<PAGE>
File No. 333-10105
Securities and Exchange Commission
Washington, D.C.
Pre-Effective Amendment No. 1
Form N-4
Registration Statement Under the Securities Act of 1933
and/or
Registration Statement Under the Investment Company Act of 1940
American Maturity Life Insurance Company
Separate Account AMLVA
(Exact Name of Registrant)
American Maturity Life Insurance Company
(Name of Depositor)
P.O. Box 2999
Hartford, CT 06104-2999
(Address of Depositor's Principal Offices)
Depositor's Telephone Number: (860) 843-7563
Thomas S. Clark
American Maturity Life Insurance Company
P.O. Box 2999
Hartford, CT 06104-2999
(Name and Address of Agent for Service)
Approximate Date of Proposed Public Offering:
As soon as practicable after the effective date of this Registration
Statement.
Calculation of Registration Fee Under Securities Act of 1933
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Title of Amount Proposed Maximum Proposed Maximum Amount of
Securities Being Offering Aggregate Registration
Being Requested Registered Price Per Unit Offering Price Fee
- -------------------------------------------------------------------------------
PAID
American Maturity Life Pursuant to Regulation 270. 24f-2 under the
Insurance Company Investment Company Act of 1940, Registrant
Separate Account AMLVA hereby elects to register an indefinite
Units of Interest number of units of interest in this
Separate Account
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The Registrant hereby amends this Registration Statement on such date or
dated as may be necessary to delay its effective date until the registrant
shall file a further amendment which specifically states that his
Registration Statement shall thereafter become effective in accordance with
Section 8(a) of the Securities Act of 1933 or until the Registration
Statement shall become effective on such date as the Commission, acting
pursuant to said Section 8(a), may determine.
<PAGE>
AMERICAN MATURITY LIFE INSURANCE COMPANY
P.O. BOX 7005
PASADENA, CA 91109-7005
TELEPHONE: 1-800-923-3334
THE AARP VARIABLE ANNUITY
This Prospectus describes the AARP Variable Annuity, a group flexible premium
variable annuity contract. American Maturity Life Insurance Company ("American
Maturity" or "Company" or "We" or "Us") offers the AARP Variable Annuity by
issuing you a Certificate ("Certificate") if you are eligible. We offer the
Certificate to members of the American Association of Retired Persons ("AARP")
for retirement planning purposes. We allocate premium payments for each
Certificate to Sub-Accounts of American Maturity's Separate Account AMLVA
("Separate Account"), or American Maturity's General Account. The following
Sub-Accounts are currently available:
MONEY MARKET PORTFOLIO of the Scudder Variable Life Investment Fund
BOND PORTFOLIO of the Scudder Variable Life Investment Fund
BALANCED PORTFOLIO of the Janus Aspen Series
CAPITAL GROWTH PORTFOLIO of the Scudder Variable Life Investment Fund
GROWTH & INCOME PORTFOLIO of the Scudder Variable Life Investment Fund
PARTNERS PORTFOLIO of the Neuberger & Berman Advisers Management Fund
CAPITAL APPRECIATION PORTFOLIO of the Dreyfus Variable Investment Fund
SMALL CAP PORTFOLIO of the Dreyfus Variable Investment Fund
WORLDWIDE GROWTH PORTFOLIO of the Janus Aspen Series
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THIS PROSPECTUS PROVIDES INFORMATION YOU SHOULD KNOW BEFORE PURCHASING A
CERTIFICATE. YOU SHOULD READ THIS PROSPECTUS CAREFULLY AND KEEP IT FOR FUTURE
REFERENCE. WE SENT ADDITIONAL INFORMATION ABOUT THE SEPARATE ACCOUNT TO THE
SECURITIES AND EXCHANGE COMMISSION. IT IS CALLED THE STATEMENT OF ADDITIONAL
INFORMATION, AND WE WILL SEND A COPY TO YOU WITHOUT CHARGE IF YOU WRITE OR CALL
US. THE TABLE OF CONTENTS FOR THE STATEMENT OF ADDITIONAL INFORMATION IS
REPRODUCED ON PAGE 27 OF THIS PROSPECTUS. THE STATEMENT OF ADDITIONAL
INFORMATION IS INCORPORATED BY REFERENCE TO THIS PROSPECTUS.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
THE CERTIFICATE IS NOT A DEPOSIT OR OBLIGATION OF, OR GUARANTEED OR ENDORSED BY,
ANY BANK. IT IS NOT FEDERALLY INSURED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER GOVERNMENT AGENCY.
INVESTMENT IN A CERTIFICATE INVOLVES RISK, INCLUDING POSSIBLE LOSS OF THE
PRINCIPAL AMOUNT INVESTED.
THE CERTIFICATE IS NOT AVAILABLE IN ALL STATES AND THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER IN ANY JURISDICTION IN WHICH SUCH AN OFFER MAY NOT BE MADE
LAWFULLY. NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATIONS IN CONNECTION WITH THE OFFER MADE BY THIS PROSPECTUS OTHER THAN
THOSE CONTAINED IN THIS PROSPECTUS AND THE RELATED STATEMENT OF ADDITIONAL
INFORMATION (OR ANY SALES LITERATURE APPROVED BY AMERICAN MATURITY), AND ANY
SUCH UNAUTHORIZED INFORMATION OR REPRESENTATION, IF GIVEN OR MADE, SHOULD NOT BE
RELIED UPON.
THIS PROSPECTUS IS VALID ONLY WHEN ACCOMPANIED BY CURRENT PROSPECTUSES FOR THE
FUNDS.
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PROSPECTUS DATED:
STATEMENT OF ADDITIONAL INFORMATION DATED:
<PAGE>
2 American Maturity Life Insurance Company
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
DEFINITIONS........................................................... 2
SUMMARY............................................................... 4
FEE TABLE............................................................. 6
AMERICAN MATURITY, THE SEPARATE ACCOUNT, THE FUNDS, AND THE GENERAL
ACCOUNT.............................................................. 9
American Maturity Life Insurance Company............................ 9
Separate Account AMLVA.............................................. 9
The Funds........................................................... 10
Investment Advisers to the Funds.................................... 11
The General Account................................................. 11
Performance Related Information..................................... 11
THE CERTIFICATE....................................................... 12
What is the Certificate?............................................ 12
How to Apply for Your Certificate................................... 12
Making Your Premium Payments........................................ 12
How Your Payments are Invested...................................... 12
Certificate Value................................................... 13
Transfers Between the Sub-Accounts/Fixed Account.................... 13
Charges Under the Certificates...................................... 14
Death Benefits...................................................... 16
Surrenders.......................................................... 16
Annuity Benefits.................................................... 17
Annuity Options..................................................... 18
FEDERAL TAX CONSIDERATIONS............................................ 19
INFORMATION REGARDING TAX QUALIFIED PLANS............................. 23
MISCELLANEOUS......................................................... 25
Voting Rights....................................................... 25
How the Certificates are Sold....................................... 25
Custodian of Separate Account Assets................................ 26
Assignment.......................................................... 26
Rights of Annuitant and Certificate Owner(s)........................ 26
Modification of Group Contract and Certificates Thereunder.......... 26
Change in the Operation of the Separate Account..................... 26
Legal Matters and Experts........................................... 26
Additional Information.............................................. 27
TABLE OF CONTENTS TO STATEMENT OF ADDITIONAL INFORMATION.............. 28
</TABLE>
<PAGE>
American Maturity Life Insurance Company 3
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DEFINITIONS
In this Prospectus, "We," "Our," "Us," or "the Company" refer to American
Maturity Life Insurance Company ("American Maturity"). "You" and "your" refer to
the Certificate Owner.
ACCUMULATION UNIT -- A unit of measure used to calculate the value of a
Sub-Account of a Certificate before the Annuity Commencement Date.
ADMINISTRATION CHARGE -- A dollar amount We deduct to cover administrative
expenses. This charge is an annual percentage. It will be shown on your
Certificate on the page entitled "Certificate Specifications."
ADMINISTRATIVE OFFICE OF THE COMPANY -- See "Additional Information" on page 26,
for address information.
ANNUAL FEE -- An amount that is deducted from your Certificate at the end of
each Certificate Year before the Annuity Commencement Date, or on the date of
full surrender of the Certificate, if earlier.
ANNUITANT -- The person on whose life an annuity is purchased.
ANNUITY COMMENCEMENT DATE -- The date on which your selected annuity option, to
receive regular annuity payments, becomes effective.
ANNUITY UNIT -- A unit of measure used to calculate the value of annuity
payments under the variable annuity option.
BENEFICIARY -- The person entitled to receive benefits according to the terms of
the Contract in case of the death of a Certificate Owner or Annuitant, as
applicable.
BUSINESS DAY -- Every day the New York Stock Exchange is open for trading. The
end of the Business Day is the close of the New York Stock Exchange. The New
York Stock Exchange normally closes at 4:00 p.m. Eastern time.
CERTIFICATE -- Your annuity policy. The Certificate is issued by Us to you. It
is evidence that you, or someone on your behalf, made a premium payment under
the group contract issued by Us to the AARP Group Annuity Trust.
CERTIFICATE ANNIVERSARY -- An anniversary of the Certificate Date. Similarly,
Certificate Years are measured from the Certificate Date. The Certificate Date
will be shown on your Certificate on the page entitled "Certificate
Specifications."
CERTIFICATE DATE -- The effective date of the Certificate (the date on which
your annuity takes effect).
CERTIFICATE OWNER -- The owner(s) of the Certificate, sometimes referred to as
"you."
CERTIFICATE VALUE -- The value of the Sub-Account(s) plus the value of the Fixed
Account on any Business Day.
CERTIFICATE YEAR -- Each 12-month period starting on the Certificate Date and
ending the day before each Certificate Anniversary.
CODE -- The Internal Revenue Code of 1986, as amended.
COMPANY -- American Maturity Life Insurance Company, sometimes referred to as
"We" or "Us."
CONTINGENT ANNUITANT -- The person designated by you who, upon the Annuitant's
death prior to the Annuity Commencement Date, becomes the Annuitant.
CONTINGENT DEFERRED SALES CHARGE -- A charge that may be deducted from Your
Certificate Value if you make withdrawals from your Certificate within a certain
number of years.
CONTRACT OWNER -- The AARP Group Annuity Trust.
DUE PROOF OF DEATH -- A certified copy of the death certificate, an order of a
court of competent jurisdiction, a statement from a physician who attended the
deceased, or any other proof acceptable to Us.
ENROLLMENT FORM -- A form you completed in order to purchase a Certificate.
FIXED ACCOUNT -- An investment option that earns a rate of interest of at least
3% per year. Amounts invested in the Fixed Account become part of Our General
Account.
FUND(S) -- The underlying investments contained in each Sub-Account of the
Separate Account.
GENERAL ACCOUNT -- All assets of the Company other than those allocated to the
Separate Accounts of the Company.
GROSS SURRENDER VALUE -- The Certificate Value (dollar amount) to be deducted
from your Certificate when you make a full or partial surrender.
MORTALITY AND EXPENSE RISK CHARGE -- A dollar amount we deduct from the
Sub-Accounts to cover risks of administrative expenses and mortality. This
charge is an annual percentage.
NET INVESTMENT FACTOR -- A factor used to determine the value of Accumulation
Units or Annuity Units each day.
NET SURRENDER VALUE -- The amount payable to you on a full or partial surrender
after the deduction for any unpaid Taxes, Annual Fee (for full surrenders only),
and any Contingent Deferred Sales Charge.
NON-QUALIFIED CERTIFICATE -- A Certificate other than a Qualified Certificate.
QUALIFIED CERTIFICATE -- A Certificate that qualifies under the Code as an
Individual Retirement Annuity ("IRA"), or a Certificate purchased by a Qualified
Plan, qualifying for special tax treatment under the Code.
QUALIFIED PLAN -- A retirement plan that receives favorable tax treatment under
Section 401, 403(a), 403(b), 408 or 547 of the Code.
SEC -- Securities and Exchange Commission, which is a federal regulatory body
authorized by Congress.
SEPARATE ACCOUNT -- An account established by Us to separate the assets funding
the variable benefits for the class of contracts to which this Certificate
belongs from the other assets of the Company. The assets in the Separate Account
<PAGE>
4 AMERICAN MATURITY LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
are not chargeable with liabilities arising out of any other business We may
conduct.
SUB-ACCOUNT -- The subdivisions of the Separate Account. You purchase units of
the Sub-Accounts to participate in the investment experience of the underlying
Funds.
SURRENDER -- A full or partial withdrawal from your Certificate.
TAXES -- The amount of tax, if any, charged by a federal, state or municipal
entity on premium payments or Certificate Values. Premium taxes imposed by some
states currently range up to 3.5%.
VALUATION PERIOD -- The period between the close of business on successive
Business Days.
WE, OUR, US -- American Maturity Life Insurance Company.
YOU, YOUR -- The Certificate Owner(s).
<PAGE>
AMERICAN MATURITY LIFE INSURANCE COMPANY 5
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SUMMARY
THIS BRIEF DESCRIPTION IS ONLY AN OVERVIEW OF THE MORE SIGNIFICANT FEATURES OF
THE CERTIFICATE. MORE DETAILED INFORMATION MAY BE FOUND IN SUBSEQUENT SECTIONS
OF THIS PROSPECTUS AND IN THE STATEMENT OF ADDITIONAL INFORMATION.
WHAT IS THE CERTIFICATE? The AARP Variable Annuity (the "Certificate") is a
long-term financial planning device offered to eligible members of the American
Association of Retired Persons. The Certificate permits you to invest on a
tax-deferred basis for retirement or other long-range goals, and to receive a
series of regular payments for life or a period of years. The Certificate is
also available for Individual Retirement Annuities (IRAs). (See "The
Certificate," page 11).
HOW DO I PURCHASE A CERTIFICATE? Generally, you may purchase a Certificate
by completing an Enrollment Form and submitting it with your initial premium
payment to Us for approval. Initially you must invest at least $5,000 (or $2,500
if you enroll in our preauthorized checking plan with scheduled contributions of
$100 per month). If you wish, you may make additional investments of at least
$250 (or $100 if enrolled in our preauthorized checking plan).
For a limited time, usually 10 days after you receive it, you may cancel
your Certificate without withdrawal charges. (See "Making Your Premium
Payments," page 11).
WHAT ARE MY INVESTMENT OPTIONS? You select your own investment options. The
underlying investments for the Certificate are certain shares of the Dreyfus
Variable Investment Fund, the Janus Aspen Series, the Neuberger & Berman
Advisers' Management Trust and the Scudder Variable Life Investment Fund, all
which are diversified series investment companies with multiple portfolios ("the
Funds") and the Fixed Account. The available Funds are listed on page 9.
WHAT CHARGES WILL I PAY? We charge an Administrative Fee of 0.20% per year,
and a Mortality and Expense Risk Charge of 0.65% per year against amounts held
in the Separate Account. Amounts held in the Separate Account are also subject
to the fees and expenses imposed on the corresponding Funds. Before the Annuity
Commencement Date, or at the time of a full withdrawal, if your Certificate
Value is less than $50,000, We charge an Annual Fee of $25. Withdrawals of
premium payments may be subject to a Contingent Deferred Sales Charge if you
withdraw money before your Certificate has been in effect for 5 years. This
Charge is determined by the amount of your withdrawal and declines over time
from your original purchase date of the Certificate. We may waive the Charge
under certain circumstances. You may also be subject to other fees. See "Charges
Under the Certificate," page 13.
CAN I WITHDRAW MY CERTIFICATE VALUE? Subject to any applicable charges, you
may withdraw all or part of your Certificate at any time on or prior to your
Annuity Commencement Date starting 30 days after your Certificate is issued.
Withdrawals may be subject to tax and, in certain circumstances, a tax penalty.
Each year you may withdraw up to 10% of remaining premium payments without the
assessment of a Contingent Deferred Sales Charge. (See "Surrenders," page 15).
DOES THE CERTIFICATE HAVE A DEATH BENEFIT? There is a Death Benefit if the
Annuitant or Certificate Owner or Joint Certificate Owner dies before the
Annuity Commencement Date. (See "Death Benefits," page 15).
WHAT ARE THE AVAILABLE ANNUITY OPTIONS UNDER THE CERTIFICATE? There are five
Annuity Options described on page 17. You may not defer the Annuity Commencement
Date beyond the Annuitant's 90th birthday (or earlier in some states). If you do
not tell Us otherwise, We will elect the Fifth Annuity Option on the Annuity
Commencement Date for you.
HOW DO I REACH AMERICAN MATURITY? You can reach our service representatives
at 1-800-923-3334. See "Additional Information," page 26, for address
information.
<PAGE>
6 AMERICAN MATURITY LIFE INSURANCE COMPANY
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FEE TABLE
CERTIFICATE OWNER TRANSACTION EXPENSES
<TABLE>
<S> <C>
Sales Charge Imposed on Purchases (as a percentage of premium payments).............................. None
Contingent Deferred Sales Charge (as a percentage of premium payments)
First Year (1)..................................................................................... 5%
Second Year (1).................................................................................... 4%
Third Year (1)..................................................................................... 3%
Fourth Year (1).................................................................................... 2%
Fifth Year (1)..................................................................................... 1%
Sixth Year (1)..................................................................................... 0%
Transfer Fee (2)..................................................................................... None
Withdrawal Fee (3)................................................................................... None
Annual Fee (4)....................................................................................... $25
</TABLE>
- ------------------------
(1) Length of time from purchase date in years.
(2) We reserve the right to impose a transaction fee in the future of up to $15
per transfer on transfers in excess of 12 in any Certificate Year. See
"Transfers Between the Sub-Accounts" on page 12.
(3) We reserve the right to impose a withdrawal fee in the future of up to $15
per withdrawal on withdrawals in excess of 12 in any Certificate Year. See
"Surrenders" on page 15.
(4) This fee will be charged at the end of each Certificate Year prior to your
Annuity Commencement Date and at the time of a full withdrawal unless your
Certificate Value is at least $50,000 on that date.
SEPARATE ACCOUNT ANNUAL EXPENSES
(as a percentage of average account value)
<TABLE>
<S> <C>
Mortality and Expense Risk Charge........................... 0.65%
Administration Fee.......................................... 0.20%
------
Total Separate Account Expenses............................. 0.85%
------
------
</TABLE>
ANNUAL FUND OPERATING EXPENSES
(as percentage of average net assets
after Fee Waiver and/or Expense Reimbursement)
<TABLE>
<CAPTION>
MANAGEMENT OTHER
FEE EXPENSES
------------- ------------
<S> <C> <C>
Money Market Portfolio (Scudder)................................................................. 0.370% 0.130%
Bond Portfolio (Scudder)......................................................................... 0.475% 0.085%
Balanced Portfolio (Janus) (1)................................................................... 0.820% 0.550%
Capital Growth Portfolio (Scudder)............................................................... 0.475% 0.095%
Growth & Income Portfolio (Scudder) (2).......................................................... 0.469% 0.281%
Partners Portfolio (Neuberger & Berman) (3)...................................................... 0.85% 0.110%
Capital Appreciation Portfolio (Dreyfus) (4)..................................................... 0.130% 0.120%
Small Cap Portfolio (Dreyfus) (1)................................................................ 0.150% 0.080%
Worldwide Growth Portfolio (Janus)............................................................... 0.680% 0.220%
<CAPTION>
TOTAL FUND
OPERATING
EXPENSES
-------------
<S> <C>
Money Market Portfolio (Scudder)................................................................. 0.500%
Bond Portfolio (Scudder)......................................................................... 0.560%
Balanced Portfolio (Janus) (1)................................................................... 1.370%
Capital Growth Portfolio (Scudder)............................................................... 0.570%
Growth & Income Portfolio (Scudder) (2).......................................................... 0.750%
Partners Portfolio (Neuberger & Berman) (3)...................................................... 0.960%
Capital Appreciation Portfolio (Dreyfus) (4)..................................................... 0.850%
Small Cap Portfolio (Dreyfus) (1)................................................................ 0.700%
Worldwide Growth Portfolio (Janus)............................................................... 0.900%
</TABLE>
Other Expenses are based on amounts incurred during the most recent fiscal
year or based on estimated amounts for the current fiscal year.
<PAGE>
AMERICAN MATURITY LIFE INSURANCE COMPANY 7
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The purpose of the foregoing table (Annual Fund Operating Expenses) is to
assist Certificate Owners in understanding the expenses that they bear directly
or indirectly of the Funds. The expenses relating to the Funds have been
provided to American Maturity by the Funds, and have not been independently
verified by American Maturity. See the sections on charges in the accompanying
prospectuses for the Funds.
- ------------------------
(1) JANUS ASPEN SERIES. The fees and expenses for the Janus Aspen Series
Balanced Portfolio and Worldwide Growth Portfolio in the table above are
based on gross expenses before expense offset arrangements for the fiscal
year ended December 31, 1995, net of any fee waivers or reductions from
Janus Capital. Janus Capital has agreed to reduce each portfolio's advisory
fee to the extent such fee exceeds the effective rate of the Janus Retail
Fund. Janus Capital may terminate this fee reduction or any of the expense
limitations set forth herein at any time upon 90 days notice to the Trustees
of the Janus Aspen Series. Without fee waivers or reductions, the Management
Fee, Other Expenses and Total Fund Operating Expenses would have been 1.00%,
.55% and 1.55% for the Balanced Portfolio and .87%, .22% and 1.09% for the
Worldwide Growth Portfolio.
(2) SCUDDER VARIABLE LIFE INVESTMENT FUND. Scudder, Stevens & Clark, Inc.
voluntarily did not impose part of its management fee in 1995. Had the fee
been imposed, the ratio of operating expenses to average net assets for the
year ended 12/31/95 would have been .756% for the Growth and Income
Portfolio.
(3) NEUBERGER & BERMAN ADVISERS MANAGEMENT TRUST. These fees are as of June 30,
1996. The figures reported under "Management Fees" include the aggregate of
the administration fees paid by the Partners Portfolio and the management
fees paid by the Series of Advisers Managers Trust in which the Partners
Portfolio invests. Similarly "Other Expenses" includes all other expenses of
the Partners Portfolio and the related Series in which the Partners
Portfolio invests. (See "Expenses" in Neuberger & Berman Advisers Management
Trust's Prospectus).
(4) DREYFUS VARIABLE INVESTMENT FUND. From time to time, The Dreyfus Corporation
and Fayez Sarofim & Co., with respect to the Capital Appreciation Portfolio,
in their sole discretion may waive all or part of their fees and or
voluntarily assume certain portfolio expenses. For the fiscal year ended
December 31, 1995 certain fees were waived with respect to the Capital
Appreciation Portfolio. Without such waiver, the Management Fee, Other
Expenses and Total Fund Operating Expenses would have been .75%, .12% and
.87% respectively. There is no guarantee that any fee waivers or expense
reimbursements will continue in the future.
<PAGE>
8 AMERICAN MATURITY LIFE INSURANCE COMPANY
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EXAMPLE
IF YOU SURRENDER YOUR CERTIFICATE AT THE END OF THE APPLICABLE TIME PERIOD:
YOU WOULD PAY THE FOLLOWING EXPENSES ON A $1,000 INVESTMENT, ASSUMING A 5%
ANNUAL RETURN ON ASSETS:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS
-------- --------
<S> <C> <C>
Money Market Portfolio...................................... $ 65 $ 76
Bond Portfolio.............................................. 65 77
Balanced Portfolio.......................................... 74 103
Capital Growth Portfolio.................................... 65 78
Growth & Income Portfolio................................... 67 83
Partners Portfolio.......................................... 69 90
Capital Appreciation Portfolio.............................. 68 86
Small Cap Portfolio......................................... 68 86
Worldwide Growth Portfolio.................................. 69 88
</TABLE>
IF YOU ANNUITIZE YOUR CERTIFICATE AT THE END OF THE APPLICABLE TIME PERIOD:
YOU WOULD PAY THE FOLLOWING EXPENSES ON A $1,000 INVESTMENT, ASSUMING A 5%
ANNUAL RETURN ON ASSETS:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS
-------- --------
<S> <C> <C>
Money Market Portfolio...................................... $ 15 $ 46
Bond Portfolio.............................................. 15 47
Balanced Portfolio.......................................... 24 73
Capital Growth Portfolio.................................... 17 52
Growth & Income Portfolio................................... 15 48
Partners Portfolio.......................................... 19 60
Capital Appreciation Portfolio.............................. 18 56
Small Cap Portfolio......................................... 18 56
Worldwide Growth Portfolio.................................. 19 58
</TABLE>
IF YOU DO NOT SURRENDER YOUR CERTIFICATE AT THE END OF THE APPLICABLE TIME
PERIOD: YOU WOULD PAY THE FOLLOWING EXPENSES ON A $1,000 INVESTMENT, ASSUMING A
5% ANNUAL RETURN ON ASSETS:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS
-------- --------
<S> <C> <C>
Money Market Portfolio...................................... $ 15 $ 46
Bond Portfolio.............................................. 15 47
Balanced Portfolio.......................................... 24 73
Capital Growth Portfolio.................................... 15 48
Growth & Income Portfolio................................... 17 53
Partners Portfolio.......................................... 19 60
Capital Appreciation Portfolio.............................. 18 56
Small Cap Portfolio......................................... 18 56
Worldwide Growth Portfolio.................................. 19 58
</TABLE>
The purpose of this table is to assist you in understanding various costs
and expenses that you will bear directly or indirectly. The table reflects
expenses of the Separate Account and underlying Funds. For more complete
descriptions of the various costs and expenses involved, see "Charges under the
Certificates" in this Prospectus and see the Fund Prospectuses. Premium taxes
may also be applicable. THIS EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION
OF PAST OR FUTURE EXPENSES AND ACTUAL EXPENSES MAY BE GREATER THAN THOSE SHOWN.
The Annual Expenses of the Funds and Examples are based on data provided by the
respective Funds. We have not independently verified such data.
The Annual Fee is reflected in the examples, using an assumed Certificate
Value of $35,000. No Annual Fee is deducted from annuitized amounts, or if your
Certificate Value is at least $50,000, or on payment of a death benefit.
<PAGE>
American Maturity Life Insurance Company 9
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AMERICAN MATURITY, THE SEPARATE ACCOUNT, THE FUNDS, AND THE GENERAL ACCOUNT
AMERICAN MATURITY LIFE INSURANCE COMPANY
We are American Maturity Life Insurance Company ("American Maturity" or "We"
or "Us"), domiciled in Connecticut. Our principal office is at 200 Hopmeadow
Street, Simsbury, Connecticut 06089. However our mailing address is 700 Newport
Center Drive, Newport Beach, California 92660.
American Maturity is a stock insurance company engaged in the business of
writing annuities. American Maturity was originally incorporated under the name
of First Equicor Life Insurance Company under the laws of California on October
24, 1972. On July 29, 1994 First Equicor Life Insurance Company redomesticated
to Connecticut and changed its name to American Maturity Life Insurance Company.
American Maturity is owned 60% by Hartford Life and Accident Insurance Company
(domiciled in Connecticut) and 40% by Pacific Mutual Life Insurance Company
(domiciled in California). Pacific Mutual serves as the administrator of the
Certificates.
The American Association of Retired Persons ("AARP") granted American
Maturity the exclusive right to offer annuity products to the membership of AARP
pursuant to an agreement established July 6, 1994. The agreement requires
American Maturity to maintain minimum capital surplus levels, minimum ratings
from nationally recognized rating services, and generally to obtain AARP's
consent in all matters relating to the offering of annuities to AARP members.
The agreement also includes a shareholder's agreement of American Maturity's
shareholders. In return for the exclusive right to offer annuity products to
AARP members, American Maturity pays AARP a royalty fee. The agreement is
effective until December 31, 2004, at which time AARP and American Maturity may
or may not renew the agreement.
Based on its financial soundness and operating performance, American
Maturity has earned an A+ (Superior) rating from A.M. Best Company, Inc., and an
(AA) (Excellent) rating from Standard & Poor's. Based on claims paying ability,
American Maturity has earned an (AA+) (Very High) rating from Duff and Phelps.
These ratings do not apply to the performance of the Separate Account.
However, the contractual obligations under this variable annuity are the general
corporate obligations of American Maturity. These ratings do apply to American
Maturity's ability to meet its insurance obligations under the Certificate.
SEPARATE ACCOUNT AMLVA
The Separate Account AMLVA (the "Separate Account") was established on
February 28, 1996, in accordance with authorization by Our Board of Directors.
It is the Separate Account in which We set aside and invest the assets
attributable to the Certificates described in this Prospectus. Although the
Separate Account is an integral part of American Maturity, it is registered as a
unit investment trust under the Investment Company Act of 1940. This
registration does not, however, involve Securities and Exchange Commission
supervision of the management or the investment practices or policies of the
Separate Account or American Maturity. The Separate Account meets the definition
of "separate account" under federal securities law.
Under Connecticut law, the assets of the Separate Account attributable to
the Certificates offered under this Prospectus are held for the benefit of the
owners of, and the persons entitled to payments under, those Certificates.
Income, gains, and losses, whether or not realized, from assets allocated to the
Separate Account, are, in accordance with the Certificates, credited to or
charged against the Separate Account. Also, the assets in the Separate Account
are not chargeable with liabilities arising out of any other business American
Maturity may conduct. So, Certificate Values allocated to the Sub-Accounts will
not be affected by the rate of return of American Maturity's General Account,
nor by the investment performance of any of American Maturity's other separate
accounts. However, all obligations arising under the Certificates are general
corporate obligations of American Maturity.
Your investment in the Separate Account is allocated to one or more
Sub-Accounts as per your specifications. Each Sub-Account is invested
exclusively in the assets of a Fund. Premium payments and proceeds of transfers
between Sub-Accounts are applied to purchase shares in the appropriate Funds at
net asset values determined as of the end of the Business Day during which the
payments were received or the transfer made. All distributions from the Fund are
reinvested at net asset value. The value of your investment will therefore vary
in accordance with the net income and fluctuation in the individual investments
within the underlying Fund. During the variable annuity payout period, both your
annuity payments and reserve values will vary in accordance with these factors.
American Maturity does not guarantee the investment results of the
Sub-Accounts or any of the underlying investments. There is no assurance that
the value of a Certificate during the years prior to retirement or the aggregate
amount of the variable annuity payments will equal the total of premium payments
made under the Certificate. Since
<PAGE>
10 AMERICAN MATURITY LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
each underlying Fund has different investment objectives, each is subject to
different risks. These risks are more fully described in the accompanying
Prospectuses for each of the Funds.
American Maturity reserves the right to substitute the shares of any other
registered investment company for the shares of any Fund already purchased or to
be purchased in the future by the Separate Account provided that the
substitution has been approved by the Securities and Exchange Commission.
The investment portfolios of the Funds are available to registered separate
accounts offering variable annuity and variable life products of other
participating insurance companies. Although we do not anticipate any
disadvantages to this, there is a possibility that a material conflict may arise
between the interest of the Separate Account and one or more of the other
separate accounts participating in the Funds. A conflict may occur due to a
change in law affecting the operations of variable life and variable annuity
separate accounts, differences in voting instructions of our Certificate Owners
and those of other companies, or some other reason. In the event of a conflict,
we will take any steps
necessary to protect Certificate Owners. See the accompanying Prospectuses for
the Funds for more information.
THE FUNDS
The underlying variable investments for the Certificates are certain shares
of the Dreyfus Variable Investment Fund, Janus Aspen Series, Neuberger & Berman
Advisers Management Trust, and Scudder Variable Life Investment Fund, all
diversified series investment companies with multiple portfolios. We reserve the
right, subject to compliance with the law, to offer additional funds with
differing investment objectives. The Funds may not be available in all states.
A full description of the Funds, their investment policies and restrictions,
risks, charges and expenses and all other aspects of their operation is
contained in separate prospectuses (reprinted at the end of this booklet). Each
prospectus should be read in conjunction with this Prospectus before investing.
The investment objectives of each of the Funds are summarized below. There
is, of course, no assurance that any Fund will meet its objective:
<TABLE>
<CAPTION>
FUND: INVESTMENT STRATEGY:
--------------------------- -------------------------------------------------------------------
<S> <C> <C>
Current Income MONEY MARKET PORTFOLIO Seeks income through investments in short-term money market
securities.
BOND PORTFOLIO Seeks high income from a high quality portfolio of bonds.
Balanced BALANCED PORTFOLIO Seeks long-term capital growth, consistent with perservation of
capital balanced by current income.
Stock Growth CAPITAL GROWTH PORTFOLIO Seeks to maximize long-term capital growth from a portfolio
consisting primarily of equity securities.
GROWTH & INCOME PORTFOLIO Seeks long-term growth of capital, current income and growth of
income from a portfolio consisting primarily of common stocks and
securities convertible into common stocks.
PARTNERS PORTFOLIO Seeks capital growth, designed with reasonable risk. Its investment
program seeks securities believed to be under-valued based on
strong fundamentals such as low price-to-earnings ratios,
consistent cash flow, and support from asset values.
CAPITAL APPRECIATION Seeks to provide long-term capital growth consistent with the
PORTFOLIO preservation of capital through investments in common stocks of
domestic and foreign issuers.
SMALL CAP PORTFOLIO Seeks maximum capital appreciation through investments in common
stocks of smaller companies.
Global WORLDWIDE GROWTH PORTFOLIO Seeks long-term growth of capital by investing primarily in common
stocks of foreign and domestic issuers.
<CAPTION>
GENERAL ACCOUNT:
---------------------------
<S> <C> <C>
Fixed Rate FIXED ACCOUNT Seeks guaranteed current interest income.
<CAPTION>
ADVISER:
---------------
<S> <C>
Current Income Scudder
Scudder
Balanced Janus
Stock Growth Scudder
Scudder
Neuberger &
Berman
Dreyfus
Dreyfus
Global Janus
<S> <C>
Fixed Rate n/a
</TABLE>
<PAGE>
AMERICAN MATURITY LIFE INSURANCE COMPANY 11
- --------------------------------------------------------------------------------
INVESTMENT ADVISERS TO THE FUNDS
DREYFUS CORPORATION
200 Park Avenue
New York, New York 10166
Investment adviser for the Capital Appreciation
Portfolio and the Small Cap Portfolio.
JANUS CAPITAL
100 Filmore Street
Denver, Colorado 80206-4923
Investment adviser for the Balanced Portfolio and the Worldwide Growth
Portfolio.
NEUBERGER & BERMAN MANAGEMENT INCORPORATED
605 Third Avenue
New York, New York 10158-0180
Investment adviser for the Partners Portfolio.
SCUDDER, STEVENS & CLARK, INC.
Two International Place
Boston, Massachusetts 02110-4103
Investment adviser for the Money Market Portfolio, the Bond Portfolio, the
Growth & Income Portfolio, and Capital Growth Portfolio.
Please see each prospectus for the Dreyfus Variable Investment Fund, Janus
Aspen Series, Neuberger & Berman Advisers Management Trust, and Scudder Variable
Life Investment Fund for more information on each investment adviser.
THE GENERAL ACCOUNT
THAT PORTION OF THE CERTIFICATE RELATING TO THE FIXED ACCOUNT IS NOT
REGISTERED UNDER THE SECURITIES ACT OF 1933 ("1933 ACT") AND THE FIXED ACCOUNT
IS NOT REGISTERED AS AN INVESTMENT COMPANY UNDER THE INVESTMENT COMPANY ACT OF
1940 ("1940 ACT"). ACCORDINGLY, NEITHER THE FIXED ACCOUNT NOR ANY INTERESTS
THEREIN ARE SUBJECT TO THE PROVISIONS OR RESTRICTIONS OF THE 1933 ACT OR THE
1940 ACT, AND THE DISCLOSURE REGARDING THE FIXED ACCOUNT HAS NOT BEEN REVIEWED
BY THE STAFF OF THE SECURITIES AND EXCHANGE COMMISSION. THE FOLLOWING DISCLOSURE
ABOUT THE FIXED ACCOUNT MAY BE SUBJECT TO CERTAIN GENERALLY APPLICABLE
PROVISIONS OF THE FEDERAL SECURITIES LAWS REGARDING THE ACCURACY AND
COMPLETENESS OF DISCLOSURE.
Premium payments and Certificate Values allocated to the Fixed Account
become a part of Our general assets. We invest the assets of the General Account
in accordance with applicable law governing the investments of insurance company
general accounts.
Currently, We guarantee interest at a rate of not less than 3.0% per year,
compounded annually, to amounts allocated to the Fixed Account. However, We
reserve the right to change the rate according to state insurance law. We may
credit interest at a rate in excess of 3.0% per year; however, We are not
obligated to credit any interest in excess of 3.0% per year. There is no
specific formula for the determination of excess interest credits. Some of the
factors that We may consider in determining whether to credit excess interest to
amounts allocated to the Fixed Account and the amount thereof, are general
economic trends, rates of return currently available and anticipated on Our
investments, regulatory and tax requirements and competitive factors. ANY
INTEREST CREDITED TO AMOUNTS ALLOCATED TO THE FIXED ACCOUNT IN EXCESS OF 3% PER
YEAR WILL BE DETERMINED IN THE SOLE DISCRETION OF AMERICAN MATURITY. THE OWNER
ACCEPTS THAT INTEREST CREDITED TO FIXED ACCOUNT ALLOCATIONS MAY NOT EXCEED THE
MINIMUM GUARANTEE OF 3% FOR ANY GIVEN YEAR.
PERFORMANCE RELATED INFORMATION
The Separate Account may advertise certain performance related information
concerning its Sub-Accounts. Performance information about a Sub-Account is
based on the Sub-Account's past performance only and is no indication of future
performance.
Historical performance information can help you understand how investment
performance can affect your investment in the Sub-Accounts. Although the Sub-
Accounts are newly-established and have no historical performance, each
Sub-Account will be investing in shares of a Fund that does have historical
performance data. Performance data include total returns for each Sub-Account,
current and effective yields for the Money Market Sub-Account, and yields for
the other fixed income Sub-Accounts. Calculations are in accordance with
standard formulas prescribed by the SEC. Yields do not reflect any charge for
premium taxes and/or other taxes; this exclusion may cause yields to show more
favorable performance. Total returns may or may not reflect withdrawal charges,
Annual Fees or any charge for premium and/or other taxes; data that do not
reflect these charges may have more favorable performance.
The Statement of Additional Information presents some hypothetical
performance data, showing what the performance of each Sub-Account would have
been if it had been investing in the corresponding Fund since that Fund's
inception. The Statement of Additional Information also presents some
performance benchmarks, based on unmanaged market indices, such as the S&P 500,
and on "peer groups," which use other managed funds with similar investment
objectives. These benchmarks may give you a
<PAGE>
12 AMERICAN MATURITY LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
broader perspective when you examine hypothetical or actual Sub-Account
performance.
THE CERTIFICATE
WHAT IS THE CERTIFICATE?
Your AARP Variable Annuity (your "Certificate") provides you with
flexibility in tax-deferred retirement planning or other long-term financial
planning. You may select among the Funds and the Fixed Account. You may add to
your Certificate Value at any time, and your additional investments may be in
any amount you choose (subject to certain limitations). When you annuitize, the
Annuitant will receive a series of variable and/or fixed payments for life or
for a specified period of years.
If you purchase a Certificate with after-tax dollars, your Certificate is
called a "Non-Qualified" Certificate. If your Certificate is purchased through a
Qualified Plan, it is called a "Qualified Certificate". Either way, your
earnings on your Certificate are not subject to tax until amounts are withdrawn
or distributed (including annuity payments).
HOW TO APPLY FOR YOUR CERTIFICATE
To purchase a Certificate, fill out an Enrollment Form and submit it along
with your initial Premium payment to American Maturity Life Insurance Company at
P.O. Box 100194, Pasadena, CA 91189-0194. If your Enrollment Form and payment
are complete when received, or once they have been complete, We will issue your
Certificate within the next two Business Days. If some information is missing
from your Enrollment Form, We may delay issuing your Certificate while we obtain
the missing information, however, we will not hold your initial Premium payment
for more than five Business Days without your permission.
If you already own a variable annuity contract, you may purchase a
Certificate by exchanging your existing contract(s). If you are interested in
this option, call Us for more information.
We reserve the right to reject any Enrollment Form or premium payment for
any reason, subject to any applicable state nondiscrimination laws and to our
own standards and guidelines. You must be age 90 or under (85 or under in
Pennsylvania) to purchase a Certificate.
MAKING YOUR PREMIUM PAYMENTS
PREMIUM PAYMENTS -- Your initial premium payment must be at least $5,000.
You may pay this entire amount when you submit your Enrollment Form, or you may
choose our preauthorized checking plan. If you choose the preauthorized checking
plan, you must make your first installment payment of at least $2,500 when you
submit your Enrollment Form, and you must schedule to contribute at least $100
per month. You must obtain our consent before making an initial or additional
premium payment that will bring your aggregate Premium payments over $1,000,000.
You may choose to invest additional amounts in your Certificate at any time.
Each additional premium payment must be at least $250 (or $100 if enrolled in
the preauthorized checking plan).
SHORT TERM CANCELLATION RIGHT ("RIGHT TO EXAMINE") -- If you are not
satisfied with your purchase you may cancel the Certificate by returning it
within ten days (or longer in some states) after you receive it. Your
cancellation request must be in writing. If you choose to cancel, We will pay
you an amount equal to the Certificate Value on the date we receive your
request, without any deduction for the Contingent Deferred Sales Charge. You
bear the investment risk of the Certificate before We receive your request for
cancellation. However, in those states where required by law, and for Individual
Retirement Annuities (IRAs), We will refund the premium you paid (rather than
the Certificate Value).
