80 FR 42571 - Horace Mann Life Insurance Company, et al; Notice of Application
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 80, Issue 137 (July 17, 2015)
Federal Register Volume 80, Issue 137 (July 17, 2015)
| Page Range | 42571-42575 | |
| FR Document | 2015-17575 |
[Federal Register Volume 80, Number 137 (Friday, July 17, 2015)] [Notices] [Pages 42571-42575] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2015-17575] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. IC-31714; File No. 812-14336] Horace Mann Life Insurance Company, et al; Notice of Application July 13, 2015. AGENCY: Securities and Exchange Commission (``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''). ----------------------------------------------------------------------- Applicants: Horace Mann Life Insurance Company (``Horace Mann''), and Horace Mann Life Insurance Company Separate Account and Horace Mann Life Insurance Company Qualified Group Annuity Separate Account (collectively, the ``Separate Accounts,'' and together with Horace Mann, the ``Applicants''). SUMMARY OF APPLICATION: The Applicants seek an order pursuant to Section 26(c) of the 1940 Act approving the substitution of shares issued by certain investment portfolios (the ``Existing Portfolios'') of registered investment companies with shares of certain investment portfolios (the ``Replacement Portfolios'') of registered investment companies, under certain variable annuity contracts (the ``Contracts''), each funded through the Separate Accounts. DATES: Filing Date: The application was filed on July 25, 2014, and amended on January 14, 2015, and May 27, 2015. 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 Commission's Secretary 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 August 6, 2015, and should be accompanied by proof of service on applicants, in the form of an affidavit or, for lawyers, a certificate of service. Pursuant to Rule 0-5 under the 1940 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, U.S. Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090; Applicants: Elizabeth E. Arthur, Esq., Maureen Bolinger, Horace Mann Life Insurance Company, One Horace Mann Plaza, Springfield, Illinois 62715. FOR FURTHER INFORMATION CONTACT: Michael S. Didiuk, Senior Counsel, at (202) 551-6839, or Holly L. Hunter-Ceci, Branch Chief, at (202) 551- 6825 (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 an applicant using the Company name box, at http://www.sec.gov/search/search.htm or by calling (202) 551-8090. Applicants' Representations 1. Horace Mann is a stock life insurance company organized under the laws of Illinois. Horace Mann is engaged in the sale of individual and group life insurance and annuity contracts on a non-participating basis. Horace Mann is an indirect wholly owned subsidiary of Horace Mann Educators Corporation, a publicly-held insurance holding company traded on the New York Stock Exchange. Horace Mann established the Horace Mann Life Insurance Company Separate Account on October 9, 1965, under Illinois law, and established the Horace Mann Life Insurance Company Qualified Group Annuity Separate Account on October 16, 2006, under Illinois law. 2. Each of the Separate Accounts meets the definition of ``separate account'' as defined in Section 2(a)(37) of the 1940 Act. The Separate Accounts are registered with the Commission under the 1940 Act as unit investment trusts. The assets of the Separate Accounts support the Contracts, and interests in the Separate Accounts offered through such Contracts have been registered under the Securities Act of 1933 (``1933 Act'') on Form N-4. The application sets forth the registration statement file numbers for the Contracts and the Separate Accounts. Horace Mann is the legal owner of the assets in the Separate Accounts. The assets of the Separate Accounts may not be chargeable with liabilities arising out of any other business of Horace Mann. 3. The Contracts are issued either as individual or group contracts, with group contract participants acquiring certain ownership rights as described in the group contract or plan documents. Contract owners and participants in group contracts (each a ``Contract owner'') may allocate some or all of their Contract value to one or more subaccounts available as investment options under their respective Contract. Each subaccount corresponds to a portfolio of an underlying registered open-end management investment company in which the Separate Account invests. A Contract owner may also invest some or all of his/ her Contract value to a fixed account investment option, which is supported by assets of Horace Mann's general account. 4. The Applicants state that under the Contracts, Horace Mann reserves the right to substitute shares of one portfolio for shares of another portfolio if: (i) Shares of a registered open-end management investment company are no longer available for investment by the Separate Account; or (ii) Horace Mann determines that further investments in a registered open-end management investment company are inappropriate in view of the purposes and objectives of a Contract. 5. The Applicants propose the substitution of shares of the Existing Portfolios with shares of the Replacement Portfolios under the Contracts, each funded through the Separate Accounts. The Separate Accounts are segmented into subaccounts, and certain of these subaccounts invest in the Existing Portfolios. Each subaccount's income, gains, and losses, whether or not realized, are credited to or charged against the amounts allocated to that [[Page 42572]] subaccount in accordance with the terms of the Contracts without regard to other income, gains, or losses of the remaining subaccounts or of Horace Mann. The Applicants state that the proposed substitutions involve redeeming shares of the Existing Portfolios for cash. The proceeds of such redemptions will then be used to purchase shares of the corresponding Replacement Portfolio, as each subaccount of the Separate Accounts will invest the proceeds of its redemption from the Existing Portfolios in the applicable Replacement Portfolios. 