
[Federal Register: March 31, 2010 (Volume 75, Number 61)]
[Notices]               
[Page 16205-16211]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr31mr10-142]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. IC-29190; File No. 812-13700]

 
MetLife Insurance Company of Connecticut, et al.

March 25, 2010.
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.

-----------------------------------------------------------------------

    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 Investors Insurance 
Company (``MetLife Investors''), MetLife Investors Variable Annuity 
Account One (``VA Account One''), MetLife Investors Variable Life 
Account One (``VL Account One''), MetLife Investors Variable Life 
Account Eight (``VL Account Eight''), 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 Separate Account 
DCVL (``Separate Account DCVL''), Metropolitan Life Separate Account UL 
(``Separate Account UL''), Security Equity Separate Account Twenty-Six 
(``SE Separate Account Twenty-Six''), Security Equity Separate Account 
Twenty-Seven (``SE Separate Account Twenty-Seven''), Security Equity 
Separate Account No. 13S (``SE Separate Account 13S''), Security Equity 
Separate Account No. 485 (``SE Separate Account 485''), 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 Twenty-Eight (``GA Separate Account Twenty-
Eight''), General American Separate Account Twenty-Nine (``GA Separate 
Account Twenty-Nine''), (together with Separate Account Eleven, 
Separate Account QPN, Fund UL, VA Account One, VL Account One, VL 
Account Eight, First VA Account One, Separate Account A, Separate 
Account DCVL, Separate Account UL, SE Separate Account Twenty-Six, SE 
Separate Account Twenty-Seven, SE Separate Account 13S, SE Separate 
Account 485 and GA Separate Account Twenty-Eight, the ``Separate 
Accounts''), Met Investors Series Trust (``MIST'') and Metropolitan 
Series Fund, Inc. (``Met Series Fund''), (together with MIST, the 
``Investment Companies'').
    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: Summary of Application: Applicants seek an order approving the 
substitution of certain series of the Investment Companies for shares 
of series of other unaffiliated 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.

DATES: Filing Date: The application was filed on September 21, 2009, 
and an amended and restated application was filed on March 23, 2010.
    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 19, 2010, 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 
issue 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. Applicants c/o Paul G. Cellupica, Chief 
Counsel--Securities Regulation and Corporate Services, MetLife Group, 
1095 Avenue of the Americas, 40th Floor, New York, NY 10036 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 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. 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

[[Page 16206]]

