81 FR 90394 - Hartford Life Insurance Company, et al; Notice of Application

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 81, Issue 240 (December 14, 2016)

Page Range90394-90398
FR Document2016-29934

Federal Register, Volume 81 Issue 240 (Wednesday, December 14, 2016)
[Federal Register Volume 81, Number 240 (Wednesday, December 14, 2016)]
[Notices]
[Pages 90394-90398]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2016-29934]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. IC-32386; File No. 812-14447]


Hartford Life Insurance Company, et al; Notice of Application

December 8, 2016.
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 (``Act'') and an order of exemption 
pursuant to section 17(b) of the Act from section 17(a) of the Act.

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Applicants: Hartford Life Insurance Company (``Hartford Life''), 
Hartford Life and Annuity Insurance Company (``Hartford Life and 
Annuity,'' and together with Hartford Life, the ``Hartford Life 
Insurance Companies''); their respective separate accounts, Hartford 
Life Insurance Company Separate Account Three (``HL Separate Account 
3''), Hartford Life and Annuity Insurance Company Separate Account 
Three (``HLA Separate Account 3''), Hartford Life Insurance Company 
Separate Account Seven (``HL Separate Account 7''), Hartford Life and 
Annuity Insurance Company Separate Account Seven (``HLA Separate 
Account 7'') (collectively, the ``Separate Accounts,'' and together 
with the Hartford Insurance Companies, the ``Section 26 Applicants''); 
HIMCO Variable Insurance Trust (the ``Trust''), Hartford Investment 
Management Company (``HIMCO,'' and collectively with the Section 26 
Applicants and the Trust, the ``Section 17 Applicants'').

Summary of Application: The Applicants seek an order pursuant to 
section 26(c) of the Act, approving the substitution of shares of 
twenty-seven (27) investment portfolios of registered investment 
companies (the ``Existing Portfolios'') with shares of six (6) 
investment portfolios of the Trust (the ``Replacement Portfolios''), 
under certain variable annuity contracts (the ``Contracts''), each 
funded through the Separate Accounts (the ``Substitutions''). In 
addition, the Section 17 Applicants also 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 (the ``In-Kind Transactions'') in connection with the 
Substitutions.

DATES: Filing Date: The application was filed on April 21, 2015, and 
amended on May 25, 2016 and August 31, 2016.

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 January 3, 2017, 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 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: Hartford Life 
Insurance Company, Attn: Lisa Proch, Vice President, Assistant General 
Counsel, P.O. Box 2999, Hartford, CT 06104-2999.

FOR FURTHER INFORMATION CONTACT: Jessica Shin, Attorney-Adviser at 
(202) 551-5921 or David J. Marcinkus, Branch Chief, at (202) 551-6821 
(Chief Counsel's Office, Division of Investment Management).

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. Hartford Life is a stock life insurance company incorporated 
under the laws of the state of Connecticut. Hartford Life was engaged 
in the business of writing individual and group life insurance and 
annuity contracts until April 30, 2013, and remains authorized to do 
business in every state and the District of Columbia. Hartford Life is 
an indirect, wholly-owned subsidiary of The Hartford Financial Services 
Group, Inc. (``The Hartford''), a Delaware corporation whose stock is 
traded on the New York Stock Exchange.
    2. Hartford Life and Annuity is a stock life insurance company 
incorporated under the laws of the state of Connecticut. Hartford Life 
and Annuity was engaged in the business of writing individual and group 
life insurance and annuity contracts until April 30, 2013, and remains 
authorized to do business in every state (except New York), the 
District of Columbia and Puerto Rico. Hartford Life and Annuity is an 
indirect wholly-owned subsidiary of The Hartford.
    3. Hartford Life established HL Separate Account 3 and HL Separate 
Account 7 as segregated asset accounts under Connecticut law on June 
22, 1994 and December 8, 1986, respectively. Hartford Life and Annuity 
established HLA Separate Account 3 and HLA Separate Account 7 as 
segregated asset accounts under Connecticut law on June 22, 1994 and 
April 1, 1999, respectively. Each of the Separate Accounts meets the 
definition of ``separate account,'' as defined in Section 2(a)(37) of 
the Act. 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 Separate Accounts are segmented into 
subaccounts, and certain of these subaccounts invest in the Existing 
Portfolios. The Contracts are individual and group deferred variable 
annuity contracts, with group 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,'' 
and collectively, ``Contract owners'') may allocate some or all of 
their Contract value to one or more subaccounts available as investment 
options under their respective Contracts and any rider(s).
    4. By the terms of each Contract (and as set forth in the 
prospectuses for the Contracts), the Hartford Insurance Companies 
reserve the right to substitute shares of another registered investment 
company for the shares of any registered investment company already 
purchased or to be purchased in the future by the Separate Accounts.
    5. The Trust is a Delaware statutory trust that was established on 
January 13, 2012. The Trust is registered with the

