Document ID: SEC-2013-1866-0001
Agency: sec
Document Type: Notice
Title: Applications: Ameritas Life Insurance Corp., et al.
Posted Date: 2013-10-31T04:00Z

[Federal Register Volume 78, Number 211 (Thursday, October 31, 2013)]
[Notices]
[Pages 65393-65396]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-25831]

=======================================================================
-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 30764; File No. 812-14189]

Ameritas Life Insurance Corp., et al; Notice of Application

October 25, 2013.
AGENCY: The Securities and Exchange Commission (``Commission'').

ACTION: Notice of application for an order approving the substitution 
of certain securities pursuant to Section 26(c) of the Investment 
Company Act of 1940, as amended (the ``1940 Act'').

-----------------------------------------------------------------------

Applicants: Ameritas Life Insurance Corp., Ameritas Life Insurance 
Corp. of New York, The Union Central Life Insurance Company (each, a 
``Life Insurance Company'' and, collectively, the ``Life Insurance 
Companies''), and their respective separate accounts: Ameritas Variable 
Separate Account VA-2, Ameritas Variable Separate Account V, Ameritas 
Variable Separate Account VA, Ameritas Variable Separate Account VL 
(the ``Ameritas Life Accounts''); Ameritas Life of NY Separate Account 
VA, Ameritas Life of NY Separate Account VUL (the ``Ameritas Life of NY 
Accounts''); and the Carillon Life Account (each an ``Account'' and 
together with the Life Insurance Companies, the ``Applicants'').

Summary of Application: The Applicants seek an order under Section 
26(c) of the 1940 Act approving the substitution of shares of the VIP 
Money Market Portfolio, Initial Class (the ``Replacement Portfolio'') 
of the Variable Insurance Products Fund V (``VIPFV'') for shares of the 
Calvert VP Money Market Portfolio (the ``Current Portfolio'') of the 
Calvert Variable Series, Inc. (``CVSI'') held by the Accounts to 
support certain variable annuity contracts or variable life insurance 
contracts (collectively, the ``Contracts'') issued by the Life 
Insurance Companies (the ``Substitution'').

DATES: Filing Date: The application was filed on July 31, 2013, and an 
amended and restated application was filed on October 25, 2013.

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 November 14, 2013, 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 requester'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, 100 F Street 
NE., Washington, DC 20549-1090. Applicants: Ameritas Life Insurance 
Corp., Ameritas Variable Separate Account VA-2, Ameritas Variable 
Separate Account V, Ameritas Variable Separate Account VA, and Ameritas 
Variable Separate Account VL, 5900 ``O'' Street, Lincoln, Nebraska 
68510; Ameritas Life Insurance Corp. of New York, Ameritas Life of NY 
Separate Account VA, Ameritas Life of NY Separate Account VUL, 1350 
Broadway, Suite 2201, New York, New York 10018; and The Union Central 
Life Insurance Company and Carillon Life Account, 5900 ``O'' Street, 
Lincoln, Nebraska 68510.

FOR FURTHER INFORMATION CONTACT: Michelle Roberts, Senior Counsel, or 
Joyce M. Pickholz, Branch Chief, Insured Investments Office, Division 
of Investment Management at (202) 551-6795.

SUPPLEMENTARY INFORMATION: The following is a summary of the 
application. The complete application may be obtained via the 
Commission's Web site by searching for the file number, or an applicant 
using the Company name box, at http://www.sec.gov/search/search.htm or 
by calling (202) 551-8090.

[[Page 65394]]