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, VA Account One, VL Account 
One, First VA Account One, Separate Account A, Separate Account UL, SE 
Separate Account Twenty-Six, SE Separate Account Twenty-Seven, Separate 
Account 13S, GA Separate Account Twenty-Eight, and GA Separate Account 
Twenty-Nine 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. VL Account Eight, Separate Account DCVL and Separate Account 485 
serve 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. Although Separate Account QPN, VL Account Eight, Separate 
Account DCVL and Separate Account 485 are exempt from registration 
under the Act, they would be subject to the investment limitations of 
Section 12 but for the exclusion contained in Section 12(d)(1)(E) of 
the Act. To rely on such exclusion, an investment company that is not a 
registered investment company must, among other things, agree to 
refrain from substituting a security unless the Commission approves the 
substitution in the manner provided in Section 26 of the Act.
    6. 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. Metlife 
Advisers, LLC serves as investment adviser to MIST and Met Series Fund.
    7. 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. The prospectuses for the 
Contracts and the Separate Accounts contain the appropriate disclosures 
of this right.
    8. Each Insurance Company, on its behalf and on behalf of the 
Separate Accounts proposes to make certain substitutions of shares of 
11 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.
    9. The proposed substitutions are as follows: (a) BlackRock Money 
Market Portfolio for AIM V.I. Money Market Fund and Legg Mason Western 
Asset Variable Money Market Portfolio; (b) RCM Technology Portfolio for 
AIM V.I. Technology Fund and DWS Technology VIP; (c) Oppenheimer Global 
Equity Portfolio for DWS Global Opportunities VIP; (d) Met/Artisan Mid 
Cap Value Portfolio for Janus Aspen Perkins Mid Cap Value Portfolio; 
(e) Met/Templeton Growth Portfolio for Legg Mason Batterymarch Variable 
Global Equity Portfolio; (f) MetLife Stock Index Portfolio for Legg 
Mason Batterymarch S&P 500 Index Portfolio; (g) BlackRock High Yield 
Portfolio for Pioneer High Yield VCT Portfolio; (h) Lord Abbett Growth 
and Income Portfolio for Putnam VT Growth and Income Fund; (i) Met/AIM 
Small Cap Growth Portfolio for UIF Small Company Growth Portfolio.
    10. 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
------------------------------------------------------------------------
AIM V.I. Money Market Fund--seeks to     BlackRock Money Market
 provide as high a level of current       Portfolio--seeks a high level
 income as is consistent with the         of current income consistent
 preservation of capital and liquidity.   with preservation of capital.
 The Fund invests only in high-quality    The Portfolio invests in
 U.S. dollar-denominated short term       accordance with industry-
 debt obligations.                        standard requirements for
                                          money market funds for the
                                          quality, maturity and
                                          diversification of
                                          investments.
AIM V.I. Technology Fund--seeks capital  RCM Technology Portfolio--seeks
 growth. The Fund normally invests at     capital appreciation; no
 least 80% of its assets in equity        consideration is given to
 securities (principally common stocks)   income. The Portfolio normally
 of issuers engaged primarily in          invests at least 80% of its
 technology-related industries.           assets in common stocks of
                                          companies which utilize new,
                                          creative or different, or
                                          ``innovative,'' technologies
                                          to gain a strategic
                                          competitive advantage in their
                                          industry, as well as companies
                                          that provide and service those
                                          technologies.
DWS Technology VIP--seeks capital        RCM Technology Portfolio--seeks
 growth. Under normal circumstances,      capital appreciation; no
 the Portfolio invests at least 80% of    consideration is given to
 net assets in common stocks of           income.The Portfolio normally
 companies in the technology sector.      invests at least 80% of its
                                          assets in common stocks of
                                          companies which utilize new,
                                          creative or different, or
                                          ``innovative,'' technologies
                                          to gain a strategic
                                          competitive advantage in their
                                          industry, as well as companies
                                          that provide and service those
                                          technologies.
DWS Global Opportunities VIP--seeks      Oppenheimer Global Equity
 above-average capital appreciation       Portfolio--seeks capital
 over the long term. The Portfolio        appreciation. The Portfolio
 invests at least 65% of total assets     invests under normal
 in common stocks and other equities of   circumstances at least 80% of
 small companies throughout the world     its assets in equity
 (companies with market values similar    securities (primarily common
 to the smallest 20% of the S&P           stock) of U.S. and foreign-
 Developed Small Cap Index).              based companies. The Portfolio
                                          can invest without limit in
                                          foreign securities and can
                                          invest in any country,
                                          including countries with
                                          developed or emerging markets.
Janus Aspen Perkins Mid Cap Value        Met/Artisan Mid Cap Value Fund--
 Portfolio--seeks capital appreciation.   seeks long term capital
 The Portfolio pursues its investment     growth. The Portfolio invests
 objective by investing primarily in      at least 80% of its net assets
 common stocks selected for their         in the common stocks of medium-
 capital appreciation potential.          sized companies.
Legg Mason Batterymarch Variable Global  Met/Templeton Growth Portfolio--
 Equity Portfolio--seeks long-term        seeks long-term capital
 capital growth. Dividend income, if      growth. Under normal market
 any, is a secondary consideration. The   conditions, the Portfolio
 Portfolio invests primarily in the       invests primarily in the
 common stock of U.S. and non-U.S.        equity securities of companies
 issuers, particularly issuers located    with various market
 in countries included in the Morgan      capitalizations located
 Stanley Capital International World      anywhere in the world,
 Index.                                   including emerging markets.

