File Nos. 333-32887
811-08325
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [ ]
Pre-Effective Amendment No. ___ [ ]
Post-Effective Amendment No. _7__ [X]
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [ ]
Amendment No. _8__ [X]
(Check appropriate box or boxes.)
BMA Variable Annuity Account A
-------------------------------
(Exact Name of Registrant)
Business Men's Assurance Company of America
-------------------------------------------
(Name of Depositor)
700 Karnes Boulevard, Kansas City, Missouri 64108
------------------------------------------------------------ ----------
(Address of Depositor's Principal Executive Offices) (Zip Code)
Depositor's Telephone Number, including Area Code (816) 753-8000
Name and Address of Agent for Service
David A. Gates
Business Men's Assurance Company of America
700 Karnes Blvd.
Kansas City, Missouri 64108
Copies to:
Judith A. Hasenauer
Blazzard, Grodd & Hasenauer, P.C.
P.O. Box 5108
Westport, CT 06881
(203) 226-7866
It is proposed that this filing will become effective:
__X__ immediately upon filing pursuant to paragraph (b) of Rule 485
_____ on (date) pursuant to paragraph (b) of Rule 485
_____ 60 days after filing pursuant to paragraph (a)(1) of Rule 485
_____ on (date) pursuant to paragraph (a)(1) of Rule 485.
If appropriate, check the following:
_____ This post-effective amendment designates a new effective date
for a previously filed post-effective amendment.
Title of Securities Being Registered:
Individual Flexible Purchase Payment Deferred Variable Annuity Contracts
CROSS REFERENCE SHEET
(required by Rule 495)
<TABLE>
<CAPTION>
ITEM NO. Location
<S> <C>
PART A
Item 1. Cover Page Cover Page
Item 2. Definitions Index of Special Terms
Item 3. Synopsis Summary
Item 4. Condensed Financial Information Appendix
Item 5. General Description of Registrant,
Depositor, and Portfolio Companies Other Information -
BMA; The Separate
Account; Investors Mark Series
Fund, Inc.; Berger Institutional
Products Trust; American Century
Variable Portfolios, Inc.; Dreyfus
Stock Index Fund; Dreyfus Variable
Investment Fund; Lazard Retirement
Series, Inc.; INVESCO Variable
Investment Funds, Inc.
Item 6. Deductions and Expenses Expenses
Item 7. General Description of Variable
Annuity Contracts The Annuity Contract
Item 8. Annuity Period Annuity Payments
(The Income Phase)
Item 9. Death Benefit Death Benefit
Item 10. Purchases and Contract Value Purchase
Item 11. Redemptions Access to Your Money
Item 12. Taxes Taxes
Item 13. Legal Proceedings None
Item 14. Table of Contents of the Statement
of Additional Information Table of Contents of the
Statement of Additional
Information
</TABLE>
CROSS REFERENCE SHEET
(required by Rule 495)
<TABLE>
<CAPTION>
ITEM NO. LOCATION
<S> <C>
PART B
Item 15. Cover Page Cover Page
Item 16. Table of Contents Table of Contents
Item 17. General Information and History Company
Item 18. Services Not Applicable
Item 19. Purchase of Securities Being Offered Not Applicable
Item 20. Underwriters Distribution
Item 21. Calculation of Performance Data Performance Information
Item 22. Annuity Payments Annuity Provisions
Item 23. Financial Statements Financial Statements
</TABLE>
PART C
Information required to be included in Part C is set forth under the appropriate
Item so numbered in Part C to this Registration Statement.
PART A
THE FIXED AND VARIABLE ANNUITY
ISSUED BY
BMA VARIABLE ANNUITY ACCOUNT A
AND
BUSINESS MEN'S ASSURANCE COMPANY OF AMERICA
This prospectus describes the Fixed and Variable Annuity Contract offered
by Business Men's Assurance Company of America (BMA).
The annuity contract has 19 investment choices-2 FIXED ACCOUNT options and
17 INVESTMENT PORTFOLIOS listed below. The 17 INVESTMENT PORTFOLIOS are part of
Investors Mark Series Fund, Inc., Berger Institutional Products Trust, American
Century Variable Portfolios, Inc., Dreyfus Stock Index Fund, Dreyfus Variable
Investment Fund, INVESCO Variable Investment Funds, Inc. and Lazard Retirement
Series, Inc. You can put your money in Fixed Account I, any currently available
GUARANTEE PERIOD of Fixed Account II and/or any of these INVESTMENT PORTFOLIOS.
INVESTORS MARK SERIES FUND, INC.
MANAGED BY STANDISH, AYER & WOOD, INC.
Intermediate Fixed Income Portfolio
Mid Cap Equity Portfolio
Money Market Portfolio
The Securities and Exchange Commission has not approved or disapproved
these securities or determined if this prospectus is accurate or complete. Any
representation to the contrary is a criminal offense.
MANAGED BY STANDISH INTERNATIONAL MANAGEMENT COMPANY, L.P.
Global Fixed Income Portfolio
MANAGED BY STEIN ROE & FARNHAM INCORPORATED
Small Cap Equity Portfolio
Large Cap Growth Portfolio
MANAGED BY DAVID L. BABSON & CO., INC.
Large Cap Value Portfolio
MANAGED BY LORD, ABBETT & CO.
Growth & Income Portfolio
MANAGED BY KORNITZER CAPITAL MANAGEMENT, INC.
Balanced Portfolio
BERGER INSTITUTIONAL PRODUCTS TRUST
MANAGED BY BBOI WORLDWIDE LLC
Berger/BIAM IPT-International Fund
AMERICAN CENTURY VARIABLE PORTFOLIOS, INC.
MANAGED BY AMERICAN CENTURY INVESTMENT MANAGEMENT, INC.
VP Income & Growth
VP Value
DREYFUS STOCK INDEX FUND
MANAGED BY THE DREYFUS CORPORATION (Index Fund Manager-Mellon Equity
Associates)
DREYFUS VARIABLE INVESTMENT FUND
MANAGED BY THE DREYFUS CORPORATION
Disciplined Stock Portfolio
INVESCO VARIABLE INVESTMENT FUNDS, INC.
MANAGED BY INVESCO FUNDS GROUP, INC.
INVESCO VIF-High Yield Fund
INVESCO VIF-Equity Income Fund (formerly, INVESCO VIF-Industrial
Income Portfolio)
LAZARD RETIREMENT SERIES, INC.
MANAGED BY LAZARD ASSET MANAGEMENT
Lazard Retirement Small Cap Portfolio
Please read this prospectus before investing and keep it on file for future
reference. It contains important information about the BMA Fixed and Variable
Annuity Contract.
To learn more about the BMA Fixed and Variable Annuity Contract, you can
obtain a copy of the Statement of Additional Information (SAI) dated December
29, 1999. The SAI has been filed with the Securities and Exchange Commission
(SEC) and is legally a part of this prospectus. The SEC has a web site
(http://www.sec.gov) that contains the SAI, material incorporated by reference,
and other information regarding companies that file electronically with the SEC.
The Table of Contents of the SAI is on Page __ of this prospectus. For a free
copy of the SAI, call us at 1-800-423-9398 or write us at: 9735 Landmark Parkway
Drive, St. Louis, MO 63127-1690.
The Contracts:
* are not bank deposits
* are not federally insured
* are not endorsed by any bank or government agency
* are not guaranteed and may be subject to loss of principal
This prospectus is not an offering of the securities in any state, country,
or jurisdiction in which we are not authorized to sell these securities. You
should rely only on the information contained in this prospectus or that we have
referred you to. We have not authorized anyone to provide you with information
that is different.
