[Federal Register Volume 70, Number 121 (Friday, June 24, 2005)]
[Notices]
[Pages 36666-36670]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E5-3279]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. IC-26910; File No. 812-13127]


GE Life and Annuity Assurance Company, et al., Notice of 
Application

June 17, 2005.
AGENCY: The Securities and Exchange Commission (``Commission'').

ACTION: Notice of application for an Order pursuant to Section 26(c) of 
the Investment Company Act of 1940 (``1940 Act'').

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    Applicants: GE Life and Annuity Assurance Company and GE Capital 
Life Assurance Company of New York (collectively, the ``Companies''), 
and GE Capital Life Separate Account II and GE Life & Annuity Separate 
Account II and GE Life & Annuity Separate Account 4 (collectively, the 
``Separate Accounts'') (the Companies and the Separate Accounts 
collectively referred to as the ``Applicants'').
    Summary of the Application: Applicants request an Order pursuant to 
Section 26(c) of the 1940 Act to permit the substitution of shares of 
the GE Investments Funds, Inc.--Global Income Fund (``GE Global 
Fund''), currently held in the Separate Accounts, for shares of the 
Franklin Templeton Variable Insurance Products Trust--Templeton Global 
Income Securities Fund--Class 1 (``FT Global Fund'').

[[Page 36667]]

    Filing Date: The application was filed on September 17, 2004, and 
amended and restated on June 2, 2005.
    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 Commission's 
secretary and serving applicants with a copy of the request, personally 
or by mail. Hearing requests should be received by the Commission by 
5:30 p.m. on July 12, 2005, 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 who wish to be notified of a hearing may request 
notification by writing to the Commission's secretary.

ADDRESSES: Secretary, Securities and Exchange Commission, 100 F Street, 
NE., Washington, DC 20549-9303. Applicants, Heather Harker, Vice 
President and Associate General Counsel, Genworth Financial, 6610 West 
Broad Street, Richmond, Virginia 23230.

FOR FURTHER INFORMATION CONTACT: Mark Cowan, Senior Counsel, or Zandra 
Bailes, Branch Chief, Office of Insurance Products, Division of 
Investment Management, at (202) 551-6795.

SUPPLEMENTARY INFORMATION: The following is a summary of the 
application. The complete application may be obtained for a fee from 
the SEC's Public Reference Branch, 100 F Street, NE., Room 1580, 
Washington, DC 20549 (telephone (202) 551-5850).

