Document ID: SEC-2017-0146-0001
Agency: sec
Document Type: Notice
Title: Applications: Allstate Assurance Co., et al
Posted Date: 2017-02-02T05:00Z

[Federal Register Volume 82, Number 21 (Thursday, February 2, 2017)]
[Notices]
[Pages 9083-9085]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-02181]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. IC-32457; File No. 812-14149]

Allstate Assurance Company, et al.; Notice of Application

January 27, 2017.

AGENCY: Securities and Exchange Commission (``SEC'' or ``Commission'').

ACTION: Notice of Application for an order pursuant to Section 6(c) of 
the Investment Company Act of 1940, as amended (the ``1940 Act'' or 
``Act''), exempting Allstate Assurance Company Separate Account B from 
all provisions of the Act, subject to certain conditions.

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Applicants: Allstate Assurance Company (the ``Company'') and Allstate 
Assurance Company Separate Account B (the ``Separate Account,'' and 
together with the Company, the ``Applicants'').

Summary of Application: The Applicants seek an order pursuant to 
Section 6(c) of the 1940 Act, exempting the Separate Account from all 
provisions of the 1940 Act, subject to certain conditions.

DATES:  Filing Date: The application was filed on April 12, 2013, and 
amended and restated on February 18, 2014, August 20, 2015 and November 
21, 2016.

Hearing or Notification of Hearing: An order granting the application 
will be issued unless the Commission orders a hearing. Interested 
persons may request

[[Page 9084]]

a hearing by writing to the Secretary of the Commission 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 
21, 2017, 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 who wish 
to be notified of a hearing may request notification by writing to the 
Secretary of the Commission.

ADDRESSES: Secretary, SEC, 100 F Street NE., Washington, DC 20549-1090. 
Applicants: Allstate Assurance Company and Allstate Assurance Company 
Separate Account B, 3100 Sanders Road, Suite J5B, Northbrook, IL 60062.

FOR FURTHER INFORMATION CONTACT: Sally Samuel, Branch Chief, Disclosure 
Review and Accounting 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 for an 
applicant using the company name box, at http://www.sec.gov/search/search.htm, or by calling (202) 551-8090.

I. Applicants' Representations

    1. The Separate Account was established as a managed separate 
account of the Company on August 21, 1967, for the purpose of funding 
certain variable annuity contracts (the ``Contracts''). The Separate 
Account is registered as an open-end management investment company 
under the Act (File No. 811-01525).
    2. The Separate Account has retained Provident Investment 
Management, LLC, to serve as the investment adviser to the Separate 
Account and The Variable Annuity Life Insurance Company and The Paul 
Revere Life Insurance Company to provide administrative services to the 
Separate Account. A Board of Managers, a majority of which consists of 
persons who are independent of the Separate Account within the meaning 
of the Act, currently oversees the Separate Account's operations.
    3. The Separate Account is one of two investment options available 
under the Contracts. The other investment option under the Contracts is 
the Company's general account, which pays a fixed rate of interest 
(``Fixed Account''). As of September 30, 2016, there were a total of 
125 individual Contract owners, only 47 of whom were invested in the 
Separate Account. Contract owners may transfer account assets between 
the Fixed Account and the Separate Account but only once every 12 
months.
    4. Redemptions have significantly reduced the Separate Account's 
assets over the past decade and are likely to continue notwithstanding 
any positive investment performance that may result in a net increase 
in the Separate Account's assets. As of September 30, 2016, the 
Separate Account had approximately $800,000 in total net assets.
    5. The public offering of the Contracts under the Securities Act of 
1933 (``Securities Act'') was initially registered in 1967 (File No. 2-
27135). The Company discontinued the sale of new Contracts in 1984. 
Although the Contracts allow Contract owners to make additional 
contributions, the Company has not received an additional contribution 
under the Contracts since November 2006, which was allocated to the 
Fixed Account. No contributions or transfers have been allocated to the 
Separate Account since 2002. The Company has no intention of offering 
the Contracts to new purchasers, and conducts no solicitation or 
marketing activities with respect to the Contracts.

