Investment Company Act of 1940: AIG Life Insurance Co. et al.,

[Federal Register: November 27, 2002 (Volume 67, Number 229)]

[Notices]

[Page 70983-70985]

From the Federal Register Online via GPO Access [wais.access.gpo.gov]

[DOCID:fr27no02-115]

SECURITIES AND EXCHANGE COMMISSION

[Rel. No. IC-25828; File No. 812-12899]

AIG Life Insurance Company, et al.

November 20, 2002. AGENCY: Securities and Exchange Commission (``SEC'' or ``Commission'').

ACTION: Notice of an application for an order pursuant to Section 6(c) of the Investment Company Act of 1940 (the ``Act'') granting exemptions from the provisions of Sections 2(a)(32), 22(c) and 27(i)(2)(A) of the Act and Rule 22c-1 thereunder.

APPLICANTS: AIG Life Insurance Company (``AIG Life'') and its Variable Account I (the ``Variable Account''), American International Life Insurance Company of New York (``AIL''), AIG SunAmerica Life Assurance Company (``AIG SunAmerica'') and its separate account Variable Annuity Account Nine (``Variable Account Nine''), First SunAmerica Life Insurance Company (``FSLIC'') and its separate account FS Variable Separate Account (``FS Separate Account''), The Variable Annuity Life Insurance Company (``VALIC'') and its separate account VALIC Separate Account (``VALIC Separate Account''), and AIG Equity Sales Corp. (``AIGESC'') (collectively, the ``Applicants'').

SUMMARY OF APPLICATION: Applicants seek an order under Section 6(c) of the Act to amend an existing order (Investment Company Act Release No. 24748, dated November 22, 2000, File No. 812-11982) (``Existing Order'') to:

1. Extend the Existing Order to AIG SunAmerica, Variable Account Nine, FSLIC, FS Separate Account, VALIC and VALIC Separate Account (collectively ``Additional Applicants'') (AIG SunAmerica, FSLIC and VALIC are collectively referred to herein as ``Additional Life Company Applicants'') (Variable Account Nine, FS Separate Account and VALIC Separate Account are collectively referred to herein as ``Accounts'');

2. Permit, under specific circumstances, the recapture of certain credits applied to premium payments made under the flexible premium deferred variable annuity contracts (``Contracts'') to be issued by Additional Applicants;

3. Extend the relief granted by the Existing Order to any National Association of Securities Dealers, Inc. (``NASD'') member broker-dealer controlling or controlled by, or under common control with, any Additional Life Company Applicant, whether existing or created in the future, that serves as a distributor or principal underwriter of the Contracts offered by Additional Applicants (collectively ``Affiliated Broker-Dealers'');

4. Expand the definition of ``Future Contracts'' to include contracts to be issued by any Additional Life Company Applicants that are substantially similar in all material respects to the deferred variable annuity contracts covered by the Existing Order; and

5. Expand the definition of ``Other Accounts'' to include any existing or future separate accounts of Additional Life Company Applicants.

FILING DATE: The application was filed on October 28, 2002.

HEARING OR NOTIFICATION OF HEARING: An order granting the application will be issued unless the SEC orders a hearing. Interested persons may request a hearing by writing to the SEC's Secretary and serving Applicants with a copy of the request, personally or by mail. Hearing requests should be received by the SEC by 5:30 p.m. on December 16, 2002, 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 issues contested. Persons who wish to be notified of a hearing may request notification by writing to the SEC's Secretary.

ADDRESSES: Secretary, SEC, 450 Fifth Street, NW., Washington DC 20549- 0609. Applicants: Christine A. Nixon, Esq., AIG SunAmerica Life Assurance Company, 1 SunAmerica Center, Los Angeles, California 90067- 6002.

FOR FURTHER INFORMATION CONTACT: Kenneth C. Fang, Attorney, or Zandra Y. Bailes, Branch Chief, Office of Insurance

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Products, Division of Investment Management at (202) 942-0670.

SUPPLEMENTARY INFORMATION: The following is a summary of the application. The complete application is available for a fee from the SEC's Public Reference Branch, 450 Fifth Street, NW., Washington DC 20549-0102 (tel. (202) 942-8090).

Applicants' Representations

1. On November 22, 2000, the Commission issued the Existing Order exempting certain transactions of AIG Life, AIL, Variable Account, AIGESC (``Original Applicants'') and certain future accounts of AIG Life and AIL from the provisions of Section 2(a)(32), 22(c) and 27(i)(2)(A) of the Act and Rule 22c-1 thereunder to the extent necessary to permit AIG Life and AIL to recapture under specified circumstances, certain credits (``Credits'') applied to premium payments made under a flexible deferred variable annuity contract that AIG Life issues through the Variable Account (the ``AIG Contract'') as well as other contracts that AIG Life or AIL may issue in the future through their existing or future separate accounts that are substantially similar in all material respects to the AIG Contract described in the application for the Existing Order (``Initial Application'').

2. AIG SunAmerica was formerly known as Anchor National Life Insurance Company and is in the process of changing its name to AIG SunAmerica Life Assurance Company. Like AIG Life and AIL, AIG SunAmerica is an indirect, wholly owned subsidiary of American International Group, Inc. (``AIG''), a Delaware corporation. AIG SunAmerica is the depositor for Variable Account Nine, which was established pursuant to Arizona law on February 4, 2002. AIG SunAmerica may establish one or more additional Other Accounts for which it will serve as depositor.

