<PAGE> 1
File Nos.33-
811-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES
ACT OF 1933 /X/
Pre-Effective Amendment No. / /
Post-Effective Amendment No. / /
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT
COMPANY ACT OF 1940 /X/
Amendment No.
(Check appropriate box or boxes)
VARIABLE ANNUITY ACCOUNT TWO-T
(Exact Name of Registrant)
Anchor National Life Insurance Company
(Name of Depositor)
1 SunAmerica Center
Los Angeles, California 90067-6022
(Address of Depositor's Principal Offices) (Zip Code)
Depositor's Telephone Number, including Area Code: (310) 772-6000
Susan L. Harris, Esq.
Anchor National Life Insurance Company
1 SunAmerica Center
Los Angeles, California 90067-6022
(Name and Address of Agent for Service)
<TABLE>
<CAPTION>
Title and Amount
of Securities Amount of
Being Registered Registration Fee
- ---------------- ----------------
<S> <C> <C>
Flexible Payment Pursuant to Rule 24f-2, the $500.00
Deferred Annuity Registrant has filed an election
Contracts to register an indefinite
number of securities under the
Securities Act of 1933
</TABLE>
Approximate date of commencement of proposed public offering: As soon as
practicable after the effective date of this registration.
The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that the Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
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VARIABLE ANNUITY ACCOUNT TWO-T
Cross Reference Sheet
PART A - PROSPECTUS
-------------------
<TABLE>
<CAPTION>
Item Number in Form N-4 Caption
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<S> <C>
1. Cover Page.................................. Cover Page
2. Definitions................................. Definitions
3. Synopsis.................................... Fee Tables; Examples
4. Condensed Financial Information............. Condensed Financial
Information-Accumulation
Unit Values
5. General Description of Registrant,
Depositor and Portfolio Companies........... Description of the
Company, the Separate
Account and the General
Account; Separate Account
Investments; Additional
Information About the
Company
6. Deductions.................................. Contract Charges
7. General Description of
Variable Annuity Contracts.................. Description of the
Contracts; Annuity
Period; Purchases,
Withdrawals and
Contract Value
8. Annuity Period.............................. Annuity Period
9. Death Benefit............................... Description of the
Contracts; Annuity Period
10. Purchases and Contract Value................ Purchases, Withdrawals
and Contract Value
11. Redemptions................................. Purchases, Withdrawals
and Contract Value
12. Taxes....................................... Taxes
13. Legal Proceedings........................... Legal Proceedings
14. Table of Contents of Statement
of Additional Information................... Additional Information
About the Separate
Account
</TABLE>
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PART B - STATEMENT OF ADDITIONAL INFORMATION
Certain information required in part B of the Registration Statement
has been included within the prospectus forming part of this Registration
Statement; the following cross-references suffixed with a "P" are made by
reference to the captions in the Prospectus.
<TABLE>
<CAPTION>
Item Number in Form N-4 Caption
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<S> <C>
15. Cover Page.................................. Cover Page
16. Table of Contents........................... Table of Contents
17. General Information and History............. Description of the
Company, the Separate
Account and the General
Account(P); Separate
Account Investments(P);
Additional Information
About the Company(P)
18. Services.................................... Contract Charges(P);
Custodian(P); Financial
Statements
19. Purchase of Securities Being Offered........ Purchases, Withdrawals
and Contract Value(P)
20. Underwriters................................ Purchases, Withdrawals
and Contract Value(P);
Distribution of Contracts
21. Calculation of Performance Data............. Performance Data
22. Annuity Payments............................ Annuity Period(P);
Annuity Unit Values;
Annuity Payments
23. Financial Statements........................ Depositor: Financial
Statements(P);
Registrant: Financial
Statements
</TABLE>
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VISTA ADVANTAGE ADVISOR
FLEXIBLE PAYMENT GROUP DEFERRED
ANNUITY CONTRACTS
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ISSUED BY
ANCHOR NATIONAL LIFE INSURANCE COMPANY
IN CONNECTION WITH
VARIABLE ANNUITY ACCOUNT TWO-T
CORRESPONDENCE ACCOMPANIED ALL OTHER CORRESPONDENCE,
BY PAYMENTS ANNUITY SERVICE CENTER:
P.O. BOX 100330 P.O. BOX 54299
PASADENA, CALIFORNIA 91189-0001 LOS ANGELES, CALIFORNIA 90054-0299
TELEPHONE NUMBER: (800) 90-VISTA
The Contracts offered by this prospectus provide for accumulation of
Contract Values and payment of annuity benefits on a fixed and/or variable
basis. The Contracts are available for both Qualified and Nonqualified Plans
(See "Taxes," page 31).
Purchase Payments under the Contracts may be allocated among the Portfolios
of the Separate Account, and/or to one or more of the Fixed Account options
funded through the Company's General Account. Each of the six Portfolios of the
Separate Account described in this prospectus is invested solely in the shares
of one of the following currently available Underlying Funds of Mutual Fund
Variable Annuity Trust:
- International Equity - Asset Allocation
- Capital Growth - U.S. Treasury Income
- Growth and Income - Money Market
Additional Underlying Funds may be made available in the future.
The Fixed Account options pay fixed rates of interest declared by the
Company for specified Guarantee Periods from the dates amounts are allocated to
the Fixed Account. As of the date of this prospectus, one, three, five, seven
and ten year options were available in most states. Please contact the Company
or the financial representative from whom this prospectus was obtained for
information as to currently available guarantee options. Such declared rates
will vary from time to time but will not be less than 3% per annum, and, once
established for a particular allocation, will not change during the course of
the Guarantee Period. However, withdrawals, transfers or annuitizations from the
three, five, seven and ten year Fixed Account options prior to the end of the
applicable Guarantee Period(s) will generally result in the imposition of a
Market Value Adjustment (See page 17).
This prospectus concisely sets forth the information a prospective investor
ought to know before investing. PLEASE READ THIS PROSPECTUS CAREFULLY AND RETAIN
IT FOR YOUR FUTURE REFERENCE. Participants bear the complete investment risk for
all Purchase Payments allocated to the Separate Account. With respect to
allocations to the Fixed Account, Participants also bear the risk that amounts
prematurely withdrawn, transferred or annuitized from, the General Account prior
to the end of their respective Guarantee Periods could result in the Participant
receiving less than Purchase Payments so allocated.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION, NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
THE CONTRACTS OFFERED BY THIS PROSPECTUS INVOLVE RISK, INCLUDING LOSS OF
PRINCIPAL, AND ARE NOT A DEPOSIT OR OBLIGATION OF, OR GUARANTEED OR ENDORSED BY,
ANY BANK AND ARE NOT FEDERALLY INSURED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER AGENCY.
THE CONTRACTS OFFERED BY THIS PROSPECTUS ARE NOT AVAILABLE IN ALL STATES.
This Prospectus is dated , 1995.
<PAGE> 5
ADDITIONAL INFORMATION:
The Company has filed registration statements (the "Registration
Statements") with the Securities and Exchange Commission ("Commission") under
the Securities Act of 1933, as amended, relating to the Contracts offered by
this prospectus. This prospectus has been filed as a part of the Registration
Statements and does not contain all of the information set forth in the
Registration Statements and exhibits thereto, and reference is hereby made to
the Registration Statements and exhibits for further information relating to the
Company, the Separate Account, and the Contracts. The Company is subject to the
informational requirements of the Securities Exchange Act of 1934, as amended,
and in accordance therewith files reports and other information with the
Commission. Such reports and other information filed by the Company can be
inspected and copied, and copies can be obtained at the public reference
facilities of the Commission at Room 1024, 450 Fifth Street, N.W., Washington,
D.C. 20549, or at the regional offices in Chicago and New York. The addresses of
these regional offices are as follows: 500 West Madison Street, Chicago,
Illinois 60661, and 7 World Trade Center, 13th Floor, New York, New York 10048.
Copies of such material also can be obtained by mail from the Public Reference
Section of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549,
upon payment of the fees prescribed by the rules and regulations of the
Commission at prescribed rates.
A Statement of Additional Information about the variable portion of the
Contracts has been filed with the Commission, as part of the Registration
Statements, and is available without charge upon written or oral request to the
Company at its Annuity Service Center at the address and telephone number given
on the prior page. The Table of Contents of the Statement of Additional
Information dated , 1995, appears on page 51 of this prospectus.
2
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
ITEM PAGE
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<S> <C>
DEFINITIONS.......................................................................... 4
SUMMARY.............................................................................. 7
FEE TABLES........................................................................... 10
EXAMPLES............................................................................. 11
CONDENSED FINANCIAL INFORMATION -- ACCUMULATION UNIT VALUES.......................... 12
PERFORMANCE DATA..................................................................... 12
DESCRIPTION OF THE COMPANY, THE SEPARATE ACCOUNT AND THE GENERAL ACCOUNT............. 13
Company......................................................................... 13
Separate Account................................................................ 13
General Account................................................................. 14
SEPARATE ACCOUNT INVESTMENTS......................................................... 15
Underlying Funds................................................................ 15
Voting Rights................................................................... 16
Substitution of Securities...................................................... 16
FIXED ACCOUNT OPTIONS................................................................ 17
Allocations..................................................................... 17
Renewals........................................................................ 17
Market Value Adjustment......................................................... 17
CONTRACT CHARGES..................................................................... 18
Mortality and Expense Risk Charge............................................... 18
Transfer Fee.................................................................... 19
Distribution Expense Charge..................................................... 19
Premium Taxes................................................................... 19
Deduction for Separate Account Income Taxes..................................... 19
Other Expenses.................................................................. 19
Reduction of Charges for Sales to Certain Groups................................ 20
DESCRIPTION OF THE CONTRACTS......................................................... 20
Summary......................................................................... 20
Participant..................................................................... 20
Annuitant....................................................................... 20
Modification of the Contract.................................................... 20
Assignment...................................................................... 21
Death Benefit................................................................... 21
Beneficiary..................................................................... 21
PURCHASES, WITHDRAWALS AND CONTRACT VALUE............................................ 22
Minimum Purchase Payment........................................................ 22
Automatic Payment Plan........................................................ 22
Automatic Dollar Cost Averaging Program....................................... 22
Asset Allocation Rebalancing Program.......................................... 22
Principal Advantage Program................................................... 23
Participant's Account........................................................... 23
Allocation of Purchase Payments................................................. 23
Transfer During Accumulation Period............................................. 24
Separate Account Accumulation Unit Value........................................ 24
Fixed Account Accumulation Value................................................ 25
Distribution of Contracts....................................................... 25
Withdrawals (Redemptions)....................................................... 25
Systematic Withdrawal Program................................................. 26
ERISA Plans................................................................... 26
Deferment of Fixed Account Withdrawal Payments................................ 26
Minimum Contract Value.......................................................... 27
ANNUITY PERIOD....................................................................... 27
Annuity Date.................................................................... 27
Deferment of Payments......................................................... 27
Payments to Participant....................................................... 27
Allocation of Annuity Payments.................................................. 27
Annuity Options................................................................. 27
Other Options................................................................... 29
Transfer During Annuity Period.................................................. 29
Death Benefit During Annuity Period............................................. 29
</TABLE>
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<TABLE>
<CAPTION>
ITEM PAGE
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<S> <C>
Annuity Payments................................................................ 29
Initial Monthly Annuity Payment............................................... 29
Subsequent Monthly Payments................................................... 30
Annuity Unit Value.............................................................. 30
Net Investment Factor......................................................... 30
ADMINISTRATION....................................................................... 31
TAXES................................................................................ 31
General......................................................................... 31
Withholding Tax on Distributions................................................ 32
Diversification -- Separate Account Investments................................. 32
Multiple Contracts.............................................................. 33
Tax Treatment of Assignments.................................................... 33
Qualified Plans................................................................. 33
Tax Treatment of Withdrawals.................................................... 34
Qualified Plans............................................................... 34
Nonqualified Plans............................................................ 35
ADDITIONAL INFORMATION ABOUT THE COMPANY............................................. 36
Selected Consolidated Financial Information..................................... 36
Management's Discussion and Analysis of Financial Condition and Results of
Operations..................................................................... 37
Properties...................................................................... 47
Directors and Executive Officers................................................ 48
Executive Compensation.......................................................... 49
Security Ownership of Certain Beneficial Owners and Management.................. 49
STATE REGULATION..................................................................... 49
CUSTODIAN............................................................................ 50
LEGAL PROCEEDINGS.................................................................... 50
REGISTRATION STATEMENTS.............................................................. 51
INDEPENDENT ACCOUNTANTS.............................................................. 51
ADDITIONAL INFORMATION ABOUT THE SEPARATE ACCOUNT.................................... 51
FINANCIAL STATEMENTS................................................................. 51
APPENDIX A -- THE MARKET VALUE ADJUSTMENT............................................ A-1
</TABLE>
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DEFINITIONS
- --------------------------------------------------------------------------------
The following terms, as used in this prospectus, have the indicated
meanings:
ACCUMULATION PERIOD -- The period between the Certificate Date and the Annuity
Date; the build-up phase under the Contract.
ACCUMULATION UNIT -- A unit of measurement which the Company uses to calculate
Contract Value under the variable portion of the Contracts during the
Accumulation Period.
ANNUITY SERVICE CENTER -- Its address and phone number are: P.O. Box 54299, Los
Angeles, California 90054-0299; (800) 90-VISTA. Correspondence accompanying a
payment should be directed to P.O. Box 100330, Pasadena, California 91189-0001.
The Company will notify Contractholders and Participants of any change in
address or telephone number.
ANNUITANT -- The natural person on whose life the annuity benefits under a
Certificate are based.
ANNUITIZATION -- The process by which a Participant converts from the
Accumulation Period to the Annuity Period. Upon Annuitization, the Certificate
is converted from the build-up phase to the phase during which the Participant
or other payee(s) receive periodic annuity payments.
ANNUITY DATE -- The date on which annuity payments are to begin.
ANNUITY PERIOD -- The period starting on the Annuity Date.
ANNUITY UNIT -- A unit of measurement which the Company uses to calculate the
amount of Variable Annuity payments.
BENEFICIARY(IES) -- The person(s) designated to receive any benefits under a
Certificate upon the death of the Annuitant or the Participant.
4
<PAGE> 8
CERTIFICATE -- A document that describes and evidences a Participant's rights
under a group Contract.
CERTIFICATE DATE -- The date a Certificate is issued.
CODE -- The Internal Revenue Code of 1986, as amended.
COMPANY -- Anchor National Life Insurance Company, a California corporation.
CONTRACT(S) -- The Flexible Payment Group Deferred Annuity Contracts offered by
this prospectus.
CONTRACT VALUE -- The value under a Contract of a Participant's Account, equal
to the sum of the values of the Participant's interest in the Fixed Account and
the Separate Account.
CONTRACT YEAR -- A year starting from the Certificate Date in one calendar year
and ending on the Certificate Date in the succeeding calendar year.
CONTRACTHOLDER -- The person or entity to whom a group Contract has been issued
on behalf of Participants in a particular group.
CONTRIBUTION YEAR -- With respect to a given Purchase Payment, a year starting
from the date of the Purchase Payment in one calendar year and ending on the day
before the anniversary of such date in the succeeding calendar years. The
Contribution Year in which a Purchase Payment is made is "Contribution Year 0";
subsequent Contribution Years are successively numbered beginning with
Contribution Year 1.
CURRENT INTEREST RATE -- The interest rate as declared from time to time by the
Company to be in effect for allocations to the Fixed Account for a specified
Guarantee Period. It is equal to the sum of the subsequent Guarantee Rate and
the excess interest rate, if any, declared by the Company for such allocation.
The subsequent Guarantee Rate will not be less than 3% per annum.
DUE PROOF OF DEATH -- (1) A certified copy of a death certificate; or (2) a
certified copy of a decree of a court of competent jurisdiction as to the
finding of death; or (3) a written statement by a medical doctor who attended
the deceased at the time of death; or (4) any other proof satisfactory to the
Company.
FIXED ACCOUNT -- Contract Values allocated to the Company's General Account
under one or more of the Fixed Account options under the Contract.
FIXED ANNUITY -- A series of payments that are fixed in amount and made during
the Annuity Period to a payee under a Certificate.
GENERAL ACCOUNT -- The Company's general investment account which contains all
the assets of the Company, with the exception of the Separate Account and other
segregated asset accounts.
GUARANTEE AMOUNT -- The accumulated value of that portion of a Participant's
Account allocated to the Fixed Account for a Guarantee Period.
GUARANTEE PERIOD -- A period during which an allocation to the Fixed Account
will earn interest at the Current Interest Rate that was in effect for that
period when the allocation was made.
GUARANTEE RATE -- The interest rate in effect for a particular allocation to the
Fixed Account for a specified Guarantee Period.
LATEST ANNUITY DATE -- The first day of the month following the 85th birthday of
the Annuitant. In the case of Contracts issued in connection with Qualified
Plans, the Code generally requires that a minimum distribution be taken by April
1 of the calendar year following the calendar year in which the Participant
attains age 70 1/2. Accordingly, the Company may require a Participant in a
Qualified Plan to annuitize prior to such date unless the Participant
demonstrates that the minimum distribution is otherwise being made.
5
<PAGE> 9
MARKET VALUE ADJUSTMENT -- An adjustment applied to amounts withdrawn,
transferred or annuitized from the three, five, seven and ten year Fixed Account
options prior to the end of the applicable Guarantee Period(s).
NONQUALIFIED PLAN -- A retirement plan which does not receive favorable tax
treatment under Sections 401, 403(b), 408 or 457 of the Internal Revenue Code.
OWNER -- The person(s) having the privileges of ownership defined in the
Contracts. Except to the extent restricted by the retirement plan pursuant to
which the Contract is issued, the Participant will be the Owner of the
Certificate.
PARTICIPANT -- The person entitled to benefits under a Contract as evidenced by
a Certificate issued to the Participant.
PARTICIPANT'S ACCOUNT -- An accounting entity maintained by the Company
indicating a Participant's Contract Value under a Certificate.
PORTFOLIO -- A subdivision of the Separate Account invested wholly in shares of
one of the investment series of the Trust.
PURCHASE PAYMENTS -- Amounts paid to the Company for the Contract by or on
behalf of a Participant.
QUALIFIED PLAN -- A retirement plan which receives favorable tax treatment under
Sections 401, 403(b), 408 or 457 of the Internal Revenue Code.
SEPARATE ACCOUNT -- A segregated investment account of the Company entitled
"Variable Annuity Account Two-T."
TRUST -- Mutual Fund Variable Annuity Trust, an open-end management investment
company.
UNDERLYING FUND(S) -- The underlying series of the Trust in which the Portfolios
invest.
VALUATION DATE -- Each day the New York Stock Exchange is open for business.
VALUATION PERIOD -- The period commencing at the close of normal trading on the
New York Stock Exchange ("NYSE") (currently 4:00 p.m. Eastern time) on each
Valuation Date and ending at the close of normal trading on the NYSE on the next
succeeding Valuation Date.
VARIABLE ANNUITY -- A series of payments made during the Annuity Period to a
payee under a Certificate which vary in amount in accordance with the investment
experience of the Portfolios to which Contract Values have been allocated.
WITHDRAWAL VALUE -- Contract Value, minus any premium tax payable, and plus or
minus any applicable Market Value Adjustment.
6
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SUMMARY
- --------------------------------------------------------------------------------
This prospectus describes the uses and objectives of the Contracts, their
costs, and the rights and privileges of the Participant and Contractholder, as
applicable. It also contains information about the Company, the Fixed Account,
the Separate Account and its Portfolios, and the Underlying Funds in which the
Portfolios invest. We urge you to read it carefully and retain it and the
prospectus for the Trust for future reference. (The prospectus for the Trust is
attached to and follows this prospectus).
WHAT IS THE CONTRACT?
The Contract offered is a tax deferred annuity which provides fixed
benefits, variable benefits or a combination of both. A group Contract is issued
to the Contractholder covering all Participants in the group. Each Participant
receives a Certificate which evidences his or her participation under the
Contract. For the purpose of determining benefits under the Contract, a
Participant's Account is established for each Participant. The Owner is the
person entitled to the rights and privileges of ownership under a Certificate.
Except to the extent limited by the retirement plan pursuant to which the
Contract was issued, the Participant is the Owner. The Contract described in
this prospectus is not available in certain states and a Flexible Payment
Individual Modified Guaranteed and Variable Deferred Annuity Contract
("Individual Contract") may be available instead. The Individual Contract is
substantially similar to the Contract except that the Individual Contract is
issued directly to the Owner, rather than to a Contractholder for the benefit of
a Participant. Subject to this difference, the information contained in this
prospectus is applicable to the Individual Contract.
Individuals wishing to purchase a Certificate must complete an application
and provide an initial Purchase Payment which will be sent to the Company at the
P.O. Box indicated for Purchase Payments on the cover page of this prospectus or
in such other manner as deemed acceptable to the Company. The minimum and
maximum of Purchase Payments vary depending upon the type of Contract purchased.
(See "Minimum Purchase Payment," page 22).
WHAT IS THE DIFFERENCE BETWEEN A VARIABLE ANNUITY AND A FIXED ANNUITY?
The Contract has appropriate provisions relating to variable and fixed
accumulation values and variable and fixed annuity payments. A Variable Annuity
and a Fixed Annuity have certain similarities. Both provide that Purchase
Payments, less certain deductions, will be accumulated prior to the Annuity
Date. After the Annuity Date, annuity payments will be made to a designated
payee (normally, the Participant), for the life of the Annuitant or a period
certain or a combination thereof. The Company assumes mortality and expense
risks under the Contracts, for which it receives certain compensation.
The most significant difference between a Variable Annuity and a Fixed
Annuity is that under a Variable Annuity, all investment risk before and after
the Annuity Date is assumed by the Participant or other payee; the amounts of
the annuity payments vary with the investment performance of the Portfolios of
the Separate Account selected by the Participant. Under a Fixed Annuity, in
contrast, the investment risk after the Annuity Date is assumed by the Company
and the amounts of the annuity payments do not vary. In the case of amounts
allocated to the Fixed Account prior to the Annuity Date, the Participant bears
the risks (1) that the Guarantee Rate to be credited on amounts allocated to the
Fixed Account may not exceed the minimum guaranteed rate of 3% for any Guarantee
Period, and (2) that amounts withdrawn, transferred or annuitized from the
three, five, seven and ten year Fixed Account options prior to the end of their
respective Guarantee Periods could result in the Participant's receiving less
than the Purchase Payments so allocated (See "Fixed Account Options -- Market
Value Adjustment," page 17).
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HOW MAY PURCHASE PAYMENTS BE ALLOCATED?
Purchase Payments for the Contracts may be allocated pursuant to
instructions in the application to one or more Portfolios of the Separate
Account, and/or to the Company's General Account under one or more of the Fixed
Account options under the Contracts. The Separate Account invests in shares of
the following Underlying Funds (see "Separate Account Investments," page 15):
- - INTERNATIONAL EQUITY
- - CAPITAL GROWTH
- - GROWTH AND INCOME
- - ASSET ALLOCATION
- - U.S. TREASURY INCOME
- - MONEY MARKET
Purchase Payments allocated to Fixed Account option(s) will earn interest
at the then Current Interest Rate(s) for the selected Guarantee Period(s). (See
"Fixed Account Options," page 17).
Prior to the Annuity Date, transfers may be made among the Portfolios
and/or the Fixed Account options. Fifteen transfers per Contract Year are
permitted before a transfer fee will be assessed. A Market Value Adjustment may
also apply, in the case of a transfer from a Fixed Account option. (See
"Purchases, Withdrawals and Contract Value -- Transfer During Accumulation
Period," page 24).
MAY WITHDRAWALS BE MADE BEFORE ANNUITIZATION?
Except as explained below, Contract Value may be withdrawn at any time
during the Accumulation Period. Contracts in connection with Qualified Plans may
be subject to withdrawal restrictions imposed by the Plan. In addition to
potential losses due to investment risks, a penalty tax and income tax may
apply. Withdrawals from the Fixed Account other than at the end of the
applicable Guarantee Periods are generally subject to a Market Value Adjustment.
(See page 17). Certain Owners of Nonqualified Plan Contracts and Contracts
issued in connection with Individual Retirement Annuities ("IRAs") may choose to
withdraw amounts pursuant to a systematic withdrawal program. (See "Purchases,
Withdrawals and Contract Value -- Withdrawals (Redemptions) -- Systematic
Withdrawal Program," page 26.) Withdrawals are taxable and a 10% federal tax
penalty may apply to withdrawals before age 59 1/2.
Participants should consult their own tax counsel or other tax adviser
regarding any withdrawals or distributions.
CAN I EXAMINE THE CONTRACT?
The Contractholder (or Participant) may return the Contract (or
Certificate, respectively) to the Company within 10 days (or longer period if
required by state law) after it is received by delivering or mailing it to the
Company's Annuity Service Center. If the Contract or Certificate is returned to
the Company, it will be terminated and, unless otherwise required by state law,
the Company will pay the Contractholder or Participant an amount equal to the
Contract Value represented by the Contract (or Certificate, respectively) on the
date it is received by the Company. The Contract Value may be more or less than
the Purchase Payments made, thus, the investment risk is borne by the
Participant. Since state laws differ as to the consequences of returning a
Contract or Certificate, purchasers should refer to the Contracts or
Certificates which they receive for information about their circumstances.
WHAT ARE THE CHARGES AND DEDUCTIONS UNDER A CONTRACT?
A mortality and expense risk charge is assessed daily against the assets of
each Portfolio at an annual rate of 0.80%. A distribution expense charge is
assessed daily against the assets of each Portfolio at an annual rate of 0.15%.
The Contract permits up to 15 free transfers each Contract Year, after which
point a $25 transfer fee ($10 in Texas and Pennsylvania) is applicable to each
subsequent transfer.
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DOES THE CONTRACT PAY ANY DEATH BENEFITS?
A Death Benefit is provided in the event of the death of the Participant
during the Accumulation Period. The Death Benefit is equal to the Contract Value
at the end of the Valuation Period during which Due Proof of Death and an
election of the type of payment to the Beneficiary is received by the Company.
(See "Description of the Contracts -- Death Benefit," page 21.)
WHAT ARE THE AVAILABLE ANNUITY OPTIONS UNDER THE CONTRACT?
There are five available annuity options under the Contract. They include
an annuity for life, a joint and survivor annuity, a joint and survivor life
annuity with 120 monthly payments guaranteed, a life annuity with 120 or 240
monthly payments guaranteed and monthly payments for a specified number of
years. The Annuity Date may not be deferred beyond an Owner's 85th birthday. If
a Contractholder does not elect otherwise, monthly annuity payments generally
will be made under the fourth option to provide a life annuity with 120 monthly
payments certain. (See "Annuity Period -- Annuity Options," page 27.)
DOES THE OWNER HAVE ANY VOTING RIGHTS UNDER THE CONTRACT?
Owners will have the right to vote on matters affecting the Underlying
Funds to the extent that proxies are solicited by the Trust. If the Owner does
not vote, the Company will vote such interests in the same proportion as it
votes shares for which it has received instructions. (See "Separate Account
Investments -- Voting Rights," page 16.)
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FEE TABLES
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OWNER TRANSACTION EXPENSE
<TABLE>
<S> <C>
TRANSFER FEE............................................................................................ $25*
(applies solely to transfers in excess of fifteen in a Contract Year)
</TABLE>
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* $10 in Pennsylvania and Texas.
The Owner Transaction Expense applies to the Contract Value allocated to the
Fixed Account, as well as the Separate Account.
- --------------------------------------------------------------------------------
ANNUAL SEPARATE ACCOUNT EXPENSES
(AS A PERCENTAGE OF DAILY NET ASSET VALUE)
<TABLE>
<S> <C>
MORTALITY RISK CHARGE.................................................................................. 0.55%
EXPENSE RISK CHARGE.................................................................................... 0.25%
DISTRIBUTION EXPENSE CHARGE............................................................................ 0.15%
----
TOTAL EXPENSE CHARGE............................................................................. 0.95%
====
</TABLE>
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ANNUAL TRUST EXPENSES*
(AS A PERCENTAGE OF AVERAGE NET ASSETS FOR THE PERIOD
MARCH 1, 1995 (INCEPTION DATE) TO AUGUST 31, 1995):
<TABLE>
<CAPTION>
TOTAL ANNUAL
ADVISORY FEE ADMINISTRATION FEE OTHER EXPENSES EXPENSES
------------ ------------------ -------------- ------------
<S> <C> <C> <C> <C>
International Equity................................ .80% .20 .10 1.10%
Capital Growth...................................... .60% .20 .10 .90%
Growth and Income................................... .60% .20 .10 .90%
Asset Allocation.................................... .55% .20 .10 .85%
U.S. Treasury Income................................ .50% .20 .10 .80%
Money Market........................................ .25% .20 .10 .55%
</TABLE>
- ---------------
*During the period for which fund expenses are reported, the investment adviser
waived a portion of fees and assumed a portion of expenses for the Portfolios.
If all fees and expenses had been incurred by the Portfolios, the ratio of
expenses to average net assets for each Portfolio would have been as follows:
International Equity 2.90%; Capital Growth 1.80%; Growth and Income 1.80%;
Asset Allocation 1.65%; U.S. Treasury Income 1.55%; and Money Market 1.21%.
10
<PAGE> 14
- --------------------------------------------------------------------------------
EXAMPLES
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
The example below shows the expenses you would pay at the end of one
or three years on a $1,000 investment, assuming a 5% annual return
on assets. The information applies if, at the end of the applicable
time period, the contract is surrendered or not surrendered.
1 Year 3 Years
International Equity $21 $64
Capital Growth $19 $58
Growth and Income $19 $58
Asset Allocation $18 $57
U.S. Treasury Income $18 $55
Money Market $15 $47
</TABLE>
- ---------------
1. The purpose of the foregoing table and examples is to assist an investor in
understanding the various costs and expenses that he or she will bear
directly or indirectly by investing in the Separate Account. The Owner
Transaction Expense at the beginning of the table is applicable to Contract
Value allocated to the Fixed Account as well as to the Separate Account.
However, the balance of the fee tables, and the Examples, apply only to
investments in the Separate Account. The table reflects expenses of the
Separate Account as well as the Underlying Funds. For additional information
see "Contract Charges," beginning on Page 18 of this prospectus; see also the
sections relating to management of the Underlying Funds in their respective
prospectuses. The examples do not illustrate the tax consequences of
surrendering a Contract.
2. The examples assume that there were no transactions which would result in the
imposition of the transfer fee. The amount of the transfer fee is $25 ($10 in
Pennsylvania and Texas), except that the first 15 transfers per Contract Year
are not subject to a fee. (See "Transfer Fee," Page 19). Premium taxes are
not reflected. (See "Premium Taxes," Page 19). Transfers from the Fixed
Account may be subject to a Market Value Adjustment even if they are not
subject to a transfer fee.
3. NEITHER THE FEE TABLES NOR THE EXAMPLES ARE REPRESENTATIONS OF PAST OR FUTURE
EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
11
<PAGE> 15
- --------------------------------------------------------------------------------
CONDENSED FINANCIAL INFORMATION
ACCUMULATION UNIT VALUES
- --------------------------------------------------------------------------------
AS OF THE DATE OF THIS PROSPECTUS, THE SALE OF CONTRACTS HAD NOT COMMENCED, AND
THE PORTFOLIOS HAD NO ASSETS. THEREFORE, NO CONDENSED FINANCIAL INFORMATION WITH
RESPECT TO THE SEPARATE ACCOUNT IS PRESENTED IN THE PROSPECTUS.
- --------------------------------------------------------------------------------
PERFORMANCE DATA
- --------------------------------------------------------------------------------
From time to time the Separate Account may advertise the Money Market
Portfolio's "yield" and "effective yield." Both yield figures are based on
historical earnings and are not intended to indicate future performance. The
"yield" of the Money Market Portfolio refers to the net income generated for a
Contract funded by an investment in the Portfolio (which invests in shares of
the Money Market Portfolio of the Trust) over a seven-day period (which period
will be stated in the advertisement). This income is then "annualized." That is,
the amount of income generated by the investment during that week is assumed to
be generated each week over a 52-week period and is shown as a percentage of the
investment. The "effective yield" is calculated similarly but, when annualized,
the income earned by an investment in the Portfolio is assumed to be reinvested
at the end of each seven-day period. The "effective yield" will be slightly
higher than the "yield" because of the compounding effect of this assumed
reinvestment. Neither the yield nor the effective yield takes into consideration
the effect of any capital changes that might have occurred during the seven-day
period, nor do they reflect the impact of premium taxes. The impact of other
recurring charges on both yield figures is, however, reflected in them to the
same extent it would affect the yield (or effective yield) for a Contract of
average size.
In addition, the Separate Account may advertise "total return" data for its
other Portfolios. Like the yield figures described above, total return figures
are based on historical data and are not intended to indicate future
performance. The "total return" is a computed rate of return that, when
compounded annually over a stated period of time and applied to a hypothetical
initial investment in a Portfolio made at the beginning of the period, will
produce the same Contract Value at the end of the period that the hypothetical
investment would have produced over the same period (assuming a complete
redemption of the Contract at the end of the period). Recurring Contract charges
are reflected in the total return figures in the same manner as they are
reflected in the yield data for Contracts funded through the Money Market
Portfolio.
The Separate Account may also advertise an annualized 30-day (or one month)
yield figure for Portfolios other than the Money Market Portfolio. These yield
figures are based upon the actual performance of the Portfolio over a 30-day (or
one month) period ending on a date specified in the advertisement. Like the
total return data described above, the 30-day (or one month) yield data will
reflect the effect of all recurring Contract charges (but will not reflect any
premium taxes). The yield figure is derived from net investment gain (or loss)
over the period expressed as a fraction of the investment's value at the end of
the period.
For a more complete description of Contract charges, see "Contract
Charges," beginning on page 18. More detailed information on the computation of
advertised performance data for the Separate Account is contained in the
Statement of Additional Information.
12
<PAGE> 16
- --------------------------------------------------------------------------------
DESCRIPTION OF THE COMPANY, THE SEPARATE ACCOUNT
AND THE GENERAL ACCOUNT
- --------------------------------------------------------------------------------
COMPANY
The Company is a stock life insurance company organized under the laws of
the state of California in April 1965. Its legal domicile and principal business
address is 1 SunAmerica Center, Los Angeles, California 90067-6022. The Company
is a wholly-owned subsidiary of SunAmerica Life Insurance Company, an Arizona
corporation, which is wholly-owned by SunAmerica Inc.
The Company and its affiliates, SunAmerica Life Insurance Company, First
SunAmerica Life Insurance Company, SunAmerica Asset Management Corp. and
Resources Trust Company, offer a full line of financial services, including
fixed and variable annuities, mutual funds and trust administration services. As
of June 30, 1995 the Company had approximately $7.1 billion in assets while
SunAmerica Inc., the Company's ultimate parent, together with its subsidiaries,
held approximately $27.0 billion of assets, consisting of over $16.2 billion of
assets owned, approximately $2.1 billion of assets managed in mutual funds and
private accounts, and approximately $8.7 billion under custody in retirement
trust accounts.
The Company may from time to time publish in advertisements, sales
literature and reports to Owners, the ratings and other information assigned to
it by one or more independent rating organizations such as A.M. Best Company
("A.M. Best"), Moody's Investors Service, Inc. ("Moody's"). Standard & Poor's
Insurance Rating Services ("Standard & Poor's"), and Duff & Phelps. A.M. Best's
and Moody's ratings reflect their current opinion on the relative financial
strength and operating performance of an insurance company in comparison to the
norms of the life/health insurance industry. Standard & Poor's and Duff & Phelps
provide ratings which measure the claims-paying ability of insurance companies.
These ratings are opinions of an operating insurance company's financial
capacity to meet the obligations of its insurance policies in accordance with
their terms. Claims-paying ability ratings do not refer to an insurer's ability
to meet non-policy obligations (i.e., debt/commercial paper). These ratings do
not apply to the Separate Account. However, the contractual obligations under
the Contracts are general corporate obligations of the Company.
The Company is admitted to conduct life insurance and annuity business in
the District of Columbia and in all states except New York. It intends to market
the Contract in most of the jurisdictions in which it is admitted to conduct
annuity business. The Contracts offered by this prospectus are issued by the
Company and will be funded in the Separate Account as well as the Company's
General Account.
For more detailed information about the Company, see "Additional
Information About the Company," page 36.
SEPARATE ACCOUNT
Variable Annuity Account Two-T was originally established by the Company on
April 2, 1995, pursuant to the provisions of California law, as a segregated
asset account of the Company. The Separate Account meets the definition of a
"separate account" under the federal securities laws and is registered with the
Securities and Exchange Commission as a unit investment trust under the
Investment Company Act of 1940. This registration does not involve supervision
of the management of the Separate Account or the Company by the Securities and
Exchange Commission.
The assets of the Separate Account are the property of the Company.
However, the assets of the Separate Account, equal to its reserves and other
contract liabilities, are not chargeable with liabilities arising out of any
other business the Company may conduct.
Income, gains, and losses, whether or not realized, from assets allocated
to the Separate Account are credited to or charged against the Separate Account
without regard to other income, gains, or losses of the Company.
13
<PAGE> 17
The Separate Account is divided into Portfolios, with the assets of each
Portfolio invested in the shares of one of the Underlying Funds. The Company
does not guarantee the investment performance of the Separate Account, its
Portfolios or the Underlying Funds. Values allocated to the Separate Account and
the amount of Variable Annuity payments will vary with the values of shares of
the Underlying Funds, and are also reduced by Contract charges.
The basic objective of a Variable Annuity contract is to provide Variable
Annuity payments which will be to some degree responsive to changes in the
economic environment, including inflationary forces and changes in rates of
return available from various types of investments. The Contract is designed to
seek to accomplish this objective by providing that Variable Annuity payments
will reflect the investment performance of the Separate Account with respect to
amounts allocated to it both before and after the Annuity Date. Since the
Separate Account is always fully invested in shares of the Underlying Funds, its
investment performance reflects the investment performance of those entities.
The values of such shares held by the Separate Account fluctuate and are subject
to the risks of changing economic conditions as well as the risk inherent in the
ability of the Underlying Funds' managements to make necessary changes in their
portfolios to anticipate changes in economic conditions. Therefore, the
Participant bears the entire investment risk that the basic objectives of the
Contract may not be realized, and that the adverse effects of inflation may not
be lessened. There can be no assurance that the aggregate amount of Variable
Annuity payments will equal or exceed the Purchase Payments made with respect to
a particular Participant's Account for the reasons described above, or because
of the premature death of an Annuitant.
Another important feature of the Contract related to its basic objective is
the Company's promise that the dollar amount of Variable Annuity payments made
during the lifetime of the Annuitant will not be adversely affected by the
actual mortality experience of the Company or by the actual expenses incurred by
the Company in excess of expense deductions provided for in the Contract
(although the Company does not guarantee the amounts of the Variable Annuity
payments).
GENERAL ACCOUNT
The General Account is made up of all of the general assets of the Company
other than those allocated to the Separate Account or any other segregated asset
account of the Company. A Purchase Payment may be allocated to one or more
Guarantee Periods available in connection with the General Account, as elected
by the Participant at the time the Purchase Payment is made. In addition, all or
part of the Participant's Contract Value may be transferred to Guarantee Periods
available under the Contract as described under "Purchases, Withdrawals and
Contract Value -- Transfer During Accumulation Period," page 24, and "Annuity
Period -- Transfer During Annuity Period," page 29. Assets supporting amounts
allocated to Guarantee Periods become part of the Company's General Account
assets and are available to fund the claims of all classes of customers of the
Company, as well as all classes of its creditors. Accordingly, all of the
Company's assets held in the General Account will be available to fund the
Company's obligations under the Contracts as well as such other claims.
The Company will invest the assets of the General Account in the manner
chosen by the Company and allowed by applicable state laws regarding the nature
and quality of investments that may be made by life insurance companies and the
percentage of their assets that may be committed to any particular type of
investment. In general, these laws permit investments, within specified limits
and subject to certain qualifications, in federal, state and municipal
obligations, corporate bonds, preferred and common stocks, real estate
mortgages, real estate and certain other investments.
14
<PAGE> 18
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT INVESTMENTS
- --------------------------------------------------------------------------------
UNDERLYING FUNDS
Each of the Portfolios of the Separate Account invests in the shares of one
of the following Underlying Funds, which are investment series of Mutual Fund
Variable Annuity Trust, an open-end management investment company registered
under the Investment Company Act of 1940:
* INTERNATIONAL EQUITY
* CAPITAL GROWTH
* GROWTH AND INCOME
* ASSET ALLOCATION
* U.S. TREASURY INCOME
* MONEY MARKET
The Chase Manhattan Bank, N.A. ("Chase" or the "Adviser") is the investment
adviser, administrator and custodian for each of the Underlying Funds. Its
headquarters are at One Chase Manhattan Plaza, New York, New York 10081. As
investment adviser to the Underlying Funds, Chase makes investment decisions
subject to such policies as the Board of Trustees of the Trust may determine. As
administrator of the Underlying Funds, Chase provides certain services including
coordinating relationships with independent contractors and agents; preparing
for signature by officers and filing of certain documents; preparing financial
statements; arranging for the maintenance of books and records; and providing
office facilities. Certain of these services have been delegated to Vista
Broker-Dealer Services, Inc. ("VBDS"), 125 West 55th Street, New York, New York
10019, which serves as sub-administrator to the Underlying Funds. As custodian
for the Underlying Funds, Chase's responsibilities include safeguarding and
controlling the Underlying Funds' cash and securities, handling the receipt and
delivery of securities, determining income and collecting interest on
investments, maintaining books of original entry and other required books and
accounts, and calculating daily net asset values.
The Underlying Funds and their investment objectives are as follows:
INTERNATIONAL EQUITY PORTFOLIO seeks to provide a total return on assets
from long-term growth of capital and from income principally through a broad
portfolio of marketable equity securities of established foreign companies
organized in countries other than the United States and companies participating
in foreign economies with prospects for growth.
CAPITAL GROWTH PORTFOLIO seeks to provide long-term capital growth
primarily through diversified holdings (i.e., at least 80% of its assets under
normal circumstances) in common stocks. The Portfolio will invest all of its
assets in stocks of issuers (including foreign issuers) with small to medium
capitalizations. The Adviser intends to utilize both quantitative and
fundamental research to identify undervalued stocks with a catalyst for positive
change. Dividend income, if any, is a consideration incidental to the
Portfolio's investment objective of growth of capital. This investment policy
involves the risks that the issues identified by the Adviser will not appreciate
or appreciate as significantly as projected.
GROWTH AND INCOME PORTFOLIO seeks to provide long-term capital appreciation
and to provide dividend income primarily through a broad portfolio (i.e., at
least 80% of its assets under normal circumstances) of common stocks. The
Portfolio will invest its assets in stocks of issuers (including foreign
issuers) ranging from small to medium to large capitalizations. For the most
part, the Adviser will pursue a "contrary opinion" investment approach,
selecting common stocks that are currently out of favor with investors in the
stock market. These securities are usually characterized by a relatively low
price/earnings ratio (using normalized earnings), a low ratio of market price to
book value, or underlying asset values that the Adviser believes are not fully
reflected in the current market price. The Adviser believes that the risk
involved in this policy will be moderated somewhat by the anticipated dividend
returns on the stocks to be held by the Portfolio.
ASSET ALLOCATION PORTFOLIO seeks to provide maximum total return through a
combination of long-term growth of capital and current income by investing in a
diversified portfolio of equity and debt securities, including common stocks,
convertible securities and government and corporate fixed-income obligations.
Under normal market conditions, between 35%-70% of the Portfolio's total assets
will be invested in common stocks and other equity investments and at least
15
<PAGE> 19
25% of the Portfolio's assets will be invested in fixed-income senior
securities, defined for this purpose to include non-convertible corporate debt
securities and preferred stock, and government obligations. The Adviser
considers both the opportunity for gain and the risk of loss in making
investments, and may alter the relative percentages of assets invested in equity
and fixed income securities from time to time, depending on the judgment of the
Adviser as to general market and economic conditions, trends and yields and
interest rates and changes in fiscal and monetary policies.
U.S. TREASURY INCOME PORTFOLIO seeks to provide monthly dividends as well
as to protect the value of an investor's investment (i.e., to preserve
principal) by investing at least 65% of its assets in debt obligations that are
backed by the "full faith and credit" of the U.S. government as well as by using
futures contracts on fixed income securities or indexes of fixed income
securities and options on such futures contracts for the purpose of protecting
(i.e., "hedging") the value of its portfolio. Neither the United States nor any
of its agencies insures or guarantees the market value of shares of this
Portfolio.
MONEY MARKET PORTFOLIO seeks to provide maximum current income consistent
with preservation of capital and maintenance of liquidity through investments in
U.S. dollar denominated commercial paper, obligations of foreign governments,
obligations guaranteed by U.S. banks, and securities issued by the U.S.
government or its agencies.
DETAILED INFORMATION ABOUT THE UNDERLYING FUNDS IS CONTAINED IN THE
ACCOMPANYING CURRENT PROSPECTUS OF THE TRUST. AN INVESTOR SHOULD CAREFULLY
REVIEW THAT PROSPECTUS BEFORE ALLOCATING AMOUNTS TO BE INVESTED IN THE
PORTFOLIOS OF THE SEPARATE ACCOUNT.
There is no assurance that the investment objective of any of the
Underlying Funds will be met. Participants bear the complete investment risk for
Purchase Payments allocated to a Portfolio. Contract Values will fluctuate in
accordance with the investment performance of the Portfolio(s) to which Purchase
Payments are allocated, and in accordance with the imposition of the fees and
charges assessed under the Contracts. Shares of the Underlying Funds are, and
will be, issued and redeemed only in connection with investments in, and
payments under, the Contracts.
VOTING RIGHTS
To the extent required by applicable law, the Company will vote the shares
of the Underlying Funds held in the Separate Account at meetings of the
shareholders of the Trust in accordance with instructions received from persons
having the voting interest in the corresponding Portfolios. The Company will
vote shares for which it has not received instructions in the same proportion as
it votes shares for which it has received instructions. The Trust does not hold
regular meetings of shareholders.
The number of shares which a person has a right to vote will be determined
as of a date to be chosen by the Trust not more than 60 days prior to the
meeting of the Underlying Fund's shareholders. Voting instructions will be
solicited by written communication in advance of such meeting. Except as may be
limited by the terms of the retirement plan pursuant to which the Contract was
issued, the person having such voting rights will be the Participant before the
Annuity Date; thereafter the payee entitled to receive payments under the
Certificate.
SUBSTITUTION OF SECURITIES
If the shares of any of the Underlying Funds should no longer be available
for investment by the Separate Account or if, in the judgment of the Company's
Board of Directors, further investment in the shares of an Underlying Fund is no
longer appropriate in view of the purposes of the Contract, the Company may
substitute shares of another mutual fund (or series thereof) for Underlying Fund
shares already purchased and/or to be purchased in the future by Purchase
Payments under the Contract. No such substitution of securities may take place
without prior approval of the Commission and under such requirements as the
Commission may impose.
16
<PAGE> 20
- --------------------------------------------------------------------------------
FIXED ACCOUNT OPTIONS
- --------------------------------------------------------------------------------
ALLOCATIONS
Purchase Payments may also be allocated, and Contract Values in the
Separate Account transferred, to one or more of the fixed accumulation options
available through the Company's General Account. Amounts thus applied will earn
interest for one or more of the available Guarantee Periods selected by the
Owner, at Guarantee Rates based on the Current Interest Rates set by the Company
for such Guarantee Periods in effect at the time the amounts are thus applied.
Current Interest Rates may change from time to time due to changes in market
conditions or other factors. However, the Guarantee Rate in effect at the time
one of these options is selected will not change for the remainder of the
Guarantee Period. THE COMPANY'S OBLIGATION TO PAY INTEREST AT THE GUARANTEE RATE
IS NOT AFFECTED BY THE PERFORMANCE OF THE COMPANY'S GENERAL ACCOUNT INVESTMENTS.
Guarantee Periods are currently available for periods of one, three, five,
seven and ten years; not all options are available in all states. An Owner may
elect to allocate Purchase Payments to one or more of those Guarantee Periods.
Each such allocation (to the extent not withdrawn, transferred or annuitized
prior to the end of the Guarantee Period), will earn interest, credited daily,
at the annual effective Guarantee Rate established for the Guarantee Period at
the time the allocation is made. The Guarantee Rate is based on the Current
Interest Rate in effect at the time the allocation is made. The Current Interest
Rate applicable to renewals for new Guarantee Periods of amounts already
allocated to the Fixed Account, or to transfers from the Separate Account to the
Fixed Account may differ from the Current Interest Rates applicable to Purchase
Payments. The Current Interest Rates are set at the sole discretion of the
Company. OWNERS BEAR THE RISK THAT CURRENT INTEREST RATES AVAILABLE AT FUTURE
TIMES MAY BE MORE OR LESS THAN THOSE CURRENTLY OR INITIALLY AVAILABLE. THEY ALSO
BEAR THE RISK THAT SUCH RATES MAY NOT EXCEED THE GUARANTEED MINIMUM RATE OF 3%.
RENEWALS
Within 30 days after the end of a Guarantee Period, amounts accumulated
during that Guarantee Period may be reallocated to the Fixed Account for a new
Guarantee Period of the same or of a different duration. If the new Guarantee
Period is of the same duration, the amounts will receive the Current Interest
Rate in effect for that duration as of the last day of the previous Guarantee
Period and the new Guarantee Period will begin the next following business day.
If the new Guarantee Period is of a different duration and the election is
received after the expiration of the Guarantee Period, the amounts will receive
the Current Interest Rate described in the previous sentence until such time as
the election is received (at which time interest will be credited at the Current
Interest Rate then in effect for the new selected Guarantee Period). In that
case, the new Guarantee Period will begin on the day that the reallocation is
made. Also, during such 30-day period, those amounts may be withdrawn,
transferred or annuitized without application of the Market Value Adjustment.
(See below.)
At the end of a Guarantee Period, the Company will, unless the Participant
has effectively elected otherwise, assume reallocation for the same period,
unless the new period would expire after the Annuity Date (or, if none has been
selected, the Latest Annuity Date). In the latter case, the Company will choose
the longest available Guarantee Period that will not extend beyond such date. If
the renewal occurs within one year prior to that date, interest will be credited
to such Annuity Date at the then Current Interest Rate for a one-year Guarantee
Period.
MARKET VALUE ADJUSTMENT
If Contract Value is withdrawn, transferred or, prior to the Annuity Date,
annuitized from the three, five, seven or ten year Fixed Account options prior
to the expiration of the Guarantee Period (other than withdrawals for the
purpose of paying the Death Benefit upon the death of the Participant,
withdrawals from the one year Fixed Account option under the Automatic Dollar
Cost Averaging Program or Asset Allocation Rebalancing Program, or withdrawals
made to pay Contract
17
<PAGE> 21
fees or charges), the amounts thus withdrawn, transferred or annuitized are
subject to a Market Value Adjustment ("MVA"). The MVA reflects the impact that
changing interest rates have on the value of money invested at a fixed interest
rate, such as a Guarantee Rate. The MVA may be either positive or negative, and
is computed by multiplying the amount withdrawn, transferred or annuitized by
the following factor:
[(1 + I)/(1 + J + 0.005)]N/12 -1
where
I is the Guarantee Rate in effect;
J is the Current Interest Rate available for a period equal to the number
of years remaining in the Guarantee Period at the time of withdrawal,
transfer or annuitization (fractional years are rounded up to the next
full year); and
N is the number of full months remaining in the Guarantee Period at the
time the withdrawal, transfer or annuitization request is processed.
In general, whether the MVA will operate to increase or decrease the
Contract Value upon withdrawal, transfer or annuitization is determined by
comparing the Guarantee Rate in effect for that allocation to the Current
Interest Rate (as of the date of the transaction) that would apply for a
Guarantee Period equal to the number of full or fractional years remaining in
the Guarantee Period as of that date. (For purposes of determining the MVA, if
the Company does not offer a Guarantee Period of that duration, the applicable
Current Interest Rate will be determined by linear interpolation between Current
Interest Rates for the nearest two Guarantee Periods that are available). If the
Current Interest Rate thus determined plus one-half of one percent is greater
than the Guarantee Rate, the MVA will be negative and Contract Value will be
decreased. Similarly, if the Current Interest Rate plus one-half of one percent
is less than the Guarantee Rate, Contract Value will be increased. If the
Current Interest Rate is exactly one-half of one percent less than the Guarantee
Rate, the MVA will be zero and Contract Value will not be affected by the MVA.
The impact of the MVA is more significant the greater the time remaining in
the Guarantee Period at the time of withdrawal, transfer or annuitization. If
the MVA is negative, it will be assessed first against any remaining value
allocated to the Fixed Account under the affected option; any remaining
unsatisfied MVA charge will be applied against the proceeds of the withdrawal,
transfer or annuitization. If the MVA is positive, it will be credited to the
amount withdrawn, transferred or annuitized. Some examples of how the MVA is
computed and its impact on Contract Value appear in Appendix A.
That portion of the Contracts relating to allocations to the one year Fixed
Account option is not registered under the Securities Act of 1933 (the "Act")
and is therefore not subject to the provisions of the Act. The Fixed Account
options, including the one year Fixed Account, are not subject to the provisions
of the Investment Company Act of 1940.
- --------------------------------------------------------------------------------
CONTRACT CHARGES
- --------------------------------------------------------------------------------
As is more fully described below, charges under the Contract offered by
this prospectus are assessed in three ways: (1) as charges against the assets of
the Separate Account for the assumption of mortality and expense risks; (2) as
charges against the assets of the Separate Account for distribution expenses;
and (3) for premium taxes, if applicable. In addition, certain deductions are
made from the assets of the Underlying Funds for investment advisory,
administrative, custodial and other fees and expenses; those fees and expenses
are described in the prospectus for the Trust.
MORTALITY AND EXPENSE RISK CHARGE
The Company deducts a Mortality and Expense Risk Charge from each Portfolio
during each Valuation Period. The aggregate Mortality and Expense Risk Charge is
equal, on an annual basis, to 0.80% of the net asset value of each Portfolio
(approximately 0.55% is for mortality risks and
18
<PAGE> 22
approximately 0.25% is for expense risks). The mortality risks assumed by the
Company arise from its contractual obligations: (1) to make annuity payments
after the Annuity Date for the life of the Annuitant(s) and (2) to provide a
death benefit prior to the Annuity Date. The Mortality and Expense Risk Charge
is assessed during both the Accumulation Period and the Annuity Period; however,
it is not applied to Contract Values allocated to the Fixed Account.
The expense risk assumed by the Company arises from its costs in
administering the Contracts and the Separate Account. The expense risk charge is
guaranteed by the Company and cannot be increased.
TRANSFER FEE
In general, a transfer fee of $25 ($10 in Pennsylvania and Texas) is
assessed on each transaction effecting transfer(s) from Portfolio(s) to other
Portfolio(s), from Portfolio(s) to the Fixed Account, from the Fixed Account to
Portfolio(s), and from one Guarantee Period to another within the Fixed Account
prior to the end of a Guarantee Period. However, the first fifteen such
transactions effecting transfer(s) in any Contract Year are permitted without
the imposition of the transfer fee, which will be assessed on the sixteenth and
each subsequent transaction within the Contract Year.
This fee will be deducted from Contract Values which remain in the
Portfolio(s) (or, where applicable, the Fixed Account) from which the transfer
was made. If such remaining Contract Value is insufficient to pay the transfer
fee, then the fee will be deducted from transferred Contract Values. The
transfer fee is at cost with no margin included for profit.
DISTRIBUTION EXPENSE CHARGE
The Company deducts a Distribution Expense Charge from each Portfolio
during each Valuation Period which is equal, on an annual basis, to 0.15% of the
net asset value of each Portfolio. This charge is designed to compensate the
Company for the cost of distributing the Contracts. The Commission considers the
Distribution Expense Charge to constitute a sales charge for purposes of the
Investment Company Act of 1940. In no event will this charge be increased. The
Distribution Expense Charge is assessed during both the Accumulation Period and
the Annuity Period; however, it is not applied to Contract Values allocated to
the Fixed Account.
PREMIUM TAXES
Premium taxes or other taxes payable to a state or other governmental
entity will be charged against the Contract Values. Some states assess premium
taxes at the time Purchase Payments are made; others assess premium taxes at the
time annuity payments begin. The Company currently intends to deduct premium
taxes at the time of surrender or withdrawal, upon death of the Participant or
upon annuitization; however, it reserves the right to deduct any premium taxes
when incurred. Premium taxes generally range from 0% to 3.5%.
DEDUCTION FOR SEPARATE ACCOUNT INCOME TAXES
While the Company is not currently maintaining a provision for taxes, the
Company has reserved the right to establish such a provision for taxes in the
future if it determines, in its sole discretion, that it will incur a tax as a
result of the operation of the Separate Account. The Company will deduct for any
taxes incurred by it as a result of the operation of the Separate Account
whether or not there was a provision for taxes and whether or not it was
sufficient. (See "Taxes," page 31.)
OTHER EXPENSES
The charges and expenses applicable to the various Underlying Funds are
borne indirectly by Participants having Contract Values allocated to the
Portfolios that invest in the respective Underlying Funds. For a summary of
current estimates of those charges and expenses, see "Fee Tables," page 10. For
more detailed information about those charges and expenses, please refer to the
prospectus for the Trust.
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REDUCTION OF CHARGES FOR SALES TO CERTAIN GROUPS
The Company may reduce the sales and administrative charges on Contracts
sold to certain groups of individuals, or to a trustee, employer or other entity
representing a group, where it is expected that such sales will result in
savings of sales or administrative expenses. The Company determines the
eligibility of groups for such reduced charges, and the amount of such
reductions for particular groups, by considering the following factors: (1) the
size of the group; (2) the total amount of Purchase Payments expected to be
received from the group; (3) the nature of the group for which the Contracts are
purchased, and the persistency expected in that group; (4) the purpose for which
the Contracts are purchased and whether that purpose makes it likely that
expenses will be reduced; and (5) any other circumstances which the Company
believes to be relevant to determining whether reduced sales or administrative
expenses may be expected. None of the reductions in charges for group sales is
contractually guaranteed. Such reductions may be withdrawn or modified by the
Company on a uniform basis. The Company's reductions in charges for group sales
will not be unfairly discriminatory to the interests of any Owners.
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DESCRIPTION OF THE CONTRACTS
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SUMMARY
The Contracts provide for the accumulation of Contract Values during the
Accumulation Period. See "Purchases, Withdrawals and Contract Value," beginning
at page 22. Upon Annuitization, benefits are payable under the Contracts in the
form of an annuity, either for the life of the Annuitant or for a fixed number
of years. (See "Annuity Period -- Annuity Options," page 27.)
PARTICIPANT
The Participant is the person normally entitled to exercise all rights of
ownership under the Contract. The Participant is also the person entitled to
receive benefits under the Contract, although the Participant may, subject to
limitations in the case of Qualified Plans, designate an alternative payee.
ANNUITANT
The Annuitant is the person on whose life annuity payments under a
Certificate depend. The Participant may change the designated Annuitant at any
time prior to the Annuity Date. In the case of a Certificate issued in
connection with a plan qualified under Section 403(b) or 408 of the Code, the
Participant is the Annuitant. The Participant may also designate a second person
on whose life, together with that of the Annuitant, annuity payments depend. In
the case of Qualified Plans, the designated second person is generally required
to be the Participant's spouse if the Participant is married. In the event an
Annuitant dies prior to the Annuity Date, the Participant must notify the
Company and designate a new Annuitant. The Participant must attest to the
Annuitant being alive before the Company will annuitize a Contract.
MODIFICATION OF THE CONTRACT
Only the Company's President, a Vice President or Secretary may approve a
change or waive any provisions of the Contract. Any change or waiver must be in
writing. No agent has the authority to change or waive the provisions of the
Contract.
The Company reserves the right to change the terms of the Contract as may
be necessary to comply with changes in applicable law.
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ASSIGNMENT
Contracts issued pursuant to Nonqualified Plans that are not subject to
Title 1 of the Employee Retirement Income Security Act of 1974 ("ERISA") may be
assigned by the Owner at any time during the lifetime of the Annuitant prior to
the Annuity Date. The Company will not be bound by any assignment until written
notice is received by the Company at its Annuity Service Center. The Company is
not responsible for the validity, tax or other legal consequences of any
assignment. An assignment will not affect any payments the Company may make or
actions it may take before it receives notice of the assignment.
If the Contract is issued pursuant to a Qualified Plan (or a Nonqualified
Plan that is subject to Title 1 of ERISA), it may not be assigned, pledged or
otherwise transferred except under such conditions as may be allowed under
applicable law.
BECAUSE AN ASSIGNMENT MAY BE A TAXABLE EVENT, CONTRACT OWNERS SHOULD
CONSULT COMPETENT TAX ADVISERS SHOULD THEY WISH TO ASSIGN THEIR CONTRACTS.
DEATH BENEFIT
If the Participant dies during the Accumulation Period, a death benefit
will be payable to the Beneficiary upon receipt by the Company of Due Proof of
Death of the Participant. The death benefit will be reduced by premium taxes
incurred by the Company, if any. Provided the Beneficiary provides a written
election to the Company within 60 days of the Company's receipt of Due Proof of
Death of the Participant, the Beneficiary may alternatively elect to (i) receive
the death benefit in a lump sum payment, (ii) receive the death benefit in the
form of one of the annuity options (over the life of the Beneficiary or over a
period not extending beyond the life expectancy of the Beneficiary), with
payments commencing within one year of the Participant's death, (iii) elect to
continue the Contract and receive the entire Contract Value (adjusted for any
applicable Market Value Adjustment) within 5 years after the Participant's
death, or (iv) if the Participant was the Beneficiary's spouse, elect to
continue the Certificate in force. If no option is selected within 60 days of
the Company's receipt of Due Proof of Death of the Participant, the Company will
pay the death benefit in a single lump sum to the Beneficiary.
The death benefit is equal to the Contract Value at the end of the
Valuation Period during which Due Proof of Death and an election of the type of
payment to the Beneficiary is received by the Company, at its Annuity Service
Center.
BENEFICIARY
The Participant may designate the Beneficiary(ies) to receive any amount
payable on death. The original Beneficiary(ies) will be named in the
application. Unless an irrevocable Beneficiary(ies) designation was previously
filed, the Participant may change the Beneficiary(ies) prior to the Annuity Date
by written request delivered to the Company at its Annuity Service Center or by
completing a Change of Beneficiary Form provided by the Company. Any change will
take effect when recorded by the Company. The Company is not liable for any
payment made or action taken before it records the change.
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PURCHASES, WITHDRAWALS AND CONTRACT VALUE
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MINIMUM PURCHASE PAYMENT
The minimum initial Purchase Payment for Contracts issued pursuant to a
Nonqualified or Qualified Plan is $75,000 and the maximum is $500,000. Minimum
subsequent Purchase Payments for either a Nonqualified Plan or Qualified Plan
may be made in amounts of $250 or more ($100 or more if made in connection with
an Automatic Payment Plan). The Company reserves the right to refuse any
Purchase Payment at any time. Generally, the Company will not issue a
Certificate under a Nonqualified Plan to a Participant who is age 85 or older or
under a Qualified Plan to a Participant who is age 70 1/2 or older.
