[Federal Register Volume 60, Number 206 (Wednesday, October 25, 1995)]
[Notices]
[Pages 54749-54750]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-26382]



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SECURITIES AND EXCHANGE COMMISSION
[Rel. No. IC-21423; International Series Release No. 871; 812-9804]


Sun Life Assurance Company of Canada and Sun Canada Financial Co.

October 17, 1995.
AGENCY: Securities and Exchange Commission (``SEC'').

ACTION: Notice of Application for Exemption under the Investment 
Company Act of 1940 (the ``Act'').

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APPLICANTS: Sun Life Assurance Company of Canada (``Sun Life'') and Sun 
Canada Financial Co. (``SCF'')

RELEVANT ACT SECTIONS: Order requested under section 6(c) of the Act 
that would exempt finance subsidiaries of Sun Life from subparagraph 
(b)(3)(i) of rule 3a-5 under the Act so as to permit such finance 
subsidiaries to rely on the exemptive provisions of rule 3a-5 under the 
Act.

SUMMARY OF APPLICATION: Applicants request an order that would permit 
SCF and future wholly-owned finance subsidiaries of Sun Life (``Future 
Subsidiaries'') to sell preferred stock and debt instruments to finance 
the business operations of their parent company, Sun Life, and certain 
subsidiaries of Sun Life.

FILING DATES: The application was filed on October 6, 1995 and amended 
on October 17, 1995.

HEARING OR NOTIFICATION OF HEARING: An order granting the application 
will be issued unless the SEC orders a hearing. Interested persons may 
request a hearing by writing to the SEC's Secretary and serving 
applicants with a copy of the request, personally or by mail. Hearing 
requests should be received by the SEC by 5:30 p.m. on November 7, 
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 request 
notification of a hearing by writing to the SEC's Secretary.

ADDRESSES: Secretary, SEC, 450 5th Street NW., Washington, DC 20549. 
Applicants: One Sun Life Executive Park, Wellesley Hills, Massachusetts 
02181.

FOR FURTHER INFORMATION CONTACT:
Sarah A. Buescher, Staff Attorney, at (202) 942-0573, or C. David 
Messman, Branch Chief, at (202) 942-0564 (Division of Investment 
Management, Office of Investment Company Regulation).

SUPPLEMENTARY INFORMATION: The following is a summary of the 
application. The complete application may be obtained for a fee at the 
SEC's Public Reference Branch.

Applicant's Representations

    1. SCF is a Delaware corporation and a finance subsidiary of Sun 
Life. All of SCF's outstanding shares are owned by Sun Life. Sun Life 
is a Canadian mutual life insurance company and together with its 
subsidiaries (the ``Company'') is the largest Canadian life insurance 
company, based on total consolidated assets under management. The 
Company's insurance products include individual and group life, health, 
and disability insurance, annuities, and pensions. The Company also 
operates in the investment management, banking, trust, and reinsurance 
businesses. Sun Life owns all of the outstanding stock of Sun Life 
Assurance Company of Canada (U.S.) (``Sun Life (U.S.)''), a stock life 
insurance company incorporated in Delaware that issues life insurance 
policies and individual and group annuities. Sun Life (U.S.) formed a 
wholly-owned subsidiary, Sun Life Insurance and Annuity Company of New 
York, that issues annuities and group life and long-term disability 
insurance in the state of New York. Sun Life (U.S.) has other wholly-
owned subsidiaries, including an insurance company and a federally 
chartered savings bank.
    2. SCF was organized to finance Sun Life's business operations, 
that may include the business operations of Sun Life's subsidiaries. 
SCF's primary function would be to raise funds through the issuance and 
offer of its non-voting preferred stock or debt instruments, and to 
lend all or substantially all (at least 85%) of the proceeds of such 
offerings to Sun Life or its subsidiaries. The remainder of the 
proceeds would be invested or held in government securities and other 
securities permitted by rule 3a-5(a)(6).
    3. SCF presently intends to raise funds through a private placement 
of debt securities (``Notes'') that would be eligible for resale under 
rule 144A under the Securities Act of 1933 (``Rule 144A Offering''). It 
is anticipated that the Notes would be sold in a private placement to 
three investment banks and reoffered by them to qualified institutional 
buyers in reliance on rule 144A and to institutional accredited 
investors within the meaning of rule 501 under the Securities Act. 
Proceeds of the Rule 144A Offering would be used to purchase surplus 
notes issued by Sun Life (U.S.).\1\ Proceeds to Sun Life (U.S.) from 
that purchase would simultaneously be used to pay off existing Sun Life 
(U.S.) surplus notes that are currently held by Sun Life. When the 
contemplated transaction is completed, substantially all of the 
proceeds from SCF's sale of its Notes would be transferred to Sun Life 
for use in the Company's business operations, and SCF would hold, in 
addition to government securities and other securities permitted by 
rule 3a-5(a)(6), surplus notes of Sun Life (U.S.).

