
[Federal Register: March 31, 2009 (Volume 74, Number 60)]
[Notices]               
[Page 14598-14604]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr31mr09-147]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. IC-28678; File No. 812-13588]

 
MetLife Insurance Company of Connecticut, et al.

March 25, 2009.
AGENCY: Securities and Exchange Commission (``Commission'').

ACTION: Notice of application for an order pursuant to Section 26(c) of 
the Investment Company Act of 1940 (the ``Act'') approving certain 
substitutions of securities 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: MetLife Insurance Company of Connecticut (``MetLife of 
CT''), MetLife of CT Separate Account Eleven for Variable Annuities 
(``Separate Account Eleven''), MetLife of CT Separate Account QPN for 
Variable Annuities (``Separate Account QPN''), MetLife of CT Fund UL 
for Variable Life Insurance (``Fund UL''), MetLife of CT Fund UL III 
for Variable Life Insurance (``Fund UL III''), MetLife Investors 
Insurance Company (``MetLife Investors''), MetLife Investors Variable 
Annuity Account One (``VA Account One''), MetLife Investors Variable 
Annuity Account Five (``VA Account Five''), First MetLife Investors 
Insurance Company (``First MetLife Investors''), First MetLife 
Investors Variable Annuity Account One (``First VA Account One''), 
MetLife Investors USA Insurance Company (``MetLife Investors USA''), 
MetLife Investors USA Separate Account A (``Separate Account A''), 
Metropolitan Life Insurance Company (``MetLife''), Metropolitan Life 
Variable Annuity Separate Account I (``Separate Account I''), 
Metropolitan Life Variable Annuity Separate Account II (``Separate 
Account II''), General American Life Insurance Company (``General 
American'') (together with MetLife of CT, MetLife Investors, First 
MetLife Investors, MetLife Investors USA and MetLife, the ``Insurance 
Companies''), General American Separate Account Seven (``GA Separate 
Account Seven'') (together with Separate Account Eleven, Separate 
Account QPN, Fund UL, Fund UL III, VA Account One, VA Account Five, 
First VA Account One, Separate Account A, Separate Account I, and 
Separate Account II, the ``Separate Accounts''), Met Investors Series 
Trust (``MIST'') and Metropolitan Series Fund, Inc. (``Met Series 
Fund''). The Insurance Companies and the Separate Accounts are referred 
to as the ``Substitution Applicants.'' The Insurance Companies, the 
Separate Accounts and the Investment Companies are referred to as the 
``Section 17 Applicants.''

Summary of Application: Applicants seek an order approving the 
substitution of certain series of the Investment Companies for shares 
of series of other registered investment companies held by the Separate 
Accounts to fund certain group and individual variable annuity 
contracts and variable life insurance policies issued by the Insurance 
Companies (collectively, the ``Contracts''). The Section 17 Applicants 
seek an order pursuant to Section 17(b) of the Act to permit certain 
in-kind transactions in connection with certain of the Substitutions.

Filing Date: The application was filed on October 21, 2008, and an 
amended and restated application was filed on March 13, 2009 and March 
24, 2009.

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 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 April 17, 2009, and should be accompanied by proof of 
service on Applicants, in the form of an affidavit or for lawyers a 
certificate of service. Hearing requests should state the nature of the 
writer's interest, the reason for the request and the issued contested. 
Persons may request notification of a hearing by writing to the 
Secretary of the Commission.

ADDRESSES: Secretary, Securities and Exchange Commission, 100 F Street, 
NE., Washington, DC 20549-1090.

[[Page 14599]]

Applicants c/o Paul G. Cellupica, Chief Counsel--Securities Regulation 
and Corporate Services, MetLife Group, One MetLife Plaza, 27-01 Queens 
Plaza North, Long Island City, NY 11101 and Robert N. Hickey, Esq., 
Sullivan & Worcester LLP, 1666 K Street, NW., Washington, DC 20006.

FOR FURTHER INFORMATION CONTACT: Alison T. White, Senior Counsel, or 
Joyce M. Pickholz, Branch Chief, Office of Insurance Products, Division 
of Investment Management, at (202) 551-6795.

SUPPLEMENTARY INFORMATION: The following is a summary of the 
application. The complete application may be obtained for a fee from 
the Public Reference Branch of the Commission, 100 F Street, NE., 
Washington, DC 20549 (202-551-8090).

