[Federal Register Volume 76, Number 2 (Tuesday, January 4, 2011)]
[Notices]
[Pages 401-407]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-33117]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. IC-29544; File No. 812-13816]


MetLife Insurance Company of Connecticut, et al.

December 28, 2010.
AGENCY: Securities and Exchange Commission (``Commission'').

ACTION: Notice of application for an order pursuant to Section 26(c) of 
the Investment Company Act of 1940 (the ``Act'') approving certain 
substitutions of securities and an order of exemption pursuant to 
Section 17(b) of the Act from Section 17(a) of the Act.

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Applicants:  MetLife Insurance Company of Connecticut (``MetLife of 
CT''), MetLife of CT Separate Account Eleven for Variable Annuities 
(``Separate Account Eleven''), MetLife of CT Separate Account QPN for 
Variable Annuities (``Separate Account QPN''), MetLife of CT Fund UL 
for Variable Life Insurance (``Fund UL''), MetLife of CT Fund UL III 
for Variable Life Insurance (``Fund UL III''), MetLife of CT Separate 
Account CPPVUL I (``Separate Account CPPVUL 1''), MetLife Investors 
Insurance Company (``MetLife Investors''), MetLife Investors Variable 
Annuity Account One (``VA Account One''), MetLife Investors Variable 
Life Account One (``VL Account One''), First MetLife Investors 
Insurance Company (``First MetLife Investors''), First MetLife 
Investors Variable Annuity Account One (``First VA Account One''), 
MetLife Investors USA Insurance Company (``MetLife Investors USA''), 
MetLife Investors USA Separate Account A (``Separate Account A''), 
Metropolitan Life Insurance Company (``MetLife''), Metropolitan Life 
Separate Account DCVL (``Separate Account DCVL''), Metropolitan Life 
Separate Account UL (``Separate Account UL''), Metropolitan Life 
Variable Annuity Separate Account II (``Separate Account II''), 
Security Equity Separate Account No. 13S (``SE Separate Account 13S''), 
Security Equity Separate Account No. 485 (``SE Separate Account 485''), 
General American Life Insurance Company (``General American''), General 
American Separate Account Seven (``GA Separate Account Seven''), 
General American Separate Account Eleven (``GA Separate Account 
Eleven''), General American Separate Account Thirty-Three (``GA 
Separate Account Thirty-Three''), (together with Separate Account 
Eleven, Separate Account QPN, Fund UL, Fund UL III, Separate Account 
CPPVUL 1, VA Account One, VL Account One, First VA Account One, 
Separate Account A, Separate Account DCVL, Separate Account UL, 
Separate Account II, SE Separate Account 13S, SE Separate Account 485, 
GA Separate Account Seven, GA Separate Account Eleven, GA Separate 
Account Thirty-Three, the ``Separate Accounts''), Met Investors Series 
Trust (``MIST'') and Metropolitan Series Fund, Inc. (``Met Series 
Fund'') (together with MIST, the ``Investment Companies''). The 
Insurance Companies and the Separate Accounts are referred to as the 
``Substitution Applicants.'' The Insurance Companies, the Separate 
Accounts and the Investment Companies are referred to as the ``Section 
17 Applicants.''

Summary of Application:  Applicants seek an order approving the 
substitution of certain series of the Investment Companies for shares 
of series of other unaffiliated registered investment companies held by 
the Separate Accounts to fund certain group and individual variable 
annuity contracts and variable life insurance policies issued by the 
Insurance Companies (collectively, the ``Contracts''). The Section 17 
Applicants seek an order pursuant to Section 17(b) of the Act to permit 
certain in-kind transactions in connection with certain of the 
Substitutions.

Filing Date:  The application was filed on August 26, 2010, and an 
amended and restated application was filed on December 9, 2010 and 
December 27, 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 Applicants with a copy of the request personally 
or by mail. Hearing requests should be received by the Commission by 
5:30 p.m. on January 21, 2011, and should be accompanied by proof of 
service on Applicants, in the form of an affidavit or for lawyers a 
certificate of service. Hearing requests should state the nature of the 
writer's interest, the reason for the request and the issue contested. 
Persons may request notification of a hearing 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 Paul G. Cellupica, Chief 
Counsel--Securities Regulation and Corporate Services, MetLife Group, 
1095 Avenue of the Americas, 40th Floor, New York, NY 10036 and David 
C. Mahaffey, Esq., Sullivan & Worcester LLP, 1666 K Street, NW., 
Washington, DC 20006.

FOR FURTHER INFORMATION CONTACT: Alison T. White, 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 
application. The complete application may be obtained via the 
Commission's Web site by searching for the file number, or for an 
applicant using the Company name box, at http://www.sec.gov/search/search.htm, or by calling (202) 551-8090.