December 29, 1999
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
<S> <C>
INDEX OF SPECIAL TERMS................................................................................. 4
SUMMARY................................................................................................ 4
FEE TABLE.............................................................................................. 6
EXAMPLES............................................................................................... 8
1. THE ANNUITY CONTRACT................................................................................ 13
2. ANNUITY PAYMENTS (THE INCOME PHASE)................................................................. 14
3. PURCHASE............................................................................................ 16
Purchase Payments................................................................................. 16
Allocation of Purchase Payments................................................................... 16
Accumulation Units................................................................................ 16
4. INVESTMENT OPTIONS.................................................................................. 17
Transfers......................................................................................... 19
Dollar Cost Averaging Option...................................................................... 20
Asset Rebalancing Option.......................................................................... 20
Asset Allocation Option........................................................................... 21
Voting Rights..................................................................................... 21
Substitution...................................................................................... 21
5. EXPENSES............................................................................................ 21
Coverage Charge................................................................................... 21
Contract Maintenance Charge....................................................................... 22
Withdrawal Charge................................................................................. 22
Waiver of Withdrawal Charge Benefits.............................................................. 23
Reduction or Elimination of the Withdrawal Charge................................................. 23
Premium Taxes..................................................................................... 24
Transfer Fee...................................................................................... 24
Income Taxes...................................................................................... 24
Investment Portfolio Expenses..................................................................... 24
6. TAXES............................................................................................... 24
Annuity Contracts in General...................................................................... 24
Qualified and Non-Qualified Contracts............................................................. 25
Withdrawals-Non-Qualified Contracts............................................................... 25
Withdrawals-Qualified Contracts................................................................... 25
Death Benefits.................................................................................... 25
Diversification................................................................................... 25
7. ACCESS TO YOUR MONEY................................................................................ 26
Automatic Withdrawal Program...................................................................... 26
Minimum Distribution Program...................................................................... 27
Suspension of Payments or Transfers............................................................... 27
8. PERFORMANCE......................................................................................... 27
9. DEATH BENEFIT....................................................................................... 28
Upon Your Death................................................................................... 28
Death of Annuitant................................................................................ 30
10. OTHER INFORMATION................................................................................. 30
BMA............................................................................................... 30
Year 2000......................................................................................... 30
The Separate Account.............................................................................. 30
Distributor....................................................................................... 30
Administration.................................................................................... 31
Ownership......................................................................................... 31
Beneficiary....................................................................................... 31
Assignment........................................................................................ 31
Financial Statements.............................................................................. 31
TABLE OF CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION........................................... 31
APPENDIX A-CONDENSED FINANCIAL INFORMATION............................................................. A-1
APPENDIX B-ADDITIONAL DEATH BENEFIT OPTION............................................................. B-1
</TABLE>
<TABLE>
<CAPTION>
INDEX OF SPECIAL TERMS
We have written this prospectus to make it as understandable as possible.
By the very nature of the contract, however, certain technical words or terms
are unavoidable and need an explanation. We have identified the following as
some of these words or terms. They appear capitalized in the text and the page
that is indicated below is where we believe you will find the best explanation
for the word or term.
Page
<S> <C>
Accumulation Phase..................................................................................... 13
Accumulation Unit...................................................................................... 16
Annuitant.............................................................................................. 14
Annuity Date........................................................................................... 14
Annuity Options........................................................................................ 15
Annuity Payments....................................................................................... 14
Annuity Unit........................................................................................... 16
Beneficiary............................................................................................ 31
Fixed Account.......................................................................................... 13
Guarantee Period....................................................................................... 13
Income Phase........................................................................................... 13
Investment Portfolios.................................................................................. 17
Joint Owner............................................................................................ 31
Non-Qualified.......................................................................................... 25
Owner.................................................................................................. 31
Purchase Payment....................................................................................... 16
Qualified.............................................................................................. 25
Tax Deferral........................................................................................... 13
</TABLE>
SUMMARY
The sections in this summary correspond to sections in this prospectus
which discuss the topics in more detail.
The Annuity Contract: The fixed and variable annuity contract offered by
BMA provides a means for investing on a tax-deferred basis in two BMA fixed
accounts (available in most states) and the 17 INVESTMENT PORTFOLIOS. The
contract is intended for retirement savings or other long-term investment
purposes and provides for a death benefit and guaranteed income options.
Annuity Payments: If you want to receive regular income from your annuity,
you can choose one of the ANNUITY OPTIONS BMA offers. You can choose whether to
have payments come from our general account, the available INVESTMENT PORTFOLIOS
or both. If you choose to have any part of your payments come from the
INVESTMENT PORTFOLIOS, the dollar amount of your payments may go up or down.
Purchase: You can buy the contract with $10,000 or more under most
circumstances. You can add $1,000 or more any time you like during the
ACCUMULATION PHASE.
Investment Options: You can put your money into the BMA FIXED ACCOUNTS
and/or the INVESTMENT PORTFOLIOS. The returns on the INVESTMENT PORTFOLIOS are
not guaranteed. You can lose money. You can make transfers between investment
options.
Expenses: The contract has insurance features and investment features, and
there are costs related to each.
Each year, BMA deducts a $35 contract maintenance charge from your
contract. BMA currently waives this charge during the ACCUMULATION PHASE if the
value of your contract is at least $100,000.
BMA deducts a coverage charge which varies depending upon (if you purchase
the contract on or after May 3, 1999) whether you elect the additional death
benefit option (ADBO).
The charge is equal, on an annual basis, to the following amounts invested
in an INVESTMENT PORTFOLIO:
If you elect ADBO 1.45%
If you do not elect ADBO 1.25%
In certain states, the ADBO may not be available (check with your
registered representative). If you bought your contract before May 3, 1999, the
ADBO is not available.
If you take money out of the contract, BMA may assess a withdrawal charge
against each PURCHASE PAYMENT withdrawn. The withdrawal charge starts at 7% in
the first year and declines to 0% after 7 years.
There are also daily investment charges which range, on an annual basis,
from .26% to 1.25% of the average daily value of the INVESTMENT PORTFOLIO,
depending upon the INVESTMENT PORTFOLIO.
Taxes: Your earnings are not taxed until you take them out. If you take
money out during the ACCUMULATION PHASE, earnings come out first and are taxed
as income. If you are younger than 591/2 when you take money out, you may be
charged a 10% federal tax penalty.
Access to Your Money: You can take money out of your contract during the
ACCUMULATION PHASE. Withdrawals may be subject to a withdrawal charge. You may
also have to pay income tax and a tax penalty on any money you take out.
Death Benefit: If you die before moving to the INCOME PHASE, the person you
have chosen as a BENEFICIARY will receive a death benefit.
Free-Look: You can cancel the contract within 10 days after receiving it
(or whatever period is required in your state). BMA will refund the value of
your contract on the day it receives your request to cancel the contract. This
may be more or less than your original payment. In certain states, or if you
have purchased the contract as an individual retirement annuity, BMA will refund
the greater of your PURCHASE PAYMENT or contract value. BMA will put your money
in the Money Market Portfolio for 15 days (or the period required in your state)
during the free-look period.
FEE TABLE
The purpose of the Fee Table is to show you the various expenses you will
incur directly or indirectly with the contract. The Fee Table reflects expenses
of the Separate Account as well as the INVESTMENT PORTFOLIOS.