Applicants' Representations

    1. MetLife of CT is a stock life insurance company organized in 
1863 under the laws of Connecticut. MetLife Investors is a stock life 
insurance company organized on August 17, 1981 under the laws of 
Missouri. First MetLife Investors is a stock life insurance company 
organized on December 31, 1992 under the laws of New York. MetLife 
Investors USA is a stock life insurance company organized on September 
13, 1960 under the laws of Delaware. MetLife is a stock life insurance 
company organized in 1868 under the laws of New York. General American 
is a stock life insurance company organized in 1933 under the laws of 
Missouri.
    2. Separate Account Eleven, Fund UL, Fund UL III, VA Account One, 
VA Account Five, First VA Account One, Separate Account A, Separate 
Account I and Separate Account II are registered under the Act as unit 
investment trusts for the purpose of funding the Contracts. Security 
interests under the Contracts have been registered under the Securities 
Act of 1933.
    3. Separate Account QPN is exempt from registration under the Act. 
Security interests under the Contracts have been registered under the 
Securities Act of 1933.
    4. GA Separate Account Seven serves as separate account funding 
vehicles for certain Contracts that are exempt from registration under 
Section 4(2) of the Securities Act of 1933 and Regulation D thereunder.
    5. MIST and Met Series Fund are each registered under the Act as 
open-end management investment companies of the series type, and their 
securities are registered under the Securities Act of 1933. Met 
Investors Advisory, LLC and Metlife Advisers, LLC serve as investment 
adviser to MIST and Met Series Fund, respectively.
    6. The annuity contracts permit the Insurance Companies to 
substitute shares of one fund with shares of another, including a fund 
of a different registered investment company.
    7. Each Insurance Company, on its behalf and on behalf of the 
Separate Accounts proposes to make certain substitutions of shares of 9 
funds (the ``Existing Funds'') held in sub-accounts of its respective 
Separate Accounts for certain series (the ``Replacement Funds'') of 
MIST and Met Series Fund.
    8. The proposed substitutions are as follows: shares of MetLife 
Moderate Strategy Portfolio for shares of DWS Conservative Allocation 
VIP; shares of MetLife Growth Strategy Portfolio for shares of DWS 
Growth Allocation VIP; shares of MetLife Balanced Strategy Portfolio 
for shares of DWS Moderate Allocation VIP; shares of Janus Forty 
Portfolio for shares of Janus (Aspen Series) Forty Portfolio; shares of 
MetLife Stock Index Portfolio for shares of Legg Mason Partners 
Variable Equity Index Portfolio; shares of PIMCO Total Return Portfolio 
for shares of PIMCO (VIT) Total Return Portfolio; shares of Pioneer 
Strategic Income Portfolio for shares of Pioneer Strategic Income VCT 
Portfolio; shares of BlackRock Bond Income Portfolio for shares of UIF 
Core Plus Fixed Income Portfolio; shares of Van Kampen Comstock 
Portfolio for shares of Van Kampen LIT Comstock Portfolio.
    9. The following is a summary of the investment objectives and 
policies of each Existing Fund and its corresponding Replacement Fund. 
Additional information including asset sizes, risk factors and 
comparative performance history for each Existing Fund and Replacement 
Fund can be found in the Application.

------------------------------------------------------------------------
             Existing fund                       Replacement fund
------------------------------------------------------------------------
DWS Conservative Allocation VIP--seeks   MetLife Moderate Strategy
 a balance of current income and long-    Portfolio--seeks high total
 term growth of capital with an           return in the form of income
 emphasis on current income. The          and growth of capital, with a
 Portfolio invests in other DWS VIP       greater emphasis on income.
 portfolios. The Portfolio's target       The Portfolio invests in a
 allocation is 60% in underlying          diversified group of
 portfolios which invest primarily in     affiliated underlying funds.
 fixed-income securities and 40% in       The Portfolio normally invests
 underlying portfolios which invest       in accordance with targeted
 primarily in equity securities.          allocations of 50% to equity
                                          securities and 50% to fixed
                                          income securities. Changes
                                          between these asset classes
                                          will be in the range of plus
                                          or minus 10%.
DWS Growth Allocation VIP--seeks long-   MetLife Growth Strategy
 term growth of capital. The Portfolio    Portfolio--seeks growth of
 invests in other DWS VIP portfolios.     capital. The Portfolio invests
 The Portfolio's target allocation is     in a diversified group of
 25% in underlying portfolios which       affiliated underlying funds.
 invest primarily in fixed income         The Portfolio normally invests
 securities, and 75% in underlying        in accordance with targeted
 portfolios which invest primarily in     allocations of 85% to equity
 equity securities.                       securities and 15% to fixed
                                          income securities. Changes
                                          between these asset classes
                                          will be in the range of plus
                                          or minus 10%.
DWS Moderate Allocation VIP--seeks a     MetLife Balanced Strategy
 balance of long-term growth of capital   Portfolio--seeks a balance
 and current income with an emphasis on   between a high level of
 growth of capital. The Portfolio         current income and growth of
 invests in other DWS VIP portfolios.     capital with a greater
 The Portfolio's target allocation is     emphasis on growth of capital.
 40% in underlying portfolios which       The Portfolio invests in a
 invest primarily in fixed income         diversified group of
 securities and 60% in underlying         affiliated underlying funds.
 portfolios which invest primarily in     The Portfolio normally
 equity securities.                       primarily invests in
                                          accordance with targeted
                                          allocations of 65% to equity
                                          securities and 35% to fixed
                                          income securities. Changes
                                          between these asset classes
                                          will be in the range of plus
                                          or minus 10%.
Janus (Aspen Series) Forty Portfolio--   Janus Forty Portfolio--seeks
 seeks long-term growth of capital. The   long-term growth of capital.
 Portfolio normally invests primarily     The Portfolio normally invests
 in a core group of 20-40 common stocks   primarily in a core group of
 selected for their growth potential.     20-40 common stocks selected
                                          for their growth potential.
Legg Mason Partners Variable Equity      MetLife Stock Index Portfolio--
 Index Portfolio--seeks investment        seeks to equal the performance
 results that, before expenses,           of the S&P 500 Index (before
 correspond to the price and yield        expenses).
 performance of the S&P 500 Index.
UIF Core Plus Fixed Income Portfolio--   BlackRock Bond Income
 seeks above-average total return over    Portfolio--seeks a competitive
 a market cycle of three to five years    total return primarily from
 by investing primarily in a              investing in fixed-income
 diversified portfolio of fixed income    securities.
 securities.

