SEC Division of Investment Management staff letter: Metropolitan Life Insurance Company

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UNITED STATES PUBLIC ITY ";~"J"';':"'" .f'O',,; SECURITIES AND EXCHANGE COMMISS~IL~BIL -

WASHINGTON. D.C. 20549

April 26, 1995
Christopher P. Nicholas, Esq.

Associate General Counsel

Metropolitan Life Insurance Company One Madison Avenue New York, New York 10010-3690 Re: Metropolitan Life Insurance Company

Metropolitan Life Separate Account E (File No. 2-90380) Metropolitan Life Separate Account UL (File No. 33-32813) Metropolitan Tower Life Insurance Company Metropolitan Tower Separate Account Two (File No. 2-95019) Dear Mr. Nicholas:
Enclosed is our response to your letters of April 21, 1995 and October 31, 1994. By incorporating our answer into the enclosed copies of your letters, we avoid having to recite or summarize the facts involved. In any future correspondence on this matter, please refer to our Reference No. IP-2-95. ;¡ereiy, iJ 1// J

~ we~Ck Friedlander
Deputy Chief
Office of Insurance Products
Enclosure

(APR ,'2_6 1995
Our Reference No. IP-2-95
Metropolitan Life Insurance Company (" MetLife") ; MetLife Separate Account E ~eUBLlC (File No. 2-90380); MetLife Separate Account UL (File No. 33-32813); RESPONSE OF THE OFFICE OF Metropolitan Tower Life INSURANCE PRODUCTS Insurance Company ("MetTower"); and DIVISION OF INVESTMENT MetTower Separate Account Two MANAGEMENT (File No. 2-95019) By letters dated April 21, 1995 and October 31, 1994 (collectively, "Letters"), you seek assurance that the staff of the Division of Investment

Management ("Division") wil not recommend enforcement action to the Commission against MetLife, MetTower (collectively, "Insurance Companies"), MetLife Separate Account E, MetLife Separate Account UL, and MetTower Separate Account Two (collectively, "Separate Accounts") if post-effective

amendments are not filed under the Securities Act of 1933 (" 1933 Act") and the

Investment Company Act of 1940 ("1940 Act"), and updated prospectuses for

the Separate Accounts are not distributed to existing owners of certain variable life insurance contracts and existing owners or participants in certain variable annuity contracts, subject to the conditions set forth in your Letters. You state that the Separate Accounts are registered as unit investment trusts under the 1940 Act and that their investment divisions invest solely in shares of the corresponding portfolios of Metropolitan Series Fund, Inc. ("Fund"), an investment company registered under the 1940 Act. You further state that the Separate Accounts fund certain flexible i premium variable life insurance contracts that were issued in reliance on Rule 6e-3(T) under the 1940 Act, and certain flexible premium variable annuity contracts (collectively, "Contracts"). Interests under the Contracts are registered under the 1933 Act. You represent that sales of these Contracts have been terminated. Specifically, MetLife has discontinued the offer of: (a) certain MetLife Separate Account E variable annuity contracts ("VestMet Contracts") on July 9, 1993; ii and (b) certain MetLife Separate Account UL flexible premium variable life insurance contracts ("UL-II Contracts") on April 1, 1994. MetTower has discontinued the offer of its flexible premium variable life insurance contracts ("FPMLI Contracts") on May 1, 1992, and is not offering any variable life insurance contracts funded by any of its separate accounts, including MetTower's Separate Account Two. You represent that, as of March 31,1995, the VestMet Contracts consist of 42,910 Contract Owners and participants, the UL-II Contracts consist of 13,066 Contract Owners, and the FPMLI Contracts consist of 36,202 Contract Owners. You represent that, since the last post-effective amendment to the registration statement for each Contract was filed, no changes to the Contracts have been made, no endorsements or riders have been added, and the identity of 1/ You explain in the April 21, 1995 Letter that, due to an administrative error, a number of Ves-tMet Contracts were issued after submission of the October 31, 1994 Letter. You represent

that the error has been corrected and that there wil be no more sales of the VestMet Contracts.

