<PAGE>
As filed with the Securities and Exchange Registration No. 33-75962*
Commission on April 17, 1996 Registration No. 811-2513
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-4
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POST-EFFECTIVE AMENDMENT NO. 6 TO
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
and Amendment To
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
----------------------------------------------------------------
Variable Annuity Account C of Aetna Life Insurance and Annuity Company
(EXACT NAME OF REGISTRANT)
Aetna Life Insurance and Annuity Company
(NAME OF DEPOSITOR)
151 Farmington Avenue, RE4C, Hartford, Connecticut 06156
(ADDRESS OF DEPOSITOR'S PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
Depositor's Telephone Number, including Area Code: (860) 273-7834
Susan E. Bryant, Counsel
Aetna Life Insurance and Annuity Company
151 Farmington Avenue, RE4C, Hartford, Connecticut 06156
(NAME AND ADDRESS OF AGENT FOR SERVICE)
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It is proposed that this filing will become effective (CHECK APPROPRIATE SPACE):
immediately upon filing pursuant to paragraph (b) of Rule 485
-----
X on May 1, 1996 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 filed a Rule 24f-2 Notice for the fiscal year ended December 31, 1995
on February 29, 1996.
*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 securities covered by the following earlier Registration Statement:
33-75978.
<PAGE>
VARIABLE ANNUITY ACCOUNT C
CROSS REFERENCE SHEET
Form N-4
Item No. Part A (Prospectus) Location
- -------- ------------------ --------
1 Cover Page. . . . . . . . . . . . . . . Cover Page
2 Definitions . . . . . . . . . . . . . . Definitions
3 Synopsis or Highlights. . . . . . . . . Prospectus Summary; Fee
Table
4 Condensed Financial Information . . . . Condensed Financial
Information
5 General Description of Registrant,
Depositor, and Portfolio Companies. . . The Company; Variable
Annuity Account C; The
Funds
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 Information. . . . . . . . . Contents of the Statement
of Additional Information
<PAGE>
Form N-4
Item No. Part B (Statement of Additional Information) Location
- -------- ------------------------------------------- --------
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
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>
PROSPECTUS
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- --------------------------------------------------------------------------------
This Prospectus describes two group deferred variable annuity contracts
("Contracts") issued by Aetna Life Insurance and Annuity Company (the
"Company"). One allows lump sum payments ("Single Purchase Payment Contracts")
and the other allows installment payments ("Installment Purchase Payment
Contracts"). The Contracts are available through participation in the
"Opportunity Plus" retirement programs which receive favorable tax deferred
treatment under Federal income tax law. (See "Purchase.") Interests in these
Contracts are offered to employees of school boards and public universities in
the state of New York.
The Contracts provide that contributions may be allocated to one or more of the
Credited Interest Options or to one or more of the Subaccounts of Variable
Annuity Account C, a separate account of the Company. The Subaccounts invest
directly in shares of the following Funds:
- Aetna Variable Fund - Franklin Government Securities
- Aetna Income Shares Trust
- Aetna Variable Encore Fund - Janus Aspen Aggressive Growth
- Aetna Investment Advisers Fund, Portfolio
Inc. - Janus Aspen Growth Portfolio
- Alger American Growth Portfolio - Janus Aspen Short-Term Bond
- Alger American Small Cap Portfolio Portfolio
- Calvert Responsibly Invested - Janus Aspen Worldwide Growth
Balanced Portfolio Portfolio
- Fidelity VIP II Asset-Manager - Lexington Emerging Markets Fund,
Portfolio Inc.
- Fidelity VIP II Contrafund - Lexington Natural Resources Trust
Portfolio - Neuberger & Berman Growth Portfolio
- Fidelity VIP II Index 500 Portfolio - Scudder International Portfolio
- Fidelity VIP Equity-Income Class A Shares
Portfolio - TCI Growth (a Twentieth Century
fund)
The Credited Interest Options currently available under the Contract are the
Guaranteed Accumulation Account and the Fixed Account. Except as specifically
mentioned, this Prospectus describes only investments through the Separate
Account. A brief description of each of the Credited Interest Options is
contained in Appendices to this Prospectus. Additional information concerning
the Guaranteed Accumulation Account is contained in a separate prospectus.
The availability of the Funds and the Credited Interest Options is subject to
applicable regulatory authorization. Not all Funds or Credited Interest Options
may be available under all Contracts. Please check with your employer to
determine option availability. (See "Investment Options.")
This Prospectus provides investors with the information that they should know
about the Separate Account before investing in the Contract through the Separate
Account. Additional information about the Separate Account is contained in a
Statement of Additional Information ("SAI") which is available at no charge. The
SAI has been filed with the Securities and Exchange Commission and is
incorporated herein by reference. The Table of Contents for the SAI is printed
on page 16 in this Prospectus. An SAI may be obtained by indicating the request
on the enrollment form or on the prospectus receipt contained in this
Prospectus, or by calling the number listed under the "Inquiries" section of the
Prospectus Summary.
THIS PROSPECTUS IS VALID ONLY WHEN ACCOMPANIED BY THE CURRENT PROSPECTUSES OF
THE FUNDS AND THE GUARANTEED ACCUMULATION ACCOUNT. ALL PROSPECTUSES SHOULD BE
READ AND RETAINED FOR FUTURE REFERENCE.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
THIS PROSPECTUS AND THE STATEMENT OF ADDITIONAL INFORMATION ARE DATED MAY 1,
1996.
<PAGE>
TABLE OF CONTENTS
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- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
DEFINITIONS.......................................................................... DEFINITIONS - 1
PROSPECTUS SUMMARY................................................................... SUMMARY - 1
FEE TABLE............................................................................ FEE TABLE - 1
CONDENSED FINANCIAL INFORMATION...................................................... AUV HISTORY - 1
THE COMPANY.......................................................................... 1
VARIABLE ANNUITY ACCOUNT C........................................................... 1
INVESTMENT OPTIONS................................................................... 1
The Funds........................................................................ 1
Credited Interest Options........................................................ 3
PURCHASE............................................................................. 4
Contract Availability............................................................ 4
Purchasing Interests in the Contract............................................. 4
Right to Cancel.................................................................. 4
CHARGES AND DEDUCTIONS............................................................... 4
Daily Deductions from the Separate Account....................................... 4
Maintenance Fee.................................................................. 5
Deferred Sales Charge............................................................ 5
Fund Expenses.................................................................... 6
Premium and Other Taxes.......................................................... 6
CONTRACT VALUATION................................................................... 7
Account Value.................................................................... 7
Accumulation Units............................................................... 7
Net Investment Factor............................................................ 7
TRANSFERS............................................................................ 7
WITHDRAWALS.......................................................................... 8
Reinvestment Privilege........................................................... 8
CONTRACT LOANS....................................................................... 8
ADDITIONAL WITHDRAWAL OPTIONS........................................................ 8
DEATH BENEFIT DURING ACCUMULATION PERIOD............................................. 9
ANNUITY PERIOD....................................................................... 10
Annuity Period Elections......................................................... 10
Annuity Options.................................................................. 10
Annuity Payments................................................................. 11
Charges Deducted During the Annuity Period....................................... 11
Death Benefit Payable During the Annuity Period.................................. 11
TAX STATUS........................................................................... 12
Introduction..................................................................... 12
Taxation of the Company.......................................................... 12
Contracts Used with Certain Retirement Plans..................................... 12
</TABLE>
<PAGE>
<TABLE>
<S> <C>
MISCELLANEOUS........................................................................ 14
Opportunity Plus Processing Office............................................... 14
Distribution..................................................................... 14
Delay or Suspension of Payments.................................................. 14
Performance Reporting............................................................ 15
Voting Rights.................................................................... 15
Changes in Beneficiary Designations.............................................. 15
Modification of the Contract..................................................... 15
Agreements with the Company...................................................... 15
Legal Matters and Proceedings.................................................... 16
CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION.................................. 16
APPENDIX I--GUARANTEED ACCUMULATION ACCOUNT.......................................... 17
APPENDIX II--FIXED ACCOUNT........................................................... 18
</TABLE>
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY JURISDICTION IN WHICH
SUCH OFFERING MAY NOT LAWFULLY BE MADE. THE COMPANY DOES NOT AUTHORIZE ANY
PERSON TO GIVE INFORMATION OR TO MAKE ANY REPRESENTATIONS IN CONNECTION WITH THE
OFFERING CONTAINED IN THIS PROSPECTUS EXCEPT AS OTHERWISE CONTAINED HEREIN.
<PAGE>
DEFINITIONS
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- --------------------------------------------------------------------------------
The following terms are defined as they are used in this Prospectus:
ACCOUNT: A record established for each Participant to identify contract values
accumulated on each Participant's behalf during the Accumulation Period. For any
given Participant, the Account includes amounts held under an Installment
Purchase Payment Contract and a Single Purchase Payment Contract.
ACCOUNT VALUE: The total dollar value of amounts held in an Account as of each
Valuation Date during the Accumulation Period.
ACCOUNT YEAR: A period of twelve months measured from the date on which an
Account is established (the effective date) or from an anniversary of such
effective date.
ACCUMULATION PERIOD: The period during which Purchase Payment(s) credited to an
Account are invested to fund future Annuity payments.
ACCUMULATION UNIT: A measure of the value of each Subaccount before annuity
payments begin.
ANNUITANT: The person on whose life or life expectancy the annuity payments are
based.
ANNUITY: A series of payments for life, a definite period or a combination of
the two.
ANNUITY DATE: The date on which annuity payments begin.
ANNUITY PERIOD: The period during which Annuity payments are made.
ANNUITY UNIT: A measure of the value of each Subaccount selected during the
Annuity Period.
BENEFICIARY(IES): The person or persons identified in the enrollment form who
are to receive any death benefit proceeds payable under the Contract.
CODE: Internal Revenue Code of 1986, as amended.
COMPANY (WE, US): Aetna Life Insurance and Annuity Company.
CONTRACTS: The group deferred, variable annuity contracts offered by this
Prospectus.
CONTRACT HOLDER: The person or entity to whom the Contract is issued. The
Contract Holder of the Contract is usually the employer.
CREDITED INTEREST OPTIONS: The fixed interest options under the Contract. The
Credited Interest Options currently consist of the Guaranteed Accumulation
Account and the Fixed Account, each of which is described in an Appendix to this
Prospectus. Amounts allocated to the Credited Interest Options are included in
the Account Value.
FUND(S): An open-end registered management investment company whose shares are
purchased by the Separate Account to fund the benefits provided by the Contract.
HOME OFFICE: The Company's principal executive offices, located at 151
Farmington Avenue, Hartford, Connecticut 06156.
NYSUT: New York State United Teachers Trust.
OPPORTUNITY PLUS PROCESSING OFFICE: The Opportunity Plus administrative
headquarters. The mailing address is P.O. Box 12894, Albany, New York
12212-2894.
PARTICIPANT (YOU): A person participating in a Plan maintained by an eligible
organization.
PLAN(S): Tax-deferred retirement plans under Section 403(b) of the Code for
employees of public school systems.
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DEFINITIONS - 1
<PAGE>
PURCHASE PAYMENT(S): The gross payment(s) made to the Company under a Contract.
PURCHASE PAYMENT PERIODS: For "Installment Purchase Payment Contracts," the
period of time for completion of the agreed upon annual number and amount of
Purchase Payments. For example, if it is determined that the Purchase Payment
Period will consist of 12 payments per year and only 11 payments are made, the
Purchase Payment Period is not completed until the twelfth Purchase Payment is
made.
SEPARATE ACCOUNT: Variable Annuity Account C, a separate account established by
the Company for the purpose of funding variable annuity contracts issued by the
Company.
SUBACCOUNT(S): The portion of the assets of the Separate Account that is
allocated to a particular Fund. Each Subaccount invests in the shares of only
one corresponding Fund.
UUP: United University Professions.
VALUATION DATE: The date and time at which the value of the Subaccount is
calculated. Currently, this calculation occurs at the close of business of the
New York Stock Exchange on any normal business day, Monday through Friday, that
the New York Stock Exchange is open.
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DEFINITIONS - 2
<PAGE>
PROSPECTUS SUMMARY
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- --------------------------------------------------------------------------------
CONTRACTS OFFERED
The two Contracts described in this Prospectus are group deferred variable
annuity contracts issued by Aetna Life Insurance and Annuity Company (the
"Company"). One allows lump sum payments ("Single Purchase Payment Contracts")
and the other allows installment payments ("Installment Purchase Payment
Contracts"). The purpose of the Contract is to accumulate values and to provide
benefits upon retirement for retirement plans under Section 403(b) of the Code.
The Contracts are available for school boards and public universities in the
State of New York, specifically for Participants who are members of NYSUT and
UUP.
The Contracts are available to Plans that include a variable annuity
contract alone or in conjunction with retail mutual funds for which Systemized
Benefits Administrators, Inc. ("SBA"), an affiliate of the Company, has agreed
to perform recordkeeping services and to provide consolidated statements. SBA
may receive compensation for these services, but such compensation will
generally not be charged to the Separate Account or deducted from a
Participant's Account under the Contract.
CONTRACT PURCHASE
The Contracts may be purchased by eligible organizations on behalf of a
group made up of their employees. Eligible employees may participate in the
Contract by completing the enrollment form and submitting it to the Opportunity
Plus Processing Office. Purchase Payments can be applied to the Contract either
through a lump-sum transfer from a pre-existing plan or through salary
reduction. (See "Purchase.")
FREE LOOK PERIOD
Contract Holders and Participants have the right to cancel their purchase
within 10 days after receiving the Contract or other document evidencing
interest in the Contract by returning it to the Opportunity Plus Processing
Office along with a written notice of cancellation. The amount received upon
cancellation will be the full value of Purchase Payments plus any increase or
minus any decrease in the Account Value allocated to the Subaccounts. (See
"Right to Cancel.")
INVESTMENT OPTIONS
The Company has established Variable Annuity Account C, a registered unit
investment trust, for the purpose of funding the variable portion of the
Contracts. The Separate Account is divided into Subaccounts which invest
directly in shares of the Funds described herein, as designated by the
Participant. The Contracts allow investment in any or all of the Subaccounts, as
well as in the Credited Interest Options described below. For a complete list of
the Funds available under the Contracts, and a description of the investment
objectives of each of the Funds and their investment advisers, see "Investment
Options--The Funds" in this Prospectus, as well as the prospectuses for each of
the Funds.
The Contracts also provide for investment in Credited Interest Options which
allow you to earn fixed rates of interest. The fixed options available under the
Contracts are the Guaranteed Accumulation Account ("GAA") and the Fixed Account.
(See the Appendices to this Prospectus.)
CHARGES AND DEDUCTIONS
Certain charges are associated with these Contracts. These charges include
daily deductions from the Separate Account (the mortality and expense risk
charges and an administrative charge), as well as any annual maintenance fee and
premium and other taxes. The Funds also incur certain fees and expenses which
are deducted directly from the Funds. A deferred sales charge may apply upon a
full or partial withdrawal of the Account Value. (See the Fee Table and "Charges
and Deductions.")
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SUMMARY - 1
<PAGE>
TRANSFERS
Prior to the Annuity Date, and subject to certain limitations, Account
Values may be transferred among the Subaccounts and the Credited Interest
Options without charge. Transfers can be requested in writing or by telephone in
accordance with the Company's transfer procedures. (See the Appendices for a
full description of the restrictions applicable to transfers made from the
Credited Interest Options.) (See "Transfers.")
WITHDRAWALS
All or a part of the Account Value may be withdrawn prior to the Annuity
Date by properly completing a disbursement form and sending it to the Company.
Certain charges may be assessed upon withdrawal. The withdrawal may also be
subject to income tax and a federal tax penalty. The Code restricts full and
partial withdrawals in some circumstances. (See "Withdrawals.")
The Contract also offers certain Additional Withdrawal Options during the
Accumulation Period to persons meeting certain criteria. Additional Withdrawal
Options may not be suitable in every situation. (See "Additional Withdrawal
Options.")
LOANS
Participants under Section 403(b) Plans may request a loan from their
Account Value at any time during the Accumulation Period. (See "Contract
Loans.")
DEATH BENEFIT
A death benefit is payable if the Participant dies before the Annuity Date.
Death benefit proceeds will be paid to the Beneficiary in an amount equal to the
Account Value. Until the election of a method of payment, the Account Value will
remain invested under the Contract. The Beneficiary may elect to receive the
proceeds in a lump sum or under any of the payment options available under the
Contract. However, the Code requires that distributions begin within a certain
time period. (See "Death Benefit During Accumulation Period.")
After Annuity Payments have commenced, a death benefit may be payable to the
Beneficiary depending upon the terms of the Contract and the Annuity Option
selected. (See "Death Benefit Payable During the Annuity Period.")
THE ANNUITY PERIOD
On the Annuity Date, you may elect to begin receiving Annuity payments.
Annuity payments can be made on either a fixed, variable or combination fixed
and variable basis. If a variable payout is selected, the payments will continue
to vary with the investment performance of the Subaccount(s) selected. The
Company reserves the right to limit the number of Subaccounts that may be
available during the Annuity Period. (See "Annuity Period.")
TAXES
Contributions and earnings are not generally taxed until you or your
Beneficiary(ies) actually receive a distribution from the Contract. A 10%
federal tax penalty and a 20% withholding for income tax may be imposed on
certain withdrawals. (See "Tax Status.")
INQUIRIES
- - Questions, inquiries or requests for additional information can be directed to
your agent or local representative, or you may contact the Company through the
Opportunity Plus Processing Office by writing to P.O. Box 12894, Albany, New
York 12212-2894, or by calling 1-800-OPP-INFO (1-800-677-4636). (See
"Miscellaneous--Opportunity Plus Processing Office.")
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SUMMARY - 2
<PAGE>
FEE TABLE
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This Fee Table describes the various charges and expenses associated with the
Contracts during the Accumulation Period. For amounts deducted during the
Annuity Period, see "Charges Deducted During the Annuity Period." No sales
charge is paid upon purchase of the Contracts. All costs that are borne directly
or indirectly under the Subaccounts and Funds are shown below. For more
information regarding expenses paid out of the assets of a particular Fund, see
the Fund's prospectus.
DIRECT CHARGES. These charges are deducted directly from the Account Value. They
include:
DEFERRED SALES CHARGE. The deferred sales charge is deducted as a
percentage of the amount withdrawn from Installment Purchase Payment
Contracts. The total amount deducted for the deferred sales charge will
not exceed 8.5% of the total Purchase Payments applied to the Account
under the Installment Purchase Payment Contract. The amount of the
deferred sales charge is calculated as follows:
<TABLE>
<CAPTION>
INSTALLMENT PURCHASE PAYMENT CONTRACTS:*
PURCHASE PAYMENT DEFERRED SALES
PERIODS COMPLETED CHARGE DEDUCTION
- --------------------------------------- ----------------------
<S> <C>
Less than 5 5%
5 or more but less than 7 4%
7 or more but less than 9 3%
9 or more but less than 10 2%
More than 10 0%
</TABLE>
* For Single Purchase Payment Contracts, there is no deduction for deferred
sales charges. For Installment Purchase Payment Contracts, the deferred sales
charge is waived for amounts deposited in the Subaccounts (or GAA) on or after
April 1, 1995. (See "Charges and Deductions--Deferred Sales Charge.")
<TABLE>
<S> <C>
ANNUAL CONTRACT MAINTENANCE FEE. The maintenance fee will generally be.................... $ 15.00
deducted quarterly during the Accumulation Period in an amount equal
to $3.75 each calendar quarter.
</TABLE>
INDIRECT CHARGES. Each Subaccount pays these expenses out of its assets. The
charges are reflected in the Subaccount's daily Accumulation Unit Value and are
not charged directly to an Account. They include:
<TABLE>
<S> <C>
MORTALITY AND EXPENSE RISK CHARGE......................................................... 1.25%
ADMINISTRATIVE EXPENSE CHARGE. We currently do not impose an Administrative Expense
Charge.................................................................................... 0.00%
---------
However, we reserve the right to deduct a daily charge of not more than 0.25%
per year from the Subaccounts.
TOTAL SEPARATE ACCOUNT CHARGES.......................................................... 1.25%
---------
---------
</TABLE>
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FEE TABLE - 1
<PAGE>
ANNUAL EXPENSES OF THE FUNDS
The following table illustrates the advisory fees and other expenses applicable
to the Funds. Except as noted, these figures are a percentage of each Fund's
average net assets and are based on figures for the year ended December 31,
1995. A Fund's "Other Expenses" include operating costs of the Fund. These
expenses are reflected in the Fund's net asset value and are not deducted from
the Account Value under the Contract.
<TABLE>
<CAPTION>
INVESTMENT
ADVISORY
FEES(1) OTHER EXPENSES TOTAL FUND
(AFTER EXPENSE (AFTER EXPENSE ANNUAL
REIMBURSEMENT) REIMBURSEMENT) EXPENSES
-------------- -------------- -----------
<S> <C> <C> <C>
Aetna Variable Fund(2) 0.25% 0.06% 0.31%
Aetna Income Shares(2) 0.25% 0.08% 0.33%
Aetna Variable Encore Fund(2) 0.25% 0.10% 0.35%
Aetna Investment Advisers Fund,
Inc.(2) 0.25% 0.08% 0.33%
Alger American Growth Portfolio 0.75% 0.10% 0.85%
Alger American Small Cap Portfolio 0.85% 0.07% 0.92%
Calvert Responsibly Invested Balanced
Portfolio(3) 0.70% 0.13% 0.83%
Fidelity VIP II Asset Manager
Portfolio(4) 0.71% 0.08% 0.79%
Fidelity VIP II Contrafund
Portfolio(4) 0.61% 0.11% 0.72%
Fidelity VIP II Index 500 Portfolio(5) 0.00% 0.20% 0.28%
Fidelity VIP Equity-Income Portfolio 0.51% 0.10% 0.61%
Franklin Government Securities
Trust(6) 0.63% 0.13% 0.76%
Janus Aspen Aggressive Growth
Portfolio(7) 0.75% 0.11% 0.86%
Janus Aspen Growth Portfolio(7) 0.65% 0.13% 0.78%
Janus Aspen Short-Term Bond
Portfolio(7) 0.00% 0.70% 0.70%
Janus Aspen Worldwide Growth
Portfolio(7) 0.68% 0.22% 0.90%
Lexington Emerging Markets Fund,
Inc.(8) 0.85% 0.90% 1.75%
Lexington Natural Resources Trust 1.00% 0.47% 1.47%
Neuberger & Berman Growth Portfolio(9) 0.84% 0.10% 0.94%
Scudder International Portfolio Class
A Shares 0.88% 0.20% 1.08%
TCI Growth(10) 1.00% 0.00% 1.00%
</TABLE>
- --------------------------
(1) Certain of the unaffiliated Fund advisers reimburse the Company for
administrative costs incurred in connection with administering the Funds as
variable funding options under the Contract. These reimbursements are paid
out of the investment advisory fees and are not charged to investors.
(2) As of May 1, 1996, the Company will provide administrative services to the
Fund and will assume the Fund's ordinary recurring direct costs under an
Administrative Services Agreement. The "Other Expenses" shown are not based
on figures for the year ended December 31, 1995, but reflect the fee
payable under this Agreement.
(3)The Management and Advisory Fees are subject to a performance adjustment,
after July 1, 1996, which could cause the fee to be as high as 0.85% or as
low as 0.55%, depending on performance. "Other Expenses" reflect an indirect
fee of 0.02%. Net fund operating expenses after reductions for fees paid
indirectly would be 0.81%.
(4) A portion of the brokerage commissions the Fund paid was used to reduce its
expenses. Without this reduction, total operating expenses would have been
0.81% for the Asset Manager Portfolio and 0.73% for the Contrafund
Portfolio.
(5)The Fund's expenses were voluntarily reduced by the Fund's investment
adviser. Absent reimbursement, the management fee, other expenses and total
expenses would have been 0.28%, 0.19% and 0.47%, respectively, for the Index
500 Portfolio.
(6)An expense reimbursement arrangement was in effect until February 1, 1996;
however, it is no longer in effect. The advisory fee and total annual
expenses shown above reflect the actual expenses of the Fund before
reimbursement, as if such arrangement had not been in effect during 1995.
(7)The information for each Portfolio is net of fee waivers or reductions from
Janus Capital. Fee reductions for the Aggressive Growth, Growth, and
Worldwide Growth Portfolios reduce the management fee to the level of the
corresponding Janus retail fund. Other waivers, if applicable, are first
applied against the management fee and then against other expenses. Without
such waivers or reductions, the Management Fee, Other Expenses and Total
Fund Annual Expenses would have been 0.82%, 0.11%, and 0.93% for Aggressive
Growth Portfolio; 0.85%, 0.13% and 0.98% for Growth Portfolio; 0.65%, 0.72%
and 1.37% for Short-Term Bond Portfolio; and 0.87%, 0.22% and 1.09% for
Worldwide Growth Portfolio; respectively. Janus Capital may modify or
terminate the waivers or reductions at any time upon 90 days' notice to the
Portfolio's Board of Trustees.
(8)The Fund's investment adviser has agreed to voluntarily limit the total
expenses of the Fund (excluding interest, taxes, brokerage, and
extraordinary expenses, but including management fees and operating
expenses) to an annual rate of 1.75% of the Fund's average net assets
through April 30, 1997. Without this agreement, the Fund's Investment
Advisory Fee, Total Other Expenses and Total Fund Annual Expenses would have
been 0.85%, 3.24% and 4.09% for the most recent fiscal year.
(9)Neuberger & Berman Advisers Management Trust (the "Trust") is divided into
portfolios ("Portfolios"), each of which invests all of its net investment
assets in a corresponding series ("Series") of Advisers management Trust.
Expenses in the table reflect expenses of the Portfolio and include the
Portfolio's pro rata portion of the operating expenses of the Portfolio's
corresponding Series. The Portfolio pays Neuberger & Berman Management Inc.
("NBMI") an administration fee based on the Portfolio's net asset value.
- --------------------------------------------------------------------------------
FEE TABLE - 2
<PAGE>
The corresponding Series of the Portfolio pays NBMI a management fee based
on the Series' average daily net assets. Accordingly, this table combines
management fees at the Series level and administration fees at the Portfolio
level in a unified fee rate. (See "Expenses" in the Trust's prospectus.)
(10) The Portfolio's investment adviser pays all expenses of the Portfolio
except brokerage commissions, taxes, interest, fees, expenses of the
non-interested person directors (including counsel fees) and extraordinary
expenses. These expenses have historically represented a very small
percentage (less than 0.01%) of total net assets in a fiscal year.
HYPOTHETICAL ILLUSTRATION (EXAMPLE)
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 Examples illustrate 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 these Examples, the maximum maintenance fee of $15.00 that can be
deducted under the Contract has been converted to a percentage of assets equal
to 0.043%.
<TABLE>
<CAPTION>
EXAMPLE A EXAMPLE B
------------------------------------- -------------------------------------
IF YOU WITHDRAW YOUR ENTIRE ACCOUNT IF YOU DO NOT WITHDRAW YOUR ACCOUNT
VALUE AT THE END OF THE PERIODS VALUE, OR IF YOU ANNUITIZE AT THE END
SHOWN, YOU WOULD PAY THE FOLLOWING OF THE PERIODS SHOWN, YOU WOULD PAY
EXPENSES, INCLUDING ANY APPLICABLE THE FOLLOWING EXPENSES (NO DEFERRED
DEFERRED SALES CHARGE:* SALES 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>
Aetna Variable Fund $68 $106 $146 $190 $16 $ 51 $ 87 $190
Aetna Income Shares $68 $106 $147 $193 $17 $ 51 $ 88 $193
Aetna Variable Encore Fund $68 $107 $148 $195 $17 $ 52 $ 89 $195
Aetna Investment Advisers Fund, Inc. $68 $106 $147 $193 $17 $ 51 $ 88 $193
Alger American Growth Portfolio $73 $122 $173 $248 $22 $ 67 $115 $248
Alger American Small Cap Portfolio $74 $124 $176 $255 $22 $ 69 $119 $255
Calvert Responsibly Invested Balanced
Portfolio $73 $121 $172 $245 $22 $ 66 $114 $245
Fidelity VIP II Asset Manager Portfolio $73 $120 $170 $241 $21 $ 65 $112 $241
Fidelity VIP II Contrafund Portfolio $72 $118 $166 $234 $20 $ 63 $108 $234
Fidelity VIP Equity-Income Portfolio $71 $115 $161 $223 $19 $ 60 $103 $223
Fidelity VIP II Index 500 Portfolio $68 $105 $145 $187 $16 $ 50 $ 86 $187
Franklin Government Securities Trust $72 $119 $168 $238 $21 $ 64 $110 $238
Janus Aspen Aggressive Growth Portfolio $73 $122 $173 $249 $22 $ 67 $116 $249
Janus Aspen Growth Portfolio $72 $119 $169 $240 $21 $ 65 $112 $240
Janus Aspen Short-Term Bond Portfolio $72 $117 $165 $232 $20 $ 63 $107 $232
Janus Aspen Worldwide Growth Portfolio $74 $123 $175 $253 $22 $ 69 $118 $253
Lexington Emerging Markets Fund, Inc. $82 $147 $215 $336 $31 $ 94 $160 $336
Lexington Natural Resources Trust $79 $139 $202 $309 $28 $ 86 $146 $309
Neuberger & Berman Growth Portfolio $74 $124 $177 $257 $23 $ 70 $120 $257
Scudder International Portfolio Class A
Shares $75 $128 $184 $271 $24 $ 74 $127 $271
TCI Growth $75 $126 $180 $263 $23 $ 72 $123 $263
</TABLE>
- ------------------------------
* For Single Purchase Payment Accounts, there is no deduction for deferred
sales charges. For Installment Purchase Payment Accounts, the deferred sales
charge is waived for amounts deposited in the Subaccounts (or GAA) on or
after April 1, 1995.
**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.)
- --------------------------------------------------------------------------------
FEE TABLE - 3
<PAGE>
CONDENSED FINANCIAL INFORMATION
(SELECTED DATA FOR ACCUMULATION UNITS OUTSTANDING THROUGHOUT EACH PERIOD)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
THE CONDENSED FINANCIAL INFORMATION PRESENTED BELOW FOR EACH OF THE YEARS IN THE
TEN-YEAR PERIOD ENDED DECEMBER 31, 1995 (AS APPLICABLE), IS DERIVED FROM THE
FINANCIAL STATEMENTS OF THE ACCOUNT, WHICH FINANCIAL STATEMENTS HAVE BEEN
AUDITED BY KPMG PEAT MARWICK LLP, INDEPENDENT AUDITORS. THE FINANCIAL STATEMENTS
AS OF AND FOR THE YEAR ENDED DECEMBER 31, 1995 AND THE INDEPENDENT AUDITORS'
REPORT THEREON, ARE INCLUDED IN THE STATEMENT OF ADDITIONAL INFORMATION.
<TABLE>
<CAPTION>
1995 1994 1993 1992 1991 1990
---------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
AETNA VARIABLE FUND
Value at beginning of period $105.558 $107.925 $102.383 $ 97.165 $77.845 $76.311
Value at end of period $137.869 $105.558 $107.925 $102.383 $97.165 $77.845
Increase (decrease) in value of accumulation
unit(1) 30.61% (2.19)% 5.41% 5.37% 24.82% 2.01%
Number of accumulation units outstanding at
end of period 6,364,000 13,966,072 21,148,863 24,201,565 20,948,226 18,362,906
AETNA INCOME SHARES
Value at beginning of period $40.173 $42.283 $39.038 $36.789 $31.192 $28.943
Value at end of period $46.913 $40.173 $42.283 $39.038 $36.789 $31.192
Increase (decrease) in value of accumulation
unit(1) 16.78% (4.99)% 8.31% 6.11% 17.94% 7.77%
Number of accumulation units outstanding at
end of period 2,377,622 5,108,720 8,210,666 8,507,292 7,844,412 6,984,793
AETNA VARIABLE ENCORE FUND
Value at beginning of period $36.271 $35.282 $34.619 $33.812 $32.138 $30.012
Value at end of period $37.988 $36.271 $35.282 $34.619 $33.812 $32.138
Increase (decrease) in value of accumulation
unit(1) 4.73% 2.80% 1.92% 2.39% 5.21% 7.08%
Number of accumulation units outstanding at
end of period 1,836,260 3,679,802 5,086,515 7,534,662 8,430,082 10,220,110
AETNA INVESTMENT ADVISERS
FUND, INC.
Value at beginning of period $14.270 $14.519 $13.379 $12.736 $10.896 $10.437
Value at end of period $17.954 $14.270 $14.519 $13.379 $12.736 $10.896
Increase (decrease) in value of accumulation
unit(1) 25.82% (1.71)% 8.52% 5.05% 16.89% 4.40%
Number of accumulation units outstanding at
end of period 9,193,181 21,990,186 30,784,750 34,802,433 22,898,099 17,078,985
ALGER AMERICAN GROWTH PORTFOLIO
Value at beginning of period $10.000(14)
Value at end of period $11.715
Increase (decrease) in value of accumulation
unit(1) 17.15%
Number of accumulation units outstanding at
end of period 530,263
ALGER AMERICAN SMALL CAP
PORTFOLIO
Value at beginning of period $ 9.513 $10.072 $10.000(3)
Value at end of period $13.558 $ 9.513 $10.072
Increase (decrease) in value of accumulation
unit(1) 42.52% (5.55)% 0.72%
Number of accumulation units outstanding at
end of period 1,714,187 665,518 51,327
CALVERT RESPONSIBLY INVESTED
BALANCED PORTFOLIO*
Value at beginning of period $13.990 $14.640 $13.726 $12.913 $11.233 $10.568
Value at end of period $17.951 $13.990 $14.640 $13.726 $12.913 $11.233
Increase (decrease) in value of accumulation
unit(1) 28.31% (4.44)% 6.66% 6.30% 14.96% 6.29%
Number of accumulation units outstanding at
end of period 856,361 743,464 705,415 503,006 355,851 148,576
<CAPTION>
1989 1988 1987 1986
---------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
AETNA VARIABLE FUND
Value at beginning of period $59.871 $52.885 $50.760 $43.205
Value at end of period $76.311 $59.871 $52.885 $50.760
Increase (decrease) in value of accumulation
unit(1) 27.46% 13.21% 4.19% 17.49%
Number of accumulation units outstanding at
end of period 17,142,820 16,455,396 16,497,406 16,578,251
AETNA INCOME SHARES
Value at beginning of period $25.574 $24.061 $23.308 $20.703
Value at end of period $28.943 $25.574 $24.061 $23.308
Increase (decrease) in value of accumulation
unit(1) 13.17% 6.29% 3.23% 12.58%
Number of accumulation units outstanding at
end of period 6,202,834 5,955,293 5,372,271 6,188,470
AETNA VARIABLE ENCORE FUND
Value at beginning of period $27.783 $26.171 $24.812 $23.504
Value at end of period $30.012 $27.783 $26.171 $24.812
Increase (decrease) in value of accumulation
unit(1) 8.02% 6.16% 5.48% 5.57%
Number of accumulation units outstanding at
end of period 8,286,033 8,154,644 7,326,151 6,692,947
AETNA INVESTMENT ADVISERS
FUND, INC.
Value at beginning of period $10.000(2)
Value at end of period $10.437
Increase (decrease) in value of accumulation
unit(1) 4.37%
Number of accumulation units outstanding at
end of period 9,535,986
ALGER AMERICAN GROWTH PORTFOLIO
Value at beginning of period
Value at end of period
Increase (decrease) in value of accumulation
unit(1)
Number of accumulation units outstanding at
end of period
ALGER AMERICAN SMALL CAP
PORTFOLIO
Value at beginning of period
Value at end of period
Increase (decrease) in value of accumulation
unit(1)
Number of accumulation units outstanding at
end of period
CALVERT RESPONSIBLY INVESTED
BALANCED PORTFOLIO*
Value at beginning of period $10.000(4)
Value at end of period $10.568
Increase (decrease) in value of accumulation
unit(1) 5.68%
Number of accumulation units outstanding at
end of period 20,710
</TABLE>
- --------------------------------------------------------------------------------
AUV HISTORY - 1
<PAGE>
CONDENSED FINANCIAL INFORMATION (CONTINUED)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1995 1994 1993 1992 1991 1990
---------- ----------- ----------- ----------- ----------- -----------
FIDELITY VIP II ASSET MANAGER
PORTFOLIO
<S> <C> <C> <C> <C> <C> <C>
Value at beginning of period $ 9.447 $10.000(5)
Value at end of period $10.912 $ 9.447
Increase (decrease) in value of accumulation
unit(1) 15.51% (5.53)%
Number of accumulation units outstanding at
end of period 1,316,916 1,254,504
FIDELITY VIP II CONTRAFUND PORTFOLIO
Value at beginning of period $10.000(15)
Value at end of period $11.763
Increase (decrease) in value of accumulation
unit(1) 17.63%
Number of accumulation units outstanding at
end of period 525,476
FIDELITY VIP EQUITY-INCOME PORTFOLIO
Value at beginning of period $10.000(15)
Value at end of period $11,617
Increase (decrease) in value of accumulation
unit(1) 16.17%
Number of accumulation units outstanding at
end of period 628,582
FIDELITY VIP GROWTH PORTFOLIO
Value at beginning of period $10.000(14)
Value at end of period $10.198
Increase (decrease) in value of accumulation
unit(1) 1.98%
Number of accumulation units outstanding at
end of period 762
FIDELITY VIP II INDEX 500 PORTFOLIO
Value at beginning of period $10.000(15)
Value at end of period $11.740
Increase (decrease) in value of accumulation
unit(1) 17.40%
Number of accumulation units outstanding at
end of period 290,547
FIDELITY VIP OVERSEAS PORTFOLIO
Value at beginning of period $10.000(14)
Value at end of period $10.197
Increase (decrease) in value of accumulation
unit(1) 1.97%
Number of accumulation units outstanding at
end of period 1,302
FRANKLIN GOVERNMENT SECURITIES TRUST
Value at beginning of period $14.190 $14.929 $14.050 $13.219 $11.545 $10.581
Value at end of period $16.495 $14.109 $14.990 $14.050 $13.219 $11.545
Increase (decrease) in value of accumulation
unit(1) 16.24% (4.95)% 6.26% 6.29% 14.50% 9.11%
Number of accumulation units outstanding at
end of period 809,414 804,457 960,629 810,155 627,552 178,761
JANUS ASPEN AGGRESSIVE GROWTH PORTFOLIO
Value at beginning of period $12.169 $10.000(7)
Value at end of period $15.323 $12.169
Increase (decrease) in value of accumulation
unit(1) 25.91% 21.69%
Number of accumulation units outstanding at
end of period 1,280,953 393,553
JANUS ASPEN BALANCED PORTFOLIO
Value at beginning of period $10.000(14)
Value at end of period $10.853
Increase (decrease) in value of accumulation
unit(1) 8.53%
Number of accumulation units outstanding at
end of period 161
<CAPTION>
1989 1988 1987 1986
---------- ----------- ----------- -----------
FIDELITY VIP II ASSET MANAGER
PORTFOLIO
<S> <C> <C> <C> <C>
Value at beginning of period
Value at end of period
Increase (decrease) in value of accumulation
unit(1)
Number of accumulation units outstanding at
end of period
FIDELITY VIP II CONTRAFUND PORTFOLIO
Value at beginning of period
Value at end of period
Increase (decrease) in value of accumulation
unit(1)
Number of accumulation units outstanding at
end of period
FIDELITY VIP EQUITY-INCOME PORTFOLIO
Value at beginning of period
Value at end of period
Increase (decrease) in value of accumulation
unit(1)
Number of accumulation units outstanding at
end of period
FIDELITY VIP GROWTH PORTFOLIO
Value at beginning of period
Value at end of period
Increase (decrease) in value of accumulation
unit(1)
Number of accumulation units outstanding at
end of period
FIDELITY VIP II INDEX 500 PORTFOLIO
Value at beginning of period
Value at end of period
Increase (decrease) in value of accumulation
unit(1)
Number of accumulation units outstanding at
end of period
FIDELITY VIP OVERSEAS PORTFOLIO
Value at beginning of period
Value at end of period
Increase (decrease) in value of accumulation
unit(1)
Number of accumulation units outstanding at
end of period
FRANKLIN GOVERNMENT SECURITIES TRUST
Value at beginning of period $10.000(6)
Value at end of period $10.581
Increase (decrease) in value of accumulation
unit(1) 5.81%
Number of accumulation units outstanding at
end of period 25,258
JANUS ASPEN AGGRESSIVE GROWTH PORTFOLIO
Value at beginning of period
Value at end of period
Increase (decrease) in value of accumulation
unit(1)
Number of accumulation units outstanding at
end of period
JANUS ASPEN BALANCED PORTFOLIO
Value at beginning of period
Value at end of period
Increase (decrease) in value of accumulation
unit(1)
Number of accumulation units outstanding at
end of period
</TABLE>
- --------------------------------------------------------------------------------
AUV HISTORY - 2
<PAGE>
CONDENSED FINANCIAL INFORMATION (CONTINUED)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1995 1994 1993 1992 1991 1990
---------- ----------- ----------- ----------- ----------- -----------
JANUS ASPEN FLEXIBLE INCOME PORTFOLIO
<S> <C> <C> <C> <C> <C> <C>
Value at beginning of period $ 9.911 $10.000(13)
Value at end of period $12.124 $ 9.911
Increase (decrease) in value of accumulation
unit(1) 22.33% (0.89)%
Number of accumulation units outstanding at
end of period 3,345 1,555
JANUS ASPEN GROWTH PORTFOLIO
Value at beginning of period $10.000(14)
Value at end of period $11.859
Increase (decrease) in value of accumulation
unit(1) 18.59%
Number of accumulation units outstanding at
end of period 109,717
JANUS ASPEN SHORT-TERM BOND PORTFOLIO
Value at beginning of period $10.000(14)
Value at end of period $10.393
Increase (decrease) in value of accumulation
unit(1) 3.93%
Number of accumulation units outstanding at
end of period 18,473
JANUS ASPEN WORLDWIDE GROWTH PORTFOLIO
Value at beginning of period $10.000(14)
Value at end of period $12.158
Increase (decrease) in value of accumulation
unit(1) 21.58%
Number of accumulation units outstanding at
end of period 314,653
LEXINGTON EMERGING MARKETS FUND, INC.
Value at beginning of period $ 8.772 $10.000(8)
Value at end of period $ 8.323 $ 8.772
Increase (decrease) in value of accumulation
unit(1) (5.12)% (12.28)%
Number of accumulation units outstanding at
end of period 371,156 144,750
LEXINGTON NATURAL RESOURCES TRUST
Value at beginning of period $ 9.412 $10.071 $ 9.193 $ 9.018 $ 9.608 $11.441
Value at end of period $10.862 $ 9.412 $10.071 $ 9.193 $ 9.018 $ 9.608
Increase (decrease) in value of accumulation
unit(1) 15.41% (6.54)% 9.55% 1.94% (6.14)% (16.02)%
Number of accumulation units outstanding at
end of period 530,562 533,016 341,771 198,338 144,139 75,052
NEUBERGER & BERMAN GROWTH PORTFOLIO
Value at beginning of period $13.398 $14.278 $13.536 $12.511 $ 9.769 $10.772
Value at end of period $17.430 $13.398 $14.278 $13.536 $12.511 $ 9.769
Increase (decrease) in value of accumulation
unit(1) 30.09% (6.16)% 5.48% 8.19% 28.07% (9.31)%
Number of accumulation units outstanding at
end of period 2,359,090 2,107,525 1,927,674 1,346,898 971,985 482,220
SCUDDER INTERNATIONAL PORTFOLIO CLASS A SHARES**
Value at beginning of period $13.227 $13.508 $ 9.922 $10.239** $ 9.256 $10.306
Value at end of period $14.515 $13.227 $13.508 $ 9.922 $10.239 $ 9.256
Increase (decrease) in value of accumulation
unit(1) 9.74% (2.08)% 36.14% (3.10)% 10.62% (10.19)%
Number of accumulation units outstanding at
end of period 3,823,292 4,240,412 2,371,037 1,161,007 779,667 317,829
TCI GROWTH
Value at beginning of period $11.172 $11.443 $10.495 $10.000(12)
Value at end of period $14.464 $11.172 $11.443 $10.495
Increase (decrease) in value of accumulation
unit(1) 29.47% (2.37)% 9.03% 4.95%
Number of accumulation units outstanding at
end of period 1,784,552 1,608,362 1,016,894 232,832
<CAPTION>
1989 1988 1987 1986
---------- ----------- ----------- -----------
JANUS ASPEN FLEXIBLE INCOME PORTFOLIO
<S> <C> <C> <C> <C>
Value at beginning of period
Value at end of period
Increase (decrease) in value of accumulation
unit(1)
Number of accumulation units outstanding at
end of period
JANUS ASPEN GROWTH PORTFOLIO
Value at beginning of period
Value at end of period
Increase (decrease) in value of accumulation
unit(1)
Number of accumulation units outstanding at
end of period
JANUS ASPEN SHORT-TERM BOND PORTFOLIO
Value at beginning of period
Value at end of period
Increase (decrease) in value of accumulation
unit(1)
Number of accumulation units outstanding at
end of period
JANUS ASPEN WORLDWIDE GROWTH PORTFOLIO
Value at beginning of period
Value at end of period
Increase (decrease) in value of accumulation
unit(1)
Number of accumulation units outstanding at
end of period
LEXINGTON EMERGING MARKETS FUND, INC.
Value at beginning of period
Value at end of period
Increase (decrease) in value of accumulation
unit(1)
Number of accumulation units outstanding at
end of period
LEXINGTON NATURAL RESOURCES TRUST
Value at beginning of period $10.000(9)
Value at end of period $11.441
Increase (decrease) in value of accumulation
unit(1) 14.41%
Number of accumulation units outstanding at
end of period 11,481
NEUBERGER & BERMAN GROWTH PORTFOLIO
Value at beginning of period $10.000(10)
Value at end of period $10.772
Increase (decrease) in value of accumulation
unit(1) 7.72%
Number of accumulation units outstanding at
end of period 68,885
SCUDDER INTERNATIONAL PORTFOLIO CLASS A SHARE
Value at beginning of period $10.000(11)
Value at end of period $10.306
Increase (decrease) in value of accumulation
unit(1) 3.06%
Number of accumulation units outstanding at
end of period 32,902
TCI GROWTH
Value at beginning of period
Value at end of period
Increase (decrease) in value of accumulation
unit(1)
Number of accumulation units outstanding at
end of period
</TABLE>
- --------------------------------------------------------------------------------
AUV HISTORY - 3
<PAGE>
CONDENSED FINANCIAL INFORMATION (CONTINUED)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(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.
(2) The initial Accumulation Unit value was established at $10.000 on June 23,
1989, the date on which the Fund commenced operations.
(3) The initial Accumulation Unit value was established at $10.000 on September
17, 1993. The Portfolio became available under the Contract on March 15,
1994.
(4) The initial Accumulation Unit value was established at $10.000 on May 31,
1989, the date on which the Fund became available under the Contract.
(5) The initial Accumulation Unit value was established at $10.000 during March
1994, when funds were first received under this option.
(6) The initial Accumulation Unit value was established at $10.000 on June 7,
1989, the date on which the Fund became available under the Contract.
(7) The initial Accumulation Unit value was established at $10.000 during June
1994, when funds were first received in this option.
(8) The initial Accumulation Unit value was established at $10.000 during
October 1994, when funds were first received in this option.
(9) The initial Accumulation Unit value was established at $10.000 on May 31,
1989, the date on which the Fund became available under the Contract.
(10) The initial Accumulation Unit value was established at $10.000 on May 31,
1989, the date on which the Portfolio became available under the Contract.
(11) The initial Accumulation Unit value was established at $10.000 on July 5,
1989, the date on which the Portfolio became available under the Contract.
(12) The initial Accumulation Unit value was established at $10.000 on September
21, 1992, the date on which the Portfolio became available under the
Contract.
(13) The initial Accumulation Unit value was established at $10.000 during
November 1994, when funds were first received in this option.
(14) The initial Accumulation Unit value was established at $10.000 during July
1995, when the Fund became available under the Contract.
(15) The initial Accumulation Unit value was established at $10.000 during May
1995, when the Fund became available under the Contract.
* Formerly Calvert Socially Responsible Series.
** Formerly T. Rowe Price International Equity Fund. On April 27, 1992, the
Fund's assets were liquidated and merged into Scudder Variable Life
Investment Fund -- Managed International Portfolio. The Accumulation Unit
value following the merger was $10.051.
- --------------------------------------------------------------------------------
AUV HISTORY - 4
<PAGE>
THE COMPANY
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Aetna Life Insurance and Annuity Company (the "Company") is the issuer of
the Contract, and as such, it is responsible for providing the insurance and
annuity benefits under the Contract. The Company is a stock life insurance
company organized under the insurance laws of the State of Connecticut in 1976.
Through a merger, it succeeded to the business of Aetna Variable Annuity Life
Insurance Company (formerly Participating Annuity Life Insurance Company, an
Arkansas life insurance company organized in 1954). The Company is engaged in
the business of issuing life insurance policies and variable annuity contracts
in all states of the United States. The Company's principal executive offices
are located at 151 Farmington Avenue, Hartford, Connecticut 06156.
The Company is a wholly owned subsidiary of Aetna Retirement Holdings, Inc.,
which is in turn a wholly owned subsidiary of Aetna Retirement Services, Inc.
and an indirect wholly owned subsidiary of Aetna Life and Casualty Company.
VARIABLE ANNUITY ACCOUNT C
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The Company established Variable Annuity Account C (the "Separate Account")
in 1976 as a segregated asset account for the purpose of funding its variable
annuity contracts. The Separate Account is registered as a unit investment trust
under the Investment Company Act of 1940 (the "1940 Act") and meets the
definition of "separate account" under federal securities laws. The Separate
Account is divided into "subaccounts" which do not invest directly in stocks,
bonds or other investments. Instead, each Subaccount buys and sells shares of a
corresponding Fund.
Although the Company holds title to the assets of the Separate Account, such
assets are not chargeable with liabilities arising out of any other business we
may conduct. Income, gains or losses of the Separate Account are credited to or
charged against the assets of the Separate Account without regard to our other
income, gains or losses. All obligations arising under the Contracts are our
general corporate obligations.
INVESTMENT OPTIONS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
THE FUNDS
Purchase Payments may be allocated to one or more of the Subaccounts as
designated on the enrollment form. In turn, the Subaccounts invest in the
corresponding Funds at net asset value.