Applicants' Representations

    1. The Life Insurance Companies, on their own behalf and on behalf 
of their respective separate accounts, propose to substitute shares of 
the Replacement Portfolio for shares of the Current Portfolio held by 
the Accounts to fund the Contracts.
    2. Ameritas Life Insurance Corp. is the depositor and sponsor of 
the Ameritas Life Accounts. Ameritas Life Insurance Corp. of New York 
is the depositor and sponsor of the Ameritas Life of NY Accounts. The 
Union Central Life Insurance Company is the depositor and sponsor of 
the Carillon Life Account.
    3. Each Account is a ``separate account'' as defined by Rule 0-1(e) 
under the 1940 Act, and is registered with the Commission as a unit 
investment trust. Security interests under the Contracts have been 
registered under the Securities Act of 1933, as amended (the ``1933 
Act''). The application sets forth the registration statement file 
numbers for the Contracts and the Separate Accounts.
    4. Each Account is divided into subaccounts, each of which invests 
exclusively in shares of a corresponding investment portfolio (a 
``Portfolio'') of a series-type management investment company, 
including CVSI.
    5. Pursuant to the Contracts, the Life Insurance Companies reserve 
the right to substitute shares of one Portfolio for shares of another. 
The prospectuses for the Contracts also disclose that the Life 
Insurance Companies reserve this right.
    6. CVSI is an open-end management investment company (File No. 811-
03591) that currently consists of six investment portfolios, including 
the Current Portfolio, and issues a separate series of shares in 
connection with each. CVSI has registered such shares under the 1933 
Act (File No. 002-80154).
    7. Calvert Investment Management, Inc. (``CIM'') serves as the 
investment adviser to each CVSI Portfolio. CIM is an indirect wholly-
owned subsidiary of AMHC.
    8. The VIPFV is an open-end management investment company (File No. 
811-05361) that currently consists of 32 investment portfolios, one of 
which, the Replacement Portfolio, is the subject of the proposed 
Substitution. VIPFV issues a separate series of shares in connection 
with each Portfolio and has registered such shares under the 1933 Act 
(File No. 033-17704).
    9. Fidelity Management & Research Company (``FMR'') serves as the 
manager of each Portfolio of VIPFV. FMR receives an investment 
management fee from each Portfolio. Fidelity Investments Money 
Management, Inc. (``FIMM'') and other affiliates of FMR serve as sub-
advisers for the Replacement Portfolio. FIMM has the day-to-day 
responsibility of choosing investments for the Replacement Portfolio. 
In addition, other affiliates of FMR serve as sub-advisers for the 
Replacement Portfolio and may provide investment research and advice 
for the Replacement Portfolio. None of VIPFV, FMR, FIMM, or other 
affiliates of FMR are affiliated persons (or affiliated persons of 
affiliated person) of any of the Applicants. Likewise, none of the 
Applicants are affiliated persons (or affiliated persons of affiliated 
persons) of VIPFV, FMR, FIMM or other affiliates of FMR.
    10. The Applicants state that Replacement Portfolio's and Current 
Portfolio's respective investment objectives, strategies and risks are 
substantially the same. A comparison of the investment objectives, 
strategies and risks of the Replacement Portfolio and the Current 
Portfolio is included in the application.
    11. The following table compares the fees and expenses of the 
Current Portfolio and the Replacement Portfolio as of the year ended 
December 31, 2012:

------------------------------------------------------------------------
                                   Current portfolio      Replacement
                                 --------------------      portfolio
                                                     -------------------
                                   Calvert Variable   Variable Insurance
                                     Series, Inc.,     Products Fund V,
                                   Calvert VP Money    VIP Money Market
                                   Market Portfolio   Portfolio, Initial
                                                             Class
------------------------------------------------------------------------
Management Fee..................  0.25%.............  0.17%.
Distribution and Service (12b-1)  None..............  None.
 Fee.
Other Expenses..................  0.14%.............  0.09%.
Total Operating Expenses........  0.39%.............  0.26%.
Fee Waivers and Expense           None \1\..........  None.
 Reimbursements.
Net Operating Expenses..........  0.39% \2\.........  0.26%.
------------------------------------------------------------------------
\1\ The Investment Advisor, CIM, has contractually agreed to limit
  direct net annual portfolio operating expenses through April 30, 2014
  to 0.40%. Under the terms of the contractual expense limitation,
  operating expenses do not include interest expense, brokerage
  commissions, taxes and extraordinary expenses. Only the Board of
  Directors of CVSI may terminate a Portfolio's expense cap before the
  contractual period expires.
\2\ The Advisor further voluntarily reimbursed expenses of $88,900 or
  0.11%, for Net Operating Expenses of 0.28% to maintain a positive
  yield during the year ended December 31, 2012.

