<PAGE> 1
Registration Statement No. 333-27689
811-08225
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Post-Effective Amendment No. 2
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Post-Effective Amendment No. 3
THE TRAVELERS FUND BD III FOR VARIABLE ANNUITIES
------------------------------------------------
(Exact name of Registrant)
THE TRAVELERS INSURANCE COMPANY
-------------------------------
(Name of Depositor)
ONE TOWER SQUARE, HARTFORD, CONNECTICUT 06183
---------------------------------------------
(Address of Depositor's Principal Executive Offices)
Depositor's Telephone Number, including area code: (860) 277-0111
--------------
ERNEST J. WRIGHT
The Travelers Insurance Company
One Tower Square
Hartford, Connecticut 06183
---------------------------
(Name and Address of Agent for Service)
Approximate Date of Proposed Public Offering:
It is proposed that this filing will become effective (check appropriate box):
immediately upon filing pursuant to paragraph (b) of Rule 485.
- -----
X on May 1, 1999 pursuant to paragraph (b) of Rule 485.
- -----
60 days after filing pursuant to paragraph (a)(1) of Rule 485.
- -----
on pursuant to paragraph (a)(1) of Rule 485.
- ----- -----------
If appropriate, check the following box:
this post-effective amendment designates a new effective date for a
- ----- previously filed post-effective amendment.
<PAGE> 2
PART A
Information Required in a Prospectus
<PAGE> 3
PROSPECTUS
TRAVELERS INDEX ANNUITY
This prospectus describes TRAVELERS INDEX ANNUITY, a single premium variable
annuity contract (the "Contract") issued by The Travelers Insurance Company (the
"Company," "us" or "we"). The Contract is available in connection with certain
retirement plans that qualify for special federal income tax treatment (such as
IRAs) as well as those that do not qualify for such treatment ("nonqualified
Contracts"). Travelers Index Annuity is issued as an individual Contract.
You can choose to have your premium (purchase payment) accumulate on a fixed
basis and/or a variable basis. Your contract value will vary daily to reflect
the investment experience of the subaccounts ("funding options") you select and
any interest credited to the Fixed Option. The variable funding options
currently available are:
Money Market Portfolio
BT INSURANCE FUNDS TRUST
EAFE(R) Equity Index Fund
Small Cap Index Fund
GREENWICH STREET SERIES FUND
Equity Index Portfolio
The Fixed Option is described in Appendix B. Unless specified otherwise, this
prospectus refers to the variable funding options. The Contracts and/or some of
the funding options may not be available in all states. THIS PROSPECTUS IS VALID
ONLY WHEN ACCOMPANIED BY THE CURRENT PROSPECTUSES FOR THE VARIABLE FUNDING
OPTIONS. THESE PROSPECTUSES SHOULD BE READ AND RETAINED FOR FUTURE REFERENCE.
In addition, you can choose to protect your investment by purchasing a guarantee
from the Company called the Principal Protection Feature. If purchased, we will
guarantee that on the Principal Protection Expiration Date (the last day of the
eighth Contract Year), your Contract will be worth at least 115%, 100%, or 90%
(depending on your selection), of your Purchase Payment adjusted for withdrawal
reductions, even if the value of your Contract on that date is less than the
chosen percentage of your original payment. To qualify for the Principal
Protection Feature, you must allocate your original payment to the Protected
Funding Option -- Equity Index Portfolio -- and keep your payment in that
funding option until the Principal Protection Expiration Date. There is a
separate charge for this feature.
This prospectus provides the information that you should know before investing
in the Contract. You can receive additional information about The Travelers Fund
BD III for Variable Annuities ("Fund BD III") by requesting a copy of the
Statement of Additional Information ("SAI") dated May 1, 1999. The SAI has been
filed with the Securities and Exchange Commission ("SEC") and is incorporated by
reference into this prospectus. To request a copy, write to The Travelers
Insurance Company, Annuity Services, One Tower Square, Hartford, Connecticut
06183, call (800) 842-8573 or access the SEC's website (http://www.sec.gov). The
SAI's table of contents appears in Appendix C of this prospectus.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
VARIABLE ANNUITY CONTRACTS ARE NOT DEPOSITS OF ANY BANK, AND ARE NOT INSURED OR
GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENT
AGENCY.
PROSPECTUS DATED MAY 1, 1999
<PAGE> 4
TABLE OF CONTENTS
<TABLE>
<S> <C>
Index of Special Terms................ 2
Summary............................... 3
Fee Tables............................ 6
Condensed Financial Information....... 9
The Annuity Contract.................. 9
Contract Owner Inquiries......... 9
Purchase Payments................ 9
Accumulation Units............... 9
The Funding Options.............. 9
Optional Principal Protection
Feature........................ 10
Principal Protection Expiration
Date........................... 10
Charges and Deductions................ 11
General.......................... 11
Withdrawal Charge................ 11
Free Withdrawal Allowance........ 12
Optional Principal Protection
Fee............................ 12
Principal Protection Cancellation
Charge......................... 13
Administrative Charges........... 13
Mortality and Expense Risk
Charge......................... 13
Funding Option Expenses.......... 14
Premium Tax...................... 14
Changes in Taxes Based Upon
Premium or Value............... 14
Transfers............................. 14
Dollar Cost Averaging............ 14
Access to Your Money.................. 15
Systematic Withdrawals........... 15
Ownership Provisions.................. 16
Types of Ownership............... 16
Beneficiary...................... 16
Annuitant........................ 16
Death Benefit......................... 17
Death Proceeds Before the
Maturity Date.................. 17
Standard Death Benefit........... 17
Enhanced Death Benefit........... 17
Payment of Proceeds.............. 18
Death Proceeds After the Maturity
Date........................... 18
The Annuity Period.................... 19
Maturity Date.................... 19
Allocation of Annuity............ 19
Variable Annuity................. 19
Fixed Annuity.................... 20
Payment Options....................... 20
Election of Options.............. 20
Annuity Options.................. 21
Miscellaneous Contract Provisions..... 21
Right to Return.................. 21
Termination...................... 22
Required Reports................. 22
Suspension of Payments........... 22
Transfers of Contract Values to
Other Annuities................ 22
The Separate Account.................. 23
Performance Information.......... 23
Federal Tax Considerations............ 24
General Taxation of Annuities.... 24
Types of Contracts: Qualified or
Nonqualified................... 24
Nonqualified Annuity Contracts... 24
Qualified Annuity Contracts...... 25
Penalty Tax for Premature
Distributions.................. 25
Ownership of the Investments..... 25
Diversification Requirements..... 25
Other Information..................... 25
The Insurance Company............ 25
Financial Statements............. 26
IMSA............................. 26
Year 2000 Compliance............. 26
Distribution of Variable Annuity
Contracts...................... 27
Conformity with State and Federal
Laws........................... 27
Voting Rights.................... 27
Legal Proceedings And Opinions... 27
APPENDIX A: Condensed Financial
Information......................... A-1
APPENDIX B: The Fixed Option.......... B-1
APPENDIX C: Contents of the Statement
of Additional Information........... C-1
</TABLE>
INDEX OF SPECIAL TERMS
The following terms are italicized throughout the prospectus. Refer to the page
listed for an explanation of each term.
<TABLE>
<S> <C>
Accumulation Unit..................... 9
Annuitant............................. 16
Annuity Payments...................... 18
Annuity Unit.......................... 9
Cash Surrender Value.................. 15
Company (We, Our)..................... 9
Contract Date......................... 9
Contract Owner (You, Your)............ 16
Contract Value........................ 9
Contract Year......................... 9
Fixed Option.......................... B-1
Funding Option(s)..................... 9
Maturity Date......................... 9
Principal Protection Expiration
Date................................ 10
Principal Protection Feature.......... 10
Purchase Payment...................... 9
Written Request....................... 9
</TABLE>
2
<PAGE> 5
SUMMARY:
TRAVELERS INDEX ANNUITY
THIS SUMMARY DETAILS SOME OF THE MORE IMPORTANT POINTS THAT YOU SHOULD KNOW AND
CONSIDER BEFORE PURCHASING THE CONTRACT. PLEASE READ THE PROSPECTUS CAREFULLY.
CAN YOU GIVE ME A GENERAL DESCRIPTION OF THE ANNUITY CONTRACT? The Contract
offered by Travelers Insurance Company is a single payment variable annuity that
is intended for retirement savings or other long-term investment purposes. The
Contract provides a death benefit as well as guaranteed income options. Under a
qualified Contract, you can make a single payment on a tax-deferred basis. Under
a nonqualified Contract, you can make a payment with after-tax dollars. You
direct your payment to one or more of the variable funding options and/or to the
Fixed Option. We guarantee money directed to the Fixed Option as to principal
and interest. The variable funding options are designed to produce a higher rate
of return than the Fixed Option, however, this is not guaranteed. You can also
lose money in the variable funding options.
The Contract, like all deferred variable annuity contracts, has two phases: the
accumulation phase and the payout phase. During the accumulation phase, under a
qualified contract, your tax-deferred contribution accumulates on a tax-deferred
basis and is taxed as income when you make a withdrawal, presumably when you are
in a lower tax bracket. During the accumulation phase, under a nonqualified
contract, earnings on your after-tax contribution accumulate on a tax-deferred
basis and are taxed as income when you make a withdrawal. The payout phase
occurs when you begin receiving regular payments from your Contract. The amount
of money you accumulate in your Contract determines the amount of income
(annuity payments) you receive during the payout phase.
PRINCIPAL PROTECTION GUARANTEE. You can choose to protect your investment by
purchasing a separate guarantee from Travelers. With the Principal Protection
Guarantee you receive, at the end of eight years, 90%, 100% or 115% of your
purchase payment (as selected at purchase), less any partial withdrawals and
related withdrawal charges, or the Contract value -- whichever is greater. Not
all levels may be available for purchase.
After the end of the eighth contract year, you may (a) remain in the contract
and transfer to any funding options, (b) purchase another Index Annuity contract
with the Principal Protection Guarantee, (c) transfer to another annuity
contract or (d) withdraw your contract value. Unless you inform us in writing of
a different investment choice, at the end of the eighth contract year we will
transfer your contract value to the Money Market Portfolio, offered within this
contract.
During the payout phase, you may choose to receive annuity payments from the
Fixed Option or the variable funding options. If you want to receive scheduled
payments from your annuity, you can choose from a number of options.
Once you make an election of an annuity option, it cannot be changed. During the
income phase, you have the same investment choices you had during the
accumulation phase. If amounts are directed to the variable funding options, the
dollar amount of your payments may increase or decrease. The Principal
Protection Feature is not offered during the income phase.
WHO SHOULD PURCHASE THIS CONTRACT? The Contract is currently available for use
in connection with (1) individual nonqualified purchases; (2) Individual
Retirement Annuities (IRAs); and (3) Section 403(b) Rollover (TSA Rollover).
You may purchase the Contract with a single payment of at least $10,000. At this
time, the Company does not permit additional payments.
3
<PAGE> 6
IS THERE A RIGHT TO RETURN PERIOD? If you cancel the Contract within ten days
after you receive it, you will receive a full refund of the Contract Value
(including charges). Where state law requires a longer right to return period,
or the return of purchase payments, the Company will comply. You bear the
investment risk during the right to return period; therefore, the Contract Value
returned may be greater or less than your purchase payment. If the Contract is
purchased as an Individual Retirement Annuity, and is returned within the first
seven days after delivery, your full purchase payment will be refunded; during
the remainder of the right to return period, the Contract Value (including
charges) will be refunded. The Contract Value will be determined at the close of
business on the day we receive a written request for a refund.
WHAT TYPES OF INVESTMENT OPTIONS ARE AVAILABLE? You can direct your money into
the Fixed Account or any or all of the variable funding options shown on the
cover page. The funding options are described in the accompanying fund
prospectuses. Depending on market conditions, you may make or lose money in any
of these options.
The value of the Contract will vary depending upon the investment performance of
the funding options you choose. Past performance is not a guarantee of future
results. Performance information that predates the separate account is
considered "nonstandard" by the SEC. Such nonstandard performance is shown in
the Statement of Additional Information that you may request free of charge.
You can transfer between the variable funding options as frequently as you wish
without any current tax implications. Currently there is no charge for
transfers, nor a limit to the number of transfers allowed. The Company may
charge a fee for any transfer requests, or may limit the number of transfers
allowed. The Company, at the minimum, would always allow one transfer every six
months. Please refer to Appendix B for information regarding transfers between
the Fixed Account and variable funding options.
WHAT EXPENSES WILL BE ASSESSED UNDER THE CONTRACT? The Contract has insurance
features and investment features, and there are costs related to each. For
Contracts with a value of less than $50,000, the Company deducts an annual
administrative charge (the "Contract Fee") of $30. For the standard death
benefit, the annual insurance charge is 1.25% of the amounts you direct to the
variable funding options. For the enhanced death benefit, the annual insurance
charge is 1.45% of the amounts you direct to the variable funding options.
Regardless of the death benefit chosen, there is an administrative charge of
.15% annually of the amounts directed to the variable funding options. Each
variable funding option also charges for management and other expenses.
An optional Contract feature, the Principal Protection Guarantee, provides that
you will receive a stated percent of your single payment, less partial
withdrawals and related withdrawal charges, on the Principal Protection
Guarantee Expiration Date. There is an annual insurance charge of up to 2.00% if
you select this contract feature. If you withdraw your money before the maturity
date and if you have selected the Principal Protection Guarantee, the Company
may deduct an additional Principal Protection Cancellation Charge (0%-4%).
We may deduct a withdrawal charge equal to a percentage of the purchase payment
withdrawn from the Contract. If you withdraw all amounts under the contract, or
if you begin receiving annuity payments, the Company may be required by your
state to deduct a premium tax. Please refer to the Fee Table for more
information about the charges.
HOW WILL MY CONTRIBUTIONS AND WITHDRAWALS BE TAXED? Generally, the payments you
make to a qualified Contract during the accumulation phase are made with
before-tax dollars. You will be taxed on your purchase payments and on any
earnings when you make a withdrawal or begin receiving annuity or income
payments. Under a nonqualified Contract, payments to the contract are made with
after-tax dollars, and any earnings will accumulate tax-deferred. You will be
taxed on these earnings when they are withdrawn from the Contract.
For owners of qualified Contracts, if you reach a certain age, you may be
required by federal tax laws to begin receiving payments from your annuity or
risk paying a penalty tax. In those cases, we
4
<PAGE> 7
can calculate and pay you the minimum required distribution amounts. If you are
younger than 59 1/2 when you take money out, you may be charged a 10% federal
penalty tax on the amount withdrawn.
HOW MAY I ACCESS MY MONEY? You can take withdrawals any time during the
accumulation phase. A withdrawal charge may apply. The amount of the charge
depends on a number of factors, including the length of time since the purchase
payment was made (6% if withdrawn within one year, gradually decreasing to 0%
for payments held by the Company for 9 years or more). After the first contract
year, you may withdraw up to 10% of the contract value (as of the previous
Contract year end) without a withdrawal charge. The Principal Protection
Cancellation Charge may also apply if you have elected the Principal Protection
Guarantee, and withdraw before the end of the eighth contract year.
Additionally, you may also have to pay income taxes and a tax penalty on taxable
amounts you withdraw.
WHAT IS THE DEATH BENEFIT UNDER THE CONTRACT? The death benefit applies upon
the first death of an owner, joint owner or annuitant. Assuming you are the
annuitant, if you die before you move to the income phase, the person you have
chosen as your beneficiary will receive a death benefit. The death benefit paid
depends on your age at the time of your death. The death benefit value is
determined at the close of the business day on which the Company's Home Office
receives due proof of death, and written payment instructions. In most states,
you may choose between the standard death benefit and the enhanced death
benefit. Certain states may have varying age requirements. Please refer to the
Death Benefit Section in the prospectus for details.
ARE THERE ANY ADDITIONAL FEATURES? This Contract has other features you may be
interested in including:
- DOLLAR COST AVERAGING. This is a program that allows you to invest a
fixed amount of money in funding options either monthly or quarterly,
theoretically giving you a lower average cost per unit over time than a
single one-time purchase. This program is not available if you have
selected the Principal Protection Feature.
- SYSTEMATIC WITHDRAWAL OPTION. Before the maturity date, you can arrange
to have money sent to you at set intervals throughout the year. Of
course, any applicable income and penalty taxes will apply on amounts
withdrawn.
5
<PAGE> 8
FEE TABLE
- --------------------------------------------------------------------------------
CONTRACT OWNER TRANSACTION EXPENSES
<TABLE>
<S> <C>
WITHDRAWAL CHARGE (as a percentage of original purchase
payment withdrawn):
LENGTH OF TIME FROM PURCHASE PAYMENT
</TABLE>
<TABLE>
<CAPTION>
(NUMBER OF YEARS) CHARGE
<S> <C>
1 6%
2 6%
3 5%
4 5%
5 4%
6 4%
7 3%
8 2%
9 and over 0%
</TABLE>
<TABLE>
<S> <C>
ANNUAL CONTRACT ADMINISTRATIVE CHARGE
(Waived if contract value is $50,000 or more) $30
ANNUAL SEPARATE ACCOUNT CHARGES:
(as a percentage of the average daily net assets of the
Separate Account)
</TABLE>
<TABLE>
<CAPTION>
STANDARD ENHANCED
DEATH DEATH
BENEFIT BENEFIT
- ---------------------------------------------------------------------------------
<S> <C> <C>
Mortality and Expense Risk Charge........................... 1.25% 1.45%
Administrative Charge....................................... 0.15% 0.15%
------- -------
Total Separate Account Charges............................ 1.40% 1.60%
</TABLE>
FUNDING OPTION EXPENSES:
(as a percentage of average daily net assets of the Funding Option as of
December 31, 1998 unless otherwise noted)
<TABLE>
<CAPTION>
TOTAL ANNUAL
MANAGEMENT OTHER OPERATING
FEE EXPENSES EXPENSES
(AFTER EXPENSES (AFTER EXPENSES (AFTER EXPENSES
PORTFOLIO NAME ARE REIMBURSED) ARE REIMBURSED) ARE REIMBURSED)
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Money Market Portfolio 0.32% 0.08% 0.40%(1)
BT INSURANCE FUNDS TRUST
Small Cap Index Fund 0.05% 0.40% 0.45%(2)
EAFE Index Fund 0.11% 0.54% 0.65%(2)
GREENWICH STREET SERIES FUND
Equity Index Portfolio 0.21% 0.09% 0.30%(3)
</TABLE>
NOTES:
The purpose of the Fee Table is to assist contract owners in understanding the
various costs and expenses that a contract owner will bear, directly or
indirectly. See "Charges and Deductions" in this prospectus for additional
information. Expenses shown do not include premium taxes, which may be
applicable. "Other Expenses" include operating costs of the fund. These expenses
are reflected in each funding option's net asset value and are not deducted from
the account value under the Contract.
(1) Other Expenses have been restated to reflect the current expense
reimbursement arrangement with The Travelers Insurance Company. Travelers
has agreed to reimburse the Fund for the amount by which its aggregate
expenses (including the management fee, but excluding brokerage commissions,
interest charges and taxes) exceeds 0.40%. Without such arrangement, Total
Annual Operating Expenses would have been 0.65% for the MONEY MARKET
PORTFOLIO.
(2) These fees reflect an expense reimbursement arrangement whereby the adviser
has agreed to reimburse the funds an amount based on the weighted average
between the Management Fee and Other Expenses. Without such arrangement, the
Management Fees and Other Expenses for the EAFE INDEX PORTFOLIO and the
SMALL CAP INDEX PORTFOLIO would have been 0.45% and 1.21%, and 0.35% and
1.23%, respectively.
(3) Other Expenses for the EQUITY INDEX PORTFOLIO have been restated to reflect
the current expense reimbursement arrangement whereby the adviser has agreed
to reimburse the Portfolio for the amount by which its expenses exceed
0.30%. Without such arrangement, Total Annual Operating Expenses would have
been 0.42%. In addition, the Portfolio's Management Fee includes 0.06% for
fund administration.
6
<PAGE> 9
EXAMPLE* -- WITHOUT PRINCIPAL PROTECTION*
STANDARD DEATH BENEFIT
Assuming a 5% annual return on assets, a $1,000 investment would be subject to
the following expenses:
<TABLE>
<CAPTION>
IF CONTRACT IS SURRENDERED AT THE IF CONTRACT IS NOT SURRENDERED OR
END OF PERIOD SHOWN: ANNUITIZED AT END OF PERIOD SHOWN:
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------
<CAPTION>
3 5 10
PORTFOLIO NAME 1 YEAR YEARS YEARS YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Money Market Portfolio $80 $112 $146 $230 $20 $62 $106 $230
BT INSURANCE FUNDS TRUST
Small Cap Index Fund 81 113 149 235 21 63 109 235
EAFE Index Fund 83 119 159 255 23 69 119 255
GREENWICH STREET SERIES FUND
Equity Index Portfolio 79 109 141 219 19 59 101 219
</TABLE>
ENHANCED DEATH BENEFIT
Assuming a 5% annual return on assets, a $1,000 investment would be subject to
the following expenses:
<TABLE>
<CAPTION>
IF CONTRACT IS SURRENDERED AT THE IF CONTRACT IS NOT SURRENDERED OR
END OF PERIOD SHOWN: ANNUITIZED AT END OF PERIOD SHOWN:
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------
<CAPTION>
3 5 10
PORTFOLIO NAME 1 YEAR YEARS YEARS YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Money Market Portfolio $82 $118 $156 $250 $22 $68 $116 $250
BT INSURANCE FUNDS TRUST
Small Cap Index Fund 83 119 159 255 23 69 119 255
EAFE Index Fund 85 125 169 276 25 75 129 276
GREENWICH STREET SERIES FUND
Equity Index Portfolio 81 115 151 240 21 65 111 240
</TABLE>
* THE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN. THIS
EXAMPLE REFLECTS THE $30 ANNUAL CONTRACT ADMINISTRATIVE CHARGE AS AN ANNUAL
CHARGE OF .020% OF ASSETS.
7
<PAGE> 10
FEE TABLE WITH PRINCIPAL PROTECTION FEATURE
- --------------------------------------------------------------------------------
CONTRACT OWNER TRANSACTION EXPENSES
<TABLE>
<S> <C> <C> <C>
PRINCIPAL PROTECTION CANCELLATION CHARGE
WITHDRAWAL CHARGE (as a percentage of
(as a percentage of original purchase payment withdrawn
purchase payment withdrawn): from Protected Funding Option):
LENGTH OF TIME FROM PURCHASE PAYMENT
(NUMBER OF YEARS) CHARGE CONTRACT YEAR CHARGE
1 6% 1 4%
2 6% 2 4%
3 5% 3 4%
4 5% 4 3%
5 4% 5 3%
6 4% 6 3%
7 3% 7 2%
8 2% 8 1%
9 and over 0% 9 and over N/A
ANNUAL CONTRACT FEE ADMINISTRATIVE CHARGE
(Waived if contract value is $50,000 or more) $30
</TABLE>
<TABLE>
<S> <C>
ANNUAL SEPARATE ACCOUNT CHARGES:
(as a percentage of the average daily net assets of the
Separate Account)
</TABLE>
<TABLE>
<CAPTION>
STANDARD ENHANCED
DEATH BENEFIT DEATH BENEFIT
---------------------------
<S> <C> <C>
Mortality and Expense Risk Charge........................... 1.25% 1.45%
Principal Protection Fee (maximum)(1)....................... 2.00% 2.00%
Administrative Charge....................................... 0.15% 0.15%
---- ----
Total Separate Account Charges............................ 3.40% 3.60%
</TABLE>
FUNDING OPTION EXPENSES:
(as a percentage of average daily net assets of the Funding Option as of
December 31, 1998, unless otherwise noted)
<TABLE>
<CAPTION>
TOTAL ANNUAL
OPERATING
EXPENSES
MANAGEMENT FEE OTHER EXPENSES (AFTER EXPENSES
(AFTER EXPENSES (AFTER EXPENSES ARE
PORTFOLIO NAME ARE REIMBURSED) ARE REIMBURSED) REIMBURSED)
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Equity Index Portfolio 0.21% 0.09% 0.30%(2)
</TABLE>
NOTES:
The purpose of the Fee Table is to assist contract owners in understanding the
various costs and expenses that a contract owner will bear, directly or
indirectly. See "Charges and Deductions" in this prospectus for additional
information. Expenses shown do not include premium taxes, which may be
applicable. "Other Expenses" include operating costs of the fund. These expenses
are reflected in each funding option's net asset value and are not deducted from
the account value under the Contract.
(1) The Principal Protection Fee is an annual insurance change that varies with
the level of guarantee chosen under the Principal Protection Feature. The
maximum Principal Protection Fee is 2.00% annually.
(2) Other Expenses for the Equity Index Portfolio have been restated to reflect
the current expense reimbursement arrangement whereby the adviser has agreed
to reimburse the Portfolio for the amount by which its expenses exceed
0.30%. Without such arrangement, Total Annual Operating Expenses would have
been 0.42%. In addition, the Portfolio's Management Fee includes 0.06% for
fund administration.
EXAMPLE* - WITH PRINCIPAL PROTECTION
Assuming a 5% annual return, a $1,000 investment would be subject to the
following expenses:
<TABLE>
<CAPTION>
IF CONTRACT IS SURRENDERED AT THE IF CONTRACT IS NOT SURRENDERED OR
END OF PERIOD SHOWN: ANNUITIZED AT END OF PERIOD SHOWN:
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------
<CAPTION>
3 5 10
PORTFOLIO NAME 1 YEAR YEARS YEARS YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
GREENWICH STREET SERIES FUND
Equity Index Portfolio (a) $139 $208 $269 $410 $ 39 $118 $199 $410
(b) 141 214 278 426 41 124 208 426
</TABLE>
- ---------------
(a) Standard Death Benefit
(b) Enhanced Death Benefit
* THE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN. THIS
EXAMPLE REFLECTS THE $30 ANNUAL CONTRACT FEE AS AN ANNUAL CHARGE OF .020% OF
ASSETS.
8
<PAGE> 11
CONDENSED FINANCIAL INFORMATION
- --------------------------------------------------------------------------------
See Appendix A
THE ANNUITY CONTRACT
- --------------------------------------------------------------------------------
Travelers Index Annuity is a contract between the contract owner ("you"), and
Travelers Insurance Company (called "us" or the "Company"). Under this contract,
you make a purchase payment to us and we credit it to your account. The Company
promises to pay you an income, in the form of annuity payments, beginning on a
future date that you choose, the maturity date. The purchase payment accumulates
tax deferred in the funding options of your choice. We offer multiple variable
funding options, and one fixed account option. You assume the risk of gain or
loss according to the performance of the variable funding options. The contract
value is the amount of the purchase payment, plus or minus any investment
experience or interest. The contract value also reflects all surrenders made and
charges deducted. There is generally no guarantee that at the maturity date the
contract value will equal or exceed the total purchase payments made under the
Contract, except as noted under the Principal Protection Feature provisions. The
date the Contract and its benefits become effective is referred to as the
contract date. Each 12-month period following this contract date is called a
contract year.
Certain changes and elections must be made in writing to the Company. Where the
term "written request" is used, it means that written information must be sent
to the Company's Home Office in a form and content satisfactory to us.
CONTRACT OWNER INQUIRIES
If you have any questions about the Contract, call the Company's Home Office at
1-800-842-8573.
PURCHASE PAYMENT
The single purchase payment must be at least $10,000. Under certain
circumstances, we may waive the minimum purchase payment requirement. For a
single purchase payment over $1 million, you must receive the Company's Home
Office approval before we will accept the purchase payment.
We will apply the single purchase payment within two business days after we
receive it in good order at our Home Office. Our business day ends when the New
York Stock Exchange closes, usually 4:00 p.m. Eastern time.
ACCUMULATION UNITS
An accumulation unit is used to calculate the value of a Contract. An
accumulation unit works like a share of a mutual fund. Each funding option has a
corresponding accumulation unit value. The accumulation units are valued each
business day and their values may increase or decrease from day to day. The
number of accumulation units we will credit to your Contract once we receive a
purchase payment is determined by dividing the amount directed to each funding
option by the value of the accumulation unit. We calculate the value of an
accumulation unit for each funding option each day after the New York Stock
Exchange closes. After the value is calculated, your account is credited. During
the annuity period (i.e., after the maturity date), you are credited with
annuity units.
FUNDING OPTIONS
You choose which of the following variable funding options to have your purchase
payment allocated to. These funding options are subsections of the Separate
Account, which invest in the underlying mutual funds. You will find detailed
information about the options and their inherent risks in the current
prospectuses for the funding options which must accompany this prospectus. You
are not investing directly in the underlying mutual funds. Since each option has
varying degrees of risk, please read the prospectuses carefully before
investing. Additional copies of the
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<PAGE> 12
prospectuses may be obtained by contacting your registered representative or by
calling 1-800-842-8573.
If any of the funding options become unavailable under the Contract, or if we
believe that further investment in a funding option is inappropriate for the
purposes of the Contract, we may substitute another funding option. However, we
will not make any substitutions without notifying you, obtaining state approval
if applicable, and without prior approval of the SEC, to the extent required by
the 1940 Act or other applicable law. From time to time we may make new funding
options available.
The current funding options are listed below, along with their investment
advisers:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C>
FUNDING OPTION INVESTMENT OBJECTIVE INVESTMENT ADVISER
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C>
Money Market Portfolio Seeks to provide high current income from Travelers Asset Management
short-term money market instruments while International Corporation
emphasizing preservation of capital and
maintaining a high degree of liquidity.
BT INSURANCE FUNDS TRUST Seeks to replicate, before deduction of Bankers Trust Global
EAFE Equity Index Fund expenses, the total return performance of Investment Management
the EAFE Index.
Small Cap Index Fund Seeks to replicate, before deduction of Bankers Trust Global
expenses, the total return performance of Investment Management
the Russell 2000 Index.
GREENWICH STREET SERIES FUND Seeks to replicate, before deduction of Travelers Investment
Equity Index Portfolio* expenses, the total return performance of Management Company
the S&P 500 Index.
</TABLE>
* IF ELECTED WITH THE PRINCIPAL PROTECTION FEATURE, THIS IS REFERRED TO AS THE
"PROTECTED FUNDING OPTION."
OPTIONAL PRINCIPAL PROTECTION FEATURE
You can choose to protect your investment by purchasing a guarantee called the
Principal Protection Feature. If you purchase this feature, the Company will
guarantee that on the Principal Protection Expiration Date, your Contract will
be worth at least either 115%, 100%, or 90% (depending on the guarantee you
purchased) of your original purchase payment adjusted only for withdrawal
reductions (including the Principal Protection Cancellation Charge), even if the
value of your Contract on that date is less than your original payment. The
purchase payment is not adjusted for administrative charges and mortality and
expense risk charges. To qualify for the Principal Protection Feature, you must
select this feature when you purchase the Contract, and allocate your entire
purchase payment to the Protected Funding Option, the Equity Index Portfolio,
until the Principal Protection Expiration Date. Not all levels of protection may
be purchased at all times. A Principal Protection Fee and a Cancellation Charge
are associated with this feature. (See "Charges and Deductions.")
At this time, the only Protected Funding Option is Equity Index Portfolio. At
some time in the future, we may add additional Protected Funding Options.
If you buy the Principal Protection Feature, you may not transfer out of the
Protected Funding Option before the end of the eighth contract year. You may
withdraw or annuitize all or part of your contract value before the Principal
Protection Expiration Date, subject to a Principal Protection Cancellation
Charge and withdrawal charges. The amounts you withdraw (including the
withdrawal charge and Principal Protection Cancellation Charge) will reduce the
amount of the principal guarantee proportionately.
PRINCIPAL PROTECTION EXPIRATION DATE
If you purchase the Principal Protection Feature, the Company will fulfill its
obligations under that feature on the Principal Protection Expiration Date
(which is the last day of the eighth contract year). On that date, we will
contribute to your contract value any amount needed to bring your
10
<PAGE> 13
contract value up to 115%, 100% or 90%, depending on your selection, of your
original payment adjusted for withdrawal reductions. In addition, on the
Principal Protection Expiration Date, we will transfer your contract value to
the Money Market Portfolio, a money market fund, unless you select, in writing,
a different funding option. On and after the Principal Protection Expiration
Date, you may remain in the Contract and transfer to any funding options,
purchase a new Travelers Index Annuity Contract with the Principal Protection
Feature, annuitize your Contract, exchange this Contract for another annuity
contract, or withdraw your contract value. Your registered representative will
help you with your decision.
CHARGES AND DEDUCTIONS
- --------------------------------------------------------------------------------
GENERAL
We deduct the charges described below. The charges are for the service and
benefits we provide, costs and expenses we incur, and risks we assume under the
Contracts. Services and benefits we provide include:
- the ability for you to make withdrawals and surrenders under the
Contracts;
- the death benefit paid on the death of the contract owner, annuitant, or
first of the joint contract owners,
- the available funding options and related programs (including dollar-cost
averaging, portfolio rebalancing, and systematic withdrawal programs);
- administration of the annuity options available under the Contracts; and
- the distribution of various reports to contract owners.
Costs and expenses we incur include:
- losses associated with various overhead and other expenses associated
with providing the services and benefits provided by the Contracts,
- sales and marketing expenses, and
- other costs of doing business.
Risks we assume include:
- risks that annuitants may live longer than estimated when the annuity
factors under the Contracts were established,
- that the amount of the death benefit will be greater than the contract
value, and
- that the costs of providing the services and benefits under the Contracts
will exceed the charges deducted.
We may also deduct a charge for taxes.
Unless otherwise specified, charges are deducted proportionately from all
funding options in which you are invested.
We may reduce or eliminate the withdrawal charge, the administrative charges,
the mortality and expense risk charge, and the distribution charge under the
Contract when certain sales or administration of the Contract result in savings
or reduced expenses and/or risks. For certain trusts, we may change the order in
which purchase payments and earnings are withdrawn in order to determine the
withdrawal charge. In no event will we reduce or eliminate the withdrawal charge
or the administrative charge where such reduction or elimination would be
unfairly discriminatory to any person.
WITHDRAWAL CHARGE
No sales charges are deducted from the purchase payment when it is applied under
the Contract. However, a withdrawal charge will be deducted if any or all of the
purchase payment is withdrawn
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<PAGE> 14
during the first eight years following the purchase payment. The length of time
from when we receive the purchase payment to the time of withdrawal determines
the amount of the charge.
The withdrawal charge is equal to a percentage of the purchase payment withdrawn
from the Contract and is calculated as follows:
<TABLE>
<CAPTION>
LENGTH OF TIME FROM
PURCHASE PAYMENT WITHDRAWAL
(NUMBER OF YEARS) CHARGE
<S> <C>
1 6%
2 6%
3 5%
4 5%
5 4%
6 4%
7 3%
8 2%
9 and over 0%
</TABLE>
For purposes of the withdrawal charge and Principal Protection Cancellation
Charge (described below) calculations, any withdrawals will be considered to be
taken in the following order:
(1) from any free withdrawal allowance (as described below);
(2) from the remainder of the purchase payment; and
(3) from Contract earnings (in excess of the free withdrawal allowance).
Unless you instruct us otherwise, we will deduct the withdrawal charge
from the amount requested.
We will not deduct a withdrawal charge or Principal Protection Cancellation
Charge from payments we make due to (1) the death of the contract owner or the
death of the annuitant with no contingent annuitant surviving; or (2) minimum
distribution requirements.
FREE WITHDRAWAL ALLOWANCE
After the first contract year, you may withdraw up to 10% of the contract value
annually, without a withdrawal charge. (If you have a purchase payment no longer
subject to a withdrawal charge, the maximum you may withdraw without a
withdrawal charge is the greater of (a) the free withdrawal allowance, or (b)
the total amount of the purchase payment no longer subject to a withdrawal
charge. Note: Any free withdrawal taken will reduce the amount of the purchase
payment no longer subject to a withdrawal charge.) The available amount will be
calculated as of the end of the previous contract year. The free withdrawal
allowance applies to any partial withdrawals and to full withdrawals, except
those transferred directly to annuity contracts issued by other financial
institutions. If you have selected the Principal Protection Feature, the
Principal Protection Cancellation Charge will not be assessed on the 10% free
withdrawal allowance. However, any free withdrawal allowance taken will reduce
the principal guarantee proportionately.
OPTIONAL PRINCIPAL PROTECTION FEE
The Company offers you the option of purchasing a guarantee on your investment.
You can obtain protection for 115%, 100% or 90% of your principal if you buy the
Principal Protection Feature at the time you purchase your Contract. Your
registered representative will tell you what levels of protection are currently
available for selection. Under this feature, we will guarantee that, on the
Principal Protection Expiration Date (which is the last day of the eighth
contract year), your Contract will be worth at least either 115%, 100%, or 90%
(depending on your choice of guarantees) of your purchase payment, less a
reduction for withdrawals, withdrawal charges, and the Principal Protection
Cancellation Charge, even if the value of your Contract on that date is less
than the chosen percentage of your original purchase payment. Of course, if your
contract value is more than the chosen percentage of original purchase payment,
you will receive the greater value.
There is an annual charge, the Principal Protection Fee, for this feature. The
Principal Protection Fee compensates us for the risks that we will bear in
providing this guarantee of principal. The
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<PAGE> 15
Principal Protection Fee is deducted daily from your contract value at a maximum
annual rate of 2.00%. The charge varies based on the level of guarantee chosen
and the current market conditions that determine our actual costs associated
with the Principal Protection Feature. The charge will be set periodically and
will lock in at the time of contract purchase. The Principal Protection Fee is
set forth in your Contract. Generally, the Principal Protection Fee will conform
with the chart below. Please note that these ranges are estimates. The actual
charge will vary due to market conditions, and will be determined by the
Company.
<TABLE>
<CAPTION>
LEVEL OF GUARANTEE CHARGE RANGE
% OF PURCHASE PAYMENT % OF CONTRACT VALUE
<S> <C>
115% 1.25%-2.00%
100% 0.75%-1.50%
90% 0.50%-1.25%
</TABLE>
The Principal Protection Feature must be selected at the time you purchase your
Contract and will extend for the eight years from the contract date until the
Principal Protection Expiration Date. This guarantee is valid only if your
Contract is held to the Principal Protection Expiration Date, and you do not
annuitize or surrender before that date.
PRINCIPAL PROTECTION CANCELLATION CHARGE
We will assess a Principal Protection Cancellation Charge if you select the
Principal Protection Feature and make a full or partial withdrawal from the
Contract, before the Principal Protection Expiration Date. This charge
compensates us for costs incurred should you withdraw from the Principal
Protection Feature before the Principal Protection Expiration Date.
The Principal Protection Cancellation Charge equals up to 4% percent of the
original purchase payment withdrawn. The percent charged depends on the length
of time you have had your contract. The Principal Protection Cancellation Charge
is set forth in your Contract.
If you have selected the Principal Protection Feature, any amounts you withdraw
(including the withdrawal charge and Principal Protection Cancellation Charge)
will reduce the amount of the principal guarantee proportionately.
ADMINISTRATIVE CHARGES
We deduct a Contract administrative fee of $30 annually from Contracts with a
value of less than $50,000. This fee compensates us for expenses incurred in
establishing and maintaining the Contract. The fee is deducted from the contract
value on the fourth Friday of each August by canceling accumulation units
applicable to each funding option on a pro rata basis. This fee will be prorated
from the date of purchase to the next date of assessment of the fee. A prorated
fee will also be deducted if the Contract is completely withdrawn or terminated.
We will not deduct a Contract Fee: (1) from the distribution of death proceeds
(2) after an annuity payout has begun, or (3) if the contract value on the date
of assessment is equal to or greater than $50,000.
An administrative expense charge (sometimes called a "sub-account administrative
charge") is deducted on each business day from amounts allocated to the variable
funding options. This charge compensates us for certain related administrative
and operating expenses. The charge equals, on an annual basis, 0.15% of the
amounts allocated to each of the variable funding options.
MORTALITY AND EXPENSE RISK CHARGE
Each business day, the Company deducts a mortality and expense risk charge. The
deduction is reflected in our calculation of accumulation and annuity unit
values. We reserve the right to lower this charge at any time.
For those contract owners who have elected a standard death benefit provision,
the mortality and expense risk charge is equivalent, on an annual basis, to
1.25% of the daily net asset value of amounts held in the Separate Account.
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<PAGE> 16
For those contract owners who have elected an enhanced death benefit provision,
the mortality and expense risk charge is equivalent, on an annual basis, to
1.45% of the daily net asset value of amounts held in the Separate Account.
FUNDING OPTION EXPENSES
The charges and expenses of the funding options are summarized in the fee table
and are described in the accompanying prospectuses.
PREMIUM TAX
Certain state and local governments charge premium taxes ranging from 0% to 5%,
depending upon jurisdiction. The Company is responsible for paying these taxes
and will determine the method used to recover premium tax expenses incurred.
Where required, the Company will deduct any applicable premium taxes from the
contract value either upon death, surrender, annuitization, or at the time
purchase payments are made to the Contract, but no earlier than when the Company
has a tax liability under state law.
CHANGES IN TAXES BASED UPON PREMIUM OR VALUE
If there is any change in a law assessing taxes against the Company based upon
premiums, contract gains or value of the Contract, we reserve the right to
charge you proportionately for this tax.
TRANSFERS
- --------------------------------------------------------------------------------
Up to 30 days before the maturity date, you may transfer all or part of the
contract value between funding options if you have not elected the Principal
Protection Feature. If you have elected the Principal Protection Feature,
transfers are permitted only after the Principal Protection Expiration Date.
There are no charges or restrictions on the amount or frequency of transfers
currently except for the Fixed Option; however, we reserve the right to charge a
fee for any transfer request, and to limit the number of transfers to one in any
six-month period. Since different funding options have different expenses, a
transfer of contract values from one funding option to another could result in
your investment becoming subject to higher or lower expenses. After the maturity
date, you may make transfers between funding options only with our consent.
DOLLAR COST AVERAGING
This feature is not available during the Guarantee Period if you selected the
Principal Protection Guarantee.
Dollar cost averaging (or "automated transfers") allows you to transfer a set
dollar amount to other funding options on a monthly or quarterly basis so that
more accumulation units are purchased in a funding option if the cost per unit
is low and less accumulation units are purchased if the cost per unit is high.
Therefore, a lower-than-average cost per unit may be achieved over the long run.
You may elect automated transfers through written request or other method
acceptable to the Company. You must have a minimum total contract value of
$10,000 to enroll in the Dollar Cost Averaging program. The minimum amount that
may be transferred through this program is $400.
You may establish automated transfers of contract values from the Fixed Account,
subject to certain restrictions. Automated transfers from the Fixed Account may
not deplete your Fixed Account Value in less than twelve months from your
enrollment in the Dollar Cost Averaging program.
You may start or stop participation in the Dollar Cost Averaging program at any
time, but you must give the Company at least 30 days' notice to change any
automated transfer instructions that are currently in place. All provisions and
terms of the Contract apply to automated transfers, including
14
<PAGE> 17
provisions relating to the transfer of money between investment options. We
reserve the right to suspend or modify transfer privileges at any time and to
assess a processing fee for this service.
ACCESS TO YOUR MONEY
- --------------------------------------------------------------------------------
Any time before the maturity date, you may redeem all or any portion of the cash
surrender value, that is, the contract value, less any withdrawal charge, any
applicable Principal Protection Cancellation Charge, and any premium tax not
previously deducted. You must submit a written request specifying the fixed or
variable funding option(s) from which amounts are to be withdrawn. If no funding
options are specified, the withdrawal will be made on a pro rata basis. The cash
surrender value will be determined as of the close of business after we receive
your surrender request at the Home Office. The cash surrender value may be more
or less than the purchase payment made depending on the contract value at the
time of surrender. For information about withdrawals from your payout option
after the Maturity Date (with no life contingency), refer to the Statement of
Additional Information.
If you select the Principal Protection Feature and withdraw any amounts before
the Principal Protection Expiration Date, the amounts withdrawn, including the
withdrawal charge and Principal Protection Cancellation Charge, will no longer
be protected by the principal guarantee and will reduce the amount of the
principal guarantee proportionately.
We may defer payment of any cash surrender value for up to seven days after the
written request is received in good order. We cannot process requests for
surrender that are not in good order. We will contact you if there is a
deficiency causing a delay and will advise what is needed to act upon the
withdrawal request.
SYSTEMATIC WITHDRAWALS
Before the maturity date, you may choose to withdraw a specified dollar amount
(at least $100) on a monthly, quarterly, semiannual or annual basis. Any
applicable withdrawal charges and Principal Protection Cancellation Charge (in
excess of the free withdrawal allowance) and any applicable premium taxes will
be deducted. To elect systematic withdrawals, you must have a contract value of
at least $15,000 and you must make the election on the form provided by the
Company. We will surrender accumulation units pro rata from all funding options
in which you have an interest, unless you instruct us otherwise. You may begin
or discontinue systematic withdrawals at any time by notifying us in writing,
but at least 30 days' notice must be given to change any systematic withdrawal
instructions that are currently in place.
If you select the Principal Protection Feature and withdraw any amounts prior to
the Principal Protection Expiration Date, the amounts withdrawn (including the
withdrawal charge and Principal Protection Cancellation Charge) will no longer
be protected by the principal guarantee and will reduce the amount of the
principal guarantee proportionately.
We reserve the right to discontinue offering systematic withdrawals or to assess
a processing fee for this service upon 30 days' written notice to contract
owners (where allowed by state law).
Each systematic withdrawal is subject to federal income taxes on the taxable
portion. In addition, a 10% federal penalty tax may be assessed on systematic
withdrawals if the contract owner is under age 59 1/2. You should consult with
your tax adviser regarding the tax consequences of systematic withdrawals.
15
<PAGE> 18
OWNERSHIP PROVISIONS
- --------------------------------------------------------------------------------
TYPES OF OWNERSHIP
Contract owner (you). The Contract belongs to the contract owner named in the
Contract (on the Specifications page), or to any other person to whom the
contract is subsequently assigned. An assignment of ownership or a collateral
assignment may be made only for nonqualified contracts. You have sole power
during the annuitant's lifetime to exercise any rights and to receive all
benefits given in the Contract provided that you have not named an irrevocable
beneficiary and provided the Contract is not assigned.
You receive all payments while the annuitant is alive unless you direct them to
an alternate recipient. An alternate recipient does not become the contract
owner.
Joint Owner. For nonqualified contracts only, joint owners (i.e., spouses) may
be named in a written request before the contract is in effect. Joint owners may
independently exercise transfers allowed under the Contract. All other rights of
ownership must be exercised by both owners. Joint owners own equal shares of any
benefits accruing or payments made to them. All rights of a joint owner end at
death if the other joint owner survives. If the first joint owner to die is also
the annuitant, the death benefit will be paid to the beneficiary if there is no
contingent annuitant. If first joint owner to die is not the annuitant, the
entire interest of the deceased joint owner in the Contract will pass to the
surviving joint owner.
BENEFICIARY
You name the beneficiary in a written request. The beneficiary has the right to
receive any remaining contractual benefits upon the death of the annuitant or
the contract owner. If more than one beneficiary survives the annuitant, they
will share equally in benefits unless different shares are recorded with the
Company by written request before the death of the annuitant or contract owner.
With nonqualified contracts the beneficiary named in the contract may differ
from the designated beneficiary. (For example, the designated beneficiary may be
the joint owner.) In such cases, the designated beneficiary receives the
contract benefits (rather than the beneficiary) upon your death.
Unless an irrevocable beneficiary has been named, you have the right to change
any beneficiary by written request during the lifetime of the annuitant and
while the Contract continues.
ANNUITANT
The annuitant is designated in the Contract (on the Specifications page), and is
the individual on whose life the maturity date and the amount of the monthly
annuity payments depend. The annuitant may not be changed after the contract is
in effect.
For nonqualified Contracts only, where the owner and annuitant are not the same
person, the contract owner may also name one individual as a contingent
annuitant by written request before the Contract becomes effective. If the
annuitant dies before the maturity date while the owner is still living and a
contingent annuitant has been named, the contingent annuitant becomes the
annuitant, and the contract continues. However, if the annuitant who is also the
owner dies before the maturity date, the death benefit is paid to the
beneficiary. The contingent annuitant does not become the annuitant and is not
entitled to receive any contract benefits. A contingent annuitant may not be
changed, deleted or added after the Contract becomes effective.
16
<PAGE> 19
DEATH BENEFIT
- --------------------------------------------------------------------------------
Before the maturity date, when there is no contingent annuitant, a death benefit
is payable when either the annuitant, or a contract owner dies. The death
benefit is calculated at the close of the business day on which the Company's
Home Office receives due proof of death and written payment instructions (the
"death report date").
DEATH PROCEEDS BEFORE THE MATURITY DATE
STANDARD DEATH BENEFIT
IF ANY CONTRACT OWNER OR THE ANNUITANT DIES BEFORE AGE 85. The Company will pay
an amount equal to the greatest of (a), (b) or (c) below, each reduced by any
applicable premium tax:
(a) the contract value; or
(b) the purchase payment made under the Contract less any partial
withdrawals (and associated charges); or
(c) the death benefit value, which will be reset once every eight years
to the contract value immediately preceding the death report date.
DEATH OF ANY CONTRACT OWNER OR THE ANNUITANT ON OR AFTER AGE 85. The Company
will pay a death benefit in an amount equal to the contract value as of the
death report date, less any applicable premium tax.
ENHANCED DEATH BENEFIT
IF ANY CONTRACT OWNER OR THE ANNUITANT DIES BEFORE AGE 80. The Company will pay
an amount equal to the greater of (a) or (b) below, each reduced by any
applicable premium tax:
(a) the contract value; or
(b) the Roll-Up Death Benefit Value (as described below) available as of
the death report date.
IF ANY CONTRACT OWNER OR THE ANNUITANT DIES ON OR AFTER AGE 80, BUT BEFORE AGE
90. Travelers will pay an amount equal to the greater of (a) or (b) below, each
reduced by any applicable premium tax:
(a) the contract value; or
(b) the Roll-Up Death Benefit Value (as described below) available as of
the Annuitant's 80th birthday, less any Partial Surrender Reductions
(as described below) which occur after the Annuitant's 80th
birthday.
DEATH OF ANY CONTRACT OWNER OR THE ANNUITANT ON OR AFTER AGE 90. The Company
will pay a death benefit in an amount equal to the contract value as of the
death report date, less any applicable premium tax.
ROLL-UP DEATH BENEFIT VALUE: On the contract date, the Roll-Up Death Benefit
Value is equal to the purchase payment. On each anniversary of the contract
date, the Roll-Up Death Benefit Value will be recalculated as follows:
(a) the Roll-Up Death Benefit Value on the previous contract date
anniversary; minus
(b) any Partial Surrender Reductions (as described below) since the
previous contract date anniversary.
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<PAGE> 20
The result increased by 7%, is the new Roll-Up Death Benefit Value. The maximum
Roll-Up Death Benefit payable equals 7% per year, to a maximum of 200% of the
difference between the purchase payment and all Partial Surrender Reductions (as
described below).
The Partial Surrender Reduction equals:
(1) the amount of the Roll-Up Death Benefit Value just before the
reduction for the partial surrender, multiplied by
(2) the amount of the partial surrender divided by the contract value
just before the partial surrender.
PAYMENT OF PROCEEDS
The process of paying death benefit proceeds under various situations is
described below. Generally, the person(s) receiving the benefit may request that
the proceeds be paid in a lump sum, or be applied to one of the settlement
options available under the Contract.
DEATH OF ANNUITANT WHO IS THE CONTRACT OWNER. The Company will pay the proceeds
to the beneficiary(ies), or if none, to the contract owner's estate.
The death benefit proceeds must be distributed to the beneficiary within five
years of the contract owner's death. Or, the beneficiary may elect to receive
payments from an annuity which begins within one year of the contract owner's
death and is payable over the life of the beneficiary or over a period not
exceeding the beneficiary's life expectancy.
Under a nonqualified contract, if the beneficiary is the contract owner's
spouse, he or she may elect to continue the contract as the new contract owner
rather than receiving the distribution. In such case, the distribution rules
applicable when a contract owner dies generally will apply when that spouse, as
contract owner, dies.
