Grant of Individual Exemptions; General Motors, et al.

DEPARTMENT OF LABOR

Pension and Welfare Benefits Administration

[Prohibited Transaction Exemption 95-103; Exemption Application No. D-

09611, et al.]

Grant of Individual Exemptions; General Motors, et al.

AGENCY: Pension and Welfare Benefits Administration, Labor.

ACTION: Grant of Individual Exemptions.

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[[Page 58646]]

SUMMARY: This document contains exemptions issued by the Department of

Labor (the Department) from certain of the prohibited transaction

restrictions of the Employee Retirement Income Security Act of 1974

(the Act) and/or the Internal Revenue Code of 1986 (the Code).

Notices were published in the Federal Register of the pendency

before the Department of proposals to grant such exemptions. The

notices set forth a summary of facts and representations contained in

each application for exemption and referred interested persons to the

respective applications for a complete statement of the facts and

representations. The applications have been available for public

inspection at the Department in Washington, D.C. The notices also

invited interested persons to submit comments on the requested

exemptions to the Department. In addition the notices stated that any

interested person might submit a written request that a public hearing

be held (where appropriate). The applicants have represented that they

have complied with the requirements of the notification to interested

persons. No public comments and no requests for a hearing, unless

otherwise stated, were received by the Department.

The notices of proposed exemption were issued and the exemptions

are being granted solely by the Department because, effective December

31, 1978, section 102 of Reorganization Plan No. 4 of 1978 (43 FR

47713, October 17, 1978) transferred the authority of the Secretary of

the Treasury to issue exemptions of the type proposed to the Secretary

of Labor.

Statutory Findings

In accordance with section 408(a) of the Act and/or section

4975(c)(2) of the Code and the procedures set forth in 29 CFR Part

2570, Subpart B (55 FR 32836, 32847, August 10, 1990) and based upon

the entire record, the Department makes the following findings:

(a) The exemptions are administratively feasible;

(b) They are in the interests of the plans and their participants

and beneficiaries; and

(c) They are protective of the rights of the participants and

beneficiaries of the plans.

General Motors Retirement Program for Salaried Employes; General Motors

Hourly Rate Employes Pension Plan; the Saturn Individual Retirement

Plan for Represented Team Members; Saturn Personal Choices Retirement

Plan for Non-Represented Team Members; and Employees' Retirement Plan

for GMAC Mortgage Corporation (collectively, the Plans) Located in New

York, New York

[Prohibited Transaction Exemption No. 95-103; Application Nos. D-09611,

D-09612, and D-09809]

Exemption

The restrictions of section 406(a) of the Act and the sanctions

resulting from the application of section 4975 of the Code, by reason

of section 4975(c)(1) (A) through (D) of the Code 1 shall not

apply, effective May 21, 1993, to the purchase by a partnership (the

Partnership) of a parcel of improved real property (the Property)

located in Washington, DC, from Collin Equities, Inc. (the Seller), a

party in interest with respect to the Plans, pursuant to an agreement

which provided that the Plans would invest in the Partnership upon

purchase of the Property, provided the following conditions are met:

\1\ For purposes of this exemption reference to specific

provisions of title I of the Act, unless otherwise specified, refer

also to the corresponding provisions of the Code.

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(a) the terms of the purchase of the Property were no less

favorable to the Plans than those negotiated at arm's length in similar

circumstances with unrelated third parties;

(b) the fair market value of the Property was determined by an

independent, qualified appraiser;

(c) the Plans paid no commissions or fees in regard to the

transaction; and

(d) prior to investing in the Partnership an independent, qualified

fiduciary acting on behalf of the Plans, reviewed and recommended

approval of the transaction and determined that the transaction was in

the best interest of the Plans and the participants and beneficiaries

of such Plans.

EFFECTIVE DATE: The exemption is effective retroactively, as of May 21,

1993.

Written Comments

In the Notice of Proposed Exemption (the Notice), the Department

invited all interested persons to submit written comments and requests

for a hearing on the proposed exemption. All comments and requests for

hearing were due by September 29, 1995.