[[Page 90395]]

Commission as an open-end management investment company under the Act 
and its shares are registered under the Securities Act of 1933. The 
Trust is a series investment company and currently has twenty-four (24) 
separate portfolios (each a ``HIMCO VIT Fund,'' and collectively, the 
``HIMCO VIT Funds''). Six (6) HIMCO VIT Funds comprise the Replacement 
Portfolios.
    6. HIMCO, a Delaware corporation and a registered investment 
adviser, serves as investment adviser to each of the HIMCO VIT Funds 
pursuant to an investment advisory agreement between the Trust, on 
behalf of each HIMCO VIT Fund, and HIMCO. In addition, the Trust has 
obtained an exemptive order from the Commission (File No. 812-11684) 
(the ``Manager of Managers Order''). The Replacement Portfolios may 
rely on the the Manager of Managers Order, and the Trust's registration 
statement discloses and explains the existence, substance and effect of 
the Manager of Managers Order.\1\
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    \1\ HIMCO has agreed, as a condition of the application, that it 
will not change a sub-adviser, add a new sub-adviser, or otherwise 
rely on the Manager of Managers Order or any replacement order from 
the Commission with respect to any Replacement Portfolio without 
first obtaining shareholder approval of the change in sub-adviser, 
the new sub-adviser, or the Replacement Portfolio's ability to add 
or to replace a sub-adviser in reliance on the Manager of Managers 
Order or any replacement order from the Commission at a shareholder 
meeting, the record date for which shall be after the proposed 
Substitution has been effected.
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    7. The Section 26 Applicants propose to substitute shares of the 
Existing Portfolios with shares of the corresponding Replacement 
Portfolios, as shown in the table below. As discussed in greater detail 
in the application, the Section 26 Applicants believe that each 
Existing Portfolio has substantially similar investment objectives, 
principal investment strategies, and principal investment risks, and 
has substantially similar risk and return characteristics, as its 
corresponding Replacement Portfolio.

------------------------------------------------------------------------
                                                         Replacement
      Substitution           Existing portfolio       portfolio (Share
                              (Share class(es))            class)
------------------------------------------------------------------------
1.......................  American Funds Growth-    HIMCO VIT Large Cap
                           Income Fund (Class 2).    Core Fund (Class
                                                     IB).
2.......................  Franklin Rising
                           Dividends VIP Fund
                           (Class 2) (Class 4).
3.......................  Invesco V.I. Core Equity
                           Fund (Series I) (Series
                           II).
4.......................  Lord Abbett Calibrated
                           Dividend Growth
                           Portfolio (Class VC).
5.......................  Lord Abbett Fundamental
                           Equity Portfolio (Class
                           VC).
6.......................  Lord Abbett Growth &
                           Income Portfolio (Class
                           VC).
7.......................  MFS Investors Trust
                           Series (Initial Class)
                           (Service Class).
8.......................  Oppenheimer Main Street
                           Fund/VA (Service
                           Shares).
9.......................  Pioneer Fund VCT
                           Portfolio (Class II).
10......................  AB VPS Value Portfolio    HIMCO VIT Large Cap
                           (Class B).                Value Fund (Class
                                                     IB).
11......................  American Century VP
                           Value Fund (Class II).
12......................  American Funds Blue Chip
                           Income and Growth Fund
                           (Class 2).
13......................  Fidelity VIP Equity-
                           Income Portfolio
                           (Service Class 2).
14......................  Franklin Mutual Shares
                           VIP Fund (Class 2)
                           (Class 4).
15......................  Invesco V.I. Comstock
                           Fund (Series II).
16......................  Invesco V.I. Diversified
                           Dividend Fund (Series
                           II).
17......................  Invesco V.I. Growth and
                           Income Fund (Series II).
18......................  Invesco V.I. Value
                           Opportunities Fund
                           (Series I).
19......................  MFS Value Series
                           (Initial Class)
                           (Service Class).
20......................  American Funds            HIMCO VIT
                           International Fund        International Core
                           (Class 2).                Equity Fund (Class
                                                     IB).
21......................  MFS Research
                           International Portfolio
                           (Initial Class).
22......................  AB VPS International      HIMCO VIT
                           Value Portfolio (Class    International Value
                           B).                       Equity Fund (Class
                                                     IB).
23......................  Templeton Foreign VIP
                           Fund (Class 2) (Class
                           4).
24......................  American Funds Bond Fund  HIMCO VIT Total
                           (Class 2).                Return Bond Fund
                                                     (Class IB).
25......................  MFS Total Return Bond
                           Series (Initial Class)
                           (Service Class).
26......................  Fidelity VIP Strategic    HIMCO VIT Strategic
                           Income Portfolio          Income Bond Fund
                           (Service Class 2).        (Class IB).
27......................  Franklin Strategic
                           Income VIP Fund (Class
                           1) (Class 2) (Class 4).
------------------------------------------------------------------------