OWNER TRANSACTION EXPENSES
Withdrawal Charge (as a percentage of PURCHASE PAYMENT withdrawn) (See Note
1 on page 13)
<TABLE>
<CAPTION>
Number of Complete Years Withdrawal
<S> <C> <C>
0........................................................................................... 7%
1........................................................................................... 6%
2........................................................................................... 5%
3........................................................................................... 4%
4........................................................................................... 3%
5........................................................................................... 2%
6........................................................................................... 1%
7 and thereafter............................................................................ 0%
</TABLE>
Transfer Fee (see Note 2 on page 13)
No charge for first 12 transfers in a contract year during the ACCUMULATION
PHASE and no charge for four transfers in a contract year during the INCOME
PHASE; thereafter, the fee is $25 per transfer.
CONTRACT MAINTENANCE CHARGE (see Note 3 on page 13) . $35 per contract per year
SEPARATE ACCOUNT ANNUAL EXPENSES
(as a percentage of average account value)
Mortality and Expense Risk Fees and Account Fees and Expenses (See Note 4
on page 13).
<TABLE>
<CAPTION>
<S> <C>
If you elect Additional Death Benefit Option........................ 1.45%
If you do not elect Additional Death Benefit Option................. 1.25%
</TABLE>
<TABLE>
<CAPTION>
INVESTMENT PORTFOLIO EXPENSES
(as a percentage of the average daily net assets of an INVESTMENT PORTFOLIO for the most recent fiscal year,
except as noted)
Total Annual
Other Expenses Portfolio Expenses
(After Expense (After Expense
Reimbursement Reimbursement
Management 12b-1 with Respect to with Respect to
Fees Fees Certain Portfolios) Certain Portfolios)
INVESTORS MARK SERIES FUND, INC.(a)
<S> <C> <C> <C>
Intermediate Fixed Income Portfolio............. .60% - .20% .80%
Mid Cap Equity Portfolio........................ .80% - .10% .90%
Money Market Portfolio.......................... .40% - .10% .50%
Global Fixed Income Portfolio................... .75% - .25% 1.00%
Small Cap Equity Portfolio...................... .95% - .10% 1.05%
Large Cap Growth Portfolio...................... .80% - .10% .90%
Large Cap Value Portfolio....................... .80% - .10% .90%
Growth & Income Portfolio....................... .80% - .10% .90%
Balanced Portfolio.............................. .80% - .10% .90%
BERGER INSTITUTIONAL PRODUCTS TRUST
Berger/BIAM IPT-International Fund(b)........... .00% - 1.20% 1.20%
AMERICAN CENTURY VARIABLE
VP Value........................................ 1.00% - .00% 1.00%
VP Income & Growth.............................. .70% - .00% .70%
DREYFUS STOCK INDEX FUND............................ .25% - .01% .26%
DREYFUS VARIABLE INVESTMENT FUND
Disciplined Stock Portfolio..................... .75% - .13% .88%
INVESCO VARIABLE INVESTMENT FUNDS,
INVESCO VIF-High Yield Fund(c).................. .60% - .47% 1.07%
INVESCO VIF-Equity Income Fund(c)(d)............ .75% - .18% .93%
LAZARD RETIREMENT SERIES, INC.
Lazard Retirement Small Cap Portfolio(e)........ .75% .25% .25% 1.25%
<FN>
(a) Investors Mark Advisors, LLC voluntarily agreed to reimburse expenses of each Portfolio of Investors Mark
Series Fund, Inc. for the year ended December 31, 1998 and will continue this arrangement until April 30,
2000 so that the annual expenses do not exceed the amounts set forth above under ''Total Annual Portfolio
Expenses'' for each Portfolio. Absent such expense reimbursement, the Total Annual Portfolio Expenses for
the year ended December 31, 1998 were: 2.89% for the Money Market Portfolio; 1.97% for the Intermediate
Fixed Income Portfolio; 1.47% for the Global Fixed Income Portfolio; 2.38% for the Mid Cap Growth Portfolio;
1.59% for the Balanced Portfolio; 1.75% for the Growth & Income Portfolio; 2.29% for the Small Cap Equity
Portfolio; 1.66% for the Large Cap Growth Portfolio; and 1.55% for the Large Cap Value Portfolio.
(b) BBOI Worldwide LLC has agreed to waive its advisory fee and reimburse the Berger/BIAM IPT-International Fund
for additional expenses to the extent that normal operating expenses in any fiscal year, including the
management fee but excluding brokerage commissions, interest, taxes and extraordinary expenses, of the Fund
exceed 1.20% of the Fund's average daily net assets. Absent the voluntary waiver and reimbursement, the
management fee for the Fund would be .90% and its ''Total Annual Portfolio Expenses'' are estimated to be
2.85%.
(c) The Fund's actual Total Annual Fund Operating Expenses were lower than the figures shown because its
transfer agent and/or custodian fees were reduced under expense offset arrangements. Because of an SEC
requirement, the figures shown do not reflect these reductions.
(d) Certain expenses of the Fund are being absorbed voluntarily by INVESCO Funds Group, Inc. pursuant to a
commitment to the Fund. In the absence of such absorption, Other Expenses and Total Annual Fund Operating
Expenses for the year ended December 31, 1998 were .42% and 1.17%, respectively. This commitment may be
changed at any time following consultation with the board of directors.
(e) Lazard Asset Management, Inc., the Fund's investment adviser, has voluntarily agreed to reimburse all
expenses through December 31, 1999 to the extent total annual portfolio expenses exceed in any fiscal year
1.25% of the Portfolio's average daily net assets. Total annual portfolio expenses prior to waivers and/or
reimbursements by the investment manager totaled 16.20% for the Lazard Retirement Small Cap Portfolio at
December 31, 1998.
</FN>
</TABLE>
EXAMPLES
There are two sets of examples below.
o Example 1 assumes you elect the Additional Death Benefit Option (ADBO).
o Example 2 assumes you do not elect the ADBO.
Premium taxes are not reflected. Premium taxes may apply depending on the
state where you live.
The assumed average contract size is $60,000.
The examples should not be considered a representation of past or future
expenses. Actual expenses may be greater or less than those shown.
<TABLE>
<CAPTION>
EXAMPLE 1:
You would pay the following expenses on a $1,000 investment, assuming a 5% annual return on assets and
assuming you elect the ADBO:
(a) if you surrender the contract at the end of each time period;
(b) if you do not surrender the contract or if your contract value is applied to an ANNUITY OPTION with a
life contingency or another ANNUITY OPTION with an ANNUITY PAYMENT period of more than 5 years.
Time Periods
1 Year 3 Years 5 Years 10 Years
INVESTORS MARK SERIES FUND, INC.
