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No-Action Letter under:
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| RESPONSE OF THE OFFICE OF INSURANCE PRODUCTS DIVISION OF INVESTMENT MANAGEMENT |
AIG Life Insurance Company |
By letter dated August 15, 2001, you request assurance that the staff will not recommend that the Commission take enforcement action under Section 26(c) of the Investment Company Act of 1940 (the "Act") against AIG Life Insurance Company ("AIG") if, in the absence of instructions requested by AIG from variable annuity contract owners, AIG allocates monies received upon the liquidation of an unaffiliated underlying investment portfolio to a money market subaccount, without obtaining an order pursuant to Section 26(c) of the Act.
Facts
Your letter states that AIG is the depositor of Variable Account I, a unit investment trust. Variable Account I offers variable annuity contracts, including the Trilogy Variable Annuity (File No. 33-39171), and is registered as an investment company under the Act. One of the variable options offered under Trilogy is the Mercury Low Duration VIP Portfolio (the "Portfolio"), a series of the Mercury HW Variable Trust (the "Trust"). The Portfolio's principal underwriter is FAM Distributors, Inc., and its investment adviser is Mercury Advisors. Mercury Advisors is a partnership formed by Merrill Lynch & Co., Inc., and Princeton Services, a wholly owned subsidiary of Merrill Lynch & Co., Inc. Except to the extent that Variable Account I may own more than 5% of the outstanding voting securities of any series of the Trust for the benefit of its contract owners, neither Variable Account I, AIG, nor any affiliate of AIG is an affiliated person of any series of the Trust, FAM Distributors, Inc., or Mercury Advisors.
You state that, at a meeting of the Trust's Board of Trustees held on January 30, 2001, the Board voted to liquidate the Portfolio. In making this decision, the Board considered relevant information, including the Portfolio's small size, its perceived lack of growth potential, and concerns about potentially substantial increases in expenses for the Portfolio. You state that no shareholder vote was required to liquidate the Portfolio. The anticipated liquidation date is on or about August 17, 2001.
In your letter, you state that, on May 15, 2001, Trilogy contract owners were sent notice of the pending liquidation of the Portfolio. That notice stated that the liquidation would occur as soon as reasonably practicable. The notice also provided summary information concerning the other variable options available under Trilogy; directions on how to obtain additional copies of the prospectuses for the other variable options; and, for those contract owners who had money allocated to the Portfolio, a transfer request form.1 Those contract owners who had money allocated to the Portfolio were advised that if a transfer request is not received, AIG will allocate the monies it receives upon the Portfolio's liquidation to the subaccount of Variable Account I that invests in the Domestic Money Market Fund, a series of the Merrill Lynch Variable Series Fund, Inc. Those contract owners were also advised that there would not be any charge for a voluntary transfer from the Portfolio or the allocation that would occur if AIG receives liquidation proceeds on a contract owner's behalf and that the transfer or allocation would not count as a transfer for purposes of any limit on the number of free transfers a contract owner may have in one year.
You also state that, on July 24, 2001, approximately two months after Trilogy contract owners were sent the first notice, a similar notice was sent to those contract owners who continued to have account value allocated to the Portfolio. This second notice alerted contract owners that the liquidation of the Portfolio is expected to occur on or about August 17, 2001, and contained summary information concerning the other variable options available under the contract, directions on how to obtain additional copies of the prospectuses for the other variable options, and a transfer request form. The second notice also advised contract owners that if a transfer request is not received, AIG will allocate the monies it receives upon the Portfolio's liquidation to the subaccount of Variable Account I that invests in the Domestic Money Market Fund. Contract owners were also advised that there would not be any charge for a voluntary transfer from the Portfolio or the allocation that would occur if AIG receives liquidation proceeds on a contract owner's behalf. Contract owners were also advised that the transfer or allocation would not count as a transfer for purposes of any limit on the number of free transfers a contract owner may have in one year.
In addition, you state that a transfer requested by a contract owner or the allocation of liquidation proceeds to the subaccount investing in the Domestic Money Market Fund will be confirmed in accordance with Rule 10b-10 under the Securities Exchange Act of 1934. For each contract owner on behalf of whom AIG receives liquidation proceeds, a notice will accompany the confirmation reminding the contract owner that the allocation to the Domestic Money Market Fund was made as a result of the liquidation of the Portfolio. You state that this notice will include a transfer request form and will advise contract owners that there will not be any charge for a transfer of liquidation proceeds from the Domestic Money Market Fund and that the transfer will not count as a transfer for purposes of any limit on the number of free transfers a contract owner may have in one year.
