[Federal Register Volume 72, Number 55 (Thursday, March 22, 2007)]
[Notices]
[Pages 13519-13526]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E7-5208]


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DEPARTMENT OF LABOR

Employee Benefits Security Administration

[Application No. D-11345]


Notice of Proposed Individual Exemption To Amend and Replace 
Prohibited Transaction Exemption (PTE) 2000-34, Involving the Fidelity 
Mutual Life Insurance Company (FML), Located in Pittsburgh, PA

AGENCY: Employee Benefits Security Administration, U.S. Department of 
Labor.

ACTION: Notice of proposed individual exemption to amend and replace 
PTE 2000-34.

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    This document contains a notice of pendency before the Department 
of Labor (the Department) of a proposed individual exemption which, if 
granted, would amend and replace PTE 2000-34 (65 FR 41732, July 6, 
2000), an exemption granted to FML. PTE 2000-34, relates to (1) the 
receipt of certain stock (Plan Stock) issued by Fidelity Insurance 
Group, Inc. (Group), a wholly owned subsidiary of FML, or (2) the 
receipt of plan credits (Plan Credits), by or on behalf of a FML mutual 
member (the Mutual Member), which is an employee benefit plan (the 
Plan), other than the Employee Pension Plan of Fidelity Mutual Life 
Insurance Company, in exchange for such Mutual Member's membership 
interest (the Membership Interest) in FML, in accordance with the terms 
of a plan of rehabilitation (the Third Amended Plan), approved by the 
Pennsylvania Commonwealth Court (the Court) and supervised by both the 
Court and a rehabilitator (the Rehabilitator) appointed by the 
Pennsylvania Insurance Commissioner (the Commissioner). These 
transactions are described in a notice of proposed exemption (65 FR 
18359, April 7, 2000), which underlies PTE 2000-34.
    If granted, this proposed exemption would incorporate by reference 
many of the conditions contained in PTE 2000-34. The proposed exemption 
would also revise and update certain facts and representations set 
forth in PTE 2000-34 to include the terms of the Fourth Amended Plan of 
Rehabilitation (the Fourth Amended Plan) which supersedes the Third 
Amended Plan upon which PTE 2000-34 is based.

DATES: Effective Date: If granted, this proposed exemption would be 
effective as of the date the grant notice is published in the Federal 
Register.

DATES: Written comments should be received by the Department by April 
24, 2007.

ADDRESSES: All written comments should be sent to the Office of 
Exemption Determinations, Employee Benefits Security Administration, 
Room N-5700, U.S. Department of Labor, 200 Constitution Avenue, NW., 
Washington, DC 20210, Attention: Application No. D-11345. Interested 
persons are also invited to submit comments to the Department by e-mail 
to [email protected] or by facsimile at (202) 219-0204.
    The application pertaining to the proposed exemption and the 
comments will be available for public inspection in the Public 
Disclosure Room of the Employee Benefits Security Administration, U.S. 
Department of Labor, Room N-1513, 200 Constitution Avenue, NW., 
Washington, DC 20210.

FOR FURTHER INFORMATION CONTACT: Ekaterina A. Uzlyan, Office of 
Exemptions Determinations, Employee Benefits Security Administration, 
U.S. Department of Labor, telephone (202) 693-8552. (This is not a 
toll-free number.)

SUPPLEMENTARY INFORMATION: Notice is hereby given of the pendency 
before the Department of a proposed exemption that would amend and 
replace PTE 2000-34. PTE 2000-34 provides an exemption from the 
prohibited transaction restrictions of section 406(a) of the Employee 
Retirement Income Security Act of 1974 (the Act) and from the sanctions 
resulting from the application of section 4975 of the Internal Revenue 
Code of 1986 (the Code), as amended, by reason of section 4975(c)(1)(A) 
through (D) of the Code.
    The proposed exemption has been requested in an application filed 
on behalf of FML pursuant to section 408(a) of the Act and section 
4975(c)(2) of the Code, and in accordance with the procedures set forth 
in 29 CFR part 2570, subpart B (55 FR 32836, August 10, 1990). 
Effective December 31, 1978, section 102 of Reorganization Plan No. 4 
of 1978 (43 FR 47713, October 17, 1978) transferred the authority of 
the Secretary of the Treasury to issue exemptions of the type requested 
to the Secretary of Labor. Accordingly, this proposed exemption is 
being issued solely by the Department.

I. FML and Its Affiliates

    As noted in the proposed exemption underlying PTE 2000-34, FML is a 
mutual life insurance company maintaining its principal place of 
business at 250 King of Prussia Road, Radnor, Pennsylvania. Prior to 
certain rehabilitation proceedings, FML was licensed to issue life 
insurance policies in 47 states and the District of Columbia. Because 
FML has been organized as a mutual form of life insurance company, it 
has no stockholders. Instead, the owners of its contracts (i.e., the 
Mutual Members) are vested with the right to vote and to receive an 
allocable portion of the divisible surplus. In addition, the Mutual 
Members have contractual rights under their contracts with FML.
    FML owns all of the stock of Group, a Pennsylvania-domiciled stock 
corporation. Group, in turn, owns all of the stock of Fidelity Life 
Insurance Company (FLIC), a Pennsylvania stock life insurance company.

[[Page 13520]]

II. Description of FML and the Earlier Plans of Rehabilitation

    During late 1990, the Pennsylvania Insurance Department began 
monitoring FML's operations because of concern over FML's real estate 
holdings, its decline in surplus and unrealized capital losses. In 
response to an increase in surrenders of FML insurance contracts (the 
Contracts), and loan requests for the period October 26 to November 5, 
1992, the Pennsylvania Insurance Department and FML's Board of 
Directors petitioned the Court for an Order of Rehabilitation. As a 
result, FML was placed in rehabilitation on November 6, 1992. Under the 
Order of Rehabilitation, a moratorium was imposed on cash 
distributions, Contract surrenders, withdrawals and policy loans, 
except in certain hardship situations. The moratorium was intended to 
stop the outflow of cash and to afford the Rehabilitator time to 
stabilize FML's assets.
    FML filed the Original Plan of Rehabilitation (the Original Plan), 
with the Court on June 30, 1994. The Original Plan and the successor 
amended plans of rehabilitation (i.e., the First Amended Plan of 
Rehabilitation (the First Amended Plan) and the Second Amended Plan of 
Rehabilitation (the Second Amended Plan)) are described in detail in 
PTE 2000-34 at 18361-18362.