<S> <C> <C> <C> <C>
Intermediate Fixed Income Portfolio.......................... a)$ 77.79 a)$109.40 a)$143.85 a)$269.56
b)$ 23.94 b)$ 73.72 b)$126.12 b)$269.56
Mid Cap Equity Portfolio..................................... a)$ 78.82 a)$112.49 a)$148.99 a)$279.79
b)$ 24.97 b)$ 76.80 b)$131.26 b)$279.79
Money Market Portfolio....................................... a)$ 74.68 a)$100.06 a)$128.25 a)$238.19
b)$ 20.86 b)$ 64.42 b)$110.56 b)$238.19
Global Fixed Income Portfolio................................ a)$ 79.85 a)$115.58 a)$154.11 a)$289.90
b)$ 25.99 b)$ 79.87 b)$136.37 b)$289.90
Small Cap Equity Portfolio................................... a)$ 80.37 a)$117.12 a)$156.66 a)$294.92
b)$ 26.51 b)$ 81.40 b)$138.91 b)$294.92
Large Cap Growth Portfolio................................... a)$ 78.82 a)$112.49 a)$148.99 a)$279.79
b)$ 24.97 b)$ 76.80 b)$131.26 b)$279.79
Large Cap Value Portfolio.................................... a)$ 78.82 a)$112.49 a)$148.99 a)$279.79
b)$ 24.97 b)$ 76.80 b)$131.26 b)$279.79
Growth & Income Portfolio.................................... a)$ 78.82 a)$112.49 a)$148.99 a)$279.79
b)$ 24.97 b)$ 76.80 b)$131.26 b)$279.79
Balanced Portfolio........................................... a)$ 78.82 a)$112.49 a)$148.99 a)$279.79
b)$ 24.97 b)$ 76.80 b)$131.26 b)$279.79
BERGER INSTITUTIONAL PRODUCTS TRUST
Berger/BIAM IPT-International Fund........................... a)$ 81.91 a)$121.72 a)$164.27 a)$309.81
b)$ 28.04 b)$ 85.99 b)$146.50 b)$309.81
AMERICAN CENTURY VARIABLE PORTFOLIOS,
VP Value..................................................... a)$79.85 a)$115.58 a)$154.11 a)$289.90
b)$25.99 b)$ 79.87 b)$136.37 b)$289.90
VP Income & Growth........................................... a)$76.75 a)$106.30 a)$138.68 a)$259.21
b)$22.92 b)$ 70.63 b)$120.96 b)$259.21
DREYFUS STOCK INDEX FUND......................................... a)$72.20 a)$ 92.53 a)$115.59 a)$212.34
b)$18.39 b)$ 56.92 b)$ 97.93 b)$212.34
DREYFUS VARIABLE INVESTMENT FUND
Disciplined Stock Portfolio.................................. a)$78.61 a)$111.87 a)$147.97 a)$277.75
b)$24.76 b)$ 76.18 b)$130.23 b)$277.75
INVESCO VARIABLE INVESTMENT FUNDS, INC.
INVESCO VIF-High Yield Fund.................................. a)$80.57 a)$117.73 a)$157.68 a)$296.92
b)$26.71 b)$ 82.02 b)$139.93 b)$296.92
INVESCO VIF-Equity Income Fund............................... a)$79.13 a)$113.42 a)$150.53 a)$282.83
b)$25.28 b)$ 77.72 b)$132.79 b)$282.83
LAZARD RETIREMENT SERIES, INC.
Lazard Retirement Small Cap Portfolio........................ a)$82.42 a)$123.25 a)$166.80 a)$314.72
b)$ 28.55 b)$ 87.51 b)$149.02 b)$314.72
</TABLE>
<TABLE>
<CAPTION>
EXAMPLE 2:
You would pay the following expenses on a $1,000 investment, assuming a 5% annual return on assets and
assuming you do not elect the ADBO:
(a) if you surrender the contract at the end of each time period;
(b) if you do not surrender the contract or if your contract value is applied to an ANNUITY OPTION with a
life contingency or another ANNUITY OPTION with an ANNUITY PAYMENT period of more than 5 years.
Time Periods
1 Year 3 Years 5 Years 10 Years
INVESTORS MARK SERIES FUND, INC.
<S> <C> <C> <C> <C>
Intermediate Fixed Income Portfolio.......................... a)$ 75.72 a)$103.18 a)$133.47 a)$248.75
b)$ 21.89 b)$ 67.53 b)$115.77 b)$248.75
Mid Cap Equity Portfolio..................................... a)$ 76.75 a)$106.29 a)$138.67 a)$259.21
b)$ 22.92 b)$ 70.63 b)$120.96 b)$259.21
Money Market Portfolio....................................... a)$ 72.61 a)$ 93.79 a)$117.71 a)$216.70
b)$ 18.80 b)$ 58.17 b)$100.04 b)$216.70
Global Fixed Income Portfolio................................ a)$ 77.79 a)$109.40 a)$143.85 a)$269.55
b)$ 23.94 b)$ 73.72 b)$126.12 b)$269.55
Small Cap Equity Portfolio................................... a)$ 78.30 a)$110.95 a)$146.42 a)$274.68
b)$ 24.46 b)$ 75.26 b)$128.69 b)$274.68
Large Cap Growth Portfolio................................... a)$ 76.75 a)$106.29 a)$138.67 a)$259.21
b)$ 22.92 b)$ 70.63 b)$120.96 b)$259.21
Large Cap Value Portfolio.................................... a)$ 76.75 a)$106.29 a)$138.67 a)$259.21
b)$ 22.92 b)$ 70.63 b)$120.96 b)$259.21
Growth & Income Portfolio.................................... a)$ 76.75 a)$106.29 a)$138.67 a)$259.21
b)$ 22.92 b)$ 70.63 b)$120.96 b)$259.21
Balanced Portfolio........................................... a)$ 76.75 a)$106.29 a)$138.67 a)$259.21
b)$ 22.92 b)$ 70.63 b)$120.96 b)$259.21
BERGER INSTITUTIONAL PRODUCTS TRUST
Berger/BIAM IPT-International Fund........................... a)$ 79.85 a)$115.58 a)$154.11 a)$289.90
b)$ 25.99 b)$ 79.87 b)$136.36 b)$289.90
AMERICAN CENTURY VARIABLE PORTFOLIOS,
VP Value..................................................... a)$ 77.79 a)$109.40 a)$143.85 a)$269.55
b)$ 23.94 b)$ 73.72 b)$126.12 b)$269.55
VP Income & Growth........................................... a)$ 74.68 a)$100.06 a)$128.25 a)$238.18
b)$ 20.86 b)$ 64.42 b)$110.55 b)$238.18
DREYFUS STOCK INDEX FUND......................................... a)$ 70.12 a)$ 86.21 a)$104.92 a)$190.28
b)$ 16.32 b)$ 50.62 b)$ 87.28 b)$190.28
DREYFUS VARIABLE INVESTMENT FUND
Disciplined Stock Portfolio.................................. a)$ 76.55 a)$105.67 a)$137.64 a)$257.13
b)$ 22.71 b)$ 70.01 b)$119.92 b)$257.13
INVESCO VARIABLE INVESTMENT FUNDS, INC.
INVESCO VIF-High Yield Fund.................................. a)$ 78.51 a)$111.56 a)$147.45 a)$276.73
b)$ 24.66 b)$ 75.88 b)$129.72 b)$276.73
INVESCO VIF-Equity Income Fund............................... a)$ 77.06 a)$107.23 a)$140.23 a)$262.32
b)$ 23.22 b)$ 71.56 b)$122.51 b)$262.32
LAZARD RETIREMENT SERIES, INC.
Lazard Retirement Small Cap Portfolio........................ a)$ 80.37 a)$117.11 a)$156.66 a)$294.92
b)$ 26.51 b)$ 81.40 b)$138.91 b)$294.92
</TABLE>
EXPLANATION OF FEE TABLE AND EXAMPLES
1. After BMA has had a PURCHASE PAYMENT for 7 years, there is no charge by BMA
for a withdrawal of that PURCHASE PAYMENT. You may also have to pay income
tax and a tax penalty on any money you take out. The first 10% of contract
value withdrawn is not subject to a withdrawal charge, unless you have
already made another withdrawal during that same contract year.
2. BMA will not charge you the transfer fee even if there are more than 12
transfers in a year during the ACCUMULATION PHASE if the transfer is for
the Dollar Cost Averaging Option, the Asset Allocation Option or Asset
Rebalancing Option.