DEATH OF ANNUITANT WHO IS NOT THE CONTRACT OWNER (NONQUALIFIED CONTRACTS
ONLY). If there is no contingent annuitant, the Company will pay the death
proceeds to the beneficiary. However, if there is a contingent annuitant, he or
she becomes the annuitant and the Contract continues in effect (generally using
the original maturity date). The proceeds described above will be paid upon the
death of the last surviving contingent annuitant.
DEATH OF CONTRACT OWNER WHO IS NOT THE ANNUITANT (NONQUALIFIED CONTRACTS ONLY).
The Company will pay the proceeds to any surviving joint owner, or if none, to
the beneficiary(ies), or if none, to the contract owner's estate. If the
surviving joint owner (or if none, the beneficiary) is the contract owner's
spouse, he or she may elect to continue the contract as the new contract owner
rather than receiving the distribution.
ENTITY AS OWNER. In the case of a nonqualified Contract owned by a nonnatural
person (e.g. a trust or another entity), any annuitant will be treated as the
contract owner. Any change in the annuitant will be treated as the death of the
contract owner.
DEATH PROCEEDS AFTER THE MATURITY DATE
If the contract owner or annuitant dies on or after the maturity date, the
Company will pay the beneficiary a death benefit consisting of any benefit
remaining under the annuity option then in effect.
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<PAGE> 21
THE ANNUITY PERIOD
- --------------------------------------------------------------------------------
MATURITY DATE
Under the Contract, you can receive scheduled annuity payments. You can choose
the month and the year in which those payments begin (maturity date). While the
annuitant is alive, you can change your selection any time up to the maturity
date. Annuity payments will begin on the maturity date stated in the Contract
unless the Contract has been fully surrendered or the proceeds have been paid to
the beneficiary before that date. Annuity payments are a series of periodic
payments (a) for life; (b) for life with either a minimum number of payments or
a specific amount assured; or (c) for the joint lifetime of the annuitant and
another person, and thereafter during the lifetime of the survivor. We may
require proof that the annuitant is alive before annuity payments are made.
Unless you elect otherwise, the maturity date will be the later of the
annuitant's 85th birthday, or ten years after the effective date of the
Contract. (For Contracts issued in Florida and New York, the maturity date
elected may not be later than the annuitant's 90th birthday.)
If you select the Principal Protection Feature, you may not select a maturity
date that is prior to the Principal Protection Expiration Date (that is, prior
to the last day of the eighth contract year).
For nonqualified Contracts, at least 30 days before the original maturity date,
a contract owner may elect to extend the maturity date to any time prior to the
annuitant's 85th birthday or, for qualified Contracts, to a later date with the
Company's consent. Certain annuity options taken at the maturity date may be
used to meet the minimum required distribution requirements of federal tax law,
or a program of partial surrenders may be used instead. These mandatory
distribution requirements take effect generally upon the death of the contract
owner, or with qualified contracts upon either the later of April 1 following
the contract owner's attainment of age 70 1/2 or the year of retirement or upon
the death of the contract owner. Independent tax advice should be sought
regarding the election of minimum required distributions.
ALLOCATION OF ANNUITY
When an annuity option is elected, it may be elected as a variable annuity, a
fixed annuity, or a combination of both. (Variable payouts under this Contract
may not be permitted in certain states.) If, at the time annuity payments begin,
no election has been made to the contrary, the cash surrender value (or contract
value, if a state so requires) will be applied to provide an annuity funded by
the same investment options as selected during the accumulation period. At least
30 days before the maturity date, you may transfer the contract value among the
funding options in order to change the basis on which annuity payments will be
determined. If the Principal Protection Feature is selected and you annuitize
before the Principal Protection Expiration Date, a Principal Protection
Cancellation Charge may apply.
VARIABLE ANNUITY
You may choose to receive annuity paymants that are based on the performance of
one or more of the variable funding options. This is called a variable payout
because the amount you receive each month will increase or decrease depending on
how the variable funding options perform. When you annuitize, we will credit you
with annuity units. An annuity unit measures the dollar value of an annuity
payment. We determine the number of annuity units to credit you with by dividing
the first monthly annuity payment for each funding option by the accumulation
unit value for that funding option as of 14 days before the annuity payments
begin. The number of annuity units (but not their valur) remains fixed during
the annuity period.
HOW WE DETERMINE THE FIRST ANNUITY PAYMENT. The Contract contains tables used to
determine the first monthly annuity payment. If a variable annuity is elected,
the amount applied to it will be the
19
<PAGE> 22
value of the funding options as of 14 days before the annuity payments begin
less any premium taxes due.
The first monthly payment amount depends on the annuity option elected and the
annuitant's adjusted age. The Contract contains a formula for determining the
adjusted age. We calculate the first monthly payment by multiplying the benefit
per $1,000 applied, shown in the Contract tables, by the number of thousands of
dollars of Contract value applied to the annuity option. We also factor in an
assumed daily net investment factor of 3%. This assumed daily net investment
factor is used to determine the guaranteed payout rates shown. If net investment
rates are higher at the time annuitization is selected, payout rates will be
higher than those shown. Payout rates wil not be lower than those shown. We
reserve the right to require satisfactory proof of an annuitant's age before we
make the first annuity payment
HOW WE DETERMINE THE PAYMENTS AFTER THE FIRST. The dollar amount of all annuity
payments after the first will change from month to month based on the investment
performance of the applicable funding options. The total amount of each annuity
payment will equal the sum of the basic payments in each funding option. The
actual amounts of these payments are determinded by multiplying the number of
annuity units credited to each funding option by the corresponding annuity unit
value as of the date 14 days before the payment is due.
FIXED ANNUITY
You may choose a fixed annuity that provides payments which do not vary during
the annuity period. We will calculate the dollar amount of the first fixed
annuity payment as described under "Variable Annuity." If it would produce a
larger payment, the first fixed annuity payment will be determined using the
Life Annuity Tables in effect on the maturity date.
PAYMENT OPTIONS
- --------------------------------------------------------------------------------
ELECTION OF OPTIONS
While the annuitant is alive, you can change your annuity option selection any
time up to the maturity date. Once annuity payments have begun, no further
elections are allowed.
During the annuitant's lifetime, if you do not elect otherwise before the
maturity date, we will pay you (or another designated payee) the first of a
series of monthly annuity payments based on the life of the annuitant, in
accordance with Annuity Option 2 (Life Annuity with 120 monthly payments
assured). For certain qualified contracts, Annuity Option 4 (Joint and Last
Survivor Joint Life Annuity -- Annuity Reduced on Death of Primary Payee) will
be the automatic option as described in the contract.
The minimum amount that can be placed under an annuity option will be $2,000
unless we agree to a lesser amount. If any monthly periodic payment due is less
than $100, the Company reserves the right to make payments at less frequent
intervals, or to pay the cash surrender value in a lump-sum. The amount applied
to effect an annuity or income option will be the cash surrender value as of the
date the payments begin, less any applicable premium taxes not previously
deducted. (Certain states may have different requirements that we will honor.)
The cash surrender value during the accumulation period, including the deduction
for mortality and expense risks and the contract administrative expense charge.
On the maturity date, we will pay the amount due under the Contract in one lump
sum, or in accordance with the payment option that you select. You must elect an
option in writing, in a form satisfactory to the Company. Any election made
during the lifetime of the annuitant must be made by the contract owner.
20
<PAGE> 23
ANNUITY OPTIONS
Subject to the conditions described in "Election of Options" above, all or any
part of the cash surrender value (contract value, if specified by state law) may
be paid under one or more of the following annuity options. Payments under the
annuity options may be elected on a monthly, quarterly, semiannual or annual
basis. We may also offer additional options.
Option 1 -- Life Annuity -- No Refund. The Company will make annuity payments
during the lifetime of the annuitant ending with the last payment before death.
This option offers the maximum periodic payment, since there is no assurance of
a minimum number of payments or provision for a death benefit for beneficiaries.
Option 2 -- Life Annuity with 120, 180 or 240 Monthly Payments Assured. The
Company will make monthly annuity payments during the lifetime of the annuitant,
with the agreement that if, at the death of that person, payments have been made
for less than 120, 180 or 240 months as elected, we will continue making
payments to the beneficiary during the remainder of the period.
Option 3 -- Joint and Last Survivor Life Annuity -- No Refund. The Company will
make regular annuity payments during the lifetime of the annuitant and a second
person. When either person dies, we will continue making payments to the
survivor. No further payments will be made following the death of the survivor.
Option 4 -- Joint and Last Survivor Life Annuity -- Annuity Reduced on Death of
Primary Payee. The Company will make annuity payments during the lifetimes of
the annuitant and a second person. One will be designated the primary payee, the
other will be designated the secondary payee. On the death of the secondary
payee, the Company will continue to make monthly annuity payments to the primary
payee in the same amount that would have been payable during the joint lifetime
of the two persons. On the death of the primary payee, the Company will continue
to make annuity payments to the secondary payee in an amount equal to 50% of the
payments which would have been made during the lifetime of the primary payee. No
further payments will be made once both payees have died.
Option 5 -- Payments for a Fixed Period. The Company will make equal payments
until the cash surrender value applied under this option has been exhausted. The
first payment and all later payments will be paid from amounts attributable to
each investment option in proportion to the cash surrender value attributable to
each. The final payment will include any amount insufficient to make another
full payment.
MISCELLANEOUS CONTRACT PROVISIONS
- --------------------------------------------------------------------------------
RIGHT TO RETURN
You may return the Contract for a full refund of the contract value (including
charges) within ten days after you receive it (the "right to return period").
You bear the investment risk during the right to return period; therefore, the
contract value returned may be greater or less than your purchase payment. If
the Contract is purchased as an Individual Retirement Annuity, and is returned
within the first seven days after delivery, your purchase payment will be
refunded in full; during the remainder of the right to return period, the
contract value (including charges) will be refunded. The contract value will be
determined following the close of the business day on which we receive a written
request for a refund. Where state law requires a longer right to return period,
or the return of purchase payments or other variations of this provision, the
Company will comply. Refer to your Contract for any state-specific information.
21
<PAGE> 24
TERMINATION
We reserve the right to terminate the Contract on any business day if the
contract value as of that date is less than $2,000, unless otherwise specified
by state law. Termination will not occur until 31 days after the Company has
mailed notice of termination to the contract owner's last known address and to
any assignee of record. If the Contract is terminated, we will pay you the cash
surrender value (contract value less any applicable premium tax, in the states
that so require), less any applicable contract administrative fee.
REQUIRED REPORTS
As often as required by law, but at least once in each contract year before the
due date of the first annuity payment, we will furnish a report showing the
number of accumulation units credited to the Contract and the corresponding
accumulation unit value(s) as of the date of the report for each funding option
to which the contract owner has allocated amounts during the applicable period.
The Company will keep all records required under federal or state laws.
SUSPENSION OF PAYMENTS
The Company reserves the right to suspend or postpone the date of any payment or
determination of values on any business day (1) when the New York Stock Exchange
("the Exchange") is closed; (2) when trading on the Exchange is restricted; (3)
when an emergency exists as determined by the SEC so that the sale of securities
held in the Separate Account may not reasonably occur or so that the Company may
not reasonably determine the value the Separate Account's net assets; or (4)
during any other period when the SEC, by order, so permits for the protection of
security holders.
TRANSFERS OF CONTRACT VALUES TO OTHER ANNUITIES
We may permit contract owners to transfer their contract values into other
annuities offered by us or our affiliated insurance companies under rules then
in effect.
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<PAGE> 25
THE SEPARATE ACCOUNT
- --------------------------------------------------------------------------------
The Travelers Fund BD III For Variable Annuities ("Fund BD III") was established
on March 27, 1997 and is registered with the SEC as a unit investment trust
(separate account) under the Investment Company Act of 1940, as amended (the
"1940 Act"). The assets of Fund BD III will be invested exclusively in the
shares of the variable funding options, as well as other variable funding
options available in similar variable annuity contracts offered by the Company.
The assets of Fund BD III are held for the exclusive benefit of the owners of
this separate account, according to the laws of Connecticut. Income, gains and
losses, whether or not realized, from assets allocated to Fund BD III are, in
accordance with the Contracts, credited to or charged against Fund BD III
without regard to other income, gains and losses of the Company. The assets held
by Fund BD III are not chargeable with liabilities arising out of any other
business which the Company may conduct. Obligations under the Contract are
obligations of the Company.
All investment income and other distributions of the funding options are payable
to Fund BD III. All such income and/or distributions are reinvested in shares of
the respective funding option at net asset value. Shares of the funding options
are currently sold only to life insurance company separate accounts to fund
variable annuity and variable life insurance contracts.
PERFORMANCE INFORMATION
From time to time, we may advertise several types of historical performance for
the Contract's funding options. We may advertise the "standardized average
annual total returns" of the funding option, calculated in a manner prescribed
by the SEC, as well as the "nonstandardized total return," as described below.
Examples of the performance figures are illustrated in the SAI.
STANDARDIZED METHOD. Quotations of average annual total returns are computed
according to a formula in which a hypothetical initial investment of $1,000 is
applied to the funding option, and then related to ending redeemable values over
one-, five-, and ten-year periods, or for a period covering the time during
which the funding option has been in existence, if less. These quotations
reflect the deduction of all recurring charges during each period (on a pro rata
basis in the case of fractional periods). The deduction for the annual contract
administrative fee is converted to a percentage of assets based on the actual
fee collected (or anticipated to be collected, if a new product), divided by the
average net assets for Contracts sold (or anticipated to be sold). Each
quotation assumes a total redemption at the end of each period with the
applicable withdrawal charge deducted at that time.
NONSTANDARDIZED METHOD. Nonstandardized "total returns" will be calculated in a
similar manner based on the performance of the funding options over a period of
time, usually for the calendar year-to-date, and for the past one-, three-,
five- and ten-year periods. Nonstandardized total returns will not reflect the
deduction of any withdrawal charge or the annual contract administrative fee,
which, if reflected, would decrease the level of performance shown. The
withdrawal charge is not reflected because the Contract is designed for
long-term investment.
For funding options that were in existence before the date they became available
under the Separate Account, the standardized average annual total return
quotations may be accompanied by returns showing the investment performance that
such funding options would have achieved (reduced by the applicable charges) had
they been held under the Contract for the period quoted. The total return
quotations are based upon historical earnings and are not necessarily
representative of future performance.
GENERAL. Within the guidelines prescribed by the SEC and the National
Association of Securities Dealers, Inc. ("NASD"), performance information may be
quoted numerically or may be presented in a table, graph or other illustration.
Advertisements may include data comparing performance to well-known indices of
market performance (including, but not limited to, the Dow
23
<PAGE> 26
Jones Industrial Average, the Standard & Poor's (S&P) 500 Index and the S&P 400
Index, the Lehman Brothers Long T-Bond Index, the Russell 1000, 2000 and 3000
Indices, the Value Line Index, and the Morgan Stanley Capital International's
EAFE Index). Advertisements may also include published editorial comments and
performance rankings compiled by independent organizations (including, but not
limited to, Lipper Analytical Services, Inc. and Morningstar, Inc.) and
publications that monitor the performance of the separate account and the
variable funding options.
FEDERAL TAX CONSIDERATIONS
- --------------------------------------------------------------------------------
The following general discussion of the federal income tax consequences under
this Contract is not intended to cover all situations, and is not meant to
provide tax advice. Because of the complexity of the law and the fact that the
tax results will vary depending on many factors, you should consult your tax
adviser regarding your personal situation. For your information, a more detailed
tax discussion is contained in the SAI.
GENERAL TAXATION OF ANNUITIES
Congress has recognized the value of saving for retirement by providing certain
tax benefits, in the form of tax deferral, for money put into an annuity. The
Internal Revenue Code (Code) governs how this money is ultimately taxed,
depending upon the type of contract, qualified or non-qualified, and the manner
in which the money is distributed, as briefly described below.
TYPES OF CONTRACTS: QUALIFIED OR NONQUALIFIED
If you purchase an annuity contract under any pension plan, specially sponsored
program, or individual retirement annuity (IRA) with pre-tax dollars, your
contract is referred to as a qualified contract. Some examples of qualified
contracts are: IRAs, pension and profit-sharing plans (including 401(k) plans),
and Keogh Plans. An exception to this is a qualified plan called a Roth IRA.
Under Roth IRAs, after-tax contributions accumulate until maturity, when amounts
(including earnings) may be withdrawn tax-free. If you purchase the contract
with after-tax dollars and not under one of the programs described above, your
contract is referred to as nonqualified.
NONQUALIFIED ANNUITY CONTRACTS
As the owner of a nonqualified annuity, you will not be taxed on increases in
the value of your contract until a distribution occurs -- either as a withdrawal
(distribution made prior to the maturity date), or as annuity payments. When a
withdrawal is made, you are taxed on the amount of the withdrawal that is
considered earnings. Similarly, when you receive an annuity payment, part of
each payment is considered a return of your purchase payments and will not be
taxed. The remaining portion of the annuity payment (i.e., any earnings) will be
considered ordinary income for tax purposes.
If a nonqualified annuity is owned by other than an individual, however (e.g.,
by a corporation), increases in the value of the contract attributable to
purchase payments made after February 28, 1986 are includable in income
annually. Furthermore, for contracts issued after April 22, 1987, all deferred
increases in value will be includable in your income if you should transfer the
contract for an amount substantially less than the value of the contract.
If you make a partial withdrawal, this money will generally be taxed as first
coming from earnings, (income in the contract), and then from your purchase
payments. These withdrawn earnings are includable in your income. (See "Penalty
Tax for Premature Distributions" below.) There is income in the contract to the
extent the cash value exceeds your investment in the contract. The investment in
the contract equals the total purchase payments you paid less any amount
received previously which was excludable from gross income. Any direct or
indirect borrowing against the value of the contract or pledging of the contract
as security for a loan will be treated as a cash distribution under the tax law.
24
<PAGE> 27
Federal tax law requires that nonqualified annuity contracts meet minimum
mandatory distribution requirements upon the death of the contract owner,
including the first of joint owners. If these requirements are not met, the
surviving joint owner, or the beneficiary, will have to pay taxes prior to
distribution. The distribution required depends, among other things, upon
whether an annuity option is elected or whether the new contract owner is the
surviving spouse. We will administer Contracts in accordance with these rules
and we will notify you when you should begin receiving payments.
QUALIFIED ANNUITY CONTRACTS
Under a qualified annuity, since amounts paid into the contract have generally
not yet been taxed, the full amount of all withdrawals and annuity payments are
taxed at the ordinary income tax rate. The Contract is available as a vehicle
for IRA rollovers. There are special rules which govern the taxation of
qualified contracts, including requirements for mandatory distributions and
contribution limits, and also special rules regarding Roth IRAs. We have
provided a more complete discussion in the SAI.
PENALTY TAX FOR PREMATURE DISTRIBUTIONS
Taxable distributions taken before the contract owner has reached the age of
59 1/2 will be subject to a 10% additional tax penalty unless the money
distributed was (1) paid on or after the owner dies; (2) paid if the taxpayer
becomes totally disabled, (as that term is defined in the Code); (3) paid in a
series of substantially equal payments made annually (or more frequently) under
a lifetime annuity; (4) paid as an immediate annuity; or (5) paid from purchase
payments made prior to August 14, 1982.
OWNERSHIP OF THE INVESTMENTS
Assets in the funding options must be owned by the Company and not by the
contract owner for federal income tax purposes. Otherwise, the deferral of taxes
is lost by the owner.
The Internal Revenue Service (IRS) has stated that a variable contract owner
will be considered the owner of the assets of a funding option if the owner has
some degree of control over those investments. The IRS has not, however,
described in detail the circumstances in which investor control of the
investments of a separate account may cause the investor, rather than the
insurance company, to be treated as the owner of the assets of the account.
We do not know if such guidance will be issued, or if it is, what standards may
be set. Furthermore, we do not know if such guidance may be issued with
retroactive effect. New regulations generally apply to future sales or to future
voluntary transactions in existing contracts. We therefore reserve the right to
modify the contract as necessary to attempt to maintain favorable tax treatment.
DIVERSIFICATION REQUIREMENTS
The Code states that in order to qualify for the tax benefits described above,
investments made in the separate account of any nonqualified variable annuity
contract must satisfy certain diversification requirements. Tax regulations
define how separate accounts must be diversified. We monitor the investments
constantly and believe that our accounts are adequately diversified. We intend
to administer all contracts subject to this provision of law in a manner that
will maintain adequate diversification.
OTHER INFORMATION
- --------------------------------------------------------------------------------
THE INSURANCE COMPANY
The Travelers Insurance Company is a stock insurance company chartered in 1864
in Connecticut and continuously engaged in the insurance business since that
time. It is licensed to conduct life
25
<PAGE> 28
insurance business in all of the states of the United States, the District of
Columbia, Puerto Rico, Guam, the British and U.S. Virgin Islands and the
Bahamas. The Company is an indirect wholly owned subsidiary of Citigroup Inc.
The Company's Home Office is located at One Tower Square, Hartford, Connecticut
06183.
FINANCIAL STATEMENTS
The financial statements for the insurance company are located in the Statement
of Additional Information. The financial statements for the separate account
will be available through annual reports to shareholders. These reports are
accessible through the SEC's website that appears on page 1 of the prospectus.
IMSA
The Company is a member of the Insurance Marketplace Standards Association
("IMSA"), and as such may use the IMSA logo and IMSA membership in its
advertisements. Companies that belong to IMSA subscribe to a set of ethical
standards covering the various aspects of sales and service for individually
sold life insurance and annuities. IMSA members have adopted policies and
procedures that demonstrate a commitment to honesty, fairness and integrity in
all customer contacts involving the sale and service of individual life
insurance and annuity products.
YEAR 2000 COMPLIANCE
The Company is highly dependent on computer systems and system applications for
conducting its ongoing business functions. In 1996, the Company began the
process of identifying, assessing and implementing changes to computer programs
necessary to address the Year 2000 issue and developed a comprehensive plan to
address the issue. This issue involves the ability of computer systems that have
time sensitive programs to recognize properly the Year 2000. The inability to do
so could result in major failures or miscalculations that would disrupt the
Company's ability to meet its customer and other obligations on a timely basis.
The Company has achieved substantial compliance with respect to its business
critical systems in accordance with its Year 2000 plan and is in the process of
certification to validate compliance. The Company anticipates completing the
certification process by June 30, 1999. An ongoing re-certification process will
be put in place for third and fourth quarter 1999 to ensure all systems and
products remain compliant.
The total pre-tax cost associated with the required modifications and
conversions is expected to be between $25 million and $35 million and is being
expensed as incurred in the period 1996 through 1999. The Company has incurred
approximately $22 million to date on these efforts. The Company also has third
party customers, financial institutions, vendors and others with which it
conducts business and has confirmed their plans to address and resolve Year 2000
issues on a timely basis. While it is likely that these efforts by third party
vendors and customers will be successful, it is possible that a series of
failures by third parties could have a material adverse effect on the Company's
results of operations in future periods.
In addition, the Company is developing contingency plans to address perceived
risks associated with the Year 2000 effort. These include business resumption
plans to address the possibility of internal systems failures and the
possibility of failure of systems or processes outside the Company's control. As
of year-end 1998, the Company has completed initial business resumption
contingency plans which would enable business critical units to function
beginning January 1, 2000 in the event of an unexpected failure. Business
resumption contingency plans are expected to be finalized by June 30, 1999.
Preparations for the management of the date change will continue through 1999.
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<PAGE> 29
DISTRIBUTION OF VARIABLE ANNUITY CONTRACTS
The Company intends to sell the Contracts in all jurisdictions where it is
licensed to do business and where the Contract is approved. Any sales
representative or employee who sells the Contracts will be qualified to sell
variable annuities under applicable federal and state laws. Each broker-dealer
is registered with the SEC under the Securities Exchange Act of 1934, and all
are members of the NASD. The principal underwriter and distributor of the
Contracts is CFBDS, Inc., 21 Milk St., Boston, MA. CFBDS, Inc. is not affiliated
with the Company or the Separate Account.
Up-front compensation paid to sales representatives will not exceed 7% of the
purchase payments made under the Contracts. If asset-based compensation is paid,
it will not exceed 2% of the average account value annually. From time to time,
the Company may pay or permit other promotional incentives, in cash, credit or
other compensation.
CONFORMITY WITH STATE AND FEDERAL LAWS
The Contract is governed by the laws of the state in which it is delivered. Any
paid-up annuity, cash surrender value or death benefits that are available under
the Contract are not less than the minimum benefits required by the statutes of
the state in which the Contract is delivered. We reserve the right to make any
changes, including retroactive changes, in the Contract to the extent that the
change is required to meet the requirements of any law or regulation issued by
any governmental agency to which the Company, the Contract or the contract owner
is subject.
VOTING RIGHTS
The Company is the legal owner of the shares of the funding options. However, we
believe that when a funding option solicits proxies in conjunction with a vote
of shareholders we are required to obtain from you and from other owners
instructions on how to vote those shares. When we receive those instructions, we
will vote all of the shares we own in proportion to those instructions. This
will also include any shares we own on our own behalf. Should we determine that
we are no longer required to comply with the above, we will vote on the shares
in our own right.
LEGAL PROCEEDINGS AND OPINIONS
There are no pending material legal proceedings affecting the Separate Account.
There is one material pending legal proceeding, other than ordinary routine
litigation incidental to the business, to which the Company is a party. In March
1997, a purported class action entitled Patterman v. The Travelers, Inc. et al,
was commenced in the Superior Court of Richmond County, Georgia, alleging, among
other things, violations of the Georgia RICO statute and other state laws by an
affiliate of the Company, Primerica Financial Services, Inc. and certain of its
affiliates. Plaintiffs seek unspecified compensatory and punitive damages and
other relief. In October 1997, defendants answered the complaint, denied
liability and asserted numerous affirmative defenses. In February 1998, the
Superior Court of Richmond County transferred the lawsuit to the Superior Court
of Gwinnett County, Georgia. The plaintiffs appealed the transfer order, and in
December 1998 the Court of Appeals of the state of Georgia reversed the lower
court's decision. Later in December 1998, defendants petitioned the Georgia
Supreme Court to hear the appeal from the decision of the Court of Appeals.
Pending appeal, proceedings in the trial court have been stayed. Defendants
intend to vigorously contest the litigation.
Legal matters in connection with the federal laws and regulations affecting the
issue and sale of the Contract described in this prospectus, as well as the
organization of the Company, its authority to issue variable annuity contracts
under Connecticut law and the validity of the forms of the variable annuity
contracts under Connecticut law, have been passed on by the General Counsel of
the Company.
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<PAGE> 31
APPENDIX A: CONDENSED FINANCIAL INFORMATION
- --------------------------------------------------------------------------------
THE TRAVELERS FUND BD III FOR VARIABLE ANNUITIES
ACCUMULATION UNIT VALUES
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1998
---------------------------------------------------
UNIT VALUE UNIT VALUE ACCUMULATION
BEGINNING OF YEAR END OF YEAR UNITS
- ------------------------------------------------------------------------------------
<S> <C> <C> <C>
MONEY MARKET PORTFOLIO (2/98)
Standard Death Benefit......... $1.000 $1.044 8,882
GREENWICH STREET SERIES FUND
EQUITY INDEX PORTFOLIO
(12/97)
Standard Death Benefit
0.00% Principal
Protection Fee......... 1.000 1.327 195,925
0.95% Principal
Protection Fee......... 1.000 1.314 16,752
1.00% Principal
Protection Fee......... 1.000 1.194 22,680
1.10% Principal
Protection Fee......... 1.043 1.308 220,067
1.35% Principal
Protection Fee......... 1.000 1.309 1,556,018
1.45% Principal
Protection Fee......... 1.000 1.095 3,460,179
1.50% Principal
Protection Fee......... 1.000 1.302 2,611,390
2.00% Principal
Protection Fee......... 1.000 1.208 22,226
Enhanced Death Benefit
0.00% Principal
Protection Fee......... 1.000 1.324 16,764
1.00% Principal
Protection Fee......... 1.000 1.193 24,092
1.10% Principal
Protection Fee......... 1.043 1.305 9,713
1.35% Principal
Protection Fee......... 1.000 1.306 11,011
1.45% Principal
Protection Fee......... 1.000 1.094 61,777
1.50% Principal
Protection Fee......... 1.041 1.298 2,000,628
2.00% Principal
Protection Fee......... 1.000 1.206 147,068
<CAPTION>
PERIOD FROM DECEMBER 10, 1997
TO DECEMBER 31, 1997
----------------------------------------------------
UNIT VALUE UNIT VALUE ACCUMULATION
BEGINNING OF PERIOD END OF PERIOD UNITS
- ------------------------------- ----------------------------------------------------
<S> <C> <C> <C>
MONEY MARKET PORTFOLIO (2/98)
Standard Death Benefit......... -- -- --
GREENWICH STREET SERIES FUND
EQUITY INDEX PORTFOLIO
(12/97)
Standard Death Benefit
0.00% Principal
Protection Fee......... -- -- --
0.95% Principal
Protection Fee......... -- -- --
1.00% Principal
Protection Fee......... -- -- --
1.10% Principal
Protection Fee......... $1.000 $1.043 143,274
1.35% Principal
Protection Fee......... -- -- --
1.45% Principal
Protection Fee......... -- -- --
1.50% Principal
Protection Fee......... -- -- --
2.00% Principal
Protection Fee......... -- -- --
Enhanced Death Benefit
0.00% Principal
Protection Fee......... -- -- --
1.00% Principal
Protection Fee......... -- -- --
1.10% Principal
Protection Fee......... $1.000 $1.043 33,723
1.35% Principal
Protection Fee......... -- -- --
1.45% Principal
Protection Fee......... -- -- --
1.50% Principal
Protection Fee......... $1.000 $1.041 9,612
2.00% Principal
Protection Fee......... -- -- --
</TABLE>
- ---------------
The date next to each funding option's name reflects the date money first
came into the funding option through the Separate Account. Funding Options not
listed had no amounts yet allocated to them. The financial statements for Fund
BD III are contained in the Annual Report which is incorporated by reference in
the SAI. The consolidated financial statements of The Travelers Insurance
Company and its subsidiaries are contained in the SAI.
A-1
<PAGE> 32
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<PAGE> 33
APPENDIX B
- --------------------------------------------------------------------------------
THE FIXED OPTION
(AVAILABLE ONLY IF YOU HAVE NOT SELECTED THE PRINCIPAL PROTECTION FEATURE
OR AFTER THE PRINCIPAL PROTECTION EXPIRATION DATE)
The Fixed Option is secured by part of the general assets of the Company. The
general assets of the Company include all assets of the Company other than those
held in the Separate Account or any other separate account sponsored by the
Company or its affiliates.
The staff of the SEC does not generally review the disclosure in the prospectus
relating to the Fixed Option. Disclosure regarding the Fixed Option and the
general account may, however, be subject to certain provisions of the federal
securities laws relating to the accuracy and completeness of statements made in
the prospectus.
Under the Fixed Option, the Company assumes the risk of investment gain or loss,
guarantees a specified interest rate, and guarantees a specified periodic
annuity payment. The investment gain or loss of the Separate Account or any of
the variable funding options does not affect the Fixed Option portion of the
contract owner's contract value, or the dollar amount of fixed annuity payments
made under any payout option.
We guarantee that, at any time, the Fixed Option contract value will not be less
than the amount of the purchase payments allocated to the Fixed Option, plus
interest credited, less any applicable premium taxes or prior surrenders. If the
contract owner effects a surrender, the amount available from the Fixed Option
will be reduced by any applicable withdrawal charge as described under "Charges
and Deductions" in this prospectus.
Purchase payments allocated to the Fixed Option and any transfers made to the
Fixed Option become part of the Company's general account which supports
insurance and annuity obligations. Neither the general account nor any interest
therein is registered under, or subject to the provisions of, the Securities Act
of 1933 or Investment Company Act of 1940. We will invest the assets of the
Fixed Option at our discretion. Investment income from such Fixed Option assets
will be allocated to us and to the Contracts participating in the Fixed Option.
Investment income from the Fixed Option allocated to us includes compensation
for mortality and expense risks borne by us in connection with Fixed Option
Contracts. The amount of such investment income allocated to the Contracts will
vary from year to year in our sole discretion at such rate or rates as we
prospectively declare from time to time.
The initial rate for any allocations into the Fixed Option is guaranteed for one
year from the date of such allocation. Subsequent renewal rates will be
guaranteed for the calendar quarter. We also guarantee that for the life of the
Contract we will credit interest at not less than 3% per year. Any interest
credited to amounts allocated to the Fixed Option in excess of 3% per year will
be determined in our sole discretion. You assume the risk that interest credited
to the Fixed Option may not exceed the minimum guarantee of 3% for any given
year.
TRANSFERS
You may make transfers from the Fixed Option to any other available funding
option(s) twice a year during the 30 days following the semiannual anniversary
of the contract effective date. The transfers are limited to an amount of up to
15% of the Fixed Option Value on the semiannual contract effective date
anniversary. (This restriction does not apply to transfers under the Dollar Cost
Averaging Program.) Amounts previously transferred from the Fixed Option to
other funding options may not be transferred back to the Fixed Option for a
period of at least six months from the date of transfer. We reserve the right to
waive either of these restrictions.
Automated transfers from the Fixed Option to any of the funding options may
begin at any time. Automated transfers from the Fixed Option may not deplete
your Fixed Option value in a period of less than twelve months from your
enrollment in the Dollar Cost Averaging Program.
B-1
<PAGE> 34
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<PAGE> 35
APPENDIX C
- --------------------------------------------------------------------------------
CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION
The Statement of Additional Information contains more specific information and
financial statements relating to The Travelers Insurance Company. A list of the
contents of the Statement of Additional Information is set forth below:
The Insurance Company
Principal Underwriter
Distribution and Principal Underwriting Agreement
Valuation of Assets
Mixed and Shared Funding
Performance Information
Federal Tax Considerations
Independent Accountants
Financial Statements
- --------------------------------------------------------------------------------
Copies of the Statement of Additional Information dated May 1, 1999 (Form No.
L-12682S) are available without charge. To request a copy, please clip this
coupon on the dotted line above, enter your name and address in the spaces
provided below, and mail to: The Travelers Insurance Company, Annuity Services,
One Tower Square, Hartford, Connecticut 06183.
Name:
Address:
C-1
<PAGE> 36
THIS PAGE INTENTIONALLY LEFT BLANK.
<PAGE> 37
L-12682 May, 1999
<PAGE> 38
PART B
Information Required in a Statement of Additional Information
<PAGE> 39
Travelers Index Annuity
STATEMENT OF ADDITIONAL INFORMATION
dated
May 1, 1999
for
THE TRAVELERS FUND BD III FOR VARIABLE ANNUITIES
ISSUED BY
THE TRAVELERS INSURANCE COMPANY
This Statement of Additional Information ("SAI") is not a prospectus but relates
to, and should be read in conjunction with, the Individual Variable Annuity
Contract Prospectus dated May 1, 1999. A copy of the Prospectus may be obtained
by writing to The Travelers Insurance Company, Annuity Services, One Tower
Square, Hartford, Connecticut 06183, or by calling 1-800-842-8573 or by
accessing the Securities and Exchange Commission's website at
http://www.sec.gov. This SAI should be read in conjunction with the accompanying
1998 Annual Report for the Fund.
TABLE OF CONTENTS
<TABLE>
<S> <C>
THE INSURANCE COMPANY . . . . . . . . . . . . . . . . . . . . . . . . 1
PRINCIPAL UNDERWRITER . . . . . . . . . . . . . . . . . . . . . . . . 1
DISTRIBUTION AND PRINCIPAL UNDERWRITING AGREEMENT . . . . . . . . . . 1
VALUATION OF ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . 2
MIXED AND SHARED FUNDING . . . . . . . . . . . . . . . . . . . . . . . 3
PERFORMANCE INFORMATION . . . . . . . . . . . . . . . . . . . . . . . 3
FEDERAL TAX CONSIDERATIONS. . . . . . . . . . . . . . . . . . . . . . 7
INDEPENDENT ACCOUNTANTS . . . . . . . . . . . . . . . . . . . . . . . 10
FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . F-1
</TABLE>
<PAGE> 40
THE INSURANCE COMPANY
The Travelers Insurance Company (the "Company"), is a stock insurance
company chartered in 1864 in Connecticut and continuously engaged in the
insurance business since that time. The Company is licensed to conduct life
insurance business in all states of the United States, the District of Columbia,
Puerto Rico, Guam, the U.S. and British Virgin Islands and the Bahamas. The
Company's Home Office is located at One Tower Square, Hartford, Connecticut
06183 and its telephone number is (860) 277-0111.
The Company is indirectly owned by a wholly owned subsidiary of Citigoup
Inc. Citigroup Inc. consists of businesses that produce a broad range of
financial services, including asset management, banking and consumer finance,
credit and charge cards, insurance, investments, investment banking and trading.
Among its businesses are Citibank, Commercial Credit, Primerica Financial
Services, Salomon Smith Barney, Salomon Smith Barney Asset Management, and
Travelers Property Casualty.
STATE REGULATION. The Company is subject to the laws of the state of Connecticut
governing insurance companies and to regulation by the Insurance Commissioner of
the state of Connecticut (the "Commissioner"). An annual statement covering the
operations of the Company for the preceding year, as well as its financial
conditions as of December 31 of such year, must be filed with the Commissioner
in a prescribed format on or before March 1 of each year. The Company's books
and assets are subject to review or examination by the Commissioner or his
agents at all times, and a full examination of its operations is conducted at
least once every four years.
The Company is also subject to the insurance laws and regulations of all
other states in which it is licensed to operate. However, the insurance
departments of each of these states generally apply the laws of the home state
(jurisdiction of domicile) in determining the field of permissible investments.
THE SEPARATE ACCOUNT. Fund BD III meets the definition of a separate account
under the federal securities laws, and will comply with the provisions of the
1940 Act. Additionally, the operations of Fund BD III are subject to the
provisions of Section 38a-433 of the Connecticut General Statutes, which
authorizes the Commissioner to adopt regulations under it. Section 38a-433
contains no restrictions on the investments of the Separate Account, and the
Commissioner has adopted no regulations under the Section that affect the
Separate Account.
PRINCIPAL UNDERWRITER
CFBDS, Inc. serves as principal underwriter for Fund BD III and the
Contracts. The offering is continuous. CFBDS's principal executive offices are
located at 21 Milk Street, Boston, Massachusetts. CFBDS is not affiliated with
the Company or Fund BD III.
DISTRIBUTION AND PRINCIPAL UNDERWRITING AGREEMENT
Under the terms of the Distribution and Principal Underwriting Agreement
among Fund BD III, CFBDS and the Company, CFBDS acts as agent for the
distribution of the Contracts and as principal underwriter for the Contracts.
The Company reimburses CFBDS for certain sales and overhead expenses connected
with sales functions.
1
<PAGE> 41
VALUATION OF ASSETS
The value of the assets of each Funding Option is determined on each
business day as of the close of the New York Stock Exchange. Each security
traded on a national securities exchange is valued at the last reported sale
price on the business day. If there has been no sale on that day, then the value
of the security is taken to be the mean between the reported bid and asked
prices on the business day or on the basis of quotations received from a
reputable broker or any other recognized source.
Any security not traded on a securities exchange but traded in the
over-the-counter-market and for which market quotations are readily available is
valued at the mean between the quoted bid and asked prices on the business day
or on the basis of quotations received from a reputable broker or any other
recognized source.
Securities traded on the over-the-counter-market and listed securities
with no reported sales are valued at the mean between the last reported bid and
asked prices or on the basis of quotations received from a reputable broker or
other recognized source.
Short-term investments for which a quoted market price is available are
valued at market. Short-term investments maturing in more than sixty days for
which there is no reliable quoted market price are valued by "marking to market"
(computing a market value based upon quotations from dealers or issuers for
securities of a similar type, quality and maturity.) "Marking to market" takes
into account unrealized appreciation or depreciation due to changes in interest
rates or other factors which would influence the current fair values of such
securities. Short-term investments maturing in sixty days or less for which
there is no reliable quoted market price are valued at amortized cost which
approximates market.
THE CONTRACT VALUE: The value of an Accumulation Unit on any business day is
determined by multiplying the value on the preceding business day by the net
investment factor for the valuation period just ended. The net investment factor
is used to measure the investment performance of a Funding Option from one
valuation period to the next. The net investment factor for a Funding Option for
any valuation period is equal to the sum of 1.000000 plus the net investment
rate (the gross investment rate less any applicable Funding Option deductions
during the valuation period relating to the mortality and expense risk charge
and the administrative expense charge). The gross investment rate of a Funding
Option is equal to (a) minus (b), divided by (c) where:
(a) = investment income plus capital gains and losses (whether realized
or unrealized);
(b) = any deduction for applicable taxes (presently zero); and
(c) = the value of the assets of the funding option at the beginning of
the valuation period.
The gross investment rate may be either positive or negative. A
Sub-Account's assets are based on the net asset value of the Funding Option, and
investment income includes any distribution whose ex-dividend date occurs during
the valuation period.
ACCUMULATION UNIT VALUE. The value of the accumulation unit for each Funding
Option was initially established at $1.00. The value of an accumulation unit on
any business day is determined by multiplying the value on the preceding
business day by the net investment factor for the valuation period just ended.
The net investment factor is calculated for each Funding Option and takes into
account the investment performance, expenses and the deduction of certain
expenses.
2
<PAGE> 42
ANNUITY UNIT VALUE. The initial Annuity Unit Value applicable to each Funding
Option was established at $1.00. An Annuity Unit Value as of any business day is
equal to (a) the value of the Annuity Unit on the preceding business day,
multiplied by (b) the corresponding net investment factor for the business day
just ended, divided by (c) the assumed net investment factor for the valuation
period. (For example, the assumed net investment factor based on an annual
assumed net investment rate of 3.0% for a valuation period of one day is
1.000081 and, for a period of two days, is 1.000081 x 1.000081.) After the
maturity date, withdrawals from the annuity unit value will be permitted only if
you have elected a variable payout option for a fixed period which is not based
on any lifetime. The maximum withdrawal amount will be calculated by computing
the payments at 7% annual interest rate.
MIXED AND SHARED FUNDING
Certain variable annuity separate accounts and variable life insurance
separate accounts may invest in the Funding Options simultaneously (called
"mixed" and "shared" funding). It is conceivable that in the future it may be
disadvantageous to do so. Although the Company and the Funding Options do not
currently foresee any such disadvantages either to variable annuity contract
owners or variable life policy owners, each Funding Option's Board of Directors
intends to monitor events in order to identify any material conflicts between
them and to determine what action, if any, should be taken. If a Board of
Directors was to conclude that separate funds should be established for variable
life and variable annuity separate accounts, the variable annuity contract
owners would not bear any of the related expenses, but variable annuity contract
owners and variable life insurance policy owners would no longer have the
economies of scale resulting from a larger combined fund.
PERFORMANCE INFORMATION
From time to time, the Company may advertise several types of historical
performance for Funding Options of Fund BD III. The Company may advertise the
"standardized average annual total returns" of the Funding Options, calculated
in a manner prescribed by the Securities and Exchange Commission, as well as the
"nonstandardized total returns," as described below:
STANDARDIZED METHOD. Quotations of average annual total returns are
computed according to a formula in which a hypothetical initial investment of
$1,000 is allocated to a Funding Option, and then related to ending redeemable
values over one-, five- and ten-year periods, or inception, if a Funding Option
has not been in existence for one of the prescribed periods. If a Funding Option
has been in existence for less than one year, the "since inception" total return
performance quotations are year-to-date and are not average annual total
returns. These quotations reflect the deduction of all recurring charges during
each period (on a pro rata basis in the case of fractional periods). The
deduction for the annual contract administrative charge is converted to a
percentage of assets based on the actual fee collected, divided by the average
net assets per contract sold under the Prospectus to which this SAI relates.
Each quotation assumes a total redemption at the end of each period with the
assessment of all applicable withdrawal charges.
NONSTANDARDIZED METHOD. Nonstandardized "total returns" will be
calculated in a manner similar to "standardized" as described above. However,
nonstandardized total returns will not reflect the deduction of any applicable
withdrawal charge or the annual contract administrative charge, which, if
reflected, would decrease the level of performance shown. The withdrawal charge
is not reflected because the Contract is designed for long-term investment.
3
<PAGE> 43
For Funding Options that were in existence prior to the date before they
became available under Fund BD III, the standardized average annual total return
quotations may be accompanied by returns showing the investment performance that
such Funding Options would have achieved (reduced by the applicable charges) had
they been held available under the Contract for the period quoted. The total
return quotations are based upon historical earnings and are not necessarily
representative of future performance.
GENERAL. Within the guidelines prescribed by the SEC and the National
Association of Securities Dealers, Inc. ("NASD"), performance information may be
quoted numerically or may be presented in a table, graph or other illustration.
Advertisements may include data comparing performance to similar products,
well-known indices of market performance (including, but not limited to, the Dow
Jones Industrial Average, the Standard & Poor's (S&P) 500 Index and the S&P 400
Index, the Lehman Brothers Long T-Bond Index, the Russell 1000, 2000 and 3000
Indices, the Value Line Index, and the Morgan Stanley Capital International's
EAFE Index). Advertisements may also include published editorial comments and
performance rankings compiled by independent organizations (including, but not
limited to, Lipper Analytical Services, Inc. and Morningstar, Inc.) and
publications that monitor the performance of Fund BD III and the Funding
Options.
Average annual total returns for each of the Funding Options computed
according to the standardized and nonstandardized methods for the period ending
December 31, 1998 are set forth in the following tables.
4
<PAGE> 44
INDEX ANNUITY
SEC STANDARDIZED PERFORMANCE
STANDARDIZED AVERAGE ANNUAL RETURNS AS OF 12/31/98
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
Standard Death Benefit Enhanced Death Benefit
- --------------------------------------------------------------------------------------------------------------------------------
WITHOUT PRINCIPAL PROTECTION Inception Date* 1 Year Inception 1 Year Inception
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
STOCK ACCOUNTS:
- --------------------------------------------------------------------------------------------------------------------------------
Bankers Trust EAFE Index Fund 10/23/97 13.81% 8.76% 13.57% 8.53%
- --------------------------------------------------------------------------------------------------------------------------------
Bankers Trust Small Cap Index Fund 10/7/97 -9.43% -11.89% -9.62% -12.06%
- --------------------------------------------------------------------------------------------------------------------------------
Equity Index Portfolio 9/12/97 20.69% 19.87% 20.43% 19.62%
- --------------------------------------------------------------------------------------------------------------------------------
MONEY MARKET ACCOUNTS:
- --------------------------------------------------------------------------------------------------------------------------------
Travelers Money Market Portfolio 10/17/97 -2.53% -1.46% -2.73% -1.67%
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Standard Death Benefit Enhanced Death Benefit
- --------------------------------------------------------------------------------------------------------------------------------
WITH PRINCIPAL PROTECTION Inception Date 1 Year Inception 1 Year Inception
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Equity Index Portfolio 9/12/97 14.18% 15.18% 13.93% 14.94%
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* The date that the Funding Option became available under the Separate Account
5
<PAGE> 45
INDEX ANNUITY
NONSTANDARDIZED PERFORMANCE AS OF 12/31/98
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
Standard Death Benefit
- --------------------------------------------------------------------------------------------------------------------
WITHOUT PRINCIPAL PROTECTION Inception* YTD 1 Year 3 Year 5 Year Inception
Date
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
STOCK ACCOUNTS:
- --------------------------------------------------------------------------------------------------------------------
Bankers Trust EAFE Index Fund (10/97) 19.93% 19.93% - - 13.81%
- --------------------------------------------------------------------------------------------------------------------
Bankers Trust Small Cap Index Fund (10/97) -3.54% -3.54% - - -7.27%
- --------------------------------------------------------------------------------------------------------------------
Equity Index Portfolio (11/91) 26.81% 26.81% 26.64% 22.75% 19.63%
- --------------------------------------------------------------------------------------------------------------------
MONEY MARKET ACCOUNTS:
- --------------------------------------------------------------------------------------------------------------------
Travelers Money Market Portfolio (12/87) 3.59% 3.59% 3.29% 2.79% 3.63%
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
<CAPTION>
Standard Death Benefit
- --------------------------------------------------------------------------------------------------------------------
Inception
WITH PRINCIPAL PROTECTION Date YTD 1 Year 3 Year 5 Year Inception
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Equity Index Portfolio (11/91) 24.30% 24.30% 24.16% 20.35% 17.28%
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
Enhanced Death Benefit
- ----------------------------------------------------------------------------------------------------------------
WITHOUT PRINCIPAL PROTECTION YTD 1 Year 3 Year 5 Year Inception
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
STOCK ACCOUNTS:
- ----------------------------------------------------------------------------------------------------------------
Bankers Trust EAFE Index Fund 19.69% 19.69% - - 13.58%
- ----------------------------------------------------------------------------------------------------------------
Bankers Trust Small Cap Index Fund -3.73% -3.73% - - -7.45%
- ----------------------------------------------------------------------------------------------------------------
Equity Index Portfolio 26.56% 26.56% 26.39% 22.51% 19.39%
- ----------------------------------------------------------------------------------------------------------------
MONEY MARKET ACCOUNTS:
- ----------------------------------------------------------------------------------------------------------------
Travelers Money Market Portfolio 3.38% 3.38% 3.08% 2.59% 3.42%
- ----------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------
<CAPTION>
Enhanced Death Benefit
- ----------------------------------------------------------------------------------------------------------------
WITH PRINCIPAL PROTECTION YTD 1 Year 3 Year 5 Year Inception
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Equity Index Portfolio 24.06% 24.06% 23.91% 20.11% 17.05%
- ----------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
* The date that the underlying fund began operating
* As presented above, "Inception" is the date that the underlying fund commenced
operations. For Funds that were in existence before they became available under
the separate account, the performance figures represent actual returns of the
fund adjusted to reflect the charges that would have been assessed under the
separate account during the period(s) shown. Funds in existence for less than
one year reflect cumulative performance; all others are annualized.
6
<PAGE> 46
FEDERAL TAX CONSIDERATIONS
The following description of the federal income tax consequences under
this Contract is not exhaustive and is not intended to cover all situations.
Because of the complexity of the law and the fact that the tax results will vary
according to the factual status of the individual involved, tax advice may be
needed by a person contemplating purchase of an annuity contract and by a
contract owner or beneficiary who may make elections under a contract. For
further information, please consult a qualified tax adviser.
MANDATORY DISTRIBUTIONS FOR QUALIFIED PLANS
Federal tax law generally requires that minimum annual distributions
begin by April 1st of the calendar year following the calendar year in which a
participant under a qualified plan, a Section 403(b) annuity, or an IRA attains
age 70 1/2. Distributions must also begin or be continued according to required
patterns following the death of the contract owner or the annuitant.
NONQUALIFIED ANNUITY CONTRACTS
Individuals may purchase tax-deferred annuities without tax law funding
limits. The purchase payments receive no tax benefit, deduction or deferral, but
increases in the value of the contract are generally deferred from tax until
distribution. If a nonqualified annuity is owned by other than an individual,
however, (e.g., by a corporation), the increases in value attributable to
purchase payments made after February 28, 1986 are includable in income
annually. Furthermore, for contracts issued after April 22, 1987, all deferred
increases in value will be includable in the income of a contract owner when the
contract owner transfers the contract without adequate consideration.
If two or more annuity contracts are purchased from the same insurer
within the same calendar year, distributions from any of them will be taxed
based upon the amount of income in all of the same calendar year series of
annuities. This will generally have the effect of causing taxes to be paid
sooner on the deferred gain in the contracts.
Those receiving partial distributions made before the maturity date will
generally be taxed on an income-first basis to the extent of income in the
contract. If you are exchanging another annuity contract for this annuity,
certain pre-August 14, 1982 deposits into an annuity contract that have been
placed in the contract by means of a tax-deferred exchange under Section 1035 of
the Code may be withdrawn first without income tax liability. This information
on deposits must be provided to the Company by the other insurance company at
the time of the exchange. There is income in the contract generally to the
extent the cash value exceeds the investment in the contract. The investment in
the contract is equal to the amount of premiums paid less any amount received
previously which was excludable from gross income. Any direct or indirect
borrowing against the value of the contract or pledging of the contract as
security for a loan will be treated as a cash distribution under the tax law.
