[Federal Register Volume 68, Number 247 (Wednesday, December 24, 2003)]
[Notices]
[Pages 74659-74663]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-31696]



[[Page 74659]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. IC-26314; File No. 812-13013]


Midland National Life Insurance Company, et al.

December 18, 2003.

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

ACTION: Notice of an application for an order pursuant to Section 6(c) 
of the Investment Company Act of 1940, as amended the (``Act'') 
granting exemptions from the provisions of sections 2(a)(32), 22(c) and 
27(i)(2)(A) of the Act and Rule 22c-1 thereunder.

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APPLICANTS: Midland National Life Insurance Company (``Midland''), 
Midland National Life Separate Account C (the ``Midland Account''), and 
Sammons Securities Company, LLC (``Sammons Securities'') (all 
collectively, the ``Applicants'').

SUMMARY: The Applicants hereby apply for an order of the Commission 
exempting them with respect to the support of variable annuity 
contracts described herein (the ``Contracts'') and other variable 
annuity contracts that are similar in all material respects to the 
contracts described herein, that Midland may issue in the future 
(``Future Contracts''), and any other separate accounts of Midland and 
its successors in interest (``Future Accounts'') that support Future 
Contracts, and certain National Association of Securities Dealers, Inc. 
(``NASD'') member broker-dealers which, in the future, may act as 
principal underwriter of such Contracts (``Future Underwriters''), from 
the provisions of sections 2(a)(32), 22(c), and 27(i)(2)(A) of the Act 
and Rule 22c-1 thereunder, pursuant to section 6(c) of the Act, to the 
extent necessary to permit the recapture of a bonus credit (previously 
applied to premium payments) where the bonus credit was applied and (i) 
the contract owner (``Owner'') exercises his or her ``free look'' 
right, or (ii) in the event of death, partial withdrawal, or surrender 
of the contract in the first seven contract years (pursuant to a 
vesting schedule).

DATES: The Application was filed on September 3, 2003, and amended and 
restated on December 1, 2003.

HEARING OR NOTIFICATION OF HEARING: An order granting the application 
will be issued unless the Commission orders a hearing. Interested 
persons may request a hearing by writing to the Secretary of the 
Commission and serving the Applicants with a copy of the request, 
personally or by mail. Hearing requests must be received by the 
Commission by 5:30 p.m. on January 11, 2004, and should be accompanied 
by proof of service on the 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 Secretary of the Commission.

ADDRESSES: Secretary, Securities and Exchange Commission, 450 Fifth 
Street, NW., Washington, DC 20549-0609. Applicants: c/o Steve Horvat, 
Esq., Midland National Life Insurance Company, One Midland Plaza, Sioux 
Falls, SD 57193. Copy to Frederick R. Bellamy, Esq., Sutherland Asbill 
& Brennan LLP, 1275 Pennsylvania Avenue, NW., Washington, DC 20004.

FOR FURTHER INFORMATION CONTACT: Mark A. Cowan, Senior Counsel, or 
Zandra Bailes, Branch, Chief, Office of Insurance Products, Division of 
Investment Management, at (202) 942-0670.

SUPPLEMENTARY INFORMATION: Following is a summary of the Application. 
The complete Application is available for a fee from the Commission's 
Public Reference Branch, 450 5th Street NW., Washington, DC 20549, 
(202) 942-8090.

