[Federal Register Volume 75, Number 131 (Friday, July 9, 2010)]
[Notices]
[Pages 39589-39593]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-16754]
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SECURITIES AND EXCHANGE COMMISSION
[Investment Company Act Release No. 29337; File No. 812-13756]
Nationwide Life Insurance Company, et al.; Notice of Application
July 2, 2010.
AGENCY: The Securities and Exchange Commission (the ``Commission'').
ACTION: Notice of Application for an order pursuant to section 6(c) of
the Investment Company Act of 1940, as amended (the ``1940 Act'')
granting exemptions from the provisions of sections 2(a)(32), 22(c),
and 27(i)(2)(A) of the 1940 Act and rule 22c-1 thereunder.
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Applicants: Nationwide Life Insurance Company (``NWL''); Nationwide
Variable Account-II (the ``Separate Account''); and Nationwide
Investment Services Corporation (``NISC'') (collectively, the
``Applicants'').
Summary of application: Applicants seek an order pursuant to section
6(c) of the 1940 Act granting exemptions from the provisions of
sections 2(a)(32), 22(c) and 27(i)(2)(A) of the 1940 Act and rule 22c-1
thereunder to the extent necessary to permit the recapture of certain
bonus credits applied to purchase payments made under a certain
deferred variable annuity contract (``Current Contract''). Applicants
request that the relief under the order extend to any deferred variable
annuity contracts substantially similar in all material respects to the
Current Contract that NWL may issue in the future (the ``Future
Contracts'') (Current Contract and Future Contracts collectively, the
``Contracts''). Applicants also request that the relief in the order
extend to any other separate accounts of NWL and its successors in
interest that support the Future Contracts (``Other Accounts'') and any
Financial Industry Regulatory Authority, Inc. (``FINRA'') member
broker-dealers controlling, controlled by, or under common control with
any Applicant, whether existing or created in the future, that in the
future may act as principal underwriter for the Contracts (``Other
Underwriters'').
Filing date: The Application was filed on February 18, 2010 and amended
on July 1, 2010.
Hearing or notification of hearing: An order granting the application
will be issued unless the Commission orders a hearing. Interested
persons may request a hearing by writing to the Secretary of the
Commission and serving the Applicants with a copy of the request,
personally or by mail. Hearing requests must be received by the
Commission by 5:30 p.m. on July 26, 2010, 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 requester's interest, the reason for the request, and the
issues contested. Persons who wish to be notified of a hearing may
request notification by writing to the Secretary of the Commission.
ADDRESSES: Secretary, Securities and Exchange Commission, 100 F Street,
NE., Washington, DC 20549-1090. Applicants, c/o Nationwide Life
Insurance Company, One Nationwide Plaza 01-34-201, Columbus, Ohio
43215, Attn: Jamie Casto, Esq.
FOR FURTHER INFORMATION CONTACT: Michelle Roberts, Senior Counsel, or
Joyce M. Pickholz, Branch Chief, Office of Insurance Products, Division
of Investment Management, at (202) 551-6795.
SUPPLEMENTARY INFORMATION: The following is a summary of the complete
application. The complete application may be obtained via the
Commission's Web site by searching for the file number, or an applicant
using the Company name box, at http://www.sec.gov/search/search.htm or
by calling (202) 551-8090.
Applicants' Representations
1. NWL is a stock life insurance company organized under the laws
of the State of Ohio.\1\ NWL offers traditional group and individual
life insurance products as well as group and individual variable and
fixed annuity contracts. NWL is wholly owned by Nationwide Financial
Services, Inc.
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\1\ Successors in interest to NWL is defined as any entity or
entities that result from a reorganization into another
jurisdiction, a merger, a change in control or a change in the type
of business organization.