You further state that, one month after the liquidation, contract owners who did not transfer their account value in the Portfolio prior to the liquidation will be sent a copy of the notice that they received with the confirmation of the allocation of liquidation proceeds. This notice will include another transfer request form and will advise contract owners that there will not be any charge for any transfer from the Domestic Money Market Fund requested within thirty days of the date of this notice. Contract owners will also be advised that the transfer will not count as a transfer for purposes of any limit on the number of free transfers a contract owner may have in one year.
According to your letter, the Domestic Money Market Fund's principal underwriter is FAM Distributors, Inc., and its investment adviser is Merrill Lynch Investment Managers, L.P. Like Mercury Advisors, Merrill Lynch Investment Managers, L.P., is a partnership formed by Merrill Lynch & Co., Inc., and Princeton Services, Inc. Except to the extent that Variable Account I may own more than 5% of the outstanding voting securities of a series of the Merrill Lynch Variable Series Fund, Inc., for the benefit of its contract owners, neither Variable Account I, AIG, nor any affiliate of AIG is an affiliated person of any series of the Merrill Lynch Variable Series Fund, Inc., FAM Distributors, Inc., or Merrill Lynch Investment Managers, L.P.
You also state that, for the year ended December 31, 2000, management fees, other expenses, and annual operating expenses were 0.46%, 0.12%, and 0.58% for the Portfolio and 0.50%, 0.05%, and 0.55% for the Domestic Money Market Fund. Before waivers and reimbursements by Mercury Advisors, the annual operating expenses for the Portfolio were 3.09%. You state that there were no waivers or reimbursements for the Domestic Money Market Fund.
You represent that, in addition to the Portfolio and the Domestic Money Market Fund, Trilogy offers twenty other variable options, representing a wide variety of investment objectives and strategies.
Analysis
Section 26 (c) of the Act provides that:
It shall be unlawful for any depositor or trustee of a registered unit investment trust holding the security of a single issuer to substitute another security for such security unless the Commission shall have approved such substitution. The Commission shall issue an order approving such substitution if the evidence establishes that it is consistent with the protection of investors and the purposes fairly intended by the policy and provisions of [the Act].
Prior to the enactment of Section 26(c), Section 26(a)(4)(B) of the Act required that the trust instrument of a unit investment trust provide that the sponsor or trustee notify the trust's shareholders within five days after a substitution of underlying securities. According to the legislative history of Section 26(c), Congress was concerned that, in the case of a unit investment trust holding the securities of a single issuer, notice of a substitution does not provide adequate protection to investors, since the only relief available to the shareholders, if dissatisfied, would be to redeem their shares. A shareholder who redeems and reinvests the proceeds in another unit investment trust or in an open-end company would under most circumstances be subject to a new sales load. The proposed amendment would close this gap in shareholder protection by providing for Commission approval of the substitution.2
In your letter, you state your belief that Section 26(c) is premised on there being a voluntary affirmative act by the depositor that results in one security replacing another. You argue that the requirement for a Commission order approving a substitution under Section 26(c) should not apply in the present circumstances, where an insurance company that is unaffiliated with a liquidating fund has taken no action to instigate the liquidation and may not have a directly comparable investment option available. You also argue that, given the involuntary nature of the insurance company's involvement, an approach that provides affected contract owners complete notice of the pending liquidation approximately three months and one month prior to the liquidation, along with a description of the alternative variable options, and two additional notices after any default allocation, resolves this situation in a manner that is in the best interests of contract owners. You also argue that the proposed transaction does not involve any of the abuses that Section 26(c) was designed to protect against because contract owners will have a selection of alternative variable options that they can select from without any sales load or other charges being imposed and without any adverse tax consequences.
We do not agree with your assertion that Section 26(c) is premised on the existence of a voluntary affirmative act by the depositor that results in one security replacing another. In the staff's view, a substitution may involve the abuses that Section 26(c) was designed to protect against, regardless of whether the reallocation is undertaken entirely on the depositor's own initiative or in response to circumstances, such as the liquidation of an unaffiliated underlying fund, that the depositor did not initiate. For example, absent the requirements of Section 26(c), upon the liquidation of an unaffiliated fund, an insurer could reallocate the proceeds to an affiliated fund with higher expenses, potentially enriching itself at the expense of contract owners affected by the liquidation. A dissatisfied contract owner might have no relief other than to transfer his or her investment to another variable annuity, likely resulting in the contract owner immediately paying a surrender charge and becoming subject to a second surrender charge in the new annuity.