During the comment period, the Department received no requests for

a hearing but did receive one letter from an interested person

commenting on the exemption. With respect to this comment letter, the

Department forwarded a copy to the applicant and requested that the

applicant address in writing the concerns raised by the commentator. In

this regard, the commentator raised four points which the applicant

responded to in turn. A description of the comments and the applicant's

responses are summarized below.

The commentator first alleges that General Motors Investment

Management Corporation (GMIMCO) would ``make sure they take care of

themselves and their fiduciary agents before they look after the

interests of the participants.'' The applicant notes that the

commentator cites no specific factual basis for his concerns other than

an unsupported assertion that ``the Corporation provides a profitable

interest to those fiduciary agents who do business with them, so that

such agents will act in kind for GM, regardless of the potential harm

to the Plan participants.'' In response, the applicant reiterates the

fact that it was completely coincidental that the Seller happened to be

a party in interest with respect to the Plans in this transaction and

that it was not known that the Seller was a party in interest at the

time the initial offering price was formulated. The applicant further

states that at no time after the Seller was identified as a subsidiary

of a service provider with respect to the Plans until the offer was

first submitted to the Seller, did GMIMCO argue or urge in any way to

have the price increased. Further, the applicant asserts that GMIMCO

did not profit from the transaction. Accordingly, the applicant

maintains that there is nothing in the record to indicate an intent on

the part of GMIMCO to favor either itself or the Seller.

In his second comment, the commentator cites the bailout of the

Savings and Loan industry, arising from bad real estate investments, as

a precedent for his uncertainty that the transaction is in the best

interest of the participants. In addition, the commentator expresses

concern that the desire and intention of GMIMCO to make money

ultimately may result in a loss to the Plans and the participants and

beneficiaries of such Plans. In response, the applicant submits that

the experience of the Savings and Loan industry in the late 1980's is

not relevant to this application for exemption, except perhaps to the

extent that it may have helped lay the backdrop for a depressed real

estate market in the early 1990's that appears to have enabled the

Plans to make a

[[Page 58647]]

favorable investment for their real estate portfolio in entering this

transaction. Further, the applicant maintains that it has provided

ample information on the value of the Property as part of its

submissions in support of the exemption. While the applicant agrees

that while intentions to make a profit can result in losses, it does

not follow that the transaction which is the subject of this exemption

was imprudent or was undertaken in a way that was not protective of the

interest of the Plans.

In his third comment, the commentator objected to the fact that the

Property was only 55.2% leased, as of March 1, 1993. In this regard,

the applicant notes that the fact that the Property was newly

constructed and was not fully leased at the time of the purchase was

taken into account in its pricing strategy and resulted in a

substantially discounted price for the Property in relation to similar

fully-leased Class A office buildings in the same market. Further, the

applicant points out that the Property is now essentially 100 percent

(100%) leased, and has met or exceeded all expectations for its value.

Finally, the commentator notes that the transaction is ``not

entirely free from doubt, in part because of the dearth of authority on

what constitutes an indirect prohibited transaction, regardless of its

``arm's length negotiation.'' In response, the applicant requests that

the dearth of legal authority in this area and the admitted uncertainty

of a legal conclusion of applicant's counsel, should not penalize the

applicant for its decision to seek the Department's guidance or an

exemption to cover the transaction.

After giving full consideration to the entire record, including the

written comments by the commentator and the responses of the applicant,

the Department has determined to grant the exemption, as described

herein. In this regard, the comment submitted to the Department and the

responses of the applicant have been included as part of the public

record of the exemption application. The complete application file,

including all supplemental submissions received by the Department, is

made available for public inspection in the Public Documents Room of

the Pension Welfare Benefits Administration, Room N-5638, U.S.

Department of Labor, 200 Constitution Avenue N.W., Washington, D.C.

20210.

For a more complete statement of the facts and representations

supporting the Department's decision to grant this exemption refer to

the Notice published on Friday, July 21, 1995, 60 FR 37677.

FOR FURTHER INFORMATION CONTACT: Angelena C. Le Blanc of the

Department, telephone (202) 219-8883 (This is not a toll-free number.)