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2. On October 7, 1981, the Nationwide Spectrum Variable Account was
established under Ohio law for the purpose of funding variable annuity
contracts. On April 1, 1987, the Board of Directors for NWL changed the
name of the Nationwide Spectrum Variable Account to Nationwide Variable
Account-II. The Separate Account is registered with the Commission as a
unit investment trust (File No. 811-3330). The Separate Account is
divided into subaccounts. Each subaccount invests exclusively in shares
of one of several series-type open-end management investment companies.
The assets of the Separate Account support various variable annuity
contracts, including the Current Contract. The Current Contract was
filed with the Commission on February 12, 2010 (File No. 333-164886).
NWL may in the future issue Contracts through Other Accounts of NWL.
3. NISC is a wholly owned subsidiary of NWL. It serves as the
general distributor and principal underwriter of the Current Contract,
as well as a number of other NWL variable annuity contracts and
variable life insurance policies. NISC is registered as a broker-dealer
under the Securities Exchange Act of 1934 and is a member of FINRA.
NISC may, in the future, act as the general distributor and principal
underwriter for Future Contracts. Additionally, Other Underwriters may
act as general distributor and principal underwriter of Future
Contracts.
4. The Current Contract is an individual flexible premium deferred
[[Page 39590]]
variable annuity contract that NWL may issue to individuals on a ``non-
qualified'' basis or in connection with employee benefit plans that
receive favorable Federal income tax treatment under the Internal
Revenue Code of 1986, as amended (the ``Code''). The Current Contract
requires an initial purchase payment of $10,000. If the Contract owner
elects to make subsequent purchase payments, they must be at least
$1,000 each ($150 each if submitted via automatic electronic transfer).
5. The Current Contract makes available a number of subaccounts of
the Separate Account to which a Contract Owner may allocate purchase
payments and associated bonus credits (described below) and to which an
owner may transfer contract value. The Current Contract also offers
fixed-interest allocation options under which NWL credits guaranteed
rates of interest for various periods. Subject to certain restrictions,
a Contract Owner may make transfers of contract value at any time among
and between the subaccounts, and among and between the subaccounts and
the fixed-interest allocation options.
6. The Current Contract offers a variety of annuity payment
options. The Contract Owner may annuitize at any time following the
second contract anniversary. In the event of a Contract Owner's (or the
Annuitant's, if any Contract Owner is not an individual) death prior to
annuitization, the beneficiary may elect to receive the death benefit
in the form of one of the annuity payment options instead of a lump
sum. The Current Contract also offers living benefits that guarantee a
minimum income benefit or lifetime withdrawals.
7. The Current Contract assesses a Mortality and Expense Risk
Charge equal to an annualized rate of 1.65% of the daily net assets of
the Separate Account for the first eight contract years. Beginning with
the ninth contract year, the Mortality and Expense Risk Charge is equal
to an annualized rate of 1.30% of the daily net assets of the Separate
Account. Also, the Current Contract assesses an Administrative Charge
equal to an annualized rate of 0.20% of the daily net assets of the
Separate Account.
8. The Current Contract assesses a Contingent Deferred Sales Charge
(``CDSC'') upon certain surrenders from the contract. The CDSC schedule
is as follows:
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Number of completed years from
date of purchase payment 0 1 2 3 4 5 6 7 8+
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CDSC Percentage................ 8% 8% 8% 7% 6% 5% 4% 3% 0%
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9. The Current Contract permits a certain amount of CDSC-free
withdrawals each year. This annual ``free-out'' amount is equal to 10%
of purchase payments that are subject to a CDSC (such amount being net
of any purchase payments previously withdrawn that were already subject
to the CDSC). Additionally, no CDSC is assessed: upon the annuitant's
death, upon annuitization of the contract, when distributions are
necessary in order to meet minimum distribution requirements under the
Code, and under an age-based ``free-withdrawal'' program that allows
Contract Owners to take systematic withdrawals of certain contract
value percentages at specified ages without incurring a CDSC. Finally
the Current Contract includes a Long-Term Care/Nursing Home and
Terminal Illness Waiver at no additional charge that allows a Contract
Owner to withdraw value from their contract free of CDSC if, under
certain circumstances, the Contract Owner is confined to a long-term
care facility or hospital, or if the Contract Owner is diagnosed with a
terminal illness.