[[Page 14600]]


PIMCO (VIT) Total Return Portfolio--     PIMCO Total Return Portfolio--
 seeks maximum total return, consistent   seeks maximum total return,
 with preservation of capital and         consistent with preservation
 prudent investment management.           of capital and prudent
                                          investment management.
Pioneer Strategic Income VCT Portfolio-  Pioneer Strategic Income
 seeks a high level of current income.    Portfolio--seeks a high level
 Normally, the Portfolio invests at       of current income. The
 least 80% of its assets in debt          Portfolio invests, under
 securities.                              normal circumstances at least
                                          80% of its assets in debt
                                          securities.
Van Kampen LIT Comstock Portfolio--      Van Kampen Comstock Portfolio--
 seeks capital growth and income.         seeks capital growth and
 Normally, the Portfolio invests at       income. Normally, the
 least 80% of its assets in common        Portfolio invests at least 80%
 stocks.                                  of its assets in common
                                          stocks.
------------------------------------------------------------------------

    10. The management fees, 12b-1 fees (if applicable), other expenses 
and total operating expenses for each Existing and Replacement Fund are 
as follows:

----------------------------------------------------------------------------------------------------------------
                                                Management                  Other        Waiver/        Total
                                                   fees      12b-1 fees    expenses   Reimbursement    expenses
                                                (percent)    (percent)    (percent)     (percent)     (percent)
----------------------------------------------------------------------------------------------------------------
Replacement Fund: MetLife Moderate Strategy            .07          .25          .65  .............          .97
 Portfolio (Class B).........................
Existing Fund: DWS Conservative Allocation             .07          .25         1.01  .............         1.33
 VIP (Class B)...............................
Replacement Fund: MetLife Growth Strategy              .06          .25          .72  .............         1.03
 Portfolio (Class B).........................
Existing Fund: DWS Growth Allocation VIP               .07          .25         1.00  .............         1.32
 (Class B)...................................
Replacement Fund: MetLife Balanced Strategy            .06          .25          .69  .............         1.00
 Portfolio (Class B).........................
Existing Fund: DWS Moderate Allocation VIP             .07          .25          .98  .............         1.30
 (Class B)...................................
Replacement Fund: Janus Forty Portfolio                .65          .15          .06  .............          .86
 (Class E)...................................
Existing Fund: Janus (Aspen Series) Forty              .64          .25          .06  .............          .95
 Portfolio (Service Class)...................
Replacement Fund: MetLife Stock Index                  .25          .10          .04       \1\ .01           .38
 Portfolio (Class D).........................
Existing Fund: Legg Mason Partners Variable            .31  ...........          .08  .............          .39
 Equity Index Portfolio (Class I)............
Replacement Fund: MetLife Stock Index                  .25          .25          .04       \1\ .01           .53
 Portfolio (Class B).........................
Existing Fund: Legg Mason Partners Variable            .31          .25          .08  .............          .64
 Equity Index Portfolio (Class II)...........
Replacement Fund: Blackrock Bond Income                .38  ...........          .06       \1\ .01           .43
 Portfolio (Class A).........................
Existing Fund: UIF Core Plus Fixed Income              .38  ...........          .27  .............          .65
 Portfolio (Class I).........................
Replacement Fund: Blackrock Bond Income                .38           25          .06       \1\ .01           .68
 Portfolio (Class B).........................
Existing Fund: UIF Core Plus Fixed Income              .38          .35          .27  .............         1.00
 Portfolio (Class II)........................
Replacement Fund: PIMCO Total Return                   .48           25          .04  .............          .77
 Portfolio (Class B).........................
Existing Fund: PIMCO (VIT) Total Return                .25  ...........          .58  .............          .83
 Portfolio (Admin Class).....................
Replacement Fund: Pioneer Strategic Income             .60          .15          .09  .............          .84
 Portfolio (Class E).........................
Existing Fund: Pioneer Strategic Income VCT            .65          .25          .18  .............         1.08
 Portfolio (Class II)........................
Replacement Fund: Van Kampen Comstock                  .58  ...........          .03  .............          .61
 Portfolio (Class A).........................
Existing Fund: Van Kampen LIT Comstock                 .56  ...........          .03  .............          .59
 Portfolio (Class I).........................
Replacement Fund: Van Kampen Comstock                  .58           25          .03  .............          .86
 Portfolio (Class B).........................
Existing Fund: Van Kampen LIT Comstock                 .56          .25          .03  .............          .84
 Portfolio (Class II)........................
----------------------------------------------------------------------------------------------------------------
\1\ Contractual fee waiver expiring 4/30/10 unless extended.