6. Applicants propose, as set forth below, to substitute shares of the Replacement Portfolios for shares of the Existing Portfolios (``Substitutions''): ------------------------------------------------------------------------ Sub. No. Existing portfolio Replacement portfolio ------------------------------------------------------------------------ 1................ Wilshire Mutual Funds Inc.-- Variable Insurance Wilshire 5000 Index\SM\ Products Fund II-- Fund--Institutional Class. Index 500 Portfolio-- Service Class 2. 2................ Wilshire Mutual Funds Inc.-- ....................... Wilshire 5000 Index\SM\ Fund--Investment Class. 3................ Variable Insurance Products ....................... Fund IIII--Growth & Income Portfolio--Service Class 2. 4................ Davis Variable Account Fund, ....................... Inc.--Davis Value Portfolio. 5................ T. Rowe Price Equity Series, ....................... Inc.--T. Rowe Price Equity Income Portfolio--II. 6................ Wilshire Large Company Value ....................... Portfolio--Investment Class. 7................ Fidelity Variable Insurance ....................... Products Fund--Growth Portfolio--Service Class 2. 8................ Wilshire Mutual Funds Inc.-- ....................... Wilshire Large Company Growth Portfolio-- Institutional Class. 9................ Wilshire Large Company ....................... Growth Portfolio-- Investment Class. 10............... Delaware VIP Trust--Delaware ....................... VIP U.S. Growth Series-- Service Class. 11............... AllianceBernstein Variable ....................... Products Series Fund, Inc.-- AllianceBernstein Large Cap Growth Portfolio--Class B. 12............... Dreyfus Investment Calvert VP S&P MidCap Portfolios--Dreyfus MidCap 400 Index Portfolio-- Stock Portfolio--Service Class F. Shares. 13............... Variable Insurance Products ....................... Fund III--Mid Cap Portfolio--Service Class 2. 14............... Rainier Investment ....................... Management Mutual Funds-- Rainier Small/Mid Cap Equity Fund--Original Shares. 15............... Aerial Investment Trust-- ....................... Ariel Appreciation Fund-- Investor Class. 16............... Goldman Sachs Variable ....................... Insurance Trust--Goldman Sachs Mid Cap Value Fund-- Service Shares. 17............... American Century Variable ....................... Portfolios, Inc.--VP Mid Cap Value Fund--Class 1. 18............... Wells Fargo Variable Trust-- ....................... Wells Fargo Advantage VT Opportunity Fund--Class 2. 19............... AllianceBernstein Variable ....................... Products Series Fund, Inc.-- AllianceBernstein Small/Mid Cap Value Portfolio--Class B. 20............... Aerial Investment Trust-- ....................... Ariel Fund--Investor Class. 21............... Lord Abbet Series Fund, ....................... Inc.--Growth Opportunities Portfolio--Class VC. 22............... Putnam Variable Trust-- ....................... Putnam VT Multi-Cap Growth Fund--Class IB. 23............... Delaware VIP Trust--Delaware ....................... VIP Smid Cap Growth Series-- Service Class (formerly Delaware VIP Growth Opportunities Series, Service Class). 24............... Goldman Sachs Variable Dreyfus Small Cap Stock Insurance Trust--Goldman Index Portfolio-- Sachs Small Cap Equity Service Shares. Insights Fund-- Institutional Shares. 25............... Lazard Retirement Series, ....................... Inc.--Lazard Retirement US Small-Mid Cap Equity Portfolio--Service Shares. 26............... Neuberger Berman Equity ....................... Funds--Neuberger Berman Genesis Fund--Advisor Class. 27............... T. Rowe Price Small-Cap ....................... Stock Fund, Inc.--T. Rowe Price Small-Cap Stock Fund-- Advisor Class. 28............... T. Rowe Price Small-Cap ....................... Value Fund, Inc.--T. Rowe Price Small-Cap Value Fund-- Advisor Class. 29............... Wilshire Small Company Value ....................... Portfolio--Investment Class. 30............... Royce Capital Fund--Royce ....................... Small-Cap Portfolio-- Investment Class. 31............... AllianceBernstein Variable ....................... Products Series Fund, Inc.-- AllianceBernstein Small Cap Growth Portfolio--Class B. 32............... Wilshire Mutual Funds Inc.-- ....................... Wilshire Small Company Growth Portfolio-- Investment Class. 33............... Delaware VIP Trust--Delaware Variable Insurance VIP REIT Series--Service Products Fund IV--Real Class. Estate Portfolio-- Service Class 2. 34............... Fidelity Variable Insurance Franklin Templeton Products Fund--High Income Variable Insurance Portfolio--Service Class 2. Products Trust--High Income VIP Fund--Class 2. 35............... ALPS Variable Investment Fidelity VIP V-- Trust--Ibbotson FundsManager 20% Conservative ETF Asset Portfolio--Service Allocation Portfolio--Class Class 2. II. 36............... ALPS Variable Investment Fidelity VIP V-- Trust--Ibbotson Income and FundsManager 50% Growth ETF Asset Allocation Portfolio--Service Portfolio--Class II. Class 2. 37............... ALPS Variable Investment Fidelity VIP V-- Trust--Ibbotson Balanced FundsManager 60% ETF Asset Allocation Portfolio--Service Portfolio--Class II. Class 2. 