Applicants' Representations

    1. MetLife of CT is a stock life insurance company organized in 
1863 under the laws of Connecticut. MetLife Investors is a stock life 
insurance company organized on August 17, 1981 under the laws of 
Missouri. First MetLife Investors is a stock life insurance company 
organized on December 31, 1992 under the laws of New York. MetLife 
Investors USA is a stock life insurance company organized on September 
13, 1960 under the laws of Delaware. MetLife is a stock life insurance 
company organized in 1868 under the laws of New York. General American 
is a stock life insurance company organized in 1933 under the laws of 
Missouri.
    2. Separate Account Eleven, Fund UL, Fund UL III, VA Account One, 
VL Account One, First VA Account One, Separate Account A, Separate 
Account UL, Separate Account II, SE Separate Account 13S and GA 
Separate Account Eleven are registered under the Act as unit investment 
trusts for the purpose of funding the Contracts. Security interests 
under the Contracts have been registered under the Securities Act of 
1933.
    3. Separate Account QPN is exempt from registration under the Act. 
Security interests under the Contracts have been

[[Page 402]]

registered under the Securities Act of 1933.
    4. Separate Account CPPVUL1, Separate Account DCVL, Separate 
Account 485, GA Separate Account Seven and GA Separate Account Thirty-
Three serve as separate account funding vehicles for certain Contracts 
that are exempt from registration under Section 4(2) of the Securities 
Act of 1933 and Regulation D thereunder.
    5. Although Separate Account QPN, Separate Account CPPVUL1, 
Separate Account DCVL, Separate Account 485, GA Separate Account Seven 
and GA Separate Account Thirty-Three are exempt from registration under 
the Act, they would be subject to the investment limitations of Section 
12 but for the exclusion contained in Section 12(d)(1)(E) of the Act. 
To rely on such exclusion, an investment company that is not a 
registered investment company must, among other things, agree to 
refrain from substituting a security unless the Commission approves the 
substitution in the manner provided in Section 26 of the Act.
    6. MIST and Met Series Fund are each registered under the Act as 
open-end management investment companies of the series type, and their 
securities are registered under the Securities Act of 1933. Metlife 
Advisers, LLC serves as investment adviser to MIST and Met Series Fund.
    7. The Contracts permit the applicable Insurance Company, subject 
to compliance with applicable law, to substitute shares of another 
investment company for shares of an investment company held by a sub-
account of the Separate Accounts. The prospectuses for the Contracts 
and the Separate Accounts contain appropriate disclosures of this 
right. File numbers for the Contracts, the Separate Accounts and the 
Investment Companies are set forth in the application.
    8. Each Insurance Company, on its behalf and on behalf of the 
Separate Accounts proposes to make certain substitutions of shares of 
11 funds (the ``Existing Funds'') held in sub-accounts of its 
respective Separate Accounts for certain series (the ``Replacement 
Funds'') of MIST and Met Series Fund.
    9. The proposed substitutions are as follows: (a) Third Avenue 
Small Cap Value Portfolio for Delaware VIP Small Cap Value Series; (b) 
RCM Technology Portfolio for Janus Aspen Global Technology Portfolio; 
(c) Davis Venture Value Portfolio for Legg Mason ClearBridge Variable 
Capital Portfolio; (d) MFS Research International Portfolio for Legg 
Mason Global Currents Variable International All Cap Opportunity 
Portfolio; (e) Western Asset Management Strategic Bond Opportunities 
Portfolio for Legg Mason Western Asset Variable Diversified Strategic 
Income Portfolio; (f) Western Asset Management Strategic Bond 
Opportunities Portfolio for Legg Mason Western Asset Variable Strategic 
Bond Portfolio; (g) PIMCO Total Return Portfolio for Pioneer Bond VCT 
Portfolio; (h) Pioneer Fund Portfolio for Pioneer Fund VCT Portfolio; 
(i) Met/Templeton Growth Portfolio for Templeton Growth Securities 
Fund; (j) Met/Templeton Growth Portfolio for Templeton Growth Fund, 
Inc.; (k) Van Eck Global Natural Resources Portfolio for Van Eck VIP 
Global Hard Assets Fund.
    10. The following is a summary of the investment objectives and 
policies of each Existing Fund and its corresponding Replacement Fund. 
Additional information including asset sizes, risk factors and 
comparative performance history for each Existing Fund and Replacement 
Fund can be found in the Application.

------------------------------------------------------------------------
             Existing fund                       Replacement fund
------------------------------------------------------------------------
