As filed with the Securities and Exchange Registration No. 33-34370*
Commission on February 12, 1997 Registration No. 811-2512
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-4
- --------------------------------------------------------------------------------
POST-EFFECTIVE AMENDMENT NO. 25 TO
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
and Amendment to
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
- --------------------------------------------------------------------------------
Variable Annuity Account B of Aetna Life Insurance and Annuity Company
Aetna Life Insurance and Annuity Company
151 Farmington Avenue, RC4A, Hartford, Connecticut 06156
Depositor's Telephone Number, including Area Code: (860) 273-7834
Susan E. Bryant, Counsel
Aetna Life Insurance and Annuity Company
151 Farmington Avenue, RC4A, Hartford, Connecticut 06156
(Name and Address of Agent for Service)
- --------------------------------------------------------------------------------
It is proposed that this filing will become effective:
X immediately upon filing pursuant to paragraph (b) of Rule 485
--------
on ____________________ pursuant to paragraph (b) of Rule 485
--------
Pursuant to Rule 24f-2 under the Investment Company Act of 1940, Registrant has
registered an indefinite number of securities under the Securities Act of 1933.
Registrant expects to file a Rule 24f-2 Notice for the fiscal year ended
December 31, 1996 on or before February 28, 1997.
*Pursuant to Rule 429(a) under the Securities Act of 1933, Registrant has
included a combined prospectus under this Registration Statement which includes
all the information which would currently be required in a prospectus relating
to the following earlier Registration Statement: 33-87932.
<PAGE>
CROSS REFERENCE SHEET
<TABLE>
<CAPTION>
FORM N-4 LOCATION - PROSPECTUS
ITEM NO. PART A (PROSPECTUS) DATED MAY 1, 1996 AND AS
AMENDED BY
SUPPLEMENTS DATED JUNE
21, 1996, SEPTEMBER 16, 1996
AND FEBRUARY 12, 1997
<S> <C> <C> <C>
1 Cover Page........................................... Cover Page
2 Definitions.......................................... Definitions
3 Synopsis............................................. Prospectus Summary; Fee Table
and as amended
4 Condensed Financial Information...................... Condensed Financial Information
5 General Description of Registrant, Depositor, and The Company; Variable Annuity
Portfolio Companies.................................. Account B; The Funds and as
amended
6 Deductions and Expenses.............................. Charges and Deductions; Distribution
7 General Description of Variable Annuity Contracts.... Purchase; Miscellaneous
8 Annuity Period....................................... Annuity Period
9 Death Benefit........................................ Death Benefit During
Accumulation Period; Death
Benefit Payable During the
Annuity Period
10 Purchases and Contract Value......................... Purchase; Contract Valuation
11 Redemptions.......................................... Right to Cancel; Withdrawals
12 Taxes................................................ Tax Status
13 Legal Proceedings.................................... Miscellaneous - Legal Matters and
Proceedings
14 Table of Contents of the Statement of Additional Contents of the Statement of
Information.......................................... Additional Information
<PAGE>
LOCATION - STATEMENT
FORM N-4 PART B (STATEMENT OF OF ADDITIONAL
ITEM NO. ADDITIONAL INFORMATION) INFORMATION DATED
MAY 1, 1996 AND AS
AMENDED BY
SUPPLEMENT DATED
FEBRUARY 12, 1997
15 Cover Page........................................... Cover page
16 Table of Contents.................................... Table of Contents
17 General Information and History...................... General Information and History
18 Services............................................. General Information and History;
Independent Auditors
19 Purchase of Securities Being Offered................. Offering and Purchase of Contracts
20 Underwriters......................................... Offering and Purchase of Contracts
21 Calculation of Performance Data...................... Performance Data; Average Annual
Total Return Quotations
22 Annuity Payments..................................... Annuity Payments
23 Financial Statements................................. Financial Statements
</TABLE>
Part C (Other Information)
--------------------------
Information required to be included in Part C is set forth under the appropriate
item, so numbered, in Part C to this Registration Statement.
<PAGE>
PARTS A AND B
The Prospectus and the Statement of Additional Information are incorporated into
Part A and B of this Post-Effective Amendment No. 25, respectively, by reference
to Post-Effective Amendment No. 22 to the Registration Statement on Form N-4
(File No. 33-34370), as filed electronically on April 22, 1996 and by reference
to Supplements dated June 21, 1996 and September 16, 1996 as contained in
Post-Effective Amendment No. 23 and 24, respectively, to Registration Statement
on Form N-4 (File No. 33-34370), as filed electronically on June 21, 1996 and
September 16, 1996, respectively.
<PAGE>
VARIABLE ANNUITY ACCOUNT B
Aetna Life Insurance and Annuity Company
Supplement dated February 12, 1997 to the Prospectus dated May 1, 1996
Growth Plus (New York)-Group and Individual Deferred Variable Annuity Contracts
The information in this supplement updates and amends the information contained
in the Prospectus dated May 1, 1996 (the "Prospectus") and should be read with
that Prospectus.
As of the date of this supplement, subject to applicable regulatory
authorization, the Federated Equity Income Fund II is available as an investment
option under the variable annuity contract described in the Prospectus.
The description of the Federated Equity Income Fund II is as follows:
[bullet] Federated Equity Income Fund II seeks to provide above average
income and capital appreciation. The Fund attempts to achieve its
objective by investing at least 65% of its assets in income-producing
equity securities. Equity securities include common stocks, preferred
stocks, and securities (including debt securities) that are convertible
into common stocks. The portion of the Fund's total assets invested in
common stocks, preferred stocks, and convertible securities will vary
according to the Fund's assessment of market and economic conditions and
outlook.
Please refer to the respective Fund prospectus for more comprehensive
information about the investment option.
FEE TABLE
The following information amends the "Annual Expenses of the Funds" and
"Hypothetical Illustrations" sections of the Fee Table to include information
for the new investment option. Please also refer to the table of Separate
Account Annual Expenses in the Fee Table in the Prospectus, which also applies
to the new investment option.
Annual Expenses of the Funds
<TABLE>
<CAPTION>
Total Fund
Annual
Other Expenses Expenses
Investment (After Expense (After Expense
Advisory Fees 12b-1 Fees Reimbursement) Reimbursement)
------------ ---------- -------------- ---------------
<S> <C> <C> <C> <C>
Federated Equity Income Fund II 0.00%(1) 0.00%(2) 0.85%(3) 0.85%(3)
</TABLE>
(1) The estimated investment advisory fee has been reduced to reflect the
anticipated voluntary waiver of the investment advisory fee. The adviser can
terminate this voluntary waiver at any time at it sole discretion. The maximum
investment advisory fee is 0.75%.
(2) The Fund has no present intention of paying or accruing the 12b-1 fee during
the fiscal year ending December 31, 1997. If the Fund were paying or accruing
the 12b-1 fee, Institutional Shares would be able to pay up to 0.25% of its
average daily net assets for the 12b-1 fee. "See Fund Information" in the Fund
prospectus.
(3) The other expenses and the total operating expenses are estimated to be
1.07% and 1.82% respectively absent the anticipated voluntary waiver the
management fee and the anticipated voluntary reimbursement of certain other
operating expenses.
Total Fund operating expenses are estimated based on average expenses expected
to be incurred during the period ending December 31, 1997. During the course of
this period, expenses may be more or less than the average amount shown.
Form No. XALIACNY-1
<PAGE>
Hypothetical Illustration
THIS EXAMPLE IS PURELY HYPOTHETICAL. IT SHOULD NOT BE CONSIDERED A
REPRESENTATION OF PAST OR FUTURE EXPENSES OR EXPECTED RETURN. ACTUAL EXPENSES
AND/OR RETURN MAY BE MORE OR LESS THAN THOSE SHOWN BELOW.
The following Example illustrates the expenses that would have been paid
assuming a $1,000 investment in the Contract and a 5% return on assets. For the
purposes of this Example, the maximum maintenance fee of $30.00 that can be
deducted under the Contract has been converted to a percentage of assets equal
to 0.005%.
<TABLE>
<CAPTION>
EXAMPLE A EXAMPLE B
If you withdraw your entire Account Value If you do not withdraw your Account
at the end of the periods shown, you Value, or if you annuitize at the end
would pay the following expenses, of the periods shown, you would pay the
including any applicable deferred sales following expenses (no deferred sales
charge: charge is reflected):*
1 year 3 years 5 years 10 Years 1 year 3 years 5 years 10 years
------ ------- ------- -------- ------ ------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Federated Equity Income Fund II $74 $104 $137 $259 $23 $70 $121 $259
</TABLE>
* This Example would not apply if a nonlifetime variable annuity option is
selected, and a lump sum settlement is requested within three years after
annuity payments start, since the lump sum payment will be treated as a
withdrawal during the Accumulation Period and will be subject to any deferred
sales charge that would then apply. (Refer to Example A.)
Form No. XALIACNY-1
<PAGE>
The following information amends the "Condensed Financial Information" section.
CONDENSED FINANCIAL INFORMATION
(Selected data for accumulation units outstanding throughout each period)
--------------------------------------------------------------------------
The condensed financial information presented below for the period ended
December 31, 1996, is derived from the financial statements of the Separate
Account.
<TABLE>
<CAPTION>
1996
(unaudited)
------------------
<S> <C>
FEDERATED AMERICAN LEADERS FUND II
Value at beginning of period $12.971
Value at end of period $15.548
Increase (decrease) in value of accumulation unit (1) 19.87%
Number of accumulation units outstanding at end of period 3,931,612.6
FEDERATED FUND FOR U.S. GOVERNMENT SECURITIES II
Value at beginning of period $10.804
Value at end of period $11.099
Increase (decrease) in value of accumulation unit (1) 2.74%
Number of accumulation units outstanding at end of period 689,789.0
FEDERATED GROWTH STRATEGIES FUND II
Value at beginning of period $10.277
Value at end of period $12.596
Increase (decrease) in value of accumulation unit (1) 22.57%
Number of accumulation units outstanding at end of period 570,181.6
FEDERATED HIGH INCOME BOND FUND II
Value at beginning of period $11.640
Value at end of period $13.119
Increase (decrease) in value of accumulation unit (1) 12.71%
Number of accumulation units outstanding at end of period 2,069,632.8
FEDERATED INTERNATIONAL EQUITY FUND II
Value at beginning of period $10.255
Value at end of period $10.952
Increase (decrease) in value of accumulation unit (1) 6.80%
Number of accumulation units outstanding at end of period 541,970.0
FEDERATED PRIME MONEY FUND II
Value at beginning of period $10.406
Value at end of period $10.748
Increase (decrease) in value of accumulation unit (1) 3.29%
Number of accumulation units outstanding at end of period 720,520.8
FEDERATED UTILITY FUND II
Value at beginning of period $12.095
Value at end of period $13.303
Increase (decrease) in value of accumulation unit (1) 9.99%
Number of accumulation units outstanding at end of period 1,260,915.0
- --------------------------------------------------------------
</TABLE>
(1) The above figures are calculated by subtracting the beginning Accumulation
Unit Value from the ending Accumulation Unit Value during a calendar year, and
dividing the result by the beginning Accumulation Unit Value. These figures do
not reflect the deferred sales charge or the fixed dollar annual maintenance
fee, if any. Inclusion of these charges would reduce the investment results
shown.