3. During the ACCUMULATION PHASE, BMA will not charge the contract maintenance
charge if the value of your contract is $100,000 or more. If you make a
complete withdrawal and the contract value is less than $100,000, BMA will
charge the contract maintenance charge. If you own more than one BMA
contract, we will determine the total value of all the contracts (except in
South Carolina). If the total value of all the contracts is more than
$100,000, we will not assess the contract maintenance charge. During the
INCOME PHASE, BMA will deduct the contract maintenance charge from each
ANNUITY PAYMENT on a pro rata basis.
4. The coverage charge is an aggregate charge which consists of mortality and
expense risk fees and account fees and expenses which is referred to as a
coverage charge throughout this prospectus and in your contract. The amount
of the coverage charge for your contract depends upon , whether you elect
the Additional Death Benefit Option. If you purchased your contract before
May 3, 1999, the Additional Death Benefit Option is not available. In
certain states, the Additional Death Benefit Option may not be available.
Check with your registered representative regarding availability.
There is an ACCUMULATION UNIT value history (Condensed Financial
Information) contained in Appendix A.
1. THE ANNUITY CONTRACT
This prospectus describes the Fixed and Variable Annuity Contract offered
by BMA.
An annuity is a contract between you, the owner, and an insurance company
(in this case BMA), where the insurance company promises to pay you an income,
in the form of ANNUITY PAYMENTS, beginning on a designated date that's at least
one year after we issue your contract. Until you decide to begin receiving
ANNUITY PAYMENTS, your annuity is in the ACCUMULATION PHASE. Once you begin
receiving ANNUITY PAYMENTS, your contract switches to the INCOME PHASE.
The contract benefits from TAX DEFERRAL. TAX DEFERRAL means that you are
not taxed on earnings or appreciation on the assets in your contract until you
take money out of your contract.
The contract is called a variable annuity because you can choose among 17
INVESTMENT PORTFOLIOS and, depending upon market conditions, you can make or
lose money in any of these portfolios. If you select the variable annuity
portion of the contract, the amount of money you are able to accumulate in your
contract during the ACCUMULATION PHASE depends upon the investment performance
of the INVESTMENT PORTFOLIO(S) you select. The amount of the ANNUITY PAYMENTS
you receive during the INCOME PHASE from the variable annuity portion of the
contract also depends upon the investment performance of the INVESTMENT
PORTFOLIOS you select for the INCOME PHASE.
The contract also contains two FIXED ACCOUNT options (Fixed Account I and
Fixed Account II). The FIXED ACCOUNTS offer interest rates that are guaranteed
by BMA. For Fixed Account I, an interest rate is set at the time of each
PURCHASE PAYMENT or transfer to the account. This initial interest rate is
guaranteed for 12 months. Fixed Account II offers different GUARANTEE PERIODS. A
GUARANTEE PERIOD is the time period for which an interest rate is credited in
Fixed Account II. Currently, the following GUARANTEE PERIODS are available:
three years, five years, and seven years. Each PURCHASE PAYMENT or transfer to a
GUARANTEE PERIOD has its own interest rate. BMA guarantees that the interest
credited to the FIXED ACCOUNT options will not be less than 3% per year.
Currently, if you purchase the contract on or after May 3, 1999 and elect the
Additional Death Benefit Option (ADBO), the amount of interest we credit to any
amounts you have allocated to Fixed Account II will be reduced in consideration
of the cost of the ADBO accordingly. If you make a withdrawal, transfer or if
your contract switches to the INCOME PHASE before the end of the GUARANTEE
PERIOD you have selected, an interest adjustment will be made to the value of
your contract.
If you select either FIXED ACCOUNT option, your money will be placed with
the other general assets of BMA. If you select either FIXED ACCOUNT, the amount
of money you are able to accumulate in your contract during the ACCUMULATION
PHASE depends upon the total interest credited to your contract. The amount of
the ANNUITY PAYMENTS you receive during the INCOME PHASE from the general
account will remain level for the entire INCOME PHASE.
As OWNER of the contract, you exercise all rights under the contract. You
can change the OWNER at any time by notifying BMA in writing. You and your
spouse can be named JOINT OWNERS (subject to state laws). We have described more
information on this in Section 10-Other Information.
2. ANNUITY PAYMENTS (THE INCOME PHASE)
Annuity Date
Under the contract you can receive regular income payments. You can choose
the date on which those payments begin. We call that date the ANNUITY DATE. Your
first ANNUITY PAYMENT will be made one month (or one modal period if you do not
choose monthly payments) after the ANNUITY DATE.
We ask you to choose your ANNUITY DATE when you purchase the contract. You
can change it at any time before the ANNUITY DATE with 30 days notice to us.
Your ANNUITY DATE cannot be any earlier than one year after we issue the
contract.
Annuity Payments
ANNUITY PAYMENTS must begin by the later of the first day of the first
calendar month after the ANNUITANT'S 95th birthday or 10 years after we issue
your contract (or the maximum date allowed under state law). The ANNUITANT is
the person whose life we look to when we make ANNUITY PAYMENTS. Currently, the
amount of each payment is determined ten business days prior to the payment
date. At the ANNUITY DATE, you can choose whether payments will come from:
o a FIXED ACCOUNT, referred to as a fixed annuity,
o the INVESTMENT PORTFOLIO(s) available, referred to as a variable annuity,
or
o a combination of both.
If you choose to have any portion of your ANNUITY PAYMENTS come from the
FIXED ACCOUNTS, Fixed Accounts I and II will be terminated, and the fixed
annuity payments will be made from BMA's general account. The general account of
BMA contains all of our assets except the assets of the Separate Account and
other separate accounts we may have. The dollar amount of each fixed annuity
payment will be determined in accordance with the annuity tables in the
contract. If, on the ANNUITY DATE, we are using annuity payment tables for
similar fixed annuity contracts which would provide a larger ANNUITY PAYMENT, we
will use those tables. Once determined, the amount of the fixed annuity payment
will not change, unless you transfer a portion of your variable annuity payment
into the fixed annuity. Up to four times each contract year you may increase the
amount of your fixed annuity payment by a transfer of all or portion of your
variable annuity payment to the fixed annuity payment. After the ANNUITY DATE,
you may not transfer any portion of the fixed annuity into the variable annuity
payment.
If you choose to have any portion of your ANNUITY PAYMENTS come from the
INVESTMENT PORTFOLIO(s), the dollar amount of the initial variable annuity
payment will depend upon the value of your contract in the INVESTMENT
PORTFOLIO(s) and the annuity tables in the contract. The dollar amount of this
variable annuity payment is not guaranteed to remain level.
Each variable annuity payment will vary depending on the investment
performance of the INVESTMENT PORTFOLIO(s) you have selected. A 3.5% annual
investment rate is used in the annuity tables in the contract. If the actual
performance of the INVESTMENT PORTFOLIO(s) you have selected equals 3.5%, then
the variable annuity payments will remain level. If the actual performance of
the INVESTMENT PORTFOLIO(s) you have selected exceeds the 3.5% assumption, the
variable annuity payments will increase. Conversely, if the performance is less
than the 3.5%, the variable annuity payments will decrease.
ANNUITY PAYMENTS are made monthly unless you have less than $10,000 to
apply toward a payment. In that case, BMA may provide your ANNUITY PAYMENT in a
single lump sum. Likewise, if your ANNUITY PAYMENTS would be or become less than
$250 a month, BMA has the right to change the frequency of payments so that your
ANNUITY PAYMENTS are at least $250.
Annuity Options
You can choose among income plans. We call those ANNUITY OPTIONS.
You can select and/or change an ANNUITY OPTION at any time prior to the
ANNUITY DATE (with 30 days notice to us). If you do not choose an ANNUITY
OPTION, we will assume that you selected Option 2 which will provide a life
annuity with 120 monthly payments guaranteed. You can choose one of the
following ANNUITY OPTIONS. Any other ANNUITY OPTION acceptable to us may also be
selected. After ANNUITY PAYMENTS begin, you cannot change the ANNUITY OPTION.