    12. The Applicants state that the proposed Substitution is in 
response to a decision by the Board of Directors for CVSI, at a meeting 
held on June 5, 2013, to approve the dissolution of the Current 
Portfolio on or about November 15, 2013 (the ``Liquidation Date''). The 
board's decision to liquidate the Current Portfolio requires the Life 
Insurance Companies to transfer accumulated Contract value invested in 
the Current Portfolio to an alternative investment option available 
under the Contracts on or before the Liquidation Date. Currently, the 
only money market portfolio investment option offered under the 
Contracts is the Current Portfolio. Accordingly, the proposed 
Substitution is necessary in order to provide the Contract owners with 
continued access to a money market portfolio investment option. 
Consequently, the Life Insurance Companies have determined to replace 
the Current Portfolio with the Replacement Portfolio via the 
Substitution.
    13. The Life Insurance Companies submit that the Replacement 
Portfolio is an appropriate alternative for Contract owners for several 
reasons. First, its investment objectives, strategies and risks are 
substantially the same as those of the Current Portfolio. Second, it is 
substantially larger than the Current Portfolio, has had lower overall 
expense levels than the Portfolio in recent years, and has had higher 
yields in recent years than the Current Portfolio. Third, the Contracts 
and other variable annuity and variable life insurance contracts issued 
by the Life Insurance Companies currently offer one or more VIPFV 
portfolios (other than the Replacement Portfolio).
    14. The Applicants believe that Contract owners would benefit from 
the significantly larger size of the Replacement Portfolio and the 
somewhat higher yields of the Replacement Portfolio, as contrasted

[[Page 65395]]

with the size and recent yields of the Current Portfolio. The yield for 
the Current Portfolio for the seven days ending December 31, 2012 was 
0.01%. The net asset value of the Current Portfolio was $85,913,000 as 
of December 31, 2012. The yield for the Replacement Portfolio Initial 
Class shares for the seven days ending December 31, 2012 was 0.08%. The 
net asset value of the Replacement Portfolio supporting Initial Class 
shares was $889,797,000 as of December 31, 2012.
    15. The Applicants believe that Contract owners will benefit from 
the reduction in overall expenses of the Replacement Portfolio as 
compared to the Current Portfolio. Specifically, the management fee, 
other expenses, and total operating expenses are less than those of the 
Current Portfolio. Both Portfolios have no charge for Rule 12b-1 
distribution and services fees. The total annual operating expense of 
the Replacement Portfolio is less than that of the Current Portfolio. 
Given this decrease, the Applicants believe that the Substitution would 
benefit Contract owners by reducing the overall level of Portfolio 
expenses.