III. The Third Amended Plan

    Because the First Amended Plan and the Second Amended Plan were 
never implemented due to objections raised by a number of parties, FML 
filed the Third Amended Plan with the Court on June 30, 1998. According 
to PTE 2000-34, the Third Amended Plan provided that on the 
reorganization closing date (the Closing Date), FML would transfer its 
insurance operations (including assets and insurance-contract 
obligations) to FLIC pursuant to assumption reinsurance and transfer 
agreements. FLIC would then continue as a wholly owned subsidiary of 
Group and a successor to FML. Prior to the transfer to and assumption 
by FLIC, FML would modify the terms of its insurance contracts by 
endorsement. These contractual obligations (as modified by such 
endorsements) would remain in force after such transfer, with FLIC 
being the obligated insurer.

A. Sale of Group Stock

    The Third Amended Plan further provided for FML to sell 
approximately 51% of the outstanding common stock of Group (Group 
Common Stock) to an investor (i.e., the Investor) in a private 
placement in exchange for cash. The Investor would be an independent 
foreign or domestic entity which satisfied certain securities law and 
certain minimum rating or capitalization criteria. The Investor would 
be selected according to bid procedures drawn up by the Commissioner 
and adopted by the Court, and would be subject to Court approval. 
Immediately after the Closing Date, the Investor would own slightly 
more than 50% of the Group Common Stock. Part of the cash received by 
FML from the sale of Group Common Stock to the Investor would be used 
by FML to pay the claims of its creditors. The remaining cash would be 
contributed by FML to the capital of FLIC in order to fund FLIC's 
future operations.

B. Classes of Claims

    The Third Amended Plan set up classes of claims against FML and 
specified the priorities of each class of claims, in conformity with 
the Pennsylvania laws applicable to insurance company rehabilitations. 
For example, Class 3 covered the claims which holders of Contracts had 
in their capacities as Contractholders (and not in their capacities as 
Mutual Members). These claims included claims for death or annuity 
proceeds or other payments for insured losses under FML insurance 
policies. Contractholders would be permitted to surrender their 
Contracts for the full cash surrender value. The Contracts of 
Contractholders not exercising this surrender option would continue in 
effect, as modified by endorsement by FML, and then assumed and 
reinsured by FLIC. Class 10, the last and residual category, covered 
claims of FML's Mutual Members with respect to their Membership 
Interests.

C. Mutual Members

    Under the Third Amended Plan, the claims of FML's Mutual Members 
would generally be satisfied on the Closing Date by distributing Group 
Common Stock and Group preferred stock (Group Preferred Stock) \1\ to 
these Mutual Members in exchange for the relinquishment of their 
Membership Interests in FML. Group Common Stock would have voting 
rights of one vote per share. Group Preferred Stock would have a 
liquidation preference and redemption value of $25 per share. The 
holders of Group Preferred Stock would be entitled to receive 
cumulative annual dividends, payable quarterly, at the rate of 7% per 
annum of the liquidation preference (i.e., $1.75 per share annually). 
Group Preferred Stock would generally be non-voting.
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    \1\ Group Common Stock and Group Preferred Stock are also 
collectively referred to as ``Plan Stock.''
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    Upon the liquidation of Group, a share of Group Preferred Stock 
would be entitled to a distribution preference of $25 per share, plus 
the amount of any accrued but unpaid dividends. Group could elect to 
redeem shares of Group Preferred Stock at any time after 20 years from 
the Closing Date (or the issue date, if later) at a redemption price of 
$25 per share plus the amount of any accrued but unpaid dividends. 
Group Preferred Stock would be convertible into shares of Group Common 
Stock at any time at the option of the holder.
    Of the Plan Stock that would be allocated to Mutual Members for 
Class 10 claims, 20% would be allocated based on voting rights, and 80% 
would be based on the Contract's contribution to FML's surplus. Each 
Mutual Member receiving Plan Stock would receive Group Common Stock and 
Group Preferred Stock in the ratio of 3 common shares to 2.8 preferred 
shares.
    Under the Third Amended Plan, a special distribution rule would 
apply to Mutual Members who held insurance contracts in connection with 
(a) retirement plans or arrangements described in sections 403(a) or 
408 of the Code or (b) non-trusteed retirement plans described in Code 
section 401(a) (Non-Trusteed Tax-Qualified Retirement Funding 
Contracts). Mutual Members holding Non-Trusteed Tax-Qualified 
Retirement Funding Contracts would not receive Plan Stock in exchange 
for the relinquishment of their Membership Interests. These Mutual 
Members would instead be entitled to receive Plan Credits having a 
value equal in value to the Plan Stock they would otherwise have 
received. This special rule was adopted to take into account the legal 
impediments which frequently exist on the ability of holders of Non-
Trusteed Tax-Qualified Retirement Funding Contracts to hold corporate 
stock.
    The Investor would be required to purchase Plan Stock which would 
otherwise have been allocated to Non-Trusteed Tax-Qualified Retirement 
Funding Contracts. The proceeds of such sale would be contributed to 
the capital of FLIC. Mutual Members holding Non-Trusteed Tax-Qualified 
Retirement Funding Contracts would have the right to disclaim the Plan 
Credits which they would otherwise receive in exchange for their 
Membership Interests. Any Mutual Member which is a Plan or other member 
would have the right to disclaim its interest in the Plan Stock which 
it would otherwise receive in exchange for its Membership Interest.

[[Page 13521]]

D. Liquidation of FML; Continuation of Group and FLIC

    Under the Third Amended Plan, FML would liquidate and dissolve 
shortly after the Closing Date. Any Group Common Stock and Group 
Preferred Stock which FML would continue to hold after the Closing Date 
would be returned to Group for cancellation. FLIC would then continue 
in existence as a wholly owned subsidiary of Group, and would continue 
FML's business in a substantially unchanged manner by receiving 
premiums, paying claims, and generally administering the FML contracts 
which FLIC had assumed.

E. Sale of Plan Stock; Commission-Free Purchase and Sales Program

    Under the Third Amended Plan, Mutual Members would not be 
restricted from selling or transferring the Plan Stock received, 
including converting the Group Preferred Stock to Group Common Stock, 
although Group, its affiliates and the Investor would be subject to 
restrictions on purchasing or redeeming such Stock. Additionally, Group 
would not be precluded from establishing a commission-free purchase or 
sales program to allow Mutual Members who received a small number of 
shares of Plan Stock the opportunity to round-up those shares or sell 
such shares for a temporary period without the payment or sales 
commission. The Plan Stock would be publicly-traded and listed on the 
Nasdaq, or the New York or American Stock Exchange.

