As filed with the Securities and Exchange Commission on December 23, 1996
File No.811-08017
File No._______
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 ( X )
Pre-effective Amendment No. ( )
Post-effective Amendment No. ( )
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT
OF 1940 ( X )
Pre-effective Amendment No._____ ( )
Post-effective Amendment No.____ ( )
(Check appropriate box or boxes)
_____________________________
ANNUITY INVESTORS[REGISTERED TRADEMARK] VARIABLE ACCOUNT B
(Exact Name of Registrant)
ANNUITY INVESTORS LIFE INSURANCE COMPANY[REGISTERED TRADEMARK]
(Name of Depositor)
P.O. Box 5423
Cincinnati, Ohio 45201-5423
(Address of Depositor's Principal Executive Offices) (Zip Code)
Depositor's Telephone Number, including Area Code:
(800) 789-6771
________________________________________________________________________________
Mark F. Muething, Esq.
Senior Vice President, Secretary and General Counsel
Annuity Investors Life Insurance Company
P.O. Box 5423
Cincinnati, Ohio 45201-5423
(Name and Address of Agent for Service)
Copy to:
Catherine S. Bardsley, Esq.
Kirkpatrick & Lockhart LLP
1800 Massachusetts Avenue, N.W.
Second Floor
Washington, D.C. 20036-1800
________________________________________________________________________________
Approximate Date of Proposed Public Offering: As soon as practicable after the
effective date of the Registration Statement.
DECLARATION REQUIRED BY RULE 24f-2 (a) (1)
Pursuant to Rule 24f-2 under the Investment Company Act of 1940, the
Registrant declares that an indefinite number of its securities is being
registered under the Securities Act of 1933.
The registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
<PAGE>
CROSS REFERENCE SHEET
Pursuant to Rule 495
Showing Location in Part A (Prospectus),
Part B (Statement of Additional Information) and Part C
of Registration Statement Information Required by Form N-4
<TABLE>
<CAPTION>
PART A
ITEM OF FORM N-4 PROSPECTUS CAPTION
---------------- ------------------
<S> <C> <C>
1. Cover Page........................................ Cover Page
2. Definitions....................................... Definitions
3. Synopsis.......................................... Highlights
4. Condensed Financial Information
(a) Accumulation Unit Values.................. Not Applicable
(b) Performance Data.......................... Not Applicable
(c) Financial Statements...................... Financial Statements for the Company
5. General Description of Registrant, Depositor and
Portfolio Companies
(a) Depositor................................. Annuity Investors Life Insurance
Company[REGISTERED TRADEMARK]
(b) Registrant................................ The Separate Account
(c) Portfolio Company......................... The Funds
(d) Fund Prospectus........................... The Funds
(e) Voting Rights............................. Voting Rights
6. Deductions and Expenses
(a) General................................... Charges and Deductions
(b) Sales Load %.............................. Contingent Deferred Sales Charge
(c) Special Purchase Plan..................... Contingent Deferred Sales Charge
(d) Commissions............................... Distribution of the Contract
(e) Fund Expenses............................. The Funds
(f) Operating Expenses........................ Summary of Expenses
7. Contracts
(a) Persons with Rights....................... The Contract; Surrenders; Contract Loans;
Death Benefit; Voting Rights
<PAGE>
(b) (i) Allocation of Premium Payments........... Purchase Payments
(ii) Transfers................................. Transfers
(iii) Exchanges................................. Additions, Deletions or Substitutions
(c) Changes................................... Not Applicable
(d) Inquiries................................. Contacting the Company
8. Annuity Period.................................... Settlement Options
9. Death Benefit..................................... Death Benefit
10. Purchases and Contract Values
(a) Purchases................................. Purchase Payments
(b) Valuation................................. Fixed Account Value; Variable Account Value
(c) Daily Calculation......................... Accumulation Unit Value; Net Investment
Factor
(d) Underwriter............................... Distribution of the Contract
11. Redemptions
(a) By Owner.................................. Surrender Value; Systematic Withdrawal Option
By Annuitant.............................. Not Applicable
(b) Texas ORP................................. Texas Optional Retirement Program
(c) Check Delay............................... Suspension or Delay in Payment of Surrender
Value
(d) Free Look................................. Right to Cancel
12. Taxes............................................. Federal Tax Matters
13. Legal Proceedings................................. Legal Proceedings
14. Table of Contents for the Statement of Additional
Information....................................... Statement of Additional Information
PART B
STATEMENT OF ADDITIONAL
ITEM OF FORM N-4 INFORMATION CAPTION
15. Cover Page........................................ Cover Page
16. Table of Contents................................. Table of Contents
<PAGE>
17. General Information and History.................. General Information and History
18. Services
(a) Fees and Expenses of Registrant........... (Prospectus) Summary of Expenses
(b) Management Contracts...................... Not Applicable
(c) Custodian................................. Not Applicable
Independent Auditors...................... Experts
(d) Assets of Registrant...................... Not Applicable
(e) Affiliated Person......................... Not Applicable
(f) Principal Underwriter..................... Not Applicable
19. Purchase of Securities Being Offered.............. (Prospectus) Distribution of the Contract
Offering Sales Load............................... (Prospectus) Contingent Deferred Sales Charge
20. Underwriters...................................... Distribution of the Contract
21. Calculation of Performance Data
(a) Money Market Funded Sub-Accounts.......... Money Market Sub-Account Standardized Yield
Calculation
(b) Other Sub-Accounts........................ Other Sub-Account Standardized Yield
Calculations
22. Annuity Payments.................................. (Prospectus) Fixed Dollar Annuity Benefit;
Variable Dollar Annuity Benefit
23. Financial Statements.............................. Financial Statements
PART C - OTHER INFORMATION
--------------------------
ITEM OF FORM N-4 PART C CAPTION
---------------- --------------
24. Financial Statements and Exhibits
(a) Financial Statements................ Financial Statements
(b) Exhibits............................ Exhibits
25. Directors and Officers of the Depositor............ Directors and Officers of Annuity Investors Life
Insurance Company[REGISTERED TRADEMARK]
26. Persons Controlled By or Under Common Persons Controlled By Or Under Common
Control With the Registrant........................ Control With the Depositor or Registrant
<PAGE>
27. Number of Owners.................................. Number of Owners
28. Indemnification................................... Indemnification
29. Principal Underwriters............................ Principal Underwriter
30. Location of Accounts and Records.................. Location of Accounts and Records
31. Management Services............................... Management Services
32. Undertakings...................................... Undertakings
Signature Page.................................... Signature Page
</TABLE>
<PAGE>
SUBJECT TO COMPLETION: DATED _____________, 1997
ANNUITY INVESTORS[REGISTERED TRADEMARK] VARIABLE ACCOUNT B
OF
ANNUITY INVESTORS LIFE INSURANCE COMPANY[REGISTERED TRADEMARK]
PROSPECTUS
FOR
THE COMMODORE NAVIGATOR[SERVICEMARK]
INDIVIDUAL FLEXIBLE PREMIUM DEFERRED ANNUITY
ISSUED BY
ANNUITY INVESTORS LIFE INSURANCE COMPANY
P.O. BOX 5423, CINCINNATI, OHIO 45201-5423, (800) 789-6771
This Prospectus describes The Commodore Navigator Individual Flexible Premium
Deferred Annuity Contract (the "Contract") issued by Annuity Investors Life
Insurance Company (the "Company").
The Commodore Navigator is available in connection with arrangements that
qualify for favorable tax treatment ("Qualified Contract(s)") under sections
401, 403 and 408 of the Internal Revenue Code of 1986, as amended (the "Code"),
and for non-tax-qualified annuity purchases ("Non-Qualified Contract(s)"),
including Contracts purchased by an employer in connection with a Code Section
457 or non-qualified deferred compensation plan.
The Contract provides for the accumulation of an Account Value on a fixed or
variable basis, or a combination of both. The Contract also provides for the
payment of periodic annuity payments on a fixed or variable basis, or a
combination of both. If the variable basis is chosen, Annuity values will be
held in Annuity Investors Variable Account B (the "Separate Account") and will
vary according to the investment performance of the mutual funds in which the
Sub-Accounts of the Separate Account invest. If the fixed basis is chosen,
periodic annuity payments from the Company's general account will be fixed and
will not vary.
The Separate Account is divided into Sub-Accounts. Each Sub-Account uses its
assets to purchase, at their net asset value, shares of a designated registered
investment company or portfolio thereof (each, a "Fund"). The Funds available
for investment in the Separate Account under the Contract are as follows: (1)
Janus Aspen Series Aggressive Growth Portfolio; (2) Janus Aspen Series Worldwide
Growth Portfolio; (3) Janus Aspen Series Balanced Portfolio; (4) Janus Aspen
Series Growth Portfolio; (5) Janus Aspen Series International Growth Portfolio;
(6) Dreyfus Variable Investment Fund-Capital Appreciation Portfolio; (7) Dreyfus
Variable Investment Fund-Money Market Portfolio; (8) Dreyfus Variable Investment
Fund-Growth and Income Portfolio; (9) Dreyfus Variable Investment Fund-Small Cap
Portfolio; (10) The Dreyfus Socially Responsible Growth Fund, Inc.; (11) Dreyfus
Stock Index Fund; (12) Strong Special Fund II; (13) Strong Growth Fund II; (14)
INVESCO VIF-Industrial Income Fund; (15) INVESCO VIF-Total Return Fund; (16)
INVESCO VIF-High Yield Fund; (17) Neuberger & Berman Advisers Management Trust
Partners Portfolio; (18) Neuberger & Berman Advisers Management Trust small cap
value portfolio; (19) Morgan Stanley Universal Funds, Inc. U.S. Real Estate
Portfolio; (20) Morgan Stanley Universal Funds, Inc. Value Portfolio; (21)
Morgan Stanley Universal Funds, Inc. Emerging Markets Equity Portfolio; (22)
Morgan Stanley Universal Funds, Inc. Fixed Income Portfolio; (23) Pilgrim Baxter
PBHG Insurance Series Funds Growth II Fund; (24) Pilgrim Baxter PBHG Insurance
Series Funds Large-Cap Growth Fund; and (25) Pilgrim Baxter PBHG Insurance
Series Funds Technology & Communications Fund.
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION BUT HAS NOT YET BECOME EFFECTIVE. THESE
SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME
THE REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT
CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL
THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER,
SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION
UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE>
INDIVIDUAL FLEXIBLE PREMIUM DEFERRED ANNUITY PROSPECTUS
________________________________________________________________________________
This Prospectus sets forth the basic information that a prospective investor
should know before investing. A "Statement of Additional Information" containing
more detailed information about the Contract is available free of charge by
writing to the Company's Administrative Office at P.O. Box 5423, Cincinnati,
Ohio 45201-5423. The Statement of Additional Information, which has the same
date as this Prospectus, as it may be supplemented from time to time, has been
filed with the Securities and Exchange Commission and is incorporated herein by
reference. The table of contents of the Statement of Additional Information is
included at the end of this Prospectus.
* * *
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE SECURITIES AND EXCHANGE COMMISSION
OR ANY STATE SECURITIES REGULATORY AUTHORITIES
NOR HAS THE COMMISSION PASSED UPON THE ACCURACY
OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
Please Read this Prospectus Carefully and
Retain It for Future Reference.
The Date of this Prospectus is __________________ 1997.
________________________________________________________________________________
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY JURISDICTION IN WHICH
SUCH OFFERING MAY NOT LAWFULLY BE MADE. NO DEALER, SALESPERSON, OR OTHER PERSON
IS AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY REPRESENTATIONS IN CONNECTION
WITH THIS OFFERING OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN
OR MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON.
________________________________________________________________________________
VARIABLE ANNUITY CONTRACTS ARE NOT DEPOSITS OR OBLIGATIONS OF, OR ENDORSED OR
GUARANTEED BY, ANY FINANCIAL INSTITUTION, NOR ARE THEY FEDERALLY INSURED OR
OTHERWISE PROTECTED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL
RESERVE BOARD, OR ANY OTHER AGENCY; THEY ARE SUBJECT TO INVESTMENT RISKS,
INCLUDING POSSIBLE LOSS OF PRINCIPAL INVESTMENT.
THIS PROSPECTUS IS VALID ONLY WHEN ACCOMPANIED BY THE CURRENT PROSPECTUS FOR
EACH UNDERLYING FUND. BOTH THIS PROSPECTUS AND THE UNDERLYING FUND PROSPECTUSES
SHOULD BE READ AND RETAINED FOR FUTURE REFERENCE.
________________________________________________________________________________
<PAGE>
INDIVIDUAL FLEXIBLE PREMIUM DEFERRED ANNUITY PROSPECTUS
________________________________________________________________________________
TABLE OF CONTENTS
-----------------
PAGE
DEFINITIONS................................................................. 4
HIGHLIGHTS.................................................................. 7
The Contract............................................................. 7
The Separate Account..................................................... 7
The Fixed Account........................................................ 8
Transfers Before the Annuity Commencement Date........................... 8
Surrenders............................................................... 8
Contingent Deferred Sales Charge ("CDSC")................................ 8
Other Charges and Deductions............................................. 8
Annuity Benefits......................................................... 9
Death Benefit............................................................ 9
Federal Income Tax Consequences.......................................... 9
Right to Cancel.......................................................... 9
Contacting the Company................................................... 9
SUMMARY OF EXPENSES......................................................... 10
Owner Transaction Expenses............................................... 10
Examples................................................................. 16
FINANCIAL STATEMENTS FOR THE COMPANY........................................ 18
THE FUNDS................................................................... 18
Janus Aspen Series....................................................... 18
Aggressive Growth Portfolio......................................... 18
Worldwide Growth Portfolio.......................................... 18
Balanced Portfolio.................................................. 18
Growth Portfolio.................................................... 18
International Growth Portfolio...................................... 18
Dreyfus Funds............................................................ 18
Capital Appreciation Portfolio...................................... 18
Money Market Portfolio.............................................. 18
Growth and Income Portfolio......................................... 19
Small Cap Portfolio................................................. 19
The Dreyfus Socially Responsible Growth Fund, Inc................... 19
Dreyfus Stock Index Fund............................................ 19
Strong Variable Insurance Funds, Inc..................................... 19
Strong Special Fund II.............................................. 19
Strong Growth Fund II............................................... 19
________________________________________________________________________________
Page i
<PAGE>
INDIVIDUAL FLEXIBLE PREMIUM DEFERRED ANNUITY PROSPECTUS
________________________________________________________________________________
INVESCO Variable Investment Funds, Inc................................... 20
Industrial Income Fund.............................................. 20
Total Return Fund................................................... 20
High Yield Fund..................................................... 20
Neuberger & Berman Advisers Management Trust............................. 20
Partners Portfolio.................................................. 20
small cap value portfolio........................................... 20
Morgan Stanley Universal Funds, Inc...................................... 20
U.S. Real Estate Portfolio.......................................... 20
Value Portfolio..................................................... 20
Emerging Markets Equity Portfolio................................... 21
Fixed Income Portfolio.............................................. 21
Pilgrim Baxter PBHG Insurance Series Funds............................... 21
Growth II Fund...................................................... 21
Large-Cap Growth Fund............................................... 21
Technology & Communications Fund.................................... 21
Additions, Deletions, or Substitutions................................... 22
PERFORMANCE INFORMATION..................................................... 22
Yield Data............................................................... 22
Total Return Data........................................................ 23
ANNUITY INVESTORS LIFE INSURANCE COMPANY[REGISTERED TRADEMARK]
AND THE SEPARATE ACCOUNT.................................................... 23
Annuity Investors Life Insurance Company................................. 23
Published Ratings........................................................ 23
The Separate Account..................................................... 24
THE FIXED ACCOUNT........................................................... 24
Fixed Account Options.................................................... 25
Renewal of Fixed Account Options......................................... 25
THE CONTRACT................................................................ 25
Right to Cancel.......................................................... 25
PURCHASE PAYMENTS........................................................... 26
Purchase Payments........................................................ 26
Allocation of Purchase Payments.......................................... 26
ACCOUNT VALUE............................................................... 26
Fixed Account Value...................................................... 27
Variable Account Value................................................... 27
Accumulation Unit Value.................................................. 27
Net Investment Factor.................................................... 27
________________________________________________________________________________
Page ii
<PAGE>
INDIVIDUAL FLEXIBLE PREMIUM DEFERRED ANNUITY PROSPECTUS
________________________________________________________________________________
TRANSFERS................................................................... 28
Telephone Transfers...................................................... 28
Dollar Cost Averaging.................................................... 29
Portfolio Rebalancing.................................................... 29
Interest Sweep........................................................... 30
Changes By the Company................................................... 30
SURRENDERS.................................................................. 30
Surrender Value.......................................................... 30
Suspension or Delay in Payment of Surrender Value........................ 31
Free Withdrawal Privilege................................................ 31
Systematic Withdrawal.................................................... 32
CONTRACT LOANS.............................................................. 32
DEATH BENEFIT............................................................... 32
When A Death Benefit Will Be Paid........................................ 32
Death Benefit Values..................................................... 33
Death Benefit Commencement Date.......................................... 34
Form of Death Benefit.................................................... 34
Beneficiary.............................................................. 34
CHARGES AND DEDUCTIONS...................................................... 34
Contingent Deferred Sales Charge ("CDSC")................................ 34
Maintenance and Administration Charges................................... 35
Mortality and Expense Risk Charge........................................ 36
Premium Taxes............................................................ 37
Transfer Fee............................................................. 37
Fund Expenses............................................................ 37
SETTLEMENT OPTIONS.......................................................... 37
Annuity Commencement Date................................................ 37
Election of Settlement Option............................................ 37
Benefit Payments......................................................... 38
Fixed Dollar Benefit..................................................... 38
Variable Dollar Benefit.................................................. 38
Settlement Options....................................................... 39
Minimum Amounts.......................................................... 39
Settlement Option Tables................................................. 40
GENERAL PROVISIONS.......................................................... 40
Non-participating........................................................ 40
Misstatement............................................................. 40
Proof of Existence and Age............................................... 40
Discharge of Liability................................................... 40
________________________________________________________________________________
Page iii
<PAGE>
INDIVIDUAL FLEXIBLE PREMIUM DEFERRED ANNUITY PROSPECTUS
________________________________________________________________________________
Transfer of Ownership.................................................... 41
Non-Qualified Contract.............................................. 41
Qualified Contract.................................................. 41
Assignment............................................................... 41
Non-Qualified Contract.............................................. 41
Qualified Contract.................................................. 41
Annual Report............................................................ 41
Incontestability......................................................... 42
Entire Contract.......................................................... 42
Changes -- Waivers....................................................... 42
Notices and Directions................................................... 42
FEDERAL TAX MATTERS......................................................... 42
Introduction............................................................. 42
Taxation of Annuities In General......................................... 43
Surrenders............................................................... 43
Qualified Contracts................................................. 43
Non-Qualified Contracts............................................. 43
Annuity Benefit Payments................................................. 43
Penalty Tax.............................................................. 44
Taxation of Death Benefit Proceeds....................................... 44
Transfers, Assignments, or Exchanges of the Contract..................... 44
Qualified Contracts - General............................................ 44
Texas Optional Retirement Program........................................ 44
Individual Retirement Annuities.......................................... 44
Tax-Sheltered Annuities.................................................. 45
Pension and Profit Sharing Plans......................................... 45
Certain Deferred Compensation Plans...................................... 45
Withholding.............................................................. 45
Possible Changes in Taxation............................................. 45
Other Tax Consequences................................................... 45
General.................................................................. 46
DISTRIBUTION OF THE CONTRACT................................................ 46
LEGAL PROCEEDINGS........................................................... 46
VOTING RIGHTS............................................................... 47
AVAILABLE INFORMATION....................................................... 47
STATEMENT OF ADDITIONAL INFORMATION......................................... 48
________________________________________________________________________________
Page iv
<PAGE>
INDIVIDUAL FLEXIBLE PREMIUM DEFERRED ANNUITY PROSPECTUS
________________________________________________________________________________
DEFINITIONS
ACCOUNT(s): The Sub-Account(s) and/or the Fixed Account options.
ACCOUNT VALUE: The aggregate value of the Owner's interest in the Sub-Account(s)
and the Fixed Account options as of the end of any Valuation Period. The value
of the Owner's interest in all Sub-Accounts is the "Variable Account Value," and
the value of the Owner's interest in all Fixed Account options is the "Fixed
Account Value."
ACCUMULATION PERIOD: The period prior to the applicable Commencement Date.
ACCUMULATION UNIT: The unit of measure used to calculate the value of the
Sub-Account(s) prior to the applicable Commencement Date.
ADMINISTRATIVE OFFICE: The home office of the Company or any other office the
Company may designate for administration.
AGE: Age as of most recent birthday.
ANNUITANT: Any natural person or persons whose life is used to determine the
duration of annuity payments involving life contingencies.
ANNUITY BENEFIT: Periodic payments under a settlement option, which commence on
or after the Annuity Commencement Date.
ANNUITY COMMENCEMENT DATE: The first day of the first period for which an
Annuity Benefit payment is to be made under a settlement option.
BENEFICIARY: The person, persons or entity entitled to the Death Benefit under
the Contract upon the death of an Owner. If there is a surviving joint Owner,
that person will be deemed the Beneficiary.
BENEFIT PAYMENT: The Annuity Benefit or Death Benefit payable under a settlement
option. Variable Dollar Benefit payments may vary in amount. Fixed Dollar
Benefit payments remain constant except under certain joint and survivor
settlement options.
BENEFIT PAYMENT PERIOD: The period commencing with the Commencement Date during
which Benefit Payments are to be made under the Contract.
BENEFIT UNIT: The unit of measure used to determine the dollar value of any
Variable Dollar Benefit payments after the first Benefit Payment is made by the
Company.
COMMENCEMENT DATE: The Annuity Commencement Date if an Annuity Benefit is
payable under the Contract, or the Death Benefit Commencement Date if a Death
Benefit is payable under the Contract.
CONTRACT ANNIVERSARY: An annual anniversary of the Contract Effective Date.
CONTRACT EFFECTIVE DATE: The date shown on the Contract Specifications page.
CONTRACT YEAR: Any period of twelve months commencing on the Contract Effective
Date and on each Contract Anniversary thereafter.
________________________________________________________________________________
Page 4
<PAGE>
INDIVIDUAL FLEXIBLE PREMIUM DEFERRED ANNUITY PROSPECTUS
________________________________________________________________________________
CODE: The Internal Revenue Code of 1986, as amended, and the rules and
regulations issued thereunder.
DEATH BENEFIT COMMENCEMENT DATE: The first day of the first period for which a
Death Benefit payment is to be made under a settlement option.
DEATH BENEFIT VALUATION DATE: The date that Due Proof of Death has been received
by the Company and the earlier to occur of:
(1) the Company's receipt of a Written Request with instructions as
to the form of Death Benefit; or
(2) the Death Benefit Commencement Date.
DUE PROOF OF DEATH: Any of the following: (1) a certified copy of a death
certificate; (2) a certified copy of a decree of a court of competent
jurisdiction as to the finding of death; (3) any other proof satisfactory to the
Company.
FUND: A management investment company or a portfolio thereof, registered under
the Investment Company Act of 1940, in which a Sub-Account of the Separate
Account invests.
NET ASSET VALUE: The amount computed by an investment company, no less
frequently than each Valuation Period, as the price at which its shares or
units, as the case may be, are redeemed in accordance with the rules of the
Securities and Exchange Commission.
OWNER: The person or persons identified as such on the Contract Specifications
page.
PERSON CONTROLLING PAYMENTS:
NON-QUALIFIED CONTRACTS: The "person controlling payments" means the
following, as the case may be:
(1) with respect to Annuity Benefit payments,
(a) the Owner, if the Owner has the right to change the payee;
or
(b) in all other cases, the payee; and
(2) with respect to Death Benefit payments,
(a) the Beneficiary, or
(b) if the Beneficiary is deceased, the payee.
QUALIFIED CONTRACTS: The "person controlling payments" means the following,
as the case may be:
(1) with respect to Annuity Benefit payments, the Owner; and
(2) with respect to Death Benefit payments,
(a) the Beneficiary, or
(b) if the Beneficiary is deceased, the payee.
PAYMENT INTERVAL: The timing and frequency of Benefit Payments under a
settlement option.
PURCHASE PAYMENT: A contribution made to the Company in consideration for the
Contract, after the deduction of any and all of the following that may apply:
(1) any fee charged by the person remitting payments for the Owner;
(2) premium taxes; and/or
(3) other taxes.
SEPARATE ACCOUNT: An account, which may be an investment company, which is
established and maintained by the Company pursuant to the laws of the State of
Ohio.
SUB-ACCOUNT: The Separate Account is divided into Sub-Accounts, each of which
invests in the shares of a designated Fund.
________________________________________________________________________________
Page 5
<PAGE>
INDIVIDUAL FLEXIBLE PREMIUM DEFERRED ANNUITY PROSPECTUS
________________________________________________________________________________
SURRENDER VALUE: The amount payable under a Contract if the Contract is
surrendered.
VALUATION PERIOD: The period commencing at the close of regular trading on the
New York Stock Exchange on any Valuation Date and ending at the close of trading
on the next succeeding Valuation Date. "Valuation Date" means each day on which
the New York Stock Exchange is open for business.
WRITTEN REQUEST: Information provided, or a request made, that is complete and
satisfactory to the Company, that is sent to the Company on the Company's form
or in a form satisfactory to the Company, and that is received by the Company at
the Administrative Office. A Written Request is subject to any payment made or
any action the Company takes before the Written Request is acknowledged by the
Company. An Owner may be required to return his or her Contract to the Company
in connection with a Written Request.
________________________________________________________________________________
Page 6
<PAGE>
INDIVIDUAL FLEXIBLE PREMIUM DEFERRED ANNUITY PROSPECTUS
________________________________________________________________________________
HIGHLIGHTS
THE CONTRACT
The Commodore Navigator[SERVICEMARK] contract described in this
Prospectus is available for use in connection with certain individual
non-tax-qualified annuity purchases, including Contracts purchased by an
employer in connection with a Code Section 457 or non-qualified deferred
compensation plan, and is also available for arrangements that qualify
for favorable tax treatment under Sections 401, 403 or 408 of the Code.
The Owner is the person or persons designated as such on the Contract
Specifications page. Subject to the terms of the Contract and unless the
Owner dies before the Annuity Commencement Date, the Account Value,
after certain adjustments, will be applied to the payment of an Annuity
Benefit under the Settlement Option elected by the Owner.
The Account Value will depend on the investment experience of the
amounts allocated to each Sub-Account of the Separate Account elected by
the Owner and/or interest credited on amounts allocated to the Fixed
Account option(s) elected. All Annuity Benefits and other values
provided under the Contract when based on the investment experience of
the Separate Account are variable and are not guaranteed as to dollar
amount. Therefore, the Owner bears the entire investment risk with
respect to amounts allocated to the Separate Account under the Contract.
THERE IS NO GUARANTEED OR MINIMUM SURRENDER VALUE WITH RESPECT TO
AMOUNTS ALLOCATED TO THE SEPARATE ACCOUNT, SO THE PROCEEDS OF A
SURRENDER COULD BE LESS THAN THE TOTAL PURCHASE PAYMENTS.
THE SEPARATE ACCOUNT
Annuity Investors[REGISTERED TRADEMARK] Variable Account B is a Separate
Account of the Company that is divided into Sub-Accounts. (See "The
Separate Account," page __.) Each Sub-Account uses its assets to
purchase, at their Net Asset Value, shares of a Fund. The Funds
available for investment in the Separate Account under the Contract are
as follows: (1) Janus Aspen Series Aggressive Growth Portfolio; (2)
Janus Aspen Series Worldwide Growth Portfolio; (3) Janus Aspen Series
Balanced Portfolio; (4) Janus Aspen Series Growth Portfolio; (5) Janus
Aspen Series International Growth Portfolio; (6) Dreyfus Variable
Investment Fund-Capital Appreciation Portfolio; (7) Dreyfus Variable
Investment Fund-Money Market Portfolio; (8) Dreyfus Variable Investment
Fund-Growth and Income Portfolio; (9) Dreyfus Variable Investment
Fund-Small Cap Portfolio; (10) The Dreyfus Socially Responsible Growth
Fund, Inc.; (11) Dreyfus Stock Index Fund; (12) Strong Special Fund II;
(13) Strong Growth Fund II; (14) INVESCO VIF-Industrial Income Fund;
(15) INVESCO VIF-Total Return Fund; (16) INVESCO VIF-High Yield Fund;
(17) Neuberger & Berman Advisers Management Trust Partners Portfolio;
(18) Neuberger & Berman Advisers Management Trust small cap value
portfolio; (19) Morgan Stanley Universal Funds, Inc. U.S. Real Estate
Portfolio; (20) Morgan Stanley Universal Funds, Inc. Value Portfolio;
(21) Morgan Stanley Universal Funds, Inc. Emerging Markets Equity
Portfolio; (22) Morgan Stanley Universal Funds, Inc. Fixed Income
Portfolio; (23) Pilgrim Baxter PBHG Insurance Series Funds Growth II
Fund; (24) Pilgrim Baxter PBHG Insurance Series Funds Large-Cap Growth
Fund; and (25) Pilgrim Baxter PBHG Insurance Series Funds Technology &
Communications Fund.
Each Fund pays its investment adviser and other service providers
certain fees charged against the assets of the Fund. The Account Value
of a Contract and the amount of any Annuity Benefits will vary to
reflect the investment performance of all the Sub-Accounts elected by
the Owner and the deduction of the charges described under "CHARGES AND
DEDUCTIONS," page __. For more information about the Funds, see "THE
FUNDS" page __, and the accompanying Funds' prospectuses.
________________________________________________________________________________
Page 7
<PAGE>
INDIVIDUAL FLEXIBLE PREMIUM DEFERRED ANNUITY PROSPECTUS
________________________________________________________________________________
THE FIXED ACCOUNT
The Fixed Account is an account within the Company's general account.
There are currently five Fixed Account options available under the Fixed
Account: a Fixed Accumulation Account option and four fixed term
options. Purchase Payments allocated or amounts transferred to the Fixed
Account options are credited with interest at a rate declared by the
Company's Board of Directors, but in any event at a minimum guaranteed
annual rate of 3.0% corresponding to a daily rate of 0.0081%. (See "THE
FIXED ACCOUNT," page __.)
TRANSFERS BEFORE THE ANNUITY COMMENCEMENT DATE
Prior to the Annuity Commencement Date, the Owner may transfer values
between the Separate Account and the Fixed Account, within the Fixed
Account and between the Sub-Accounts, by Written Request to the Company
or by telephone in accordance with the Company's telephone transfer
rules. (See "TRANSFERS," page __.)
The Company currently charges a fee of $25 for each transfer ("Transfer
Fee") in excess of twelve made during the same Contract Year. (See
"TRANSFERS," page __.)
SURRENDERS
All or part of the Surrender Value of a Contract may be surrendered by
the Owner on or before the Annuity Commencement Date by Written Request
to the Company. Amounts surrendered may be subject to a Contingent
Deferred Sales Charge ("CDSC") depending upon how long the Purchase
Payments to be withdrawn have been held under the Contract. Amounts
withdrawn also may be subject to a premium tax or similar tax, depending
upon the jurisdiction in which the Owner lives. Surrenders may be
subject to a 10% premature distribution penalty tax if made before the
Owner reaches age 59 1/2. Surrenders may further be subject to federal,
state or local income taxes or significant tax law restrictions. (See
"FEDERAL TAX MATTERS," page 40.)
CONTINGENT DEFERRED SALES CHARGE ("CDSC")
A CDSC may be imposed on amounts surrendered. The maximum CDSC is 7% for
each Purchase Payment. That percentage decreases by 1% annually to 0%
after year seven.
The CDSC may be reduced or waived under certain circumstances. (See
"CHARGES AND DEDUCTIONS," page __.)
OTHER CHARGES AND DEDUCTIONS
The Company deducts a daily charge ("Mortality and Expense Risk Charge")
at an effective annual rate of 1.25% of the daily Net Asset Value of
each Sub-Account. In connection with certain Contracts where the Company
incurs reduced sales and servicing expenses, such as Contracts offered
to active employees of the Company or any of its subsidiaries and/or
affiliates, the Company may offer a Contract with a Mortality and
Expense Risk Charge at an effective annual rate of 0.95% of the daily
Net Asset Value of each Sub- Account. The Mortality and Expense Risk
Charge is not assessed against Fixed Account options. (See "CHARGES AND
DEDUCTIONS," page __.)
The Company also deducts a Contract maintenance charge each year
("Contract Maintenance Fee"). This Fee is currently $30 and is deducted
from an Owner's Variable Account Value on each Contract Anniversary. The
Contract Maintenance Fee may be waived under certain circumstances. This
Contract Maintenance Fee is not assessed against Fixed Account options.
(See "CHARGES AND DEDUCTIONS," page __.)
________________________________________________________________________________
Page 8
<PAGE>
INDIVIDUAL FLEXIBLE PREMIUM DEFERRED ANNUITY PROSPECTUS
________________________________________________________________________________
Additionally, the Company deducts a charge to help cover the costs of
administering the Contract and the Separate Account ("Administration
Charge"). The Administration Charge is computed at an effective annual
rate of 0.15% of the daily Net Asset Value of each Sub-Account. This
Administration Charge is not assessed against Fixed Account options.
Charges for premium taxes may be imposed in some jurisdictions.
Depending on the applicability of such taxes, the charges may be
deducted from Purchase Payments, from surrenders, and from other
payments made under the Contract. (See "CHARGES AND DEDUCTIONS," page
__.)
ANNUITY BENEFITS
Annuity Benefits are paid on a fixed or variable basis, or a combination
of both. (See "Benefit Payments," page __.)
DEATH BENEFIT
The Contract provides for the payment of a Death Benefit if the Owner
dies prior to the Annuity Commencement Date. The Death Benefit may be
paid in one lump sum or pursuant to any available settlement option
offered under the Contract. (See "DEATH BENEFIT," page __.)
FEDERAL INCOME TAX CONSEQUENCES
An Owner generally should not be taxed on increases in the Account Value
until a distribution under the Contract occurs (E.G., a surrender or
Annuity Benefit) or is deemed to occur (E.G., a loan in default).
Generally, a portion (up to 100%) of any distribution or deemed
distribution is taxable as ordinary income. The taxable portion of
distributions is generally subject to income tax withholding unless the
recipient elects otherwise. In addition, a 10% federal penalty tax may
apply to certain distributions. (See "FEDERAL TAX MATTERS," page __.)