Nonetheless, based on all of the facts and circumstances outlined in your letter, we would not recommend enforcement action under Section 26(c) of the Act against AIG if AIG, without obtaining an order pursuant to Section 26(c) of the Act, allocates monies received upon the liquidation of the Portfolio to the subaccount of Variable Account I that invests in the Domestic Money Market Fund. Our conclusion is based in particular on the following representations:
Absence of Affiliation. Except to the extent that Variable Account I may own more than 5% of the outstanding voting securities of a series of the Trust or the Merrill Lynch Variable Series Fund, Inc., for the benefit of its contract owners, neither Variable Account I, AIG, nor any affiliate of AIG is an affiliated person of any series of the Trust, the Merrill Lynch Variable Series Fund, Inc., Mercury Advisors, Merrill Lynch Investment Managers, L.P., or FAM Distributors, Inc.
Notice to Contract Owners and Opportunity to Select Alternative Investment. AIG is providing multiple notices to affected contract owners regarding the liquidation of the Portfolio and multiple opportunities to select an alternative investment. Specifically, AIG provided notice to contract owners approximately three months and one month prior to the liquidation and will provide additional notices with the confirmation of the allocation of liquidation proceeds to the subaccount investing in the Domestic Money Market Fund and one month after the liquidation. Each of those notices advises affected contract owners of the liquidation of the Portfolio, the contract owner's rights to make alternative allocations, and the consequences of not making a transfer, i.e., allocation to the Domestic Money Market Fund; and each of those notices contains a transfer request form.
Variety of Investment Options. In addition to the Domestic Money Market Fund, Trilogy offers twenty other variable options, representing a wide variety of investment strategies and objectives.
Free Transfer Privilege. Contract owners will not be charged for a voluntary transfer from the Portfolio from the time of the first notice of for the allocation to the Domestic Money Market Fund that will occur if AIG receives liquidation proceeds on a contract owner's behalf. In addition, contract owners who have liquidation proceeds allocated to the Domestic Money Market Fund will not be charged for any transfer from the Domestic Money Market Fund made within 30 days of the final notice. The transfer or allocation also will not count as a transfer for purposes of any limit on the number of transfers a contract owner may make in one year.
Default Allocation to Money Market Fund. If AIG receives liquidation proceeds on a contract owner's behalf, the proceeds will be allocated to the Domestic Money Market Fund.
Relative Expenses. For the year ended December 31, 2000, total expenses were lower for the Domestic Money Market Fund than for the Portfolio, both before and after waivers and reimbursements.
We believe that, taken together, the facts and circumstances surrounding the proposed allocation by AIG to the Domestic Money Market Fund provide adequate protection against the buses at which Section 26(c) was targeted. AIG has taken reasonable steps to ensure that the Portfolio's liquidation will not result in investor dissatisfaction, for which the only relief would be to transfer to another variable annuity and incur sales charges. These steps include the procedures that are in place to provide affected contract owners notice of the liquidation of the Portfolio, their transfer privileges, and the consequences of not exercising the right to transfer; the fact that no charge is imposed for exercising the transfer privilege; and the fact that numerous alternative variable options, representing a wide variety of investment objectives and strategies, are available. In addition, the absence of affiliation between AIG and either the Portfolio or the Domestic Money Market Fund, as well as the relative expenses of the Portfolio and the Domestic Money Market Fund, suggest that the transaction is not being undertaken to enrich AIG or the funds' affiliates to the detriment of contract owners. Finally, the proposed default allocation to the Domestic Money Market Fund is appropriate, inasmuch as money market funds generally are regarded as suitable short-term cash management vehicles.
Because our position is based on the facts and representations set forth in your letter, you should note that different facts or representations may require a different conclusion.
Zandra Y. Bailes
Senior Counsel
| 1 | You represent that contract owners had previously been sent current prospectuses for all of the variable options. |
| 2 | S. Rep. No. 184, 91st Cong. 1st Sess. (1969), at 41. |
Michael Berenson
(202) 467-7450
mberenson@morganlewis.com
August 15, 2001
VIA HAND DELIVERY AND FACSIMILE
William J. Kotapish, Esq.