F. Protections for Plan Mutual Members

    PTE 2000-34 provided certain protections for Mutual Members that 
are Plans. In this regard:
     The Third Amended Plan would be approved by the Court and 
implemented in accordance with procedural and substantive safeguards 
that are imposed under Pennsylvania law and would be subject to review 
and/or supervision by the Commissioner and the Rehabilitator.
     The Court would determine whether the Third Amended Plan 
properly conserved and equitably administered the assets of FML in the 
interests of investors, the public and others in accordance with the 
legislatively-stated purpose of protecting the interests of the 
insured, creditors and the public; and (2) equitably apportioned any 
unavoidable loss through improved methods for rehabilitating FML.
     Each Mutual Member would have an opportunity to comment on 
the Third Amended Plan at hearings held by the Court after full written 
disclosure of the terms of the Third Amended Plan is given to such 
Mutual Member by FML.
     Participation by all Mutual Members in the Third Amended 
Plan, if approved by the Court, would be mandatory, although Mutual 
Members could disclaim Plan Stock.
     The decision by a Mutual Member, which was a Plan, to 
receive or disclaim Plan Stock or Plan Credits allocated to such Mutual 
Member would be made by one or more independent fiduciaries of such 
plan and not by FML, Group or FLIC. Consequently, neither FML nor any 
of its affiliates could exercise investment discretion nor render 
``investment advice'' within the meaning of 29 CFR 2510.3-21(c) with 
respect to an independent plan fiduciary's decision to receive or 
disclaim Plan Stock or Plan Credits.
     Twenty percent (20%) of the Plan Stock would be allocated 
to a Mutual Member based upon voting rights and eighty percent (80%) 
would be allocated to a Mutual Member on the basis of the contribution 
of the Mutual Member's insurance or annuity Contract to the surplus of 
FML. The contribution to FML's surplus is the actuarial calculation of 
both the historical and expected future profit contribution of the 
Contracts that have contributed to the surplus (i.e., the net earnings) 
of FML. The actuarial formulas would be approved by the Court and the 
Commissioner.
     The value of Plan Stock or Plan Credits that would be 
received by a Mutual Member would reflect the aggregate price paid by 
the Investor Group for Group Common Stock and for Plan Credits.
     All Mutual Members that were Plans would participate in 
the transactions on the same basis as all other Mutual Members that are 
not Plans.
     No Mutual Member would pay any brokerage commissions or 
fees in connection with the receipt of Plan Stock or Plan Credits.
     The Third Amended Plan would not affect the rights of a 
Contractholder, which is a Mutual Member. In this regard, FML's 
obligations to a Contractholder would be discharged and terminated upon 
their endorsement and assumption by FLIC, thereby making FLIC liable 
for the obligations under such Contract.

IV. The Fourth Amended Plan

    Subsequent to the granting of PTE 2000-34, FML informed the 
Department of certain modifications to the Summary of Facts and 
Representations set forth in PTE 2000-34. Specifically, on November 23, 
2005, the Fourth Amended Plan was submitted to the Court. The Fourth 
Amended Plan supersedes the Third Amended Plan. FML represents that it 
was not possible to implement the Third Amended Plan because a 
qualified bidder could not be obtained. Consequently, FML explains that 
in November 2005, the Fourth Amended Plan was introduced and submitted 
to the Court.
    The Fourth Amended Plan calls for the Commissioner to adopt one of 
the following reorganization alternatives for FML: (a) Cause FML to 
sell its insurance operations, assets, and insurance-contract 
obligations to an Investor who is an asset purchaser (the Asset 
Purchaser) in exchange for cash (the Asset Acquisition Alternative); or 
(b) convert FML from a mutual company to a stock company, and cause FML 
to sell its stock to an Investor who is a stock purchaser (the Stock 
Purchaser) in exchange for Investor Stock and/or cash (the Stock 
Acquisition Alternative).\2\
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    \2\ For purposes of this proposed exemption, the Asset 
Acquisition Alternative and the Stock Acquisition Alternative are 
together referred to as ``the Alternatives.''
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    The Rehabilitator will conduct a competitive bidding process in 
accordance with the bid procedures set forth in the Fourth Amended 
Plan. The Rehabilitator will have the right to reject any and all bids, 
and will have no authority to accept a bid without the prior approval 
of the proposed transaction by the Pennsylvania Insurance Department 
and by the Court after petition, notice, and hearing.
    Bidders may bid for either the purchase of all of the stock of FML 
or the assumption of all of FML's insurance contracts. If an assuming 
insurer is the successful bidder, selected assets of FML will be 
transferred to the Asset Purchaser in exchange for its assumption and 
reinsurance of FML's obligations under all of FML's insurance 
Contracts. If a purchaser of FML's stock is the successful bidder, FML 
will be demutualized and converted into a stock corporation, and FML's 
stock will be sold to such Stock Purchaser.
    As under the Third Amended Plan, cash obtained by FML will be used 
to pay the claims of FML's creditors. In addition, FML's Mutual Members 
will receive cash or a combination of cash and Investor Stock (or, in 
some cases, Plan Credits).

A. The Asset Acquisition Alternative

    Under the Asset Acquisition Alternative, the Asset Purchaser will 
assume all of FML's insurance contracts on the Closing Date. These 
contractual obligations (as modified) will remain in force after such 
transfer, with the Asset Purchaser being the obligated insurer.

[[Page 13522]]

    In addition, before the Closing Date, each FML Contract in force 
will be modified by endorsement to remove provisions for voting rights, 
participation in divisible surplus through dividends, and to provide 
for continued compliance with various tax provisions. Moreover, each 
Contract having a cash value will be modified to provide that the 
Contract will be eligible annually, in lieu of dividends, for certain 
contractual charges, payments and credits which are not guaranteed by 
the terms of the contract (the Non-Guaranteed Elements). The 
Contractholder may elect to apply these Non-Guaranteed Elements in 
accordance with the same options as were available for the application 
of dividends before the contract was modified. No Contract 
modifications will reduce any benefits and guarantees.
    The cash value, the Non-Guaranteed Element accumulation account, 
and policy loan accounts of each Contract will be the same after the 
Closing Date as they were before the Closing Date. Additionally, the 
initial post-closing Non-Guaranteed Elements will be determined by the 
Rehabilitator and will be subject to notice, hearing, and Court 
approval.
    Further, the Asset Purchaser will pay FML a ceding commission 
determined by competitive bidding in accordance with the bidding 
procedures. The bidding procedure will be subject to approval by the 
Court.
    Also under the Asset Acquisition Alternative, FML will transfer to 
the Asset Purchaser the assets of its insurance operations and other 
assets having a total value equal to the net FML liabilities assumed by 
the Asset Purchaser (i.e., statutory reserves), less the agreed-upon 
purchase price as determined through the bidding procedures (i.e., the 
ceding commission). The transferred assets will be free and clear of 
all liens and claims arising from pre-closing to claims against FML, 
but will be subject to the obligations imposed by the assumed Contracts 
and ``the Assumption Reinsurance Agreement.'' Additionally, FML will 
transfer all of the outstanding common stock of FLIC to the Asset 
Purchaser in the event such assuming insurer submits a bid to purchase 
the stock of FLIC that is selected by the Rehabilitator and approved by 
the Court.
    Further, holders of FML Contracts will have the right to reject the 
transfer of their Contracts to the Asset Purchaser. Each rejected 
contract will be cancelled by FML before the Closing Date, and the 
Contractholder will receive the cash surrender value of the Contract 
(if any). The Asset Purchaser will have no liability with respect to 
any rejected contract. The rights of Contractholders in their 
capacities as Mutual Members of FML will not be affected by any such 
Contract rejection.
    As noted below, as soon as practicable after the Closing Date, FML 
will transfer to Mutual Members (including Mutual Members that are 
Plans), consideration in the form of cash or Plan Credits, in exchange 
for such Mutual Member's Membership Interest in FML.