The Contract Holder may decide to offer only a select number of Funds under
its Plan, or it may decide to substitute shares of one Fund for shares of
another Fund currently held by the Separate Account. The availability of Funds
may be subject to regulatory authorization. In addition, the Company may add or
withdraw Funds, as permitted by applicable law.
The investment results of the Funds described below are likely to differ
significantly and there is no assurance that any of the Funds will achieve their
respective investment objectives. Except where otherwise noted, all of the Funds
are diversified, as defined in the 1940 Act.
- -AETNA VARIABLE FUND seeks to maximize total return through investments in a
diversified portfolio of common stocks and securities convertible into common
stock.(1)
- -AETNA INCOME SHARES seeks to maximize total return, consistent with reasonable
risk, through investments in a diversified portfolio consisting primarily of
debt securities.(1)
- -AETNA VARIABLE ENCORE FUND seeks to provide high current return, consistent
with preservation of capital and liquidity, through investment in high-quality
money market instruments. An investment in the Fund is neither insured nor
guaranteed by the U.S. Government.(1)
- -AETNA INVESTMENT ADVISERS FUND, INC. is a managed fund which seeks to maximize
investment return consistent with reasonable safety of principal by
- --------------------------------------------------------------------------------
1
<PAGE>
investing in one or more of the following asset classes: stocks, bonds and cash
equivalents based on the Company's judgment of which of those sectors or mix
thereof offers the best investment prospects.(1)
- -ALGER AMERICAN FUND--ALGER AMERICAN GROWTH PORTFOLIO seeks long-term capital
appreciation by investing in a diversified, actively managed portfolio of
equity securities. The Portfolio primarily invests in equity securities of
companies which have a market capitalization of $1 billion or greater.(2)
- -ALGER AMERICAN FUND--ALGER AMERICAN SMALL CAPITALIZATION PORTFOLIO seeks
long-term capital appreciation. Except during temporary defensive periods, the
Portfolio invests at least 65% of its total assets in equity securities of
companies that, at the time of purchase of such securities, have total market
capitalization within the range of companies included in the Russell 2000
Growth Index, updated quarterly. The Russell 2000 Growth Index is designed to
track the performance of small capitalization companies. At December 30, 1995,
the range of market capitalization of these companies was $20 million to $2.2
billion.(2)
- -CALVERT RESPONSIBLY INVESTED BALANCED PORTFOLIO is a NONDIVERSIFIED portfolio
that seeks growth of capital through investment in enterprises that make a
significant contribution to society through their products and services and
through the way they do business.(3)
- -FIDELITY INVESTMENTS VARIABLE INSURANCE PRODUCTS FUND II--ASSET MANAGER
PORTFOLIO seeks high total return with reduced risk over the long-term by
allocating its assets among stocks, bonds and short-term fixed-income
instruments.
- -FIDELITY INVESTMENTS' VARIABLE INSURANCE PRODUCTS FUND II--CONTRAFUND PORTFOLIO
seeks maximum total return over the long term by investing mainly in equity
securities of companies that are undervalued or out-of-favor.(4)
- -FIDELITY INVESTMENTS VARIABLE INSURANCE PRODUCTS FUND II--INDEX 500 PORTFOLIO
seeks to provide investment results that correspond to the total return of
common stocks publicly traded in the United States by duplicating the
composition and total return of the Standard & Poor's 500 Composite Index of
500 stocks.(4)
- -FIDELITY INVESTMENTS' VARIABLE INSURANCE PRODUCTS FUND--EQUITY-INCOME PORTFOLIO
seeks reasonable income by investing primarily in income-producing equity
securities. In selecting investments, the Fund also considers the potential for
capital appreciation.(4)
- -FRANKLIN GOVERNMENT SECURITIES TRUST seeks income through investments in
obligations of the U.S. Government or its agencies or instrumentalities,
primarily GNMA obligations.(5)
- -JANUS ASPEN SERIES--AGGRESSIVE GROWTH PORTFOLIO is a NONDIVERSIFIED portfolio
that seeks long-term growth of capital in a manner consistent with the
preservation of capital. The Portfolio pursues its investment objective by
normally investing at least 50% of its equity assets in securities issued by
medium-sized companies. Medium-sized companies are those whose market
capitalizations fall within the range of companies in the S&P MidCap 400 Index,
which as of December 29, 1995 included companies with capitalizations between
approximately $118 million and $7.5 billion, but which is expected to change on
a regular basis.(6)
- -JANUS ASPEN SERIES--GROWTH PORTFOLIO seeks long-term growth of capital in a
manner consistent with the preservation of capital. The Portfolio pursues its
investment objective by investing in common stocks of companies of any size.(6)
- -JANUS ASPEN SERIES--SHORT-TERM BOND PORTFOLIO seeks as high a level of current
income as is consistent with preservation of capital. The Portfolio pursues its
investment objective by investing primarily in short-and intermediate-term
fixed income securities.(6)
- -JANUS ASPEN SERIES--WORLDWIDE GROWTH PORTFOLIO seeks long-term growth of
capital in a manner consistent with preservation of capital. The Portfolio
pursues its investment objective primarily through investments in common stocks
of foreign and domestic issuers.(6)
- -LEXINGTON EMERGING MARKETS FUND, INC seeks long-term growth of capital
primarily through investment in equity securities of companies domiciled in, or
doing business in emerging countries and emerging markets. Investments in
emerging markets involve risks not present in domestic markets. See the Fund's
prospectus for information on risks inherent in this investment.(7)
- -LEXINGTON NATURAL RESOURCES TRUST is a NONDIVERSIFIED portfolio that seeks
long-term growth of capital through investment primarily in common stocks of
companies
- --------------------------------------------------------------------------------
2
<PAGE>
which own or develop natural resources and other basic commodities or supply
goods and services to such companies.(7)
- -NEUBERGER & BERMAN ADVISERS MANAGEMENT TRUST-- GROWTH PORTFOLIO seeks capital
appreciation without regard to income. The Portfolio generally invests in
securities believed to have the maximum potential for long-term capital
appreciation. The Portfolio expects to be almost fully invested in common
stocks, often of companies that may be temporarily out of favor in the
market.(8)
- -SCUDDER VARIABLE LIFE INVESTMENT FUND-- INTERNATIONAL PORTFOLIO CLASS A SHARES
seeks long-term growth of capital primarily through diversified holdings of
marketable foreign equity investments.(9)
- -TCI PORTFOLIOS, INC.--TCI GROWTH (a Twentieth Century fund) seeks capital
growth. The Fund seeks to achieve its objective by investing in common stocks
(including securities convertible into common stocks) and other securities that
meet certain fundamental and technical standards of selection and, in the
opinion of the Fund's investment manager, have better than average potential
for appreciation.(10)
Investment Advisers for each of the Funds:
(1) Aetna Life Insurance and Annuity Company
(2) Fred Alger Management, Inc.
(3) Calvert Asset Management Company, Inc.
(4) Fidelity Management & Research Company
(5) Franklin Advisers, Inc.
(6) Janus Capital Corporation
(7) Lexington Management Corporation (adviser); Market Systems Research
Advisors, Inc. (subadviser) [Lexington Natural Resources Trust only]
(8) Neuberger & Berman Management Inc. (Investment Manager); Neuberger &
Berman, L.P. (Sub-Adviser)
(9) Scudder, Stevens & Clark, Inc.
(10) Investors Research Corporation
RISKS ASSOCIATED WITH INVESTMENT IN THE FUNDS. Some of the Funds may use
instruments known as derivatives as part of their investment strategies. The use
of certain derivatives may involve high risk of volatility to a Fund, and the
use of leverage in connection with such derivatives can also increase risk of
losses. Some of the Funds may also invest in foreign or international securities
which involve greater risks than U.S. investments.
More comprehensive information, including a discussion of potential risks,
is found in the respective Fund prospectuses which accompany this Prospectus.
You should read the Fund prospectuses and consider carefully, and on a
continuing basis, which Fund or combination of Funds is best suited to your
long-term investment objectives.
CONFLICTS OF INTEREST (MIXED AND SHARED FUNDING). Shares of the Funds are
sold to each of the Subaccounts for funding the variable annuity contracts
issued by the Company. Shares of the Funds may also be sold to other insurance
companies for the same purpose. This is referred to as "shared funding." Shares
of the Funds may also be used for funding variable life insurance contracts
issued by the Company or by third parties. This is referred to as "mixed
funding."
Because the Funds available under the Contract are sold to fund variable
annuity contracts and variable life insurance policies issued by us or by other
companies, certain conflicts of interest could arise. If a conflict of interest
were to occur, one of the separate accounts might withdraw its investment in a
Fund, which might force that Fund to sell portfolio securities at
disadvantageous prices, causing its per share value to decrease. Each Fund's
Board of Directors or Trustees has agreed to monitor events in order to identify
any material irreconcilable conflicts which might arise and to determine what
action, if any, should be taken to address such conflict.
CREDITED INTEREST OPTIONS
Purchase Payments may be allocated to one or more of the Credited Interest
Options available under the Contracts as described below. Under group Contracts,
the Contract Holder may elect not to offer all Credited Interest Options under
its Plan. The Credited Interest Options currently available under the Contract
include the Guaranteed Accumulation Account and the Fixed Account.
- - The Guaranteed Accumulation Account (GAA) is a credited interest option
through which we guarantee stipulated rates of interest for stated periods of
time. Amounts must remain in the GAA for the full guaranteed term to received
the quoted interest rates, or a market value adjustment (which may be positive
or negative) will be applied. (See Appendix I.)
- - The Fixed Account is a part of the Company's general account. The Fixed
Account guarantees a minimum interest rate, as specified in the Contract. The
Company may credit higher interest rates from time to time. Transfers from the
Fixed Account are limited. (See Appendix II.)
- --------------------------------------------------------------------------------
3
<PAGE>
PURCHASE
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
CONTRACT AVAILABILITY
The Contracts are designed to allow the accumulation of assets and to
provide retirement benefits under retirement plans under Section 403(b) of the
Code by school boards and public universities in the state of New York, for
Participants who are members of NYSUT or UUP.
Two group contracts may be issued to cover all present and future
Participants. The group Contracts are generally owned by the employer and
individual Accounts are established for each Participant. Single Purchase
Payment Contracts are issued for lump-sum transfers to us of amounts accumulated
under a pre-existing Plan. Installment Purchase Payment Contracts are
established to accept continuing periodic payments. We reserve the right to set
a minimum Purchase Payment on Single Purchase Payment Contracts. Lump Sum
transfers below this minimum will be applied to an Installment Purchase Payment
Contract.
Under the Plans, the employer has no right, title or interest in the amounts
held under the Contract or in the Account; Participants make all elections under
the Contract.
PURCHASING INTERESTS IN THE CONTRACT
Eligible organizations may acquire Contracts by submitting an application to
the Opportunity Plus Processing Office at 18 Corporate Woods Boulevard, Fourth
Floor, Albany, New York 12211. Once we approve the forms, the Contract will be
issued to the employer as the group Contract Holder. Participants may purchase
interests in a group Contract by submitting enrollment materials to the
Opportunity Plus Processing Office.
The Company must accept or reject the application or enrollment forms within
two business days of receipt. If the forms are incomplete, the Company may hold
any forms and accompanying Purchase Payments for five days. Purchase Payments
may be held for longer periods pending acceptance of the forms only with the
consent of the Participant, or under limited circumstances, with the consent of
the Contract Holder. If we agree to hold Purchase Payments for longer than the
five business days based on the consent of the Contract Holder, the Purchase
Payments will be deposited in the Aetna Variable Encore Fund Subaccount until
the forms are completed.
ALLOCATION OF PURCHASE PAYMENTS. Purchase Payments will initially be
allocated to the Subaccounts or Credited Interest Options as specified by the
Participant on the enrollment form. Changes in such allocation may be made in
writing or by telephone transfer. Allocations must be in whole percentages.
RIGHT TO CANCEL
Contract Holders and Participants have the right to cancel their purchase
within 10 days of receiving the Contract (or other document evidencing your
interest) by returning it to the Opportunity Plus Processing Office with a
written notice of intent to cancel. When we receive your request for
cancellation, we will return your Account Value. You bear the entire investment
risk for amounts allocated among the Subaccounts during the free look period.
Account Values will be determined as of the Valuation Date on which we receive
your request for cancellation at the Opportunity Plus Processing Office.
CHARGES AND DEDUCTIONS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
DAILY DEDUCTIONS FROM THE SEPARATE ACCOUNT
MORTALITY AND EXPENSE RISK CHARGE. The Company makes a daily deduction from
each of the Subaccounts for the mortality and expense risk charge. The charge is
equal, on an annual basis, to 1.25% of the daily net assets of the Subaccounts
and compensates the Company for the assumption of the mortality and expense
risks under the Contract. The mortality risks are those assumed for our promise
to make lifetime payments according to annuity rates specified in the Contract.
The expense risk is the risk that the actual expenses for costs incurred under
the Contract will exceed the maximum costs that can be charged under the
Contract.
If the amount deducted for mortality and expense risks is not sufficient to
cover the mortality costs and expense shortfalls, the loss is borne by the
Company. If the deduction is more than sufficient, the excess may be used to
recover distribution expenses relating to the
- --------------------------------------------------------------------------------
4
<PAGE>
Contracts and as a source of profit to the Company. The Company expects to make
a profit from the mortality and expense risk charge.
ADMINISTRATIVE EXPENSE CHARGE. The Company reserves the right to make a
deduction from each of the Subaccounts for an administrative expense charge. The
administrative expense charge compensates the Company for administrative
expenses that exceed revenues from the maintenance fee described below. The
charge is set at a level which does not exceed the average expected cost of the
administrative services to be provided while the Contract is in force. The
Company does not expect to make a profit from this charge.
Under the Contract, the amount of the administrative expense charge may be
of an amount equal, on an annual basis, to a maximum of 0.25% of the daily net
assets of the Subaccounts. There is currently no administrative expense charge
during the Accumulation Period or Annuity Period. Once an Annuity Option is
elected, the charge will be established and will be effective during the entire
Annuity Period.
MAINTENANCE FEE
During the Accumulation Period, the Company will deduct an annual
maintenance fee from the Account Value. The maintenance fee is to reimburse the
Company for some of its administrative expenses relating to the establishment
and maintenance of the Accounts.
The maintenance fee under the Contract is $15. One fourth of this fee
($3.75) is deducted during the first month after the end of each calendar
quarter. The maintenance fee will be deducted on a pro rata basis from each
investment option in which you have an interest.
DEFERRED SALES CHARGE
Withdrawals of all or a portion of the Account Value may be subject to a
deferred sales charge. The deferred sales charge is a percentage of the amounts
withdrawn from the Subaccounts, the Fixed Account and the Guaranteed
Accumulation Account.
For Installment Purchase Payment Contracts, the deferred sales charge is
based on the number of completed Purchase Payment Periods. There is no deferred
sales charge provision on Single Purchase Payment Contracts. However, if amounts
are transferred from a Single Purchase Payment Contract to an Installment
Purchase Payment Contract, the applicable deferred sales charge provisions apply
to all amounts in the Installment Purchase Payment Contract.
For Installment Purchase Payment Contracts, the amount of the deferred sales
charge is determined in accordance with the schedule set forth in the following
table:
<TABLE>
<CAPTION>
INSTALLMENT PURCHASE PAYMENT
CONTRACTS:
DEFERRED SALES
PURCHASE PAYMENT CHARGE
PERIODS COMPLETED DEDUCTION
- -------------------- ---------------
<S> <C>
Less than 5 5%
5 or more but less
than 7 4%
7 or more but less
than 9 3%
9 or more but less
than 10 2%
More than 10 0%
</TABLE>
In addition, if a nonlifetime Annuity Option is elected on a variable basis
and the remaining value is withdrawn before three years of Annuity payments have
been completed, the applicable deferred sales charge will be assessed (see
"Annuity Options").
The deduction for the deferred sales charge will not exceed 8.5% of the
total Purchase Payments actually made to the Account. The Company does not
anticipate that the deferred sales charge will cover all sales and
administrative expenses which it incurs in connection with the Contract. The
difference will be covered by the general assets of the Company which are
attributable, in part, to mortality and expense risk charges under the Contract
described above.
Generally, if you transfer the total account value under another similar
annuity contract issued by the Company to an Account under this Contract, the
effective date of the new Account will be the same effective date as your former
contract for the purpose of calculating the applicable deferred sales charge
under this Contract.
A deferred sales charge will not be deducted from any portion of the Account
Value if the withdrawal is:
- - applied to provide Annuity benefits;
- - taken on or after the tenth anniversary of the effective date of the Account;
- - paid due to your death before Annuity payments begin;
- - made due to the election of an Additional Withdrawal Option (see "Additional
Withdrawal Options");
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5
<PAGE>
- - paid where the Account Value is $2,500 or less and no amount has been
withdrawn, taken as a loan, or used to purchase Annuity benefits during the
prior 12 months;
- - taken from an Installment Purchase Payment Contract by a Participant who is at
least age 59 1/2 and who has completed nine Purchase Payment Periods;
- - withdrawn due to disability as specified in the Code;
- - withdrawn due to financial hardship as specified in the Code;
- - withdrawn due to separation from service while meeting the age and service
requirements to receive benefits under the New York State Teachers' or
Employees' Retirement Systems (even if you are not a member of either system);
or
- - withdrawn from the portion of the Account Value invested in the Subaccount(s)
and/or GAA attributable to Purchase Payments made on or after April 1, 1995.
This waiver does not apply to amounts deposited in the Fixed Account. If
amounts are deposited in a Subaccount or GAA and then transferred to the Fixed
Account, the waiver would no longer apply. If amounts are deposited in the
Fixed Account and then transferred to a Subaccount or GAA, the waiver would
not apply to amounts that came from the Fixed Account. No deferred sales
charge would be assessed unless and until these amounts are withdrawn from the
Account. For any withdrawal, the Account Value of the Purchase Payment(s) made
on or after April 1, 1995 will be withdrawn first. Then, the remaining Account
Value will be used to satisfy the disbursement request.
FREE WITHDRAWALS. For Participants between the ages of 59 1/2 and 70 1/2,
up to 10% of the current Account Value may be withdrawn during each calendar
year without imposition of a deferred sales charge. The free withdrawal applies
only to the first partial withdrawal in each calendar year. The 10% amount will
be based on the Account Value calculated on the Valuation Date next following
our receipt of your request for withdrawal. Any outstanding contract loans are
excluded from the Account Value when calculating the 10% free withdrawal amount.
This provision does not apply to a full withdrawal of the Account, or to partial
withdrawals due to a default on a contract loan (see "Contract Loans"). This
provision may not be exercised if ECO or SWO is elected. (See "Additional
Withdrawal Options.")
In the instances cited above, no deferred sales charge is deducted. However,
the amount withdrawn may be subject to the 10% federal penalty tax. (See "Tax
Status.")
DEFERRED SALES CHARGE SCHEDULE FOR GAA FOR CERTAIN NEW YORK CONTRACTS
The following deferred sales charge schedule applies for withdrawals from
the GUARANTEED ACCUMULATION ACCOUNT, where available, for Single Purchase
Payment and Installment Purchase Payment Master Contracts which are issued after
July 29, 1993 in the STATE OF NEW YORK. This schedule is based on the number of
completed Account Years, as follows:
<TABLE>
<CAPTION>
DEFERRED SALES
COMPLETED ACCOUNT CHARGE
YEARS DEDUCTION
- -------------------- ---------------
<S> <C>
Less than 3 5%
3 or more but less
than 4 4%
4 or more but less
than 5 3%
5 or more but less
than 6 2%
6 or more but less
than 7 1%
7 or more 0%
</TABLE>
FUND EXPENSES
Each Fund incurs certain expenses which are paid out of its net assets.
These expenses include, among other things, the investment advisory or
"management" fee. The expenses of the Funds are set forth in the Fee Table in
this Prospectus and described more fully in the accompanying Fund prospectuses.
PREMIUM AND OTHER TAXES
Currently, there is no premium tax on annuities under New York regulations.
However, if the state does impose a premium tax, it would be deducted from the
amount applied to an annuity option. We reserve the right to deduct a state
premium tax at any time from the Purchase Payment(s) or from the Account Value
at any time, but no earlier than when we have a tax liability under state law.
(See "Tax Status.")
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6
<PAGE>
CONTRACT VALUATION
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
ACCOUNT VALUE
Until the Annuity Date, the Account Value is the total dollar value of
amounts held in the Account as of any Valuation Date. The Account Value at any
given time is based on the value of the units held in each Subaccount, plus the
value of amounts held in any of the Credited Interest Options.
ACCUMULATION UNITS
The value of your interests in a Subaccount is expressed as the number of
"Accumulation Units" that you hold multiplied by an "Accumulation Unit Value"
(or "AUV") for each unit. The AUV on any Valuation Date is determined by
multiplying the value on the immediately preceding Valuation Date by the net
investment factor of that Subaccount for the period between the immediately
preceding Valuation Date and the current Valuation Date. (See "Net Investment
Factor" below.) The Accumulation Unit Value will be affected by the investment
performance, expenses and charges of the applicable Fund and is reduced each day
by a percentage that accounts for the daily assessment of mortality and expense
risk charges and the administrative expense charge (if any).
Initial Purchase Payments will be credited to your Account as described
under "Purchasing Interests in the Contract." Each subsequent Purchase Payment
(or amount transferred) will be credited to your Account at the AUV computed on
the next Valuation Date following our receipt of your payment or transfer
request. The value of an Accumulation Unit may increase or decrease.
NET INVESTMENT FACTOR
The net investment factor is used to measure the investment performance of a
Subaccount from one Valuation Date to the next. The net investment factor for a
Subaccount for any valuation period is equal to the sum of 1.0000 plus the net
investment rate. The net investment rate equals:
(a) the net assets of the Fund held by the Subaccount on the current Valuation
Date, minus
(b) the net assets of the Fund held by the Subaccount on the preceding Valuation
Date, plus or minus
(c) taxes or provisions for taxes, if any, attributable to the operation of the
Subaccount;
(d) divided by the total value of the Subaccounts' Accumulation and Annuity
Units the preceding Valuation Date;
(e) minus a daily charge at the annual effective rate of 1.25% for mortality and
expense risks and up to 0.25% as an administrative expense charge (currently
0%).
The net investment rate may be either positive or negative.
TRANSFERS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
At any time prior to the Annuity Date, you can transfer amounts held under
the Contracts from one Subaccount to another. Transfers between the Credited
Interest Options and the Subaccounts are subject to certain restrictions. (See
Appendices I and II.) A request for transfer can be made either in writing or by
telephone. The telephone transfer privilege is available automatically; no
special election is necessary. All transfers must be in accordance with the
terms of the Contracts and your Plan, as applicable.
The Company currently allows unlimited transfers of accumulated amounts to
available investment options without charge. The minimum transfer amount may not
be less than $500. Any transfer will be based on the Accumulation Unit Value
next determined after the Company receives a valid transfer request at the
Opportunity Plus Processing Office. Transfers are currently not available during
the Annuity Period; however, they may be available under some Annuity Options
beginning later in 1996. (See "Annuity Period-- Annuity Options.")
- --------------------------------------------------------------------------------
7
<PAGE>
WITHDRAWALS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Subject to the withdrawal restrictions under Section 403(b) Contracts
described below, all or a portion of the Account Value may be withdrawn at any
time during the Accumulation Period. To request a withdrawal, you must properly
complete a disbursement form and send it to the Opportunity Plus Processing
Office. Payments for withdrawal requests will be made in accordance with SEC
requirements, but normally not later than seven calendar days following our
receipt of a disbursement form.
Withdrawals may be requested as in one of the following forms:
- -FULL WITHDRAWAL OF AN ACCOUNT: The amount paid upon a full withdrawal will be
the full Account Value, minus any applicable deferred sales charge and
maintenance fee due.
- -PARTIAL WITHDRAWALS (Percentage): The amount paid will be the percentage of the
Account Value requested minus any applicable deferred sales charge.
- -PARTIAL WITHDRAWAL (Specified Dollar Amount): The amount paid will be the
dollar amount requested. However, the amount withdrawn from the Account will
equal the amount requested plus any applicable deferred sales charge.
For any partial withdrawal, amounts will be withdrawn proportionately from
each Subaccount or Credited Interest Option in which the Account is invested,
unless you request otherwise in writing. All amounts paid will be based on
Account Values as of the next Valuation Date after we receive a request for
withdrawal at our Home Office, or on such later date as the disbursement form
may specify. A 20% federal income tax may be withheld from amounts paid directly
to you. (See "Tax Status--Contracts Used with Certain Retirement Plans.")
WITHDRAWAL RESTRICTIONS FROM 403(B) PLANS. Under Section 403(b) Contracts, a
withdrawal of salary reduction contributions and earnings on such contributions
is generally prohibited prior to the Participant's death, disability, attainment
of age 59 1/2, separation from service or financial hardship. (See "Tax
Status.")
REINVESTMENT PRIVILEGE
You may elect to reinvest all or a portion of the proceeds received from a
full withdrawal of your Account within 30 days after such withdrawal has been
made. Accumulation Units will be credited to the Account for the amount
reinvested, as well as any maintenance fee and any deferred sales charge imposed
at the time of withdrawal. Any maintenance fee which falls due after the
withdrawal and before the reinvestment will be deducted from the amounts
reinvested. Reinvested amounts will be reallocated to the applicable investment
options in the same proportion as they were allocated at the time of withdrawal.
Accumulation Units will be credited to your Account based on the Accumulation
Unit Value next computed following our receipt of your request along with the
amount to be reinvested. The reinvestment privilege may be used only once. See
Appendix I for a discussion of amounts withdrawn from GAA and then reinvested.
If you are contemplating reinvestment, you should seek competent advice
regarding the tax consequences associated with such a transaction.
CONTRACT LOANS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
During the Accumulation Period, Participants may request a loan from their
Account Value. Loans can only be taken from those Account Values held in the
Subaccounts or from those Credited Interest Options that allow loans. (See
Appendices I and II.) A loan may be obtained by reviewing and reading the terms
of the loan agreement, properly completing a loan request form and submitting it
to the Opportunity Plus Processing Office.
ADDITIONAL WITHDRAWAL OPTIONS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The Company offers certain withdrawal options under the Contract that are
not considered annuity options ("Additional Withdrawal Options"). These options
are available for Participants whose Account Value is at least $25,000 at the
time of election.
- --------------------------------------------------------------------------------
8
<PAGE>
The Additional Withdrawal Options currently available under the Contract
include the following:
- - SWO--SYSTEMATIC WITHDRAWAL OPTION. SWO is a series of partial withdrawals
from your Account based on a payment method you select. It is designed for
those who want a periodic income while retaining investment flexibility for
amounts accumulated under a Contract. This option may not be elected if you
have an outstanding contract loan and payments may not be made until you
attain age 59 1/2 (55 if separated from service with the Contract Holder).
- - ECO--ESTATE CONSERVATION OPTION. ECO offers the same investment flexibility
as SWO but is designed for those who want to receive only the minimum
distribution that the Code requires each year. Under ECO, the Company
calculates the minimum distribution amount required by law at age 70 1/2 (or
retirement, if later, for governmental plans), and pays you that amount once a
year. (See "Tax Status.")
Other Additional Withdrawal Options may be added from time to time.
Additional information relating to any of the Additional Withdrawal Options may
be obtained from your local representative or from the Company at the
Opportunity Plus Processing Office.
If you select one of the Additional Withdrawal Options, you will retain all
of the rights and flexibility permitted under the Contract during the
Accumulation Period. Your Account Value will continue to be subject to the
charges and deductions described in this Prospectus.
Once you elect an Additional Withdrawal Option, you may revoke it any time
by submitting a written request to the Opportunity Plus Processing Office. Once
an option is revoked, it may not be elected again, nor may any other additional
withdrawal options be elected unless permitted by the Code. The Company reserves
the right to discontinue the availability of one or all of these Additional
Withdrawal Options at any time, and/or to change the terms of future elections.
DEATH BENEFIT DURING ACCUMULATION PERIOD
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The Contract provides that a death benefit is payable to the
Beneficiary(ies) upon the death of the Participant before the Annuity Date. The
amount of the death benefit will be equal to the Account Value. Death benefit
proceeds may be paid to the Beneficiary:
- - in a lump sum;
- - in accordance with any of the Annuity Options available under the Contract; or
- - under any Additional Withdrawal Options available under the Contract (if the
Beneficiary is your spouse).
The Beneficiary may instead elect one of the following two options; however,
the Code limits how long the death benefit proceeds may be left in these options
(see below):
- - to leave the Account Value invested in the Contract; or
- - to leave the Account Value on deposit in the Company's general account, and to
receive monthly, quarterly, semi-annual or annual interest payments at the
interest rate then being credited on such deposits. The balance on deposit can
be withdrawn at any time or applied to an Annuity Option.
When paying the Beneficiary, we will determine the Account Value on the
Valuation Date following the date on which we receive proof of death acceptable
to the Company. Interest, if any, will be paid from the date of death at a rate
no less than required by law. We will mail payment to the Beneficiary within
seven days after we receive proof of death.
The Code requires that distribution of death proceeds begin within a certain
period of time. Generally, either annuity payments must begin by December 31 of
the year following the year of your death, or the entire value of your benefits
must be distributed by December 31 of the fifth year following the year of your
death. If your Beneficiary is your spouse, he or she is not required to begin
distributions until the year you would have attained age 70 1/2. In no event may
payments extend beyond the life expectancy of the Beneficiary or any period
certain greater than the Beneficiary's life expectancy.
If no elections are made, no distributions will be made. Failure to commence
distributions within the above time periods can result in tax penalties.
Regardless of the method of payment, death benefit proceeds will generally
be taxed to the Beneficiary in the same manner as if you had received those
payments. (See "Tax Status.")
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9
<PAGE>
ANNUITY PERIOD
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
ANNUITY PERIOD ELECTIONS
The Code generally requires that minimum annual distributions of the Account
Value must begin by April 1st of the calendar year following the calendar year
in which a Participant attains age 70 1/2, or retires, if later, for
governmental plans. In addition, distributions must be in a form and amount
sufficient to satisfy the Code requirements. These requirements may be satisfied
by the election of certain Annuity Options or Additional Withdrawal Options.
(See "Tax Status.")
At least 30 days prior to the Annuity Date, you must notify us in writing of
the following:
- - the date on which you would like to start receiving annuity payments;
- - the Annuity Option under which you want your payments to be calculated and
paid;
- - whether the payments are to be made monthly, quarterly, semi-annually or
annually; and
- - the investment option(s) used to provide annuity payments (i.e., a fixed
annuity using the general account or any of the Subaccounts available at the
time of annuitization). As of the date of this Prospectus, Aetna Variable
Fund, Aetna Income Shares and Aetna Investment Advisers Fund, Inc. are the
only Subaccounts available; however, additional Subaccounts may be available
under some Annuity Options in the future. (See "Annuity Options" below.)
Annuity payments will not begin until you have selected an Annuity Option.
Until a date and option are elected, the Account will continue in the
Accumulation Period. Once annuity payments begin, the Annuity Option may not be
changed, nor may transfers currently be made among the investment option(s)
selected. (See "Annuity Options" below for more information about transfers
during the Annuity Period.)
ANNUITY OPTIONS
You may choose one of the following Annuity Options:
LIFETIME ANNUITY OPTIONS:
- -OPTION 1--Life Annuity--An annuity with payments ending on the Annuitant's
death.
- -OPTION 2--Life Annuity with Guaranteed Payments-- An annuity with payments
guaranteed for 5, 10, 15 or 20 years, or such other periods as the Company may
offer at the time of annuitization.
- -OPTION 3--Life Income based Upon the Lives of Two Payees--An annuity will be
paid during the lives of the Annuitant and a second Annuitant, with 100%,
66 2/3% or 50% of the payment to continue after the first death, or 100% of the
payment to continue at the death of the second Annuitant and 50% of the payment
to continue at the death of the Annuitant.
- -OPTION 4--Life Income based Upon the Lives of Two Payees--An annuity with
payments for a minimum of 120 months, with 100% of the payment to continue
after the first death.
If Option 1 or 3 is elected, it is possible that only one Annuity Payment
will be made if the Annuitant under Option 1, or the surviving Annuitant under
Option 3, should die prior to the due date of the second Annuity Payment. Once
lifetime Annuity payments begin, the Annuitant cannot elect to receive a
lump-sum settlement.
NONLIFETIME ANNUITY OPTIONS:
- -OPTION 1--PAYMENTS FOR A SPECIFIED PERIOD-- payments will continue for a
specified period of time, as provided for under your Contract.
Under the Nonlifetime Option, an annuity may be selected on a fixed or
variable basis and payments may be made for 3-30 years. If this option is
elected on a variable basis, the Annuitant may request at any time during the
payment period that the present value of all or any portion of the remaining
variable payments be paid in one sum. However, under an Installment Purchase
Payment Contract, any lump-sum elected before three years of payments have been
completed will be treated as a withdrawal during the Accumulation Period and any
applicable deferred sales charge will be assessed. (See "Charges and
Deductions--Deferred Sales Charge.")
We may also offer additional Annuity Options under the Contract from time to
time. The Company expects to offer additional Annuity Options and enhanced
versions of the Annuity Options listed above at some time during 1996. These
additional Annuity Options and enhanced versions of the existing options will
have additional Subaccounts available and will allow transfers between
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Subaccounts during the Annuity Period. (Additional Subaccounts and transfer
capability are expected during the second half of 1996.) Such additional or
enhanced options will be made available by an endorsement to the Contract, which
will include the guaranteed annuity payout rates and other terms applicable to
such options. (Depending on which guaranteed payout rates apply to the existing
options, the guaranteed payout rates for the new and enhanced options will be
the same or lower.) Please refer to the Contract, or call the number listed in
the "Inquiries" section of the Prospectus Summary, to determine which options
are available and the terms of such options. It is not expected that these
additional or enhanced options will be made available to those who have already
commenced receiving Annuity Payments.
ANNUITY PAYMENTS
DATE PAYOUTS START. When payments start, the age of the Annuitant plus the
number of years for which payments are guaranteed must not exceed 95. Annuity
payments may not extend beyond (a) the life of the Annuitant, (b) the joint
lives of the Annuitant and beneficiary, (c) a period certain greater than the
Annuitant's life expectancy, or (d) a period certain greater than the joint life
expectancies of the Annuitant and beneficiary.
AMOUNT OF EACH ANNUITY PAYMENT. The amount of each payment depends on the
size of your Account Value, how you allocate it between fixed and variable
payouts, and the Annuity Option chosen. No election may be made that would
result in the first Annuity payment of less than $20, or total yearly Annuity
payments of less than $100. If your Account Value on the Annuity Date is
insufficient to elect an option for the minimum amount specified, a lump-sum
payment must be elected.
If Annuity Payments are to be made on a variable basis, the first and
subsequent payments will vary depending on the assumed net investment rate
selected (3 1/2% or 5% per annum). Selection of a 5% rate causes a higher first
payment, but Annuity Payments will increase thereafter only to the extent that
the net investment rate exceeds 5% on an annualized basis. Annuity Payments
would decline if the rate were below 5%. Use of the 3 1/2% assumed rate causes a
lower first payment, but subsequent payments would increase more rapidly or
decline more slowly as changes occur in the net investment rate. (See the
Statement of Additional Information for further information on the impact of
selecting a particular net investment rate.)
CHARGES DEDUCTED DURING THE ANNUITY PERIOD
We make a daily deduction for mortality and expense risks from any amounts
held on a variable basis. Therefore, electing the nonlifetime option on a
variable basis will result in a deduction being made even though we assume no
mortality risk. We may also deduct a daily administrative charge from amounts
held under the variable options. (See "Charges and Deductions.")
DEATH BENEFIT PAYABLE DURING THE ANNUITY PERIOD
If an Annuitant dies after Annuity Payments have begun, any death benefit
payable will depend on the terms of the Contract and the Annuity Option
selected. If Option 1 or Option 3 was elected, Annuity Payments will cease on
the death of the Annuitant under Option 1 or the death of the surviving
Annuitant under Option 3.
If Lifetime Option 2 or Option 4 was elected and the death of the Annuitant
under Option 2, or the surviving Annuitant under Option 4, occurs prior to the
end of the guaranteed minimum payment period, we will pay to the beneficiary in
a lump sum, unless otherwise requested, the present value of the guaranteed
annuity payments remaining.
If the nonlifetime option was elected, and the Annuitant dies before all
payments are made, the value of any remaining payments may be paid in a lump-sum
to the beneficiary (unless otherwise requested), and no deferred sales charge
will be imposed.
If the Annuitant dies after Annuity payments have begun and if there is a
death benefit payable under the Annuity option elected, the remaining value must
be distributed to the beneficiary at least as rapidly as under the original
method of distribution.
Any lump-sum payment paid under the applicable lifetime or nonlifetime
Annuity options will be made within seven calendar days after proof of death
acceptable to us, and a request for payment are received at our Home Office. The
value of any death benefit proceeds will be determined as of the next Valuation
Date after we receive acceptable proof of death and a request for payment. Under
Options 2 and 4, such value will be reduced by any payments made after the date
of death.
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TAX STATUS
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INTRODUCTION
The following provides a general discussion and is not intended as tax
advice. This discussion reflects the Company's understanding of current federal
income tax law. Such laws may change in the future, and it is possible that any
change could be retroactive (i.e., effective prior to the date of the change).
The Company makes no guarantee regarding the tax treatment of any contract or
transaction involving a Contract. The ultimate effect of federal income taxes on
the amounts held under a Contract, on Annuity Payments, and on the economic
benefit to the Contract Holder, Participant or Beneficiary may depend upon the
tax status of the individual concerned. Any person concerned about these tax
implications should consult a competent tax adviser before initiating any
transaction.
TAXATION OF THE COMPANY
The Company is taxed as a life insurance company under the Code. Since the
Separate Account is not an entity separate from the Company, it will not be
taxed separately as a "regulated investment company" under the Code. Investment
income and realized capital gains are automatically applied to increase reserves
under the Contracts. Under existing federal income tax law, the Company believes
that the Separate Account investment income and realized net capital gains will
not be taxed to the extent that such income and gains are applied to increase
the reserves under the Contracts.
Accordingly, the Company does not anticipate that it will incur any federal
income tax liability attributable to the Separate Account and, therefore, the
Company does not intend to make provisions for any such taxes. However, if
changes in the federal tax laws or interpretation thereof result in the Company
being taxed on income or gains attributable to the Separate Account, then the
Company may impose a charge against the Separate Account (with respect to some
or all Contracts) in order to set aside provisions to pay such taxes.
CONTRACTS USED WITH CERTAIN RETIREMENT PLANS
IN GENERAL. The Contract is designed for use with Section 403(b) plans. The
tax rules applicable to retirement plans vary according to the type of plan and
the terms and conditions of the plan.
The Company makes no attempt to provide more than general information about
use of the Contracts with the various types of retirement plans. Participants as
well as beneficiaries are cautioned that the rights of any person to any
benefits under the Contracts may be subject to the terms and conditions of the
plans themselves, in addition to the terms and conditions of the Contracts
issued in connection with such plans. Some retirement plans are subject to
limitations on distribution and other requirements that are not incorporated in
the Contracts. Purchasers are responsible for determining that contributions,
distributions and other transactions with respect to the Contracts satisfy
applicable laws, and should consult their legal counsel and tax adviser
regarding the suitability of the Contract.
SECTION 403(B) PLANS. Under Section 403(b), contributions made by public
school systems to purchase annuity contracts for their employees are generally
excludable from the gross income of the employee.
In order to be excludable from taxable income, total annual contributions
made by you and your employer cannot exceed either of two limits set by the
Code. The first limit, under Section 415, is generally the lesser of 25% of your
includible compensation or $30,000. The second limit, which is the exclusion
allowance under Section 403(b), is usually calculated according to a formula
that takes into account your length of employment and any pretax contributions
to certain other retirement plans. These two limits apply to your contributions
as well as to any contributions made by your employer on your behalf. There is
an additional limit that specifically limits your salary reduction contributions
to generally no more than $9,500 annually (subject to indexing); your own limit
may be higher or lower, depending on certain conditions. In addition Purchase
Payments will be excluded from your gross income only if the Plan meets certain
non-discrimination requirements.
Section 403(b)(11) restricts the distribution under Section 403(b) contracts
of: (1) salary reduction contributions made after December 31, 1988; (2)
earnings on those contributions; and (3) earnings during such period on amounts
held as of December 31, 1988. Distribution of those amounts may only occur upon
death of the employee, attainment of age 59 1/2, separation from
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service, disability, or financial hardship. In addition, income attributable to
salary reduction contributions may not be distributed in the case of hardship.
If, pursuant to Revenue Ruling 90-24, the Company agrees to accept, under
any of the Contracts covered by this Prospectus, amounts transferred from a Code
Section 403(b)(7) custodial account, such amounts will be subject to the
withdrawal restrictions set forth in Code Section 403(b)(7)(A)(ii).
Generally, no amounts accumulated under the Contract will be taxable prior
to the time of actual distribution. However, the IRS has stated in published
rulings that a variable contract owner, including participants under Section
403(b) Plans, will be considered the owner of separate account assets if the
owner possesses incidents of investment control over the assets. In these
circumstances, income and gains from the separate account assets would be
currently includible in the variable contract owner's gross income. The Treasury
announced that guidance would be issued in the future regarding the extent to
which owners could direct their investments among Subaccounts without being
treated as owners of the underlying assets of the Separate Account. It is
possible that the Treasury's position, when announced, may adversely affect the
tax treatment of existing contracts. The Company therefore reserves the right to
modify the Contract as necessary to attempt to prevent the owner from being
considered the federal tax owner of the assets of the Separate Account.
MINIMUM DISTRIBUTION REQUIREMENTS. The Code has required distribution rules
for Section 403(b) Plans. Under 403(b) Plans, distributions of amounts held as
of December 31, 1986 must generally begin by the end of the calendar year in
which you attain age 75 (or retire, if later, for governmental or church plans).
However, special rules require that some or all of that balance be distributed
earlier if any distributions are taken in excess of the minimum required amount.
Distributions attributable to contributions under Section 403(b) Plans on or
after January 1, 1987 (including any earnings on the entire Account Value after
that date), must generally begin by April 1 of the calendar year following the
calendar year in which you attain age 70 1/2 or retire, whichever occurs later.
In general, annuity payments must be distributed over your life or the joint
lives of you and your beneficiary, or over a period not greater than your life
expectancy or the joint life expectancies of you and your beneficiary.
If you die after the required minimum distribution has commenced,
distributions to your beneficiary must be made at least as rapidly as under the
method of distribution in effect at the time of your death. However, if the
minimum required distribution is calculated each year based on your single life
expectancy or the joint life expectancies of you and your beneficiary, the
regulations for Code Section 401(a))9) provide specific rules for calculating
the minimum required distributions at your death. For example, if you have
elected ECO with the calculation based on your single life expectancy, and the
life expectancy is recalculated each year, your recalculated life expectancy
becomes zero in the calendar year following your death and the entire remaining
interest must be distributed to your beneficiary by December 31 of the year
following your death. However, a spousal beneficiary has certain rollover rights
which can only be exercised in the year of your death. The rules are complex and
you should consult your tax adviser before electing the method of calculation to
satisfy the minimum requirements.
If you die before the required minimum distribution has commenced, your
entire interest must be distributed by December 31 of the calendar year
containing the fifth anniversary of the date of your death. Alternatively,
payments may be made over the life of the beneficiary or over a period not
extending beyond the life expectancy of the beneficiary provided the
distribution begins by December 31 of the calendar year following the calendar
year of your death, or December 31 of the calendar year in which you would have
attained age 70 1/2.
If you fail to receive the minimum required distribution for any tax year, a
50% excise tax is imposed on the required amount that was not distributed.
TAXATION OF DISTRIBUTIONS. All distributions will be taxed as they are
received unless you made a rollover contribution of the distribution to another
plan of the same type or to an individual retirement annuity/account ("IRA") in
accordance with the Code, or unless you have made after-tax contributions to the
plan, which are not taxed upon distribution. The Code has specific rules that
apply, depending on the type of distribution received, if after-tax
contributions were made.
In general, payments received by your beneficiaries after your death are
taxed in the same manner as if you had received those payments, except that a
limited death benefit exclusion may apply.
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Pension and annuity distributions generally are subject to withholding for
the recipient's federal income tax liability at rates that vary according to the
type of distribution and the recipient's tax status. Recipients may be provided
the opportunity to elect not to have tax withheld from distributions; however,
certain distributions from annuities are subject to mandatory federal income tax
withholding. We will report to the IRS the taxable portion of all distributions.
The Code imposes a 10% penalty tax on the taxable portion of any
distribution unless made when (a) you have attained age 59 1/2, (b) you have
become disabled, (c) you have died, (d) you have separated from service with the
plan sponsor at or after age 55, (e) the distribution amount is rolled over into
another plan of the same type in accordance with the terms of the Code, or (f)
the distribution amount is made in substantially equal periodic payments (at
least annually) over your life or life expectancy or the joint lives or joint
life expectancies of you and your plan beneficiary, provided you have separated
from service with the plan sponsor. In addition, the penalty tax does not apply
for the amount of a distribution equal to unreimbursed medical expenses incurred
by you that qualify for deduction as specified in the Code. The Code may impose
other penalty taxes in other circumstances.
MISCELLANEOUS
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OPPORTUNITY PLUS PROCESSING OFFICE
We have established the Opportunity Plus Processing Office to provide
administrative support to Participants of the Opportunity Plus Program. This
office will handle enrollments, billing, transfers, redemptions and inquiries
for all Opportunity Plus Participants. All forms and correspondence should be
sent to:
Aetna Life Insurance and Annuity Company
Opportunity Plus Processing Office
P.O. Box 12894
Albany, New York 12212-2894
Telephone Number: 1-800-677-4636
DISTRIBUTION
The Company will serve as the Principal Underwriter for the securities sold
by this Prospectus. The Company is registered as a broker-dealer with the
Securities and Exchange Commission and is a member of the National Association
of Securities Dealers, Inc. (NASD). As Underwriter, the Company will contract
with one or more registered broker-dealers ("Distributors"), including at least
one affiliate of the Company, to offer and sell the Contracts. All persons
offering and selling the Contracts must be registered representatives of the
Distributors and must also be licensed as insurance agents to sell variable
annuity contracts. These registered representatives may also provide services to
Participants in connection with establishing their Accounts under the Contract.
PAYMENT OF COMMISSIONS. Persons offering and selling the Contracts may
receive commissions in connection with the sale of the Contracts. The maximum
percentage amount that the Company will ever pay as commission with respect to
any given Purchase Payment is with respect to those made during the first year
of Purchase Payments under an Account. The percentage amount will range from 1%
to 4% of those Purchase Payments. The Company may also pay renewal commissions
on Purchase Payments made after the first year and asset-based service fees. The
average of all payments made by the Company is estimated to equal approximately
3% of the total Purchase Payments made over the life of an average Contract. The
Company may also reimburse the Distributor for certain expenses. The name of the
Distributor and the registered representative responsible for your Account are
set forth in your enrollment materials. Commissions and sales related expenses
are paid by the Company and are not deducted from Purchase Payments. (See
"Charges and Deductions--Deferred Sales Charge.")
DELAY OR SUSPENSION OF PAYMENTS
The Company reserves the right to suspend or postpone the date of payment
for any benefit or values (a) on any Valuation Date on which the New York Stock
Exchange ("Exchange") is closed (other than customary weekend and holiday
closings) or when trading on the Exchange is restricted; (b) when an emergency
exists, as determined by the SEC, so that disposal of securities held in the
Subaccounts is not reasonably practicable or is not reasonably practicable for
the value of the Subaccount's assets; or (c) during such other periods as the
SEC may by order permit for the protection of investors. The conditions under
which restricted trading or an emergency exists shall be determined by the rules
and regulations of the SEC.
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PERFORMANCE REPORTING
From time to time, the Company may advertise different types of historical
performance for the Subaccounts of the Separate Account. The Company may
advertise the "standardized average annual total returns" of the Subaccounts,
calculated in a manner prescribed by the SEC, as well as the "non-standardized
returns." "Standardized average annual total returns" are computed according to
a formula in which a hypothetical investment of $1,000 is applied to the
Subaccount and then related to the ending redeemable values over the most recent
one, five and ten-year periods (or since inception, if less than ten years).
Standardized returns will reflect the reduction of all recurring charges during
each period (e.g., mortality and expense risk charges, annual maintenance fees,
administrative expense charge (if any) and any applicable deferred sales
charge). "Non-standardized returns" will be calculated in a similar manner,
except that non-standardized figures will not reflect the deduction of any
applicable deferred sales charge (which would decrease the level of performance
shown if reflected in these calculations). The non-standardized figures may also
include monthly, quarterly, year-to-date and three-year periods.
The Company may also advertise certain ratings, rankings or other
information related to the Company, the Subaccounts or the Funds. Further
details regarding performance reporting and advertising are described in the
Statement of Additional Information.
VOTING RIGHTS
In accordance with the Company's view of present applicable law, it will
vote the shares of each of the Funds held by the Separate Account at regular and
special meetings of Fund shareholders in accordance with instructions received
from each Contract Holder. Participants and Annuitants have a fully vested
(100%) interest in the benefits provided under the Contract and may instruct the
Contract Holder how to direct the Company to cast the votes for the portion of
the Account Value or valuation reserve attributable to their individual
Accounts. Currently, for group contracts used with Section 403(b) plans, the
Company obtains participant voting instructions directly from the participants,
subject to receipt of authorization from the Contract Holder to accept such
instructions. The Company will vote shares for which it has not received
instructions in the same proportion as it votes shares for which it has received
instructions.
Each person having a voting interest in the Separate Account will receive
periodic reports relating to the Fund(s) in which he or she has an interest, as
well as any proxy materials and a form on which to give voting instructions.
Voting instructions will be solicited by written communication at least 14 days
before such meeting. The number of votes to which each person may give direction
will be determined as of the record date set by the Fund.
The number of votes each Contract Holder or Participant, as applicable, may
cast during the Accumulation Period is equal to the portion of the Account Value
to that Fund, divided by the net asset value of one share of that Fund. During
the Annuity Period, the number of votes is equal to the valuation reserve
applicable to the portion of the Contract attributable to that Fund, divided by
the net asset value of one share of that Fund. In determining the number of
votes, fractional votes will be recognized.
CHANGES IN BENEFICIARY DESIGNATIONS
The designated Beneficiary may be changed at any time. Such change will not
become effective until written notice of the change is received by the Company.