HOW YOUR PAYMENTS ARE INVESTED
Each initial premium payment is credited to your Certificate within two
business days of receipt of a properly completed Enrollment Form by American
Maturity at its Administrative Office. It will be credited to the Sub-Account(s)
and/or the Fixed Account in accordance with your election. If the Enrollment
Form is incomplete when received, once completed each initial premium payment
will be credited to the Sub-Account(s) or the Fixed Account within five business
days of receipt. If the initial premium payment is not credited within five
business days, the premium payment will be immediately returned unless you have
been informed of the delay and request that the premium payment not be returned.
Any additional premium payments are credited to your Certificate on the Business
Day We receive your completed request.
If your Certificate is an IRA or is issued in a state which requires the
return of premium upon the exercise of your "Right to Examine," your initial
premium payment to be allocated to any Sub-Account is allocated to the Money
Market Sub-Account during your "Right to Examine" period. In most cases your
initial premium payment will be allocated to your chosen Sub-Accounts at the end
of the 15th calendar day after your Certificate Date. We reserve the right to
extend this period to correspond with the number of days in which your state
allows you to return your Certificate under the "Right to Examine" provision.
The number of Accumulation Units in each Sub-Account to be credited to a
Certificate is determined by dividing the portion of the premium payment being
<PAGE>
AMERICAN MATURITY LIFE INSURANCE COMPANY 13
- --------------------------------------------------------------------------------
credited to each Sub-Account by the value of an Accumulation Unit in that
Sub-Account on that date. Subsequent premium payments are priced on the Business
Day received by American Maturity.
CERTIFICATE VALUE
The value of your Sub-Account(s) under your Certificate at any time prior to
the Annuity Commencement Date is determined by multiplying the total number of
Accumulation Units credited to your Certificate in each Sub-Account by the then
current Accumulation Unit values for the applicable Sub-Account. The value of
the Fixed Account under your Certificate will be the amount allocated to the
Fixed Account plus interest credited less withdrawals. You will be advised at
least quarterly of the number of Accumulation Units credited to each
Sub-Account, the current Accumulation Unit values, the Fixed Account value, and
the total value of your Certificate.
The Accumulation Unit value for each Sub-Account will vary to reflect the
investment experience of the applicable Fund. It will be determined on each
Business Day by multiplying the Accumulation Unit value of the particular
Sub-Account on the preceding Business Day by a "Net Investment Factor" for that
Sub-Account for the Business Day then ended. The "Net Investment Factor" for
each of the Sub-Accounts is equal to the net asset value per share of the
corresponding Fund at the end of the Business Day (plus the per share amount of
any dividends or capital gains distributed by that Fund if the ex-dividend date
occurs in the Business Day then ended) divided by the net asset value per share
of the corresponding Fund at the beginning of the Business Day and subtracting
from that amount the Mortality and Expense Risk Charge and the Administration
Charge. You should refer to the Fund Prospectuses which accompany this
Prospectus for a description of how the assets of each Fund are valued since
each determination has a direct bearing on the Accumulation Unit value of the
Sub-Account and therefore the value of a Certificate. The Accumulation Unit
Value is affected by the performance of the underlying Fund(s), expenses and
deduction of the charges described in this Prospectus.
The shares of the Fund are valued at net asset value on each Business Day. A
complete description of the valuation method used in valuing Fund shares may be
found in the accompanying Prospectuses of the Funds.
American Maturity will determine the value of the Fixed Account by crediting
interest to amounts allocated to the Fixed Account. The minimum Fixed Account
interest rate is 3%, compounded annually. We may not credit a lower minimum
interest rate according to state law. We also may credit interest at rates
greater than the minimum Fixed Account interest rate.
TRANSFERS BETWEEN THE SUB-ACCOUNTS/
FIXED ACCOUNT
TRANSFERS BETWEEN THE SUB-ACCOUNTS AND FIXED ACCOUNT -- You may transfer the
values among your Sub-Accounts and the Fixed Account free of charge before the
Annuity Commencement Date.
If the Fixed Account contains amounts credited with different rates of
interest, any transfer from the Fixed Account will reduce each of those amounts
pro rata according to the amount transferred.
However, We reserve the right to limit the number of transfers to twelve
(12) per Certificate Year, with no two (2) transfers occurring on consecutive
Business Days. We also reserve the right to limit the size, number, and
frequency of transfers, to restrict or suspend transfers, or to reject any
transfer request. We do not currently, but may impose a fee of up to $15 (or
2.0% of the amount transferred, if less) for each transfer in excess of 12
transfers in any Certificate Year. Such fee would be deducted from Certificate
Values remaining in the Sub-Account from which the transfer is made. We reserve
the right to defer transfers from the Fixed Account for up to six months from
the date of request. If the result of any transfer would leave less than a $500
balance in the Fixed Account, the entire balance of the Fixed Account will be
transferred to the Sub-Account(s) corresponding to the Certificate Owner's last
allocation instructions.
After the Annuity Commencement Date, you may only transfer among the
Sub-Accounts once per calendar quarter. For any transfer, the minimum allocation
to any Sub-Account may not be less than $500. No transfers may be made between
the General Account and the Sub-Accounts after the Annuity Commencement Date.
We will send you a written confirmation of any transfer. It will be your
responsibility to verify the accuracy of all confirmations of transfers and to
promptly advise Us of any inaccuracies within one Business Day of receipt of the
confirmation.
TRANSFERS BY TELEPHONE -- American Maturity may permit you to authorize
transfers among the Sub-Accounts and the Fixed Account over the telephone. We
will not be responsible for losses resulting from acting upon telephone requests
reasonably believed to be genuine. We will employ reasonable procedures to
confirm that instructions communicated by telephone are genuine. All transfer
instructions by telephone are tape recorded.
Transaction instructions we receive by telephone before 4:00 p.m. Eastern
time (1:00 p.m. Pacific time), (or the close of the New York Stock Exchange, if
earlier), on any Business Day will normally be effective on that day, and we
<PAGE>
14 AMERICAN MATURITY LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
will send you written confirmation of each telephone transfer. We cannot
guarantee that you will always be able to reach us to complete a telephone
transaction in the event of busy telephone lines, severe weather conditions, or
other emergencies.
The right to reallocate Certificate Values between the Sub-Accounts is
subject to modification if We determine, in our sole opinion, that the exercise
of that right by one or more Certificate Owners is, or would be, to the
disadvantage of other Certificate Owners. Any modification could be applied to
transfers to or from some or all of the Sub-Accounts and the Fixed Account and
could include, but not be limited to, the requirement of a minimum time period
between each transfer, not accepting transfer requests of an agent acting under
a power of attorney on behalf of more than one Certificate Owner, or limiting
the dollar amount that may be transferred between the Sub-Accounts and the Fixed
Account by a Certificate Owner at any one time. Such restrictions may be applied
in any manner reasonably designed to prevent any use of the transfer right which
is considered by American Maturity to be to the disadvantage of other
Certificate Owners.
DOLLAR COST AVERAGING -- Dollar cost averaging is a method in which
investors buy securities in a series of regular purchases instead of in a single
purchase. This allows the investor to have a lower average security price over
time. This allows the investor to purchase more units in a lower price
environment, and fewer units in a higher price environment. Prior to your
Annuity Commencement Date, you may use dollar cost averaging to transfer
amounts, over time, from any Sub-Account or the Fixed Account with a Certificate
Value of at least $500 to one or more other Sub-Accounts.
FUND REBALANCING -- You may instruct us to maintain a specific balance of
Sub-Accounts under your Certificate (e.g., 30% in one Sub-Account, 40% in
another Sub-Account, and 30% in the last Sub-Account) prior to your Annuity
Commencement Date. Periodically, We will "rebalance" your investment to the
percentage you have specified. Rebalancing may result in transferring amounts
from a Sub-Account earning a relatively higher return to one earning a
relatively lower return. The Fixed Account is not available for rebalancing.
EARNINGS SWEEP -- You may instruct us to make automatic periodic transfers
of your earnings from the Money Market Sub-Account or from the Fixed Account to
one or more Sub-Accounts (other than the Money Market Sub-Account).
CHARGES UNDER THE CERTIFICATES
CONTINGENT DEFERRED SALES CHARGE -- There is no deduction for sales expenses
from premium payments when made. However, a Contingent Deferred Sales Charge may
be assessed against Certificate Values if they are withdrawn before the fifth
(5th) Certificate Anniversary and prior to your Annuity Commencement Date. The
length of time from your Certificate Date to the time of surrender determines
the Contingent Deferred Sales Charge. The charge is a percentage of the Gross
Surrender Value (the amount you withdraw) attributable to premium payments. For
purposes of calculating the charge, premium payments are deemed to be
surrendered before earnings.
<TABLE>
<CAPTION>
CERTIFICATE
YEAR CHARGE
- -------------- ---------
<S> <C>
1 5%
2 4%
3 3%
4 2%
5 1%
6 or greater 0%
</TABLE>
The amount of any Contingent Deferred Sales Charge and any charge for
premium taxes and/or other taxes is added to the amount of your withdrawal
request. For example, if you request to withdraw a net amount of $10,000, pay a
5% sales charge, and owe a 1% premium tax, your Certificate Value is reduced by
$10,638.30. Premium payments will be deemed to be surrendered in the order in
which they were received.
If, at the time of a surrender, you own another AARP Variable Annuity
Certificate(s), the Contingent Deferred Sales Charge is calculated based on the
purchase date of your oldest Certificate.
Transfers between Sub-Accounts and/or the Fixed Account are not considered
withdrawals of an amount from your Certificate, so no Contingent Deferred Sales
Charge is imposed at the time of such transfers.
AMOUNTS NOT SUBJECT TO THE CONTINGENT DEFERRED SALES CHARGE -- No Contingent
Deferred Sales Charge is imposed on amounts withdrawn:
- at annuitization
- at death
- under the Annual Withdrawal Amount (see below)
- to meet IRS minimum distribution requirements on a qualified contract (see
below)
- while you are confined to a nursing home (see below)
- while your are under age 65 and totally disabled (see below)
- while you have a terminal illness (see below)
ANNUAL WITHDRAWAL AMOUNT -- No Contingent Deferred Sales Charge will be
assessed against any withdrawals made each Certificate Year, on a non-cumulative
basis, of up to 10% of premium payments remaining in the
<PAGE>
AMERICAN MATURITY LIFE INSURANCE COMPANY 15
- --------------------------------------------------------------------------------
Certificate as of the last Certificate Anniversary. Withdrawals in excess of
this amount will be subject to the Contingent Deferred Sales Charge.
NURSING HOME WAIVER -- No Contingent Deferred Sales Charge will be assessed
upon surrenders that occur during your confinement in a facility certified as a
nursing home. Such confinement (1) must have been continuous for at least 90
days before the surrender request; (2) must be at the recommendation of a U.S.
licensed physician; (3) must be for medically necessary reasons and; (4) must be
in effect at the time of the surrender request.
DISABILITY WAIVER -- No Contingent Deferred Sales Charge will be assessed
upon surrenders that occur when you are under age 65 and Totally Disabled. You
must provide written proof, satisfactory to us, that you are Totally Disabled.
Totally Disabled means a disability that: (1) results from bodily injury or
disease; (2) begins while the Certificate is in force; (3) has existed
continuously for at least 12 months; and (4) prevents you from engaging in the
substantial and material duties of your regular occupation. During the first 12
months of Total Disability, regular occupation means your usual full time (at
least 30 hours per week) work when Total Disability begins. We reserve the right
to require reasonable proof of such work. After the first 12 months of Total
Disability, regular occupation means that for which you are reasonably qualified
by education, training or experience.
TERMINAL ILLNESS -- No Contingent Deferred Sales Charge will be assessed
upon surrenders that occur when you have been diagnosed with a medical condition
that results in a life expectancy of less than twelve months. You must provide
written proof, satisfactory to us, that you have been diagnosed by a U.S.
licensed physician with a medical determinable condition that results in a life
expectancy of less than twelve months.
IRS MINIMUM DISTRIBUTIONS -- No Contingent Deferred Sales Charge will be
assessed against surrenders necessary to meet the minimum distribution
requirements set forth in Section 401(a) of the Internal Revenue Code as such
requirements apply to amounts held under the Certificate if you so specify in
writing.
PREMIUM TAXES -- A deduction is made for premium taxes or other taxes
("Taxes"), if applicable, that are imposed by some states or other governmental
entities. Premium taxes imposed by some states currently range up to 3.5%. We
will determine when taxes have resulted from the receipt of premium payments,
the commencement of annuity payments, or the investment experience of the
Separate Account. We may, at our discretion, pay taxes when due and deduct that
amount from the Certificate Value at a later date. Payment at a earlier date
does not waive any right that We may have to deduct amounts at a later date. We
reserve the right to establish a provision for federal income taxes if the
Company determines, in its sole discretion, that it will incur a tax as a result
of the operation of the Separate Account.
ANNUAL FEE -- American Maturity will deduct an Annual Fee of $25 at the end
of each Certificate year prior to the Annuity Commencement Date, or at the time
you withdraw your entire Certificate Value, if your Certificate Value is less
than $50,000 on either date. The fee is not imposed on amounts you annuitize or
on payment of a death benefit. The fee reimburses certain of our costs in
administering the Certificates and the Separate Account; we do not intend to
realize a profit from this fee. Your Annual Fee will be charged proportionately
according to the value in each Sub-Account and the Fixed Account.
MORTALITY AND EXPENSE RISK CHARGE -- American Maturity assesses a charge
against the assets of the Separate Account to compensate for certain mortality
and expense risks that we assume under the Certificates (the "Risk Charge").
Mortality risk is the risk that an Annuitant will live longer (and therefore
receive more annuity payments) than we predict through our actuarial
calculations at the time the Certificate is issued. American Maturity also bears
mortality risk in connection with death benefits payable under the Certificates.
Expense risk is the risk that the expense charges and fees under the
Certificates and Separate Account are less than our actual administrative and
operating expenses.
For assuming these risks, We charge 0.65% per year (0.0017751% per day)
against all Certificate Values held in the Sub-Accounts during the life of the
Certificate.
Risk Charges will stop at annuitization if you select a fixed annuity; Risk
Charges will continue after annuitization if you choose any variable annuity,
even though we do not bear mortality risk if your Annuity Option is Period
Certain Only. American Maturity will realize a gain if the Risk Charge exceeds
our actual cost of expenses and benefits, and will suffer a loss if actual costs
exceed the Risk Charge. Any gain will become part of American Maturity's General
Account; we may use it for any reason, including covering sales expenses on the
Certificates.
ADMINISTRATIVE FEE -- American Maturity charges an Administrative Fee as
compensation for costs we incur in operating the Separate Account and issuing
and administering the Certificates, including processing Enrollment Forms and
payments, and issuing reports to Certificate Owners and to regulatory
authorities.
We charge 0.20% per year (0.0005474% per day) against all Certificate Values
held in the Sub-Accounts during the life of the Certificate. This fee is
assessed daily during both the accumulation and the annuity periods. A
relationship will not necessarily exist between the actual administrative
expenses attributable to a particular Certificate and the Administrative Fee
paid in respect of that particular Certificate.
<PAGE>
16 AMERICAN MATURITY LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
EXPENSES OF THE FUNDS -- Your Certificate Value will reflect advisory fees
and other expenses incurred by the Funds as the underlying investments of your
Sub-Account(s). These fees and expenses are not specified by your Certificate,
and you should refer to the Fund prospectuses for a description of the
deductions and expenses paid out of the assets of the Funds.
SALES COMMISSIONS -- American Maturity does not currently pay any
commissions to any registered representatives. However, it incurs sales expenses
in the form of direct marketing, advertising, and AARP royalty fees. The
contingent deferred sales charge is designed to reimburse us for these costs.
DEATH BENEFITS
WHEN A DEATH BENEFIT IS PAYABLE -- Before the Annuity Commencement Date, a
death benefit may be payable upon the death of the last surviving Annuitant or
upon the first death of any Certificate Owner. We calculate the death benefit as
of the Notice Date. The Notice Date is the date we receive proof (in good form)
of death at our Administrative Office and instructions regarding payment of the
proceeds.
BENEFICIARY -- The death benefit is payable to your Beneficiary as described
in the Control Provisions of your Certificate. Usually the Beneficiary will be
the person you name in your Enrollment Form if you name yourself as both the
Owner and Annuitant. However, the Beneficiary of a jointly owned Certificate
will be the surviving joint owner, regardless of the beneficiary designation in
your Enrollment Form. Also, upon the death of the last Annuitant who was not a
Certificate Owner, the Beneficiary will be the surviving Certificate Owner(s),
regardless of the beneficiary designation in your Enrollment Form. If you
designate your spouse as the Beneficiary in your Enrollment Form, at your death
your spouse may become the Certificate Owner and continue the Certificate in
lieu of receiving the death benefit.
THE AMOUNT OF THE DEATH BENEFIT -- The death benefit amount prior to the
Annuity Commencement Date shall be the greater of (a) total Purchase Payments
less any Gross Surrenders since the Certificate Date or (b) the Certificate
Value. The death benefit shall be calculated as of the end of the Notice Date.
PAYMENT OF THE DEATH BENEFIT -- The death benefit may be taken in a lump sum
or under any of the settlement options then being offered by the Company,
subject however to certain required distributions that are imposed by the
Internal Revenue Code upon the death of the Certificate Owner (See "Federal Tax
Considerations", Required Distributions, page 20). When payment of the death
benefit is taken in one lump sum, payment will be made within 7 days after the
date due proof of death is received, except when the Company is permitted to
defer such payment under the Investment Company Act of 1940. Payment to the
Beneficiary, other than in a lump sum, may only be elected during the sixty-day
period beginning with the date of receipt of due proof of death.
In the event of the death of the Annuitant after the Annuity Commencement
Date, a death benefit, equal to the present value of any remaining payments
according to the Annuity Option in effect, will be paid in one sum to the
Beneficiary unless other provisions shall have been made and approved by the
Company.
If death proceeds are received by a Beneficiary upon the death of the
Annuitant who was not a Certificate Owner, such payment may be subject to a 10%
tax penalty.
SURRENDERS
FULL SURRENDERS -- Beginning 30 days after your Certificate Date, at any
time prior to the Annuity Commencement Date, you have the right to terminate the
Certificate and take its Net Surrender Value in a lump sum. The Net Surrender
Value is equal to the Certificate Value less any applicable Premium Taxes, the
Annual Fee and any applicable Contingent Deferred Sales Charges. The Net
Surrender Value may be more or less than the amount of the premium payments made
to a Certificate.
PARTIAL SURRENDERS -- Beginning 30 days after your Certificate Date, you may
make a partial surrender of Certificate Values at any time prior to the Annuity
Commencement Date so long as the amount surrendered is at least $500.
Additionally, if the remaining Certificate Value following a surrender is less
than $5,000, We may terminate the Certificate and pay the Net Surrender Value.
We may permit you to preauthorize partial surrenders subject to certain
limitations then in effect.
In requesting a partial surrender you should specify the Sub-Account(s)
and/or the Fixed Account from which the partial surrender is to be taken.
Otherwise, such surrender and any applicable Contingent Deferred Sales Charges
will be effected on a pro rata basis according to the value in the Fixed Account
and each Sub-Account under your Certificate.
No surrenders are permitted after the Annuity Commencement Date.
WITHDRAWAL TRANSACTION FEES -- There is currently no transaction fee for
partial surrenders. However, we reserve the right to impose a withdrawal
transaction fee in the future of up to $15 for each partial withdrawal in excess
of 12 in any Certificate Year. Any such fee would be charged against your
Sub-Account(s) and the Fixed Account, proportionately based on your Certificate
Value in each, immediately after the withdrawal.
TAX CONSEQUENCES OF SURRENDERS -- Any surrender will generally have federal
income tax consequences, which could include tax penalties. Any surrender made
prior to
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AMERICAN MATURITY LIFE INSURANCE COMPANY 17
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the Certificate Owner's attained age 59 1/2 will generally be subject to a 10%
penalty tax. You should consult with a tax adviser before making any withdrawal.
See Federal Tax Considerations, beginning on page 18, for more information.
SPECIAL RESTRICTIONS -- American Maturity may defer payment of any amounts
from the Fixed Account for up to six months from the date of the request for the
withdrawal. If we defer payment for more than 30 days, we will pay interest of
at least 3.0% per annum on the amount deferred.
There may be postponement of payment of a withdrawal whenever (a) the New
York Stock Exchange is closed, except for holidays or weekends, or trading on
the New York Stock Exchange is restricted as determined by the Securities and
Exchange Commission; (b) the Securities and Exchange Commission permits
postponement and so orders; or (c) the Securities and Exchange Commission
determines that an emergency exists making valuation of the amounts or disposal
of securities not reasonably practicable.
ANNUITY BENEFITS
ANNUITY COMMENCEMENT DATE -- You may select an Annuity Commencement Date.
The Annuity Commencement Date selected must be at least one year after the
Certificate Date and on or before the Annuitant's attained age 90, except in
certain states where a different age is required. If you do not select an
Annuity Commencement Date, the scheduled Annuity Commencement Date will be the
date of the Annuitant's attained age 90, or an earlier age if required by state
law. You may change the Annuity Commencement Date provided you notify us, in
writing, 30 days before the scheduled Annuity Commencement Date.
ANNUITY BENEFIT -- On the Annuity Commencement Date, unless directed
otherwise, We will apply the Net Surrender Value to purchase monthly income
payments payable to the Annuitant according to the Annuity Option elected. The
Contingent Deferred Sales Charge will not be assessed. The Certificate may not
be surrendered after the Annuity Commencement Date.
ELECTION OF ANNUITY OPTION -- You may elect any one of the annuity options
described below or under any of the settlement options then being offered by Us.
In the absence of your election, the Net Surrender Value, without deduction for
any Contingent Deferred Sales Charge, will be applied on the Annuity
Commencement Date under the fifth option to provide a Payment for a Designated
Period for 5 years. The Net Surrender Value is determined on the basis of the
Accumulation Unit value of each Sub-Account no later than the fifth Business Day
preceding the date annuity payments are to commence, plus the value of the Fixed
Account on the Annuity Commencement Date.
DATE OF PAYMENT -- The first annuity payment under the Annuity Option shall
be made one month, (or the period selected for periodic payments: annual,
semi-annual, quarterly, or monthly), following the Annuity Commencement Date.
Subsequent payments shall be made on the same calendar day of the month as was
the first payment, or the preceding day if no such day exists (e.g. September
31), in accordance with the payment period selected.
If the Annuitant dies after the Annuity Commencement Date but before the
Company issues the payee's first check, the Beneficiary will be entitled to the
Net Surrender Value applied to the Annuity Option, without assessment of the
Contingent Deferred Sales Charge or Annual Fee.
ALLOCATION OF ANNUITY -- The person electing an annuity option may further
elect to have the value of the Certificate applied to provide a variable
annuity, a fixed dollar annuity or a combination of both. Once every 3 months,
following the commencement of annuity payments, the Certificate Owner may elect,
in writing, to transfer among any Sub-Account(s) on which variable annuity
payments are based. No transfers may be made between the Sub-Accounts and the
General Account after the Annuity Commencement Date.
If no election is made to the contrary, the value of each Sub-Account shall
be applied to provide a variable annuity based thereon, and the value of the
Fixed Account shall be applied to provide a fixed dollar annuity.
VARIABLE ANNUITY -- A variable annuity is an annuity with payments
increasing or decreasing in amount in accordance with the net investment results
of the Sub-Account(s) of the Separate Account. After the first monthly payment
for a variable Annuity has been determined in accordance with the provisions of
the Certificate (see Description of Tables below), a number of Annuity Units is
determined by dividing that first monthly payment by the appropriate Annuity
Unit value on the effective date of the annuity payments.
The value of an Annuity Unit for each Sub-Account of the Separate Account
will vary to reflect the investment experience of the applicable Funds and will
be determined by multiplying the value of the Annuity Unit for that Sub-Account
on the preceding business day by the product of (a) the net investment factor
for that Sub-Account for the day for which the Annuity Unit value is being
calculated, and (b) an interest factor to offset the effect of the assumed
interest rate of 5% per year, which is built into the Annuity Tables.
The number of Annuity Units remains fixed with respect to a particular
Sub-Account. If the Certificate Owner elects that continuing annuity payments be
based on different Sub-Account(s), the number will change effective with that
election but will remain constant following such election.
The dollar amount of the second and subsequent variable annuity payments is
not predetermined and may increase or decrease from month to month. The actual
amount of each variable annuity payment after the first is
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18 AMERICAN MATURITY LIFE INSURANCE COMPANY
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determined by multiplying the number of Annuity Units by the Annuity Unit value.
The Annuity Unit value will be determined no earlier than the fifth Business Day
preceding the date the annuity payment is due.
The Company guarantees that the dollar amount of variable annuity payments
will not be adversely affected by variations in the expense results of the
Company and/or in the actual mortality experience of Annuitants from the
mortality assumptions, including any age adjustment, used in determining the
first monthly payment.
You should consider the question of allocation among the Sub-Accounts and
the General Account to make certain that annuity payments are based on the
investment alternative best suited to your needs for retirement.
FIXED DOLLAR ANNUITY -- A fixed dollar annuity is an annuity with payments
which remain fixed as to dollar amount throughout the payment period.
ANNUITY OPTIONS
FIRST OPTION: LIFE ANNUITY
An annuity payable monthly during the lifetime of the Annuitant, ceasing
with the last payment due prior to the death of the Annuitant. This option
offers the largest payment amount of any of the life Annuity options since there
is no guarantee of a minimum number of payments nor a provision for a death
benefit payable to a Beneficiary.
It would be possible under this option for an Annuitant to receive only one
Annuity payment if he died prior to the due date of the second Annuity payment,
two if he died before the due date of the third Annuity payment, etc.
SECOND OPTION: LIFE ANNUITY WITH 120, 180 OR 240 MONTHLY PAYMENTS CERTAIN
An annuity providing monthly income for a fixed period of 120 months, 180
months, or 240 months (as selected), and for as long thereafter as the Annuitant
shall live.
If, at the death of the Annuitant, payments have been made for less than the
minimum elected number of months, then the present value as of the date of the
Annuitant's death, of any remaining guaranteed payments will be paid in one sum
to the Beneficiary unless other provisions have been made and approved by
American Maturity.
THIRD OPTION: CASH REFUND LIFE ANNUITY
An annuity payable monthly during the lifetime of the Annuitant ceasing with
the last payment due prior to the death of the Annuitant provided that, at the
death of the Annuitant, the Beneficiary will receive an additional payment equal
to the excess, if any, of (a) minus (b) where: (a) is the Net Surrender Value
applied on the Annuity Commencement Date under this option: and (b) is the
dollar amount of annuity payments already paid. This option is not available for
variable payouts.
FOURTH OPTION: JOINT AND LAST SURVIVOR LIFE ANNUITY
An annuity payable monthly during the joint lifetime of the Annuitant and a
secondary Annuitant, and thereafter during the remaining lifetime of the
survivor, ceasing with the last payment prior to the death of the survivor. It
would be possible under this option for an Annuitant and designated second
person to receive only one payment in the event of the common or simultaneous
death of the parties prior to the due date for the second payment and so on.
FIFTH OPTION: PAYMENT FOR A DESIGNATED PERIOD
An amount payable monthly for the number of years selected which may be from
5 to 30 years.
In the event of the Annuitant's death prior to the end of the designated
period, the present value as of the date of the Annuitant's death, of any
remaining guaranteed payments will be paid in one sum to the Beneficiary unless
other provisions have been made and approved by American Maturity.
Option 5 is an option that does not involve life contingencies and thus no
mortality guarantee. Charges made for the mortality undertaking under the
Certificates thus provide no real benefit to a Certificate Owner.
American Maturity may offer other annuity options from time to time.
DESCRIPTION OF TABLES: The Certificate contains tables that show the dollar
amount of the first monthly payment for the variable annuity and the minimum
dollar amount of the monthly payments for the fixed annuity for each $1,000
applied under the Annuity Options. The variable payment annuity tables are based
on the 1983a Individual Annuity Mortality Table with ages set back one year, and
an interest rate of 5% per annum. The fixed annuity payment tables are based on
the 1983a Individual Annuity Mortality Table with ages set back one year, and an
interest rate of 3% per annum. Once you have elected an annuity option, that
election may not be changed with respect to any Annuitant following the
commencement of annuity payments.
MINIMUM PAYMENT: No election of any options or combination of options may
be made under the Certificate unless the first payment for each affected
Sub-Account or Fixed Account would be at least equal to the minimum payment
amount according to Company rules then in effect. If at any time, payments to be
made to any Annuitant from each Account are or become less than the minimum
payment amount, the Company shall have the right to change the frequency of
payment to such intervals as will result in a payment at least equal to the
minimum. If any amount due would be less than the minimum payment amount per
annum, the Company may make such other settlement as may be equitable to the
Annuitant.
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AMERICAN MATURITY LIFE INSURANCE COMPANY 19
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FEDERAL TAX CONSIDERATIONS
A. GENERAL
SINCE THE TAX LAW IS COMPLEX AND SINCE TAX CONSEQUENCES WILL VARY ACCORDING
TO THE ACTUAL STATUS OF THE CERTIFICATE OWNER INVOLVED AND THE TYPE OF PLAN
UNDER WHICH THE CERTIFICATE IS PURCHASED, LEGAL AND TAX ADVICE MAY BE NEEDED BY
A PERSON, TRUSTEE OR OTHER ENTITY CONTEMPLATING THE PURCHASE OF A CERTIFICATE
DESCRIBED HEREIN.
It should be understood that any detailed description of the Federal income
tax consequences regarding the purchase of these Certificates cannot be made in
this Prospectus and that special tax rules may be applicable with respect to
certain purchase situations not discussed herein. In addition, no attempt is
made here to consider any applicable state or other tax laws. For detailed
information, a qualified tax adviser should always be consulted. The discussion
here is based on American Maturity's understanding of current Federal income tax
laws as they are currently interpreted.
B. TAXATION OF AMERICAN MATURITY AND THE SEPARATE ACCOUNT
The Separate Account is taxed as part of American Maturity which is taxed as
a life insurance company in accordance with the Internal Revenue Code (the
"Code"). Accordingly, the Separate Account will not be taxed as a "regulated
investment company" under subchapter M of Chapter 1 of the Code. Investment
income and any realized capital gains on the assets of the Separate Account are
reinvested and are taken into account in determining the value of the
Accumulation and Annuity Units (See "Value of Accumulation Units" commencing on
page ). As a result, such investment income and realized capital gains are
automatically applied to increase reserves under the Certificate.
No taxes are due on interest, dividends and short-term or long-term capital
gains earned by the Separate Account with respect to Qualified or Non-Qualified
Certificates.
C. TAXATION OF ANNUITIES -- GENERAL PROVISIONS AFFECTING PURCHASERS OTHER
THAN QUALIFIED RETIREMENT PLANS
Section 72 of the Internal Revenue Code governs the taxation of annuities in
general.
1. NON-NATURAL PERSONS, CORPORATIONS, ETC. Section 72 contains provisions
for Certificate Owners which are non-natural persons. Non-natural
persons include corporations, trusts, and partnerships. The annual net
increase in the value of the Certificate is currently includable in the
gross income of a non-natural person unless the non-natural person holds
the Certificate as an agent for a natural person. There is an exception
from current inclusion for certain annuities held by structured
settlement companies, certain annuities held by an employer with respect
to a terminated qualified retirement plan and certain immediate
annuities. A non-natural person which is a tax-exempt entity for Federal
tax purposes will not be subject to income tax as a result of this
provision.
If the Certificate Owner is not an individual, the primary Annuitant
shall be treated as the Certificate Owner for purposes of making
distributions which are required to be made upon the death of the
Certificate Owner. If there is a change in the primary Annuitant, such
change shall be treated as the death of the Certificate Owner.
2. OTHER CERTIFICATE OWNERS (NATURAL PERSONS). A Certificate Owner is not
taxed on increases in the value of the Certificate until an amount is
received or deemed received, e.g., in the form of a lump sum payment
(full or partial value of a Certificate) or as Annuity payments under
the settlement option elected.
The provisions of Section 72 of the Code concerning distributions are
summarized briefly below. Also summarized are special rules affecting
distributions from Certificates obtained in a tax-free exchange for
other annuity certificates or life insurance contracts which were
purchased prior to August 14, 1982.
a. DISTRIBUTIONS PRIOR TO THE ANNUITY COMMENCEMENT DATE.
i. Total premium payments less amounts received which were not
includable in gross income equal the "investment in the
contract" under Section 72 of the Code.
ii. To the extent that the value of the Certificate (ignoring any
surrender charges except on a full surrender) exceeds the
"investment in the contract," such excess constitutes the
"income on the contract."
iii. Any amount received or deemed received prior to the Annuity
Commencement Date (e.g., upon a partial surrender) is deemed to
come first from any such "income on the contract" and then from
"investment in the contract," and for these purposes such
"income on the contract" shall be computed by reference to any
aggregation rule in subparagraph 2.c. below. As a result, any
such amount received or deemed received (1) shall be includable
in gross income to the extent that such amount does not exceed
any such "income on the contract," and (2) shall not be
includable in gross income to the extent that such amount does
exceed
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20 AMERICAN MATURITY LIFE INSURANCE COMPANY
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any such "income on the contract." If at the time that any
amount is received or deemed received there is no "income on
the contract" (e.g., because the gross value of the Certificate
does not exceed the "investment in the contract" and no
aggregation rule applies), then such amount received or deemed
received will not be includable in gross income, and will
simply reduce the "investment in the contract."
iv. The receipt of any amount as a loan under the Certificate or
the assignment or pledge of any portion of the value of the
Certificate shall be treated as an amount received for purposes
of this subparagraph a. and the next subparagraph b.
v. In general, the transfer of the Certificate, without full and
adequate consideration, will be treated as an amount received
for purposes of this subparagraph a. and the next subparagraph
b. This transfer rule does not apply, however, to certain
transfers of property between spouses or incident to divorce.
b. DISTRIBUTIONS AFTER ANNUITY COMMENCEMENT DATE. Annuity payments made
periodically after the Annuity Commencement Date are includable in
gross income to the extent the payments exceed the amount determined
by the application of the ratio of the "investment in the contract"
to the total amount of the payments to be made after the Annuity
Commencement Date (the "exclusion ratio").
i. When the total of amounts excluded from income by application of
the exclusion ratio is equal to the investment in the contract
as of the Annuity Commencement Date, any additional payments
(including surrenders) will be entirely includable in gross
income.
ii. If the annuity payments cease by reason of the death of the
Annuitant and, as of the date of death, the amount of annuity
payments excluded from gross income by the exclusion ratio does
not exceed the investment in the contract as of the Annuity
Commencement Date, then the remaining portion of unrecovered
investment shall be allowed as a deduction for the last taxable
year of the Annuitant.
iii. Generally, nonperiodic amounts received or deemed received
after the Annuity Commencement Date are not entitled to any
exclusion ratio and shall be fully includable in gross income.
However, upon a full surrender after such date, only the excess
of the amount received (after any surrender charge) over the
remaining "investment in the contract" shall be includable in
gross income (except to the extent that the aggregation rule
referred to in the next subparagraph c. may apply).
c. AGGREGATION OF TWO OR MORE ANNUITY CERTIFICATES. Certificates issued
after October 21, 1988 by the same insurer (or affiliated insurer)
to the same Certificate Owner within the same calendar year (other
than certain contracts held in connection with a tax-qualified
retirement arrangement) will be treated as one annuity Certificate
for the purpose of determining the taxation of distributions prior
to the Annuity Commencement Date. An annuity contract received in a
tax-free exchange for another annuity contract or life insurance
contract may be treated as a new Certificate for this purpose.
American Maturity believes that for any annuity subject to such
aggregation, the values under the Certificates and the investment in
the contracts will be added together to determine the taxation under
subparagraph 2.a., above, of amounts received or deemed received
prior to the Annuity Commencement Date. Withdrawals will first be
treated as withdrawals of income until all of the income from all
such Certificates is withdrawn. As of the date of this Prospectus,
there are no regulations interpreting this provision.
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American Maturity Life Insurance Company 21
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d. 10% PENALTY TAX -- APPLICABLE TO CERTAIN WITHDRAWALS AND ANNUITY
PAYMENTS.
i. If any amount is received or deemed received on the Certificate
(before or after the Annuity Commencement Date), the Code
applies a penalty tax equal to ten percent of the portion of the
amount includable in gross income, unless an exception applies.
ii. The 10% penalty tax will not apply to the following
distributions (exceptions vary based upon the precise plan
involved):
1. Distributions made on or after the date the recipient has
attained the age of 59 1/2.
2. Distributions made on or after the death of the holder or
where the holder is not an individual, the death of the
primary annuitant.
3. Distributions attributable to a recipient's becoming
disabled.
4. A distribution that is part of a scheduled series of
substantially equal periodic payments for the life (or life
expectancy) of the recipient (or the joint lives or life
expectancies of the recipient and the recipient's
Beneficiary).
5. Distributions of amounts which are allocable to the
"investment in the contract" prior to August 14, 1982 (see
next subparagraph e.).
iii. Death proceeds received by a Beneficiary upon the death of the
Annuitant are generally subject to this penalty unless the
Annuitant was also the Certificate Owner.
e. SPECIAL PROVISIONS AFFECTING CERTIFICATES OBTAINED THROUGH A
TAX-FREE EXCHANGE OF OTHER ANNUITY OR LIFE INSURANCE CONTRACTS
PURCHASED PRIOR TO AUGUST 14, 1982. If the Certificate was obtained
by a tax-free exchange of a life insurance or annuity contract
purchased prior to August 14, 1982, then any amount received or
deemed received prior to the Annuity Commencement Date shall be
deemed to come (1) first from the amount of the "investment in the
contract" prior to August 14, 1982 ("pre-8/14/82 investment")
carried over from the prior contract, (2) then from the portion of
the "income on the contract" (carried over to, as well as
accumulating in, the successor contract) that is attributable to
such pre-8/14/82 investment, (3) then from the remaining "income on
the contract" and (4) last from the remaining "investment in the
contract." As a result, to the extent that such amount received or
deemed received does not exceed such pre-8/14/82 investment, such
amount is not includable in gross income., In addition, to the
extent that such amount received or deemed received does not exceed
the sum of (a) such pre-8/14/82 investment and (b) the "income on
the contract" attributable thereto, such amount is not subject to
the 10% penalty tax. In all other respects, amounts received or
deemed received from such post-exchange contracts are generally
subject to the rules described above.
f. REQUIRED DISTRIBUTIONS
i. Death of Certificate Owner or Primary Annuitant
Subject to the alternative election or spouse beneficiary
provisions in ii or iii below:
1. If any Certificate Owner dies on or after the Annuity
Commencement Date and before the entire interest in the
Certificate has been distributed, the remaining portion of
such interest shall be distributed at least as rapidly as
under the method of distribution being used as of the date
of such death;
2. If any Certificate Owner dies before the Annuity
Commencement Date, the entire interest in the Certificate
will be distributed within 5 years after such death; and
3. If the Certificate Owner is not an individual, then for
purposes of 1. or 2. above, the primary annuitant under the
Certificate shall be treated as the Certificate Owner, and
any change in the primary annuitant shall be treated as the
death of the Certificate Owner. The primary annuitant is the
individual, the events in the life of whom are of primary
importance in affecting the timing or amount of the payout
under the Certificate.
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22 AMERICAN MATURITY LIFE INSURANCE COMPANY
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ii. Alternative Election to Satisfy Distribution Requirements
If any portion of the interest of a Certificate Owner described
in i. above is payable to or for the benefit of a designated
beneficiary, such beneficiary may elect to have the portion
distributed over a period that does not extend beyond the life
or life expectancy of the beneficiary. The election and payments
must begin within a year of the death.
iii. Spouse Beneficiary
If any portion of the interest of a Certificate Owner is payable
to or for the benefit of his or her spouse, and the Annuitant or
Contingent Annuitant is living, such spouse shall be treated as
the Certificate Owner of such portion for purposes of section i.
above.
3. DIVERSIFICATION REQUIREMENTS. Section 817 of the Code provides that a
variable annuity contract will not be treated as an annuity contract for
any period during which the investments made by the separate account or
underlying fund are not adequately diversified in accordance with
regulations prescribed by the Treasury. If a contract is not treated as
an annuity contract, the Certificate Owner will be subject to income tax
on the annual increases in cash value.
The Treasury has issued diversification regulations which generally
require, among other things, that no more than 55% of the value of the
total assets of the segregated asset account underlying a variable
contract is represented by any one investment, no more than 70% is
represented by any two investments, no more than 80% is represented by
any three investments, and no more than 90% is represented by any four
investments. In determining whether the diversification standards are
met, all securities of the same issuer, all interests in the same real
property project, and all interests in the same commodity are each
treated as a single investment. In addition, in the case of government
securities, each government agency or instrumentality shall be treated
as a separate issuer.
A separate account must be in compliance with the diversification
standards on the last day of each calendar quarter or within 30 days
after the quarter ends. If an insurance company inadvertently fails to
meet the diversification requirements, the company may comply within a
reasonable period and avoid the taxation of contract income on an
ongoing basis. However, either the company or the contract owner must
agree to pay the tax due for the period during which the diversification
requirements were not met.