the depositors of the Separate Accounts and the issuers of the Contracts have not changed. You further represent that at present neither Insurance Company has undergone any fundamental change in corporate structure or regulatory situs, and that the Separate Accounts wil continue to fund the Contracts. No change in the investment media underlying any of the Contracts is anticipated. You further state, however, that the Insurance Companies presently are considering certain assumption reinsurance arrangements in which all MetTower variable life insurance contracts, including the FPMLI Contracts, wil be reinsured by MetLife and funded by MetLife Separate Account UL, subject to regulatory approvals and Contract Owner consent, as may be required. You further represent that no other change in the contractual terms of the affected Contracts wil be made by MetLife and no interruption of investment performance wil occur as a result of the reinsurance transactions. No charge or expense wil be incurred by the Separate Accounts or the Fund in connection with the transfers of Fund shares and, therefore, cash values credited under the MetTower Contracts wil not change. Finally, there wil be no tax consequences, adverse or otherwise, to Contract Owners as a result of the reinsurance transactions. You represent that, in conjunction with the assumption reinsurance arrangement and to the extent set forth in your Letters, each Insurance Company wil file any necessary post-effective registration statements under the 1933 Act and 1940 Act with respect to the Separate Accounts affected thereby. In addition, after the successful completion of the proposed reinsurance arrangements, MetTower intends in the future to apply to the Commission to deregister its separate accounts, including Separate Account Two, under Section 8 (f) of the 1 940 Act. Based on the facts and representations made in your Letters, and without necessarily agreeing with your legal analysis, we would not recommend any enforcement action. We base our position particularly upon your representation that each Insurance Company wil provide all existing Contract Owners with the following information:

1. In compliance with Rule 30d-2 under the 1940 Act, the information

required in the annual and semi-annual reports of the Fund; in addition, current prospectuses for the Fund and any other periodic reports, all proxy materials, including proxy statements and related voting instructions, and other shareholder materials pertaining to the underlying portfolios of the Fund, as applicable.
2. Confirmations of Contract Owner transactions, including confirmation

of premiums or purchase payments, changes in allocation of investment base am.ong the investment divisions, reduction of insurance, reinstatement, surrenders, withdrawals, loans, due and unpaid loan interest added to loan principal, and loan repayments, as applicable.

3. Within 120 days after the close of the fiscal year with regard to
   variable life insurance Contracts, audited statutory financial

statements for the issuing Insurance Company and audited financial statements for each Separate Account prepared on the basis of generally accepted accounting principles. Such audited financial statements wil be not more than 1 6 months old and wil include an opinion of an independent public auditor in the same form as would be required in post-effective amendments to the same registration statements for the Contracts. Within 120 days after the close of the fiscal year with regard to variable annuity Contracts, audited financial statements for MetLife 21 in the form that would be required in a post-effective amendment to a registration statement for variable annuity contracts wil be made available to existing variable annuity Contract Owners; such Contract Owners wil be informed that, upon request, financial statements for the appropriate Insurance Company wil be sent to them without charge.
4. At least once a year, a statement of the cash value and for VestMet

Contracts, the number of units of each Contract owned by each Contract Owner. The statement wil include, as applicable for the particular type of Contract, the cash value (and for flexible premium variable life insurance Contracts, cash surrender value), total monies loaned, total loan repayments, the interest charged to the loan balance, the loan balance, the death benefit, and the face amount of the Contract.

Through the above information, existing Contract Owners wil receive the same financial information that they would receive if annual post￾effective amendments for the Contracts were filed. There wil be no change in the amount of information received by the Contract Owners regarding the underlying portfolios of the Fund. In addition, our position is based on your specific representations that:
1 . The annual report of each Separate Account on Form N-SAR wil be

filed with the Commission in accordance with the requirements of
Section 30 of the 1940 Act.
2. No new Contracts will be offered to the public, and the Insurance Companies do not currently contemplate commencement of such an
offering in the future. If Contracts are again offered to the public by either Insurance Company, or if changes are made to any existing Contracts, then the appropriate Insurance Company wil file a post￾effective amendment relating to such Contracts and wil comply with 2,, MetTower does not issue variable annuity contracts and, therefore, has no variable annuity contracts outstanding.

the prospectus delivery and annual updating requirements of the 1933 Act in connection with the public offering of such Contracts.
3. In the event that the assumption reinsurance arrangement is effected,

the Insurance Companies wil not rely on any relief granted herein with respect to the Separate Accounts for any Contracts that are so reinsured. Rather, each Insurance Company wil submit a new no￾action request, unless it otherwise is able to come within all of the parameters set forth in Great- West Life & Annuity Insurance Co. (pub. avaiL. Oct. 23, 1990), with respect to such Contracts. Please note that facts or conditions different from those presented in your Letters might require a different conclusion. Further, this response expresses only the Division's position on enforcement action and does not purport to express any legal conclusions on the questions presented. ,vi -

Yvonne M. Hunold

Assistant Special Counsel
April 26, 1995

/' Co f . 2; / l- /, One Madison Avenue, New York, NY 10010-3690 i"://:.r. "~o." , . . 1/ (. / r'" / __ y, I~'(',C" c¿ '(,t;l( /!i-;--,"/-.. ~c'C,l:- at/37 Christopher P. Nicholas