MODIFICATION OF THE CONTRACT
The Company may change the Contract as required by federal or state law. In
addition, the Company may, upon 30 days written notice to the Contract Holder,
make other changes to the Contracts that would apply only to individuals who
become Participants under that Contract after the effective date of such
changes. If the Contract Holder does not agree to a change, no new Participants
will be covered under the Contract. Certain changes will require the approval of
appropriate state or federal regulatory authorities.
AGREEMENTS WITH THE COMPANY
In 1994, NYSUT and the Company entered into an arrangement which calls for
NYSUT to exclusively endorse the Opportunity Plus program and for the Company to
provide educational programs focusing on financial planning for retirement. The
educational program is provided to all NYSUT members including agency fee
payors. Trained personnel have been hired by the Company to conduct these
programs exclusively for NYSUT members. NYSUT is reimbursed for direct out-
of-pocket expenses incurred in the promotion of the Opportunity Plus program up
to a maximum of $75,000 per year. In addition, the Company will pay NYSUT
between $30,000-$42,000 per month from 1994 through
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1998. NYSUT has indicated to the Company that it intends to use these amounts to
enhance benefits to the membership.
The Company compensates UUP $48,000 per year for the use of on-site campus
facilities, the endorsement of the Opportunity Plus program and for the use of
UUP payroll slots.
LEGAL MATTERS AND PROCEEDINGS
The Company knows of no material legal proceedings pending to which the
Separate Account or the Company is a party or which would materially affect the
Separate Account. The validity of the securities offered by this Prospectus has
been passed upon by Susan E. Bryant, Esq., Counsel to the Company.
CONTENTS OF THE
STATEMENT OF ADDITIONAL INFORMATION
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The Statement of Additional Information contains more specific information on
the Separate Account and the Contract, as well as the financial statements of
the Separate Account and the Company. A list of the contents of the SAI is set
forth below:
<TABLE>
<S> <C>
General Information and History
Variable Annuity Account C
Offering and Purchase of Contracts
Performance Data
General
Average Annual Total Return Quotations
Annuity Payments
Sales Material and Advertising
Independent Auditors
Financial Statements of the Separate Account
Financial Statements of the Company
</TABLE>
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APPENDIX I
GUARANTEED ACCUMULATION ACCOUNT
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THE GUARANTEED ACCUMULATION ACCOUNT ("GAA") IS A CREDITED INTEREST OPTION
AVAILABLE DURING THE ACCUMULATION PERIOD UNDER THE CONTRACTS DESCRIBED IN THIS
PROSPECTUS. AMOUNTS ALLOCATED TO LONG-TERM CLASSIFICATIONS OF GAA ARE HELD IN A
NONINSULATED, NONUNITIZED SEPARATE ACCOUNT. AMOUNTS ALLOCATED TO SHORT-TERM
CLASSIFICATIONS OF GAA ARE HELD IN THE COMPANY'S GENERAL ACCOUNT. THIS APPENDIX
IS A SUMMARY OF GAA AND IS NOT INTENDED TO REPLACE THE GAA PROSPECTUS. YOU
SHOULD READ THE ACCOMPANYING GAA PROSPECTUS CAREFULLY BEFORE INVESTING.
GAA is a Credited Interest Option in which we guarantee stipulated rates of
interest for stated periods of time on amounts directed to GAA. The interest
rate stipulated is an annual effective yield; that is, it reflects a full year's
interest. Interest is credited daily at a rate that will provide the guaranteed
annual effective yield for one year. This option guarantees the minimum interest
rate specified in the Contract.
During a specified period of time (the "deposit period"), amounts may be
applied to any or all available Guaranteed Terms within the Short-Term and
Long-Term classifications. Short-Term GAA has Guaranteed Terms from one to three
years, and Long-Term GAA has Guaranteed Terms from three to ten years.
Purchase Payments must remain in GAA for the full Guaranteed Term to receive
the quoted interest rates. Withdrawals or transfers from a Guaranteed Term
before the end of that Guaranteed Term may be subject to a market value
adjustment ("MVA"). An MVA reflects the change in the value of the investments
due to changes in interest rates since the date of deposit. When interest rates
increase after the date of deposit, the value of the investment decreases and
the MVA is negative. Conversely, when interest rates decrease after the date of
deposit, the value of the investment increases, and the MVA is positive. It is
possible that a negative MVA could result in the Participant receiving an amount
which is less than the amount paid into GAA.
As a Guaranteed Term matures, assets accumulating under GAA may be (a)
transferred to a new Guaranteed Term, (b) transferred to other available
investment options, or (c) withdrawn. Amounts withdrawn may be subject to a
deferred sales charge and/or federal tax penalties or mandatory income tax
withholding.
By notifying us at least 30 days prior to the Annuity Date, you may elect a
variable annuity and have amounts that have been accumulating under GAA
transferred to one or more of the Subaccounts available during the Annuity
Period. GAA cannot be used as an investment option during the Annuity Period.
MORTALITY AND EXPENSE RISK CHARGES
We make no deductions from the credited interest rate for mortality and
expense risks; these risks are considered in determining the credited rate.
TRANSFERS
Transfers are permitted among Guaranteed Terms. However, amounts applied to
GAA may not be transferred to another Guaranteed Term of GAA, or to any other
Subaccount or Credited Interest Option available under the Contract, during the
deposit period or the 90 days after the close of the deposit period. We will
apply an MVA to transfers made before the end of a Guaranteed Term, unless such
transfer is due to the maturity of the Guaranteed Term.
CONTRACT LOANS
Loans may not be made against amounts held in GAA, although such value is
included in determining the Account Value against which a loan may be made.
REINVESTMENT PRIVILEGE
If amounts are withdrawn from GAA and reinvested, they will be applied to
the current deposit period. Amounts are proportionately reinvested to the
classifications in the same manner as they were allocated before the withdrawal.
Any negative MVA amount applied to a withdrawal is not included in the
reinvestment.
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APPENDIX II
FIXED ACCOUNT
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THE FOLLOWING SUMMARIZES MATERIAL INFORMATION CONCERNING THE FIXED ACCOUNT.
AMOUNTS ALLOCATED TO THE FIXED ACCOUNT ARE HELD IN THE COMPANY'S GENERAL ACCOUNT
THAT SUPPORTS GENERAL INSURANCE AND ANNUITY OBLIGATIONS. INTERESTS IN THE FIXED
ACCOUNT HAVE NOT BEEN REGISTERED WITH THE SEC IN RELIANCE ON EXEMPTIONS UNDER
THE SECURITIES ACT OF 1933, AS AMENDED. DISCLOSURE IN THE PROSPECTUS REGARDING
THE FIXED ACCOUNT, MAY, HOWEVER, BE SUBJECT TO CERTAIN GENERALLY APPLICABLE
PROVISIONS OF THE FEDERAL SECURITIES LAWS RELATING TO THE ACCURACY AND
COMPLETENESS OF SUCH STATEMENTS. DISCLOSURE IN THIS APPENDIX REGARDING THE FIXED
ACCOUNT HAS NOT BEEN REVIEWED BY THE SEC.
The Fixed Account guarantees the minimum interest rate specified in the
Contract. The Company may credit a higher interest rate from time to time. The
current rate is subject to change at any time, but will never fall below the
guaranteed minimum. The Company's determination of interest rates reflects the
investment income earned on invested assets and the amortization of any capital
gains and/or losses realized on the sale of invested assets. Under the Fixed
Account, the Company assumes the risk of investment gain or loss by guaranteeing
Account Values and promising a minimum interest rate and Annuity Payment. The
Fixed Account is available under Installment Purchase Payment Contracts only.
Under certain emergency conditions, we may defer payment of a Fixed Account
withdrawal value (a) for a period of up to six months, or (b) as provided by
federal law.
Amounts applied to the Fixed Account will earn the interest rate in effect
when actually applied to the Fixed Account.
The Fixed Account will reflect a compound interest rate credited by us. The
interest rate quoted is an annual effective yield. We make no deductions from
the credited interest rate for mortality and expense risks; these risks are
considered in determining the credited rate.
If a withdrawal is made from the Fixed Account, a deferred sales charge may
apply. See "Charges and Deductions-- Deferred Sales Charge."
TRANSFERS AMONG INVESTMENT OPTIONS
Transfers from the Fixed Account to any other available investment
options(s) are allowed in each calendar year during the Accumulation Period.
There is no limit on the number of transfers that you can make out of the Fixed
Account in a calendar year; however, the amount you are allowed to transfer from
the Fixed Account is the current value of your Fixed Account multiplied by the
current maximum percentage of the transfer allowed (the "window") minus any
previous transfers made during the calendar year.
By notifying us at the Opportunity Plus Processing Office at least 30 days
before Annuity payments begin, you may elect to have amounts which have been
accumulating under the Fixed Account transferred to one or more of the
Subaccounts available during the Annuity Period to provide variable Annuity
Payments.
CONTRACT LOANS
Loans may be made from Account Values held in the Fixed Account.
- --------------------------------------------------------------------------------
18
<PAGE>
FOR MASTER APPLICATIONS ONLY
I HEREBY ACKNOWLEDGE RECEIPT OF AN ACCOUNT C "OPPORTUNITY PLUS" GROUP
DEFERRED VARIABLE ANNUITY PROSPECTUS DATED MAY 1, 1996, AS WELL AS ALL CURRENT
PROSPECTUSES PERTAINING TO THE VARIABLE INVESTMENT OPTIONS AVAILABLE UNDER THE
CONTRACTS.
- ---- PLEASE SEND AN ACCOUNT C STATEMENT OF ADDITIONAL INFORMATION (FORM NO.
75962(S)-2) DATED MAY 1, 1996.
- --------------------------------------------------------------------------------
CONTRACT HOLDER'S SIGNATURE
- --------------------------------------------------------------------------------
DATE
75962-2 (5/96)
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
VARIABLE ANNUITY ACCOUNT C
OF
AETNA LIFE INSURANCE AND ANNUITY COMPANY
- --------------------------------------------------------------------------------
STATEMENT OF ADDITIONAL INFORMATION DATED MAY 1, 1996
for
OPPORTUNITY PLUS
Group Variable Multiple Option Annuity Contracts
This Statement of Additional Information is not a prospectus and should be read
in conjunction with the current prospectus for Variable Annuity Account C (the
"Separate Account") dated May 1, 1996.
A free prospectus is available upon request from the local Aetna Life Insurance
and Annuity Company office or by writing to or calling:
Aetna Life Insurance and Annuity Company
Opportunity Plus Processing Office
P. O. Box 12894
Albany, New York 12212-2894
1-800-677-4636
Read the prospectus before you invest. Unless otherwise indicated, terms used
in this Statement of Additional Information have the same meaning as in the
prospectus.
TABLE OF CONTENTS
Page
----
General Information and History. . . . . . . . . . . . . . . . . . . 2
Variable Annuity Account C . . . . . . . . . . . . . . . . . . . . . 2
Offering and Purchase of Contracts . . . . . . . . . . . . . . . . . 3
Performance Data . . . . . . . . . . . . . . . . . . . . . . . . . . 3
General. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Average Annual Total Return Quotations . . . . . . . . . . . . . 4
Annuity Payments . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Sales Material and Advertising . . . . . . . . . . . . . . . . . . . 7
Independent Auditors . . . . . . . . . . . . . . . . . . . . . . . . 8
Financial Statements of the Separate Account . . . . . . . . . . . . S-1
Financial Statements of Aetna Life Insurance and Annuity Company . . F-1
<PAGE>
GENERAL INFORMATION AND HISTORY
Aetna Life Insurance and Annuity Company (the "Company") is a stock life
insurance company which was organized under the insurance laws of the State of
Connecticut in 1976. Through a merger, it succeeded to the business of Aetna
Variable Annuity Life Insurance Company (formerly Participating Annuity Life
Insurance Company organized in 1954). As of December 31, 1995, the Company had
assets of $27.1 billion (subject to $25.5 billion of customer and other
liabilities, $1.6 billion of shareholder equity) which includes $11 billion in
assets held in the Company's separate accounts. The Company had $22 billion in
assets under management, including $8 billion in its mutual funds. As of
December 31, 1994, it ranked among the top 2% of all U.S. life insurance
companies by size. The Company is a wholly owned subsidiary of Aetna Retirement
Holdings, Inc., which is in turn a wholly owned subsidiary of Aetna Retirement
Services, Inc. and an indirectly wholly owned subsidiary of Aetna Life and
Casualty Company. The Company is engaged in the business of issuing life
insurance policies and annuity contracts in all states of the United States.
The Company's Home Office is located at 151 Farmington Avenue, Hartford,
Connecticut 06156.
In addition to serving as the principal underwriter and the depositor for the
Separate Account, the Company is also a registered investment adviser under the
Investment Advisers Act of 1940, and a registered broker-dealer under the
Securities Exchange Act of 1934. The Company provides investment advice to
several of the registered management investment companies offered as variable
investment options under the Contracts funded by the Separate Account (see
"Variable Annuity Account C" below).
The Company has established the Opportunity Plus Processing Office to provide
administrative support to Contract Holders and Participants investing in the
Opportunity Plus Contract. This office will handle enrollments, billing,
transfers, redemptions, and inquiries for all Opportunity Plus Contract Holders
and Participants. All forms and correspondence should be sent to:
Aetna Life Insurance and Annuity Company
Opportunity Plus Processing Office
P. O. Box 12894
Albany, New York 12212-2894
Telephone number: 1-800-677-4636
Other than the mortality and expense risk charges and administrative expense
charge described in the prospectus, all expenses incurred in the operations of
the Separate Account are borne by the Company. See "Charges and Deductions" in
the prospectus. The Company receives reimbursement for certain administrative
costs from some unaffiliated sponsors of the Funds used as funding options under
the Contract. These fees generally range up to 0.25%.
The assets of the Separate Account are held by the Company. The Separate
Account has no custodian. However, the Funds in whose shares the assets of the
Separate Account are invested each have custodians, as discussed in their
respective prospectuses.
VARIABLE ANNUITY ACCOUNT C
Variable Annuity Account C (the "Separate Account") is a separate account
established by the Company for the purpose of funding variable annuity contracts
issued by the Company. The Separate Account is registered with the Securities
and Exchange Commission as a unit investment trust under the Investment
2
<PAGE>
Company Act of 1940, as amended. The assets of each of the Subaccounts of the
Separate Account will be invested exclusively in shares of the Funds described
in the Prospectus. Purchase Payments made under the Contract may be allocated
to one or more of the Subaccounts. The Company may make additions to or
deletions from available investment options as permitted by law. The
availability of the Funds is subject to applicable regulatory authorization.
Not all Funds are available in all jurisdictions, under all Contracts, or under
all Plans. The Funds currently available under the Contract are as follows:
Aetna Variable Fund Franklin Government Securities Trust
Aetna Income Shares Janus Aspen Aggressive Growth
Aetna Variable Encore Fund Portfolio
Aetna Investment Advisers Fund, Inc. Janus Aspen Growth Portfolio
Alger American Growth Portfolio Janus Aspen Short-Term Bond Portfolio
Alger American Small Cap Portfolio Janus Aspen Worldwide Growth Portfolio
Calvert Responsibly Invested Balanced Lexington Emerging Markets Fund, Inc.
Portfolio Lexington Natural Resources Trust
Fidelity VIP II Asset Manager Portfolio Neuberger & Berman Growth Portfolio
Fidelity VIP II Contrafund Portfolio Scudder International Portfolio
Fidelity VIP II Index 500 Portfolio Class A Shares
Fidelity VIP Equity-Income Portfolio TCI Growth
Complete descriptions of each of the Funds, including their investment
objectives, policies, risks and fees and expenses, is contained in the
prospectuses and statements of additional information for each of the Funds.
OFFERING AND PURCHASE OF CONTRACTS
The Company is both the depositor and the principal underwriter for the
securities sold by the prospectus. The Company offers the Contracts through
life insurance agents licensed to sell variable annuities who are registered
representatives of the Company or of other registered broker-dealers who have
sales agreements with the Company. The offering of the Contracts is continuous.
A description of the manner in which Contracts are purchased may be found in the
prospectus under the sections titled "Purchase" and "Contract Valuation."
PERFORMANCE DATA
GENERAL
From time to time, the Company may advertise different types of historical
performance for the Subaccounts of the Separate Account available under the
Contracts issued by the Company in connection with Plans described in the
Prospectus. The Company may advertise the "standardized average annual total
returns," calculated in a manner prescribed by the Securities and Exchange
Commission (the "standardized return"), as well as "non-standardized returns,"
both of which are described below.
The standardized and non-standardized total return figures are computed
according to a formula in which a hypothetical initial Purchase Payment of
$1,000 is applied to the various Subaccounts under the Contract, and then
related to the ending redeemable values over one, five and ten year periods (or
fractional periods thereof). The standardized figures reflect the deduction of
all recurring charges
3
<PAGE>
during each period (e.g., mortality and expense risk charges, maintenance fees,
administrative expense charges, and deferred sales charges). These charges will
be deducted on a pro rata basis in the case of fractional periods. The
maintenance fee is converted to a percentage of assets based on the average
account size under the Contracts described in the Prospectus.
The non-standardized figures will be calculated in a similar manner, except that
they will not reflect the deduction of any applicable deferred sales charge
(which would decrease the level of performance shown if reflected in these
calculations). The non-standardized figures may also include monthly,
quarterly, year-to-date and three year periods.
If a Fund was in existence prior to the date it became available under the
Contract, standardized and non-standardized total returns may include periods
prior to such date. These figures are calculated by adjusting the actual
returns of the Fund to reflect the charges that would have been assessed under
the Contract had that Fund been available under the Contract during that period.
Investment results of the Subaccounts will fluctuate over time, and any
presentation of the Subaccounts' total return quotations for any prior period
should not be considered as a representation of how the Subaccounts will perform
in any future period. Additionally, the Account Value upon redemption may be
more or less than your original cost.
AVERAGE ANNUAL TOTAL RETURN QUOTATIONS - STANDARDIZED AND NON-STANDARDIZED
The tables shown below represent each type of contract provided for in this
Statement of Additional Information. The first table reflects the average
annual standardized and non-standardized total return quotation figures for the
periods ended December 31, 1995 for the Subaccounts under the Single Payment
Contract issued by the Company. The second table reflects the average annual
standardized and non-standardized total return quotation figures for the periods
ended December 31, 1995 for the Subaccounts under Installment Payment Contracts
with a $15 annual maintenance fee, deducted quarterly. 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
*).
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
FUND
SINGLE PURCHASE PAYMENT CONTRACT STANDARDIZED NON-STANDARDIZED INCEPTION
($0 MAINTENANCE FEE) 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>
Aetna Variable Fund 12.30% 30.61% 12.11% 30.61% 10.43% 12.11% 12.30% 04/30/75
- ------------------------------------------------------------------------------------------------------------------------------------
Aetna Income Shares 16.78% 8.51% 8.52% 16.78% 6.32% 8.51% 8.52% 06/01/78
- ------------------------------------------------------------------------------------------------------------------------------------
Aetna Variable Encore Fund 4.74% 3.40% 4.92% 4.74% 3.14% 3.40% 4.92% 09/01/75
- ------------------------------------------------------------------------------------------------------------------------------------
Aetna Investment Advisers Fund, Inc. 25.65% 10.50% 9.39%* 25.65% 10.30% 10.50% 9.39%* 06/23/89
- ------------------------------------------------------------------------------------------------------------------------------------
Alger American Growth Portfolio 34.76% 20.23% 17.97%* 34.76% 17.76% 20.23% 17.97%* 01/08/89
- ------------------------------------------------------------------------------------------------------------------------------------
Alger American Small Cap Portfolio 42.53% 19.11% 21.09%* 42.53% 14.64% 19.11% 21.09%* 09/21/88
- ------------------------------------------------------------------------------------------------------------------------------------
Calvert Responsibly Invested Balanced
Portfolio 28.31% 9.83% 8.71%* 28.31% 9.36% 9.83% 8.71%* 09/04/86
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
FUND
SINGLE PURCHASE PAYMENT CONTRACT STANDARDIZED NON-STANDARDIZED INCEPTION
($0 MAINTENANCE FEE) 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>
Fidelity VIP II Asset Manager Portfolio 15.51% 11.37% 9.88%* 15.51% 8.66% 11.37% 9.88%* 11/07/86
- ------------------------------------------------------------------------------------------------------------------------------------
Fidelity VIP II Contrafund Portfolio 37.94%* n/a n/a 37.94%* n/a n/a n/a 01/03/95
- ------------------------------------------------------------------------------------------------------------------------------------
Fidelity VIP II Index 500 Portfolio 35.53% 14.03%* n/a 35.53% 13.59% 14.03%* n/a 08/27/92
- ------------------------------------------------------------------------------------------------------------------------------------
Fidelity VIP Equity-Income Portfolio 33.55% 19.82% 11.99%* 33.55% 18.13% 19.82% 11.99%* 10/22/86
- ------------------------------------------------------------------------------------------------------------------------------------
Franklin Government Securities Trust 16.24% 7.40% 7.89%* 16.24% 5.49% 7.40% 7.89%* 05/30/89
- ------------------------------------------------------------------------------------------------------------------------------------
Janus Aspen Aggressive Growth Portfolio 25.91%* n/a n/a 25.91% 26.02%* n/a n/a 9/13/93
- ------------------------------------------------------------------------------------------------------------------------------------
Janus Aspen Growth Portfolio 28.19%* n/a n/a 28.19% 13.63%* n/a n/a 09/13/93
- ------------------------------------------------------------------------------------------------------------------------------------
Janus Aspen Short-Term Bond Portfolio 7.89%* n/a n/a 7.89% 3.18%* n/a n/a 09/13/93
- ------------------------------------------------------------------------------------------------------------------------------------
Janus Aspen Worldwide Growth Portfolio 25.83%* n/a n/a 25.83% 19.19%* n/a n/a 09/13/93
- ------------------------------------------------------------------------------------------------------------------------------------
Lexington Emerging Markets Fund (5.12%)* n/a n/a (5.12%) (3.18%)* n/a n/a 3/31/94
- ------------------------------------------------------------------------------------------------------------------------------------
Lexington Natural Resources Trust 15.41% 5.03%* n/a 15.41% 5.72% 5.03%* n/a 10/14/91
- ------------------------------------------------------------------------------------------------------------------------------------
Neuberger & Berman Growth Portfolio 30.09% 12.28% 10.77% 30.09% 8.80% 12.28% 10.77% 12/31/85
- ------------------------------------------------------------------------------------------------------------------------------------
Scudder International Portfolio Class A
Shares 9.74% 9.03% 8.03%* 9.74% 13.52% 9.03% 8.03%* 05/01/87
- ------------------------------------------------------------------------------------------------------------------------------------
TCI Growth 29.47% 13.49% 11.46%* 29.47% 11.28% 13.49% 11.46%* 11/20/87
- ------------------------------------------------------------------------------------------------------------------------------------
</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.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
INSTALLMENT PURCHASE PAYMENT FUND
CONTRACTS STANDARDIZED NON-STANDARDIZED INCEPTION
($15 MAINTENANCE FEE) 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>
Aetna Variable Fund 24.04% 10.92% 12.26% 30.57% 10.39% 12.07% 12.26% 04/30/75
- ------------------------------------------------------------------------------------------------------------------------------------
Aetna Income Shares 10.90% 7.35% 8.48% 16.73% 6.27% 8.46% 8.48% 06/01/78
- ------------------------------------------------------------------------------------------------------------------------------------
Aetna Variable Encore Fund (0.55%) 2.30% 4.88% 4.69% 3.10% 3.36% 4.88% 09/01/75
- ------------------------------------------------------------------------------------------------------------------------------------
Aetna Investment Advisers Fund, Inc. 19.33% 9.33% 8.49%* 25.61% 10.26% 10.46% 9.34%* 06/23/89
- ------------------------------------------------------------------------------------------------------------------------------------
Alger American Growth Portfolio 27.98% 18.96% 17.06%* 34.71% 17.71% 20.19% 17.92%* 01/08/89
- ------------------------------------------------------------------------------------------------------------------------------------
Alger American Small Cap Portfolio 35.36% 17.85% 20.20%* 42.48% 14.59% 19.06% 21.05%* 09/21/88
- ------------------------------------------------------------------------------------------------------------------------------------
Calvert Responsibly Invested Balanced
Portfolio 21.85% 8.67% 8.07%* 28.27% 9.32% 9.79% 8.66%* 09/30/86
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
INSTALLMENT PURCHASE PAYMENT FUND
CONTRACTS STANDARDIZED NON-STANDARDIZED INCEPTION
($15 MAINTENANCE FEE) 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>
Fidelity VIP Equity-Income Portfolio 26.83% 18.56% 11.33%* 33.51% 18.09% 19.78% 11.95%* 10/22/86
- ---------------------------------------------------------------------------------------------------------------------------
Fidelity VIP II Asset Manager 9.69% 10.19% 8.95%* 15.46% 8.62% 11.33% 9.83%* 11/07/86
Portfolio
- ---------------------------------------------------------------------------------------------------------------------------
Fidelity VIP II Contrafund Portfolio 31.00%* n/a n/a 37.90%* n/a n/a n/a 01/03/95
- ---------------------------------------------------------------------------------------------------------------------------
Fidelity VIP II Index 500 Portfolio 28.71% 12.25%* n/a 35.49% 13.55% 13.99%* n/a 08/27/92
- ---------------------------------------------------------------------------------------------------------------------------
Franklin Government Securities Trust 10.39% 6.26% 7.01%* 16.20% 5.45% 7.35% 7.85%* 05/30/89
- ---------------------------------------------------------------------------------------------------------------------------
Janus Aspen Aggressive Growth 19.58% 23.20%* n/a 25.87% 25.98%* n/a n/a 9/13/93
Portfolio
- ---------------------------------------------------------------------------------------------------------------------------
Janus Aspen Growth Portfolio 21.74% 11.08%* n/a 28.15% 13.59%* n/a n/a 09/13/93
- ---------------------------------------------------------------------------------------------------------------------------
Janus Aspen Short-Term Bond Portfolio 2.45% 0.86%* n/a 7.85% 3.13%* n/a n/a 09/13/93
- ---------------------------------------------------------------------------------------------------------------------------
Janus Aspen Worldwide Growth 19.50% 16.52%* n/a 25.79% 19.15%* n/a n/a 09/13/93
Portfolio
- ---------------------------------------------------------------------------------------------------------------------------
Lexington Emerging Markets Fund (9.91%) (6.02%)* n/a (5.16%) (3.22%)* n/a n/a 3/31/94
- ---------------------------------------------------------------------------------------------------------------------------
Lexington Natural Resources Trust 9.60% 3.72%* n/a 15.37% 5.68% 4.99%* n/a 10/14/91
- ---------------------------------------------------------------------------------------------------------------------------
Neuberger & Berman Growth Portfolio 23.55% 11.09% 10.73% 30.05% 8.75% 12.23% 10.73% 12/31/85
- ---------------------------------------------------------------------------------------------------------------------------
Scudder International Portfolio
Class A Shares 4.21% 7.88% 7.35%* 9.69% 13.48% 8.99% 7.99%* 05/01/87
- ---------------------------------------------------------------------------------------------------------------------------
TCI Growth 22.95% 12.28% 10.71%* 29.42% 11.24% 13.44% 11.41%* 11/20/87
- ---------------------------------------------------------------------------------------------------------------------------
</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.
ANNUITY PAYMENTS
When Annuity payments are to begin, the value of the Account is determined using
Accumulation Unit values as of the tenth Valuation Date before the first annuity
payment is due. Such value (less any applicable premium tax) is applied to
provide an Annuity in accordance with the annuity and investment options
elected.
The Annuity option tables found in the Contract show, for each form of Annuity,
the amount of the first annuity payment for each $1,000 of value applied.
Thereafter, variable annuity payments fluctuate as the Annuity Unit value(s)
fluctuates with the investment experience of the selected investment option(s).
The first payment and subsequent payments also vary depending on the assumed net
investment rate selected (3.5% or 5% per annum). Selection of a 5% rate causes a
higher first payment, but annuity payments will increase thereafter only to the
extent that the net investment rate increases by more than 5% on an annual
basis. Annuity payments would decline if the rate failed to increase by 5%. Use
of the 3.5% assumed rate causes a lower first payment, but subsequent payments
would increase more rapidly or decline more slowly as changes occur in the net
investment rate.
6
<PAGE>
When the Annuity Period begins, the Annuitant is credited with a fixed number of
Annuity Units (which does not change thereafter) in each of the designated
investment options. This number is calculated by dividing (a) by (b), where (a)
is the amount of the first annuity payment based on a particular investment
option, and (b) is the then current Annuity Unit value for that investment
option. As noted, Annuity Unit values fluctuate from one Valuation Date to the
next; such fluctuations reflect changes in the net investment factor for the
appropriate Subaccount(s) (with a ten Valuation Date lag which gives the Company
time to process Annuity payments) and a mathematical adjustment which offsets
the assumed net investment rate of 3.5% or 5% per annum.
The operation of all these factors can be illustrated by the following
hypothetical example. These procedures will be performed separately for the
investment options selected during the Annuity Period.
EXAMPLE:
Assume that, at the date Annuity payments are to begin, there are 3,000
Accumulation Units credited under a particular Account and that the value of an
Accumulation Unit for the tenth Valuation Date prior to retirement was
$13.650000. This produces a total value of $40,950.
Also assume that no premium tax is payable and that the Annuity table in the
Contract provides, for the option elected, a first monthly variable Annuity
payment of $6.68 per $1,000 of value applied; the Annuitant's first monthly
payment would thus be 40.950 multiplied by $6.68, or $273.55.
Assume then that the value of an Annuity Unit for the Valuation Date on which
the first payment was due was $13.400000. When this value is divided into the
first monthly payment, the number of Annuity Units is determined to be 20.414.
The value of this number of Annuity Units will be paid in each subsequent month.
If the net investment factor with respect to the appropriate Subaccount is
1.0015000 as of the tenth Valuation Date preceding the due date of the second
monthly payment, multiplying this factor by .9999058* (to neutralize the assumed
net investment rate of 3.5% per annum built into the number of Annuity Units
determined above) produces a result of 1.0014057. This is then multiplied by the
Annuity Unit value for the prior Valuation Date (assume such value to be
$13.504376) to produce an Annuity Unit value of $13.523359 for the Valuation
Date on which the second payment is due.
The second monthly payment is then determined by multiplying the number of
Annuity Units by the current Annuity Unit value, or 20.414 times $13.523359,
which produces a payment of $276.07.
*If an assumed net investment rate of 5% is elected, the appropriate factor to
neutralize such assumed rate would be .9998663.
SALES MATERIAL AND ADVERTISING
The Company may include hypothetical illustrations in its sales literature that
explain the mathematical principles of dollar cost averaging, compounded
interest, tax deferred accumulation, and the mechanics of variable annuity
contracts. The Company may also discuss the difference between variable annuity
contracts and other types of savings or investment products, including, but not
limited to, personal savings accounts and certificates of deposit.
7
<PAGE>
We may distribute sales literature that compares the percentage change in
Accumulation Unit values for any of the Subaccounts to established market
indices such as the Standard & Poor's 500 Stock Index and the Dow Jones
Industrial Average or to the percentage change in values of other management
investment companies that have investment objectives similar to the Subaccount
being compared.
We may publish in advertisements and reports, the ratings and other information
assigned to us by one or more independent rating organizations such as A.M. Best
Company, Duff & Phelps, Standard & Poor's Corporation and Moody's Investors
Services, Inc. The purpose of the ratings is to reflect our financial strength
and/or claims-paying ability. We may also quote ranking services such as
Morningstar's Variable Annuity/Life Performance Report and Lipper's Variable
Insurance Products Performance Analysis Service (VIPPAS), which rank variable
annuity or life Subaccounts or their underlying funds by performance and/or
investment objective. From time to time, we will quote articles from newspapers
and magazines or other publications or reports, including, but not limited to
The Wall Street Journal, Money magazine, USA Today and The VARDS Report.
The Company may provide in advertising, sales literature, periodic publications
or other materials information on various topics of interest to current and
prospective Contract Holders or Participants. These topics may include the
relationship between sectors of the economy and the economy as a whole and its
effect on various securities markets, investment strategies and techniques (such
as value investing, market timing, dollar cost averaging, asset allocation,
constant ratio transfer and account rebalancing), the advantages and
disadvantages of investing in tax-deferred and taxable investments, customer
profiles and hypothetical purchase and investment scenarios, financial
management and tax and retirement planning, and investment alternatives to
certificates of deposit and other financial instruments, including comparison
between the Contracts and the characteristics of and market for such financial
instruments.
INDEPENDENT AUDITORS
KPMG Peat Marwick LLP, CityPlace II, Hartford, Connecticut 06103-4103, are the
independent auditors for the Separate Account and for the Company. The services
provided to the Separate Account include primarily the examination of the
Separate Account's financial statements and the review of filings made with the
SEC.
8
<PAGE>
FINANCIAL STATEMENTS
VARIABLE ANNUITY ACCOUNT C
INDEX
Independent Auditors' Report .............................................. S-2
Statement of Assets and Liabilities ....................................... S-3
Statement of Operations ................................................... S-8
Statements of Changes in Net Assets ....................................... S-9
Notes to Financial Statements ............................................. S-10
Condensed Financial Information ........................................... S-12
S-1
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors of Aetna Life Insurance and Annuity Company and
Contract Owners of Variable Annuity Account C:
We have audited the accompanying statement of assets and liabilities of Aetna
Life Insurance and Annuity Company Variable Annuity Account C (the "Account")
as of December 31, 1995, and the related statement of operations for the year
then ended, statements of changes in net assets for each of the years in the
two-year period then ended and condensed financial information for the year
ended December 31, 1995. These financial statements and condensed financial
information are the responsibility of the Account's management. Our
responsibility is to express an opinion on these financial statements and
condensed financial information based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
condensed financial information are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. Our procedures included
confirmation of securities owned as of December 31, 1995, by correspondence
with the custodian. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and condensed financial information
referred to above present fairly, in all material respects, the financial
position of the Aetna Life Insurance and Annuity Company Variable Annuity
Account C as of December 31, 1995, the results of its operations for the year
then ended, changes in its net assets for each of the years in the two-year
period then ended and condensed financial information for the year ended
December 31, 1995 in conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
Hartford, Connecticut
February 16, 1996
S-2
<PAGE>
VARIABLE ANNUITY ACCOUNT C
STATEMENT OF ASSETS AND LIABILITIES - December 31, 1995
<TABLE>
<CAPTION>
ASSETS:
<S> <C>
Investments, at net asset value: (Note 1)
Aetna Variable Fund; 135,944,293 shares at $29.06 per share (cost $3,682,373,523).................... $3,949,941,096
Aetna Income Shares; 29,688,857 shares at $13.00 per share (cost $382,776,733)....................... 386,007,595
Aetna Variable Encore Fund; 17,318,377 shares at $13.30 per share (cost $221,087,268) ............... 230,291,686
Aetna Investment Advisers Fund, Inc.; 49,855,715 shares at $14.50 per share
(cost $600,395,092) ............................................................................... 723,017,695
Aetna GET Fund, Series B; 5,897,397 shares at $12.40 per share (cost $59,712,454).................... 73,136,258
Aetna Ascent Variable Portfolio; 454,714 shares at $10.80 per share (cost $4,803,331)................ 4,908,736
Aetna Crossroads Variable Portfolio; 341,591 shares at $10.74 per share (cost $3,599,790)............ 3,668,757
Aetna Legacy Variable Portfolio; 180,468 shares at $10.64 per share (cost $1,883,466)................ 1,919,680
Alger American Funds:
Alger American Growth Portfolio; 1,234,082 shares at $31.16 per share (cost
$38,739,937)....................................................................................... 38,454,000
Alger American Small Capitalization Portfolio; 6,121,453 shares at $39.41 per share
(cost $203,207,523)................................................................................ 241,246,447
Calvert Responsibly Invested Balanced Portfolio; 16,846,014 shares at $1.70 per share
(cost $26,512,853)................................................................................ 28,688,761
Fidelity Investments Variable Insurance Products Funds:
Equity-Income Portfolio; 1,973,219 shares at $19.27 per share (cost $35,264,252)................... 38,023,939
Growth Portfolio; 949,237 shares at $29.20 per share (cost $27,212,340)............................ 27,717,728
Overseas Portfolio; 218,122 shares at $17.05 per share (cost $3,555,791)........................... 3,718,987
Fidelity Investments Variable Insurance Products Funds II -
Asset Manager Portfolio; 910,080 shares at $15.79 per share (cost $12,839,173)..................... 14,370,158
Contrafund Portfolio; 2,202,984 shares at $13.78 per share (cost $30,071,951) ..................... 30,357,117
Index 500 Portfolio; 45,055 shares at $75.71 per share (cost $3,187,279) .......................... 3,411,144
Franklin Government Securities Trust; 1,651,095 shares at $13.35 per share
(cost $21,210,874) .............................................................................. 22,042,115
Janus Aspen Series -
Aggressive Growth Portfolio; 5,116,845 shares at $17.08 per share (cost $74,304,318)............... 87,395,716
Balanced Portfolio; 115,516 shares at $13.03 per share (cost $1,444,640)........................... 1,505,170
Flexible Income Portfolio; 347,266 shares at $11.11 per share (cost $3,690,542).................... 3,858,123
Growth Portfolio; 376,690 shares at $13.45 per share (cost $4,920,509)............................. 5,066,487
Short-Term Bond Portfolio; 54,258 shares at $10.03 per share (cost $544,564)....................... 544,210
Worldwide Growth Portfolio; 1,048,130 shares at $15.31 per share (cost $15,260,366)................ 16,046,863
Lexington Emerging Markets Fund, Inc.; 329,323 shares at $9.38 per share (cost $3,135,164) .......... 3,089,046
Lexington Natural Resources Trust; 1,257,565 shares at $11.30 per share (cost $12,932,744) .......... 14,210,484
Neuberger & Berman Advisers Management Trust - Growth Portfolio; 3,460,773 shares
at $25.86 per share (cost $77,838,858)............................................................ 89,495,579
Scudder Variable Life Investment Fund - International Portfolio; 13,936,090 shares
at $11.82 per share (cost $151,941,144).................................. ........................ 164,724,583
TCI Portfolios, Inc. - TCI Growth; 35,261,982 shares at $12.06 per share (cost $333,587,996) ........ 425,259,499
NET ASSETS ............................................................................................ 6,632,117,659
--------------
--------------
</TABLE>
S-3
<PAGE>
Net assets represented by:
<TABLE>
<CAPTION>
Accumulation
Unit
Units Value
<S> <C> <C> <C>
Reserves for annuity contracts in accumulation and payment period:
AETNA VARIABLE FUND:
Qualified I ..................................................... 549,055.7 $180.879 $99,312,649
Qualified III ................................................... 6,364,000.3 137.869 877,395,210
Qualified IV .................................................... 269.0 83.646 22,498
Qualified V ..................................................... 121,691.2 14.113 1,717,411
Qualified VI .................................................... 188,964,022.4 14.077 2,660,123,261
Qualified VII ................................................... 9,779,134.6 13.247 129,544,460
Qualified VIII .................................................. 20,835.7 13.074 272,413
Qualified IX .................................................... 21,417.9 12.935 277,043
Qualified X (1.15)............................................... 273,578.4 14.108 3,859,670
Qualified X (1.25)............................................... 2,370,233.5 14.077 33,366,740
Reserves for annuity contracts in payment period (Note 1)........ 144,049,741
AETNA INCOME SHARES:
Qualified I ..................................................... 72,902.0 47.405 3,455,895
Qualified III ................................................... 2,377,621.8 46.913 111,541,104
Qualified V ..................................................... 20,427.2 12.283 250,918
Qualified VI .................................................... 21,379,975.5 12.098 258,665,226
Qualified VII ................................................... 185,030.5 11.176 2,067,926
Qualified VIII .................................................. 1,090.6 11.143 12,153
Qualified IX .................................................... 3,580.8 11.203 40,116
Qualified X (1.15)............................................... 50,261.1 12.125 609,409
Qualified X (1.25)............................................... 354,993.3 12.098 4,294,879
Reserves for annuity contracts in payment period (Note 1) ....... 5,069,969
AETNA VARIABLE ENCORE FUND:
Qualified I ..................................................... 150,480.4 38.485 5,791,253
Qualified III ................................................... 1,836,260.4 37.988 69,756,054
Qualified V ..................................................... 19,202.4 11.003 211,293
Qualified VI .................................................... 12,999,680.2 11.026 143,337,034
Qualified VII ................................................... 324,091.0 10.936 3,544,190
Qualified VIII .................................................. 656.2 10.620 6,969
Qualified IX .................................................... 3,050.3 10.857 33,118
Qualified X (1.15)............................................... 145,629.4 11.051 1,609,306
Qualified X (1.25)............................................... 544,382.5 11.026 6,002,469
AETNA INVESTMENT ADVISERS FUND, INC.:
Qualified I ..................................................... 393,612.5 18.024 7,094,461
Qualified III ................................................... 9,193,181.4 17.954 165,052,015
Qualified V ..................................................... 19,038.2 13.693 260,683
Qualified VI .................................................... 38,152,394.6 13.673 521,663,491
Qualified VII ................................................... 335,791.4 13.135 4,410,596
Qualified VIII .................................................. 1,055.3 12.695 13,397
Qualified IX .................................................... 3,961.7 12.613 49,969
Qualified X (1.15)............................................... 138,270.8 13.703 1,894,705
Qualified X (1.25)............................................... 940,932.7 13.673 12,865,516
Reserves for annuity contracts in payment period (Note 1) ....... 9,712,862
AETNA GET FUND, SERIES B:
Qualified III .................................................. 63,245.0 12.850 812,688
S-4
<PAGE>
<CAPTION>
Accumulation
Unit
Units Value
<S> <C> <C> <C>
Qualified VI..................................................... 5,279,157.0 12.850 67,836,249
Qualified X (1.25)............................................... 349,212.6 12.850 4,487,321
AETNA ASCENT VARIABLE PORTFOLIO:
Qualified III.................................................... 8.4 10.673 90
Qualified V...................................................... 202.1 10.666 2,156
Qualified VI..................................................... 393,052.6 10.673 4,195,040
Qualified VIII................................................... 7.7 10.673 82
Qualified X (1.15)............................................... 15,054.8 10.982 165,326
Qualified X (1.25)............................................... 49,748.1 10.976 546,042
AETNA CROSSROADS VARIABLE PORTFOLIO:
Qualified V...................................................... 243.2 10.605 2,579
Qualified VI..................................................... 294,673.3 10.612 3,126,954
Qualified VIII................................................... 43.8 10.611 464
Qualified X (1.15)............................................... 2,393.5 10.868 26,012
Qualified X (1.25)............................................... 47,204.4 10.862 512,748
AETNA LEGACY VARIABLE PORTFOLIO:
Qualified VI..................................................... 143,636.5 10.580 1,519,662
Qualified X (1.15)............................................... 17,106.0 10.631 181,853
Qualified X (1.25)............................................... 20,531.2 10.626 218,165
ALGER AMERICAN FUNDS:
ALGER AMERICAN GROWTH PORTFOLIO:
Qualified III ................................................... 530,262.6 11.715 6,211,911
Qualified V...................................................... 7,965.7 10.365 82,564
Qualified VI..................................................... 2,832,439.7 10.157 28,770,111
Qualified VIII................................................... 38.3 10.371 397
Qualified X (1.15)............................................... 12,858.7 11.385 146,392
Qualified X (1.25)............................................... 284,978.1 11.379 3,242,625
ALGER AMERICAN SMALL CAPITALIZATION PORTFOLIO:
Qualified III ................................................... 1,714,187.0 13.558 23,241,019
Qualified V ..................................................... 31,527.5 13.463 424,453
Qualified VI .................................................... 15,036,764.7 13.450 202,245,073
Qualified VIII .................................................. 3,845.1 14.093 54,189
Qualified X (1.15)............................................... 54,683.5 13.481 737,179
Qualified X (1.25)............................................... 1,081,374.8 13.450 14,544,534
CALVERT RESPONSIBLY INVESTED BALANCED PORTFOLIO:
Qualified III ................................................... 856,360.5 17.951 15,372,772
Qualified V ..................................................... 14,656.3 13.870 203,278
Qualified VI .................................................... 966,097.9 13.527 13,068,322
Qualified VIII .................................................. 3,611.6 12.291 44,389
FIDELITY INVESTMENTS VARIABLE INSURANCE PRODUCTS FUNDS:
EQUITY-INCOME PORTFOLIO:
Qualified III ................................................... 628,581.6 11.617 7,301,978
Qualified V ..................................................... 1,107.9 11.047 12,239
Qualified VI .................................................... 1,660,304.1 11.092 18,415,763
Qualified VIII .................................................. 638.7 11.054 7,060
Qualified X (1.15)............................................... 118,679.1 13.902 1,649,878
Qualified X (1.25)............................................... 766,359.8 13.880 10,637,021
GROWTH PORTFOLIO:
Qualified III ................................................... 762.1 10.198 7,772
Qualified V ..................................................... 2,540.5 10.183 25,871
Qualified VI .................................................... 1,833,793.9 10.066 18,458,844
S-5
<PAGE>
<CAPTION>
Accumulation
Unit
Units Value
<S> <C> <C> <C>
Qualified VIII .................................................. 158.7 10.190 1,617
Qualified X (1.15)............................................... 45,764.6 14.023 641,737
Qualified X (1.25)............................................... 612,991.7 14.000 8,581,887
OVERSEAS PORTFOLIO:
Qualified III ................................................... 1,301.8 10.197 13,274
Qualified V ..................................................... 190.8 9.954 1,899
Qualified VI .................................................... 196,089.8 9.961 1,953,206
Qualified X (1.15)............................................... 4,284.4 10.278 44,037
Qualified X (1.25)............................................... 166,303.2 10.262 1,706,571
FIDELITY INVESTMENTS VARIABLE INSURANCE PRODUCTS FUNDS II:
ASSET MANAGER PORTFOLIO:
Qualified III.................................................... 1,316,915.5 10.912 14,370,158
CONTRAFUND PORTFOLIO:
Qualified III ................................................... 525,476.0 11.763 6,181,326
Qualified V ..................................................... 6,415.4 10.461 67,111
Qualified VI .................................................... 2,116,732.0 10.397 22,007,519
Qualified VIII .................................................. 173.7 10.467 1,818
Qualified X (1.15)............................................... 5,452.8 10.689 63,737
Qualified X (1.25)............................................... 174,259.3 10.681 2,035,606
INDEX 500 PORTFOLIO:
Qualified III ................................................... 290,546.8 11.740 3,411,144
FRANKLIN GOVERNMENT SECURITIES TRUST:
Qualified III ................................................... 809,413.7 16.495 13,351,329
Qualified V ..................................................... 16,226.2 11.946 193,844
Qualified VI .................................................... 717,760.0 11.762 8,442,415
Qualified VIII .................................................. 4,916.9 11.090 54,527
JANUS ASPEN SERIES:
AGGRESSIVE GROWTH PORTFOLIO:
Qualified III ................................................... 1,280,952.5 15.323 19,627,517
Qualified V.. ................................................... 15,482.4 13.296 205,852
Qualified VI. ................................................... 4,887,059.8 13.322 65,105,449
Qualified VIII .................................................. 1,021.7 13.321 13,610
Qualified X (1.15)............................................... 22,049.9 12.869 283,760
Qualified X (1.25)............................................... 167,919.9 12.861 2,159,528
BALANCED PORTFOLIO:
Qualified III ................................................... 161.4 10.853 1,751
Qualified V ..................................................... 160.2 10.843 1,737
Qualified VI .................................................... 93,303.8 10.850 1,012,385
Qualified X (1.15)............................................... 9,382.9 11.265 105,697
Qualified X (1.25)............................................... 34,071.6 11.259 383,600
FLEXIBLE INCOME PORTFOLIO:
Qualified III ................................................... 3,344.5 12.124 40,550
Qualified V ..................................................... 745.1 12.054 8,981
Qualified VI .................................................... 315,361.3 12.077 3,808,592
GROWTH PORTFOLIO:
Qualified III ................................................... 109,716.5 11.859 1,301,115
Qualified V. .................................................... 166.2 10.872 1,807
Qualified VI. ................................................... 259,195.5 10.870 2,817,612
Qualified X (1.15)............................................... 3,238.4 11.633 37,671
Qualified X (1.25)............................................... 78,126.0 11.626 908,282
S-6
<PAGE>
<CAPTION>
Accumulation
Unit
Units Value
<S> <C> <C> <C>
SHORT-TERM BOND PORTFOLIO:
Qualified III ................................................... 18,472.9 10.393 191,983
Qualified V ..................................................... 23.8 10.316 245
Qualified VI .................................................... 32,695.8 10.323 337,528
Qualified X (1.25)............................................... 1,405.3 10.285 14,454
WORLDWIDE GROWTH PORTFOLIO:
Qualified III ................................................... 314,652.7 12.158 3,825,607
Qualified V ..................................................... 11,127.9 10.952 121,875
Qualified VI .................................................... 1,036,039.6 10.877 11,268,519
Qualified VIII .................................................. 13.7 10.846 149
Qualified X (1.15)............................................... 2,616.9 12.223 31,987
Qualified X (1.25)............................................... 65,384.2 12.216 798,726
LEXINGTON EMERGING MARKETS FUND:
Qualified III ................................................... 371,155.8 8.323 3,089,046
LEXINGTON NATURAL RESOURCES TRUST:
Qualified III ................................................... 530,562.2 10.862 5,763,092
Qualified V ..................................................... 8,347.9 12.095 100,969
Qualified VI .................................................... 711,891.9 11.720 8,346,423
NEUBERGER & BERMAN ADVISERS MANAGEMENT TRUST:
GROWTH PORTFOLIO:
Qualified III ................................................... 2,359,089.9 17.430 41,119,982
Qualified V ..................................................... 35,940.7 14.359 516,068
Qualified VI .................................................... 3,331,217.5 14.345 47,786,169
Qualified VIII .................................................. 5,947.6 12.334 73,360
SCUDDER VARIABLE LIFE INVESTMENT FUND:
INTERNATIONAL PORTFOLIO:
Qualified III ................................................... 3,823,292.2 14.515 55,495,694
Qualified V ..................................................... 38,067.4 13.799 525,305
Qualified VI .................................................... 7,323,208.0 13.923 101,958,550
Qualified VIII .................................................. 12,189.3 11.733 143,011
Qualified X (1.15)............................................... 41,921.0 13.952 584,886
Qualified X (1.25)............................................... 432,183.0 13.923 6,017,137
TCI PORTFOLIOS, INC.:
TCI GROWTH:
Qualified III *.................................................. 1,784,551.6 14.464 25,811,741
Qualified III .................................................. 4,184,701.2 13.224 55,336,455
Qualified V ..................................................... 24,825.6 15.176 376,753
Qualified VI .................................................... 21,986,645.3 15.253 335,360,124
Qualified VII ................................................... 63,035.5 12.840 809,380
Qualified VIII .................................................. 8,144.3 12.868 104,799
Qualified IX .................................................... 1,241.8 12.581 15,623
Qualified X (1.15)............................................... 13,306.7 15.285 203,397
Qualified X (1.25)............................................... 474,744.3 15.253 7,241,227
$6,632,117,659
--------------
--------------
</TABLE>
*Applies only to participants of the Opportunity Plus program and Multiple
Options Contracts.
