80 FR 22245 - Voya Retirement Insurance and Annuity Company et al.;

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 80, Issue 76 (April 21, 2015)

Page Range		22245-22249
FR Document		2015-09067

Summary of Application: Applicants seek an order pursuant to section 26(c) of the 1940 Act, approving the substitution of shares issued by certain series of Voya Variable Portfolios, Inc. (the ``Replacement Funds'') for shares of certain registered investment companies currently held by subaccounts of the Accounts (the ``Existing Funds''), to support certain variable annuity contracts (collectively, the ``Contracts'') issued by the Companies.

Federal Register, Volume 80 Issue 76 (Tuesday, April 21, 2015)

[Federal Register Volume 80, Number 76 (Tuesday, April 21, 2015)]
[Notices]
[Pages 22245-22249]
From the Federal Register Online [www.thefederalregister.org]
[FR Doc No: 2015-09067]

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SECURITIES AND EXCHANGE COMMISSION

[Investment Company Act Release No. 31552; File No. 812-14302]

Voya Retirement Insurance and Annuity Company et al.; Notice of
Application

April 15, 2015.

AGENCY: Securities and Exchange Commission (``SEC'' or ``Commission'').

ACTION: 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 ``1940 Act'' or ``Act'').

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Applicants: Voya Retirement Insurance and Annuity Company (``Voya
Retirement''), Voya Insurance and Annuity Company (``Voya Insurance''),
ReliaStar Life Insurance Company of New York (``ReliaStar NY''), and
Security Life of Denver Insurance Company (``Security Life'') (each a
``Company'' and together, the ``Companies''), Variable Annuity Account
B of Voya Retirement (``Voya Retirement B''), Variable Annuity Account
I of Voya Retirement (``Voya Retirement I''), Separate Account B of
Voya Insurance (``Voya Insurance B''), Separate Account EQ of Voya
Insurance (``Voya Insurance EQ''), ReliaStar Life Insurance Company of
New York Separate Account NY-B (``ReliaStar NY-B''), Security Life
Separate Account A1 (``Security Life A1''), Security Life Separate
Accounts S-A1 (``Security Life S-A1'') (each, an ``Account'' and

[[Page 22246]]

together, the ``Accounts'') and Voya Variable Portfolios, Inc. The
Companies, the Accounts, and Voya Variable Portfolios, Inc. are
collectively referred to herein as the ``Applicants.''
SUMMARY: Summary of Application: Applicants seek an order pursuant to
section 26(c) of the 1940 Act, approving the substitution of shares
issued by certain series of Voya Variable Portfolios, Inc. (the
``Replacement Funds'') for shares of certain registered investment
companies currently held by subaccounts of the Accounts (the ``Existing
Funds''), to support certain variable annuity contracts (collectively,
the ``Contracts'') issued by the Companies.

DATES:
Filing Date: The application was filed on April 29, 2014, and was
amended and restated October 27, 2014, February 23, 2015 and March 31,
2015.
Hearing or Notification of Hearing: An order granting the
application will be issued unless the Commission orders a hearing.
Interested persons may request a hearing by writing to the Secretary of
the Commission and serving the Applicants with a copy of the request,
personally or by mail. Hearing requests should be received by the
Commission by 5:30 p.m. on May 11, 2015 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: Commission: Brent Fields, Secretary, SEC, 100 F Street, NE.,
Washington, DC 20549-1090. Applicants: J. Neil McMurdie, Esquire,
Senior Counsel, Voya Financial Legal Services, One Orange Way, Windsor,
CT 06095.