Form No. XALIACNY-1
<PAGE>
VARIABLE ANNUITY ACCOUNT B
OF
AETNA LIFE INSURANCE AND ANNUITY COMPANY
New York Growth Plus
Supplement dated February 12, 1997 to Statement of Additional Information
dated May 1, 1996
The information in this supplement updates and amends the information contained
in the Statement of Additional Information dated May 1, 1996 (the "Statement")
and should be read with that Statement. Capitalized terms are defined in the
Statement or in the Prospectus.
The following infomation is added to the section entitled "Variable Annuity
Account B" of the Statement:
Federated Equity Income Fund II
The following information amends the "Average Annual Total Return Quotations"
section of the Statement:
AVERAGE ANNUAL TOTAL RETURN QUOTATIONS - Standardized and Non-Standardized
The tables shown below reflect the average annual standardized and
non-standardized total return quotation figures for the periods ended December
31, 1996 for the Subaccounts available under the Contract. The table reflects
the total return quotations for Growth Plus Contracts issued in the state of New
York. For those Subaccounts where results are not available for the full
calendar period indicated, the percentage shown is an average annual return
since inception (denoted with an asterisk).
<TABLE>
<CAPTION>
CONTRACTS ISSUED IN NEW YORK
---------------------------------- ------------------------------------------- ------------
FUND
($30 MAINTENANCE FEE) STANDARDIZED NON-STANDARDIZED INCEPTION
DATE
--------------------------------------- ---------- ----------- ----------- ----------- ---------- --------- ----------- -----------
SUBACCOUNT 1 Year 5 Years 10 Years 1 Year 3 Years 5 Years 10 Years
--------------------------------------- ---------- ----------- ----------- ----------- ---------- --------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Federated American Leaders Fund II 12.66% 15.37%* n/a 19.85% 16.38%* n/a n/a 02/10/94
--------------------------------------- ---------- ----------- ----------- ----------- ---------- --------- ----------- -----------
Federated Fund for U.S. Government
Securities II (3.45%) 2.68%* n/a 2.72% 4.10%* n/a n/a 03/28/94
--------------------------------------- ---------- ----------- ----------- ----------- ---------- --------- ----------- -----------
Federated Growth Strategies Fund II 15.20% 17.85%* n/a 22.55% 21.91%* n/a n/a 11/01/95
--------------------------------------- ---------- ----------- ----------- ----------- ---------- --------- ----------- -----------
Federated High Income Bond Fund II 5.92% 7.71%* n/a 12.69% 8.94%* n/a n/a 03/01/94
--------------------------------------- ---------- ----------- ----------- ----------- ---------- --------- ----------- -----------
Federated International Equity Fund II 0.37% 2.47%* n/a 6.78% 5.27%* n/a n/a 04/04/95
--------------------------------------- ---------- ----------- ----------- ----------- ---------- --------- ----------- -----------
Federated Prime Money Fund II (2.94%) 1.51%* n/a 3.26% 3.42%* n/a n/a 11/14/94
--------------------------------------- ---------- ----------- ----------- ----------- ---------- --------- ----------- -----------
Federated Utility Fund II 3.38% 7.65%* n/a 9.98% 8.86%* n/a n/a 02/10/94
--------------------------------------- ---------- ----------- ----------- ----------- ---------- --------- ----------- -----------
</TABLE>
Please refer to the discussion preceding the Tables for an explanation of the
charges included in the Standardized and Non-Standardized figures. These figures
represent historical performance and should not be considered a projection of
future performance.
Form No.XSAIALIACNY-1
<PAGE>
Variable Annuity Account B
Statement of Assets and Liabilities - December 31, 1996 (unaudited):
<TABLE>
<S> <C>
ASSETS:
Investments, at net asset value: (Note 1)
Aetna Variable Fund; 22,674,496 shares (cost $674,480,933) .................................... $ 734,460,247
Aetna Income Shares; 5,554,723 shares (cost $69,738,402) ...................................... 70,118,035
Aetna Variable Encore Fund; 8,093,492 shares (cost $107,322,605) .............................. 106,781,998
Aetna Investment Advisers Fund, Inc.; 8,423,410 shares (cost $112,230,262)..................... 127,344,696
Aetna GET Fund, Series B; 1,148,634 shares (cost $11,845,728) ................................. 16,333,339
Aetna GET Fund, Series C; 907,283 shares (cost $9,136,442)..................................... 9,281,276
Aetna Ascent Variable Portfolio; 446,824 shares (cost $5,362,215) ............................. 5,638,668
Aetna Crossroads Variable Portfolio; 442,088 shares (cost $5,144,208) ......................... 5,295,700
Aetna Legacy Variable Portfolio; 549,727 shares (cost $6,140,411) ............................. 6,186,987
Aetna Variable Index Plus Portfolio; 182,043 shares (cost $1,989,418) ......................... 1,985,372
Alger American Funds:
Balanced Portfolio; 408,798 shares (cost $4,238,672) ...................................... 3,777,291
Growth Portfolio; 1,268,424 shares (cost $41,195,068) ....................................... 43,545,003
Income and Growth Portfolio; 768,597 shares (cost $7,300,499) ............................... 6,471,587
Leveraged AllCap Portfolio; 589,862 shares (cost $11,198,918) ............................... 11,419,728
MidCap Growth Portfolio; 929,402 shares (cost $19,160,303) .................................. 19,842,727
Small Capitalization Portfolio; 1,436,114 shares (cost $59,246,689) ......................... 58,751,429
Calvert Responsibly Invested Balanced Portfolio; 336,323 shares (cost $597,518)................ 596,637
Fidelity Investments Variable Insurance Products Funds:
Equity-Income Portfolio; 3,446,529 shares (cost $66,707,023) ................................ 72,480,497
Growth Portfolio; 1,860,260 shares (cost $54,670,184) ....................................... 57,928,484
High Income Portfolio; 1,174,877 shares (cost $13,895,035) .................................. 14,709,464
Overseas Portfolio; 515,036 shares (cost $8,959,583) ........................................ 9,703,271
Fidelity Investments Variable Insurance Products Funds II:
Asset Manager Portfolio; 350,352 shares (cost $5,447,282) ................................... 5,931,464
Contrafund Portfolio; 3,414,168 shares (cost $50,327,864) ................................... 56,538,618
Index 500 Portfolio; 307,196 shares (cost $25,139,330) ...................................... 27,380,370
Investment Grade Bond Portfolio; 389,026 shares (cost $4,585,849) ........................... 4,761,677
Federated Insurance Series:
American Leaders Fund II; 4,005,705 shares (cost $52,316,587)................................ 61,127,055
Growth Strategies Fund II; 561,108 shares (cost $6,448,785).................................. 7,182,178
High Income Bond Fund II; 2,651,478 shares (cost $26,128,555)................................ 27,151,137
International Equity Fund II; 531,863 shares (cost $5,627,988)............................... 5,935,590
Prime Money Fund II; 7,744,318 shares (cost $7,744,318)...................................... 7,744,318
U.S. Government Securities Fund II; 758,792 shares (cost $7,582,811)......................... 7,656,209
Utility Fund II; 1,420,364 shares (cost $15,043,602)......................................... 16,774,494
Janus Aspen Series:
Aggressive Growth Portfolio; 1,729,280 shares (cost $31,007,237)............................. 31,542,060
Balanced Portfolio; 797,173 shares (cost $11,400,361)........................................ 11,774,244
Flexible Income Portfolio; 457,937 shares (cost $5,073,822).................................. 5,147,217
Growth Portfolio; 1,346,496 shares (cost $19,790,729)........................................ 20,884,154
Short-Term Bond Portfolio; 192,639 shares (cost $1,947,988).................................. 1,920,611
Worldwide Growth Portfolio; 3,419,377 shares (cost $61,321,568).............................. 66,472,691
Lexington Emerging Markets Fund; 249,599 shares (cost $2,582,550).............................. 2,515,960
Lexington Natural Resources Trust; 332,525 shares (cost $4,213,645)............................ 4,751,784
MFS Funds:
Emerging Growth Series; 679,608 shares (cost $9,083,804)..................................... 8,998,008
Research Series; 516,109 shares (cost $6,571,748)............................................ 6,776,512
Total Return Series; 307,540 shares (cost $4,144,359)........................................ 4,216,370
Value Series; 19,591 shares (cost $207,906).................................................. 208,841
Worldwide Government Series; 38,555 shares (cost $398,609)................................... 407,913
Neuberger & Berman Advisers Management Trust - Growth Portfolio; 319,727 shares
(cost $8,249,239) ........................................................................... 8,242,574
Scudder Variable Life Investment Fund - International Portfolio; 909,444 shares
(cost $10,539,678) .......................................................................... 12,050,127
<PAGE>
Variable Annuity Account B
Statement of Assets and Liabilities - December 31, 1996 (unaudited and
continued):
TCI Portfolios, Inc.:
Balanced; 396,732 shares (cost $2,846,031) .................................................. $ 2,991,356
Growth; 4,332,926 shares (cost $45,957,552) ................................................. 44,369,162
International; 789,697 shares (cost $4,330,759) ............................................. 4,706,594
---------------
NET ASSETS (cost $1,726,620,672)................................................................ $1,848,811,724
===============
Reserves for annuity contracts in accumulation and payment period (Note 1):
Aetna Variable Fund:
Annuity contracts in accumulation................................................................ $644,728,031
Annuity contracts in payment period.............................................................. 89,732,216
Aetna Income Shares:
Annuity contracts in accumulation................................................................ 66,534,546
Annuity contracts in payment period.............................................................. 3,583,489
Aetna Variable Encore Fund:
Annuity contracts in accumulation................................................................ 106,781,998
Aetna Investment Advisers Fund, Inc.:
Annuity contracts in accumulation................................................................ 119,402,212
Annuity contracts in payment period.............................................................. 7,942,484
Aetna GET Fund, Series B:
Annuity contracts in accumulation................................................................ 16,333,339
Aetna GET Fund, Series C:
Annuity contracts in accumulation................................................................ 9,281,276
Aetna Ascent Variable Portfolio:
Annuity contracts in accumulation................................................................ 5,638,668
Aetna Crossroads Variable Portfolio:
Annuity contracts in accumulation................................................................ 5,295,700
Aetna Legacy Variable Portfolio:
Annuity contracts in accumulation................................................................ 6,186,987
Aetna Variable Index Plus Portfolio:
Annuity contracts in accumulation................................................................ 1,985,372
Alger American Funds:
Alger American Balanced Portfolio:
Annuity contracts in accumulation................................................................ 3,777,291
Alger American Growth Portfolio:
Annuity contracts in accumulation................................................................ 43,545,003
Alger American Income and Growth Portfolio:
Annuity contracts in accumulation................................................................ 6,471,587
Alger American Leveraged AllCap Portfolio:
Annuity contracts in accumulation................................................................ 11,419,728
Alger American MidCap Growth Portfolio:
Annuity contracts in accumulation................................................................ 19,842,727
Alger American Small Capitalization Portfolio:
Annuity contracts in accumulation................................................................ 58,751,429
Calvert Responsibly Invested Balanced Portfolio:
Annuity contracts in accumulation................................................................ 596,637
Fidelity Investments Variable Insurance Products Funds:
Equity - Income Portfolio:
Annuity contracts in accumulation................................................................ 72,480,497
Growth Portfolio:
Annuity contracts in accumulation................................................................ 57,928,484
High Income Portfolio:
Annuity contracts in accumulation................................................................ 14,709,464
Overseas Portfolio:
Annuity contracts in accumulation................................................................ 9,703,271
<PAGE>
Variable Annuity Account B
Statement of Assets and Liabilities - December 31, 1996 (unaudited and
continued):
Fidelity Investments Variable Insurance Products Funds II
Asset Manager Portfolio:
Annuity contracts in accumulation................................................................ $5,931,464
Contrafund Portfolio:
Annuity contracts in accumulation................................................................ 56,538,618
Index 500 Portfolio:
Annuity contracts in accumulation................................................................ 27,380,370
Investment Grade Bond Portfolio:
Annuity contracts in accumulation................................................................ 4,761,677
Insurance Management Series:
American Leaders Fund II:
Annuity contracts in accumulation................................................................ 61,127,055
Growth Strategies Fund II:
Annuity contracts in accumulation................................................................ 7,182,178
High Income Bond Fund II:
Annuity contracts in accumulation................................................................ 27,151,137
International Equity Fund II:
Annuity contracts in accumulation................................................................ 5,935,590
Prime Money Fund II:
Annuity contracts in accumulation................................................................ 7,744,318
U.S. Government Securities Fund II:
Annuity contracts in accumulation................................................................ 7,656,209
Utility Fund II:
Annuity contracts in accumulation................................................................ 16,774,494
Janus Aspen Series:
Aggressive Growth Portfolio:
Annuity contracts in accumulation................................................................ 31,542,060
Balanced Portfolio:
Annuity contracts in accumulation................................................................ 11,774,244
Flexible Income Portfolio:
Annuity contracts in accumulation................................................................ 5,147,217
Growth Portfolio:
Annuity contracts in accumulation................................................................ 20,884,154
Short-Term Bond Portfolio:
Annuity contracts in accumulation................................................................ 1,920,611
Worldwide Growth Portfolio:
Annuity contracts in accumulation................................................................ 66,472,691
Lexington Emerging Markets Fund:
Annuity contracts in accumulation................................................................ 2,515,960
Lexington Natural Resources Trust:
Annuity contracts in accumulation................................................................ 4,751,784
MFS Funds:
Emerging Growth Series:
Annuity contracts in accumulation................................................................ 8,998,008
Research Series:
Annuity contracts in accumulation................................................................ 6,776,512
Total Return Series:
Annuity contracts in accumulation................................................................ 4,216,370
Value Series:
Annuity contracts in accumulation................................................................ 208,841
Worldwide Government Series:
Annuity contracts in accumulation................................................................ 407,913
Neuberger & Berman Advisers
Management Trust - Growth Portfolio:
Annuity contracts in accumulation................................................................ 8,242,574
Scudder Variable Life Investment Fund - International
Portfolio:
Annuity contracts in accumulation................................................................ 12,050,127
<PAGE>
Variable Annuity Account B
Statement of Assets and Liabilities - December 31, 1996 (unaudited and
continued):
TCI Portfolios, Inc.:
Balanced:
Annuity contracts in accumulation................................................................ $2,991,356
Growth:
Annuity contracts in accumulation................................................................ 44,369,162
International:
Annuity contracts in accumulation................................................................ 4,706,594
---------------
$1,848,811,724
===============
</TABLE>
See Notes to Financial Statements
<PAGE>
Variable Annuity Account B
Statements of Operations and Changes in Net Assets
<TABLE>
<CAPTION>
Year Ended December 31,
(unaudited)
1996 1995
<S> <C> <C>
INVESTMENT INCOME:
Income: (Notes 1 and 3)
Dividends ....................................................... $ 120,367,178 $ 112,097,675
Expenses: (Notes 2)
Valuation Period Deductions ..................................... (17,483,870) (11,786,592)
-------------- --------------
Net investment income .............................................. 102,883,308 100,311,083
-------------- --------------
NET REALIZED AND UNREALIZED GAIN
ON INVESTMENTS:
Net realized gain on sales of investments: (Notes 1 and 4)
Proceeds from sales .............................................. 365,025,974 495,934,611
Cost of investments sold ......................................... 347,598,566 463,921,121
-------------- --------------
Net realized gain .............................................. 17,427,408 32,013,490
Net unrealized gain on investments:
Beginning of year ................................................ 28,746,944 (44,356,052)
End of year ...................................................... 122,191,053 28,746,944
-------------- --------------
Net unrealized gain ............................................ 93,444,109 73,102,996
-------------- --------------
Net realized and unrealized gain on investments .................... 110,871,517 105,116,486
-------------- --------------
Net increase in net assets resulting from operations ............... 213,754,825 205,427,569
-------------- --------------
FROM UNIT TRANSACTIONS:
Variable annuity contract purchase payments ........................ 538,586,667 178,474,387
Sales and administrative charges deducted by the Company ........... (17,370) (34,250)
-------------- --------------
Net variable annuity contract purchase payments................. 538,569,297 178,440,137
Transfer from the Company for mortality guarantee adjustments ...... 690,779 1,565,140
Transfers from the Company's fixed account options ................. 50,549,121 4,144,061
Redemptions by contract holders .................................... (73,738,526) (46,390,791)
Annuity Payments ................................................... (12,108,943) (9,198,421)
Other .............................................................. 159,467 1,143,373
-------------- --------------
Net increase in net assets from unit transactions .............. 504,121,195 129,703,499
-------------- --------------
Change in net assets ............................................... 717,876,020 335,131,068
NET ASSETS:
Beginning of year .................................................. 1,130,935,704 795,804,636
-------------- ---------------
End of year ........................................................ $1,848,811,724 $1,130,935,704
============== ===============
</TABLE>
<PAGE>
Variable Annuity Account B
Condensed Financial Information - December 31, 1996 (unaudited):
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
Increase/Decrease
Value at Value at in Value of Reserves
Beginning End of Accumulation End
of Year Year Unit Units of Year
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Aetna Variable Fund:
Non-Qualified 1964 $149.975 $184.327 22.91% 958.7 $176,710
Non-Qualified V 13.972 17.173 22.91% 15,372,944.3 263,995,515
Non-Qualified V (0.75) 14.935 17.246 15.47% (1) 14,930,379.5 257,489,863
Non-Qualified VI 13.060 16.061 22.98% 2,399,460.6 38,537,273
Non-Qualified VII 14.001 17.181 22.71% 4,919,944.5 84,528,670
Annuity contracts in payment period 89,732,217
- ---------------------------------------------------------------------------------------------------------------------------------
Aetna Income Shares:
Non-Qualified V $12.212 $12.493 2.30% 1,947,629.3 24,330,935
Non-Qualified V (0.75) 12.124 12.546 3.48% (1) 2,206,334.4 27,680,552
Non-Qualified VI 11.140 11.403 2.36% 55,543.9 633,377
Non-Qualified VII 12.037 12.294 2.14% 1,129,814.1 13,889,682
Annuity contracts in payment period 3,583,489
- ---------------------------------------------------------------------------------------------------------------------------------
Aetna Variable Encore Fund:
Non-Qualified V $11.007 $11.453 4.05% 1,984,269.2 22,726,343
Non-Qualified V (0.75) 11.083 11.502 3.78% (1) 2,421,519.1 27,852,719
Non-Qualified VI 10.728 11.170 4.12% 62,753.0 700,921
Non-Qualified VII 10.968 11.394 3.89% 4,871,014.9 55,502,015
- ---------------------------------------------------------------------------------------------------------------------------------
Aetna Investment Advisers Fund, Inc.:
Non-Qualified V $13.803 $15.698 13.73% 3,885,730.0 60,999,048
Non-Qualified V (0.75) 14.322 15.765 10.08% (1) 2,141,188.6 33,756,373
Non-Qualified VI 11.589 13.188 13.80% 59,780.7 788,384
Non-Qualified VII 13.602 15.445 13.55% 1,544,723.2 23,858,407
Annuity contracts in payment period 7,942,484
- ---------------------------------------------------------------------------------------------------------------------------------
Aetna GET Fund, Series B:
Non-Qualified V $12.849 $15.633 21.67% 1,044,789.3 16,333,339
- ---------------------------------------------------------------------------------------------------------------------------------
Aetna GET Fund, Series C:
Non-Qualified V $10.000 $10.241 2.41% (3) 272,598.7 2,791,650
Non-Qualified V (0.75) 10.000 10.256 2.56% (3) 632,781.0 6,489,626
- ---------------------------------------------------------------------------------------------------------------------------------
Aetna Ascent Variable Portfolio:
Non-Qualified V $10.652 $12.999 22.04% 99,588.6 1,294,577
Non-Qualified V (0.75) 11.021 13.055 18.46% (1) 35,958.8 469,433
Non-Qualified VII 10.645 12.970 21.84% 298,739.6 3,874,658
- ---------------------------------------------------------------------------------------------------------------------------------
Aetna Crossroads Variable Portfolio:
Non-Qualified V $10.594 $12.430 17.32% 74,128.2 921,378
Non-Qualified V (0.75) 10.892 12.483 14.61% (1) 26,260.3 327,796
Non-Qualified VII 10.587 12.402 17.14% 326,291.7 4,046,526
- ---------------------------------------------------------------------------------------------------------------------------------
Aetna Legacy Variable Portfolio:
Non-Qualified V $10.443 $11.776 12.76% 25,977.0 305,908
Non-Qualified V (0.75) 10.667 11.826 10.87% (1) 7,509.8 88,814
Non-Qualified VII 10.438 11.751 12.58% 492,915.1 5,792,265