Delaware VIP Small Cap Value Series--    Third Avenue Small Cap Value
 seeks capital appreciation. The Series   Portfolio--seeks long-term
 invests at least 80% of its assets in    capital appreciation. The
 investments of small companies whose     Portfolio invests at least 80%
 stock prices appear low relative to      of its assets in equity
 their underlying value or future         securities of well-financed
 potential.                               small companies (meaning
                                          companies with high quality
                                          assets and a relative absence
                                          of liabilities) at a discount
                                          to what the subadviser
                                          believes is the intrinsic
                                          value.
Janus Aspen Global Technology            RCM Technology Portfolio--seeks
 Portfolio--seeks long-term growth of     capital appreciation; no
 capital. The Portfolio invests, under    consideration is given to
 normal circumstances, at least 80% of    income. The Portfolio invests,
 its net assets in securities of          under normal circumstances, at
 companies that the adviser believes      least 80% of its assets in
 will benefit significantly from          common stocks of companies
 advances or improvements in              which utilize new, creative or
 technology.                              different, or ``innovative''
                                          technologies.
Legg Mason ClearBridge Variable Capital  Davis Venture Value Portfolio--
 Portfolio--seeks capital appreciation    seeks growth of capital. The
 through investment in securities which   Portfolio invests, under
 the portfolio manager believes have      normal circumstances, the
 above-average capital appreciation       majority of its assets in
 potential.                               equity securities of companies
                                          with market capitalizations of
                                          at least $10 billion.
Legg Mason Global Currents Variable      MFS Research International
 International All Cap Opportunity        Portfolio--seeks capital
 Portfolio--seeks total return on its     appreciation. The Portfolio
 assets from growth of capital and        invests, under normal
 income. Normally, the Portfolio          circumstances, primarily in
 invests 80% of its net assets in a       foreign equity securities,
 diversified portfolio of equity          including emerging market
 securities of foreign companies and      equity securities.
 invests substantially all of its
 assets outside of the United States.
Legg Mason Western Asset Variable        Western Asset Management
 Diversified Strategic Income             Strategic Bond Opportunities
 Portfolio--seeks high current income.    Portfolio--seeks to maximize
 The Portfolio normally invests in        total return consistent with
 fixed income securities, including       preservation of capital. The
 related securities and instruments.      Portfolio invests, under
                                          normal circumstances, at least
                                          80% of its assets in three
                                          classes of bonds and other
                                          fixed-income securities.
Legg Mason Western Asset Variable        Western Asset Management
 Strategic Bond Portfolio--seeks to       Strategic Bond Opportunities
 maximize current income consistent       Portfolio--seeks to maximize
 with preservation of capital. Under      total return consistent with
 normal circumstances, the Portfolio      preservation of capital. The
 invests at least 80% of its assets in    Portfolio invests, under
 fixed income securities and related      normal circumstances, at least
 instruments.                             80% of its assets in three
                                          classes of bonds and other
                                          fixed-income securities.
Pioneer Bond VCT Portfolio--seeks to     PIMCO Total Return Portfolio--
 provide current income from an           seeks maximum total return,
 investment grade portfolio with due      consistent with the
 regard to preservation of capital and    preservation of capital and
 prudent investment risk.                 prudent investment management.
Pioneer Fund VCT Portfolio--seeks        Pioneer Fund Portfolio--seeks
 reasonable income and capital growth.    reasonable income and capital
 The Portfolio primarily invests in       growth. The Portfolio normally
 securities of U.S. issuers.              invests substantially in
                                          equity securities, primarily
                                          of U.S. issuers.

