<PAGE> 1
Registration No. 33-65339
811-07463
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Pre-Effective Amendment No. 1
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 1
THE TRAVELERS FUND ABD II FOR VARIABLE ANNUITIES
------------------------------------------------
(Exact name of Registrant)
THE TRAVELERS LIFE AND ANNUITY COMPANY
--------------------------------------
(Name of Depositor)
ONE TOWER SQUARE, HARTFORD, CONNECTICUT 06183
----------------------------------------------
(Address of Depositor's Principal Executive Offices)
Depositor's Telephone Number, including area code: (860) 277-0111
--------------
KATHLEEN A. McGAH
Assistant Secretary
The Travelers Life and Annuity Company
One Tower Square
Hartford, Connecticut 06183
----------------------------
(Name and Address of Agent for Service)
<TABLE>
<S> <C>
Approximate Date of Proposed Public Offering: As soon as practicable after effectiveness
of Registration Statement.
</TABLE>
It is proposed that this filing will become effective (check appropriate box):
N/A immediately upon filing pursuant to paragraph (b) of Rule 485
- ------------
N/A on pursuant to paragraph (b) of Rule 485
- ------------ -----------
N/A 60 days after filing pursuant to paragraph (a)(1) of Rule 485
- ------------
N/A on pursuant to paragraph (a)(1) of Rule 485
- ------------ -----------
If appropriate, check the following box:
______ this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
Pursuant to Rule 24f-2 of the Investment Company Act of 1940, the Registrant
hereby declares that an indefinite amount of Variable Annuity Contracts is
being registered under the Securities Act of 1933. Amount of registration fee:
$500.
<PAGE> 2
THE TRAVELERS FUND ABD II FOR VARIABLE ANNUITIES
Cross-Reference Sheet
Form N-4
<TABLE>
<CAPTION>
ITEM
NO. CAPTION IN PROSPECTUS
- --- ---------------------
<S> <C> <C>
1. Cover Page Prospectus
2. Definitions Glossary of Special Terms
3. Synopsis Prospectus Summary
4. Condensed Financial Information Not Applicable
5. General Description of Registrant, The Insurance Company; The Separate
Depositor, and Portfolio Companies Account and the Funding Options; Voting
Rights
6. Deductions (and Expenses) Fee Table; Charges and Deductions;
Distribution of Variable Annuity Contracts
7. General Description of Variable The Contract; Ownership Provisions; Transfers
Annuity Contracts
8. Annuity Period The Annuity Period; Payment Options
9. Death Benefit Death Benefit
10. Purchases and Contract Value The Contract
11. Redemptions Surrenders and Redemptions; Miscellaneous
Contract Provisions; The Contract
12. Taxes Federal Tax Considerations
13. Legal Proceedings Legal Proceedings and Opinions
14. Table of Contents of Statement Appendix C
of Additional Information
<CAPTION>
CAPTION IN STATEMENT OF ADDITIONAL
INFORMATION
---------------------------------------------------
<S> <C> <C>
15. Cover Page Statement of Additional Information
16. Table of Contents Table of Contents
17. General Information and History The Insurance Company
18. Services Principal Underwriter; Distribution and
Management Agreement
19. Purchase of Securities Being Offered Valuation of Assets
20. Underwriters Principal Underwriter
21. Calculation of Performance Data Performance Information
22. Annuity Payments Not Applicable
23. Financial Statements Financial Statements
</TABLE>
<PAGE> 3
PART A
INFORMATION REQUIRED IN A PROSPECTUS
<PAGE> 4
THE TRAVELERS FUND ABD II FOR VARIABLE ANNUITIES
PROSPECTUS
This Prospectus describes an individual flexible premium variable annuity
contract (the "Contract") offered by The Travelers Life and Annuity Company (the
"Company"). The Contract is currently available for use in connection with (1)
individual nonqualified purchases; (2) Individual Retirement Annuities (IRAs)
pursuant to Section 408 of the Internal Revenue Code of 1986, as amended (the
"Code"); and (3) qualified retirement plans. Qualified contracts include
contracts qualifying under Section 401(a), 403(b), or 408(b) of the Code.
Purchase Payments made under the Contract will accumulate on a fixed and/or a
variable basis, as selected by you. If on a variable basis, the value of the
Contract prior to the Maturity Date will vary continuously to reflect the
investment experience of the underlying funds (the "Funding Options") available
under The Travelers Fund ABD II for Variable Annuities ("Fund ABD II"). The
Funding Options currently available are: Capital Appreciation Fund; Cash Income
Trust; Alliance Growth Portfolio, MFS Total Return Portfolio and Putnam
Diversified Income Portfolio of the Travelers Series Fund, Inc. A Fixed Account
Option is also available and is described in Appendix A. Unless specified
otherwise, this prospectus refers to the Funding Options.
This Prospectus provides the information about Fund ABD II that you should know
before investing. Please read it and retain it for future reference. Additional
information about Fund
ABD II is contained in a Statement of Additional Information ("SAI") dated
which has been filed with the Securities and Exchange Commission
("SEC") and is incorporated by reference into this Prospectus. A copy may be
obtained, without charge, by writing to The Travelers Life and Annuity Company,
Annuity Investor Services, One Tower Square, Hartford, Connecticut 06183-9061,
or by calling 1-800-842-8573. The Table of Contents of the SAI appears in
Appendix C of this Prospectus.
THIS PROSPECTUS IS VALID ONLY WHEN ACCOMPANIED BY THE CURRENT PROSPECTUSES FOR
THE UNDERLYING FUNDS. BOTH THIS CONTRACT PROSPECTUS AND THE UNDERLYING FUND
PROSPECTUSES SHOULD BE READ AND RETAINED FOR FUTURE REFERENCE.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
VARIABLE ANNUITY CONTRACTS ARE NOT DEPOSITS OR OBLIGATIONS OF, OR ENDORSED OR
GUARANTEED BY ANY BANK, NOR ARE THEY FEDERALLY INSURED OR OTHERWISE PROTECTED BY
THE FDIC, THE FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY; THEY ARE SUBJECT TO
INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL INVESTMENT.
THIS PROSPECTUS IS DATED .
<PAGE> 5
TABLE OF CONTENTS
<TABLE>
<S> <C>
GLOSSARY OF SPECIAL TERMS.............................................................. 4
PROSPECTUS SUMMARY..................................................................... 6
FEE TABLE.............................................................................. 8
THE INSURANCE COMPANY.................................................................. 10
THE SEPARATE ACCOUNT AND THE FUNDING OPTIONS........................................... 10
The Travelers Fund ABD II For Variable Annuities (Fund ABD II)....................... 10
The Funding Options.................................................................. 10
Funding Option Investment Managers................................................... 11
Substitutions and Additions.......................................................... 11
PERFORMANCE INFORMATION................................................................ 11
THE CONTRACT........................................................................... 11
Purchase Payments.................................................................... 12
Right to Return...................................................................... 12
Accumulation Units................................................................... 12
CHARGES AND DEDUCTIONS................................................................. 12
Contingent Deferred Sales Charge..................................................... 12
Administrative Charges............................................................... 13
Mortality and Expense Risk Charge.................................................... 14
Reduction or Elimination of Contract Charges......................................... 14
Funding Option Charges............................................................... 14
Premium Tax.......................................................................... 14
Changes in Taxes Based Upon Premium or Value......................................... 14
OWNERSHIP PROVISIONS................................................................... 14
Types of Ownership................................................................... 14
Beneficiary.......................................................................... 15
Annuitant............................................................................ 15
TRANSFERS.............................................................................. 15
Dollar-Cost Averaging (Automated Transfers).......................................... 16
Telephone Transfers.................................................................. 16
SURRENDERS AND REDEMPTIONS............................................................. 16
Systematic Withdrawals............................................................... 17
DEATH BENEFIT.......................................................................... 17
Death Proceeds Prior to the Maturity Date............................................ 18
Death Proceeds After the Maturity Date............................................... 18
THE ANNUITY PERIOD..................................................................... 18
Maturity Date........................................................................ 18
Allocation of Annuity................................................................ 18
Variable Annuity..................................................................... 19
Fixed Annuity........................................................................ 19
PAYMENT OPTIONS........................................................................ 19
Election of Options.................................................................. 19
</TABLE>
2
<PAGE> 6
<TABLE>
<S> <C>
Annuity Options...................................................................... 20
Income Options....................................................................... 20
MISCELLANEOUS CONTRACT PROVISIONS...................................................... 21
Termination.......................................................................... 21
Misstatement......................................................................... 21
Required Reports..................................................................... 21
Suspension of Payments............................................................... 21
Transfers of Contract Values to other Securities..................................... 22
FEDERAL TAX CONSIDERATIONS............................................................. 22
General Taxation of Annuities........................................................ 22
Tax Law Diversification Requirements for Variable Annuities.......................... 22
Ownership of the Investments......................................................... 22
Penalty Tax for Premature Distributions.............................................. 23
Mandatory Distributions for Qualified Plans.......................................... 23
Nonqualified Annuity Contracts....................................................... 23
Individual Retirement Annuities...................................................... 23
Qualified Pension and Profit-Sharing Plans........................................... 24
Federal Income Tax Withholding....................................................... 24
VOTING RIGHTS.......................................................................... 25
DISTRIBUTION OF VARIABLE ANNUITY CONTRACTS............................................. 25
Conformity with State and Federal Laws............................................... 25
LEGAL PROCEEDINGS AND OPINIONS......................................................... 26
APPENDIX A: THE FIXED ACCOUNT.......................................................... 27
APPENDIX B: Contracts issued in the State of Florida................................... 28
APPENDIX C: Table of Contents of the Statement of Additional Information............... 29
</TABLE>
3
<PAGE> 7
GLOSSARY OF SPECIAL TERMS
- --------------------------------------------------------------------------------
ACCUMULATION UNIT -- an accounting unit of measure used to calculate the value
of a Contract before Annuity Payments begin.
ACCUMULATION UNIT VALUE -- the dollar amount of an Accumulation Unit.
ANNUITANT -- the person on whose life this contract is issued and the amount of
the monthly Annuity Payments depend.
ANNUITY PAYMENTS -- a series of periodic payments (a) for life; (b) for life
with either a minimum number of payments or a determinable sum assured; or (c)
for the joint lifetime of the Annuitant and another person ("Contingent
Annuitant") and thereafter during the lifetime of the survivor.
ANNUITY UNIT -- an accounting unit of measure used to calculate the amount of
Annuity Payments.
CASH SURRENDER VALUE -- the amount payable to the Contract Owner or other payee
upon full or partial surrender of the Contract during the lifetime of the
Annuitant. The amount will be the contract value, less any applicable surrender
charge and any premium tax not previously deducted.
COMPANY -- (WE, OUR) -- The Travelers Life and Annuity Company.
COMPANY'S HOME OFFICE -- the principal offices of The Travelers Life and Annuity
Company located at One Tower Square, Hartford, Connecticut 06183-9061.
CONTRACT DATE -- the date on which the Contract, benefits and the contract
provisions become effective.
CONTRACT OWNER (YOU, YOUR) -- the person or entity to whom the Contract is
issued or assigned. A married spouse may be designated as the joint owner.
CONTRACT VALUE -- the current value of Accumulation Units credited to the
Contract and the Fixed Account less any administrative charges.
CONTRACT YEARS -- twelve-month periods beginning on the Contract Date.
FIXED ACCOUNT -- an additional account into which Purchase Payments may be
allocated and which is included in the Contract Value. Purchase Payments
allocated to the Fixed Account will earn interest at a rate guaranteed by the
Company; this rate will change from time to time.
FUNDING OPTION(S) -- the investment option(s) available under the Separate
Account.
HOME OFFICE -- The Travelers Life and Annuity Company, One Tower Square,
Hartford, CT 06183 INCOME PAYMENTS -- optional forms of payments made by the
Company which are based on an agreed-upon number of payments or payment amount.
MATURITY DATE -- the date on which the first Annuity or Income Payment is to
begin under a Contract.
PURCHASE PAYMENT -- a gross amount paid to the Company during the accumulation
period.
SEPARATE ACCOUNT -- assets set aside by the Company, the investment experience
of which is kept separate from that of other assets of the Company (Fund ABD
II).
SUB-ACCOUNT -- The portion of the assets of the Separate Account which is
allocated to a particular Funding Option.
VALUATION DATE -- generally, a day on which the Funding Option is valued. A
Valuation Date is any day on which the New York Stock Exchange is open for
trading. The value of Accumulation Units and Annuity Units will be determined as
of the close of trading on the New York Stock Exchange.
VALUATION PERIOD -- the period between the close of business on successive
Valuation Dates.
VARIABLE ANNUITY -- an annuity contract which provides for accumulation and for
Annuity Payments which vary in amount in accordance with the investment
experience of a Separate Account.
4
<PAGE> 8
Certain changes and elections must be made in writing to the Company. Where the
term "written request" is used, it means that written information must be sent
to the Company's Home Office in a form and content satisfactory to the Company.
5
<PAGE> 9
PROSPECTUS SUMMARY
- --------------------------------------------------------------------------------
INTRODUCTION
The Contract described in this Prospectus is both an insurance policy and a
security. As an insurance policy, it is subject to the insurance laws and
regulations of each state in which it is available for distribution. As a
security, it is subject to the federal securities laws. The Contract is an
individual flexible premium variable annuity. It allows you to allocate Purchase
Payments to any or all of the Funding Options currently available under Fund ABD
II, as well as to the Fixed Account. (See "The Funding Options" on page .)
An initial lump-sum Purchase Payment of at least $5,000 must be made to the
Contract; additional Purchase Payments of at least $500 may be made. In some
states, subsequent Purchase Payments are not allowed. (See "Purchase Payments,"
page .)
RIGHT TO RETURN
You may return the Contract and receive a full refund of the Contract Value
(including charges) within twenty days after the Contract is delivered to you,
unless state law requires a longer period. (See "Right to Return," page
.)
CHARGES AND EXPENSES
No sales charges are deducted from Purchase Payments when they are received.
However, a Contingent Deferred Sales Charge ("CDSC" or "surrender charge") may
apply if you make a full or partial surrender of the Contract Value during the
first seven years following each Purchase Payment. The maximum surrender charge
that could be assessed is 6% of the aggregate Purchase Payments made under the
Contract. (See "Contingent Deferred Sales Charge," page .)
Other charges include the contract administrative expense charge ($30 annually)
and a Sub-Account administrative expense charge (0.15% on an annual basis of the
average daily net asset value allocated to each Funding Options). (See
"Administrative Charges," page .) A mortality and expense risk charge,
equivalent on an annual basis to 1.25% of the daily net assets of amounts
allocated to each Funding Option will also be charged. (See "Mortality and
Expense Risk Charge," page .) If applicable, state premium taxes will
also be deducted and paid when due. (See "Premium Tax," page .)
TRANSFERS
Prior to the Maturity Date, you may reallocate the Cash Value among the Fixed
Account and any of the Sub-Accounts available under Fund ABD II. Transfers
between the variable Sub-Accounts are unlimited. Transfers between the Fixed
Account and any of the Sub-Accounts are subject to certain restrictions. (See
"Transfers," page , and "The Fixed Account," page .) Dollar-Cost
Averaging, or automated transfers, are also available. The minimum automated
transfer amount is $400. (See "Dollar Cost Averaging (Automated Transfers)," on
page .)
SURRENDERS
Prior to the Maturity Date, you may surrender all or part of the Contract Value
subject to certain charges and limitations. You will be liable for income tax on
the taxable portion of any full or partial surrender, and you may incur a 10%
tax penalty if such surrender is made prior to the age of 59 1/2. (See
"Surrenders and Redemptions," page and "Penalty Tax for Premature
Distributions" page .)
Systematic withdrawals of at least $100 on a monthly, quarterly, semiannual or
annual basis may be elected if your Contract Value is at least $15,000. All
applicable surrender charges and premium taxes will be deducted. (See
"Systematic Withdrawals," on page .)
6
<PAGE> 10
DEATH BENEFIT
A death benefit is payable to the Beneficiary upon the death of the Annuitant
prior to the Maturity Date with no Contingent Annuitant surviving. The death
benefit will vary based on the Annuitant's age at the time of death. (See "Death
Benefit," page .)
THE ANNUITY PERIOD
On the Maturity Date, or other agreed-upon payment date, the Company will
provide Annuity or Income Payments as described in the section entitled "The
Annuity Period." (See page .)
THE FIXED ACCOUNT
Although this Prospectus specifically applies only to the variable features of
the Contract, the Contract also allows you to allocate Purchase Payments to a
Fixed Account where they will earn interest at a rate guaranteed by the Company,
which interest rate will not be less than 3% per year. (See Appendix A.)
7
<PAGE> 11
FEE TABLE
- --------------------------------------------------------------------------------
FUND ABD II AND THE UNDERLYING FUNDING OPTIONS
The purpose of the Fee Table is to assist Contract Owners in understanding the
various costs and expenses that a Contract Owner will bear, directly or
indirectly, under the Contract. Additional information regarding the charges and
deductions assessed under the Contract can be found on page 12. Expenses shown
do not include premium taxes, which may be applicable. Information regarding the
charges and deductions assessed under the Contract can be found on page .
CONTRACT OWNER TRANSACTION EXPENSES
Contingent Deferred Sales Charge (as a percentage of purchase payments):
<TABLE>
<CAPTION>
----------------------------------------------------------------------------
LENGTH OF TIME FROM PURCHASE PAYMENT
(NUMBER OF YEARS) SURRENDER CHARGE
----------------------------------------------------------------------------
<S> <C>
1 6%
2 6%
3 5%
4 5%
5 4%
6 3%
7 2%
8 and thereafter 0%
Annual Contract Administrative Charge
(Waived if Contract Value is $40,000 or more) $ 30
</TABLE>
ANNUAL SEPARATE ACCOUNT CHARGES
(As a percentage of average daily net asset value of amounts held in the
Separate Account)
<TABLE>
<S> <C> <C>
Mortality and Expense Risk Fee 1.25%
Sub-Account Administrative Charge 0.15%
-----
TOTAL FUNDING OPTION CHARGES 1.40%
</TABLE>
FUNDING OPTION EXPENSES
(as a percentage of average daily net assets of the Funding Option)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
MANAGEMENT FEE OTHER EXPENSES TOTAL FUND
PORTFOLIO NAME (AS A PERCENTAGE OF ASSETS) (AFTER EXPENSES ARE REIMBURSED) OPTION EXPENSES
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Capital Appreciation Fund 0.75% 0.10% 0.85%
Cash Income Trust 0.32% 0.93%(1) 1.25%
Alliance Growth 0.80% 0.10%(2) 0.90%
MFS Total Return 0.80% 0.15%(2) 0.95%
Putnam Diversified Income 0.75% 0.22%(2) 0.97%
</TABLE>
(1) Other Expenses take into account the current expense reimbursement
arrangement with the Company. The Company has agreed to reimburse the Fund
for the amount by which its aggregate expenses (including the management
fee, but excluding brokerage commissions, interest charges and taxes)
exceeds 1.25%. Without such arrangement, Other Expenses would have been
7.37% for Cash Income Trust.
(2) Other expenses are as of October 31, 1995, (the Fund's fiscal year end)
taking into account the current expense limitations agreed to by the
Manager. The Manager waived all of its fees for the period and reimbursed
the Portfolios for their expenses. If such fees were not waived and expenses
were not reimbursed, Total Underlying Fund Expenses would have been as
follows: Alliance Growth Portfolio, 0.97%; Putnam Diversified Income
Portfolio, 1.31% and MFS Total Return Portfolio, 1.06%.
8
<PAGE> 12
EXAMPLE*
THE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
Assuming a 5% annual return, a $1,000 investment would be subject to the
following expenses, if surrendered or withdrawn at the end of the period shown.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
PORTFOLIO NAME 1 YEAR 3 YEARS 5 YEARS 10 YEARS
<CAPTION>
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Capital Appreciation Fund $ 83 $ 121 $ 161 $260
Cash Income Trust 87 133 181 300
Alliance Growth 83 122 164 265
MFS Total Return 84 124 166 270
Putnam Diversified Income 84 124 167 272
</TABLE>
If annuitized, or if no withdrawals are made at the end of the period shown, a
$1,000 investment would be subject to the following expenses:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
PORTFOLIO NAME 1 YEAR 3 YEARS 5 YEARS 10 YEARS
<CAPTION>
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Capital Appreciation Fund $ 23 $71 $ 121 $260
Cash Income Trust 27 83 141 300
Alliance Growth 23 72 124 265
MFS Total Return 24 74 126 270
Putnam Diversified Income 24 74 127 272
</TABLE>
* The Example reflects the $30 Annual Contract Fee as an annual charge of .016%
assets.
9
<PAGE> 13
THE INSURANCE COMPANY
- --------------------------------------------------------------------------------
The Travelers Life and Annuity Company (the "Company"), an indirect wholly owned
subsidiary of Travelers Group Inc., is a stock insurance company chartered in
1973 in Connecticut and continuously engaged in the insurance business since
that time. The Company is licensed to conduct a life insurance business in a
majority of the states of the United States and intends to become licensed in
the remaining states, except New York. The Company's Home Office is located at
One Tower Square, Hartford, Connecticut 06183.
THE SEPARATE ACCOUNT AND THE FUNDING OPTIONS
- --------------------------------------------------------------------------------
THE TRAVELERS FUND ABD II FOR VARIABLE ANNUITIES ("FUND ABD II")
Fund ABD II was established on October 17, 1995 and is registered with the
Securities and Exchange Commission as a unit investment trust under the
Investment Company Act of 1940, as amended (the "1940 Act"). The assets of Fund
ABD II will be invested exclusively in the shares of the Funding Options.
The assets of Fund ABD II are held for the exclusive benefit of the owners of
this separate account, according to the laws of Connecticut. Income, gains and
losses, whether or not realized, from assets allocated to Fund ABD II are, in
accordance with the Contracts, credited to or charged against Fund ABD II
without regard to other income, gains and losses of the Company. The assets held
by Fund ABD II are not chargeable with liabilities arising out of any other
business which the Company may conduct. Obligations under the Contract are
obligations of the Company.
All investment income and other distributions of the Funding Options are payable
to Fund ABD II. All such income and/or distributions are reinvested in shares of
the respective Funding Option at net asset value. Shares of the Funding Options
listed above are currently sold only to life insurance company separate accounts
to fund variable annuity and variable life insurance contracts. Fund shares are
not sold to the general public.
THE FUNDING OPTIONS
Purchase Payments are allocated to the Funding Options in accordance with the
selections made by the Contract Owner.
More detailed information about the options and their inherent risks may be
found in the current prospectuses for the Funding Options. These prospectuses
are included with and must accompany this Prospectus. Since there are varying
degrees of risk inherent in each option, please read them carefully before
investing. Additional copies of the prospectuses may be obtained by contacting
your registered representative or by calling 1-800-842-8573. Some of the Funding
Options may not be available in evey state due to various insurance regulations.
The current Funding Options are:
CAPITAL APPRECIATION FUND. The objective of the Capital Appreciation Fund is
growth of capital through the use of common stocks. Income is not an objective.
The Fund invests principally in common stocks of small to large companies which
are expected to experience wide fluctuations in price in both rising and
declining markets.
CASH INCOME TRUST. Cash Income Trust seeks to provide high current income while
emphasizing preservation of capital and maintaining a high degree liquidity by
investing in short-term money market securities deemed to present minimal credit
risks.
TRAVELERS SERIES FUND, INC.
ALLIANCE GROWTH PORTFOLIO. The objective of the Growth Portfolio is long-term
growth of capital by investing predominantly in equity securities of companies
with a favorable outlook for earnings and whose rate of growth is expected to
exceed that of the U.S. economy over time. Current income is only an incidental
consideration.
10
<PAGE> 14
PUTNAM DIVERSIFIED INCOME PORTFOLIO. The objective of the Diversified Income
Portfolio is to seek high current income consistent with preservation of
capital. The Portfolio will allocate its investments among the U.S. Government
Sector, the High Yield Sector, and the International Sector of the fixed income
securities markets.
MFS TOTAL RETURN PORTFOLIO. The Total Return Portfolio's objective is to obtain
above-average income (compared to a portfolio entirely invested in equity
securities) consistent with the prudent employment of capital. Generally, at
least 40% of the Portfolio's assets will be invested in equity securities.
FUNDING OPTION INVESTMENT MANAGERS:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
FUNDING OPTION INVESTMENT ADVISER SUB-ADVISER
- ----------------------------------------------------------------------------------------------
<S> <C> <C>
Capital Appreciation Fund The Travelers Investment Janus Capital Corporation
Management Company (TIMCO)
- ----------------------------------------------------------------------------------------------
Cash Income Trust Travelers Asset Management
International Corporation
("TAMIC")
- ----------------------------------------------------------------------------------------------
Alliance Growth Portfolio TAMIC Alliance Capital
Management L.P.
- ----------------------------------------------------------------------------------------------
MFS Total Return Portfolio TAMIC Massachusetts Financial
Services Company
- ----------------------------------------------------------------------------------------------
Putnam Diversified Income TAMIC Putnam Investment Management,
Portfolio Inc
- ----------------------------------------------------------------------------------------------
</TABLE>
SUBSTITUTIONS AND ADDITIONS
If any of the Funding Options become unavailable for allocating purchase
payments, or if, in our judgment further investment in a Funding Option becomes
inappropriate for the purposes of the Contract, we may substitute another
registered, open-end management investment company. Substitution may be made
with respect to both existing investments and the investment of any future
Purchase Payments. However, no such substitution will be made without notice to
Contract Owners, state approval if applicable, and without prior approval of the
SEC, to the extent required by the 1940 Act, or other applicable law. Additional
Funding Options may also be added.
PERFORMANCE INFORMATION
- --------------------------------------------------------------------------------
From time to time, the Company may advertise different types of historical
performance for the Funding Options available through Fund ABDII. The Company
may advertise the "standardized average annual total returns" of each,
calculated in a manner prescribed by the SEC, as well as the "non-standardized
total return," both described below.
"Standardized average annual total return" will show the percentage rate of
return of a hypothetical initial investment of $1,000 for the most recent one-,
five- and ten-year periods (or fractional periods thereof). This standardized
calculation reflects the deduction of all applicable charges made to the
Contract, except for premium taxes which may be imposed by certain states.
"Non-standardized total return" will be calculated in a similar manner, except
non-standardized total returns will not reflect the deduction of any applicable
Contingent Deferred Sales Charge or the $30 annual contract administrative
charge, which would decrease the level of performance shown if reflected in
these calculations.
Performance information may be quoted numerically or may be presented in a
table, graph or other illustration. Advertisements may include data comparing
performance to well-known indices of market performance (including, but not
limited to, the Dow Jones Industrial Average, the Standard & Poor's (S&P) 500
Index and the S&P 400 Index, the Lehman Brothers Long-T-Bond
11
<PAGE> 15
Index, the Russell 1000, 2000 and 3000 Indices, the Value Line Index, and the
Morgan Stanley Capital International's EAFE Index). Advertisements may also
include published editorial comments and performance rankings compiled by
independent organizations (including, but not limited to, Lipper Analytical
Services, Inc. and Morningstar, Inc.) and publications that monitor the
performance of Fund ABDII and the Funding Options.
The total return quotations are based upon historical earnings and are not
necessrily representative of future performance. A Contract Owner's Contract
Value at redemption may be more or less than original cost. The SAI contains
more detailed information about these performance calculations, including actual
examples of each type of performance advertised.
THE CONTRACT
- --------------------------------------------------------------------------------
Purchase Payments are paid to the Company and credited to the Contract Owner's
account to accumulate until the Maturity Date. The Contract Owner assumes the
risk of gain or loss according to the performance of the Sub-Account(s). There
is generally no guarantee that the Contract Value at the Maturity Date will
equal or exceed the total Purchase Payments made under the Contract, except as
specified or elected under the Death Benefit provisions described on
page .
PURCHASE PAYMENTS
The initial Purchase Payment must be at least $5,000. Additional payments of at
least $500 may be made under the Contract at any time. Under certain
circumstances, the Company may change the size of minimum initial Purchase
Payments and subsequent payments. In some states, subsequent Purchase Payments
may not be allowed.
The Company will apply the initial Purchase Payment within two business days
after its receipt at the Company's Home Office. Subsequent Purchase Payments
will be credited to a Contract on the basis of Accumulation Unit Values next
determined after receipt of the Purchase Payment.
RIGHT TO RETURN
You may return the Contract for a full refund of the Contract Value (including
charges) within twenty days after you receive it (the "free-look period"). Where
state law requires a longer free look period, or the return of Purchase
Payments, the Company will comply. The Contract Owner bears the investment risk
during the free-look period; therefore, the Contract Value returned may be
greater or less than your Purchase Payment. If the Contract is purchased as an
Individual Retirement Annuity, and is returned within the first seven days after
delivery, your Purchase Payment will be refunded in full; during the remainder
of the free-look period, the Contract Value (including charges) will be
refunded. All Contract Values will be determined as of the next valuation
following the Company's receipt of the Owner's written request for refund.
ACCUMULATION UNITS
The number of Accumulation Units to be credited to the Contract once a Purchase
Payment has been received by the Company is determined by dividing the amount
allocated to each Funding Option by the current applicable Accumulation Unit
Value. The value of an Accumulation Unit may increase or decrease. The value of
an Accumulation Unit on any date other than a Valuation Date will be equal to
its value as of the next succeeding Valuation Date.
The initial Accumulation Unit Value applicable to each Funding Option was
established at $1.00. The value of an Accumulation Unit on any Valuation Date is
determined by multiplying the value on the preceding Valuation Date by the net
investment factor for the Valuation Period just ended. The net investment
factor, calculated for each Funding Option takes into account the investment
performance, expenses and the deduction of certain expenses. The net investment
factor equation is described more fully in the SAI.
12
<PAGE> 16
CHARGES AND DEDUCTIONS
- --------------------------------------------------------------------------------
CONTINGENT DEFERRED SALES CHARGE
No sales charges are deducted from Purchase Payments when they are applied under
the Contract. However, a CDSC will be assessed if a full or partial surrender of
the Contract Value is made during the first seven years following a Purchase
Payment. The length of time from receipt of the Purchase Payment to the time of
surrender determines the amount of the charge.