- ---------------------------------------------------------------------------------------------------------------------------------
Aetna Variable Index Plus Portfolio:
Non-Qualified V $10.000 $10.924 9.24% (3) 89,498.3 977,659
Non-Qualified V (0.75) 10.000 10.940 9.40% (3) 72,973.2 798,330
Non-Qualified VII 10.000 10.919 9.19% (3) 19,176.7 209,383
- ---------------------------------------------------------------------------------------------------------------------------------
Alger American Funds:
Balanced Portfolio:
Non-Qualified VII $12.588 $13.673 8.62% 276,258.8 3,777,291
- ---------------------------------------------------------------------------------------------------------------------------------
Growth Portfolio:
Non-Qualified V $10.157 $11.370 11.93% 190,593.0 2,166,955
Non-Qualified V (0.75) 11.202 11.418 1.93% (1) 330,595.4 3,774,778
Non-Qualified VII 12.980 14.506 11.75% 2,592,294.1 37,603,270
- ---------------------------------------------------------------------------------------------------------------------------------
Income and Growth Portfolio:
Non-Qualified VII $10.660 $12.578 18.00% 514,513.2 6,471,587
- ---------------------------------------------------------------------------------------------------------------------------------
Leveraged AllCap Portfolio:
Non-Qualified VII $12.265 $13.548 10.46% 842,889.8 11,419,728
- ---------------------------------------------------------------------------------------------------------------------------------
MidCap Portfolio:
Non-Qualified VII $13.974 $15.417 10.33% 1,287,070.2 19,842,727
- ---------------------------------------------------------------------------------------------------------------------------------
Small Capitalization Portfolio:
Non-Qualified V $13.714 $14.109 2.88% 881,881.1 12,442,465
Non-Qualified V (0.75) 14.681 14.169 (3.49%) (1) 676,931.3 9,591,650
Non-Qualified VII 13.295 13.656 2.72% 2,688,730.1 36,717,314
- ---------------------------------------------------------------------------------------------------------------------------------
Calvert Responsibily Invested Balanced Portfolio:
Non-Qualified V $13.480 $14.992 11.22% 6,302.6 94,490
Non-Qualified V (0.75) 14.071 15.056 7.00% (1) 33,351.7 502,147
- ---------------------------------------------------------------------------------------------------------------------------------
Fidelity Investments Variable Insurance Products Fund:
Equity-Income Portfolio:
Non-Qualified V $11.054 $12.475 12.86% 208,072.0 2,595,785
Non-Qualified V (0.75) 11.620 12.529 7.82% (1) 544,656.8 6,823,834
Non-Qualified VII 13.324 15.013 12.68% 4,200,500.7 63,060,878
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Variable Annuity Account B
Condensed Financial Information - December 31, 1996 (unaudited and continued):
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
Increase/Decrease
Value at Value at in Value of Reserves
Beginning End of Accumulation End
of Year Year Unit Units of Year
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Growth Portfolio:
Non-Qualified V $10.066 $11.402 13.27% 199,719.7 $2,277,203
Non-Qualified V (0.75) 10.828 11.451 5.75% (1) 379,385.4 4,344,231
Non-Qualified VII 13.913 15.734 13.09% 3,260,854.6 51,307,050
- ----------------------------------------------------------------------------------------------------------------------------------
High Income Portfolio:
Non-Qualified VII $10.701 $12.031 12.43% 1,222,579.8 14,709,464
- ----------------------------------------------------------------------------------------------------------------------------------
Overseas Portfolio:
Non-Qualified V $10.052 $11.238 11.80% 38,993.7 438,218
Non-Qualified V (0.75) 10.376 11.286 8.77% (1) 70,270.5 793,085
Non-Qualified VII 11.143 12.439 11.62% 681,093.7 8,471,968
- ----------------------------------------------------------------------------------------------------------------------------------
Fidelity Investments Variable
Insurance Products Fund II:
Asset Manager Portfolio:
Non-Qualified VII $11.664 $13.180 12.99% 450,050.8 5,931,464
- ----------------------------------------------------------------------------------------------------------------------------------
Contrafund Portfolio:
Non-Qualified V $10.468 $12.540 19.79% 273,189.3 3,425,731
Non-Qualified V (0.75) 10.715 12.593 17.53% (1) 569,561.4 7,172,658
Non-Qualified VII 11.658 13.943 19.60% 3,294,963.8 45,940,229
- ----------------------------------------------------------------------------------------------------------------------------------
Index 500 Portfolio:
Non-Qualified VII $11.336 $13.728 21.10% 1,994,555.6 27,380,370
- ----------------------------------------------------------------------------------------------------------------------------------
Investment Grade Bond Portfolio:
Non-Qualified VII $10.600 $10.784 1.73% 441,549.3 4,761,677
- ----------------------------------------------------------------------------------------------------------------------------------
Federated Insurance Series:
American Leaders Fund II:
Non-Qualified VII $12.971 $15.548 19.87% 3,931,612.6 61,127,055
- ----------------------------------------------------------------------------------------------------------------------------------
Growth Strategies Fund II:
Non-Qualified VII $10.277 $12.596 22.57% 570,181.6 7,182,178
- ----------------------------------------------------------------------------------------------------------------------------------
High Income Bond Fund II:
Non-Qualified VII $11.640 $13.119 12.71% 2,069,632.8 27,151,137
- ----------------------------------------------------------------------------------------------------------------------------------
International Equity Fund II:
Non-Qualified VII $10.255 $10.952 6.80% 541,970.0 5,935,590
- ----------------------------------------------------------------------------------------------------------------------------------
Prime Money Fund II:
Non-Qualified VII $10.406 $10.748 3.29% 720,520.8 7,744,318
- ----------------------------------------------------------------------------------------------------------------------------------
U.S. Government Securities II:
Non-Qualified VII $10.804 $11.099 2.74% 689,789.0 7,656,209
- ----------------------------------------------------------------------------------------------------------------------------------
Utility Fund II:
Non-Qualified VII $12.095 $13.303 9.99% 1,260,915.0 16,774,494
- ----------------------------------------------------------------------------------------------------------------------------------
Janus Aspen Series:
Aggressive Growth Portfolio:
Non-Qualified V $12.992 $13.850 6.60% 590,903.6 8,184,081
Non-Qualified V (0.75) 13.415 13.909 3.68% (1) 433,363.3 6,027,779
Non-Qualified VII 13.040 13.879 6.43% 1,248,668.8 17,330,200
- ----------------------------------------------------------------------------------------------------------------------------------
Balanced Portfolio:
Non-Qualified V $10.835 $12.431 14.73% 74,184.4 922,218
Non-Qualified V (0.75) 11.271 12.484 10.76% (1) 111,525.4 1,392,338
Non-Qualified VII 12.104 13.865 14.55% 682,295.5 9,459,688
- ----------------------------------------------------------------------------------------------------------------------------------
Flexible Income Portfolio:
Non-Qualified V $12.094 $13.040 7.83% 96,128.4 1,253,556
Non-Qualified V (0.75) 12.081 13.096 8.40% (1) 73,340.0 960,469
Non-Qualified VII 12.071 12.995 7.66% 225,717.0 2,933,192
- ----------------------------------------------------------------------------------------------------------------------------------
Growth Portfolio:
Non-Qualified V $10.870 $12.716 16.98% 132,464.8 1,684,382
Non-Qualified V (0.75) 11.810 12.770 8.13% (1) 144,443.1 1,844,539
Non-Qualified VII 12.975 15.153 16.79% 1,145,305.4 17,355,233
- ----------------------------------------------------------------------------------------------------------------------------------
Short-Term Bond Portfolio:
Non-Qualified V $10.325 $10.602 2.68% 10,382.3 110,077
Non-Qualified V (0.75) 10.367 10.648 2.71% (1) 14,326.0 152,537
Non-Qualified VII 10.765 11.036 2.52% 150,230.3 1,657,997
- ----------------------------------------------------------------------------------------------------------------------------------
Worldwide Growth Portfolio:
Non-Qualified V $10.893 $13.880 27.43% 520,275.1 7,221,661
Non-Qualified V (0.75) 11.603 13.940 20.14% (1) 803,488.2 11,200,388
Non-Qualified VII 12.341 15.701 27.22% 3,060,431.5 48,050,642
- ----------------------------------------------------------------------------------------------------------------------------------
Lexington Emerging Markets Fund:
Non-Qualified VII $9.277 $9.829 5.95% 255,963.0 2,515,960
- ----------------------------------------------------------------------------------------------------------------------------------
Lexington Natural Resources Trust Fund:
Non-Qualified V $10.479 $13.132 25.31% 115,869.1 1,521,556
Non-Qualified V (0.75) 11.089 13.188 18.93% (1) 73,698.7 971,918
Non-Qualified VII 10.436 13.056 25.11% 172,966.0 2,258,310
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Variable Annuity Account B
Condensed Financial Information - December 31, 1996 (unaudited and continued):
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Increase/Decrease
Value at Value at in Value of Reserves
Beginning End of Accumulation End
of Year Year Unit Units of Year
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
MFS Funds:
Emerging Growth Series:
Non-Qualified VII $10.000 $10.074 0.74% (2) 893,166.3 $8,998,008
- -----------------------------------------------------------------------------------------------------------------------------------
Research Series:
Non-Qualified VII $10.000 $10.970 9.70% (2) 617,709.0 $6,776,512
- -----------------------------------------------------------------------------------------------------------------------------------
Total Return Series:
Non-Qualified VII $10.000 $10.894 8.94% (2) 387,018.9 4,216,370
- -----------------------------------------------------------------------------------------------------------------------------------
Value Series:
Non-Qualified VII $10.000 $10.334 3.34% (4) 20,208.3 208,841
- -----------------------------------------------------------------------------------------------------------------------------------
World Government Series:
Non-Qualified VII $10.000 $10.471 4.71% (2) 38,958.0 407,913
- -----------------------------------------------------------------------------------------------------------------------------------
Neuberger & Berman Advisers Management Trust -
Growth Portfolio:
Non-Qualified V $15.871 $17.105 7.78% 320,077.9 5,474,935
Non-Qualified V (0.75) 16.918 17.178 1.54% (1) 161,114.4 2,767,639
- -----------------------------------------------------------------------------------------------------------------------------------
Scudder Variable Life Investment Fund -
International Portfolio:
Non-Qualified V $14.674 $16.633 13.35% 472,098.7 7,852,462
Non-Qualified V (0.75) 15.154 16.704 10.23% (1) 251,295.2 4,197,665
- -----------------------------------------------------------------------------------------------------------------------------------
TCI Portfolios, Inc.:
Balanced Fund:
Non-Qualified VII $12.124 $13.410 10.61% 223,072.5 2,991,356
- -----------------------------------------------------------------------------------------------------------------------------------
Growth Fund:
Non-Qualified V $14.091 $13.298 (5.63%) 1,337,305.7 17,783,783
Non-Qualified V (0.75) 14.682 13.355 (9.04%) (1) 761,722.5 10,172,878
Non-Qualified VI 11.884 11.222 (5.57%) 32,175.3 361,070
Non-Qualified VII 14.021 13.211 (5.78%) 1,214,961.2 16,051,431
- -----------------------------------------------------------------------------------------------------------------------------------
International:
Non-Qualified VII $10.446 $11.782 12.80% 399,464.0 4,706,594
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Non-Qualified 1964 - Individual contracts issued from December 1, 1964 to
March 14, 1967.