AUTOMATIC PAYMENT PLAN
Participants utilizing automatic bank drafts through the Company's
Automatic Payment Plan may make scheduled subsequent Purchase Payments of $100
or more per month. An enrollment form for this program is available through the
Company's Annuity Service Center.
AUTOMATIC DOLLAR COST AVERAGING PROGRAM
Owners who wish to purchase units of the Portfolios over a period of time
may be able to do so through the Automatic Dollar Cost Averaging ("DCA")
Program. Under this DCA Program, the Owner may authorize the automatic transfer
of a fixed dollar amount ($100 minimum) of his or her choice at regular
intervals from a source account to one or more of the Portfolios (other than the
source account) at the unit values determined on the dates of the transfers.
Currently, all Portfolios and the one-year Fixed Account option are available as
source accounts. However, the Owner must elect to have the transfers exclusively
from one source account. The intervals between transfers may be monthly,
quarterly, semiannually or annually, at the option of the Owner. The theory of
dollar cost averaging is that, if purchases are made at fluctuating prices, this
will have the effect of reducing the aggregate average cost per unit to less
than the average of the unit prices on the same purchase dates. However,
participation in the DCA Program does not assure the Owner of a greater profit
from his or her purchases under the DCA Program; nor will it prevent or
necessarily alleviate losses in a declining market.
Another option under the DCA Program is the periodic transfer of a selected
percentage of the value of the source account to one of the Portfolios (other
than the source account). A third option is to transfer the entire Contract
Value in the source account in a stated number of transfers as selected by the
Participant. Although the various options under the DCA Program will allow
transfers to be made from the Portfolios or the one-year Fixed Account option,
the Owner must elect to have the transfers made exclusively from one of these
source accounts.
An Owner may elect to increase, decrease or change the frequency or amount
of Purchase Payments under a DCA Program. The application and any Purchase
Payments should be sent to the Company at its Annuity Service Center. The
Company reserves the right to modify, suspend and terminate the DCA Program at
any time.
ASSET ALLOCATION REBALANCING PROGRAM
Owners may participate in the Asset Allocation Rebalancing ("AAR") Program
pursuant to which Owners authorize the Company to automatically transfer their
Contract Value on a periodic basis to maintain a particular percentage
allocation among the Portfolios or the one year Fixed Account option as selected
by the Owner. The Contract Value allocated to each Portfolio will grow or
decline at different rates depending on the investment experience of the
Portfolio, and Asset Allocation Rebalancing automatically reallocates the
Contract Value in the Portfolios and the Fixed Account option to the allocation
selected by the Owner. As with dollar cost averaging, one theory behind this
type of reallocation is that it may help an Owner purchase Accumulation Units
low and sell Accumulation Units high. However, participation in AAR does not
assure the Owner of a greater profit
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from his or her purchases under the program; nor will it prevent or necessarily
alleviate losses in a declining market.
An Owner may select that rebalancing occur on a calendar quarter,
semiannual or annual basis and currently all Portfolios and the one year Fixed
Account option are the available investment options under AAR. Contract Value
reallocation will occur on the last business day before the selected period
ends. If an Owner elects to participate in AAR, the entire Contract Value must
be included in the program, except for allocations to the 3, 5, 7 and 10 year
Fixed Account options. Amounts transferred under AAR are not counted against the
15 free transfers per Contract Year or subject to any transfer charge or
negative MVA. Owners may participate in AAR by completing an Asset Allocation
Rebalancing Authorization Form or by calling the Company at its Annuity Service
Center. On the application or form, as appropriate, the Owner must select the
Portfolios or one year Fixed Account option, the percentage of Contract Value to
be allocated to each under the program, and the frequency of rebalancing. Owners
may modify their allocations or terminate participation in the program by
completing an Asset Allocation Rebalancing Form and indicating the appropriate
instructions. The Company reserves the right to modify, suspend, or terminate
AAR at any time.
PRINCIPAL ADVANTAGE PROGRAM
Owners may participate in the Principal Advantage Program. Under the
Principal Advantage Program, the Owner's Purchase Payment is divided between one
or more of the Fixed Account options and one or more of the Portfolios. While
the Owner selects the Fixed Account options and the Portfolio(s), the Principal
Advantage Program determines the portion of Purchase Payments allocated to each.
When determined in accordance with the Principal Advantage Program, the portion
allocated to the Fixed Account option(s) will be guaranteed by the Company to
grow to equal the full amount of the Purchase Payment over an established period
of time. The remaining portion of Purchase Payment is then invested in the
Portfolios, where it has the potential to achieve greater growth.
An Owner may elect to participate in the Principal Advantage Program (1) at
the time of initial purchase, by completing the instructions on the Vista
Advantage Advisor application or (2) at the time of a subsequent purchase or
reallocation of existing Contract Value, by contacting the Company or the
financial representative from whom this Prospectus was obtained. The Company
reserves the right to modify, suspend or terminate the Principal Advantage
Program at any time.
PARTICIPANT'S ACCOUNT
The Company will establish a Participant's Account for each Participant
under a Contract and will maintain the Participant's Account during the
Accumulation Period. The Contract Value of a Participant's Account for any
Valuation Period is equal to the sum of the variable accumulation value, if any,
plus the fixed accumulation value, if any, of the Participant's Account for that
Valuation Period.
ALLOCATION OF PURCHASE PAYMENTS
Purchase Payments are allocated to the Fixed Account and/or the
Portfolio(s) selected by the Participant. Participants making initial Purchase
Payments should specify their allocations on the application for a Contract. If
the application is in good order, the Company will apply the initial Purchase
Payment to the Fixed Account and/or the Portfolio(s), as selected, and credit
the Contract with Accumulation Units within two business days of receipt at the
Company's P.O. Box for correspondence accompanied by payments. The number of
Accumulation Units in a Portfolio attributable to a Purchase Payment is
determined by dividing that portion of the Purchase Payment which is allocated
to the Portfolio by that Portfolio's Accumulation Unit value as of the end of
the Valuation Period when the allocation occurs.
IF THE APPLICATION DOES NOT SPECIFY AN ALLOCATION, THE APPLICATION IS NOT
IN GOOD ORDER. If the application for a Contract or Certificate is not in good
order for this or any other reason, the Company will attempt to rectify it
within five business days of its receipt at the Company's P.O. Box for
correspondence accompanied by payments. The Company will credit the
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initial Purchase Payment within two business days after the application has been
rectified. Unless the prospective Owner consents otherwise, the application and
the initial Purchase Payment will be returned if the application cannot be put
in good order within five business days of such receipt.
Just like Participants making initial Purchase Payments, Participants
making subsequent Purchase Payments should specify how they want their payments
allocated. OTHERWISE, THE COMPANY WILL AUTOMATICALLY PROCESS THE PURCHASE
PAYMENT BASED ON THE PREVIOUS ALLOCATION.
TRANSFER DURING ACCUMULATION PERIOD
During the Accumulation Period, the Participant, or his or her designated
agent, may transfer Contract Values among Portfolios and/or the Fixed Account,
by written request or by telephone authorization unless the Participant
specifies on the Contract application that telephone transfers are not to be
accepted. The Company has in place procedures which are designed to provide
reasonable assurance that telephone authorizations are genuine, including tape
recording of telephone communications and requesting identifying information.
Accordingly, the Company and its affiliates disclaim all liability for any
claim, loss or expense resulting from any alleged error or mistake in connection
with a telephone transfer which was not properly authorized by the Participant.
However, if the Company fails to employ reasonable procedures to ensure that all
telephone transfers are properly authorized, the Company may be held liable for
such losses. The Company reserves the right to modify or discontinue at any time
and without notice the use of telephone transfers and acceptance of transfer
instructions from someone other than the Owner. Telephone calls authorizing
transfers must be completed by 4:00 p.m. Eastern time on a Valuation Date in
order to be effected at the price determined on such Date. Transfer
authorizations, whether written or telephone, which are received after 4:00 p.m.
Eastern time will be processed as of the next Valuation Date.
A transfer fee may be assessed (See "Contract Charges -- Transfer Fee,"
page 19).
This transfer privilege may be suspended, modified or terminated at any
time without notice.
The minimum partial transfer amount is $100. Also, no partial transfer may
be made if the value of the Participant's interest in the Portfolio from which a
transfer is being made (or the remaining Guarantee Amount, where applicable)
would be less than $100 after the transfer. These dollar amounts are subject to
change at the Company's option. The Company may waive the minimum partial
transfer amount in connection with preauthorized automatic transfer programs.
Both prior to and after the Annuity Date, Contract Values may be
transferred from the Separate Account to the Fixed Account. Any amounts
allocated or transferred to the Fixed Account may, however, be transferred from
the Fixed Account to the Separate Account only prior to the Annuity Date.
Transfers may be made within the Fixed Account prior to the expiration date
of one or more Guarantee Periods, by electing to have the respective Guarantee
Amount(s) applied to newly established Guarantee Periods. Such transfers are
counted against the 15 transfer allowance on free transfers. In addition, such
transfers are generally subject to a Market Value Adjustment.
SEPARATE ACCOUNT ACCUMULATION UNIT VALUE
Accumulation Unit value is determined Monday through Friday on each day
that the New York Stock Exchange is open for business.
A separate Accumulation Unit value is determined for each Portfolio. If the
Company elects or is required to assess a charge for taxes, a separate
Accumulation Unit value may be calculated for Contracts issued in connection
with Nonqualified and Qualified Plans, respectively, within each account.
The Accumulation Unit value for each Portfolio will vary with the price of
a share in the Underlying Fund and in accordance with the Mortality and Expense
Risk Charge, Distribution Expense Charge, and any provision for taxes.
Assessment of transfer fees is made separately for each Certificate. They are
effected by redemption of Accumulation Units and do not affect Accumulation Unit
value.
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The Accumulation Unit value of a Portfolio for any Valuation Period is
calculated by subtracting (2) from (1) and dividing the result by (3) where:
(1) is the total value at the end of the Valuation Period of the
assets attributable to the Accumulation Units of the Portfolio minus
liabilities;
(2) is the cumulative unpaid charge for the assumption of mortality
and expense risks and for the distribution expense; and
(3) is the number of Accumulation Units outstanding at the end of the
Valuation Period.
FIXED ACCOUNT ACCUMULATION VALUE
The accumulation value of the fixed portion of a Participant's Account, if
any, at any Valuation Date is equal to the sum of the values of all Guarantee
Amounts credited to the Participant's Account up to and including that date.
Each Guarantee Amount reflects interest accumulated to the Valuation Date at the
applicable Guarantee Rate, compounded annually.
DISTRIBUTION OF CONTRACTS
Contracts are sold by registered representatives of broker-dealers who are
licensed insurance agents of the Company, either individually or through an
incorporated insurance agency. Commissions on Purchase Payments are paid on a
persistency basis which will take into account, among other things, the length
of time Purchase Payments have been held under a Contract and Contract Values.
The persistency commission is not anticipated to exceed 1.00%, on an annual
basis, of Contract Values. All such commissions are paid by the Company.
Vista Broker-Dealer Services, Inc. ("VBDS"), located at 125 West 55th
Street, New York, New York, 10019, serves as distributor of the Contracts. VBDS
is registered as a broker-dealer under the Securities Exchange Act of 1934, as
amended, and is a member of the National Association of Securities Dealers, Inc.
VBDS is not affiliated with the Company or the Adviser to the Trust.
WITHDRAWALS (REDEMPTIONS)
Federal law places a number of constraints on withdrawals from annuity
contracts. Subject to those limitations, the Contract Value may be withdrawn at
any time during the Accumulation Period. Owners should consult their own tax
counsel or other tax advisers regarding any withdrawals. (See "Taxes -- Tax
Treatment of Withdrawals," page 34.)
Except as explained below, an Owner may redeem a Certificate for all or a
portion of its Contract Value during the Accumulation Period. A Market Value
Adjustment may be applied, in the case of redemptions from the Fixed Account,
which would affect Contract Value. (See "Fixed Account Options -- Market Value
Adjustment," page 17.)
Withdrawals and distributions from Contracts issued in connection with
certain Qualified Plans may be subject to a mandatory 20% withholding
requirement. (See "Taxes -- Withholding Tax on Distributions," page 32.)
Withdrawals of amounts attributable to contributions made pursuant to a
salary reduction agreement (in accordance with Section 403(b)(11) of the Code)
are limited to circumstances only: when the Participant attains age 59 1/2,
separates from service, dies, becomes disabled (within the meaning of Section
72(m)(7) of the Code), or in the case of hardship. Withdrawals for hardship are
restricted to the portion of the Contract Value which represents contributions
made by the Participant and does not include any investment results. These
limitations on withdrawals apply to: (1) salary reduction contributions made
after December 31, 1988; (2) income attributable to such contributions; and (3)
income attributable to amounts held as of December 31, 1988. The limitations on
withdrawals do not affect rollovers or exchanges between certain Qualified
Plans. Tax penalties may also apply. While the foregoing limitations only apply
to certain Contracts issued in connection with Sec-
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tion 403(b) Qualified Plans, all Participants should seek competent tax advice
regarding any withdrawals or distributions. (See "Taxes," beginning at page 31.)
Except in connection with a Systematic Withdrawal Program, described below,
the minimum partial withdrawal amount is $1,000, or, if less, the Participant's
entire interest in the Portfolio from which a withdrawal is requested (or the
Fixed Account, where applicable). The Participant's interest in the Portfolio
from which the withdrawal is requested (or the remaining Guarantee Amount) must
be at least $100 after the withdrawal is completed if anything is left in that
Portfolio (or Fixed Account allocation).
A written withdrawal request or Systematic Withdrawal Program enrollment
form, as the case may be, must be sent to the Company at its Annuity Service
Center. The required program form will not be in good order unless it includes
the Participant's Tax I.D. Number (e.g., Social Security Number) and provides
instructions regarding withholding of income taxes. The Company provides the
required forms.
If the request is for total withdrawal, the Certificate (or Contract), or a
Lost Certificate (or Contract) Affidavit (which may be obtained by calling the
Company at its Annuity Service Center), must be submitted as well. The
Withdrawal Value is determined on the basis of the Contract Values next computed
following receipt of a request in proper order. The Withdrawal Value will
normally be paid within seven days after the day a proper request is received by
the Company. However, the Company may suspend the right of withdrawal from the
Separate Account or delay payment for such withdrawal more than seven days: (1)
during any period when the New York Stock Exchange ("NYSE") is closed (other
than customary weekend and holiday closings); (2) when trading on the NYSE is
restricted or an emergency exists as determined by the Commission so that
disposal of the Separate Account's investments or determination of Accumulation
Unit value is not reasonably practicable; or (3) for such other periods as the
Commission, by order, may permit for protection of Owners.
SYSTEMATIC WITHDRAWAL PROGRAM
Certain Participants of Nonqualified Plan Contracts and Contracts issued in
connection with IRAs may choose to withdraw amounts pursuant to a Systematic
Withdrawal Program. Withdrawals are taxable and a 10% federal tax penalty may
apply to withdrawals before age 59 1/2. In addition, withdrawals from the Fixed
Account prior to the end of their respective Guarantee Periods are generally
subject to a Market Value Adjustment. (See "Fixed Account Options -- Market
Value Adjustment," page 17.) Participants must complete an enrollment form which
describes the program and send it to the Company at its Annuity Service Center.
Participation in the Systematic Withdrawal Program may be elected at the time
the Certificate is issued or on any date thereafter, prior to the Annuity Date.
Depending on fluctuations in the net asset value of the Portfolios, systematic
withdrawals may reduce or even exhaust Contract Value. The minimum systematic
withdrawal amount is $250 per withdrawal. The Company reserves the right to
modify, suspend or terminate the Systematic Withdrawal Program at any time.
ERISA PLANS
Spousal consent may be required when a married Participant seeks a
distribution from a Contract that has been issued in connection with a Qualified
Plan (or a Nonqualified Plan that is subject to Title 1 of ERISA). Participants
should obtain competent advice.
DEFERMENT OF FIXED ACCOUNT WITHDRAWAL PAYMENTS
In the case of withdrawals from the Fixed Account, the Company may defer
making payment for a period of up to six months (or the period permitted by
applicable state insurance law, if less) from the date the Company receives
notice of such withdrawal request. Only under highly unusual circumstances will
the Company defer a withdrawal payment from the Fixed Account for more than 7
days, and if the Company defers payment for more than 7 days, it will pay
interest of at least 3% per annum on the amount deferred. While all the
circumstances under which the Company could defer payment upon withdrawal may
not be foreseeable at this time, such circumstances could include, for example,
a
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time of unusually high surrender rate among Owners, accompanied by a radical
shift in interest rates. If the Company intends to withhold payment for more
than 7 days, it will notify affected Owners in writing.
MINIMUM CONTRACT VALUE
If the Contract Value is less than $500 and no Purchase Payments have been
made during the previous three full calendar years, the Company reserves the
right, after 60 days written notice to the Participant, to terminate the
Certificate and distribute its Withdrawal Value to the Participant. This
privilege will be exercised only if the Contract Value has been reduced to less
than $500 as a result of withdrawals, and state law permits. In no instance
shall such termination occur if the value has fallen below $500 due to either
decline in Accumulation Unit value or the imposition of fees and charges.
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ANNUITY PERIOD
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ANNUITY DATE
The Participant selects an Annuity Date (the date on which annuity payments
are to begin) at the time of application. The Annuity Date must always be the
first day of a calendar month and must be at least two years after the Issue
Date, but in any event will be no later than the Latest Annuity Date. Annuity
payments will begin no later than the Latest Annuity Date. If no Annuity Date is
selected, the Annuity Date will be the Latest Annuity Date. The Participant may
change the Annuity Date at any time at least seven days prior to the Annuity
Date then indicated on the Company's records by written notice to the Company at
its Annuity Service Center.
DEFERMENT OF PAYMENTS
The Company may defer making Fixed Annuity payments for a period of up to
six months or such lesser time as state law may permit. Interest, subject to
state law requirements, will be credited during the deferral period. For a
discussion of the circumstances under which the Company could defer these
payments, please refer to "Purchases, Withdrawals and Contract
Value -- Deferment of Fixed Account Withdrawal Payments," above.
PAYMENTS TO PARTICIPANT
The Company will make annuity payments to the Participant, unless the
Participant designates an alternate payee. Such designation must be made in
writing to the Company's Annuity Service Center and must be received more than
30 days before the Annuity Date.
ALLOCATION OF ANNUITY PAYMENTS
If all of the Contract Value on the Annuity Date is allocated to the Fixed
Account, the Annuity will be paid as a Fixed Annuity. If all of the Contract
Value on that date is allocated to the Separate Account, the Annuity will be
paid as a Variable Annuity. If the Contract Value on that date is allocated to
both the Fixed Account and the Separate Account, the Annuity will be paid as a
combination of a Fixed Annuity and a Variable Annuity to reflect the allocation
between the Portfolios and the Fixed Account. Variable Annuity payments will
reflect the investment performance of the Portfolios. The Participant(s) may, by
written notice to the Company, convert Variable Annuity payments to Fixed
Annuity payments. However, Fixed Annuity payments may not be converted to
Variable Annuity payments.
ANNUITY OPTIONS
The Participant, or any Beneficiary who is so entitled, may elect to
receive a lump sum at the end of the Accumulation Period. However, a lump sum
distribution may be deemed to be a withdrawal, and at least a portion of it may
be subject to federal income tax. (See "Taxes -- Tax Treatment of
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Withdrawals," page 34.) Alternatively, any of the annuity options listed below
may be elected. The Participant may elect an annuity option or change an annuity
option at any time prior to the Annuity Date.
If no other annuity option is elected, monthly annuity payments will be
made in accordance with annuity option 4 below, a life annuity with a 120-month
period certain (annuity option 3 in the case where payments are to be made for
the joint lives of the Annuitant and a designated second person and for the life
of the survivor). Annuity payments will be made in monthly, quarterly,
semiannual or annual installments as selected by the Participant. However, if
the amount available to apply under an annuity option is less than $5,000, and
state law permits, the Company has the right to pay the annuity in one lump sum.
In addition, if the first payment provided would be less than $50, and state law
permits, the Company shall have the right to require the frequency of payments
be at quarterly, semiannual or annual intervals so as to result in an initial
payment of at least $50.
NO WITHDRAWALS OF CONTRACT VALUE ARE PERMITTED DURING THE ANNUITY PERIOD
FOR ANY ANNUITY OPTION IN WHICH PAYMENTS ARE BASED ON A PERSON'S LIFE.
The following annuity options are generally available under the Contract.
Each is available in the form of either a Fixed Annuity or a Variable Annuity
(or a combination of both Fixed and Variable Annuity). However, there may be
restrictions in the retirement plan pursuant to which a Contract has been
purchased.
OPTION 1 -- LIFE INCOME
An annuity payable monthly during the lifetime of the Annuitant. Under this
option, no further payments are payable after the death of the Annuitant and
there is no provision for a death benefit payable to the Beneficiary. Therefore,
it is possible under option 1 for the payee to receive only one monthly annuity
payment under the Contract.
OPTION 2 -- JOINT AND SURVIVOR ANNUITY
An annuity payable monthly while both the Annuitant and a designated second
person are living. Upon the death of either person, the monthly income payable
will continue during the lifetime of the survivor at either the full amount
previously payable or as a percentage (either one-half or two-thirds) of the
full amount, as chosen by the Participant at the time of election of this
option.
Annuity payments terminate automatically and immediately upon the death of
the surviving person without regard to the number or total amount of payments
received.
There is no minimum number of guaranteed payments and it is possible to
have only one annuity payment if both the Annuitant and the designated second
person die before the due date of the second payment.
OPTION 3 -- JOINT AND SURVIVOR LIFE ANNUITY --
120 MONTHLY PAYMENTS GUARANTEED
This option is similar to option 2, above, but with the additional
guarantee that payments will be made for not fewer than 120 monthly periods. If
the surviving Annuitant dies before all such payments have been made, the
balance of the guaranteed number of payments will be made to the Beneficiary.
OPTION 4 -- LIFE ANNUITY WITH 120 OR 240 MONTHLY
PAYMENTS GUARANTEED
An annuity payable monthly during the lifetime of the Annuitant, with the
guarantee that if, at the death of the Annuitant, payments have been made for
fewer than the guaranteed 120 or 240 monthly periods, as elected by the Owner,
the balance of the guaranteed number of payments will be made to the
Beneficiary.
28
<PAGE> 32
OPTION 5 -- INCOME FOR A SPECIFIED PERIOD
Under this option, a payee can elect an annuity payable monthly for any
period of years from 5 to 30. This election must be made for full 12 month
periods. In the event the payee dies before the specified number of payments has
been made, the Beneficiary may elect to continue receiving the scheduled
payments or may alternatively elect to receive the discounted present value of
any remaining guaranteed payments as a lump sum.
The value of an Annuity Unit, regardless of the option chosen, takes into
account the Mortality and Expense Risk Charge. (See "Contract
Charges -- Mortality and Expense Risk Charge," page 18.) Since option 5, Income
for a Specified Period, does not contain an element of mortality risk, the payee
is not getting the benefit of the Mortality Risk Charge if option 5 is selected
on a variable basis.
OTHER OPTIONS
At the sole discretion of the Company, other annuity options may be made
available. However, to the extent that Contract charges would otherwise apply to
a withdrawal or termination, the identical Contract charges may apply with
respect to any additional options.
With respect to Contracts issued under Sections 401, 403(b) or 408 of the
Internal Revenue Code, any payments will be made only to the Participant and/or
the Participant's spouse.
TRANSFER DURING ANNUITY PERIOD
During the Annuity Period, the Owner may transfer the Contract Value to the
Fixed Account and/or among Portfolios. Such transfers are subject to the same
limitations and conditions as are prescribed for transfers during the
Accumulation Period, page 24, except that, in addition, no transfers may be made
from the Fixed Account to the Separate Account during the Annuity Period.
Transfers from the Separate Account to the Fixed Account are effected by
crediting the Fixed Account with the actuarial present value of future annuity
payments to be made, assuming that all such payments would be equal to a
subsequent Variable Annuity payment as computed on the effective date of the
transfer, in the manner described below under "Annuity Payments."
DEATH BENEFIT DURING ANNUITY PERIOD
If the Annuitant dies after the Annuity Date while the Contract is in
force, the death proceeds, if any, will depend upon the annuity option in effect
at the time of the Annuitant's death. If the Annuitant dies after the Annuity
Date and before the entire interest in the Contract has been distributed, the
remaining interest, if any, as provided for in the option elected, will be
distributed at least as rapidly as under the method of distribution in effect at
the Annuitant's death.
ANNUITY PAYMENTS
INITIAL MONTHLY ANNUITY PAYMENT
The initial annuity payment is determined by taking the Contract Value,
less any premium tax, less any Market Value Adjustment that may apply in the
case of a premature annuitization of certain Guarantee Amounts, and then
applying it to the annuity table specified in the Contract (or, if more
favorable to the payee, the annuity tables in effect as of the Annuity Date for
similar immediate annuity contracts issued by the Company). Those tables are
based on a set amount per $1,000 of proceeds applied. The appropriate rate must
be determined by the sex (except where, as in the case of certain Qualified
Plans and other employer-sponsored retirement plans, such classification is not
permitted) and age of the Annuitant and designated second person, if any.
The dollars applied are then divided by 1,000 and the result multiplied by
the appropriate annuity factor appearing in the table to compute the amount of
the first monthly annuity payment. In the case of a Variable Annuity, that
amount is divided by the value of an Annuity Unit as of the Annuity Date to
establish the number of Annuity Units representing each Variable Annuity
payment. The number of Annuity Units determined for the first Variable Annuity
payment remains constant for the second and subsequent monthly Variable Annuity
payments, assuming that no reallocation of Contract Values is made.
29
<PAGE> 33
SUBSEQUENT MONTHLY PAYMENTS
For a Fixed Annuity, the amount of the second and each subsequent monthly
annuity payment is the same as that determined above for the first monthly
payment.
The amount of the second and each subsequent monthly Variable Annuity
payment is determined by multiplying the number of Annuity Units, as determined
in connection with the determination of the initial monthly annuity payment,
above, by the annuity unit value, below, as of the Valuation Period ending on
the Valuation Date next preceding the date on which each annuity payment is due.
ANNUITY UNIT VALUE
The value of an Annuity Unit is determined independently for each
Portfolio, but was initially set at $10.00.
The annuity tables contained in the Contract are based on a 3.5% per annum
assumed investment rate. If the actual net investment rate experienced by a
Portfolio exceeds 3.5%, Variable Annuity payments derived from allocations to
that Portfolio will increase over time. Conversely, if the actual rate is less
than 3.5%, Variable Annuity payments will decrease over time. If the net
investment rate equals 3.5%, the Variable Annuity payments will remain constant.
If a higher assumed investment rate had been used, the initial monthly payment
would be higher, but the actual net investment rate would also have to be higher
in order for annuity payments to increase (or not to decrease).
The payee receives the value of a fixed number of Annuity Units each month.
The value of a fixed number of Annuity Units will reflect the investment
performance of the Portfolios elected, and the amount of each annuity payment
will vary accordingly.
For each Portfolio, the value of an Annuity Unit for any Valuation Period
is determined by multiplying the Annuity Unit Value for the immediately
preceding Valuation Period by the Net Investment Factor for the Valuation Period
for which the Annuity Unit Value is being calculated. The result is then
multiplied by a second factor which offsets the effect of the assumed net
investment rate of 3.5% per annum which is assumed in the annuity tables
contained in the Contract. The Net Investment Factor is described below. More
detailed information on the computation of Annuity Unit Values is contained in
the Statement of Additional Information.
NET INVESTMENT FACTOR
The Net Investment Factor is an index applied to measure the net investment
performance of a Portfolio from one Valuation Date to the next. The Net
Investment Factor may be greater or less than or equal to one; therefore, the
value of an Annuity Unit may increase, decrease or remain the same.
The Net Investment Factor for any Portfolio for any Valuation Period is
determined by dividing (a) by (b) and then subtracting (c) from the result
where:
(a) is the net result of:
(1) the net asset value of an Underlying Fund share held in the
Portfolio determined as of the Valuation Date at the end of the
Valuation Period, plus
(2) the per share amount of any dividend or other distribution
declared by the Underlying Fund if the "ex-dividend" date occurs during
the Valuation Period, plus or minus
(3) a per share credit or charge with respect to any taxes paid or
reserved for by the Company during the Valuation Period which are
determined by the Company to be attributable to the operation of the
Portfolio (no federal income taxes are applicable under present law);
(b) is the net asset value of the Underlying Fund share held in the
Portfolio determined as of the Valuation Date at the end of the preceding
Valuation Period; and
(c) is the asset charge factor determined by the Company for the
Valuation Period to reflect the charges for assuming the mortality and
expense risks and the distribution expenses.
30
<PAGE> 34
- --------------------------------------------------------------------------------
ADMINISTRATION
- --------------------------------------------------------------------------------
The Company has primary responsibility for all administration of the
Contracts and the Separate Account. The mailing address of the Company's Annuity
Service Center is P.O. Box 54299, Los Angeles, California 90054-0299, and its
telephone number is (800) 90-VISTA.
The administrative services provided include, but are not limited to:
issuance of the Contracts; maintenance of Participant records; Participant
services; calculation of unit values; and preparation of Participant reports.
Contract statements and transaction confirmations are mailed to
Participants at least quarterly. Participants should read their statements and
confirmations carefully and verify their accuracy. Questions about periodic
statements should be communicated to the Company promptly. The Company will
investigate all complaints and make any necessary adjustments retroactively,
provided that it has received notice of a potential error within 30 days after
the date of the questioned statement. If the Company has not received notice of
a potential error within this time, any adjustment shall be made as of the date
that the Annuity Service Center receives notice of the potential error.
The Company will also provide Participants with such additional periodic
and other reports, information and prospectuses as may be required by federal
securities laws.
- --------------------------------------------------------------------------------
TAXES
- --------------------------------------------------------------------------------
NOTE: THE FOLLOWING DESCRIPTION IS BASED UPON THE COMPANY'S UNDERSTANDING
OF CURRENT FEDERAL INCOME TAX LAW APPLICABLE TO ANNUITIES IN GENERAL. THE
COMPANY CANNOT PREDICT THE PROBABILITY THAT ANY CHANGES IN SUCH LAWS WILL BE
MADE. PURCHASERS ARE CAUTIONED TO SEEK COMPETENT TAX ADVICE REGARDING THE
POSSIBILITY OF SUCH CHANGES. THE COMPANY DOES NOT GUARANTEE THE TAX STATUS OF
THE CONTRACTS. PURCHASERS BEAR THE COMPLETE RISK THAT THE CONTRACTS MAY NOT BE
TREATED AS "ANNUITY CONTRACTS" UNDER FEDERAL INCOME TAX LAWS.
GENERAL
Section 72 of the Internal Revenue Code of 1986, as amended (the "Code")
governs taxation of annuities in general. A Participant is not taxed on
increases in the value of a Contract until distribution occurs, either in the
form of a non-annuity distribution or as annuity payments under the annuity
option elected. For a lump sum payment received as a total surrender (total
redemption), the recipient is taxed on the portion of the payment that exceeds
the cost basis of the Contract. For a payment received as a withdrawal (partial
redemption), federal tax liability is determined on a last-in, first-out basis,
meaning taxable income is withdrawn before the cost basis of the Contract is
withdrawn. For Contracts issued in connection with Nonqualified Plans, the cost
basis is generally the Purchase Payments, while for Contracts issued in
connection with Qualified Plans there may be no cost basis. The taxable portion
of the lump sum payment is taxed at ordinary income tax rates. Tax penalties may
also apply.
For annuity payments, the taxable portion is determined by a formula which
establishes the ratio that the cost basis of the Contract bears to the total
value of annuity payments for the term of the annuity Contract. The taxable
portion is taxed at ordinary income tax rates. Participants, Annuitants and
Beneficiaries under the Contracts should seek competent financial advice about
the tax consequences of distributions under the retirement plan under which the
Contracts are purchased.
31
<PAGE> 35
The Company is taxed as a life insurance company under the Code. For
federal income tax purposes, the Separate Account is not a separate entity from
the Company and its operations form a part of the Company.
WITHHOLDING TAX ON DISTRIBUTIONS
The Code generally requires the Company (or, in some cases, a plan
administrator) to withhold tax on the taxable portion of any distribution or
withdrawal from a Contract. For "eligible rollover distributions" from Contracts
issued under certain types of Qualified Plans, 20% of the distribution must be
withheld, unless the payee elects to have the distribution "rolled over" to
another eligible plan in a direct "trustee to trustee" transfer. This
requirement is mandatory and cannot be waived by the Participant. Withholding on
other types of distributions can be waived.
An "eligible rollover distribution" is the estimated taxable portion of any
amount received by a covered employee from a plan qualified under Section 401(a)
or 403(a) of the Code, or from a tax-sheltered annuity qualified under Section
403(b) of the Code (other than (1) annuity payments for the life (or life
expectancy) of the employee, or joint lives (or joint life expectancies) of the
employee and his or her designated beneficiary, or for a specified period of ten
years or more; and (2) distributions required to be made under the Code).
Failure to "roll over" the entire amount of an eligible rollover distribution
(including an amount equal to the 20% portion of the distribution that was
withheld) could have adverse tax consequences, including the imposition of a
penalty tax on premature withdrawals, described later in this section.
Withdrawals or distributions from a Contract other than eligible rollover
distributions are also subject to withholding on the estimated taxable portion
of the distribution, but the Participant may elect in such cases to waive the
withholding requirement. If not waived, withholding is imposed (1) for periodic
payments, at the rate that would be imposed if the payments were wages, or (2)
for other distributions, at the rate of 10%. If no withholding exemption
certificate is in effect for the payee, the rate under (1) above is computed by
treating the payee as a married individual claiming 3 withholding exemptions.
DIVERSIFICATION -- SEPARATE ACCOUNT INVESTMENTS
Section 817(h) of the Code imposes certain diversification standards on the
underlying assets of variable annuity contracts. The Code provides that a
variable annuity contract will not be treated as an annuity contract for any
period (and any subsequent period) for which the investments are not adequately
diversified, in accordance with regulations prescribed by the United States
Treasury Department ("Treasury Department"). Disqualification of the Contract as
an annuity contract would result in imposition of federal income tax to the
Participant with respect to earnings allocable to the Contract prior to the
receipt of payments under the Contract. The Code contains a safe harbor
provision which provides that annuity contracts such as the Contracts meet the
diversification requirements if, as of the close of each calendar quarter, the
underlying assets meet the diversification standards for a regulated investment
company, and no more than 55% of the total assets consist of cash, cash items,
U.S. government securities and securities of other regulated investment
companies.
The Treasury Department has issued Regulations which establish
diversification requirements for the investment portfolios underlying variable
contracts such as the Contracts. The Regulations amplify the diversification
requirements for variable contracts set forth in the Code and provide an
alternative to the safe harbor provision described above. Under the Regulations
an investment portfolio will be deemed adequately diversified if (1) no more
than 55% of the value of the total assets of the portfolio is represented by any
one investment; (2) no more than 70% of the value of the total assets of the
portfolio is represented by any two investments; (3) no more than 80% of the
value of the total assets of the portfolio is represented by any three
investments; and (4) no more than 90% of the value of the total assets of the
portfolio is represented by any four investments. For purposes of determining
whether or not the diversification standards imposed on the underlying assets of
variable
32
<PAGE> 36
contracts by Section 817(h) of the Code have been met, "each United States
government agency or instrumentality shall be treated as a separate issuer."
The Company intends that each of the Underlying Funds will be managed by
its investment adviser in such a manner as to comply with these diversification
requirements.
MULTIPLE CONTRACTS
Multiple annuity contracts which are issued within a calendar year to the
same contract owner by one company or its affiliates are treated as one annuity
contract for purposes of determining the tax consequences of any distribution.
Such treatment may result in adverse tax consequences including more rapid
taxation of the distributed amounts from such multiple contracts. The Company
believes that Congress intended to affect the purchase of multiple deferred
annuity contracts which may have been purchased to avoid withdrawal income tax
treatment. Owners should consult a tax adviser prior to purchasing more than one
annuity contract in any calendar year.
TAX TREATMENT OF ASSIGNMENTS
An assignment of a Contract may have tax consequences, and may also be
prohibited by ERISA in some circumstances. Owners should therefore consult
competent legal advisers should they wish to assign their Contracts.
QUALIFIED PLANS
The Contracts offered by this prospectus are designed to be suitable for
use under various types of Qualified Plans. Taxation of Participants in each
Qualified Plan varies with the type of plan and terms and conditions of each
specific plan. Participants, Annuitants and Beneficiaries are cautioned that
benefits under a Qualified Plan may be subject to the terms and conditions of
the plan, regardless of the terms and conditions of the contracts issued
pursuant to the plan.
Following are general descriptions of the types of Qualified Plans with
which the Contracts may be used. Such descriptions are not exhaustive and are
for general information purposes only. The tax rules regarding Qualified Plans
are very complex and will have differing applications depending on individual
facts and circumstances. Each purchaser should obtain competent tax advice prior
to purchasing a Contract or Certificate issued under a Qualified Plan.
Contracts issued pursuant to Qualified Plans include special provisions
restricting Contract provisions that may otherwise be available and described in
this Prospectus. Generally, Contracts issued pursuant to Qualified Plans are not
transferable except upon surrender or annuitization. Various penalty and excise
taxes may apply to contributions or distributions made in violation of
applicable limitations. Furthermore, certain withdrawal penalties and
restrictions may apply to surrenders from Qualified Contracts. (See "Tax
Treatment of Withdrawals -- Qualified Plans," below.)
(A) H.R. 10 PLANS
Section 401 of the Code permits self-employed individuals to establish
Qualified Plans for themselves and their employees, commonly referred to as
"H.R. 10" or "Keogh" Plans. Contributions made to the Plan for the benefit
of the employees will not be included in the gross income of the employees
until distributed from the Plan. The tax consequences to Owners may vary
depending upon the particular Plan design. However, the Code places
limitations and restrictions on all Plans on such items as: amounts of
allowable contributions; form, manner and timing of distributions; vesting
and nonforfeitability of interests; nondiscrimination in eligibility and
participation; and the tax treatment of distributions, withdrawals and
surrenders. (See "Tax Treatment of Withdrawals -- Qualified Plans," below.)
Purchasers of Contracts or Certificates for use with an H.R. 10 Plan should
obtain competent tax advice as to the tax treatment and suitability of such
an investment.
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<PAGE> 37
(B) TAX-SHELTERED ANNUITIES
Section 403(b) of the Code permits the purchase of "tax-sheltered
annuities" by public schools and certain charitable, educational and
scientific organizations described in Section 501(c)(3) of the Code. These
qualifying employers may make contributions to the Contracts for the
benefit of their employees. Such contributions are not includible in the
gross income of the employee until the employee receives distributions from
the Contract. The amount of contributions to the tax-sheltered annuity is
limited to certain maximums imposed by the Code. Furthermore, the Code sets
forth additional restrictions governing such items as transferability,
distributions, nondiscrimination and withdrawals. (See "Tax Treatment of
Withdrawals -- Qualified Plans," below.) Any employee should obtain
competent tax advice as to the tax treatment and suitability of such an
investment.
(C) INDIVIDUAL RETIREMENT ANNUITIES
Section 408(b) of the Code permits eligible individuals to contribute
to an individual retirement program known as an "Individual Retirement
Annuity" ("IRA"). Under applicable limitations, certain amounts may be
contributed to an IRA which will be deductible from the individual's gross
income. These IRAs are subject to limitations on eligibility,
contributions, transferability and distributions. (See "Tax Treatment of
Withdrawals -- Qualified Plans," below.) Sales of Contracts for use with
IRAs are subject to special requirements imposed by the Code, including the
requirement that certain informational disclosure be given to persons
desiring to establish an IRA. Purchasers of Contracts or Certificates to be
qualified as IRAs should obtain competent tax advice as to the tax
treatment and suitability of such an investment.
(D) CORPORATE PENSION AND PROFIT-SHARING PLANS
Sections 401(a) and 401(k) of the Code permit corporate employers to
establish various types of retirement plans for employees. These retirement
plans may permit the purchase of the Contracts to provide benefits under
the plan. Contributions to the plan for the benefit of employees will not
be includible in the gross income of the employee until distributed from
the plan. The tax consequences to Owners may vary depending upon the
particular plan design. However, the Code places limitations on all plans
on such items as amount of allowable contributions; form, manner and timing
of distributions; vesting and nonforfeitability of interests;
nondiscrimination in eligibility and participation; and the tax treatment
of distributions, withdrawals and surrenders. (See "Tax Treatment of
Withdrawals -- Qualified Plans," below.) Purchasers of Contracts for use
with corporate pension or profit sharing plans should obtain competent tax
advice as to the tax treatment and suitability of such an investment.
(E) DEFERRED COMPENSATION PLANS -- SECTION 457
Under Section 457 of the Code, governmental and certain other
tax-exempt employers may establish, for the benefit of their employees,
deferred compensation plans which may invest in annuity contracts. The
Code, as in the case of Qualified Plans, establishes limitations and
restrictions on eligibility, contributions and distributions. Under these
plans, contributions made for the benefit of the employees will not be
includible in the employees' gross income until distributed from the plan.
However, under a 457 plan all the plan assets shall remain solely the
property of the employer, subject only to the claims of the employer's
general creditors until such time as made available to an Owner or a
Beneficiary.
TAX TREATMENT OF WITHDRAWALS
QUALIFIED PLANS
Section 72(t) of the Code imposes a 10% penalty tax on the taxable portion
of any early distribution from qualified retirement plans, including contracts
issued and qualified under Code Sections 401 (H.R. 10 and Corporate Pension and
Profit Sharing Plans), 403(b) (Tax-Sheltered Annuities) and 408(b) (IRAs).
34
<PAGE> 38
The tax penalty will not apply to the following distributions: (1) if
distribution is made on or after the date on which the Owner or Annuitant (as
applicable) reaches age 59 1/2; (2) distributions following the death or
disability of the Owner or Annuitant (as applicable) (for this purpose
"disability" is defined in Section 72(m)(7) of the Code); (3) distributions that
are part of substantially equal periodic payments made not less frequently than
annually for the life (or life expectancy) of the Owner or Annuitant (as
applicable) or the joint lives (or joint life expectancies) of such Owner or
Annuitant (as applicable) and his or her designated beneficiary; (4)
distributions to an Owner or Annuitant (as applicable) who has separated from
service after he or she has attained age 55; (5) distributions made to the Owner
or Annuitant (as applicable) to the extent such distributions do not exceed the
amount allowable as a deduction under Code Section 213 to the Owner or Annuitant
(as applicable) for amounts paid during the taxable year for medical care; and
(6) distributions made to an alternate payee pursuant to a qualified domestic
relations order.
The exceptions stated in items (4), (5) and (6) above do not apply in the
case of an IRA.
Limitations imposed by the Code on withdrawals from tax-sheltered annuities
are described above under "Purchases, Withdrawals and Contract
Value -- Withdrawals (Redemptions)," page 25.
The taxable portion of a withdrawal or distribution from Contracts issued
under certain types of plans may, under some circumstances, be "rolled over"
into another eligible plan so as to continue to defer income tax on the taxable
portion. Effective January 1, 1993, such treatment is available for any
"eligible rollover distribution" made by certain types of plans (as described
above under "Taxes -- Withholding Tax on Distributions," page 32) that is
transferred within 60 days of receipt into a plan qualified under section 401(a)
or 403(a) of the Code, a tax-sheltered annuity, an IRA, or an individual
retirement account described in section 408(a) of the Code. Plans making such
eligible rollover distributions are also required, with some exceptions
specified in the Code, to provide for a direct "trustee to trustee" transfer of
the distribution to the transferee plan designated by the recipient.
Amounts received from IRAs may also be rolled over into other IRAs,
individual retirements accounts or certain other plans, subject to limitations
set forth in the Code.
NONQUALIFIED PLANS
Section 72 of the Code governs treatment of distributions from annuity
contracts. It provides that if the Contract Value exceeds the aggregate Purchase
Payments made, any amount withdrawn not in form of an annuity payment will be
treated as coming first from the earnings and then, only after the income
portion is exhausted, as coming from the principal. Withdrawn earnings are
includible in a taxpayer's gross income. Section 72 further provides that a 10%
penalty will apply to the income portion of any premature distribution. The
penalty is not imposed on amounts received: (1) after the taxpayer reaches
59 1/2; (2) upon the death of the Owner or Annuitant (as applicable); (3) if the
taxpayer is totally disabled; (4) in a series of substantially equal periodic
payments made for the life of the taxpayer or for the joint lives of the
taxpayer and his or her designated Beneficiary; (5) under an immediate annuity;
or (6) which are allocable to purchase payments made prior to August 14, 1982.
The above information applies to Contracts issued pursuant to Section 457
of the Code, but does not apply to other Qualified Plan Contracts. Separate tax
withdrawal penalties and restrictions apply to Qualified Plan Contracts.
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<PAGE> 39
- --------------------------------------------------------------------------------
ADDITIONAL INFORMATION ABOUT THE COMPANY
- --------------------------------------------------------------------------------
SELECTED CONSOLIDATED FINANCIAL INFORMATION (IN THOUSANDS)
The following selected consolidated financial information for Anchor
National Life Insurance Company, insofar as it relates to each of the years
1990-1994, has been derived from audited annual financial statements, including
the consolidated balance sheets at September 30, 1993 and 1994 and the related
consolidated statements of income and of cash flows for each of the three years
in the period ended September 30, 1994 and the notes thereto appearing elsewhere
herein. The information as of and for the nine months ended June 30, 1994 and
1995 has been derived from unaudited financial information which, in the opinion
of management, includes all adjustments, consisting only of normal recurring
adjustments, necessary for a fair statement of the results for the unaudited
interim periods.
This information should be read in conjunction with the Management's
Discussion and Analysis of Financial Condition and Results of Operations
beginning on page 37 and the consolidated financial statements and notes thereto
included in this prospectus beginning on page 53.
<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEARS ENDED SEPTEMBER 30, JUNE 30,
-------------------------------------------------------------- -----------------------
1990 1991 1992 1993 1994 1994 1995
---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
RESULTS OF OPERATIONS
Net investment income........... $ 28,710 $ 31,882 $ 36,499 $ 48,912 $ 58,996 $ 43,061 $ 38,710
Net realized investment
losses........................ (14,907) (12,744) (22,749) (22,247) (33,713) (26,180) (8,874)
Fee income...................... 59,002 74,735 95,482 116,443 129,583 97,226 97,713
General and administrative
expenses...................... (56,031) (58,364) (55,615) (55,142) (52,636) (38,955) (42,255)
Provision for future guaranty
fund assessments.............. -- -- -- (4,800) -- -- --
Amortization of deferred
acquisition costs............. (12,911) (19,010) (18,224) (30,825) (43,992) (31,148) (40,554)
Other income and expenses....... 11,496 14,473 10,741 11,171 9,082 7,046 4,478
---------- ---------- ---------- ---------- ---------- ---------- ----------
PRETAX INCOME................... 15,359 30,972 46,134 63,512 67,320 51,050 49,218
Income tax expense.............. (6,792) (11,847) (15,361) (21,794) (22,705) (17,640) (17,659)
---------- ---------- ---------- ---------- ---------- ---------- ----------
Income from continuing
operations.................... 8,567 19,125 30,773 41,718 44,615 33,410 31,559
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net income of subsidiaries sold
to affiliates................. 4,744 7,000 1,312 -- -- -- --
---------- ---------- ---------- ---------- ---------- ---------- ----------
INCOME BEFORE CUMULATIVE EFFECT
OF CHANGE IN ACCOUNTING FOR
INCOME TAXES.................. 13,311 26,125 32,085 41,718 44,615 33,410 31,559
Cumulative effect of change in
accounting for income taxes... -- -- -- -- (20,463) (20,463) --
---------- ---------- ---------- ---------- ---------- ---------- ----------
NET INCOME...................... $ 13,311 $ 26,125 $ 32,085 $ 41,718 $ 24,152 $ 12,947 $ 31,559
========== ========== ========== ========== ========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
AT SEPTEMBER 30, AT JUNE 30,
-------------------------------------------------------------- -----------------------
1990 1991 1992 1993 1994 1994 1995
---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
FINANCIAL POSITION
Investments..................... $2,012,805 $1,917,719 $2,126,899 $2,093,100 $1,632,072 $1,667,485 $1,804,954
Variable annuity assets......... 2,145,196 2,746,685 3,284,507 4,170,275 4,486,703 4,342,313 4,864,463
Deferred acquisition costs...... 185,628 226,192 288,264 336,677 416,289 373,970 379,113
Other assets.................... 159,330 162,855 91,588 71,337 67,062 72,324 69,803
---------- ---------- ---------- ---------- ---------- ---------- ----------
TOTAL ASSETS.................... $4,502,959 $5,053,451 $5,791,258 $6,671,389 $6,602,126 $6,456,092 $7,118,333
========== ========== ========== ========== ========== ========== ==========
Reserves for fixed annuity
contracts..................... $2,100,972 $1,957,116 $1,735,565 $1,562,136 $1,437,488 $1,437,246 $1,508,072
Variable annuity liabilities.... 2,145,196 2,746,685 3,284,507 4,170,275 4,486,703 4,342,313 4,864,463
Other reserves, payables and
accrued liabilities........... 88,522 105,694 398,045 495,740 195,846 232,667 213,776
Senior indebtedness............. 40,174 -- -- -- -- -- --
Subordinated notes payable to
Parent........................ -- -- 15,500 34,000 34,000 34,000 34,000
Deferred income taxes........... 273 16,536 35,163 38,145 64,567 60,376 60,705
Shareholder's equity............ 127,822 227,420 322,478 371,093 383,522 349,490 437,317
---------- ---------- ---------- ---------- ---------- ---------- ----------
TOTAL LIABILITIES AND
SHAREHOLDER'S EQUITY.......... $4,502,959 $5,053,451 $5,791,258 $6,671,389 $6,602,126 $6,456,092 $7,118,333
========== ========== ========== ========== ========== ========== ==========
</TABLE>
36
<PAGE> 40
- --------------------------------------------------------------------------------
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
- --------------------------------------------------------------------------------
The following is management's discussion and analysis of financial
condition and results of operations of Anchor National Life Insurance Company
(the "Company") for the three years in the period ended September 30, 1994.
RESULTS OF OPERATIONS FOR THE FISCAL YEARS 1992, 1993 AND 1994
INCOME BEFORE CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING FOR INCOME TAXES
totaled $44.6 million in 1994, compared with $41.7 million in 1993 and $32.1
million in 1992. The cumulative effect of the change in accounting for income
taxes resulting from the implementation of Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes," amounted to a nonrecurring
non-cash charge of $20.4 million in 1994. Accordingly, net income amounted to
$24.2 million in 1994.
PRETAX INCOME totaled $67.3 million in 1994, $63.5 million in 1993, and
$46.1 million in 1992. The $3.8 million improvement in 1994 primarily resulted
from increased net investment income and fee income, partially offset by
increased net realized investment losses and additional amortization of deferred
acquisition costs. In addition, 1993 results include a $4.8 million provision
for future guaranty fund assessments. The $17.4 million improvement in 1993 over
1992 primarily resulted from increased net investment income and fee income,
partially offset by an increase in amortization of deferred acquisition costs
and the provision for future guaranty fund assessments.
Net operating results in 1992 also included the segregated net income of
subsidiaries sold to affiliates which amounted to $1.3 million in 1992. During
1992, the Company sold its trust services subsidiary, Resources Trust Company,
to an affiliate for cash equal to its book value of $9.4 million. Also during
1992, the Company sold its 70.5% interest in Sun Mortgage Acceptance Corporation
to an affiliate for cash equal to its book value of $52.8 million. The
consolidated financial statements for prior years have been reclassified to
segregate the net assets and operating results of these sold subsidiaries.
NET INVESTMENT INCOME, which is the spread between the income earned on
invested assets and the interest paid on fixed annuities and other
interest-bearing liabilities, increased to $59.0 million in 1994 from $48.9
million in 1993 and $36.5 million in 1992. These amounts represent net
investment spreads of 3.78% on average invested assets (computed on a daily
basis) of $1.56 billion in 1994, 2.86% on average invested assets of $1.71
billion in 1993 and 2.00% on average invested assets of $1.83 billion in 1992.
These improvements in net investment income primarily resulted from reductions
in interest rates paid on fixed annuities.
Investment income totaled $127.8 million in 1994, $137.6 million in 1993
and $156.8 million in 1992. The declines in investment income of $9.8 million in
1994 and $19.2 million in 1993 resulted primarily from lower levels of average
invested assets. The yield on average invested assets totaled 8.20% in 1994,
8.05% in 1993 and 8.58% in 1992. The improvement in yield in 1994 primarily
resulted from a decrease in the average level of the short-term portfolio, while
the decline in yield from 1992 to 1993 was due primarily to lower prevailing
interest rates combined with lower relative average levels of high-yield
investments. These yields are computed without subtracting net realized
investment losses. If net realized investment losses were included in the
computation, the yields would be 6.03% in 1994, 6.75% in 1993 and 7.33% in 1992.
There can be no assurance that the Company will achieve similar yields in future
periods.
The Company has enhanced investment yield since 1992 through its use of
dollar roll transactions ("Dollar Rolls") whereby the proceeds from sales of
mortgage-backed securities ("MBSs") are invested in short-term securities
pending the contractual repurchase of substantially the same securities at
discounted prices in the forward market. The Company has been able to engage in
Dollar
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<PAGE> 41
Rolls due to the market demand for MBSs for formation of collateralized mortgage
obligations ("CMOs"), which was particularly high in 1993. The Company recorded
$3.7 million of enhanced yield on a weighted average volume of $253.4 million of
such transactions during 1994, compared with $5.7 million of enhanced yield on a
weighted average volume of $290.1 million during 1993, and $2.2 million of
enhanced yield on a weighted average volume of $141.1 million during 1992. The
decline in yield enhancement relative to the volume of Dollar Rolls in 1994 is
primarily due to a narrowing of market spreads on such transactions.
Total interest expense aggregated $68.8 million in 1994, $88.7 million in
1993 and $120.3 million in 1992. The average rate paid on all interest-bearing
liabilities fell to 4.56% (4.50% on fixed annuities) in 1994 from 5.29% (5.28%
on fixed annuities) in 1993 and 6.54% (6.54% on fixed annuities) in 1992. These
declines in rates were primarily due to a decline in prevailing interest rates
that began during the latter half of fiscal 1992 and continued into the first
half of fiscal 1994. This was reflected in a corresponding decline in the
average crediting rate on annuity contracts, the majority of which reprice
annually as interest rate guarantees are renewed. Interest-bearing liabilities
averaged $1.51 billion during 1994, compared with $1.68 billion during 1993 and
$1.84 billion during 1992.
NET REALIZED INVESTMENT LOSSES totaled $33.7 million in 1994, $22.2 million
in 1993 and $22.7 million in 1992, and include impairment writedowns of $14.2
million in 1994, $37.7 million in 1993 and $38.0 million in 1992. Therefore, net
losses from sales of investments totaled $19.5 million in 1994, compared with
net gains of $15.5 million in 1993 and $15.3 million in 1992.
Net losses in 1994 include $17.3 million of net losses realized on $673.6
million of sales of bonds. These bond sales include approximately $289.3 million
of sales of MBSs made primarily to acquire other MBSs that were then used in
Dollar Rolls. In addition, bond sales include $118.3 million of sales of
high-yield investments and $158.9 million of sales of certain CMOs and
asset-backed securities, which were primarily made to maximize total return.
Net gains in 1993 include $17.0 million of gains realized on $1.09 billion
of sales of bonds. These bond sales include approximately $735.5 million of
sales of MBSs made primarily to acquire other MBSs that were then used in Dollar
Rolls and $155.1 million of sales of high-yield investments.
Net gains in 1992 include $12.0 million of net gains realized on $1.32
billion of sales of bonds. These bond sales include approximately $645.9 million
of sales of MBSs made primarily to acquire other MBSs for use in Dollar Rolls
and $117.5 million of high-yield investments made primarily to improve the
overall credit quality of the portfolio.
Impairment writedowns in 1994 of $14.2 million reflect additional
provisions applied to bonds, primarily made in response to the adverse impact of
declining interest rates on certain MBSs.
Impairment writedowns in 1993 include $5.6 million of provisions applied to
mortgage loans that were restructured during 1993 and reduced to the aggregate
appraised value of the underlying real estate. Impairment writedowns in 1993
also include $30.3 million of additional provisions applied to bonds, including
$28.3 million applied to certain interest-only strips ("IOs"). IOs, a type of
MBS used as an asset-liability matching tool to hedge against rising interest
rates, are investment grade securities that give the holder the right to receive
only the interest payments on a pool of underlying mortgage loans. As would be
anticipated in a lower interest rate environment, the amortized cost of these
IOs became impaired as a result of increased prepayments of the underlying
loans. At September 30, 1994, the amortized cost, which is net of impairment
writedowns, of the IOs held by the Company was $9.6 million and their fair value
was $7.4 million.
Impairment writedowns in 1992 include $16.5 million of provisions applied
to bonds in response to increased defaults. Impairment writedowns in 1992 also
include $20.4 million of provisions applied to the Company's investment in a
real estate-related separate account which the Company liquidated on December
31, 1992.
VARIABLE ANNUITY FEES are based on the market value of assets supporting
variable annuity contracts in separate accounts. Such fees totaled $79.1 million
in 1994, $67.2 million in 1993 and
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<PAGE> 42
$57.1 million in 1992. Variable annuity fees have increased over the last three
years principally due to asset growth from the receipt of variable annuity
premiums and, during 1993, from increased market values. Variable annuity assets
averaged $4.40 billion during 1994, $3.64 billion during 1993 and $3.05 billion
during 1992. Variable annuity premiums, which exclude premiums allocated to the
fixed accounts of variable annuity products, totaled $769.6 million in 1994,
$782.5 million in 1993 and $581.3 million in 1992. Total variable annuity
product sales, which include premiums allocated to the fixed accounts of
variable annuities, aggregated $909.7 million in 1994, $845.5 million in 1993
and $666.9 million in 1992. Though total variable annuity product sales rose
modestly in 1994, variable annuity premiums declined, principally due to a
rising demand for fixed-rate investment options, including the fixed accounts of
variable annuities, as prevailing interest rates increased during the latter
half of the 1994 fiscal year. The Company has encountered increased competition
in the variable annuity marketplace in 1994 and anticipates that the market will
remain highly competitive for the foreseeable future.
ASSET MANAGEMENT FEES, which include investment advisory fees and 12b-1
distribution fees, are based on the market value of assets managed in mutual
funds and private accounts by SunAmerica Asset Management Corp. Such fees
totaled $31.3 million on average assets managed of $2.39 billion in 1994, $32.3
million on average assets managed of $2.46 billion in 1993 and $25.3 million on
average assets managed of $2.15 billion in 1992. Asset management fees decreased
in 1994 primarily due to a decline in the market value of assets managed and
increased redemptions, both a reflection of adverse market conditions for
fixed-income and equity securities which can be attributed, in part, to rising
interest rates during the latter half of the 1994 fiscal year. Mutual fund sales
in 1994 also were affected by these adverse market conditions. Sales of mutual
funds, excluding sales of money market funds, totaled $342.6 million in 1994,
compared with $532.4 million in 1993 and $827.6 million in 1992. The decline in
mutual fund sales during 1993 resulted primarily from the Company's strategic
decision to diversify its mutual fund product sales, and to reduce the
percentage of sales derived from back-end loaded products.
NET RETAINED COMMISSIONS are primarily derived from commissions on the
sales of nonproprietary investment products by the Company's broker-dealer
subsidiary, after deducting the substantial portion of such commissions that is
passed on to registered representatives. Net retained commissions totaled $19.2
million in 1994, $16.9 million in 1993 and $13.2 million in 1992. Sales of
nonproprietary products (mainly mutual funds and general securities) totaled
$4.91 billion in 1994, $4.61 billion in 1993 and $3.64 billion in 1992. The
increases in net retained commissions are not proportionate to the related
changes in sales, primarily due to changes in sales mix.
SURRENDER CHARGES on fixed and variable annuities totaled $5.0 million in
1994, compared with $5.3 million in 1993 and $7.2 million in 1992. Surrender
charges generally are assessed on annuity withdrawals at declining rates during
the first five to seven years of the contract. Withdrawal payments, which
include surrenders and lump-sum annuity benefits, totaled $723.9 million in
1994, $557.3 million in 1993 and $651.6 million in 1992. Respectively, these
payments represent 12.5%, 10.7% and 13.5% of average fixed and variable annuity
reserves. Withdrawals include variable annuity payments from the separate
accounts totaling $459.1 million in 1994, $314.2 million in 1993 and $306.4
million in 1992. Variable annuity surrenders have increased during 1994
primarily due to surrenders on a closed block of business, policies coming off
surrender charge restrictions and increased competition in the marketplace. In
addition, fixed annuity surrenders have increased in 1994 due to policies coming
off surrender charge restrictions. Management anticipates that withdrawal rates
will be reasonably stable for the foreseeable future and the Company's
investment portfolio has been structured to provide sufficient liquidity for
anticipated withdrawals.
PROVISION FOR FUTURE GUARANTY FUND ASSESSMENTS totaled $4.8 million in
1993. No such provision was recorded in 1994 or 1992. Guaranty associations of
the states in which the Company sells annuities assess insurance companies to
pay policyholder claims relating to insurer insolvencies. This provision
represents management's best estimate, based upon available industry data, of
the Company's ultimate exposure to future assessments anticipated as a result of
certain large insurance
39
<PAGE> 43
company failures that occurred during the past few years. Currently, management
estimates that the remaining assessments will be primarily paid over the next
four years.
GENERAL AND ADMINISTRATIVE EXPENSES totaled $52.6 million in 1994, compared
with $55.1 million in 1993 and $55.6 million in 1992, and represent 0.8%, 0.9%
and 1.0% of average total assets for fiscal years 1994, 1993 and 1992,
respectively. General and administrative expenses remain closely controlled
through a company-wide cost containment program.
AMORTIZATION OF DEFERRED ACQUISITION COSTS increased during the three-year
period primarily due to additional variable annuity and mutual fund sales and
the subsequent amortization of related deferred commissions and other
acquisition costs. Amortization of all deferred acquisition costs totaled $44.0
million in 1994, $30.8 million in 1993 and $18.2 million in 1992.
INCOME TAX EXPENSE totaled $22.7 million in 1994, $21.8 million in 1993 and
$15.4 million in 1992, representing effective tax rates of 34% in 1994 and 1993
and 33% in 1992. These tax rates reflect the favorable impact of certain
affordable housing tax credits.
FINANCIAL CONDITION AND LIQUIDITY
SHAREHOLDER'S EQUITY increased by $12.4 million to $383.5 million at
September 30, 1994 from $371.1 million at September 30, 1993, primarily due to
net income of $24.2 million realized during 1994, partially offset by an $11.8
million increase in net unrealized losses on debt and equity securities
available for sale.
