[Federal Register Volume 64, Number 55 (Tuesday, March 23, 1999)]
[Notices]
[Pages 14024-14028]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-7089]


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

SECURITIES AND EXCHANGE COMMISSION

[Rel. No. IC-23743; File No. 812-11454]


Western Reserve Life Assurance Co. Of Ohio, et al.

March 17, 1999.
AGENCY: Securities and Exchange Commission (the ``Commission'' or 
``SEC'').

ACTION: Notice of application for an order under Section 6(c) the 
Investment Company Act of 1940 (the ``1940 Act'') granting relief from 
Rule 6e-2(c)(1) and from certain provisions of the Act and Rules 
thereunder specified in paragraph (b) of Rule 6e-2; and from Sections 
2(a)(32) and 27(i)(2)(A) of the Act and Rules 6e-2(b)(12) and 22c-1.

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

APPLICANTS: Western Reserve Life Assurance Co. of Ohio (``Western 
Reserve''), WRL Series Life Account (``Western Reserve Separate 
Account''), PFL Life Insurance Company (``PFL''), Legacy Builder 
Variable Life Separate Account (``PLF Separate Account''), and AFSG 
Securities Corporation (``AFSG'') (collectively, the ``Applicants'').

SUMMARY OF APPLICATION: Applicants seek exemptive relief to the extent 
necessary: (1) to permit them to offer and sell certain variable life 
insurance policies with modified single premiums (``Policies''); and 
(2) to permit other NASD member broker-dealers which may become the 
principal underwriter for such Policies (``Future Underwriters'') to 
offer and sell such Policies.

FILING DATE: The application was filed on January 7, 1999.

HEARING OR NOTIFICATION OF HEARING: The Commission will issue an order 
granting the application unless the Commission 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, in 
person or by mail. The Commission should receive hearing requests by 
5:30 p.m. on April 12, 1999, and the requests 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, Securities and Exchange Commission, 450 Fifth 
Street, N.W., Washington, D.C. 20549-0609. Applicants, c/o Thomas E. 
Pierpan, Esq., Western Reserve Life Assurance Co. of Ohio, 570 Carillon 
Parkway, St. Petersburg, Florida 33716; and Frank A. Camp, Esq., PFL 
Life Insurance Company, 4333 Edgewood Road, NE, Cedar Rapids, Iowa 
52499.

FOR FURTHER INFORMATION CONTACT: Kevin P. McEnery, Senior Counsel, or 
Susan M. Olson, 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 
SEC's Public Reference Branch, Mail Stop 1-2, 450 Fifth St., N.W., 
Washington, D.C. 20549-0102 (tel (202) 942-8090).

[[Page 14025]]