See Notes to Financial Statements.
S-7
<PAGE>
VARIABLE ANNUITY ACCOUNT C
STATEMENT OF OPERATIONS - Year Ended December 31, 1995
<TABLE>
<CAPTION>
INVESTMENT INCOME:
<S> <C> <C>
Dividends: (Notes 1 and 3)
Aetna Variable Fund............................................................ $648,150,765
Aetna Income Shares............................................................ 23,872,308
Aetna Variable Encore Fund .................................................... 172,751
Aetna Investment Advisers Fund, Inc............................................ 47,274,300
Aetna GET Fund, Series B ...................................................... 1,878,972
Aetna Ascent Variable Portfolio ............................................... 110,626
Aetna Crossroads Variable Portfolio ........................................... 61,834
Aetna Legacy Variable Portfolio ............................................... 33,640
Calvert Responsibly Invested Balanced Portfolio .............................. 2,556,825
Fidelity Investments Variable Insurance Products Fund - Equity Income Portfolio 423,626
Fidelity Investments Variable Insurance Products Fund - Growth Portfolio ...... 10,256
Fidelity Investments Variable Insurance Products Fund - Overseas Portfolio .... 5,145
Fidelity Investments Variable Insurance Products Fund II - Asset Manager Portfolio 259,914
Fidelity Investments Variable Insurance Products Fund II - Contrafund Portfolio 379,043
Franklin Government Securities Trust .......................................... 1,061,449
Janus Aspen Series - Aggressive Growth Portfolio............................... 982,586
Janus Aspen Series - Balanced Portfolio........................................ 11,553
Janus Aspen Series - Flexible Income Portfolio................................. 151,761
Janus Aspen Series - Growth Portfolio.......................................... 91,472
Janus Aspen Series - Short-Term Bond Portfolio................................. 11,707
Janus Aspen Series - Worldwide Growth Portfolio................................ 50,858
Lexington Emerging Markets Fund................................................ 29,990
Lexington Natural Resources Trust.............................................. 59,767
Neuberger & Berman Advisers Management Trust - Growth Portfolio ............... 1,779,523
Scudder Variable Life Investment Fund - International Portfolio............... 670,720
TCI Portfolios, Inc. - TCI Growth.............................................. 339,221
--------------
Total investment income ..................................................... 730,430,612
Valuation period deductions (Note 2)............................................. (71,090,542)
--------------
Net investment income............................................................ 659,340,070
--------------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on sales of investments: (Notes 1 and 4)
Proceeds from sales ........................................................... $570,154,582
Cost of investments sold ...................................................... 409,480,615
------------
Net realized gain ........................................................... 160,673,967
Net unrealized gain on investments:
Beginning of year ............................................................. 73,479,233
End of year ................................................................... 594,083,184
------------
Net unrealized gain ......................................................... 520,603,951
--------------
Net realized and unrealized gain on investments ................................. 681,277,918
--------------
Net increase in net assets resulting from operations ............................ $1,340,617,988
--------------
--------------
</TABLE>
See Notes to Financial Statements.
S-8
<PAGE>
VARIABLE ANNUITY ACCOUNT C
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Year Ended December 31,
1995 1994
---- ----
<S> <C> <C>
FROM OPERATIONS:
Net investment income .......................................... $ 659,340,070 $ 476,196,420
Net realized and unrealized gain (loss) on investments .......... 681,277,918 (581,812,453)
Net increase (decrease) in net assets resulting from operations 1,340,617,988 (105,616,033)
FROM UNIT TRANSACTIONS:
Variable annuity contract purchase payments ..................... 771,594,245 711,565,372
Sales and administrative charges deducted by the Company ........ (98,694) (137,737)
Net variable annuity contract purchase payments ............... 771,495,551 711,427,635
Transfers from the Company for mortality guarantee adjustments .. 3,678,430 1,880,350
Transfers to the Company's fixed account options ................ (44,377,350) (56,920,532)
Transfers to other variable annuity accounts ........... 0 (23,284,415)
Redemptions by contract holders ................................. (287,945,984) (269,542,942)
Annuity payments ................................................ (14,807,537) (11,189,149)
Other ........................................................... 1,144,770 1,452,959
Net increase in net assets from unit transactions ............. 429,187,880 353,823,906
Change in net assets ............................................ 1,769,805,868 248,207,873
NET ASSETS:
Beginning of year ............................................... 4,862,311,791 4,614,103,918
End of year...................................................... $6,632,117,659 $4,862,311,791
-------------- --------------
-------------- --------------
</TABLE>
See Notes to Financial Statements.
S-9
<PAGE>
VARIABLE ANNUITY ACCOUNT C
NOTES TO FINANCIAL STATEMENTS - December 31, 1995
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Variable Annuity Account C ("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 are qualified under the
Internal Revenue Code of 1986, as amended.
The accompanying financial statements of the Account have been prepared in
accordance with generally accepted accounting principles.
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, 1995:
Aetna Variable Fund
Aetna Income Shares
Aetna Variable Encore Fund
Aetna Investment Advisers Fund, Inc.
Aetna GET Fund, Series B
Aetna Ascent Variable Portfolio
Aetna Crossroads Variable Portfolio
Aetna Legacy Variable Portfolio
Alger American Fund:
- Alger American Growth Portfolio
- Alger American Small Capitalization Portfolio
Calvert Responsibly Invested Balanced Portfolio
Fidelity Investments Variable Insurance Products Fund:
- Equity-Income Portfolio
- Growth Portfolio
- Overseas Portfolio
Fidelity Investments Variable Insurance Products Fund II:
- Asset Manager Portfolio
- Contrafund Portfolio
- Index 500 Portfolio
Franklin Government Securities Trust
Janus Aspen Series:
- Aggressive Growth Portfolio
- Balanced Portfolio
- Flexible Income Portfolio
- Growth Portfolio
- Short-Term Bond Portfolio
- Worldwide Growth Portfolio
Lexington Emerging Markets Fund
Lexington Natural Resources Trust
Neuberger & Berman Advisers Management Trust:
- Growth Portfolio
Scudder Variable Life Investment Fund:
- International Portfolio
TCI Portfolios, Inc.:
- TCI Growth
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 Variable Annuity Account C 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 are computed for currently payable contracts according
to the Progressive Annuity, Individual Annuity Mortality, and Group
Annuity Mortality tables using various assumed interest rates not to
exceed seven percent. Mortality experience is monitored by the Company.
S-10
<PAGE>
VARIABLE ANNUITY ACCOUNT C
NOTES TO FINANCIAL STATEMENTS - December 31, 1995 (continued)
Charges to annuity reserves for mortality and expense risk 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 year ended December 31, 1995 aggregated
$1,658,682,532 and $570,154,582, respectively.
5. ESTIMATES
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.
S-11
<PAGE>
VARIABLE ANNUITY ACCOUNT C
CONDENSED FINANCIAL INFORMATION
CHANGE IN VALUE OF ACCUMULATION UNIT - JANUARY 1, 1995 TO DECEMBER 31, 1995
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
Increase
Value at Value at in Value of
Beginning End of Accumulation
of Year Year Unit
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
AETNA VARIABLE FUND:
Qualified I ............................................................. $138.406 $180.879 30.69%
Qualified III ........................................................... 105.558 137.869 30.61%
Qualified IV ............................................................ 63.884 83.646 30.93%
Qualified V ............................................................. 10.823 14.113 30.40%
Qualified VI ............................................................ 10.778 14.077 30.61%
Qualified VII ........................................................... 10.136 13.247 30.69%
Qualified VIII .......................................................... 10.011 13.074 30.60%
Qualified IX ............................................................ 9.879 12.935 30.93%
Qualified X (1.15) ...................................................... 10.791 14.108 30.74%
Qualified X (1.25) ...................................................... 10.778 14.077 30.61%
- -------------------------------------------------------------------------------------------------------------------------
AETNA INCOME SHARES:
Qualified I ............................................................. $ 40.570 $ 47.405 16.85%
Qualified III ........................................................... 40.173 46.913 16.78%
Qualified V ............................................................. 10.536 12.283 16.59%
Qualified VI ............................................................ 10.360 12.098 16.78%
Qualified VII ........................................................... 9.565 11.176 16.85%
Qualified VIII .......................................................... 9.543 11.143 16.77%
Qualified IX ............................................................ 9.570 11.203 17.07%
Qualified X (1.15) ...................................................... 10.373 12.125 16.89%
Qualified X (1.25) ...................................................... 10.360 12.098 16.78%
- -------------------------------------------------------------------------------------------------------------------------
AETNA VARIABLE ENCORE FUND:
Qualified I ............................................................. $ 36.723 $ 38.485 4.80%
Qualified III ........................................................... 36.271 37.988 4.73%
Qualified V ............................................................. 10.523 11.003 4.57%
Qualified VI ............................................................ 10.528 11.026 4.73%
Qualified VII ........................................................... 10.435 10.936 4.80%
Qualified VIII .......................................................... 10.141 10.620 4.73%
Qualified IX ............................................................ 10.341 10.857 5.00%
Qualified X (1.15) ...................................................... 10.541 11.051 4.84%
Qualified X (1.25) ...................................................... 10.528 11.026 4.73%
- -------------------------------------------------------------------------------------------------------------------------
AETNA INVESTMENT ADVISERS FUND, INC.:
Qualified I ............................................................. $ 14.317 $ 18.024 25.89%
Qualified III ........................................................... 14.270 17.954 25.82%
Qualified V ............................................................. 10.900 13.693 25.62%
Qualified VI ............................................................ 10.868 13.673 25.81%
Qualified VII ........................................................... 10.434 13.135 25.89%
Qualified VIII .......................................................... 10.091 12.695 25.81%
Qualified IX ............................................................ 10.000 12.613 26.13%
Qualified X (1.15) ...................................................... 10.880 13.703 25.95%
Qualified X (1.25) ...................................................... 10.868 13.673 25.81%
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
S-12
<PAGE>
VARIABLE ANNUITY ACCOUNT C
CONDENSED FINANCIAL INFORMATION
CHANGE IN VALUE OF ACCUMULATION UNIT - JANUARY 1, 1995 TO DECEMBER 31, 1995
(continued)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
Increase
Value at Value at in Value of
Beginning End of Accumulation
of Year Year Unit
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
AETNA GET FUND, SERIES B:
Qualified III ........................................................... $ 10.160 $ 12.850 26.48%
Qualified VI ............................................................ 10.160 12.850 26.48%
Qualified X (1.25) ...................................................... 10.160 12.850 26.48%
- -------------------------------------------------------------------------------------------------------------------------
AETNA ASCENT VARIABLE PORTFOLIO:
Qualified III ........................................................... $ 10.000 $ 10.673 6.73% (4)
Qualified V ............................................................. 10.000 10.666 6.66% (5)
Qualified VI ............................................................ 10.000 10.673 6.73% (5)
Qualified VIII .......................................................... 10.000 10.673 6.73% (5)
Qualified X (1.15) ...................................................... 10.000 10.982 9.82% (3)
Qualified X (1.25) ...................................................... 10.000 10.976 9.76% (3)
- -------------------------------------------------------------------------------------------------------------------------
AETNA CROSSROADS VARIABLE PORTFOLIO:
Qualified V ............................................................. $ 10.000 $ 10.605 6.05% (5)
Qualified VI ............................................................ 10.000 10.612 6.12% (5)
Qualified VIII .......................................................... 10.000 10.611 6.11% (5)
Qualified X (1.15) ...................................................... 10.000 10.868 8.68% (3)
Qualified X (1.25) ...................................................... 10.000 10.862 8.62% (3)
- -------------------------------------------------------------------------------------------------------------------------
AETNA LEGACY VARIABLE PORTFOLIO:
Qualified VI ............................................................ $ 10.000 $ 10.580 5.80% (5)
Qualified X (1.15) ...................................................... 10.000 10.631 6.31% (4)
Qualified X (1.25) ...................................................... 10.000 10.626 6.26% (4)
- -------------------------------------------------------------------------------------------------------------------------
ALGER AMERICAN FUNDS:
ALGER AMERICAN GROWTH PORTFOLIO:
Qualified III ........................................................... $ 10.000 $ 11.715 17.15% (4)
Qualified V ............................................................. 10.000 10.365 3.65% (5)
Qualified VI ............................................................ 10.000 10.157 1.57% (5)
Qualified VIII .......................................................... 10.000 10.371 3.71% (5)
Qualified X (1.15) ...................................................... 10.000 11.385 13.85% (3)
Qualified X (1.25) ...................................................... 10.000 11.379 13.79% (3)
- -------------------------------------------------------------------------------------------------------------------------
ALGER AMERICAN SMALL CAPITALIZATION PORTFOLIO:
Qualified III ........................................................... $ 9.513 $ 13.558 42.52%
Qualified V ............................................................. 9.461 13.463 42.29%
Qualified VI ............................................................ 9.437 13.450 42.52%
Qualified VIII .......................................................... 9.889 14.093 42.51%
Qualified X (1.15) ...................................................... 9.450 13.481 42.66%
Qualified X (1.25) ...................................................... 9.437 13.450 42.52%
- -------------------------------------------------------------------------------------------------------------------------
CALVERT RESPONSIBLY INVESTED BALANCED PORTFOLIO:
Qualified III ........................................................... $ 13.990 $ 17.951 28.31%
Qualified V ............................................................. 10.839 13.870 27.96%
Qualified VI ............................................................ 10.554 13.527 28.17%
Qualified VIII .......................................................... 9.590 12.291 28.16%
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
S-13
<PAGE>
VARIABLE ANNUITY ACCOUNT C
CONDENSED FINANCIAL INFORMATION
CHANGE IN VALUE OF ACCUMULATION UNIT - JANUARY 1, 1995 TO DECEMBER 31, 1995
(continued)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
Increase
(Decrease)
Value at Value at in Value of
Beginning End of Accumulation
of Year Year Unit
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
FIDELITY INVESTMENTS VARIABLE INSURANCE PRODUCTS FUNDS:
EQUITY - INCOME PORTFOLIO:
Qualified III ........................................................... $ 10.000 $ 11.617 16.17% (2)
Qualified V ............................................................. 10.000 11.047 10.47% (5)
Qualified VI ............................................................ 10.000 11.092 10.92% (5)
Qualified VIII .......................................................... 10.000 11.054 10.54% (5)
Qualified X (1.15) ...................................................... 10.409 13.902 33.55%
Qualified X (1.25) ...................................................... 10.403 13.880 33.42%
- -------------------------------------------------------------------------------------------------------------------------
GROWTH PORTFOLIO:
Qualified III ........................................................... $ 10.000 $ 10.198 1.98% (4)
Qualified V ............................................................. 10.000 10.183 1.83% (5)
Qualified VI ............................................................ 10.000 10.066 0.66% (5)
Qualified VIII .......................................................... 10.000 10.190 1.90% (5)
Qualified X (1.15) ...................................................... 10.479 14.023 33.82%
Qualified X (1.25) ...................................................... 10.472 14.000 33.69%
- -------------------------------------------------------------------------------------------------------------------------
OVERSEAS PORTFOLIO:
Qualified III ........................................................... $ 10.000 $ 10.197 1.97% (4)
Qualified V ............................................................. 10.000 9.954 (0.46%) (5)
Qualified VI ............................................................ 10.000 9.961 (0.39%) (5)
Qualified X (1.15) ...................................................... 9.480 10.278 8.43%
Qualified X (1.25) ...................................................... 9.474 10.262 8.32%
- -------------------------------------------------------------------------------------------------------------------------
FIDELITY INVESTMENTS VARIABLE INSURANCE PRODUCTS FUNDS II:
ASSET MANAGER PORTFOLIO:
Qualified III ........................................................... $ 9.447 $ 10.912 15.51%
- -------------------------------------------------------------------------------------------------------------------------
CONTRAFUND PORTFOLIO:
Qualified III ........................................................... $ 10.000 $ 11.763 17.63% (2)
Qualified V ............................................................. 10.000 10.461 4.61% (5)
Qualified VI ............................................................ 10.000 10.397 3.97% (5)
Qualified VIII .......................................................... 10.000 10.467 4.67% (5)
Qualified X (1.15) ...................................................... 10.000 10.689 6.89% (2)
Qualified X (1.25) ...................................................... 10.000 10.681 6.81% (2)
- -------------------------------------------------------------------------------------------------------------------------
INDEX 500 PORTFOLIO:
Qualified III ........................................................... $ 10.000 $ 11.740 17.40% (2)
- -------------------------------------------------------------------------------------------------------------------------
FRANKLIN GOVERNMENT SECURITIES TRUST:
Qualified III ........................................................... $ 14.190 $ 16.495 16.24%
Qualified V ............................................................. 10.294 11.946 16.06%
Qualified VI ............................................................ 10.119 11.762 16.24%
Qualified VIII .......................................................... 9.541 11.090 16.23%
- -------------------------------------------------------------------------------------------------------------------------
JANUS ASPEN SERIES:
AGGRESSIVE GROWTH PORTFOLIO:
Qualified III ........................................................... $ 12.169 $ 15.323 25.91%
Qualified V ............................................................. 10.577 13.296 25.71%
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
S-14
<PAGE>
VARIABLE ANNUITY ACCOUNT C
CONDENSED FINANCIAL INFORMATION
CHANGE IN VALUE OF ACCUMULATION UNIT - JANUARY 1, 1995 TO DECEMBER 31, 1995
(continued)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
Increase
(Decrease)
Value at Value at in Value of
Beginning End of Accumulation
of Year Year Unit
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
JANUS ASPEN SERIES:
AGGRESSIVE GROWTH PORTFOLIO (continued):
Qualified VI ............................................................ $ 10.581 $ 13.322 25.91%
Qualified VIII .......................................................... 10.581 13.321 25.90%
Qualified X (1.15) ...................................................... 10.000 12.869 28.69% (2)
Qualified X (1.25) ...................................................... 10.000 12.861 28.61% (2)
- -------------------------------------------------------------------------------------------------------------------------
BALANCED PORTFOLIO:
Qualified III ........................................................... $ 10.000 $ 10.853 8.53% (4)
Qualified V ............................................................. 10.000 10.843 8.43% (5)
Qualified VI ............................................................ 10.000 10.850 8.50% (5)
Qualified X (1.15) ...................................................... 10.000 11.265 12.65% (3)
Qualified X (1.25) ...................................................... 10.000 11.259 12.59% (3)
- -------------------------------------------------------------------------------------------------------------------------
FLEXIBLE INCOME PORTFOLIO:
Qualified III ........................................................... $ 9.911 $ 12.124 22.33%
Qualified V ............................................................. 10.000 12.054 20.54% (1)
Qualified VI ............................................................ 9.873 12.077 22.33%
- -------------------------------------------------------------------------------------------------------------------------
GROWTH PORTFOLIO:
Qualified III ........................................................... $ 10.000 $ 11.859 18.59% (4)
Qualified V ............................................................. 10.000 10.872 8.72% (5)
Qualified VI ............................................................ 10.000 10.870 8.70% (5)
Qualified X (1.15) ...................................................... 10.000 11.633 16.33% (3)
Qualified X (1.25) ...................................................... 10.000 11.626 16.26% (3)
- -------------------------------------------------------------------------------------------------------------------------
SHORT TERM BOND PORTFOLIO:
Qualified III ........................................................... $ 10.000 $ 10.393 3.93% (4)
Qualified V ............................................................. 10.000 10.316 3.16% (5)
Qualified VI ............................................................ 10.000 10.323 3.23% (5)
Qualified X (1.25) ...................................................... 10.000 10.285 2.85% (4)
- -------------------------------------------------------------------------------------------------------------------------
WORLDWIDE GROWTH PORTFOLIO:
Qualified III ........................................................... $ 10.000 $ 12.158 21.58% (4)
Qualified V ............................................................. 10.000 10.952 9.52% (4)
Qualified VI ............................................................ 10.000 10.877 8.77% (5)
Qualified VIII .......................................................... 10.000 10.846 8.46% (5)
Qualified X (1.15) ...................................................... 10.000 12.223 22.23% (2)
Qualified X (1.25) ...................................................... 10.000 12.216 22.16% (2)
- -------------------------------------------------------------------------------------------------------------------------
LEXINGTON EMERGING MARKETS FUND:
Qualified III ........................................................... $ 8.772 $ 8.323 (5.12%)
- -------------------------------------------------------------------------------------------------------------------------
LEXINGTON NATURAL RESOURCES TRUST:
Qualified III ........................................................... $ 9.412 $ 10.862 15.41%
Qualified V ............................................................. 10.496 12.095 15.24%
Qualified VI ............................................................ 10.154 11.720 15.42%
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
S-15
<PAGE>
VARIABLE ANNUITY ACCOUNT C
CONDENSED FINANCIAL INFORMATION
CHANGE IN VALUE OF ACCUMULATION UNIT - JANUARY 1, 1995 TO DECEMBER 31, 1995
(continued)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
Increase
Value at Value at in Value of
Beginning End of Accumulation
of Year Year Unit
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
NEUBERGER & BERMAN ADVISERS
MANAGEMENT TRUST - GROWTH PORTFOLIO:
Qualified III ........................................................... $ 13.398 $ 17.430 30.09%
Qualified V ............................................................. 11.055 14.359 29.89%
Qualified VI ............................................................ 11.026 14.345 30.10%
Qualified VIII .......................................................... 9.482 12.334 30.09%
- --------------------------------------------------------------------------------------------------------------------------
SCUDDER VARIABLE LIFE INVESTMENT FUND - INTERNATIONAL
PORTFOLIO:
Qualified III ........................................................... $ 13.227 $ 14.515 9.74%
Qualified V ............................................................. 12.595 13.799 9.56%
Qualified VI ............................................................ 12.687 13.923 9.74%
Qualified VIII .......................................................... 10.692 11.733 9.73%
Qualified X (1.15) ...................................................... 12.701 13.952 9.85%
Qualified X (1.25) ...................................................... 12.687 13.923 9.74%
- --------------------------------------------------------------------------------------------------------------------------
TCI PORTFOLIOS, INC.:
TCI GROWTH:
Qualified III* .......................................................... $ 11.172 $ 14.464 29.47%
Qualified III ........................................................... 10.213 13.224 29.47%
Qualified V ............................................................. 11.740 15.176 29.27%
Qualified VI ............................................................ 11.781 15.253 29.47%
Qualified VII ........................................................... 9.911 12.840 29.55%
Qualified VIII .......................................................... 9.939 12.868 29.46%
Qualified IX ............................................................ 9.693 12.581 29.80%
Qualified X (1.15) ...................................................... 11.794 15.285 29.60%
Qualified X (1.25) ...................................................... 11.781 15.253 29.47%
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
*Applies only to participants of the Opportunity Plus program and Multiple
Options Contracts.
QUALIFIED I Individual contracts issued prior to May 1, 1975
in connection with "Qualified Corporate Retirement
Plans" established pursuant to Section 401 of the
Internal Revenue Code ("Code"); "Tax-Deferred
Annuity Plans" established by the public school
systems and tax-exempt organizations pursuant to
Section 403(b) of the Code, and certain Individual
Retirement Annuity Plans established by or on
behalf of individuals pursuant to section 408(b)
of the Code; Individual contracts issued prior to
November 1, 1975 in connection with "H.R. 10
Plans" established by persons entitled to the
benefits of the Self-Employed Individuals Tax
Retirement Act of 1962, as amended; allocated
group contracts issued prior to May 1, 1975 in
connection with Qualified Corporate Retirement
Plans; and group contracts issued prior to
October 1, 1978 in connection with Tax-Deferred
Annuity Plans.
QUALIFIED III Individual contracts issued in connection with
Tax-Deferred Annuity Plans and Individual
Retirement Annuity Plans since May 1, 1975, H.R.
10 Plans since November 1, 1975; group contracts
issued since October 1, 1978 in connection with
Tax-Deferred Annuity
S-16
<PAGE>
VARIABLE ANNUITY ACCOUNT C
CONDENSED FINANCIAL INFORMATION
CHANGE IN VALUE OF ACCUMULATION UNIT - JANUARY 1, 1995 TO DECEMBER 31, 1995
(continued)
- --------------------------------------------------------------------------------
QUALIFIED III (continued): Plans and group contracts issued since May 1, 1979
in connection with "Deferred Compensation Plans"
adopted by state and local governments and H.R. 10
Plans.
QUALIFIED IV Certain large group contracts (Jumbo) issued in
connection with Tax-Deferred Annuity Plans and
Deferred Compensation Plans issued since
January 1, 1979.
QUALIFIED V Group AetnaPlus contracts issued since August 28,
1992 in connection with "Optional Retirement
Plans" established pursuant to Section 403(b) or
401(a) of the Internal Revenue Code.
QUALIFIED VI Group AetnaPlus contracts issued in connection
with Tax-Deferred Annuity Plans and Retirement
Plus Plans since August 28, 1992.
QUALIFIED VII Certain existing contracts that were converted to
ACES, the new administrative system (Previously
valued under Qualified I).
QUALIFIED VIII "Group Aetna Plus" contracts issued in connection
with Tax-Deferred Annuity Plans and "Deferred
Compensation Plans" adopted by state and local
governments since June 30, 1993.
QUALIFIED IX Certain large group contracts (Jumbo) that were
converted to ACES, the new administrative system
(previously valued under Qualified VI).
QUALIFIED X Individual Retirement Annuity and Simplified
Employee Pension Plans issued or converted to
ACES, the new administrative system.
1 - Reflects less than a full year of performance activity. The initial
Accumulation Unit Value was established at $10.000 during March 1995 when
the fund became available under the contract or the applicable daily asset
charge was first utilized.
2 - Reflects less than a full year of performance activity. The initial
Accumulation Unit Value was established at $10.000 during May 1995 when the
fund became available under the contract or the applicable daily asset
charge was first utilized.
3 - Reflects less than a full year of performance activity. The initial
Accumulation Unit Value was established at $10.000 during June 1995 when
the fund became available under the contract or the applicable daily asset
charge was first utilized.
4 - Reflects less than a full year of performance activity. The initial
Accumulation Unit Value was established at $10.000 during July 1995 when
the fund became available under the contract or the applicable daily asset
charge was first utilized.
5 - Reflects less than a full year of performance activity. The initial
Accumulation Unit Value was established at $10.000 during August 1995 when
the fund became available under the contract or the applicable daily asset
charge was first utilized.
S-17
<PAGE>
CONSOLIDATED FINANCIAL STATEMENTS
AETNA LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES
Index
<TABLE>
<CAPTION>
PAGE
---
<S> <C>
Independent Auditors' Report..................................... F-2
Consolidated Financial Statements:
Consolidated Statements of Income for the Years Ended
December 31, 1995, 1994 and 1993.............................. F-3
Consolidated Balance Sheets as of December 31, 1995 and 1994... F-4
Consolidated Statements of Changes in Shareholder's Equity for
the Years Ended
December 31, 1995, 1994 and 1993.............................. F-5
Consolidated Statements of Cash Flows for the Years Ended
December 31, 1995, 1994 and 1993.............................. F-6
Notes to Consolidated Financial Statements....................... F-7
</TABLE>
F-1
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Shareholder and Board of Directors
Aetna Life Insurance and Annuity Company:
We have audited the accompanying consolidated balance sheets of Aetna Life
Insurance and Annuity Company and Subsidiaries as of December 31, 1995 and 1994,
and the related consolidated statements of income, changes in shareholder's
equity and cash flows for each of the years in the three-year period ended
December 31, 1995. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Aetna Life Insurance
and Annuity Company and Subsidiaries as of December 31, 1995 and 1994, and the
results of their operations and their cash flows for each of the years in the
three-year period ended December 31, 1995, in conformity with generally accepted
accounting principles.
As discussed in Note 1 to the consolidated financial statements, in 1993 the
Company changed its methods of accounting for certain investments in debt and
equity securities.
KPMG Peat Marwick LLP
Hartford, Connecticut
February 6, 1996
F-2
<PAGE>
AETNA LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES
(A wholly owned subsidiary of Aetna Retirement Services, Inc.)
Consolidated Statements of Income
(millions)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------
1995 1994 1993
-------- -------- --------
<S> <C> <C> <C>
Revenue:
Premiums............................................. $ 130.8 $ 124.2 $ 82.1
Charges assessed against policyholders............... 318.9 279.0 251.5
Net investment income................................ 1,004.3 917.2 911.9
Net realized capital gains........................... 41.3 1.5 9.5
Other income......................................... 42.0 10.3 9.5
-------- -------- --------
Total revenue...................................... 1,537.3 1,332.2 1,264.5
-------- -------- --------
Benefits and expenses:
Current and future benefits.......................... 915.3 854.1 818.4
Operating expenses................................... 318.7 235.2 207.2
Amortization of deferred policy acquisition costs.... 43.3 26.4 19.8
-------- -------- --------
Total benefits and expenses........................ 1,277.3 1,115.7 1,045.4
-------- -------- --------
Income before federal income taxes..................... 260.0 216.5 219.1
Federal income taxes................................. 84.1 71.2 76.2
-------- -------- --------
Net income............................................. $ 175.9 $ 145.3 $ 142.9
-------- -------- --------
-------- -------- --------
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
F-3
<PAGE>
AETNA LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES
(A wholly owned subsidiary of Aetna Retirement Services, Inc.)
Consolidated Balance Sheets
(millions)
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1995 1994
--------- ---------
<S> <C> <C>
ASSETS
- -------------------------------------------------------
Investments:
Debt securities, available for sale:
(amortized cost: $11,923.7 and $10,577.8)........... $12,720.8 $10,191.4
Equity securities, available for sale:
Non-redeemable preferred stock (cost: $51.3 and
$43.3)............................................ 57.6 47.2
Investment in affiliated mutual funds (cost: $173.4
and $187.1)....................................... 191.8 181.9
Common stock (cost: $6.9 at December 31, 1995)..... 8.2 --
Short-term investments............................... 15.1 98.0
Mortgage loans....................................... 21.2 9.9
Policy loans......................................... 338.6 248.7
Limited partnership.................................. -- 24.4
--------- ---------
Total investments................................ 13,353.3 10,801.5
Cash and cash equivalents.............................. 568.8 623.3
Accrued investment income.............................. 175.5 142.2
Premiums due and other receivables..................... 37.3 75.8
Deferred policy acquisition costs...................... 1,341.3 1,164.3
Reinsurance loan to affiliate.......................... 655.5 690.3
Other assets........................................... 26.2 15.9
Separate Accounts assets............................... 10,987.0 7,420.8
--------- ---------
Total assets..................................... $27,144.9 $20,934.1
--------- ---------
--------- ---------
LIABILITIES AND SHAREHOLDER'S EQUITY
- -------------------------------------------------------
Liabilities:
Future policy benefits............................... $ 3,594.6 $ 2,912.7
Unpaid claims and claim expenses..................... 27.2 23.8
Policyholders' funds left with the Company........... 10,500.1 8,949.3
--------- ---------
Total insurance reserve liabilities.............. 14,121.9 11,885.8
Other liabilities.................................... 259.2 302.1
Federal income taxes:
Current............................................ 24.2 3.4
Deferred........................................... 169.6 233.5
Separate Accounts liabilities........................ 10,987.0 7,420.8
--------- ---------
Total liabilities................................ 25,561.9 19,845.6
--------- ---------
--------- ---------
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 (losses)................ 132.5 (189.0)
Retained earnings.................................... 1,040.1 867.1
--------- ---------
Total shareholder's equity....................... 1,583.0 1,088.5
--------- ---------
Total liabilities and shareholder's equity..... $27,144.9 $20,934.1
--------- ---------
--------- ---------
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
F-4
<PAGE>
AETNA LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES
(A wholly owned subsidiary of Aetna Retirement Services, Inc.)
Consolidated Statements of Changes in Shareholder's Equity
(millions)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------
1995 1994 1993
--------- --------- ---------
<S> <C> <C> <C>
Shareholder's equity, beginning of year................ $ 1,088.5 $ 1,246.7 $ 990.1
Net change in unrealized capital gains (losses)........ 321.5 (303.5) 113.7
Net income............................................. 175.9 145.3 142.9
Common stock dividends declared........................ (2.9) -- --
--------- --------- ---------
Shareholder's equity, end of year...................... $ 1,583.0 $ 1,088.5 $ 1,246.7
--------- --------- ---------
--------- --------- ---------
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
F-5
<PAGE>
AETNA LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES
(A wholly owned subsidiary of Aetna Retirement Services, Inc.)
Consolidated Statements of Cash Flows
(millions)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------------------
1995 1994 1993
---------- ---------- ----------
<S> <C> <C> <C>
Cash Flows from Operating Activities:
Net income........................................... $ 175.9 $ 145.3 $ 142.9
Adjustments to reconcile net income to net cash
provided by operating activities:
Increase in accrued investment income.............. (33.3) (17.5) (11.1)
Decrease (increase) in premiums due and other
receivables....................................... 25.4 1.3 (5.6)
Increase in policy loans........................... (89.9) (46.0) (36.4)
Increase in deferred policy acquisition costs...... (177.0) (105.9) (60.5)
Decrease in reinsurance loan to affiliate.......... 34.8 27.8 31.8
Net increase in universal life account balances.... 393.4 164.7 126.4
Increase in other insurance reserve liabilities.... 79.0 75.1 86.1
Net increase in other liabilities and other
assets............................................ 15.0 53.9 7.0
Decrease in federal income taxes................... (6.5) (11.7) (3.7)
Net accretion of discount on bonds................. (66.4) (77.9) (88.1)
Net realized capital gains......................... (41.3) (1.5) (9.5)
Other, net......................................... -- (1.0) 0.2
---------- ---------- ----------
Net cash provided by operating activities........ 309.1 206.6 179.5
---------- ---------- ----------
Cash Flows from Investing Activities:
Proceeds from sales of:
Debt securities available for sale................. 4,207.2 3,593.8 473.9
Equity securities.................................. 180.8 93.1 89.6
Mortgage loans..................................... 10.7 -- --
Limited partnership................................ 26.6 -- --
Investment maturities and collections of:
Debt securities available for sale................. 583.9 1,289.2 2,133.3
Short-term investments............................. 106.1 30.4 19.7
Cost of investment purchases in:
Debt securities.................................... (6,034.0) (5,621.4) (3,669.2)
Equity securities.................................. (170.9) (162.5) (157.5)
Short-term investments............................. (24.7) (106.1) (41.3)
Mortgage loans..................................... (21.3) -- --
Limited partnership................................ -- (25.0) --
---------- ---------- ----------
Net cash used for investing activities........... (1,135.6) (908.5) (1,151.5)
---------- ---------- ----------
Cash Flows from Financing Activities:
Deposits and interest credited for investment
contracts........................................... 1,884.5 1,737.8 2,117.8
Withdrawals of investment contracts.................. (1,109.6) (948.7) (1,000.3)
Dividends paid to shareholder........................ (2.9) -- --
---------- ---------- ----------
Net cash provided by financing activities........ 772.0 789.1 1,117.5
---------- ---------- ----------
Net (decrease) increase in cash and cash equivalents... (54.5) 87.2 145.5
Cash and cash equivalents, beginning of year........... 623.3 536.1 390.6
---------- ---------- ----------
Cash and cash equivalents, end of year................. $ 568.8 $ 623.3 $ 536.1
---------- ---------- ----------
---------- ---------- ----------
Supplemental cash flow information:
Income taxes paid, net............................... $ 90.2 $ 82.6 $ 79.9
---------- ---------- ----------
---------- ---------- ----------
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
F-6
<PAGE>
AETNA LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES
(A wholly owned subsidiary of Aetna Retirement Services, Inc.)
Notes to Consolidated Financial Statements
December 31, 1995, 1994, and 1993
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Aetna Life Insurance and Annuity Company and its wholly owned subsidiaries
(collectively, the "Company") is a provider of financial services and life
insurance products in the United States. The Company has two business segments,
financial services and life insurance.
The financial services products include individual and group annuity contracts
which offer a variety of funding and distribution options for personal and
employer-sponsored retirement plans that qualify under Internal Revenue Code
Sections 401, 403, 408 and 457, and individual and group non-qualified annuity
contracts. These contracts may be immediate or deferred and are offered
primarily to individuals, pension plans, small businesses and employer-sponsored
groups in the health care, government, education (collectively "not-for-profit"
organizations) and corporate markets. Financial services also include pension
plan administrative services.
The life insurance products include universal life, variable universal life,
interest sensitive whole life and term insurance. These products are offered
primarily to individuals, small businesses, employer sponsored groups and
executives of Fortune 2000 companies.
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. Aetna Life Insurance and Annuity Company is a
wholly owned subsidiary of Aetna Retirement Services, Inc. ("ARSI"). ARSI is a
wholly owned subsidiary of Aetna Life and Casualty Company ("Aetna"). Two
subsidiaries, Systematized Benefits Administrators, Inc. ("SBA"), and Aetna
Investment Services, Inc. ("AISI"), which were previously reported in the
consolidated financial statements were distributed in the form of dividends to
ARSI in December of 1995. The impact to the Company's financial statements of
distributing these dividends was immaterial.
The consolidated financial statements have been prepared in conformity with
generally accepted accounting principles. Intercompany transactions have been
eliminated. Certain reclassifications have been made to 1994 and 1993 financial
information to conform to the 1995 presentation.
ACCOUNTING CHANGES
Accounting for Certain Investments in Debt and Equity Securities
On December 31, 1993, the Company adopted Financial Accounting Standard ("FAS")
No. 115, Accounting for Certain Investments in Debt and Equity Securities, which
requires the classification of debt securities into three categories: "held to
maturity", which are carried at amortized cost; "available for sale", which are
carried at fair value with changes in fair value recognized as a component of
shareholder's equity; and "trading", which are carried at fair value with
immediate recognition in income of changes in fair value.
Initial adoption of this standard resulted in a net increase of $106.8 million,
net of taxes of $57.5 million, to net unrealized gains in shareholder's equity.
These amounts exclude gains and losses allocable to experience-rated (including
universal life) contractholders. Adoption of FAS No. 115 did not have a material
effect on deferred policy acquisition costs.
F-7
<PAGE>
AETNA LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES
(A wholly owned subsidiary of Aetna Retirement Services, Inc.)
Notes to Consolidated Financial Statements (continued)
December 31, 1995, 1994, and 1993
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts reported in the financial statements and accompanying notes.
Actual results could differ from reported results using those estimates.
CASH AND CASH EQUIVALENT
Cash and cash equivalents include cash on hand, money market instruments and
other debt issues with a maturity of ninety days or less when purchased.
INVESTMENTS
Debt Securities
At December 31, 1995 and 1994, all of the Company's debt securities are
classified as available for sale and carried at fair value. These securities are
written down (as realized losses) for other than temporary decline in value.
Unrealized gains and losses related to these securities, after deducting amounts
allocable to experience-rated contractholders and related taxes, are reflected
in shareholder's equity.
Fair values for debt securities are based on quoted market prices or dealer
quotations. Where quoted market prices or dealer quotations are not available,
fair values are measured utilizing quoted market prices for similar securities
or by using discounted cash flow methods. Cost for mortgage-backed securities is
adjusted for unamortized premiums and discounts, which are amortized using the
interest method over the estimated remaining term of the securities, adjusted
for anticipated prepayments.
Purchases and sales of debt securities are recorded on the trade date.
Equity Securities
Equity securities are classified as available for sale and carried at fair value
based on quoted market prices or dealer quotations. Equity securities are
written down (as realized losses) for other than temporary declines in value.
Unrealized gains and losses related to such securities are reflected in
shareholder's equity. Purchases and sales are recorded on the trade date.
The investment in affiliated mutual funds represents an investment in the Aetna
Series Fund, Inc., a retail mutual fund which has been seeded by the Company,
and is carried at fair value.
Mortgage Loans and Policy Loans
Mortgage loans and policy loans are carried at unpaid principal balances net of
valuation reserves, which approximates fair value, and are generally secured.
Purchases and sales of mortgage loans are recorded on the closing date.
F-8
<PAGE>
AETNA LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES
(A wholly owned subsidiary of Aetna Retirement Services, Inc.)
Notes to Consolidated Financial Statements (continued)
December 31, 1995, 1994, and 1993
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Limited Partnership
The Company's limited partnership investment was carried at the amount invested
plus the Company's share of undistributed operating results and unrealized gains
(losses), which approximates fair value. The Company disposed of the limited
partnership during 1995.
Short-Term Investments
Short-term investments, consisting primarily of money market instruments and
other debt issues purchased with an original maturity of over ninety days and
less than one year, are considered available for sale and are carried at fair
value, which approximates amortized cost.
DEFERRED POLICY ACQUISITION COSTS
Certain costs of acquiring insurance business have been deferred. These costs,
all of which vary with and are primarily related to the production of new
business, consist principally of commissions, certain expenses of underwriting
and issuing contracts and certain agency expenses. For fixed ordinary life
contracts, such costs are amortized over expected premium-paying periods. For
universal life and certain annuity contracts, such costs are amortized in
proportion to estimated gross profits and adjusted to reflect actual gross
profits. These costs are amortized over twenty years for annuity pension
contracts, and over the contract period for universal life contracts.
Deferred policy acquisition costs are written off to the extent that it is
determined that future policy premiums and investment income or gross profits
would not be adequate to cover related losses and expenses.
INSURANCE RESERVE LIABILITIES
The Company's liabilities include reserves related to fixed ordinary life, fixed
universal life and fixed annuity contracts. Reserves for future policy benefits
for fixed ordinary life contracts are computed on the basis of assumed
investment yield, assumed mortality, withdrawals and expenses, including a
margin for adverse deviation, which generally vary by plan, year of issue and
policy duration. Reserve interest rates range from 2.25% to 10.00%. Assumed
investment yield is based on the Company's experience. Mortality and withdrawal
rate assumptions are based on relevant Aetna experience and are periodically
reviewed against both industry standards and experience.
Reserves for fixed universal life (included in Future Policy Benefits) and fixed
deferred annuity contracts (included in Policyholders' Funds Left With the
Company) are equal to the fund value. The fund value is equal to cumulative
deposits less charges plus credited interest thereon, without reduction for
possible future penalties assessed on premature withdrawal. For guaranteed
interest options, the interest credited ranged from 4.00% to 6.38% in 1995 and
4.00% to 5.85% in 1994. For all other fixed options, the interest credited
ranged from 5.00% to 7.00% in 1995 and 5.00% to 7.50% in 1994.
Reserves for fixed annuity contracts in the annuity period and for future
amounts due under settlement options are computed actuarially using the 1971
Individual Annuity Mortality Table, the 1983 Individual Annuity Mortality Table,
the
F-9
<PAGE>
AETNA LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES
(A wholly owned subsidiary of Aetna Retirement Services, Inc.)
Notes to Consolidated Financial Statements (continued)
December 31, 1995, 1994, and 1993
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
1983 Group Annuity Mortality Table and, in some cases, mortality improvement
according to scales G and H, at assumed interest rates ranging from 3.5% to
9.5%. Reserves relating to contracts with life contingencies are included in
Future Policy Benefits. For other contracts, the reserves are reflected in
Policyholders' Funds Left With the Company.
Unpaid claims for all lines of insurance include benefits for reported losses
and estimates of benefits for losses incurred but not reported.
PREMIUMS, CHARGES ASSESSED AGAINST POLICYHOLDERS, BENEFITS AND EXPENSES
Premiums are recorded as revenue when due for fixed ordinary life contracts.
Charges assessed against policyholders' funds for cost of insurance, surrender
charges, actuarial margin and other fees are recorded as revenue for universal
life and certain annuity contracts. Policy benefits and expenses are recorded in
relation to the associated premiums or gross profit so as to result in
recognition of profits over the expected lives of the contracts.
SEPARATE ACCOUNTS
Assets held under variable universal life, variable life and variable annuity
contracts are segregated in Separate Accounts and are invested, as designated by
the contractholder or participant under a contract, in shares of Aetna Variable
Fund, Aetna Income Shares, Aetna Variable Encore Fund, Aetna Investment Advisers
Fund, Inc., Aetna GET Fund, or The Aetna Series Fund Inc., which are managed by
the Company or other selected mutual funds not managed by the Company. Separate
Accounts assets and liabilities are carried at fair value except for those
relating to a guaranteed interest option which is offered through a Separate
Account. The assets of the Separate Account supporting the guaranteed interest
option are carried at an amortized cost of $322.2 million for 1995 (fair value
$343.9 million) and $149.7 million for 1994 (fair value $146.3 million), since
the Company bears the investment risk where the contract is held to maturity.
Reserves relating to the guaranteed interest option are maintained at fund value
and reflect interest credited at rates ranging from 4.5% to 8.38% in both 1995
and 1994. Separate Accounts assets and liabilities are shown as separate
captions in the Consolidated Balance Sheets. Deposits, investment income and net
realized and unrealized capital gains (losses) of the Separate Accounts are not
reflected in the Consolidated Statements of Income (with the exception of
realized capital gains (losses) on the sale of assets supporting the guaranteed
interest option). The Consolidated Statements of Cash Flows do not reflect
investment activity of the Separate Accounts.
FEDERAL INCOME TAXES
The Company is included in the consolidated federal income tax return of Aetna.
The Company is taxed at regular corporate rates after adjusting income reported
for financial statement purposes for certain items. Deferred income tax benefits
result from changes during the year in cumulative temporary differences between
the tax basis and book basis of assets and liabilities.
F-10
<PAGE>
AETNA LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES
(A wholly owned subsidiary of Aetna Retirement Services, Inc.)
Notes to Consolidated Financial Statements (continued)
December 31, 1995, 1994, and 1993
2. INVESTMENTS
Investments in debt securities available for sale as of December 31, 1995 were
as follows:
<TABLE>
<CAPTION>
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
--------- ---------- ---------- ---------
(MILLIONS)
<S> <C> <C> <C> <C>
U.S. Treasury securities and obligations of
U.S. government agencies and corporations... $ 539.5 $ 47.5 $ -- $ 587.0
Obligations of states and political
subdivisions................................ 41.4 12.4 -- 53.8
U.S. Corporate securities:
Financial.................................. 2,764.4 110.3 2.1 2,872.6
Utilities.................................. 454.4 27.8 1.0 481.2
Other...................................... 2,177.7 159.5 1.2 2,336.0
--------- ---------- ----- ---------
Total U.S. Corporate securities............ 5,396.5 297.6 4.3 5,689.8
Foreign securities:
Government................................. 316.4 26.1 2.0 340.5
Financial.................................. 534.2 45.4 3.5 576.1
Utilities.................................. 236.3 32.9 -- 269.2
Other...................................... 215.7 15.1 -- 230.8
--------- ---------- ----- ---------
Total Foreign securities................... 1,302.6 119.5 5.5 1,416.6
Residential mortgage-backed securities:
Residential pass-throughs.................. 556.7 99.2 1.8 654.1
Residential CMOs........................... 2,383.9 167.6 2.2 2,549.3
--------- ---------- ----- ---------
Total Residential mortgage-backed
securities................................ 2,940.6 266.8 4.0 3,203.4
Commercial/Multifamily mortgage-backed
securities.................................. 741.9 32.3 0.2 774.0
--------- ---------- ----- ---------
Total Mortgage-backed securities........... 3,682.5 299.1 4.2 3,977.4
Other asset-backed securities................ 961.2 35.5 0.5 996.2
--------- ---------- ----- ---------
Total debt securities available for sale..... $11,923.7 $811.6 $14.5 $12,720.8
--------- ---------- ----- ---------
--------- ---------- ----- ---------
</TABLE>
F-11
<PAGE>
AETNA LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES
(A wholly owned subsidiary of Aetna Retirement Services, Inc.)
Notes to Consolidated Financial Statements (continued)
December 31, 1995, 1994, and 1993
2. INVESTMENTS (CONTINUED)
Investments in debt securities available for sale as of December 31, 1994 were
as follows:
<TABLE>
<CAPTION>
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
--------- ---------- ---------- ---------
(MILLIONS)
<S> <C> <C> <C> <C>
U.S. Treasury securities and obligations of
U.S. government agencies and corporations... $ 1,396.1 $ 2.0 $ 84.2 $ 1,313.9
Obligations of states and political
subdivisions................................ 37.9 1.2 -- 39.1
U.S. Corporate securities:
Financial.................................. 2,216.9 3.8 109.4 2,111.3
Utilities.................................. 100.1 -- 7.9 92.2
Other...................................... 1,344.3 6.0 67.9 1,282.4
--------- ---------- ---------- ---------
Total U.S. Corporate securities............ 3,661.3 9.8 185.2 3,485.9
Foreign securities:
Government................................. 434.4 1.2 33.9 401.7
Financial.................................. 368.2 1.1 23.0 346.3
Utilities.................................. 204.4 2.5 9.5 197.4
Other...................................... 46.3 0.8 1.5 45.6
--------- ---------- ---------- ---------
Total Foreign securities................... 1,053.3 5.6 67.9 991.0
Residential mortgage-backed securities:
Residential pass-throughs.................. 627.1 81.5 5.0 703.6
Residential CMOs........................... 2,671.0 32.9 139.4 2,564.5
--------- ---------- ---------- ---------
Total Residential mortgage-backed
securities.................................. 3,298.1 114.4 144.4 3,268.1
Commercial/Multifamily mortgage-backed
securities.................................. 435.0 0.2 21.3 413.9
--------- ---------- ---------- ---------
Total Mortgage-backed securities............. 3,733.1 114.6 165.7 3,682.0
Other asset-backed securities................ 696.1 0.2 16.8 679.5
--------- ---------- ---------- ---------
Total debt securities available for sale..... $10,577.8 $133.4 $519.8 $10,191.4
--------- ---------- ---------- ---------
--------- ---------- ---------- ---------
</TABLE>
At December 31, 1995 and 1994, net unrealized appreciation (depreciation) of
$797.1 million and $(386.4) million, respectively, on available for sale debt
securities included $619.1 million and $(308.6) million, respectively, related
to experience-rated contractholders, which were not included in shareholder's
equity.