The federal tax law requires that nonqualified annuity contracts meet
minimum mandatory distribution requirements upon the death of the contract
owner, including the first of joint owners. Failure to meet these requirements
will cause the surviving joint owner, or the beneficiary to lose the tax
benefits associated with annuity contracts, i.e., primarily the tax deferral
prior to distribution. The distribution required depends, among other things,
upon whether an annuity option is elected or whether the new contract owner is
the surviving spouse. Contracts will be administered by the Company in
accordance with these rules and the Company will make a notification when
payments should be commenced.
7
<PAGE> 47
INDIVIDUAL RETIREMENT ANNUITIES
To the extent of earned income for the year and not exceeding $2,000 per
individual, an individual may make deductible contributions to an individual
retirement annuity (IRA). There are certain limits on the deductible amount
based on the adjusted gross income of the individual and spouse and based on
their participation in a retirement plan. If an individual is married and the
spouse does not have earned income, the individual may establish IRAs for the
individual and spouse. Purchase payments may then be made annually into IRAs for
both spouses in the maximum amount of 100% of earned income up to a combined
limit of $4,000.
The Code provides for the purchase of a Simplified Employee Pension (SEP)
plan. A SEP is funded through an IRA with an annual employer contribution limit
of 15% of compensation up to $30,000 for each participant.
SIMPLE Plan IRA Form
Effective January 1, 1997, employers may establish a savings incentive
match plan for employees ("SIMPLE plan") under which employees can make elective
salary reduction contributions to an IRA based on a percentage of compensation
of up to $6,000. (Alternatively, the employer can establish a SIMPLE cash or
deferred arrangement under IRS Section 401(k)). Under a SIMPLE plan IRA, the
employer must either make a matching contribution of 100% on the first 3% or 7%
contribution for all eligible employees. Early withdrawals are subject to the
10% early withdrawal penalty generally applicable to IRAs, except that an early
withdrawal by an employee under a SIMPLE plan IRA, within the first two years of
participation, shall be subject to a 25% early withdrawal tax.
ROTH IRAs
Effective January 1, 1998, Section 408A of the Code permits certain
individuals to contribute to a Roth IRA. Eligibility to make contributions is
based upon income, and the applicable limits vary based on marital status and/or
whether the contribution is a rollover contribution from another IRA or an
annual contribution. Contributions to a Roth IRA, which are subject to certain
limitations ($2,000 per year for annual contributions), are not deductible and
must be made in cash or as a rollover or transfer from another Roth IRA or other
IRA. A conversion of a "traditional" IRA to a Roth IRA may be subject to tax and
other special rules apply. You should consult a tax adviser before combining any
converted amounts with other Roth IRA contributions, including any other
conversion amounts from other tax years.
Qualified distributions from a Roth IRA are tax-free. A qualified
distribution requires that the Roth IRA has been held for at least 5 years, and
the distribution is made after age 59 1/2, on death or disability of the owner,
or for a limited amount ($10,000) for a qualified first time home purchase for
the owner or certain relatives. Income tax and a 10% penalty tax may apply to
distributions made (1) before age 59 1/2 (subject to certain exceptions) or (2)
during five taxable years starting with the year in which the first contribution
is made to the Roth IRA.
8
<PAGE> 48
QUALIFIED PENSION AND PROFIT-SHARING PLANS
Under a qualified pension or profit-sharing plan, purchase payments made
by an employer are not currently taxable to the participant and increases in the
value of a contract are not subject to taxation until received by a participant
or beneficiary.
Distributions are taxable to the participant or beneficiary as ordinary
income in the year of receipt. Any distribution that is considered the
participant's "investment in the contract" is treated as a return of capital and
is not taxable. Certain lump-sum distributions may be eligible for special
forward averaging tax treatment for certain classes of individuals.
FEDERAL INCOME TAX WITHHOLDING
The portion of a distribution which is taxable income to the recipient
will be subject to federal income tax withholding as follows:
1. ELIGIBLE ROLLOVER DISTRIBUTION FROM SECTION 403(b) PLANS OR ARRANGEMENTS OR
FROM QUALIFIED PENSION AND PROFIT-SHARING PLANS
There is a mandatory 20% tax withholding for plan distributions that are
eligible for rollover to an IRA or to another retirement plan but that are not
directly rolled over. A distribution made directly to a participant or
beneficiary may avoid this result if:
(a) a periodic settlement distribution is elected based upon a life or
life expectancy calculation, or
(b) a term-for-years settlement distribution is elected for a period of
ten years or more, payable at least annually, or
(c) a minimum required distribution as defined under the tax law is taken
after the attainment of the age of 70 1/2 or as otherwise required by
law.
A distribution including a rollover that is not a direct rollover will be
subject to the 20% withholding, and a 10% additional tax penalty may apply to
any amount not added back in the rollover. The 20% withholding may be recovered
when the participant or beneficiary files a personal income tax return for the
year if a rollover was completed within 60 days of receipt of the funds, except
to the extent that the participant or spousal beneficiary is otherwise
underwithheld or short on estimated taxes for that year.
2. OTHER NON-PERIODIC DISTRIBUTIONS (FULL OR PARTIAL REDEMPTIONS)
To the extent not described as requiring 20% withholding in 1 above, the
portion of a non-periodic distribution which constitutes taxable income will be
subject to federal income tax withholding, if the aggregate distributions exceed
$200 for the year, unless the recipient elects not to have taxes withheld. If no
such election is made, 10% of the taxable distribution will be withheld as
federal income tax. Election forms will be provided at the time distributions
are requested. This form of withholding applies to all annuity programs.
9
<PAGE> 49
3. PERIODIC DISTRIBUTIONS (DISTRIBUTIONS PAYABLE OVER A PERIOD GREATER THAN ONE
YEAR)
The portion of a periodic distribution which constitutes taxable income
will be subject to federal income tax withholding under the wage withholding
tables as if the recipient were married claiming three exemptions. A recipient
may elect not to have income taxes withheld or have income taxes withheld at a
different rate by providing a completed election form. Election forms will be
provided at the time distributions are requested. This form of withholding
applies to all annuity programs. As of January 1, 1999, a recipient receiving
periodic payments (e.g., monthly or annual payments under an annuity option)
which total $14,700 or less per year, will generally be exempt from periodic
withholding.
Recipients who elect not to have withholding made are liable for payment
of federal income tax on the taxable portion of the distribution. All recipients
may also be subject to penalties under the estimated tax payment rules if
withholding and estimated tax payments are not sufficient to cover tax
liabilities.
Recipients who do not provide a social security number or other taxpayer
identification number will not be permitted to elect out of withholding.
Additionally, U.S citizens residing outside of the country, or U.S. legal
residents temporarily residing outside the country, are not permitted to elect
out of withholding.
INDEPENDENT ACCOUNTANTS
The consolidated financial statements of The Travelers Insurance Company
and Subsidiaries as of December 31, 1998 and 1997, and for each of the years in
the three-year period ended December 31, 1998, included herein, and the
financial statements of Fund BD III as of December 31, 1998 and for the year
ended December 31, 1998, incorporated herein by reference, have been included or
incorporated in reliance upon the reports of KPMG LLP, independent certified
public accountants, appearing elsewhere herein or incorporated herein by
reference, and upon the authority of said firm as experts in accounting and
auditing.
10
<PAGE> 50
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholder
The Travelers Insurance Company and Subsidiaries:
We have audited the accompanying consolidated balance sheets of The Travelers
Insurance Company and Subsidiaries as of December 31, 1998 and 1997, and the
related consolidated statements of income, changes in retained earnings and
accumulated other changes in equity from non-owner sources and cash flows for
each of the years in the three-year period ended December 31, 1998. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of The Travelers
Insurance Company and Subsidiaries as of December 31, 1998 and 1997, and the
results of their operations and their cash flows for each of the years in the
three-year period ended December 31, 1998, in conformity with generally accepted
accounting principles.
/s/ KPMG LLP
Hartford, Connecticut
January 25, 1999
F-1
<PAGE> 51
THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
($ IN MILLIONS)
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31, 1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
REVENUES
Premiums $1,740 $1,583 $1,387
Net investment income 2,185 2,037 1,950
Realized investment gains 149 199 65
Other revenues 440 354 284
- ------------------------------------------------------------------------------------------------
Total Revenues 4,514 4,173 3,686
- ------------------------------------------------------------------------------------------------
BENEFITS AND EXPENSES
Current and future insurance benefits 1,475 1,341 1,187
Interest credited to contractholders 876 829 863
Amortization of deferred acquisition costs and value of 311 293 281
insurance in force
General and administrative expenses 469 427 380
- ------------------------------------------------------------------------------------------------
Total Benefits and Expenses 3,131 2,890 2,711
- ------------------------------------------------------------------------------------------------
Income from continuing operations before federal income 1,383 1,283 975
taxes
- ------------------------------------------------------------------------------------------------
Federal income taxes:
Current expense 442 434 284
Deferred 39 10 58
- ------------------------------------------------------------------------------------------------
Total Federal Income Taxes 481 444 342
- ------------------------------------------------------------------------------------------------
Income from continuing operations 902 839 633
Discontinued operations, net of income taxes
Gain on disposition (net of taxes of $0, $0 and $14) - - 26
- ------------------------------------------------------------------------------------------------
Income from Discontinued Operations - - 26
================================================================================================
Net income $ 902 $ 839 $ 659
================================================================================================
</TABLE>
See Notes to Consolidated Financial Statements.
F-2
<PAGE> 52
THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
($ IN MILLIONS)
<TABLE>
<CAPTION>
DECEMBER 31, 1998 1997
- ---------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Fixed maturities, available for sale at fair value (cost, $23,893 $21,511
$22,973, $20,682)
Equity securities, at fair value (cost, $474, $480) 518 512
Mortgage loans 2,606 2,869
Real estate held for sale 143 134
Policy loans 1,857 1,872
Short-term securities 1,098 1,102
Trading securities, at market value 1,186 800
Other invested assets 2,251 1,702
- ---------------------------------------------------------------------------------------------
Total Investments 33,552 30,502
- ---------------------------------------------------------------------------------------------
Cash 65 58
Investment income accrued 393 338
Premium balances receivable 99 106
Reinsurance recoverables 3,387 3,753
Deferred acquisition costs and value of insurance in force 2,567 2,312
Separate and variable accounts 15,313 11,319
Other assets 1,172 1,052
- ---------------------------------------------------------------------------------------------
Total Assets $56,548 $49,440
- ---------------------------------------------------------------------------------------------
LIABILITIES
Contractholder funds $16,739 $14,913
Future policy benefits and claims 12,326 12,361
Separate and variable accounts 15,305 11,309
Deferred federal income taxes 422 409
Trading securities sold not yet purchased, at market value 873 462
Other liabilities 2,783 2,661
- ---------------------------------------------------------------------------------------------
Total Liabilities 48,448 42,115
- ---------------------------------------------------------------------------------------------
SHAREHOLDER'S EQUITY
Common stock, par value $2.50; 40 million shares authorized, 100 100
issued and outstanding
Additional paid-in capital 3,800 3,187
Retained earnings 3,602 2,810
Accumulated other changes in equity from non-owner sources 598 535
Unrealized gain on Citigroup Inc. stock, net of tax - 693
- ---------------------------------------------------------------------------------------------
Total Shareholder's Equity 8,100 7,325
- ---------------------------------------------------------------------------------------------
Total Liabilities and Shareholder's Equity $56,548 $49,440
=============================================================================================
</TABLE>
See Notes to Consolidated Financial Statements.
F-3
<PAGE> 53
THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN RETAINED EARNINGS AND ACCUMULATED
OTHER CHANGES IN EQUITY FROM NON-OWNER SOURCES
($ IN MILLIONS)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------
STATEMENTS OF CHANGES IN RETAINED 1998 1997 1996
EARNINGS
- --------------------------------------------------------------------------
<S> <C> <C> <C>
Balance, beginning of year $2,810 $2,471 $2,312
Net income 902 839 659
Dividends to parent 110 500 500
- --------------------------------------------------------------------------
Balance, end of year $3,602 $2,810 $2,471
==========================================================================
- --------------------------------------------------------------------------
STATEMENTS OF ACCUMULATED OTHER CHANGES
IN EQUITY FROM NON-OWNER SOURCES
- --------------------------------------------------------------------------
Balance, beginning of year $ 535 $ 223 $ 449
Unrealized gains (losses), net of tax 62 313 (226)
Foreign currency translation, net of 1 (1) -
tax
- --------------------------------------------------------------------------
Balance, end of year $ 598 $ 535 $ 223
==========================================================================
- --------------------------------------------------------------------------
SUMMARY OF CHANGES IN EQUITY
FROM NON-OWNER SOURCES
- --------------------------------------------------------------------------
Net Income $ 902 $ 839 $ 659
Other changes in equity from
non-owner sources 63 312 (226)
- --------------------------------------------------------------------------
Total changes in equity from
non-owner sources $ 965 $1,151 $ 433
==========================================================================
</TABLE>
See Notes to Consolidated Financial Statements.
F-4
<PAGE> 54
THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
INCREASE (DECREASE) IN CASH
($ IN MILLIONS)
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31, 1998 1997 1996
---- ---- ----
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Premiums collected $1,763 $1,519 $1,387
Net investment income received 2,021 2,059 1,910
Other revenues received 255 180 131
Benefits and claims paid (1,127) (1,230) (1,060)
Interest credited to contractholders (918) (853) (820)
Operating expenses paid (587) (445) (343)
Income taxes paid (506) (368) (328)
Trading account investments, (purchases) sales, net (38) (54) -
Other 12 18 (70)
- ---------------------------------------------------------------------------------------------------
Net cash provided by operating activities 875 826 807
Net cash used in discontinued operations - - (350)
- ---------------------------------------------------------------------------------------------------
Net Cash Provided by Operations 875 826 457
- ---------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from maturities of investments
Fixed maturities 2,608 2,259 1,928
Mortgage loans 722 663 917
Proceeds from sales of investments
Fixed maturities 13,390 7,592 9,101
Equity securities 212 341 479
Mortgage loans - 207 178
Real estate held for sale 53 169 210
Purchases of investments
Fixed maturities (18,072) (11,143) (11,556)
Equity securities (194) (483) (594)
Mortgage loans (457) (771) (470)
Policy loans, net 15 38 (23)
Short-term securities, (purchases) sales, net (495) (2) 498
Other investments, purchases, net (550) (260) (137)
Securities transactions in course of settlement 192 311 (52)
Net cash provided by investing activities of - - 348
discontinued operations
- ---------------------------------------------------------------------------------------------------
Net Cash Provided by (Used In) Investing Activities (2,576) (1,079) 827
- ---------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Redemption of commercial paper, net - (50) (23)
Contractholder fund deposits 4,383 3,544 2,493
Contractholder fund withdrawals (2,565) (2,757) (3,262)
Dividends to parent company (110) (500) (500)
Other - - 9
- ---------------------------------------------------------------------------------------------------
Net Cash Provided by (Used In) Financing Activities 1,708 237 (1,283)
- ---------------------------------------------------------------------------------------------------
Net increase (decrease) in cash 7 (16) 1
- ---------------------------------------------------------------------------------------------------
Cash at December 31, $ 65 $ 58 $ 74
===================================================================================================
</TABLE>
See Notes to Consolidated Financial Statements.
F-5
<PAGE> 55
THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Significant accounting policies used in the preparation of the accompanying
financial statements follow.
Basis of Presentation
The Travelers Insurance Company (TIC) and, collectively with its subsidiaries
(the Company) is a wholly owned subsidiary of The Travelers Insurance Group
Inc. (TIGI), an indirect wholly owned subsidiary of Citigroup Inc.
(Citigroup), formerly Travelers Group Inc. The consolidated financial
statements include the accounts of TIC and its insurance and non-insurance
subsidiaries on a fully consolidated basis. The primary insurance
subsidiaries of the Company are The Travelers Life and Annuity Company (TLAC)
and Primerica Life Insurance Company (Primerica Life) and its subsidiary
National Benefit Life Insurance Company (NBL).
As discussed in Note 2 of Notes to Consolidated Financial Statements, in
January 1995 the group life insurance and related businesses of the Company
were sold to Metropolitan Life Insurance Company (MetLife). Also in January
1995, the group medical component was exchanged for a 42% interest in The
MetraHealth Companies, Inc. (MetraHealth). The Company's interest in
MetraHealth was sold on October 2, 1995 and a final contingent payment was
made during 1996. The Company's discontinued operations reflect the results
of the gain from the contingent payment in 1996.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and benefits and expenses during the
reporting period. Actual results could differ from those estimates.
Certain prior year amounts have been reclassified to conform with the 1998
presentation.
F-6
<PAGE> 56
THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
ACCOUNTING CHANGES
Accounting for Transfers and Servicing of Financial Assets and
Extinguishments of Liabilities
Effective January 1, 1997, the Company adopted Statement of Financial
Accounting Standards No. 125, "Accounting for Transfers and Servicing of
Financial Assets and Extinguishments of Liabilities" (FAS 125). This
statement establishes accounting and reporting standards for transfers and
servicing of financial assets and extinguishments of liabilities. These
standards are based on an approach that focuses on control. Under this
approach, after a transfer of financial assets, an entity recognizes the
financial and servicing assets it controls and the liabilities it has
incurred, derecognizes financial assets when control has been surrendered and
derecognizes liabilities when extinguished. FAS 125 provides standards for
distinguishing transfers of financial assets that are sales from transfers
that are secured borrowings. Effective January 1, 1998, the Company adopted
the collateral provisions of FAS 125 which were not effective until 1998 in
accordance with Statement of Financial Accounting Standards No. 127,
"Deferral of the Effective Date of Certain Provisions of SFAS 125". The
adoption of the collateral provisions of FAS 125 created additional assets
and liabilities on the Company's consolidated statement of financial position
related to the recognition of securities provided and received as collateral.
There was no impact on the Company's results of operations from the adoption
of the collateral provisions of FAS 125.
Reporting Comprehensive Income
Effective January 1, 1998, the Company adopted Statement of Financial
Accounting Standards No. 130, "Reporting Comprehensive Income" (FAS 130). FAS
130 establishes standards for the reporting and display of comprehensive
income and its components in a full set of general-purpose financial
statements. All items that are required to be recognized under accounting
standards as components of comprehensive income are required to be reported
in an annual financial statement that is displayed with the same prominence
as other financial statements. This statement stipulates that comprehensive
income reflect the change in equity of an enterprise during a period from
transactions and other events and circumstances from non-owner sources.
Comprehensive income thus represents the sum of net income and other
changes in equity from non-owner sources. The accumulated balance of other
changes in equity from non-owner sources is required to be displayed
separately from retained earnings and additional paid-in capital in the
consolidated balance sheet. The adoption of FAS 130 resulted primarily in the
Company reporting unrealized gains and losses on investments in debt and
equity securities in changes in equity from non-owner sources. See Note 5.
F-7
<PAGE> 57
THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
Disclosures About Segments of an Enterprise and Related Information
During 1998, the Company adopted Statement of Financial Accounting Standards No.
131, "Disclosures About Segments of an Enterprise and Related Information" (FAS
131). FAS 131 establishes standards for the way that public enterprises report
information about operating segments in annual financial statements and requires
that selected information about those operating segments be reported in interim
financial statements. This statement supersedes Statement of Financial
Accounting Standards No. 14, "Financial Reporting for Segments of a Business
Enterprise". FAS 131 requires that all public enterprises report financial and
descriptive information about its reportable operating segments. Operating
segments are defined as components of an enterprise about which separate
financial information is available that is evaluated regularly by the chief
operating decisionmaker in deciding how to allocate resources and in assessing
performance. As a result of the adoption of FAS 131, the Company has two
reportable operating segments, Travelers Life and Annuity and Primerica Life
Insurance. See Note 17.
Accounting for the Costs of Computer Software Developed or Obtained for
Internal Use
During the third quarter of 1998, the Company adopted (effective January 1,
1998) the Accounting Standards Executive Committee of the American Institute
of Certified Public Accountants' Statement of Position 98-1, "Accounting for
the Costs of Computer Software Developed or Obtained for Internal Use" (SOP
98-1). SOP 98-1 provides guidance on accounting for the costs of computer
software developed or obtained for internal use and for determining when
specific costs should be capitalized or expensed. The adoption of SOP 98-1
did not have a material impact on the Company's financial condition,
statement of operations or liquidity.
ACCOUNTING POLICIES
Investments
Fixed maturities include bonds, notes and redeemable preferred stocks. Fair
values of investments in fixed maturities are based on quoted market prices
or dealer quotes or, if these are not available, discounted expected cash
flows using market rates commensurate with the credit quality and maturity of
the investment. Also included in fixed maturities are loan-backed and
structured securities, which are amortized using the retrospective method.
The effective yield used to determine amortization is calculated based upon
actual historical and projected future cash flows, which are obtained from a
widely-accepted securities data provider. Fixed maturities are classified as
"available for sale" and are reported at fair value, with unrealized
investment gains and losses, net of income taxes, charged or credited
directly to shareholder's equity.
Equity securities, which include common and nonredeemable preferred stocks,
are classified as "available for sale" and carried at fair value based
primarily on quoted market prices. Changes in fair values of equity
securities are charged or credited directly to shareholder's equity, net of
income taxes.
Mortgage loans are carried at amortized cost. A mortgage loan is considered
impaired when it is probable that the Company will be unable to collect
principal and interest amounts due. For mortgage loans that are determined to
be impaired, a reserve is established for the difference between the
amortized cost and fair market value of the underlying collateral. In
estimating fair value, the Company uses interest rates reflecting the higher
returns required in the current real estate financing market. Impaired loans
were insignificant at December 31, 1998 and 1997.
F-8
<PAGE> 58
THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
Real estate held for sale is carried at the lower of cost or fair value less
estimated cost to sell. Fair value of foreclosed properties is established at
the time of foreclosure by internal analysis or external appraisers, using
discounted cash flow analyses and other accepted techniques. Thereafter, an
allowance for losses on real estate held for sale is established if the
carrying value of the property exceeds its current fair value less estimated
costs to sell. There was no such allowance at December 31, 1998 and 1997.
Trading securities and related liabilities are normally held for periods less
than six months. These investments are marked to market with the change
recognized in net investment income during the current period.
Short-term securities, consisting primarily of money market instruments and
other debt issues purchased with a maturity of less than one year, are
carried at amortized cost which approximates market.
Accrual of income is suspended on fixed maturities or mortgage loans that are
in default, or on which it is likely that future payments will not be made as
scheduled. Interest income on investments in default is recognized only as
payment is received.
DERIVATIVE FINANCIAL INSTRUMENTS
The Company uses derivative financial instruments, including financial
futures contracts, options, forward contracts and interest rate swaps and
caps, as a means of hedging exposure to interest rate and foreign currency
risk. Hedge accounting is used to account for derivatives. To qualify for
hedge accounting the changes in value of the derivative must be expected to
substantially offset the changes in value of the hedged item. Hedges are
monitored to ensure that there is a high correlation between the derivative
instruments and the hedged investment.
Gains and losses arising from financial futures contracts are used to adjust
the basis of hedged investments and are recognized in net investment income
over the life of the investment.
Payments to be received or made under interest rate swaps are accrued and
recognized in net investment income. Swaps are carried at fair value with
unrealized gains and losses, net of taxes, charged or credited directly to
shareholder's equity.
Forward contracts, and options, and interest rate caps were not significant
at December 31, 1998 and 1997. Information concerning derivative financial
instruments is included in Note 6.
INVESTMENT GAINS AND LOSSES
Realized investment gains and losses are included as a component of pre-tax
revenues based upon specific identification of the investments sold on the
trade date. Also included are gains and losses arising from the remeasurement
of the local currency value of foreign investments to U.S. dollars, the
functional currency of the Company. The foreign exchange effects of Canadian
operations are included in unrealized gains and losses.
F-9
<PAGE> 59
THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
POLICY LOANS
Policy loans are carried at the amount of the unpaid balances that are not in
excess of the net cash surrender values of the related insurance policies.
The carrying value of policy loans, which have no defined maturities, is
considered to be fair value.
DEFERRED ACQUISITION COSTS AND VALUE OF INSURANCE IN FORCE
Costs of acquiring individual life insurance, annuities and long-term care
business, principally commissions and certain expenses related to policy
issuance, underwriting and marketing, all of which vary with and are
primarily related to the production of new business, are deferred.
Acquisition costs relating to traditional life insurance, including term
insurance and long-term care insurance, are amortized in relation to
anticipated premiums; universal life in relation to estimated gross profits;
and annuity contracts employing a level yield method. For life insurance, a
15 to 20 year amortization period is used; for long-term care business, a 10
to 20 year period is used, and a 7 to 20 year period is employed for
annuities. Deferred acquisition costs are reviewed periodically for
recoverability to determine if any adjustment is required.
The value of insurance in force is an asset recorded at the time of
acquisition of an insurance company. It represents the actuarially determined
present value of anticipated profits to be realized from life insurance,
annuities and health contracts at the date of acquisition using the same
assumptions that were used for computing related liabilities where
appropriate. The value of insurance in force was the actuarially determined
present value of the projected future profits discounted at interest rates
ranging from 14% to 18%. Traditional life insurance and guaranteed renewable
health policies are amortized in relation to anticipated premiums; universal
life is amortized in relation to estimated gross profits; and annuity
contracts are amortized employing a level yield method. The value of
insurance in force is reviewed periodically for recoverability to determine
if any adjustment is required.
SEPARATE AND VARIABLE ACCOUNTS
Separate and variable accounts primarily represent funds for which investment
income and investment gains and losses accrue directly to, and investment
risk is borne by, the contractholders. Each account has specific investment
objectives. The assets of each account are legally segregated and are not
subject to claims that arise out of any other business of the Company. The
assets of these accounts are carried at market value. Certain other separate
accounts provide guaranteed levels of return or benefits and the assets of
these accounts are primarily carried at market value. Amounts assessed to the
contractholders for management services are included in revenues. Deposits,
net investment income and realized investment gains and losses for these
accounts are excluded from revenues, and related liability increases are
excluded from benefits and expenses.
GOODWILL
Goodwill represents the cost of acquired businesses in excess of net assets
and is being amortized on a straight-line basis principally over a 40-year
period. The carrying amount is regularly reviewed for indication of
impairment in value that in the view of management would be other than
temporary. Impairments would be recognized in operating results if a
permanent diminution in value is deemed to have occurred.
F-10
<PAGE> 60
THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
CONTRACTHOLDER FUNDS
Contractholder funds represent receipts from the issuance of universal life,
corporate owned life insurance, pension investment and certain deferred
annuity contracts. Contractholder fund balances are increased by such
receipts and credited interest and reduced by withdrawals, mortality charges
and administrative expenses charged to the contractholders. Interest rates
credited to contractholder funds range from 3.5% to 9.1%.
FUTURE POLICY BENEFITS
Benefit reserves represent liabilities for future insurance policy benefits.
Benefit reserves for life insurance and annuities have been computed based
upon mortality, morbidity, persistency and interest assumptions applicable to
these coverages, which range from 2.5% to 10.0%, including adverse deviation.
These assumptions consider Company experience and industry standards. The
assumptions vary by plan, age at issue, year of issue and duration.
Appropriate recognition has been given to experience rating and reinsurance.
PERMITTED STATUTORY ACCOUNTING PRACTICES
The Company, whose insurance subsidiaries are domiciled principally in
Connecticut and Massachusetts, prepares statutory financial statements in
accordance with the accounting practices prescribed or permitted by the
insurance departments of the states of domicile. Prescribed statutory
accounting practices include certain publications of the National Association
of Insurance Commissioners (NAIC) as well as state laws, regulations, and
general administrative rules. Permitted statutory accounting practices
encompass all accounting practices not so prescribed. The impact of any
permitted accounting practices on statutory surplus of the Company is not
material.
The NAIC recently completed a process intended to codify statutory accounting
practices for certain insurance enterprises. As a result of this process, the
NAIC will issue a revised statutory Accounting Practices and Procedures
Manual version effective January 1, 2001 (the revised Manual) that will be
effective January 1, 2001 for the calendar year 2001 statutory financial
statements. It is expected that the State of Connecticut will require that,
effective January 1, 2001, insurance companies domiciled in Connecticut
prepare their statutory basis financial statements in accordance with the
revised Manual subject to any deviations prescribed or permitted by the
Connecticut insurance commissioner. The Company has not yet determined the
impact that this change will have on the statutory capital and surplus of its
insurance subsidiaries.
PREMIUMS
Premiums are recognized as revenues when due. Reserves are established for
the portion of premiums that will be earned in future periods and for
deferred profits on limited-payment policies that are being recognized in
income over the policy term.
OTHER REVENUES
Other revenues include surrender, mortality and administrative charges and
fees earned on investment, universal life and other insurance contracts.
Other revenues also include gains and losses on dispositions of assets other
than realized investment gains and losses and revenues of non-insurance
subsidiaries.
F-11
<PAGE> 61
THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
INTEREST CREDITED TO CONTRACTHOLDERS
Interest credited to contractholders represents amounts earned by universal
life, corporate owned life insurance, pension investment and certain deferred
annuity contracts in accordance with contract provisions.
FEDERAL INCOME TAXES
The provision for federal income taxes is comprised of two components,
current income taxes and deferred income taxes. Deferred federal income taxes
arise from changes during the year in cumulative temporary differences
between the tax basis and book basis of assets and liabilities. The deferred
federal income tax asset is recognized to the extent that future realization
of the tax benefit is more likely than not, with a valuation allowance for
the portion that is not likely to be recognized.
FUTURE APPLICATION OF ACCOUNTING STANDARDS
In December 1997, the Accounting Standards Executive Committee of the
American Institute of Certified Public Accountants issued Statement of
Position 97-3, "Accounting by Insurance and Other Enterprises for
Insurance-Related Assessments" (SOP 97-3). SOP 97-3 provides guidance for
determining when an entity should recognize a liability for guaranty-fund and
other insurance-related assessments, how to measure that liability, and when
an asset may be recognized for the recovery of such assessments through
premium tax offsets or policy surcharges. This SOP is effective for financial
statements for fiscal years beginning after December 15, 1998, and the effect
of initial adoption is to be reported as a cumulative catch-up adjustment.
Restatement of previously issued financial statements is not allowed. The
Company plans to implement SOP 97-3 in the first quarter of 1999 and expects
there to be no material impact on the Company's financial condition, results
of operations or liquidity.
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, "Accounting for Derivative
Instruments and Hedging Activities" (FAS 133). This statement establishes
accounting and reporting standards for derivative instruments, including
certain derivative instruments embedded in other contracts, (collectively
referred to as derivatives) and for hedging activities. It requires that an
entity recognize all derivatives as either assets or liabilities in the
balance sheet and measure those instruments at fair value. If certain
conditions are met, a derivative may be specifically designated as (a) a
hedge of the exposure to changes in the fair value of a recognized asset or
liability or an unrecognized firm commitment, (b) a hedge of the exposure to
variable cash flows of a forecasted transaction, or (c) a hedge of the
foreign currency exposure of a net investment in a foreign operation, an
unrecognized firm commitment, an available-for-sale security, or a
foreign-currency-denominated forecasted transaction. The accounting for
changes in the fair value of a derivative (that is, gains and losses) depends
on the intended use of the derivative and the resulting designation. FAS 133
is effective for all fiscal quarters of fiscal years beginning after June 15,
1999. Upon initial application of FAS 133, hedging relationships must be
designated anew and documented pursuant to the provisions of this statement.
The Company has not yet determined the impact that FAS 133 will have on its
consolidated financial statements.
F-12
<PAGE> 62
THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
2. DISPOSITIONS AND DISCONTINUED OPERATIONS
On January 3, 1995, the Company and its affiliates completed the sale of
their group life and related non-medical group insurance businesses to
MetLife for $350 million and formed the MetraHealth joint venture by
contributing their group medical businesses to MetraHealth, in exchange for
shares of common stock of MetraHealth. No gain was recognized as a result of
this transaction.
On October 2, 1995, the Company and its affiliates completed the sale of
their ownership in MetraHealth to United HealthCare Corporation. During 1996
the Company received a contingency payment based on MetraHealth's 1995
results. In conjunction with this payment, certain reserves associated with
the group medical business and exit costs related to the discontinued
operations were reevaluated resulting in a final after-tax gain of $26
million.
3. COMMERCIAL PAPER AND LINES OF CREDIT
TIC issues commercial paper directly to investors. No commercial paper was
outstanding at December 31, 1998 or 1997. TIC maintains unused credit
availability under bank lines of credit at least equal to the amount of the
outstanding commercial paper. No interest was paid in 1998 and interest
expense was not significant in 1997.
Citigroup, Commercial Credit Company (CCC) (an indirect wholly owned
subsidiary of Citigroup) and TIC have an agreement with a syndicate of banks
to provide $1.0 billion of revolving credit, to be allocated to any of
Citigroup, CCC or TIC. TIC's participation in this agreement is limited to
$250 million. The agreement consists of a five-year revolving credit facility
that expires in 2001. At December 31, 1998, $700 million was allocated to
Citigroup, $300 million was allocated to CCC and $0 was allocated to TIC.
Under this facility TIC is required to maintain certain minimum equity and
risk-based capital levels. At December 31, 1998, TIC was in compliance with
these provisions. There were no amounts outstanding under this agreement at
December 31, 1998 and 1997. If TIC had borrowings outstanding on this
facility, the interest rate would be based upon LIBOR plus a negotiated
margin.
4. REINSURANCE
The Company participates in reinsurance in order to limit losses, minimize
exposure to large risks, provide additional capacity for future growth and to
effect business-sharing arrangements. Reinsurance is accomplished through
various plans of reinsurance, primarily yearly renewable term coinsurance and
modified coinsurance. The Company remains primarily liable as the direct
insurer on all risks reinsured.
Beginning in 1997, new universal life business was reinsured under an 80%/20%
quota share reinsurance program and new term life business was reinsured
under a 90%/10% quota share reinsurance program. Maximum retention of $1.5
million is generally reached on policies in excess of $7.5 million. For other
plans of insurance, it is the policy of the Company to obtain reinsurance for
amounts above certain retention limits on individual life policies, which
limits vary with age and underwriting classification. Generally, the maximum
retention on an ordinary life risk is $1.5 million.
The Company writes workers' compensation business through its Accident
Department. This business is ceded 100% to an affiliate, The Travelers
Indemnity Company.
F-13
<PAGE> 63
THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
A summary of reinsurance financial data reflected within the consolidated
statements of income and balance sheets is presented below ($ in millions):
<TABLE>
<CAPTION>
WRITTEN PREMIUMS 1998 1997 1996
----------------------------------------------------------------------
<S> <C> <C> <C>
Direct $2,310 $2,148 $1,982
Assumed from:
Non-affiliated companies - 1 5
Ceded to:
Affiliated companies (242) (280) (284)
Non-affiliated companies (317) (273) (309)
----------------------------------------------------------------------
Total Net Written Premiums $1,751 $1,596 $1,394
======================================================================
</TABLE>
<TABLE>
<CAPTION>
EARNED PREMIUMS 1998 1997 1996
----------------------------------------------------------------------
<S> <C> <C> <C>
Direct $1,949 $2,170 $1,897
Assumed from:
Non-affiliated companies - 1 5
Ceded to:
Affiliated companies (251) (321) (219)
Non-affiliated companies (308) (291) (315)
----------------------------------------------------------------------
Total Net Earned Premiums $1,390 $1,559 $1,368
======================================================================
</TABLE>
Reinsurance recoverables at December 31, 1998 and 1997 include amounts
recoverable on unpaid and paid losses and were as follows ($ in millions):
<TABLE>
<CAPTION>
REINSURANCE RECOVERABLES 1998 1997
-----------------------------------------------------------
<S> <C> <C>
Life and Accident and Health Business:
Non-affiliated companies $1,297 $1,362
Property-Casualty Business:
Affiliated companies 2,090 2,391
-----------------------------------------------------------
Total Reinsurance Recoverables $3,387 $3,753
===========================================================
</TABLE>
Total reinsurance recoverables at December 31, 1998 and 1997 include $640
million and $697 million, respectively, from MetLife in connection with the
sale of the Company's group life and related businesses.
F-14
<PAGE> 64
THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
5. SHAREHOLDER'S EQUITY
Additional Paid-In Capital
Additional paid-in capital increased during 1998 primarily due to the
conversion of Citigroup common stock to Citigroup preferred stock. This
increase in stockholder's equity was offset by a decrease in unrealized
investment gains due to the same transaction. See Note 13.
Unrealized Investment Gains (Losses)
An analysis of the change in unrealized gains and losses on investments is
shown in Note 13.
Shareholder's Equity and Dividend Availability
The Company's statutory net income, which includes all insurance
subsidiaries, was $702 million, $754 million and $656 million for the years
ended December 31, 1998, 1997 and 1996, respectively.
The Company's statutory capital and surplus was $4.95 billion and $4.12
billion at December 31, 1998 and 1997, respectively.
The Company is currently subject to various regulatory restrictions that
limit the maximum amount of dividends available to be paid to its parent
without prior approval of insurance regulatory authorities. Statutory surplus
of $504 million is available in 1999 for dividend payments by the Company
without prior approval of the Connecticut Insurance Department. In addition,
under a revolving credit facility, the Company is required to maintain
certain minimum equity and risk based capital levels. The Company is in
compliance with these covenants at December 31, 1998 and 1997.
F-15
<PAGE> 65
THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
ACCUMULATED OTHER CHANGES IN EQUITY FROM NON-OWNER SOURCES, NET OF TAX
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
NET UNREALIZED FOREIGN CURRENCY ACCUMULATED OTHER
GAIN ON TRANSLATION CHANGES IN EQUITY FROM
INVESTMENT ADJUSTMENTS NON-OWNER SOURCES
(for the year ended December 31, $ in millions) SECURITIES
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1998
Balance, beginning of year $545 $(10) $535
Current-year change 62 1 63
- --------------------------------------------------------------------------------------------------------------------------
Balance, end of year $607 $(9) $598
==========================================================================================================================
1997
Balance, beginning of year $232 $(9) $223
Current-year change 313 (1) 312
- --------------------------------------------------------------------------------------------------------------------------
Balance, end of year $545 $(10) $535
==========================================================================================================================
1996
Balance, beginning of year $458 $(9) $449
Current-year change (226) - (226)
- --------------------------------------------------------------------------------------------------------------------------
Balance, end of year $232 $(9) $223
==========================================================================================================================
</TABLE>
TAX EFFECTS ALLOCATED TO EACH COMPONENT OF OTHER CHANGES IN EQUITY FROM
NON-OWNER SOURCES
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
Pre-tax Tax expense After-tax
(for the year ended December 31, $ in millions) amount (benefit) amount
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1998
Unrealized gain on investment securities:
Unrealized holding gains arising during year $ 244 $ 85 $ 159
Less: reclassification adjustment for gains
realized in net income 149 52 97
- ---------------------------------------------------------------------------------------------------------
Net unrealized gain on investment securities 95 33 62
Foreign currency translation adjustments 3 2 1
- ---------------------------------------------------------------------------------------------------------
Other changes in equity from non-owner sources $ 98 $ 35 $ 63
=========================================================================================================
1997
Unrealized gain on investment securities:
Unrealized holding gains arising during year $ 681 $ 239 $ 442
Less: reclassification adjustment for gains
realized in net income 199 70 129
- ---------------------------------------------------------------------------------------------------------
Net unrealized gain on investment securities 482 169 313
Foreign currency translation adjustments (1) - (1)
- ---------------------------------------------------------------------------------------------------------
Other changes in equity from non-owner sources $ 481 $ 169 $ 312
=========================================================================================================
1996
Unrealized gain on investment securities:
Unrealized holding losses arising during year $(283) $ (99) $(184)
Less: reclassification adjustment for gains
realized in net income 65 23 42
- ---------------------------------------------------------------------------------------------------------
Net unrealized loss on investment securities (348) (122) (226)
Foreign currency translation adjustments - - -
- ---------------------------------------------------------------------------------------------------------
Other changes in equity from non-owner sources $(348) $(122) $(226)
=========================================================================================================
</TABLE>
F-16
<PAGE> 66
THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
6. DERIVATIVE FINANCIAL INSTRUMENTS AND FAIR VALUE OF FINANCIAL INSTRUMENTS
Derivative Financial Instruments
The Company uses derivative financial instruments, including financial
futures, interest rate swaps, options and forward contracts as a means of
hedging exposure to interest rate and foreign currency risk on anticipated
transactions or existing assets and liabilities. The Company does not hold or
issue derivative instruments for trading purposes. These derivative financial
instruments have off-balance sheet risk. Financial instruments with
off-balance sheet risk involve, to varying degrees, elements of credit and
market risk in excess of the amount recognized in the balance sheet. The
contract or notional amounts of these instruments reflect the extent of
involvement the Company has in a particular class of financial instrument.
However, the maximum loss of cash flow associated with these instruments can
be less than these amounts. For interest rate swaps, options and forward
contracts, credit risk is limited to the amount that it would cost the
Company to replace the contracts. Financial futures contracts have little
credit risk since organized exchanges are the counterparties. The Company is
a writer of option contracts and as such has no credit risk since the
counterparty has no performance obligation after it has paid a cash premium.
The Company monitors creditworthiness of counterparties to these financial
instruments by using criteria of acceptable risk that are consistent with
on-balance sheet financial instruments. The controls include credit
approvals, limits and other monitoring procedures.
The Company uses exchange traded financial futures contracts to manage its
exposure to changes in interest rates which arise from the sale of certain
insurance and investment products, or the need to reinvest proceeds from the
sale or maturity of investments. To hedge against adverse changes in interest
rates, the Company enters long or short positions in financial futures
contracts which offset asset price changes resulting from changes in market
interest rates until an investment is purchased or a product is sold.
Margin payments are required to enter a futures contract and contract gains
or losses are settled daily in cash. The contract amount of futures contracts
represents the extent of the Company's involvement, but not future cash
requirements, as open positions are typically closed out prior to the
delivery date of the contract.
At December 31, 1998 and 1997, the Company held financial futures contracts
with notional amounts of $459 million and $625 million, respectively. These
financial futures had a deferred gain of $3.3 million and a deferred loss of
$.1 million in 1998 and a deferred gain of $.7 million, and a deferred loss
of $4.1 million in 1997. Total gains of $1.5 million and losses of $5.8
million from financial futures were deferred at December 31, 1998 and 1997,
respectively, relating to anticipated investment purchases and investment
product sales, and are reported as other liabilities. At December 31, 1998
and 1997, the Company's futures contracts had no fair value because these
contracts were marked to market and settled in cash daily.
F-17
<PAGE> 67
THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
The Company enters into interest rate swaps in connection with other
financial instruments to provide greater risk diversification and better
match an asset with a corresponding liability. Under interest rate swaps, the
Company agrees with other parties to exchange, at specific intervals, the
difference between fixed-rate and floating-rate interest amounts calculated
by reference to an agreed notional principal amount. The Company also enters
into basis swaps in which both legs of the swap are floating with each based
on a different index. Generally, no cash is exchanged at the outset of the
contract and no principal payments are made by either party. A single net
payment is usually made by one counterparty at each due date. Swap agreements
are not exchange traded and are subject to the risk of default by the
counterparty.
At December 31, 1998 and 1997, the Company held interest rate swap contracts
with notional amounts of $1,077.9 million and $234.7 million, respectively.
The fair value of these financial instruments was $5.6 million (gain
position) and $19.6 million (loss position) at December 31, 1998 and was $.3
million (gain position) and $2.5 million (loss position) at December 31,
1997. The fair values were determined using the discounted cash flow method.
The off-balance sheet risks of options and forward contracts were not
significant at December 31, 1998 and 1997.
The Company purchased a 5-year interest rate cap, with a notional amount of
$200 million, from Travelers Group Inc. in 1995 to hedge against losses that
could result from increasing interest rates. This instrument, which does not
have off-balance sheet risk, gave the Company the right to receive payments
if interest rates exceeded specific levels at specific dates. The premium of
$2 million paid for this instrument was being amortized over its life. The
interest rate cap asset was terminated in 1998. The fair value at December
31, 1997 was $0.
Financial Instruments with Off-Balance Sheet Risk
In the normal course of business, the Company issues fixed and variable rate
loan commitments and has unfunded commitments to partnerships. The
off-balance sheet risk of these financial instruments was not significant at
December 31, 1998 and 1997.
Fair Value of Certain Financial Instruments
The Company uses various financial instruments in the normal course of its
business. Fair values of financial instruments that are considered insurance
contracts are not required to be disclosed and are not included in the
amounts discussed.
At December 31, 1998 and 1997, investments in fixed maturities had a carrying
value and a fair value of $23.9 billion and $21.5 billion, respectively. See
Notes 1 and 13.
At December 31, 1998 mortgage loans had a carrying value of $2.6 billion and
a fair value of $2.8 billion and in 1997 had a carrying value of $2.9 billion
and a fair value of $3.0 billion. In estimating fair value, the Company used
interest rates reflecting the current real estate financing market.
F-18
<PAGE> 68
THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
The carrying values of $144 million and $143 million of financial instruments
classified as other assets approximated their fair values at December 31,
1998 and 1997, respectively. The carrying values of $2.3 billion and $2.0
billion of financial instruments classified as other liabilities also
approximated their fair values at December 31, 1998 and 1997, respectively.
Fair value is determined using various methods, including discounted cash
flows, as appropriate for the various financial instruments.
At December 31, 1998, contractholder funds with defined maturities had a
carrying value and a fair value of $3.3 billion, compared with a carrying
value and a fair value of $2.3 billion at December 31, 1997. The fair value
of these contracts is determined by discounting expected cash flows at an
interest rate commensurate with the Company's credit risk and the expected
timing of cash flows. Contractholder funds without defined maturities had a
carrying value of $10.4 billion and a fair value of $10.2 billion at December
31, 1998, compared with a carrying value of $9.7 billion and a fair value of
$9.5 billion at December 31, 1997. These contracts generally are valued at
surrender value.
The assets of separate accounts providing a guaranteed return had a carrying
value and a fair value of $235 million at December 31, 1998, compared with a
carrying value and a fair value of $260 million at December 31, 1997. The
liabilities of separate accounts providing a guaranteed return had a carrying
value and a fair value of $209 million and $206 million, respectively, at
December 31, 1998, compared with a carrying value and a fair value of $209
million and $206 million, respectively, at December 31, 1997.
The carrying values of cash, trading securities and trading securities sold
not yet purchased are carried at fair value. The carrying values of
short-term securities and investment income accrued approximated their fair
values.
The carrying value of policy loans, which have no defined maturities, is
considered to be fair value.
7. COMMITMENTS AND CONTINGENCIES
Financial Instruments with Off-Balance Sheet Risk
See Note 6 for a discussion of financial instruments with off-balance sheet
risk.
F-19
<PAGE> 69
THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
Litigation
In March 1997, a purported class action entitled Patterman v. The Travelers,
Inc. et al. was commenced in the Superior Court of Richmond County, Georgia,
alleging, among other things, violations of the Georgia RICO statute and
other state laws by an affiliate of the Company, Primerica Financial
Services, Inc. and certain of its affiliates. Plaintiffs seek unspecified
compensatory and punitive damages and other relief. In October 1997,
defendants answered the complaint, denied liability and asserted numerous
affirmative defenses. In February 1998, the Superior Court of Richmond County
transferred the lawsuit to the Superior Court of Gwinnett County, Georgia.
The plaintiffs appealed the transfer order, and in December 1998 the Court of
Appeals of the State of Georgia reversed the lower court's decision. Later in
December 1998, defendants petitioned the Georgia Supreme Court to hear the
appeal from the decision of the Court of Appeals. Pending appeal, proceedings
in the trial court have been stayed. Defendants intend to vigorously contest
the litigation.
The Company is also a defendant or co-defendant in various other litigation
matters in the normal course of business. Although there can be no
assurances, as of December 31, 1998, the Company believes, based on
information currently available, that the ultimate resolution of these legal
proceedings would not be likely to have a material adverse effect on its
results of operations, financial condition or liquidity.
8. BENEFIT PLANS
Pension and Other Postretirement Benefits
The Company participates in a qualified, noncontributory defined benefit
pension plan sponsored by Citigroup. In addition, the Company provides
certain other postretirement benefits to retired employees through a plan
sponsored by TIGI. The Company's share of net expense for the qualified
pension and other postretirement benefit plans was not significant for 1998,
1997 and 1996. Through plans sponsored by TIGI, the Company also provides
defined contribution pension plans for certain agents. Company contributions
are primarily a function of production. The expense for these plans was not
significant in 1998, 1997 and 1996.
401(k) Savings Plan
Substantially all of the Company's employees are eligible to participate in a
401(k) savings plan sponsored by Citigroup. During 1996, the Company made
matching contributions in an amount equal to the lesser of 100% of the
pre-tax contributions made by the employee or $1,000. Effective January 1,
1997, the Company discontinued matching contributions for the majority of its
employees. The Company's expenses in connection with the 401(k) savings plan
were not significant in 1998, 1997 and 1996.
F-20
<PAGE> 70
THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
9. RELATED PARTY TRANSACTIONS
The principal banking functions, including payment of salaries and expenses,
for certain subsidiaries and affiliates of TIGI are handled by two companies.
The Travelers Insurance Company (Life Department) handles banking functions
for the life and annuity operations of Travelers Life and Annuity and some of
its non-insurance affiliates. The Travelers Indemnity Company handles banking
functions for the property-casualty operations, including most of its
property-casualty insurance and non-insurance affiliates. Settlements between
companies are made at least monthly. The Company provides various employee
benefits coverages to employees of certain subsidiaries of TIGI. The premiums
for these coverages were charged in accordance with cost allocation
procedures based upon salaries or census. In addition, investment advisory
and management services, data processing services and claims processing
services are shared with affiliated companies. Charges for these services are
shared by the companies on cost allocation methods based generally on
estimated usage by department.
The Company maintains a short-term investment pool in which its insurance
affiliates participate. The position of each company participating in the
pool is calculated and adjusted daily. At December 31, 1998 and 1997, the
pool totaled approximately $2.3 billion and $2.6 billion, respectively. The
Company's share of the pool amounted to $793 million and $725 million at
December 31, 1998 and 1997, respectively, and is included in short-term
securities in the consolidated balance sheet.
Included in short-term investments is a 90 day variable rate note receivable
from Citigroup issued on August 28, 1998 and renewed on November 25, 1998.
The rate is based upon the AA financial commercial paper rate plus 14 basis
points. The rate at December 31, 1998 is 5.47%. The balance at December 31,
1998 is $500 million. Interest accrued at December 31, 1998 was $2.2 million.
Interest earned during 1998 was $9.4 million. Citigroup repaid this note on
February 25, 1999.
The Company sells structured settlement annuities to the insurance
subsidiaries of TAP in connection with the settlement of certain policyholder
obligations. Such premiums and deposits were $104 million, $88 million, and
$40 million for 1998, 1997 and 1996, respectively. Reserves and
contractholder funds related to these annuities amounted to $787 million and
$795 million in 1998 and 1997, respectively.
The Company markets deferred annuity products and life and health insurance
through its affiliate, Salomon Smith Barney Inc. (SSB). Premiums and
deposits related to these products were $1.3 billion, $1.0 billion, and
$820 million in 1998, 1997 and 1996, respectively.
During the year the Company lent out $78.5 million par of debentures to SSB
for $84.8 million in cash collateral. Loaned debentures totaling $37.6
million with cash collateral of $39.7 million remained outstanding at
December 31, 1998.
The Company sold $27.4 million par of 6.125% U.S. Treasury bonds to SSB for
$31.1 million.
F-21
<PAGE> 71
THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
The Company purchased $36 million par of 6.56% Chase Commercial Mortgage
Securities Corp. bonds from SSB for $35.9 million.