Applicants' Representations

    1. Western Reserve, a stock life insurance company, is a wholly 
owned subsidiary of First AUSA Life Insurance Company, a stock life 
insurance company that is a wholly owned subsidiary of AEGON USA, Inc., 
a financial services holding company.
    2. Western Reserve established the Western Reserve Separate Account 
under Ohio law to serve as a funding vehicle for variable life 
insurance policies issued by Western Reserve and its affiliates. The 
Western Reserve Separate Account is registered under the Act as a unit 
investment trust. In connection with the Policy issued by Western 
Reserve, the Western Reserve Separate Account currently has 12 
subaccounts, each of which invests in shares of a corresponding 
portfolio of a mutual fund registered under the Act as an open-end 
management investment company.
    3. PFL, a stock life insurance company, is a wholly owned indirect 
subsidiary of AEGON USA, Inc.
    4. PFL established the PFL Separate Account under Iowa law to serve 
as a funding vehicle for variable life insurance policies issued by 
PFL. The PFL Separate Account is registered under the Act as a unit 
investment trust. The PFL Separate Account currently has 19 
subaccounts, each of which invests in shares of a corresponding 
portfolio of a mutual fund registered under the Act as an open-end 
management investment company. The Application refers to Western 
Reserve and PFL, when used together, as the ``Companies,'' and the 
Application refers to the Western Reserve Separate Account and the PFL 
Separate Account, when used together, as the ``Separate Accounts.''
    5. AFSG is registered with the Commission as a broker-dealer under 
the Securities Exchange Act of 1934, as amended, and is a member of the 
National Association of Securities Dealers, Inc. (``NASD''). AFSG is 
the principal underwriter of the Policies issued by both Western 
Reserve and PFL.
    6. The Policies are modified single premium variable life insurance 
policies that prospective owners may purchase on an individual or a 
joint and last survivor basis. The Companies will rely on Rule 6e-2 in 
connection with the Policies, although the Policies also contain 
features not contemplated by Rule 6e-2.
    7. The minimum premium required under the Policy for a given 
specified amount depends on a number of factors, including the age, 
sex, and risk class of the proposed insured(s). The Companies currently 
require a minimum initial premium of $20,000; however, each Policy will 
specify the minimum initial premium that the applicant must pay.
    8. The Companies provide limited flexibility to add additional 
premiums since the Companies require that the initial premium equal the 
maximum amount that can be applied to the Policy at issue. In general, 
owners of the Policies may not pay any additional premiums on the 
Policy for several years in order for the Policy to continue to qualify 
on a life insurance contract as defined in Federal tax laws and 
regulations.
    9. Policy owners may instruct the Companies to allocate from 1% to 
100% of premiums to one or more subaccounts of the Separate Accounts 
and to the fixed account options. Policy owners may change the 
allocation instructions for additional premiums without charge at any 
time by providing the Companies with written notification. The 
Companies may limit the number of premium allocation changes.
    10. If the Companies sell a Policy in a state that requires the 
return of initial premium upon exercise of the free look right, then 
the Companies will allocate the initial premium (plus interest) to a 
reallocation account. The premium will remain in the reallocation 
account (earning interest) for the length of time of the state's free 
look period plus five days. After this time, the Companies will 
reallocate all amounts in the reallocation account to the subaccounts 
and fixed account options selected on the Policy application. In other 
states, once underwriting is completed, the Companies will allocate 
premiums to the subaccounts and the fixed account options according to 
Policy owner instructions.
    11. The value of amounts allocated to the subaccounts of the 
Separate Accounts will vary with the investment performance of the 
portfolios underlying the subaccounts. Policy owners bear the entire 
risk for amounts allocated to a subaccount.
    12. The Policies provide for a death benefit that the Companies 
will determine as of the insured's date of death (the last insured, of 
a joint Policy). The death benefit is equal to the greater of: (1) the 
specified amount; or (2) the sum of the Policy's value in the 
subaccounts and the fixed accounts (``cash value'') on the date the 
insured dies multiplied by the applicable limitation percentage. The 
limitation percentage is a percentage based on the insured's age at the 
beginning of each Policy year. For joint Policies, the Companies will 
use the age of the younger insured. Policy owners may not increase or 
decrease the specified amount under the Policy.
    13. When applying for a Policy, owners may also purchase a 
guaranteed minimum death benefit rider whereby the Companies guarantee 
to provide a death benefit (minimum $1,000) as follows: (1) If the net 
surrender value (a Policy's cash value minus any surrender charge and 
minus any outstanding Policy loan) on any monthly deduction day is not 
sufficient to cover the monthly Policy charge on that day, then 
coverage will be provided as indicated below, and no grace period will 
begin, provided that the owner has not taken any Policy loans; and (2) 
If a death benefit is payable due to the provisions of the guaranteed 
minimum death benefit rider, then the following minimum death benefit 
is applicable:
     During the first 15 Policy years, or before the Policy 
anniversary next following the insured's (or younger joint insured's) 
75th birthday, if sooner, the minimum death benefit payable will be as 
described at the beginning of this paragraph 13 above.
     After the first 15 Policy years, or on or after the Policy 
anniversary next following the insured's (or younger joint insured's) 
75th birthday, if sooner, the minimum death benefit payable will be the 
initial premium, reduced by any partial withdrawals.
    14. Owners of a Policy may request a partial withdrawal after the 
first Policy year. The Companies place the following limitations on 
partial withdrawals: (1) only 1 partial withdrawal is allowed during a 
12-month period; and (2) the maximum partial withdrawal is equal to the 
excess of the cash value minus total outstanding loans, minus any 
interest owed on the loans, and minus total premiums paid.
    15. A partial withdrawal will reduce the specified amount (or the 
guaranteed minimum death benefit) under the Policy by an amount equal 
to the amount of the partial withdrawal multiplied by the ratio of the 
initial specified amount to the initial premium.
    16. The Companies do not deduct any charges from premiums before 
allocating the premiums to the subaccounts of the Separate Accounts and 
the fixed account options according to the Policy owner's instructions.
    17. On each valuation date, the Companies deduct a daily charge at 
the annual rate of 0.50% from the assets in the subaccounts as part of 
the calculation of the unit value for each subaccount.
    18. The Companies make a monthly deduction from the Policy's cash 
value