B. The Stock Acquisition Alternative

    Under the Stock Acquisition Alternative, FML will demutualize and 
convert to a stock corporation effective as of the Closing Date. All of 
FML's assets will vest in the stock corporation, and the Stock 
Purchaser will assume all of FML's liabilities which are not released, 
discharged, or otherwise retained under the Fourth Amended Plan. 
Moreover, FML's Contracts will be endorsed as under the Asset 
Acquisition Alternative.
    Also under the Stock Acquisition Alternative, all of FML's post-
conversion (Post-Conversion) issued and outstanding common stock \3\ 
will be transferred to the Stock Purchaser on the Closing Date, in 
exchange for the consideration determined by competitive bidding, in 
accordance with the bidding procedures, and subject to approval by the 
Court. Such consideration may consist of (a) cash or (b) a combination 
of cash and common stock issued by the Stock Purchaser or the parent of 
the Stock Purchaser (Investor Stock), or a combination of both. 
Alternatively, the Stock Purchaser may acquire all of FML's stock 
pursuant to a merger for (a) cash or (b) a combination of cash and 
Investor Stock.
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    \3\ The applicant represents that neither Group nor FLIC has any 
preferred stock outstanding. The Fourth Amended Plan also does not 
propose to use any preferred stock.
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    Investor Stock forming part of the consideration for FML's stock 
will be listed on either the Nasdaq or the New York Stock Exchange. The 
Investor Stock will also be registered under the Securities Exchange 
Act of 1934, and it will not be subject to transfer restrictions 
(except as may otherwise be required under relevant securities laws). 
As another option, pursuant to a registration exemption under the 
Securities Exchange Act of 1933, the Stock Purchaser may use as 
consideration, its shares of unregistered common stock if such Stock 
Purchaser obtains an SEC ``no action'' letter or a legal opinion as to 
the applicability of such SEC exemption.
    If Investor Stock forms part of the consideration for FML's shares, 
the Stock Purchaser will be required to establish a ``round lot'' 
program under which each FML Mutual Member who receives fewer than 100 
shares of Investor Stock under the Fourth Amended Plan may either (a) 
purchase additional shares of Investor Stock to increase his holdings 
to a ``round lot'' consisting of 100 shares, or (b) sell all of his or 
her shares of Investor Stock, without paying brokerage commissions or 
administrative or similar expenses.
    At or before Closing, the Rehabilitator and the Stock Purchaser 
will determine how many shares of Investor Stock are allocable to 
Mutual Members which are entitled to receive Plan Credits instead of 
Investor Stock. Instead of transferring these shares as part of the 
consideration, the Stock Purchaser will pay to FML the market value of 
such shares as of the Closing Date, and FML will apply this amount as 
Plan Credits.

C. FML Creditors

    Part of the cash received by FML from either the Asset Purchaser or 
the Stock Purchaser will be used to pay the claims of FML's creditors 
in full, together with interest at the rate of 6%. In addition, the 
Fourth Amended Plan sets up ten classes of claims against FML and 
specifies the priorities of each class of claims, in conformity with 
the Pennsylvania laws applicable to insurance company rehabilitations. 
These classes, priorities, and payment provisions are substantially 
identical to those included in the Third Amended Plan. In this regard, 
Mutual Members' claims for their Mutual Membership Interests in FML 
comprise class 10 claims.

D. Mutual Members

    The Fourth Amended Plan provides that in exchange for the mandatory 
relinquishment of their Mutual Membership Interests, Mutual Members of 
FML will be entitled to receive FML's net assets (including cash or a 
combination of cash and Investor Stock) remaining after the 
satisfaction of all claims in Classes 1 through 9. Of the FML net 
assets allocated to Mutual Members for Class 10 claims, 20% will be 
allocated based on voting rights, and 80% will be based on the 
Contract's contribution to FML's surplus.
    As under the Third Amended Plan, the Fourth Amended Plan provides 
for a special distribution rule. This special distribution rule will 
apply to Mutual Members, under both Alternatives, who hold Contracts in 
connection with Non-Trusteed Tax-Qualified Retirement Funding 
Contracts. These Mutual

[[Page 13523]]

Members will not receive any cash or Investor Stock in exchange for the 
relinquishment of their Membership Interests with respect to such 
Contracts, but will instead receive Plan Credits having a value equal 
to the cash or combination of cash and Investor Stock they would 
otherwise have received. Under the Stock Acquisition Alternative, the 
Stock Purchaser will be required to pay cash to this group of Mutual 
Members in lieu of Investor Stock, which will be replaced by Plan 
Credits.
    Each Mutual Member will have the right to disclaim its interest in 
the cash or combination of cash and Investor Stock which such Mutual 
Member would otherwise receive in exchange for its Membership Interest.

E. Liquidation or Continuation of FML

    Effective as of the Closing Date, FML will generally be discharged 
from any liability with respect to any and all of its liabilities 
claims and, obligations. Under the Asset Acquisition Alternative, FML 
will be liquidated and dissolved after all endorsed insurance contracts 
are assumed by the Asset Purchaser. Under the Stock Purchase 
Alternative, FML will continue in existence as an operating stock 
insurance company owned by the Stock Purchaser.