Primerica Life has entered into a General Agency Agreement with Primerica
Financial Service, Inc. (Primerica), that provides that Primerica will be
Primerica Life's general agent for marketing all insurance of Primerica Life.
In consideration of such services, Primerica Life agreed to pay Primerica
marketing fees of no less than $10 million based upon U.S. gross direct
premiums received by Primerica Life. In 1998 the fees paid by Primerica Life
were $12.5 million.
In 1998 Primerica became a distributor of products for Travelers Life and
Annuity. During the year Primerica sold $256 million of deferred annuities.
Included in other invested assets is a $987 million investment in Citigroup
preferred stock at December 31, 1998, carried at cost. Also, included in
other invested assets is a $1.15 billion investment in common stock of
Citigroup at December 31, 1997, carried at fair value.
The Company participates in a stock option plan sponsored by Citigroup that
provides for the granting of stock options in Citigroup common stock to
officers and key employees. To further encourage employee stock ownership,
during 1997 Citigroup introduced the WealthBuilder stock option program.
Under this program, all employees meeting certain requirements have been
granted Citigroup stock options.
The Company applies APB 25 and related interpretations in accounting for
stock options. Since stock options under the Citigroup plans are issued at
fair market value on the date of award, no compensation cost has been
recognized for these awards. FAS 123 provides an alternative to APB 25
whereby fair values may be ascribed to options using a valuation model and
amortized to compensation cost over the vesting period of the options.
Had the Company applied FAS 123 in accounting for Citigroup stock options,
net income would have been the pro forma amounts indicated below:
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------
YEAR ENDING DECEMBER 31, 1998 1997 1996
($ IN MILLIONS)
-----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net income, as reported $902 $839 $659
FAS 123 pro forma adjustments, after tax (13) (9) (3)
-----------------------------------------------------------------------------------------------------
Net income, pro forma $889 $830 $656
</TABLE>
The Company had an interest rate cap agreement with Citigroup. See Note 6.
F-22
<PAGE> 72
THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
10. LEASES
Most leasing functions for TIGI and its subsidiaries are administered by TAP.
In 1996, TAP assumed the obligations for several leases. Rent expense related
to all leases are shared by the companies on a cost allocation method based
generally on estimated usage by department. Rent expense was $18 million, $15
million, and $24 million in 1998, 1997 and 1996, respectively.
<TABLE>
<CAPTION>
---------------------------------------------------
YEAR ENDING DECEMBER 31, MINIMUM OPERATING
($ in millions) RENTAL PAYMENTS
---------------------------------------------------
<S> <C>
1999 $ 47
2000 50
2001 54
2002 44
2003 42
Thereafter 296
---------------------------------------------------
Total Rental Payments $533
===================================================
</TABLE>
Future sublease rental income of approximately $86 million will partially
offset these commitments. Also, the Company will be reimbursed for 50% of the
rental expense for a particular lease totaling $207 million, by an affiliate.
Minimum future capital lease payments are not significant.
The Company is reimbursed for use of furniture and equipment through cost
sharing agreements by its affiliates.
F-23
<PAGE> 73
THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
11. FEDERAL INCOME TAXES
($ in millions)
EFFECTIVE TAX RATE
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------
FOR THE YEAR ENDED DECEMBER 31, 1998 1997 1996
----------------------------------------------------------------------------------
<S> <C> <C> <C>
Income Before Federal Income Taxes $1,383 $1,283 $ 975
Statutory Tax Rate 35% 35% 35%
----------------------------------------------------------------------------------
Expected Federal Income Taxes 484 449 341
Tax Effect of:
Non-taxable investment income (5) (4) (3)
Other, net 2 (1) 4
----------------------------------------------------------------------------------
Federal Income Taxes $ 481 $ 444 $ 342
==================================================================================
Effective Tax Rate 35% 35% 35%
----------------------------------------------------------------------------------
COMPOSITION OF FEDERAL INCOME TAXES
Current:
United States $ 418 $ 410 $ 263
Foreign 24 24 21
---------------------------------------------------------------------------------
Total 442 434 284
---------------------------------------------------------------------------------
Deferred:
United States 40 10 57
Foreign (1) - 1
---------------------------------------------------------------------------------
Total 39 10 58
----------------------------------------------------------------------------------
Federal Income Taxes $ 481 $ 444 $ 342
=================================================================================
</TABLE>
Additional tax benefits attributable to employee stock plans allocated
directly to shareholder's equity for the years ended December 31, 1998, 1997
and 1996 were $17 million, $17 million and $8 million, respectively.
F-24
<PAGE> 74
THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
The net deferred tax liabilities at December 31, 1998 and 1997 were comprised
of the tax effects of temporary differences related to the following assets
and liabilities:
<TABLE>
<CAPTION>
($ in millions) 1998 1997
---- ----
<S> <C> <C>
Deferred Tax Assets:
Benefit, reinsurance and other reserves $ 616 $ 561
Operating lease reserves 76 80
Other employee benefits 103 102
Other 135 127
----------------------------------------------------------------------------------
Total 930 870
----------------------------------------------------------------------------------
Deferred Tax Liabilities:
Deferred acquisition costs and value of 673 608
insurance in force
Investments, net 489 484
Other 90 87
----------------------------------------------------------------------------------
Total 1,252 1,179
----------------------------------------------------------------------------------
Net Deferred Tax Liability Before Valuation (322) (309)
Allowance
Valuation Allowance for Deferred Tax Assets (100) (100)
----------------------------------------------------------------------------------
Net Deferred Tax Liability After Valuation Allowance $ (422) $ (409)
----------------------------------------------------------------------------------
</TABLE>
The Company and its life insurance subsidiaries will file a consolidated
federal income tax return. Federal income taxes are allocated to each member
of the consolidated group on a separate return basis adjusted for credits and
other amounts required by the consolidation process. Any resulting liability
will be paid currently to the Company. Any credits for losses will be paid by
the Company to the extent that such credits are for tax benefits that have
been utilized in the consolidated federal income tax return.
The $100 million valuation allowance is sufficient to cover any capital
losses on investments that may exceed the capital gains able to be generated
in the life insurance group's consolidated federal income tax return based
upon management's best estimate of the character of the reversing temporary
differences. Reversal of the valuation allowance is contingent upon the
recognition of future capital gains or a change in circumstances that causes
the recognition of the benefits to become more likely than not. There was no
change in the valuation allowance during 1998. The initial recognition of any
benefit produced by the reversal of the valuation allowance will be
recognized by reducing goodwill.
At December 31, 1998, the Company had no ordinary or capital loss
carryforwards.
F-25
<PAGE> 75
THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
The policyholders surplus account, which arose under prior tax law, is
generally that portion of the gain from operations that has not been
subjected to tax, plus certain deductions. The balance of this account is
approximately $932 million. Income taxes are not provided for on this amount
because under current U.S. tax rules such taxes will become payable only to
the extent such amounts are distributed as a dividend to exceed limits
prescribed by federal law. Distributions are not contemplated from this
account. At current rates the maximum amount of such tax would be
approximately $326 million.
12. NET INVESTMENT INCOME
<TABLE>
<CAPTION>
----------------------------------------------------------------------
FOR THE YEAR ENDED DECEMBER 31, 1998 1997 1996
---- ---- ----
($ in millions)
----------------------------------------------------------------------
<S> <C> <C> <C>
GROSS INVESTMENT INCOME
Fixed maturities $1,598 $1,460 $1,387
Mortgage loans 295 291 334
Policy loans 131 137 156
Other, including trading 226 238 171
----------------------------------------------------------------------
2,250 2,126 2,048
----------------------------------------------------------------------
Investment expenses 65 89 98
----------------------------------------------------------------------
Net investment income $2,185 $2,037 $1,950
----------------------------------------------------------------------
</TABLE>
13. INVESTMENTS AND INVESTMENT GAINS (LOSSES)
Realized investment gains (losses) for the periods were as follows:
<TABLE>
<CAPTION>
----------------------------------------------------------------------
FOR THE YEAR ENDED DECEMBER 31, 1998 1997 1996
---- ---- ----
($ in millions)
----------------------------------------------------------------------
<S> <C> <C> <C>
REALIZED INVESTMENT GAINS
Fixed maturities $111 $71 $(63)
Equity securities 6 (9) 47
Mortgage loans 21 59 49
Real estate held for sale 16 67 33
Other (5) 11 (1)
----------------------------------------------------------------------
Total Realized Investment Gains $149 $199 $65
----------------------------------------------------------------------
</TABLE>
F-26
<PAGE> 76
THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
Changes in net unrealized investment gains (losses) that are reported as
accumulated other changes in equity from non-owner sources or unrealized
gains on Citigroup stock in shareholder's equity were as follows:
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------
FOR THE YEAR ENDED DECEMBER 31, 1998 1997 1996
------- ------- -------
($ in millions)
-------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
UNREALIZED INVESTMENT GAINS (LOSSES)
Fixed maturities $ 91 $ 446 $ (323)
Equity securities 13 25 (35)
Other (169) 520 220
-------------------------------------------------------------------------------------------------
Total Unrealized Investment Gains (Losses) (65) 991 (138)
-------------------------------------------------------------------------------------------------
Related taxes (20) 350 (43)
-------------------------------------------------------------------------------------------------
Change in unrealized investment gains (45) 641 (95)
(losses)
Transferred to paid in capital, net of tax (585) -- --
Balance beginning of year 1,228 587 682
-------------------------------------------------------------------------------------------------
Balance End of Year $ 598 $ 1,228 $ 587
-------------------------------------------------------------------------------------------------
</TABLE>
Included in Other in 1998 is the unrealized loss on Citigroup common stock of
$167 million prior to the conversion to preferred stock. Also included in
Other were unrealized gains of $506 million and $203 million, which were
reported in 1997 and 1996, respectively, related to appreciation of Citigroup
common stock.
Fixed Maturities
Proceeds from sales of fixed maturities classified as available for sale were
$13.4 billion, $7.6 billion and $9.1 billion in 1998, 1997 and 1996,
respectively. Gross gains of $314 million, $170 million and $107 million and
gross losses of $203 million, $99 million and $175 million in 1998, 1997 and
1996, respectively, were realized on those sales.
Fair values of investments in fixed maturities are based on quoted market
prices or dealer quotes or, if these are not available, discounted expected
cash flows using market rates commensurate with the credit quality and
maturity of the investment. The fair value of investments for which a quoted
market price or dealer quote are not available amounted to $4.8 billion and
$5.1 billion at December 31, 1998 and 1997, respectively.
F-27
<PAGE> 77
THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
The amortized cost and fair value of investments in fixed maturities were as
follows:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
DECEMBER 31, 1998 GROSS GROSS
($ in millions) AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
AVAILABLE FOR SALE:
Mortgage-backed securities - CMOs and
pass-through securities $ 4,717 $ 147 $ 11 $ 4,853
U.S. Treasury securities and obligations of
U.S. Government and government agencies and
authorities 1,563 186 3 1,746
Obligations of states, municipalities and
political subdivisions 239 18 -- 257
Debt securities issued by foreign governments 634 41 3 672
All other corporate bonds 13,025 532 57 13,500
Other debt securities 2,709 106 38 2,777
Redeemable preferred stock 86 3 1 88
- ---------------------------------------------------------------------------------------------------------
Total Available For Sale $22,973 $ 1,033 $ 113 $23,893
- ---------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
DECEMBER 31, 1997 GROSS GROSS
($ in millions) AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
AVAILABLE FOR SALE:
Mortgage-backed securities - CMOs and
pass-through securities $ 3,842 $ 124 $ 2 $ 3,964
U.S. Treasury securities and obligations of
U.S. Government and government agencies and
authorities 1,580 149 1 1,728
Obligations of states, municipalities and
political subdivisions 78 8 -- 86
Debt securities issued by foreign governments 622 31 4 649
All other corporate bonds 11,787 459 17 12,229
Other debt securities 2,761 88 7 2,842
Redeemable preferred stock 12 1 -- 13
- --------------------------------------------------------------------------------------------------------------
Total Available For Sale $20,682 $ 860 $ 31 $21,511
- --------------------------------------------------------------------------------------------------------------
</TABLE>
F-28
<PAGE> 78
THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
The amortized cost and fair value of fixed maturities at December 31, 1998, by
contractual maturity, are shown below. Actual maturities will differ from
contractual maturities because borrowers may have the right to call or prepay
obligations with or without call or prepayment penalties.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------
($ in millions) AMORTIZED FAIR
COST VALUE
- -----------------------------------------------------------------
<S> <C> <C>
MATURITY:
Due in one year or less $ 1,296 $ 1,305
Due after 1 year through 5 years 6,253 6,412
Due after 5 years through 10 years 5,096 5,310
Due after 10 years 5,611 6,013
- -----------------------------------------------------------------
18,256 19,040
- -----------------------------------------------------------------
Mortgage-backed securities 4,717 4,853
- -----------------------------------------------------------------
Total Maturity $22,973 $23,893
- -----------------------------------------------------------------
</TABLE>
The Company makes investments in collateralized mortgage obligations (CMOs).
CMOs typically have high credit quality, offer good liquidity, and provide a
significant advantage in yield and total return compared to U.S. Treasury
securities. The Company's investment strategy is to purchase CMO tranches which
are protected against prepayment risk, including planned amortization class
(PAC) tranches. Prepayment protected tranches are preferred because they provide
stable cash flows in a variety of interest rate scenarios. The Company does
invest in other types of CMO tranches if a careful assessment indicates a
favorable risk/return tradeoff. The Company does not purchase residual interests
in CMOs.
At December 31, 1998 and 1997, the Company held CMOs classified as available for
sale with a fair value of $3.4 billion and $2.1 billion, respectively.
Approximately 54% and 72%, respectively, of the Company's CMO holdings are fully
collateralized by GNMA, FNMA or FHLMC securities at December 31, 1998 and 1997.
In addition, the Company held $1.4 billion and $1.9 billion of GNMA, FNMA or
FHLMC mortgage-backed pass-through securities at December 31, 1998 and 1997,
respectively. Virtually all of these securities are rated AAA.
F-29
<PAGE> 79
THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
Equity Securities
The cost and fair values of investments in equity securities were as
follows:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------
EQUITY SECURITIES: GROSS UNREALIZED GROSS UNREALIZED FAIR
($ in millions) COST GAINS LOSSES VALUE
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
DECEMBER 31, 1998
Common stocks $129 $ 44 $ 3 $170
Non-redeemable preferred stocks 345 10 7 348
- ------------------------------------------------------------------------------------------------
Total Equity Securities $474 $ 54 $ 10 $518
- ------------------------------------------------------------------------------------------------
DECEMBER 31, 1997
Common stocks $179 $ 34 $ 11 $202
Non-redeemable preferred stocks 301 13 4 310
- ------------------------------------------------------------------------------------------------
Total Equity Securities $480 $ 47 $ 15 $512
- ------------------------------------------------------------------------------------------------
</TABLE>
Proceeds from sales of equity securities were $212 million, $341 million
and $479 million in 1998, 1997 and 1996, respectively. Gross gains of $30
million, $53 million and $64 million and gross losses of $24 million, $62
million and $11 million in 1998, 1997 and 1996, respectively, were realized
on those sales.
Mortgage Loans and Real Estate Held For Sale
At December 31, 1998 and 1997, the Company's mortgage loan and real estate
held for sale portfolios consisted of the following ($ in millions):
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------
1998 1997
- ------------------------------------------------------------------------------------
<S> <C> <C>
Current Mortgage Loans $2,370 $2,866
Underperforming Mortgage Loans 236 3
- ------------------------------------------------------------------------------------
Total Mortgage Loans 2,606 2,869
- ------------------------------------------------------------------------------------
Real Estate Held For Sale - Foreclosed 112 117
Real Estate Held For Sale - Investment 31 17
- ------------------------------------------------------------------------------------
Total Real Estate 143 134
- ------------------------------------------------------------------------------------
Total Mortgage Loans and Real Estate Held for Sale $2,749 $3,003
====================================================================================
</TABLE>
Underperforming mortgage loans include delinquent mortgage loans, loans in the
process of foreclosure, foreclosed loans and loans modified at interest rates
below market.
F-30
<PAGE> 80
THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
Aggregate annual maturities on mortgage loans at December 31, 1998 are as
follows:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------
YEAR ENDING DECEMBER 31,
($ in millions)
- -----------------------------------------------------------------------
<S> <C>
Past Maturity $ 186
1999 188
2000 196
2001 260
2002 118
2003 206
Thereafter 1,452
- -----------------------------------------------------------------------
Total $2,606
=======================================================================
</TABLE>
Joint Venture
In October 1997, the Company and Tishman Speyer Properties (Tishman), a
worldwide real estate owner, developer and manager, formed a real estate
joint venture with an initial equity commitment of $792 million. The
Company and certain of its affiliates originally committed $420 million in
real estate equity and $100 million in cash while Tishman originally
committed $272 million in properties and cash. Both companies are serving
as general partners for the venture and Tishman is primarily responsible
for the venture's real estate acquisition and development efforts. The
Company's carrying value of this investment was $252.4 million and $204.8
million at December 31, 1998 and 1997, respectively.
Trading Securities
Trading securities of the Company are held in a subsidiary that is a
broker/dealer, Tribeca Investments L.L.C.
<TABLE>
<CAPTION>
($ in millions)
- -------------------------------------------------------------------------------------
TRADING SECURITIES OWNED 1998 1997
------ ------
<S> <C> <C>
Convertible bond arbitrage $ 754 $ 370
Merger arbitrage 427 352
Other 5 78
- -------------------------------------------------------------------------------------
Total $1,186 $ 800
- -------------------------------------------------------------------------------------
TRADING SECURITIES SOLD NOT YET PURCHASED
Convertible bond arbitrage $ 521 $ 249
Merger arbitrage 352 213
- -------------------------------------------------------------------------------------
Total $ 873 $ 462
- -------------------------------------------------------------------------------------
</TABLE>
The Company's trading portfolio investments and related liabilities are
normally held for periods less than six months. Therefore, expected future
cash flows for these assets and liabilities are expected to be realized in
less than one year.
F-31
<PAGE> 81
THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
Concentrations
At December 31, 1998 and 1997, the Company had no concentration of credit
risk in a single investee exceeding 10% of consolidated shareholder's
equity.
The Company maintains a short-term investment pool for its insurance
affiliates in which the Company also participates. See Note 9.
Included in fixed maturities are below investment grade assets totaling
$2.1 billion and $1.4 billion at December 31, 1998 and 1997, respectively.
The Company defines its below investment grade assets as those securities
rated "Ba1" or below by external rating agencies, or the equivalent by
internal analysts when a public rating does not exist. Such assets include
publicly traded below investment grade bonds and certain other privately
issued bonds that are classified as below investment grade.
The Company had concentrations of investments, primarily fixed maturities,
in the following industries:
<TABLE>
<CAPTION>
-----------------------------------------------------------------------
($ in millions) 1998 1997
-----------------------------------------------------------------------
<S> <C> <C>
Banking $2,131 $2,215
Electric Utilities 1,513 1,377
Finance 1,346 1,556
Asset-Backed Credit Cards 1,013 778
-----------------------------------------------------------------------
</TABLE>
Below investment grade assets included in the preceding table were not
significant.
At December 31, 1998 and 1997, concentrations of mortgage loans of $751
million and $794 million, respectively, were for properties located in
highly populated areas in the state of California.
Other mortgage loan investments are relatively evenly dispersed throughout
the United States, with no significant holdings in any one state.
Significant concentrations of mortgage loans by property type at December
31, 1998 and 1997 were as follows:
<TABLE>
<CAPTION>
------------------------------------------------------------------------
($ in millions) 1998 1997
------------------------------------------------------------------------
<S> <C> <C>
Office $1,185 $1,382
Agricultural 887 771
------------------------------------------------------------------------
</TABLE>
F-32
<PAGE> 82
THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
The Company monitors creditworthiness of counterparties to all financial
instruments by using controls that include credit approvals, limits and
other monitoring procedures. Collateral for fixed maturities often includes
pledges of assets, including stock and other assets, guarantees and letters
of credit. The Company's underwriting standards with respect to new
mortgage loans generally require loan to value ratios of 75% or less at the
time of mortgage origination.
Non-Income Producing Investments
Investments included in the consolidated balance sheets that were
non-income producing for the preceding 12 months were insignificant.
Restructured Investments
The Company had mortgage loans and debt securities that were restructured
at below market terms at December 31, 1998 and 1997. The balances of the
restructured investments were insignificant. The new terms typically defer
a portion of contract interest payments to varying future periods. The
accrual of interest is suspended on all restructured assets, and interest
income is reported only as payment is received. Gross interest income on
restructured assets that would have been recorded in accordance with the
original terms of such loans was insignificant in 1998 and in 1997.
Interest on these assets, included in net investment income was
insignificant in 1998 and 1997.
14. DEPOSIT FUNDS AND RESERVES
At December 31, 1998, the Company had $25.7 billion of life and annuity
deposit funds and reserves. Of that total, $13.8 billion is not subject to
discretionary withdrawal based on contract terms. The remaining $11.9
billion is for life and annuity products that are subject to discretionary
withdrawal by the contractholder. Included in the amount that is subject to
discretionary withdrawal is $2.4 billion of liabilities that are
surrenderable with market value adjustments. Also included are an
additional $5.1 billion of life insurance and individual annuity
liabilities which are subject to discretionary withdrawals, and have an
average surrender charge of 4.7%. In the payout phase, these funds are
credited at significantly reduced interest rates. The remaining $4.4
billion of liabilities are surrenderable without charge. More than 14.2% of
these relate to individual life products. These risks would have to be
underwritten again if transferred to another carrier, which is considered a
significant deterrent against withdrawal by long-term policyholders.
Insurance liabilities that are surrendered or withdrawn are reduced by
outstanding policy loans and related accrued interest prior to payout.
F-33
<PAGE> 83
THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
15. RECONCILIATION OF NET INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES
The following table reconciles net income to net cash provided by operating
activities:
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------
FOR THE YEAR ENDED DECEMBER 31, 1998 1997 1996
---- ---- ----
($ in millions)
--------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net Income From Continuing Operations $902 $839 $633
Adjustments to reconcile net income to net cash provided by
operating activities:
Realized gains (149) (199) (65)
Deferred federal income taxes 39 10 58
Amortization of deferred policy acquisition costs and
value of insurance in force 311 293 281
Additions to deferred policy acquisition costs (566) (471) (350)
Investment income accrued (55) 14 2
Premium balances receivable 7 3 (6)
Insurance reserves and accrued expenses 335 131 (1)
Other 51 206 255
--------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 875 826 807
Net cash used in discontinued operations - - (350)
Net cash provided by operations $875 $826 $457
--------------------------------------------------------------------------------------------------------------
</TABLE>
16. NON-CASH INVESTING AND FINANCING ACTIVITIES
Significant non-cash investing and financing activities include the
transfer of Citigroup common stock to Citigroup preferred stock valued at
$987 million in 1998 and the conversion of $119 million of real estate held
for sale to other invested assets as a joint venture in 1997.
F-34
<PAGE> 84
THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
17. OPERATING SEGMENTS
The Company has two reportable business segments that are separately managed due
to differences in products, services, marketing strategy and resource
management. The business of each segment is maintained and reported through
separate legal entities within the Company. The management groups of each
segment report separately to the common ultimate parent, Citigroup Inc.
The TRAVELERS LIFE AND ANNUITY business segment consolidates primarily the
business of Travelers Insurance Company and The Travelers Life and Annuity
Company. The Travelers Life and Annuity business segment offers fixed and
variable deferred annuities, payout annuities and term, universal and variable
life and long-term care insurance to individuals and small businesses. It also
provides group pension products, including guaranteed investment contracts and
group annuities for employer-sponsored retirement and savings plans.
The PRIMERICA LIFE business segment consolidates primarily the business of
Primerica Life Insurance Company and National Benefit Life Insurance Company.
The Primerica Life business segment offers individual life products, primarily
term insurance, to customers through a nationwide sales force of approximately
80,000 full and part-time licensed Personal Financial Analysts.
The accounting policies of the segments are the same as those described in the
summary of significant accounting policies (see Note 1), except that management
also includes receipts on long-duration contracts (universal life-type and
investment contracts) as deposits along with premiums in measuring business
volume.
BUSINESS SEGMENT INFORMATION:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
TRAVELERS LIFE AND PRIMERICA LIFE
1998 ($ IN MILLIONS) ANNUITY INSURANCE TOTAL
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Business Volume:
Premiums $ 683 $ 1,057 $ 1,740
Deposits 7,693 -- 7,693
------- ------- -------
Total business volume $ 8,376 $ 1,057 $ 9,433
Net investment income 1,965 220 2,185
Interest credited to contractholders 876 -- 876
Amortization of deferred acquisition costs and value of
insurance in force 115 196 311
Federal income taxes on Operating Income 260 170 430
Operating Income (excludes realized gains or losses and
the related FIT) $ 493 $ 312 $ 805
Segment Assets $49,646 $ 6,902 $56,548
</TABLE>
F-35
<PAGE> 85
THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
TRAVELERS LIFE AND PRIMERICA LIFE
1997 ($ IN MILLIONS) ANNUITY INSURANCE TOTAL
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Business Volume
Premiums $ 548 $ 1,035 $ 1,583
Deposits 5,276 -- 5,276
------- ------- -------
Total business volume $ 5,824 $ 1,035 $ 6,859
Net investment income 1,836 201 2,037
Interest credited to contractholders 829 -- 829
Amortization of deferred acquisition costs and value of
insurance in force 96 197 293
Federal income taxes on Operating Income 221 153 374
Operating Income (excludes realized gains or losses and
the related FIT) $ 427 $ 283 $ 710
Segment Assets $42,330 $ 7,110 $49,440
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
TRAVELERS LIFE AND PRIMERICA LIFE
1996 ($ IN MILLIONS) ANNUITY INSURANCE TOTAL
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Business Volume:
Premiums $ 357 $ 1,030 $ 1,387
Deposits 3,502 -- 3,502
------- ------- -------
Total business volume $ 3,859 $ 1,030 $ 4,889
Net investment income 1,775 175 1,950
Interest credited to contractholders 863 -- 863
Amortization of deferred acquisition costs and value of
insurance in force 83 198 281
Federal income taxes on Operating Income 189 130 319
Operating Income (excludes realized gains or losses and
the related FIT) $ 356 $ 235 $ 591
Segment Assets $37,564 $ 5,409 $42,973
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
The amount of investments in equity method investees and total expenditures for
additions to long-lived assets other than financial instruments, long-term
customer relationships of a financial institution, mortgage and other servicing
rights, deferred policy acquisition costs, and deferred tax assets, were not
material.
F-36
<PAGE> 86
THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
BUSINESS SEGMENT RECONCILIATION:
($ in millions)
<TABLE>
<CAPTION>
REVENUES 1998 1997 1996
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Total business volume $ 9,433 $ 6,859 $ 4,889
Net investment income 2,185 2,037 1,950
Realized investment gains 149 199 65
Other revenues 440 354 284
Elimination of deposits (7,693) (5,276) (3,502)
- -------------------------------------------------------------------------------
Total revenues $ 4,514 $ 4,173 $ 3,686
===============================================================================
</TABLE>
<TABLE>
<CAPTION>
OPERATING INCOME 1998 1997 1996
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Total operating income of business segments $805 $710 $591
Realized investment gains net of tax 97 129 42
- --------------------------------------------------------------------------------
Income from continuing operations $902 $839 $633
================================================================================
</TABLE>
<TABLE>
<CAPTION>
ASSETS 1998 1997 1996
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Total assets of business segments $56,548 $49,440 $42,973
================================================================================
</TABLE>
<TABLE>
<CAPTION>
REVENUE BY PRODUCTS 1998 1997 1996
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Deferred Annuities $ 4,198 $ 3,303 $ 2,635
Group and Payout Annuities 5,326 3,737 2,194
Individual Life & Health Insurance 2,270 2,102 1,956
Other (a) 413 307 403
Elimination of deposits (7,693) (5,276) (3,502)
- --------------------------------------------------------------------------------
Total Revenue $ 4,514 $ 4,173 $ 3,686
================================================================================
</TABLE>
(a) Other represents revenue attributable to unallocated capital and run-off
business.
The Company's revenue was derived almost entirely from U.S. domestic business.
Revenue attributable to foreign countries was insignificant.
The Company had no transactions with a single customer representing 10% or more
of its revenue.
F-37
<PAGE> 87
Travelers Index Annuity
STATEMENT OF ADDITIONAL INFORMATION
THE TRAVELERS FUND BD III FOR VARIABLE ANNUITIES
Individual Variable Annuity Contract
issued by
The Travelers Insurance Company
One Tower Square
Hartford, Connecticut 06183
L-12682S May 1999
<PAGE> 88
PART C
Other Information
Item 24. Financial Statements and Exhibits
(a) The financial statements of the Registrant and the Report of Independent
Accountants thereto are contained in the Registrant's Annual Report and
are incorporated into the Statement of Additional Information by
reference. The financial statements of the Registrant include:
Statement of Assets and Liabilities as of December 31, 1998
Statement of Operations for the year ended December 31, 1998
Statement of Changes in Net Assets for the year ended December 31,
1998 and for the period December 10, 1997 (date operations
commenced) to December 31, 1997
Notes to Financial Statements
The consolidated financial statements of The Travelers Insurance Company
and Subsidiaries and the report of Independent Accountants, are contained
in the Statement of Additional Information. The consolidated financial
statements of The Travelers Insurance Company and Subsidiaries include:
Consolidated Statements of Income for the years ended December 31,
1998, 1997 and 1996
Consolidated Balance Sheets as of December 31, 1998 and 1997
Consolidated Statements of Changes in Retained Earnings and
Accumulated Other Changes in Equity from Non-Owner Sources for the
years ended December 31, 1998, 1997 and 1996
Consolidated Statements of Cash Flows for the years ended December
31, 1998, 1997 and 1996
Notes to Consolidated Financial Statements
(b) Exhibits
1. Resolution of The Travelers Insurance Company Board of Directors
authorizing the establishment of the Registrant. (Incorporated herein by
reference to Exhibit 1 to the Registration Statement on Form N-4, filed
May 23, 1997.)
2. Not Applicable.
3(a). Distribution and Principal Underwriting Agreement among the Registrant,
The Travelers Insurance Company and CFBDS, Inc. (Incorporated herein by
reference to Exhibit 3(a) to Pre-Effective Amendment No. 1 to the
Registration Statement on Form N-4, File No. 333-60227 filed November 9,
1998)
3(b). Selling Agreement. (Incorporated herein by reference to Exhibit 3(b) to
the Registration Statement on Form N-4, filed May 23, 1997.)
(Incorporated herein by reference to Exhibit 3(b) to Pre-Effective
Amendment No. 1 to the Registration Statement on Form N-4, File No.
333-60227 filed November 9, 1998)
4. Variable Annuity Contract. (Incorporated herein by reference to Exhibit 4
to the Registration Statement on Form N-4, filed May 23, 1997.)
5. Application. (Incorporated herein by reference to Pre-Effective Amendment
No. 2 to the Registration Statement on Form N-4, filed August 12, 1997.)
<PAGE> 89
6(a). Charter of The Travelers Insurance Company, as amended on October 19,
1994. (Incorporated herein by reference to Exhibit 3(a)(i) to
Registration Statement on Form S-2, File No. 33-58677, filed via Edgar on
April 18, 1995.)
6(b). By-Laws of The Travelers Insurance Company, as amended on October 20,
1994. (Incorporated herein by reference to Exhibit 3(b)(i) to the
Registration Statement on Form S-2, File No. 33-58677, filed via Edgar on
April 18, 1995.)
9. Opinion of Counsel as to the legality of securities being registered.
(Incorporated herein by reference to Exhibit 9 to the Registration
Statement on Form N-4 filed May 23, 1997.)
10. Consent of KPMG LLP, Independent Certified Public Accountants.
13. Computation of Total Return Calculations - Standardized and
Non-Standardized. (Incorporated herein by reference to Pre-Effective
Amendment No. 2 to the Registration Statement on Form N-4, filed August
12, 1997.)
15(a). Powers of Attorney authorizing Ernest J. Wright or Kathleen A. McGah as
signatory for Michael A. Carpenter, Jay S. Benet, George C. Kokulis,
Robert I. Lipp, Ian R. Stuart, Katherine M. Sullivan and Marc P. Weill.
(Incorporated herein by reference to Exhibit 15(a) to the Registration
Statement on Form N-4, filed May 23, 1997.)
15(b). Powers of Attorney authorizing Ernest J. Wright or Kathleen A. McGah as
signatory for J. Eric Daniels and Jay S. Benet.
16. Organizational Chart.
Item 25. Directors and Officers of the Depositor
<TABLE>
<CAPTION>
Name and Principal Positions and Offices
Business Address with Insurance Company
- -------------------- ----------------------
<S> <C>
Michael A. Carpenter** Director, Chairman of the Board
J. Eric Daniels* President and Chief Executive Officer
Jay S. Benet* Director, Senior Vice President
Chief Financial Officer, Chief
Accounting Officer and Controller
George C. Kokulis* Director and Senior Vice President
Robert I. Lipp* Director
Katherine M. Sullivan* Director and Senior Vice President
and General Counsel
Marc P. Weill** Director and Senior Vice President
Stuart Baritz*** Senior Vice President
Jay S. Fishman* Senior Vice President
Elizabeth C. Georgakopoulos* Senior Vice President
Barry Jacobson* Senior Vice President
Russell H. Johnson* Senior Vice President
Warren H. May* Senior Vice President
Christine M. Modie* Senior Vice President
Kathlen Preston* Senior Vice President
</TABLE>
<PAGE> 90
<TABLE>
<S> <C>
David A. Tyson* Senior Vice President
F. Denney Voss* Senior Vice President
Ambrose J. Murphy* Deputy General Counsel
Virginia M. Meany* Vice President
Selig Ehrlich* Vice President and Actuary
Donald R. Munson, Jr.* Second Vice President
Anthony Cocolla Second Vice President
Scott R. Hansen Second Vice President
Ernest J. Wright* Vice President and Secretary
Kathleen A. McGah* Assistant Secretary and Counsel
</TABLE>
Principal Business Address:
* The Travelers Insurance Company ** Citigroup Inc.
One Tower Square 388 Greenwich Street
Hartford, CT 06183 New York, N.Y. 10013
*** Travelers Portfolio Group
1345 Avenue of the Americas
New York, NY 10105
Item 26. Persons Controlled by or Under Common Control with the Depositor or
Registrant
Filed herewith as Exhibit 16
Item 27. Number of Contract Owners
As of March 31, 1999, 183 contract owners held qualified and non-qualified
contracts offered by the Registrant.
Item 28. Indemnification
Sections 33-770 to 33-778, inclusive of the Connecticut General Statutes
("C.G.S.") regarding indemnification of directors and officers of Connecticut
corporations provides in general that Connecticut corporations shall indemnify
their officers, directors and certain other defined individuals against
judgments, fines, penalties, amounts paid in settlement and reasonable expenses
actually incurred in connection with proceedings against the corporation. The
corporation's obligation to provide such indemnification generally does not
apply unless (1) the individual is wholly successful on the merits in the
defense of any such proceeding; or (2) a determination is made (by persons
specified in the statute) that the individual acted in good faith and in the
best interests of the corporation and in all other cases, his conduct was at
least not opposed to the best interests of the corporation, and in a criminal
case he had no reasonable cause to believe his conduct was unlawful; or (3) the
court, upon application by the individual, determines in view of all of the
circumstances that such person is fairly and reasonably entitled to be
indemnified, and then for such amount as the court shall determine. With respect
to proceedings brought by or in the right of the corporation, the statute
provides that the corporation shall indemnify its officers, directors and
certain other defined individuals, against reasonable expenses actually incurred
by them in connection with such proceedings, subject to certain limitations.
<PAGE> 91
Citigroup Inc. also provides liability insurance for its directors and officers
and the directors and officers of its subsidiaries, including the Registrant.
This insurance provides for coverage against loss from claims made against
directors and officers in their capacity as such, including, subject to certain
exceptions, liabilities under the federal securities laws.
Rule 484 Undertaking
Insofar as indemnification for liability arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
Item 29. Principal Underwriter
(a) CFBDS, Inc.
21 Milk Street
Boston, MA 02109
CFBDS, Inc. also serves as principal underwriter for the following :
(a) CFBDS, the Registrant's Distributor, is also the distributor for CitiFundsSM
International Growth & Income Portfolio, CitiFundsSM International Growth
Portfolio, CitiFundsSM U.S. Treasury Reserves, CitiFundsSM Cash Reserves,
CitiFundsSM Premium U.S. Treasury Reserves, CitiFundsSM Premium Liquid Reserves,
CitiFundsSM Institutional U.S. Treasury Reserves, CitiFundsSM Institutional
Liquid Reserves, CitiFundsSM Institutional Cash Reserves, CitiFundsSM Tax Free
Reserves, CitiFundsSM Institutional Tax Free Reserves, CitiFundsSM California
Tax Free Reserves, CitiFundsSM Connecticut Tax Free Reserves, CitiFundsSM New
York Tax Free Reserves, CitiFundsSM New York Tax Free Income Portfolio,
CitiFundsSM National Tax Free Income Portfolio, CitiFundsSM California Tax Free
Income Portfolio, CitiFundsSM Intermediate Income Portfolio, CitiFundsSM
Balanced Portfolio, CitiFundsSM Small Cap Value Portfolio, CitiFundsSM Growth &
Income Portfolio, CitiFundsSM Large Cap Growth Portfolio, CitiFundsSM Small Cap
Growth Portfolio, CitiSelect VIP Folio 200, CitiSelect VIP Folio 300, CitiSelect
VIP Folio 400, CitiSelect VIP Folio 500, CitiFundsSM Small Cap Growth VIP
Portfolio, CitiSelect Folio 200, CitiSelect Folio 300, CitiSelect Folio 400, and
CitiSelect Folio 500. CFBDS is also the placement agent for Large Cap Value
Portfolio, Small Cap Value Portfolio, International Portfolio, Foreign Bond
Portfolio, Intermediate Income Portfolio, Short-Term Portfolio, Growth & Income
Portfolio, U.S. Fixed Income Portfolio, Large Cap Growth Portfolio, Small Cap
Growth Portfolio, International Equity Portfolio, Balanced Portfolio, Government
Income Portfolio, Tax Free Reserves Portfolio, Cash Reserves Portfolio and U.S.
Treasury Reserves Portfolio. CFBDS also serves as the distributor for the
following funds: The Travelers Fund U for Variable Annuities, The Travelers Fund
VA for Variable Annuities, The Travelers Fund BD for Variable Annuities, The
Travelers Fund BD II for Variable Annuities, The Travelers Fund BD III for
Variable Annuities, The Travelers Fund BD IV for Variable Annuities, The
Travelers Fund ABD for Variable Annuities, The Travelers Fund ABD II for
Variable Annuities, The Travelers Separate Account PF for Variable Annuities,
The Travelers Separate Account PF II for Variable Annuities, The Travelers
Separate Account QP for Variable Annuities, The Travelers Separate Account TM
for Variable Annuities, The Travelers Separate Account TM II for Variable
Annuities, The Travelers Separate Account Five for Variable Annuities, The
Travelers Separate
<PAGE> 92
Account Six for Variable Annuities, The Travelers Separate Account Seven for
Variable Annuities, The Travelers Separate Account Eight for Variable Annuities,
The Travelers Fund UL for Variable Life Insurance, The Travelers Fund UL II for
Variable Life Insurance, The Travelers Fund UL III for Variable Life Insurance,
The Travelers Variable Life Insurance Separate Account One, The Travelers
Variable Life Insurance Separate Account Two, The Travelers Variable Life
Insurance Separate Account Three, The Travelers Variable Life Insurance Separate
Account Four, The Travelers Separate Account MGA, The Travelers Separate Account
MGA II, The Travelers Growth and Income Stock Account for Variable Annuities,
The Travelers Quality Bond Account for Variable Annuities, The Travelers Money
Market Account for Variable Annuities, The Travelers Timed Growth and Income
Stock Account for Variable Annuities, The Travelers Timed Short-Term Bond
Account for Variable Annuities, The Travelers Timed Aggressive Stock Account for
Variable Annuities, The Travelers Timed Bond Account for Variable Annuities,
Emerging Growth Fund, Government Fund, Growth and Income Fund, International
Equity Fund, Municipal Fund, Balanced Investments, Emerging Markets Equity
Investments, Government Money Investments, High Yield Investments, Intermediate
Fixed Income Investments, International Equity Investments, International Fixed
Income Investments, Large Capitalization Growth Investments, Large
Capitalization Value Equity Investments, Long-Term Bond Investments, Mortgage
Backed Investments, Municipal Bond Investments, Small Capitalization Growth
Investments, Small Capitalization Value Equity Investments, Appreciation
Portfolio, Diversified Strategic Income Portfolio, Emerging Growth Portfolio,
Equity Income Portfolio, Equity Index Portfolio, Growth & Income Portfolio,
Intermediate High Grade Portfolio, International Equity Portfolio, Money Market
Portfolio, Total Return Portfolio, Smith Barney Adjustable Rate Government
Income Fund, Smith Barney Aggressive Growth Fund Inc., Smith Barney Appreciation
Fund, Smith Barney Arizona Municipals Fund Inc., Smith Barney California
Municipals Fund Inc., Balanced Portfolio, Conservative Portfolio, Growth
Portfolio, High Growth Portfolio, Income Portfolio, Global Portfolio, Select
Balanced Portfolio, Select Conservative Portfolio, Select Growth Portfolio,
Select High Growth Portfolio, Select Income Portfolio, Concert Social Awareness
Fund, Smith Barney Large Cap Blend Fund, Smith Barney Fundamental Value Fund
Inc., Large Cap Value Fund, Short-Term High Grade Bond Fund, U.S. Government
Securities Fund, Smith Barney Balanced Fund, Smith Barney Convertible Fund,
Smith Barney Diversified Strategic Income Fund, Smith Barney Exchange Reserve
Fund, Smith Barney High Income Fund, Smith Barney Municipal High Income Fund,
Smith Barney Premium Total Return Fund, Smith Barney Total Return Bond Fund,
Cash Portfolio, Government Portfolio, Municipal Portfolio, Concert Peachtree
Growth Fund, Smith Barney Contrarian Fund, Smith Barney Government Securities
Fund, Smith Barney Hansberger Global Small Cap Value Fund, Smith Barney
Hansberger Global Value Fund, Smith Barney Investment Grade Bond Fund, Smith
Barney Special Equities Fund, Smith Barney Intermediate Maturity California
Municipals Fund, Smith Barney Intermediate Maturity New York Municipals Fund,
Smith Barney Large Capitalization Growth Fund, Smith Barney S&P 500 Index Fund,
Smith Barney Mid Cap Blend Fund, Smith Barney Managed Governments Fund Inc.,
Smith Barney Managed Municipals Fund Inc., Smith Barney Massachusetts Municipals
Fund, Cash Portfolio, Government Portfolio, Retirement Portfolio, California
Money Market Portfolio, Florida Portfolio, Georgia Portfolio, Limited Term
Portfolio, New York Money Market Portfolio, New York Portfolio, Pennsylvania
Portfolio, Smith Barney Municipal Money Market Fund, Inc., Smith Barney Natural
Resources Fund Inc., Smith Barney New Jersey Municipals Fund Inc., Smith Barney
Oregon Municipals Fund, Zeros Plus Emerging Growth Series 2000, Smith Barney
Security and Growth Fund, Smith Barney Small Cap Blend Fund, Inc., Smith Barney
Telecommunications Income Fund, Income and Growth Portfolio, Reserve Account
Portfolio, U.S. Government/High Quality Securities Portfolio, Emerging Markets
Portfolio, European Portfolio, Global Government Bond Portfolio, International
Balanced Portfolio, International Equity Portfolio, Pacific Portfolio, AIM
Capital Appreciation Portfolio, Alliance Growth Portfolio, GT Global Strategic
Income Portfolio, MFS Total Return Portfolio, Putnam Diversified Income
Portfolio, Smith Barney High Income Portfolio, Smith Barney Large Cap Value
Portfolio, Smith Barney International Equity Portfolio, Smith Barney Large
Capitalization Growth Portfolio, Smith Barney Money Market Portfolio, Smith
Barney Pacific Basin Portfolio, TBC Managed Income Portfolio, Van Kampen
American Capital Enterprise Portfolio, Centurion Tax-Managed U.S. Equity Fund,
Centurion Tax-Managed International Equity Fund, Centurion U.S. Protection Fund,
Centurion International Protection Fund, Global High-Yield Bond Fund,
International Equity Fund, Emerging Opportunities Fund, Core Equity Fund,
Long-Term Bond Fund, Global Dimensions Fund L.P., Citicorp Private Equity L.P.,
AIM V.I. Capital
<PAGE> 93
Appreciation Fund, AIM V.I. Government Series Fund, AIM V.I. Growth Fund, AIM
V.I. International Equity Fund, AIM V.I. Value Fund, Fidelity VIP Growth
Portfolio, Fidelity VIP High Income Portfolio, Fidelity VIP Equity Income
Portfolio, Fidelity VIP Overseas Portfolio, Fidelity VIP II Contrafund
Portfolio, Fidelity VIP II Index 500 Portfolio, MFS World Government Series, MFS
Money Market Series, MFS Bond Series, MFS Total Return Series, MFS Research
Series, MFS Emerging Growth Series, Salomon Brothers Institutional Money Market
Fund, Salomon Brothers Cash Management Fund, Salomon Brothers New York Municipal
Money Market Fund, Salomon Brothers National Intermediate Municipal Fund,
Salomon Brothers U.S. Government Income Fund, Salomon Brothers High Yield Bond
Fund, Salomon Brothers Strategic Bond Fund, Salomon Brothers Total Return Fund,
Salomon Brothers Asia Growth Fund, Salomon Brothers Capital Fund Inc, Salomon
Brothers Investors Fund Inc, Salomon Brothers Opportunity Fund Inc, Salomon
Brothers Institutional High Yield Bond Fund, Salomon Brothers Institutional
Emerging Markets Debt Fund, Salomon Brothers Variable Investors Fund, Salomon
Brothers Variable Capital Fund, Salomon Brothers Variable Total Return Fund,
Salomon Brothers Variable High Yield Bond Fund, Salomon Brothers Variable
Strategic Bond Fund, Salomon Brothers Variable U.S. Government Income Fund, and
Salomon Brothers Variable Asia Growth Fund.
(b) The information required by this Item 29 with respect to each director and
officer of CFBDS, Inc. is incorporated by reference to Schedule A of Form BD
filed by CFBDS pursuant to the Securities and Exchange Act of 1934 (File No.
8-32417).
(c) Not Applicable
Item 30. Location of Accounts and Records
(1) The Travelers Insurance Company
One Tower Square
Hartford, Connecticut 06183
Item 31. Management Services
Not Applicable.
Item 32. Undertakings
The undersigned Registrant hereby undertakes:
(a) To file a post-effective amendment to this registration statement as
frequently as is necessary to ensure that the audited financial
statements in the registration statement are never more than sixteen
months old for so long as payments under the variable annuity contracts
may be accepted;
(b) To include either (1) as part of any application to purchase a contract
offered by the prospectus, a space that an applicant can check to request
a Statement of Additional Information, or (2) a post card or similar
written communication affixed to or included in the prospectus that the
applicant can remove to send for a Statement of Additional Information;
and
(c) To deliver any Statement of Additional Information and any financial
statements required to be made available under this Form N-4 promptly
upon written or oral request.
The Company hereby represents:
(a). That the aggregate charges under the Contracts of the Registrant
described herein are reasonable in relation to the services rendered, the
expenses expected to be incurred, and the risks assumed by the Company.
<PAGE> 94
SIGNATURES
As required by the Securities Act of 1933 and the Investment Company Act of
1940, the Registrant certifies that it meets the requirements of Securities Act
Rule 485(b) for effectiveness of this post-effective amendment to this
registration statement and has duly caused this post-effective amendment to this
registration statement to be signed on its behalf in the City of Hartford, State
of Connecticut, on the 16th day of April 1999.
THE TRAVELERS FUND BD III FOR VARIABLE ANNUITIES
(Registrant)
THE TRAVELERS INSURANCE COMPANY
(Depositor)
By: *JAY S. BENET
-----------------------------
Jay S. Benet
Senior Vice President, Chief Financial Officer
Chief Accounting Officer and Controller
As required by the Securities Act of 1933, this post-effective amendment to this
registration statement has been signed by the following persons in the
capacities indicated on the 16th day of April 1999.
<TABLE>
<S> <C>
*MICHAEL A. CARPENTER Director and Chairman of the Board
- ---------------------------
(Michael A. Carpenter)
*J. ERIC DANIELS Director, President and Chief Executive Officer
- ---------------------------
(J. Eric Daniels)
*JAY S. BENET Director, Senior Vice President, Chief
- --------------------------- Financial Officer, Chief Accounting Officer
(Jay S. Benet) and Controller
*GEORGE C. KOKULIS Director
- ---------------------------
(George C. Kokulis
*ROBERT I. LIPP Director
- ---------------------------
(Robert I. Lipp)
*KATHERINE M. SULLIVAN Director, Senior Vice President and
- --------------------------- General Counsel
(Katherine M. Sullivan)
*MARC P. WEILL Director
- ---------------------------
(Marc P. Weill)
*By: /s/Ernest J. Wright, Attorney-in-Fact
</TABLE>
<PAGE> 95
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
No. Description Method of Filing
- ------- -----------
<S> <C> <C>
10 Consent of KPMG LLP, Independent Certified Electronically
Public Accountants.
15(b) Powers of Attorney authorizing Ernest J. Wright or Kathleen A. Electronically
McGah as signatory for J. Eric Daniels and Jay S. Benet.
16 Organizational Chart. Electronically
</TABLE>
<PAGE> 1
Consent of Independent Certified Public Accountants
The Board of Directors
The Travelers Insurance Company
We consent to the use of our reports included herein or incorporated herein by
reference and to the reference to our firm as experts under the heading
"Independent Accountants."
KPMG LLP
Hartford, Connecticut
April 16, 1999
<PAGE> 1
THE TRAVELERS FUND BD III FOR VARIABLE ANNUITIES
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
That I, J. ERIC DANIELS of Farmington, Connecticut, Director, President
and Chief Executive Officer of The Travelers Insurance Company (hereafter the
"Company"), do hereby make, constitute and appoint ERNEST J. WRIGHT, Secretary
of said Company, and KATHLEEN A. McGAH, Assistant Secretary of said Company, or
either one of them acting alone, my true and lawful attorney-in-fact, for me,
and in my name, place and stead, to sign registration statements on behalf of
said Company on Form N-4 or other appropriate form under the Securities Act of
1933 and the Investment Company Act of 1940 for The Travelers Fund BD III for
Variable Annuities, a separate account of the Company dedicated specifically to
the funding of variable annuity contracts to be offered by said Company, and
further, to sign any and all amendments thereto, including post-effective
amendments, that may be filed by the Company on behalf of said registrant.
IN WITNESS WHEREOF, I have hereunto set my hand this 15th day of
January 1999.
/s/ J. Eric Daniels
Director, President and Chief Executive Officer
The Travelers Insurance Company
<PAGE> 2
THE TRAVELERS FUND BD III FOR VARIABLE ANNUITIES
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
That I, JAY S. BENET of West Hartford, Connecticut, Director, Senior Vice
President and Chief Financial Officer, Chief Accounting Officer and Controller
of The Travelers Insurance Company (hereafter the "Company"), do hereby make,
constitute and appoint ERNEST J. WRIGHT, Secretary of said Company, and KATHLEEN
A. McGAH, Assistant Secretary of said Company, or either one of them acting
alone, my true and lawful attorney-in-fact, for me, and in my name, place and
stead, to sign registration statements on behalf of said Company on Form N-4 or
other appropriate form under the Securities Act of 1933 and the Investment
Company Act of 1940 for The Travelers Fund BD III for Variable Annuities, a
separate account of the Company dedicated specifically to the funding of
variable annuity contracts to be offered by said Company, and further, to sign
any and all amendments thereto, including post-effective amendments, that may be
filed by the Company on behalf of said registrant.