Non-Qualified V - Group Aetna Plus contracts issued in connection with
Deferred Compensation Plans issued since August 28, 1992.
Non-Qualified VI - Certain existing contract that were converted to ACES
adminstrative system (previously valued under Non-Qualified
I).
Non-Qualified VII - Certain individual and group contracts issued as
non-qualified deferred annuity contracts or Individual
Retirement Annuity contracts issued since May 4, 1994.
Notes to Condensed Financial Information
(1) - Reflects less than a full year of performance activity. Funds were first
received in this option during February 1996.
(2) - Reflects less than a full year of performance activity. The initial
Accumulation Unit Value was established at $10.000 during May 1996 when
the fund became available under the option.
(3) - Reflects less than a full year of performance activity. The initial
Accumulation Unit Value was established at $10.000 during September 1996
when the fund became available under the option.
(4) - Reflects less than a full year of performance activity. The initial
Accumulation Unit Value was established at $10.000 during October 1996
when the fund became available under the option.
See Notes to Financial Statements.
<PAGE>
Variable Annuity Account B
Notes to Financial Statements - December 31, 1996 (unaudited):
1. Summary of Significant Accounting Policies
Variable Annuity Account B ("Account") is registered under the Investment
Company Act of 1940 as a unit investment trust. The Account is sold
exclusively for use with annuity contracts that may be entitled to
tax-deferred treatment under specific sections of the Internal Revenue Code
of 1986, as amended.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect amounts reported therein. Although actual results
could differ from these estimates, any such differences are expected to be
immaterial to the net assets of the Account.
a. Valuation of Investments
Investments in the following Funds are stated at the closing net asset
value per share as determined by each Fund on December 31, 1996:
<TABLE>
<S> <C>
Aetna Variable Fund Federated Insurance Series:
Aetna Income Shares (bullet) American Leaders Fund II
Aetna Variable Encore Fund (bullet) Growth Strategies Fund II
Aetna Investment Advisers Fund, Inc. (bullet) High Income Bond Fund II
Aetna GET Fund, Series B (bullet) International Equity Fund II
Aetna GET Fund, Series C (bullet) Prime Money Fund II
Aetna Ascent Variable Portfolio (bullet) U.S. Government Securities II
Aetna Crossroads Variable Portfolio (bullet) Utility Fund II
Aetna Legacy Variable Portfolio Janus Aspen Series:
Aetna Variable Index Plus Portfolio (bullet) Aggressive Growth Portfolio
Alger American Funds: (bullet) Balanced Portfolio
(bullet) Balanced Portfolio (bullet) Flexible Income Portfolio
(bullet) Growth Portfolio (bullet) Growth Portfolio
(bullet) Income and Growth Portfolio (bullet) Short-Term Bond Portfolio
(bullet) Leveraged AllCap Portfolio (bullet) Worldwide Growth Portfolio
(bullet) MidCap Growth Portfolio Lexington Funds:
(bullet) Small Capitalization Portfolio (bullet) Emerging Markets Fund
Calvert Responsibily Invested Balanced Portfolio (bullet) Natural Resources Trust Fund
Fidelity Investments Variable Insurance Products Fund: MFS Funds:
(bullet) Equity-Income Portfolio (bullet) Emerging Growth Series
(bullet) Growth Portfolio (bullet) Research Series
(bullet) High Income Portfolio (bullet) Total Return Series
(bullet) Overseas Portfolio (bullet) Value Series
Fidelity Investments Variable Insurance Products Fund II: (bullet) World Government Series
(bullet) Asset Manager Portfolio Neuberger & Berman Advisers Management Trust
(bullet) Contrafund Portfolio (bullet) Growth Portfolio
(bullet) Index 500 Portfolio Scudder Variable Life Investment Fund
(bullet) Investment Grade Bond Portfolio (bullet) International Portfolio
TCI Portfolios, Inc.:
(bullet) Balanced Fund
(bullet) Growth Fund
(bullet) International
</TABLE>
<PAGE>
Variable Annuity Account B
Notes to Financial Statements - December 31, 1996 (unaudited and continued):
b. Other
Investment transactions are accounted for on a trade date basis and
dividend income is recorded on the ex-dividend date. The cost of
investments sold is determined by specific identification.
c. Federal Income Taxes
The operations of the Account form a part of, and are taxed with, the total
operations of Aetna Life Insurance and Annuity Company ("Company") which is
taxed as a life insurance company under the Internal Revenue Code of 1986,
as amended.
d. Annuity Reserves
Annuity reserves held in the Separate Accounts are computed for currently
payable contracts according to the Progressive Annuity, a49, 1971
Individual Annuity Mortality, 1971 Group Annuity Mortality, 83a, and 1983
Group Annuity Mortality tables using various assumed interest rates not to
exceed seven percent. Mortality experience is monitored by the Company.
Charges to annuity reserves for mortality experience are reimbursed to the
Company if the reserves required are less than originally estimated. If
additional reserves are required, the Company reimburses the Account.
2. Valuation Period Deductions
Deductions by the Account for mortality and expense risk charges are made
in accordance with the terms of the contracts and are paid to the Company.
3. Dividend Income
On an annual basis, the Funds distribute substantially all of their taxable
income and realized capital gains to their shareholders. Distributions to
the Account are automatically reinvested in shares of the Funds. The
Account's proportionate share of each Fund's undistributed net investment
income and accumulated net realized gain on investments is included in net
unrealized gain in the Statement of Operations.
4. Purchases and Sales of Investments
The cost of purchases and proceeds from sales of investments other than
short-term investments for the years ended December 31, 1996 and December
31, 1995 aggregated $972,030,477 and $365,025,974; $725,949,193 and
$495,934,611, respectively.
<PAGE>
AETNA LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES (A
wholly-owned subsidiary of Aetna Retirement Holdings, Inc.)
Consolidated Statements of Income
(millions)
<TABLE>
<CAPTION>
9 Months Ended September 30,
----------------------------
1996 1995
(unaudited) (unaudited)
---- ----
<S> <C> <C>
Revenue:
Premiums $46.4 $94.8
Charges assessed against policyholders 289.3 231.1
Net investment income 771.8 732.0
Net realized capital gains 17.2 19.3
Other income 34.6 30.0
-------- --------
Total revenue 1,159.3 1,107.2
Benefits and expenses:
Current and future benefits 665.6 663.5
Operating expenses 264.1 232.4
Amortization of deferred policy acquisition costs 46.6 31.4
Severance and facilities charges 61.3 -
-------- --------
Total benefits and expenses 1,037.6 927.3
Income before income taxes 121.7 179.9
Income taxes 31.5 58.8
-------- --------
Net income $90.2 $121.1
======== ========
</TABLE>
See Condensed Notes to Consolidated Financial Statements.
(3)
<PAGE>
AETNA LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES (A
wholly-owned subsidiary of Aetna Retirement Holdings, Inc.)
Consolidated Balance Sheets
(millions, except share data)
<TABLE>
<CAPTION>
September 30, December 31,
Assets 1996 1995
(unaudited) (unaudited)
------------ -----------
<S> <C> <C>
Investments:
Debt securities, available for sale:
(amortized cost: $12,367.3 and $11,923.7) $12,573.0 $12,720.8
Equity securities, available for sale:
Non-redeemable preferred stock (cost: $79.3 and $51.3) 86.6 57.6
Investment in affiliated mutual funds (cost: $112.9 and $173.4) 135.4 191.8
Common stock (cost: $0.0 and $6.9) 0.3 8.2
Short-term investments 29.1 15.1
Mortgage loans 13.0 21.2
Policy loans 368.1 338.6
---------- ----------
Total investments 13,205.5 13,353.3
Cash and cash equivalents 422.0 568.8
Accrued investment income 188.5 175.5
Premiums due and other receivables 159.1 37.3
Deferred policy acquisition costs 1,468.5 1,341.3
Reinsurance loan to affiliate 633.4 655.5
Other assets 19.3 26.2
Separate Accounts assets 14,010.7 10,987.0
---------- ----------
Total assets $30,107.0 $27,144.9
========== ==========
Liabilities and Shareholder's Equity
Liabilities:
Future policy benefits $3,584.3 $3,594.6
Unpaid claims and claim expenses 28.3 27.2
Policyholders' funds left with the Company 10,413.8 10,500.1
---------- ----------
Total insurance reserve liabilities 14,026.4 14,121.9
Other liabilities 375.1 259.2
Income taxes:
Current 16.6 24.2
Deferred 99.9 169.6
Separate Accounts liabilities 14,010.7 10,987.0
---------- ----------
Total liabilities 28,528.7 25,561.9
---------- ----------
Shareholder's equity:
Common stock, par value $50 (100,000 shares
authorized; 55,000 shares issued and outstanding) 2.8 2.8
Paid-in capital 407.6 407.6
Net unrealized capital gains 39.1 132.5
Retained earnings 1,128.8 1,040.1
---------- ----------
Total shareholder's equity 1,578.3 1,583.0
---------- ----------
Total liabilities and shareholder's equity $30,107.0 $27,144.9
========== ==========
</TABLE>
See Condensed Notes to Consolidated Financial Statements.
(4)
<PAGE>
AETNA LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES (A
wholly-owned subsidiary of Aetna Retirement Holdings, Inc.)
Consolidated Statements of Changes in Shareholder's Equity
(millions)
9 Months Ended September 30,
----------------------------
1996 1995
(unaudited) (unaudited)
----------- -----------
Shareholder's equity, beginning of period $1,583.0 $1,088.5
Net change in unrealized capital gains and losses (93.4) 300.2
Net income 90.2 121.1
Common stock dividends declared (1.5) -
---------- ----------
Shareholder's equity, end of period $1,578.3 $1,509.8
========== ==========
See Condensed Notes to Consolidated Financial Statements.
