Mutual of America Life Insurance Company, et al.
| Published date | 07 October 2019 |
| Record Number | 2019-21811 |
| Section | Notices |
| Court | Securities And Exchange Commission |
Federal Register, Volume 84 Issue 194 (Monday, October 7, 2019)
[Federal Register Volume 84, Number 194 (Monday, October 7, 2019)]
[Notices]
[Pages 53482-53487]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-21811]
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SECURITIES AND EXCHANGE COMMISSION
[Investment Company Act Release No. 33654; File No. 812-15033]
Mutual of America Life Insurance Company, et al.
October 2, 2019.
Agency: Securities and Exchange Commission (``Commission'').
Action: Notice.
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Notice of application for an order approving the substitution of
certain securities pursuant to section 26(c) of the Investment Company
Act of 1940, as amended (the ``Act'') and an order of exemption
pursuant to section 17(b) of the Act from section 17(a) of the Act.
Applicants: Mutual of America Life Insurance Company (``Mutual of
America''), Wilton Reassurance Life Company of New York (``Wilton,''
and together with Mutual of America, the ``Companies''), Mutual of
America Separate Account No. 2, Mutual of America Separate Account No.
3, American Separate Account No. 2, and American Separate Account No. 3
(the ``Separate Accounts,'' and together with the Companies, the
``Section 26 Applicants''); and Mutual of America Variable Insurance
Portfolios, Inc. (``Investment Corporation II'') and Mutual of America
Capital Management LLC (the ``Adviser,'' and collectively with
Investment Corporation II and the Section 26 Applicants, the ``Section
17 Applicants'').
Summary of Application The Section 26 Applicants seek an order pursuant
to section 26(c) of the Act, approving the substitution of shares
issued by certain investment portfolios (the ``Existing Portfolios'')
of Mutual of America Investment Corporation (``Investment Corporation
I'') for shares of certain investment portfolios of the Investment
Corporation II (the ``Replacement Portfolios''), held by the Separate
Accounts to support certain variable annuity insurance contracts
(``Non-Qualified Annuity Contracts'') and variable life insurance
contracts (the ``Life Insurance Contracts'').\1\ The Section 17
Applicants seek an order pursuant to section 17(b) of the Act exempting
them from section 17(a) of the Act to the extent necessary to permit
them to engage in certain in-kind transactions.
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\1\ The variable annuity contracts that are issued in connection
with retirement plans or individual retirement annuities under the
Code (other than the individual retirement annuities issued by
American Separate Account No. 2) are referred to herein as the
``Qualified Annuity Contracts.'' The Non-Qualified Annuity
Contracts, the Life Insurance Contracts, and the Qualified Annuity
Contracts are collectively referred to herein as the ``Contracts.''
Filing Dates: The application was filed on May 15, 2019 and amended on
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August 20, 2019 and September 27, 2019.
Hearing or Notification of Hearing: An order granting the requested
relief 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 should be received by the
Commission by 5:30 p.m. on October 28, 2019 and should be accompanied
by proof of service on the Applicants in the form of an affidavit or,
for lawyers, a certificate of service. Pursuant to rule 0-5 under the
Act, hearing requests should state the nature of the writer's interest,
any facts bearing upon the desirability of a hearing on the matter, the
reason for the request, and the issues contested. Persons who wish to
be notified of a hearing may request notification by writing to the
Commission's Secretary.
ADDRESSES: Secretary, Securities and Exchange Commission, 100 F Street
NE, Washington, DC 20549-1090. Applicants: Mutual of America Life
Insurance Company, 320 Park Avenue, New York, New York 10022.
FOR FURTHER INFORMATION CONTACT: Hae-Sung Lee, Senior Counsel, at (202)
551-7345, or Trace W. Rakestraw, Branch Chief at (202) 551-6825
(Division of
[[Page 53483]]
Investment Management, Chief Counsel's Office).
SUPPLEMENTARY INFORMATION: The following is a summary of the
application. The complete application may be obtained via the
Commission's website 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. Mutual of America is a mutual life insurance company organized
under the laws of the state of New York and is authorized to transact
its business in 50 states and the District of Columbia.