Assiate General Counsel

. Law Departent o MetLife

April 21, 1995

Securities Act of 1933

Sections 5 and 10 (a) (3)
Investment Company Act of 1940

Yvonne M. Hunold, Esquire

Office of Insurance Products

and Legal Compliance

Division of Investment Management

Securities and Exchange Commission

Room 10165, Stop 10-6

450 Fifth Street, N. W.

Washington, D. C. 20549

Re: Metropolitan Life Insurance Company; Metropolitan Life

Separate Account E and Metropolitan Life Separate Account UL,

each of Metropolitan Life Insurance Company; Metropolitan Tower

Life Insurance Company; and Metropolitan Tower Sèparate Account

Two of Metropolitan Tower Life Insurance Company

Dear Ms. Hunold:

As you and I discussed on April 5, 1995 and subsequently,

this letter supplements our no-action request dated October 31,

1994 (the lIOctober Letter"), which was addressed to Brenda D.

Sneed, Esq. of your office. Terms capitalized herein have the

same meaning as defined in the October Letter unless otherwise

defined herein. . You asked for the number of Policies Owners for each class

of Policies as of a more recent date than that of the October

Letter. As of March 31, 1995, the VestMet Policy consists of

42,9101 Policy Owners and participants, the UL- II Policy

consists of 13,066 Policy Owners, and the FPMLI Policy consists

of 36,202 Policy Owners.

1The number of VestMet Policy Owners and participants set

forth herein is larger than the number set forth in the October

Letter because, as a result of administrative error, a number of

VestMet Policies were permitted to be issued to new participants

in existing allocated plans that had previously authorized the

VestMet Policies as an option for their participants. The error

has been corrected both by communicating with the individuals who

service the plans and by adjusting MetLife's administrative

system to prevent the issuance by MetLife of the VestMet

'Policies. Thus, there will be no more sales of the VestMet Policies. Metrpolita Life Insurace Company

The October Letter stated in footnote 7 on page 4 thereof

that the Insurance Companies were considering the possibility of

entering into an assumption reinsurance arrangement whereby

MetLife would reinsure all of the business of MTL. The footnote

also stated that after the completion of such arrangement,

MetLife and Separate Account UL intended in future periods to

rely on the no-action relief requested in the October Letter by

MTL with respect to the FPMLI Policies reinsured by MetLife. You

have indicated to us that you would like us to set forth in

greater detail the terms of the proposed reinsurance arrangement.

You also indicated that the staff would not be inclined to grant

the no-action request set forth in the October Letter unless

MetLife agrees not to rely on such relief for the FPMLI Policies

it reinsures but instead submits a no-action request with respect

to such FPMLI Policies after the reinsurance arrangement is

completed.
If appropriate relief is obtained from the Internal Revenue

Service, it is the current intention of the Insurance Companies

that Metropolitan Tower will enter into an assumption reinsurance

agreement (the "Reinsurance Agreement") with MetLife relating to

policies issued by MTL (the "MTL Policies II ), including the FPMLI Policies.2 Under the Reinsurance Agreement, MTL will agree to

transfer, assign and cede all of its rights, title and interest

under the MTL Policies, as well as its obligations and

liabilities under the MTL Policies, to MetLife on an assumption

reinsurance basis. MetLife will agree to assume all obligations

and liabilities transferred to it to the maximum extent permitted

by law. The parties anticipate that MetLife will assume the MTL

Policies pursuant to the Reinsurance Agreement, notify each owner

of an MTL Policy ("Policyownerll) to be reinsured of its

assumption of MTL's liabilities under the MTL Policy and will

issue an assumption reinsurance certificate to each Policyowner.

No fee or commission will be payable by MTL or MetLife to any

other party with respect to the Reinsurance Agreement. The

transactions contemplated pursuant to the Reinsurance Agreement

are referred to herein as the "Reinsurance Transactions."

The Reinsurance Agreement will be subj ect to the

satisfaction of various conditions, including the making of all

required filings with and obtaining all necessary approvals of

applicable state insurance authorities and any other regulatory

approvals which may be required, the parties' having obtained

from the Commission all necessary orders under the 1940 Act to

2The Insurance Companies intend that all of the variable

life policies issued by MTL, including both scheduled premium and

flexible premium policies, will be reinsured by MetLife and

funded by Separate Account UL. In connection with the

reinsurance arrangement, the Insurance Companies and Separate

Account UL will apply to the SEC for exemptive relief to fund

both scheduled premium and flexible premium variable life / policies through the same separate account.

permit the Reinsurance Transactions and there being effective

registration statements under the 1933 Act relating to the

policies being issued by MetLife in exchange for the MTL Policies

as a result of the Reinsurance Transactions. Consequently, some

Reinsurance Transactions 'may take place at a date or dates

subsequent to the date of the initial Reinsurance Transaction

because all required state authority approvals with respect to

the Reinsurance Transactions may not have been obtained at the

time of the initial Reinsurance Transaction. Until such time as

any MTL Policy is the subject of a Reinsurance Transaction, such

policy will continue to be insured and administered by MTL.