OPTION 1. LIFE ANNUITY. Under this option, we will make an ANNUITY PAYMENT
each month so long as the ANNUITANT is alive. After the ANNUITANT dies, we stop
making ANNUITY PAYMENTS.
OPTION 2. LIFE ANNUITY WITH 10 OR 20 YEARS GUARANTEED. Under this option,
we will make an ANNUITY PAYMENT each month so long as the ANNUITANT is alive.
However, if, when the ANNUITANT dies, we have made ANNUITY PAYMENTS for less
than the selected guaranteed period, we will then continue to make ANNUITY
PAYMENTS for the rest of the guaranteed period to the BENEFICIARY. If the
BENEFICIARY does not want to receive ANNUITY PAYMENTS, he or she can ask us for
a single lump sum.
OPTION 3. JOINT AND LAST SURVIVOR ANNUITY. Under this option, we will make
ANNUITY PAYMENTS each month so long as the ANNUITANT and a second person are
both alive. When either of these people dies, we will continue to make ANNUITY
PAYMENTS, so long as the survivor continues to live. The amount of the ANNUITY
PAYMENTS we will make to the survivor can be equal to 100%, 75% or 50% of the
amount that we would have paid if both were alive.
OPTION 4. JOINT AND LAST SURVIVOR ANNUITY WITH 10 OR 20 YEARS GUARANTEED.
Under this option, we will make ANNUITY PAYMENTS each month so long as the
ANNUITANT and a second person (joint ANNUITANT) are both alive. However, if when
the last ANNUITANT dies, we have made ANNUITY PAYMENTS for less than the
selected guaranteed period, we will then continue to make ANNUITY PAYMENTS for
the rest of the guaranteed period to the BENEFICIARY. If the BENEFICIARY does
not want to receive ANNUITY PAYMENTS, he or she can ask us for a single lump
sum.
3. PURCHASE
Purchase Payments
A PURCHASE PAYMENT is the money you give us to buy the contract. The
minimum we will accept for a NON-QUALIFIED contract is $10,000. If you buy the
contract as part of an Individual Retirement Annuity (IRA), the minimum PURCHASE
PAYMENT we will accept is $2,000. The maximum PURCHASE PAYMENTS we accept are $1
million without our prior approval. You can make additional PURCHASE PAYMENTS of
$1,000 or more.
Allocation of Purchase Payments
When you purchase a contract, we will allocate your PURCHASE PAYMENT to:
o Fixed Account I;
o any currently available GUARANTEE PERIOD of Fixed Account II; and/or
o one or more of the INVESTMENT PORTFOLIOS you have selected.
If you make additional PURCHASE PAYMENTS, we will allocate them in the same
way as your first PURCHASE PAYMENT unless you tell us otherwise. Any allocation
to Fixed Account I or to any GUARANTEE PERIOD of Fixed Account II must be at
least $5,000. Allocation percentages need to be in whole numbers. Each
allocation must be at least 1%. Any allocation to an INVESTMENT PORTFOLIO must
be at least $1,000. BMA reserves the right to decline any PURCHASE PAYMENT.
At its discretion, BMA may refuse PURCHASE PAYMENTS into Fixed Account I or
Fixed Account II if the total value of Fixed Accounts I and II is greater than
or equal to 30% of the value of your contract at the time of the PURCHASE
PAYMENT.
Once we receive your PURCHASE PAYMENT and the necessary information, we
will issue your contract and allocate your first PURCHASE PAYMENT within 2
business days. If you do not give us all of the information we need, we will
contact you to get it. If for some reason we are unable to complete this process
within 5 business days, we will either send back your money or get your
permission to keep it until we get all of the necessary information. If you add
more money to your contract by making additional PURCHASE PAYMENTS, we will
credit these amounts to your contract within one business day. Our business day
closes when the New York Stock Exchange closes, usually 4:00 P.M. Eastern time.
Free Look
If you change your mind about owning the contract, you can cancel it within
10 days after receiving it, or the period required in your state. When you
cancel the contract within this time period, BMA will not assess a withdrawal
charge. You will receive back whatever your contract is worth on the day we
receive your request. In certain states, or if you have purchased the contract
as an IRA, we will refund the greater of your PURCHASE PAYMENT (less
withdrawals) or the value of your contract if you decide to cancel your contract
within 10 days after receiving it (or whatever period is required in your
state). If that is the case, we will put your PURCHASE PAYMENT in the Money
Market Portfolio for 15 days beginning when we allocate your first PURCHASE
PAYMENT. (In some states, the period may be longer.) At the end of that period,
we will re-allocate those funds as you selected.
Accumulation Units
The value of the variable annuity portion of your contract will go up or
down depending upon the investment performance of the INVESTMENT PORTFOLIO(S)
you choose. In order to keep track of the value of your contract, we use a unit
of measure we call an ACCUMULATION UNIT. (An ACCUMULATION UNIT works like a
share of a mutual fund.) During the INCOME PHASE of the contract we call the
unit an ANNUITY UNIT.
Every business day we determine the value of an ACCUMULATION UNIT for each
of the INVESTMENT PORTFOLIOS by multiplying the ACCUMULATION UNIT value for the
previous business day by a factor for the current business day. The factor is
determined by:
1. dividing the value of an INVESTMENT PORTFOLIO share at the end of the
current business day by the value of an INVESTMENT PORTFOLIO share for the
previous business day; and
2. multiplying it by one minus the daily amount of the coverage charge and
any charges for taxes.
The value of an ACCUMULATION UNIT may go up or down from business day to
business day.
When you make a PURCHASE PAYMENT, we credit your contract with ACCUMULATION
UNITS. The number of ACCUMULATION UNITS credited is determined by dividing the
amount of the PURCHASE PAYMENT allocated to an INVESTMENT PORTFOLIO by the value
of the ACCUMULATION UNIT for that INVESTMENT PORTFOLIO.
We calculate the value of an ACCUMULATION UNIT for each INVESTMENT
PORTFOLIO after the New York Stock Exchange closes each day and then credit your
contract.
Example:
On Monday we receive an additional PURCHASE PAYMENT of $4,000 from you. You
have told us you want this to go to the Balanced Portfolio. When the New York
Stock Exchange closes on that Monday, we determine that the value of an
ACCUMULATION UNIT for the Balanced Portfolio is $12.70. We then divide $4,000 by
$12.70 and credit your contract on Monday night with 314.960630 ACCUMULATION
UNITS for the Balanced Portfolio.
4. INVESTMENT OPTIONS
The contract offers 17 INVESTMENT PORTFOLIOS which are listed below.
Additional INVESTMENT PORTFOLIOS may be available in the future.
Shares of the portfolios may be offered in connection with certain variable
annuity contracts and variable life insurance policies of various life insurance
companies which may or may not be affiliated with BMA. Certain portfolios may
also be sold directly to qualified plans. The funds do not believe that offering
their shares in this manner will be disadvantageous to you.
BMA may enter into certain arrangements under which it is reimbursed by the
INVESTMENT PORTFOLIOS' advisers, distributors and/or affiliates for the
administrative services which it provides to the portfolios.
The investment objectives and policies of certain of the Investment
Portfolios are similar to the investment objectives and policies of other mutual
funds that certain of the investment advisers manage. Although the objectives
and policies may be similar, the investment results of the Investment Portfolios
may be higher or lower than the results of such other mutual funds. The
investment advisers cannot guarantee, and make no representation, that the
investment results of similar funds will be comparable even though the funds
have the same investment advisers.