IN WITNESS WHEREOF, I have hereunto set my hand this 15th day of
January 1999.
/s/ Jay S. Benet
Director, Senior Vice President
Chief Financial Officer,
Chief Accounting Officer and Controller
The Travelers Insurance Company
<PAGE> 1
<TABLE>
<CAPTION>
CITIGROUP INC. AS 31-DEC-1998
PLACE OF %VOTING
1 2 3 4 5 6 7 8 9 10 INCORPORATION DIRECT TOTAL CTL ACT CO
<S> <C> <C> <C> <C> <C> <C>
AC HEALTH VENTURES, INC. Delaware 100 100 Y N 6005
AMCO BIOTECH, INC. Delaware 100 100 Y N 6016
ASSOCIATED MADISON COMPANIES, INC. Delaware 100 100 Y Y 6029
ERISA CORPORATION New York 100 100 Y N 6211
MID-AMERICA INSURANCE SERVICES, INC. Georgia 100 100 Y Y 6320
NATIONAL MARKETING CORPORATION Pennsylvania 100 100 Y N 6333
PFS SERVICES, INC. Georgia 100 100 Y Y 6374
PFS SHAREHOLDER SERVICES Georgia 50 100 Y Y 6375
THE TRAVELERS INSURANCE GROUP INC. Connecticut 100 100 Y Y 6772
CONSTITUTION PLAZA, INC. Connecticut 100 100 Y N 6164
LA METROPOLE S.A. Belgium 98.83 98.8 Y N 6300
THE PROSPECT COMPANY Delaware 100 100 Y Y 6757
89TH & YORK AVENUE CORPORATION New York 100 100 Y N 6004
PANTHER VALLEY, INC. New Jersey 100 100 Y Y 6350
THE TRAVELERS ASSET FUNDING CORPORATION Connecticut 100 100 Y Y 6761
THE TRAVELERS INSURANCE COMPANY Connecticut 100 100 Y Y 6770
440 SOUTH LASALLE LLC Delaware 100 100 Y Y 6003
AMERICAN FINANCIAL LIFE INSURANCE COMPANY Texas 100 100 Y Y 6017
CARLTON ARMS OF BRADENTON Florida 50 50 Y (1) Y 6055
CRIPPLE CREEK VENTURE PARTNER II L.P 29.1 64.6 Y Y 6912
GREENWICH STREET CAPITAL PARTNERS II, L.P. Delaware 11.3 25.1 Y (1) Y 6243
GREENWICH STREET CAPITAL PARTNERS, L.P. Delaware 29.4 31.2 Y (1) Y 6247
GREENWICH STREET INVESTMENTS, L.L.C. Delaware 100 100 Y Y 6244
</TABLE>
1=Citigroup-controlled entity acts as general partner; 2=Managerial control;
3=Direct investor is Citigroup controlled entity.
1
<PAGE> 2
<TABLE>
<CAPTION>
CITIGROUP INC. AS 31-DEC-1998
PLACE OF %VOTING
1 2 3 4 5 6 7 8 9 10 INCORPORATION DIRECT TOTAL CTL ACT CO
<S> <C> <C> <C> <C> <C> <C>
GREENWICH STREET INVESTMENTS, L.P. 1.46 1.46 Y (1) Y 6251
THE GREENWICH STREET FUND L.P. 1 2 Y (1) Y 6752
GRIFFITH PARTNERS, L.P. 16.4 37.4 Y (1) Y 6253
HOLLOW CREEK, L.L.C. 100 100 Y Y 6270
STATION HILL, L.L.C. 75 75 Y Y 6894
MIDKIFF DEVELOPMENT DRILLING PROGRAM, L.P. 8.8 99 Y Y 6322
OAKBROOK HOTEL VENTURE Illinois 100 100 Y Y 6343
PRIMERICA LIFE INSURANCE COMPANY Massachusetts 100 100 Y Y 6445
GREENWICH STREET CAPITAL PARTNERS, L.P. Delaware 1.8 31.2 Y (1) Y 6247
NATIONAL BENEFIT LIFE INSURANCE COMPANY New York 100 100 Y Y 6331
PRIMERICA FINANCIAL SERVICES (CANADA) LTD. Canada 100 100 Y Y 6419
PFSL INVESTMENTS CANADA LTD. Canada 100 100 Y Y 6377
PRIMERICA LIFE INSURANCE COMPANY OF CANADA Canada 100 100 Y Y 6446
PRIMERICA CLIENT SERVICES INC. CANADA Canada 100 100 Y Y 6412
PRIMERICA FINANCIAL SERVICES LTD. Canada 100 100 Y Y 6435
SALOMON BROTHERS CAPITAL STRUCTURE ARBITRAGE FUND I, L.P. 4.6 13.3 Y (1) Y 6486
SSB PRIVATE SELECTIONS, LLC Delaware 45 100 Y Y 6724
SALOMON SMITH BARNEY PRIVATE SELECTION FUND I, LLC 25 25 Y (1) Y 6564
THE GREENWICH STREET FUND L.P. 1 2 Y (1) Y 6752
THE PLAZA CORPORATION Connecticut 100 100 Y Y 6755
THE COPELAND COMPANIES (HOLDING COMPANY) New Jersey 100 100 Y Y 6750
AMERICAN ODYSSEY FUNDS MANAGEMENT, INC. New Jersey 100 100 Y Y 6019
COPELAND ASSOCIATES, INC. Delaware 100 100 Y Y 6171
</TABLE>
1=Citigroup-controlled entity acts as general partner; 2=Managerial control;
3=Direct investor is Citigroup controlled entity.
2
<PAGE> 3
<TABLE>
<CAPTION>
CITIGROUP INC. AS 31-DEC-1998
PLACE OF %VOTING
1 2 3 4 5 6 7 8 9 10 INCORPORATION DIRECT TOTAL CTL ACT CO
<S> <C> <C> <C> <C> <C> <C>
COPELAND ASSOCIATES AGENCY OF OHIO, INC. Ohio 100 100 Y Y 6167
COPELAND ASSOCIATES OF ALABAMA, INC. Alabama 100 100 Y Y 6168
COPELAND ASSOCIATES OF MONTANA, INC. Montana 100 100 Y Y 6169
COPELAND ASSOCIATES OF NEVADA, INC. Nevada 100 100 Y Y 6170
COPELAND BENEFITS MANAGEMENT COMPANY New Jersey 100 100 Y N 6172
COPELAND EQUITIES, INC. New Jersey 100 100 Y Y 6173
DONALD F. SMITH & ASSOCIATES New Jersey 100 100 Y Y 6200
H.C. COPELAND ASSOCIATES, INC. OF MASSACHUSETTS Massachusetts 100 100 Y Y 6264
SMITH ANNUITY SERVICES, INC. New Jersey 100 100 Y Y 6652
COPELAND FINANCIAL SERVICES, INC. New Jersey 100 100 Y Y 6174
COPELAND MORTGAGE SERVICES, INC. New Jersey 100 100 Y Y 6175
H.C. COPELAND AND ASSOCIATES, INC. OF TEXAS Texas 100 100 Y Y 6263
THREE PARKWAY INC. - I Pennsylvania 100 100 Y N 6786
THREE PARKWAY INC. - II Pennsylvania 100 100 Y N 6787
THREE PARKWAY INC. - III Pennsylvania 100 100 Y N 6788
TOWER SQUARE SECURITIES, INC. Connecticut 100 100 Y Y 6798
TOWER SQUARE SECURITIES INSURANCE AGENCY OF ALABAMA, INC. Alabama 100 100 Y Y 6793
TOWER SQUARE SECURITIES INSURANCE AGENCY OF MASSACHUSETTS, INC. Massachusetts 100 100 Y Y 6794
TOWER SQUARE SECURITIES INSURANCE AGENCY OF NEW MEXICO, INC. New Mexico 100 100 Y Y 6795
TOWER SQUARE SECURITIES INSURANCE AGENCY OF OHIO, INC. Ohio 99 99 Y Y 6796
TOWER SQUARE SECURITIES INSURANCE AGENCY OF TEXAS, INC. Texas 100 100 Y Y 6797
TRAVELERS ASSET MANAGEMENT INTERNATIONAL CORPORATION New York 100 100 Y Y 6806
TRAVELERS DISTRIBUTION COMPANY Delaware 100 100 Y Y 6818
</TABLE>
1=Citigroup-controlled entity acts as general partner; 2=Managerial control;
3=Direct investor is Citigroup controlled entity.
3
<PAGE> 4
<TABLE>
<CAPTION>
CITIGROUP INC. AS 31-DEC-1998
PLACE OF %VOTING
1 2 3 4 5 6 7 8 9 10 INCORPORATION DIRECT TOTAL CTL ACT CO
<S> <C> <C> <C> <C> <C> <C>
TRAVELERS INVESTMENT ADVISERS, INC. Delaware 100 100 Y Y 6834
TRAVELERS/NET PLUS INSURANCE AGENCY, INC. Massachusetts 100 100 Y Y 6854
TRAVELERS/NET PLUS, INC. Connecticut 100 100 Y Y 6855
TRAVELERS/NET PLUS AGENCY OF OHIO, INC. Ohio 100 100 Y Y 6853
THE TRAVELERS LIFE AND ANNUITY COMPANY Connecticut 100 100 Y Y 6774
CRIPPLE CREEK VENTURE PARTNER II L.P 3.2 64.6 Y Y 6912
GREENWICH STREET CAPITAL PARTNERS II, L.P. Delaware 1.36 25.1 Y (1) Y 6243
GRIFFITH PARTNERS, L.P. 1.8 37.4 Y (1) Y 6253
MIDKIFF DEVELOPMENT DRILLING PROGRAM, L.P. 34.3 99 Y Y 6322
SSB PRIVATE SELECTIONS, LLC Delaware 5 100 Y Y 6724
TRAVELERS ANNUITY UK INVESTMENTS, LLC Delaware 100 100 Y Y 6805
TRIBECA INVESTMENTS, L.L.C. Delaware 4.15 100 Y Y 6858
TIMCO ALPHA I, LLC Connecticut 9.9 100 Y Y 6557
TRAVELERS GROUP INVESTMENT MANAGEMENT, LLC Delaware 50 100 Y N 6825
TRAVELERS HIGHLAND PARK, LLC Colorado 100 100 Y Y 6826
TRAVELERS INSURANCE UK INVESTMENTS, LLC Delaware 100 100 Y Y 6832
TRAVELERS INTERNATIONAL INVESTMENTS LTD. Cayman Is. 100 100 Y Y 6833
SALOMON-SHANGHAI INDUSTRIAL GREATER CHINA FUND 14.9 52.2 Y Y 6916
TRAVELERS OPPORTUNITY FUND I, LLC Delaware 100 100 Y Y 6839
TISHMAN SPEYER/TRAVELERS ASSOCIATES Delaware 50 50 Y Y 6791
TISHMAN SPEYER/TRAVELERS REAL ESTATE VENTURE L.P. Delaware 1 83.0 Y (1) Y 6792
TST 125 HIGH STREET, L.L.C. Delaware 100 100 Y Y 6008
ONE TWENTY FIVE HIGH STREET LIMITED PARTNERSHIP Massachusetts 60 60 Y Y 6344
</TABLE>
1=Citigroup-controlled entity acts as general partner; 2=Managerial control;
3=Direct investor is Citigroup controlled entity.
4
<PAGE> 5
<TABLE>
<CAPTION>
CITIGROUP INC. AS 31-DEC-1998
PLACE OF %VOTING
1 2 3 4 5 6 7 8 9 10 INCORPORATION DIRECT TOTAL CTL ACT CO
<S> <C> <C> <C> <C> <C> <C>
TRAVELERS OPPORTUNITY FUND II, LLC Delaware 100 100 Y Y 6840
TISHMAN SPEYER/TRAVELERS REAL ESTATE VENTURE L.P. Delaware 82.04 83.0 Y (1) Y 6792
TST 125 HIGH STREET, L.L.C. Delaware 100 100 Y Y 6008
ONE TWENTY FIVE HIGH STREET LIMITED PARTNERSHIP Massachusetts 60 60 Y Y 6344
TRAVELERS SCHAUMBERG WINDY POINT LLC Delaware 100 100 Y Y 6848
WINDY POINT OF SCHAUMBERG LLC Delaware 80 80 Y Y 6882
TRAVELERS YORK ROAD LLC Delaware 100 100 Y Y 6852
YORK ROAD PROPERTIES LLC Delaware 85 85 Y Y 6884
TRIBECA INVESTMENTS, L.L.C. Delaware 16.96 100 Y Y 6858
TRIBECA MANAGEMENT, L.L.C. Delaware 100 100 Y Y 6859
TRIBECA INVESTMENTS, L.L.C. Delaware 0.75 100 Y Y 6858
UMBRELLA CAPITAL COMPANY LLC Delaware 100 100 Y Y 6870
TRAVELERS CANADA CORPORATION Canada 100 100 Y N 6809
TRAVELERS MORTGAGE SECURITIES CORPORATION Delaware 100 100 Y Y 6838
TRAVELERS PROPERTY CASUALTY CORP. Delaware 98 98 Y Y 6845
THE STANDARD FIRE INSURANCE COMPANY Connecticut 100 100 Y Y 6760
AE PROPERTIES, INC. California 100 100 Y Y 6010
AE TOWN AND COUNTRY LIMITED PARTNERSHIP Arizona 51 51 Y Y 6011
BAYHILL ASSOCIATES California 83 83 Y Y 6034
INDUSTRY LAND DEVELOPMENT COMPANY California 100 100 Y Y 6279
INDUSTRY PARTNERS California 50 100 Y Y 6280
INDUSTRY PARTNERS California 50 100 Y Y 6280
COMMUNITY REHABILITATION INVESTMENT CORPORATION Connecticut 100 100 Y Y 6160
</TABLE>
1=Citigroup-controlled entity acts as general partner; 2=Managerial control;
3=Direct investor is Citigroup controlled entity.
5
<PAGE> 6
<TABLE>
<CAPTION>
CITIGROUP INC. AS 31-DEC-1998
PLACE OF %VOTING
1 2 3 4 5 6 7 8 9 10 INCORPORATION DIRECT TOTAL CTL ACT CO
<S> <C> <C> <C> <C> <C> <C>
STANDARD FIRE UK INVESTMENTS, LLC Connecticut 100 100 Y Y 6730
THE AUTOMOBILE INSURANCE COMPANY OF HARTFORD, CONNECTICUT Connecticut 100 100 Y Y 6748
TRAVCAL SECURE INSURANCE COMPANY California 100 100 Y Y 6802
TRAVCAL INDEMNITY COMPANY California 100 100 Y Y 6801
TRAVELERS ALPHA HOLDINGS, INC. 50 100 Y Y 6115
TIMCO ALPHA I, LLC Connecticut 89.1 100 Y Y 6557
TRAVELERS INFORMATION SERVICES INC. Connecticut 50 100 Y N 6831
TRAVELERS PERSONAL SECURITY INSURANCE COMPANY Connecticut 100 100 Y Y 6844
TRAVELERS PROPERTY CASUALTY INSURANCE COMPANY Connecticut 100 100 Y Y 6846
TRAVELERS PROPERTY CASUALTY INSURANCE COMPANY OF ILLINOIS Illinois 100 100 Y Y 6847
THE TRAVELERS INDEMNITY COMPANY Connecticut 100 100 Y Y 6765
BLACK ENTERPRISE/GREENWICH STREET CORPORATE GROWTH PARTNERS L.P. Delaware 20 20 Y (1) Y 6037
COMMERCIAL INSURANCE RESOURCES, INC. Delaware 100 100 Y Y 6156
GULF INSURANCE COMPANY Missouri 100 100 Y Y 6257
ATLANTIC INSURANCE COMPANY Texas 100 100 Y Y 6030
GULF GROUP LLOYDS Texas 100 100 Y Y 6256
GULF INSURANCE HOLDINGS UK LIMITED England 100 100 Y Y 6259
GULF INSURANCE COMPANY U.K. LIMITED England 100 100 Y Y 6258
GULF RISK SERVICES, INC. Delaware 100 100 Y Y 6260
GULF UNDERWRITERS INSURANCE COMPANY Missouri 100 100 Y Y 6261
SELECT INSURANCE COMPANY Texas 100 100 Y Y 6634
CONSTITUTION STATE SERVICES LLC Delaware 1 100 Y Y 6166
COUNTERSIGNATURE AGENCY, INC. Florida 100 100 Y Y 6181
</TABLE>
1=Citigroup-controlled entity acts as general partner; 2=Managerial control;
3=Direct investor is Citigroup controlled entity.
6
<PAGE> 7
<TABLE>
<CAPTION>
CITIGROUP INC. AS 31-DEC-1998
PLACE OF %VOTING
1 2 3 4 5 6 7 8 9 10 INCORPORATION DIRECT TOTAL CTL ACT CO
<S> <C> <C> <C> <C> <C> <C>
CRIPPLE CREEK VENTURE PARTNER II L.P 28.4 64.6 Y Y 6912
CRIPPLE CREEK VENTURE PARTNER L.P. 80.8 85 Y Y 6186
FIRST FLORIDIAN AUTO AND HOME INSURANCE COMPANY Florida 100 100 Y Y 6224
FIRST TRENTON INDEMNITY COMPANY New Jersey 100 100 Y Y 6225
RED OAK INSURANCE COMPANY New Jersey 100 100 Y Y 6463
GPM GAS GATHERING L.L.C. 23.8 25 Y (1) Y 6233
GRIFFITH PARTNERS, L.P. 17 37.4 Y (1) Y 6253
MIDKIFF DEVELOPMENT DRILLING PROGRAM, L.P. 55.5 99 Y Y 6322
SALOMON BROTHERS CAPITAL STRUCTURE ARBITRAGE FUND I, L.P. 8.7 13.3 Y (1) Y 6486
SECURE AFFINITY AGENCY, INC. Delaware 100 100 Y Y 6633
THE CHARTER OAK FIRE INSURANCE COMPANY Connecticut 100 100 Y Y 6749
THE PHOENIX INSURANCE COMPANY Connecticut 100 100 Y Y 6754
CONSTITUTION STATE SERVICE COMPANY Montana 100 100 Y Y 6165
CONSTITUTION STATE SERVICES LLC Delaware 99 100 Y Y 6166
CRIPPLE CREEK VENTURE PARTNER II L.P 3.9 64.6 Y Y 6912
CRIPPLE CREEK VENTURE PARTNER L.P. 4.2 85 Y Y 6186
GPM GAS GATHERING L.L.C. 1.2 25 Y (1) Y 6233
GREENWICH STREET CAPITAL PARTNERS II, L.P. Delaware 1.5 25.1 Y (1) Y 6243
GRIFFITH PARTNERS, L.P. 2.2 37.4 Y (1) Y 6253
PHOENIX UK INVESTMENTS, LLC Connecticut 100 100 Y Y 6403
SSB PRIVATE SELECTIONS, LLC Delaware 6 100 Y Y 6724
THE TRAVELERS INDEMNITY COMPANY OF AMERICA Connecticut 100 100 Y Y 6766
THE TRAVELERS INDEMNITY COMPANY OF CONNECTICUT Connecticut 100 100 Y Y 6767
</TABLE>
1=Citigroup-controlled entity acts as general partner; 2=Managerial control;
3=Direct investor is Citigroup controlled entity.
7
<PAGE> 8
<TABLE>
<CAPTION>
CITIGROUP INC. AS 31-DEC-1998
PLACE OF %VOTING
1 2 3 4 5 6 7 8 9 10 INCORPORATION DIRECT TOTAL CTL ACT CO
<S> <C> <C> <C> <C> <C> <C>
MIDKIFF DEVELOPMENT DRILLING PROGRAM, L.P. 0.4 99 Y Y 6322
THE TRAVELERS INDEMNITY COMPANY OF ILLINOIS Illinois 100 100 Y Y 6768
TRAVELERS FOREIGN BOND PARTNERSHIP Connecticut 30 100 Y Y 6820
THE PREMIER INSURANCE COMPANY OF MASSACHUSETTS Massachusetts 100 100 Y Y 6756
THE TRAVELERS HOME AND MARINE INSURANCE COMPANY Indiana 100 100 Y Y 6764
THE TRAVELERS INDEMNITY COMPANY OF MISSOURI Missouri 100 100 Y Y 6769
THE TRAVELERS LLOYDS INSURANCE COMPANY Texas 100 100 Y Y 6775
THE TRAVELERS MARINE CORPORATION California 100 100 Y Y 6776
TI HOME MORTGAGE BROKERAGE, INC. Delaware 100 100 Y N 6789
TRAVCO INSURANCE COMPANY Indiana 100 100 Y Y 6803
TRAVELERS BOND INVESTMENTS, INC. Connecticut 100 100 Y Y 6808
TRAVELERS FOREIGN BOND PARTNERSHIP Connecticut 1 100 Y Y 6820
TRAVELERS FOREIGN BOND PARTNERSHIP Connecticut 69 100 Y Y 6820
TRAVELERS GENERAL AGENCY OF HAWAII, INC. Hawaii 100 100 Y Y 6821
TRAVELERS MEDICAL MANAGEMENT SERVICES INC. Delaware 100 100 Y Y 6837
TRAVELERS SPECIALTY PROPERTY CASUALTY COMPANY, INC. Connecticut 100 100 Y N 6850
TRIPLE T DIAMOND GATEWAY LLC 100 100 Y Y 6861
TPC INVESTMENTS, INC. 100 100 Y Y 6908
TRAVELERS (BERMUDA) LIMITED 100 100 Y Y 6804
TRAVELERS CASUALTY AND SURETY COMPANY Connecticut 100 100 Y Y 6812
AE DEVELOPMENT GROUP, INC. Connecticut 100 100 Y Y 6009
PONDEROSA HOMES Connecticut 23.5 100 Y Y 6409
CHARTER OAK SERVICES CORPORATION New York 100 100 Y N 6084
</TABLE>
1=Citigroup-controlled entity acts as general partner; 2=Managerial control;
3=Direct investor is Citigroup controlled entity.
8
<PAGE> 9
<TABLE>
<CAPTION>
CITIGROUP INC. AS 31-DEC-1998
PLACE OF %VOTING
1 2 3 4 5 6 7 8 9 10 INCORPORATION DIRECT TOTAL CTL ACT CO
<S> <C> <C> <C> <C> <C> <C>
FARMINGTON CASUALTY COMPANY Connecticut 100 100 Y Y 6218
HEARTLAND INSURANCE SERVICES, INC. Connecticut 100 100 Y Y 6266
TRAVELERS ALPHA HOLDINGS, INC. 50 100 Y Y 6115
TIMCO ALPHA I, LLC Connecticut 89.1 100 Y Y 6557
GREENWICH STREET CAPITAL PARTNERS II, L.P. Delaware 11 25.1 Y (1) Y 6243
PONDEROSA HOMES Connecticut 76.5 100 Y Y 6409
T-W MASTER LLC Delaware 100 100 Y Y 6735
T-W SANTA CLARA LLC Delaware 100 100 Y Y 6736
SSB PRIVATE SELECTIONS, LLC Delaware 44 100 Y Y 6724
TRAVELERS CASUALTY & SURETY COMPANY OF CANADA Canada 100 100 Y Y 6811
TRAVELERS CASUALTY AND SURETY COMPANY OF AMERICA Connecticut 100 100 Y Y 6813
TRAVELERS CASUALTY AND SURETY COMPANY OF ILLINOIS Illinois 100 100 Y Y 6814
TRAVELERS CASUALTY COMPANY OF CONNECTICUT Connecticut 100 100 Y Y 6815
TRAVELERS CASUALTY UK INVESTMENTS, LLC Connecticut 100 100 Y Y 6816
TRAVELERS COMMERCIAL INSURANCE COMPANY Connecticut 100 100 Y Y 6817
TRAVELERS EXCESS AND SURPLUS LINES COMPANY Connecticut 100 100 Y Y 6819
TRAVELERS INFORMATION SERVICES INC. Connecticut 50 100 Y N 6831
TRAVELERS LLOYDS OF TEXAS INSURANCE COMPANY Texas 100 100 Y Y 6836
TRAVELERS TRIBECA INVESTMENTS, INC. 100 100 Y Y 6851
TRIBECA INVESTMENTS, L.L.C. Delaware 78.14 100 Y Y 6858
URBAN DIVERSIFIED PROPERTIES, INC. Connecticut 100 100 Y N 6873
TRAVELERS P&C CAPITAL I Delaware 100 100 Y Y 6841
TRAVELERS P&C CAPITAL II Delaware 100 100 Y Y 6842
</TABLE>
1=Citigroup-controlled entity acts as general partner; 2=Managerial control;
3=Direct investor is Citigroup controlled entity.
9
<PAGE> 10
<TABLE>
<CAPTION>
CITIGROUP INC. AS 31-DEC-1998
PLACE OF %VOTING
1 2 3 4 5 6 7 8 9 10 INCORPORATION DIRECT TOTAL CTL ACT CO
<S> <C> <C> <C> <C> <C> <C>
TRAVELERS P&C CAPITAL III Delaware 100 100 Y Y 6843
TRIBECA ALTERNATIVE STRATEGIES, INC. 100 100 Y Y 6644
THE TRAVELERS INSURANCE CORPORATION PROPRIETARY LIMITED France 100 100 Y N 6771
PRIMERICA SERVICES, INC. Duluth, Georgia 100 100 Y Y 6447
PRIMERICA CLIENT SERVICES, INC. (USA) Delaware 100 100 Y Y 6413
PRIMERICA CONVENTION SERVICES, INC. Georgia 100 100 Y Y 6414
PRIMERICA FINANCE CORPORATION Delaware 100 100 Y Y 6417
PFS DISTRIBUTORS, INC. Georgia 100 100 Y Y 6372
PFS INVESTMENTS INC. Georgia 100 100 Y Y 6373
PFS T.A., INC. Delaware 100 100 Y Y 6376
PFS SHAREHOLDER SERVICES Georgia 50 100 Y Y 6375
PRIMERICA FINANCIAL SERVICES HOME MORTGAGES, INC. Georgia 100 100 Y Y 6426
PRIMERICA FINANCIAL SERVICES HOME MORTGAGES LIMITED PARTNERSHIP OF ARIZONA Delaware 100 100 Y Y 6422
PRIMERICA FINANCIAL SERVICES HOME MORTGAGES LIMITED PARTNERSHIP OF NORTH CAROLINA North Carolina 100 100 Y Y 6424
PRIMERICA FINANCIAL SERVICES HOME MORTGAGES LIMITED PARTNERSHIP OF OHIO Ohio 100 100 Y Y 6425
PRIMERICA FINANCIAL SERVICES, INC. Nevada 100 100 Y Y 6440
PRIMERICA FINANCIAL INSURANCE SERVICES OF TEXAS, INC. Texas 100 100 Y Y 6418
PRIMERICA FINANCIAL SERVICES AGENCY OF NEW YORK, INC. New York 100 100 Y Y 6420
PRIMERICA FINANCIAL SERVICES AGENCY OF OHIO, INC. Ohio 100 100 Y Y 6421
PRIMERICA FINANCIAL SERVICES INSURANCE MARKETING OF CONNECTICUT, INC. Connecticut 100 100 Y Y 6427
PRIMERICA FINANCIAL SERVICES INSURANCE MARKETING OF IDAHO, INC. Idaho 100 100 Y Y 6428
PRIMERICA FINANCIAL SERVICES INSURANCE MARKETING OF MAINE, INC. Maine 100 100 Y Y 6429
PRIMERICA FINANCIAL SERVICES INSURANCE MARKETING OF NEVADA, INC. Nevada 100 100 Y Y 6430
</TABLE>
1=Citigroup-controlled entity acts as general partner; 2=Managerial control;
3=Direct investor is Citigroup controlled entity.
10
<PAGE> 11
<TABLE>
<CAPTION>
CITIGROUP INC. AS 31-DEC-1998
PLACE OF %VOTING
1 2 3 4 5 6 7 8 9 10 INCORPORATION DIRECT TOTAL CTL
<S> <C> <C> <C> <C>
PRIMERICA FINANCIAL SERVICES INSURANCE MARKETING OF PENNSYLVANIA, INC. Pennsylvania 100 100 Y
PRIMERICA FINANCIAL SERVICES INSURANCE MARKETING OF THE VIRGIN ISLANDS, INC. U.S. Virgin Islands 100 100 Y
PRIMERICA FINANCIAL SERVICES INSURANCE MARKETING OF WYOMING, INC. Wyoming 100 100 Y
PRIMERICA FINANCIAL SERVICES INSURANCE MARKETING, INC. Delaware 100 100 Y
PRIMERICA FINANCIAL SERVICES OF ALABAMA, INC. Alabama 100 100 Y
PRIMERICA FINANCIAL SERVICES OF ARIZONA, INC. Arizona 100 100 Y
PRIMERICA FINANCIAL SERVICES OF KENTUCKY, INC. Kentucky 100 100 Y
PRIMERICA FINANCIAL SERVICES OF NEW MEXICO, INC. New Mexico 100 100 Y
PRIMERICA INSURANCE AGENCY OF MASSACHUSETTS, INC. Massachusetts 100 100 Y
PRIMERICA INSURANCE MARKETING SERVICES OF PUERTO RICO, INC. Puerto Rico 100 100 Y
PRIMERICA INSURANCE SERVICES OF LOUISIANA, INC. Louisiana 100 100 Y
RCM ACQUISITION INC. Delaware 100 100 Y
SCN ACQUISITIONS COMPANY Delaware 100 100 Y
SL&H REINSURANCE, LTD. Leeward Islands 100 100 Y
SOUTHWEST SERVICE AGREEMENTS, INC. North Carolina 100 100 Y
SOUTHWEST WARRANTY CORPORATION Florida 100 100 Y
CCC HOLDINGS, INC. Delaware 100 100 Y
CCC FAIRWAYS, INC. Delaware 100 100 Y
COMMERCIAL CREDIT COMPANY Delaware 100 100 Y
AMERICAN HEALTH AND LIFE INSURANCE COMPANY Texas 100 100 Y
BROOKSTONE INSURANCE COMPANY Vermont 100 100 Y
CC CREDIT CARD CORPORATION Delaware 100 100 Y
CC FINANCE SYSTEM INCORPORATED Delaware 100 100 Y
<CAPTION>
ACT CO
1 2 3 4 5 6 7 8 9 10
<S> <C> <C>
PRIMERICA FINANCIAL SERVICES INSURANCE MARKETING OF PENNSYLVANIA, INC. Y 6431
PRIMERICA FINANCIAL SERVICES INSURANCE MARKETING OF THE VIRGIN ISLANDS, INC. Y 6432
PRIMERICA FINANCIAL SERVICES INSURANCE MARKETING OF WYOMING, INC. Y 6433
PRIMERICA FINANCIAL SERVICES INSURANCE MARKETING, INC. Y 6434
PRIMERICA FINANCIAL SERVICES OF ALABAMA, INC. Y 6436
PRIMERICA FINANCIAL SERVICES OF ARIZONA, INC. Y 6437
PRIMERICA FINANCIAL SERVICES OF KENTUCKY, INC. Y 6438
PRIMERICA FINANCIAL SERVICES OF NEW MEXICO, INC. Y 6439
PRIMERICA INSURANCE AGENCY OF MASSACHUSETTS, INC. Y 6441
PRIMERICA INSURANCE MARKETING SERVICES OF PUERTO RICO, INC. Y 6442
PRIMERICA INSURANCE SERVICES OF LOUISIANA, INC. Y 6443
RCM ACQUISITION INC. N 6461
SCN ACQUISITIONS COMPANY N 6631
SL&H REINSURANCE, LTD. Y 6648
SOUTHWEST SERVICE AGREEMENTS, INC. Y 6721
SOUTHWEST WARRANTY CORPORATION Y 6722
CCC HOLDINGS, INC. Y 6081
CCC FAIRWAYS, INC. Y 6080
COMMERCIAL CREDIT COMPANY Y 6104
AMERICAN HEALTH AND LIFE INSURANCE COMPANY Y 6018
BROOKSTONE INSURANCE COMPANY Y 6042
CC CREDIT CARD CORPORATION Y 6060
CC FINANCE SYSTEM INCORPORATED Y 6063
</TABLE>
1=Citigroup-controlled entity acts as general partner; 2=Managerial control;
3=Direct investor is Citigroup controlled entity.
11
<PAGE> 12
<TABLE>
<CAPTION>
CITIGROUP INC. AS 31-DEC-1998
PLACE OF %VOTING
1 2 3 4 5 6 7 8 9 10 INCORPORATION DIRECT TOTAL CTL ACT CO
<S> <C> <C> <C> <C> <C> <C>
CC FINANCIAL SERVICES INC. 100 100 Y N 6065
CCC CAPITAL I Delaware 100 100 Y N 6075
CCC CAPITAL II Delaware 100 100 Y N 6076
CCC CAPITAL III Delaware 100 100 Y N 6077
CCC CAPITAL IV Delaware 100 100 Y N 6078
CCC CAPITAL V Delaware 100 100 Y N 6079
CHESAPEAKE APPRAISAL AND SETTLEMENT SERVICES INC. Maryland 100 100 Y Y 6086
CHESAPEAKE APPRAISAL AND SETTLEMENT SERVICES AGENCY OF OHIO INC. Ohio 100 100 Y Y 6085
CHESAPEAKE WEST ESCROW SERVICES INC. California 100 100 Y Y 6087
CITY LOAN FINANCIAL SERVICES, INC. Ohio 100 100 Y Y 6100
CITY LOAN FINANCIAL, INC. Ohio 100 100 Y N 6101
COMMERCIAL CREDIT BANKING CORPORATION Oregon 100 100 Y N 6103
COMMERCIAL CREDIT CONSUMER SERVICES, INC. Minnesota 100 100 Y Y 6105
COMMERCIAL CREDIT CORPORATION (HAWAII) Hawaii 100 100 Y Y 6106
COMMERCIAL CREDIT CORPORATION (AL) Alabama 100 100 Y Y 6107
COMMERCIAL CREDIT CORPORATION (CA) California 100 100 Y Y 6108
COMMERCIAL CREDIT CORPORATION (IA) Iowa 100 100 Y Y 6109
COMMERCIAL CREDIT OF ALABAMA, INC. Delaware 100 100 Y Y 6140
COMMERCIAL CREDIT OF MISSISSIPPI, INC. Delaware 100 100 Y Y 6141
COMMERCIAL CREDIT CORPORATION (KY) Kentucky 100 100 Y Y 6110
COMMERCIAL CREDIT INVESTMENT, INC. Kentucky 100 100 Y Y 6133
COMMERCIAL CREDIT CORPORATION (MD) Maryland 100 100 Y Y 6111
ACTION DATA SERVICES, INC. Missouri 100 100 Y N 6006
</TABLE>
1=Citigroup-controlled entity acts as general partner; 2=Managerial control;
3=Direct investor is Citigroup controlled entity.
12
<PAGE> 13
<TABLE>
<CAPTION>
CITIGROUP INC. AS 31-DEC-1998
PLACE OF %VOTING
1 2 3 4 5 6 7 8 9 10 INCORPORATION DIRECT TOTAL CTL ACT CO
<S> <C> <C> <C> <C> <C> <C>
COMMERCIAL CREDIT PLAN, INCORPORATED (OK) Oklahoma 100 100 Y Y 6151
COMMERCIAL CREDIT CORPORATION (SC) South Carolina 100 100 Y Y 6112
COMMERCIAL CREDIT CORPORATION (WV) West Virginia 100 100 Y Y 6114
COMMERCIAL CREDIT CORPORATION NC North Carolina 100 100 Y Y 6116
COMMERCIAL CREDIT INSURANCE SERVICES, INC. Maryland 100 100 Y Y 6130
COMMERCIAL CREDIT INSURANCE AGENCY (P&C) OF MISSISSIPPI, INC. Mississippi 100 100 Y Y 6122
COMMERCIAL CREDIT INSURANCE AGENCY OF ALABAMA, INC. Alabama 100 100 Y Y 6123
COMMERCIAL CREDIT INSURANCE AGENCY OF HAWAII, INC. Hawaii 100 100 Y Y 6124
COMMERCIAL CREDIT INSURANCE AGENCY OF KENTUCKY, INC. Kentucky 100 100 Y Y 6125
COMMERCIAL CREDIT INSURANCE AGENCY OF MASSACHUSETTS, INC. Massachusetts 100 100 Y Y 6126
COMMERCIAL CREDIT INSURANCE AGENCY OF NEVADA, INC. Nevada 100 100 Y Y 6127
COMMERCIAL CREDIT INSURANCE AGENCY OF NEW MEXICO, INC. New Mexico 100 100 Y Y 6128
COMMERCIAL CREDIT INSURANCE AGENCY OF OHIO, INC. Ohio 100 100 Y Y 6129
COMMERCIAL CREDIT INTERNATIONAL, INC. Delaware 100 100 Y Y 6132
COMMERCIAL CREDIT INTERNATIONAL BANKING CORPORATION Oregon 100 100 Y Y 6131
COMMERCIAL CREDIT SERVICES DO BRAZIL LTDA. Brazil 99 99 Y N 6154
COMMERCIAL CREDIT SERVICES BELGIUM S.A. Belgium 100 100 Y N 6153
CREDITO FAMILIAR, S.A. DE C.V. Mexico 49 49 Y Y 6182
COMMERCIAL CREDIT LOAN, INC. (NY) New York 100 100 Y Y 6135
COMMERCIAL CREDIT LOANS, INC. (DE) Delaware 100 100 Y Y 6136
COMMERCIAL CREDIT LOANS, INC. (OH) Ohio 100 100 Y Y 6137
COMMERCIAL CREDIT LOANS, INC. (VA) Virginia 100 100 Y Y 6138
COMMERCIAL CREDIT MANAGEMENT CORPORATION Maryland 100 100 Y Y 6139
</TABLE>
1=Citigroup-controlled entity acts as general partner; 2=Managerial control;
3=Direct investor is Citigroup controlled entity.
13
<PAGE> 14
<TABLE>
<CAPTION>
CITIGROUP INC. AS 31-DEC-1998
PLACE OF %VOTING
1 2 3 4 5 6 7 8 9 10 INCORPORATION DIRECT TOTAL CTL ACT CO
<S> <C> <C> <C> <C> <C> <C>
COMMERCIAL CREDIT PLAN INCORPORATED (TN) Tennessee 100 100 Y Y 6143
COMMERCIAL CREDIT PLAN INCORPORATED (UT) Utah 100 100 Y Y 6144
COMMERCIAL CREDIT PLAN INCORPORATED OF GEORGETOWN Delaware 100 100 Y Y 6145
COMMERCIAL CREDIT PLAN INDUSTRIAL LOAN COMPANY Virginia 100 100 Y Y 6146
COMMERCIAL CREDIT PLAN, INCORPORATED (CO) Colorado 100 100 Y Y 6147
COMMERCIAL CREDIT PLAN, INCORPORATED (DE) Delaware 100 100 Y Y 6148
COMMERCIAL CREDIT PLAN, INCORPORATED (GA) Georgia 100 100 Y Y 6149
COMMERCIAL CREDIT PLAN, INCORPORATED (MO) Missouri 100 100 Y Y 6150
COMMERCIAL CREDIT SECURITIES, INC. Delaware 100 100 Y N 6152
PARK TOWER HOLDINGS, INC. Delaware 100 100 Y Y 6353
CC RETAIL SERVICES, INC. Delaware 100 100 Y Y 6074
PARK TOWER BROKERAGE ASSOCIATES Delaware 50 50 Y Y 6352
TROY TEXTILES, INC. Delaware 100 100 Y N 6863
COMMERCIAL CREDIT DEVELOPMENT CORPORATION Delaware 100 100 Y N 6117
MYERS PARK PROPERTIES, INC. Delaware 100 100 Y N 6330
TRAVELERS HOME MORTGAGE SERVICES OF ALABAMA, INC. Delaware 100 100 Y Y 6828
PENN RE, INC. North Carolina 100 100 Y N 6370
RESOURCE DEPLOYMENT, INC. Texas 100 100 Y Y 6465
THE TRAVELERS BANK USA Delaware 100 100 Y Y 6762
TRAVELERS BANK & TRUST, FSB Delaware 100 100 Y Y 6807
TRAVELERS HOME EQUITY, INC. North Carolina 100 100 Y Y 6827
CC CONSUMER SERVICES OF ALABAMA, INC. Alabama 100 100 Y Y 6059
CC HOME LENDERS FINANCIAL, INC. Georgia 100 100 Y Y 6070
</TABLE>
1=Citigroup-controlled entity acts as general partner; 2=Managerial control;
3=Direct investor is Citigroup controlled entity.
14
<PAGE> 15
<TABLE>
<CAPTION>
CITIGROUP INC. AS 31-DEC-1998
PLACE OF %VOTING
1 2 3 4 5 6 7 8 9 10 INCORPORATION DIRECT TOTAL CTL ACT CO
<S> <C> <C> <C> <C> <C> <C>
CC HOME LENDERS, INC. Ohio 100 100 Y Y 6071
COMMERCIAL CREDIT CORPORATION (TX) Texas 100 100 Y Y 6113
COMMERCIAL CREDIT FINANCIAL OF WEST VIRGINIA, INC. West Virginia 100 100 Y Y 6121
COMMERCIAL CREDIT PLAN CONSUMER DISCOUNT COMPANY Pennsylvania 100 100 Y Y 6142
TRAVELERS HOME MORTGAGE SERVICES, INC. North Carolina 100 100 Y Y 6830
TRAVELERS HOME MORTGAGE SERVICES OF PENNSYLVANIA, INC. Pennsylvania 100 100 Y Y 6829
TRITON INSURANCE COMPANY Missouri 100 100 Y Y 6862
VEROCHRIS CORPORATION Delaware 100 100 Y N 6876
AMC AIRCRAFT CORP. Delaware 100 100 Y N 6015
WORLD SERVICE LIFE INSURANCE COMPANY Colorado 100 100 Y Y 6883
CITICORP Delaware 100 100 Y Y 6091
CITIBANK, N.A. New York 100 100 Y Y 2
399 VENTURE PARTNERS, INC. Delaware 100 100 Y Y 2518
AGAMEMNON INCORPORATED Liberia 100 100 Y Y 5
BANCO DE HONDURAS S.A. Honduras 97.4 97.4 Y Y 312
CAMWIL LEASE, INC. Delaware 100 100 Y Y 319
CITICORP INVESTOR LEASE, INC. 100 100 Y Y 320
CITICORP MULTILEASE (SEF), INC. 100 100 Y Y 321
CAREERCOM CORPORATION 72 72 Y N 4544
CCBC HOLDINGS, INC. Philippines 40 40 Y (2) Y 3856
CITI CENTER BUILDING CORPORATION Philippines 60 100 Y (2) Y 3436
CITI (NOMINEES) LIMITED Hong Kong 100 100 Y Y 341
CITI CENTER BUILDING CORPORATION Philippines 40 100 Y (2) Y 3436
</TABLE>
1=Citigroup-controlled entity acts as general partner; 2=Managerial control;
3=Direct investor is Citigroup controlled entity.
15
<PAGE> 16
<TABLE>
<CAPTION>
CITIGROUP INC. AS 31-DEC-1998
PLACE OF %VOTING
1 2 3 4 5 6 7 8 9 10 INCORPORATION DIRECT TOTAL CTL
<S> <C> <C> <C> <C>
CITI CHREMATODOTIKES MISTHOSIS S.A. Greece 100 100 Y
CITI TOWER BUILDING CORPORATION Philippines 100 100 Y
CITIACH, INC. Delaware 50 100 Y
CITIBANK (CHANNEL ISLANDS) LIMITED Channel Islands 100 100 Y
CCIL (NOMINEES) LIMITED Channel Islands 100 100 Y
CCIL PENSION SCHEME TRUSTEES LIMITED Channel Islands 100 100 Y
CITIBANK (ZAIRE) S.A.R.L. Congo (Zaire) 100 100 Y
CITIBANK CAPITAL MANAGEMENT, INC. Delaware 100 100 Y
CITIBANK CONSUMERS NOMINEE PTE. LTD. Singapore 100 100 Y
CITIBANK INTERNATIONAL 100 100 Y
3C (HONG KONG) FUNDING CORPORATION Geroge Town, Cayman Islands 0 0 Y (
CITIBANK-MAGHREB Morocco 85.55 85.5 Y
CITIBANK NOMINEES (IRELAND) LIMITED Ireland 100 100 Y
CITIBANK NOMINEES SINGAPORE PTE. LTD. Singapore 100 100 Y
CITIBANK OVERSEAS INVESTMENT CORPORATION 100 100 Y
ASESORES CORPORATIVOS DE COSTA RICA, S.A. Costa Rica 100 100 Y
CITIBANK (COSTA RICA) SOCIEDAD ANONIMA Costa Rica 100 100 Y
CITISEGUROS DE COSTA RICA, S.A. San Jose, Costa Rica 100 100 Y
CITITARJETAS, S.A. Costa Rica 100 100 Y
CITIVALORES PUESTO DE BOLSA, S.A. Costa Rica 100 100 Y
ASIA PACIFIC TECHNOLOGY SERVICES PTE. LIMITED Singapore 100 100 Y
BANCO CITIBANK S.A. Brazil 100 100 Y
CITIBANK-CORRETORA DE CAMBIO, TITULOS E VALORES MOBILIARIOS S.A. Brazil 100 100 Y
<CAPTION>
ACT CO
1 2 3 4 5 6 7 8 9 10
<S> <C> <C>
CITI CHREMATODOTIKES MISTHOSIS S.A. Y 2432
CITI TOWER BUILDING CORPORATION Y 3839
CITIACH, INC. Y 2323
CITIBANK (CHANNEL ISLANDS) LIMITED Y 325
CCIL (NOMINEES) LIMITED Y 2080
CCIL PENSION SCHEME TRUSTEES LIMITED Y 4613
CITIBANK (ZAIRE) S.A.R.L. Y 713
CITIBANK CAPITAL MANAGEMENT, INC. N 4001
CITIBANK CONSUMERS NOMINEE PTE. LTD. Y 3063
CITIBANK INTERNATIONAL Y 327
3C (HONG KONG) FUNDING CORPORATION Y 4962
CITIBANK-MAGHREB Y 334
CITIBANK NOMINEES (IRELAND) LIMITED Y 340
CITIBANK NOMINEES SINGAPORE PTE. LTD. Y 2587
CITIBANK OVERSEAS INVESTMENT CORPORATION Y 342
ASESORES CORPORATIVOS DE COSTA RICA, S.A. Y 2563
CITIBANK (COSTA RICA) SOCIEDAD ANONIMA Y 464
CITISEGUROS DE COSTA RICA, S.A. Y 5057
CITITARJETAS, S.A. Y 4657
CITIVALORES PUESTO DE BOLSA, S.A. Y 2564
ASIA PACIFIC TECHNOLOGY SERVICES PTE. LIMITED Y 3311
BANCO CITIBANK S.A. Y 424
CITIBANK-CORRETORA DE CAMBIO, TITULOS E VALORES MOBILIARIOS S.A. Y 567
</TABLE>
1=Citigroup-controlled entity acts as general partner; 2=Managerial control;
3=Direct investor is Citigroup controlled entity.
16
<PAGE> 17
<TABLE>
<CAPTION>
CITIGROUP INC. AS 31-DEC-1998
PLACE OF %VOTING
1 2 3 4 5 6 7 8 9 10 INCORPORATION DIRECT TOTAL CTL ACT CO
<S> <C> <C> <C> <C> <C> <C>
CITIBANK-DISTRIBUIDORA DE TITULOS E VALORES MOBILIARIOS S.A. Brazil 100 100 Y Y 425
CITIBANK COMPANHIA HIPOTECARIA S.A. Sao Paulo, Brazil 99.99 100 Y Y 5305
BANCO DE DESARROLLO CITICORP, S.A. Dominican Republic 100 100 Y Y 534
CITINVERSIONES DE TITULOS Y VALORES (PUESTO DE BOLSA) S.A. Dominican Republic 99.72 99.7 Y Y 4455
BERLIN REAL ESTATE B.V. Netherlands 74.23 74.2 Y Y 3477
CCSCI, INC. Puerto Rico 100 100 Y Y 1404
CENTAUR INVESTMENT CORPORATION 100 100 Y Y 365
CENTRAL HOLDINGS CORPORATION Philippines 30 30 Y (2) N 366
CITI INVERSIONES, S.A. DE C.V. El Salvador 100 100 Y Y 4247
CITI VALORES DE EL SALVADOR S.A. DE C.V. San Salvador, El Salvador 100 100 Y Y 4268
CITI MUTUAL FUNDS MANAGEMENT COMPANY S.A. Greece 100 100 Y Y 3690
CITI-INFO, S.A. DE C.V. Mexico 100 100 Y Y 1830
CITI-INMOBILIARIA E INVERSIONES, S.A. DE C.V. Honduras 96.92 96.9 Y Y 3328
CITIBANK (POLAND) S.A. Warsaw, Poland 100 100 Y Y 3535
CITIBROKERAGE S.A. Poland 100 100 Y Y 4250
CITILEASING SP. Z O.O. Poland 100 100 Y Y 4604
CITIBANK (SLOVAKIA) A.S. Slovak Republic 100 100 Y Y 2007
CITIBANK A.S. Czech Republic 100 100 Y Y 3442
CITICORP SECURITIES (CR), S.R.O. Czech Republic 100 100 Y Y 4468
CITIBANK ASIA PACIFIC BANKING INSTITUTE PTE. LTD. Singapore 100 100 Y N 2709
CITIBANK BELGIUM S.A./N.V. Belgium 99.49 99.4 Y Y 1834
CITIBANK BERHAD Malaysia 100 100 Y Y 4248
CITICORP NOMINEE (MALAYSIA) SENDIRIAN BERHAD Malaysia 100 100 Y Y 2320
</TABLE>
1=Citigroup-controlled entity acts as general partner; 2=Managerial control;
3=Direct investor is Citigroup controlled entity.
17
<PAGE> 18
<TABLE>
<CAPTION>
CITIGROUP INC. AS 31-DEC-1998
PLACE OF %VOTING
1 2 3 4 5 6 7 8 9 10 INCORPORATION DIRECT TOTAL CTL ACT CO
<S> <C> <C> <C> <C> <C> <C>
CITICORP NOMINEES (ASING) SDN. BHD. Malaysia 100 100 Y Y 4150
CITICORP NOMINEES (TEMPATAN) SDN. BHD. Malaysia 100 100 Y Y 4151
CITIBANK CANADA Canada 100 100 Y Y 416
1084851 ONTARIO INC. Canada 100 100 Y Y 4345
1169513 ONTARIO INC. Canada 100 100 Y Y 4754
J.D.S. INVESTMENTS LIMITED Canada 61 61 Y N 4755
2490827 NOVA SCOTIA LIMITED Canada 100 100 Y Y 4492
CM NORTH AMERICA HOLDING COMPANY Canada 0.01 100 Y Y 4480
CM LEASING COMPANY Canada 69.99 100 Y Y 4481
CM TULIP HOLDING COMPANY Canada 0.01 100 Y Y 4482
CM LEASING COMPANY Canada 29.99 100 Y Y 4481
CM LEASING COMPANY Canada 0.004 100 Y Y 4481
3121615 CANADA INC. Canada 100 100 Y Y 4426
3278662 CANADA INC. Canada 100 100 Y Y 4790
598299 ALBERTA LIMITED Canada 100 100 Y (1) Y 4183
AVENIDA PLACE SHOPPING CENTRE LTD. Canada 100 100 Y Y 4155
BERSHAW & COMPANY Canada 100 100 Y Y 4606
CCLI (1994) INC. Canada 100 100 Y N 4296
CHUDLEIGH FUNDING INC. Canada 100 100 Y Y 2621
CITIBANK CANADA INVESTMENT FUNDS LIMITED Canada 100 100 Y Y 4182
CITIBANK CANADA SECURITIES LIMITED Canada 100 100 Y Y 2562
CITIBANK NOMINEES LTD. Canada 100 100 Y Y 2589
CITIBANK RAC INVESTMENTS INC. Canada 100 100 Y N 3289
</TABLE>
1=Citigroup-controlled entity acts as general partner; 2=Managerial control;
3=Direct investor is Citigroup controlled entity.