FOR FURTHER INFORMATION CONTACT: Rochelle Kauffman Plesset, Senior
Counsel, at (202) 551-6840, or Nadya Roytblat, Assistant Chief Counsel
at (202) 551-0825 (Division of 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 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. Voya Retirement is the depositor of Voya Retirement B and Voya
Retirement I. Voya Insurance is the depositor of Voya Insurance B and
Voya Insurance EQ. ReliaStar NY is the depositor of ReliaStar NY-B.
Security Life is the depositor of Security Life A1 and Security Life S-
A1. Each Company is an indirect, wholly-owned subsidiary of Voya
Financial, Inc.\1\
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\1\ Prior to September 1, 2014, Voya Retirement was known as ING
Life Insurance and Annuity Company and Voya Insurance was known as
ING USA Annuity and Life Insurance Company. Prior to April 7, 2014,
Voya Financial, Inc. was known as ING U.S. Inc.
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2. Each Account is a ``separate account'' as defined by Rule 0-1(e)
under the 1940 Act and each is registered under the 1940 Act as a unit
investment trust. Each of the respective Accounts is used by the
Company for which it is a part to support the Contracts that it issues.
Each Account is divided into subaccounts, each of which invests
exclusively in shares of an Existing Fund or another registered open-
end management investment company. The application sets forth the
registration statement file numbers for the Contracts and the Accounts.
3. The Contracts are individual variable annuity contracts. Each of
the prospectuses for the Contracts discloses that the issuing Company
reserves the right, subject to Commission approval and compliance with
applicable law, to substitute shares of another registered open-end
management investment company for shares of a registered open-end
management investment company held by a subaccount of an Account
whenever the Company, in its judgment, determines that the investment
in the registered open-end management investment company no longer
suits the purpose of the Contract.
4. Voya Variable Portfolios is an open-end management investment
company of the series type that is registered with the Commission under
the 1940 Act (File No. 811-05173).\2\ Shares of the series are
registered under the Securities Act of 1933 (File No. 333-05173).
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\2\ Effective May 1, 2014 Voya Variable Portfolios changed its
name from ING Variable Portfolios, Inc. The names of the Replacement
Funds were also changed as of this date to reflect the rebranding of
the investment company.
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5. Voya Investments LLC (``Voya Investments''), a registered
investment adviser, has overall responsibility for the management of
each Replacement Fund.\3\ Voya Investments delegates to a sub-adviser
the responsibility for day-to-day management of the investments of each
Replacement Fund, subject to Voya Investment's oversight.
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\3\ Effective May 1, 2014, Voya Investments changed its name
from ING Investments, LLC.
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6. Applicants propose, as set forth below, to substitute shares of
the Replacement Funds for shares of the Existing Funds
(``Substitutions''):

7. Applicants state that the investment objectives and investment
policies of each Replacement Fund are similar to the corresponding
Existing Fund, or each Replacement Fund's underlying portfolio
construction and investment results are similar to those of the
Existing Fund, and therefore the fundamental objectives, risk and
performance expectations of those Contract Owners with interests in
subaccounts of the Existing Funds will continue to be met after the
Substitutions.
8. The investment objectives of each Existing Fund and its
corresponding Replacement Fund are set out below. Additional
information for each Existing Fund and Replacement Fund, including
principal investment strategies, principal risks and comparative
performance history, can be found in the application.

[[Page 22247]]

------------------------------------------------------------------------
Existing fund Replacement fund
------------------------------------------------------------------------
ClearBridge Variable Large Cap Value Voya Russell Large Cap Value
Portfolio seeks long-term growth of Index Portfolio seeks
capital as its primary investment investment results (before
objective. Current income is a fees and expenses) that
secondary objective. correspond to the total return
(which includes capital
appreciation and income) of
the Russell Top 200 Value
Index.
Fidelity VIP Equity-Income Portfolio Voya Russell Large Cap Value
seeks reasonable income. The fund will Index Portfolio seeks
also consider the potential for investment results (before
capital appreciation. The fund's goal fees and expenses) that
is to achieve a yield which exceeds correspond to the total return
the composite yield on the securities (which includes capital
comprising the S&P 500 Index. appreciation and income) of
the Russell Top 200 Value
Index.
Invesco VI Core Equity Fund seeks long- Voya Russell Large Cap Index
term growth of capital. Portfolio seeks investment
results (before fees and
expenses) that correspond to
the total return (which
includes capital appreciation
and income) of the Russell Top
200 Index.
Invesco VI American Franchise Fund Voya Russell Large Cap Growth
seeks capital growth.. Index Portfolio seeks
investment results (before
fees and expenses) that
correspond to the total return
(which includes capital
appreciation and income) of
the Russell Top 200 Growth
Index.
Pioneer Equity Income VCT Portfolio Voya Russell Large Cap Value
seeks current income and long-term Index Portfolio seeks
growth of capital from a portfolio investment results (before
consisting primarily of income fees and expenses) that
producing equity securities of U.S. correspond to the total return
corporations. (which includes capital
appreciation and income) of
the Russell Top 200 Value
Index.
------------------------------------------------------------------------