RIGHT TO CANCEL
An Owner may cancel the Contract by giving the Company written notice of
cancellation and returning the Contract before midnight of the twentieth
day (or longer if required by state law) after receipt. (See "Right to
Cancel," page __.)
CONTACTING THE COMPANY
All Written Requests and any questions or inquiries should be directed
to the Company's Administrative Office, P.O. Box 5423, Cincinnati, Ohio
45201-5423, (800) 789-6771. All inquiries should include the Contract
Number and the Owner's name.
NOTE: THE FOREGOING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY THE DETAILED
INFORMATION IN THE REMAINDER OF THIS PROSPECTUS AND IN THE ACCOMPANYING
PROSPECTUSES FOR THE FUNDS WHICH SHOULD BE REFERRED TO FOR MORE DETAILED
INFORMATION. THE REQUIREMENTS OF AN ENDORSEMENT TO THE CONTRACT OR
LIMITATIONS OR PENALTIES IMPOSED BY THE CODE MAY IMPOSE ADDITIONAL
LIMITS OR RESTRICTIONS ON PURCHASE PAYMENTS, SURRENDERS, DISTRIBUTIONS,
BENEFITS, OR OTHER PROVISIONS OF THE CONTRACT. THIS PROSPECTUS DOES NOT
DESCRIBE SUCH LIMITATIONS OR RESTRICTIONS. (SEE "FEDERAL TAX MATTERS,"
page __.)
________________________________________________________________________________
Page 9
<PAGE>
INDIVIDUAL FLEXIBLE PREMIUM DEFERRED ANNUITY PROSPECTUS
________________________________________________________________________________
SUMMARY OF EXPENSES
Owner Transaction Expenses
================================================================================
Sales Load Imposed on Purchase Payments NONE
- - --------------------------------------------------------------------------------
Contingent Deferred Sales Charge (as a percentage of Purchase
Payments surrendered)
- - --------------------------------------------------------------------------------
Contract Years elapsed since receipt of Purchase Payment
- - --------------------------------------------------------------------------------
less than 1 year 7%
- - --------------------------------------------------------------------------------
1 year but less than 2 years 6%
- - --------------------------------------------------------------------------------
2 years but less than 3 years 5%
- - --------------------------------------------------------------------------------
3 years but less than 4 years 4%
- - --------------------------------------------------------------------------------
4 years but less than 5 years 3%
- - --------------------------------------------------------------------------------
5 years but less than 6 years 2%
- - --------------------------------------------------------------------------------
6 years but less than 7 years 1%
- - --------------------------------------------------------------------------------
7 years or more 0%
- - --------------------------------------------------------------------------------
Surrender Fees NONE
- - --------------------------------------------------------------------------------
Transfer Fee1 $25
- - --------------------------------------------------------------------------------
Annual Contract Maintenance Fee $30
================================================================================
- - ---------------------
1/ The first twelve transfers in a Contract Year are free. Thereafter, a
$25 fee will be charged on each subsequent transfer.
________________________________________________________________________________
Page 10
<PAGE>
INDIVIDUAL FLEXIBLE PREMIUM DEFERRED ANNUITY PROSPECTUS
________________________________________________________________________________
<TABLE>
<CAPTION>
FUND ANNUAL EXPENSES
=====================================================================================================
SEPARATE ACCOUNT
ANNUAL EXPENSES2 (as a JANUS A.S. JANUS A.S. JANUS A.S.
percentage of average AGGRESSIVE WORLDWIDE JANUS A.S. JANUS A.S. INTERNATIONAL
Separate Account GROWTH GROWTH BALANCED GROWTH GROWTH
assets) PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
- - -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Mortality and Expense
Risk Charge 1.25% 1.25% 1.25% 1.25% 1.25%
- - -----------------------------------------------------------------------------------------------------
Administration Charge 0.15% 0.15% 0.15% 0.15% 0.15%
- - -----------------------------------------------------------------------------------------------------
Other Fees and
Expenses of the
Separate Account 0.00% 0.00% 0.00% 0.00% 0.00%
- - -----------------------------------------------------------------------------------------------------
Total Separate Account
Annual Expenses 1.40% 1.40% 1.40% 1.40% 1.40%
- - -----------------------------------------------------------------------------------------------------
Fund Annual Expenses3
(as a percentage of Fund average net assets after fee waiver and/or expense reimbursement, if any)
- - -----------------------------------------------------------------------------------------------------
Management Fees 0.75% 0.68% 0.82% 0.65% 0.84%
- - -----------------------------------------------------------------------------------------------------
Other Expenses 0.11% 0.22% 0.55% 0.13% 1.85%
- - -----------------------------------------------------------------------------------------------------
Total Fund Annual
Expenses 0.86% 0.90% 1.37% 0.78% 2.69%
=====================================================================================================
============================================================================================================
SEPARATE ACCOUNT DREYFUS DREYFUS THE DREYFUS
ANNUAL EXPENSES2 (as DREYFUS V.I.F. V.I.F. DREYFUS SOCIALLY DREYFUS
a percentage of V.I.F. CAPITAL MONEY GROWTH & V.I.F. RESPONSIBLE STOCK
average Separate APPRECIATION MARKET INCOME SMALL-CAP GROWTH INDEX
Account assets) PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO FUND, INC. FUND
- - ------------------------------------------------------------------------------------------------------------
Mortality and Expense
Risk Charge 1.25% 1.25% 1.25% 1.25% 1.25% 1.25%
- - ------------------------------------------------------------------------------------------------------------
Administration Charge 0.15% 0.15% 0.15% 0.15% 0.15% 0.15%
- - ------------------------------------------------------------------------------------------------------------
Other Fees and
Expenses of the
Separate Account 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- - ------------------------------------------------------------------------------------------------------------
Total Separate Account
Annual Expenses 1.40% 1.40% 1.40% 1.40% 1.40% 1.40%
- - ------------------------------------------------------------------------------------------------------------
Fund Annual Expenses3
(as a percentage of Fund average net assets after fee waiver and/or expense reimbursement, if any)
- - ------------------------------------------------------------------------------------------------------------
Management Fees 0.73% 0.50% 0.75% 0.75% 0.69% 0.25%
- - ------------------------------------------------------------------------------------------------------------
Other Expenses 0.12% 0.12% 0.17% 0.08% 0.58% 0.14%
- - ------------------------------------------------------------------------------------------------------------
Total Fund Annual
Expenses 0.85% 0.62% 0.92% 0.83% 1.27% 0.39%
============================================================================================================
</TABLE>
________________________________________________________________________________
Page 11
<PAGE>
INDIVIDUAL FLEXIBLE PREMIUM DEFERRED ANNUITY PROSPECTUS
________________________________________________________________________________
================================================================================
SEPARATE ACCOUNT
ANNUAL EXPENSES2
(as a percentage of
average Separate STRONG SPECIAL FUND STRONG GROWTH FUND
Account assets) II II
- - --------------------------------------------------------------------------------
Mortality and
Expense Risk Charge 1.25% 1.25%
- - --------------------------------------------------------------------------------
Administration
Charge 0.15% 0.15%
- - --------------------------------------------------------------------------------
Other Fees and
Expenses of the
Separate Account 0.00% 0.00%
- - --------------------------------------------------------------------------------
Total Separate
Account Annual
Expenses 1.40% 1.40%
- - --------------------------------------------------------------------------------
Fund Annual Expenses3
(as a percentage of Fund average net assets after fee waiver and/or
expense reimbursement, if any)
- - --------------------------------------------------------------------------------
Management Fees 1.00% 1.00%
- - --------------------------------------------------------------------------------
Other Expenses 0.20% 0.24%4
- - --------------------------------------------------------------------------------
Total Fund Annual
Expenses 1.20% 1.24%5
================================================================================
================================================================================
SEPARATE ACCOUNT
ANNUAL EXPENSES2 INVESCO
(as a percentage of INVESCO VIF- INVESCO VIF- VIF-
average Separate INDUSTRIAL TOTAL RETURN HIGH YIELD
Account assets) INCOME FUND FUND FUND
- - --------------------------------------------------------------------------------
Mortality and
Expense Risk
Charge 1.25% 1.25% 1.25%
- - --------------------------------------------------------------------------------
Administration
Charge 0.15% 0.15% 0.15%
- - --------------------------------------------------------------------------------
Other Fees and
Expenses of the
Separate Account 0.00% 0.00% 0.00%
- - --------------------------------------------------------------------------------
Total Separate
Account Annual
Expenses 1.40% 1.40% 1.40%
- - --------------------------------------------------------------------------------
Fund Annual Expenses3
(as a percentage of Fund average net assets after fee waiver and/or
expense reimbursement, if any)
- - --------------------------------------------------------------------------------
Management Fees 0.75% 0.75% 0.60%
- - --------------------------------------------------------------------------------
Other Expenses 0.28% 0.26% 0.37%
- - --------------------------------------------------------------------------------
Total Fund Annual
Expenses 1.03% 1.01% 0.97%
================================================================================
________________________________________________________________________________
Page 12
<PAGE>
INDIVIDUAL FLEXIBLE PREMIUM DEFERRED ANNUITY PROSPECTUS
________________________________________________________________________________
<TABLE>
<CAPTION>
====================================================================================================
Neuberger & NEUBERGER &
SEPARATE ACCOUNT ANNUAL Berman Advisers BERMAN ADVISERS MORGAN STANLEY
EXPENSES2 (as a Management MANAGEMENT UNIVERSAL FUNDS,
percentage of average Trust Partners TRUST SMALL CAP INC. U.S. REAL
Separate Account assets) Portfolio VALUE PORTFOLIO ESTATE PORTFOLIO
- - ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Mortality and Expense Risk
Charge 1.25% 1.25% 1.25%
- - ----------------------------------------------------------------------------------------------------
Administration Charge 0.15% 0.15% 0.15%
- - ----------------------------------------------------------------------------------------------------
Other Fees and Expenses
of the Separate Account 0.00% 0.00% 0.00%
- - ----------------------------------------------------------------------------------------------------
Total Separate Account
Annual Expenses 1.40% 1.40% 1.40%
- - ----------------------------------------------------------------------------------------------------
Fund Annual Expenses3
(as a percentage of Fund average net assets after fee waiver and/or expense reimbursement,
if any)
- - ----------------------------------------------------------------------------------------------------
Management Fees 0.55% 0.75% 0.80%
- - ----------------------------------------------------------------------------------------------------
Other Expenses 0.54% 0.50% 0.30%
- - ----------------------------------------------------------------------------------------------------
Total Fund Annual
Expenses 1.09% 1.25% 1.10%
====================================================================================================
====================================================================================================
MORGAN STANLEY
SEPARATE ACCOUNT ANNUAL MORGAN STANLEY UNIVERSAL MORGAN STANLEY
EXPENSES2 (as a UNIVERSAL FUNDS, FUNDS, INC. UNIVERSAL FUNDS,
percentage of average INC. EMERGING MARKETS INC. FIXED INCOME
Separate Account assets) VALUE PORTFOLIO EQUITY PORTFOLIO PORTFOLIO
- - ----------------------------------------------------------------------------------------------------
Mortality and Expense Risk
Charge 1.25% 1.25% 1.25%
- - ----------------------------------------------------------------------------------------------------
Administration Charge 0.15% 0.15% 0.15%
- - ----------------------------------------------------------------------------------------------------
Other Fees and Expenses
of the Separate Account 0.00% 0.00% 0.00%
- - ----------------------------------------------------------------------------------------------------
Total Separate Account
Annual Expenses 1.40% 1.40% 1.40%
- - ----------------------------------------------------------------------------------------------------
Fund Annual Expenses3
(as a percentage of Fund average net assets after fee waiver and/or expense reimbursement,
if any)
- - ----------------------------------------------------------------------------------------------------
Management Fees 0.55% 1.25% 0.40%
- - ----------------------------------------------------------------------------------------------------
Other Expenses 0.30% 0.50% 0.30%
- - ----------------------------------------------------------------------------------------------------
Total Fund Annual
Expenses 0.85% 1.75% 0.70%
====================================================================================================
________________________________________________________________________________
Page 13
<PAGE>
INDIVIDUAL FLEXIBLE PREMIUM DEFERRED ANNUITY PROSPECTUS
________________________________________________________________________________
====================================================================================================
Pilgrim Baxter
Pilgrim Baxter PBHG Insurance
SEPARATE ACCOUNT ANNUAL Pilgrim Baxter PBHG Insurance Series Funds
EXPENSES2 (as a PBHG Insurance Series Funds Technology &
percentage of average Series Funds Large-Cap Communications
Separate Account assets) Growth II Fund Growth Fund Fund
- - ----------------------------------------------------------------------------------------------------
Mortality and Expense Risk
Charge 1.25% 1.25% 1.25%
- - ----------------------------------------------------------------------------------------------------
Administration Charge 0.15% 0.15% 0.15%
- - ----------------------------------------------------------------------------------------------------
Other Fees and Expenses
of the Separate Account 0.00% 0.00% 0.00%
- - ----------------------------------------------------------------------------------------------------
Total Separate Account
Annual Expenses 1.40% 1.40% 1.40%
- - ----------------------------------------------------------------------------------------------------
Fund Annual Expenses3
(as a percentage of Fund average net assets after fee waiver and/or expense reimbursement,
if any)
- - ----------------------------------------------------------------------------------------------------
Management Fees 0.75% 0.75% 0.85%
- - ----------------------------------------------------------------------------------------------------
Other Expenses 0.35% 0.35% 0.35%
- - ----------------------------------------------------------------------------------------------------
Total Fund Annual
Expenses 1.10% 1.10% 1.20%
====================================================================================================
</TABLE>
________________________________________________________________________________
Page 14
<PAGE>
INDIVIDUAL FLEXIBLE PREMIUM DEFERRED ANNUITY PROSPECTUS
________________________________________________________________________________
The purpose of this table is to assist an Owner in understanding the various
costs and expenses that the Owner will bear directly and indirectly with respect
to investment in the Separate Account. The table reflects expenses of each
Sub-Account as well as of the Fund in which the Sub-Account invests. See
"CHARGES AND DEDUCTIONS " on page __ of this Prospectus and the accompanying
prospectus for the applicable Fund for a more complete description of the
various costs and expenses. In addition to the expenses listed above, premium
taxes may be applicable. The dollar figures should not be considered a
representation of past or future expenses. Actual expenses may be greater or
less than those shown. The $30 Contract Maintenance Charge is included in the
Examples as $1.
- - ------------------
2/ Annual expenses are anticipated to be the same for each Sub-Account.
These expenses are based on estimated amounts for the current fiscal year.
Currently, the Company imposes no charge for participation in the
Dollar Cost Averaging, Portfolio Rebalancing, Interest Sweep and Systematic
Withdrawal programs. The Company reserves the right to impose an annual fee in
the future for participation in each of the foregoing programs. (See
"TRANSFERS," page __.) The Company deducts a $30 Contract Maintenance Fee from
an Owner's Variable Account Value on each Contract Anniversary. Additionally,
the Company deducts a charge to help cover the costs of administering the
Contract and the Separate Account. This Administration Charge is computed at an
effective annual rate of 0.15% of the daily Net Asset Value of each Sub-Account.
(See "CHARGES AND DEDUCTIONS," page __.)
3/ Information regarding each underlying Fund has been provided to the
Company by each Fund, and the Company has not independently verified such
information. Data for each Fund are for its fiscal year ended December 31, 1995.
Actual expenses in future years may be higher or lower.
Fund expenses are net of management fees and other expenses waived
and/or reimbursed and are gross of expense offset arrangements. In the absence
of such fee waivers and/or expense reimbursements, Management Fees, Other
Expenses and Total Portfolio Expenses would have been as follows for the fiscal
year ended December 31, 1995: 0.82%, 0.11% and 0.93%, respectively, for the
Janus A.S. Aggressive Growth Portfolio; 0.87%, 0.22% and 1.09%, respectively,
for the Janus A.S. Worldwide Growth Portfolio; 1.00%, 0.55% and 1.55%,
respectively, for the Janus A.S. Balanced Portfolio; 0.85%, 0.13% and 0.98%,
respectively, for the Janus A.S. Growth Portfolio; 1.00%, 2.57% and 3.57%,
respectively, for the Janus A.S. International Growth Portfolio; 0.75%, 0.12%
and 0.87%, respectively, for the Dreyfus VIF Capital Appreciation Portfolio;
0.50%, 0.15% and 0.65%, respectively, for the Dreyfus VIF Money Market
Portfolio; 0.75%, 0.20% and 0.95%, respectively, for the Dreyfus VIF Growth &
Income Portfolio; 0.75%, 0.58% and 1.33%, respectively, for the Dreyfus Socially
Responsible Growth Fund; and 0.25%, 0.17% and 0.42%, respectively, for the
Dreyfus Stock Index Fund; 0.75%,1.56% and 2.31%, respectively for the INVESCO
VIF-Industrial Income Fund; 0.75%, 1.76% and 2.51%, respectively for the INVESCO
VIF-Total Return Fund; 0.60%, 2.11% and 2.71%, respectively for the INVESCO
VIF-High Yield Fund. Currently, there are no fee waivers and/or expense
reimbursements that are applicable to any of the other Funds.
4/ Estimated expenses are based on average net assets of $25,000,000.00.
5/ Actual expenses for the Fund may be more or less than reflected on the
table. The advisory agreement requires the Adviser to reimburse the Fund in the
event that expenses and charges payable by the Fund in any fiscal year exceed 2%
of the average net asset value of the Fund for such year.
________________________________________________________________________________
Page 15
<PAGE>
INDIVIDUAL FLEXIBLE PREMIUM DEFERRED ANNUITY PROSPECTUS
________________________________________________________________________________
EXAMPLES6
If the Owner surrenders his or her Contract at the end of the applicable
time period, the following expenses will be charged on a $1,000 investment,
assuming a 5% annual return on assets:
<TABLE>
<CAPTION>
=====================================================================================================
SUB-ACCOUNT 1 YEAR 3 YEARS
- - -----------------------------------------------------------------------------------------------------
<S> <C> <C>
Janus A.S. Aggressive Growth Portfolio $ 94 $126
Janus A.S. Worldwide Growth Portfolio $ 95 $128
Janus A.S. Balanced Portfolio $ 99 $143
Janus A.S. Growth Portfolio $ 94 $124
Janus A.S. International Growth Portfolio $113 $183
Dreyfus V.I.F. Capital Appreciation Portfolio $ 94 $126
Dreyfus V.I.F. Money Market Portfolio $ 92 $119
Dreyfus V.I.F. Growth and Income Portfolio $ 95 $128
Dreyfus V.I.F. Small Cap Portfolio $ 94 $125
The Dreyfus Socially Responsible Growth Fund, Inc. $ 98 $140
Dreyfus Stock Index Fund $ 90 $111
Strong Special Fund II $ 98 $137
Strong Growth Fund II $ 98 $139
INVESCO VIF-Industrial Income Fund $ 96 $132
INVESCO VIF-Total Return Fund $ 96 $131
INVESCO VIF-High Yield Fund $ 95 $130
Neuberger & Berman Advisers Management Trust Partners Portfolio $ 97 $134
Neuberger & Berman Advisers Management Trust small cap value portfolio $ 98 $139
Morgan Stanley Universal Funds, Inc. U.S. Real Estate Portfolio $ 97 $134
Morgan Stanley Universal Funds, Inc. Value Portfolio $ 94 $126
Morgan Stanley Universal Funds, Inc. Emerging Markets Equity Portfolio $103 $155
Morgan Stanley Universal Funds, Inc. Fixed Income Portfolio $ 93 $121
Pilgrim Baxter PBHG Insurance Series Funds Growth II Fund $ 97 $134
Pilgrim Baxter PBHG Insurance Series Funds Large-Cap Growth Fund $ 97 $134
Pilgrim Baxter PBHG Insurance Series Funds Technology & Communications Fund $ 98 $137
=====================================================================================================
</TABLE>
6/ The examples assume the reinvestment of all dividends and
distributions, no transfers among Sub- Accounts or between Accounts and a 5%
annual rate of return as mandated by Securities and Exchange Commission
regulations. Annual Contract Maintenance Fees are based on an estimated average
Account Value for the current fiscal year.
________________________________________________________________________________
Page 16
<PAGE>
INDIVIDUAL FLEXIBLE PREMIUM DEFERRED ANNUITY PROSPECTUS
________________________________________________________________________________
If the Owner does not surrender his or her Contract, or it is
annuitized, the following expenses would be charged on a $1,000 investment at
the end of the applicable time period, assuming a 5% annual return on assets:
<TABLE>
<CAPTION>
=======================================================================================================
SUB-ACCOUNT 1 YEAR 3 YEARS
- - -------------------------------------------------------------------------------------------------------
<S> <C> <C>
Janus A.S. Aggressive Growth Portfolio $ 24 $ 76
Janus Worldwide Growth Portfolio $ 25 $ 78
Janus A.S. Balanced Portfolio $ 29 $ 93
Janus A.S. Growth Portfolio $ 24 $ 74
Janus A.S. International Growth Portfolio $ 43 $133
Dreyfus V.I.F. Capital Appreciation Portfolio $ 24 $ 76
Dreyfus V.I.F. Money Market Portfolio $ 22 $ 69
Dreyfus V.I.F. Growth and Income Portfolio $ 25 $ 78
Dreyfus V.I.F. Small Cap Portfolio $ 24 $ 75
The Dreyfus Socially Responsible Growth Fund, Inc. $ 28 $ 90
Dreyfus Stock Index Fund $ 20 $ 61
Strong Special Fund II $ 28 $ 87
Strong Growth Fund II $ 28 $ 89
INVESCO VIF-Industrial Income Fund $ 26 $ 82
INVESCO VIF-Total Return Fund $ 26 $ 81
INVESCO VIF-High Yield Fund $ 25 $ 80
Neuberger & Berman Advisers Management Trust Partners Portfolio $ 27 $ 84
Neuberger & Berman Advisers Management Trust small cap value portfolio $ 28 $ 89
Morgan Stanley Universal Funds, Inc. U.S. Real Estate Portfolio $ 27 $ 84
Morgan Stanley Universal Funds, Inc. Value Portfolio $ 24 $ 76
Morgan Stanley Universal Funds, Inc. Emerging Markets Equity Portfolio $ 33 $105
Morgan Stanley Universal Funds, Inc. Fixed Income Portfolio $ 23 $ 71
Pilgrim Baxter PBHG Insurance Series Funds Growth II Fund $ 27 $ 84
Pilgrim Baxter PBHG Insurance Series Funds Large-Cap Growth Fund $ 27 $ 84
Pilgrim Baxter PBHG Insurance Series Funds Technology & Communications Fund $ 28 $ 87
=======================================================================================================
</TABLE>
The examples should not be considered a representation of past or
future expenses or annual rates of return of any Fund. Actual expenses
and annual rates of return may be more or less than those assumed for
the purpose of the examples.
The fee table and examples do not include charges to the Owner for
premium taxes.
________________________________________________________________________________
Page 17
<PAGE>
FINANCIAL STATEMENTS FOR THE COMPANY
The financial statements and report of independent public accountants
for the Company are contained in the Statement of Additional
Information. Because the Contracts registered by this Prospectus had not
yet been issued as of the date of this Prospectus, no financial
information for the Separate Account is provided.
THE FUNDS
The Separate Account currently has twenty-five Funds that are available
for investment under the Contract. Each Fund has separate investment
objectives and policies. As a result, each Fund operates as a separate
investment portfolio and the investment performance of one Fund has no
effect on the investment performance of any other Fund. There is no
assurance that any of these Funds will achieve their stated objectives.
The Securities and Exchange Commission does not supervise the management
or the investment practices and/or policies of any of the Funds.
The Separate Account invests exclusively in shares of the Funds listed
below (followed by a brief overview of each Fund's investment
objective(s) and policies):
JANUS ASPEN SERIES:
AGGRESSIVE GROWTH PORTFOLIO. A nondiversified portfolio that seeks
long-term growth of capital by investing primarily in common stocks with
an emphasis on securities issued by medium-sized companies.
WORLDWIDE GROWTH PORTFOLIO. A diversified portfolio that seeks long-term
growth of capital by investing primarily in common stocks of foreign and
domestic issuers.
BALANCED PORTFOLIO. A diversified portfolio that seeks long-term growth
of capital balanced by current income. The Fund normally invests 40-60%
of its assets in securities selected primarily for their growth
potential and 40-60% of its assets in securities selected primarily for
their income potential.
GROWTH PORTFOLIO. A diversified portfolio that seeks long-term growth of
capital by investing primarily in common stocks, with an emphasis on
companies with larger market capitalizations.
INTERNATIONAL GROWTH PORTFOLIO. A diversified portfolio that seeks
long-term growth of capital by investing primarily in common stocks of
foreign issuers.
Janus Capital Corporation serves as the investment adviser to each of
these Funds.
DREYFUS FUNDS:
CAPITAL APPRECIATION PORTFOLIO (Dreyfus Variable Investment Fund). The
Capital Appreciation Portfolio's primary investment objective is to
provide long-term capital growth consistent with the preservation of
capital. Current income is a secondary goal. It seeks to achieve its
goals by investing principally in common stocks of domestic and foreign
issuers, common stocks with warrants attached and debt securities of
foreign governments.
The Dreyfus Corporation serves as the investment adviser and Fayez
Sarofim & Co. serves as the sub- investment adviser to this Fund.
MONEY MARKET PORTFOLIO (Dreyfus Variable Investment Fund). The Money
Market Portfolio's goal is to provide as high a level of current income
as is consistent with the preservation of capital and the maintenance of
________________________________________________________________________________
Page 18
<PAGE>
INDIVIDUAL FLEXIBLE PREMIUM DEFERRED ANNUITY PROSPECTUS
________________________________________________________________________________
liquidity. This Portfolio invests in short-term money market
instruments. An investment in the Money Market Portfolio is neither
insured nor guaranteed by the U.S. Government. There can be no assurance
that the Money Market Portfolio will be able to maintain a stable net
asset value of $1.00 per share.
GROWTH AND INCOME PORTFOLIO (Dreyfus Variable Investment Fund). The
Growth and Income Portfolio's goal is to provide long-term capital
growth, current income and growth of income, consistent with reasonable
investment risk. This Portfolio invests primarily in equity securities,
debt securities and money market instruments of domestic and foreign
issuers.
SMALL CAP PORTFOLIO (Dreyfus Variable Investment Fund). The Small Cap
Portfolio's goal is to maximize capital appreciation. This Portfolio
invests primarily in common stocks of domestic and foreign issuers. This
Portfolio will be particularly alert to companies that The Dreyfus
Corporation considers to be emerging smaller-sized companies which are
believed to be characterized by new or innovative products, services or
processes which should enhance prospects for growth in future earnings.
The Dreyfus Corporation serves as investment adviser to the Money
Market, Growth and Income, and Small Cap Portfolios.
THE DREYFUS SOCIALLY RESPONSIBLE GROWTH FUND, INC. The Dreyfus Socially
Responsible Growth Fund, Inc.'s primary goal is to provide capital
growth. It seeks to achieve this goal by investing principally in common
stocks, or securities convertible into common stock, of companies which,
in the opinion of the Fund's management, not only meet traditional
investment standards, but also show evidence that they conduct their
business in a manner that contributes to the enhancement of the quality
of life in America. Current income is a secondary goal.
The Dreyfus Corporation serves as the investment adviser and NCM Capital
Management Group, Inc. serves as the sub-investment adviser to this
Fund.
DREYFUS STOCK INDEX FUND. The Dreyfus Stock Index Fund's investment
objective is to provide investment results that correspond to the price
and yield performance of publicly traded common stocks in the aggregate,
as represented by the Standard & Poor's 500 Composite Stock Price Index.
The Stock Index Fund is neither sponsored by nor affiliated with
Standard & Poor's Corporation.
The Dreyfus Corporation acts as the Fund manager and Mellon Equity
Associates, an affiliate of Dreyfus, is the index manager.
STRONG VARIABLE INSURANCE FUNDS, INC.:
STRONG SPECIAL FUND II. The investment objective of the Strong Special
Fund II is to seek capital growth by currently emphasizing medium-sized
companies that the Fund's adviser believes are under-researched and
attractively valued.
STRONG GROWTH FUND II. The investment objective of the Strong Growth
Fund II is to seek capital growth by investing primarily in equity
securities that the Fund's adviser believes have above-average growth
prospects.
Strong Capital Management, Inc. serves as the investment adviser to each
of these Funds.
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INVESCO VARIABLE INVESTMENT FUNDS, INC.:
INDUSTRIAL INCOME FUND. The investment objective of the Industrial
Income Fund is to seek the best possible current income while following
sound investment practices. Capital growth potential is an additional,
but secondary, consideration in the selection of portfolio securities.
TOTAL RETURN FUND. The investment objective of the Total Return Fund is
to seek a high total return on investment through capital appreciation
and current income. The Total Return Fund seeks to accomplish its
objective by investing in a combination of equity securities (consisting
of common stocks and, to a lesser degree, securities convertible into
common stock) and fixed income securities.
HIGH YIELD FUND. The investment objective of the High Yield Fund is to
seek a high level of current income by investing substantially all of
its assets in lower rated bonds and other debt securities and in
preferred stock. The Fund pursues its investment objective through
investment in a variety of long-term, intermediate-term, and short-term
bonds. Potential capital appreciation is a factor in the selection of
investments, but is secondary to the Fund's primary objective. For
further discussion of the risks associated with investment in lower
rated bonds, please see the attached INVESCO Variable Investment Funds,
Inc. prospectus.
INVESCO Funds Group, Inc. serves as the investment adviser to each of
these Funds.
NEUBERGER & BERMAN ADVISERS MANAGEMENT TRUST:
PARTNERS PORTFOLIO. The investment objective of the Partners Portfolio
is to seek capital growth by investing primarily in common stocks of
established companies, using a value-oriented investment approach. Its
investment program seeks securities believed to be undervalued based on
strong fundamentals, such as low price-to-earnings ratios, consistent
cash flow, and support from asset values.
SMALL CAP VALUE PORTFOLIO. The investment objective of the small cap
value portfolio is to seek capital growth by investing primarily in
common stocks of "small-cap" companies, using a value-oriented
investment approach. Its investment program seeks securities believed to
be undervalued based on strong fundamentals, such as low
price-to-earnings ratios, consistent cash flow, and support from asset
values.
Neuberger & Berman Management serves as the investment adviser to these
Funds.
MORGAN STANLEY UNIVERSAL FUNDS, INC.:
U.S. REAL ESTATE PORTFOLIO. The investment objective of the U.S. Real
Estate Portfolio is above-average current income and long-term capital
appreciation by investing primarily in equity securities of U.S. and
non- U.S. companies principally engaged in the U.S. real estate
industry, including Real Estate Investment Trusts (REITs).
Morgan Stanley Asset Management Inc. serves as the investment adviser to
this Fund.
VALUE PORTFOLIO. The investment objective of the Value Portfolio is to
seek above-average total return over a market cycle of three to five
years by investing primarily in a diversified portfolio of common stocks
and other equity securities deemed by the adviser to be undervalued
based on various measures such as price-earnings ratios and price/book
ratios.
Miller Anderson & Sherrerd, LLP (an indirect wholly-owned subsidiary of
Morgan Stanley Group, Inc.) serves as the investment adviser to this
Fund.
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EMERGING MARKETS EQUITY PORTFOLIO. The investment objective of the
Emerging Markets Equity Portfolio is long-term capital appreciation by
investing primarily in equity securities of emerging market country
issuers with a focus on those in which the adviser believes the
economies are developing strongly and in which markets are becoming more
sophisticated.
Morgan Stanley Asset Management Inc. serves as the investment adviser to
this Fund.
FIXED INCOME PORTFOLIO. The investment objective of the Fixed Income
Portfolio is to seek above-average total return over a market cycle of
three to five years by investing primarily in a diversified portfolio of
securities issued by the U.S. Government and its Agencies, Corporate
Bonds, Mortgage-Backed Securities, Foreign Bonds, and other Fixed Income
Securities.
Miller Anderson & Sherrerd, LLP (an indirect wholly-owned subsidiary of
Morgan Stanley Group, Inc.) serves as the investment adviser to this
Fund.
PILGRIM BAXTER PBHG INSURANCE SERIES FUNDS:
GROWTH II FUND. The investment objective of the PBHG Insurance Series
Growth II Fund is to seek capital appreciation by investing primarily in
common stocks and convertible securities of small and medium sized
growth companies (market capitalization up to $4 billion) that are
considered to have an outlook for strong earnings growth.
LARGE-CAP GROWTH FUND. The investment objective of the PBHG Insurance
Series Large-Cap Growth Fund is to seek long-term growth of capital by
investing primarily in common stocks of large capitalization companies
(market capitalization in excess of $1 billion) that are considered to
have an outlook for strong growth in earnings and potential for capital
appreciation.
TECHNOLOGY & COMMUNICATIONS FUND. The investment objective of the PBHG
Insurance Series Technology & Communications Fund is to seek long-term
growth of capital by investing primarily in common stocks of companies
which rely extensively on technology or communications in their product
development or operations, or which may be experiencing exceptional
growth in sales and earnings driven by technology or
communications-related products and services.
Pilgrim Baxter & Associates, Ltd. serves as the investment advisor to
each of these funds.
THERE IS NO ASSURANCE THAT ANY OF THESE FUNDS WILL ACHIEVE THEIR STATED
OBJECTIVES.
INVESTMENTS IN THESE FUNDS ARE NEITHER INSURED NOR GUARANTEED BY THE
U.S. GOVERNMENT OR ANY OTHER ENTITY OR PERSON.
Since each of the Funds is available to separate accounts of other
insurance companies offering variable annuity and variable life
products, and certain Funds may be available to qualified pension and
retirement plans, there is a possibility that a material conflict may
arise between the interests of the Separate Account and one or more
other separate accounts or plans investing in the Fund. In the event of
a material conflict, the affected insurance companies and plans will
take any necessary steps to resolve the matter, including stopping their
separate accounts from investing in the particular Fund. See the Funds'
prospectuses for greater detail.
Additional information concerning the investment objectives and policies
of each Fund, the investment advisory services and administrative
services of each Fund and charges of each Fund can be found in the
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current prospectus for each Fund which accompany this Prospectus. THE
APPROPRIATE FUNDS' PROSPECTUSES SHOULD BE READ CAREFULLY BEFORE ANY
DECISION IS MADE CONCERNING THE ALLOCATION OF PURCHASE PAYMENTS TO, OR
TRANSFERS AMONG, THE SUB-ACCOUNTS.
ADDITIONS, DELETIONS, OR SUBSTITUTIONS
The Company does not control the Funds and cannot guarantee that any of
the Sub-Accounts or any of the Funds will always be available for
allocation of Purchase Payments or transfers. The Company retains the
right to make changes in the Separate Account and its investments.