38............... ALPS Variable Investment Fidelity VIP V-- Trust--Ibbotson Growth ETF FundsManager 70% Asset Allocation Portfolio-- Portfolio--Service Class II. Class 2. 39............... ALPS Variable Investment Fidelity VIP V-- Trust--Ibbotson Aggressive FundsManager 85% Growth ETF Asset Allocation Portfolio--Service Portfolio--Class II. Class 2. 40............... Fidelity Variable Insurance American Funds Products Fund II--Emerging Insurance Series--New Markets Portfolio--Service World Fund--Class 4. Class 2. ------------------------------------------------------------------------ [[Page 42573]] 7. The Applicants state that the proposed Substitutions involve substituting a Replacement Portfolio for an Existing Portfolio with very similar--and at times, substantially identical--investment objectives, investment strategies, and principal risks and therefore the expectations of Contract owners will continue to be met after the proposed Substitutions. The Applicants state that the performance for the Replacement Portfolios is at least comparable to that of the Existing Portfolios. Additional information for each Existing Portfolio and the corresponding Replacement Portfolio, including investment objectives, principal investment strategies, principal risks, and performance can be found in the application. 8. Applicants represent that Contract owners with Contract value allocated to the subaccounts of the Existing Portfolios will have the same or lower total net annual operating expenses (i.e. total annual portfolio operating expenses after taking into account any fee waiver or expense reimbursement) after the proposed Substitutions as before the proposed Substitutions (based on the periods covered by the most recent prospectuses for the Existing and Replacement Portfolios), except for the following Substitutions: \1\ --------------------------------------------------------------------------- \1\ For Substitution #36 the total annual operating expenses of the Replacement Portfolio for the period covered by the most recent prospectus dated April 30, 2015, were lower than those of the Existing Portfolio for the same period only after taking into account any contractual fee waivers/expense reimbursement applied under the Replacement Portfolio. ------------------------------------------------------------------------ Sub. No. Existing portfolio Replacement portfolio ------------------------------------------------------------------------ 37............. ALPS Variable Insurance Fidelity VIP V-- Trust--Ibbotson Balanced FundsManager 60% ETF Asset Allocation Portfolio. Portfolio. 38............. ALPS Variable Insurance Fidelity VIP V-- Trust--Ibbotson Growth ETF FundsManager 70% Asset Allocation Portfolio. Portfolio. 39............. ALPS Variable Insurance Fidelity VIP V-- Trust--Ibbotson Aggressive FundsManager 85% Growth ETF Asset Portfolio. Allocation Portfolio. ------------------------------------------------------------------------ Horace Mann represents that it will solicit approval for proposed Substitutions #37, #38 and #39 from the respective Contract owners owning interests in the applicable subaccount. Further, Applicants represent that each Replacement Portfolio has a combined management and 12b-1 fee that is less than or equal to that of the Existing Portfolio, except for the following Substitution: ------------------------------------------------------------------------ Sub. No. Existing portfolio Replacement portfolio ------------------------------------------------------------------------ 1.............. Wilshire Mutual Funds Inc.-- Variable Insurance Wilshire 5000 Index\SM\ Products Fund II--Index Fund. 500 Portfolio. ------------------------------------------------------------------------ Horace Mann represents that it will solicit approval with respect to the Substitution involving the Wilshire 5000 Index\SM\ Fund from Contract owners owning interests in the subaccount. 9. The Applicants state that the Substitutions proposed are part of an overall business goal of Horace Mann to improve the administrative efficiency and cost effectiveness, as well as the attractiveness to investors, of its Contracts. Horace Mann asserts that it has determined that a more streamlined array of investment options, concentrated in fewer fund families, would permit Horace Mann to lower its costs of administering the Contracts, increase its operational and administrative efficiencies, and create a more manageable investment process for Contract owners. 10. The Applicants represent that Contract owners will also be notified of this Application by means of a prospectus supplement or other communication (``Pre-Substitution Notice'') for each of the Contracts. The Pre-Substitution Notice will notify Contract owners of Horace Mann's intent to implement the Substitutions; will notify Contract owners that Horace Mann has filed this Application to obtain the necessary approval from the Commission to effect the Substitutions; and will set forth the anticipated Substitution Date. In addition, the Pre-Substitution Notice will: (a) Advise Contract owners that Contract values attributable to investments in the Existing Portfolios will be transferred to the Replacement Portfolios, without any charge that would otherwise apply (including sales charges or surrender charges) and without being subject to any limitations on transfers, on the Substitution Date; (b) state that, from May 1, 2015, through the date 30 days after the Substitutions, Contract owners may make one transfer of Contract value from the subaccounts investing in the Existing Portfolios (before the Substitution Date) or the Replacement Portfolios (after the Substitution Date) to any other available investment option under the Contract without any charge