(5)
<PAGE>
AETNA LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES (A
wholly-owned subsidiary of Aetna Retirement Holdings, Inc.)
Consolidated Statements of Cash Flows
(millions)
<TABLE>
<CAPTION>
9 Months Ended September 30,
----------------------------
1996 1995
(unaudited) (unaudited)
----------- ------------
<S> <C> <C>
Cash Flows from Operating Activities:
Net income $90.2 $121.1
Adjustments to reconcile net income to net cash
provided by operating activities:
Increase in accrued investment income (13.0) (29.6)
(Increase) decrease in premiums due and other receivables (2.3) 28.1
Increase in policy loans (29.5) (57.0)
Increase in deferred policy acquisition costs (127.2) (137.9)
Decrease in reinsurance loan to affiliate 22.1 30.9
Net increase in universal life account balances 172.5 164.0
(Decrease) increase in other insurance reserve liabilities (125.2) 10.6
Net increase in other liabilities and other assets 130.0 9.6
Decrease in income taxes (26.7) (3.6)
Net accretion of discount on investments (51.1) (48.9)
Net realized capital gains (17.2) (19.3)
---------- ----------
Net cash provided by operating activities 22.6 68.0
---------- ----------
Cash Flows from Investing Activities:
Proceeds from sales of:
Debt securities available for sale 3,830.6 3,271.9
Equity securities 114.5 130.5
Mortgage loans 8.6 4.3
Investment maturities and collections of:
Debt securities available for sale 681.8 420.7
Short-term investments 21.5 95.6
Cost of investment purchases in:
Debt securities available for sale (4,996.5) (4,581.6)
Equity securities (63.7) (170.2)
Short-term investments (35.5) (14.2)
Other, net (9.1) -
---------- ----------
Net cash used for investing activities (447.8) (843.0)
---------- ----------
Cash Flows from Financing Activities:
Deposits and interest credited for investment contracts 1,140.6 1,461.9
Withdrawals of investment contracts (860.7) (803.8)
Dividends paid to shareholder (1.5) -
---------- ----------
Net cash provided by financing activities 278.4 658.1
---------- ----------
Net decrease in cash and cash equivalents (146.8) (116.9)
Cash and cash equivalents, beginning of period 568.8 623.3
---------- ----------
Cash and cash equivalents, end of period $422.0 $506.4
========== ==========
Supplemental cash flow information:
Income taxes paid, net $60.3 $62.4
========== ==========
</TABLE>
See Condensed Notes to Consolidated Financial Statements.
(6)
<PAGE>
AETNA LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES (A
wholly-owned subsidiary of Aetna Retirement Holdings, Inc.)
Condensed Notes to Consolidated Financial Statements
(unaudited)
1. Basis of Presentation
---------------------
The consolidated financial statements include Aetna Life Insurance and
Annuity Company and its wholly-owned subsidiaries, Aetna Insurance Company
of America and Aetna Private Capital, Inc. (collectively, the "Company").
Aetna Life Insurance and Annuity Company is a wholly-owned subsidiary of
Aetna Retirement Holdings, Inc. ("HOLDCO"). HOLDCO is a wholly-owned
subsidiary of Aetna Retirement Services, Inc., which is a wholly-owned
subsidiary of Aetna Services, Inc. ("Aetna") (formerly Aetna Life and
Casualty Company). Aetna is a wholly-owned subsidiary of Aetna Inc.
These consolidated financial statements have been prepared in accordance
with generally accepted accounting principles and are unaudited. Certain
reclassifications have been made to 1995 financial information to conform to
the 1996 presentation. These interim statements necessarily rely heavily on
estimates, including assumptions as to annualized tax rates. In the opinion
of management, all adjustments necessary for a fair statement of results for
the interim periods have been made. All such adjustments are of a normal,
recurring nature. The accompanying condensed consolidated financial
statements should be read in conjunction with the consolidated financial
statements and related notes as presented in the Company's 1995 Annual
Report on Form 10-K as filed with the Securities and Exchange Commission on
March 29, 1996. Certain financial information that is normally included in
annual financial statements prepared in accordance with generally accepted
accounting principles, but that is not required for interim reporting
purposes, has been condensed or omitted.
2. Future Application of Accounting Standards
------------------------------------------
Financial Accounting Standard ("FAS") No. 125, Accounting for Transfers and
Servicing of Financial Assets and Extinguishments of Liabilities, was issued
in June 1996. This statement provides accounting and reporting standards for
transfers of financial assets and extinguishments of liabilities.
Transactions covered by this statement would include securitizations, sales
of partial interests in assets, repurchase agreements and securities
lending. This statement requires that after a transfer of financial assets,
an entity would recognize on the balance sheet any assets it controls and
liabilities it has incurred. Similarly, an entity would remove assets or
liabilities from its balance sheet when control of the assets has been
surrendered or the liabilities satisfied.
This statement is effective for 1997 financial statements and early adoption
or retroactive application of this statement is not permitted. The Company
does not expect the adoption of this statement will have a material effect
on its financial position or results of operations.
(7)
<PAGE>
AETNA LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES (A
wholly-owned subsidiary of Aetna Retirement Holdings, Inc.)
Condensed Notes to Consolidated Financial Statements (unaudited)
(Continued)
3. Severance and Facilities Charges
--------------------------------
In the third quarter of 1996, the Company recorded a $30.7 million after tax
($47.3 million pretax) severance and facilities charge primarily related to
actions taken or expected to be taken to improve its cost structure relative
to its competitors. The severance portion of the charge is based on a plan
to eliminate 702 positions (primarily customer service, sales and
information technology support staff). The facilities portion of the charge
is based on a plan to consolidate sales/service field offices.
In addition to the above charge, Aetna recorded a facilities and severance
charge in the second quarter of 1996, primarily as a result of actions taken
or expected to be taken to reduce the level of corporate expenses and other
costs previously absorbed by Aetna's property-casualty operations. The cost
allocated to the Company associated with this charge was $9.1 million after
tax ($14.0 million pretax).
Severance and facilities charges for the nine months ended September 30,
1996 included the following (pretax):
<TABLE>
<CAPTION>
Vacated
Asset Leased Corporate
(Millions) Severance Write-Off Property Other Allocation Total
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Financial Services $ 29.1 $ 1.0 $ 1.3 $ 1.7 $ - $ 33.1
Life Insurance 12.5 0.4 0.5 0.8 - 14.2
Corporate Allocation - - - - 14.0 14.0
------------------------------------------------------------------
Total Company $ 41.6 $ 1.4 $ 1.8 $ 2.5 $ 14.0 $ 61.3
- -----------------------------------------------------------------------------------------
</TABLE>
The activity for the nine months ended September 30, 1996 within the severance
and facilities reserve (pretax, in millions) and the number of positions
eliminated related to such actions were as follows:
Reserve Positions
- -------------------------------------------------------------------
Beginning of period $ - -
Severance and facilities charges 47.3 702
Corporate Allocation 14.0 -
Actions taken (5.9) (1) (68)
- -------------------------------------------------------------------
End of period $ 55.4 634
- -------------------------------------------------------------------
(1) Includes $3.6 million of severance related actions and $2.3 million of
corporate allocation related actions.
Termination of the remaining employees, under the announced actions, and the
vacating of the leased office space are expected to be substantially completed
within 15 months.
(8)
<PAGE>
AETNA LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES (A
wholly-owned subsidiary of Aetna Retirement Holdings, Inc.)
Condensed Notes to Consolidated Financial Statements (unaudited)
(Continued)
4. Dividends
---------
The Company paid $1.5 million in cash dividends to HOLDCO in the second
quarter of 1996. No dividends were paid in the third quarter of 1996.
5. Off-Balance-Sheet and Other Financial Instruments
-------------------------------------------------
The Company engages in hedging activities to manage interest rate and price
risks. Such hedging activities have principally consisted of using futures
and forward contracts and interest rate swap agreements.
At September 30, 1996, the Company had stock index futures with a notional
amount of $139.2 million and a carrying value of ($9.1) million which
approximated fair value. In addition, at September 30, 1996, the Company had
commitments to purchase investments for $2.3 million, the fair market value
of which is $2.5 million.
6. Related Party Transactions
--------------------------
The Company acts as an investment adviser for its affiliated mutual funds.
Since August 1996, Aeltus Investment Management, Inc. ("Aeltus"), a
wholly-owned subsidiary of HOLDCO and an affiliate of the Company, has been
acting as Subadvisor of all affiliated mutual funds and of most of the
General Account assets.
Fees paid by the Company to Aeltus, on an annual basis, range from .06% to
.55% of the average daily net assets under management. For both the three
and nine months ended September 30, 1996, the Company paid $6.0 million in
such fees.
7. Litigation
----------
The Company is involved in numerous lawsuits arising, for the most part, in
the ordinary course of its business operations. While the ultimate outcome
of litigation against the Company cannot be determined at this time, after
consideration of the defenses available to the Company and any related
reserves established, it is not expected to result in liability for amounts
material to the financial condition of the Company, although it may
adversely affect results of operations in future periods.