Applicant's Representations

    1. GE Life and Annuity Assurance Company (``GELAAC''), located at 
6610 West Broad Street, Richmond, Virginia 23230, is a stock life 
insurance company incorporated under the laws of the Commonwealth of 
Virginia and operating under a charter granted by the Commonwealth in 
1871. GELAAC principally offers annuity contracts, guaranteed 
investment contracts, funding agreements and life insurance. GELAAC is 
licensed to do business in the District of Columbia and all states 
except New York. GELAAC is an indirect wholly-owned subsidiary of 
Genworth Financial, Inc. (``Genworth''), a publicly-traded company. 
General Electric Company (``GE''), through its indirect wholly owned 
subsidiary, GE Financial Assurance Holdings, Inc., owns approximately 
70% of the outstanding common stock of Genworth.
    2. GE Life & Annuity Separate Account II (``Separate Account II'') 
was established by GELAAC pursuant to the laws of the Commonwealth of 
Virginia on August 21, 1986 as a segregated asset account and is 
registered under the 1940 Act as a unit investment trust (File No. 811-
4885). Separate Account II supports variable life insurance policies, 
the interests in which are registered under the Securities Act of 1933 
(the ``1933 Act'') (File Nos. 33-09651, 333-32071, 333-82311, 333-
41031, and 333-111208).
    3. GE Life & Annuity Separate Account 4 (``Separate Account 4'') 
was established by GELAAC pursuant to the laws of the Commonwealth of 
Virginia on August 19, 1987 as a segregated asset account and is 
registered under the 1940 Act as a unit investment trust (File No. 811-
5343). Separate Account 4 supports deferred variable annuity contracts, 
the interests in which are registered under the 1933 Act (File Nos. 33-
17428, 33-76336, 33-76334, 333-96513, 333-62695, and 333-63531).
    4. GE Capital Life Assurance Company of New York (``GECLANY''), 
located at 622 Third Avenue, 33rd Floor, New York, New York 10017, is a 
stock life insurance company that was incorporated under the laws of 
the State of New York in 1988. GECLANY principally offers variable 
annuities and variable life insurance policies. GECLANY is licensed to 
do business in the State of New York. GECLANY is an indirect, wholly-
owned subsidiary of Genworth.
    5. GE Capital Life Separate Account II (``Capital Account II'') was 
established by GECLANY pursuant to the laws of the State of New York on 
April 1, 1996 as a segregated asset account and is registered under the 
1940 Act as a unit investment trust (File No. 811-8475). Capital 
Account II supports deferred variable annuity contracts, the interests 
in which are registered under the 1933 Act (File No. 333-39955).
    6. Each variable annuity contract and variable life insurance 
policy (collectively, the ``Contracts'') issued by the Companies 
through the Separate Accounts has a variable investment component that 
allows an investor to allocate purchase payments among a specific menu 
of underlying mutual fund options. Some of the Contracts also provide 
for a fixed account allocation, which is supported by the assets of the 
Company's general account. The Separate Accounts maintain separate sub-
accounts for each underlying mutual fund available under the Contracts. 
Contract owners may currently choose to have purchase payments 
allocated to one or more sub-accounts, each of which invests in an 
underlying mutual fund.
    7. The current prospectuses for the Contracts, and the Contracts 
themselves, contain provisions stipulating the Companies' right to 
substitute shares of one underlying mutual fund for shares of another 
underlying mutual fund in the event that: (i) the underlying mutual 
fund option currently available under the Contracts is no longer 
available for investment by the Separate Accounts; or (ii) in the 
judgment of the Company's management, further investment in currently 
available underlying mutual fund shares is inappropriate in view of the 
purposes of the Contracts.
    8. None of the Contracts are being actively marketed by the 
Companies. Although existing Contract owners are permitted to make 
additional subsequent purchase payments, the Companies do not 
anticipate acquiring new assets through new Contract owners.
    9. The GE Global Fund is a series of GE Investments Funds, Inc. 
(``GIF''). GIF is registered with the Commission as an open-end 
management investment company and presently consists of 14 separate 
series (File Nos. 2-91369; 811-04041). GE Asset Management Incorporated 
(``GEAM'') is the investment adviser and administrator of the GE Global 
Fund. GEAM is a wholly-owned subsidiary of GE and, by virtue of GE's 
indirect ownership of approximately 70% of the outstanding common stock 
of Genworth, could be deemed to be an affiliated person of the 
Companies. The GE Global Fund is available only through the Contracts, 
which as noted previously are no longer being sold by the Companies.
    10. Applicants have been informed that GEAM wishes to liquidate the 
GE Global Fund and terminate its operations. GEAM has explained to 
Applicants that the GE Global Fund was created to serve as an 
investment option for variable annuity contracts and variable life 
insurance policies offered by GE-affiliated insurers. According to 
GEAM, the GE Global Fund has not attracted sufficient assets to grow to 
an efficient size and there is no realistic expectation that it will do 
so in the future as the Contracts are no longer actively marketed by 
the Companies. Thus, it is not anticipated that the GE Global Fund will 
attain economies of scale and the benefits associated therewith. 
Additionally, the GE Global Fund consistently has been out-performed by 
other mutual funds with similar objectives. In light of these factors, 
GEAM has presented the GIF Board of Directors with a proposal to 
liquidate the GE Global Fund and the

[[Page 36668]]