2. Wilton is a life insurance company organized under New York law
and is authorized to transact the business of life insurance, including
annuities, in all 50 states, the Virgin Islands, and the District of
Columbia. Wilton was a wholly-owned subsidiary of a holding company
that was, in turn, 100% owned by Mutual of America. Mutual of America
sold the holding company that owned Wilton but retained full authority
and responsibility to take all actions in regard to American Separate
Account No. 2 and American Separate Account No. 3, under an agreement
with the holding company, and assumptively reinsured the variable
contracts offered through those accounts.
3. Each Separate Account meets the definition of ``separate
account,'' as defined in section 2(a)(37) of the Act and rule 0-1(e)
thereunder. The Separate Accounts are registered with the Commission
under the Act as unit investment trusts. The assets of the Separate
Accounts support the Contracts and interests in the Separate Accounts
offered through such Contracts. The Companies are the legal owners of
the assets in their respective Separate Accounts. The Separate Accounts
are segmented into subaccounts, and each subaccount invests in an
underlying registered open-end management investment company or series
thereof.
4. The Contracts are individual and group flexible premium variable
annuity and variable life insurance contracts. Each Contract is
registered under the Securities Act of 1933, as amended (the ``1933
Act'') on Form N-4 or Form N-6 (or, in the case of the variable life
insurance contract supported by American Separate Account No. 3, on
Form S-6). Each Contract has particular fees, charges, and investment
options, as described in the Contracts' respective prospectuses.
5. As set forth under each Contract, as well as in the prospectus
for each Contract, the Companies reserve the right to substitute shares
of the underlying fund for shares of another underlying fund. The
substitutions will be performed only for the Non-Qualified Annuity
Contracts and the Life Insurance Contracts. The substitutions will not
affect the Qualified Annuity Contracts.
6. The Companies, on their own behalf and on behalf of their
Separate Accounts, propose to exercise their contractual rights to
substitute underlying funds currently available under the Contracts for
different underlying funds (``Substitutions'' or each, a
``Substitution''), as shown in the table below:
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Substitution No. Existing portfolio Replacement portfolio
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1............................... Equity Index Fund....... Equity Index Portfolio.
2............................... All America Fund........ All America Portfolio.
3............................... Small Cap Value Fund.... Small Cap Value Portfolio.
4............................... Small Cap Growth Fund... Small Cap Growth Portfolio.
5............................... Small Cap Equity Index Small Cap Equity Index Portfolio.
Fund.
6............................... Mid Cap Value Fund...... Mid Cap Value Portfolio.
7............................... Mid-Cap Equity Index Mid-Cap Equity Index Portfolio.
Fund.
8............................... Composite Fund.......... Moderate Allocation Portfolio.
9............................... International Fund...... International Portfolio.
10.............................. Money Market Fund....... Money Market Portfolio.
11.............................. Mid-Term Bond Fund...... Mid-Term Bond Portfolio.
12.............................. Bond Fund............... Bond Portfolio.
13.............................. Retirement Income Fund.. Retirement Income Portfolio.
14.............................. 2010 Retirement Fund.... 2010 Retirement Portfolio.
15.............................. 2015 Retirement Fund.... 2015 Retirement Portfolio.
16.............................. 2020 Retirement Fund.... 2020 Retirement Portfolio.
17.............................. 2025 Retirement Fund.... 2025 Retirement Portfolio.
18.............................. 2030 Retirement Fund.... 2030 Retirement Portfolio.
19.............................. 2035 Retirement Fund.... 2035 Retirement Portfolio.
20.............................. 2040 Retirement Fund.... 2040 Retirement Portfolio.
21.............................. 2045 Retirement Fund.... 2045 Retirement Portfolio.
22.............................. 2050 Retirement Fund.... 2050 Retirement Portfolio.
23.............................. 2055 Retirement Fund.... 2055 Retirement Portfolio.
24.............................. 2060 Retirement Fund.... 2060 Retirement Portfolio.