The CDSC is equal to a percentage of the amount withdrawn from the Contract (not
to exceed the aggregate amount of Purchase Payments made) and is calculated as
follows:
<TABLE>
<CAPTION>
LENGTH OF TIME FROM
PURCHASE PAYMENT CONTINGENT DEFERRED
(NUMBER OF YEARS) SALES CHARGE
- ----------------------------------------------------
<S> <C>
1 6%
2 6%
3 5%
4 5%
5 4%
6 3%
7 2%
8 and thereafter 0%
</TABLE>
For purposes of determining the amount of any CDSC, surrenders will be deemed to
be taken first from any applicable free withdrawal amount (as described below);
next from remaining Purchase Payments (on a first-in, first-out basis); and then
from contract earnings (in excess of the free withdrawal amount). Unless the
Company receives other instructions, the CDSC will be deducted from the amount
requested.
No CDSC will be assessed (1) in the event of distributions resulting from the
death of the Contract Owner or the death of the Annuitant with no Contingent
Annuitant surviving; (2) if an annuity payout has begun; or (3) if an income
option of at least five years' duration is begun after the first Contract Year.
The purpose of this charge is to help defray expenses incurred in the sale of
the Contract, including commissions and other expenses associated with the
printing and distribution of prospectuses and sales material. However, the
Company expects that the CDSC assessed under the Contract will be insufficient
to cover these expenses; the difference will be covered by the general assets of
the Company which are attributable, in part, to mortality and expense risk
charges under the Contract which are described below.
FREE WITHDRAWAL ALLOWANCE. After the first Contract Year, surrenders of up to
10% of the Contract Value as of the end of the previous Contract Year are
available without imposition of a CDSC. The free withdrawal allowance applies to
partial surrenders of any amount and to full surrenders, except those full
surrenders transferred directly to annuity contracts issued by other financial
institutions.
ADMINISTRATIVE CHARGES
CONTRACT ADMINISTRATIVE CHARGE. An administrative charge of $30 will be
deducted annually from the Contract to compensate the Company for expenses
incurred in establishing and administering the Contract. The contract
administrative charge will be deducted from the Contract Value on the fourth
Friday of each August by canceling Accumulation Units applicable to each Funding
Option on a pro rata basis. This charge will be prorated from the date of
purchase to the next date of assessment of charge. A prorated charge will also
be assessed upon voluntary or involuntary surrender of the Contract. The
contract administrative charge will not be assessed if (1) the distribution
results from the death of the Contract Owner or the Annuitant with no Contingent
13
<PAGE> 17
Annuitant surviving, (2) after an annuity payout has begun, or (3) if the
Contract Value is equal to or greater than $40,000 on the charge assessment
date.
SUB-ACCOUNT ADMINISTRATIVE CHARGE. An administrative charge is deducted on each
Valuation Date from amounts allocated to the variable Funding Options in order
to compensate the Company for certain related administrative and operating
expenses. The charge is equivalent, on an annual basis, to 0.15% of the daily
net asset value allocated to each of the Funding Options.
Neither administrative charge can be increased. The charges are set at a level
which does not exceed the average expected cost of the administrative services
to be provided while the Contract is in force, and the Company does not expect
to profit from these charges.
MORTALITY AND EXPENSE RISK CHARGE
A mortality and expense risk charge is deducted on each Valuation Date from
amounts held in the Separate Account. This charge is equivalent, on an annual
basis, to 1.25% of the amounts allocated to each Funding Option. The Company
reserves the right to lower this charge at any time. The mortality risk portion
compensates the Company for guaranteeing to provide Annuity Payments according
to the terms of the Contract regardless of how long the Annuitant lives and for
guaranteeing to provide the death benefit if an Annuitant dies prior to the
Maturity Date. The expense risk charge compensates the Company for the risk that
the charges under the Contract, which cannot be increased during the duration of
the Contract, will be insufficient to cover actual costs.
If the amount deducted for mortality and expense risks is not sufficient to
cover the mortality costs and expense shortfalls, the loss is borne by the
Company. If the deduction is more than sufficient, the excess will be a profit
to the Company. The Company expects to make a profit from the mortality and
expense risk charge.
REDUCTION OR ELIMINATION OF CONTRACT CHARGES
The CDSC, the administrative charges, and the mortality and expense risk charge
under the Contract may be reduced or eliminated when certain sales of the
Contract result in savings or reduction of sales expenses, administrative or
mortality and expenses. The entitlement to such a reduction in the CDSC, the
administrative charges, or the mortality and expense risk charge will be based
on the following: (1) the size and type of group to which sales are to be made;
(2) the total amount of Purchase Payments to be received; and (3) any prior or
existing relationship with the Company. There may be other circumstances, of
which the Company is not presently aware, which could result in fewer sales
expenses, administrative charges, or mortality and expense risk charges. The
reduction or elimination of the CDSC, the administrative charge, or the
mortality expense charges will be permitted only where such reduction or
elimination will not be unfairly discriminatory to any person.
FUNDING OPTION CHARGES
Fund ABD II purchases shares of the Funding Options at net asset value. The net
asset value of each Funding Option reflects investment management fees and other
expenses deducted from the assets of the Funding Options. For a complete
description of these investment advisory fees and other expenses, refer to the
prospectuses for the Funding Options.
PREMIUM TAX
Certain state and local governments impose premium taxes. These taxes currently
range from 0.5% to 5.0%, depending upon jurisdiction. The Company, in its sole
discretion and in compliance with any applicable state law, will determine the
method used to recover premium tax expenses incurred. Where required, the
Company will deduct any applicable premium taxes from the Contract Value either
upon death, surrender, annuitization, or at the time Purchase Payments are made
to the Contract, but no earlier than when the Company has a tax liability under
state law.
14
<PAGE> 18
CHANGES IN TAXES BASED UPON PREMIUM OR VALUE
If there is any change in a law assessing taxes against the Company based upon
the premiums, the contract gains, or value of the contract, we reserve the right
to charge proportionately for this tax.
OWNERSHIP PROVISIONS
- --------------------------------------------------------------------------------
TYPES OF OWNERSHIP
CONTRACT OWNER. The Contract belongs to the Contract Owner designated on the
Contract Specifications page, or to any other person subsequently named pursuant
to a valid assignment. An assignment of ownership or a collateral assignment may
be made only for nonqualified contracts. The Contract Owner has sole power
during the Annuitant's lifetime to exercise any rights and to receive all
benefits given in the contract provided the Contract Owner has not named an
irrevocable beneficiary and provided the Contract is not assigned.
The Contract Owner is the recipient of all payments while the Annuitant is alive
unless the Contract Owner directs them to an alternate recipient. An alternate
recipient under a payment direction does not become the Contract Owner.
JOINT OWNER. For nonqualified contracts only, Joint Owners (i.e., married
spouses) may be named in a written request prior to the Contract Date. Joint
Owners may independently exercise transfers allowed under the contract. All
other rights of ownership must be exercised by joint action. Joint owners own
equal shares of any benefits accruing or payments made to them. All rights of a
Joint Owner end at death if the other Joint Owner survives. The entire interest
of the deceased Joint Owner in the Contract will pass to the surviving Joint
Owner.
BENEFICIARY
The Beneficiary is the party named by the Owner in a written request. The
Beneficiary has the right to receive any remaining contractual benefits upon the
death of the Annuitant or the Owner. If there is more than one Beneficiary
surviving the Annuitant, the Beneficiaries will share equally in benefits unless
different shares are recorded with the Company by written request prior to the
death of the Annuitant or Owner.
With nonqualified contracts, the Beneficiary may differ from the designated
beneficiary as defined in the Contract. The designated beneficiary may take the
contract benefits in lieu of the Beneficiary upon the death of the Contract
Owner.
Unless an irrevocable Beneficiary has been named, the Owner has the right to
change any Beneficiary by written request during the lifetime of the Annuitant
and while the Contract continues.
ANNUITANT
The Annuitant is designated on the Contract Specifications page, and is the
individual on whose life the Maturity Date and the amount of the monthly annuity
payments depend. The Annuitant may not be changed after the Contract Date.
For nonqualified contracts only, the Contract Owner may also name one individual
as a Contingent Annuitant by written request prior to the Contract Date. A
Contingent Annuitant may not be changed, deleted or added to the Contract after
the Contract Date.
If an Annuitant who is not also an Owner or a Joint Owner dies prior to the
Maturity Date while this Contract is in effect and while the Contingent
Annuitant is living:
1) the Contract Value will not be payable upon the Annuitant's death;
2) the Contingent Annuitant becomes the Annuitant; and
3) all other rights and benefits provided by this Contract will continue in
effect.
When a Contingent Annuitant becomes the Annuitant, the Maturity Date remains the
same as previously in effect, unless otherwise provided.
15
<PAGE> 19
TRANSFERS
- --------------------------------------------------------------------------------
Prior to the Maturity Date, the Contract Owner may transfer all or part of the
Contract Value between Funding Options. There are no charges or restrictions on
the amount or frequency of transfers currently; however, the Company reserves
the right to charge a fee for any transfer request, and to limit the number of
transfers to no more than one in any six-month period. Since different Funding
Options have different expenses, a transfer of Contract Values from one Funding
Option to another could result in a Contract Owner's investment becoming subject
to higher or lower expenses.
DOLLAR COST AVERAGING (AUTOMATED TRANSFERS)
Dollar cost averaging permits the Contract Owner to transfer a fixed dollar
amount to other Sub-Accounts on a monthly or quarterly basis so that more
Accumulation Units are purchased in a Sub-Account if the value per unit is low
and less Accumulation Units are purchased if the value per unit is high.
Therefore, a lower-than-average value per unit may be achieved over the long
run.
You may elect automated transfers through written request or other method
acceptable to the Company. You must have a minimum total Contract Value of
$5,000 to enroll in the Dollar Cost Averaging program. The minimum total
automated transfer amount is $400.
Certain restrictions apply for automated transfers from the Fixed Account that
do not apply to automated transfers from any of the other Sub-Accounts. You may
establish automated transfers of Contract Values from the Fixed Account.
Automated transfers from the Fixed Account may not deplete your Fixed Account
Value in a period of less than twelve months from your enrollment in the Dollar
Cost Averaging program.
You may start or stop participation in the Dollar Cost Averaging program at any
time, but you must give the Company at least 30 days' notice to change any
automated transfer instructions that are currently in place. Automated transfers
are subject to all of the other provisions and terms of the Contract, including
provisions relating to the transfer of money between investment options. The
Company reserves the right to suspend or modify transfer privileges at any time
and to assess a processing fee for this service.
Before transferring any part of the Contract Value, Contract Owners should
consider the risks involved in switching between investments available under
this Contract. Dollar cost averaging requires regular investments regardless of
fluctuating price levels, and does not guarantee profits or prevent losses in a
declining market. Potential investors should consider their financial ability to
continue purchases through periods of low price levels.
TELEPHONE TRANSFERS
A Contract Owner may place a transfer request via telephone. The telephone
transfer privilege is available automatically; no special election is necessary
for a Contract Owner to have this privilege. All transfers must be in accordance
with the terms of the Contract. Transfer instructions are currently accepted on
each Valuation Date between 9:00 a.m. and 4:00 p.m., Eastern time, at
1-800-842-8573. Once instructions have been accepted, they may not be rescinded;
however, new telephone instructions may be given the following day. If the
transfer instructions are not in good order, the Company will not execute the
transfer and will promptly notify the caller.
The Company will make a reasonable effort to record each telephone transfer
conversation, but in the event that no recording is effective or available, the
Contract Owner will remain liable for each telephone transfer effected.
Additionally, the Company is not liable for acting upon instructions believed to
be genuine and in accordance with the procedures described above. As a result of
this policy, the Contract Owner may bear the risk of loss in the event that the
Company follows instructions that prove to be fraudulent.
16
<PAGE> 20
SURRENDERS AND REDEMPTIONS
- --------------------------------------------------------------------------------
A Contract Owner may redeem all or any portion of the Cash Surrender Value at
any time prior to the Maturity Date. The Contract Owner must submit a written
request specifying the investment option(s) from which the surrender is to be
made. The Cash Surrender Value will be determined as of the next valuation
following receipt of the Owner's surrender request at the Company's Home Office.
The Cash Surrender Value may be more or less than the Purchase Payments made
depending on the Contract Value at the time of surrender.
The Company may defer payment of any Cash Surrender Value for a period of not
more than seven days after the request is received in the mail, but it is our
intent to pay as soon as possible. Requests for surrender that are not in good
order will not be processed until the deficiencies are corrected. The Company
will contact the Contract Owner to advise of the reason for the delay and what
is needed to act upon the surrender request.
SYSTEMATIC WITHDRAWALS
Prior to the Maturity Date, a Contract Owner may elect to take systematic
withdrawals by surrendering a specified dollar amount (at least $100) on a
monthly, quarterly, semiannual or annual basis. The election must be made on a
form provided by the Company. Any applicable surrender charges above the free
withdrawal allowance and any applicable premium taxes will be deducted. The
minimum Contract Value required to elect systematic withdrawals is $15,000 and
the election must be made on the form provided by the company. The Company will
process the withdrawals by surrendering on a pro-rata basis Accumulation Units
from all investment options in which the Contract Owner has an interest, unless
otherwise directed. The Contract Owner may begin or discontinue systematic
withdrawals at any time by notifying the Company in writing, but at least 30
days' notice must be given to change any systematic withdrawal instructions that
are currently in place.
The Company reserves the right to discontinue offering systematic withdrawals or
to assess a processing fee for this service upon 30 days' written notice to
Contract Owners.
Each systematic withdrawal is subject to federal income taxes on the taxable
portion. In addition, a 10% federal penalty tax may be assessed on systematic
withdrawals if the Contract Owner is under age 59 1/2. Contract Owners should
consult with their tax adviser regarding the tax consequences of systematic
withdrawals.
DEATH BENEFIT
- --------------------------------------------------------------------------------
Prior to the Maturity Date, a Death Benefit is payable to the Beneficiary when
either the Annuitant, you or the first of Joint Owners, dies and there is no
Contingent Annuitant. Death Benefits are payable upon the Company's receipt at
its Home Office of due proof of death. If the Company is notified of the
Annuitant's, Contract Owner's, or first of the Joint Owner's death more than six
months after the death, the Death Benefit will be the Contract Value. A
Beneficiary may request that a death benefit payable under the Contract be
applied to one of the settlement options available under the Contract. (See also
"Nonqualified Annuity Contracts," page .) See Appendix B for Contracts
issued in Florida.
For nonqualified contracts, if the Contract Owner (including the first of joint
owners) dies before the Maturity Date, a distribution may be required under the
minimum distribution requirements of the federal tax law. If so required, the
Company will recalculate the value of the Contract under the provisions of
"Death Proceeds Prior to the Maturity Date," below. The value of the Contract,
as recalculated, will be credited to the party taking distributions upon the
death of the Contract Owner with the Annuitant or Contingent Annuitant
surviving. This will generally be the surviving joint owner or otherwise the
Beneficiary in accordance with all the circumstances and the terms of the
Contract. This party may differ from the Beneficiary who was named by the Owner
in a written request and who would receive any remaining contractual benefits
upon the death of the
17
<PAGE> 21
Annuitant. This party may be paid in a single lump sum, or by other options, but
should take distributions as required by minimum distribution requirements of
the federal tax law.
If the Contract Owner's spouse is the surviving joint owner, the spouse may
elect to continue the Contract as owner in lieu of taking a distribution under
the Contract. (See, "Nonqualified Annuity Contracts," page .) In either
case, all references to age in the "Death Proceeds Prior to the Maturity Date"
section will be based on the Contract Owner's age rather than the Annuitant's
age.
DEATH PROCEEDS PRIOR TO THE MATURITY DATE
If the Annuitant dies before age 75 and before the Maturity Date, the Company
will pay to the Beneficiary an amount equal to the greatest of (1), (2) or (3)
below, each reduced by any applicable premium tax or prior surrenders not
previously deducted:
1) the Contract Value;
2) the total Purchase Payments made under the Contract; or
3) the Contract Value on the fifth contract year anniversary immediately
preceding the date on which the Company receives due proof of death.
If the Annuitant dies on or after age 75, but before age 85 (90 in Florida) and
before the Maturity Date, the Company will pay to the Beneficiary a death
benefit in an amount equal to the greatest of (1), (2) or (3) below, each
reduced by any applicable premium tax or prior surrenders not previously
deducted:
1) the Contract Value;
2) the total Purchase Payments made under the Contract; or
3) the Contract Value on the latest fifth contract year anniversary
occurring on or before the Annuitant's 75th birthday.
If the Annuitant dies on or after age 85 (prior to age 90 in Florida) and before
the Maturity Date, the Company will pay to the Beneficiary a death benefit in an
amount equal to the Contract Value, less any applicable premium tax.
DEATH PROCEEDS AFTER THE MATURITY DATE
If the Annuitant dies on or after the Maturity Date, the Company will pay the
Beneficiary a death benefit consisting of any benefit remaining under the
Annuity or Income Option then in effect.
THE ANNUITY PERIOD
- --------------------------------------------------------------------------------
MATURITY DATE
Annuity Payments will ordinarily begin on the Maturity Date stated in the
Contract. If no Maturity Date is elected, the Maturity Date will be the
Annuitant's 70th birthday for qualified contracts and the Annuitant's 75th
birthday, or ten years after the Contract Date, if later, for nonqualified
contracts. The Maturity Date is the date on which the Company will begin paying
the first of a series of Annuity or Income Payments in accordance with the
Settlement Option selected by the Contract Owner. Annuity or Income Payments
will begin on the Maturity Date unless the Contract has been fully surrendered
or the proceeds have been paid to the Beneficiary prior to that date. The
Company may require proof that the Annuitant is alive before Annuity Payments
are made.
For nonqualified Contracts, at least 30 days before the original Maturity Date,
a Contract Owner may elect to extend the Maturity Date to any time prior to the
Annuitant's 85th birthday or, for qualified Contracts, to a later date with the
Company's consent. Certain annuity options taken at the Maturity Date may be
used to meet the minimum required distribution requirements of federal tax law,
or a program of partial surrenders may be used instead. These mandatory
distribution requirements take effect generally upon the death of the Contract
Owner, or with qualified contracts upon either the Contract Owner's attainment
of age 70 1/2 or the death of the Contract
18
<PAGE> 22
Owner. Independent tax advice should be sought regarding the election of minimum
required distributions.
See Appendix B for Contracts issued in Florida.
ALLOCATION OF ANNUITY
When an Annuity Option is elected, it may be elected as a Variable Annuity, a
Fixed Annuity, or a combination of both. If, at the time Annuity Payments begin,
no election has been made to the contrary, the Contract Value shall be applied
to provide an annuity funded by the same investment option. At least 15 days
prior to the maturity Date, you may reallocate the Contract Value among the
investment options in order to reallocate the basis on which Annuity Payments
will be determined. (See "Transfers," page .)
VARIABLE ANNUITY
ANNUITY UNIT VALUE. The initial Annuity Unit value applicable to each Funding
Option was established at $1. An Annuity Unit Value as of any Valuation Date is
equal to (a) the value of the Annuity Unit on the immediately preceding
Valuation Date, multiplied by (b) the corresponding net investment factor for
the Valuation Period just ended, divided by (c) the assumed net investment
factor for the Valuation Period. (For example, the assumed net investment factor
based on an annual assumed net investment rate of 3.0% for a Valuation Period of
one day is 1.000081 and, for a period of two days, is 1.000081 x 1.000081.) The
value of an Annuity Unit as of any date other than a Valuation Date is equal to
its value on the next succeeding Valuation Date.
The number of Annuity Units credited to the Contract is determined by dividing
the first monthly Annuity Payment attributable to each Sub-Account by the
corresponding Annuity Unit Value as of 14 days prior to the date Annuity
Payments commence. The number of Annuity Units remains fixed during the annuity
period.
DETERMINATION OF FIRST ANNUITY PAYMENT. The Contract contains tables used to
determine the first monthly Annuity Payment. The amount applied to effect a
variable Annuity will be the value of the Sub-Accounts as of 14 days before the
date Annuity Payments commence less any applicable premium taxes not previously
deducted.
The amount of the first monthly payment depends on the Annuity Option elected. A
formula for determining the adjusted age is contained in the Contract. The total
first monthly Annuity Payment is determined by multiplying the benefit per
$1,000 of value shown in the tables of the Contract by the number of thousands
of dollars of value of the Contract applied to that Annuity Option. The Company
reserves the right to require satisfactory proof of age of any person on whose
life Annuity Payments are based before making the first payment under any of the
Settlement Options.
DETERMINATION OF SECOND AND SUBSEQUENT ANNUITY PAYMENTS. The dollar amount of
the second and subsequent Annuity Payments is not predetermined and may change
from month to month based on the investment experience of the applicable Funding
Option. The total amount of each Annuity Payment will be equal to the sum of the
basic payments in each Funding Option. The actual amounts of these payments are
determined by multiplying the number of Annuity Units credited to each Funding
Option by the corresponding Annuity Unit Value as of the date 14 days prior to
the date before payment is due.
See Appendix B for Contracts issued in Florida.
FIXED ANNUITY
A Fixed Annuity provides for payments which do not vary during the annuity
period. The dollar amount of the first Fixed Annuity Payment will be calculated
as described under "Variable Annuity." All subsequent payments will be made in
the same amount. If it would produce a larger payment, the first Fixed Annuity
Payment will be determined using the Life Annuity Tables in effect on the
Maturity Date. The Fixed Account Annuity Unit Value is determined as of the day
annuity payments commence.
19
<PAGE> 23
PAYMENT OPTIONS
- --------------------------------------------------------------------------------
ELECTION OF OPTIONS
On the Maturity Date, or other agreed-upon date, the Company will pay the amount
due under the Contract in one lump sum, or in accordance with the payment option
selected by the Contract Owner. Election of an option must be made in writing in
a form satisfactory to the Company. Any election made during the lifetime of the
Annuitant must be made by the Contract Owner. While the Annuitant is alive, the
Contract Owner may change a Settlement Option election by written request at any
time prior to the Maturity Date. Once Annuity or Income Payments have begun, no
further election changes are allowed. During the Annuitant's lifetime, if no
election has been made prior to the Maturity Date, the Company will pay to the
Contract Owner (or other designated Payee) the first of a series of monthly
Annuity Payments based on the life of the Annuitant, in accordance with Annuity
Option 2 (Life Annuity with 120 monthly payments assured). For certain qualified
contracts, Annuity Option 4 (Joint and Last Survivor Joint Life
Annuity -- Annuity Reduced on Death of Primary Payee) will be the automatic
option as described in the contract.
The minimum amount that can be placed under an Annuity or Income Option will be
$2,000 unless the Company consents to a lesser amount. If any monthly periodic
payment due any payee is less than $100, the Company reserves the right to make
payments at less frequent intervals, or to pay the Contract Value in one
lump-sum payment.
See Appendix B for Contracts issued in Florida.
ANNUITY OPTIONS
Subject to the conditions described in "Election of Options" above, all or any
part of the Cash Surrender Value of the Contract may be paid under one or more
of the following Annuity Options. Payments under the Annuity Options may be
elected on a monthly, quarterly, semiannual or annual basis.
OPTION 1 -- LIFE ANNUITY -- NO REFUND. The Company will make Annuity Payments
during the lifetime of the Annuitant, terminating with the last payment
preceding death. This option offers the maximum periodic payment, since there is
no assurance of a minimum number of payments or provision for a death benefit
for beneficiaries.
OPTION 2 -- LIFE ANNUITY WITH 120, 180 OR 240 MONTHLY PAYMENTS ASSURED. The
Company will make monthly Annuity Payments during the lifetime of the Annuitant,
with the agreement that if, at the death of that person, payments have been made
for less than 120, 180 or 240 months, as elected, payments will be continued
during the remainder of the period to the Beneficiary.
OPTION 3 -- JOINT AND LAST SURVIVOR LIFE ANNUITY -- NO REFUND. The Company will
make Annuity Payments during the joint lifetime of the two persons on whose
lives payments are based, and during the lifetime of the survivor. No further
payments will be made following the death of the survivor.
OPTION 4 -- JOINT AND LAST SURVIVOR LIFE ANNUITY -- ANNUITY REDUCED ON DEATH OF
PRIMARY PAYEE. The Company will make Annuity Payments during the lifetimes of
the two persons on whose lives payments are based. One of the two persons will
be designated as the primary payee, the other will be designated as the
secondary payee. On the death of the secondary payee, if survived by the primary
payee, the Company will continue to make monthly Annuity Payments to the primary
payee in the same amount that would have been payable during the joint lifetime
of the two persons. On the death of the primary payee, if survived by the
secondary payee, the Company will continue to make Annuity Payments to the
secondary payee in an amount equal to 50% of the payments which would have been
made during the lifetime of the primary payee. No further payments will be made
following the death of the survivor.
OPTION 5 -- OTHER ANNUITY OPTIONS. The Company will make any other arrangements
for Annuity Payments as may be mutually agreed upon.
20
<PAGE> 24
INCOME OPTIONS
Instead of one of the Annuity Options described above, and subject to the
conditions described under "Election of Options," all or part of the Cash
Surrender Value of the Contract may be paid under one or more of the following
Income Options, provided that they are consistent with federal tax law
qualification requirements. Payments under the Income Options may be elected on
a monthly, quarterly, semiannual or annual basis:
OPTION 1 -- PAYMENTS OF A FIXED AMOUNT. The Company will make equal payments of
the amount elected until the Contract Value applied under this option has been
exhausted. The first payment and all later payments will be paid from amounts
attributable to each investment option in proportion to the Cash Surrender Value
attributable to each. The final payment will include any amount insufficient to
make another full payment.
OPTION 2 -- PAYMENTS FOR A FIXED PERIOD. The Company will make payments for the
period selected. The amount of each payment will be equal to the remaining
Contract Value applied under this option divided by the number of remaining
payments.
OPTION 3 -- OTHER INCOME OPTIONS. The Company will make any other arrangements
for Income Payments as may be mutually agreed upon.
The amount applied to effect an Income Option will be the Contract Value as of
14 days before the date Income Payments commence, less any applicable premium
taxes not previously deducted and any applicable contingent deferred sales
charge. The Contract Value used to determine the amount of any Income Payment
will be determined on the same basis as the Contract Value during the
Accumulation Period, including the deduction for mortality and expense risks and
the Sub-Account Administrative Charge. Income Options differ from Annuity
Options in that the amount of the payments made under Income Options are
unrelated to the length of life of any person. Although the Company continues to
deduct the charge for mortality and expense risks, it assumes no mortality risks
for amounts applied under any Income Option. Moreover, payments are unrelated to
the actual life span of any person. Thus, the Annuitant may outlive the payment
period.
MISCELLANEOUS CONTRACT PROVISIONS
- --------------------------------------------------------------------------------
TERMINATION
No Purchase Payments after the first are required to keep the Contract in
effect. However, the Company reserves the right to terminate the Contract on any
Valuation Date if the Contract Value as of that date is less than $1,000 and no
Purchase Payments have been made for at least two years, unless otherwise
specified by state law. Termination will not occur until 31 days after the
Company has mailed notice of termination to the Contract Owner at his or her
last known address and to any assignee of record. If the Contract is terminated,
the Company will pay to the Contract Owner the Cash Surrender Value (Contract
Value, in the states of Washington and New Jersey), less any applicable
administrative charge or premium tax.
MISSTATEMENT
If the Annuitant's or Contract Owner's sex or date of birth was misstated, all
benefits under the Contract are what the Purchase Payment paid would have
purchased at the correct sex and age. Proof of the Annuitant's or Contract
Owner's age may be filed at any time at the Company's Home Office.
REQUIRED REPORTS
As often as required by law, but at least once in each Contract Year before the
due date of the first Annuity Payment, the Company will furnish a report showing
the number of Accumulation Units credited to the Contract and the corresponding
Accumulation Unit Value(s) as of the date of the report for each Funding Option
to which the Contract Owner has allocated amounts during the applicable period.
The Company will keep all records required under federal or state laws.
21
<PAGE> 25
SUSPENSION OF PAYMENTS
The Company reserves the right to suspend or postpone the date of any payment of
any benefit or values for any Valuation Period (1) when the New York Stock
Exchange ("the Exchange") is closed; (2) when trading on the Exchange is
restricted; (3) when an emergency exists as determined by the Securities and
Exchange Commission so that disposal of the securities held in the Separate
Account is not reasonably practicable or it is not reasonably practicable to
determine the value of the Separate Accounts' net assets; or (4) during any
other period when the Securities and Exchange Commission, by order, so permits
for the protection of security holders.
TRANSFERS OF CONTRACT VALUES TO OTHER ANNUITIES
The Company may permit Contract Owners to transfer their Contract Values into
other annuities offered by the Company or its affiliated insurance Companies
under rules then in effect.
FEDERAL TAX CONSIDERATIONS
- --------------------------------------------------------------------------------
The following description of the federal income tax consequences under this
Contract is not exhaustive and is not intended to cover all situations. Because
of the complexity of the law and the fact that the tax results will vary
according to the factual status of the individual involved, tax advice may be
needed by a person contemplating purchase of an annuity contract and by a
Contract Owner or Beneficiary who may make elections under a contract. For
further information, a qualified tax adviser should be consulted.
GENERAL TAXATION OF ANNUITIES
Amounts credited to the Contract are not generally taxable until they are
received by the Contract Owner or the Beneficiary, either in the form of Annuity
Payments or other distributions. Distributions from annuities that include
previously taxed amounts may be taxed on either an income-first basis or an
income-last basis, or on a pro-rata basis according to the type of plan or due
to other circumstances.
TAX LAW DIVERSIFICATION REQUIREMENTS FOR VARIABLE ANNUITIES
The Code requires that any nonqualified variable annuity contracts based on a
segregated asset account shall not be treated as an annuity for any period if
investments made in the account are not adequately diversified. Final tax
regulations define how segregated asset accounts must be diversified. The
Company monitors the diversification of investments constantly and believes that
its accounts are adequately diversified. The consequence of any failure is
essentially the loss to the contract owner of tax deferred treatment. The
Company intends to administer all contracts subject to this provision of law in
a manner that will maintain adequate diversification.
OWNERSHIP OF THE INVESTMENTS
Assets in the segregated asset accounts must be owned by the Company and not by
the contract owner for federal income tax purposes. Otherwise, the deferral of
taxes is lost and income and gains from the accounts would be includible
annually in the contract owner's gross income.
The Internal Revenue Service has stated in published rulings that a variable
contract owner will be considered the owner of the assets of a segregated asset
account if the owner possesses an incident of ownership in those assets, such as
the ability to exercise investment control over the assets. The Treasury
Department announced, in connection with the issuance of temporary regulations
concerning investment diversification, that those regulations "do not provide
guidance concerning the circumstances in which investor control of the
investments of a segregated asset account may cause the investor, rather than
the insurance company, to be treated as the owner of the assets of the account."
