Boulevard, Arlington, Virginia 22209–

2425.

Written comments and

recommendations for the proposed

extension of clearance of the form(s)

should be sent within 60 days of

publication of this notice to Selective

Service System, Reports Clearance

Officer, 1515 Wilson Boulevard,

Arlington, Virginia 22209–2425.

A copy of the comments should be

sent to the Office of Information and

Regulatory Affairs, Attention: Desk

Officer, Selective Service System, Office

of Management and Budget, New

Executive Office Building, Room 3235,

Washington, DC 20503.

Dated: February 22, 1995.

Gil Coronado,

Director.

[FR Doc. 95–5435 Filed 3–6–95; 8:45 am]

BILLING CODE 8015–01–M

SMALL BUSINESS ADMINISTRATION

Declaration of Disaster Loan Area;

Alabama

Cullman and Marshall Counties and

the contiguous Counties of Blount,

Dekalb, Etowah, Jackson, Lawrence,

Madison, Morgan, Walker and Winston

in the State of Alabama constitute a

disaster area as a result of damages

caused by severe storms, flooding and

tornadoes which occurred on February

15, 1995. Applications for loans for

physical damage may be filed until the

close of business on May 1, 1995 and for

economic injury until the close of

business on December 1, 1995 at the

address listed below:

U.S. Small Business Administration,

Disaster Area 2 Office, One Baltimore

Place, Suite 300, Atlanta, GA 30308

or other locally announced locations.

The interest rates are:

Percent

For Physical Damage:

Homeowners with credit available elsewhere ........................ 8.000

Homeowners without credit available elsewhere ........................ 4.000

Businesses with credit available

elsewhere ................................ 8.000

Businesses and non-profit organizations without credit available elsewhere ........................ 4.000

Others (including non-profit organizations) with credit available

elsewhere ................................ 7.125

For Economic Injury:

Businesses and small agricultural cooperatives without

credit available elsewhere ....... 4.000

The number assigned to this disaster

for physical damage is 276512 and for

economic injury the number is 847600.

(Catalog of Federal Domestic Assistance

Program Nos. 59002 and 59008).

Dated: March 1, 1995.

Philip Lader,

Administrator.

[FR Doc. 95–5549 Filed 3–6–95; 8:45 am]

BILLING CODE 8025–01–M

Declaration of Disaster Loan Area;

North Carolina and Contiguous

Counties in Tennessee

Watauga County and the contiguous

counties of Ashe, Avery, Caldwell, and