American Maturity monitors the diversification of investments in the
separate accounts and tests for diversification as required by the Code.
American Maturity intends to administer all contracts subject to the
diversification requirements in a manner that will maintain adequate
diversification.
4. OWNERSHIP OF THE ASSETS IN THE SEPARATE ACCOUNT. In order for a variable
annuity contract to qualify for tax deferral, assets in the segregated
asset accounts supporting the variable contract must be considered to be
owned by the insurance company and not by the variable contract owner.
The Internal Revenue Service has issued several rulings which discuss
investor control. The Service has ruled that incidents of ownership by
the contract owner, such as the ability to select and control
investments in a separate account, will cause the contract owner to be
treated as the owner of the assets for tax purposes.
Further, in the explanation to the temporary Section 817 diversification
regulations, the Treasury Department noted that the temporary
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 in the account." The explanation further
indicates that "the temporary regulations provide that in appropriate
cases a segregated asset account may include multiple Sub-Accounts, but
do not specify the extent to which policyholders may direct their
investments to particular Sub-Accounts without being treated as the
owners of the underlying assets. Guidance on this and other issues will
be provided in regulations or revenue rulings under section 817(d),
relating to the definition of variable contract." The final regulations
issued under Section 817 did not provide guidance regarding investor
control, and as of the date of this prospectus, no other such guidance
has been issued. Further, American Maturity does not know if or in what
form such guidance will be issued. In addition, although regulations are
generally issued with prospective effect, it is possible that
regulations may be issued with retroactive effect. Due to the lack of
specific guidance regarding the issue of investor control, there is
necessarily some uncertainty regarding whether a Certificate Owner could
be considered the owner of the assets for tax purposes. American
Maturity reserves the right to modify the contracts, as necessary, to
prevent
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AMERICAN MATURITY LIFE INSURANCE COMPANY 23
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Certificate Owners from being considered the owners of the assets in the
separate accounts.
D. FEDERAL INCOME TAX WITHHOLDING
The portion of a distribution which is taxable income to the recipient will
be subject to Federal income tax withholding, pursuant to Section 3405 of the
Internal Revenue Code. The application of this provision is summarized below:
1. NON-PERIODIC DISTRIBUTIONS. The portion of a non-periodic distribution
which constitutes taxable income will be subject to Federal income tax
withholding unless the recipient elects not to have taxes withheld. If
an election not to have taxes withheld is not provided, 10% of the
taxable distribution will be withheld as Federal income tax. Election
forms will be provided at the time distributions are requested. If the
necessary election forms are not submitted to American Maturity,
American Maturity will automatically withhold 10% of the taxable
distribution.
2. PERIODIC DISTRIBUTIONS (DISTRIBUTIONS PAYABLE OVER A PERIOD GREATER THAN
ONE YEAR). The portion of a periodic distribution which constitutes
taxable income will be subject to Federal income tax withholding 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.
E. GENERAL PROVISIONS AFFECTING QUALIFIED RETIREMENT PLANS
The Certificate may be used for a number of qualified retirement plans. If
the Certificate is being purchased with respect to some form of qualified
retirement plan, please see below.
INFORMATION REGARDING TAX-QUALIFIED PLANS
The tax rules applicable to tax qualified certificate owners, including
restrictions on contributions and distributions, taxation of distributions and
tax penalties, vary according to the type of plan as well as the terms and
conditions of the plan itself. Various tax penalties may apply to contributions
in excess of specified limits, to distributions in excess of specified limits,
distributions which do not satisfy certain requirements and certain other
transactions with respect to qualified plans. Accordingly, this summary provides
only general information about the tax rules associated with use of the
Certificate by a qualified plan. Certificate owners, plan participants and
beneficiaries are cautioned that the rights and benefits of any person to
benefits are controlled by the terms and conditions of the plan regardless of
the terms and conditions of the Certificate. Some qualified plans are subject to
distribution and other requirements which are not incorporated into American
Maturity's administrative procedures. Owners, participants and beneficiaries are
responsible for determining that contributions, distributions and other
transactions comply with applicable law. Because of the complexity of these
rules, owners, participants and beneficiaries are encouraged to consult their
own tax advisors as to specific tax consequences.
A. QUALIFIED PENSION PLANS
Provisions of the IRC permit eligible employers to establish pension or
profit sharing plans (described in Section 401(a) and 401(k), if applicable, and
exempt from taxation under Section 501(a) of the Code), and Simplified Employee
Pension Plans (described in Section 408(k)). Such plans are subject to
limitations on the amount that may be contributed, the persons who may be
eligible and the time when distributions must commence. Corporate employers
intending to use these certificates in connection with such plans should seek
competent advice.
B. TAX SHELTERED ANNUITIES UNDER SECTION 403(B)
Section 403(b) of the Code permits public school employees and employees of
certain types of charitable, educational and scientific organizations specified
in Section 501(c)(3) of the Code to purchase annuity contracts, and, subject to
certain limitations, exclude such contributions from gross income. Generally,
such contributions may not exceed the lesser of $9,500 or 20% of the employees
"includable compensation" for his most recent full year of employment, subject
to other adjustments. Special provisions may allow some employees to elect a
different overall limitation.
Tax-sheltered annuity programs under Section 403(b) are subject to a
PROHIBITION AGAINST DISTRIBUTIONS FROM THE CERTIFICATE ATTRIBUTABLE TO
CONTRIBUTIONS MADE PURSUANT TO A SALARY REDUCTION AGREEMENT UNLESS SUCH
DISTRIBUTION IS MADE:
1) after the participating employee attains age 59 1/2;
2) upon separation from service;
3) upon death or disability, or
4) in the case of hardship.
The above restrictions apply to distributions of employee contributions made
after December 31, 1988, earnings on those contributions, and earnings on
amounts attributable to employee contributions held as of December 31, 1988.
They do not apply to distributions of any employer or other after-tax
contributions, employee contributions made on or before December 31, 1988, and
<PAGE>
24 AMERICAN MATURITY LIFE INSURANCE COMPANY
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earnings credited to employee contributions before December 31, 1988.
C. DEFERRED COMPENSATION PLANS UNDER SECTION 457
Employees and independent contractors performing services for such employers
may contribute on a before tax basis to the Deferred Compensation Plan or their
employer in accordance with the employer's plan and Section 457 of the Code.
Section 457 places limitations on contributions to Deferred Compensation Plans
maintained by a State ("State" means a State, a political sub-division of a
State, and an agency or instrumentality of a State or political sub-division of
a State) or other tax-exempt organization. Generally, the limitation is 33 1/3%
of includable compensation (25% of gross compensation) or $7,500, whichever is
less. The plan may also provide for additional "catch-up" deferrals during the
three taxable years ending before a Participant attains normal retirement age.
An employee electing to participate in a plan should understand that his
rights and benefits are governed strictly by the terms of the plan, that the
employer is legal owner of any contract issued with respect to the plan and that
deferred amounts will be subject to the claims of the employer's creditors. The
employer as owner of the contract(s) retains all voting and redemption rights
which may accrue to the contract(s) issued with respect to the plan. The
participating employee should look to the terms of his plan for any charges in
regard to participating therein other than those disclosed in this Prospectus.
Distributions from a 457 deferred compensation plan are prohibited unless
made after the participating employee attains the age specified in the plan,
separates from service, dies, becomes permanently and totally disabled or
suffers an unforeseeable financial emergency. Present federal tax law does not
allow tax-free transfers or rollovers for amounts accumulated in a Section 457
plan except for transfers to other Section 457 plans in limited cases.
D. INDIVIDUAL RETIREMENT ANNUITIES UNDER SECTION 408
Section 408 of the Code permits eligible individuals to establish individual
retirement programs through the purchase of Individual Retirement Annuities
("IRAs"). IRAs are subject to limitations on the amount that may be contributed,
the contributions that may be deducted from taxable income, the persons who may
be eligible and the time when distributions may commence. Also, distributions
from certain qualified plans may be "rolled-over" on a tax-deferred basis into
an IRA.
E. TAX PENALTIES
Distributions from retirement plans are generally taxed under Section 72 of
the Code. Under these rules, a portion of each distribution may be excludable
from income. The excludable amount is the portion of the distribution which
bears the same ratio as the after-tax contributions bear to the expected return.
1. PREMATURE DISTRIBUTION
Distributions from a qualified plan before the Participant attains age
59 1/2 are generally subject to an additional tax equal to 10% of the
taxable portion of the distribution. The 10% penalty does not apply to
distributions made after the employee's death, on account of disability
and distributions in the form of a life annuity and, except in the case
of an IRA, certain distributions after separation from service at or
after age 55 and certain distributions for eligible medical expenses. A
life annuity is defined as a scheduled series of substantially equal
periodic payments for the life or life expectancy of the Participant (or
the joint lives or life expectancies of the Participant and
Beneficiary).
2. MINIMUM DISTRIBUTION TAX
If the amount distributed is less than the minimum required distribution
for the year, the Participant is subject to a 50% tax on the amount that
was not properly distributed.
An individual's interest in a retirement plan must generally be
distributed or begin to be distributed not later than April 1 of the
calendar year in which the individual attains age 70 1/2 ("required
beginning date"). The required beginning date with respect to certain
government plans may be further deferred. The entire interest of the
Participant must be distributed beginning no later than this required
beginning date over a period which may not extend beyond a maximum of
the life expectancy of the Participant and a designated Beneficiary.
Each annual distribution must equal or exceed a "minimum distribution
amount" which is determined by dividing the account balance by the
applicable life expectancy. This account balance is generally based upon
the account value as of the close of business on the last day of the
previous calendar year. In addition, minimum distribution incidental
benefit rules may require a larger annual distribution.
If an individual dies before reaching his or her required beginning
date, the individual's entire interest must generally be distributed
within five years of the individuals death. However, this rule will be
deemed satisfied, if distributions begin before the close of the
calendar year following the individual's death to a designated
Beneficiary (or over a period not extending beyond the life expectancy
of the beneficiary). If the Beneficiary is the individual's surviving
spouse, distributions may be delayed until the individual would have
attained age 70 1/2.
<PAGE>
AMERICAN MATURITY LIFE INSURANCE COMPANY 25
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If an individual dies after reaching his or her required beginning date
or after distributions have commenced, the individual's interest must
generally be distributed at least as rapidly as under the method of
distribution in effect at the time of the individual's death.
3. EXCESS DISTRIBUTION TAX
If the aggregate distributions from all IRAs and certain other qualified
plans in a calendar year exceed the greater of (i) $150,000, or (ii)
$112,500 as indexed for inflation ($155,000 as of January 1, 1996), a
penalty tax of 15% is generally imposed on the excess portion of the
distribution.
4. WITHHOLDING
Periodic distributions from a qualified plan lasting for a period of 10
or more years are generally subject to voluntary income tax withholding.
The recipient of periodic distributions may generally elect not to have
withholding apply or to have income taxes withheld at a different rate
by providing a completed election form. Otherwise, the amount withheld
on such distributions is determined at the rate applicable to wages as
if the recipient were married claiming three exemptions.
Nonperiodic distributions from an IRA are subject to income tax
withholding at a flat 10% rate. The recipient may elect not to have
withholding apply.
Nonperiodic distributions from other qualified plans are generally
subject to mandatory income tax withholding at the flat rate of 20%
unless such distributions are:
a) the non-taxable portion of the distribution;
b) required minimum distributions;
c) eligible rollover distributions.
Eligible rollover distributions are direct payments to an IRA or to
another qualified employer plan.
Any distribution from plans described in Section 457 of the Code is
subject to regular wage withholding rules.
MISCELLANEOUS
VOTING RIGHTS
American Maturity is the legal owner of all Fund shares held in the Separate
Account. As the owner, American Maturity has the right to vote at the Funds'
shareholder meetings. However, to the extent required by federal securities laws
or regulations, American Maturity will:
- Vote all Fund shares attributable to a Certificate according to
instructions received from the Certificate Owner, and
- Vote shares attributable to a Certificate for which no voting instructions
are received in the same portion as shares for which instructions are
received.
If any federal securities laws or regulations, or their present
interpretation change to permit American Maturity to vote Fund shares in its own
right, American Maturity may elect to do so.
American Maturity will notify you of any Fund shareholders' meeting if the
shares held for your account may be voted at such meetings. American Maturity
will also send proxy materials and a form of instruction by means of which you
can instruct American Maturity with respect to the voting of the Fund shares
held for your account.
In connection with the voting of Fund shares held by it, American Maturity
will arrange for the handling and tallying of proxies received from Certificate
Owners. American Maturity as such, shall have no right, except as hereinafter
provided, to vote any Fund shares held by it hereunder which may be registered
in its name or the names of its nominees. American Maturity will, however, vote
the Fund shares held by it in accordance with the instructions received from the
Certificate Owners for whose accounts the Fund shares are held. If a Certificate
Owner desires to attend any meeting at which shares held for the Certificate
Owner's benefit may be voted, the Certificate Owner may request American
Maturity to furnish a proxy or otherwise arrange for the exercise of voting
rights with respect to the Fund shares held for such Certificate Owner's
account. American Maturity will vote shares for which no instructions have been
given and shares which are not attributable to Certificate Owners (i.e. shares
owned by American Maturity) in the same proportion as it votes shares of that
Fund for which it has received instructions. During the Annuity period under a
Certificate the number of votes will decrease as the assets held to fund Annuity
benefits decrease.
HOW THE CERTIFICATES ARE SOLD
Hartford Securities Distribution Company, Inc. ("HSD") serves as Principal
Underwriter for the securities issued with respect to the Separate Account. HSD
is a wholly-owned subsidiary of Hartford Life Insurance Company. The principal
business address of HSD is 200 Hopmeadow Street, Simsbury, CT 06089. HSD is
registered with the SEC under the Securities Exchange Act of 1934 as a
Broker-Dealer and is a member of the National Association of Securities Dealers,
Inc. ("NASD").
The securities will be sold by salespersons of HSD, who represent American
Maturity as insurance and variable
<PAGE>
26 AMERICAN MATURITY LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
annuity agents and who are registered representatives. These salespersons will
be supervised by American Maturity who will respond to telephone inquiries as a
result of national advertising.
CUSTODIAN OF SEPARATE ACCOUNT ASSETS
The assets of the Separate Account are held by American Maturity under a
safekeeping arrangement.
ASSIGNMENT
Ownership of a Certificate described herein is generally assignable.
However, if the Certificates are issued pursuant to some form of Qualified Plan,
it is possible that the ownership of the Certificates may not be transferred or
assigned depending on the type of qualified retirement plan involved. An
assignment of a Non-Qualified Certificate may subject the assignment proceeds to
income taxes and certain penalty taxes.
RIGHTS OF ANNUITANT AND CERTIFICATE OWNER(S)
The Certificate does not allow the Annuitant to be changed.
The designations of Certificate Owner and Contingent Annuitant will remain
in effect until changed by the Certificate Owner. Changes in the designation of
the Certificate Owner may be made during the lifetime of the Annuitant by
written notice to the Company. Changes in the designation of Contingent
Annuitant may be made at any time prior to the Annuity Commencement Date by
written notice to the Company. Notwithstanding the foregoing, if no Contingent
Annuitant has been named and the Certificate Owner/ Annuitant's spouse is the
Beneficiary, it will be assumed that the Certificate Owner/Annuitant's spouse is
the Contingent Annuitant.
The Certificate Owner has the sole power to exercise all the rights, options
and privileges granted by the Certificate or permitted by the Company and to
agree with the Company to any change in or amendment to the Certificate. The
rights of the Certificate Owner shall be subject to the rights of any assignee
of record with the Company and of any irrevocably designated Beneficiary. In the
case of joint Certificate Owners, each Certificate Owner alone may exercise all
rights, options and privileges, except with respect to the Surrender Provisions
and change of ownership or beneficiary.
MODIFICATION OF GROUP CONTRACT AND CERTIFICATES THEREUNDER
American Maturity reserves the right to modify the Group Contract and
Certificates, but only if such modification: (i) is necessary to make the
Contract or the Separate Account comply with any law or regulation issued by a
governmental agency to which American Maturity is subject; (ii) is necessary to
assure continued qualification of the Contract under the Internal Revenue Code
or other federal or state laws relating to retirement annuities or annuity
Certificates; (iii) is necessary to reflect a change in the operation of the
Separate Account or the Sub-Account(s); (iv) provides additional Sub-Account or
Fixed Account options; or (v) withdraws Sub-Account or Fixed Account options. In
the event of any such modification, American Maturity will provide notice to the
Contract Owner and Certificate Owner, or to the payee(s) during the annuity
period. American Maturity may also make appropriate endorsement in the Contract
and Certificates to reflect such modification.
CHANGE IN THE OPERATION OF THE SEPARATE ACCOUNT
The Company reserves the right to substitute the shares of any other
registered investment company for the shares of any Fund already purchased or to
be purchased in the future by the Separate Account provided that the
substitution has been approved by the Securities and Exchange Commission.
At the Company's election and subject to any necessary vote by persons
having the right to give instructions with respect to the voting of the Fund
shares held by the Sub-Accounts, the Separate Account may be operated as a
management company under the Investment Company Act of 1940 or it may be
deregistered under the Investment Company Act of 1940 in the event registration
is no longer required. Deregistration of the Separate Account requires an order
by the Securities and Exchange Commission.
LEGAL MATTERS AND EXPERTS
There are no material legal proceedings affecting the Separate Account.
Counsel with respect to Federal laws and regulations applicable to the issue and
sale of the Certificates and with respect to Connecticut law is Lynda Godkin,
Esquire, General Counsel and Corporate Secretary, American Maturity Life
Insurance Company, 200 Hopmeadow Street, Simsbury CT 06089.
The audited statutory-basis financial statements incorporated by reference
in this prospectus and included in the registration statement have been audited
by Arthur Andersen LLP, independent public accountants, as indicated in their
report with respect thereto, and are included
<PAGE>
AMERICAN MATURITY LIFE INSURANCE COMPANY 27
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herein in reliance upon the authority of said firm as experts in accounting and
auditing in giving said report. Reference is made to said report on the
statutory-basis financial statements of American Maturity Life Insurance Company
which states the statutory-basis financial statements are presented in
accordance with statutory accounting practices prescribed or permitted by the
National Association of Insurance Commissioners and the State of Connecticut
Insurance Department, not presented in accordance with generally accepted
accounting principles. The principal business address of Arthur Andersen LLP is
One Financial Plaza, Hartford, Connecticut 06103.
ADDITIONAL INFORMATION
You may reach our service representatives at 1-800-923-3334 between the
hours of 6:00 a.m. and 5:00 p.m., Pacific time.
If you are submitting a payment by mail, please send it, along with your
Enrollment Form (if it is your first payment), to:
American Maturity Life Insurance Company
P.O. Box 100194
Pasadena, CA 91189-0194
Please send your other forms and written requests or questions to:
American Maturity Life Insurance Company
P.O. Box 7005
Pasadena, CA 91109-7005
If you are using an overnight delivery service to send payments, please send
them to:
American Maturity Life Insurance Company
c/o FCNPC
1111 South Arroyo Parkway, First Floor
Pasadena, CA 91109-7122
The effective day of your instructions to Us is determined by the date and
time on which American Maturity receives the instructions. We receive your
instructions only when it arrives, in good form, at the correct mailing address
set our above. Please call us at 1-800-923-3334 if you have any questions
regarding the address you should use.
<PAGE>
28 AMERICAN MATURITY LIFE INSURANCE COMPANY
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TABLE OF CONTENTS
TO
STATEMENT OF ADDITIONAL INFORMATION
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
INTRODUCTION..............................................................
DESCRIPTION OF AMERICAN MATURITY LIFE INSURANCE COMPANY...................
SAFEKEEPING OF ASSETS.....................................................
INDEPENDENT PUBLIC ACCOUNTANTS............................................
DISTRIBUTION OF THE CERTIFICATES..........................................
ANNUITY PERIOD............................................................
A. Annuity Payments.....................................................
B. Electing the Annuity Commencement Date and Form of Annuity...........
C. Optional Annuity Forms...............................................
Option 1: Life Annuity................................................
Option 2: Life Annuity with 120, 180 or 240 Monthly Payments
Certain................................................................
Option 3: Cash Refund Life Annuity....................................
Option 4: Joint and Last Survivor Annuity.............................
Option 5: Payments for a Designated Period............................
D. The Annuity Unit and Valuation.......................................
E. Determination of Amount of First Monthly Annuity Payment -- Fixed and
Variable.............................................................
F. Amount of Second and Subsequent Monthly Annuity Payments.............
G. Date and Time of Annuity Payments....................................
CALCULATION OF YIELD AND RETURN...........................................
PERFORMANCE COMPARISONS...................................................
FINANCIAL STATEMENTS......................................................
</TABLE>
<PAGE>
To obtain a Statement of Additional Information, please complete the form below
and mail to:
American Maturity Life Insurance Company
700 Newport Center Drive
Newport Beach, CA 92660
Please send a Statement of Additional Information for Separate Account AMLVA
to me at the following address:
- ----------------------------------------------------
Name
- ------------------------------------------------------------------
Address
- ------------------------------------------------------------------
City/State Zip Code
<PAGE>
PART B
STATEMENT OF ADDITIONAL INFORMATION
AMERICAN MATURITY LIFE INSURANCE COMPANY
SEPARATE ACCOUNT AMLVA
This Statement of Additional Information is not a prospectus. The information
contained herein should be read in conjunction with the Prospectus.
To obtain a Prospectus, send a written request to American Maturity Life
Insurance Company, 700 Newport Center Drive, Newport Beach, CA 92660.
Date of Prospectus: __________
Date of Statement of Additional Information: ____________
<PAGE>
TABLE OF CONTENTS
SECTION
PAGE
-------
INTRODUCTION
DESCRIPTION OF AMERICAN MATURITY LIFE INSURANCE CO.
SAFEKEEPING OF ASSETS
INDEPENDENT PUBLIC ACCOUNTANTS
DISTRIBUTION OF THE CERTIFICATES
ANNUITY PERIOD
A. Annuity Payments
B. Electing the Annuity Commencement Date and Form of Annuity
C. Optional Annuity Forms
OPTION 1: Life Annuity
OPTION 2: Life Annuity With 120, 180 or 240 Monthly Payments Certain
OPTION 3: Cash Refund Life Annuity
OPTION 4: Joint and Last Survivor Annuity
OPTION 5: Payments for a Designated Period
D. The Annuity Unit and Valuation
E. Determination of Amount of First Monthly Annuity Payment --
Fixed and Variable
F. Amount of Second and Subsequent Monthly Annuity Payments
G. Date and Time of Annuity Payments
CALCULATION OF YIELD AND RETURN
PERFORMANCE COMPARISONS
FINANCIAL STATEMENTS
<PAGE>
INTRODUCTION
This Statement of Additional Information is to be read in conjunction with
the Prospectus of American Maturity Life Insurance Company's Separate Account
AMLVA (the AARP Variable Annuity). This Statement of Additional Information
contains information that may be of some interest to some investors.
DESCRIPTION OF AMERICAN MATURITY LIFE INSURANCE COMPANY
American Maturity Life Insurance Company ("American Maturity"), is
domiciled in Connecticut. Its principal office is at 200 Hopmeadow Street,
Simsbury, Connecticut 06089. However its mailing address is 700 Newport Center
Drive, Newport Beach, California 92660.
American Maturity is a stock insurance company engaged in the business of
writing annuities. American Maturity was originally incorporated under the
name of First Equicor Life Insurance Company under the laws of California on
October 24, 1972. On July 29, 1994 First Equicor Life Insurance Company
redomesticated to Connecticut and changed its name to American Maturity Life
Insurance Company. American Maturity is owned 60% by Hartford Life and Accident
Insurance Company (domiciled in Connecticut) and 40% by Pacific Mutual Life
Insurance Company (domiciled in California). Hartford Life and Accident
Insurance Company is ultimately 100% owned by Hartford Fire Insurance Company.
Pacific Mutual serves as the administrator of the Certificates.
The American Association of Retired Persons ("AARP") granted American
Maturity the exclusive right to offer annuity products to the membership of AARP
pursuant to an agreement established July 6, 1994. The agreement requires
American Maturity to maintain minimum capital surplus levels, minimum ratings
from nationally recognized rating services, and generally to obtain AARP's
consent in all matters relating to the offering of annuities to AARP members.
The agreement also includes a shareholder's agreement of American Maturity's
shareholders. In return for the exclusive right to offer annuity products to
AARP members, American Maturity pays AARP a royalty fee. The agreement is
effective until December 31, 2004, at which time AARP and American Maturity may
or may not renew the agreement.
Based on its financial soundness and operating performance, American
Maturity has earned an A+ (Superior) rating from A.M. Best Company, Inc., and an
(AA) (Excellent) rating from Standard & Poor's. Based on claims paying
ability, American Maturity has earned an (AA+) (Very High) rating from Duff and
Phelps.
These ratings do not apply to the performance of the Separate Account.
However, the contractual obligations under this variable annuity are the general
corporate obligations of American Maturity. These ratings do apply to American
Maturity's ability to meet its insurance obligations under the Certificate.
<PAGE>
SAFEKEEPING OF ASSETS
The assets of the Separate Account are held by American Maturity under a
safekeeping arrangement.
INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen LLP, One Financial Plaza Hartford, Connecticut 06103,
independent public accountants, will perform an annual audit of the Separate
Account. The audited statutory-basis financial statements included in this
statement of additional information have been audited by Arthur Andersen
LLP as indicated in their report with respect thereto, and are included
herein in reliance upon the authority of said firm as experts in accounting
and auditing in giving said report. Reference is made to said report on the
statutory-basis financial statements of American Maturity Life Insurance
Company which states the statutory-basis financial statements are presented
in accordance with statutory accounting practices prescribed or permitted by
the National Association of Insurance Commissioners and the State of
Connecticut Insurance Department, not presented in accordance with generally
accepted accounting principles.
DISTRIBUTION OF CERTIFICATES
Hartford Securities Distribution, Inc. ("HSD") serves as Principal
Underwriter for the securities issued with respect to the Separate Account. HSD
is a wholly-owned subsidiary of Hartford Life Insurance Company. The principal
business address of HSD is 200 Hopmeadow Street, Simsbury, CT 06089. HSD is
registered with the SEC under the Securities Exchange Act of 1934 as a
Broker-Dealer and is a member of the National Association of Securities Dealers,
Inc. ("NASD").
The securities will be sold by salespersons of HSD, who represent American
Maturity as insurance and variable annuity agents and who are NASD registered
representatives. These salespersons will be supervised by American Maturity who
will respond to telephone inquires as a result of national advertising.
American Maturity is obligated to reimburse HSD for all operating expenses
associated with HSD's services provided.
American Maturity may pay a consultation service fee to the American
Association of Retired Persons for demographic, administrative, record keeping
and marketing consultation services provided. In no event will such service fee
exceed 0.07%of the premiums deposited in the Certificate.
The offering of Certificates is continuous.
ANNUITY PERIOD
A. Annuity Payments
Variable annuity payments are determined on the basis of (1) a mortality
table set forth in the Certificates and the type of annuity payment option
selected, and (2) the investment performance of the investment medium selected.
Fixed annuity payments are based on the Annuity tables contained in the
Certificates, and will remain level for the duration of the annuity.
The amount of the annuity payments will not be affected by adverse
mortality experience
<PAGE>
or by an increase in expenses in excess of the expense deduction for which
provision has been made (see "Charges Under the Certificates," on page ____of
the Prospectus).
For a variable annuity, the Annuitant will be paid according to the value
of a fixed number of Annuity Units. However, the value of the Annuity Units,
and the amounts of the variable annuity payments, will vary with the investment
experience of the Fund shares selected.
B. Electing the Annuity Commencement Date and Form of Annuity
The Certificate Owner selects an Annuity Commencement Date and an Annuity
Option which may be on a fixed or variable basis, or a combination thereof. The
Annuity Commencement Date will not be deferred beyond the Annuitant's 90th
birthday (85th in Pennsylvania).
The Annuity Commencement Date and/or the Annuity Option may be changed from
time to time, but any such change must be made in writing at least 30 days
before the scheduled Annuity Commencement Date.
The Certificate contains the five Annuity Options. Options 5 is available
with respect to Qualified Certificates only if the guaranteed payment period is
less than the life expectancy of the Annuitant at the time the option becomes
effective. Such life expectancy shall be computed on the basis of the mortality
table prescribed by the IRS, or if none is prescribed, the mortality table then
in use by American Maturity.
If you do not elect otherwise, payments will automatically begin at the
Annuitant's age 90 (85 in Pennsylvania) under Option 5, Designated Period for 5
years.
When an Annuity is effected under a Certificate, unless otherwise
specified, variable values will be applied to provide a variable annuity based
on Certificate Values as they are held in the various Sub-Accounts under the
Certificates. Fixed Account Certificate Values will be applied to provide a
fixed annuity. The Certificate Owner should consider the question of allocation
of Certificate Values among Sub-Accounts of the Separate Account and the General
Account of American Maturity to make certain that Annuity payments are based on
the investment alternative best suited to the Certificate Owner's needs for
retirement.
If at any time annuity payments are or become less than the minimum payment
amount according to Company rules then in effect, American Maturity has the
right to change the frequency of payment to such intervals as will result in a
payment at least equal to the minimum.
There may be other annuity options available offered by American Maturity
from time to time.
<PAGE>
C. Optional Annuity Forms
OPTION 1: Life Annuity
A life annuity is an annuity payable during the lifetime of the Annuitant and
terminating with the last payment preceding the death of the Annuitant. This
option offers the maximum level of monthly payments of any of the life annuity
options since there is no guarantee of a minimum number of payments nor a
provision for a death benefit payable to a Beneficiary.
It would be possible under this option for an Annuitant to receive only one
annuity payment if he died prior to the due date of the second annuity payment,
two if he died before the due date of the third annuity payment, etc.
OPTION 2: Life Annuity with 120, 180 or 240 Monthly Payments Certain
This annuity option is an annuity payable monthly during the lifetime of an
Annuitant with the provision that if, at the death of the Annuitant, payments
have been made for less than 120, 180 or 240 months, as elected, then the
present value as of the date of the Annuitant's death of the current dollar
amount at the date of death, of any remaining guaranteed monthly payments will
be paid in one sum to the Beneficiary or Beneficiaries designated.
ILLUSTRATION OF ANNUITY PAYMENTS
MALE INDIVIDUAL AGE 65, LIFE ANNUITY
WITH 120 PAYMENTS CERTAIN
1. Net amount applied 10,000.00
2. Initial monthly income per $1,000 of payment applied 6.78
3. Initial monthly payment (1x2/1,000) 67.80
4. Annuity Unit value 0.995995
5. Number of monthly Annuity Units (3/4) 68.073
6. Assume Annuity Unit value for second month equal to 1.00704
7. Second monthly payment (5x6) 68.55
8. Assume Annuity Unit value for third month equal to 0.964917
9. Third monthly payment (5x8) 65.68
For the purpose of this illustration, purchase is assumed to have been made on
the fifth business day preceding the first payment date. In determining the
second and subsequent payments, the Annuity Unit Value of the fifth business day
preceding the annuity due date is used.
OPTION 3: Cash Refund Life Annuity
An annuity payable monthly during the lifetime of the Annuitant ceasing with the
last payment due prior to the death of the Annuitant provided that, at the death
of the Annuitant, the Beneficiary will receive an additional payment equal to
the excess, if any, of (a) minus (b) where: (a) is the Net Surrender Value
applied on the Annuity Commencement Date under this option: and (b) is the
dollar amount of annuity payments already paid. This option is not available
for variable payouts.
<PAGE>
OPTION 4: Joint and Last Survivor Annuity
An annuity payable monthly during the joint lifetime of the Annuitant and a
designated second person, and thereafter during the remaining lifetime of the
survivor, ceasing with the last payment prior to the death of the survivor.
It would be possible under this option for an Annuitant and designated second
person in the event of the common or simultaneous death of the parties to
receive only one payment in the event of death prior to the due date for the
second payment and so on.
OPTION 5: Payments for a Designated Period
An amount payable monthly for the number of years selected which may be from 5
to 30 years. In the event of the Annuitant's death prior to the end of the
designated period, the present value as of the date of the Annuitant's death, of
the current dollar amount of any remaining guaranteed monthly payments will be
paid in one sum to the Beneficiary or Beneficiaries designated.
Under any of the annuity options above, no surrenders are permitted after
the Annuity Commencement Date.
Option 5 is an option that does not involve life contingencies and thus no
mortality guarantee, thus the Mortality and Expense Risk Charge provides no
real benefit to a Certificate Owner.
D. The Annuity Unit and Valuation
The value of an Annuity Unit Value for each Sub-Account will vary to
reflect the investment experience of the applicable Funds and will be determined
by multiplying the value of the Annuity Unit for that particular Subaccount on
the preceding Business Day by the product of (1) the net investment factor for
that Sub-Account for the day for which the Annuity Unit value is being
calculated, and (2) 0.999866 which is a factor that neutralizes an assumed
interest rate of 5.00%.
ILLUSTRATION OF CALCULATION OF ANNUITY UNIT VALUE
1. Net Investment Factor for period 1.011225
2. Adjustment for 5% Assumed Rate of Investment Return 0.999866
3. 2x1 1.01109
4. Annuity Unit value, beginning of period .995995
5. Annuity Unit value, end of period (3x4) 1.00704
E. Determination of Amount of First Monthly Annuity Payment -- Fixed and
Variable
When annuity payments are to commence, the value of the Certificate is
determined as the sum of the value of the Fixed Account plus the product of the
value of the Accumulation Unit of each Sub-Account and the number of
Accumulation Units credited to each Sub-Account as of the
<PAGE>
date the annuity option is to commence. The Annuity Unit will be determined no
earlier than the close of business on the fifth Business Day preceding the date
the first annuity payment is due.
The Certificate contains tables indicating the minimum dollar amount of the
first monthly payment under the optional forms of annuity for each $1,000 of
value of a Sub-Account under a Certificate. The first monthly payment varies
according to the form and type of annuity selected. The certificate contains
annuity tables derived from the 1983a Individual Annuity Mortality table with
ages set back one year with an assumed investment rate ("A.I.R.") of 5% per
annum. The total first monthly variable annuity payment is determined by
multiplying the value (expressed in thousands of dollars) of a Sub-Account (less
any applicable Premium Taxes) by the amount of the first monthly payment per
$1,000 of value obtained from the tables in the Certificates.
Fixed annuity payments are determined at annuitization by multiplying the values
allocated to the Fixed Account by a rate to be determined by American Maturity
which is no less than the rate specified in the annuity tables in the
Certificate. The annuity payment will remain level for the duration of the
annuity.
F. Amount of Second and Subsequent Monthly Variable Annuity Payments
The amount of the first monthly variable annuity payment, determined as
described above, is divided by the value of an Annuity Unit for the appropriate
Sub-Account no earlier than the close of business on the fifth Business Day
preceding the day on which the payment is due in order to determine the number
of Annuity Units represented by the first payment. This number of Annuity Units
remains fixed during the Annuity Period, and in each subsequent month the dollar
amount of the variable annuity payment is determined by multiplying this fixed
number of Annuity Units by the then current Annuity Unit Value.
Level variable annuity payments would be produced if the investment rate
remained constant and equal to the A.I.R. In fact, payments will vary up or
down as the investment rate varies up or down from the A.I.R.
G. Date and Time of Annuity Payments
The first annuity payment under any Option shall be made one month, (or the
period selected for periodic payments: annual, semi-annual, quarterly, or
monthly), following the Annuity Commencement Date. Subsequent payments shall be
made on the same calendar day of the month as was the first payment, or
preceding day if no such day exists (e.g. September 31), in accordance with the
payment period selected. The Annuity Unit Value used in calculating the amount
of the variable annuity payments will be based on an Annuity Unit Value
determined as of the close of business on a day no earlier than the fifth
Business Day preceding the date of the annuity payment.
<PAGE>
CALCULATION OF YIELD AND RETURN
From time to time, quotations of a Sub-Account's performance may be
included in advertisements, sales literature or reports to shareholders or
prospective investors. These performance figures may be calculated in the
following manner:
YIELD CALCULATION: MONEY MARKET PORTFOLIO SUB-ACCOUNT
A. YIELD is the net annualized yield based on a specified seven calendar
days calculated at simple interest rates. Yield is calculated by
determining the net change, exclusive of capital changes, in the value
of a hypothetical pre-existing account having a balance of one share
at the beginning of the period subtracting a hypothetical charge
reflecting deductions from shareholder accounts and dividing the
difference by the value of the account at the beginning of the base
period to obtain the base period return. The yield is annualized by
multiplying the base period return by 365/7. The yield figure is
stated to the nearest hundredth of one percent.
B. EFFECTIVE YIELD is the net annualized yield for a specified seven
calendar days assuming a reinvestment of the income compounding.
Effective yield is calculated by the same method as yield except the
yield figure is compounded by adding 1, raising the sum to a power
equal to 365 divided by 7, and subtracting one from the result,
according to the following formula:
EFFECTIVE YIELD = [(BASE PERIOD RETURN + 1)365/7] - 1
For purposes of the yield and effective yield computations, the
hypothetical charge reflects recurring charges on the the Separate
Account level, including the annual policy fee.
As described above, yield and effective yield are based on historical
earnings and show the performance of a hypothetical investment and are not
intended to indicate future performance. Yield and effective yield will vary
based on changes in market conditions and the level of expenses.
YIELD CALCULATION: BOND PORTFOLIO SUB-ACCOUNT
YIELD is the net annualized yield based on a specified 30-day (or one
month) period assuming a semiannual compounding of income. Yield is
calculated by dividing the net investment income per unit earned during the
period by the maximum offering price per unit on the last day of the
period, according to the following formula:
YIELD = 2[((A-B)/CD + 1)6 - 1]
Where:
<PAGE>
a = net investment income earned during the period by the
portfolio company attributable to shares owned by the
sub-account
b = expenses accrued for the period (net of reimbursements)
c = the average daily number of units outstanding during the
period
d = the maximum offering price per unit on the last day of the
period.
TOTAL RETURN CALCULATIONS
A. AVERAGE ANNUAL TOTAL RETURN is the average annual compound rate of
return for the periods of one, five, or ten years (or such shorter
periods as may be applicable dating from the commencement of the
Sub-Account's operations) all ended on the date of a recent calendar
quarter.
Average total return quotations reflect changes in the price of a
Portfolio's shares and assume that all dividends and capital gains
distributions during the respective periods were reinvested in
Portfolio shares. Average annual return is calculated by finding the
average annual compound rates of return over the relevant periods that
would equate the initial amount invested to the ending redeemable
value, according to the following formula:
P(1+T)N =ERV
Where:
P = a hypothetical initial investment of $1,000
T = Average Annual Total Return
n = number of years
ERV = ending redeemable value (ERV) at the end of the applicable
period of a hypothetical $1,000 investment made at the
beginning of the applicable period or at the end of the
particular period.
PERFORMANCE COMPARISONS
YIELD AND TOTAL RETURN. Each Sub-Account may from time to time include its
performance in advertising and other sales literature furnished to present or
prospective shareholders. Each Sub-Account may from time to time include in
advertisements its total return (and yield in the case of certain Sub-Accounts),
and the ranking of those performance figures relative to such figures for groups
of other annuities analyzed by Lipper Analytical Services and Morningstar, Inc.
as having the same investment objectives.
The total return and yield may also be used to compare the performance of the
Sub-Accounts against certain widely acknowledged outside standards or indices
for stock and bond market performance. The Standard & Poor's Composite Index of
500 Stocks (the "S&P 500") is a
<PAGE>
market value-weighted and unmanaged index showing the changes in the aggregate
market value of 500 stocks relative to the base period 1941-43. The S&P 500 is
composed almost entirely of common stocks of companies listed on the New York
Stock Exchange, although the common stocks of a few companies listed on the
American Stock Exchange or traded over-the-counter are included. The 500
companies represented include 400 industrial, 60 transportation and 40 financial
services concerns. The S&P 500 represents about 80% of the market value of all
issues traded on the New York Stock Exchange.
The NASDAQ-OTC Price Index (The "NASDAQ Index") is a market value-weighted and
unmanaged index showing the changes in the aggregate market value of
approximately 3,500 stocks relative to the base measure of 100.00 on February 5,
1971. The NASDAQ Index is composed entirely of common stocks of companies
traded over-the-counter and often through the National Association of Securities
Dealers Automated Quotations ("NASDAQ") system. Only those over-the-counter
stocks having only one market maker or traded on exchanges are excluded.
The Morgan Stanley Capital International EAFE Index (the "EAFE Index") is an
unmanaged index, which includes over 1,000 companies representing the stock
markets of Europe, Australia, New Zealand, and the Far East. The EAFE Index is
weighted by market capitalization, and therefore, it has a heavy representation
in countries with large stock markets, such as Japan.
The Lehman Government Bond Index (the "Lehman Government Index") is a measure of
the market value of all public obligations of the U.S. Treasury; all publicly
issued debt of all agencies of the U.S. Government and all quasi-federal
corporations; and all corporate debt guaranteed by the U.S. Government.
Mortgage backed securities, flower bonds and foreign targeted issues are not
included in the Lehman Government Index.