18
<PAGE> 19
<TABLE>
<CAPTION>
CITIGROUP INC. AS 31-DEC-1998
PLACE OF %VOTING
1 2 3 4 5 6 7 8 9 10 INCORPORATION DIRECT TOTAL CTL ACT CO
<S> <C> <C> <C> <C> <C> <C>
CITICORP CAPITAL INVESTORS LTD. Canada 100 100 Y Y 2331
COMMERCIAL CREDIT CORPORATION CCC LIMITED Toronto, Canada 100 100 Y Y 5269
CITIBANK CAPITAL CORPORATION Cayman Is. 100 100 Y Y 2873
CITIBANK COLOMBIA Colombia 85 100 Y Y 354
CITITRUST COLOMBIA S.A. SOCIEDAD FIDUCIARIA Colombia 82.35 100 Y Y 3539
CITIBANK-COLOMBIA (NASSAU) LIMITED Bahamas 100 100 Y Y 355
CITIBANK COLOMBIA Colombia 0.1 100 Y Y 354
COMPANIA EXPORTADORA CITYEXPORT S.A. Colombia 24.25 100 Y Y 475
CITIBANK COLOMBIA Colombia 3.8 100 Y Y 354
CITIVALORES S.A. COMISIONISTA DE BOLSA Colombia 5 100 Y Y 4011
LEASING CITIBANK S.A. COMPANIA DE FINANCIAMIENTO COMERCIAL Colombia 8.07 100 Y Y 347
LEASING CITIBANK S.A. COMPANIA DE FINANCIAMIENTO COMERCIAL Colombia 91.93 100 Y Y 347
CITIBANK ESPANA S.A. Spain 99.91 99.9 Y Y 1442
CANTABRA DE AVIACION, SOCIEDAD LIMITADA Madrid, Spain 100 100 Y Y 5304
CITI RECOVERY, A.I.E. Spain 66.67 68.3 Y Y 4297
CITIBANK BROKER CORREDURIA DE SEGUROS S.A. Spain 100 100 Y Y 3352
CITI RECOVERY, A.I.E. Spain 1.66 68.3 Y Y 4297
CITICONSULTING A.I.E. Spain 10 80 Y Y 4298
CITICONSULTING A.I.E. Spain 70 80 Y Y 4298
CITIGESTION, SOCIEDAD GESTORA DE INSTITUCIONES DE INVERSION COLECTIVA, S.A. Spain 100 100 Y Y 2905
CITIHOUSE, S.A. Spain 100 100 Y Y 4444
CITIPARTNERS SERVICES GROUP A.I.E. Spain 40 100 Y Y 4189
CITIPENSIONES, ENTIDAD GESTORA DE FONDOS DE PENSIONES, S.A. Spain 100 100 Y Y 3291
</TABLE>
1=Citigroup-controlled entity acts as general partner; 2=Managerial control;
3=Direct investor is Citigroup controlled entity.
19
<PAGE> 20
<TABLE>
<CAPTION>
CITIGROUP INC. AS 31-DEC-1998
PLACE OF %VOTING
1 2 3 4 5 6 7 8 9 10 INCORPORATION DIRECT TOTAL CTL ACT CO
<S> <C> <C> <C> <C> <C> <C>
CITIBANK FINANCE LIMITED Singapore 100 100 Y Y 426
CITIBANK HOUSING FINANCE COMPANY LIMITED Pakistan 100 100 Y Y 3800
CITIBANK INVESTMENT AND SECURITIES RT. Hungary 100 100 Y Y 4443
EUROPEAN COMMERCIAL BANK LTD. Budapest, Hungary 0.08 100 Y Y 5164
CITIBANK INVESTMENT SERVICES IRELAND LTD. Ireland 100 100 Y Y 4299
CITI INSTITUTIONAL LIQUIDITY FUND PLC Ireland 100 100 Y Y 4607
CITIBANK INVESTMENT SERVICES LIMITED Hong Kong 100 100 Y Y 541
CITIBANK INVESTMENTS LIMITED England 100 100 Y Y 1776
CHANNEL COLLECTIONS LIMITED England 100 100 Y Y 1507
CIB PROPERTIES LIMITED England 100 100 Y Y 1844
CITI PENSIONS & TRUSTEES LIMITED England 100 100 Y Y 2321
CITIBANK EUROPE PLC England 100 100 Y N 3254
CITIBANK INTERNATIONAL PLC London, England 100 100 Y Y 1283
CARDHOLDER SERVICES LIMITED England 100 100 Y N 510
CITIBANK FINANCIAL TRUST LIMITED England 100 100 Y N 427
CITICORP SCRIMGEOUR VICKERS SECURITIES LIMITED England 100 100 Y N 2186
DINERS CLUB LIMITED, THE Ireland 100 100 Y N 511
GROUPEMENT D'INTERET ECONOMIQUE "PARIS CITICORP CENTER" France 5 100 Y Y 1084
HEATHVIEW NOMINEES LIMITED England 100 100 Y N 2101
KEMP-GEE NOMINEES LIMITED England 100 100 Y N 1819
QUOTNET (U.K.) LIMITED England 100 100 Y N 2237
SCRIMGEOUR VICKERS (ASSET MANAGEMENT) LIMITED England 100 100 Y N 2188
SCRIMGEOUR VICKERS UNIT TRUST MANAGERS LIMITED England 80 100 Y N 1826
</TABLE>
1=Citigroup-controlled entity acts as general partner; 2=Managerial control;
3=Direct investor is Citigroup controlled entity.
20
<PAGE> 21
<TABLE>
<CAPTION>
CITIGROUP INC. AS 31-DEC-1998
PLACE OF %VOTING
1 2 3 4 5 6 7 8 9 10 INCORPORATION DIRECT TOTAL CTL ACT CO
<S> <C> <C> <C> <C> <C> <C>
SCRIMGEOUR VICKERS NOMINEES LIMITED England 100 100 Y N 2143
SCRIMGEOUR VICKERS UNIT TRUST MANAGERS LIMITED England 20 100 Y N 1826
SNC CITI GESTION France 1 100 Y Y 3013
SNC CITI MANAGEMENT France 99 100 Y Y 4908
SNC CITI MANAGEMENT France 1 100 Y Y 4908
SVT (NOMINEES) LIMITED England 100 100 Y N 2196
VIDACOS NOMINEES LIMITED England 100 100 Y Y 1686
CITIBANK LEASING LIMITED England 100 100 Y N 429
CITIBANK LONDON NOMINEES LIMITED England 100 100 Y Y 329
CITIBANK PENSIONS TRUSTEES IRELAND LTD. Ireland 100 100 Y Y 4359
CITIBANK TRUST LIMITED England 100 100 Y N 430
CITICORP CAPITAL LIMITED England 100 100 Y Y 718
CITICORP DINERS CLUB LIMITED England 100 100 Y N 3668
CITICORP FINANCE LIMITED England 100 100 Y N 2086
CITICORP SCRIMGEOUR VICKERS LIMITED England 100 100 Y N 1815
CITICORP TRUSTEE COMPANY LIMITED England 100 100 Y Y 1648
NORWICH PROPERTY TRUST LIMITED England 100 100 Y Y 3193
CITICORPORATE LIMITED England 100 100 Y Y 2511
CITIDEALINGS LIMITED England 100 100 Y Y 1555
CITIFRIENDS NOMINEE LIMITED England 100 100 Y Y 2544
CITIFUTURES LIMITED England 100 100 Y N 428
CITILOANS PLC England 100 100 Y Y 3253
CITINET LIMITED England 100 100 Y Y 2398
</TABLE>
1=Citigroup-controlled entity acts as general partner; 2=Managerial control;
3=Direct investor is Citigroup controlled entity.
21
<PAGE> 22
<TABLE>
<CAPTION>
CITIGROUP INC. AS 31-DEC-1998
PLACE OF %VOTING
1 2 3 4 5 6 7 8 9 10 INCORPORATION DIRECT TOTAL CTL ACT CO
<S> <C> <C> <C> <C> <C> <C>
CITINVEST S.P.A. Italy 100 100 Y Y 1485
CITIOPTIONS LIMITED England 100 100 Y N 2259
CUIM NOMINEE LIMITED England 100 100 Y Y 4658
DINERS CLUB LIMITED, THE England 99.98 99.9 Y N 509
FXT-G.P., LTD. England 100 100 Y N 3774
FXT-L.P., LTD. England 100 100 Y N 3772
INFOCAST LIMITED England 100 100 Y N 2633
N.C.B. TRUST LIMITED England 100 100 Y Y 1110
NATIONAL CITY NOMINEES LIMITED England 100 100 Y Y 1106
NEW YORK LONDON FINANCE CO. LIMITED England 100 100 Y Y 1111
CITIBANK MALAYSIA (L) LIMITED Malaysia 100 100 Y Y 4204
CITIBANK MERCADO DE CAPITALES, CITIMERCA C.A. Venezuela 100 100 Y Y 2400
CITIBANK NIGERIA Nigeria 75 75 Y Y 1650
CITIBANK PRIVATKUNDEN AG Germany 0 100 Y Y 371
CITIBANK ROMANIA S.A. Romania 100 100 Y Y 4617
CITIBANK RT. Hungary 100 100 Y Y 2089
EUROPEAN COMMERCIAL BANK LTD. Budapest, Hungary 99.92 100 Y Y 5164
EKB KERESKEDELMI ES SZOLGALTATO KFT. Budapest, Hungary 100 100 Y Y 5233
CITIBANK, S.A. France 99.99 99.9 Y Y 1083
CITI CHANZY S.A. France 100 100 Y Y 3736
CITI CHURCHILL S.A. France 100 100 Y Y 3738
CITI-IMMOBILIER S.A. France 100 100 Y Y 3871
CITI LES TILLEULS S.A. France 100 100 Y N 3877
</TABLE>
1=Citigroup-controlled entity acts as general partner; 2=Managerial control;
3=Direct investor is Citigroup controlled entity.
22
<PAGE> 23
<TABLE>
<CAPTION>
CITIGROUP INC. AS 31-DEC-1998
PLACE OF %VOTING
1 2 3 4 5 6 7 8 9 10 INCORPORATION DIRECT TOTAL CTL ACT CO
<S> <C> <C> <C> <C> <C> <C>
CITIFINANCEMENT S.A. France 100 100 Y N 641
CITIMMO S.A. France 100 100 Y N 2495
COMPAGNIE DE NEGOCIATION ET DE GESTION S.A.R.L. France 100 100 Y N 1922
GROUPEMENT D'INTERET ECONOMIQUE "PARIS CITICORP CENTER" France 45 100 Y Y 1084
SNC CITI GESTION France 99 100 Y Y 3013
SNC CITI MANAGEMENT France 99 100 Y Y 4908
CITIBANK SHIPPING BANK S.A. Greece 100 100 Y Y 2634
CITIBANK T/O Russia 100 100 Y Y 4058
CITIBANK TANZANIA LIMITED Tanzania 100 100 Y Y 4401
CITIBANK TRUSTEES (IRELAND), LIMITED Ireland 100 100 Y Y 712
CITICAPITAL LIMITED Thailand 100 100 Y Y 2438
CITICARD S.A. Argentina 100 100 Y Y 434
CITICORP VALORES S.A. SOCIEDAD DE BOLSA Argentina 1 100 Y Y 4190
CITICO, SGPS, LDA. Portugal 99.2 100 Y Y 4791
CITIBANK PORTUGAL, S.A. Portugal 100 100 Y Y 2515
CITICORP (B) SDN. BHD. Brunei 100 100 Y Y 3169
CITICORP ADMINISTRADORA DE INVERSIONES S.A. Argentina 100 100 Y Y 2546
CITICORP ASESORA DE SEGUROS S.A. Buenos Aires, Argentina 100 100 Y Y 5167
CITICORP BANCO DE INVERSION S.A. Argentina 100 100 Y Y 467
CITICORP CAPITAL ASIA (TAIWAN) LTD. Taipei, Taiwan 100 100 Y Y 5112
CITICORP CAPITAL ASIA LIMITED Bahamas 100 100 Y Y 1281
CITICORP CHINA INVESTMENT MANAGEMENT (BVI) LIMITED British Virgin Is. 55 55 Y Y 4445
CITICORP CHINA INVESTMENT MANAGEMENT LIMITED Hong Kong 55 55 Y Y 4446
</TABLE>
1=Citigroup-controlled entity acts as general partner; 2=Managerial control;
3=Direct investor is Citigroup controlled entity.
23
<PAGE> 24
<TABLE>
<CAPTION>
CITIGROUP INC. AS 31-DEC-1998
PLACE OF %VOTING
1 2 3 4 5 6 7 8 9 10 INCORPORATION DIRECT TOTAL CTL ACT CO
<S> <C> <C> <C> <C> <C> <C>
CITICORP CAPITAL MARKETS SOCIEDAD ANONIMA Argentina 100 100 Y Y 630
CITICORP VALORES S.A. SOCIEDAD DE BOLSA Argentina 99 100 Y Y 4190
CITICORP CAPITAL MARKETS URUGUAY S.A. Uruguay 100 100 Y Y 4236
CITICORP CAPITAL PHILIPPINES, INC. Philippines 53 100 Y Y 4403
CITICORP CAPITAL SDN. BHD. Malaysia 100 100 Y Y 2385
CITICORP CHILE S.A. Chile 100 100 Y Y 587
CAMBIOS CITIEXCHANGE LIMITADA Chile 100 100 Y Y 3136
CITICORP CHILE ADMINISTRADORA DE FONDOS DE INVERSION S.A. Chile 100 100 Y Y 3537
CITICORP CHILE ADMINSITRADORA DE FONDOS MUTUOS S.A. Chile 100 100 Y Y 1760
CITICORP CHILE S.A. CORREDORES DE BOLSA Chile 100 100 Y Y 1761
CITICORP CHILE SERVICIOS Y ASESORIAS LIMITADA Chile 100 100 Y Y 3264
CORREDORES DE SEGUROS CITICORP LIMITADA Santiago, Chile 99.9 100 Y Y 3887
SOCIEDAD COMERCIAL CITIBANK LEASING S.A. Chile 100 100 Y Y 632
CITICORP COMMERCIAL FINANCE (H.K.) LTD. Hong Kong 100 100 Y Y 437
CITICORP CREDIT Guam 100 100 Y Y 438
CITICORP DEUTSCHLAND AKTIENGESELLSCHAFT Germany 99.89 99.8 Y Y 3821
CCD IMMOBILIEN BETEILIGUNGS GMBH Germany 100 100 Y Y 4319
CCD IMMOBILIEN BETEILIGUNGS GMBH & CO. BERLIN KG Germany 0 100 Y Y 4404
CCD IMMOBILIEN BETEILIGUNGS GMBH & CO. FRANKFURT BUERO KG Germany 0 100 Y Y 3825
CCD IMMOBILIEN BETEILIGUNGS GMBH & CO. FRANKFURT HOTEL KG Germany 0 100 Y Y 3824
CCD IMMOBILIEN BETEILIGUNGS GMBH & CO. BERLIN KG Germany 100 100 Y Y 4404
CCD IMMOBILIEN BETEILIGUNGS GMBH & CO. FRANKFURT BUERO KG Germany 100 100 Y Y 3825
CCD IMMOBILIEN BETEILIGUNGS GMBH & CO. FRANKFURT HOTEL KG Germany 100 100 Y Y 3824
</TABLE>
1=Citigroup-controlled entity acts as general partner; 2=Managerial control;
3=Direct investor is Citigroup controlled entity.
24
<PAGE> 25
<TABLE>
<CAPTION>
CITIGROUP INC. AS 31-DEC-1998
PLACE OF %VOTING
1 2 3 4 5 6 7 8 9 10 INCORPORATION DIRECT TOTAL
<S> <C> <C> <C>
CITIBANK BETEILIGUNGEN AKTIENGESELLSCHAFT Germany 100 100
CITI SERVICES GMBH Germany 100 100
CITIBANK AKTIENGESELLSCHAFT Germany 100 100
CITIBANK PRIVATKUNDEN AG Germany 100 100
CITICORP LEASING (DEUTSCHLAND) GMBH Germany 100 100
ACHTZEHNTE GAMMA TRANS LEASING VERWALTUNGS GMBH & CO. FINANZIERUNGS-MANAGEMENT KG Germany 100 100
BETA TRANS LEASING VERWALTUNGS GMBH & CO. FINANZIERUNGS-MANAGEMENT KG Germany 100 100
BETA TRANS LEASING VERWALTUNGS GMBH Germany 100 100
BETA TRANS LEASING VERWALTUNGS GMBH & CO. FINANZIERUNGS-MANAGEMENT KG Germany 0 100
EINUNDZWANDZIGSTE GAMMA TRANS LEASING VERWALTUNGS GMBH & CO. Germany 100 100
NEUNZEHNTE GAMMA TRANS LEASING VERWALTUNGS GMBH & CO. FINANZIERUNGS-MANAGEMENT KG Germany 100 100
ZWANZIGSTE GAMMA TRANS LEASING VERWALTUNGS GMBH & CO. FINANZIERUNGS-MANAGEMENT KG Germany 100 100
GAMMA TRANS LEASING VERWALTUNGS GMBH Germany 100 100
ACHTZEHNTE GAMMA TRANS LEASING VERWALTUNGS GMBH & CO. FINANZIERUNGS-MANAGEMENT KG Germany 0 100
DREIZEHNTE GAMMA TRANS LEASING VERWALTUNGS GMBH & CO. FINANZIERUNGS-MANAGEMENT KG Germany 0 0
EINUNDZWANDZIGSTE GAMMA TRANS LEASING VERWALTUNGS GMBH & CO. Germany 0 100
ELFTE GAMMA TRANS LEASING VERWALTUNGS GMBH & CO. FINANZIERUNGS-MANAGEMENT KG Germany 0 0
FUENFZEHNTE GAMMA TRANS LEASING VERWALTUNGS GMBH & CO. FINANZIERUNGS-MANAGEMENT KG Germany 0 0
GAMMA TRANS LEASING VERWALTUNGS GMBH & CO. FINANZIERUNGS-MANAGEMENT KG Germany 0 0
GAMMA TRANS LEASING VERWALTUNGS GMBH & CO. ACHTE FINANZIERUNGS-MANAGEMENT KG Germany 0 0
GAMMA TRANS LEASING VERWALTUNGS GMBH & CO. DRITTE FINANZIERUNGS-MANAGEMENT KG Germany 0 0
GAMMA TRANS LEASING VERWALTUNGS GMBH & CO. FUENFTE FINANZIERUNGS-MANAGEMENT KG Germany 0 0
GAMMA TRANS LEASING VERWALTUNGS GMBH & CO. NEUNTE FINANZIERUNGS-MANAGEMENT KG Germany 0 0
<CAPTION>
1 2 3 4 5 6 7 8 9 10 CTL ACT CO
<S> <C> <C> <C>
CITIBANK BETEILIGUNGEN AKTIENGESELLSCHAFT Y Y 369
CITI SERVICES GMBH Y Y 380
CITIBANK AKTIENGESELLSCHAFT Y Y 2937
CITIBANK PRIVATKUNDEN AG Y Y 371
CITICORP LEASING (DEUTSCHLAND) GMBH Y Y 451
ACHTZEHNTE GAMMA TRANS LEASING VERWALTUNGS GMBH & CO. FINANZIERUNGS-MANAGEMENT KG Y Y 5013
BETA TRANS LEASING VERWALTUNGS GMBH & CO. FINANZIERUNGS-MANAGEMENT KG Y N 4853
BETA TRANS LEASING VERWALTUNGS GMBH Y Y 3326
BETA TRANS LEASING VERWALTUNGS GMBH & CO. FINANZIERUNGS-MANAGEMENT KG Y N 4853
EINUNDZWANDZIGSTE GAMMA TRANS LEASING VERWALTUNGS GMBH & CO. Y Y 5016
NEUNZEHNTE GAMMA TRANS LEASING VERWALTUNGS GMBH & CO. FINANZIERUNGS-MANAGEMENT KG Y Y 5014
ZWANZIGSTE GAMMA TRANS LEASING VERWALTUNGS GMBH & CO. FINANZIERUNGS-MANAGEMENT KG Y Y 5015
GAMMA TRANS LEASING VERWALTUNGS GMBH Y Y 3327
ACHTZEHNTE GAMMA TRANS LEASING VERWALTUNGS GMBH & CO. FINANZIERUNGS-MANAGEMENT KG Y Y 5013
DREIZEHNTE GAMMA TRANS LEASING VERWALTUNGS GMBH & CO. FINANZIERUNGS-MANAGEMENT KG Y (1) Y 4763
EINUNDZWANDZIGSTE GAMMA TRANS LEASING VERWALTUNGS GMBH & CO. Y Y 5016
ELFTE GAMMA TRANS LEASING VERWALTUNGS GMBH & CO. FINANZIERUNGS-MANAGEMENT KG Y (1) Y 4764
FUENFZEHNTE GAMMA TRANS LEASING VERWALTUNGS GMBH & CO. FINANZIERUNGS-MANAGEMENT KG Y (1) Y 5010
GAMMA TRANS LEASING VERWALTUNGS GMBH & CO. FINANZIERUNGS-MANAGEMENT KG Y (1) Y 4760
GAMMA TRANS LEASING VERWALTUNGS GMBH & CO. ACHTE FINANZIERUNGS-MANAGEMENT KG Y (1) Y 4513
GAMMA TRANS LEASING VERWALTUNGS GMBH & CO. DRITTE FINANZIERUNGS-MANAGEMENT KG Y (1) Y 4361
GAMMA TRANS LEASING VERWALTUNGS GMBH & CO. FUENFTE FINANZIERUNGS-MANAGEMENT KG Y (1) Y 4360
GAMMA TRANS LEASING VERWALTUNGS GMBH & CO. NEUNTE FINANZIERUNGS-MANAGEMENT KG Y (1) Y 4514
</TABLE>
1=Citigroup-controlled entity acts as general partner; 2=Managerial control;
3=Direct investor is Citigroup controlled entity.
25
<PAGE> 26
<TABLE>
<CAPTION>
CITIGROUP INC. AS 31-DEC-1998
PLACE OF %VOTING
1 2 3 4 5 6 7 8 9 10 INCORPORATION DIRECT TOTAL
<S> <C> <C> <C>
GAMMA TRANS LEASING VERWALTUNGS GMBH & CO. SECHSTE FINANZIERUNGS-MANAGEMENT KG Germany 0 0
GAMMA TRANS LEASING VERWALTUNGS GMBH & CO. SIEBTE FINANZIERUNGS-MANAGEMENT KG Germany 0 0
GAMMA TRANS LEASING VERWALTUNGS GMBH & CO. VIERTE FINANZIERUNGS-MANAGEMENT KG Germany 0 0
GAMMA TRANS LEASING VERWALTUNGS GMBH & CO. ZWEITE FINANZIERUNGS-MANAGEMENT KG Germany 0 0
NEUNZEHNTE GAMMA TRANS LEASING VERWALTUNGS GMBH & CO. FINANZIERUNGS-MANAGEMENT KG Germany 0 100
SECHZEHNTE GAMMA TRANS LEASING VERWALTUNGS GMBH & CO. FINANZIERUNGS-MANAGEMENT KG Germany 0 0
SIEBZEHNTE GAMMA TRANS LEASING VERWALTUNGS GMBH & CO. FINANZIERUNGS-MANAGEMENT KG Germany 0 0
VIERZEHNTE GAMMA TRANS LEASING VERWALTUNGS GMBH & CO. FINANZIERUNGS-MANAGEMENT KG Germany 0 0
ZEHNTE GAMMA TRANS LEASING VERWALTUNGS GMBH & CO. FINANZIERUNGS-MANAGEMENT KG Germany 0 0
ZWANZIGSTE GAMMA TRANS LEASING VERWALTUNGS GMBH & CO. FINANZIERUNGS-MANAGEMENT KG Germany 0 100
ZWOELFTE GAMMA TRANS LEASING VERWALTUNGS GMBH & CO. FINANZIERUNGS-MANAGEMENT KG Germany 0 0
CITICORP CARD OPERATIONS GMBH Germany 100 100
CITICORP KARTENSERVICE GMBH Germany 100 100
CITICORP KARTENSERVICE UNTERSTUETZUNGSKASSE GMBH Germany 100 100
ACHTUNDZWANZIGSTE GAMMA TRANS LEASING VERWALTUNGS GMBH & CO. Nidderau, Germany 100 100
DRITTE BETA TRANS LEASING VERWALTUNGS GMBH & CO. FINANZIERUNGS-MANAGEMENT KG Frankfurt, Germany 0 100
FUENFTE BETA TRANS LEASING VERWALTUNGS GMBH & CO. FINANZIERUNGS-MANAGEMENT KG Frankfurt 0 100
VIERTE BETA TRANS LEASING VERWALTUNGS GMBH & CO. FINANZIERUNGS-MANAGEMENT KG Frankfurt, Germany 0 100
ZWEITE BETA TRANS LEASING VERWALTUNGS GMBH & CO. FINANZIERUNGS-MANAGEMENT KG Frankfurt, Germany 0 100
DREISSIGSTE GAMMA TRANS LEASING VERWALTUNGS GMBH & CO. FINANZIERUNGS-MANAGEMENT KG Nidderau, Germany 100 100
DREIUNDZWANZIGSTE GAMMA TRANS LEASING VERWALTUNGS GMBH & CO. FINANZIERUNGS-MANAGEMENT Nidderau, Germany 100 100
DRITTE BETA TRANS LEASING VERWALTUNGS GMBH & CO. FINANZIERUNGS- MANAGEMENT KG Frankfurt, Germany 100 100
EINUNDDREISSIGSTE GAMMA TRANS LEASING VERWALTUNGS GMBH & CO. FINANZIERUNGS-MANAGEMENT Nidderau, Germany 100 100
<CAPTION>
1 2 3 4 5 6 7 8 9 10 CTL ACT CO
<S> <C> <C> <C>
GAMMA TRANS LEASING VERWALTUNGS GMBH & CO. SECHSTE FINANZIERUNGS-MANAGEMENT KG Y (1) Y 4515
GAMMA TRANS LEASING VERWALTUNGS GMBH & CO. SIEBTE FINANZIERUNGS-MANAGEMENT KG Y (1) Y 4516
GAMMA TRANS LEASING VERWALTUNGS GMBH & CO. VIERTE FINANZIERUNGS-MANAGEMENT KG Y (1) Y 4362
GAMMA TRANS LEASING VERWALTUNGS GMBH & CO. ZWEITE FINANZIERUNGS-MANAGEMENT KG Y (1) Y 4363
NEUNZEHNTE GAMMA TRANS LEASING VERWALTUNGS GMBH & CO. FINANZIERUNGS-MANAGEMENT KG Y Y 5014
SECHZEHNTE GAMMA TRANS LEASING VERWALTUNGS GMBH & CO. FINANZIERUNGS-MANAGEMENT KG Y (1) Y 5011
SIEBZEHNTE GAMMA TRANS LEASING VERWALTUNGS GMBH & CO. FINANZIERUNGS-MANAGEMENT KG Y (1) Y 5012
VIERZEHNTE GAMMA TRANS LEASING VERWALTUNGS GMBH & CO. FINANZIERUNGS-MANAGEMENT KG Y (1) Y 4765
ZEHNTE GAMMA TRANS LEASING VERWALTUNGS GMBH & CO. FINANZIERUNGS-MANAGEMENT KG Y (1) Y 4766
ZWANZIGSTE GAMMA TRANS LEASING VERWALTUNGS GMBH & CO. FINANZIERUNGS-MANAGEMENT KG Y Y 5015
ZWOELFTE GAMMA TRANS LEASING VERWALTUNGS GMBH & CO. FINANZIERUNGS-MANAGEMENT KG Y (1) Y 4767
CITICORP CARD OPERATIONS GMBH Y Y 4503
CITICORP KARTENSERVICE GMBH Y Y 1353
CITICORP KARTENSERVICE UNTERSTUETZUNGSKASSE GMBH Y N 3064
ACHTUNDZWANZIGSTE GAMMA TRANS LEASING VERWALTUNGS GMBH & CO. Y Y 5290
DRITTE BETA TRANS LEASING VERWALTUNGS GMBH & CO. FINANZIERUNGS-MANAGEMENT KG Y Y 5293
FUENFTE BETA TRANS LEASING VERWALTUNGS GMBH & CO. FINANZIERUNGS-MANAGEMENT KG Y Y 5295
VIERTE BETA TRANS LEASING VERWALTUNGS GMBH & CO. FINANZIERUNGS-MANAGEMENT KG Y Y 5300
ZWEITE BETA TRANS LEASING VERWALTUNGS GMBH & CO. FINANZIERUNGS-MANAGEMENT KG Y Y 5302
DREISSIGSTE GAMMA TRANS LEASING VERWALTUNGS GMBH & CO. FINANZIERUNGS-MANAGEMENT KG Y Y 5292
DREIUNDZWANZIGSTE GAMMA TRANS LEASING VERWALTUNGS GMBH & CO. FINANZIERUNGS-MANAGEMENT Y Y 5291
DRITTE BETA TRANS LEASING VERWALTUNGS GMBH & CO. FINANZIERUNGS- MANAGEMENT KG Y Y 5293
EINUNDDREISSIGSTE GAMMA TRANS LEASING VERWALTUNGS GMBH & CO. FINANZIERUNGS-MANAGEMENT Y Y 5294
</TABLE>
1=Citigroup-controlled entity acts as general partner; 2=Managerial control;
3=Direct investor is Citigroup controlled entity.
26
<PAGE> 27
<TABLE>
<CAPTION>
CITIGROUP INC. AS 31-DEC-1998
PLACE OF %VOTING
1 2 3 4 5 6 7 8 9 10 INCORPORATION DIRECT
<S> <C> <C>
FUENFTE BETA TRANS LEASING VERWALTUNGS GMBH & CO. FINANZIERUNGS- MANAGEMENT KG Frankfurt, Germany 100
FUENFUNDZWANZIGSTE GAMMA TRANS LEASING VERWALTUNGS GMBH & CO. Nidderau, Germany 100
NEUNUNDZWANZIGSTE GAMMA TRANS LEASING VERWALTUNGS GMBH & CO. Nidderau, Germany 100
SECHSUNDZWANZIGSTE GAMMA TRANS LEASING VERWALTUNGS GMBH & CO. Nidderau, Germany 100
SIEBENUNDZWANZIGSTE GAMMA TRANS LEASING VERWALTUNGS GMBH & CO. Nidderau, Germany 100
VIERTE BETA TRANS LEASING VERWALTUNGS GMBH & CO. FINANZIERUNGS-MANAGEMENT KG Frankfurt, Germany 100
VIERUNDZWANZIGSTE GAMMA TRANS LEASING VERWALTUNGS GMBH & CO. FINANZIERUNGS-MANAGEMENT Nidderau, Germany 100
ZWEITE BETA TRANS LEASING VERWALTUNGS GMBH & CO. FINANZIERUNGS-MANAGEMENT KG Frankfurt, Germany 100
ZWEIUNDZWANDZIGSTE GAMMA TRANS LEASING VERWALTUNGS GMBH & CO. Nidderau, Germany 100
ACHTUNDZWANZIGSTE GAMMA TRANS LEASING VERWALTUNGS GMBH & CO. Nidderau, Germany 0
DREISSIGSTE GAMMA TRANS LEASING VERWALTUNGS GMBH & CO. FINANZIERUNGS-MANAGEMENT KG Nidderau, Germany 0
DREIUNDZWANZIGSTE GAMMA TRANS LEASING VERWALTUNGS GMBH & CO. FINANZIERUNGS-MANAGEMENT Nidderau, Germany 0
EINUNDDREISSIGSTE GAMMA TRANS LEASING VERWALTUNGS GMBH & CO. FINANZIERUNGS-MANAGEMENT Nidderau, Germany 0
FUENFUNDZWANZIGSTE GAMMA TRANS LEASING VERWALTUNGS GMBH & CO. Nidderau, Germany 0
NEUNUNDZWANZIGSTE GAMMA TRANS LEASING VERWALTUNGS GMBH & CO. Nidderau, Germany 0
SECHSUNDZWANZIGSTE GAMMA TRANS LEASING VERWALTUNGS GMBH & CO. Nidderau, Germany 0
SIEBENUNDZWANZIGSTE GAMMA TRANS LEASING VERWALTUNGS GMBH & CO. Nidderau, Germany 0
VIERUNDZWANZIGSTE GAMMA TRANS LEASING VERWALTUNGS GMBH & CO. FINANZIERUNGS-MANAGEMENT Nidderau, Germany 0
ZWEIUNDZWANZIGSTE GAMMA TRANS LEASING VERWALTUNGS GMBH & CO. Nidderau, Germany 0
CITICORP OPERATIONS CONSULTING GMBH Germany 100
CITIFINANZBERATUNG GMBH Germany 100
CITICORP EUROPEAN SERVICE CENTER B.V. Netherlands 100
CITICORP FINANCE (INDIA) LIMITED India 100
<CAPTION>
%VOTING
1 2 3 4 5 6 7 8 9 10 TOTAL CTL ACT CO
<S> <C> <C> <C> <C>
FUENFTE BETA TRANS LEASING VERWALTUNGS GMBH & CO. FINANZIERUNGS- MANAGEMENT KG 100 Y Y 5295
FUENFUNDZWANZIGSTE GAMMA TRANS LEASING VERWALTUNGS GMBH & CO. 100 Y Y 5296
NEUNUNDZWANZIGSTE GAMMA TRANS LEASING VERWALTUNGS GMBH & CO. 100 Y Y 5297
SECHSUNDZWANZIGSTE GAMMA TRANS LEASING VERWALTUNGS GMBH & CO. 100 Y Y 5298
SIEBENUNDZWANZIGSTE GAMMA TRANS LEASING VERWALTUNGS GMBH & CO. 100 Y Y 5299
VIERTE BETA TRANS LEASING VERWALTUNGS GMBH & CO. FINANZIERUNGS-MANAGEMENT KG 100 Y Y 5300
VIERUNDZWANZIGSTE GAMMA TRANS LEASING VERWALTUNGS GMBH & CO. FINANZIERUNGS-MANAGEMENT 100 Y Y 5301
ZWEITE BETA TRANS LEASING VERWALTUNGS GMBH & CO. FINANZIERUNGS-MANAGEMENT KG 100 Y Y 5302
ZWEIUNDZWANDZIGSTE GAMMA TRANS LEASING VERWALTUNGS GMBH & CO. 100 Y Y 5303
ACHTUNDZWANZIGSTE GAMMA TRANS LEASING VERWALTUNGS GMBH & CO. 100 Y Y 5290
DREISSIGSTE GAMMA TRANS LEASING VERWALTUNGS GMBH & CO. FINANZIERUNGS-MANAGEMENT KG 100 Y Y 5292
DREIUNDZWANZIGSTE GAMMA TRANS LEASING VERWALTUNGS GMBH & CO. FINANZIERUNGS-MANAGEMENT 100 Y Y 5291
EINUNDDREISSIGSTE GAMMA TRANS LEASING VERWALTUNGS GMBH & CO. FINANZIERUNGS-MANAGEMENT 100 Y Y 5294
FUENFUNDZWANZIGSTE GAMMA TRANS LEASING VERWALTUNGS GMBH & CO. 100 Y Y 5296
NEUNUNDZWANZIGSTE GAMMA TRANS LEASING VERWALTUNGS GMBH & CO. 100 Y Y 5297
SECHSUNDZWANZIGSTE GAMMA TRANS LEASING VERWALTUNGS GMBH & CO. 100 Y Y 5298
SIEBENUNDZWANZIGSTE GAMMA TRANS LEASING VERWALTUNGS GMBH & CO. 100 Y Y 5299
VIERUNDZWANZIGSTE GAMMA TRANS LEASING VERWALTUNGS GMBH & CO. FINANZIERUNGS-MANAGEMENT 100 Y Y 5301
ZWEIUNDZWANZIGSTE GAMMA TRANS LEASING VERWALTUNGS GMBH & CO. 100 Y Y 5303
CITICORP OPERATIONS CONSULTING GMBH 100 Y Y 4076
CITIFINANZBERATUNG GMBH 100 Y Y 376
CITICORP EUROPEAN SERVICE CENTER B.V. 100 Y Y 531
CITICORP FINANCE (INDIA) LIMITED 100 Y Y 4915
</TABLE>
1=Citigroup-controlled entity acts as general partner; 2=Managerial control;
3=Direct investor is Citigroup controlled entity.
27
<PAGE> 28
<TABLE>
<CAPTION>
CITIGROUP INC. AS 31-DEC-1998
PLACE OF %VOTING
1 2 3 4 5 6 7 8 9 10 INCORPORATION DIRECT TOTAL CTL ACT CO
<S> <C> <C> <C> <C> <C> <C>
CITICORP INFORMATION TECHNOLOGY INDUSTRIES LIMITED Mumbai, India 10.5 49.4 Y (2) Y 3286
CITICORP MARUTI FINANCE LTD. New Delhi, India 74 74 Y Y 5060
CITICORP OVERSEAS SOFTWARE LIMITED Mumbai, India 0 100 Y Y 1846
CITICORP FINANCE & SECURITIES (THAILAND) LTD. Thailand 100 100 Y Y 442
CITICORP FINANCE INTERNATIONAL LTD. Bermuda 100 100 Y Y 3192
CITICORP FINANCE IRELAND LIMITED Ireland 100 100 Y Y 2623
CITICORP (DUBLIN) FINANCE Ireland 100 100 Y Y 2624
CITICORP FINANCIAL SERVICES CORPORATION Puerto Rico 100 100 Y Y 445
CITICORP FINANCIAL SERVICES LIMITED Hong Kong 100 100 Y Y 1408
CITICORP FINANZIARIA S.P.A. Italy 100 100 Y Y 446
CITICORP FSC I LTD. Bermuda 100 100 Y Y 4431
CITICORP GENERAL INSURANCE AGENCY CORPORATION Taiwan 100 100 Y Y 4851
CITICORP GULF FINANCE LTD. United Arab Emirates 100 100 Y Y 448
CITICORP HOLDINGS IRELAND LIMITED Ireland 100 100 Y N 2394
CITICORP INSURANCE AGENCY CO., LTD. Taiwan 100 100 Y Y 3880
CITICORP INTERNATIONAL LIMITED Hong Kong 100 100 Y Y 1289
CITICORP INTERNATIONAL SECURITIES FINANCE LTD United Kingdom 100 100 Y Y 1653
CITICORP INTERNATIONAL SECURITIES LTD England 100 100 Y Y 1654
CITIVIC NOMINEES LIMITED England 100 100 Y Y 1656
VICKERS DA COSTA LIMITED England 100 100 Y N 3302
CITICORP INVERSORA S.A. GERENTE DE FONDOS COMUNES DE INVERSION Argentina 100 100 Y Y 1859
CITICORP INVESTICNI SPOLECNOST, A.S. Prague, Czech Republic 100 100 Y Y 4844
CITICORP INVESTMENT BANK (PAKISTAN) LIMITED Pakistan 60 60 Y Y 3801
</TABLE>
1=Citigroup-controlled entity acts as general partner; 2=Managerial control;
3=Direct investor is Citigroup controlled entity.
28
<PAGE> 29
<TABLE>
<CAPTION>
CITIGROUP INC. AS 31-DEC-1998
PLACE OF %VOTING
1 2 3 4 5 6 7 8 9 10 INCORPORATION DIRECT TOTAL CTL ACT CO
<S> <C> <C> <C> <C> <C> <C>
CITICORP INVESTMENT BANK (SINGAPORE) LIMITED Singapore 100 100 Y Y 1291
CITICORP INVESTMENT MANAGERS IRELAND LIMITED Ireland 100 100 Y Y 3285
CITICORP INVESTMENT SERVICES LIMITED Hong Kong 100 100 Y Y 450
CITICORP LEASING (THAILAND) LIMITED Thailand 100 100 Y Y 2439
CITICORP LEASING ARGENTINA S.A. Buenos Aires, Argentina 100 100 Y Y 4958
CITICORP LEASING INTERNATIONAL, INC. 100 100 Y Y 453
CITICORP CARD SERVICES, INC. 100 100 Y Y 2359
CITICORP CREDIT, INC. Japan 100 100 Y Y 1314
CITILEASE COMPANY LTD. Japan 100 100 Y Y 1309
AARHUS AIRCRAFT LTD. Japan 100 100 Y Y 3453
ALPHA AIRCRAFT LTD. Japan 100 100 Y Y 3114
AMS AIRCRAFT LTD. Japan 100 100 Y Y 3575
ANDROMEDA CITIAIRCRAFT LTD. Japan 100 100 Y Y 2303
ARBOGA AIRCRAFT LTD. Japan 100 100 Y Y 4323
ARIZONA AIRCRAFT LTD. Japan 100 100 Y Y 3576
ARLANDA AIRCRAFT LTD. Japan 100 100 Y Y 3372
ASCOT AIRCRAFT LTD. Japan 100 100 Y Y 3179
ATLANTA AIRCRAFT LTD. Japan 100 100 Y Y 2884
BALTIC AIRCRAFT LTD. Japan 100 100 Y Y 4757
BETA AIRCRAFT LTD. Japan 100 100 Y Y 3115
BIRMINGHAM AIRCRAFT LTD. Japan 100 100 Y Y 4206
BISHOP AIRCRAFT LTD. Japan 100 100 Y Y 2980
BOSTON AIRCRAFT LTD. Japan 100 100 Y Y 2981
</TABLE>
1=Citigroup-controlled entity acts as general partner; 2=Managerial control;
3=Direct investor is Citigroup controlled entity.
29
<PAGE> 30
<TABLE>
<CAPTION>
CITIGROUP INC. AS 31-DEC-1998
PLACE OF %VOTING
1 2 3 4 5 6 7 8 9 10 INCORPORATION DIRECT TOTAL CTL ACT CO
<S> <C> <C> <C> <C> <C> <C>
BRISTOL AIRCRAFT LTD. Japan 100 100 Y Y 3886
BROMMA AIRCRAFT LTD. Japan 100 100 Y Y 3454
BUNGA EMAS LTD. Tokyo, Japan 100 100 Y Y 5131
CALIFORNIA AIRCRAFT LTD. Japan 100 100 Y Y 3748
CAMBRIDGE AIRCRAFT LTD. Japan 100 100 Y Y 4008
CASTLE AIRCRAFT LTD. Japan 100 100 Y Y 2982
CHARLIE AIRCRAFT LTD. Japan 100 100 Y Y 3116
CHICAGO AIRCRAFT LTD. Japan 100 100 Y Y 2983
VENUS AIRCRAFT LTD. Japan 100 100 Y Y 4893
COLORADO AIRCRAFT LTD. Japan 100 100 Y Y 3577
CONDOR AIRCRAFT LTD. Japan 100 100 Y Y 2865
COVENTRY AIRCRAFT LTD. Japan 100 100 Y Y 3885
CRANE AIRCRAFT LTD. Japan 100 100 Y Y 2866
CROWN AIRCRAFT LTD. Japan 100 100 Y Y 2867
CRUX LEASING CO. LTD. Tokyo, Japan 100 100 Y Y 5132
CSA ROBIN AIRCRAFT LTD. Japan 100 100 Y Y 4717
CSA SWAN AIRCRAFT LTD. Japan 100 100 Y Y 4829
CURIE AIRCRAFT LTD. Japan 100 100 Y Y 4052
DAINI CITIAIRCRAFT LTD. Japan 100 100 Y Y 2304
DALLAS AIRCRAFT LTD. Japan 100 100 Y Y 2984
DELTA AIRCRAFT LTD. Japan 100 100 Y Y 3117
DENVER AIRCRAFT LTD. Japan 100 100 Y Y 3650
DETROIT AIRCRAFT LTD. Japan 100 100 Y Y 3220
</TABLE>
1=Citigroup-controlled entity acts as general partner; 2=Managerial control;
3=Direct investor is Citigroup controlled entity.
30
<PAGE> 31
<TABLE>
<CAPTION>
CITIGROUP INC. AS 31-DEC-1998
PLACE OF %VOTING
1 2 3 4 5 6 7 8 9 10 INCORPORATION DIRECT TOTAL CTL ACT CO
<S> <C> <C> <C> <C> <C> <C>
DONAU AIRCRAFT LTD. Japan 100 100 Y Y 3118
DURHAM AIRCRAFT LTD. Japan 100 100 Y Y 4405
EAGLE AIRCRAFT LTD. Japan 100 100 Y Y 4432
ECHO AIRCRAFT LTD. Japan 100 100 Y Y 3119
EIFFEL AIRCRAFT LTD. Japan 100 100 Y Y 3221
ELBE AIRCRAFT LTD. Japan 100 100 Y Y 3120
ELYSEE AIRCRAFT LTD. Japan 100 100 Y Y 3222
EMS AIRCRAFT LTD. Japan 100 100 Y Y 3144
ENNS LEASE CO., LTD. Japan 100 100 Y Y 2305
EPSILON AIRCRAFT LTD. Japan 100 100 Y Y 3145
ERIE AIRCRAFT LTD. Japan 100 100 Y Y 3373
EUROPE AIRCRAFT LTD. Japan 100 100 Y Y 3884
FAIRFIELD AIRCRAFT LTD. Japan 100 100 Y Y 4494
FLORIDA AIRCRAFT LTD. Japan 100 100 Y Y 3676
FORNEBU AIRCRAFT LTD. Japan 100 100 Y Y 3455
FOXTROT AIRCRAFT LTD. Japan 100 100 Y Y 3121
GAMMA AIRCRAFT LTD. Japan 100 100 Y Y 3146
GOTEBORG AIRCRAFT LTD. Japan 100 100 Y Y 4275
HAGUE AIRCRAFT LTD. Japan 100 100 Y Y 3578
HAVEL AIRCRAFT LTD. Japan 100 100 Y Y 3481
HONOLULU AIRCRAFT LTD. Japan 100 100 Y Y 3223
HOUSTON AIRCRAFT LTD. Japan 100 100 Y Y 2985
HURON AIRCRAFT LTD. Japan 100 100 Y Y 3374
</TABLE>
1=Citigroup-controlled entity acts as general partner; 2=Managerial control;
3=Direct investor is Citigroup controlled entity.
31
<PAGE> 32
<TABLE>
<CAPTION>
CITIGROUP INC. AS 31-DEC-1998
PLACE OF %VOTING
1 2 3 4 5 6 7 8 9 10 INCORPORATION DIRECT TOTAL CTL ACT CO
<S> <C> <C> <C> <C> <C> <C>
HUSKVARNA AIRCRAFT LTD. Japan 100 100 Y Y 4324
ILLINOIS AIRCRAFT LTD. Japan 100 100 Y Y 3579
INDIANA AIRCRAFT LTD. Japan 100 100 Y Y 3675
ISAR AIRCRAFT LTD. Japan 100 100 Y Y 3122
ITHACA AIRCRAFT LTD. Japan 100 100 Y Y 2945
JOTA AIRCRAFT LTD. Japan 100 100 Y Y 3147
JUPITER AIRCRAFT LTD. Japan 100 100 Y Y 4802
KING AIRCRAFT LTD. Japan 100 100 Y Y 2885
KNIGHT AIRCRAFT LTD. Japan 100 100 Y Y 2986
LA AIRCRAFT LTD. Japan 100 100 Y Y 2886
LAHN AIRCRAFT LTD. Japan 100 100 Y Y 3652
LAMBDA AIRCRAFT LTD. Japan 100 100 Y Y 3148
LEONE LEASE LTD. Japan 100 100 Y Y 4795
LINDEN CITIAIRCRAFT LTD. Japan 100 100 Y Y 2629
LIVERPOOL AIRCRAFT LTD. Japan 100 100 Y Y 4166
LOIRE AIRCRAFT LTD. Japan 100 100 Y Y 3207
LONDON AIRCRAFT LTD. Japan 100 100 Y Y 4009
LOUVRE AIRCRAFT LTD. Japan 100 100 Y Y 3224
MADRID AIRCRAFT LTD. Japan 100 100 Y Y 4053
MAIN AIRCRAFT LTD. Japan 100 100 Y Y 3149
MANCHESTER AIRCRAFT LTD. Japan 100 100 Y Y 4167
MAPLE AIRCRAFT LTD. Japan 100 100 Y Y 2479
MARSEILLES AIRCRAFT LTD. Japan 100 100 Y Y 4010
</TABLE>
1=Citigroup-controlled entity acts as general partner; 2=Managerial control;
3=Direct investor is Citigroup controlled entity.
32
<PAGE> 33
<TABLE>
<CAPTION>
CITIGROUP INC. AS 31-DEC-1998
PLACE OF %VOTING
1 2 3 4 5 6 7 8 9 10 INCORPORATION DIRECT TOTAL CTL ACT CO
<S> <C> <C> <C> <C> <C> <C>
METTE AIRCRAFT LTD. Japan 100 100 Y Y 3071
MIAMI AIRCRAFT LTD. Japan 100 100 Y Y 2946
MICHIGAN AIRCRAFT LTD. Japan 100 100 Y Y 3376
MILWAUKEE AIRCRAFT LTD. Japan 100 100 Y Y 2987
MINNESOTA AIRCRAFT LTD. Japan 100 100 Y Y 3749
MOLEN AIRCRAFT LTD. Japan 100 100 Y Y 3225
MOSEL AIRCRAFT LTD. Japan 100 100 Y Y 3653
NASHVILLE AIRCRAFT LTD. Japan 100 100 Y Y 2887
NECKAR AIRCRAFT LTD. Japan 100 100 Y Y 3150
NS CITITRAIN LTD. Japan 100 100 Y Y 2578
ODER AIRCRAFT LTD. Japan 100 100 Y Y 3482
OHIO AIRCRAFT LTD. Japan 100 100 Y Y 3651
OREGON AIRCRAFT LTD. Japan 100 100 Y Y 3580
OTTAWA AIRCRAFT LTD. Japan 100 100 Y Y 2988
OXFORD AIRCRAFT LTD. Japan 100 100 Y Y 4389
PARIS AIRCRAFT LTD. Japan 100 100 Y Y 3208
PEGASUS LEASING CO. LTD. Tokyo, Japan 100 100 Y Y 5133
PHOENIX AIRCRAFT LTD. Japan 100 100 Y Y 2989
QUEBEC AIRCRAFT LTD. Japan 100 100 Y Y 2990
QUEEN AIRCRAFT LTD. Japan 100 100 Y Y 2888
RHEIN AIRCRAFT LTD. Japan 100 100 Y Y 3123
ROTTER AIRCRAFT LTD. Japan 100 100 Y Y 3581
SAALE AIRCRAFT LTD. Japan 100 100 Y Y 3483
</TABLE>
1=Citigroup-controlled entity acts as general partner; 2=Managerial control;
3=Direct investor is Citigroup controlled entity.