This announcement, dated September 15, 1986, also stated that the guidance would
be issued by way of regulations or rulings on the "extent to which policyholders
may direct their investments to particular sub-accounts [of a segregated asset
account] without being treated as owners of the underlying assets." As of the
date of this prospectus, no such guidance has been issued.
22
<PAGE> 26
The Company does not know if such guidance will be issued, or if it is, what
standards it may set. Furthermore, the Company does not know if such guidance
may be issued with retroactive effect. New regulations are generally issued with
a prospective-only effect as to future sales or as to future voluntary
transactions in existing contracts. The Company therefore reserves the right to
modify the contract as necessary to attempt to prevent contract owners from
being considered the owner of the assets of the accounts.
PENALTY TAX FOR PREMATURE DISTRIBUTIONS
Taxable distributions taken before the Contract Owner has attained the age of
59 1/2 will be subject to a 10% additional tax penalty unless the distribution
is taken in a series of periodic distributions for life or life expectancy, or
unless the distribution follows the death or disability of the Contract Owner.
Other exceptions may be available in certain tax-benefited plans.
MANDATORY DISTRIBUTIONS FOR QUALIFIED PLANS
Federal tax law requires that minimum annual distributions begin by April 1st of
the calendar year following the calendar year in which a participant under a
qualified plan, a Section 403(b) annuity, or an IRA attains age 70 1/2.
Distributions must also begin or be continued according to required patterns
following the death of the Owner or the Annuitant.
NONQUALIFIED ANNUITY CONTRACTS
Individuals may purchase tax-deferred annuities without tax law funding limits.
The Purchase Payments receive no tax benefit, deduction or deferral, but
increases in the value of the contract are generally deferred from tax until
distribution. If a nonqualified annuity is owned by other than an individual,
however, (e.g., by a corporation), the increases in value attributable to
Purchase Payments made after February 28, 1986 are includable in income
annually. Furthermore, for contracts issued after April 22, 1987, all deferred
increases in value will be includable in the income of a Contract Owner when the
Contract Owner transfers the contract without adequate consideration.
If two or more annuity contracts are purchased from the same insurer within the
same calendar year, distributions from any of them will be taxed based upon the
amount of income in all of the same calendar year series of annuities. This will
generally have the effect of causing taxes to be paid sooner on the deferred
gain in the contracts.
Those receiving partial distributions made before the Maturity Date will
generally be taxed on an income-first basis to the extent of income in the
contract. If you are exchanging another annuity contract for this annuity,
certain pre-August 14, 1982 deposits into an annuity contract that have been
placed in the contract by means of a tax-deferred exchange under Section 1035 of
the Code may be withdrawn first without income tax liability. This information
on deposits must be provided to the Company by the other insurance company at
the time of the exchange. There is income in the contract generally to the
extent the Cash Value exceeds the investment in the contract. The investment in
the contract is equal to the amount of premiums paid less any amount received
previously which was excludable from gross income. Any direct or indirect
borrowing against the value of the contract or pledging of the contract as
security for a loan will be treated as a cash distribution under the tax law.
The federal tax law requires that nonqualified annuity contracts meet minimum
mandatory distribution requirements upon the death of the Contract Owner,
including the first of joint owners. Failure to meet these requirements will
cause the surviving joint owner, or the Beneficiary to lose the tax benefits
associated with annuity contracts, i.e., primarily the tax deferral prior to
distribution. The distribution required depends, among other things, upon
whether an Annuity Option is elected or whether the new Contract Owner is the
surviving spouse. Contracts will be administered by the Company in accordance
with these rules and the Company will make a notification when payments should
be commenced.
23
<PAGE> 27
INDIVIDUAL RETIREMENT ANNUITIES
To the extent of earned income for the year and not exceeding $2,000 per
individual, an individual may make deductible contributions to an individual
retirement annuity (IRA). There are certain limits on the deductible amount
based on the adjusted gross income of the individual and spouse and based on
their participation in a retirement plan. If an individual is married and the
spouse does not have earned income, the individual may establish IRAs for the
individual and spouse. Purchase Payments may then be made annually into IRAs for
both spouses in the maximum amount of 100% of earned income up to a combined
limit of $2,250.
The Code provides for the purchase of a Simplified Employee Pension (SEP) plan.
A SEP is funded through an IRA with an annual employer contribution limit of 15%
of compensation up to $30,000 for each participant.
QUALIFIED PENSION AND PROFIT-SHARING PLANS
Under a qualified pension or profit-sharing plan, Purchase Payments made by an
employer are not currently taxable to the participant and increases in the value
of a contract are not subject to taxation until received by a participant or
Beneficiary.
Distributions are taxable to the participant or Beneficiary as ordinary income
in the year of receipt. Any distribution that is considered the participant's
"investment in the contract" is treated as a return of capital and is not
taxable. Certain lump-sum distributions may be eligible for special forward
averaging tax treatment for certain classes of individuals.
FEDERAL INCOME TAX WITHHOLDING
The portion of a distribution which is taxable income to the recipient will be
subject to federal income tax withholding as follows:
1. ELIGIBLE ROLLOVER DISTRIBUTION FROM SECTION 403(B) PLANS OR ARRANGEMENTS
OR FROM QUALIFIED PENSION AND PROFIT-SHARING PLANS
There is a mandatory 20% tax withholding for plan distributions that are
eligible for rollover to an IRA or to another retirement plan but that
are not directly rolled over. A distribution made directly to a
participant or Beneficiary may avoid this result if:
(a) a periodic settlement distribution is elected based upon a life or
life expectancy calculation, or
(b) a term-for-years settlement distribution is elected for a period of
ten years or more, payable at least annually, or
(c) a minimum required distribution as defined under the tax law is
taken after the attainment of the age of 70 1/2 or as otherwise
required by law.
A distribution including a rollover that is not a direct rollover will
be subject to the 20% withholding, and a 10% additional tax penalty may
apply to any amount not added back in the rollover. The 20% withholding
may be recovered when the participant or Beneficiary files a personal
income tax return for the year if a rollover was completed within 60
days of receipt of the funds, except to the extent that the participant
or spousal Beneficiary is otherwise underwithheld or short on estimated
taxes for that year.
2. OTHER NON-PERIODIC DISTRIBUTIONS (FULL OR PARTIAL REDEMPTIONS)
To the extent not described as requiring 20% withholding in 1 above, the
portion of a non-periodic distribution which constitutes taxable income
will be subject to federal income tax withholding, if the aggregate
distributions exceed $200 for the year, unless the recipient elects not
to have taxes withheld. If no such election is made, 10% of the taxable
distribution will be withheld as federal income tax. Election forms will
be provided at the time distributions are requested. This form of
withholding applies to all annuity programs.
3. PERIODIC DISTRIBUTIONS (DISTRIBUTIONS PAYABLE OVER A PERIOD GREATER THAN
ONE YEAR)
24
<PAGE> 28
The portion of a periodic distribution which constitutes taxable income
will be subject to federal income tax withholding under the wage
withholding tables as if the recipient were married claiming three
exemptions. A recipient may elect not to have income taxes withheld or
have income taxes withheld at a different rate by providing a completed
election form. Election forms will be provided at the time distributions
are requested. This form of withholding applies to all annuity programs.
As of January 1, 1996, a recipient receiving periodic payments (e.g.,
monthly or annual payments under an Annuity Option) which total $14,350
or less per year, will generally be exempt from periodic withholding.
Recipients who elect not to have withholding made are liable for payment of
federal income tax on the taxable portion of the distribution. All recipients
may also be subject to penalties under the estimated tax payment rules if
withholding and estimated tax payments are not sufficient to cover tax
liabilities.
Recipients who do not provide a social security number or other taxpayer
identification number will not be permitted to elect out of withholding.
Additionally, United States citizens residing outside of the country, or U.S.
legal residents temporarily residing outside the country, are not permitted to
elect out of withholding.
VOTING RIGHTS
- --------------------------------------------------------------------------------
The Contract Owner has certain voting rights in Fund ABD II and the Funding
Options. The number of votes which a Contract Owner may cast in the accumulation
period is equal to the number of Accumulation Units credited under the Contract.
During the annuity period, the Contract Owner may cast the number of votes equal
to (i) the reserve related to the Contract divided by (ii) the value of an
Accumulation Unit. A Contract Owner's voting rights will decline as the reserve
for the Contract declines.
Each person having a voting interest in Fund ABD II will receive periodic
reports relating to the Funding Options in which he or she has an interest, as
well as any proxy materials, including a form on which to give voting
instructions with respect to the proportion of the Funding Option shares held by
Fund ABD II which correspond to his or her interest in the Funding Option.
Upon the death of the Contract Owner, all voting rights will vest in the
Beneficiary of the Contract, except in the case of Contracts where the surviving
spouse becomes the owner.
The Company will vote shares of Funding Options held by Fund ABD II at regular
and special meetings of the Funding Option shareholders in accordance with
instructions received from persons having a voting interest in Fund ABD II. 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. If the
1940 Act or any regulation thereunder should be amended, or if the present
interpretation thereof should change, and as a result the Company determines
that it is permitted to vote shares of the Funding Options in its own right, it
may elect to do so.
DISTRIBUTION OF VARIABLE ANNUITY CONTRACTS
- --------------------------------------------------------------------------------
The Company intends to sell the Contracts in all jurisdictions where it is
licensed to do business and where the Contract is approved. The Contracts will
be sold by life insurance sales agents who represent the Company, and who are
licensed registered representatives of the Company or certain other registered
broker-dealers. The compensation paid to sales representatives will not exceed
8.5% of the payments made under the Contracts.
From time to time, the Company may pay or permit other promotional incentives,
in cash, credit or other compensation.
Any sales representative or employee will have been qualified to sell Variable
Annuities under applicable federal and state laws. Each broker-dealer is
registered with the Securities and Exchange Commission under the Securities
Exchange Act of 1934, and all are members of the National Association of
Securities Dealers, Inc. Tower Square Securities, Inc., an affiliate of the
Company, is
25
<PAGE> 29
the principal underwriter for the Contracts; however, it is currently
anticipated that an affiliated broker-dealer may become the principal
underwriter for the Contracts during 1996 or early in 1997.
CONFORMITY WITH STATE AND FEDERAL LAWS
The Contract is governed by the laws of the state in which it is delivered. Any
paid-up Annuity, Cash Surrender Value or death benefits that are available under
the Contract are not less than the minimum benefits required by the statutes of
the state in which the Contract is delivered. The Company may at any time make
any changes, including retroactive changes, in the Contract to the extent that
the change is required to meet the requirements of any law or regulation issued
by any governmental agency to which the Company, the Contract or the Contract
Owner is subject.
LEGAL PROCEEDINGS AND OPINIONS
- --------------------------------------------------------------------------------
There are no pending material legal proceedings affecting Fund ABD II. Legal
matters in connection with the federal laws and regulations affecting the issue
and sale of the Contract described in this Prospectus, as well as the
organization of the Company, its authority to issue variable annuity contracts
under Connecticut law and the validity of the forms of the variable annuity
contracts under Connecticut law, have been reviewed by the General Counsel of
the Life and Annuity Division of the Company.
+++
26
<PAGE> 30
APPENDIX A
THE FIXED ACCOUNT
- --------------------------------------------------------------------------------
Under the Fixed Account, the Company assumes the risk of investment gain or
loss, guarantees a specified interest rate, and guarantees a specified periodic
annuity payment. The investment gain or loss of Fund ABD II or any of the
Funding Options does not affect the Fixed Account portion of the Contract
Owner's Contract Value, or the dollar amount of fixed annuity payments made
under any payout option.
The Company guarantees that, at any time, the Fixed Account Contract Value will
not be less than the amount of the Purchase Payments allocated to the Fixed
Account, plus interest credited as described above, less any applicable premium
taxes or prior surrenders. If the Contract Owner effects a surrender, the amount
available from the Fixed Account will be reduced by any applicable surrender
charge as described under "Charges and Fees" in this prospectus.
Purchase Payments allocated to the Fixed Account and any transfers made to the
Fixed Account become part of the Company's general account which supports
insurance and annuity obligations. Neither the general account nor any interest
therein is registered under, nor subject to the provisions of the Securities Act
of 1933 or 1940 Acts. The Company will invest the assets of the Fixed Account at
its discretion. Investment income from such Fixed Account assets will be
allocated to the Company and to the Contracts participating in the Fixed
Account.
Investment income from the Fixed Account allocated to the Company includes
compensation for mortality and expense risks borne by the Company in connection
with Fixed Account Contracts. The amount of such investment income allocated to
the Contracts will vary from year to year in the sole discretion of the Company
at such rate or rates as the Company prospectively declares from time to time.
The initial rate for any deposit into the Fixed Account is guaranteed for one
year from the date of such deposit. Subsequent renewal rates will be guaranteed
for the calendar quarter. The Company also guarantees that for the life of the
Contract it will credit interest at not less than 3% per year. Any interest
credited to amounts allocated to the Fixed Account in excess of 3% per year will
be determined in the sole discretion of the company. The contract owner assumes
the risk that interest credit to the Fixed Account may not exceed the minimum
guarantee of 3% for any given year.
TRANSFERS
Transfers from the Fixed Account to any other investment options will be
permitted twice a year during the 30 days following the semiannual Contract Date
anniversary in an amount of up to 15% of the Fixed Account Value on the
semiannual Contract Date anniversary. (This restriction does not apply to
transfers from the Dollar Cost Averaging Program.) Amounts previously
transferred from the Fixed Account to the other investment option(s) may not be
transferred back to the Fixed Account for a period of at least six months from
the date of transfer. The Company reserves the right to waive either of these
restrictions in its discretion.
Automated transfers from the Fixed Account to any of the investment option(s)
may begin at any time. Automated transfers from the Fixed Account may not
deplete your Fixed Account value in a period of less than twelve months from
your enrollment in the Dollar Cost Averaging Program.
27
<PAGE> 31
APPENDIX B
CONTRACTS ISSUED IN THE STATE OF FLORIDA
- --------------------------------------------------------------------------------
THE ANNUITY PERIOD
MATURITY DATE
The maturity date may not be any date beyond the Annuitant's 90th birthday.
THE VARIABLE ANNUITY
Variable payouts are not permitted in Florida. Contract Owners may only have
their Contract Values applied to provide a Fixed Annuity.
Disregard the "Variable Annuity" section described on page 14.
ELECTION OF OPTIONS
ON THE MATURITY DATE, OR OTHER AGREED-UPON DATE, THE COMPANY WILL PAY AN AMOUNT
PAYABLE UNDER THE CONTRACT IN ACCORDANCE WITH THE PAYMENT OPTION SELECTED BY THE
CONTRACT OWNER. Election of an option must be made in writing in a form
satisfactory to the Company. Any election made during the lifetime of the
Annuitant must be made by the Contract Owner. While the Annuitant is alive, the
Contract Owner may change a Settlement Option election by Written Request at any
time prior to the Maturity Date. Once Annuity or Income Payments have begun, no
further election changes are allowed. During the Annuitant's lifetime, if no
election has been made prior to the Maturity Date, the Company will pay to the
Contract Owner the first of a series of monthly Annuity Payments based on the
life of the Annuitant, in accordance with Annuity Option 2 (Life Annuity with
120 monthly payments assured). For certain tax-qualified contracts, Annuity
Option 4 (Joint and Last Survivor Joint Life Annuity -- Annuity Reduced on Death
of Primary Payee) will be the automatic option as described in the contract.
The minimum amount that can be placed under an Annuity or Income Option will be
$2,000 unless the Company consents to a lesser amount. If any monthly periodic
payment due any payee is less than $100, the Company reserves the right to make
payments at less frequent intervals, or to pay the Contract Value in one
lump-sum payment.
28
<PAGE> 32
APPENDIX C
CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION
- --------------------------------------------------------------------------------
The Statement of Additional Information contains more specific information and
financial statements relating to the Separate Account and The Travelers Life and
Annuity Company. A list of the contents of the Statement of Additional
Information is set forth below:
The Insurance Company
Principal Underwriter
Distribution and Management Agreement
Valuation of Assets
Performance Information
Independent Accountants
Financial Statements
- -------------------------------------------------------------------------------
COPIES OF THE STATEMENT OF ADDITIONAL INFORMATION DATED , 1996 (FORM NO.
L-12548S) ARE AVAILABLE WITHOUT CHARGE. TO REQUEST A COPY, PLEASE CLIP THIS
COUPON ON THE DOTTED LINE ABOVE, ENTER YOUR NAME AND ADDRESS IN THE SPACES
PROVIDED BELOW, AND MAIL TO: THE TRAVELERS LIFE AND ANNUITY COMPANY, ANNUITY
INVESTOR SERVICES, ONE TOWER SQUARE, HARTFORD, CONNECTICUT 06183-9061.
Name:
- --------------------------------------------------------------------------------
Address:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
29
<PAGE> 33
PART B
INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL INFORMATION
<PAGE> 34
STATEMENT OF ADDITIONAL INFORMATION
dated
, 1996
---------------
for
THE TRAVELERS FUND ABD II FOR VARIABLE ANNUITIES
ISSUED BY
THE TRAVELERS LIFE AND ANNUITY COMPANY
This Statement of Additional Information ("SAI") is not a prospectus but
relates to, and should be read in conjunction with, the Individual Variable
Annuity Contract Prospectus dated __________, 1996. A copy of the Prospectus
may be obtained by writing to The Travelers Life and Annuity Company, Annuity
Services, One Tower Square, Hartford, Connecticut 06183-9061, or by calling
1-800-842-8573.
<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C>
THE INSURANCE COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
PRINCIPAL UNDERWRITER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
DISTRIBUTION AND MANAGEMENT AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
VALUATION OF ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
PERFORMANCE INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
INDEPENDENT ACCOUNTANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
FINANCIAL STATEMENTS (Travelers Life and Annuity Company) . . . . . . . . . . . . . . . . . . . . . . . . F-1
</TABLE>
<PAGE> 35
THE INSURANCE COMPANY
The Travelers Life and Annuity Company (the "Company"), a stock
insurance company chartered in 1973 in Connecticut. It is a wholly owned
subsidiary of The Travelers Insurance Company, which is indirectly owned,
through a wholly owned subsidiary, by Travelers Group Inc., a financial
services holding company.
STATE REGULATION. The Company is subject to the laws of the state of
Connecticut governing insurance companies and to regulation by the Insurance
Commissioner of the state of Connecticut. An annual statement covering the
operations of the Company for the preceding year, as well as its financial
conditions as of December 31 of such year, must be filed with the Commissioner
in a prescribed format on or before March 1 of each year. The Company's books
and assets are subject to review or examination by the Commissioner or his
agents at all times, and a full examination of its operations is conducted at
least once every four years.
The Company is also subject to the insurance laws and regulations of all
other states in which it is licensed to operate. However, the insurance
departments of each of these states generally apply the laws of the
jurisdiction of domicile in determining the field of permissible investments.
THE SEPARATE ACCOUNT. Fund ABD II meets the definition of a separate account
under the federal securities laws, and will comply with the provisions of the
1940 Act. Additionally, the operations of Fund ABD II are subject to the
provisions of Section 38a-433 of the Connecticut General Statutes which
authorizes the Connecticut Insurance Commissioner to adopt regulations under
it. Section 38a-433 contains no restrictions on the investments of the
Separate Account, and the Commissioner has adopted no regulations under the
Section that affect the Separate Account.
THE FIXED ACCOUNT. The Fixed Account is secured by part of the general assets
of the Company. The general assets of the Company include all assets of the
Company other than those held in Fund ABD II or any other separate account
sponsored by the Company or its affiliates.
The staff of the Securities and Exchange Commission does not generally review
the disclosure in the prospectus relating to the Fixed Account. Disclosure
regarding the Fixed Account and the general account may, however, be subject to
certain provisions of the federal securities laws relating to the accuracy and
completeness of statements made in the prospectus.
PRINCIPAL UNDERWRITER
Tower Square Securities, Inc. ("Tower Square"), an affiliate of the
Company, serves as principal underwriter for Fund ABD II and the Contracts.
The offering is continuous. Tower Square is an indirect wholly owned subsidiary
of Travelers Group Inc. and its principal executive offices are located at One
Tower Square, Hartford, Connecticut. It is anticipated that an affiliated
broker-dealer may become the principal underwriter for the Contracts in 1996
1
<PAGE> 36
DISTRIBUTION AND MANAGEMENT AGREEMENT
Under the terms of the Distribution and Management Agreement among
Fund ABD II, the Company and Tower Square, the Company provides all
administrative services and mortality and expense risk guarantees related to
variable annuity contracts sold by the Company in connection with the Fund ABD
II. Tower Square performs the sales functions related to the Contracts. The
Company reimburses Tower Square for commissions paid, other sales expenses and
certain overhead expenses connected with sales functions. The Company also
pays all costs (including costs associated with the preparation of sales
literature); all costs of qualifying the Fund ABD II and the variable annuity
contract with regulatory authorities; the costs of proxy solicitation; and all
custodian, accountant's and legal fees. The Company also provides without cost
to the Fund ABD II all necessary office space, facilities, and personnel to
manage its affairs.
VALUATION OF ASSETS
FUNDING OPTIONS: The value of the assets of each Underlying Fund is determined
on each Valuation Date as of the close of the New York Stock Exchange. Each
security traded on a national securities exchange is valued at the last
reported sale price on the Valuation Date. If there has been no sale on that
day, then the value of the security is taken to be the mean between the
reported bid and asked prices on the Valuation Date or on the basis of
quotations received from a reputable broker or any other recognized source.
Any security not traded on a securities exchange but traded in the
over-the-counter-market and for which market quotations are readily available
is valued at the mean between the quoted bid and asked prices on the Valuation
Date or on the basis of quotations received from a reputable broker or any
other recognized source.
Securities traded on the over-the-counter-market and listed securities
with no reported sales are valued at the mean between the last reported bid and
asked prices or on the basis of quotations received from a reputable broker or
other recognized source.
Short-term investments for which a quoted market price is available
are valued at market. Short-term investments maturing in more than sixty days
for which there is no reliable quoted market price are valued by "marking to
market" (computing a market value based upon quotations from dealers or issuers
for securities of a similar type, quality and maturity.) "Marking to market"
takes in account unrealized appreciation or depreciation due to changes in
interest rates or other factors which would influence the current fair values
of such securities. Short-term investments maturing in sixty days or less for
which there is no reliable quoted market price are valued at amortized cost
which approximates market.
THE CONTRACT VALUE: The value of an Accumulation Unit on any Valuation Date is
determined by multiplying the value on the immediately preceding Valuation Date
by the net investment factor for the Valuation Period just ended. The net
investment factor is used to measure the investment performance of a Funding
Option from one Valuation Period to the next. The net investment factor for a
Funding Option for any Valuation Period is equal to the sum of 1.000000 plus
the net investment rate (the gross investment rate less any applicable Funding
Option deductions during the Valuation Period relating to
2
<PAGE> 37
the Insurance Charge and the Funding Option Administrative Charge). The gross
investment rate of a Funding Option is equal to (a) minus b), divided by c
where:
(a) = investment income plus capital gains and losses (whether realized or
unrealized);
(b) = any deduction for applicable taxes (presently zero); and
(c) = the value of the assets of the Funding Option at the beginning of the
Valuation Period.
The gross investment rate may be either positive or negative. A Funding
Option's investment income includes any distribution whose ex-dividend date
occurs during the Valuation Period.
PERFORMANCE INFORMATION
From time to time, the Company may advertise several types of
historical performance for the Funding Options of Fund ABD II. The Company may
advertise the "standardized average annual total returns" of the Funding
Option, calculated in a manner prescribed by the Securities and Exchange
Commission, as well as the "non-standardized total return," as described below:
STANDARDIZED METHOD. Quotations of average annual total return are computed
according to a formula in which a hypothetical initial investment of $1,000 is
applied to the Funding Option, and then related to ending redeemable values
over one-, five-, and ten-year periods, or for a period covering the time
during which the Funding Option has been in existence, if less. These
quotations reflect the deduction of all recurring charges during each period
(on a pro rata basis in the case of fractional periods). The deduction for the
annual administrative charge ($30) is converted to a percentage of assets based
on the actual fee collected (or anticipated, in the case of a new product)
divided by the average net assets contracts sold under the Prospectus (or
anticipated to be sold) to which this Statement of Additional Information
relates. Each quotation assumes a total redemption at the end of each period
with the assessment of any applicable Contingent Deferred Sales Charge at that
time.
NON-STANDARDIZED METHOD. Non-standardized "average annual total
returns" will be calculated in a similar manner based on the performance of the
Funding Options over a period of time, usually for the calendar year-to-date,
and for the past one-, three-, five- and ten-year periods. Non-standardized
total returns will not reflect the deduction of any applicable Contingent
Deferred Sales Charge or the $30 annual contract administrative charge, which,
if reflected, would decrease the level of performance shown. The Contingent
Deferred Sales Charge is not reflected because the Contract is designed for
long-term investment.
GENERAL. Within the guidelines prescribed by the SEC and the National
Association of Securities Dealers, Inc. ("NASD"), performance information may
be quoted numerically or may be presented in a table, graph or other
illustration. Advertisements may include data comparing performance to
well-known indices of market performance (including, but not limited to, the
Dow Jones Industrial Average, the Standard & Poor's (S&P) 500 Index and the S&P
400 Index, the Lehman Brothers Long T-Bond Index, the Russell 1000, 2000 and
3000 Indices, the Value Line Index, and the Morgan Stanley Capital
International's EAFE Index). Advertisements may also include published
editorial comments and performance rankings compiled by independent
organizations (including, but not limited to, Lipper Analytical Services, Inc.
and Morningstar, Inc.) and publications that monitor the performance of Fund
ABD II and the Underlying Funds.
3
<PAGE> 38
For Funding Options that were in existence prior to the date they became
available under Fund ABD II, the standardized and non-standardized average
annual total return quotations will show the investment performance that
such Funding Options would have achieved (reduced by the applicable charges)
had they been held under the Contract for the period quoted. The total return
quotations are based upon historical earnings and are not necessarily
representative of future performance. An Owner's Contract Value at redemption
may be more or less than original cost.
Average annual total returns for each of the Funding Options computed
according to the standardized and non-standardized methods for the period
ending December 31, 1995 (beginning at inception date) are set forth in the
following table.
TOTAL RETURN CALCULATIONS
FUNDING OPTIONS OF FUND ABD II
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
STANDARDIZED NON-STANDARDIZED
Inception
Date
- ------------------------------------------------------------------------------------------------------------
1-YR 5-YR 10-YR 1-YR 3-YR 5-YR 10-YR
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Capital Appreciation
Fund 28.45% 16.57% 9.52% 34.47% 12.73% 17.02% 9.53% 3/18/82
Alliance Growth 26.97% 20.50%* -- 32.99% 24.04%* -- -- 6/20/94
MFS Total Return 17.93% 9.64%* -- 23.95% 13.36%* -- -- 6/20/94
Putnam Diversified
Income 9.74% 6.78%* -- 15.76% 10.55%* -- -- 6/20/94
</TABLE>
* Since inception.
INDEPENDENT ACCOUNTANTS
Coopers & Lybrand L.L.P., certified public independent accountants,
100 Pearl Street, Hartford, Connecticut, are the independent auditors for Fund
ABD II. The services provided to Fund ABD II will include primarily the
examination of the Fund's financial statements. Financial Statements for Fund
ABD II are not available since the Fund had no assets as of the effective date
of this SAI.
The balance sheet of the Travelers Life and Annuity Company (the
"Company") as of December 31, 1995 and 1994 and the statements of operation and
retained earnings and cash flows for the years then ended, have been included
herein in reliance upon the report of KPMG Peat Marwick LLP, independent
certified public accountants, and upon the authority of said firm as experts in
accounting and auditing. The report of KPMG Peat Marwick LLP covering the
December 31, 1995 financial statements of the Company refers to a change in the
accounting for investments in accordance with provisions of Statement of
Financial Accounting Standards No. 115, "Accounting for Certain Investments in
Debt and Equity Securities," in 1994.
The statements of operations and retained earnings and cash flows of
the Company for the year ended December 31, 1993, have been included herein in
reliance upon the report dated September 16, 1994 of Coopers & Lybrand, L.L.P.,
certified public accountants, and upon the authority of said firm as experts in
accounting and auditing.
4
<PAGE> 39
Independent Auditors' Report
The Board of Directors and Shareholder of
The Travelers Life and Annuity Company:
We have audited the accompanying balance sheet of The Travelers Life and
Annuity Company as of December 31, 1995 and 1994, and the related statements of
operations and retained earnings and cash flows for the years then ended.
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 in accordance with generally accepted auditing
standards. Those standards 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. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of The Travelers Life and Annuity
Company as of December 31, 1995 and 1994, and the results of its operations and
its cash flows for the years then ended, in conformity with generally accepted
accounting principles.
As discussed in note 3 to the financial statements, the Company adopted the
provisions of Statement of Financial Accounting Standards No. 115, "Accounting
for Certain Investments in Debt and Equity Securities," in 1994.
/s/KPMG Peat Marwick LLP
Hartford, Connecticut
January 16, 1996
7
<PAGE> 40
Report of Independent Accountants
To the Board of Directors and Shareholder of
The Travelers Life and Annuity Company:
We have audited the statements of operations and retained earnings and cash
flows of The Travelers Life and Annuity Company for the year ended December 31,
1993. These financial statements are the responsibility of Company
management. Our responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards 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. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the results of operations and cash flows of The
Travelers Life and Annuity Company for the year ended December 31, 1993 in
conformity with generally accepted accounting principles.
/s/ COOPERS & LYBRAND L.L.P.