Assistant Director
Office of Insurance Products
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, DC 20549-0506
Re: AIG Life Insurance Company
Dear Mr. Kotapish:
As we have previously discussed, the purpose of this letter is to seek assurance that the Staff of the Division of Investment Management will not recommend that the Securities and Exchange Commission (the "Commission") take any enforcement action under Section 26(c) of the Investment Company Act of 1940 (the "Act") against AIG Life Insurance Company ("AIG"), if AIG, with respect to its Variable Account I (the "Variable Account"), in the absence of requested instructions from contract owners after notice and opportunity to reallocate their investment currently held in the liquidating portfolio, allocates monies received upon the liquidation of an unaffiliated underlying investment portfolio to the money market subaccount without obtaining an order pursuant to Section 26(c) of the Act. The various steps involved in the proposed allocation are discussed below.
Background
The Variable Account is a unit investment trust and is registered as an investment company under the Act. The Variable Account offers variable annuity contracts issued by AIG, its depositor, including the Trilogy Variable Annuity (File No. 33-39171). One of the variable options offered under Trilogy is the Mercury Low Duration VIP Portfolio (the "Portfolio"), which is a series of Mercury HW Variable Trust (the "Trust"). There is no other low duration variable option available under the contract. Except to the extent that the Variable Account may own more than 5% of the outstanding voting securities of any series of the Trust for the benefit of its contract owners, neither the Variable Account, its depositor, nor any of its depositor's affiliates is an affiliated person of any series of the Trust, its principal underwriter, or its investment adviser. The Portfolio's principal underwriter is FAM Distributors, Inc. and its investment adviser is Mercury Advisors. Mercury Advisors (a/k/a Fund Asset Management, L.P.) is a partnership formed by Merrill Lynch & Co., Inc. and Princeton Services, a wholly owned subsidiary of Merrill Lynch & Co., Inc.
At a meeting of the Trust's Board of Trustees held on January 30, 2001, the Board voted to liquidate the Portfolio. In making this decision, the Board considered relevant information, including its small size, its perceived lack of growth potential, and concerns about potentially substantial increases in expenses for the Portfolio. No shareholder vote is required to liquidate the Portfolio. The anticipated liquidation date is on or about August 17, 2001.
Shares of the Portfolio are currently owned by the Variable Account for the benefit of its contract owners and by Merrill Lynch Investment Managers, L.P., an affiliate of Mercury Advisors, in the form of seed money. The Portfolio was established on March 17, 1998. Pursuant to participation agreements dated February 26, 1998, and April 30, 1999, respectively, American General Life Insurance Company ("American General") and AIG purchased shares of the Portfolio on behalf of their contract owners. American General held $610,155 in Portfolio assets as of June 30, 1998, the end of its first quarter investing in the Portfolio. AIG held $82,307 as of September 30, 1999, the end of its first quarter investing in the Portfolio. As of December 31, 2000, American General held $446,118 in Portfolio assets and AIG held $393,539. In response to the Board's decision to liquidate the Portfolio, American General sent its contract owners notice of the pending liquidation. By the close of business on March 21, 2001, all of American General's contract owners had voluntarily transferred out of the Portfolio.
AIG has begun taking the following steps in anticipation of the liquidation of the Portfolio.
1) On May 15, 2001, Trilogy contract owners were sent notice of the pending liquidation of the Portfolio and were given summary information concerning the other variable options available under the contract,1 directions on how to obtain additional copies of the prospectuses for the other variable options, and, for those contract owners that had money allocated to the Portfolio, a transfer request form.2 The notice explained the reasons behind the Board's decision to liquidate the Portfolio and informed contract owners that premium may no longer be allocated to the Portfolio. The notice stated that the liquidation would occur as soon as reasonably practicable. Those contract owners that had money allocated to the Portfolio were also advised that if a transfer request is not received, AIG will allocate the monies it receives upon the Portfolio's liquidation to the subaccount of the Variable Account that invests in the Domestic Money Market Fund, a series of the Merrill Lynch Variable Series Fund, Inc. Those contract owners were also advised that there would not be any charge for a voluntary transfer from the Portfolio or for the allocation that would occur if AIG receives liquidation proceeds on a contract owner's behalf. Contract owners were also advised that the transfer or allocation also would not count as a transfer for purposes of any limit on the number of free transfers a contract owner may have in one year.
