14808 Federal Register / Vol. 60, No. 53 / Monday, March 20, 1995 / Notices

5 17 CFR 200.30–3(a)(12) (1994).

1Applicants undertake to amend the application

during the notice period to make this

representation.

2Applicants undertake to amend the application

during the notice period to make this

representation.

may summarily abrogate such rule

change if it appears to the Commission

that such action is necessary or

appropriate in the public interest, for

the protection of investors, or otherwise

in furtherance of the purposes of the

Act.

IV. Solicitation of Comments

Interested persons are invited to

submit written data, views, and

arguments concerning the foregoing.

Persons making written submissions

should file six copies thereof with the

Secretary, Securities and Exchange

Commission, 450 Fifth Street, N.W.,

Washington, D.C. 20549. Copies of the

submission, all subsequent

amendments, all written statements

with respect to the proposed rule

change that are filed with the

Commission, and all written

communications relating to the

proposed rule change between the

Commission and any person, other than

those that may be withheld from the

public in accordance with the

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

available for inspection and copying in

the Commission’s Public Reference

Section, 450 Fifth Street, N.W.,

Washington, D.C. 20549. Copies of such

filing will also be available for

inspection and copying at the principal

office of MSTC. All submissions should

refer to File No. SR–MSTC–95–05 and

should be submitted by April 10, 1995.

For the Commission by the Division of

Market Regulation, pursuant to delegated

authority.5

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 95–6697 Filed 3–17–95; 8:45 am]

BILLING CODE 8010–01–M

[Rel. No. IC–20954; No. 812–9364]

New York Life Insurance and Annuity

Corporation, et al.

March 14, 1995.

AGENCY: The Securities and Exchange

Commission (‘‘Commission’’).

ACTION: Notice of Application for an

Order under the investment Company

Act of 1940 (‘‘1940 Act’’).

APPLICANTS: New York Life Insurance

and Annuity Corporation (‘‘NYLIAC’’),

NYLIAC LifeStages Annuity Separate

Account (‘‘Separate Account’’) and

NYLIFE Distributors, Inc.

(‘‘Distributors’’).

RELEVANT 1940 ACT SECTIONS: Order

requested under Section 6(c) of the 1940

Act granting exemptions from the

provisions of Sections 26(a)(2)(C) and

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

SUMMARY OF THE APPLICATION:

Applicants seek an order permitting the

deduction of mortality and expense risk

charges from the assets of the Separate

Account in connection with the

issuance and sale of certain flexible

premium variable annuity contracts

(‘‘Contracts’’), and in connection with

certain other NYLIAC variable annuity

contracts which are substantially similar

in all material respects to the Contracts

(‘‘Other Contracts’’) which are offered in

the future through the Separate

Account. Applicants also seek to deduct

mortality and expense risk changes from

the assets of any other similar separate

account(s) established by NYLIAC

(‘‘Other Accounts’’), whether currently

existing or hereafter created, in

connection with the issuance and sale of

the Other Contracts. Applicants also

request that the exemptive relief include

any other broker-dealer (‘‘Other BrokerDealers’’) which may serve in the future

as principal underwriter of the contracts

or of the Other Contracts.

FILING DATE: The application was filed

on December 14, 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 April 4, 1995, and

should be accompanied by proof of

service on Applicants in the form of an

affidavit or, for lawyers, a certificate of

service. Hearing requests should state

the nature of the writer’s interest, the

reason for the request, and the issues

contested Persons may requests

notification of hearing by writing to the

Commission’s Secretary.

ADDRESSES: Secretary, The Securities

and Exchange Commission, 450 Fifth

Street NW., Washington, DC 20549.

Applicants, c/o New York Life

Insurance and Annuity Corporation, 51

Madison Avenue, New York 10010.

FOR FURTHER INFORMATION CONTACT:

Yvonne M. Hunold, Assistant Special

Counsel or Wendy Friedlander, Deputy

Chief at (202) 942–0670, Office of

Insurance Products (Division of

Investment Management)..

SUPPLEMENTARY INFORMATION: Following

is a summary of the application;

complete application is available for a

fee from the Commission’s Public

Reference Branch.

Applicants’ Representations

1. NYLIAC, a stock life insurance

company, is wholly-owned by New

York Life Insurance Company (‘‘New

York Life’’), a mutual life insurance

company. NYLIAC is principally

engaged in offering life insurance and

annuities and is admitted to do business

in all 50 states, the District of Columbia,

Puerto Rico and Canada.

2. The Separate Account was

established by NYLIAC to fund the

Contracts. The Separate Account and

the Other Accounts may be used to fund

Other Contracts. The Separate Account

has filed a notice of registration under

the 1940 Act to register as a unit

investment trust, and a registration

statement under the 1940 Act and the

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

register the Contracts as securities.