F. Protections for Plan Mutual Members

    Under the Fourth Amended Plan, all Mutual Members that are Plans 
will be subject to the similar protections as those provided under the 
Third Amended Plan. In this regard:
     The Fourth Amended Plan will be approved by the Court, 
implemented in accordance with procedural and substantive safeguards 
that are imposed under Pennsylvania law and be subject to review and/or 
supervision by the Commissioner (both in her own capacity and in her 
capacity as Rehabilitator of FML). The Court will determine whether the 
Fourth Amended Plan (1) properly conserves and equitably administers 
the assets of FML, in the interests of investors, the public, and 
others in accordance with the legislatively-stated purpose of 
protecting the interests of the insured, creditors, and the public; and 
(2) equitably apportions any unavoidable loss through imposed methods 
for rehabilitating FML. The Court will also retain exclusive 
jurisdiction over the implementation, interpretation, and enforcement 
of the Fourth Amended Plan.
     The Fourth Amended Plan will provide for either: (1) the 
transfer of FML's assets to an independent Asset Purchaser in exchange 
for cash; or (2) the conversion of FML from a mutual life insurance 
company into a stock life insurance company and either (A) the transfer 
of the stock of Post-Conversion FML to the independent Stock Purchaser 
or (B) the merger of Post-Conversion FML into the Stock Purchaser or an 
affiliate of the Stock Purchaser.
     Each Mutual Member will have an opportunity to comment on 
the Fourth Amended Plan at hearings held by the Court after full 
written disclosure of the terms of the Plan will be given to such 
Mutual Member by FML.
     Participation by all Mutual Members in the Fourth Amended 
Plan, if approved by the Court, will be mandatory, although Mutual 
Members may disclaim the Investor Stock, cash, and/or Plan Credits 
which they would otherwise receive.
     The decision by a Mutual Member which is a Plan to receive 
or disclaim Investor Stock, cash, and/or Plan Credits allocated to such 
Mutual Member will be made by one or more independent fiduciaries of 
such Plan, and not by FML or any affiliate of FML. Consequently, 
neither FML nor any of its affiliates will exercise discretion nor 
render ``investment advice'' within the meaning of 29 CFR 2510.3-21(c) 
with respect to an independent Plan fiduciary's decision to receive or 
disclaim Investor Stock, cash, and/or Plan Credits.
     Twenty percent (20%) of the net assets which will be 
available for distribution to the Mutual Members would be allocated 
among the Mutual Members based upon voting rights, and eighty percent 
(80%) of such net assets will be allocated among the Mutual Members on 
the basis of the contribution of the Mutual Members' respective 
insurance or annuity contracts to the surplus of FML. The contribution 
to FML's surplus will be based on the actuarial calculation of both the 
historical and expected future profit contribution of the Contracts 
that have contributed to the surplus (i.e., the net earnings) of FML. 
The actuarial formulas will be approved by the Court and the 
Commissioner.
     The amount and value of the Investor Stock, cash, and/or 
Plan Credits received by a Mutual Member will reflect the aggregate 
consideration paid by the Investor.
     All Mutual Members that are Plans will participate in the 
transactions on the same basis as all other Mutual Members that are not 
Plans, except that Mutual Members which hold Non-Trusteed Tax-Qualified 
Retirement Funding Contracts will receive Plan Credits in exchange for 
their membership interests, rather than cash or cash and Investor 
Stock.
     No Mutual Member will pay any brokerage commissions or 
fees in connection with the receipt of Investor Stock, cash, and/or 
Plan Credits.
     Mutual Members will not be restricted from selling or 
otherwise transferring any Investor Stock which they receive. If 
Investor Stock comprises part of the consideration paid by the 
Investor, the Investor will be required to establish a commission-free 
purchase or sales program which would allow Mutual Members who receive 
a small number of shares of Investor Stock to ``round up'' such shares 
or sell such shares free of sales commissions.
     The Fourth Amended Plan will not adversely affect the 
rights of a Contractholder of the company which is a Mutual Member. In 
this regard, (1) if Post-Conversion FML is acquired by the Stock 
Purchaser, the obligations of FML to a Contractholder are retained by 
Post-Conversion FML, and (2) if FML's assets are purchased by the Asset 
Purchaser, FML's obligations to a Contractholder will be discharged and 
terminated upon their endorsement, and assumed by the Asset Purchaser, 
thereby making the Asset Purchaser liable for the obligations under the 
Contract.

G. Status of the Fourth Amended Plan

    FML represents that the Fourth Amended Plan has been submitted to 
the Court. Written objections to the Fourth Amended Plan were due in 
April 2006 and no objections were received. By order dated August 29, 
2006, the Court gave its preliminary approval to the Fourth Amended 
Plan which would allow the Rehabilitator to sell FML through a 
competitive bid process, with final approval to follow the selection of 
the winning bidder.
    The competitive bid process has been initiated and the bidding was 
closed in February 2007. FML states that it is now very likely that its 
proposed acquisition under the Fourth Amended Plan will take the form 
of the Asset Acquisition Alternative. In addition, FML anticipates the 
successful bidder will be selected before the end of March 2007.

V. Request for Individual Exemptive Relief

    FML requests an individual exemption from the Department that would 
apply to both Alternatives under the Fourth Amended Plan. Because FML 
is a service provider to Mutual Members that are Plans, FML is also a 
party in interest with respect to such plans under section 3(14)(B) of 
the Act. In addition, the successful bidder under

[[Page 13524]]

the Stock Acquisition Alternative would become a party in interest with 
respect to Mutual Members that are Plans under section 3(14)(H) of the 
Act. This is because the Stock Purchaser would own directly 100% of the 
common stock of FML.\4\ Thus, in tendering cash, or a combination of 
cash and Investor Stock, or Plan Credits to Mutual Members that are 
Plans in exchange for their Mutual Membership Interests, FML and/or the 
Stock Purchaser would be engaging in a prohibited transaction in 
violation of section 406(a) of the Act. In this respect, the proposed 
transactions under the Fourth Amended Plan constitute material changes 
from the Third Amended Plan and necessitate an amendment to PTE 2000-
34.
---------------------------------------------------------------------------

    \4\ Although the Asset Purchaser will have an opportunity to 
purchase the common stock of FLIC, the Asset Purchaser will not 
become a direct or indirect owner of FML or a party in interest with 
respect to Mutual Members of FML that are Plans.
---------------------------------------------------------------------------

    Accordingly, the Department is amending and replacing PTE 2000-34 
to reflect the implementation of the Alternatives under the Fourth 
Amended Plan. All references to the Third Amended Plan in the operative 
language of PTE 2000-34 have been replaced with references to the 
Fourth Amended Plan.
    If granted, the amendment would be effective on the date the final 
amendment is published in the Federal Register. The revised operative 
language and definitions, with emphasis added to show the 
modifications, appear as follows:
SECTION I. COVERED TRANSACTIONS

    If the exemption is granted, the restrictions of section 406(a) 
of the Act and the sanctions resulting from the application of 
section 4975 of the Code, by reason of section 4975(c)(1)(A) through 
(D) of the Code, shall not apply to (1) the receipt of certain stock 
(the Investor Stock) issued by the corporation (the Stock Purchaser) 
which acquires Post-Conversion Fidelity Mutual Life Insurance 
Company (Post-Conversion FML) by stock purchase or by merger, (2) 
the receipt of plan credits (the Plan Credits), or (3) the receipt 
of cash, by or on behalf of a mutual member (the Mutual Member) of 
FML which is an employee benefit plan (a Plan), other than an in 
house Plan sponsored by FML and/or its affiliates, in exchange for 
such Mutual Member's membership interest (the Membership Interest) 
in FML, in accordance with the terms of a plan of rehabilitation of 
FML (the Fourth Amended Plan) approved by the Pennsylvania 
Commonwealth Court (the Court) and supervised by both the Court and 
the Pennsylvania Insurance Commissioner (the Commissioner), who is 
acting as the rehabilitator of FML (the Rehabilitator).