The Lehman Government/Corporate Bond Index (the "Lehman Government/Corporate
Index") is a measure of the market value of approximately 5,300 bonds with a
face value currently in excess of $1.3 trillion. To be included in the Lehman
Government/Corporate Index, an issue must have amounts outstanding in excess of
$1 million, have at least one year to maturity and be rated "Baa" or higher
("investment grade") by a nationally recognized rating agency.
The manner in which total return and yield will be calculated for public use is
described above.
There are no financial statements for the Separate Account since no Certificates
have been sold yet.
<PAGE>
American Maturity Life Insurance Company 29
- --------------------------------------------------------------------------------
AMERICAN MATURITY LIFE INSURANCE COMPANY
STATUTORY-BASIS BALANCE SHEETS
(IN THOUSANDS)
UNAUDITED
<TABLE>
<CAPTION>
AS OF SEPTEMBER 30
------------------
1996
------------------
<S> <C>
Assets
Bonds..................................................... $ 7,566
Cash and Short-Term Investments........................... 9,308
-------
Total Cash and Invested Assets.......................... 16,874
Investment Income Due and Accrued......................... 196
Other Assets.............................................. 323
Separate Account Assets................................... 44,188
-------
Total Assets............................................ $61,581
-------
-------
Liabilities
Aggregate Reserves for Future Benefits.................... $ 1,297
Liability for Premium and Other Deposit Funds............... 1,744
Asset Valuation Reserve................................... 220
Payable to Affiliates..................................... 656
Other Liabilities......................................... 1,062
Separate Account Liabilities.............................. 44,188
-------
Total Liabilities....................................... 49,167
-------
Capital and Surplus
Common Stock.............................................. 2,500
Gross Paid-in and Contributed Surplus..................... 17,500
Unassigned Funds.......................................... (7,586)
-------
Total Capital and Surplus............................... 12,414
-------
Total Liabilities and Capital and Surplus................... $61,581
-------
-------
</TABLE>
<PAGE>
30 AMERICAN MATURITY LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
AMERICAN MATURITY LIFE INSURANCE COMPANY
STATUTORY-BASIS STATEMENT OF OPERATIONS
(IN THOUSANDS)
UNAUDITED
<TABLE>
<CAPTION>
FOR THE NINE MONTHS
ENDED
SEPTEMBER 30, 1996
--------------------
<S> <C>
Revenues
Premiums and Annuity Considerations.................. $ 2,562
Annuity and Other Fund Deposits...................... 26,023
Investment Income.................................... 725
-------
Total Revenue...................................... 29,310
-------
Benefits and Expenses
Surrenders and Other Benefit Payments................ 2,594
General Insurance Expenses........................... 3,808
Increase in Reserve for Future Benefits and Liability
for Premium and Other Deposit Funds................. 2,358
Net Transfers to Separate Accounts................... 23,298
-------
Total Benefits and Expenses...................... 32,058
-------
Loss from Operations Before Federal Income Taxes....... (2,748)
Federal Income Taxes................................... 0
-------
Loss from Operations................................... (2,748)
Net Realized Capital Gains............................. 0
-------
Net Loss............................................... $(2,748)
-------
-------
</TABLE>
<PAGE>
AMERICAN MATURITY LIFE INSURANCE COMPANY 31
- --------------------------------------------------------------------------------
AMERICAN MATURITY LIFE INSURANCE COMPANY
STATUTORY-BASIS STATEMENT OF CHANGES IN CAPITAL AND SURPLUS
(IN THOUSANDS)
UNAUDITED
<TABLE>
<CAPTION>
FOR THE NINE MONTHS
ENDED
SEPTEMBER 30, 1996
--------------------
<S> <C>
Capital and Surplus -- Beginning of Period............. $15,280
Net Loss............................................. (2,748)
Change in Asset Valuation Reserve.................... (118)
-------
Changes in Capital and Surplus....................... (2,866)
-------
Capital and Surplus -- End of Period................... $12,414
-------
-------
</TABLE>
<PAGE>
32 AMERICAN MATURITY LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
AMERICAN MATURITY LIFE INSURANCE COMPANY
STATUTORY-BASIS STATEMENT OF CASH FLOWS
(IN THOUSANDS)
UNAUDITED
<TABLE>
<CAPTION>
FOR THE NINE MONTHS
ENDED
SEPTEMBER 30, 1996
--------------------
<S> <C>
Operations
Premiums, Annuity Considerations and Fund Deposits... $28,585
Investment Income.................................... 896
-------
Total Income....................................... 29,481
-------
Benefits Paid........................................ 2,594
Net Transfers to Separate Accounts................... 23,351
Other Expenses....................................... 3,607
-------
Total Benefits and Expenses........................ 29,552
-------
Net Cash used for Operations....................... (71)
-------
Proceeds from Investments
Bonds................................................ 1,000
-------
Net Investment Proceeds............................ 1,000
-------
Other Cash Provided
Other Sources........................................ 2,696
-------
Total Proceeds..................................... 3,696
-------
Cost of Investments Acquired
Bonds................................................ 3,553
-------
Total Investments Acquired......................... 3,553
-------
Total Other Cash Applied........................... 207
-------
Total Applications................................. 3,760
-------
Net Change in Cash and Short-Term Investments.......... (135)
Cash and Short-Term Investments, Beginning of Period... 9,443
-------
Cash and Short-Term Investments, End of Period......... $ 9,308
-------
-------
</TABLE>
<PAGE>
AMERICAN MATURITY LIFE INSURANCE COMPANY 33
- --------------------------------------------------------------------------------
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors of American Maturity Life Insurance Company:
We have audited the accompanying statutory-basis balance sheets of American
Maturity Life Insurance Company (a Connecticut corporation) (the Company) as of
December 31, 1995 and 1994, and the related statutory-basis statements of
operations, changes in capital and surplus and cash flows for the year ended
December 31, 1995. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
statutory-basis 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.
The Company presents its financial statements in conformity with statutory
accounting practices as described in Note 1 of notes to statutory-basis
financial statements. When statutory-basis financial statements are presented
for purposes other than for filing with a regulatory agency, generally accepted
auditing standards require that an auditors' report on them state whether they
are presented in conformity with generally accepted accounting principles. The
accounting practices used by the Company vary from generally accepted accounting
principles as explained and quantified in Note 1. In our opinion, because the
differences in accounting practices as described in Note 1 are material, the
statutory-basis financial statements referred to above do not present fairly, in
accordance with generally accepted accounting principles, the financial position
of the Company as of December 31, 1995 and 1994, and the results of its
operations and its cash flows for the year ended December 31, 1995.
However, in our opinion, the statutory-basis financial statements referred to
above present fairly, in all material respects, the financial position of the
Company as of December 31, 1995 and 1994, and the results of its operations and
its cash flows for the year ended December 31, 1995 in conformity with statutory
accounting practices as described in Note 1.
/s/ Arthur Andersen LLP
Hartford, Connecticut
March 22, 1996
<PAGE>
34 AMERICAN MATURITY LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
AMERICAN MATURITY LIFE INSURANCE COMPANY
STATUTORY-BASIS BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
AS OF DECEMBER 31
--------------------
1995 1996
-------- --------
<S> <C> <C>
Assets
Bonds..................................................... $ 5,060 $ 5,158
Cash and Short-Term Investments........................... 9,443 14,647
Receivable on Investment Sales............................ 2,108 0
-------- --------
Total Cash and Invested Assets.......................... 16,611 19,805
Investment Income Due and Accrued......................... 320 78
Other Assets.............................................. 341 460
Separate Account Assets................................... 18,303 0
-------- --------
Total Assets............................................ $ 35,575 $ 20,343
-------- --------
-------- --------
Liabilities
Aggregate Reserves for Future Benefits.................... $ 202 $ 0
Liability for Premium and Other Deposit Funds............. 482 0
Asset Valuation Reserve................................... 102 38
Payable to Affiliates..................................... 863 240
Other Liabilities......................................... 343 0
Separate Account Liabilities.............................. 18,303 0
-------- --------
Total Liabilities....................................... 20,295 278
-------- --------
Commitments and Contingencies
(Notes 5 and 7)
Capital and Surplus
Common Stock.............................................. 2,500 2,500
Gross Paid-in and Contributed Surplus..................... 17,500 17,500
Unassigned Funds.......................................... (4,720) 65
-------- --------
Total Capital and Surplus............................... 15,280 20,065
-------- --------
Total Liabilities and Capital and Surplus................... $ 35,575 $ 20,343
-------- --------
-------- --------
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
AMERICAN MATURITY LIFE INSURANCE COMPANY 35
- --------------------------------------------------------------------------------
AMERICAN MATURITY LIFE INSURANCE COMPANY
STATUTORY-BASIS STATEMENT OF OPERATIONS
(IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE YEAR ENDED
DECEMBER 31, 1995
--------------------
<S> <C>
Revenues
Premiums and Annuity Considerations $ 746
Annuity and Other Fund Deposits...................... 18,043
Investment Income.................................... 1,181
-------
Total Revenue...................................... 19,970
-------
Benefits and Expenses
Surrenders and Other Benefit Payments................ 789
General Insurance Expenses........................... 6,376
Increase in Reserve for Future Benefits and Liability
for Premium and Other Deposit Funds................. 684
Net Transfers to Separate Accounts................... 16,842
-------
Total Benefits and Expenses........................ 24,691
-------
Loss from Operations Before Federal Income Taxes....... (4,721)
Federal Income Taxes................................... 0
-------
Loss from Operations................................... (4,721)
Net Realized Capital Gains............................. 0
-------
Net Loss............................................... $(4,721)
-------
-------
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
36 AMERICAN MATURITY LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
AMERICAN MATURITY LIFE INSURANCE COMPANY
STATUTORY-BASIS STATEMENT OF CHANGES IN CAPITAL AND SURPLUS
(IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE YEAR ENDED
DECEMBER 31, 1995
--------------------
<S> <C>
Capital and Surplus -- Beginning of Year............... $20,065
-------
Net Loss............................................. (4,721)
Change in Asset Valuation Reserve.................... (64)
-------
Changes in Capital and Surplus....................... (4,785)
-------
Capital and Surplus -- End of Year..................... $15,280
-------
-------
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
AMERICAN MATURITY LIFE INSURANCE COMPANY 37
- --------------------------------------------------------------------------------
AMERICAN MATURITY LIFE INSURANCE COMPANY
STATUTORY- BASIS STATEMENT OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE YEAR ENDED
DECEMBER 31, 1995
--------------------
<S> <C>
Operations
Premiums, Annuity Considerations and Fund Deposits... $18,789
Investment Income.................................... 983
-------
Total Income....................................... 19,772
-------
Benefits Paid........................................ 789
Net Transfers to Separate Accounts................... 16,973
Other Expenses....................................... 5,633
-------
Total Benefits and Expenses........................ 23,395
-------
Net Cash used for Operations....................... (3,623)
-------
Proceeds from Investments
Bonds................................................ 3,310
-------
Net Investment Proceeds............................ 3,310
-------
Other Cash Provided
Other Sources........................................ 353
-------
Total Proceeds..................................... 3,663
-------
Cost of Investments Acquired
Bonds................................................ 3,255
-------
Total Investments Acquired......................... 3,255
-------
Total Other Cash Applied........................... 1,989
-------
Total Applications................................. 5,244
-------
Net Change in Cash and Short-Term Investments.......... (5,204)
Cash and Short-Term Investments, Beginning of Year..... 14,647
-------
Cash and Short-Term Investments, End of Year........... $ 9,443
-------
-------
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
38 AMERICAN MATURITY LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
AMERICAN MATURITY LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS
DECEMBER 31, 1995
(DOLLAR AMOUNTS IN THOUSANDS UNLESS OTHERWISE STATED)
1. SIGNIFICANT ACCOUNTING POLICIES:
ORGANIZATION:
American Maturity Life Insurance Company (AML or the Company), formerly
First Equicor Life Insurance Company (FELIC), is a sixty percent owned
subsidiary of Hartford Life and Accident Insurance Company (HLA), which is an
indirect subsidiary of ITT Hartford Group, Inc. (ITT Hartford Group), a formerly
wholly owned subsidiary of ITT Corporation (ITT). In December 1995, ITT split
into three legal entities: ITT Hartford Group, ITT Industries Inc., and ITT
Corporation. Forty percent of the common stock of the Company is owned by
Pacific Mutual Life Insurance Company (PMLIC). AML was sold to HLA on April 29,
1994 (the purchase date) by Connecticut General Life Insurance Company (CGLIC).
AML offers annuities exclusively to members of The American Association of
Retired Persons.
BASIS OF PRESENTATION:
The financial statements are prepared in conformity with statutory
accounting practices prescribed or permitted by the National Association of
Insurance Commissioners (NAIC) and the State of Connecticut Insurance
Department.
Statutory accounting practices and generally accepted accounting principles
(GAAP) differ in certain significant respects. These differences principally
involve:
(1) treatment of policy acquisition costs (commissions, underwriting and
selling expenses, premium taxes, etc.), which are charged to expense when
incurred for statutory purposes rather than on a pro-rata basis over the
expected life of the policies;
(2) recognition of premium revenues, which for statutory purposes are
generally recorded as collected or when due during the premium paying period
of the contract, and which for GAAP purposes, are only recorded for policy
charges for contract administration and surrender charges assessed to policy
account balances;
(3) development of liabilities for future policy benefits, which for
statutory purposes predominantly use methods prescribed by the NAIC which
vary considerably from interest and mortality assumptions used for GAAP
financial reporting;
(4) providing for income taxes based on current taxable (tax return) income
only for statutory purposes, rather than establishing additional assets or
liabilities for deferred income taxes to recognize the tax effect related to
reporting revenues and expenses in different periods for financial reporting
and tax return purposes;
(5) excluding certain GAAP assets designated as non-admitted assets (agents'
balances, furniture and equipment, etc.) from the balance sheet for
statutory purposes by directly charging surplus;
(6) establishing accruals for post-retirement and post-employment health
care benefits on an optional basis, using a twenty year phase-in approach,
whereas GAAP liabilities were established at date of adoption;
(7) establishing a formula reserve for realized and unrealized losses due to
default and equity risk associated with certain invested assets (Asset
Valuation Reserve) and the deferral and amortization of realized gains and
losses, motivated by changes in interest rates during the period the asset
is held, into income over the remaining life to maturity of the asset sold
(Interest Maintenance Reserve), whereas on a GAAP basis, no such formula
reserve is required and realized gains and losses are recognized in the
period the asset is sold;
(8) the reporting of fixed maturities at amortized cost, whereas GAAP
requires that fixed maturities be classified as "held-to-maturity,"
"available-for-sale" or "trading" based on the Company's intentions with
respect to the ultimate disposition of the security and its ability to
effect those intentions. The Company's fixed maturities were classified on a
GAAP basis as "available-for-sale" and accordingly, these investments were
reflected at fair value with the corresponding impact included as a
component of Shareholder's Equity; and
(9) no re-evaluation of assets and liabilities upon the acquisition of FELIC
by HLA, whereas on a GAAP basis the assets and liabilities were re-valued to
their fair values on the purchase date, with the excess of the
<PAGE>
AMERICAN MATURITY LIFE INSURANCE COMPANY 39
- --------------------------------------------------------------------------------
purchase price over the net fair value recorded as goodwill.
The significant differences between statutory and GAAP-basis net loss for
the year ended December 31, 1995 and capital and surplus as of December 31, 1994
and 1995 are summarized as follows:
<TABLE>
<CAPTION>
1995
---------
<S> <C> <C>
GAAP Net Loss: $ (4,365)
Amortization and Deferral of
Policy Acquisition Costs....... (220)
Capitalized Software............ (160)
Benefit Reserve Adjustment...... 52
Deferred Taxes.................. 122
Amortization of Goodwill........ 55
Other, Net...................... (205)
---------
Statutory Net Loss.............. $ (4,721)
---------
---------
<CAPTION>
1995 1994
--------- ---------
<S> <C> <C>
GAAP Capital and Surplus: $ 17,749 $ 21,901
Amortization and Deferral of
Policy Acquisition Costs....... (220) 0
Capitalized Software............ (160) 0
Benefit Reserve Adjustment...... 52 0
Asset Valuation Reserve......... (102) (38)
Deferred Taxes.................. 91 (31)
Unrealized (Gain) Loss on Bonds,
Net of Tax..................... (79) 133
Goodwill........................ (2,134) (2,189)
Other, Net...................... 83 289
--------- ---------
Statutory Capital and Surplus... $ 15,280 $ 20,065
--------- ---------
--------- ---------
</TABLE>
AGGREGATE RESERVES FOR FUTURE BENEFITS AND LIABILITIES FOR PREMIUM AND OTHER
DEPOSIT FUNDS:
Aggregate reserves for payment of annuity benefits were computed in
accordance with presently accepted actuarial standards. On-benefit annuity
reserves were based principally on Group Annuity Tables at an interest rate of
7.25%. Premium and deposit funds were generally valued on the Commissioner's
Annuity Reserve Valuation Method (CARVM).
SEPARATE ACCOUNTS:
AML has established separate accounts to segregate the assets and
liabilities of certain annuity contracts. The assets consist primarily of
marketable securities reported at market value. Total assets and liabilities of
the separate account are included on the Statutory-Basis Balance Sheets.
INVESTMENTS:
Investments include bonds carried at amortized cost. Bonds which are deemed
ineligible to be held at amortized cost by the NAIC Securities Valuation Office
(SVO) are carried at the appropriate SVO published value. When a permanent
reduction in the value of publicly traded securities occurs, the decrease is
reported as a realized loss and the carrying value is adjusted accordingly.
The Company uses derivative financial instruments within the separate
account as part of an overall risk management strategy. These instruments,
consisting primarily of exchange traded financial futures, are used as a means
of hedging exposure to price and/or interest rate risk on planned investment
purchases or existing assets and liabilities in the separate account. The
Company does not hold or issue derivative financial instruments for trading
purposes.
Realized capital gains and losses, net of taxes and amounts transferred to
the Interest Maintenance Reserve (IMR), are reported in the Statutory-Basis
Statement of Operations. The Asset Valuation Reserve is designed to provide a
standardized reserve process for realized and unrealized losses due to the
default and equity risks associated with invested assets. The AVR was increased
by $64 in 1995. The IMR captures realized capital gains and losses, net of
applicable income taxes, resulting from changes in interest rates and amortizes
these gains or losses into income over the remaining life of the asset sold.
Realized capital gains and losses, net of taxes, not included in IMR are
reported in the Statutory-Basis Statement of Operations. In 1995, no capital
gains or losses were reclassified to the IMR. There was no amortization.
Realized gains and losses are determined on a specific identification basis.
USE OF ESTIMATES:
The preparation of financial statements in conformity with statutory
accounting practices requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosures of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
<PAGE>
40 AMERICAN MATURITY LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
2. INVESTMENTS:
COMPONENTS OF NET INVESTMENT INCOME:
<TABLE>
<S> <C>
Interest income from bonds and
short- term Investments............ $ 1,181
---------
Gross investment income............. 1,181
Less: investment expenses........... 0
---------
Net investment income............... $ 1,181
---------
---------
</TABLE>
UNREALIZED GAINS (LOSSES) ON BONDS AND SHORT-TERM INVESTMENTS:
<TABLE>
<S> <C>
Gross unrealized gains at end of
year................................ $ 132
Gross unrealized losses at end of
year................................ 0
---------
Net unrealized gains................. 132
Balance at beginning of year......... (133)
---------
Net change in unrealized gains
(losses)............................ $ 265
---------
---------
</TABLE>
BONDS AND SHORT-TERM INVESTMENTS:
<TABLE>
<CAPTION>
DECEMBER 31, 1995
---------------------------------------
<S> <C> <C> <C>
AMORTIZED UNREALIZED UNREALIZED
COST GAINS LOSSES
----------- ------------- -----------
U.S. government and government agencies and authorities -- guaranteed and sponsored.... $ 4,069 $ 128 $ 0
All other corporate.................................................................... 991 4 0
Short-term investments................................................................. 9,370 0 0
----------- ----- -----------
Total.............................................................................. $ 14,430 $ 132 0
----------- ----- -----------
----------- ----- -----------
<CAPTION>
DECEMBER 31, 1994
---------------------------------------
AMORTIZED UNREALIZED UNREALIZED
COST GAINS LOSSES
----------- ------------- -----------
<S> <C> <C> <C>
U.S. government and government agencies and authorities -- guaranteed and sponsored.... $ 5,158 $ 35 $ (168)
Short-term investments................................................................. 14,605 0 0
----------- ----- -----------
Total.............................................................................. $ 19,763 $ 35 $ (168)
----------- ----- -----------
----------- ----- -----------
<CAPTION>
<S> <C>
FAIR
VALUE
---------
U.S. government and government agencies and authorities -- guaranteed and sponsored.... $ 4,197
All other corporate.................................................................... 995
Short-term investments................................................................. 9,370
---------
Total.............................................................................. $ 14,562
---------
---------
FAIR
VALUE
---------
<S> <C>
U.S. government and government agencies and authorities -- guaranteed and sponsored.... $ 5,025
Short-term investments................................................................. 14,605
---------
Total.............................................................................. $ 19,630
---------
---------
</TABLE>
The amortized cost and estimated market value of bonds and short-term
investments at December 31, 1995 by management's anticipated maturity are:
<TABLE>
<CAPTION>
ESTIMATED
FAIR
MATURITY AMORTIZED COST VALUE
- ------------------------------------------------------------------------------------------------- -------------- -----------
<S> <C> <C>
Due in one year or less.......................................................................... $ 10,362 $ 10,364
Due after one year through five years............................................................ 3,312 3,395
Due after five years through ten years........................................................... 214 219
Due after ten years.............................................................................. 542 584
------- -----------
Total........................................................................................ $ 14,430 $ 14,562
------- -----------
------- -----------
</TABLE>
Proceeds from the sales and maturities of fixed maturity investments were
$3,310 during 1995, resulting in $0 gross realized gains or losses.
CONCENTRATION OF CREDIT RISK:
Excluding U.S. government and government agency investments, the Company is
not exposed to any significant concentration of credit risk.
3. RELATED PARTY TRANSACTIONS:
Transactions between the Company and its affiliates within ITT Hartford
Group relate principally to rental, service and investment management fees.
Rental and service fees allocated by HLA to the Company were $1,414 during 1995.
4. FEDERAL INCOME TAXES:
The Company files its own Federal income tax return. No Federal income taxes
were paid or payable for 1995.
5. CAPITAL AND SURPLUS AND SHAREHOLDER DIVIDEND RESTRICTIONS:
The maximum amount of dividends which can be paid without prior approval by
State of Connecticut domiciled insurance companies to shareholders is restricted
to the
<PAGE>
AMERICAN MATURITY LIFE INSURANCE COMPANY 41
- --------------------------------------------------------------------------------
greater of 10% of surplus of the preceding December 31 or the net gain from
operations of the previous year. Dividends are paid as determined by the Board
of Directors and are not cumulative. Current year dividends were $0.
6. PENSION PLANS AND OTHER POST-RETIREMENT AND POST-EMPLOYMENT BENEFITS:
The Company's employees are included in ITT Hartford Group's
non-contributory defined benefit pension plans. These plans provide pension
benefits that are based on years of service and the employee's compensation
during the last ten years of employment. ITT Hartford Group's funding policy is
to contribute annually an amount between the minimum funding requirements set
forth in the Employee Retirement Income Security Act of 1974 and the maximum
amount that can be deducted for Federal income tax return purposes. The Company
also participates in an Investment and Savings Plan sponsored by ITT Hartford
Group, which is available to substantially all employees. This plan includes a
deferred compensation option under IRC section 401(k). The liabilities for these
plans are included in the financial statements of ITT Hartford Group, and a
portion of the expenses were allocated to the Company by HLA as part of rental
and service fees.
The Company's employees are included in ITT Hartford Group's contributory
post-retirement defined health care and life insurance benefit plans. These
plans provide health care and life insurance benefits for eligible retired
employees. Substantially all employees may become eligible for those benefits if
they reach normal or early retirement age while still working for the Company.
ITT Hartford Group has prefunded a portion of the health care and life insurance
obligations through trust funds where such prefunding can be accomplished on a
tax effective basis.
Post-retirement liabilities and expenses are allocated to the Company. The
assumed rate of future increases in the per capita cost of health care (the
health care trend rate) was 10.1% for 1995, decreasing ratably to 6% in the year
2001. Increasing the health care trend rates by one percent per year would have
an immaterial impact on the accumulated post retirement benefit obligation and
the annual expense. The post-retirement benefits expense allocated to the
Company was not significant in 1995.
Post-employment benefits are primarily comprised of obligations to provide
medical and life insurance to employees on long term disability. The
post-employment benefits expense was not significant in 1995.
7. COMMITMENTS AND CONTINGENCIES:
Under Insurance Guaranty Fund laws in most states, insurers doing business
therein can be assessed up to prescribed limits for policyholder losses incurred
by insolvent companies. The amount of any future assessments on AML under these
laws cannot be reasonably estimated. Most of these laws do provide, however,
that an assessment may be excused or deferred if it would threaten an insurer's
own financial strength. Additionally, Guaranty Fund assessments are used to
reduce state premium taxes paid by the Company in certain states.
8. GUARANTEED SEPARATE ACCOUNTS:
The Company maintained separate account assets and liabilities totaling
$18.3 million as of December 31, 1995 which are reported at fair value. No
separate accounts existed as of December 31, 1994. Separate accounts reflect a
guaranteed risk assumption wherein the Company contractually guarantees interest
rates and a minimum return of account value to the policyholder.
The guaranteed separate accounts include guaranteed individual annuity
contracts. The portfolios are segregated from other investments and are managed
so as to minimize liquidity and interest rate risk. To minimize the risk of
disintermediation associated with early withdrawals, individual annuity
contracts carry a graded surrender charge as well as a market value adjustment.
Additional investment risk is hedged using futures contracts which totaled $6 in
carrying value and $3,800 in notional amounts as of December 31, 1995.
<PAGE>
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) All financial statements are included in Part A and Part B of the
Registration Statement.
(b) (1) A copy of the resolution authorizing the Separate Account is
incorporated by reference to the Initial Submission, to the
Registration Statement File No. 333-10105, filed on
August 12, 1996.
(2) Not applicable. American Maturity maintains custody of all
assets.
(3) (a) Principal Underwriter Agreement between American Maturity
Life Insurance Company and Hartford Securities Distribution
Company, Inc. is incorporated by reference to the Initial
Submission, to the Registration Statement File No. 333-10105,
filed on August 12, 1996.
(b) Not applicable.
(4) A copy of the Group Flexible Premium Variable Annuity Contract and the
Flexible Premium Variable Annuity Certificate are filed herein.
(5) The Enrollment Form is filed herein.
(6) (a) Certificate of Incorporation of American Maturity Life Insurance
Company is incorporated by reference to the Initial Submission,
to the Registration Statement File No. 333-10105, filed on
August 12, 1996.
(b) Bylaws of American Maturity Life Insurance Company are
incorporated by reference to the Initial Submission, to the
Registration Statement File No. 333-10105, filed on
August 12, 1996.
(7) Not applicable.
(8) Fund Participation agreements between Neuberger & Berman Advisors
Management Trust and American Maturity Life; and Dreyfus Variable
Investment Fund and American Maturity Life are filed herein. Fund
Participation agreements between Janus Aspen Series and American
Maturity Life; and Scudder Variable Life Investment Fund and
American Maturity Life are incorporated by reference to the
Initial Submission, to the Registration Statement File No.
333-10105, filed on August 12, 1996.
(9) Opinion and consent of Lynda Godkin, Esquire is incorporated by
reference to the Initial Submission, to the Registration Statement
File No. 333-10105, filed on August 12, 1996.
(10) Consent of Arthur Andersen LLP is filed herein.
(11) No financial statements are omitted.
(12) Not applicable.
(13) Not applicable.
(14) Not applicable.
<PAGE>
Item 25. Directors and Officers of the Depositor
Michael B. Cefole Vice President and Chief Financial
Officer
James Cubanski Assistant Secretary
Lynda Godkin* General Counsel and Secretary
David A. Hall* Senior Vice President and
Chief Investment Officer
Michael J. Loparco Vice President
William B. Malchodi Vice President and Director of Taxes
Thomas M. Marra* Chief Executive Officer
Robert C. Mayne Vice President
Joseph J. Noto* President and Chief Operating Officer
Glenn S. Schafer* Director
Lowndes A. Smith* Chairman
Thomas C. Sutton* Director
George W. Tang Vice President and Actuary
Joseph Tedesco Assistant Secretary
Donald E. Waggaman, Jr. Treasurer
* Indicates a Director
Unless otherwise indicated, the principal business address of each the above
individuals is P.O. Box 2999, Hartford, CT 01604-2999.
Item 26. Persons Controlled By or Under Common Control with the Depositor or
Registrant
Exhibit 26 is incorporated by reference to the Initial Submission,
to the Regstration Statement File No. 333-10105, filed on
August 12, 1996.
<PAGE>
Item 27. Number of Certificate Owners
As of December 1, 1996 there were no Certificate Owners.
Item 28. Indemnification - The directors and officers of American Maturity and
HSD are covered under a directors and officers liability insurance
policy issued to ITT Hartford Insurance Group and its subsidiaries.
Such policy will reimburse the Registrant for any payments that it
shall make to directors and officers pursuant to law and will, subject
to certain exclusions contained in the policy, further pay any other
costs, charges and expenses and settlements and judgments arising from
any proceeding involving any director or officer of the Registrant in
his past or present capacity as such, and for which he may be liable,
except as to any liabilities arising from acts that are deemed to be
uninsurable. The Registrant hereby undertakes that insofar as
indemnification for liabilities arising under the Securities Act of
1933 (the "Act") 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 liabilities (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.
Item 29. Principal Underwriters
(a) HSD acts as principal underwriter for the following companies:
Hartford Life Insurance Company - DC Variable Account I
Hartford Life Insurance Company - Separate Account Two
(DC Variable Account II)
Hartford Life Insurance Company - Separate Account Two
(Variable Account "A")
Hartford Life Insurance Company - Separate Account Two
(NQ Variable Account)
Hartford Life Insurance Company - Separate Account Two
(QP Variable Account)
Hartford Life Insurance Company - Separate Account Two
(Director)
Hartford Life Insurance Company - Putnam Capital Manager Trust
Separate Account
<PAGE>
Hartford Life and Accident Insurance Company - Putnam Capital Manager
Separate Account One
Hartford Life and Accident Insurance Company - Separate Account One
ITT Hartford Life and Annuity Insurance Company - Separate Account One
ITT Hartford Life and Annuity Insurance Company - Separate Account Two
Hartford Life Insurance Company - Separate Account Three
ITT Hartford Life and Annuity Insurance Company - Separate Account
Three
Hartford Life Insurance Company - Separate Account Five
ITT Hartford Life and Annuity Insurance Company - Separate Account
Five
ITT Hartford Life and Annuity Insurance Company - Separate Account Six
(b) Directors and Officers of HSD
Name and Principal Positions and Offices
Business Address With Underwriter
------------------ ----------------------
Bruce D. Gardner Secretary
George R. Jay Controller
Lowndes A. Smith President
Donald E. Waggaman, Jr. Treasurer
Item 30. Location of Accounts and Records
Accounts and records are maintained by:
American Maturity Life Insurance Company
P.O. Box 2999
Hartford, Connecticut 06104-2999
Item 31. Management Services
None
<PAGE>
Item 32. Undertakings
(a) The Registrant hereby undertakes 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 16 months old so long as payments under the variable annuity
contracts may be accepted.
(b) The Registrant hereby undertakes 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.
(c) The Registrant hereby undertakes to deliver any Statement of
Additional Information and any financial statements required to be made
available under this Form promptly upon written or oral request.
(d) American Maturity Life Insurance Company hereby represents that the
aggregate fees and charges under the contract are reasonable in relation
to the services rendered, the expenses expected to be incurred, and the
risks assumed by American Maturity Life Insurance Company.
The Registrant is relying on the no-action letter issued by the Division of
Investment Management to American Council of Life Insurance, Ref. No. IP-6-88,
November 28, 1988. The Registrant has complied with the four provisions of the
no-action letter.
<PAGE>
AMERICAN MATURITY LIFE INSURANCE COMPANY
POWER OF ATTORNEY
Joseph J. Noto, President and Chief Operating Officer
Donald E. Waggaman, Jr., Treasurer
George W. Tang, Vice President and Actuary
Michael B. Cefole, Vice President and Chief Financial Officer
Lowndes A. Smith, Chairman
Thomas M. Marra, Chief Executive Officer
Thomas C. Sutton
David A. Hall, Senior Vice President and Chief Investment Officer
Glenn S. Schafer
do hereby jointly and severally authorize Lynda Godkin and/or Scott Richardson
to sign as their agent, any Registration Statement, pre-effective amendment, and
any post-effective amendment of American Maturity Life Insurance Company under
the Securities Act of 1933 and/or the Investment Company Act of 1940.
IN WITNESS WHEREOF, the undersigned have executed this Power of Attorney for the
purpose herein set forth.
/s/ JOSEPH J. NOTO Dated March 25, 1996
------------------------------- ------------------------
Joseph J. Noto
/s/ DONALD E. WAGGAMAN, JR. Dated March 26, 1996
------------------------------- ------------------------
Donald E. Waggaman, Jr.
/s/ GEORGE W. TANG Dated March 25, 1996
------------------------------- ------------------------
George W. Tang
/s/ MICHAEL B. CEFOLE Dated March 25, 1996
------------------------------- ------------------------
Michael B. Cefole
/s/ LOWNDES A. SMITH Dated March 29, 1996
------------------------------- ------------------------
Lowndes A. Smith
/s/ THOMAS M. MARRA Dated April 2, 1996
------------------------------- ------------------------
Thomas M. Marra
/s/ THOMAS C. SUTTON Dated March 18, 1996
------------------------------- ------------------------
Thomas C. Sutton
/s/ DAVID A. HALL Dated March 26, 1996
------------------------------- ------------------------
David A. Hall
/s/ GLENN S. SCHAFER Dated March 20, 1996
------------------------------- ------------------------
Glenn S. Schafer
<PAGE>
SIGNATURES
----------
As required by the Securities Act of 1933 and the Investment Company Act of
1940, the Registrant has caused this Registration Statement to be signed on
its behalf, in the Town of Simsbury, and State of Connecticut on this 25 day
of December 4, 1996.
AMERICAN MATURITY LIFE INSURANCE INSURANCE COMPANY
SEPARATE ACCOUNT AMLVA
(Registrant)
*By: /s/ JOSEPH J. NOTO *By: /s/ LYNDA GODKIN
-------------------------------- --------------------------------
Joseph J. Noto Lynda Godkin
President and Chief Operating Attorney-in-Fact
Officer
AMERICAN MATURITY LIFE INSURANCE COMPANY
(Depositor)
*By: /s/ JOSEPH J. NOTO
--------------------------------
Joseph J. Noto
President and Chief Operating
Officer
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed by the following persons and in the capacities and on
the dates indicated.
Joseph J. Noto, President and Chief Operating Officer*
Donald E. Waggaman, Jr., Treasurer*
Lynda Godkin, General Counsel and Secretary
George W. Tang, Vice President and Actuary*
Michael B. Cefole, Vice President and Chief
Financial Officer* *By: /s/ LYNDA GODKIN
Lowndes A. Smith, Chairman* ------------------------
Thomas M. Marra, Chief Executive Officer Lynda Godkin
Thomas C. Sutton* Attorney-in-Fact
David A. Hall, Senior Vice President and Chief
Investment Officer* Dated: December 4, 1996
Glenn S. Schafer * ----------------------
<PAGE>
GROUP FLEXIBLE PREMIUM VARIABLE
ANNUITY CONTRACT
AMERICAN MATURITY LIFE INSURANCE COMPANY
200 Hopmeadow Street
Simsbury, Connecticut 06089
(a stock life insurance company, herein called the "Company")
Agrees with the Contract Owner to provide benefits as provided herein.
This is a Group Variable Annuity Contract.
The Contract Specifications on Page 3 and the conditions and provisions on this
and the following pages are part of the Contract.
Signed for the Company
Joseph J. Noto, President Lynda Godkin, Secretary
<PAGE>
TABLE OF CONTENTS
SECTION
Page
1. Contract Specifications 3
2. Definitions 6
3. Premium Payments 9
4. Valuation Provisions 10
5. Transfers 11
6. Annual Fees and Deductions 12
7. Control Provisions 13
8. General Provisions 14
9. Surrender Provisions 16
10. Annuity Benefits 21
11. Annuity Tables 24
2
<PAGE>
1. CONTRACT SPECIFICATIONS
Contract Owner: The AARP Group Annuity Trust
Contract Holder: The Executive Director of the American
Association of Retired Persons (AARP)
Trustee for the AARP Group Annuity Trust
Contract Effective Date: November 1, 1996
Contract Number: 10
Eligibility Requirements: Members of the American Association
of Retired Persons,
herein referred to as
members.
This Contract affords members the right to participate in a flexible premium
variable annuity under the terms and conditions contained herein. To
participate, the member submits an Enrollment Form, a premium payment, and any
other required administrative forms. The Company may accept the member's
Enrollment Form according to the Certificate Issue Requirements below and
according to state and federal law applicable to variable annuities.
Upon accepting a member's Enrollment Form, the Company will send the member a
Certificate of Participation (herein "Certificate").
CERTIFICATE ISSUE REQUIREMENTS
MAXIMUM ISSUE AGE:
90
MINIMUM PURCHASE PAYMENT:
$5,000
MINIMUM SUBSEQUENT PAYMENT:
$250 - ($100 for systematic deposit program)
MAXIMUM AGGREGATE PURCHASE WITHOUT COMPANY CONSENT:
$1,000,000
3
<PAGE>
CERTIFICATE SPECIFICATIONS:
ANNUAL WITHDRAWAL AMOUNT:
A Contingent Deferred Sales Charge is not assessed against any withdrawals made
each Certificate Year, on a non-cumulative basis, of up to 10% of premium
payments remaining in the Certificate as of the last Certificate Anniversary.
ANNUAL FEE:
$25 on each Certificate Anniversary before the Annuity Commencement Date, or at
the time of full surrender, if the Certificate Value is less than $50,000 on
either date.
MORTALITY AND EXPENSE RISK CHARGE:
0.65% per annum of the average daily Sub-Account value
ADMINISTRATION CHARGE:
0.20% per annum of the average daily Sub-Account value
MINIMUM FIXED ACCOUNT INTEREST RATE:
3%
CONTINGENT DEFERRED SALES CHARGE SCHEDULE:
See "Contingent Deferred Sales Charge" provisions for a description of the
Contingent Deferred Sales Charge. The Contingent Deferred Sales Charge is a
percentage of the Gross Surrender Value (not to exceed the aggregate amount of
premium payments made) and equals:
CHARGE CERTIFICATE YEAR
5% 1
4% 2
3% 3
2% 4
1% 5
0% 6 and thereafter
SEPARATE ACCOUNT:
Separate Account AMLVA
AVAILABLE SUB-ACCOUNTS: BASED ON FUND:
4
<PAGE>
Money Market Portfolio Money Market Portfolio
of the Scudder Variable Life Investment
Fund
Bond Portfolio Bond Portfolio
of the Scudder Variable Life Investment
Fund
Balanced Portfolio Balanced Portfolio
of the Janus Aspen Series
Capital Growth Portfolio Capital Growth Portfolio
of the Scudder Variable Life Investment
Fund
Growth & Income Portfolio Growth & Income Portfolio
of the Scudder Variable Life Investment
Fund
[Partners Portfolio] [Partners Portfolio
of the Neuberger & Berman Advisors
Management Trust]
[Capital Appreciation [Capital Appreciation Portfolio
Portfolio] of the Dreyfus Variable Investment
Fund]
Small Cap Portfolio Small Cap Portfolio
of the Dreyus Variable Investment
Fund
Worldwide Growth Portfolio Worldwide Growth Portfolio
of the Janus Aspen Series
Or other Sub-Accounts as may be made available from time to time.
5
<PAGE>
2. DEFINITIONS
ACCUMULATION UNIT - A unit of measure used to calculate the value of a
Sub-Account of a Certificate before the Annuity Commencement Date.
ADMINISTRATION CHARGE - A dollar amount that the Company deducts to cover
administrative expenses. This charge is an annual percentage. It is shown on
the Contract Specifications Page.
ADMINISTRATIVE OFFICE OF THE COMPANY -- Currently located at 700 Newport Center
Drive, Newport Beach, California 92660. All correspondence should be sent to
our mailing address at P.O. Box 7005, Pasadena, CA 91109-7005. Any additional
premium payments should be sent to P.O. Box 100194, Pasadena, CA 91189-0194.
AMLVA - See "Separate Account."
ANNUAL FEE - An amount that is deducted from the Certificate at the end of each
Certificate Year before the Annuity Commencement Date, or on the date of full
surrender of the Certificate, if earlier. The fee reimburses certain costs in
administering the Certificates and the Separate Account; the Company does not
intend to realize a profit from this fee.
ANNUITANT - The person on whose life an annuity is purchased.
ANNUITY - An Annuity is a contract with an insurance company in which an
individual deposits a sum of money (premium) and the insurer guarantees to make
periodic income payments to that individual for a specified period, or for life.
ANNUITY COMMENCEMENT DATE - The date on which the Certificate Owner's selected
Annuity Option, to receive regular annuity payments, becomes effective.