that would otherwise apply (including sales charges or surrender charges) and without imposing any transfer limitations; and (c) inform Contract owners that, except as described in the market timing/short-term trading provisions of the relevant prospectus, Horace Mann will not exercise any right it may have under the Contracts to impose additional restrictions on transfers between the subaccounts under the Contracts, including any limitation on the number of transfers permitted, for a period beginning on May 1, 2015, through the date 30 days following the Substitution Date. Applicant further states that at least 30 days before the Substitution Date all affected Contract owners will have received the most recent prospectus for each applicable Replacement Portfolio. Finally, within five (5) business days following the Substitution Date, Contract owners affected by the Substitution will receive a written confirmation that the Substitutions were carried out as previously notified. This confirmation will restate the information set forth in the Pre- Substitution Notice and will include the before and after account values. 11. Each proposed Substitution will take place at relative net asset value determined on the Substitution Date pursuant to Section 22 of the 1940 Act and Rule 22c-1 thereunder, with no change in the amount of any Contract [[Page 42574]] owner's Contract value or death benefit or in the dollar value of his or her investments in any of the subaccounts. The procedures to be implemented are sufficient to assure that each Contract owner's cash values immediately after the Substitution will be equal to the cash value immediately before the Substitution. Contract owners will not incur any fees or charges as a result of the Substitutions, nor will their rights or Horace Mann's obligations under the Contracts be altered in any way, and the Substitutions will not change Contract owners' insurance benefits under the Contracts. 12. The proposed Substitution will be effected on the Substitution Date by having the Separate Accounts redeem shares of the Existing Portfolios for cash.\2\ The proceeds of such redemptions will then be used to purchase shares of the corresponding Replacement Portfolio, as each subaccount of the Separate Accounts will invest the proceeds of its redemption from the Existing Portfolios in the applicable Replacement Portfolios. Redemption requests and purchase orders will be placed simultaneously so that Contract values will remain fully invested at all times. --------------------------------------------------------------------------- \2\ To the extent that there are any in-kind redemptions, such redemptions will be effected in accordance with the conditions set forth in the no-action letter issued by the Commission staff to Signature Financial Group (pub. avail. Dec. 28, 1999). In the event that a Replacement Portfolio or its investment adviser declines to accept, on behalf of the Replacement Portfolio, securities redeemed in-kind by an Existing Portfolio, such Existing Portfolio will instead provide cash equal to the value of the declined securities so that the Contract owner's contract values will not be adversely affected or diluted. --------------------------------------------------------------------------- 13. Horace Mann will pay all expenses incurred in connection with the Substitutions, including legal, accounting, transactional, and other fees and expenses, including brokerage commissions. Contract owners will not incur any fees or charges as a result of the Substitutions, nor will their rights or Horace Mann's obligations under the Contracts be altered in any way, and the Substitutions will not change Contract owners' insurance benefits under the Contracts. The Substitutions will not cause the contract fees and charges currently being paid by Contract owners to be greater after the Substitution than before the Substitution. 14. The Applicants represent that Horace Mann will take further steps to ensure that those Contract owners for whom the total annual operating expense ratio of the Replacement Portfolio was appreciably higher than that of the Existing Portfolio do not incur higher expenses for a period of two years after the Substitution. More specifically, for two years following the Substitution Date, Horace Mann will reimburse those who were Contract owners on the Substitution Date and who, as a result of a Substitution, had Contract value allocated to a subaccount investing in a Replacement Portfolio such that the Replacement Portfolio's net annual operating expenses (taking into account any fee waivers and expense reimbursements) for such period will not exceed, on an annualized basis, the net annual operating expenses (taking into account any fee waivers and expense reimbursements) of the corresponding Existing Portfolio as of the Existing Portfolio's most recent fiscal year preceding the Substitution Date. Any adjustments will be made at least on a quarterly basis. Legal Analysis 1. Applicants request that the Commission issue an order pursuant to Section 26(c) of the 1940 Act approving the proposed Substitutions. Section 26(c) of the 1940 Act 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 of the Commission if the evidence establishes that the substitution is consistent with the protection of investors and the purposes of the 1940 Act. 2. The 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 1940 Act was amended to include this provision. As described in the application, each Replacement Portfolio and its corresponding Existing Portfolio have similar, and in some cases substantially similar or identical, investment objectives and strategies. The application also states that, except for three Substitutions noted in the application, the Existing Portfolios will have the same or lower total net annual operating expenses after the proposed Substitutions as before the proposed Substitutions. The application states further that the Existing Portfolios and the Replacement Portfolios have similar, and in many cases substantially similar, investment policies and risks. Applicants believe that, to the extent that differences in risks and strategies do exist, these differences do not introduce Contract owners to materially greater risks than before the Substitution. 