When all conditions of the Reinsurance Agreement as it

relates to specified MTL Policies have been satisfied, MTL will

withdraw from its separate accounts (the "MTL Separate

Accounts"), including Separate Account Two, assets equal to the

policy liabilities attributable to the variable portion of the

MTL Policies covered by the Reinsurance Transactions. Pursuant

to the Reinsurance Agreement, MTL will transfer said assets to

MetLife. MTL will also transfer to MetLife assets in an amount

equal to its general account statutory reserves with respect to

the MTL Policies as of the effective date of the Reinsurance

Transaction covering such policies.

Upon the assumption reinsurance of an MTL Policy, MetLife

will (1) deposit into Separate Account UL all of the aforesaid

assets derived from the appropriate MTL Separate Account relating

to that policy and (2) issue an assumption certificate to the

Policyowner. The assumption certificate will inform the

Policyowner of the assumption by MetLife of all of MTL's

liabilities under the MTL Policy. Since the charges against

assets of Separate AccountUL under the policies issued by

MetLife will be identical to the charges against assets of the

MTL Separate Accounts under the MTL Policies, the assumption

certificate will inform the Policyowner that there will be no

impact on the Policyowner's cash value, cash surrender value or death benefit by virtue of the Reinsurance Transaction. After the effective date of the Reinsurance Transaction applicable to

the MTL Policy, a Policyowner will deal directly with MetLife and

any further premiums the Policyowner wishes to or is required to

apply to the MTL Policy will be forwarded directly to MetLife for

allocation to MetLife Separate Account UL. MetLife will perform

all policy administration, pay all claims and pay all

commissions, overrides, service fees, taxes' and expenses due and

owing in connection with the MTL Policies, and will be in

possession of all available files, records and correspondence

relating to the MTL Policies.

No change in the contractual terms of the MTL Policies will

be made by MetLife in connection with the Reinsurance

Transactions other than changing the separate accounts and the

. depositor. The Reinsurance Transactions will not change the

amount of the cash value credited under the MTL Policies, which

will continue to be affected only by the investment performance

of the underlying portfolios of the Fund. Because shares of the

Fund held by the MTL Separate Accounts will be deposited by

MetLife into Separate Account UL on the dates the Reinsurance

Transactions are effected, no interruption of investment

performance will occur. No charge or expense will be incurred by

the MTL -Separate Accounts, Separate Account UL or the Fund in

connection with the transfer of shares of the Fund, since the

transfer will be made by book entry on the shareholder records of

the Fund. Accordingly, cash values under the MTL Policies will be

the same as they would have been had the Reinsurance Transactions

not occurred. Finally, there will be no tax consequences,

adverse or otherwise, to Policyowners as a result of the

Reinsurance Transactions.
The Insurance Companies anticipate that one or more

jurisdictions may require or the Insurance Companies may

otherwise determine that owners of MTL Policies potentially

covered by the Reinsurance Transactions be afforded the right to

"opt-out" of the Reinsurance Transaction applicable to their MTL

Policies by submitting a timely objection or, in some cases, by

requiring an affirmative consent to the Reinsurance Transaction.

Thus, a state may require that a Policyowner be permitted to

object or specifically agree to the Reinsurance Transaction

within a specified number of days before or after the effective

date of the Reinsurance Transaction. If, under such an opt-out

provision, timely objection from the owner was received by

MetLife or the required affirmative consent was not received by

MetLife, the Reinsurance Transaction applicable to that specific

Policyowner would be canceled and, if the Reinsurance Transaction

had already occurred, the assets equal to the policy liabilities

attributable to such MTL Policy would be withdrawn by MetLife

from Separate Account UL and transferred back to MTL for deposit

into the appropriate MTL Separate Account. In the latter case,

the Policyowner would be restored to the same position he or she

would have had if the transaction had not taken place i the amount

of cash value credited under the MTL Policy would remain

unchanged. There will be no tax consequences to the Policyowner resulting from his or her election of the opt-out right. In the future, MetLife may afford Policyowners who had

previously opted out of the assumption reinsurance of their MTL

Policies a second opportunity to have their MTL Policies assumed

by MetLife by issuing to them a second assumption certificate

which also would be subject to any state-mandated opt-out

provision. Policyowners opting out of the assumption reinsurance

of their MTL Policies would thereafter remain with MTL and have

their MTL Policy cash values based on the MTL Separate Accounts

so long as they continue to hold their MTL Policies and so long

as the MTL Separate Accounts continue to be available as funding

media thereunder. MTL may seek at a future date to deregister

the MTL Separate Accounts pursuant to Section 8 (f) of the Act or

to take such other steps as it deems appropriate to reduce the

number of MTL Policies outstanding or the administrative burdens presented by such policies. At the present time, it is not yet determined when the