II. Applicants' Legal Analysis

    1. Applicants respectfully request that the Commission, pursuant to 
Section 6(c) of the Act, issue an Order granting an exemption from all 
provisions of the Act, subject to the conditions set out in Section 
III, below. Applicants believe, based on the grounds set out in the 
application, that the requested exemption meets the standards of 
Section 6(c) of the Act.
    2. Section 6(c) of the Act authorizes the Commission to 
``conditionally or unconditionally exempt any person, security, or 
transaction, or any class or classes of persons, securities, or 
transactions, from the provisions of [the Act] or of 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 Act.]''
    3. Applicants believe that the requested exemption 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 
Act. Section 3(c)(1) of the Act makes clear that Congress intended to 
exclude from the Act entities in which there is no significant public 
interest.\1\ As noted above, only 47 individual beneficial owners are 
currently invested in the Separate Account, well below the 100 person 
limit of Section 3(c)(1). In addition, the Company discontinued the 
sale of new Contracts in 1984. Likewise, the Separate Account has not 
received any additional Contract owner money in over a decade. No 
salesperson is engaged in any solicitation or marketing activity with 
respect to the Contracts or the Separate Account, and no compensation 
is being paid for any such activity. The Company has no intention of 
offering the Contracts to new purchasers, or encouraging any 
investments in the Separate Account and will not do so if the Order is 
granted. Although the terms and conditions of the Contracts permit 
Contract owners to make future allocations to or investments in the 
Separate Account, Applicants assert that the Separate Account's 
historical experience strongly suggests that the likelihood of 
receiving any such allocation or investment is remote.
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    \1\ H.R. Rep. No. 96-1341 at 35 (1980); S. Rep. No. 96-958 at 20 
(1980). (``Section 3(c)(1) was intended to exclude from the Act 
private companies in which there is no significant public interest 
and which are therefore not appropriate subjects of federal 
regulation.'')
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    4. In addition, Applicants state that Contract owners do not need 
the protections afforded by the Act. Applicants assert that Contract 
owners are adequately protected by the fact that their longstanding 
relationship with the Company of over 30 years is established by the 
terms and conditions of the Contracts, which may not be changed without 
Contract owner approval except where permitted or required by 
applicable law. The Contracts, among other things, fix the fees and 
charges (including management fees) associated with the Separate 
Account, thus distinguishing the Separate Account from mutual funds 
whose expenses can change periodically. The Contracts also confer upon 
owners the right to receive at least annually a statement (a) 
reflecting the investment results for the prior year, (b) listing the 
investments of the Separate Account as of the date of the statement, 
and (c) reflecting the value of the accumulation units credited to the 
Contracts. Moreover, after the date of the Order requested by the 
application, Applicants will provide Contract owners with annual 
audited financial statements of the Company and the Separate Account 
pursuant to proposed condition 5 described below. In addition, the 
Contracts are governed by and administered according to state

[[Page 9085]]

insurance law, which requires that the Company maintain in the Separate 
Account assets with a value at least equal to the reserves and other 
contract liabilities with respect to the Separate Account; that the 
income, gains and losses, realized or unrealized, from assets allocated 
to the Separate Account be credited to or charged against the Separate 
Account, without regard to other income, gains or losses of the 
Company; and that assets of the Separate Account equal to the reserves 
and other contract liabilities with respect to the Separate Account not 
be charged with liabilities arising out of any other business the 
Company may conduct. Furthermore, the requested relief would be subject 
to the other conditions described in Section III, below.
    5. Applicants state that there is very little Contract owner 
interest in the Separate Account. The last time a premium was received 
under a Contract was in November 2006, and the last time a premium or 
transfer was allocated to the Separate Account was in 2002. The 
Separate Account's assets have been declining due to redemptions over 
the past decade and are likely to continue to decline as the result of 
redemptions.
    6. Applicants maintain that granting the requested relief would 
enable Applicants to avoid the difficulties of trying to efficiently 
manage the Separate Account in compliance with the diversification and 
other requirements of the Act as assets dwindle down to zero. Further, 
Applicants assert that granting the requested relief would enable 
Applicants to avoid the significant ongoing legal, accounting, and 
other costs of maintaining a registered investment company, which costs 
currently exceed the amount of revenues generated by the fees under the 
Contracts.
    7. Applicants submit that the relief is consistent with the 
protection of investors and the purposes fairly intended by the policy 
and provisions of the 1940 Act.

