[Federal Register Volume 69, Number 60 (Monday, March 29, 2004)]
[Notices]
[Pages 16292-16295]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-6891]


=======================================================================
-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Rel. No. IC-26390; File No. 812-13073]


Allstate Life Insurance Company, et al.; Notice of Application

March 23, 2004.
AGENCY: Securities and Exchange Commission (``SEC'' or ``Commission'').

ACTION: Notice of application for an order of exemption pursuant to 
section 17(b) of the Investment Company Act of

[[Page 16293]]

1940 (the ``Act'') from section 17(a) of the Act.

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

Applicants: Allstate Life Insurance Company (``Allstate Life'') and 
Allstate Life Insurance Company of New York (``Allstate New York''), 
and Allstate Financial Advisors Separate Account I (``Allstate Separate 
Account I''), Allstate Life Insurance Company Separate Account A 
(``ALIC Separate Account A''), Allstate Life of New York Separate 
Account A (``ALNY Separate Account A''), Allstate Life of New York 
Variable Annuity Account (``ALNY VA''), and Allstate Life of New York 
Variable Annuity Account II (``ALNY VAII'') (collectively, the 
``Separate Accounts'').

Summary of Application: Applicants seek an order of exemption to the 
extent necessary to permit a transfer of assets and assumption of 
liabilities of: (1) ALIC Separate Account A by Allstate Separate 
Account I; and (2) ALNY VA and ALNY VA II by ALNY Separate Account A.

Filing Date: The application was filed on March 8, 2004.

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 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 April 22, 2004, and must 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 Secretary of the Commission.

ADDRESSES: Secretary, Securities and Exchange Commission, 450 5th 
Street, NW., Washington, DC 20549. Applicants, Charles Smith, Esq., 
Assistant Counsel, Allstate Life Insurance Company, 3100 Sanders Road, 
Northbrook, Illinois 60062.

FOR FURTHER INFORMATION CONTACT: Alison White, Senior Counsel, or Lorna 
MacLeod, 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. Allstate Life is a stock life insurance company organized under 
the laws of the State of Illinois in 1957. Allstate Life's home office 
is located at 3100 Sanders Road, Northbrook, Illinois, 60062. Allstate 
Life is licensed to operate in the District of Columbia, Puerto Rico, 
and all states except New York. Allstate Life is a wholly owned 
subsidiary of Allstate Insurance Company, a stock property-liability 
insurance company incorporated under the laws of Illinois. All of the 
outstanding capital stock of Allstate Insurance Company is owned by The 
Allstate Corporation.
    2. Allstate Life established Allstate Separate Account I and ALIC 
Separate Account A (collectively ``Allstate Life Separate Accounts'') 
as separate accounts pursuant to Illinois law. Each is a ``separate 
account,'' as defined by section 2(a)(37) of the Act, and is registered 
with the Commission pursuant to the Act as a unit investment trust.
    3. Allstate New York is a stock life insurance company organized 
under the laws of the State of New York in 1967 and was known as 
``Financial Life Insurance Company'' from 1967 to 1978. From 1978 to 
1984, the Company was known as ``PM Life Insurance Company.'' Since 
1984, the Company has been known as ``Allstate Life Insurance Company 
of New York.'' Allstate New York's home office is located at 100 Motor 
Parkway, Hauppauge, NY 11788-5107. Allstate New York is licensed to 
operate in the states of New York and Texas. Allstate New York is a 
wholly owned subsidiary of Allstate Life.
    4. Allstate New York established ALNY Separate Account A, ALNY VA 
and ALNY VAII (collectively ``Allstate New York Separate Accounts'') as 
separate accounts pursuant to New York law. Each is a ``separate 
account,'' as defined by section 2(a)(37) of the Act, and is registered 
with the Commission pursuant to the Act as a unit investment trust.
    5. Certain variable annuity contracts sponsored by Allstate Life 
and issued through Allstate Separate Account I and ALIC Separate 
Account A are registered with the Commission pursuant to the Securities 
Act of 1933 (the ``Securities Act''). Certain variable annuity 
contracts sponsored by Allstate New York and issued through ALNY 
Separate Account A, ALNY VA and ALNY VA II are registered with the 
Commission pursuant to the Securities Act.
    6. Allstate Separate Account I is divided into 105 sub-accounts, 
each of which invests exclusively in shares of a corresponding 
portfolio of an open-end, diversified management investment company 
registered under the Act (the ``Funds''). ALIC Separate Account A is 
divided into 47 sub-accounts, each of which invests exclusively in 
shares of a corresponding portfolio of the Funds.
    7. ALNY Separate Account A is divided into 111 sub-accounts, each 
of which invests exclusively in shares of a corresponding portfolio of 
the Funds. ALNY VA is divided into 11 sub-accounts, each of which 
invests exclusively in shares of a corresponding portfolio of the 
Funds. ALNY VAII is divided into 52 sub-accounts, each of which invests 
exclusively in shares of a corresponding portfolio of the Funds.
    8. After considering the nature and purpose of each separate 
account, the Boards of Directors of Allstate Life and Allstate New York 
have determined that the efficiency of the operations of the separate 
accounts could be improved, and the overall administration enhanced, by 
merging: (a) ALIC Separate Account A into Allstate Separate Account I ; 
and (b) ALNY VA and ALNY VA II into ALNY Separate Account A (together, 
the ``Mergers''). The Mergers will be structured so there will be no 
change in the rights and benefits of persons having an interest in any 
of the Contracts issued by those Separate Accounts.
    9. The consolidation of the overlapping sub-accounts will take 
place at their respective net asset values and each Allstate Life or 
Allstate New York owner holding units of interest in one of the merging 
sub-accounts will have those units exchanged for units of equal value 
in the corresponding surviving sub-account. The values of the exchanged 
interests under the Contracts will thus be equivalent. The accumulation 
unit values for these sub-accounts will not change, and the Contract 
value of any affected Contract owner immediately after the sub-account 
consolidation will be the same as the value immediately before the sub-
account consolidation.
    10. The Merger provides for the transfer of ALIC Separate Account A 
assets to Allstate Separate Account I and the assumption of the 
liabilities and contractual obligations of ALIC Separate Account A by 
Allstate Separate Account I in return for the crediting of accumulation 
units of Allstate Separate Account I to ALIC Separate Account A 
contract owners. Once this process has been completed, the units of 
ALIC Separate Account A would be cancelled, ALIC Separate Account A 
would submit an application to the Commission pursuant to section 8(f) 
of the Act to