[[Page 403]]

 
Templeton Growth Securities Fund--seeks  Met/Templeton Growth Portfolio--
 long-term capital growth. The Fund       seeks long-term capital
 normally invests in the equity           growth. The Portfolio, under
 securities of companies located          normal circumstances,
 anywhere in the world, including         primarily invests in the
 emerging markets.                        equity securities of companies
                                          of various market
                                          capitalizations located
                                          anywhere in the world,
                                          including emerging markets.
Templeton Growth Fund, Inc.--seeks long- Met/Templeton Growth Portfolio--
 term capital growth. The Fund, under     seeks long-term capital
 normal circumstances, primarily          growth. The Portfolio, under
 invests in the equity securities and     normal circumstances,
 companies of various market              primarily invests in the
 capitalizations located anywhere in      equity securities of companies
 the world, including emerging markets.   of various market
                                          capitalizations located
                                          anywhere in the world,
                                          including emerging markets.
Van Eck VIP Global Hard Assets Fund--    Van Eck Global Natural
 seeks long-term capital appreciation     Resources Portfolio--seeks
 by investing primarily in hard-asset     long-term capital appreciation
 securities. Income is a secondary        with income as a secondary
 consideration.                           consideration. Under normal
                                          market conditions, the
                                          Portfolio invests at least 80%
                                          of its net assets in
                                          securities of natural resource
                                          companies and in instruments
                                          that derive their value from
                                          natural resources.
------------------------------------------------------------------------

    11. The management fees, 12b-1 fees (if applicable), other expenses 
and total operating expenses for each Existing (``Old Fund'') and 
Replacement Fund (``New Fund'') are as follows:

----------------------------------------------------------------------------------------------------------------
                                                                                      Waiver/
                                    Management      12b-1 fees         Other        Reimbursemt        Total
                                     fees  (%)          (%)        expenses  (%)        (%)        expenses  (%)
----------------------------------------------------------------------------------------------------------------
New Fund: Third Avenue Small Cap             .74  ..............             .04  ..............             .78
 Portfolio--Class A.............
Old Fund: Delaware VIP Small Cap             .74  ..............             .11  ..............             .85
 Value Series--Standard Class...
New Fund: Third Avenue Small Cap             .74             .25             .04  ..............            1.03
 Portfolio--Class B.............
Old Fund: Delaware VIP Small Cap             .74             .30             .11             .05            1.10
 Value Series--Service Class....
New Fund: RCM Technology                     .88             .25             .08  ..............            1.21
 Portfolio--Class B.............
Old Fund: Janus Aspen Global                 .64             .25             .33  ..............            1.22
 Technology Portfolio--Service
 Class..........................
New Fund: Davis Venture Value                .71       .25 (.50)             .03             .05             .94
 Portfolio--Class B.............
Old Fund: Legg Mason ClearBridge             .75             .25             .14             .14            1.00
 Variable Capital Portfolio.....
New Fund: MFS Research                       .71       .25 (.50)             .10  ..............            1.06
 International Portfolio--Class
 B..............................
Old Fund: Legg Mason Global                  .85  ..............             .25  ..............            1.10
 Currents Variable International
 All Cap Opportunity Portfolio..
New Fund: Western Asset                      .62       .25 (.50)             .07             .04             .90
 Management Strategic Bond
 Opportunities Portfolio--Class
 B..............................
Old Fund: Legg Mason Western                 .65  ..............             .30  ..............             .95
 Asset Variable Diversified
 Strategic Income Portfolio.....
New Fund: Western Asset                      .62       .25 (.50)             .07             .04             .90
 Management Strategic Bond
 Opportunities Portfolio--Class
 B..............................
Old Fund: Legg Mason Western                  65  ..............             .31  ..............             .96
 Asset Variable Strategic Bond
 Portfolio--Class I.............
New Fund: PIMCO Total Return                 .48       .25 (.50)             .04  ..............             .77
 Portfolio--Class B.............
Old Fund: Pioneer Bond VCT                   .50             .25             .26             .14             .87
 Portfolio--Class II............
New Fund: Pioneer Fund                       .66       .25 (.50)             .08  ..............             .99
 Portfolio--Class B.............
Old Fund: Pioneer Fund VCT                   .65             .25             .09  ..............             .99
 Portfolio--Class II............
New Fund: Met/Templeton Growth               .69  ..............             .18             .07             .80
 Portfolio--Class A.............
Old Fund: Templeton Growth                   .75  ..............             .04  ..............             .79
 Securities Fund--Class 1.......
New Fund: Met/Templeton Growth               .69       .25 (.50)             .18             .07            1.05
 Portfolio--Class B.............
Old Fund: Templeton Growth                   .75             .25             .04  ..............            1.04
 Securities Fund--Class 2.......
New Fund: Met/Templeton Growth               .69       .15 (.25)             .18             .07             .95
 Portfolio--Class E.............
Old Fund: Templeton Growth Fund--            .59             .25             .28  ..............            1.12
 Class A........................
New Fund: Van Eck Global Natural             .79  ..............             .08  ..............             .87
 Resources Portfolio--Class A...
Old Fund: Van Eck VIP Global                 .96  ..............             .15  ..............            1.11
 Hard Assets Fund--Initial Class
----------------------------------------------------------------------------------------------------------------

