0706023 Informal Interpretation

BY OVERNIGHT COURIER

Mr. James Ferkingstad

PremergerNotification Office
Federal Trade Commission Room 303

600 Pennsylvania Avenue, N.W.
Washington, D.C. 20580

Re: Categorization of Contract Loans For Purposesof Section 802.4

Dear Mr. Ferkingstad:

I am writingthis letter to confirm oral advice you provided to (redacted in a telephone conversationearlier today regarding the applicability to the following transaction of thenotification requirements under the Hart-Scott-Rodino AntitrustImprovement Act of 1976 (the "Act") and the Federal TradeCommission's implementing regulations (the "Rules").

CompanyA and Company B are mutual insurance companies, each of which meets the size ofthe parties jurisdictional requirements under the Act. CompanyA and Company B are contemplating entering into a transactionwhereby Company A will merge into Company B.

Inorder to determine whether Section 802.4 of the Rules applies to thistransaction, the parties will need to determine the fairmarket value of the assets of Company B. In order to do so, we need to knowwhether contract loans (described below) are included in or excluded from thedefinition of assets set forth in Section 801.21.

Contract loansare policy loans made by a mutual insurer to its policyholders, secured by thecash value credited to the policyholder (most whole life policies permit thepolicyholder to borrow against the cash value accumulated in the policy atfavorable interest rates). Thus, contract loans are essentiallysecured debt, very similar to bonds and other assets identified in Section 7A(c)(2)of the Act and excluded from the determination of the assetsacquired under Rule 801.21. Therefore, after our discussion, you confirmedthat contract loans would be excluded from the definition of assets in Section 801.21.

Please contact me as soon as possible ifthe analysis set forth herein does not accurately reflect the informal adviceyou provided in our telephone conversation. I understand that you will writeyour comments on this letter and that it will subsequently be publiclyavailable through requests under the Freedom of Information Act.Thank you for your assistance with this matter.