9. Applicants state that at the time of the Substitutions the
overall fees and expenses of the Replacement Funds will be less than
those assessed by the Existing Funds and that for two years following
the effective date of the Substitutions (``Effective Date''), the net
annual expenses of each of the Replacement Funds will not exceed the
net annual expenses of each corresponding Existing Fund. The
application sets forth the fees and expenses of each Existing Fund and
its corresponding Replacement Fund in greater detail.
10. Applicants state that by substituting unaffiliated funds with
funds that are advised and subadvised by affiliates of the Companies,
the principal purposes of the Substitutions would, among other things:
(1) Help implement the Companies' overall business plan to make the
Contracts more competitive (and thus more attractive to customers) and
more efficient to administer and oversee; (2) provide the Companies
with more influence over the administrative and management aspects of
the funds offered through the Contracts, thereby reducing costs and
customer confusion; (3) allow each Company the ability to react more
quickly to the changes and problems it encounters in its oversight of
the funds which are available in its Contracts; (4) allow the Companies
to reduce costs by consolidating the administration of the Replacement
Funds with its other funds; and (5) allow the Companies to respond to
expense, performance and management matters that they have identified
in their due diligence review of the funds available through the
Contracts.
11. Applicants represent that as of the Effective Date shares of
the Existing Funds will be redeemed for cash. The Companies, on behalf
of each Existing Fund subaccount of each relevant Account, will
simultaneously place a redemption request with each Existing Fund and a
purchase order with the corresponding Replacement Fund so that the
purchase of Replacement Fund shares will be for the exact amount of the
redemption proceeds. Thus, Contract values will remain fully invested
at all times. The proceeds of such redemptions will then be used to
purchase the appropriate number of shares of the applicable Replacement
Fund.
12. The Substitutions will take place at relative net asset value
(in accordance with Rule 22c-1 under the 1940 Act) with no change in
the amount of any Affected Contract Owner's contract value, cash value,
accumulation value, account value or death benefit or in dollar value
of his or her investment in the applicable Accounts. No brokerage
commissions, fees or other remuneration will be paid by either the
Existing Funds or the Replacement Funds or by Affected Contract Owners
in connection with the Substitutions.
13. The Affected Contract Owners will not incur any fees or charges
as a result of the Substitutions nor will their rights or the
Companies' obligations under the Contracts be altered in any way. The
Companies or their affiliates will pay all expenses and transaction
costs of the Substitutions, including legal and accounting expenses,
any applicable brokerage expenses, and other fees and expenses. The
Substitutions will not cause the Contract fees and charges currently
being paid by Affected Contract Owners to be greater after the
Substitutions than before the Substitutions. Moreover, the
Substitutions will not impose any tax liability on Affected Contract
Owners.
14. As described in the application, after notification of the
Substitution and for 30 days after the Effective Date, Affected
Contract Owners may reallocate the subaccount value of an Existing Fund
to any other investment option available under their Contract without
incurring any administrative costs or transfer charges.
15. All Affected Contract Owners affected by the Substitutions were
notified of this application by means of supplements to the Contract
prospectuses shortly after the date the application was first filed
with the Commission. Among other information, the supplements informed
Affected Contract Owners that beginning on the date of the supplements,
the Companies will not exercise any rights reserved by them under the
Contracts to impose restrictions or fees on transfers from an Existing
Fund (other than restrictions related to frequent or disruptive
transfers) until at least 30 days after the Effective Date.
16. Following the date the order requested by this application is
issued, but at least 30 days before the Effective Date, Affected
Contract Owners will receive a ``Pre-Substitution Notice,'' consisting
of a second supplement to the Contract prospectuses setting forth the
intended Effective Date and advising Affected Contract Owners of their
right, if they so choose, at any time during the period beginning 30
days before the Effective Date through at least 30 days