33
<PAGE> 34
<TABLE>
<CAPTION>
CITIGROUP INC. AS 31-DEC-1998
PLACE OF %VOTING
1 2 3 4 5 6 7 8 9 10 INCORPORATION DIRECT TOTAL CTL ACT CO
<S> <C> <C> <C> <C> <C> <C>
SAKURA FA CITIAIRCRAFT LTD. Japan 100 100 Y Y 2616
SEAGULL AIRCRAFT LTD. Japan 100 100 Y Y 4325
SEATTLE AIRCRAFT LTD. Japan 100 100 Y Y 3035
SEINE AIRCRAFT LTD. Japan 100 100 Y Y 3209
SIGMA AIRCRAFT LTD. Japan 100 100 Y Y 3151
ST. LOUIS AIRCRAFT LTD. Japan 100 100 Y Y 2811
STAMFORD AIRCRAFT LTD. Japan 100 100 Y Y 3838
STOCKHOLM AIRCRAFT LTD. Japan 100 100 Y Y 4277
TACHIBANA FA CITIAIRCRAFT LTD. Japan 100 100 Y Y 2617
TAMPA AIRCRAFT LTD. Japan 100 100 Y Y 3226
THETA AIRCRAFT LTD. Japan 100 100 Y Y 3152
TOKYO FA CITIAIRCRAFT LTD. Japan 100 100 Y Y 2478
TORONTO AIRCRAFT LTD. Japan 100 100 Y Y 2965
UPPSALA AIRCRAFT LTD. Japan 100 100 Y Y 4276
UTRECHT AIRCRAFT LTD. Japan 100 100 Y Y 3582
VANCOUVER AIRCRAFT LTD. Japan 100 100 Y Y 3036
VERSAILLES AIRCRAFT LTD. Japan 100 100 Y Y 3227
WASHINGTON AIRCRAFT LTD. Japan 100 100 Y Y 2889
WINDSOR AIRCRAFT LTD. Japan 100 100 Y Y 4326
ZWOLLE AIRCRAFT LTD. Japan 100 100 Y Y 3583
CITICORP MENKUL KIYMETLER ANONIM SIRKETI Turkey 100 100 Y Y 4478
CITICORP MERCHANT BANK LIMITED Trinidad & Tobago 100 100 Y Y 2457
CITIBANK (TRINIDAD & TOBAGO) LIMITED Trinidad & Tobago 100 100 Y Y 661
</TABLE>
1=Citigroup-controlled entity acts as general partner; 2=Managerial control;
3=Direct investor is Citigroup controlled entity.
34
<PAGE> 35
<TABLE>
<CAPTION>
CITIGROUP INC. AS 31-DEC-1998
PLACE OF %VOTING
1 2 3 4 5 6 7 8 9 10 INCORPORATION DIRECT TOTAL CTL ACT CO
<S> <C> <C> <C> <C> <C> <C>
CITICORP OVERSEAS SOFTWARE LIMITED Mumbai, India 100 100 Y Y 1846
CITICORP BROKERAGE (INDIA) LIMITED India 100 100 Y Y 4512
CITICORP INFORMATION TECHNOLOGY INDUSTRIES LIMITED Mumbai, India 38.97 49.4 Y (2) Y 3286
CITICORP P.R. MORTGAGE, INC. Puerto Rico 100 100 Y Y 3721
CITICORP PENSION MANAGEMENT LTD. Bahamas 100 100 Y Y 4132
CITICORP PERU S.A. SOCIEDAD AGENTE DE BOLSA Peru 6.903 100 Y Y 2214
CITICORP PERU SOCIEDAD TITULIZADORA S.A. Lima, Peru 100 100 Y Y 4994
CITILEASING S.A. Peru 1.08 100 Y Y 4110
CITICORP SECURITIES BOLIVIA S.A. Bolivia 100 100 Y Y 4854
CITICORP SECURITIES AND INVESTMENTS LIMITED India 32.4 32.4 Y (2) Y 3574
CITICORP CREDIT SERVICES INDIA LIMITED India 52.29 16.9 Y (3) Y 3922
CITICORP SECURITIES (TAIWAN) LTD. Taiwan 100 100 Y Y 5030
CITICORP SECURITIES INTERNATIONAL (RP) INC. Philippines 100 100 Y Y 2417
CITICORP FINANCIAL SERVICES PHILIPPINES, INC. Philippines 100 100 Y N 5181
CITICORP SECURITIES WEST AFRICA Abidjan, Ivory Coast 100 100 Y N 5018
CITICORP SERVICES LIMITED New Zealand 100 100 Y Y 465
ADVANCED FUTURES LIMITED New Zealand 100 100 Y Y 2550
CITIBANK GLOBAL ASSET MANAGEMENT LIMITED New Zealand 100 100 Y Y 1505
CITIBANK NOMINEES (NEW ZEALAND) LIMITED New Zealand 100 100 Y Y 2939
CITICORP CAPITAL MARKETS NEW ZEALAND LIMITED New Zealand 100 100 Y Y 2830
CITICORP NEW ZEALAND LIMITED New Zealand 100 100 Y Y 466
FUTURE TECHNOLOGY LIMITED New Zealand 100 100 Y Y 3194
OPTIONAL DEVELOPMENT HOLDINGS LIMITED New Zealand 100 100 Y Y 2997
</TABLE>
1=Citigroup-controlled entity acts as general partner; 2=Managerial control;
3=Direct investor is Citigroup controlled entity.
35
<PAGE> 36
<TABLE>
<CAPTION>
CITIGROUP INC. AS 31-DEC-1998
PLACE OF %VOTING
1 2 3 4 5 6 7 8 9 10 INCORPORATION DIRECT TOTAL CTL ACT CO
<S> <C> <C> <C> <C> <C> <C>
SEABIRD LIMITED New Zealand 100 100 Y Y 2516
CITICORP SERVIUM S.A. Peru 100 100 Y Y 2212
CITICORP PERU S.A. SOCIEDAD AGENTE DE BOLSA Peru 93.09 100 Y Y 2214
CITICORP PERU SOCIEDAD TITULIZADORA S.A. Lima, Peru 100 100 Y Y 4994
CITILEASING S.A. Peru 1.08 100 Y Y 4110
CITILEASING S.A. Peru 98.92 100 Y Y 4110
CITICORP SUBSAHARA INVESTMENTS, INC. 100 100 Y Y 1117
CITICORP TRADE SERVICES (MALAYSIA) SENDIRIAN BERHAD Malaysia 100 100 Y Y 4235
CITICORP TRUSTEE (SINGAPORE) LIMITED Singapore 100 100 Y Y 4877
CITICORP VENTURE CAPITAL BERATUNGS GESELLSCHAFT MBH Germany 100 100 Y Y 1554
CITICORP VENTURES PHILIPPINES, INC. Philippines 100 100 Y Y 3693
CITICREDITO S.A. Honduras 100 100 Y Y 2335
CITIDATOS S.A. Ecuador 100 100 Y Y 1545
CITIFINANCE LIMITED Jamaica 100 100 Y Y 536
CITIMERCHANT BANK LIMITED Jamaica 100 100 Y Y 322
CITIFINANCE S.A. Port-au-Prince, Haiti 100 100 Y N 5106
CITIFINANCIERA, S.A. Paraguay 100 100 Y N 468
CITINVERSIONES, S.A. Guatemala, Guatemala 100 100 Y Y 5234
CITILEASE, S.A. Belgium 100 100 Y Y 469
CITILEASE FINANSAL KIRALAMA ANONIM SIRKETI Turkey 100 100 Y Y 4792
CITILEASING (HUNGARY) LTD. Hungary 100 100 Y Y 4918
CITILEASING S.R.O. Czech Republic 100 100 Y Y 4705
CITINVEST CASA DE BOLSA SOCIEDAD ANONIMA Paraguay 100 100 Y Y 4261
</TABLE>
1=Citigroup-controlled entity acts as general partner; 2=Managerial control;
3=Direct investor is Citigroup controlled entity.
36
<PAGE> 37
<TABLE>
<CAPTION>
CITIGROUP INC. AS 31-DEC-1998
PLACE OF %VOTING
1 2 3 4 5 6 7 8 9 10 INCORPORATION DIRECT TOTAL CTL ACT CO
<S> <C> <C> <C> <C> <C> <C>
CITINVESTMENT CHILE LIMITED Bahamas 100 100 Y Y 2554
CORREDORES DE SEGUROS CITICORP LIMITADA Santiago, Chile 0.1 100 Y Y 3887
CITIPORTFOLIO LIMITED Channel Islands 100 100 Y Y 3654
CITIPROPERTIES (BVI) LIMITED British Virgin Is. 100 100 Y Y 3840
CITIREALTY (BVI) LIMITED British Virgin Is. 100 100 Y Y 4383
CITIREALTY (HONG KONG) LIMITED Hong Kong 100 100 Y Y 4384
CITIREALTY CHINA (BVI) LIMITED Tortola, Britisn Virgn Is. 100 100 Y Y 4961
GARDEN ROAD (BVI) LIMITED British Virgin Is. 100 100 Y Y 3836
CITIPROPERTIES (HONG KONG) LIMITED Hong Kong 100 100 Y Y 3837
CITISERVICE S.P.A. Italy 100 100 Y Y 471
CITITARJETAS DE GUATEMALA, S.A. Guatemala 100 100 Y Y 3791
CITITRUST (BAHAMAS) LIMITED Bahamas 100 100 Y Y 727
ALBACORE INVESTMENTS, LTD. Bahamas 100 100 Y Y 728
ANTARES ASSOCIATES LIMITED Bahamas 100 100 Y Y 4427
ASTAIRE ASSOCIATES LIMITED Bahamas 100 100 Y Y 4458
BEACONSFIELD HOLDINGS LIMITED Bahamas 100 100 Y Y 1407
CITITRUST SERVICES LIMITED Bahamas 100 100 Y Y 4390
DONAT INVESTMENTS S.A. Bahamas 100 100 Y Y 1400
FIRST NATIONAL NOMINEES, LTD. Bahamas 100 100 Y Y 729
HITCHCOCK INVESTMENTS S.A. Bahamas 100 100 Y Y 1401
MADELEINE INVESTMENTS S.A. Bahamas 100 100 Y Y 1402
PROVIDENCE ASSOCIATES, LTD. Bahamas 100 100 Y Y 730
CITITRUST (CAYMAN) LIMITED Cayman Is. 100 100 Y Y 731
</TABLE>
1=Citigroup-controlled entity acts as general partner; 2=Managerial control;
3=Direct investor is Citigroup controlled entity.
37
<PAGE> 38
<TABLE>
<CAPTION>
CITIGROUP INC. AS 31-DEC-1998
PLACE OF %VOTING
1 2 3 4 5 6 7 8 9 10 INCORPORATION DIRECT TOTAL CTL ACT CO
<S> <C> <C> <C> <C> <C> <C>
BRENNAN LIMITED Switzerland 100 100 Y Y 1697
BUCHANAN LIMITED Switzerland 100 100 Y Y 1734
TYLER LIMITED Switzerland 100 100 Y Y 1698
CITITRUST (JERSEY) LIMITED Channel Islands 100 100 Y Y 1762
SECUNDUS NOMINEES (JERSEY) LIMITED Channel Islands 100 100 Y Y 1764
TERTIUS NOMINEES (JERSEY) LIMITED Channel Islands 100 100 Y Y 1765
CITITRUST (KENYA) LIMITED Kenya 100 100 Y Y 2380
CITITRUST AND BANKING CORPORATION Japan 100 100 Y Y 2120
CITIVALORES DE HONDURAS, S.A. Honduras 100 100 Y Y 4433
CITIVALORES, S.A. Guatemala 100 100 Y Y 3204
CITIVALORES, S.A. Panama 100 100 Y Y 3112
CJSC CITIBANK KAZAKHSTAN Almaty, Kazakhstan 100 100 Y Y 5129
CONFIDAS FINANCE ET PLACEMENT S.A. Switzerland 100 100 Y Y 473
CORPIFEXSA, CORPORACION DE INVERSIONES Y FOMENTO DE EXPORTACIONES S.A. Ecuador 100 100 Y Y 2434
CITITRADING S.A. CASA DE VALORES Ecuador 100 100 Y Y 4449
INMOCITI S.A. Ecuador 100 100 Y Y 3415
CORPORACION CITIBANK G.F.C. S.A. San Jose, Costa Rica 100 100 Y Y 5203
CREINVEST B.V. Netherlands 100 100 Y Y 3585
DINERS CLUB (THAILAND) LIMITED, THE Thailand 100 100 Y Y 489
DINERS CLUB ARGENTINA S.A.C. Y DE T. Argentina 100 100 Y Y 483
DINERS TRAVEL S.A.C. Y DE T. Argentina 100 100 Y Y 484
SERVICIOS COMERCIALES S.A.C.I.M. Y F. Argentina 100 100 Y Y 486
DINERS CLUB ASIA, INC. Singapore 100 100 Y N 488
</TABLE>
1=Citigroup-controlled entity acts as general partner; 2=Managerial control;
3=Direct investor is Citigroup controlled entity.
38
<PAGE> 39
<TABLE>
<CAPTION>
CITIGROUP INC. AS 31-DEC-1998
PLACE OF %VOTING
1 2 3 4 5 6 7 8 9 10 INCORPORATION DIRECT TOTAL CTL ACT CO
<S> <C> <C> <C> <C> <C> <C>
DINERS CLUB BENELUX S.A., THE Belgium 100 100 Y Y 491
DINERS CLUB DE FRANCE S.A. France 100 100 Y Y 495
LEADAIR ASSURANCES France 99.75 99.7 Y Y 4529
LEADAIR SELECTION France 99.9 99.9 Y Y 4530
DINERS CLUB DE MEXICO S.A. DE C.V. Mexico 100 100 Y Y 1484
DINERS CLUB DEUTSCHLAND GMBH Germany 100 100 Y Y 502
DINERS CLUB DEUTSCHLAND UNTERSTUETZUNGSKASSE GMBH Germany 100 100 Y N 3067
DINERS CLUB INTERNATIONAL (HONG KONG) LIMITED Hong Kong 100 100 Y Y 505
DINERS CLUB INTERNATIONAL (TAIWAN) LIMITED Taiwan 100 100 Y Y 2906
DINERS CLUB OF GREECE, S.A. Greece 100 100 Y Y 519
CITICORP PROCESSING SERVICES S.A. Greece 100 100 Y N 2605
DINERS CLUB URUGUAY S.A. Uruguay 100 100 Y Y 523
FIMEN S.A. Belgium 100 100 Y Y 476
CITICORP INSURANCE SERVICES S.A./N.V. Belgium 100 100 Y Y 2386
CITIBANK INSURANCE SERVICES S.A. Greece 100 100 Y Y 3571
FNC-COMERCIO E PARTICIPACOES LTDA. Brazil 100 100 Y Y 543
CHELSEA-EMPREENDIMENTOS E PARTICIPACOES LIMITADA Brazil 100 100 Y Y 2848
CITIBANK COMPANHIA HIPOTECARIA S.A. Sao Paulo, Brazil 0.01 100 Y Y 5305
CITI CP MERCANTIL S.A. Brazil 100 100 Y Y 2576
CITIBANK LEASING S.A.-ARRENDAMENTO MERCANTIL Brazil 100 100 Y Y 560
CITICORP CORRETORA DE SEGUROS S.A. Brazil 100 100 Y Y 564
INTERCHANGE S.A. Brazil 25 25 Y (2) Y 3484
MIBRAK S.A. Uruguay 100 100 Y Y 3349
</TABLE>
1=Citigroup-controlled entity acts as general partner; 2=Managerial control;
3=Direct investor is Citigroup controlled entity.
39
<PAGE> 40
<TABLE>
<CAPTION>
CITIGROUP INC. AS 31-DEC-1998
PLACE OF %VOTING
1 2 3 4 5 6 7 8 9 10 INCORPORATION DIRECT
<S> <C> <C>
RIBA-REPRESENTACOES PARTICIPACOES E ADMINISTRACAO LTDA. Brazil 99.44
FOFIP S.A. Uruguay 88.56
FOREMOST INVESTMENT CORPORATION 100
FREPERP 1 LLC Wilmington, Delaware 100
FREPERP 2 LLC Wilmington, Delaware 100
GLOBAL TRANSPORTATION INVESTMENTS INC. Bahamas 100
GRUPO FINANCIERO CITIBANK, S.A. DE C.V. Mexico 100
ARRENDADORA CITIBANK, S.A. DE C.V., ORGANIZACION AUXILIAR DEL CREDITO, GRUPO FINANCIERO Mexico 100
CASA DE BOLSA CITIBANK, S.A. DE C.V., GRUPO FINANCIERO CITIBANK Mexico 100
CITIBANK MEXICO, S.A., GRUPO FINANCIERO CITIBANK Mexico 100
HACIENDA EL CAMPANARIO, S.A. DE C.V. Mexico 51
IMREF S.A. DE C.V. Mexico 100
INMOBILIARIA CONFIA, S.A. DE C.V. Mexico 100
HANSEATIC REAL ESTATE B.V. Netherlands 100
INARCO INTERNATIONAL BANK N.V. Aruba 100
INTERCO (INTERMEDIACIONES COMERCIALES) S.A. Bolivia 100
INTERNATIONAL FINANCE ASSOCIATES, B.V. Netherlands 100
CITICO, SGPS, LDA. Portugal 0.8
CITICORP INVESTMENT BANK (THE NETHERLANDS) N.V. Netherlands 100
CITICORP FLEETINSEL III BUEROHAUS B.V. Netherlands 100
CITICORP LEASING NEDERLAND, B.V. Netherlands 100
CITICORP FLEETINSEL HOTEL B.V. Netherlands 100
CITICORP FUBTINA LEASING B.V. Netherlands 100
<CAPTION>
%VOTING
1 2 3 4 5 6 7 8 9 10 TOTAL CTL ACT CO
<S> <C> <C> <C> <C>
RIBA-REPRESENTACOES PARTICIPACOES E ADMINISTRACAO LTDA. 99.4 Y N 565
FOFIP S.A. 88.5 Y Y 3879
FOREMOST INVESTMENT CORPORATION 100 Y Y 568
FREPERP 1 LLC 100 Y Y 5283
FREPERP 2 LLC 100 Y Y 5284
GLOBAL TRANSPORTATION INVESTMENTS INC. 100 Y N 3368
GRUPO FINANCIERO CITIBANK, S.A. DE C.V. 100 Y Y 4280
ARRENDADORA CITIBANK, S.A. DE C.V., ORGANIZACION AUXILIAR DEL CREDITO, GRUPO FINANCIERO 100 Y Y 346
CASA DE BOLSA CITIBANK, S.A. DE C.V., GRUPO FINANCIERO CITIBANK 100 Y Y 4281
CITIBANK MEXICO, S.A., GRUPO FINANCIERO CITIBANK 100 Y Y 4282
HACIENDA EL CAMPANARIO, S.A. DE C.V. 51 Y Y 5313
IMREF S.A. DE C.V. 100 Y Y 1092
INMOBILIARIA CONFIA, S.A. DE C.V. 100 Y Y 5314
HANSEATIC REAL ESTATE B.V. 100 Y Y 3358
INARCO INTERNATIONAL BANK N.V. 100 Y Y 585
INTERCO (INTERMEDIACIONES COMERCIALES) S.A. 100 Y Y 2243
INTERNATIONAL FINANCE ASSOCIATES, B.V. 100 Y Y 586
CITICO, SGPS, LDA. 100 Y Y 4791
CITICORP INVESTMENT BANK (THE NETHERLANDS) N.V. 100 Y Y 443
CITICORP FLEETINSEL III BUEROHAUS B.V. 100 Y N 3356
CITICORP LEASING NEDERLAND, B.V. 100 Y Y 458
CITICORP FLEETINSEL HOTEL B.V. 100 Y N 3357
CITICORP FUBTINA LEASING B.V. 100 Y Y 3355
</TABLE>
1=Citigroup-controlled entity acts as general partner; 2=Managerial control;
3=Direct investor is Citigroup controlled entity.
40
<PAGE> 41
<TABLE>
<CAPTION>
CITIGROUP INC. AS 31-DEC-1998
PLACE OF %VOTING
1 2 3 4 5 6 7 8 9 10 INCORPORATION DIRECT TOTAL CTL ACT CO
<S> <C> <C> <C> <C> <C> <C>
CITICORP XACOBEO LEASING B.V. Netherlands 100 100 Y Y 3354
INVERSIONES CITICORP (R.D.), S.A. Santo Domingo, Dominican 100 100 Y Y 5249
INVERSIONES Y ADELANTOS, C.A. Venezuela 100 100 Y Y 592
JSCB CITIBANK (UKRAINE) Kiev, Ukraine 100 100 Y Y 5056
LATIN AMERICAN INVESTMENT BANK BAHAMAS LIMITED Bahamas 100 100 Y Y 2976
CITIBRAZIL BOND FUND-FUNDO DE RENDA FIXA CAPITAL ESTRANGEIRO Brazil 100 100 Y Y 4112
CITIBRAZIL INVESTMENTS-FUNDO DE PRIVATIZACAO CAPITAL ESTRANGEIRO Brazil 100 100 Y Y 4532
MATRIX LTD. Bermuda 100 100 Y Y 745
NESSUS INVESTMENT CORPORATION 100 100 Y Y 603
CITIBANK LIMITED Australia 100 100 Y Y 604
OUTSOURCING INVESTMENTS PTY. LIMITED Australia 100 100 Y N 4428
CITICORP AUSTRALIA INTERNATIONAL FINANCE LIMITED Australia 100 100 Y N 3572
CITICORP AUSTRALIA OVERSEAS FINANCE LIMITED Australia 100 100 Y N 3589
CITICORP CAPITAL MARKETS AUSTRALIA LIMITED Australia 100 100 Y Y 1292
CITICORP NOMINEES PTY. LIMITED Australia 0.12 100 Y Y 1293
CITIFUTURES LIMITED Australia 100 100 Y Y 1549
CITISECURITIES LIMITED Australia 100 100 Y Y 1294
CSVA LIMITED Australia 100 100 Y N 2090
CITICORP EQUITY CAPITAL LIMITED Australia 100 100 Y Y 362
CITICORP INVESTMENTS LIMITED Australia 99.88 100 Y Y 621
CITICORP LIMITED Australia 100 100 Y Y 1651
CITICORP FINANCE PTY. LIMITED Australia 100 100 Y N 619
CITICORP GENERAL INSURANCE LIMITED Australia 100 100 Y Y 609
</TABLE>
1=Citigroup-controlled entity acts as general partner; 2=Managerial control;
3=Direct investor is Citigroup controlled entity.
41
<PAGE> 42
<TABLE>
<CAPTION>
CITIGROUP INC. AS 31-DEC-1998
PLACE OF %VOTING
1 2 3 4 5 6 7 8 9 10 INCORPORATION DIRECT TOTAL CTL ACT CO
<S> <C> <C> <C> <C> <C> <C>
CITICORP INVESTMENTS LIMITED Australia 0.12 100 Y Y 621
CITICORP LIFE INSURANCE LIMITED Australia 100 100 Y Y 614
CITICORP WHOLESALE PTY. LIMITED Australia 100 100 Y N 608
MARGARET STREET NOMINEES PTY. LIMITED Australia 100 100 Y Y 606
CITICORP NOMINEES PTY. LIMITED Australia 99.88 100 Y Y 1293
CITICORP REGIONAL SERVICE CENTRE PTY. LTD. Australia 100 100 Y Y 4588
PHINDA PTY. LIMITED Australia 100 100 Y Y 2297
REMITTANCE COLLECTION SERVICES LIMITED Australia 100 100 Y Y 2260
TARWOOD PTY. LIMITED Australia 100 100 Y Y 3281
NOSTRO INVESTMENT CORPORATION 100 100 Y Y 623
P.T. CITICORP FINANCE INDONESIA Indonesia 85 85 Y Y 628
P.T. CITICORP SECURITIES INDONESIA Indonesia 85 85 Y Y 3030
PAVEC DEVELOPMENTS LIMITED Ireland 100 100 Y Y 2625
PREMIUM FINANCE NO. 3 C.V. Netherlands 100 100 Y Y 4936
PRIMUS HOLDINGS, INC. Philippines 10 10 Y (2) Y 4402
CITICORP CAPITAL PHILIPPINES, INC. Philippines 47 100 Y Y 4403
REPFIN LTDA. Colombia 100 100 Y Y 350
CITIBANK COLOMBIA Colombia 11.1 100 Y Y 354
CITITRUST COLOMBIA S.A. SOCIEDAD FIDUCIARIA Colombia 17.65 100 Y Y 3539
CITIVALORES S.A. COMISIONISTA DE BOLSA Colombia 95 100 Y Y 4011
COMPANIA EXPORTADORA CITYEXPORT S.A. Colombia 75.75 100 Y Y 475
CITIBANK COLOMBIA Colombia 3.8 100 Y Y 354
CITIVALORES S.A. COMISIONISTA DE BOLSA Colombia 5 100 Y Y 4011
</TABLE>
1=Citigroup-controlled entity acts as general partner; 2=Managerial control;
3=Direct investor is Citigroup controlled entity.
42
<PAGE> 43
<TABLE>
<CAPTION>
CITIGROUP INC. AS 31-DEC-1998
PLACE OF %VOTING
1 2 3 4 5 6 7 8 9 10 INCORPORATION DIRECT TOTAL CTL ACT CO
<S> <C> <C> <C> <C> <C> <C>
LEASING CITIBANK S.A. COMPANIA DE FINANCIAMIENTO COMERCIAL Colombia 8.07 100 Y Y 347
SCOTTISH PROVIDENT (IRISH HOLDINGS) LIMITED Ireland 100 100 Y Y 3587
TARJETAS DE CHILE S.A. Chile 100 100 Y Y 1409
UNIVERSAL HOLDCORP, INC. Delaware 100 100 Y Y 5094
YONDER INVESTMENT CORPORATION 100 100 Y Y 640
CITIBANK PREMIUM FINANCE NO. 1, LTD. Channel Islands 100 100 Y Y 4678
CITIBANK PREMIUM FINANCE NO. 2, LTD. Channel Islands 100 100 Y Y 4679
CITIBANK STRATEGIC TECHNOLOGY INC. New Castle, Delaware 100 100 Y Y 4952
CITIBANK ZAMBIA LIMITED Zambia 100 100 Y Y 714
CITIBUREAU ZAMBIA LIMITED Zambia 100 100 Y Y 3987
CITICAL, INC. 100 100 Y Y 1156
CITICORP CAPITAL INVESTORS, LIMITED Delaware 100 100 Y Y 3251
WORLD SUBORDINATED DEBT PARTNERS, L.P. Delaware 54.22 54.2 Y Y 3307
CITICORP ELECTRONIC COMMERCE, INC. New York 100 100 Y Y 1557
CITICORP FINANCE PUERTO RICO, INC. Puerto Rico 100 100 Y Y 2134
CITICORP FINANCIAL GUARANTY HOLDINGS, INC. Delaware 100 100 Y Y 1831
CITICORP INSURANCE SERVICES, INC. 100 100 Y Y 2283
CITICORP INTERIM SERVICES, INC. Delaware 100 100 Y Y 720
ADV ELEVEN, INC. 100 100 Y Y 2362
AZ NOTES CORP. Arizona 100 100 Y Y 3770
MONACO ART CORP. New York 100 100 Y Y 4556
MBBT CORP. Florida 100 100 Y Y 3346
MR ABLES INC. 100 100 Y Y 3135
</TABLE>
1=Citigroup-controlled entity acts as general partner; 2=Managerial control;
3=Direct investor is Citigroup controlled entity.
43
<PAGE> 44
<TABLE>
<CAPTION>
CITIGROUP INC. AS 31-DEC-1998
PLACE OF %VOTING
1 2 3 4 5 6 7 8 9 10 INCORPORATION DIRECT TOTAL CTL ACT CO
<S> <C> <C> <C> <C> <C> <C>
CITICORP INVESTMENT SERVICES Delaware 100 100 Y Y 2702
CITICORP LEASING, INC. Delaware 100 100 Y Y 721
ADV THREE, INC. 100 100 Y Y 1794
CPI LEASING CORP. 100 100 Y Y 2348
CITICORP MORTGAGE, INC. Delaware 100 100 Y Y 1188
CITICORP CREDIT SERVICES, INC. (MARYLAND) Delaware 100 100 Y Y 2960
CITICORP MORTGAGE SECURITIES, INC. Delaware 100 100 Y Y 2382
CITICORP WASHINGTON INDUSTRIAL LOAN COMPANY 100 100 Y Y 1231
CPTPFC, INC. Delaware 100 100 Y N 3853
EKS CORP. Delaware 100 100 Y Y 3545
CITICORP PAYMENT SERVICES, INC. Delaware 100 100 Y Y 4905
CITICORP REAL ESTATE, INC. Delaware 100 100 Y Y 722
CITICORP TRUST, N.A. (FLORIDA) USA 100 100 Y Y 1633
CITICORP TRUST, NATIONAL ASSOCIATION USA 100 100 Y Y 1783
CITICORP USA, INC. Delaware 100 100 Y Y 2915
CITICORP VENTURE CAPITAL LTD. 100 100 Y Y 724
CITIFLIGHT, INC. 100 100 Y Y 1307
CITIMAE, INC. Delaware 100 100 Y Y 726
CITIPARTNERS SERVICES GROUP A.I.E. Spain 60 100 Y Y 4189
CITITRUST LIMITED Hong Kong 100 100 Y Y 719
GROUPEMENT D'INTERET ECONOMIQUE "PARIS CITICORP CENTER" France 50 100 Y Y 1084
INTERNATIONAL BANKING CORPORATION Connecticut 100 100 Y N 1081
INTERNATIONAL EQUITY INVESTMENTS, INC. Delaware 100 100 Y Y 3252
</TABLE>
1=Citigroup-controlled entity acts as general partner; 2=Managerial control;
3=Direct investor is Citigroup controlled entity.
44
<PAGE> 45
<TABLE>
<CAPTION>
CITIGROUP INC. AS 31-DEC-1998
PLACE OF %VOTING
1 2 3 4 5 6 7 8 9 10 INCORPORATION DIRECT TOTAL CTL ACT CO
<S> <C> <C> <C> <C> <C> <C>
CORPORACION INVERSORA DE CAPITALES S.R.L. Argentina 100 100 Y Y 3278
CELULOSA ARGENTINA S.A. Argentina 65.27 65.2 Y Y 3279
CARTULINAS ARGENTINAS S.A. Argentina 100 100 Y Y 4501
FORESTAL SANTA LUCIA S.A. Argentina 99.99 99.9 Y N 4506
TISSUCEL S.A. Argentina 99.99 99.9 Y Y 4505
USINA BERNAL S.A. Buenos Aires, Argentina 99.99 99.9 Y Y 4975
CVC/OPPORTUNITY EQUITY PARTNERS, L.P. George Town, Cayman Is. 100 100 Y Y 5063
525 PARTICIPACOES S.A. Brazil 98.98 98.9 Y Y 5076
SWEET RIVER FUND George Town, Cayman Is. 99 99 Y Y 4887
MATIN REALTY, INC. 100 100 Y Y 1091
PERENNIALLY GREEN, INC. 100 100 Y Y 1115
R DE VR INVESTMENTS (PTY) LTD. South Africa 100 100 Y Y 2004
UNIVERSAL CARD SERVICES CORP. Delaware 100 100 Y Y 5086
UNIVERSAL BANCORP SERVICES Delaware 100 100 Y Y 5091
UNIVERSAL BANK, N.A. Delaware 100 100 Y Y 5089
UNIVERSAL FINANCIAL CORP. Utah 100 100 Y Y 5090
CITIBANK (NEW YORK STATE) 100 100 Y Y 1129
CITIACH, INC. Delaware 50 100 Y Y 2323
CITICORP DEVELOPMENT CENTER, INC. Delaware 100 100 Y Y 1153
ENHANCED TELEPHONE SERVICES, INC. Delaware 100 100 Y N 3037
CITICORP INFORMATION MANAGEMENT SERVICES, INC. Delaware 100 100 Y N 2312
CITICORP POS INFORMATION SERVICES, INC. Delaware 100 100 Y N 2282
DINERS CLUB INTERNATIONAL LTD. New York 100 100 Y Y 1136
</TABLE>
1=Citigroup-controlled entity acts as general partner; 2=Managerial control;
3=Direct investor is Citigroup controlled entity.
45
<PAGE> 46
<TABLE>
<CAPTION>
CITIGROUP INC. AS 31-DEC-1998
PLACE OF %VOTING
1 2 3 4 5 6 7 8 9 10 INCORPORATION DIRECT TOTAL CTL ACT CO
<S> <C> <C> <C> <C> <C> <C>
CARTE BLANCHE INTERNATIONAL LTD. Delaware 100 100 Y N 1131
DINERS CLUB EQUIPMENT CORPORATION New York 100 100 Y N 1142
DINERS FINANCIAL CORPORATION New York 100 100 Y N 1145
DINERS WORLD TRAVEL INC. Delaware 100 100 Y N 1146
STUDENT LOAN CORPORATION, THE Delaware 80 80 Y Y 3846
CITICORP BANKING CORPORATION Delaware 100 100 Y Y 1166
CB INCOME PESOS FUND Buenos Aires, Argentina 84.81 84.8 Y Y 5228
CB INCOME DOLLAR MEDIANO PLAZO FUND Buenos Aires 75.7 75.7 Y Y 5229
CB INCOME DOLLAR LARGO PLAZO FUND Buenos Aires, Argentina 80.39 80.3 Y Y 5230
CFIB, INC. Puerto Rico 100 100 Y N 1311
CITI ISLAMIC INVESTMENT BANK Bahrain 100 100 Y Y 566
CITI ISLAMIC PORTFOLIOS S.A. Luxembourg 100 100 Y Y 4869
CITIBANK (ARIZONA) Arizona 100 100 Y N 2139
CITICORP AGENCY SERVICES, INC. 100 100 Y N 2570
CITIBANK (LUXEMBOURG) S.A. Luxembourg 100 100 Y Y 330
CITIBANK (SWITZERLAND) Switzerland 100 100 Y Y 1288
CITIBANK, FEDERAL SAVINGS BANK USA 100 100 Y Y 1364
CITIBANK MORTGAGE SERVICES, INC. 100 100 Y Y 1514
CITIBANK INSURANCE AGENCY, INC. Illinois 100 100 Y Y 1517
CITIBANK SERVICE CORPORATION 100 100 Y Y 1365
CITICORP FINANCIAL SERVICES CORPORATION (D.C.) 100 100 Y Y 2271
CITICORP INSURANCE AGENCY, INC. District of Columbia 100 100 Y Y 2272
FIRST SAVINGS CORPORATION 100 100 Y Y 1518
</TABLE>
1=Citigroup-controlled entity acts as general partner; 2=Managerial control;
3=Direct investor is Citigroup controlled entity.
46
<PAGE> 47
<TABLE>
<CAPTION>
CITIGROUP INC. AS 31-DEC-1998
PLACE OF %VOTING
1 2 3 4 5 6 7 8 9 10 INCORPORATION DIRECT TOTAL CTL ACT CO
<S> <C> <C> <C> <C> <C> <C>
FSC DEVELOPMENT CORP. 100 100 Y Y 1520
HOLIDAY HARBOR MANAGEMENT CORPORATION 100 100 Y Y 2992
THL, LTD. 100 100 Y Y 1912
WEST SUBURBAN INVESTMENTS, INC. 100 100 Y Y 1526
FIRST PADDLE CREEK, INC. Florida 100 100 Y Y 1573
WEST FLORIDA INVESTMENTS, INC. Florida 100 100 Y Y 1530
WEST SUBURBAN INVESTMENTS, INC. OF CALIFORNIA California 100 100 Y Y 1533
WEST SUBURBAN INVESTMENTS, INC. OF COLORADO Colorado 100 100 Y Y 1534
CITICORP (JERSEY) LIMITED Channel Islands 100 100 Y Y 1763
CITICORP ADMINISTRADORA DE INVERSIONES S.A. Uruguay 100 100 Y Y 3728
CITICORP CAPITAL INVESTORS EUROPE LIMITED Delaware 100 100 Y Y 1457
CITICORP CAPITAL INVESTORS GERMANY LIMITED Delaware 100 100 Y N 1539
CITICORP COMMUNITY DEVELOPMENT, INC. 100 100 Y Y 1272
MISSION PARK CORPORATION 80 80 Y Y 1276
CITICORP DATA DISTRIBUTION, INC. Delaware 100 100 Y Y 1161
CITICORP DATA SYSTEMS INCORPORATED Delaware 100 100 Y Y 2103
CITICORP DELAWARE SERVICES, INC. 100 100 Y Y 1278
CITICORP FUNDING, INC. Delaware 100 100 Y Y 1175
CITICORP FUTURES CORPORATION Delaware 100 100 Y N 1176
CITICORP GLOBAL HOLDINGS, INC. 100 100 Y Y 4408
CITICORP GLOBAL TECHNOLOGY, INC. Delaware 100 100 Y Y 1279
CITICORP INFORMATION TECHNOLOGY, INC. Delaware 100 100 Y Y 3228
CITICORP INSURANCE (BERMUDA) LIMITED Bermuda 100 100 Y N 1627
</TABLE>
1=Citigroup-controlled entity acts as general partner; 2=Managerial control;
3=Direct investor is Citigroup controlled entity.
47
<PAGE> 48
<TABLE>
<CAPTION>
CITIGROUP INC. AS 31-DEC-1998
PLACE OF %VOTING
1 2 3 4 5 6 7 8 9 10 INCORPORATION DIRECT TOTAL CTL ACT CO
<S> <C> <C> <C> <C> <C> <C>
CITICORP INSURANCE USA, INC. 100 100 Y Y 1837
CITICORP INTERNATIONAL FINANCE CORPORATION 100 100 Y Y 2350
BRAZIL HOLDINGS INC. LIMITED Bahamas 100 100 Y Y 2684
CHL COMERCIO E PARTICIPACOES LTDA. Brazil 100 100 Y Y 3541
CITICORP MERCANTIL-PARTICIPACOES E INVESTIMENTOS S.A. Brazil 100 100 Y Y 2685
CITICORP INTERNATIONAL INSURANCE COMPANY, LTD. Bermuda 100 100 Y Y 1744
CITICORP INTERNATIONAL TECHNOLOGY, INC. Delaware 100 100 Y Y 1305
CITICORP INTERNATIONAL TRADING COMPANY, INC. Delaware 100 100 Y Y 496
ADVANX S.A. Uruguay 100 100 Y Y 2182
CITICOM DE MEXICO, S.A. DE C.V. Mexico 100 100 Y Y 1887
CITICORP INTERNATIONAL TRADE INDEMNITY, INC. 100 100 Y Y 2316
CITICORP MARINE MANAGEMENT, INC. New Jersey 100 100 Y Y 2846
CITICORP INTERNATIONAL TRADING COMPANY (BAHAMAS) LTD. Bahamas 100 100 Y Y 4207
CITICORP INTERNATIONAL TRADING COMPANY ARGENTINA S.A. Argentina 100 100 Y Y 2314
CITICORP INTERNATIONAL TRADING COMPANY SDN. BHD. Malaysia 100 100 Y N 1886
CITICORP TRADING S.A. Brazil 100 100 Y Y 2224
COMERCIALIZADORA CITICORP, S.A. Dominican Republic 100 100 Y Y 2424
ESMERIL TRADING LDA Portugal 100 100 Y Y 4668
MARCHANTE TRADING LDA Portugal 100 100 Y Y 4817
RICHEMONT SERVICOS LDA Portugal 100 100 Y Y 4820
TREVANO SERVICOS E GESTAO LDA Portugal 100 100 Y Y 4819
TURBANTE COMERCIO INTERNACIONAL LDA Portugal 100 100 Y Y 4818
VILACETE INVESTIMENTOS E GESTAO LDA Portugal 100 100 Y Y 4821
</TABLE>
1=Citigroup-controlled entity acts as general partner; 2=Managerial control;
3=Direct investor is Citigroup controlled entity.
48
<PAGE> 49
<TABLE>
<CAPTION>
CITIGROUP INC. AS 31-DEC-1998
PLACE OF %VOTING
1 2 3 4 5 6 7 8 9 10 INCORPORATION DIRECT TOTAL CTL ACT CO
<S> <C> <C> <C> <C> <C> <C>
CITICORP INVESTMENT MANAGEMENT (LUXEMBOURG) S.A. Luxembourg 100 100 Y Y 3497
CITICORP INVESTMENT PARTNERS, INC. Delaware 100 100 Y Y 4208
CITICORP OVERSEAS FINANCE CORPORATION N.V. Aruba 100 100 Y N 1301
CITICORP SECURITIES ASIA PACIFIC LIMITED Hong Kong 100 100 Y Y 1669
CITIBANK GLOBAL ASSET MANAGEMENT (ASIA) LIMITED Hong Kong 100 100 Y Y 1671
CITICORP SECURITIES INVESTMENT CONSULTING INC. Taiwan 100 100 Y Y 2418
CITICORP VICKERS ENERGY INVESTMENTS LIMITED Hong Kong 100 100 Y N 3033
CITICORP VICKERS POWER FACILITATORS LIMITED Hong Kong 100 100 Y N 3034
CITICORP STRATEGIC TECHNOLOGY CORPORATION Delaware 100 100 Y Y 4919
CITICORP SECURITIES SERVICES, INC. Delaware 100 100 Y Y 1625
CITICORP TRUST COMPANY (MARYLAND) Maryland 100 100 Y Y 4145
CITICORP WASHINGTON, INC. 100 100 Y Y 2559
CITICURRENCIES S.A. Luxembourg 100 100 Y Y 1890
CITIDEL, INC. Delaware 100 100 Y Y 1306
CITILANDMARK S.A. Luxembourg 100 100 Y Y 2345
CITILIFE S.A./N.V. Belgium 99.9 99.9 Y Y 715
CITIMARKETS S.A. Luxembourg 100 100 Y Y 1889
CITIMORTGAGES, INC. Delaware 100 100 Y Y 2225
CITINVEST S.A. Luxembourg 100 100 Y Y 2226
CITIPORTFOLIOS S.A. Luxembourg 100 100 Y Y 2560
CITIRENTA S.A. DE C.V., SOCIEDAD DE INVERSION
EN INSTRUMENTOS DE DEUDA Mexico 100 100 Y Y 3678
CITISHARE CORPORATION Delaware 100 100 Y Y 1310
CITITRUST S.P.A.-ISTITUTO FIDUCIARIO Italy 100 100 Y Y 2195
</TABLE>
1=Citigroup-controlled entity acts as general partner; 2=Managerial control;
3=Direct investor is Citigroup controlled entity.
49
<PAGE> 50
<TABLE>
<CAPTION>
CITIGROUP INC. AS 31-DEC-1998
PLACE OF %VOTING
1 2 3 4 5 6 7 8 9 10 INCORPORATION DIRECT TOTAL CTL ACT CO
<S> <C> <C> <C> <C> <C> <C>
COURT SQUARE CAPITAL LIMITED Delaware 100 100 Y Y 1167
CROSSMAR, INC. Delaware 100 100 Y Y 3371
HOUSING SECURITIES, INC. Delaware 100 100 Y Y 2618
CITIEMPRESA, S.A. DE C.V., SOCIEDAD DE INVERSION EN
INSTRUMENTOS DE DEUDA PARA PERSONAS Mexico 100 100 Y Y 3680
INVERSIONES CITIMINERA S.A. Chile 100 100 Y Y 2552
MORTGAGE CAPITAL FUNDING INC. Delaware 100 100 Y Y 2309
RESOLUTION SERVICES, INC. Delaware 100 100 Y N 3565
CITICORP CAPITAL I Delaware 100 100 Y Y 4806
CITICORP CAPITAL II Delaware 100 100 Y Y 4805
CITICORP CAPITAL III Delaware 100 100 Y Y 5147
CITICORP CREDIT SERVICES, INC. Delaware 100 100 Y Y 1173
CITICORP HOLDINGS, INC. 100 100 Y Y 1558
CITIBANK DELAWARE Delaware 100 100 Y Y 1403
CITIBANK INSURANCE AGENCY, INC. New York 100 100 Y Y 3990
CITICORP DELAWARE EQUITY, INC. 100 100 Y Y 2907
ESSL-RP, INC. 100 100 Y Y 3032
FAIRFAX HOLDINGS, INC. 100 100 Y Y 2908
CITICORP DEL-LEASE, INC. 100 100 Y Y 2279
CITICORP AIRCRAFT MANAGEMENT, INC. 100 100 Y Y 2408
CITICORP BANKERS LEASING CORPORATION Delaware 100 100 Y Y 2499
BANKERS LEASING CORPORATION Massachusetts 100 100 Y Y 2500
BLC CORPORATION Utha 100 100 Y Y 2503
CITICORP BANKERS LEASING
FINANCE CORPORATION Delaware 100 100 Y Y 3724
</TABLE>
1=Citigroup-controlled entity acts as general partner; 2=Managerial control;
3=Direct investor is Citigroup controlled entity.
50
<PAGE> 51
<TABLE>
<CAPTION>
CITIGROUP INC. AS 31-DEC-1998
PLACE OF %VOTING
1 2 3 4 5 6 7 8 9 10 INCORPORATION DIRECT TOTAL CTL ACT CO
<S> <C> <C> <C> <C> <C> <C>
COMMETRO LEASING, INC. Delaware 100 100 Y Y 2506
COMMONWEALTH CONTROL, INC. Delaware 100 100 Y Y 2508
COMMONWEALTH PLAN, INC., THE Massachusetts 100 100 Y Y 2505
COMMONWEALTH SYSTEM, INC., THE Massachusetts 100 100 Y Y 2504
FINANCIAL LEASING CORPORATION Massachusetts 100 100 Y Y 2509
PACIFIC PLAN, INC., THE Massachusetts 100 100 Y Y 2510
WORCESTER PLAN, INC., THE Massachusetts 100 100 Y Y 2507
CBL CAPITAL CORPORATION Delaware 100 100 Y Y 2502
CITICORP DELAWARE PROPERTIES, INC. Delaware 100 100 Y Y 4748
CITICORP NEVADA CREDIT, INC. Nevada 100 100 Y Y 2406
CITICORP NEVADA LEASING, INC. California 100 100 Y Y 2407
G.W.L. LEASING COMPANY, INCORPORATED California 100 100 Y Y 2614
GXW CORPORATION California 100 100 Y Y 2615
PALM DEFEASANCE COMPANY 100 100 Y Y 2517
CITICORP INSURANCE AGENCY, INC. Delaware 100 100 Y Y 3751
EASTERN SERVICE CORPORATION 100 100 Y N 2270
CITICORP INSURANCE AGENCY, INC. Missouri 100 100 Y Y 1244
CITICORP INSURANCE AGENCY, INC. California 100 100 Y Y 1237
CITICORP LIFE INSURANCE COMPANY Arizona 100 100 Y Y 1233
CITICORP ASSURANCE CO. 100 100 Y Y 3593
FIRST CITICORP LIFE INSURANCE COMPANY 100 100 Y Y 1234
CITICORP RAILMARK, INC. 100 100 Y Y 435
CITICORP U.S. HOLDINGS NETHERLANDS, INC. New Castle, Delaware 100 100 Y Y 5243
</TABLE>
1=Citigroup-controlled entity acts as general partner; 2=Managerial control;
3=Direct investor is Citigroup controlled entity.
51
<PAGE> 52
<TABLE>
<CAPTION>
CITIGROUP INC. AS 31-DEC-1998
PLACE OF %VOTING
1 2 3 4 5 6 7 8 9 10 INCORPORATION DIRECT TOTAL CTL ACT CO
<S> <C> <C> <C> <C> <C> <C>
CITICORP HOLDINGS NETHERLANDS B.V. Netherlands 100 100 Y Y 5244
CITICORP LIFE INSURANCE COMPANY Arizona 0 100 Y Y 1233
CITIBANK (FLORIDA), NATIONAL ASSOCIATION 100 100 Y Y 2635
CITIBANK MORTGAGE CORP. Florida 100 100 Y Y 2638
CITIBANK COMMERCIAL PROPERTIES, INC. 100 100 Y Y 2639
INCOME SERVICE GROUP, INC. 100 100 Y Y 2930
LAND SERVICE GROUP, INC. 100 100 Y Y 2841
RRR PROPERTY MANAGEMENT, INC. 100 100 Y Y 2666
THIRTEEN PROPERTY MANAGEMENT, INC. 100 100 Y Y 4495
CITIBANK (MARYLAND), NATIONAL ASSOCIATION USA 100 100 Y N 1556
CITIBANK (NEVADA), NATIONAL ASSOCIATION USA 100 100 Y Y 1799
CITIBANK (SOUTH DAKOTA), N.A. USA 100 100 Y Y 1155
CDC HOLDINGS INC. Delaware 100 100 Y Y 2294
CITICORP DINERS CLUB INC. Delaware 100 100 Y Y 2293
CITICORP TRUST SOUTH DAKOTA South Dakota 100 100 Y Y 4498
CITIHOUSING, INC. 100 100 Y Y 4014
CITICORP NATIONAL SERVICES, INC. Delaware 100 100 Y Y 1185
CITICORP ACCEPTANCE COMPANY, INC. Nevada 100 100 Y N 1186
CITICORP ACCEPTANCE COMPANY OF CALIFORNIA, INC. 100 100 Y N 1184
CITICORP ACCEPTANCE COMPANY OF NEW MEXICO, INC. 100 100 Y N 1187
CITICORP ACCEPTANCE SERVICE CORPORATION Alabama 100 100 Y N 1183
CITICORP NORTH AMERICA, INC. Delaware 100 100 Y Y 1177
ADV ONE, INC. Delaware 100 100 Y Y 1792
</TABLE>
1=Citigroup-controlled entity acts as general partner; 2=Managerial control;
3=Direct investor is Citigroup controlled entity.
52
<PAGE> 53
<TABLE>
<CAPTION>
CITIGROUP INC. AS 31-DEC-1998
PLACE OF %VOTING
1 2 3 4 5 6 7 8 9 10 INCORPORATION DIRECT TOTAL CTL ACT CO
<S> <C> <C> <C> <C> <C> <C>
ASSET D VEHICLE, INC. 100 100 Y Y 1780
CITICORP CHURCHILL LEASE, INC. 100 100 Y Y 1726
CITICORP EPIC FINANCE, INC. Delaware 100 100 Y Y 4651
CITICORP FSC II LTD. Bermuda 100 100 Y Y 4477
CITICORP GLOBAL LEASE, INC. 100 100 Y Y 1178
CITICORP MT AQUARIUS SHIP, INC. Delaware 100 100 Y Y 5187
CITIMARLEASE (BURMAH I), INC. UTA (9/28/72) Delaware 26.7 70 Y Y 5238
CITICORP MT ARIES SHIP, INC. Delaware 100 100 Y Y 5186
CITIMARLEASE (BURMAH LNG CARRIER), INC. UTA (9/28/72) Delaware 26.3 100 Y Y 5237
CITICORP SIERRA LEASE, INC. 100 100 Y Y 1262
CITICORP TRANSLEASE, INC. Delaware 100 100 Y Y 1259
CGI CAPITAL, INC. 100 100 Y Y 1264
CITICORP LEASING (ALYESKA), INC. Delaware 100 100 Y Y 1180
CITICORP LESCAMAN, INC. New York 100 100 Y Y 1181
CITICORP PETROLEASE, INC. 100 100 Y Y 1261
CITICORP TULIP LEASE, INC. 100 100 Y Y 1263
CM LEASING MEMBER 1995 TRUST-A2 100 100 Y Y 4483
CM NORTH AMERICA HOLDING COMPANY Canada 1 100 Y Y 4480
CM LEASING COMPANY Canada 69.99 100 Y Y 4481
CM TULIP HOLDING COMPANY Canada 4 100 Y Y 4482
CM LEASING COMPANY Canada 29.99 100 Y Y 4481
CITIMARLEASE (BURMAH I), INC. Delaware 100 100 Y Y 1266
CITIMARLEASE (BURMAH I), INC. UTA (9/28/72) Delaware 43.3 70 Y Y 5238
</TABLE>
1=Citigroup-controlled entity acts as general partner; 2=Managerial control;
3=Direct investor is Citigroup controlled entity.