ANNUITY PERIOD - The period during which the Certificate Owner receives
scheduled income payments according to the annuity option the Certificate Owner
selected.
ANNUITY UNIT - A unit of measure used to calculate the value of annuity payments
under the variable annuity option.
BENEFICIARY - The person entitled to receive benefits according to the terms of
the Contract in case of the death of a Certificate Owner or Annuitant, as
applicable.
BUSINESS DAY - Every day the New York Stock Exchange is open for trading. The
end of the Business Day is the close of the New York Stock Exchange. The New
York Stock Exchange normally closes at 4:00 p.m. Eastern time.
CERTIFICATE - The Certificate Owner's policy. The Certificate is issued by the
Company to the Certificate Owner. It is evidence that the Certificate Owner, or
someone on behalf of the Certificate Owner, made a premium payment under this
Contract.
CERTIFICATE ANNIVERSARY - An anniversary of the Certificate Date. Similarly,
Certificate Years are measured
6
<PAGE>
from the Certificate Date. The Certificate Date is shown on the Certificate in
the Certificate Specifications section.
CERTIFICATE DATE - The effective date of the Certificate (the date on which the
Certificate Owner's annuity takes effect).
CERTIFICATE OWNER - The owner(s) of the Certificate.
CERTIFICATE VALUE - The value of the Sub-Account(s) plus the value of the Fixed
Account on any Business Day.
CERTIFICATE YEAR - Each 12-month period starting on the Certificate Date and
ending the day before Certificate Anniversary.
COMPANY - American Maturity Life Insurance Company, sometimes referred to as
"the Company."
CONTINGENT ANNUITANT - The person designated by the Certificate Owner who, upon
the Annuitant's death prior to the Annuity Commencement Date, becomes the
Annuitant.
CONTINGENT DEFERRED SALES CHARGE ("CDSC") - A surrender charge that may be
deducted from the Certificate Owner's Certificate Value if a withdrawal is made
from the Certificate within a certain number of years. See "Contingent
Deferred Sales Charge" under the Surrender Provisions of the Certificate
(Section 6, Page 17).
CONTRACT OWNER - The AARP Group Annuity Trust.
DUE PROOF OF DEATH - A certified copy of the death certificate, an order of a
court of competent jurisdiction, a statement from a physician who attended the
deceased, or any other proof acceptable to the Company.
ENROLLMENT FORM - The form the Certificate Owner completes in order to purchase
the Certificate.
FIXED ACCOUNT - An investment option that earns a rate of interest of at least
3% per annum. Amounts invested in the Fixed Account become part of the
Company's General Account.
FUND(S) - Currently the Funds listed on the Contract Specifications page, or any
other Fund(s) that the Company may add from time to time.
GENERAL ACCOUNT - All assets of the Company other than those allocated to the
Separate Accounts of the Company.
GROSS SURRENDER VALUE - The Certificate Value (dollar amount) that is deducted
from the Certificate when the Certificate Owner makes a full or partial
surrender.
MORTALITY AND EXPENSE RISK CHARGE - A dollar amount that the Company deducts
from the Sub-Accounts to cover administrative expenses and mortality risks.
This charge is an annual percentage and is shown on the Contract Specifications
Page.
NET INVESTMENT FACTOR - A factor used to determine the value of Accumulation
Units or Annuity Units each day.
NET SURRENDER VALUE - The amount payable to the Certificate Owner on a
surrender after the deduction for any unpaid Taxes and any Contingent Deferred
Sales Charge. If the Certificate Owner fully surrenders the Certificate the
Annual Fee is also deducted.
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SEPARATE ACCOUNT ("SEPARATE ACCOUNT AMLVA") - An account established by the
Company to separate the assets funding the variable benefits for the class of
contracts to which the Certificate belongs from the other assets of the Company.
The assets in the Separate Account are not chargeable with liabilities arising
out of any other business the Company may conduct. The Separate Account and
the Funds, which are the underlying securities of the Separate Account, are
listed on the Contract Specifications of this Contract.
SUB-ACCOUNT - The subdivisions of the Separate Account. The Certificate Owner
purchases units of the Sub-Accounts to participate in the investment experience
of the underlying Funds.
SURRENDER - A full or partial withdrawal from the Certificate.
TAXES - The amount of tax, if any, charged by a federal, state or municipal
entity on premium payments or Certificate Values.
TOTAL DISABILITY - Totally Disabled means a disability that: (1) results from
bodily injury or disease; (2) begins while the Certificate is in force; (3) has
existed continuously for at least 12 months; and (4) prevents the Certificate
Owner from engaging in the substantial and material duties of the Certificate
Owner's regular occupation.
3. PREMIUM PAYMENTS
PREMIUM PAYMENTS
Premium payments may be accepted at the Administrative Office of the Company.
Payments are made by check
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payable to American Maturity Life Insurance Company or by any other method that
the Company may deem acceptable. The initial premium payment, and the minimum
subsequent payment that the Company may accept, are shown in the Contract
Specifications. The Company reserves the right to limit the amount of a premium
payment.
ALLOCATION OF PREMIUM PAYMENTS
The initial premium payment is allocated to those Sub-Accounts and/or Fixed
Account the Certificate Owner selected on his Enrollment Form. The same
allocations are made for subsequent premium payments unless otherwise directed
by the Certificate Owner. Any allocation to a Sub-Account or Fixed Account must
be at least equal to the Company's minimum amount rules then in effect.
Certain laws in some states require a full return of premium upon the exercise
of the Right to Examine (shown on the front page of the Certificate). For
Certificates sold in those states, the Company will allocate premium payments to
the Money Market Sub-Account for the period during which the Right to Examine
may be exercised according to state law.
PREMIUM TAXES AND OTHER TAXES
A deduction is made for premium taxes or other taxes ("Taxes") which are imposed
by some states or other governmental entities. The Company will determine when
taxes have resulted from the receipt of premium payments, the commencement of
annuity payments, or the investment experience of the Separate Account. The
Company may, at its discretion, pay taxes when due and deduct that amount from
the Certificate Value at a later date. Payment at a earlier date does not waive
any right that the Company may have to deduct amounts at a later date. The
Company reserves the right to establish a provision for federal income taxes if
it determines, in its sole discretion, that it will incur a tax as a result of
the operation of the Separate Account.
4. VALUATION PROVISIONS
THE FIXED ACCOUNT
If the Certificate Owner allocates any premium payments to the Fixed Account,
the Fixed Account will earn interest at no less than a 3% annual effective rate.
The Company, in its sole discretion, may credit interest rates greater than 3%.
The Company will determine the value of the Fixed Account daily by crediting
interest to the
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Fixed Account.
THE SUB-ACCOUNTS
The available Sub-Accounts and their underlying investments are listed in the
Contract Specifications. The Certificate Owner may allocate premium payments to
one or more Sub-Accounts. Any premium payment allocated to a Sub-Account is
applied to provide for a number of Accumulation Units with respect to that
Sub-Account.
ACCUMULATION UNITS
The number of Accumulation Units credited to each Sub-Account is determined by
dividing the premium payment allocated to a Sub-Account by the dollar value of
one Accumulation Unit for such Sub-Account, next computed after the receipt of a
premium payment by the Company. The number of Accumulation Units so determined
will not be affected by any subsequent change in the value of such Accumulation
Units. The Accumulation Unit value in any Sub-Account may increase or decrease
from day to day as described below.
NET INVESTMENT FACTOR
The net investment factor for each of the Sub-Accounts is equal to the net asset
value per share of the corresponding Fund at the end of the valuation period
(plus the per share amount of any unpaid dividends or capital gains by the Fund)
divided by the net asset value per share of the corresponding Fund at the
beginning of the valuation period and subtracting from that amount the Mortality
and Expense Risk Charge and the Administration Charge shown in the Contract
Specifications.
ACCUMULATION UNIT VALUE
The Accumulation Unit Value for each Sub-Account will vary to reflect the
investment experience of the applicable Fund. The Accumulation Unit Value is
determined on each Business Day by multiplying the Accumulation Unit Value of
the particular Sub-Account on the preceding Business Day by the net investment
factor for that Sub-Account for the valuation period then ended. The value of
the Sub-Account on each Business Day is then calculated by multiplying the
number of Accumulation Units in that Sub-Account by the Accumulation Unit Value
on that Business Day.
5. TRANSFERS
TRANSFERS AMONG THE SUB-ACCOUNTS AND/OR FIXED ACCOUNT
At any time before the Annuity Commencement Date, the Certificate Owner may
transfer values among the Sub-Accounts and/or the Fixed Account.
After a transfer, if the remaining value of any Sub-Account or Fixed Account is
less than $500, the Company
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reserves the right to transfer the entire remaining balance. The Company
reserves the right to defer transfers from the Fixed Account for up to six
months from the date of request.
After the Annuity Commencement Date, the Certificate Owner may elect in writing
to transfer values among the Sub-Accounts once every three (3) months.
ALL TRANSFERS
The Company reserves the right to limit the number of transfers to twelve (12)
per Certificate Year, with no two (2) transfers occuring on consecutive business
days. The Company reserves the right to limit the size, number, and frequency
of transfers. Further, the Company may restrict or suspend transfers. The
Company may reject any transfer request, or the Company may impose a fee of up
to $15 for any unscheduled transfer in excess of 12 transfers in any Certificate
Year. The Company reserves the right to accept transfer instructions solely
from the Certificate Owner and not from a representative, agent or person acting
under a power of attorney for the Certificate Owner.
6. ANNUAL FEES AND DEDUCTIONS
ANNUAL FEE
Before the Annuity Commencement Date, each year an Annual Fee is deducted from
the Certificate. The Annual Fee is deducted on each Certificate Anniversary, or
on the date of surrender of the Certificate, if earlier. The Annual Fee is
deducted from the Certificate Value by reducing each Sub-Account and Fixed
Account pro-rata according to the value in each on that day.
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The Fixed Account will be reduced by the pro-rata dollar amount. The
Sub-Accounts will be reduced by a number of Accumulation Units. The number of
Accumulation Units deducted from the Sub-Account is determined by dividing the
pro-rata portion of the Annual Fee applicable to that Sub-Account, by the value
of an Accumulation Unit for the Sub-Account on the date the Annual Fee is
deducted.
SEPARATE ACCOUNT CHARGES
Each Business Day, a charge is deducted from each Sub-Account equal to the
Mortality and Expense Risk Charge and the Administration Charge shown in the
Contract Specifications.
7. CONTROL PROVISIONS
ANNUITANT, CONTINGENT ANNUITANT AND CERTIFICATE OWNER(S)
The Annuitant may not be changed.
The designations of Certificate Owner and Contingent Annuitant will remain in
effect until changed by the Certificate Owner. Changes in the designation of
the Certificate Owner may be made during the lifetime of the Annuitant by
written notice to the Company. Changes in the designation of Contingent
Annuitant may be made at any time prior to the Annuity Commencement Date by
written notice to the Company. Notwithstanding the
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foregoing, if no Contingent Annuitant has been named and the Certificate
Owner/Annuitant's spouse is the Beneficiary, it will be assumed that the
Certificate Owner/Annuitant's spouse is the Contingent Annuitant. A Certificate
Owner who is a non-natural person may not designate a Contingent Annuitant.
The Certificate Owner has the sole power to exercise all the rights, options and
privileges granted by the Certificate or permitted by the Company and to agree
with the Company to any change in or amendment to the Certificate. The rights
of the Certificate Owner shall be subject to the rights of any assignee of
record with the Company and of any irrevocably designated Beneficiary. In the
case of joint Certificate Owners, each Certificate Owner alone may exercise all
rights, options and privileges, except with respect to the Surrender Provisions
and change of ownership or Beneficiary. If the Certificate Owner dies on or
after the Annuity Commencement Date, then the Joint Certificate Owner, or if
none, the Annuitant, becomes the Certificate Owner.
BENEFICIARY
The Designated Beneficiary will remain in effect until changed by the
Certificate Owner. Changes in the Designated Beneficiary may be made during the
lifetime of the Annuitant by written notice to the Administrative Office of the
Company. If the Designated Beneficiary has been designated irrevocably,
however, such designation cannot be changed or revoked without such
Beneficiary's written consent. Upon receipt of such notice and written consent,
if required, at the Administrative Office of the Company, the new designation
will take effect as of the date the notice is signed, whether or not the
Annuitant or Certificate Owner is alive at the time of receipt of such notice.
The change will be subject to any payment made or other action taken by the
Company before the receipt of the notice.
In the event of the death of the Annuitant when there is no surviving Contingent
Annuitant, the Beneficiary shall be the surviving Certificate Owner, or joint
Certificate Owners, if applicable, notwithstanding that the Designated
Beneficiary may be different. Otherwise, the Beneficiary will be the Designated
Beneficiary then in effect. If the Annuitant is the sole Certificate Owner and
there is no Designated Beneficiary in effect, the Annuitant's estate will be the
Beneficiary.
In the event of the death of a Certificate Owner prior to the Annuity
Commencement Date, the Beneficiary will be as follows. Upon the death of the
joint Certificate Owner, the Beneficiary will be the surviving joint Certificate
Owner, notwithstanding that the designated Beneficiary may be different. If the
Certificate Owner was the sole Certificate Owner, the Beneficiary shall be the
Designated Beneficiary then in effect. If no Beneficiary designation is in
effect or if the Designated Beneficiary has died prior to the death of the
Certificate owner, the Certificate Owner's estate shall be the Beneficiary.
8. GENERAL PROVISIONS
THE CONTRACT
This Contract and the Application constitute the entire Contract.
MODIFICATION
The Contract or the Certificates cannot be modified except over the signature of
the President, a Vice President, a Secretary or an Assistant Secretary of the
Company.
The Company reserves the right to modify the Contract and Certificates, but only
if such modification: (i) is necessary to make the Contract and Certificates or
the Separate Account comply with any law or regulation issued
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by a governmental agency to which the Company is subject; (ii) is necessary to
assure continued qualification of the Contract and Certificates under the
Internal Revenue Code or other federal or state laws relating to retirement
annuities or annuity contracts; (iii) is necessary to reflect a change in the
operation of the Separate Account or the Sub-Account(s); (iv) provides
additional Sub-Account or Fixed Account options; or (v) withdraws Sub-Account or
Fixed Account options. In the event of any such modification, the Company will
provide notice to the Contract Owner and Certificate Owner, or to the
Annuitant(s) during the annuity period. The Company may also make appropriate
endorsements to the Contract and Certificate to reflect such modification.
MINIMUM VALUE STATEMENT
Any Net Surrender Values, death benefits or settlement provisions available
under the Certificate equal or exceed those required by the state in which the
Certificate is delivered.
NON-PARTICIPATION
This Contract and the Certificates do not share in the surplus earnings of the
Company. That portion of the assets of the Separate Account equal to the
reserves and other contract liabilities of the Separate Account shall not be
chargeable with liabilities arising out of any other business the Company may
conduct.
MISSTATEMENT OF AGE AND SEX
All statements made by the Certificate Owner are deemed to be true and complete
to the best of his/her knowledge and belief.
If the age and/or sex of the Annuitant and/or Certificate Owner is incorrectly
stated, death benefits or annuity payments will be adjusted to the payment which
would have been provided at the correct age and sex. The payments will be
adjusted for any overpayments or underpayments that may have been made. The
adjusted annuity payment or death benefit will include interest of 3% per annum
in the event of an underpayment or will deduct interest of 3% per annum in the
event of an overpayment.
PROTECTION OF PROCEEDS
To the extent permitted by law, no values under the Certificate will be subject
to the debts, contracts, or engagements of any Beneficiary, and all such values
shall be free from legal process and the claims of any creditors.
REPORTS TO THE CERTIFICATE OWNER
The Certificate Owner shall receive copies of any shareholder reports of the
Funds and of any other notices, reports or documents required by law to be
delivered to Certificate Owners. The Company will also deliver to the
Certificate Owner, at least quarterly, a statement showing the Certificate
Value.
VOTING RIGHTS
The Company shall notify the Certificate Owner of any Fund shareholder's
meetings at which the shares held for the Certificate Owner Sub-Account may be
voted. The Company shall also send the Certificate Owner proxy
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materials and a form of instruction so that the Certificate Owner can instruct
the Company how to vote the shares held for the Certificate Owner's Sub-Account.
The Company shall arrange for the handling and tallying of proxies received from
Certificate Owners. The Company will vote the Fund shares in accordance with
the instructions received from the Certificate Owners having the right to give
voting instructions. If the Certificate Owner desires to attend any meeting
which shares held for the Certificate Owner's benefit may be voted, the
Certificate Owner may request the Company to furnish a proxy or otherwise
arrange for the exercise of voting rights with respect to the Fund shares held
for such Certificate Owner's Sub-Account.
In the event that the Certificate Owner gives no instructions or leaves the
manner of voting discretionary, the Company will vote such shares of the
appropriate Fund in the same proportion as shares of that Fund for which
instructions have been received. Also, the Company will vote the Fund shares in
this proportionate manner which are held by the Company for its own Sub-Account.
During the annuity period under a Certificate the number of votes will decrease
as the assets held to fund annuity benefits decrease.
SUBSTITUTION
The Company reserves the right to substitute the shares of any other registered
Investment Company for the shares of any Fund already purchased or to be
purchased in the future by the Separate Account provided that the substitution
has been approved by the Securities and Exchange Commission. The Company also
may limit further purchases of such shares.
CHANGE IN THE OPERATION OF THE SEPARATE ACCOUNT
At the Company election and subject to any necessary vote by persons having the
right to give instructions with respect to the voting of the Fund shares held by
the Sub-Accounts, the Separate Account may be operated as a management company
under the Investment Company Act of 1940 or it may be deregistered under the
Investment Company Act of 1940 in the event registration is no longer required.
Deregistration of the Separate Account requires an order by the Securities and
Exchange Commission.
PROOF OF SURVIVAL
The payment of any annuity benefit will be subject to evidence that the
Annuitant is alive on the date such payment is otherwise due.
9. SURRENDER PROVISIONS
FULL SURRENDER
Beginning 30 days after the Certificate Date, at any time prior to the Annuity
Commencement Date, the Certificate Owner has the right to terminate the
Certificate by submitting a written request to the Administrative Office . In
such event, the Certificate Owner will be entitled to the Net Surrender Value of
the Certificate.
On any Business Day, the Gross Surrender Value of the Certificate for a full
surrender equals the Certificate Value. The Net Surrender Value of the
Certificate is equal to the Gross Surrender Value minus:
(a) any applicable Taxes not previously deducted;
(b) the Annual Fee as specified in the Contract Specifications (for full, not
partial, surrenders); and
(c) any applicable Contingent Deferred Sales Charge as specified in the
Contract Specifications.
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PARTIAL SURRENDERS
Beginning 30 days after the Certificate date, and before the Annuity
Commencement Date, the Certificate Owner may partially surrender Certificate
Values and receive a Net Surrender Value.
Any partial surrender request must be in writing. If the Certificate Owner does
not specify which Sub-Account(s) or Fixed Account from which the partial
surrender is to be taken, the surrender will be effected on a pro rata basis
according to the value in each Sub-Account or Fixed Account.
For any partial surrender, the Certificate Values remaining after the surrender
must be at least equal to the Company's minimum amount rules then in effect. If
the remaining Certificate Value following such surrender is less than the
Company's minimum amount rules, the Certificate will be terminated and the
Company will pay the Net Surrender Value as if it were a full surrender.
The Company reserves the right to deduct a partial surrender fee of up to $15
per partial surrender in excess of 12 partial surrenders during any Certificate
Year. The fee would be deducted on a pro-rata basis from Certificate Values
held in the Sub-Accounts and Fixed Account immediately after the partial
surrender.
CONTINGENT DEFERRED SALES CHARGES "CDSC"
Unless specified otherwise, a Contingent Deferred Sales Charge ("charge") is
assessed against any premium payments surrendered before the end of the charge
period shown in the Contingent Deferred Sales Charge Schedule in the Contract
Specifications. In the Schedule, the length of time from the Certificate Date
to the time of surrender determines the charge. The charge is a percentage of
the Gross Surrender Value attributable to premium payments. For this purpose,
premium payments will be deemed to be surrendered before any other Certificate
Values. When the total Gross Surrender Value equals all premium payments, a
Contingent Deferred Sales Charge will not be assessed against the surrender of
the remaining Certificate Value.
The Company will not assess a Contingent Deferred Sales Charge against
withdrawals that qualify for the Annual Withdrawal Amount shown in the Contract
Specifications. Withdrawals of values in excess of the Annual Withdrawal
Amount will be subject to Contingent Deferred Sales Charges, according to the
Contingent Deferred Sales Charge Schedule, if applicable.
No Contingent Deferred Sales Charges will be assessed against Certificate
Values:
- - applied to an Annuity Option (see Section 10, Page 23);
- - equal to the Annual Withdrawal Amount described in the Certificate
Specifications;
- - surrendered to meet the minimum distribution rules under the Internal
Revenue Code as they apply to amounts held under the Certificate ( see
Section 9, Page18 );
- - surrendered while the Certificate Owner is confined to a nursing home( see
Section 9, Page 18)
- - surrendered while the Certificate Owner is under age 65 and is totally
disabled at the time of the surrender request( see Section 9, Page 18);
- - surrendered when there is medical evidence that the life expectancy of the
Certificate Owner is less than twelve months ( see Section 9, Page 18)
- - if the Certificate terminates due to the death of the Certificate Owner or
Annuitant, as applicable;
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SURRENDERS NOT SUBJECT TO CONTINGENT DEFERRED SALES CHARGES
NURSING HOME CONFINEMENT: No Contingent Deferred Sales Charge is assessed upon
surrenders that occur during the Certificate Owner's confinement in a facility
certified as a nursing home. Such confinement must (1) have been continuous for
at least 90 days before the surrender request; (2) must be at the recommendation
of a U.S. licensed physician; (3) must be for medically necessary reasons and;
(4) must be confined at the time of the surrender request.
DISABILITY: No Contingent Deferred Sales Charge is assessed upon surrenders
that occur when the Certificate Owner is under age 65 and Totally Disabled. The
Certificate Owner must provide written proof, satisfactory to the Company, that
the Certificate Owner is Totally Disabled. Totally Disabled means a disability
that: (1) results from bodily injury or disease; (2) begins while the
Certificate is in force; (3) has existed continuously for at least 12 months;
and (4) prevents the Certificate Owner from engaging in the substantial and
material duties of the Certificate Owner's regular occupation. During the first
12 months of Total Disability, regular occupation means the Certificate Owner's
usual full time (at least 30 hours per week) work when Total Disability begins.
The Company reserves the right to require reasonable proof of such work. After
the first 12 months of Total Disability, regular occupation means that for which
the Certificate Owner is reasonably qualified by education, training or
experience.
TERMINAL ILLNESS: No Contingent Deferred Sales Charge is assessed upon
surrenders that occur when the Certificate Owner has been diagnosed by a U.S.
licensed physician with a medical condition that results in a life expectancy of
less than twelve months. The Certificate Owner must provide written proof,
satisfactory to the Company, that the Certificate Owner has been diagnosed with
a medical determinable condition that results in a life expectancy of less than
twelve months.
IRS MINIMUM DISTRIBUTIONS: No Contingent Deferred Sales Charge is assessed
against surrenders necessary to meet the minimum distribution requirements set
forth in Section 401(a) of the Internal Revenue Code as such requirements apply
to amounts held under the Certificate. The Certificate Owner must indicate on
his written request for surrender that the surrender is a required minimum
distribution.
TERMINATION AFTER THE ANNUITY COMMENCEMENT DATE
The Certificate Owner may not surrender the Certificate for its Net Surrender
Value after the Annuity Commencement Date.
PAYMENT ON SURRENDER - DEFERRAL OF PAYMENT
Payment on any request for surrender will be made as soon as possible and, with
respect to the Certificate Values in the Sub-Accounts, no later than seven days
after the written request is received by the Company. However, such payment may
be subject to postponement:
(a) for any period during which the New York Stock Exchange is closed or during
which trading on the New York Stock Exchange is restricted;
(b) for any period during which an emergency exists as a result of which (i)
disposal of the securities held in the Sub-Accounts is not reasonably
practicable, or (ii) it is not reasonably practicable for the value of the
net assets of the Separate Account to be fairly determined; and
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(c) for such other periods as the Securities and Exchange Commission may, by
order, permit for the protection of the Certificate Owners. The conditions
under which trading shall be deemed to be restricted or any emergency shall
be deemed to exist shall be determined by rules and regulations of the
Securities and Exchange Commission.
The Company may defer payment of any amounts from the Fixed Account for up to
six months from the date of the request to surrender. If the Company defer
payment for more than 30 days, the Company will pay interest of at least 3% per
year on the amount deferred, calculated as of the date of receipt of the
request.
DEATH BENEFIT
A Death Benefit will be paid if the Annuitant dies prior to the Annuity
Commencement Date and there is no designated Contingent Annuitant surviving, or
if any Certificate Owner dies prior to the Annuity Commencement Date. The Death
Benefit will be payable to the Beneficiary as determined under the Control
Provisions of this Contract.
The Death Benefit is equal to the greater of: (a) total Purchase Payments less
any prior Gross Surrenders and Withdrawals since the Certificate Date or (b) the
Certificate Value. The Death Benefit shall be calculated as of the end of the
valuation period during which the Company receives Due Proof of Death.
The Death Benefit may be taken in a lump sum or under any of the settlement
options then being offered by the Company, subject, however to the Required
Distribution provisions below. When payment of the Death Benefit is taken in
one lump sum, payment will be made within 7 days after the date Due Proof of
Death is received, except when the Company is permitted to defer such payment
under the Investment Company Act of 1940. Payment to the Beneficiary, other
than in a lump sum, may only be elected during the sixty-day period beginning
with the date of receipt of Due Proof of Death.
DEATH OF ANNUITANT AFTER ANNUITY COMMENCEMENT DATE
In the event of the death of the Annuitant after the Annuity Commencement Date,
a Death Benefit, equal to the present value of any remaining payments under the
annuity option chosen, will be paid in one sum to the Beneficiary unless other
provisions shall have been made and approved by the Company.
If the Annuitant dies after the Annuity Commencement Date but before the Company
issues the payee's first check, the Beneficiary will be entitled to the Net
Surrender Value applied to the Annuity Option, without assessment of the
Contingent Deferred Sales Charge or Annual Fee.
REQUIRED DISTRIBUTIONS
A. DEATH OF OWNER OR PRIMARY ANNUITANT
Subject to the alternative election or spouse beneficiary provisions in
subsection B or C below, and to the tax qualification provision in subsection D
below:
1. If any Certificate Owner dies on or after the Annuity Commencement Date and
before the entire interest in this Certificate has been distributed, the
remaining portion of such interest shall be distributed at least as
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rapidly as under the method of distribution being used as of the date of
such death.
2. If any Certificate Owner dies before the Annuity Commencement Date, the
entire interest in this Certificate will be distributed within 5 years
after such death.
3. If the Certificate Owner is not an individual, then for purposes of the
immediately preceding paragraph 1 or 2, the primary annuitant under this
Certificate shall be treated as the Certificate Owner for purposes of these
Required Distributions only, and any change in the primary annuitant shall
be treated as the death of the Certificate Owner. The primary annuitant is
the individual, the events in the life of whom are of primary importance in
affecting the timing or amount of the payout under the Certificate.
B. ALTERNATIVE ELECTION TO SATISFY DISTRIBUTION REQUIREMENTS
If any portion of the interest of a Certificate Owner described in subsection A
immediately above is payable to or for the benefit of a designated beneficiary,
and such beneficiary elects within a period of less than one year after such to
have such portion distributed over a period that: (1) does not extend beyond
such beneficiary's life (or life expectancy) and (2) starts within 1 year after
such death, for purposes of satisfying the requirements of paragraph A.1 or A.2
immediately above, such portion shall be treated as distributed entirely on the
date such periodic distributions begin. Such beneficiary may elect any
settlement option allowed by the Company, subject to any restrictions imposed by
any regulations under Section 72(s) of the Internal Revenue Code.
C. SPOUSE BENEFICIARY
In the event of the Certificate Owner's death where the sole Beneficiary is the
spouse of the Certificate Owner and the Annuitant or Contingent Annuitant is
living, such spouse may elect, in lieu of receiving the Death Benefit, to be
treated as the Certificate Owner for purposes of subsection A. Only one such
spousal election may be made with respect to any Certificate.
D. TAX QUALIFICATION
The Contract (and any Certificate thereunder) is intended to qualify as an
annuity contract for Federal income tax purposes. To that end, the provisions
of this Contact (and any such Certificate) are to be interpreted to ensure or
maintain such tax qualification, notwithstanding any other provisions to the
contrary. Payments and distributions under this Contract shall be made in a
timely manner necessary to maintain such qualification under the applicable
provisions in the Internal Revenue Code in existence at the time this Contract
is issued. Notwithstanding any other provisions to the contrary, the Company
reserves the right to amend this Contract and Certificate to reflect any
clarifications that may be needed or are appropriate to maintain such tax
qualification or to conform this Contract or Certificate to any applicable
changes in the tax qualification requirements. The Company will send the
Certificate Owner a copy of any such amendment.
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10. ANNUITY BENEFITS
ANNUITY COMMENCEMENT DATE
The Certificate Owner may select an Annuity Commencement Date. The Annuity
Commencement Date selected must be at least one year after the Certificate Date
and on or before the Annuitant's attained age 90, except in certain states where
an earlier age is required. If the Certificate Owner does not choose an Annuity
Commencement Date, the scheduled Annuity Commencement Date will be the date of
the Annuitant's attained age 90, or an earlier age if required by state law. The
Certificate Owner may change the Annuity Commencement Date if the Certificate
Owner notifies the Company in writing 30 days before the scheduled Annuity
Commencement Date.
ANNUITY BENEFIT
On the Annuity Commencement Date, unless directed otherwise, the Company will
apply the Net Surrender Value to purchase monthly income payments payable to the
Annuitant according to the Annuity Option the Certificate Owner elects. The
Contingent Deferred Sales Charge will not be assessed. The Certificate Owner
may not surrender the Certificate after the Annuity Commencement Date.
ELECTION OF ANNUITY OPTION
The Certificate Owner may elect any one of the annuity options described below
or under any of the settlement
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options offered by the Company at that time. In the absence of the Certificate
Owner's election, the Net Surrender Value, without deduction for any Contingent
Deferred Sales Charge, will be applied on the Annuity Commencement Date under
the Fifth Option to provide a Payment for a Designated Period for 5 years. The
Net Surrender Value is determined on the basis of the value of the Fixed Account
as of the Annuity Commencement Date, and of the Accumulation Unit Value of each
Sub-Account no later than the fifth Business Day preceding the date annuity
payments are to commence.
DATE OF PAYMENT
The first annuity payment under the Annuity Option shall be made one month, (or
the period selected for periodic payments: annual, semi-annual, quarterly, or
monthly), following the Annuity Commencement Date. Subsequent payments shall be
made on the same calendar day of the month as was the first payment, or the
preceding day if no such day exists (e.g. September 31), in accordance with the
payment period selected.
ALLOCATION OF ANNUITY
The Certificate Owner may further elect to have the Net Surrender Value applied
to a variable annuity, a fixed dollar annuity or a combination of both. Once
every 3 months, following the Annuity Commencement Date, the Certificate Owner
may elect, in writing, to transfer among any Sub-Account(s) on which variable
annuity payments are based. No transfers may be made between the Sub-Accounts
and the General Account after the Annuity Commencement Date.
If no election is made to the contrary, the value of each Sub-Account shall be
applied to provide a variable annuity based thereon, and the value of the Fixed
Account shall be applied to provide a fixed dollar annuity.
VARIABLE ANNUITY AND FIXED DOLLAR ANNUITY
VARIABLE ANNUITY - A variable annuity is an annuity with payments increasing or
decreasing in amount in accordance with the net investment results of the
Sub-Account(s) of the Separate Account (as described in the Valuation
Provisions). After the first monthly payment for a variable annuity has been
determined in accordance with the provisions of this Certificate (see
Description of Tables), a number of Annuity Units is determined by dividing that
first monthly payment by the appropriate Annuity Unit value on the Annuity
Commencement Date.
The value of an Annuity Unit for each Sub-Account of the Separate Account will
vary to reflect the investment experience of the applicable Fund. The Annuity
Unit Value is determined by multiplying the value of the Annuity Unit for that
Sub-Account on the preceding Business Day by the product of (a) the net
investment factor for that Sub-Account for the day for which the Annuity Unit
value is being calculated, and (b) an interest factor to offset the effect of
the asumed interest rate of 5% per year, which is built into the annuity tables.
Once variable annuity payments have begun, the number of Annuity Units remains
fixed with respect to a particular Sub-Account(s). If the Certificate Owner
elects that continuing annuity payments be based on a different Sub-Account(s),
the number will change effective with that election but will remain constant
following such election.
The dollar amount of the second and subsequent variable annuity payments is not
predetermined and may increase or decrease from month to month. The actual
amount of each variable annuity payment after the first is determined by
multiplying the number of Annuity Units by the Annuity Unit Value as described
above. The Annuity Unit Value will be determined no earlier than the fifth
Business Day preceding the date the annuity
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payment is due.
The Company guarantees that the dollar amount of variable annuity payments will
not be adversely affected by variations in the expense results and in the actual
mortality experience of payees from the mortality assumptions, including any age
adjustment, used in determining the first monthly payment.
FIXED DOLLAR ANNUITY - A fixed dollar annuity is an annuity with payments that
remain fixed as to dollar amount throughout the payment period.
ANNUITY OPTIONS
FIRST OPTION - LIFE ANNUITY - An annuity payable monthly during the lifetime of
the Annuitant, ceasing with the last payment due prior to the death of the
Annuitant.
SECOND OPTION - LIFE ANNUITY WITH 120, 180 OR 240 MONTHLY PAYMENTS CERTAIN - An
annuity providing monthly income for a fixed period of 120 months, 180 months,
or 240 months (as selected), and for as long thereafter as the Annuitant shall
live.
THIRD OPTION - CASH REFUND LIFE ANNUITY - An annuity payable monthly during the
lifetime of the Annuitant ceasing with the last payment due prior to the death
of the Annuitant provided that, at the death of the Annuitant, the Beneficiary
will receive an additional payment equal to the excess, if any, of (a) minus (b)
where: (a) is the Net Surrender Value applied on the Annuity Commencement Date
under this option: and (b) is the dollar amount of annuity payments already
paid. This option is not available for variable annuitization.
FOURTH OPTION - JOINT AND LAST SURVIVOR LIFE ANNUITY - An annuity payable
monthly during the joint lifetime of the Annuitant and a secondary Annuitant,
and thereafter during the remaining lifetime of the survivor, ceasing with the
last payment prior to the death of the survivor.
FIFTH OPTION - PAYMENT FOR A DESIGNATED PERIOD - An amount payable monthly for
the number of years selected which may be from 5 to 30 years.
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11. ANNUITY TABLES
The attached tables show the dollar amount of the first monthly payment for the
variable annuity and the minimum dollar amount of the monthly payments for the
fixed annuity for each $1,000 applied under the Annuity Options. Under the
First, Second and Third Options, the amount of each payment will depend upon the
age and sex of the Annuitant at the time of the Annuity Commencement Date.
Under the Fourth Option, the amount of each payment will depend upon the sex of
both Annuitants and their ages at the time the Annuity Commencement Date.
The variable payment annuity tables for the First, Second, and Fourth Options
are based on the 1983a Individual Annuity Mortality Table with ages set back one
year, and an interest rate of 5% per annum. The table for the Fifth Option is
based on an interest rate of 5% per annum.
The fixed annuity payment tables for the First, Second , Third and Fourth
Options are based on the 1983a Individual Annuity Mortality Table with ages set
back one year, and an interest rate of 3% per annum. The table for the Fifth
Option is based on an interest rate of 3% per annum.
Once the Certificate Owner elects an annuity option, the Certificate Owner may
not change it with respect to any Annuitant following the Annuity Commencement
Date.
MINIMUM PAYMENT
No election of any options or combination of options may be made under this
Certificate unless the first payment for each affected Sub-Account or Fixed
Account would be at least equal to the minimum payment amount according to
Company rules then in effect. If at any time, payments to be made to any
Annuitant from each Sub-Account or Fixed Account are or become less than the
minimum payment amount, the Company shall have the right to change the frequency
of payment to
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such intervals as will result in a payment at least equal to the minimum. If
any amount due would be less than the minimum payment amount per annum, the
Company may make such other settlement as may be equitable to the Annuitant.
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GROUP FLEXIBLE PREMIUM VARIABLE
ANNUITY CERTIFICATE
AMERICAN MATURITY LIFE INSURANCE COMPANY
200 Hopmeadow Street
Simsbury, Connecticut 06089
(a stock life insurance company, herein called the "Company", or "We" or "Us")
Certifies that a Group Flexible Premium Variable Annuity Contract has been
issued to the AARP Group Annuity Trust. This Certificate is a summary of Your
rights under that contract.
YOUR RIGHT TO EXAMINE THIS CERTIFICATE:
American Maturity Life Insurance Company wants You to be satisfied with the
Certificate You have purchased. We urge You to examine it carefully. If for any
reason You are not satisfied with it, You may cancel the Certificate by
returning it within ten days after You receive it. A written request for
cancellation must accompany the Certificate. In such event, We will pay You the
Certificate Value as of the date We receive Your request. However, You bear the
investment risk prior to Our receiving Your request.
Signed for the Company
Joseph J. Noto, President Lynda Godkin, Secretary
PREMIUM PAYMENTS ARE FLEXIBLE AS DESCRIBED ON PAGE 8.
NONPARTICIPATING. THIS ANNUITY DOES NOT EARN DIVIDENDS.
ALL PAYMENTS AND VALUES PROVIDED BY THIS CERTIFICATE, WHEN BASED ON INVESTMENT
EXPERIENCE OF A SUB-ACCOUNT, ARE VARIABLE AND ARE NOT GUARANTEED AS TO A FIXED
DOLLAR AMOUNT. DETAILS OF THE VARIABLE PROVISIONS ARE DESCRIBED UNDER THE
VALUATION PROVISIONS, SECTION 4, PAGE 9.
<PAGE>
TABLE OF CONTENTS
SECTION PAGE
1. Certificate Specifications 3
2. Definitions 5
3. Premium Payments 8
4. Valuation Provisions 9
5. Transfers 10
6. Annual Fees and Deductions 10
7. Control Provisions 11
8. General Provisions 12
9. Surrender Provisions 14
10. Annuity Benefits 18
11. Annuity Tables 20
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1. CERTIFICATE SPECIFICATIONS
CERTIFICATE NUMBER: [ ]
CERTIFICATE DATE: [ ]
CERTIFICATE OWNER: [ ]
JOINT CERTIFICATE OWNER: [ ]
ANNUITANT: [ ]
CONTINGENT ANNUITANT: [ ]
AGE OF ANNUITANT: [ ]
SEX OF ANNUITANT: [ ]
BENEFICIARY(IES): [ ]
[ ]
[ ]
ANNUITY COMMENCEMENT DATE: [ ]
INITIAL PREMIUM PAYMENT: [ ]
ANNUAL FEE:
$25 on each Certificate Anniversary before the Annuity Commencement Date, or at
the time of full surrender, if the Certificate Value is less than $50,000 on
either date.
MORTALITY AND EXPENSE RISK CHARGE:
0.65% per annum of the average daily Sub-Account value
ADMINISTRATION CHARGE:
0.20% per annum of the average daily Sub-Account value
MINIMUM SUBSEQUENT PAYMENT:
$ 250 (or $100 if part of an electronic funds transfer program)
CONTINGENT DEFERRED SALES CHARGE SCHEDULE:
See "Contingent Deferred Sales Charge" provisions for a description of the
Contingent Deferred Sales Charge. The Contingent Deferred Sales Charge is a
percentage of the Gross Surrender Value (not to exceed the aggregate amount of
premium payments made) and equals:
CHARGE CERTIFICATE YEAR
5% 1
4% 2
3% 3
2% 4
1% 5
0% 6 and thereafter
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ANNUAL WITHDRAWAL AMOUNT:
A Contingent Deferred Sales Charge is not assessed against any withdrawals made
each Certificate Year, on a non-cumulative basis, of up to 10% of premium
payments remaining in the Certificate as of the last Certificate Anniversary.
FIXED ACCOUNT:
Minimum Fixed Account Rate: [ 3% ]
SEPARATE ACCOUNT:
Separate Account AMLVA
AVAILABLE SUB-ACCOUNTS: BASED ON FUND:
Money Market Portfolio Money Market Portfolio
of the Scudder Variable Life Investment
Fund
Bond Portfolio Bond Portfolio
of the Scudder Variable Life Investment
Fund
Balanced Portfolio Balanced Portfolio
of the Janus Aspen Series
Capital Growth Portfolio Capital Growth Portfolio
of the Scudder Variable Life Investment
Fund
Growth & Income Portfolio Growth & Income Portfolio
of the Scudder Variable Life Investment
Fund
[Partners Portfolio] [Partners Portfolio
of the Neuberger & Berman Advisors
Management Trust]
[Capital Appreciation [Capital Appreciation Portfolio
Portfolio] of the Dreyfus Variable Investment
Fund]
[Small Cap Portfolio] [Small Cap Portfolio
of the Dreyus Variable Investment
Fund]
Worldwide Growth Portfolio Worldwide Growth Portfolio
of the Janus Aspen Series
Or other Sub-Accounts as may be made available from time to time.