Applicants' Representations

    1. Midland is a stock life insurance company. Midland was organized 
in 1906, in South Dakota, as a mutual life insurance company at that 
time named the Dakota Mutual Life Insurance Company. It was 
reincorporated as a stock life insurance company in 1909. The name 
Midland was adopted in 1925. Midland was redomesticated to Iowa in 
1999. It is licensed to do business in the District of Columbia, Puerto 
Rico, and in all States except New York. Midland is a subsidiary of 
Sammons Enterprises, Inc. which has controlling or substantial stock 
interests in a large number of other companies engaged in the areas of 
insurance, corporate services, and industrial distribution.
    2. Under the terms of the Contracts, the assets of the Midland 
Account equal to the reserves and other contract liabilities with 
respect to the Midland Account are not chargeable with liabilities 
arising out of any other business which the sponsoring company may 
conduct (except to the extent that assets in the Midland Account exceed 
the reserves and liabilities of the Midland Account). The Midland 
Account is comprised of investment divisions established to receive and 
invest net premium payments under the Contracts (the ``Investment 
Divisions'') and other annuity contracts. The income, gains and losses, 
realized or unrealized, from the assets allocated to each Investment 
Division will be credited to or charged against that Investment 
Division without regard to other income, gains or losses of any other 
Investment Division. The Midland Account meets the definition of a 
``separate account'' in Rule 0-1(e) under the Act.
    3. The Board of Directors of Midland established the Midland 
Account under the insurance laws of the State of South Dakota in March 
1991. The Midland Account is now governed by Iowa law. The Midland 
Account is registered under the Act as a unit investment trust (File 
No. 811-07772). The assets of the Midland Account support certain 
flexible premium variable annuity contracts, and interests in the 
Midland Account offered through such contracts have been registered 
under the Securities Act of 1933 (``1933 Act'') on three Form N-4 
Registration Statements (File Nos. 33-64016, 333-71800 and 333-108437). 
The Contract, which includes the optional bonus and accompanying 
recapture that is the subject of this application, is registered in 
File No. 333-108437.
    4. Sammons Securities, an affiliate of Midland, is the principal 
underwriter of the Contracts. Sammons Securities is registered with the 
Commission as a broker-dealer under the Securities Exchange Act of 
1934, as amended, and is a member of the NASD.
    5. Each Investment Division will invest exclusively in a designated 
series of shares, representing an interest in a particular portfolio of 
one or more designated management investment companies of the series 
type (``Funds''). Midland reserves the right to designate the shares of 
another portfolio of the Funds or of other management investment 
companies (``Other Funds'') as the exclusive investment vehicle for 
each new Investment Division that may be created in the future. Subject 
to Commission approval under section 26(c) of the Act, Applicants also 
reserve the right to substitute the shares of another portfolio 
previously designated as the exclusive investment vehicle for each 
Investment Division.
    6. The Contracts are flexible premium deferred variable annuity 
contracts issued by Midland through the Midland Account. Midland 
currently intends to market the Contract under the name ``Advantage II 
Variable Annuity.'' The Contracts provide for the accumulation of 
values on a variable or fixed basis during the accumulation period, and 
may provide settlement or annuity payment plans on a variable or fixed

[[Page 74660]]

basis. The Contracts may be purchased on a non-qualified tax basis. The 
Contracts may also be purchased and used in connection with plans 
qualifying for favorable Federal income tax treatment.
    7. The Owner determines in the supplemental application or 
transmittal form for a Contract how the net premium payments will be 
allocated among the Investment Divisions of the Midland Account, the 
Fixed Account and any available dollar cost averaging options of the 
Fixed Account (the ``Fixed Account Options''). The Owner generally may 
allocate premium payments to each Investment Division and to each Fixed 
Account Option. The Accumulation Value will vary with the investment 
performance of the Investment Divisions selected, and the Owner bears 
the entire risk for amounts allocated to the Investment Division.
    8. An Owner may return his or her Contract for a refund. This is 
called the ``Free Look Right.'' The Free Look Right allows an Owner 10 
days (or longer if required by state law) to return his or her 
Contract. Midland generally will return the Accumulation Value minus 
any premium bonus credit to the Owner, but may return the full premium 
payment (not including the bonus credit), if greater and required by 
state law.
    9. An Owner may transfer Accumulation Value among the Investment 
Divisions and between the Fixed Account and any Investment Division 
prior to the maturity date. The amount that an Owner may transfer into 
or out of the Fixed Account is limited. The minimum transfer amount is 
$200, or 100% of an Investment Division if less than $200. The minimum 
amount does not have to come from or be transferred to just one 
Investment Division. The only requirement is that the total amount 
transferred in a day equals at least the transfer minimum. Midland 
currently allows an unlimited number of transfers of accumulated value 
in a contract year prior to the maturity date, but Midland reserves the 
right to charge a transfer fee of $15 for every transfer after the 
twelfth in a contract year. After the maturity date, Owners may only 
make two transfers per contract year and then only among the Investment 
Divisions of the Midland Account.
    10. The Owner may withdraw all or part of his or her surrender 
value prior to the maturity date. If an Owner surrenders a Contract or 
takes partial surrender, Midland may deduct a surrender charge to 
compensate it partially for the selling and distribution expenses of 
the Contracts, including commissions and the costs of preparing sales 
literature and printing prospectuses. An Owner is permitted to withdraw 
10% of net premiums (premium minus partial surrenders) once each 
contact year without incurring a surrender charge. The following chart 
shows the surrender charges that apply to the Contracts:

------------------------------------------------------------------------
                                                             Surrender
                                                           charge (as a
  Length of time from premium payment (number of years)    percentage of
                                                              premium
                                                            withdrawn)
------------------------------------------------------------------------
1.......................................................               9
2.......................................................               8
3.......................................................               7
4.......................................................               6
5.......................................................               5
6.......................................................               4
7.......................................................               3
8.......................................................               2
9.......................................................               1
10+.....................................................               0
------------------------------------------------------------------------

    11. Under the Contracts, Midland will pay a death benefit under 
certain circumstances. Midland's death benefit equals the greatest of: 
(i) The Accumulation Value (less any non-vested premium bonus and 
premium taxes); or (ii) 100% of the total net premium payments. Future 
Contracts may provide different death benefits.
    12. If an Owner elects the Premium Bonus Rider under the Contracts, 
then Midland will add a 6% bonus credit to the Owner's premium payments 
made during the first contract year. Once elected, the Premium Bonus 
Rider may not be terminated. The Owner will vest in a portion of this 
bonus over each of the first seven contract years. As requested in the 
application, Midland intends that if the Owner exercises the Free Look 
Right, then the Owner will not receive any portion of the bonus amount. 
In the event of death, annuitization, withdrawal (including any penalty 
fee withdrawals), or surrender of the Contract in the first seven 
contract years, the Owner or the Owner's beneficiary(ies) will only be 
entitled to that portion of the bonus that has vested, and is not 
retained by Midland, at the time the event occurs. In contract year 8 
and thereafter, the Owner will be entitled to 100% of the bonus amount. 
The vesting schedule is as follows:

------------------------------------------------------------------------
                                                             Amount of
                      Contract year                        bonus vested
------------------------------------------------------------------------
1.......................................................          \4/12\
2.......................................................          \5/12\
3.......................................................          \6/12\
4.......................................................          \7/12\
5.......................................................          \8/12\
6.......................................................          \9/12\
7.......................................................         \10/12\
8.......................................................         \12/12\
------------------------------------------------------------------------

    13. Midland will assess daily charge during the first nine contract 
years against the Owner's Accumulation Value in the Midland Account as 
a charge for the Premium Bonus Rider. The current charge for the 
Premium Bonus Rider is at an annual rate of 0.65% of the Midland 
Account Accumulation Value. Midland reserves the right to change the 
charge for the Premium Bonus Rider, but the guaranteed maximum level of 
this charge is 0.70% annually.
    14. On the maturity date the Owner may take the surrender value in 
one lump sum or convert the surrender value into an annuity. The owner 
may elect or change an annuity payment option up until thirty days 
before the maturity date. The first annuity payment will be made within 
one month after the maturity date. The first annual payment will be 
made within one month after the maturity date. The Owner generally may 
change the maturity date, subject to limits specified in the 
prospectus.
    15. The amount of each annuity payment under the annuity payment 
plans will depend on which type of plan is selected, and depending on 
the plan that is chosen, may depend on factors such as the payee's age, 
sex (if allowed), and length of the payment period between each annuity 
payment.
    16. Midland may offer Owners dollar cost averaging programs, where 
Midland, on a monthly or quarterly basis, will automatically transfer a 
predetermined amount of money from any Investment Option or the Fixed 
Account into one or more of the Investment Divisions; a portfolio 
rebalancing program, where Midland will automatically rebalance, on a 
monthly, quarterly, semi-annual or annual basis, the amounts in an 
Owner's Investment Divisions according to his or her desired asset 
allocation; a fixed account earnings sweep program, where Midland will 
transfer, on a monthly or quarterly basis, Fixed Account interest 
earnings to one or more of the Investment Divisions; and a systematic 
withdrawal option, where an Owner, on a monthly quarterly semi-annual 
or annual basis, which basis the Owner shall select may receive regular 
payments from his or her Contract subject to certain limitations; or 
other programs.
    17. Midland deducts various fees and charges from the Contracts or 
the