25.............................. Conservative Allocation Conservative Allocation Portfolio.
Fund.
26.............................. Moderate Allocation Fund Moderate Allocation Portfolio.
27.............................. Aggressive Allocation Aggressive Allocation Portfolio.
Fund.
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7. The Existing Portfolios are series of Investment Corporation I,
a Maryland corporation registered as an open-end management investment
company under the Act (File No. 811-05084) and whose shares are
registered under the 1933 Act (File No. 033-06486). Investment
Corporation I issues separate classes (or series) of shares, each of
which represents a separate portfolio of investments. There are
currently 27 series of Investment Corporation I; they are the Existing
Portfolios. Investment Corporation I intends to begin offering shares
of its series directly to the general public through the retail market.
8. The Replacement Portfolios are series of Investment Corporation
II, a Maryland corporation. On June 13, 2019, Investment Corporation II
filed a new registration statement on Form N-1A to register as an open-
end management investment company under the Act (File No. 811-23449)
and to register shares of the Replacement Portfolios under the 1933 Act
(File No. 333-232095). There will be 26 series of
[[Page 53484]]
Investment Corporation II; they are the Replacement Portfolios.
Investment Corporation II was formed for the purpose of performing the
Substitutions. However, new series of Investment Corporation II may be
established in the future, and the series of Investment Corporation II
may be made available as investment allocation options under variable
insurance contracts of the Companies other than the Non-Qualified
Annuity Contracts and the Life Insurance Contracts.
9. The Adviser serves as the investment adviser for the Existing
Portfolios and the Replacement Portfolios. The Adviser is a Delaware
limited liability company that is registered as an investment adviser
under the Investment Advisers Act of 1940. A sub-adviser has not been
engaged to manage any of the Portfolios.
10. Applicants state that the primary purpose of the Substitutions
is to preserve the favorable tax treatment of the Non-Qualified Annuity
Contracts and the Life Insurance Contracts that are currently supported
by the Existing Portfolios. With exception of Substitution No. 8, each
Existing Portfolio and its corresponding Replacement Portfolio have
identical investment objectives, strategies, and risks and
substantially identical fee structures (with different expense ratios
due to differences in net assets). With respect to Substitution No. 8,
the Existing Portfolio and its corresponding Replacement Portfolio have
substantially similar objectives, strategies, and risks, and the
Replacement Portfolio has a lower expense ratio. The Portfolios are
advised by the same Adviser and share a common board of directors. As
such, the Substitutions will permit owners of the Non-Qualified Annuity
Contracts (``Non-Qualified Annuity Contract Owners'') and owners of the
Life Insurance Contracts (``Life Insurance Contract Owners'') to
maintain the favorable tax treatment of their Non-Qualified Annuity and
Life Insurance Contracts and continue their investments in
substantially identical underlying funds (or a substantially similar
underlying fund with respect to Substitution No. 8).
11. In order to preserve that favorable tax treatment, Section 26
Applicants propose to reallocate contract values attributable to the
Non-Qualified Annuity and Life Insurance Contracts from the Existing
Portfolios to the Replacement Portfolios. Applicants represent that the
Substitutions will preserve the favorable tax treatment of the Non-
Qualified Annuity and Life Insurance Contracts because the Replacement
Portfolios will be offered only under variable annuity and life
insurance contracts. The Replacement Portfolios will not be sold
directly to the general public through the retail market.