TOTAL ASSETS decreased by $69.3 million to $6.60 billion at September 30,
1994 from $6.67 billion at September 30, 1993, principally due to a decrease in
invested assets, partially offset by increases in variable annuity assets.
INVESTED ASSETS at year-end totaled $1.63 billion in 1994, compared with
$2.09 billion in 1993. The Company managed most of these investments internally.
Invested assets declined by $461.0 million during 1994, primarily as a result of
a reduction in unsettled trades and dollar-roll positions, as indicated by the
$303.5 million decline in amounts payable to brokers for purchases of
securities. Invested assets also declined as a consequence of the change in net
unrealized losses on debt and equity securities available for sale charged
directly to shareholder's equity.
The Company's general investment philosophy is to hold fixed maturity
assets for long-term investment. Thus, it does not have a trading portfolio.
Effective September 30, 1993, the Company adopted Statement of Financial
Accounting Standards No. 115, "Accounting for Certain Investments in Debt and
Equity Securities" and, accordingly, began to carry the portion of its portfolio
of bonds, notes and redeemable preferred stocks that is available for sale (the
"Available for Sale Portfolio") at estimated fair value. The remaining portion
of its portfolio of bonds, notes and redeemable preferred stocks is held for
investment and is carried at amortized cost.
BONDS, NOTES AND REDEEMABLE PREFERRED STOCKS, including those held for
investment and the Available for Sale Portfolio (the "Bond Portfolio"), at
September 30, 1994, had an aggregate amortized cost that exceeded its fair value
by $77.8 million (including net unrealized losses of $82.2 million on the
Available for Sale Portfolio). The fair value of the Bond Portfolio was $1.4
million above its amortized cost at September 30, 1993 (including net unrealized
losses of $12.7 million on the Available for Sale Portfolio). The unrealized
losses on the Bond Portfolio at September 30, 1994 principally resulted from
increases in prevailing interest rates since September 30, 1993 and the
corresponding effect on the Bond Portfolio.
Approximately $1.28 billion or 99.9% of the Bond Portfolio (at amortized
cost) at September 30, 1994 was rated by Standard and Poor's Corporation
("S&P"), Moody's Investors Service ("Moody's") or under comparable statutory
rating guidelines established by the National Association of Insurance
Commissioners ("NAIC") and implemented by either the NAIC or the Company. At
September 30, 1994, approximately $1.14 billion (at amortized cost) was rated
investment grade by
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<PAGE> 44
one or both of these agencies or under the NAIC guidelines, including $857.2
million of U.S. government/agency securities and MBSs.
At September 30, 1994, the Bond Portfolio included $141.8 million (fair
value, $136.4 million) of bonds not rated investment grade by S&P, Moody's or
the NAIC. Based on their September 30, 1994 amortized cost, these bonds
accounted for 2.13% of the Company's total assets and 8.26% of invested assets.
Non-investment grade securities generally provide higher yields and involve
greater risks than investment grade securities because their issuers typically
are more highly leveraged and more vulnerable to adverse economic conditions
than investment grade issuers. In addition, the trading market for these
securities is usually more limited than for investment grade securities. The
Company intends that its holdings of such securities not exceed current levels,
but its policies may change from time to time, including in connection with any
possible acquisition. The Company had no material concentrations of
non-investment grade securities at September 30, 1994.
The table below summarizes the Company's rated bonds by rating
classification as of September 30, 1994.
RATED BONDS BY RATING CLASSIFICATION
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
ISSUES NOT RATED BY S&P TOTAL
(MOODY'S) --------------------------------------
ISSUES RATED BY S&P (MOODY'S) BY NAIC CATEGORY PERCENT
- --------------------------------------------- ----------------------------------- OF
ESTIMATED NAIC ESTIMATED INVESTED ESTIMATED
S&P (MOODY'S) AMORTIZED FAIR CATEGORY AMORTIZED FAIR AMORTIZED ASSETS FAIR
CATEGORY(1) COST VALUE (2) COST VALUE COST (3) VALUE
- -------------------- ---------- ---------- --------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
AAA+ to A-
(Aaa to A3)....... $683,104 $632,916 1 $248,236 $240,006 $ 931,340 54.29% $ 872,922
BBB+ to BBB-
(Baa1 to Baa3).... 75,086 69,750 2 136,262 125,725 211,348 12.32 195,475
BB+ to BB-
(Ba1 to Ba3)...... 19,718 18,798 3 23,510 26,099 43,228 2.52 44,897
B+ to B-
(B1 to B3)........ 49,977 44,922 4 28,602 26,557 78,579 4.58 71,479
CCC+ to C-
(Caa to C)........ 1,906 1,906 5 5,551 5,634 7,457 0.43 7,540
D................... -- -- 6 12,508 12,508 12,508 0.73 12,508
-------- -------- -------- -------- ---------- ----------
Total rated
issues............ $829,791 $768,292 $454,669 $436,529 $1,284,460 $1,204,821
======== ======== ======== ======== ========== ==========
</TABLE>
- ---------------
(1) S&P rates debt securities in eleven rating categories, from AAA (the
highest) to D (in payment default). A plus(+) or minus(-) indicates the
debt's relative standing within the rating category. A security rated BBB-
or higher is considered investment grade. Moody's rates debt securities in
nine rating categories, from Aaa (the highest) to C (extremely poor
prospects of attaining real investment standing). The number 1, 2 or 3
(with 1 the highest and 3 the lowest) indicates the debt's relative
standing within the rating category. A security rated Baa3 or higher is
considered investment grade. Issues are categorized based on the higher of
the S&P or Moody's rating if rated by both agencies.
(2) Bonds and short-term promissory instruments are divided into six quality
categories for NAIC rating purposes, ranging from 1 (highest) to 5 (lowest)
for nondefaulted bonds plus one category, 6, for bonds in or near default.
These six categories correspond with the S&P (Moody's) rating groups listed
above, with categories 1 and 2 considered investment grade. A substantial
portion of the assets in the NAIC categories were rated by the Company based
on its implementation of NAIC rating guidelines.
(3) At amortized cost.
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<PAGE> 45
SENIOR SECURED LOANS ("Secured Loans") are included in the Bond Portfolio
and their amortized cost aggregated $99.0 million at September 30, 1994. Secured
Loans are primarily originated by money center or investment banks or are
originated directly by the Company. Secured Loans are senior to subordinated
debt and equity, and virtually all are secured by assets of the issuer. At
September 30, 1994, Secured Loans consisted of loans to 13 borrowers spanning 10
industries, with no industry concentration constituting more than 19% of these
assets.
While the trading market for Secured Loans is more limited than for
publicly traded corporate debt issues, management believes that participation in
these transactions has enabled the Company to improve its investment yield. The
majority of the Company's Secured Loans are not rated by S&P or Moody's.
However, 90% of the Secured Loans (at amortized cost) are rated in NAIC
categories 1 and 2. Although, as a result of restrictive financial covenants,
Secured Loans involve greater risk of technical default than do publicly traded
investment grade securities, management believes that generally the risk of loss
upon default for its Secured Loans is mitigated by their three-year average
lives, financial covenants and senior secured positions.
MORTGAGE LOANS aggregated $108.3 million at September 30, 1994 and
consisted of 17 first mortgage loans with an average loan balance of
approximately $6.4 million, collateralized by properties located in 8 states.
Approximately 43% of the portfolio was office, 23% was retail, 19% was hotel and
15% was multifamily residential. At September 30, 1994, approximately 22% of the
portfolio was secured by properties located in California, 22% of the portfolio
was secured by properties located in New Jersey and approximately 19% of the
portfolio was secured by properties located in Colorado. No more than 12% of the
portfolio was secured by properties in any other single state. At September 30,
1994, there were no construction, takeout, farm or land loans and there were two
loans with outstanding balances of $20 million or more; these loans aggregated
approximately 43% of the portfolio. At September 30, 1994, approximately 7% of
the mortgage loan portfolio consisted of loans with balloon payments due before
October 1, 1997. At September 30, 1994, there were no loans delinquent by more
than 90 days. Loans foreclosed upon and transferred to real estate in the
balance sheet during fiscal 1994 totaled $2.9 million (2.7% of total mortgages).
On September 30, 1994, one mortgage loan having an aggregate carrying value of
$12.1 million had been restructured. No mortgage loans were restructured during
the 1993 or 1994 fiscal years.
Approximately 63% of the mortgage loans in the portfolio at September 30,
1994 were seasoned loans underwritten to the Company's standards and purchased
at or near par from another financial institution which was downsizing its
portfolio. Such loans generally have higher average interest rates than loans
that could be originated today. The balance of the mortgage loan portfolio has
been originated by the Company under strict underwriting standards. Commercial
mortgage loans on properties such as offices, hotels and shopping centers
represent a higher level of risk for the industry than have mortgage loans
secured by multifamily residences. This greater risk is due to several factors,
including the larger size of such loans, and the effects of general economic
conditions on these commercial properties. However, due to the seasoned nature
of the Company's mortgage loans and its strict underwriting standards, the
Company believes that it has reduced the risk attributable to its mortgage loan
portfolio while maintaining attractive yields.
OTHER INVESTED ASSETS aggregated $67.2 million at September 30, 1994,
including $45.9 million of investments in limited partnerships and an aggregate
of $21.3 million of miscellaneous investments, including policy loans, CMO
residuals and leveraged leases. The Company's limited partnership interests
primarily include partnerships, accounted for by using the cost method of
accounting, that invest mainly in equity securities.
ASSET-LIABILITY MATCHING is utilized by the Company to minimize the risks
of interest rate fluctuations and disintermediation. The Company believes that
its fixed-rate liabilities should be backed by a portfolio principally composed
of fixed maturities that generate predictable rates of return. The Company does
not have a specific target rate of return. Instead, its rates of return vary
over time depending on the current interest rate environment, the slope of the
yield curve, the spread at which fixed maturities are priced over the yield
curve and general competitive conditions within the
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<PAGE> 46
industry. Its portfolio strategy is designed to achieve adequate risk-adjusted
returns consistent with its investment objectives of effective asset-liability
matching, liquidity and safety.
The Company designs its fixed-rate products and conducts its investment
operations in order to closely match the duration of the assets in its
investment portfolio to its annuity obligations. The Company seeks to achieve a
predictable spread between what it earns on its assets and what it pays on its
liabilities by investing principally in fixed maturities. The Company's
fixed-rate products incorporate surrender charges or other limitations on when
contracts can be surrendered for cash to encourage persistency and discourage
withdrawals. Approximately 56% of the Company's fixed annuity reserves had
surrender penalties or other restrictions at September 30, 1994.
As part of its asset-liability matching discipline, the Company conducts
detailed computer simulations that model its fixed-maturity assets and
liabilities under commonly used stress-test interest rate scenarios. Based on
the results of these computer simulations, the investment portfolio has been
constructed with a view to maintaining a desired investment spread between the
yield on portfolio assets and the rate paid on its reserves under a variety of
possible future interest rate scenarios. The cash flow obtained from MBSs helps
to maintain the anticipated spread, while providing desired liquidity. At
September 30, 1994, the weighted average life of the Company's investments was
approximately four years and the portfolio had a duration of approximately
three-and-one-fourth years. Weighted average life is defined as the average time
to receipt of all principal, incorporating the effects of scheduled amortization
and expected prepayments, weighted by book value. Duration is a common measure
for the price sensitivity of a fixed-income security or portfolio to changes in
interest rates. It is the weighted average time to receipt of all expected cash
flows, both principal and interest, including the effects of scheduled
amortization and expected prepayments, in which the weight attached to each year
of receipt is the proportion of the present value of cash to be received during
that year to the total present value of the portfolio.
The Company also seeks to provide liquidity, while enhancing its spread
income, by using reverse repurchase agreements ("Reverse Repos"), Dollar Rolls
and by investing in MBSs. Reverse Repos involve a sale of securities and an
agreement to repurchase the same securities at a later date at an agreed upon
price and are generally over-collateralized. Dollar Rolls are similar to Reverse
Repos except that the repurchase involves securities that are only substantially
the same as the securities sold and the arrangement is not collateralized, nor
is it governed by a repurchase agreement. MBSs are generally investment grade
securities collateralized by large pools of mortgage loans. MBSs generally pay
principal and interest monthly. The amount of principal and interest payments
may fluctuate as a result of prepayments of the underlying mortgage loans.
There are risks associated with some of the techniques the Company uses to
enhance its spread income and match its assets and liabilities. The primary risk
associated with Dollar Rolls and Reverse Repos is the risk associated with
counterparty nonperformance. The Company believes, however, that the
counterparties to its Dollar Rolls and Reverse Repos are financially responsible
and that the counterparty risk associated with those transactions is minimal.
Counterparty risk associated with Dollar Rolls is further mitigated by the
Company's participation in an MBS trading clearinghouse. The sell and buy
transactions that are submitted to this clearinghouse are marked to market on a
daily basis and each participant is required to over-collateralize its net loss
position by 30% with either cash, letters of credit or government securities.
The primary risk associated with MBSs is that a changing interest rate
environment might cause prepayment of the underlying obligations at speeds
slower or faster than anticipated at the time of their purchase.
INVESTED ASSETS EVALUATION routinely includes a review by the Company of
its portfolio of debt securities. Management identifies monthly those
investments that require additional monitoring and carefully reviews the
carrying value of such investments at least quarterly to determine whether
specific investments should be placed on a nonaccrual basis and to determine
declines in value that may be other than temporary. In making these reviews for
bonds, management principally considers the adequacy of collateral (if any),
compliance with contractual covenants, the borrower's recent financial
performance, news reports and other externally generated information concerning
the
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<PAGE> 47
creditor's affairs. In the case of publicly traded bonds, management also
considers market value quotations, if available. For mortgage loans, management
generally considers information concerning the mortgaged property and, among
other things, factors impacting the current and expected payment status of the
loan and, if available, the current fair value of the underlying collateral.
The carrying values of bonds that are determined to have declines in value
that are other than temporary are reduced to net realizable value and no further
accruals of interest are made. Mortgage loan writedowns are based on losses
expected by management to be realized on transfers of mortgage loans to real
estate, on the disposition and settlement of mortgage loans and on mortgage
loans that management believes may not be collectible in full. Accrual of
interest is suspended when principal and interest payments on mortgage loans are
past due more than 90 days.
DEFAULTED INVESTMENTS, comprising all investments (at amortized cost, net
of impairment writedowns) that are in default as to the payment of principal or
interest, totaled $4.4 million at September 30, 1994, all of which are unsecured
non-investment grade bonds. At September 30, 1994, defaulted investments
constituted 0.3% of total invested assets at amortized cost and their fair value
was equal to their amortized cost. At September 30, 1993, defaulted investments
totaled $10.6 million, all of which were unsecured non-investment grade bonds.
At September 30, 1993, defaulted investments constituted 0.5% of total invested
assets at amortized cost and their fair value totaled $9.3 million.
SOURCES OF LIQUIDITY are readily available to the Company in the form of
existing cash and short-term investments, Reverse Repo capacity on invested
assets and, if required, proceeds from invested asset sales. At September 30,
1994, approximately $257.4 million of the Company's Bond Portfolio had an
aggregate unrealized gain of $8.5 million, while approximately $1.03 billion had
an aggregate unrealized loss of $86.3 million. In addition, the Company's
investment portfolio also currently provides approximately $16.6 million of
monthly cash flow from scheduled principal and interest payments.
Management is aware that prevailing market interest rates may shift
significantly and has strategies in place to manage either an increase or
decrease in prevailing rates. In a rising interest rate environment, the
Company's average cost of funds would increase over time as it prices its new
and renewing annuities to maintain a generally competitive market rate.
Management would seek to place new funds in investments that were matched in
duration to, and higher yielding than, the liabilities assumed. The Company
believes that liquidity to fund withdrawals would be available through incoming
cash flow, the sale of short-term or floating-rate instruments or Reverse Repos
on the Company's substantial MBS segment of the Bond Portfolio, thereby avoiding
the sale of fixed-rate assets in an unfavorable bond market.
In a declining rate environment, the Company's cost of funds would decrease
over time, reflecting lower interest crediting rates on its fixed annuities.
Should increased liquidity be required for withdrawals, the Company believes
that a significant portion of its investments could be sold without adverse
consequences in light of the general strengthening that would be expected in the
bond market.
RESULTS OF OPERATIONS FOR THE FIRST NINE MONTHS OF FISCAL 1995
INCOME BEFORE CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING FOR INCOME TAXES
totaled $31.6 million for the first nine months of 1995 ("Fiscal 1995"),
compared with $33.4 million for the first nine months of 1994 ("Fiscal 1994").
The cumulative effect of the change in accounting for income taxes resulting
from the implementation of Statement of Financial Accounting Standards No. 109,
"Accounting for Income Taxes," amounted to a nonrecurring non-cash charge of
$20.5 million in the first quarter of fiscal 1994. Accordingly, net income
amounted to $12.9 in Fiscal 1994.
PRETAX INCOME totaled $49.2 million in Fiscal 1995, compared with $51.1
million in Fiscal 1994. The $1.9 million decrease in Fiscal 1995 primarily
resulted from increases in amortization of deferred acquisition costs and
general and administrative expenses, and a decline in net investment income, all
of which were partially offset by a decline in net realized investment losses.
44
<PAGE> 48
NET INVESTMENT INCOME decreased to $38.7 million in Fiscal 1995 from $43.1
million in Fiscal 1994. These amounts represent net investment spreads of 3.17%
on average invested assets (computed on a daily basis) of $1.63 billion in
Fiscal 1995 and 3.67% on average invested assets of $1.56 billion in Fiscal
1994. This decline primarily resulted from declines in investment yield and an
increase in the average rate paid on fixed annuities.
INVESTMENT INCOME totaled $94.5 million in Fiscal 1995, compared with $95.2
million in Fiscal 1994. This $0.7 million decline resulted from decreased
investment yields, as the yield on average invested assets decreased to 7.73% in
Fiscal 1995 from 8.12% in Fiscal 1994. Yields are computed without subtracting
net realized investment losses. If net realized investment losses were included
in the computation, the yields would be 7.01% in Fiscal 1995 and 5.88% in Fiscal
1994. There can be no assurance that the Company will achieve similar yields in
future periods.
The decline in investment yield in Fiscal 1995 was primarily due to lower
contributions from the Company's investment in partnerships compared with Fiscal
1994. Partnership income in Fiscal 1995 totaled $4.8 million, compared with $8.2
million in Fiscal 1994. This income represents a yield of 13.18% on average
investments in partnerships of $48.5 million in Fiscal 1995, compared with a
yield of 28.77% on average investments in partnerships of $37.8 million in
Fiscal 1994.
The Company continues to enhance investment yield through its use of Dollar
Rolls; however, their use did not have a significant impact on investment income
in Fiscal 1995.
Total interest expense aggregated $55.8 million in Fiscal 1995, compared
with $52.1 million in Fiscal 1994. The average rate paid on all interest-bearing
liabilities increased to 4.88% in Fiscal 1995 from 4.58% in Fiscal 1994.
Interest-bearing liabilities averaged $1.52 billion in both Fiscal 1995 and
Fiscal 1994.
The increases in the average rate paid on all interest-bearing liabilities
primarily resulted from increased average crediting rates on the Company's fixed
annuity contracts. Average fixed annuity crediting rates were 4.83% in Fiscal
1995 and 4.52% in Fiscal 1994. During 1995, the Company increased its average
crediting rates on fixed annuity contracts relative to those issued in the
comparable 1994 periods to maintain a generally competitive market rate. This
increase was reflected in a corresponding increase in the average crediting rate
on fixed annuity contracts, the majority of which reprice annually as interest
rate guarantees are renewed.
NET REALIZED INVESTMENT LOSSES totaled $8.9 million in Fiscal 1995,
compared with $26.2 million in Fiscal 1994 and include impairment writedowns of
bonds of $3.8 million and $14.2 million, respectively. Therefore, for the nine
months net losses from sales of investments totaled $5.1 million in Fiscal 1995
and $12.0 million in Fiscal 1994.
Net losses in Fiscal 1995 include $9.2 million of net losses realized on
$518.2 million of sales of bonds. These bond sales include sales of certain CMOs
and asset-backed securities, U.S. Treasury securities, high yield investments
and MBSs, all of which were primarily made to maximize total return.
Net losses in Fiscal 1994 include $11.6 million of net losses realized on
$563.0 million of sales of bonds. These bond sales include sales of MBSs made
primarily to acquire other MBSs that were then used in Dollar Rolls. In
addition, bond sales include sales of high-yield investments primarily made to
improve the overall credit quality of the portfolio.
VARIABLE ANNUITY FEES totaled $61.2 million in Fiscal 1995, compared with
$58.9 million in Fiscal 1994. Variable annuity assets averaged $4.50 billion
during Fiscal 1995, compared with $4.38 billion during Fiscal 1994. Variable
annuity premiums, which exclude premiums allocated to the fixed accounts of
variable annuity products, aggregated $485.1 million since June 30, 1994.
Variable annuity premiums declined to $362.5 million in Fiscal 1995 from $647.0
million in Fiscal 1994.
ASSET MANAGEMENT FEES totaled $20.4 million on average assets managed of
$2.07 billion in Fiscal 1995, compared with $24.0 million on average assets
managed of $2.44 billion in Fiscal 1994.
45
<PAGE> 49
Sales of mutual funds, excluding sales of money market funds, totaled $100.0
million in Fiscal 1995, compared with $302.2 million in Fiscal 1994.
NET RETAINED COMMISSIONS totaled $16.1 million in Fiscal 1995, compared
with $14.3 million in Fiscal 1994. Broker-dealer sales (mainly mutual funds and
general securities) totaled $3.80 billion in Fiscal 1995, compared with $3.87
billion in Fiscal 1994. Net retained commissions are not proportionate to sales
primarily due to differences in sales mix.
SURRENDER CHARGES on fixed and variable annuities totaled $4.6 million in
Fiscal 1995 and $3.8 million in Fiscal 1994. Withdrawal payments, which include
surrenders and lump-sum annuity benefits, totaled $677.0 million in Fiscal 1995
and $533.5 million in Fiscal 1994, and respectively represent 14.9% and 12.3% of
average fixed and variable annuity reserves. Withdrawals include variable
annuity payments from the separate accounts totaling $467.7 million in Fiscal
1995 and $334.5 million in Fiscal 1994. Variable annuity surrenders have
increased primarily due to surrenders on a closed block of business, policies
coming off surrender charge restrictions and increased competition in the
marketplace. In addition, fixed annuity surrenders have increased in Fiscal 1995
largely due to policies coming off surrender charge restrictions. Management
anticipates that withdrawal rates will remain relatively stable for the
foreseeable future and the Company's investment portfolio has been structured to
provide sufficient liquidity for anticipated withdrawals.
GENERAL AND ADMINISTRATIVE EXPENSES totaled $42.3 million in Fiscal 1995,
compared with $39.0 million in Fiscal 1994. General and administrative expenses
in Fiscal 1995 include expenses related to a national advertising campaign to
increase the Company's brand name awareness. General and administrative expenses
remain closely controlled through a company-wide cost containment program and
represent approximately 1% of average total assets.
AMORTIZATION OF DEFERRED ACQUISITION COSTS increased from that recorded
during Fiscal 1994 primarily due to additional fixed and variable annuity and
mutual fund sales and the subsequent amortization of related deferred
commissions and other acquisition costs. Amortization also has been impacted by
a reduction in net realized capital losses and increases in mutual fund
redemptions. Amortization of all deferred acquisition costs totaled $40.6
million in Fiscal 1995 and $31.1 million in Fiscal 1994.
INCOME TAX EXPENSE totaled $17.7 million in Fiscal 1995, compared with
$17.6 million in Fiscal 1994, representing effective tax rates of 36% and 35%,
respectively.
FINANCIAL CONDITION AND LIQUIDITY AT JUNE 30, 1995
SHAREHOLDER'S EQUITY increased by $53.8 million to $437.3 million at June
30, 1995 from $383.5 million at September 30, 1994. This increase primarily
reflects $31.6 million of net income and a $22.2 million decrease in net
unrealized losses on debt and equity securities available for sale charged
directly to shareholder's equity.
TOTAL ASSETS increased by $516.2 million to $7.12 billion at June 30, 1995
from $6.60 billion at September 30, 1994, principally due to a $377.8 million
increase in the separate account for variable annuities and a $172.9 million
increase in invested assets.
INVESTED ASSETS at June 30, 1995 totaled $1.80 billion, compared with $1.63
billion at September 30, 1994. This $172.9 million increase primarily resulted
from a $74.5 million decrease in net unrealized losses on debt and equity
securities available for sale and a $100.7 million net increase in invested
assets fueled by sales of fixed annuities and guaranteed investment contracts.
The Bond Portfolio at June 30, 1995 had a fair value that exceeded its
aggregate amortized cost by $0.1 million (including net unrealized losses of
$7.2 million on the Available for Sale Portfolio). The aggregate amortized cost
of the Bond Portfolio was $77.8 million above its fair value at September 30,
1994 (including net unrealized losses of $82.2 million on the Available for Sale
Portfolio). The decrease in net unrealized losses on the Bond Portfolio since
September 30, 1994
46
<PAGE> 50
principally resulted from a decrease in prevailing long-term interest rates and
the corresponding effect on the fair value of the Bond Portfolio.
Approximately $1.38 billion or 99.9% of the Bond Portfolio (at amortized
cost) at June 30, 1995 was rated by S&P, Moody's or under comparable statutory
rating guidelines established by the NAIC and implemented by either the NAIC or
the Company. At June 30, 1995, approximately $1.24 billion (at amortized cost)
was rated investment grade by one or both of these agencies or under the NAIC
guidelines, including $969.8 million of U.S. government/agency securities and
MBSs.
At June 30, 1995, the Bond Portfolio included $144.1 million (fair value,
$144.5 million) of bonds not rated investment grade by S&P, Moody's or the NAIC.
Based on their June 30, 1995 amortized cost, these bonds accounted for 2.02% of
the Company's total assets and 7.91% of invested assets.
Defaulted Investments, comprising all investments (at amortized cost) that
are in default as to the payment of principal or interest, totaled $0.5 million
at June 30, 1995 and $4.4 million at September 30, 1994. At June 30, 1995,
defaulted investments constituted 0.02% of total invested assets at amortized
cost and their fair value was equal to their amortized cost. At September 30,
1994, defaulted investments constituted 0.3% of total invested assets at
amortized cost and their fair value was equal to their amortized cost.
SOURCES OF LIQUIDITY continue to be readily available to the Company in the
form of existing cash and short-term investments, Reverse Repo capacity on
invested assets and, if required, proceeds from invested asset sales. At June
30, 1995, approximately $829.2 million of the Company's Bond Portfolio had an
aggregate unrealized gain of $35.2 million, while approximately $556.7 million
had an aggregate unrealized loss of $35.1 million. In addition, the Company's
investment portfolio also currently provides approximately $18.1 million of
monthly cash flow from scheduled principal and interest payments.
The Company has undertaken to dispose of $55.8 million of certain of its
real estate investments located in the Phoenix, Arizona metropolitan area during
the next one to two years, either to affiliated or nonaffiliated parties, and
SunAmerica Inc., the ultimate parent, has guaranteed that the Company will
receive its statutory carrying value of these assets.
- --------------------------------------------------------------------------------
PROPERTIES
- --------------------------------------------------------------------------------
The Company's principal office is in leased premises at 1 SunAmerica
Center, Los Angeles, California. The Company, through an affiliate, also leases
office space in Torrance, California which is utilized for certain recordkeeping
and data processing functions. The Company's broker-dealer and asset management
subsidiaries lease offices in New York, New York.
The Company believes that such properties, including the equipment located
therein, are suitable and adequate to meet the requirements of its businesses.
47
<PAGE> 51
- --------------------------------------------------------------------------------
DIRECTORS AND EXECUTIVE OFFICERS
- --------------------------------------------------------------------------------
The directors and principal officers of Anchor National Life Insurance
Company (the "Company") as of June 30, 1995 are listed below, together with
information as to their ages, dates of election and principal business
occupation during the last five years (if other than their present business
occupation).
<TABLE>
<CAPTION>
OTHER POSITIONS AND
YEAR OTHER BUSINESS
PRESENT ASSUMED EXPERIENCE WITHIN
NAME AGE POSITION(S) POSITION(S) LAST FIVE YEARS** FROM-TO
---- --- ----------- ----------- ------------------- -------
<S> <C> <C> <C> <C> <C>
Eli Broad* 62 Chairman, Chief Executive 1994 Cofounded SunAmerica Inc.
Officer and President of the ("SAI") in 1957
Company
Chairman, Chief Executive 1986
Officer and President of SAI
Jay S. Wintrob* 38 Executive Vice President of 1991 Senior Vice President 1989-1991
the Company and SAI (Joined SAI in 1987)
James R. Belardi* 38 Senior Vice President and 1992 Vice President and Treasurer 1989-1992
Treasurer of the Company and (Joined SAI in 1986)
SAI
Jana W. Greer* 43 Senior Vice President of the 1994 Vice President (Joined SAI in 1981-1991
Company and SAI 1974)
Peter McMillan, III* 38 Executive Vice President and 1994 Senior Vice President, 1989-1994
Chief Investment Officer of SunAmerica Investments, Inc.
SunAmerica Investments, Inc.
Gary W. Krat* 48 Senior Vice President of the 1992 Chairman, Royal Alliance 1991 to present
Company and SAI Associates, Inc.
Chief Executive Officer, 1990 to present
Royal Alliance Associates,
Inc.
President, Integrated 1986-1990
Resources Equity Corp.
Scott L. Robinson* 49 Senior Vice President of the 1991 Vice President and Controller 1986-1991
Company and Senior Vice (Joined SAI in 1978)
President and Controller of
SAI
Lorin M. Fife* 42 Senior Vice President and 1994 Vice President and Associate 1989-1994
General Counsel of the General Counsel of SAI
Company and Vice President (Joined SAI in 1989)
and General Counsel --
Regulatory Affairs of SAI
Susan L. Harris* 38 Senior Vice President and 1994 Vice President, Associate 1989-1994
Secretary of the Company and General Counsel and Secretary
Vice President, General of SAI (Joined SAI in 1985)
Counsel -- Corporate Affairs
and Secretary of SAI
N. Scott Gillis 42 Senior Vice President and 1994 Vice President and 1989-1994
Controller of the Company Controller, SunAmerica Life
Companies (Joined SAI in
1985)
Edwin Reoliquio 38 Senior Vice President and 1995 Vice President and Actuary, 1990-1995
Actuary of the Company SunAmerica Life Companies
</TABLE>
- ---------------
* Also serves as a director
** Unless otherwise indicated, officers and positions are with SunAmerica Inc.
48
<PAGE> 52
- --------------------------------------------------------------------------------
EXECUTIVE COMPENSATION
- --------------------------------------------------------------------------------
All of the executive officers of the Company also serve as employees of
SunAmerica Inc. or its affiliates and receive no compensation directly from the
Company. Some of the officers also serve as officers of other companies
affiliated with the Company. Allocations have been made as to each individual's
time devoted to his or her duties as an executive officer of the Company.
The following table shows the cash compensation paid or earned, based on
these allocations, to the chief executive officer and top four executive
officers of the Company whose allocated compensation exceeds $100,000 and to all
executive officers of the Company as a group for services rendered in all
capacities in the Company during 1994:
<TABLE>
<CAPTION>
NAME OF INDIVIDUAL OR CAPACITIES IN ALLOCATED CASH
NUMBER IN GROUP WHICH SERVED COMPENSATION
--------------------- ------------- --------------
<S> <C> <C>
Eli Broad..................... Chairman, Chief Executive $ 906,341
Officer and President
Jay S. Wintrob................ Executive Vice President 527,357
Gary W. Krat.................. Senior Vice President 287,192
James R. Belardi.............. Senior Vice President and 199,581
Treasurer
Clark P. Manning, Jr. ........ Former Senior Vice President 188,946
and Actuary
All Executive Officers as a
Group (10).................. $2,823,262
</TABLE>
Directors of the Company who are also employees of SunAmerica Inc. or its
affiliates receive no compensation in addition to their compensation as
employees of SunAmerica Inc. or its affiliates.
No shares of the Company are owned by any executive officer or director.
The Company is an indirect wholly-owned subsidiary of SunAmerica Inc. Except for
Mr. Broad, the percentage of shares of SunAmerica Inc. beneficially owned by any
director does not exceed one percent of the class outstanding. At August 31,
1995, Mr. Broad was the beneficial owner of 1,162,024 shares of Common Stock
(approximately 3.9% of the class outstanding) and 5,914,212 shares of Class B
Common Stock (approximately 86.7% of the class outstanding). Of the Common
Stock, 93,084 shares represent restricted shares granted under the Company's
employee stock plans as to which Mr. Broad has no investment power; 337,500
shares are held by a trust formed by Mr. Broad of which he is a beneficiary; and
692,900 shares represent employee stock options held by Mr. Broad and as to
which he has no voting or investment power. Of the Class B Stock, 562,500 shares
are held by a trust formed by Mr. Broad of which he is a beneficiary; 21,712
shares are held by a foundation of which Mr. Broad is a director and as to which
he has shared voting and investment power; and 1,935,000 shares are registered
in the name of a corporation as to which Mr. Broad exercises voting and
investment power. At August 31, 1995, all directors and officers as a group
beneficially owned 2,141,818 shares of Common Stock (approximately 7.2% of the
class outstanding) and 5,914,212 shares of Class B Common Stock (approximately
86.7% of the class outstanding).
- --------------------------------------------------------------------------------
STATE REGULATION
- --------------------------------------------------------------------------------
The Company is subject to regulation and supervision by the states in which
it is authorized to transact business. State insurance laws establish
supervisory agencies with broad administrative and supervisory powers related to
granting and revoking licenses to transact business, regulating marketing and
other trade practices, operating guaranty associations, licensing agents,
approving policy forms, regulating certain premium rates, regulating insurance
holding company systems, establishing reserve requirements, prescribing the form
and content of required financial statements and reports,
49
<PAGE> 53
performing financial and other examinations, determining the reasonableness and
adequacy of statutory capital and surplus, regulating the type and amount of
investments permitted, limiting the amount of dividends that can be paid without
first obtaining regulatory approval and other related matters.
In recent years, the insurance regulatory framework has been placed under
increased scrutiny by various states, the federal government and the NAIC.
Various states have considered or enacted legislation that changes, and in many
cases increases, the states' authority to regulate insurance companies.
Legislation has been introduced from time to time in Congress that could result
in the federal government assuming some role in the regulation of insurance
companies. The NAIC has recently approved and recommended to the states for
adoption and implementation several regulatory initiatives designed to reduce
the risk of insurance company insolvencies. These initiatives include new
investment reserve requirements, risk-based capital standards and restrictions
on an insurance company's ability to pay dividends to its stockholders. A
committee is also currently developing model laws to govern insurance company
investments for adoption by the NAIC. Current proposals are still being debated
and the Company is monitoring developments in this area and the effects any
change would have on the Company.
SunAmerica Asset Management is registered with the Securities and Exchange
Commission (the "Commission") as a registered investment adviser under the
Investment Advisers Act of 1940. The mutual funds that it markets are subject to
regulation under the Investment Company Act of 1940. SunAmerica Asset Management
and the mutual funds are subject to regulation and examination by the
Commission. In addition, variable annuities and the related separate accounts of
the Company are subject to regulation by the Commission under the Securities Act
of 1933 and the Investment Company Act of 1940.
The Company's broker-dealer subsidiary is subject to regulation and
supervision by the states in which it transacts business, as well as by the
National Association of Securities Dealers, Inc. (the "NASD"). The NASD has
broad administrative and supervisory powers relative to all aspects of business
and may examine the subsidiary's business and accounts at any time.
- --------------------------------------------------------------------------------
CUSTODIAN
- --------------------------------------------------------------------------------
Chase Manhattan Bank, N.A., One Chase Manhattan Plaza, New York, New York
10081, serves as the custodian of the assets of the Separate Account.
- --------------------------------------------------------------------------------
LEGAL PROCEEDINGS
- --------------------------------------------------------------------------------
There are no pending legal proceedings affecting the Separate Account. The
Company and its subsidiaries are engaged in various kinds of routine litigation
which, in management's judgment, is not of material importance to their
respective total assets or material with respect to the Separate Account.
50
<PAGE> 54
- --------------------------------------------------------------------------------
REGISTRATION STATEMENTS
- --------------------------------------------------------------------------------
Registration statements have been filed with the Commission under the
Securities Act of 1933, as amended, with respect to the Contracts offered by
this prospectus. This prospectus does not contain all the information set forth
in the registration statements and the exhibits filed as part of the
registration statements, to all of which reference is hereby made for further
information concerning the Separate Account, the General Account, the Company,
the Underlying Funds, the Contracts and the Certificates. Statements found in
this prospectus as to the terms of the Contracts, the Certificates and other
legal instruments are summaries, and reference is made to such instruments as
filed.
- --------------------------------------------------------------------------------
INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
The consolidated financial statements of the Company as of September 30,
1994 and 1993 and for each of the three years in the period ended September 30,
1994 included in this prospectus have been so included in reliance on the report
of Price Waterhouse LLP, independent accountants, given on the authority of said
firm as experts in auditing and accounting.
- --------------------------------------------------------------------------------
ADDITIONAL INFORMATION ABOUT THE SEPARATE ACCOUNT
- --------------------------------------------------------------------------------
Additional information concerning the operations of the Separate Account is
contained in a Statement of Additional Information, which is available without
charge upon written request addressed to the Company at its Annuity Service
Center, P.O. Box 54299, Los Angeles, California 90054-0299 or (800) 90-VISTA.
The contents of the Statement of Additional Information are tabulated below.
STATEMENT OF ADDITIONAL INFORMATION
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Performance Data...................................................................... 3
Annuity Unit Values; Annuity Payments................................................. 5
Distribution of Contracts............................................................. 7
Financial Statements.................................................................. 7
</TABLE>
- --------------------------------------------------------------------------------
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
The consolidated financial statements of the Company which are included in
this prospectus should be considered only as bearing on the ability of the
Company to meet its obligations with respect to amounts allocated to the General
Account and with respect to the Death Benefit and the Company's assumption of
the mortality and expense risks. They should not be considered as bearing on the
investment performance of the Underlying Fund shares held in the Portfolios of
the Separate Account. The value of the interests of Owners, Participants,
Annuitants, payees and Beneficiaries under the variable portion of the Contracts
is affected primarily by the investment results of the Underlying Funds.
51
<PAGE> 55
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholder of
Anchor National Life Insurance Company
In our opinion, the accompanying consolidated balance sheet and the related
consolidated income statement and statement of cash flows present fairly, in all
material respects, the financial position of Anchor National Life Insurance
Company and its subsidiaries at September 30, 1994 and 1993, and the results of
their operations and their cash flows for each of the three years in the period
ended September 30, 1994, in conformity with generally accepted accounting
principles. These financial statements are the responsibility of the Company's
management; our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these statements in
accordance with generally accepted auditing standards which require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for the opinion expressed
above.
As discussed in Note 8, the Company adopted Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes," in fiscal 1994.
Price Waterhouse LLP
Los Angeles, California
November 9, 1994
52
<PAGE> 56
ANCHOR NATIONAL LIFE INSURANCE COMPANY
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
SEPTEMBER 30, SEPTEMBER 30, JUNE 30,
1993 1994 1995
-------------- -------------- --------------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
Investments:
Cash and short-term investments............ $ 500,624,000 $ 157,438,000 $ 206,766,000
Bonds, notes and redeemable preferred
stocks:
Available for sale, at fair value
(amortized cost: September 1993,
$1,098,439,000; September 1994,
$1,108,271,000; June 1995,
$1,226,185,000)....................... 1,085,695,000 1,026,120,000 1,219,010,000
Held for investment, at amortized cost
(fair value: September 1993,
$225,057,000; September 1994,
$180,274,000; June 1995,
$167,050,000)......................... 210,878,000 175,885,000 159,726,000
Mortgage loans............................. 112,493,000 108,332,000 93,728,000
Common stocks, at fair value
(cost: September 1993, $6,450,000;
September 1994, $8,789,000; June 1995,
$7,645,000)............................. 5,964,000 7,550,000 5,940,000
Real estate................................ 118,108,000 89,539,000 55,798,000
Other invested assets...................... 59,338,000 67,208,000 63,986,000
-------------- -------------- --------------
Total investments.......................... 2,093,100,000 1,632,072,000 1,804,954,000
Variable annuity assets...................... 4,170,275,000 4,486,703,000 4,864,463,000
Accrued investment income.................... 16,255,000 17,565,000 19,927,000
Deferred acquisition costs................... 336,677,000 416,289,000 379,113,000
Other assets................................. 55,082,000 49,497,000 49,876,000
-------------- -------------- --------------
TOTAL ASSETS................................. $6,671,389,000 $6,602,126,000 $7,118,333,000
============== ============== ==============
LIABILITIES AND SHAREHOLDER'S EQUITY
Reserves, payables and accrued liabilities:
Reserves for fixed annuity contracts....... $1,562,136,000 $1,437,488,000 $1,508,072,000
Reserves for guaranteed investment
contracts............................... -- -- 30,155,000
Payable to brokers for purchases of
securities.............................. 428,167,000 124,624,000 82,521,000
Income taxes currently payable............. 5,772,000 12,331,000 29,729,000
Other liabilities.......................... 61,801,000 58,891,000 71,371,000
-------------- -------------- --------------
Total reserves, payables and accrued
liabilities............................. 2,057,876,000 1,633,334,000 1,721,848,000
-------------- -------------- --------------
Variable annuity liabilities................. 4,170,275,000 4,486,703,000 4,864,463,000
-------------- -------------- --------------
Subordinated notes payable to Parent......... 34,000,000 34,000,000 34,000,000
-------------- -------------- --------------
Deferred income taxes........................ 38,145,000 64,567,000 60,705,000
-------------- -------------- --------------
Shareholder's equity:
Common Stock............................... 3,511,000 3,511,000 3,511,000
Additional paid-in capital................. 252,876,000 252,876,000 252,876,000
Retained earnings.......................... 127,936,000 152,088,000 183,647,000
Net unrealized losses on debt and equity
securities available for sale........... (13,230,000) (24,953,000) (2,717,000)
-------------- -------------- --------------
Total shareholder's equity................. 371,093,000 383,522,000 437,317,000
-------------- -------------- --------------
TOTAL LIABILITIES AND SHAREHOLDER'S EQUITY... $6,671,389,000 $6,602,126,000 $7,118,333,000
============== ============== ==============
</TABLE>
The accompanying notes are an integral part of
these consolidated financial statements.
53
<PAGE> 57
ANCHOR NATIONAL LIFE INSURANCE COMPANY
CONSOLIDATED INCOME STATEMENT
<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEARS ENDED SEPTEMBER 30, JUNE 30,
------------------------------------------- ---------------------------
1992 1993 1994 1994 1995
------------- ------------ ------------ ------------ ------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Investment income........................... $ 156,805,000 $137,591,000 $127,758,000 $ 95,207,000 $ 94,466,000
------------- ------------ ------------ ------------ ------------
Interest expense on:
Fixed annuity contracts................... (119,781,000) (87,479,000) (66,311,000) (50,358,000) (53,768,000)
Guaranteed investment contracts........... -- -- -- -- (160,000)
Senior indebtedness....................... (134,000) (34,000) (71,000) (3,000) (16,000)
Subordinated notes payable to Parent...... (391,000) (1,166,000) (2,380,000) (1,785,000) (1,812,000)
------------- ------------ ------------ ------------ ------------
Total interest expense.................... (120,306,000) (88,679,000) (68,762,000) (52,146,000) (55,756,000)
------------- ------------ ------------ ------------ ------------
NET INVESTMENT INCOME....................... 36,499,000 48,912,000 58,996,000 43,061,000 38,710,000
------------- ------------ ------------ ------------ ------------
NET REALIZED INVESTMENT LOSSES.............. (22,749,000) (22,247,000) (33,713,000) (26,180,000) (8,874,000)
------------- ------------ ------------ ------------ ------------
Fee income:
Variable annuity fees..................... 57,050,000 67,222,000 79,101,000 58,865,000 61,175,000
Asset management fees..................... 25,269,000 32,293,000 31,302,000 24,017,000 20,399,000
Net retained commissions.................. 13,163,000 16,928,000 19,180,000 14,344,000 16,139,000
------------- ------------ ------------ ------------ ------------
TOTAL FEE INCOME............................ 95,482,000 116,443,000 129,583,000 97,226,000 97,713,000
------------- ------------ ------------ ------------ ------------
Other income and expenses:
Surrender charges......................... 7,201,000 5,306,000 5,034,000 3,806,000 4,610,000
General and administrative expenses....... (55,615,000) (55,142,000) (52,636,000) (38,955,000) (42,255,000)
Provision for future guaranty fund
assessments............................. -- (4,800,000) -- -- --
Amortization of deferred acquisition
costs................................... (18,224,000) (30,825,000) (43,992,000) (31,148,000) (40,554,000)
Other, net................................ 3,540,000 5,865,000 4,048,000 3,240,000 (132,000)
------------- ------------ ------------ ------------ ------------
TOTAL OTHER INCOME AND EXPENSES............. (63,098,000) (79,596,000) (87,546,000) (63,057,000) (78,331,000)
------------- ------------ ------------ ------------ ------------
PRETAX INCOME............................... 46,134,000 63,512,000 67,320,000 51,050,000 49,218,000
Income tax expense.......................... (15,361,000) (21,794,000) (22,705,000) (17,640,000) (17,659,000)
------------- ------------ ------------ ------------ ------------
INCOME FROM CONTINUING OPERATIONS........... 30,773,000 41,718,000 44,615,000 33,410,000 31,559,000
Net income of subsidiaries sold to
affiliates, net of income taxes of
$751,000.................................. 1,312,000 -- -- -- --
------------- ------------ ------------ ------------ ------------
INCOME BEFORE CUMULATIVE EFFECT OF CHANGE IN
ACCOUNTING FOR INCOME TAXES............... 32,085,000 41,718,000 44,615,000 33,410,000 31,559,000
Cumulative effect of change in accounting
for income taxes.......................... -- -- (20,463,000) (20,463,000) --
------------- ------------ ------------ ------------ ------------
NET INCOME.................................. $ 32,085,000 $ 41,718,000 $ 24,152,000 $ 12,947,000 $ 31,559,000
============= ============ ============ ============ ============
</TABLE>
The accompanying notes are an integral part of
these consolidated financial statements.
54
<PAGE> 58
ANCHOR NATIONAL LIFE INSURANCE COMPANY
CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEARS ENDED SEPTEMBER 30, JUNE 30,
--------------------------------------------------- -----------------------------
1992 1993 1994 1994 1995
--------------- --------------- --------------- ------------- -------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income.......................... $ 32,085,000 $ 41,718,000 $ 24,152,000 $ 12,947,000 $ 31,559,000
Adjustments to reconcile net income
to net cash provided by operating
activities:
Interest credited to:
Fixed annuity contracts......... 119,781,000 87,479,000 66,311,000 50,358,000 53,768,000
Guaranteed investment
contracts.................... -- -- -- -- 160,000
Net realized investment losses.... 22,749,000 22,247,000 33,713,000 26,180,000 8,874,000
Accretion of net discounts on
investments..................... (14,090,000) (9,149,000) (2,050,000) (678,000) (5,947,000)
Amortization of goodwill.......... 1,173,000 1,167,000 1,169,000 876,000 876,000
Provision for deferred income
taxes........................... 18,779,000 2,982,000 19,395,000 17,283,000 (15,836,000)
Cumulative effect of change in
accounting for income taxes..... -- -- 20,463,000 20,463,000 --
Change in:
Deferred acquisition costs........ (62,072,000) (48,413,000) (34,612,000) (30,772,000) (3,124,000)
Other assets.................... 384,000 3,017,000 5,133,000 (2,047,000) (1,256,000)
Income taxes
receivable/payable........... (2,408,000) 23,479,000 6,559,000 (964,000) 17,398,000
Other liabilities............... (6,199,000) 11,596,000 46,000 285,000 (1,198,000)
Other, net........................ 5,553,000 466,000 (950,000) (891,000) (2,336,000)
--------------- --------------- --------------- ------------- -------------
NET CASH PROVIDED BY OPERATING
ACTIVITIES.......................... 115,735,000 136,589,000 139,329,000 93,040,000 82,938,000
--------------- --------------- --------------- ------------- -------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Premium receipts on:
Fixed annuity contracts........... 86,577,000 63,796,000 140,741,000 84,248,000 210,264,000
Guaranteed investment contracts... -- -- -- -- 30,000,000
Net exchanges to (from) the fixed
accounts of variable annuity
contracts......................... (46,361,000) (45,516,000) (29,286,000) (36,500,000) 40,989,000
Withdrawal payments on:
Fixed annuity contracts........... (345,955,000) (245,250,000) (267,197,000) (200,331,000) (209,358,000)
Guaranteed investment contracts... -- -- -- -- (5,000)
Claims and annuity payments on fixed
annuity contracts................. (35,593,000) (33,938,000) (31,146,000) (23,538,000) (25,104,000)
Net increase in subordinated notes
payable to Parent................. 15,500,000 18,500,000 -- -- --
Net receipts from (repayments of)
other short-term financings....... 243,589,000 38,857,000 (171,115,000) (141,340,000) (51,496,000)
Capital contributions received...... 80,000,000 -- -- -- --
--------------- --------------- --------------- ------------- -------------
NET CASH USED BY FINANCING
ACTIVITIES.......................... (2,243,000) (203,551,000) (358,003,000) (317,461,000) (4,710,000)
--------------- --------------- --------------- ------------- -------------
</TABLE>
55
<PAGE> 59
ANCHOR NATIONAL LIFE INSURANCE COMPANY
CONSOLIDATED STATEMENT OF CASH FLOWS (CONTINUED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEARS ENDED SEPTEMBER 30, JUNE 30,
--------------------------------------------------- -----------------------------
1992 1993 1994 1994 1995
--------------- --------------- --------------- ------------- -------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of:
Bonds, notes and redeemable pre-
ferred stocks available for
sale............................ $ -- $(1,254,755,000) $(1,197,743,000) $(936,638,000) $(678,324,000)
Bonds, notes and redeemable pre-
ferred stocks held for
investment...................... -- -- (209,000) (209,000) --
Other bonds, notes and redeemable
preferred stocks................ (1,478,405,000) (64,167,000) -- -- --
Mortgage loans.................... (9,530,000) (39,100,000) (10,666,000) (10,666,000) --
Investment in real estate separate
account......................... (10,152,000) -- -- -- --
Other investments, excluding
short-term investments.......... (11,196,000) (31,674,000) (26,108,000) (19,759,000) (11,086,000)
Sales of:
Bonds, notes and redeemable pre-
ferred stocks available for
sale............................ -- 874,966,000 877,068,000 751,420,000 478,051,000
Other bonds, notes and redeemable
preferred stocks................ 1,272,255,000 106,142,000 -- -- --
Real estate....................... 38,729,000 38,333,000 33,443,000 33,443,000 36,821,000
Other investments, excluding
short-term investments.......... 41,119,000 21,616,000 2,353,000 2,269,000 4,623,000
Redemptions and maturities of:
Bonds, notes and redeemable pre-
ferred stocks available for
sale............................ -- 160,035,000 139,691,000 112,674,000 95,781,000
Bonds, notes and redeemable pre-
ferred stocks held for
investment...................... -- -- 34,072,000 25,924,000 18,682,000
Other bonds, notes and redeemable
preferred stocks................ 261,710,000 259,860,000 -- -- --
Investment in real estate separate
account......................... -- 92,130,000 -- -- --
Mortgage loans.................... 10,441,000 17,614,000 10,087,000 11,305,000 14,834,000
Other investments, excluding
short-term investments.......... 8,260,000 6,962,000 13,500,000 13,461,000 11,718,000
Payment of holdback liability for
1990 purchase of annuity
business.......................... -- (14,250,000) -- -- --
Net receipts from sales of
subsidiaries...................... 62,165,000 -- -- -- --
Dividends and returns of capital
received from subsidiaries sold to
an affiliate........................ 4,400,000 -- -- -- --
--------------- --------------- --------------- ------------- -------------
NET CASH PROVIDED (USED) BY INVESTING
ACTIVITIES.......................... 189,796,000 173,712,000 (124,512,000) (16,776,000) (28,900,000)
--------------- --------------- --------------- ------------- -------------
NET INCREASE (DECREASE) IN CASH AND
SHORT-TERM INVESTMENTS.............. 303,288,000 106,750,000 (343,186,000) (241,197,000) 49,328,000
CASH AND SHORT-TERM INVESTMENTS AT
BEGINNING OF PERIOD................. 90,586,000 393,874,000 500,624,000 500,624,000 157,438,000
--------------- --------------- --------------- ------------- -------------
CASH AND SHORT-TERM INVESTMENTS AT END
OF PERIOD........................... $ 393,874,000 $ 500,624,000 $ 157,438,000 $ 259,427,000 $ 206,766,000
=============== =============== =============== ============= =============
SUPPLEMENTAL CASH FLOW INFORMATION:
Interest paid on indebtedness....... $ 134,000 $ 34,000 $ 1,175,000 $ 784,000 $ 2,562,000
=============== =============== =============== ============= =============
Income taxes paid (recovered)....... $ (181,000) $ (6,736,000) $ (3,328,000) $ 1,317,000 $ 16,026,000
=============== =============== =============== ============= =============
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
56
<PAGE> 60
ANCHOR NATIONAL LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
GENERAL: Anchor National Life Insurance Company (the "Company") is a
wholly-owned indirect subsidiary of SunAmerica Inc. (the "Parent").
The consolidated financial statements include the accounts of the Company
and all significant subsidiaries, including Anchor Investment Advisor, Inc.;
SunAmerica Asset Management Corp.; SunAmerica Capital Services, Inc.; Saamsun
Holdings Corp.; SAM Holdings Corporation; SunRoyal Holding Corp.; and Royal
Alliance Associates, Inc. All significant intercompany transactions have been
eliminated. Certain items have been reclassified to conform to the current
year's presentation.
The interim financial information is unaudited; however, in the opinion of
the Company, the interim information includes all adjustments, consisting only
of normal recurring adjustments, necessary for a fair statement of the results
for the interim periods.
INVESTMENTS: Cash and short-term investments primarily include cash,
commercial paper, money market investments, repurchase agreements and short-term
bank participations. All such investments are carried at cost plus accrued
interest, which approximates fair value, have maturities of twelve months or
less and are considered cash equivalents for purposes of reporting cash flows.
Bonds, notes and redeemable preferred stocks available for sale and common
stocks are carried at aggregate fair value and changes in unrealized net gains
or losses, net of tax, are credited or charged directly to shareholder's equity.
It is management's intent, and the Company has the ability, to hold the
remainder of bonds, notes and redeemable preferred stocks until maturity, and
therefore, these investments are carried at amortized cost. Bonds, notes and
redeemable preferred stocks, whether available for sale or held for investment,
are reduced to estimated net realizable value when necessary for declines in
value considered to be other than temporary. Estimates of net realizable value
are subjective and actual realization will be dependant upon future events.
Mortgage loans are carried at amortized unpaid balances, net of provisions for
estimated losses. Real estate is carried at the lower of cost or fair value.
Other invested assets include investments in limited partnerships, most of which
are accounted for by using the cost method of accounting; separate account
investments; leveraged leases; policy loans, which are carried at unpaid
balances; and collateralized mortgage obligation residuals. Realized gains and
losses on the sale of investments are recognized in operations at the date of
sale and are determined using the specific cost identification method. Premiums
and discounts on investments are amortized to investment income using the
interest method over the contractual lives of the investments.
UNITED STATES TREASURY BILL FUTURES CONTRACTS: Gains and losses on United
States Treasury Bill Futures Contracts designated as hedges are deferred and
subsequently credited or charged to income over the life of the related hedged
assets.
DEFERRED ACQUISITION COSTS: Policy acquisition costs are deferred and
amortized, with interest, over the estimated lives of the contracts in relation
to the present value of estimated gross profits, which are composed of net
interest income, net realized investment gains and losses, surrender charges and
direct administrative expenses. Costs incurred to sell mutual funds are also
deferred and amortized over the estimated lives of the funds obtained. Deferred
acquisition costs consist of commissions and other costs which vary with, and
are primarily related to, the production or acquisition of new business.
As debt and equity securities available for sale are carried at aggregate
fair value, an adjustment is made to deferred acquisition costs equal to the
change in amortization that would have been recorded if such securities had been
sold at their stated aggregate fair value and the proceeds reinvested at current
yields. The change in this adjustment, net of tax, is included with the change
in net unrealized gains or losses on debt and equity securities available for
sale that is credited or charged directly to shareholder's equity. At September
30, 1994, deferred acquisition costs have been increased by $45,000,000 for this
adjustment.
57
<PAGE> 61
ANCHOR NATIONAL LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
VARIABLE ANNUITY ASSETS AND LIABILITIES: The assets and liabilities
resulting from the receipt of variable annuity premiums are segregated in
separate accounts. The Company receives administrative fees for managing the
funds and other fees for assuming mortality and certain expense risks. Such fees
are included in Variable Annuity Fees in the income statement.
GOODWILL: Goodwill, amounting to $21,815,000 at September 30, 1994, is
amortized by using the straight-line method over a period averaging 25 years and
is included in Other Assets in the balance sheet.
CONTRACTHOLDER RESERVES: Contractholder reserves for fixed annuity
contracts are accounted for as investment-type contracts in accordance with
Statement of Financial Accounting Standards No. 97, "Accounting and Reporting by
Insurance Enterprises for Certain Long-Duration Contracts and for Realized Gains
and Losses from the Sale of Investments," and are recorded at accumulated value
(premiums received, plus accrued interest, less withdrawals and assessed fees).
FEE INCOME: Variable annuity fees and asset management fees are recognized
as earned on a daily basis. Net retained commissions are recognized on a trade
date basis.
2. ACQUISITIONS AND DIVESTITURES
Effective November 30, 1991, the Company acquired Anchor Investment
Advisors, Inc. from an affiliated company, SunAmerica Financial, Inc., for cash
equal to its book value of $1,797,000.
Effective November 30, 1991, the Company sold Resources Trust Company to
the Parent for cash equal to its book value of $9,415,000.
Effective November 30, 1991, the Company sold its 70.5% interest in Sun
Mortgage Acceptance Corporation to SunAmerica Life Insurance Company (formerly
known as Sun Life Insurance Company of America) ("SunAmerica Life") for cash
equal to its book value of $52,750,000.
3. INVESTMENTS
The amortized cost and estimated fair value of bonds, notes and redeemable
preferred stocks available for sale and held for investment by major category
follow:
<TABLE>
<CAPTION>
ESTIMATED
AMORTIZED FAIR
COST VALUE
-------------- --------------
<S> <C> <C>
AT SEPTEMBER 30, 1994:
AVAILABLE FOR SALE:
Securities of the United States government............... $ 16,623,000 $ 16,379,000
Mortgage-backed securities............................... 833,445,000 765,946,000
Securities of public utilities........................... 13,423,000 12,837,000
Corporate bonds and notes................................ 243,405,000 229,411,000
Redeemable preferred stocks.............................. 1,375,000 1,547,000
-------------- --------------
Total available for sale.............................. $1,108,271,000 $1,026,120,000
============== ==============
</TABLE>
58
<PAGE> 62
ANCHOR NATIONAL LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
<TABLE>
<CAPTION>
ESTIMATED
AMORTIZED FAIR
COST VALUE
-------------- --------------
<S> <C> <C>
3. INVESTMENTS (CONTINUED)
HELD FOR INVESTMENT:
Securities of the United States government............... $ 10,370,000 $ 10,320,000
Mortgage-backed securities............................... 8,831,000 8,725,000
Corporate bonds and notes................................ 126,333,000 130,851,000
Other debt securities.................................... 30,351,000 30,351,000
-------------- --------------
Total held for investment............................. $ 175,885,000 $ 180,247,000
============== ==============
AT SEPTEMBER 30, 1993:
AVAILABLE FOR SALE:
Mortgage-backed securities............................... $ 849,176,000 $ 828,705,000
Corporate bonds and notes................................ 247,888,000 255,357,000
Redeemable preferred stocks.............................. 1,375,000 1,633,000
-------------- --------------
Total available for sale.............................. $1,098,439,000 $1,085,695,000
============== ==============
HELD FOR INVESTMENT:
Securities of the United States Government............... $ 10,153,000 $ 11,306,000
Mortgage-backed securities............................... 15,317,000 15,435,000
Corporate bonds and notes................................ 156,603,000 169,511,000
Other debt securities.................................... 28,805,000 28,805,000
-------------- --------------
Total held for investment............................. $ 210,878,000 $ 225,057,000
============== ==============
</TABLE>
The amortized cost and estimated fair value of bonds, notes and redeemable
preferred stocks available for sale and held for investment by contractual
maturity follow:
<TABLE>
<CAPTION>
ESTIMATED
AMORTIZED FAIR
COST VALUE
-------------- --------------
<S> <C> <C>
AT SEPTEMBER 30, 1994:
AVAILABLE FOR SALE:
Due in one year or less.................................. $ 991,000 $ 987,000
Due after one year through five years.................... 90,381,000 88,906,000
Due after five years through ten years................... 158,098,000 146,017,000
Due after ten years...................................... 25,356,000 24,264,000
Mortgage-backed securities............................... 833,445,000 765,946,000
-------------- --------------
Total available for sale.............................. $1,108,271,000 $1,026,120,000
============== ==============
HELD FOR INVESTMENT:
Due in one year or less.................................. $ 7,427,000 $ 7,517,000
Due after one year through five years.................... 35,285,000 36,351,000
Due after five years through ten years................... 77,203,000 80,091,000
Due after ten years...................................... 47,139,000 47,563,000
Mortgage-backed securities............................... 8,831,000 8,725,000
-------------- --------------
Total held for investment............................. $ 175,885,000 $ 180,247,000
============== ==============
</TABLE>
Actual maturities of bonds, notes and redeemable preferred stocks will
differ from those shown above because of prepayments and redemptions.
59
<PAGE> 63
ANCHOR NATIONAL LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
3. INVESTMENTS (CONTINUED)
Gross unrealized gains and losses on bonds, notes and redeemable preferred
stocks available for sale and held for investment by major category follow:
<TABLE>
<CAPTION>
GROSS GROSS
UNREALIZED UNREALIZED
GAINS LOSSES
----------- ------------
<S> <C> <C>
AT SEPTEMBER 30, 1994:
AVAILABLE FOR SALE:
Securities of the United States government................... $ -- $ (244,000)
Mortgage-backed securities................................... 2,852,000 (70,351,000)
Securities of public utilities............................... -- (586,000)
Corporate bonds and notes.................................... 753,000 (14,747,000)
Redeemable preferred stocks.................................. 172,000 --
----------- ------------
Total available for sale............................. $ 3,777,000 $(85,928,000)
=========== ============
HELD FOR INVESTMENT:
Securities of the United States government................... $ 85,000 $ (135,000)
Mortgage-backed securities................................... 7,000 (113,000)
Corporate bonds and notes.................................... 4,619,000 (101,000)
----------- ------------
Total held for investment............................ $ 4,711,000 $ (349,000)
=========== ============
AT SEPTEMBER 30, 1993:
AVAILABLE FOR SALE:
Mortgage-backed securities................................... $ 9,789,000 $(30,260,000)
Corporate bonds and notes.................................... 8,624,000 (1,155,000)
Redeemable preferred stocks.................................. 258,000 --
----------- ------------
Total available for sale............................. $18,671,000 $(31,415,000)
=========== ============
HELD FOR INVESTMENT:
Securities of the United States government................... $ 1,153,000 $ --
Mortgage-backed securities................................... 118,000 --
Corporate bonds and notes.................................... 12,908,000 --
----------- ------------
Total held for investment............................ $14,179,000 $ --
=========== ============
</TABLE>
At September 30, 1994, gross unrealized gains on equity securities
aggregated $878,000 and gross unrealized losses aggregated $2,117,000. At
September 30, 1993, gross unrealized gains on equity securities aggregated
$330,000 and gross unrealized losses aggregated $816,000.