    8. The Hartford Insurance Companies state that the proposed 
Substitutions are intended to improve the administrative efficiency and 
cost-effectiveness of the Contracts, as well as to make the Contracts 
more attractive to existing Contract owners. Applicants state that by 
eliminating overlapping investment options that duplicate one another 
by having substantially similar investment objectives, strategies and 
risks, the Hartford Insurance Companies can present a more streamlined 
menu of investment options under the Contracts. Applicants further 
state that since the proposed Substitutions were designed to reduce 
investment-option redundancy, the diversity of available investment 
styles under the Contracts will not be adversely impacted. Additional 
information for each Existing Portfolio and the corresponding 
Replacement Portfolio, including investment objectives, principal 
investment strategies, principal risks, and fees can be found in the 
application.
    9. Applicants state that through the proposed Substitutions, the 
Hartford Insurance Companies seek to replace certain investment options 
in the Contracts' current fund lineups with investment options that 
will provide Contract owners with lower expenses, while maintaining a 
high-quality menu of investment options. In this regard, the Section 26 
Applicants believe that Contract owners with Contract value allocated 
to the subaccounts of the Existing Portfolios will have lower total and 
net annual operating expenses immediately after the proposed 
Substitutions than before the proposed Substitutions. Applicants also 
state that, for each Substitution, the combined management fee and Rule 
12b-1 fee of each Replacement Portfolio is lower than that of the 
corresponding Existing Portfolio. The application sets forth the fees 
and expenses of each Existing Portfolio and its corresponding 
Replacement Portfolio in greater detail.
    10. The Section 26 Applicants also agree that, during a period of 
two (2)

[[Page 90396]]