    11. MetLife Advisers, LLC or Met Investors Advisory, LLC is the 
adviser of each of the Replacement Funds. Each Replacement Fund 
currently offers up to five classes of shares, four of which, Class A, 
Class B, Class D and Class E are involved in the substitutions.
    12. The Applicants believe the substitutions will provide 
significant benefits to Contract owners, including improved selection 
of sub-advisers and simplification of fund offerings through the 
elimination of overlapping offerings.
    13. As a result of the substitutions, the number of investment 
options under each Contract will either not be decreased, or, in those 
cases where the number of investment options is being reduced, continue 
to offer a significant number of alternative investment options 
(currently expected to range in number from 2 to 134 after the 
substitutions versus 2 to 134 before the substitutions).
    14. Those substitutions which replace investment options advised by 
investment advisers that are not affiliated with the Substitution 
Applicants with funds for which either Met Investors Advisory, LLC or 
MetLife Advisers, LLC acts as investment adviser will permit each 
adviser, under the Multi-Manager Order, [IC-22824 (1997) and IC-23859 
(1999)], to hire, monitor and replace sub-advisers as necessary to 
achieve optimal performance.
    15. Contract owners with sub-account balances invested (through the 
separate account) in shares of the Replacement Funds will have either 
lower or substantially similar total expense ratios.
    16. In the following substitutions, the management fee and/or 
applicable Rule 12b-1 fee of the Replacement Fund are either currently 
higher, or, at certain management fee breakpoints, may be higher than 
those of the respective Existing Fund: DWS Conservative Allocation VIP/
MetLife Moderate Strategy Portfolio; DWS Growth Allocation VIP/MetLife 
Growth Strategy Portfolio; DWS Moderate Allocation VIP/MetLife Balanced 
Strategy Portfolio; Legg Mason Partners Variable Equity Index 
Portfolio/MetLife Stock Index Portfolio; UIF Core Plus Fixed Income 
Portfolio/BlackRock Bond Income Portfolio; PIMCO (VIT) Total Return 
Portfolio/PIMCO Total Return Portfolio; and Van Kampen LIT Comstock 
Portfolio/Van Kampen Comstock Portfolio.

[[Page 14601]]

    17. The Substitution Applicants propose to limit Contract charges 
attributable to Contract value invested in the Replacement Funds 
following the proposed substitutions to a rate that would offset the 
difference in the expense ratio between each Existing Fund's net 
expense ratio and the net expense ratio for the respective Replacement 
Fund.
    18. The substitutions will result in decreased net expense ratios, 
except for the Van Kampen LIT Comstock Portfolio/Van Kampen Comstock 
Portfolio substitution. Moreover, there will be no increase in Contract 
fees and expenses, including mortality and expense risk fees and 
administration and distribution fees charged to the Separate Accounts 
as a result of the substitutions.
    19. The Substitution Applicants believe that the Replacement Funds 
have investment objectives, policies and risk profiles that are either 
substantially the same as, or sufficiently similar to, the 
corresponding Existing Funds to make those Replacement Funds 
appropriate candidates as substitutes.
    20. In addition, after the substitutions, neither Met Investors 
Advisory, LLC, MetLife Advisers, LLC nor any of their affiliates will 
receive compensation from the charges to the Separate Accounts related 
to the Contracts or from Rule 12b-1 fees or revenue sharing from the 
Replacement Funds in excess of the compensation currently received from 
the investment advisers or distributors of the Existing Funds.
    21. The share classes of the Replacement Funds are either identical 
to or less than the share classes of the Existing Funds with respect to 
the imposition of Rule 12b-1 fees currently imposed, except with 
respect to the substitution of MetLife Stock Index Portfolio for Legg 
Mason Partners Variable Equity Index Portfolio and PIMCO Total Return 
Portfolio for PIMCO (VIT) Total Return Portfolio.
    22. Each Met Series Fund Replacement Fund's Class B, Class D and 
Class E Rule 12b-1 fees can be raised to 0.50% of net assets by the 
Replacement Fund's Board of Directors without shareholder approval. 
Each MIST Replacement Fund's Class B and Class E Rule 12b-1 fees can be 
raised to 0.50% and 0.25%, respectively, of net assets by the 
Replacement Fund's Board of Trustees without shareholder approval. 
However, Met Series Fund and MIST represent that Rule 12b-1 fees of the 
Class B, Class D and Class E shares of the Replacement Funds issued in 
connection with the proposed substitutions will not be raised above the 
current rate without approval of a majority in interest of the 
respective Replacement Funds' shareholders after the substitutions.
    23. The distributors of the Existing Funds pay to the Insurance 
Companies, or their affiliates, any 12b-1 fees associated with the 
class of shares sold to the Separate Accounts. Similarly, the 
distributors for MIST and Met Series Fund will receive from the 
applicable class of shares held by the Separate Accounts Rule 12b-1 
fees in the same amount or a lesser amount than the amount paid by the 
Existing Funds, except as described above.
    24. Further, in addition to any Rule 12b-1 fees, the investment 
advisers or distributors of the Existing Funds pay the Insurance 
Companies or one of their affiliates from 0 to 45 basis points for the 
Existing Funds' classes of shares involved in the substitutions. 
Following the substitutions, these payments will not be made on behalf 
of the Replacement Funds. Rather, 25, 10 and 15 basis points in Rule 
12b-1 fees from the Replacement Funds (with respect to Class B, Class D 
and Class E shares, respectively) and profit distributions to members 
from the Replacement Funds' advisers, will be available to the 
Insurance Companies. These profits from investment advisory fees may be 
more or less than the fees being paid by the Existing Funds.