[[Page 16294]]

effect its deregistration as an investment company and would cease to 
exist, and Allstate Separate Account I would continue to exist.
    11. Immediately following the Merger, each ALIC Separate Account A 
contract owner will possess a number of Allstate Separate Account I 
units (both full and fractional) that, when multiplied by the unit 
value of Allstate Separate Account I units, would result in an 
aggregate unit value equal to the aggregate unit value of the units the 
contract owner had in the respective Separate Account immediately 
before the consummation of the Merger.
    12. Allstate Life will distribute to each existing ALIC Separate 
Account A contract owner: (a) A contract rider indicating that such 
contracts are thereafter funded by Allstate Separate Account I; (b) a 
letter informing such contract owners of the Merger; and (c) a 
prospectus supplement that reflects Allstate Separate Account I as the 
separate account funding the contracts.
    13. The Merger provides for the transfer of ALNY VA and ALNY VA II 
assets to ALNY Separate Account A and the assumption of the liabilities 
and contractual obligations of each of ALNY VA and ALNY VA II by ALNY 
Separate Account A in return for the crediting of accumulation units of 
ALNY Separate Account A to ALNY VA and ALNY VA II contract owners. Once 
this process has been completed, the units of ALNY VA and ALNY VA II 
would be cancelled, ALNY VA and ALNY VA II would each submit an 
application to the Commission pursuant to section 8(f) of the Act to 
effect its deregistration as an investment company and would cease to 
exist, and ALNY Separate Account A would continue to exist.
    14. Immediately following the Merger, each ALNY VA and ALNY VA II 
contract owner will possess a number of ALNY Separate Account A units 
(both full and fractional) that, when multiplied by the unit value of 
ALNY Separate Account A units, would result in an aggregate unit value 
equal to the aggregate unit value of the units the contract owner had 
in the respective Separate Account immediately before the consummation 
of the Merger.
    15. Allstate New York will distribute to each existing ALNY VA and 
ALNY VA II contract owner: (a) A contract rider indicating that such 
contracts are thereafter funded by ALNY Separate Account A; (b) a 
letter informing such contract owners of the Merger; and (c) a 
prospectus supplement that reflects ALNY Separate Account A as the 
separate account funding the contracts.
    16. Except for the change in the separate account funding the 
variable annuity contracts, all the rights and benefits of the contract 
owners will remain unchanged after the Mergers. Further, the fees and 
charges under the contracts will not change as a result of the Mergers.
    17. Allstate Life and Allstate New York assert that the Mergers 
will have no tax consequences for Allstate Life and Allstate New York 
contract owners. In addition, no payments will be required or charges 
imposed under the Allstate Life and Allstate New York contracts in 
connection with, or by virtue of, the Mergers that would not otherwise 
be required or imposed.