Reinsurance Agreement will be entered into. Relief must first be

obtained from the Internal Revenue Service, and, for a variety of

reasons, the Insurance Companies have not yet applied for such relief. The Insurance Companies agree that each of them will, in

conjunction with the assumption reinsurance arrangement and to

the extent set forth in footnote 7 of the October Letter, file

any necessary post-effective registration statements under the

1933 Act and 1940 Act with respect to the Accounts affected

thereby, and, if the assumption reinsurance arrangement is

effected, will not rely on any relief granted by the staff in

response to the October Letter with respect to such Accounts for

any Policies reinsured. With respect to such Policies, each

Insurance Company will submit a new no-action request, unless it

is otherwise able to come within all of the parameters set forth

. in the Great-West letter with respect to such Policies it issues.

With respect to representation number 3 of each Insurance

Company set forth on page 6 of the October Letter as such

representation relates to variable annuity Policy Owners,

MetLife3 additionally represents that, with regard to variable

annuity Policies, within 120 days after the close of the fiscal

year, audited financial statements for MetLife in the form that

would be required in a post-effective amendment to a registration

statement for variable annuity contracts will be made available

to existing variable annuity Policy Owners. Such Policy Owners

will be informed that, upon request, financial statements for

MetLife will be sent to them without charge.

You have also asked us to clarify the meaning of the phrase

"investment base II used in several places throughout the October Letter. This phrase was used in place of several different

phrases set forth in the prospectuses of the variable products of

the Insurance Companies, and is the amount at work earning a

return under a Policy. The phrase is equivalent to "cash value"

as used in Rule 6e-3 (T) under the 1940 Act and in the prospectuses for the variable life Policies of MetLife and MTL,

and is also referred to as "account balancell in the prospectus

for the VestMet Policies. Rather than continually use both" cash

value" and lIaccount balancell in the October Letter, we chose to use "investment base" as a generic term for convenience.

3MTL does not issue variable annuity contracts and therefore

has no variable annuity contracts outstanding.

The Insurance Companies greatly appreciate the attention

that the staff is giving to this matter. If we can provide any

further input relating to this matter, please feel free to call

me at any time at 212-578-4487. Thank you.

YOVI'/l
Christopher P. Nicholas

cc: Thomas C. Lauerman, Esq.

.1
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A~"U'iatl' 1;"lipr:11 ('IiIIIIS!'1
Law Ili'p:i II liu'ii1
~ MetLifë'

october 31, 1994

Securities Act of 1933

Sections 5 and 10(a)(3)

Investment Company Act of 1940

B rendaD . Sneed, Esquire
Office of Insurance Products

and Legal Compl iance

Division of Investment Management

Securi ties and Exchange Commission

Room 10162, stop 10-6

450 Fifth Street, N.W.

Washington, D.C. 20549

Re: Metropolitan Life Insurance Company; Metropolitan Life

Separate Account E and Metropolitan Life Separate Account UL,

each of Metropolitan Life Insurance, Company; Metropolitan Tower

Life Insurance Company; and Metropolitan Tower Separate Account

Two of Metropolitan Tower Life Insurance Company

Dea r Ms. Sneed:

I am writing on behaIf of Metropolitan Life Insurance

Company ("MetLife"), Metropolitan Tower Life Insurance Company

("MTL") (MetLife and MTL being referred to herein collectively as

the "Insurance Companies") and certain separate accounts of

MetLife (the "MetLife Accounts") and MTL (the "MTL Account") (the

MetLife Accounts and the MTL Account are hereinafter collectively

referred to as the "Accounts")l to request that the staff (the

"Staff") of the Securities and Exchange Commission (the

"Commission") advise the Insurance Companies and the Accounts

that it will not recommend that the Commission take any

enforcement action against the Insurance Companies or the

Accounts if post-effective amendments are not filed under the

Securities Act of 1933 (the "1933 Act") and the Investment

Company Act of 1940 (the "1940 Act"), and updated prospectuses

for the Accounts are not distributed to existing owners of

certain variable life insurance policies and existing owners of

or participants in certain variable annuity contracts issued

1 The Accounts (and the classes of variable life insurance

policies and variable annuity contracts) to which this no-action

request pertains are as follows: Metropolitan Life Separate

Account E ("Separate AccountE") (File No. 2-90380); Metropolitan Life Separate Account UL ("Separate Account UL") (File No.