[[Page 22248]]

following the Effective Date, to reallocate or withdraw accumulated
value in the Existing Fund subaccounts under their Contracts or
otherwise terminate their interest therein in accordance with the terms
and conditions of their Contracts. If Affected Contract Owners
reallocate account value during this 60 day period, there will be no
charge for the reallocation of accumulated value from the Existing Fund
subaccounts and the reallocation will not count as a transfer when
imposing any applicable restriction or limit under the Contract on
transfers. Additionally, all Affected Contract Owners will be sent
prospectuses of the applicable Replacement Funds at least 30 days
before the Effective Date.
17. Within five (5) business days after the Effective Date,
Affected Contract Owners will be sent a written confirmation, which
will include confirmation that the Substitutions were carried out as
previously notified, a restatement of the information set forth in the
Pre-Substitution Notice and information showing how the allocation of
the Affected Contract Owner's account value before and immediately
following the Substitution has changed as a result of the
Substitutions.

Legal Analysis

1. Applicants request that the Commission issue an order pursuant
to section 26(c) of the 1940 Act approving the Substitutions. Section
26(c) requires the depositor of a registered unit investment trust
holding the securities of a single issuer to obtain Commission approval
before substituting the securities held by the trust. Section 26(c)
requires the Commission to issue such an order if the evidence
establishes that the substitution is consistent with the protection of
investors and the purposes fairly intended by the policy and provisions
of the 1940 Act.
2. Applicants submit that the terms and conditions of the
Substitutions meet the standards set forth in section 26(c) and assert
that the replacement of an Existing Fund with the corresponding
Replacement Fund is consistent with the protection of investors and the
purposes fairly intended by the policy and provisions of the l940 Act.
As described in the application, as of the Effective Date of the
Substitution, the overall fees and expenses of each Replacement Fund
will be less than those of the corresponding Existing Fund and for two
years following the Effective Date, the net annual expenses of each
Replacement Fund will not exceed the net annual expenses of the
corresponding Existing Fund. Applicants further asset that each
Replacement Fund has similar investment objectives and investment
strategies as the corresponding Existing Fund, or each Replacement
Fund's underlying portfolio construction and investment results are
similar to those of the corresponding Existing Fund. Accordingly,
Applicants believe that the fundamental investment objectives, risk and
performance expectations of the Affected Contract Owners will continue
to be met after the Substitutions.
3. Applicants also maintain that Affected Contract Owners will be
better served by the Substitutions. Applicants anticipate that the
substitution of an Existing Fund with the corresponding Replacement
Fund will result in a Contract that is administered and managed more
efficiently, and one that is more competitive with other variable
products. The rights of Affected Contract Owners and the obligations of
the Companies under the Contracts will not be altered by the
Substitutions. Affected Contract Owners will not incur any additional
tax liability or any additional fees and expenses as a result of the
Substitutions.
4. Each of the prospectuses for the Contracts discloses that the
issuing Company reserves the right, subject to Commission approval and
compliance with applicable law, to substitute shares of another
registered open-end management investment company for shares of an
open-end management investment company held by a subaccount of an
Account.
5. Applicants also assert that the Substitutions do not entail any
of the abuses that section 26(c) was designed to prevent. Unlike a
traditional unit investment trust where a depositor could only
substitute an investment security in a manner which permanently
affected all the investors in the trust, the Contracts provide each
Contract Owner with the right to exercise his or her own judgment and
transfer account values into other subaccounts. Moreover, the Contracts
will offer Affected Contract Owners the opportunity to transfer amounts
out of the affected subaccounts into any of the remaining subaccounts
without cost or other disadvantage. The Substitution, therefore, will
not result in the type of costly forced redemptions that section 26(c)
was designed to prevent. Applicants also maintain that the
Substitutions are unlike the type of substitutions which section 26(c)
was designed to prevent in that by purchasing a Contract, Contract
Owners select much more than a particular registered management open-
end investment company in which to invest their account values. They
also select the specific type of death benefit and other optional
benefits as well as other rights and privileges set forth in the
Contracts that will not be changed as a result of the Substitutions.