Prudential Property Investment Separate Account (PRISA) and Prudential

Property Investment Separate Account II (PRISA II), Located in Newark,

NJ

[Prohibited Transaction Exemption No. 95-104; Application Nos. D-09845

and D-09846]

Exemption

The restrictions of section 406(a), 406(b)(1), and 406(b)(2) of the

Act and the sanctions resulting from the application of section 4975 of

the Code, by reason of section 4975(c)(1)(A) through (E) of the

Code,2 shall not apply, effective December 31, 1995, to the

advanced commitment to provide an enhanced return and the payment of

such return by the Prudential Insurance Company of America (Prudential)

to various employee benefit plans (the Plan or Plans) on the assets of

such Plans which are invested either in PRISA and/or PRISA II (the

Account or Accounts), as of April 1, 1994, and which remain invested

for all or any portion of a twenty-one (21) month period, beginning

April 1, 1994, and ending December 31, 1995, (the Investment Period),

provided that the following conditions are met:

\2\ For purposes of this exemption, references to specific

provisions of Title I of the Act, unless otherwise specified, refer

also to the corresponding provisions of the Code.

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(1) the decision to invest funds in either or both of the Accounts

for all or a portion of the Investment Period has been and will be made

by fiduciaries of the Plans independent of Prudential;

(2) the amount of the enhanced return payment with respect to the

assets of the Plans that are invested in either or both of the Accounts

for only a portion of the Investment Period will be calculated in the

same manner as the amount of the enhanced return payment with respect

to the assets of the Plans that remain invested in either or both of

the Accounts for the entire Investment Period;

(3) the enhanced return will be derived by comparing the cumulative

total return for the Investment Period reported by the expanded NCREIF

Property Index (the Index) with the cumulative total return of PRISA or

PRISA II for the same period;

(4) the Plans will obtain an enhanced rate of return (but not more

than 200 basis points) for amounts invested in one or both of the

Accounts during all or any portion of the Investment Period, if the

cumulative total investment return of such Account for such Investment

Period is less than that reported for the Index;

(5) the payments, if any, of enhanced return will be made by

Prudential to investors in the Accounts not later than thirty (30) days

following the final determination of the amounts owed;

(6) every property held by the Accounts is individually valued at

least once during the Investment Period and thereafter will be valued

at least once in each calendar year by an independent qualified

appraiser;

(7) a valuation policy committee, consisting of representatives

from an valuation management firm (the Valuation Management Firm),

Prudential Real Estate Investors (PREI), the interim and permanent

advisory councils (the Advisory Council or Advisory Councils) composed

of investors in PRISA and PRISA II and their consultants, and other

clients of PREI, will meet at least quarterly and set valuation policy

for the Accounts;

(8) the Valuation Management Firm, an independent third party, will

be responsible for retaining (and terminating) all appraisal firms

which value the properties in the Accounts; reviewing all appraisals

generated by such appraisal firms; and collecting, reviewing, and

distributing any information needed by such appraisal firms to appraise

the properties in the Accounts;

(9) the Plans invested in the Accounts who receive the enhanced

return will incur no additional cost or risk in connection with the

transaction;

(10) in connection with the determination of enhanced return

payments, no upward adjustment will be made by Prudential to the value

reported by an external independent appraiser of any Property in PRISA

and PRISA II without the concurrence of the Valuation Management Firm;

(11) any required state insurance regulatory approvals are obtained

for the transaction; and

(12) the Plans will receive the same treatment and proportional

payment under the enhanced return as any other investor in PRISA and

PRISA II.

EFFECTIVE DATE: This exemption will be effective on December 31, 1995.

Written Comments

In the Notice of Proposed Exemption (the Notice), the Department

invited all interested persons to submit written comments and requests

for a hearing on the proposed exemption within forty-five (45) days of

the date of the publication of the Notice in the Federal Register on

September 13, 1995. All

[[Page 58648]]

comments and requests for hearing were due by October 30, 1995.

During the comment period, the Department received no requests for

hearing. However, the Department did receive a comment letter from

Prudential, dated September 20, 1995. In this letter, Prudential

requested a clarification of the meaning of one of the operant

conditions of the proposed exemption and suggested that certain

revisions to the Summary of Facts and Representations (SFR) would more

accurately describe the transactions.