Hartford, Connecticut
September 16, 1994
8
<PAGE> 41
THE TRAVELERS LIFE AND ANNUITY COMPANY
STATEMENT OF OPERATIONS AND RETAINED EARNINGS
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
(for the year ended December 31, in thousands) 1995 1994 | 1993
- --------------------------------------------------------------------------------------------|-----------
<S> <C> <C> | <C>
REVENUES |
Premiums $ 2,652 $ 3,498 | $ 4,524
Net investment income 63,209 66,093 | 58,044
Realized investment gains (losses) 18,713 (2,074) | 11,955
Other 17,466 18,702 | 9,102
- --------------------------------------------------------------------------------------------|-----------
102,040 86,219 | 83,625
- --------------------------------------------------------------------------------------------|-----------
|
BENEFITS AND EXPENSES |
Current and future insurance benefits 52,390 55,596 | 67,489
Amortization of deferred acquisition costs |
and value of insurance in force 1,563 - | -
Other operating expenses 4,651 2,758 | 3,075
- --------------------------------------------------------------------------------------------|-----------
58,604 58,354 | 70,564
- --------------------------------------------------------------------------------------------|-----------
|
Income before federal income taxes 43,436 27,865 | 13,061
- --------------------------------------------------------------------------------------------|-----------
|
Federal income taxes: |
Current 2,555 4,742 | 22,124
Deferred 11,964 4,798 | (22,672)
- --------------------------------------------------------------------------------------------|-----------
14,519 9,540 | (548)
- --------------------------------------------------------------------------------------------|-----------
Net income 28,917 18,325 | 13,609
Retained earnings beginning of year 128,990 110,665 | 97,034
Preference stock tax benefit allocated by parent - - | 22
- --------------------------------------------------------------------------------------------|-----------
Retained earnings end of year $ 157,907 $ 128,990 | $ 110,665
- --------------------------------------------------------------------------------------------------------
</TABLE>
See notes to financial statements.
9
<PAGE> 42
THE TRAVELERS LIFE AND ANNUITY COMPANY
BALANCE SHEET
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
(at December 31, in thousands) 1995 1994
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Fixed maturities, available for sale at market
(cost, $678,293; $624,347) $ 724,639 $ 559,142
Equity securities, at market (cost, $9,453; $14,252) 13,099 16,064
Mortgage loans 125,813 152,359
Real estate held for sale, net of accumulated depreciation of $524; $337 8,995 6,810
Short-term securities 51,381 44,472
Other investments 65,805 72,190
- ---------------------------------------------------------------------------------------------------------------
Total investments 989,732 851,037
- ---------------------------------------------------------------------------------------------------------------
Cash - 296
Investment income accrued 11,030 10,211
Premium balances receivable 2,277 -
Reinsurance recoverables 718 573
Deferred acquisition costs and value of insurance in force 22,560 21,014
Deferred federal income taxes 41,158 94,315
Separate accounts 886,688 820,384
Current federal income taxes 6,691 -
Other assets 3,785 3,539
- ---------------------------------------------------------------------------------------------------------------
Total assets $ 1,964,639 $ 1,801,369
- ---------------------------------------------------------------------------------------------------------------
LIABILITIES
Future policy benefits $ 671,027 $ 691,108
Contractholder funds 11,947 -
Current federal income taxes - 26,071
Separate accounts 856,867 808,181
Other liabilities 61,247 17,889
- ---------------------------------------------------------------------------------------------------------------
Total liabilities 1,601,088 1,543,249
- ---------------------------------------------------------------------------------------------------------------
SHAREHOLDER'S EQUITY
Common stock, par value $100; 100,000
shares authorized, 30,000 issued and outstanding 3,000 3,000
Additional paid-in capital 167,314 167,354
Retained earnings 157,907 128,990
Unrealized investment gains (losses), net of taxes 35,330 (41,224)
- ---------------------------------------------------------------------------------------------------------------
Total shareholder's equity 363,551 258,120
- ---------------------------------------------------------------------------------------------------------------
Total liabilities and shareholder's equity $ 1,964,639 $ 1,801,369
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
See notes to financial statements.
10
<PAGE> 43
THE TRAVELERS LIFE AND ANNUITY COMPANY
STATEMENT OF CASH FLOWS
Increase (Decrease) in Cash
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
(for the year ended December 31, in thousands) 1995 1994 | 1993
- ------------------------------------------------------------------------------------------|-------------
<S> <C> <C> | <C>
CASH FLOWS FROM OPERATING ACTIVITIES |
Premiums collected $ 1,950 $ 3,498 | $ 4,524
Net investment income received 66,219 57,240 | 53,944
Benefits and claims paid (71,710) (72,298) | (74,660)
Operating expenses paid (3,013) (4,400) | (3,249)
Income taxes refunded (paid) (35,305) 1,030 | (10,661)
Trading account investments, (purchases) sales, net - - | 35,093
Other (6,772) 22,507 | (683)
- ------------------------------------------------------------------------------------------|-------------
Net cash provided by (used in) operating activities (48,631) 7,577 | 4,308
- ------------------------------------------------------------------------------------------|-------------
CASH FLOWS FROM INVESTING ACTIVITIES |
Investment repayments |
Fixed maturities 11,752 29,043 | 29,479
Mortgage loans 24,137 60,260 | 53,835
Proceeds from investments sold, including real estate |
held for sale |
Fixed maturities 459,971 41,671 | 46,001
Equity securities 11,823 9,373 | 7,676
Mortgage loans 7,013 23,327 | 11,835
Real estate held for sale - 34,181 | 26,014
Investments in |
Fixed maturities (515,098) (204,412) | (206,682)
Equity securities (156) (375) | (5,280)
Mortgage loans (4,890) (5,607) | -
Short-term securities, (purchases) sales, net (5,051) (1,146) | (16,430)
Other investments, (purchases) sales, net 9,274 682 | 46,595
Securities transactions in course of settlement 45,727 5,722 | 1,133
- ------------------------------------------------------------------------------------------|-------------
Net cash provided by (used in) investing activities 44,502 (7,281) | (5,824)
- ------------------------------------------------------------------------------------------|-------------
CASH FLOWS FROM FINANCING ACTIVITIES |
Contractholder fund deposits 5,707 - | -
Contractholder fund withdrawals (1,874) - | -
- ------------------------------------------------------------------------------------------|-------------
Net cash provided by financing activities 3,833 - | -
- ------------------------------------------------------------------------------------------|-------------
Net increase (decrease) in cash $ (296) $ 296 | $ (1,516)
- --------------------------------------------------------------------------------------------------------
Cash at December 31 $ - $ 296 $ -
- --------------------------------------------------------------------------------------------------------
</TABLE>
See notes to financial statements.
11
<PAGE> 44
THE TRAVELERS LIFE AND ANNUITY COMPANY
NOTES TO FINANCIAL STATEMENTS
1. NATURE OF OPERATIONS
The Travelers Life and Annuity Company (the Company) is a wholly owned
subsidiary of The Travelers Insurance Company (TIC), which is an
indirect, wholly owned subsidiary of Travelers Group Inc. (Travelers).
The Company primarily writes single premium group annuity close-out
contracts and individual structured settlement annuities. The single
premium group annuity contracts are typically purchased by
employer-sponsored pension plans upon termination of the plan, asset
reversion or other significant plan changes. The individual structured
settlement contracts are purchased by affiliates, The Travelers
Indemnity Company and its subsidiaries, in connection with the
settlement of certain of its policyholder obligations. In 1995, the
Company also commenced writing individual life and deferred annuity
business.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Significant accounting policies used in the preparation of the
accompanying financial statements follow.
Basis of presentation
In December 1992, Primerica Corporation (Primerica) acquired
approximately 27% of The Travelers Corporation's common stock (the 27%
Acquisition). The 27% Acquisition was accounted for as a purchase.
Effective December 31, 1993, Primerica acquired the approximately 73% of
The Travelers Corporation common stock which it did not already own, and
The Travelers Corporation was merged into Primerica, which was renamed
Travelers Group Inc. This was effected through the exchange of .80423
shares of Travelers common stock for each share of The Travelers
Corporation common stock (the Merger). All subsidiaries of The
Travelers Corporation were contributed to The Travelers Insurance Group
Inc. (TIGI).
The 27% Acquisition and the Merger were accounted for as a "step
acquisition", and the purchase accounting adjustments were "pushed down"
as of December 31, 1993 to the subsidiaries of TIGI, including the
Company, and reflect adjustments of assets and liabilities of the
Company to their fair values determined at each acquisition date (i.e.,
27% of values at December 31, 1992 as carried forward and 73% of the
values at December 31, 1993). These assets and liabilities were
recorded at December 31, 1993 based upon management's then best estimate
of their fair values at the respective dates. Evaluation and appraisal
of assets and liabilities, including investments, the value of insurance
in force, other insurance assets and liabilities and related deferred
federal income taxes was completed during 1994. The excess of the 27%
share of assigned value of identifiable net assets over cost at December
31, 1992, which was allocated to the Company through "pushdown"
accounting, was approximately $1.3 million and is being amortized over
ten years on a straight-line basis.
The statements of operations and retained earnings and of cash flows and
the related accompanying notes for the years ended December 31, 1995 and
1994, which are presented on a purchase accounting basis, are separated
from the corresponding 1993 information, which is presented on a
historical accounting basis, to indicate the difference in valuation
bases.
12
<PAGE> 45
THE TRAVELERS LIFE AND ANNUITY COMPANY
NOTES TO FINANCIAL STATEMENTS, Continued
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and benefits
and expenses during the reporting period. Actual results could differ
from those estimates.
Certain prior year amounts have been reclassified to conform with the
1995 presentation.
Investments
Fixed maturities include bonds, notes and redeemable preferred stocks.
Fixed maturities are valued based upon quoted market prices, or if
quoted market prices are not available, discounted expected cash flows
using market rates commensurate with the credit quality and maturity of
the investment. Fixed maturities are classified as "available for sale"
and are reported at fair value, with unrealized gains and losses, net of
income taxes, charged or credited directly to shareholder's equity.
Equity securities, which include common and nonredeemable preferred
stocks, are carried at market values that are based primarily on quoted
market prices. Changes in market values of equity securities are
charged or credited directly to shareholder's equity, net of applicable
income taxes.
Mortgage loans are carried at amortized cost. For mortgage loans that
are determined to be impaired, a reserve is established for the
difference between the amortized cost and fair market value of the
underlying collateral. Impaired loans were insignificant at December
31, 1995.
Real estate held for sale is carried at the lower of cost or fair value
less estimated costs to sell. Fair value was established at time of
foreclosure by appraisers, either internal or external, using discounted
cash flow analyses and other acceptable techniques. Thereafter, an
allowance for losses on real estate held for sale is established if the
carrying value of the property exceeds its current fair value less
estimated costs to sell. There was no such allowance at December 31,
1995.
Accrual of income is suspended on fixed maturities or mortgage loans
that are in default, or on which it is likely that future payments will
not be made as scheduled. Interest income on investments in default is
recognized only as payment is received.
Investment Gains and Losses
Realized investment gains and losses are included as a component of
pretax revenues based upon specific identification of the investments
sold on the trade date and, prior to the Merger, included adjustments to
investment valuation reserves. These adjustments reflected changes
considered to be other than temporary in the net realizable value of
investments. Also included are gains and losses arising from the
remeasurement of the local currency value of foreign investments to U.S.
dollars, the functional currency of the Company.
13
<PAGE> 46
THE TRAVELERS LIFE AND ANNUITY COMPANY
NOTES TO FINANCIAL STATEMENTS, Continued
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued
Separate Accounts
Separate account liabilities primarily represent structured settlement
annuity obligations, which provide guaranteed levels of return or
benefits to contractholders. The separate account assets supporting
these obligations, which are legally segregated and are not subject to
claims that arise out of any other business of the Company, are carried
at amortized cost. Earnings on structured settlement contracts,
generally net investment income less policyholder benefits and operating
expenses, are included in other revenues.
In addition, the Company has other separate accounts, representing funds
for which investment income and investment gains and losses accrue
directly to, and investment risk is borne by, the contractholders. Each
of these accounts have specific investment objectives. The assets and
liabilities of these accounts are carried at market value, and amounts
assessed to the contractholders for management services are included in
revenues. Deposits, net investment income and realized investment gains
and losses for these accounts are excluded from revenues, and related
liability increases are excluded from benefits and expenses.
Deferred Acquisition Costs and Value of Insurance In Force
Costs of acquiring individual life insurance and annuity business,
principally commissions and certain expenses related to policy issuance,
underwriting and marketing, all of which vary with and are primarily
related to the production of new business, are deferred. Acquisition
costs relating to traditional life insurance are amortized over the
period of anticipated premiums; universal life in relation to estimated
gross profits; and annuity contracts employing a level yield method. A
10- to 25-year amortization period is used for life insurance, and a 10-
to 15-year period is employed for annuities. Deferred acquisition costs
are reviewed periodically for recoverability to determine if any
adjustment is required.
The value of insurance in force represents the actuarially determined
present value of anticipated profits to be realized from annuities
contracts at the date of the Merger using the same assumptions that were
used for computing related liabilities where appropriate. The value of
insurance in force was the actuarially determined present value of the
projected future profits discounted at an interest rate of 16% for the
business acquired. The value of the business in force is amortized over
the contract period using current interest crediting rates to accrete
interest and using an amortization method based on a level yield method.
The value of insurance in force is reviewed periodically for
recoverability to determine if any adjustment is required.
Future Policy Benefits
Benefit reserves represent liabilities for future insurance policy
benefits. Benefit reserves for life insurance and annuity policies have
been computed based upon mortality, morbidity, persistency and interest
assumptions applicable to these coverages, which range from 4.5% to
7.5%, including a provision for adverse deviation. These assumptions
consider Company experience and industry standards and may be revised if
it is determined that the future experience will differ substantially
from that previously assumed. The assumptions vary by plan, age at
issue, year of issue and duration.
14
<PAGE> 47
THE TRAVELERS LIFE AND ANNUITY COMPANY
NOTES TO FINANCIAL STATEMENTS, Continued
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued
Contractholder Funds
Contractholder funds represent receipts from the issuance of universal
life and certain individual annuity contracts. Such receipts are
considered deposits on investment contracts that do not have substantial
mortality or morbidity risk. Account balances are also increased by
interest credited and reduced by withdrawals, mortality charges and
administrative expenses charged to the contractholders. Calculations of
contractholder account balances reflect lapse, withdrawal and interest
rate assumptions based on contract provisions, the Company's experience
and industry standards. Interest rates credited to contractholder funds
range from 4.2% to 6.5%.
Permitted Statutory Accounting Practices
The Company, domiciled in the State of Connecticut, prepares statutory
financial statements in accordance with the accounting practices
prescribed or permitted by the State of Connecticut Insurance
Department. Prescribed statutory accounting practices include a variety
of publications of the National Association of Insurance Commissioners
as well as state laws, regulations, and general administrative rules.
Permitted statutory accounting practices encompass all accounting
practices not so prescribed. The impact of any permitted accounting
practices on the statutory surplus of the Company is not material.
Premiums
Premiums are recognized as revenues when due. Reserves are established
for the portion of premiums that will be earned in future periods.
Other Revenues
Other revenues include surrender, mortality and administrative charges
and fees as earned on investment and other insurance contracts. Other
revenues also include structured settlement policyholder revenues, which
relate to contracts issued through a separate account of the Company,
net of the related policyholder benefits and expenses.
Federal Income Taxes
The provision for federal income taxes is comprised of two components,
current income taxes and deferred income taxes. Deferred federal income
taxes arise from changes during the year in cumulative temporary
differences between the tax basis and book basis of assets and
liabilities. The deferred federal income tax asset is recognized to the
extent that future realization of the tax benefit is more likely than
not, with a valuation allowance for the portion that is not likely to be
recognized.
15
<PAGE> 48
THE TRAVELERS LIFE AND ANNUITY COMPANY
NOTES TO FINANCIAL STATEMENTS, Continued
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued
Accounting Standards not yet Adopted
Statement of Financial Accounting Standards No. 121, "Accounting for
Long-Lived Assets and for Long-Lived Assets to be Disposed Of"
establishes accounting standards for the impairment of long-lived
assets, certain identifiable intangibles, and goodwill related to those
assets to be held and used and for long-lived assets and certain
identifiable intangibles to be disposed of. This statement requires the
write down to fair value when long-lived assets to be held and used are
impaired. It also requires long-lived assets to be disposed of (e.g.,
real estate held for sale) to be carried at the lower of cost or fair
value less cost to sell and does not allow such assets to be
depreciated. The adoption of this statement, effective January 1, 1996,
did not have a material effect on results of operations, financial
condition or liquidity.
In October 1995, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 123, "Accounting for
Stock-Based Compensation" (FAS 123). This statement addresses
alternative accounting treatments for stock-based compensation, such as
stock options and restricted stock. FAS 123 permits either expensing
the value of stock-based compensation over the period earned or
disclosing in the financial statement footnotes the pro forma impact to
net income as if the value of stock-based compensation awards had been
expensed. The value of awards would be measured at the grant date based
upon estimated fair value, using option pricing models. The
requirements of this statement will be effective for 1996 financial
statements, although earlier adoption is permissible if an entity elects
to expense the cost of stock-based compensation. The Company, along
with affiliated companies, participates in stock option and incentive
plans sponsored by Travelers. The Company is currently evaluating the
disclosure requirements and expense recognition alternatives addressed
by this statement.
3. CHANGES IN ACCOUNTING PRINCIPLES
Accounting by Creditors for Impairment of a Loan
Effective January 1, 1995, the Company adopted Statement of Financial
Accounting Standards No. 114, "Accounting by Creditors for Impairment of
a Loan," and Statement of Financial Accounting Standards No. 118,
"Accounting by Creditors for Impairment of a Loan - Income Recognition
and Disclosures," which describe how impaired loans should be measured
when determining the amount of a loan loss accrual. These statements
amended existing guidance on the measurement of restructured loans in a
troubled debt restructuring involving a modification of terms. Their
adoption did not have a material impact on the Company's financial
condition, results of operations or liquidity.
Accounting for Certain Debt and Equity Securities
Effective January 1, 1994, the Company adopted Statement of Financial
Accounting Standards No. 115, "Accounting for Certain Investments in
Debt and Equity Securities" (FAS 115), which addresses accounting and
reporting for investments in equity securities that have a readily
determinable fair value and for all debt securities. Investment
securities have been classified as "available for sale" and are reported
at fair value, with unrealized gains and losses, net of income taxes,
charged or credited directly to shareholder's equity. Previously,
securities classified as available for sale were carried at the lower of
aggregate cost or market value. Initial adoption of this standard
resulted in an increase of approximately $530 thousand (net of taxes) to
net unrealized gains in shareholder's equity. See note 12 for
additional disclosures.
16
<PAGE> 49
THE TRAVELERS LIFE AND ANNUITY COMPANY
NOTES TO FINANCIAL STATEMENTS, Continued
4. REINSURANCE
The Company participates in reinsurance in order to limit losses,
minimize exposure to large risks, provide capacity for future growth and
to effect business-sharing arrangements. The Company remains primarily
liable as the direct insurer on all risks reinsured.
Life insurance in force ceded to affiliates at December 31, 1995 and
1994 was $97.7 million and $106.0 million, respectively. At December
31, 1995 and 1994, $601.2 million and $0, respectively, was ceded to
non-affiliates.
5. SHAREHOLDER'S EQUITY
Unrealized Investment Gains (Losses)
An analysis of the change in unrealized gains and losses on investments
is shown in note 12.
Additional Paid-in Capital
As a result of the finalization of the evaluations and appraisals used
to assign fair value to assets and liabilities under purchase
accounting, additional paid-in capital was increased by $1.3 million in
1994. It was decreased by $70.4 million in 1993 based upon the initial
evaluations and appraisals.
Shareholder's Equity and Dividend Availability
Statutory net income was $23.0 million and $5.7 million for the years
ended December 31, 1995 and 1994, respectively. Statutory net loss was
$23.0 million for the year ended December 31, 1993.
Statutory capital and surplus was $257.8 million and $233.0 million at
December 31, 1995 and 1994, respectively.
The Company is currently subject to various regulatory restrictions that
limit the maximum amount of dividends available to be paid to its parent
without prior approval of insurance regulatory authorities. Statutory
surplus of $16.4 million is available in 1996 for dividend payments by
the Company without prior approval of the Connecticut Insurance
Department.
17
<PAGE> 50
THE TRAVELERS LIFE AND ANNUITY COMPANY
NOTES TO FINANCIAL STATEMENTS, Continued
6. DERIVATIVE FINANCIAL INSTRUMENTS AND FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company has, in the normal course of business, provided fixed rate
loan commitments and commitments to partnerships. The Company does not
hold or issue derivative instruments for trading purposes.
The off-balance-sheet risks of fixed rate loan commitments, commitments
to partnerships and forward contracts were not significant at December
31, 1995 and 1994.
Fair Value of Certain Financial Instruments
The Company uses various financial instruments in the normal course of
its business. Fair values of financial instruments which are considered
insurance contracts are not required to be disclosed and are not
included in the amounts discussed.
At December 31, 1995, investments in fixed maturities had a carrying
value and a fair value of $724.6 million, compared with a carrying value
and a fair value of $559.1 million at December 31, 1994. See note 12.
At December 31, 1995 and 1994, mortgage loans had a carrying value of
$125.8 million and $152.4 million, respectively, which approximates fair
value. In estimating fair value, the Company used interest rates
reflecting the higher returns required in the real estate financing
market.
The carrying values of $1.9 million and $2.4 million of financial
instruments classified as other assets approximated their fair values at
December 31, 1995 and 1994, respectively. The carrying values of $55.3
million and $14.2 million of financial instruments classified as other
liabilities also approximated their fair values at December 31, 1995 and
1994, respectively. Fair value is determined using various methods
including discounted cash flows, as appropriate for the various
financial instruments.
The assets of separate accounts providing a guaranteed return had a
carrying value and a fair value of $869.1 million and $923.0 million,
respectively, at December 31, 1995, compared to a carrying value and a
fair value of $820.4 million and $757.2 million, respectively, at
December 31, 1994. The liabilities of separate accounts providing a
guaranteed return had a carrying value and a fair value of $839.1
million and $766.3 million, respectively, at December 31, 1995, compared
to a carrying value and a fair value of $808.2 million and $681.4
million, respectively, at December 31, 1994.
The carrying values of short-term securities and investment income
accrued approximated their fair values.
18
<PAGE> 51
THE TRAVELERS LIFE AND ANNUITY COMPANY
NOTES TO FINANCIAL STATEMENTS, Continued
7. COMMITMENTS AND CONTINGENCIES
Financial Instruments with Off-Balance-Sheet Risk
See note 6 for a discussion of financial instruments with off-balance-
sheet risk.
Litigation
The Company is a defendant in various litigation matters. Although
there can be no assurances, as of December 31, 1995, the Company
believes, based on information currently available, that the ultimate
resolution of these legal proceedings would not be likely to have a
material adverse effect on its results of operations, financial
condition or liquidity.
8. BENEFIT PLANS
Pension Plans
The Company participates in qualified and nonqualified, noncontributory
defined benefit pension plans sponsored by an affiliate. Benefits for
the qualified plan are based on an account balance formula. Under this
formula, each employee's accrued benefit can be expressed as an account
that is credited with amounts based upon the employee's pay, length of
service and a specified interest rate, all subject to a minimum benefit
level. This plan is funded in accordance with the Employee Retirement
Income Security Act of 1974 and the Internal Revenue Code. For the
nonqualified plan, contributions are based on benefits paid. The
Company's share of net pension expense was not significant for 1995,
1994 or 1993.
Other Benefit Plans
In addition to pension benefits, the Company provides certain health
care and life insurance benefits for retired employees through a plan
sponsored by TIGI. Covered employees may become eligible for these
benefits if they reach retirement age while working for the Company.
These retirees may elect certain prepaid health care benefit plans.
Life insurance benefits generally are set at a fixed amount. The cost
recognized by the Company for these benefits represents its allocated
share of the total costs of the plan, net of employee contributions.
The Company's share of the total cost of the plan for 1995, 1994 and
1993 was not significant.
The Merger resulted in a change in control of The Travelers Corporation
as defined in the applicable plans, and provisions of some employee
benefit plans secured existing compensation and benefit entitlements
earned prior to the change in control, and provided a salary and benefit
continuation floor for employees whose employment was affected. These
merger-related costs were assumed by TIGI.
19
<PAGE> 52
THE TRAVELERS LIFE AND ANNUITY COMPANY
NOTES TO FINANCIAL STATEMENTS, Continued
8. BENEFIT PLANS
Savings, Investment and Stock Ownership Plan
Under the savings, investment and stock ownership plan available to
substantially all employees of TIGI, the Company matches a portion of
employee contributions. Effective April 1, 1993, the match decreased
from 100% to 50% of an employee's first 5% contribution and a variable
match based on the profitability of TIGI and its subsidiaries was added.
The Company's matching obligation was not significant for 1995, 1994 or
1993.
9. RELATED PARTY TRANSACTIONS
The principal banking functions, including payment of salaries and
expenses, for certain subsidiaries and affiliates of TIGI, including the
Company, are handled by TIC. Settlements for these functions between
TIC and its affiliates are made regularly. TIC provides various
employee benefit coverages to certain subsidiaries of TIGI. The
premiums for these coverages were charged in accordance with cost
allocation procedures based upon salaries or census. In addition,
investment advisory and management services, data processing services
and claims processing services are provided by affiliated companies.
Charges for these services are shared by the companies on cost
allocation methods based generally on estimated usage by department.
TIGI and its subsidiaries maintain a short-term investment pool in which
the Company participates. The position of each company participating in
the pool is calculated and adjusted daily. At December 31, 1995 and
1994, the pool totaled approximately $2.2 billion and $1.5 billion,
respectively. The Company's share of the pool amounted to $49.5 million
and $44.5 million at December 31, 1995 and 1994, respectively, and is
included in short-term securities in the balance sheet.
The Company's TTM Modified Guaranteed Annuity Contracts are subject to a
limited guarantee agreement by TIC in a principal amount of up to $100
million. TIC's obligation is to pay in full to any owner or beneficiary
of the TTM Modified Guaranteed Annuity Contracts principal and interest
as and when due under the annuity contract to the extent that the
Company fails to make such payment. In addition, TIC guarantees that
the Company will maintain a minimum statutory capital and surplus level.
The Company sells structured settlement annuities to its affiliates, The
Travelers Indemnity Company and its subsidiaries. Such deposits were
$36.6 million, $37.6 million and $48.4 million for 1995, 1994 and 1993,
respectively.
The Company began marketing variable annuity products through its
affiliate, Smith Barney, Inc., in 1995. Deposits related to these
products were $20.5 million in 1995.
Most leasing functions for TIGI and its subsidiaries are handled by TIC.
Leasing expenses are shared by the companies on a cost allocation method
based generally on estimated usage by department.
20
<PAGE> 53
THE TRAVELERS LIFE AND ANNUITY COMPANY
NOTES TO FINANCIAL STATEMENTS, Continued
10. FEDERAL INCOME TAXES
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------
(in thousands) 1995 1994 | 1993
----------------------------------------------------------------------------|-------------
<S> <C> <C> | <C>
Effective tax rate |
------------------ |
|
Income before federal income taxes $ 43,436 $ 27,865 | $ 13,061
Statutory tax rate 35% 35% | 35%
----------------------------------------------------------------------------|-------------
|
Expected federal income taxes $ 15,203 $ 9,753 | $ 4,571
Tax effect of: |
Nontaxable investment income (13) (90) | (85)
Adjustments to benefit and other reserves - (117) | (4,705)
Adjustment to deferred tax asset for |
enacted change in tax rates from |
34% to 35% - - | (255)
Other, net (671) (6) | (74)
----------------------------------------------------------------------------|-------------
Federal income taxes $ 14,519 $ 9,540 | $ (548)
----------------------------------------------------------------------------|-------------
|
Effective tax rate 33% 34% | (4)%
----------------------------------------------------------------------------|-------------
|
Composition of federal income taxes |
----------------------------------- |
Current: |
United States $ 2,555 $ 4,742 | $ 22,124
----------------------------------------------------------------------------|-------------
|
Deferred: |
United States 11,964 4,798 | (22,672)
----------------------------------------------------------------------------|-------------
Federal income taxes $ 14,519 $ 9,540 | $ (548)
------------------------------------------------------------------------------------------
</TABLE>
21
<PAGE> 54
THE TRAVELERS LIFE AND ANNUITY COMPANY
NOTES TO FINANCIAL STATEMENTS, Continued
10. FEDERAL INCOME TAXES, Continued
The net deferred tax assets at December 31, 1995 and 1994 were comprised
of the tax effects of temporary differences related to the following
assets and liabilities:
<TABLE>
<CAPTION>
(in thousands) 1995 1994
-----------------------------------------------------------------------------------------------
<S> <C> <C>
Deferred tax assets:
Benefit, reinsurance and other reserves $ 67,104 $ 70,729
Investments - 30,908
Other 2,570 2,766
-----------------------------------------------------------------------------------------------
Total 69,674 104,403
-----------------------------------------------------------------------------------------------
Deferred tax liabilities:
Investments 19,625 -
Deferred acquisition costs and
value of insurance in force 6,285 7,355
Other 536 663
-----------------------------------------------------------------------------------------------
Total 26,446 8,018
-----------------------------------------------------------------------------------------------
Net deferred tax asset before valuation allowance 43,228 96,385
Valuation allowance for deferred tax assets (2,070) (2,070)
-----------------------------------------------------------------------------------------------
Net deferred tax asset after valuation allowance $ 41,158 $ 94,315
-----------------------------------------------------------------------------------------------
</TABLE>
Starting in 1994 and continuing for at least five years, TIC and its
life insurance subsidiaries, including the Company, will file a
consolidated federal income tax return. Federal income taxes are
allocated to each member on a separate return basis adjusted for credits
and other amounts required by the consolidation process. Any resulting
liability will be paid currently to TIC. Any credits for losses will be
paid by TIC to the extent that such credits are for tax benefits that
have been utilized in the consolidated federal income tax return.
A net deferred tax asset valuation allowance of $2.1 million has been
established to reduce the deferred tax asset on investment losses to the
amount that, based upon available evidence, is more likely than not to
be realized. Reversal of the valuation allowance is contingent upon the
recognition of future capital gains in the Company's consolidated life
insurance company federal income tax return through 1998, and the
consolidated federal income tax return of Travelers commencing in 1999,
or a change in circumstances which causes the recognition of the
benefits to become more likely than not. There was no change in the
valuation allowance during 1995. The initial recognition of any benefit
provided by the reversal of the valuation allowance will be recognized
by reducing goodwill.
22
<PAGE> 55
THE TRAVELERS LIFE AND ANNUITY COMPANY
NOTES TO FINANCIAL STATEMENTS, Continued
10. FEDERAL INCOME TAXES, Continued
In management's judgment, the $41.2 million "net deferred tax asset after
valuation allowance" as of December 31, 1995, is fully recoverable
against expected future years' taxable ordinary income and capital gains.