F-12
<PAGE>
AETNA LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES
(A wholly owned subsidiary of Aetna Retirement Services, Inc.)
Notes to Consolidated Financial Statements (continued)
December 31, 1995, 1994, and 1993
2. INVESTMENTS (CONTINUED)
The amortized cost and fair value of debt securities for the year ended December
31, 1995 are shown below by contractual maturity. Actual maturities may differ
from contractual maturities because securities may be restructured, called, or
prepaid.
<TABLE>
<CAPTION>
AMORTIZED FAIR
COST VALUE
--------- ---------
(MILLIONS)
<S> <C> <C>
Due to mature:
One year or less..................................... $ 348.8 $ 351.1
After one year through five years.................... 2,100.2 2,159.5
After five years through ten years................... 2,516.0 2,663.4
After ten years...................................... 2,315.0 2,573.2
Mortgage-backed securities........................... 3,682.5 3,977.4
Other asset-backed securities........................ 961.2 996.2
--------- ---------
Total................................................ $11,923.7 $12,720.8
--------- ---------
--------- ---------
</TABLE>
The Company engages in securities lending whereby certain securities from its
portfolio are loaned to other institutions for short periods of time. Cash
collateral, which is in excess of the market value of the loaned securities, is
deposited by the borrower with a lending agent, and retained and invested by the
lending agent to generate additional income for the Company. The market value of
the loaned securities is monitored on a daily basis with additional collateral
obtained or refunded as the market value fluctuates. At December 31, 1995, the
Company had loaned securities (which are reflected as invested assets on the
Consolidated Balance Sheets) with a market value of approximately $264.5
million.
At December 31, 1995 and 1994, debt securities carried at $7.4 million and $7.0
million, respectively, were on deposit as required by regulatory authorities.
The valuation reserve for mortgage loans was $3.1 million at December 31, 1994.
There was no valuation reserve for mortgage loans at December 31, 1995. The
carrying value of non-income producing investments was $0.1 million and $0.2
million at December 31, 1995 and 1994, respectively.
F-13
<PAGE>
AETNA LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES
(A wholly owned subsidiary of Aetna Retirement Services, Inc.)
Notes to Consolidated Financial Statements (continued)
December 31, 1995, 1994, and 1993
2. INVESTMENTS (CONTINUED)
Investments in a single issuer, other than obligations of the U.S. government,
with a carrying value in excess of 10% of the Company's shareholder's equity at
December 31, 1995 are as follows:
<TABLE>
<CAPTION>
AMORTIZED
DEBT SECURITIES COST FAIR VALUE
---------- ----------
(MILLIONS)
<S> <C> <C>
General Electric Corporation........................... $ 314.9 $ 329.3
General Motors Corporation............................. 273.9 284.5
Associates Corporation of North America................ 230.2 239.1
Society National Bank.................................. 203.5 222.3
Ciesco, L.P............................................ 194.9 194.9
Countrywide Funding.................................... 171.2 172.7
Baxter International................................... 168.9 168.9
Time Warner............................................ 158.6 166.1
Ford Motor Company..................................... 156.7 162.6
</TABLE>
The portfolio of debt securities at December 31, 1995 and 1994 included $662.5
million and $318.3 million, respectively, (5% and 3%, respectively, of the debt
securities) of investments that are considered "below investment grade". "Below
investment grade" securities are defined to be securities that carry a rating
below BBB-/Baa3, by Standard & Poors/ Moody's Investor Services, respectively.
The increase in below investment grade securities is the result of a change in
investment strategy, which has reduced the Company's holdings in residential
mortgage-back securities and increased the Company's holdings in corporate
securities. Residential mortgage-back securities are subject to higher
prepayment risk and lower credit risk, while corporate securities earning a
comparable yield are subject to higher credit risk and lower prepayment risk. We
expect the percentage of below investment grade securities will increase in
1996, but we expect that the overall average quality of the portfolio of debt
securities will remain at AA-. Of these below investment grade assets, $14.5
million and $31.8 million, at December 31, 1995 and 1994, respectively, were
investments that were purchased at investment grade, but whose ratings have
since been downgraded.
Included in residential mortgage-back securities are collateralized mortgage
obligations ("CMOs") with carrying values of $2.5 billion and $2.6 billion at
December 31, 1995 and 1994, respectively. The principal risks inherent in
holding CMOs are prepayment and extension risks related to dramatic decreases
and increases in interest rates whereby the CMOs would be subject to repayments
of principal earlier or later than originally anticipated. At December 31, 1995
and 1994, approximately 79% and 85%, respectively, of the Company's CMO holdings
consisted of sequential and planned amortization class debt securities which are
subject to less prepayment and extension risk than other CMO instruments. At
December 31, 1995 and 1994, approximately 81% and 82%, respectively, of the
Company's CMO holdings were collateralized by residential mortgage loans, on
which the timely payment of principal and interest was backed by specified
government agencies (e.g., GNMA, FNMA, FHLMC).
If due to declining interest rates, principal was to be repaid earlier than
originally anticipated, the Company could be affected by a decrease in
investment income due to the reinvestment of these funds at a lower interest
rate. Such prepayments may result in a duration mismatch between assets and
liabilities which could be corrected as cash from prepayments could be
reinvested at an appropriate duration to adjust the mismatch.
F-14
<PAGE>
AETNA LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES
(A wholly owned subsidiary of Aetna Retirement Services, Inc.)
Notes to Consolidated Financial Statements (continued)
December 31, 1995, 1994, and 1993
2. INVESTMENTS (CONTINUED)
Conversely, if due to increasing interest rates, principal was to be repaid
slower than originally anticipated, the Company could be affected by a decrease
in cash flow which reduces the ability to reinvest expected principal repayments
at higher interest rates. Such slower payments may result in a duration mismatch
between assets and liabilities which could be corrected as available cash flow
could be reinvested at an appropriate duration to adjust the mismatch.
At December 31, 1995 and 1994, approximately 3% and 4%, respectively, of the
Company's CMO holdings consisted of interest-only strips ("IOs") or
principal-only strips ("POs"). IOs receive payments of interest and POs receive
payments of principal on the underlying pool of mortgages. The risk inherent in
holding POs is extension risk related to dramatic increases in interest rates
whereby the future payments due on POs could be repaid much slower than
originally anticipated. The extension risks inherent in holding POs was
mitigated somewhat by offsetting positions in IOs. During dramatic increases in
interest rates, IOs would generate more future payments than originally
anticipated.
The risk inherent in holding IOs is prepayment risk related to dramatic
decreases in interest rates whereby future IO cash flows could be much less than
originally anticipated and in some cases could be less than the original cost of
the IO. The risks inherent in IOs are mitigated somewhat by holding offsetting
positions in POs. During dramatic decreases in interest rates POs would generate
future cash flows much quicker than originally anticipated.
Investments in available for sale equity securities were as follows:
<TABLE>
<CAPTION>
GROSS GROSS
UNREALIZED UNREALIZED
COST GAINS LOSSES FAIR VALUE
------ ---------- ---------- ----------
(MILLIONS)
<S> <C> <C> <C> <C>
1995
Equity Securities................ $231.6 $ 27.2 $ 1.2 $ 257.6
------ ----- --- ----------
1994
Equity Securities................ $230.5 $ 6.5 $ 7.9 $ 229.1
------ ----- --- ----------
</TABLE>
3. CAPITAL GAINS AND LOSSES ON INVESTMENT OPERATIONS
Realized capital gains or losses are the difference between proceeds received
from investments sold or prepaid, and amortized cost. Net realized capital gains
as reflected in the Consolidated Statements of Income are after deductions for
net realized capital gains (losses) allocated to experience-rated contracts of
$61.1 million, $(29.1) million and $(54.8) million for the years ended December
31, 1995, 1994, and 1993, respectively. Net realized capital gains (losses)
allocated to experience-rated contracts are deferred and subsequently reflected
in credited rates on an amortized basis. Net unamortized gains (losses),
reflected as a component of Policyholders' Funds Left With the Company, were
$7.3 million and $(50.7) million at the end of December 31, 1995 and 1994,
respectively.
Changes to the mortgage loan valuation reserve and writedowns on debt securities
are included in net realized capital gains (losses) and amounted to $3.1
million, $1.1 million and $(98.5) million, of which $2.2 million, $0.8 million
and $(91.5) million were allocable to experience-rated contractholders, for the
years ended December 31, 1995, 1994 and 1993, respectively. The 1993 losses were
primarily related to writedowns of interest-only mortgage-backed securities to
their fair value.
F-15
<PAGE>
AETNA LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES
(A wholly owned subsidiary of Aetna Retirement Services, Inc.)
Notes to Consolidated Financial Statements (continued)
December 31, 1995, 1994, and 1993
3. CAPITAL GAINS AND LOSSES ON INVESTMENT OPERATIONS (CONTINUED)
Net realized capital gains (losses) on investments, net of amounts allocated to
experience-rated contracts, were as follows:
<TABLE>
<CAPTION>
1995 1994 1993
----- ----- ------
(MILLIONS)
<S> <C> <C> <C>
Debt securities........................................ $32.8 $ 1.0 $ 9.6
Equity securities...................................... 8.3 0.2 0.1
Mortgage loans......................................... 0.2 0.3 (0.2)
----- ----- ------
Pretax realized capital gains.......................... $41.3 $ 1.5 $ 9.5
----- ----- ------
After-tax realized capital gains....................... $25.8 $ 1.0 $ 6.2
----- ----- ------
</TABLE>
Gross gains of $44.6 million, $26.6 million and $33.3 million and gross losses
of $11.8 million, $25.6 million and $23.7 million were realized from the sales
of investments in debt securities in 1995, 1994 and 1993, respectively.
Changes in unrealized capital gains (losses), excluding changes in unrealized
capital gains (losses) related to experience-rated contracts, for the years
ended December 31, were as follows:
<TABLE>
<CAPTION>
1995 1994 1993
------ -------- ------
(MILLIONS)
<S> <C> <C> <C>
Debt securities........................................ $255.9 $ (242.1) $164.3
Equity securities...................................... 27.3 (13.3) 10.6
Limited partnership.................................... 1.8 (1.8) --
------ -------- ------
285.0 (257.2) 174.9
Deferred federal income taxes (See Note 6)............. (36.5) 46.3 61.2
------ -------- ------
Net change in unrealized capital gains (losses)........ $321.5 $ (303.5) $113.7
------ -------- ------
------ -------- ------
</TABLE>
Net unrealized capital gains (losses) allocable to experience-rated contracts of
$515.0 million and $104.1 million at December 31, 1995 and $(260.9) million and
$(47.7) million at December 31, 1994 are reflected on the Consolidated Balance
Sheet in Policyholders' Funds Left With the Company and Future Policy Benefits,
respectively, and are not included in shareholder's equity.
F-16
<PAGE>
AETNA LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES
(A wholly owned subsidiary of Aetna Retirement Services, Inc.)
Notes to Consolidated Financial Statements (continued)
December 31, 1995, 1994, and 1993
3. CAPITAL GAINS AND LOSSES ON INVESTMENT OPERATIONS (CONTINUED)
Shareholder's equity included the following unrealized capital gains (losses),
which are net of amounts allocable to experience-rated contractholders, at
December 31:
<TABLE>
<CAPTION>
1995 1994 1993
------ ------- -------
(MILLIONS)
<S> <C> <C> <C>
Debt securities
Gross unrealized capital gains....................... $179.3 $ 27.4 $ 164.3
Gross unrealized capital losses...................... (1.3) (105.2) --
------ ------- -------
178.0 (77.8) 164.3
Equity securities
Gross unrealized capital gains....................... 27.2 6.5 12.0
Gross unrealized capital losses...................... (1.2) (7.9) (0.1)
------ ------- -------
26.0 (1.4) 11.9
Limited Partnership
Gross unrealized capital gains....................... -- -- --
Gross unrealized capital losses...................... -- (1.8) --
------ ------- -------
Deferred federal income taxes (See Note 6)............. 71.5 108.0 61.7
------ ------- -------
Net unrealized capital gains (losses).................. $132.5 $(189.0) $ 114.5
------ ------- -------
------ ------- -------
</TABLE>
4. NET INVESTMENT INCOME
Sources of net investment income were as follows:
<TABLE>
<CAPTION>
1995 1994 1993
-------- ------ ------
(MILLIONS)
<S> <C> <C> <C>
Debt securities........................................ $ 891.5 $823.9 $828.0
Preferred stock........................................ 4.2 3.9 2.3
Investment in affiliated mutual funds.................. 14.9 5.2 2.9
Mortgage loans......................................... 1.4 1.4 1.5
Policy loans........................................... 13.7 11.5 10.8
Reinsurance loan to affiliate.......................... 46.5 51.5 53.3
Cash equivalents....................................... 38.9 29.5 16.8
Other.................................................. 8.4 6.7 7.7
-------- ------ ------
Gross investment income................................ 1,019.5 933.6 923.3
Less investment expenses............................... (15.2) (16.4) (11.4)
-------- ------ ------
Net investment income.................................. $1,004.3 $917.2 $911.9
-------- ------ ------
-------- ------ ------
</TABLE>
Net investment income includes amounts allocable to experience-rated
contractholders of $744.2 million, $677.1 million and $661.3 million for the
years ended December 31, 1995, 1994 and 1993, respectively. Interest credited to
contractholders is included in Current and Future Benefits.
F-17
<PAGE>
AETNA LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES
(A wholly owned subsidiary of Aetna Retirement Services, Inc.)
Notes to Consolidated Financial Statements (continued)
December 31, 1995, 1994, and 1993
5. DIVIDEND RESTRICTIONS AND SHAREHOLDER'S EQUITY
The Company distributed $2.9 million in the form of dividends of two of its
subsidiaries, SBA and AISI, to Aetna Retirement Services, Inc. in 1995.
The amount of dividends that may be paid to the shareholder in 1996 without
prior approval by the Insurance Commissioner of the State of Connecticut is
$70.0 million.
The Insurance Department of the State of Connecticut (the "Department")
recognizes as net income and shareholder's equity those amounts determined in
conformity with statutory accounting practices prescribed or permitted by the
Department, which differ in certain respects from generally accepted accounting
principles. Statutory net income was $70.0 million, $64.9 million and $77.6
million for the years ended December 31, 1995, 1994 and 1993, respectively.
Statutory shareholder's equity was $670.7 million and $615.0 million as of
December 31, 1995 and 1994, respectively.
At December 31, 1995 and December 31, 1994, the Company does not utilize any
statutory accounting practices which are not prescribed by insurance regulators
that, individually or in the aggregate, materially affect statutory
shareholder's equity.
6. FEDERAL INCOME TAXES
The Company is included in the consolidated federal income tax return of Aetna.
Aetna allocates to each member an amount approximating the tax it would have
incurred were it not a member of the consolidated group, and credits the member
for the use of its tax saving attributes in the consolidated return.
In August 1993, the Omnibus Budget Reconciliation Act of 1993 (OBRA) was enacted
which resulted in an increase in the federal corporate tax rate from 34% to 35%
retroactive to January 1, 1993. The enactment of OBRA resulted in an increase in
the deferred tax liability of $3.4 million at date of enactment, which is
included in the 1993 deferred tax expense.
Components of income tax expense (benefits) were as follows:
<TABLE>
<CAPTION>
1995 1994 1993
----- ----- -------
(MILLIONS)
<S> <C> <C> <C>
Current taxes (benefits):
Income from operations............................... $82.9 $78.7 $ 87.1
Net realized capital gains........................... 28.5 (33.2) 18.1
----- ----- -------
111.4 45.5 105.2
----- ----- -------
Deferred taxes (benefits):
Income from operations............................... (14.4) (8.0) (14.2)
Net realized capital gains........................... (12.9) 33.7 (14.8)
----- ----- -------
(27.3) 25.7 (29.0)
----- ----- -------
Total................................................ $84.1 $71.2 $ 76.2
----- ----- -------
----- ----- -------
</TABLE>
F-18
<PAGE>
AETNA LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES
(A wholly owned subsidiary of Aetna Retirement Services, Inc.)
Notes to Consolidated Financial Statements (continued)
December 31, 1995, 1994, and 1993
6. FEDERAL INCOME TAXES (CONTINUED)
Income tax expense was different from the amount computed by applying the
federal income tax rate to income before federal income taxes for the following
reasons:
<TABLE>
<CAPTION>
1995 1994 1993
------ ------ ------
(MILLIONS)
<S> <C> <C> <C>
Income before federal income taxes..................... $260.0 $216.5 $219.1
Tax rate............................................... 35% 35% 35%
------ ------ ------
Application of the tax rate............................ 91.0 75.8 76.7
------ ------ ------
Tax effect of:
Excludable dividends................................. (9.3) (8.6) (8.7)
Tax reserve adjustments.............................. 3.9 2.9 4.7
Reinsurance transaction.............................. (0.5) 1.9 (0.2)
Tax rate change on deferred liabilities.............. -- -- 3.7
Other, net........................................... (1.0) (0.8) --
------ ------ ------
Income tax expense................................... $ 84.1 $ 71.2 $ 76.2
------ ------ ------
------ ------ ------
</TABLE>
The tax effects of temporary differences that give rise to deferred tax assets
and deferred tax liabilities at December 31 are presented below:
<TABLE>
<CAPTION>
1995 1994
------ ------
(MILLIONS)
<S> <C> <C>
Deferred tax assets:
Insurance reserves................................... $290.4 $211.5
Net unrealized capital losses........................ -- 136.3
Unrealized gains allocable to experience-rated
contracts........................................... 216.7 --
Investment losses not currently deductible........... 7.3 15.5
Postretirement benefits other than pensions.......... 7.7 8.4
Other................................................ 32.0 28.3
------ ------
Total gross assets..................................... 554.1 400.0
Less valuation allowance............................... -- 136.3
------ ------
Deferred tax assets, net of valuation.................. 554.1 263.7
Deferred tax liabilities:
Deferred policy acquisition costs.................... 433.0 385.2
Unrealized losses allocable to experience-rated
contracts........................................... -- 108.0
Market discount...................................... 4.4 3.6
Net unrealized capital gains......................... 288.2 --
Other................................................ (1.9) 0.4
------ ------
Total gross liabilities................................ 723.7 497.2
------ ------
Net deferred tax liability............................. $169.6 $233.5
------ ------
------ ------
</TABLE>
F-19
<PAGE>
AETNA LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES
(A wholly owned subsidiary of Aetna Retirement Services, Inc.)
Notes to Consolidated Financial Statements (continued)
December 31, 1995, 1994, and 1993
6. FEDERAL INCOME TAXES (CONTINUED)
Net unrealized capital gains and losses are presented in shareholder's equity
net of deferred taxes. At December 31, 1994, $81.0 million of net unrealized
capital losses were reflected in shareholder's equity without deferred tax
benefits. As of December 31, 1995, no valuation allowance was required for
unrealized capital gains and losses. The reversal of the valuation allowance had
no impact on net income in 1995.
The "Policyholders' Surplus Account," which arose under prior tax law, is
generally that portion of a life insurance company's statutory income that has
not been subject to taxation. As of December 31, 1983, no further additions
could be made to the Policyholders' Surplus Account for tax return purposes
under the Deficit Reduction Act of 1984. The balance in such account was
approximately $17.2 million at December 31, 1995. This amount would be taxed
only under certain conditions. No income taxes have been provided on this amount
since management believes the conditions under which such taxes would become
payable are remote.
The Internal Revenue Service ("Service") has completed examinations of the
consolidated federal income tax returns of Aetna through 1986. Discussions are
being held with the Service with respect to proposed adjustments. However,
management believes there are adequate defenses against, or sufficient reserves
to provide for, such challenges. The Service has commenced its examinations for
the years 1987 through 1990.
7. BENEFIT PLANS
Employee Pension Plans--The Company, in conjunction with Aetna, has
non-contributory defined benefit pension plans covering substantially all
employees. The plans provide pension benefits based on years of service and
average annual compensation (measured over sixty consecutive months of highest
earnings in a 120 month period). Contributions are determined using the
Projected Unit Credit Method and, for qualified plans subject to ERISA
requirements, are limited to the amounts that are currently deductible for tax
reporting purposes. The accumulated benefit obligation and plan assets are
recorded by Aetna. The accumulated plan assets exceed accumulated plan benefits.
There has been no funding to the plan for the years 1993 through 1995, and
therefore, no expense has been recorded by the Company.
Agent Pension Plans--The Company, in conjunction with Aetna, has a non-qualified
pension plan covering certain agents. The plan provides pension benefits based
on annual commission earnings. The accumulated plan assets exceed accumulated
plan benefits. There has been no funding to the plan for the years 1993 through
1995, and therefore, no expense has been recorded by the Company.
Employee Postretirement Benefits--In addition to providing pension benefits,
Aetna also provides certain postretirement health care and life insurance
benefits, subject to certain caps, for retired employees. Medical and dental
benefits are offered to all full-time employees retiring at age 50 with at least
15 years of service or at age 65 with at least 10 years of service. Retirees are
required to contribute to the plans based on their years of service with Aetna.
The cost to the Company associated with the Aetna postretirement plans for 1995,
1994 and 1993 were $1.4 million, $1.0 million and $0.8 million, respectively.
Agent Postretirement Benefits--The Company, in conjunction with Aetna, also
provides certain postemployment health care and life insurance benefits for
certain agents.
F-20
<PAGE>
AETNA LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES
(A wholly owned subsidiary of Aetna Retirement Services, Inc.)
Notes to Consolidated Financial Statements (continued)
December 31, 1995, 1994, and 1993
7. BENEFIT PLANS (CONTINUED)
The cost to the Company associated to the agents' postretirement plans for 1995,
1994 and 1993 were $0.8 million, $0.7 million and $0.6 million, respectively.
Incentive Savings Plan--Substantially all employees are eligible to participate
in a savings plan under which designated contributions, which may be invested in
common stock of Aetna or certain other investments, are matched, up to 5% of
compensation, by Aetna. Pretax charges to operations for the incentive savings
plan were $4.9 million, $3.3 million and $3.1 million in 1995, 1994 and 1993,
respectively.
Stock Plans--Aetna has a stock incentive plan that provides for stock options
and deferred contingent common stock or cash awards to certain key employees.
Aetna also has a stock option plan under which executive and middle management
employees of Aetna may be granted options to purchase common stock of Aetna at
the market price on the date of grant or, in connection with certain business
combinations, may be granted options to purchase common stock on different
terms. The cost to the Company associated with the Aetna stock plans for 1995,
1994 and 1993, was $6.3 million, $1.7 million and $0.4 million, respectively.
8. RELATED PARTY TRANSACTIONS
The Company is compensated by the Separate Accounts for bearing mortality and
expense risks pertaining to variable life and annuity contracts. Under the
insurance contracts, the Separate Accounts pay the Company a daily fee which, on
an annual basis, ranges, depending on the product, from .25% to 1.80% of their
average daily net assets. The Company also receives fees from the variable life
and annuity mutual funds and The Aetna Series Fund for serving as investment
adviser. Under the advisory agreements, the Funds pay the Company a daily fee
which, on an annual basis, ranges, depending on the fund, from .25% to 1.00% of
their average daily net assets. The advisory agreements also call for the
variable funds to pay their own administrative expenses and for The Aetna Series
Fund to pay certain administrative expenses. The Company also receives fees
(expressed as a percentage of the average daily net assets) from The Aetna
Series Fund for providing administration, shareholder services and promoting
sales. The amount of compensation and fees received from the Separate Accounts
and Funds, included in Charges Assessed Against Policyholders, amounted to
$128.1 million, $104.6 million and $93.6 million in 1995, 1994 and 1993,
respectively. The Company may waive advisory fees at its discretion.
The Company may, from time to time, make reimbursements to a Fund for some or
all of its operating expenses. Reimbursement arrangements may be terminated at
any time without notice.
Since 1981, all domestic individual non-participating life insurance of Aetna
and its subsidiaries has been issued by the Company. Effective December 31,
1988, the Company entered into a reinsurance agreement with Aetna Life Insurance
Company ("Aetna Life") in which substantially all of the non-participating
individual life and annuity business written by Aetna Life prior to 1981 was
assumed by the Company. A $108.0 million commission, paid by the Company to
Aetna Life in 1988, was capitalized as deferred policy acquisition costs. The
Company maintained insurance reserves of $655.5 million and $690.3 million as of
December 31, 1995 and 1994, respectively, relating to the business assumed. In
consideration for the assumption of this business, a loan was established
relating to the assets held by Aetna Life which support the insurance reserves.
The loan is being reduced in accordance with the decrease in the reserves. The
fair value of this loan was $663.5 million and $630.3 million as of December 31,
1995 and 1994, respectively, and is based upon the fair value of the underlying
assets. Premiums of $28.0 million, $32.8 million and $33.3 million and current
and future benefits of $43.0 million, $43.8 million and $55.4 million were
assumed in 1995, 1994 and 1993, respectively.
F-21
<PAGE>
AETNA LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES
(A wholly owned subsidiary of Aetna Retirement Services, Inc.)
Notes to Consolidated Financial Statements (continued)
December 31, 1995, 1994, and 1993
8. RELATED PARTY TRANSACTIONS (CONTINUED)
Investment income of $46.5 million, $51.5 million and $53.3 million was
generated from the reinsurance loan to affiliate in 1995, 1994 and 1993,
respectively. Net income of approximately $18.4 million, $25.1 million and $13.6
million resulted from this agreement in 1995, 1994 and 1993, respectively.
On December 16, 1988, the Company assumed $25.0 million of premium revenue from
Aetna Life for the purchase and administration of a life contingent single
premium variable payout annuity contract. In addition, the Company also is
responsible for administering fixed annuity payments that are made to annuitants
receiving variable payments. Reserves of $28.0 million and $24.2 million were
maintained for this contract as of December 31, 1995 and 1994, respectively.
Effective February 1, 1992, the Company increased its retention limit per
individual life to $2.0 million and entered into a reinsurance agreement with
Aetna Life to reinsure amounts in excess of this limit, up to a maximum of $8.0
million on any new individual life business, on a yearly renewable term basis.
Premium amounts related to this agreement were $3.2 million, $1.3 million and
$0.6 million for 1995, 1994 and 1993, respectively.
The Company received no capital contributions in 1995, 1994 or 1993.
The Company distributed $2.9 million in the form of dividends of two of its
subsidiaries, SBA and AISI, to Aetna Retirement Services, Inc. in 1995.
Premiums due and other receivables include $5.7 million and $27.6 million due
from affiliates in 1995 and 1994, respectively. Other liabilities include $12.4
million and $27.9 million due to affiliates for 1995 and 1994, respectively.
Substantially all of the administrative and support functions of the Company are
provided by Aetna and its affiliates. The financial statements reflect allocated
charges for these services based upon measures appropriate for the type and
nature of service provided.
9. REINSURANCE
The Company utilizes indemnity reinsurance agreements to reduce its exposure to
large losses in all aspects of its insurance business. Such reinsurance permits
recovery of a portion of losses from reinsurers, although it does not discharge
the primary liability of the Company as direct insurer of the risks reinsured.
The Company evaluates the financial strength of potential reinsurers and
continually monitors the financial condition of reinsurers. Only those
reinsurance recoverables deemed probable of recovery are reflected as assets on
the Company's Consolidated Balance Sheets.
F-22
<PAGE>
AETNA LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES
(A wholly owned subsidiary of Aetna Retirement Services, Inc.)
Notes to Consolidated Financial Statements (continued)
December 31, 1995, 1994, and 1993
9. REINSURANCE (CONTINUED)
The following table includes premium amounts ceded/assumed to/from affiliated
companies as discussed in Note 8 above.
<TABLE>
<CAPTION>
CEDED TO ASSUMED
DIRECT OTHER FROM OTHER
AMOUNT COMPANIES COMPANIES
--------- ------------- -------------
(MILLIONS)
<S> <C> <C> <C>
1995
Premiums:
Life Insurance.................................................................. $ 28.8 $ 8.6 $ 28.0
Accident and Health Insurance................................................... 7.5 7.5 --
Annuities....................................................................... 82.1 -- 0.5
--------- ----- -----
Total earned premiums........................................................... $ 118.4 $ 16.1 $ 28.5
--------- ----- -----
--------- ----- -----
1994
Premiums:
Life Insurance.................................................................. $ 27.3 $ 6.0 $ 32.8
Accident and Health Insurance................................................... 9.3 9.3 --
Annuities....................................................................... 69.9 -- 0.2
--------- ----- -----
Total earned premiums........................................................... $ 106.5 $ 15.3 $ 33.0
--------- ----- -----
--------- ----- -----
1993
Premiums:
Life Insurance.................................................................. $ 22.4 $ 5.6 $ 33.3
Accident and Health Insurance................................................... 12.9 12.9 --
Annuities....................................................................... 31.3 -- 0.7
--------- ----- -----
Total earned premiums........................................................... $ 66.6 $ 18.5 $ 34.0
--------- ----- -----
--------- ----- -----
<CAPTION>
NET
AMOUNT
---------
<S> <C>
1995
Premiums:
Life Insurance.................................................................. $ 48.2
Accident and Health Insurance................................................... --
Annuities....................................................................... 82.6
---------
Total earned premiums........................................................... $ 130.8
---------
---------
1994
Premiums:
Life Insurance.................................................................. $ 54.1
Accident and Health Insurance................................................... --
Annuities....................................................................... 70.1
---------
Total earned premiums........................................................... $ 124.2
---------
---------
1993
Premiums:
Life Insurance.................................................................. $ 50.1
Accident and Health Insurance................................................... --
Annuities....................................................................... 32.0
---------
Total earned premiums........................................................... $ 82.1
---------
---------
</TABLE>
F-23
<PAGE>
AETNA LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES
(A wholly owned subsidiary of Aetna Retirement Services, Inc.)
Notes to Consolidated Financial Statements (continued)
December 31, 1995, 1994, and 1993
10. FINANCIAL INSTRUMENTS
ESTIMATED FAIR VALUE
The carrying values and estimated fair values of the Company's financial
instruments at December 31, 1995 and 1994 were as follows:
<TABLE>
<CAPTION>
1995 1994
-------------------- --------------------
CARRYING FAIR CARRYING FAIR
VALUE VALUE VALUE VALUE
--------- --------- --------- ---------
(MILLIONS)
<S> <C> <C> <C> <C>
Assets:
Cash and cash equivalents................................. $ 568.8 $ 568.8 $ 623.3 $ 623.3
Short-term investments.................................... 15.1 15.1 98.0 98.0
Debt securities........................................... 12,720.8 12,720.8 10,191.4 10,191.4
Equity securities......................................... 257.6 257.6 229.1 229.1
Limited partnership....................................... -- -- 24.4 24.4
Mortgage loans............................................ 21.2 21.9 9.9 9.9
Liabilities:
Investment contract liabilities:
With a fixed maturity................................... 989.1 1,001.2 826.7 833.5
Without a fixed maturity................................ 9,511.0 9,298.4 8,122.6 7,918.2
</TABLE>
Fair value estimates are made at a specific point in time, based on available
market information and judgments about the financial instrument, such as
estimates of timing and amount of expected future cash flows. Such estimates do
not reflect any premium or discount that could result from offering for sale at
one time the Company's entire holdings of a particular financial instrument, nor
do they consider the tax impact of the realization of unrealized gains or
losses. In many cases, the fair value estimates cannot be substantiated by
comparison to independent markets, nor can the disclosed value be realized in
immediate settlement of the instrument. In evaluating the Company's management
of interest rate and liquidity risk, the fair values of all assets and
liabilities should be taken into consideration, not only those above.
The following valuation methods and assumptions were used by the Company in
estimating the fair value of the above financial instruments:
SHORT-TERM INSTRUMENTS: Fair values are based on quoted market prices or dealer
quotations. Where quoted market prices are not available, the carrying amounts
reported in the Consolidated Balance Sheets approximates fair value. Short-term
instruments have a maturity date of one year or less and include cash and cash
equivalents, and short-term investments.
DEBT AND EQUITY SECURITIES: Fair values are based on quoted market prices or
dealer quotations. Where quoted market prices or dealer quotations are not
available, fair value is estimated by using quoted market prices for similar
securities or discounted cash flow methods.
F-24
<PAGE>
AETNA LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES
(A wholly owned subsidiary of Aetna Retirement Services, Inc.)
Notes to Consolidated Financial Statements (continued)
December 31, 1995, 1994, and 1993
10. FINANCIAL INSTRUMENTS (CONTINUED)
MORTGAGE LOANS: Fair value is estimated by discounting expected mortgage loan
cash flows at market rates which reflect the rates at which similar loans would
be made to similar borrowers. The rates reflect management's assessment of the
credit quality and the remaining duration of the loans. The fair value estimate
of mortgage loans of lower quality, including problem and restructured loans, is
based on the estimated fair value of the underlying collateral.
INVESTMENT CONTRACT LIABILITIES (INCLUDED IN POLICYHOLDERS' FUNDS LEFT WITH THE
COMPANY):
WITH A FIXED MATURITY: Fair value is estimated by discounting cash flows at
interest rates currently being offered by, or available to, the Company for
similar contracts.
WITHOUT A FIXED MATURITY: Fair value is estimated as the amount payable to the
contractholder upon demand. However, the Company has the right under such
contracts to delay payment of withdrawals which may ultimately result in paying
an amount different than that determined to be payable on demand.
OFF-BALANCE-SHEET FINANCIAL INSTRUMENTS (INCLUDING DERIVATIVE FINANCIAL
INSTRUMENTS)
During 1995, the Company received $0.4 million for writing call options on
underlying securities. As of December 31, 1995 there were no option contracts
outstanding.
At December 31, 1995, the Company had a forward swap agreement with a notional
amount of $100.0 million and a fair value of $0.1 million.
The Company did not have transactions in derivative instruments in 1994.
The Company also holds investments in certain debt and equity securities with
derivative characteristics (i.e., including the fact that their market value is
at least partially determined by, among other things, levels of or changes in
interest rates, prepayment rates, equity markets or credit ratings/spreads). The
amortized cost and fair value of these securities, included in the $13.4 billion
investment portfolio, as of December 31, 1995 was as follows:
<TABLE>
<CAPTION>
AMORTIZED FAIR
(MILLIONS) COST VALUE
----------- -----------
<S> <C> <C>
Collateralized mortgage obligations..................................................................... $ 2,383.9 $ 2,549.3
Principal-only strips (included above).................................................................. 38.7 50.0
Interest-only strips (included above)................................................................... 10.7 20.7
Structured Notes (1).................................................................................... 95.0 100.3
</TABLE>
(1) Represents non-leveraged instruments whose fair values and credit risk are
based on underlying securities, including fixed income securities and
interest rate swap agreements.
11. COMMITMENTS AND CONTINGENT LIABILITIES
COMMITMENTS
Through the normal course of investment operations, the Company commits to
either purchase or sell securities or money market instruments at a specified
future date and at a specified price or yield. The inability of counterparties
to honor these commitments may result in either higher or lower replacement
cost. Also, there is likely to be a change in
F-25
<PAGE>
AETNA LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES
(A wholly owned subsidiary of Aetna Retirement Services, Inc.)
Notes to Consolidated Financial Statements (continued)
December 31, 1995, 1994, and 1993
11. COMMITMENTS AND CONTINGENT LIABILITIES (CONTINUED)
the value of the securities underlying the commitments. At December 31, 1995,
the Company had commitments to purchase investments of $31.4 million. The fair
value of the investments at December 31, 1995 approximated $31.5 million. There
were no outstanding forward commitments at December 31, 1994.
LITIGATION
There were no material legal proceedings pending against the Company as of
December 31, 1995 or December 31, 1994 which were beyond the ordinary course of
business. The Company is involved in lawsuits arising, for the most part, in the
ordinary course of its business operations as an insurer.
12. SEGMENT INFORMATION
The Company's operations are reported through two major business segments: Life
Insurance and Financial Services.
Summarized financial information for the Company's principal operations was as
follows:
<TABLE>
<CAPTION>
(MILLIONS) 1995 1994 1993
----------- ----------- -----------
<S> <C> <C> <C>
Revenue:
Financial services..................................................................... $ 1,129.4 $ 946.1 $ 892.8
Life insurance......................................................................... 407.9 386.1 371.7
----------- ----------- -----------
Total revenue.......................................................................... $ 1,537.3 $ 1,332.2 $ 1,264.5
----------- ----------- -----------
Income before federal income taxes:
Financial services..................................................................... $ 158.0 $ 119.7 $ 121.1
Life insurance......................................................................... 102.0 96.8 98.0
----------- ----------- -----------
Total income before federal income taxes............................................... $ 260.0 $ 216.5 $ 219.1
----------- ----------- -----------
Net income:
Financial services..................................................................... $ 113.8 $ 85.5 $ 86.8
Life insurance......................................................................... 62.1 59.8 56.1
----------- ----------- -----------
Net income............................................................................... $ 175.9 $ 145.3 $ 142.9
----------- ----------- -----------
Assets under management, at fair value:
Financial services..................................................................... $ 23,224.3 $ 17,785.2 $ 16,600.5
Life insurance......................................................................... 2,698.1 2,171.7 2,175.5
----------- ----------- -----------
Total assets under management.......................................................... $ 25,922.4 $ 19,956.9 $ 18,776.0
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
F-26
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
VARIABLE ANNUITY ACCOUNT C
VARIABLE ANNUITY CONTRACTS
ISSUED BY
AETNA LIFE INSURANCE AND ANNUITY COMPANY
FORM NO. 75962(S)-2 ALIAC ED. MAY 1996
<PAGE>
VARIABLE ANNUITY ACCOUNT C
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 C:
- 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
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
(b) Exhibits
(1) Resolution of the Board of Directors of Aetna Life Insurance
and Annuity Company establishing Variable Annuity Account C(1)
(2) Not applicable
(3.1) Form of Broker-Dealer Agreement(1)
(3.2) Alternative Form of Wholesaling Agreement and related Selling
Agreement(1)
(4.1) Form of Variable Annuity Contract (G-TDA-HH(XC/M))
(4.2) Form of Variable Annuity Contract (GTDA-HH(XC/S))
(5) Form of Variable Annuity Contract Application (300-TDA-
HH(XC))(2)
(6) Certification of Incorporation and By-Laws of Depositor(3)
(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(1)
(8.2) Fund Participation Agreement between Aetna Life Insurance and
Annuity Company and Calvert Asset Management Company (Calvert
Responsibly Invested Balanced
<PAGE>
Portfolio formerly Calvert Socially Responsible Series) dated
March 13, 1989 and amended December 27, 1993(1)
(8.3) Fund Participation Agreement between Aetna Life Insurance and
Annuity Company and Fidelity Distributors Corporation
(Variable Insurance Products Fund) dated February 1, 1994 and
amended March 1, 1996(1)
(8.4) Fund Participation Agreement between Aetna Life Insurance and
Annuity Company and Fidelity Distributors Corporation
(Variable Insurance Products Fund II) dated February 1, 1994
and amended March 1, 1996(1)
(8.5) Fund Participation Agreement between Aetna Life Insurance and
Annuity Company and Franklin Government Securities Trust dated
January 31, 1989(1)
(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(1)
(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(1)
(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(4)
(8.9) Fund Participation Agreement between Aetna Life Insurance and
Annuity Company and Advisers Management Trust (now Neuberger &
Berman Advisers Management Trust) dated April 14, 1989 and as
assigned and modified on May 1, 1995(1)
(8.10) Fund Participation Agreement between Aetna Life Insurance and
Annuity Company and Scudder Variable Life Investment Fund
dated April 27, 1992 and amended February 19, 1993 and August
13, 1993(1)
(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(1)
(9) Opinion of Counsel(5)
(10.1) Consent of Independent Auditors
(10.2) Consent of Counsel
(11) Not applicable
(12) Not applicable
(13) Computation of Performance Data(6)
(14) Not applicable
(15.1) Powers of Attorney(7)
(15.2) Authorization for Signatures(1)
(27) Financial Data Schedule
1. 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.
<PAGE>
2. Incorporated by reference to Post-Effective Amendment No. 4 to Registration
Statement on Form N-4 (File No. 33-75962), as filed on March 24, 1995.
3. Incorporated by reference to Post-Effective Amendment No. 58 to
Registration Statement on Form N-4 (File No. 33-52449), as filed on
February 28, 1994.
4. Incorporated by reference to Post-Effective Amendment No. 1 to Registration
Statement on Form N-4 (File No. 33-75978), as filed electronically on
August 24, 1994.
5. Incorporated by Reference to Registrant's 24f-2 Notice for fiscal year
ended December 31, 1995, as filed electronically on February 29, 1996.
6. Incorporated by reference to Pre-Effective Amendment No. 4 to Registration
Statement on Form N-4 (File No. 33-75962), as filed on March 24, 1995.
7. Incorporated by reference to Post-Effective Amendment No. 1 to Registration
Statement on Form N-4 (File No. 33-75974), as filed electronically on April
9, 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 Vice President
Creed R. Terry Director Vice President
Eugene M. Trovato Vice President and Treasurer, Corporate
Controller
Zoe Baird Senior Vice President and General Counsel
Diane Horn Vice President and Chief Compliance
Officer
Susan E. Schechter Corporate Secretary and Counsel
* 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.
5 to Registration Statement on Form N-4 (File No. 33-75986), as filed
electronically on April 12, 1996.
<PAGE>
ITEM 27. NUMBER OF CONTRACT OWNERS
As of February 29, 1996, there were 527,607 individuals holding interests
in variable annuity contracts funded through Variable Annuity Account C.
ITEM 28. INDEMNIFICATION
Reference is hereby made to Section 33-320a of the Connecticut General
Statutes ("C.G.S.") regarding indemnification of directors and officers of
Connecticut corporations. The statute provides in general that Connecticut
corporations shall indemnify their officers, directors, employees, agents,
and certain other defined individuals against judgments, fines, penalties,
amounts paid in settlement and reasonable expenses actually incurred in
connection with proceedings against the corporation. The corporation's
obligation to provide such indemnification does not apply unless (1) the
individual is successful on the merits in the defense of any such proceeding;
or (2) a determination is made (by a majority of the board of directors not a
party to the proceeding by written consent; by independent legal counsel
selected by a majority of the directors not involved in the proceeding; or by
a majority of the shareholders not involved in the proceeding) that the
individual acted in good faith and in the best interests of the corporation;
or (3) the court, upon application by the individual, determines in view of
all the circumstances that such person is reasonably entitled to be
indemnified.
C.G.S. Section 33-320a provides an exclusive remedy: a Connecticut
corporation cannot indemnify a director or officer to an extent either greater
or less than that authorized by the statute, e.g., pursuant to its certificate
of incorporation, bylaws, or any separate contractual arrangement. However, the
statute does specifically authorize a corporation to procure indemnification
insurance to provide greater indemnification rights. The premiums for such
insurance may be shared with the insured individuals on an agreed basis.
Consistent with the statute, Aetna Life and Casualty Company 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, which supplements the indemnification
rights provided by C.G.S. Section 33-320a to the extent such coverage does not
violate public policy.
ITEM 29. PRINCIPAL UNDERWRITER
(a) In addition to serving as the principal underwriter for the
Registrant, Aetna Life Insurance and Annuity Company (ALIAC) also acts
as the principal underwriter for Variable Life Account B and Variable
Annuity Accounts B and G (separate accounts of ALIAC registered as
unit investment trusts), and Variable Annuity Account I (a separate
account of Aetna Insurance Company of America registered as a unit
investment trust). Additionally, ALIAC is the investment adviser for
Aetna Variable Fund, Aetna Income Shares, Aetna Variable Encore Fund,
Aetna Investment Advisers Fund, Inc., Aetna GET Fund, Aetna Series
Fund, Inc. and Aetna Generation Portfolios, Inc. ALIAC is also the
depositor of Variable Life Account B and Variable Annuity Accounts B
and G.
<PAGE>
(b) See Item 25 regarding the Depositor.
(c) Compensation as of December 31, 1995:
<TABLE>
<CAPTION>
(1) (2) (3) (4) (5)
Name of Net Underwriting Compensation
Principal Discounts and on Redemption Brokerage
Underwriter commissions or Annuitization Commission Compensation*
- ----------- ----------- ---------------- ----------- -------------
<S> <C> <C> <C> <C>
Aetna Life $1,830,629 $74,341,006
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 C.
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS
All records concerning contract owners of Variable Annuity Account C are
located at the home office of the Depositor as follows:
Aetna Life Insurance and Annuity Company
151 Farmington Avenue
Hartford, Connecticut 06156
and
Opportunity Plus Processing Office
18 Corporate Woods Blvd., Fourth Floor
Albany, New York 12211
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
<PAGE>
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
(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 complies
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) PARA 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.
<PAGE>
SIGNATURES
As required by the Securities Act of 1933, as amended, and the Investment
Company Act of 1940, the Registrant, Variable Annuity Account C 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. 6 to its Registration Statement on Form N-4 (File No. 33-75962) and has duly
caused this Post-Effective Amendment No. 6 to its Registration Statement on Form
N-4 (File No. 33-75962) to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Hartford, State of Connecticut, on the 17th day
of April, 1996.
VARIABLE ANNUITY ACCOUNT C 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, as amended, this Post-Effective
Amendment No. 6 to the Registration Statement on Form N-4 (File No. 33-75962)
has been signed by the following persons in the capacities and on the dates
indicated.
Signature Title Date
- --------- ------ ----
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 )
)
Eugene M. Trovato* Vice President and Treasurer, ) April 17, 1996
- ------------------------ Corporate Controller )
Eugene M. Trovato )
)
Christopher J. Burns* Director )
- ------------------------ )
Christopher J. Burns )
)
<PAGE>
Laura R. Estes* Director )
- ------------------------ )
Laura R. Estes )
)
Gail P. Johnson* Director )
- ------------------------ )
Gail P. Johnson )
)
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 )
By: /s/Julie E. Rockmore
----------------------------------------
Julie E. Rockmore
*Attorney-in-Fact
<PAGE>
VARIABLE ANNUITY ACCOUNT C
EXHIBIT INDEX
Exhibit No. Exhibit Page
- ----------- ------- ----
99-B.1 Resolution of the Board of Directors of *
Aetna Life Insurance and Annuity Company
establishing Variable Annuity Account C
99-B.3.1 Form of Broker-Dealer Agreement *
99-B.3.2 Alternative Form of Wholesaling Agreement and
related Selling Agreement *
99-B.4.1 Form of Variable Annuity Contract (G-TDA-HH(XC/M)) ---------
99-B.4.2 Form of Variable Annuity Contract (GTDA-HH(XC/S)) ---------
99-B.5 Form of Variable Annuity Contract Application
(300-TDA-HH(XC)) *
99-B.6 Certification of Incorporation and By-Laws 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 as of March 31, 1995
99-B.8.2 Fund Participation Agreement between Aetna Life Insurance *
and Annuity Company and Calvert Asset Management Company
(Calvert Responsibly Invested Balanced Portfolio, formerly
Calvert Socially Responsible Series) dated March 13, 1989
and amended December 27, 1993
99-B.8.3 Fund Participation Agreement between Aetna Life *
Insurance and Annuity Company and Fidelity Distributors
Corporation (Variable Insurance Products Fund) dated
February 1, 1994 and amended March 1, 1996
99-B.8.4 Fund Participation Agreement between Aetna Life *
Insurance and Annuity Company and Fidelity Distributors
Corporation (Variable Insurance Products Fund II) dated
February 1, 1994 and amended March 1, 1996
99-B.8.5 Fund Participation Agreement between Aetna Life *
Insurance and Annuity Company and Franklin Government
Securities Trust dated January 31, 1989
*Incorporated by reference
<PAGE>
Exhibit No. Exhibit Page
- ----------- ------- ----
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 Fund Participation Agreement between Aetna Life Insurance *
and Annuity Company and Advisers Management Trust (now
Neuberger & Berman Advisers Management Trust) dated
April 14, 1989 and as assigned and modified on May 1, 1995
99-B.8.10 Fund Participation Agreement between Aetna Life Insurance *
and Annuity Company and Scudder Variable Life Investment
Fund dated April 27, 1992 and amended February 19, 1993
and August 13, 1993
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.9 Opinion of Counsel *
99-B.10.1 Consent of Independent Auditors ---------
99-B.10.2 Consent of Counsel ---------
99-B.13 Computation of Performance Data *
*Incorporated by reference
<PAGE>
Exhibit No. Exhibit Page
- ---------- ------- -----
99-B.15.1 Powers of Attorney *
99-B.15.2 Authorization for Signatures *
27 Financial Data Schedule ---------
*Incorporated by reference
<PAGE>
[LOGO] AETNA LIFE INSURANCE AND ANNUITY COMPANY
HOME OFFICE: 151 FARMINGTON AVE. OPPORTUNITY PLUS
HARTFORD, CONNECTICUT 06156 PROCESSING OFFICE
1-800-677-4636 P.O. BOX 12894
ALBANY, NEW YORK
12212-2894
Herein called Aetna
Agrees to pay the benefits stated in this Contract.
THE VARIABLE FEATURES OF THIS CONTRACT ARE DESCRIBED IN PARTS III AND IV.
RIGHT TO CANCEL
The Contract Holder may cancel this Contract within 10 days of receiving it by
returning this Contract along with a written notice to Aetna at the Processing
Office at the above address or to the agent from whom it was purchased. Within
7 days after it receives the notice of cancellation and this Contract at its
Processing Office, Aetna will return the entire consideration paid plus any
increase or minus any decrease in the cash value of any funds allocated to the
Separate Account.
This page, the following pages, and the application make up the entire Contract.
Signed at the Home Office on the Effective Date.
/s/ Lucille M. Nickerson /s/ Dan Kearney
SECRETARY PRESIDENT
INSTALLMENT PREMIUM, INDIVIDUAL VARIABLE, FIXED, OR COMBINATION ANNUITY
CONTRACT, NONPARTICIPATING. ALL PAYMENTS AND VALUES PROVIDED BY THIS
CONTRACT, WHEN BASED ON INVESTMENT EXPERIENCE OF A SEPARATE ACCOUNT, ARE
VARIABLE AND ARE NOT GUARANTEED AS TO FIXED DOLLAR AMOUNT. THIS CONTRACT
CONTAINS A MARKET-VALUE ADJUSTMENT FORMULA. APPLICATION OF A MARKET-VALUE
ADJUSTMENT MAY RESULT IN EITHER AN INCREASE OR DECREASE IN THE CASH VALUE.