2) On July 24, 2001, approximately two months after Trilogy contract owners were sent the notice described immediately above, a similar notice was sent to those Trilogy contract owners who continued to have account value allocated to the Portfolio. This second notice alerted contract owners that the liquidation of the Portfolio is expected to occur on or about August 17, 2001. Like the first notice sent to contract owners that had money allocated to the Portfolio, this second notice contained summary information concerning the other variable options available under the contract, directions on how to obtain additional copies of the prospectuses for the other variable options, and a transfer request form. The notice explained the reasons behind the Board's decision to liquidate the Portfolio and informed contract owners that premium may no longer be allocated to the Portfolio. Contract owners were advised that if a transfer request is not received, AIG will allocate the monies it receives upon the Portfolio's liquidation to the subaccount of the Variable Account that invests in the Domestic Money Market Fund. Contract owners were also advised that there would not be any charge for a voluntary transfer from the Portfolio or for the allocation that would occur if AIG receives liquidation proceeds on a contract owner's behalf. Contract owners were further advised that the transfer or allocation also would not count as a transfer for purposes of any limit on the number of free transfers a contract owner may have in one year.
3) A transfer requested by a Trilogy contract owner or the allocation of liquidation proceeds to the subaccount investing in the Domestic Money Market Fund will be confirmed in accordance with Rule 10b-10 under the Securities Exchange Act of 1934. Where the insurance company has received liquidation proceeds, a notice will accompany the confirmation reminding contract owners that the allocation to the Domestic Money Market Fund was made as a result of the liquidation of the Portfolio. The notice will include a transfer request form and advise contract owners that there will not be any charge for a transfer of liquidation proceeds from the Domestic Money Market Fund. Contract owners will also be advised that the transfer will not count as a transfer for purposes of any limit on the number of free transfers a contract owner may have in one year.
4) One month after the liquidation, those Trilogy contract owners who do not voluntarily transfer their account value in the Portfolio prior to the liquidation will be sent a copy of the notice that they received with the confirmation of the allocation of liquidation proceeds. The notice will include another transfer request form and advise contract owners that there will not be any charge for any transfer from the Domestic Money Market Fund requested within thirty days of the date of this last notice. Contract owners will also be advised that a transfer made within the thirty-day period will not count as a transfer for purposes of any limit on the number of free transfers a contract owner may have in one year.
Except to the extent that the Variable Account may own more than 5% of the outstanding voting securities of any series of the Merrill Lynch Variable Series Fund, Inc. for the benefit of its contract owners, neither the Variable Account, its depositor, nor any of its depositor's affiliates is an affiliated person of any series of the Merrill Lynch Variable Series Fund, Inc., its principal underwriter, or its investment adviser. The Domestic Money Market Fund's principal underwriter is FAM Distributors, Inc. and its investment adviser is Merrill Lynch Investment Managers, L.P. Like Mercury Advisors, Merrill Lynch Investment Managers, L.P. is a partnership formed by Merrill Lynch & Co., Inc. and Princeton Services, Inc. The Domestic Money Market Fund and the Portfolio are under common control.
For the year ended December 31, 2000, management fees, other expenses, and annual operating expenses were .46%, .12%, and .58% for the Portfolio and .50%, .05%, and .55% for the Domestic Money Market Fund. Before waivers and reimbursements by Mercury Advisors, the annual operating expenses for the Portfolio were 3.09%. There were no waivers or reimbursements for the Domestic Money Market Fund. In addition to the Portfolio and the Domestic Money Market Fund, Trilogy offers contract owners twenty other variable options representing a wide variety of investment objectives and strategies. All currently offered variable options are listed below.
Merrill Lynch Variable Series Fund, Inc.
(managed by Merrill Lynch Investment Managers, L.P.)
Basic Value Focus Fund
Domestic Money Market Fund
Global Growth Focus Fund
Global Strategy Focus Fund
Merrill Lynch Large Cap Growth Focus Fund
High Current Income Fund
Quality Equity Fund
Small Cap Value Focus Fund
Utilities and Telecommunications Focus Fund
Mercury HW Variable Trust
(managed by Mercury Advisors)
Mercury HW International VIP Portfolio
Mercury Low Duration VIP Portfolio
Alliance Variable Products Series Fund, Inc.
(managed by Alliance Capital Management L.P.)
Global Dollar Government Portfolio
Growth Portfolio (Class B)
Growth and Income Portfolio (Class B)
High-Yield Portfolio
Premier Growth Portfolio
Quasar Portfolio
AllianceBernstein Real Estate Investment Portfolio
Technology Portfolio
Total Return Portfolio
U.S. Government/High Grade Securities Portfolio (Class B)
Worldwide Privatization Portfolio
Analysis
Section 26(c) of the Act provides that:
It shall be unlawful for any depositor or trustee of a registered unit investment trust holding a security of a single issuer to substitute another security for such security unless the Commission approves the substitution. The Commission shall issue an order approving such substitution if the evidence establishes that it is consistent with the protection of investors and the purposes fairly intended by the policy and provisions of the Act.