Legal Analysis and Conditions

    1. The Applicants request that the Commission issue an order 
pursuant to Section 26(c) of the 1940 Act approving the proposed 
Substitution. Section 26(c) of the 1940 Act requires the depositor of a 
registered unit investment trust holding securities of a single issuer 
to obtain Commission approval before substituting the securities held 
by the trust.
    2. Applicants submit that the proposed Substitution is not the type 
of substitution that Section 26(c) was designed to prevent. Section 
26(c) was intended to provide for Commission scrutiny of a proposed 
Substitution which could, in effect, force shareholders dissatisfied 
with the substitute security to redeem their shares, thereby possibly 
incurring a loss of the sales load deducted from initial premium, an 
additional sales load upon reinvestment of the proceeds of redemption, 
or both, as well as possibly suffering adverse tax consequences upon 
redemption. Consequently, the section was designed to forestall the 
ability of a depositor to present holders of interest in a unit 
investment trust with situations in which a holder's only choice would 
be to continue an investment in an unsuitable underlying security, or 
to elect a costly and, in effect, forced redemption.
    3. Applicants submit that the proposed substitution will provide 
Contract owners with substantially the same investment vehicle and 
would not raise any of the aforementioned concerns that Congress 
intended to address when the 1940 Act was amended to include Section 
26(c).
    4. Applicants represent that redemptions and purchases will occur 
simultaneously so that contract values will remain fully invested at 
all times. All redemptions of shares of the Current Portfolio and 
purchases of shares of the Replacement Portfolio will be effected in 
accordance with Section 22(c) of the Act and Rule 22c-1 thereunder. The 
Substitution will take place at relative net asset value as of the 
effective date of the Substitution (``Effective Date'') with no change 
in the amount of any Contract owner's contract value or death benefit 
or in the dollar value of his or her investments in the money market 
subaccount of the applicable Account.
    5. Contract values attributable to investments in the Current 
Portfolio will be transferred to the Replacement Portfolio without 
charge (including sales charges or surrender charges) and without 
counting toward the number of transfers that may be permitted without 
charge. Contract owners will not incur any additional fees or charges 
as a result of the Substitution, nor will their rights or the Life 
Insurance Companies' respective obligations under the Contracts be 
altered in any way and the Substitution will not change Contract 
owners' insurance benefits under the Contracts. All expenses incurred 
in connection with the Substitution, including legal, accounting, 
transactional, and other fees and expenses, including brokerage 
commissions, will be paid by the Life Insurance Companies. In addition, 
the Substitution will not impose any tax liability on Contract owners.
    6. The Applicants also represent that the Substitution will not 
cause the Contract fees and charges currently paid by existing Contract 
owners to be greater after the Substitution than before the 
Substitution. The Life Insurance Companies will not exercise any right 
they may have under the Contracts to impose restrictions on transfers 
under the Contracts for the period beginning on the date of the Pre-
Substitution Notice (defined below) through at least thirty (30) days 
following the Effective Date.
    7. Existing Contract owners will be notified of the proposed 
Substitution by means of a prospectus or prospectus supplement for each 
of the Contracts (``Pre-Substitution Notice'') at least thirty (30) 
days before the Effective Date. New purchasers of the Contracts will be 
provided the Pre-Substitution Notice, the Contract prospectus, and the 
prospectus for the Replacement Portfolio in accordance with all 
applicable legal requirements.
    8. The Pre-Substitution Notice will: (i) State that the Applicants 
filed the application seeking approval of the Substitution; (ii) set 
forth the anticipated Effective Date; (iii) explain that the Contract 
values attributable to investments in the Current Portfolio would be 
attributable to the Replacement Portfolio as of the Effective Date; 
(iv) state that, from the date of the Pre-Substitution Notice until the 
Effective Date, Contract Owners are permitted to transfer Contract 
value out of any Current Portfolio sub-account to any other sub-
account(s) offered under the Contract without the transfer being 
treated as a transfer for purposes of transfer limitations and fees 
that would otherwise be applicable under the terms of the Contract; (v) 
advise Contract owners that any contract value remaining in the Current 
Portfolio sub-account on the Effective Date will be transferred to a 
sub-account investing in the Replacement Portfolio, and that the 
Substitution will take place at relative net asset value; (vi) inform 
Contract owners that for at least thirty (30) days following the 
Effective Date, the applicable Life Insurance Company will permit 
Contract owners to make transfers of contract value out of the sub-
account investing in the Replacement Portfolio to any other available 
sub-accounts offered under their Contracts without the transfer being 
counted as a transfer for purposes of transfer limitations and fees, if 
any, that would otherwise be applicable under the terms of the 
Contracts; and (vii) inform Contract owners that, except as described 
in the market timing limitations section of the relevant prospectus, 
the applicable Life Insurance Company will not exercise any rights 
reserved by it under the Contracts to impose additional restrictions on 
transfers out of the sub-account investing in the Replacement Portfolio 
for at least thirty (30) days after the Effective Date.
    9. All Contract owners will have received a copy of the most recent 
prospectus for the Replacement Portfolio prior to the Substitution. In 
addition, within five (5) days following the Substitution, Contract 
owners affected by the Substitution will be notified in writing that 
the Substitution was carried out. This notice will restate the relevant 
information set forth in the Pre-Substitution Notice, and will also 
explain that the contract values attributable to investments in the 
Current Portfolio were transferred to the Replacement Portfolio without 
charge

[[Page 65396]]

(including sales charges or surrender charges) and without counting 
toward the number of transfers that may be permitted without charge.
    10. The Applicants represent that the Life Insurance Companies will 
not receive, for three (3) years after the Effective Date, any direct 
or indirect benefits from the Replacement Portfolio, its advisor or 
underwriter (or their affiliates), in connection with assets 
attributable to the Contracts affected by the Substitution, at a higher 
rate than the Life Insurance Companies had received from the Current 
Portfolio, its advisor or underwriter (or their affiliates), including 
without limitation 12b-1 fees, revenue sharing or other arrangements. 
The Applicants further represent that the Substitution and the 
selection of the Replacement Portfolio were not motivated by any 
financial consideration paid or to be paid to a Life Insurance Company 
or its affiliates by the Replacement Portfolio, its advisor or 
underwriter, or their affiliates.
    11. Applicants submit that the replacement of the Current Portfolio 
with the Replacement Portfolio is consistent with the protection of 
Contract owners and the purposes fairly intended by the policy and 
provisions of the 1940 Act and, thus, meets the standards necessary to 
support an order pursuant to Section 26(c) of the 1940 Act. In 
addition, the Applicants submit that the proposed Substitution meets 
the standards that the Commission and its staff have applied to 
Substitutions that have been approved in the past.

Conclusion

    For the reasons and upon the facts set forth above in the 
application, the Applicants believe that the requested order meets the 
standards set forth in Section 26(c) of the 1940 Act and should 
therefore be granted.

    For the Commission, by the Division of Investment Management, 
pursuant to delegated authority.
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-25831 Filed 10-30-13; 8:45 am]
BILLING CODE 8011-01-P