The Company reserves the right to eliminate the shares of any Fund held
by a Sub-Account and to substitute shares of another investment company
for the shares of any Fund, if the shares of that Fund are no longer
available for investment or if, in the Company's judgment, investment in
any Fund would be inappropriate in view of the purposes of the Separate
Account. To the extent required by the Investment Company Act of 1940,
as amended ("1940 Act"), or other applicable law, a substitution of
shares attributable to the Owner's interest in a Sub-Account will not be
made without prior notice to the Owner and the prior approval of the
Securities and Exchange Commission. Nothing contained herein shall
prevent the Separate Account from purchasing other securities for other
series or classes of variable annuity policies, or from effecting an
exchange between series or classes of variable policies on the basis of
requests made by Owners.
New Sub-Accounts may be established when, in the sole discretion of the
Company, marketing, tax, investment or other conditions so warrant. Any
new Sub-Accounts will be made available to existing Owners on a basis to
be determined by the Company. Each additional Sub-Account will purchase
shares in a Fund or in another mutual fund or investment vehicle. The
Company may also eliminate one or more Sub-Accounts, if in its sole
discretion, marketing, tax, investment or other conditions so warrant.
In the event any Sub-Account is eliminated, the Company will notify
Owners and request a re-allocation of the amounts invested in the
eliminated Sub-Account.
In the event of any substitution or change, the Company may make such
changes in the Contract as may be necessary or appropriate to reflect
such substitution or change. Furthermore, if deemed to be in the best
interests of persons having voting rights under the Contracts, the
Separate Account may be operated as a management company under the 1940
Act or any other form permitted by law, may be de-registered under the
1940 Act in the event such registration is no longer required, or may be
combined with one or more separate accounts.
PERFORMANCE INFORMATION
From time to time, the Company may advertise yields and/or total returns
for the Sub-Accounts. THESE FIGURES ARE BASED ON HISTORICAL INFORMATION
AND ARE NOT INTENDED TO INDICATE FUTURE PERFORMANCE. For a description
of the methods used to determine yield and total return, see the
Statement of Additional Information.
YIELD DATA
The yield of the Money Market Sub-Account refers to the annualized
income generated by an investment in that Sub-Account over a specified
seven-day period. The Company may also advertise the effective yield of
the Money Market Sub-Account which is calculated similarly but, when
annualized, the income earned by an investment in that Sub-Account is
assumed to be reinvested. The effective yield will be slightly higher
than the yield because of the compounding effect of this assumed
reinvestment.
The yield of a Sub-Account other than the Money Market Sub-Account
refers to the annualized income generated by an investment in the
Sub-Account over a specified 30-day period.
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The yield calculations do not reflect the effect of any CDSC or premium
taxes that may be applicable to a particular Contract which would reduce
the yield of that Contract.
TOTAL RETURN DATA
The average annual total return of a Sub-Account refers to return
quotations assuming an investment has been held in the Sub-Account for
various periods of time including, but not limited to, a period measured
from the date the Sub-Account commenced operations. When a Sub-Account
has been in operation for one, five and ten years, respectively, the
average annual total return presented will be presented for these
periods, although other periods may also be provided. The average annual
total return quotations reflect the deduction of all applicable charges
except for premium taxes. In addition to average annual total return for
a Sub-Account, the Company may provide cumulative total return and/or
other non-standardized total return for the Sub-Account. Total return
data that does not reflect the CDSC and other nonrecurring charges will
be higher than the total return realized by an investor who incurs the
charges.
Reports and promotional literature may contain the ranking of any
Sub-Account derived from rankings of variable annuity separate accounts
or their investment products tracked by Lipper Analytical Services,
Inc., VARDS, IBC/Donoghue's Money Fund Report, Financial Planning
Magazine, Money Magazine, Bank Rate Monitor, Standard & Poor's Indices,
Dow Jones Industrial Average, and other rating services, companies,
publications, or other persons who rank separate accounts or other
investment products on overall performance or other criteria. The
Company may compare the performance of a Sub-Account with applicable
indices and/or industry averages. Performance information may present
the effects of tax-deferred compounding on Sub-Account investment
returns, or returns in general, which may be illustrated by graphs,
charts, or otherwise, and which may include comparisons of investment
return on a tax-deferred basis with currently taxable investment return.
The Company may also advertise performance figures for the Sub-Accounts
based on the performance of a Fund prior to the time the Separate
Account commenced operations.
ANNUITY INVESTORS LIFE INSURANCE COMPANY[REGISTERED TRADEMARK] AND THE
SEPARATE ACCOUNT
ANNUITY INVESTORS LIFE INSURANCE COMPANY
Annuity Investors Life Insurance Company (the "Company"), formerly known
as Carillon Life Insurance Company, is a stock life insurance company.
It was incorporated under the laws of the State of Ohio in 1981. The
Company is principally engaged in the sale of fixed and variable annuity
policies.
The Company is a wholly-owned subsidiary of Great American[REGISTERED
TRADEMARK] Life Insurance Company which is a wholly-owned subsidiary of
American Annuity Group[SERVICEMARK], Inc., a publicly traded insurance
holding company. That company is in turn indirectly controlled by
American Financial Group, Inc., a publicly traded holding company.
The home office of the Company is located at 250 East Fifth Street,
Cincinnati, Ohio 45202.
PUBLISHED RATINGS
The Company may from time to time publish in advertisements, sales
literature and reports to Owners, the ratings and other information
assigned to it by one or more independent rating organizations such as
A.M. Best Company, Standard & Poor's, and Duff & Phelps. The purpose of
the ratings is to reflect the financial strength and/or claims-paying
ability of the Company and should not be considered as reflecting on the
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investment performance of assets held in the Separate Account. Each year
the A.M. Best Company reviews the financial status of thousands of
insurers, culminating in the assignment of Best's Ratings. These ratings
reflect their current opinion of the relative financial strength and
operating performance of an insurance company in comparison to the norms
of the life/health insurance industry. In addition, the claims-paying
ability of the Company as measured by Standard & Poor's or Duff & Phelps
may be referred to in advertisements or sales literature or in reports
to Owners. These ratings are opinions of those agencies as to an
operating insurance company's financial capacity to meet the obligations
of its insurance and annuity policies in accordance with their terms.
Such ratings do not reflect the investment performance of the Separate
Account or the degree of risk associated with an investment in the
Separate Account.
THE SEPARATE ACCOUNT
Annuity Investors[REGISTERED TRADEMARK] Variable Account B was estab-
lished by the Company as an insurance company separate account under the
laws of the State of Ohio on December 19, 1996, pursuant to resolutions
of the Company's Board of Directors. The Separate Account is registered
with the Securities and Exchange Commission under the 1940 Act as a unit
investment trust. However, the Securities and Exchange Commission does
not supervise the management or the investment practices or policies of
the Separate Account.
The assets of the Separate Account are owned by the Company but they are
held separately from the other assets of the Company. The Ohio Revised
Code provides that the assets of a separate account are not chargeable
with liabilities incurred in any other business operation of the
Company. Income, gains and losses incurred on the assets in the Separate
Account, whether or not realized, are credited to or charged against the
Separate Account, without regard to other income, gains or losses of the
Company. Therefore, the investment performance of the Separate Account
is entirely independent of the investment performance of the Company's
general account assets or any other separate account maintained by the
Company.
Under Ohio law, the assets of the Separate Account will be held for the
exclusive benefit of Owners of, and the persons entitled to payment
under, the Contracts offered by this Prospectus and under all other
contracts which provide for accumulated values or dollar amount payments
to reflect investment results of the Separate Account. The obligations
arising under the Contracts are obligations of the Company.
The Separate Account is divided into Sub-Accounts, each of which invests
solely in a specific corresponding Fund. (See "THE FUNDS," page __.)
Changes to the Sub-Accounts may be made at the discretion of the
Company. (See "Additions, Deletions, or Substitutions," page __.)
THE FIXED ACCOUNT
The Fixed Account is a part of the Company's general account. Because of
exemptive and exclusionary provisions, interests in the general account
have not been registered under the Securities Act of 1933, nor is the
general account registered as an investment company under the 1940 Act.
Accordingly, neither the general account nor any interest therein is
generally subject to the provisions of these Acts, and the staff of the
Securities and Exchange Commission does not generally review the
disclosures in the prospectus relating to the Fixed Account. Disclosures
regarding the Fixed Account and the general account may, however, be
subject to certain generally applicable provisions of the federal
securities laws relating to the accuracy and completeness of statements
made in the prospectus.
The Company has sole discretion to invest the assets of the Fixed
Account, subject to applicable law. The Company delegates the investment
of the assets of the Fixed Account to American Money Management
Corporation. Allocation of any amounts to the Fixed Account does not
entitle Owners to share directly in the investment experience of these
assets. The Company assumes the risk of investment gain or loss on the
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portion of the Account Value allocated to the Fixed Account. All assets
held in the general account are subject to the Company's general
liabilities from business operations.
FIXED ACCOUNT OPTIONS
There are currently five options under the Fixed Account: the Fixed
Accumulation Account option; and the guarantee period options referred
to in the Contract as the Fixed Account options One-Year, Three-Year,
Five-Year, and Seven-Year Guarantee Period, respectively. Different
Fixed Account options may be offered by the Company at any time.
Purchase Payments allocated and amounts transferred to the Fixed Account
options accumulate interest at the applicable current interest rate
declared by the Company's Board of Directors, and if applicable, for the
duration of the guarantee period selected.
The Company guarantees a minimum rate of interest for the Fixed Account
options. The guaranteed rate is 3% per year, compounded annually.
RENEWAL OF FIXED ACCOUNT OPTIONS
The following provisions apply to all Fixed Account options except the
Fixed Accumulation Account option.
At the end of a guarantee period, and for the thirty days immediately
preceding the end of such guarantee period, the Owner may elect a new
option to replace the Fixed Account option that is then expiring. The
entire amount maturing may be reallocated to any of the then-current
options under the Contract (including the various Sub-Accounts within
the Separate Account), except that a Fixed Account option with a
guarantee period that would extend past the Annuity Commencement Date
may not be selected. In particular, in the case of renewals occurring
within one year of such Commencement Date, the only Fixed Account option
available is the Fixed Accumulation Account option.
If the Owner does not specify a new Fixed Account option in accordance
with the preceding paragraph, the Owner will be deemed to have elected
the same Fixed Account option as is expiring, so long as the guarantee
period of such option does not extend beyond the Annuity Commencement
Date. In the event that such a period would extend beyond the Annuity
Commencement Date, the Owner will be deemed to have selected the Fixed
Account option with the longest available guarantee period that expires
prior to the Annuity Commencement Date, or, failing that, the Fixed
Accumulation Account Option.
THE CONTRACT
The Contract is an individual flexible premium deferred annuity. The
rights and benefits are described below and in the Contract. The Company
reserves the right to make any modification to conform the Contracts to,
or give the Owner the benefit of, any applicable law. The obligations
under the Contracts are obligations of the Company.
Fixed Account Values, Variable Account Values, benefits and charges will
be calculated separately for each Contract. The various administrative
rules described below will apply separately to each Contract, unless
otherwise noted. The Company reserves the right to terminate any
Contract at any time the Account Value is less than $500. Upon the
termination of a Contract, the Company will pay the Owner the Surrender
Value.
RIGHT TO CANCEL
The Owner may cancel the Contract by giving the Company written notice
of cancellation and returning the Contract before midnight of the
twentieth day (or longer if required by state law) following the date
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the Owner receives the Contract. The Contract must be returned to the
Company, and the required notice must be given in person, or to the
agent who sold it to the Owner, or by mail. If by mail, the return of
the Contract or the notice is effective on the date it is postmarked,
with the proper address and with postage paid. If the Owner cancels the
Contract as set forth above, the Contract will be void and the Company
will refund the Purchase Payment(s) plus or minus any investment gains
or losses under the Contract as of the end of the Valuation Period
during which the returned Contract is received by the Company, or as
otherwise required by law.
PURCHASE PAYMENTS
PURCHASE PAYMENTS
The minimum initial Purchase Payment for Qualified Contracts purchased
under a periodic payment program is $50; for other Qualified Contracts,
$2,000; for Non-Qualified Contracts purchased under a periodic payment
program, $100; and for other Non-Qualified Contracts, $5,000. Both
Contracts require each subsequent Purchase Payment to be at least $50.
Purchase Payments and tax-free transfers or rollovers may be sent to the
Company at its Administrative Office at any time before the Annuity
Commencement Date so long as the Contract has not been fully
surrendered.
Each Purchase Payment will be applied by the Company to the credit of
the Owner's Account. If the application form is in good order, the
Company will apply the initial Purchase Payment to an account for the
Owner within two business days of receipt of the Purchase Payment at the
Administrative Office. If the application form is not in good order, the
Company will attempt to get the application form in good order within
five business days. If the application form is not in good order at the
end of this period, the Company will inform the Owner of the reason for
the delay and that the Purchase Payment will be returned immediately
unless he or she specifically consents to the Company keeping the
Purchase Payment until the application form is in good order. Once the
application form is in good order, the Purchase Payment will be applied
to the Owner's Account within two business days.
Each additional Purchase Payment is credited to a Contract as of the
next Valuation Date following the receipt of such additional Purchase
Payment.
No Purchase Payment for any Contract may exceed $500,000 without prior
approval of the Company.
ALLOCATION OF PURCHASE PAYMENTS
The Company will allocate Purchase Payments to the Fixed Account options
and/or to the Sub-Accounts according to instructions received by Written
Request. Allocations must be made in whole percentages. The minimum
Purchase Payment amount that can be allocated to a Fixed Account option
other than the Fixed Accumulated Account is $2,000.
ACCOUNT VALUE
The Account Value is equal to the aggregate value of the Owner's
interest in the Sub-Account(s) and the Fixed Account options as of the
end of any Valuation Period. The value of the Owner's interest in all
Sub- Accounts is the "Variable Account Value," and the value of the
Owner's interest in all Fixed Account options is the "Fixed Account
Value."
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FIXED ACCOUNT VALUE
The Fixed Account Value for the Contract at any time is equal to: (a)
the Purchase Payment(s) allocated to the Fixed Account; plus (b) amounts
transferred to the Fixed Account; plus (c) interest credited to the
Fixed Account; less (d) any charges, surrenders, deductions, amounts
transferred from the Fixed Account or other adjustments made in
accordance with the provisions of the Contract.
VARIABLE ACCOUNT VALUE
Purchase Payments may be allocated among, and Account Values may be
transferred to, the various Sub-Accounts within the Separate Account,
subject to the provisions of the Contract governing transfers. For each
Sub-Account, the Purchase Payment(s) or amounts transferred are
converted into Accumulation Units. The number of Accumulation Units
credited is determined by dividing the dollar amount directed to each
Sub-Account by the value of the Accumulation Unit for that Sub-Account
at the end of the Valuation Period on which the Purchase Payment(s) or
transferred amount is received.
The following events will result in the cancellation of an appropriate
number of Accumulation Units of a Sub-Account:
(1) transfer from a Sub-Account;
(2) full or partial surrender of the Variable Account Value;
(3) payment of a Death Benefit;
(4) application of the Variable Account Value to a Settlement Option;
(5) deduction of the Contract Maintenance Fee; or
(6) deduction of any Transfer Fee.
Accumulation Units will be canceled as of the end of the Valuation
Period during which the Company receives a Written Request regarding the
event giving rise to such cancellation, or an applicable Commencement
Date, or the end of the Valuation Period on which the Contract
Maintenance Fee or Transfer Fee is due, as the case may be.
The Variable Account Value for a Contract at any time is equal to the
sum of the number of Accumulation Units for each Sub-Account
attributable to that Contract multiplied by the Accumulation Unit value
("Accumulation Unit Value") for each Sub-Account at the end of the
preceding Valuation Period.
ACCUMULATION UNIT VALUE
The initial Accumulation Unit Value for each Sub-Account, with the
exception of the Money Market Sub-Account, was set at $10. The initial
Accumulation Unit Value for the Money Market Sub-Account was set at
$1.00. Thereafter, the Accumulation Unit Value at the end of each
Valuation Period is the Accumulation Unit Value at the end of the
previous Valuation Period multiplied by the Net Investment Factor, as
described below.
NET INVESTMENT FACTOR
The Net Investment Factor is a factor applied to measure the investment
performance of a Sub-Account from one Valuation Period to the next. Each
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Sub-Account has a Net Investment Factor for each Valuation Period which
may be greater or less than one. Therefore, the value of an Accumulation
Unit for each Sub-Account may increase or decrease. The Net Investment
Factor for any Sub-Account for any Valuation Period is determined by
dividing (1) by (2) and subtracting (3) from the result, where:
(1) is equal to:
a. the Net Asset Value per share of the Fund held in the
Sub-Account, determined at the end of the applicable Valuation
Period; plus
b. the per share amount of any dividend or net capital gain
distributions made by the Fund held in the Sub-Account, if the
"ex-dividend" date occurs during the applicable Valuation Period;
plus or minus
c. a per share charge or credit for any taxes reserved for, which
is determined by the Company to have resulted from the investment
operations of the Sub-Account;
(2) is the Net Asset Value per share of the Fund held in the
Sub-Account, determined at the end of the immediately preceding
Valuation Period; and
(3) is the factor representing the Mortality and Expense Risk Charge and
the Administration Charge deducted from the Sub-Account for the number
of days in the applicable Valuation Period.
TRANSFERS
Prior to the applicable Commencement Date, the Owner may transfer
amounts in a Sub-Account to a different Sub-Account and/or one or more
of the Fixed Account options. The minimum transfer amount is $500. If
the Sub-Account balance is less than $1,000 at the time of the transfer,
the entire amount of the Sub-Account balance must be transferred. The
Owner may also transfer amounts from any Fixed Account option to any
other Fixed Account option and/or one or more of the Sub-Accounts. If a
transfer is being made from a Fixed Account option pursuant to the
"Renewal of Fixed Account Options" provision of the "THE FIXED ACCOUNT"
section of this Prospectus, then the entire amount of that Fixed Account
option subject to renewal at that time may be transferred to any one or
more of the Sub-Accounts. In any other case, transfers from any Fixed
Account option are subject to a cumulative limit during each Contract
Year of 20% of the Fixed Account option's value as of the most recent
Contract Anniversary. Fixed Account transfers are not permitted during
the first Contract Year. The minimum transfer amount from any Fixed
Account option is $500. The Company may from time to time change the
amount available for transfer from the Fixed Accumulation Account.
Amounts previously transferred from Fixed Account options to the
Sub-Accounts may not be transferred back to the Fixed Account options
for a period of six months from the date of transfer.
The Company currently charges a Transfer Fee of $25 for each transfer in
excess of twelve during the same Contract Year.
TELEPHONE TRANSFERS
An Owner may place a request for all or part of the Account Value to be
transferred by telephone. All transfers must be in accordance with the
terms of the Contract. Transfer instructions are currently accepted on
each Valuation Date between 9:30 a.m. and 4:00 p.m. Eastern Time at
(800) 789-6771. Once instructions have been accepted, they may not be
rescinded; however, new telephone instructions may be given the
following day.
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INDIVIDUAL FLEXIBLE PREMIUM DEFERRED ANNUITY PROSPECTUS
________________________________________________________________________________
The Company will not be liable for complying with telephone instructions
which the Company reasonably believes to be genuine, or for any loss,
damage, cost or expense in acting on such telephone instructions. The
Owner or person controlling payments will bear the risk of such loss.
The Company will employ reasonable procedures to determine that
telephone instructions are genuine. If the Company does not employ such
procedures, the Company may be liable for losses due to unauthorized or
fraudulent instructions. These procedures may include, among others,
tape recording telephone instructions.
DOLLAR COST AVERAGING
Prior to the applicable Commencement Date, the Owner may establish
automatic transfers from the Money Market Sub-Account to any other
Sub-Account(s), or from the Fixed Accumulation Account to any Sub-
Account(s), on a monthly or quarterly basis, by submitting to the
Administrative Office a Dollar Cost Averaging Authorization Form. No
Dollar Cost Averaging transfers may be made to any of the Fixed Account
options. The Dollar Cost Averaging transfers will take place on the last
Valuation Date of each calendar month or quarter as requested by the
Owner.
In order to be eligible for Dollar Cost Averaging, the value of the
source of funds (the Money Market Sub-Account or the Fixed Accumulation
Account) must be at least $10,000, and the minimum amount that may be
transferred is $500.
Dollar Cost Averaging will automatically terminate if any Dollar Cost
Averaging transfer would cause the account balance of the source of the
funds (the Money Market Sub-Account or the Fixed Accumulation Account)
to fall below $500. At that time, the Company will then transfer the
account balance of the source of the funds to the designated
Sub-Account(s) in the same percentage distribution as directed in the
Dollar Cost Averaging Authorization Form.
Dollar Cost Averaging transfers will not count toward the twelve
transfers permitted under the Contract without a Transfer Fee charge.
Before electing Dollar Cost Averaging, an Owner should consider the
risks involved in switching between investments available under the
Contract. Dollar Cost Averaging requires regular investments regardless
of fluctuating price levels and does not guarantee profits nor prevent
losses in a declining market. An Owner should consider his or her
financial ability to continue Dollar Cost Averaging transfers through
periods of changing price levels.
The Owner may terminate Dollar Cost Averaging services at any time, but
must give the Company at least 30 days notice to change any automatic
transfer instructions that are currently in place. Termination and
change instructions will be accepted by telephone at (800) 789-6771.
Currently, the Company does not charge a fee for Dollar Cost Averaging
services.
PORTFOLIO REBALANCING
In connection with the allocation of Purchase Payments to the
Sub-Accounts, and/or the Fixed Accumulation Account, the Owner may elect
to have the Company perform Portfolio Rebalancing services. The election
of Portfolio Rebalancing instructs the Company to automatically transfer
amounts between the Sub-Accounts and the Fixed Accumulation Account to
maintain the percentage allocations selected by the Owner.
Prior to the applicable Commencement Date, the Owner may elect Portfolio
Rebalancing, by submitting to the Administrative Office a Portfolio
Rebalancing Authorization Form. In order to be eligible for the
Portfolio Rebalancing program, the Owner must have a minimum Account
Value of $10,000. Portfolio Rebalancing transfers will take place on the
last Valuation Date of each calendar quarter.
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INDIVIDUAL FLEXIBLE PREMIUM DEFERRED ANNUITY PROSPECTUS
________________________________________________________________________________
Portfolio Rebalancing transfers will not count toward the twelve
transfers permitted under the Contract without a Transfer Fee charge.
The Owner may terminate Portfolio Rebalancing services at any time, but
must give the Company at least 30 days notice to change any automatic
transfer instructions that are already in place. Termination and change
instructions will be accepted by telephone at (800) 789-6771. Currently,
the Company does not charge a fee for Portfolio Rebalancing services.
INTEREST SWEEP
Prior to the applicable Commencement Date, the Owner may elect automatic
transfers of the income from each Fixed Account option to the
Sub-Account(s), by submitting to the Administrative Office an Interest
Sweep Authorization Form. Interest Sweep transfers will take place on
the last Valuation Date of each calendar quarter.
In order to be eligible for the Interest Sweep program, the value of
each Fixed Account option selected must be at least $5,000. The maximum
amount that may be transferred from each Fixed Account option selected
is 20% of such Fixed Account option's value per year. Any amounts
transferred under the Interest Sweep program reduce the 20% maximum
otherwise allowed.
Interest Sweep transfers will not count toward the twelve transfers
permitted under the Contract without a Transfer Fee charge.
The Owner may terminate the Interest Sweep program, at any time, but
must give the Company at least 30 days notice to change any automatic
transfer instructions that are already in place. Termination and change
instructions will be accepted by telephone at (800) 789-6771. Currently,
the Company does not charge a fee for Interest Sweep services.
CHANGES BY THE COMPANY
The Company reserves the right, in the Company's sole discretion and at
any time, to terminate, suspend or modify any aspect of the transfer
privileges described above without prior notice to Owners, as permitted
by applicable law. The Company may also impose an annual fee or increase
the current annual fee, as applicable, for any of the foregoing services
in amount(s) as the Company may then determine to be reasonable for
participation in the service.
SURRENDERS
SURRENDER VALUE
The Owner may surrender a Contract in full for the Surrender Value, or,
partial surrenders may be made for a lesser amount, by Written Request
at any time prior to the Annuity Commencement Date. The amount of any
partial surrender must be at least $500. A partial surrender cannot
reduce the Surrender Value to less than $500. Surrenders will be deemed
to be withdrawn first from the portion of the Account Value that
represents accumulated earnings and then from Purchase Payments. For
purposes of the Contract, Purchase Payments are deemed to be withdrawn
on a "first-in, first-out" basis.
The amount available for surrender will be the Surrender Value at the
end of the Valuation Period in which the Written Request is received.
The Surrender Value at any time is an amount equal to:
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INDIVIDUAL FLEXIBLE PREMIUM DEFERRED ANNUITY PROSPECTUS
________________________________________________________________________________
(1) the Account Value as of the end of the applicable Valuation
Period; less
(2) any applicable CDSC; less
(3) any outstanding loans; and less
(4) any applicable premium tax or other taxes not previously
deducted.
On full surrender, a full Contract Maintenance Fee will also be deducted
as part of the calculation of the Surrender Value. The Contract
Maintenance Fee will be deducted before the application of any CDSC.
A full or partial surrender may be subject to a CDSC as set forth in
this prospectus. (See "Contingent Deferred Sales Charge ("CDSC")," page
__.)
Surrenders will result in the cancellation of Accumulation Units from
each applicable Sub-Account(s) and/or a reduction of the Fixed Account
Value. In the case of a full surrender, the Contract will be terminated.
Surrenders may be subject to a 10% premature distribution penalty tax if
made before the Owner reaches age 59 1/2, and may further be subject to
federal, state or local income tax, as well as significant tax law
restrictions in the case of Qualified Contracts. (See "FEDERAL TAX
MATTERS," page __.)
SUSPENSION OR DELAY IN PAYMENT OF SURRENDER VALUE
The Company has the right to suspend or delay the date of payment of a
partial or full surrender of the Variable Account Value for any period:
(1) when the New York Stock Exchange ("NYSE") is closed or trading on
the NYSE is restricted;
(2) when an emergency exists (as determined by the Securities and
Exchange Commission) as a result of which (a) the disposal of
securities in the Separate Account is not reasonably practicable
or (b) it is not reasonably practicable to determine fairly the
value of the net assets in the Separate Account; or
(3) when the Securities and Exchange Commission so permits for the
protection of security holders.
The Company further reserves the right to delay payment of any partial
or full surrender of the Fixed Account Value for up to six months after
the receipt of a Written Request.
A surrender request will be effective when all appropriate surrender
request forms are received. Payments of any amounts derived from a
Purchase Payment paid by check may be delayed until the check has
cleared.
SINCE THE OWNER ASSUMES THE INVESTMENT RISK AND BECAUSE CERTAIN
SURRENDERS ARE SUBJECT TO A CDSC, THE TOTAL AMOUNT PAID UPON SURRENDER
OF THE CONTRACT (TAKING INTO ACCOUNT ANY PRIOR SURRENDERS) MAY BE MORE
OR LESS THAN THE TOTAL PURCHASE PAYMENTS.
When Contracts offered by this Prospectus are issued in connection with
retirement plans which meet the requirements of Sections 401, 403, 408
or 457 of the Code, as applicable, reference should be made to the terms
of the particular plans for any additional limitations or restrictions
on surrenders.
FREE WITHDRAWAL PRIVILEGE
Subject to the provisions of the Contract, the Company will waive the
CDSC, to the extent applicable, on full or partial surrenders as
follows:
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(1) during the first Contract Year, on an amount equal to not
more than 10% of all Purchase Payments received; and
(2) during the second and succeeding Contract Years, on an
amount equal to not more than the greater of: (a)
Accumulated Earnings (Account Value in excess of Purchase
Payments); or (b) 10% of Account Value as of the last
Contract Anniversary.
If the Free Withdrawal Privilege is not exercised during a Contract
Year, it does not carry over to the next Contract Year.
SYSTEMATIC WITHDRAWAL
Prior to the applicable Commencement Date, the Owner, by Written Request
to the Administrative Office, may elect to automatically withdraw money
from the Fixed Account and/or the Sub-Accounts. To be eligible for the
Systematic Withdrawal program, the Account Value must be at least
$10,000 at the time of election. The minimum monthly amount that can be
withdrawn is $100. Systematic withdrawals will be subject to the CDSC to
the extent the amount withdrawn exceeds the Free Withdrawal Privilege
(See "CHARGES AND DEDUCTIONS," page __.) The Owner may begin or
discontinue systematic withdrawals at any time by Written Request to the
Company, but at least 30 days notice must be given to change any
systematic withdrawal instructions that are currently in place. The
Company reserves the right to discontinue offering systematic
withdrawals at any time. Currently, the Company does not charge a fee
for Systematic Withdrawal services. However, the Company reserves the
right to impose an annual fee in such amount as the Company may then
determine to be reasonable for participation in the Systematic
Withdrawal program.
Systematic withdrawals may have tax consequences or may be limited by
tax law restrictions. (See "FEDERAL TAX MATTERS," page __.)
CONTRACT LOANS
If permitted under the Contract, an Owner may obtain a loan using his or
her interest under such Contract as the only security for the loan.
Loans are subject to provisions of the Code. A tax adviser should be
consulted prior to exercising loan privileges. Loan provisions are
described in the loan endorsement to the Contract.
The amount of any loan will be deducted from any Death Benefit. In
addition, a loan, whether or not repaid, will have a permanent effect on
the Account Value because the investment results of the investment
options will only apply to the unborrowed portion of the Account Value.
The longer the loan is outstanding, the greater the effect is likely to
be. The effect could be favorable or unfavorable. If the investment
results are greater than the rate being credited on amounts held in the
loan account while the loan is outstanding, the Account Value will not
increase as rapidly as it would if no loan were outstanding. If
investment results are below that rate, the Account Value will be higher
than it would have been if no loan had been outstanding.
DEATH BENEFIT
WHEN A DEATH BENEFIT WILL BE PAID
A Death Benefit will be paid under the Contract if:
(1) the Owner or the joint owner, if any, dies before the Annuity
Commencement Date and before the Contract is fully surrendered;
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INDIVIDUAL FLEXIBLE PREMIUM DEFERRED ANNUITY PROSPECTUS
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(2) the Death Benefit Valuation Date has occurred; and
(3) a spouse does not become the Successor Owner.
If a Death Benefit becomes payable:
(1) it will be in lieu of all other benefits under the Contract; and
(2) all other rights under the Contract will be terminated except for
rights related to the Death Benefit.
Only one Death Benefit will be paid under the Contract.
DEATH BENEFIT VALUES
If the Owner dies before attaining age 80 and before the Annuity
Commencement Date, the Death Benefit is an amount equal to the greatest
of:
(1) the Account Value on the Death Benefit Valuation Date, less any
applicable premium tax or other taxes not previously deducted,
less any partial surrenders, and less any outstanding loans;
(2) the total Purchase Payment(s), less any applicable premium tax or
other taxes not previously deducted, less any partial surrenders,
and less any outstanding loans, compounded at 3% annually; or
(3) the largest Death Benefit amount on any Contract Anniversary
prior to death that is an exact multiple of five and occurs prior
to the Death Benefit Valuation Date, less any applicable premium
tax or other taxes not previously deducted, less any partial
surrenders after such Death Benefit was determined, and less any
outstanding loans.
If the Owner dies after attaining Age 80 and before the Annuity
Commencement Date, the Death Benefit is an amount equal to the greatest
of:
(1) the Account Value on the Death Benefit Valuation Date, less any
applicable premium tax or other taxes not previously deducted,
less any partial surrenders, and less any outstanding loans;
(2) the total Purchase Payment(s), less any applicable premium tax or
other taxes not previously deducted, less any partial surrenders,
and less any outstanding loans, compounded at 3% annually through
the Contract Anniversary Date prior to the Owner's 80th birthday;
or
(3) the largest Death Benefit amount on any Contract Anniversary
prior to death that is both an exact multiple of five and occurs
prior to the date on which the Owner attained Age 80, less any
applicable premium tax or other taxes not previously deducted,
less any partial surrenders after such Death Benefit was
determined, and less any outstanding loans.
In any event, if the Contract is issued after any Owner has attained age
80, and any Owner dies before the Annuity Commencement Date, the amount
of the Death Benefit will be the greater of:
(1) the Account Value on the Death Benefit Valuation Date, less any
applicable premium tax or other taxes not previously deducted,
less any partial surrenders, and less any outstanding loans; or
(2) the total Purchase Payment(s), less any applicable premium tax or
other taxes not previously deducted, less any partial surrenders,
and less any outstanding loans.
_______________________________________________________________________________
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INDIVIDUAL FLEXIBLE PREMIUM DEFERRED ANNUITY PROSPECTUS
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DEATH BENEFIT COMMENCEMENT DATE
The Beneficiary may designate the Death Benefit Commencement Date by
Written Request within one year of the Owner's death. If no designation
is made, then the Death Benefit Commencement Date will be one year after
the Owner's death.
FORM OF DEATH BENEFIT
Death Benefit payments will be Fixed Dollar Benefit payments made
monthly in accordance with the terms of Option A with a period certain
of 48 months under the "SETTLEMENT OPTIONS" section of this prospectus.
(See page __.)
In lieu of that, the Owner may elect at any time before his or her death
to have Death Benefit payments made in one lump sum or pursuant to any
available settlement option under the "SETTLEMENT OPTIONS" section of
this prospectus. If the Owner does not make any such election, the
Beneficiary may make that election at any time after the Owner's death
and before the Death Benefit Commencement Date.
BENEFICIARY
Non-Qualified Contracts may be jointly owned by two people. If there is
a joint owner and that joint owner survives the Owner, the joint owner
is the Beneficiary, regardless of any designation made by the Owner. If
there is no surviving joint owner, and in the case of Qualified
Contracts, the Beneficiary is the person or persons so designated in the
application, if any, or under the Change of Beneficiary provision of the
Contract. If the Owner has not designated a Beneficiary, or if no
Beneficiary designated by the Owner survives the Owner, then the
Beneficiary will be the Owner's estate.
CHARGES AND DEDUCTIONS
There are two types of charges and deductions. First, there are charges
assessed under the Contract. These charges include the CDSC, the
Administration Charge, the Mortality and Expense Risk Charge, Premium
Taxes and Transfer Fees. All of these charges are described below and
some may not be applicable to every Contract. Second, there are Fund
expenses for fund management fees and administration expenses. These
fees are described in the prospectus and statement of additional
information for each Fund.