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2. DEFINITIONS
ACCUMULATION UNIT - A unit of measure used to calculate the value of a
Sub-Account of a Certificate before the Annuity Commencement Date.
ADMINISTRATION CHARGE - A dollar amount We deduct to cover administrative
expenses. This charge is an annual percentage. It is shown on the Certificate
Specifications Page.
ADMINISTRATIVE OFFICE OF THE COMPANY - Currently located at 700 Newport Center
Drive, Newport Beach, California 92660. All correspondence should be sent to
our mailing address at P.O. Box 7005, Pasadena, CA 91109-7005. Any additional
premium payments should be sent to P.O. Box 100194, Pasadena, CA 91189-0194.
AMLVA - See "Separate Account."
ANNUAL FEE - An amount that is deducted from Your Certificate at the end of each
Certificate Year before the Annuity Commencement Date, or on the date of full
surrender of the Certificate, if earlier. The fee reimburses certain costs in
administering the Certificates and the Separate Account; We do not intend to
realize a profit from this fee.
ANNUITANT - The person on whose life an annuity is purchased.
ANNUITY - An Annuity is a contract with an insurance company in which You
deposit a sum of money(Your premium) and the insurer guarantees to make periodic
income payments to You for a specified period, or for life.
ANNUITY COMMENCEMENT DATE - The date on which Your selected Annuity Option, to
receive regular annuity payments, becomes effective.
ANNUITY PERIOD - The period during which You receive scheduled income payments
according to the annuity option You have selected.
ANNUITY UNIT - A unit of measure used to calculate the value of annuity payments
under the variable annuity option.
BENEFICIARY - The person entitled to receive benefits according to the terms of
the Certificate in case of the death of a Certificate Owner or Annuitant, as
applicable.
BUSINESS DAY - Every day the New York Stock Exchange is open for trading. The
end of the Business Day is the close of the New York Stock Exchange. The New
York Stock Exchange normally closes at 4:00 p.m. Eastern time.
CERTIFICATE - This document, which is Your policy. This Certificate was issued
by Us to You. It is evidence that You, or someone on your behalf, made a
premium payment under the group contract issued by Us to the AARP Group Annuity
Trust.
CERTIFICATE ANNIVERSARY - An anniversary of the Certificate Date. Similarly,
Certificate Years are measured
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from the Certificate Date. The Certificate Date is shown on the Certificate
Specifications.
CERTIFICATE DATE - The effective date of the Certificate (the date on which Your
annuity takes effect).
CERTIFICATE OWNER - The owner(s) of the Certificate, sometimes referred to as
"You."
CERTIFICATE VALUE - The value of the Sub-Account(s) plus the value of the Fixed
Account on any Business Day.
CERTIFICATE YEAR - Each 12-month period starting on the Certificate Date and
ending the day before each Certificate Anniversary.
COMPANY - American Maturity Life Insurance Company, sometimes referred to as
"We" or "Us."
CONTINGENT ANNUITANT - The person designated by You who, upon the Annuitant's
death prior to the Annuity Commencement Date, becomes the Annuitant.
CONTINGENT DEFERRED SALES CHARGE ("CDSC") - A surrender charge that may be
deducted from Your Certificate Value if You make withdrawals from Your
Certificate within a certain number of years. See "Contingent Deferred Sales
Charge" under the Surrender Provisions of this Certificate. (see Section 6, Page
15)
CONTRACT OWNER - The AARP Group Annuity Trust.
DUE PROOF OF DEATH - A certified copy of the death certificate, an order of a
court of competent jurisdiction, a statement from a physician who attended the
deceased, or any other proof acceptable to Us.
ENROLLMENT FORM - The form You completed in order to purchase this Certificate.
FIXED ACCOUNT - An investment option that earns a rate of interest of at least
3% per annum. Amounts invested in the Fixed Account become part of Our General
Account.
FUND(S) - Currently the Funds listed on the Certificate Specifications page, or
any other Fund(s) that We may add from time to time.
GENERAL ACCOUNT - All assets of the Company other than those allocated to the
Separate Accounts of the Company.
GROSS SURRENDER VALUE - The Certificate Value (dollar amount) to be deducted
from Your Certificate when you make a full or partial surrender.
MORTALITY AND EXPENSE RISK CHARGE - A dollar amount we deduct from the
Sub-Accounts to cover administrative expenses and mortality risks. This charge
is an annual percentage and is shown on the Certificate Specifications Page.
NET INVESTMENT FACTOR - A factor used to determine the value of Accumulation
Units or Annuity Units each day.
NET SURRENDER VALUE - The amount payable to You on a surrender after the
deduction for any unpaid Taxes and
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any Contingent Deferred Sales Charge. If You fully surrender Your Certificate
the Annual Fee is also deducted.
SEPARATE ACCOUNT ("SEPARATE ACCOUNT AMLVA") - An account established by Us to
separate the assets funding the variable benefits for the class of contracts to
which this Certificate belongs from the other assets of the Company. The assets
in the Separate Account are not chargeable with liabilities arising out of any
other business We may conduct. The Separate Account and the Funds, which are
the underlying securities of the Separate Account, are listed on the Certificate
Specifications of this Certificate.
SUB-ACCOUNT - The subdivisions of the Separate Account. You purchase units of
the Sub-Accounts to participate in the investment experience of the underlying
Funds.
SURRENDER - A full or partial withdrawal from your Certificate.
TAXES - The amount of tax, if any, charged by a federal, state or municipal
entity on premium payments or Certificate Values.
TOTAL DISABILITY - Totally Disabled means a disability that: (1) results from
bodily injury or disease; (2) begins while the Certificate is in force; (3) has
existed continuously for at least 12 months; and (4) prevents You from engaging
in the substantial and material duties of Your regular occupation.
WE, OUR, US - American Maturity Life Insurance Company.
YOU, YOUR - The Certificate Owner(s).
3. PREMIUM PAYMENTS
PREMIUM PAYMENTS
Premium payments may be accepted at Our Administrative Office. Payments are
made by check payable to American Maturity Life Insurance Company or by any
other method that We deem acceptable. Your initial
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premium payment, and the minimum subsequent payment that We may accept, are
shown in the Certificate Specifications. We reserve the right to limit the
amount of a premium payment.
ALLOCATION OF PREMIUM PAYMENTS
Your initial premium payment is allocated to those Sub-Accounts and/or Fixed
Account You selected on Your Enrollment Form. The same allocations are made for
subsequent premium payments unless otherwise directed by You. Any allocation to
a Sub-Account or Fixed Account must be at least equal to Our minimum amount
rules then in effect.
Certain laws in some states require a full return of premium upon the exercise
of the Right to Examine (shown on the front page of this Certificate). For
Certificates sold in those states, We will allocate premium payments to the
Money Market Sub-Account during this Right to Examine period according to state
law.
PREMIUM TAXES AND OTHER TAXES
A deduction is made for premium taxes or other taxes ("Taxes") which are imposed
by some states or other governmental entities. We will determine when taxes
have resulted from the receipt of premium payments, the commencement of annuity
payments, or the investment experience of the Separate Account. We may, at Our
discretion, pay taxes when due and deduct that amount from the Certificate Value
at a later date. Payment at a earlier date does not waive any right that We may
have to deduct amounts at a later date. We reserve the right to establish a
provision for federal income taxes if the Company determines, in its sole
discretion, that it will incur a tax as a result of the operation of the
Separate Account.
4. VALUATION PROVISIONS
THE FIXED ACCOUNT
If You allocate any premium payments to the Fixed Account, the Fixed Account
will earn interest at no less than a 3% annual effective rate. We , in Our sole
discretion, may credit interest rates greater than 3%. We will
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<PAGE>
determine the value of the Fixed Account daily by crediting interest to the
Fixed Account.
THE SUB-ACCOUNTS
The available Sub-Accounts and their underlying investments are listed in the
Certificate Specifications. You may allocate premium payments to one or more
Sub-Accounts. Any premium payment allocated to a Sub-Account is applied to
provide for a number of Accumulation Units with respect to that Sub-Account.
ACCUMULATION UNITS
The number of Accumulation Units credited to each Sub-Account is determined by
dividing the premium payment allocated to a Sub-Account by the dollar value of
one Accumulation Unit for such Sub-Account, next computed after the receipt of a
premium payment by Us. The number of Accumulation Units so determined will not
be affected by any subsequent change in the value of such Accumulation Units.
The Accumulation Unit value in any Sub-Account may increase or decrease from day
to day as described below.
NET INVESTMENT FACTOR
The net investment factor for each of the Sub-Accounts is equal to the net asset
value per share of the corresponding Fund at the end of the valuation period
(plus the per share amount of any unpaid dividends or capital gains by the Fund)
divided by the net asset value per share of the corresponding Fund at the
beginning of the valuation period and subtracting from that amount the Mortality
and Expense Risk Charge and the Administration Charge shown in the Certificate
Specifications.
ACCUMULATION UNIT VALUE
The Accumulation Unit Value for each Sub-Account will vary to reflect the
investment experience of the applicable Fund. The Accumulation Unit Value is
determined on each Business Day by multiplying the Accumulation Unit Value of
the particular Sub-Account on the preceding Business Day by the net investment
factor for that Sub-Account for the valuation period then ended. The value of
the Sub-Account on each Business Day is then calculated by multiplying the
number of Accumulation Units in that Sub-Account by the Accumulation Unit Value
on that Business Day.
5. TRANSFERS
TRANSFERS AMONG THE SUB-ACCOUNTS AND/OR FIXED ACCOUNT
At any time before the Annuity Commencement Date, You may transfer values among
the Sub-Accounts and/or the Fixed Account.
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After a transfer, if the remaining value of any Sub-Account or Fixed Account is
less than $500, We reserve the right to transfer the entire remaining balance.
We reserve the right to defer transfers from the Fixed Account for up to six
months from the date of request.
After the Annuity Commencement Date, You may elect in writing to transfer values
among the Sub-Accounts once every three (3) months.
ALL TRANSFERS
We reserve the right to limit the number of transfers to twelve (12) per
Certificate Year, with no two (2) transfers occurring on consecutive Business
Days. We reserve the right to limit the size, number, and frequency of
transfers. Further, We may restrict or suspend transfers. We may reject any
transfer request, or We may impose a fee of up to $15 for any unscheduled
transfer in excess of 12 transfers in any Certificate Year. We reserve the
right to accept transfer instructions solely from You and not from Your
representative, agent or person acting under a power of attorney for You.
6. ANNUAL FEES AND DEDUCTIONS
ANNUAL FEE
Before the Annuity Commencement Date, each year an Annual Fee is deducted from
the Certificate. The Annual Fee is deducted on each Certificate Anniversary, or
on the date of surrender of the Certificate, if earlier. The
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Annual Fee is deducted from the Certificate Value by reducing each Sub-Account
and Fixed Account pro-rata according to the value in each on that day.
The Fixed Account will be reduced by the pro-rata dollar amount. The
Sub-Accounts will be reduced by a number of Accumulation Units. The number of
Accumulation Units deducted from the Sub-Account is determined by dividing the
pro-rata portion of the Annual Fee applicable to that Sub-Account, by the value
of an Accumulation Unit for the Sub-Account on the date the Annual Fee is
deducted.
SEPARATE ACCOUNT CHARGES
Each Business Day, a charge is deducted from each Sub-Account equal to the
Mortality and Expense Risk Charge and the Administration Charge shown in the
Certificate Specifications.
7. CONTROL PROVISIONS
ANNUITANT, CONTINGENT ANNUITANT AND CERTIFICATE OWNER(S)
The Annuitant may not be changed.
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The designations of Certificate Owner and Contingent Annuitant will remain in
effect until changed by the Certificate Owner. Changes in the designation of
the Certificate Owner may be made during the lifetime of the Annuitant by
written notice to us. Changes in the designation of Contingent Annuitant may be
made at any time prior to the Annuity Commencement Date by written notice to the
Company. Notwithstanding the foregoing, if no Contingent Annuitant has been
named and the Certificate Owner/Annuitant's spouse is the Beneficiary, it will
be assumed that the Certificate Owner/Annuitant's spouse is the Contingent
Annuitant. A Certificate Owner who is a non-natural person may not designate a
Contingent Annuitant.
The Certificate Owner has the sole power to exercise all the rights, options and
privileges granted by this Certificate or permitted by the Company and to agree
with the Company to any change in or amendment to the Certificate. The rights
of the Certificate Owner shall be subject to the rights of any assignee of
record with the Company and of any irrevocably designated Beneficiary. In the
case of joint Certificate Owners, each Certificate Owner alone may exercise all
rights, options and privileges, except with respect to the Surrender Provisions
and change of ownership or beneficiary. If the Certificate Owner dies on or
after the Annuity Commencement Date, then the Joint Certificate Owner, or if
none, the Annuitant, becomes the Certificate Owner.
BENEFICIARY
The Designated Beneficiary will remain in effect until changed by the
Certificate Owner. Changes in the Designated Beneficiary may be made during the
lifetime of the Annuitant by written notice to the Administrative Office of the
Company. If the Designated Beneficiary has been designated irrevocably,
however, the designation cannot be changed or revoked without such Beneficiary's
written consent. Upon receipt of such notice and written consent, if required,
at the Administrative Office of the Company, the new designation will take
effect as of the date the notice is signed, whether or not the Annuitant or
Certificate Owner is alive at the time of receipt of such notice. The change
will be subject to any payment made or other action taken by the Company before
the receipt of the notice.
In the event of the death of the Annuitant when there is no surviving Contingent
Annuitant, the Beneficiary shall be the surviving Certificate Owner, or joint
Certificate Owners, if applicable, notwithstanding that the Designated
Beneficiary may be different. Otherwise, the Beneficiary will be the Designated
Beneficiary then in effect. If the Annuitant is the sole Certificate Owner and
there is no Designated Beneficiary in effect, the Annuitant's estate will be the
Beneficiary.
In the event of the death of a Certificate Owner prior to the Annuity
Commencement Date, the Beneficiary will be as follows. Upon the death of the
joint Certificate Owner, the Beneficiary will be the surviving joint Certificate
Owner, notwithstanding that the designated Beneficiary may be different. If the
Certificate Owner was the sole Certificate Owner, the Beneficiary shall be the
Designated Beneficiary then in effect. If no Beneficiary designation is in
effect or if the Designated Beneficiary has died prior to the death of the
Certificate owner, the Certificate Owner's estate shall be the Beneficiary.
8. GENERAL PROVISIONS
THE CERTIFICATE
This Certificate is a summary of the group annuity Contract between American
Maturity Life Insurance Company and the AARP Group Annuity Trust. This
Certificate and the Enrollment Form constitute the entire Certificate.
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MODIFICATION
The Contract or the Certificates cannot be modified except over the signature of
the President, a Vice President, a Secretary or an Assistant Secretary of the
Company.
We reserve the right to modify the Contract and Certificates, but only if such
modification: (i) is necessary to make the Contract and Certificates or the
Separate Account comply with any law or regulation issued by a governmental
agency to which the Company is subject; (ii) is necessary to assure continued
qualification of the Contract and Certificates under the Internal Revenue Code
or other federal or state laws relating to retirement annuities or annuity
contracts; (iii) is necessary to reflect a change in the operation of the
Separate Account or the Sub-Account(s); (iv) provides additional Sub-Account or
Fixed Account options; or (v) withdraws Sub-Account or Fixed Account options.
In the event of any such modification, the Company will provide notice to the
Contract Owner and Certificate Owner, or to the Annuitant(s) during the annuity
period. We may also make appropriate endorsements to the Contract and
Certificate to reflect such modification.
MINIMUM VALUE STATEMENT
Any Net Surrender Values, death benefits or settlement provisions available
under the Certificate equal or exceed those required by the state in which the
Certificate is delivered.
NON-PARTICIPATION
This Certificates does not share in our surplus earnings. That portion of the
assets of the Separate Account equal to the reserves and other contract
liabilities of the Separate Account shall not be chargeable with liabilities
arising out of any other business We may conduct.
MISSTATEMENT OF AGE AND SEX
All statements made by You are deemed to be true and complete to the best of
Your knowledge and belief.
If the age and/or sex of the Annuitant and/or Certificate Owner is incorrectly
stated, death benefits or annuity payments will be adjusted to the payment which
would have been provided at the correct age and sex. The payments will be
adjusted for any overpayments or underpayments that may have been made. The
adjusted annuity payment or death benefit will include interest of 3% per annum
in the event of an underpayment or will deduct interest of 3% per annum in the
event of an overpayment.
PROTECTION OF PROCEEDS
To the extent permitted by law, no values under the Certificate will be subject
to the debts, contracts, or engagements of any Beneficiary, and all such values
shall be free from legal process and the claims of any creditors.
REPORTS TO THE CERTIFICATE OWNER
The Certificate Owner shall receive copies of any shareholder reports of the
Funds and of any other notices, reports or documents required by law to be
delivered to Certificate Owners. We will also deliver to You, at least
quarterly, a statement showing the Certificate Value.
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VOTING RIGHTS
We shall notify You of any Fund shareholder's meetings at which the shares held
for the Your Sub-Account may be voted. We shall also send You proxy materials
and a form of instruction so that You can instruct us how to vote the shares
held for Your Sub-Account. We shall arrange for the handling and tallying of
proxies received from Certificate Owners. We will vote the Fund shares in
accordance with the instructions received from the Certificate Owners having the
right to give voting instructions. If You desire to attend any meeting which
shares held for the Certificate Owner's benefit may be voted, You may request
the Company to furnish a proxy or otherwise arrange for the exercise of voting
rights with respect to the Fund shares held for such Certificate Owner's
Sub-Account.
In the event that the Certificate Owner does not give Us instructions or leaves
the manner of voting discretionary, the Company will vote such shares of the
appropriate Fund in the same proportion as shares of that Fund for which
instructions have been received. Also, the Company will vote the Fund shares in
this proportionate manner which are held by the Company for its own Sub-Account.
During the annuity period under a Certificate the number of votes will decrease
as the assets held to fund annuity benefits decrease.
SUBSTITUTION
We reserve the right to substitute the shares of any other registered Investment
Company for the shares of any Fund already purchased or to be purchased in the
future by the Separate Account provided that the substitution has been approved
by the Securities and Exchange Commission. The Company also may limit further
purchases of such shares.
CHANGE IN THE OPERATION OF THE SEPARATE ACCOUNT
At Our election and subject to any necessary vote by persons having the right to
give instructions with respect to the voting of the Fund shares held by the
Sub-Accounts, the Separate Account may be operated as a management company under
the Investment Company Act of 1940 or it may be deregistered under the
Investment Company Act of 1940 in the event registration is no longer required.
Deregistration of the Separate Account requires an order by the Securities and
Exchange Commission.
PROOF OF SURVIVAL
The payment of any annuity benefit will be subject to evidence that the
Annuitant is alive on the date such payment is otherwise due.
9. SURRENDER PROVISIONS
FULL SURRENDER
Beginning 30 days after the Certificate Date, at any time prior to the Annuity
Commencement Date, You have the right to terminate Your Certificate by
submitting a written request to Our Administrative Office . In such event, You
will be entitled to the Net Surrender Value of Your Certificate.
14
<PAGE>
On any Business Day, the Gross Surrender Value of Your Certificate for a full
surrender equals the Certificate Value. The Net Surrender Value of Your
Certificate is equal to the Gross Surrender Value minus:
(a) any applicable Taxes not previously deducted;
(b) the Annual Fee as specified in the Certificate Specifications (for full,
not partial, surrenders); and
(c) any applicable Contingent Deferred Sales Charge as specified in the
Certificate Specifications.
PARTIAL SURRENDERS
Beginning 30 days after the Certificate date, and before the Annuity
Commencement Date, You may partially surrender Certificate Values and receive a
Net Surrender Value.
Any partial surrender request must be in writing. If You do not specify which
Sub-Account(s) or Fixed Account from which the partial surrender is to be taken,
the surrender will be effected on a pro rata basis according to the value in
each Sub-Account or Fixed Account.
For any partial surrender, the Certificate Values remaining after the surrender
must be at least equal to the Company's minimum amount rules then in effect. If
the remaining Certificate Value following such surrender is less than the
Company's minimum amount rules, the Certificate will be terminated and We will
pay the Net Surrender Value as if it were a full surrender.
We reserve the right to deduct a partial surrender fee of up to $15 per partial
surrender in excess of 12 partial surrenders during any Certificate Year. The
fee would be deducted on a pro-rata basis from Certificate Values held in the
Sub-Accounts and Fixed Account immediately after the partial surrender.
CONTINGENT DEFERRED SALES CHARGES "CDSC"
Unless specified otherwise, a Contingent Deferred Sales Charge ("charge") is
assessed against any premium payments surrendered before the end of the charge
period shown in the Contingent Deferred Sales Charge Schedule in the Certificate
Specifications. In the Schedule, the length of time from the Certificate Date
to the time of surrender determines the charge. The charge is a percentage of
the Gross Surrender Value attributable to premium payments. For this purpose,
premium payments will be deemed to be surrendered before any other Certificate
Values. When the total Gross Surrender Value equals all premium payments, a
Contingent Deferred Sales Charge will not be assessed against the surrender of
the remaining Certificate Value.
We will not assess a Contingent Deferred Sales Charge against withdrawals that
qualify for the Annual Withdrawal Amount shown in the Certificate
Specifications. Withdrawals of values in excess of the Annual Withdrawal
Amount will be subject to Contingent Deferred Sales Charges, according to the
Contingent Deferred Sales Charge Schedule, if applicable.
No Contingent Deferred Sales Charges will be assessed against Certificate
Values:
- - applied to an Annuity Option (see Section 10, Page 21)
- - equal to the Annual Withdrawal Amount described in the Certificate
Specifications;
- - surrendered to meet the minimum distribution rules under the Internal
Revenue Code as they apply to
15
<PAGE>
amounts held under the Certificate (see Section 9, Page 16);
- - surrendered while the Certificate Owner is confined to a nursing home (see
Section 9, Page 16);
- - surrendered while the Certificate Owner is under age 65 and is totally
disabled at the time of the surrender request (see Section 9, Page 16);
- - surrendered when there is medical evidence that the life expectancy of the
Certificate Owner is less than twelve months (see Section 9, Page 16);
- - if the Certificate terminates due to the death of the Certificate Owner or
Annuitant, as applicable;
SURRENDERS NOT SUBJECT TO CONTINGENT DEFERRED SALES CHARGES
NURSING HOME CONFINEMENT: No Contingent Deferred Sales Charge is assessed upon
surrenders that occur during Your confinement in a state certified nursing
home. Such confinement must (1) have been continuous for at least 90 days
before the surrender request; (2) must be at the recommendation of a U.S.
licensed physician; (3) must be for medically necessary reasons and; (4) must be
confined at the time of the surrender request.
DISABILITY: No Contingent Deferred Sales Charge is assessed upon surrenders
that occur when You are under age 65 and Totally Disabled. You must provide
written proof, satisfactory to the Company, that You are Totally Disabled.
Totally Disabled means a disability that: (1) results from bodily injury or
disease; (2) begins while the Certificate is in force; (3) has existed
continuously for at least 12 months; and (4) prevents You from engaging in the
substantial and material duties of Your regular occupation. During the first 12
months of Total Disability, regular occupation means Your usual full time (at
least 30 hours per week) work when Total Disability begins. We reserve the
right to require reasonable proof of such work. After the first 12 months of
Total Disability, regular occupation means that for which You are reasonably
qualified by education, training or experience.
TERMINAL ILLNESS: No Contingent Deferred Sales Charge is assessed upon
surrenders that occur when You have been diagnosed by a U.S. licensed physician
with a medical condition that results in a life expectancy of less than twelve
months. You must provide written proof, satisfactory to Us, that You have been
diagnosed with a medical determinable condition that results in a life
expectancy of less than twelve months.
IRS MINIMUM DISTRIBUTIONS: No Contingent Deferred Sales Charge is assessed
against surrenders necessary to meet the minimum distribution requirements set
forth in Section 401(a) of the Internal Revenue Code as such requirements apply
to amounts held under the Certificate. You must indicate on Your written request
for surrender that the surrender is a required minimum distribution.
TERMINATION AFTER THE ANNUITY COMMENCEMENT DATE
You may not surrender the Certificate for its Net Surrender Value after the
Annuity Commencement Date.
PAYMENT ON SURRENDER - DEFERRAL OF PAYMENT
Payment on any request for surrender will be made as soon as possible and, with
respect to the Certificate Values in the Sub-Accounts, no later than seven days
after the written request is received by Us. However, such payment may be
subject to postponement:
(a) for any period during which the New York Stock Exchange is closed or during
which trading on the New York Stock Exchange is restricted;
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<PAGE>
(b) for any period during which an emergency exists as a result of which (i)
disposal of the securities held in the Sub-Accounts is not reasonably
practicable, or (ii) it is not reasonably practicable for the value of the
net assets of the Separate Account to be fairly determined; and
(c) for such other periods as the Securities and Exchange Commission may, by
order, permit for the protection of the Certificate Owners. The conditions
under which trading shall be deemed to be restricted or any emergency shall
be deemed to exist shall be determined by rules and regulations of the
Securities and Exchange Commission.
We may defer payment of any amounts from the Fixed Account for up to six months
from the date of the request to surrender. If We defer payment for more than 30
days, We will pay interest of at least 3% per year on the amount deferred,
calculated as of the date of receipt of the request.
DEATH BENEFIT
A Death Benefit will be paid if the Annuitant dies prior to the Annuity
Commencement Date and there is no designated Contingent Annuitant surviving, or
if any Certificate Owner dies prior to the Annuity Commencement Date. The Death
Benefit will be payable to the Beneficiary as determined under the Control
Provisions of this Certificate.
The Death Benefit is equal to the greater of: (a) total Purchase Payments less
any prior Gross Surrenders and Withdrawals since the Certificate Date or (b) the
Certificate Value. The Death Benefit shall be calculated as of the end of the
valuation period during which the Company receives Due Proof of Death.
The Death Benefit may be taken in a lump sum or under any of the settlement
options then being offered by the Company, subject, however to the Required
Distribution provisions below. When payment of the Death Benefit is taken in
one lump sum, payment will be made within 7 days after the date Due Proof of
Death is received, except when the Company is permitted to defer such payment
under the Investment Company Act of 1940. Payment to the Beneficiary, other
than in a lump sum, may only be elected during the sixty-day period beginning
with the date of receipt of Due Proof of Death.
DEATH OF ANNUITANT AFTER ANNUITY COMMENCEMENT DATE
In the event of the death of the Annuitant after the Annuity Commencement Date,
a Death Benefit, equal to the present value of any remaining payments under the
annuity option chosen, will be paid in one sum to the Beneficiary unless other
provisions shall have been made and approved by the Company.
If the Annuitant dies after the Annuity Commencement Date but before We issue
the payee's first check, the Beneficiary will be entitled to the Net Surrender
Value applied to the Annuity Option, without assessment of the Contingent
Deferred Sales Charge or Annual Fee.
REQUIRED DISTRIBUTIONS
A. DEATH OF OWNER OR PRIMARY ANNUITANT
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Subject to the alternative election or spouse beneficiary provisions in
subsection B or C below, and to the tax qualification provision in subsection D
below:
1. If any Certificate Owner dies on or after the Annuity Commencement Date and
before the entire interest in this Certificate has been distributed, the
remaining portion of such interest shall be distributed at least as rapidly
as under the method of distribution being used as of the date of such
death.
2. If any Certificate Owner dies before the Annuity Commencement Date, the
entire interest in this Certificate will be distributed within 5 years
after such death.
3. If the Certificate Owner is not an individual, then for purposes of the
immediately preceding paragraph 1 or 2, the primary annuitant under this
Certificate shall be treated as the Certificate Owner for purposes of these
Required Distributions only, and any change in the primary annuitant shall
be treated as the death of the Certificate Owner. The primary annuitant is
the individual, the events in the life of whom are of primary importance in
affecting the timing or amount of the payout under the Certificate.
B. ALTERNATIVE ELECTION TO SATISFY DISTRIBUTION REQUIREMENTS
If any portion of the interest of a Certificate Owner described in subsection A
immediately above is payable to or for the benefit of a designated beneficiary,
and such beneficiary elects within a period of less than one year after such to
have such portion distributed over a period that: (1) does not extend beyond
such beneficiary's life (or life expectancy) and (2) starts within 1 year after
such death, for purposes of satisfying the requirements of paragraph A.1 or A.2
immediately above, such portion shall be treated as distributed entirely on the
date such periodic distributions begin. Such beneficiary may elect any
settlement option allowed by the Company, subject to any restrictions imposed by
any regulations under Section 72(s) of the Internal Revenue Code.
C. SPOUSE BENEFICIARY
In the event of the Certificate Owner's death where the sole Beneficiary is the
spouse of the Certificate Owner and the Annuitant or Contingent Annuitant is
living, such spouse may elect, in lieu of receiving the Death Benefit, to be
treated as the Certificate Owner for purposes of subsection A. Only one such
spousal election may be made with respect to any Certificate.
D. TAX QUALIFICATION
The Contract (and any Certificate thereunder) is intended to qualify as an
annuity contract for Federal income tax purposes. To that end, the provisions
of the Contact (and any such Certificate) are to be interpreted to ensure or
maintain such tax qualification, notwithstanding any other provisions to the
contrary. Payments and distributions under this Contract shall be made in a
timely manner necessary to maintain such qualification under the applicable
provisions in the Internal Revenue Code in existence at the time this Contract
is issued. Notwithstanding any other provisions to the contrary, the Company
reserves the right to amend this Contract and Certificate to reflect any
clarifications that may be needed or are appropriate to maintain such tax
qualification or to conform this Contract or Certificate to any applicable
changes in the tax qualification requirements. The Company will send You a copy
of any such amendment.
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10. ANNUITY BENEFITS
ANNUITY COMMENCEMENT DATE
You may select an Annuity Commencement Date. The Annuity Commencement Date
selected must be at least one year after the Certificate Date and on or before
the Annuitant's attained age 90, except in certain states where an earlier age
is required. If You do not choose an Annuity Commencement Date, the scheduled
Annuity Commencement Date will be the date of the Annuitant's attained age 90,
or an earlier age if required by state law. You may change the Annuity
Commencement Date if You notify Us in writing 30 days before the scheduled
Annuity Commencement Date.
ANNUITY BENEFIT
On the Annuity Commencement Date, unless directed otherwise, We will apply the
Net Surrender Value to purchase monthly income payments payable to the Annuitant
according to the Annuity Option You elect. The
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Contingent Deferred Sales Charge will not be assessed. You may not surrender
the Certificate after the Annuity Commencement Date.
ELECTION OF ANNUITY OPTION
You may elect any one of the annuity options described below or under any of the
settlement options offered by Us at that time. In the absence of your election,
the Net Surrender Value, without deduction for any Contingent Deferred Sales
Charge, will be applied on the Annuity Commencement Date under the Fifth Option
to provide a Payment for a Designated Period for 5 years. The Net Surrender
Value is determined on the basis of the value of the Fixed Account as of the
Annuity Commencement Date, and of the Accumulation Unit Value of each
Sub-Account no later than the fifth Business Day preceding the date annuity
payments are to commence.
DATE OF PAYMENT
The first annuity payment under the Annuity Option shall be made one month, (or
the period selected for periodic payments: annual, semi-annual, quarterly, or
monthly), following the Annuity Commencement Date. Subsequent payments shall be
made on the same calendar day of the month as was the first payment, or the
preceding day if no such day exists (e.g. September 31), in accordance with the
payment period selected.
ALLOCATION OF ANNUITY
You may further elect to have the Net Surrender Value applied to a variable
annuity, a fixed dollar annuity or a combination of both. Once every 3 months,
following the Annuity Commencement Date, You may elect, in writing, to transfer
among any Sub-Account(s) on which variable annuity payments are based. No
transfers may be made between the Sub-Accounts and the General Account after the
Annuity Commencement Date.
If no election is made to the contrary, the value of each Sub-Account shall be
applied to provide a variable annuity based thereon, and the value of the Fixed
Account shall be applied to provide a fixed dollar annuity.
VARIABLE ANNUITY AND FIXED DOLLAR ANNUITY
VARIABLE ANNUITY - A variable annuity is an annuity with payments increasing or
decreasing in amount in accordance with the net investment results of the
Sub-Account(s) of the Separate Account (as described in the Valuation
Provisions). After the first monthly payment for a variable annuity has been
determined in accordance with the provisions of this Certificate (see
Description of Tables), a number of Annuity Units is determined by dividing that
first monthly payment by the appropriate Annuity Unit Value on the Annuity
Commencement Date.
The value of an Annuity Unit for each Sub-Account of the Separate Account will
vary to reflect the investment experience of the applicable Fund. The Annuity
Unit Value is determined by multiplying the value of the Annuity Unit for that
Sub-Account on the preceding Business Day by the product of (a) the net
investment factor for that Sub-Account for the day for which the Annuity Unit
Value is being calculated, and (b) an interest factor to offset the effect of
the assumed interest rate of 5% per year, which is built into the annuity
tables.
Once variable annuity payments have begun, the number of Annuity Units remains
fixed with respect to a particular Sub-Account(s). If You elect that continuing
annuity payments be based on a different Sub-Account(s), the number will change
effective with that election but will remain constant following such election.
The dollar amount of the second and subsequent variable annuity payments is not
predetermined and may increase
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or decrease from month to month. The actual amount of each variable annuity
payment after the first is determined by multiplying the number of Annuity Units
by the Annuity Unit Value as described above. The Annuity Unit Value will be
determined no earlier than the fifth Business Day preceding the date the annuity
payment is due.
The Company guarantees that the dollar amount of variable annuity payments will
not be adversely affected by variations in the expense results and in the actual
mortality experience of payees from the mortality assumptions, including any age
adjustment, used in determining the first monthly payment.
FIXED DOLLAR ANNUITY - A fixed dollar annuity is an annuity with payments that
remain fixed as to dollar amount throughout the payment period.
ANNUITY OPTIONS
FIRST OPTION - LIFE ANNUITY - An annuity payable monthly during the lifetime of
the Annuitant, ceasing with the last payment due prior to the death of the
Annuitant.
SECOND OPTION - LIFE ANNUITY WITH 120, 180 OR 240 MONTHLY PAYMENTS CERTAIN - An
annuity providing monthly income for a fixed period of 120 months, 180 months,
or 240 months (as selected), and for as long thereafter as the Annuitant shall
live.
THIRD OPTION - CASH REFUND LIFE ANNUITY - An annuity payable monthly during the
lifetime of the Annuitant ceasing with the last payment due prior to the death
of the Annuitant provided that, at the death of the Annuitant, the Beneficiary
will receive an additional payment equal to the excess, if any, of (a) minus (b)
where: (a) is the Net Surrender Value applied on the Annuity Commencement Date
under this option: and (b) is the dollar amount of annuity payments already
paid. This option is not available for variable annuitization.
FOURTH OPTION - JOINT AND LAST SURVIVOR LIFE ANNUITY - An annuity payable
monthly during the joint lifetime of the Annuitant and a secondary Annuitant,
and thereafter during the remaining lifetime of the survivor, ceasing with the
last payment prior to the death of the survivor.
FIFTH OPTION - PAYMENT FOR A DESIGNATED PERIOD - An amount payable monthly for
the number of years selected which may be from 5 to 30 years.
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11. ANNUITY TABLES
The attached tables show the dollar amount of the first monthly payment for the
variable annuity and the minimum dollar amount of the monthly payments for the
fixed annuity for each $1,000 applied under the Annuity Options. Under the
First, Second and Third Options, the amount of each payment will depend upon the
age and sex of the Annuitant at the time the Annuity Commencement Date. Under
the Fourth Option, the amount of each payment will depend upon the sex of both
Annuitants and their ages at the time the Annuity Commencement Date.
The variable payment annuity tables for the First, Second, and Fourth Options
are based on the 1983a Individual Annuity Mortality Table with ages set back one
year, and an interest rate of 5% per annum. The table for the Fifth Option is
based on an interest rate of 5% per annum.
The fixed annuity payment tables for the First, Second , Third and Fourth
Options are based on the 1983a Individual Annuity Mortality Table with ages set
back one year, and an interest rate of 3% per annum. The table for the Fifth
Option is based on an interest rate of 3% per annum.
Once you elect an annuity option, you may not change it with respect to any
Annuitant following the Annuity Commencement Date.
MINIMUM PAYMENT
No election of any options or combination of options may be made under this
Certificate unless the first payment for each affected Sub-Account or Fixed
Account would be at least equal to the minimum payment amount
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according to Company rules then in effect. If at any time, payments to be made
to any Annuitant from each Sub-Account or Fixed Account are or become less than
the minimum payment amount, the Company shall have the right to change the
frequency of payment to such intervals as will result in a payment at least
equal to the minimum. If any amount due would be less than the minimum payment
amount per annum, we may make such other settlement as may be equitable to the
Annuitant.
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Exhibit 5
Application for Group Annuity Contract
American Maturity Life Insurance Company
200 Hopmeadow Street
Simsbury, CT 06089
Application is hereby made for a Group Annuity Contract-10
1. Applicant-Contract Owner:
The American Association of Retired Persons Group Annuity Trust
-------------------------------------------------------------------------
601 E Street N.W. Washington, DC 20049
-------------------------------------------------------------------------
2. Nature of Applicant's Business: Nonprofit Corporation
----------------------------------------
3. Requested Effective Date of Contract: August 15, 1996
----------------------------------
4. Eligibility Requirements: Membership in American Association of Retired
Persons
--------------------------------------------------------------------------
5. Special Requests:
-------------------------------------------------------
- ------------------------------------------------------------------------------
Date at this day of , 19
--------------------------- ----------- ------------- --
For Witness
------------------------------------- -----------------------------
<PAGE>
<TABLE>
<CAPTION>
ENROLLMENT FORM If you need help
To Participate in a Group Variable Annuity Contract completing this form,
Owned By The AARP Group Annuity Trust call 1-800-396-5552.
<S> <C>
Please mail your completed form to: American Maturity Life Insurance Company, P.O. Box 7122, Pasadena, CA 91109-8853
- ---------------------------------------------------------------------------------------------------------------------------------
1A ANNUITANT 1B CONTINGENT ANNUITANT (If any)
First Name Middle Last First Name Middle Last
Street Address Street Address
City State Zip City State Zip
AARP Number SSN/TIN:
------------------------
SSN/TIN: Sex: / / M / / F Date of Birth:
Sex: / / M / / F Date of Birth:
Phone: ( )
- ---------------------------------------------------------------------------------------------------------------------------------
2A OWNER (If same as Annuitant, check here / /. Owner and 2B JOINT OWNER (Optional)
Annuitant must be the same on some qualified (Not available on qualified plans)
plans.)
First Name Middle Last
First Name Middle Last
Street Address
Street Address
City State Zip
City State Zip
AARP Number:
AARP Number:
SSN/TIN:
SSN/TIN:
Sex: / / M / / F Date of Birth:
Sex: / / M / / F Date of Birth:
Relationship to Owner:
Phone ( )
Phone: ( )
- ---------------------------------------------------------------------------------------------------------------------------------
3 BENEFICIARY 4 TYPE OF PLAN (Check non-qualified or indicate the type
of qualified plan from which your funds will come.)
- ----------------------------------------------------
Name of Relationship to Percentage / / Non-qualified
Designated Beneficiary Certificate Owner ----------------------------------------------------------
/ / IRA Rollover / / 401(a) Pension
/ / IRA Transfer / / 401(k) Profit Sharing
- ---------------------------------------------------- / / IRA: Tax Yr. 19___ / / 403(b) Transfer
Name of Relationship to Percentage / / SEP-IRA / / Keogh/HR10
Designated Beneficiary Certificate Owner / / Other
- ----------------------------------------------------
Name of Relationship to Percentage
Contingent Beneficiary Certificate Owner
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<S> <C>
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7 TELEPHONE AUTHORIZATION ( Owner/ 5 ISSUE STATE 6 INITIAL PURCHASE
Owners must check and Initial.) PAYMENT AMOUNT
ENTER THE STATE WHERE
/ / __________ / / ____________ ENROLLMENT FORM WAS SIGNED $
FORM WAS SIGNED
By initialing, American Maturity Life is authorized and
directed to act on telephone instructions from any person(s)
who can furnish proper identification. American Maturity
Life will use reasonable procedures to confirm that these
instructions are authorized and genuine. As long as these 8 REPLACEMENT
procedures are followed, AMERICAN MATURITY LIFE, ITS Will the purchase of this annuity replace or change any other
AFFILIATES, DIRECTORS, TRUSTEES, officers, employees insurance or annuity? / / Yes / / No
representatives and/or agents, will be held harmless for any (If yes, or 1035 exchange, write insurance company name and
claim, liability, loss or cost. contract number in Special Requests section and attach any required
state replacement and/or transfer forms.)
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9 TRANSFERS (Choose only one of the four options, 10 PRE-AUTHORIZED WITHDRAWALS (Choose one option
then frequency and start date below.) only, then frequency and term below.)
EARNINGS SWEEP: 1 / / Withdraw $_____ from the source account(s) as indicated
below.