[[Page 14026]]

on the Policy's effective date and on each monthiversary (the same day 
of each succeeding month as the Policy's effective date, or, if there 
is not comparable valuation date, the next valuation date). The 
Companies make the deduction from each subaccount and the fixed account 
options in accordance with the current allocation instructions. If the 
value of any account is insufficient to pay that account's portion of 
the monthly deduction, the Companies will take the monthly deduction on 
a pro-rata basis from all accounts (that is, in the same proportion 
that the value in each subaccount and the fixed accounts bears to the 
total cash value on the monthiversary).
    19. The monthly deduction is equal to: (1) the monthly Policy 
charge based each Separate Account's assets; plus (2) the monthly 
Policy charge based on each fixed account's assets; plus (3) the 
monthly cost of insurance charge for a Policy, if any; plus (4) the 
monthly charge for any benefits provided by riders attached to the 
Policy.
    20. The monthly Policy charge for each Policy varies based on the 
Policy year, gender, and whether the Policy is issued on a single life 
basis or a joint and last survivor basis.
    21. The monthly Policy charge, based on each Separate Account's 
assets is equal to: (1) The separate account monthly deduction charge 
(see table below) divided by 12; multiplied by (2) the sum of the 
subaccount values on the monthiversary.
    22. The monthly Policy charge, based on each fixed account's assets 
is equal to: (1) The fixed account monthly deduction charge (see tables 
below) divided by 12; multiplied by (2) the fixed account value on the 
monthiversary, minus any outstanding Policy loan(s).

----------------------------------------------------------------------------------------------------------------
                                                                     Male/unisex                 Female
                                                             ---------------------------------------------------
         Single life policy             Single life policy       Policy       Policy       Policy       Policy
                                                              years  1-10   years  11+  years  1-10   years  11+
                                                                (percent)   (percent)     (percent)   (percent)
----------------------------------------------------------------------------------------------------------------
Separate account charges (annualized  Monthly deduction              2.00         1.00         1.85          .85
 rate).                                charge (as a % of
                                       separate account
                                       assets).
Fixed account charges (annualized     Monthly deduction              2.00         1.00         1.85          .85
 rate).                                charge (as a % of
                                       fixed account assets).


------------------------------------------------------------------------
                                   Joint &         Policy       Policy
 Joint & survivor life policy   survivor life   years  1-10   years  11+
                                    policy        (percent)   (percent)
------------------------------------------------------------------------
Separate account charges       Monthly                 1.50          .50
 (annualized rate).             deduction
                                charge (as a %
                                of separate
                                account
                                assets).
Fixed account charges          Monthly                 1.50          .50
 (annualized rate).             deduction
                                charge (as a %
                                of fixed
                                account
                                assets).
------------------------------------------------------------------------

    23. The Companies reserve the right to assess a monthly cost of 
insurance charge to compensate them for underwriting the death benefit. 
The charge would depend on a number of variables (age, sex, risk class, 
number of years the Policy has been in force) that would cause it to 
vary from Policy to Policy and from monthiversary to monthiversary. If 
applicable, the Companies would calculate the cost of insurance each 
month for the specified amount at issue. The amount of this charge may 
not exceed the death benefit minus the cash value, and the difference 
multiplied by the appropriate monthly cost of insurance rate. The 
Companies do not currently assess this charge. If the Companies begin 
to assess this charge, the Companies will waive surrender charges upon 
any surrender of the Policy.
    24. The monthly deduction also will include a charge for any 
supplemental benefits added to a Policy by rider.
    25. The Companies currently assess a $10 fee for the 13th and each 
additional transfer during a Policy Year. The transfer charge is 
deducted from the amount transferred.
    26. The value of the net assets of each subaccount will reflect the 
investment advisory fees and other expenses incurred by the 
corresponding portfolio in which the subaccount invests.
    27. If the owner selects the guaranteed minimum death benefit rider 
at application, on each monthiversary the Companies will deduct 0.02% 
of the cash value in the Policy.
    28. If an owner surrenders his Policy during the first 9 Policy 
years, the Companies will deduct a surrender charge from the cash value 
and pay the remaining cash value to the owner. The payment the owner 
receives is the net surrender value. The Companies reduce the surrender 
charge at older ages in compliance with state laws. The Companies 
calculate the surrender charge as a percentage of premium(s) paid based 
on the following schedule:

------------------------------------------------------------------------
                                                             Contingent
                                                              surrender
                                                            charge (as a
                        Policy year                          percentage
                                                             of initial
                                                              premium)
------------------------------------------------------------------------
 1........................................................          9.75
 2........................................................          9.50
 3........................................................          9.25
 4........................................................          9
 5........................................................          8
 6........................................................          7
 7........................................................          6
 8........................................................          4
 9........................................................          2
10........................................................          0
------------------------------------------------------------------------

Applicants' Legal Analysis

Definition of ``Variable Life Insurance Contract''

    1. Rule 6c-3 grants exemptions from those provisions of the Act 
(except for Sections 7 and 8(a)) that are specified in paragraph (b) of 
Rule 6e-2 to certain separate accounts of life insurance companies that 
support variable life insurance policies. Specifically, the exemptions 
provided by Rule 6c-3 are available only to separate accounts 
registered under the Act whose assets are derived solely from the sale 
of ``variable life insurance contracts'' that meet the definition set 
forth in Rule 6e-2(c)(1), and from certain advances made by the 
insurer. Rule 6e-2(c)(1) defines the term ``variable life insurance 
contract'' to include only life insurance policies that provide a death 
benefit and a cash surrender value, both of which vary to reflect the 
investment

[[Page 14027]]

experience of the separate account, and that guarantee that the death 
benefit will not be less than an initial dollar amount stated in the 
policy. As discussed above, the Policies' death benefit provides that 
the beneficiary will receive the greater of (1) the specified amount, 
or (2) the cash value multiplied by the appropriate limitation 
percentage. Thus, Applicants submit that the death benefit will not 
necessarily vary to reflect the investment experience of the Separate 
Account(s). Applicants request relief from the definition of ``variable 
life insurance contracts'' set forth in Rule 6e-2(c)(1) because 
Applicants must rely on certain exemptive provisions in Rule 6e-2(b), 
as described below, in connection with the issuance and sale of the 
Policies.
    2. Applicants state that they must avail themselves of certain 
relief provided by Rule 6e-2(b), as set forth below, in order to issue, 
sell, and maintain the Policies.\1\ Applicants request relief to the 
extent necessary to permit reliance on the exemptions provided in each 
of the provisions of paragraph (b) of Rule 6e-2 that are set forth 
below, in connection with the issuance and sale of the Policies.
---------------------------------------------------------------------------

    \1\ Applicants state that certain of the relief requested may 
not currently be necessary in light of the structure of each of the 
Separate Accounts as a ``unit investment trust,'' but would become 
necessary if either of the Separate Accounts were restructured as an 
open-end management company in the future. The Policies permit such 
a restructuring.
---------------------------------------------------------------------------