    This proposed exemption is subject to the following conditions 
set forth below in Section II.

SECTION II. GENERAL CONDITIONS

    (a) The Fourth Amended Plan is approved by the Court, 
implemented in accordance with procedural and substantive safeguards 
that are imposed under Pennsylvania law and is subject to review 
and/or supervision by the Commissioner (both in her own capacity and 
in her capacity as Rehabilitator of FML). The Court determines 
whether the Fourth Amended Plan--
    (1) Properly conserves and equitably administers the assets of 
FML, in the interests of investors, the public, and others in 
accordance with the legislatively-stated purpose of protecting the 
interests of the insured, creditors, and the public; and
    (2) Equitably apportions any unavoidable loss through imposed 
methods for rehabilitating FML.The Court retains exclusive 
jurisdiction over the implementation, interpretation, and 
enforcement of the Fourth Amended Plan.
    (b) The Fourth Amended Plan provides for either:
    (1) The transfer of FML's assets to an independent purchaser 
(the Asset Purchaser) in exchange for cash; or
    (2) The conversion of FML from a mutual life insurance company 
into a stock life insurance company and either (A) the transfer of 
the stock of Post-Conversion FML to the independent Stock Purchaser 
or (B) the merger of Post-Conversion FML into the independent Stock 
Purchaser or an affiliate of the Stock Purchaser.
    (c) Each Mutual Member has an opportunity to comment on the 
Fourth Amended Plan hearings held by the Court after full written 
disclosure of the terms of the Plan is given to such Mutual Member 
by FML.
    (d) Participation by all Mutual Members in the Fourth Amended 
Plan, if approved by the Court, is mandatory, although Mutual 
Members may disclaim the Investor Stock, cash, and/or Plan Credits 
which they would otherwise receive.
    (e) The decision by a Mutual Member which is a Plan to receive 
or disclaim Investor Stock, cash, and/or Plan Credits allocated to 
such Mutual Member is made by one or more independent fiduciaries of 
such Plan, and not by FML or any affiliate of FML. Consequently, 
neither FML nor any of its affiliates will exercise discretion nor 
render ``investment advice'' within the meaning of 29 CFR 2510.3-
21(c) with respect to an independent Plan fiduciary's decision to 
receive or disclaim Investor Stock, cash, and/or Plan Credits.
    (f) Twenty percent (20%) of the net assets which are available 
for distribution to the Mutual Members is allocated among the Mutual 
Members based upon voting rights, and eighty percent (80%) of such 
net assets is allocated among the Mutual Members on the basis of the 
contribution of the Mutual Members' respective insurance or annuity 
contracts (the Contracts) to the surplus of FML. The contribution to 
FML's surplus is the actuarial calculation of both the historical 
and expected future profit contribution of the Contracts that have 
contributed to the surplus (i.e., the net earnings) of FML. The 
actuarial formulas are approved by the Court and the Commissioner.
    (g) The amount and value of the Investor Stock, cash, and/or 
Plan Credits received by a Mutual Member reflect the aggregate 
consideration paid by the Stock Purchaser or Asset Purchaser, which 
is independent of FML.
    (h) All Mutual Members that are Plans participate in the 
transactions on the same basis as all other Mutual Members that are 
not Plans, except that Mutual Members which hold Non-Trusteed Tax-
Qualified Retirement Funding Contracts receive Plan Credits in 
exchange for their membership interests, rather than cash and/or 
Investor Stock.
    (i) No Mutual Member pays any brokerage commissions or fees in 
connection with the receipt of Investor Stock, cash, and/or Plan 
Credits.
    (j) Mutual Members are not restricted from selling or otherwise 
transferring any Investor Stock which they receive. If Investor 
Stock comprises part of the consideration paid by the Stock 
Purchaser, the Stock Purchaser is required to establish a 
commission-free purchase or sales program which will allow Mutual 
Members who receive a small number of shares of Investor Stock to 
``round up'' such shares or sell such shares free of sales 
commissions.
    (k) The Fourth Amended Plan does not adversely affect the rights 
of a contractholder of the company (the Contractholder) which is a 
Mutual Member. In this regard,
    (1) If Post-Conversion FML is acquired by the Stock Purchaser, 
the obligations of FML to a Contractholder are retained by Post-
Conversion FML; and
    (2) If FML's assets are purchased by the Asset Purchaser, FML's 
obligations to a Contractholder are discharged and terminated upon 
their endorsement and assumption by the Asset Purchaser, thereby 
making the Asset Purchaser liable for the obligations under the 
Contract.

SECTION III. DEFINITIONS

    For purposes of this proposed exemption:
    (a) An ``affiliate'' of FML, Post-Conversion FML, the Stock 
Purchaser, or the Asset Purchaser includes--
    (1) Any person directly or indirectly through one or more 
intermediaries, controlling, controlled by, or under common control 
with such entity. (For purposes of this paragraph, the term 
``control'' means the power to exercise a controlling influence over 
the management or policies of a person other than an individual.) or
    (2) Any officer, director or partner in such person.
    (b) The term ``Asset Purchaser'' means the person (e.g., 
individual, corporation, partnership, joint venture, etc.) selected 
by the Rehabilitator and approved by the Court to purchase FML's 
assets under an assumption reinsurance agreement.
    (c) The term ``FML'' means the Fidelity Mutual Life Insurance 
Company (In Rehabilitation) and any affiliate of FML, as defined in 
paragraph (a) of this Section III, as they exist before FML is 
converted from a mutual life insurance company into a stock life 
insurance company.
    (d) The term ``Investor Stock'' means the common stock of the 
Stock Purchaser that will be allocated to Mutual Members if Post-

[[Page 13525]]