With respect to Prudential's requested clarification of the operant

language of the exemption, on page 47594, column 1, lines 35-40, the

sixth condition in the Notice reads as follows: ``Every property held

by the Accounts is individually valued at least once during the

Investment Period and thereafter will be valued at least once in each

calendar year by an independent qualified appraiser.'' Prudential

represents that in accordance with current policy and practice and

state regulatory approvals, every property held by PRISA and PRISA II

is valued at least once in each calendar year by an independent

qualified appraiser. Accordingly, each such property will be valued at

least once during the Investment Period (i.e. the period April 1, 1994

through December 31, 1995). Although there are at present no plans to

seek regulatory approval to change the current policy and practice of

obtaining independent valuations at least annually, it is Prudential's

understanding that the above-quoted language of condition six is not

intended to preclude future modification of this policy and practice.

The Department concurs in Prudential's understanding in this matter.

However, we do note that condition 6, which requires that every

property held by the Accounts be valued at least annually, must be met

until the successful completion of the payment of the enhanced return

by Prudential to the Plans which were invested in the Accounts on April

1, 1995, and remain invested in the Accounts for any portion of the

Investment Period.

With respect to Prudential's suggested revisions of the facts as

reflected in the SFR, on page 47595, column 3, lines 19-25, with regard

to the expanded Russell-NCREIF Property Index (the Index), the Notice

reads as follows: ``The Index is produced in partnership between

Russell Real Estate Consulting (a division of the Frank Russell

Company, an investment consulting firm) and the National Council of

Real Estate Investment Fiduciaries (NCREIF).'' Prudential has informed

the Department that, while the statement in the Notice correctly

identifies the parties responsible for the production of the Index

through the final quarter of 1994, commencing with the first quarter of

1995, the Index has been produced solely by NCREIF without

participation by Russell Real Estate Consulting and, accordingly, is

currently referred to as the NCREIF Property Index. The Department

concurs with this comment and has incorporated this change in the

reference to the Index in condition three of the operant language of

this exemption.

On page 47596, column 2, lines 52-58, regarding the PRISA and PRISA

II Advisory Councils, the Notice reads as follows: ``It is represented

that formal meetings of the Advisory Councils will be held quarterly

approximately thirty (30) days following the end of each quarter, with

additional meetings to be held at the discretion of the Advisory

Councils.'' Prudential has informed the Department that meetings of the

PRISA and PRISA II Advisory Councils are scheduled at the discretion of

each respective Advisory Council. In this regard, during 1994, both

Advisory Councils met more frequently than quarterly. During 1995, the

PRISA Advisory Council has met four times and is expected to have at

least one more meeting before year end. The PRISA II Advisory Council

has met once during 1995, and is expected to have at least one more

meeting before year end. Both Advisory Councils have the discretion to

schedule additional meetings. The Department concurs in this comment.

After giving full consideration to the entire record, including the

written comment from Prudential, the Department has decided to grant

the exemption, as described and concurred in above. In this regard, the

comment letter submitted by Prudential to the Department has been

included as part of the public record of the exemption application. The

complete application file, including all supplemental submissions

received by the Department, is made available for public inspection in

the Public Documents Room of the Pension Welfare Benefits

Administration, Room N-5638, U. S. Department of Labor, 200

Constitution Avenue NW., Washington, DC 20210. For a more complete

statement of the facts and representations supporting the Department's

decision to grant this exemption refer to the Notice published on

Wednesday, September 13, 1995, at 60 FR 47593.

FOR FURTHER INFORMATION CONTACT: Angelena C. Le Blanc of the

Department, telephone (202) 219-8883 (This is not a toll-free number.)

Plumbers and Steamfitters Local No. 177 Health and Welfare Fund (the

Welfare Plan), and Plumbers and Steamfitters Local No. 177 Pension

Trust Fund (the Pension Plan; collectively, the Plans) Located in

Brunswick, Georgia

[Prohibited Transaction Exemption 95-105; Exemption Application Nos. L-

09927, D-09928 and L-09929]

Exemption

The restrictions of sections 406(a), 406(b)(1) and (b)(2) of the

Act and the sanctions resulting from the application of section 4975 of

the Code, by reason of section 4975(c)(1)(A) through (E) of the Code,

shall not apply (1) effective February 17, 1994, to the past sale by

the Welfare Plan of an office building located in Brunswick, Georgia

(the Office Building) to Plumbers and Steamfitters Local No. 177 (the

Union), a party in interest with respect to the Plans; and (2)

effective February 16, 1995, to the leases of space in the Office

Building by the Union to the Plans (the Leases); provided the following

conditions are satisfied:

(a) The purchase price paid by the Union for the Office Building

was no less than the fair market value of the Office Building as of the

date of the sale;

(b) All terms of the Leases are at least as favorable to the Plans

as those which the Plans could obtain in arm's-length transactions with

unrelated parties;

(c) Rents paid under the Leases do not exceed the fair market

rental values of the leased spaces;

(d) The interests of the Plans under the Leases for all purposes

are represented by a qualified independent fiduciary who monitors the

Leases and takes appropriate action to enforce the Union's compliance

with all Lease terms and conditions; and

(e) Within 60 days of the publication in the Federal Register of

this notice granting the exemption, the Union pays any excise taxes

applicable under section 4975(a) of the Code by virtue of the past

Leases for the period commencing February 17, 1994 to February 16,

1995.

EFFECTIVE DATE: This exemption is effective as of February 17, 1994

with respect to the sale of the Office Building, and February 16, 1995

with respect to the Leases.

For a more complete statement of the facts and representations

supporting this exemption, refer to the notice of proposed exemption

published on September 21, 1995 at 60 FR 49014.

[[Page 58649]]

FOR FURTHER INFORMATION CONTACT: Ronald Willett of the Department,

telephone (202) 219-8881. (This is not a toll-free number.)

State Mutual Life Assurance Company of America (State Mutual) Located

in Worcester, MA

[Prohibited Transaction Exemption 95-106; Exemption Application No. D-

10008]

Exemption

Section I. Covered Transactions.

Effective October 16, 1995, the restrictions of section 406(a) of

the Act and the sanctions resulting from the application of section

4975 of the Code, by reason of section 4975(c)(1)(A) through (D) of the

Code, shall not apply to (a) the receipt of common stock of Allmerica

Financial Corporation, State Mutual's prospective sole owner, or (b)

the receipt of cash or policy credits, by or on behalf of an employee

benefit plan policyholder of State Mutual (the Plan), other than any

policyholder which is a Plan maintained by State Mutual or an affiliate

of State Mutual for its own employees (the State Mutual Plans), in

exchange for such policyholder's membership interest in State Mutual,

in accordance with the terms of a plan of reorganization (the

Demutualization Plan) adopted by State Mutual and implemented pursuant

to section 19E (Section 19E) of Chapter 175 of the Massachusetts

General Laws.

In addition, effective October 16, 1995, the restrictions of

section 406(a)(1)(E) and (a)(2) and section 407(a)(2) of the Act shall

not apply to the receipt and holding, by the Allmerica Financial Cash

Balance Pension Plan (the Allmerica Pension Plan), of employer

securities in the form of excess stock, in accordance with the terms of

the Demutualization Plan.

This exemption is subject to the conditions set forth below in

Section II.

Section II. General Conditions.

(a) The Demutualization Plan is implemented in accordance with

procedural and substantive safeguards that are imposed under

Massachusetts law and is subject to the review and supervision by the

Massachusetts Commissioner of Insurance (the Commissioner).

(b) The Commissioner reviews the terms of the options that are

provided to certain policyholders of State Mutual, which include, but

are not limited to the subject Plans and the State Mutual Plans (the

Eligible Policyholders), as part of such Commissioner's review of the

Demutualization Plan, and approves the Demutualization Plan following a

determination that such Demutualization Plan is not prejudicial to all

Eligible Policyholders.

(c) The Demutualization Plan is filed with the New York

Superintendent of Insurance (the Superintendent) who determines whether

the Demutualization Plan is fair and equitable to Eligible

Policyholders from New York.

(d) Each Eligible Policyholder has an opportunity to comment on the

Demutualization Plan and decide whether to vote to approve such

Demutualization Plan after full written disclosure is given such

Eligible Policyholder by State Mutual, of the terms of the

Demutualization Plan.

(e) Any election by an Eligible Policyholder which is a Plan

(including the State Mutual Plans), to receive stock, cash or policy

credits, pursuant to the terms of the Demutualization Plan is made by

one or more independent fiduciaries (the Independent Fiduciaries) of

such Plan and neither State Mutual nor any of its affiliates exercises

any discretion or provides investment advice with respect to such

election.