60
<PAGE> 64
ANCHOR NATIONAL LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
3. INVESTMENTS (CONTINUED)
Gross realized investment gains and losses on sales of all types of
investments are as follows:
<TABLE>
<CAPTION>
YEARS ENDED SEPTEMBER 30,
----------------------------------------------
1994 1993 1992
------------ ------------ ------------
<S> <C> <C> <C>
Bonds, notes and redeemable preferred stocks:
Available for sale:
Realized gains........................... $ 12,760,000 $ 20,193,000 $ --
Realized losses.......................... (31,066,000) (8,132,000) --
Other:
Realized gains........................... 890,000 5,194,000 59,422,000
Realized losses.......................... (1,913,000) (257,000) (47,458,000)
Equities:
Realized gains.............................. 467,000 2,445,000 686,000
Realized losses............................. (303,000) (2,653,000) (283,000)
Other investments:
Realized gains.............................. -- 255,000 7,050,000
Realized losses............................. (358,000) (1,573,000) (4,178,000)
Impairment writedowns......................... (14,190,000) (37,719,000) (37,988,000)
------------ ------------ ------------
Total net realized investment losses.......... $(33,713,000) $(22,247,000) $(22,749,000)
============ ============ ============
</TABLE>
The sources and related amounts of investment income are as follows:
<TABLE>
<CAPTION>
YEARS ENDED SEPTEMBER 30,
----------------------------------------------
1994 1993 1992
------------ ------------ ------------
<S> <C> <C> <C>
Short-term investments........................ $ 4,648,000 $ 7,278,000 $ 10,488,000
Bonds, notes and redeemable preferred
stocks...................................... 98,935,000 106,013,000 128,411,000
Mortgage loans................................ 12,133,000 9,418,000 11,571,000
Common stocks................................. 1,000 15,000 5,000
Real estate................................... 1,379,000 302,000 (1,176,000)
Limited partnerships.......................... 9,487,000 12,064,000 3,057,000
Other invested assets......................... 1,175,000 2,501,000 4,449,000
------------ ------------ ------------
Total investment income............. $127,758,000 $137,591,000 $156,805,000
============ ============ ============
</TABLE>
Expenses incurred to manage the investment portfolio amounted to $1,714,000
for the year ended September 30, 1994; $1,478,000 for the year ended September
30, 1993 and $2,057,000 for the year ended September 30, 1992; and are included
in General and Administrative Expenses in the income statement.
At September 30, 1994, no investment exceeded 10% of the Company's
consolidated shareholder's equity.
At September 30, 1994, mortgage loans were collateralized by properties
located in 8 states, with loans totaling approximately 22% of the aggregate
carrying value of the portfolio secured by properties located in California.
At September 30, 1994, bonds, notes and redeemable preferred stocks
included $141,772,000 (at amortized cost, with fair value of $136,423,000) of
investments not rated investment grade by either Standard & Poor's Corporation,
Moody's Investors Service or under National Association of Insurance
Commissioners' guidelines. The Company had no material concentrations of
non-investment grade assets at September 30, 1994.
61
<PAGE> 65
ANCHOR NATIONAL LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
3. INVESTMENTS (CONTINUED)
At September 30, 1994, the amortized cost (and fair value) of investments
in default as to the payment of principal or interest was $4,406,000, all of
which are unsecured non-investment grade bonds.
The Company entered into various United States Treasury Bill Futures
Contracts with major brokerage firms to shorten the duration of certain
investment securities. These futures contracts matured in March 1993.
At September 30, 1994, $5,385,000 of bonds, at amortized cost, were on
deposit with regulatory authorities in accordance with statutory requirements.
The Company has undertaken to dispose of certain real estate investments,
having an aggregate carrying value of $84,544,000, during the next one to three
years, to affiliated or nonaffiliated parties, and the Parent has guaranteed
that the Company will receive its current carrying value for these assets.
4. DISCLOSURE ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS
The following estimated fair value disclosures are limited to the
reasonable estimates of the fair value of only the Company's financial
instruments. The disclosures do not address the value of the Company's
recognized and unrecognized nonfinancial assets (including its other invested
assets, equity investments and real estate investments) and liabilities or the
value of anticipated future business. The Company does not plan to sell most of
its assets or settle most of its liabilities at these estimated fair values.
The fair value of a financial instrument is the amount at which the
instrument could be exchanged in a current transaction between willing parties,
other than in a forced or liquidation sale. Selling expenses and potential taxes
are not included. The estimated fair value amounts were determined using
available market information, current pricing information and various valuation
methodologies. If quoted market prices were not readily available for a
financial instrument, management determined an estimated fair value.
Accordingly, the estimates may not be indicative of the amounts the financial
instruments could be exchanged for in a current or future market transaction.
The following methods and assumptions were used to estimate the fair value
of each class of financial instruments for which it is practicable to estimate
that value:
CASH AND SHORT TERM INVESTMENTS: Carrying value is considered to be a
reasonable estimate of fair value.
BONDS, NOTES AND REDEEMABLE PREFERRED STOCKS: Fair value is based
principally on independent pricing services, broker quotes and other independent
information.
MORTGAGE LOANS: Fair values are primarily determined by discounting future
cash flows to the present at current market rates, using expected prepayment
rates.
VARIABLE ANNUITY ASSETS: Variable annuity assets are carried at the market
value of the underlying securities.
RESERVES FOR FIXED ANNUITY CONTRACTS: Deferred annuity contracts and single
premium life contracts are assigned fair value equal to current net surrender
value. Annuitized contracts are valued based on the present value of future cash
flows at current pricing rates.
PAYABLE TO BROKERS FOR PURCHASES OF SECURITIES: Such obligations represent
net transactions of a short-term nature for which the carrying value is
considered a reasonable estimate of fair value.
62
<PAGE> 66
ANCHOR NATIONAL LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
4. DISCLOSURE ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS (CONTINUED)
VARIABLE ANNUITY LIABILITIES: Fair values of contracts in the accumulation
phase are based on net surrender values. Fair values of contracts in the payout
phase are based on the present value of future cash flows at assumed investment
rates.
SUBORDINATED NOTES PAYABLE TO PARENT: Fair value is estimated based on the
quoted market prices for similar issues.
The estimated fair values of the Company's financial instruments at
September 1994 and 1993, compared with their respective carrying values are as
follows:
<TABLE>
<CAPTION>
CARRYING FAIR
VALUE VALUE
-------------- --------------
<S> <C> <C>
1994:
Assets:
Cash and short-term investments........................ $ 157,438,000 $ 157,438,000
Bonds, notes and redeemable preferred stocks........... 1,202,005,000 1,206,367,000
Mortgage loans......................................... 108,332,000 104,835,000
Variable annuity assets................................ 4,486,703,000 4,486,703,000
Liabilities:
Reserves for fixed annuity contracts................... 1,437,488,000 1,411,117,000
Payable to brokers for purchases of securities......... 124,624,000 124,624,000
Variable annuity liabilities........................... 4,486,703,000 4,335,753,000
Subordinated notes payable to Parent................... 34,000,000 33,897,000
============== ==============
1993:
Assets:
Cash and short-term investments........................ $ 500,624,000 $ 500,624,000
Bonds, notes and redeemable preferred stocks........... 1,296,573,000 1,310,752,000
Mortgage loans......................................... 112,493,000 114,994,000
Variable annuity assets................................ 4,170,275,000 4,170,275,000
Liabilities:
Reserves for fixed annuity contracts................... 1,562,136,000 1,542,355,000
Payable to brokers for purchases of securities......... 428,167,000 428,167,000
Variable annuity liabilities........................... 4,170,275,000 4,029,570,000
Subordinated notes payable to Parent................... 34,000,000 35,569,000
============== ==============
</TABLE>
5. INDEBTEDNESS
Subordinated notes payable to Parent bear interest at 7% and require future
principal payments of $11,500,000 in 1995, $18,500,000 in 1996 and $4,000,000 in
1997.
Short-term borrowings, which include short-term bank notes and reverse
repurchase agreements, averaged $1,647,000 at a weighted average interest rate
of 4.31% during 1994 and $4,318,000 at a weighted average interest rate of 3.42%
during 1993. The highest level of short-term borrowings at any month-end was
$9,988,000 at 4.40% during 1994. There were no short-term borrowings outstanding
at any month-end, but the highest level of short-term borrowings on any given
day was $51,813,000 at 3.38% during 1993. There were no short-term borrowings
outstanding at September 30, 1994 or 1993.
63
<PAGE> 67
ANCHOR NATIONAL LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
6. CONTINGENT LIABILITIES
The Company is involved in various kinds of litigation common to its
businesses. These cases are in various stages of development and, based on
reports of counsel, management believes that provisions made for potential
losses are adequate and any further liabilities and costs will not have a
material adverse impact upon the Company's financial position or results of
operations.
7. SHAREHOLDER'S EQUITY
The Company is authorized to issue 4,000 shares of its $1,000 par value
Common Stock. At September 30, 1994, 1993 and 1992, 3,511 shares are
outstanding.
Changes in shareholder's equity are as follows:
<TABLE>
<CAPTION>
YEARS ENDED SEPTEMBER 30,
----------------------------------------------
1994 1993 1992
------------ ------------ ------------
<S> <C> <C> <C>
ADDITIONAL PAID-IN CAPITAL:
Beginning balance........................... $252,876,000 $252,876,000 $172,876,000
Contributions from Sun Life................. -- -- 80,000,000
------------ ------------ ------------
Ending balance.............................. $252,876,000 $252,876,000 $252,876,000
============ ============ ============
RETAINED EARNINGS:
Beginning balance........................... $127,936,000 $ 86,218,000 $ 54,133,000
Net income.................................. 24,152,000 41,718,000 32,085,000
------------ ------------ ------------
Ending balance.............................. $152,088,000 $127,936,000 $ 86,218,000
============ ============ ============
NET UNREALIZED INVESTMENT GAINS (LOSSES):
Beginning balance........................... $(13,230,000) $(20,127,000) $ (3,100,000)
Change in net unrealized gains (losses) on
debt securities available for sale....... (69,407,000) 4,998,000 (17,742,000)
Change in net unrealized gains (losses) on
equity securities available for sale..... (753,000) 1,899,000 715,000
Adjustment to deferred acquisition costs.... 45,000,000 -- --
Tax effects of net changes.................. 13,437,000 -- --
------------ ------------ ------------
Ending balance.............................. $(24,953,000) $(13,230,000) $(20,127,000)
============ ============ ============
</TABLE>
Dividends which the Company may pay to its shareholder in any year without
prior approval of the California Insurance Commissioner are limited by statute.
Under California insurance law, without prior approval of the insurance
commissioner, dividends and distributions to shareholders are limited to the
greater of (i) 10% of the preceding December 31 balance of statutory surplus as
regards policyholders or (ii) the prior calendar year's net statutory gain from
operations. In addition, new law requires prior notice of any dividend and
grants the commissioner authority to order that a dividend not be paid. No
dividends were paid in fiscal years 1994, 1993 or 1992.
Under statutory accounting principles utilized in filings with insurance
regulatory authorities, the Company's net income for the nine months ended
September 30, 1994 was $30,439,000. The statutory net income for the year ended
December 31, 1993 was $51,686,000 and for the year ended December 31, 1992 was
$1,031,000. The Company's statutory capital and surplus was $223,379,000 at
September 30, 1994, $199,082,000 at December 31, 1993 and $145,147,000 at
December 31, 1992.
64
<PAGE> 68
ANCHOR NATIONAL LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
8. INCOME TAXES
The components of the provisions for federal income taxes on pretax income
consist of the following:
<TABLE>
<CAPTION>
NET REALIZED
INVESTMENT
GAINS (LOSSES) OPERATIONS TOTAL
-------------- ----------- -----------
<S> <C> <C> <C>
1994:
Currently payable.............................. $ (6,825,000) $10,135,000 $ 3,310,000
Deferred....................................... (1,320,000) 20,715,000 19,395,000
------------ ----------- -----------
Total income tax expense....................... $ (8,145,000) $30,850,000 $22,705,000
============ =========== ===========
1993:
Currently payable.............................. $ (836,000) $19,648,000 $18,812,000
Deferred....................................... (6,819,000) 9,801,000 2,982,000
------------ ----------- -----------
Total income tax expense....................... $ (7,655,000) $29,449,000 $21,794,000
============ =========== ===========
1992:
Currently payable.............................. $ (7,161,000) $ 3,743,000 $(3,418,000)
Deferred....................................... (4,352,000) 23,131,000 18,779,000
------------ ----------- -----------
Total income tax expense....................... $(11,513,000) $26,874,000 $15,361,000
============ =========== ===========
</TABLE>
Income taxes computed at the United States federal income tax rate of 35%
for 1994, 34.75% for 1993 and 34% for 1992 and income taxes provided differ as
follows:
<TABLE>
<CAPTION>
YEARS ENDED SEPTEMBER 30,
-------------------------------------------
1994 1993 1992
----------- ----------- -----------
<S> <C> <C> <C>
Amount computed at statutory rate.............. $23,562,000 $22,000,000 $15,685,000
Increases (decreases) resulting from:
Amortization of differences between book and
tax bases of net assets acquired.......... 465,000 1,423,000 (2,075,000)
State income taxes, net of federal tax
benefit................................... (662,000) (223,000) 2,742,000
Tax credits.................................. (612,000) (1,849,000) (1,460,000)
Other........................................ (48,000) 443,000 469,000
----------- ----------- -----------
Total income tax expense....................... $22,705,000 $21,794,000 $15,361,000
=========== =========== ===========
</TABLE>
For United States federal income tax purposes, certain amounts from life
insurance operations are accumulated in a memorandum policyholders' surplus
account and are taxed only when distributed to shareholders or when such account
exceeds prescribed limits. The accumulated policyholders' surplus was
$14,300,000 at September 30, 1994. The Company does not anticipate any
transactions which would cause any part of this surplus to be taxable.
Effective October 1, 1993, the Company adopted the provisions of Statement
of Financial Accounting Standards No. 109, "Accounting for Income Taxes."
Accordingly, the cumulative effect of this change in accounting for income taxes
was recorded during the quarter ended December 31, 1993 to increase the
liability for deferred income taxes by $20,463,000.
Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax
65
<PAGE> 69
ANCHOR NATIONAL LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
8. INCOME TAXES (CONTINUED)
reporting purposes. The significant components of the liability for deferred
income taxes are as follows:
<TABLE>
<CAPTION>
SEPTEMBER 30, SEPTEMBER 30,
1994 1993
------------- -------------
<S> <C> <C>
Deferred tax liabilities:
Investments............................................... $ 17,079,000 $ 3,051,000
Deferred acquisition costs................................ 117,200,000 102,381,000
State income taxes........................................ 2,917,000 4,050,000
------------ ------------
Total deferred tax liabilities............................ 137,196,000 109,482,000
------------ ------------
Deferred tax assets:
Contractholder reserves................................... (54,819,000) (47,601,000)
Guaranty fund assessments................................. (1,197,000) (1,680,000)
Deferred expenses......................................... (3,177,000) (1,593,000)
Net unrealized losses on certain debt and equity
securities............................................. (13,436,000) --
------------ ------------
Total deferred tax assets................................. (72,629,000) (50,874,000)
------------ ------------
Net deferred tax liability (pro forma at September 30,
1993)..................................................... 64,567,000 58,608,000
Cumulative effect of change in accounting for income taxes
recorded in the first quarter 1994........................ -- (20,463,000)
------------ ------------
Deferred income taxes, per balance sheet.................... $ 64,567,000 $ 38,145,000
============ ============
</TABLE>
9. RELATED PARTY MATTERS
The Company pays commissions to two affiliated companies, SunAmerica
Securities, Inc. ("SAS") and Royal Alliance Associates, Inc. ("Royal"), and, in
1992, also paid commissions to another affiliate, Anchor National Financial
Services, Inc. ("ANFS"), whose operations were discontinued on September 30,
1992. These broker-dealers represent a significant portion of the Company's
business, amounting to approximately 40.0% in 1994, 43.7% in 1993 and 39.8% in
1992. During the year ended September 30, 1994, commissions paid to SAS and
Royal totaled $9,725,000 and $9,000,000, respectively, and during the year ended
September 30, 1993, such commission payments totaled $9,151,000 and $8,390,000,
respectively. During the year ended September 30, 1992, commissions paid to SAS,
Royal and ANFS totaled $3,975,000, $6,993,000 and $3,155,000, respectively.
The Company purchases administrative, investment management, accounting,
data processing and programming services from SunAmerica Financial, Inc., whose
purpose is to provide services to the SunAmerica companies. Amounts paid for
such services totaled $36,934,000 for the year ended September 30, 1994,
$32,711,000 for the year ended September 30, 1993 and $27,388,000 for the year
ended September 30, 1992.
SunAmerica Asset Management Corp. ("SunAmerica Asset Management"), receives
investment management fees from SunAmerica Life and the Parent. SunAmerica Asset
Management received $125,000 from each of these two companies during the year
ended September 30, 1994, and received $73,000 during the year ended September
30, 1993.
During the year ended September 30, 1994, the Company sold to the Parent
real estate for cash equal to its carrying value of $29,761,000. During the year
ended September 30, 1993, the Company sold to the Parent various invested assets
for cash equal to their carrying values of $88,488,000 (including real estate of
$45,668,000).
During the year ended September 30, 1993, the Company sold to SunAmerica
Life various invested assets with carrying values of $46,332,000 for cash of
$46,334,000 and recorded net gains of $2,000.
66
<PAGE> 70
ANCHOR NATIONAL LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
10. BUSINESS SEGMENTS
The Company has three business segments: annuity operations, asset
management, and broker-dealer operations. Respectively, these include the sale
of fixed and variable annuities; the management and marketing of mutual funds;
and the sale of securities and financial services products. Summarized data for
the years ended September 30, 1994, 1993 and 1992 follow:
<TABLE>
<CAPTION>
TOTAL
DEPRECIATION
AND
TOTAL AMORTIZATION PRETAX TOTAL
REVENUES EXPENSE INCOME ASSETS
------------ ----------- ----------- --------------
<S> <C> <C> <C> <C>
1994:
Annuity operations................... $171,431,000 $26,298,000 $52,253,000 $6,473,065,000
Asset management..................... 32,803,000 19,330,000 7,916,000 102,192,000
Broker-dealer operations............. 19,394,000 408,000 7,151,000 26,869,000
------------ ----------- ----------- --------------
Total...................... $223,628,000 $46,036,000 $67,320,000 $6,602,126,000
============ =========== =========== ==============
1993:
Annuity operations................... $180,686,000 $23,634,000 $42,489,000 $6,545,966,000
Asset management..................... 33,826,000 8,853,000 14,806,000 98,137,000
Broker-dealer operations............. 17,275,000 440,000 6,217,000 27,286,000
------------ ----------- ----------- --------------
Total...................... $231,787,000 $32,927,000 $63,512,000 $6,671,389,000
============ =========== =========== ==============
1992:
Annuity operations................... $187,838,000 $14,769,000 $30,607,000 $5,673,250,000
Asset management..................... 26,926,000 5,141,000 10,194,000 94,534,000
Broker-dealer operations............. 14,774,000 371,000 5,333,000 23,474,000
------------ ----------- ----------- --------------
Total...................... $229,538,000 $20,281,000 $46,134,000 $5,791,258,000
============ =========== =========== ==============
</TABLE>
67
<PAGE> 71
APPENDIX A
THE MARKET VALUE ADJUSTMENT
EXAMPLES OF THE MARKET VALUE ADJUSTMENT (MVA)
The Market Value Adjustment Factor appearing on page 17 of the prospectus
and reproduced here for convenience is:
[(1 + I)/(1 + J + 0.005)]N/12 -1
where
I is the Guarantee Rate in effect;
J is the Current Interest Rate available for a period equal to the
number of years remaining in the Guarantee Period at the time of
withdrawal, transfer or annuitization (fractional years are rounded up
to the next full year); and
N is the number of full months remaining in the Guarantee Period at the
time the withdrawal, transfer or annuitization request is processed.
These examples assume the following:
(1) An initial Purchase Payment of $100,000 was made and allocated to
a ten year Guarantee Period with a Guarantee Rate of 5.50% (.055);
(2) a partial withdrawal of $4,000 is requested 2 1/2 years (30
months) from the expiration date (i.e., N = 30);
(3) the accumulated value attributable to the Purchase Payment (i.e.,
the Guarantee Amount) on the date of withdrawal is $149,414.74 and
(4) no transfers, additional Purchase Payments, or other withdrawals
have been made.
EXAMPLE OF A NEGATIVE MVA:
Assume that on the date of withdrawal, the Current Interest Rate for a
new Guarantee Period of 3 years (2 1/2 years rounded up to the next full
year) is 6.50%:
The MVA factor = [(1 + I)/(1 + J + .005)]N/12 -1
= [(1.055)/(1.065 + .005)](30/12) -1
= (0.985981)2.5 -1
= 0.965321 -1
= -0.034679
The requested withdrawal amount is multiplied by the MVA factor to
determine the MVA:
MVA = $4,000 X (-0.034679) = -$138.72
$138.72 represents the MVA that will be deducted from the remaining
accumulated value.
EXAMPLE OF A POSITIVE MVA:
Assume that on the date of withdrawal, the Current Interest Rate for a
new Guarantee Period of 3 years is 4.50%:
The MVA factor = [(1 + I)/(1 + J + .005)]N/12 -1
= [(1.055)/(1.045 + .005)](30/12) -1
= (1.004762)2.5 -1
= 1.011947-1
= +0.011947
The requested withdrawal amount is multiplied by the MVA factor to
determine the MVA:
$4,000 X 0.011947 = +$47.79
$47.79 represents the MVA that would be added to the amount withdrawn.
A-1
<PAGE> 72
STATEMENT OF ADDITIONAL INFORMATION
Vista Advantage Advisor
Fixed and Variable Group Deferred Contracts
VARIABLE ANNUITY ACCOUNT TWO-T
Depositor: ANCHOR NATIONAL LIFE INSURANCE COMPANY
This Statement of Additional Information is not a prospectus; it should be read
with the prospectus relating to the annuity contracts described above, a copy of
which may be obtained without charge by written request addressed to:
Anchor National Life Insurance Company
Annuity Service Center
P.O. Box 54299
Los Angeles, California 90054-0299
THE DATE OF THIS STATEMENT OF ADDITIONAL INFORMATION IS
, 1995
<PAGE> 73
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Performance Data......................................................... 3
Annuity Unit Values; Annuity Payments.................................... 5
Distribution of Contracts................................................ 7
Financial Statements..................................................... 7
</TABLE>
<PAGE> 74
PERFORMANCE DATA
Performance data for the various Portfolios are computed in the manner
described below.
Money Market Portfolio
Current yield is computed by first determining the Base Period Return
attributable to a hypothetical Certificate having a balance of one Accumulation
Unit at the beginning of a 7 day period using the formula:
Base Period Return = (EV-SV)/(SV)
where:
SV = value of one Accumulation Unit at the start of a 7 day period
EV = value of one Accumulation Unit at the end of the 7 day period
The value of the Accumulation Unit at the end of the period (EV) is
determined by (1) adding, to the value of the Unit at the beginning of the
period (SV), the investment income from the Underlying Fund attributed to the
Unit over the period, and (2) subtracting, from the result, the portion of the
annual Mortality and Expense Risk and Distribution Expense Charges allocable to
the 7 day period (obtained by multiplying the annually-based charges by the
fraction 7/365).
The current yield is then obtained by annualizing the Base Period Return:
Current Yield = (Base Period Return) x (365/7)
The Money Market Portfolio also quotes an "effective yield" that differs
from the current yield given above in that it takes into account the effect of
dividend reinvestment in the Underlying Fund. The effective yield, like the
current yield, is derived from the Base Period Return over a 7 day period.
However, the effective yield accounts for dividend reinvestment by compounding
the current yield according to the formula:
Effective Yield = [(Base Period Return + 1) - 365/7 - 1]
Net investment income for yield quotation purposes will not include
either realized capital gains and losses or unrealized appreciation and
depreciation, whether reinvested or not. The yield quotations also do not
reflect any impact of premium taxes or transfer fees.
The yield quoted should not be considered a representation of the yield
of the Money Market Portfolio in the future since the yield is not fixed. Actual
yields will depend on the type, quality and maturities of the investments held
by the Underlying Fund and changes in interest rates on such investments.
Yield information may be useful in reviewing the performance of the
Money Market Portfolio and for providing a basis for comparison with other
investment alternatives. However, the Money Market Portfolio's yield fluctuates,
unlike bank deposits or other investments that typically pay a fixed yield for a
stated period of time.
Other Portfolios
The Portfolios of the Separate Account other than the Money Market
Portfolio compute their performance data as "total return".
Total return for a Portfolio represents a single computed annual rate
of return that, when compounded annually over a specified time period (one,
five, and ten years, or since inception) and applied to a hypothetical initial
investment in a Certificate funded by that Portfolio made at the beginning of
the period, will produce the same Contract Value at the end of the period that
the hypothetical investment would have produced over the same
<PAGE> 75
period. The total rate of return (T) is computed so that it satisfies the
formula:
P(1+T) - n = ERV
where: P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value of a hypothetical $1,000 payment
made at the beginning of the 1, 5, or 10 year period as of the end of the period
(or fractional portion thereof).
The total return figures reflect the effect of both nonrecurring and
recurring charges, as discussed herein. Recurring charges are taken into account
in a manner similar to that used for the yield computations for the Money Market
Portfolio, described above. As with the Money Market Portfolio yield figures,
total return figures are derived from historical data and are not intended to be
a projection of future performance.
ANNUITY UNIT VALUES; ANNUITY PAYMENTS
Net Investment Factor
The Net Investment Factor ("NIF") for a Portfolio for a given Valuation
Period is a measure of the net investment performance of the Portfolio from the
end of the prior Valuation Period to the end of the given Period. A NIF of 1.000
for a Period results in no change; a NIF greater than 1.000 results in an
increase; and a NIF less than 1.000 results in a decrease. The NIF is increased
(or decreased) in accordance with the increases (or decreases, respectively) in
the value of a share of the Underlying Fund in which the Portfolio invests; it
is also reduced by Separate Account asset charges.
Illustrative Example
Assume that one share of a given Portfolio's Underlying Fund had a net
asset value of $11.46 as of the close of the New York Stock Exchange ("NYSE") on
a Tuesday; that its net asset value had been $11.44 at the close of the NYSE on
Monday, the day before; and that no dividends or other distributions on that
share had been made during the intervening Valuation Period. The NIF for the
Valuation Period (ending on Tuesday's close of the NYSE) is:
NIF = ($11.46/$11.44) - 0.00002591
= 1.00174825 - 0.00002591
= 1.00172234
The amount subtracted from the ratio of the two net asset values
(0.00002591) is the daily equivalent of the annual asset charge against the
Portfolio of 0.95%.
Annuity Unit Value
Illustrative Example
The change in Annuity Unit value for a Portfolio from one Valuation Date to the
next is determined in part by multiplying the Annuity Unit value on the prior
date by the Net Investment Factor for that Portfolio for that Valuation Period.
In addition, however, the result of that computation must also be multiplied by
an additional factor that takes into account, and neutralizes, the assumed
investment rate of 3.5 percent per annum upon which the annuity payment tables
are based. For example, if the net investment rate for a Portfolio (reflected in
the Net Investment Factor) were equal to
<PAGE> 76
the assumed investment rate, the Variable Annuity payments should remain
constant (i.e., the Annuity Unit value should not change). The daily factor that
neutralizes the assumed investment rate of 3.5 percent per annum is:
1/[(1.035) - (1/365)] = 0.99990575
In the example given above, if the Annuity Unit value for the Portfolio
was $10.103523 on Monday, the Annuity Unit value on Tuesday would have been:
$10.103523 x 1.00172234 x 0.99990575 = $10.119971
Variable Annuity Payments
Illustrative Example
Assume that a male, O, owns a Certificate in connection with which O has
allocated all of his Contract Value to a single Portfolio. O is also the sole
Annuitant and, at age 60, has elected to annuitize his Certificate under Option
4, a Life Annuity With 120 Monthly Payments Guaranteed. As of the last Valuation
Date preceding the Annuity Date, O's Participant's Account was credited with
7543.2456 Accumulation Units each having a value of $15.432655, (i.e., O's
Participant's Account at that Date is equal to 7543.2456 x $15.432655 =
$116,412.31). Assume also that the Annuity Unit value for the Portfolio at the
same date is $13.256932, and that the Annuity Unit value on the Valuation Date
immediately prior to the second annuity payment date is $13.327695.
O's first Variable Annuity payment is determined from the annuity rate
tables in O's Contract, using the information assumed above. From the tables,
which supply monthly annuity payments for each $1,000 of applied Contract Value,
O's first Variable Annuity payment is determined by multiplying the monthly
installment of $5.42 (Option 4 tables, male Annuitant age 60 at the Annuity
Date) by the result of dividing O's Account Value by $1,000:
First Payment = $5.42 x ($116,412.31/$1,000)
= $630.95
The number of O's Annuity Units (which will be fixed; i.e., it will not
change unless he transfers his Contract Value to another Portfolio) is also
determined at this time and is equal to the amount of the first Variable Annuity
payment divided by the value of an Annuity Unit at the Valuation Date
immediately prior to annuitization:
Annuity Units = $630.95/$13.256932 = 47.593968
O's second Variable Annuity payment is determined by multiplying the
number of Annuity Units by the Annuity Unit value as of the Valuation Date
immediately prior to the second payment due date:
Second Payment = 47.593968 x $13.327695 = $634.32
The third and subsequent Variable Annuity payments are computed in a
manner similar to the second Variable Annuity payment.
Note that the amount of the first Variable Annuity payment depends on
the Contract Value in the relevant Portfolio on the Annuity Date and thus
reflects the investment performance of the Portfolio net of fees and charges
during the Accumulation Period. The amount of that payment determines the number
of Annuity Units, which will remain constant during the Annuity Period (assuming
no transfers from the Portfolio). The net investment performance of the
Portfolio during the Annuity Period is reflected in continuing changes during
the Annuity Period in the Annuity Unit value, which determines the amounts of
the second and subsequent Variable Annuity payments.
<PAGE> 77
DISTRIBUTION OF CONTRACTS
The Contracts are offered through the distributor for the Separate
Account, Vista Broker Dealer Services, Inc., located at 125 West 55th Street,
New York, New York 10019. Vista Broker Dealer Services, Inc. is registered as a
broker-dealer under the Securities Exchange Act of 1934, as amended, is a member
of the National Association of Securities Dealers, Inc. and is not affiliated
with the Company.
Contracts are offered on a continuous basis.
FINANCIAL STATEMENTS
The audited financial statements of the Company as of September 30, 1994
and 1993 and for each of the three years in the period ended September 30, 1994
are presented in the prospectus. In addition, the unaudited financial statements
of the Company as of June 30, 1995 and for the nine months ended June 30, 1995
and 1994 are also presented in the prospectus. The financial statements of the
Company should be considered only as bearing on the ability of the Company to
meet its obligation under the Contracts.
As of the date of this Statement of Additional Information the sale of
Contracts had not commenced, and the Portfolios had no assets. Therefore, no
financial statements with respect to the Separate Account are presented in this
Statement of Additional Information.
Price Waterhouse LLP, 400 South Hope Street, Los Angeles, California
90071, serves as the independent accountants for the Separate Account and the
Company. The financial statements of the Company as of September 30, 1994 and
1993 and for each of the three years in the period ended September 30, 1994 have
been so included in reliance on the report of Price Waterhouse LLP, independent
accountants, given on the authority of said firm as experts in auditing and
accounting.
The unaudited financial statements as of June 30, 1995 and for the nine
months ended June 30, 1995 and 1994 have been derived from unaudited financial
information and which, in the opinion of management, include all adjustments,
consisting of only normal recurring adjustments, necessary for a fair statement
of the results for the unaudited interim periods.
<PAGE> 78
PART C - OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements
The following financial statements are included in Part A of the
Registration Statement:
Financial Statements of Anchor National Life Insurance Company
The following financial statements are included in Part B of the
Registration Statement:
None
(b) Exhibits
<TABLE>
<S> <C>
(1) Resolutions Establishing Separate Account.............. Filed Herewith
(2) Custody Agreements..................................... Not Applicable
(3) (a) Form of Distribution Contract...................... Filed Herewith
(b) Selling Agreement.................................. Filed Herewith
(4) Variable Annuity Contract.............................. Filed Herewith
(5) Application for Contract............................... Filed Herewith
(6) Depositor - Corporate Documents
(a) Certificate of Incorporation....................... Filed Herewith
(b) By-Laws............................................ Filed Herewith
(7) Reinsurance Contract................................... Not Applicable
(8) Form of Fund Participation Agreement................... Filed Herewith
(9) Opinion of Counsel..................................... To Be Filed
By Amendment
Consent of Counsel..................................... To Be Filed
By Amendment
(10) Consent of Independent Accountants..................... Filed Herewith
(11) Financial Statements Omitted from Item 23.............. None
(12) Initial Capitalization Agreement....................... Not Applicable
(13) Performance Computations............................... Not Applicable
(14) Diagram and Listing of All Persons Directly
or Indirectly Controlled By or Under Common
Control with Anchor National Life Insurance
Company, the Depositor of Registrant................... Filed Herewith
(15) Powers of Attorney..................................... Filed Herewith
</TABLE>
Item 25. Directors and Officers of the Depositor
The officers and directors of Anchor National Life Insurance Company
are listed below. Their principal business address is 1 SunAmerica Center, Los
Angeles, California 90067-6022, unless otherwise noted.
<TABLE>
<CAPTION>
Name Position
- ---- --------
<S> <C>
Eli Broad Chairman, President and
Chief Executive Officer
Jay S. Wintrob Director and Executive Vice
President
Jana W. Greer Director and Senior Vice
President
Peter McMillan Director
James R. Belardi Director, Senior Vice
President and Treasurer
Lorin M. Fife Director, Senior Vice
President, General Counsel
and Assistant Secretary
</TABLE>
<PAGE> 79
<TABLE>
<S> <C>
Susan L. Harris Director, Senior Vice
President and Secretary
Gary W. Krat Director and Senior Vice
President
Scott L. Robinson Director and Senior Vice
President
N. Scott Gillis Senior Vice President and
Controller
Edwin R. Reoliquio Senior Vice President and Actuary
Victor E. Akin Vice President
James W. Rowan Vice President
Michael L. Fowler Vice President
J. Franklin Grey Vice President
Keith B. Jones Vice President
Michael Lindquist Vice President
Edward P. Nolan * Vice President
Greg Outcalt Vice President
Scott H. Richland Vice President and
Assistant Treasurer
</TABLE>
- -----------------
* 88 Bradley Road, P.O. Box 4005, Woodbridge, Connecticut 06525
Item 26. Persons Controlled By or Under Common Control With Depositor or
Registrant
The Registrant is a separate account of Anchor National Life Insurance
Company (Depositor). For a complete listing and diagram of all persons directly
or indirectly controlled by or under common control with the Depositor or
Registrant, see Exhibit 14 which is incorporated herein by reference.
Item 27. Number of Contract Owners
None.
Item 28. Indemnification
None.
Item 29. Principal Underwriter
Vista Broker-Dealer Services, Inc. serves as distributor to the
Registrant.
Its principal business address is 125 West 55th Street, New York, New
York 10019. The following are the directors and officers of Vista Broker-Dealer
Services, Inc.
<PAGE> 80
<TABLE>
<CAPTION>
Name Position with Distributor
- ---- -------------------------
<S> <C>
Lynn J. Mangum Chairman
Joseph F. Kissel President
Richard E. Stierwalt Vice President & Chief Executive
Officer
Robert J. McMullan Executive Vice President
Steven Mintos Executive Vice President & Chief
Operating Officer
Dale Smith Vice President & Chief Financial
Officer
George Martinez Senior Vice Presient
Catherine T. Dwyer Vice President & Secretary
Irimga McKay Vice President
Michael Burns Vice President/Compliance
William Blundin Vice President
Dennis Sheehan Vice President
Annamaria Porcaro Assistant Secretary
Robert Tuch Assistant Secretary
</TABLE>
<TABLE>
<CAPTION>
Net Distribution Compensation on
Name of Discounts and Redemption or Brokerage
Distributor Commissions Annuitization Commissions Commissions*
- ----------- ----------- ------------- ----------- -----------
<S> <C> <C> <C> <C>
Vista None None None None
Broker-Dealer
Services, Inc.
</TABLE>
- --------------------
*Distribution fee is paid by Anchor National Life Insurance Company.
Item 30. Location of Accounts and Records
Anchor National Life Insurance Company, the Depositor for the
Registrant, is located at 1 SunAmerica Center, Los Angeles, California
90067-6022. Vista Broker-Dealer Services, Inc., the distributor of the
Contracts, is located at 125 West 55th Street, New York, New York. Each
maintains those accounts and records required to be maintained by it pursuant to
Section 31(a) of the Investment Company Act and the rules promulgated
thereunder.
State Street Bank and Trust Company, 225 Franklin Street, Boston,
Massachusetts 02100, maintains certain accounts and records pursuant to the
instructions of the Registrant.
Item 31. Management Services
Not Applicable.
Item 32. Undertakings
Registrant undertakes to (1) file post-effective amendments to this
Registration Statement as frequently as is necessary to ensure that the audited
financial statements in the Registration Statement are never more than 16 months
old for so long as payments under the variable annuity Contracts may be
accepted; (2) include either (A) as part of any application to purchase a
Contract offered by the prospectus forming a part of the Registration Statement,
a space that an applicant can check to request a Statement of Additional
Information, or (B) a postcard or similar written communication affixed to or
included in the Prospectus that the Applicant can remove to send for a Statement
of Additional Information; and (3) deliver any Statement of Additional
Information and any financial statements required to be made available under
this Form N-4 promptly upon written or oral request.
<PAGE> 81
Item 33. Representation
The Company hereby represents that it is relying upon a No-Action
Letter issued to the American Council of Life Insurance dated November 28, 1988
(Commission ref. IP-6-88) and that the following provisions have been complied
with:
1. Include appropriate disclosure regarding the redemption restrictions
imposed by Section 403(b)(11) in each registration statement, including
the prospectus, used in connection with the offer of the contract;
2. Include appropriate disclosure regarding the redemption restrictions
imposed by Section 403(b)(11) in any sales literature used in
connection with the offer of the contract;
3. Instruct sales representatives who solicit participants to purchase the
contract specifically to bring the redemption restrictions imposed by
Section 403(b)(11) to the attention of the potential participants;
4. Obtain from each plan participant who purchases a Section 403(b)
annuity contract, prior to or at the time of such purchase, a signed
statement acknowledging the participant's understanding of (1) the
restrictions on redemption imposed by Section 403(b)(11), and (2) other
investment alternatives available under the employer's Section 403(b)
arrangement to which the participant may elect to transfer his contract
value.
<PAGE> 82
SIGNATURES
As required by the Securities Act of 1933 and the Investment Company
Act of 1940, the Registrant has caused this Registration Statement to be signed
on its behalf, in the City of Los Angeles, and the State of California, on this
6th day of November, 1995.
VARIABLE ANNUITY ACCOUNT TWO-T
(Registrant)
By: ANCHOR NATIONAL LIFE INSURANCE COMPANY
(Depositor)
By: /s/ JAY S. WINTROB
------------------------------------------
Jay S. Wintrob
Executive Vice President
By: ANCHOR NATIONAL LIFE INSURANCE COMPANY
(Depositor, on behalf of itself and Registrant)
By: /s/ JAY S. WINTROB
------------------------------------------
Jay S. Wintrob
Executive Vice President
POWER-OF-ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below hereby constitutes and appoints LORIN M. FIFE, SUSAN L. HARRIS AND
CHRISTINE A. NIXON or each of them, as his or her true and lawful
attorneys-in-fact and agents, with full power of substitution and
resubstitution, for him or her and in his or her name, place and stead, in any
and all capacities, to sign any and all amendments (including post-effective
amendments) to this Registration Statement, and to file the same, with all
exhibits thereto, and other documents in connection therewith, as fully to all
intents as he or she might or could do in person, including specifically, but
without limiting the generality of the foregoing, to (i) take any action to
comply with any rules, regulations or requirements of the Securities and
Exchange Commission under the federal securities laws; (ii) make application for
and secure any exemptions from the federal securities laws; (iii) register
additional annuity contracts under the federal securities laws, if registration
is deemed necessary. The undersigned hereby ratifies and confirms all that said
attorneys-in-fact and agents or any of them, or their substitutes, shall do or
cause to be done by virtue thereof.
As required by the Securities Act of 1933, this Registration Statement
has been signed by the following persons in the capacity and on the dates
indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
<S> <C> <C>
/s/ ELI BROAD President, Chief November 6, 1995
- --------------------- Executive Officer and
Eli Broad Chairman of the Board
(Principal Executive
Officer)
/s/ SCOTT L. ROBINSON Senior Vice President November 6, 1995
- --------------------- and Director
Scott L. Robinson (Principal Financial
Officer)
/s/ N. SCOTT GILLIS Senior Vice President November 6, 1995
- --------------------- and Controller
N. Scott Gillis (Principal Accounting
Officer)
</TABLE>
<PAGE> 83
<TABLE>
<S> <C> <C>
/s/ JAMES R. BELARDI Director November 6, 1995
- ---------------------
James R. Belardi
/s/ LORIN M. FIFE Director November 6, 1995
- ---------------------
Lorin M. Fife
/s/ JANA W. GREER Director November 6, 1995
- ---------------------
Jana W. Greer
/s/ SUSAN L. HARRIS Director November 6, 1995
- ---------------------
Susan L. Harris
/s/ GARY W. KRAT Director November 6, 1995
- ---------------------
Gary W. Krat
/s/ PETER MCMILLAN Director November 6, 1995
- ---------------------
Peter McMillan
/s/ JAY S. WINTROB Director November 6, 1995
- ---------------------
Jay S. Wintrob
</TABLE>
<PAGE> 84
EXHIBIT INDEX
<TABLE>
<CAPTION>
Sequentially
Exhibit Description Numbered Pages
- ------- ----------- --------------
<S> <C> <C>
(1) Resolutions Establishing Separate Account
(3)(a) Form of Distribution Contract
(3)(b) Selling Agreement
(4) Variable Annuity Contract
(5) Application for Contract
(6)(a) Certificate of Incorporation
(6)(b) By-Laws
(8) Form of Fund Participation Agreement
(10) Consent of Independent Accountants
(14) Diagram and Listing of All Persons Directly
or Indirectly Controlled By or Under Common
Control with Anchor National Life Insurance
Company, the Depositor of Registrant
(15) Powers of Attorney
(included on signature page)
</TABLE>
<PAGE> 1
EXHIBIT 1
SECRETARY CERTIFICATE
I, Susan L. Harris, Secretary of ANCHOR NATIONAL LIFE INSURANCE COMPANY,
a California corporation (this "Corporation"), do hereby certify that the
Executive Committee of the Board of Directors of this Corporation on April 2,
1995 adopted the following resolutions and that such resolutions have not been
amended or rescinded from the date of their adoption and are in full force and
effect as of the date hereof:
NOW, THEREFORE, BE IT RESOLVED that the officers of this Corporation be,
and they hereby are, authorized to establish for the account of this Corporation
Variable Annuity Account Two-T ("Variable Annuity Account Two-T") in accordance
with the insurance laws of the state of California, to provide the investment
medium for certain annuity contracts to be issued by this Corporation
("Contracts") as may be designated as participating therein. The Variable
Annuity Account Two-T shall receive, hold, invest and reinvest only the monies
arising from: (1) premiums, contributions or payments made pursuant to Contracts
participating therein; (2) such assets of this Corporation as may be deemed
necessary for the orderly operation of such Variable Annuity Account Two-T; and
(3) the dividends, interest and gains produced by the foregoing; and
RESOLVED FURTHER, that the Variable Annuity Account Two-T shall be
administered and accounted for as part of the general business of this
Corporation; and
RESOLVED FURTHER, that the officers of this Corporation be and they
hereby are, authorized:
(i) to take whatever actions are necessary to see to it that the
Contracts are registered under the provisions of the Securities Act of 1933 to
the extent that they shall determine that such registration is necessary;
(ii) to take whatever actions are necessary to assure that such
Variable Annuity Account Two-T is properly registered with the Securities and
Exchange Commission under the provisions of the Investment Company Act of 1940,
if any, and to the extent that they shall determine such registration is
necessary;
(iii) to prepare, execute and file such amendments to any registration
statements filed under the aforementioned Acts (including such pre-effective and
post-effective amendments), supplements and exhibits thereto as they may deem
necessary or desirable;
(iv) to apply for exemption from those provisions of the aforementioned
Acts and the rules promulgated thereunder as they may deem necessary or
desirable and to take any and all other actions which they may deem necessary,
desirable or appropriate in connection with such Acts;
(v) to take whatever actions are necessary to assure that the
Contracts are filed with the appropriate state insurance regulatory authorities
and to prepare and execute all necessary documents to obtain approval of the
insurance regulatory authorities;
(vi) to prepare or have prepared and executed all necessary documents
to obtain approval of, or clearance with, or other appropriate actions required
by, any other regulatory authority that may be necessary in connection with the
foregoing matters;
(vii) to enter into fund participation agreements with trusts which
will be advised by The Chase Manhattan Bank, N.A.; and
RESOLVED FURTHER, that the form of any resolutions required by any state
or other governmental authority to be filed in connection with any of the
documents or instruments referred to in any of the preceding resolutions be, and
they same hereby are, adopted as fully set forth herein if (i) in the opinion of
the officers of this Corporation the adoption of the resolutions is advisable;
and (ii) the Corporate Secretary or Assistant Secretary of this Corporation
evidences such adoption by inserting into these minutes copies of such
resolutions; and
<PAGE> 2
RESOLVED FURTHER, that the officers of this Corporation, and each of them
are hereby authorized to prepare and to execute the necessary documents; and
RESOLVED FURTHER, that any officer of this Corporation and each of
them, acting individually, are authorized to execute and deliver on behalf of
this Corporation any fund participation agreements and any such other
agreements, certificates, documents or instruments as may be appropriate or
required in connection therewith, all to be in such form and with such
changes or revisions as may be approved by the officer executing and
delivering the same, such execution and delivery being conclusive evidence of
such approval;
RESOLVED FURTHER, that this Corporation hereby ratifies any and all
actions that may have previously been taken by the officers of this
Corporation in connection with the foregoing resolutions and authorizes the
officers of this Corporation to take any and all such further actions as may
be appropriate to reflect these resolutions and to carry out their tenor
effect and intent.
IN WITNESS WHEREOF, the undersigned has executed this Certificate and
affixed the seal of this Corporation, this 31st day of October, 1995
[SEAL]
/s/ SUSAN L. HARRIS
----------------------------
Susan L. Harris, Secretary
<PAGE> 1
EXHIBIT (3)(A)
DISTRIBUTION AGREEMENT
THIS AGREEMENT, entered into as of this th day of , 1995,
is among ANCHOR NATIONAL LIFE INSURANCE COMPANY ("Anchor National"), a life
insurance company organized under the laws of the State of California, on behalf
of itself and VARIABLE ANNUITY ACCOUNT TWO - T ("Separate Account"), a separate
account established by Anchor National pursuant to the insurance laws of the
State of California, and VISTA BROKER-DEALER SERVICES ("Distributor"), a
corporation organized under the laws of the State of Maryland.
WITNESSETH:
WHEREAS, Anchor National intends to issue certain flexible payment
deferred annuity contracts under the name "Vista Advantage Advisor" (the
"Contracts") which will permit allocation of premium payments and contract value
to the Separate Account and/or Anchor National's general account ("Fixed Account
Options"); and
WHEREAS, Anchor National, by resolution adopted on April 2, 1995,
established the Separate Account on its books of account, for the purpose of
supporting variable benefits under the Contracts; and
WHEREAS, the Separate Account will invest in an investment company
("Trust") which will be managed by The Chase Manhattan Bank, N.A. ("Chase");
WHEREAS, the Separate Account has been registered with the Securities and
Exchange Commission ("Commission") as a unit investment trust under the
Investment Company Act of 1940 ("1940 Act") (File No. 811- ); and
WHEREAS, two registration statements for the Contracts, one on Form N-4
relating to the Separate Account and one on Form S-1 relating to the Fixed
Account Options (collectively, the "Registration Statements"), have been filed
with the Commission under the Securities Act of 1933 (the "1933 Act") (File Nos.
33- and 33- , respectively); and
WHEREAS, the two Registration Statements include the same prospectus, and
the same definitive form of the prospectus will be used from time to time to
offer both the Separate Account and the Fixed Account Options under the
Contracts (herein, the "Prospectus"); and
WHEREAS, the Distributor, a broker-dealer registered under the Securities
Exchange Act of 1934 (the "1934 Act") and a member of the National Association
of Securities Dealers, Inc. ("NASD"), proposes to act as distributor on an
agency basis in the marketing and distribution of the Contracts;
NOW THEREFORE, in consideration of the foregoing, and of the mutual
covenants and conditions set forth herein, and for other good and valuable
consideration, the receipt of which is hereby acknowledged, Anchor National, the
Separate Account and Distributor hereby agree as follows:
1. Authorization of Distributor
(a) The Distributor will serve as distributor on an agency basis
for the Contracts. This authorization is exclusive until this
Agreement is terminated or the authorization is otherwise terminated
pursuant to an amendment hereto. The Distributor represents that it
will actively engage in its duties under this Agreement on a
continuous basis while the Registration Statements (or any other
registration statements filed and declared effective in lieu
thereof) for the Contracts are effective, consistent with its
business and relationship with Chase pursuant to the Omnibus
Agreement described in Section 14
<PAGE> 2
hereof, and subject to applicable material market and regulatory
conditions and any other restrictions that may become applicable to
its activities. Anchor National reserves the right at any time to
suspend or limit the public offering of the Contracts, upon written
notice to Distributor.
(b) It is understood that Distributor has no present intention of
engaging in sales of the Contracts on a retail basis (although it
reserves the right to do so), and intends to restrict its
distribution activities to wholesaling activities, and in that
regard will recruit and recommend for appointment by Anchor National
duly registered broker-dealers and licensed insurance agents
(together, "Selling Broker-Dealers") to sell the Contracts on a
retail basis directly to purchasers, subject to the provisions of
this Agreement and a selling agreement to be entered into between
Anchor National, Distributor and such Selling Broker-Dealer.
Distributor will provide information and marketing assistance to
Selling Broker-Dealers. Distributor shall use its reasonable best
efforts to enter into selling agreements for the Contracts with
those persons currently selling the Vista family of mutual funds.
(c) For so long as the Contracts are still being publicly offered,
Anchor National will use its reasonable best efforts to assure that
the Contracts are continuously registered under the 1933 Act and,
should it ever be required, under state securities laws, and will
use reasonable efforts to ensure that the Contracts are approved
under state insurance laws when and where necessary so that the
Contracts may be offered continuously. Anchor National shall
provide internal marketing support for Distributor's wholesaling
efforts appropriate for the Contracts, including providing
wholesaler training, advanced markets and retirement plan support,
sales ideas, competitive information and other market research, and
illustrative software.
2. Authorization of Selling Broker-Dealers. Anchor National and the
Distributor shall enter into selling agreements ("Selling Agreements")
with Selling Broker-Dealers, which shall be broker-dealers registered
under the 1934 Act and authorized by applicable state insurance law to
sell variable annuity contracts. Selling Agreements shall contain the
written representations of Selling Broker-Dealers that all individuals
who offer and sell the Contracts pursuant to the Selling Agreements on
behalf of such Selling Broker-Dealers are duly registered representatives
of such Broker-Dealers and are fully licensed as insurance agents under
applicable state insurance laws. Anchor National alone shall be
responsible for appointing Selling Broker-Dealers and all persons
selling the Contracts on their behalf in accordance with applicable state
insurance law, it being understood that Anchor National may refuse to
appoint a person or to pay appointment fees with respect to the
appointment of a person, to the extent consistent with Anchor National's
internal policies applicable to all persons selling its products.
Distributor shall have no responsibility in this regard. Anchor National
alone shall be responsible for communicating to all Selling
Broker-Dealers and their personnel, all policies and procedures
applicable to them as such appointed agents of Anchor National.
3. Distributor's Compliance with Applicable Law. Distributor shall be
responsible for its compliance, in connection with its duties as
distributor of the Contracts under this Agreement, with the requirements
of: (a) the 1934 Act; (b) any state securities laws to the extent
broker-dealer registration requirements imposed thereby are applicable to
it in performing such duties; (c) NASD filing requirements with respect
to any advertisements and sales literature for the Contracts, regardless
of which person prepared such material; and (d) all applicable state
insurance laws and
<PAGE> 3
regulations relating to licensed insurance agents, it being understood
that a person associated with Distributor, rather than Distributor
itself, may hold a corporate insurance agent's license in certain states
in which the performance of such duties requires an insurance agent's
license. Without limiting the foregoing, Distributor shall be
responsible for ensuring that all individuals associated with Distributor
who are offering and selling the Contracts on its behalf are licensed as
insurance agents under applicable state insurance laws. Anchor National
shall appoint and maintain the appointment of Distributor as necessary or
appropriate for Distributor to engage in the offer and sale of the
Contracts during the term of this Agreement, and in that regard shall
appoint any individuals associated with Distributor and designated by
Distributor as agents acting on its behalf, provided, however, that
Anchor National reserves the right to refuse to appoint any such person,
consistent with its duties and responsibilities under applicable
insurance law. Anchor National shall be responsible for the payment of
all fees and the making of all filings required to effect such
appointments during the term of this Agreement. Distributor shall
conduct its affairs in accordance with the Rules of Fair Practice of the
NASD.
4. Representations and Warranties
(a) Anchor National represents and warrants to Distributor on the
effective date of this Agreement that:
(1) Anchor National is validly existing as a corporation in
good standing under the laws of the state of California with
power (corporate or otherwise) to own its properties and
conduct its business in the manner described in the
Registration Statements, is duly qualified to transact the
business of a life insurance company and to issue variable
annuity products, and is in good standing, in the state of
California.
(2) The execution and delivery of this Agreement and the
consummation of the transactions contemplated by this Agreement
have been duly authorized by all necessary corporate action by
Anchor National, and when so executed and delivered this
Agreement shall be the valid and binding obligation of Anchor
National enforceable in accordance with its terms.
(3) Consummation of the transactions contemplated by this
Agreement, and the fulfillment of the terms of this Agreement,
will not conflict with, result in any breach of any of the
terms and provisions of, or constitute (with or without notice
or lapse of time) a default under, the articles of
incorporation or bylaws of Anchor National, or any indenture,
agreement, mortgage, deed of trust, or other instrument to
which Anchor National is a party or by which it is bound, or
violate any law, or, to the best of Anchor National's
knowledge, any order, rule or regulation applicable to Anchor
National of any court or of any federal or State regulatory
body, administrative agency or any other governmental
instrumentality having jurisdiction over Anchor National or any
of its properties.
(b) Anchor National further represents and warrants to Distributor,
on the effective date of each Registration Statement for the
Contracts, that:
(1) Anchor National has filed with the Commission all
statements, notices, and other documents required for
registration of the Contracts, the Separate Account and the
Fixed Account Option
<PAGE> 4
under the provisions of the 1933 Act and the 1940 Act and
regulations thereunder; and, in particular, but not by way of
limitation, has filed as exhibits thereto, all contracts or
documents of Anchor National relating to the Contracts or the
Separate Account or Fixed Account Option which are required to
be filed as exhibits thereto by the 1933 Act or the 1940 Act or
regulations thereunder. Notwithstanding the foregoing, the
parties recognize that this Agreement, in the form in which it
is executed, has not been filed with the Registration Statement
(an earlier form having been so filed) and it is the intention
of Anchor National to file a form of this Agreement with the
first post-effective amendment to the Registration Statement.
(2) Anchor National has obtained all necessary orders of
exemption or approval from the Commission to permit the
distribution of the Contracts pursuant to this Agreement and to
permit the establishment and operation of the Separate Account
as contemplated in the Registration Statements, and such orders
apply to Distributor, as principal underwriter for the
Contracts and for the Separate Account.
(3) Each Registration Statement has been declared effective by
the Commission or has become effective in accordance with
applicable regulations. Anchor National has not received any
notice from the Commission with respect to either Registration
Statement pursuant to Section 8(e) of the 1940 Act, and no stop
order under the 1933 Act has been issued, and no proceeding
therefor has been instituted or threatened by the Commission.
(4) Each Registration Statement complies in all material
respects with applicable provisions of the 1933 Act and the
1940 Act and regulations thereunder, and no Registration
Statement contains an untrue statement of a material fact or
omits to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, in
light of the circumstances in which they were made; provided,
however, that none of the representations and warranties in
this Section 5 shall apply to statements or omissions from a
Registration Statement made in reliance upon and in conformity
with information furnished to Anchor National by Distributor
expressly for use therein.
(5) The Contracts have been duly and validly authorized and,
when issued and delivered against payment therefor, will be
duly and validly issued and will conform in all material
respects to the description of such Contracts in the
Registration Statement.
(6) The Separate Account has been duly established by Anchor
National and conforms to the description thereof in the
Registration Statement.
(7) The form of the Contracts have been or prior to
commencement of sale will be duly approved to the extent
required by the California insurance commission or otherwise
have been cleared for the sale of the Contracts in such state.
(8) The Contracts and the Separate Account have been duly
registered with each state securities
<PAGE> 5
commission, agency or other governmental body charged with the
regulation of securities (herein, "securities commission") to
the extent required by such state, except where failure to
effect such registration would not have a material adverse
effect on the marketing of the Contracts.
(9) No other consent, approval, authorization or order of any
court or governmental authority or agency is required for the
issuance or sale of the Contracts, the establishment or
operation of the Separate Account, or for the consummation of
the transactions contemplated by this Agreement, that has not
been obtained, except where the failure to obtain such consent,
approval or authorization would not have a material adverse
effect on the marketing of the Contracts.
(c) Distributor represents and warrants to Anchor National that:
(1) Distributor is validly existing as a corporation in good
standing under the laws of the State of Maryland, with power
(corporate or other) to own its properties and conduct its
business as a broker-dealer in securities and has been duly
qualified for the transaction of such business and is in good
standing under the laws of each other jurisdiction in which it
owns or leases properties, or conducts any business, so as to
require such qualification;
(2) Distributor is registered as a broker-dealer with all
federal and state authorities with which such registration is
required to carry out its obligations as contemplated by this
Agreement, and either Distributor or an associated person
thereof is licensed as an insurance agent with all state
authorities with whom such licensing is required for
Distributor to carry out its obligations as contemplated by
this Agreement;
(3) The execution and delivery of this Agreement and the
consummation of the transactions contemplated by this Agreement
have been duly authorized by all necessary corporate action by
Distributor, and when so executed and delivered, this Agreement
shall be the valid and binding obligation of Distributor
enforceable in accordance with its terms.
(4) Consummation of the transactions contemplated by this
Agreement, and the fulfillment of the terms of this Agreement,
will not conflict with, result in any breach of any of the
terms or provisions of, or constitute (with or without notice
or lapse of time) a default under, the articles of
incorporation or by-laws of Distributor, or any indenture,
agreement, mortgage, deed of trust, or other instrument to
which Distributor is a party or by which Distributor is bound,
or violate any law, or, to the best of Distributor's knowledge,
any order, rule or regulation applicable to Distributor of any
court or of any federal or State regulatory body,
administrative agency or any other governmental instrumentality
having jurisdiction over Distributor or any of its properties;
and
(5) There are no material legal or governmental proceedings
pending to which Distributor is a party or of which any
property of Distributor is
<PAGE> 6
the subject which, if determined adversely to Distributor,
would individually or in the aggregate have a material adverse
effect on the financial position, surplus or operations of
Distributor.
(6) To the extent that any statements or omissions made in any
Registration Statement for the Contracts, or any amendment or
supplement thereto, are made in reliance upon and in conformity
with information furnished to Anchor National by Distributor
expressly for use therein, such information shall conform in
all material respects to the requirements of the Act and the
rules and regulations of the Commission thereunder and, with
respect to the presentation of such information, will not
contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or
necessary to make the statements therein not misleading.
5. Undertakings of Anchor National
(a) For so long as the Contracts are being publicly offered, Anchor
National shall use its best efforts to maintain the registration of
the Contracts, the Fixed Account Option and the Separate Account
with the Commission and to maintain any registrations and approvals
of the Contracts, the Fixed Account Option and the Separate Account
with any securities or insurance commission or agency of any state
whose securities or insurance laws require registration or approval
of the Contracts, the Fixed Account Option or the Separate Account
for purposes of the distribution contemplated by this Agreement
(except where failure to effect or maintain such registration with a
state would not have a material adverse effect on the marketing of
the Contracts), such efforts to include, without limitation, best
efforts to prevent a stop order from being issued by the Commission
or any such state commission or, if a stop order has been issued, to
cause such stop order to be withdrawn.
(b) Anchor National shall take all action required to cause the
Separate Account to comply, and to continue to comply, with the
provisions of the 1940 Act and regulations and exemptions thereunder
applicable to the Separate Account as a registered investment
company classified as a unit investment trust and a separate account
under the 1940 Act, and shall not take any action unilaterally, in
its capacity as depositor for the Separate Account, that would cause
Distributor to be in violation of the 1940 Act.
(c) Anchor National shall provide Distributor with a preliminary
draft of any amendment to a Registration Statement, supplement to
the Prospectus, exemptive application or no-action request to be
filed with the Commission in connection with the Contracts, the
Fixed Account Option and/or the Separate Account. Anchor National
shall provide Distributor with a reasonable opportunity to review
and comment on any such draft before any such material is filed with
the Commission. Anchor National shall furnish Distributor with
copies of any such material or amendment thereto, as filed with the
Commission, promptly after the filing thereof, and any Commission
communication or order with respect thereto, promptly after receipt
thereof. Anchor National shall maintain and keep on file in its
principal executive office any file memoranda or any supplemental
materials referred to in any such Registration Statement,
Prospectus, exemptive application and no-action request and shall,
as necessary, amend such memoranda or materials
<PAGE> 7
and shall provide or otherwise make available copies of such
memoranda and materials to the Distributor.
(d) Anchor National shall provide Distributor access to such
records, officers and employees of Anchor National at reasonable
times as Distributor may request is necessary to enable Distributor
to fulfill its obligation, as the underwriter under the 1933 Act for
the Contracts and as principal underwriter for the Separate Account
under the 1940 Act, to perform due diligence and to use reasonable
care.