At December 31, 1995, the Company has no ordinary or capital loss
carryforwards.
The "policyholders surplus account", which arose under prior tax law, is
generally that portion of the gain from operations that has not been
subjected to tax, plus certain deductions. The balance of this account,
which, under provisions of the Tax Reform Act of 1984, will not increase
after 1983, is estimated to be $2.0 million. This amount has not been
subjected to current income taxes but, under certain conditions that
management considers to be remote, may become subject to income taxes in
future years. At current rates, the maximum amount of such tax (for
which no provision has been made in the financial statements) would be
approximately $700 thousand.
11. NET INVESTMENT INCOME
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------
(For the year ended December 31, in thousands) 1995 1994 | 1993
---------------------------------------------------------------------------------|--------------
<S> <C> <C> | <C>
Gross investment income |
----------------------- |
Fixed maturities $ 49,486 $ 44,354 | $ 39,189
Equity securities 497 827 | 930
Mortgage loans 11,644 17,178 | 25,258
Real estate held for sale 2,476 6,299 | 19,028
Other 2,552 4,480 | (4,062)
---------------------------------------------------------------------------------|--------------
66,655 73,138 | 80,343
---------------------------------------------------------------------------------|--------------
|
Investment expenses 3,446 7,045 | 22,299
---------------------------------------------------------------------------------|--------------
Net investment income $ 63,209 $ 66,093 | $ 58,044
------------------------------------------------------------------------------------------------
</TABLE>
23
<PAGE> 56
THE TRAVELERS LIFE AND ANNUITY COMPANY
NOTES TO FINANCIAL STATEMENTS, Continued
12. INVESTMENTS AND INVESTMENT GAINS (LOSSES)
Realized investment gains (losses) for the periods were as follows:
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------
(For the year ended December 31, in thousands) 1995 1994 | 1993
----------------------------------------------------------------------------------|-------------
<S> <C> <C> | <C>
Realized |
-------- |
|
Fixed maturities $ (4,240) $ (908) | $ 8,659
Equity securities 6,138 1,675 | 1,580
Mortgage loans 725 36 | (1,564)
Real estate held for sale (35) - | (8,310)
Other 16,125 (2,877) | 11,590
----------------------------------------------------------------------------------|-------------
Realized investment gains (losses) $ 18,713 $ (2,074) | $ 11,955
------------------------------------------------------------------------------------------------
</TABLE>
Changes in net unrealized investment gains (losses) that are included
as a separate component of shareholder's equity were as follows:
<TABLE>
<CAPTION>
(For the year ended December 31, in thousands) 1995 1994 1993
------------------------------------------------------------------------------------------------
<S> <C> <C> | <C>
Unrealized |
---------- |
|
Fixed maturities $ 111,551 $ (65,205) | $ (20,059)
Equity securities 1,834 (27) | (1,389)
Other 4,390 (28) | 8,524
----------------------------------------------------------------------------------|-------------
117,775 (65,260) | (12,924)
Related taxes 41,221 (22,841) | (3,445)
----------------------------------------------------------------------------------|-------------
Change in unrealized investment gains (losses) 76,554 (42,419) | (9,479)
Balance beginning of year (41,224) 1,195 | 10,674
------------------------------------------------------------------------------------------------
Balance end of year $ 35,330 $ (41,224) $ 1,195
------------------------------------------------------------------------------------------------
</TABLE>
The initial adoption of FAS 115 resulted in an increase of approximately
$530 thousand (net of taxes) to net unrealized investment gains in 1994.
Fixed Maturities
Proceeds from sales of fixed maturities classified as available for sale
were $460.0 million and $41.7 million in 1995 and 1994, respectively.
Gross gains of $7.9 million and $869 thousand and gross losses of $10.3
million and $1.9 million in 1995 and 1994, respectively, were realized
on those sales.
24
<PAGE> 57
THE TRAVELERS LIFE AND ANNUITY COMPANY
NOTES TO FINANCIAL STATEMENTS, Continued
12. INVESTMENTS AND INVESTMENT GAINS (LOSSES), Continued
Prior to December 31, 1993, fixed maturities that were intended to be
held to maturity were recorded at amortized cost and classified as held
for investment. Proceeds from sales of such securities were $16.4
million in 1993, resulting in gross realized gains of $617 thousand.
Prior to December 31, 1993, the carrying values of the trading portfolio
fixed maturities were adjusted to market value as it was likely they
would be sold prior to maturity. Sales of trading portfolio fixed
maturities were $96.6 million in 1993, resulting in gross realized gains
of $12.4 million.
The amortized cost and market values of investments in fixed maturities
were as follows:
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------
December 31, 1995
------------------------------------------------------------------------------------------------
Gross Gross
Amortized unrealized unrealized Market
(in thousands) cost gains losses value
------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Available for sale:
Mortgage-backed securities -
CMOs and pass through
securities $ 89,044 $ 2,545 $ 378 $ 91,211
U.S. Treasury securities
and obligations of U.S.
Government and
government agencies
and authorities 160,988 24,267 1 185,254
Obligations of states and
political subdivisions 3,500 499 - 3,999
All other corporate bonds 424,676 21,576 2,162 444,090
Redeemable preferred stock 85 - - 85
------------------------------------------------------------------------------------------------
Total $ 678,293 $ 48,887 $ 2,541 $ 724,639
------------------------------------------------------------------------------------------------
</TABLE>
25
<PAGE> 58
THE TRAVELERS LIFE AND ANNUITY COMPANY
NOTES TO FINANCIAL STATEMENTS, Continued
12. INVESTMENTS AND INVESTMENT GAINS (LOSSES), Continued
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------
December 31, 1994
------------------------------------------------------------------------------------------------
Gross Gross
Amortized unrealized unrealized Market
(in thousands) cost gains losses value
------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Available for sale:
Mortgage-backed securities -
CMOs and pass through
securities $ 60,102 $ 14 $ 4,624 $ 55,492
U.S. Treasury securities
and obligations of U.S.
Government and
government agencies
and authorities 188,043 25 24,301 163,767
Obligations of states and
political subdivisions 3,000 - 184 2,816
Debt securities issued by
foreign governments 20,076 - 2,157 17,919
All other corporate bonds 352,197 1,140 35,055 318,282
Redeemable preferred stock 929 13 76 866
------------------------------------------------------------------------------------------------
Total $ 624,347 $ 1,192 $ 66,397 $ 559,142
------------------------------------------------------------------------------------------------
</TABLE>
The amortized cost and market value of fixed maturities available for
sale at December 31, 1995, by contractual maturity, are shown below.
Actual maturities will differ from contractual maturities because
borrowers may have the right to call or prepay obligations with or
without call or prepayment penalties.
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------
Maturity Amortized Market
(in thousands) cost value
------------------------------------------------------------------------------------------------
<S> <C> <C>
Due in one year or less $ 7,858 $ 8,245
Due after 1 year through 5 years 28,392 29,022
Due after 5 years through 10 years 172,831 178,526
Due after 10 years 380,168 417,635
------------------------------------------------------------------------------------------------
589,249 633,428
Mortgage-backed securities 89,044 91,211
------------------------------------------------------------------------------------------------
Total $ 678,293 $ 724,639
------------------------------------------------------------------------------------------------
</TABLE>
The Company makes significant investments in collateralized mortgage
obligations (CMOs). CMOs typically have high credit quality, offer good
liquidity, and provide a significant advantage in yield and total return
compared to U.S. Treasury securities. The Company's investment strategy
is to purchase CMO tranches which are protected against prepayment risk,
primarily planned amortization class (PAC) tranches. Prepayment
protected tranches are preferred because they provide stable cash flows
in a variety of scenarios. The Company does invest in other types of
CMO tranches if a careful assessment indicates a favorable risk/return
tradeoff. The Company does not purchase residual interests in CMOs.
26
<PAGE> 59
THE TRAVELERS LIFE AND ANNUITY COMPANY
NOTES TO FINANCIAL STATEMENTS, Continued
12. INVESTMENTS AND INVESTMENT GAINS (LOSSES), Continued
At December 31, 1995 and 1994, the Company held CMOs with a market value
of $68.6 million and $55.5 million, respectively. Approximately 94% and
96% of the Company's CMO holdings are fully collateralized by
GNMA, FNMA or FHLMC securities at December 31, 1995 and 1994,
respectively. Virtually all of these securities are rated AAA.
Equity Securities
The cost and market values of investments in equity securities were as
follows:
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------
December 31, 1995
------------------------------------------------------------------------------------------------
Gross Gross
unrealized unrealized Market
(in thousands) Cost gains losses value
------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common stocks $ 3,310 $ 3,374 $ 68 $ 6,616
Nonredeemable preferred stocks 6,143 340 - 6,483
------------------------------------------------------------------------------------------------
Total $ 9,453 $ 3,714 $ 68 $ 13,099
------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------
December 31, 1994
------------------------------------------------------------------------------------------------
Gross Gross
unrealized unrealized Market
(in thousands) Cost gains losses value
------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common stocks $ 6,141 $ 3,177 $ 654 $ 8,664
Nonredeemable preferred stocks 8,111 7 718 7,400
------------------------------------------------------------------------------------------------
Total $ 14,252 $ 3,184 $ 1,372 $ 16,064
------------------------------------------------------------------------------------------------
</TABLE>
Proceeds from sales of equity securities were $11.8 million and $9.4
million in 1995 and 1994, respectively. Gross gains of $4.9 million and
$2.8 million and gross losses of $474 thousand and $369 thousand in
1995 and 1994, respectively, were realized on those sales.
Mortgage loans and real estate held for sale
Underperforming assets include delinquent mortgage loans, loans in the
process of foreclosure, foreclosed loans and loans modified at interest
rates below market. The Company continues its strategy, adopted in
conjunction with the Merger, to dispose of these real estate assets and
some of the mortgage loans and to reinvest the proceeds to obtain
current market yields.
27
<PAGE> 60
THE TRAVELERS LIFE AND ANNUITY COMPANY
NOTES TO FINANCIAL STATEMENTS, Continued
12. INVESTMENTS AND INVESTMENT GAINS (LOSSES), Continued
At December 31, 1995 and 1994, the Company's mortgage loan and real
estate held for sale portfolios consisted of the following:
<TABLE>
<CAPTION>
------------------------------------------------------------------------------
(in thousands) 1995 1994
------------------------------------------------------------------------------
<S> <C> <C>
Current mortgage loans $ 108,142 $ 134,868
Underperforming mortgage loans 17,671 17,491
------------------------------------------------------------------------------
Total 125,813 152,359
------------------------------------------------------------------------------
Real estate held for sale 8,995 6,810
------------------------------------------------------------------------------
Total $ 134,808 $ 159,169
------------------------------------------------------------------------------
</TABLE>
Aggregate annual maturities on mortgage loans at December 31, 1995 are
as follows:
<TABLE>
<CAPTION>
(in thousands)
-----------------------------------------------------
<S> <C>
Past maturity $ 3,437
1996 21,927
1997 5,966
1998 21,237
1999 9,700
2000 6,016
Thereafter 57,530
-----------------------------------------------------
Total $ 125,813
-----------------------------------------------------
</TABLE>
Concentrations
At December 31, 1995 and 1994, the Company had no concentration of
credit risk in a single investee exceeding 10% of shareholder's equity.
The Company participates in a short-term investment pool maintained by
TIGI and its subsidiaries. See note 9.
Included in fixed maturities are below investment grade assets totaling
$59.0 million and $51.1 million at December 31, 1995 and 1994,
respectively. The Company defines its below investment grade assets as
those securities rated "Ba1" or below by external rating agencies, or
the equivalent by internal analysts when a public rating does not exist.
Such assets include publicly traded below investment grade bonds and
certain other privately issued bonds that are classified as below
investment grade loans.
28
<PAGE> 61
THE TRAVELERS LIFE AND ANNUITY COMPANY
NOTES TO FINANCIAL STATEMENTS, Continued
12. INVESTMENTS AND INVESTMENT GAINS (LOSSES), Continued
The Company also had significant concentrations of investments,
primarily fixed maturities, in the following industries:
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------
(in thousands) 1995 1994
--------------------------------------------------------------------------------------------------
<S> <C> <C>
Oil and gas $ 63,835 $ 39,749
Transportation 44,119 38,523
Banking 33,168 42,191
Chemical manufacturing 16,032 27,326
--------------------------------------------------------------------------------------------------
</TABLE>
Below investment grade assets included in the totals of the previous
table were as follows:
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------
(in thousands) 1995 1994
--------------------------------------------------------------------------------------------------
<S> <C> <C>
Oil and gas $ 3,469 $ 4,002
Transportation 18,648 2,678
Banking 632 5,124
--------------------------------------------------------------------------------------------------
</TABLE>
Concentrations of mortgage loans by property type at December 31, 1995
and 1994 were as follows:
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------
(in thousands) 1995 1994
-------------------------------------------------------------------------------------------------
<S> <C> <C>
Office $ 32,024 $ 40,559
Agricultural 29,820 32,890
Retail 27,870 31,712
-------------------------------------------------------------------------------------------------
</TABLE>
The Company monitors creditworthiness of counterparties to all financial
instruments by using controls that include credit approvals, limits and
other monitoring procedures. Collateral for fixed maturities often
includes pledges of assets, including stock and other assets, guarantees
and letters of credit. The Company's underwriting standards with
respect to new mortgage loans generally require loan to value ratios of
75% or less at the time of mortgage origination.
29
<PAGE> 62
THE TRAVELERS LIFE AND ANNUITY COMPANY
NOTES TO FINANCIAL STATEMENTS, Continued
12. INVESTMENTS AND INVESTMENT GAINS (LOSSES), Continued
Investment Valuation Reserves
There were no investment valuation reserves at December 31, 1995, 1994
and 1993. Investment valuation reserve activity during 1993 was as
follows:
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------
(in thousands) 1993
------------------------------------------------------------------------------------------------
<S> <C>
Beginning of year $ 41,443
Increase 8,355
Impairments, net of gains/recoveries (6,887)
Purchase accounting adjustment (42,911)
------------------------------------------------------------------------------------------------
End of year $ -
------------------------------------------------------------------------------------------------
</TABLE>
Increases in the investment valuation reserves were reflected as
realized investment losses.
Nonincome Producing
Investments included in the balance sheets that were nonincome producing
for the preceding 12 months were insignificant.
Restructured Investments
The Company had mortgage loan and debt securities which were restructured
at below market terms totaling approximately $17.7 million and $17.4
million at December 31, 1995 and 1994, respectively. At December 31,
1993, the Company's restructured assets were recorded at purchase
accounting value. The new terms typically defer a portion of contract
interest payments to varying future periods. The accrual of interest is
suspended on all restructured assets, and interest income is reported
only as payment is received. Gross interest income on restructured
assets that would have been recorded in accordance with the original
terms of such assets amounted to $4.9 million in 1995 and $5.2 million in
1994. Interest on these assets, included in net investment income,
aggregated $2.0 million in 1995 and $1.4 million in 1994.
30
<PAGE> 63
THE TRAVELERS LIFE AND ANNUITY COMPANY
NOTES TO FINANCIAL STATEMENTS, Continued
13. LIFE AND ANNUITY DEPOSIT FUNDS AND RESERVES
At December 31, 1995, the Company had $683.0 million of life and annuity
deposit funds and reserves. Of that total, $671.2 million were not
subject to discretionary withdrawal based on contract terms. The
remaining $11.8 million were life and annuity products that were subject
to discretionary withdrawal by the contractholders. Included in the
amount that is subject to discretionary withdrawal were $8.2 million of
liabilities that are surrenderable with market value adjustments. An
additional $3.6 million of the life insurance and individual annuity
liabilities are subject to discretionary withdrawals with an average
surrender charge of 6.6%. The life insurance risks would have to be
underwritten again if transferred to another carrier, which is considered
a significant deterrent for long-term policyholders. Insurance
liabilities that are surrendered or withdrawn from the Company are
reduced by outstanding policy loans and related accrued interest prior to
payout.
14. RECONCILIATION OF NET INCOME TO NET CASH PROVIDED BY (USED IN) OPERATING
ACTIVITIES
The following table reconciles net income to net cash provided by (used
in) operating activities:
<TABLE>
<CAPTION>
(For the year ended December 31, in thousands) 1995 1994 1993
-------------------------------------------------------------------------------------------------------
<S> <C> <C> | <C>
Net income $ 28,917 $ 18,325 | $ 13,609
Reconciling adjustments |
Realized (gains) losses (18,713) 2,074 | (11,955)
Deferred federal income taxes 11,964 4,798 | (22,672)
Amortization of deferred policy acquisition costs and |
value of insurance in force 1,563 - | -
Deferred policy acquisition costs (3,109) (21,014) | -
Investment income accrued (819) 1,085 | (9,607)
Insurance reserves (20,081) (16,062) | 80,238
Trading account investments, (purchases) sales, net - - | 35,093
Other (48,353) 18,371 | (80,398)
-----------------------------------------------------------------------------------------|-------------
|
Net cash provided by (used in) operating activities $ (48,631) $ 7,577 | $ 4,308
-------------------------------------------------------------------------------------------------------
</TABLE>
15. NONCASH INVESTING AND FINANCING ACTIVITIES
Significant noncash investing and financing activities include: a) the
transfer of $2.6 million and $5.6 million of mortgage loans and real
estate held for sale from one of the Company's separate accounts to the
general account in 1995 and 1994, respectively; b) acquisition of real
estate through foreclosures of mortgage loans amounting to $10.3 million
and $7.7 million in 1994 and 1993, respectively; and c) increases in
investment valuation reserves in 1993 for mortgage loans and real estate
held for sale (see note 12).
31
<PAGE> 64
STATEMENT OF ADDITIONAL INFORMATION
FUND ABD II
Individual Variable Annuity Contract
issued by
The Travelers Life and Annuity Company
One Tower Square
Hartford, Connecticut 06183
L-12548S (MONTH, YEAR)
5
<PAGE> 65
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) The financial statements of the Registrant are not provided since the
Registrant will have no assets prior to the effective date of the
Registration Statement.
The audited financial statements of The Travelers Life and Annuity
Company and the Reports of Independent Accountants, are contained in
the Statement of Additional Information. The financial statements of
The Travelers Life and Annuity Company include:
Statements of Operations and Retained Earnings for the years ended
December 31, 1995, 1994 and 1993
Balance Sheet as of December 31, 1995 and 1994
Statements of Cash Flows for the years ended December 31, 1995,
1994 and 1993
Notes to Financial Statements
(b) Exhibits
1. Resolution of The Travelers Life and Annuity Company Board of
Directors authorizing the establishment of the Registrant.
(Incorporated herein by reference to Exhibit 1 to the
Registration Statement on Form N-4, filed December 22, 1995.)
2. Exempt.
3(a). Form of Distribution and Management Agreement among the
Registrant, The Travelers Life and Annuity Company and Tower
Square Securities, Inc. (Incorporated herein by reference to
Exhibit 3(a) to the Registration Statement on Form N-4, filed
December 22, 1995.)
3(b). Form of Selling Agreement. (Incorporated herein by reference to
Exhibit 3(b) to the Registration Statement on Form N-4, filed
December 22, 1995.)
4. Form of Variable Annuity Contract(s).
5. None.
6(a). Charter of The Travelers Life and Annuity Company, as amended on
April 10, 1990. (Incorporated herein by reference to Exhibit
3(a) to the Registration Statement on Form N-4, File No.
33-58131, filed via Edgar on March 17, 1995.)
6(b). By-Laws of The Travelers Life and Annuity Company, as amended on
October 20, 1994. (Incorporated herein by reference to Exhibit
3(b) to the Registration Statement on Form N-4, File No.
33-58131, filed via Edgar on March 17, 1995.)
<PAGE> 66
7. None.
8. None.
9. Opinion of Counsel as to the legality of securities being
registered. (Incorporated herein by reference to Exhibit 9 to
the Registration Statement on Form N-4, filed December 22,
1995.)
10(a). Consent of Coopers & Lybrand, L.L.P., Independent Accountants.
10(b). Consent of KPMG Peat Marwick LLP, Independent Certified Public
Accountants.
13. Schedule for computation of each performance quotation.
15. Powers of Attorney authorizing Jay S. Fishman or Ernest J.
Wright as signatory for Michael A. Carpenter, Robert I. Lipp,
Charles O. Prince III, Marc P. Weill, Irwin R. Ettinger, Donald
T. DeCarlo and Christine B. Mead. (Incorporated herein by
reference to Exhibit 15 to the Registration Statement on Form
N-4, filed December 22, 1995.)
15(b). Powers of Attorney authorizing Ernest J. Wright or Kathleen A.
McGah as signatory for Michael A. Carpenter, Ian R. Stuart and
Katherine M. Sullivan.
<PAGE> 67
Item 25. Directors and Officers of the Depositor
<TABLE>
<CAPTION>
Name and Principal Positions and Offices
Business Address with Depositor
- ---------------- -------------------------
<S> <C>
Michael A. Carpenter* Chairman of the Board, President and Chief Executive Officer
Robert I. Lipp* Director
Katherine M. Sullivan* Director, Senior Vice President, General Counsel
Ian R. Stuart* Director, Vice President, Chief Financial Officer,
Chief Accounting Officer and Controller
Marc P. Weill** Director, Senior Vice President and Chief Investment Officer
Charles O. Prince III** Assistant Counsel
Stuart L. Baritz** Senior Vice President
Jay S. Benet* Senior Vice President
George C. Kokulis* Senior Vice President
Warren H. May* Senior Vice President
David A. Tyson* Senior Vice President
F. Denney Voss* Senior Vice President
Kathleen A. D'Auria* Vice President
Elizabeth Charron* Vice President
Robert C. Hamilton* Vice President
Russell H. Johnson* Vice President
Charles N. Vest* Vice President and Actuary
William H. White* Vice President and Treasurer
Ernest J. Wright* Vice President and Secretary
Bethann C. Maas* Second Vice President
Kathleen A. McGah* Assistant Secretary
William D. Wilcox* Assistant Secretary
</TABLE>
Principal Business Address:
* The Travelers Life and Annuity Company **Travelers Group Inc.
One Tower Square 388 Greenwich Street
Hartford, CT 06183 New York, N.Y. 10013
<PAGE> 68
Item 26. Persons Controlled by or Under Common Control with the Depositor or
Registrant
OWNERSHIP OF THE TRAVELERS LIFE AND ANNUITY COMPANY
<TABLE>
<CAPTION>
Company State of Organization Ownership Principal Business
- ------- ---------------------- --------- ------------------
<S> <C> <C> <C>
Travelers Group Inc. Delaware Publicly Held ----------------
Associated Madison Companies Inc. Delaware 100.00 ----------------
The Travelers Insurance Group, Inc. Connecticut 100.00 ----------------
The Travelers Insurance Company Connecticut 100.00 Insurance
The Travelers Life and Annuity Company Connecticut 100.00 Insurance
</TABLE>
PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH
THE TRAVELERS LIFE AND ANNUITY COMPANY
<TABLE>
<CAPTION>
% of Voting
Securities
State of Owned Directly
Organization or Indirectly by
------------ The Travelers Inc. Principal Business
----------------- ------------------
<S> <C> <C> <C>
AC Health Ventures, Inc. Delaware 100.00 Inactive
AMCO Biotech, Inc. Delaware 100.00 Inactive
Associated Madison Companies, Inc. Delaware 100.00 Holding company.
American National Life Insurance (T & C), Ltd. Turks and Caicos Islands 100.00 Insurance
ERISA Corporation New York 100.00 Inactive
Mid-America Insurance Services, Inc. Georgia 100.00 Third party administrator
National Marketing Corporation Pennsylvania 100.00 Inactive
PFS Services, Inc. Georgia 100.00 General partner
The Travelers Insurance Group Inc. Connecticut 100.00 Holding company
Constitution Plaza, Inc. Connecticut 100.00 Real estate brokerage
KP Properties Corporation Massachusetts 100.00 Real estate
</TABLE>
<PAGE> 69
<TABLE>
<CAPTION>
% of Voting
Securities
State of Owned Directly
Organization or Indirectly by
------------ The Travelers Inc. Principal Business
----------------- ------------------
<S> <C> <C> <C>
KPI 85, Inc. Massachusetts 100.00 Real estate
KRA Advisers Corporation Massachusetts 100.00 Real estate
KRP Corporation Massachusetts 100.00 Real estate
La Metropole S.A. Belgium 98.83 P-C insurance/reinsurance
Principal Financial Associates, Inc. Delaware 100.00 Inactive
Winthrop Financial Group, Inc. Delaware 100.00 Leasing company.
The Prospect Company Delaware 100.00 Investments
89th & York Avenue Corporation New York 100.00 Real estate
979 Third Avenue Corporation Delaware 100.00 Real estate
Meadow Lane, Inc. Georgia 100.00 Real estate development
Panther Valley, Inc. New Jersey 100.00 Real estate management
Prospect Management Services Company Delaware 100.00 Real estate management
The Travelers Asset Funding Corporation Connecticut 100.00 Investment adviser
Travelers Capital Funding Corporation Connecticut 100.00 Furniture/equipment
The Travelers Corporation of Bermuda Limited Bermuda 99.99 Pensions
The Travelers Insurance Company Connecticut 100.00 Insurance
The Plaza Corporation Connecticut 100.00 Holding company
Joseph A. Wynne Agency California 100.00 Inactive
The Copeland Companies New Jersey 100.00 Holding company
American Odyssey Funds Management, Inc. New Jersey 100.00 Investment advisor
American Odyssey Funds, Inc. Maryland 100.00 Investment management
Copeland Administrative Services, Inc. New Jersey 100.00 Administrative services
Copeland Associates, Inc. Delaware 100.00 Fixed/variable annuities
Copeland Associates Agency of Ohio, Inc. Ohio 99.00 Fixed/variable annuities
Copeland Associates of Alabama, Inc. Alabama 100.00 Fixed/variable annuities
Copeland Associates of Montana, Inc. Montana 100.00 Fixed/variable annuities
Copeland Benefits Management Company New Jersey 51.00 Investment marketing
Copeland Equities, Inc. New Jersey 100.00 Fixed/variable annuities
H.C. Copeland Associates, Inc. of
Massachusetts Massachusetts 100.00 Fixed annuities
Copeland Financial Services, Inc. New Jersey 100.00 Investment advisory
services.
</TABLE>
2
<PAGE> 70
<TABLE>
<CAPTION>
% of Voting
Securities
State of Owned Directly
Organization or Indirectly by
------------ The Travelers Inc. Principal Business
----------------- ------------------
<S> <C> <C> <C>
Copeland Healthcare Services, Inc. New Jersey 100.00 Life insurance marketing
H.C. Copeland and Associates, Inc. of Texas Texas 100.00 Fixed/variable annuities
Tower Square Securities, Inc. Connecticut 100.00 Broker dealer
The Travelers Life and Annuity Company Connecticut 100.00 Life insurance
The Travelers Marine Corporation California 100.00 General insurance brokerage
Three Parkway Inc. - I Pennsylvania 100.00 Investment real estate
Three Parkway Inc. - II Pennsylvania 100.00 Investment real estate
Three Parkway Inc. - III Pennsylvania 100.00 Investment real estate
Travelers Insurance Holdings Inc. Georgia 100.00 Holding company
AC RE, Ltd. Bermuda 100.00 Reinsurance
American Financial Life Insurance Company Texas 100.00 Insurance
Primerica Life Insurance Company Massachusetts 100.00 Life insurance
National Benefit Life Insurance Company New York 100.00 Insurance
Primerica Financial Services (Canada) Ltd. Canada 100.00 Holding company
PFSL Investments Canada Ltd. Canada 100.00 Mutual fund dealer
Primerica Financial Services Ltd. Canada 82.82 General agent
Primerica Life Insurance Company
of Canada Canada 100.00 Life insurance
Travelers/Net Plus, Inc. Connecticut 100.00
The Travelers Insurance Corporation Proprietary Limited Australia 100.00 Inactive
Travelers Asset Management International Corporation New York 100.00 Investment adviser
Travelers Canada Corporation Canada 100.00 Inactive
Travelers Mortgage Securities Corporation Delaware 100.00 Collateralized
obligations
Travelers of Ireland Limited Ireland 99.90 Data processing
Travelers/Aetna Property Casualty Corp. Delaware 100.00 Holding company
The Aetna Casualty and Surety Company Connecticut 100.00 Insurance company
ABP Community Urban Redevelopment Corporation Connecticut 100.00
AE Development Group, Inc. Connecticut 100.00
Aetna Casualty & Surety Company of Canada Canada 100.00
Aetna Financial Futures, Inc. Connecticut 100.00
Aetna Lloyds of Texas Insurance Company Texas 100.00 Insurance company
</TABLE>
3
<PAGE> 71
<TABLE>
<CAPTION>
% of Voting
Securities
State of Owned Directly
Organization or Indirectly by
------------ The Travelers Inc. Principal Business
----------------- ------------------
<S> <C> <C> <C>
Aetna National Accounts U.K. Limited United Kingdom 100.00 Insurance company
Aetna Opportunity Corporation Connecticut 100.00
Aetna Property Services, Inc. Delaware 100.00
AFF, Inc. Connecticut 100.00
Axia Services, Inc. New York 100.00
Farmington Management, Inc. Connecticut 100.00
Urban Diversified Properties, Inc. Connecticut 100.00
AE Properties, Inc. California 100.00
Community Rehabilitation Investment Corporation Connecticut 100.00
The Travelers Indemnity Company Connecticut 100.00 P-C insurance
Commercial Insurance Resources, Inc. Delaware 100.00 Holding company
Gulf Insurance Company Missouri 100.00 P-C insurance
Atlantic Insurance Company Texas 100.00 P-C insurance
Gulf Risk Services, Inc. Delaware 100.00 Claims/risk management
Gulf Underwriters Insurance Company North Carolina 100.00 P-C ins/surplus lines
Select Insurance Company Texas 100.00 P-C insurance
Countersignature Agency, Inc. Florida 100.00 Countersign ins policies
First Trenton Indemnity Company New Jersey 100.00 P-C insurance
Laramia Insurance Agency, Inc. North Carolina 100.00 Flood insurance
Lynch, Ryan & Associates, Inc. Massachusetts 100.00 Cost containment
The Charter Oak Fire Insurance Company Connecticut 100.00 P-C insurance
The Parker Realty and Insurance Agency, Inc. Vermont 58.00 Real estate
The Phoenix Insurance Company Connecticut 100.00 P-C insurance
Constitution State Service Company Montana 100.00 Service company
The Travelers Indemnity Company of America Georgia 100.00 P-C insurance
The Travelers Indemnity Company of Connecticut Connecticut 100.00 Insurance
The Travelers Indemnity Company of Illinois Illinois 100.00 P-C insurance
The Premier Insurance Company of Massachusetts Massachusetts 100.00 Insurance
The Travelers Home and Marine Insurance Company Indiana 100.00 P-C insurance
The Travelers Indemnity Company of Missouri Missouri 100.00 P-C insurance
</TABLE>
4
<PAGE> 72
<TABLE>
<CAPTION>
% of Voting
Securities
State of Owned Directly
Organization or Indirectly by
------------ The Travelers Inc. Principal Business
----------------- ------------------
<S> <C> <C> <C>
The Travelers Lloyds Insurance Company Texas 100.00 Non-life insurance
TI Home Mortgage Brokerage, Inc. Delaware 100.00 Mortgage brokerage
services
TravCo Insurance Company Indiana 100.00 P-C insurance
Travelers Bond Investments, Inc. Connecticut 100.00 Bond investments
Travelers General Agency of Hawaii, Inc. Hawaii 100.00 Insurance agency
Travelers Medical Management Services Inc. Delaware 100.00 Managed care
Travelers Specialty Property Casualty Company, Inc. Connecticut 100.00 Insurance management
VIPortfolio Agency, Inc. Delaware 100.00 Insurance agency
Primerica Finance Corporation Delaware 100.00 Holding company
PFS Distributors, Inc. Georgia 100.00 General partner
PFS Investments Inc. Georgia 100.00 Broker dealer
PFS T.A., Inc. Delaware 100.00 Joint venture partner
Primerica Financial Services Home Mortgages, Inc. Georgia 100.00 Mortgage loan broker
Primerica Financial Services, Inc. Nevada 100.00 General agency
Primerica Financial Services Agency of New York, Inc. New York 100.00 General agency licensing
Primerica Financial Services Insurance Marketing of
Connecticut, Inc. Connecticut 100.00 General agency licensing
Primerica Financial Services Insurance Marketing of Idaho, Inc. Idaho 100.00 General agency licensing
Primerica Financial Services Insurance Marketing of Nevada, Inc. Nevada 100.00 General agency licensing
Primerica Financial Services Insurance Marketing of
Pennsylvania, Inc. Pennsylvania 100.00 General agency licensing
Primerica Financial Services Insurance Marketing of the
Virgin Islands, Inc. United States Virgin 100.00 General agency licensing
Islands
Primerica Financial Services Insurance Marketing of Wyoming, Inc. Wyoming 100.00 General agency licensing
Primerica Financial Services Insurance Marketing, Inc. Delaware 100.00 General agency licensing
Primerica Financial Services of Alabama, Inc. Alabama 100.00 General agency licensing
Primerica Financial Services of New Mexico, Inc. New Mexico 100.00 General agency licensing
Primerica Insurance Agency of Massachusetts, Inc. Massachusetts 100.00 General agency licensing
Primerica Insurance Marketing Services of Puerto Rico, Inc. Puerto Rico 100.00 Insurance agency
Primerica Insurance Services of Louisiana, Inc. Louisiana 100.00 General agency licensing
Primerica Insurance Services of Maryland, Inc. Maryland 100.00 General agency licensing
Primerica Services, Inc. Georgia 100.00 Print operations
RCM Acquisition Inc. Delaware 100.00 Investments
</TABLE>
5
<PAGE> 73
<TABLE>
<CAPTION>
% of Voting
Securities
State of Owned Directly
Organization or Indirectly by
------------ The Travelers Inc. Principal Business
----------------- ------------------
<S> <C> <C> <C>
SCN Acquisitions Company Delaware 100.00 Investments
SL&H Reinsurance, Ltd. Nevis 100.00 Reinsurance
Southwest Service Agreements, Inc. North Carolina 100.00 Warranty/service
agreements
Southwest Warranty Corporation Florida 100.00 Extended automobile
warranty
CCC Holdings, Inc. Delaware 100.00 Holding company
Commercial Credit Company Delaware 100.00 Holding company.