3. Applicants also maintain that the ultimate effect of the Substitutions would be to continue to provide Contract owners with a wide array of investment options and managers, while at the same time increasing administrative efficiencies of the Contracts and streamlining and simplifying the investment line-up available to Contract owners under the affected Contracts. 4. Applicants state that the Contracts and the Contract prospectuses disclose that Horace Mann has reserved the right under the Contracts to substitute shares of another underlying registered open- end management investment company for one of the current underlying registered open-end management investment companies offered as an investment option under the Contracts. 5. Applicants also assert that the proposed Substitutions are not of the type that Section 26(c) was designed to prevent because they will not result in costly forced redemption, nor will they affect 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 value among the investment options available under the Contracts. 6. The proposed Substitutions will offer Contract owners the opportunity to transfer amounts out of the affected subaccounts without any cost or other penalty (other than those necessary to implement policies and procedures designed to detect and deter disruptive transfer and other ``market timing'' activity) that may otherwise have been imposed for a period beginning on May 1, 2015, and ending no earlier than 30 days after the Substitution. Applicants posit that this reduces the likelihood of being invested in an undesired underlying registered open-end management investment company, with the discretion remaining with the Contract owners. 7. Applicants state that the proposed 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 proposed Substitutions will not affect the type of benefits offered by Horace Mann under the Contracts, or numerous other rights and privileges associated with the Contracts. [[Page 42575]] 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 Applicants 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 Applicants 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 affected 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 Contract owners as a result of the Substitutions. 5. The rights or obligations of the Applicants 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 Portfolio (before the Substitution Date) or the Replacement Portfolio (after the Substitution Date) to any other available investment option under the Contract without charge for a period beginning at least 30 days before the Substitution Date through at least 30 days following the Substitution Date. Except as described in any market timing/short-term trading provisions of the relevant prospectus, Horace Mann will not exercise any right it may have under the Contracts 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 Substitution Date through at least 30 days following the Substitution Date. 7. All affected Contract owners will be notified, at least 30 days before the Substitution Date about: (a) The intended substitution of Existing Portfolios with the Replacement Portfolios; (b) the intended Substitution Date; and (c) information with respect to transfers as set forth in Condition 6 above. In addition, the Applicants will also deliver to all affected Contract owners, at least 30 days before the Substitution Date, a prospectus for each applicable Replacement Portfolio. 8. Applicants will deliver to each affected Contract owner within five (5) business days of the Substitution 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. For two years following the Substitution Date, Horace Mann will reimburse those who were Contract owners on the Substitution Date and who, as a result of a Substitution, had Contract value allocated to a subaccount investing in a Replacement Portfolio such that the Replacement Portfolio's net annual operating expenses (taking into account any fee waivers and expense reimbursements) for such period will not exceed, on an annualized basis, the net annual operating expenses (taking into account any fee waivers and expense reimbursements) of the corresponding Existing Portfolio as of the Existing Portfolio's most recent fiscal year preceding the Substitution Date. Any adjustments will be made at least on a quarterly basis. In addition, for a period of at least two years following the Substitution Date, the Applicants will not increase the Contract fees and charges-- including asset based charges such as mortality and expense risk charges deducted from the subaccounts--that would otherwise be assessed under the terms of Contracts that are in force on the Substitution Date. For the Commission, by the Division of Investment Management, under delegated authority. Robert W. Errett, Deputy Secretary. [FR Doc. 2015-17575 Filed 7-16-15; 8:45 am] BILLING CODE 8011-01-P
![Federal Register / Vol. 80, No. 137 / Friday, July 17, 2015 / Notices 42571
Commission and any person, other than variable annuity contracts (the Account on October 16, 2006, under
those that may be withheld from the ‘‘Contracts’’), each funded through the Illinois law.