    (a) Paragraph (b)(3)--Applicants request relief to permit the 
Separate Accounts to rely on paragraph (b)(3)(ii) of Rule 6e-2 in order 
to effect compliance with Section 8(b) of the Act (regarding the filing 
of a registration statement with the Commission).
    (b) Paragraph (b)(4)--Applicants request relief to permit 
Applicants to apply the eligibility restrictions of Section 9 of the 
Act in the fashion contemplated by paragraph (b)4).
    (c) Paragraph (b)(5)--Applicants request relief to permit 
Applicants to rely on the exemptions provided from Section 13(a) of the 
Act relating to insurance regulatory authority imposing certain 
requirements on the investment policies of the Separate Accounts; and 
disapproval by the Companies of changes in the Separate Accounts' 
investment policies initiated by Policy owners under circumstances 
contemplated by and in accordance with the requirements of paragraph 
(b)(5); and to rely on the relief provided by (b)(15) of Rule 6e-2 (see 
below), which in turn refers to the conditions of paragraph (b)(5).
    (d) Paragraph (b)(6)--Applicants request relief to permit 
Applicants to rely on the relief provided by paragraph (b)(15) of Rule 
6e-2 (see below), which in turn refers to the conditions of paragraph 
(b)(6).
    (e) Paragraph (b)(7)--Applicants request relief to permit 
Applicants to rely on the exemptions provided from Section 15(a), (b) 
and (c) relating to an insurance regulatory authority disapproving 
advisory or underwriting contracts; disapproval by the Companies of 
changes in any principal underwriter for the Separate Accounts 
initiated by Policy owners; and disapproval by the Companies of changes 
in any investment adviser to the Separate Accounts initiated by Policy 
owners under circumstances contemplated by and in accordance with the 
requirements of paragraph (b)(7); and to rely on the relief provided by 
paragraph (b)(15) of Rule 6e-2 (see below), which in turn refers to the 
conditions of paragraph (b)(7).
    (f) Paragraph (b)(8)--Applicants request relief to permit 
Applicants to rely on the exemptions provided from Section 16(a) 
relating to an insurance regulatory authority disapproving or removing 
a member of the board of directors of a separate account under 
circumstances contemplated by and in accordance with the requirements 
of paragraph (b)(8); and to rely on the relief provided by paragraph 
(b)(15) of Rule 6e-2, which in turn refers to the conditions of 
paragraph (b)(8).
    (g) Paragraph (b)(9)--Applicants request relief to permit 
Applicants to reply on the exemptions provided from Section 17(f) in 
order to maintain separate account assets in the custody of the 
Companies or an affiliate thereof, in accordance with the requirements 
of paragraph (b)(9).
    (h) Paragraph (b)(10)--Applicants request relief to permit 
Applicants to reply on the exemptions provided from Section 18(i) in 
order to provide for variable contract owner voting as contemplated by 
and in accordance with the requirements of paragraph (b)(10).
    (i) Paragraph (b)(12)--Applicants request relief to permit 
Applicants to rely on the exemptions provided from Section 22(d), 22(e) 
and Rule 22c-1 in connection with issuance, transfer and redemption 
procedures for the Policies, including premium processing, premium rate 
structure, underwriting standards, and the benefit provided by the 
Policies, as contemplated by and in accordance with the requirements of 
paragraph (b)(12).
    (j) Paragraph (b)(14)--Applicants request relief to permit 
Applicants to rely on the relief provided by paragraph (b)(15) of Rule 
6e-2 (see below), which in turn refers to the conditions of paragraph 
(b)(14).
    (k) Paragraph (b)(15)--Applicants request relief to permit 
Applicants to rely on the exemptions provided from Section 9(a), and to 
facilitate the voting by the Companies of shares of management 
investment companies held by the Separate Accounts in disregard of 
Policy owner instructions under the circumstances contemplated by, and 
in accordance with the requirements of, paragraph (b)(15). Relief is 
also requested to permit Applicants to rely on he exemptions provided 
from Sections 14(a), 15(a), 16(a), and 32(a)(2) in connection with any 
registered management investment company established by the Companies 
in the future in connection with the Policies, in accordance with the 
requirements of paragraph (b)(15), and paragraphs (b)(5), (b)(7), 
(b)(8), and (b)(14) of Rule 6e-2.
    3. Applicants submit that the death benefit under the Policies may 
vary to reflect investment experience within the meaning of Rule 6e-
2(c)(1)(i). Applicants state, however, the structure of the death 
benefit may not precisely meet with the definitional requirements of 
Rule 6e-2(c)(1) since the death benefit will vary with investment 
experience only when the cash value is sufficiently large that, in 
order to qualify a Policy as life insurance for Federal income tax 
purposes, the death benefit must be increased. Applicants state that 
this may happen, for example, because of very favorable investment 
experience, the payment of additional premiums, or both. Under ordinary 
circumstances, it is likely that the death benefit will not change for 
several years as a result of any favorable investment experience. 
Therefore, Applicants request relief to the extent necessary to permit 
reliance on the definition of ``variable life insurance contract'' in 
Rule 6e-2(c)(1), and on the exemptions provided in each of the 
provisions of paragraph (b) of Rule 6e-2 that are set forth above, 
under the same terms and conditions applicable to a separate account 
that satisfies the conditions set forth in Rule 6e-2(a), to the extent 
necessary to permit the offer and sale of the policies in reliance on 
Rule 6e-2.
    4. Applicants further submit that the considerations that led the 
Commission to adopt Rules 6c-3 and 6e-2 apply equally to the Separate 
Accounts and the Policies, and that the exemptions provided by these 
rules should be granted to the Separate Accounts and to the other 
Applicants on the terms specified in those rules, except to the

[[Page 14028]]

extent that further exemption from those terms is specifically 
requested herein.