American Health and Life Insurance Company Maryland 100.00 LH&A Insurance
Brookstone Insurance Company Vermont 100.00 Insurance managers
CC Finance Company, Inc. New York 100.00 Consumer lending
CC Financial Services, Inc. Hawaii 100.00 Financial services
CCC Fairways, Inc. Delaware 100.00 Investment company
City Loan Financial Services, Inc. Ohio 100.00 Consumer finance
Commercial Credit Banking Corporation Oregon 100.00 Consumer finance
Commercial Credit Consumer Services, Inc. Minnesota 100.00 Consumer finance
Commercial Credit Corporation {AL} Alabama 100.00 Consumer finance
Commercial Credit Corporation {CA} California 100.00 Consumer finance
Commercial Credit Corporation {IA} Iowa 100.00 Consumer finance
Commercial Credit of Alabama, Inc. Delaware 100.00 Consumer lending
Commercial Credit Corporation {KY} Kentucky 100.00 Consumer finance
Certified Insurance Agency, Inc. Kentucky 100.00 Insurance agency
Commercial Credit Investment, Inc. Kentucky 100.00 Investment company
National Life Insurance Agency of Kentucky, Inc. Kentucky 100.00 Insurance agency
Union Casualty Insurance Agency, Inc. Kentucky 100.00 Insurance agency
Commercial Credit Corporation {MD} Maryland 100.00 Consumer finance
Action Data Services, Inc. Missouri 100.00 Data processing
Commercial Credit Plan, Incorporated {OK} Oklahoma 100.00 Consumer finance
Commercial Credit Corporation {NY} New York 100.00 Consumer finance
Commercial Credit Corporation {SC} South Carolina 100.00 Consumer finance
Commercial Credit Corporation {WV} West Virginia 100.00 Consumer finance
Commercial Credit Corporation NC North Carolina 100.00 Consumer finance
</TABLE>
6
<PAGE> 74
<TABLE>
<CAPTION>
% of Voting
Securities
State of Owned Directly
Organization or Indirectly by
------------ The Travelers Inc. Principal Business
----------------- ------------------
<S> <C> <C> <C>
Commercial Credit Europe, Inc. Delaware 100.00 Inactive
Commercial Credit Far East Inc. Delaware 100.00 Inactive
Commercial Credit Insurance Services, Inc. Maryland 100.00 Insurance broker
Commercial Credit Insurance Agency (P&C) of Mississippi, Inc. Mississippi 100.00 Insurance agency
Commercial Credit Insurance Agency of Alabama, Inc. Alabama 100.00 Insurance agency
Commercial Credit Insurance Agency of Kentucky, Inc. Kentucky 100.00 Insurance agency
Commercial Credit Insurance Agency of Massachusetts, Inc. Massachusetts 100.00 Insurance agency
Commercial Credit Insurance Agency of Nevada, Inc. Nevada 100.00 Credit LH&A,P-C
insurance
Commercial Credit Insurance Agency of New Mexico, Inc. New Mexico 100.00 Insurance agency/Broker
Commercial Credit Insurance Agency of Ohio, Inc. Ohio 100.00 Insurance agency/broker
Commercial Credit International, Inc. Delaware 100.00 Holding company
Commercial Credit International Banking Corporation Oregon 100.00 International lending
Commercial Credit Corporation CCC Limited Canada 100.00 Second mortgage loans
Commercial Credit Services do Brazil Ltda. Brazil 99.00 Inactive
Commercial Credit Services Belgium S.A. Belgium 100.00 Inactive
Commercial Credit Limited Delaware 100.00 Inactive
Commercial Credit Loan, Inc. {NY} New York 100.00 Consumer finance
Commercial Credit Loans, Inc. {DE} Delaware 100.00 Consumer finance
Commercial Credit Loans, Inc. {OH} Ohio 100.00 Consumer finance
Commercial Credit Loans, Inc. {VA} Virginia 100.00 Consumer finance
Commercial Credit Management Corporation Maryland 100.00 Intercompany services
Commercial Credit Plan Incorporated {TN} Tennessee 100.00 Consumer finance
Commercial Credit Plan Incorporated {UT} Utah 100.00 Consumer finance
Commercial Credit Plan Incorporated of Georgetown Delaware 100.00 Consumer finance
Commercial Credit Plan Industrial Loan Company Virginia 100.00 Consumer finance
Commercial Credit Plan, Incorporated {CO} Colorado 100.00 Consumer finance
Commercial Credit Plan, Incorporated {DE} Delaware 100.00 Consumer finance
Commercial Credit Plan, Incorporated {GA} Georgia 100.00 Consumer finance
Commercial Credit Plan, Incorporated {MO} Missouri 100.00 Consumer finance
Commercial Credit Securities, Inc. Delaware 100.00 Broker dealer
</TABLE>
7
<PAGE> 75
<TABLE>
<CAPTION>
% of Voting
Securities
State of Owned Directly
Organization or Indirectly by
------------ The Travelers Inc. Principal Business
----------------- ------------------
<S> <C> <C> <C>
DeAlessandro & Associates, Inc. Delaware 100.00 Insurance consulting
Park Tower Holdings, Inc. Delaware 100.00 Holding company
CC Retail Services, Inc. Delaware 100.00 Leasing, financing
Troy Textiles, Inc. Delaware 100.00 Factoring.Company is
inactive.
COMCRES, Inc. Delaware 100.00 Inactive
Commercial Credit Development Corporation Delaware 100.00 Direct loan
Myers Park Properties, Inc. Delaware 100.00 Inactive
Penn Re, Inc. North Carolina 100.00 Management company
Plympton Concrete Products, Inc. Delaware 100.00 Inactive
Resource Deployment, Inc. Texas 100.00 Management company
The Travelers Bank Delaware 100.00 Banking services
The Travelers Bank USA Delaware 100.00 Credit card bank
Travelers Home Equity, Inc. North Carolina 100.00 Financial services
CC Consumer Services of Alabama, Inc. Alabama 100.00 Financial services
CC Home Lenders Financial, Inc. Georgia 100.00 Financial services
CC Home Lenders, Inc. Ohio 100.00 Financial services
Commercial Credit Corporation {TX} Texas 100.00 Consumer finance
Commercial Credit Financial of Kentucky, Inc. Kentucky 100.00 Consumer finance
Commercial Credit Financial of West Virginia, Inc. West Virginia 100.00 Consumer finance
Commercial Credit Plan Consumer Discount Company Pennsylvania 100.00 Financial services
Commercial Credit Services of Kentucky, Inc. Kentucky 100.00 Financial services.
Travelers Home Equity Services, Inc. North Carolina 100.00 Financial services
Triton Insurance Company Missouri 100.00 P-C insurance
Verochris Corporation Delaware 100.00 Joint venture company
AMC Aircraft Corp. Delaware 100.00 Aviation
World Service Life Insurance Company Colorado 100.00 Life insurance
Greenwich Street Capital Partners, Inc. Delaware 100.00 Investments
Greenwich Street Investments, Inc. Delaware 100.00 Investments
Greenwich Street Capital Partners Offshore Holdings, Inc. Delaware 100.00 Investments
Margco Holdings, Inc. Delaware 100.00 Holding company
</TABLE>
8
<PAGE> 76
<TABLE>
<CAPTION>
% of Voting
Securities
State of Owned Directly
Organization or Indirectly by
------------ The Travelers Inc. Principal Business
----------------- ------------------
<S> <C> <C> <C>
Berg Associates New Jersey 100.00 Inactive
Berg Enterprises Realty, Inc. {NY} New York 100.00 Inactive
Dublin Escrow, Inc. California 100.00 Inactive
M.K.L. Realty Corporation New Jersey 66.67 Holding company
MRC Holdings, Inc. Delaware 100.00 Real estate
The Berg Agency, Inc. {NJ} New Jersey 100.00 Inactive
Mirasure Insurance Company, Ltd. Bermuda 100.00 Inactive
Pacific Basin Investments Ltd. Delaware 100.00 Inactive
Primerica Corporation {WY} Wyoming 100.00 Inactive
Primerica, Inc. Delaware 100.00 Name saver
RCM Capital Trust Company California 100.00 Trust company
Smith Barney Corporate Trust Company Delaware 100.00 Trust company
Smith Barney Holdings Inc. Delaware 100.00 Holding company
Mutual Management Corp. New York 100.00 Inactive
R-H Capital, Inc. Delaware 100.00 Investments
R-H Sports Enterprises Inc Georgia 100.00 Sports representation
SB Cayman Holdings I Inc. Delaware 100.00 Holding company
Greenwich (Cayman) I Limited Cayman Islands 100.00 Corporate services
Greenwich (Cayman) II Limited Cayman Islands 100.00 Corporate services
Greenwich (Cayman) III Limited Cayman Islands 100.00 Corporate services
SB Cayman Holdings II Inc. Delaware 100.00 Holding company
SB Cayman Holdings III Inc. Delaware 100.00 Holding company
SB Cayman Holdings IV Inc. Delaware 100.00 Holding company
Smith Barney (Delaware) Inc. Delaware 100.00 Holding company
1345 Media Corp. Delaware 100.00 Holding company
Americas Avenue Corporation Delaware 100.00 Inactive
Corporate Realty Advisors, Inc. Delaware 100.00 Realty trust adviser
IPO Holdings Inc. Delaware 100.00 Holding company
Institutional Property Owners, Inc. V Delaware 100.00 Investments
Institutional Property Owners, Inc. VI Delaware 100.00 General partner
</TABLE>
9
<PAGE> 77
<TABLE>
<CAPTION>
% of Voting
Securities
State of Owned Directly
Organization or Indirectly by
------------ The Travelers Inc. Principal Business
----------------- ------------------
<S> <C> <C> <C>
MLA 50 Corporation Delaware 100.00 Limited partner
MLA GP Corporation Delaware 100.00 General partner
Municipal Markets Advisors Incorporated Delaware 100.00 Public finance
SBF Corp. Delaware 100.00 Merchant banking
investments
Smith Barney Acquisition Corporation Delaware 100.00 Offshore fund adviser
Smith Barney Global Capital Management, Inc. Delaware 100.00 Investment management
Smith Barney Investment, Inc. Delaware 100.00 Inactive
Smith Barney Realty, Inc. Delaware 100.00 Investments
Smith Barney Risk Investors, Inc. Delaware 100.00 Investments
Smith Barney Venture Corp. Delaware 100.00 Investments
Smith Barney (Ireland) Limited Ireland 100.00 Fund management
Smith Barney Asia Inc. Delaware 100.00 Investment banking
Smith Barney Asset Management Group (Asia) Pte. Ltd. Singapore 100.00 Asset management
Smith Barney Canada Inc. Canada 100.00 Investment dealer
Smith Barney Capital Services Inc. Delaware 100.00 Derivative product
transactions
Smith Barney Cayman Islands, Ltd. Cayman Islands 100.00 Securities trading
Smith Barney Commercial Corp. Delaware 100.00 Commercial credit
Smith Barney Commercial Corporation Asia Limited Hong Kong 99.00 Commodities trading
Smith Barney Europe Holdings, Ltd. United Kingdom 100.00 Holding corp.
Smith Barney Europe, Ltd. United Kingdom 100.00 Securities brokerage
Smith Barney Shearson Futures, Ltd. United Kingdom 100.00 Inactive
Smith Barney Futures Management Inc. Delaware 100.00 Commodities pool
operator
Smith Barney Offshore Fund Ltd. Delaware 100.00 Commodity pool
Smith Barney Overview Fund PLC Dublin 100.00 Commodity fund
Smith Barney Inc. Delaware 100.00 Broker dealer
Institutional Property Owners, Inc. VII Delaware 100.00 Never activated
SBHU Life Agency, Inc. Delaware 100.00 Insurance brokerage
Robinson-Humphrey Insurance Services Inc. Georgia 100.00 Insurance brokerage
Robinson-Humphrey Insurance Services of
Alabama, Inc. Alabama 100.00 Insurance brokerage
SBHU Life & Health Agency, Inc. Delaware 100.00 Insurance brokerage
</TABLE>
10
<PAGE> 78
<TABLE>
<CAPTION>
% of Voting
Securities
State of Owned Directly
Organization or Indirectly by
------------ The Travelers Inc. Principal Business
----------------- ------------------
<S> <C> <C> <C>
SBHU Life Agency of Arizona, Inc. Arizona 100.00 Insurance brokerage
SBHU Life Agency of Indiana, Inc. Indiana 100.00 Insurance brokerage
SBHU Life Agency of Utah, Inc. Utah 100.00 Insurance brokerage
SBHU Life Insurance Agency of Massachusetts, Inc. Massachusetts 100.00 Insurance brokerage
SBS Insurance Agency of Hawaii, Inc. Hawaii 100.00 Insurance brokerage
SBS Insurance Agency of Idaho, Inc. Idaho 100.00 Insurance brokerage
SBS Insurance Agency of Maine, Inc. Maine 100.00 Insurance brokerage
SBS Insurance Agency of Montana, Inc. Montana 100.00 Insurance brokerage
SBS Insurance Agency of Nevada, Inc. Nevada 100.00 Insurance brokerage
SBS Insurance Agency of North Carolina, Inc. North Carolina 100.00 Insurance brokerage
SBS Insurance Agency of Ohio, Inc. Ohio 100.00 Insurance brokerage
SBS Insurance Agency of South Dakota, Inc. South Dakota 100.00 Insurance brokerage
SBS Insurance Agency of Wyoming, Inc. Wyoming 100.00 Insurance brokerage
SBS Insurance Brokerage Agency of Arkansas, Inc. Arkansas 100.00 Insurance brokerage
SBS Insurance Brokers of Kentucky, Inc. Kentucky 100.00 Insurance brokerage
SBS Insurance Brokers of Louisiana, Inc. Louisiana 100.00 Insurance brokerage
SBS Insurance Brokers of New Hampshire, Inc. New Hampshire 100.00 Insurance brokerage
SBS Insurance Brokers of North Dakota, Inc. North Dakota 100.00 Insurance brokerage
SBS Life Insurance Agency of Puerto Rico, Inc. Puerto Rico 100.00 Insurance brokerage
SLB Insurance Agency of Maryland, Inc. Maryland 100.00 Insurance brokerage
Smith Barney Life Agency Inc. Louisiana 100.00 Insurance brokerage
Smith Barney (France) S.A. France 100.00 Commodities trading
Smith Barney (Hong Kong) Limited Hong Kong 100.00 Broker dealer
Smith Barney (Netherlands) Inc. Delaware 100.00 Broker dealer
Smith Barney International Incorporated Oregon 100.00 Broker dealer
Smith Barney (Singapore) Pte Ltd Singapore 100.00 Commodities
Smith Barney Pacific Holdings, Inc. British Virgin Islands 100.00 Holding company
Smith Barney (Asia) Limited Hong Kong 100.00 Broker dealer
Smith Barney (Pacific) Limited Hong Kong 100.00 Commodities dealer
Smith Barney Securities Pte Ltd Singapore 100.00 Securities brokerage
</TABLE>
11
<PAGE> 79
<TABLE>
<CAPTION>
% of Voting
Securities
State of Owned Directly
Organization or Indirectly by
------------ The Travelers Inc. Principal Business
----------------- ------------------
<S> <C> <C> <C>
Smith Barney Research Pte. Ltd. Singapore 100.00 Inactive
The Robinson-Humphrey Company, Inc. Delaware 100.00 Broker dealer
Smith Barney Mortgage Brokers Inc. Delaware 100.00 Mortgage brokerage
Smith Barney Mortgage Capital Corp. Delaware 100.00 Mortgage-backed
securities
Smith Barney Mortgage Capital Group, Inc. Delaware 100.00 Mortgage trading
Smith Barney Mutual Funds Management Inc. Delaware 100.00 Investment management
Smith Barney Strategy Advisers Inc. Delaware 100.00 Investment management
E.C. Tactical Management S.A. Luxembourg 100.00 Investment management
Smith Barney Offshore, Inc. Delaware 100.00 Decathlon Fund advisor
Decathlon Offshore Limited Cayman Islands 100.00 Commodity fund
Smith Barney S.A. France 100.00 Commodities trading
Smith Barney Asset Management France SA France 100.00 Com. based asset
management
Smith Barney Shearson (Chile) Corredora
de Seguro Limitada Chile 100.00 Insurance brokerage
Structured Mortgage Securities Corporation Delaware 100.00 Mortgage-backed
securities
The Travelers Investment Management Company Connecticut 100.00 Investment advisor
Smith Barney Private Trust Company New York 100.00 Trust company.
Smith Barney Private Trust Company of Florida Florida 100.00 Trust company
Tinmet Corporation Delaware 100.00 Inactive
Travelers Services Inc. Delaware 100.00 Holding company
Tribeca Management Inc. Delaware 100.00
TRV Employees Investments, Inc. Delaware 100.00 Investments
TRV/RCM Corp. Delaware 100.00 Inactive
TRV/RCM LP Corp. Delaware 100.00 Inactive
</TABLE>
12
<PAGE> 80
Item 27. Number of Contract Owners
Not Applicable.
Item 28. Indemnification
Section 33-320a of the Connecticut General Statutes ("C.G.S.") regarding
indemnification of directors and officers of Connecticut corporations provides
in general that Connecticut corporations shall indemnify their officers,
directors and certain other defined individuals against judgments, fines,
penalties, amounts paid in settlement and reasonable expenses actually incurred
in connection with proceedings against the corporation. The corporation's
obligation to provide such indemnification generally does not apply unless (1)
the individual is successful on the merits in the defense of any such
proceeding; or (2) a determination is made (by persons specified in the
statute) that the individual acted in good faith and in the best interests of
the corporation; or (3) the court, upon application by the individual,
determines in view of all of the circumstances that such person is fairly and
reasonably entitled to be indemnified, and then for such amount as the court
shall determine. With respect to proceedings brought by or in the right of the
corporation, the statute provides that the corporation shall indemnify its
officers, directors and certain other defined individuals, against reasonable
expenses actually incurred by them in connection with such proceedings, subject
to certain limitations.
C.G.S. Section 33-320a provides an exclusive remedy; a Connecticut corporation
cannot indemnify a director or officer to an extent either greater or less than
that authorized by the statute, e.g., pursuant to its certificate of
incorporation, by-laws, or any separate contractual arrangement. However, the
statute does specifically authorize a corporation to procure indemnification
insurance to provide greater indemnification rights. The premiums for such
insurance may be shared with the insured individuals on an agreed basis.
Travelers Group Inc. also provides liability insurance for its directors and
officers and the directors and officers of its subsidiaries, including the
Depositor. This insurance provides for coverage against loss from claims made
against directors and officers in their capacity as such, including, subject to
certain exceptions, liabilities under the Federal securities laws.
Rule 484 Undertaking
Insofar as indemnification for liability arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification
against such liability (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by
such director, officer or controlling person in connection with the securities
being registered, the registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
<PAGE> 81
Item 29. Principal Underwriter
(a) In addition to The Travelers Fund ABD II for Variable Annuities, Tower
Square Securities, Inc. also serves as the principal underwriter for:
The Travelers Growth and Income Stock Account for Variable Annuities
The Travelers Quality Bond Account for Variable Annuities
The Travelers Money Market Account for Variable Annuities
The Travelers Timed Growth and Income Stock Account for Variable
Annuities
The Travelers Timed Short-Term Bond Account for Variable Annuities
The Travelers Timed Aggressive Stock Account for Variable Annuities
The Travelers Timed Bond Account for Variable Annuities
The Travelers Fund U for Variable Annuities
The Travelers Fund VA for Variable Annuities
The Travelers Fund BD for Variable Annuities
The Travelers Fund BD II for Variable Annuities
The Travelers Fund ABD for Variable Annuities
The Travelers Separate Account QP for Variable Annuities
The Travelers Separate Account QP II for Variable Annuities
The Travelers Fund UL for Variable Life Insurance
The Travelers Fund UL II for Variable Life Insurance
The Travelers Variable Life Insurance Separate Account One
The Travelers Variable Life Insurance Separate Account Three
<TABLE>
<CAPTION>
(b) Name and Principal Positions and Offices Positions and Offices
Business Address * With Underwriter With Registrant
------------------ ---------------- -----------------
<S> <C> <C>
Russell H. Johnson Chairman and Chief Executive -----
Officer
Donald R. Munson, Jr. Director, President and Chief -----
Operating Officer
William F. Scully, III Member, Board of Directors, -----
Senior Vice President, Treasurer
and Chief Financial Officer
Cynthia P. Macdonald Vice President, Chief Compliance -----
Officer, Assistant Secretary
Jay S. Benet Member, Board of Directors -----
George C. Kokulis Member, Board of Directors -----
Warren H. May Member, Board of Directors -----
Kathleen A. McGah General Counsel and Secretary Assistant Secretary
Robert C. Hamilton Vice President -----
Tracey Kiff-Judson Second Vice President -----
Robin A. Jones Second Vice President -----
Whitney F. Burr Second Vice President -----
Marlene M. Ibsen Second Vice President -----
John J. Williams, Jr. Director and Assistant Compliance -----
Officer
</TABLE>
<PAGE> 82
<TABLE>
<CAPTION>
(cont'd)
(b) Name and Principal Positions and Offices Positions and Offices
Business Address * With Underwriter With Registrant
------------------ ---------------------------------------------------------------
<S> <C> <C>
Susan M. Curcio Director and Operations Manager -----
Gregory C. Macdonald Director -----
Thomas P. Tooley Director -----
Dennis D. D'Angelo Director -----
Nancy S. Waldrop Assistant Treasurer -----
</TABLE>
* Principal business address: One Tower Square, Hartford,
Connecticut 06183
(c). Not Applicable.
Item 30. Location of Accounts and Records
The Travelers Life and Annuity Company
One Tower Square
Hartford, Connecticut 06183
Item 31. Management Services
Not applicable.
Item 32. Undertakings
The undersigned Registrant hereby undertakes:
(a) To file a post-effective amendment to this registration statement as
frequently as is necessary to ensure that the audited financial
statements in the registration statement are never more than sixteen
months old for so long as payments under the variable annuity contracts
may be accepted;
(b) To include either (1) as part of any application to purchase a contract
offered by the prospectus, a space that an applicant can check to
request a Statement of Additional Information, or (2) a post card 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
(c) To 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> 83
SIGNATURES
As required by the Securities Act of 1933 and the Investment Company Act of
1940, the Registrant has caused this Pre-Effective Amendment No. 1 to this
Registration Statement to be signed on its behalf, in the City of Hartford, and
State of Connecticut, on this 17th day of June, 1996.
THE TRAVELERS FUND ABD II FOR VARIABLE ANNUITIES
(Registrant)
THE TRAVELERS LIFE AND ANNUITY COMPANY
(Depositor)
By: /s/ Ian R. Stuart
----------------------------------------------
Ian R. Stuart
Director, Vice President, Chief Financial Officer
Chief Accounting Officer and Controller
Pursuant to the requirements of the Securities Act of 1933, this Pre-Effective
Amendment No. 1 to this Registration Statement has been signed below by the
following persons in the capacities indicated on June 17, 1996.
<TABLE>
<S> <C>
*MICHAEL A. CARPENTER Chairman of the Board, President
- --------------------------------------- and Chief Executive Officer
(Michael A. Carpenter)
*ROBERT I. LIPP Director
- ---------------------------------------
(Robert I. Lipp)
*KATHERINE M. SULLIVAN Director, Senior Vice President and General
- ---------------------------------------
(Katherine M. Sullivan)
*IAN R. STUART Director, Vice President, Chief Financial Officer
- --------------------------------------- Chief Accounting Officer and Controller
(Ian R. Stuart)
*MARC P. WEILL Director
- ---------------------------------------
(Marc P. Weill)
*By: /s/ Ernest J. Wright
--------------------------------------------------------
Ernest J. Wright, Attorney-in-Fact
</TABLE>
<PAGE> 84
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
No. Description Method of Filing
--------- ----------- ----------------
<S> <C> <C>
1. Resolution of The Travelers Life and Annuity Company
Board of Directors authorizing the establishment
of the Registrant. (Incorporated herein by reference
to Exhibit 1 to the Registration Statement on Form N-4,
filed December 22, 1995.)
3(a). Form of Distribution and Management Agreement
among the Registrant, The Travelers Life and Annuity
Company and Tower Square Securities, Inc.
(Incorporated herein by reference to Exhibit 3(a) to
the Registration Statement on Form N-4, filed
December 22, 1995.)
3(b). Form of Selling Agreement. (Incorporated herein by
reference to Exhibit 3(b) to the Registration Statement
on Form N-4, filed December 22, 1995.)
4. Form of Variable Annuity Contract(s). Electronically
6(a). Charter of The Travelers Life and Annuity Company, as
amended on April 10, 1990. (Incorporated herein
by reference to Exhibit 3(a) to the Registration
Statement on Form N-4, File No. 33-58131, filed via
Edgar on March 17, 1995.)
6(b). By-laws of The Travelers Life and Annuity Company, as
amended on October 20, 1994. (Incorporated herein
by reference to Exhibit 3(b) to the Registration
Statement on Form N-4, File No. 33-58131, filed via
Edgar on March 17, 1995.)
9. Opinion of Counsel as to the legality of securities being
registered by Registrant. (Incorporated herein by reference
to Exhibit 9 to the Registration Statement on Form N-4,
filed December 22, 1995.)
10(a). Consent of Coopers & Lybrand, L.L.P., Independent Accountants. Electronically
10(b). Consent of KPMG Peat Marwick LLP, Independent Electronically
Certified Public Accountants.
13. Schedule of Computation of Total Return Calculations. Electronically
</TABLE>
<PAGE> 85
<TABLE>
<S> <C> <C>
15. Powers of Attorney authorizing Jay S. Fishman or
Ernest J. Wright as signatory for Michael A Carpenter,
Robert I. Lipp, Charles O. Prince III, Marc P. Weill,
Irwin R. Ettinger, Donald T. DeCarlo and Christine B.
Mead. (Incorporated herein by reference to Exhibit 15
to the Registration Statement on Form N-4, filed
December 22, 1995.)
15(b). Powers of Attorney authorizing Ernest J. Wright and Electronically
and Kathleen A. McGah as signatory for Michael A.
Carpenter, Ian R. Stuart and Katherine M. Sullivan.
</TABLE>
<PAGE> 1
TRAVELERSINSURANCE
A MEMBER OF TRAVELERSGROUP
THE TRAVELERS LIFE AND ANNUITY COMPANY -- ONE TOWER
SQUARE -- HARTFORD, CONNECTICUT -- 06183
A STOCK COMPANY
We are pleased to provide you the benefits of this Variable Annuity Contract.