[[Page 74661]]

Midland Account, which currently include daily mortality and expense 
risk fee; an annual maintenance fee (which may be waived if the Owner's 
net premium exceeds a certain amount or if the Owner's Contract is a 
qualified plan under Federal tax law); premium taxes, surrender charges 
(contingent deferred sales loads) ; transfer fees (if applicable 
although no such fees is currently charged); and fees for optional 
benefits or riders.

Applicants' Legal Analysis

    1. Applicants respectfully request that the Commission, pursuant to 
section 6(c) of the Act, grant the exemptions set forth below to permit 
the Applicants to recapture the bonus credit applied to premium 
payments under the Premium Bonus Rider of the Contracts (subject to a 
vesting schedule) (i) upon exercise of the Free Look Right, or (ii) in 
the event of death, annutization, or surrender (full or partial) before 
the eighth contract year.
    2. Section 6(c) authorizes the Commission, by order upon 
application, to conditionally or unconditionally grant an exemption 
from any provision, rule or regulation of the Act to the extent that 
the exemption is necessary or appropriate in the public interest and 
consistent with the protection of investors and the purposes fairly 
intended by the contract and provisions of the Act. Applicants request 
exemptions for the Contracts described herein, and for Future 
Contracts, from sections 2(a)(32), 22(c) and 27(i)(2)(a) of the Act, 
and Rule 22c-1 thereunder, pursuant to section 6(c), to the extent 
necessary to recapture the bonus credit applied to a premium payment 
under the Premium Bonus Rider, as described above. Applicants seek 
exemptions therefrom in order to avoid any questions concerning the 
Contracts' compliance with the Act and rules thereunder.
    3. For the reasons discussed below, Applicants assert that the 
recapture of some or all of the bonus credit under the Premium Bonus 
Rider in the circumstances described herein is necessary or appropriate 
in the public interest and consistent with the protection of investors 
and purposes fairly intended by the policy and provisions of the Act.
    4. Section 27(i) provides that section 27 does not apply to any 
registered separate account funding variable insurance contracts, nor 
to the sponsoring insurance company and principal underwriter of such 
account, except as provided for in section 27(i)(2)(A). 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 a redeemable security.
    5. 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.
    6. To the extent that the recapture of bonus credit under the 
Premium Bonus Rider might be seen as a discount from the net asset 
value, or might be viewed as resulting in the payment to an Owner of 
less than the proportionate share of the issuer's net assets, the bonus 
credit recapture would trigger the need for relief absent some 
exemption from the Act. Rule 6c-8 provides, in relevant part, that a 
registered separate account, and any depositor of such account, shall 
be exempt from sections 2(a)(32), 22(c), 27(c)(1), 27(c)(2) and 27(d) 
of the Act and Rule 22c-1 thereunder to the extent necessary to permit 
them to impose a deferred sales load on any variable annuity contract 
participating in such account. However, the bonus credit recapture 
under the Premium Bonus Rider is not a sales load, but a recapture of a 
bonus credit Midland previously applied to an Owner's premium payments. 
Under the Premium Bonus Rider, Midland provides the bonus credit from 
its general account on a guaranteed basis. The Contracts are designed 
to be long-term investment vehicles. In undertaking this financial 
obligation, Midland contemplates that an Owner will retain a Contract 
over an extended period, consistent with the long-term nature of the 
Contracts. Midland designed its product so that it would recover its 
costs (including the bonus credit) over an anticipated duration while a 
Contract is in force. If an Owner withdraws his or her money from the 
Contract before this anticipated period, Midland must recapture the 
bonus credit under the Premium Bonus Rider in order to avoid a loss.
    7. Applicants submit that the recapture of a bonus credit does not 
violate section 2(a)(32) of the Act. The Applicants submit that the 
bonus recapture under the Premium Bonus Rider of the Contracts does not 
deprive the Owner of his or her proportionate share of the issuer's 
current net assets. An Owner's right to the bonus credit under the 
Premium Bonus Rider will begin to vest in the first contract year, and 
will become fully vested after the seventh contract year. Until that 
time, Midland retains the right and interest in the dollar amount of 
any unvested bonus credit amount. Thus, when Midland recaptures a bonus 
credit, it is only retrieving its own assets, and because an Owner's 
interest in the bonus credit is not vested, such Owner would not be 
deprived of a proportionate share of the Midland Account's assets (the 
issuer's current net assets) in violation of section 2(a)(32). 
Therefore, such recapture does not reduce the amount of the Midland 
Account's current net assets an Owner would otherwise be entitled to 
receive. However, to avoid uncertainty as to full compliance with the 
Act, the Applicants request an exemption from the provisions of 
sections (2)(a)(32) and 27(i)(2)(A) to the extent deemed necessary to 
permit them to recapture the bonus credit under the Premium Bonus Rider 
of the Contracts and Future Contracts.
    8. Section 22(c) of the Act states that the Commission may make 
rules and regulations applicable to registered investment companies, 
and to principal underwriters of, and dealers in, the redeemable 
securities of any registered investment company to accomplish the same 
ends as contemplated by section 22(a). Rule 22c-1, promulgated under 
section 22(c) of the Act, in pertinent part, prohibits a registered 
investment company issuing a redeemable security (and a person 
designated in such issuer's prospectus as authorized to consummate 
transactions in such security, and a 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.
    9. As a result of the 6% bonus credit under the Premium Bonus 
Rider, an Owner who made a $10,000 initial premium payment could be 
viewed as having an Accumulation Value of $10,600 before any earnings 
accrued. Midland's addition of the bonus credit might arguably be 
viewed as resulting in an Owner purchasing a redeemable security for a 
price below the current net asset value. Further, by recapturing the 
bonus credit, Midland might arguably be redeeming a redeemable security 
for a price other than one based on the current net asset value of the 
Midland Account. The Applicants contend that these are not correct 
interpretations or applications of these statutory and regulatory 
provisions. The Applicants contend that the bonus credit under the 
Premium Bonus Rider of the Contracts does not violate section 22(c) and 
Rule 22c-1.