Applicants' Legal Analysis and Conditions

    1. The Substitution Applicants request that the Commission issue an 
order pursuant to Section 26(c) of the Act approving the proposed 
substitutions.
    2. Applicants represent that the Contracts permit the applicable 
Insurance Company, subject to compliance with applicable law, to 
substitute shares of another investment company for shares of an 
investment company held by a sub-account of the Separate Accounts. The 
prospectuses for the Contracts and the Separate Accounts contain 
appropriate disclosure of this right.
    3. By a supplement to the prospectuses for the Contracts and the 
Separate Accounts, each Insurance Company has notified all owners of 
the Contracts of its intention to take the necessary actions, including 
seeking the order requested by this Application, to substitute shares 
of the funds as described herein. The supplement has advised Contract 
owners that from the date of the supplement until the date of the 
proposed substitution, owners are permitted to make one transfer of 
Contract value (or annuity unit exchange) out of the Existing Fund sub-
account to one or more other sub-accounts without the transfer (or 
exchange) being treated as one of a limited number of permitted 
transfers (or exchanges) or a limited number of transfers (or 
exchanges) permitted without a transfer charge. The supplement also has 
informed Contract owners that the Insurance Company will not exercise 
any rights reserved under any Contract to impose additional 
restrictions on transfers until at least 30 days after the proposed 
substitutions. The supplement has also advised Contract owners that for 
at least 30 days following the proposed substitutions, the Insurance 
Companies will permit Contract owners affected by the substitutions to 
make one transfer of Contract value (or annuity unit exchange) out of 
the Replacement Fund sub-account to one or more other sub-accounts 
without the transfer (or exchange) being treated as one of a limited 
number of permitted transfers (or exchanges) or a limited number of 
transfers (or exchanges) permitted without a transfer charge.
    4. The proposed substitutions will take place at relative net asset 
value with no change in the amount of any Contract owner's Contract 
value, cash value, or death benefit or in the dollar value of his or 
her investment in the Separate Accounts.
    5. The process for accomplishing the transfer of assets from each 
Existing Fund to its corresponding Replacement Fund will be determined 
on a case-by-case basis. In most cases, it is expected that the 
substitutions will be effected by redeeming shares of an Existing Fund 
for cash and using the cash to purchase shares of the Replacement Fund. 
In certain other cases, it is expected that the substitutions will be 
effected by redeeming the shares of an Existing Fund in-kind; those 
assets will then be contributed in-kind to the corresponding 
Replacement Fund to purchase shares of that Fund. All in-kind 
redemptions from an Existing Fund of which any of the Substitution 
Applicants is an affiliated person will be effected in accordance with 
the conditions set forth in the Commission's no-action letter issued to 
Signature Financial Group, Inc. (available December 28, 1999).
    6. Contract owners will not incur any fees or charges as a result 
of the proposed substitutions, nor will their rights or an Insurance 
Company's obligations under the Contracts be altered in any way. All 
expenses incurred in connection with the proposed substitutions, 
including brokerage, legal, accounting, and other fees and expenses, 
will be paid by the

[[Page 14602]]