12. Mutual of America will cause the Adviser to enter into a
written contract with Investment Corporation II whereby, for a period
of two years following the date of substitution for each Substitution
(the ``Substitution Date''), the Adviser will, at least as frequently
as the last business day of each fiscal quarter, reimburse the expenses
of the Replacement Portfolio to the extent that the net annual
operating expenses of the Replacement Portfolio (after taking into
account any other fee waivers or expense reimbursements) for such
period exceed, on an annualized basis, the net annual operating
expenses of the Existing Portfolio for the most recent fiscal year
preceding the date of the application (the ``Expense Caps''). Any
amounts waived or reimbursed by the Adviser will not be subject to
recoupment rights. Any Expense Cap that applies to a Replacement
Portfolio as a condition of this application is separate and apart from
any other contractual expense reimbursement agreement between
Investment Corporation II and the Adviser. To the extent that an
Expense Cap caps a Replacement Portfolio's net annual operating
expenses at a lower percentage of net assets than any other contractual
expense reimbursement agreement between Investment Corporation II and
the Adviser, such other contractual expense reimbursement agreement
will have no practical impact on the Replacement Portfolio's net annual
operating expenses due to the operation of the Expense Cap. In
addition, for each Substitution, the Section 26 Applicants will not
increase the Contract fees and charges that would otherwise be assessed
under the terms of the Contracts for the Non-Qualified Annuity and Life
Insurance Contract Owners for a period of at least two years following
the Substitution Date.
13. Applicants represent that as of the Substitution Date, the
Separate Accounts will redeem shares of the applicable Existing
Portfolios for cash and/or in-kind. Redemption requests and purchase
orders will be placed simultaneously so that the Non-Qualified Annuity
and Life Insurance Contract values will remain fully invested at all
times.
14. Each Substitution will be effected at the relative net asset
values of the respective shares of the Replacement Portfolios in
conformity with section 22(c) of the Act and rule 22c-1 thereunder
without the imposition of any transfer or similar charges by the
Section 26 Applicants. The Substitutions will be effected without
change in the amount or value of any Non-Qualified Annuity and Life
Insurance Contracts.\2\
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\2\ The Section 26 Applicants note that, because the
Substitutions will occur at relative net asset value, and the fees
and charges under the Non-Qualified Annuity and Life Insurance
Contracts will not change as a result of the Substitutions, the
benefits offered by the guarantees under the Contracts will be the
same immediately before and after the Substitutions. What effect the
Substitutions may have on the value of the benefits offered by the
Contract guarantees would depend, among other things, on the
relative future performance of each Existing Portfolio and
Replacement Portfolio, which the Section 26 Applicants cannot
predict. Nevertheless, the Section 26 Applicants note that at the
time of the Substitutions, the Contracts will offer a comparable
variety of investment options with as broad a range of risk/return
characteristics.
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15. Non-Qualified Annuity and Life Insurance Contract Owners will
not incur any fees or charges as a result of the Substitutions. The
obligations of the Section 26 Applicants, and the rights of the Non-
Qualified Annuity and Life Insurance Contract Owners, under the
Contracts will not be altered in any way. The Companies and/or their
affiliates (other than Investment Corporation II) will pay all expenses
and transaction costs of the Substitutions, including legal and
accounting expenses, any applicable brokerage expenses, and other fees
and expenses. No fees or charges will be paid by the Non-Qualified
Annuity and Life Insurance Contract Owners to effect the Substitutions.
The Substitutions will not cause the Contract fees and charges
currently being paid by Non-Qualified Annuity and Life Insurance
Contract Owners to be greater after any Substitution than before the
Substitution. In addition, the Substitutions will in no way alter the
tax treatment of affected Contract owners in connection with their
Contracts, and no tax liability will arise for Contract owners as a
result of the Substitutions.
16. From the date of the Pre-Substitution Notice (defined below)
through 30 days following the Substitution Date, Non-Qualified Annuity
and Life Insurance Contract Owners may make at least one transfer of
Contract value from the subaccount investing in an Existing Portfolio
(before the Substitution) or the Replacement Portfolio (after the
Substitution) to any other available subaccount under the Contract
without charge and without imposing any transfer limitations. Further,
on a Substitution Date, values
[[Page 53485]]
under Non-Qualified Annuity and Life Insurance Contracts attributable
to investments in the applicable Existing Portfolio will be transferred
to the corresponding Replacement Portfolio without charge and without
being subject to any transfer limitations. Moreover, for each
Substitution, except with respect to frequent trading restrictions
described in the Contracts' prospectuses, the Companies will not
exercise any rights reserved under their policies to impose
restrictions on transfers between the subaccounts for a period
beginning at least 30 days before the Substitution Date through at
least 30 days following the Substitution Date.