(f) In the case of the State Mutual Plans, where the consideration

is in the form of stock, the Independent Fiduciary--

(1) Elects the form of consideration that such Plans receive;

(2) Monitors, on behalf of such Plans, the acquisition and holding

of the stock;

(3) Makes determinations on behalf of such Plans with respect to

the voting, the continued holding or the disposition of such stock; and

(4) Disposes, in a prudent manner, shares of stock exceeding the 10

percent holding limitation of section 407(a)(2) of the Act within 90

days following its receipt by the Allmerica Pension Plan. Such shares

that are not disposed of during this initial 90 day period must be

disposed of within an additional period of 90 days.

(g) After each Eligible Policyholder entitled to receive stock is

allocated at least 28 shares of stock, additional consideration is

allocated to Eligible Policyholders who own participating policies

based on actuarial formulas that take into account each participating

policy's contribution to the surplus of State Mutual which formulas

have been approved by the Commissioner and the Superintendent.

(h) All Eligible Policyholders that are Plans participate in the

transactions on the same basis as other Eligible Policyholders that are

not Plans.

(i) No Eligible Policyholder pays any brokerage commissions or fees

in connection with their receipt of stock or in connection with the

implementation of the commission-free sales program.

(j) All of State Mutual's policyholder obligations remain in force

and are not affected by the Demutualization Plan.

Section III. Definitions.

For purposes of this proposed exemption:

(a) The term ``State Mutual'' means State Mutual Life Assurance

Company of America and any affiliate of State Mutual as defined in

paragraph (b) of this Section III.

(b) An ``affiliate'' of State Mutual includes--

(1) Any person directly or indirectly through one or more

intermediaries, controlling, controlled by, or under common control

with State Mutual. (For purposes of this paragraph, the term

``control'' means the power to exercise a controlling influence over

the management or policies of a person other than an individual.)

(2) Any officer, director or partner in such person, and

(3) Any corporation or partnership of which such person is an

officer, director or a 5 percent partner or owner.

(c) The term ``Eligible Policyholder'' means a policyholder whose

name appears on the conversion date on the insurer's records as owner

of a participating policy under which there is a right to vote and

which is in full force on both the December 31 immediately preceding

the conversion date and the date the insurer's board of directors first

votes to convert to stock form. Under Massachusetts law, only such

policyholders are entitled to receive consideration in the

demutualization. Policyholders who are not Eligible Policyholders will

not receive any stock or other consideration. As used herein, the term

``Eligible Policyholder'' includes, but is not limited to, the State

Mutual Pension Plan as well as those Plans that are not sponsored by

State Mutual.

(d) The term ``policy credit'' means (i) for an individual life

insurance policy, an increase in the dividend accumulation account,

(ii) for an individual deferred annuity policy where the owner has

elected a dividend accumulation option, an increase in the dividend

accumulation account, (iii) for all other individual deferred annuity

policies, an increase to the dividend addition value, and (iv) for a

supplementary contract or settlement option issued by State Mutual to

effect the annuitization of an individual deferred annuity, an increase

in the contract reserve which shall provide for an increase in the

monthly income payment equal to the ratio of the reserve

[[Page 58650]]

increase to the then current contract reserve.

EFFECTIVE DATE: This exemption is effective as of October 16, 1995.

For a more complete statement of the facts and representations

supporting the Department's decision to grant this exemption, refer to

the notice of proposed exemption (the Notice) published on September

21, 1995 at 60 FR 49016.

Written Comments

The Department received one written comment with respect to the

Notice. The comment was submitted by State Mutual and is intended to

clarify information contained in the Notice. Discussed below is State

Mutual's comment.

1. Form of Transaction. State Mutual represents that in describing

the demutualization transaction, the Notice refers to the receipt by

policyholders of common stock of State Mutual and the substitution of

the common stock of Allmerica, State Mutual's prospective sole owner,

for the State Mutual stock. State Mutual explains that while this

structure was initially considered, the Demutualization Plan ultimately

adopted called for the issuance of Allmerica stock directly to

policyholders in exchange for such policyholder's membership interests

in State Mutual. Accordingly, State Mutual represents that reference to

the issuance of State Mutual stock to policyholders and the

substitution of the Allmerica stock should be amended to reflect the

direct issuance of Allmerica stock to policyholders in exchange for

their policyholder interests.