CONTINGENT DEFERRED SALES CHARGE ("CDSC")
No deduction for front-end sales charges is made from Purchase Payments.
However, the Company may deduct a CDSC of up to 7% of Purchase Payments
on certain surrenders to partially cover certain expenses incurred by
the Company relating to the sale of the Contract, including commissions
paid, the costs of preparation of sales literature and other promotional
costs and acquisition expenses.
The CDSC applies to and is calculated separately for each Purchase
Payment. The CDSC percentage varies according to the number of full
years elapsed between the date of receipt of a Purchase Payment and the
date a Written Request for surrender is made. The amount of the CDSC is
determined by multiplying the amount withdrawn subject to the CDSC by
the CDSC percentage in accordance with the following table. Surrenders
will be applied first to accumulated earnings (which may be surrendered
without charge) and then to Purchase Payments on a first-in, first-out
basis.
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==============================================================================
Number of Full Years Elapsed
Between Date of Receipt
of Purchase Payment Contingent Deferred Sales Charge
and Date Written Request as a Percentage of Associated
for Surrender Received Purchase Payment Surrendered
- - --------------------------------------------------------------------------------
0 7%
- - ------------------------------------------------------------------------------
1 6%
- - ------------------------------------------------------------------------------
2 5%
- - ------------------------------------------------------------------------------
3 4%
- - ------------------------------------------------------------------------------
4 3%
- - ------------------------------------------------------------------------------
5 2%
- - ------------------------------------------------------------------------------
6 1%
- - ------------------------------------------------------------------------------
7 or more 0%
==============================================================================
In no event shall the CDSC assessed against the Contract exceed 7% of
the aggregate Purchase Payment(s).
Any Purchase Payments that have been held by the Company for at least
seven years may be surrendered free of any CDSC. The CDSC will not be
imposed on amounts surrendered under the Free Withdrawal Privilege. (See
"Free Withdrawal Privilege," page __.)
No CDSC is assessed upon payment of the Death Benefit.
The CDSC will be waived upon surrender if: (i) all or part of the
Account Value is applied to the purchase of an annuity from the Company
for life or for a noncommutable period of five years or more; or (ii)
the Contract is modified by the Long-Term Care Waiver Rider and the
Owner is confined in a licensed Hospital or Long- Term Care Facility, as
those terms are defined in the Rider, for at least 90 days beginning on
or after the first Contract Anniversary. This Rider may not be available
in all jurisdictions. Also, the CDSC will be waived if the Owner has
been determined by the Social Security Administration to be "disabled"
as that term is defined in the Social Security Act of 1935, as amended.
The CDSC may be reduced or waived in connection with certain Contracts
where the Company incurs reduced sales and servicing expenses, such as
Contracts offered to active employees of the Company or any of its
subsidiaries and/or affiliates.
In addition, for Contracts qualified under Section 403(b) of the Code,
the CDSC will be waived if (i) the Owner incurs a separation from
service, has attained age 55 and has held the Contract for at least
seven years; or (ii) the Owner has held the Contract for fifteen years
or more.
The Company reserves the right to terminate, suspend or modify waivers
of the CDSC, without prior notice to Owners, as permitted by applicable
law.
MAINTENANCE AND ADMINISTRATION CHARGES
On each Contract Anniversary, the Company deducts an annual Contract
Maintenance Fee as partial compensation for expenses relating to the
issue and maintenance of the Contract, and the Separate Account. The
annual Contract Maintenance Fee is $30. This Contract Maintenance Fee is
not assessed against Fixed Account options. If the Contract is
surrendered in full on any day other than on the Contract Anniversary,
the Contract Maintenance Fee will be deducted in full at the time of
such surrender. If a Variable Annuity Benefit is elected, a portion of
the $30 annual Contract Maintenance Fee will be deducted from each
Benefit Payment.
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The Company will waive the Contract Maintenance Fee if the Account Value
is equal to or greater than $40,000 on the date of the assessment of the
charge. The Contract Maintenance Fee may also be waived in connection
with certain Contracts where the Company incurs reduced Contract
issuance and maintenance expenses, such as Contracts offered to active
employees of the Company or any of its subsidiaries, and/or affiliates.
The Company imposes an Administration Charge to reimburse the Company
for those administrative expenses attributable to the Contract and the
Separate Account which exceed the revenues received from the Contract
Maintenance Fee and any Transfer Fee. For this Administration Charge,
the Company makes a daily charge equal to .000411% corresponding to an
effective annual rate of 0.15% of the daily Net Asset Value of each
Sub-Account in the Separate Account. This Administration Charge is not
assessed against Fixed Account options.
The Company has set the Administration Charge and the Contract
Maintenance Fee at levels such that the Company will recover no more
than the anticipated and estimated costs associated with administering
the Contract and Separate Account. The Company does not expect to make a
profit from either the Administration Charge or the Contract Maintenance
Fee. The Company guarantees that it will not increase the Administration
Charge or the Contract Maintenance Fee.
MORTALITY AND EXPENSE RISK CHARGE
The Company imposes a Mortality and Expense Risk Charge as compensation
for bearing certain mortality and expense risks under the Contract. For
assuming these risks, the Company makes a daily charge equal to .003403%
corresponding to an effective annual rate of 1.25% of the daily Net
Asset Value of each Sub-Account in the Separate Account. The Company
estimates that the mortality risk component of this charge is 0.75% of
the daily Net Asset Value of each Sub-Account and the expense risk
component is 0.50%. In connection with certain Contracts where the
Company incurs reduced sales and servicing expenses, such as Contracts
offered to active employees of the Company or any of its subsidiaries
and/or affiliates, the Company may offer a Contract with a Mortality and
Expense Risk Charge equal to an effective annual rate of 0.95%. This is
equal to a daily charge of 0.002590%. The Company estimates that for
these Contracts, the mortality risk component of this charge is 0.75% of
the daily Net Asset Value of each Sub-Account and the expense risk
component is 0.20%. The Mortality and Expense Risk Charge is imposed
before the Annuity Commencement Date and after the Annuity Commencement
Date if a Variable Annuity Benefit is selected. The Company guarantees
that the Mortality and Expense Risk Charge will never increase for a
Contract. The Mortality and Expense Risk Charge is reflected in the
Accumulation Unit values for each Sub-Account. The Mortality and Expense
Risk Charge is not assessed against Fixed Account options.
The mortality risks assumed by the Company arise from its contractual
obligations to make annuity payments (determined in accordance with the
annuity tables and other provisions contained in the Contract) and to
pay Death Benefits prior to the Annuity Commencement Date.
The Company also bears substantial risk in connection with the Death
Benefit before the Annuity Commencement Date, since in certain
circumstances the Company may be obligated to pay a larger Death Benefit
amount than the then-existing Account Value of the Contract.
The expense risk assumed by the Company is the risk that the Company's
actual expenses in administering the Contracts and the Separate Account
will exceed the amount recovered through the Contract Maintenance Fees
and Transfer Fees.
If the Mortality and Expense Risk Charge is insufficient to cover actual
costs and risks assumed, the loss will fall on the Company. Conversely,
if this charge is more than sufficient, any excess will be profit to the
Company. Currently, the Company expects a profit from this charge.
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The Company recognizes that the CDSC may not generate sufficient funds
to pay the cost of distributing the Contracts. To the extent that the
CDSC is insufficient to cover the actual cost of Contract distribution,
the deficiency will be met from the Company's general corporate assets
which may include amounts, if any, derived from the Mortality and
Expense Risk Charge.
PREMIUM TAXES
Certain state and local governments impose premium taxes. These taxes
currently range up to 5.0% depending upon the jurisdiction. The Company,
in its sole discretion and in compliance with any applicable state law,
will determine the method used to recover premium tax expenses incurred.
The Company will deduct any applicable premium taxes from the Account
Value either upon death, surrender, annuitization, or at the time
Purchase Payments are made to the Contract, but no earlier than when the
Company has a tax liability under state law.
TRANSFER FEE
The Company currently imposes a $25 fee for each transfer in excess of
twelve in a single Contract Year. The Company will deduct the charge
from the amount transferred. Transfers associated with Dollar Cost
Averaging, Interest Sweep and Automatic Rebalancing programs do not
currently incur a Transfer Fee and do not count toward the twelve annual
transfers currently permitted under the Contract without a Transfer Fee.
FUND EXPENSES
The value of the assets in the Separate Account reflects the value of
Fund shares and therefore the fees and expenses paid by each Fund. The
annual expenses of each Fund are set out in the "Summary of Expenses"
tables at the front of this Prospectus. A complete description of the
fees, expenses, and deductions from the Funds are found in the
respective prospectuses for the Funds. (See "THE FUNDS," page __.)
SETTLEMENT OPTIONS
ANNUITY COMMENCEMENT DATE
The Annuity Commencement Date is shown on the Contract Specifications
page. The Owner may change the Annuity Commencement Date by Written
Request made at least 30 days prior to the date that Annuity Benefit
payments are scheduled to begin. In no event can the Annuity
Commencement Date be later than the Contract Anniversary following the
95th birthday of the eldest Owner.
ELECTION OF SETTLEMENT OPTION
If the Owner is alive on the Annuity Commencement Date and unless
otherwise directed, the Company will apply the Account Value, less
premium taxes, if any, according to the Settlement Option elected.
If no election has been made on the Annuity Commencement Date, the
Company will begin payments based on Settlement Option B (Life Annuity
with Payments for at Least a Fixed Period), described below, with a
fixed period of 120 monthly payments assured.
________________________________________________________________________________
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BENEFIT PAYMENTS
Benefit Payments may be calculated and paid: (1) as a Fixed Dollar
Benefit; (2) as a Variable Dollar Benefit; or (3) as a combination of
both.
If only a Fixed Dollar Benefit is to be paid, the Company will transfer
all of the Account Value to the Company's general account on the
applicable Commencement Date, or on the Death Benefit Valuation Date (if
applicable). Similarly, if only a Variable Dollar Benefit is elected,
the Company will transfer all of the Account Value to the Sub-Accounts
as of the end of the Valuation Period immediately prior to the
applicable Commencement Date; the Company will allocate the amount
transferred among the Sub-Accounts in accordance with a Written Request.
No transfers between the Fixed Dollar Benefit and the Variable Dollar
Benefit will be allowed after the Commencement Date. However, after the
Variable Dollar Benefit has been paid for at least twelve months, the
person controlling payments may, no more than once each twelve months
thereafter, transfer all or part of the Benefit Units upon which the
Variable Dollar Benefit is based from the Sub-Account(s) then held, to
Benefit Units in different Sub-Account(s).
If a Variable Dollar Benefit is elected, the amount to be applied under
that benefit is the Variable Account Value as of the end of the
Valuation Period immediately preceding the applicable Commencement Date.
If a Fixed Dollar Benefit is to be paid, the amount to be applied under
that benefit is the Fixed Account Value as of the applicable
Commencement Date, or as of the Death Benefit Valuation Date (if
applicable).
FIXED DOLLAR BENEFIT
Fixed Dollar Benefit payments are determined by multiplying the Fixed
Account Value (expressed in thousands of dollars and after deduction of
any fees and charges, loans, or applicable premium tax not previously
deducted) by the amount of the monthly payment per $1,000 of value
obtained from the Settlement Option Table for the settlement option
elected. Fixed Dollar Benefit payments will remain level for the
duration of the payment period.
If at the time a Fixed Dollar Benefit is elected, the Company has
available options or rates on a more favorable basis than those
guaranteed, the higher benefits shall be applied and shall not change
for as long as that election remains in force.
VARIABLE DOLLAR BENEFIT
The first monthly Variable Dollar Benefit payment is equal to the
Owner's Variable Account Value (expressed in thousands of dollars and
after deduction of any fees and charges, loans, or applicable premium
tax not previously deducted) as of the end of the Valuation Period
immediately preceding the applicable Commencement Date multiplied by the
amount of the monthly payment per $1,000 of value obtained from the
Settlement Option Table for the Benefit Payment option elected less the
pro rata portion of the Contract Maintenance Fee.
The number of Benefit Units in each Sub-Account held by the Owner is
determined by dividing the dollar amount of the first monthly Variable
Dollar Benefit payment from each Sub-Account by the Benefit Unit Value
for that Sub-Account as of the applicable Commencement Date. The number
of Benefit Units remains fixed during the payment period, except as a
result of any transfers among Sub-Accounts after the applicable
Commencement Date.
The dollar amount of the second and any subsequent Variable Dollar
Benefit payment will reflect the investment performance of the
Sub-Account(s) selected and may vary from month to month. The total
amount of the second and any subsequent Variable Dollar Benefit payment
will be equal to the sum of the payments from each Sub-Account less a
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pro rata portion of the Contract Maintenance Fee. Where an Owner elects
a Variable Dollar Benefit, there is a risk that only one Benefit Payment
will be made under any settlement option, if: (i) at the end of the
applicable Valuation Period, the Owner's Variable Account Value has
declined to zero; or (ii) the person on whose life Benefit Payments are
based dies prior to the second Benefit Payment.
The payment from each Sub-Account is found by multiplying the number of
Benefit Units held in each Sub- Account by the Benefit Unit Value for
that Sub-Account as of the end of the fifth Valuation Period preceding
the due date of the payment.
The Benefit Unit Value for each Sub-Account is originally established in
the same manner as Accumulation Unit values. Thereafter, the Benefit
Unit Value for a Sub-Account is determined by multiplying the Benefit
Unit Value as of the end of the preceding Valuation Period by the Net
Investment Factor, determined as set forth above under "Accumulation
Unit Value", for the Valuation Period just ended. The product is then
multiplied by the assumed daily investment factor (0.99991781), for the
number of days in the Valuation Period. The factor is based on the
assumed net investment rate of 3% per year, compounded annually that is
reflected in the Settlement Option Tables.
SETTLEMENT OPTIONS
OPTION A: INCOME FOR A FIXED PERIOD
-------------------------
The Company will make periodic payments for a fixed
period. The first payment will be paid as of the last day
of the initial Payment Interval. The maximum time over
which payments will be made by the Company or money will
be held by the Company is 30 years. The Option A Table
applies to this Option.
OPTION B: LIFE ANNUITY WITH PAYMENTS FOR AT LEAST A FIXED PERIOD
------------------------------------------------------
The Company will make periodic payments for at least a
fixed period. If the person on whose life Benefit Payments
are based lives longer than the fixed period, then the
Company will make payments until his or her death. The
first payment will be paid as of the first day of the
initial Payment Interval. The Option B Table applies to
this Option.
OPTION C: JOINT AND ONE-HALF SURVIVOR ANNUITY
-----------------------------------
The Company will make periodic payments until the death of
the primary person on whose life Benefit Payments are
based; thereafter, the Company will make one-half of the
periodic payment until the death of the secondary person
on whose life Benefit Payments are based. The Company will
require Due Proof of Death of the primary person on whose
life Benefit Payments are based. The first payment will be
paid as of the first day of the initial Payment Interval.
The Option C Table applies to this Option.
OPTION D: ANY OTHER FORM
--------------
The Company will make periodic payments in any other form
of settlement option which is acceptable to us at the time
of an election.
MINIMUM AMOUNTS
Presently, the minimum amount of a Benefit Payment under any settlement
option is $50. If an Owner selects a Payment Interval under which a
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INDIVIDUAL FLEXIBLE PREMIUM DEFERRED ANNUITY PROSPECTUS
________________________________________________________________________________
Benefit Payment would be less than $50, the Company will advise the the
Owner that a new Payment Interval must be selected so that the Benefit
Payment will be at least $50. Generally, monthly, quarterly, semi-annual
and annual Payment Intervals are available. From time to time, the
Company may require Benefit Payments to be made by direct deposit or
wire transfer to the account of a designated payee.
Minimum amounts, Payment Intervals and other terms and conditions may be
modified by the Company at any time without prior notice to Owners, as
permitted by applicable law. If the Company changes the minimum amounts,
the Company may change any current or future payment amounts and/or
Payment Intervals to conform with the change. More than one settlement
option may be elected if the requirements for each settlement option
elected are satisfied. Once payment begins under a settlement option,
the settlement option may not be changed.
All factors, values, benefits and reserves under the Contract will not
be less than those required by the law of the state in which the
Contract is delivered.
SETTLEMENT OPTION TABLES
The Settlement Option Tables in Appendix A show the payments that the
Company will make at sample Payment Intervals for each $1,000 applied at
the guaranteed interest rate.
Rates for monthly payments for ages or fixed periods not shown in the
Settlement Option Tables will be calculated on the same basis as those
shown and may be obtained from the Company. Fixed periods shorter than
five years are not available, except as a Death Benefit Settlement
Option.
GENERAL PROVISIONS
NON-PARTICIPATING
The Contract does not pay dividends or share in the Company's divisible
surplus.
MISSTATEMENT
If the age and/or sex of a person on whose life Benefit Payments are
based is misstated, the payments or other benefits under the Contract
shall be adjusted to the amount which would have been payable based on
the correct age and/or sex. If the Company made any underpayments based
on any misstatement, the amount of any underpayment with interest shall
be immediately paid in one sum. In addition to any other remedies that
may be available at law or at equity, the Company may deduct any
overpayments made, with interest, from any succeeding payment(s) due
under the Contract.
PROOF OF EXISTENCE AND AGE
The Company may require proof of age and/or sex of any person on whose
life Benefit Payments are based.
DISCHARGE OF LIABILITY
Upon payment of any partial or full surrender, or any Benefit Payment,
the Company shall be discharged from all liability to the extent of each
such payment.
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TRANSFER OF OWNERSHIP
NON-QUALIFIED CONTRACT
The Owner of a Non-Qualified Contract may transfer ownership at any time
during his or her lifetime. Any such transfer is subject to the
following:
1) it must be made by Written Request; and
2) unless otherwise elected or required by law, it will not
cancel a designation of an Annuitant or Beneficiary or any
settlement option election previously made.
QUALIFIED CONTRACT
The Owner of a Qualified Contract may not transfer ownership.
ASSIGNMENT
NON-QUALIFIED CONTRACT
The Owner of a Non-Qualified Contract may assign all or any part of his
or her rights under the Contract except rights to:
(1) designate or change a Beneficiary;
(2) designate or change an Annuitant;
(3) transfer ownership; and
(4) elect a settlement option.
The person to whom an assignment is made is called an assignee.
The Company is not responsible for the validity of any assignment. An
assignment must be in writing and must be received at the Administrative
Office of the Company. The Company will not be bound by an assignment
until the Company acknowledges it. An assignment is subject to any
payment made or any action the Company takes before the Company
acknowledges it. An assignment may be ended only by the assignee or as
provided by law.
QUALIFIED CONTRACT
The Owner of a Qualified Contract may not assign or in any way alienate
his or her interest under the Contract.
ANNUAL REPORT
At least once each Contract Year, the Company will provide a report of
the Contract's current values and any other information required by law,
until the first to occur of the following:
1) the date the Contract is fully surrendered;
2) the Annuity Commencement Date; or
3) the date a Death Benefit becomes payable under the Contract.
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INCONTESTABILITY
No Contract shall be contestable by the Company.
ENTIRE CONTRACT
The Company issues the Contract in consideration and acceptance of the
payment of the initial Purchase Payment. In those states that require a
written application, a copy of the application will be attached to and
become part of the Contract. Only statements in the application, if any,
or made elsewhere by the Owner in consideration for the Contract will be
used to void the Owner's interest under the Contract, or to defend a
claim based on it. Such statements are representations and not
warranties.
CHANGES -- WAIVERS
No changes or waivers of the terms of the Contract are valid unless made
in writing by the Company's President, Vice President, or Secretary. The
Company reserves the right both to administer and to change the
provisions of the Contract to conform to any applicable laws,
regulations or rulings issued by a governmental agency.
NOTICES AND DIRECTIONS
The Company will not be bound by any authorization, election or notice
which is not made by Written Request.
Any written notice requirement by the Company to the Owner will be
satisfied by the mailing of any such required written notice, by
first-class mail, to the Owner's last known address as shown on the
Company's records.
FEDERAL TAX MATTERS
INTRODUCTION
The following discussion is a general description of federal tax
considerations relating to the Contract and is not intended as tax
advice. This discussion is not intended to address the tax consequences
resulting from all of the situations in which a person may be entitled
to or may receive a distribution under the Contract. Any person
concerned about tax implications should consult a competent tax advisor
before initiating any transaction. This discussion is based upon the
Company's understanding of the present federal income tax laws as they
are currently interpreted by the Internal Revenue Service. No
representation is made as to the likelihood of the continuation of the
present federal income tax laws or of the current interpretation by the
Internal Revenue Service. Moreover, no attempt has been made to consider
any applicable state or other tax laws.
The Contract may be purchased on a tax-qualified or non-tax-qualified
basis. Qualified Contracts are designed for use in connection with plans
entitled to special income tax treatment under Section 401, 403, or 408
of the Code. The ultimate effect of federal income taxes on the amounts
held under a Contract, on Benefit Payments, and on the economic benefit
to the Owner or the Beneficiary may depend on the type of Contract and
the tax status of the individual concerned. Certain requirements must be
satisfied in purchasing a Qualified Contract and receiving distributions
from such a Contract in order to continue to receive favorable tax
treatment. The Company makes no attempt to provide more than general
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________________________________________________________________________________
information about use of Contracts with the various types of
tax-qualified arrangements. Owners and Beneficiaries are cautioned that
the rights of any person to any benefits may be subject to the terms
and conditions of the tax-qualified arrangement, regardless of the
terms and conditions of the Contract. Some tax-qualified arrangements
are subject to distribution and other requirements that are not
incorporated in the administration of the Contract. Owners are
responsible for determining that contributions, distributions and other
transactions with respect to Qualified Contracts satisfy applicable
law. Therefore, purchasers of Qualified Contracts should seek competent
legal and tax advice regarding the suitability of the Contract for
their situation, the applicable requirements, and the tax treatment of
the rights and benefits of the Contract. The Statement of Additional
Information discusses the requirements for qualifying as an annuity.
TAXATION OF ANNUITIES IN GENERAL
Section 72 of the Code governs taxation of annuities in general. The
Company believes that the Owner who is a natural person generally is not
taxed on increases in the value of an Account until distribution occurs
by withdrawing all or part of the Account Value (E.G., surrenders or
annuity payments under the Settlement Option elected.) The taxable
portion of a distribution (in the form of a single sum payment or an
annuity) is generally taxable as ordinary income.
The following discussion generally applies to a Contract owned by a
natural person.
SURRENDERS
QUALIFIED CONTRACTS
In the case of a surrender under a Contract, other than
Systematic Withdrawal Option payments treated as Annuity Benefit
Payments for tax purposes, a pro rata portion of the amount
received is taxable, generally based on the ratio of the
"investment in the contract" to the individual's total accrued
benefit under the annuity. The "investment in the contract"
generally equals the amount of any non-deductible and/or
non-excludable Purchase Payments paid by or on behalf of any
individual. Special tax rules may be available for certain
distributions from a Qualified Contract.
NON-QUALIFIED CONTRACTS
In the case of a surrender under a Non-Qualified Contract, the
amount recovered is taxable to the extent that the Account Value
immediately before the surrender, reduced by any applicable
charges, exceeds the "investment in the contract" at such time.
ANNUITY BENEFIT PAYMENTS
Although the tax consequences may vary depending on the Settlement
Option elected under the Contract, in general, only the portion of a
Benefit Payment that represents the amount by which the Account Value
exceeds the "investment in the contract" will be taxed; after the
"investment in the contract" is recovered, the full amount of any
additional Benefit Payments is taxable. For Variable Dollar Benefit
Payments, the taxable portion is generally determined by an equation
that establishes a specific dollar amount of each payment that is not
taxed. The dollar amount is determined by dividing the "investment in
the contract" by the total number of expected periodic payments. For
Fixed Dollar Benefit Payments, in general there is no tax on the portion
of each payment which represents the same ratio that the "investment in
the contract" bears to the total expected value of the Benefit Payments
for the term of the payments; however, the remainder of each Benefit
Payment is taxable. In either case, once the "investment in the
contract" has been fully recovered, the full amount of any additional
Benefit Payments is taxable. If Benefit Payments cease as a result of an
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Owner's death before full recovery of the "investment in the contract,"
consult a competent tax adviser regarding deductibility of the
unrecovered amount.
PENALTY TAX
In general, a 10% premature distribution penalty tax applies to the
taxable portion of a distribution from a Contract prior to age 59 1/2.
Exceptions to this penalty tax are available to distributions made on
account of disability, death, and certain payments for life and life
expectancy. Certain other exceptions may apply depending on the
tax-qualification of the Contract involved. A 25% premature distribution
penalty tax applies to certain distributions from a Savings Incentive
Match Plan for Employees (SIMPLE) IRA described in Section 408(p) of the
Code.
TAXATION OF DEATH BENEFIT PROCEEDS
Amounts may be distributed under a Contract because of the death of an
Owner. Generally such amounts are includable in the income of the
recipient as follows: (1) if distributed in a lump sum, they are taxed
in the same manner as a full surrender as described above, or (2) if
distributed under a Settlement Option, they are taxed in the same manner
as Annuity Benefit Payments, as described above.
TRANSFERS, ASSIGNMENTS, OR EXCHANGES OF THE CONTRACT
A transfer of ownership or an assignment of a Contract, the designation
of an Annuitant who is not also the Owner, or the exchange of a Contract
may result in certain tax consequences to the Owner that are not
discussed herein.
QUALIFIED CONTRACTS - GENERAL
The Qualified Contract is designed for use with several types of
retirement plans. The tax rules applicable to Owner and Beneficiaries in
retirement plans vary according to the type of plan and the terms and
conditions of the plan.
TEXAS OPTIONAL RETIREMENT PROGRAM
Section 830.105 of the Texas Government Code permits participants in the
Texas Optional Retirement Program ("ORP") to withdraw their interests in
a variable annuity policy issued under the ORP only upon: (1)
termination of employment in the Texas public institutions of higher
education; (2) retirement; (3) attainment of age 70 1/2; or (4) death.
Section 830.205 of the Texas Government Code provides that benefits
under the optional retirement program vest after one year of
participation. Accordingly, an Account Value cannot be withdrawn or
distributed without written certification from the employer of the ORP
participant's vesting status and, if the participant is living and under
age 70 1/2, the participant's retirement or other termination from
employment.
INDIVIDUAL RETIREMENT ANNUITIES
Code sections 219 and 408 permit individuals or their employers to
contribute to an individual retirement program known as an "Individual
Retirement Annuity" or "IRA". Under applicable limitations, certain
amounts may be contributed to an IRA that are deductible from an
individual's gross income. Employers also may establish a Simplified
Employee Pension (SEP) Plan or Savings Incentive Match Plan for
Employees (SIMPLE) to provide IRA contributions on behalf of their
employees.
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TAX-SHELTERED ANNUITIES
Section 403(b) of the Code permits the purchase of "tax-sheltered
annuities" by public schools and certain charitable, educational and
scientific organizations described in Section 501(c)(3) of the Code.
These qualifying employers may make contributions to the Contracts for
the benefit of their employees. Subject to certain limits, such
contributions are not includable in the gross income of the employee
until the employee receives distributions under the Contract. Amounts
attributable to contributions made under a salary reduction agreement
cannot be distributed until the employee attains age 59 1/2, separates
from service, becomes disabled, incurs a hardship, or dies.
PENSION AND PROFIT SHARING PLANS
Code section 401 permits employers to establish various types of
retirement plans for employees, and permits self-employed individuals to
establish retirement plans for themselves and their employees. These
retirement plans may permit the purchase of the Contracts to accumulate
retirement savings under the plans.
CERTAIN DEFERRED COMPENSATION PLANS
Governmental and other tax-exempt employers may invest in annuity
contracts in connection with deferred compensation plans established for
the benefit of their employees under Section 457 of the Code. Other
employers may invest in annuity contracts in connection with
non-qualified deferred compensation plans established for the benefit of
their employees. Under these plans, contributions made for the benefit
of the employees generally will not be includable in the employees'
gross income until distributed from the plan.
WITHHOLDING
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.
Federal withholding at a flat 20% of the taxable part of the
distribution is required if the distribution is eligible for rollover
and the distribution is not paid as a direct rollover. In other cases,
recipients generally are provided the opportunity to elect not to have
tax withheld from distributions.
POSSIBLE CHANGES IN TAXATION
There is always the possibility that the tax treatment of annuities
could change by legislation or other means (such as IRS regulations,
revenue rulings, judicial decisions, etc.). Moreover, it is also
possible that any change could be retroactive (that is, effective prior
to the date of the change).
OTHER TAX CONSEQUENCES
As noted above, the foregoing discussion of the federal income tax
consequences is not exhaustive and special rules are provided with
respect to other tax situations not discussed in this Prospectus.
Further, the federal income tax consequences discussed herein reflect
the Company's understanding of current law and the law may change.
Federal estate and gift tax consequences and state and local estate,
inheritance, and other tax consequences of ownership or receipt of
distributions under the Contract depend on the circumstances of each
Owner or recipient of the distribution. A competent tax adviser should
be consulted for further information.
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GENERAL
At the time the initial Purchase Payment is paid, a prospective
purchaser must specify whether the purchase is a Qualified Contract or a
Non-Qualified Contract. If the initial Purchase Payment is derived from
an exchange or surrender of another annuity contract, the Company may
require that the prospective purchaser provide information with regard
to the federal income tax status of the previous annuity contract. The
Company will require that persons purchase separate Contracts if they
desire to invest monies qualifying for different annuity tax treatment
under the Code. Each such separate Contract will require the minimum
initial Purchase Payment stated above. Additional Purchase Payments
under a Contract must qualify for the same federal income tax treatment
as the initial Purchase Payment under the Contract; the Company will not
accept an additional Purchase Payment under a Contract if the federal
income tax treatment of such Purchase Payment would be different from
that of the initial Purchase Payment.
DISTRIBUTION OF THE CONTRACT
AAG Securities, Inc. ("AAG Securities"), an affiliate of the Company, is
the principal underwriter and distributor of the Contracts. AAG
Securities may also serve as an underwriter and distributor of other
contracts issued through the Separate Account and certain other Separate
Accounts of the Company and any affiliates of the Company. AAG
Securities is a wholly-owned subsidiary of American Annuity
Group[SERVICEMARK], Inc., a publicly traded company which is an indirect
subsidiary of American Financial Group, Inc. AAG Securities is
registered with the Securities and Exchange Commission as a
broker-dealer and is a member of the National Association of Securities
Dealers, Inc. ("NASD"). Its principal offices are located at 250 East
Fifth Street, Cincinnati, Ohio 45202. The Company pays AAG Securities
for acting as underwriter under a distribution agreement.
AAG Securities sells Contracts through its registered representatives.
In addition, AAG Securities may enter into sales agreements with other
broker-dealers to solicit applications for the Contracts through
registered representatives who are licensed to sell securities and
variable insurance products. These agreements provide that applications
for the Contracts may be solicited by registered representatives of the
broker-dealers appointed by the Company to sell its variable life
insurance and variable annuities. These broker-dealers are registered
with the Securities and Exchange Commission and are members of the NASD.
The registered representatives are authorized under applicable state
regulations to sell variable annuities.
The Company or AAG Securities may pay commissions to registered
representatives of AAG Securities and other broker-dealers of up to 8.5%
of Purchase Payments made under the Contracts ("Commissions"). These
Commissions are reduced by one-half for Contracts issued to Owners over
age 75. When permitted by state law and in exchange for lower initial
Commissions, AAG Securities and/or the Company may pay trail commissions
to registered representatives of AAG Securities and to other
broker-dealers. Trail commissions are not expected to exceed 1% of the
Account Value of a Contract on an annual basis. To the extent
permissible under current law, the Company and/or AAG Securities may pay
production, persistency and managerial bonuses as well as other
promotional incentives, in cash or other compensation, to registered
representatives of AAG Securities and/or other broker-dealers.
LEGAL PROCEEDINGS
There are no pending legal proceedings affecting the Separate Account or
AAG Securities. The Company is involved in various kinds of routine
litigation which, in management's judgment, are not of material
importance to the Company's assets or the Separate Account.
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VOTING RIGHTS
To the extent required by applicable law, all Fund shares held in the
Separate Account will be voted by the Company at regular and special
shareholder meetings of the respective Funds in accordance with
instructions received from persons having voting interests in the
corresponding Sub-Account. If, however, the 1940 Act or any regulation
thereunder should be amended, or if the present interpretation thereof
should change, or if the Company determines that it is allowed to vote
all shares in its own right, the Company may elect to do so.
The person with the voting interest is the Owner, or the person
controlling payments, if different from the Owner. The number of votes
which are available will be calculated separately for each Sub-Account.
Before the Annuity Commencement Date, that number will be determined by
applying the Owner's percentage interest, if any, in a particular
Sub-Account to the total number of votes attributable to that
Sub-Account. The Owner, or the person controlling payments, if
different from the Owner, holds a voting interest in each Sub-Account
to which the Account Value is allocated. After the Annuity Commencement
Date, the number of votes decreases as Annuity Payments are made and as
the number of Accumulation Units for a Contract decreases.
The number of votes of a Fund will be determined as of the date
coincident with the date established by that Fund for shareholders
eligible to vote at the meeting of the Fund. Voting instructions will be
solicited by written communication prior to such meeting in accordance
with procedures established by the respective Funds.
Shares as to which no timely instructions are received and shares held
by the Company as to which Owners have no beneficial interest will be
voted in proportion to the voting instructions which are received with
respect to all Contracts participating in the Sub-Account. Voting
instructions to abstain on any item will be applied on a pro rata basis
to reduce the votes eligible to be cast.
Each person or entity having a voting interest in a Sub-Account will
receive proxy material, reports and other material relating to the
appropriate Fund.
It should be noted that the Funds are not required to hold annual or
other regular meetings of shareholders.
AVAILABLE INFORMATION
The Company has filed a registration statement (the Registration
Statement) with the Securities and Exchange Commission under the
Securities Act of 1933 relating to the Contracts offered by this
Prospectus. This Prospectus has been filed as a part of the Registration
Statement and does not contain all of the information set forth in the
Registration Statement and exhibits thereto, and reference is hereby
made to such Registration Statement and exhibits for further information
relating to the Company or the Contracts. Statements contained in this
Prospectus, as to the content of the Contracts and other legal
instruments, are summaries. For a complete statement of the terms
thereof, reference is made to the instruments filed as exhibits to the
Registration Statement. The Registration Statement and the exhibits
thereto may be inspected and copied at the office of the Commission,
located at 450 Fifth Street, N.W., Washington, D.C.