[[Page 74662]]

    10. An Owner's interest in his or her Accumulation Value or in the 
Midland Account would always be offered at a price based on the net 
asset value next calculated after receipt of the order. The granting of 
a bonus credit pursuant to the Premium Bonus Rider does not reflect a 
reduction of that price. Instead, Midland will purchase with its own 
general account assets an interest in the Midland Account equal to the 
bonus credit. Because the bonus credit will be paid out of Midland's 
assets, not the Midland Account's assets, no dilution will occur as a 
result of the credit.
    11. The recapture of the bonus credit under the Premium Bonus Rider 
does not involve either of the evils that the Commission intended to 
eliminate or reduce with Rule 22c-1. The Commission's stated purposes 
in adopting Rule 22c-1 were to avoid or minimize (i) dilution of the 
interests of other security holders and (ii) speculative trading 
practices that are unfair to such holders. These evils were the result 
of backward pricing, the practice of basing the price of a mutual fund 
share on the net asset value per share determined as of the close of 
the market on the previous day. Backward pricing allowed investors to 
take advantage of increases or decreases in net asset value that were 
not yet reflected in the price, and thereby the values of outstanding 
mutual fund shares were diluted.
    12. The proposed recapture of the bonus credit under the Premium 
Bonus Rider does not pose such threat of dilution. The bonus credit 
recapture will not alter an Owner's net asset value. Midland will 
determine an Owner's surrender value under a Contract in accordance 
with Rule 22c-1 on a basis next computed after receipt of an Owner's 
request for surrender (likewise, the calculation of death benefits and 
annuity payment amounts will be in full compliance with the forward 
pricing requirement of Rule 22c-1). The amount recaptured will equal 
the amount of the bonus credit that Midland paid out of its general 
accounts assets. Although an Owner will retain any investment gain 
attributable to the bonus credit, Midland will determine the amount of 
such gain on the basis of the current net asset value of the Investment 
Division. Thus, no dilution will occur upon the recapture of the bonus 
credit.
    13. Further, Applicants submit that the other harm that Rule 22c-1 
was designed to address (speculative trading practices calculated to 
take advantage of backward pricing) will not occur as a result of 
Midland's recapture of the bonus credit. Variable annuities are 
designed for long-term investment, and by their nature, do not lend 
themselves to the kind of speculative short-term trading that Rule 22c-
1 was designed to prevent. More to the point, the credit recapture 
simply does not create the opportunity for speculative trading.
    14. Applicants assert that Rule 22c-1 and section 22(c) should have 
not application to the bonus credit available under the Premium Bonus 
Rider, as neither of the harms that Rule 22c-1 was designed to address 
is present in the recapture of the bonus credit. However, to avoid 
uncertainty as to full compliance with the Act, the Applicants request 
an exemption from the provisions of section 22(c) and Rule 22c-1 to the 
extent deemed necessary to permit them to recapture the bonus credit 
under the Premium Bonus Rider of the Contracts and Future Contracts.
    15. Applicants submit that Midland's recapture of the bonus credit 
is designed to prevent anti-selection. The risk of anti-selection would 
be that an Owner could make significant premium payments into the 
Contract solely in order to receive a quick profit from the credit.

