Chapter 9: legal considerations III. Claims G. Assets that are not General Assets, Special Deposits and Letters of Credit


Transferring the Registered Variable Product Business



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Transferring the Registered Variable Product Business


General guidance: The receiver should be in communication with the SEC staff regarding plans to transfer a book of business to an assuming solvent insurer or plans to restructure the insurer’s registered Variable Products, and should seek necessary approvals from the SEC. No action and/or exemptive relief under the 1940 Act should be considered in connection with such a transfer and change in control issues arising from the liquidation.


  1. Continuing to “Evergreen” Prospectuses and File Required Reports

Registration statements and other required reports generally would need to be kept up to date and filed in a timely manner with the SEC if the insurer continues to sell registered products in rehabilitation. Prospectuses would need to be kept up to date and mailed to existing contract owners.




  1. Redeemability

The 1940 Act requirement of redeemability is a primary concern of the SEC for Registered Variable Products. Receivers may potentially request the SEC to grant an exceptive order permitting the receiver to temporarily suspend the daily redeemability requirement and defer the variable contract owners’ ability to redeem their contracts utilizing separate account assets. Administrative, technical and/or operational issues preventing the receiver from processing redemptions may necessitate a moratorium on rights of redemption.


Exemptions from the redeemability requirement are rarely granted and are narrowly tailored to address the circumstances presented. Receivers need to be aware that:


  • It would be necessary to communicate with the SEC staff and experienced legal counsel regarding potential delays in payments and request an exemptive order

  • Communications with the SEC staff and experienced legal counsel about what is happening and about how it is communicated to contract owners would be required


General guidance: The receiver should be in communication with the SEC staff and experienced legal counsel about any anticipated disruptions in payments or processing redemptions.





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