    12. MetLife Advisers, LLC is the adviser of each of the Replacement 
Funds. Each Replacement Fund currently offers up to four classes of 
shares, three of which, Class A, Class B and Class E are involved in 
the substitutions.
    13. The Applicants believe the substitutions will provide 
significant benefits to Contract owners, including improved selection 
of sub-advisers and simplification of fund offerings through the 
elimination of overlapping offerings.
    14. As a result of the substitutions, the number of investment 
options offered under substantially all of the Contracts will not 
change (currently ranges in number from 12 to 121). For the limited 
number of Contracts that will experience a reduction in the number of 
available investment options, no contract will ever be reduced by more 
than 2 investment options after the substitutions.
    15. Those substitutions which replace investment options advised by 
investment advisers that are not

[[Page 404]]

affiliated with the Substitution Applicants with funds for which 
MetLife Advisers, LLC acts as investment adviser will permit each 
adviser, under the Multi-Manager Order, [IC-22824 (1997) and IC-23859 
(1999)], to hire, monitor and replace sub-advisers as necessary to 
achieve optimal performance.
    16. Contract owners with sub-account balances invested (through the 
separate account) in shares of the Replacement Funds, except for the 
Templeton Growth Securities Fund/Met/Templeton Growth Portfolio 
substitution, will have the same or lower total expense ratios taking 
into account fund expenses and current fee waivers.
    17. In the following substitutions, the management fee and/or 
applicable Rule 12b-1 fee of the Replacement Fund are either currently 
higher, or, at certain management fee breakpoints, may be higher than 
those of the respective Existing Fund: Delaware VIP Small Cap Value 
Series/Third Avenue Small Cap Value Portfolio; Janus Aspen Global 
Technology Portfolio/RCM Technology Portfolio; Legg Mason Global 
Currents Variable International All Cap Opportunity Portfolio/MFS 
Research International Portfolio; Legg Mason Western Asset Variable 
Diversified Strategic Income Portfolio/Western Asset Management 
Strategic Bond Opportunities Portfolio; Legg Mason Western Asset 
Variable Strategic Bond Portfolio/Western Asset Management Strategic 
Bond Opportunities Portfolio; Pioneer Fund VCT Portfolio/Pioneer Fund 
Portfolio; Templeton Growth Fund, Inc./Met/Templeton Growth Portfolio; 
and Templeton Growth Securities Fund/Met/Templeton Growth Portfolio.
    18. The Substitution Applicants propose to limit Contract charges 
attributable to Contract value invested in the Replacement Funds 
following the proposed substitutions to a rate that would offset the 
difference in the expense ratio between each Existing Fund's net 
expense ratio and the net expense ratio for the respective Replacement 
Fund.
    19. Except for the Templeton Growth Securities Fund/Met/Templeton 
Growth Portfolio substitution where there is an increase in net 
expenses after waivers of 0.01% and the Pioneer Fund VCT Portfolio/
Pioneer Fund Portfolio where there is no increase or decrease in net 
expense ratios, after waivers, the substitutions will result in 
decreased net expense ratios, after waivers, ranging from 1 basis point 
to 24 basis points. Moreover, there will be no increase in Contract 
fees and expenses, including mortality and expense risk fees and 
administration and distribution fees charged to the Separate Accounts 
as a result of the substitutions.
    20. The Substitution Applicants believe that the Replacement Funds 
have investment objectives, policies and risk profiles, as described in 
their prospectuses, that are substantially the same as, or sufficiently 
similar to, the corresponding Existing Funds to make those Replacement 
Funds appropriate candidates as substitutes.
    21. In addition, after the substitutions, neither MetLife Advisers, 
LLC nor any of their affiliates will receive compensation from the 
charges to the Separate Accounts related to the Contracts or from Rule 
12b-1 fees or revenue sharing from the Replacement Funds in excess of 
the compensation currently received from the investment advisers or 
distributors of the Existing Funds.
    22. The share classes of the Replacement Funds are either identical 
to or less than the share classes of the Existing Funds with respect to 
the imposition of Rule 12b-1 fees currently imposed, except with 
respect to the substitution of MFS Research International Portfolio 
(Class B shares--0.25%) for Legg Mason Global Currents Variable 
International All Cap Opportunity Portfolio (single share class--0%); 
Western Asset Management Strategic Bond Opportunities Portfolio (Class 
B shares--0.25%) for Legg Mason Western Asset Variable Diversified 
Strategic Income Portfolio (single share class--0%); Western Asset 
Management Strategic Bond Opportunities Portfolio (Class B shares--
0.25%) for Legg Mason Western Asset Variable Strategic Bond Portfolio 
(Class I--0%).
    23. Each MIST and Met Series Fund Replacement Fund's Class B shares 
Rule 12b-1 fees can be raised to 0.50%, each MIST Replacement Fund's 
Class E shares Rule 12b-1 fees can be raised to 0.25% and each Met 
Series Fund Replacement Fund's Class E shares Rule 12b-1 fees can be 
raised to 0.50% of net assets by the Replacement Fund's Board of 
Directors/Trustees without shareholder approval. However, Met Series 
Fund and MIST represent that Rule 12b-1 fees of the Class B and Class E 
shares of the Replacement Funds issued in connection with the proposed 
substitutions will not be raised above the current rate without 
approval of a majority in interest of the respective Replacement Funds' 
shareholders after the substitutions.
    24. The distributors of the Existing Funds pay to the Insurance 
Companies, or their affiliates, any 12b-1 fees associated with the 
class of shares sold to the Separate Accounts. Similarly, the 
distributors for MIST and Met Series Fund will receive from the 
applicable class of shares held by the Separate Accounts Rule 12b-1 
fees in the same amount or a lesser amount than the amount paid by the 
Existing Funds, except as described above.
    25. Further, in addition to any Rule 12b-1 fees, the investment 
advisers or distributors of the Existing Funds pay the Insurance 
Companies or one of their affiliates from 0 to 50 basis points for the 
Existing Funds' classes of shares involved in the substitutions. 
Following the substitutions, these payments will not be made on behalf 
of the Replacement Funds. Rather, the Insurance Companies or their 
affiliates will have available both the 25 and 15 basis points in Rule 
12b-1 fees from the Replacement Funds (with respect to Class B and 
Class E shares, respectively) and, as owners of the Replacement Funds' 
adviser, profit distributions from the adviser. These profits from 
investment advisory fees may be more or less than the fees being paid 
by the Existing Funds.

