[Federal Register Volume 62, Number 69 (Thursday, April 10, 1997)]
[Notices]
[Pages 17650-17652]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-9173]


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SECURITIES AND EXCHANGE COMMISSION

[Investment Company Act Release No. 22598; 812-10576]


Chubb America Fund, Inc., et al.; Notice of Application

April 3, 1997.
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: Chubb America Fund, Inc. (the ``Fund''), on behalf of World 
Growth Stock Portfolio, Money Market Portfolio, Domestic Growth Stock 
Portfolio, Gold Stock Portfolio, Bond Portfolio, Growth and Income 
Portfolio, Capital Growth Portfolio, Balanced Portfolio, and Emerging 
Growth Portfolio (collectively, the ``Portfolios''), and Chubb 
Investment Advisory Corporation (the ``Adviser'').

RELEVANT ACT SECTIONS: Order requested under section 6(c) granting an 
exemption from section 15(a).

SUMMARY OF APPLICATION: Jefferson-Pilot Corporation (``Jefferson-
Pilot'') has agreed to acquire 100% of the issued and outstanding 
shares of common stock of Chubb Life Insurance Company of America 
(``Chubb Life''), the parent of the Adviser. The indirect change in 
control of the Adviser will result in the assignment, and thus the 
termination, of the existing investment management agreements between 
the Fund and the Adviser (the ``Existing Agreements''). The order would 
permit the implementation, without shareholder approval, of a new 
investment management agreement (the ``New Agreement'') for an interim 
period of not more than 120 days beginning on the date on which Chubb 
Life is sold to Jefferson Pilot (but in no event later than August 28, 
1997). The order also would permit the Adviser to receive from each 
Portfolio all fees earned under the New Agreement following shareholder 
approval.

FILING DATES: The application was filed on March 13, 1997 and amended 
on April 2, 1997.

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 April 28, 1997 
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 Fifth Street, N.W., Washington, D.C. 
20549. Applicants: One Granite Place, Concord, NH 03301.

FOR FURTHER INFORMATION CONTACT: John K. Forst, Staff Attorney, at 
(202) 942-0569, or Mary Kay Frech, 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 from 
the SEC's Public Reference Branch.

Applicants' Representations

    1. The Fund is a Maryland corporation registered under the Act as 
an open-end, management investment company. The Portfolios are series 
of the Fund, the assets of which are managed by the Adviser pursuant to 
the Existing Agreements.
    2. Under a stock purchase agreement (the ``Stock Purchase 
Agreement'') dated as of February 23, 1997, between The Chubb 
Corporation (``Chubb'') and Jefferson-Pilot, Chubb has agreed to sell 
all the shares of Chubb Life to Jefferson-Pilot in exchange for 
$875,000,000 in cash (subject to reduction to the extent of certain 
distributions made prior to closing) (the ``Transaction''). As a result 
of the Transaction, Chubb Life will become a wholly-owned subsidiary of 
Jefferson-Pilot and the Adviser will remain a wholly-owned subsidiary 
of Chubb Life. Applicants expect the Transaction to be consummated on 
April 30, 1997. Consummation of the Stock Purchase Agreement is subject 
to the satisfaction of certain conditions, including state insurance 
department regulatory approvals.

[[Page 17651]]

    3. Applicants request an exemption to permit implementation, 
without shareholder approval, of the New Agreement between the Fund and 
the Adviser, on behalf of each of the Portfolios. The requested 
exemption will cover an interim period of not more than 120 days 
beginning on the date on which Chubb and Jefferson-Pilot consummate the 
Transaction and continuing through the date the New Agreement is 
approved or disapproved by the shareholders of the respective 
Portfolios (but in no event later than August 28, 1997) (the ``Interim 
Period''). It is anticipated that the New Agreement will be identical 
in substance to the Fund's Existing Agreements. The aggregate 
contractual rate chargeable for investment advisory services for each 
Portfolio will remain the same as in the relevant Existing Agreement. 
The Fund proposes to implement the New Agreement during the Interim 
Period, subject to the conditions contained in the application.
    4. The Fund's board of directors (the ``Board'') is expected to 
meet on or about April 3, 1997 for the purpose of considering the New 
Agreement in accordance with section 15(c) of the Act. The Board will 
receive such information as the directors deem necessary to evaluate 
whether the terms of the New Agreement are in the best interests of the 
Portfolios and their shareholders. Proxy materials seeking approval of 
the New Agreement are expected to be mailed to shareholders of each 
Portfolio on or about April 15, 1997. A meeting of shareholders of the 
Fund is expected to take place on or about May 30, 1997 to consider 
approval of the New Agreement. Applicants believe that the Interim 
Period is reasonable because it will allow for preparation and 
distribution of proxy materials in order to obtain shareholder 
approval.
    5. Applicants also request an exemption to permit the Adviser to 
receive from the Fund all fees earned under the New Agreement 
implemented during the Interim Period if, and to the extent, the New 
Agreement is approved by the shareholders of each Portfolio. The fees 
to be paid during the Interim Period are at the same rate as the fees 
currently payable by the Portfolios.
    6. Applicants propose to enter into an escrow arrangement with an 
unaffiliated financial institution that will serve as escrow agent. The 
fees payable to the Adviser during the Interim Period will be paid into 
an interest-bearing escrow account maintained by the escrow agent. 
Amounts in the escrow account (including interest earned on such fees) 
will be paid to the Adviser to the extent shareholders of each 
Portfolio approve the New Agreement with their respective Portfolio. If 
shareholders of any Portfolio fail to approve the New Agreement, the 
escrow agent will pay to that Portfolio the applicable escrow amounts 
(including interest earned). The escrow agent will release the escrow 
funds only upon receipt of certificates from officers of the Fund 
stating, if the escrow funds are to be delivered to the Adviser, that 
the New Agreement has received the requisite Portfolio shareholder 
vote, or, if the escrow funds are to be delivered to any Portfolio, 
that the Interim Period has ended and the New Agreement has not been 
approved by the requisite shareholder vote. Before any such certificate 
is sent, the directors of the Fund who are not ``Interested Persons'' 
of the Fund within the meaning of section 2(a)(19) of the Act (the 
``Independent Directors'') will be notified.