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STATEMENT OF ADDITIONAL INFORMATION
A Statement of Additional Information is available which contains more
details concerning the subjects discussed in this Prospectus. The
following is the Table of Contents for that Statement:
TABLE OF CONTENTS
________________________________________________________________________________
Page
ANNUITY INVESTORS LIFE INSURANCE COMPANY[REGISTERED TRADEMARK]............. 1
General Information and History........................................ 1
State Regulation....................................................... 1
SERVICES................................................................... 1
Safekeeping of Separate Account Assets................................. 1
Records and Reports.................................................... 2
Experts................................................................ 2
DISTRIBUTION OF THE CONTRACTS.............................................. 2
CALCULATION OF PERFORMANCE INFORMATION..................................... 2
Money Market Sub-Account Standardized Yield Calculation................ 2
Other Sub-Account Standardized Yield Calculation....................... 3
Standardized Total Return Calculation.................................. 4
Hypothetical Performance Data.......................................... 4
Other Performance Data................................................. 5
FEDERAL TAX MATTERS........................................................ 6
Taxation of the Company................................................ 7
Tax Status of the Contract............................................. 7
FINANCIAL STATEMENTS....................................................... 8
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________________________________________________________________________________
Copies of the Statement of Additional Information dated are available
without charge. To request a copy, please clip this coupon on the dotted
line above, enter your name and address in the spaces provided below,
and mail to: Annuity Investors Life Insurance Company[REGISTERED
TRADEMARK], P.O. Box 5423, Cincinnati, Ohio 45201-5423.
Name:
Address:
City:
State:
Zip:
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<TABLE>
<CAPTION>
APPENDIX A
QUALIFIED CONTRACTS
OPTION A TABLE -- INCOME FOR A FIXED PERIOD
Payments for fixed number of years for each $1,000 applied.
;
- - --------------------------------------------------------------------------------------------------------------------------------
Terms of Annual Semi- Quar- Terms of Annual Semi Quar- Monthly Terms of Annual Semi- Quar- Monthly
Payments Annual terly Monthly Payments Annual terly Payments Annual terly
- - --------------------------------------------------------------------------------------------------------------------------------
Years Years Years
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
6 184.60 91.62 45.64 15.18 11 108.08 53.64 26.72 8.88 16 79.61 39.51 19.68 6.54
7 160.51 79.66 39.68 13.20 12 100.46 49.86 24.84 8.26 17 75.95 37.70 18.78 6.24
8 142.46 70.70 35.22 11.71 13 94.03 46.67 23.25 7.73 18 72.71 36.09 17.98 5.98
9 128.43 63.74 31.75 10.56 14 88.53 43.94 21.89 7.28 19 69.81 34.65 17.26 5.74
10 117.23 58.18 28.98 9.64 15 83.77 41.57 20.71 6.89 20 67.22 33.36 16.62 5.53
- - --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
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OPTION B TABLES - LIFE ANNUITY
With Payments For At Least A Fixed Period
- - ----------------------------------------------------------------------
60 120 180 240
Months Months Months Months
- - ----------------------------------------------------------------------
Age
- - ----------------------------------------------------------------------
55 $4.42 $4.39 $4.32 $4.22
56 4.51 4.47 4.40 4.29
57 4.61 4.56 4.48 4.35
58 4.71 4.65 4.56 4.42
59 4.81 4.75 4.64 4.49
60 4.92 4.86 4.73 4.55
61 5.04 4.97 4.83 4.62
62 5.17 5.08 4.92 4.69
63 5.31 5.20 5.02 4.76
64 5.45 5.33 5.12 4.83
65 5.61 5.46 5.22 4.89
66 5.77 5.60 5.33 4.96
67 5.94 5.75 5.43 5.02
68 6.13 5.91 5.54 5.08
69 6.33 6.07 5.65 5.14
70 6.54 6.23 5.76 5.19
71 6.76 6.41 5.86 5.24
72 7.00 6.58 5.96 5.28
73 7.26 6.77 6.06 5.32
74 7.53 6.95 6.16 5.35
- - ----------------------------------------------------------------------
________________________________________________________________________________
Page 51
<PAGE>
INDIVIDUAL FLEXIBLE PREMIUM DEFERRED ANNUITY PROSPECTUS
________________________________________________________________________________
<TABLE>
<CAPTION>
OPTION C TABLE - JOINT AND ONE-HALF SURVIVOR ANNUITY
Monthly payments for each $1,000 of proceeds by ages of persons named*.
- - -------------------------------------------------------------------------------------------------------------
PRIMARY Secondary Age
AGE
--------------------------------------------------------------------------------------------------
60 61 62 63 64 65 66 67 68 69 70
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- - -------------------------------------------------------------------------------------------------------------
60 $4.56 $4.58 $4.61 $4.63 $4.65 $4.67 $4.69 $4.71 $4.73 $4.75 $4.76
61 4.63 4.66 4.69 4.71 4.73 4.76 4.78 4.80 4.82 4.84 4.86
62 4.71 4.74 4.77 4.80 4.82 4.85 4.87 4.90 4.92 4.94 4.96
63 4.79 4.82 4.85 4.88 4.91 4.94 4.97 5.00 5.02 5.05 5.07
64 4.88 4.91 4.94 4.98 5.01 5.04 5.07 5.10 5.13 5.15 5.18
65 4.96 5.00 5.03 5.07 5.11 5.14 5.17 5.20 5.24 5.27 5.30
66 5.05 5.09 5.13 5.17 5.21 5.24 5.28 5.32 5.35 5.38 5.42
67 5.14 5.18 5.23 5.27 5.31 5.35 5.39 5.43 5.47 5.51 5.54
68 5.23 5.28 5.33 5.37 5.42 5.46 5.50 5.55 5.59 5.63 5.67
69 5.33 5.38 5.43 5.48 5.53 5.57 5.62 5.67 5.72 5.76 5.81
70 5.43 5.48 5.53 5.59 5.64 5.69 5.74 5.80 5.85 5.90 5.95
- - -------------------------------------------------------------------------------------------------------------
*Payments after the death of the Primary Payee will be one-half of the amount shown.
</TABLE>
NON-QUALIFIED CONTRACTS
<TABLE>
OPTION A TABLE - INCOME FOR A FIXED PERIOD
Payments for fixed number of years for each $1,000 applied.
- - --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Terms of Annual Semi- Quar- Monthly Terms of Annual Semi- Quar- Monthly Terms of Annual Semi- Quar- Monthly
Payments Annual terly Payments Annual terly Payments Annual terly
- - --------------------------------------------------------------------------------------------------------------------------------
Years Years Years
6 184.60 91.62 45.64 15.18 11 108.08 53.64 26.72 8.88 16 79.61 39.51 19.68 6.54
7 160.51 79.66 39.68 13.20 12 100.46 49.86 24.84 8.26 17 75.95 37.70 18.78 6.24
8 142.46 70.70 35.22 11.71 13 94.03 46.67 23.25 7.73 18 72.71 36.09 17.98 5.98
9 128.43 63.74 31.75 10.56 14 88.53 43.94 21.89 7.28 19 69.81 34.65 17.26 5.74
10 117.23 58.18 28.98 9.64 15 83.77 41.57 20.71 6.89 20 67.22 33.36 16.62 5.53
- - --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
________________________________________________________________________________
Page 52
<PAGE>
INDIVIDUAL FLEXIBLE PREMIUM DEFERRED ANNUITY PROSPECTUS
________________________________________________________________________________
OPTION B TABLES - LIFE ANNUITY
With Payments For At Least A Fixed Period
- - ----------------------------------------------------------------------
MALE 60 120 180 240
Months Months Months Months
- - ----------------------------------------------------------------------
Age
- - ----------------------------------------------------------------------
55 $4.68 $4.62 $4.53 $4.39
56 4.78 4.72 4.61 4.45
57 4.89 4.82 4.69 4.51
58 5.00 4.92 4.78 4.58
59 5.12 5.03 4.87 4.64
60 5.25 5.14 4.96 4.71
61 5.39 5.26 5.06 4.78
62 5.53 5.39 5.16 4.84
63 5.69 5.52 5.26 4.90
64 5.85 5.66 5.36 4.96
65 6.03 5.81 5.46 5.02
66 6.21 5.96 5.56 5.08
67 6.41 6.11 5.66 5.13
68 6.62 6.28 5.76 5.18
69 6.84 6.44 5.86 5.23
70 7.07 6.61 5.96 5.27
71 7.32 6.78 6.05 5.31
72 7.58 6.96 6.14 5.34
73 7.85 7.14 6.23 5.37
74 8.14 7.32 6.31 5.40
- - -------------------------------------------------------------------
________________________________________________________________________________
Page 53
<PAGE>
INDIVIDUAL FLEXIBLE PREMIUM DEFERRED ANNUITY PROSPECTUS
________________________________________________________________________________
OPTION B TABLES (CONTINUED)
- - -----------------------------------------------------------------------
FEMALE 60 120 180 240
Months Months Months Months
- - -----------------------------------------------------------------------
Age
- - -----------------------------------------------------------------------
55 $4.25 $4.22 $4.18 $4.10
56 4.33 4.30 4.25 4.17
57 4.41 4.38 4.32 4.23
58 4.50 4.47 4.40 4.30
59 04.60 4.56 4.48 4.37
60 4.70 4.66 4.57 4.44
61 4.81 4.76 4.66 4.51
62 4.93 4.86 4.75 4.58
63 5.05 4.98 4.85 4.65
64 5.18 5.10 4.95 4.72
65 5.32 5.22 5.05 4.79
66 5.47 5.36 5.16 4.86
67 5.63 5.50 5.26 4.93
68 5.80 5.65 5.37 5.00
69 5.98 5.80 5.49 5.06
70 6.18 5.96 5.60 5.12
71 6.39 6.14 5.71 5.18
72 6.62 6.31 5.83 5.23
73 6.86 6.50 5.94 5.28
74 7.12 6.69 6.04 5.32
- - -------------------------------------------------------------------
________________________________________________________________________________
Page 54
<PAGE>
INDIVIDUAL FLEXIBLE PREMIUM DEFERRED ANNUITY PROSPECTUS
________________________________________________________________________________
<TABLE>
<CAPTION>
OPTION C TABLE - JOINT AND ONE-HALF SURVIVOR ANNUITY
Monthly payments for each $1,000 of proceeds by ages of persons named*.
- - ------------------------------------------------------------------------------------------------------------
MALE Female Secondary Age
PRIMARY
AGE
-------------------------------------------------------------------------------------------------
60 61 62 63 64 65 66 67 68 69 70
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- - ------------------------------------------------------------------------------------------------------------
60 $4.70 $4.73 $4.76 $4.79 $4.82 $4.85 $4.88 $4.91 $4.94 $4.96 $4.99
61 4.78 4.81 4.84 4.88 4.91 4.94 4.97 5.00 5.03 5.06 5.09
62 4.86 4.89 4.93 4.96 5.00 5.03 5.07 5.10 5.13 5.16 5.19
63 4.94 4.97 5.01 5.05 5.09 5.13 5.16 5.20 5.24 5.27 5.31
64 5.02 5.06 5.10 5.14 5.18 5.23 5.27 5.31 5.34 5.38 5.42
65 5.10 5.15 5.19 5.24 5.28 5.33 5.37 5.41 5.46 5.50 5.54
66 5.19 5.24 5.28 5.33 5.38 5.43 4.84 5.52 5.57 5.62 5.66
67 5.28 5.33 5.38 5.43 5.48 5.53 5.59 5.64 5.69 5.74 5.79
68 5.37 5.42 5.48 5.53 5.59 5.64 5.70 5.75 5.81 5.86 5.92
69 5.46 5.52 5.57 5.63 5.69 5.75 5.81 5.87 5.93 5.99 6.05
70 5.55 5.61 5.67 5.74 5.80 5.86 5.93 5.99 6.06 6.12 6.19
- - ------------------------------------------------------------------------------------------------------------
* Payments after the death of the Primary Payee will be one-half of the amount shown.
Monthly payments for each $1,000 of proceeds by ages of persons named*.
- - --------------------------------------------------------------------------------------------------------------
MALE Female Primary Age
SECONDARY
AGE
--------------------------------------------------------------------------------------------------
60 61 62 63 64 65 66 67 68 69 70
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- - ---------------------------------------------------------------------------------------------------------------
60 $4.46 $4.54 $4.62 $4.71 $4.79 $4.88 $4.98 $5.07 $5.17 $5.27 $5.38
61 4.48 4.56 4.65 4.73 4.82 4.91 5.01 5.11 5.21 5.31 5.42
62 4.50 4.58 4.67 4.75 4.85 4.94 5.04 5.14 5.25 5.36 5.47
63 4.52 4.60 4.69 4.78 4.87 4.97 5.07 5.17 5.28 5.40 5.51
64 4.53 4.62 4.71 4.80 4.90 5.00 5.10 5.21 5.32 5.44 5.56
65 4.55 4.63 4.72 4.82 4.92 5.02 5.13 5.24 5.35 5.48 5.60
66 4.56 4.65 4.74 4.84 4.94 5.05 5.16 5.27 5.39 5.51 5.64
67 4.57 4.66 4.76 4.86 4.96 5.07 5.18 5.30 5.42 5.55 5.68
68 4.59 4.68 4.78 4.88 4.98 5.09 5.21 5.33 5.45 5.59 5.72
69 4.60 4.69 4.79 4.89 5.00 5.11 5.23 5.36 5.48 5.62 5.76
70 4.61 4.70 4.80 4.91 5.02 5.13 5.25 5.38 5.51 5.65 5.80
- - -------------------------------------------------------------------------------------------------------------
* Payments after the death of the Primary Payee will be one-half of the amount shown.
</TABLE>
________________________________________________________________________________
Page 55
<PAGE>
Subject to Completion: Dated _______, 1997
ANNUITY INVESTORS[REGISTERED TRADEMARK] VARIABLE ACCOUNT B
of
ANNUITY INVESTORS LIFE INSURANCE COMPANY[REGISTERED TRADEMARK]
STATEMENT OF ADDITIONAL INFORMATION
for
The Commodore Navigator[SERVICEMARK]
Individual Flexible Premium Deferred Annuity Issued by
ANNUITY INVESTORS LIFE INSURANCE COMPANY
P.O. Box 5423, Cincinnati, Ohio 45201-5423, (800) 789-6771
The Statement of Additional Information expands upon subjects discussed in the
current Prospectus for The Commodore Navigator, Individual Flexible Premium
Deferred Annuity Contract (the "Contract") offered by Annuity Investors Life
Insurance Company. A copy of the Prospectus dated ______________, 1997, as
supplemented from time to time, may be obtained free of charge by writing to
Annuity Investors Life Insurance Company, Administrative Office, P.O. Box 5423,
Cincinnati, Ohio 45201-5423. Terms used in the current Prospectus for the
Contract are incorporated in this Statement of Additional Information.
THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS AND SHOULD BE READ
ONLY IN CONJUNCTION WITH THE PROSPECTUS FOR THE CONTRACT.
Dated _____________, 1997
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION BUT HAS NOT YET BECOME EFFECTIVE. THESE
SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME
THE REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS STATEMENT OF ADDITIONAL
INFORMATION SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN
OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN
WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION
OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE>
TABLE OF CONTENTS
________________________________________________________________________________
Page
ANNUITY INVESTORS LIFE INSURANCE COMPANY[REGISTERED TRADEMARK]............. 1
General Information and History................................... 1
State Regulation.................................................. 1
SERVICES .................................................................. 1
Safekeeping of Separate Account Assets............................ 1
Records and Reports............................................... 2
Experts ......................................................... 2
DISTRIBUTION OF THE CONTRACTS.............................................. 2
CALCULATION OF PERFORMANCE INFORMATION..................................... 2
Money Market Sub-Account Standardized Yield Calculation........... 2
Other Sub-Account Standardized Yield Calculations................. 3
Standardized Total Return Calculation............................. 4
Hypothetical Performance Data..................................... 4
Other Performance Data............................................ 5
FEDERAL TAX MATTERS........................................................ 6
Taxation of the Company........................................... 7
Tax Status of the Contract........................................ 7
FINANCIAL STATEMENTS....................................................... 8
- i -
<PAGE>
The following information supplements the information in the Prospectus about
the Contract. Terms used in this Statement of Additional Information have the
same meaning as in the Prospectus.
ANNUITY INVESTORS LIFE INSURANCE COMPANY[REGISTERED TRADEMARK]
GENERAL INFORMATION AND HISTORY
Annuity Investors Life Insurance Company (the "Company"), formerly known as
Carillon Life Insurance Company, is a stock life insurance company incorporated
under the laws of the State of Ohio in 1981. The name change occurred in the
state of domicile on April 12, 1995. The Company is principally engaged in the
sale of fixed and variable annuity policies.
The Company was acquired in November, 1994, by American Annuity
Group[SERVICEMARK], Inc. ("AAG") a Delaware corporation that is a publicly
traded insurance holding company. Great American Insurance Company[REGISTERED
TRADEMARK] ("GAIC"), an Ohio corporation, owns 80% of the common stock of AAG.
GAIC is a multi-line insurance carrier and a wholly-owned subsidiary of Great
American[REGISTERED TRADEMARK] Holding Company ("GAHC"), an Ohio corporation.
GAHC is a wholly-owned subsidiary of American Financial Corporation ("AFC"), an
Ohio corporation. AFC is a wholly-owned subsidiary of American Financial Group,
Inc. ("AFG"), an Ohio corporation that owns 1% of the common stock of AAG. AFG
is a publicly traded holding company which is engaged, through its subsidiaries,
in financial businesses that include annuities, insurance and portfolio
investing, and non-financial businesses including food products.
STATE REGULATION
The Company is subject to the insurance laws and regulations of all the
jurisdictions where it is licensed to operate. The availability of certain
Contract rights and provisions depends on state approval and/or filing and
review processes in each such jurisdiction. Where required by law or regulation,
the Contract will be modified accordingly.
SERVICES
SAFEKEEPING OF SEPARATE ACCOUNT ASSETS
Title to assets of the Separate Account is held by the Company. The Separate
Account assets are segregated from the Company's general account assets. Records
are maintained of all purchases and redemptions of Fund shares held by each of
the Sub-Accounts.
Title to assets of the Fixed Account is held by the Company together with the
Company's general account assets.
________________________________________________________________________________
<PAGE>
RECORDS AND REPORTS
All records and accounts relating to the Fixed Account and the Separate Account
will be maintained by the Company. As presently required by the provisions of
the Investment Company Act of 1940, as amended ("1940 Act"), and rules and
regulations promulgated thereunder which pertain to the Separate Account,
reports containing such information as may be required under the 1940 Act or by
other applicable law or regulation will be sent to each Owner semi-annually at
the Owner's last known address.
EXPERTS
The statutory-basis financial statements of the Company included in this
Statement of Additional Information have been audited by Ernst & Young LLP,
independent auditors, to the extent indicated in their report thereon also
appearing elsewhere herein. Such statutory-basis financial statements have been
included herein in reliance upon such report given upon the authority of such
firm as experts in accounting and auditing.
DISTRIBUTION OF THE CONTRACTS
The offering of the Contracts is expected to be continuous, and the Company does
not anticipate discontinuing the offering of the Contracts. However, the Company
reserves the right to discontinue the offering of the Contracts.
CALCULATION OF PERFORMANCE INFORMATION
MONEY MARKET SUB-ACCOUNT STANDARDIZED YIELD CALCULATION
In accordance with rules and regulations adopted by the Securities and Exchange
Commission, the Company computes the Money Market Sub-Account's current
annualized yield for a seven-day period in a manner which does not take into
consideration any realized or unrealized gains or losses on shares of the Money
Market Fund or on its portfolio securities. This current annualized yield is
computed by determining the net change (exclusive of realized gains and losses
on the sale of securities and unrealized appreciation and depreciation) in the
value of a hypothetical account having a balance of one unit of the Money Market
Sub-Account at the beginning of such seven-day period, dividing such net change
in the value of the hypothetical account by the value of the hypothetical
account at the beginning of the period to determine the base period return and
annualizing this quotient on a 365-day basis. The net change in the value of the
hypothetical account reflects the deductions for the Mortality and Expense Risk
and Administration Charges and income and expenses accrued during the period.
Because of these deductions, the yield for the Money Market Sub-Account of the
Separate Account will be lower than the yield for the Money Market Fund or any
comparable substitute funding vehicle.
________________________________________________________________________________
- 2 -
<PAGE>
The Securities and Exchange Commission also permits the Company to disclose the
effective yield of the Money Market Sub-Account for the same seven-day period,
determined on a compounded basis. The effective yield is calculated according to
the following formula:
365/7
EFFECTIVE YIELD = [(BASE PERIOD RETURN + 1) ]- 1
The yield on amounts held in the Money Market Sub-Account normally will
fluctuate on a daily basis. Therefore, the disclosed yield for any given past
period is not an indication or representation of future yields. The Money Market
Sub-Account's actual yield is affected by changes in interest rates on money
market securities, average portfolio maturity of the Money Market Fund or
substitute funding vehicle, the types and quality of portfolio securities held
by the Money Market Fund or substitute funding vehicle, and operating expenses.
IN ADDITION, THE YIELD FIGURES DO NOT REFLECT THE EFFECT OF ANY CONTINGENT
DEFERRED SALES CHARGE ("CDSC") (OF UP TO 7% OF PURCHASE PAYMENTS) THAT MAY BE
APPLICABLE ON SURRENDER.
OTHER SUB-ACCOUNT STANDARDIZED YIELD CALCULATIONS
The Company may from time to time disclose the current annualized yield of one
or more of the Sub-Accounts (other than the Money Market Sub-Account) for 30-day
periods. The annualized yield of a Sub-Account refers to the income generated by
the Sub-Account over a specified 30-day period. Because this yield is
annualized, the yield generated by a Sub-Account during the 30-day period is
assumed to be generated each 30-day period. The yield is computed by dividing
the net investment income per Accumulation Unit earned during the period by the
price per unit on the last day of the period, according to the following
formula:
a-b 6
YIELD = 2[(-----+ 1) - 1]
cd
Where:
a = net investment income earned during the period by the
Portfolio attributable to the shares owned by the Sub-Account.
b = expenses for the Sub-Account accrued for the period (net of
reimbursements).
c = the average daily number of Accumulation Units outstanding
during the period.
d = the maximum offering price per Accumulation Unit on the last
day of the period.
Net investment income will be determined in accordance with rules and
regulations established by the Securities and Exchange Commission. Accrued
expenses will include all recurring fees that are charged to all Contracts. The
yield calculations do not reflect the effect of any CDSC that may be applicable
________________________________________________________________________________
- 3 -
<PAGE>
to a particular Contract. CDSCs range from 7% to 0% of the Purchase Payments
withdrawn depending on the elapsed time since the receipt of such Purchase
Payments.
Because of the charges and deductions imposed by the Separate Account, the yield
for a Sub-Account will be lower than the yield for the corresponding Fund. The
yield on amounts held in a Sub-Account normally will fluctuate over time.
Therefore, the disclosed yield for any given period is not an indication or
representation of future yields or rates of return. The Sub-Account's actual
yield will be affected by the types and quality of portfolio securities held by
the Fund and its operating expenses.
STANDARDIZED TOTAL RETURN CALCULATION
The Company may from time to time also disclose average annual total returns for
one or more of the Sub-Accounts for various periods of time. Average annual
total return quotations are computed by finding the average annual compounded
rates of return over one, five and ten year periods that would equal the initial
amount invested to the ending redeemable value, according to the following
formula:
n
P(1 + T) = ERV
Where
P = a hypothetical initial payment of $1,000.
T = average annual total return.
n = number of years.
ERV = "ending redeemable value" of a hypothetical $1,000
payment made at the beginning of the one, five or
ten- year period at the end of the one, five, or
ten-year period (or fractional portion thereof).
All recurring fees, such as the Contract Maintenance Fee and the Mortality and
Expense Risk Charge, which are charged to all Contracts are recognized in the
ending redeemable value. The average annual total return calculations will
reflect the effect of any CDSCs that may be applicable to a particular period.
HYPOTHETICAL PERFORMANCE DATA
The Company may also disclose "hypothetical" performance data for a Sub-Account,
for periods BEFORE the Sub-Account commenced operations. Such performance
information for the Sub-Account will be calculated based on the performance of
the corresponding Fund and the assumption that the Sub-Account was in existence
for the same periods as those indicated for the Fund, with a level of Contract
charges currently in effect. The Fund used for these calculations will be the
actual Fund in which the Sub-Account invests.
________________________________________________________________________________
- 4 -
<PAGE>
This type of hypothetical performance data may be disclosed on both an average
annual total return and a cumulative total return basis. Moreover, it may be
disclosed assuming that the Contract is not surrendered (i.e., with no deduction
for a CDSC) or assuming that the Contract is surrendered at the end of the
applicable period (i.e., reflecting a deduction for any applicable CDSC).
OTHER PERFORMANCE DATA
The Company may from time to time disclose other non-standardized total return
in conjunction with the standardized performance data described above.
Non-standardized data may reflect no CDSC or present performance data for a
period other than that required by the standardized format. The Company may from
time to time also disclose cumulative total return calculated using the
following formula assuming that the CDSC percentage is 0%:
CTR = (ERV/P) - 1
Where:
CTR = the cumulative total return net of Sub-Account recurring
charges for the period.
ERV = ending redeemable value of a hypothetical $1,000 payment at
the beginning of the one, five or ten-year period at the
end of the one, five or ten-year period (or fractional
portion thereof).
P = a hypothetical initial payment of $1,000.
All non-standardized performance data will be advertised only if the requisite
standardized performance data is also disclosed.
The Contracts may be compared in advertising materials to Certificates of
Deposit ("CDs") or other investments issued by banks or other depository
institutions. Variable annuities differ from bank investments in several
respects. For example, variable annuities may offer higher potential returns
than CDs. However, unless you have elected to invest in only the Fixed Account
Options, the Company does not guarantee your return. Also, none of your
investments under the Contract, whether allocated to the Fixed Account or a
Sub-Account, are FDIC-insured.
Advertising materials for the Contracts may, from time to time, address
retirement needs and investing for retirement, the usefulness of a tax-qualified
retirement plan, saving for college, or other investment goals. Advertising
materials for the Contracts may discuss, generally, the advantages of investing
in a variable annuity and the Contract's particular features and their
desirability and may compare Contract features with those of other variable
annuities and investment products of other issuers. Advertising materials may
also include a discussion of the balancing of risk and return in connection with
the selection of investment options under the Contract and investment
________________________________________________________________________________
- 5 -
<PAGE>
alternatives generally, as well as a discussion of the risks and attributes
associated with the investment options under the Contract. A description of the
tax advantages associated with the Contract, including the effects of
tax-deferral under a variable annuity or retirement plan generally, may be
included as well. Advertising materials for the Contracts may quote or reprint
financial or business publications and periodicals, including model portfolios
or allocations, as they relate to current economic and political conditions,
management and composition of the underlying Funds, investment philosophy,
investment techniques, the desirability of owning the Contract and other
products and services offered by the Company or AAG Securities, Inc. ("AAG
Securities").
The Company or AAG Securities may provide information designed to help
individuals understand their investment goals and explore various financial
strategies. Such information may include: information about current economic,
market and political conditions; materials that describe general principles of
investing, such as asset allocation, diversification, risk tolerance and goal
setting; questionnaires designed to help create a personal financial profile;
worksheets used to project savings needs based on assumed rates of inflation and
hypothetical rates of return; and alternative investment strategies and plans.
Ibbotson Associates of Chicago, Illinois ("Ibbotson") provides historical
returns of the capital markets in the United States, including common stocks,
small capitalization stocks, long-term corporate bonds, intermediate-term
government bonds, long-term government bonds, Treasury bills, the U.S. rate of
inflation (based on the Consumer Price Index), and combinations of various
capital markets. The performance of these capital markets is based on the
returns of different indices.
Advertising materials for the Contracts may use the performance of these capital
markets in order to demonstrate general risk-versus-reward investment scenarios.
Performance comparisons may also include the value of a hypothetical investment
in any of these capital markets. The risk associated with the security types in
any capital market may or may not correspond directly to those of the
Sub-Accounts and the Funds. Advertising materials may also compare performance
to that of other compilations or indices that may be developed and made
available in the future.
In addition, advertising materials may quote various measures of volatility and
benchmark correlations for the Sub-Accounts and the respective Funds and compare
these volatility measures and correlations with those of other separate accounts
and their underlying funds. Measures of volatility seek to compare a
sub-account's, or its underlying fund's, historical share price fluctuations or
total returns to those of a benchmark. Measures of benchmark correlation
indicate how valid a comparative benchmark may be. All measures of volatility
and correlation are calculated using averages of historical data.
FEDERAL TAX MATTERS
The Contract is designed for use by individuals as a non-tax-qualified annuity
(including Contracts purchased by an employer in connection with a Code Section
457 or non-qualified deferred compensation plan), and with arrangements which
________________________________________________________________________________
- 6 -
<PAGE>
qualify for special tax treatment under Sections 401, 403 or 408 of the Code.
The ultimate effect of federal taxes on the Account Value, on Annuity Benefits,
and on the economic benefit to the Owner and/or the Beneficiary may depend on
the type of retirement plan for which the Contract is purchased, on the tax and
employment status of the individual concerned and on the Company's tax status.
THE FOLLOWING DISCUSSION IS GENERAL AND IS NOT INTENDED AS TAX ADVICE. Any
person concerned about tax implications should consult a competent tax adviser.
This discussion is based upon the Company's understanding of the present federal
income tax laws as they are currently interpreted by the Internal Revenue
Service. No representation is made as to the likelihood of continuation of
present federal income tax laws or of the current interpretations by the
Internal Revenue Service. Moreover, no attempt has been made to consider any
applicable state or other tax laws.
TAXATION OF THE COMPANY
The Company is taxed as a life insurance company under Part I of Subchapter L of
the Code. Since the Separate Account is not an entity separate from the Company,
and its operations form a part of the Company, it will not be taxed separately
as a "regulated investment company" under Subchapter M of 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 it will not be taxed on the Separate Account investment income and realized
net capital gains 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 interpretations 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.
TAX STATUS OF THE CONTRACT
Section 817(h) of the Code requires that with respect to Non-Qualified
Contracts, the investments of the Funds be "adequately diversified" in
accordance with Treasury regulations in order for the Contracts to qualify as
annuity contracts under federal tax law. The Separate Account, through the
Funds, intends to comply with the diversification requirements prescribed by the
Treasury in Reg. Sec. 1.817-5, which affect how the Funds' assets may be
invested.
In certain circumstances, Owners of individual variable annuity contracts may be
considered the owners, for federal income tax purposes, of the assets of the
separate accounts used to support their contracts. In those circumstances,
income and gains from the separate account assets would be includible in the
variable contract owner's gross income. The Internal Revenue Service has stated
in published rulings that a variable contract owner will be considered the owner
of separate account assets if the contract owner possesses incidents of
ownership in those assets, such as the ability to exercise investment control
________________________________________________________________________________
- 7 -
<PAGE>
over the assets. The Treasury Department has also announced, in connection with
the issuance of regulations concerning diversification, that those regulations
"do not provide guidance concerning the circumstances in which investor control
of the investments of a segregated asset account may cause the investor (i.e.,
the Owner), rather than the insurance company, to be treated as the owner of the
assets in the account." This announcement also stated that guidance would be
issued by way of regulations or rulings on the "extent to which policyholders
may direct their investments to particular subaccounts without being treated as
owners of the underlying assets." As of the date of this Statement of Additional
Information, no guidance has been issued.
The ownership rights under the Contract are similar to, but different in certain
respects from, those described by the Internal Revenue Service in rulings in
which it was determined that contract owners were not owners of separate account
assets. For example, the Owner has additional flexibility in allocating Purchase
Payments and Account Value. These differences could result in an Owner being
treated as the owner of a pro-rata portion of the assets of the Separate Account
and/or Fixed Account. In addition, the Company does not know what standards will
be set forth, if any, in the regulations or rulings which the Treasury
Department has stated it expects to issue. The Company therefore reserves the
right to modify the Contract as necessary to attempt to prevent an Owner from
being considered the owner of a pro-rata share of the assets of the Separate
Account.
FINANCIAL STATEMENTS
The Company's audited statutory-basis financial statements for the years ended
December 31, 1996 and 1995 are included herein. [TO BE SUPPLIED.]
The financial statements of the Company included in this Statement of Additional
Information should be considered only as bearing on the ability of the Company
to meet its obligations under the Contract. They should not be considered as
bearing on the investment performance of the assets held in the Separate
Account.
________________________________________________________________________________
- 8 -
<PAGE>
PART C
OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements
All required financial statements are included in Parts A or B of this
Registration Statement.
(b) Exhibits
(1) Resolution of the Board of Directors of Annuity Investors Life
Insurance Company[REGISTERED TRADEMARK] authorizing establish-
ment of Annuity Investors[REGISTERED TRADEMARK] Variable
Account B.
(2) Not Applicable.
(3) (a) Distribution Agreement between Annuity Investors Life
Insurance Company and AAG Securities, Inc. [To Be
Supplied.]
(b) Form of Selling Agreement between Annuity Investors
Life Insurance Company, AAG Securities, Inc. and
another Broker-Dealer.
(4) Individual Contract Forms and Endorsements.
(a) Form of Qualified Individual Flexible Premium
Deferred Annuity Contract. [To Be Supplied.]
(b) Form of Non-Qualified Individual Contract. [To Be
Supplied.]
(c) Form of Loan Endorsement to Individual Contract. [To
Be Supplied.]
(d) Form of Tax Sheltered Annuity Endorsement to
Individual Contract. [To Be Supplied.]
(e) Form of Qualified Pension, Profit Sharing and Annuity
Plan Endorsement to Qualified Individual Contract.
[To Be Supplied.]
(f) Form of Employer Plan Endorsement to Individual
Contract. [To Be Supplied.]
(g) Form of Individual Retirement Annuity Endorsement to
Individual Contract. [To Be Supplied.]
________________________________________________________________________________
- 9 -
<PAGE>
(h) Form of Texas Optional Retirement Program Endorsement
to Individual Contract. [To Be Supplied.]
(i) Form of Long-Term Care Waiver Rider to Individual
Contract. [To Be Supplied.]
(5) (a) Form of Application for Individual Flexible Premium
Deferred Annuity Contract. [To Be Supplied.]
(6) (a) Articles of Incorporation of Annuity Investors Life
Insurance Company[REGISTERED TRADEMARK].
(b) Code of Regulations of Annuity Investors Life
Insurance Company.
(7) Not Applicable
(8) (a) Participation Agreement between Annuity Investors
Life Insurance Company and Dreyfus Variable
Investment Fund. [To Be Supplied.]