Applicants' Conditions

Applicants agree that any order of the Commission granting the
requested relief will be subject to the following conditions:
1. The Substitutions will not be effected unless the Companies
determine that: (a) The Contracts allow the substitution of shares of
registered open-end investment companies in the manner contemplated by
the application; (b) the Substitutions can be consummated as described
in the application under applicable insurance laws; and (c) 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 their affiliates 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 assessed to the Contract Owners to
effect the Substitutions.
3. The Substitutions will be effected at the relative net asset
values of the respective shares in conformity with section 22(c) of the
1940 Act and Rule 22c-1 thereunder without the imposition of any
transfer or similar charges by Applicants. The Substitutions will be
effected without change in the amount or value of any Contracts held by
Affected Contract Owners.
4. 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 Affected Contract Owners as a result of the
Substitutions.
5. The rights or obligations of the Companies under the Contracts
of Affected Contract Owners will not be altered in any way. The
Substitutions will not adversely affect any riders under the Contracts.
6. Affected Contract Owners will be permitted to make at least one
transfer of Contract value from the subaccount investing in the
Existing Fund (before the Effective Date) or the Replacement Fund
(after the Effective Date) to any other available investment option
under the Contract without charge for a period beginning at least 30
days before the Effective Date through at least 30 days following the
Effective Date. Except as described in any market timing/short-term
trading provisions of the relevant

[[Page 22249]]

prospectus, the Company will not exercise any right it may have under
the Contract to impose restrictions on transfers between the
subaccounts under the Contracts, including limitations on the future
number of transfers, for a period beginning at least 30 days before the
Effective Date through at least 30 days following the Effective Date.
7. All Affected Contract Owners will be notified, at least 30 days
before the Effective Date about: (a) The intended substitution of
Existing Funds with the Replacement Funds; (b) the intended Effective
Date; and (c) information with respect to transfers as set forth in
Condition 6 above. In addition, the Companies will also deliver, at
least 30 days before the Effective Date a prospectus for each
applicable Replacement Fund.
8. Companies will deliver to each Affected Contract Owner within
five (5) business days of the Effective Date a written confirmation
which will include: (a) A confirmation that the Substitutions were
carried out as previously notified; (b) a restatement of the
information set forth in the Pre-Substitution Notice; and (c) before
and after account values.
9. After the Effective Date Applicants agree not to change a
Replacement Fund's sub-adviser without first (a) obtaining shareholder
approval of the sub-adviser change or (b) Voya Variable Portfolios Inc.
determining that it can continue to rely on its manager-of-managers
exemptive order.
10. For two years following the Effective Date the net annual
expenses of each Replacement Fund will not exceed the net annual
expenses of the corresponding Existing Fund as of the Fund's most
recent fiscal year. To achieve this limitation, the Replacement Fund's
investment adviser will waive fees or reimburse the Replacement Fund in
certain amounts to maintain expenses at or below the limit. Any
adjustments will be made at least on a quarterly basis. In addition,
the Companies will not increase the Contract fees and charges including
asset based charges such as mortality expense risk charges deducted
from the subaccounts that would otherwise be assessed under the terms
of the Contracts for a period of at least two years following the
Effective Date.

For the Commission, by the Division of Investment Management,
under delegated authority.
Brent J. Fields,
Secretary.
[FR Doc. 2015-09067 Filed 4-20-15; 8:45 am]
BILLING CODE 8011-01-P

Category		Regulatory Information
Collection		Federal Register
sudoc Class		AE 2.7: GS 4.107: AE 2.106:
Publisher		Office of the Federal Register, National Archives and Records Administration
Section		Notices
Action		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 ``1940 Act'' or ``Act'').
Contact		Rochelle Kauffman Plesset, Senior Counsel, at (202) 551-6840, or Nadya Roytblat, Assistant Chief Counsel at (202) 551-0825 (Division of Investment Management, Chief Counsel's Office).
FR Citation		80 FR 22245