10. At the time of application, an owner may purchase one of two
optional living benefit riders described below, subject to state
availability. The Applicants may add other optional living benefit
riders to the Current Contract in the future.
(a) The 5% Lifetime Income Option (``5% L.Inc Option'') provides
for lifetime withdrawals, up to a certain amount each year, even after
the contract value is zero, for the duration of the Contract Owner's
lifetime. The 5% L.Inc Option calculates the benefit base using a 5%
simple interest calculation. In exchange for the 5% L.Inc Option, NWL
assesses an annual charge not to exceed 1.00% (currently, 0.85%) of the
current benefit base.
(b) NWL also offers a 5% Spousal Continuation Benefit whereby the
spouse of a deceased Contract Owner can continue to receive the
benefits associated with the 5% L.Inc Option for the rest of his or her
lifetime. In exchange for the 5% Spousal Continuation Option Benefit,
NWL assesses an annual charge equal to 0.15% of the current benefit
base. The charges for the 5% L.Inc Option and the 5% Spousal
Continuation Benefit are taken via redemption of accumulation units.
The 5% L.Inc Option and the 5% Spousal Continuation Benefit are only
available for Current Contracts issued in the State of New York.
(c) The 10% L.Inc Option is substantially the same as the 5% L.Inc
Option except that it calculates the benefit base using a 10% simple
interest calculation. In exchange for the 10% L.Inc Option, NWL
assesses an annual charge not to exceed 1.20% (currently, 1.00%) of the
current benefit base.
(d) NWL also offers a 10% Spousal Continuation Benefit whereby the
spouse of a deceased Contract Owner can continue to receive the
benefits associated with the 10% L.Inc Option for the rest of his or
her lifetime. In exchange for the 10% Spousal Continuation Benefit, NWL
assesses an annual charge not to exceed 0.30% (currently, 0.20%) of the
current benefit base. The charges for the 10% L.Inc Option and the 10%
Spousal Continuation Benefit are taken via redemption of accumulation
units. The 10% Spousal Continuation Benefit is not available for
Current Contracts issued in the State of New York.
11. The Current Contract provides for a death benefit to be paid to
the designated beneficiary(ies) upon the death of the annuitant prior
to annuitization. The death benefit will be the greater of the contract
value or the total of all purchase payments, less an adjustment for
amounts surrendered. There is no charge for this death benefit. In lieu
of the standard death benefit, the Contract Owner can elect one of
three available death benefit options, each of which assesses an
additional charge.
(a) One-Year Enhanced Death Benefit Option--For Current Contracts
with total purchase payments equal to or less than $3 million at the
time of death, the amount of the death benefit will be the greatest of:
(1) The contract value; (2) the total of all purchase payments, less an
adjustment for amounts surrendered; or (3) the highest contract value
on any contract anniversary before the annuitant's 86th birthday, less
an adjustment for amounts subsequently surrendered, plus purchase
payments received after that contract anniversary. For Current
Contracts with total purchase payments greater than $3 million at the
time of death, the amount of the death benefit will be calculated using
the following formula: (A x F) + B(1-F) where A equals the death
[[Page 39591]]
benefit described above, B equals the contract value, and F equals the
ratio of $3,000,000 to the total of all purchase payments made to the
contract. In no event will the beneficiary receive less than the
contract value. This rider option is only available for Current
Contracts where the annuitant is age 80 or younger at the time of
application. An annualized charge equal to 0.20% of the daily net
assets of the Separate Account is assessed for the election of this
rider option.