[[Page 16207]]


Legg Mason Batterymarch S&P 500 Index    MetLife Stock Index Portfolio--
 Fund--seeks investment results that,     seeks to equal the performance
 before expenses, correspond to the       of the S&P 500 Index (before
 price and yield performance of the S&P   expenses).
 500 Index.
Legg Mason Western Asset Variable Money  BlackRock Money Market
 Market Portfolio--seeks to maximize      Portfolio--seeks a high level
 current income consistent with           of current income consistent
 preservation of capital. The Portfolio   with preservation of capital.
 invests exclusively in high quality      The Portfolio invests in
 U.S. dollar denominated short-term       accordance with industry-
 debt securities.                         standard requirements for
                                          money market funds for the
                                          quality, maturity and
                                          diversification of
                                          investments.
Pioneer High Yield VCT Portfolio--seeks  BlackRock High Yield Portfolio--
 to maximize total return through a       seeks to maximize total return
 combination of income and capital        consistent with income
 appreciation. Normally, the Portfolio    generation and prudent
 invests at least 80% of its total        investment. The Portfolio will
 assets in below investment grade high    invest primarily in non-
 yield debt securities (junk bonds) and   investment grade bonds with
 preferred stocks.                        maturities of ten years or
                                          less. The Portfolio will
                                          normally invest at least 80%
                                          of its assets in high yield
                                          (``junk'') bonds, including
                                          convertible and preferred
                                          securities.
Putnam VT Growth and Income Fund--seeks  Lord Abbett Growth and Income
 capital growth and current income. The   Fund--seeks long-term growth
 Fund invests mainly in common stocks     of capital and income without
 of U.S. companies, with a focus on       excessive fluctuation in
 value stocks that offer the potential    market value. The Portfolio
 for capital growth, current income, or   primarily purchases equity
 both.                                    securities of large, seasoned,
                                          U.S. and multinational
                                          companies that the portfolio
                                          manager believes are
                                          undervalued.
UIF Small Company Growth Portfolio--     Met/AIM Small Cap Growth
 seeks long-term capital appreciation.    Portfolio--seeks long-term
 The portfolio manager seeks long-term    growth of capital. The
 capital appreciation by investing at     Portfolio invests normally at
 least 80% of the Portfolio's assets in   least 80% of its assets in
 growth-oriented equity securities of     securities of small-cap
 small U.S. and foreign companies,        companies.
 including emerging market securities.
------------------------------------------------------------------------

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

----------------------------------------------------------------------------------------------------------------
                                    Management                                        Waiver/
                                       fees         12b-1 fees    Other expenses   Reimbursement  Total expenses
                                     (Percent)       (Percent)       (Percent)       (Percent)       (Percent)
----------------------------------------------------------------------------------------------------------------
New Fund: BlackRock Money Market             .32  ..............             .02             .01             .33
 Portfolio......................
Old Fund: AIM V.I. Money Market              .40  ..............             .50  ..............             .90
 Fund...........................
New Fund: RCM Technology Fund...             .88  ..............             .08  ..............             .96
Old Fund: AIM V.I. Technology                .75  ..............             .45  ..............            1.20
 Fund...........................
New Fund: RCM Technology Fund...             .88             .15             .08  ..............            1.11
                                                           (.25)
Old Fund: DWS Technology VIP....             .67             .25             .26  ..............            1.18
New Fund: Oppenheimer Global                 .53             .25             .11  ..............             .89
 Equity Portfolio...............                           (.50)
Old Fund: DWS Global                         .89             .25             .28  ..............            1.42
 Opportunities VIP..............
New Fund: Met/Artisan Mid Cap                .82             .25             .05  ..............            1.12
 Value Portfolio................                           (.50)
Old Fund: Janus Aspen Perkins                .77             .25             .36             .04            1.34
 Mid Cap Value Portfolio........
New Fund: Met/Templeton Growth               .69             .25             .18             .07            1.05
 Portfolio......................                           (.50)
Old Fund: Legg Mason                         .75             .25             .39             .39            1.00
 Batterymarch Variable Global
 Equity Portfolio...............
New Fund: BlackRock Money Market             .32             .15             .02             .01             .48
 Portfolio......................                           (.25)
Old Fund: Legg Mason Western                 .45  ..............             .05  ..............             .50
 Asset Variable Money Market
 Portfolio......................
New Fund: Met Life Stock Index               .25  ..............             .03             .01             .27
 Portfolio......................
Old Fund: Legg Mason                         .25             .20             .16             .02             .59
 Batterymarch S&P 500 Index
 Portfolio......................
New Fund: BlackRock High Yield               .60             .25             .07  ..............             .92
 Portfolio......................                           (.50)
Old Fund: Pioneer High Yield VCT             .65             .25             .15  ..............            1.05
 Portfolio......................
New Fund: Lord Abbett Growth and             .53  ..............             .03  ..............             .56
 Income Portfolio--Class A......
Old Fund: Putnam VT Growth &                 .48  ..............             .10  ..............             .58
 Income Portfolio--Class IA.....
New Fund: Lord Abbett Growth and             .53             .25             .03  ..............             .81
 Income Portfolio--Class B......                           (.50)
Old Fund: Putnam VT Growth &                  48             .25             .10  ..............             .83
 Income Portfolio--Class B......
New Fund: Met/AIM Small Cap                  .86             .25             .04  ..............            1.15
 Growth Portfolio...............                           (.50)
Old Fund: UIF Small Company                  .92             .35             .44  ..............            1.71
 Growth Portfolio...............
----------------------------------------------------------------------------------------------------------------