17. For each Substitution, at least 30 days prior to the
Substitution Date, Non-Qualified Annuity and Life Insurance Contract
Owners will be notified via prospectus supplements (i) that the Section
26 Applicants received or expect to receive Commission approval of the
Substitution and (ii) of the anticipated Substitution Date (the ``Pre-
Substitution Notice''). Pre-Substitution Notices sent to Non-Qualified
Annuity and Life Insurance Contract Owners (including a subset of
contract owners that own inactive contracts (``Inactive Contract
Owners'')) will be filed with the Commission pursuant to rule 497(e)
under the 1933 Act. The Pre-Substitution Notice will also advise Non-
Qualified Annuity and Life Insurance Contract Owners of their pre- and
post-Substitution rights. For each Substitution, the Section 26
Applicants will also deliver to affected Non-Qualified Annuity and Life
Insurance Contract Owners (including Inactive Contract Owners), at
least 30 days before the Substitution Date, a prospectus for the
Replacement Portfolio.
18. In addition, within five business days after the Substitution
Date, Non-Qualified Annuity and Life Insurance Contract Owners
(including Inactive Contract Owners) whose assets were allocated to the
Replacement Portfolio as part of the Substitution will be sent a
written notice (a ``Confirmation'') informing them that the
Substitution was carried out as previously notified. The Confirmation
will also restate the information set forth in the Pre-Substitution
Notice. The Confirmation will also reflect the values of the Non-
Qualified Annuity or Life Insurance Contract Owner's positions in the
Existing Portfolio before the Substitution and the Replacement
Portfolio after the Substitution.
Legal Analysis
1. The Section 26 Applicants request that the Commission issue an
order pursuant to section 26(c) of the Act approving the Substitutions.
Section 26(c) prohibits any depositor or trustee of a unit investment
trust that invests exclusively in the securities of a single issuer
from substituting the securities of another issuer without the approval
of the Commission. Section 26(c) provides that such approval shall be
granted by order from the Commission if the evidence establishes that
the substitution is consistent with the protection of investors and the
purposes of the Act.
2. The Section 26 Applicants submit that the Substitutions meet the
standards set forth in section 26(c) and that, if implemented, the
Substitutions would not raise any of the concerns that Congress
intended to address when the Act was amended to include this provision.
Applicants state that they are seeking the Substitutions to preserve
the favorable tax treatment of the Non-Qualified Annuity Contracts and
the Life Insurance Contracts. A key feature of annuity and life
insurance contracts is the deferral of federal income taxes on the
accumulated earnings within such contracts if fund shares supporting
such contracts are not offered directly to the general public. The
Existing Portfolios are presently sold in a manner that facilitates the
deferral of federal income taxes on the accumulated earnings under the
Non-Qualified Annuity and Life Insurance Contracts. However, in an
effort to expand the markets to which the Existing Portfolios are
offered, Investment Corporation I intends to begin offering shares of
the Existing Portfolios directly to the general public through the
retail market. While this initiative will generally benefit the
Existing Portfolios, and will not affect the tax treatment of the
Qualified Annuity Contracts, it would result in the Non-Qualified
Annuity and Life Insurance Contracts no longer receiving tax deferral
unless the Substitutions are performed.
3. Companies have reserved the right under the Contracts to
substitute shares of another underlying fund for one of the current
funds offered as an investment option under the Contracts. The
Contracts and the Contracts' prospectuses disclose this right.
4. The Section 26 Applicants submit that the Substitutions are not
of the type that section 26 was designed to prevent because they will
not result in costly forced redemptions, nor will they affect any other
aspects of the Contracts. In the current situation, Contract owners are
contractually provided investment discretion during the accumulation
phase of the Contracts to allocate and reallocate their Contract values
among the investment options available under the Contracts.