(b) One-Month Enhanced Death Benefit Option--For Current Contracts
with total purchase payments equal to or less than $3 million at the
time of death, the amount of the death benefit will be the greatest of:
(1) The contract value; (2) the total of all purchase payments, less an
adjustment for amounts surrendered; or (3) the highest contract value
on any monthly contract anniversary before the annuitant's 81st
birthday, less an adjustment for amounts subsequently surrendered, plus
purchase payments received after that contract anniversary. For Current
Contracts with total purchase payments greater than $3 million at the
time of death, the amount of the death benefit will be calculated using
the following formula: (A x F) + B(1-F) where A equals the death
benefit described above, B equals the contract value, and F equals the
ratio of $3,000,000 to the total of all purchase payments made to the
contract. In no event will the beneficiary receive less than the
contract value. This rider option is only available for Current
Contracts where the annuitant is age 75 or younger at the time of
application. An annualized charge equal to 0.35% of the daily net
assets of the Separate Account is assessed for the election of this
rider option.
(c) Combined Enhanced Death Benefit Option--For Current Contracts
with total purchase payments equal to or less than $3 million at the
time of death, the amount of the death benefit will be the greatest of:
(1) The contract value; (2) the total of all purchase payments, less an
adjustment for amounts surrendered; (3) the highest contract value on
any contract anniversary before the annuitant's 81st birthday, less an
adjustment for amounts subsequently surrendered, plus purchase payments
received after that contract anniversary; or (4) the 5% interest
anniversary value, which is equal to purchase payments minus amounts
surrendered, accumulated at 5% compound interest until the last
contract anniversary prior to the annuitant's 81st birthday. Such total
accumulated amount shall not exceed 200% of the net of purchase
payments and amounts surrendered. For Current Contracts with total
purchase payments greater than $3 million at the time of death, the
amount of the death benefit will be calculated using the following
formula: (A x F) + B(1-F) where A equals the death benefit described
above, B equals the contract value, and F equals the ratio of
$3,000,000 to the total of all purchase payments made to the contract.
In no event will the beneficiary receive less than the contract value.
This rider option is only available for Current Contracts where the
annuitant is age 75 or younger at the time of application. An
annualized charge equal to 0.45% of the daily net assets of the
Separate Account is assessed for the election of this rider option.
(d) Spousal Protection Feature--The standard death benefit and each
of the death benefit riders include a Spousal Protection Feature at no
additional charge. This feature allows a surviving spouse to continue
the contract while receiving the economic benefit of the death benefit
upon the death of the other spouse.
12. The Beneficiary Protector Option II--The Current Contract
offers the Beneficiary Protector Option II as an optional rider. This
option provides that upon the death of the annuitant, and in addition
to any death benefit payable, NWL will credit an additional amount to
the contract equal to either 40% (if the annuitant is age 70 or younger
at the time of application) or 25% (if the annuitant is age 71 to 75 at
the time of application) of adjusted earnings. If no co-annuitant is
named, the optional benefit and its associated charge will terminate
after the application of the earnings enhancement. If a co-annuitant is
named and such surviving co-annuitant is 75 or younger at the time of
the first annuitant's death, the option will ``reset'' upon the death
of the first co-annuitant and a second earnings enhancement will be
applied upon the death of the second annuitant. If the surviving co-
annuitant is older than 75 at the time of the first annuitant's death,
the optional benefit and its associated charge will terminate. This
rider option is not available for Current Contracts where the annuitant
is older than age 75 at the time of application. Earnings enhancements
applied under this option are considered earnings, not purchase
payments. An annualized charge of 0.35% of the daily net assets of the
Separate Account is assessed for election of this rider option.
Additionally, allocations made to the fixed account are assessed a
charge of 0.35% by means of a decreased interest crediting rate.
13. For the first contract year, NWL will apply a credit (the
``Credit'') to each Current Contract equal to 5% of each purchase
payment made to that contract. The Credit, which is funded by NWL's
general account, will be allocated among the subaccounts and the fixed
account in the same proportion and at the same time that the purchase
payment is allocated to the Current Contract. For purposes of all
benefits and taxes under the Current Contract, Credits are considered
earnings, not purchase payments.