years following the implementation of the proposed Substitution (the 
``Substitution Date''), and for those Contracts with assets allocated 
to an Existing Portfolio on the Substitution Date, the Hartford 
Insurance Companies will reimburse, on the last business day of each 
fiscal quarter, the owners of those Contracts invested in the 
applicable Replacement Portfolio to the extent that the Replacement 
Portfolio's total net annual operating expenses (taking into account 
fee waivers and expense reimbursements) for such period exceeds, on an 
annualized basis, the total net annual operating expenses of the 
Existing Portfolio for fiscal year 2015. In addition, the Hartford 
Insurance Companies will not increase the Contract fees and charges 
that would otherwise be assessed under the terms of those Contracts for 
a period of at least two (2) years following the Substitution Date.
    11. Applicants state that the Hartford Insurance Companies or their 
affiliates will pay all expenses and transaction costs of the proposed 
Substitutions, including legal and accounting expenses, any applicable 
brokerage expenses and other fees and expenses. Applicants state that 
no fees or charges will be assessed to the affected Contract owners to 
effect the proposed Substitutions. Applicants state that the proposed 
Substitutions will not cause the Contract fees and charges currently 
being paid by existing Contract owners to be greater after the 
Substitutions than before the Substitutions.
    12. Applicants state that the Contract value of each Contract owner 
affected by the proposed Substitutions will not change as a result of 
the proposed Substitutions. Applicants state that, because the 
Substitutions will occur at relative net asset value, and the fees and 
charges under the 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. Applicants further state that 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.
    13. At least 30 days prior to the Substitution Date, Contract 
owners will be notified via prospectus supplements, which will be filed 
with the Commission pursuant to Rule 497 under the Securities Act of 
1933, that the Section 26 Applicants received or expect to receive 
Commission approval of the applicable proposed Substitutions and of the 
anticipated Substitution Date (the ``Pre-Substitution Notice''). The 
Pre-Substitution Notice will 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 and without being subject to any limitations on 
transfers, on the Substitution Date. The Pre-Substitution Notice also 
will state that, from the date of the Pre-Substitution Notice through 
the date thirty (30) days after the Substitutions, Contract owners may 
transfer Contract value from the subaccounts investing in the Existing 
Portfolios (before the Substitutions) or the Replacement Portfolios 
(after the Substitutions) to any other available investment option 
without charge and without imposing any transfer limitations.
    14. The Section 26 Applicants will also deliver to affected 
Contract owners, at least thirty (30) days before the Substitution 
Date, a prospectus for each applicable Replacement Portfolio. In 
addition, within five (5) business days after the Substitution Date, 
Contract owners whose assets are allocated to a Replacement Portfolio 
as part of the proposed Substitutions will be sent a written notice 
(each, a ``Confirmation'') informing them that the Substitutions were 
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 Contract owners Contract values 
before and after the Substitution(s).
    15. 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 1940 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 Contracts held by affected 
Contract owners. As such, the Section 26 Applicants believe that 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. As of the 
Substitution Date, the Separate Accounts will redeem shares of the 
Existing Portfolios for cash or in- kind. 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.
Legal Analysis
    1. The Section 26 Applicants request that the Commission issue an 
order pursuant to section 26(c) of the Act approving the proposed 
Substitutions. Section 26(c) of the Act prohibits any depositor or 
trustee of a unit investment trust holding the security of a single 
issuer from substituting another security 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 fairly intended by the policy and 
provisions of [the Act].''
    2. The Section 26 Applicants submit that each of the Substitutions 
meet the standards set forth in section 26(c) and that, if implemented, 
the Substitutions would not raise any of the concerns underlying this 
provision. The Section 26 Applicants believe that each Replacement 
Portfolio and its corresponding Existing Portfolio(s) have 
substantially similar investment objectives, principal investment 
strategies and principal risks. Applicants state that, accordingly, no 
Contract owner will involuntarily lose his or her rider(s) as a result 
of any proposed Substitution. Contract owners will not incur any fees 
or charges as a result of the proposed Substitutions.
    3. The Section 17 Applicants request that the Commission issue 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 carry out, 
as part of the Substitutions, the In-Kind Transactions. Section 
17(a)(1) of the Act prohibits any affiliated person of a registered 
investment company, or any affiliated person of such person, acting as 
principal, from selling any security or other property to such 
registered investment company. Section 17(a)(2) of the Act prohibits 
any of the persons described above, acting as principals, from 
purchasing any security or other property from such registered 
investment company.
    4. Because the proposed Substitutions may be effected, in whole or 
in part, by means of in-kind redemptions and purchases, the proposed 
Substitutions

[[Page 90397]]