GIF Board has determined that liquidating the GE Global Fund is in the 
best interest of shareholders.
    11. In light of the foregoing, Applicants propose to substitute 
shares of the GE Global Fund with shares of the FT Global Fund. The FT 
Global Fund is a series of the Franklin Templeton Variable Insurance 
Products Trust (File Nos. 33-23493; 811-5583). The FT Global Fund and 
its investment adviser, Franklin Advisers, Inc., are not affiliated 
with the Companies or their Separate Accounts.
    12. Applicants believe that the FT Global Fund is an appropriate 
substitute for the GE Global Fund because the FT Global Fund has: (i) 
investment objectives, strategies and risks that are substantially 
similar to those of the GE Global Fund; (ii) lower total operating 
expenses than the GE Global Fund; (iii) a larger asset base than the GE 
Global Fund; and (iv) returns that demonstrate that it has 
significantly outperformed the GE Global Fund.
    13. The discussion below compares the investment objectives, 
investment risks and strategies of the GE Global Fund and the FT Global 
Fund. Applicants submit that the investment objectives, strategies and 
risks of the GE Global Fund are substantially similar to those of the 
FT Global Fund.
    14. GE Global Fund--Investment Objectives and Strategies. The GE 
Global Fund seeks high return, emphasizing current income, and, to a 
lesser extent, capital appreciation. The GE Global Fund seeks to 
achieve its objective by investing in a combination of foreign and 
domestic debt securities, with an emphasis in foreign debt securities. 
Under normal circumstances, the Fund invests in securities of companies 
or governments representing at least three different countries, one of 
which may be the United States. The particular types of securities in 
which the Fund invests include foreign government securities, foreign 
and domestic corporate bonds, U.S. Government securities, and money 
market instruments. The Fund may invest up to 25% of its net assets in 
below-investment grade debt securities rated B or higher by S&P or 
Moodys (or otherwise comparably rated). Of that 25%, no more than 10% 
may be represented by securities in the B rating category. The Fund may 
also invest in securities of emerging market issuers and in 
derivatives. In selecting investments for the Fund, the portfolio 
manager considers factors such as: currency and interest rate trends; 
the instrument's duration; yield; issuer credit quality; and prospects 
for capital appreciation. The Fund is non-diversified as defined by 
Section 5(b)(2) of the 1940 Act.
    15. GE Global Fund--Investment Risks. Because the GE Global Fund 
invests primarily in debt securities, the principal risks of investing 
in this Fund are interest rate and credit risk. The Fund is also 
subject to foreign securities risk because its assets are invested in 
securities of issuers from around the world, including issuers located 
or doing business in emerging markets, which exposes the Fund to 
emerging markets risk. To the extent the Fund invests in below-
investment grade debt securities, the Fund is subject to the risks 
associated with high-yield, lower-rated instruments. Finally, the Fund 
may invest in derivative instruments which carry derivative instruments 
risk.
    16. FT Global Fund--Investment Objectives and Strategies. The 
Fund's investment objective is high current income, consistent with 
preservation of capital. Capital appreciation is a secondary 
consideration. Under normal market conditions, the Fund invests mainly 
in debt securities of governments and their political subdivisions and 
agencies, supranational organizations and companies located anywhere in 
the world, including emerging markets. Under normal circumstances, the 
Fund's assets are invested in issuers in at least three countries, one 
of which may be the United States. The Fund focuses on investment grade 
debt securities but may invest up to 30% of its net assets in lower-
rated securities, including debt obligations of emerging market 
issuers, and up to 10% in defaulted debt securities. The manager 
allocates the Fund's assets among issuers, geographic regions, and 
currencies based upon its assesment of: Relative interest rates among 
currencies, outlook for changes in interest rates, and credit risks. 
The Fund is non-diversified as defined by Section 5(b)(2) of the 1940 
Act.
    17. FT Global Fund--Investment Risks. Like the GE Global Fund, the 
FT Global Fund is subject to interest rate and credit risk with respect 
to its investments in debt securities. Because the Fund invests its 
assets around the world, the Fund is also subject to foreign securities 
risk as well as emerging markets risk. To the extent the Fund invests 
in below-investment grade debt securities, the Fund will be subject to 
the risks associated with high yield, lower-rated instruments. In 
addition, as the manager uses derivatives in managing the portfolio, 
the Fund is subject to the risks associated with those instruments.
    18. The table below compares the audited fees and expenses (as of 
December 31, 2004) of the GE Global Fund and the FT Global Fund. As the 
table reflects, the total expenses of the FT Global Fund are lower than 
those of the GE Global Fund.

------------------------------------------------------------------------
                                                 GE Global    FT Global
                                                    fund         fund
                                                 (percent)    (percent)
------------------------------------------------------------------------
Management Fees...............................         0.60         0.62
Other Expenses................................         0.26         0.16
12b-1 Fees....................................         None         None
                                               --------------
  Total Expenses..............................         0.86         0.78
------------------------------------------------------------------------

    19. The table below compares the asset size of the GE Global Fund 
and the FT Global Fund as well as their respective performance history 
as of December 31, 2004.