THE MARKET-VALUE ADJUSTMENT FORMULA DOES NOT APPLY TO A GUARANTEED TERM
AT THE TIME OF ITS MATURITY.
<PAGE>
SPECIFICATIONS
OPPORTUNITY PLUS
TYPE OF PLAN
CONTRACT HOLDER
GROUP CONTRACT NO.
EFFECTIVE DATE
THIS CONTRACT IS DELIVERED IN
AND IS SUBJECT TO THE LAWS OF THAT JURISDICTION
Guaranteed Interest Rate -- There is a guaranteed interest rate for Purchase
Payment(s) held in the General Account. (See 3.03)
Surrender Fee -- There will be a charge deducted for early surrender. (See
3.16.)
Deductions from the Separate Account -- There will be deductions for mortality
and expense risks and administrative fees. (See 3.07.)
Deduction from Purchase Payment(s) -- Purchase Payment(s) are subject to a
deduction for premium taxes, if any. (See 3.01.)
If Variable Annuity Payments are not to decrease, Aetna must earn a gross return
on the assets of the Separate Account of:
- - 5.0% on an annual basis set at the time Annuity payments commence if an
Assumed Annual Net Return Rate of 3.5% is chosen; or
- - 6.50% on an annual basis set at the time Annuity payments commence if an
Assumed Annual Net Return Rate of 5% is chosen.
READ THIS CONTRACT CAREFULLY. This Contract sets forth, in detail, all of the
rights and obligations of both you and Aetna. IT IS, THEREFORE, IMPORTANT THAT
YOU READ THIS CONTRACT CAREFULLY.
2
<PAGE>
TABLE OF CONTENTS
I. GENERAL DEFINITIONS
PAGE
1.01 Annuitant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.02 Annuity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.03 Fixed Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.04 Fixed Annuity . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.05 Fund(s) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.06 General Account . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.07 Guaranteed Accumulation Account . . . . . . . . . . . . . . . . . . . 5
1.08 Participant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.09 Plan. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.10 Purchase Payments . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.11 Separate Account. . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.12 Valuation Period. . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.13 Variable Annuity. . . . . . . . . . . . . . . . . . . . . . . . . . . 5
II. GENERAL PROVISIONS
2.01 Change of Contract. . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.02 Change of Fund(s) . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.03 Nonparticipating Contract . . . . . . . . . . . . . . . . . . . . . . 6
2.04 Payments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.05 State Laws. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.06 Control of Contract . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.07 Designation of Beneficiary. . . . . . . . . . . . . . . . . . . . . . 7
2.08 Misstatements and Adjustments . . . . . . . . . . . . . . . . . . . . 7
2.09 Incontestability. . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.10 Grace Period. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.11 Individual Certificates . . . . . . . . . . . . . . . . . . . . . . . 7
III. PURCHASE PAYMENT, CURRENT VALUE, AND SURRENDER PROVISIONS
3.01 Net Purchase Payment(s) . . . . . . . . . . . . . . . . . . . . . . . 8
3.02 Individual Accounts . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.03 Guaranteed Accumulation Account (GA Account). . . . . . . . . . . . . 8
3.04 Guaranteed Interest Rate -- Fixed Account . . . . . . . . . . . . . . 10
3.05 Maintenance Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.06 Fund(s) Record Units -- Separate Account. . . . . . . . . . . . . . . 10
3.07 Net Return Factor(s) -- Separate Account. . . . . . . . . . . . . . . 10
3.08 Fund(s) Record Unit Value -- Separate Account . . . . . . . . . . . . 10
3.09 Current Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.10 Transfer of Current Value from the Funds or GA Account. . . . . . . . 11
3.11 Transfer of Current Value from the Fixed Account. . . . . . . . . . . 11
3.12 Notice to the Participant . . . . . . . . . . . . . . . . . . . . . . 11
3.13 Loan Value. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.14 Sum Payable at Death (Before Annuity Payments Start). . . . . . . . . 13
3.15 Surrender Value . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.16 Surrender Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
3.17 Payment of Surrender Value. . . . . . . . . . . . . . . . . . . . . . 14
3.18 Reinstatement . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
3.19 Payment of Current Value. . . . . . . . . . . . . . . . . . . . . . . 15
3
<PAGE>
IV. ANNUITY PROVISIONS
4.01 Choices to be Made. . . . . . . . . . . . . . . . . . . . . . . . . .16
4.02 Terms of Annuity Options. . . . . . . . . . . . . . . . . . . . . . .16
4.03 Death of Annuitant/Beneficiary. . . . . . . . . . . . . . . . . . . .17
4.04 Fund(s) Annuity Units -- Separate Account . . . . . . . . . . . . . .17
4.05 Fund(s) Annuity Unit Value -- Separate Account. . . . . . . . . . . .17
4.06 Annuity Options . . . . . . . . . . . . . . . . . . . . . . . . . . .17
4
<PAGE>
I. GENERAL DEFINITIONS
1.01. ANNUITANT -- A person on whose life an An-nuity has been effected under
this Contract.
1.02. ANNUITY -- Payment of an income:
(a) For the life of one or two persons;
(b) For a stated period; or
(c) For some combination of (a) and (b).
1.03. FIXED ACCOUNT -- An accumulation option with a guaranteed minimum
interest rate. Aetna may credit a higher rate which is not guaranteed.
1.04. FIXED ANNUITY -- An Annuity with payments which do not vary in amount.
1.05. FUND(S) -- The open-end registered man-agement investment companies
(mutual funds) made available by Aetna under this Contract.
These Funds currently are:
- Aetna Variable Fund, a conservative common stock fund;
- Aetna Income Shares, a bond fund;
- Aetna Variable Encore Fund, a money market fund;
- Aetna Guaranteed Equity Trust, a dynamic hedged portfolio fund;
- Franklin Government Securities Trust, a government bond fund;
- Advisers Management Trust, a growth common stock fund;
- Lexington Gold Trust, a gold fund;
- Calvert Socially Responsible Series, a socially responsible common
stock fund; or
- T. Rowe Price International Equity Fund, an international stock
fund.
Additional information regarding these Funds is available in each Fund
prospectus.
1.06. GENERAL ACCOUNT -- The Account holding the assets of Aetna, other than
those assets held in the Separate Account.
1.07. GUARANTEED ACCUMULATION ACCOUNT (GA ACCOUNT) -- An accumulation option
which guarantees a stipulated rate of interest for a specified period of
time. Amounts withdrawn before the end of the Guaranteed Term may be
subject to a Market Value Adjustment.
1.08. PARTICIPANT -- A person who participates in the Opportunity Plus program.
1.09. PLAN -- The Opportunity Plus program named on the Specifications. Aetna
is not bound by the terms of the Plan.
1.10. PURCHASE PAYMENTS -- Payments made to Aetna.
1.11. SEPARATE ACCOUNT -- Variable Annuity Account C is a separate account set
up by Aetna under the Connecticut Insurance Laws which purchases shares
of the Fund(s).
1.12. VALUATION PERIOD (PERIOD) -- The period of time from the end of one
business day on the New York Stock Exchange to the end of the next
business day.
1.13. VARIABLE ANNUITY -- An Annuity with pay-ments which vary with the net
investment results of Separate Account C.
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II. GENERAL PROVISIONS
2.01. CHANGE OF CONTRACT: Only an authorized officer of Aetna may change the
terms of this Contract. Aetna will notify the Contract Holder in writing
at least 30 days before the effective date of change. Any change will
not affect the amount or terms of any Annuity which begins before the
change.
Any changes that affect the following provisions of this Contract will
not apply to any individual participating under this Con-tract before the
effective date of the change:
(a) Net Purchase Payment(s)
(b) Guaranteed GA Account Interest Rate
(c) Guaranteed Interest Rate -- Fixed Account
(d) Net Return Factor(s) -- Separate Ac-count
(e) Current Value
(f) Surrender Value
(g) Fund(s) Annuity Unit Value -- Separate Account
(h) Fixed Annuity minimum interest rate
(i) Maximum transfer, maintenance, or sur-render fees.
Any change that affects the Annuity Options and the tables for the
Options can only be made:
(1) No earlier than 12 months after the Effective Date of this
Contract; and
(2) No earlier than 12 months after the effective date of any such
prior change.
Aetna may make any change that affects the GA Account Market Value
Adjustment with at least 30 days' advance written notice to the Contract
Holder. Any such change shall become effective for any new Term and for
any present or future Participant.
New Participants covered under this Con-tract on or after the effective
date of any change will be subject to the change. If the Contract Holder
does not agree to any change under this provision, no new Par-ticipants
will be covered under this Contract. Aetna will continue to accept
Purchase Pay-ments for the Participants covered under this Contract
before the change.
This Contract may also be changed as required by federal or state law.
2.02. CHANGE OF FUND(S): Aetna, or the Separate Account, may:
(a) Change the Fund(s) which may be in-vested in by the Separate
Account; and
(b) Replace the shares of any Fund(s) held in the Separate Account with
shares of any other Fund(s).
Changes must be:
(1) Approved by a majority vote of persons having an investment in the
Separate Account and the Fund(s);
(2) Deemed necessary by Aetna under the Investment Company Act of 1940;
or
(3) Deemed necessary by Aetna to accom-plish the purpose of the
Separate Account.
Aetna will notify the Contract Holder of any change.
2.03. NONPARTICIPATING CONTRACT: The Contract Holder, Participants, or
beneficiaries will not have a right to share in the earnings of Aetna.
2.04. PAYMENTS: Aetna will make Annuity pay-ments as and when due. Aetna will
make other payments within 7 days of receipt at the Opportunity Plus
Processing Office of written claim for payment which is in good order.
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2.05. STATE LAWS: This Contract complies with the laws of the State of New
York. Any cash, death, or Annuity payments are equal to or greater than
the minimum required by such laws. Annuity tables for legal reserve
valuation shall be as required by state law. Such tables may be
different from Annuity tables used to determine Annuity payments.
2.06. CONTROL OF CONTRACT: This is a Contract between the Contract Holder and
Aetna only to satisfy the "purchase" requirements of Section 403(b)(1) of
the Internal Revenue Code of 1954, as amended. The Contract Holder has
no right, title, or interest in the amounts held under the Contract
either by reason of remitting Purchase Payments or applying for this
Contract.
Each Participant shall own all amounts held in his or her Individual
Account. Each Participant may make any choices allowed by this Contract
for his or her Individual Account. Choices made under this Contract must
be in writing. Until receipt of such choices at the Opportunity Plus
Processing Office, Aetna may rely on any previous choices made. This
Contract and any Individual Accounts shall not be subject to the claims
of any creditors. This Contract and any Individual Accounts are
nonassignable except to Aetna in the event of a loan, and non-
transferable. In the event of a loan against an Individual Account is
requested, however, the Current Value of the Individual Account necessary
to cover the loan amount plus interest must be assigned to Aetna.
2.07. DESIGNATION OF BENEFICIARY: Each Partici-pant shall name a beneficiary.
The bene-ficiary may be changed at any time.
2.08. MISSTATEMENTS AND ADJUSTMENTS: If Aetna finds the age of any payee to be
misstated, the correct facts will be used to adjust payments.
2.09. INCONTESTABILITY: Aetna cannot cancel the Contract because of any error
of fact on the application.
2.10. GRACE PERIOD: This Contract will remain in effect even if Purchase
Payments are not continued.
2.11. INDIVIDUAL CERTIFICATES: Aetna shall issue certificates to the
Participants as required under the New York Insurance Laws. The
certificate will summarize certain provisions of the Contract.
Certificates are for information only and are not a part of the Contract.
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III. PURCHASE PAYMENT, CURRENT VALUE, AND SURRENDER PROVISIONS
3.01. NET PURCHASE PAYMENT(S): The actual Pur-chase Payment less any premium
tax. As a rule, Aetna will deduct the premium tax when Annuity benefits
are purchased (see Part IV). If Aetna determines that it must pay a
premium tax when Purchase Payments are received or at any other time, it
will deduct the tax at that time.
The Net Purchase Payment(s) will be credited among:
(a) The Fixed Account;
(b) The Guaranteed Accumulation Account; and
(c) The Fund(s) in which the Separate Account invests.
Aetna must be told the percentage of the Net Purchase Payment(s) to be
applied to each investment above.
During any calendar year, Aetna may be told to change the investment mix
four times. If additional changes are allowed, each may be subject to a
fee of up to $10.
3.02. INDIVIDUAL ACCOUNTS: Aetna will maintain an Individual Account for each
Participant. Should a Participant wish to exchange an existing Aetna TDA
Contract for this Contract, the original enrollment date will be used to
calculate the Surrender Fee.
In addition to any Purchase Payments stated to be made to this Contract,
a lump-sum Purchase Payment(s), of not less than a minimum amount stated
by Aetna, may be made on behalf of one or more Participants. Any lump-
sum Purchase Payment(s) made from an Aetna Single Premium Contract will
be subject to the terms and conditions of this Contract.
3.03. GUARANTEED ACCUMULATION ACCOUNT (GA ACCOUNT): An accumulation option
which guarantees a stipulated rate of interest for a specified period of
time (See (c) below). Amounts withdrawn before the end of the Guaranteed
Term may be subject to a Market Value Adjustment (See (f) below).
(a) Guaranteed Deposit Period (Deposit Period) -- The period of time,
usually a calendar month during which Net Purchase Payment(s) are
accepted in the GA Account for a Guaranteed Term.
(b) Guaranteed Term (Term) -- A period of time, including the Deposit
Period, for which interest rates are guaranteed on the Net Purchase
Payment made to the GA Account. The Term may vary for each
Purchase Payment and will be from approximately 1 to 5 years from
the date the Deposit Period ends.
(c) Guaranteed GA Account Interest Rates (Guaranteed Rates ) -- An
interest rate will be declared at the start of a Deposit Period and
guaranteed by Aetna for a Term; this interest rate will never be
less than 4%. Aetna will add interest daily. Aetna may declare
higher interim Guaranteed Rates for:
(1) The Deposit Period and 12 months following the close of a
Deposit Period; and
(2) Any subsequent 12-month period until the end of the Term. The
last period of the Term may be from 10-12 months.
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(d) Withdrawals -- Amounts withdrawn from the GA Account before the
end of the Term may be subject to a Market Value Adjustment (See
(f) below). Withdrawals will be made from the Term with the
oldest Deposit Period. During the Deposit Period and the 90 days
following the close of the Deposit Period, any amounts applied to
the GA Account during that Deposit Period may not be withdrawn
unless due to:
(1) A surrender; or
(2) To pay a premium for an Annuity Option.
(e) Reinvestment -- The Participant will receive a thirty day notice
that Term(s) are about to mature. This thirty day notice will be
mailed at least 15 days but not more than 45 days prior to the
beginning of each thirty day period. At least 18 days before the
end of a Term, the Participant will be mailed a notice of the
next available Guaranteed Rates and Term. Amounts may be
withdrawn from the ending Term on its final day without Market
Value Adjustment. Aetna must receive written notice of such
election at the Opportunity Plus Processing Office at least three
(3) business days before the end of the Term. Otherwise, amounts
in the ending Term will be subject to the new Term and will be
subject to the new Guaranteed Rates.
(f) Market Value Adjustment -- There will be a Market Value
Adjustment for a withdrawal from the GA Account before the end of
a Term when due to:
(1) A transfer;
(2) A surrender; or
(3) A payment of an Annuity premium for Annuity Option 2.
The amount of the withdrawal will be adjusted to a market value amount as
described below. The market value amount will be equal to the amount
withdrawn multiplied by the following ratio:
x
(1+i)TO THE POWER OF ---
365
--------------------------
x
(1+j)TO THE POWER OF ---
365
Where:
- i is the Deposit Period Yield;
- j is the Current Yield; and
- x is the number of days from the Wednesday of the week of
withdrawal to the last day of the Term.
The Deposit Period Yield will be determined as follows:
- At the close of the last business day of each week of the Deposit
Period, a yield will be computed as the average of the yields on
that day of U.S. Treasury Notes which mature in the last quarter of
the Term.
- The Deposit Period Yield is then the average of those yields for
the Deposit period. If withdrawal is made prior to the close of
the Deposit Period, it is the average of those yields on each week
preceding withdrawal.
The Current Yield is the average of the yields on the last business day
of the week preceding withdrawal on the same U.S. Treasury Notes included
in the Deposit Period Yield.
In the event that no U.S. Treasury Notes exist which mature in the last
quarter of the Term, Aetna reserves the right to use the next available
U.S. Treasury Notes that mature in the following quarter.
There will be no Market Value Adjustment for withdrawals made to:
- Satisfy the terms of the Sum Payable at Death provision; or
- Pay a premium for Annuity Options 3 or 4.
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Aetna shall make any change that affects the Market Value Adjustment with
at least 30 days' advance written notice to the Contract Holder. Any
such change shall become effective for any new Term and for any present
or future Participant.
3.04. GUARANTEED INTEREST RATE -- FIXED ACCOUNT: On any Net Purchase
Payment(s) made to the Fixed Account, Aetna will add interest daily at
any annual rate no less than 4%. Aetna may add interest daily at any
higher rate determined by its Board of Directors.
3.05. MAINTENANCE FEE: There is an annual maintenance fee of $15.00. One-
fourth of this fee ($3.75) is deducted from the Current Value on the last
business day of each calendar quarter.
3.06. FUND(S) RECORD UNITS -- SEPARATE AC-COUNT: The portion of the Net
Purchase Payment(s) applied to the Separate Account will determine the
number of Fund(s) Record Units. This number is equal to the Net Pur-
chase Payment applied to the Fund divided by the Fund Record Unit Value
(see 3.09) for the Valuation Period in which the Pur-chase Payment is
received in good order.
3.07. NET RETURN FACTOR(S) -- SEPARATE ACCOUNT: The Net Return Factors are
used to compute all Separate Account values and payments for any Fund.
The Net Return Factor for each Fund is equal to 1.0000000 plus the Net
Return Rate.
The Net Return Rate is equal to:
(a) The value of the shares of the Fund held by the Separate Account at
the end of a Valuation Period; minus
(b) The value of the shares of the Fund held by the Separate Account at
the start of the Valuation Period; plus or minus
(c) Taxes (or reserves for taxes) on the Separate Account (if any);
divided by
(d) The total value of the Fund Record Units and Fund Annuity Units of
the Separate Account (see 3.06 and 4.05) at the start of the
Valuation Period; minus
(e) A daily actuarial charge at an annual rate of 1.25% for Annuity
mortality and expense risks and profit and a daily administrative
charge which will not exceed .25% on an annual basis.
(f) For GET, a daily fee at the annual rate of .25% for the guarantee
and profit.
A Net Return Rate may be more or less than 0.
The value of a share of the Fund is equal to the net assets of the Fund
divided by the number of shares outstanding.
The administrative charge may be changed annually except for amounts
which have been used to purchase an Annuity. This charge will not
exceed .25%.
3.08. FUND(S) RECORD UNIT VALUE -- SEPARATE ACCOUNT: A Fund(s) Record Unit
Value is computed by multiplying the Net Return Factor for the current
Valuation Period by the Fund(s) Record Unit Value for the previous
Period. The dollar value of a Fund(s) Record Unit, Separate Account
assets, and Variable Annuity payments may go up or down due to investment
gain or loss.
3.09. CURRENT VALUE: The Current Value is equal to:
(a) Any amounts in the Fixed Account, including Fixed Account interest
added by Aetna; plus
(b) Any amounts in the GA Account, including GA Account interest added
by Aetna; plus
(c) The sum of any Separate Account Record Unit value(s); less
(d) Any Maintenance Fee(s) due.
Current Value does not include amounts used to purchase an Annuity.
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3.10. TRANSFER OF CURRENT VALUE FROM THE FUNDS OR GA ACCOUNT: Before an
Annuity Option is elected, all or any portion of the Current Value may be
transferred from any Fund to any other Fund, to the Fixed Account, or to
the GA Account's current Deposit Period.
Four transfers of Current Value (excluding transfers from the GA Account
at the end of a Guaranteed Term) can be made during a calendar year
period. If Aetna allows additional transfers, each may be subject to a
fee of up to $10.
3.11. TRANSFER OF CURRENT VALUE FROM THE FIXED ACCOUNT: 10% of the Current
Value held in the Fixed Account may be transferred to any Fund(s) or to
the GA Account's current Deposit Period. Such transfer will be:
(a) Without charge;
(b) Allowed once per calendar year; and
(c) Not allowed under an Annuity Option.
Aetna may, on a temporary basis, allow any larger percent to be
transferred.
The Current Value of the Fixed Account, as used above, is the value when
the request is received at the Opportunity Plus Processing Office in
Albany, New York.
3.12. NOTICE TO THE PARTICIPANT: Aetna will notify the Participant each year
of:
(a) The Value of any amounts held in:
(1) The Fixed Account;
(2) The GA Account; and
(3) The Fund(s) for the Separate Account; and
(b) The number of any Fund(s) Record Units;
(c) The Fund(s) Record Unit Value(s); and
(d) The Surrender Value of these amounts.
Such number or values will be as of a date no more than 60 days before
the date of the notice.
3.13. LOAN VALUE: During the accumulation period, a Participant may request a
loan from his or her Individual Account by submitting a loan request form
to the Opportunity Plus Processing Office. A loan may not be requested
within 12 months from the date of any prior loan. The following
conditions must also be met:
(a) The minimum Individual Account Current Value must be $5,000. The
loan amount must be at least $3,500. The loan amount may not
exceed the lesser of:
(1) 50% of the vested Individual Account Current Value reduced by
the outstanding loan balance on the date on which the loan is
made; or
(2) $50,000 reduced by the highest outstanding balance of loans
within the preceding 12 months ending on the day before the
loan is made.
However, if the Individual Account Current Value is between
$5,000 and $20,000, the loan amount is the lesser of:
(3) 75% of the vested Individual Account Current Value reduced by
the outstanding loan balance on the date on which the loan is
made, or
(4) $10,000 reduced by the outstanding loan balance on the date on
which the loan is made.
Loans can be made from those Individual Account values held in the
Fund(s) and the Fixed Account. Loans may not be made against amounts
held in the GA Account although such values are included in the
determination of Individual Account Current Value. If a Participant
intends to request a loan against any portion of the GA Account,
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that portion must be transferred to any of the other Fund(s) or to the
Fixed Account. Amounts transferred from the GA Account will be subject
to the Withdrawals and Market Value Adjustment provisions.
Aetna reserves the right to restrict or limit the amount that may be
borrowed from any investment option at any time. However, the full value
of all investment options is included in the determination of Individual
Account value.
When a loan is made, the number of accumulation units equal to the loan
amount will be withdrawn from the Individual Account. Accumulation units
taken from the Individual Account to provide a loan do not participate in
the investment experience of the related investment options. Unless
instructed otherwise, the amount withdrawn will be allocated on a pro
rata basis among the Fixed Account and the Fund(s).
(b) Loan interest payable to Aetna will accrue on a daily basis at the
rate of 1% annually unless a higher rate is required by law.
(c) Principal and interest on loans will be amortized over a 5-year
term. However, principal and interest on loans taken for the
acquisition of the Participant's principal residence will be
amortized over a period of 1 to 20 whole years, as elected by the
Par-ticipant. The projected final repayment must be no later than
the end of the calendar year in which the Participant attains age
70.
(d) Repayment of principal and interest is required at 3-month
intervals. A bill in the amount of the quarterly repayment due
will be mailed to the Participant in advance of the payment due
date. The repayment due date will coincide with the loan effective
date. The loan effective date will be the date the Opportunity
Plus Processing Office in Albany, New York receives the loan
request form in good order. Payment will be due within 30 days of
the repayment due date.
(e) Unless otherwise specified, the repayments of principal will be
allocated among the current investment options including the
current GA Account Deposit Period.
The Participant may specify the allocation of the principal
repayments among the same contract investment options and in the
same proportion as when the loan was initially made.
(f) If a partial surrender is taken from a Participant's Individual
Account due to non-payment of a billed quarterly installment, the
date of the surrender will be the first business day following the
last day of the month in which the repayment was due.
(g) If a repayment is received in excess of a billed amount, the excess
will be applied towards the principal portion of the outstanding
loan. Payments received which are less than the billed amount will
be returned to the Participant.
(h) Prepayment of the entire loan will be allowed. At the time of
prepayment, Aetna will bill the Participant for an accrued
interest. Aetna will consider the loan paid when this accrued
interest is paid.
(i) If an Individual Account is surrendered with an outstanding loan
balance, accrued interest and any applicable deferred sales charge
will be deducted from the surrender amount. If an Individual
Account with an outstanding loan balance is surrendered due to the
Participant's death or the election of an Annuity Option, accrued
interest will be deducted from the surrender amount.
(j) If the Participant's Individual Account Reserve falls below an
amount equal to 25% of the total loans outstanding,
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repayment of all outstanding loans may be required.
The amount payable by Aetna upon the total surrender of an
Individual Account with a loan(s) outstanding shall be reduced by
accrued interest on the loan amount.
3.14. SUM PAYABLE AT DEATH (BEFORE ANNUITY PAYMENTS START): The Current Value
payable under the terms of this section will be reduced by the amount of
the accrued interest on any outstanding loan. Aetna will pay the current
Value to the beneficiary if:
(1) The Participant dies before Annuity payments start; and
(2) The notice of death is received in good order by Aetna.
The sum paid will be the Current Value on the date the notice is received
at the Opportunity Plus Processing Office.
The amount paid from the Fixed Account will not be less than the Net
Purchase Payment(s) allocated to the Fixed Account under the
Participant's Individual Account (less any prior transfers (see 3.11),
surrenders, Maintenance Fees, or amounts used to purchase Annuity
Options). The beneficiary, if a spouse, may choose to apply all or any
portion of the payment to an Annuity Option. If the beneficiary is not a
spouse, all of the payment must either be applied only to Annuity Option
1 or 2 within one year of the Participant's death or be paid to the
beneficiary within 5 years of the death of the Participant (see Part IV).
If no beneficiary exists, the payment will be made to the estate of the
Participant.
3.15. SURRENDER VALUE: The amount payable by Aetna upon the surrender of any
portion of the Individual Account(s) shall be reduced by a Surrender Fee.
The Surrender Fee will be in accordance with the Surrender Fee table in
3.16.
The Surrender Fee on a total surrender of an Individual Account will not
exceed 9.0% of the actual Purchase Payments made to that Account and will
not be greater than that allowable under Section 4223(e)(4) of the New
York State Insurance Law.
3.16. SURRENDER FEE: For each surrender from an Individual Account, the
Surrender Fee will vary according to the number of Purchase Payment
Cycles completed for the Individual Account being surrendered. The
number and amount of Purchase Payments to be made in a year is chosen by
the Participant. A Purchase Payment Cycle is completed when this number
and amount of Purchase Payments have been made. The number of Purchase
Payment Cycles completed may not be greater than the number of whole
years since the Individual Account was established. For each surrender,
the Fee will be as follows:
NUMBER OF PURCHASE
PAYMENT CYCLES SURRENDER
COMPLETED FEE
Less Than 5 5%
5 or more but less than 7 4%
7 or more but less than 9 3%
9 or 10 2%
More than 10 0%
No Surrender Fee is deducted from any portion of the Individual Account
which is paid:
(a) At the death of a Participant before Annuity payments start;
(b) As a premium for an Annuity for a Participant under this Contract;
(c) After a Participant has reached age 59 1/2 and 9 or more Purchase
Payment Cycles have been completed for the Individual Account being
surrendered;
(d) After the tenth anniversary of the Effective Date of the Individual
Account;
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(e) Due to the Participant's disability as defined by the Internal
Revenue Service for Tax Deferred Annuities;
(f) As a result of a Participant's financial hardship as defined by the
Internal Revenue Service for Tax Deferred Annuities; or
(g) After a Participant becomes eligible to immediately begin receiving
benefits under the New York State Teachers' or Employees'
Retirement Systems and actually retires.
3.17. PAYMENT OF SURRENDER VALUE: Under certain emergency conditions, Aetna
may defer payment;
(a) For a period of up to 6 months (unless not allowed by state law);
or
(b) As provided by federal law.
3.18. REINSTATEMENT: All or a portion of the proceeds of a full surrender of
this Contract may be reinvested within 30 days after the surrender if
allowed by law. Any Maintenance Fee and Surrender Fee charged at the
time of surrender on the amount being reinvested will be included in the
reinstatement. Any Market Value Adjustment deducted from GA Account
surrenders will not be included in the reinstatement. Amounts will be
reinstated among the Fixed Account, GA Account, and Separate Account in
the same proportion as they were at the time of surrender. Any amounts
reinstated to the GA Account will be credited to the current Deposit
Period. The number of Record Units reinstated will be based on the
Record Unit Value(s) next computed after receipt at Aetna's Home Office
of the reinstatement request and the amount to be reinvested.
Reinstatement is permitted only once.
3.19. PAYMENT OF CURRENT VALUE: Aetna may pay in a lump sum any Current Value
if Purchase Payments have not been received for three full years and the
Current Value is less than $2,000. Such Current Value paid may not be
reinstated.
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IV. ANNUITY PROVISIONS
4.01. CHOICES TO BE MADE: The Participant may tell Aetna to pay all or any
portion of the Current Value of the Contract (minus any premium tax) as a
premium for an Annuity under Option 2, 3 or 4 (see 4.06). The first
Annuity payment must generally be made by the April first following the
year in which the Participant turns 70 1/2 or such later date as may be
allowed under federal law or regulations. In no event may any payments
to the Annuitant under an Annuity Option extend beyond:
(a) The life of the Annuitant;
(b) The lives of the Annuitant and second Annuitant;
(c) A period certain greater than the Annuitant's life expectancy,
determined as of the date payments are to commence; or
(d) A period certain greater than the life expectancies of the
Annuitant and the second Annuitant, determined as of the date
payments are to commence.
When an Option is chosen, Aetna must also be told if payments are to be
made other than monthly and to pay:
(a) A Fixed Annuity using the General Account;
(b) A Variable Annuity using any of the Fund(s) made available by Aetna
for Annuity purposes; or
(c) A combination of (a) and (b).
If a Fixed Annuity is chosen, Aetna will credit interest daily at an
annual rate no less than 3.5%. Aetna may add interest daily at any
higher rate.
If a Variable Annuity is chosen, an Assumed Annual Net Return Rate of 5%
may be chosen. If not chosen, Aetna will use an Assumed Annual Net
Return Rate of 3.5%.
With the exception of Option 2 on a variable basis, once elected, an
Annuity Option may not be revoked.
4.02. TERMS OF ANNUITY OPTIONS:
(a) When payments start, the age of the Annuitant plus the number of
years for which payments are guaranteed must not exceed 95.
(b) The present value of the expected payments to the Annuitant when
payments start shall be more than 50% of the present value of the
total expected payments to be made; this restriction does not apply
if Option 4 is chosen and the second Annuitant is the spouse of the
Annuitant.
(c) An Annuity Option may not be chosen if the first payment would be
less than $20 or if the total payments in a year would be less than
$100.
(d) If a Fixed Annuity under Option 2, 3 or 4 is chosen and a larger
payment would result from applying the Surrender Value to a current
Aetna single premium immediate Annuity, Aetna will make the larger
payment.
(e) Age, where used in the following tables, means age on the birthday
closest to the date of the first payment.
The Annuity rates for Options 3 and 4 are based on mortality from
1983 Table 2. The Annuity rates do not differ by sex. A more
complete description of rates has been filed with the office of the
New York Department of Insurance.
(f) Assumed Annual Net Return Rate is the interest rate used to
determine the amount of the first Annuity payment under a Variable
Annuity. The Separate Account must earn this rate plus enough to
cover the mortality and expense risk and administrative fee charges
if future Variable Annuity payments are to remain level.
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4.03. DEATH OF ANNUITANT/BENEFICIARY: When an Annuitant dies under Options 2
and 3, the present value of any remaining guaranteed payments will be
paid in one sum to the beneficiary, or upon election by the beneficiary,
any remaining payments will continue to the beneficiary. If no
beneficiary exists, the present value of any remaining guaranteed
payments will be paid in one sum to the estate of the Annuitant.
In no event may any payments to the beneficiary under an Annuity Option
extend beyond:
(a) The life of the beneficiary, determined as of the date payments are
to commence; or
(b) Any certain period greater than the beneficiary's life expectancy
determined as of the date payments are to commence.
If a beneficiary dies while under Option 1 or while receiving Annuity
payments, the present value of any remaining payments will be paid in one
sum to the estate of the beneficiary. The interest rate used to
determine the first payment will be used to calculate the present value.
4.04. FUND(S) ANNUITY UNITS -- SEPARATE AC-COUNT: The number of Fund(s)
Annuity Units is based on the amount of the first Variable Annuity
payment which is equal to:
(a) The portion of the Current Value (minus any premium tax) applied to
pay a Variable Annuity; divided by
(b) 1,000; multiplied by
(c) The payment rate for the Option chosen.
Such amount, or portion, of the Variable Payment will be divided by the
appropriate Fund(s) Annuity Unit Value (See 4.05) on the tenth Valuation
Period before the due date of the first payment to determine the number
of each Fund(s) Annuity Units. The number of each Fund(s) Annuity Units
remains fixed. Each future payment is equal to the sum of the products
of each Fund(s) Annuity Unit Value multiplied by the appropriate number
of Units. The Fund(s) Annuity Unit Value on the tenth Valuation Period
prior to the due date of the payment is used.
4.05. FUND(S) ANNUITY UNIT VALUE -- SEPARATE ACCOUNT: For any Valuation Period
a Fund(s) Annuity Unit Value is equal to:
(a) The Value for the previous Period; multiplied by
(b) The Net Return Factor(s) (see 3.06) for the Period; multiplied by
(c) A factor to reflect the Assumed Annual Net Return Rate.
The factor for 3.5% per year is .9999058; for 5% per year it is .9998663.
The dollar value of a Fund(s) Annuity Unit Values and payments may go up
or down due to investment gain or loss.
If Variable Annuity payments are not to decrease, Aetna must earn a gross
return on the assets of the Separate Account of:
- 5.0% on an annual basis plus an annual return of up to .25% needed
to offset the administrative charge set at the time Annuity
payments commence if an Assumed Annual Net Return Rate of 3.5% is
chosen; or
- 6.50% on an annual basis plus an annual return of up to .25% needed
to offset the administrative charge set at the time Annuity
payments commence if an Assumed Annual Net Return Rate of 5% is
chosen.
Payments shall not be changed due to changes in the mortality or expense
results or administrative charges.
16
<PAGE>
4.06. ANNUITY OPTIONS:
Option 1 -- Payment of Interest on Sum Left with Aetna -- This Option may
be used only by the beneficiary when the Participant dies before Aetna
has started paying an Annuity. A portion or all of the sum paid upon
death may be held under this Option and will be held in the General
Account of Aetna at interest (See 4.01). The beneficiary may later tell
Aetna to:
(a) Pay a portion or all of the sum held by Aetna; or
(b) Apply a portion or all of the sum held by Aetna to any Annuity
Option below.
Option 2 -- Payments for a Stated Period of Time -- An Annuity will be
paid for the number of years chosen. The number of years must be at
least 3 and not more than 30.
If payments for this Option are made under a Variable Annuity, the
present value of any remaining payments may be withdrawn at any time. If
a withdrawal is requested within 3 years after the start of payments, it
will be treated as a surrender (See 3.15).
Option 3 -- Life Income -- An Annuity will be paid for the life of the
Annuitant. If also chosen, Aetna will guarantee payments for 60, 120,
180, or 240 months.
Option 4 -- Life Income for Two Payees -- An Annuity will be paid during
the lives of the Annuitant and a second Annuitant. At the death of
either, payments will continue to the survivor. When this Option is
chosen, a choice must be made of:
(a) 100% of the payment to continue to the survivor;
(b) 66 2/3% of the payment to continue to the survivor;
(c) 50% of the payment to continue to the survivor; or
(d) Payments for a minimum of 120 months with 100% of the payment to
continue to the survivor; or
(e) 100% of the payment to continue to the survivor if the survivor is
the Annuitant and 50% of the payment to continue to the survivor if
the survivor is the second Annuitant.
Other Options -- Aetna may make other options available as allowed by the
laws of the state in which this Contract is delivered.
17
<PAGE>
OPTION 2
PAYMENTS FOR A STATED PERIOD OF TIME
AMOUNT OF FIRST MONTHLY PAYMENT FOR EACH $1,000
AFTER DEDUCTION OF ANY CHARGE FOR PREMIUM TAXES
Rates for a Fixed Annuity with Guaranteed Interest Rate of 3.5% and
Rates for a Variable Annuity with Assumed Net Return Rate of 3.5%
<TABLE>
<CAPTION>
YEARS AMOUNT OF YEARS AMOUNT OF YEARS AMOUNT OF
OF PAY- PAYMENTS OF PAY- PAYMENTS OF PAY- PAYMENTS
MENTS -------- MENTS -------- MENTS --------
----- ----- -----
<S> <C> <C> <C> <C> <C>
3 $29.19 13 $7.94 22 $5.39
4 22.27 14 7.49 23 5.24
5 18.12 15 7.10 24 5.09
6 15.35 16 6.76 25 4.96
7 13.38 17 6.47 26 4.84
8 11.90 18 6.20 27 4.73
9 10.75 19 5.97 28 4.63
10 9.83 20 5.75 29 4.53
11 9.09 21 5.56 30 4.45
12 8.46
</TABLE>
Rates for a Variable Annuity with Assumed Net Return Rate of 5%
<TABLE>
<CAPTION>
YEARS AMOUNT OF YEARS AMOUNT OF YEARS AMOUNT OF
OF PAY- PAYMENTS OF PAY- PAYMENTS OF PAY- PAYMENTS
MENTS -------- MENTS -------- MENTS --------
----- ----- -----
<S> <C> <C> <C> <C> <C>
3 $29.80 13 $8.64 22 $6.17
4 22.89 14 8.20 23 6.02
5 18.74 15 7.82 24 5.88
6 15.99 16 7.49 25 5.76
7 14.02 17 7.20 26 5.65
8 12.56 18 6.94 27 5.54
9 11.42 19 6.71 28 5.45
10 10.51 20 6.51 29 5.36
11 9.77 21 6.33 30 5.28
12 9.16
</TABLE>
18
<PAGE>
OPTION 3
LIFE INCOME
AMOUNT OF FIRST MONTHLY PAYMENT FOR EACH $1,000
AFTER DEDUCTION OF ANY CHARGE FOR PREMIUM TAXES
Rates for a Fixed Annuity with Guaranteed Interest Rate of 3.5% and
Rates for a Variable Annuity with Assumed Net Return Rate of 3.5%
PAYMENTS GUARANTEED FOR A STATED PERIOD OF MONTHS
<TABLE>
<CAPTION>
AGE OF
ANNUITANT NONE 60 120 180 240
- --------- ------ ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
50 $4.34 $4.34 $4.31 $4.27 $4.22
51 4.41 4.40 4.38 4.33 4.27
52 4.48 4.47 4.45 4.40 4.32
53 4.56 4.55 4.52 4.46 4.38
54 4.64 4.63 4.59 4.53 4.44
55 4.72 4.71 4.67 4.60 4.50
56 4.81 4.80 4.75 4.67 4.56
57 4.91 4.89 4.84 4.75 4.62
58 5.01 4.99 4.93 4.83 4.69
59 5.12 5.10 5.03 4.92 4.75
60 5.23 5.21 5.13 5.00 4.82
61 5.36 5.33 5.24 5.09 4.88
62 5.49 5.45 5.35 5.19 4.95
63 5.63 5.59 5.47 5.28 5.02
64 5.78 5.73 5.60 5.38 5.08
65 5.94 5.89 5.73 5.48 5.15
66 6.11 6.05 5.87 5.58 5.21
67 6.29 6.22 6.02 5.69 5.27
68 6.49 6.41 6.17 5.79 5.33
69 6.70 6.60 6.33 5.90 5.38
70 6.92 6.81 6.49 6.00 5.43
71 7.17 7.04 6.66 6.10 5.48
72 7.43 7.27 6.84 6.20 5.52
73 7.71 7.53 7.02 6.30 5.55
74 8.02 7.80 7.20 6.39 5.59
75 8.35 8.08 7.38 6.48 5.62
</TABLE>
Rates for ages not shown will be provided on request and will be computed on a
basis consistent with the rates in the above tables.
19
<PAGE>
OPTION 3
LIFE INCOME
AMOUNT OF FIRST MONTHLY PAYMENT FOR EACH $1,000
AFTER DEDUCTION OF ANY CHARGE FOR PREMIUM TAXES
Rates for a Variable Annuity with Assumed Net Return Rate of 5.0%
PAYMENTS GUARANTEED FOR A STATED PERIOD OF MONTHS
<TABLE>
<CAPTION>
AGE OF
ANNUITANT NONE 60 120 180 240
- --------- ------ ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
50 $5.26 $5.25 $5.22 $5.17 $5.11
51 5.33 5.32 5.28 5.23 5.15
52 5.40 5.38 5.34 5.29 5.20
53 5.47 5.45 5.41 5.35 5.26
54 5.54 5.53 5.48 5.41 5.31
55 5.63 5.61 5.56 5.47 5.36
56 5.71 5.69 5.63 5.54 5.42
57 5.80 5.78 5.72 5.61 5.47
58 5.90 5.88 5.81 5.69 5.53
59 6.01 5.98 5.90 5.77 5.59
60 6.12 6.09 6.00 5.85 5.65
61 6.24 6.21 6.10 5.93 5.71
62 6.37 6.33 6.21 6.02 5.77
63 6.51 6.46 6.33 6.11 5.83
64 6.66 6.60 6.45 6.20 5.89
65 6.82 6.75 6.57 6.30 5.95
66 6.99 6.91 6.71 6.39 6.01
67 7.17 7.08 6.85 6.49 6.06
68 7.36 7.27 6.99 6.59 6.12
69 7.57 7.46 7.15 6.69 6.17
70 7.80 7.67 7.30 6.78 6.21
71 8.05 7.89 7.47 6.88 6.25
72 8.31 8.13 7.64 6.97 6.29
73 8.59 8.38 7.81 7.06 6.33
74 8.90 8.64 7.99 7.15 6.36
75 9.23 8.93 8.16 7.23 6.38
</TABLE>
Rates for ages not shown will be provided on request and will be computed on a
basis consistent with the rates in the above tables.
20
<PAGE>
OPTION 4
LIFE INCOME FOR TWO PAYEES
JOINT AND LAST SURVIVOR ANNUITY
100% TO THE SURVIVOR
NO MINIMUM PERIOD
AMOUNT OF FIRST MONTHLY PAYMENT FOR EACH $1,000
AFTER DEDUCTION OF ANY CHARGE FOR PREMIUM TAXES
Rates for a Fixed Annuity with Guaranteed Interest Rate of 3.5% and
Rates for a Variable Annuity with Assumed Net Return Rate of 3.5%
AGE OF SECOND ANNUITANT
<TABLE>
<CAPTION>
AGE OF
ANNUITANT 45 50 55 60 65 70 75 80 85
- --------- ----- ----- ----- ----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
45 $3.69 $3.75 $3.81 $3.84 $3.87 $3.90 $3.91 $3.92 $3.92
50 3.75 3.89 3.97 4.04 4.09 4.13 4.15 4.17 4.18
55 3.81 3.97 4.16 4.27 4.35 4.42 4.47 4.50 4.51
60 3.84 4.04 4.27 4.51 4.66 4.78 4.86 4.92 4.95
65 3.87 4.09 4.35 4.66 4.99 5.19 5.35 5.46 5.53
70 3.90 4.13 4.42 4.78 5.19 5.67 5.95 6.17 6.31
75 3.91 4.15 4.47 4.86 5.35 5.95 6.64 7.04 7.34
80 3.92 4.17 4.50 4.92 5.46 6.17 7.04 8.04 8.63
85 3.92 4.18 4.51 4.95 5.53 6.31 7.34 8.63 10.05
</TABLE>
Rates for a Variable Annuity with Assumed Net Return Rate of 5%
AGE OF SECOND ANNUITANT
<TABLE>
<CAPTION>
AGE OF
ANNUITANT 45 50 55 60 65 70 75 80 85
- --------- ----- ----- ----- ----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
45 $4.63 $4.68 $4.73 $4.77 $4.80 $4.82 $4.84 $4.85 $4.86
50 4.68 4.80 4.88 4.95 5.00 5.04 5.06 5.08 5.10
55 4.73 4.88 5.04 5.15 5.24 5.30 5.35 5.39 5.41
60 4.77 4.95 5.15 5.37 5.52 5.63 5.72 5.79 5.83
65 4.80 5.00 5.24 5.52 5.83 6.04 6.20 6.31 6.39
70 4.82 5.04 5.30 5.63 6.04 6.49 6.77 6.99 7.15
75 4.84 5.06 5.35 5.72 6.20 6.77 7.45 7.86 8.16
80 4.85 5.08 5.39 5.79 6.31 6.99 7.86 8.84 9.43
85 4.86 5.10 5.41 5.83 6.39 7.15 8.16 9.43 10.86
</TABLE>
21
<PAGE>
OPTION 4
LIFE INCOME FOR TWO PAYEES
JOINT AND LAST SURVIVOR ANNUITY
66 2/3% TO THE SURVIVOR
NO MINIMUM PERIOD
AMOUNT OF FIRST MONTHLY PAYMENT FOR EACH $1,000
AFTER DEDUCTION OF ANY CHARGE FOR PREMIUM TAXES
Rates for a Fixed Annuity with Guaranteed Interest Rate of 3.5% and
Rates for a Variable Annuity with Assumed Net Return Rate of 3.5%
AGE OF SECOND ANNUITANT
<TABLE>
<CAPTION>
AGE OF
ANNUITANT 45 50 55 60 65 70 75 80 85
- --------- ----- ----- ----- ----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
45 $3.94 $4.05 $4.18 $4.32 $4.48 $4.66 $4.84 $5.02 $5.19
50 4.05 4.20 4.35 4.51 4.69 4.89 5.09 5.30 5.49
55 4.18 4.35 4.54 4.73 4.95 5.18 5.42 5.65 5.87
60 4.32 4.51 4.73 4.99 5.25 5.53 5.82 6.11 6.37
65 4.48 4.69 4.95 5.25 5.61 5.97 6.33 6.69 7.02
70 4.66 4.89 5.18 5.53 5.97 6.49 6.96 7.43 7.88
75 4.84 5.09 5.42 5.82 6.33 6.96 7.73 8.39 9.02
80 5.02 5.30 5.65 6.11 6.69 7.43 8.39 9.54 10.46
85 5.19 5.49 5.87 6.37 7.02 7.88 9.02 10.46 12.15
</TABLE>
Rates for a Variable Annuity with Assumed Net Return Rate of 5%
AGE OF SECOND ANNUITANT
<TABLE>
<CAPTION>
AGE OF
ANNUITANT 45 50 55 60 65 70 75 80 85
- --------- ----- ----- ----- ----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
45 $4.87 $4.99 $5.12 $5.27 $5.44 $5.64 $5.86 $6.09 $6.30
50 4.99 5.12 5.26 5.43 5.63 5.85 6.09 6.33 6.57
55 5.12 5.26 5.44 5.63 5.85 6.11 6.38 6.65 6.92
60 5.27 5.43 5.63 5.87 6.14 6.44 6.75 7.07 7.38
65 5.44 5.63 5.85 6.14 6.49 6.84 7.23 7.62 8.00
70 5.64 5.85 6.11 6.44 6.84 7.35 7.84 8.34 8.83
75 5.86 6.09 6.38 6.75 7.23 7.84 8.60 9.28 9.93
80 6.09 6.33 6.65 7.07 7.62 8.34 9.28 10.42 11.35
85 6.30 6.57 6.92 7.38 8.00 8.83 9.93 11.35 13.04
</TABLE>
22
<PAGE>
OPTION 4
LIFE INCOME FOR TWO PAYEES
JOINT AND LAST SURVIVOR ANNUITY
50% TO THE SURVIVOR
NO MINIMUM PERIOD
AMOUNT OF FIRST MONTHLY PAYMENT FOR EACH $1,000
AFTER DEDUCTION OF ANY CHARGE FOR PREMIUM TAXES
Rates for a Fixed Annuity with Guaranteed Interest Rate of 3.5% and
Rates for a Variable Annuity with Assumed Net Return Rate of 3.5%
AGE OF SECOND ANNUITANT
<TABLE>
<CAPTION>
AGE OF
ANNUITANT 45 50 55 60 65 70 75 80 85
- --------- ----- ----- ----- ----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
45 $4.07 $4.22 $4.40 $4.61 $4.87 $5.17 $5.49 $5.84 $6.18
50 4.22 4.37 4.56 4.79 5.06 5.39 5.75 6.13 6.51
55 4.40 4.56 4.76 5.00 5.31 5.66 6.06 6.49 6.91
60 4.61 4.79 5.00 5.27 5.61 6.01 6.46 6.95 7.43
65 4.87 5.06 5.31 5.61 5.99 6.44 6.96 7.54 8.11
70 5.17 5.39 5.66 6.01 6.44 6.99 7.61 8.29 9.00
75 5.49 5.75 6.06 6.46 6.96 7.61 8.43 9.29 10.17
80 5.84 6.13 6.49 6.95 7.54 8.29 9.29 10.54 11.71
85 6.18 6.51 6.91 7.43 8.11 9.00 10.17 11.71 13.57
</TABLE>
Rates for a Variable Annuity with Assumed Net Return Rate of 5%
AGE OF SECOND ANNUITANT
<TABLE>
<CAPTION>
AGE OF
ANNUITANT 45 50 55 60 65 70 75 80 85
- --------- ----- ----- ----- ----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
45 $5.01 $5.15 $5.33 $5.56 $5.83 $6.17 $6.55 $6.98 $7.40
50 5.15 5.29 5.48 5.71 6.01 6.36 6.78 7.23 7.68
55 5.33 5.48 5.66 5.91 6.23 6.61 7.05 7.54 8.05
60 5.56 5.71 5.91 6.16 6.51 6.93 7.42 7.96 8.53
65 5.83 6.01 6.23 6.51 6.87 7.34 7.89 8.51 9.16
70 6.17 6.36 6.61 6.93 7.34 7.87 8.51 9.23 10.00
75 6.55 6.78 7.05 7.42 7.89 8.51 9.33 10.20 11.14
80 6.98 7.23 7.54 7.96 8.51 9.23 10.20 11.44 12.64
85 7.40 7.68 8.05 8.53 9.16 10.00 11.14 12.64 14.51
</TABLE>
23
<PAGE>
OPTION 4
LIFE INCOME FOR TWO PAYEES
JOINT AND LAST SURVIVOR ANNUITY
100% TO THE SURVIVOR
120 MONTHS MINIMUM PERIOD
AMOUNT OF FIRST MONTHLY PAYMENT FOR EACH $1,000
AFTER DEDUCTION OF ANY CHARGE FOR PREMIUM TAXES
Rates for a Fixed Annuity with Guaranteed Interest Rate of 3.5% and
Rates for a Variable Annuity with Assumed Net Return Rate of 3.5%
AGE OF SECOND ANNUITANT
<TABLE>
<CAPTION>
AGE OF
ANNUITANT 45 50 55 60 65 70 75 80 85
- --------- ----- ----- ----- ----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
45 $3.69 $3.75 $3.80 $3.84 $3.87 $3.89 $3.91 $3.91 $3.92
50 3.75 3.89 3.97 4.04 4.09 4.13 4.15 4.16 4.17
55 3.80 3.97 4.15 4.26 4.35 4.41 4.46 4.48 4.49
60 3.84 4.04 4.26 4.50 4.65 4.76 4.84 4.89 4.91
65 3.87 4.09 4.35 4.65 4.98 5.17 5.31 5.41 5.46
70 3.89 4.13 4.41 4.76 5.17 5.62 5.87 6.05 6.15
75 3.91 4.15 4.46 4.84 5.31 5.87 6.48 6.79 6.98
80 3.91 4.16 4.48 4.89 5.41 6.05 6.79 7.50 7.83
85 3.92 4.17 4.49 4.91 5.46 6.15 6.98 7.83 8.50
</TABLE>
Rates for a Variable Annuity with Assumed Net Return Rate of 5%
AGE OF SECOND ANNUITANT
<TABLE>
<CAPTION>
AGE OF
ANNUITANT 45 50 55 60 65 70 75 80 85
- --------- ----- ----- ----- ----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
45 $4.63 $4.68 $4.73 $4.77 $4.80 $4.82 $4.84 $4.85 $4.85
50 4.68 4.80 4.88 4.94 4.99 5.03 5.06 5.07 5.08
55 4.73 4.88 5.04 5.14 5.23 5.29 5.34 5.37 5.38
60 4.77 4.94 5.14 5.37 5.51 5.62 5.70 5.75 5.78
65 4.80 4.99 5.23 5.51 5.82 6.00 6.15 6.24 6.30
70 4.82 5.03 5.29 5.62 6.00 6.44 6.68 6.86 6.96
75 4.84 5.06 5.34 5.70 6.15 6.68 7.27 7.57 7.76
80 4.85 5.07 5.37 5.75 6.24 6.86 7.57 8.26 8.58
85 4.85 5.08 5.38 5.78 6.30 6.96 7.76 8.58 9.23
</TABLE>
24
<PAGE>
OPTION 4
LIFE INCOME FOR TWO PAYEES
JOINT AND 1/2 CONTINGENT LIFE INCOME ANNUITY
NO MINIMUM PERIOD
AMOUNT OF FIRST MONTHLY PAYMENT FOR EACH $1,000
AFTER DEDUCTION OF ANY CHARGE FOR PREMIUM TAXES
Rates for a Fixed Annuity with Guaranteed Interest Rate of 3.5% and
Rates for a Variable Annuity with Assumed Net Return Rate of 3.5%
AGE OF SECOND ANNUITANT
<TABLE>
<CAPTION>
AGE OF
ANNUITANT 45 50 55 60 65 70 75 80 85
- --------- ----- ----- ----- ----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
45 $3.86 $3.89 $3.93 $3.94 $3.96 $3.97 $3.98 $3.98 $3.98
50 4.02 4.10 4.15 4.18 4.21 4.23 4.24 4.25 4.26
55 4.22 4.31 4.42 4.48 4.53 4.57 4.59 4.61 4.61
60 4.43 4.56 4.70 4.84 4.93 4.99 5.04 5.07 5.09
65 4.69 4.84 5.02 5.22 5.42 5.54 5.63 5.69 5.73
70 4.99 5.17 5.39 5.65 5.93 6.23 6.40 6.52 6.60
75 5.33 5.54 5.82 6.14 6.52 6.95 7.40 7.64 7.81
80 5.70 5.96 6.29 6.69 7.17 7.75 8.41 9.08 9.45
85 6.07 6.38 6.75 7.24 7.84 8.59 9.49 10.51 11.50
</TABLE>
Rates for a Variable Annuity with Assumed Net Return Rate of 5%
AGE OF SECOND ANNUITANT
<TABLE>
<CAPTION>
AGE OF
ANNUITANT 45 50 55 60 65 70 75 80 85
- --------- ----- ----- ----- ----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
45 $4.80 $4.83 $4.86 $4.88 $4.89 $4.90 $4.91 $4.92 $4.92
50 4.95 5.02 5.06 5.10 5.13 5.15 5.16 5.17 5.18
55 5.14 5.23 5.32 5.38 5.43 5.46 5.49 5.51 5.52
60 5.36 5.47 5.59 5.72 5.80 5.86 5.91 5.95 5.97
65 5.63 5.77 5.93 6.10 6.29 6.41 6.50 6.56 6.60
70 5.96 6.12 6.31 6.54 6.81 7.08 7.25 7.37 7.46
75 6.35 6.54 6.77 7.06 7.42 7.81 8.25 8.49 8.66
80 6.79 7.01 7.30 7.66 8.11 8.65 9.28 9.93 10.29
85 7.26 7.53 7.86 8.29 8.85 9.55 10.41 11.39 12.37
</TABLE>
These Annuity rates are based on mortality from 1983 Table a.