You should read the prospectuses for these funds carefully before investing.
Copies of these prospectuses will be sent to you with your contract. Certain
portfolios contained in the fund prospectuses may not be available with your
contract. Below are the investment objectives of each investment portfolio
available under the contract. There can be no assurance that the investment
objectives will be achieved.
INVESTORS MARK SERIES FUND, INC.
Investors Mark Series Fund, Inc. is managed by Investors Mark Advisors, LLC
(Adviser), which is an affiliate of BMA. Investors Mark Series Fund, Inc. is a
mutual fund with multiple portfolios. Each INVESTMENT PORTFOLIO has a different
investment objective. The Adviser has engaged sub-advisers to provide investment
advice for the individual INVESTMENT PORTFOLIOS. The following INVESTMENT
PORTFOLIOS are available under the contract:
Standish, Ayer & Wood, Inc. is the sub-adviser to the following portfolios:
Intermediate Fixed Income Portfolio
The goal of this Portfolio is a high level of current income with
stability of principal and liquidity. The Portfolio seeks to
accomplish this by investing in intermediate term, high-quality
corporate and mortgage-backed fixed income investments. The average
maturity of the investments in the Portfolio is five to thirteen
years. The Portfolio also looks for other opportunities to invest in
securities that have the potential for capital appreciation, but are
not likely to add risk to the Portfolio.
Mid Cap Equity Portfolio
The goal of the Portfolio is to achieve long-term growth by investing
in the common stock of mid-sized U.S. companies.
Stocks must meet to criteria in order to be included in the Portfolio:
o they must have above-average growth potential and momentum, and
o they must be undervalued, or "cheap," relative to other stocks
and the market as a whole.
The Portfolio's Adviser uses both mathematical models and years of
experience in individual judgment to make the stock buy and sell
decisions for the Portfolio.
Money Market Portfolio
The goal of this Portfolio is to earn the highest possible level of
current income while preserving capital and maintaining liquidity. It
invests in carefully selected short-term fixed income securities
issued by the U.S. government and its agencies and by other stable
financial institutions.
Standish International Management Company, L.P. is the sub-adviser to
the following portfolio:
Global Fixed Income Portfolio
The Portfolio's objective is to maximize total return and to generate
a market level return while preserving both liquidity and principal.
Typically, assets are diversified across ten or more countries.
Stein Roe & Farnham Incorporated is the sub-adviser to the following
portfolios:
Small Cap Equity Portfolio
This Portfolio seeks long-term growth by investing in small and
medium-sized entrepreneurially managed companies that the Portfolio's
Adviser believes are selling at attractive prices and that enjoyed
good management.
Large Cap Growth Portfolio
The goal of this Portfolio is long-term capital appreciation. The
Portfolio invests, under normal circumstances, at least 65 percent of
its total assets in common stocks and other equity type securities
believed to have the ability to appreciate in value over time. The
Portfolio's Adviser seeks to invest in companies that it believes have
the potential to maintain their competitive advantages and to create
wealth over a long period of time.
David L. Babson & Co., Inc. is the sub-adviser to the following
portfolio:
Large Cap Value Portfolio
The goal of this Portfolio is long-term capital growth. It invests in
common stocks that are seen as undervalued, or "cheap," relative to
corporate earnings, dividends, and/or assets - striving to achieve
above-average return with below average risk.
Lord, Abbett & Co. is the sub-adviser to the following portfolio:
Growth & Income Portfolio
This Portfolio is value driven, seeking long-term growth of capital
and income without a lot of fluctuation in market value. It invests in
large, seasoned companies in sound financial condition that are
expected to show above average price appreciation.
Kornitzer Capital Management, Inc. is the sub-adviser to the following
portfolio:
Balanced Portfolio
The goal of this Portfolio is both long-term capital growth and high
current income. It invests in both stocks and fixed income securities.
The balance of stocks and bonds in the Portfolio can change based on
the Portfolio Adviser's view of economic conditions, interest rates,
and stock prices. Generally, about one-third of the Portfolio's assets
will be invested in common stocks, one-third in high yielding
corporate bonds, and one-third in convertible securities. Convertible
securities offer current income like a corporate bond, but can also
provide capital appreciation through their conversion feature (the
right to convert to common stock).
BERGER INSTITUTIONAL PRODUCTS TRUST
Berger Institutional Products Trust is a mutual fund with multiple
portfolios, one of which, the Berger/ BIAM IPT-International Fund, is managed by
BBOI Worldwide LLC. BBOI Worldwide LLC has retained Bank of Ireland Asset
Management (U.S.) Limited (''BIAM'') as subadviser. The following INVESTMENT
PORTFOLIO is available under the contract:
Berger/BIAM IPT-International Fund
The goal of this Fund is long-term capital appreciation through
investments in non-U.S. equity securities of well-established
companies. The primary for focus of the fund is on undervalued, or
"cheap,' stocks of mid-sized to large companies.
AMERICAN CENTURY VARIABLE PORTFOLIOS, INC.
American Century Variable Portfolios, Inc. is a series of funds managed by
American Century Investment Management, Inc. The following INVESTMENT PORTFOLIOS
are available under the contract:
VP Income & Growth
This Portfolio seeks dividend growth, current income, and capital
appreciation by investing in a diversified portfolio of U.S. stocks.
The Portfolio invests in mainly large company stocks, such as those in
the Standard & Poors 500 Composite Stock Price Index (S&P 500), but it
also may invest in the stocks of small and medium-size companies. The
management team strives to outperform the S&P 500 over time while
matching its risk characteristics.
VP Value
This Portfolio seeks long-term capital growth as a primary objective
and income as a secondary objective. It invests in well-established
companies that the Portfolio's Adviser believes are undervalued but
financially sound.
DREYFUS STOCK INDEX FUND
The Dreyfus Corporation serves as the Fund's manager. Dreyfus has hired its
affiliate, Mellon Equity Associates, to serve as the Fund's index fund manager
and provide day-to-day management of the Fund's investments.
The objective of this Portfolio is to match, as closely as possible, the
performance of the Standard & Poor's 500 Composite Stock Price Index (S&P
500) - the most widely accepted benchmark for market performance. To pursue
this goal, the Fund generally invests in all 500 stocks in the S&P 500 in
proportion to their weighting in the index.
DREYFUS VARIABLE INVESTMENT FUND
The Dreyfus Variable Investment Fund is a mutual fund with multiple
portfolios. The Dreyfus Corporation serves as the investment adviser. The
following INVESTMENT PORTFOLIO is available under the contract:
Disciplined Stock Portfolio
The Portfolio seeks investment returns (consisting of capital
appreciation and income) that are greater than the total return
performance of stocks represented by the Standard & Poor's 500
Composite Stock Price Index. To pursue this goal, the Portfolio
invests in a blended portfolio of growth and value stocks chosen
through a disciplined investment process.
INVESCO VARIABLE INVESTMENT FUNDS, INC.
INVESCO Variable Investment Funds, Inc. is a mutual fund with multiple
portfolios. INVESCO Funds Group, Inc. is the investment adviser. The following
INVESTMENT PORTFOLIOS are available under the contract:
INVESCO VIF-High Yield Fund
The objective of this Portfolio is to seek a high-level of current
income by investing substantially all of its assets in lower-rated
bonds and other debt securities as well as preferred stock. A
secondary goal is long-term capital appreciation.