(9)
<PAGE>
VARIABLE ANNUITY ACCOUNT B
PART C - OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements:
(1) Included in Part A:
Condensed Financial Information
(2) Included in Part B:
Financial Statements of Variable Annuity Account B:
- Independent Auditors' Report
- Statement of Assets and Liabilities as of December 31, 1995
- Statement of Operations for the year ended December 31, 1995
- Statements of Changes in Net Assets for the years ended
December 31, 1995 and 1994
- Notes to Financial Statements
- Unaudited Statement of Assets and Liabilities as of December
31, 1996
- Unaudited Statements of Operations and Changes in Net Assets
for the years ended December 31, 1996 and 1995
- Notes to Financial Statements
Financial Statements of the Depositor:
- Independent Auditors' Report
- Consolidated Statements of Income for the years ended
December 31, 1995, 1994 and 1993
- Consolidated Balance Sheets as of December 31, 1995 and 1994
- Consolidated Statements of Changes in Shareholder's
Equity for the years ended December 31, 1995, 1994 and 1993
- Consolidated Statements of Cash Flows for the years ended
December 31, 1995, 1994 and 1993
- Notes to Consolidated Financial Statements
- Unaudited Consolidated Statements of Income for the
nine-month period ended September 30, 1996 and 1995
- Unaudited Consolidated Balance Sheets as of
September 30, 1996 and December 31, 1995
- Unaudited Consolidated Statements of Changes in
Shareholder's Equity for the nine-month period ended
September 30, 1996 and 1995
- Unaudited Consolidated Statements of Cash Flows for the
nine-month period ended September 30, 1996 and 1995
- Condensed Notes to Consolidated Financial Statements
<PAGE>
(b) Exhibits
(1) Resolution of the Board of Directors of Aetna Life Insurance
and Annuity Company establishing Variable Annuity Account B(1)
(2) Not applicable
(3.1) Form of Selling Agreement(2)
(3.2) Alternative Form of Wholesaling Agreement and Related Selling
Agreement(3)
(3.3) Form of Federated Broker Dealer Agreement (9/2/94)(4)
(4.1) Form of Variable Annuity Contracts and Certificates
(G-CDA-IC(NQ), G-CDA-IC(IR), I-CDA-IC(NQ/MP), I-CDA-IC(IR/MP),
GMCC-IC(NQ) and GMCC-IC(IR))(5)
(4.2) Form of Variable Annuity Contracts and Certificates
(G-CDA-IC(IR/NY), GMCC-IC(IR-NY), G-CDA-IC(NQ/NY) and
GMCC-IC(NQ/NY))(6)
(5) Form of Variable Annuity Contract Application (300-MAR-IB and
710.6.13)(5)
(6.1) Certificate of Incorporation and By-Laws of Aetna Life
Insurance and Annuity Company(7)
(6.2) Amendment of Certificate of Incorporation of Aetna Life
Insurance and Annuity Company(8)
(7) Not applicable
(8.1) Fund Participation Agreement (Amended and Restated) between
Aetna Life Insurance and Annuity Company, Alger American Fund
and Fred Alger Management, Inc. dated as of March 31, 1995(3)
(8.2) Form of Fund Participation Agreement by and among Aetna Life
Insurance and Annuity Company, Insurance Management Series and
Federated Advisors (12/12/94)(9)
(8.3) Fund Participation Agreements between Aetna Life Insurance and
Annuity Company Variable Insurance Products Fund and Fidelity
Distributors Corporation dated February 1, 1994 and amended on
December 15, 1994, February 1, 1996, May 1, 1995, January 1,
1996 and March 1, 1996(8)
(8.4) Fund Participation Agreement between Aetna Life Insurance and
Annuity Company Variable Insurance Products Fund II and
Fidelity Distributors Corporation dated February 1, 1994 and
amended on December 15, 1994, February 1, 1996, May 1, 1995,
January 1, 1996 and March 1, 1996(8)
(8.5) Service Agreement between Aetna Life Insurance and Annuity
Company and Fidelity Investments Institutional Operations
Company dated as of November 1, 1995(10)
(8.6) Fund Participation Agreement between Aetna Life Insurance and
Annuity Company and Janus Aspen Series dated April 19, 1994,
and amended March 1, 1996(3)
(8.7) Fund Participation Agreement between Aetna Life Insurance and
Annuity Company and Lexington Management Corporation regarding
Natural Resources Trust dated December 1, 1988 and amended
February 11, 1991(3)
<PAGE>
(8.8) Fund Participation Agreement between Aetna Life Insurance and
Annuity Company, Lexington Emerging Markets Fund, Inc. and
Lexington Management Corporation (its investment advisor)
dated April 28, 1994(2)
(8.9) Form of Fund Participation Agreement among MFS Variable
Insurance Trust, Aetna Life Insurance and Annuity Company and
Massachusetts Financial Services Company(2)
(8.10) First Amendment dated September 3,1996 to Fund Participation
Agreement among MFS Variable Insurance Trust, Aetna Life
Insurance and Annuity Company and Massachusetts Financial
Services Company(11)
(8.11) Fund Participation Agreement between Aetna Life Insurance and
Annuity Company, Investors Research Corporation and TCI
Portfolios, Inc. dated July 29, 1992 and amended December 22,
1992 and June 1, 1994(3)
(8.12) Form of Administrative Service Agreement between Aetna Life
Insurance and Annuity Company and Agency, Inc.(2)
(9) Opinion of Counsel(12)
(10.1) Consent of Independent Auditors
(10.2) Consent of Counsel
(11) Not applicable
(12) Not applicable
(13) Schedule for Computation of Performance Data(11)
(14) Not applicable
(15.1) Powers of Attorney(8)
(15.2) Authorization for Signatures(3)
(27) Financial Data Schedule
1. Incorporated by reference to Post-Effective Amendment No. 6 to Registration
Statement on Form N-4 (File No. 33-75986), as filed electronically on April
22, 1996.
2. Incorporated by reference to Post-Effective Amendment No. 22 to
Registration Statement on Form N-4 (File No. 33-34370), as filed
electronically on April 22, 1996.
3. Incorporated by reference to Post-Effective Amendment No. 5 to Registration
Statement on Form N-4 (File No. 33-75986), as filed electronically on April
12, 1996.
4. Incorporated by reference to Post-Effective Amendment No. 3 to Registration
Statement on Form N-4 (File No. 33-79122), as filed electronically on
August 16, 1995.
5. Incorporated by reference to Post-Effective Amendment No. 15 to
Registration Statement on Form N-4 (File No. 33-34370), as filed on April
19, 1994.
6. Incorporated by reference to Post-Effective Amendment No. 1 to Registration
Statement on Form N-4 (File No. 33-87932), as filed electronically on
September 18, 1996.
7. Incorporated by reference to Post-Effective Amendment No. 1 to Registration
Statement on Form S-1 (File No. 33-60477), as filed electronically on April
15, 1996.
8. Incorporated by reference to Post-Effective Amendment No. 12 to
Registration Statement on Form N-4 (File No. 33-75964), as filed
electronically on February 11, 1997.
<PAGE>
9. Incorporated by reference to Pre-Effective Amendment No. 1 to Registration
Statement on Form N-4 (File No. 33-79122), as filed on September 15, 1994.
10. Incorporated by reference to Post-Effective Amendment No. 3 to Registration
Statement on Form N-4 (File No. 33-88720), as filed electronically on June
28, 1996.
11. Incorporated by reference to Post-Effective Amendment No. 24 to
Registration Statement on Form N-4 (File No. 33-34370), as filed
electronically on September 16, 1996.
12. Incorporated by reference to Registrant's 24f-2 Notice for fiscal year
ended December 31, 1995, as filed electronically on February 29, 1996.
<PAGE>
Item 25. Directors and Officers of the Depositor
- ------------------------------------------------
Name and Principal
Business Address* Positions and Offices with Depositor
- ----------------- ------------------------------------
Daniel P. Kearney Director and President
Timothy A. Holt Director, Senior Vice President and Chief
Financial Officer
Christopher J. Burns Director and Senior Vice President
Laura R. Estes Director and Senior Vice President
Gail P. Johnson Director and Vice President
John Y. Kim Director and Senior Vice President
Shaun P. Mathews Director and Vice President
Glen Salow Director and Vice President
Creed R. Terry Director and Vice President
Deborah Koltenuk Vice President and Treasurer, Corporate Controller
Frederick D. Kelsven Vice President and Chief Compliance Officer
Kirk P. Wickman Vice President, General Counsel and Secretary
* The principal business address of all directors and officers listed is 151
Farmington Avenue, Hartford, Connecticut 06156.
Item 26. Persons Controlled by or Under Common Control with the Depositor or
- ----------------------------------------------------------------------------
Registrant
- ----------
Incorporated herein by reference to Item 26 of Post-Effective Amendment No.
12 to the Registration Statement on Form N-4 (File No. 33-75964), as filed
electronically on February 11, 1997.
Item 27. Number of Contract Owners
- ----------------------------------
As of December 31, 1996, there were 47,053 individuals holding interests in
variable annuity contracts funded through Variable Annuity Account B.
<PAGE>
Item 28. Indemnification
- ------------------------
Reference is hereby made to Section 33-771(f) of the Connecticut General
Statutes ("C.G.S.") regarding indemnification of directors and Section 33-776(4)
regarding indemnification of officers, employees and agents of Connecticut
corporations. These statutes provide in general that Connecticut corporations
incorporated prior to January 1, 1997 shall indemnify their officers, directors,
employees and agents against "liability" (defined as the obligation to pay a
judgment, settlement, penalty, fine, excise tax in the case of an employee
benefit plan or reasonable expenses incurred with respect to a proceeding). In
the case of a proceeding by or in the right of the corporation, indemnification
is limited to reasonable expenses incurred in connection with the proceeding
against the corporation to which the individual was named a party. The
corporation's obligation to provide such indemnification does not apply unless
(1) the individual has met the standard of conduct set forth in Section 33-771;
and (2) a determination is made (by majority vote of a quorum of the board of
directors who were not parties to the proceeding, or if a quorum cannot be
obtained, by a committee of the board selected as described in Section
33-775(b)(2); by special legal counsel selected by the board of directors or
members thereof as described in Section 33-775(b)(3); by shareholders) that the
individual met the standard set forth in Section 33-771; or (3) the court, upon
application by the individual, determines in view of all the circumstances that
such person is reasonably entitled to be indemnified. Also, unless limited by
its Certificate of Incorporation, a corporation must indemnify an individual who
was wholly successful on the merits or otherwise against reasonable expenses
incurred by him in connection with a proceeding to which he was a party because
of his relationship as director, officer, employee or agent of the corporation.
The statute does specifically authorize a corporation to procure indemnification
insurance on behalf of an individual who is or was a director, officer, employer
or agent of the corporation. Consistent with the statute, Aetna Inc. has
procured insurance from Lloyd's of London and several major United States excess
insurers for its directors and officers and the directors and officers of its
subsidiaries, including the Depositor.
Item 29. Principal Underwriter
- ------------------------------
(a) In addition to serving as the principal underwriter and depositor for
the Registrant, Aetna Life Insurance and Annuity Company (ALIAC) also
acts as the principal underwriter and investment adviser for Aetna
Variable Encore Fund, Aetna Variable Fund, Aetna Series Fund, Inc.,
Aetna Generation Portfolios, Inc., Aetna Income Shares, Aetna
Investment Advisers Fund, Inc., Aetna GET Fund, and Aetna Variable
Portfolios, Inc. (all registered management investment companies under
the 1940 Act). Additionally, ALIAC acts as the principal underwriter
and depositor for Variable Life Account B and Variable Annuity Accounts
C and G (separate accounts of ALIAC registered as unit investment
trusts under the 1940 Act). ALIAC is also the principal underwriter for
Variable Annuity Account I (a separate account of Aetna Insurance
Company of America registered as a unit investment trust under the 1940
Act).
(b) See Item 25 regarding the Depositor.