Applicants' Legal Analysis and Conditions

    1. The Substitution Applicants request that the Commission issue an 
order pursuant to Section 26(c) of the Act approving the proposed 
substitutions.
    2. Applicants represent that the Contracts permit the applicable 
Insurance Company, subject to compliance with applicable law, to 
substitute shares of another investment company for shares of an 
investment company held by a sub-account of the Separate Accounts. The 
prospectuses for the Contracts and the Separate Accounts contain 
appropriate disclosure of this right.
    3. By a supplement to the prospectuses for the Contracts and the 
Separate Accounts, each Insurance Company has notified all owners of 
the Contracts of its intention to take the necessary actions, including 
seeking the order requested by this Application, to substitute shares 
of the funds as described herein. The supplement has advised Contract 
owners that from the date of the supplement until the date of the 
proposed substitution, owners are permitted to make one transfer of 
Contract value (or annuity unit exchange) out of the Existing Fund sub-
account to one or more other sub-accounts without the transfer (or 
exchange) being treated as one of a limited number of permitted 
transfers (or exchanges) or a limited number of transfers (or 
exchanges) permitted without a transfer charge. The

[[Page 405]]

supplement also has informed Contract owners that the Insurance Company 
will not exercise any rights reserved under any Contract to impose 
additional restrictions on transfers until at least 30 days after the 
proposed substitutions. The supplement has also advised Contract owners 
that for at least 30 days following the proposed substitutions, the 
Insurance Companies will permit Contract owners affected by the 
substitutions to make one transfer of Contract value (or annuity unit 
exchange) out of the Replacement Fund sub-account to one or more other 
sub-accounts without the transfer (or exchange) being treated as one of 
a limited number of permitted transfers (or exchanges) or a limited 
number of transfers (or exchanges) permitted without a transfer charge.
    4. The proposed substitutions will take place at relative net asset 
value with no change in the amount of any Contract owner's Contract 
value, cash value, or death benefit or in the dollar value of his or 
her investment in the Separate Accounts.
    5. The process for accomplishing the transfer of assets from each 
Existing Fund to its corresponding Replacement Fund will be determined 
on a case-by-case basis. In most cases, it is expected that the 
substitutions will be effected by redeeming shares of an Existing Fund 
for cash and using the cash to purchase shares of the Replacement Fund. 
In certain other cases, it is expected that the substitutions will be 
effected by redeeming the shares of an Existing Fund in-kind; those 
assets will then be contributed in-kind to the corresponding 
Replacement Fund to purchase shares of that Fund. All in-kind 
redemptions from an Existing Fund of which any of the Substitution 
Applicants is an affiliated person will be effected in accordance with 
the conditions set forth in the Commission's no-action letter issued to 
Signature Financial Group, Inc. (available December 28, 1999).
    6. Contract owners will not incur any fees or charges as a result 
of the proposed substitutions, nor will their rights or an Insurance 
Company's obligations under the Contracts be altered in any way. All 
expenses incurred in connection with the proposed substitutions, 
including brokerage, legal, accounting, and other fees and expenses, 
will be paid by the Insurance Companies. In addition, the proposed 
substitutions will not impose any tax liability on Contract owners. The 
proposed substitutions will not cause the Contract fees and charges 
currently being paid by existing Contract owners to be greater after 
the proposed substitutions than before the proposed substitutions. No 
fees will be charged on the transfers made at the time of the proposed 
substitutions, because the proposed substitutions will not be treated 
as a transfer for the purpose of assessing transfer charges or for 
determining the number of remaining permissible transfers in a Contract 
year.
    7. In addition to the prospectus supplements distributed to owners 
of Contracts, within five business days after the proposed 
substitutions are completed, Contract owners will be sent a written 
notice informing them that the substitutions were carried out and that 
they may make one transfer of all Contract value or cash value under a 
Contract invested in any one of the sub-accounts on the date of the 
notice to one or more other sub-accounts available under their Contract 
at no cost and without regard to the usual limit on the frequency of 
transfers among sub-accounts or from the variable account options to 
the fixed account options. The notice will also reiterate that (other 
than with respect to ``market timing'' activity) the Insurance Company 
will not exercise any rights reserved by it under the Contracts to 
impose additional restrictions on transfers or to impose any charges on 
transfers until at least 30 days after the proposed substitutions. The 
Insurance Companies will also send each Contract owner current 
prospectuses for the Replacement Funds involved to the extent that they 
have not previously received a copy.
    8. Each Insurance Company also is seeking approval of the proposed 
substitutions from any State insurance regulators whose approval may be 
necessary or appropriate.
    9. The Substitution Applicants agree that for those who were 
Contract owners on the date of the proposed substitutions, the 
Insurance Companies will reimburse, on the last business day of each 
fiscal period (not to exceed a fiscal quarter) during the twenty-four 
months following the date of the proposed substitutions, those Contract 
owners whose sub-account invests in the Replacement Fund such that the 
sum of the Replacement Fund's net operating expenses (taking into 
account fee waivers and expense reimbursements) and sub-account 
expenses (asset-based fees and charges deducted on a daily basis from 
sub-account assets and reflected in the calculation of sub-account unit 
values) for such period will not exceed, on an annualized basis, the 
sum of the Existing Fund's net operating expenses taking into account 
fee waivers and expense reimbursements and sub-account expenses for 
fiscal year 2009, except with respect to the Delaware VIP Small Cap 
Value Series/Third Avenue Small Cap Value Portfolio, Janus Aspen Global 
Technology Portfolio/RCM Technology Portfolio, Legg Mason Global 
Currents Variable International All Cap Opportunity Portfolio/MFS 
Research International Portfolio, Legg Mason Western Asset Variable 
Diversified Strategic Income Portfolio/Western Asset Management 
Strategic Bond Opportunities Portfolio, Legg Mason Western Asset 
Variable Strategic Bond Portfolio/Western Asset Management Strategic 
Bond Opportunities Portfolio, Pioneer Fund VCT Portfolio/Pioneer Fund 
Portfolio, Templeton Growth Fund, Inc./Met/Templeton Growth Portfolio, 
and Templeton Growth Securities Fund/Met/Templeton Growth Portfolio 
substitutions.
    10. With respect to the Delaware VIP Small Cap Value Series/Third 
Avenue Small Cap Value Portfolio, Janus Aspen Global Technology 
Portfolio/RCM Technology Portfolio, Legg Mason Global Currents Variable 
International All Cap Opportunity Portfolio/MFS Research International 
Portfolio, Legg Mason Western Asset Variable Diversified Strategic 
Income Portfolio/Western Asset Management Strategic Bond Opportunities 
Portfolio, Legg Mason Western Asset Variable Strategic Bond Portfolio/
Western Asset Management Strategic Bond Opportunities Portfolio, 
Pioneer Fund VCT Portfolio/Pioneer Fund Portfolio substitutions, 
Templeton Growth Fund, Inc./Met/Templeton Growth Portfolio, and 
Templeton Growth Securities Fund/Met/Templeton Growth Portfolio 
substitutions, the reimbursement agreement with respect to the 
Replacement Fund's operating expenses and sub-account expenses, will 
extend for the life of each Contract outstanding on the date of the 
proposed substitutions.
    11. The Substitution Applicants further agree that, except with 
respect to the Delaware VIP Small Cap Value Series/Third Avenue Small 
Cap Value Portfolio, Janus Aspen Global Technology Portfolio/RCM 
Technology Portfolio, Legg Mason Global Currents Variable International 
All Cap Opportunity Portfolio/MFS Research International Portfolio, 
Legg Mason Western Asset Variable Diversified Strategic Income 
Portfolio/Western Asset Management Strategic Bond Opportunities 
Portfolio, Legg Mason Western Asset Variable Strategic Bond Portfolio/
Western Asset Management Strategic Bond Opportunities Portfolio,