(b) Participation Agreement between Annuity Investors
Life Insurance Company and Dreyfus Stock Index Fund.
[To Be Supplied.]
(c) Participation Agreement between Annuity Investors
Life Insurance Company and The Dreyfus Socially
Responsible Fund, Inc. [To Be Supplied.]
(d) Participation Agreement between Annuity Investors
Life Insurance Company and Janus Aspen Series. [To Be
Supplied.]
(e) Participation Agreement between Annuity Investors
Life Insurance Company and Strong Variable Insurance
Funds, Inc. [To Be Supplied.]
(f) Participation Agreement between Annuity Investors
Life Insurance Company and INVESCO Variable
Investment Funds, Inc. [To Be Supplied.]
(g) Participation Agreement between Annuity Investors
Life Insurance Company and Neuberger & Berman
Advisers Management Trust Series. [To Be Supplied.]
(h) Participation Agreement between Annuity Investors
Life Insurance Company and Pilgrim Baxter PBHG
Insurance Series Funds. [To Be Supplied.]
(i) Service Agreement between Annuity Investors Life
Insurance Company and American Annuity
Group[SERVICEMARK], Inc.
________________________________________________________________________________
- 10 -
<PAGE>
(j) Agreement between AAG Securities, Inc. and AAG
Insurance Agency, Inc.
(k) Investment Service Agreement between Annuity
Investors Life Insurance Company[REGISTERED
TRADEMARK] and American Annuity Group[SERVICEMARK],
Inc.
(9) Opinion and Consent of Counsel.
(10) Consent of Independent Auditors. [To Be Supplied.]
(11) No financial statements are omitted from Item 23.
(12) Not Applicable.
(13) Not Applicable.
(14) Not Applicable.
________________________________________________________________________________
- 11 -
<PAGE>
ITEM 25. DIRECTORS AND OFFICERS OF THE DEPOSITOR
Principal Positions and Offices
Name Business Address With the Company
---- ---------------- ----------------------
Robert Allen Adams (1) President, Director
Stephen Craig Lindner (1) Director
William Jack Maney, II (1) Assistant Treasurer and
Director
James Michael Mortensen (1) Executive Vice President,
Assistant Secretary and
Director
Mark Francis Muething (1) Senior Vice President,
Secretary, General Counsel
and Director
Jeffrey Scott Tate (1) Director
Thomas Kevin Liguzinski (1) Senior Vice President
Charles Kent McManus (1) Senior Vice President
Robert Eugene Allen (1) Vice President and Treasurer
Arthur Ronald Greene, III (1) Vice President
Betty Marie Kasprowicz (1) Vice President and Assistant
Secretary
Michael Joseph O'Connor (1) Vice President and Chief
Actuary
Lynn Edward Laswell (1) Assistant Vice President and
Assistant Treasurer
====================
(1) P.O. Box 5423, Cincinnati, Ohio 45201-5423.
ITEM 26. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE DEPOSITOR OR
REGISTRANT
The Depositor, Annuity Investors Life Insurance Company[REGISTERED TRADEMARK] is
a wholly-owned subsidiary of Great American[REGISTERED TRADEMARK] Life Insurance
Company, which is a wholly-owned subsidiary of American Annuity
Group[SERVICEMARK], Inc. The Registrant, Annuity Investors[REGISTERED TRADEMARK]
Variable Account B, is a segregated asset account of Annuity Investors Life
Insurance Company.
________________________________________________________________________________
- 12 -
<PAGE>
The following chart indicates the persons controlled by or under common control
with the Company. [To Be Supplied.]
ITEM 27. NUMBER OF CONTRACT OWNERS
Not Applicable.
ITEM 28. INDEMNIFICATION
(a) The Code of Regulations of Annuity Investors Life Insurance
Company[REGISTERED TRADEMARK] provides in Article V as follows:
The Corporation shall, to the full extent permitted by the General
Corporation Law of Ohio, indemnify any person who is or was a director
or officer of the Corporation and whom it may indemnify pursuant
thereto. The Corporation may, within the sole discretion of the Board
of Directors, indemnify in whole or in part any other persons whom it
may indemnify pursuant thereto.
Insofar as indemnification for liability arising under the Securities Act of
1933 ("1933 Act") may be permitted to directors, officers and controlling
persons of the Depositor pursuant to the foregoing provisions, or otherwise, the
Depositor has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
1933 Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Depositor of expenses incurred or paid by the 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 Depositor will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the 1933 Act and
will be governed by the final adjudication of such issue.
(b) The directors and officers of Annuity Investors Life Insurance Company are
covered under a Directors and Officers Reimbursement Policy. Under the
Reimbursement Policy, directors and officers are indemnified for loss arising
from any covered claim by reason of any Wrongful Act in their capacities as
directors or officers, except to the extent the Company has indemnified them. In
general, the term "loss" means any amount which the directors or officers are
legally obligated to pay for a claim for Wrongful Acts. In general, the term
"Wrongful Acts" means any breach of duty, neglect, error, misstatement,
misleading statement, omission or act by a director or officer while acting
individually or collectively in their capacity as such claimed against them
solely by reason of their being directors and officers. The limit of liability
under the program is $20,000,000 for the policy year ending September 1, 1997.
The primary policy under the program is with National Union Fire Insurance
Company of Pittsburgh, PA. in the name of American Premier Underwriters, Inc.
________________________________________________________________________________
- 13 -
<PAGE>
ITEM 29. PRINCIPAL UNDERWRITER
AAG Securities, Inc. is the underwriter and distributor of the Contracts as
defined in the Investment Company Act of 1940 ("1940 Act").
(a) AAG Securities, Inc. does not act as a principal underwriter, depositor,
sponsor or investment adviser for any investment company other than Annuity
Investors[REGISTERED TRADEMARK] Variable Account B.
(b) Directors and Officers of AAG Securities, Inc.
Name and Principal Position with
Business Address AAG Securities, Inc.
- - ------------------ ---------------------
Thomas Kevin Liguzinski (1) Chief Executive Officer and Director
Mark Francis Muething (1) Vice President, Secretary and
Director
William Jack Maney, II (1) Director
Jeffrey Scott Tate (1) Director
James Lee Henderson (1) President
Andrew Conrad Bambeck, III (1) Vice President
William Claire Bair, Jr. (1) Treasurer
=======================
(1) 250 East Fifth Street, Cincinnati, Ohio 45202
(c) Not applicable.
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS
All accounts and records required to be maintained by Section 31(a) of the 1940
Act and the rules under it are maintained by Lynn E. Laswell, Assistant Vice
President of the Company, at the Administrative Office.
________________________________________________________________________________
- 14 -
<PAGE>
ITEM 31. MANAGEMENT SERVICES
Not applicable.
ITEM 32. UNDERTAKINGS
(a) Annuity Investors Life Insurance Company[REGISTERED TRADEMARK] represents
that the fees and charges deducted under the Contract, in the aggregate, are
reasonable in relation to the services rendered, the expenses expected to be
incurred and the risks assumed by the Company.
(b) Registrant undertakes that it will file a post-effective amendment to this
registration statement as frequently as necessary to ensure that the audited
financial statements in the registration statement are never more than 16 months
old for so long as payments under the variable annuity contracts may be
accepted.
(c) Registrant undertakes that it will include either (1) as part of any
application to purchase a Contract offered by the Prospectus, a space that an
applicant can check to request a Statement of Additional Information, or (2) a
post card or similar written communication affixed to or included in the
Prospectus that the applicant can remove to send for a Statement of Additional
Information.
(d) Registrant undertakes to deliver any Prospectus and Statement of Additional
Information and any financial statements required to be made available under
this Form promptly upon written or oral request to the Company at the address or
phone number listed in the Prospectus.
________________________________________________________________________________
- 15 -
<PAGE>
SIGNATURES
As required by the Securities Act of 1933 and the Investment Company
Act of 1940, the Registrant certifies that it has caused this Registration
Statement to be signed on its behalf by the undersigned in the City of
Cincinnati, State of Ohio on the 23th day of December, 1996.
ANNUITY INVESTORS[REGISTERED TRADEMARK]
VARIABLE ACCOUNT B (REGISTRANT)
By: /s/ Robert Allen Adams
---------------------------------------
Robert Allen Adams
Chairman of the Board, President
and Director, Annuity Investors
Life Insurance Company[REGISTERED
TRADEMARK]
ANNUITY INVESTORS LIFE INSURANCE COMPANY
(DEPOSITOR)
By: /s/ Robert Allen Adams
---------------------------------------
Robert Allen Adams
Chairman of the Board, President
and Director
As required by the Securities Act of 1933, this Registration Statement
has been signed by the following persons in the capacities and on the dates
indicated.
/s/ Robert Allen Adams
- - --------------------------- Principal Executive December 23, 1996
Robert Allen Adams Officer, Director
/s/ Robert Eugene Allen
- - --------------------------- Principal Financial December 23, 1996
Robert Eugene Allen Officer
/s/ Lynn Edward Laswell
- - --------------------------- Principal Accounting December 23, 1996
Lynn Edward Laswell Officer
________________________________________________________________________________
- 16 -
<PAGE>
/s/ Stephen Craig Lindner
- - --------------------------- Director December 23, 1996
Stephen Craig Lindner
/s/ William Jack Maney, II
- - --------------------------- Director December 23, 1996
William Jack Maney, II
/s/ James Michael Mortensen
- - --------------------------- Director December 23, 1996
James Michael Mortensen
/s/ Mark Francis Muething
- - --------------------------- Director December 23, 1996
Mark Francis Muething
/s/ Jeffrey Scott Tate
- - --------------------------- Director December 23, 1996
Jeffrey Scott Tate
________________________________________________________________________________
- 17 -
<PAGE>
EXHIBIT INDEX
Exhibit No. Description of Exhibit
- - ---------- ----------------------
(1) Resolution of the Board of Directors of Annuity Investors
Life Insurance Company[REGISTERED TRADEMARK]authorizing
establishment of Annuity Investors[REGISTERED TRADEMARK]
Variable Account B.
(3)(b) Form of Selling Agreement between Annuity
Investors Life Insurance Company, AAG Securities,
Inc. and another Broker-Dealer.
(6)(a) Articles of Incorporation of Annuity Investors Life
Insurance Company
(6)(b) Code of Regulations of Annuity Investors Life
Insurance Company
(8)(i) Service Agreement between Annuity Investors Life
Insurance Company and American Annuity
Group[SERVICEMARK], Inc.
(8)(j) Agreement between AAG Securities Inc. and AAG
Insurance Agency, Inc.
(8)(k) Investment Service Agreement between Annuity
Investors Life Insurance Company and American
Annuity Group, Inc.
(9) Opinion and Consent of Counsel
- i -
EXHIBIT (1)
ACTION TAKEN IN WRITING BY ALL MEMBERS OF THE
BOARD OF DIRECTORS OF ANNUITY INVESTORS LIFE INSURANCE COMPANY
PURSUANT TO SECTION 1701.54 OF THE OHIO REVISED CODE
The undersigned, being all of the Directors of Annuity Investors Life
Insurance Company, an Ohio corporation (the "Corporation"), do hereby adopt the
following resolutions by unanimous written consent pursuant to Section 1701.54
of the Ohio Revised Code as of December 19, 1996.
WHEREAS, Section 3907.15 of the Ohio Revised Code permits the
establishment of one or more separate accounts;
WHEREAS, It is desired that the Corporation have a funding
vehicle for its variable annuity contracts;
NOW, THEREFORE, BE IT
RESOLVED, That pursuant to Section 3907.15 of the Ohio Revised Code, a
separate account referred to herein as "Annuity Investors Variable Account B"
("Variable Account B") is hereby established and empowered to:
(a) to the extent required by the Investment Company Act of 1940,
register under such Act and make applications for such
exemptions or orders under such provisions thereof as may
appear to be necessary or desirable;
(b) to the extent required by the Securities Act of 1933, effect
one or more registrations thereunder and, in connection with
such registrations, file one or more registration statements
thereunder, or amendments thereto, including any documents or
exhibits required as a part thereof;
(c) provide for the sale of contracts issued by the Corporation as
the officers of the Corporation may deem necessary and
appropriate, to the extent such contracts provide for
allocation of amounts to Variable Account B;
(d) provide for custodial or depository arrangements for assets
allocated to Variable Account B as the officers of the
Corporation may deem necessary and appropriate including self
custodianship and safekeeping arrangements by the Corporation;
(e) select an independent public accountant to audit the
books and records of Variable Account B;
- 1 -
<PAGE>
(f) invest or reinvest the assets of Variable Account B in
securities issued by one or more investment companies
registered under the Investment Company Act of 1940 or other
appropriate securities, as the officers of the Corporation may
designate;
(g) divide Variable Account B into divisions and subdivisions with
each division or subdivision investing in shares of designated
investment companies or portfolios or classes thereof or other
appropriate securities; and
(h) perform such additional functions and take such additional
action as may be necessary or desirable to carry out the
foregoing and the intent and purpose thereof;
FURTHER RESOLVED, That the assets of Variable Account B shall be
derived solely from (a) sale of variable annuity products, (b) funds
corresponding to dividend accumulation with respect to investment of such
assets, and (c) advances made by the Corporation in connection with the
operation of Variable Account B;
FURTHER RESOLVED, That pursuant to Section 3907.15 of the Ohio Revised
Code the assets of Variable Account B shall be legally segregated and that part
of the assets of Variable Account B with a value equal to the reserves and other
variable annuity contract liabilities shall not be chargeable with the
liabilities arising out of any other business of the Corporation;
FURTHER RESOLVED, That this Corporation shall maintain in Variable
Account B assets with a fair market value at least equal to the statutory
valuation reserves for the variable annuity contracts;
FURTHER RESOLVED, That the officers of the Corporation be, and each of
them hereby is, authorized in their discretion as they may deem appropriate from
time to time in accordance with applicable laws and regulations (a) to modify or
eliminate any such divisions or subdivisions, (b) to change the designation of
Variable Account B to another designation, and (c) to designate further any
division or subdivision thereof, and (d) to deregister Variable Account B under
the Investment Company Act of 1940 and to deregister the contracts or units of
interest thereunder under the Securities Act of 1933;
FURTHER RESOLVED, That the officers of the Corporation be, and each of
them hereby is, authorized to invest cash from the Corporation's general account
in Variable Account B or in any division thereof as may be deemed necessary or
appropriate to facilitate the commencement of Variable Account B's operations or
to meet any minimum capital requirements under the Investment Company Act of
- 2 -
<PAGE>
1940, and to transfer cash or securities from time to time between the
Corporation's general account and Variable Account B as deemed necessary or
appropriate so long as such transfers are not prohibited by law and are
consistent with the terms of the variable annuity contracts issued by the
Corporation providing for allocations to Variable Account B;
FURTHER RESOLVED, That the income, gains, and losses (whether or not
realized) from assets allocated to Variable Account B shall, in accordance with
any variable annuity contracts issued by the Corporation providing for
allocations to Variable Account B, be credited to or charged against such
Separate Account without regard to the other income, gains, or losses of the
Corporation;
FURTHER RESOLVED, That authority is hereby delegated to the Chief
Executive Officer or the President of the Corporation to adopt procedures
providing for, among other things, criteria by which the Corporation shall
institute procedures to provide for a pass-through of voting rights to the
owners of variable annuity contracts issued by the Corporation providing for
allocation to Variable Account B with respect to the shares of any investment
companies which are held in Variable Account B;
FURTHER RESOLVED, That the officers of the Corporation are authorized
and directed, with the assistance of accountants, legal counsel, and other
consultants, to prepare and execute any necessary agreements to enable Variable
Account B to invest or reinvest the assets of Variable Account B in securities
issued by any investment companies registered under the Investment Company Act
of 1940, or other appropriate securities as the officers of the Corporation may
designate pursuant to the provisions of the variable annuity contracts issued by
the Corporation providing for allocations to Variable Account B.
FURTHER RESOLVED, The fiscal year of Variable Account B shall end on
the 31st day of December each year;
FURTHER RESOLVED, That the officers of the Corporation, with the
assistance of accountants, legal counsel, and other consultants, are authorized
to prepare, execute, and file all periodic reports required under the Investment
Company Act of 1940 and the Securities Exchange Act of 1934;
FURTHER RESOLVED, That the Corporation may register under the
Securities Act of 1933 variable annuity contracts, or units of interest
thereunder, under which amounts will be allocated by the Corporation to Variable
Account B to support reserves for such contracts and, in connection therewith,
that the officers of the Corporation be, and each of them hereby is, authorized,
with the assistance of accountants, legal counsel, and other consultants, to
prepare, execute, and file with the Securities and Exchange Commission, in the
name and on behalf of the Corporation, registration statements under the
- 3 -
<PAGE>
Securities Act of 1933, including prospectuses, supplements, exhibits, and other
documents relating thereto, and amendments to the foregoing, in such form as the
officer executing the same may deem necessary or appropriate;
FURTHER RESOLVED, That the officers of the Corporation be, and each of
them hereby is, authorized, with the assistance of accountants, legal counsel,
and other consultants, to take all actions necessary to register Variable
Account B as a unit investment trust under the Investment Company Act of 1940
and to take such related actions as they deem necessary and appropriate to carry
out the foregoing;
FURTHER RESOLVED, That the officers of the Corporation be, and each of
them hereby is, authorized to prepare, execute, and file, with the assistance of
accountants, legal counsel, and other consultants, with the Securities and
Exchange Commission applications and amendments thereto for such exemptions from
or orders under the Investment Company Act of 1940, and to request from the
Securities and Exchange Commission no action and interpretative letters as they
may from time to time deem necessary or desirable;
FURTHER RESOLVED, That the General Counsel of the Corporation is hereby
appointed as agent for service under any such registration statement and is duly
authorized to receive communications and notices from the Securities and
Exchange Commission with respect thereto and to exercise powers given to such
agent by the Securities Act of 1933 and the rules thereunder, and any other
necessary acts;
FURTHER RESOLVED, That the officers of the Corporation be, and each of
them hereby is, authorized, with the assistance of accountants, legal counsel,
and other consultants, to effect in the name of and on behalf of the Corporation
all such registrations, filings, and qualifications under blue sky or other
applicable securities laws and regulations and under insurance securities laws
and insurance laws and regulations of such states and other jurisdictions, as
they may deem necessary or appropriate with respect to the Corporation and with
respect to any variable annuity contracts under which amounts will be allocated
by the Corporation to Variable Account B to support reserves for such contracts;
such authorization shall include registration, filing, and qualification of the
Corporation and of said contracts, as well as registration, filing, and
qualification of officers, employees, and agents of the Corporation as brokers,
dealers, agents, salesmen, or otherwise; and such authorization shall also
include, in connection therewith, authority to prepare, execute, acknowledge,
and file all such applications, applications for exemptions, certificates,
affidavits, covenants, consents to service of process, and other instruments and
to take all such action as the officer executing the same or taking such action
may deem necessary or desirable;
- 4 -
<PAGE>
FURTHER RESOLVED, That the officers of the Corporation be, and each of
them hereby is, authorized to execute and deliver all such documents and papers
and to do or cause to be done all such acts and things as they may deem
necessary or desirable to carry out the foregoing resolutions and the intent and
purpose thereof.
Signed at Cincinnati, Ohio as of this 19th day of December, 1996.
/s/ Robert A. Adams
-----------------------------
Robert A. Adams
/s/ S. Craig Lindner
-----------------------------
S. Craig Lindner
/s/ William J. Maney
----------------------------
William J. Maney
/s/ James M. Mortensen
----------------------------
James M. Mortensen
/s/ Mark F. Muething
----------------------------
Mark F. Muething
/s/ Jeffrey S. Tate
----------------------------
Jeffrey S. Tate
- 5 -
EXHIBIT 3(b)
SELLING AGREEMENT
AGREEMENT made this _______ day of _________________, 19__, by and
between ANNUITY INVESTORS LIFE INSURANCE COMPANY, an Ohio life insurance company
("AILIC"), AAG SECURITIES, INC., an Ohio corporation ("AAGS") and
_______________________________________, a ___________ corporation
("Broker/Dealer") and any and all insurance agency affiliates or subsidiaries of
Broker/Dealer ("Agencies"). Broker/Dealer and the Agencies are hereinafter
referred to as the "Producers." The Agencies are listed in Appendix I to this
Agreement, as may be amended from time to time.
WHEREAS, AILIC issues certain variable annuity and variable insurance
policies, and certificates thereunder in the case of group policies
("Contracts"), described in this Agreement, which are deemed securities under
the Securities Act of 1933, and
WHEREAS, AAGS is duly licensed as a broker-dealer with the National
Association of Securities Dealers, Inc. ("NASD") and the Securities and Exchange
Commission ("SEC"), and
WHEREAS, Broker/Dealer is duly licensed as a broker-dealer with the
NASD and SEC, and
WHEREAS, AILIC has appointed AAGS as the principal underwriter of the
Contracts, and
WHEREAS, AAGS proposes to have Broker/Dealer's registered
representatives ("Representatives") who are also duly licensed insurance agents
solicit sales of the Contracts, and
WHEREAS, AAGS delegates to Broker/Dealer and the Agencies, to the
extent legally permitted, training, supervisory and certain administrative
responsibilities and duties.
NOW, THEREFORE, in consideration of the mutual promises contained
herein, the parties agree as follows:
1. Appointment. AILIC and AAGS hereby appoint Broker/Dealer and the
Agencies under the securities and insurance laws to supervise Representatives in
connection with the distribution of the Contracts, solely in accordance with the
Contract and the then current Prospectus relating thereto, and to provide
certain services as described herein.
2. Supervision of Representatives. Broker/Dealer shall have full
responsibility for the training and supervision of all Representatives
associated with Broker/Dealer who are engaged directly or indirectly in the
offer or sale of the Contracts and all such persons shall be subject to the
control of Broker/Dealer with respect to such persons' securities-related
activities in connection with the Contracts. Broker/Dealer will establish rules,
<PAGE>
procedures and supervisory and inspection techniques necessary to diligently
supervise the activities of its Representatives.
Producers will cause the Representatives to be trained in the sale of
the Contracts; Producers warrant that Representatives qualify under applicable
federal and state laws to engage in the sale of the Contracts; and Producers
will cause such Representatives to be registered representatives of
Broker/Dealer before such Representatives engage in the solicitation of
applications for the Contracts in jurisdictions where AILIC has authorized such
solicitation. Broker/Dealer has full responsibility in connection with the
training, supervision and control of the Representatives as contemplated by
Section 15(b)(4)(E) of the Securities Exchange Act of 1934 (the "1934 Act"). By
submitting to AAGS or AILIC a registered representative for appointment,
Broker/Dealer shall be deemed to have certified Representatives' qualifications
including those set forth in Appendix II hereto. Upon request, Broker/Dealer
shall confirm the foregoing by delivering a letter in the form of Appendix II
hereto. Producers shall ensure that the Contracts are offered, sold and serviced
only through Representatives who comply with all appropriate state insurance
licensing requirements and solely in accordance with the Contract and the then
current Prospectus relating thereto.
3. Appointment of Agents. With respect to each Representative to be
appointed, Broker/Dealer shall submit to AAGS an Agent Data Form, a copy of a
current NASD status sheet, a copy of the appropriate state insurance license and
such additional documents as requested by AILIC or AAGS and shall await approval
from AILIC before a Representative shall be permitted to solicit applications
for the sale of Contracts.
4. Notice of Representative's Noncompliance. In the event a
Representative fails or refuses to submit to supervision by Broker/Dealer,
ceases to be a registered representative of Broker/Dealer, or fails to meet the
rules and standards imposed by Broker/Dealer on its Representatives,
Broker/Dealer shall certify such fact to AILIC and shall immediately notify such
Representative that he or she is no longer authorized to sell the Contracts, and
Broker/Dealer shall take whatever additional action may be necessary to
terminate the sales activities of such Representative relating to the Contracts.
5. Compliance with NASD Rules of Fair Practice and Federal and State
Security and Insurance Laws. Broker/Dealer shall and shall ensure that its
Representatives fully comply with the requirements of the 1934 Act and the NASD
and all other applicable federal or state laws applicable to the offer, sale and
service of the Contracts and will establish such rules and procedures as may be
necessary to cause diligent supervision of the securities and insurance
activities of Representatives. Broker/Dealer agrees to maintain all
transactions, books and records concerning the activities of their
Representatives as required by the SEC, NASD or other regulatory agencies having
jurisdiction, or under applicable state insurance laws or regulations. Upon
request by AILIC or AAGS, Broker/Dealer shall furnish or make available for
- 2 -
<PAGE>
inspection, such appropriate records as may be necessary to establish such
diligent supervision.
6. Prospectus, Sales Promotion Material and Advertising. Broker/Dealer
shall be provided with, and Broker/Dealer shall forward to Representatives,
prospectuses relating to the Contracts and such other material as AILIC or AAGS
determines to be necessary or desirable for use in connection with sales of the
Contracts. Broker/Dealer shall ensure that no sales promotion materials or
advertising related to AILIC, AAGS and/or the Contracts shall be used by
Representatives unless the specific item has first been approved by AILIC or
AAGS in writing. Producers and their Representative shall discontinue the use of
any item when notified by AILIC or AAGS.
No Producer or any Representative shall in connection with the offer or
sale of Contracts use any advertising material, prospectus, proposal or
representation either in general or in relation to a Contract, AAGS or AILIC
unless furnished by AAGS or AILIC or until the consent of AAGS or AILIC is first
obtained. Neither Producers nor any Representative shall issue or recirculate
any illustration, circular, statement or memorandum of any sort, misrepresenting
the terms, benefits or advantages of any Contract, or make any misleading
statement as to benefits thereon or the financial position of AILIC.
7. Applications. Producers shall cause all applications for Contracts
to be made on application forms supplied by AILIC and all payments collected by
Broker/Dealer or any Representative to be remitted promptly in full, together
with such application forms and any other documentation, directly to AILIC at
the address indicated on such application. Producers shall review all such
applications for completeness. Producers shall be solely responsible for
determining the suitability of Contracts for purchasers. Checks or money orders
for Purchase Payments shall be drawn to the order of AILIC. All applications are
subject to acceptance or rejection by AILIC at its sole discretion. Producers
agree to remit in full to AILIC immediately upon receipt all Purchase Payments
received on such applications, forms and any other required documentation
obtained in respect to the Contracts.
8. Compensation.
(a) Commissions. Commissions payable in connection with the
Contracts for which Broker/Dealer is the broker of record shall be payable in
accordance with the Schedule(s) attached hereto and made a part hereof and shall
be paid by or on behalf of AAGS to one or more of the Producers in accordance
with applicable insurance and securities laws. Payment of commissions to the
Producer(s) shall be full and sole compensation for all services and expenses
and for the fulfillment of duties under this Agreement. These commissions will
be paid as a percentage of Purchase Payments received in cash and accepted by
AILIC on applications obtained by the Representatives of Broker/Dealer provided
a Contract is issued, delivered to and accepted by the applicant. Upon
- 3 -
<PAGE>
termination of this Agreement, all compensation to Broker/Dealer hereunder shall
cease; however, Producers shall continue to be liable for any chargebacks (as
defined in Subsections (A), (B) and (C) below). Producers shall have no interest
in any surrender charges, deductions or other fees payable to AILIC or AAGS. The
Producers shall pay the person(s) entitled thereto as provided in any agreement
between Producers and the Representatives, and AILIC and AAGS shall have no
responsibility or liability therefor.
A) If AAGS has paid any compensation in advance,
Producers hereby agree that they are indebted to AAGS if the Purchase
Payment on which the compensation is based is not paid within the time
provided by the Contract, or allowed by AILIC, or, if the Purchase
Payment is paid, if Producers would not have been entitled to the
compensation when the Purchase Payment is paid. AAGS, in its sole
discretion, will determine whether or not Producers would have been
entitled to the compensation when the Purchase Payment is paid.
B) Upon demand by AAGS, the Producers hereby agree to
return to AAGS any compensation paid to them based on refunds or
adjustments of Contract values, in whole or in part, including in the
event of termination, modification or recision of a Contract. AILIC may
in its sole discretion, and at any time, terminate, modify or rescind
the sale of any Contract or contract issued by it, and Producers are
indebted to AAGS for the amount of compensation deemed necessary to
refund until Producers repay such amount.
C) Any compensation which would be due Producers
under this Agreement shall not become due if any Producer is indebted
to AAGS or AILIC. In the case of such indebtedness, any compensation
will be applied by AAGS to reduce the indebtedness, regardless of any
claim or lien by Producers or by someone other than AAGS. Upon
termination of this Agreement, the Producers shall immediately pay to
AAGS any and all amounts which are owed.
The foregoing subsections A, B and C shall survive the termination of
this Agreement.
(b) Time of Payment. AAGS shall pay or cause to be paid any
compensation due Producers within fifteen (15) business days after the end of
the calendar month in which Purchase Payments upon which such compensation is
based are accepted by AILIC, and for which Contracts have been issued and
accepted by the applicant.
(c) Amendments of Schedules. AAGS may, upon at least ten (10)
business days prior written notice to Broker/Dealer, amend the attached
Schedule(s) made part hereof. Any such amendments shall be in writing and shall
apply to premiums received by AILIC after the effective date of such written
notice.
- 4 -
<PAGE>
(d) Prohibition Against Rebates and Replacements. Except as
permitted by law, if any Producer or any Representative of Broker/Dealer shall
rebate or offer to rebate all or any part of a Purchase Payment or commission on
a Contract, or if any Producer or any Representative of Broker/Dealer provides
or offers to provide an applicant with other valuable consideration or
inducement in connection with a Contract, the same shall be grounds for
termination of this Agreement by AILIC or AAGS. If any Producer, or any
Representative of Broker/Dealer shall withhold any Purchase Payment on a
Contract, the same shall also be grounds for termination of this Agreement by
AILIC or AAGS. If any Producer, or any Representative of Broker/Dealer, shall at
any time induce or endeavor to induce any person paying Purchase Payments on any
Contract issued hereunder to discontinue Purchase Payments or to relinquish any
such Contract except under circumstances in which there are reasonable grounds
for believing the Contract is not suitable for such person, any and all
compensation due Producers shall cease and terminate.
(e) Indebtedness. Nothing in this Agreement shall be construed
as giving Broker/Dealer the right to incur an indebtedness on behalf of AILIC or
AAGS.
9. Investigations. Producers, AAGS and AILIC agree to cooperate fully
in any investigation or proceeding with respect to any Representative or other
agent or the Producers to the extent that such investigation or proceeding is in
connection with the Contracts. Without limiting the foregoing:
(a) AILIC and AAGS will promptly notify Producers of any
substantive customer complaint or notice of any regulatory investigation or
proceeding or judicial proceeding received by it with respect to Producers or
any Representative or other agent of Producers with respect to AILIC or AAGS
which may affect the issuance of the Contracts marketed under this Agreement.
(b) Producers will promptly notify AILIC and AAGS of any
substantive customer complaint or notice of any regulatory investigation or
proceeding or judicial proceeding received by Producers with respect to
Producers or to any Representative or other agent of Producers in connection
with the Contracts or any activity in connection therewith.
In the case of a substantive complaint in connection with the
Contracts, AILIC, AAGS, and Producers will cooperate in investigating such
complaint. In connection therewith, Producers shall provide AILIC and AAGS with
all information reasonably requested. AILIC and AAGS shall respond to and defend
any such complaint.
10. Independent Contractors. Producers in performing their duties
hereunder shall be acting as independent contractors and not as agents or
employees of AILIC or AAGS. In addition, nothing contained herein shall be
construed as a partnership among AILIC, AAGS and Producers.
- 5 -
<PAGE>
11. Indemnification. Producers shall indemnify and hold harmless AILIC
and AAGS from any claims, damages, expenses (including reasonable attorneys'
fees and expenses), liabilities or causes of action, asserted or brought by
anyone, resulting from any negligent, fraudulent, or intentional acts,
omissions, or errors of Producers, their employees, registered representatives,
other representatives, or agents in the offering for sale, solicitation, or
servicing of the Contracts, and from any negligent, fraudulent, or intentional
acts, omissions, or errors of Producers, their employees, registered
representatives, other representatives, or agents in violation of Federal or
State laws or regulations and NASD rules of any nature, applicable to the
offering for sale, solicitation, or servicing of the Contracts.
Broker/Dealer shall assume full responsibility for the activities of
all persons associated with it who are engaged directly or indirectly in the
sales and servicing operations of Broker/Dealer. Broker/Dealer shall indemnify
and hold harmless AILIC and AAGS from any claims, damages, expenses, liabilities
or causes of action, asserted or brought by anyone, resulting from any private
business transactions of any associated persons which are the subject of this
paragraph.
AILIC and AAGS shall indemnify and hold harmless Producers from any
claims, damages, expenses, liabilities or causes of action, asserted or brought
by anyone, resulting from any negligent, fraudulent, or intentional acts,
omissions, or errors of AILIC or AAGS or their employees in the offering for
sale, solicitation, or servicing of the Contracts and from any negligent,
fraudulent, or intentional acts, omissions, or errors of AILIC or AAGS or their
employees in violation of Federal or State laws or regulations and NASD rules of
any nature, applicable to the offering for sale, solicitation, or servicing of
the Contracts.
12. Termination. AAGS may terminate this Agreement immediately and
without notice if the Broker/Dealer fails to maintain its registration as a
broker/dealer under the 1934 Act or a member of the NASD. AAGS may terminate
this Agreement immediately upon providing written notice to Broker/Dealer or
Agency if Broker/Dealer or Agency violates this Agreement or fails to perform to
AAGS's satisfaction under the terms and conditions of this Agreement or if
Broker/Dealer or Agency becomes insolvent or files a petition for bankruptcy,
reorganization or liquidation under applicable law. AAGS and Broker/Dealer or
Agency shall each have the right, upon thirty days' written notice to the other,
to terminate this agreement for whatever reason deemed appropriate by such
party. Notwithstanding the termination of this Agreement, AAGS, Broker/Dealer
and Agency acknowledge that each of them shall be individually and respectively
liable, responsible and accountable for any and all actions undertaken prior to
the effective date of the termination of this Agreement. In furtherance of the
foregoing, the provisions of Sections 8, 9, 10, 11 and 15 hereof shall survive
termination
13. Fidelity Bond. Broker/Dealer shall secure and maintain a fidelity
bond in at least the amounts prescribed under Article III, Section 32 of the
- 6 -
<PAGE>
NASD Rules of Fair Practice. Broker/Dealer shall provide AAGS with a copy of
said bond within thirty days after executing this Agreement.