Conclusion

    1. For the reasons discussed above, the Applicants submit that the 
bonus credit involves none of the abuses to which provisions of the Act 
and the rules thereunder are directed. The Owner will always retain the 
investment experience attributable to the bonus credit, and will retain 
the principal amount in all cases except under the single circumstances 
described herein. Further, Midland should be able to recapture such 
bonus credit to protect itself from investors wishing to use the 
Contract as a vehicle for a quick profit at a Midland's expense, and to 
enable Midland to limit potential losses associated with such bonus 
credit.
    2. Accordingly, Applicants request exemptions from section 
2(a)(32), 22(c), and 27(i)(2)(A) of the Act and Rule 22c-1 thereunder, 
to the extent necessary to permit the Applicants to recapture the bonus 
credit applied to a premium payment in the circumstance described 
above. For the reasons set forth above, Applicants believe that the 
exemptions requested 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, and 
consistent with and supported by Commission precedent.
    3. Applicants seek relief herein not only for themselves with 
respect to the support of the Contracts, but also with respect to 
Future Accounts or Future Contracts described herein. Applicants 
represent that the terms of the relief requested with respect to any 
Contracts or Future Contracts funded by the Midland Account or Future 
Accounts are consistent with the standards set forth in section 6(c) of 
the Act and Commission precedent. The Commission has previously granted 
class relief (from certain specified provisions of the Act for separate 
accounts that support variable annuity contracts) that is materially 
similar to the relief described in the application.
    4. In addition, Applicants seek relief herein with respect to 
Future Underwriters (i.e., a class consisting of NASD member broker-
dealers which may also as principal underwriter of the Contracts and 
Future Contracts). The Commission has regularly granted relief to 
``future underwriters'' that are not named, and are not affiliates of 
the Applicants. 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 and Commission 
precedent.
    5. Applicants state that, without the requested class relief, 
exemptive relief for any Future Account, Future Contract, or Future 
Underwriter would have to be requested and obtained separately. 
Applicants assert that these additional requests for exemptive relief 
would present no issues under the Act not already addressed herein. 
Applicants state that if the Applicants were to repeatedly seek 
exemptive relief with respect to the same issues addressed herein, 
investors would not receive additional protection or benefit, and 
investors and the Applicants could be disadvantaged by increased costs 
from preparing such additional request 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 Midland 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 opine, enhance 
Applicants' ability to effectively take advantage of business 
opportunities as such opportunities arise. 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

[[Page 74663]]

the Act, and that an order of the Commission including such class 
relief, should, therefore, be granted. Any entity that currently 
intends to rely on the requested exemptive order is named as an 
applicant. Any entity that relies upon the requested order in the 
future will comply with the terms and conditions contained in this 
Application.
    6. Applicants represent that the requested exemptions are necessary 
and appropriate in the public interest and consistent with 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. 03-31696 Filed 12-23-03; 8:45 am]
BILLING CODE 8010-01-M