------------------------------------------------------------------------
                                                 GE Global    FT Global
                                                    fund         fund
                                                 (percent)    (percent)
------------------------------------------------------------------------
Inception Date................................     05/01/97     01/24/89
Net Assets (in millions)......................        $16.7        $49.5
------------------------------------------------------------------------
   Average Annual Total Return for the Periods Ended December 31, 2004
------------------------------------------------------------------------
 1 Year.......................................         5.72        15.09
3 Years.......................................        12.55        19.79
5 Years.......................................         6.84        12.91
10 Years......................................          N/A         9.08
------------------------------------------------------------------------

    20. The prospectuses, as well as the Contracts, state that the 
Companies may substitute, eliminate, and/or combine shares of one 
mutual fund for shares of another mutual fund already purchased or to 
be purchased in the future if either of the following occurs: (i) 
Shares of a current mutual fund are no longer available for investment; 
or (ii) in the judgment of our Company's management, investment in a 
mutual fund's shares are inappropriate for purposes of the Contracts.
    21. Applicants note that in view of the fact that GEAM has proposed 
to liquidate the GE Global Fund, Applicants are exercising their 
contractual right, subject to Commission approval, to provide Contract 
owners with alternative investment options through a substitution 
transaction. Applicants have taken several steps toward accomplishing 
the proposed substitution. The Companies have added the FT Global Fund 
to the Contract registration statements via a post-effective amendment 
and have delivered a current prospectus for the FT Global Fund to all 
Contract owners. In addition, supplements have been sent

[[Page 36669]]

to all Contract owners informing Contract owners that the Companies 
have filed an application with the Commission to effect a substitution 
of shares of the FT Global Fund for shares of the GE Global Fund. The 
substitution transaction will be effected on a date designated by the 
Companies (the ``Exchange Date'').
    22. Contract owners also will be advised that they are free to 
transfer assets from the GE Global Fund to any of the investment 
options available under the Contracts, in accordance with the terms of 
the Contracts, in advance of the Exchange Date without the imposition 
of any restrictions or fees. Likewise, after the Exchange Date, 
Contract owners affected by the substitution will be free to transfer 
assets from the FT Global Fund to any other investment option without 
restriction or the imposition of any fees for at least thirty (30) days 
after the Exchange Date. Contract owners may still be restricted to 
trade via U.S. mail or overnight delivery service as described in the 
current prospectus. All necessary forms and other information necessary 
for Contract owners to effectuate exchanges among investment options 
will continue to be provided. In addition, Applicants represent that 
they will not exercise their right to impose a fee on transfers 
involving the GE Global Fund during the thirty day period leading up to 
the substitution or on transfers involving the FT Global Fund during 
the thirty day period following the substitution. Moreover, Applicants 
presently permit Contract owners to make unlimited transfers. However, 
any transfer after the 12th in a calendar year must be submitted by 
U.S. mail or overnight delivery. Applicants represent that they will 
honor, during the 30 day periods prior to and after the substitution, 
one transfer request involving the FT Global Fund that is not submitted 
by U.S. mail or overnight delivery by a Contract owner who has exceeded 
or, because of such transfer, will exceed the 12 transfer limitation.
    23. On the Exchange Date, shares of the GE Global Fund held by the 
Separate Account will be redeemed. Contemporaneously with this 
redemption, proceeds received from the GE Global Fund will be used to 
purchase shares in the FT Global Fund. All shares will be purchased and 
redeemed at each Fund's current net asset value per share next computed 
after receipt of the purchase and redemption requests, consistent with 
Section 22(c) of the 1940 Act and Rule 22c-1 thereunder. Applicants 
submit that there will be no change in the amount of any Contract 
owner's Contract value or in the dollar value of his or her investment 
in the Separate Account. Fees charged under the Contracts will not 
increase because of the substitution. In addition, no charges will be 
assessed in connection with the substitution transaction. The Companies 
will bear all of the costs (including legal, accounting, brokerage, and 
other expenses) associated with the substitution. The proposed 
substitution will not impose any tax liability on Contract owners and 
will not cause the fees and charges currently being paid by existing 
Contract owners to be greater after the proposed substitution than 
before the proposed substitution. The substitution will in no way alter 
the insurance benefits to Contract owners or the contractual 
obligations of the Companies.
    24. Within five (5) days after the Exchange Date, all Contract 
owners affected by the substitution transaction will receive a written 
confirmation. The confirmation will state that Contract owners may 
transfer Contract value allocated to the FT Global Fund as a result of 
the substitution transaction to any other available sub-accounts. The 
notice will also reiterate that the Companies will not exercise any 
right reserved by them under the Contracts to impose any fees on 
transfers involving the FT Global Fund until at least thirty (30) days 
after the Exchange Date. However, as discussed above, Contract owners 
who have exceeded the 12 transfer limitation may be required to submit 
transfer requests involving the Funds by U.S. mail or overnight 
delivery.