    \1\Surplus notes are a form of debt security permitted by state 
insurance laws.
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    4. The Notes would be direct unsecured obligations of SCF that 
would be subordinated in right of payment to all present and future 
indebtedness and liabilities of SCF. The Notes would be guaranteed, on 
a subordinated basis, by Sun Life. SCF may issue a different type of 
debt security, or may issue non-voting preferred stock in the future. 
SCF also may lend funds to or hold the securities of a U.S. bank 
subsidiary of Sun Life or other subsidiaries excepted from the 
definition of investment company by section 3(c)(3) of the Act. SCF 
would limit its financing activities to those that, but for the status 
of certain of Sun Life's subsidiaries, conform to the requirements of 
rule 3a-5.

Applicants' Legal Analysis

    1. Applicants request an exemption pursuant to section 6(c) from 
rule 3a-5(b)(3)(i) so as to allow SCF and Future Subsidiaries to rely 
on the exemptive provisions of rule 3a-5 under the Act. 

[[Page 54750]]
Rule 3a-5 under the Act provides an exemption from the definition of 
investment company for a company organized primarily to finance the 
business operations of its parent company or other subsidiaries of its 
parent company and where any purchaser of such finance subsidiary's 
debt instruments ultimately looks to such parent for repayment and not 
to the finance subsidiary.
    2. Applicants may not rely on the safe harbor provided by rule 3a-5 
because Sun Life (U.S.) and other insurance subsidiaries of Sun Life 
may not be considered a ``company controlled by the parent company'' as 
defined in rule 3a-5. Under rule 3a-5(b)(3)(i), a ``company controlled 
by a parent company'' is defined as any corporation, partnership, or 
joint venture that is not considered an investment company under 
section 3(a) or that is excepted or exempted by order from the 
definition of investment company by section 3(b) or by the rules or 
regulations under section 3(a). SCF's lending to Sun Life complies with 
rule 3a-5 because under rule 3a-6, a foreign insurance company is 
exempted from the definition of ``investment company'' under the Act. 
SCF's lending to Sun Life (U.S.) however, does not comply with rule 3a-
5 because Sun Life (U.S.) is excepted from the definition of investment 
company under section 3(c)(3) of the Act.
    3. The adopting release of rule 3a-5 stated that relief similar to 
that granted under rule 3a-5 may be appropriate for a finance 
subsidiary of a parent company that derives its non-investment company 
status from section 3(c) of the Act.\2\ The release stated, however, 
that such requests should be examined on a case-by-case basis. 
According to the adopting release, the concern was that a company may 
be considered a non-investment company for the purposes of the Act 
under section 3(c) of the Act and still be engaged primarily in 
investment company activities.

    \2\ See, Exemption From the Definition of Investment Company for 
Certain Finance Subsidiaries of United States and Foreign Private 
Issuers, Investment Company Act Release No. 14275 (Dec. 14, 1984).
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    4. Applicants represent that SCF would not engage in a general 
program of investment, nor would SCF be used to finance such a program. 
SCF's primary purpose is to provide an alternate vehicle to finance the 
non-investment company business operations of Sun Life, including those 
of Sun Life's non-investment company subsidiaries.
    5. Section 6(c) provides that the SEC may exempt any person or 
transaction from any provision of the Act or any rule thereunder 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. 
Applicants submit that the exemptive relief requested meets the 
requirements of section 6(c).

Applicants' Condition

    Applicants agree that any order granting the requested relief shall 
be subject to the condition that SCF, or any other wholly-owned finance 
subsidiary of Sun Life rely on the order, will comply with all 
provisions of rule 3a-5 under the Act, except that the term ``company 
controlled by the parent company'' will include subsidiaries of Sun 
Life that do not meet the requirements of rule 3a-5(b)(3)(i) solely 
because they are excluded from the definition of investment company by 
section 3(c)(3) of the Act.

    For the Commission, by the Division of Investment Management, 
pursuant to delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 95-26382 Filed 10-24-95; 8:45 am]
BILLING CODE 8010-01-M