[[Page 16208]]

    12. MetLife Advisers, LLC is the adviser of each of the Replacement 
Funds. Each Replacement Fund currently offers up to four classes of 
shares, three of which, Class A, Class B and Class E are involved in 
the substitutions.
    13. 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.
    14. As a result of the substitutions, the number of investment 
options offered under substantially all of the Contracts will not 
change (currently ranges in number from 3 to 122). For a limited number 
of Contracts which currently have at least 21 investment options 
available, after the substitutions there will be available at least 20 
investment options.
    15. Those substitutions which replace investment options advised by 
investment advisers that are not affiliated with the Substitution 
Applicants with funds for which 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.
    16. Contract owners with sub-account balances invested (through the 
separate account) in shares of the Replacement Funds, except for the 
Legg Mason Batterymarch Variable Global Equity Portfolio/Met/Templeton 
Growth Portfolio, will have lower total expense ratios taking into 
account fund expenses and current fee waivers.
    17. 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: Legg Mason Western Asset 
Variable Money Market Portfolio/BlackRock Money Market Portfolio; AIM 
V. I. Technology Fund/RCM Technology Portfolio; DWS Technology VIP/RCM 
Technology Portfolio; DWS Global Opportunities VIP/Oppenheimer Global 
Equity Portfolio; Putnam VT Growth and Income Portfolio/Lord Abbett 
Growth and Income Portfolio; UIF Small Company Growth Portfolio/Met/AIM 
Small Cap Growth Portfolio; and Janus Aspen Perkins Mid Cap Value 
Portfolio/Met/Artisan Mid Cap Value Portfolio.
    18. 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.
    19. Except for the Legg Mason Batterymarch Variable Global Equity 
Portfolio/Met/Templeton Growth Portfolio substitution where there is an 
increase in net expenses after waivers of 0.05%, the substitutions will 
result in decreased net expense ratios ranging from 2 basis points to 
57 basis points. 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.
    20. 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.
    21. In addition, after the substitutions, neither 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.
    22. 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 BlackRock Money Market Portfolio for 
Legg Mason Western Asset Variable Money Market Portfolio.
    23. Each MIST and Met Series Fund Replacement Fund's Class B and 
Class E Rule 12b-1 fees can be raised to 0.50% of net assets by the 
Replacement Fund's Board of Directors/Trustees without shareholder 
approval. However, Met Series Fund and MIST represent that Rule 12b-1 
fees of the Class B 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.
    24. 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.
    25. 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 43 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, the Insurance Companies or their 
affiliates will have available both the 25 and 15 basis points in Rule 
12b-1 fees from the Replacement Funds (with respect to Class B and 
Class E shares, respectively) and, as owners of the Replacement Funds' 
adviser, profit distributions from the adviser. 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

[[Page 16209]]