Section 26(c) of the Act (previously Section 26(b) until May 12, 2001) was enacted as part of the Investment Company Act Amendments of 1970 ("1970 Amendments"). Prior to the enactment of the 1970 Amendments, Section 26(a)(4)(B) of the Act only required that the trust instrument of a unit investment trust provide that the sponsor or trustee notify the trust's shareholders within five (5) days after a substitution of the underlying securities. The legislative history of Section 26(c) describes the underlying purpose of the amendment to the section:
The proposed amendment recognizes that in the case of a unit investment trust holding the securities of a single issuer notification to shareholders does not provide adequate protection since the only relief available to the shareholder, if dissatisfied, would be to redeem their shares. A shareholder who redeems and reinvests the proceeds in another unit investment trust or in an open-end company would under most circumstances be subject to a new sales load. The proposed amendment would close this gap in shareholder protection by providing for Commission approval of the substitution. The Commission would be required to issue an order approving the substitution if it finds the substitution consistent with the protection of investors and the purposes fairly intended by the policy and provisions of the Act.3
We believe that Section 26(c) is premised on there being a voluntary affirmative act by the depositor that results in one security replacing another. In the current circumstances, the insurance company's involvement is reactive. It receives notice that the board of an unaffiliated underlying fund has voted to liquidate and is faced with a decision as to what course of action will be in the best interests of contract owners with account value allocated to the terminating fund. There does not appear to be any investor protection reason to force the insurance company to select a new investment option and then seek a Commission order of approval in a Section 26(c) application. The insurance company did not instigate the sequence of events and may not have a directly comparable investment option available. Even if there is an option which might be a suitable alternative, we do not believe that the insurance company should be forced to bear the costs of pursuing an order of substitution, costs which will almost inevitably affect the insurance company's pricing of future products. Even if these costs were imposed on the fund's investment adviser/sponsor, they too will almost inevitably be reflected in that party's future pricing decisions.
More serious questions arise if the fund were to liquidate before a substitution order could be obtained. At that point, the insurance company would seem to have a series of unattractive options other than the one we are proposing.
1) The insurance company could send the proceeds to the contract owner. Assuming the owner has a gain in the contract, taxes would be due. Moreover, there would be a 10% penalty unless the owner is over age 59½ or meets certain exceptions.
2) The insurance company could hold the proceeds uninvested.
3) The insurance company could allocate the proceeds to the company's general account where it would be earning interest but would not be insulated from the claims of general creditors of the insurance company.
Given the involuntary nature of the insurance company's involvement, we believe an approach that provides affected contract owners complete notice of the pending liquidation approximately three months and one month prior to the liquidation, along with a description of the alternative variable options, and two additional notices after any default allocation (with the confirmation of the allocation and one month after the allocation) resolves this situation in a manner that is in the best interests of contract owners.
Moreover, the proposed transaction does not involve any of the abuses Section 26(c) was designed to protect against. Contract owners will have a selection of alternative variable options that they can select from without any sales load or other charges being imposed and without any adverse tax consequences.
For all of the reasons set forth above, we do not believe that the steps described above involve a "substitution" for purposes of Section 26(c) in the context of an unaffiliated underlying fund whose Board of Trustees has determined to liquidate the fund. Accordingly, we respectfully request that the Staff advise us that it will not recommend that the Commission take any enforcement action against AIG if it adopts the steps described above with respect to contract owners who have account value allocated to the Portfolio, a series of the Trust, whose Board of Trustees has voted to liquidate the Portfolio.
We appreciate your attention to this matter. If you have any questions or need any additional information, please call me at (202) 467-7450 or my colleague, Magda El Guindi-Rosenbaum, at (202) 467-7778.
Sincerely yours,
Michael Berenson
cc: Robert Saginaw, Esq.
Magda El Guindi-Rosenbaum, Esq.
1-WA/1574392.6
| 1 | Contract owners have previously been sent current prospectuses for all of the underlying investment options. |
| 2 | The notice is intended to provide contract owners with three months notice of the Portfolio's liquidation. |
| 3 | S. Rep. No. 91-184 (1969), at 41; reprinted in 1970 U.S.C.C.A.N. 4897, 4936. |
http://www.sec.gov/divisions/investment/noaction/aig081601.htm
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