25
<PAGE>
[LOGO] AETNA LIFE INSURANCE AND ANNUITY COMPANY
HOME OFFICE: 151 FARMINGTON AVE. OPPORTUNITY PLUS
HARTFORD, CONNECTICUT 06156 PROCESSING OFFICE
1-800-677-4636 P.O. BOS 12894
ALBANY, NEW YORK
12212-2894
INSTALLMENT PREMIUM
INDIVIDUAL VARIABLE, FIXED, OR COMBINATION CONTRACT
NONPARTICIPATING
ALL PAYMENTS AND VALUES PROVIDED BY THIS CONTRACT,
WHEN BASED ON INVESTMENT EXPERIENCE OF A SEPARATE ACCOUNT,
ARE VARIABLE AND ARE NOT GUARANTEED AS TO FIXED DOLLAR AMOUNT.
<PAGE>
Aetna Life Insurance and Annuity Company
ENDORSEMENT
This Contract is hereby endorsed as follows:
The first paragraph of Section 4.01 Choices to be Made is deleted and replaced
by the following:
An Annuity Option may be elected by telling Aetna to pay all or any portion
of the Current Value (minus any premium tax) as a premium for an Annuity
under Option 2, 3, or 4 (see 4.06). The present value of the expected
payments to the Annuitant when payments start shall be determined in
accordance with the tables under Code Section 401(a)(9) regulations in
order to comply with the incidental death benefit test. This restriction
does not apply if Option 4(e) is chosen and the second Annuitant is the
spouse of the Annuitant.
Payment Commencement Date - Generally, the first Annuity payment must be
made no later than the April 1 of the calendar year following the year in
which the Participant turns age 70 1/2 or such later date as may be allowed
under Federal law or regulations. In no event may any payments to the
Annuitant under an Annuity Option extend beyond:
(a) The life of the Annuitant;
(b) The lives of the Annuitant and beneficiary;
(c) A period certain greater than the Annuitant's life expectancy
according to regulations under Code Section 401(a)(9), determined as
of the date payments are to commence; or
(d) A period certain greater than the life expectancies of the Annuitant
and beneficiary according to regulations under Code Section 401(a)(9),
determined as of the date payments are to begin.
For distributions taken in a lump sum, see Surrender Value.
Endorsed and made a part of the Contract effective October 15, 1990 or the
effective date of the Contract whichever is later.
/s/ Dan Kearney
PRESIDENT
AETNA LIFE INSURANCE AND ANNUITY COMPANY
<PAGE>
Aetna Life Insurance and Annuity Company
ENDORSEMENT
This Contract is hereby endorsed as follows:
Section 3.09 is deleted and replaced as follows:
The Current Value payable under the terms of this section will be reduced
by the amount of the accrued interest on any outstanding loan. Aetna will
pay the Current Value to the beneficiary when:
(1) The Participant dies before Annuity payments start; and
(2) The notice of death is received in good order by Aetna.
The sum payable will be the Current Value on the date when the notice is
received. The beneficiary may choose to apply any sum under an Annuity
Option (see Annuity Provisions), subject to any other terms and conditions
of this Contract, or to receive a lump sum payment.
If the beneficiary is the surviving spouse, the first Annuity payment or
the lump sum payment may be deferred to a date not later than when the
Participant would have attained age 70 1/2 or such later date as may be
allowed under Federal law or regulations. If the beneficiary is not the
surviving spouse, all of the Current Value must either be applied to an
Annuity Option within one year of the Participant's death or be paid to the
beneficiary within 5 years of Participant's death (see Part IV). In no
event may payments to any beneficiary under an Annuity Option extend beyond
the life of the beneficiary or any period certain greater than the
beneficiary's life expectancy. If no beneficiary exists, the payment will
be made to the estate of the Participant.
Add the following provision to Section 3.15 - Surrender Value:
Surrender Restrictions: Limitations apply to full and partial surrenders
of the Restricted Amount from this Contract, as required by Code Section
403(b)(11). The Restricted Amount is the sum of :
(a) Net Purchase Payments attributable to Participant salary reduction
contributions made on and after January 1, 1989; plus
(b) The net increase, if any, in the Current Value of the Participant's
Individual Account after December 31, 1988 attributable to investment
gains and losses and credited interest.
The Restricted Amount may be fully or partially surrendered only if one or
more of the following conditions are met:
(a) The Participant has reached age 59 1/2;
(b) The Participant has separated from service;
(c) The Participant has died;
(d) The Participant has become disabled, within the meaning of Code
Section 72(m)(7); or
(e) The withdrawal is otherwise allowed by federal law, regulations or
rulings.
A full or partial surrender is also allowed if the Participant incurs a
"hardship" as the term is defined in the Code or regulations under 403(b).
However, the amount available for hardship is limited to the lesser of the
amount necessary to satisfy the need, or the Net Purchase Payments
attributable to Participant Salary reduction contributions made on or after
January 1, 1989.
Aetna may require that the Contract Holder and/or the Participant certify
and/or provide satisfactory proof that one of these conditions has been met
before a surrender request will be considered to be in good order.
<PAGE>
The Participant or beneficiary must notify Aetna in writing when a lump sum
payment is to be made or Annuity payments are to commence.
Renumber Section 3.18 entitled Reinstatement as Section 3.22.
Add the following as Section 3.18 as follows:
Limitation on Contributions: The Purchase Payment(s) made to a
Participant's Individual Account in any year cannot exceed the lesser of
the amount determined under the exclusion allowance of Code Section
403(b)(2) or the annual additions limitation of Code Section 415(c)(1). In
addition, in no event may the Purchase Payment(s) attributable to elective
deferrals as defined in Code Section 402(g) exceed $9,500 (or, such larger
amount as adjusted by the Secretary of the Treasury) during any calendar
year, unless the alternate limitation of Code Section 402(g)(8) applies.
Renumber Section 3.19 entitled Payment of Current Value as Section 3.21.
Add the following provision as Section 3.19 as follows:
Timing of Distributions: The distribution of benefits accrued after
December 31, 1986, must be made in a lump sum or must begin not later than
the April 1 of the calendar year following the calendar year in which the
Participant attains age 70 1/2. However, for a Participant who attained
age 70 1/2 before January 1, 1988, the distribution of such benefits must
be made or must begin not later than the April 1 of the calendar year
following the calendar year in which the Participant retires.
The above does not apply if the Contract Holder is a governmental entity or
a church. For Participants of such an employer, the distribution of
benefits accrued after December 31, 1986, must be made or must begin not
later than the April 1 of the calendar year following the calendar year in
which the Participant attains age 70 1/2 or retires, whichever occurs
later.
The required distribution described in either of the above rules must be
made over the life of the Participant (or the joint lives of the
Participant and beneficiary).
If the Participant does not request commencement of benefits as described
above, Aetna will not be responsible for compliance with the Code 401(a)(9)
minimum distribution requirements and for any adverse tax consequences that
may result.
Endorsed and made a part of the Contract effective on October 15, 1990 or the
effective date of the Contract whichever is later.
/s/ Dan Kearney
PRESIDENT
AETNA LIFE INSURANCE AND ANNUITY COMPANY
<PAGE>
Aetna Life Insurance and Annuity Company
ENDORSEMENT
The Contract is hereby endorsed in the following manner.
Add the following paragraph to Section 1 entitled GENERAL DEFINITIONS.
Maturity Date: The last day of a GA Account Term.
Mature Term Value: The amount payable on a GA Account Term's Maturity
Date.
Nonunitized Separate Account: An account set up by Aetna under Title 38,
Section 38a-433, of the Connecticut General Statutes, that holds assets for
GA Account Terms greater than three years. There are no discrete units for
this Account. The Contract Holder or Participant, as applicable, does not
participate in the investment gain or loss from the assets held in the
Nonunitized Separate Account. Such gain or loss is borne entirely by
Aetna. These assets may be chargeable with liabilities arising out of any
other business of Aetna.
Delete and replace Section 3.02 or 3.03 entitled Guaranteed Accumulation Account
(GA Account), as applicable, in the following manner.
The GA Account guaranteed stipulated rates of interest for stated periods
of time (see (a) and (c) below). Amounts withdrawn before the end of a
Guaranteed Term may be subject to a Market Value Adjustment (MVA) (see (g)
below).
(a) Deposit Period -- A calendar month, a calendar quarter, or any other
period of time specified by Aetna during which Net Purchase Payment(s)
and transfers are accepted into the GA Account for one or more
Guaranteed Term(s).
(b) Guaranteed Term (Term) -- The period of time for which interest rates
are guaranteed on Net Purchase Payment(s) and on transfers made into a
Deposit Period of the GA Account. Term(s) are offered at Aetna's
discretion for various lengths of time ranging up to and including ten
years.
(c) Guaranteed Term Classifications -- The grouping of Terms according to
their time to maturity.
The following are the Classifications:
(1) Short-Term: Terms of up to and including three years; or
(2) Long-Term: Terms of greater than three years and up to and
including ten years.
During a Deposit Period, Aetna may make available one or more Term(s)
within a Classification. The Contract Holder or Participant, as
applicable, has the option to allocate Net Purchase Payment(s) and
transfers into any or all of the available Deposit Period Term(s). If
no specific direction is given, Net Purchase Payment(s) and transfers
will go into available Term(s) on a pro-rata basis within the
Classification(s) previously chosen by the Contract Holder or
Participant, as applicable. At least one Term in the Short-Term
Classification will be available each Deposit Period.
(d) Guaranteed GA Account Interest Rates (Guaranteed Rates) -- Aetna will
declare all interest rate(s) applicable to a specific Term at the
start of the Deposit Period for that Term. These rate(s) are
guaranteed by Aetna for that Deposit Period and the ensuing Term and
are not automatically reinvested in that Term. Within two business
days after the Maturity Date, the Contract Holder or Participant, as
applicable, will be mailed a confirmation statement. This notice will
state the Terms and Guaranteed Rates which will apply to the
reinvested Matured Term Value.
During this Calendar month period, the Contract Holder or Participant,
as applicable, may notify Aetna's Home Office to transfer or surrender
all or part of the Matured Term Value plus any interest accrued
thereon from the GA Account without an MVA. This provision only
applies to the first such such request received from the Contract
Holder or Participant, as applicable, during this period for any
Matured Term Value. The Matured Term Value plus any interest accrued
thereon may be transferred upon such request without an MVA to:
<PAGE>
(1) Any other Term(s) of the GA Account available in the then-current
Deposit Period; or
(2) Any other allowable Fund(s).
If no such notification is given, the Matured Term Value will remain
subject to the terms and conditions of the new Term. All surrender
and transfer requests will be processed as of the date they are
received in in good order at Aetna's Home Office.
If the Contract is issued under a Tax Deferred Annuity Plan (see
Specifications page) the above notice will be sent to the
Participant(s).
(g) Market Value Adjustment (MVA) -- There will be an MVA for a withdrawal
from the GA Account before the end of a Term when the withdrawal is
due to:
(1) A transfer;
(2) A full or partial surrender; or
(3) A payment for Annuity Option 2.
The market value adjusted amount will be equal to the amount withdrawn
multiplied by the following ratio:
X
---------
365
(1+I)
-----------
X
--------
365
(1+j)
Where: I is the Deposit Period
j is the current yield
x is the number of days remaining, (computed from
Wednesday of the week of withdrawal) in the Guaranteed
Term.
The Deposit Period yield will be determined as follows:
Delete and replace Section 3.10, 3.11 or 3.12 entitled TRANSFER OF CURRENT
VALUE FRO THE FUND(S), as applicable, in the following manner.
Before an Annuity Option is elected, all or any portion of the Current
Value may be transferred from any Fund(s) and/or GA Account to:
(1) Any other allowable Fund;
(2) The Fixed Account; or
(3) Term(s) of the GA Account available in the then-current Deposit
Period.
Amounts in a specific GA Account Term cannot be transferred to the Deposit
Period of another Term within the same Classification except at the Term's
maturity (see 3.02(f) or 3.03(f), as applicable).
Amounts applied to Classifications of the GA Account may not be transferred
to the Fund(s) and/or to the Fixed Account during the Deposit Period or for
90 days after the close of the Deposit Period.
Transfers from Term(s) of the GA Account are subject to the withdrawal and
MVA provisions (see (3.02(e) and (g), as applicable).
Twelve transfers of the Current Value can be made during a calendar year
period. The Transfer of any portion of the GA Account value at the
Maturity Date of a Term is not counted for this purpose. Aetna may allow
additional transfers, but each may be subject to a fee of up to $10.
<PAGE>
Add the following statement to Section 3.14 or Section 3.15, as applicable,
entitled SURRENDER VALUE.
To comply with Section 4223 of New York Insurance Laws, the surrender
charge will never be greater than (a) plus (b) below.
(a) 7% of amounts surrendered from options other than the GA Account;
plus
(b) 7%, reduced (but not below zero) by one percent for each year the
Contract has been inforce, of amounts surrendered from the GA
Account. Aetna reserves the right to compute the surrender
charge for amounts transferred into the GA Account within 90 days
prior to surrender as if such amounts had not been transferred.
Endorsed and made a part of the Contract on April 1, 1994 or the effective date
of the Contract whichever is later.
/s/ Dan Kearney
PRESIDENT
AETNA LIFE INSURANCE AND ANNUITY COMPANY
<PAGE>
AETNA LIFE INSURANCE AND ANNUITY COMPANY
ENDORSEMENT
The Contract and the Certificate are hereby endorsed to delete SECTION 1.05
entitled FUND(S) and to replace with the following:
FUND(S) - The open-end registered management investment companies (mutual
funds) made available by Aetna under this Contract. These Funds currently
are:
- Aetna Variable Fund -- a growth and income fund;
- Aetna Income Shares -- a bond fund;
- Aetna Variable Encore Fund -- a money market fund;
- Aetna Investment Advisers Fund, Inc. -- a managed fund;
- Alger American Fund - Alger American Growth Portfolio -- an equity
fund;
- Alger American Fund - Alger American Small Capitalization Portfolio --
an equity fund;
- Calvert Responsibly Invested Balanced Portfolio -- an equity fund;
- Fidelity Investments Variable Insurance Products Fund II - Asset
Manager Portfolio -- a managed fund;
- Fidelity Investments Variable Insurance Products Fund II - Contrafund
Portfolio -- an equity fund;
- Fidelity Investments Variable Insurance Products Fund - Equity-Income
Portfolio -- a growth and income fund;
- Fidelity Investments Variable Insurance Products Fund II - Index 500
Portfolio -- an index fund investing in equity securities;
- Franklin Government Securities Trust -- a government bond fund;
- Janus Aspen Series - Aggressive Growth Portfolio -- an aggressive
growth fund;
- Janus Aspen Series - Growth Portfolio-- an equity fund;
- Janus Aspen Series - Short-Term Bond Portfolio -- a bond fund;
- Janus Aspen Series - Worldwide Growth Portfolio -- an international
equity fund;
- Lexington Emerging Markets Fund, Inc. -- an equity fund;
- Lexington Natural Resources Trust -- an equity fund;
- Neuberger & Berman Advisers Management Trust - Growth Portfolio -- a
growth fund;
- Scudder Variable Life Investment Fund - International Portfolio -- an
international equity fund;
- TCI Portfolios, Inc. - TCI Growth -- a growth fund.
Additional information regarding these Funds is available in each Fund
prospectus.
Endorsed and made a part of the Contract and the Certificate effective May 1,
1995.
/s/ Dan Kearney
PRESIDENT
AETNA LIFE INSURANCE AND ANNUITY COMPANY
<PAGE>
Aetna Life Insurance and Annuity Company
ENDORSEMENT
The Contract is hereby endorsed as follows:
Add the following provision to Section 3.16. Surrender Fee
(h) From the portion of the Individual Account's Current Value invested
inthe Fund(s) and/or the GA Account attributable to Purchase Payment(s)
made on or after April 1, 1995. This condition will apply only to the
extent that the portion of the Purchase Payment which was initially
allocated to one or more of these investment options and whose Current
Value has remained in one or more of these investment options since the
Purchase Payment was made. For any surrender, the Current Value of the
Purchase Payment(s) made on or after April 1, 1995 will be withdrawn first.
Then, the remaining Current Value will be used to satisfy the surrender
request.
Endorsed and made a part of the Contract effective March 31, 1995.
/s/ Dan Kearney
President
Aetna Life Insurance and Annuity Company
<PAGE>
AETNA LIFE INSURANCE AND ANNUITY COMPANY
ENDORSEMENT
This Certificate is hereby endorsed as follows:
The following language amends and restates the last paragraph of the cover page
of the Certificate:
INDIVIDUAL VARIABLE, FIXED OR COMBINATION ANNUITY CERTIFICATE
NONPARTICIPATING
ALL PAYMENTS AND VALUES PROVIDED BY THIS CONTRACT, WHEN BASED ON INVESTMENT
EXPERIENCE OF A SEPARATE ACCOUNT, ARE VARIABLE AND ARE NOT GUARANTEED AS TO
FIXED DOLLAR AMOUNT. THIS CERTIFICATE CONTAINS A MARKET-VALUE ADJUSTMENT
FORMULA. APPLICATION OF A MARKET-VALUE ADJUSTMENT MAY RESULT IN EITHER AN
INCREASE OR DECREASE IN THE CASH VALUE. THE MARKET-VALUE ADJUSTMENT FORMULA
DOES NOT APPLY TO A GUARANTEED TERM AT THE TIME OF ITS MATURITY.
Endorsed and made a part of the Certificate effective May 1, 1991.
/s/ Dan Kearney
President
Aetna Life Insurance and Annuity Company
<PAGE>
Aetna Life Insurance and Annuity Company
ENDORSEMENT
This Contract is hereby endorsed as follows:
Section 3.16 entitled SURRENDER FEE is hereby deleted and replaced to read as
follows:
For each surrender from an Individual Account, the Surrender Fee will vary
according to the number of Purchase Payment Cycles completed for the
Individual Account being surrendered. The number and amount of Purchase
Payments to be made in a year is chosen by the Participant. A Purchase
Payment Cycle is completed when this number and amount of Purchase Payments
have been made. The number of Purchase Payment Cycles completed may not be
greater than the number of whole years since the Individual Account was
established. For each surrender, the Fee will be as follows:
Number of Purchase Payment Cycles Surrender Fee
Less than 5 5%
5 or more but less than 7 4%
7 or more but less than 9 3%
9 or 10 2%
more than 10 0%
No Surrender Fee is deducted from any portion of the Individual Account which is
paid:
(a) At the death of the Participant before Annuity payments start;
(b) As a premium for an Annuity for a Participant under this Contract;
(c) After a Participant has reached age 59 1/2 and 9 or more Purchase Payment
Cycles have been completed for the Individual Account being surrendered;
(d) After the tenth anniversary of the Effective Date of the Individual Account;
(e) For an amount equal to or less than 10% of the Current Value, as part of the
first partial surrender request in a calendar year to a Contract Holder who is
at least age 59 1/2 and less than 70 1/2. The Current Value is calculated as of
the date the partial surrender request is received in good order at Aetna's Home
Office. Any outstanding loans from the Contact are excluded when calculating
the Current Value. This provision does not apply to partial surrenders due to
loan defaults made from the Contract and does not apply to full surrender
requests;
(f) When the Current Value is $2,500 or less and no surrenders have been taken
from the contract within the prior 12 months;
(g) Due to the Participant's disability as defined by the Internal Revenue
Service for Tax Deferred Annuities;
(h) As a result of a Participant's financial hardship as defined by the Internal
Revenue Service for Tax Deferred Annuities; or
<PAGE>
(i) Upon separation from service after a Participant meets the age and service
requirements for eligibility to immediately begin receiving benefits under the
New York State Teachers' or Employees' Retirement Systems, even if the
Participant is not a member of either System.
Endorsed and made a part of the Contract.
/s/ Edmund F. Kelly
-------------------
President
Aetna Life Insurance and Annuity Company
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
[LOGO]
AETNA LIFE INSURANCE AND ANNUITY COMPANY
HOME OFFICE: 151 FARMINGTON AVE. OPPORTUNITY PLUS
HARTFORD, CONNECTICUT 06156 PROCESSING OFFICE
1-800-525-4225 P.O. BOX 12894
ALBANY, NEW YORK
12212-2894
Herein called Aetna
Agrees to pay the benefits stated in this Contract.
THE VARIABLE FEATURES OF THIS CONTRACT ARE DESCRIBED IN PARTS III AND IV.
RIGHT TO CANCEL
The Contract Holder may cancel this Contract within 10 days of receiving it by
returning this Contract along with a written notice to Aetna at the Processing
Office at the above address or to the agent from whom it was purchased. Within
7 days after it receives the notice of cancellation and this Contract at its
Processing Office, Aetna will return the entire consideration paid plus any
increase or minus any decrease in the cash value of any funds allocated to the
Separate Account.
This page, the following pages, and the application make up the entire Contract.
Signed at the Home Office on the Effective Date.
/s/ Lucille M. Nickerson /s/ Dan Kearney
---------------------------- -------------------------
SECRETARY PRESIDENT
SINGLE PREMIUM, INDIVIDUAL VARIABLE, FIXED, OR COMBINATION ANNUITY CONTRACT,
NONPARTICIPATING. ALL PAYMENTS AND VALUES PROVIDED BY THIS CONTRACT, WHEN BASED
ON INVESTMENT EXPERIENCE OF A SEPARATE ACCOUNT, ARE VARIABLE AND ARE NOT
GUARANTEED AS TO FIXED DOLLAR AMOUNT. THIS CONTRACT CONTAINS A MARKET-VALUE
ADJUSTMENT FORMULA. APPLICATION OF A MARKET-VALUE ADJUSTMENT MAY RESULT IN
EITHER AN INCREASE OR DECREASE IN THE CASH VALUE. THE MARKET-VALUE ADJUSTMENT
FORMULA DOES NOT APPLY TO A GUARANTEED TERM AT THE TIME OF ITS MATURITY.
39470 (10-94)
CAT.2000676100
G-TDA-HH (XC/S) PRINTED IN U.S.A.
- -------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
I. GENERAL DEFINITIONS
PAGE
1.01 Annuitant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
1.02 Annuity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
1.03 Fixed Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
1.04 Fund(s) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
1.05 General Account . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
1.06 Guaranteed Accumulation Account . . . . . . . . . . . . . . . . . . . .5
1.07 Participant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
1.08 Plan. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
1.09 Purchase Payment(s) . . . . . . . . . . . . . . . . . . . . . . . . . .5
1.10 Separate Account. . . . . . . . . . . . . . . . . . . . . . . . . . . .5
1.11 Valuation Period. . . . . . . . . . . . . . . . . . . . . . . . . . . .5
1.12 Variable Annuity. . . . . . . . . . . . . . . . . . . . . . . . . . . .5
II. GENERAL PROVISIONS
2.01 Change of Contract. . . . . . . . . . . . . . . . . . . . . . . . . . .6
2.02 Change of Fund(s) . . . . . . . . . . . . . . . . . . . . . . . . . . .6
2.03 Nonparticipating Contract . . . . . . . . . . . . . . . . . . . . . . .6
2.04 Payments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
2.05 State Laws. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
2.06 Control of Contract . . . . . . . . . . . . . . . . . . . . . . . . . .7
2.07 Designation of Beneficiary. . . . . . . . . . . . . . . . . . . . . . .7
2.08 Misstatements and Adjustments . . . . . . . . . . . . . . . . . . . . .7
2.09 Incontestability. . . . . . . . . . . . . . . . . . . . . . . . . . . .7
2.10 Grace Period. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7
2.11 Individual Certificates . . . . . . . . . . . . . . . . . . . . . . . .7
III. PURCHASE PAYMENT, CURRENT VALUE, AND SURRENDER PROVISIONS
3.01 Net Purchase Payment(s) . . . . . . . . . . . . . . . . . . . . . . . .8
3.02 Individual Accounts . . . . . . . . . . . . . . . . . . . . . . . . . .8
3.03 Guaranteed Accumulation Account (GA Account). . . . . . . . . . . . . .8
3.04 Maintenance Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.05 Fund(s) Record Units -- Separate Account. . . . . . . . . . . . . . . 10
3.06 Net Return Factor(s) -- Separate Account. . . . . . . . . . . . . . . 10
3.07 Fund(s) Record Unit Value -- Separate Account . . . . . . . . . . . . 10
3.08 Current Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.09 Transfer of Current Value from the Funds or GA Account. . . . . . . . 11
3.10 Notice to the Participant . . . . . . . . . . . . . . . . . . . . . . 11
3.11 Loan Value. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.12 Sum Payable at Death (Before Annuity Payments Start). . . . . . . . . 13
3.13 Surrender Value . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.14 Payment of Surrender Value. . . . . . . . . . . . . . . . . . . . . . 13
3.15 Reinstatement . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
3.16 Payment of Current Value. . . . . . . . . . . . . . . . . . . . . . . 14
3
<PAGE>
IV. ANNUITY PROVISIONS
4.01 Choices to be Made. . . . . . . . . . . . . . . . . . . . . . . . . . 15
4.02 Terms of Annuity Options. . . . . . . . . . . . . . . . . . . . . . . 15
4.03 Death of Annuitant/Beneficiary. . . . . . . . . . . . . . . . . . . . 16
4.04 Fund(s) Annuity Units -- Separate Account . . . . . . . . . . . . . . 16
4.05 Fund(s) Annuity Unit Value -- Separate Account. . . . . . . . . . . . 16
4.06 Annuity Options . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
4
<PAGE>
I. GENERAL DEFINITIONS
1.01. ANNUITANT -- A person on whose life an Annuity has been effected under
this Contract.
1.02. ANNUITY -- Payment of an income:
(a) For the life of one or two persons;
(b) For a stated period; or
(c) For some combination of (a) and (b).
1.03. FIXED ANNUITY -- An Annuity with payments which do not vary in amount.
1.04. FUND(S) -- The open-end registered management investment companies
(mutual funds) made available by Aetna under this Contract.
These funds currently are:
- Aetna Variable Fund, a conservative common stock fund;
- Aetna Income Shares, a bond fund;
- Aetna Variable Encore Fund, a money market fund;
- Aetna Guaranteed Equity Trust, a dynamic hedged portfolio fund;
- Franklin Government Securities Trust, a government bond fund;
- Advisers Management Trust, a growth common stock fund;
- Lexington Gold Trust, a gold fund;
- Calvert Socially Responsible Series, a socially responsible common
stock fund; or
- T. Rowe Price International Equity Fund, an international stock
fund.
Additional information regarding these Funds is available in each Fund
prospectus.
1.05. GENERAL ACCOUNT -- The Account holding the assets of Aetna, other than
those assets held in the Separate Account.
1.06. GUARANTEED ACCUMULATION ACCOUNT (GA ACCOUNT) -- An accumulation option
which guarantees a stipulated rate of interest for a specified period of
time. Amounts withdrawn before the end of the Guaranteed Term may be
subject to a Market Value Adjustment.
1.07. PARTICIPANT -- A person who participates in the Opportunity Plus program.
1.08. PLAN -- The Opportunity Plus program named on the Specifications. Aetna
is not bound by the terms of the Plan.
1.09. PURCHASE PAYMENTS -- Payments made to Aetna.
1.10. SEPARATE ACCOUNT -- Variable Annuity Account C is a separate account set
up by Aetna under the Connecticut Insurance Laws which purchases shares
of the Fund(s).
1.11. VALUATION PERIOD (PERIOD) -- The period of time from the end of one
business day on the New York Stock Exchange to the end of the next
business day.
1.12. VARIABLE ANNUITY -- Any Annuity with payments which vary with the net
investment results of Separate Account C.
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II. GENERAL PROVISIONS
2.01. CHANGE OF CONTRACT: Only an authorized officer of Aetna may change the
terms of this Contract. Aetna will notify the Contract Holder in writing
at least 30 days before the effective date of change. Any change will
not affect the amount or terms of any Annuity which begins before the
change.
Any change that affects the following provisions of this Contract will
not apply to any individual participating under this Contract before the
effective date of the change:
(a) Net Purchase Payment
(b) Guaranteed GA Account Interest Rate
(c) Net Return Factor(s) -- Separate Account
(d) Current Value
(e) Surrender Value
(f) Fund(s) Annuity Unit Value -- Separate Account.
(g) Maximum transfer, maintenance, or surrender fees.
Any change that affects the Annuity Options and the tables for the
Options can only be made:
(1) No earlier than 12 months after the Effective Date of this
Contract; and
(2) No earlier than 12 months after the effective date of any such
prior change.
Aetna may make any change that affects the GA Account Market Value
Adjustment with at least 30 days advance written notice to the Contract
Holder. Any such change shall become effective for any new Term and for
any present or future Participant.
New Participants covered under this Contract on or after the effective
date of any change will be subject to the change. If the Contract Holder
does not agree to any change under this provision, no new Participants
will be covered under this Contract. Aetna will continue to accept
Purchase Pay-ments for the Participants covered under this Contract
before the change.
This Contract may also be changed as required by federal or state law.
2.02. CHANGE OF FUND(S): Aetna, or the Separate Account, may:
(a) Change the Fund(s) which may be invested in by the Separate
Account; and
(b) Replace the shares of any Fund(s) held in the Separate Account with
shares of any other Fund(s).
Changes must be:
(1) Approved by a majority vote of persons having an investment in the
Separate Account and the Fund(s);
(2) Deemed necessary by Aetna under the Investment Company Act of 1940;
or
(3) Deemed necessary by Aetna to accomplish the purpose of the
Separate Account.
Aetna will notify the Contract Holder of any change.
2.03. NONPARTICIPATING CONTRACT: The Contract Holder, Participants, or
beneficiaries will not have a right to share in the earnings of Aetna.
2.04. PAYMENTS: Aetna will make Annuity payments as and when due. Aetna will
make other payments within 7 days of receipt at the Opportunity Plus
Processing Office of written claim for payment which is in good order.
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2.05. STATE LAWS: This Contract complies with the laws of the State of New
York. Any cash, death, or Annuity payments are equal to or greater than
the minimum required by such laws. Annuity tables for legal reserve
valuation shall be as required by state law. Such tables may be
different from Annuity tables used to determine Annuity payments.
2.06. CONTROL OF CONTRACT: This is a Contract between the Contract Holder and
Aetna only to satisfy the "purchase" requirements of Section 403(b)(1) of
the Internal Revenue Code of 1954, as amended. The Contract Holder has
no right, title, or interest in the amounts held under the Contract
either by reason of remitting Purchase Payments or applying for this
Contract.
Each Participant shall own all amounts held in his or her Individual
Account. Each Participant may make any choices allowed by this Contract
for his or her Individual Account. Choices made under this Contract must
be in writing. Until receipt of such choices at the Opportunity Plus
Processing Office, Aetna may rely on any previous choices made. This
Contract and any Individual Accounts shall not be subject to the claims
of any creditors. This Contract and any Individual Accounts are
nonassignable except to Aetna in the event of a loan, and non-
transferable. In the event of a loan against an Individual Account is
requested, however, the Current Value of the Individual Account necessary
to cover the loan amount plus interest must be assigned to Aetna.
2.07. DESIGNATION OF BENEFICIARY: Each Participant shall name a beneficiary.
The beneficiary may be changed at any time.
2.08. MISSTATEMENTS AND ADJUSTMENTS: If Aetna finds the age of any payee to be
misstated, the correct facts will be used to adjust payments.
2.09. INCONTESTABILITY: Aetna cannot cancel the Contract because of any error
of fact on the application.
2.10. GRACE PERIOD: This Contract will remain in effect even if Purchase
Payments are not continued.
2.11. INDIVIDUAL CERTIFICATES: Aetna shall issue certificates to the
Participant as required under the New York Insurance Laws. The
certificate will summarize certain provisions of the Contract.
Certificates are for information only and are not a part of the Contract.
7
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III. PURCHASE PAYMENT, CURRENT VALUE, AND SURRENDER PROVISIONS
3.01. NET PURCHASE PAYMENT: The actual Purchase Payment less any premium tax.
As a rule, Aetna will deduct the premium tax when Annuity benefits are
purchased (see Part IV). If Aetna determines that it must pay a premium
tax when Purchase Payments are received or at any other time, it will
deduct the tax at that time.
The Net Purchase Payment will be credited to:
(a) The Guaranteed Accumulation Account; and
(b) The Fund(s) in which the Separate Account invests.
Aetna must be told the percentage of the Net Purchase Payment to be
applied to each investment above.
During any calendar year, Aetna may be told to change the investment mix
four times. If additional changes are allowed, each may be subject to a
fee of up to $10.
3.02. INDIVIDUAL ACCOUNTS: Aetna will maintain an Individual Account for each
Participant. Should a Participant wish to exchange an existing Aetna TDA
Contract for this Contract, the original enrollment date will be used to
calculate the Surrender Fee.
In addition to any Purchase Payment stated to be made to this Contract, a
lump-sum Purchase Payment, of not less than a minimum amount stated by
Aetna, may be made on behalf of one or more Participants. Any lump-sum
Purchase Payment will be subject to the terms and conditions of this
Contract.
3.03. GUARANTEED ACCUMULATION ACCOUNT (GA ACCOUNT): An accumulation option
which guarantees a stipulated rate of interest for a specified period of
time (See (c) below). Amounts withdrawn before the end of the Guaranteed
Term may be subject to a Market Value Adjustment (See (f) below).
(a) Guaranteed Deposit Period (Deposit Period) -- The period of time,
usually a calendar month during which Net Purchase Payment(s) are
accepted in the GA Account for a Guaranteed Term.
(b) Guaranteed Term (Term) -- A period of time, including the Deposit
Period, for which interest rates are guaranteed on the Net Purchase
Payment(s) made to the GA Account. The Term may vary for each
Purchase Payment and will be from approximately 1 to 5 years from
the date the Deposit Period ends.
(c) Guaranteed GA Account Interest Rates (Guaranteed Rates) -- An
interest rate will be declared at the start of a Deposit Period and
guaranteed by Aetna for a Term; this interest rate will never be
less than 4%. Aetna will add interest daily. Aetna may declare
higher interim Guaranteed Rates for:
(1) The Deposit Period and 12 months following the close of a
Deposit Period; and
(2) Any subsequent 12-month period until the end of the Term.
The last period of the Term may be from 10-12 months.
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<PAGE>
(d) Withdrawals -- Amounts withdrawn from the GA Account before the end
of the Term may be subject to a Market Value Adjustment (See (f)
below). Withdrawals will be made from the Term with the oldest
Deposit Period. During the Deposit Period and the 90 days
following the close of the Deposit Period, any amounts applied to
the GA Account during that Deposit Period may not be withdrawn
unless due to:
(1) A surrender; or
(2) To pay a premium for an Annuity Option.
(e) Reinvestment -- The Participant will receive a thirty day notice
that Term(s) are about to mature. This thirty day notice will be
mailed at least 15 days but not more than 45 days prior to the
beginning of each thirty day period. At least 18 days before the
end of a Term, the Participant will be mailed a notice of the next
available Guaranteed Rates and Term. Amounts may be withdrawn from
the ending Term on its final day without Market Value Adjustment.
Aetna must receive written notice of such election at the
Opportunity Plus Processing Office at least three (3) business days
before the end of the Term. Otherwise, amounts in the ending Term
will be subject to the new Term and will be subject to the new
Guaranteed Rates.
(f) Market Value Adjustment -- There will be a Market Value Adjustment
for a withdrawal from the GA Account before the end of a Term when
due to:
(1) A transfer;
(2) A surrender; or
(3) A payment of an Annuity premium for Annuity Option 2.
The amount of the withdrawal will be adjusted to a market value amount as
described below. The market value amount will be equal to the amount
withdrawn multiplied by the following ratio:
(1+i)TO THE POWER OF x DIVIDED BY 365
----------------------------------------
(1+j)TO THE POWER OF x DIVIDED BY 365
Where:
- i is the Deposit Period Yield;
- j is the Current Yield; and
- x is the number of days from the Wednesday of the week of
withdrawal to the last day of the Term.
The Deposit Period Yield will be determined as follows:
- At the close of the last business day of each week of the Deposit
Period, a yield will be computed as the average of the yields on
that day of U.S. Treasury Notes which mature in the last quarter of
the Term.
- The Deposit Period Yield is then the average of those yields for
the Deposit period. If withdrawal is made prior to the close of
the Deposit Period, it is the average of those yields on each week
preceding withdrawal.
The Current Yield is the average of the yields on the last business day
of the week preceding withdrawal on the same U.S. Treasury Notes included
in the Deposit Period Yield.
In the event that no U.S. Treasury Notes exist which mature in the last
quarter of the Term, Aetna reserves the right to use the next available
U.S. Treasury Notes that mature in the following quarter.
There will be no Market Value Adjustment for withdrawals made to:
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<PAGE>
- Satisfy the terms of the Sum Payable at Death provision; or
- Pay a premium for Annuity Options 3 or 4.
Aetna shall make any change that affects the Market Value Adjustment with
at least 30 days' advance written notice to the Contract Holder. Any
such change shall become effective for any new Term and for any present
or future Participant.
3.04. MAINTENANCE FEE: There is an annual maintenance fee of $15.00. One-
fourth of this fee ($3.75) is deducted from the Current Value on the last
business day of each calendar quarter.
3.05. FUND(S) RECORD UNITS -- SEPARATE ACCOUNT: The portion of the Net
Purchase Payment(s) applied to the Separate Account will determine the
number of Fund(s) Record Units. This number is equal to the Net Pur-
chase Payment applied to the Fund divided by the Fund Record Unit Value
(see 3.09) for the Valuation Period in which the Purchase Payment is
received in good order.
3.06. NET RETURN FACTOR(S) -- SEPARATE ACCOUNT: The Net Return Factors are
used to compute all Separate Account values and payments for any Fund.
The Net Return Factor for each Fund is equal to 1.0000000 plus the Net
Return Rate.
The Net Return Rate is equal to:
(a) The value of the shares of the Fund held by the Separate Account at
the end of a Valuation Period; minus
(b) The value of the shares of the Fund held by the Separate Account at
the start of the Valuation Period; plus or minus
(c) Taxes (or reserves for taxes) on the Separate Account (if any);
divided by
(d) The total value of the Fund Record Units and Fund Annuity Units of
the Separate Account (see 3.06 and 4.05) at the start of the
Valuation Period; minus
(e) A daily actuarial charge at an annual rate of 1.25% for Annuity
mortality and expense risks and profit and a daily administrative
charge which will not exceed .25% on an annual basis.
A Net Return Rate may be more or less than 0.
The value of a share of the Fund is equal to the net assets of the Fund
divided by the number of shares outstanding.
The administrative charge may be changed annually except for amounts
which have been used to purchase an Annuity. This charge will not exceed
.25%.
3.07. FUND(S) RECORD UNIT VALUE -- SEPARATE ACCOUNT: A Fund(s) Record Unit
Value is computed by multiplying the Net Return Factor for the current
Valuation Period by the Fund(s) Record Unit Value for the previous
Period. The dollar value of a Fund(s) Record Unit, Separate Account
assets, and Variable Annuity payments may go up or down due to investment
gain or loss.
3.08. CURRENT VALUE: The Current Value is equal to:
(a) Any amounts in the Fixed Account, including Fixed Account interest
added by Aetna; plus
(b) Any amounts in the GA Account, including GA Account interest added
by Aetna; plus
(c) The sum of any Separate Account Record Unit value(s); less
(d) Any Maintenance Fee(s) due.
Current Value does not include amounts used to purchase an Annuity.
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3.09. TRANSFER OF CURRENT VALUE FROM THE FUNDS OR GA ACCOUNT: Before an
Annuity Option is elected, all or any portion of the Current Value may be
transferred from any Fund to any other Fund, or to the GA Account's
current Deposit Period.
Four transfers of Current Value (excluding transfers from the GA Account
at the end of a Guaranteed Term) can be made during a calendar year
period. If Aetna allows additional transfers, each may be subject to a
fee of up to $10.
3.10. NOTICE TO THE PARTICIPANT: Aetna will notify the Participant each year
of:
(a) The Value of any amounts held in the Fund(s) for the Separate
Account.
(b) The number of any Fund(s) Record Units;
(c) The Fund(s) Record Unit Value(s); and
(d) The Surrender Value of these amounts.
Such number or values will be as of a date no more than 60 days before
the date of the notice.
3.11. LOAN VALUE: During the accumulation period, a Participant may request a
loan from his or her Individual Account by submitting a loan request form
to the Opportunity Plus Processing Office. A loan may not be requested
within 12 months from the date of any prior loan. The following
conditions must also be met:
(a) The minimum Individual Account Current Value must be $5,000. The
loan amount must be at least $3,500. The loan amount may not
exceed the lesser of:
(1) 50% of the vested Individual Account Current Value reduced
by the outstanding loan balance on the date on which the
loan is made; or
(2) $50,000 reduced by the highest outstanding balance of loans
within the preceding 12 months ending on the day before the
loan is made.
However, if the Individual Account Current Value is between $5,000
and $20,000, the loan amount is the lesser of:
(1) 75% of the vested Individual Account Current Value reduced
by the outstanding loan balance on the date on which the
loan is made, or
(2) $10,000 reduced by the outstanding loan balance on the date
on which the loan is made.
Loans can be made from those Individual Account values held in the
Fund(s).
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<PAGE>
Loans may not be made against amounts held in the GA Account although
such values are included in the determination of Individual Account
Current Value. If a Participant intends to request a loan against any
portion of the GA Account, that portion must be transferred to any of the
other Fund(s) or to the Fixed Account. Amounts transferred from the GA
Account will be subject to the Withdrawals and Market Value Adjustment
provisions.
Aetna reserves the right to restrict or limit the amount that may be
borrowed from any investment option at any time. However, the full value
of all investment options is included in the determination of Individual
Account value.
When a loan is made, the number of accumulation units equal to the loan
amount will be withdrawn from the Individual Account. Accumulation units
taken from the Individual Account to provide a loan do not participate in
the investment experience of the related investment options. Unless
instructed otherwise, the amount withdrawn will be allocated on a pro
rata basis among the Fixed Account and the Fund(s).
(b) Loan interest payable to Aetna will accrue on a daily basis at the
rate of 1% annually unless a higher rate is required by law.
(c) Principal and interest on loans will be amortized over a 5-year
term. However, principal and interest on loans taken for the
acquisition of the Participant's principal residence will be
amortized over a period of 1 to 20 whole years, as elected by the
Participant. The projected final repayment must be no later than
the end of the calendar year in which the Participant attains age
70.
(d) Repayment of principal and interest is required at 3-month
intervals. A bill in the amount of the quarterly repayment due
will be mailed to the Participant in advance of the payment due
date. The repayment due date will coincide with the loan effective
date. The loan effective date will be the date the Opportunity
Plus Processing Office receives the loan request form in good
order. Payment will be due within 30 days of the repayment due
date.
(e) Unless otherwise specified, the repayments of principal will be
allocated among the current investment options including the
current GA Account Deposit Period.
The Participant may specify the allocation of the principal
repayments among the same contract investment options and in the
same proportion as when the loan was initially made.
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(f) If a partial surrender is taken from a Participant's Individual
Account due to non-payment of a billed quarterly installment, the
date of the surrender will be the first business day following the
last day of the month in which the repayment was due.
(g) If a repayment is received in excess of a billed amount, the excess
will be applied towards the principal portion of the outstanding
loan. Payments received which are less than the billed amount will
be returned to the Participant.
(h) Prepayment of the entire loan will be allowed. At the time of
prepayment, Aetna will bill the Participant for any accrued
interest. Aetna will consider the loan paid when this accrued
interest is paid.
(i) If an Individual Account is surrendered with an outstanding loan
balance, accrued interest will be deducted from the surrender
amount. If an Individual Account with an outstanding loan balance
is surrendered due to the Participant's death or the election of an
Annuity Option, accrued interest will be deducted from the
surrender amount.
(j) If the Participant's Individual Account Reserve falls below an
amount equal to 25% of the total loans outstanding, repayment of
all outstanding loans may be required.
The amount payable by Aetna upon the total surrender of an
Individual Account with a loan(s) outstanding shall be reduced by
accrued interest on the loan amount.
3.12. SUM PAYABLE AT DEATH (BEFORE ANNUITY PAYMENTS START): The Current Value
payable under the terms of this section will be reduced by the amount of
the accrued interest on any outstanding loan. Aetna will pay the Current
Value to the beneficiary if:
(1) The Participant dies before Annuity payments start; and
(2) The notice of death is received in good order by Aetna.
The sum paid will be the Current Value on the date the notice is received
at the Opportunity Plus Processing Office. The beneficiary, if a spouse,
may choose to apply all or any portion of the payment to an Annuity
Option. If the beneficiary is not a spouse, all of the payment must
either be applied only to Annuity Option 1 or 2 within one year of the
Participant's death or be paid to the beneficiary within 5 years of the
death of the Participant (see Part IV). If no beneficiary exists, the
payment will be made to the estate of the Participant.
3.13. SURRENDER VALUE: The amount payable by Aetna upon the surrender of any
portion of the Individual Account(s) shall be the total amount of
Purchase Payments.