1 / / Sweep previous period's earnings of either the Fixed 2/ / Withdraw _______% annually from the source account(s) as
Account or the Money Market account to the target indicated below.
account(s)indicated below. Choose one source account. If
also rebalancing, only Fixed Account available.) FREQUENCY: (Choose one.)
/ / Fixed / / Money Market / / Monthly / / Quarterly / / Semi-Annually / / Annually
DOLLAR COST AVERAGING: START DATE:
2 / / Deplete the source account in (indicate number) _____ FEDERAL TAXES: TARGET: (Must be different than
transfers to the target account(s) indicated below. (If Fixed / / Do Not Withhold source. Total must equal 100% or
Account is source account, up to 100% can be transferred / / Withhold % total $ transfer amount.)
over one year or more.)
(If not specified, a Fixed ________
3/ / Transfer $_____ from the source account to minimum 10% Federal Money Market ________
the target account(s) as indicated below. tax on non-qualified plans, Bond ________
20% will be withheld. State Balanced ________
4/ / Transfer _____% annually from the source account to mandated income tax Growth & Income ________
the target account(s) as indicated below. will be withheld where Partners ________
required by law.) Capital Growth ________
FREQUENCY: (Choose one.) Capital Appreciation ________
Worldwide Growth ________
/ / Monthly / / Quarterly / / Semi-Annually / / Annually Small Cap ________
START DATE: __________ THIRD PARTY PAYEE: (Indicate name and address of payee, if other
than owner, below:)
TERM: (If option 1,3 or 4 selected above, indicate both
term and number.) First Name Middle Last
/ / Months (Enter number of months.) Street Address
/ / Years (Enter number of years.) City State Zip
SOURCE: (If option 2, TARGET: (Must be --------------------------------------------------- 11
3 or 4 selected above, different than source. Total PRE-AUTHORIZED CHECKING (Please attach a voided
must equal 100% or total $ check. To begin the plan, the $2,500 minimum must
transfer amount.) accompany this application.)
/ / Fixed (American Maturity Life) Collect $________monthly by initiating automatic withdrawals from
/ / Money Market (Scudder) my account as indicated on the attached voided check. Payments
/ / Bond (Scudder) will be applied according to the allocations on this application or
/ / Balanced (Janus) more current instructions if any.
/ / Capital Growth (Scudder)
/ / Growth & Income (Scudder) START DATE:
/ / Partners (Neuberger & Berman)
/ / Capital Appreciation (Dreyfus)
/ / Worldwide Growth (Janus)
/ / Small Cap (Dreyfus)
</TABLE>
<PAGE>
<TABLE>
<S> <C>
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12 ANNUITY COMMENCEMENT DATE (Optional, 13 ALLOCATIONS OPTIONS (Indicate either whole
annuity date cannot be prior to first certificate percentages or dollars. Total must equal either 100% or initial
anniversary.) purchase payment.)
Fixed (American Maturity Life)
Money Market (Scudder)
- -------------------------------------------------------- Bond (Scudder)
14 REBALANCING / / (Variable accounts will be Balanced (Janus)
rebalanced to the allocation percentages of this application.) Growth & Income (Scudder)
Partners (Neuberger & Berman)
Frequency: (Choose one.) Capital Growth (Scudder)
Worldwide Growth (Janus)
/ / Monthly / / Quarterly / / Semi-Annually / / Annually Capital Appreciation (Dreyfus)
Small Cap (Dreyfus)
Start Date: - -
----------------------------
- ---------------------------------------------------------
15 SPECIAL REQUESTS
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</TABLE>
16 STATEMENT OF CERTIFICATE OWNER
Have you purchased another annuity from American Maturity Life during the
previous 12 months? / / Yes / / No
I hereby represent my answers to the above questions to be true and correct
to the best of my knowledge and belief. I UNDERSTAND THAT ANNUITY PAYMENTS
OR SURRENDER VALUES, WHEN BASED ON THE PERFORMANCE OF A SEPARATE ACCOUNT,
ARE VARIABLE AND ARE NOT GUARANTEED AS TO A FIXED DOLLAR AMOUNT.
/ / RECEIPT OF A VARIABLE ANNUITY AND FUND PROSPECTUS IS HEREBY
ACKNOWLEDGED. (If not checked, the appropriate prospectus will be mailed
to you.)
SIGNED AT ON
--------------- ---------------- -------------------------------
City, State Date Certificate Owner's Signature
-------------------------------------
Joint Certificate Owner's Signature
17 REGISTERED REPRESENTATIVE'S For American Maturity Life's Use Only
CERTIFICATION
Do you, as an agent, have reason to believe the contract applied for will
replace existing annuities or insurance?
/ / Yes / / No
Registered Representatives
---------------------------------------------
Signature
---------------------------------------------
Print
---------------------------------------------
License ID # (Florida only)
<PAGE>
FUND PARTICIPATION AGREEMENT
This Agreement is entered into as of the 21st day of October, 1996, between
American Maturity Life Insurance Company, a life insurance company organized
under the laws of the State of Connecticut ("Insurance Company"), and each of
the DREYFUS VARIABLE INVESTMENT FUND, THE DREYFUS SOCIALLY RESPONSIBLE GROWTH
FUND, INC. and DREYFUS LIFE AND ANNUITY INDEX FUND, INC. (d/b/a DREYFUS STOCK
INDEX FUND) (each a "fund").
ARTICLE I
DEFINITIONS
1.1 "Act" shall mean the Investment Company Act of 1940, as amended.
1.2 "Board" shall mean the Board of Directors or Trustees, as the case may
be, of a Fund, which has the responsibility for management and control of
the Fund.
1.3 "Business Day" shall mean any day for which a Fund calculates net asset
value per share as described in the Fund's Prospectus.
1.4 "Commission" shall mean the Securities and Exchange Commission.
1.5 "Contract" shall mean a variable annuity or life insurance contract that
uses any Participating Fund (as defined below) as an underlying
investment medium. Individuals who participate under a group contract
are "Participants"
1.6 "Contractholder" shall mean any entity that is party to a Contract
with a Participating Company (as defined below)
1.7 "Disinterested Board Members" shall mean those members of the Board of
a Fund that are not deemed to be "interested persons" of the Fund, as
defined by the Act.
1.8 "Dreyfus" shall mean The Dreyfus Corporation and its affiliates,
including the Dreyfus Service Corporation.
1.9 "Participating Companies" shall mean any insurance company (including
Insurance Company) that offers variable annuity and/or variable life
insurance contracts to the public and that has entered into an agreement
with one or more of the Funds.
1.10 "Participating Fund" shall mean each Fund, including, as applicable, any
series thereof, specified in Exhibit A, as such Exhibit may be amended
from time to time by agreement of the parties hereto, the shares of which
are available to serve as the underlying investment medium for the
aforesaid Contracts.
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1.11 "Prospectus" shall mean the current prospectus and statement of additional
information of a Fund as most recently filed with the Commission.
1.12 "Separate Account" shall mean AMLVA Separate Account, a separate account
established by Insurance Company in accordance with the laws of the State
of Connecticut.
1.13 "Software Program" shall mean the software program used by a fund for
providing Fund and account balance information including net asset value
per share. Such program may include the Lion System. In situations where
the Lion System or any other Software Program used by the Fund is not
available, such information may be provided by telephone. The Lion System
shall be provided to Insurance Company at no charge.
1.14 "Insurance Company's General Account(s)" shall mean the general account(s)
of Insurance Company and its affiliates that invest in the Fund.
ARTICLE II
REPRESENTATIONS
2.1 Insurance Company represents and warrants that (a) it is an insurance
company duly organized and in good standing under applicable law; (b) it
has legally and validly established the Separate Account pursuant to the
Connecticut Insurance Code for the purpose of offering to the public
certain individual and group variable annuity and life insurance
contracts; (c) it has registered the Separate Account as a unit
investment trust under the Act to serve as the segregated investment
account for the Contracts; and (d) the Separate Account is eligible to
invest in shares of each Participating Fund without such investment
disqualifying any Participating Fund as an investment medium for insurance
company separate accounts supporting variable annuity contracts and
variable life insurance contracts.
2.2 Insurance Company represents and warrants that (a) the Contracts will
be described in a registration statement filed under the Securities Act
of 1933, as amended ("1933 Act"); (b) the Contracts will be issued and
sold in compliance in all material respects with all applicable federal
and state laws; and (c) the sale of the Contracts shall comply in all
material respects with state insurance law requirements. Insurance
Company agrees to notify each Participating Fund promptly of any
investment restrictions imposed by state insurance law and applicable to
the Participating Fund.
2.3 Insurance Company represents and warrants that the income, gains and
losses, whether or not realized, from assets allocated to the Separate
Account are, in accordance with the applicable Contracts, to be credited
to or charged against such Separate Account without regard to other
income, gains or losses from assets allocated to any other accounts of
Insurance Company. Insurance Company represents and warrants that the
assets of the
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Separate Account are and will be kept separate from Insurance Company's
General Account and any other separate accounts Insurance Company may
have, and will not be charged with liabilities from any business that
Insurance Company may conduct or the liabilities of any companies
affiliated with Insurance Company.
2.4 Each Participating Fund represents that it is registered with the
Commission under the Act as an open-end, management investment company
and possesses, and shall maintain, all legal and regulatory licenses,
approvals, consents and/or exemptions required for the Participating
Fund to operate and offer its shares as an underlying investment medium
for Participating Companies.
2.5 Each Participating Fund represents that it is currently qualified as a
regulated investment company under Subchapter M of the Internal Revenue
Code of 1986, as amended (the "Code"), and that it will make every
effort to maintain such qualification (under Subchapter M or any
successor or similar provision) and that it will notify Insurance
Company immediately upon having a reasonable basis for believing that
it has ceased to so qualify or that it might not so qualify in the
future.
2.6 Insurance Company represents and agrees that the Contracts are currently,
and at the time of issuance will be, treated as life insurance policies
or annuity contracts, whichever is appropriate, under applicable
provisions of the Code, and that it will make every effort to maintain
such treatment and that it will notify each Participating Fund and
Dreyfus immediately upon having a reasonable basis for believing that
the Contracts have ceased to be so treated or that they might not be so
treated in the future. Insurance Company agrees that any prospectus
offering a Contract that is a "modified endowment contract," as that
term is defined in Section 7702A of the Code, will identify such
Contract as a modified endowment contract (or policy).
2.7 Each Participating Fund agrees that its assets shall be managed and
invested in a manner that complies with the requirements of Section 817
(h) of the Code.
2.8 Insurance Company agrees that each Participating Fund shall be permitted
(subject to the other terms of this Agreement) to make its shares
available to other Participating Companies and Contractholders.
2.9 Each Participating Fund represents and warrants that any of its directors,
trustees, officers, employees, investment advisers, and other
individuals/entities who deal with the money and/or securities of the
Participating Fund are and shall continue to be at all times covered by
a blanket fidelity bond or similar coverage for the benefit of the
Participating Fund in an amount not less than that required by Rule
17g-1 under the Act. The aforesaid Bond shall include coverage for
larceny and embezzlement and shall be issued by a reputable bonding
company.
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2.10 Insurance Company represents and warrants that all of its employees and
agents who deal with the money and/or securities of each Participating
Fund are and shall continue to be at all times covered by a blanket
fidelity bond and similar coverage in an amount not less than the
coverage required to be maintained by the Participating Fund. The
aforesaid Bond shall include coverage for larceny and embezzlement and
shall be issued by a reputable bonding company.
2.11 Insurance Company agrees that Dreyfus shall be deemed a third party
beneficiary under this Agreement and may enforce any and all rights
conferred by virtue of this Agreement.
ARTICLE III
FUND SHARES
3.1 The Contracts funded through the Separate Account will provide for the
investment of certain amounts in shares of each Participating Fund.
3.2 Each Participating Fund agrees to make its shares available for purchase
at the then applicable net asset value per share by Insurance Company and
the Separate Account on each Business Day pursuant to rules of the
Commission. Notwithstanding the foregoing, each Participating Fund may
refuse to sell its shares to any person, or suspend or terminate the
offering of its shares, if such action is required by law or by
regulatory authorities having jurisdiction or is, in the sole
discretion of its Board, acting in good faith and in light of its
fiduciary duties under federal and any applicable state laws, necessary
and in the best interests of the Participating Fund's shareholders.
3.3 Each Participating Fund agrees that shares of the Participating Fund will
be sold only to (a) Participating Companies and their separate accounts
or (b) qualified pension or retirement plans" as determined under
Section 817 (h) (4) of the Code. Except as otherwise set forth in this
Section 3.3, no shares of any Participating Fund will be sold to the
general public.
3.4 Each Participating Fund shall use its best efforts to provide closing net
asset value, dividend and capital gain information on a per-share basis
to Insurance Company by 6:00 p.m. Eastern time on each Business Day.
Any material errors in the calculation of net asset value, dividend and
capital gain information shall be reported immediately upon discovery
to Insurance Company. Non-material errors will be corrected in the
next Business Day's net asset value per share.
3.5 At the end of each Business Day, Insurance Company will use the
information described in Sections 3.2 and 3.4 to calculate the unit values
of the Separate Account for the day. Using this unit value, Insurance
Company will process the day's Separate Account transactions received by
it by the close of trading on the floor of the New York Stock Exchange
(currently 4:00 p.m. Eastern time) to determine the net dollar amount
of each Participating Fund's shares that will be purchased or redeemed
at that day's closing net asset value per share. The net purchase or
redemption orders will be transmitted to each Participating
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Fund by Insurance Company by 11:00 a.m. Eastern time on the Business
Day next following Insurance Company's receipt of that information.
Insurance Company's General Account(s) shall not purchase any shares of
any Participating Fund.
3.6 Each Participating Fund appoints Insurance Company as its agent for the
limited purpose of accepting orders for the purchase and redemption of
Participating Fund shares for the Separate Account. Each Participating
Fund will execute orders at the applicable net asset value per share
determined as of the close of trading on the day of receipt of such
orders by Insurance Company acting as agent ("effective trade date"),
provided that the Participating Fund receives notice of such orders by
11:00 a.m. Eastern time on the next following Business Day and, if such
orders request the purchase of Participating Fund shares, the
conditions specified in Section 3.8, as applicable, are satisfied. A
redemption or purchase request that does not satisfy the conditions
specified above and in Section 3.8, as applicable, will be effected at
the net asset value per share computed on the Business Day immediately
preceding the next following Business Day upon which such conditions
have been satisfied in accordance with the requirements of this Section
and Section 3.8.
3.7 Insurance Company will make its best efforts to notify each applicable
Participating Fund in advance of any unusually large purchase or
redemption orders.
3.8 If Insurance Company's order requests the purchase of a Participating
Fund's shares, Insurance Company will pay for such purchases by wiring
Federal Funds to the Participating Fund or its designated custodial
account on the day the order is transmitted. Insurance Company shall
make all reasonable efforts to transmit to the applicable Participating
Fund payment in Federal Funds by 12:00 noon Eastern time on the
Business Day the Participating Fund receives the notice of the order
pursuant to Section 3.5. Each applicable Participating Fund will
execute such orders at the applicable net asset value per share
determined as of the close of trading on the effective trade date if
the Participating Fund receives payment in Federal Funds by 12:00
midnight Eastern time on the Business Day the Participating Fund
receives the notice of the order pursuant to Section 3.5. If payment
in Federal Funds for any purchase is not received or is received by a
Participating Fund after 12:00 noon Eastern time on such Business Day,
Insurance Company shall promptly, upon each applicable Participating
Fund's request, reimburse the respective Participating Fund for any
charges, costs, fees, interest or other expenses incurred by the
Participating Fund in connection with any advances to, or borrowings or
overdrafts by, the Participating Fund, or any similar expenses incurred
by the Participating Fund, as a result of portfolio transactions
effected by the Participating Fund based upon such purchase request.
If Insurance Company's order requests the redemption of any
Participating Fund's shares valued at or greater than $1 million
dollars, the Participating Fund will wire such amount to Insurance
Company within seven days of the order.
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3.9 Each Participating Fund has the obligation to ensure that its shares are
registered with applicable federal agencies at all times.
3.10 Each Participating Fund will confirm each purchase or redemption order
made by Insurance Company. Transfer of Participating Fund shares will be
by book entry only. No share certificates will be issued to Insurance
Company. Insurance Company will record shares ordered from a
Participating Fund in an appropriate title for the corresponding
account.
3.11 Each Participating Fund shall credit Insurance Company with the
appropriate number of shares.
3.12 On each ex-dividend date of a Participating Fund or, if not a Business
Day, on the first Business Day thereafter, each Participating Fund shall
communicate to Insurance Company the amount of dividend and capital
gain, if any, per share. All dividends and capital gains shall be
automatically reinvested in additional shares of the applicable
Participating Fund at the net asset value per share on the ex-dividend
date. Each Participating Fund shall, on the day after the ex-dividend
date or, if not a Business Day, on the first Business Day thereafter,
notify Insurance Company of the number of shares so issued.
ARTICLE IV
STATEMENTS AND REPORTS
4.1 Each Participating Fund shall provide monthly statements of account as of
the end of each month for all of Insurance Company's accounts by the
fifteenth (15th) Business Day of the following month.
4.2 Each Participating Fund shall distribute to Insurance Company copies of
the Participating Fund's Prospectuses, proxy materials, notices, periodic
reports and other printed materials (which the Participating Fund
customarily provides to its shareholders) in quantities as Insurance
Company may reasonably request for distribution to each Contractholder
and Participant.
4.3 Each Participating Fund will provide to Insurance Company at least one
complete copy of all registration statements, Prospectuses, reports,
proxy statements, sales literature and other promotional materials,
applications for exemptions, requests for no-action letters, and all
amendments to any of the above, that relate to the Participating Fund
or its shares, contemporaneously with the filing of such document with
the Commission or other regulatory authorities.
4.4 Insurance Company will provide to each Participating Fund at
least one copy of all registration statements, Prospectuses, reports,
proxy statements, sales literature and other promotional materials,
applications for exemptions, requests for no-action letters, and all
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amendments to any of the above, that relate to the Contracts or the
Separate Account, contemporaneously with the filing of such document
with the Commission.
ARTICLE V
EXPENSES
5.1 The charge to each Participating Fund for all expenses and costs of the
Participating Fund, including but not limited to management fees,
administrative expenses and legal and regulatory costs, will be made in
the determination of the Participating Fun's daily net asset value per
share so as to accumulate to an annual charge at the rate set forth in
the Participating Fund's Prospectus. Excluded from the expense
limitation described herein shall be brokerage commissions and
transaction fees and extraordinary expenses.
5.2 Except as provided in this Article V and, in particular in the next
sentence, Insurance Company shall not be required to pay directly any
expenses of any Participating Fund or expenses relating to the
distribution of its shares. Insurance Company shall pay the following
expenses or costs:
a. Such amount of the production expenses of any Participating Fund
materials, including the cost of printing a Participating Fund's
Prospectus, or marketing materials for prospective Insurance Company
Contractholders and Participants as Dreyfus and Insurance Company shall
agree from time to time.
b. Distribution expenses of any Participating Fund materials or
marketing materials for prospective Insurance Company Contractholders
and Participants.
c. Distribution expenses of any Participating Fund materials or
marketing materials for Insurance Company Contractholders and
Participants.
Except as provided herein, all other expenses of each participating
Fund shall not be borne by Insurance Company.
ARTICLE VI
EXEMPTIVE RELIEF
6.1 Insurance Company has reviewed a copy of the order dated December 23, 1987
of the Securities and Exchange Commission under Section 6 (c) of the
Act with respect to Dreyfus Variable Investment Fund and a copy of the
order dated August 23, 1989 of the Securities and Exchange Commission
under Section 6 (c) of the Act with respect to Dreyfus Life and Annuity
Index Fund, Inc. and, in particular, has reviewed the conditions to the
relief set forth in each related Notice. As set forth therein, if
Dreyfus Variable Investment Fund or Dreyfus Life and Annuity Index
Fund, Inc. is a Participating Fund, Insurance Company agrees, as
applicable, to report any potential or existing conflicts promptly to
the respective Board of Dreyfus Variable Investment Fund and/or Dreyfus
Life and Annuity Index Fund, Inc. and, in particular, whenever contract
voting instructions are
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disregarded, and recognizes that it will be responsible for assisting
each applicable Board in carrying out its responsibilities under such
application. Insurance Company agrees to carry out such
responsibilities with a view to the interests of existing
Contractholders.
The Dreyfus Socially Responsible Growth Fund, Inc., if it is a
Participating Fund, shall furnish Insurance Company with a copy of its
application for an order of the Securities and Exchange Commission
under Section 6 (c) of the Act for mixed and shared funding relief, and
the notice of such application and order when issued by the SEC.
Insurance Company agrees to comply with the conditions on which such
order is issued, including reporting any potential or existing
conflicts promptly to the Board of The Dreyfus Socially Responsible
Growth Fund, Inc., and in particular whenever contractholder voting
instructions are disregarded, to the extent such conditions are not
materially different from the conditions of the mixed and shared
funding relief obtained by Dreyfus Variable Investment Fund and Dreyfus
Life and Annuity Index Fund, Inc., respectively; and recognizes that it
shall be responsible for assisting the Board of The Dreyfus Socially
Responsible Growth Fund, Inc. in carrying out its responsibilities in
connection with such order. Insurance Company agrees to carry out such
responsibilities with a view to the interests of existing
Contractholders.
6.2 If a majority of the Board, or a majority of Disinterested Board Members,
determines that a material irreconcilable conflict exists with regard
to Contractholder investments in a Participating Fund, the Board shall
give prompt notice to all Participating companies and any other
Participating Fund. If the Board determines that Insurance Company is
responsible for causing or creating said conflict, Insurance Company
shall at its sole cost and expense, and to the extent reasonably
practicable (as determined by a majority of the Disinterested Board
Members), take such action as is necessary to remedy or eliminate the
irreconcilable material conflict. Such necessary action may include,
but shall not be limited to:
a. Withdrawing the assets allocable to the Separate Account from the
Participating Fund and reinvestment such assets in another
Participating Fund (if applicable) or a different investment medium, or
submitting the question of whether such segregation should be
implemented to a vote of all affected Contractholders; and/or
b. Establishing a new registered management investment company.
6.3 If a material irreconcilable conflict arises as a result of a decision by
Insurance Company to disregard Contractholder voting instructions and
said decision represents a minority position or would preclude a
majority vote by all Contractholders having an interest in a
Participating Fund, Insurance Company may be required, at the Board's
election, to withdraw the investments of the Separate Account in that
Participating Fund.
6.4 For the purpose of this Article, a majority of the Disinterested Board
Members shall
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determine whether or not any proposed action adequately remedies any
irreconcilable material conflict, but in no event will any
Participating Fund be required to bear the expense of establishing a
new funding medium for any Contract. Insurance Company shall not be
required by this Article to establish a new funding medium for any
Contract if an offer to do so has been declined by vote of a majority
of the Contractholders materially adversely affected by the
irreconcilable material conflict.
6.5 No action by Insurance Company taken or omitted, and no action by the
Separate Account or any Participating Fund taken or omitted as a result
of any act or failure to act by Insurance Company pursuant to this
Article VI, shall relieve Insurance Company of its obligations under,
or otherwise affect the operation of, Article V.
ARTICLE VII
VOTING OF PARTICIPATING FUND SHARES
7.1 Each Participating Fund shall provide Insurance Company with copies, at no
cost to Insurance Company, of the Participating Fund's proxy material,
reports to shareholders and other communications to shareholders in
such quantity as Insurance Company shall reasonably require for
distributing to Contractholders or Participants.
Insurance Company shall:
(a) solicit voting instructions from Contractholders or Participants on
a timely basis and in accordance with applicable law;
(b) vote the Participating Fund shares in accordance with instructions
received from Contractholders or Participants; and
(c) vote the Participating Fund shares for which no instructions have
been received in the same proportion as Participating Fund shares for
which instructions have been received.
7.2 Insurance Company agrees that it shall not, without the prior written
consent of each applicable Participating Fund and Dreyfus, solicit,
induce or encourage Contractholders to (a) change or supplement the
Participating Fund's current investment adviser or (b) change, modify,
substitute, add to or delete from the current investment media for the
Contract.
ARTICLE VIII
MARKETING AND REPRESENTATIONS
8.1 Each Participating Fund or its underwriter shall periodically furnish
Insurance Company with the following documents, in quantities as
Insurance Company may reasonably request:
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a. Current Prospectus and any supplements thereto; and
b. Other marketing materials.
Expenses for the production of such documents shall be borne by
Insurance Company in accordance with Section 5.2 of this Agreement.
8.2 Insurance Company shall designate certain persons or entities that shall
have the requisite licenses to solicit applications for the sale of
Contracts. No representation is made as to the number or amount of
Contracts that are to be sold by Insurance Company. Insurance Company
shall make reasonable effort to market the Contracts and shall comply
with all applicable federal and state laws in connection therewith.
8.3 Insurance Company shall furnish, or shall cause to be furnished, to each
applicable Participating Fund or its designee, each piece of sales
literature or other promotional material in which the Participating
Fund, its investment adviser or the administrator is named, at least
fifteen Business Days prior to its use. No such material shall be used
unless the Participating Fund or its designee approves such material.
Such approval (if given) must be in writing or shall be presumed given
if not received within ten Business Days after receipt of such
material. Each applicable Participating Fund or its designee, as the
case may be, shall use all reasonable efforts to respond within ten
days of receipt.
8.4 Insurance Company shall not give any information or make any
representations or statements on behalf of a Participating Fund or
concerning a Participating Fund in connection with the sale of the
Contracts other than the information or representations contained in
the registration statement or Prospectus of, as may be amended or
supplemented from time to time, or in reports or proxy statements for,
the applicable Participating Fund, or in sales literature or other
promotional material approved by the applicable Participating Fund.
8.5 Each Participating Fund shall furnish, or shall cause to be furnished, to
Insurance Company, each piece of the Participating Fund's sales
literature or other promotional material in which Insurance Company or
the Separate Account is named, at least fifteen Business Days prior to
its use. No such material shall be used unless Insurance Company
approves such material. Such approval (if given) must be in writing or
shall be presumed given if not received within ten Business Days after
receipt of such material. Insurance Company shall use all reasonable
efforts to respond within ten days of receipt.
8.6 Each Participating Fund shall not, in connection with the sale of
Participating Fund shares, give any information or make any
representations on behalf of Insurance Company or concerning Insurance
Company, the Separate Account, or the Contracts other than the
information or representations contained in a registration statement or
prospectus for the Contracts, as may be amended or supplemented from
time to time, or in published reports for the Separate Account that re
in the public domain or approved by Insurance Company
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for distribution to Contractholders or Participants, or in sales
literature or other promotional material approved by Insurance Company.
8.7 For purposes of this Agreement, the phrase "sales literature or other
promotional material" or words of similar import include, without
limitation, advertisements (such as material published, or designed for
use, in a newspaper, magazine or other periodical, radio, television,
telephone or tape recording, videotape display, signs or billboards,
motion pictures or other public media), sales literature (such as any
written communication distributed or made generally available to
customers or the public, including brochures, circulars, research
reports, market letters, form letters, seminar texts, or reprints or
excerpts of any other advertisement, sales literature, or published
article), educational or training materials or other communications
distributed or made generally available to some or all agents or
employees, registration statements, prospectuses, statements of
additional information, shareholder reports and proxy materials, and
any other material constituting sales literature or advertising under
National Association of Securities Dealers, Inc. rules, the Act or the
1933 Act. Notwithstanding the foregoing, "sales literature or other
promotional material" shall not include any communication prepared by
or on behalf of the American Association of Retired Persons provided
that (a) such communication is limited to any one or more of the
following: (i) explanatory information relating to variable annuity
contracts generally, the nature of variable annuity contracts or
services offered in connection with the ownership of a variable annuity
contract; (ii) the mention or explanation of different generic types of
investment companies serving as funding vehicles for variable annuity
contracts, such as balanced funds, income funds, growth funds, etc.;
(iii) offers, descriptions and explanations of various products and
services not constituting a security subject to registration under the
1933 Act, provided that such offers, descriptions and explanations do
not relate directly to the desirability of investment in a
Participating Fund by owning a Contract; or (iv) an invitation to
inquire for further information; and (b) such communication contains
the name and address of a registered broker or dealer or other person
sponsoring the communication.
ARTICLE IX
INDEMNIFICATION
9.1 Insurance Company agrees to indemnify and hold harmless each Participating
Fund, Dreyfus, each respective Participating Fund's investment adviser
and sub-investment adviser (if applicable), each respective
Participating Fund's distributor, and their respective affiliates, and
each of their directors, trustees, officers, employees, agents and each
person, if any, who controls or is associated with any of the foregoing
entities or persons within the meaning of the 1933 Act (collectively,
the "Indemnified Parties" for purposes of Section 9.1), against any and
all losses, claims, damages or liabilities joint or several(including
any investigative, legal and other expenses reasonably incurred in
connection with, and any amounts paid in settlement of, any action,
suit or proceeding or any claim asserted) for which the Indemnified
Parties may become subject, under the 1933 Act or otherwise
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insofar as such losses, claims, damages or liabilities (or actions in
respect to thereof) (i) arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact contained in
information furnished by Insurance Company for use in the registration
statement or Prospectus or sales literature or advertisements of the
respective Participating Fund or with respect to the Separate Account
or Contracts, or arise out of or are based upon the omission or the
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading;
(ii) arise out of or as a result of conduct, statements or
representations (other than statements or representations contained in
the Prospectus and sales literature or advertisements of the respective
Participating Fund) of Insurance Company or its agents, with respect to
the sale and distribution of Contracts for which the respective
Participating Fund's shares are an underlying investment; (iii) arise
out of the wrongful conduct of Insurance Company or persons under its
control with respect to the sale or distribution of the Contracts or
the respective Participating Fund's shares; (iv) arise out of Insurance
Company's incorrect calculation and/or untimely reporting of net
purchase or redemption orders; or (v) arise out of any breach by
Insurance Company of a material term of this Agreement or as a result
of any failure by Insurance Company to provide the services and furnish
the materials or to make any payments provided for in this Agreement.
Insurance Company will reimburse any Indemnified Party in connection
with investigating or defending any such loss, claim, damage, liability
or action; provided, however, that with respect to clauses (i) and (ii)
above Insurance Company will not be liable in any such case to the
extent that any such loss, claim, damage or liability arises out of or
is based upon any untrue statement or omission or alleged omission made
in such registration statement, prospectus, sales literature, or
advertisement in conformity with written information furnished to
Insurance Company by the respective Participating Fund specifically for
use therein. This indemnity agreement will be in addition to any
liability which Insurance Company may otherwise have.
9.2 Each Participating Fund severally agrees to indemnify and hold harmless
Insurance Company and each of its directors, officers, employees,
agents and each person, if any, who controls Insurance Company within
the meaning of the 1933 Act against any losses, claims, damages or
liabilities to which Insurance Company or any such director, officer,
employee, agent or controlling person may become subject, under the
1933 Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) (1) arise out of or are
based upon any untrue statement or alleged untrue statement of any
material fact contained in the registration statement or Prospectus or
sales literature or advertisements of the respective Participating
Fund; (2) arise out of or are based upon the omission to state in the
registration statement or Prospectus or sales literature or
advertisements of the respective Participating Fund any material fact
required to be stated therein or necessary to make the statements
therein not misleading; or (3) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact
contained in the registration statement or Prospectus or sales
literature or advertisements with respect to the Separate Account or
the Contracts and such statements were based on information provided to
Insurance Company by the respective Participating Fund; and the
respective Participating Fund will reimburse any legal or other
expenses reasonably incurred by Insurance
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Company or any such director, officer, employee, agent or controlling
person in connection with investigating or defending any such loss,
claim, damage, liability or action; provided, however, that the
respective Participating Fund will not be liable in any such case to
the extent that any such loss, claim, damage or liability arises out of
or is based upon an untrue statement or omission or alleged omission
made in such registration statement, prospectus, sales literature or
advertisements in conformity with written information furnished to the
respective Participating Fund by Insurance Company specifically for use
therein. This indemnity agreement will be in addition to any liability
which the respective Participating Fund may otherwise have.
9.3 Each Participating Fund severally shall indemnify and hold Insurance
Company harmless against any and all liability, loss, damages, costs or
expenses which Insurance Company may incur, suffer or be required to
pay due to the respective Participating Fund's (1) incorrect
calculation of the daily net asset value, dividend rate or capital gain
distribution rate; (2) incorrect reporting of the daily net asset
value, dividend rate or capital gain distribution rate; and (3)
untimely reporting of the net asset value, dividend rate or capital
gain distribution rate; provided that the respective Participating Fund
shall have no obligation to indemnify and hold harmless Insurance
Company if the incorrect calculation or incorrect or untimely reporting
was the result of incorrect information furnished by Insurance Company
or information furnished untimely by Insurance Company or otherwise as
a result of or relating to a breach of this Agreement by Insurance
Company.
9.4 Promptly after receipt of an indemnified party under this Article of
notice of the commencement of any action, such indemnified party will, if
a claim in respect thereof is to be made against the indemnifying party
under this Article, notify the indemnifying party of the commencement
thereof. The omission to so notify the indemnifying party will not
relieve the indemnifying party from any liability under this Article
IX, except to the extent that the omission results in a failure of
actual notice to the indemnifying party and such indemnifying party is
damaged solely as a result of the failure to give such notice. In case
any such action is brought against any indemnified party, and it
notified the indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate therein and, to the
extent that it may wish, assume the defense thereof, with counsel
satisfactory to such indemnified party, and to the extent that the
indemnifying party has given notice to such effect to the indemnified
party and is performing its obligations under this Article, the
indemnifying party shall not be liable for any legal or other expenses
subsequently incurred by such indemnified party in connection with the
defense thereof, other than reasonable costs of investigation.
Notwithstanding the foregoing, in any such proceeding, any indemnified
party shall have the right to retain its own counsel, but the fees and
expenses of such counsel shall be at the expense of such indemnified
party unless (i) the indemnifying party and the indemnified party shall
have mutually agreed to the retention of such counsel or (ii) the named
parties to any such proceeding (including any impleaded parties)
include both the indemnifying party and the indemnified party and
representation of both parties by the same counsel would be
inappropriate due to actual or potential differing interests between
them. The indemnifying party shall not be liable for
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any settlement of any proceeding effected without its written consent.
A successor by law of the parties to this Agreement shall be entitled
to the benefits of the indemnification contained in this Article IX.
The provisions of this Article IX shall survive termination of this
Agreement.
ARTICLE X
COMMENCEMENT AND TERMINATION
10.1 This Agreement shall be effective as of the date hereof and shall
continue in force until terminated in accordance with the provisions
herein.
10.2 This Agreement shall terminate without penalty:
a. As to any Participating Fund, at the option of Insurance Company or
the Participating Fund at any time from the date hereof upon 180 days'
notice, unless a shorter time is agreed to by the respective
Participating Fund and Insurance Company;
b. As to any Participating Fund, at the option of Insurance Company, if
shares of that Participating Fund are not reasonably available to meet
the requirements of the Contracts as determined by Insurance Company.
Prompt notice of election to terminate shall be furnished by Insurance
Company, said termination to be effective ten days after receipt of
notice unless the Participating Fund makes available a sufficient
number of shares to meet the requirements of the Contracts within said
ten-day period;
c. As to a Participating Fund, at the option of Insurance Company, upon
the institution of formal proceedings against that Participating Fund
by the Commission, National Association of Securities Dealers or any
other regulatory body, the expected or anticipated ruling, judgment or
outcome of which would, in Insurance Company's reasonable judgment,
materially impair that Participating Fund's ability to meet and perform
the Participating Fund's obligations and duties hereunder. Prompt
notice of election to terminate shall be furnished by Insurance Company
with said termination to be effective upon receipt of notice;
d. As to a Participating Fund, at the option of each Participating
Fund, upon the institution of formal proceedings against Insurance
Company by the
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Commission, National Association of Securities Dealers or any other
regulatory body, the expected or anticipating ruling, judgment or
outcome of which would, in the Participating Fund's reasonable
judgment, materially impair Insurance Company's ability to meet and
perform Insurance Company's obligations and duties hereunder. Prompt
notice of election to terminate shall be furnished by such
Participating Fund with said termination to be effective upon receipt
of notice;
e. As to a Participating Fund, at the option of that Participating
Fund, if the Participating Fund shall determine, in its sole judgment
reasonably exercised in good faith, that Insurance Company has suffered
a material adverse change in its business or financial condition or is
the subject of material adverse publicity and such material adverse
change or material adverse publicity is likely to have a material
adverse impact upon the business and operation of that Participating
Fund or Dreyfus, such Participating Fund shall notify Insurance Company
in writing of such determination and its intent to terminate this
Agreement, and after considering the actions taken by Insurance Company
and any other changes in circumstances since the giving of such notice,
such determination of the Participating Fund shall continue to apply on
the sixtieth (60th) day following the giving of such notice, which
sixtieth day shall be the effective date of termination;
f. As to a Participating Fund, upon termination of the Investment
Advisory Agreement between that Participating Fund and Dreyfus or its
successors unless Insurance Company specifically approves the selection
of a new Participating Fund investment adviser. Such Participating
Fund shall promptly furnish notice of such termination to Insurance
Company;
g. As to a Participating Fund, in the event that Participating Fund's
shares are not registered, issued or sold in accordance with applicable
federal law, or such law precludes the use of such shares as the
underlying investment medium of Contracts issued or to be issued by
Insurance Company. Termination shall be effective immediately as to
that Participating Fund only upon such occurrence without notice;
h. At the option of a Participating Fund upon a determination by its
Board in good faith that it is no longer advisable and in the best
interests of shareholders of that Participating Fund to continue to
operate pursuant to this Agreement. Termination pursuant to this
Subsection (h) shall be effective upon 60 days written notice by such
Participating Fund to Insurance Company of such termination;
i. At the option of a Participating Fund if the Contracts cease to
qualify as annuity contracts or life insurance policies, as applicable,
under the Code, or if such
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Participating Fund reasonably believes that the Contracts
may fail to so qualify;
j. At the option of any party to this Agreement, upon another party's
breach of any material provision of this Agreement that remains
unremedied 60 days after written notice of such breach;
k. At the option of a Participating Fund, if the Contracts are not
registered, issued or sold in accordance with applicable federal and/or
state law; or
l. Upon assignment of this Agreement, unless made with the written
consent of every other non-assigning party.
Any such termination pursuant to Section 10.2a, 10.2d, 10.2e, 10.2f or
10.2k herein shall not affect the operation of Article V of this
Agreement. Any termination of this Agreement shall not affect the
operation of Article IX of this Agreement.
10.3 Notwithstanding any termination of this Agreement pursuant to Section 10.2
hereof each Participating Fund and Dreyfus shall continue to make
available additional shares of that Participating Fund pursuant to the
terms and conditions of this Agreement as provided below, for all
Contracts in effect on the effective date of termination of this
Agreement (hereinafter referred to as "Existing Contracts").
Specifically, without limitation, the owner's of the Existing Contracts
or Insurance Company, whichever shall have legal authority to do so,
shall be permitted to reallocate investments in that Participating
Fund, redeem investments in that Participating Fund and/or invest in
that Participating Fund upon the making of additional purchase payments
under the Existing Contracts. In the event of a termination of this
Agreement pursuant to Section 10.2 hereof, Insurance Company shall
notify such Participating Fund and Dreyfus, as promptly as is
practicable under the circumstances, whether Insurance Company will
continue to permit the owners of the Existing contracts or Insurance
Company, whichever shall have legal authority to do so, to reallocate
investments in that Participating Fund, redeem investments in that
Participating Fund and/or invest in that Participating Fund upon the
making of additional purchase payments under the Existing Contracts.
If Insurance Company continues to permit such Participating Fund shares
to be made available after such termination, the provisions of this
Agreement shall remain in effect and thereafter Insurance Company may
terminate the Agreement as to that Participating Fund, as so continued
pursuant to this Section 10.3, upon prior written notice to such
Participating Fund, such notice to be for a period that is reasonable
under the circumstances but need not be for more than six months.
10.4 Termination of this Agreement as to any one Participating Fund shall not
be deemed a termination as to any other Participating Fund unless
Insurance Company or such other Participating Fund, as the case may be,
terminates this Agreement as to such other Participating Fund in
accordance with this Article X.
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ARTICLE XI
AMENDMENTS
11.1 Any other changes in the terms of this Agreement, except for the addition
or deletion of any Participating Fund as specified in Exhibit A, shall
be made by agreement in writing between Insurance Company and each
respective Participating Fund.
ARTICLE XII
NOTICE
12.1 Each notice required by this Agreement shall be given by certified mail,
return receipt requested, to the appropriate parties at the following
addresses:
Insurance Company: American Maturity Life Insurance Company
200 Hopmeadow Street
Simsbury, CT 06089
Attn: Joseph J. Noto
Participating Funds: [Name of Fund]
c/o Premier Mutual Fund Services, Inc.
200 Park Avenue, 6th Floor West
New York, New York 10166
Attn: Elizabeth A. Bachman, Esq.
with copies to: [Name of Fund]
c/o The Dreyfus corporation
200 Park Avenue
New York, New York 10166
Attn: Mark N. Jacobs, Esq.
Lawrence B. Stoller, Esq.
with copies to: Stroock & Stroock & Lavan
7 Hanover Square
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New York, New York 10004-2696
Attn: Lewis G. Cole, Esq.
Stuart H. Coleman, Esq.