Please read your contract and all attached forms carefully.
RIGHT TO EXAMINE THIS CONTRACT
If this contract is returned to us at Our Office or to our Agent to be
cancelled within 20 days after its delivery to you, we will pay
you the Contract Value determined as of the next valuation date
after we receive the Written Request at Our Office, plus any
premium tax charges or contract charges paid. After the contract
is returned, it will be considered as never in effect.
This contract is issued in consideration of the purchase payment. It is subject
to the terms and conditions stated on the attached pages, all of which are a
part of it.
Executed at Hartford, Connecticut
Chairman
This is a legal contract between you and us. READ YOUR CONTRACT CAREFULLY
INDIVIDUAL DEFERRED VARIABLE ANNUITY CONTRACT
NON TAX QUALIFIED
LIFE ANNUITY COMMENCING AT MATURITY DATE
Elective Options Non--Participating
ANNUITY PAYMENTS AND OTHER VALUES PROVIDED BY THIS CONTRACT, WHEN BASED ON THE
INVESTMENT EXPERIENCE OF THE SEPARATE ACCOUNT, ARE VARIABLE AND ARE NOT
GUARANTEED AS TO FIXED DOLLAR AMOUNT.
TL-14529 TLAC Ed.1-96
<PAGE> 2
T A B L E OF C O N T E N T S
<TABLE>
<S> <C>
Right to Examine this Contract Cover Page
Contract Specifications Page 3- 4
Definitions Page 5
Owner, Beneficiary and Annuitant Provisions Pages 6 - 7
Purchase Payment and Valuation Provisions Pages 8 - 10
Death Benefit Provisions Page 11
Settlement Provisions Pages 12 - 14
General Provisions Pages 16 - 16
Table of Values Page 17
Life Annuity Tables Pages 19 - 20
</TABLE>
Any Riders or Endorsements follow the Life Annuity Tables.
TL-14529 Page 2 TLAC Ed. 1-96
<PAGE> 3
<TABLE>
<S> <C> <C>
OWNER JOHN DOE
JOINT OWNER
ANNUITANT JOHN DOE
CONTINGENT ANNUITANT
CONTRACT NUMBER SPECIMEN 01/01/96 CONTRACT DATE
MONTHLY LIFE ANNUITY 12/01/26 MATURITY DATE
--------------------------------------------------------------------------------------------------
</TABLE>
PURCHASE PAYMENTS:
Minimum Initial Purchase Payment: $5,000
Minimum Subsequent Purchase Payment: $500
Maximum Purchase Payment: $1,000,000 unless we consent to a larger amount
SEPARATE ACCOUNT: THE TRAVELERS FUND ABD
<TABLE>
<CAPTION>
FUNDING OPTIONS SUB ACCOUNT
DEDUCTION PER DAY
<S> <C>
Capital Appreciation Fund .0000384
High Yield Bond Trust .0000384
Managed Assets Trust .0000384
Travelers Series Trust .0000384
U.S. Government Securities Portfolio .0000384
Social Awareness Stock Portfolio .0000384
Utilities Portfolio .0000384
</TABLE>
Information about the Separate Account is provided in the prospectus for Fund
ABD.
FIXED ACCOUNT GUARANTEED INTEREST PERIODS: The initial rate for any deposit is
guaranteed for one year from date of deposit. Subsequent renewal rates will be
guaranteed for the calendar quarter.
TRANSFER CHARGE: $0.00
You may transfer up to 15 % of the Fixed Account value to any of the
Sub-Accounts twice a year during the 30 days following the semi-annual Contract
Date anniversary.
AMOUNTS DEDUCTED ON SURRENDER (FIRST IN, FIRST OUT BASIS):
<TABLE>
<CAPTION>
YEARS SINCE PURCHASE PERCENT OF PURCHASE
PAYMENT WAS PAID PAYMENTS (NOT PREVIOUSLY SURRENDERED)
-------------------------- -------------------------------------
<S> <C>
1 6%
2 6%
3 5%
4 5%
5 4%
6 3%
7 2%
8 AND THEREAFTER 0%
</TABLE>
After the first Contract Year, you may take partial surrenders annually of up
to 10% of your Contract Value as of the first Valuation Date of any given
Contract Year without imposition of amounts deducted on surrender.
TL-14530 Page 3 TLAC Ed. 1-96
<PAGE> 4
CONTRACT CHARGE
$30.00, Annually. This charge will be taken on the fourth Friday of August of
each year. This charge will be waived if your Contract Value is equal to or
greater than $40,000 on the date the charge would be taken. No Contract Charge
will be deducted from the Fixed Account
ASSUMED DAILY NET INVESTMENT FACTOR is 1.000081 for all Sub-Accounts.
TERMINATION
We reserve the right to terminate this contract when the Contract Value is less
than the Termination Amount of $1,000 and no purchase payments have been made
for at least two years.
TL-14530 Page 4 TLAC Ed. 1-96
<PAGE> 5
DEFINITIONS
(a) ACCOUNT(S) --the Sub-Accounts and/or the Fixed Account under this
contract.
(b) ACCUMULATION UNIT--an accounting unit of measure used to calculate the
value of this contract before Annuity payments begin.
(c) AGE--age last birthday.
(d) ANNUITANT--the person on whose life the Maturity Date and Annuity payments
depend.
(e) ANNUITY UNIT--an accounting unit of measure used to calculate the amount
of Annuity payments.
(f) CODE--the Internal Revenue Code of 1986, as amended, and all related laws
and regulations which are in effect during the term of this contract
(g) CONTRACT DATE --the date on which the contract is issued.
(h) CONTRACT YEARS--twelve month periods beginning with the Contract Date.
(i) DEATH REPORT DATE--the Valuation Date coincident with or next following
the day on which we have received 1) Due Proof of Death and 2) Written
Request for an election of a single sum payment or an alternate Settlement
Option as described in the contract.
(j) DUE PROOF OF DEATH--(i) a copy of a certified death certificate; (ii) a
copy of a certified decree of a court of competent jurisdiction as to the
finding of death; (iii) a written statement by a medical doctor who
attended the deceased; or (iv) any other proof satisfactory to us.
(k) FIXED ACCOUNT--an account that consists of all the assets under this
contract other than those in the Separate Account.
(l) FUNDING OPTION--an open-end diversified management investment company
indicated in the CONTRACT SPECIFICATIONS, which serves as an investment
option under the Separate Account
(m) MATURITY DATE--the date on which the Annuity or Income payments are to
begin.
(n) OUR OFFICE--the Home Office of The Travelers Life and Annuity Company or
any other office which we may designate for the purpose of administering
this contract.
(o) RECORDED--a Written Request is recorded when the information is noted in
our file for this contract.
(p) SEPARATE ACCOUNTS--those Separate Accounts indicated in the CONTRACT
SPECIFICATIONS which we established for this class of contracts and
certain other contracts.
(q) SETTLEMENT OPTION--an Annuity or Income option elected under this
contract.
(r) SUB-ACCOUNT--that portion of the assets of a Separate Account which is
allocated to a particular Underlying Fund.
(s) VALUATION DATE--a date on which a Sub-Account is valued.
(t) VALUATION PERIOD--the period between successive valuations.
(u) WE, US, OUR--The Travelers Life and Annuity Company.
(v) WRITTEN REQUEST--written information including requests for contract
changes sent to us in a form and content satisfactory to us and received
at Our Office.
(w) YOU, YOUR--the owner including a joint owner.
TL-14531 Page 5 TLAC Ed. 1-96
<PAGE> 6
OWNER, BENEFICIARY AND ANNUITANT PROVISIONS
OWNER
This contract belongs to the owner shown on the CONTRACT SPECIFICATIONS or to
any person subsequently named in a Written Request of transfer of owner as
provided below. As owner, you have sole power during the Annuitant's lifetime
to exercise any rights and to receive all benefits given in this contract
provided you have not named an irrevocable Beneficiary and provided the
contract is not assigned.
You will be the recipient of all payments while the Annuitant is alive unless
you direct them to an alternate recipient under a Recorded payment direction. An
alternate recipient under a payment direction does not become the owner. A
payment direction is revocable by you at any time by Written Request giving 30
days advance notice.
JOINT OWNER
Joint owners may be named in a Written Request prior to the Contract Date.
Joint owners may independently exercise transfers between Accounts. All other
rights of ownership must be exercised by joint action. Joint owners own equal
shares of any benefits accruing or payments made to them. All rights of a joint
owner end at death if another joint owner survives. The entire interest of the
deceased joint owner in this contract will pass to the surviving joint owner.
If the owner dies and is survived by the Annuitant before payment of an Annuity
or Income Option begins, any surviving joint or succeeding owner is the
"designated beneficiary" referred to in Section 72(s) of the Code, and his or
her rights pre-empt those of the Beneficiary named in a Written Request.
TRANSFER OF OWNER
You may transfer ownership by Written Request. You may not revoke any transfer
after the effective date. Once the transfer of owner is Recorded by us, it will
take effect as of the date of your Request, subject to any payments made or
other actions taken by us before the recording.
Unless provided otherwise, a transfer does not affect the interest of any
Beneficiary designated prior to the effective date of the transfer.
A transfer of ownership may have adverse tax consequences to you as the former
owner.
ASSIGNMENT
You may collaterally assign ownership of all or a portion of this contract by
Written Request without the approval of any Beneficiary unless irrevocably
named. You may not exercise any rights of ownership while the assignment remains
in effect without the approval of the collateral assignee. We are not
responsible for the validity of any assignment. Once the collateral assignment
is Recorded by us, it will take effect as of the date of your Written Request,
subject to any payments made or other actions taken by us before the Request is
received.
If a claim is made based on an assignment, we may require proof of interest of
the claimant. A Recorded assignment takes precedence over any rights of a
Beneficiary. Any amounts due under a Recorded assignment will be paid in a
single sum.
An assignment may have adverse tax consequences to you.
CREDITOR CLAIMS
To the extent permitted by law, no right or benefit of the owner or Beneficiary
under this contract shall be subject to the claims of creditors or any legal
process except as may be provided by an assignment.
BENEFICIARY
The Beneficiary is the party named in a Written Request. The Beneficiary has the
right to receive any remaining contractual benefits upon the death of the
Annuitant, or under certain circumstances, upon the death of the owner. If there
is more than one Beneficiary surviving the Annuitant, the Beneficiaries will
share equally in benefits unless different shares are Recorded with us by
Written Request prior to the death of the Annuitant.
If the owner dies and is survived by the Annuitant before payment of an
Annuity or Income Option begins, any surviving joint owner is the "designated
beneficiary" referred to in Section 72(s) of the Code, and his or her rights
pre-empt those of the Beneficiary named in a Written Request.
<PAGE> 7
Unless an irrevocable Beneficiary has been named, you have the right to change
any Beneficiary by Written Request during the lifetime of the Annuitant and
while the contract continues.
Once a change in Beneficiary is Recorded by us, it will take effect as of the
date of the Written Request, subject to any payments made or other actions taken
by us before the recording.
If no Beneficiary has been named by you, or if no Beneficiary is living when the
Annuitant dies, the interest of any Beneficiary will pass:
a. if you are living, to you;
b. if you have died and there is a surviving joint owner, to the
joint owner;
c. if you have died and there is not a joint owner surviving, to
your estate.
ANNUITANT
The Annuitant is the individual shown on the CONTRACT SPECIFICATIONS on whose
life the first Annuity payment is made. The Annuitant may not be changed after
the Contract Date.
CONTINGENT ANNUITANT
You may name one individual as a contingent annuitant by Written Request prior
to the Contract Date. A contingent annuitant may not be changed, deleted or
added to the contract after the Contract Date. For purposes of this provision
the owner cannot be the Annuitant.
If the Annuitant dies prior to the Maturity Date while this contract is in
effect and while the contingent annuitant is living:
a. the death benefit will not be payable upon the Annuitant's death;
b. the contingent annuitant becomes the Annuitant; and
c. all other rights and benefits provided by this contract will
continue in effect.
When a contingent annuitant becomes the Annuitant, the Maturity Date remains the
same as previously in effect, unless otherwise provided.
TL-14531 Page 7 TLAC Ed. 1-96
<PAGE> 8
PURCHASE PAYMENT AND VALUATION PROVISIONS
PURCHASE PAYMENTS
PURCHASE PAYMENT
Purchase payments are the payments you make for this contract and the benefits
it provides. An initial lump sum purchase payment must be made to the contract
and is due and payable before the contract becomes effective. Each purchase
payment is payable as shown on the CONTRACT SPECIFICATIONS to us at Our Office
or to one of our authorized representatives. No purchase payments after the
initial purchase payment are required to continue this contract in force, except
as provided in the "Termination" provision.
Net purchase payments are that part of your purchase payments applied to the
Contract Value. A net purchase payment is equal to the purchase payment less any
applicable premium tax charge.
ALLOCATION OF PURCHASE PAYMENTS
We will apply any net purchase payments to provide Accumulation Units of
selected Sub-Accounts and/or the Fixed Account of this contract. The initial
payment will be applied within two business days following its receipt at Our
Office. Any subsequent purchase payments will be applied as of the next
valuation following receipt of those payments at Our Office. The net purchase
payment will be allocated to the Accounts in the proportion specified by you for
this contract. By Written Request, you may change your choice of Accounts or
allocation percentages. The available Funding Options to which Sub-Account
assets are allocated are shown on the CONTRACT SPECIFICATIONS; funds may be
subsequently added or may be deleted.
SUB-ACCOUNT VALUATION
NUMBER OF ACCUMULATION UNITS
The number of Accumulation Units to be credited to each Sub-Account once a
purchase payment has been received by us will be determined by dividing the net
purchase payment applied to that Sub-Account by the then Accumulation Unit Value
of that Sub-Account.
ACCUMULATION UNIT VALUE
The initial value of an Accumulation Unit for each Sub-Account was set at $1.00.
We determine the value of an Accumulation Unit in each Sub-Account on each
Valuation Date by multiplying the value on the immediately preceding Valuation
Date by the net investment factor for that Sub-Account for the Valuation Period
just ended.
The value of an Accumulation Unit on any date other than a Valuation Date will
be equal to its value as of the next Valuation Date.
NET INVESTMENT FACTOR
The net investment factor is a factor applied to measure the investment
performance of a Sub-Account from one Valuation Period to the next. The net
investment factor for a Sub-Account for any Valuation Period is equal to the sum
of 1.0000 plus the net investment rate.
Each Sub-Account's net investment rate for a Valuation Period is equal to the
gross investment rate for that Sub-Account, less the applicable Sub-Account
deduction for the Valuation Period.
All Sub-Account deductions are shown on the CONTRACT SPECIFICATIONS.
The gross investment rate of a Sub-Account for a Valuation Period is equal to
(1) divided by (2) where (1) is:
a. investment income, plus
b. capital gains and losses, whether realized or unrealized; less
c. a deduction for any tax levied against the Separate Account and
its Funding Options; and
(2) is the amount of the assets at the beginning of the Valuation Period.
<PAGE> 9
The gross investment rate for a Sub-Account may be either positive or negative.
If a Sub-Account is invested in shares of an Underlying Fund, assets are based
on the net asset value of the Underlying Fund. Investment income includes any
distribution whose ex-dividend date occurs during the Valuation Period.
FIXED ACCOUNT VALUATION
NUMBER OF ACCUMULATION UNITS--We will determine the number of Accumulation Units
to be credited to the Fixed Account on receipt of a purchase payment by dividing
the net purchase payment applied to the Fixed Account by the then dollar value
of one Accumulation Unit Value of the Fixed Account.
ACCUMULATION UNIT VALUE--We determine the value of an Accumulation Unit in the
Fixed Account on any day by multiplying the value on the immediately preceding
day by the net interest factor for the day on which the value is being
determined.
TL-14531 Page 8 TLAC Ed. 1-96
<PAGE> 10
NET INTEREST FACTOR--The net interest factor for any day is the guaranteed net
interest rate which is equivalent to an effective annual interest rate of 3.00%,
plus 1.0000. The method of crediting additional interest will be at our
discretion.
Interest is declared in advance. Before Annuity or Income payments begin, we may
credit the Fixed Account with annual interest rates higher than the minimum
guaranteed interest rate of 3.00 % . Interest rates may be higher or lower than
the initial interest rates, but not less than the minimum guaranteed interest
rate of 3.00%. Additional amounts may be credited by us at our discretion for
the guaranteed interest periods shown on the CONTRACT SPECIFICATIONS.
TRANSFER BETWEEN ACCOUNTS
You may transfer all or any part of the Contract Value from one Sub-Account to
any other Sub-Account at any time up to 30 days before the due date of the first
Annuity or Income payment. Additionally, you may transfer a part of the Fixed
Account value to any of the Sub-Accounts, twice a year during the 30 days
following the semi-annual Contract Date anniversary in the amount shown on the
CONTRACT SPECIFICATIONS.
Amounts may generally be transferred from the Sub-Accounts to the Fixed Account
at any time, up to 30 days before the due date of the first Annuity or Income
payment. Amounts previously transferred from the Fixed Account to the
Sub-Accounts may not be transferred back to the Fixed Account for a period of at
least 6 months from the date of transfer. We reserve the right to limit the
number of transfers from one Sub-Account to any other Sub-Account or to the
Fixed Account. We will not limit these transfers to less than one in any six
month period.
Transfers between Accounts will result in the addition or deletion of
Accumulation Units having a total value equal to the dollar amount being
transferred to or from a particular Account. The number of Accumulation Units
will be determined by using the Accumulation Unit Value of the Accounts involved
as of the next valuation after we receive notification of request for transfer.
Transfers will be subject to any applicable Transfer charge stated on the
CONTRACT SPECIFICATIONS.
CONTRACT VALUES
CONTRACT VALUE
The Contract Value of this contract on any date equals the sum of the
accumulated values in the Accounts. The accumulated value in an Account equals
the number of outstanding Accumulation Units credited to that Account,
multiplied by the then Accumulation Unit Value for that Account.
The Guaranteed Value of the Fixed Account equals the accumulated value of the
Fixed Account calculated by using the guaranteed net interest factor. The
Guaranteed Values of the Fixed Account are shown in the Table of Values.
CONTRACT CHARGE
A Contract Charge in the amount and for the period shown on the CONTRACT
SPECIFICATIONS will be deducted from the Contract Value to reimburse us for
administrative expenses relating to the contract. The Contract Charge will be
deducted by surrendering on a pro rata basis Accumulation Units from all
Sub-Accounts in which you have an interest.
We will deduct the charge on a pro rata basis if the contract has been in effect
for less than a full period on the date a Contract Charge is deducted. The
Contract Charge will also be prorated upon full surrender or termination of the
contract.
CASH SURRENDER
You may elect by Written Request to receive the Cash Surrender Value of this
contract before the due date of the first Annuity or Income payment and without
the consent of any Beneficiary unless irrevocably named. You may elect either a
full or partial surrender of the Cash Surrender Value. In the case of a full
surrender, this contract will be cancelled. A partial surrender will result in a
reduction in your Contract Value. If you have a balance in more than one
Account, your Contract Value will be reduced from all your Accounts on a pro
rata basis, unless you request otherwise.
The Cash Surrender Value will be determined as of the next valuation following
receipt of your Written Request. We may delay payment of the Cash Surrender
Value of the Sub-Accounts for a period of not more than five days after we
receive your Written Request. We may delay payment of the Cash Surrender Value
of the Fixed Account for a period of not more than six months after we receive
your Written Request.
<PAGE> 11
CASH SURRENDER VALUE
The Cash Surrender Value is equal to the Contract Value less any amounts
deducted on surrender which are shown on the CONTRACT SPECIFICATIONS and any
applicable premium tax not previously deducted.
The Guaranteed Cash Surrender Value of the Fixed Account equals the Guaranteed
Value of the Fixed Account less any amounts deducted on surrender which are
shown on the CONTRACT SPECIFICATIONS and less any applicable premium tax not
previously deducted. For Guaranteed Cash Surrender Values of the Fixed Account,
see the Table of Values.
CONTRACT CONTINUATION
Except as provided in the "Termination" provision, this contract does not
require continuing purchase payments and will automatically continue as a
paid-up contract during the lifetime of the Annuitant until the Maturity Date or
until it is surrendered.
TL-14531 Page 10 TLAC Ed. 1-96
<PAGE> 12
DEATH BENEFIT PROVISIONS
DEATH OF ANNUITANT
A death benefit is payable to the Beneficiary upon the death of the Annuitant
before the Maturity Date, unless prior to the Maturity Date there is a
contingent annuitant surviving. A death benefit is also payable under those
Settlement Options which provide for death benefits. We will pay the Beneficiary
the death benefit in a single sum as described below upon receiving Due Proof of
Death. A Beneficiary may request that a death benefit payable under this
contract be applied to a Settlement Option subject to the provisions of this
contract and the current Tax Law Qualification Rider.
DEATH OF OWNER WITH ANNUITANT SURVIVING
If the owner dies (including the first of joint owners) before the Maturity Date
and with the Annuitant surviving, we will recalculate the value of the death
benefit under provisions of DEATH PROCEEDS PRIOR TO THE MATURITY DATE below. The
value of the death benefit, as recalculated, will be paid in a single lump sum
or by other election to the party taking proceeds under the current Tax Law
Qualification Rider. The party must take distributions no later than under the
applicable elections of that provision. All references to annuitant in the DEATH
PROCEEDS PRIOR TO MATURITY DATE provision will be replaced with reference to the
owner.
DEATH PROCEEDS PRIOR TO THE MATURITY DATE
If the Annuitant dies before age 75 and before the Maturity Date, we will pay
the Beneficiary the greatest of a), b), or c) below, less any applicable
premium tax or prior surrenders not previously deducted as of the Death Report
Date:
a. the Contract Value;
b. the total purchase payments under the contract; or
c. the death benefit value, which will be reset once every five
years to the then current Contract Value, immediately preceding
the Death Report Date.
If the Annuitant dies on or after age 75, but before age 85 and before the
Maturity Date, we will pay the Beneficiary the greatest of a), b), or c) below,
less any applicable premium tax or prior surrenders not previously deducted as
of the Death Report Date:
a. the Contract Value;
b. the total purchase payments under the contract; or
c. the death benefit value which will be reset once every five
years to the then current Contract Value, occurring on or before
the Annuitant's 75th birthday.
If the Annuitant dies on or after age 85 and before the Maturity Date, we will
pay the Beneficiary the Contract Value less any applicable premium tax as of the
Death Report Date.
DEATH PROCEEDS AFTER THE MATURITY DATE
If the Annuitant dies on or after the Maturity Date, we will pay the
Beneficiary a death benefit consisting of any benefit remaining under the
Annuity or Income option then in effect.
TL-14531 Page 11 TLAC Ed. 1-96
<PAGE> 13
SETTLEMENT PROVISIONS
MATURITY DATE
The Maturity Date is shown on the CONTRACT SPECIFICATIONS. This is the date on
which we will begin paying to you the first of a series of Annuity or Income
payments in accordance with the Settlement Option elected by you. Annuity or
Income payments will begin under this contract on the Maturity Date unless the
contract has been fully surrendered or the proceeds have been paid to the
Beneficiary prior to that date. We may require proof that the Annuitant is
alive before Annuity payments are made. If no Maturity Date is specified, the
automatic Maturity Date will be the greater of when the Annuitant reaches age
75 or ten years after the Contract Date.
Additionally, to the extent permitted by law, at least 30 days before the
original Maturity Date, you may change the Maturity Date by Written Request to
any time prior to the Annuitant's 85th birthday or to a later date with our
consent.
ELECTION OF SETTLEMENT OPTIONS
On the Maturity Date, or other agreed upon date, we will pay the amount payable
under this contract to you in one lump sum or in accordance with the option
elected by you. While the Annuitant is alive, you may change your Settlement
Option election by Written Request, but only before the Maturity Date. Once
Annuity or Income payments have commenced, no further election changes are
allowed.
During the Annuitant's lifetime, if no election has been made on the Maturity
Date, we will pay to you the first of a series of monthly Annuity payments based
on the life of the Annuitant, in accordance with Annuity Option 2, with 120
monthly payments assured.
MINIMUM AMOUNTS
The minimum amount that can be placed under a Settlement Option is $2,000 unless
we consent to a lesser amount. If any periodic payments due are less than
$100.00, we reserve the right to make payments at less frequent intervals.
ALLOCATION OF ANNUITY
At the time election of one of the Annuity Options is made, the person electing
the option may further elect to have the Cash Surrender Value applied to provide
a Variable Annuity, a Fixed Annuity or a combination of both.
If no election is made to the contrary, the value of a Sub-Account will be
applied when Annuity payments start to provide an Annuity which varies with the
investment experience of that same Sub-Account and the value of the Fixed
Account will be applied to provide a Fixed Annuity.
You may elect to transfer Contract Value from one Account to another, as
described in the provision "Transfer Between Accounts," in order to reallocate
the basis on which Annuity payments will be determined. Once Annuity payments
start, you may, with our consent, change the allocation of your values in each
Sub-Account.
VARIABLE ANNUITY
AMOUNT OF BASIC FIRST PAYMENT
The LIFE ANNUITY TABLES are used to determine the basic first monthly Annuity
payment. They show the dollar amount of the basic first monthly Annuity payment
which can be purchased with each $1,000 applied. The amount applied to an
Annuity will be the Cash Surrender Value as of 14 days before the date Annuity
payments start. We reserve the right to require satisfactory proof of the age of
any person on whose life Annuity payments are based before making the first
payment under any of these options.
ANNUITY UNIT VALUE
The initial value of an Annuity Unit for each Sub-Account was set at $1.00. On
any Valuation Date, the Annuity Unit Value for a Sub-Account equals the
Sub-Account Annuity Unit Value on the immediately preceding Valuation Date,
multiplied by the net investment factor for that Sub-Account for the Valuation
Period just ended, divided by the Assumed Daily Net Investment Factor. The
Assumed Daily Net Investment Factor is shown on the CONTRACT SPECIFICATIONS.
<PAGE> 14
The value of an Annuity Unit as of any date other than a Valuation Date will be
equal to its value as of the next succeeding Valuation Date.
NUMBER OF ANNUITY UNITS
We determine the number of Annuity Units credited to this contract in each
Sub-Account by dividing the basic first monthly Annuity payment attributable to
that Sub-Account by the Sub-Account's Annuity Unit Value as of 14 days before
the due date of the first Annuity payment.
TL-14531 Page 12 TLAC Ed. 1-96
<PAGE> 15
AMOUNT OF SECOND AND SUBSEQUENT BASIC PAYMENTS
The dollar amount of the second and subsequent payments may change from month to
month. The total amount of each Annuity payment will be equal to the sum of the
basic payments in each Sub-Account.
The actual amount of the basic payments in each Sub-Account is found by
multiplying the number of Annuity Units credited to the contract in that
Sub-Account by the Annuity Unit Value of the Sub-Account as of the date 14 days
prior to the date on which the payment is due.
FIXED ANNUITY
A Fixed Annuity is an Annuity with payments which remain fixed as to dollar
amount throughout the payment period. The dollar amount of the first Fixed
Annuity payment will be calculated as described above in the "Amount of Basic
First Payment" provision. All subsequent payments will be in the same amount and
that amount will be assured throughout the payment period. If it would produce a
larger payment, we agree that the first Fixed Annuity payment will be determined
using the Life Annuity Tables in effect on the Maturity Date.
ANNUITY OPTIONS
Subject to conditions stated in ELECTIONS OF SETTLEMENT OPTIONS and MINIMUM
AMOUNTS, all or any part of the Cash Surrender Value of this contract may be
paid under one or more of the Annuity Options below.
OPTION 1. LIFE ANNUITY--NO REFUND
We will make monthly Annuity payments during the lifetime of the person on whose
life the payments are based, ending with the last monthly payment preceding
death.
OPTION 2. LIFE ANNUITY WITH 120, 180 OR 240 MONTHLY PAYMENTS ASSURED
We will make monthly Annuity payments during the lifetime of the person on whose
life the payments are based and under the conditions stated below.
If at the death of that person, payments have been made for less than 120, 180
or 240 months, as elected, we will continue to make payments to the designated
Beneficiary during the remainder of the period.
OPTION 3. JOINT AND LAST SURVIVOR LIFE ANNUITY
We will make monthly Annuity payments during the joint lifetime of two persons
on whose lives payments are based and during the lifetime of the survivor.
No more payments will be made after the death of the survivor.
OPTION 4. JOINT AND LAST SURVIVOR LIFE ANNUITY--ANNUITY REDUCED ON DEATH OF
PRIMARY PAYEE
We will make monthly Annuity payments during the joint lifetime of two persons
on whose lives payments are based. One of the two persons will be designated as
the primary payee. The other will be designated the secondary payee. On the
death of the secondary payee, if survived by the primary payee, we will continue
to make monthly Annuity payments to the primary payee in the same amount that
would have been payable during the joint lifetime of the two persons.
On the death of the primary payee, if survived by the secondary payee, we will
continue to make monthly Annuity payments to the secondary payee in an amount
equal to 50% of the payments which would have been made during the lifetime of
the primary payee.
No further payments will be made following the death of the survivor.
OPTION 5. OTHER ANNUITY OPTIONS
We will make any other arrangements for Annuity payments as may be mutually
agreed.
TL-14531 Page 13 TLAC Ed.1-96
<PAGE> 16
INCOME OPTIONS
We will pay all or any part of the Cash Surrender Value to you under one or more
of the Income Options below subject to the conditions stated in ELECTION OF
SETTLEMENT OPTIONS and MINIMUM AMOUNTS and the currently effective Tax Law
Qualification Rider.
The Cash Surrender Value used to determine the amount of any Income payment will
be based on the Accumulation Unit Value as of 14 days before the date an Income
payment is due and will be determined the same way as in the Accumulation
period.
OPTION 1. PAYMENTS OF A FIXED AMOUNT
We will make equal payments each month in the amount elected until the Cash
Surrender Value applied under this option is gone.
The first monthly payment will be paid from each Sub-Account in proportion to
its Cash Surrender Values applied.
The second payment and all later payments from each Sub-Account will be the same
as the first payment under this option. The final payment will include any
amount that is not enough to make another full payment.
OPTION 2. PAYMENTS FOR A FIXED PERIOD
We will make monthly payments for the period selected. The amount of each
payment will be equal to the then remaining Cash Surrender Value applied under
this option divided by the number of remaining payments.