public in accordance with the Separate Accounts. 2. Each of the Separate Accounts
provisions of 5 U.S.C. 552, will be DATES: Filing Date: The application was meets the definition of ‘‘separate
available for Web site viewing and filed on July 25, 2014, and amended on account’’ as defined in Section 2(a)(37)
printing in the Commission’s Public January 14, 2015, and May 27, 2015. of the 1940 Act. The Separate Accounts
Reference Room, 100 F Street NE., HEARING OR NOTIFICATION OF HEARING: An are registered with the Commission
Washington, DC 20549, on official order granting the requested relief will under the 1940 Act as unit investment
business days between the hours of be issued unless the Commission orders trusts. The assets of the Separate
10:00 a.m. and 3:00 p.m. Copies of such a hearing. Interested persons may Accounts support the Contracts, and
filing also will be available for request a hearing by writing to the interests in the Separate Accounts
inspection and copying at the principal Commission’s Secretary and serving offered through such Contracts have
office of the Exchange. All comments applicants with a copy of the request, been registered under the Securities Act
received will be posted without change; personally or by mail. Hearing requests of 1933 (‘‘1933 Act’’) on Form N–4. The
the Commission does not edit personal should be received by the Commission application sets forth the registration
identifying information from by 5:30 p.m. on August 6, 2015, and statement file numbers for the Contracts
submissions. You should submit only should be accompanied by proof of and the Separate Accounts. Horace
information that you wish to make service on applicants, in the form of an Mann is the legal owner of the assets in
available publicly. All submissions affidavit or, for lawyers, a certificate of the Separate Accounts. The assets of the
should refer to File Number SR–BATS– service. Pursuant to Rule 0–5 under the Separate Accounts may not be
2015–53 and should be submitted on or 1940 Act, hearing requests should state chargeable with liabilities arising out of
before August 7, 2015. the nature of the writer’s interest, any any other business of Horace Mann.
facts bearing upon the desirability of a 3. The Contracts are issued either as
For the Commission, by the Division of individual or group contracts, with
Trading and Markets, pursuant to delegated hearing on the matter, the reason for the
request, and the issues contested. group contract participants acquiring
authority.15
Persons who wish to be notified of a certain ownership rights as described in
Brent J. Fields, the group contract or plan documents.
Secretary. hearing may request notification by
Contract owners and participants in
[FR Doc. 2015–17492 Filed 7–16–15; 8:45 am]
writing to the Commission’s Secretary.
group contracts (each a ‘‘Contract
ADDRESSES: Secretary, U.S. Securities
BILLING CODE 8011–01–P owner’’) may allocate some or all of
and Exchange Commission, 100 F Street their Contract value to one or more
NE., Washington, DC 20549–1090; subaccounts available as investment
SECURITIES AND EXCHANGE Applicants: Elizabeth E. Arthur, Esq., options under their respective Contract.
COMMISSION Maureen Bolinger, Horace Mann Life Each subaccount corresponds to a
Insurance Company, One Horace Mann portfolio of an underlying registered
[Release No. IC–31714; File No. 812–14336] Plaza, Springfield, Illinois 62715. open-end management investment
Horace Mann Life Insurance Company, FOR FURTHER INFORMATION CONTACT: company in which the Separate
et al; Notice of Application Michael S. Didiuk, Senior Counsel, at Account invests. A Contract owner may
(202) 551–6839, or Holly L. Hunter-Ceci, also invest some or all of his/her
July 13, 2015. Branch Chief, at (202) 551–6825 Contract value to a fixed account
AGENCY: Securities and Exchange (Division of Investment Management, investment option, which is supported
Commission (‘‘Commission’’). Chief Counsel’s Office). by assets of Horace Mann’s general
ACTION: Notice of application for an SUPPLEMENTARY INFORMATION: The account.
order approving the substitution of following is a summary of the 4. The Applicants state that under the
certain securities pursuant to Section application. The complete application Contracts, Horace Mann reserves the
26(c) of the Investment Company Act of may be obtained via the Commission’s right to substitute shares of one portfolio
1940, as amended (the ‘‘1940 Act’’). Web site by searching for the file for shares of another portfolio if: (i)
number, or an applicant using the Shares of a registered open-end
APPLICANTS: Horace Mann Life Company name box, at http:// management investment company are
Insurance Company (‘‘Horace Mann’’), www.sec.gov/search/search.htm or by no longer available for investment by
and Horace Mann Life Insurance calling (202) 551–8090. the Separate Account; or (ii) Horace
Company Separate Account and Horace Mann determines that further
Mann Life Insurance Company Applicants’ Representations investments in a registered open-end
Qualified Group Annuity Separate 1. Horace Mann is a stock life management investment company are
Account (collectively, the ‘‘Separate insurance company organized under the inappropriate in view of the purposes
Accounts,’’ and together with Horace laws of Illinois. Horace Mann is engaged and objectives of a Contract.