Applicants' Legal Analysis

    1. Section 17(a) of the Act provides generally that it is unlawful 
for any affiliated person of a registered investment company, or any 
affiliated person of such a person, acting as principal to knowingly 
purchase or to sell any security or other property from or to such 
registered company.
    2. Section 17(b) of the Act provides generally that the Commission 
may grant an order exempting a transaction otherwise prohibited by 
section 17(a) of the Act if evidence establishes that: (a) The terms of 
the proposed transaction, including the consideration to be paid or 
received, are reasonable and fair and do not involve overreaching on 
the part of any person concerned; (b) the proposed transaction is 
consistent with the policy of each registered investment company 
concerned; and (c) the proposed transaction is consistent with the 
general purposes of the Act.
    3. The Mergers may be subject to the provisions of section 17(a) of 
the Act because it could be viewed as involving an investment company 
(ALIC Separate Account A, ALNY VA, ALNY VA II,) selling its assets to 
another investment company (Allstate Separate Account I, ALNY Separate 
Account A) that is affiliated by reason of having sponsoring insurance 
companies that are under common control, or by reason of having common 
directors.
    4. Applicants request an order of the Commission pursuant to 
section 17(b) of the Act to the extent necessary to exempt the Mergers 
from the provisions of section 17(a) of the Act.
    5. Applicants assert that the terms of the Mergers are fair and 
reasonable. Applicants represent that the transfer of assets held by 
ALIC Separate Account A will be made at the relative net asset values 
of the sub-accounts. Consequently, the interests of Allstate Separate 
Account I owners will not be diluted by the Merger, and each ALIC 
Separate Account A contract will be credited, immediately after the 
Merger, with units of Allstate Separate Account I having the same 
aggregate value as the aggregate value of the units of ALIC Separate 
Account A credited to such contract immediately prior to the Merger. 
Likewise, each ALNY VA and ALNY VA II contract will be credited, 
immediately after the Merger, with units of ALNY Separate Account A 
having the same aggregate value as the aggregate value of the units of 
ALNY VA and ALNY VA II credited to such contract immediately prior to 
the Merger. The Merger will not result in any change in charges, costs, 
fees or expenses borne by any Contract owner. No direct or indirect 
costs will be incurred by any Separate Account concerned as a result of 
the Mergers. Therefore, the proposed transactions will not result in 
dilution of the economic interests of any Contract owner. In addition, 
the Mergers will result in no change in the investment options 
available to Contract owners. Each sub-account of the Separate Accounts 
will continue to invest in the same Fund as that sub-account invested 
in prior to the Mergers.
    6. The consolidation of any overlapping sub-accounts will take 
place at their respective net asset values and each Allstate Life or 
Allstate New York Contract owner holding units of interest in one of 
the merging sub-accounts will have those units exchanged for units of 
equal value in the corresponding surviving sub-account. The values of 
the exchanged interests under the Contracts will thus be equivalent. 
The accumulation unit values for these sub-accounts will not change, 
and the Contract value of any affected Contract owner immediately after 
the sub-account consolidation will be the same as the value immediately 
before the sub-account consolidation.
    7. Applicants assert that the Mergers do not involve overreaching 
on the part of any party involved and is consistent with the general 
purposes of the Act. The purposes of the Mergers are to consolidate 
three variable annuity separate accounts, each of which issue variable 
annuity contracts, into a single separate account and to consolidate 
two variable life separate accounts, each of which issue variable life 
contracts, into a single separate account. The Mergers will allow for 
administrative efficiencies and cost savings by Allstate Life and 
Allstate New York because they can consolidate its separate account 
operations. The Merger will not dilute or otherwise adversely affect 
the economic interests of the owners of the Allstate Life and Allstate 
New York contracts, nor will the Mergers affect the values determined 
under the Allstate Life and Allstate New York contracts.

[[Page 16295]]

    8. Applicants represent that the Mergers are consistent with the 
policy of each Separate Account as set forth in its registration 
statement. The policy of each Separate Account is to invest in the 
Funds. As noted above, the Mergers will result in no change to any Fund 
underlying the Separate Accounts. Each sub-account of the Separate 
Accounts will continue to invest in the same Fund as that sub-account 
invested in prior to the Mergers. Accordingly, the assets underlying 
the Contracts will continue to be invested in accordance with the 
policies recited in the Separate Accounts' respective registration 
statements.

Conclusion

    For the reasons summarized above, Applicants assert that the terms 
of the Merger, including the consideration to be paid or received, are 
reasonable and fair and do not involve overreaching on the part of any 
person concerned, are consistent with the policies of the Allstate Life 
and Allstate New York Separate Accounts as recited in their 
registration statements, are consistent with the general purposes of 
the Act, and therefore meet the conditions for exemptive relief 
established by section 17(b).

    For the Commission, by the Division of Investment Management, 
pursuant to delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 04-6891 Filed 3-26-04; 8:45 am]
BILLING CODE 8010-01-P