Applicants' Legal Analysis

    1. Section 15(a) of the Act provides, in pertinent part, that it 
shall be unlawful for any person to serve or act as an investment 
adviser of a registered investment company, except pursuant to a 
written contract that has been approved by the vote of a majority of 
the outstanding voting securities of such investment company. Section 
15(a) further requires that such written contract provide for automatic 
termination in the event of its assignment. Section 2(a)(4) of the Act 
defines ``assignment'' to include any direct or indirect transfer of a 
contract by the assignor.
    2. Applicants state that, upon completion of the Transaction, Chubb 
Life, the Adviser's parent, will be controlled by Jefferson-Pilot 
rather than Chubb. Applicants therefore believe that the Transaction 
will result in an indirect ``assignment'' of the Existing Agreements 
between the Fund and the Adviser within the meaning of section 2(a)(4).
    3. Rule 15a-4 provides, in pertinent part, that if an investment 
advisory contract with an investment company is terminated by 
assignment, the adviser may continue to act as such for 120 days under 
a written contract that has not been approved by the company's 
shareholders, only to the extent that (a) the new contract is approved 
by the company's board of directors (including a majority of directors 
that are not ``interested persons'' of the investment company), (b) the 
compensation to be paid under the new contract does not exceed the 
compensation which would have been paid under the contract most 
recently approved by shareholders of the investment company, and (c) 
neither the investment adviser nor any controlling person of the 
investment adviser ``directly or indirectly receives money or other 
benefit'' in connection with the assignment. Applicants state that they 
cannot rely on rule 15a-4 because of the benefits to Chubb arising from 
the Transaction.
    4. Section 6(c) provides that the SEC may exempt any person, 
security, or transaction from any provision of the Act, 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. 
Applicants believe that the requested relief meets this standard.
    5. Applicants contend that the Fund has prepared the required proxy 
materials as expeditiously as possible and shareholder meetings are 
expected to be held on or about May 30, 1997. Applicants believe that 
the timing of the shareholder meetings may not provide an adequate 
solicitation period to obtain approval of the New Agreement by the 
shareholders of each Portfolio prior to effecting the Transaction.
    6. Applicants believe that the requested relief is necessary, as it 
would permit continuity of investment management services to the 
Portfolios during the Interim Period. Applicants submit that the scope 
and quality of services provided to the Portfolios during the Interim 
Period will not be diminished. During the Interim Period, the 
Portfolios would operate under the New Agreement, which is anticipated 
to be identical in substance to the Existing Agreements, except for 
their effective dates. Applicants are not aware of any material changes 
in personnel who will provide investment management services during the 
Interim Period.
    7. Applicants represent that the best interests of the Portfolios' 
shareholders would be served if the Adviser receives fees for services 
during the Interim Period as provided herein. In addition, applicants 
believe that it would be unjust to deprive the Adviser of fees due to a 
change in control of the corporate parent. Finally, the fees to be paid 
during the Interim Period are at the same rate as the fees currently 
payable by the Fund under the Existing Agreements.

Applicants' Conditions

    Applicants agree as conditions to the issuance of the exemptive 
order requested by the application that:
    1. The New Agreement will have substantially the same terms and

[[Page 17652]]

conditions as the Existing Agreements, except for the effective date.
    2. Fees earned by the Adviser in respect of the New Agreement 
during the Interim Period will be maintained in an interest-bearing 
escrow account, and amounts in the account (including interest earned 
on such paid fees) will be paid (a) to the Adviser in accordance with 
the New Agreement, after the requisite approvals are obtained, or (b) 
to the respective Portfolio, in the absence of such approvals.
    3. The Portfolios will hold a meeting of their shareholders to vote 
on approval of New Agreement on or before the 120th day following the 
termination of the Existing Agreements (but in no event later than 
August 28, 1997).
    4. Jefferson-Pilot and/or Chubb will bear the costs of preparing 
and filing the application and the costs relating to the solicitation 
of the shareholders approval necessitated by the Transaction.
    5. The Adviser will take all appropriate steps so that the scope 
and quality of advisory and other services provided to the Portfolios 
during the Interim Period will be at least equivalent, in the judgment 
of the Board, including a majority of the Independent Directors, to the 
scope and quality of services previously provided. If personnel 
providing material services during the Interim Period change 
materially, the Adviser will apprise and consult with the Board to 
assure that the directors, including a majority of the Independent 
Directors of the Fund, are satisfied that the services provided will 
not be diminished in scope or quality.

    For the Commission, by the Division of Investment Management, 
pursuant to delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 97-9173 Filed 4-9-97; 8:45 am]
BILLING CODE 8010-01-M