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Pioneer Fund VCT Portfolio/Pioneer Fund Portfolio, Templeton Growth 
Fund, Inc./Met/Templeton Growth Portfolio and Templeton Growth 
Securities Fund/Met/Templeton Growth Portfolio substitutions, the 
Insurance Companies will not increase total separate account charges 
(net of any reimbursements or waivers) for any existing owner of the 
Contracts on the date of the substitutions for a period of two years 
from the date of the substitutions.
    12. With respect to the Delaware VIP Small Cap Value Series/Third 
Avenue Small Cap Value Portfolio, Janus Aspen Global Technology 
Portfolio/RCM Technology Portfolio, Legg Mason Global Currents Variable 
International All Cap Opportunity Portfolio/MFS Research International 
Portfolio, Legg Mason Western Asset Variable Diversified Strategic 
Income Portfolio/Western Asset Management Strategic Bond Opportunities 
Portfolio, Legg Mason Western Asset Variable Strategic Bond Portfolio/
Western Asset Management Strategic Bond Opportunities Portfolio, 
Pioneer Fund VCT Portfolio/Pioneer Fund Portfolio, Templeton Growth 
Fund, Inc./Met/Templeton Growth Portfolio, and Templeton Growth 
Securities Fund/Met/Templeton Growth Portfolio substitutions, the 
agreement not to increase the separate account charges will extend for 
the life of each Contract outstanding on the date of the proposed 
substitutions.
    13. In each case, the applicable Insurance Companies believe that 
it is in the best interests of the Contract owners to substitute the 
Replacement Fund for the Existing Fund. The Insurance Companies believe 
that in cases where the Replacement Fund has a new sub-adviser, the new 
sub-adviser will, over the long term, be positioned to provide at least 
comparable performance to that of the Existing Fund's sub-adviser.
    14. The Substitution Applicants anticipate that Contract owners 
will be better off with the array of sub-accounts offered after the 
proposed substitutions than they have been with the array of sub-
accounts offered prior to the substitutions.
    15. The Substitution Applicants submit that none of the proposed 
substitutions is of the type that Section 26(c) was designed to 
prevent.
    16. The Substitution Applicants request an order of the Commission 
pursuant to Section 26(c) of the Act approving the proposed 
substitutions by the Insurance Companies.
    17. The Section 17 Applicants request an order under Section 17(b) 
exempting them from the provisions of Section 17(a) to the extent 
necessary to permit the Insurance Companies to carry out each of the 
proposed substitutions.
    18. Section 17(a)(1) of the Act, in relevant part, prohibits any 
affiliated person of a registered investment company, or any affiliated 
person of such person, acting as principal, from knowingly selling any 
security or other property to that company. Section 17(a)(2) of the Act 
generally prohibits the persons described above, acting as principals, 
from knowingly purchasing any security or other property from the 
registered company.
    19. Because shares held by a separate account of an insurance 
company are legally owned by the insurance company, the Insurance 
Companies and their affiliates collectively own of record substantially 
all of the shares of MIST and Met Series Fund. Therefore, MIST and Met 
Series Fund and their respective funds are arguably under the control 
of the Insurance Companies notwithstanding the fact that Contract 
owners may be considered the beneficial owners of those shares held in 
the Separate Accounts. If MIST and Met Series Fund and their respective 
funds are under the control of the Insurance Companies, then each 
Insurance Company is an affiliated person or an affiliated person of an 
affiliated person of MIST and Met Series Fund and their respective 
funds. If MIST and Met Series Fund and their respective funds are under 
the control of the Insurance Companies, then MIST and Met Series Fund 
and their respective funds are affiliated persons of the Insurance 
Companies.
    20. Regardless of whether or not the Insurance Companies can be 
considered to control MIST and Met Series Fund and their respective 
funds, because the Insurance Companies own of record more than 5% of 
the shares of each of them and are under common control with each 
Replacement Fund's investment adviser, the Insurance Companies are 
affiliated persons of both MIST and Met Series Fund and their 
respective funds. Likewise, their respective funds are each an 
affiliated person of the Insurance Companies.
    21. The Insurance Companies, through their separate accounts in the 
aggregate own more than 5% of the outstanding shares of the following 
Existing Funds: Janus Aspen Global Technology Portfolio, Legg Mason 
Clearbridge Variable Capital Portfolio, Legg Mason Global Currents 
Variable International All Cap Opportunity Portfolio, Legg Mason 
Western Asset Variable Diversified Strategic Income Portfolio, Legg 
Mason Western Asset Variable Strategic Bond Portfolio, Pioneer Bond VCT 
Portfolio and Pioneer Fund VCT Portfolio. Therefore, each Insurance 
Company is an affiliated person of those funds.
    22. Because the substitutions may be effected, in whole or in part, 
by means of in-kind redemptions and purchases, the substitutions may be 
deemed to involve one or more purchases or sales of securities or 
property between affiliated persons. The proposed transactions may 
involve a transfer of portfolio securities by the Existing Funds to the 
Insurance Companies; immediately thereafter, the Insurance Companies 
would purchase shares of the Replacement Funds with the portfolio 
securities received from the Existing Funds. Accordingly, as the 
Insurance Companies and certain of the Existing Funds listed above, and 
the Insurance Companies and the Replacement Funds, could be viewed as 
affiliated persons of one another under Section 2(a)(3) of the Act, it 
is conceivable that this aspect of the substitutions could be viewed as 
being prohibited by Section 17(a).
    23. Section 17(b) of the Act provides that the Commission may, upon 
application, grant an order exempting any transaction from the 
prohibitions of Section 17(a) if the evidence establishes that: (a) The 
terms of the proposed transaction, including the consideration to be 
paid or received, are reasonable and fair and do not involve 
overreaching on the part of any person concerned; (b) the proposed 
transaction is consistent with the policy of each registered investment 
company concerned, as recited in its registration statement and records 
filed under the Act; and (c) the proposed transaction is consistent 
with the general purposes of the Act.
    24. The Section 17 Applicants submit that for all the reasons 
stated above the terms of the proposed in-kind purchases of shares of 
the Replacement Funds by the Insurance Companies, including the 
consideration to be paid and received, as described in this 
Application, are reasonable and fair and do not involve overreaching on 
the part of any person concerned. The Section 17 Applicants also submit 
that the proposed in-kind purchases by the Insurance Companies are 
consistent with the policies of: (a) MIST and of its Third Avenue Small 
Cap Value, RCM Technology, Met/Templeton Growth, MFS Research 
International, PIMCO Total Return, and Pioneer Fund Portfolios; and (b) 
Met Series Fund and of its Davis Venture Value, Western Asset 
Management Strategic Bond Opportunities and Van Eck Global Natural 
Resources Portfolios,

