[Federal Register Volume 62, Number 104 (Friday, May 30, 1997)]
[Notices]
[Pages 29380-29382]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-14123]


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SECURITIES AND EXCHANGE COMMISSION

[Rel. No. IC-22680; File No. 812-10362]


United Investors Life Insurance Company, et al.

May 22, 1997.
AGENCY: The Securities and Exchange Commission (the ``SEC'' or 
``Commission'').

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

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APPLICANTS: United Investors Life Insurance Company (``United 
Investors''), RetireMAP Variable Account (the ``Variable Account''), 
and MAP Investments Incorporated (``MAP'').

RELEVANT ACT SECTIONS: Order requested pursuant to Section 6(c) of the 
Act, granting exemptions from Sections 2(a)(32), 22(c), and 27(i)(2)(A) 
of the Act and Rule 22c-1 thereunder.

SUMMARY OF APPLICATION: Applicants seek exemptive relief to the extent 
necessary to permit United Investors, with respect to the Variable 
Account and any other separate accounts which United Investors may 
establish in the future (``Other Account''), to deduct prorated death 
benefit charges, upon surrender of a variable annuity policy, under an 
optional death benefit rider (the ``Optional Death Benefit Rider'') to 
the variable annuity policies currently offered through the Variable 
Account (``Policies'') and future variable annuity policies that are 
similar in all material respects to the Policies (``Future Policies''). 
Exemptive relief also is requested to the extent necessary to permit 
the offer and sale of Policies and Future Policies for which certain 
broker-dealers other than MAP serve as the principal underwriter.

FILING DATE: The application was filed on September 23, 1996, and 
amended on January 31, 1997, and March 7, 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 Secretary of the Commission 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 June 16, 
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 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, 450 Fifth 
Street, NW., Washington, DC 20549. Applicants, c/o James L. Sedgwick, 
Esq., United Investors Life Insurance Company, 2001 Third Avenue South, 
Birmingham, Alabama 35233.

FOR FURTHER INFORMATION CONTACT: Michael B. Koffler, Staff Attorney, or 
Kevin M. Kirchoff, Branch Chief, Office of Insurance Products, Division 
of Investment Management, at (202) 942-0670.

SUPPLEMENTARY INFORMATION: The following is a summary of the 
application. The complete application is available for a fee from the 
Public Reference Branch of the Commission.