Insurance Companies. In addition, the proposed substitutions will not 
impose any tax liability on Contract owners. The proposed substitutions 
will not cause the Contract fees and charges currently being paid by 
existing Contract owners to be greater after the proposed substitutions 
than before the proposed substitutions. No fees will be charged on the 
transfers made at the time of the proposed substitutions because the 
proposed substitutions will not be treated as a transfer for the 
purpose of assessing transfer charges or for determining the number of 
remaining permissible transfers in a Contract year.
    7. In addition to the prospectus supplements distributed to owners 
of Contracts, within five business days after the proposed 
substitutions are completed, Contract owners will be sent a written 
notice informing them that the substitutions were carried out and that 
they may make one transfer of all Contract value or cash value under a 
Contract invested in any one of the sub-accounts on the date of the 
notice to one or more other sub-accounts available under their Contract 
at no cost and without regard to the usual limit on the frequency of 
transfers from the variable account options to the fixed account 
options. The notice will also reiterate that (other than with respect 
to ``market timing'' activity) the Insurance Company will not exercise 
any rights reserved by it under the Contracts to impose additional 
restrictions on transfers or to impose any charges on transfers until 
at least 30 days after the proposed substitutions. The Insurance 
Companies will also send each Contract owner current prospectuses for 
the Replacement Funds involved to the extent that they have not 
previously received a copy.
    8. Each Insurance Company also is seeking approval of the proposed 
substitutions from any state insurance regulators whose approval may be 
necessary or appropriate.
    9. The Substitution Applicants agree that for those who were 
Contract owners on the date of the proposed substitutions, the 
Insurance Companies will reimburse, on the last business day of each 
fiscal period (not to exceed a fiscal quarter) during the twenty-four 
months following the date of the proposed substitutions, those Contract 
owners whose sub-account invests in the Replacement Fund such that the 
sum of the Replacement Fund's operating expenses and sub-account 
expenses (asset-based fees and charges deducted on a daily basis from 
sub-account assets and reflected in the calculation of sub-account unit 
values) for such period will not exceed, on an annualized basis, the 
sum of the Existing Fund's operating expenses and sub-account expenses 
for fiscal year 2007, except with respect to the DWS Conservative 
Allocation VIP/MetLife Moderate Strategy Portfolio, DWS Growth 
Allocation VIP/MetLife Growth Strategy Portfolio, DWS Moderate 
Allocation VIP/MetLife Balanced Strategy Portfolio, Legg Mason Partners 
Variable Equity Index Portfolio/MetLife Stock Index Portfolio, UIF Core 
Plus Fixed Income Portfolio/BlackRock Bond Income Portfolio, PIMCO 
(VIT) Total Return Portfolio/PIMCO Total Return Portfolio and Van 
Kampen LIT Comstock Portfolio/Van Kampen Comstock Portfolio 
substitutions.
    10. With respect to the DWS Conservative Allocation VIP/MetLife 
Moderate Strategy Portfolio, DWS Growth Allocation VIP/MetLife Growth 
Strategy Portfolio, DWS Moderate Allocation VIP/MetLife Balanced 
Strategy Portfolio, Legg Mason Partners Variable Equity Index 
Portfolio/MetLife Stock Index Portfolio, UIF Core Plus Fixed Income 
Portfolio/BlackRock Bond Income Portfolio, PIMCO (VIT) Total Return 
Portfolio/PIMCO Total Return Portfolio and Van Kampen LIT Comstock 
Portfolio/Van Kampen Comstock Portfolio substitutions, the 
reimbursement agreement with respect to the Replacement Fund's 
operating expenses and sub-account expenses, will extend for the life 
of each Contract outstanding on the date of the proposed substitutions.
    11. The Substitution Applicants further agree that, except with 
respect to the DWS Conservative Allocation VIP/MetLife Moderate 
Strategy Portfolio, DWS Growth Allocation VIP/MetLife Growth Strategy 
Portfolio, DWS Moderate Allocation VIP/MetLife Balanced Strategy 
Portfolio, Legg Mason Partners Variable Equity Index Portfolio/MetLife 
Stock Index Portfolio, UIF Core Plus Fixed Income Portfolio/BlackRock 
Bond Income Portfolio, PIMCO (VIT) Total Return Portfolio/PIMCO Total 
Return Portfolio and Van Kampen LIT Comstock Portfolio/Van Kampen 
Comstock Portfolio substitutions, the Insurance Companies will not 
increase total separate account charges (net of any reimbursements or 
waivers) for any existing owner of the Contracts on the date of the 
substitutions for a period of two years from the date of the 
substitutions.
    12. With respect to the DWS Conservative Allocation VIP/MetLife 
Moderate Strategy Portfolio, DWS Growth Allocation VIP/MetLife Growth 
Strategy Portfolio, DWS Moderate Allocation VIP/MetLife Balanced 
Strategy Portfolio, Legg Mason Partners Variable Equity Index 
Portfolio/MetLife Stock Index Portfolio, UIF Core Plus Fixed Income 
Portfolio/BlackRock Bond Income Portfolio, PIMCO (VIT) Total Return 
Portfolio/PIMCO Total Return Portfolio and Van Kampen LIT Comstock 
Portfolio/Van Kampen Comstock Portfolio substitutions, the agreement 
not to increase the separate account charges will extend for the life 
of each Contract outstanding on the date of the proposed substitutions.
    13. The Substitution Applicants submit that, in general, there is 
little likelihood that significant additional assets, if any, will be 
allocated to the above-listed Existing Funds and, therefore, because of 
the cost of maintaining such Funds as investment options under the 
Contracts, it is in the interest of shareholders to substitute the 
applicable Replacement Funds which are currently being offered as 
investment options by the Insurance Companies.
    14. In each case, the applicable Insurance Companies believe that 
it is in the best interests of the Contract owners to substitute the 
Replacement Fund for the Existing Fund. The Insurance Companies believe 
that in cases where the Replacement Fund has a new sub-adviser, the new 
sub-adviser will, over the long term, be positioned to provide at least 
comparable performance to that of the Existing Fund's sub-adviser. In 
certain substitutions, the same entity serves as sub-adviser for both 
the Existing Fund and the Replacement Fund.
    15. The Substitution Applicants anticipate that Contract owners 
will be better off with the array of sub-accounts offered after the 
proposed substitutions than they have been with the array of sub-
accounts offered prior to the substitutions.
    16. The Substitution Applicants submit that none of the proposed 
substitutions is of the type that Section 26(c) was designed to 
prevent.
    17. The Substitution Applicants request an order of the Commission 
pursuant to Section 26(c) of the Act approving the proposed 
substitutions by the Insurance Companies.
    18. The Section 17 Applicants request an order under Section 17(b) 
exempting them from the provisions of Section 17(a) to the extent 
necessary to permit the Insurance Companies to carry out each of the 
proposed substitutions, except for the DWS Conservative Allocation VIP/
MetLife Moderate Strategy Portfolio, DWS Growth Allocation VIP/MetLife 
Growth Strategy Portfolio and DWS Moderate Allocation