Notice shall be deemed to be given on the date of receipt by the
addresses as evidenced by the return receipt.
ARTICLE XIII
MISCELLANEOUS
13.1 This Agreement has been executed on behalf of each Fund by the undersigned
officer of the Fund in his capacity as an officer of the Fund. The
obligations of this Agreement shall only be binding upon the assets and
property of the Fund and shall not be binding upon any director,
trustee, officer or shareholder of the Fund individually. It is agreed
that the obligations of the Funds are several and not joint, that no
Fund shall be liable for any amount owing by another Fund and that the
Funds have executed one instrument for convenience only.
ARTICLE XIV
LAW
14.1 This Agreement shall be construed in accordance with the internal laws of
the State of New York, without giving effect to principles of conflict
of laws.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement to be
duly executed and attested as of the date first above written.
AMERICAN MATURITY LIFE INSURANCE
COMPANY
By: /s/ Joseph J. Noto
----------------------------------
Its: President
----------------------------------
Attest: /s/ David Pickett
----------------------------
DREYFUS LIFE AND ANNUITY INDEX FUND,
INC. (d/b/a/ DREYFUS STOCK INDEX FUND)
By: /s/ Elizabeth Bachman
----------------------------------
Its: Vice President
----------------------------------
Attest: /s/ L. B. Stoller
------------------------------
THE DREYFUS SOCIALLY RESPONSIBLE
GROWTH FUND, INC.
By: /s/ Elizabeth Bachman
----------------------------------
Its Vice President
----------------------------------
Attest: /s/ L. B. Stoller
-------------------------------
DREYFUS VARIABLE INVESTMENT FUND
By: /s/ Elizabeth Bachman
----------------------------------
Its: Vice President
----------------------------------
Attest: /s/ L. B. Stoller
-------------------------------
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EXHIBIT A
LIST OF PARTICIPATING FUNDS
Dreyfus Variable Investment Fund - Capital Appreciation Portfolio
Dreyfus Variable Investment Fund - Small Cap Portfolio
20
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FUND PARTICIPATION AGREEMENT
THIS AGREEMENT made as of the 26th day of November, 1996, by and between
NEUBERGER&BERMAN ADVISERS MANAGEMENT TRUST ("TRUST"), a Delaware business
trust, ADVISERS MANAGERS TRUST ("MANAGERS TRUST"), a New York common law
trust, NEUBERGER&BERMAN MANAGEMENT INCORPORATED ("N&B MANAGEMENT"), a New
York corporation, and AMERICAN MATURITY LIFE INSURANCE COMPANY ("LIFE
COMPANY"), a life insurance company organized under the laws of the State of
Connecticut.
WHEREAS, TRUST and MANAGERS TRUST are registered with the Securities and
Exchange Commission ("SEC") under the Investment Company Act of 1940, as
amended ("40 Act") as open-end, diversified management investment companies;
and
WHEREAS, TRUST is organized as a series fund comprised of several
portfolios ("Portfolios"), the currently available of which are listed on
Appendix A hereto; and
WHEREAS, MANAGERS TRUST is organized as a series fund, comprised of
several portfolios ("Series"), the currently operational of which are listed
on Appendix A hereto; and
WHEREAS, each Portfolio of TRUST will invest all of its net investable
assets in a corresponding Series of MANAGERS TRUST; and
WHEREAS, TRUST was organized to act as the funding vehicle for certain
variable life insurance and/or variable annuity contracts ("Variable
Contracts") offered by life insurance companies through separate accounts of
such life insurance companies ("Participating Insurance Companies") and also
offers its shares to certain qualified pension and retirement plans; and
WHEREAS, TRUST has received an order from the SEC, dated May 5, 1995
(File No. 812-9164), granting Participating Insurance Companies and their
separate accounts exemptions from the provisions of Sections 9 (a), 13 (a),
15 (a) and 15 (b) of the '40 Act, and Rules 6e-2 (b) (15) and 6e-3 (T) (b)
(15) thereunder, to the extent necessary to permit shares of the Portfolios
of the TRUST to be sold to and held by variable annuity and variable life
insurance separate accounts of both affiliated and unaffiliated life
insurance companies and certain qualified pension and retirement plans (the
"Order"); and
WHEREAS, LIFE COMPANY has established or will establish one or more
separate accounts ("Separate Accounts") to order Variable Contracts and is
desirous of having TRUST as one of the underlaying funding vehicles for such
Variable Contracts; and
WHEREAS, N&B MANAGEMENT is registered with the SEC as an investment
adviser under the Investment Advisers Act of 1940 and as a broker-dealer
under the Securities Exchange Act of 1934, as amended; and
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WHEREAS, N&B MANAGEMENT is the administrator and distributor of the
shares of each Portfolio of TRUST and investment manager of the corresponding
Series of MANAGERS TRUST; and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, LIFE COMPANY intends to purchase shares of TRUST to fund the
aforementioned Variable Contracts and TRUST is authorized to sell such shares
to LIFE COMPANY at net asset value;
NOW, THEREFORE, in consideration of their mutual promises, LIFE COMPANY,
TRUST, MANAGERS TRUST and N&B MANAGEMENT agree as follows:
Article I. SALE OF TRUST SHARES
1.1 TRUST agrees to make available to the Separate Accounts of LIFE
COMPANY shares of the selected Portfolios as listed on Appendix B for
investment of purchase payments of Variable Contracts allocated to the
designated Separate Accounts as provided in TRUST's Prospectus.
1.2 TRUST agrees to sell to LIFE COMPANY those share of the selected
Portfolios of TRUST which LIFE COMPANY orders, executing such orders on a
daily basis at the net asset value next computed after receipt by TRUST or
its designee of the order for the shares of TRUST. For purposes of this
Section 1.2, LIFE COMPANY shall be the designee of TRUST for receipt of such
orders from LIFE COMPANY and receipt by such designee shall constitute
receipt by TRUST; provided that TRUST receives notice of such order by 9:30
a.m. New York time on the next following Business Day. "Business Day" shall
mean any day on which the New York Stock Exchange is open for trading and on
which TRUST calculates its net asset value pursuant to the rules of the SEC.
1.3 TRUST agrees to redeem for cash, on LIFE COMPANY's request, any full
or fractional shares of TRUST held by LIFE COMPANY, executing such requests
on a daily basis at the net asset value next computed after receipt by TRUST
or its designee of the request for redemption. For purposes of this Section
1.3, LIFE COMPANY shall be the designee of TRUST for receipt of requests for
redemption from LIFE COMPANY and receipt by such designee shall constitute
receipt by TRUST; provided that TRUST receives notice of such request for
redemption by 9:30 a.m. New York time on the next following Business Day.
1.4 TRUST shall furnish, on or before the ex-dividend date, notice to
LIFE COMPANY of any income dividends or capital gain distributions payable on
the shares of any Portfolio of TRUST. LIFE COMPANY hereby elects to receive
all such income dividends and capital gain distributions as are payable on a
Portfolio's shares in additional shares of the Portfolio. TRUST shall notify
LIFE COMPANY of the number of shares so issued as payment of such dividends
and distributions.
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<PAGE>
1.5 TRUST shall make the net asset value per share for the selected
Portfolio(s) available to LIFE COMPANY on a daily basis as soon as reasonably
practicable after the net asset value per share is calculated but shall use
its best efforts to make such net asset value available by 6:30 p.m. New York
time. If TRUST provides LIFE COMPANY with materially incorrect share net
asset value information through no fault of LIFE COMPANY, LIFE COMPANY on
behalf of the Separate Accounts, shall be entitled to an adjustment to the
number of shares purchased or redeemed to reflect the correct share net
asset value. Any material error in the calculation of net asset value per
share, dividend or capital gain information shall be reported promptly upon
discovery to LIFE COMPANY.
1.6 At the end of each Business Day, LIFE COMPANY shall use the
information described in Section 1.5 to calculate Separate Account unit
values for the day. Using these unit values, LIFE COMPANY shall process each
such Business Day's Separate Account transactions based on requests and
premiums received by the close of trading on the floor of the New York Stock
Exchange (currently 4:00 p.m. New York time) to determine the net dollar
amount of TRUST shares which shall be purchased or redeemed at that day's
closing net asset value per share. The net purchase or redemption orders so
determined shall be transmitted to TRUST by LIFE COMPANY by 9:30 a.m. New
York Time on the Business Day next following LIFE COMPANY's receipt of such
requests and premiums in accordance with the terms of Sections 1.2 and 1.3
hereof.
1.7 If LIFE COMPANY's order requests the purchase of TRUST shares, LIFE
COMPANY shall pay for such purchase by wiring federal funds to TRUST or its
designated custodial account on the day the order is transmitted by LIFE
COMPANY. If LIFE COMPANY's order requests a net redemption resulting in a
payment of redemption proceeds to LIFE COMPANY, TRUST shall wire the
redemption proceeds to LIFE COMPANY by the next Business Day, unless doing so
would require TRUST to dispose of portfolio securities or otherwise incur
additional costs, but in such event, proceeds shall be wired to LIFE COMPANY
within seven days and TRUST shall notify the person designated in writing by
LIFE COMPANY as the recipient for such notice of such delay by 3:00 p.m. New
York Time the same Business Day that LIFE COMPANY transmits the redemption
order to TRUST. If LIFE COMPANY's order requests the application of
redemption proceeds from the redemption of shares to the purchase of shares
of another fund administered or distributed by N&B MANAGEMENT, TRUST shall so
apply such proceeds the same Business Day that LIFE COMPANY transmits such
order to TRUST.
1.8 TRUST agrees that all shares of the Portfolios of TRUST will be sold
only to Participating Insurance Companies which have agreed to participate in
TRUST to fund their Separate Accounts and/or to certain qualified pension and
other retirement plans, all in accordance with the requirements of Section
817(h) of the Internal Revenue Code of 1986, as amended ("Code") and Treasury
Regulation 1.817-5. Shares of the Portfolios of TRUST will not be sold
directly to the general public.
1.9 TRUST may refuse to sell shares of any Portfolio to any person, or
suspend or terminate the offering of the shares of any Portfolio if such
action is required by law or by regulatory authorities having jurisdiction or
is in the sole discretion of the Board of Trustees of TRUST, acting in good
faith and in light of its fiduciary duties under federal and any applicable
state laws, deemed necessary and in the best interests of the shareholders
of such Portfolios.
3
<PAGE>
Article II. REPRESENTATIONS AND WARRANTIES
2.1 LIFE COMPANY represents and warrants that it is an insurance
company duly organized and in good standing under the laws of Connecticut and
that it has legally and validly established each Separate Account as a
segregated asset account under such laws, and that Hartford Securities
Distribution Company Inc., the principal underwriter for the Variable
Contracts, is registered as a broker-dealer under the Securities Exchange Act
of 1934.
2.2 LIFE COMPANY represents and warrants that it has registered or,
prior to any issuance or sale of the Variable Contracts, will register each
Separate Account as a unit investment trust ("UIT") in accordance with the
provisions of the '40 Act and cause each Separate Account to remain so
registered to serve as a segregated asset account for the Variable Contracts,
unless an exemption from registration is available.
2.3 LIFE COMPANY represents and warrants that the Variable Contracts
will be registered under the Securities Act of 1933 (the " '33 Act") unless
an exemption from registration is available prior to any issuance or sale of
the Variable Contracts and that the Variable Contracts will be issued and
sold in compliance in all material respects with all applicable federal and
state laws and further that the sale of the Variable Contracts shall comply
in all material respects with state insurance law suitability requirements.
2.4 LIFE COMPANY represents and warrants that the Variable Contracts are
currently and at the time of issuance will be treated as life insurance,
endowment or annuity contracts under applicable provisions of the Code, that
it will maintain such treatment and that it will notify TRUST immediately
upon having a reasonable basis for believing that the Variable Contracts have
ceased to be so treated or that they might not be so treated in the future.
2.5 LIFE COMPANY represents and warrants that it shall deliver such
prospectuses, statements of additional information, proxy statements and
periodic reports of the TRUST as required to be delivered under applicable
federal and state law and interpretations of federal and state securities
regulators thereunder in connection with the offer, sale or acquisition of
the Variable Contracts.
2.6 TRUST represents and warrants that the Portfolio shares offered and
sold pursuant to this Agreement will be registered under the '33 Act and sold
in accordance with all applicable federal and state laws, and TRUST shall be
registered under the '40 Act prior to and at the time of any issuance or sale
of such shares. TRUST shall amend its registration statement under the '33
Act and the '40 Act from time to time as required in order to effect the
continuous offering of its shares. TRUST shall register and qualify its
shares for sale in accordance with the law of the various states only if and
to the extent deemed advisable by TRUST.
2.7 TRUST represents and warrants that each portfolio will comply with
the diversification requirements set forth in Section 817(h) of the Code, and
the rules and regulations thereunder, including without limitation Treasury
Regulation 1.817-5, and will notify LIFE COMPANY immediately upon having a
reasonable basis for believing any Portfolio has ceased to comply or might
not so comply and will immediately take all reasonable steps to adequately
diversify the
4
<PAGE>
Portfolio to achieve compliance within the grace period afforded by
Regulation 1.817-5.
2.8 TRUST represents and warrants that each Portfolio invested in by the
Separate Account is currently qualified as a "regulated investment company"
under Subchapter M of the Code, that it will make every effort to maintain
such qualification and will notify LIFE COMPANY immediately upon having a
reasonable basis for believing it has ceased to so qualify or might not so
qualify in the future.
Article III. PROSPECTUS AND PROXY STATEMENTS
3.1 TRUST shall prepare and be responsible for filing with the SEC and
any state regulators requiring such filing all shareholder reports, notices,
proxy materials (or similar materials such as voting instruction solicitation
materials), prospectuses and statements of additional information of TRUST.
TRUST shall bear the costs of registration and qualification of shares of the
Portfolios, preparation and filing of the documents listed in this Section
3.1 and all taxes to which an issuer is subject on the issuance and transfer
of its shares.
3.2 TRUST will bear the printing costs (or duplicating costs with
respect to the statement of additional information) and mailing costs
associated with the delivery of the following TRUST (or individual Portfolio)
documents, and any supplements thereto, to existing Variable Contract owners
of LIFE COMPANY:
(i) prospectuses and statements of additional information;
(ii) annual and semi-annual reports; and
(iii) proxy materials.
LIFE COMPANY will submit any bills for printing, duplicating and/or
mailing costs, relating to the TRUST documents described above, to TRUST for
reimbursement by TRUST. LIFE COMPANY shall monitor such costs and shall use
its best efforts to control these costs. LIFE COMPANY will provide TRUST on
a semi-annual basis, or more frequently as reasonably requested by TRUST,
with a current tabulation of the number of existing Variable Contract owners
of LIFE COMPANY whose Variable Contract values are invested in TRUST. This
tabulation will be sent to TRUST in the form of a letter signed by a duly
authorized officer of LIFE COMPANY attesting to the accuracy of the
information contained in the letter. If requested by LIFE COMPANY, the TRUST
shall provide such documentation (including a final copy of the TRUST's
prospectus as set in type or in camera-ready copy) and other assistance as is
reasonably necessary in order for LIFE COMPANY to print together in one
document the current prospectus for the Variable Contracts issued by LIFE
COMPANY and the current prospectus for the TRUST. Should LIFE COMPANY wish
to print any of these documents in a format different from that provided by
TRUST, LIFE COMPANY shall provide Trust with sixty (60) days' prior written
notice and LIFE COMPANY shall bear the cost associated with any format change.
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3.3 TRUST will provide, at its expense, LIFE COMPANY with the following
TRUST (or individual Portfolio) documents, and any supplements thereto, with
respect to prospective Variable Contract owners of LIFE COMPANY:
(i) camera-ready copy of the current prospectus for printing by the
LIFE COMPANY;
(ii) a copy of the statement of additional information suitable for
duplication;
(iii) camera-ready copy of proxy material suitable for printing; and
(iv) camera-ready copy of the annual and semi-annual reports for
printing by the LIFE COMPANY.
3.4 TRUST will provide LIFE COMPANY with at least one complete copy of
all prospectuses, statements of additional information, annual and
semi-annual reports, proxy statements, exemptive application and all
amendments or supplements to any of the above that relate to the Portfolios
promptly after the filing of each such document with the SEC or other
regulatory authority. LIFE COMPANY will provide TRUST with at least one
complete copy of all prospectuses, statements of additional information,
annual and semi-annual reports, proxy statements, exemptive applications and
all amendments or supplements to any of the above that relate to a Separate
Account promptly after the filing of each such document with the SEC or other
regulatory authority.
Article IV. SALES MATERIALS
4.1 LIFE COMPANY will furnish, or will cause to be furnished, to TRUST
and N&B MANAGEMENT, each piece of sales literature or other promotional
material in which TRUST, MANAGERS TRUST or N&B MANAGEMENT is named, at least
fifteen (15) Business Days prior to its intended use. No such material will
be used if TRUST, MANAGERS TRUST or N&B MANAGEMENT objects to its use in
writing within ten (10) Business Days after receipt of such material.
4.2 TRUST and N&B MANAGEMENT will furnish, or will cause to be
furnished, to LIFE COMPANY, each piece of sales literature or other
promotional material in which LIFE COMPANY or its Separate Accounts are
named, at least fifteen (15) Business Days prior to its intended use. No
such material will be used if LIFE COMPANY objects to its use in writing
within ten (10) Business Days after receipt of such material.
4.3 TRUST and its affiliates and agents shall not give any information
or make any representations on behalf of LIFE COMPANY or concerning LIFE
COMPANY, the Separate Accounts, or the Variable Contracts issued by LIFE
COMPANY, other than the information or representations contained in a
registration statement or prospectus for such Variable Contracts, as such
registration statement and prospectus may be amended or supplemented from
time to time, or in reports of the Separate Accounts or reports prepared for
distribution to owners of such Variable
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Contracts, or in sales literature or other promotional material approved by
LIFE COMPANY or its designee, except with the written permission of LIFE
COMPANY.
4.4 LIFE COMPANY and its affiliates and agents shall not give any
information or make any representations on behalf of TRUST or concerning
TRUST other than the information or representations contained in a
registration statement or prospectus for TRUST, as such registration
statement and prospectus may be amended or supplemented from time to time, or
in sales literature or other promotional material approved by TRUST or its
designee, except with the written permission of TRUST.
4.5 For purposes of this Agreement, the phrase "sales literature or
other promotional material" or words of similar import include, without
limitation, advertisements (such as material published, or designed for use,
in a newspaper, magazine or other periodical, radio, television, telephone or
tape recording, videotape display, signs or billboards, motion pictures or
other public media), sales literature (such as any written communication
distributed or made generally available to customers or the public, including
brochures, circulars, research reports, market letters, form letters, seminar
texts, or reprints or excerpts of any other advertisement, sales literature,
or published article), educational or training materials or other
communications distributed or made generally available to some or all agents
or employees, registration statements, prospectuses, statements of additional
information, shareholder reports and proxy materials, and any other material
constituting sales literature or advertising under National Association of
Securities Dealers, Inc. rules, the '40 Act or the '33 Act.
Article V. POTENTIAL CONFLICTS
5.1 The Board of Trustees of TRUST and MANAGERS TRUST (the "Boards")
will monitor TRUST and MANAGERS TRUST, respectively, (collectively the
"Funds"), for the existence of any material irreconcilable conflict between
the interests of the Variable Contract owners of Participating Insurance
Company Separate Accounts investing in the Funds. A material irreconcilable
conflict may arise for a variety of reasons, including: (a) state insurance
regulatory authority action; (b) a change in applicable federal or state
insurance, tax, or securities laws or regulations, or a public ruling,
private letter ruling, or any similar action by insurance, tax, or securities
regulatory authorities; (c) an administration or judicial decision in any
relevant proceeding; (d) the manner in which the investments of the Funds
are being managed; (e) a difference in voting instructions given by variable
annuity and variable life insurance contract owners or by contract owners of
different Participating Insurance Companies; or (f) a decision by a
Participating Insurance Company to disregard voting instructions of Variable
Contract owners.
5.2 LIFE COMPANY will report any potential or existing conflicts to the
Boards. LIFE COMPANY will be responsible for assisting each appropriate
Board in carrying out its responsibilities under the Conditions set forth in
the notice issued by the SEC for the Funds on April 12, 1995 (the "Notice")
(Investment Company Act Release No. 21003), which LIFE COMPANY has reviewed,
by providing each appropriate Board with all information reasonably necessary
for it to consider any issues raised. This responsibility includes, but is
not limited to, an obligation by LIFE COMPANY to inform each appropriate
Board whenever Variable Contract owner voting
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instructions are disregarded by LIFE COMPANY. These responsibilities will be
carried out with a view only to the interests of the Variable Contract owners.
5.3 If a majority of the Board of a Fund or a majority of its
disinterested trustees or directors, determines that a material
irreconcilable conflict exists, affecting the LIFE COMPANY, LIFE COMPANY, at
its expense and to the extent reasonably practicable (as determined by a
majority of disinterested trustees or directors), will take any steps
necessary to remedy or eliminate the irreconcilable material conflict,
including: (a) withdrawing the assets allocable to some or all of the
Separate Accounts from the Funds or any series thereof and reinvesting those
assets in a different investment medium, which may include another series of
TRUST or MANAGERS TRUST or another investment company or submitting the
question as to whether such segregation should be implemented to a vote of
all affected Variable Contract owners and, as appropriate, segregating the
assets of any appropriate group (i.e., Variable Contract owners of one or
more Participating Insurance Companies) that votes in favor of such
segregation, or offering to the affected Variable Contract owners the option
of making such a change; and (b) establishing a new registered management
investment company or managed separate account. If a material irreconcilable
conflict arises because of LIFE COMPANY's decision to disregard Variable
Contract owner voting instructions, and that decision represents a minority
position or would preclude a majority vote, LIFE COMPANY may be required, at
the election of the relevant Fund, to withdraw its Separate Account's
investment in such Fund, and no charge or penalty will be imposed as a result
of such withdrawal. The responsibility to take such remedial action shall be
carried out with a view only to the interests of the Variable Contract
owners.
For the purposes of this Section 5.3, a majority of the disinterested
members of the applicable Board shall determine whether or not any proposed
action adequately remedies any irreconcilable material conflict, but in no
event will the relevant Fund or N&B MANAGEMENT (or any other investment
adviser of the Funds) be required to establish a new funding medium for any
Variable Contract. Further, LIFE COMPANY shall not be required by this
Section 5.3 to establish a new funding medium for any Variable Contract if
any offer to do so has been declined by a vote of a majority of Variable
Contract owners materially affected by the irreconcilable material conflict.
5.4 Any Board's determination of the existence of an irreconcilable
material conflict and its implications shall be made known promptly and in
writing to LIFE COMPANY.
5.5 No less than annually, LIFE COMPANY shall submit to the Boards such
reports, materials or data as such Board may reasonably request so that the
Boards may fully carry out the obligations imposed upon them by these
Conditions. Such reports materials, and data shall be submitted more
frequently if deemed appropriate by the applicable Boards.
Article VI. VOTING
6.1 LIFE COMPANY will provide pass-through voting privileges to all
Variable Contract owners so long as the SEC continues to interpret the '40
Act as requiring pass-through voting
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privileges for Variable Contract owners. This condition will apply to
UIT-Separate Accounts investing in TRUST and to managed separate accounts
investing in MANAGERS TRUST to the extent a vote is required with respect to
matters relating to MANAGERS TRUST. Accordingly, LIFE COMPANY, where
applicable, will vote shares of a Fund held in its Separate Accounts in a
manner consistent with voting instructions timely received from its Variable
Contract owners. LIFE COMPANY will be responsible for assuring that each of
its Separate Accounts that participates in any Fund calculates voting
privileges in a manner consistent with other participants as defined in the
Conditions set forth in the Notice ("Participants"). The obligation to
calculate voting privileges in a manner consistent with all other Separate
Accounts investing in a Fund will be a contractual obligation of all
Participants under the agreements governing participation in the Funds. Each
Participant will vote shares for which it has not received timely voting
instructions, as well as shares it owns, in the same proportion as its votes
those shares for which it has received voting instructions.
6.2 If and to the extent Rule 6e-2 and Rule 6e-3 (T) are amended, or
Rule 6e-3 is adopted, to provide exemptive relief from any provision of the
'40 Act or the rules thereunder with respect to mixed and shared funding on
terms and conditions materially different from any exemptions granted in the
Order, then TRUST, MANAGERS TRUST and/or the Participants, as appropriate,
shall take such steps as may be necessary to comply with Rule 6e-2 and Rule
6e-3 (T), as amended, and Rule 6e-3, as adopted to the extent such Rules are
applicable.
Article VII. INDEMNIFICATION
7.1 INDEMNIFICATION BY LIFE COMPANY. LIFE COMPANY agrees to indemnify
and hold harmless TRUST, MANAGERS TRUST, N&B MANAGEMENT and each of their
Trustees, directors, officers, employees and agents and each person, if any,
who controls TRUST or MANAGERS TRUST or N&B MANAGEMENT within the meaning of
Section 15 of the '33 Act (collectively, the "Indemnified Parties" for
purposes of this Article VII) against any and all losses, claims, damages,
liabilities (including amounts paid in settlement with the written consent of
LIFE COMPANY, which consent shall not be unreasonably withheld) or litigation
(including legal and other expenses), to which the Indemnified Parties may
become subject under any statute, regulation, at common law or otherwise,
insofar as such losses, claims, damages, liabilities or expenses (or actions
in respect thereof) or settlements are related to the offer, sale or
acquisition of TRUST's shares or the Variable Contracts and:
(a) arise out of or are based upon any untrue statements or
alleged untrue statements of any material fact
contained in the Registration Statement or prospectus
for the Variable Contracts or contained in the Variable
Contracts (or any amendment or supplement to any of the
foregoing), or arise out of or are based upon the
omission or the alleged omission to state therein a
material fact required to be stated therein or
necessary to make the statements therein not
misleading, provided that this agreement to indemnify
shall not apply as to any Indemnified Party if such
statement or omission or such alleged statement or
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omission was made in reliance upon and in conformity
with information furnished to LIFE COMPANY by or on
behalf of TRUST for use in the registration statement
or prospectus for the Variable Contracts or in the
Variable Contracts or sales literature (or any
amendment or supplement) or otherwise for use in
connection with the sale of the Variable Contracts or
TRUST shares; or
(b) arise out of or as a result of statements or
representations (other than statements or
representations contained in the registration
statement, prospectus or sales literature of TRUST not
supplied by LIFE COMPANY, or persons under its control)
or wrongful conduct of LIFE COMPANY or persons under
its control, with respect to the sale or distribution
of the Variable Contracts or TRUST shares; or
(c) arise out of any untrue statement or alleged untrue
statement of a material fact contained in a
registration statement, prospectus, or sales literature
of TRUST or any amendment thereof or supplement thereto
or the omission or alleged omission to state therein a
material fact required to be stated therein or
necessary to make the statements therein not misleading
if such statement or omission or such alleged statement
or omission was made in reliance upon and in conformity
with information furnished to TRUST by or on behalf of
LIFE COMPANY; or
(d) arise as a result of any failure by LIFE COMPANY to
substantially provide the services and furnish the
materials under the terms of this Agreement; or
(e) arise out of or result from any material breach of any
representation and/or warranty made by LIFE COMPANY in
this Agreement or arise out of or result from any other
material breach of this Agreement by LIFE COMPANY.
7.2 LIFE COMPANY shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or
litigation incurred or assessed against an Indemnified Party as such may
arise from such Indemnified Party's willful misfeasance, bad faith, or gross
negligence in the performance of such Indemnified Party's duties or by reason
of such Indemnified Party's reckless disregard of obligations or duties under
this Agreement or to TRUST, whichever is applicable.
7.3 LIFE COMPANY shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified LIFE COMPANY in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party
10
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(or after such Indemnified Party shall have received notice of such service
on any designated agent), but failure to notify LIFE COMPANY of any such
claim shall not relieve LIFE COMPANY from any liability which it may have to
the Indemnified Party against whom such action is brought otherwise than on
account of this indemnification provision. In case any such action is
brought against an Indemnified Party, LIFE COMPANY shall be entitled to
participate at its own expense in the defense of such action. LIFE COMPANY
also shall be entitled to assume the defense thereof, with counsel
satisfactory to the party named in the action. After notice from LIFE
COMPANY to such party of LIFE COMPANY's election to assume the defense
thereof, the Indemnified Party shall bear the fees and expenses of any
additional counsel retained by it, and LIFE COMPANY will not be liable to
such party under this Agreement for any legal or other expenses subsequently
incurred by such party independently in connection with the defense thereof
other than reasonable costs of investigation.
7.4 INDEMNIFICATION BY N&B MANAGEMENT. N&B MANAGEMENT agrees to
indemnify and hold harmless LIFE COMPANY and each of its directors, officers,
employees, and agents and each person, if any, who controls LIFE COMPANY
within the meaning of Section 15 of the '33 Act (collectively, the
"Indemnified Parties" for the purposes of this Article VII) against any and
all losses, claims, damages, liabilities (including amounts paid in
settlement with the written consent of N&B MANAGEMENT which consent shall not
be unreasonably withheld) or litigation (including legal and other expenses)
to which the Indemnified Parties may become subject under any statute, or
regulation, at common law or otherwise, insofar as such losses, claims,
damages, liabilities or expenses (or actions in respect thereof) or
settlements are related to the offer, sale or acquisition of TRUST's shares
or the Variable Contracts and:
(a) arise out of or are based upon any untrue statement or alleged
untrue statementof any material fact contained in the
registration statement or prospectus or sales literature of
TRUST (or any amendment or supplement to any of the
foregoing), or arise out of or are based upon the omission or
the alleged omission to state therein a material fact
required to be stated therein or necessary to make the
statements therein not misleading, provided that this
agreement to indemnify shall not apply as to any Indemnified
Party if such statement or omission or such alleged statement
or omission was made in reliance upon and in conformity with
information furnished to N&B MANAGEMENT or TRUST by or on
behalf of LIFE COMPANY for use in the registration statement
or prospectus for TRUST or in sales literature (or any
amendment or supplement) or otherwise for use in connection
with the sales of the Variable Contracts or TRUST shares; or
(b) arise out of or as a result of statements or representations
(other than statements or representations contained in the
registration statement, prospectus or sales literature for the
Variable Contracts not supplied by N&B MANAGEMENT or persons
under its control) or wrongful conduct of TRUST or N&B
MANAGEMENT or persons under their control, with respect to
the sale or distribution of the Variable Contracts or TRUST
shares; or
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(c) arise out of any untrue statement or alleged untrue statement of
a material fact contained in a registration statement, prospectus,
or sales literature covering the Variable Contracts, or any
amendment thereof or supplement thereto or the omission or alleged
omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not
misleading, if such statement or omission or such alleged
statement or omission was made in reliance upon and in conformity
with information furnished to LIFE COMPANY for inclusion therein
by or on behalf of TRUST; or
(d) arise as a result of (i) a failure by TRUST to substantially
provide the services and furnish the materials under the terms
of this Agreement; or (ii) a failure by a Portfolio(s) invested
in by the Separate Account to comply with the diversification
requirements of Section 817 (h) of the Code; or (iii) a failure
by a Portfolio(s) invested in by the Separate Account to qualify
as a "regulated investment company" under Subchapter M of the
Code; or
(e) arise out of or result from any material breach of any
representation and/or warranty made by N&B MANAGEMENT in this
Agreement or arise out of or result from any other material
breach of this Agreement by N&B MANAGEMENT.
7.5 N&B MANAGEMENT shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or
litigation to which an Indemnified Party would otherwise by subject by reason
of such Indemnified Party's willful misfeasance, bad faith, or gross
negligence in the performance of such Indemnified Party's duties or by reason
of such Indemnified Party's reckless disregard of obligations and duties
under this Agreement or to LIFE COMPANY.
7.6 N&B MANAGEMENT shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified N&B MANAGEMENT in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice
of such service on any designated agent), but failure to notify N&B
MANAGEMENT of any such claim shall not relieve N&B MANAGEMENT from any
liability which it may have to the Indemnified Party against whom such action
is brought otherwise than on account of this indemnification provision. In
case any such action is brought against the Indemnified Parties, N&B
MANAGEMENT shall be entitled to participate at its own expense in the defense
thereof. N&B MANAGEMENT also shall be entitled to assume the defense
thereof, with counsel satisfactory to the party named in the action. After
notice from N&B MANAGEMENT to such party of N&B MANAGEMENT's election to
assume the defense thereof, the Indemnified Party shall bear the fees and
expenses of any additional counsel retained by it, and N&B MANAGEMENT will
not be liable to such party under this Agreement for any legal or other
expenses subsequently incurred by such party independently in connection with
the defense thereof other than reasonable costs of investigation.
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Article VIII. TERM: TERMINATION
8.1 This Agreement shall be effective as of the date hereof and shall
continue in force until terminated in accordance with the provisions herein.
8.2 This Agreement shall terminate in accordance with the following
provisions:
(a) At the option of LIFE COMPANY or TRUST at any time from the
date hereof upon 180 days' notice, unless a shorter time is
agreed to by the parties;
(b) At the option of LIFE COMPANY, if TRUST shares are not
reasonably available to meet the requirements of the
Variable Contracts as determined by LIFE COMPANY. Prompt
notice of election to terminate shall be furnished by LIFE
COMPANY, said termination to be effective ten days after
receipt of notice unless TRUST makes available a sufficient
number of shares to reasonably meet the requirements of the
Variable Contracts within said ten-day period;
(c) At the option of LIFE COMPANY, upon the institution of
formal proceedings against TRUST by the SEC, or any other
regulatory body, the expected or anticipated ruling,
judgment or outcome of which would, in LIFE COMPANY's
reasonable judgment, materially impair TRUST's ability to
meet and perform Trust's obligations and duties hereunder.
Prompt notice of election to terminate shall be furnished by
LIFE COMPANY with said termination to be effective upon
receipt of notice;
(d) At the option of TRUST, upon the institution of formal
proceedings against LIFE COMPANY by the SEC, the National
Association of Securities Dealers, Inc., or any other
regulatory body, the expected or anticipated ruling,
judgment or outcome of which would, in TRUST's reasonable
judgment, materially impair LIFE COMPANY's ability to meet
and perform its obligations and duties hereunder. Prompt
notice of election to terminate shall be furnished by TRUST
with said termination to be effective upon receipt of
notice;
(e) In the event TRUST's shares are not registered, issued or
sold in accordance with applicable state or federal law, or
such law precludes the use of such shares as the underlying
investment medium of Variable Contracts issued or to the
issued by LIFE COMPANY. Termination shall be effective upon
such occurrence without notice;
(f) At the option of TRUST if the Variable Contracts cease to
qualify as annuity contracts or life insurance contracts, as
applicable, under the Code, or if TRUST
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reasonably believes that the Variable Contracts may fail to
so qualify. Termination shall be effective upon receipt of
notice by LIFE COMPANY;
(g) At the option of LIFE COMPANY, upon TRUST's breach of any
material provision of this Agreement, which breach has not
been cured to the satisfaction of LIFE COMPANY within ten
days after written notice of such breach is delivered to
TRUST;
(h) At the option of TRUST, upon LIFE COMPANY's breach of any
material provision of this Agreement, which breach has not
been cured to the satisfaction of TRUST within ten days after
written notice of such breach is delivered to LIFE COMPANY;
(i) At the option of TRUST, if the Variable Contracts are not
registered, issued or sold in accordance with applicable
federal and/or state law. Termination shall be effective
immediately upon such occurrence without notice;
(j) In the event this Agreement is assigned without the prior
written consent of LIFE COMPANY, TRUST, MANAGERS TRUST and
N&B MANAGEMENT, termination shall be effective immediately
upon such occurrence without notice.
8.3 Notwithstanding any termination of this Agreement pursuant to
paragraphs (a), (b), (c), (g), or (j) of Section 8.2 hereof, TRUST shall, at
the option of LIFE COMPANY, continue to make available additional shares of
TRUST subject to all of the terms of this Agreement, for all Variable
Contracts in effect on the effective date of termination of this Agreement
(hereinafter referred to as "Existing Contracts"). Specifically, without
limitation, the owners of the Existing Contracts or LIFE COMPANY, whichever
shall have legal authority to do so, shall be permitted to reallocate
investments in TRUST, redeem investments in TRUST and/or invest in TRUST upon
the payment of additional premiums under the Existing Contracts. The parties
agree that this Section 8.3 shall not apply to any terminations under
paragraphs (d), (e), (f), (h), or (i) of Section 8.2 hereof or under Article
V hereof, and the effect of Article V terminations shall be governed by said
Article V. In the event of a termination of this Agreement pursuant to
paragraphs (a), (b), (c), (g), or (j) of Section 8.2 hereof, LIFE COMPANY, as
promptly as is practicable under the circumstances, shall notify TRUST
whether LIFE COMPANY elects to continue to make TRUST shares available after
such termination.
8.4 Except as necessary to implement Variable Contract owner initiated
transactions, or as required by state insurance laws or regulations, LIFE
COMPANY shall not redeem the shares attributable to the Variable Contracts
(as opposed to the shares attributable to LIFE COMPANY's assets held in the
Separate Accounts), and LIFE COMPANY shall not prevent Variable Contract
owners from allocating payments to a Portfolio that was otherwise available
under the Variable Contracts, until thirty (30) days after the LIFE COMPANY
shall have notified TRUST of its intention to do so.
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Article IX. NOTICES
Any notice hereunder shall be given by registered or certified mail
return receipt requested to the other party at the address of such party set
forth below or at such other address as such party may from time to time
specify in writing to the other party.
If to TRUST, MANAGERS TRUST or N&B MANAGEMENT:
Neuberger&Berman Management Incorporated
605 Third Avenue
New York, NY 10158-0006
Attention: Ellen Metzger, General Counsel
If to LIFE COMPANY:
American Maturity Life Insurance Company
200 Hopmeadow Street
Simsbury, CT 06089
Attention: Joseph Noto, Esq.
Notice shall be deemed given on the date of receipt by the addressee as
evidenced by the return receipt.
Article X. MISCELLANEOUS
10.1 The captions in this Agreement are included for convenience of
reference only and in no way define or delineate any of the provisions hereof
or otherwise affect their construction or effect.
10.2 This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
10.3 If any provision of this Agreement shall be held or made invalid by
a court decision, statute, rule or otherwise, the remainder of the Agreement
shall not be affected thereby.
10.4 This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of the State of New York.
It shall also be subject to the provisions of the federal securities laws and
the rules and regulations thereunder and to any orders of the SEC granting
exemptive relieve therefrom and the conditions of such order.
10.5 The parties agree that the assets and liabilities of each Series are
separate and distinct from the assets and liabilities of each other Series.
No Series shall be liable or shall be charged for
15
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any debt, obligation or liability of any other Series. No Trustee, officer
or agent shall be personally liable for such debt, obligation or liability of
any Series or Portfolio and no Portfolio or other investor, other than the
Portfolio or other investors investing in the Series which incurs a debt,
obligation or liability, shall be liable therefor.
10.6 Each party shall cooperate with each other party and all appropriate
governmental authorities (including without limitation the SEC, the National
Association of Securities Dealers, Inc. and state insurance regulators) and
shall permit such authorities reasonable access to its books and records in
connection with any investigation or inquiry relating to this Agreement or
the transactions contemplated hereby.
10.7 The rights, remedies and obligations contained in this Agreement are
cumulative and are in addition to any and all rights, remedies and
obligations, at law or in equity, which the parties hereto are entitled to
under state and federal laws.
10.8 No provision of this Agreement may be amended or modified in any
manner except by a written agreement properly authorized and executed by
TRUST, MANAGERS TRUST, N&B MANAGEMENT and the LIFE COMPANY.
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IN WITNESS WHEREOF, the parties have caused their duly authorized officers to
execute this Fund Participation Agreement as of the date and year first above
written.
NEUBERGER&BERMAN
ADVISERS MANAGEMENT TRUST
By: \s\ Stanley Egener
-----------------------------
Name:
Title:
ADVISERS MANAGERS TRUST
By: \s\ Stanley Egener
-----------------------------
Name:
Title:
NEUBERGER&BERMAN
MANAGEMENT INCORPORATED
By: \s\ Peter Sundman
-----------------------------
Name:
Title:
AMERICAN MATURITY LIFE INSURANCE
COMPANY
By: \s\ Joseph J. Noto
-----------------------------
Name: Joseph J. Noto
-----------------------------
Title: President
-----------------------------
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APPENDIX A
Neuberger&Berman Advisers Corresponding Series of
Management Trust and its Series (Portfolios) Advisers Managers Trust (Series)
Balanced Portfolio AMT Balanced Investments
Government Income Portfolio AMT Government Income Investment
Growth Portfolio AMT Growth Investments
Limited Maturity Bond Portfolio AMT Limited Maturity Bond
Investments
Liquid Asset Portfolio AMT Liquid Asset Investments
Partners Portfolio AMT Partners Investments
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APPENDIX B
Separate Accounts Selected Portfolios
AMLVA Neuberger&Berman Advisers Management
Trust Partners Portfolio
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ARTHUR ANDERSEN LLP
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our report
(and to all references to our Firm) included in or made a part of this
Registration Statement File No. 333-10105 on Form N-4 for American Maturity
Life Insurance Company Separate Account AMLVA.
/s/ Arthur Andersen LLP
Hartford, Connecticut
December 9, 1996