14. Confirmations. Upon or prior to completion of each transaction for
which the issuance of a confirmation is legally required, a confirmation
reflecting the fact of the transaction and those items under SEC Rule 10b-10
will be promptly forwarded by AILIC on AAGS's behalf. A copy of such
confirmation will be made available to Broker/Dealer.
15. Scope of Authority for Processing Business. Broker/Dealer shall be
authorized to: (a) accept applications for Contracts, (b) receive for forwarding
to AILIC the Purchase Payments paid in connection with any such applications,
(c) deliver the Contracts issued to the applicants by AILIC, and (d) collect
Purchase Payments for forwarding to AILIC as specifically directed by such
applicants who have authorized Broker/Dealer to act on their behalf.
Broker/Dealer is not authorized to: (a) alter any applications or
Contracts, (b) collect or in any manner receive premiums from applicants in the
form of checks, money orders or electronic funds transfers payable to any person
or entity other than AILIC, (c) waive any forfeiture, (d) make any settlement of
any claim or claims, or (e) perform any function other than as expressly
authorized in the preceding paragraph.
16. Miscellaneous. AAGS and AILIC reserve the right, without notice to
Producers, to suspend, withdraw, or modify the offering of the Contracts or to
change the conditions of their offering with respect to anyone. Producers are
not authorized to market any Contract until notified by AILIC or AAGS of an
effective registration statement therefor with the Securities and Exchange
Commission. AAGS will provide Broker/Dealer with a list, and updates thereto
which list the jurisdictions in which the Contracts may be sold.
The right is reserved to AILIC and AAGS to contract separately with any
employee, representative or agent of Producers in connection with the Contracts
or otherwise, provided that the terms of any such contract do not conflict with
the provisions of this Agreement. Nothing contained herein shall prevent or
restrict (i) AILIC or AAGS from marketing said Contracts through other
broker/dealers, insurance agents and brokers, and through its own organization,
or (ii) Producers from acting as agent and/or broker for other insurance
companies, whether or not affiliated with a Producer, in any jurisdiction with
respect to any insurance or securities product, including securities products
similar or identical to those of AILIC or AAGS. Neither Producers nor their
Representatives shall have any right of exclusivity to market and sell Contracts
in any geographical area.
Any manuals, guides, books, tapes, programs and other materials, if
any, developed by AILIC or AAGS, which may be delivered to Broker/Dealer from
- 7 -
<PAGE>
time to time will be owned solely by AILIC or AAGS, as the case may be; however,
during such time as this Agreement is in effect between the parties hereto, if
the Producers elect to do so, Representatives may use any such manuals, guides,
books, programs and other materials which may have been delivered to the
Producers but may use them solely in the Producers' business hereunder, and upon
such terms and conditions as AILIC or AAGS may establish at the time of such
delivery. Upon termination of this Agreement, such items will be returned
promptly to AAGS.
Included on Appendix I is a list of jurisdictions in which
Broker/Dealer or Agency is duly authorized to sell the Contracts and receive
commissions thereon and Producers represent that this list is true and complete.
17. Notices, Etc. All notices, demands, billings, requests and other
written communications hereunder shall be deemed to have been properly given to
Producers when delivered by hand or sent by registered or certified United
States mail, postage prepaid and addressed to Producers at
_________________________________________________________. Any communications to
AILIC or AAGS shall be deemed properly given if delivered by hand or sent by
registered or certified United States mail, postage prepaid and addressed to
AILIC or AAGS, respectively, at 250 East Fifth Street, 10th Floor, Cincinnati,
Ohio 45202, Attention: Mark F. Muething, Esq. The address for notice hereunder
may be changed by giving written notice of such change to the other parties in
accordance with the provisions of this Section 17.
18. Governing Law. This Agreement shall be interpreted in accordance
with the laws of the State of Ohio. The parties hereto agree that any state or
federal court located in Hamilton County, Ohio shall have sole and exclusive
jurisdiction and be the appropriate venue for any required judicial
interpretation and enforcement of this Agreement.
19. Binding Effect. If any provision of this Agreement shall be held or
made invalid by a court decision, statute, rule, or otherwise, the remainder of
this Agreement shall not be affected thereby.
20. No Assignment. This Agreement, and the rights and duties hereunder,
may not be assigned or delegated except as expressly provided for herein.
Commissions to be paid pursuant to this Agreement may not be assigned without
the consent of AAGS.
21. No Waiver. Any failure to enforce any right under this Agreement or
to object to any violations of its terms shall not operate as a waiver of any
rights.
This Agreement shall be effective as of the date it is fully executed
by all parties. This Agreement constitutes the entire Agreement between the
parties hereto. However, AILIC and AAGS reserve the right to modify the
Schedules as provided herein. AILIC and AAGS further reserve the right to amend
from time to time this Agreement, other than its schedule, by providing thirty
(30) days written notice to the Broker/Dealer. Broker/Dealer shall be deemed to
have accepted all terms and conditions set forth in such amendment if no
- 8 -
<PAGE>
objections are received in writing by AILIC or AAGS within fifteen (15) days
after notification is mailed. This Agreement supersedes in its entirety any and
all previous agreements among the parties hereto with respect to the Contracts;
provided, however, any former agreement shall survive with respect to any
Contracts offered or sold during the term thereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
signed by their respective officials thereunto duly authorized, as of the day
and year first above written.
ANNUITY INVESTORS LIFE AAG SECURITIES, INC.
INSURANCE COMPANY
BY: ____________________________ BY: ___________________________
Name: __________________ Name: ________________
Title:__________________ Title: _______________
BROKER/DEALER:
-------------------------------
BY: ___________________________
Name: ________________
Title: _______________
- 9 -
<PAGE>
APPENDIX I
[LIST OF AGENCIES]
States
Name of Agency in which Licensed Taxpayer I.D. No.
- - -------------- ----------------- -----------------
By executing below, the foregoing entities agree to join in this
Agreement as an Agency and be bound by all terms of such Agreement.
Name of Agency
- - -----------------------------
By: _________________________
Its: ________________________
Name of Agency
- - -----------------------------
By: _________________________
Its: ________________________
Name of Agency
- - -----------------------------
By: _________________________
Its: ________________________
Name of Agency
- - -----------------------------
By: _________________________
Its: ________________________
<PAGE>
APPENDIX II
General Letter of Recommendation
BROKER/DEALER hereby certifies to AAGS and AILIC that all the following
requirements will be fulfilled in conjunction with the submission of
licensing/appointment papers for all applicants as agents of AILIC submitted by
BROKER/DEALER. BROKER/DEALER will, upon request, forward proof of compliance
with same to AAGS and AILIC in a timely manner.
1. We have made a thorough and diligent inquiry and investi-
gation relative to each applicant's identity, residence and
business reputation and declare that each applicant is
personally known to us, has been examined by us, is known to
be of good moral character, has a good business reputation, is
reliable, is financially responsible and is worthy of a
license. Each individual is trustworthy, competent and
qualified to act as an agent for AILIC to hold himself out in
good faith to the general public.
2. We have on file a U-4 form which was completed by each
applicant. We have fulfilled all the necessary investigative
requirements for the registration of each applicant as a
registered representative through our NASD member firm and
each applicant is presently registered as an NASD registered
representative.
The above information in our files indicates no fact or
condition which would disqualify the applicant from receiving
a license and all the findings of all investigative
information is favorable.
3. We certify that all educational requirements have been met for
the specified state each applicant is requesting a license in,
and that all such persons have fulfilled the appropriate
examination, education and training requirements.
4. If the applicant is required to submit his picture, his
signature, and securities registration in the state in which
he is applying for a license, we certify that those items
forwarded to AILIC are those of the applicant and the
securities registration is a true copy of the original.
5. We hereby warrant that the applicant is not applying for a
license with AILIC in order to place insurance chiefly and
solely on his life or property, or lives or property of his
relatives, or lines or property of his associates.
<PAGE>
6. We will not permit any applicant to transact insurance as an
agent until duly licensed therefore. No applicants have been
given a contract or furnished supplies, nor have any
applicants been permitted to write, solicit business, or act
as an agent in any capacity, and they will not be so permitted
until the certificate of authority or license applied for is
received.
- 2 -
EXHIBIT (6)(a)
CERTIFICATION
******
As DIRECTOR OF INSURANCE OF THE STATE OF OHIO, I do hereby certify that that I
have the annexed copy of the:
Articles of Incorporation and all amendments of the ANNUITY
INVESTORS LIFE INSURANCE COMPANY, Cincinnati, Ohio.
with the original on file in this Department.
May 8, 1995
IN WITNESS WHERE OF, I have hereunto
subscribed my name and caused my seal to be
affixed at Columbus, Ohio, this day and date
Director of Insurance of Ohio
<PAGE>
APPROVED
BY ----------------------
DATE 11/13/81
--------------------
AMOUNT $650.00
------------------
ARTICLES OF INCORPORATION
OF
UCL LIFE ASSURANCE CORPORATION
The undersigned, desiring to form a stock life insurance corporation
under the laws of the State of Ohio, do hereby certify:
FIRST: The name of the corporation shall be UCL LIFE ASSURANCE
CORPORATION.
SECOND: The place of business and the location of the principal office
of the Corporation shall be Hamilton County, Ohio, but it may establish other
offices or places of business in the State of Ohio and elsewhere.
THIRD: The business to be undertaken by and the objects and purposes of
the Corporation shall be to insure the lives of persons in and out of the State
of Ohio under policies and contracts providing for fixed or variable benefits or
both; to insure against accidents to persons, sickness, or temporary or
permanent physical disability; to take all risks in connection with or
pertaining to such insurances; to grant, purchase and dispose of annuities
providing for fixed or variable benefits or both; to set up and operate separate
accounts; to carry on all of said business under either the participating or
non-participating plan or both; to accept reinsurance; and to do any and all
other acts either permitted or not prohibited under the laws of the State of
Ohio for a stock life insurance corporation.
FOURTH: The number of shares which the Corporation is authorized to
have outstanding is Fifteen Thousand (15,000), all of which shall be Common
Shares, par value One Hundred Dollars ($100).
FIFTH: The corporate powers of the Corporation shall be exercised by
and its business and affairs shall be under the control of a Board of Directors,
a majority of whom shall be citizens of the State of Ohio and all of whom shall
be shareholders of the Corporation. The Board of Directors shall be composed of
seven (7) Directors unless and until such number is changed by the affirmative
vote of the holders of a majority of the shares which are represented at the
meeting of the shareholders called for the purpose of electing directors at
which a quorum is present and which are entitled to vote on such proposal. In no
event, however, shall the number of directors be less than five (5) nor more
than twenty-one (21). The directors shall be elected by the written ballot of a
majority of shareholders entitled to vote thereon at an annual meeting of
<PAGE>
shareholders to be held at the principal office of the Corporation on the third
Friday in February at such hour as the Board of Directors may fix (provided,
however, that in the event such day is a legal holiday, the annual meeting shall
be held the next February at such hour as the Board of Directors may fix
(provided, however, that in the event such day is a legal holiday, the annual
meeting shall be held the next succeeding day not a Saturday, Sunday or legal
holiday), or at a special meeting of shareholders called for the purpose of
electing directors. Vacancies in the Board of Directors shall be filled for the
unexpired term by the vote of a majority of the remaining directors.
SIXTH: The officers of the Corporation shall be a President, one or
more Vice Presidents, a Secretary, a Treasurer and such other officers and
assistant officers as the Board of Directors may from time to time deem
necessary. Such officers shall be elected by the Board of Directors at its first
meeting held each year following the annual meeting of shareholders, and shall
hold their respective offices for one year and until their successors are duly
elected and qualified. Any officer may be removed or suspended at any time with
or without cause by the Board of Directors. Any two offices except the offices
of President and Vice President may be held by the same person. Vacancies among
the officers may be filled for the unexpired term by the Board of Directors.
SEVENTH: The amount of capital to be employed in the business of the
Corporation will be paid-in-capital of not less than One Million Five Hundred
Thousand Dollars ($1,500,000). In addition to such paid-in-capital, there shall
be initial contributed surplus of not less than One Million Five Hundred
Thousand Dollars ($1,500,000). Additional contributions to surplus may be made
at any time and from time to time.
EIGHTH: The Corporation, by action of the Board and without action by
the shareholders, may purchase its shares of any class, whether such shares or
such class be now or hereafter authorized, for the purposes and to the extent
permitted by law.
NINTH: No holder of shares of the Corporation shall have any preemptive
right to subscribe for or to purchase any shares of the Corporation of any
class, whether such shares or such class be now or hereafter authorized.
TENTH: Notwithstanding any provision of the General Corporation Law or
the Insurance Laws of Ohio now or hereafter in force, requiring for any purpose
the vote or consent of the holders of shares entitling them to exercise
two-thirds of the voting power of the Corporation or of any class or classes of
shares thereof, such action, unless otherwise expressly required by statute, may
be taken by the vote or consent of the holders of shares entitling them to
exercise a majority of the voting power of the corporation or of such class or
classes of shares thereof.
- 2 -
<PAGE>
IN WITNESS WHEREOF the undersigned have hereunto set their hands this
2nd day of October , 1981.
/s/ Harry Rossi /s/ Kenneth J. Longerman
- - ----------------------------- ------------------------------
Harry Rossi Kenneth J. Longerman
/s/ Charles C. Hinckley /s/ John C. Powers
- - ----------------------------- ------------------------------
Charles C. Hinckley John C. Powers
/s/ Daniel J. Fischer /s/ Charles R. Scheper
- - ----------------------------- ------------------------------
Daniel J. Fischer Charles R. Scheper
/s/ James P. Shanahan /s/ David F. Westerbeck
- - ----------------------------- ------------------------------
James P. Shanahan David F. Westerbeck
/s/ Judith A. Kleemann /s/ Dennis L. Trammell
- - ----------------------------- ------------------------------
Judith A. Kleemann Dennis L. Trammell
/s/ Charles W. McMahon /s/ Stephen R. Hatcher
- - ----------------------------- ------------------------------
Charles W. McMahon Stephen R. Hatcher
/s/ Thomas J. Hummel
- - -----------------------------
Thomas J. Hummel
- 3 -
<PAGE>
ORIGINAL APPOINTMENT OF AGENT
------------------------------
The Undersigned, being at least a majority of the incorporators of UCL
Life Assurance Corporation hereby appoint David F. Westerbeck, a natural person
resident in the county in which the corporation has its principal office upon
whom any process, notice or demand required or permitted by statute to be served
upon the corporation may be served. His complete address is Post Office Box 179,
Cincinnati, Hamilton County, Ohio, 45201.
/s/ Daniel J. Fischer
-------------------------------
Daniel J. Fischer
/s/ Dennis L. Trammell
-------------------------------
Dennis L. Trammell
/s/ Charles W. McMahon
-------------------------------
Charles W. McMahon
/s/ Thomas J. Hummel
-------------------------------
Thomas J. Hummel
/s/ Kenneth J. Longerm
-------------------------------
Kenneth J. Longerman
/s/ James P. Shanahan
-------------------------------
James P. Shanahan
/s/ Judith A. Kleeman
-------------------------------
Judith A. Kleemann
Cincinnati, Ohio, October 2, 1981.
<PAGE>
UCL LIFE ASSURANCE CORPORATION
Gentlemen: I hereby accept appointment as agent for your corporation
upon whom process, tax notices or demands may be served.
/s/ David F. Westerbeck
-------------------------------
David F. Westerbeck
<PAGE>
STATE OF OHIO
Department of Insurance
2100 Stella Court
Columbus, Ohio 43219
November 13, 1981
Honorable Anthony J. Celebrezze, Jr.
Secretary of State
14th Floor
30 East Broad Street
Columbus, Ohio 43215
Attention: Corporation Division
Re: UCL Life Assurance Corporation
Dear Sirs:
The Ohio Department of Insurance has reviewed the attached Articles of
Incorporation of UCL Life Assurance Corporation. Our Legal and Examination
divisions have reviewed these Articles and find them acceptable.
Very truly yours,
/s/ Robert H. Katz
-----------------
ROBERT H. KATZ
Deputy Director
RHK:eag
cc: Steven L. Petty
Assistant Attorney General
<PAGE>
STATE OF OHIO
Office of the Attorney General
November 13, 1981
Honorable Anthony J. Celebrezze, Jr.
Secretary of State
14th Floor
30 East Broad Street
Columbus, Ohio 43215
Attention: Corporation Division
Re: UCL Life Assurance Corporation
Dear Sirs:
Enclosed please find the original Articles of Incorporation of UCL Life
Assurance Corporation.
Based upon the language of the Articles, the approval of the Ohio
Department of Insurance, and my review of the relevant statutes I find these
Articles to be in accordance with those sections of law and not inconsistent
with the Constitution and laws of the United States and this State.
Very truly yours,
WILLIAM J. BROWN
Attorney General
/s/ Steven L. Petty
---------------------
STEVEN L. PETTY
Assistant Attorney General
SLP:mfg
cc: Robert H. Katz
Deputy Director
Charles Hertlein
Dinsmore, Shohl, Coates & Deupree
<PAGE>
STATE OF OHIO
Department of Insurance
2100 Stella Court
Columbus, Ohio 43219
DATE: October 20, 1981
TO: Office of Secretary of State
30 East Broad Street, 14th Floor
Attn: Corporations Department
FROM: Robert H. Katz
Deputy Director
SUBJ: UCL Life Assurance Corporation
Enclosed are the original Articles of Incorporation, Code of Regulations, and
Emergency Bylaws of UCL Life Assurance Corporation. Also please find a check for
$650.00
Please hold these for filing until you receive approval letters, as necessary,
from either this office or the Office of the Attorney General.
Please call me if you have any questions.
RHK:bjl
xc :Steve Petty
Attorney General's Office
<PAGE>
APPROVED
BY ----------------------
DATE 10/18/83
---------------------
AMOUNT $235.00
------------------
CERTIFICATE
We, the undersigned, Charles C. Hinckley and David F. Westerbeck,
respectively the President and Secretary of UCL Life Assurance Corporation, a
stock life insurance company, do hereby certify that at a special meeting of the
stockholders of said Corporaration duly called and held in the City of
Cincinnati, on the 25th day of July, 1983, at which meeting 14,997 out of a
total 15,000 shares of the capital stock of said Corporation issued and
outstanding, were represented in person, resolutions as hereinafter set forth
were adopted by a unanimous vote of said issued and outstanding stock
represented;
RESOLVED, that the fourth article of the Articles of Incorporation of
UCL Life Assurance Corporation is hereby amended to read as follows:
"Fourth: The number of shares which the Corporation is
authorized to have outstanding is Twenty-Five Thousand
(25,000), all of which shall be Common Shares, par value
One Hundred Dollars ($100).
RESOLVED, FURTHER, that the President and Secretary of this Corporation
be and they are authorized and directed to make, execute, and acknowledge a
certificate, under the corporate seal of this company, embracing the foregoing
resolutions, and cause such certificate to be filed, recorded or published as
may be required by law.
IN WITNESS WHEREOF, we have set our hands on this 25th day of July,
1983.
/s/ Charles C. Hinkley
-----------------------------------------
President
Attest /s/ David F. Westerbeck
---------------------------------------
Secretary
<PAGE>
STATE OF OHIO
Department of Insurance
2100 Stella Court
Columbus, Ohio 43215
September 15, 1983
Secretary of State's Office
State Office Tower
30 East Broad Street, 14th Floor
Columbus, Ohio 43215
Attn: Corporations Division, W. Curtis Stitt
Re: UCL Life Assurance Corporation
Dear Sir:
Please find enclosed the copy of the certificate of amendment to the articles of
UCL Life Assurance Company which you recently forwarded to this office. Pending
further approval from the Attorney General's Office, the Department approves the
amendment in the articles.
If you have any questions regarding this matter, please contact me.
Very truly yours,
/s/ Andromeda Monroe
- - -----------------------
ANDROMEDA MONROE
Deputy Director
AM/KW/slp
Enclosure
cc: Pat Devine, Esq. (Attorney General's Office)
<PAGE>
Attorney General
Anthony J. Celebrezze, Jr.
October 18, 1983
Honorable Sherrod Brown
Secretary of State
State Office Tower
14th Floor
Columbus, Ohio 43215
ATTN: W. Curtis Stitt
Assistant Corporate Counsel
Re: UCL Life Assurance Corporation
Charter No. 584965
Dear Sir:
I have reviewed the certificate of amendment to the articles of
incorporation of UCL Life Assurance Corporation. I have also discussed the same
with the Ohio Department of Insurance which has approved the amendment in
question.
Based upon my examination of the certificate of amendment and my review
of the relevant statutes, I find the certificate of amendment to be in
accordance with the constitution and laws of the State of Ohio and of the United
States.
Very truly yours,
ANTHONY J. CELEBREZZE, JR.
Attorney General
/s/ Patrick A. Devine
----------------------------
PATRICK A. DEVINE
Assistant Attorney General
1680 State Office Tower
30 East Broad Street
Columbus, Ohio, 43215
(614) 466-8614
PAD:mfm
cc: Kurt Weiland
<PAGE>
INTER-OFFICE COMMUNICATION
To: W. Curtis Stitt, Secretary of State Date: October 11, 1983
----------------------------------- ----------------
From: Kurt Weiland, Attorney, Department of Insurance
-----------------------------------------------
Subject: UCL Life Amendment
------------------
- - -------------------------------------------------------------------------------
I spoke with David Westerbrook (513-595-2325) regarding the UCL Life Amendment
to articles. Enclosed is a copy of the Department's approval letter regarding
that amendment. I've spoken to Assistant Attorney General Devine, who has
indicated that he thinks he can complete this review by Monday, October 17.
Westerbrook also indicated that he has requested twenty-five (25) certified
copies of the approved articles from your office and was curious whether there
would be any delay in receiving them.
KW/slp
cc: - Pat Devine
David Westerbrook
<PAGE>
Charter # 584965
--------------------
Approved By: D. Burns
----------------
Date: 10-17-85
-----------------------
Fee: $35.00
-----------------------
CERTIFICATE OF AMENDMENT
By Shareholders
to the Articles of Incorporation of
UCL LIFE ASSURANCE CORPORATION
- - -------------------------------------------------------------------------------
(Name of Corporation)
Charles C. Hinckley , who is / / Chairman of the Board /x/ President
- - ---------------------- --- ---
/ / Vice President (Check One)
- - ---
and David F. Westerbeck , who is /xx/ Secretary
---------------------------------- ----
/ / Assistant Secretary (Check One)
- - ---
of the above named Ohio corporation for profit with its principal location at
Mill and Waycross Roads, Cincinnati, Ohio do hereby certify that (check
- - ----------------------------------- the appropriate box and complete the
appropriate statements)
/x/ a meeting of the shareholders was duly called for the purpose of
adopting this amendment and held on September 23, 1985, at which
meeting a quorum of the shareholders was present in person or by proxy,
and by the affirmative vote of the holders of shares entitling them to
exercise 99 % of the voting power of the corporation.
/ / in a writing signed by all of the shareholders who would be entitled to
notice of a meeting held for that purpose,
the following resolution to amend the articles was adopted:
<PAGE>
RESOLVED, by the Shareholders of UCL Life Assurance Corporation that
the first article of the Articles of Incorporation of UCL Life Assurance
Corporation is hereby amended to read as follows:
"FIRST: The name of the Corporation shall be Carillon Life Insurance
Company"
RESOLVED FURTHER, that the President and Secretary of this Corporation
be and they are authorized and directed to make, execute and acknowledge all
documents on behalf of the Corporation necessary to effectuate the foregoing
resolution as may be required by law.
IN WITNESS WHEREOF, the above named officers, acting for and on the
behalf of the corporation, have hereto subscribed their names this _______ day
of October, 1985.
BY /s/ Charles C. Hinckley
----------------------------------------
(Chairman, President or Vice President)
BY /s/ David F. Westerbeck
-----------------------------------------
(Secretary or Assistant Secretary)
NOTE: Ohio law does not permit one officer to sign in two capacities. Two
separate signatures required, even if this necessitates the election of a second
officer before the filing can be made.
<PAGE>
Attorney General
Anthony J. Celebrezze, Jr.
October 8, 1985
Honorable Sherrod Brown
Secretary of State
State Office Tower
14th Floor
Columbus, Ohio 43215
Attn: Bradley Hoffman
Assistant Corporate Counsel
Re: UCL Life Assurance Corporation
Dear Sir:
I have reviewed the amendment to the articles of incorporation of the
UCL Life Assurance Corporation adopted September 23, 1985. I have also discussed
the same with the Ohio Department of Insurance which has expressed its approval
of the amendments in question.
Based upon my examination of the amendments of the articles of
incorporation and my review of the relevant statutes, I find the amendment to be
in accordance with the constitution and laws of the State of Ohio and of the
United States.
Very truly yours,
/s/ Kenneth L. McLaughlin
-----------------------------
Kenneth L. McLaughlin
Assistant Attorney General
State Departments
16th Floor
Columbus, Ohio 43215
(614) 466-8614
KLM:jdc
Enclosures RECEIVED
cc: Kurt Weiland Oct. 10, 1985
David F. Westerbeck SHERROD BROWN
Secretary of State
<PAGE>
Charter No. 584965
--------------
Approved: RB
----------------
Date: 4/12/95
-------------------
Fee: $35.00
---------------------
95041233101
CERTIFICATE OF AMENDMENT
BY SHAREHOLDERS TO THE ARTICLES OF INCORPORATION OF
Carillon Life Insurance Company
- - --------------------------------------------------------------------------
(Name of Corporation)
Betty M. Kasprowicz , who is:
- - -------------------------------------------------------
/ / Chairman of the Board / / President
/xx/ Vice President (Please check one.)
and James M. Mortensen , who is:
-------------------------------------------------
/ / Secretary /xx/ Assistant Secretary (Please check one.)
of the above named Ohio corporation organized for profit does hereby certify
that: (Please check the appropriate box and complete the appropriate
statements.)
/ / a meeting of the shareholders was duly called for the purpose of
adopting this amendment and held on --------------------------, 19---
at which meeting a quorum of the shareholders was present in person or
by proxy, and by the affirmative vote of the holders of shares
entitling them to exercise -----------------% of the voting power of
the corporation.
/xx/ in a writing signed by all of the shareholders who would be entitled to
notice of a meeting held for that purpose, the following resolution to
amend the articles was adopted:
<PAGE>
RESOLVED, by the Sole Shareholder of Carillon Life Insurance
Company that the first article of the Articles of Incorporation of
Carillon Life Insurance Company is hereby amended to read as follows:
"FIRST: The name of the Corporation shall be Annuity Investors
Life Insurance Company."
RESOLVED FURTHER, that the Vice President and Assistant
Secretary of this Corporation be and they are authorized and directed
to make, execute and acknowledge all documents on behalf of the
Corporation necessary to effectuate the foregoing resolution as may be
required by law.
IN WITNESS WHEREOF, the above named officers, acting for and on the behalf of
the corporation, have hereto subscribed their names this 30th day --------- of
March , 1995. ------------- ----
By /s/ Betty Kasprowicz By /s/ James M. Mortense
-------------------------- -----------------------------
Betty Kasprowicz James M. Mortensen
(Chairman, President, Vice President) (Secretary, Assistant Secretary)
NOTE: OHIO LAW DOES NOT PERMIT ONE OFFICER TO SIGN IN TWO CAPACITIES. TWO
SEPARATE SIGNATURES ARE REQUIRED, EVEN IF THIS NECESSITATES THE ELECTION OF A
SECOND OFFICER BEFORE THE FILING CAN BE MADE.
- 2 -
<PAGE>
Attorney General
Betty D. Montgomery
April 7, 1995
Honorable Robert Taft
Secretary of State
30 East Broad Street
14th Floor
Columbus, Ohio 43215
ATTN: KATHIE MCCLURG
OFFICE MANAGER
Re: Carillon Life Insurance Company
Dear Sir:
I have reviewed the Certificate of Amendment to the Articles of
Incorporation for the Carillon Life Insurance Company which was adopted on March
30, 1995. I have also discussed the same with the Ohio Department of Insurance
which has expressed its approval of the articles in question.
Based upon my examination of these articles and my review of the
relevant statutes, I find the articles to be in accordance with the constitution
and laws of the State of Ohio and of the United States.
Very truly yours,
ATTORNEY GENERAL
BETTY D. MONTGOMERY
/s/ Julia M Graver
------------------------
JULIA M. GRAVER
Assistant Attorney General
Health and Human Services Section
30 East Broad Street, 26th Floor
Columbus, Ohio 43215-3428
(614) 466-8600
JMG/mdg
Enclosures
cc: Stephen J. Vamos
<PAGE>
State of Ohio
Department of Insurance
2100 Stella Court
Columbus, Ohio 43266-0566
April 6, 1995 RECEIVED
Attorney General's Office
Apr. 7, 1995
Health & Human
Julia M. Graver Services Section
Office of The Attorney General
Health & Human Services Section
30 E Broad St 26th Fl
Columbus OH 43215
Dear Ms. Graver:
Enclosed please find an originally executed Certificate of Amendment by the
Shareholders to the Articles of Incorporation of Carillon Life Insurance
Company.
Based upon my review, the Department extends its preclearance to the amended
Articles which amend Article First changing the name of the corporation from
Carillon Life Insurance Company to Annuity Investors Life Insurance Company.
Please call should you have any questions.
Sincerely,
/s/ Stephen J. Vamos
- - -----------------------
Stephen J. Vamos
Staff Counsel
Office of Legal Services
SJV/baw
Enclosure
<PAGE>
584965
APPROVED
By CR
Date 7-11-96
Amount 35.00
96071237601
05559-0891
CERTIFICATE OF AMENDMENT TO THE
ARTICLES OF INCORPORATION OF
ANNUITY INVESTORS LIFE INSURANCE COMPANY
The undersigned President and Senior Vice President and Secretary of
Annuity Investors Life Insurance Company, an Ohio corporation for profit (the
"Corporation), do hereby certify that in a writing dated as of April 9, 1996
signed by the sole shareholder of the Corporation, the following resolution to
amend the Articles of Incorporation of the Corporation was adopted:
"RESOLVED: That the Articles of Incorporation, as amended, of the
Corporation be amended by deleting Article FOURTH in its entirety
and replacing therefor the following:
Fourth. The number of shares which the Corporation
is authorized to have outstanding is Fifteen
Thousand (15,000), all of which shall be Common
Shares, par value One Hundred Twenty Five Dollars
($125)."
IN WITNESS WHEREOF, the undersigned have hereunto subscribed their
names as of the 19th day of April, 1996.
/s/ Robert A. Adams
----------------------------------
Robert A. Adams
President
/s/ Mark F. Muething
-----------------------------------
Mark F. Muething
Senior Vice President and Secretary
RECEIVED
JUL 11 1996
BOB TAFT
SECRETARY OF STATE
<PAGE>
05686-0362 584965
APPROVED
By CR
Date 12-3-96
Amount 35.00
96120353501
Use Credit from
7/11/96
CERTIFICATE OF AMENDMENT TO THE
ARTICLES OF INCORPORATION OF
ANNUITY INVESTORS LIFE INSURANCE COMPANY
The undersigned President and Senior Vice President and Secretary of
Annuity Investors Life Insurance Company, an Ohio corporation for profit (the
"Corporation), do hereby certify that in a writing dated as of August 9, 1996
signed by the sole shareholder of the Corporation, the following resolution to
amend the Articles of Incorporation of the Corporation was adopted:
"RESOLVED: That the Articles of Incorporation, as amended, of the
Corporation be amended by deleting Article FOURTH in its entirety
and replacing therefor the following:
Fourth. The number of shares which the Corporation
is authorized to have outstanding is Twenty Five
Thousand (25,000), all of which shall be Common
Shares, par value One Hundred Twenty Five Dollars
($125)."
IN WITNESS WHEREOF, the undersigned have hereunto subscribed their
names as of the 14th day of August, 1996.
/s/ Robert A. Adams
----------------------------------
Robert A. Adams
President
/s/ Mark F. Muething
RECEIVED ----------------------------------
Dec 03 1996 Mark F. Muething
SECRETARY OF STATE Senior Vice President and Secretary
EXHIBIT (6)(b)
CODE OF REGULATIONS
OF
ANNUITY INVESTORS LIFE INSURANCE COMPANY
ARTICLE I
---------
SHAREHOLDERS
------------
1. The annual meeting of the shareholders shall be held at the time
provided in the corporation's Articles of Incorporation.
2. All meetings of shareholders shall be held at the principal office
of the corporation, or (except in the case of the annual meeting which shall be
held at the place fixed in the corporation's Articles of Incorporation) at such
other place within or without the State of Ohio as may be designated in the
notice of such meeting.
3. A meeting of the shareholders which is called by shareholders may be
called only by persons who hold at least twenty-five percent of all shares
issued and outstanding and entitled to vote at such meeting.
4. A majority of the shares issued and outstanding and entitled to
vote, represented by the holders of record thereof, in person or by proxy shall
constitute a quorum at all meetings of shareholders.
ARTICLE II
----------
BOARD OF DIRECTORS
------------------
1. The Board of Directors shall hold regular meetings on the third
Friday of each February, May, August, and November, and such other regular
meetings as it shall determine from time to time. The President may convene
special meetings of the Board at any time and shall be required so to do at the
request of the Executive Committee or of any four members of the Board. An
organizational meeting of the Board of Directors may be held without notice
immediately after each annual meeting of shareholders for the purpose of
electing officers and attending to such other business as may properly come
before the meeting.
2. The Board of Directors shall adopt such plans of insurance and
annuities, rates of premiums, and regulations on the subject of insurance and
annuities as it may deem proper.
3. The Board of Directors from the funds of the Corporation shall:
<PAGE>
FIRST -
Pay the necessary expenses of conducting the business of the
Corporation, and all approved policy claims. The compensation of each
officer shall be fixed by the Board. The compensation of each
non-officer employee shall be fixed by the President.
SECOND -
Establish and maintain the reserve funds required by law.
THIRD -
Establish and maintain surplus funds in such amounts as, in the
judgment of the Board, may be necessary for the security of the
Corporation.
FOURTH -
Declare annually a dividend to participating policyholders, if any,
according to the kind and class of each policy, that shall be applied
according to the terms and conditions of each policy.
4. After provision has been made in accordance with Section 4 of this
Article for expenses, policy claims, reserve funds, surplus funds and dividends
to participating policyholders, if any, the Board may from time to time declare
and cause to be paid dividends to shareholders according to the terms of each
class of shares then outstanding and as provided by law.
5. The Board of Directors may create an Executive Committee or any
other committee of the directors, each such committee to consist of not less
than three directors, and may delegate to any such committee any of the
authority of the directors, however conferred, other than that of filling
vacancies among the directors or in any committee of the directors. Any director
may, however, be designated by the Chief Executive Officer or by the members
present at any meeting of a committee to serve on the committee at that meeting
in place of an absent committee member.