Mann, the ‘‘Applicants’’). in the sale of individual and group life 5. The Applicants propose the
SUMMARY OF APPLICATION: The insurance and annuity contracts on a substitution of shares of the Existing
Applicants seek an order pursuant to non-participating basis. Horace Mann is Portfolios with shares of the
Section 26(c) of the 1940 Act approving an indirect wholly owned subsidiary of Replacement Portfolios under the
the substitution of shares issued by Horace Mann Educators Corporation, a Contracts, each funded through the
certain investment portfolios (the publicly-held insurance holding Separate Accounts. The Separate
srobinson on DSK5SPTVN1PROD with NOTICES
‘‘Existing Portfolios’’) of registered company traded on the New York Stock Accounts are segmented into
investment companies with shares of Exchange. Horace Mann established the subaccounts, and certain of these
certain investment portfolios (the Horace Mann Life Insurance Company subaccounts invest in the Existing
‘‘Replacement Portfolios’’) of registered Separate Account on October 9, 1965, Portfolios. Each subaccount’s income,
investment companies, under certain under Illinois law, and established the gains, and losses, whether or not
Horace Mann Life Insurance Company realized, are credited to or charged
15 17 CFR 200.30–3(a)(12). Qualified Group Annuity Separate against the amounts allocated to that
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![Federal Register / Vol. 80, No. 137 / Friday, July 17, 2015 / Notices 42575
Applicants’ Conditions limitations on the future number of SECURITIES AND EXCHANGE
Applicants agree that any order transfers, for a period beginning at least COMMISSION
granting the requested relief will be 30 days before the Substitution Date
[Release No. 34–75444; File No. SR–NYSE–
subject to the following conditions: through at least 30 days following the 2015–15]
1. The Substitutions will not be Substitution Date.
effected unless the Applicants 7. All affected Contract owners will be Self-Regulatory Organizations; New
determine that: (a) The Contracts allow notified, at least 30 days before the York Stock Exchange LLC; Notice of
the substitution of shares of registered Substitution Date about: (a) The Filing of Amendment No. 2 and Order
open-end investment companies in the intended substitution of Existing Granting Accelerated Approval of a
manner contemplated by the Portfolios with the Replacement Proposed Rule Change, as Modified by
application; (b) the Substitutions can be Portfolios; (b) the intended Substitution Amendment No. 2, To Amend NYSE
consummated as described in the Date; and (c) information with respect to Rule 13 and Related Rules Governing
application under applicable insurance transfers as set forth in Condition 6 Order Types and Modifiers
laws; and (c) any regulatory above. In addition, the Applicants will July 13, 2015.
requirements in each jurisdiction where also deliver to all affected Contract
the Contracts are qualified for sale have owners, at least 30 days before the I. Introduction
been complied with to the extent Substitution Date, a prospectus for each On March 24, 2015, New York Stock
necessary to complete the Substitutions. applicable Replacement Portfolio. Exchange LLC (‘‘Exchange’’ or ‘‘NYSE’’)
2. The Applicants or their affiliates filed with the Securities and Exchange
8. Applicants will deliver to each
will pay all expenses and transaction Commission (‘‘Commission’’), pursuant
affected Contract owner within five (5)
costs of the Substitutions, including to Section 19(b)(1) of the Securities
business days of the Substitution Date a
legal and accounting expenses, any Exchange Act of 1934 (‘‘Act’’) 1 and Rule
written confirmation which will
applicable brokerage expenses and other 19b–4 thereunder,2 a proposed rule
include: (a) A confirmation that the
fees and expenses. No fees or charges change to amend Exchange Rule 13, and
Substitutions were carried out as
will be assessed to the affected Contract related Exchange rules, governing order
previously notified; (b) a restatement of
owners to effect the Substitutions. types and modifiers. The proposed rule
3. The Substitutions will be effected the information set forth in the Pre-
Substitution Notice; and (c) before and change was published for comment in
at the relative net asset values of the the Federal Register on April 14, 2015.3
respective shares in conformity with after account values.