Accordingly, after the Substitutions, each Non-Qualified Annuity and
Life Insurance Contract Owner may exercise his or her own judgment as
to the most appropriate investment alternative available under the
Contract. Moreover, for each Substitution, the Section 26 Applicants
will offer Non-Qualified Annuity and Life Insurance Contract Owners the
opportunity to transfer amounts out of the affected subaccounts which,
as with all transfers under the Contracts, will be without any cost or
other penalty (other than those necessary to implement policies and
procedures designed to detect and deter disruptive transfers) for a
period beginning on the date of the Pre-Substitution Notice (which
supplement will be delivered to the Non-Qualified Annuity and Life
Insurance Contract Owners at least 30 days before the Substitution
Date) and ending no earlier than 30 days after the Substitution Date.
The Substitutions, therefore, will not result in the type of forced
redemption that section 26(c) was designed to prevent.
5. The Substitutions are also unlike the type of substitution that
section 26(c) was designed to prevent in that the Substitutions have no
impact on other aspects of the Contracts. Specifically, the
Substitutions will not affect the type of benefits offered by the
Companies under the Contracts, or numerous other rights and privileges
associated with the Contracts.
6. 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 Section 17 Applicants to carry out some or all
of the Substitutions. The Section 17 Applicants state that 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.
7. 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 investment company.
8. The Section 17 Applicants state that the proposed transactions
may involve a transfer of portfolio securities by the Existing
Portfolios to the Separate
[[Page 53486]]
Accounts. Immediately thereafter, the Separate Accounts would purchase
shares of the Replacement Portfolios with the portfolio securities
received from the Existing Portfolios. Accordingly, the Section 17
Applicants provide that to the extent that the Companies, the Separate
Accounts, the Adviser, Investment Corporation II, or the Replacement
Portfolios are deemed to be affiliated persons of one another under
section 2(a)(3) or section 2(a)(9) of the Act, it is conceivable that
this aspect of the Substitutions could be viewed as being prohibited by
section 17(a). Accordingly, the Section 17 Applicants have determined
to seek relief from section 17(a).
9. The Section 17 Applicants submit that the terms of the proposed
in-kind purchases of shares of the Replacement Portfolios by the
Separate Accounts, including the consideration to be paid and received,
as described in the 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 terms of the proposed in-kind
transactions, including the consideration to be paid by each Existing
Portfolio and received by each Replacement Portfolio 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 under the Act.
10. 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 without the imposition of any transfer or
similar charges by the Section 26 Applicants. The Substitutions will be
effected without change in the amount or value of any Non-Qualified
Annuity Contract or any Life Insurance Contract. The Substitutions will
in no way alter the tax treatment of Non-Qualified Annuity and Life
Insurance Contract Owners in connection with their Contracts, and no
tax liability will arise for Non-Qualified Annuity and Life Insurance
Contract Owners as a result of the Substitutions. The fees and charges
under the Non-Qualified Annuity and Life Insurance Contracts will not
increase because of the Substitutions. Even though the Company, the
Separate Accounts, the Adviser, Investment Corporation II, and the
Replacement Portfolios 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.
11. The Section 17 Applicants also submit that the proposed in-kind
purchases by the Separate Accounts are consistent with the investment
policies and restrictions of the Section 17 Applicants and the
Replacement Portfolio. Finally, the Section 17 Applicants submit that
the Substitutions are consistent with the general purposes of the Act.
Applicants' Conditions
Applicants agree that any order granting the requested relief will
be subject to the following conditions:
1. The Substitutions will not be effected unless the Companies
determine that: (i) The Contracts allow the substitution of shares of
registered open-end investment companies in the manner contemplated by
the application; (ii) the Substitutions can be consummated as described
in the application under applicable insurance laws; and (iii) any
regulatory requirements in each jurisdiction where the Contracts are
qualified for sale have been complied with to the extent necessary to
complete the Substitutions.
2. The Companies or an affiliate thereof (other than Investment
Corporation II) will pay all expenses and transaction costs of the
Substitutions, including legal and accounting expenses, any applicable
brokerage expenses and other fees and expenses. No fees or charges will
be paid by Non-Qualified Annuity and Life Insurance Contract Owners to
effect the Substitutions. The Substitutions will not cause the Contract
fees and charges currently being paid by Non-Qualified Annuity and Life
Insurance Contract Owners to be greater after the Substitution than
before the Substitution.