33-32813); and Metropolitan Tower Separate Account Two ("Separate

Account Two") (File No. 2-95019).

Mplri'pl,lilali Lirp Iiisii,.r.." ('niiipaiiy

through the Accounts, subject to the conditions set forth

below.2
MetLife is a mutual life insurance company organized under

the laws of the state of New York, and is authori zed to enga~e in

the sale of Ii fe insurance, accident and heal th insurance, and

annui ties. MTL, a wholly owned subsidiary of MetLi fe, is a stock

life insurance company organized under the laws of the state of

Delaware, and is authorized to engage in the sale of life

insurance, accident and heal th insurance, and annui ties. Each

MetLife Account was established by MetLife under New York law,

and is registered with the Commission as a unit investment trust

under the 1940 Act. The MTL Account was established by MTL under

Delaware law, and is registered with the Commission as a unit

investment trust under the 1940 Act.3 The Accounts fund certain

flexible premium variable life insurance policies that were

issued in reliance on Rule 6e-3(T) under the 1940 Act, and

certain flexible premium variable annui ty contracts (each, a

"Policy"; together, the "Policies"). Interests under the

Policies are registeied under the 1933 Act.4 Each Account

consists of a number of investment divisions available for

allocations of investment base (the amount at work earning a

return under the Policy). The divisions invest in shares of the investment portfolios of the' Netropolitan Series Fund, Inc. (t.he "Fund"), an investment company registered under the 1940 Act.s

2The SEC Staff has provided such no-action assurance to a

numbe r of othe r insure rs, including MTL, subj ec t to ce rtain

conditions set forth therein. See Great-West Life & Annuity

Insurance Co. (pub. avail. Oct. 23, 1990) (the "Great-West

letter"); Monarch Life Insurance Company (pub. avail. June 9,

1992); The Equi table Li fe Assurance Society of the Uni ted Sta tes (pub. avail. August 30, 1990); Transamerica Occidental Life

Insurance Co. (pub. avail. Mar. 16, 1990); MONY Life Insurance

Company of America (pub. avail. Feb. 27, 1990); Century Life of

America (pub. avail. Jan. 17, 1990); New York Life Insurance and

Antiuity Corp. (pub. avail. Nov. 15, 1989); Bankers National Life

Insurance Co. (pub. avail. Apr. 28, 1989); and Metropolitan Tower

Separate Account One (pub. avail. June 13, 1988).

3 The Accounts are registered under the 1940 Act as follows:

Separate Account E - File No. 811-4001; Separate Account UL -

File No. 811-6025; Separate Account Two - File No. 811-4189.

4 See note 1 above.

5Separate Account E also consists of investment divisions

that invest in other registered investment companies. However,

these investment divisions are not available under the policies

which are the subject of this no-action request.

Each investment division of an Account invests solely in shares

of the corresponding portfolio of the Fund.

The Policies provide that, upon purchase of a Policy, the

ini tial premium or purchase payment made by the owner of the

Policy (the "Policy Owner") will be allocated among investment

divisions of the Account which funds the Policy, in accordance

with the Policy Owner's instructions. Under the Policies,

subsequent premium or purchase payments may be made subject to

certain conditions set ,forth in the applicable Policy. Under all

Policies, unplanned payments may be made, subject to certain

conditions. The Policies generally provide that a Policy Owner,

subject to certain restrictions, may change the allocation of the

investment base of the Policy, subject to certain condi tions and

limitations specified in the Policy. In addition, a Policy Owner

may surrender the Policy to obtain net cash surrender value and,

depending upon the terms of the Policy, may have the right to

take ~ut pol.icy loans, and, for the variable life insurance

policies and under èertain circumstances, effect changes in the

face amount under the Policy. At present, each class of Policies

consists of more than 5000 Policy Owners.