3.14. PAYMENT OF SURRENDER VALUE: Under certain emergency conditions, Aetna
may defer payment;
(a) For a period of up to 6 months (unless not allowed by state law);
or
(b) As provided by federal law.
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3.17. REINSTATEMENT: All or a portion of the proceeds of a full surrender of
this Contract may be reinvested within 30 days after the surrender if
allowed by law. Any Maintenance Fee charged at the time of surrender on
the amount being reinvested will be included in the reinstatement. Any
Market Value Adjustment deducted from GA Account surrenders will not be
included in the reinstatement. Amounts will be reinstated among the GA
Account and Separate Account in the same proportion as they were at the
time of surrender. Any amounts reinstated to the GA Account will be
credited to the current Deposit Period. The number of Record Units
reinstated will be based on the Record Unit Value(s) next computed after
receipt at Aetna's Home Office of the reinstatement request and the
amount to be reinvested.
Reinstatement is permitted only once.
3.16 PAYMENT OF CURRENT VALUE: Aetna may pay in a lump sum any Current Value
that is less than $2,000. Such Current Value paid may not be reinstated.
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IV. ANNUITY PROVISIONS
4.01. CHOICES TO BE MADE: The Participant shall determine when to begin
payments and may tell Aetna to pay all or any portion of the Current
Value of the Contract (minus any premium tax) as a premium for an Annuity
under Option 2, 3 or 4 (see 4.06). The first Annuity payment must
generally be made by the April first following the year in which the
Participant turns 70 1/2 or such later date as may be allowed under
federal law or regulations. In no event may any payments to the
Annuitant under an Annuity Option extend beyond:
(a) The life of the Annuitant;
(b) The lives of the Annuitant and second Annuitant;
(c) A period certain greater than the Annuitant's life expectancy,
determined as of the date payments are to commence; or
(d) A period certain greater than the life expectancies of the
Annuitant and the second Annuitant, determined as of the date
payments are to commence.
When an Option is chosen, Aetna must also be told if payments are to be
made other than monthly and to pay:
(a) A Fixed Annuity using the General Account;
(b) A Variable Annuity using any of the Fund(s) made available by Aetna
for Annuity purposes; or
(c) A combination of (a) and (b).
If a Fixed Annuity is chosen, Aetna will add interest daily at an annual
rate no less than 3.5%. Aetna may add interest daily at any higher rate.
If a Variable Annuity is chosen, an Assumed Annual Net Return Rate of 5%
may be chosen. If not chosen, Aetna will use an Assumed Annual Net
Return Rate of 3.5%.
With the exception of Option 2 on a variable basis, once elected, an
Annuity Option may not be revoked.
4.02. TERMS OF ANNUITY OPTIONS:
(a) When payments start, the age of the Annuitant plus the number of
years for which payments are guaranteed must not exceed 95.
(b) The present value of the expected payments to the Annuitant when
payments start shall be more than 50% of the present value of the
total expected payments to be made; this restriction does not apply
if Option 4 is chosen and the second Annuitant is the spouse of the
Annuitant.
(c) No choice of any Annuity Option may be made if the first payment
would be less than $20 or if the total payments in a year would be
less than $100.
(d) If a Fixed Annuity under Option 2, 3 or 4 is chosen and a larger
payment would result from applying the Surrender Value to a current
Aetna single premium immediate annuity, Aetna will make the larger
payment.
(e) Age, where used in the following tables, means age on the birthday
closest to the date of the first payment.
The Annuity rates for Options 3 and 4 are based on mortality from
1983 Table a. The Annuity rates do not differ by sex. A more
complete description of rates has been filed with the office of the
New York Department of Insurance.
(f) Assumed Annual Net Return Rate is the interest rate used to
determine the amount of the first Annuity payment under a Variable
Annuity. The Separate Account must earn this rate plus enough to
cover the mortality and expense risk and administrative fee charges
if future Variable Annuity payments are to remain level.
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4.03. DEATH OF ANNUITANT/BENEFICIARY: When an Annuitant dies under Options 2
and 3, the present value of any remaining guaranteed payments will be
paid in one sum to the beneficiary, or upon election by the beneficiary,
any remaining payments will continue to the beneficiary. If no
beneficiary exists, the present value of any remaining guaranteed
payments will be paid in one sum to the estate of the Annuitant.
In no event may any payments to the beneficiary under an Annuity Option
extend beyond:
(a) The life of the beneficiary, determined as of the date payments are
to commence; or
(b) Any certain period greater than the beneficiary's life expectancy
determined as of the date payments are to commence.
If a beneficiary dies while under Option 1 or while receiving Annuity
payments, the present value of any remaining payments will be paid in one
sum to the estate of the beneficiary. The interest rate used to
determine the first payment will be used to calculate the present value.
4.04. FUND(S) ANNUITY UNITS -- SEPARATE ACCOUNT: The number of Fund(s)
Annuity Units is based on the amount of the first Variable Annuity
payment which is equal to:
(a) The portion of the Current Value (minus any premium tax) applied to
pay a Variable Annuity; divided by
(b) 1,000; multiplied by
(c) The payment rate for the Option chosen.
Such amount, or portion, of the Variable Payment will be divided by the
appropriate Fund(s) Annuity Unit Value (See 4.05) on the tenth Valuation
Period before the due date of the first payment to determine the number
of each Fund(s) Annuity Units. The number of each Fund(s) Annuity Units
remains fixed. Each future payment is equal to the sum of the products
of each Fund(s) Annuity Unit Value multiplied by the appropriate number
of Units. The Fund(s) Annuity Unit Value on the tenth Valuation Period
prior to the due date of the payment is used.
4.05. FUND(S) ANNUITY UNIT VALUE -- SEPARATE ACCOUNT: For any Valuation Period
a Fund(s) Annuity Unit Value is equal to:
(a) The Value for the previous Period; multiplied by
(b) The Net Return Factor(s) (see 3.06) for the Period; multiplied by
(c) A factor to reflect the Assumed Annual Net Return Rate.
The factor for 3.5% per year is .9999058; for 5% per year it is .9998663.
The dollar value of a Fund(s) Annuity Unit Values and payments may go up
or down due to investment gain or loss.
If Variable Annuity payments are not to decrease, Aetna must earn a gross
return on the assets of the Separate Account of:
- 5.0% on an annual basis plus an annual return of up to .25% needed to
offset the administrative charge set at the time Annuity payments
commence if an Assumed Annual Net Return Rate of 3.5% is chosen; or
- 6.50% on an annual basis plus an annual return of up to .25% needed to
offset the administrative charge set at the time Annuity payments
commence if an Assumed Annual Net Return Rate of 5% is chosen.
Payments shall not be changed due to changes in the mortality or expense
results or administrative charges.
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4.06. ANNUITY OPTIONS:
Option 1 -- Payment of Interest on Sum Left with Aetna -- This Option may
be used only by the beneficiary when the Participant dies before Aetna
has started paying an Annuity. A portion or all of the sum paid upon
death may be held under this Option and will be held in the General
Account of Aetna at interest (See 4.01). The beneficiary may later tell
Aetna to:
(a) Pay a portion or all of the sum held by Aetna; or
(b) Apply a portion or all of the sum held by Aetna to any Annuity
Option below.
Option 2 -- Payments for a Stated Period of Time -- An Annuity will be
paid for the number of years chosen. The number of years must be at
least 3 and not more than 30.
If payments for this Option are made under a Variable Annuity, the
present value of any remaining payments may be withdrawn at any time. If
a withdrawal is requested within 3 years after the start of payments, it
will be treated as a surrender (See 3.15).
Option 3 -- Life Income -- An Annuity will be paid for the life of the
Annuitant. If also chosen, Aetna will guarantee payments for 60, 120,
180, or 240 months.
Option 4 -- Life Income for Two Payees -- An Annuity will be paid during
the lives of the Annuitant and a second Annuitant. At the death of
either, payments will continue to the survivor. When this Option is
chosen, a choice must be made of:
(a) 100% of the payment to continue to the survivor;
(b) 66 2/3% of the payment to continue to the survivor;
(c) 50% of the payment to continue to the survivor; or
(d) Payments for a minimum of 120 months with 100% of the payment to
continue to the survivor; or
(e) 100% of the payment to continue to the survivor if the survivor is
the Annuitant and 50% of the payment to continue to the survivor if
the survivor is the second Annuitant.
Other Options -- Aetna may make other options available as allowed by
the laws of the state in which this Contract is delivered.
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OPTION 2
PAYMENTS FOR A STATED PERIOD OF TIME
AMOUNT OF FIRST MONTHLY PAYMENT FOR EACH $1,000
AFTER DEDUCTION OF ANY CHARGE FOR PREMIUM TAXES
Rates for a Fixed Annuity with Guaranteed Interest Rate of 3.5%
Rates for a Variable Annuity with Assumed Net Return Rate of 3.5%
<TABLE>
<CAPTION>
YEARS YEARS YEARS
OF PAY- AMOUNT OF OF PAY- AMOUNT OF OF PAY- AMOUNT OF
MENTS PAYMENTS MENTS PAYMENTS MENTS PAYMENTS
------ --------- ----- -------- ----- --------
<S> <S> <C> <C> <C> <C>
3 $29.19 13 $7.94 22 $5.39
4 22.27 14 7.49 23 5.24
5 18.12 15 7.10 24 5.09
6 15.35 16 6.76 25 4.96
7 13.38 17 6.47 26 4.84
8 11.90 18 6.20 27 4.73
9 10.75 19 5.97 28 4.63
10 9.83 20 5.75 29 4.53
11 9.09 21 5.56 30 4.45
12 8.46
</TABLE>
Rates for a Variable Annuity with Assumed Net Return Rate of 5%
<TABLE>
<CAPTION>
YEARS YEARS YEARS
OF PAY- AMOUNT OF OF PAY- AMOUNT OF OF PAY- AMOUNT OF
MENTS PAYMENTS MENTS PAYMENTS MENTS PAYMENTS
----- -------- ----- -------- ----- ---------
<S> <C> <C> <C> <C> <C>
3 $29.80 13 $8.64 22 $6.17
4 22.89 14 8.20 23 6.02
5 18.74 15 7.82 24 5.88
6 15.99 16 7.49 25 5.76
7 14.02 17 7.20 26 5.65
8 12.56 18 6.94 27 5.54
9 11.42 19 6.71 28 5.45
10 10.51 20 6.51 29 5.36
11 9.77 21 6.33 30 5.28
12 9.16
</TABLE>
18
<PAGE>
OPTION 3
LIFE INCOME
AMOUNT OF FIRST MONTHLY PAYMENT FOR EACH $1,000
AFTER DEDUCTION OF ANY CHARGE FOR PREMIUM TAXES
Rates for a Fixed Annuity with Guaranteed Interest Rate of 3.5% and
Rates for a Variable Annuity with Assumed Net Return Rate of 3.5%
PAYMENTS GUARANTEED FOR A STATED PERIOD OF MONTHS
<TABLE>
<CAPTION>
AGE OF
ANNUITANT NONE 60 120 180 240
--------- ------ ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
50 $4.34 $4.34 $4.31 $4.27 $4.22
51 4.41 4.40 4.38 4.33 4.27
52 4.48 4.47 4.45 4.40 4.32
53 4.56 4.55 4.52 4.46 4.38
54 4.64 4.63 4.59 4.53 4.44
55 4.72 4.71 4.67 4.60 4.50
56 4.81 4.80 4.75 4.67 4.56
57 4.91 4.89 4.84 4.75 4.62
58 5.01 4.99 4.93 4.83 4.69
59 5.12 5.10 5.03 4.92 4.75
60 5.23 5.21 5.13 5.00 4.82
61 5.36 5.33 5.24 5.09 4.88
62 5.49 5.45 5.35 5.19 4.95
63 5.63 5.59 5.47 5.28 5.02
64 5.78 5.73 5.60 5.38 5.08
65 5.94 5.89 5.73 5.48 5.15
66 6.11 6.05 5.87 5.58 5.21
67 6.29 6.22 6.02 5.69 5.27
68 6.49 6.41 6.17 5.79 5.33
69 6.70 6.60 6.33 5.90 5.38
70 6.92 6.81 6.49 6.00 5.43
71 7.17 7.04 6.66 6.10 5.48
72 7.43 7.27 6.84 6.20 5.52
73 7.71 7.53 7.02 6.30 5.55
74 8.02 7.80 7.20 6.39 5.59
75 8.35 8.08 7.38 6.48 5.62
</TABLE>
Rates for ages not shown will be provided on request and will be computed
on a basis consistent with the rates in the above tables.
19
<PAGE>
OPTION 3
LIFE INCOME
AMOUNT OF FIRST MONTHLY PAYMENT FOR EACH $1,000
AFTER DEDUCTION OF ANY CHARGE FOR PREMIUM TAXES
Rates for a Variable Annuity with Assumed Net Return Rate of 5.0%
PAYMENTS GUARANTEED FOR A STATED PERIOD OF MONTHS
<TABLE>
<CAPTION>
AGE OF
ANNUITANT NONE 60 120 180 240
--------- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
50 $5.26 $5.25 $5.22 $5.17 $5.11
51 5.33 5.32 5.28 5.23 5.15
52 5.40 5.38 5.34 5.29 5.20
53 5.47 5.45 5.41 5.35 5.26
54 5.54 5.53 5.48 5.41 5.31
55 5.63 5.61 5.56 5.47 5.36
56 5.71 5.69 5.63 5.54 5.42
57 5.80 5.78 5.72 5.61 5.47
58 5.90 5.88 5.81 5.69 5.53
59 6.01 5.98 5.90 5.77 5.59
60 6.12 6.09 6.00 5.85 5.65
61 6.24 6.21 6.10 5.93 5.71
62 6.37 6.33 6.21 6.02 5.77
63 6.51 6.46 6.33 6.11 5.83
64 6.66 6.60 6.45 6.20 5.89
65 6.82 6.75 6.57 6.30 5.95
66 6.99 6.91 6.71 6.39 6.01
67 7.17 7.08 6.85 6.49 6.06
68 7.36 7.27 6.99 6.59 6.12
69 7.57 7.46 7.15 6.69 6.17
70 7.80 7.67 7.30 6.78 6.21
71 8.05 7.89 7.47 6.88 6.25
72 8.31 8.13 7.64 6.97 6.29
73 8.59 8.38 7.81 7.06 6.33
74 8.90 8.64 7.99 7.15 6.36
75 9.23 8.93 8.16 7.23 6.38
</TABLE>
Rates for ages not shown will be provided on request and will be computed
on a basis consistent with the rates in the above tables.
20
<PAGE>
OPTION 4
LIFE INCOME FOR TWO PAYEES
JOINT AND LAST SURVIVOR ANNUITY
100% TO THE SURVIVOR
NO MINIMUM PERIOD
AMOUNT OF FIRST MONTHLY PAYMENT FOR EACH $1,000
AFTER DEDUCTION OF ANY CHARGE FOR PREMIUM TAXES
Rates for a Fixed Annuity with Guaranteed Interest Rate of 3.5% and
Rates for a Variable Annuity with Assumed Net Return Rate of 3.5%
<TABLE>
<CAPTION>
AGE OF SECOND ANNUITANT
------------------------
AGE OF
ANNUITANT 45 50 55 60 65 70 75 80 85
--------- ----- ----- ----- ----- ----- ----- ----- ----- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
45 $3.69 $3.75 $3.81 $3.84 $3.87 $3.90 $3.91 $3.92 $3.92
50 3.75 3.89 3.97 4.04 4.09 4.13 4.15 4.17 4.18
55 3.81 3.97 4.16 4.27 4.35 4.42 4.47 4.50 4.51
60 3.84 4.04 4.27 4.51 4.66 4.78 4.86 4.92 4.95
65 3.87 4.09 4.35 4.66 4.99 5.19 5.35 5.46 5.53
70 3.90 4.13 4.42 4.78 5.19 5.67 5.95 6.17 6.31
75 3.91 4.15 4.47 4.86 5.35 5.95 6.64 7.04 7.34
80 3.92 4.17 4.50 4.92 5.46 6.17 7.04 8.04 8.63
85 3.92 4.18 4.51 4.95 5.53 6.31 7.34 8.63 10.05
</TABLE>
Rates for a Variable Annuity with Assumed Net Return Rate of 5%
<TABLE>
<CAPTION>
AGE OF SECOND ANNUITANT
-----------------------
AGE OF
ANNUITANT 45 50 55 60 65 70 75 80 85
--------- ------ ----- ----- ----- ----- ----- ----- ---- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
45 $4.63 $4.68 $4.73 $4.77 $4.80 $4.82 $4.84 $4.85 $4.86
50 4.68 4.80 4.88 4.95 5.00 5.04 5.06 5.08 5.10
55 4.73 4.88 5.04 5.15 5.24 5.30 5.35 5.39 5.41
60 4.77 4.95 5.15 5.37 5.52 5.63 5.72 5.79 5.83
65 4.80 5.00 5.24 5.52 5.83 6.04 6.20 6.31 6.39
70 4.82 5.04 5.30 5.63 6.04 6.49 6.77 6.99 7.15
75 4.84 5.06 5.35 5.72 6.20 6.77 7.45 7.86 8.16
80 4.85 5.08 5.39 5.79 6.31 6.99 7.86 8.84 9.43
85 4.86 5.10 5.41 5.83 6.39 7.15 8.16 9.43 10.86
</TABLE>
21
<PAGE>
OPTION 4
LIFE INCOME FOR TWO PAYEES
JOINT AND LAST SURVIVOR ANNUITY
66 2/3% TO THE SURVIVOR
NO MINIMUM PERIOD
AMOUNT OF FIRST MONTHLY PAYMENT FOR EACH $1,000
AFTER DEDUCTION OF ANY CHARGE FOR PREMIUM TAXES
Rates for a Fixed Annuity with Guaranteed Interest Rate of 3.5% and
Rates for a Variable Annuity with Assumed Net Return Rate of 3.5%
<TABLE>
<CAPTION>
AGE OF SECOND ANNUITANT
-----------------------
AGE OF
ANNUITANT 45 50 55 60 65 70 75 80 85
--------- ----- ----- ----- ----- ----- ---- ---- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
45 $3.94 $4.05 $4.18 $4.32 $4.48 $4.66 $4.84 $5.02 $5.19
50 4.05 4.20 4.35 4.51 4.69 4.89 5.09 5.30 5.49
55 4.18 4.35 4.54 4.73 4.95 5.18 5.42 5.65 5.87
60 4.32 4.51 4.73 4.99 5.25 5.53 5.82 6.11 6.37
65 4.48 4.69 4.95 5.25 5.61 5.97 6.33 6.69 7.02
70 4.66 4.89 5.18 5.53 5.97 6.49 6.96 7.43 7.88
75 4.84 5.09 5.42 5.82 6.33 6.96 7.73 8.39 9.02
80 5.02 5.30 5.65 6.11 6.69 7.43 8.39 9.54 10.46
85 5.19 5.49 5.87 6.37 7.02 7.88 9.02 10.46 12.15
</TABLE>
Rates for a Variable Annuity with Assumed Net Return Rate of 5%
<TABLE>
<CAPTION>
AGE OF SECOND ANNUITANT
-----------------------
AGE OF
ANNUITANT 45 50 55 60 65 70 75 80 85
-------- ----- ----- ----- ----- ----- ----- ----- ----- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
45 $4.87 $4.99 $5.12 $5.27 $5.44 $5.64 $5.86 $6.09 $6.30
50 4.99 5.12 5.26 5.43 5.63 5.85 6.09 6.33 6.57
55 5.12 5.26 5.44 5.63 5.85 6.11 6.38 6.65 6.92
60 5.27 5.43 5.63 5.87 6.14 6.44 6.75 7.07 7.38
65 5.44 5.63 5.85 6.14 6.49 6.84 7.23 7.62 8.00
70 5.64 5.85 6.11 6.44 6.84 7.35 7.84 8.34 8.83
75 5.86 6.09 6.38 6.75 7.23 7.84 8.60 9.28 9.93
80 6.09 6.33 6.65 7.07 7.62 8.34 9.28 10.42 11.35
85 6.30 6.57 6.92 7.38 8.00 8.83 9.93 11.35 13.04
</TABLE>
22
<PAGE>
OPTION 4
LIFE INCOME FOR TWO PAYEES
JOINT AND LAST SURVIVOR ANNUITY
50% TO THE SURVIVOR
NO MINIMUM PERIOD
AMOUNT OF FIRST MONTHLY PAYMENT FOR EACH $1,000
AFTER DEDUCTION OF ANY CHARGE FOR PREMIUM TAXES
Rates for a Fixed Annuity with Guaranteed Interest Rate of 3.5% and
Rates for a Variable Annuity with Assumed Net Return Rate of 3.5%
<TABLE>
<CAPTION>
AGE OF SECOND ANNUITANT
------------------------
AGE OF
ANNUITANT 45 50 55 60 65 70 75 80 85
--------- ----- ----- ----- ----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
45 $4.07 $4.22 $4.40 $4.61 $4.87 $5.17 $5.49 $5.84 $6.18
50 4.22 4.37 4.56 4.79 5.06 5.39 5.75 6.13 6.51
55 4.40 4.56 4.76 5.00 5.31 5.66 6.06 6.49 6.91
60 4.61 4.79 5.00 5.27 5.61 6.01 6.46 6.95 7.43
65 4.87 5.06 5.31 5.61 5.99 6.44 6.96 7.54 8.11
70 5.17 5.39 5.66 6.01 6.44 6.99 7.61 8.29 9.00
75 5.49 5.75 6.06 6.46 6.96 7.61 8.43 9.29 10.17
80 5.84 6.13 6.49 6.95 7.54 8.29 9.29 10.54 11.71
85 6.18 6.51 6.91 7.43 8.11 9.00 10.17 11.71 13.57
</TABLE>
Rates for a Variable Annuity with Assumed Net Return Rate of 5%
<TABLE>
<CAPTION>
AGE OF SECOND ANNUITANT
------------------------
AGE OF
ANNUITANT 45 50 55 60 65 70 75 80 85
--------- ----- ----- ----- ----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
45 $5.01 $5.15 $5.33 $5.56 $5.83 $6.17 $6.55 $6.98 $7.40
50 5.15 5.29 5.48 5.71 6.01 6.36 6.78 7.23 7.68
55 5.33 5.48 5.66 5.91 6.23 6.61 7.05 7.54 8.05
60 5.56 5.71 5.91 6.16 6.51 6.93 7.42 7.96 8.53
65 5.83 6.01 6.23 6.51 6.87 7.34 7.89 8.51 9.16
70 6.17 6.36 6.61 6.93 7.34 7.87 8.51 9.23 10.00
75 6.55 6.78 7.05 7.42 7.89 8.51 9.33 10.20 11.14
80 6.98 7.23 7.54 7.96 8.51 9.23 10.20 11.44 12.64
85 7.40 7.68 8.05 8.53 9.16 10.00 11.14 12.64 14.51
</TABLE>
23
<PAGE>
OPTION 4
LIFE INCOME FOR TWO PAYEES
JOINT AND LAST SURVIVOR ANNUITY
100% TO THE SURVIVOR
120 MONTHS MINIMUM PERIOD
AMOUNT OF FIRST MONTHLY PAYMENT FOR EACH $1,000
AFTER DEDUCTION OF ANY CHARGE FOR PREMIUM TAXES
Rates for a Fixed Annuity with Guaranteed Interest Rate of 3.5% and
Rates for a Variable Annuity with Assumed Net Return Rate of 3.5%
<TABLE>
<CAPTION>
AGE OF SECOND ANNUITANT
-----------------------
AGE OF
ANNUITANT 45 50 55 60 65 70 75 80 85
--------- ----- ----- ----- ----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
45 $3.69 $3.75 $3.80 $3.84 $3.87 $3.89 $3.91 $3.91 $3.92
50 3.75 3.89 3.97 4.04 4.09 4.13 4.15 4.16 4.17
55 3.80 3.97 4.15 4.26 4.35 4.41 4.46 4.48 4.49
60 3.84 4.04 4.26 4.50 4.65 4.76 4.84 4.89 4.91
65 3.87 4.09 4.35 4.65 4.98 5.17 5.31 5.41 5.46
70 3.89 4.13 4.41 4.76 5.17 5.62 5.87 6.05 6.15
75 3.91 4.15 4.46 4.84 5.31 5.87 6.48 6.79 6.98
80 3.91 4.16 4.48 4.89 5.41 6.05 6.79 7.50 7.83
85 3.92 4.17 4.49 4.91 5.46 6.15 6.98 7.83 8.50
</TABLE>
Rates for a Variable Annuity with Assumed Net Return Rate of 5%
<TABLE>
<CAPTION>
AGE OF SECOND ANNUITANT
-----------------------
AGE OF
ANNUITANT 45 50 55 60 65 70 75 80 85
--------- ----- ----- ----- ----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
45 $4.63 $4.68 $4.73 $4.77 $4.80 $4.82 $4.84 $4.85 $4.85
50 4.68 4.80 4.88 4.94 4.99 5.03 5.06 5.07 5.08
55 4.73 4.88 5.04 5.14 5.23 5.29 5.34 5.37 5.38
60 4.77 4.94 5.14 5.37 5.51 5.62 5.70 5.75 5.78
65 4.80 4.99 5.23 5.51 5.82 6.00 6.15 6.24 6.30
70 4.82 5.03 5.29 5.62 6.00 6.44 6.68 6.86 6.96
75 4.84 5.06 5.34 5.70 6.15 6.68 7.27 7.57 7.76
80 4.85 5.07 5.37 5.75 6.24 6.86 7.57 8.26 8.58
85 4.85 5.08 5.38 5.78 6.30 6.96 7.76 8.58 9.23
</TABLE>
24
<PAGE>
OPTION 4
LIFE INCOME FOR TWO PAYEES
JOINT AND 1/2 CONTINGENT LIFE INCOME ANNUITY
NO MINIMUM PERIOD
AMOUNT OF FIRST MONTHLY PAYMENT FOR EACH $1,000
AFTER DEDUCTION OF ANY CHARGE FOR PREMIUM TAXES
Rates for a Fixed Annuity with Guaranteed Interest Rate of 3.5% and
Rates for a Variable Annuity with Assumed Net Return Rate of 3.5%
<TABLE>
<CAPTION>
AGE OF SECOND ANNUITANT
-----------------------
AGE OF
ANNUITANT 45 50 55 60 65 70 75 80 85
--------- ----- ----- ----- ----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
45 $3.86 $3.89 $3.93 $3.94 $3.96 $3.97 $3.98 $3.98 $3.98
50 4.02 4.10 4.15 4.18 4.21 4.23 4.24 4.25 4.26
55 4.22 4.31 4.42 4.48 4.53 4.57 4.59 4.61 4.61
60 4.43 4.56 4.70 4.84 4.93 4.99 5.04 5.07 5.09
65 4.69 4.84 5.02 5.22 5.42 5.54 5.63 5.69 5.73
70 4.99 5.17 5.39 5.65 5.93 6.23 6.40 6.52 6.60
75 5.33 5.54 5.82 6.14 6.52 6.95 7.40 7.64 7.81
80 5.70 5.96 6.29 6.69 7.17 7.75 8.41 9.08 9.45
85 6.07 6.38 6.75 7.24 7.84 8.59 9.49 10.51 11.50
</TABLE>
Rates for a Variable Annuity with Assumed Net Return Rate of 5%
<TABLE>
<CAPTION>
AGE OF SECOND ANNUITANT
-----------------------
AGE OF
ANNUITANT 45 50 55 60 65 70 75 80 85
--------- ----- ----- ----- ----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
45 $4.80 $4.83 $4.86 $4.88 $4.89 $4.90 $4.91 $4.92 $4.92
50 4.95 5.02 5.06 5.10 5.13 5.15 5.16 5.17 5.18
55 5.14 5.23 5.32 5.38 5.43 5.46 5.49 5.51 5.52
60 5.36 5.47 5.59 5.72 5.80 5.86 5.91 5.95 5.97
65 5.63 5.77 5.93 6.10 6.29 6.41 6.50 6.56 6.60
70 5.96 6.12 6.31 6.54 6.81 7.08 7.25 7.37 7.46
75 6.35 6.54 6.77 7.06 7.42 7.81 8.25 8.49 8.66
80 6.79 7.01 7.30 7.66 8.11 8.65 9.28 9.93 10.29
85 7.26 7.53 7.86 8.29 8.85 9.55 10.41 11.39 12.37
</TABLE>
These Annuity rates are based on mortality from 1983 Table a.
25
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
[LOGO]
Aetna Life Insurance and Annuity Company
Home Office: 151 FARMINGTON AVE. OPPORTUNITY PLUS
HARTFORD, CONNECTICUT 06156 PROCESSING OFFICE
1-800-525-4225 P.O. BOX 12894
ALBANY, NEW YORK
12212-2894
SINGLE PREMIUM
INDIVIDUAL VARIABLE, FIXED, OR COMBINATION CONTRACT
NONPARTICIPATING
ALL PAYMENTS AND VALUES PROVIDED BY THIS CONTRACT,
WHEN BASED ON INVESTMENT EXPERIENCE OF A SEPARATE ACCOUNT D,
ARE VARIABLE AND ARE NOT GUARANTEED AS TO FIXED DOLLAR AMOUNT.
G-TDA-HH (XC/S) PRINTED IN U.S.A.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
Aetna Life Insurance and Annuity Company
ENDORSEMENT
This Contract is hereby endorsed as follows:
The first paragraph of Section 4.01 Choices to be Made is deleted and replaced
by the following:
An Annuity Option may be elected by telling Aetna to pay all or any portion
of the Current Value (minus any premium tax) as a premium for an Annuity
under Option 2, 3, or 4 (see 4.06). The present value of the expected
payments to the Annuitant when payments start shall be determined in
accordance with the tables under Code Section 401(a)(9) regulations in
order to comply with the incidental death benefit test. This restriction
does not apply if Option 4(e) is chosen and the second Annuitant is the
spouse of the Annuitant.
Payment Commencement Date - Generally, the first Annuity payment must be
made no later than the April 1 of the calendar year following the year in
which the Participant turns age 70 1/2 or such later date as may be allowed
under Federal law or regulations. In no event may any payments to the
Annuitant under an Annuity Option extend beyond:
(a) The life of the Annuitant;
(b) The lives of the Annuitant and beneficiary;
(c) A period certain greater than the Annuitant's life expectancy
according to regulations under Code Section 401(a)(9), determined as
of the date payments are to commence; or
(d) A period certain greater than the life expectancies of the Annuitant
and beneficiary according to regulations under Code Section 401(a)(9),
determined as of the date payments are to begin.
For distributions taken in a lump sum, see Surrender Value.
Endorsed and made a part of the Contract effective October 15, 1990 or the
effective date of the Contract whichever is later.
/s/ Dan Kearney
PRESIDENT
AETNA LIFE INSURANCE AND ANNUITY COMPANY
ETDA-REA-IO (XC)
<PAGE>
Aetna Life Insurance and Annuity Company
ENDORSEMENT
This Contract is hereby endorsed as follows:
Section 3.09 is deleted and replaced as follows:
The Current Value payable under the terms of this section will be reduced
by the amount of the accrued interest on any outstanding loan. Aetna will
pay the Current Value to the beneficiary when:
(1) The Participant dies before Annuity payments start; and
(2) The notice of death is received in good order by Aetna.
The sum payable will be the Current Value on the date when the notice is
received. The beneficiary may choose to apply any sum under an Annuity
Option (see Annuity Provisions), subject to any other terms and conditions
of this Contract, or to receive a lump sum payment.
If the beneficiary is the surviving spouse, the first Annuity payment or
the lump sum payment may be deferred to a date not later than when the
Participant would have attained age 70 1/2 or such later date as may be
allowed under Federal law or regulations. If the beneficiary is not the
surviving spouse, all of the Current Value must either be applied to an
Annuity Option within one year of the Participant's death or be paid to the
beneficiary within 5 years of Participant's death (see Part IV). In no
event may payments to any beneficiary under an Annuity Option extend beyond
the life of the beneficiary or any period certain greater than the
beneficiary's life expectancy. If no beneficiary exists, the payment will
be made to the estate of the Participant.
Add the following provision to Section 3.15 - Surrender Value:
Surrender Restrictions: Limitations apply to full and partial surrenders
of the Restricted Amount from this Contract, as required by Code Section
403(b)(11). The Restricted Amount is the sum of :
(a) Net Purchase Payments attributable to Participant salary reduction
contributions made on and after January 1, 1989; plus
(b) The net increase, if any, in the Current Value of the Participant's
Individual Account after December 31, 1988 attributable to investment
gains and losses and credited interest.
The Restricted Amount may be fully or partially surrendered only if one or
more of the following conditions are met:
(a) The Participant has reached age 59 1/2;
(b) The Participant has separated from service;
(c) The Participant has died;
(d) The Participant has become disabled, within the meaning of Code
Section 72(m)(7); or
(e) The withdrawal is otherwise allowed by federal law, regulations or
rulings.
A full or partial surrender is also allowed if the Participant incurs a
"hardship" as the term is defined in the Code or regulations under 403(b).
However, the amount available for hardship is limited to the lesser of the
amount necessary to satisfy the need, or the Net Purchase Payments
attributable to Participant Salary reduction contributions made on or after
January 1, 1989.
Aetna may require that the Contract Holder and/or the Participant certify
and/or provide satisfactory proof that one of these conditions has been met
before a surrender request will be considered to be in good order.
<PAGE>
The Participant or beneficiary must notify Aetna in writing when a lump sum
payment is to be made or Annuity payments are to commence.
Renumber Section 3.18 entitled Reinstatement as Section 3.22.
Add the following as Section 3.18 as follows:
Limitation on Contributions: The Purchase Payment(s) made to a
Participant's Individual Account in any year cannot exceed the lesser of
the amount determined under the exclusion allowance of Code Section
403(b)(2) or the annual additions limitation of Code Section 415(c)(1).
In addition, in no event may the Purchase Payment(s) attributable to
elective deferrals as defined in Code Section 402(g) exceed $9,500 (or,
such larger amount as adjusted by the Secretary of the Treasury) during any
calendar year, unless the alternate limitation of Code Section 402(g)(8)
applies.
Renumber Section 3.19 entitled Payment of Current Value as Section 3.21.
Add the following provision as Section 3.19 as follows:
Timing of Distributions: The distribution of benefits accrued after
December 31, 1986, must be made in a lump sum or must begin not later than
the April 1 of the calendar year following the calendar year in which the
Participant attains age 70 1/2. However, for a Participant who attained
age 70 1/2 before January 1, 1988, the distribution of such benefits must
be made or must begin not later than the April 1 of the calendar year
following the calendar year in which the Participant retires.
The above does not apply if the Contract Holder is a governmental entity or
a church. For Participants of such an employer, the distribution of
benefits accrued after December 31, 1986, must be made or must begin not
later than the April 1 of the calendar year following the calendar year in
which the Participant attains age 70 1/2 or retires, whichever occurs
later.
The required distribution described in either of the above rules must be
made over the life of the Participant (or the joint lives of the
Participant and beneficiary).
If the Participant does not request commencement of benefits as described
above, Aetna will not be responsible for compliance with the Code 401(a)(9)
minimum distribution requirements and for any adverse tax consequences that
may result.
Endorsed and made a part of the Contract effective on October 15, 1990 or the
effective date of the Contract whichever is later.
/s/ Dan Kearney
PRESIDENT
AETNA LIFE INSURANCE AND ANNUITY COMPANY
ETDA-IO(XC)
<PAGE>
Aetna Life Insurance and Annuity Company
ENDORSEMENT
The Contract is hereby endorsed in the following manner.
Add the following paragraph to Section 1 entitled GENERAL DEFINITIONS.
Maturity Date: The last day of a GA Account Term.
Mature Term Value: The amount payable on a GA Account Term's Maturity
Date.
Nonunitized Separate Account: An account set up by Aetna under Title 38,
Section 38a-433, of the Connecticut General Statutes, that holds assets for
GA Account Terms greater than three years. There are no discrete units for
this Account. The Contract Holder or Participant, as applicable, does not
participate in the investment gain or loss from the assets held in the
Nonunitized Separate Account. Such gain or loss is borne entirely by
Aetna. These assets may be chargeable with liabilities arising out of any
other business of Aetna.
Delete and replace Section 3.02 or 3.03 entitled Guaranteed Accumulation Account
(GA Account), as applicable, in the following manner.
The GA Account guaranteed stipulated rates of interest for stated periods
of time (see (a) and (c) below). Amounts withdrawn before the end of a
Guaranteed Term may be subject to a Market Value Adjustment (MVA) (see (g)
below).
(a) Deposit Period -- A calendar month, a calendar quarter, or any other
period of time specified by Aetna during which Net Purchase Payment(s)
and transfers are accepted into the GA Account for one or more
Guaranteed Term(s).
(b) Guaranteed Term (Term) -- The period of time for which interest rates
are guaranteed on Net Purchase Payment(s) and on transfers made into a
Deposit Period of the GA Account. Term(s) are offered at Aetna's
discretion for various lengths of time ranging up to and including ten
years.
(c) Guaranteed Term Classifications -- The grouping of Terms according to
their time to maturity. The following are the Classifications:
(1) Short-Term: Terms of up to and including three years; or
(2) Long-Term: Terms of greater than three years and up to and
including ten years.
During a Deposit Period, Aetna may make available one or more Term(s)
within a Classification. The Contract Holder or Participant, as
applicable, has the option to allocate Net Purchase Payment(s) and
transfers into any or all of the available Deposit Period Term(s). If
no specific direction is given, Net Purchase Payment(s) and transfers
will go into available Term(s) on a pro-rata basis within the
Classification(s) previously chosen by the Contract Holder or
Participant, as applicable. At least one Term in the Short-Term
Classification will be available each Deposit Period.
(d) Guaranteed GA Account Interest Rates (Guaranteed Rates) -- Aetna will
declare all interest rate(s) applicable to a specific Term at the
start of the Deposit Period for that Term. These rate(s) are
guaranteed by Aetna for that Deposit Period and the ensuing Term and
are not automatically reinvested in that Term. Within two business
days after the Maturity Date, the Contract Holder or Participant, as
applicable, will be mailed a confirmation statement. This notice will
state the Terms and Guaranteed Rates which will apply to the
reinvested Matured Term Value.
During this Calendar month period, the Contract Holder or Participant,
as applicable, may notify Aetna's Home Office to transfer or surrender
all or part of the Matured Term Value plus any interest accrued
thereon from the GA Account without an MVA. This provision only
applies to the first such such request received from the Contract
Holder or Participant, as applicable, during this period for any
Matured Term Value. The Matured Term Value plus any interest accrued
thereon may be transferred upon such request without an MVA to:
<PAGE>
(1) Any other Term(s) of the GA Account available in the then-current
Deposit Period; or
(2) Any other allowable Fund(s).
If no such notification is given, the Matured Term Value will
remain subject to the terms and conditions of the new Term. All
surrender and transfer requests will be processed as of the date
they are received in in good order at Aetna's Home Office.
If the Contract is issued under a Tax Deferred Annuity Plan (see
Specifications page) the above notice will be sent to the
Participant(s).
(g) Market Value Adjustment (MVA) -- There will be an MVA for a
withdrawal from the GA Account before the end of a Term when the
withdrawal is due to:
(1) A transfer;
(2) A full or partial surrender; or
(3) A payment for Annuity Option 2.
The market value adjusted amount will be equal to the amount
withdrawn multiplied by the following ratio:
X
-------
365
(1+I)
--------------
X
----------
365
(1+j)
Where: I is the Deposit Period
j is the current yield
x is the number of days remaining, (computed from
Wednesday of the week of withdrawal) in the
Guaranteed Term.
The Deposit Period yield will be determined as follows:
Delete and replace Section 3.10, 3.11 or 3.12 entitled TRANSFER OF
CURRENT VALUE FROM THE FUND(S), as applicable, in the following
manner.
Before an Annuity Option is elected, all or any portion of the
Current Value may be transferred from any Fund(s) and/or GA Account
to:
(1) Any other allowable Fund;
(2) The Fixed Account; or
(3) Term(s) of the GA Account available in the then-current
Deposit Period.
Amounts in a specific GA Account Term cannot be transferred to the
Deposit Period of another Term within the same Classification except
at the Term's maturity (see 3.02(f) or 3.03(f), as applicable).
Amounts applied to Classifications of the GA Account may not be
transferred to the Fund(s) and/or to the Fixed Account during the
Deposit Period or for 90 days after the close of the Deposit Period.
Transfers from Term(s) of the GA Account are subject to the withdrawal
and MVA provisions (see (3.02(e) and (g), as applicable).
Twelve transfers of the Current Value can be made during a calendar
year period. The Transfer of any portion of the GA Account value at
the Maturity Date of a Term is not counted for this purpose. Aetna
may allow additional transfers, but each may be subject to a fee of up
to $10.
<PAGE>
Add the following statement to Section 3.14 or Section 3.15, as applicable,
entitled SURRENDER VALUE.
To comply with Section 4223 of New York Insurance Laws, the surrender
charge will never be greater than (a) plus (b) below.
(a) 7% of amounts surrendered from options other than the GA Account;
plus
(b) 7%, reduced (but not below zero) by one percent for each year the
Contract has been inforce, of amounts surrendered from the GA
Account. Aetna reserves the right to compute the surrender
charge for amounts transferred into the GA Account within 90 days
prior to surrender as if such amounts had not been transferred.
Endorsed and made a part of the Contract on April 1, 1994 or the effective date
of the Contract whichever is later.
/s/ Dan Kearney
PRESIDENT
AETNA LIFE INSURANCE AND ANNUITY COMPANY
EGAA-ID(XC)
<PAGE>
Aetna Life Insurance and Annuity Company
ENDORSEMENT
The Contract is hereby endorsed in the following manner.
Add the following paragraph to Section I entitled GENERAL DEFINITIONS.
Maturity Date: The last day of a GA Account Term.
Matured Term Value: The amount payable on a GA Account Term's Maturity
Date.
Nonunitized Separate Account: An account set up by Aetna under Title 38,
Section 38a-433, of the Connecticut General Statutes, that holds assets for
GA Account Terms greater than three years. There are no discrete units for
this Account. The Contract Holder or Participant, as applicable, does not
participate in the investment gain or loss from the assets held in the
Nonunitized Separate Account. Such gain or loss is borne entirely by
Aetna. These assets may be chargable with liabilities arising out of any
other business of Aetna.
Delete and replace Section 3.02 or 3.03 entitled GUARANTEED ACCUMULATION ACCOUNT
(GA ACCOUNT), as applicable, in the following manner.
The GA Account guaranteed stipulated rates of interest for stated periods
of time (see (a) and (c) below). Amounts withdrawn before the end of a
Guaranteed Term may be subject to a Market Value Adjustment (MVA)
(see (g) below).
(a) Deposit Period --A calendar month, a calendar quarter, or any other
period of time specified by Aetna during which Net Purchase Payment(s)
and transfers are accepted into the GA Account for one or more
Guaranteed Term(s).
(b) Guaranteed Term (Term) --The period of time for which interest rates
are guaranteed on Net Purchase Payment(s) and on transfers made into a
Deposit Period of the GA Account. Term(s) are offered at Aetna's
discretion for various lengths of time ranging up to and including ten
years.
(c) Guaranteed Term Classifications --The grouping of Terms according to
their time to maturity. The following are the Classifications:
(1) Short-Term: Terms of up to and including three years; or
(2) Long-Term: Terms of greater than three years and up to
and including ten years.
During a Deposit Period, Aetna may make available one or more
Term(s) within a Classification. The Contract Holder or
Participant, as applicable, has the option to allocate Net
Purchase Payment(s) and transfers into any or all of the
available Deposit Period Term(s). If no specific direction is
given, Net Purchase Payment(s) and transfers will go into
available Term(s) on a pro-rata basis within the
Classification(s) previously chosen by the Contract Holder or
Participant, as applicable. At least one Term in the Short-Term
Classification will be available each Deposit Period.
(d) Guaranteed GA Account Interest Rates (Guaranteed Rates) --Aetna will
declare all interest rate(s) applicable to a specific Term at the
start of the Deposit Period for that Term. these rate(s) are
guaranteed by Aetna for that Deposit Period and the ensuing Term and
are not automatically reinvested in that Term. Within two business
days after the Maturity Date, the Contract Holder or Participant, as
applicable, will be mailed a confirmation statement. This notice will
state the Terms and Guaranteed Rates which will apply to the
reinvested Matured Term Value.
During the Calendar month following the Term's Maturity Date, one
exception is allowed to the 90 day transfer restriction and MVA
under (e) and (g). This exception is applicable to each Matured
Term Value plus any interest accrued thereon, provided no part of
the Matured Term Value was transferred on the Maturity Date.
<PAGE>
During this calendar month period, the Contract Holder or
Participant, as applicable, may notify Aetna's Home Office to
transfer or surrender all or part of the Matured Term Value plus
any interest accrued thereon from the GA Account without an MVA.
This provision only applies to the first such request received
fro the Contract Holder or Participant, as applicable, during
this period for any Matured Term Value. The Matured Term Value
plus any interest accrued thereon may be transferred upon such
request without an MVA to:
(1) Any other Term(s) of the GA Account available in the
then-current Deposit Period; or
(2) Any other allowable Fund(s).
If no such notification is given, the matured Term Value will
remain subject to the terms and conditions of the new Term. All
surrender and transfer requests will be processed as of the date
they are received in good order at Aetna's Home Office.
If the Contract is issued under a Tax Deferred Annuity Plan (see
Specifications page) the above notice will be sent to the
Participant(s).
(g) Market Value Adjustment (MVA) -- There will be an MVA for a
withdrawal from the GA Account before the end of a Term
when the withdrawal is due to:
(1) A transfer;
(2) A full or partial surrender; or
(3) A payment for Annuity Option 2.
The market value adjusted amount will be equal to the amount
withdrawn multiplied by the
ECMVA-IO(NY)
<PAGE>
AETNA LIFE INSURANCE AND ANNUITY COMPANY
ENDORSEMENT
The Contract and the Certificate are hereby endorsed to delete SECTION 1.05
entitled FUND(S) and to replace with the following:
FUND(S) - The open-end registered management investment companies (mutual
funds) made available by Aetna under this Contract. These Funds currently
are:
- Aetna Variable Fund -- a growth and income fund;
- Aetna Income Shares -- a bond fund;
- Aetna Variable Encore Fund -- a money market fund;
- Aetna Investment Advisers Fund, Inc. -- a managed fund;
- Alger American Fund - Alger American Growth Portfolio -- an equity
fund;
- Alger American Fund - Alger American Small Capitalization Portfolio --
an equity fund;
- Calvert Responsibly Invested Balanced Portfolio -- an equity fund;
- Fidelity Investments Variable Insurance Products Fund II - Asset
Manager Portfolio -- a managed fund;
- Fidelity Investments Variable Insurance Products Fund II - Contrafund
Portfolio -- an equity fund;
- Fidelity Investments Variable Insurance Products Fund - Equity-Income
Portfolio -- a growth and income fund;
- Fidelity Investments Variable Insurance Products Fund II - Index 500
Portfolio -- an index fund investing in equity securities;
- Franklin Government Securities Trust -- a government bond fund;
Janus Aspen Series - Aggressive Growth Portfolio -- an aggressive
growth fund;
- Janus Aspen Series - Growth Portfolio-- an equity fund;
- Janus Aspen Series - Short-Term Bond Portfolio -- a bond fund;
- Janus Aspen Series - Worldwide Growth Portfolio -- an international
equity fund;
- Lexington Emerging Markets Fund, Inc. -- an equity fund;
- Lexington Natural Resources Trust -- an equity fund;
- Neuberger & Berman Advisers Management Trust - Growth Portfolio -- a
growth fund;
- Scudder Variable Life Investment Fund - International Portfolio -- an
international quity fund;
- TCI Portfolios, Inc. - TCI Growth -- a growth fund.
Additional information regarding these Funds is available in each Fund
prospectus.
Endorsed and made a part of the Contract and the Certificate effective May 1,
1995.
/s/ Dan Kearney
-----------------------------------
PRESIDENT
AETNA LIFE INSURANCE AND ANNUITY COMPANY
EROP-95(XC/M)
<PAGE>
Aetna Life Insurance and Annuity Company
ENDORSEMENT
This certificate is hereby endorsed as follows:
Section 3.10 entitled Surrender Value is amended to read as follows:
The amount payable by Aetna upon the surrender of any portion of the
Individual Account(s) shall be the Current Value as of the date the surrender
request is received in good order by Aetna.
Endorsed and made a part of this Certificate on the effective date of the
Certificate.
/s/ John J. Martin
-------------------
President
Aetna Life Insurance and Annuity Company
ECSV-IO (XC/S)
<PAGE>
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors of Aetna Life Insurance and Annuity Company
and Contract Owners of Aetna Variable Annuity Account C:
We consent to the use of our reports dated February 6, 1996 and February 16,
1996 included herein and to the references to our Firm under the captions
"Condensed Financial Information" in the Prospectus and "Independent Auditors"
in the Statement of Additional Information.
Our report dated February 6, 1996 refers to a change in 1993 in the Company's
method of accounting for certain investments in debt and equity securities.
KPMG Peat Marwick LLP
Hartford, Connecticut
April 16, 1996
<PAGE>
151 Farmington Avenue SUSAN E. BRYANT
Hartford, CT 06156 Counsel
Law & Regulatory Affairs, RE4C
(860) 273-7834
Fax: (860) 273-8340
April 17, 1996
Securities and Exchange Commission
450 Fifth Street N.W.
Washington, D.C. 20549
Dear Sir or Madam:
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 C of Aetna Life
Insurance and Annuity Company on February 29, 1996) as an exhibit to this
Post-Effective Amendment No. 6 to Registration Statement on Form N-4 (File
No. 33-75962) and to my being named under the caption "Legal Matters" therein.
Sincerely,
/s/ Susan E. Bryant
Susan E. Bryant
Counsel
Aetna Life Insurance and Annuity Company
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 6,038,034,475
<INVESTMENTS-AT-VALUE> 6,632,117,659
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 6,632,117,659
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 6,632,117,659
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 6,632,117,659
<DIVIDEND-INCOME> 730,430,612
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> (71,090,542)
<NET-INVESTMENT-INCOME> 659,340,070
<REALIZED-GAINS-CURRENT> 160,673,967
<APPREC-INCREASE-CURRENT> 520,603,951
<NET-CHANGE-FROM-OPS> 1,340,617,988
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 1,769,805,868
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