On May 14, 2015, the Exchange filed
Section 22(c) of the 1940 Act and Rule 9. For two years following the Partial Amendment No. 1 to the
22c–1 thereunder without the Substitution Date, Horace Mann will proposed rule change 4 On May 27,
imposition of any transfer or similar reimburse those who were Contract 2015, pursuant to Section 19(b)(2) of the
charges by Applicants. The owners on the Substitution Date and Act,5 the Commission designated a
Substitutions will be effected without who, as a result of a Substitution, had longer period within which to approve
change in the amount or value of any Contract value allocated to a subaccount the proposed rule change, disapprove
Contracts held by affected Contract investing in a Replacement Portfolio the proposed rule change, or institute
owners. such that the Replacement Portfolio’s proceedings to determine whether to
4. The Substitutions will in no way net annual operating expenses (taking disapprove the proposed rule change.6
alter the tax treatment of affected into account any fee waivers and
Contract owners in connection with expense reimbursements) for such 1 15 U.S.C. 78s(b)(1).
their Contracts, and no tax liability will period will not exceed, on an 2 17 CFR 240.19b–4.
arise for Contract owners as a result of annualized basis, the net annual 3 See Securities Exchange Act Release No. 74678
the Substitutions. operating expenses (taking into account (April 8, 2015), 80 FR 20053 (‘‘Notice’’). Prior to
5. The rights or obligations of the any fee waivers and expense filing this proposal, the Exchange filed a similar
proposal to amend Rule 13, and related Exchange
Applicants under the Contracts of reimbursements) of the corresponding rules, governing order types and modifiers. See
affected Contract owners will not be Existing Portfolio as of the Existing Securities Exchange Act Release No. 73703
altered in any way. The Substitutions Portfolio’s most recent fiscal year (November 28, 2014), 79 FR 72039 (December 4,
will not adversely affect any riders preceding the Substitution Date. Any 2014) (SR–NYSE–2014–59). For that proposal, the
Commission extended the time period for action,
under the Contracts. adjustments will be made at least on a see Securities Exchange Act Release No. 74051
6. Affected Contract owners will be quarterly basis. In addition, for a period (January 14, 2015), 80 FR 2983 (January 21, 2015)
permitted to make at least one transfer of at least two years following the (SR–NYSE–2014–59), and for an almost identical
of Contract value from the subaccount Substitution Date, the Applicants will filing of NYSE MKT LLC (‘‘NYSE MKT’’), the
Commission instituted proceedings to determine
investing in the Existing Portfolio not increase the Contract fees and whether to approve or disapprove NYSE MKT’s
(before the Substitution Date) or the charges—including asset based charges proposal, see Securities Exchange Act Release No.
Replacement Portfolio (after the such as mortality and expense risk 74298 (February 18, 2015), 80 FR 9770 (February
Substitution Date) to any other available charges deducted from the 24, 2015) (SR–NYSEMKT–2014–95). Prior to the
conclusion of those proceedings for NYSE MKT’s
investment option under the Contract subaccounts—that would otherwise be proposal, both NYSE and NYSE MKT withdrew
without charge for a period beginning at assessed under the terms of Contracts their respective proposals. See Securities Exchange
least 30 days before the Substitution that are in force on the Substitution Act Release Nos. 74642 (April 3, 2015), 80 FR 19096
Date through at least 30 days following Date. (April 9, 2015) (SR–NYSE–2014–59) and 74643
(April 3, 2015), 80 FR 19102 (April 9, 2015) (SR–
the Substitution Date. Except as
srobinson on DSK5SPTVN1PROD with NOTICES
For the Commission, by the Division of NYSEMKT–2014–95).
described in any market timing/short- Investment Management, under delegated 4 The Exchange subsequently withdrew Partial
term trading provisions of the relevant authority. Amendment No. 1 on May 20, 2015.
prospectus, Horace Mann will not 5 15 U.S.C. 78s(b)(2).
Robert W. Errett, 6 See Securities Exchange Act Release No. 75048,
exercise any right it may have under the
Deputy Secretary. 80 FR 31419 (June 2, 2015). The Commission
Contracts to impose restrictions on designated July 13, 2015, as the date by which it
transfers between the subaccounts [FR Doc. 2015–17575 Filed 7–16–15; 8:45 am]
should approve, disapprove, or institute
under the Contracts, including BILLING CODE 8011–01–P Continued
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Document Created: 2018-02-23 09:21:32
Document Modified: 2018-02-23 09:21:32
| 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''). | |
| Dates | Filing Date: The application was filed on July 25, 2014, and amended on January 14, 2015, and May 27, 2015. | |
| Contact | Michael S. Didiuk, Senior Counsel, at (202) 551-6839, or Holly L. Hunter-Ceci, Branch Chief, at (202) 551- 6825 (Division of Investment Management, Chief Counsel's Office). | |
| FR Citation | 80 FR 42571 |
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