Applicants' Legal Analysis

    1. Section 26(c) of the 1940 Act prohibits a depositor or trustee 
of a registered unit investment trust holding the securities of the 
single issuer from substituting another security for such security 
unless the Commission approves the substitution, finding that it is 
consistent with the protection of investors and the purposes fairly 
intended by the policy and provisions of the 1940 Act.
    2. The legislative history makes clear that the purpose of Section 
26(c) is to protect the expectation of investors in a unit investment 
trust that the unit investment trust will accumulate shares of a 
particular issuer by preventing unscrutinized substitutions that might, 
in effect, force shareholders dissatisfied with the substituted 
security to redeem their shares, thereby possibly incurring either a 
loss of the sales load deducted from initial premium payments, an 
additional sales load upon reinvestment of the redemption proceeds, or 
both. Moreover, in the insurance product context, a contract owner 
forced to redeem may suffer adverse tax consequences. Section 26(c) 
affords protection to investors by preventing a depositor or trustee of 
a unit investment trust that holds shares of one issuer from 
substituting for those shares the shares of another issuer, unless the 
Commission approves that substitution.
    3. Applicants submit that the proposed substitution is in the best 
interests of Contract owners and will not give rise to the type of 
costly forced redemption that Section 26(c) was intended to guard 
against. Applicants further submit that, for the reasons discussed 
below, the Commission should find that the substitution is consistent 
with the protection of investors and the purposes fairly intended by 
the 1940 Act.
    4. Applicants have proposed the substitution in response to GEAM's 
decision to recommend the liquidation of the GE Global Fund to the GIF 
Board of Directors. Applicants have been informed that the GIF Board 
believes it is in the best interest of shareholders to liquidate the GE 
Global Fund and is expected to act on GEAM's proposal pending the 
outcome of the application. As discussed previously, GEAM proposed the 
liquidation because the GE Global Fund has not attracted assets 
sufficient to achieve economies of scale, and the Fund's performance 
has lagged behind that of its peers. Because the GE Global Fund is 
available only through the Contracts and the Companies no longer sell 
the Contracts, there is no realistic expectation that the GE Global 
Fund will grow in size.
    5. Applicants submit that the FT Global Fund is an appropriate 
substitute for the GE Global Fund. The FT Global Fund has investment 
objectives, strategies and risks that are substantially similar to 
those of the GE Global Fund. Accordingly, the proposed substitution 
should not cause Contract owners to surrender their Contracts for 
purposes of seeking out other investment opportunities in order to 
maintain a desired investment strategy. On the contrary, Applicants 
believe that the FT Global Fund should provide Contract owners with 
continuity of investment objectives and expectations. In this 
connection, Applicants submit that the Funds have substantially similar 
investment objectives as they both seek high returns, with an emphasis 
on current income. Capital appreciation is a secondary consideration 
for both Funds. The investment strategies of the Funds are also 
substantially similar as both Funds invest primarily in debts 
securities of issuers from around the

[[Page 36670]]