(e) Anchor National shall timely file each post-effective amendment
to a Registration Statement, Prospectus, Rule 24f-2 notice, annual
report on Form N-SAR, and all other reports, notices, statements,
and amendments required to be filed by or for Anchor National and/or
the Separate Account with the Commission under the 1933 Act, the
1934 Act and/or the 1940 Act or any applicable regulations, and
shall pay all filing or registration fees payable in connection
therewith. To the extent there occurs an event or development
(including, without limitation, a change of applicable law,
regulation or administrative interpretation), which in Anchor
National's reasonable judgment warrants an amendment to either the
Registration Statement or a supplement to the Prospectus, Anchor
National shall endeavor to prepare, subject to the Distributor's
right to review such material provided in Section 5(c), and file
such amendment or supplement with the Commission with all deliberate
speed.
6. Notification of Material Developments
(a) Anchor National and Distributor each agree to notify the other
in writing upon (i) being apprised of the institution of any
proceeding, investigation or hearing involving the offer or sale of
the Contracts, (ii) the happening of any material event, if known by
such notifying party, which makes untrue any statement made in a
Registration Statement or which requires the making of a change
therein in order to make any statement made therein not materially
misleading; or (iii) upon becoming aware that any Prospectus, sales
literature or other printed matter or material used in marketing and
distributing any Contract contains an untrue statement of a material
fact or omits to state a material fact necessary in order to make
the statements made therein, in light of the circumstances in which
they were made, not misleading.
(b) In addition, Anchor National shall notify the Distributor
immediately or in any event as soon as possible under the following
circumstances:
(1) Of any request by the Commission for any amendment to a
Registration Statement, for any supplement to the Prospectus,
or for additional information relating to the Contracts;
(2) Of the issuance by the Commission of any stop order with
respect to a Registration Statement or any amendment thereto,
or the initiation of any proceedings for that purpose or for
any other purpose relating to the registration and/or offering
of the Contracts;
(3) Of any loss or suspension of the approval of the Contracts
or distribution thereof by an insurance commission of any
state, any loss or suspension of Anchor National's certificate
of authority to do business or to issue variable annuity
products in any state.
<PAGE> 8
7. Books and Records. With respect to the issuance and servicing of
the Contracts, and execution of transactions thereunder carried out by
Anchor National (or a person acting pursuant to its authorization),
Anchor National shall keep records and books relating thereto in a manner
and form prescribed by and in accordance with Rules 17a-3 and 17a-4 under
the 1934 Act as are required to be maintained by Distributor as a
registered broker-dealer acting as distributor for the Contracts. Anchor
National acknowledges that it shall maintain such records and books on
behalf of Distributor and shall make such records and books of account
available for inspection by the Commission. Distributor shall have the
right to inspect and make copies of such records and books of account at
any time on demand.
8. Authorized Marketing Materials
(a) Subsequent to having been notified by Anchor National to
commence offers and sales of the Contracts, the Distributor, in
connection with its distribution activities hereunder, will utilize
no Prospectus purporting to meet the requirements of Section 10(a)
of the 1933 Act other than the one so designated by Anchor National.
As to other types of sales material used in connection with its
distribution activities, the Distributor agrees that it will use,
and pursuant to Selling Agreements will require Selling
Broker-Dealers to use, only sales materials as have been authorized
in writing for use by Anchor National, and which have been filed by
Distributor with the NASD, and approved where necessary or required.
For purposes of this Agreement, the phrase "sales material"
includes, but is not limited to, advertisements (such as material
published, or designed for use in, a newspaper, magazine, or other
periodical, radio, television, telephone or tape recording,
videotape display, signs or billboards, motion pictures, or other
public media), sales literature (i.e., any written communication
distributed or made generally available to customers or the public,
including brochures, circulars, research reports, market letters,
form letters, seminar texts, reprints or excerpts of any other
advertisement, sales literature, or published article), Registration
Statements, Prospectuses, Statements of Additional Information,
shareholder reports, and proxy materials.
(b) The Distributor will not distribute any Prospectus, sales
material, or any other printed matter or material in the marketing
and distribution of any Contract if, to the knowledge of the
Distributor, any of the foregoing contains any untrue statement of a
material fact or omits to state a material fact necessary in order
to make the statements made therein, in the light of the
circumstances with which they were made, not misleading.
9. Compensation. The Distributor, as distributor of the Contracts,
shall not be entitled to any remuneration from Anchor National or its
affiliates.
10. Remittance of Premium Payments. All premium payments collected on
the sale of the Contracts by the Distributor, if any, shall be
transmitted to Anchor National for immediate allocation to the Separate
Account and/or Fixed Account Option in accordance with the directions
furnished by the purchasers of such Contracts.
11. Termination. This Agreement will terminate automatically upon its
assignment to any person. This Agreement shall terminate, without the
payment of any penalty by any party:
(a) at the option of Anchor National, upon 60 days' advance written
notice to the Distributor; or
<PAGE> 9
(b) at the option of the Distributor upon 60 days' advance written
notice to Anchor National; or
(c) at the option of Anchor National upon written notice of such
termination to the Distributor, if formal proceedings against the
Distributor involving the offer or sale of the Contracts by the NASD
or by the Commission are instituted; or
(d) at the option of the Distributor upon written notice of such
termination to Anchor National, if formal proceedings against Anchor
National by a state insurance regulatory agency initiating seizure
or with respect to the Contracts are instituted; or
(e) at the option of either party if the offering and sale of the
Contracts is terminated or if the Omnibus Agreement defined in
Section 14 hereof is terminated; or
(f) at the option of either party upon written notice of such
termination to the other parties, if any other party or any
representative thereof at any time (i) in connection with the offer
or sale of the Contracts (A) employs any device, scheme, or artifice
to defraud; (B) makes any untrue statement of a material fact or
omits to state a material fact necessary in order to make the
statements made, in light of the circumstances under which they were
made, not misleading; or (C) engages in any act, practice, or course
of business which operates or would operate as a fraud or deceit
upon any person; or (ii) breaches its representations or warranties
under this Agreement.
12. Notice. Each notice required by this Agreement shall be given in
writing and shall be deemed to have been given if delivered personally,
given by facsimile or mailed by registered or certified mail (return
receipt requested) or by Federal Express or other overnight delivery as
follows:
if to Anchor National or the Separate Account:
c/o SunAmerica Inc.
1 SunAmerica Center
Century City
Los Angeles, California 90067-6022
Attention: James W. Rowan
Vice President
with a copy to:
SunAmerica Inc.
1 SunAmerica Center
Century City
Los Angeles, California 90067-6022
Attention: Susan L. Harris
Vice President, General
Counsel - Corporate
Affairs and Secretary
if to Distributor:
Vista Broker-Dealer Services, Inc.
125 W. 55th Street
New York, New York 10019
Attention: President
with a copy to:
Vista Broker-Dealer Services, Inc.
11th Floor
125 West 55th Street
New York, New York 10019
Attention: Paul Costagliola
<PAGE> 10
Vice President
13. Indemnification
(a) Anchor National shall indemnify and hold harmless Distributor
and its affiliates and each of their respective directors and
officers and each person, if any, who controls Distributor and its
affiliates against any and all losses, claims, damages, liabilities
or litigation (including legal and other expenses), arising out of
activities undertaken pursuant to this Agreement, to which
Distributor and its affiliates or such directors, officers or
controlling persons may become subject, under any statute, at common
law, or otherwise, which (i) may be based upon any wrongful act or
breach of this Agreement by Anchor National, or any of its employees
or representatives (other than any insurance agents appointed
pursuant to this Agreement or a Selling Agreement), any affiliate of
or any person acting on behalf of Anchor National; (ii) may be based
upon a breach of the warranties made by Anchor National set forth in
this Agreement; or (iii) may be based upon any untrue statement or
alleged untrue statement of a material fact contained in the
Registration Statements, Prospectus or Statement of Additional
Information for the Contracts or any other written sales material
prepared exclusively by Anchor National which is utilized by the
Distributor in connection with the sale of Contracts or arise out of
or are based upon the omission or alleged omission to state therein
a material fact required to be stated therein or necessary to make
the statements therein not misleading (but not if such untrue
statement or alleged untrue statement or omission or alleged
omission was made in conformity with information furnished to Anchor
National by Distributor specifically for use therein), provided,
however, that in no case is Anchor National's indemnity in favor of
a director or officer or any other person deemed to protect such
director or officer or other person against any liability to which
any such person would otherwise be subject by reason of willful
misfeasance, bad faith, or gross negligence in the performance of
his or her duties or by reason of his or her reckless disregard of
obligations and duties under this Agreement.
(b) Distributor shall indemnify and hold harmless Anchor National
and its affiliates and each of their respective directors and
officers and each person, if any, who controls Anchor National
against any and all losses, claims, damages, liabilities or
litigation (including legal and other expenses) arising out of
activities undertaken pursuant to this Agreement, to which Anchor
National or its affiliates, or such directors, officers or
controlling person may become subject, under any statute, at common
law, or otherwise, which (i) may be based upon any wrongful act or
breach of this Agreement by Distributor or any of its employees or
representatives any affiliate or any person acting on behalf of
Distributor; (ii) may be based upon a breach of the warranties made
by Distributor set forth in this Agreement; or (iii) may be based on
an untrue statement or alleged untrue statement of a material fact
contained in the Registration Statements, Prospectus or Statement of
Additional Information for the Contracts or any other written sales
material utilized in connection with the sale of the Contracts or
arise out of or are based upon the omission or alleged omission to
state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading (but only to
the extent such untrue statement or alleged untrue statement or
omission or alleged omission was made in conformity with information
furnished to Anchor National by Distributor specifically for use
therein); provided, however, that in
<PAGE> 11
no case is Distributor's indemnity in favor of a director or officer
or any other person deemed to protect such director or officer or
other person against any liability to which any such person would
otherwise be subject by reason of willful misfeasance, bad faith, or
gross negligence in the performance of his or her duties or by
reason of his or her reckless disregard of obligations and duties
under this Agreement.
(c) The indemnification provision of this Section 13 shall survive
any termination of this Agreement.
14. Omnibus Agreement. As between Anchor National and Distributor, this
Agreement, together with a certain letter agreement dated as of even date
herewith between Anchor National and Distributor, constitutes the entire
agreement, verbal and written, of the parties insofar as this Agreement
is in furtherance of discharging their respective obligations under that
certain agreement dated February 28, 1995 by and among Anchor National,
Chase, Distributor and First SunAmerica Life Insurance Company ("Omnibus
Agreement"). As between Anchor National and Distributor, accordingly,
this Agreement supersedes and annuls all other agreements between the
parties relating to the distribution of the Contracts except for the
Selling Agreements described in Section 2 hereinabove, the letter
agreement referred to herein and the Omnibus Agreement.
15. Amendments. This Agreement may be amended from time to time by the
mutual agreement and consent of the undersigned parties; provided that
such amendment shall not affect the rights of existing Contract Owners,
and that such amendment must be in writing and duly executed.
16. No Third Party Beneficiary. None of the provisions of this
Agreement shall inure to the benefit of any person other than the parties
hereto or their respective successors, or be deemed to create any rights,
benefits or privileges in favor of any person except the parties hereto.
17. No Agency Created Hereby. Except to the extent their duties under
this Agreement otherwise require, none of the provisions of this
Agreement shall be deemed to designate or appoint any party hereto as the
agent of any other party or to authorize or empower any party hereto to
act for or to create or incur any obligations on behalf of any other
party.
18. Counterparts. This Agreement may be executed and delivered in any
one or more counterparts, and each such counterpart so delivered and
bearing the original signature of a party hereto shall be binding as to
such party, and all counterparts shall together constitute one original
and the same instrument.
19. Interpretation. This Agreement shall be governed by, construed and
enforced in accordance with the laws of the State of California and shall
be interpreted in such a manner as to be effective and valid under the
laws of the State of California. If any provision of this Agreement
shall be deemed to be prohibited by law or invalid, such provision shall
be ineffective only to the extent of the prohibition or invalidity,
without invalidating the remainder of such provision or the remaining
provisions of this Agreement.
20. Waiver. The waiver by one party of the performance in observance of
any covenant or condition to be performed or observed by any other
hereunder shall not invalidate this Agreement, nor constitute a waiver by
such party of any other covenant or condition to be performed or observed
by any other hereunder. The exercise by any party hereto of any right,
privilege or remedy provided by this Agreement shall not constitute a
waiver by such party of any other covenant or condition to be performed
or observed by any other party under
<PAGE> 12
this Agreement. The exercise by any party hereto of any right, privilege
or remedy provided by this Agreement or otherwise by law shall not
exclude the exercise of any other right, privilege or remedy.
IN WITNESS WHEREOF, the undersigned parties have caused this Agreement to
be duly executed and their respective corporate seals to be hereunto affixed and
attested on the date first stated above.
ANCHOR NATIONAL LIFE
INSURANCE COMPANY
By:
----------------------
VARIABLE ANNUITY
ACCOUNT TWO - T
By: ANCHOR NATIONAL LIFE
INSURANCE COMPANY
By:
----------------------
VISTA BROKER-DEALER
SERVICES, INC.
By:
----------------------
<PAGE> 1
EXHIBIT (3)(B)
VISTA CAPITAL ADVANTAGE
VARIABLE CONTRACT SELLING AGREEMENT
This Agreement, dated __________________, ________, is by and among Anchor
National Life Insurance Company ("Insurer"), Vista Broker-Dealer Services, Inc.
("Distributor") and
- ------------------------------------
("Broker/Dealer")
- ------------------------------------
("General Agent")
If permitted by state law, the Broker/Dealer and the General Agent may be the
same person or entity. If Broker/Dealer and General Agent are the same person
or legal entity, such person or legal entity shall have the rights and
obligations hereunder of both Broker/Dealer and General Agent and this Agreement
shall be binding and enforceable by and against such person or legal entity in
both capacities. If Broker/Dealer and General Agent are not the same person or
legal entity, Broker/Dealer and General Agent shall not have the other entity's
authority and shall not be responsible for the other entity's duties hereunder,
except as provided in Section 4 hereof.
This Agreement is for the purpose of arranging for the distribution of certain
variable annuity contracts to be issued by the Insurer and for which Distributor
is distributor through sales people who are licensed agents of the Insurer and
associated with General Agent and are also registered representatives of
Broker/Dealer (each, a "Subagent").
In consideration of the mutual promises and covenants contained in this
Agreement, the Insurer and Distributor appoint Broker/Dealer and General Agent
and their Subagents to solicit and procure applications for Vista Capital
Advantage variable annuity contracts issued by the Insurer (the "Contracts").
This appointment is not deemed to be exclusive in any manner and only extends to
those jurisdictions where the Contracts have been approved for sale. In this
regard, Broker/Dealer and General Agent may rely on written notification, as
revised from time to time, provided by Insurer. Applications shall be taken only
on preprinted application forms supplied by the Insurer or such other form as
may be approved by the Insurer. All completed applications, supporting
documents and initial and subsequent payments are the sole property of the
Insurer and must be promptly remitted, and in any event not later than two
business days after receipt, to the Insurer at such address as it may from time
to time designate. All applications are subject to acceptance by Insurer in its
sole discretion. All money payable in connection with any of the Contracts,
whether as premium, purchase payment or otherwise and whether paid by or on
behalf of any Contract owner or anyone else having an interest in a Contract, is
the property of Insurer and shall be transmitted immediately in accordance with
the administrative procedures of Insurer furnished by Insurer to Broker/Dealer
and General Agent.
1. Subagents
General Agent is authorized to recommend for appointment Subagents to solicit
sales of the Contracts. General Agent is responsible for investigating the
character, work experience and background of any proposed Subagent prior to
recommending appointment by Insurer. No Subagent shall solicit applications or
otherwise act on behalf of Insurer until General Agent receives notice that
Subagent has been properly appointed by Insurer. Broker/Dealer and General
Agent are responsible for ensuring that their Subagents (1) offer and sell only
the Contracts, and (2) unless agreed to with Insurer in writing in another
selling agreement, are not authorized to offer and sell any other variable
annuity contracts issued by Insurer. Insurer shall be responsible for state
insurance law filings required with respect to the initial
<PAGE> 2
appointment of General Agent and Subagents and shall pay all filing fees
required under such laws by reason of such appointment. General Agent is
responsible for supervising the insurance solicitation activities of its
Subagents and for assuring that Subagents are properly licensed and in
compliance with all applicable Federal, state and local laws and regulations
governing insurance activities and all rules and procedures of Insurer. Insurer
reserves the right to refuse to appoint any proposed Subagent and to terminate
any relationship with any Subagent, with or without cause, at any time. By
submitting a Subagent for appointment, General Agent and Broker/Dealer warrant
that: (1) such Subagent is recommended for appointment; (2) such Subagent is
fully licensed under applicable laws to transact business with Insurer and is a
duly registered representative of Broker/Dealer; and (3) all background
investigations required by state and federal laws have been made with respect to
such Subagent.
2. Sales Material
General Agent and Broker/Dealer and the Subagents shall not use any written or
audio-visual sales material (including prepared scripts for oral presentations)
in connection with the sales of the Contracts or solicitations thereof, unless
such material has been provided by, or approved in writing in advance of such
use by, the Insurer and Distributor. In accordance with the requirements of
Federal law and certain state laws, General Agent and Broker/Dealer shall
maintain complete records indicating the manner and extent of distribution of
any such solicitation material. This material shall be made available to
appropriate federal and state regulatory agencies as required by law or
regulation and to Distributor and Insurer upon written request. General Agent
and Broker/Dealer jointly and severally hold the Insurer, Distributor and their
respective affiliates harmless from any liability arising from the use of any
material which has not been provided specifically approved in writing by Insurer
and Distributor.
3. Prospectuses
For any Contract which is a registered security, Broker/Dealer and General Agent
warrant that solicitation by Broker/Dealer, General Agent and every Subagent
will be made by use of a currently effective Prospectus, that a Prospectus will
be delivered concurrently with each sales presentation and that no statements
shall be made to a client superseding or controverting or otherwise inconsistent
with any statement made in the Prospectus. Insurer and Distributor shall
furnish Broker/Dealer and General Agent, at no cost to Broker/Dealer or General
Agent, reasonable quantities of currently effective Prospectuses.
4. Broker/Dealer and Insurance Agent Compliance
Broker/Dealer will fully comply with the requirements of the National
Association of Securities Dealers, Inc. (the "NASD") and of the Securities
Exchange Act of 1934 and such other applicable Federal or state laws and will
establish rules, procedures, supervisory and inspection techniques as necessary
to diligently supervise the activities of its registered representatives who are
Subagents and their compliance with applicable federal and state securities
laws, rules and regulations and NASD rules. Upon request by Insurer or
Distributor, Broker/Dealer will furnish appropriate records as are necessary to
establish diligent supervision. General Agent will fully comply with the
requirements of applicable state insurance laws and regulations and will
maintain all books and records and file all reports required thereunder to be
maintained or filed by a licensed insurance agent. If Broker/Dealer and General
Agent are not the same person or legal entity, Broker/Dealer and General Agent
shall comply with the terms and conditions of no-action letters made publicly
available by the staff of the SEC regarding the non-registration as a
broker-dealer under the 1934 Act, of a corporation licensed as an insurance
agent and associated with a registered broker/dealer.
Neither Broker/Dealer, General Agent nor any Subagent shall solicit an
application from, or recommend the purchase of a Contract to, an applicant
without having reasonable grounds to believe, in accordance with, among other
things, applicable regulations of any state insurance commission, the SEC and
the NASD, that such purchase is suitable for the applicant. While not
<PAGE> 3
limited to the following, a determination of suitability shall be based on
information supplied after a reasonable inquiry concerning the applicant's
insurance and investment objectives and financial situation and needs.
Unless required by a determination of suitability, neither Broker/Dealer,
General Agent nor any Subagent shall encourage a purchaser of a Contract to
surrender or exchange his Contract in order to purchase another insurance policy
or contract.
Broker/Dealer and General Agent shall promptly notify Insurer and Distributor of
any written customer complaint or notice of any regulatory investigation or
proceeding received by Broker/Dealer, General Agent or Subagent relating to a
Contract or any activities undertaken in connection with this Agreement.
5. Indemnification
In addition to any indemnification obligation under any other provision of this
Agreement or otherwise, Broker/Dealer and General Agent jointly and severally
agree to hold harmless and indemnify Distributor, the Insurer and their
respective affiliates against any and all claims, liabilities and expenses which
any such party may incur from liabilities (including reasonable attorney fees
and related expenses) arising from the actions or omissions, violations of law
or failure to comply therewith, of Broker/Dealer, General Agent, their Subagents
and other associated persons.
6. Fidelity Bond
Broker/Dealer and General Agent each represent that all directors, officers,
employees, and Subagents licensed pursuant to this Agreement or who have access
to funds of the Insurer are and will continue to be covered by a blanket
fidelity bond including coverage for larceny, embezzlement or any other
defalcation, issued by a reputable bonding company. This bond shall be
maintained at Broker/Dealer's and General Agent's expense. Such bond shall be
at least equivalent to the minimal coverage required under the NASD Rules of
Fair Practice, endorsed to extend coverage to life insurance and annuity
transactions. Broker/Dealer and General Agent acknowledge that the Insurer may
require evidence that such coverage is in force and Broker/Dealer and General
Agent shall promptly give notice to the Insurer of any notice of cancellation or
change of coverage.
Broker/Dealer and General Agent each assign any proceeds received from the
fidelity bond company to the Insurer to the extent of the Insurer's loss due to
activities covered by the bond. If there is any deficiency, Broker/Dealer and
General Agent jointly and severally indemnify and hold harmless the Insurer from
any deficiency and from the cost of collection.
7. Limitations of Authority
The Contract forms are the sole property of the Insurer. No person other than
the Insurer has the authority to make, alter or discharge any policy, Contract,
certificate, supplemental contract or form issued by the Insurer. No person
other than the Insurer has the right to waive any provision with respect to any
contract or policy. No person other than the Insurer has the authority to enter
into any proceeding in a court of law or before a regulatory agency in the name
of or on behalf of the Insurer.
8. Market Timer Program
Insurer has available a Market Timer Program which allows a market-timer service
to effect multiple transfers or other transactions. Broker/Dealer or the
Subagents desire to use this program, they may do so only be executing a Market
Timer Agreement. This Agreement specifies that if the impact of processing
exchange transactions received from all outside sources is deemed to be
injurious to one of Insurer's separate accounts or a subaccount thereof, then
Insurer in its sole discretion may elect not to process the exchanges. Insurer
will notify the Service of the inability to process the requested exchange.
<PAGE> 4
9. Representations and Warranties
Each party hereto represents and warrants to each other party, as follows:
(i) It is duly organized, validly existing and in good standing under the
laws of the state of its incorporation or other corresponding applicable law and
has all requisite corporate power to carry on its business as now being
conducted and to perform its obligations as contemplated by this Agreement.
(ii) As of the date this Agreement becomes effective, (as defined in
Paragraph 10 below) it will have all licenses, approvals, permits and
authorizations of, and registrations with, all authorities and agencies,
including non-governmental self-regulatory agencies, required under all federal
state and local laws and regulations to enable it to perform its obligations as
contemplated by this Agreement.
(iii) It has all requisite corporate power and authority to enter into this
Agreement. The execution, delivery and performance of this Agreement have been
duly and validly authorized by all necessary corporate action and this Agreement
constitutes the legal, valid and binding agreement of such party, enforceable
against it in accordance with its terms, except as the same may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights generally and general
principles of equity.
(iv) Except as provided in this Agreement, no approval, authorization,
consent, license, clearance or order of, declaration or notification to, or
filing or registration with, any governmental or regulatory authority
(including, without limitation, any non-governmental regulatory agencies or
authorities) is required to be obtained by it for the consummation of the
transactions contemplated in this Agreement.
10. General Provisions
(a) Effectiveness
This Agreement shall be effective, with respect to any Contract which is a
registered security, on the date that the registration statement containing the
Prospectus for such Contract is declared effective.
(b) Waiver
Waiver by any of the parties to promptly insist upon strict compliance with any
of the obligations of any other party under this Agreement will not be deemed to
constitute a waiver of the right to enforce strict compliance.
(c) Independent Contractors
Broker/Dealer, General Agent and Subagents are independent contractors and not
employees or subsidiaries of Distributor or the Insurer.
(d) Independent Assignment
No assignment of this Agreement or of commissions or other payments under this
Agreement shall be valid without the prior written consent of the Insurer and
the Distributor.
(e) Notice
Any notice pursuant to this Agreement shall be mailed, postage paid, to the last
address communicated by the receiving party to the other parties to this
Agreement.
(f) Severability
To the extent this Agreement may be in conflict with any applicable law or
regulation, this Agreement shall be construed in a manner not inconsistent with
such law or regulation. The invalidity or illegality of any provision of this
Agreement shall not be deemed to effect the validity or legality of any other
provision of this Agreement.
<PAGE> 5
(g) Amendment
This Agreement may be amended by the Insurer and the Distributor in a writing
duly executed by the Insurer and the Distributor. The submission of an
application for the Contracts by Broker/Dealer or General Agent five or more
business day after notice of any such amendment has been sent to the other
parties shall constitute agreement to such amendment.
(h) Termination
This Agreement may be terminated by any party upon written notice to the other
parties and termination shall be effective immediately.
(i) California Law
This Agreement shall be construed in accordance with the laws of the State of
California.
11. RapidApp Program (Optional)
If applications are transmitted to the Insurer pursuant to the Insurer's
RapidApp Program, the following provisions shall apply to such applications and
Contracts issued pursuant to the RapidApp Program.
(a) Broker/Dealer and General Agent will agree and will require each
subagent to agree to communication with owners of the Contracts issued through
the RapidApp Program in order to obtain and deliver to the Insurer the signed
confirmation for the Contract. Broker/Dealer and General Agent each further
agree to provide any assistance or cooperation required to enforce a Contract
issued under the RapidApp Program which shall include, but not be limited to,
providing the Insurer access to recordings of telephone conversations with
customers of Broker/Dealer or General Agent containing their consent to the
purchase of Contracts, or providing statements or affidavits from such Subagents
as to the customer's consent to the making of the Contract.
(b) In the event the owner of a Contract repudiates or rescinds the
Contract and the Insurer, in its sole discretion, waives any surrender charges,
the full commission paid by the Insurer will be returned to the Insurer upon
demand or, in the absence of such demand, charged back to the recipient of the
commission. In addition, all amounts equal to any market loss arising from such
rescission or repudiation will be paid by Broker/Dealer or General Agent on
demand, or in the absence of such demand, charged back to Broker/Dealer or
General Agent.
(c) Broker/Dealer and General Agent each agree that it will be solely
responsible for the transmission or failure of transmission of application
information to the Insurer. Broker/Dealer and General Agent each warrant that
all application information will be accurate and can be relied upon by the
Insurer.
(d) Broker/Dealer and General Agent each agree to pay the Insurer all
amounts equal to any market loss resulting from the misallocation of the initial
purchase payment into the subaccounts, which misallocation was the result of
Insurer relying on Broker/Dealer's, General Agent's, or their Subagents'
application information. In the absence of a demand for payment, such amounts
shall be charged back to Broker/Dealer or General Agent.
(e) Broker/Dealer and General Agent each agree that their representatives
or Subagents who are resident and licensed in those jurisdictions approved by
the Insurer may submit applications to the Insurer pursuant to the RapidApp
Program and agree to the provisions of this paragraph 11. Broker/Dealer and
General Agent acknowledge that agreeing to the provisions of this paragraph 11
does not require their Subagents to submit all applications to the Insurer
pursuant to the RapidApp Program.
<PAGE> 6
12. Commissions
Commissions payable under this Agreement shall be paid by Insurer. Broker/Dealer
and General Agent acknowledge and agree that they shall have no claim against
Distributor for commissions hereunder or Insurer's failure to pay commissions in
accordance with the terms and conditions of this Agreement. In no event shall
the Insurer or Distributor be liable for the payment of any commissions with
respect to any solicitation made, in whole or in part, by any person not
appropriately licensed and registered prior to the commencement of such
solicitation.
If a Contract is returned to the Insurer pursuant to the "Free Look" provision
of the Contract, the full commission paid by the Insurer will be unearned and
shall be returned to the Insurer upon demand or, in the absence of such demand,
charged back to the recipient of the commission. Broker/Dealer and General Agent
agree to promptly deliver Contracts and hold the Insurer and Distributor
harmless from and against any claim arising from market loss resulting from late
delivery by Broker/Dealer or General Agent to the owner of the Contract.
Further, with respect to any Contract that is rescinded by the Insurer, as
determined by the Insurer in its sole discretion or if the Insurer otherwise
determines that a commission has not been earned, 100% of such unearned
commission will be returned to the Insurer upon demand or, in the absence of
such demand, charged back to the recipient of the commission.
Notwithstanding anything to the contrary below, the Insurer reserves the right
to determine in its sole discretion commissions different than those set forth
below with respect to any Contract, or group of Contracts which the Insurer in
its sole discretion deems to be a single case, which at the time of application
submission is purchased with an initial payment of greater than $500,000.
With respect to Contracts issued to persons age 80 or younger (at date of
issue), commission will be paid pursuant to one or more of the options set forth
below ("Commission Option"), as selected by Broker/Dealer or General Agent. If
more than one Commission Option is chosen, Broker/Dealer and General Agent agree
that their Subagents may select from the specified Commission Options at the
time a Contract is sold, which selection may not be changed at a later time.
Broker/Dealer and General Agent may also allow specified Subagents to utilize a
Commission Option other than what is selected below by completing an Exception
Sheet for such Subagents and attaching it hereto. Broker/Dealer and General
Agent may from time to time amend an Exception Sheet by sending it to the
Insurer, which amendment will become effective upon the Insurer's receipt. If
more than one Commission Option is selected, Broker/Dealer or General Agent must
also specify a "default" Commission Option, the "default" Commission Option
shall be Option B.
Commission will be paid in the amount indicated as a percentage of the aggregate
purchase payments received and accepted by the Insurer with complete application
information and documentation as required by the Insurer or as a subsequent
purchase payment under a Contract after the Contract is in force.
If a "trail" commission is indicated, the annual trail commission in the amount
shown will be payable in quarterly installments on each Contract that has been
in force for 15 months or more. At the end of each quarter, commencing with the
end of the 15th month following the issue date of the Contract, the Insurer will
determine the Contract value. The trail commission installment for each such
quarter will be the percentage shown of the Contract value as of the end of such
quarter. The trail commission for a quarter is not payable on any Contract that
has been surrendered, annuitized or under which a death benefit has been paid
during that quarter.
<PAGE> 7
<TABLE>
<CAPTION>
<S> <C> <C>
Option A:
/ / Commission
- -------------------- 5.50%
Signature
Trail
Option B: Commission Installment
Annual Quarterly
/ /
4.75% .20% .05%
- --------------------
Signature
Trail
Option C: Commission Installment
Annual Quarterly
/ /
1.75% .75% .1875%
- --------------------
Signature
Months Trail
Option D: Contract Installment
Commission In Force Annual Quarterly
/ /
2.00% 15-24 .50% .125%
27-38 .60% .15%
- -------------------- 39-42 .70% .175%
Signature 51 & .80% .20%
thereafter
</TABLE>
If more than one Commission Option has been selected, a "default" Commission
Option must be selected below: (choose one only; if none is specified, the
"default" option shall be Option B):
/ / Option A
--------------------
Signature
/ / Option B
--------------------
Signature
/ / Option C
--------------------
Signature
/ / Option D
--------------------
Signature
With respect to Contracts sold to persons age 81 and older (at date of issue),
commissions will be paid in the amount of 2.50% of the aggregate purchase
payments received and accepted by the Insurer with complete application
information and documentation as required by the Insurer or as a subsequent
purchase payment under a Contract after the Contract is in force.
Broker/Dealer and General Agent shall be solely responsible for the payment of
any compensation to Subagents and any tax reporting applicable thereto.
Broker/Dealer and General Agent shall be solely responsible for any expenses
incurred by either of them or any Subagents in connection with carrying out
their duties and obligations under this Agreement or applicable law.
<PAGE> 8
IN WITNESS WHEREOF, this Agreement has been executed by duly authorized
representatives of the parties to this Agreement as of the date set forth above.
ANCHOR NATIONAL LIFE INSURANCE COMPANY
By:
---------------------------------
Its: Senior Vice President
VISTA BROKER-DEALER SERVICES, INC.
By:
---------------------------------
Its:
Check here if your Subagents
will participate in RapidApp
/ / YES / / NO
- ------------------------------------
BROKER/DEALER NAME (Please Print)
By:
---------------------------------
Its:
- -------------------------------------
GENERAL AGENT NAME (Please Print)
By:
---------------------------------
Its:
<PAGE> 1
EXHIBIT 4
Anchor National Life Insurance Company
A STOCK COMPANY LOS ANGELES, CALIFORNIA
CERTIFICATE NUMBER P9999999999
PARTICIPANT JOHN DOE
EXECUTIVE OFFICE ANNUITY SERVICE CENTER
1 SUNAMERICA CENTER P.O. BOX 54299
CENTURY CITY LOS ANGELES, CA 90054-0299
LOS ANGELES, CA 90067
ANCHOR NATIONAL LIFE INSURANCE COMPANY ("We", "Us" or the "Company" or "Anchor
National") agrees to provide benefits to the Participant in the Group Contract,
subject to the provisions set forth in this Certificate and in consideration of
the Participant's Enrollment Form and Purchase Payments We receive.
This Certificate is evidence of coverage under the Group Contract if a
Participant Enrollment Form is attached. The coverage will begin as of the
Certificate Date, shown on the Certificate Data Page.
The value of amounts allocated to the Separate Account during the accumulation
and annuity periods is not guaranteed, and will increase or decrease based upon
the investment experience of the Fund underlying the Separate Account. The
value of the cash surrender benefit increases or decreases based on the
application of the Market Value Adjustment. The unadjusted cash surrender
benefit is available for 30 days after the end of the Guarantee Period.
TEN DAY RIGHT TO EXAMINE CERTIFICATE - You may return this Certificate to Our
Annuity Service Center within 10 days after You receive it. The Company will
refund the Certificate Value for the valuation period in which the Certificate
is received. Upon such refund, the Certificate shall be void.
THIS IS A LEGAL CONTRACT. READ IT CAREFULLY.
/s/ SUSAN L. HARRIS /s/ ELI BROAD
---------------------- ----------------------
Susan L. Harris Eli Broad
Secretary President
ALLOCATED FIXED AND
VARIABLE GROUP ANNUITY CERTIFICATE
Nonparticipating
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C>
Certificate Data Page Page 3
Definitions Page 5
General Provisions Page 8
Conformity With State Laws; Changes in Law; Assignment; Misstatement
of Age or Sex; Written Notice; Proof of Age, Sex or Survival;
Non-Participating; Periodic Reports; Premium Taxes; Death of
Annuitant; Change of Annuitant; Deferment of Payments; Suspension of
Payments; Purchase Payments; Substitution of Fund; Separate Account
Accumulation Provisions Page 11
Separate Account Accumulation Value; Number of Accumulation Units;
Accumulation Unit Value (AUV); Fixed Account Accumulation Value; Fixed
Account Guarantee Period Options; Market Value Adjustment
Charges and Deductions Page 13
Expense Risk Charge; Distribution Expense Charge; Mortality Risk
Charge
Transfer Provision Page 14
Transfers of Accumulation Units Between Variable Accounts; Transfers
of Accumulation Units To and From the Fixed Account
Withdrawal Provision Page 15
Death Benefit Provision Page 16
Proof of Death; Amount of Death Benefit; Death of Participant or
Annuitant On Or After the Annuity Date; Death of Participant Before
the Annuity Date; Non- Natural Participant; Beneficiary
Annuity Provisions Page 18
Annuity Date; Payments to Participant; Fixed Annuity Payments; Amount
of Fixed Annuity Payments; Amount of Variable Annuity Payments
Annuity Options Page 20
</TABLE>
<PAGE> 3
Certificate Data Page
Certificate Number Annuity Service Center:
P9999999999 P.O. BOX 54299
LOS ANGELES, CA 90054-0299
Participant:
JOHN DOE
Annuitant:
JOHN DOE
Beneficiary: Date of Issue:
DECEMBER 09, 1992
Annuity Date: First Purchase Price
SEPTEMBER 01, 2048 $75,000.00
Age at Issue: Fixed Account -
35 Subsequent Guarantee Rate:
(3.0%)
Funds Underlying Variable
Separate Account:
MUTUAL FUND VARIABLE
ANNUITY TRUST For Inquiries Call:
(800) 445-7862
Separate Accounts:
VARIABLE ANNUITY ACCOUNT TWO-T
MARKET VALUE ADJUSTMENT
All payments and values based on the Fixed Account are subject to a Market Value
Adjustment formula, the operation of which may result in upward and downward
adjustments in amounts payable. The Market Value Adjustment formula will not be
applied:
(1) for the payment of the Death Benefit,
(2) for the amounts withdrawn to pay fees or charges,
(3) for amounts withdrawn within 30 days after the end of the Guarantee Period,
(4) for annuitizations on the latest Annuity Date,
(5) for amounts withdrawn from a one year Guarantee Period
<PAGE> 4
PURCHASE PAYMENT ALLOCATION
<TABLE>
<CAPTION>
Variable Account Options Fixed Account Options
Mutual Fund Variable Guarantee
Annuity Trust Period
<S> <C>
100.00% International Equity 0.00% 1 Year Fixed
0.00% Capital Growth 0.00% 3 Year Fixed
0.00% Growth and Income 0.00% 5 Year Fixed
0.00% Asset Allocation 0.00% 7 Year Fixed
0.00% U.S. Treasury Income 0.00% 10 Year Fixed
0.00% Money Market
</TABLE>
<PAGE> 5
DEFINITIONS
ACCUMULATION UNIT
A unit of measurement used to compute the Certificate Value in a Variable
Account prior to the Annuity Date.
ANNUITANT
The natural person on whose life the annuity benefit for the Certificate is
based.
ANNUITY DATE
The date on which annuity payments to the Payee are to start. The latest
possible Annuity Date will be set by Us.
ANNUITY SERVICE CENTER
As specified on the Certificate Data Page.
ANNUITY UNIT
A unit of measurement used to compute annuity payments in a Separate Account.
AUTOMATIC DOLLAR COST AVERAGING PROGRAM
A program under which the Participant may authorize the automatic transfer of a
fixed dollar amount of his or her choice at regular intervals from a source
account to one or more portfolios (other than the source account) at the unit
values determined on the dates of transfers. The Company reserves the right to
change the terms and conditions.
CERTIFICATE
This form which describes Your interest in the Group Contract.
CERTIFICATE DATE
The date Your Certificate is issued, shown on the Certificate Data Page.
CERTIFICATE VALUE
The sum of Your share of the Variable Accounts' Accumulation Values and Fixed
Account Accumulation Values.
CERTIFICATE YEAR
A year starting from the Certificate Date in one calendar year and ending on
the Certificate Date in the succeeding calendar year.
CURRENT INTEREST RATE
The sum of the Subsequent Guarantee Rate and the Excess Interest Rate
declared by Us for any Guarantee Period.
DEFERRED ANNUITY
An annuity contract under which the start of annuity payments is deferred to
a future date.
EXCESS INTEREST RATE
A rate of interest declared by Us in excess of the Subsequent Guarantee Rate
for any Guarantee Period.
FIXED ANNUITY
A series of periodic payments for the benefit of the Participant of
predetermined amounts that do not vary with investment experience. Such
payments are made out of the general account assets of the Company.
FIXED ACCOUNT
The Fixed Account is the Company's general asset account. It contains all of
the assets of the Company except for the Separate Account and other
segregated asset accounts. Amounts in the Fixed Account are guaranteed by
the Company.
FUND
A collective term used to represent an investment entity, a portfolio of
which may be selected by the Participant to be an underlying investment of
the Participant's Certificate.
GUARANTEE PERIOD
The period for which the Current Interest Rate is credited.
<PAGE> 6
IRC
The Internal Revenue Code of 1986, as amended, as the same may be amended or
superseded.
PARTICIPANT
The person named in the Certificate who is entitled to exercise all rights
and privileges of ownership under the Certificate.
PAYEE
Any person receiving payment of annuity benefits under this Certificate during
the Annuity Period.
PORTFOLIO
A separate investment portfolio of a Fund which has distinct investment
objectives. Each Portfolio serves as an underlying investment medium for
Purchase Payments and allocations made to one of the Variable Accounts of the
Separate Account.
PURCHASE PAYMENTS
Payments made by or on behalf of the Participant to the Company for the
Certificate.
SEPARATE ACCOUNT
A segregated asset account named on the Certificate Data Page, established by
the Company in accordance with California law. The Separate Account consists of
several Variable Accounts, each investing in a Portfolio of a Fund. The
Prospectus should be read for complete details regarding Separate Account
contracts.
SUBSEQUENT GUARANTEE RATE
The rate of interest established by the Company for the applicable subsequent
Guarantee Period, but in no event less than the rate specified on the
Certificate Data Page.
VALUATION PERIOD
The period beginning at the close of the New York Stock Exchange on each day
that the New York Stock Exchange is open for regular trading and ending at the
close of the next succeeding business day of the New York Stock Exchange.
VARIABLE ACCOUNT
A division of the Separate Account, the assets of which consist of shares of a
specified Portfolio of a Fund. The available Variable Accounts are shown on the
Certificate Data Page.
VARIABLE ANNUITY
A series of periodic payments which vary in amount according to the investment
experience of a one or more Variable Accounts.
WE, OUR, US, THE COMPANY
Anchor National Life Insurance Company.
YOU, YOUR
The Participant.
<PAGE> 7
GENERAL PROVISIONS
CONFORMITY WITH STATE LAWS
This Certificate will be interpreted under the law of the state in which it is
delivered. Any provision which, on the Certificate Date, is in conflict with
the law of such state is amended to conform to the minimum requirements of such
law.
CHANGES IN LAW
If laws governing this Certificate or the taxation of benefits under the
Certificate change, We will amend the Group Contract and this Certificate to
comply with these changes.
ASSIGNMENT
The Participant may assign this Certificate before the Annuity Date, but We will
not be bound by an assignment unless it is in writing and We have received it.
Participant's rights and those of any other person referred to in this
Certificate will be subject to the assignment. We assume no responsibility for
the validity or tax consequences of any assignment.
MISSTATEMENT OF AGE OR SEX
If the age or sex of any Annuitant has been misstated, future payments will be
adjusted using the correct age and sex, according to Our rates in effect on the
date that annuity payments were determined. Any overpayment from the Fixed
Account, plus interest at the rate of 4% per year, will be deducted from the
next payment(s) due. Any underpayment from the Fixed Account, plus interest at
the rate of 4% per year, will be paid in full with the next payment due. Any
overpayment from the Variable Accounts will be deducted from the next payment(s)
due. Any underpayment from the Variable Accounts will be paid in full with the
next payment due.
WRITTEN NOTICE
Any notice We send to the Participant will be sent to the Participant's address
shown in the Application unless the Participant requests otherwise. Any written
request or notice to Us must be sent to Our Annuity Service Center, as specified
on the Certificate Data Page.
PROOF OF AGE, SEX OR SURVIVAL
The Company may require satisfactory proof of correct age or sex at any time. If
any payment under this Certificate depends on the Annuitant being alive, the
Company may require satisfactory proof of survival.
NON-PARTICIPATING
This Certificate does not share in Our surplus.
PERIODIC REPORTS
The Company will furnish the Participant with a statement of the Variable and
Fixed Account balances periodically.
PREMIUM TAXES
The Company may deduct from the Certificate Value any premium or other taxes
payable to a state or other government entity. Should We advance any amount so
due, We are not waiving any right to collect such amounts at a later date. The
Company will deduct any withholding taxes required by applicable law.
DEATH OF ANNUITANT
If the Participant and Annuitant are different and the Annuitant dies before the
Annuity Date, the Participant becomes the Annuitant until such time as the
Participant elects a new Annuitant. The preceding sentence shall not apply if
the Participant is not an individual.
CHANGE OF ANNUITANT
The Participant may change the Annuitant at any time prior to the Annuity Date.
If the Participant is not an individual, the Participant may not change the
Annuitant at any time.
DEFERMENT OF PAYMENTS
We may defer making payments from the Fixed Account for up to 6 months.
Interest, subject to state requirements, will be credited during the deferral
period.
<PAGE> 8
SUSPENSION OF PAYMENTS
We may suspend or postpone any payments from the Variable Accounts if any of the
following occur:
(a) the New York Stock Exchange is closed,
(b) trading on the New York Stock Exchange is restricted,
(c) an emergency exists such that it is not reasonably practical to dispose
of securities in the Separate Account or to determine the value of its
assets, or
(d) the Securities and Exchange Commission, by order, so permits for the
protection of security holders.
Conditions in (b) and (c) will be decided by or in accordance with rules of the
Securities and Exchange Commission.
PURCHASE PAYMENTS
Purchase Payments are flexible. This means that You, subject to Company
declared minimums and maximums, may change the amounts, frequency or timing of
Purchase Payments. Purchase Payments may be allocated to the Fixed Account and
one or more Variable Accounts in accordance with instructions from You. We
reserve the right to specify the minimum that may be allocated to a Variable
Account under the Certificate.
SUBSTITUTION OF FUND
If the shares of any of the Funds or any Portfolio of a Fund should no longer be
available for investment by the Separate Account or if, in the judgment of the
Company's Board of Directors, further investment in the shares of a Fund is no
longer appropriate in view of the purpose of the contract, the Company may
substitute shares of another mutual fund or separate investment series thereof,
for Fund shares already purchased or to be purchased in the future by Purchase
Payments under the contract. No substitution of securities may take place
without prior approval of the Securities and Exchange Commission and under such
requirements as it may impose.
SEPARATE ACCOUNT
The Separate Account is a separate investment account of the Company. It is
shown on the Certificate Data Page. The assets of the Separate Account are the
property of the Company. However, they are not chargeable with the liabilities
arising out of any other business the Company may conduct. Each Variable
Account is not chargeable with liabilities arising out of any other Variable
Account.
ACCUMULATION PROVISIONS
SEPARATE ACCOUNT ACCUMULATION VALUE
The Separate Account Accumulation Value under the Certificate shall be the sum
of the values of the Accumulation Units held in the Variable Accounts for the
Participant.
NUMBER OF ACCUMULATION UNITS
For each Variable Account, the number of Accumulation Units is the sum of:
Each Purchase Payment and transfer allocated to the Variable Account, reduced by
applicable premium taxes, if any:
Divided by
The Accumulation Unit Value for that Variable Account as of the Valuation Period
in which the Purchase Payment or transfer amount is received.
The number of Accumulation Units will be similarly adjusted for withdrawals,
annuitizations, transfers, and charges. Adjustments will be made as of the end
of the Valuation Period in which We receive all requirements for the
transaction, as appropriate.
ACCUMULATION UNIT VALUE (AUV)
The AUV of a Variable Account for any Valuation Period is calculated by
subtracting (2) from (1) and dividing the result by (3) where:
(1) is the total value at the end of the given Valuation Period of the
<PAGE> 9
assets attributable to the Accumulation Units of the Variable Account
minus the total liabilities;
(2) is the cumulative unpaid charge for assumption of mortality expense and
distribution expense risks (See CHARGES AND DEDUCTIONS);
(3) is the number of Accumulation Units outstanding at the end of the given
Valuation Period.
FIXED ACCOUNT ACCUMULATION VALUE
Under a Certificate, the Fixed Account Accumulation Value shall be the sum of
all monies allocated or transferred to the Fixed Account, reduced by any
applicable premium taxes, plus all interest credited on the Fixed Account during
the period that the Certificate has been in effect. This amount shall be
adjusted for withdrawals, annuitizations, transfers, and charges.
FIXED ACCOUNT GUARANTEE PERIOD OPTIONS
For any amounts allocated to the Fixed Account, the Participant will select the
duration of the Guarantee Period(s) from those listed on the Certificate Data
Page. Such amounts will earn interest at the Current Interest Rate for the
chosen duration, compounded annually during the entire Guarantee Period. In no
event will the Current Interest Rate be less than the Subsequent Guarantee Rate
specified on the Certificate Data Page.
You may allocate Purchase Payments, or make transfers from the Variable Account
Options, to the Fixed Account at any time prior to the Annuity Date. However, no
Guarantee Period other than one year may be chosen which extends beyond the
Annuity Date. For thirty (30) days following the date of expiration of the
current Guarantee Period, You may renew for the same or any other Guarantee
Period at the then Current Interest Rate or may transfer all or a portion of the
amount to the Variable Accounts. Transfers from the Fixed Account for Guarantee
Periods greater than one year may take place thirty (30) days following the end
of a Guarantee Period without being subject to a Market Value Adjustment (MVA).
Transfers from the Fixed Account from a one year Guarantee Period are not
subject to a Market Value Adjustment (MVA).
If the Participant does not specify a Guarantee Period at the time of renewal,
We will select the same Guarantee Period as has just expired, so long as such
Guarantee Period does not extend beyond the Annuity Date. If a renewal occurs
within one year of the latest Annuity Date We will credit interest up to the
Annuity Date at the then Current Interest Rate for the one year Guarantee
Period.
MARKET VALUE ADJUSTMENT
Any amount withdrawn, transferred or annuitized prior to the end of that
Guarantee Period may be subject to a MVA. The MVA will be calculated by
multiplying the amount withdrawn, transferred or annuitized by the formula
described below:
[(1 + I)/(1+J+0.0050)] - N/12 - 1
I = The interest rate currently in effect for that Guarantee Period.
J = The Current Interest Rate available for the Guarantee Period equal to the
number of years (rounded up to an integer) remaining in the current Guarantee
Period at the time of withdrawal, transfer or annuitization. In the
determination of J, if the Company currently does not offer the applicable
Guarantee Period, then the rate will be determined by linear interpolation of
the current rates for the nearest two Guarantee Periods that are available.
N = The number of full months remaining in the current Guarantee Period at the
time the withdrawal or annuitization request is processed.
There will be no Market Value Adjustment on withdrawals from the Fixed Account
in the following situations: (1) Death Benefit paid upon death of the
Participant; (2) amounts withdrawn to pay fees or charges; (3) amounts
withdrawn from the Fixed Account within thirty (30) days after the end of the
Guarantee Period; (4) annuitizations on the latest Annuity Date; (5) amounts
withdrawn with a one year Guarantee Period.
CHARGES AND DEDUCTIONS
<PAGE> 10
We will deduct the following charges from the Certificate:
EXPENSE RISK CHARGE
On an annual basis this charge equals 0.25% of the average daily total net asset
value of the Variable Accounts. This charge is to compensate Us for assuming
the expense risks under the Certificate.
DISTRIBUTION EXPENSE CHARGE
On an annual basis this charge equals 0.15% of the average daily total net asset
value of the Variable Accounts. This charge is to compensate Us for all
distribution expenses associated with the Certificate.
MORTALITY RISK CHARGE
On an annual basis this charge equals 0.55% of the average daily total net asset
value of the Variable Accounts. This charge is to compensate Us for assuming
the mortality risks under the Certificate.
TRANSFER PROVISION
Prior to the Annuity Date, You may transfer all or part of Your Certificate
Value to any of the Variable Accounts or the Fixed Account, subject to certain
restrictions.
We reserve the right to charge a fee for transfers if the number of transfers
exceeds the limit specified by Us.
Transfers will be effected at the end of the Valuation Period in which We
receive Your request for the transfer.
TRANSFERS OF ACCUMULATION UNITS BETWEEN VARIABLE ACCOUNTS
Both prior to and after the Annuity Date, You may transfer all or a portion of
Your investment in one Variable Account to another Variable Account. A transfer
will result in the purchase of Accumulation Units in a Variable Account and the
redemption of Accumulation Units in the other Variable Account.
The minimum amount which can be transferred between Variable Accounts and the
amount that can remain in the Variable Account is subject to Company limits.
TRANSFERS OF ACCUMULATION UNITS TO AND FROM THE FIXED ACCOUNT
Both prior to and after the Annuity Date, You may transfer all or any part of
the Certificate Value from the Variable Account(s) to the Fixed Account of the
Certificate. After the Annuity Date no transfers from the Fixed Account to the
Variable Account are allowed. For transfers from the Fixed Account prior to the
Annuity Date see ACCUMULATION PROVISIONS - FIXED ACCOUNT ACCUMULATION VALUE.
During the Annuity Period, the amount transferred to the Fixed Account from a
Variable Account will be equal to the annuity reserve for the Payee's interest
in that Variable Account. The annuity reserve is the product of (a) multiplied
by (b) multiplied by (c), where
(a) is the number of Annuity Units representing the Participant's interest
in the Variable Account;
(b) is the Annuity Unit Value for the Variable Account; and
(c) is the present value of $1.00 per payment period as of the age of the
Annuitant at the time of transfer for the Annuity Option, determined
using the 1983a Annuity Mortality Tables with interest at 3.5% per year.
Amounts transferred to the Fixed Account will be applied under the Annuity
Option at the age of the Annuitant at the time of the transfer. All amounts and
Annuity Unit Values will be determined as of the end of the Valuation Period
preceding the effective date of the transfer.
WITHDRAWAL PROVISION
<PAGE> 11
Prior to the Annuity Date while the Annuitant is living, You may withdraw all or
part of the Certificate Value amounts under this Certificate by informing Us at
Our Annuity Service Center. For full withdrawal, this Certificate must be
returned to Our Annuity Service Center.
Absent written notification to the contrary, withdrawals and any applicable
charge will be deducted from the Certificate Value in proportion to its
allocation among the Fixed Account and the Variable Accounts. Withdrawals will
be based on values at the end of the valuation Period in which the request for
withdrawal and the Certificate (in the case of a full withdrawal), are received
at the Annuity Service Center. Unless the SUSPENSION OF PAYMENTS or DEFERMENT
OF PAYMENTS sections are in effect, payment of withdrawals will be made within
seven days.
DEATH BENEFIT PROVISION
We will pay a Death Benefit to the Beneficiary upon Our receiving due proof that
the Participant died prior to the Annuity Date. The Death Benefit shall be
reduced by premium taxes incurred by the Company, if any. The Beneficiary may
elect to receive a single sum distribution or to receive annuity payments. If a
single sum payment is requested, payment will be in accordance with any
applicable laws and regulations governing payments on death. If an Annuity
Option is desired, an Option must be elected within 60 days of Our receipt of
due proof of the Participant's death at Our Annuity Service Center; otherwise a
single sum payment will be made at the end of such 60 day period. Funds will
remain allocated pursuant to the last allocation and instructions in effect at
the Participant's death until Our Annuity Service Center receives new written
instructions.
PROOF OF DEATH
Due Proof of Death means:
1. a certified copy of a death certificate; OR
2. a certified copy of a decree of a court of competent jurisdiction as to
the finding of death; OR
3. a written statement by a medical doctor who attended the deceased
Participant at the time of death; OR
4. any other proof satisfactory to Us.
AMOUNT OF DEATH BENEFIT
The Death Benefit shall be the Certificate Value at the end of the Valuation
Period during which We receive at Our Annuity Service Center due proof of the
Participant's death and an election of the type of payment to be made.
DEATH OF PARTICIPANT OR ANNUITANT ON OR AFTER THE ANNUITY DATE
If the Participant or Annuitant dies on or after the Annuity Date and before the
entire interest in the contract has been distributed, We will pay the remaining
portion of the interest in the contract, at least as rapidly as under the method
of payment being used on the date of death.
DEATH OF PARTICIPANT BEFORE THE ANNUITY DATE
We will pay the Death Benefit to the Beneficiary upon Our receiving due proof
that the Participant died before the Annuity Date and an election form as to the
Settlement Option to be elected. The Beneficiary must select one of the
following options:
1. Immediately collect the Death Benefit in a lump sum payment. If a lump
sum payment is elected, payment will be in accordance with any applicable laws
and regulations governing payments and death. If no election is received within
60 days of Our Annuity Service Center, a lump sum payment will be automatically
elected, Or
2. Collect the Death Benefit in the form of one of the Annuity Options. The
payments must be over the life of the Beneficiary or over a period not extending
beyond the life expectancy of the Beneficiary. This option must be elected
within 60 days of Our receipt of Due Proof of Death at Our Annuity Service
Center and payment must commence within one year after the Participant's death.
Otherwise, a lump sum payment will be made at the end of such 60 day period, Or
<PAGE> 12
3. If the Beneficiary is the Participant's spouse, the Beneficiary may elect
to become the Participant and continue the contract in force. Upon the new
Participant's subsequent death, the entire proceeds must be distributed
immediately.
Unless Option 2 or 3 applies, the entire interest in the contract must be
distributed within 5 years of the Participant's death. In no event will payment
of the Death Benefit be deferred for a period which exceeds the requirements of
IRC Code section 72(s).
NON-NATURAL PARTICIPANT
If the Participant is not an individual, the death of the Annuitant will be
treated as the death of the Participant and the Death Benefit will be paid as
described in this section.
BENEFICIARY
The Beneficiary is as stated in the Application unless later changed by the
Participant. While the Participant is living and before the Annuity Date, the
Participant may change the Beneficiary by written notice in a form satisfactory
to Us. The change will take effect in the date We receive the proper notice
subject to any payments We have made. If two or more persons are named, those
surviving the Participant will share equally unless otherwise stated, and the
Beneficiaries must elect to receive their respective portions of the Death
Benefit according to Option 1, 2 or 3 above. If the Annuitant survives the
Participant, and there are no surviving Beneficiaries, the Annuitant will be
deemed the Beneficiary. If the Participant is also the Annuitant and there are
no surviving Beneficiaries at the death of the Participant, the Death Benefit
will be paid to the estate of the Participant in accordance with Option 1 above.
ANNUITY PROVISIONS
ANNUITY DATE
The Participant selects an Annuity Date (the date on which the payments are to
begin) at the time of application. The Annuity Date must always be the first
day of the calendar month and must be at least two years after the Issue Date,
but in any event will be no later than the Latest Annuity Date. Annuity payments
will begin no later than the latest Annuity Date, as set by the Company. If no
Annuity Date is selected, the Annuity Date will be the latest Annuity Date, as
set by the Company. The Participant may change the Annuity Date at any time at
least seven days prior to the Annuity Date then indicated on the Company's
records by written notice to the Company at its Annuity Service Center.
PAYMENTS TO PARTICIPANT
Unless otherwise requested by the Participant, the Company will make annuity
payments to the Participant. If the Participant wants the annuity payments to
be made to some other Payee, We will make such payments subject to the
following:
(a) A written request must be filed at the Annuity Service Center.
(b) Such request must be filed not later than thirty (30) days before the due
date of the first annuity payment.
Any such request is subject to the rights of any assignee. No payments
available to or being paid to the Payee while the Annuitant is alive can be
transferred, commuted, anticipated or encumbered.
FIXED ANNUITY PAYMENTS
To the extent a fixed annuity option has been elected, the proceeds payable
under this Certificate less any applicable premium taxes, shall be applied to
the payment of the Annuity Option elected at whichever of the following is more
favorable to the Payee: (a) the annuity rates based upon the applicable tables
in the Certificate; or (b) the then current rates provided by the Company on
Certificates of this type on the Annuity Date. In no event will the fixed
annuity payments be changed once they begin.
AMOUNT OF FIXED ANNUITY PAYMENTS
The amount of each Fixed Annuity payment will be determined by applying the
portion of the Certificate Value allocated to Fixed Annuity payments less any
<PAGE> 13
applicable premium taxes or other charges to the annuity table applicable to the
Annuity Option chosen.
AMOUNT OF VARIABLE ANNUITY PAYMENTS
(a) FIRST VARIABLE PAYMENT: The dollar amount of the first monthly annuity
payment will be determined by applying the portion of the Certificate Value
allocated to Variable Annuity payments, less any applicable premium taxes or
other charges, to the annuity table applicable to the Annuity Option chosen. If
more than one Variable Account has been selected, the value of the Participant's
interest in each Variable Account is applied separately to the annuity table to
determine the amount of the first annuity payment attributable to the Variable
Account.
(b) NUMBER OF VARIABLE ANNUITY UNITS: The number of Annuity Units for each
applicable Variable Account is the amount of the first annuity payment
attributable to that Variable Account divided by the value of the applicable
Annuity Unit for that Variable Account as of the Annuity Date. The number will
not change as a result of investment experience.
(c) VALUE OF EACH VARIABLE ANNUITY UNIT: The initial value of an Annuity
Unit of each Variable Account was arbitrarily set at $10 when the Variable
Accounts were established. The value may increase or decrease from one
Valuation Period to the next. For any Valuation Period, the value of an Annuity
Unit of a particular Variable Account is the value of that Annuity Unit during
the last Valuation Period, multiplied by the Net Investment Factor for that
Variable Account for the current Valuation Period.
The Net Investment Factor for any Variable Account for any Valuation Period is
determined by dividing (a) by (b) and then subtracting (c) from the result
where:
(a) is the net result of:
(1) the net asset value of a Portfolio of the Fund share held
in the Variable Account determined as of the end of the
Valuation Period, plus
(2) the per share amount of a dividend or other distribution
declared by the Portfolio of the Fund on the shares held
in the Variable Account if the "ex- dividend" date occurs
during the Valuation Period, plus or minus
(3) a per share credit or charge with respect to any taxes
paid or reserved for by the Company during the Valuation
Period which are determined by the Company to be
attributable to the operation of the Variable Account (no
federal income taxes are applicable under present law);
(b) is the net asset value of a Portfolio of the Fund share held in
the Variable Account determined as of the end of the preceding
Valuation Period; and
(c) is the asset charge factor determined by the Company for the
Valuation Period to reflect the Expense Risk Charge, Distribution
Expense Charge and Mortality Risk Charge.
The result is then multiplied by a factor that neutralizes the Assumed
Investment Rate.
(d) SUBSEQUENT VARIABLE ANNUITY PAYMENTS: After the first Variable Annuity
payment, payments will vary in amount according to the investment performance of
the applicable Variable Accounts. The amount may change from month to month.
The amount of each subsequent payment is the sum of:
The number of Annuity Units for each Variable Account as determined for the
first annuity payment
Multiplied by
The value of an Annuity Unit for that Variable Account at the end of the
<PAGE> 14
Valuation Period immediately preceding in which payment is due.
The Company guarantees that the amount of each Variable Annuity payment will not
be affected by variations in expenses or mortality experience.
ANNUITY OPTIONS
Upon written election filed with the Company at its Annuity Service Center, all
or part of the Certificate Value may be applied to provide one of the following
options or any Annuity Option that is mutually agreeable. If Annuity Option is
elected, the Payee will automatically receive Option 4 (Life Annuity with 120
monthly payments. )
OPTION 1 - LIFE ANNUITY, LIFETIME MONTHLY PAYMENTS GUARANTEED
Monthly payments payable to the Payee during the lifetime of the Annuitant. No
further payments are payable after the death of the Annuitant and there is no
provision for a Death Benefit payable to the Beneficiary.
OPTION 2 - JOINT AND SURVIVOR LIFE ANNUITY
Monthly payments payable to the Payee during the joint lifetime of the Annuitant
and a designated second person and during the lifetime of the survivor.