Applicants' Representations

    1. United Investors is a stock life insurance company that was 
incorporated in the State of Missouri on August 17, 1981. United 
Investors is a wholly-owned subsidiary of United Investors Management 
Company (formerly TMK/United, Inc.), which in turn is indirectly owned 
by Torchmark Corporation. United Investors is principally engaged in 
offering life insurance and annuity contracts and is admitted to do 
business in the District of Columbia and all states except New York.
    2. The Variable Account was established on September 20, 1996, to 
fund tax-qualified and non-tax-qualified variable annuity policies. The 
Variable Account will be divided into a number of divisions 
(``Investment Divisions''), each of which will invest exclusively in a 
portfolio (``Portfolio'') of a designated mutual fund (``Fund'').
    3. MAP is the principal underwriter and the distributor of the 
Policies. MAP is registered with the Commission as a broker-dealer 
under the Securities Exchange Act of 1934 and is a member of the 
National Association of Securities Dealers, Inc. (``NASD''). MAP is not 
affiliated with United Investors.
    4. Applicants reserve the right to designate the shares of another 
Portfolio of the Funds or of other management investment companies of 
the series type as the exclusive investment vehicle for each new 
Investment Division that may be created in the future.
    5. The Policies may be purchased and used in connection with 
pension plans that qualify or do not qualify for favorable federal 
income tax treatment.
    6. An owner of a variable annuity issued by United Investors 
(``Policyowner'') determines in the application for the Policy how the 
initial net purchase payment will be allocated among the Investment 
Divisions of the Variable Account and a fixed account of United 
Investors (``Fixed Account''). The Policyowner may allocate any whole 
percentage of net purchase payments, from 0% to 100%, to each 
Investment Division and the Fixed Account. The value of the policy will 
vary with the investment performance of the Investment Divisions 
selected, and the Policyowner bears the entire risk for amounts 
allocated to the Variable Account.
    7. The Policyowner may transfer all or part of the policy value 
attributed to each investment Division to one or more of the other 
Investment Divisions at any time prior to the retirement date. The 
Policyowner may transfer all or a part of the policy value attributed 
to the Fixed Account to one or more of the Investment Divisions once 
per policy year prior to the retirement date. This restriction will not 
apply to automatic monthly transfers of a pre-selected dollar amount 
from the Fixed Account to the Investment Divisions.
    8. Prior to the retirement date, the Policyowner may authorize 
automatic transfers of a fixed dollar amount from the Fixed Account or 
the money market Investment Division to up to four of the other 
Investment Divisions. Automatic transfers will be made on a monthly 
basis at the unit values determined on the date of each transfer. The 
Policyowner may surrender the Policy or make a partial withdrawal from 
the policy value and time prior to the retirement date.
    9. The Policy pays a death benefit to the beneficiary if the 
Policyowner dies prior to the retirement date while the Policy is in 
force. The regular death benefit (``Basic Death Benefit'') payable on 
the death of the Owner through attained age 75 is the greatest of: (a) 
The policy value; (b) the total purchase payments made, adjusted for 
any amount withdrawn and any withdrawal charges on the amounts 
withdrawn; and (c) the highest policy values on the 2nd, 4th, or 6th 
anniversaries that the policy went into effect (``Policy 
Anniversaries''), and every 6th Policy Anniversary thereafter. Purchase 
payments made after the Policy

[[Page 29381]]

Anniversary having the highest policy value will be added to the Basic 
Death Benefit, and adjustments will be made for any amounts withdrawn 
and any withdrawal charges since that anniversary. Withdrawal and 
withdrawal charges will result in a reduction of the Basic Death 
Benefit in the same proportion that the amount reduced the policy value 
on the date of the withdrawal.
    10. Under the Optional Death Benefit Rider the death benefit 
payable on the death of the Policyowner (``Optional Death Benefit'') 
through attained age 75 will be the greater of: (a) the policy value; 
and (b) the total purchase payments made, less withdrawals and 
withdrawal charges, accumulated at an annual effective rate of 5%, 
subject to a cap of 200% of purchase payments less withdrawals and 
withdrawal charges. The Optional Death Benefit payable on the death of 
the Policyowner after attained age 75 will be equal to the amount of 
the Optional Death Benefit on the Policy Anniversary on which age 76 is 
attained and will not increase thereafter.
    11. The Policyowner has the sole right to elect (in the application 
for the Policy) or change (at lease 30 days before the retirement date) 
an annuity payment option during the lifetime of the Policyowner. The 
first annuity payment will be made as of the retirement date. The 
Policyowner may select the retirement date in the application for the 
Policy. The Policyowner may change the retirement date at any time at 
least 30 days prior to the new retirement date. The retirement date may 
be changed to the first day of any calendar month commencing 30 days 
after the first Policy Anniversary. The amount of each annuity payment 
under the annuity payment options will depend on the sex and age of the 
annuitant at the time the first payment is due. The payment options 
currently available all involve life contingencies.
    12. There will be a charge made each year (``Optional Death Benefit 
Rider Charge'') for expenses related to the Optional Death Benefit 
available under the terms of the Optional Death Benefit Rider. United 
Investors deducts this charge through the cancellation of accumulation 
units at each Policy Anniversary and at surrender to compensate it for 
the increased risk associated with providing the Optional Death 
Benefit. The charge at full surrender will be a pro rata portion of the 
annual charge. United Investors guarantees that this charge will never 
exceed the annual rate of 0.17% of the average death benefit amount, 
which is the mean of the death benefit amount on the current Policy 
Anniversary (or date of surrender) and the death benefit amount on the 
immediately preceding Policy Anniversary.