may be deemed to involve one or more purchases or sales of securities 
or property between affiliated persons. The proposed transactions may 
involve a transfer of portfolio securities by the Existing Portfolios 
to the Separate Accounts. Immediately thereafter, the Separate Accounts 
would purchase shares of the Replacement Portfolios with the portfolio 
securities received from the Existing Portfolios. Accordingly, to the 
extent the Separate Accounts and the Existing Portfolios, and the 
Separate Accounts and the Replacement Portfolios, are deemed to be 
affiliated persons of one another under Section 2(a)(3) of the Act, it 
is conceivable that this aspect of the proposed Substitutions could be 
viewed as being prohibited by Section 17(a). As such, the Section 17 
Applicants have determined that it is prudent to seek relief from 
Section 17(a) in the context of this application.
    5. The Section 17 Applicants maintain 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. The In-Kind 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 Contract held by the affected 
Contract owners. 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. The fees and charges under the Contracts 
will not increase because of the Substitutions. Even though the 
Separate Accounts, the Hartford Insurance Companies and the Trust 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.
    6. The Section 17 Applicants submit that the proposed in-kind 
purchases by the Separate Accounts are consistent with the policies of 
the Trust and the Replacement Portfolios, as recited in the Trust's 
current registration statement and reports filed under the Act. 
Finally, the Section 17 Applicants submit that the proposed 
Substitutions are consistent with the general purposes of the Act.
Applicants' Conditions
    The Section 26 Applicants, and HIMCO as applicable, agree that any 
order granting the requested relief will be subject to the following 
conditions.
    1. The Substitutions will not be effected unless the Section 26 
Applicants determine that: (i) The Contracts allow the substitution of 
shares of registered open-end investment companies in the manner 
contemplated by this application; (ii) the Substitutions can be 
consummated as described in this 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 Hartford Insurance Companies will seek approval of the 
proposed Substitutions from any state insurance regulators whose 
approval may be necessary or appropriate.
    3. HIMCO will not change a sub-adviser, add a new sub-adviser, or 
otherwise rely on the Manager of Managers Order or any replacement 
order from the Commission with respect to any Replacement Portfolio 
without first obtaining shareholder approval of the change in sub-
adviser, the new sub-adviser, or the Replacement Portfolio's ability to 
add or to replace a sub-adviser at a shareholder meeting, the record 
date for which shall be after the proposed Substitution has been 
effected.
    4. The Hartford Insurance 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 
affected Contract owners to effect the Substitutions. The proposed 
Substitutions will not cause the Contract fees and charges currently 
being paid by Contract owners to be greater after the proposed 
Substitution than before the proposed Substitution.
    5. 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 1940 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 Contracts held by affected 
Contract owners.
    6. 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.
    7. The obligations of the Section 26 Applicants, and the rights of 
the affected Contract owners, under the Contracts of affected Contract 
owners will not be altered in any way.
    8. Affected Contract owners will be permitted to transfer Contract 
value from the subaccount investing in the Existing Portfolio (before 
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. Contract owners with guaranteed living and/or death benefit 
riders, as applicable, may transfer Contract value from the subaccounts 
investing in the Existing Portfolios (before the Substitutions) or the 
Replacement Portfolios (after the Substitutions) to any other available 
investment option available under their respective riders without 
charge and without imposing any transfer limitations. Except as 
described in any market timing/short-term trading provisions of the 
relevant prospectus, the Section 26 Applicants will not exercise any 
rights reserved 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.
    9. 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 8 above. In addition, the Section 26 Applicants will 
also deliver to affected Contract owners, at least thirty (30) days 
before the Substitution Date, a prospectus for each applicable 
Replacement Portfolio.
    10. The Section 26 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-

[[Page 90398]]

Substitution Notice; and (c) values of the Contract owner's positions 
in the Existing Portfolio before the Substitution and the Replacement 
Portfolio after the Substitution.
    11. For a period of two years following the Substitution Date, for 
those Contracts with assets allocated to the Existing Portfolio on the 
Substitution Date, the Hartford Insurance Companies will reimburse, on 
the last business day of each fiscal quarter, the Contract owners whose 
subaccounts invest in the applicable Replacement Portfolio to the 
extent that the Replacement Portfolio's net annual operating expenses 
(taking into account fee waivers and expense reimbursements) for such 
period exceeds, on an annualized basis, the net annual operating 
expenses of the Existing Portfolio for fiscal year 2015. In addition, 
the Section 26 Applicants will not increase the Contract fees and 
charges that would otherwise be assessed under the terms of the 
Contracts for a period of at least two years following the Substitution 
Date.

    For the Commission, by the Division of Investment Management, 
under delegated authority.
 Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-29934 Filed 12-13-16; 8:45 am]
BILLING CODE 8011-01-P


Current View
CategoryRegulatory Information
CollectionFederal Register
sudoc ClassAE 2.7:
GS 4.107:
AE 2.106:
PublisherOffice of the Federal Register, National Archives and Records Administration
SectionNotices
ActionNotice 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 (``Act'') and an order of exemption pursuant to section 17(b) of the Act from section 17(a) of the Act.
ContactJessica Shin, Attorney-Adviser at (202) 551-5921 or David J. Marcinkus, Branch Chief, at (202) 551-6821 (Chief Counsel's Office, Division of Investment Management).
FR Citation81 FR 90394 

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