John Marshall Harlan II

“ However, the net premium guarantee is, because of this conversion system, also a guarantee that a certain amount of fixed-amount payment life annuity will be available at maturity.
After maturity the policyholder has no further interest in the 'Flexible Fund.' He has either received the value of his interest in cash, or converted to a fixed-payment annuity in which case his interest has been transferred from the 'Flexible Fund' to the general reserves of the company, and mingled, on equal terms per dollar of cash value, with the interests of holders of conventional deferred annuities. ”

“ United undertakes to invest the 'Flexible Fund' with the object of producing capital gains as well as an interest return, and the major part of the fund is invested in common stocks. The purchasers, at all times before maturity, is entitled to his proportionate share of the total fund and may withdraw all or part of this interest. The purchaser is also entitled to an alternative cash value measured by a percentage of his net premiums which gradually increases from 50% of that sum in the first year to 100% after 10 years. ”

“ In considering VALIC to have turned solely on the absence of any substantial investment risk-taking on the part of the insurer there, we think that the Court of Appeals in the present case viewed that decision too narrowly. ”

“ Given VALIC, we hold that for the purposes of the Securities Act these contracts are also to be considered nonexempt securities and cannot be offered to the public without conformity to the registration requirements of § 5. ”