Other Accounts each will file a notice

of registration under the 1940 Act to

register as unit investment trusts, and a

registration statement under the 1940

Act and the 1933 Act to register any

Other Contract as securities.1

The Separate Account currently has

seven investment divisions, each

investing exclusively in one of seven

corresponding portfolios of New York

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

diversified, open-end management

investment company registered under

the 1940 Act. Additional investment

divisions may be established in the

future to invest in other Fund portfolios

or in other investments. Portfolio shares

also may be offered to Other Accounts.

3. Distributors, currently the principal

underwriter of the Contracts is an

indirect wholly-owned subsidiary of

New York Life. Broker-Dealer and is a

member of the National Association of

Securities Dealers (‘‘NASD’’).

Distributors may enter into agreements

for the sale of the Contracts or the Other

Contracts with Other Broker-Dealers

which will be registered under the 1934

Act,2 and which are or will be members

of the NASD.

The Contracts are to be used either in

connection with retirement plans

qualities under Sections 401(a), 403(a)

403(b), 403(b), 408 OR 457 of the

Internal Revenue Code or by any other

purchaser for whom the Contracts may

provide a suitable investment.

5. The Contracts provide for the

payment of initial premium payments

and allow for additional premium

payments at any time prior to Annuity
Federal Register / Vol. 60, No. 53 / Monday, March 20, 1995 / Notices 14809

3The ‘‘reset value,’’ is equal to the Accumulation

Value, as recalculated on each ‘‘reset date’’ (every

3 years from the date of initial premium payments

until age 85). If the new reset value calculated on

the most recent reset date is higher than the

previous reset value, the new reset value will be

retained for purposes of determining the available

death benefit. If it is lower, the old reset value will

be retained. The formula guarantees that the

amount paid will at least equal the sum of all

premium payments (less any outstanding loan

balance, partial withdrawals, CDSL deductions and

rider premiums), independent of the investment

experience of the Separate Account.

Commencement Date for the life of the

Annuitant. Contract owners may direct

the allocation of premium payments, as

well as Accumulation Value, among the

investment divisions and to the Fixed

Account, which is part of NYLIAC’s

General Account. Accumulation value is

determined on a variable basis by the

investment experience of the investment

divisions selected for the allocation of

premium payments, other than the

amount allocated to the Fixed Account.

6. The Contracts also provide for the

payment of a minimum death benefit

equal to the greatest of: (a)

Accumulation Value, less any

outstanding loan balance under the

Contract, (b) the sum of all premium

payments made less any outstanding

loan balance, partial withdrawals, CDSL

deductions and any rider premiums, or

(c) the ‘‘reset value’’ plus any additional

premium payments, other than rider

premiums, made since the most recent

‘‘reset date,’’ less any outstanding loan

balance, withdrawals made since the

most recent ‘‘reset date,’’ and any CDSL

deductions applicable to such

withdrawals.3

7. Various fees and charges are

deducted under the Contracts, An

annual Contract fee of the lesser of $30

or 2% of the Accumulation Value at the

end of the Contract Year will be

deducted on each Contract Anniversary

during the Accumulation Period, or

upon surrender of the Contract if on that

date the Accumulation Value is less

than $20,000. A daily charge equal, on

an annual basis, of up to .15% of the net

asset value of the appropriate separate

account will be deducted to cover

administration expenses of the Contract

and of the Other Contracts. These fees

are guaranteed for the life of such

Contracts or Other Contracts and will

not exceed the cost of services to be

provided over the life of such Contracts,

in accordance with the provisions of

Rule 26a–1 under the 1940 Act.

8. A charge for premium taxes

imposed by state law may be deducted

under the Contracts, either when a

surrender or cancellation occurs, or at

the Annuity Commencement Date or the

Retirement Date, as applicable.

Currently, these taxes range up to 3.5%.

The Separate Account and the

investment divisions may bear charges

for federal income taxes, should such

taxes be incurred by NYLIAC in

connection with the operation of the

Separate Account.

9. No charge currently is deducted for

the first twelve transfers during any

Contract Year or for transfers prior to 30

days before the Annuity

Commencement Date. NYLIAC reserves

the right to charge a $30 fee for each

transfer in excess of twelve per Contract

Year.

10. No sales charge currently is

deducted from premium payments

under the Contracts, nor will be

deducted under Other Contracts.

Surrenders and partial withdrawals,

however, are subject to a maximum

contingent deferred sales load (‘‘CDSL’’)

of 7% during the first three years,

declining by 1% per year thereafter

until reaching 0% in the sixth year.