14. NWL would recapture Credits in several circumstances. First,
NWL would recapture Credits in the event that the Contract Owner
exercises his or her ``free look'' right. Second, NWL would recapture
Credits applied after or within 12 months prior to the Contract Owner's
death (unless the deceased Contract Owner's spouse chooses to continue
the Current Contract) (the ``Death Caveat''). Third, NWL would
recapture Credits upon a surrender or withdrawal of purchase payments
where the CDSC is waived under the terms of the Long-Term Care/Nursing
Home and Terminal Illness Waiver, as defined in the Current Contract,
in which event NWL would recapture all Credits applied during the 12
months prior to receipt of long-term care, confinement to a nursing
home, or date of diagnosis of a terminal illness, as applicable (the
``Long-term Care Caveat'').
15. Credits vest after the end of the free look period, with two
exceptions. After the end of the free look period, NWL would recapture
subject to the Death and Long-term Care Caveats. All Credits are fully
vested 12 months after the date NWL applies them to the Contract
Owner's contract value.
16. The Applicants represent that NWL provides the Credit from its
general account on a guaranteed basis. The Current Contract is designed
to be a long-term investment vehicle and, consistent with this design,
NWL contemplates that a Contract Owner would retain his or her Current
Contract over an extended period. NWL designed the Current Contract so
that it would recover its costs (including the Credits) over an
anticipated duration while a Current Contract is in force. The
Applicants contend that if NWL pays a death benefit or the Contract
Owner takes a withdrawal or surrender before the end of this
anticipated period, or if a Contract Owner withdraws his or her money
during the free look period, NWL would not have had sufficient time to
recover the costs associated with providing the Credits, and will incur
a loss.
[[Page 39592]]
17. The Applicants previously received orders for exemptive relief
to permit, with respect to an earlier class of contracts (the ``Prior
Contracts''), the recapture of certain bonus credits. Those orders
encompassed relief for future contracts substantially similar to the
Prior Contracts. Applicants assert that the Current Contract differs
from the Prior Contracts in the following respects: (1) The bonus
credits are part of the base contract, as opposed to being optional
riders; (2) the CDSC in the Current Contract is slightly higher; (3)
the Current Contract offers two optional guaranteed lifetime withdrawal
riders, which were not contemplated in the Prior Contracts; and (4) the
circumstances under which NWL will recapture the bonus credits is
different than contemplated in previous applications. Because the
Applicants believe the Commission may view these differences as
material, the Applicants are seeking an additional order as set forth
in the amended application.
Legal Analysis
1. Subsection (i) of section 27 of the act provides that section 27
does not apply to any registered separate account supporting variable
annuity contracts, or to the sponsoring insurance company and principal
underwriter of such account, except as provided in paragraph (2) of the
subsection. Paragraph (2) provides that it shall be unlawful for a
registered separate account funding variable insurance contracts or a
sponsoring insurance company of such account to sell a contract funded
by the registered separate account unless, among other things, such
contract is a redeemable security.
2. Section 2(a)(32) of the act defines a ``redeemable security'' as
any security, other than short-term paper, under the terms of which the
holder, upon presentation to the issuer, is entitled to receive
approximately his or her proportionate share of the issuer's current
net assets, or the cash equivalent thereof.
3. Section 22(c) of the act authorizes the Commission to make rules
and regulations applicable to registered investment companies and to
principal underwriters of, and dealers in, the redeemable securities of
any registered investment company to accomplish the same purposes as
contemplated by section 22(a) of the act. Rule 22c-1 thereunder imposes
requirements with respect to both the amount payable on redemption of a
redeemable security and the time as of which such amount is calculated.
Specifically, rule 22c-1, in pertinent part, prohibits a registered
investment company issuing any redeemable security, a person designated
in such issuer's prospectus as authorized to consummate transactions in
any such security, and a principal underwriter of, or dealer in, such
security from selling, redeeming, or repurchasing any such security,
except at a price based on the current net asset value of such security
which is next computed after receipt of a tender of such security for
redemption, or of an order to purchase or sell such security.