ARTICLE III
-----------
DUTIES OF THE OFFICERS
----------------------
1. PRESIDENT: The Board of Directors shall elect a President who shall
be the chief executive officer of the Corporation. The President shall have
general supervision and control of the business of the Corporation, shall
preside at meetings of the Board of Directors and of the shareholders, and shall
perform such other duties as may be assigned to him by the Board of Directors.
All other officers and employees shall act under the direction of the President
and shall perform such duties as he may assign to them.
2. VICE PRESIDENTS: The Vice Presidents, under the direction of the
President, shall assist in the management of the Corporation and shall perform
- 2 -
<PAGE>
such other duties as may be assigned to them. The President shall designate a
Vice President to act for him in his absence; otherwise, the Vice Presidents in
the order in which they were listed for election at the most recent election of
officers of the Corporation shall act in his place and perform the duties of his
office.
3. SECRETARY: The Secretary shall keep the minutes of meetings of
shareholders, of the Board of Directors and of committees of the Board of
Directors and shall record them in books kept for that purpose, shall keep all
corporate records and archives and shall perform such other duties as may be
assigned to him. In addition, in the absence of the President and all Vice
Presidents, the Secretary shall act in the place of the President and shall
perform all the duties of his office.
ARTICLE IV
----------
EXECUTION OF INSTRUMENTS
------------------------
The President, a Vice President, the Secretary, an Assistant Secretary,
the Treasurer or an Assistant Treasurer, and each of them, shall have authority
to execute in the name of and on behalf of the Corporation all deeds, mortgages,
powers of attorney, waivers of service, leases, contract, bonds, full or partial
assignments and releases of mortgages, deeds of trust, vendors' liens,
judgments, tax certificates, certificates of purchase or other securities, and
any and all other instruments that are necessary or proper to be executed in the
transaction of the Corporation's business, and to affix the corporate seal
thereto when necessary. The Board of Directors may from time to time authorize
other officers and non-officer employees to execute instruments and to affix the
corporate seal thereto.
ARTICLE V
---------
INDEMNIFICATION OF DIRECTORS AND OFFICERS
-----------------------------------------
The Corporation shall, to the full extent permitted by the General
Corporation Law of Ohio, indemnify any person who is or was a director or
officer of the Corporation and whom it may indemnify pursuant thereto. The
Corporation may, within the sole discretion of the Board of Directors, indemnify
in whole or in part any other persons whom it may indemnify pursuant thereto.
ARTICLE VI
----------
CERTIFICATES FOR SHARES
-----------------------
If any certificate for shares is lost, stolen or destroyed, a new
certificate may be issued upon such terms or under such rules as the Board of
Directors may from time to time determine.
- 3 -
<PAGE>
ARTICLE VII
-----------
SEAL
----
The seal of the Corporation shall be in such form as the Board of
Directors may from time to time determine.
ARTICLE VIII
------------
FISCAL YEAR
-----------
The fiscal year of the Corporation shall end on December 31 of each
year, or on such date as the Board of Directors may from time to time determine.
- 4 -
EXHIBIT (8)(i)
SERVICE AGREEMENT
THIS SERVICE AGREEMENT (hereinafter called "Agreement") dated December 1,
1995, by and between AMERICAN ANNUITY GROUP, INC.(hereinafter called "AAG") and
ANNUITY INVESTORS LIFE INSURANCE COMPANY (hereinafter called "AILIC").
WHEREAS, AAG has extensive experience in the administration of annuity
business; and
WHEREAS, AILIC is a subsidiary of AAG, and desires that AAG perform certain
administrative, accounting and other services (hereinafter called "Services")
for AILIC in its business operations and desires further to make use in its
day-to-day operations of certain property, equipment, and facilities
(hereinafter called "Facilities") of AAG and its subsidiaries as AILIC may
request; and
WHEREAS, AAG and AILIC contemplate that such an arrangement will achieve
certain operating economies and improve Services to the benefit of AAG, AILIC
and AILIC's policyholders; and
WHEREAS, AAG and AILIC wish to assure that all charges for Services and the
use of Facilities incurred hereunder are reasonable and in accordance with the
requirements of applicable law and regulations and to the extent practicable
reflect actual costs and are arrived at in a fair and equitable manner, and that
estimated costs, whenever used, are adjusted periodically, to bring them into
alignment with actual costs; and
WHEREAS, AAG and AILIC wish to identify the Services to be rendered to
AILIC and AAG and its subsidiaries and the Facilities to be used by AILIC and to
provide a method for determining the charges to be made to AILIC.
NOW, THEREFORE, in consideration of the premises and of the promises set
forth herein, and intending to be legally bound hereby, AAG and AILIC agree as
follows:
1. PERFORMANCE OF SERVICES AND USE OF FACILITIES. AAG agrees to the extent
requested by AILIC to perform such Services for AILIC as AILIC determines to be
reasonably necessary in the conduct of its business and operations.
AAG agrees to the extent requested by AILIC to make available its personnel
and Facilities to AILIC as AILIC may determine to be reasonably necessary in the
conduct of its business and operations, including but not limited to the
following functions: policy administration; accounting and auditing services;
actuarial; marketing; legal; administrative and other regulatory matters;
general corporate matters; contract matters; use of data processing and computer
equipment; use of business property, whether owned or leased; and use of
communications equipment. It is the intent of the parties that AAG will perform
all services which AILIC requires in connection with its business of marketing,
<PAGE>
issuing and servicing fixed and variable annuities and provide all Facilities
needed in connection with such business. Notwithstanding the foregoing, this
Agreement is not intended to cover investment services or policy distribution
which may be the subject of separate agreements.
AAG agrees at all times to use its best efforts to maintain sufficient
personnel and Facilities of the kind necessary to perform the Services sent
forth in this Agreement. AAG shall have the right upon thirty (30) days prior
written notice to and non-disapproval by the Ohio Department of Insurance to
subcontract with those subsidiaries, affiliates or unrelated third parties
(hereinafter "Subcontractors") accepted in writing by AILIC to perform any
Services and provide any personnel and Facilities which AAG is obligated to
provide to AILIC pursuant to this Agreement and in strict accordance with the
terms, conditions and limitations contained in this Agreement; provided,
however, AAG shall not be relieved of its obligations, or of any liability
hereunder to AILIC arising as a result of any failures of SUBCONTRACTORS to
perform. Until changed in accordance with the foregoing, Services shall be
provided by AAG.
(a) CAPACITY OF PERSONNEL; STATUS OF FACILITIES, Whenever AAG utilizes its
personnel to perform Services for AILIC pursuant to this Agreement, such
personnel shall at all times remain employees of AAG subject solely to its
direction and control and AAG shall alone retain full liability to such
employees for their welfare, salaries, fringe benefits, legally required
employer contributions and tax obligations.
No facility of AAG used in performing Services for or subject to use by
AILIC shall be deemed to be transferred, assigned, conveyed or leased by
performance or use pursuant to this Agreement.
(b) EXERCISE OF JUDGMENT IN RENDERING SERVICES. In providing any Services
hereunder which require the exercise of judgment by AAG, AAG shall perform any
such Services in accordance with any standards and guidelines AILIC develops and
communicates to AAG. In performing any Services hereunder, AAG shall at all
times act in a manner reasonably calculated to be in, or not opposed to, the
best interests of AILIC. AAG shall have no liability for any action taken or
omitted by it in furnishing Services and Facilities under this Agreement, in
good faith and without gross negligence or willful misconduct.
(c) CONTROL. The performance of Services by AAG for AILIC pursuant to this
Agreement shall in no way impair the absolute control of the business and
operations of AAG or AILIC by their respective Boards of Directors. AAG shall
act hereunder so as to assure the separate operating identity of AILIC as
required pursuant to the laws of the State of Ohio.
2. SERVICES. The performance of services by AAG under this Agreement with
respect to the business and operations of AILIC shall at all times be subject to
the direction and control of the Board of Directors of AILIC.
- 2 -
<PAGE>
Subject to the foregoing and to the terms and conditions of this Agreement,
AAG shall provide to AILIC the Services set forth below.
(a) POLICY ADMINISTRATION. Under the general supervision of the Board of
Directors of AILIC, AAG shall provide all services in connection with policy
administration and policyholder services including: policy issuance, premium
processing, loan processing, surrender and annuity processing and policyholder
services.
(b) ACCOUNTING AND AUDITING. Under the general supervision of the Board of
Directors of AILIC, AAG shall provide the following accounting services:
preparation and maintenance of the financial statements and reports including
annual and quarterly statements on both statutory and GAAP bases and tax
returns, and processing of the related financial records and transactions of
AILIC. AAG shall also provide such assistance as may be required with respect to
tax and auditing services.
(c) ACTUARIAL. Under the general supervision of the Board of Directors of
AILIC, AAG shall provide all actuarial services needed in connection with
AILIC's business including policy design and development and reserve valuation.
(d) MARKETING. Under the general supervision of the Board of Directors of
AILIC, AAG shall provide all marketing services needed in connection with
AILIC's business including market research, development of marketing materials
and campaigns and recruitment of agents.
(e) LEGAL. Under the general supervision of the Board of Directors of
AILIC, AAG shall provide all legal services and compliance services needed in
connection with AILIC's business including company licensing, product approval
and other regulatory matters.
(f) ADMINISTRATIVE AND OTHER REGULATORY MATTERS. Under the general
supervision of the Board of Directors of AILIC, AAG shall provide all
administrative and regulatory services needed in connection with AILIC's
business.
(g) CORPORATE MATTERS. Under the general supervision of the Board of
Directors of AILIC, AAG shall provide services with respect to general corporate
matters involving AILIC.
(h) POLICY MATTERS. Under the general supervision of the Board of Directors
of AILIC, AAG shall provide all services in connection with the development of
policies and products to be marketed by AILIC.
(i) DATA PROCESSING AND COMPUTER EQUIPMENT. Under the general supervision
of the Board of Directors of AILIC, AAG shall provide telecommunications
services and electronic data processing services, Facilities and integration,
including software programming and documentation and hardware utilization.
- 3 -
<PAGE>
3. CHARGES. AILIC shall not be charged by AAG for the Services and Facilities
provided by AAG until such time as AILIC becomes an operating entity issuing
annuity contracts. All expenses incurred prior to such time in the development
of the annuity contracts shall be borne by AAG under the general supervision of
the Board of Directors of AILIC.
After such time, the charge to AILIC for such Services and Facilities shall
be at a rate as mutually agreed upon plus a reasonable charge for direct
overhead, the amount of such charge for overhead to be agreed upon by the
parties from time to time and reported annually.
The bases for determining such charges for Services and Facilities to AILIC
shall be those used by AAG for internal cost distribution including, where
appropriate, Activity Based Costing records. Such bases shall be modified and
adjusted by mutual agreement where necessary or appropriate to reflect fairly
and equitably the actual incidence of cost incurred by AAG and/or SUBCONTRACTORS
on behalf of AILIC.
4. PAYMENT. AAG and/or SUBCONTRACTORS shall submit to AILIC within thirty (30)
days of the end of each calendar month a written statement of the amount
estimated to be owed by AILIC for Services and the use of personnel or
Facilities pursuant to this Agreement in that calendar month and AILIC shall pay
to the party rendering the statement within thirty (30) days following receipt
of such written statement the amount set forth in the statement.
Within thirty (30) days after the end of each calendar quarter, AAG and/or
SUBCONTRACTORS will submit to AILIC a detailed written statement of the charges
due from AILIC to AAG and/or SUBCONTRACTORS in the preceding calendar quarter,
including charges not included in any previous statements, and any balance
payable as shown in such statement shall be paid within fifteen (15) days
following receipt of such written statement by AILIC.
5. ACCOUNTING RECORDS AND DOCUMENTS. AAG and/or SUBCONTRACTORS shall be
responsible for maintaining full and accurate accounting records of all Services
rendered and Facilities used pursuant to this Agreement and such additional
information as AILIC may reasonably request for purposes of its internal
bookkeeping and accounting operations. The accounting records to be maintained
by AAG shall include any records required to be maintained by AILIC under
applicable laws. AAG and/or SUBCONTRACTORS shall keep such accounting records
insofar as they pertain to the computation of charges hereunder available at its
principal offices for audit, inspection and copying by AILIC or any governmental
agency having jurisdiction over AILIC during all reasonable business hours. With
respect to accounting and statistical records prepared by AAG by reason of its
performance under this Agreement, summaries of such records shall be delivered
to AILIC within thirty (30) days from the end of the month to which the records
pertain.
- 4 -
<PAGE>
6. OTHER RECORDS AND DOCUMENTS. All books, records, and files established and
maintained by AAG and/or SUBCONTRACTORS by reason of its performance under this
Agreement which, absent this Agreement, would have been held by AILIC shall be
deemed the property of AILIC, and shall be subject to examination by AILIC and
persons authorized by it at all times, and shall be delivered to AILIC at least
quarterly. With respect to original documents other than those provided for in
Section 5 hereof which would otherwise be held by AILIC and which may be
obtained by AAG in performing under this Agreement, AAG shall deliver such
documents to AILIC within thirty (30) days of their receipt by AAG except where
continued custody of such original documents is necessary to perform hereunder
7. LICENSING. AAG shall be responsible for obtaining any licenses or permits
needed to provide the services described herein and shall be responsible for
providing personnel who have any required license or permit.
8. RIGHT TO CONTRACT WITH THIRD PARTIES. Nothing herein shall be deemed to grant
AAG an exclusive right to provide Services to AILIC, and AILIC retains the right
to contract with any third party, affiliated or unaffiliated, for the
performance of Services or for the use of Facilities as are available to or have
been requested by AILIC pursuant to this Agreement. Similarly, AAG retains the
right to contract with any third party, affiliated or unaffiliated, to perform
services or to provide facilities, identical or similar to those being performed
or provided herein.
9. TERMINATION AND MODIFICATION. This Agreement shall remain in effect until
terminated by either AAG or AILIC upon giving thirty (30) days or more advance
written notice, provided that AILIC shall have the right to elect to continue to
receive data processing Services and/or to continue to utilize data processing
Facilities and related software for up to one year from the date of such notice.
Upon termination, AAG shall promptly deliver to AILIC all books and records that
are, or are deemed by this Agreement to be, the property of AILIC.
10. SETTLEMENT ON TERMINATION. No later than ninety (90) days after the
effective date of termination of this Agreement, AAG shall deliver to AILIC a
detailed written statement for all charges incurred and not included in any
previous statement to the effective date of termination. The amount owned
hereunder shall be due and payable within thirty(30) days of receipt of such
statement.
11. EFFECTIVE DATE. This Agreement shall become effective upon the later of (i)
the date hereof, or (ii) the receipt of any required approval of the Ohio
Department of Insurance or the expiration of any waiting period provided for by
the laws or regulations of the State of Ohio.
12. ASSIGNMENT. This Agreement and any rights pursuant hereto shall not be
assignable by either party hereto, except as set forth herein or by operation of
law. Except as and to the extent specifically provided in this Agreement,
- 5 -
<PAGE>
nothing in this Agreement, expressed or implied, is intended to confer on any
person other than the parties hereto, or their respective legal successors, any
rights, remedies, obligations or liabilities, or to relieve any person other
than the parties hereto, or their respective legal successors, from any
obligations or liabilities that would otherwise be applicable. The covenants and
agreements contained in this Agreement shall be binding upon, extend to and
inure to the benefit of the parties hereto, their, and each of their, successors
and assigns respectively.
13. GOVERNING LAW. This Agreement is made pursuant to and shall be governed by,
interpreted under, and the rights of the parties determined in accordance with,
the laws of the State of Ohio.
14. ARBITRATION. Any unresolved difference of opinion between the parties
arising out of or relating to this Agreement, or the breach thereof, except as
provided in Section 3, shall be settled by arbitration in accordance with the
Commercial Arbitration Rules of the American Arbitration Association and the
Expedited Procedures thereof, and judgment upon the award rendered by the
Arbitrator may be entered in any Court having jurisdiction thereof. The
arbitration shall take place in Cincinnati, Ohio.
15. NOTICE. All notices, statements or requests provided for hereunder shall be
deemed to have been duly given when delivered by hand to an officer of the other
party, or when deposited with the U.S. Postal Service, as certified or
registered mail, postage prepaid, addressed or to such other person or place as
each party may from time to time designate by written notice sent as aforesaid.
If to AAG:
AMERICAN ANNUITY GROUP, INC.
250 East Fifth Street, 10th Floor
Cincinnati, OH 45202
Attention: General Counsel
Phone Number (513) 333-5515
Fax Number (513) 357-3397
If to AILIC:
ANNUITY INVESTORS LIFE INSURANCE COMPANY
250 East Fifth Street, 10th Floor
Cincinnati, OH 45202
Attention: General Counsel
Phone Number (513) 333-5515
Fax Number (513) 357-3397
16. ENTIRE AGREEMENT. This Agreement, together with such Amendments as may from
time to time be executed in writing by the parties, constitutes the entire
Agreement between the parties with respect to the subject matter hereof.
- 6 -
<PAGE>
In witness whereof, the parties hereunto set their hands as of the date
first above written.
AMERICAN ANNUITY GROUP, INC.
By: /s/ Mark F. Muething
-----------------------------
Its: Senior Vice President
ANNUITY INVESTORS LIFE INSURANCE
COMPANY, INC.
By: /s/ Mark F. Muething
-----------------------------
Its: Senior Vice President
- 7 -
EXHIBIT (8)(j)
AGREEMENT
THIS AGREEMENT made this 2nd day of February, 1995 by and among AAG
SECURITIES, INC. ("AAG Securities"), AAG INSURANCE AGENCY, INC. ("AAG Agency")
and such other subsidiaries and affiliates of AAG Agency which may from
time-to-time become a party to this Agreement.
WHEREAS, AAG Securities is a member of the National Association of
Securities Dealers, Inc. ("NASD") and registered as a broker-dealer in various
jurisdictions;
WHEREAS, AAG Securities has registered representatives who have the
requisite licenses to sell both securities and insurance products;
WHEREAS, AAG Agency and certain subsidiaries are licensed as life insurance
agencies in various jurisdictions;
WHEREAS, AAG Securities and AAG Agency are both wholly-owned subsidiaries
of American Annuity Group, Inc.; and
WHEREAS, AAG Securities and AAG Agency desire to cooperate in connection
with the marketing and sale of variable annuities.
NOW, THEREFORE, in consideration of the foregoing and the mutual promises
and covenants contained herein, the parties agree as follows:
1. Parties to Agreements. AAG Securities and AAG Agency may from
time-to-time mutually decide that it is in their mutual best interests to enter
into agreements with issuers of variable annuity products to become agents for
such issuers. Any selling agreement or general agent agreement to be entered
into with any such issuer shall be executed by AAG Securities and AAG Agency or
one of its subsidiaries which is properly licensed as a life insurance agency in
the appropriate jurisdiction.
2. Agents. Only those individuals who are licensed with both AAG Securities
and AAG Agency or one of its subsidiaries will be permitted to market, sell or
service variable annuities through AAG Securities or AAG Agency or one of its
subsidiaries. Individuals who are licensed with the appropriate entities may
market, sell and service only those variable annuities which are subject to a
selling agreement or general agent agreement as to which AAG Securities and AAG
Agency or one of its subsidiaries are parties.
3. Licensing Files. AAG Securities shall be responsible for maintaining
licensing files for all individuals who are licensed with AAG Securities and AAG
Agency or one of its subsidiaries to permit the marketing, sale and servicing of
variable annuities.
4. Supervision. In each jurisdiction in which the parties hereto intend to
market variable annuities, AAG Securities and AAG Agency or one of its
subsidiaries shall designate a person to be responsible for supervision of all
<PAGE>
variable annuity marketing. Such individual must be (i) an NASD registered
principal of AAG Securities, and ii) licensed with AAG Agency or one of its
subsidiaries to sell variable annuities.
5. Additional Duties. AAG Securities shall also perform the duties set
forth on Exhibit "A" attached hereto.
6. Commissions. All net dealer commissions earned on the sale of variable
annuity contracts shall be the property of AAG Agency or one of its
subsidiaries. For purposes of the foregoing, "net dealer commissions" shall mean
all commissions paid by the issuer of the contract that remain after all
commissions have been paid to properly licensed agents pursuant to agreements
among that agent, AAG Securities and AAG Agency or one of its subsidiaries.
7. Payment of Commissions. AAG Securities shall serve as the agent for the
payment of all commissions on variable annuities sold pursuant to this
Agreement. AAG Securities shall disburse such amounts and invoice AAG Agency or
one of its subsidiaries for the amounts paid. AAG Agency or one of its
subsidiaries agrees to promptly reimburse AAG Securities for the commissions
disbursed.
8. Accounting. All accounting for the commissions earned on variable
annuities sold pursuant to this Agreement shall be done in accordance with all
applicable state and federal laws and regulations and the rules of the NASD.
9. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Ohio.
10. Additional Parties. From time-to-time, subsidiaries of AAG Agency may
become parties to this Agreement by executing an Addendum agreeing to be bound
by the provisions hereof.
IN WITNESS WHEREOF, the parties have hereunto set their hands as of the
date first above written.
AAG SECURITIES, INC.
BY: /s/ Mark F. Muething
----------------------
ITS: Senior Vice President
AAG INSURANCE AGENCY, INC.
BY: /s/ Mark F. Muething
----------------------
ITS: Senior Vice President
- 2 -
<PAGE>
EXHIBIT A
. AAG Securities will operate and be responsible for all securities services
provided in connection with the sale of insurance products.
. AAG Securities will be responsible for the control and supervision of all
agents selling insurance securities under this arrangement.
. AAG Securities will be responsible for training, controlling, supervising
and shall assume responsibility for all securities activities of agents
selling insurance securities under this arrangement.
. AAG Securities will conduct periodic audits of agents selling securities
under this arrangement to ensure that they are in compliance with AAG
Securities' operating procedures and the federal securities law.
. AAG Securities will approve and assume responsibility for any advertising
or promotional materials pertaining to insurance securities prior to
distribution to ensure that these materials are in compliance with federal
securities laws and the rules of the NASD.
. AAG Securities will comply with all statutory and regulatory requirements
of the federal securities laws and the rules of the NASD in connection with
the sale of insurance securities.
. AAG Securities will ensure that all its registered representatives comply
with all statutory and regulatory requirements of the federal securities
laws and the rules of the NASD that are applicable to registered
representatives.
- 3 -
EXHIBIT (8)(k)
INVESTMENT SERVICES AGREEMENT
-----------------------------
THIS INVESTMENT SERVICES AGREEMENT ("Agreement"), dated and effective
as of November 28, 1995 between ANNUITY INVESTORS LIFE INSURANCE COMPANY, an
Ohio corporation ("Company"), and AMERICAN ANNUITY GROUP, INC., a Delaware
corporation ("American").
WHEREAS, Company seeks to obtain information and advice with respect to
the investment of its assets; and
WHEREAS, American, utilizing its own employees along with services
provided by its affiliate, American Money Management ("AMM"), is willing and
able to supply such investment services pursuant to the terms and conditions set
forth below;
NOW, THEREFORE, for the consideration herein stated, the parties agree
as follows:
1. INVESTMENT SERVICES.
--------------------
1 American shall furnish investment services to Company, which services
shall include the following:
.1 to counsel and advise Company in connection with the formulation
of investment programs and strategies designed to accomplish Company's
investment objectives; and
.2 to manage the investment of Company's portfolios of Invested
Assets (as later defined) in accordance with investment policies, objectives,
directions and guidelines established by Company, as set forth in Section below,
and, in connection therewith, to have full discretion and authority, without
prior consultation or prior approval, to buy, sell and otherwise trade in
stocks, bonds and other securities or assets and take such other actions which
American shall deem requisite, appropriate or advisable.
2 Custody and control of the securities and all other assets comprising
Company's investment portfolio shall at all times be subject to the direction
and control of Company, acting through its Board of Directors or an appropriate
committee thereof. All purchases and sales of securities shall be in the name of
Company, and all certificates or other instruments representing its investments
shall be held by Company or in accounts at depository institutions designated by
Company or in book form where appropriate. Such securities will be held in
accounts segregated from those of American or its affiliates.
3 American agrees that the investment services it furnishes will be in
accordance with the general, investment policies, objectives and guidelines
<PAGE>
(collectively, "Guidelines") submitted by American to Company and approved by
the Board of Directors of Company or an appropriate committee of the Board of
Directors of Company.
4 The Company shall at all times keep American fully informed as to the
funds available, or to become available, for investment, and generally as to its
financial condition. The Company shall furnish American with copies of financial
statements and with other information with regard to its affairs, as American
may from time to time request.
5 Notwithstanding Section 1.1 above, American shall not (i) invest any
of the Invested Assets in securities of American or any of its affiliates or any
entity controlled by any of them, (ii) cause Company to purchase any securities
from, or sell any securities to, American or any of its affiliates or any entity
controlled by any of them or (iii) invest any of such Invested Assets in any
investment opportunity which was previously made available to and declined by
American, in each case without first obtaining the approval of the Board of
Directors of the Company or a appropriate Committee thereof.
6 For purposes of this Agreement, "Invested Assets" shall mean bonds,
stocks (common and preferred), short term investments and similar invested
assets carried on the Company's statutory convention statements on Schedules BA,
DA and D as admitted assets as permitted by applicable law.
2. PURCHASE AND SALE OF SECURITIES.
--------------------------------
American shall place all orders for the purchase and sale of portfolio
securities for Company accounts with brokers or dealers selected by American and
shall seek to execute portfolio transactions on terms which are advantageous to
Company in selecting brokers or dealers to execute transactions. American shall
not be obligated to solicit competitive bids or seek the lowest available
commission cost.
3. OTHER SERVICES; REPORTS AND RECORDS.
------------------------------------
1 American shall maintain adequate records relating to the furnishing
of investment services under this Agreement, including those with respect to the
acquisition and disposition of securities, and shall provide Company with all
reports and documentation necessary for proper accounting and regulatory
reporting. American shall provide to Company such oral or written reports as to
its services provided under this Agreement as Company shall reasonably require.
2 All records maintained pursuant to this Agreement shall be deemed the
property of Company and shall be subject to examination by Company and by
persons authorized by it, or by governmental authorities, at all times upon
reasonable notice. Except as expressly authorized in this Agreement or directed
- 2 -
<PAGE>
by Company in writing, American shall keep confidential such records and other
information obtained by reason of this Agreement. Upon termination of this
Agreement, American shall promptly return all such records to Company.
4. INVESTMENT FEES; EXPENSES.
--------------------------
1 In full compensation and consideration for the performance of its
obligations hereunder, Company shall pay to American an annual fee equal to .15%
of the statutory carrying value of Invested Assets. The fee paid by the Company
shall not in any case exceed the actual cost of the services provided by
American. In addition, American shall be entitled to reimbursement for the
reasonable fees and expenses of its outside legal counsel for necessary legal
services rendered to American in connection with the performance of its
obligations hereunder. All such fees and expenses shall be paid by Company.
Payments due hereunder shall be computed by American and paid by Company on a
quarterly basis measured as of the end of the preceding calendar quarter based
on the statutory carrying value of Invested Assets at such date. The quarterly
portion of the fee shall be billed within 30 days after the end of each calendar
quarter or portion thereof in which services are rendered under this Agreement
and paid within 10 days after receipt of the bill.
2 American shall furnish at its own expense necessary executive and
other personnel for providing investment services to Company hereunder,
including personnel to perform clerical, bookkeeping, accounting and other
office functions. Company shall be responsible for the expenses of (a) brokerage
commissions, issue and transfer taxes and other costs in connection with
securities transactions to which Company is a party, including any portion of
such commissions attributable to research and brokerage services, (b) taxes
payable by Company to federal, state and other governmental agencies, and (c)
custodial fees and expenses.
5. NON-EXCLUSIVITY OF SERVICES.
----------------------------
The services of American to be provided hereunder are not to be deemed
exclusive and American shall be free to provide similar services for its own
account and the accounts of other affiliates, provided that such services do not
materially interfere with services to be rendered hereunder.
6. SUBCONTRACTING.
---------------
Company acknowledges that American intends to subcontract with American
Money Management Corporation to provide a portion of the services to be rendered
hereunder. The arrangement with American Money Management Corporation to provide
those services shall not relieve American of any liability or responsibility
hereunder and any cost or expense of obtaining such services shall be the sole
responsibility of American.
- 3 -
<PAGE>
7. LIABILITY; INDEMNIFICATION.
---------------------------
1 Neither American nor any of its directors, officers or employees or
other persons affiliated with American shall have any liability hereunder for
any act, omission, misstatement or error in judgment in the course of, or in
connection with, providing investment advisory services under this Agreement, or
for any losses that may be sustained from such investment advisory services.
Company shall indemnify and hold harmless American and its directors, officers,
employees and other affiliated persons from and against any and all liability,
claims and damages arising from or in connection with providing services
hereunder; provided, however, that the foregoing shall not relieve American from
liability for negligence, gross negligence or willful misfeasance in providing
services under this Agreement.
2 As to all other services provided by American hereunder, neither
American nor any of its directors, officers or employees or other persons
affiliated with American shall have any liability hereunder for any act,
omission, misstatement or error in judgment in the course of, or in connection
with, providing such other services, or for any losses that may be sustained
from such other services, and Company shall indemnify and hold harmless American
and its directors, officers, employees and other affiliated persons from and
against any and all liability, claims and damages arising from or in connection
with providing such other services hereunder; provided, however, that the
foregoing shall not relieve American from liability for negligence, gross
negligence or willful misfeasance in providing such other services.
8. TERMINATION; RENEGOTIATION.
---------------------------
1 This Agreement shall remain in effect until terminated by any party
thereto at any time upon ninety (90) days written notice to the other party's
normal business address. Upon termination of this Agreement, Company shall pay
pro rata any investment fees due for any portion of a calendar quarter within
ten (10) days following the date of termination.
2 This Agreement shall be subject to renegotiations upon the request of
either party at the end of each three (3) year period during which this
Agreement continues in effect. The party requesting renegotiation shall provide
written notice thereof to the other party's normal business address during the
thirty (30) day period preceding the end of any three (3) year period. If such
renegotiations result in an Agreement which is unsatisfactory to Company, it
shall be entitled to terminate this Agreement in accordance with the terms
hereof.
- 4 -
<PAGE>
9. NOTICES.
--------
Notices or other writings given or sent under or pursuant to this
Agreement shall be in writing and be deemed to have been given or sent if
delivered to the party at its address listed below in person or by telex or
telecopy or within two (2) days of mailing if mailed postage prepaid to such
address. The addresses of the parties are:
Annuity Investors Life Insurance Company
250 East Fifth Street
Cincinnati, Ohio 45202
Attn: General Counsel
with a copy to:
American Annuity Group, Inc.
250 East Fifth Street
Cincinnati, Ohio 45202
Attn: General Counsel
Each party may change its address by giving notice as herein required.
10. SOLE INSTRUMENT.
----------------
This instrument constitutes the sole and only agreement of the parties
hereto relating to the subject matter hereof and correctly sets forth the
rights, duties, and obligations of each party to the other as of its date.
11. WAIVER OR MODIFICATION.
-----------------------
No waiver or modification of this Agreement shall be effective unless
reduced to a written document signed by the party to be charged.
12. GOVERNING LAW.
--------------
This Agreement shall be governed by and construed in accordance with
the laws of the State of Ohio.
13. ASSIGNMENT.
-----------
No party to this Agreement shall have the right to sell, transfer,
delegate, or assign this Agreement or any of its rights or duties hereunder to
any person, firm or corporation at any time during the term hereof, and any
proposed assignee shall acquire no rights nor be able to assume any obligations
unless the written consent of the other party to this Agreement is given before
- 5 -
<PAGE>
such assignment or delegation takes place. However, subject to this paragraph,
this Agreement binds and inures to the benefit of the parties, their successors
and assigns.
14. COMPLIANCE WITH APPLICABLE LAW. This Agreement shall be performed in
accordance with the requirements of the Securities Act of 1933, Securities
Exchange Act of 1934, Investment Company Act of 1940, Investment Advisors Act of
1940 and the applicable rules and regulations of the Securities and Exchange
Commission promulgated thereunder, to the extent that any of the foregoing are
applicable to the subject matter of this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of
November 28, 1995, effective for all purposes as of such date for services
rendered subsequent to November 28, 1995.
ANNUITY INVESTORS LIFE INSURANCE
COMPANY
BY: /s/ Mark F. Muething
----------------------------
Title: Senior Vice President
AMERICAN ANNUITY GROUP, INC.
BY: /s/ Mark F. Muething
----------------------------
Title: Senior Vice President
- 6 -
EXHIBIT (9)
AMERICAN ANNUITY GROUP, INC.
________________________________________________________________________________
P.O. Box 120
Cincinnati, Ohio 45201
(513) 333-5515
Fax (513) 357-3397
Mark F. Muething
Senior Vice President,
General Counsel and Secretary
December 19, 1996
Annuity Investors Life Insurance Company
250 East Fifth Street
Cincinnati, Ohio 45202
Gentlemen:
This opinion is provided in connection with the Registration Statement
on Form N-4 for the Annuity Investors Variable Account B of which Annuity
Investors Life Insurance Company ("AILIC") is the Depositor. The Registration
Statement has been filed with the Securities and Exchange Commission for the
purpose of registering variable annuity contracts issued by AILIC and interests
in the Annuity Investors Variable Account B under such variable annuity
contracts.
I have examined the Articles of Incorporation and bylaws of AILIC,
minutes of meetings of its Board of Directors and other records, and pertinent
provisions of the Ohio insurance laws, together with such other documents as I
have deemed appropriate. Based on the foregoing it is my opinion that:
1. AILIC is duly organized and validly existing as an insurance
company under the laws of the State of Ohio.
2. Annuity Investors Variable Account B has been validly created
as a Separate Account in accordance with the laws of the State
of Ohio.
3. AILIC has the legal power and authority to create and issue
the variable annuity contracts which are administered within
and by means of the Annuity Investors Variable Account B.
4. The variable annuity contracts to be sold pursuant to the
Registration Statement, when issued, will represent binding
obligations of AILIC in accordance with their terms, provided
<PAGE>
Annuity Investors Life Insurance Company
December 19, 1996
Page 2
such contracts are issued for the consideration set forth
therein and evidenced by appropriate policies and
certificates.
I hereby consent to the filing of this opinion as an exhibit to the
Registration Statement.
Very truly yours,
/s/ Mark F. Meuthing
---------------------------
Mark F. Muething
MFM/lcr