53
<PAGE> 54
<TABLE>
<CAPTION>
CITIGROUP INC. AS 31-DEC-1998
PLACE OF %VOTING
1 2 3 4 5 6 7 8 9 10 INCORPORATION DIRECT TOTAL CTL ACT CO
<S> <C> <C> <C> <C> <C> <C>
CITIMARLEASE (BURMAH LIQUEGAS), INC. Delaware 100 100 Y Y 1267
CITIMARLEASE (BURMAH LIQUEGAS), INC. UTA (9/28/92) Delaware 59.1 100 Y Y 5240
CITIMARLEASE (BURMAH LNG CARRIER), INC. Delaware 100 100 Y Y 1268
CITIMARLEASE (BURMAH LNG CARRIER), INC. UTA (9/28/72) Delaware 43.6 100 Y Y 5237
CITIMARLEASE (FULTON), INC. Delaware 100 100 Y Y 1269
CITIMARLEASE (WHITNEY), INC. Delaware 100 100 Y Y 1270
CM FSC I LTD. Bermuda 100 100 Y N 4970
CM LEASING MEMBER 1995 TRUST-A1 Delaware 100 100 Y Y 4479
CM NORTH AMERICA HOLDING COMPANY Canada 98.99 100 Y Y 4480
CM LEASING COMPANY Canada 69.99 100 Y Y 4481
CM TULIP HOLDING COMPANY Canada 95.99 100 Y Y 4482
CM LEASING COMPANY Canada 30 100 Y Y 4481
ESSL 1, INC. 100 100 Y Y 2363
ESSL 2, INC. 100 100 Y Y 2364
FCL SHIP THREE, INC. Delaware 100 100 Y Y 4934
CITIMARLEASE (BURMAH LIQUEGAS), INC. UTA (9/28/72) Delaware 40.9 100 Y Y 5240
FCL SHIP TWO, INC. Delaware 100 100 Y Y 5241
CITIMARLEASE (BURMAH LNG CARRIER), INC. UTA (9/28/72) Delaware 30.1 100 Y Y 5237
POP TROPHY I INC. 100 100 Y Y 3860
POP TROPHY INC. 100 100 Y Y 3859
S.P.L., INC. 100 100 Y Y 478
SCIENCE DEFEASANCE CORP. 100 100 Y Y 2281
CITICORP RETAIL SERVICES, INC. Delaware 100 100 Y Y 1255
</TABLE>
1=Citigroup-controlled entity acts as general partner; 2=Managerial control;
3=Direct investor is Citigroup controlled entity.
54
<PAGE> 55
<TABLE>
<CAPTION>
CITIGROUP INC. AS 31-DEC-1998
PLACE OF %VOTING
1 2 3 4 5 6 7 8 9 10 INCORPORATION DIRECT TOTAL CTL ACT CO
<S> <C> <C> <C> <C> <C> <C>
CITICORP SECURITIES FUNDING, INC. Delaware 100 100 Y Y 1257
CITICORP SERVICES INC. New York 100 100 Y Y 1258
CITIGROUP CAPITAL I Delaware 100 100 Y Y 6092
CITIGROUP CAPITAL II Delaware 100 100 Y Y 6093
CITIGROUP CAPITAL III Delaware 100 100 Y Y 6094
CITIGROUP CAPITAL IV Delaware 100 100 Y Y 6095
CITIGROUP CAPITAL V Delaware 100 100 Y Y 6096
CITIGROUP CAPITAL VI Delaware 100 100 Y Y 6097
CITIGROUP CAPITAL VII Delaware 100 100 Y Y 6098
CITIGROUP CAPITAL VIII 100 100 Y Y 6810
GREENWICH STREET CAPITAL PARTNERS, INC. Delaware 100 100 Y Y 6246
MIRASURE INSURANCE COMPANY, LTD. Bermuda 100 100 Y N 6323
MRC HOLDINGS, INC. Delaware 100 100 Y Y 6328
PACIFIC BASIN INVESTMENTS LTD. Delaware 100 100 Y N 6346
PRIMERICA CORPORATION (WY) Wyoming 100 100 Y N 6416
PRIMERICA, INC. Delaware 100 100 Y N 6448
SALOMON SMITH BARNEY HOLDINGS INC. Delaware 100 100 Y Y 6559
BASIS CLEARING INC Delaware 100 100 Y N 6033
GENESIS CRUDE OIL, L.P. Delaware 10.58 91.2 Y (1) Y 6227
GENESIS PIPELINE TX, L.P. 100 100 Y Y 6014
GENESIS PIPELINE USA, L.P. 100 100 Y Y 6919
GENESIS ENERGY, L.L.C. Delaware 54 54 Y Y 6228
GENESIS CRUDE OIL, L.P. Delaware 80.01 91.2 Y (1) Y 6227
</TABLE>
1=Citigroup-controlled entity acts as general partner; 2=Managerial control;
3=Direct investor is Citigroup controlled entity.
55
<PAGE> 56
<TABLE>
<CAPTION>
CITIGROUP INC. AS 31-DEC-1998
PLACE OF %VOTING
1 2 3 4 5 6 7 8 9 10 INCORPORATION DIRECT TOTAL CTL ACT CO
<S> <C> <C> <C> <C> <C> <C>
GENESIS PIPELINE TX, L.P. 100 100 Y Y 6014
GENESIS PIPELINE USA, L.P. 100 100 Y Y 6919
GENESIS ENERGY, L.P. Delaware 2 2 Y (1) Y 6229
GENESIS CRUDE OIL, L.P. Delaware 0.61 91.2 Y (1) Y 6227
GENESIS PIPELINE TX, L.P. 100 100 Y Y 6014
GENESIS PIPELINE USA, L.P. 100 100 Y Y 6919
MUTUAL MANAGEMENT CORP. Delaware 100 100 Y Y 6329
SALOMON SMITH BARNEY ASSET MANAGEMENT AUSTRALIA LTD. Australia 100 100 Y Y 6546
SMITH BARNEY ASSET MANAGEMENT COMPANY, LTD. Japan 100 100 Y Y 6663
SMITH BARNEY MANAGEMENT COMPANY (IRELAND) LIMITED Ireland 100 100 Y Y 6684
SMITH BARNEY STRATEGY ADVISERS INC. Delaware 100 100 Y Y 6711
TRAVELERS GROUP INVESTMENT MANAGEMENT, LLC Delaware 50 100 Y N 6825
WESTPAC BANKING CORPORATION Australia 1.6 1.6 Y Y 6185
NEW AMSTERDAM INVESTING LTD. New York 100 100 Y N 6334
NEXTCO INC. Delaware 100 100 Y Y 6341
PHIBRO ENERGY PRODUCTION, INC. Delaware 100 100 Y Y 6386
ANGLO SUISSE USSR L.P. Russia 55.5 56.5 Y Y 6023
PHIBRO ENERGY PRODUCTION G.P. INC Delaware 100 100 Y Y 6385
ANGLO SUISSE USSR L.P. Russia 1 56.5 Y Y 6023
PHIBRO INC. Delaware 100 100 Y Y 6392
MC2 TECHNOLOGIES, INC. Delaware 100 100 Y Y 6315
PHIBRO COMMODITIES England 100 100 Y Y 6380
PHIBRO ENERGY CLEARING, INC. Delaware 100 100 Y Y 6381
</TABLE>
1=Citigroup-controlled entity acts as general partner; 2=Managerial control;
3=Direct investor is Citigroup controlled entity.
56
<PAGE> 57
<TABLE>
<CAPTION>
CITIGROUP INC. AS 31-DEC-1998
PLACE OF %VOTING
1 2 3 4 5 6 7 8 9 10 INCORPORATION DIRECT TOTAL CTL ACT CO
<S> <C> <C> <C> <C> <C> <C>
PHIBRO ENERGY HONG KONG LIMITED Hong Kong 100 100 Y N 6382
PHIBRO ENERGY OIL, INC. Delaware 100 100 Y N 6384
PHIBRO GMBH Switzerland 100 100 Y Y 6390
DERBY RESOURCES AG Australia 100 100 Y N 6918
PHIBRO (ASIA) PTE LTD Singapore 100 100 Y Y 6378
PHIBRO ENERGY REPRESENTACOES COMMERCIAIA LTDA. 100 100 Y N 6387
PHILIPP BROTHERS AG (SWITZERLAND) Switzerland 100 100 Y N 6397
SCANPORTS LIMITED England 100 100 Y Y 6628
SCANPORTS SHIPPING LIMITED Switzerland 100 100 Y N 6629
SHIPALKS SHIPPING AG England 100 100 Y N 6645
SHIPALKS SHIPPING LIMITED 100 100 Y N 6646
TURAVENT OIL AG Switzerland 100 100 Y Y 6868
PHIBRO HOLDINGS LIMITED England 100 100 Y Y 6391
CARISGREEN LIMITED England 100 100 Y N 6047
PHIBRO BULLION LIMITED England 100 100 Y N 6379
PHIBRO ENERGY MARKETING LIMITED England 100 100 Y N 6383
PHIBRO FUTURES AND METALS LIMITED England 100 100 Y Y 6389
PHILIPP BROTHERS LIMITED England 100 100 Y N 6400
SCANPORTS SHIPPING, INC. Delaware 100 100 Y Y 6630
PHIBRO RESOURCES CORP. Delaware 100 100 Y Y 6393
THE S.W. SHATTUCK CHEM CO., INC. 100 100 Y N 6759
PHILIPP BROTHERS, INC. New York 100 100 Y N 6402
DERBY & CO. INC. New York 100 100 Y N 6194
</TABLE>
1=Citigroup-controlled entity acts as general partner; 2=Managerial control;
3=Direct investor is Citigroup controlled entity.
57
<PAGE> 58
<TABLE>
<CAPTION>
CITIGROUP INC. AS 31-DEC-1998
PLACE OF %VOTING
1 2 3 4 5 6 7 8 9 10 INCORPORATION DIRECT TOTAL CTL ACT CO
<S> <C> <C> <C> <C> <C> <C>
PHILIPP BROTHERS TRADING CORP. Delaware 100 100 Y N 6401
R-H CAPITAL, INC. Delaware 100 100 Y Y 6459
R-H/TRAVELERS, L.P. Delaware 100 100 Y Y 6460
R-H CAPITAL PARTNERS, L.P. Delaware 75.45 75.4 Y (1) Y 6458
SALOMON BROTHERS SERVICES GMBH Germany 100 100 Y Y 6521
LLC BELOYE OZERO Russia 19.9 100 Y Y 6305
SMITH BARNEY MORTGAGE BROKERS INC. Delaware 100 100 Y N 6686
SMITH BARNEY MORTGAGE CAPITAL CORP. Delaware 100 100 Y N 6687
SMITH BARNEY MORTGAGE CAPITAL GROUP, INC. Delaware 100 100 Y Y 6688
SMITH BARNEY OFFSHORE, INC. Delaware 100 100 Y Y 6691
DECATHLON OFFSHORE LIMITED Cayman Is. 100 100 Y N 6193
SMITH BARNEY PRIVATE TRUST GMBH Switzerland 100 100 Y Y 6703
SMITH BARNEY SECURITIES INVESTMENT CONSULTING CO. LTD. Taiwan 99 99 Y Y 6708
SMITH BARNEY SHEARSON (CHILE) CORREDORA DE SEGURO LIMITADA Chile 99.99 99.9 Y N 6710
SSBH CAPITAL I Delaware 100 100 Y Y 6726
SSBH CAPITAL II Delaware 100 100 Y Y 6727
SSBH CAPITAL III Delaware 100 100 Y Y 6728
SSBH CAPITAL IV Delaware 100 100 Y Y 6729
STRUCTURED MORTGAGE SECURITIES CORPORATION Delaware 100 100 Y N 6731
SUDTEX REAL ESTATE INC. 100 100 Y Y 5219
LT INVESTMENT I, LLC 100 100 Y Y 6899
LT INVESTMENT II, LLC 100 100 Y Y 6090
TARGETS TRUST I Delaware 100 100 Y Y 6737
</TABLE>
1=Citigroup-controlled entity acts as general partner; 2=Managerial control;
3=Direct investor is Citigroup controlled entity.
58
<PAGE> 59
<TABLE>
<CAPTION>
CITIGROUP INC. AS 31-DEC-1998
PLACE OF %VOTING
1 2 3 4 5 6 7 8 9 10 INCORPORATION DIRECT TOTAL CTL ACT CO
<S> <C> <C> <C> <C> <C> <C>
THE TRAVELERS INVESTMENT MANAGEMENT COMPANY Connecticut 100 100 Y Y 6773
TIMCO ALPHA I, LLC Connecticut 1 100 Y Y 6557
SALOMON BROTHERS HOLDING COMPANY INC Delaware 100 100 Y Y 6494
BECKHAM NO. 2 LIMITED Hong Kong 99.99 99.9 Y N 6668
GROVE STREET FILM CORP Delaware 100 100 Y Y 6254
HUWEST COMPANY INC Delaware 100 100 Y Y 6277
LOAN PARTICIPATION HOLDING CORPORATION Delaware 100 100 Y Y 6308
HOME MORTGAGE ACCESS CORPORATION District of Columbia 100 100 Y Y 6274
HOME MAC GOVERNMENT FINANCIAL CORPORATION District of Columbia 100 100 Y Y 6271
HOME MAC GOVERNMENT FINANCIAL CORPORATION WEST District of Columbia 100 100 Y Y 6272
HOME MAC MORTGAGE SECURITIES CORPORATION District of Columbia 100 100 Y Y 6273
PB-SB INVESTMENTS, INC Delaware 100 100 Y Y 6366
PB-SB 1983 I 1 1 Y (1) Y 6358
PB-SB 1983 IA 1 1 Y (1) Y 6359
PB-SB 1983 II 1 1 Y (1) Y 6360
PB-SB 1983 III 1 1 Y (1) Y 6361
PB-SB VENTURES, INC Delaware 100 100 Y Y 6367
PB-SB 1985 VII 1 1 Y (1) Y 6362
PB-SB 1988 II 23.06 23.0 Y (1) Y 6363
PB-SB 1988 III 1 1 Y (1) Y 6364
PB-SB 1988 VIII 1 1 Y (1) Y 6365
PT SALOMON SMITH BARNEY NUSA SECURITIES Indonesia 60 60 Y Y 6454
SALOMON (INTERNATIONAL) FINANCE AG Switzerland 100 100 Y Y 6471
</TABLE>
1=Citigroup-controlled entity acts as general partner; 2=Managerial control;
3=Direct investor is Citigroup controlled entity.
59
<PAGE> 60
<TABLE>
<CAPTION>
CITIGROUP INC. AS 31-DEC-1998
PLACE OF %VOTING
1 2 3 4 5 6 7 8 9 10 INCORPORATION DIRECT TOTAL CTL ACT CO
<S> <C> <C> <C> <C> <C> <C>
PHIBRO S.A. (MADRID) Spain 100 100 Y N 6395
SALOMON BROTHERS EUROPE LIMITED England 25 100 Y Y 6490
ANGLO CHEMICAL METALS LIMITED England 100 100 Y N 6022
CHARLES WADE & CO. LIMITED England 100 100 Y N 6083
COCOA MERCHANTS LIMITED England 100 100 Y N 6102
CRESTHAYES LIMITED England 100 100 Y N 6184
DAMSONBUSH LIMITED England 100 100 Y N 6188
HILSREST LIMITED England 100 100 Y N 6269
ION TRADING SYSTEMS LIMITED England 51 51 Y Y 6285
PE 1994 LIMITED England 100 100 Y N 6368
PHIBRO ENERGY SERVICES LIMITED England 100 100 Y N 6388
PHIBRO-SALOMON NOMINEES LIMITED England 100 100 Y N 6396
PHILIPP BROTHERS BULLION LIMITED England 100 100 Y N 6398
PHILIPP BROTHERS FUTURES LIMITED England 100 100 Y N 6399
PS4 LIMITED England 100 100 Y N 6453
SALOMON BROTHERS ASSET MANAGEMENT LIMITED England 100 100 Y N 6484
SALOMON BROTHERS EASTERN EUROPE LIMITED England 100 100 Y Y 6489
SALOMON BROTHERS INTERNATIONAL LIMITED England 100 100 Y Y 6500
SBI 1984 100 100 Y N 6614
SALOMON BROTHERS NOMINEES LIMITED England 100 100 Y Y 6514
SALOMON BROTHERS UK EQUITY LIMITED England 100 100 Y Y 6526
SB FINANCE PLC England 100 100 Y N 6584
SB FUNDING NO 1 LIMITED England 100 100 Y N 6587
</TABLE>
1=Citigroup-controlled entity acts as general partner; 2=Managerial control;
3=Direct investor is Citigroup controlled entity.
60
<PAGE> 61
<TABLE>
<CAPTION>
CITIGROUP INC. AS 31-DEC-1998
PLACE OF %VOTING
1 2 3 4 5 6 7 8 9 10 INCORPORATION DIRECT TOTAL CTL ACT CO
<S> <C> <C> <C> <C> <C> <C>
SB FUNDING NO 2 LIMITED England 100 100 Y N 6588
SB MORTGAGE SECURITIES NO 21 PLC England 100 100 Y N 6592
SB MORTGAGE SECURITIES NO 22 PLC England 100 100 Y N 6593
SB MORTGAGE SECURITIES NO 23 PLC England 100 100 Y N 6594
SB MORTGAGE SECURITIES NO 24 PLC England 100 100 Y N 6595
SB PLACEMENT NO 2 LIMITED England 100 100 Y N 6599
SB PORTFOLIO SERVICES LIMITED England 100 100 Y N 6600
SB RESIDENTIAL PLC England 100 100 Y N 6601
WAVENDOWN LIMITED 100 100 Y Y 6880
SALOMON BROTHERS HOLDINGS GMBH Switzerland 77.63 100 Y Y 6495
SALOMON BROTHERS ASIA LIMITED Hong Kong 50 100 Y N 6476
SALOMON CONTRACTUALS LIMITED Cayman Is. 100 100 Y Y 6530
SALOMON INTERNATIONAL FINANCIAL PRODUCTS Delaware 100 100 Y Y 6533
SALOMON SMITH BARNEY (JAPAN) LIMITED Cayman Is. 100 100 Y Y 6544
SALOMON SMITH BARNEY SERVICES JAPAN Cayman Is. 100 100 Y Y 6568
SALOMON BROTHERS OVERSEAS INC Cayman Is. 100 100 Y Y 6515
SALOMON SMITH BARNEY HONG KONG HOLDINGS LIMITED Hong Kong 53.4 100 Y Y 6462
SALOMON SMITH BARNEY ASSET MANAGEMENT
ASIA PACIFIC LIMITED Hong Kong 100 100 Y Y 6480
SALOMON SMITH BARNEY HONG KONG FUTURES, LIMITED Hong Kong 100 100 Y Y 6496
SALOMON SMITH BARNEY HONG KONG LIMITED Hong Kong 100 100 Y Y 6497
SALOMON SMITH BARNEY HONG KONG NOMINEE LIMITED Hong Kong 50 100 Y Y 6498
SALOMON-SHANGHAI INDUSTRIAL GREATER CHINA FUND 37.3 52.2 Y Y 6916
SALOMON ANALYTICS INC Delaware 100 100 Y Y 6472
</TABLE>
1=Citigroup-controlled entity acts as general partner; 2=Managerial control;
3=Direct investor is Citigroup controlled entity.
61
<PAGE> 62
<TABLE>
<CAPTION>
CITIGROUP INC. AS 31-DEC-1998
PLACE OF %VOTING
1 2 3 4 5 6 7 8 9 10 INCORPORATION DIRECT TOTAL CTL ACT CO
<S> <C> <C> <C> <C> <C> <C>
SALOMON BROTHERS ASIA CAPITAL CORP Ireland 100 100 Y Y 6474
DARKLAND INTERNATIONAL LIMITED Ireland 100 100 Y Y 6189
ILSHIN NO. 4 VENTURE INVESTMENT PARTNERSHIP South Korea 90 90 Y Y 6278
KOOKMIN NO. 5 INVESTMENT PARTNERSHIP South Korea 90 90 Y Y 6295
SOLOM INTERNATIONAL LIMITED Ireland 100 100 Y Y 6720
SALOMON BROTHERS ASIA LIMITED Hong Kong 50 100 Y N 6476
SALOMON BROTHERS ASIA PACIFIC LTD. 100 100 Y Y 6478
SALOMON BROTHERS FINANCE AG Switzerland 100 100 Y Y 6491
SALOMON BROTHERS ASSET MANAGEMENT (IRELAND) LTD Ireland 100 100 Y Y 6479
SALOMON BROTHERS ASSET MANAGEMENT INC Delaware 100 100 Y Y 6482
SALOMON BROTHERS ASSET MANAGEMENT G.P. INC. Delaware 100 100 Y Y 6481
SALOMON BROTHERS CAPITAL STRUCTURE ARBITRAGE FUND I, L.P. 0 13.3 Y (1) Y 6486
SALOMON BROTHERS ASSET MANAGEMENT JAPAN LTD Japan 100 100 Y Y 6483
SALOMON INVESTMENT TRUST MANAGEMENT CO., LTD. Japan 100 100 Y Y 6536
SALOMON SMITH BARNEY CHINA LIMITED Hong Kong 100 100 Y Y 6487
SALOMON BROTHERS HOUSING INVESTMENT INC Delaware 100 100 Y Y 6499
NOMOLAS BA LTD Australia 100 100 Y N 6485
SALOMON BROTHERS INTERNATIONAL OPERATIONS (JAPAN) INC Delaware 100 100 Y Y 6501
SALOMON BROTHERS INTERNATIONAL OPERATIONS (JERSEY) LIMITED Channel Islands 100 100 Y Y 6502
SALOMON BROTHERS INTERNATIONAL OPERATIONS (OVERSEAS) LIMITED Channel Islands 100 100 Y Y 6503
SALOMON BROTHERS INTERNATIONAL OPERATIONS INC Delaware 100 100 Y Y 6504
SALOMON BROTHERS MORTGAGE SECURITIES II, INC Delaware 100 100 Y Y 6508
SALOMON BROTHERS MORTGAGE SECURITIES III, INC Delaware 100 100 Y Y 6509
</TABLE>
1=Citigroup-controlled entity acts as general partner; 2=Managerial control;
3=Direct investor is Citigroup controlled entity.
62
<PAGE> 63
<TABLE>
<CAPTION>
CITIGROUP INC. AS 31-DEC-1998
PLACE OF %VOTING
1 2 3 4 5 6 7 8 9 10 INCORPORATION DIRECT TOTAL CTL ACT CO
<S> <C> <C> <C> <C> <C> <C>
SALOMON BROTHERS MORTGAGE SECURITIES INC Delaware 100 100 Y Y 6510
SALOMON BROTHERS MORTGAGE SECURITIES V, INC. 100 100 Y Y 6511
SALOMON BROTHERS MORTGAGE SECURITIES VI, INC Delaware 100 100 Y Y 6512
SALOMON BROTHERS MORTGAGE SECURITIES VII, INC Delaware 100 100 Y Y 6513
SALOMON BROTHERS PACIFIC HOLDING COMPANY INC Delaware 100 100 Y Y 6516
SALOMON BROTHERS HOLDINGS GMBH Switzerland 22.37 100 Y Y 6495
SALOMON BROTHERS ASIA LIMITED Hong Kong 50 100 Y N 6476
SALOMON CONTRACTUALS LIMITED Cayman Is. 100 100 Y Y 6530
SALOMON INTERNATIONAL FINANCIAL PRODUCTS Delaware 100 100 Y Y 6533
SALOMON SMITH BARNEY (JAPAN) LIMITED Cayman Is. 100 100 Y Y 6544
SALOMON SMITH BARNEY SERVICES JAPAN Cayman Is. 100 100 Y Y 6568
SALOMON BROTHERS PROPERTIES INC Delaware 100 100 Y Y 6517
SALOMON BROTHERS INVESTMENTS INC Delaware 100 100 Y Y 6505
SALOMON BROTHERS FINANCE CORPORATION AND CO
BESCHRANTHAFTENDE KG Germany 28.4 99.8 Y Y 6493
SALOMON BROTHERS AG Germany 100 100 Y Y 6473
SALOMON BROTHERS CORPORATE SUPPORT GMBH Germany 100 100 Y N 6488
SALOMON BROTHERS KAPITALANLAGE-GESELLSCHAFT MBH Germany 100 100 Y Y 6506
SALOMON BROTHERS REAL ESTATE DEVELOPMENT CORP Delaware 100 100 Y Y 6518
SALOMON BROTHERS REALTY CORP New York 100 100 Y Y 6519
LIQUIDATION PROPERTIES HOLDING COMPANY INC. 100 100 Y Y 6423
LIQUIDATION PROPERTIES INC. 100 100 Y Y 6318
SALOMON BROTHERS RUSSIA HOLDING COMPANY INC Delaware 100 100 Y Y 6520
AO SALOMON BROTHERS Russia 100 100 Y Y 6024
</TABLE>
1=Citigroup-controlled entity acts as general partner; 2=Managerial control;
3=Direct investor is Citigroup controlled entity.
63
<PAGE> 64
<TABLE>
<CAPTION>
CITIGROUP INC. AS 31-DEC-1998
PLACE OF %VOTING
1 2 3 4 5 6 7 8 9 10 INCORPORATION DIRECT TOTAL CTL ACT CO
<S> <C> <C> <C> <C> <C> <C>
SALOMON BROTHERS SERVICES INC Delaware 100 100 Y N 6522
SALOMON SMITH BARNEY ASIA MANAGEMENT SERVICES LIMITED Hong Kong 100 100 Y N 6477
SALOMON BROTHERS SIM SPA Italy 100 100 Y N 6523
SALOMON BROTHERS TAIWAN LIMITED Taiwan 100 100 Y Y 6524
SALOMON BROTHERS TOSCA INC Delaware 100 100 Y Y 6525
SALOMON CAPITAL ACCESS FOR SAVINGS INSTITUTIONS, INC. Delaware 100 100 Y Y 6529
SALOMON CAPITAL ACCESS CORPORATION District of Columbia 100 100 Y Y 6528
SALOMON FOREX INC Delaware 100 100 Y Y 6531
SALOMON BROTHERS FINANCE CORPORATION Delaware 100 100 Y Y 6492
SALOMON BROTHERS FINANCE CORPORATION
AND CO BESCHRANTHAFTENDE KG Germany 18.9 99.8 Y Y 6493
SALOMON BROTHERS AG Germany 100 100 Y Y 6473
SALOMON BROTHERS CORPORATE SUPPORT GMBH Germany 100 100 Y N 6488
SALOMON BROTHERS KAPITALANLAGE-GESELLSCHAFT MBH Germany 100 100 Y Y 6506
SALOMON INTERNATIONAL INVESTMENTS INC Delaware 100 100 Y N 6534
SALOMON INTERNATIONAL LIMITED Delaware 100 100 Y Y 6535
SALOMON BROTHERS EUROPE LIMITED England 75 100 Y Y 6490
ANGLO CHEMICAL METALS LIMITED England 100 100 Y N 6022
CHARLES WADE & CO. LIMITED England 100 100 Y N 6083
COCOA MERCHANTS LIMITED England 100 100 Y N 6102
CRESTHAYES LIMITED England 100 100 Y N 6184
DAMSONBUSH LIMITED England 100 100 Y N 6188
HILSREST LIMITED England 100 100 Y N 6269
ION TRADING SYSTEMS LIMITED England 51 51 Y Y 6285
</TABLE>
1=Citigroup-controlled entity acts as general partner; 2=Managerial control;
3=Direct investor is Citigroup controlled entity.
64
<PAGE> 65
<TABLE>
<CAPTION>
CITIGROUP INC. AS 31-DEC-1998
PLACE OF %VOTING
1 2 3 4 5 6 7 8 9 10 INCORPORATION DIRECT TOTAL CTL ACT CO
<S> <C> <C> <C> <C> <C> <C>
PE 1994 LIMITED England 100 100 Y N 6368
PHIBRO ENERGY SERVICES LIMITED England 100 100 Y N 6388
PHIBRO-SALOMON NOMINEES LIMITED England 100 100 Y N 6396
PHILIPP BROTHERS BULLION LIMITED England 100 100 Y N 6398
PHILIPP BROTHERS FUTURES LIMITED England 100 100 Y N 6399
PS4 LIMITED England 100 100 Y N 6453
SALOMON BROTHERS ASSET MANAGEMENT LIMITED England 100 100 Y N 6484
SALOMON BROTHERS EASTERN EUROPE LIMITED England 100 100 Y Y 6489
SALOMON BROTHERS INTERNATIONAL LIMITED England 100 100 Y Y 6500
SBI 1984 100 100 Y N 6614
SALOMON BROTHERS NOMINEES LIMITED England 100 100 Y Y 6514
SALOMON BROTHERS UK EQUITY LIMITED England 100 100 Y Y 6526
SB FINANCE PLC England 100 100 Y N 6584
SB FUNDING NO 1 LIMITED England 100 100 Y N 6587
SB FUNDING NO 2 LIMITED England 100 100 Y N 6588
SB MORTGAGE SECURITIES NO 21 PLC England 100 100 Y N 6592
SB MORTGAGE SECURITIES NO 22 PLC England 100 100 Y N 6593
SB MORTGAGE SECURITIES NO 23 PLC England 100 100 Y N 6594
SB MORTGAGE SECURITIES NO 24 PLC England 100 100 Y N 6595
SB PLACEMENT NO 2 LIMITED England 100 100 Y N 6599
SB PORTFOLIO SERVICES LIMITED England 100 100 Y N 6600
SB RESIDENTIAL PLC England 100 100 Y N 6601
WAVENDOWN LIMITED 100 100 Y Y 6880
</TABLE>
1=Citigroup-controlled entity acts as general partner; 2=Managerial control;
3=Direct investor is Citigroup controlled entity.
65
<PAGE> 66
<TABLE>
<CAPTION>
CITIGROUP INC. AS 31-DEC-1998
PLACE OF %VOTING
1 2 3 4 5 6 7 8 9 10 INCORPORATION DIRECT TOTAL CTL ACT CO
<S> <C> <C> <C> <C> <C> <C>
SAMCHULLY INVESTMENT PARTNERSHIP NO. 3 South Korea 90 90 Y N 6577
SALOMON LOAN FUND INC Delaware 100 100 Y Y 6538
SALOMON LOAN FUND I LLC Delaware 100 100 Y N 6537
SALOMON MILLENNIUM BRIDGE FUND INC. Delaware 100 100 Y Y 6539
SALOMON NORTHPOINT CORP Delaware 100 100 Y Y 6540
SALOMON PLAZA HOLDINGS INC Delaware 100 100 Y Y 6541
PLAZA HOLDINGS INC. Delaware 100 100 Y Y 6405
SALOMON BROTHERS FINANCE CORPORATION AND CO
BESCHRANTHAFTENDE KG Germany 52.5 99.8 Y Y 6493
SALOMON BROTHERS AG Germany 100 100 Y Y 6473
SALOMON BROTHERS CORPORATE SUPPORT GMBH Germany 100 100 Y N 6488
SALOMON BROTHERS KAPITALANLAGE-GESELLSCHAFT MBH Germany 100 100 Y Y 6506
SALOMON REINVESTMENT COMPANY, INC Delaware 100 100 Y Y 6542
SALOMON SMITH BARNEY (MALAYSIA) SDN BHD Malaysia 100 100 Y Y 6545
SALOMON SMITH BARNEY AUSTRALIA PTY LTD Australia 100 100 Y Y 6552
SALOMON SMITH BARNEY AUSTRALIA BROKER HOLDINGS PTY LIMITED Australia 100 100 Y Y 6547
SALOMON SMITH BARNEY AUSTRALIA SECURITIES PTY LIMITED Australia 100 100 Y Y 6553
BOWYANG NOMINEES PTY LIMITED Australia 100 100 Y Y 6039
CALEX NOMINEES PTY LIMITED Australia 100 100 Y Y 6044
DERVAT NOMINEES PTY LIMITED Australia 100 100 Y Y 6196
FETA NOMINEES PTY LIMITED Australia 100 100 Y Y 6220
GYMKHANA NOMINEES PTY LIMITED Australia 100 100 Y Y 6262
SALOMON SMITH BARNEY NEW ZEALAND LIMITED New Zealand 100 100 Y Y 6562
PALLISER NOMINEES LIMITED New Zealand 100 100 Y Y 6348
</TABLE>
1=Citigroup-controlled entity acts as general partner; 2=Managerial control;
3=Direct investor is Citigroup controlled entity.
66
<PAGE> 67
<TABLE>
<CAPTION>
CITIGROUP INC. AS 31-DEC-1998
PLACE OF %VOTING
1 2 3 4 5 6 7 8 9 10 INCORPORATION DIRECT TOTAL CTL ACT CO
<S> <C> <C> <C> <C> <C> <C>
SALOMON SMITH BARNEY AUSTRALIA CAPITAL MARKETS PTY LIMITED Australia 100 100 Y Y 6548
SALOMON SMITH BARNEY AUSTRALIA CORPORATE FINANCE PTY LIMITED Australia 100 100 Y Y 6549
SALOMON SMITH BARNEY AUSTRALIA NOMINEES NO. 2 PTY LIMITED Australia 100 100 Y Y 6550
SALOMON SMITH BARNEY AUSTRALIA NOMINEES PTY LIMITED Australia 100 100 Y Y 6551
SALOMON SMITH BARNEY AUSTRALIA SUPERANNUATION FUND
PTY LIMITED Australia 100 100 Y Y 6554
SALOMON SMITH BARNEY CANADA HOLDING CO 100 100 Y Y 6555
SALOMON SMITH BARNEY CANADA INC. Canada 100 100 Y Y 6556
SALOMON SMITH BARNEY HONG KONG NOMINEE LIMITED Hong Kong 50 100 Y Y 6498
SALOMON SMITH BARNEY HONG KONG HOLDINGS LIMITED Hong Kong 46.6 100 Y Y 6462
SALOMON SMITH BARNEY ASSET MANAGEMENT ASIA PACIFIC LIMITED Hong Kong 100 100 Y Y 6480
SALOMON SMITH BARNEY HONG KONG FUTURES LIMITED Hong Kong 100 100 Y Y 6496
SALOMON SMITH BARNEY HONG KONG LIMITED Hong Kong 100 100 Y Y 6497
SALOMON SMITH BARNEY HONG KONG NOMINEE LIMITED Hong Kong 50 100 Y Y 6498
SALOMON SMITH BARNEY INC. Delaware 100 100 Y Y 6560
BECKHAM NO. 1 LIMITED LIMITED Hong Kong 100 100 Y N 6655
MICRO HYDRO POWER INC. 70 70 Y N 6902
SALOMON BROTHERS UK LIMITED England 100 100 Y Y 6527
SBHU LIFE AGENCY, INC. Delaware 100 100 Y Y 6611
ROBINSON-HUMPHREY INSURANCE SERVICES INC. Georgia 100 100 Y Y 6468
ROBINSON-HUMPHREY INSURANCE SERVICES OF ALABAMA, INC. Alabama 100 100 Y Y 6469
SALOMON SMITH BARNEY LIFE AGENCY INC. 100 100 Y Y 6561
SBHU LIFE AGENCY OF ARIZONA, INC. Arizona 100 100 Y Y 6605
SBHU LIFE AGENCY OF INDIANA, INC. Indiana 100 100 Y Y 6606
</TABLE>
1=Citigroup-controlled entity acts as general partner; 2=Managerial control;
3=Direct investor is Citigroup controlled entity.
67
<PAGE> 68
<TABLE>
<CAPTION>
CITIGROUP INC. AS 31-DEC-1998
PLACE OF %VOTING
1 2 3 4 5 6 7 8 9 10 INCORPORATION DIRECT TOTAL CTL ACT CO
<S> <C> <C> <C> <C> <C> <C>
SBHU LIFE AGENCY OF OHIO, INC. Ohio 100 100 Y Y 6607
SBHU LIFE AGENCY OF OKLAHOMA, INC. Oklahoma 100 100 Y Y 6608
SBHU LIFE AGENCY OF TEXAS, INC. Texas 100 100 Y Y 6609
SBHU LIFE AGENCY OF UTAH, INC. Utah 100 100 Y Y 6610
SBHU LIFE INSURANCE AGENCY OF MASSACHUSETTS, INC. Massachusetts 100 100 Y Y 6612
SBS INSURANCE AGENCY OF HAWAII, INC. Hawaii 100 100 Y Y 6615
SBS INSURANCE AGENCY OF IDAHO, INC. Idaho 100 100 Y Y 6616
SBS INSURANCE AGENCY OF MAINE, INC. Maine 100 100 Y Y 6617
SBS INSURANCE AGENCY OF MONTANA, INC. Montana 100 100 Y Y 6618
SBS INSURANCE AGENCY OF NEVADA, INC. Nevada 100 100 Y Y 6619
SBS INSURANCE AGENCY OF OHIO, INC. Ohio 100 100 Y Y 6620
SBS INSURANCE AGENCY OF SOUTH DAKOTA, INC. South Dakoba 100 100 Y Y 6621
SBS INSURANCE AGENCY OF WYOMING, INC. Wyoming 100 100 Y Y 6622
SBS INSURANCE BROKERAGE AGENCY OF ARKANSAS, INC. Arkansas 100 100 Y Y 6623
SBS INSURANCE BROKERS OF KENTUCKY, INC. Kentucky 100 100 Y Y 6624
SBS INSURANCE BROKERS OF NEW HAMPSHIRE, INC. New Hampshire 100 100 Y Y 6625
SBS INSURANCE BROKERS OF NORTH DAKOTA, INC. North Dakota 100 100 Y Y 6626
SBS LIFE INSURANCE AGENCY OF PUERTO RICO, INC. Puerto Rico 100 100 Y Y 6627
SLB INSURANCE AGENCY OF MARYLAND, INC. Maryland 100 100 Y Y 6649
SMITH BARNEY (NETHERLANDS) INC. Delaware 100 100 Y Y 6657
SMITH BARNEY INTERNATIONAL INCORPORATED Oregon 100 100 Y Y 6681
SMITH BARNEY PACIFIC HOLDINGS, INC. British Virgin Islands 100 100 Y Y 6693
BECKHAM NO. 3 LIMITED Hong Kong 100 100 Y Y 6653
</TABLE>
1=Citigroup-controlled entity acts as general partner; 2=Managerial control;
3=Direct investor is Citigroup controlled entity.
68
<PAGE> 69
<TABLE>
<CAPTION>
CITIGROUP INC. AS 31-DEC-1998
PLACE OF %VOTING
1 2 3 4 5 6 7 8 9 10 INCORPORATION DIRECT TOTAL CTL ACT CO
<S> <C> <C> <C> <C> <C> <C>
BECKHAM NO. 4 LIMITED Hong Kong 100 100 Y N 6658
SMITH BARNEY PUERTO RICO INC. Puerto Rico 100 100 Y Y 6704
THE ROBINSON-HUMPHREY COMPANY LLC Delaware 100 100 Y Y 6758
SALOMON SMITH BARNEY S.A. France 99 99 Y Y 6567
SALOMON SMITH BARNEY SINGAPORE HOLDINGS PTE. LTD. Singapore 100 100 Y Y 6570
SALOMON SMITH BARNEY SINGAPORE FUTURES PTE. LTD. Singapore 100 100 Y Y 6569
SALOMON SMITH BARNEY SINGAPORE PTE. LTD. Singapore 100 100 Y Y 6571
SALOMON SWAPCO INC Delaware 100 100 Y Y 6574
SB CONTRACTUAL PRODUCTS INC Delaware 100 100 Y Y 6582
SB FUNDING CORP. Delaware 100 100 Y Y 6586
SB GRAPHICS CORP. Delaware 100 100 Y N 6590
SB MANAGEMENT SERVICES INC Delaware 100 100 Y Y 6591
SB MOTEL CORP. Delaware 100 100 Y Y 6596
SB MOTEL DURHAM I-95 CORP Delaware 100 100 Y N 6597
SB MOTEL MORTGAGE CORP Delaware 100 100 Y Y 6598
SB/EJV PARTICIPATION CORP Delaware 100 100 Y N 6602
SEVEN WORLD HOLDINGS INC Delaware 100 100 Y Y 6636
MOSENERGIA HOLDINGS LIMITED Cyprus 100 100 Y Y 6327
LLC BELOYE OZERO Russia 29.1 100 Y Y 6305
LLC IMANTA Russia 51 100 Y N 6306
LLC MUDRAYA SOVA Russia 51 100 Y Y 6307
LLC IMANTA Russia 49 100 Y N 6306
LLC MUDRAYA SOVA Russia 49 100 Y Y 6307
</TABLE>
1=Citigroup-controlled entity acts as general partner; 2=Managerial control;
3=Direct investor is Citigroup controlled entity.
69
<PAGE> 70
<TABLE>
<CAPTION>
CITIGROUP INC. AS 31-DEC-1998
PLACE OF %VOTING
1 2 3 4 5 6 7 8 9 10 INCORPORATION DIRECT TOTAL CTL ACT CO
<S> <C> <C> <C> <C> <C> <C>
LLC BELOYE OZERO Russia 51 100 Y Y 6305
POLARISO HOLDINGS LIMITED Cyprus 100 100 Y N 6408
SEVEN WORLD TECHNOLOGIES, INC Delaware 100 100 Y Y 6637
SMITH BARNEY SECURITIES PTE. LTD. Singapore 100 100 Y N 6709
SSB VEHICLE SECURITIES INC. Delaware 100 100 Y Y 6725
STRUCTURED PLACEMENTS CORP Delaware 100 100 Y Y 6732
STRUCTURED PRODUCTS CORP Delaware 100 100 Y Y 6733
TCEP PARTICIPATION CORP. New York 100 100 Y Y 6738
TCP CORP. Delaware 100 100 Y Y 6739
THE DOWNTOWN CONFERENCE CENTER INC. Delaware 100 100 Y Y 6751
THIRD STREET PROMENADE PRODUCTIONS, INC. Delaware 100 100 Y N 6784
SB CAYMAN HOLDINGS I INC. Delaware 100 100 Y Y 6578
SMITH BARNEY PRIVATE TRUST COMPANY (CAYMAN) LIMITED Cayman Is. 50 100 Y Y 6699
GREENWICH (CAYMAN) I LIMITED Cayman Is. 100 100 Y Y 6234
GREENWICH (CAYMAN) II LIMITED Cayman Is. 100 100 Y Y 6235
GREENWICH (CAYMAN) III LIMITED Cayman Is. 100 100 Y Y 6236
SB CAYMAN HOLDINGS II INC. Delaware 100 100 Y Y 6579
SMITH BARNEY PRIVATE TRUST COMPANY (CAYMAN) LIMITED Cayman Is. 50 100 Y Y 6699
GREENWICH (CAYMAN) I LIMITED Cayman Is. 100 100 Y Y 6234
GREENWICH (CAYMAN) II LIMITED Cayman Is. 100 100 Y Y 6235
GREENWICH (CAYMAN) III LIMITED Cayman Is. 100 100 Y Y 6236
SB CAYMAN HOLDINGS III INC. Delaware 100 100 Y Y 6580
SMITH BARNEY CREDIT SERVICES (CAYMAN) LTD. Cayman Is. 50 100 Y Y 6671
</TABLE>
1=Citigroup-controlled entity acts as general partner; 2=Managerial control;
3=Direct investor is Citigroup controlled entity.
70
<PAGE> 71
<TABLE>
<CAPTION>
CITIGROUP INC. AS 31-DEC-1998
PLACE OF %VOTING
1 2 3 4 5 6 7 8 9 10 INCORPORATION DIRECT TOTAL CTL ACT CO
<S> <C> <C> <C> <C> <C> <C>
SB CAYMAN HOLDINGS IV INC. Delaware 100 100 Y Y 6581
SMITH BARNEY CREDIT SERVICES (CAYMAN) LTD. Cayman Is. 50 100 Y Y 6671
SFP SODITIC FINANCIAL PRODUCTS LTD. Cayman Is. 100 100 Y Y 6639
SI FINANCING TRUST I 100 100 Y Y 6647
SMITH BARNEY (DELAWARE) INC. Delaware 100 100 Y Y 6654
1345 MEDIA CORP. Delaware 100 100 Y N 6000
CORPORATE REALTY ADVISORS, INC. Delaware 100 100 Y N 6178
IPO HOLDINGS INC. Delaware 100 100 Y Y 6286
INSTITUTIONAL PROPERTY OWNERS, INC. V Delaware 100 100 Y N 6282
INSTITUTIONAL PROPERTY OWNERS, INC. VI Delaware 100 100 Y N 6283
MLA 50 CORPORATION Delaware 100 100 Y N 6324
MLA GP CORPORATION Delaware 100 100 Y N 6325
SMITH BARNEY GLOBAL CAPITAL MANAGEMENT, INC. Delaware 100 100 Y Y 6677
SMITH BARNEY REALTY, INC. Delaware 100 100 Y N 6706
SMITH BARNEY RISK INVESTORS, INC. Delaware 100 100 Y Y 6707
SMITH BARNEY CONSULTING PARTNERSHIP, LP Delaware 1 1 Y (1) Y 6669
SMITH BARNEY INVESTORS L.P. Delaware 9.9 9.9 Y (1) Y 6682
SMITH BARNEY VENTURE CORP. Delaware 100 100 Y Y 6714
FIRST CENTURY COMPANY New York 100 100 Y N 6222
FIRST CENTURY MANAGEMENT COMPANY New York 1 1 Y (1) Y 6223
SMITH BARNEY (IRELAND) LIMITED Ireland 100 100 Y Y 6656
SMITH BARNEY ASIA INC. Delaware 100 100 Y N 6662
SMITH BARNEY ASSET MANAGEMENT GROUP (ASIA) PTE. LTD. Singapore 100 100 Y N 6664
</TABLE>
1=Citigroup-controlled entity acts as general partner; 2=Managerial control;
3=Direct investor is Citigroup controlled entity.
71
<PAGE> 72
<TABLE>
<CAPTION>
CITIGROUP INC. AS 31-DEC-1998
PLACE OF %VOTING
1 2 3 4 5 6 7 8 9 10 INCORPORATION DIRECT TOTAL CTL ACT CO
<S> <C> <C> <C> <C> <C> <C>
SMITH BARNEY CAPITAL SERVICES INC. Delaware 100 100 Y Y 6665
SMITH BARNEY CAYMAN ISLANDS, LTD. Cayman Is. 100 100 Y N 6666
SMITH BARNEY COMMERCIAL CORP. Delaware 100 100 Y Y 6667
SMITH BARNEY EUROPE HOLDINGS, LTD. England 100 100 Y Y 6674
SMITH BARNEY FUNDING CORP. Delaware 100 100 Y Y 6675
SMITH BARNEY FUTURES MANAGEMENT INC. Delaware 100 100 Y Y 6676
F-1000 FUTURES FUND L.P., MICHIGAN SERIES I New York 1 1 Y (1) Y 6214
F-1000 FUTURES FUND L.P., MICHIGAN SERIES II New York 1 1 Y (1) Y 6215
F-1000 FUTURES FUND L.P., SERIES IX New York 1 1 Y (1) Y 6216
HUTTON INVESTORS FUTURES FUND, L.P. II Delaware 1 1 Y (1) Y 6276
SALOMON SMITH BARNEY GLOBAL DIVERSIFIED FUTURES FUND L.P. 1 1 Y (1) Y 6543
SB/MICHIGAN FUTURES FUND L.P. New York 1 1 Y (1) Y 6603
SHEARSON MID-WEST FUTURES FUND 1 1 Y (1) Y 6643
SHEARSON SELECT ADVISORS FUTURES FUND L.P. Delaware 1 1 Y (1) Y 6642
SLB MID-WEST FUTURES FUND L.P. 1 1 Y (1) Y 6650
SMITH BARNEY AAA ENERGY FUND L.P. New York 1 1 Y (1) Y 6659
SMITH BARNEY DIVERSIFIED FUTURES FUND L.P. New York 1 1 Y (1) Y 6672
SMITH BARNEY DIVERSIFIED FUTURES FUND L.P. II New York 1 1 Y (1) Y 6673
SMITH BARNEY GLOBAL MARKETS FUTURES FUND L.P. New York 1.78 1.78 Y (1) Y 6678
SMITH BARNEY GREAT LAKES FUTURES FUND L.P. New York 1 1 Y (1) Y 6679
SMITH BARNEY INTERNATIONAL ADVISORS CURRENCY FUND L.P. New York 1 1 Y (1) Y 6680
SMITH BARNEY MID-WEST FUTURES FUND LP II New York 1 1 Y (1) Y 6685
SMITH BARNEY POTOMAC FUTURES FUND L.P. New York 1.29 1.29 Y (1) Y 6694
</TABLE>
1=Citigroup-controlled entity acts as general partner; 2=Managerial control;
3=Direct investor is Citigroup controlled entity.
72
<PAGE> 73
<TABLE>
<CAPTION>
CITIGROUP INC. AS 31-DEC-1998
PLACE OF %VOTING
1 2 3 4 5 6 7 8 9 10 INCORPORATION DIRECT TOTAL CTL ACT CO
<S> <C> <C> <C> <C> <C> <C>
SMITH BARNEY PRINCIPAL PLUS FUTURES FUND L.P.II New York 1 1 Y (1) Y 6695
SMITH BARNEY PRINCIPAL PLUS FUTURES FUND LP New York 1 1 Y (1) Y 6696
SMITH BARNEY TELESIS FUTURES FUND L.P. New York 1 1 Y (1) Y 6712
SMITH BARNEY TIDEWATER FUTURES FUND L.P. New York 1 1 Y (1) Y 6713
SMITH BARNEY WESTPORT FUTURES FUND L.P. New York 1 1 Y (1) Y 6715
SMITH BARNEY CORPORATE TRUST COMPANY Delaware 100 100 Y Y 6670
SMITH BARNEY PRIVATE TRUST BANK OF MICHIGAN Michigan 100 100 Y Y 6697
SMITH BARNEY PRIVATE TRUST COMPANY New York 100 100 Y Y 6698
SMITH BARNEY PRIVATE TRUST COMPANY OF FLORIDA Florida 100 100 Y Y 6700
SMITH BARNEY PRIVATE TRUST COMPANY OF NEW JERSEY New Jersey 99.8 99.8 Y Y 6701
SMITH BARNEY PRIVATE TRUST COMPANY OF TEXAS Texas 100 100 Y Y 6702
SALOMON SMITH BARNEY HICKS MUSE PARTNERS, L.P. 0.5 0.5 Y (1) Y 6558
TINMET CORPORATION Delaware 100 100 Y N 6790
TRAVELERS GROUP 401(k) SAVINGS PLAN 100 100 Y Y 6237
TRAVELERS GROUP DIVERSIFIED DISTRIBUTION SERVICES, INC. Delaware 100 100 Y Y 6822
TRAVELERS GROUP EXCHANGE, INC. Delaware 100 100 Y Y 6823
TGE INSURANCE AGENCY OF ALABAMA, INC. Alabama 100 100 Y N 6740
TGE INSURANCE AGENCY OF KENTUCKY, INC. Kentucky 100 100 Y N 6741
TGE INSURANCE AGENCY OF MISSISSIPPI, INC. P.C. Mississippi 100 100 Y N 6742
TGE INSURANCE AGENCY OF NEW MEXICO, INC. New Mexico 100 100 Y N 6743
TGE INSURANCE AGENCY OF OHIO, INC. Ohio 100 100 Y N 6744
TGE INSURANCE AGENCY OF TEXAS, INC. Texas 100 100 Y N 6745
TRAVELERS GROUP INTERNATIONAL INC. Delaware 100 100 Y Y 6824
</TABLE>
1=Citigroup-controlled entity acts as general partner; 2=Managerial control;
3=Direct investor is Citigroup controlled entity.
73
<PAGE> 74
<TABLE>
<CAPTION>
CITIGROUP INC. AS 31-DEC-1998
PLACE OF %VOTING
1 2 3 4 5 6 7 8 9 10 INCORPORATION DIRECT TOTAL CTL ACT CO
<S> <C> <C> <C> <C> <C> <C>
TRAVELERS INVESTMENT GROUP INC. Delaware 100 100 Y Y 6835
TRAVELERS SERVICES INC. Delaware 100 100 Y N 6849
TRV EMPLOYEES INVESTMENTS, INC. Delaware 100 100 Y Y 6865
TRV EMPLOYEES FUND, L.P. Delaware 1.8 1.8 Y (1) Y 6864
TRV/RCM CORP. Delaware 100 100 Y N 6866
PARC ACQUISITION LIMITED PARTNERSHIP Delaware 50 100 Y N 6351
TRV/RCM LP CORP. Delaware 100 100 Y N 6867
PARC ACQUISITION LIMITED PARTNERSHIP Delaware 50 100 Y N 6351
TOTAL RECORDS: 1687
</TABLE>
1=Citigroup-controlled entity acts as general partner; 2=Managerial control;
3=Direct investor is Citigroup controlled entity.
74