Applicants' Legal Analysis

    1. Section 2(a)(32) of the Act defines ``redeemable security'' as 
any security under the terms of which the holder, upon its presentation 
to the issuer, is entitled to receive approximately his proportionate 
share of the issuer's current net assets, or the cash equivalent 
thereof.
    2. Rule 22c-1, promulgated under Section 22(c) of the Act, in 
pertinent part, prohibits a registered investment company issuing a 
redeemable security, a person designated in such issuer's prospectus as 
authorized to consummate transactions in such security, and the 
principal underwriter of, or dealer in, any such security from selling, 
redeeming, or repurchasing any such security except at a price based on 
the current net asset value of such security.
    3. Section 27(i)(2)(A) of the Act, in pertinent part, makes it 
unlawful for any registered separate account funding variable insurance 
contracts, or for the sponsoring insurance company of such account, to 
sell any such contract unless such contract is redeemable security.
    4. The optional death benefit represents an optional insurance 
benefit that United Investors may provide through the life of the 
Policy. United Investors assesses the Optional Death Benefit Rider 
Charge to compensate it for the increased risk it bears if a 
Policyowner elects the Optional Death Benefit Rider. Normally, the 
Optional Death Benefit Rider Charge accrues each policy year and is 
deducted retroactively on each Policy Anniversary, for the prior policy 
year. By paying a prorated Optional Death Benefit Rider Charge upon a 
surrender of the policy, the Policyowner compensates United Investors 
for the additional risk the company bears during the period between the 
last Policy Anniversary and the date of surrender.
    5. Applicants submit that the assessment of a prorated Optional 
Death Benefit Rider Charge upon a Policyowner's surrender, which is 
fully disclosed in the prospectus for the Policy, should not be 
construed as a restriction on redemption. Applicants maintain that the 
imposition of the prorated Optional Death Benefit Rider Charge upon 
surrender represents nothing more than the proportionate deduction of 
an insurance charge that could otherwise be deducted daily through the 
life of the Policy. Moreover, the Optional Death Benefit Rider Charge 
is assessed only if the Policyowner has elected it.
    6. Accordingly, Applicants request that the Commission issue an 
order pursuant to Section 6(c) of the Act exempting them from Sections 
2(a)(32), 22(c), and 27(i)(2)(A) thereof and Rule 22c-1 thereunder to 
the extent necessary to permit the Applicants to assess a prorated 
Optional Death Benefit Rider Charge upon surrender of a Policy where 
the Policyowner has elected the Optional Death Benefit Rider. 
Applicants assert that the requested relief is substantially the same 
as exemptive relief the Commission has granted to other applicants.
    7. Applicants seek relief not only with respect to the Policies, 
but also with respect to Future Policies issued by the Variable Account 
or Other Accounts. Applicants also seek relief with respect to Future 
Underwriters, which will be members of the NASD.
    8. Applicants state that, without the requested class relief, 
exemptive relief for Future Policies, any Other Account, or any Future 
Underwriter would have to be requested and obtained separately. 
Applicants assert that such additional requests for exemptive relief 
would not present additional issues under the Act. Applicants state 
that if they were to repeatedly seek exemptive relief, investors would 
not receive additional protection or benefit, and investors and the 
Applicants could be disadvantaged by increased costs resulting from 
such additional requests for relief. Applicants argue that the 
requested class relief is appropriate in the public interest because 
the relief will promote competitiveness in the variable annuity market 
by eliminating the need for United Investors to file redundant 
exemptive applications, thereby reducing administrative expenses and 
maximizing efficient use of resources. Elimination of the delay and the 
expense of repeatedly seeking exemptive relief would, Applicants 
assert, enhance their ability to effectively take advantage of business 
opportunities as such opportunities arise.

Conclusion

    For the reasons summarized above, Applicants believe that the 
requested exemptions are necessary and 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.


[[Page 29382]]


    For the Commission, by the Division of Investment Management, 
pursuant to delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 97-14123 Filed 5-29-97; 8:45 am]
BILLING CODE 8010-01-M