Conversion FML is acquired by the Stock Purchaser in exchange for 
consideration that includes common stock of the Stock Purchaser.
    (e) The term ``Mutual Member'' means a Contractholder whose name 
appears on FML's records as an owner of an FML Contract on the 
Record Date of the Fourth Amended Plan.
    (f) The term ``Non-Trusteed Tax-Qualified Retirement Funding 
Contracts'' means FML insurance contracts which are held in 
connection with retirement plans or arrangements described in 
section 403(a) or 408 of the Code or non-trusteed retirement plans 
described in section 401(a) of the Code.
    (g) The term ``Plan Credit'' means either--
    (1) Additional paid up insurance for a traditional life policy; 
or
    (2) Credits to the account values for Contracts that are not 
traditional (such as a flexible premium policy).
    Under FML's Fourth Amended Plan, Plan Credits are to be 
allocated to Mutual Members who hold Non-Trusteed Tax-Qualified 
Retirement Funding Contracts, in lieu of Investor Stock and/or cash.
    (h) The term ``Post-Conversion FML'' means the Fidelity Mutual 
Life Insurance Company (In Rehabilitation) and any affiliate of FML, 
as defined in paragraph (a) of this Section III, as they exist after 
FML is converted from a mutual life insurance company into a stock 
life insurance company.
    (i) The term ``Stock Purchaser'' means the person (e.g., 
individual, corporation, partnership, joint venture, etc.) selected 
by the Rehabilitator and approved by the Court to purchase the Post-
Conversion FML, or to acquire Post-Conversion FML by merger, under a 
stock purchase agreement or merger agreement.

Notice to Interested Persons

    Notice of the proposed exemption will be provided by FML to Mutual 
Members which are Plans within 3 days of the publication of the notice 
of the proposed exemption in the Federal Register. Such notice will be 
provided to interested persons by first class mail and will include a 
copy of the notice of proposed exemption, as published in the Federal 
Register, as well as a supplemental statement, as required pursuant to 
29 CFR 2570.43(b)(2), which shall inform interested persons of their 
right to comment on the proposed exemption. Comments with respect to 
the notice of proposed exemption are due within 33 days after the date 
of publication of this pendency notice in the Federal Register.

General Information

    The attention of interested persons is directed to the following:
    (1) The fact that a transaction is the subject of an exemption 
under section 408(a) of the Act and section 4975(c)(2) of the Code does 
not relieve a fiduciary or other party in interest or disqualified 
person from certain other provisions of the Act and the Code, including 
any prohibited transaction provisions to which the exemption does not 
apply and the general fiduciary responsibility provisions of section 
404 of the Act, which require, among other things, a fiduciary to 
discharge his or her duties respecting the plan solely in the interest 
of the participants and beneficiaries of the plan and in a prudent 
fashion in accordance with section 404(a)(1)(B) of the Act; nor does it 
affect the requirements of section 401(a) of the Code that the plan 
operate for the exclusive benefit of the employees of the employer 
maintaining the plan and their beneficiaries;
    (2) The proposed exemption, if granted, will not extend to 
transactions prohibited under section 406(b) of the Act and section 
4975(c)(1)(E)-(F) of the Code;
    (3) Before an exemption can be granted under section 408(a) of the 
Act and section 4975(c)(2) of the Code, the Department must find that 
the exemption is administratively feasible, in the interest of the plan 
and of its participants and beneficiaries and protective of the rights 
of participants and beneficiaries of the plan;
    (4) This proposed exemption, if granted, will be supplemental to, 
and not in derogation of, any other provisions of the Act and the Code, 
including statutory or administrative exemptions. Furthermore, the fact 
that a transaction is subject to an administrative or statutory 
exemption is not dispositive of whether the transaction is in fact a 
prohibited transaction; and
    (5) This proposed exemption, if granted, is subject to the express 
condition that the facts and representations set forth in the notice of 
proposed exemption relating to PTE 2000-34 and this notice, accurately 
describe, where relevant, the material terms of the transactions to be 
consummated pursuant to this exemption.

Written Comments

    All interested persons are invited to submit written comments on 
the pending exemption to the address above, within the time frame set 
forth above, after the publication of this proposed exemption in the 
Federal Register. All comments will be made a part of the record. 
Comments received will be available for public inspection with the 
referenced applications at the address set forth above.
    Based on the facts and representations set forth in the 
application, the Department is considering granting the requested 
exemption under the authority of section 408(a) of the Act and section 
4975(c) of the Code and in accordance with the procedures set forth in 
29 CFR part 2570, subpart B (55 FR 32836, August 10, 1990), the 
Department proposes to amend and replace PTE 2000-34 as follows:

SECTION I. COVERED TRANSACTIONS

    If the exemption is granted, the restrictions of section 406(a) 
of the Act and the sanctions resulting from the application of 
section 4975 of the Code, by reason of section 4975(c)(1)(A) through 
(D) of the Code, shall not apply to (1) the receipt of certain stock 
(the Investor Stock) issued by the corporation (the Stock Purchaser) 
which acquires Post-Conversion Fidelity Mutual Life Insurance 
Company (Post-Conversion FML) by stock purchase or by merger, (2) 
the receipt of plan credits (the Plan Credits), or (3) the receipt 
of cash, by or on behalf of a mutual member (the Mutual Member) of 
FML which is an employee benefit plan (a Plan), in exchange for such 
Mutual Member's membership interest (the Membership Interest) in 
FML, in accordance with the terms of a plan of rehabilitation of FML 
(the Fourth Amended Plan) approved by the Pennsylvania Commonwealth 
Court (the Court) and supervised by both the Court and the 
Pennsylvania Insurance Commissioner (the Commissioner), who is 
acting as the rehabilitator of FML (the Rehabilitator). This 
proposed exemption is subject to the following conditions set forth 
below in Section II.

SECTION II. GENERAL CONDITIONS

    (a) The Fourth Amended Plan is approved by the Court, 
implemented in accordance with procedural and substantive safeguards 
that are imposed under Pennsylvania law and is subject to review 
and/or supervision by the Commissioner (both in her own capacity and 
in her capacity as Rehabilitator of FML). The Court determines 
whether the Fourth Plan--
    (1) Properly conserves and equitably administers the assets of 
FML, in the interests of investors, the public, and others in 
accordance with the legislatively-stated purpose of protecting the 
interests of the insured, creditors, and the public; and
    (2) Equitably apportions any unavoidable loss through imposed 
methods for rehabilitating FML.
    (The Court will retain exclusive jurisdiction over the 
implementation, interpretation, and enforcement of the Fourth 
Amended Plan of Reorganization.)
    (b) The Fourth Amended Plan provides for either:
    (1) The transfer of FML's assets to an independent purchaser 
(the Asset Purchaser) in exchange for cash; or
    (2) The conversion of FML from a mutual life insurance company 
into a stock life insurance company and either (A) the transfer of 
the stock of Post-Conversion FML to the independent Stock Purchaser 
or (B) the merger of Post-Conversion FML into the independent Stock 
Purchaser or an affiliate of the Stock Purchaser.
    (c) Each Mutual Member has an opportunity to comment on the 
Fourth