world. The assets of each Fund are represented by issuers from at least 
three countries, one of which may be the United States. In addition, 
both Funds may invest in securities of issuers located, or that do 
business in, emerging markets. Although the Funds have authority to 
invest in below-investment grade debt securities, they both focus their 
investments on investment-grade debt. And, while the FT Global Fund may 
invest a greater percentage of its assets in below-investment grade 
debt than the GE Global Fund (30% vs. 25%), Applicants submit that this 
limited flexibility does not significantly or meaningfully increase the 
risk profile of the FT Global Fund as compared to that of the GE Global 
Fund because of the FT Global Fund's stated focus on investment-grade 
debt. In fact, the average credit quality of the debt securities 
comprising the FT Global Fund as of December 31, 2004 was AA-/A+. 
Moreover, annual returns, which can provide an indication of the risks 
of investing in a fund, demonstrate that, year after year, the FT 
Global Fund is a more consistent performer than the GE Global Fund. 
Furthermore, the FT Global Fund's consistently higher income ratios 
strongly suggest that the Fund's investment approach to achieving its 
objective of high current income is superior to and more effective than 
the GE Global Fund's approach.
    6. Because both Funds have substantially similar objectives and 
strategies, their portfolios are subject to the same types of principal 
risks, including the following: Interest rate risk, credit risk, 
foreign securities risk, emerging markets risk, derivatives risk, and 
non-diversification risk.
    7. Furthermore, the performance history of the FT Global Fund is 
significantly better than that of the GE Global Fund. Given the reasons 
offered by GEAM for the liquidation of the GE Global Fund, Applicants 
believe that the FT Global Fund should continue to outperform the GE 
Global Fund. Factoring into this conclusion is the fact that the FT 
Global Fund has substantially greater assets than the GE Global Fund. 
This creates the opportunity for better performance because the FT 
Global Fund's fixed costs are spread across a larger number of 
shareholders. The economies of scale inherent in the FT Global Fund's 
greater asset size will be passed to Contract owners.
    8. Importantly, the total operating expenses of the FT Global Fund 
are lower than those of the GE Global Fund. Given that there is no 
expectation for any significant growth in the assets of the GE Global 
Fund, Applicants believe that the expenses of the GE Global Fund will 
remain higher than those of the FT Global Fund. Thus, the substitution 
will not result in Contract owners paying a higher level of expenses.
    9. Applicants asset that after taking all of these factors into 
consideration--namely that (1) the investment objectives, strategies 
and risks of the Funds are substantially similar, (2) the FT Global 
Fund consistently has outperformed the GE Global Fund, (3) the FT 
Global Fund has produced a higher level of income for its shareholders 
year after year, (4) the FT Global Fund has lower operating expenses 
than the GE Global, and (5) the GIF Board has determined that the 
liquidation of the GE Global Fund would be in the best interests of its 
shareholders--if Contract owners are not satisfied with the FT Global 
Fund as a replacement for the GE Global Fund, it is important to note 
that they will have a myriad of options under their Contracts, managed 
by a diverse group of quality investment advisers, from which to choose 
if they decide to transfer their assets.
    10. Furthermore, the Companies submit that the substitution and the 
selection of the FT Global Fund were not motivated by any financial 
consideration paid or to be paid to the Companies or their affiliates 
by the FT Global Fund, its advisor or underwriter, or their respective 
affiliates. In this connection, Applicants represent that the Companies 
will not receive, for 36 months following the Exchange Date, any direct 
or indirect benefits from the FT Global Fund, its advisor or 
underwriter (or their affiliates) at a rate higher than that which they 
had received from the GE Global Fund, its advisor or underwriter (or 
their affiliates), including without limitation 12b-1, shareholder 
service, administration or other service fees, revenue sharing or other 
arrangements.
    11. In addition to the foregoing, Applicants submit that the 
proposed substitution satisfies the standards of Section 26(c) because:
    (a) The costs of the substitution, including any brokerage costs, 
will be borne by the Companies and will not be borne by Contract 
owners. No charges will be assessed to effect the substitution.
    (b) The substitution will be effected at the net asset values of 
the respective shares without the imposition of any transfer or similar 
charge and with no change in the amount of any Contract owner's 
accumulation value.
    (c) The Substitution will not cause the fees and charges under the 
Contracts currently being paid by Contract owners to be greater after 
the substitution than before the substitution.
    (d) All Contract owners will be given prior notice of the 
substitution and will have an opportunity for 30 days after the 
Exchange Date to reallocate Contract value among other available sub-
accounts without the restriction or the imposition of any fees.
    (e) Within five days after the substitution, the Companies will 
send to affected Contract owners written confirmation that the 
substitution has occurred.
    (f) The substitution will in no way alter the insurance benefits to 
Contract owners or the contractual obligations of the Companies.
    (g) The substitution will have no adverse tax consequences to 
Contract owners and will in no way alter the tax benefits to Contract 
owners.
    Conclusion: Applicants request an order of the Commission pursuant 
to Section 26(c) of the 1940 Act approving the Substitution. Section 
26(c), in pertinent part, provides that the Commission shall issue an 
order approving a substitution of securities if the evidence 
establishes that it is consistent with the protection of investors and 
the purposes fairly intended by the policy and provisions of the Act. 
Thus, Applicants assert that, for the reasons and upon the facts set 
forth above, the requested order meets the standards set forth in 
Section 26(c) and should, therefore, be granted.

    For the Commission, by the Division of Investment Management, 
pursuant to delegated authority.
Jill M. Peterson,
Assistant Secretary.
[FR Doc. E5-3279 Filed 6-23-05; 8:45 am]
BILLING CODE 8010-01-P