[[Page 14603]]

VIP/MetLife Balanced Strategy Portfolio substitutions.
    19. Section 17(a)(1) of the Act, in relevant part, prohibits any 
affiliated person of a registered investment company, or any affiliated 
person of such person, acting as principal, from knowingly selling any 
security or other property to that company. Section 17(a)(2) of the Act 
generally prohibits the persons described above, acting as principals, 
from knowingly purchasing any security or other property from the 
registered company.
    20. Because shares held by a separate account of an insurance 
company are legally owned by the insurance company, the Insurance 
Companies and their affiliates collectively own of record substantially 
all of the shares of MIST and Met Series Fund. Therefore, MIST and Met 
Series Fund and their respective funds are arguably under the control 
of the Insurance Companies notwithstanding the fact that Contract 
owners may be considered the beneficial owners of those shares held in 
the Separate Accounts. If MIST and Met Series Fund and their respective 
funds are under the control of the Insurance Companies, then each 
Insurance Company is an affiliated person or an affiliated person of an 
affiliated person of MIST and Met Series Fund and their respective 
funds. If MIST and Met Series Fund and their respective funds are under 
the control of the Insurance Companies, then MIST and Met Series Fund 
and their respective funds are affiliated persons of the Insurance 
Companies.
    21. Regardless of whether or not the Insurance Companies can be 
considered to control MIST and Met Series Fund and their respective 
funds, because the Insurance Companies own of record more than 5% of 
the shares of each of them and are under common control with each 
Replacement Fund's investment adviser, the Insurance Companies are 
affiliated persons of both MIST and Met Series Fund and their 
respective funds. Likewise, their respective funds are each an 
affiliated person of the Insurance Companies.
    22. The Insurance Companies, through their separate accounts in the 
aggregate own more than 5% of the outstanding shares of the following 
Existing Funds: Legg Mason Partners Variable Equity Index Portfolio, 
PIMCO (VIT) Total Return Portfolio, Pioneer Strategic Income VCT 
Portfolio, Van Kampen LIT Comstock Portfolio. Therefore, each Insurance 
Company is an affiliated person of those funds.
    23. Because the substitutions other than the DWS Conservative 
Allocation VIP/MetLife Moderate Strategy Portfolio, DWS Growth 
Allocation VIP/MetLife Growth Strategy Portfolio and DWS Moderate 
Allocation VIP/MetLife Balanced Strategy Portfolio substitutions may be 
effected, in whole or in part, by means of in-kind redemptions and 
purchases, the substitutions may be deemed to involve one or more 
purchases or sales of securities or property between affiliated 
persons. The proposed transactions may involve a transfer of portfolio 
securities by the Existing Funds to the Insurance Companies; 
immediately thereafter, the Insurance Companies would purchase shares 
of the Replacement Funds with the portfolio securities received from 
the Existing Funds. Accordingly, as the Insurance Companies and certain 
of the Existing Funds listed above, and the Insurance Companies and the 
Replacement Funds, could be viewed as affiliated persons of one another 
under Section 2(a)(3) of the Act, it is conceivable that this aspect of 
the substitutions could be viewed as being prohibited by Section 17(a).
    24. Section 17(b) of the Act provides that the Commission may, upon 
application, grant an order exempting any transaction from the 
prohibitions of Section 17(a) if the evidence establishes that: (a) The 
terms of the proposed transaction, including the consideration to be 
paid or received, are reasonable and fair and do not involve 
overreaching on the part of any person concerned; (b) the proposed 
transaction is consistent with the policy of each registered investment 
company concerned, as recited in its registration statement and records 
filed under the Act; and (c) the proposed transaction is consistent 
with the general purposes of the Act.
    25. The Section 17 Applicants submit that for all the reasons 
stated above the terms of the proposed in-kind purchases of shares of 
the Replacement Funds by the Insurance Companies, including the 
consideration to be paid and received, as described in this 
Application, are reasonable and fair and do not involve overreaching on 
the part of any person concerned. The Section 17 Applicants also submit 
that the proposed in-kind purchases by the Insurance Companies are 
consistent with the policies of: (a) MIST and of its Janus Forty, PIMCO 
Total Return, Pioneer Strategic Income and Van Kampen Comstock 
Portfolios; and (b) Met Series Fund and of its MetLife Stock Index and 
BlackRock Bond Income Portfolios, as recited in the current 
registration statements and reports filed by each under the Act. 
Finally, the Section 17 Applicants submit that the proposed 
substitutions set forth above are consistent with the general purposes 
of the Act.
    26. To the extent that the in-kind purchases by the Insurance 
Company of the Replacement Funds' shares are deemed to involve 
principal transactions among affiliated persons, the procedures 
described below should be sufficient to assure that the terms of the 
proposed transactions are reasonable and fair to all participants. The 
Section 17 Applicants maintain that the terms of the proposed in-kind 
purchase transactions, including the consideration to be paid and 
received by each fund 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 proposed 
transactions will take place at relative net asset value in conformity 
with the requirements of Section 22(c) of the Act and Rule 22c-1 
thereunder with no change in the amount of any Contract owner's 
contract value or death benefit or in the dollar value of his or her 
investment in any of the Separate Accounts. Contract owners will not 
suffer any adverse tax consequences 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 Insurance 
Companies, MIST and Met Series Fund 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. In addition, as stated above, the in-kind redemptions will 
only be made in accordance with the conditions set out in the Signature 
Financial Group no-action letter (December 29, 1999).
    27. The boards of MIST and Met Series Fund have adopted procedures, 
as required by paragraph (e)(1) of Rule 17a-7, pursuant to which the 
series of each may purchase and sell securities to and from their 
affiliates. The Section 17 Applicants will carry out the proposed 
Insurance Company in-kind purchases in conformity with all of the 
conditions of Rule 17a-7 and each series' procedures thereunder, except 
that the consideration paid for the securities being purchased or sold 
may not be entirely cash. Nevertheless, the circumstances surrounding 
the proposed substitutions will be such as to offer the same degree of 
protection to each Replacement Fund from overreaching that Rule 17a-7 
provides