[[Page 13526]]

Amended Plan at hearings held by the Court after full written 
disclosure of the terms of the Plan is given to such Mutual Member 
by FML.
    (d) Participation by all Mutual Members in the Fourth Amended 
Plan, if approved by the Court, is mandatory, although Mutual 
Members may disclaim the Investor Stock, cash, and/or Plan Credits 
which they would otherwise receive.
    (e) The decision by a Mutual Member which is a Plan to receive 
or disclaim Investor Stock, cash, and/or Plan Credits allocated to 
such Mutual Member is made by one or more independent fiduciaries of 
such Plan, and not by FML or any affiliate of FML. Consequently, 
neither FML nor any of its affiliates will exercise discretion nor 
render ``investment advice'' within the meaning of 29 CFR 2510.3-
21(c) with respect to an independent Plan fiduciary's decision to 
receive or disclaim Investor Stock, cash, and/or Plan Credits.
    (f) Twenty percent (20%) of the net assets which are available 
for distribution to the Mutual Members is allocated among the Mutual 
Members based upon voting rights, and eighty percent (80%) of such 
net assets is allocated among the Mutual Members on the basis of the 
contribution of the Mutual Members' respective insurance or annuity 
contracts (the Contracts) to the surplus of FML. The contribution to 
FML's surplus is the actuarial calculation of both the historical 
and expected future profit contribution of the Contracts that have 
contributed to the surplus (i.e., the net earnings) of FML. The 
actuarial formulas are approved by the Court and the Commissioner.
    (g) The amount and value of the Investor Stock, cash, and/or 
Plan Credits received by a Mutual Member reflect the aggregate 
consideration paid by the Stock Purchaser or Asset Purchaser, which 
is independent of FML.
    (h) All Mutual Members that are Plans participate in the 
transactions on the same basis as all other Mutual Members that are 
not Plans, except that Mutual Members which hold Non-Trusteed Tax-
Qualified Retirement Funding Contracts receive Plan Credits in 
exchange for their membership interests, rather than cash and/or 
Investor Stock.
    (i) No Mutual Member pays any brokerage commissions or fees in 
connection with the receipt of Investor Stock, cash, and/or Plan 
Credits.
    (j) Mutual Members are not restricted from selling or otherwise 
transferring any Investor Stock which they receive. If Investor 
Stock comprises part of the consideration paid by the Stock 
Purchaser, the Stock Purchaser is required to establish a 
commission-free purchase or sales program which will allow Mutual 
Members who receive a small number of shares of Investor Stock to 
``round up'' such shares or sell such shares free of sales 
commissions.
    (k) The Fourth Amended Plan does not adversely affect the rights 
of a contractholder of the company (the Contractholder) which is a 
Mutual Member. In this regard,
    (1) If Post-Conversion FML is acquired by the Stock Purchaser, 
the obligations of FML to a Contractholder are retained by Post-
Conversion FML; and
    (2) If FML's assets are purchased by the Asset Purchaser, FML's 
obligations to a Contractholder are discharged and terminated upon 
their endorsement and assumption by the Asset Purchaser, thereby 
making the Asset Purchaser liable for the obligations under the 
Contract.

SECTION III. DEFINITIONS

    For purposes of this proposed exemption:
    (a) An ``affiliate'' of FML, Post-Conversion FML, the Stock 
Purchaser, or the Asset Purchaser includes--
    (1) Any person directly or indirectly through one or more 
intermediaries, controlling, controlled by, or under common control 
with such entity. (For purposes of this paragraph, the term 
``control'' means the power to exercise a controlling influence over 
the management or policies of a person other than an individual.); 
or
    (2) Any officer, director or partner in such person.
    (b) The term ``Asset Purchaser'' means the person (e.g., 
individual, corporation, partnership, joint venture, etc.) selected 
by the Rehabilitator and approved by the Court to purchase FML's 
assets under an assumption reinsurance agreement.
    (c) The term ``FML'' means the Fidelity Mutual Life Insurance 
Company (In Rehabilitation) and any affiliate of FML, as defined in 
paragraph (a) of this Section III, as they exist before FML is 
converted from a mutual life insurance company into a stock life 
insurance company.
    (d) The term ``Investor Stock'' means the common stock of the 
Stock Purchaser that will be allocated to Mutual Members if Post-
Conversion FML is acquired by the Stock Purchaser in exchange for 
consideration that includes common stock of the Stock Purchaser.
    (e) The term ``Mutual Member'' means a Contractholder whose name 
appears on FML's records as an owner of an FML Contract on the 
Record Date of the Fourth Amended Plan.
    (f) The term ``Non-Trusteed Tax-Qualified Retirement Funding 
Contracts'' means FML insurance contracts which are held in 
connection with retirement plans or arrangements described in 
section 403(a) or 408 of the Internal Revenue Code or non-trusteed 
retirement plans described in Section 401(a) of the Internal Revenue 
Code.
    (g) The term ``Plan'' means an employee benefit plan.
    (h) The term ``Plan Credit'' means either (1) additional paid up 
insurance for a traditional life policy or (2) credits to the 
account values for Contracts that are not traditional (such as a 
flexible premium policy). Under FML's Fourth Amended Plan, Plan 
Credits are to be allocated to Mutual Members who hold Non-Trusteed 
Tax-Qualified Retirement Funding Contracts, in lieu of Investor 
Stock and/or cash.
    (i) The term ``Post-Conversion FML'' means the Fidelity Mutual 
Life Insurance Company (In Rehabilitation) and any affiliate of FML, 
as defined in paragraph (a) of this Section III, as they exist after 
FML is converted from a mutual life insurance company into a stock 
life insurance company.
    (j) The term ``Stock Purchaser'' means the person (e.g., 
individual, corporation, partnership, joint venture, etc.) selected 
by the Rehabilitator and approved by the Court to purchase the stock 
of Post-Conversion FML, or to acquire Post-Conversion FML by merger, 
under a stock purchase agreement or merger agreement.

    This exemption is available to a Mutual Member of FML that is a 
Plan if the terms and conditions of the exemption are satisfied with 
respect to such Plan.
    For a more complete statement of the facts and representations 
supporting the Department's decision to grant PTE 2000-34, refer to the 
proposed exemption and the grant notice which are cited above.

    Signed at Washington, DC, this 16th day of March, 2007.
Ivan L. Strasfeld,
Director of Exemption Determinations, Employee Benefits Security 
Administration, U.S. Department of Labor.
[FR Doc. E7-5208 Filed 3-21-07; 8:45 am]
BILLING CODE 4510-29-P