If a reduced payment to the survivor is desired, Variable Annuity payments to
the survivor will be determined using either one-half or two-thirds of the
number of each type of Annuity Unit credited to the Certificate. Fixed monthly
payments to the survivor will be equal to either one-half or two- thirds of the
fixed monthly payment payable during the joint lifetime of the Annuitant and the
designated second person.
OPTION 3 - JOINT AND SURVIVOR LIFE ANNUITY - 120 MONTHLY PAYMENTS GUARANTEED
Monthly payments payable to the Payee during the joint lifetime of the Annuitant
and designated second person and continuing during the remaining lifetime of the
survivor, with the guarantee that if, at the death of the survivor, payments
have been made for less than 120 monthly periods, any remaining guaranteed
annuity payments will be continued to the Beneficiary named on the Annuity
Option Selection Form. In the event of death of the Annuitant and the
designated second person under this option, the Company shall in most instances,
calculate the discounted value of the remaining guaranteed annuity payments and
pay them in one sum.
OPTION 4 - LIFE ANNUITY WITH 120 OR 240 MONTHLY PAYMENTS GUARANTEED
An annuity payable monthly to the Payee during the lifetime of the Annuitant
with the guarantee that if, at the death of the Annuitant, payments have been
made for less than the 120 or 240 monthly periods, as selected, payments will be
made in the same manner as provided under OPTION 3 above. In the event of death
of the Annuitant under this option, the Company shall in most instances,
calculate the discounted value of the remaining guaranteed annuity payments and
pay them in one sum.
OPTION 5 - FIXED PAYMENTS FOR A SPECIFIED PERIOD CERTAIN
Fixed monthly payments payable to the Payee for any specified period of time
(five (5) years or more, but not exceeding thirty (30) years), as elected. The
election must be made for full twelve month periods. In the event of death of
the Payee under this option, the Company shall in most instances, calculate the
discounted value of the remaining guaranteed annuity payments and pay them in
one sum.
BASIS OF COMPUTATION
The actuarial basis for the Table of Guaranteed Annuity Rates is the 1983a
Annuity Mortality Table, without projection with interest at 3.5%. The Table of
Guaranteed Annuity Rates does not include any applicable premium tax.
<PAGE> 15
OPTIONS 1 & 4 - TABLE OF MONTHLY INSTALLMENTS PER $1,000
(Monthly installments for ages not shown will be furnished upon request.)
<TABLE>
<CAPTION>
Option 1 Option 4 Option 4
Age of Life Annuity Life Annuity
Payee Life Annuity (w/120 payments (w/240 payments
guaranteed) guaranteed)
Male Female Male Female Male Female
<S> <C> <C> <C> <C> <C> <C>
55 4.99 4.54 4.91 4.51 4.66 4.38
56 5.09 4.62 5.00 4.58 4.72 4.44
57 5.20 4.71 5.10 4.66 4.78 4.51
58 5.32 4.80 5.20 4.75 4.85 4.57
59 5.44 4.90 5.31 4.84 4.91 5.64
60 5.57 5.00 5.42 4.93 4.97 4.70
61 5.71 5.11 5.54 5.03 5.04 4.77
62 5.86 5.23 5.67 5.14 5.10 4.84
63 6.02 5.36 5.80 5.25 5.16 4.91
64 6.20 5.49 5.94 5.37 5.22 4.98
65 6.38 5.64 6.08 5.50 5.28 5.05
66 6.58 5.79 6.23 5.63 5.33 5.12
67 6.79 5.95 6.38 5.77 5.38 5.19
68 7.02 6.13 6.54 5.91 5.43 5.25
69 7.26 6.32 6.71 6.07 5.48 5.32
70 7.52 6.53 6.87 6.23 5.52 5.37
71 7.80 6.75 7.04 6.40 5.55 5.43
72 8.09 6.99 7.22 6.58 5.59 5.48
73 8.41 7.26 7.39 6.76 5.62 5.52
74 8.75 7.54 7.57 6.95 5.64 5.56
75 9.12 7.85 7.75 7.14 5.66 5.60
76 9.51 8.18 7.92 7.34 5.68 5.63
77 9.92 8.54 8.09 7.54 5.70 5.66
78 10.37 8.94 8.26 7.74 5.71 5.68
79 10.85 9.36 8.42 7.94 5.72 5.70
80 11.37 9.82 8.57 8.13 5.73 5.71
81 11.92 10.32 8.71 8.32 5.74 5.72
82 12.50 10.87 8.85 8.50 5.74 5.73
83 13.12 11.46 8.97 8.67 5.75 5.74
84 13.78 12.09 9.09 8.83 5.75 5.74
85 14.47 12.78 9.20 8.97 5.75 5.75
</TABLE>
<PAGE> 16
OPTION 2 - TABLE OF MONTHLY INSTALLMENTS
(Monthly installments for ages not shown will be furnished upon request.)
Joint and Survivor Life Annuity
<TABLE>
<CAPTION>
Age of
Male
Payee Age of Female Payee
55 60 65 70 75 80 85
<S> <C> <C> <C> <C> <C> <C> <C>
55 4.16 4.34 4.51 4.66 4.78 4.86 4.92
60 4.27 4.51 4.76 4.99 5.19 5.33 5.44
65 4.35 4.66 4.99 5.34 5.66 5.92 6.11
70 4.42 4.78 5.20 5.67 6.16 6.60 6.96
75 4.47 4.86 5.35 5.95 6.63 7.33 7.95
80 4.50 4.92 5.46 6.17 7.04 8.04 9.02
85 4.52 4.95 5.53 6.31 7.34 8.63 10.05
</TABLE>
OPTION 3 - TABLE OF MONTHLY INSTALLMENTS PER $1,000
(Monthly installments for ages not shown will be furnished upon request.)
Joint & 100% Survivor Life Annuity (w/120 payments guaranteed)
<TABLE>
<CAPTION>
Age of
Male
Payee Age of Female Payee
55 60 65 70 75 80 85
<S> <C> <C> <C> <C> <C> <C> <C>
55 4.15 4.34 4.51 4.65 4.76 4.84 4.88
60 4.26 4.51 4.75 4.98 5.16 5.29 5.37
65 4.35 4.65 4.98 5.31 5.61 5.84 5.98
70 4.41 4.76 5.17 5.62 6.07 6.44 6.68
75 4.46 4.84 5.32 5.88 6.48 7.03 7.42
80 4.48 4.89 5.41 6.05 6.79 7.52 8.07
85 4.50 4.92 5.46 6.15 6.99 7.85 8.53
</TABLE>
OPTION 5 - TABLE OF MONTHLY INSTALLMENTS
Fixed Payment For Specified Period
<TABLE>
<CAPTION>
No. Mo. No. Mo. No. Mo. No. Mo.
of Yrs. Payment of Yrs. Payment of Yrs. Payment of Yrs. Payment
- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
5 18.12 12 8.46 19 5.97 26 4.84
6 15.35 13 7.94 20 5.75 27 4.73
7 13.38 14 7.49 21 5.56 28 4.63
8 11.90 15 7.10 22 5.39 29 4.53
9 10.75 16 6.76 23 5.24 30 4.45
10 9.83 17 6.47 24 5.09
11 9.09 18 6.20 25 4.96
</TABLE>
<PAGE> 1
EXHIBIT 5
Anchor National Life New Business Documents New Business Documents
Insurance Company with checks: without checks:
1 Sun America Center P. O. Box 100330 P. O. Box 54299
Los Angeles, CA Pasadena, CA 91189 Los Angeles, CA
90067-6022 91189-0330 90054-0299
- --------------------------------------------------------------------------------
PARTICIPANT ENROLLMENT FORM R-5427CMB(10/95)
DO NOT USE HIGHLIGHTER. Please print or type.
A. PARTICIPANT
- --------------------------------------------------------------------------------
LAST NAME/CUSTODIAN/TRUST/PLAN NAME FIRST NAME MIDDLE INITIAL
- --------------------------------------------------------------------------------
STREET ADDRESS
- --------------------------------------------------------------------------------
CITY STATE ZIP CODE TELEPHONE NUMBER
MO______ DAY______ YR______ M____ F____ _________________________
DATE OF BIRTH SEX SOCIAL SECURITY OR TAX ID
NUMBER
JOINT -----------------------------------------------------------
PARTICIPANT LAST NAME FIRST NAME MIDDLE INITIAL
(if applicable)
(must be MO____ DAY____ YR____ M____ F____ __________________
spouse of DATE OF BIRTH SEX SOCIAL SECURITY OR
participant) TAX ID NUMBER
B. ANNUITANT
-----------------------------------------------------------
(Complete only LAST NAME FIRST NAME MIDDLE INITIAL
if different
from -----------------------------------------------------------
participant. STREET ADDRESS
This product
does not -----------------------------------------------------------
provide for CITY STATE ZIP CODE TELEPHONE NUMBER
joint
annuitants.) MO____ DAY____ YR____ M____ F____ __________________
DATE OF BIRTH SEX SOCIAL SECURITY OR
TAX ID NUMBER
C. BENEFICIARY(IES)
Primary ___ -----------------------------------------------------------
Contingent___ LAST NAME FIRST NAME MIDDLE INITIAL
Relationship
Primary ___ -----------------------------------------------------------
Contingent___ LAST NAME FIRST NAME MIDDLE INITIAL
Relationship
D. TYPE OF CONTRACT
Nonqualified.
- -----
Is this a 1035 Exchange? ______YES ______NO
Is this a Transfer of Assets (funds to be transferred from a mutual
fund, CD, etc.) ______YES ______NO
If either of the above is yes, please complete a "Request for
Transfer or 1035 Exchange" (G-2500NB).
<PAGE> 2
______ Qualified, as indicated below. Is this a direct transfer?
______YES ______NO
If yes, please complete a "Request for Transfer or 1035 Exchange" (G-
2500NB).
_____SEP _____403(b) _____Terminal funding _____457 plan
_____401 retirement plan _____IRA Tax year_____ _____IRA Rollover
_____IRA Transfer _____Other_______________________________________
PLEASE SPECIFY
E. ANNUITY DATE MO______ DAY______ YR______
Date annuity payout will begin. (Note: Maximum age 85.
If left blank, the date will default to age 85 for
nonqualified and 70 1/2 for qualified contracts.)
F. PURCHASE _____INITIAL PAYMENT: $________________________
PAYMENT(S) Minimum initial payment is $75,000 for nonqualified
contracts and qualified contracts. Payments may be wired
or mailed. Make check payable to Anchor National Life
Insurance Company.
_____AUTOMATIC PAYMENTS: $_____________________
To establish automatic bank drafts, include a completed
"Automatic Payment Authorization" (G-2233POS), a voided
check and initial premium for the policy.
G. SPECIAL _____SYSTEMATIC WITHDRAWAL: Check the box at left and
FEATURES include a completed "Systematic Withdrawal Application"
(B-5550CMB)
_____AUTOMATIC DOLLAR COST AVERAGING: Check the box at
left and include a completed "Dollar Cost Averaging"
application (B-5551CMB)
_____PRINCIPAL ADVANTAGE: Check the box at left. In
Section H, indicate the fixed account desired and specify
other allocations as percentages.
H. INVESTMENT Fixed Account Options Variable Portfolio Options
INSTRUCTIONS
______% 1 yr. ______% International Equity
(Allocations must
be expressed in ______% 3 yr. ______% Capital Growth
whole percentages
and total ______% 5 yr. ______% Growth and Income
allocations must
equal 100%) ______% 7 yr. ______% Asset Allocation
______% 10 yr. ______% U.S. Treasury Income
______% Money Market
I. TELEPHONE Do you wish to authorize telephone transfers, subject to the
TRANSFERS conditions set forth below? ______YES ______NO
AUTHORIZATIONS (If no election is indicated the Company will
default to yes for transfers and no for
withdrawals.)
If indicated above, I authorize the Company to accept telephone instructions for
transfers in any amount among sub-accounts from anyone providing proper
identification subject to restrictions and limitations contained in the contract
and related prospectus, if any. I understand that I bear the risk
<PAGE> 3
of loss in the event of a telephone instruction not authorized by me. The
Company will not be responsible for any losses resulting from unauthorized
transactions if it follows reasonable procedures designed to verify the identity
of the caller and therefore, the Company will record telephone conversations
containing transaction instructions, request personal identification information
before acting upon telephone instructions and send written confirmation
statements of transactions to the address of record.
J. SPECIAL REQUESTS_____________________________________________________________
K. STATEMENT OF I certify that this Certificate ___WILL ___ WILL NOT replace
PARTICIPANT in whole or in part any existing life insurance or annuity
contract. (If so, please indicate name of issuing company
and contract number below.)
______________________________________ __________________
COMPANY NAME CERTIFICATE NUMBER
I hereby represent my answers to the above questions to be correct and true to
the best of my knowledge and belief and agree that this Enrollment Form shall be
a part of any Certificate issued by the Company. I verify my understanding that
all payments and values provided by the Certificate, when based on investment
experience of a variable account(s), are variable and not guaranteed as to
dollar amount. I understand that all payments and values based on the General
Account are subject to a Market Value Adjustment formula, which may result in
upward and downward adjustments in amounts payable. I further verify that I (1)
was not offered any advice or recommendation on investing in the Certificate by
any commercial bank; and (2) understand that (i) the Certificate is not insured
by the FDIC or Federal Reserve Board or any other agency; (ii) the Certificate
is not a deposit or obligation of, or endorsed, nor guaranteed by, Chase or any
commercial bank. I acknowledge receipt of the current prospectus for the Vista
Advantage Advisor and its underlying funds. I have read it carefully and
understand its contents.
Signed at______________________________________________ ___________________
CITY STATE DATE
______________________________________________ ___________________________
PARTICIPANT'S SIGNATURE REGISTERED REPRESENTATIVE'S
SIGNATURE
_________________________________________________
JOINT PARTICIPANT'S SIGNATURE (IF APPLICABLE)
L. REGISTERED Will this Certificate replace in whole or in part
REPRESENTATIVE any existing life insurance or annuity Certificate?
INFORMATION ______YES ______NO
________________________________________________________________________________
REPRESENTATIVE'S LAST NAME FIRST NAME MIDDLE INITIAL SOC.SEC. NUMBER
________________________________________________________________________________
REPRESENTATIVE'S STREET ADDRESS CITY STATE ZIP CODE
________________________ ________________________________ _______________
BRANCH OFFICE REPRESENTATIVE'S AGENT ID NUMBER
TELEPHONE NO.
FRAUD WARNING: ANY PERSON WHO WITH INTENT TO DEFRAUD OR KNOWING THAT HE IS
FACILITATING A FRAUD AGAINST AN INSURER, SUBMITS AN APPLICATION OR FILES A
CLAIM CONTAINING A FALSE OR DECEPTIVE STATEMENT MAY BE GUILTY OF INSURANCE
FRAUD. R-5427CMB(10/95)
<PAGE> 1
EXHIBIT (6)(A)
FILED
4/12/65
ARTICLES OF INCORPORATION
OF
SIERRA-NEVADA LIFE INSURANCE COMPANY
KNOW ALL MEN BY THESE PRESENTS:
That we, the undersigned, have this day voluntarily associated ourselves
together for the purpose of forming a corporation under the laws of the State of
California, and WE HEREBY CERTIFY:
ARTICLE I
The name of the corporation shall be:
SIERRA-NEVADA LIFE INSURANCE COMPANY.
ARTICLE II
That the primary purpose for which the corporation is formed is:
To engage in the business of insurance as principal, and make contracts
of life and endowment insurance, and grant, purchase or dispose of annuities or
endowments of any kind; and in such contracts, or in contracts supplemental
thereto, to provided additional benefits in the event of death of the insured by
accidental means, total and permanent disability to the insured, or specified
dismemberment or disablement suffered by the insured; to insure against loss or
damage by the sickness, bodily injury or death by accident of the insured. In
addition, to the specific lines herein provided, the corporation shall also be
empowered to transact any kind or class of insurance which may now or hereafter
be permitted to be written, insured or assumed by the corporation of this class
and character.
The corporation shall also have the following general powers:
(a) To enter into contracts or treaties of reinsurance and
coinsurance;
(b) To purchase, rent, or otherwise acquire real estate and personal
property; to sell, lease, mortgage, exchange or otherwise dispose of the same,
in whole or in part; to take, hold, and manage every kind of property, real,
personal or mixed; to convey or otherwise transfer the same or any part thereof;
to rent and lease buildings and lands and all kinds of property from any and to
any person whomsoever.
(c) To purchase or otherwise acquire real and personal property of
any and all kinds that may be lawfully held by a California insurance
corporation, including, but not limited to, lands, leaseholds, shares of stock,
bonds, mortgages, debentures, and other securities.
(d) To lend money and take as security for loans, mortgages and deeds
of trust, or either, of real property and pledges of personal property, as may
be permitted by law.
(e) To borrow money, and from time to time, accept, endorse, execute
and issue bonds, debentures, promissory notes, bills of exchange and other
obligations of the corporation for moneys borrowed or in payment for property
acquired, or for any of the other objects or purposes of the corporation or its
business and to secure the payment of any such obligation by mortgage, pledge,
deed, indenture, agreement, or other instrument of trust, or by lien upon,
assignment of, or agreement in regard to all or any part of the property rights
or privileges of the corporation wherever situated, whether now owned or
hereafter to be acquired.
(f) To make, enter into, carry out and perform contracts of every
kind and character with any person, firm, association, corporation, either
public or private, municipal or body politic, and with the Government of the
United States or any State thereof or any foreign country.
(g) The foregoing clauses shall be liberally construed as to purposes
and powers, and shall not be construed or held as limiting or restricting any
purposes and powers of this corporation which are authorized, or granted, or
which may be authorized or granted by the laws of the State of California.
<PAGE> 2
ARTICLE III
That Los Angeles County is the County in this State where the corporation
shall maintain its principal office for the transaction of business. The
corporation may, when deemed expedient by the Board of Directors, establish
offices and transact business anywhere in the United States of America, the
Dominion of Canada, the territories of either, and in foreign countries.
ARTICLE IV
The corporation is authorized to issue one class of stock, which shall be
designated as common stock; the total number of shares which this corporation
shall have authority to issue is 100,000 and the aggregate par value of all
shares that are to be issued shall be $1,500,000.00, and the par value of each
of said shares shall be $15.00.
No holders of stock of the corporation shall have any preferential,
pre-emptive or other rights to subscribe for or to purchase from the corporation
any stock in the corporation of any class, whether or not now authorized, or
other securities which the corporation may at any time issue.
The common stock of the corporation shall not be assessed by any act of
the corporation or its directors or officers, and when issued, shall be fully
paid, and no holder of such stock shall be liable for any debts or liabilities
of the corporation.
ARTICLE V
The Board of Directors shall consist of not less than five (5) members
and not more than seven (7) members, the exact number of which shall be fixed by
a by-law adopted by the shareholders or by the Board of Directors.
The minimum and maximum number of Directors may be changed by a by- law
duly adopted by the shareholders, provided, however, that the maximum number of
Directors shall in no event exceed the minimum by more than two (2); the
shareholders may also adopt a by-law providing for a definite number of
Directors without provision for an indefinite number.
The names and addresses of the persons who are hereby appointed to act as
the first Directors of the corporation are:
<TABLE>
<CAPTION>
Name Address
- ---- -------
<S> <C>
RICHARDS D. BARGER 2161 Adair Street,
San Marino, California 91108
ALFRED B. DOUTRE 5471 Keats Street
Los Angeles, California 90032
AGNES JOHNSON 611 Normandie Avenue
Los Angeles, California 90005
HAUN CHAMBERLAIN 1015 East Lexington,
Glendale, California 91206
GERRIE RUE 804 North Garfield Avenue
Montebello, California 90540
</TABLE>
IN WITNESS WHEREOF, for the purpose of forming this Corporation under the
laws of the State of California, we, the undersigned, constituting the
Incorporators of this Corporation, including the persons named hereinabove as
the first Directors of this Corporation, have executed these Articles of
Incorporation, the 6th day of April. 1963.
/s/ Richards D. Barger
---------------------------------
Richards D. Barger
/s/ Alfred B. Doutre
---------------------------------
<PAGE> 3
Alfred B. Doutre
/s/ Agnes Johnson
---------------------------------
Agnes Johnson
/s/ Haun Chamberlain
--------------------------------
Haun Chamberlain
/s/ Gerrie Rue
--------------------------------
Gerrie Rue
STATE OF CALIFORNIA )
) SS
County of Los Angeles )
On this 6th day of April, 1965, before me, the undersigned, a Notary
Public in and for said County and State, personally appeared RICHARDS D. BARGER,
ALFRED B. DOUTRE, AGNES JOHNSON, HAUN CHAMBERLAIN and GERRIE RUE, known to me to
be the persons whose names are subscribed to the within Instrument and
acknowledged to me that they executed the same.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal, the day and year in this Certificate first above written.
/s/ Richard T. Griffin
SEAL -------------------------------------
Notary Public in and for the County
of Los Angeles, State of California
My Commission Expires March 8, 1966.
<PAGE> 4
FILED
ENDORSED
7/14/65
CERTIFICATE OF AMENDMENT OF
ARTICLES OF INCORPORATION OF
SIERRA-NEVADA LIFE INSURANCE COMPANY
RICHARDS D. BARGER and WILLIAM M. POINDEXTER CERTIFY:
(1) That they are the Vice-President and Secretary, respectively, of
SIERRA-NEVADA LIFE INSURANCE COMPANY, a California corporation;
(2) That at a meeting of the Board of Directors of said Corporation,
duly held at Los Angeles, California, on the 8th day of July, 1965, the
following resolution was adopted:
RESOLVED: That ARTICLE I of the Articles of Incorporation of this
Corporation be amended to read as follows:
"The name of the Corporation shall be:
"ANCHOR LIFE INSURANCE COMPANY".
(3) That no shares have been issued by the Corporation, but RICHARDS
D. BARGER has subscribed to purchase twenty thousand shares of the $15.00 par
value stock of the Corporation, and he has consented, in writing, to the
adoption of said Amendment and the form of the written Consent as follows:
"The undersigned, being a subscriber to purchase 20,000 shares of the
stock of SIERRA-NEVADA LIFE INSURANCE COMPANY, a California corporation, hereby
consents to ARTICLE I of the Articles of Incorporation being amended to read as
follows:
'ARTICLE I:
'The name of the Corporation shall be:
'ANCHOR LIFE INSURANCE COMPANY."'
(4) That the total number of shares entitled to vote on or consent to
said Amendment is 20,000 shares, said shares being subject to a Subscription
Agreement from RICHARDS D. BARGER.
/s/ Richards D. Barger
------------------------------------
Richards D. Barger, Vice-President
/s/ William M. Poindexter
------------------------------------
William M. Poindexter, Secretary
Each of the undersigned declares, under penalty of perjury, that the
matters set forth in the foregoing Certificate are true and correct.
EXECUTED at Los Angeles, California, this 8th day of July, 1965.
/s/ Richards D. Barger
------------------------------------
Richards D. Barger, Vice-President
/s/ William M. Poindexter
------------------------------------
William M. Poindexter, Secretary
<PAGE> 5
FILED
12/1/66
CERTIFICATE OF OFFICERS OF
ANCHOR LIFE INSURANCE COMPANY
AS TO MERGER PROCEEDINGS
The undersigned, JACK D. RICH AND RICHARDS D. BARGER, do hereby certify
that they are and have been at all times hereinafter mentioned the duly elected
and acting President and Assistant Secretary, respectively, of ANCHOR LIFE
INSURANCE COMPANY, a California corporation, and do further hereby certify:
(a) That a special meeting of the Board of Directors of said
Corporation was duly held at 11:00 o'clock A.M. on September 19, 1966 at 40
Parker Road, Elizabeth, New Jersey, at which time there was at all times present
and acting a quorum of said Board, to-wit, three (3) if the five (5) members
thereof;
(b) That at said meeting the following resolution was duly adopted:
RESOLVED, that the Plan and Agreement of merger, ("Plan") between this
Company and FIRST WESTERN LIFE ]INSURANCE COMPANY, in the form presented to this
meeting and incorporated by this reference into this resolution as if fully set
forth herein be, and the same hereby is, adopted and approved; and
FURTHER, RESOLVED, that the Plan, in the form submitted to this meeting,
be submitted to the Shareholders of the Company, and that the Board of Directors
of this Company hereby calls a special meeting of the shareholders to be held at
40 Parker Rood, Elizabeth, New Jersey, on Monday, November 7, 1966, at 11:00
A.M., local time, for the purpose, among other purposes, of voting upon the
proposed Plan, and the proper officers of the Company are hereby directed to
send to each Shareholder entitled to vote at said meeting, a Notice of Special
Meeting, Proxy Statement a copy of the Plan and Agreement of Merger, Pro Forma
Balance Sheet of the Company, of FIRST WESTERN LIFE INSURANCE COMPANY and the
combined Companies, as of the period ending June 30, 1966, and Proxies, all
substantially in the form submitted to this meeting and approved hereby with
such changes therein as the Chairman of the Company shall approve; and
FURTHER RESOLVED, that September 26, 1966, shall be fixed as the record
date for the determination of holders of the $15.00 par value Common Stock of
the Company entitled to Notice of and to vote on such Plan, and that only such
Shareholders of record at the close of business on such date shall be entitled
to receive Notice of such meeting and to vote thereat; and
FURTHER RESOLVED, that the Plan in the form approved by the
Shareholders be submitted to the Insurance Commissioner of the State of
California and Arizona for approval prior to its being filed with the Secretary
of State of the State of California; and
FURTHER RESOLVED, that the proper officers of the Company be, and each of
then hereby is, authorized and empowered to do or cause to be done any act or
thing, including the obtaining of the consent, approval or authority of any
State regulatory body which may be requisite or proper in the premises, and to
make, execute and deliver and file any contract, agreement, document, or other
instrument which any such person may in his sole discretion, deem necessary
proper or advisable to effectuate and carry out the purposes and intentions of
the foregoing resolutions.
(c) That the vote in favor of said resolution was unanimous;
(d) That a special meeting of the Shareholders of said Corporation
was duly held at 11:00 o'clock A.M., on November 7, 1966, at 40 Parker Road,
Elizabeth, New Jersey; that as said meeting the terms and conditions of said
Plan and Agreement of Merger, referred to in said resolution of the of
Directors, were approved by a vote of 20,000 common shares, constituting a vote
of not less than 2/3rds of the issued and outstanding shares of each Class of
stock of said Corporation;
<PAGE> 6
(e) That the total number of outstanding common shares of the
Corporation is 20,000, constituting the total number of outstanding shares of
all classes of stock of said Corporation;
(f) That Notice of the time and place and purpose of said special
meeting of Shareholders was mailed to each Shareholder not less than twenty (20)
days prior to said meeting; that with such Notice there was mailed a statement
of the general terms o the proposed Plan and Agreement of Merger, and a copy of
said Plan Agreement of Merger;
(g) That the name of the surviving corporation is ANCHOR LIFE
INSURANCE COMPANY and upon the filing of the within certificate and attached
Plan and Agreement of Merger with the Secretary of State of the State of
California, the name of the surviving corporation shall be ANCHOR NATIONAL LIFE
INSURANCE COMPANY.
(h) That the Plan and Agreement of Merger between ANCHOR LIFE
INSURANCE COMPANY and FIRST WESTERN LIFE INSURANCE COMPANY merging said FIRST
WESTERN LIFE INSURANCE COMPANY into ANCHOR LIFE INSURANCE COMPANY, filed with
the Secretary of State of the State of California concurrently with this
Certificate, pursuant to the provisions of Sec. 4113 of the Corporations Code,
is the Plan and Agreement of Merger hereinabove referred to, and sets forth the
terms and conditions approved by said resolution of the Directors and vote of
the Shareholders.
(i) That the Plan and Agreement of Merger between ANCHOR LIFE
INSURANCE COMPANY and FIRST WESTERN LIFE INSURANCE COMPANY, as hereinbefore
described in this Certificate, has been approved by the Commissioners of
Insurance of the States of Arizona and California under the applicable statutes,
rules and regulations of said States; and all acts of both corporations to
effectuate the merging of FIRST WESTERN LIFE INSURANCE COMPANY into ANCHOR LIFE
INSURANCE COMPANY have been completed pursuant to the Plan and Agreement of
Merger.
IN WITNESS WHEREOF, the undersigned have executed this Certificate, this
30th day of November, 1966.
/s/ [unreadable]
------------------------------
President
Anchor Life Insurance Company
/s/ [unreadable]
------------------------------
Assistant Secretary
Anchor Life Insurance Company
<PAGE> 7
STATE OF CALIFORNIA )
) ss.
County of Los Angeles )
JACK D. RICH and RICHARDS D. BARGER, being first duly sworn, depose and
say:
That they are, respectively, the President and Assistant Secretary of
ANCHOR LIFE INSURANCE COMPANY, a corporation, the corporation named in the
CERTIFICATE OF OFFICERS AS TO MERGER PROCEEDINGS attached hereto; that they make
this verification individually and are authorized to make this verification for
and on behalf of said Corporation; that they have read the foregoing CERTIFICATE
OF OFFICERS AS TO MERGER PROCEEDINGS and know the contents thereof; that the
same is true of their own knowledge, except as to those matters which are
therein stated on their information or belief, and as to those matters they
believe it to be true.
/s/ Jack D. Rich
-------------------------------
JACK D. RICH
/s/ Richard D. Barger
-------------------------------
RICHARDS D. BARGER
Subscribed and sworn to before me
this 30th day of November, 1966
/s/ [unreadable]
- ------------------------------------
Notary Public in and for said County
and State
My Commission expires October 18, 1970
[SEAL]
<PAGE> 8
Na. chg. to ANCHOR NATIONAL LIFE INSURANCE COMPANY FILED
12/1/66
ANCHOR LIFE INSURANCE COMPANY
FIRST WESTERN LIFE INSURANCE COMPANY
PLAN AND AGREEMENT OF MERGER
THIS PLAN AND AGREEMENT OF MERGER (hereinafter referred to as the "Plan
and Agreement") entered into by and between. ANCHOR LIFE INSURANCE COMPANY, a
California insurance corporation, (hereinafter sometimes referred to as "ANCHOR
LIFE"), and FIRST WESTERN LIFE INSURANCE COMPANY, an Arizona insurance
corporation, (hereinafter sometimes referred to as "FIRST WESTERN");
W I T N E S S E T H:
WHEREAS, ANCHOR LIFE has on the date hereof an authorized capital
consisting of 100,000 shares of Common Stock, $15.00 par value, of which on the
date hereof 20,000 shares are issued and outstanding, and 10,000 shares are
reserved for issuance on the exercise of an option granted to ANCHOR
CORPORATION, a Delaware corporation; and
WHEREAS, FIRST WESTERN has, on the date hereof, an authorized capital of
20,000,000 shares of Class "A" (non-voting) Stock and 5,000,000 shares of Common
(voting) Stock each having a par value of 21 cents per share, of which, on the
date hereof, 707,650 shares of the Class "A' Stock are issued outstanding, and
225,000 shares of the Class "A" Stock are reserved for issuance on the exercise
of options granted by FIRST WESTERN to its President and Executive Vice
President, and 500,000 shares of the Common Stock are issued and outstanding;
and
WHEREAS, ANCHOR LIFE and FIRST WESTERN have the same officers and
directors, said directors being five in number, and said officers consisting of
a Chairman of the Board, President, Executive Vice President,
Secretary-Treasurer, an Assistant Treasurer and two Assistant Secretaries; and
WHEREAS, ANCHOR LIFE and FIRST WESTERN (herein sometimes collectively
referred to as the "Constituent Corporations") are legal reserve, capital stock
life insurance corporations, and are engaged generally in the business of
writing life insurance, health, accident and sickness insurance, annuities and
other lines of insurance connected therewith; and
WHEREAS, it is proposed to merge FIRST WESTERN with and into ANCHOR LIFE;
and
WHEREAS, the Boards of Directors of the Constituent Corporations have
concluded that it is to the mutual advantage of the Stockholders and
Policyholders of the Constituent Corporations that such a merger be effected,
and that the Plan and Agreement is fair, just and equitable and in the best
interests of such Stockholders and Policyholders; and
WHEREAS, the Plan and Agreement has been duly approved by the Boards of
Directors of FIRST WESTERN and ANCHOR LIFE as required by law;
NOW, THEREFORE, in consideration of the mutual promises hereinafter set
forth, and for other good and valuable consideration, it is hereby agreed that
FIRST WESTERN shall be merged with and into ANCHOR LIFE as a single corporation
(which shall be the surviving corporation and is hereinafter sometimes referred
to as the "CORPORATION"), to be governed by the laws of the State of California,
and that the terms and conditions of such merger and the mode of carrying it
into effect shall be as follows:
I. Submission to Stockholders. The Plan and Agreement shall
promptly be submitted to the Stockholders of the Constituent Corporations in the
manner provided by the laws of the States of Arizona and California,
respectively, upon such notice and publication as shall be required under such
laws, and if the votes of the Stockholders representing, in the case of
<PAGE> 9
ANCHOR LIFE, not less than two thirds of the total number of shares of its
Common Stock issued and outstanding and entitled to vote thereon and, in the
case of FIRST WESTERN, not less than two-thirds of the total number of shares of
Class "A" Stock issued and outstanding and entitled to vote thereon and not less
than two-thirds of the total number of shares of Common Stock, issued and
outstanding and entitled to vote thereon, shall be for the adoption of the Plan
and Agreement, then the Plan and Agreement shall be certified, signed, sealed
and acknowledged, as provided in the applicable laws of such States, and the
further covenants hereof shall become immediately effective. Any notices
required by applicable law shall be mailed to Stockholders promptly after such
adoption. If the Stockholders of either of the Constituent Corporations do not
so adopt the Plan and Agreement then the Plan and Agreement shall thereupon
terminate, without further action by any person.
II. Application for Governmental Approvals. The Constituent
Corporations shall take every reasonable and necessary step and action,
including the preparation and filing of all necessary documents and papers to
comply with and to secure such approval as may be required by the statutes,
rules and regulations of such States and agencies thereof, the approval of which
is necessary or desirable in order to effect and facilitate the merger
contemplated hereby.
III. Terms and Conditions and Mode of Carrying, the Merger into
Effect. The merger contemplated hereby shall become effective on the first day
of the month following the later of the performance of the last act, or the
obtaining of the last approval, required to complete the same under the
applicable statutes, rules and regulations of California and Arizona. (such date
being herein referred to as the "Effective Date"). On the Effective Date:
(a) FIRST WESTERN shall be merged with and into ANCHOR LIFE, the
separate existence of FIRST WESTERN shall cease, and the CORPORATION shall
continue in existence as a corporation incorporated under the laws of
California;
(b) The CORPORATION shall thereupon and thereafter, without other
transfers, to the extent permitted by law, possess all the rights, privileges,
immunities, powers and franchises of a public as well as of a private nature of
each of the Constituent Corporations, and all assets and property, real and
personal and mixed, and all issued and outstanding insurance policies, and all
debts due on whatever account, including subscriptions to shares of capital
stock and all other chosen in action and all and every other interest, of or
belonging to or due to each of the Constituent Corporations so merged shall be
taken and deemed to be transferred to and vested in the CORPORATION without
further act or deed; and title to any real estate, or any interest therein,
vested in either of the Constituent Corporations shall not revert or be in my
way impaired by reason of such merger. In furtherance, and not in limitation of
the foregoing:
(i) All leases, accounts receivable, agency balances, claims and
credits of any and all kinds, as well as all books, records, claim files,
application files, agency lists, policyholder lists and prospect lists of FIRST
WESTERN shall become the absolute property of the CORPORATION, without the
necessity of execution of assignments, deeds, conveyances, bills of sale or
other documents transferring title; and
(ii) The CORPORATION shall succeed to all rights in any and all
outstanding contracts and franchises and licenses of FIRST WESTERN, and all
property insurance policies and fidelity bonds covering FIRST WESTERN shall
inure to the benefit of the CORPORATION and such policies shall be endorsed
accordingly as requested; and
(c) The CORPORATION shall thenceforth be responsible and liable for
all the liabilities and obligations of each of the Constituent Corporations in
the same manner and to the same extent as if the CORPORATION had itself incurred
the same or contracted therefor; and any claim existing or action or proceeding
pending by or against either of the Constituent Corporations, whether civil or
criminal, may be prosecuted to judgment as if such merger had not taken place,
or the CORPORATION may be substituted in its place. Neither the rights of
creditors nor any liens upon the property of either of the Constituent,
Corporations so merged shall be impaired by such
<PAGE> 10
merger, but such liens shall be limited to the property upon which they were
liens immediately prior to the time of such merger.
(d) The assets and liabilities of FIRST WESTERN shall be taken up or
continued an the books of the CORPORATION in the amounts at which such assets
and liabilities shall be carried on the books of FIRST WESTERN as of the
Effective Date, and the capital and surplus appearing on the books of FIRST
WESTERN shall be entered and continued on the books of the CORPORATION as
capital to the extent of the par value of the shares of stock of the CORPORATION
issuable to the Stockholders of FIRST WESTERN as a result of the merger, and the
balance as surplus;
(e) On the Effective Date each issued and outstanding share of Common
Stock of ANCHOR LIFE shall continue to be issued and outstanding Common Stock of
the CORPORATION; and each share of issued and outstanding Class "A" (non-voting)
Stock and Common Stock (voting) of FIRST WESTERN shall be converted into issued
and outstanding shares of the Common Stock of the CORPORATION, on the basis
described in Section IV hereof.
IV. Conversion of Shares of Stock of First Western. The manner of
converting the shares of FIRST WESTERN into shares of the CORPORATION shall be
as follows:
(a) Seventy-seven (77) shares of the issued and outstanding Common
Stock (voting) and/or the Class "A" (non-voting) Stock of FIRST WESTERN shall,
on the Effective Date, without any action on the part of the holder thereof and
without any further action on the part of the CORPORATION or any officers
thereof, automatically become and be converted into one share of the Common
Stock of the CORPORATION; subject, however, to the provisions of paragraphs (b)
and (c) of this Section IV.
(b) No fractional shares of the capital stock of the CORPORATION
shall be issued as a result of the merger contemplated hereby, and in the event
the conversion of shares on the basis described herein results in any
Stockholder of FIRST WESTERN being entitled to a fractional interest in the
Common Stock of the CORPORATION, such Stockholder shall be given the option to
sell such fractional interest or to purchase an additional fractional interest
in the amount necessary to make a whole share. The CORPORATION shall act as
Agent for such Stockholders in purchasing or selling such fractional interests,
and any such Stockholder entitled to a fractional interest who shall not elect
to purchase an additional fractional interest for consolidation, after the
expiration of 10 days written notice from the CORPORATION of his right to do so,
shall be deemed to have elected to sell his fractional interest. The Agent
shall offset purchase and sell order with respect to fractional interests to the
extent practicable.
(c) After the Effective Date each holder of a Certificate
representing outstanding shares of FIRST WESTERN Class "A" Stock (non-voting) or
Common Stock (voting), (other than those to which Section VI hereof is
applicable) shall be entitled, upon surrender of such Certificate or
Certificates, to receive in exchange therefor a Certificate or Certificates
issued by the CORPORATION representing the number of full shares of the Common
Stock of the CORPORATION to which he is entitled in accordance with the Plan and
Agreement. Until so surrendered, each outstanding Certificate which, prior to
the Effective Date of the merger, represented shares of FIRST WESTERN stock,
shall be deemed for all corporate purposes to evidence the ownership of such
number of full shares of Common Stock of the CORPORATION to which the holder in
entitled upon the exchange of such Certificate.
(d) The CORPORATION shall be entitled to rely on the Stock Register
of FIRST WESTERN to the same extent as if the same were its own Stock Register.
V. Shares of Stock of the Corporation. Except as provided in
Section VI, the shares of capital stock of ANCHOR LIFE which were outstanding
immediately prior to the Effective Date shall remain outstanding, and shall not
be affected by the merger. Stock options outstanding at the Effective Date
which were previously granted by ANCHOR LIFE shall remain outstanding.
VI. Dissenting Shareholders. On the Effective Date any Stockholder of
FIRST WESTERN or of ANCHOR LIFE who properly shall have objected to the merger
contemplated hereby in accordance with the applicable
<PAGE> 11
provisions of the Arizona and California statutes, respectively, and who shall
properly demand payment of the value of his shares as provided in said statute
or statutes, shall thereafter have only such right; as are provided for such
dissenting Stockholders in the applicable statute or statutes.
VII. Stock Options. The outstanding Stock Options previously granted
by FIRST WESTERN to its officers for the purchase of its Class "A" (non-voting)
Stock shall be assumed by the CORPORATION at the Effective Date. The number of
shares of Common Stock of the CORPORATION to which such assumed option
agreements shall relate shall be the largest whole number obtained by dividing
the number of shares of Class "A" (non-voting) Stock of FIRST WESTERN to which
such option related immediately prior to the merger by seventy-seven (77) and
the option price shall be the option price relating to such option immediately
prior to the Effective Date multiplied by seventy-seven (77).
VIII. Articles of Incorporation, By-Laws, Officers of the Surviving
Corporation. On the Effective Date:
(a) Article I of the Articles of Incorporation of ANCHOR LIFE, as
amended. shall be amended on the Effective Date to read as follows:
"1. ARTICLE I. The name of the Corporation shall be ANCHOR NATIONAL LIFE
INSURANCE COMPANY."
As so amended such Articles shall be the Articles of Incorporation of the
CORPORATION until further amended.
(b) The By-Laws of ANCHOR LIFE in effect immediately prior to the
Effective Date shall continue to be the By-Laws of the CORPORATION until further
amended.
(c) The officers of ANCHOR LIFE in office immediately prior to the
Effective Date shall continue to be the officers of the CORPORATION until its
Board of Directors shall otherwise determine.
(d) The directors of ANCHOR LIFE in office immediately prior to the
Effective Date shall be the directors of the CORPORATION and all such directors
shall serve as provided in the By-Laws of the CORPORATION.
IX. Fees and Commissions. No director or officer of either FIRST
WESTERN or ANCHOR LIFE shall receive any fee, commission or other compensation
whatever, directly or indirectly, not herein specifically provided, for in any
manner aiding, promoting or assisting in the merger contemplated, except for
services actually rendered and only to the extent permitted by law.
X. Assumption Certificate. The CORPORATION, as soon after the
Effective Date as practicable, shall send to each Policyholder of FIRST WESTERN
a Certificate of assumption, evidencing the obligation of the CORPORATION to
assume the liabilities of FIRST WESTERN in accordance with the terms and
conditions of the respective policies of insurance and the provisions hereof,
said Certificate of assumption to be in such form and to contain such terms and
conditions as approved by the insurance supervisory officials of California and
Arizona.
XI. Miscellaneous.
(a) The Plan and Agreement may be executed in one more counterparts,
each of which shall be considered an original;
(b) Each of the Constituent Corporations shall cause to be executed
and delivered such further and additional documents as may from time to time be
required by law or which may be reasonably necessary or convenient for the
purpose of consummating the merger contemplated hereby;
(c) At any time before the Effective Date the merger contemplated
hereby may be abandoned by resolution of the Board of Directors of either of the
Constituent Corporations. In such event, the Plan and Agreement shall thereupon
terminate without any further action by any person, and such termination shall
be without liability on the part of either of the Constituent Corporations,
their shareholders, directors or officers;
<PAGE> 12
(d) For accounting purposes only, all accounting entries and
adjustments necessitated by the merger contemplated hereby shall be made on the
books of the CORPORATION as of the close of business on the day immediately
preceding the Effective Date of merger.
IN WITNESS WHEREOF, pursuant to authority duly given by the respective
Boards of Directors of the Constituent Corporations, this Plan and Agreement of
Merger is hereby executed this 19th day of September, 1966, on behalf of the
Constituent Corporations, by their respective Chairmen of the Board or
Presidents and attested to by their respective Secretaries, or one of their
respective Assistant Secretaries.
ANCHOR LIFE INSURANCE COMPANY
By /s/ [unreadable]
--------------------------
Chairman of the Board
By /s/ [unreadable]
--------------------------
President
ATTEST:
/s/ [unreadable]
- ------------------
Secretary
By /s/ [unreadable]
--------------------------
Assistant Secretary
FIRST WESTERN LIFE INSURANCE COMPANY
By /s/ [unreadable]
--------------------------
Chairman of the Board
By /s/ [unreadable]
--------------------------
President
ATTEST:
/s/ [unreadable]
- ------------------
Secretary
By /s/ [unreadable]
--------------------------
Assistant Secretary
<PAGE> 13
STATE OF ARIZONA )
) ss
County of Maricopa )
On the 19th day of September, 1966, before me, a Notary Public in and for
said County and State, personally appeared EDWARD B. BURR, known to me to be the
Chairman, JACK D. RICH, known to me to be the President, MELVIN INTRILIGATOR,
known to me to be the Secretary, and RICHARDS D. BARGER, known to me to be the
Assistant Secretary, of ANCHOR LIFE INSURANCE COMPANY, the Corporation that
executed the within Plan and Agreement of Merger, known to me to be the persons
who executed the within Certificate on behalf of the Corporation therein named,
and acknowledged to me that such Corporation executed the same pursuant to its
By-Laws or a resolution of its Board of Directors.
WITNESS my hand and official seal.
/s/ Jerry J. Moorhead
-----------------------------
Jerry J. Moorhead
Notary Public in and for said County
and State
My Commission Expires April 8, 1969
<PAGE> 14
STATE OF ARIZONA )
) ss
County of Maricopa )
On the 19th day of September, 1966, before me, a Notary Public in and for
said County and State, personally appeared EDWARD B. BURR, known to me to be the
Chairman, JACK D. RICH, known to me to be the President, MELVIN INTRILIGATOR,
known to me to be the Secretary, and RICHARDS D. BARGER, known to me to be the
Assistant Secretary, of FIRST WESTERN LIFE INSURANCE COMPANY, the Corporation
that executed the within Plan and Agreement of Merger, known to me to be the
persons who executed the within Certificate on behalf of the Corporation therein
named, and acknowledged to me that such Corporation executed the same pursuant
to its By-Laws or a resolution of its Board of Directors.
WITNESS my hand and official seal.
/s/ Jerry J. Moorhead
-----------------------------
Jerry J. Moorhead
Notary Public in and for said County
and State
My Commission Expires April 8, 1969
<PAGE> 15
BEFORE THE
DEPARTMENT OF INVESTMENT
DIVISION OF CORPORATIONS
OF THE
STATE OF CALIFORNIA
In the matter of the application of ) CERTIFICATION OF LACK OF
) NECESSITY OF PERMIT FROM
ANCHOR LIFE INSURANCE COMPANY ) THE COMMISSIONER OF
for a certificate. ) CORPORATIONS
FILE No. ALPHA
Receipt No. LA 377581
I. JERALD S. SCHUTZBANK , Commissioner of Corporations of the state of
California, do hereby certify that in my opinion a permit from the Commissioner
of Corporations is not required under the provisions of the Corporate Securities
Law in the matter of the proposed merger agreement, by and between FIRST WESTERN
LIFE INSURANCE COMPANY, an Arizona corporation, and ANCHOR LIFE INSURANCE
COMPANY, California corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal this 16th day of November 1966, at Los Angeles, California.
JERALD S. SCHUTZBANK
Commissioner of Corporations
By /s/ Michael J. Brody
----------------------
MICHAEL J. BRODY
Senior Corporations Counsel
<PAGE> 16
Cap Stock cha fr $1,500,000 to $1,100,000
FILED
12/22/67
CERTIFICATE OF AMENDMENT
OF
ARTICLES OF INCORPORATION
MELVIN INTRILIGATOR and ROGER T. WICKERS certify:
1. That they are the Vice President and the Secretary, respectively, of
ANCHOR NATIONAL LIFE INSURANCE COMPANY, a California Corporation.
2. That at a meeting of the Board of Directors of said Corporation, duly
held at Elizabeth, New Jersey, on the 2nd day of November, 1967, the following
resolution was adopted:
NOW, THEREFORE, BE IT RESOLVED, that the first paragraph of the ARTICLES
of INCORPORATION of this Corporation be amended to read as follows:
ARTICLE IV
"The Corporation is authorized to issue one class of stock, which shall
be designated as Common Stock; the total number of shares which this
Corporation shall have authority to issue is 100,000, and the aggregate
par value of all shares that are to be issued shall be One Million One
Hundred Thousand Dollars ($1,100,000.00), and the par value of each of
said shares shall be Eleven Dollars ($11.00), and upon effective date of
this Amendment each outstanding $15.00 share is converted into one $11.00
share."
3. That at a meeting of the shareholders of said Corporation, duly held at
Elizabeth, New Jersey, an the 19th day of December, 1967, a resolution was
adopted, which resolution is identical in form to the directors' resolution set
forth in paragraph 2 above.
4. That the number of shares which voted affirmatively for the adoption of
said resolution was 41,270; that no shares were voted against the adoption of
said resolution; and that the total number of shares entitled to vote on or
consent to said amendment was 48,221.
5. That upon the of Amendment of Articles of Incorporation as hereinabove
set forth, each outstanding share of a par value of $15.00 is converted into and
reconstituted as one share of Common Stock of a par value of $11.00.
STATE OF NEW JERSEY )
) ss.
COUNTY OF UNION )
MELVIN INTRILIGATOR and ROGER T. WICKERS being each first duly sworn,
depose and say:
That they are the Vice President and Secretary, respectively, of ANCHOR
NATIONAL LIFE INSURANCE COMPANY and that they have read the foregoing
Certificate of Amendment of Articles of Incorporation of ANCHOR NATIONAL LIFE
INSURANCE COMPANY and know the contents thereof, and that the same is true of
their own knowledge.
/s/ Melvin Intriligator
------------------------------------
Melvin Intriligator, Vice President
/s/ Roger T. Wickers
------------------------------------
Roger T. Wickers, Secretary
<PAGE> 17
Subscribed and sworn to before me
this 19th day of December, 1967.
/s/ Elizabeth A. Gallagher
- ----------------------------------
Notary Public in and for said
County and State
My Commission expires on December 8, 1971
[SEAL]
<PAGE> 18
FILED
6/20/68
Aggregate par value chg from $1,100,000 to $1,080,000
CERTIFICATE OF AMENDMENT
OF
ARTICLES OR INCORPORATION
MELVIN INTRILIGATOR and ROGER T. WICKERS certify:
1. That they are the Vice President and the Secretary, respectively,
of ANCHOR NATIONAL LIFE INSURANCE COMPANY, a California corporation.
2. That at a meeting of the Board of Directors of said Corporation
held at Elizabeth, New Jersey on the 10th day of June, 1963, the following
resolutions were adopted:
"NOW, THEREFORE, BE IT RESOLVED, that this Board of Directors does hereby
propose and declare it advisable that the first paragraph of Article IV of the
Articles of Incorporation be amended to read as follows:
'The Corporation is authorized to issue one class of stock, which shall
be designated as Common Stock; the total number of shares which this Corporation
shall have authority to issue is 300,000, and the aggregate par value of all
shares that are to be issued shall be One Million Eighty Thousand Dollars
($1,080,000.), and the par value of each of said a shares shall be Three Dollars
and Sixty Cents ($3.60), and, upon the effective date of this Agreement, each
outstanding share of the Common Stock of the par value of $11.00 per share is
converted into three shares of the par value of Three Dollars and Sixty Cents
($3.60) per share.'
"and be it further
"RESOLVED, that the aforesaid amendment of the Article IV of the Articles
of Incorporation be submitted to the stockholders of this Corporation, as
hereinafter provided, for their approval, subject to approval by the California
Insurance Commissioner."
3. That at a meeting of the stockholders of said Corporation held at
Elizabeth, New Jersey, an the 20th day of June, 1968, a resolution was adopted,
subject to the approval of the California Insurance Commissioner, amending the
first paragraph of Article IV of the Articles of Incorporation of Anchor
National Life Insurance Company in identical form as set forth in paragraph 2
above.
4. That the number of shares which voted affirmatively for the
adoption of said resolutions was 36,795 shares; that no shares were voted
against the adoption of said resolutions; and that the total number of shares
entitled to vote on or consent to said amendment was 48,266.
5. That upon the Amendment of Articles of Incorporation as
ereinabove set forth, each outstanding share of a par value of $11.00 is
converted into and reconstituted as three shares of Common Stock of a par value
of $3.60.
/s/ Melvin Intriligator
----------------------------------
Melvin Intriligator, Vice President
/s/ Roger T. Wickers
-----------------------------------
Roger T. Wickers, Secretary
<PAGE> 19
STATE OF NEW JERSEY )
) ss.
COUNTY OF UNION )
MELVIN INTRILIGATOR and ROGER T. WICKERS, being such first duly sworn,
depose and say:
That they are the Vice President and Secretary, respectively, of ANCHOR
NATIONAL LIFE INSURANCE COMPANY and that they have read the foregoing
Certificate of Amendment of Articles of Incorporation of ANCHOR NATIONAL LIFE
INSURANCE COMPANY and know the contents thereof, and that the same is true of
their own knowledge.
/s/ Melvin Intriligator
-----------------------------------
Melvin Intriligator, Vice President
/s/ Roger T. Wickers
------------------------------------
Roger T. Wickers, Secretary
Subscribed and sworn to before me
this 20th day of June, 1968
/s/ [unreadable]
- ---------------------------------
Notary Public in and for Union
County, State of New Jersey.
My Commission expires on September 22, 1972
[SEAL]
<PAGE> 20
FILED
12/31/68
CERTIFICATE OF OFFICERS OF
ANCHOR NATIONAL LIFE INSURANCE COMPANY
AS TO MERGER PROCEDURES
The undersigned, MELVIN INTRILIGATOR and ROGER T. WICKERS, do hereby
certify that they are and have been at all times hereinafter mentioned the duly
elected and acting Vice President-Treasurer and Secretary, respectively, of
ANCHOR NATIONAL LIFE INSURANCE COMPANY, a California corporation, and do further
hereby certify:
(a) That a special meeting of the Board of Directors of said
corporation was duly held at 10:00 o'clock a.m. on October 16, 1968, at 40
Parker Road, Elizabeth, New Jersey, at which time there was all times present
and acting a quorum of said Board, to-wit, there (3) of the five (5) members
thereof;
(b) That at said meeting the following resolution was duly adopted:
RESOLVED, that the Plan and Agreement of Merger, ("Plan") between this
company and THE SELECTIVE LIFE INSURANCE COMPANY, in the form presented
to this meeting and incorporated by this reference into this resolution
as if fully set forth herein be, and the same hereby is, adopted and
approved; and
FURTHER RESOLVED, that the Plan, in the form submitted to this meeting,
be submitted to the Shareholders of the company hereby calls a special
meeting of the shareholders to be held at 40 Parker Road, Elizabeth, New
Jersey, on Friday, November 22, 1968, at 10:00 a.m., local time, for the
purpose, among other purposes, of voting upon the proposed Plan, and the
proper officers of the company are hereby directed to send to each
Shareholder entitled to vote at said meeting, a Notice of Special
Meeting, Proxy Statement and Proxy, a copy of the form of Plan and
Agreement of Merger and related Agreement between the company, ANCHOR
CORPORATION and BANKERS UNITED LIFE ASSURANCE COMPANY, the unaudited
Balance Sheet of the company as of June 30, 2968, the unaudited Balance
Sheet of THE SELECTIVE LIFE INSURANCE COMPANY as of June 30, 1968, and
the unaudited pro form Balance Sheet of the company and THE SELECTIVE
LIFE INSURANCE COMPANY reflecting the combined balance sheets of the
company and THE SELECTIVE LIFE INSURANCE COMPANY had the proposed merger
taken effect on June 30, 1968, all substantially in the form submitted to
this meeting and approved hereby, with such changes therein as the
Chairman of the company shall approve; and
FURTHER RESOLVED, that October 31, 1968, shall be fixed as the record
date for the determination of holders of the $3.60 per value Common Stock
of the company entitled to Notice of and to vote on such Plan, and that
only such shareholders of record at the close of business on such date
shall be entitled at; and
FURTHER RESOLVED, that the Plan is the form approved by the shareholders
be submitted to the Insurance Commissioner of the State of California,
and any other state deemed appropriate by the officers of the company,
for approval prior to its being filed with the Secretary of State of the
State of California; and
FURTHER RESOLVED, that the proper officers of the company be, and each of
them hereby is, authorized and empowered to do or cause to be any act or
thing, including the obtaining
<PAGE> 21
of the approval or authority of any state regulatory body which may be
requisite or proper in the premises, and to make, execute and deliver and
file any contract, agreement, document, or other instrument which any
such person may, is his sole discretion, deem necessary, proper or
advisable to effectuate and carry out the purposes and of the foregoing
resolutions.
(c) That the vote in favor of said resolution was unanimous;
(d) That a special meeting of the shareholders of said corporation
was duly held at 10:00 o'clock a.m., on November 22, 1968, at 40 Parker Road,
Elizabeth, New Jersey; that at said meeting the terms and conditions of said
Plan and Agreement of Merger, refused to is said resolution of the Board of
Directors, were approved by a vote of 165,021 common shares, constituting a vote
of not less than 2/3rds of the issued and outstanding shares of each class of
stock of said corporation:
(e) That the total number of outstanding common shares of the
corporation is 165,021, constituting the total number of outstanding shares of
all classes of stock of said corporation;
(f) That Notice of the time and place and purpose of said special
meeting of shareholders was mailed to each shareholder not less than twenty (20)
days prior to said meeting; that with such Notice there was mailed a statement
of the general terms of the proposed Plan and Agreement of Merger, and a copy of
said Plan and Agreement of Merger;
(g) that the name of the surviving corporation is ANCHOR NATIONAL
LIFE INSURANCE COMPANY; and
(h) that the Plan and Agreement of Merger between ANCHOR NATIONAL
LIFE INSURANCE COMPANY and THE SELECTIVE LIFE INSURANCE COMPANY, filed with the
Secretary of State of the State of California concurrently with this
Certificate, pursuant to the provisions of Sec. 4111 of the Corporation Code, is
the Plan and Agreement of Merger heretoabove referenced to, and sets forth the
terms and conditions approved by said resolution of the directors and vote of
the shareholders.
IN WITNESS WHEREOF, the undersigned have executed this Certificate this
18th day of December, 1968.
/s/ Melvin Intriligator
-----------------------------
Melvin Intriligator
Vice President and Treasurer
/s/ Roger T. Wickers
-----------------------------
Roger T. Wickers, Secretary
STATE OF NEW JERSEY )
) ss:
COUNTY OF UNION )
MELVIN INTRILIGATOR, being first duly sworn, deposes and says that he is
the Vice President and Treasurer of ANCHOR NATIONAL LIFE INSURANCE COMPANY,
executing the foregoing CERTIFICATE OF OFFICERS OF ANCHOR NATIONAL LIFE
INSURANCE COMPANY AS TO MERGER PROCEEDINGS on behalf of said Company, and that
all the statements contained is said Certificate are true.
/s/ Melvin Intriligator
-------------------------------
Melvin Intriligator
Subscribed and sworn to before me
this 18th day of December, 1968.
<PAGE> 22
/s/ Elizabeth A. Gallegher
- ----------------------------
Elizabeth A. Gallegher
Notary Public in and for said
County and State
[SEAL]
STATE OF NEW JERSEY )
) ss:
COUNTY OF UNION )
ROGER T. WICKERS, being first duly sworn, deposes and says that
he is the Secretary of ANCHOR NATIONAL LIFE INSURANCE COMPANY, executing the
foregoing CERTIFICATE OF OFFICERS OF ANCHOR NATIONAL LIFE INSURANCE COMPANY AS
TO MERGER PROCEDURES on behalf of said Company, and that all the statements
contained in said Certificate are true.
/s/ Roger T. Wickers
----------------------------
Roger T. Wickers
Subscribed and sworn to before me
this 18th day of December, 1968.
/s/ Elizabeth A. Gallegher
- ------------------------------
Elizabeth A. Gallegher
Notary Public in and for said
County and State
<PAGE> 23
FILED
12/31/68
ANCHOR NATIONAL LIFE INSURANCE COMPANY
THE SELECTIVE LIFE INSURANCE COMPANY
PLAN AND AGREEMENT OF MERGER
<PAGE> 24
ANCHOR NATIONAL LIFE INSURANCE COMPANY
THE SELECTIVE LIFE INSURANCE COMPANY
PLAN AND AGREEMENT OF MERGER
PLAN AND AGREEMENT OF MERGER (hereinafter referred to as the "Agreement")
entered into as of the 31st day of October, 1968, by and between ANCHOR NATIONAL
LIFE INSURANCE COMPANY, a California insurance corporation, (hereinafter
sometimes referred to as "Anchor Life") and THE SELECTIVE LIFE INSURANCE
COMPANY, an Illinois insurance corporation, (hereinafter sometimes referred to
as "Selective").
WHEREAS, Anchor Life and Selective are legal reserve capital stock life
insurance corporations and are engaged generally in the business of writing life
insurance, health, accident and sickness insurance, annuities and other lines of
insurance connected therewith; and
WHEREAS, it is proposed to merger Selective with and into Anchor Life;
and
WHEREAS, the boards of directors of Anchor Life and Selective have
concluded that it is to the mutual advantage of the stockholders and
policyholders of said corporations that such a merger be effected, and that the
Agreement is fair, just and equitable, and in the best interests of such
stockholders and policyholders; and
WHEREAS, the Agreement has been duly approved by the boards of directors
of Anchor Life and Selective as required by law;
NOW, THEREFORE, this Agreement
W I T N E S S E T H :
that in consideration of the mutual promises hereinafter set forth end for other
good and valuable considerations, it is hereby agreed that Selective shall be
merged with and into Anchor Life, which shall be the surviving corporation (and
is hereinafter sometimes referred to as the "Corporation"), to be governed by
the laws of the State of California, and that the terms and conditions of such
merger and the mode of carrying it into effect shall be as follows:
FIRST: Representations of Selective. Selective represents and warrants
as follows:
1. Selective is an insurance corporation duly organized and existing
and in good standing under the laws of the State of Illinois, having an
authorized capital consisting of 600,000 shares of Common Stock, of a par value
of $1.00 per share, of which, on the date hereof, 413,075 shares are issued and
outstanding, and there are not outstanding options of the purchase of such
stock.
2. The unaudited financial statements of Selective as of June 30,
1968, heretofore furnished to Anchor Life, present fairly the financial
condition of Selective as at the date hereof and the results of its operations
for the period then ended, and are in conformity with the statutes of Illinois
applicable to life insurance companies and the applicable rules and regulations
thereunder; and the list of the assets and the location thereof as of September
30, 1968, heretofore or herewith furnished to Anchor Life, is in all respects
true and correct.
3. Since June 30, 1968, there has been no material adverse change in
the condition (financial or otherwise), or in the assets, liabilities or
business of Selective from those set forth or reflected in the financial
statements referred to in subparagraph (2) hereof; there has been no damage,
destruction, extraordinary death claims, or any other loss materially and
adversely affecting the business, prospects or property of Selective; and as of
the Effective Date there will have been no such change; provided, however, that
: (a) the transfer, assignment, assumption by another insurance company, or
other removal of the insurance in force on the books of Selective shall not be
deemed to be a material adverse change; and (b) not
<PAGE> 25
change shall be deemed to be material and adverse if, notwithstanding such
change, Selective shall have on the Effective Date assets of the amount and
character described in paragraph 10 of this Article FIRST.