3. Variable Account Nine is a segregated asset account of AIG SunAmerica. Variable Account Nine is registered with the Commission under the Act as a unit investment trust. Variable Account Nine will fund the variable benefits available under the AIG SunAmerica contracts. Units of interest of Variable Account Nine under the AIG SunAmerica Contracts will be registered under the Securities Act of 1933 (``1933 Act''). AIG SunAmerica may issue Future Contracts through Variable Account Nine.

4. FSLIC is a stock life insurance company organized under the laws of the state of New York on December 5, 1928. FSLIC conducts a life insurance and annuity business in the state of New York. It is an indirect, wholly owned subsidiary of AIG. FSLIC may establish one or more additional Other Accounts for which it will serve as depositor.

5. FS Variable Separate Account is a segregated asset account of FSLIC. FS Variable Separate Account is registered with the Commission under the Act as a unit investment trust. FS Variable Separate Account will fund the variable benefits available under the AIG SunAmerica contract. Units of interest of Variable Account Nine under the AIG SunAmerica Contracts will be registered under the 1933 Act. FSLIC may issue Future Contracts through FS Variable Separate Account.

6. VALIC is a stock life insurance company originally organized as The Variable Annuity Life Insurance Company of America, located in Washington, DC, and reorganized under the laws of the state of Texas on August 20, 1968. It is also an indirect, wholly owned subsidiary of AIG. VALIC may establish one or more additional Other Accounts for which it will serve as depositor.

7. VALIC Separate Account is a segregated asset account of VALIC. VALIC Separate Account will fund the variable benefits available under the VALIC contracts. Units of interest of VALIC Separate Account under the VALIC contracts will be registered under the 1933 Act. VALIC may issue Future Contracts through VALIC Separate Account.

8. That portion of the assets of Variable Account Nine, FS Variable Separate Account and VALIC Separate Account (``Additional Separate Account Applicants'') that are equal to the reserves and other contract liabilities with respect to the respective separate accounts are not chargeable with liabilities arising out of any other business of the respective life insurance company. Any income, gains or losses, realized or unrealized, from assets allocated to the respective separate accounts are, in accordance with the contract, credited to or charged against the separate account without regard to other income, gains or losses of the life insurance company. The same will be true for any other Future Account of any Additional Life Company Applicant.

9. Each of the Additional Separate Account Applicants and any Other Accounts established by the Additional Life Company Applicants will be registered with the Commission under the Act as a unit investment trust. Units of interest in the separate accounts they fund will be registered under the 1933 Act. That portion of the assets of each of the respective Accounts that is equal to the reserves and other contract liabilities with respect to the Account is not chargeable with liabilities arising out of any other business of the life insurance company. Any income, gains or losses, realized or unrealized, from assets allocated to the Account are, in accordance with the contract, credited to or charged against the Account, without regard to other income, gains or losses of the life company. The same will be true for any Other Account.

10. But for the depositor and issuing separate account, the Contracts to be issued by Additional Life Company Applicants are substantially similar in all material respects to the AIG Contract described in the Initial Application. Future Contracts will be substantially similar in all material respects to the contracts covered in the Existing Order.

11. Additional Applicants will recapture Credits under the Contracts under the same circumstances covered by the Existing Order. The Existing Order grants exemptions from Sections 2(a)(32), 22(c) and 27(i)(2)(A) of the Act and Rule 22c-1 thereunder to the extent necessary to permit the recapture of Credits in the following instances:

    (i) When an owner exercises the contract's free look provision;

    (ii) when a death benefit is payable within twenty-four months after receipt of a Credit; and

    (iii) when a surrender is requested within twenty-four months after receipt of a Credit. If the surrender is a partial surrender during the twenty-four month period following receipt of a Credit, except as part of the contract's systematic withdrawal program, Additional Life Company Applicants will reduce the Credit in the same proportion as the partial surrender bears to the value of the contract, less the Credit, and deduct it from the value of the contract.

    Regardless of whether or not the Credit is vested, all gains or losses attributable to such Credit are part of the owner's contract value and are vested immediately. Applicants represent that the Credit and the applicable provisions relating to the Credit are substantially similar in all material respects as for Original Applicants.

    Applicants' Legal Analysis

1. 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 provision 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

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   investors and the purposes fairly intended by the policy and provisions of the Act. Applicants request that the Commission, pursuant to Section 6(c) of the Act, grant exemptions summarized above with respect to Additional Applicants and any Other Accounts that the Additional Life Company Applicants have established or may establish in the future, in connection with the issuance of contracts that are substantially similar in all material respects to the AIG Contract described in the Initial Application. Applicants believe that the requested exemptions are 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.

2. Applicants submit that the recapture of the Credits by Additional Applicants will not raise concerns under Section 2(a)(32), 22(c) and 27(i)(2)(A) of the Act and Rule 22c-1 thereunder for the same reasons given in support of the Existing Order. The Credits will be recapturable under the same circumstances and on the same basis as described in the Initial Application.

   Based on the grounds summarized above, Applicants submit 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.

   For the Commission, by the Division of Investment Management, pursuant to delegated authority. Margaret H. McFarland, Deputy Secretary.

   [FR Doc. 02-30037 Filed 11-26-02; 8:45 am]

   BILLING CODE 8010-01-P