MetLife discontinued the offer of certain variable annuity

Policies funded by Separate Account E ("VestMet Policies") on

July 9, 1993, after all jurisdictions had approved a new variable

annuity contract, also funded by Separate Account E and utilizing

the same registration statement under the 1933 Act.6 At

present, the VestMet Policy consists of 42,732 Policy Owners and

participants. MetLife discontinued the offer of the flexible

premium variable life insurance Policies ("UL-II Policies") on

April i, 1994, after all jurisdictions had approved a new

flexible premium variable life insurance policy, also funded by

Separate Account UL but utilizing a different registration

statement under the 1933 Act. At present, the UL-II Policy

consists of 13,637 policy Owners. MTL discontinued the offer of

its flexible premium var iable Ii fe insurance Pol icie s (" FPMLI"

Policies) on May 1, 1992, after all or almost all jurisdictions

had approved the MetLife UL-II Policies. Thus, MTL is not

offering any life insurance policies funded by any of its

separate accounts, including Separate Account Two. At present,

the FPMLI Policy consists of 37,441 policy Owners.

Section 5 of the 1933 Act generally requires that an offer

or sale of a security be preceded or accompanied by the delivery

of a current prospectus. Section 10(a)(3) of the 1933 Act in

effect requi res, among other things, that the prospectus of a

uni t investment trust generally be updated at least annually to ensure that information included in the prospectus is not more

6The new variable annui ty contracts are not a subject of

-this no-action request.

than 16 months old. Until recently, the Insurance Companies were

selling certain Policies to the public, and, primarily for that

reason, filed post-effective amendments as required to keep the

prospectuses for such Policies current. As descr ibed above,

sales of any new Policies have now been terminated, and current

prospectuses therefore need not be maintained for new sales.

Howeve r, the Staff has taken the posi tion that addi tional premium or purchase payments under variable contracts may consti tute "sales" under Section 5 of the 1933 Act. MetLife and MTL believe

that the continued preparation and filing of post-effective

amendments to the registration statements and delivery of

prospectuses for the Policies solely for existing Policy Owners

would, however, be extremely costly and, in view of the

information and materials that the Insurance Companies are

prepared to distribute to Policy Owners, unnecessary and not in the public interest. '

wi th respect to each Policy, since the last post-effective

amendment to the registration statement for the Policy was filed,

no changes to the Policy have been made, no endorsements or

riders have been added to the Policy, and the identity öf the

depositor of the Account and the issuer of the Policy has not

changed. Ne i the r Insurance Company has unde rgone any fundamental

• change in corporate structure or regulatory si tus, and the

Accounts will continue to fund the Policies. No change in the

investment media underlying any of the Policies is anticipated.7

In thi s rega rd, we note that, but for the numbe r of exi sting

Policy Owners of each class of the Policies (over 5,000), we

believe that it would be appropriate for the Insurance Companies

and the Accounts to forego filing post-effective amendments and

to forego distributing updated prospectuses for the Policies to

Policy Owners, in reliance on the Great-West line of no-action

letters. The Insurance Companies will satisfy the conditions

outlined therein. Nonetheless, in view of the fact that each

7The Insurance Companies are presently considering the

possibi ty of entering into an assumption reinsurance arrangement whereby MetLife would reinsure all of the business of

MTL. If regulatory approval and any necessary Policy Owner

consent is obtained, the FPMLI Policies would become funded by

Separate Account UL. MetLife intends to file a registration

statement under the 1933 Act with respect to the FPMLI Policies

in connection with the reinsurance arrangement, and to deliver a

copy of the defini tive prospectus therefor to each FPMLI Policy

Owner. After the successful completion of the proposed

arrangement, MTL intends to apply to the SEC to deregister

Separate Account Two, pursuant to Section 8(f) of the 1940 Act,

and MetLife and Separate Account UL intend in future periods to

rely on the no-action relief requested hereby wi th respect to the

FPMLI Policies.

class of Policies has more than 5000 Policy Owners, the Insurance

Companies have determined that no-action assurance from the

Staff, while not necessarily required, may be appropriate under

the circumstances.8

As previous requests for no-action have noted, an "updated"

prospectus that includes information that is relevant at the time

a variable insurance policy or annui ty contract is sold may not

be particularly useful to an existing owner. Such prospectuses

require that the existing owner differentiate between information

that has previously been provided, and updated information (such

as financial statements). By providing updated information in a

separate and streamlined disclosure vehicle, existing Policy

Owners would receive required updated information in a more "user

friendly" format. In addition, to assist Policy Owners in making informed choi ces among unde rlying inves tment portfol ios, cur rent

prospectuses of the Fund will be sent to Policy Owners annually.

The Insurance Companies do not believe that the reasoning

set forth above is in any way affected by the number of Policy

Owners for a class of Policy. Indeed, insofar as the high cost

to the insurance company of continuing to file post-effective

amendments to print and distribute prospectuses has been a factor

in the favorable responses to prior no-action requests, such

costs are even more significant with a larger number of Policy

Owners. Thus, the Insurance Companies respectfully submit that

their requested no~action relief should be granted.