Other Contracts will be subject to a

maximum 7% CDSL. The total CDSL

will not exceed 8.5% of the premium

payments under the Contract or Other

Contracts. Applicants are relying on

Rule 6c–8 under the 1940 Act to deduct

the CDSL.

11. A daily charge equal to an

effective annual rate of 1.25% of the net

asset value of each investment division

will be imposed to compensate NYLIAC

for bearing certain mortality and

expense risks in connection with the

Contracts and Other Contracts. Of this

amount, 0.75% is allocable to mortality

risks and 0.50% is allocable to expense

risks. This charge may be a source of

profit for NYLIAC which will be added

to its surplus and may be used for,

among other things, the payment of

distribution expenses.

12. The mortality risk borne by

NYLIAC arises from its obligation to

make annuity payments (determined in

accordance with the Annuity Tables and

other provisions contained in the

Contract), where a life annuity is

selected, regardless of how long an

Annuitant may live. The mortality risk

under the Contract is the risk that, upon

selection of an annuity payment option

which has a life contingency,

Annuitants will live longer than

NYLIAC’s actuarial projections indicate,

resulting in higher than expected

income payments. NYLIAC also is

assuming mortality risk as a result of its

promise to pay a minimum death

benefit under the Contracts.

13. The expense risk borne by

NYLIAC under the Contract is the risk

that the charges for administrative

expenses, which are guaranteed for the

life of the Contract, may be insufficient

to cover the actual costs of issuing and

administering the Contracts.

Applicants’ Legal Analysis and

Conditions

1. Applicants request an order under

Section 6(c) granting exemptions from

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

1940 Act to permit the deduction from

the assets of the Separate Account or

Other Accounts of a charge for mortality

and expense risks under the Contracts

or Other Contracts. Applicants also

request that the exemptive relief extend

to Other Broker-Dealers which may

serve in the future as principal

underwriters of the Contracts or Other

Contracts.

2. Section 6(c) of the 1940 Act

authorizes the Commission, by order

upon application, to conditionally or

unconditionally grant an exemption

from any provision, rule or regulation of

the 1940 Act to the extent that the

exemption is necessary or appropriate

in the public interest and consistent

with the protection of investors and the

purposes fairly intended by the policy

and provisions of the 1940 Act.

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

the 1940 Act, in relevant part, prohibit

a registered unit investment trust, its

depositor or principal underwriter, from

selling periodic payment plan

certificates unless the proceeds of all

payments, other than sales loads, are

deposited with a qualified bank and

held under arrangements which prohibit

any payment to the depositor or

principal underwriter except a

reasonable fee, as the Commission may

prescribe, for performing bookkeeping

and other administrative duties

normally performed by the bank itself.

4. Applicants submit that their

request for an order is appropriate in the

public interest because it would

promote competitiveness in the variable

annuity contract market by eliminating

the need for NYLIAC to file redundant

exemptive applications, thereby

reducing its administrative expenses

and maximizing the efficient use of its

resources. Investors would not receive

any benefit or additional protection by

requiring NYLIAC repeatedly to seek

exemptive relief with respect to the

same issues addressed in this

Application.

5. Applicants represent that the

1.25% mortality and expense risk

charge under the Contracts is within the

range of industry practice for

comparable annuity contracts. This

representation is based upon

Applicants’ analysis of publicly

available information about similar

industry products, taking into

consideration such factors as current
14810 Federal Register / Vol. 60, No. 53 / Monday, March 20, 1995 / Notices

4Applicants undertake to amend the application

during the notice period to make this

representation.

5Applicants undertake to amend the application

during the notice period to make this

representation.

6Applicants undertake to amend the application

during the notice period to make this

representation.

7Applicants undertake to amend the application

during the notice period to make this

representation.

charge levels, the manner in which

charges are imposed, the presence of

charge level or annuity rate guarantees

and the markets in which the Contracts

will be offered. Based upon this review,

Applicants represent that the mortality

and expense risk charges under the

Contracts are within the range of

industry practice for comparable

contracts. Applicants state that NYLIAC

will maintain at its corporate

headquarters 4 and make available to the

Commission, upon request, a

memorandum outlining the

methodology underlying this

representation.

Similarly, prior to making available

any Other Contracts, Applicants will

determine that the mortality and

expense risk charges under any such

Other Contracts will be within the range

of industry practice for comparable

contracts. Applicants state that NYLIAC

will maintain at corporate

headquarters 5 and make available to the

Commission, upon request, a

memorandum outlining the

methodology underlying such

conclusion.

