MEAG New York Corporation -- s. 74(1)

Ruling

Headnote

Application to the Ontario Securities Commission for a ruling pursuant to subsection 74(1) of the Securities Act (Ontario) (the Act) for a ruling that the Applicant be exempted from the adviser registration requirements in subsection 25(3) of the Act. The Applicant will provide advice to certain affiliated companies in Ontario only for so long as such affiliates remain affiliates of the Applicant.

Applicable Legislative Provisions

Securities Act, R.S.O. 1990, c. S.5, as am., ss. 25(3), 74(1).

December 14, 2012

IN THE MATTER OF

THE SECURITIES ACT,

R.S.O. 1990, c. S.5, AS AMENDED

(THE ACT)

AND

IN THE MATTER OF

MEAG NEW YORK CORPORATION

RULING

(Subsection 74(1) of the Act)

UPON the Application (the Application) of MEAG New York Corporation (the Applicant) to the Ontario Securities Commission (the Commission) for a ruling pursuant to subsection 74(1) of the Act that the Applicant be exempted from the adviser registration requirements in subsection 25(3) of the Act;

AND UPON considering the Application and the recommendation of staff of the Commission;

AND UPON the Applicant having represented to the Commission as follows:

1. The Applicant is a corporation existing under the laws of the State of Delaware, based in the City of New York in the State of New York and is registered as an adviser with the U.S. Securities and Exchange Commission under the United States Investment Advisers Act of 1940. The Applicant does not have an office or employees in Canada.

2. The Applicant is an indirect wholly-owned subsidiary of Münchener Rückversicherungs-Gesellschaft Aktiengesellschaft in München (Munich Re), a global re-insurance company headquartered in Germany. The Applicant provides services, including investment advice and portfolio management services, to entities within the Munich Re group of companies. The Applicant does not provide services to any persons or companies other than its affiliated entities. As of September 30, 2012, the Applicant's discretionary client assets under management totalled approximately US$49 billion.

3. The Applicant is an affiliated company of Munich Reinsurance Company of Canada, Temple Insurance Company, The Boiler Inspection and Insurance Company of Canada, Munich Reinsurance America, Inc. (Canadian branch) and Munich Re (Canadian branch) (collectively, the Insurance Companies), all of which are insurance companies or branches of foreign insurance companies that carry on business in Canada as Canadian federally licensed insurance companies or branches of foreign insurance companies with their Canadian head offices located in Ontario. The Applicant is also an affiliated company of Munich Holdings Ltd., a holding company established under the laws of Canada with its head office located in Ontario (the Holding Company), which, as its sole business activity, holds securities of certain Canadian companies in the Munich Re group, including certain of the Insurance Companies and Munich Life Management Corporation Limited, a services company that provides administrative services to Munich Re (Canadian branch). The Insurance Companies and the Holding Company are collectively referred to as the Affiliated Companies.

4. Each of the Affiliated Companies is a direct or indirect wholly-owned subsidiary of Munich Re and, as such, is an affiliate of the Applicant as defined in the Act.

5. Each of the Affiliated Companies is a permitted client as defined in National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations (NI 31-103).

6. The Applicant provides investment advice and portfolio management services to the Affiliated Companies with respect to the portfolio assets of the Affiliated Companies maintained in connection with their respective Canadian businesses and, as such, requires adviser registration under the Act or an exemption from the adviser registration requirements in subsection 25(3) of the Act. For certain of the Affiliated Companies, the provision of these services by the Applicant commenced as early as 1997. The Applicant provided these services to the Affiliated Companies without obtaining adviser registration under the Act on the basis of a good faith determination that it was not providing advice to others with respect to investing in securities or buying or selling securities because it was providing such advice only to affiliates within the Munich Re group of companies. The Applicant seeks to continue to provide investment advice and portfolio management services to the Affiliated Companies on a basis that would not require adviser registration under the Act.

7. Except as indicated in the previous paragraph, the Applicant is not, to the best of its knowledge, in default of any requirements of securities legislation in Ontario.

8. The Applicant is not able to rely on the international adviser registration exemption in section 8.26 of NI 31-103 to continue to provide such services to the Affiliated Companies because the advice provided by the Applicant to the Affiliated Companies on securities of Canadian issuers is not incidental to the advice it is providing on a foreign security, as investments in securities of Canadian issuers are part of the investment objectives of the Affiliated Companies.

9. There is no requirement for employees of a corporation to be registered as advisers under the Act if the employees provide investment advice and portfolio management services to their corporate employers with respect to the portfolio assets of such corporate employers. The Affiliated Companies do not currently employ individuals to provide investment advice and portfolio management services with respect to their portfolio assets, but rather the Affiliated Companies have outsourced this function to the Applicant, an affiliate of the Affiliated Companies. The Insurance Companies are permitted to outsource this function under federal insurance company legislation in Canada.

10. The portfolio assets of the Affiliated Companies managed by the Applicant are owned by each of the respective Affiliated Companies. There are no external stakeholders (such as, for example, holders of variable annuity contracts or segregated funds/separate accounts for policyholders) that have any direct or indirect interest in the performance of such portfolios. Accordingly, there are no stakeholders in Ontario or elsewhere other than the Affiliated Companies and their direct and indirect owner, Munich Re, that will be directly affected by the results of the investment advice and portfolio management services provided by the Applicant and, as such, it would not be prejudicial to the public interest to grant the relief requested by the Applicant.

11. Subsection 74(1) of the Act provides that a ruling may be made by the Commission that a person or company is not subject to section 25 of the Act, subject to such terms and conditions as the Commission considers necessary, where the Commission is satisfied that to do so would not be prejudicial to the public interest.

AND UPON the Commission being satisfied that to do so would not be prejudicial to the public interest;

IT IS RULED, pursuant to subsection 74(1) of the Act, that the Applicant is exempt from the adviser registration requirements of subsection 25(3) of the Act in respect of it acting as an adviser to its affiliates in Ontario, provided that:

1. the Applicant provides investment advice and portfolio management services in Ontario only to its affiliates that:

(a) are licensed or otherwise duly permitted or authorized to carry on business as an insurance company in Canada or a branch of a foreign insurance company in Canada, or

(b) are holding companies that have as their principal business activity to hold securities of one or more affiliates that are each licensed or otherwise duly permitted or authorized to carry on business as an insurance company in Canada; and

2. with respect to any particular affiliate, the investment advice and portfolio management services provided in Ontario are provided only as long as that affiliate remains:

(a) an "affiliate" of the Applicant as defined in the Act, and

(b) a "permitted client" as defined in NI 31-103.

December 14, 2012

"Edward P. Kerwin"
Commissioner
Ontario Securities Commission
 
"Vern Krishna"
Commissioner
Ontario Securities Commission