2. The Initial Public Offering (the IPO). State Mutual explains

that the Notice states that Allmerica ``may'' sell new Allmerica stock

in an underwritten IPO. However, State Mutual advises that the

Demutualization Plan now requires the IPO as a condition to the

effectiveness of the reorganization.

3. Adoption of Demutualization Plan, Policyholder Vote and Hearing.

State Mutual notes that its Board of Directors adopted the

Demutualization Plan on February 28, 1995 and that on June 30, 1995,

the Demutualization Plan was approved by a vote of the policyholders.

On June 17 and June 27, 1995, State Mutual represents that the

Commissioner held a hearing on the Demutualization Plan and issued an

order on August 2, 1995, approving such plan.

4. Minimum Consideration. State Mutual explains that the Notice

states that each Eligible Policyholder will be allocated a minimum

consideration of 30 shares. While section 7.1(b)(i) of the

Demutualization Plan refers to a fixed component of consideration equal

to 30 shares, that number, according to State Mutual, is subject to

proportional adjustment as provided in section 9.6 of the

Demutualization Plan. Pursuant to this provision, State Mutual asserts

that the number of shares constituting the minimum consideration has

been adjusted to 28 shares and that the exemption should be amended to

reflect 28 shares rather than 30 shares as the minimum consideration.

5. Definition of Policy Credit. State Mutual points out that the

Notice contained the following definition of the term ``policy credit''

which it now considers to be out of date:

``(d) The term ``policy credit'' means an increase in

accumulation account value (to which no surrender or similar charges

are applied) in the general account or an increase in a dividend

accumulation on a policy.''

To make the definition more comprehensive, State Mutual has

redefined this term as follows:

``(d) The term ``policy credit'' means (i) for an individual

life insurance policy, an increase in the dividend accumulation

account, (ii) for an individual deferred annuity policy where the

owner has elected a dividend accumulation option, an increase in the

dividend accumulation account, (iii) for all other individual

deferred annuity policies, an increase to the dividend addition

value, and (iv) for a supplementary contract or settlement option

issued by State Mutual to effect the annuitization of an individual

deferred annuity, an increase in the contract reserve which shall

provide for an increase in the monthly income payment equal to the

ratio of the reserve increase to the then current contract

reserve.''

6. Plan Name Change and Coverage. State Mutual represents that the

Notice describes the State Mutual Companies' Pension Plan (the State

Mutual Pension Plan) as covering exclusively eligible career agents,

general agents and clerical employees of State Mutual and its

affiliates. State Mutual wishes, however, to clarify that the name of

the State Mutual Pension Plan has been changed to the ``Allmerica

Financial Cash Balance Pension Plan'' and to explain that this Plan

covers all eligible employees of State Mutual.

7. Trustee Change. State Mutual advises that the trustee of the

Allmerica Pension Plan (i.e., the former State Mutual Pension Plan) is

currently First National Bank of Boston and not Mechanics Bank of

Worcester.

8. Independent Fiduciary. State Mutual represents that the Notice

requires State Street Bank & Trust Company (State Street), an

independent fiduciary, to act on behalf of all State Mutual Plans.

Specifically, State Street is required to--(a) elect the form of

consideration that such Plans receive; (b) monitor, on behalf of such

Plans, the acquisition and holding of the stock; (c) make

determinations on behalf of the Plans with respect to the voting, the

continued holding or the disposition of such stock; and (d) dispose, in

a prudent manner, shares of stock exceeding the 10 percent holding

limitation of section 407(a)(2) of the Act within 90 days following its

receipt by the Allmerica Pension Plan. Such shares that are not

disposed of during this initial 90 day period must be disposed of

within an additional period of 90 days.