[[Page 407]]

as recited in the current registration statements and reports filed by 
each under the Act. Finally, the Section 17 Applicants submit that the 
proposed substitutions are consistent with the general purposes of the 
Act.
    25. To the extent that the in-kind purchases by the Insurance 
Company of the Replacement Funds' shares are deemed to involve 
principal transactions among affiliated persons, the procedures 
described below should be sufficient to assure that the terms of the 
proposed transactions are reasonable and fair to all participants. The 
Section 17 Applicants maintain that the terms of the proposed in-kind 
purchase transactions, including the consideration to be paid and 
received by each fund involved, are reasonable, fair and do not involve 
overreaching principally because the transactions will conform with all 
but one of the conditions enumerated in Rule 17a-7. The proposed 
transactions will take place at relative net asset value in conformity 
with the requirements of Section 22(c) of the Act and Rule 22c-1 
thereunder with no change in the amount of any Contract owner's 
contract value or death benefit or in the dollar value of his or her 
investment in any of the Separate Accounts. Contract owners will not 
suffer any adverse tax consequences as a result of the substitutions. 
The fees and charges under the Contracts will not increase because of 
the substitutions. Even though the Separate Accounts, the Insurance 
Companies, MIST and Met Series Fund may not rely on Rule 17a-7, the 
Section 17 Applicants believe that the Rule's conditions outline the 
type of safeguards that result in transactions that are fair and 
reasonable to registered investment company participants and preclude 
overreaching in connection with an investment company by its affiliated 
persons. In addition, as stated above, the in-kind redemptions will 
only be made in accordance with the conditions set out in the Signature 
Financial Group no-action letter (December 29, 1999).
    26. The boards of MIST and Met Series Fund have adopted procedures, 
as required by paragraph (e)(1) of Rule 17a-7, pursuant to which the 
series of each may purchase and sell securities to and from their 
affiliates. The Section 17 Applicants will carry out the proposed 
Insurance Company in-kind purchases in conformity with all of the 
conditions of Rule 17a-7 and each series' procedures thereunder, except 
that the consideration paid for the securities being purchased or sold 
may not be entirely cash. Nevertheless, the circumstances surrounding 
the proposed substitutions will be such as to offer the same degree of 
protection to each Replacement Fund from overreaching that Rule 17a-7 
provides to them generally in connection with their purchase and sale 
of securities under that Rule in the ordinary course of their business. 
In particular, the Insurance Companies (or any of their affiliates) 
cannot effect the proposed transactions at a price that is 
disadvantageous to any of the Replacement Funds. Although the 
transactions may not be entirely for cash, each will be effected based 
upon (1) the independent market price of the portfolio securities 
valued as specified in paragraph (b) of Rule 17a-7, and (2) the net 
asset value per share of each fund involved valued in accordance with 
the procedures disclosed in its respective investment company 
registration statement and as required by Rule 22c-1 under the Act. No 
brokerage commission, fee, or other remuneration will be paid to any 
party in connection with the proposed in kind purchase transactions.
    27. The sale of shares of Replacement Funds for investment 
securities, as contemplated by the proposed Insurance Company in-kind 
purchases, is consistent with the investment policies and restrictions 
of the Investment Companies and the Replacement Funds because (a) the 
shares are sold at their net asset value, and (b) the portfolio 
securities are of the type and quality that the Replacement Funds would 
each have acquired with the proceeds from share sales had the shares 
been sold for cash. To assure that the second of these conditions is 
met, MetLife Advisers, LLC and the sub-adviser, as applicable, will 
examine the portfolio securities being offered to each Replacement Fund 
and accept only those securities as consideration for shares that it 
would have acquired for each such fund in a cash transaction.
    28. The Section 17 Applicants submit that the proposed Insurance 
Company in-kind purchases are consistent with the general purposes of 
the Act as stated in the Findings and Declaration of Policy in Section 
1 of the Act and that the proposed transactions do not present any of 
the conditions or abuses that the Act was designed to prevent.
    29. The Section 17 Applicants request that the Commission issue an 
order pursuant to Section 17(b) of the Act exempting the Separate 
Accounts, the Insurance Companies, MIST, Met Series Fund and each 
Replacement Fund from the provisions of Section 17(a) of the Act to the 
extent necessary to permit the Insurance Companies on behalf of the 
Separate Accounts to carry out, as part of the substitutions, the in-
kind purchase of shares of the Replacement Funds which may be deemed to 
be prohibited by Section 17(a) of the Act.

Conclusion

    Applicants assert that for the reasons summarized above that the 
proposed substitutions and related transactions meet the standards of 
Section 26(c) of the Act and are consistent with the standards of 
Section 17(b) of the Act and that the requested orders should be 
granted.

    For the Commission, by the Division of Investment Management 
pursuant to delegated authority.
Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-33117 Filed 1-3-11; 8:45 am]
BILLING CODE 8011-01-P