III. Conditions

    Applicants consent to the following conditions to any Order issued 
by the Commission:
    1. The Company will continue to be responsible for satisfying all 
the obligations to Contract owners as specified under the terms of 
their Contracts. In addition, promptly after the issuance of the Notice 
of the application, the Company will deliver a written document to all 
Contract owners that will state that the Notice has been issued; that, 
consequently, after the order granting the relief requested in the 
Notice is issued, certain legal protections afforded to Contract owners 
allocating assets to an investment company registered under the Act no 
longer apply to them; that, nevertheless, the terms and conditions of 
such Contracts have not changed; and that the Company continues to be 
responsible for satisfying all the obligations to such Contract owners 
as specified under the terms of their Contracts. In the event a 
Contract owner transfers money from the Fixed Account to the Separate 
Account, the Company and the Separate Account will notify such 
transferring Contract owner that the Separate Account is no longer a 
Separate Account registered under the Act and provide the Contract 
owner a one-time opportunity to transfer the money back into the Fixed 
Account prior to the 12 month holding period required by the Contracts. 
Any subsequent transfer by the same Contract owner from the Fixed 
Account to the Separate Account will be subject to the 12 month holding 
period required by the Contracts.
    2. The Company will continue to be responsible for maintaining 
records of the values under each owner's Contract, providing quarterly 
statements and transaction confirmations to Contract owners, and all 
other administrative functions in connection with the Separate Account. 
As in the past, the Company may retain one or more administrators to 
provide such services, but the Company will remain ultimately 
responsible therefor.
    3. The Separate Account will at all times continue to be operated 
in the manner contemplated by Rule 0-1(e)(1) and (2) under the Act. 
Specifically:
    (a) The Separate Account will continue to be an account established 
and maintained by an insurance company pursuant to the laws of a state 
or territory of the United States under which income, gains and losses, 
whether or not realized, from assets allocated to the Separate Account 
are, in accordance with the Contracts, credited to or charged against 
the Separate Account without regard to other income, gains or losses of 
the insurance company,
    (b) the Separate Account shall be legally segregated and the assets 
of the Separate Account will, at the time during the year that 
adjustments in the reserves are made, have a value at least equal to 
the Company's reserves and other contract liabilities with respect to 
the Separate Account, and, at all other times, will have a value 
approximately equal to or in excess of such reserves and liabilities, 
and
    (c) that portion of the Separate Account's assets having a value 
equal to such reserves and contract liabilities will not be chargeable 
with liabilities arising out of any other business that the Company may 
conduct.
    4. The Company and the Separate Account will operate in compliance 
with applicable state insurance law, including but not limited to 
filing annual audited financial statements of the Company and the 
Separate Account with the insurance department of the Company's 
domiciliary state.
    5. The Company will provide Contract owners invested in the 
Separate Account with copies of the annual audited financial statements 
of the Company and the Separate Account.
    6. The Company and the Separate Account will not solicit additional 
contributions from Contract owners, or resume the sale of Contracts, 
and will not use the Separate Account to issue any other annuity 
contracts that would require the Separate Account to be registered 
under the Act unless so registered. In addition, the Company and the 
Separate Account will not solicit transfers from the Fixed Account into 
the Separate Account. Furthermore, the Separate Account will not be 
used for any other business other than as a funding vehicle for the 
Contracts.
    7. The Separate Account will re-register under the Act should the 
number of beneficial owners invested in the Separate Account exceed 
100.
    8. The Separate Account will continue to create, maintain and keep 
current the books and records as set forth in Rules 31a-1 and 31a-2 
under the Act for the periods specified by these Rules.

IV. Conclusion

    For the reasons and upon the facts set forth above and in the 
application, Applicants submit that their exemptive request meets the 
standards set out in Section 6(c) of the Act and that the Commission, 
therefore, should grant the requested Order.

    For the Commission, by the Division of Investment Management, 
pursuant to delegated authority.
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-02181 Filed 2-1-17; 8:45 am]
BILLING CODE 8011-01-P