4. Since June 30, 1968, there has been no change in the
capitalization of Selective; and between the date of this agreement and the
Effective Date, Selective will not issue any additional shares of its Common
Stock or grant options with respect thereto, and will not purchase any shares of
its Common Stock.
5. At June 30, 1968, Selective did not have, and as of the Effective
Date it will not have, any liability not included or provided for in the
financial statements as at that date heretofore referred to or which shall have
been thereafter incurred in the ordinary course of business and shall have no
material adverse effect on the business or property of Selective; and the
amounts set up as policy reserves and valuation reserves are sufficient and as
of the Effective Date will be sufficient and as of the Effective Date will be
sufficient for their respective purposes; and the reserves for federal taxes as
of the same date, together with all refunds to be received, will be sufficient
for the payment of all unpaid federal, state and local taxes, for all fiscal
years and periods prior to the Effective Date. Selective has filed all federal,
state, county and local tax returns which are required to be filed by it, and
such returns are true and correct.
6. Selective has and will on the Effective Date have good title to
all of its properties and assets, including those reflected in the financial
statements hereinbefore referred to, and such properties and assets are subject
to no mortgage, pledge, lien or other change or encumbrance except as shown in
such financial statements.
7. There are not actions. proceedings or investigations pending
against or affecting Selective in any court, tribunal or agency, and there are
no orders, writs, injunctions, or decrees of any court, tribunal or agency
pending against or affecting Selective, except as set forth in Exhibit A hereto
annexed; and Selective agrees to notify Anchor Life in writing of any legal
action instituted or threatened against it between the date of this agreement
and the Effective Date, and that as of the Effective Date there will be no
action, proceeding, investigation, order, decree or claim existing, pending or
threatened which may adversely affect Selective.
8. Selective is not a party to any material written or oral contract
except as set forth and described in Exhibit B hereto annexed, including,
without limiting the foregoing, any employment contract which is not terminable
without cost or expense to Selective, any contract with a labor union or
association, any bonus, pension, profit sharing, retirement, stock purchase,
hospitalization, insurance or similar plan providing employees' benefits, any
distribution, sales, agency or advertising contract which is not terminable
without cost to Selective or any successor, any leases with respect to any
property, real or personal, or any contracts or commitments for capital
expenditures; and Selective agrees that as of the Effective Date it will hold or
be subject to no leases of real or personal property.
9. Selective has duly complied with all laws and regulations
applicable to it in the State of Illinois, and in each other state in which it
is authorized to do business, and it now and on the Effective Date will be fully
authorized to do business and is and will be in good standing in the States of
California, Florida, Illinois, Indiana, Iowa, Minnesota, Montana, Nebraska,
North Dakota, Oregon and Washington.
10. (a) On the Effective Date, Selective shall have not less than
$817,000 of capital and surplus based on convention statement values. All of
the assets of Selective shall be admissible for insurance companies domiciled in
the State of California, shall be readily marketable, shall not include any real
estate, and shall have an aggregate fair market value of $817,000 after
deducting all liabilities and reserves.
(b) Securities shall be deemed to be marketable if they are freely traded
on a national securities exchange or over-the-counter and if market quotations
are readily available through normal financial channels. Securities listed or
traded on an exchange shall be valued at the last sale price on the exchange on
the las business day preceding the Effective Date,
<PAGE> 26
and if there shall have been no sale on that date, then at the closing bid
price. Securities traded over-the -counter shall be valued at the closing bid
price on the day preceding the Effective Date.
SECOND: Representations of Anchor Life. Anchor Life represents and
warrants as follows:
1. Anchor Life is an insurance corporation duly organized and existing
and in good standing under the laws of the State of California, having an
authorized capital consisting of 300,000 shares of Common Stock, of the par
value of $3.60 per share, of which, on the date hereof, 165,021 shares are
issued and outstanding; and there are no outstanding options for the purchase of
such stock.
2. The unaudited financial statements of Anchor Life as of June 30
1968, heretofore furnished to Selective, present daily the financial condition
of Anchor Life as at the date thereof and the results of its operations for the
period then ended, and are in conformity with the statutes of California
applicable to life insurance companies and the applicable rules and regulations
thereunder.
3. Since June 30, 1968, there has been no material adverse change in
the condition (financial or otherwise) or in the assets, liabilities or business
of Anchor Life from those set forth or reflected in the financial statements
referred to in subparagraph (2) hereof; and there has been no damage,
destruction or other loss materially and adversely affecting the business
prospects or property of Anchor Life; and as of the Effective Date there will
have been no such change; provided, however, that no reduction of surplus by
reason of the additions to insurance in force on the books of Anchor Life shall
be deemed a material adverse change.
4. Anchor Life has good title to all of its properties and assets,
including those reflected in the financial statements hereinbefore referred to,
and such properties and assets are subject to no mortgage, pledge, lien or other
charge or encumbrance except as shown in such financial statements.
5. There are no actions, proceedings or investigations pending against
or affecting Anchor Life in any court, tribunal or agency and there are no
orders, writs, injunctions or decrees of any court, tribunal or agency pending
against or affecting Anchor Life, except as set forth in Exhibit C hereto
annexed; and Anchor Life agrees to notify Selective in writing of any legal
action instituted or threatened against it between the date of this agreement
and the Effective Date.
6. Anchor Life has duly complied with all laws and regulations
applicable to it in the State of California, and in each other state in which it
is authorized to do business, and it now and on the Effective Date will be fully
authorized to do business and is and will be in good standing in the States of
Alabama, Arizona, California, Hawaii, Idaho, Indiana, Montana, Nevada, New
Mexico, North Dakota, Oregon, South Dakota, Utah, Washington and Wyoming.
THIRD: (1) Submission to Stockholders. This Plan and Agreement shall
as soon as practicable to submitted to the stockholders of Anchor Life and
Selective (which are hereinafter sometimes referred to as "the constituent
corporations") in the manner provided by the laws of the States of California
and Illinois, respectively; and if the votes of stockholders representing in the
case of each of the constituent corporations not less than two-thirds of the
total number of shares of its Common Stock issued and outstanding and entitled
to vote thereon, shall be in favor of the adoption of this Plan and Agreement,
then this Plan and Agreement shall be certified as may be provided by the
applicable law of each such state, any notices required by such laws shall be
mailed to stockholders, and the further covenants hereof shall become effective
as hereinafter provided.
(2) Applications for Government Approvals. Each of the constituent
corporations shall take every reasonable and necessary step, including the
preparation, execution and filing of all necessary documents and applications,
to secure such approval, licenses and permits as may be required by the laws,
rules and regulations of the States of California and Illinois, respectively,
and of such other states and agencies thereof, the approval of which Anchor Life
shall deem to be necessary or desirable in
<PAGE> 27
order to effect and facilitate the merger hereby contemplated. Selective hereby
authorized Anchor Life, its officers and counsel, to act on behalf of Selective
in taking any action which Anchor Life, its officers and counsel, to act on
behalf of Selective in taking any action which Anchor Life shall deem desirable
to obtain such approvals, licenses and permits, and agrees that its officers and
directors will sign, seal and otherwise execute and file such instruments and
documents for the purpose as Anchor Life may request.
FOURTH: Manner and Basis of Converting Shares of Stock.
1. On the Effective Date, without any action on the part of the holder
thereof, each twenty (20) shares of the issued and outstanding Common Stock of
Selective shall automatically become and be converted into on (1) share of
Common Stock of Anchor Life, the continuing corporation.
2. No fractional shares of the capital stock of the corporation shall be
issued, and in the event that the conversion of shares on the basis described in
the foregoing paragraph 1, results in any stockholder of Selective being
entitled to a fractional interest in the Common Stock of the corporation, Anchor
Life will purchase such interest for an amount in cash based upon a price of
$60. for one full share.
3. After the Effective Date each holder of a certificate representing
outstanding shares of Selective (other than those to which paragraph 6 of this
Article is applicable) shall be entitled, upon surrender of such certificates
issued by Anchor Life as the continuing corporation, representing the number of
full shares of the Common Stock of the corporation to which he is entitled.
Until so surrendered, each outstanding certificate of stock of Selective (other
than those to which said paragraph 6 is applicable) shall be deemed for all
corporate purposes to evidence the ownership of the number of full shares of
Common Stock of the corporation to which the holder thereof shall be entitled
upon exchange thereof.
4. The corporation shall be entitled to rely on the stock register of
Selective to determine the names of its stockholders and the number of shares
held by each as of the Effective Date.
5. Except as provided in paragraph 6 of this Article, the shares of
Common Stock of Anchor Life which were outstanding immediately prior to the
Effective Date, shall remain outstanding and shall not be affected by the
merger.
6. Any stockholder of Anchor Life or of Selective, who shall have
objected to the merger hereby contemplated in accordance with the applicable
provisions of the laws of California and Illinois, respectively, and who shall
make proper demand for the payment of the value of his shares as provided in
said respective laws shall, after the Effective Date, have only such rights as
are provided for such dissenting stockholders by the applicable laws of said
states.
FIFTH: Mode of Carrying Merger Into Effect. On the Effective Date, as
hereinafter defined, and subject to the further conditions hereinafter set
forth:
1. Selective shall be merged with into Anchor Life, the separate
existence of Selective shall cease, and Anchor Life (the "Corporation") shall
continue in existence as an insurance corporation organized and existing under
the laws of California.
2. To the extent permitted by law, the Corporation shall thereupon and
thereafter, without other transfers or conveyances, possess all of the rights,
privileges, immunities, powers and franchises of each of the constituent
corporations, all assets and property, real, personal and mixed, all insurance
policies, all debts and accounts receivable, and other cases in action, and all
and every other interest of or belonging to each of the constituent corporations
shall be deemed to be transferred to and vested in the corporation. Without
limiting the foregoing, all leases, agency balances, claims and credits, books,
records, files, agency lists, policyholder lists and prospect lists of
Selective, shall become the property of the corporation without the necessity of
execution of assignments, conveyances, bills of sales or other documents
transferring title; and the
<PAGE> 28
corporation shall succeed to all rights in any and all outstanding contracts,
franchises and licenses of Selective, and all property, insurance policies and
fidelity bonds covering Selective shall inure to the benefit of the corporation.
3. The corporation shall further be responsible for and be subject to
all the liabilities and obligations of each of the constituent corporations, and
neither the rights of creditors nor any liens upon the property of either of the
constituent corporations shall be impaired by such merger, but any such liens
shall be limited to the property upon which they were liens immediately prior to
the Effective Date.
4. The corporation shall assume the liabilities of Selective on any
policies of insurance outstanding at the Effective Date or shall cause the same
to be assumed by another insurance company acceptable to Selective; and as soon
after the Effective Date, as practicable, the corporations shall send or shall
cause to be sent, to each policy holder of Selective as of the Effective Date, a
certificate of assumption, in such form an containing such terms and conditions
as may be approved by the insurance supervisory authorized of the States of
California and Illinois.
SIXTH: (a) The articles of incorporation of Anchor National Life
Insurance Company, as amended to the Effective Date, shall be the articles of
Incorporation of the surviving corporation until further amendment.
(b) The by-laws of Anchor Life, in effect immediately prior to the
Effective Date, shall continue to be the by-laws of the surviving corporation
until further amended.
(c) The directors and officers of Anchor Life, in office immediately
prior to the Effective Date, shall continue to be the directors and officers of
the surviving corporation to serve as provided in the by-laws of that
corporation.
SEVENTH: Effective Date, Conditions and Termination.
1. The Effective Date of the merger hereby contemplated shall be the day
of the month on which shall occur the later of the performance of the last act
or the obtaining of the last approval required to complete the same under the
applicable laws, rules and regulations of the States of California and Illinois,
provided that said Effective Date shall in no event be later than March 31,
1969, and that on or before the Effective Date as herein defined, the following
conditions shall have been fulfilled:
(a) The Plan and Agreement of Merger shall have been duly approved by
the vote of two-thirds of the stockholders of each of the constituent
corporations in compliance with the law of state of its incorporation.
(b) All necessary approvals, licenses and permits shall have been issued
by and received from the regulatory authorities of the States of california and
Illinois, respectively, including, without limitation, permission of the
Commissioner of Corporations of the State of California to issue and distribute
the stock herein provided to be issued to the Stockholders of Selective, and
approval by the Commissioner of Insurance of Illinois of the admission of Anchor
Life (the surviving corporation) to conduct its insurance business in Illinois.
(c) All representations made by Selective in Article FIRST hereof or
elsewhere in this Agreement, shall be true and correct as of the Effective Date
except to the extent that changes have occurred which are contemplated by this
agreement, or which are the results of transactions entered into in the ordinary
course of business from the date hereof to the Effective Date and which shall
not materially and adversely affect the business and finances of Selective, as
such terms are defined in paragraph 3 of Article FIRST hereof, and Selective
shall have delivered to Anchor Life a certificate to that effect, signed by each
of the executive officers of Selective under the corporate seal.
(d) All representations made by anchor Life in Article SECOND hereof or
elsewhere in this Agreement, shall be true and correct as of the Effective Date
except to the extent that changes have occurred which are contemplated by this
agreement, or which are the results of transactions entered into in
<PAGE> 29
the ordinary course of business from the date hereof to the Effective Date, and
Anchor Life shall have delivered to Selective a certificate to that effect,
signed by each of the executive officers of Anchor Life, under the corporate
seal.
(e) Anchor Life shall have received the opinion of Messrs. McBride,
Baker, Wienke & Schlosser as counsel to Selective, or of other counsel
acceptable to Anchor Life, to the effect that as of the Effective Date: (1)
Selective is an insurance corporation duly organized and existing and authorized
to do business under the laws of the State of Illinois, having authorized
capital of 600,000 shares of common stock of the par value of $1 per share,
which 413,075 shares are issued and outstanding, and the are no outstanding
options for the purchase of such stock; (2) Selective has good title of all of
the properties and assets to be acquired by the continuing corporation pursuant
to paragraph 10 of Article FIRST hereof, and such properties and assets are
subject to no mortgage, pledge, lien or other charge or encumbrance; (3) there
is no action, proceeding, investigation, order, decree or claim existing,
pending or threatened which may materially and adversely affect Selective; and
(4) Selective has taken al corporate steps necessary to authorize and effectuate
this merger in accordance with the laws of the State of Illinois, and has duly
filed the necessary documents and obtained from the regulatory authorities of
the State of Illinois valid and effective approvals, licenses and permits as
contemplated by paragraph 1(b) of this Article SEVENTH.
(f) Selective shall have received an opinion of Messrs. Poindexter &
Barger or their successors as counsel to Anchor Life, verifying the
representations made by Anchor Life in paragraphs 1, 4, 5 and 6 of said Article
SECOND, and further to the effect that Anchor Life has duly taken all corporate
steps necessary to effectuate this merger in accordance with the laws of the
State of California, and has duly filed the necessary documents and obtained
valid and effective permits or approval thereof by the appropriate authorities
of the State of California. In giving their opinion with respect to states
other than California, counsel may rely upon the opinions of counsel practicing
in such other states.
(g) Anchor Life shall have received an opinion of Messrs. McBride,
Baker, Wienke & Schlosser, or of other counsel satisfactory to it, to the effect
that the agreement between Anchor Corporation, Anchor Life and Bankers United
Life Assurance Company, executed simultaneously herewith, has been duly
authorized and executed by said Bankers United Life Assurance Company within its
corporate powers and in accordance with the laws of the state of its
incorporation, and is a valid and binding obligation of said corporation.
2. (a) In the event that the foregoing conditions shall not have been
fulfilled on or before March 31, 1969, the parties may by mutual agreement in
writing extend said date and defer the Effective Date accordingly; but it there
shall be no such extension, this agreement shall automatically terminate and be
deemed to be abandoned, without any obligation on the part of either party to
the other.
(b) If, on the Effective Date, the conditions set forth in subparagraphs
(a), (b), (c), (e) and (g) of the foregoing paragraph 1, shall not have been
fulfilled, this agreement may be terminated by Anchor Life at its option and
upon written notice to Selective and the same shall thereupon be deemed to have
been terminated and abandoned, without liability or obligation of either party
to the other.
(c) If, on the Effective Date, the conditions set forth in subparagraphs
(a), (b), (d) and (f) of the foregoing paragraph 1, shall not have been
fulfilled, this agreement may be terminated by Selective at tits option and upon
written notice to Anchor Life and the same shall thereupon be deemed to have
been terminated and abandoned, without liability or obligation of wither party
to the other.
EIGHTH: Miscellaneous.
1. This Plan and Agreement may be executed in one or more counterparts,
each of which shall be considered an original.
2. Each of the constituent corporations shall cause to be executed and
delivered such additional documents and instruments of further assurance
<PAGE> 30
as may from time to time be required by law or which may be reasonably required
by the other party for the purpose of consummating the merger hereby
contemplated.
3. For accounting purposes only, all accounting entries and adjustments
necessitated by the merger contemplated hereby, shall be made on the books of
the surviving corporation as of the close of business on the Effective Date.
4. Each of the parties hereto agrees to indemnify and hold the other
harmless against any claim for brokerage commissions or finders' fees which such
indemnifying party may have incurred in connection with this Agreement.
5. Any notice required or permitted to be given hereunder shall be
deemed to be sufficiently given if addressed and sent by registered mail or by
telegram to:
Anchor National Life Insurance Company
2146 Towne House Tower
100 W. Clarendon Street
Phoenix, Ariz. 85013
The Selective Life Insurance Company
222 W. Adams Street
Chicago, Illinois 60606
IN WITNESS WHEREOF, Pursuant to the authority of their respective boards
of directors, the constituent corporations have caused this Plan and Agreement
to Merger to be executed by their respective corporate seals to be affixed as of
the day and year first above written.
ANCHOR NATIONAL LIFE INSURANCE COMPANY
By /s/ [unreadable]
BY: ------------------------------------
/s/ [unreadable]
- -----------------------
THE SELECTIVE LIFE INSURANCE COMPANY
By /s/ [unreadable]
------------------------------------
ATTEST:
/s/ [unreadable]
- ------------------------
STATE OF ARIZONA )
) ss.
COUNTY OF MARICOPA )
On this 27th day of December, 1968, personally appeared before me Jack D.
Rich and Carroll E. Dietie, II, known to me to be President and Assistant
Secretary respectively, of Anchor National Life Insurance Company, the
Corporation which executed the Plan and Agreement of Merger with The Selective
Life Insurance Company, dated October 31, 1968, and acknowledged to me that said
Corporation executed the same.
Subscribed and sworn to before me this 27th day of December, 1968.
/s/ [unreadable]
--------------------------------
Notary Public
My Commission expires:
<PAGE> 31
February 6, 1971
<PAGE> 32
STATE OF ILLINOIS
ss:
COUNTY OF COOK
I, Jeri A. Henrich, a Notary Public, do hereby certify that on the 31st
day of October, A.D. 1968, personally appeared before me David J. Elmore, who
declared that he is the President of THE SELECTIVE LIFE INSURANCE COMPANY, one
of the corporations executing the foregoing document, and being first duly
sworn, acknowledged that he signed the foregoing articles of merger in the
capacity therein set forth and declared that the statements therein contained
are true.
IN WITNESS WHEREOF, I have hereunto set my hand and seal the day and year
before written.
/s/ Jeri A. Henrich
-------------------------------
Notary Public
<PAGE> 33
EXHIBIT "A"
1. Internal Revenue Service Proceeding (Midwest Region-Reference:
The Selective Life Insurance Company AP:CHI:TAC): covering
various items for the taxable years 1958 through 1964.
<PAGE> 34
EXHIBIT "B"
1. Agreement between The Selective Life Insurance Company and Group
Association Plans, Inc. dated October 1, 1968.
2. Commission Agreement between The Selective Live Insurance Company and
Interstate Brokerage dated February 1, 1966.
3. Reinsurance Agreement between Bankers United Life Assurance Company and
The Selective Life Insurance Company.
4. Reinsurance Agreement between Bankers United Life Assurance Company and
The Selective Life Insurance Company with respect to Group Life Insurance
Policy No. 100 and the Rider thereto and Group Life Insurance Policy No.
101, issued by The Selective Life Insurance Company to the Jewish War
Veterans of the Unites States of America.
5. Group Life Insurance Policy No. 100 issued by The Selective Life
Insurance Company to the Jewish Veterans of the United States of America.
6. Group Life Insurance Policy No. 101 issued by The Selective Life
Insurance Company to the Jewish War Veterans of the United States of
America.
<PAGE> 35
ADMINISTRATION AGREEMENT
Policyholder: Life Insurance on members of the Jewish War Veterans of the
United States, Inc.
Policy Number(s): Master Group Policy #100 and #101 issued by certificates
Effective Date: on form #GP-23, GP-22, and GP-23D.
The following Agreement entered into by and between Group Association
Plan, Inc. (herein call First Party) of_____________________________ and
The Selective Life Insurance Company (herein called Company) of Chicago,
Illinois on this 1st day of October, 1968.
WITNESSETH:
IT IS MUTUALLY AGREED AS FOLLOWS:
1. The First Party agrees to assume responsibility for the
performance of all "Administration" as such term is hereinafter defined, with
respect to the Policy (or policies) hereinbefore described: and the Company
agrees to pay to the First Party, as compensation for services rendered in the
performance of this function 12-1/2% of Adjusted premiums of the premium paid in
cash to and accepted by the Company on such Policy (or policies) during the
period this Agreement continue in force.
2. The term "Administration" as used in this Agreement, shall mean
the performance of any one or more of the following functions as are from time
to time to time required by the Company:
(a) Maintenance of all records necessary to enable the Company to
determine at any time, the true and accurate status of the
insurance in force.
(b) Preparation and delivery of Certificates or Individual Policies
of Insurance to all Insurance to all insured persons.
(c) Preparation of all premium statements.
(d) Collection of premiums and reporting of same to the Home Office
of Company.
(e) Furnishing to the Home Office of the Company any and all required
data necessary in connection with underwriting view for renewal
of said Policy (or policies).
(f) Any other duties which the Company might reasonably require to be
performed in connection with said Policy (or policies).
3. Any compensation accruing hereunder shall be payable as the
premium on the hereinbefore described Policy (or policies) is paid in cash to
and accepted by the Company. Compensation received hereunder based upon any
premium or portion thereof returned by the Company shall be immediately repaid
to the Company. If any Policy covered by this Agreement is terminated either by
the Company or the Policyholder all right to compensation for services rendered
on such Policy shall be immediately terminated.
* Adjusted Premiums which shall mean the gross premium developed during
such policy year, minus any premium refunds due to cancellations L-407-076
occurring during such policy years.
4. This Agreement shall take effect as of January 1, 1969 for a term
of one year from that date, and shall automatically be renewed from year to year
thereafter so long as the above described Policy (or policies) continues in full
force and effect, unless either Party hereto notifies the other, in writing, not
less than thirty (30) days prior to the end of a term of their intention not to
renew and provided (a) the First Party is a licensed agent or broker during such
renewal year and (b) the First Party has
<PAGE> 36
the permission of the Policyholder to service its interests under the Agreement
hereto and to solicit for new insurance during such renewal year, and (c) the
First Party shall perform such service and solicitation in a manner satisfactory
to the Company.
5. This Agreement or any renewal thereof may be canceled by either
Party at any time and without cause upon the giving of not less than thirty (30)
days prior written notice to the other party.
6. All Obligations of the Company to compensate the First Party for
services rendered, with respect to functions performed after termination of this
Agreement, and all obligations of the First Party to perform requested
functions, in behalf of the Company, for periods subsequent to such termination,
shall be canceled as of the effective date of such termination.
7. The Company's sole payment to the First Party, as compensation
for performing functions defined in paragraph two (2) above, shall be the sum
specified in paragraph on (1) hereof. No other payments shall be made to the
First Party respecting g such functions.
8. This Agreement constitutes the entire contract between the
Parties hereto. Any amendments or modifications shall be in writing and jointly
signed by both parties.
IN WITNESS WHEREOF this Agreement has been executed in duplicate by the
undersigned parties on the date first above mentioned.
----------------------------------
First Party
-----------------------------------
-----------------------------------
Company
------------------------------------
<PAGE> 37
THE SELECTIVE LIFE INSURANCE COMPANY
a legal reserve stock company
222 West Adams Street
Chicago, Illinois 60606
Telephone 346-9079
COMMISSION AGREEMENT
February 1, 1966
INTERSTATE BROKERAGE WASHINGTON, D.C.
Soliciting Agent City and State
THE SELECTIVE LIFE INSURANCE COMPANY hereby agrees to pay you commissions on the
regular premiums as paid in cash to said Company on Policy No. AG 100 and AG 101
issued by said Company on the Group Life Insurance plan on the life of Members
of the Jewish War Veterans of the U.S. as follows:
TWO PERCENT (2%) percent of the first year's premium, and
TWO PERCENT (2%) percent of the second and subsequent years' premiums, not
exceeding a total renewal period of N/A years, provided said policy remains
continuously in force and premiums are paid in cash at the Home Office of the
Company during said period.
No assignment of this agreement or of commissions hereunder shall be valid
unless authorized in advance in writing by the Agent any by the Company.
No authority is granted to make, after or discharge contracts for Company or
waive forfeitures, grant permits, name special rates, or bind company in any way
or under any circumstances to receipt for deferred or renewal premiums, or make
any endorsements on the policies of Company, or to receive any monies due or to
become due Company.
Should Company for any reason refund any premium on any policy covered
hereunder, any commission received on such premium shall be refunded upon
demand.
Payment of any commissions hereunder shall be expressly subject to any
indebtedness due the Company by the Agent, a first lien in their favor with all
offset rights being reserved to them.
Under no circumstances whatsoever shall the be paid or allowed, or offered to be
paid or allowed, any rebate of premium in any manner whatsoever, directly or
indirectly.
No renewal commissions will be paid on premiums waived or paid by Company under
the disability provision of any policy.
This agreement will take effect only when approved in writing by said Company.
/s/ [unreadable]
------------------------------
Agent
Approved this 1st day of
February, 1966.
THE SELECTIVE LIFE INSURANCE COMPANY
By: /s/ [unreadable]
-------------------------------
<PAGE> 38
ENDORSED
FILED
7/24/69
RESTATED ARTICLES OF INCORPORATION
OF
ANCHOR NATIONAL LIFE INSURANCE COMPANY
(As Amended Through June 20, 1968)
The undersigned, Melvin Intriligator and Roger T. Wickers hereby certify
that they are, respectively, the duly elected and acting Vice President and
Secretary of Anchor National Life Insurance Company, a California corporation,
and that the following correctly sets forth the text of the Articles of
Incorporation of said corporation, as amended to the date of this certificate:
RESTATED ARTICLES OF INCORPORATION
OF
ANCHOR NATIONAL LIFE INSURANCE COMPANY
KNOW ALL MEN BY THESE PRESENTS:
That we, the undersigned, have this day voluntarily associated ourselves
together for the purpose of forming a corporation under the laws of the State of
California, and WE HEREBY CERTIFY:
ARTICLE I
The name of the corporation shall be:
ANCHOR NATIONAL LIFE INSURANCE COMPANY.
ARTICLE II
That the primary purpose for which the corporation is formed is:
To engage in the business of insurance as principal, and make contracts
of life and endowment insurance, and grant, purchase or dispose of annuities or
endowments of any kind; and in such contracts, or in contracts supplemental
thereto, to provide additional benefits in the event of death of the insured by
accidental means, total and permanent disability to the insured, or specified
dismemberment or disablement suffered by the insured; to insure against loss or
damage by the sickness, bodily injury or death by accident of the insured. In
addition, to the specific lines herein provided, the corporation shall also be
empowered to transact any kind or class of insurance which may now or hereafter
be permitted to be written, insured or assumed by the corporation of this class
and character.
The corporation shall also have the following general powers:
(a) To enter into contracts or treaties of reinsurance and
coinsurance;
(b) To purchase, rent, or otherwise acquire real estate and ersonal
property; to sell, lease, mortgage, exchange or otherwise dispose of the same,
in whole or in part; to take, hold, and manage every kind of property, real,
personal or mixed; to convey or otherwise transfer the same or any part thereof;
to rent and lease buildings and lands and all kinds of property from any and to
any person whomsoever;
<PAGE> 39
(c) To purchase or otherwise acquire real and personal property of
any and all kinds that may be lawfully held by a California insurance
corporation, including, but not limited to, lands, leaseholds, shares of stock,
bonds, mortgages, debentures, and other securities;
(d) To lend money and take as security for loans, mortgages and deeds
of trust, or either, of real property and pledges of personal property, as may
be permitted by law.
(e) To borrow money, and from time to time, accept, endorse, execute
and issue bonds, debentures, promissory notes, bills of exchange and other
obligations of the corporation for moneys borrowed or in payment for property
acquired, or for any of the other objects or purposes of the corporation or its
business and to secure the payment of any such obligation by mortgage, pledge,
deed, indenture, agreement, or other instrument of trust, or by lien upon,
assignment of, or agreement in regard to all or any part of the property rights
or privileges of the corporation wherever situated, whether now owned or
hereafter to be acquired.
(f) To make, enter into, carry out and perform contracts of every
kind and character with any person, firm, association, corporation, either
public or private, municipal or body politic, and with the Government of the
United States or any State thereof or any foreign country.
(g) The foregoing clauses shall be liberally construed as to purposes
and powers, and shall not be construed or held as limiting or restricting any
purposes and powers of this corporation which are authorized, or granted, or
which may be authorized or granted by the laws of the State of California.
ARTICLE III
That Los Angeles County is the County in this State where the corporation
shall maintain its principal office for the transaction of business. The
corporation may, when deemed expedient by the Board of Directors, establish
offices and transact business anywhere in the United States of America, the
Dominion of Canada, the territories of either, and in foreign countries.
ARTICLE IV
The corporation is authorized to issue one class of stock, which shall be
designated as common stock; the total number of shares which this corporation
shall have authority to issue is 300,000, and the aggregate par value of all
shares that are to be issued shall be One Million Eighty Thousand Dollars
($1,080,000.), and the par value of each of said shares shall be Three Dollars
and Sixty Cents ($3.60), and, upon the effective date of this Amendment, each
outstanding share of the common stock of the par value of $11.00 per share is
converted into three shares of the par value of Three Dollars and Sixty Cents
($3.60) per share.
No holders of stock of the corporation shall have any preferential,
pre-emptive or other rights to subscribe for or to purchase from the corporation
any stock in the corporation of any class, whether or not now authorized, or
other securities which the corporation may at any time issue.
The common stock of the corporation shall not be assessed by any set of
the corporation or its directors or officers, and when issued, shall be fully
paid, and no holder of such stock shall be liable for any debts or liabilities
of the corporation.
ARTICLE V
The Board of Directors shall consist of not less than five (5) members
and not more than seven (7) members, the exact number of which shall be fixed by
a by-law adopted by the shareholders or by the Board of Directors.
<PAGE> 40
The minimum and maximum number of Directors may be changed by a by-law
duly adopted by the shareholders, provided, however, that the maximum number of
Directors shall in no event exceed the minimum by more than two (2); the
shareholders may also adopt a by-law; providing for a definite number of
Directors without provision for an indefinite number.
The names and addresses of the persons who are hereby appointed to act as
the first Directors of the corporation are:
<TABLE>
<CAPTION>
Name Address
- ------------------- ---------------------
<S> <C>
RICHARDS D. BARGER 2161 Adair Street
San Marino, California 91108
ALFRED B. DOUTRE' 5471 Keats Street
Los Angeles, California 90032
AGNES JOHNSON 611 Normandie Avenue
Los Angeles, California 90005
HAUN CHAMBERLAIN 1015 East Lexington
Glendale, California 91206
GERRIE RUE 804 North Garfield Avenue
Montebello, California 90640
</TABLE>
<PAGE> 41
IN WITNESS WHEREOF, the undersigned have executed this certificate this 10th day
of July, 1969.
/s/ Melvin Intriligator
--------------------------
Melvin Intriligator
Vice President of Anchor National
Life Insurance Company
/s/ Roger T. Wickers
---------------------------
Roger T. Wickers
Secretary of Anchor National
Life Insurance Company
<PAGE> 42
AFFIDAVIT OF OFFICERS
STATE OF NEW JERSEY )
) SS
COUNTY OF UNION )
MELVIN INTRILIGATOR, and ROGER T. WICKERS and each of them, being first
duly sworn, depose and say:
That we are the Vice President and Secretary respectively of ANCHOR
NATIONAL LIFE INSURANCE COMPANY, a California corporation;
That at a Special Meeting of the Board of Directors of said corporation
duly held at TowneHouse Tower, Suite 2146, Phoenix, Arizona at 10:00 A.M. on the
1st day of March, 1969, at which meeting there was at all times present and
acting a quorum of the members of said Board, they were duly authorized by
resolution of said Board of Directors adopted on said date to execute and file
or cause to be filed with the Secretary of State of the State of California the
certificate of Restated Articles of Incorporation annexed hereto; and
That the certificate of Restated Articles of Incorporation of said
corporation annexed hereto correctly sets forth the text of the Articles of
Incorporation of Anchor National Life Insurance Company as amended to the date
of said certificate.
/s/ Melvin Intriligator
-------------------------------
Melvin Intriligator,
Vice President
Subscribed and sworn to before me
this 10th day of July, 1969.
/s/ Elizabeth A. Gallagher
- -----------------------------
Notary Public in and/for said State
My Commission Expires 12/8/71
[SEAL]
<PAGE> 43
ENDORSED
FILED
12/29/70
CERTIFICATE OF AMENDMENT
OF
ARTICLES OF INCORPORATION
Jack D. Rich and Carroll E. Dietle, II, certify:
1. That they are the President and the Assistant Secretary
respectively, of ANCHOR NATIONAL LIFE INSURANCE COMPANY, a California
corporation.
2. That at a meeting of the Board of Directors of said corporation
held at Elizabeth, New Jersey on the 18th day of November, 1970, the following
resolutions were adopted:
"NOW, THEREFORE, BE IT RESOLVED, that this Board of Directors does hereby
propose and declare it advisable that subject to the approval of the
California Insurance Commissioner of a change in the par value of this
corporation's common stock from $3.60 per share to $5.20 per share and to
the sale and issuance to Washington National Corporation of 26,147 shares
of the corporation's $5.20 per share par value stock at a price of
$57.37.per share, that the first paragraph of Article IV of the Articles
of Incorporation, which reads as follows:
'The corporation is authorized to issue one class of stock, which shall
be designated as common stock; the total number of shares which this
corporation shall have authority to issue is 300,000, and the aggregate
par value of all shares that are to be issued shall be One Million Eighty
Thousand Dollars ($1,080,000), and the par value of each of said shares
shall be Three Dollars and Sixty Cents ($3.60), and upon the effective
date of this Amendment, each outstanding share of the common stock of the
par value of $11.00 per share is converted into three shares of the par
value of Three Dollars and Sixty Cents ($3.60) per share.'
is hereby stricken and the following language is hereby substituted therefore:
'The corporation is authorized to issue one class of stock, which shall
be designated as common stock; the total number of shares which this
corporation shall have authority to issue is 300,000, and the aggregate
par value of all shares that are to be issued shall be One Million Five
Hundred Sixty Thousand Dollars ($1,560,000) and the par value of each of
said shares shall be Five Dollars and Twenty Cents ($5.20); and upon the
effective date of this Amendment, each outstanding $3.60 par value share
is converted into a $5.20 par value share.'
"and be it further
"RESOLVED: That the aforementioned amendment to Article IV of the
Articles of Incorporation be submitted to the stockholders of this
corporation, as hereinafter provided, for their approval, subject to the
approval by the California Insurance Commissioner as aforesaid; and be it
further
"RESOLVED: That this Board of Directors does propose and declare it
advisable that the first sentence of Article V of the Articles of
Incorporation, which reads as follows:
<PAGE> 44
'The Board of Directors shall consist of not less than five (5) members
and not more than seven (7) members, the exact number of which shall be
fixed by a by-law adopted by the shareholders or by the Board of
Directors.'
is hereby stricken and the following language is hereby substituted therefore:
'The Board of Directors shall consist of not less than six (6) members
and not more than eight (8) members, the exact number of which shall be
fixed by a by-law adopted by the stockholders or by the Board of
Directors.'
"and be it further
"RESOLVED: That the aforementioned amendment to Article V of the
Articles of Incorporation be submitted to the stockholders as hereinafter
provided."
3. That at a meeting of the stockholders of said corporation held at
Elizabeth, New Jersey, on the 14th day of December, 1970, resolutions were
adopted, subject to the approval of the California Insurance Commissioner,
amending the first paragraph of Article IV and the first sentence of Article V
of the Articles of Incorporation of Anchor National Life Insurance Company in
identical form as set forth in Paragraph 2 above.
4. That the number of shares which voted affirmatively for the
adoption of said resolutions was 156,581 shares; that no shares were voted
against the adoption of said resolutions; and that the total number of shares
entitled to vote on or consent to said amendment was $185,669.
5. That upon the Amendment of Articles of Incorporation as
hereinabove set forth, each outstanding share of a par value of $3.60 is
converted into and reconstituted as one share of common stock of a par value of
$5.20.
/s/ Jack D. Rich
---------------------------
Jack D. Rich,
President
/s/ Carroll E. Dietle
----------------------------
Carroll E. Dietle, II,
Assistant Secretary
State of Arizona )
) SS
County of Maricopa )
Jack D. Rich, first being duly sworn, deposes and says that he is the
President of Anchor National Life Insurance Company, and that he has read the
foregoing Certificate of Amendment of Articles of Incorporation of Anchor
National Life Insurance Company and knows the contents thereof and the same are
true of his own knowledge.
Subscribed and sworn to before me
this 25 day of December, 1970.
/s/ [unreadable]
- --------------------------------
Notary Public in and for said
County and State
My commission expires November 15, 1973.
State of Arizona )
) SS
County of Maricopa )
<PAGE> 45
Carroll E. Dietle, II, first being duly sworn, deposes and says that he
is the Assistant Secretary of Anchor National Life Insurance Company, and that
he has read the foregoing, Certificate of Amendment of Articles of Incorporation
of Anchor National Life Insurance Company and knows the contents thereof and the
same are true of his own knowledge.
/s/ Carroll E. Dietle
------------------------------
Carroll E. Dietle, II, Assistant Secretary
Subscribed and sworn to before me
this 25th of December, 1970.
/s/ [unreadable]
- ------------------------------
Notary Public in and for said
County and State
My commission expires Nov. 13, 1973
[SEAL]
<PAGE> 46
ENDORSED
FILED
12/29/71
CERTIFICATE OF AMENDMENT
OF
ARTICLES OF INCORPORATION
Jack D. Rich and Carroll E. Dietle, II, certify:
1. That they are the President and Secretary respectively, of ANCHOR
NATIONAL LIFE INSURANCE COMPANY, a California corporation.
2. That at a meeting of the Board of Directors of said corporation
held at Phoenix, Arizona on the 12th day of November 1971, the following
resolutions were adopted:
"NOW THEREFORE, BE IT RESOLVED, that this Board of Directors does hereby
propose and declare it advisable that subject to the approval of the
California Insurance Commissioner of an increase in the authorized shares
of common stock of the corporation from 300,000 shares to 400,000 shares
and of a change in the par value of this corporation's common stock from
$5.20 per share to $5.70 per share and to the sale and issuance to
Washington National Corporation of 139,446 shares of the corporation's
$5.70 per share par value stock at a price of $57.37 per share, that the
first paragraph of Article IV of the Articles of Incorporation, which
reads as follows;
'The corporation is authorized to issue one class of stock, which shall
be designated as common stock; the total number of shares which this
corporation shall have authority to issue is 300,000, and the aggregate
par value of all shares that are to be issued shall be One Million Five
Hundred Sixty Thousand Dollars ($1,560,000), and the par value of each of
said shares shall be Five Dollars and Twenty Cents ($5.20), and upon the
effective date of this Amendment, each outstanding $3.60 par value share
is converted into a Five Dollar and Twenty Cents ($5.20) par value share.
is hereby stricken and the following language is hereby substituted therefore:
'The corporation is authorized to issue one class of stock, which shall
be designated as common stock; the total number of shares which this
corporation shall have authority to issue is 400,000, and the aggregate
par value of all shares that are to be issued Two Million Two Hundred
Eighty Thousand Dollars ($2,280,000) and the par value of each of said
shares shall be Five Dollars and Seventy Cents ($5.70); and upon the
effective date of this Amendment, each outstanding $5.20 par value share
is converted into a $5.70 par value share.'
"and be it further
"RESOLVED: That the aforementioned amendment to Article IV of the
Articles of Incorporation be submitted to the stockholders of this
corporation, as hereinafter provided, for their approval, subject to the
approval by the California Insurance Commissioner as aforesaid.
3. That at a meeting of the stockholders of said corporation held at
Phoenix, Arizona on the 20th day of December, 1971 a resolution was adopted,
subject to the approval of the California Insurance Commissioner, amending the
first paragraph of Article IV of the Articles of Incorporation of Anchor
National Life Insurance Company in identical form as set forth in Paragraph 2
above.
4. That the number of shares which voted affirmatively for the
<PAGE> 47
adoption of said resolutions was 211,677 shares; that no shares were voted
against the adoption of said resolutions; and that the total number of shares
entitled to vote on or consent to said amendment was 211,816.
5. That upon the Amendment of Articles of Incorporation as
hereinabove set forth, the number of authorized shares of common stock of the
corporation is increased from 300,000 shares to 400,000 shares and each
outstanding share of a par value of $5.20 is converted into and reconstituted as
one share of common stock of a par value of $5.70.
/s/ Jack D. Rich
------------------------------
Jack D. Rich, President
/s/ Carroll E. Dietle
------------------------------
Carroll E. Dietle, II, Secretary
STATE OF ARIZONA )
) SS
COUNTY OF MARICOPA )
Jack D. Rich, first being duly sworn, deposes and says that he is the
President of Anchor National Life Insurance Company, and that he has read the
foregoing Certificate of Amendment of Articles of Incorporation of Anchor
National Life Insurance Company and knows the contents thereof and the same are
true of his own knowledge.
/s/ Jack D. Rich
-------------------------------
Jack D. Rich
Subscribed and sworn to before me
this 20th day of December, 1971
/s/ [unreadable]
- -----------------------------
Notary Public in and for said
County and State
My Commission Expires:
8/17/73
STATE OF ARIZONA )
) SS
COUNTY OF MARICOPA )
Carroll E. Dietle, II, first being duly sworn, deposes and says that he
is the Secretary of Anchor National Life Insurance Company and that he has read
the foregoing Certificate of Amendment of Articles of Incorporation of Anchor
National Life Insurance Company and knows the contents thereof and the same are
true of his own knowledge.
/s/ Carroll E. Dietle
-------------------------------
Carroll E. Dietle, II
Subscribed and sworn to before me
this 20th day of December, 1971
/s/ Margaret L. Martin
- ------------------------------
Notary Public in and for said
County and State
My Commission Expires:
<PAGE> 48
8/17/73
[SEAL]
<PAGE> 49
ENDORSED
FILED
1/16/75
CERTIFICATE OF AMENDMENT
OF
ARTICLES OF INCORPORATION
Carroll E. Dietle, II, and Crystal A. Russell, certify:
1. That they are Vice President and Assistant Secretary
respectively, of Anchor National Life Insurance Company, a California
corporation.
2. That at a meeting of the Board of Directors of said corporation
held at Phoenix, Arizona, on the 18th day of October, 1974, the following
resolution was adopted:
"NOW, THEREFORE, BE IT RESOLVED, that this Board of Directors does hereby
propose and declare it advisable to Amend its Articles of Incorporation
so that the first sentence of Article V of its Articles of Incorporation,
which now reads as follows:
'The Board of Directors shall consist of not less than six (6) members
and not more than eight (8) members, the exact number of which shall be
fixed by a By-Law adopted by the Stockholder or by the Board of
Directors.'
be hereby stricken and the following language shall be hereby substituted
therefore:
'The Board of Directors shall consist of not less than seven (7) members
and not more than nine (9) members, the exact number of which shall be
fixed by a By-Law adopted by the Stockholders or by the Board of
Directors.'
"RESOLVED: that the aforementioned Amendment to Article V of the Articles
of Incorporation be submitted to the Stockholders as hereinafter
provided."
3. That at a meeting of the Stockholders of said corporation held at
Phoenix, Arizona, on the 27th day of November, 1974, the resolution was adopted,
with 351,163 shares out of 351,262 shares issued and outstanding voting in favor
of the amendment, subject to the approval of the California Insurance
Commissioner, amending the first sentence of Article V of the Articles of
Incorporation of Anchor National Life Insurance Company in the identical form as
set forth above.
/s/ Carroll E. Dietle
-------------------------------------
Carroll E. Dietle, II, Vice President
/s/ Crystal A. Russell
-------------------------------------
Crystal A. Russell, Assistant Secretary
<PAGE> 50
AFFIDAVIT
State of ARIZONA )
) SS
County of Maricopa )
Carroll E. Dietle, II, first duly sworn, deposes and says that he is the
Vice President of Anchor National Life Insurance Company, and that he has read
the foregoing certificate of Amendment of Articles of incorporation of Anchor
National Life Insurance Company and knows the contents thereof and the same are
true to the best of his own knowledge.
/s/ Carroll E. Dietle, II
---------------------------------------
Carroll E. Dietle, II, Vice President
Subscribed and sworn to before me this 31st day of December, 1974.
/s/ Margaret L. Martin
---------------------------------------
Notary
(My Commission Expires: Oct. 28, 1978)
Crystal A. Russell, first being duly sworn, deposes and says that she is
the Assistant Secretary of Anchor National Life Insurance Company and that she
has read the foregoing certificate of Amendment of the Articles of Incorporation
of Anchor National Life Insurance Company and knows the contents thereof and the
same are true to the best of her knowledge.
/s/ Crystal A. Russell
---------------------------------------
Crystal Russell, Assistant Secretary
Subscribed and sworn to before me this 31st day of December, 1974.
/s/ Margaret L. Martin
---------------------------------------
Notary
(My Commission Expires: Oct. 28, 1978)
<PAGE> 51
Endorsed
Filed November 8, 1977
by James E. Harris, Deputy
CERTIFICATE OF AMENDMENT
OF
ARTICLES OF INCORPORATION
Carroll E. Dietle, II, and James A. Deer, certify:
1. That they are Vice President and Assistant Secretary,
respectively, of Anchor National Life Insurance Company, a California
corporation.
2. That at a meeting of the Board of Directors of said corporation
held at Phoenix, Arizona, on the 4th day of March, 1976, the following
resolution was adopted:
"NOW, THEREFORE, BE IT RESOLVED, that subject to the approval of the
California Insurance Commissioner and the shareholders of the corporation
Article IV of the Articles of Incorporation of this corporation, as
previously amended and which now reads:
'The corporation is authorized to issue one class of stock, which
shall be designated as common stock; the total number of shares
which this corporation shall have authority to issue is 400,000
and the aggregate par value of all shares that are to be issued
shall be Two Million, Two Hundred and Eighty Thousand Dollars
($2,280,000) and the par value of each of said shares shall be
Five Dollars and Seventy Cents ($5.70); and upon the effective
date of this Amendment, each outstanding $5.20 par value share is
converted into a $5.70 par value share.'
is hereby stricken, and the following language is hereby substituted
therefore:
'The corporation is authorized to issue one class of stock, which
shall be designated as common stock; the total number of shares
which this corporation shall have authority to issue is 4,000
shares and the aggregate par value of all shares that are to be
issued shall be Two Million, Two Hundred and Eighty Thousand
Dollars ($2,280,000), and the par value shall be Five Hundred and
Seventy Dollars and No Cents ($570.00). Upon the effective date
of this Amendment, each 100 outstanding $5.70 par value shares
shall be converted to one $570.00 par value share, and provided
further that nothing in this Amendment shall authorize the
conversion of outstanding shares of par value of Five Dollars and
Seventy Cents ($5.70) into outstanding fractional shares with a
par value of less than Five Hundred and Seventy Dollars and No
Cents.
3. That at a meeting of the Stockholders of said corporation held at
Phoenix, Arizona, on the 3rd day of May, 1976, the resolution was adopted with
351,163 shares out of 351,262 shares issued and outstanding voting in favor of
the Amendment, subject to the approval of the California Insurance Commissioner,
amending Article IV of the Articles of Incorporation of Anchor National Life
Insurance Company in the identical form as set forth above.
/s/ Carroll E. Dietle
-------------------------------------
Carroll E. Dietle, II, Vice President
/s/ James A. Deer
-------------------------------------
James A. Deer, Assistant Secretary
<PAGE> 52
AFFIDAVIT
State of ARIZONA )
) SS
County of Maricopa )
Carroll E. Dietle, II, first duly sworn, deposes and says that he is the
Vice President of Anchor National Life Insurance Company, and that he has read
the foregoing certificate of Amendment of Articles of Incorporation of Anchor
National Life Insurance Company and knows the contents thereof and the same are
true to the best of his own knowledge.
/s/ Carroll E. Dietle
--------------------------------------
Carroll E. Dietle, II, Vice President
Subscribed and sworn to before me this 2nd day of November, 1977.
/s/ Patricia Smith
- ------------------------------------- [SEAL]
Notary
(My Commission expires Feb. 13, l98l)
James A. Deer, first being duly sworn, deposes and says that he is the
Assistant Secretary of Anchor National Life Insurance Company and that he has
read the foregoing certificate of Amendment of the Articles of Incorporation of
Anchor National Life Insurance Company and knows the contents thereof and the
same are true to the best of his knowledge.
/s/ James A. Deer
-------------------------------------
James A. Deer, Assistant Secretary
Subscribed and sworn to before me this 2nd day of November, 1977.
/s/ Patricia Smith
- ------------------------------------- [SEAL]
Notary
(My Commission expires Feb. 13, l98l)
<PAGE> 53
FILED
7/27/78
CERTIFICATE OF AMENDMENT
OF
ARTICLES OF INCORPORATION
Carroll E. Dietle, II, and James A. Deer, certify:
1. That they are Senior Vice President and Assistant Secretary
respectively, of Anchor National Life Insurance Company, a California
corporation.
2. That at a Special meeting of the Stockholders of said corporation
held at Phoenix, Arizona, on the 23rd day of June, 1978, the following
resolution was adopted:
"RESOLVED, that the first sentence of ARTICLE V of the ARTICLES OF
INCORPORATION of this corporation, which reads as follows:
'The Board of Directors shall consist of not less than seven (7)
members and not more than nine (9) members, the exact number of
which shall be fixed by a bylaw adopted by the stockholders or by
the Board of Directors.'
is hereby stricken and the following language is hereby substituted
therefore:
'The Board of Directors shall consist of not less than eleven
(11) members and not more than thirteen (13) members, the exact
number of which shall be fixed by a by-law adopted by the
stockholders or by the Board of Directors.'
3. That at the Special meeting of the Stockholders of said
corporation held at Phoenix, Arizona, on the 23rd day of June, 1978, the
resolution was adopted, with 3,511 shares out of 3,511 shares issued and
outstanding voting in favor of the amendment, subject to the approval of the
California Insurance Commissioner, amending the first sentence of Article V of
the Articles of Incorporation of Anchor National Life Insurance Company in the
identical form as set forth above.
4. That at the Board of Director's Meeting of Anchor National Life
Insurance Company on June 23, 1978, held immediately following the Special
Meeting of the Stockholders the amendment of Article 5 of the Articles of
Incorporation as adopted by the Stockholders was approved and ratified.
/s/ Carroll E. Dietle
------------------------
Carroll E. Dietle, II
Senior Vice President
/s/ James A. Deer
------------------------
James A. Deer
Assistant Secretary
<PAGE> 54
AFFIDAVIT
STATE OF ARIZONA )
) SS
COUNTY OF MARICOPA )
Carroll E. Dietle, II, first duly sworn, deposes and says that he is the
Senior Vice President of Anchor National Life Insurance Company, and that he has
read the foregoing certificate of Amendment of Articles of Incorporation of
Anchor National Life Insurance Company, and knows the contents thereof and the
same are true to the best of his own knowledge.
/s/ Carroll E. Dietle
------------------------
Carroll E. Dietle, II
Senior Vice President
Subscribed and sworn to before
me this 20th day of July, 1978.
/s/ Margaret L. Martin
- ------------------------------
Notary
James A. Deer, first being duly sworn, deposes and says that he is
the Assistant Secretary of Anchor National Life Insurance
Company and that he has read the foregoing certificate of Amendment of the
Articles of Incorporation of Anchor National Life Insurance Company and knows
the contents thereof and the same are true to the best of his knowledge.
/s/ James A. Deer
------------------------
James A. Deer
Assistant Secretary
Subscribed and sworn to before
me this 20th day of July, 1978.
/s/ Margaret L. Martin
- ------------------------------
Notary
<PAGE> 55
FILED
10/1/84
CERTIFICATE OF AMENDMENT OF ARTICLES OF INCORPORATION
OF
ANCHOR NATIONAL LIFE INSURANCE COMPANY
William G. Stalnaker and James A. Deer hereby certify:
1. That they are the President and Secretary respectively of Anchor
National Life Insurance Company, a California corporation.
2. That the Shareholders of the corporation adopted and approved the
amendment of Article V of the Articles of Incorporation of the corporation by
resolution at a meeting held at Anchor National Life Plaza, 2202 E. Camelback
Rd., Phoenix Arizona, on March 24, 1983 by the required vote of shareholders as
prescribed by section 902 of the corporation code of the state of California.
The resolution setting forth the amendment of the Articles of Incorporation
reads as follows:
"RESOLVED, that the first sentence of ARTICLE V of the ARTICLES OF
INCORPORATION of this corporation, which reads as follows:
'The Board of Directors shall consist of not less than eleven
(11) members and not more than thirteen (13) members, the exact
number of which shall be fixed by a By-law adopted by the
stockholders or by the Board of Directors.'
is hereby stricken and the following language is hereby substituted therefore:
'The Board of Directors shall consist of not less than fourteen
(14) members and not more than sixteen members, the exact number
of which shall be fixed by a By-law adopted by the stockholders
or by the Board of Directors.'
3. That the number of shares entitled to vote on or consent to the
amendment is 3,511 shares.
4. That the number of shares voting in favor of the resolution was
3,511 shares, or 100%, which exceeded the required vote, which is 50% plus one.
5. That at a duly held meeting of the Board of Directors of the
corporation held at Anchor National Life Plaza, 2202 E. Camelback Rd., Phoenix,
Arizona, 85016, on March 24, 1983, at which a quorum of the members was present
and voting, the Directors approved, ratified and confirmed the resolution of the
shareholders in the form set forth above.
In Witness Whereof, the undersigned have executed this Certificate of
Amendment on September 20, 1984.
/s/ William G. Stalnaker
------------------------
William G. Stalnaker
President
/s/ James A. Deer
------------------------
James A. Deer
Vice President, Secretary
and Associate General Counsel
Subscribed and sworn to before me this 20th day of September, 1984.
/s/ Nancy R. Greenleaf
- -----------------------
Notary Public
(My Commission Expires Feb. 29, 1988)
<PAGE> 56
AFFIDAVIT
State of ARIZONA )
) SS
County of Maricopa )
William G. Stalnaker, first duly sworn, deposes and says that he is
President of Anchor National Life Insurance Company, and that he has read the
foregoing certificate of Amendment of Articles of Incorporation of Anchor
National Life Insurance Company and knows the contents thereof and the same are
true and correct of affiant's own knowledge.
/s/ William G. Stalnaker
--------------------------
William G. Stalnaker
President
Subscribed and sworn to before me this 20th day of September, 1984.
/s/ Nancy R. Greenleaf
- -----------------------
Notary
(My Commission Expires Feb. 29, 1988)
James A. Deer, first being duly sworn, deposes and says that he is the
Secretary of Anchor National Life Insurance Company and that he has read the
foregoing certificate of Amendment of the Articles of Incorporation of Anchor
National Life Insurance Company and knows the contents thereof and the same are
true and correct of affiant's own knowledge.
/s/ James A. Deer
--------------------------
James A. Deer
Vice President, Secretary
and Associate General Counsel
Subscribed and sworn to before me this 20th day of September, 1984.
/s/ Nancy R. Greenleaf
- -----------------------
Notary
(My Commission Expires Feb. 29, 1988)
<PAGE> 57
ENDORSED
FILED
10/11/84
by James E. Harris, Deputy
CERTIFICATE OF AMENDMENT OF ARTICLES OF INCORPORATION
OF
ANCHOR NATIONAL LIFE INSURANCE COMPANY
William G. Stalnaker and James A. Deer hereby certify:
1. That they are the President and Vice President, Secretary and
Associate General Counsel respectively of Anchor National Life Insurance
Company, a California corporation.
2. That the Shareholders of the corporation adopted and approved an
amendment of Article IV of the Articles of Incorporation of this corporation by
resolution at a meeting held at Anchor Centre One, 2201 E. Camelback Road,
Phoenix, Arizona, 85016 on September 21, 1984, by the required vote of
shareholders as prescribed by section 902 of the Corporation Code of the state
of California. The resolution setting forth the amendment of the Articles of
Incorporation reads as follows:
WHEREAS, the corporation is currently doing business pursuant to a
certificate of authority issued by the state of Maine which permits it to
transact life, health and variable annuity insurance, and
WHEREAS, the state of Maine has recently adopted new requirements for
Paid-Up Capital set forth in Title 24-A, M.R.S.A. Section 410 requiring a
minimum Paid-Up Capital of $2,500,000 for the transaction of business in
the lines in which the corporation is currently authorized, and
WHEREAS, it is deemed desirable for the corporation to continue doing
business under its certificate of authority as currently constituted in
the state of Maine;
RESOLVED, that Article IV of the Articles of Incorporation of this
corporation, as previously amended and which now reads:
"The corporation is authorized to issue one class of stock, which
shall be designated as common stock; the total number of shares
which this corporation shall have authority to issue is 4,000
shares and the aggregate par value of all shares that are to be
issued shall be Two Million, Two Hundred and Eighty Thousand
Dollars ($2,280,000), and the par value of each of said shares
shall be Five Hundred Seventy Dollars and No Cents ($570.00).
Upon the effective date of this amendment, each one hundred
outstanding $5.70 par value shares shall be converted to one
$570.00 par value share, and provided further that nothing in
this amendment shall authorize the conversion of outstanding
shares of par value of Five Dollars Seventy Cents ($5.70) into
outstanding fractional shares with a par value of less than Five
Hundred and Seventy Dollars and No Cents."
is hereby stricken and the following language is hereby substituted therefore:
"The corporation is authorized to issue one class of stock, which
shall be designated as common stock; the total number of shares
which this corporation shall have authority to issue is 4,000
shares and the aggregate par value of all shares that are to be
issued shall be Four Million Dollars ($4,000,000), and the par
value of each of said shares shall be One Thousand Dollars
($1,000). Upon the effective date of this amendment, each one
hundred outstanding Five Hundred Seventy Dollar par value share
shall be converted to One Thousand Dollar par value share, and
upon the conversion of each outstanding share, funds shall be
transferred from Gross paid-in and contributed surplus to Capital
Paid-Up equal to the aggregate par value of the issued and
<PAGE> 58
outstanding shares."
3. That the number of shares entitled to vote on or consent to the
amendment is 3,511 shares.
4. That the number of shares voting in favor of the resolution was
3,511 shares, or 100%, which exceeded the required vote, which is 50% plus one.
5. That at a duly held special meeting of the Board of Directors of
the corporation held by telephone conference on September 21, 1984, at which a
quorum of the board was present and voting, the board approved, ratified and
confirmed the resolution of the shareholders.
<PAGE> 59
In witness whereof, the undersigned have executed this certificate of
amendment on October 8, 1984.
/s/ William G. Stalnaker
------------------------
William G. Stalnaker
President
/s/ James A. Deer
------------------------
James A. Deer
Vice President, Secretary
and Associate General Counsel
Subscribed and sworn to before me this 8th day of October, 1984.
/s/ [unreadable]
- ------------------------
Notary Public
(My Commission Expires Oct. 13, 1987)
<PAGE> 60
AFFIDAVIT
State of ARIZONA )
) SS
County of Maricopa )
William G. Stalnaker, first duly sworn, deposes and says that he is
President of Anchor National Life Insurance Company, and that he has read the
foregoing certificate of Amendment of Articles of Incorporation of Anchor
National Life Insurance Company and knows the contents thereof and the same are
true and correct of affiant's own knowledge.
/s/ William G. Stalnaker
------------------------
William G. Stalnaker
President
Subscribed and sworn to before me this 8th day of October, 1984.
/s/ [unreadable]
- -----------------------
Notary
(My Commission Expires Oct. 13, 1987)
James A. Deer, first being duly sworn, deposes and says that he is the
Secretary of Anchor National Life Insurance Company and that he has read the
foregoing certificate of Amendment of the Articles of Incorporation of Anchor
National Life Insurance Company and knows the contents thereof and the same are
true and correct of affiant's own knowledge.
/s/ James A. Deer
------------------------
James A. Deer
Vice President, Secretary
and Associate General Counsel
Subscribed and sworn to before me this 8th day of October, 1984.
/s/ [unreadable]
- -----------------------
Notary
(My Commission Expires Oct. 13, 1987)
<PAGE> 61
CERTIFICATE OF OWNERSHIP
MERGING
ANCHOR NATIONAL PROPERTIES, INC., an Arizona corporation
INTO
ANCHOR NATIONAL LIFE INSURANCE COMPANY, a California corporation
We, THOMAS B. PHILLIPS, the Senior Vice President and General Counsel,
and JAMES A. DEER, the Secretary, of Anchor National Life Insurance Company, a
corporation organized and existing under the laws of the State of California, DO
HEREBY CERTIFY:
1. That Thomas B. Phillips is the Senior Vice President and General
Counsel and James A. Deer is the Secretary of this corporation.
2. This corporation owns 100 percent of the outstanding shares of
each class of Anchor National Properties, Inc., and Arizona corporation the laws
of which permit a merger in the manner provided by Section 1110 of the
California Corporations Code.
3. The board of directors of Anchor National Life Insurance Company
duly adopted the following resolution:
RESOLVED that this corporation merge into itself Anchor National
Properties, Inc., an Arizona corporation, its wholly-owned
subsidiary.
and assumes all of the obligations of Anchor National Properties,
Inc., pursuant to Section 1110 of the California Corporation
Code.
4. This certificate shall become effective on June 30, 1985. Each of
the undersigned declares under penalty of perjury that the statements contained
in the foregoing certificate are true of their own knowledge.
Executed at Phoenix, Arizona, on June 26, 1985.
/s/ Thomas B. Phillips
-----------------------------
THOMAS B. PHILLIPS, Senior Vice
President and General Counsel
/s/ James A. Deer
-----------------------------
JAMES A. DEER, Secretary
<PAGE> 62
FILED
2/18/86
CERTIFICATE OF AMENDMENT OF ARTICLES OF INCORPORATION
OF
ANCHOR NATIONAL LIFE INSURANCE COMPANY
William G. Stalnaker and James A. Deer hereby certify:
1. That they are the President and Secretary respectively of Anchor
National Life Insurance Company, a California corporation.