4. Section 6(c) of the act authorizes the Commission to exempt any
person, security, or transaction, or any class or classes of persons,
securities, or transactions from the provisions of the act and the
rules promulgated thereunder if and to the extent that such exemption
is necessary or appropriate in the public interest and consistent with
the protection of investors and the purposes fairly intended by the
policy and provisions of the act.
5. To the extent that the recapture of the Credits could be seen as
resulting in the redemption of a security at a price other than at the
security's current net asset value, or could be viewed as resulting in
the payment to a Contract Owner of less than his or her proportional
share of the issuer's net assets in violation of section 2(a)(32) or
27(i)(2)(A) of the act, NWL's recapture of Credits would trigger the
need for relief absent some exemption from the act. Consequently, the
Applicants request an exemption from the provisions of sections
2(a)(32), 22(c), and 27(i)(2)(A) of the act and Rule 22c-1 thereunder
to the extent deemed necessary to permit them to recapture Credits
under the Contracts issued in conjunction with the Separate Account and
any Other Accounts.
6. The Applicants contend that the recapture of the Credit would
not result in a violation of section 22(c) and rule 22c-1, which
prohibit, among other things, the redemption of a security at a price
other than the security's current net asset value. The Applicants
contend that the recapture procedures described herein do not involve
either of the evils or harmful events that rule 22c-1 was intended to
eliminate or reduce, namely: (1) The dilution of the value of
outstanding redeemable securities of registered investment companies
through their sale at a price below net asset value or their redemption
or repurchase at a price above it; and (2) other unfair results,
including speculative trading practices. Applicants submit that these
evils were the result of backward pricing, the practice of pricing a
mutual fund share based on the per share net asset value determined as
of the close of the market on the previous day. Backward pricing
diluted the value of outstanding mutual fund shares by allowing
investors to take advantage of increases or decreases in net asset
value that were not yet reflected in the mutual fund share price.
7. The Applicants submit that recapturing the Credits will not
deprive a Contract Owner of his or her proportionate share of the
Separate Account's current net assets. After the end of the free look
period, the Credits are fully vested with two exceptions. NWL will
recapture: (1) All Credits applied within 12 months prior to the
Contract Owner's death, and also any Credits applied after the Contract
Owner's death (unless the deceased Contract Owner's spouse chooses to
continue the Current Contract); and (2) all Credits applied within 12
months prior to receipt of long-term care, confinement to a nursing
home, or date of diagnosis of a terminal illness, as applicable. The
purpose of these exceptions is to allow enough time to pass after
application of a Credit for NWL to recoup a sufficient portion of the
expense it incurred in providing the Credit. The Applicants submit that
until the Credits are fully vested, NWL retains the right to and
interest in each Contract Owner's contract value in an amount equal to
the dollar amount of any unvested Credits. Therefore, if NWL recaptures
any Credits in the circumstances described herein, it would merely be
retrieving its own assets. To the extent that NWL recaptures any
Credits in connection with the Current Contract, it would not deprive
any Contract Owner of his or her proportionate share of the Separate
Account's assets, and thus would not violate the act.
8. The Applicants also submit that the second harm that rule 22c-1
was designed to address, namely, speculative trading practices
calculated to take advantage of backward pricing, will not occur as a
result of the recapture of the Credit. Variable annuities are designed
for long-term investment, and by their nature do not lend themselves to
the kind of speculative short-term trading that rule 22c-1 was designed
to prevent. Furthermore, the Applicants contend that the process of
recapturing Credits does not create the opportunity for speculative
trading.