OPTION 3. OTHER INCOME OPTIONS
We will make any other arrangements for Income payments as may be mutually
agreed.
TL-14531 Page 14 TLAC Ed. 1-96
<PAGE> 17
GENERAL PROVISIONS
THE CONTRACT
The entire contract between you and us consists of the contract and all attached
pages.
CONTRACT CHANGES
The only way this contract may be changed is by a written endorsement signed
by one of our officers.
SUBSTITUTION OF SEPARATE ACCOUNT OR FUNDING OPTIONS
If it is not possible to continue to offer a Separate Account or Funding
Option, or in our judgment becomes inappropriate for the purposes of this
contract, we may substitute another Separate Account or Funding Option without
your consent. Substitution may be made with respect to both existing
investments and investment of future premium payments. However, no such
substitution will be made without notice to you and without prior approval of
the Securities and Exchange Commission, to the extent required by law.
MISSTATEMENT
If the Annuitant's or owner's sex or date of birth was misstated, all benefits
of this contract are what the purchase payment paid would have purchased at the
correct sex and age. Proof of the Annuitant's and owner's ages may be filed at
any time at Our Office.
INCONTESTABILITY
We will not contest this contract from its Contract Date.
TERMINATION
We reserve the right to terminate this contract on any Valuation Date if the
Contract Value as of the date is less than the Termination Amount shown on the
CONTRACT SPECIFICATIONS, and purchase payments have not been made to this
contract for at least two years. Termination will not occur until 31 days after
we have mailed notice of termination to you at your last known address and to
any assignee of record. If this contract is terminated, we will pay you the
Cash Surrender Value, if any.
REQUIRED REPORTS
We will furnish a report to the owner as often as required by law, but at least
once in each Contract Year before the due date of the first Annuity or Income
payment. The report will show the number of Accumulation Units credited to the
contract in each Account and the corresponding Accumulation Unit Value as of
the date of the report.
VOTING RIGHTS
If required by federal law, you may have the right to vote at the meetings of
the shareholders of the Funding Option. If you have voting rights, we will send
a notice to you telling you the time and place of a meeting. The notice will
also explain matters to be voted upon and how many votes you may exercise.
MORTALITY AND EXPENSES
Our actual mortality and expense experience will not affect the amount of any
Annuity or Income payments or any other values under this contract
NON-PARTICIPATING
This contract does not share in our surplus earnings, so you will receive no
dividends under it.
CHANGES IN TAXES BASED UPON PREMIUM OR VALUE
If there is any change in a law assessing taxes against us based upon the
premiums or value of this contract, we reserve the right to charge you
proportionately for that tax. This would include a tax based upon our realized
net capital gains in the Sub-Accounts and on earnings in the Fixed Account, on
which we are not currently taxed.
CONFORMITY WITH STATE AND FEDERAL LAWS
This contract is governed by the law of the state in which it is delivered. Any
paid-up Annuity, Cash Surrender or death benefits that are available under this
contract are not less than the minimum benefits required by the statutes of the
state in which this contract is delivered.
<PAGE> 18
Upon receiving appropriate state approval, we may at any time make any changes,
including retroactive changes, in this contract to the extent that the change is
required to meet the requirements of any law or regulation issued by any
governmental agency to which we or you are subject.
EMERGENCY PROCEDURE
We reserve the right to suspend or postpone the date of any payment of any
benefit or values for any Valuation Period (1) when the New York Stock Exchange
is closed; (2) when trading on the Exchange is restricted; (3) when an emergency
exists as determined by the Securities and Exchange Commission so that disposal
of the securities held in the Sub-Accounts is not reasonably practicable or it
is not reasonably practicable to determine the value of the Sub-Account's net
assets, or (4) during any other period when the Securities and Exchange
Commission, by order, so permits for the protection of security holders. Any
provision of this contract which specifies a Valuation Date will be superseded
by this Emergency Procedure.
RELATION OF THIS CONTRACT TO THE SEPARATE ACCOUNTS AND SUB-ACCOUNTS
We will have exclusive and absolute ownership and control of the assets of our
Separate Account and the Sub-Accounts. That portion of the assets of a Separate
Account or Sub-Account equal to the reserves and other contract liabilities with
respect to such Separate Account or Sub-Account shall not be chargeable with
liabilities arising out of any other business we conduct. Our determination of
the value of an Accumulation Unit and an Annuity Unit by the method described in
this contract will be conclusive.
TL-14531 Page 16 TLAC Ed. 1-96
<PAGE> 19
TABLE OF VALUES
GUARANTEED VALUES OF THE FIXED ACCOUNT PER $1,000 OF NET PURCHASE PAYMENT
APPLIED
<TABLE>
<CAPTION>
NO. OF YEARS GUARANTEED NO. OF GUARANTEED
FROM CASH YEARS FROM CASH
DATE PAYMT. GUARANTEED SURRENDER DATE PAYMT. GUARANTEED SURRENDER
IS APPLIED VALUE VALUE IS APPLIED VALUE VALUE
<S> <C> <C> <C> <C> <C>
1030 970 36 2898 2898
2 1060 1000 37 2985 2985
3 1092 1042 38 3074 3074
4 1125 1075 39 3167 3167
5 1159 1119 40 3262 3262
6 1194 1164 41 3359 3359
7 1229 1209 42 3460 3460
8 1266 1266 43 3564 3564
9 1304 1304 44 3671 3671
10 1343 1343 45 3781 3781
11 1384 1384 46 3895 3895
12 1425 1425 47 4011 4011
13 1468 1468 48 4132 4132
14 1512 1512 49 4256 4256
15 1557 1557 50 4383 4383
16 1604 1604 51 4515 4515
17 1652 1652 52 4650 4650
18 1702 1702 53 4790 4790
19 1753 1753 54 4934 4934
20 1806 1806 55 5082 5082
21 1860 1860 56 5234 5234
22 1916 1916 57 5391 5391
23 1973 1973 58 5553 5553
24 2032 2032 59 5720 5720
25 2093 2093 60 5891 5891
26 2156 2156 61 6068 6068
27 2221 2221 62 6250 6250
28 2287 2287 63 6437 6437
29 2356 2356 64 6631 6631
30 2427 2427 65 6829 6829
31 2500 2500 66 7034 7034
32 2575 2575 67 7245 7245
33 2652 2652 68 7463 7463
34 2731 2731 69 7687 7687
35 2813 2813 70 7917 7917
</TABLE>
TL-14531 Page 17 TLAC Ed. 1-96
<PAGE> 20
This Page Intentionally Left Blank
TL-14531 Page 18 TLAC Ed. 1-96
<PAGE> 21
LIFE ANNUITY TABLES
DOLLAR AMOUNT OF THE FIRST MONTHLY ANNUITY PAYMENT WHICH IS PURCHASED
WITH EACH $1,000 APPLIED
OPTIONS 1 AND 2 - SINGLE LIFE ANNUITIES
<TABLE>
<CAPTION>
120 180 240
ADJUSTED ADJUSTED MONTHLY MONTHLY MONTHLY
AGE AGE NO PAYMENTS PAYMENTS PAYMENTS
MALE FEMALE REFUND
<S> <C> <C> <C> <C> <C>
50 54 $4.13 $4.10 $4.06 $4.00
51 55 4.20 4.17 4.13 4.06
52 56 4.28 4.25 4.20 4.12
53 57 4.37 4.33 4.27 4.18
54 58 4.46 4.41 4.35 4.25
55 59 4.55 4.50 4.42 4.31
56 60 4.65 4.59 4.51 4.38
57 61 4.76 4.69 4.59 4.44
58 62 4.87 4.79 4.68 4.51
59 63 4.99 4.90 4.77 4.58
60 64 5.12 5.01 4.86 4.65
61 65 5.26 5.13 4.96 4.72
62 66 5.40 5.25 5.06 4.79
63 67 5.56 5.39 5.16 4.85
64 68 5.72 5.52 5.27 4.92
65 69 5.90 5.67 5.37 4.99
66 70 6.09 5.82 5.48 5.05
67 71 6.29 5.97 5.59 5.11
68 72 6.51 6.13 5.69 5.16
69 73 6.74 6.30 5.80 5.21
70 74 6.99 6.48 5.90 5.26
71 75 7.26 6.66 6.01 5.31
72 76 7.54 6.84 6.11 5.34
73 77 7.86 7.03 6.20 5.38
74 78 8.19 7.22 6.29 5.41
75 79 8.55 7 41 6.38 5 43
</TABLE>
OPTION 3 - JOINT AND LAST SURVIVOR LIFE ANNUITY
<TABLE>
<CAPTION>
ADJUSTED AGE OF ADJUSTED AGE OF SECOND LIFE
FIRST LIFE M-51 M-56 M-58 M-61 M 63 M-66 M-71
MALE FEMALE F-55 F-60 F-62 F-65 F-67 F-70 F-75
<S> <C> <C> <C> <C> <C> <C> <C> <C>
50 54 $3.69 $3.81 $3.85 $3.91 $3.94 $3.98 $4.04
55 59 3.82 3.99 4.06 4.15 4.20 4.28 4.38
57 61 3.87 4.06 4.14 4.25 4.32 4.41 4.53
60 64 3.93 4.17 4.26 4.40 4.48 4.61 4.78
62 66 3.97 4.23 4.34 4.49 4.60 4.74 4.96
65 69 4.02 4.32 4.44 4.63 4.76 4.95 5.24
70 74 4.09 4.43 4.59 4.83 5.01 5.27 5.72
</TABLE>
Dollar amounts of the first monthly payments for ages not shown in these Tables
will be calculated on the same basis as those shown and may be obtained from
us. Amounts shown in these Tables are based on the Progressive Annuity Table,
with a two year set-back, (assuming births in the year 1900) with interest at
the rate of 3-0 per annum. The adjusted age of the person on whose life the
Annuity is based is determined from the actual age last birthday on the due
date of the first Annuity payment in the following manner.
<TABLE>
<S> <C> <C> <C>
Calendar Year in which
First Payment is Due . 1991-2000 2001-2010 2011 & later
Adjusted Age is Actual Age plus 2 plus 1 plus 0
</TABLE>
<PAGE> 22
OPTION 4-JOINT AND LAST SURVIVOR LIFE ANNUITY
ANNUITY REDUCES ON DEATH OF PRIMARY PAYEE
<TABLE>
<CAPTION>
ADJUSTED AGE OF
PRIMARY PAYEE ADJUSTED AGE OF SECOND PAYEE
MALE 50 55 60 65
<S> <C> <C> <C> <C>
50 $3.82 $3.90 $3.96 $4.01
55 4.05 4.15 4.25 4.34
60 4.31 4.45 4.59 4.73
65 4.60 4.78 4.98 5.19
70 4.93 5.16 5.43 5.71
</TABLE>
<TABLE>
<CAPTION>
ADJUSTED AGE OF
PRIMARY PAYEE ADJUSTED AGE OF SECOND PAYEE
FEMALE 50 55 60 65
<S> <C> <C> <C> <C>
50 $3.70 $3.75 $3.79 $3.81
55 3.93 4.00 4.06 4.11
60 4.19 4.30 4.40 4.48
65 4.48 4.64 4.79 4.92
70 4.81 5.03 5.25 5.46
</TABLE>
Dollar amounts of the monthly payments for ages not shown in these Tables will
be calculated on the same basis as those shown and may be obtained from us.
Amounts shown in these Tables are based on the Progressive Annuity Table, with
a two year set-back, (assuming births in the year 1900) with interest at the
rate of 39-0 per annum. The adjusted age of the person on whose life the
annuity is based is determined from the actual age last birthday on the due
date of the first annuity payment in the following manner.
<TABLE>
<S> <C> <C> <C>
Calendar Year in Which
First Payment is Due . . . 1991-2000 2001-2010 2011 & later
Adjusted Age is Actual Age . plus 2 plus plus 0
</TABLE>
<PAGE> 23
Individual Deferred Variable Annuity Contract
Non-Tax Qualified Non-Participating
TL-14529 TLAC Ed. 1-96
<PAGE> 24
TAX LAW QUALIFICATION RIDER
This rider is made a part of this contract at its Contract Date in order to
comply with the tax rules under Section 72(s) of the Code for required
distributions upon the death of any contract owner. The following conditions,
restrictions and limitations must apply to maintain the tax qualified status of
your Annuity.
REQUIRED DISTRIBUTIONS WHERE OWNER AND ANNUITANT DIE SIMULTANEOUSLY
If you are the owner and the Annuitant or you are the owner and you die
simultaneously with the Annuitant before payment of any Annuity or Income
Option begins, an amount equal to the Death Benefit will be distributed within
five years of your death to the contract Beneficiary unless:
a. the Beneficiary elects by Written Request to have the proceeds
distributed over the Beneficiary's life or over a period not
extending beyond life expectancy, and the payments begin within one
year of your death: or
b. the sole Beneficiary is your spouse who elects by Written Request to
continue the contract as the owner and Annuitant.
If you are the owner and the Annuitant or you are the owner and you die
simultaneously with the Annuitant after an Annuity or Income option begins but
before your entire interest has been distributed, the remaining proceeds of the
contract will be distributed at least as rapidly as they were being distributed
under the method of payment in effect at the time of your death.
The death of the first joint owner triggers these distribution requirements.
NON-NATURAL OWNER HOLDING FOR NATURAL PERSONS
The above rules also apply if you are not an individual and the primary
Annuitant dies before payment of an Annuity or Income Option begins. Payments
will be made to the Beneficiary. The primary Annuitant is the first-named
Annuitant and the individual who is of primary importance in affecting the
timing or amount of payments under the contract.
If you are not an individual and the primary annuitant dies after payment of an
Annuity or Income option begins, the remaining proceeds of the contract will be
distributed at least as rapidly as they were being distributed under the method
of payment in effect at the time of the primary Annuitant's death.
REQUIRED DISTRIBUTIONS WHERE OWNER AND ANNUITANT DO NOT DIE SIMULTANEOUSLY
If you are the owner but not the Annuitant, and you die before the Annuitant
and before payment of an Annuity or Income Option begins, an amount equal to
the Death Benefit will be distributed within five years of your death to the
joint owner surviving you. In this circumstance, the joint owner is the
"designated beneficiary" referred to in Section 72(s) of the Code, and his or
her rights preempt those of the Beneficiary named in a Written Request. The
distribution may be made over a period that exceeds five years from your death
or postponed by your spouse if:
a. the joint owner elects by Written Request to have the proceeds
distributed over his or her life or over a period not extending
beyond life expectancy, and the payments begin within one year of
your death; or
b. the sole joint owner is your spouse, who elects by Written Request
to continue the contract as owner.
The joint owner is determined by contract designation. If there is no joint
owner or Beneficiary surviving you, ownership of this contract passes to your
estate. The estate or the individual taking the contract benefits through your
estate must take complete distribution within five years of your death.
If you are the owner but not the Annuitant, and you die before payment of an
Annuity or Income Option begins, the remaining proceeds of the contract will be
distributed at least as rapidly as they were being distributed under the method
of payment in effect at the time of your death.
The death of the first joint owner triggers these distribution requirements.
<PAGE> 25
ADMINISTRATIVE COMPLIANCE
If the Code and related law, regulations and rulings require a distribution
other than described above in order to keep this Annuity contract qualified
under the Code, we will administer the contract in accordance with these laws,
regulations and rulings. We will provide you with a revised rider describing
any necessary changes, following all regulatory approvals.
THE TRAVELERS LIFE AND ANNUITY COMPANY
PRESIDENT
TL-14533 TLAC Ed. 1-96
<PAGE> 1
EXHIBIT 10(A)
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the inclusion in this Pre-Effective Amendment No. 1 of the
Registration Statement on Form N-4 of The Travelers Fund ABDII for Variable
Annuities of our report dated September 16, 1994, on our audit of the
consolidated statements of operations and retained earnings and cash flows of
The Travelers Life and Annuity Company for the year ended December 31, 1993.
We also consent to the reference to our Firm as experts in accounting and
auditing under the caption "Independent Accountants" in the Statement of
Additional Information.
/s/ COOPERS & LYBRAND L.L.P.
Hartford, Connecticut
June 17, 1996
<PAGE> 1
EXHIBIT 10(B)
Consent of Independent Certified Public Accountants
The Board of Directors
The Travelers Life and Annuity Company:
We consent to the use of our report included herein and to the reference to our
firm as experts under the heading "Independent Accountants" in the Prospectus.
Our report refers to a change in accounting for investments in accordance with
the provisions of Statement of Financial Accounting Standards No. 115,
"Accounting for Certain Investments in Debt and Equity Securities," in 1994.
/s/ KPMG Peat Marwick LLP
Hartford, Connecticut
June 17, 1996
<PAGE> 1
EXHIBIT 13
THE TRAVELERS FUND ABDII FOR VARIABLE ANNUITIES
SCHEDULE FOR COMPUTATION OF TOTAL RETURN CALCULATIONS
The standardized and nonstandardized average annual total returns are computed
according to the formula described below. A hypothetical initial investment of
$1,000 is applied to the fund, and then related to ending redeemable values as
of the most recent fiscal year end over a 1-year, 3-year (non standardized
only), 5-year, and 10-year period, or since inception if a fund has not been in
existence for one of the prescribed periods.
1/n
T = (ERV/P) where:
T = average annual total return
P = a hypothetical initial payment of $1,000
n = the applicable year (1, 3, 5, 10) or portion thereof
ERV = ending redeemable value of a hypothetical $1,000 payment made
at the beginning of each of the periods
Both the standardized and nonstandardized performance returns reflect the
deduction for the management fees and other expenses for a fund, the mortality
and expense risk fee and the sub-account administrative charge.
Standardized Method
The standardized returns take into consideration all fees and/or charges
applicable to the fund or contract.
Under the standardized method, the $30 annual administrative charge is
reflected in the calculation and is assumed to be deducted on August 31st of
each year. It is expressed as a percentage of assets based on the fees
collected (or, anticipated, if a new product) divided by the average net assets
(or, anticipated average net assets, if a new product) for contracts sold under
the prospectus for each year for which performance is shown.
Each standardized average annual total return quotation assumes a total
redemption at the end of each period with the assessment of any applicable
contingent deferred sales charge (6%, 6%, 5%, 5%, 4%, 3% 2%) at that time.
Nonstandardized Method
Nonstandardized returns do not reflect the deduction of any applicable
contingent deferred sales charge or the $30 annual administrative charge,
which, if reflected, would decrease the level of performance shown. The
contingent deferred sales charge is not reflected because the contract is
designed for long-term investment.
For a Schedule of the Computation of the Total Return Quotations, both
Standardized and Nonstandardized, see attached.
<PAGE> 2
PORTFOLIO ARCHITECT
NON-STANDARDIZED PERFORMANCE
CAPITAL APPRECIATION FUND
<TABLE>
<CAPTION>
Unit Values Dollars Units Dollars Units Dollars Units Dollars Units
----------- ------- ----- ------- ----- ------- ----- ------- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
--------
12/31/85 1.216390 1000 822.105
--------
08/31/86 1.375282
08/31/87 1.806448
08/31/88 1.266597
08/31/89 1.571569
08/31/90 1.323715
--------
12/31/90 1.377966 1000 725.707
--------
08/31/91 1.709558
08/31/92 1.829642
12/31/92 2.110689 1000 473.779
08/31/93 2.377278
08/31/94 2.298900
--------
12/31/94 2.248748 1000 444.692
--------
08/31/95 2.892386
--------
12/31/95 3.023936
--------
</TABLE>
<TABLE>
<CAPTION>
One-Year Three-Year Five-Year Ten-Year
<S> <C> <C> <C>
Ending units 444.692 473.779 725.707 822.105
Contract Value $1,344.72 $1,432.68 $2,194.49 $2,485.99
---------
Total Return 34.47% 43.27% 119.45% 148.60%
--------- --------- --------- ---------
Average Annual Total Return 12.73% 17.02% 9.53%
--------- --------- ---------
</TABLE>
ALLIANCE GROWTH PORTFOLIO
<TABLE>
<CAPTION>
Unit Values Dollars Units Dollars Units
----------- ------- ----- ------- -----
<S> <C> <C> <C> <C> <C>
--------
06/20/94 1.000000 1000 1000.000
--------
08/31/94 1.036482
--------
12/31/94 1.045913 1000 956.102
--------
08/31/95 1.344239
--------
12/31/95 1.390920
--------
</TABLE>
<TABLE>
<CAPTION>
One-Year Since inception
<S> <C>
Ending units 956.102 1000.000
Contract Value $1,329.86 $1,390.92
---------
Total Return 32.99% 39.09%
--------- ---------
Average Annual Total Return 24.04%
---------
</TABLE>
MFS TOTAL RETURN PORTFOLIO
<TABLE>
<CAPTION>
Unit Values Dollars Units Dollars Units
----------- ------- ----- ------- -----
<S> <C> <C> <C> <C> <C>
--------
06/20/94 1.000000 1000 1000.000
--------
08/31/94 1.018312
--------
12/31/94 0.977576 1000 1022.938
--------
08/31/95 1.121520
--------
12/31/95 1.211665
--------
</TABLE>
<TABLE>
<CAPTION>
One-Year Since inception
<S> <C>
Ending units 1022.938 1000.000
Contract Value $1,239.46 $1,211.67
---------
Total Return 23.95% 21.17%
--------- ---------
Average Annual Total Return 13.36%
---------
</TABLE>
PUTNAM DIVERSIFIED INCOME PORTFOLIO
<TABLE>
<CAPTION>
Unit Values Dollars Units Dollars Units
----------- ------- ----- ------- -----
<S> <C> <C> <C> <C> <C>
--------
06/20/94 1.000000 1000 1000.000
--------
08/31/94 1.011206
--------
12/31/94 1.007284 1000 992.769
--------
08/31/95 1.109026
--------
12/31/95 1.166003
--------
</TABLE>
<TABLE>
<CAPTION>
One-Year Since inception
<S> <C>
Ending units 992.769 1000.000
Contract Value $1,157.57 $1,166.00
---------
Total Return 15.76% 16.60%
--------- ---------
Average Annual Total Return 10.55%
---------
</TABLE>
<PAGE> 3
PORTFOLIO ARCHITECT
STANDARDIZED PERFORMANCE
CAPITAL APPRECIATION FUND
<TABLE>
<CAPTION>
Unit Values Dollars Units Dollars Units Dollars Units Annual Fee
----------- ------- ----- ------- ----- ------- ----- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
--------
12/31/85 1.216390 1000 822.105 0.016%
--------
08/31/86 1.375282 -0.11348 -0.083 0.016%
08/31/87 1.806448 -0.20924 -0.116 0.016%
08/31/88 1.266597 -0.20206 -0.160 0.016%
08/31/89 1.571569 -0.18658 -0.119 0.016%
08/31/90 1.323715 -0.19031 -0.144 0.016%
--------
12/31/90 1.377966 1000 725.707 0.016%
--------
08/31/91 1.709558 -0.11934 -0.070 -0.19934 -0.117 0.016%
08/31/92 1.829642 -0.20545 -0.112 -0.23256 -0.127 0.016%
08/31/93 2.377278 -0.24418 -0.103 -0.27639 -0.116 0.016%
08/31/94 2.298900 -0.27138 -0.118 -0.30718 -0.134 0.016%
--------
12/31/94 2.248748 1000 444.692 0.016%
--------
08/31/95 2.892386 -0.12176 -0.042 -0.30122 -0.104 -0.34096 -0.118 0.016%
--------
12/31/95 3.023936 -0.07034 -0.023 -0.11473 -0.038 -0.12986 -0.043 0.016%
--------
</TABLE>
<TABLE>
<CAPTION>
One-Year Five-Year Ten-Year
-------- --------- --------
<S> <C> <C>
Ending units 444.627 725.162 820.828
Contract Value $1,344.52 $2,192.84 $2,482.13
Cash Surrender Value $1,284.52 $2,152.84 $2,482.13
---------
Total Return 28.45% 115.28% 148.21%
--------- --------- ---------
Average Annual Total Return 16.57% 9.52%
--------- ---------
</TABLE>
ALLIANCE GROWTH PORTFOLIO
<TABLE>
<CAPTION>
Unit Values Dollars Units Dollars Units Annual Fee
----------- ------- ----- ------- ----- ----------
<S> <C> <C> <C> <C> <C> <C>
--------
06/20/94 1.000000 1000 1000.000 0.016%
--------
08/31/94 1.036482 -0.03214 -0.031 0.016%
--------
12/31/94 1.045913 1000 956.102 0.016%
--------
08/31/95 1.344239 -0.12171 -0.091 -0.19045 -0.142 0.016%
--------
12/31/95 1.390920 -0.06992 -0.050 -0.07312 -0.053 0.016%
--------
</TABLE>
<TABLE>
<CAPTION>
One-Year Since inception
<S> <C>
Ending units 955.961 999.774
Contract Value $1,329.67 $1,390.61
Cash Surrender Value $1,269.67 $1,330.61
---------
Total Return 26.97% 33.06%
--------- ---------
Average Annual Total Return 20.50%
---------
</TABLE>
MFS TOTAL RETURN PORTFOLIO
<TABLE>
<CAPTION>
Unit Values Dollars Units Dollars Units Annual Fee
----------- ------- ----- ------- ----- ----------
<S> <C> <C> <C> <C> <C> <C>
--------
06/20/94 1.000000 1000 1000.000 0.016%
--------
08/31/94 1.018312 -0.03185 -0.031 0.016%
--------
12/31/94 0.977576 1000 1022.938 0.016%
--------
08/31/95 1.121520 -0.11436 -0.102 -0.17118 -0.153 0.016%
--------
12/31/95 1.211665 -0.06381 -0.053 -0.06238 -0.051 0.016%
--------
</TABLE>
<TABLE>
<CAPTION>
One-Year Since inception
<S> <C>
Ending units 1022.783 999.765
Contract Value $1,239.27 $1,211.38
Cash Surrender Value $1,179.27 $1,151.38
---------
Total Return 17.93% 15.14%
--------- ---------
Average Annual Total Return 9.64%
---------
</TABLE>
PUTNAM DIVERSIFIED INCOME PORTFOLIO
<TABLE>
<CAPTION>
Unit Values Dollars Units Dollars Units Annual Fee
----------- ------- ----- ------- ----- ----------
<S> <C> <C> <C> <C> <C> <C>
--------
06/20/94 1.000000 1000 1000.000 0.016%
--------
08/31/94 1.011206 -0.03174 -0.031 0.016%
--------
12/31/94 1.007284 1000 992.769 0.016%
--------
08/31/95 1.109026 -0.11190 -0.101 -0.16961 -0.153 0.016%
--------
12/31/95 1.166003 -0.06039 -0.052 -0.06082 -0.052 0.016%
--------
</TABLE>
<TABLE>
<CAPTION>
One-Year Since inception
<S> <C>
Ending units 992.616 999.764
Contract Value $1,157.39 $1,165.73
Cash Surrender Value $1,097.39 $1,105.73
---------
Total Return 9.74% 10.57%
--------- ---------
Average Annual Total Return 6.78%
---------
</TABLE>
<PAGE> 1
THE TRAVELERS FUND ABD II FOR VARIABLE ANNUITIES
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
That I, MICHAEL A. CARPENTER of Greenwich, Connecticut, Chairman of the Board,
President and Chief Executive Officer of The Travelers Life and Annuity Company
(hereafter the "Company"), do hereby make, constitute and appoint ERNEST J.
WRIGHT, Secretary of said Company, and KATHLEEN A. McGAH, Assistant Secretary
of said Company, or either one of them acting alone, my true and lawful
attorney-in-fact, for me, and in my name, place and stead, to sign registration
statements on behalf of said Company on Form N-4 or other appropriate form
under the Securities Act of 1933 for The Travelers Fund ABD II for Variable
Annuities, a separate account of the Company dedicated specifically to the
funding of variable annuity contracts to be offered by the Company, and
further, to sign any and all amendments thereto, including post-effective
amendments, that may be filed by the Company on behalf of said registrant.
IN WITNESS WHEREOF, I have hereunto set my hand this 10th day
of June, 1996.
/s/Michael A. Carpenter
Chairman of the Board, President
and Chief Executive Officer
The Travelers Life and Annuity Company
<PAGE> 2
THE TRAVELERS FUND ABD II FOR VARIABLE ANNUITIES
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
That I, KATHERINE M. SULLIVAN of Longmeadow, Massachusetts, Director, Senior
Vice President and General Counsel of The Travelers Life and Annuity Company
(hereafter the "Company"), do hereby make, constitute and appoint ERNEST
J. WRIGHT, Secretary of said Company, and KATHLEEN A. McGAH, Assistant
Secretary of said Company, or either one of them acting alone, my true and
lawful attorney-in-fact, for me, and in my name, place and stead, to sign
registration statements on behalf of said Company on Form N-4 or other
appropriate form under the Securities Act of 1933 for The Travelers Fund ABD II
for Variable Annuities, a separate account of the Company dedicated
specifically to the funding of variable annuity contracts to be offered by the
Company, and further, to sign any and all amendments thereto, including
post-effective amendments, that may be filed by the Company on behalf of said
registrant.
IN WITNESS WHEREOF, I have hereunto set my hand this 10th day
of June, 1996.
/s/Katherine M. Sullivan
Director
Senior Vice President and General Counsel
The Travelers Life and Annuity Company
<PAGE> 3
THE TRAVELERS FUND ABD II FOR VARIABLE ANNUITIES
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
That I, IAN R. STUART of East Hampton, Connecticut, Director, Vice President,
Chief Financial Officer, Chief Accounting Officer and Controller of The
Travelers Life and Annuity Company (hereafter the "Company"),do hereby make,
constitute and appoint ERNEST J. WRIGHT, Secretary of said Company, and
KATHLEEN A. McGAH, Assistant Secretary of said Company, or either one of them
acting alone, my true and lawful attorney-in-fact, for me, and in my name,
place and stead, to sign registration statements on behalf of said Company on
Form N-4 or other appropriate form under the Securities Act of 1933 for The
Travelers Fund ABD II for Variable Annuities, a separate account of the Company
dedicated specifically to the funding of variable annuity contracts to be
offered by the Company, and further, to sign any and all amendments thereto,
including post-effective amendments, that may be filed by the Company on behalf
of said registrant.
IN WITNESS WHEREOF, I have hereunto set my hand this 10th day
of June, 1996.
/s/Ian R. Stuart
Director, Vice President, Chief Financial Officer,
Chief Accounting Officer and Controller
The Travelers Life and Annuity Company