Although State Street has been retained as independent fiduciary on

behalf of all of the State Mutual Plans throughout the demutualization

process, State Mutual believes that once the transaction has been

consummated and the Allmerica Pension Plan has reduced its holdings of

employer stock to under the 10 percent limitation of section 407(a)(2)

of the Act, the retention of State Street should not be required

indefinitely. Therefore, State Mutual wishes to clarify that once a

State Mutual Plan's holdings have been reduced to below the 10 percent

threshold, the continued retention of State Street will be at the

discretion of a State Mutual Plan's named fiduciary.

9. Retroactivity of Exemption. State Street requests that the

exemption reflect a retroactive effective date of October 16, 1995

which is the closing date of the demutualization and the IPO.

The Department does not object to any of the clarifications or

modifications of the Notice that have been described by State Street in

its comment letter and it has revised the exemption, accordingly.

Thus, after giving full consideration to the entire record, the

Department has decided to grant the subject exemption. State Street's

comment letter has been included as part of the public record of the

exemption application. The complete application file, including all

supplemental submissions received by the Department, is made available

for public inspection in the Public Documents Room of the Pension and

Welfare Benefits Administration, Room N-5638, U.S. Department of Labor,

200 Constitution Avenue, N.W., Washington, D.C. 20210.

FOR FURTHER INFORMATION CONTACT: Ms. Jan D. Broady of the Department,

telephone (202) 219-8881. (This is not a toll-free number.)

[[Page 58651]]

Charleston Area Medical Center Deferred Profit Sharing Plan (the Plan);

Located in Charleston, West Virginia

[Prohibited Transaction Exemption 95-107; Exemption Application No. D-

10009]

Exemption

The restrictions of sections 406(a), 406(b)(1) and (b)(2) of the

Act and the sanctions resulting from the application of section 4975 of

the Code, by reason of section 4975(c)(1)(A) through (E) of the Code,

shall not apply to the past cash sale by the Plan to the Camcare &

Affiliates Malpractice Self-Insurance Trust (the Malpractice Trust) of

certain publicly-traded securities, provided the following conditions

were satisfied: a) the sale was a one-time transaction for cash; b) the

Plan paid no commissions or other fees in connection with the

transaction; and c) the transaction involved publicly-traded

securities, the fair market values of which were determined by an

independent bank by reference to the closing price for the securities

on the New York Stock Exchange.

For a more complete statement of the facts and representations

supporting the Department's decision to grant this exemption, refer to

the notice of proposed exemption published on September 25, 1995 at 60

FR 49423.

EFFECTIVE DATE: This exemption is effective November 30, 1993.

FOR FURTHER INFORMATION CONTACT: Gary H. Lefkowitz of the Department,

telephone (202) 219-8881. (This is not a toll-free number.)

General Information

The attention of interested persons is directed to the following:

(1) The fact that a transaction is the subject of an exemption

under section 408(a) of the Act and/or section 4975(c)(2) of the Code

does not relieve a fiduciary or other party in interest or disqualified

person from certain other provisions to which the exemptions does not

apply and the general fiduciary responsibility provisions of section

404 of the Act, which among other things require a fiduciary to

discharge his duties respecting the plan solely in the interest of the

participants and beneficiaries of the plan and in a prudent fashion in

accordance with section 404(a)(1)(B) of the Act; nor does it affect the

requirement of section 401(a) of the Code that the plan must operate

for the exclusive benefit of the employees of the employer maintaining

the plan and their beneficiaries;

(2) These exemptions are supplemental to and not in derogation of,

any other provisions of the Act and/or the Code, including statutory or

administrative exemptions and transactional rules. Furthermore, the

fact that a transaction is subject to an administrative or statutory

exemption is not dispositive of whether the transaction is in fact a

prohibited transaction; and

(3) The availability of these exemptions is subject to the express

condition that the material facts and representations contained in each

application are true and complete and accurately describe all material

terms of the transaction which is the subject of the exemption. In the

case of continuing exemption transactions, if any of the material facts

or representations described in the application change after the

exemption is granted, the exemption will cease to apply as of the date

of such change. In the event of any such change, application for a new

exemption may be made to the Department.

Signed at Washington, D.C., this 21st day of November, 1995.

Ivan Strasfeld,

Director of Exemption Determinations, Pension and Welfare Benefits

Administration, U.S. Department of Labor.

[FR Doc. 95-28911 Filed 11-27-95; 8:45 am]

BILLING CODE 4510-29-P