9. Even if the Credit provisions arguably conflict with sections
2(a)(32) or 27(i)(2)(A) of the act or rule 22c-1 thereunder, the
Applicants submit that the Commission should grant the exemptions
requested in the application
[[Page 39593]]
on equitable grounds. The Applicants contend that the Credit provisions
are generally beneficial to the Contract Owner. The recapture
provisions of the Current Contracts temper this benefit somewhat, but
unless the Contract Owner dies, the Contract Owner retains the ability
to avoid the Credit recapture in the circumstances described in the
application. The Applicants state that the Credit recapture provisions
are necessary for NWL to offer the Credits and avoid anti-selection
against it. No CDSC would be imposed in any of the circumstances under
which a Credit would be recaptured.
10. The Applicants submit that it would be inequitable to NWL to
permit a Contract Owner to keep his or her Credits upon his or her
exercise of the Current Contract's free look provision. Because no CDSC
applies to the exercise of the free look right, the Contract Owner
could obtain a quick profit in the amount of the Credit at NWL's
expense by exercising that right immediately after the Credits were
applied to the Current Contract.
11. Likewise, the Applicants submit that it would be inequitable to
permit a Contract Owner or beneficiary to keep Credits in those
situations where the annuitant dies within 12 months of applying a
Credit, where Credits are applied after the Contract Owner's death, or
where the Contract Owner takes a surrender or withdrawal from the
Current Contract without a CDSC under the terms of the Long-Term Care/
Nursing Home and Terminal Illness Waiver within 12 months of applying a
Credit. In these situations, NWL would be unable to recover the cost of
granting the Credits because they would be redeemed out of the Current
Contract before enough time passed for NWL to recoup a sufficient
portion of the associated costs through the assessment of charges,
particularly the daily Mortality and Expense Risk Charge and the daily
Administrative Charge. The Applicants state that NWL cannot offer the
proposed Credits without the ability to recapture those Credits in the
circumstances described herein.
12. The Applicants state, based on the grounds presented below,
that their exemptive request meets the standards set out in section
6(c) of the act, namely, that the exemptions requested are necessary or
appropriate in the public interest and consistent with the protection
of investors and the purposes fairly intended by the policy and
provisions of the act and that, therefore, the Commission should grant
the requested order.
13. The Applicants submit that their request for an Order that is
applicable to the Contracts and Other Accounts, as well as Other
Underwriters, is appropriate in the public interest. The Applicants
also contend that such Order would promote competitiveness in the
variable annuity market by eliminating the need to file redundant
exemptive applications, thereby reducing administrative expenses and
maximizing the efficient use of the Applicants' resources. The
Applicants further assert that investors would not receive any benefit
or additional protection by requiring the Applicants to repeatedly seek
exemptive relief that would present no issue under the act that has not
already been addressed in the Amended Application described herein. The
Applicants submit that filing additional applications would impair
their ability to effectively take advantage of business opportunities
as they arise. Furthermore, the Applicants state that if they were
repeatedly required to seek exemptive relief with respect to the same
issues addressed in the Amended Application described herein, investors
would not receive any benefit or additional protection thereby.
Conclusion
Applicants submit that based on the analysis presented above, the
provisions for recapture of the Credit under the Contracts does not
violate sections 2(a)(32) and 27(i)(2)(A) of the act and rule 22c-1
thereunder. Applicants further submit that there are equitable grounds
for granting the requested relief and the exemptions requested meet the
standards of section 6(c) of the act and respectfully request that the
Commission issue an order of approval pursuant to section 6(c) of the
act to exempt the Applicants with respect to: (1) The Contracts; (2)
the Separate Account and Other Accounts that support the Contracts; and
(3) NISC and Other Underwriters, from the provisions of sections
2(a)(32) and 27(i)(2)(A) of the act and rule 22c-1 thereunder, to the
extent necessary to permit the recapture of all or a portion of the
Credits in the circumstances described above.
For the Commission, by the Division of Investment Management,
pursuant to delegated authority.
Elizabeth M. Murphy,
Secretary.
[FR Doc. 2010-16754 Filed 7-8-10; 8:45 am]
BILLING CODE 8010-01-P