6. Applicants acknowledge that, if a

profit is realized from the mortality and

expense risk charge under the Contracts,

all or a portion of such profit may be

available to pay distribution expenses

not reimbursed by the CDSC. NYLIAC

has concluded that there is a reasonable

likelihood that the proposed

distribution financing arrangements will

benefit the Separate Account and the

Contract Owners. NYLIAC will keep at

its corporate headquarters 6 and make

available to the Commission, upon

request, a memorandum setting forth the

basis for this representation.

7. Similarly, Applicants recognize

that, if a profit is realized from the

mortality and expense risk charge under

the Other Contracts, all or a portion of

such profit may be available to pay

distribution expenses not reimbursed by

the CDSL. Prior to issuing Other

Contracts, NYLIAC will determine that

there is a reasonable likelihood that the

proposed distribution financing

arrangements will benefit the relevant

separate account and the Other Contract

Owners. The basis for that conclusion

will be set forth in a memorandum

which will be maintained by NYLIAC at

its corporate headquarters 7 and will be

made available to the Commission,

upon request.

8. Applicants represent that the

Separate Account, and any Other

Accounts, will invest only in underlying

funds that have undertaken to have a

board of directors/trustees, a majority of

whom are not interested persons of any

such fund, formulate and approve any

plan under Rule 12b–1 under the 1940

Act to finance distribution expenses.

Applicants’ Conditions

Applicants agree that if the requested

order is granted such order will be

expressly conditioned on Applicants’

compliance with the undertakings set

forth above. In addition, Applicants

undertake to rely on the exemptive

relief requested herein with respect to

Other Contracts only if such Other

Contracts are substantially similar in all

material respects to the Contracts.

Conclusion

Applicants assert that, for the reasons

and upon the facts set forth above, the

requested exemptions from Sections

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

to deduct the mortality and expense risk

charge under the Contracts, or under

Other Contracts, offered by the Separate

Account or by Other Accounts, meets

the standards in Section 6(c) of the 1940

Act. Applicants assert that the

exemptions requested are necessary and

appropriate in the public interest and

consistent with the protection of

investors and the policies and

provisions of the 1940 Act.

For the Commission, by the Division of

Investment Management, pursuant to

delegated authority.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 95–6749 Filed 3–17–95; 8:45 am]

BILLING CODE 8010–01–M

SMALL BUSINESS ADMINISTRATION

Reporting and Recordkeeping

Requirements Under OMB Review

ACTION: Notice of reporting requirements

submitted for review.

SUMMARY: Under the provisions of the

Paperwork Reduction Act (44 U.S.C.

Chapter 35), agencies are required to

submit proposed reporting and

recordkeeping requirements to OMB for

review and approval, and to publish a

notice in the Federal Register notifying

the public that the agency has made

such a submission.

DATES: Comments should be submitted

on or before April 19, 1995. If you

intend to comment but cannot prepare

comments promptly, please advise the

OMB Reviewer and the Agency

Clearance Officer before the deadline.

COPIES: Request for clearance (OMB 83–

1), supporting statement, and other

documents submitted to OMB for

review may be obtained from the

Agency Clearance Officer. Submit

comments to the Agency Clearance

Officer and the OMB Reviewer.

FOR FURTHER INFORMATION CONTACT:

Agency Clearance Officer: Cleo

Verbillis, Small Business

Administration, 409 3rd Street, SW.,

5th Floor, Washington, DC 20416,

Telephone: (202) 205–6629

OMB Reviewer: Donald Arbuckle, Office

of Information and Regulatory Affairs,

Office of Management and Budget,

New Executive Office Building,

Washington, DC 20503

Title: Financing Eligibility Statement

Form No.: SBA Form 1941A, B, and C

Frequency: On Occasion

Description of Respondents: SBA

businesses seeking financing from

Specialized Small Business

Investment Companies (SSBIC)

Annual Responses: 1,000

Annual Burden: 2,000

Dated: March 10, 1995.

Cleo Verbillis,

Chief, Administrative Information Branch.

[FR Doc. 95–6712 Filed 3–17–95; 8:45 am]

BILLING CODE 8025–01–M

Reporting and Recordkeeping

Requirements Under OMB Review

ACTION: Notice of reporting requirements

submitted for review.

SUMMARY: Under the provisions of the

Paperwork Reduction Act (44 U.S.C.

Chapter 35), agencies are required to

submit proposed reporting and

recordkeeping requirements to OMB for

review and approval, and to publish a

notice in the Federal Register notifying

the pubic that the agency has made such

a submission.

DATES: Comments should be submitted

on or before April 19, 1995. If you

intend to comment but cannot prepare

comments promptly, please advise the

OMB Reviewer and the Agency

Clearance Officer before the deadline.

COPIES: Request for clearance (OMB 83–

1), supporting statement, and other

documents submitted to OMB for

review may be obtained from the

Agency Clearance Officer. Submit