Redeemability

    5. Section 27(i)(2)(A) provides that no registered separate account 
funding variable insurance contracts or its sponsoring insurance 
company shall sell such a contract unless it is a ``redeemable 
security.'' Section 2(a)(32) defines a ``redeemable security'' as any 
security (other than short-term paper) entitling its holder to receive 
``approximately his proportionate share of the issuer's current net 
assets'' (or the cash equivalent thereof) upon presentation to the 
issuer. Applicants request relief from the requirement in Section 
27(i)(2)(A) that the Policy be a ``redeemable security,'' and from the 
definition of ``redeemable security'' set forth in Section 2(a)(32), in 
connection with the issuance and sale of the Policies and the surrender 
charge applicable to the Policies.
    6. Rule 22c-1 promulgated under Section 22(c) of the Act requires 
that a security be redeemed at a price based on the current net asset 
value of the security next computed after receipt of request for 
surrender. If the conditions of Rule 6e-2(b)(12) are satisfied, 
paragraph (b)(12) provides certain exemptions from Rule 22c-1. However, 
a surrender charge such as the one provided under the Policies may not 
be contemplated by Rule 6e-2(b)(12), and thus may be deemed 
inconsistent with the foregoing provisions, to the extent that the 
charge can be viewed as causing a Policy to be redeemed at a price 
based on less than the current net asset value that is next computed 
after surrender of the Policy. Accordingly, Applicants request relief 
from Rule 22c-1 and Rule 6e-2(b)(12) to the extent necessary to permit 
the deduction of the surrender charge on surrender of a Policy.
    7. Although Section 2(a)(32) does not specifically contemplate the 
imposition of a charge at the time of redemption, Applicants state that 
such charges are not necessarily inconsistent with the definition of 
``redeemable security.''
    8. Applicants submit that each of the Policies will be a 
``redeemable security.'' Each Policy provides for full surrender of the 
Policy for its net surrender value. The prospectuses for the Policies 
will disclose the nature of the surrender charge. Accordingly, 
Applicants state that there will be no restriction on, or impediment 
to, surrender that should cause a Policy to be considered other than a 
redeemable security within the meaning of the Act and rules thereunder. 
Upon surrender, a Policy owner will receive his or her ``proportionate 
share'' of the assets of the appropriate Separate Account, i.e., the 
amount of premiums paid, reduced by the amount of all charges and 
loans, and increased or decreased by the amount of investment 
performance credited to the Policy.
    9. Applicants, consistent with their current procedures, will 
determine the net surrender value under a Policy in accordance with the 
requirements of Rules 6e-2(b)(12) and 22c-1 and on a basis next 
computed after receipt of a Policy owner's request for surrender the of 
the Policy.
    10. Applicants also state that the charge structure has been 
accepted as an appropriate feature of life insurance products under 
Rule 6e-3(T), as well as pursuant to exemptive relief granted by the 
Commission.
    11. Therefore, Applicants respectfully submit that the surrender 
charge is consistent with the principles and policies underlying the 
limitations in Sections 2(a)(32) and 27(i)(2)(A) of the Act and Rules 
6e-2(b)(12) and 22c-1 thereunder.

Class Exemption for Future Underwriters

    12. Applicants also seek the relief herein with respect to Future 
Underwriters, a class consisting of NASD member broker-dealers which 
may, in the future, act as principal underwriter of the Policies.
    13. Applicants represent that the terms of the relief requested 
with respect to any Future Underwriters are consistent with the 
standards set forth in Section 6(c) of the Act. Further, Applicants 
state that, without the requested class relief, exemptive relief any 
Future Underwriter would have to be requested and obtained separately. 
Applicants assert that such additional requests for exemptive relief 
would present no issues under the Act not already addressed herein. 
Applicants state that if Applicants were to repeatedly seek exemptive 
relief with respect to the same issues addressed in their application, 
investors would not receive additional protection or benefit, and 
investors and Applicants could be disadvantaged by increased costs from 
preparing additional requests for relief. Applicants argue that the 
requested class relief will promote competitiveness in the variable 
life insurance market by eliminating the need for the Companies to file 
redundant exemptive applications, thereby reducing administrative 
expenses and maximizing efficient use of resources. Applicants submit, 
for all the reasons stated herein, that their request for class 
exemptions 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, and that an order of 
the Commission including such class relief, should, therefore, be 
granted.

Conclusion

    Applicants submit, for all of the reasons stated therein, that 
their request for exemptions are 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.

    For the Commission, by the Division of Investment Management, 
pursuant to delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 99-7089 Filed 3-22-99; 8:45 am]
BILLING CODE 8010-01-M