2. That the Shareholders of the corporation adopted and approved he
amendment of Article V of the Articles of Incorporation of the corporation by
resolution at a meeting held at Anchor Centre One, 2201 East Camelback Road,
Phoenix, Arizona, on November 18, 1985, by the required vote of shareholders as
prescribed by section 902 of the corporation code of the State of California.
The resolution setting forth the amendment of the Articles of Incorporation
reads as follows:
"RESOLVED, that the first sentence of ARTICLE V of the ARTICLES OF
INCORPORATION of this corporation, which reads as follows:
'The Board of Directors shall consist of not less than fourteen (14)
members and not more than sixteen (16) members, the exact number of which
shall be fixed by a By-Law adopted by the stockholders or by the Board of
Directors.'
is hereby stricken and the following language is hereby substituted therefore:
"The Board of Directors shall consist of not less than sixteen (16)
members and not more than seventeen (17) members, the exact number of
which shall be fixed by a By-Law adopted by the stockholders or by the
Board of Directors."
3. That the number of shares entitled to vote on or consent to the
amendment is 3,511 shares.
4. That the number of shares voting in favor of the resolution was
3,511 shares, or 100%, which exceeded the required vote, which is 50% plus one.
5. That at a duly held meeting of the Board of Directors of the
corporation held at Anchor Centre One, 2201 East Camelback Road, Phoenix,
Arizona 85016 on November 18, 1985 at which a quorum of the members were present
and voting, the Directors approved, ratified and confirmed the resolution of the
shareholders in the form set forth above.
In witness Whereof, the undersigned have executed this Certificate of
Amendment on February 11, 1986.
/s/ William G. Stalnaker
------------------------------
William G. Stalnaker
President
/s/ James A. Deer
------------------------------
James A. Deer
Vice President, Secretary and
Associate General Counsel
Subscribed and sworn to before me this llth day of February, 1986.
/s/ Nancy Greenleaf
- --------------------------------
Notary Public
My Commission Expires Feb. 29, 1988
<PAGE> 63
AFFIDAVIT
State of ARIZONA )
) SS
County of Maricopa )
William G. Stalnaker, first duly sworn, deposes and says that he is
President of Anchor National Life Insurance Company, and that he has read the
foregoing certificate of Amendment of Articles of Incorporation of Anchor
National Life Insurance Company and knows the contents thereof and the same are
true and correct of affiant's own knowledge.
/s/ William G. Stalnaker
------------------------
William G. Stalnaker
President
Subscribed and sworn to before me this 20th day of September, 1984.
/s/ Nancy R. Greenleaf
- ------------------------
Notary
(My Commission Expires Feb. 29, 1988)
James A. Deer, first being duly sworn, deposes and says that he is the
Secretary of Anchor National Life Insurance Company and that he has read the
foregoing certificate of Amendment of the Articles of Incorporation of Anchor
National Life Insurance Company and knows the contents thereof and the same are
true and correct of affiant's own knowledge.
/s/ James A. Deer
------------------------
James A. Deer
Vice President, Secretary
and Associate General Counsel
Subscribed and sworn to before me this 20th day of September, 1984.
/s/ Nancy R. Greenleaf
- ------------------------
Notary
(My Commission Expires Feb. 29, 1988)
<PAGE> 64
ENDORSED
FILED
12/3/86
March Fong Eu, Secretary of State
CERTIFICATE OF AMENDMENT OF ARTICLES OF INCORPORATION
OF
ANCHOR NATIONAL LIFE INSURANCE COMPANY
Howard R. Fricke and Janet E. Jackim hereby certify:
1. That they are the Chairman of the Board and Secretary
respectively of Anchor National Life Insurance Company, a California
corporation.
2. That the Shareholders of the corporation adopted and approved the
amendment of Article V of the Articles of Incorporation of the corporation by
resolution at a meeting held at Anchor Centre One, 2201 E. Camelback Rd.,
Phoenix, Arizona, on June 19, 1986 by the required vote of shareholders as
prescribed by section 902 of the corporation code of the state of California.
The resolution setting forth the amendment of the Articles of Incorporation
reads as follows:
"RESOLVED, that the first sentence of ARTICLE V of the ARTICLES OF
INCORPORATION of this corporation, which reads as follows:
The Board of Directors shall consist of not less than sixteen (16)
members and not more than seventeen (17) members, the exact number of
which shall be fixed by a By-law adopted by the stockholders or by the
Board of Directors."
is hereby stricken and the following language is hereby substituted therefore:
"The Board of Directors shall consist of not less than nine (9) members
and not more than twelve (12) members, the exact number of which shall be
fixed by a By-law adopted by the stockholders or by the Board of
Directors."
3. That the number of shares entitled to vote on or consent to the
amendment is 3,511 shares.
4. That the number of shares voting in favor of the resolution was
3,511 shares, or 100%, which exceeded the required vote, which is 50% plus one.
5. That at a duly held meeting of the Board of Directors of the
corporation held at Anchor Centre One, 2201 E. Camelback Rd., Phoenix, Arizona,
85016, on June 19, 1986, at which a quorum of the members was present and
voting, the Directors approved, ratified and confirmed the resolution of the
shareholders in the form set forth above.
In Witness Whereof, the undersigned have executed this Certificate of
Amendment on August 27, 1986.
/s/ Howard R. Fricke
-------------------------
Howard R. Fricke
Chairman of the Board
/s/ Janet E. Jackim
-------------------------
Janet E. Jackim
Second Vice President,
Secretary and Assistant
General Counsel
Subscribed and sworn to before me this 14th day of November, 1986.
/s/ DonnaSue Martin
[SEAL] -------------------------
<PAGE> 65
Notary Public
My Commission Expires Mar. 7, 1988
<PAGE> 66
AFFIDAVIT
State of ARIZONA )
) SS
County of Maricopa )
Howard R. Fricke, first being duly sworn, deposes and says that he is
Chairman of the Board of Anchor National Life Insurance Company, and that he has
read the foregoing Certificate of Amendment of Articles of Incorporation of
Anchor National Life Insurance Company and knows the contents thereof and the
same are true and correct of affiant's own knowledge.
/s/ Howard R. Fricke
-------------------------
Howard R. Fricke
Chairman of the Board
Subscribed and sworn to before me this 14th day of November, 1986.
/s/ DonnaSue Martin
-------------------------
Notary Public
My Commission Expires Mar. 7, 1988
Janet E. Jackim, first being duly sworn, deposes and says that she is the
Secretary of Anchor National Life Insurance Company and that she has read the
foregoing Certificate of Amendment of the Articles of Incorporation of Anchor
National Life Insurance Company and knows the contents thereof and the same are
true and correct of affiant's own knowledge.
/s/ Janet E. Jackim
-------------------------
Janet E. Jackim
Second Vice President,
Secretary and Assistant
General Counsel
Subscribed and sworn to before me this 14th day of November, 1986.
/s/ DonnaSue Martin
-------------------------
Notary Public
My Commission Expires Mar. 7, 1988
<PAGE> 67
ENDORSED
FILED
3/31/89
March Fong Eu, Secretary of State
CERTIFICATE OF AMENDMENT OF ARTICLES OF INCORPORATION
OF
ANCHOR NATIONAL LIFE INSURANCE COMPANY
Robert P. Saltzman and Gail A. Lione hereby certify:
1. That they are the President and Secretary, respectively, of
Anchor National Life Insurance Company, a California corporation.
2. That by unanimous written consent of the Board of Directors of
the corporation on December 1, 1988, the Board adopted the following resolutions
approving the amendment of Article V of the Articles of Incorporation:
RESOLVED, that the first sentence of Article V of the Articles of
Incorporation of this Corporation, which reads as follows:
"The Board of Directors shall consist of not less than nine (9)
members and not more than twelve (12) members, the exact number
of which shall be fixed by a by-law adopted by the stockholders
or by the Board of Directors."
is hereby stricken and the following language is substituted therefor:
"The Board of Directors shall consist of not less than five (5)
members and not more than nine (9) members, the exact number of
which shall be fixed by a Bylaw adopted by the shareholders or by
the Board of Directors."
RESOLVED, FURTHER, that the second sentence of Article V of the Articles
of Incorporation of this Corporation, which reads as follows:
"The minimum and maximum number of Directors may be changed by a
by-law duly adopted by the shareholders, provided, however, that
the maximum number of Directors shall in no event exceed the
minimum by more than two (2); the shareholders may also adopt a
by-law providing for a definite number of Directors without
provision for an indefinite number."
is hereby stricken and the following language is substituted therefor:
"The minimum and maximum number of Directors may be changed by a
Bylaw duly adopted by the shareholders; the shareholders may also
adopt a Bylaw providing for a definite number of Directors
without provision for an indefinite number."
3. That the sole shareholder of the corporation adopted and approved
the same amendment to the Articles of Incorporation by unanimous written consent
of the sole shareholder on December 1, 1988, by the required vote of the sole
shareholder as prescribed by Section 902 of the Corporations Code of the State
of California.
IN WITNESS WHEREOF, the undersigned have executed this Certificate of
Amendment on December 1, 1988.
/s/ Robert P. Saltzman
---------------------------
Robert P. Saltzman
President
/s/ Gail A. Lione
---------------------------
<PAGE> 68
Gail A. Lione
Senior Vice President, Secretary
and General Counsel
Subscribed and sworn to before me this 1st day of December, 1988.
/s/ Frances S. Booker
----------------------------
Notary Public
(Notary Public, Fulton County, Georgia
My commission Expires Nov. 22, 1992)
[SEAL]
<PAGE> 69
AFFIDAVIT
State of GEORGIA )
) SS
County of Fulton )
Robert P. Saltzman, first being duly sworn, deposes and says that he is
President of Anchor National Life Insurance Company, and that he has read the
foregoing Certificate of Amendment of Articles of Incorporation of Anchor
National Life Insurance Company and knows the contents thereof and the same are
true and correct of affiant's own knowledge.
/s/ Robert P. Saltzman
-------------------------
Robert P. Saltzman
President
Subscribed and sworn to before me this 1st day of December, 1988.
/s/ Frances S Booker
----------------------------
Notary Public
(Notary Public, Fulton County, Georgia
My commission Expires Nov. 22, 1992)
Gail A. Lione, first being duly sworn, deposes and says that she is the
Secretary of Anchor National Life Insurance Company and that she has read the
foregoing Certificate of Amendment of the Articles of Incorporation of Anchor
National Life Insurance Company and knows the contents thereof and the same are
true and correct of affiant's own knowledge.
/s/ Gail A. Lione
-------------------------
Gail A. Lione
Senior Vice President, Secretary
and General Counsel
Subscribed and sworn to before me this 1st day of December, 1988.
/s/ Frances S. Booker
----------------------------
Notary Public
(Notary Public, Fulton County, Georgia
My commission Expires Nov. 22, 1992)
<PAGE> 70
ENDORSED
FILED
3/1/94
Tony Miller, Acting Secretary of State
CERTIFICATE OF AMENDMENT
OF
ARTICLES OF INCORPORATION
Eli Broad and Susan L. Harris certify that:
1. They are the president and the secretary, respectively, of Anchor
National Life Insurance Company, a California corporation.
2 . The first sentence of Article V of the articles of incorporation
of this corporation is amended to read as follows:
"The Board of Directors shall consist of not less than Nine (9)
members and not more than Seventeen (17) members, the exact
number of which shall be fixed by a Bylaw adopted by the
shareholders or by the Board of Directors."
3 . The foregoing amendment of articles of incorporation has been
duly approved by the board of directors.
4 . The foregoing amendment of articles of incorporation has been
duly approved by the required vote of shareholders in accordance with Section
902 of the Corporations Code. The total number of outstanding shares of the
corporation is 3,511. The number of shares voting in favor of the amendment
equaled or exceeded the vote required. The percentage vote required was more
than 50%.
We further declare under penalty of perjury under the laws of the State
of California that the matters set forth in this certificate are true and
correct of our own knowledge.
Dated: January 26, 1994
/s/ Eli Broad
-----------------------------
Eli Broad
/s/ Susan L. Harris
-----------------------------
Susan L. Harris
<PAGE> 1
EXHIBIT (6)(B)
BY-LAWS
ANCHOR NATIONAL LIFE INSURANCE COMPANY
ARTICLE I
OFFICES
Section 1. The name of the Corporation shall be:
ANCHOR NATIONAL LIFE INSURANCE COMPANY
as amended 12/5/66
Section 2. The principal office shall be located in Los Angeles,
California.
Section 3. The Corporation may also have offices at such other
places both within and without the State of California as the Board of Directors
may from time to time determine or the business of the Corporation may require.
ARTICLE II
MEETINGS OF SHAREHOLDERS
Section 1. Annual meetings of Shareholders may be held within or
without the State of California at such place as may be fixed from time to time
by the Board of Directors and as shall be stated in the Notice of the meeting or
as stated in a duly executed Waiver of Notice thereof.
Special meetings of Shareholders may be held within or without the State
of California at such times and at such places as shall be stated in the Notice
of meeting or as stated in a duly executed Waiver of Notice thereof.
Section 2. An annual meeting of shareholders, commencing with the
year 1973, shall be held on the Third Thursday of March of each year, or at such
other date and time as shall be designated from time to time by the Board of
Directors and stated in the notice of the meeting, at which they shall elect by
a plurality vote a Board of Directors, and transact such other business as may
properly come before the meeting.
Section 3. Written Notice of the annual meeting shall be given to
each Shareholder entitled to vote thereat not less than ten (10) days before the
date of the meeting.
Section 4. Special meetings of the Shareholders for any purpose or
purposes may be called by the Chairman of the Board and shall be called by the
Chairman of the Board or Secretary at the request, in writing, of a majority of
the Board of Directors, or at the request, in writing, of Shareholders owning
two-fifths (2/5ths) of all of the outstanding shares of the Corporation entitled
to vote. Such request shall state the purpose or purposes of the proposed
meeting, and business transacted at any special meeting of Shareholders shall be
limited to the purposes stated in the Notice or in the Waiver thereof.
Section 5. Written Notice of a special meeting of Shareholders,
stating the time, place and purpose thereof, shall be given to each Shareholder
entitled to vote thereat, at least ten (10) days before the date fixed for the
meeting.
Section 6. The holders of a majority of the outstanding shares,
represented in person or by proxy, shall constitute a quorum at al meetings of
the Shareholders for the transaction of business except as otherwise provided by
statute or by the Articles of Incorporation. If, however, such quorum shall not
be present or represented at any meeting of the Shareholders, the Shareholders
present in person or represented by proxy shall have power to adjourn the
meeting from time to time, without Notice other than announcement at the
meeting, until a quorum shall be present or represented. At such adjourned
meeting at which a quorum shall be present or
<PAGE> 2
represented, any business may be transacted which might have been transaction at
the meeting as originally notified.
Section 7. If a quorum is present, the affirmative votes of a
majority of the shares represented at the meeting and entitled to vote shall be
the act of the Shareholders unless the vote of a greater number of shares is
required by law or the Articles of Incorporation.
October 28, 1965, Amendment:
Section 8. Each outstanding share of stock shall be entitled to one
(1) vote on each matter submitted to a vote at a meeting of the Shareholders. A
Shareholder may vote either in person or by proxy executed in writing by the
Shareholder or by his duly authorized attorney-in-fact. No proxy shall be valid
after eleven (11) months from the date of its execution, unless otherwise
provided in the proxy or fixed by statute.
In all elections for Directors, every holder of stock entitled to vote
shall have the right to vote, in person or by proxy, the number of shares
entitled to vote owned by him, for as many persons as there are Directors to be
elected, or to cumulate said shares and give one candidate as many votes as the
number of Directors multiplied by the number of his shares entitled to vote
shall equal, or to distribute them on the same principle among as many
candidates as he shall think fit.
ARTICLE III
DIRECTORS
Section 1. The number of Directors shall be ten (10). Directors
need not be residents of the State of California or Shareholders of the
corporation. The Directors shall be elected at the Annual Meeting of
Shareholders, and each Director elected shall serve until the next succeeding
annual meeting and until his successor shall have been elected and qualified.
(As amended 3/17/95.)
Section 2. Vacancies and newly created directorships resulting from
any increase from the authorized number of Directors may be filled by a majority
of the Directors then in office, although less than a quorum, and the Directors
so chosen shall hold office until the next annual election and until their
successors are duly elected and shall qualify.
Section 3. The business of the Corporation shall be managed by its
Board of Directors, which may exercise all such powers of the Corporation and do
all such lawful acts and things as are not by statute or by the Articles of
Incorporation or by these By-Laws directed or required to be exercised or done
by the Shareholders.
Section 4. The Directors may keep the books of the Corporation,
except such as are required by law to be kept within the State outside of the
State of California, at such place or places as they may from time to time
determine.
MEETINGS OF THE BOARD OF DIRECTORS
Section 5. Meetings of the Board of Directors, regular or special,
may be held either within or without the State of California.
Section 6. The first meeting of each newly elected Board of
Directors shall be held at such time and place as shall be fixed by the vote of
the Shareholders at the annual meeting and no notice of such meeting shall be
necessary to the newly elected Directors or order legally to constitute the
meeting, provided a quorum shall be present, or it may convene at such place and
time as shall be specified in a notice for special meetings of the Board of
Directors or fixed by the consent in writing of all the Directors.
Section 6(a). The Executive Vice President, or if there be more than
one, the Executive Vice President in the order determined by the Board of
Directors shall, in the absence or disability of the President, perform the
duties and exercise the powers of the President and, in the absence of
disability of both the Chairman of the Board and the President, perform the
duties and exercise the powers of the Chairman of the Board; and shall
<PAGE> 3
perform such other duties and exercise such other powers as the Board of
Directors shall prescribe. In the event of the temporary absence or temporary
disability of either the President or the Chairman of the Board, the Chairman or
acting Chairman, in the absence of an order previously determined by the Board
of Directors, shall set the order or succession subject to further action by the
Board of Directors.
Section 7. Regular meetings of the Board of Directors may be held
upon such notice, or without notice, and at such time and at such place as shall
from time to time be determined by the Board.
Section 8. Special meeting of the Board of Directors shall be held
on two (2) days notice to each Director, either by mail or by telegram. Special
meetings may be called by the Chairman of the Board and shall be called by the
Chairman of the Board or Secretary on the written request of two (2) Directors.
Section 9. Attendance of a Director at any meeting shall constitute
a Waiver of Notice of such meeting, except where a Director attends for the
express purpose of objecting to the transaction of any business because the
meeting is not lawfully called or convened. Neither the business to be
transacted at, nor the purpose of, any regular or special meeting of the Board
of Directors need to be specified in the notice or waiver of notice of such
meeting.
Section 10. A majority of the Directors shall constitute a quorum for
the transaction of business unless a greater number is required by law or by the
Articles of Incorporation. The act of a majority of the Directors present at
any meeting at which a quorum is present shall be the act of the Board of
Directors, unless the act of a greater number is required by statute or by the
Articles of Incorporation or by these By-Laws. If a quorum shall not be present
at any meeting of Directors, the Directors present thereat may adjourn the
meeting from time to time, without notice other than announcement at the
meeting, until a quorum shall be present.
COMMITTEES OF DIRECTORS
Section 11(a). The Board of Directors, may appoint from among its
members, by resolution adopted by a majority of the whole Board, an executive
committee which shall consist of three (3) or more Directors. The executive
committee shall have and exercise all of the rights and powers of the Board of
Directors during the intervals between meetings of the Board of Directors.
Meetings of the executive committee shall be held on two (2) days' notice to
each of the members, any two of whom shall constitute a quorum for the
transaction of business. Any vacancy on the executive committee shall be filled
by the Board of Directors at any regular or special meeting.
Section 11(b). The Board of Directors, by resolution adopt by a majority
of the whole board, may designate and elect one or more committees in addition
to the executive committee, each such committee to consist of two or more
Directors of the Corporation. The additional committees shall have and exercise
such of the rights and powers of the Board of Directors and shall transact
business in such manner as shall be specified in the resolutions providing for
their creation. Vacancies in the membership of any such committee shall be
filled by the Board of Directors at any regular or special meeting.
COMPENSATION OF DIRECTORS
Section 12. The Board of Directors, by the affirmative vote of a
majority of the Directors then in office, and irrespective of any personal
interest of any of its members, shall have authority to establish reasonable
compensation of all Directors for services to the Corporation as Directors,
officers or otherwise.
ARTICLE IV
NOTICES
Section 1. Whenever, under the provisions of the statutes or of the
Articles of Incorporation or of these By-Laws, notice is required to be given to
any Director or Shareholder, it shall not be construed to mean
<PAGE> 4
personal notice, but such notice may be given, in writing, by mail, addressed to
such Director or Shareholder, at his address as it appears on the records of the
Corporation, with postage thereon prepaid, and such notice shall be deemed to be
given at the time when the same shall be deposited in the United States mail.
Notice to Directors may also be given by telegram.
Section 2. Whenever any Notice whatever is required to be given
under the provisions of the statutes or under the provisions of the Articles of
Incorporation or these By-Laws, a Waiver thereof, in writing, signed by the
person or persons entitled to such notice, whether before or after the time
stated therein, shall be deemed equivalent to the giving of such Notice.
ARTICLE V
OFFICERS
December 23, 1968, Amendment:
Section 1. The officers of the Corporation shall be chosen by the
Board of Directors and shall be a Chairman of the Board, a President, a
Secretary, a Treasurer and one or more Vice Presidents any one or more of whom
may be designated Executive Vice President. None of the officers, except the
Chairman of the Board, need be a director. Two or more offices may be held by
the same person, except the offices of President and Secretary.
Section 2. The Board of Directors may appoint such other officers,
assistant officers and agents as it shall deem necessary, who shall hold their
offices for such terms and shall exercise such powers and perform such duties as
shall be determined from time to time by the Board of Directors.
Section 3. The salaries of all officers and agents of the
Corporation shall be fixed by or in the manner prescribed by the Board of
Directors.
Section 4. The officers of the Corporation shall hold office until
their successors are chosen and qualify. Any officer elected or appointed by
the Board of Directors may be removed at any time by the affirmative vote of a
majority of the Board of Directors. Any vacancy occurring in any office of the
Corporation shall be filled by the Board of Directors.
Section 5(a). The Chairman of the Board shall be the chief executive
officer of the Corporation; he shall preside at all meetings of the stockholders
and the Directors, and of the executive committee if there be one, shall have
general and active management of the business of the Corporation, and shall see
to it that all orders and resolutions of the Board of Directors are carried into
effect. He shall have authority to execute insurance policies, bonds, mortgages
and other instruments requiring a seal, under the seal of the Corporation,
except where required or permitted by law to be otherwise signed or executed or
where the signing and execution thereof shall be exclusively delegated by the
Board of Directors to some other officer or agent of the Corporation.
THE PRESIDENT
Section 5(b). The President shall be the executive officer of the
Corporation next in authority to the Chairman of the Board. In the absence or
disability of the Chairman, he shall preside at all meetings of the stockholders
and the Directors, and of the executive committee if there be one, and shall
exercise all other functions of the Chairman of the Board; and he shall perform
such other duties and exercise such other powers as the Board of Directors shall
prescribe.
THE EXECUTIVE VICE-PRESIDENT AND
Section 6(a). The Executive Vice President, or if there be more than
one, the Executive Vice Presidents in the order determined by the Board of
Directors shall, in the absence or disability of the President, perform the
duties and exercise the powers of the President and, in the absence or
disability of both the Chairman of the Board and the President, perform the
<PAGE> 5
duties and exercise the powers of the Chairman of the Board; and shall perform
such other duties and exercise such other powers as the Board of Directors shall
prescribe. In the event of the temporary absence or temporary disability of
either the President or the Chairman of the Board, the Chairman or acting
Chairman, in the absence of an order previously determined by the Board of
Directors, shall set the order of succession subject to further action of the
Board of Directors. (As amended March 24, 1983.)
Section 6(b). The Vice-President, or if there be more than one, the
Vice-Presidents in the order determined by the Board of Directors, shall, in the
absence or disability of the executive Vice-President perform the duties and
exercise the powers of the executive Vice-President and shall perform, such
other duties and exercise such other powers as the Board of Directors shall
prescribe.
THE SECRETARY AND ASSISTANT SECRETARIES
Section 7. The Secretary shall attend all meetings of the Board of
Directors and all meetings of the Shareholders and records all the proceedings
of the meetings of the Shareholders and of the Board of Directors in a book to
be kept for that purpose and shall perform like duties for committees of the
Board of Directors when required. He shall give, or cause to be given, notice
of all meetings of the Shareholders and special meetings of the Board of
Directors, and shall perform such other duties as may be prescribed by the Board
of Directors or the Chairman of the Board. He shall have custody of the
corporate seal of the Corporation and he, or an Assistant Secretary, shall have
authority to affix the same to any instrument requiring it and when so affixed,
it may be attested by his signature or by the signature of such Assistant
Secretary. The Board of Directors may give general authority to any other
officer to affix the seal of the Corporation and to attest thereto by his
signature.
Section 8. The Assistant Secretary, or if there be more than one,
the assistant secretaries in the order determined by the Board of Directors,
shall, in the absence or disability of the Secretary, perform the duties and
exercise the powers of the Secretary and shall perform such other duties and
have such other powers as the Board of Directors may from time to time
prescribe.
THE TREASURER AND ASSISTANT TREASURERS
Section 9. Except as otherwise prescribed by law or by the Board of
Directors, the Treasurer shall have the custody of the corporate funds and
securities. He shall keep full and accurate accounts of receipts and
disbursements in books belonging to the Corporation and shall deposit all moneys
and other valuable effects in the name and to the credit of the Corporation in
such depositaries as may be designated by or in the manner prescribed by the
Board of Directors. He shall disburse the funds of the Corporation as may be
ordered by the Board of Directors, taking proper vouchers for such
disbursements, and shall render to the Chairman of the Board and the Board of
Directors, at its regular meetings, or when the Chairman of the Board or the
Board of Directors so requires, an account of all his transactions as Treasurer
and of the financial condition of the Corporation.
Section 10. The Assistant Treasurer or, if there shall be more than
one, the assistant treasurers in the order determined by the Board of Directors,
shall, in the absence or disability of the Treasurer, perform the duties and
exercise the powers of the Treasurer and shall perform such other duties and
have such other powers as the Board of Directors may from time to time
prescribe.
ARTICLE VI
CERTIFICATES FOR SHARES
Section 1. The shares of the Corporation shall be represented by the
Certificates signed by the Chairman of the Board, the President, the executive
Vice-President, or any other Vice-President, and by the Secretary or an
assistant secretary, or the Treasurer or an assistant treasurer of the
Corporation, and may be sealed with the seal of the Corporation or a
<PAGE> 6
facsimile thereof.
Section 2. The signature of any officer or officers upon a
Certificate may be facsimiles if the Certificate is countersigned by a transfer
agent, or registered by a registrar, other than the Corporation itself, or an
employee of the Corporation. In case any officer who has signed or whose
facsimile signature has been placed upon such Certificate shall have ceased to
be such officer before such Certificate is issued, it may be issued by the
Corporation with the same effect as if he were such officer of the Corporation
at the date of its issue.
LOST CERTIFICATES
Section 3. The Board of Directors may direct a new Certificate to be
issued in place of any Certificate theretofore issued by the Corporation alleged
to have been lost, mutilated or destroyed. When authorizing such issue of a new
Certificate, the Board of Directors, in its discretion and as a condition
precedent to the issuance thereof, may prescribe such terms and conditions as it
deems expedient, and may require such indemnities as it deems adequate, to
protect the Corporation from any claim that may be made against it with respect
to any such Certificate alleged to have been lost, mutilated or destroyed.
TRANSFER OF SHARES
Section 4. Upon surrender to the Corporation or the transfer agent
of the Corporation of a Certificate representing shares duly endorsed or
accompanied by proper evidence of succession, assignment or authority to
transfer, authenticated in such manner as the officers authorized to sign
Certificates or the transfer agent may require, a new Certificate shall be
issued to the person entitled thereto, and the old Certificate canceled and the
transaction recorded upon the books of the Corporation.
CLOSING OF TRANSFER BOOKS; RECORD DATE
Section 5. For the purpose of determining Shareholders entitled to
notice or to vote at any meeting of Shareholders, or Shareholders entitled to
receive payment of any dividend, or in order to make a determination of
Shareholders for any other proper purpose, the Board of Directors may provide
that the stock transfer books shall be closed for a stated period but not to
exceed, in any case, forth (40) days. If the stock transfer books shall be
closed for the purpose of determining Shareholders entitled to notice of or to
vote at a meeting of Shareholders, such books shall be closed for at least ten
(10) days, immediately preceding such meeting. In lieu of closing the stock
transfer books, the Board of Directors may fix in advance a date as the record
date for any such determination of Shareholders, such date in any case to be not
more than forty (40) days and, in case of a meeting of Shareholders, not less
than ten (10) days prior to the date on which the particular action requiring
such determination of Shareholders is to be taken. If the stock transfer books
are not closed and no record date is fixed, the record date for the
determination of Shareholders entitled to notice of or to vote at a meeting, or
to receive payment of a dividend, shall be the date on which notice of the
meeting is mailed or the date on which the resolution of the Board of Directors
declaring such dividend is adopted, as the case may be.
REGISTERED SHAREHOLDERS
Section 6. The Corporation shall be entitled to recognize the
exclusive right of a person registered on its books as the owner of shares to
receive dividends, and to vote as such owner, and shall not be bound to
recognize any equitable or other claim to or interest in such share or shares on
the part of any other person, whether or not it shall have express or other
notice thereof, except as otherwise provided by the laws of California.
ARTICLE VII
GENERAL PROVISIONS
DIVIDENDS
Section 1. Subject to the provisions of the Articles of
<PAGE> 7
Incorporation relating thereto, if any, dividends may be declared by the Board
of Directors at any regular or special meeting, pursuant to law. Dividends may
be paid in cash, in property or in shares of the capital stock, subject to any
provisions of the Articles of Incorporation.
Section 2. Before payment of any dividend, there may be set aside
out of any funds of the Corporation available for dividends such sum or sums as
the Directors from time to time, in their absolute discretion, think proper as a
reserve fund to meet contingencies, or for such other purpose as the Directors
shall think conducive to the interests of the Corporation, and the Directors may
modify or abolish any such reserve in their discretion.
CHECKS
Section 3. All checks or demands for money and notes of the
Corporation shall be signed by such officer or officers, or such other person or
persons as may from time to time be designated by or in the manner prescribed by
the Board of Directors.
FISCAL YEAR
Section 4. The fiscal year of the Corporation shall commence on
January 1st and end on December 31st.
SEAL
Section 5. The corporate seal shall have inscribed thereon the name
of the corporation, the year of its organization, and the words, "Corporate
Seal, California". The seal may be used by causing it or a facsimile thereof to
be impressed or affixed or in any manner reproduced.
ARTICLE VIII
AMENDMENTS
Section 1. These By-Laws may be altered, amended or repealed by the
Shareholders or by the Board of Directors at any regular or special meeting if
Notice of such alteration, amendment or repeal be contained in the Notice of
such meeting, and provided further that the wishes of the Shareholders shall
prevail in the event of any conflict.
KNOW ALL MEN BY THESE PRESENTS:
That we, the undersigned, being all of the persons appointed in the
Articles of Incorporation to act as the first Board of Directors of SIERRA-
NEVADA LIFE INSURANCE COMPANY, hereby assent to the foregoing By-Laws, and adopt
the same as the By-Laws of said Corporation.
IN WITNESS WHEREOF, we have hereunto set our hands this 16th day of
April, 1965.
/s/ RICHARD D. BARGER
- ----------------------------------- )
Richard D. Barger )
)
/s/ ALFRED B. DOUTRE )
- ----------------------------------- )
Alfred B. Doutre )
)
/s/ AGNES JOHNSON ) DIRECTORS
- ----------------------------------- )
Agnes Johnson )
)
/s/HAUN CHAMBERLAIN )
- ----------------------------------- )
Haun Chamberlain )
)
/s/ GERRIE RUE )
- ----------------------------------- )
Gerrie Rue
THIS IS TO CERTIFY:
<PAGE> 8
That I am the duly elected, qualified and acting Secretary of
SIERRA-NEVADA LIFE INSURANCE COMPANY, and that the above and foregoing By-Laws
were adopted as the By-Laws of said Corporation on the 16th day of April, 1965,
by the persons appointed in the Articles of Incorporation to act as the first
Directors of said Corporation.
IN WITNESS WHEREOF, I have hereunto set my hand this 16th day of April,
1965.
/S/ [unreadable]
-----------------------------------
Secretary
<PAGE> 1
EXHIBIT 8
FUND PARTICIPATION AGREEMENT
AGREEMENT, made on this th day of 1995, among ANCHOR
NATIONAL LIFE INSURANCE COMPANY (the "Company"), a life insurance company
organized under the laws of the State of California, on behalf of itself and on
behalf of VARIABLE ANNUITY ACCOUNT TWO - T ("Variable Account"), a separate
account of the Company existing pursuant to the laws of the State of California
and MUTUAL FUND VARIABLE ANNUITY TRUST ("Fund"), an open-end management
investment company established pursuant to the Commonwealth of Massachusetts
under a Declaration of Trust dated April 14, 1994 and which is composed of
multiple investment series ("Portfolios").
WITNESSETH:
WHEREAS, the Company, by resolution, has established the Variable
Account on its books of account for the purpose of funding certain variable
annuity contracts issued by it to be marketed under the name "Vista Advantage
Advisor" (the "Contracts"); and
WHEREAS, the Variable Account, registered with the Securities and
Exchange Commission ("SEC") as a unit investment trust under the Investment
Company Act of 1940 (the "1940 Act"), is divided into various portfolios
("Divisions") under which the income, gains and losses, whether or not realized,
from assets allocated to each such Division are, in accordance with the
applicable variable annuity contracts, credited to or charged against such
Division without regard to any income, gains or losses of other Divisions or
separate accounts of the Company; and
WHEREAS, the Fund, registered with the SEC as an open-end, diversified
management investment company under the 1940 Act, is divided into various series
("Portfolios"), each Portfolio being subject to separate investment objectives
and restrictions which may not be changed without a majority vote of the
shareholders of each such Portfolio; and
WHEREAS, the Variable Account desires to purchase shares of the Fund in
connection with the issuance of the Contracts; and
WHEREAS, the Fund agrees to make shares of its Portfolios available to
serve as underlying investment media for the corresponding Divisions of the
Variable Account; and
NOW, THEREFORE, in consideration of the foregoing and of mutual covenants
and conditions set forth herein and for other good and valuable consideration,
the Company (on behalf of itself and the Variable Account) and, the Fund hereby
agree as follows:
ARTICLE I
SALE OF FUND SHARES
1.1 The Contracts funded by the Variable Account will provide for the
allocation of net amounts among the various Divisions of the Variable Account
for investment in the shares of the particular Portfolio of the Fund underlying
each such Division. The selection of a particular Division is to be made (and
such selection may be changed) in accordance with the terms of the applicable
Contract.
1.2 Fund shares to be made available to the respective Divisions of
the Variable Account shall be sold by each of the respective Portfolios of the
Fund and purchased by the Company for that Division at the net asset value next
computed after receipt of each order, as established in accordance with the
provisions of the then current prospectus of the Fund. Shares of a particular
Portfolio of the Fund shall be ordered in such quantities and at such times as
determined by the Company to be necessary to meet the requirements of those
Contracts having amounts allocated to the Division for which the Fund Portfolio
shares serve as the underlying investment medium. Orders and payments for shares
purchased will be sent promptly to the Fund and will be made payable in the
manner established from time to time by the
<PAGE> 2
Fund for the receipt of such payments. The Fund has the obligation to ensure
that its shares to be made available to the appropriate Division(s) under the
Contracts are registered at all times under the Securities Act of 1933, as
amended (the "1933 Act").
1.3 The Fund will redeem the shares of the various Portfolios when
requested by the Company on behalf of the corresponding Division of the Variable
Account at the net asset value next computed after receipt of each request for
redemption, as established in accordance with the provisions of the then current
prospectus of the Fund. The Fund will make payment in the manner established
from time to time by the Fund for the receipt of such redemption requests, but
in no event shall payment be delayed for a greater period than is permitted by
the 1940 Act.
1.4 For purposes of paragraphs 1.2 and 1.3 above, the Company shall
be the agent of the Fund for the receipt of (i) orders to purchase, and (ii)
requests to redeem shares of the Portfolios of the Fund on behalf of the
Variable Account, the receipt of such orders and requests by such agent shall
constitute receipt thereof by the Fund, provided that the Fund receives actual
notice of such order or request by 12:00 noon (at the Fund's offices) on the
next following Business Day. "Business Day" shall mean any day on which the New
York Stock Exchange is open for trading and on which the Fund calculates its net
asset value pursuant to the rules of the SEC and the Fund's currently effective
registration statement.
1.5 Transfer of the Fund's shares will be by book entry only. No
stock certificates will be issued to the Variable Account. Shares ordered from
a particular Portfolio to the Fund will be recorded in an appropriate title for
the corresponding Division of the Variable Account.
1.6 The Fund shall make the net asset value per share of each
Portfolio available to the Company on a daily basis as soon as reasonably
practical after the net asset value per share is calculated and shall use its
best efforts to make such net asset value per share available by 6:00 p.m.
Eastern Time.
1.7 The Fund shall furnish same day notice promptly to the Company of
any dividend or distribution payable on its shares. All of such dividends and
distributions as are payable on each of the Portfolio shares in the title for
the corresponding Division of the Variable Account shall be automatically
reinvested in additional shares of that Portfolio of the Fund. The Fund shall
notify the Company of the number of shares so issued.
ARTICLE II
REGISTRATION STATEMENTS,
SALES MATERIAL AND OTHER INFORMATION
2.1 The Company shall not give any information or make any
representations or statements on behalf of the Fund or concerning the Fund in
connection with the sale of the Contracts other than the information or
representations contained in the registration statement or prospectus for the
Fund shares, as such document may be amended or supplemented from time to time,
or in reports or proxy statements for the Fund, or in sales literature or other
promotional material approved by the Fund, except with the permission of the
Fund.
2.2 The Fund shall not give any information or make any
representations or statements on behalf of the Company or concerning the
Company, the Variable Account, or the Contracts other than the information or
representations contained in the registration statement or prospectus for the
Contracts, as such registration statement and prospectus may be amended or
supplemented from time to time, or in published reports for the Variable Account
which are in the public domain or approved by the Company for distribution to
Contract owners, or in sales literature or other promotional material approved
by the Company, except with the permission of the Company.
2.3 The Fund will provide to the Company at least one complete copy
of all registration statements, prospectuses, Statements of Additional
Information, reports, proxy statements, sales literature and other promotional
materials, applications for exemptions, requests for no-action letters, and all
amendments to any of the above that relate to the Fund or
<PAGE> 3
its shares, contemporaneously with, or promptly after, the filing of such
document with the SEC or other regulatory authorities. The Fund shall provide
the Company copies of its prospectus, proxy material, reports to stockholders as
other communication to stockholders in such quantities as the Company and the
distributor for the Variable Account's shares shall reasonably require for
distributing to Contract owners and prospective Contract owners. Copies of such
material for distribution to Contract owners shall be provided to the Company at
the Fund's expense.
2.4 The Company will provide to the Fund at least one complete copy
of all registration statements, prospectuses, Statements of Additional
Information, reports, solicitations for voting instructions, sales literature
and other promotional materials, applications for exemptions, request for no-
action letters, and all amendments to any of the above, that relate to the
Contracts or the Variable Account, contemporaneously with, or promptly after,
the filing of such document with the SEC or other regulatory authorities.
2.5 For purposes of this Article II, the phrase "sales literature or
other promotional materials" includes, but is not limited to, advertisements
(such as material published, or designed for use in, a newspaper, magazine, or
other periodical, radio, television, telephone or tape recording, videotape
display, signs or billboards, motion pictures, or other public media), sales
literature (i.e., any written communication distributed or made generally
available to customers or the public, including brochures, circulars, research
reports, market letters, form letters, seminar texts, reprints or excerpts of
any other advertisement, sales literature, or published articles), educational
or training materials or other communications distributed or made generally
available to some or all agents or employees, and registration statements,
prospectuses, Statements of Additional Information, shareholder reports, and
proxy materials.
ARTICLE III
EXPENSES
3.1 All expenses incident to the performance of the Fund under this
Agreement shall be paid by the Fund (or the Fund will contract for a third party
to bear such expenses). The Fund shall ensure that all of its shares which are
subject to this Agreement are registered and authorized for issuance in
accordance with applicable federal and state laws prior to their purchase by the
Variable Account. Except as otherwise provided by the separate written
agreement (the "Omnibus Agreement") among the Company, The Chase Manhattan Bank,
N.A., Vista Broker-Dealer Services, Inc., Anchor National Life Insurance Company
and the Company dated February 28, 1995, the Company shall bear none of the
expenses for the cost of registration of the Fund's shares, preparation of the
Fund's prospectuses, proxy materials and reports, the distribution of such items
to shareholders, the preparation of all statements and notices required by any
federal or state law or any taxes on the issue or transfer of the Fund's shares
subject to this Agreement. The Fund's prospectus shall state that the Statement
of Additional Information for the Fund is available from the Company or the
distributor for the Contracts, and the Fund, at its expense, shall print and
provide such statement free of charge to the Company or the distributor for the
Contracts for distribution to any Contract Owner or prospective Contract Owner
who requests such statement.
ARTICLE IV
VOTING
4.1 The Company shall provide pass-through voting privileges to all
variable Contract owners so long as the SEC continues to interpret the 1940 Act
to require pass-through voting privileges for variable Contract owners. The
Company will vote shares for which it has not received voting instructions in
the same proportion as it votes shares for which it has received instructions.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
<PAGE> 4
5.1 The Company represents and warrants that the Contracts are or
will be registered under the 1933 Act and have been duly authorized for
issuance. The Company further represents and warrants that it is an insurance
company duly organized and in good standing under the laws of the State of
California and that it has legally and validly established the Variable Account
prior to any issuance or sale thereof as a segregated asset account under the
California Insurance Code and has registered or, prior to any issuance or sale
of the Contracts, will register the Variable Account as a unit investment trust
in accordance with the provisions of the 1940 Act to serve as a segregated
investment account for the Contracts and that the Variable Account will comply
in all material respects with the 1940 Act.
5.2 The Fund represents and warrants that Fund shares sold through
this Agreement shall be registered under the 1933 Act, shall be duly authorized
for issuance and sold in compliance with all applicable federal and state
securities laws and that the Fund is and shall remain registered under the 1940
Act. The Fund shall amend the Registration Statement for its shares under the
1933 Act and the 1940 Act from time to time as required in order to effect the
continuous offering of its shares. The Fund represents that it is lawfully
organized and validly existing as a business trust under the laws of Delaware
and that it does and will comply in all material respects with the 1940 Act.
5.3 The Fund represents and warrants that it will at all times be
operated and managed (a) in compliance with all applicable federal and state
laws; (b) in compliance with the policies and procedures of the Fund and in
compliance with the objectives, policies and limitations for the Portfolio(s)
set forth in the Fund's current prospectus and statement of additional
information; (c) so as not to preclude either the treatment of the Contracts as
annuity contracts for purposes of the Internal Revenue Code of 1986, as amended
(the "Code"), or the eligibility of the Contracts to qualify for sale to the
public in any state where they may otherwise be sold; and (d) to minimize any
taxes and/or penalties payable by the Fund or such Portfolio. Without limiting
the scope of the foregoing, the Fund represents and warrants (i) qualification,
election and maintenance of such election by each Portfolio to be treated as a
"regulated investment company" pursuant to Section 851 of the Code, and (ii)
compliance with (aa) the provisions of the 1940 Act, and the rules adopted
thereunder; (bb) the diversification requirements of Section 817(h) of the Code
and regulations thereunder as set forth in guidelines provided by the Company
from time to time; (cc) applicable state insurance laws; (dd) applicable federal
and state securities, commodities and banking laws; and (ee) the distribution
requirements necessary to avoid payment of any excise tax pursuant to Section
4982 of the Code. The Fund will notify the Company immediately upon having a
reasonable basis for believing it will not be operated and managed as set forth
in this paragraph 5.3.
5.4 The Fund represents that the Fund's investment policies, fees and
expenses are and shall at all times remain in compliance with the laws of the
State of California and the Fund represents that its operations are and shall at
all times remain in material compliance with the laws of the State of California
to the extent required to perform this Agreement.
5.5 The Fund represents and warrants that all of its Directors,
officers, employees, investment advisers, and other persons dealing with the
money or securities of the Fund are and shall continue to be at all times
covered by a blanket fidelity bond or similar coverage for the benefit of the
Fund in an amount not less than the minimal coverage as required currently by
Section 17(g) of the 1940 Act or related provisions as may be promulgated from
time to time. The aforesaid bond shall include coverage for larceny and
embezzlement and shall be issued by a reputable bonding company.
5.6 The Fund represents and warrants that no shares of any Portfolio
will be sold to the general public. The Fund further represents and warrants
that its shares will be offered or sold solely to separate accounts of the
Company or an affiliated insurance company thereof for a period of seven years
commencing March 1, 1995; provided, however, if the investment adviser to the
Fund has given six months written notice to the Company on any date after
September 1, 1988, the Fund may offer or sell its shares to separate accounts of
insurance companies unaffiliated with the Company. The Fund may also offer its
shares to insurance companies unaffiliated with the Company if, and only if, (i)
the products distributed
<PAGE> 5
by such separate account is not sold in any bank branches of the investment
adviser to the Fund, (ii) neither the Fund's investment adviser nor any party
selected by it acts as distributor, business manager or administrator for the
product; (iii) neither the name of the Fund's investment adviser nor the Vista
name is used in connection with the product except as necessary to identify the
role of the Fund's investment adviser as adviser or subadviser; and (iv) the
Fund's investment adviser does not act as investment adviser or subadviser for
more than one series out of five in any such variable annuity product, excluding
any cash or money market fund.
ARTICLE VI
INDEMNIFICATION
6.1 The Company agrees to indemnify and hold harmless the Fund and
each of its Trustees and officers and each person, if any, who controls the Fund
within the meaning of Section 15 of the 1933 Act against any and all losses,
claims, damages, liabilities or litigation (including reasonable legal and other
expenses) to which the Fund or such Trustees, officers or controlling person may
become subject under the 1933 Act , under any other statute, at common law or
otherwise, arising out of the acquisition of the Contracts by any person which
(i) may be based upon any breach of this Agreement by the Company, any of its
employees or representatives (other than an insurance agent), (ii) may be based
upon a breach of the representations and warranties made by the Company in this
Agreement, (iii) may be based on any untrue statement or alleged untrue
statement of a material fact contained in a registration statement or prospectus
covering the Contracts, or any amendments or supplement thereto, or the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, unless such
statement or omission was made in reliance upon information furnished to the
Company by or on behalf of the Fund, or (iv) may be based on any untrue
statement or alleged untrue statement of material fact contained in a
registration statement or prospectus covering the Fund, or any amendment or
supplement thereto, or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statement
or statements therein not misleading, if such statement or omission was made in
reliance upon information furnished to the Fund by or on behalf of the Company;
provided, however, that in no case (a) is the Company's indemnity in favor of a
Trustee or officer or any other person deemed to protect such Trustee or officer
or other person against any liability to which any such person would otherwise
be subject by reason of willful misfeasance, bad faith, or gross negligence in
the performance of his or her duties or by reason of his or her reckless
disregard of obligations and duties under this Agreement, or (b) is the Company
to be liable under its indemnity agreement contained in this paragraph 6.1 with
respect to any claim made against the Fund or any person indemnified unless the
Fund or such person, as the case may be, shall have notified the Company in
writing pursuant to paragraph 8.1 of this Agreement within a reasonable time
after the summons or other first legal process giving information of the nature
of the claims shall have been served upon the Fund or upon such other person (or
after the Fund or such person shall have received notice of such service on any
designated agent), but failure to notify the Company of any such claim shall not
relieve the Company from any liability which it may have to the Fund or any
person against whom such action is brought otherwise than on account of its
indemnity agreement contained in this paragraph 6.1. The Company shall be
entitled to participate, at its own expense, in the defense, or, if it so
elects, to assume the defense of any suit which could result in liability to it
under this paragraph 6.1, but if the Company elects to assume the defense, such
defense shall be conducted by counsel chosen by it and reasonably satisfactory
to the Fund and to such of its officers, Trustees, and controlling person or
persons as may be defendants in the suit. In the event that the Company elects
to assume the defense of any such suit and retain such counsel, the Fund, such
Trustees, officers and controlling person or persons shall bear the fees and
expenses of any additional counsel retained by them, but, in the case the
Company does not elect to assume the defense of any such suit, the Company will
reimburse the Fund, such officers, Trustees, and controlling person or persons
for the reasonable fees and expenses of any counsel retained by them. The Fund
agrees promptly to notify the Company pursuant to paragraph 8.1 of this
Agreement of the commencement of any litigation or proceedings against it or its
officers or Trustees in connection with the issue and sale of any Contracts.
<PAGE> 6
6.2 The Fund agrees to indemnify and hold harmless the Company and
its affiliates and each of their Directors and officers and each person, if any,
who controls the Company within the meaning of Section 15 of the 1933 Act
against any and all losses, claims, damages, liabilities or litigation
(including reasonable legal and other expenses) to which it or such Directors,
officers or controlling person may become subject under the 1933 Act, under any
other statute, at common law or otherwise, arising out of the acquisition of any
shares of the Fund by any person which (i) may be based upon any breach of this
Agreement by the Fund or any of its employees or representatives, (ii) may be
based upon any breach of the representations and warranties made by the Fund in
this Agreement (iii) may be based upon any untrue statement or alleged untrue
statement of a material fact contained in a registration statement or prospectus
covering shares of the Fund or any amendment thereof or supplement thereto, or
the omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading,
unless such statement or omission was made in reliance upon information
furnished to the Fund by the Company, or (iv) may be based on any untrue
statement or alleged untrue statement of a material fact contained in a
registration statement or prospectus covering the Contracts, or any amendment or
supplement thereto, or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statement
or statements therein not misleading, if such statement or omission was made in
reliance upon information furnished to the Company by or on behalf of the Fund;
provided, however, that in no case (a) is the Fund's indemnity in favor of a
Director or officer or any other person deemed to protect such Director or
officer or other person against any liability to which any such person would
otherwise be subject by reason of willful misfeasance, bad faith, or gross
negligence in the performance of his or her duties or by reason of his or her
reckless disregard of obligations and duties under this Agreement or (b) is the
Fund to be liable under its indemnity agreement contained in this paragraph 6.2
with respect to any claims made against the Company or such person indemnified
unless the Company or such person, as the case may be, shall have notified the
Fund in writing pursuant to paragraph 8.1 of this Agreement within a reasonable
time after the summons or the first legal process giving information of the
nature of the claim shall have been served upon the Company or such other person
(or after the Company or such person shall have received notice of such service
on any designated agent), but failure to notify the Fund of any claim shall not
relieve it from any liability which it may have to the Company or any person
against whom such action is brought otherwise than on account of its indemnity
agreement contained in this paragraph 6.2. The Fund will be entitled to
participate, at its own expense, in the defense, or, if it so elects, to assume
the defense of any suit which could result in liability to it under this
paragraph 6.2, but, if the Fund elects to assume the defense, such defense shall
be conducted by counsel chosen by it and reasonably satisfactory to the Company
and to such of its Directors, officers and controlling person or persons as may
be defendants in the suit. In the event that the Fund elects to assume the
defense of any such suit and retain such counsel, the Company, such Directors,
officers and controlling person or persons shall bear the fees and expenses of
any additional counsel retained by them, but, in the case the Fund does not
elect to assume the defense of any such suit, it will reimburse the Company,
such Directors, officers and controlling person or persons for the reasonable
fees and expenses of any counsel retained by them. The Company agrees promptly
to notify the Fund pursuant to paragraph 8.1 of this Agreement of the
commencement of any litigation or proceedings against it or any of its officers
or Directors in connection with the issue and sale of any shares of the Fund.
ARTICLE VII
Termination
7.1 This Agreement shall terminate:
(a) by mutual written consent of the Company and the Fund;
(b) after six years from March 1, 1995, at the option of the
Company or the Fund upon 60 days' advance written notice
to all other parties to this Agreement; or
<PAGE> 7
(c) at the option of the Company if any of the Fund's shares
are not reasonably available to meet the requirements of
the Contracts funded in the Variable Account as determined
by the Company; or
(d) at the option of the Company upon institution of formal
proceedings against the Fund by the SEC or any other
regulatory body; or
(e) at the option of the Fund upon institution of formal
proceedings against or with respect to the Variable
Account by the SEC or any other regulatory body; or
(f) upon the vote of Contract owners having an interest in a
particular Division of the Variable Account to substitute
the shares of another investment company for the
corresponding Portfolio shares in accordance with the
terms of the Contracts for which those shares had been
selected to serve as the underlying investment medium. The
Company will give 30 days' prior written notice to the
Fund of the date of any proposed action to replace the
Fund's shares; or
(g) in the event a Portfolio's shares are not registered,
issued or sold in accordance with applicable state and/or
federal law or such law precludes the use of such shares
as the underlying investment medium of the Contracts
funded in the Variable Account; provided, however, that
such termination shall only affect this Agreement's
applicability to such Portfolio; or
(h) at the option of the Company if the Fund (i) ceases to
qualify as a Regulated Investment Company under Subchapter
M of the Code or under any successor or similar provision,
or if the Company reasonably believes that the Fund may
fail to so qualify, (ii) fails to meet the diversification
requirements specified in paragraph 5.5 hereof, or (iii)
otherwise materially breaches this Agreement; or
(i) at the option of the Fund, upon material breach of this
Agreement by the Company; or
(j) at the option of the Fund, without payment of any amount,
for cause on not less than 60 days prior written notice to
the Company, unless such cause has been cured within 30
days of receiving such notice, for any one of the
following reasons:
(i) the acquisition of more than 50% of the common
stock, par value $1.00 per share, of SunAmerica Inc. by a
national bank holding company (as such term is defined
under the Bank Holding Company Act) or an asset management
company which acts as an investment adviser with respect
to mutual funds aggregating more than $15 billion in
assets (in each case where such entity is not controlled
by SunAmerica prior to such acquisition);
(ii) other than as required by law, a material change
in, or other material revision tot he Contracts not
previously accepted in writing by the Fund's investment
adviser; or
(iii) any material suspension or withdrawal, or revision
downward, of the Company's published claims paying ratings
below "A-" (or in the case of Moody's Investor Services,
below Baa3) by (A) any
<PAGE> 8
two of the following rating agencies: Standard & Poor's
Corporation, Duff & Phelps and Best's Insurance Reports
and (B) Moody's Investor Services.
Prompt notice shall be given by each party to all other parties in the
event that the conditions stated in subsections (c), (d), (e), (g), (h), (i) or
(j) of this paragraph 7.1 should occur.
7.2 Notwithstanding any termination of this Agreement under paragraph
7.1, the Fund shall, at the option of the Company, continue to make available
additional shares of the Fund pursuant to the terms and conditions of this
Agreement for all Contracts in effect on the effective date of termination of
this Agreement (hereinafter referred to as "Existing Contracts") for a period of
at least two years. The owners of the Existing Contracts shall be permitted to
reallocate investments in the Fund, redeem investments in the Fund or invest in
the Fund upon the making of additional purchase payments under the Existing
Contracts.
7.3 Notwithstanding any termination of this Agreement under this
paragraph 7.1, the provisions of paragraphs 6.1 and 6.2 (Indemnification) shall
survive any termination of this Agreement.
7.4 Notwithstanding any other provisions of this Agreement, the
obligations of the Fund hereunder are not personally binding upon any of the
trustees, shareholders, officers, employees or agents of the Fund; resort in
satisfaction of such obligations shall be had only to the assets and property of
the Fund and not to the private property of any of such Fund's trustees,
shareholders, officers, employees or agents.
ARTICLE VIII
Notices
8.1 Any notice shall be sufficiently given when sent by registered or
certified mail to the other party at the address of such party set forth below
or at such other address as such party may from time to time specify in writing
to the other party.
If to the Fund: Mutual Fund Variable Annuity Trust
125 W. 55th Street
New York, New York 10019
Attention: Vicky Preston
With a copy to: The Chase Manhattan Bank, N.A.
Two Chase Manhattan Plaza - 18th Floor
New York, New York 10081
Attention: Mark Rapp
Vice President
If to the Company: SunAmerica Inc.
1 SunAmerica Center
Century City
Los Angeles, California 90067-6022
Attention: Jim Rowan
Vice President
With a copy to: SunAmerica Inc.
1 SunAmerica Center
Los Angeles, California 90067-6022
Attention: Susan L. Harris
Vice President,
General Counsel-Corporate
Affairs & Secretary
ARTICLE IX
Miscellaneous
9.1 This Agreement shall be construed in accordance with the laws of
the State of California.
<PAGE> 9
9.2 The captions in this Agreement are included for convenience of
reference only and in no way define or delineate any of the provisions hereof or
otherwise affect their construction or effect.
9.3 If any provision of this Agreement shall be held or made invalid
by a court decision, statute, rule or otherwise, the remainder of the Agreement
shall not be affected thereby.
9.4 The rights, remedies and obligations contained in this Agreement
are cumulative and are in addition to any and all rights, remedies and
obligations, at law or in equity, which the parties hereto are entitled to under
state and federal laws.
9.5 This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
ANCHOR NATIONAL LIFE INSURANCE COMPANY
By:
-------------------------------------
Susan L. Harris, Senior Vice President
VARIABLE ANNUITY ACCOUNT TWO - T
By: ANCHOR NATIONAL LIFE INSURANCE COMPANY
By:
-------------------------------------
Susan L. Harris, Senior Vice President
MUTUAL FUND VARIABLE ANNUITY TRUST
By:
-------------------------------------
<PAGE> 1
EXHIBIT 10
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in the Prospectus constituting part of this
Registration Statement on Form S-1 and Form N-4 for Variable Annuity Account
Two-T of Anchor National Life Insurance Company, of our report dated November 9,
1994 relating to the consolidated financial statements of Anchor National Life
Insurance Company, which appears in such Prospectus. We also consent to the
reference to us under the heading "Independent Accountants" in such Prospectus.
In addition, we consent to the reference to us under the heading "Financial
Statements" in the Statement of Additional Information.
PRICE WATERHOUSE LLP
Los Angeles, California
November 6, 1995
<PAGE> 1
EXHIBIT 14
SunAmerica Inc. (a Maryland corporation) owns 100% of SunAmerica Funding Corp.
(a Delaware corporation); SunAmerica Financial, Inc. (a Georgia corporation);
Resources Trust Company (a Colorado corporation); SunAmerica Life Insurance
Company (an Arizona corporation); Imperial Premium Finance, Inc. (a Delaware
corporation); IPF Funding Corp. (a Delaware corporation); SA Investment Group,
Inc. (a California corporation); SunAmerica Capital Trust I (a Delaware business
trust); SunAmerica Capital Trust II (a Delaware business trust); SunAmerica
Capital Trust III (a Delaware business trust); and SunAmerica Capital Trust IV
(a Delaware business trust). In addition, SunAmerica Inc. owns 80% of AMSUN
Realty Holdings (a California corporation).
SunAmerica Financial, Inc. owns 100% of SunAmerica Marketing, Inc. (a Maryland
corporation); SunAmerica Advertising, Inc. (a Georgia corporation); SunAmerica
Investments, Inc. (a Delaware corporation) which owns 100% of Accelerated
Capital Corp. (a Florida corporation; 1401 Sepulveda Corp. (a California
corporation); SunAmerica Louisiana Properties, Inc. (a California corporation);
SunAmerica Real Estate and Office Administration, Inc. (a Delaware corporation);
SunAmerica Affordable Housing Partners, Inc. (a California corporation);
SUN-PLA, Inc. (a California corporation); Hampden I & II Corp. (a California
corporation); SUN-PENN, Inc. (a California corporation); Sun-Duke, Inc. (a
California corporation); Sunport Holdings, Inc. (a California corporation) which
owns 100% of Sunport Property Co. (a Florida corporation); Sun Chino Property,
Inc. (a California corporation); SunAmerica Mortgages, Inc. (a Delaware
corporation); Sun Riverchase, Inc. (a California corporation); Sun Princeton II,
Inc. (a California corporation) which owns 100% of Sun Princeton I (a California
corporation); SunAmerica Planning, Inc. (a Maryland corporation); Sun Mexico
Holdings, Inc. (a Delaware corporation) which owns 100% of Sun Cancun I, Inc. (a
Delaware corporation), Sun Cancun II, Inc. (a Delaware corporation), Sun Ixtapa
I, Inc. (a Delaware corporation) and Sun Ixtapa II, Inc. (a Delaware
corporation); Sun Hechs, Inc. (a California corporation); and KBHS, Inc. (a
California corporation) which owns 100% of Kaufman and Broad Home Systems of
Texas, Inc. (a Texas corporation) and 70% of Home Systems Partners (a California
limited partnership) which owns 100% of Extraneous Holdings Corp. (a Delaware
corporation). SunAmerica Planning, Inc. owns 100% of SunAmerica Securities,
Inc. (a Delaware corporation) which owns 100% of Anchor Insurance Services, Inc.
(a Hawaii corporation) which owns The Producers' Edge Insurance Agency Inc. (a
California corporation).
SunAmerica Life Insurance Company owns 100% of First SunAmerica Life Insurance
Company (a New York corporation); SunAmerica National Life Insurance Company (an
Arizona corporation); Anchor National Life Insurance Company (a California
corporation) which owns 100% of Anchor Pathway Fund, Anchor Series Trust,
SunAmerica Series Trust (all Massachusetts business trusts); UG Corporation (a
Georgia corporation); Export Leasing FSC, Inc. (a U.S. Virgin Islands
corporation); SunAmerica Virginia Properties, Inc. (a California corporation);
SAL Investment Group (a California corporation); and Saamsun Holding Corporation
(a Delaware corporation). Saamsun Holding Corporation owns 100% of SAM Holdings
Corporation (a California corporation) which owns 100% of SunAmerica Asset
Management Corp. (a Delaware corporation), Anchor Investment Adviser,
Incorporated (a Maryland corporation), SunAmerica Capital Services, Inc. (a
Delaware corporation); SunAmerica Fund Services, Inc. (a Delaware corporation),
ANF Property Holdings, Inc. (a California corporation), Capitol Life Mortgage
Corp. (a Delaware corporation) and Sun Royal Holdings Corporation (a California
corporation). Sun Royal Holdings Corporation and Anchor Insurance Services,
Inc. each owns 50% of Royal Alliance Associates, Inc. (a Delaware corporation).
In addition, SunAmerica Life Insurance Company owns 80% of SunAmerica Realty
Partners (a California corporation) and 33% of New California Life Holdings,
Inc. (a Delaware corporation) which owns 100% of Aurora National Life Assurance
Company (a California corporation) and Premier Life Insurance Company (a
Pennsylvania corporation).
Imperial Premium Finance, Inc. (Delaware) owns 100% of Imperial Premium Finance,
Inc. (a California corporation); Imperial Premium Funding, Inc. (a Delaware
corporation); and SunAmerica Financial Resources, Inc. (a Delaware corporation).