[[Page 14604]]

to them generally in connection with their purchase and sale of 
securities under that Rule in the ordinary course of their business. In 
particular, the Insurance Companies (or any of their affiliates) cannot 
effect the proposed transactions at a price that is disadvantageous to 
any of the Replacement Funds. Although the transactions may not be 
entirely for cash, each will be effected based upon (1) the independent 
market price of the portfolio securities valued as specified in 
paragraph (b) of Rule 17a-7, and (2) the net asset value per share of 
each fund involved valued in accordance with the procedures disclosed 
in its respective investment company registration statement and as 
required by Rule 22c-1 under the Act. No brokerage commission, fee, or 
other remuneration will be paid to any party in connection with the 
proposed in kind purchase transactions.
    28. The sale of shares of Replacement Funds for investment 
securities, as contemplated by the proposed Insurance Company in-kind 
purchases, is consistent with the investment policies and restrictions 
of the Investment Companies and the Replacement Funds because (a) the 
shares are sold at their net asset value, and (b) the portfolio 
securities are of the type and quality that the Replacement Funds would 
each have acquired with the proceeds from share sales had the shares 
been sold for cash. To assure that the second of these conditions is 
met, Met Investors Advisory, LLC, MetLife Advisers, LLC and the sub-
adviser, as applicable, will examine the portfolio securities being 
offered to each Replacement Fund and accept only those securities as 
consideration for shares that it would have acquired for each such fund 
in a cash transaction.
    29. The Section 17 Applicants submit that the proposed Insurance 
Company in-kind purchases are consistent with the general purposes of 
the Act as stated in the Findings and Declaration of Policy in Section 
1 of the Act and that the proposed transactions do not present any of 
the conditions or abuses that the Act was designed to prevent.
    30. The Section 17 Applicants represent that the proposed in-kind 
purchases meet all of the requirements of Section 17(b) of the Act and 
request that the Commission issue an order pursuant to Section 17(b) of 
the Act exempting the Separate Accounts, the Insurance Companies, MIST, 
Met Series Fund and each Replacement Fund from the provisions of 
Section 17(a) of the Act to the extent necessary to permit the 
Insurance Companies on behalf of the Separate Accounts to carry out, as 
part of the substitutions, the in-kind purchase of shares of the 
Replacement Funds which may be deemed to be prohibited by Section 17(a) 
of the Act.

Conclusion

    Applicants assert that for the reasons summarized above that the 
proposed substitutions and related transactions meet the standards of 
Section 26(c) of the Act and are consistent with the standards of 
Section 17(b) of the Act and that the requested orders should be 
granted.

    For the Commission, by the Division of Investment Management 
pursuant to delegated authority.
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9-7086 Filed 3-30-09; 8:45 am]