3. The Substitutions will be effected at the relative net asset
values of the respective shares of the Replacement Portfolios in
conformity with section 22(c) of the Act and rule 22c-1 thereunder
without the imposition of any transfer or similar charges by the
Applicants. The Substitutions will be effected without change in the
amount or value of any Non-Qualified Annuity Contract or Life Insurance
Contract.
4. The Substitutions will in no way alter the tax treatment of Non-
Qualified Annuity and Life Insurance Contract Owners in connection with
their Contracts, and no tax liability will arise for Non-Qualified
Annuity and Life Insurance Contract Owners as a result of the
Substitutions.
5. The obligations of the Section 26 Applicants, and the rights of
the Non-Qualified Annuity and Life Insurance Contract Owners, under the
Non-Qualified Annuity and Life Insurance Contracts will not be altered
in any way.
6. For each Substitution, Non-Qualified Annuity and Life Insurance
Contract Owners will be permitted to transfer Contract value from the
subaccount investing in the Existing Portfolio (before the Substitution
Date) or the Replacement Portfolio (after the Substitution Date) to any
other available subaccount without charge for a period beginning at
least 30 days before the Substitution Date through at least 30 days
following the Substitution Date. Except with respect to any frequent
trading restrictions described in the relevant prospectus, the
Applicants will not exercise any rights reserved under the Contracts to
impose restrictions on transfers between the subaccounts, including
limitations on the future number of transfers, for a period beginning
at least 30 days before the Substitution Date through at least 30 days
following the Substitution Date.
7. For each Substitution, all Non-Qualified Annuity and Life
Insurance Contract Owners will be notified via the Pre-Substitution
Notice, at least 30 days before the Substitution Date, about: (i) The
intended Substitution of the Existing Portfolio with the Replacement
Portfolio; (ii) the intended Substitution Date; and (iii) information
with respect to transfers as set forth in Condition 6 above. In
addition, for each Substitution, the Section 26 Applicants will also
deliver to Non-Qualified Annuity and Life Insurance Contract Owners, at
least 30 days before the Substitution Date, a prospectus for the
applicable Replacement Portfolio.
8. For each Substitution, the Section 26 Applicants will deliver to
each Non-Qualified Annuity and Life Insurance Contract Owner within
five business days after the Substitution Date, a written confirmation
which will include: (i) A confirmation that the Substitution was
carried out as previously notified; (ii) a restatement of the
information set forth in the Pre-Substitution Notice; and (iii) values
of the Non-Qualified Annuity and Life Insurance Contract Owner's
positions in the Existing Portfolio before the Substitution and the
Replacement Portfolio after the Substitution.
9. Mutual of America will cause the Adviser, as the investment
adviser of the Replacement Portfolios, to enter into a written contract
with Investment Corporation II whereby, for a period of two years
following the Substitution Date for each Substitution, the Adviser
will, at least as frequently as the last business day of each fiscal
quarter,
[[Page 53487]]
reimburse the expenses of the Replacement Portfolio to the extent that
the net annual operating expenses of the Replacement Portfolio (i.e.,
after taking into account any other fee waivers or expense
reimbursements) for such period exceed, on an annualized basis, the net
annual operating expenses of the Existing Portfolio for the most recent
fiscal year preceding the date of the application. Any amounts waived
or reimbursed by the Adviser will not be subject to recoupment rights.
In addition, for each Substitution, the Section 26 Applicants will not
increase the Contract fees and charges that would otherwise be assessed
under the terms of the Contracts for the Non-Qualified Annuity and Life
Insurance Contract Owners for a period of at least two years following
the Substitution Date.
For the Commission, by the Division of Investment Management,
under delegated authority.
Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2019-21811 Filed 10-4-19; 8:45 am]
BILLING CODE 8011-01-P