Each Insurance Company represents that it will comply with

the condi tions outlined in the Great-West line of no-action

letters, in the manner set out below. Each Insurance Company

represents that all 'existing policy Owners will be provided with

the following information:

1. In compliance with Rule 30d-2 under the 1940 Act, the

information requi red in the annual and semi-annual reports of the

Fund; in addi tion, current prospectuses for the Fund, and any

other periodic reports, all proxy materials, including proxy

statements and related voting instructions, and other shareholder

materials pertaining to the underlying portfolios of the Fund, as

applicable.
8In New York Life Insurance and Annuity Corp. (pub. avail.

Nov. 11, 1989), the Staff granted no-action relief comparable to

that here requested in a case involving 13,713 variable life

insurance pol i cies. In Security Bene fi t Li fe Insu rance Company

(pub. avail ~ July 2, 1987), such no-action relief was granted

wi th respect to two classes of policies having 28,019 and 21,529

participants (and 6,572 and 14,615 contract holders),

respecti vely.

2. Confi rmations of Policy Owner transactions, including
   confirmation of premiums or purchase payments, changes in

allocation of investment base among the investment divisions,

reduction of insurance, reinsta tement, surrenders, wi thdrawals,

loans, due and unpaid loan interest added to loan principal, and

loan repayments, as applicable.

3. wi thin 120 days after the close of the fiscal year, wi th

regard to variable life insurance Policies, audited statutory

financial statements for the issuing Insurance Company and

audi ted financial statements for each Account prepared on the

basis of generally accepted accounting principles ("GAAP"). Such

audited financial statements will be not more than 16 months old and will include an opinion of an independent public audi tor in the same form as would be requi red ,in post-effective amendments

to the registration statements for the Policies.

The Insurance Companies under$tand that the Staff has not

interpreted the Great-west letter to requi re the distribution of

life insurance company financial statements to variable annui ty

contract owners; accordingly, such financial statements will not

be automatically sent to variable annui ty Policy Owners.

4. At leèst once a year, a statement of the inv~stment base

and, for VestMet Policies, the number of units of each Policy

owned by each Policy Owner. The statement will include, as

applicable for the particular type of Policy, the cash value (and

for flexible premium variable life Policies, cash surrender

value), total monies loaned, total loan repayments, the interest

charged to the loan balance, the loan balance, the death benefi t, and the face amount of the Policy.

Through the above information, existing Policy Owners will

receive the sème financial information that they would receive if

annual post-effective amendments for the Policies were filed.

There will be no change in the amount of information received by

the Policy Owners regarding the underlying portfolios of the

Fund.
Al though the Insurance Companies are requesting no-action

assurance with respect to the filing of post-effective amendments

and the delivery of updated prospectuses for the Accounts, they

understand that Policy transactions generally are subject to the

anti-fraud provisions of the federal securities laws, including

Section 17(a) of the 1933 Act and Section 10(b) of the Securities

Exchange Act of 1934 and Rule 10b-S the reunder, and the liabili ty

provisions of Section 12(2) of the 1933 Act.

The Insurance Companies further represent that:

1. The annual report of each Account on Form N-SAR will be

filed with the Commission in accordance with the requirements of

'~

Section 30 of the 1940 Act.

2. No new Policies will be offered to the public, and the

Insurance Companies do not currently contemplate commencement of

such an offering in the future, other than the assumption

reinsurance arrangement discussed in note 6 above. If Policies

are again offered to the public by either Insurance Company, or

if changes are made to any existing Policies, then the

appropriate Insurance Company will file a post-effective

amendment relating to such Policies and will comply wi th the

prospectus delivery and annual updating requirements of the 1933 Act in qonnection with the public offering of such 'Policies. On the basis of the forgoing facts and undertakings, it is

the view of the Insurance Companies that no meaningful purpose is

served by the Insurance Companies' annual preparation and filing

of updated post-effective amendments in order to create updated

prospectuses for the Policies. No public interest is served by

requiring the Insurance Companies to incur the cost and expense

of preparing these materials which, under the circumstances, are

unnecessary. Thus, the Insurance Companies and the Accounts

respectfully request that, in keeping wi th the policies

underlying the positions taken in the no-action letters cited

above, the staff of the Commission advise them that it will not

recommend any action against the Insurance Companies or the

Accounts if post-effective amendments are not filed and annual

updated prospectuses for the Accounts are not delivered.

Thank you for your assistance, and for your expedited

consideration of this matter. Should you have any questions

concerning this letter, please call the undersigned at (212) 578 4487, or Robin Wagner at (212) 578-8717.

Sincerely yours,

Christopher P. Nicholas