<PAGE>
(c) Compensation as of December 31, 1996:
<TABLE>
<CAPTION>
(1) (2) (3) (4) (5)
Name of Net Underwriting Compensation on
Principal Discounts and Redemption or Brokerage
Underwriter Commissions Annuitization Commissions Compensation*
- ----------- ----------- ------------- ----------- -------------
<S> <C> <C>
Aetna Life $288,029 $17,661,810
Insurance and
Annuity
Company
</TABLE>
* Compensation shown in column 5 includes deductions for mortality and
expense risk guarantees and contract charges assessed to cover costs
incurred in the sales and administration of the contracts issued under
Variable Annuity Account B.
Item 30. Location of Accounts and Records
- -----------------------------------------
All accounts, books and other documents required to be maintained by
Section 31(a) of the 1940 Act and the Rules under it relating to the securities
described in and issued under this Registration Statement are located at the
home office of the Depositor as follows:
Aetna Life Insurance and Annuity Company
151 Farmington Avenue
Hartford, Connecticut 06156
Item 31. Management Services
- ----------------------------
Not applicable
Item 32. Undertakings
- ---------------------
Registrant hereby undertakes:
(a) to file a post-effective amendment to this registration statement on
Form N-4 as frequently as is necessary to ensure that the audited
financial statements in the registration statement are never more than
sixteen months old for as long as payments under the variable annuity
contracts may be accepted;
(b) to include as part of any application to purchase a contract offered by
a prospectus which is part of this registration statement on Form N-4,
a space that an applicant can check to request a Statement of
Additional Information; and
<PAGE>
(c) to deliver any Statement of Additional Information and any financial
statements required to be made available under this Form N-4 promptly
upon written or oral request.
(d) The Company hereby represents that it is relying upon and will comply
with the provisions of Paragraphs (1) through (4) of the SEC Staff's
No-Action Letter dated November 22, 1988 with respect to language
concerning withdrawal restrictions applicable to plans established
pursuant to Section 403(b) of the Internal Revenue Code. See American
Counsel of Life Insurance; SEC No-Action Letter, [1989 Transfer Binder]
Fed. SEC. L. Rep. (CCH) [paragraph symbol] 78,904 at 78,523 (November
22, 1988).
(e) Insofar as indemnification for liability arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against
public policy as expressed in the Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such 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 of 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.
(f) Aetna Life Insurance and Annuity Company represents that the fees and
charges deducted under the contracts covered by this registration
statement, in the aggregate, are reasonable in relation to the services
rendered, the expenses expected to be incurred, and the risks assumed
by the insurance company.
<PAGE>
SIGNATURES
As required by the Securities Act of 1933 and the Investment Company Act of
1940, the Registrant, Variable Annuity Account B of Aetna Life Insurance and
Annuity Company, certifies that it meets the requirements of Securities Act Rule
485(b) for effectiveness of this Post-Effective Amendment No. 25 to its
Registration Statement on Form N-4 (File No. 33-34370) and has duly caused this
Post-Effective Amendment No. 25 to its Registration Statement on Form N-4 (File
No. 33-34370) to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Hartford, State of Connecticut, on the 12th day of
February, 1997.
VARIABLE ANNUITY ACCOUNT B OF AETNA
LIFE INSURANCE AND ANNUITY COMPANY
(Registrant)
By: AETNA LIFE INSURANCE AND ANNUITY
COMPANY
(Depositor)
By: Daniel P. Kearney*
-------------------------------------
Daniel P. Kearney
President
As required by the Securities Act of 1933, this Post-Effective Amendment
No. 25 to the Registration Statement on Form N-4 (File No. 33-34370) has been
signed by the following persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
Daniel P. Kearney* Director and President )
- ------------------------------------ (principal executive officer) )
Daniel P. Kearney )
)
Timothy A. Holt* Director, Senior Vice President and Chief )
- ------------------------------------ Financial Officer )
Timothy A. Holt )
)
Christopher J. Burns* Director ) February
- ------------------------------------ )
Christopher J. Burns ) 12, 1997
)
Laura R. Estes* Director )
- ------------------------------------ )
Laura R. Estes )
)
Gail P. Johnson* Director )
- ------------------------------------ )
Gail P. Johnson )
<PAGE>
)
John Y. Kim* Director )
- ------------------------------------
John Y. Kim )
)
Shaun P. Mathews* Director )
- ------------------------------------
Shaun P. Mathews )
)
Glen Salow* Director )
- ------------------------------------
Glen Salow )
)
Creed R. Terry* Director )
- ------------------------------------
Creed R. Terry )
)
Deborah Koltenuk* Vice President and Treasurer, Corporate Controller )
- ------------------------------------
Deborah Koltenuk )
By: /s/Julie E. Rockmore
-------------------------------------------------------------
*Julie E. Rockmore
Attorney-in-Fact
</TABLE>
<PAGE>
VARIABLE ANNUITY ACCOUNT B
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Exhibit Page
- ----------- ------ ----
<S> <C> <C>
99-B.1 Resolution of the Board of Directors of Aetna Life Insurance and Annuity *
Company establishing Variable Annuity Account B
99-B.3.1 Form of Selling Agreement *
99-B.3.2 Alternative Form of Wholesaling Agreement and Related Selling Agreement *
99-B.3.3 Form of Federated Broker Dealer Agreement (9/2/94) *
99-B.4.1 Form of Variable Annuity Contracts and Certificates (G-CDA-IC(NQ), *
G-CDA-IC(IR), I-CDA-IC(NQ/MP), I-CDA-IC(IR/MP), GMCC-IC(NQ) and GMCC-IC(IR))
99-B.4.2 Form of Variable Annuity Contracts and Certificates *
(G-CDA-IC(IR/NY), GMCC-IC(IR-NY), G-CDA-IC(NQ/NY) and GMCC-IC(NQ/NY))
99-B.5 Form of Variable Annuity Contract Applications *
99-B.6.1 Certificate of Incorporation and By-Laws of Depositor *
99-B.6.2 Amendment of Certificate of Incorporation of Depositor *
99-B.8.1 Fund Participation Agreement (Amended and Restated) between Aetna Life *
Insurance and Annuity Company, Alger American Fund and Fred Alger
Management, Inc. dated March 31, 1995
99-B.8.2 Form of Fund Participation Agreement by and among Aetna Life Insurance and *
Annuity Company, Insurance Management Series and Federated Advisors
(12/12/94)
99-B.8.3 Fund Participation Agreements between Aetna Life *
Insurance and Annuity Company Variable Insurance
Products Fund and Fidelity Distributors Corporation dated
February 1, 1994 and amended on December 15, 1994,
February 1, 1996, May 1, 1995, January 1, 1996 and March
1, 1996
*Incorporated by reference
<PAGE>
Exhibit No. Exhibit Page
- ----------- ------ ----
99-B.8.4 Fund Participation Agreement between Aetna Life Insurance *
and Annuity Company Variable Insurance Products Fund II
and Fidelity Distributors Corporation dated February 1,
1994 and amended on December 15, 1994, February 1, 1996,
May 1, 1995, January 1, 1996 and March 1, 1996
99-B.8.5 Service Agreement between Aetna Life Insurance and Annuity Company and *
Fidelity Investments Institutional Operations Company dated as of November
1, 1995
99-B.8.6 Fund Participation Agreement between Aetna Life Insurance and Annuity *
Company and Janus Aspen Series dated April 19, 1994, and amended March 1,
1996
99-B.8.7 Fund Participation Agreement between Aetna Life Insurance and Annuity *
Company and Lexington Management Corporation regarding Natural Resources
Trust dated December 1, 1988 and amended February 11, 1991
99-B.8.8 Fund Participation Agreement between Aetna Life Insurance and Annuity *
Company, Lexington Emerging Markets Fund, Inc. and Lexington Management
Corporation (its investment advisor) dated April 28, 1994
99-B.8.9 Form of Fund Participation Agreement among MFS Variable Insurance Trust, *
Aetna Life Insurance and Annuity Company and Massachusetts Financial
Services Company
99-B.8.10 First Amendment dated September 3,1996 to Fund Participation Agreement among *
MFS Variable Insurance Trust, Aetna Life Insurance and Annuity Company and
Massachusetts Financial Services Company
99-B.8.11 Fund Participation Agreement between Aetna Life Insurance and Annuity *
Company, Investors Research Corporation and TCI Portfolios, Inc. dated July
29, 1992 and amended December 22, 1992 and June 1, 1994
99-B.8.12 Form of Administrative Service Agreement between Aetna Life Insurance and *
Annuity Company and Agency, Inc.
*Incorporated by reference
<PAGE>
Exhibit No. Exhibit Page
- ----------- ------- -----
99-B.9 Opinion of Counsel *
99-B.10.1 Consent of Independent Auditors
-----------------
99-B.10.2 Consent of Counsel
-----------------
99-B.13 Schedule for Computation of Performance Data *
99-B15.1 Powers of Attorney *
99-B.15.2 Authorization for Signatures *
27 Financial Data Schedule
-----------------
*Incorporated by reference
</TABLE>
151 Farmington Avenue Susan E. Bryant
Hartford, CT 06156 Counsel
Law and Regulatory Affairs, RE4C
(860) 273-7834
Fax: (860) 273-8340
February 12, 1996
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Attention: Filing Desk
Re: Variable Annuity Account B of Aetna Life Insurance and Annuity Company
Post-Effective Amendment No. 25 to the Registration Statement on Form N-4
File Nos. 33-34370* and 811-2512
Gentlemen:
As Counsel of Aetna Life Insurance and Annuity Company (the "Company"), I hereby
consent to the use of my opinion dated February 28, 1996 (incorporated herein by
reference to the 24f-2 Notice for the fiscal year ended December 31, 1995 filed
on behalf of Variable Annuity Account B of Aetna Life Insurance and Annuity
Company on February 29, 1996) as an exhibit to this Post-Effective Amendment No.
25 to the Registration Statement on Form N-4 (File No. 33-34370) and to my being
named under the caption "Legal Matters" therein.
Very truly yours,
/s/Susan E. Bryant
- ----------------------------------
Susan E. Bryant
Counsel
Aetna Life Insurance and Annuity Company
- --------
* Pursuant to Rule 429(a) under the Securities Act of 1933, Registrant has
included a combined prospectus under this Registration Statement which
includes all the information which would currently be required in
prospectuses relating to the securities covered by the following earlier
Registration Statements: 33-87932.
Consent of Independent Auditors
The Board of Directors of Aetna Life Insurance and Annuity Company and Contract
Owners of Aetna Variable Annuity Account B:
We consent to the use of our reports incorporated herein by reference.
/s/KPMG Peat Marwick LLP
----------------------------
KPMG Peat Marwick LLP
Hartford, Connecticut
February 12, 1997
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<CIK> 0000103005
<NAME> VARIABLE ANNUITY ACCOUNT B
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