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 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 net operating expenses (taking into 
account fee waivers and expense reimbursements) 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 net operating expenses taking into account 
fee waivers and expense reimbursements and sub-account expenses for 
fiscal year 2009, except with respect to the AIM V.I. Technology Fund/
RCM Technology Portfolio, DWS Technology VIP/RCM Technology Portfolio, 
DWS Global Opportunities VIP/Oppenheimer Global Equity Portfolio, Janus 
Aspen Perkins Mid Cap Value Portfolio/Met/Artisan Mid Cap Value 
Portfolio, Legg Mason Western Asset Variable Money Market Portfolio/
BlackRock Money Market Portfolio, Putnam VT Growth and Income 
Portfolio/Lord Abbett Growth and Income Portfolio, and UIF Small 
Company Growth Portfolio/Met/AIM Small Cap Growth Portfolio 
substitutions.
    10. With respect to the AIM V.I. Technology Fund/RCM Technology 
Portfolio, DWS Technology VIP/RCM Technology Portfolio, DWS Global 
Opportunities VIP/Oppenheimer Global Equity Portfolio, Janus Aspen 
Perkins Mid Cap Value Portfolio/Met/Artisan Mid Cap Value Portfolio, 
Legg Mason Western Asset Variable Money Market Portfolio/BlackRock 
Money Market Portfolio, Putnam VT Growth and Income Portfolio/Lord 
Abbett Growth and Income Portfolio and UIF Small Company Growth 
Portfolio/Met/AIM Small Cap Growth 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 AIM V.I. Technology Fund/RCM Technology Portfolio, DWS 
Technology VIP/RCM Technology Portfolio, DWS Global Opportunities VIP/
Oppenheimer Global Equity Portfolio, Janus Aspen Perkins Mid Cap Value 
Portfolio/Met/Artisan Mid Cap Value Portfolio, Legg Mason Western Asset 
Variable Money Market Portfolio/BlackRock Money Market Portfolio, 
Putnam VT Growth and Income Portfolio/Lord Abbett Growth and Income 
Portfolio, and UIF Small Company Growth Portfolio/Met/AIM Small Cap 
Growth 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 AIM V.I. Technology Fund/RCM Technology 
Portfolio, DWS Technology VIP/RCM Technology Portfolio, DWS Global 
Opportunities VIP/Oppenheimer Global Equity Portfolio, Janus Aspen 
Perkins Mid Cap Value Portfolio/Met/Artisan Mid Cap Value Portfolio, 
Legg Mason

[[Page 16210]]

Western Asset Variable Money Market Portfolio/BlackRock Money Market 
Portfolio, Putnam VT Growth and Income Portfolio/Lord Abbett Growth and 
Income Portfolio and UIF Small Company Growth Portfolio/Met/AIM Small 
Cap Growth 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. 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.
    14. 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.
    15. The Substitution Applicants submit that none of the proposed 
substitutions is of the type that Section 26(c) was designed to 
prevent.
    16. 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.
    17. 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.
    18. 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.
    19. 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.
    20. 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.
    21. 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 Batterymarch Variable Global Equity 
Portfolio, Legg Mason Western Asset Variable Money Market Portfolio, 
Legg Mason Batterymarch S&P 500 Index Portfolio, Pioneer High Yield VCT 
Portfolio, UIF Small Company Growth Portfolio. Therefore, each 
Insurance Company is an affiliated person of those funds.
    22. Because the substitutions may be effected, in whole or in part, 
by means of in-kind redemptions and purchases, the substitutions may be 
deemed to involve one or more purchases or sales of securities or 
property between affiliated persons. 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).
    23. 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.
    24. 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 RCM Technology, 
Met/Templeton Growth, BlackRock High Yield, Lord Abbett Growth and 
Income and Met/AIM Small Cap Growth Portfolios; and (b) Met Series Fund 
and of its BlackRock Money Market, Oppenheimer Global Equity, Met/
Artisan Mid Cap Value and MetLife Stock Index 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 are consistent with the general purposes of the Act.
    25. 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

[[Page 16211]]

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).
    26. 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 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.
    27. 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, 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.
    28. 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.
    29. 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. 2010-7207 Filed 3-30-10; 8:45 am]
BILLING CODE 8011-01-P