INVESCO VIF-Equity Income Fund (formerly, INVESCO VIF-Industrial
Income Portfolio)
This Portfolio seeks high current income with capital appreciation as
a secondary goal. The Portfolio normally invests at least 65 percent
of its assets in dividend paying common stocks. The remaining assets
are generally invested in income producing securities such as
corporate bonds; however, in order to take advantage of strong equity
markets, there are no limits on the amount of equity securities in
which the Portfolio may invest. The Portfolio may invest up to 10
percent of its total assets in non-dividend paying common stocks.
LAZARD RETIREMENT SERIES, INC.
Lazard Retirement Series, Inc. is a mutual fund with multiple portfolios.
Lazard Asset Management, a division of Lazard Freres & Co. LLC, a New York
limited liability company, is the investment manager for each portfolio. The
following INVESTMENT PORTFOLIO is available under the contract:
Lazard Retirement Small Cap Portfolio
The Portfolio seeks long-term capital appreciation. It invests
primarily in equity securities, principally common stocks of
relatively small U.S. companies in the range of the Russell 2000 Index
that the manager believes are undervalued based on their earnings,
cash flow or asset values.
Transfers
You can transfer money among the FIXED ACCOUNTS and the 17 INVESTMENT
PORTFOLIOS.
Telephone Transfers
You can make transfers by telephone. If you own the contract with a JOINT
OWNER, unless BMA is instructed otherwise, BMA will accept instructions from
either you or the other OWNER. BMA will use reasonable procedures to confirm
that instructions given us by telephone are genuine. If BMA fails to use such
procedures, we may be liable for any losses due to unauthorized or fraudulent
instructions. BMA tape records all telephone instructions.
Transfers During the Accumulation Phase
You can make 12 transfers every year during the ACCUMULATION PHASE without
charge. We measure a year from the anniversary of the day we issued your
contract. You can make a transfer to or from the FIXED ACCOUNTS and to or from
any INVESTMENT PORTFOLIO. If you make more than 12 transfers in a year, there is
a transfer fee deducted. The fee is $25 per transfer. The following apply to any
transfer during the ACCUMULATION PHASE:
1. The minimum amount which you can transfer from the INVESTMENT PORTFOLIO,
Fixed Account I or any GUARANTEE PERIOD of Fixed Account II is $250 or your
entire interest in the INVESTMENT PORTFOLIO, Fixed Account I or GUARANTEE PERIOD
of Fixed Account II, if less.
2. We reserve the right to restrict the maximum amount which you can
transfer from any FIXED ACCOUNT option (unless the transfer is from a GUARANTEE
PERIOD of Fixed Account II just expiring) to 25% of the amount in Fixed Account
I or any GUARANTEE PERIOD of Fixed Account II. Currently, BMA is waiving this
restriction. This requirement is waived if the transfer is part of the Dollar
Cost Averaging, Asset Allocation or Asset Rebalancing options. This requirement
is also waived if the transfer is to switch your contract to the INCOME PHASE.
3. At its discretion, BMA may refuse transfers to Fixed Account I or Fixed
Account II if the total value of Fixed Accounts I and II is greater than or
equal to 30% of the value of your contract at the time of the transfer.
4. The minimum amount which must remain in any INVESTMENT PORTFOLIO after a
transfer is $1,000. The minimum amount which must remain in Fixed Account I or
any GUARANTEE PERIOD of Fixed Account II after a transfer is $5,000.
5. You may not make a transfer until after the end of the free look period.
6. We reserve the right to restrict the number of transfers per year and to
restrict transfers made on consecutive business days.
Your right to make transfers may be modified if we determine, in our sole
opinion, that the exercise of the transfer right by one or more OWNERS is, or
would be, harmful to other OWNERS.
Transfers During the Income Phase
Each year, during the INCOME PHASE, you can make 4 transfers between the
INVESTMENT PORTFOLIO(s). We measure a year from the anniversary of the day we
issued your contract. You can also make 4 transfers each contract year from the
INVESTMENT PORTFOLIOS to the general account. You may not make a transfer from
the general account to the INVESTMENT PORTFOLIOS. These four transfers each
contract year during the INCOME PHASE are free. If you make more than 4
transfers in a year during the INCOME PHASE, a transfer fee of $25 per transfer
(after the 4 free) will be charged.
Dollar Cost Averaging Option
The Dollar Cost Averaging Option allows you to systematically transfer a
set amount each month from the Money Market Portfolio or Fixed Account I to any
of the other INVESTMENT PORTFOLIO(s). By allocating amounts on a regular
schedule as opposed to allocating the total amount at one particular time, you
may be less susceptible to the impact of market fluctuations.
The minimum amount which can be transferred each month is $250. The value
of your contract must be at least $10,000 in order to participate in Dollar Cost
Averaging.
All Dollar Cost Averaging transfers will be made on the 15th day of the
month unless that day is not a business day. If it is not, then the transfer
will be made the next business day. You must participate in Dollar Cost
Averaging for at least 6 months.
If you participate in Dollar Cost Averaging, the transfers made under this
option are not taken into account in determining any transfer fee. Currently,
there is no charge for participating in the Dollar Cost Averaging Option.
No Automatic Withdrawals and Minimum Distributions will be allowed if you
are participating in Dollar Cost Averaging.
Asset Rebalancing Option
Once your money has been allocated among the INVESTMENT PORTFOLIOS, the
performance of each portfolio may cause your allocation to shift. If the value
of your contract is at least $10,000, you can direct us to automatically
rebalance your contract each quarter to return to your original percentage
allocations by selecting our Asset Rebalancing Option.
The program will ignore any new PURCHASE PAYMENTS or transfers allocated to
portfolios other than the original (or most current) rebalancing portfolio
allocations. You may change your allocations to incorporate new PURCHASE
PAYMENTS or transfers by contacting the BMA Service Center.
The minimum period to participate in this program is 6 months. The transfer
date will be the 15th of the month unless that day is not a business day. If it
is not, then the transfer will be made the next business day. The FIXED ACCOUNT
options are not part of asset rebalancing. Currently, there is no charge for
participating in the Asset Rebalancing Option.
If you participate in the Asset Rebalancing Option, the transfers made
under the program are not taken into account in determining any transfer fee.
Example:
Assume that you want your initial PURCHASE PAYMENT split between 2
INVESTMENT PORTFOLIOS. You want 40% to be in the Intermediate Fixed Income
Portfolio and 60% to be in the Mid Cap Equity Portfolio. Over the next 21/2
months the bond market does very well while the stock market performs poorly. At
the end of the first quarter, the Intermediate Fixed Income Portfolio now
represents 50% of your holdings because of its increase in value. If you had
chosen to have your holdings rebalanced quarterly, on the first day of the next
quarter, BMA would sell some of your units in the Intermediate Fixed Income
Portfolio to bring its value back to 40% and use the money to buy more units in
the Mid Cap Equity Portfolio to increase those holdings to 60%.
Asset Allocation Option
BMA recognizes the value to certain OWNERS of having available, on a
continuous basis, advice for the allocation of your money among the investment
options available under the contract.
Even though BMA may allow the use of approved Asset Allocation Programs,
the contract was not designed for professional market timing organizations.
Repeated patterns of frequent transfers are disruptive to the operations of the
INVESTMENT PORTFOLIOS, and should BMA become aware of such disruptive practices,
we may modify the transfer provisions of the contract.
If you participate in an approved Asset Allocation Program, the transfers
made under the program will not be taken into account in determining any
transfer fee. Currently, BMA does not charge for participating in an Asset
Allocation Program.
Voting Rights
BMA is the legal owner of the INVESTMENT PORTFOLIO shares. However, BMA
believes that when an INVESTMENT PORTFOLIO solicits proxies in conjunction with
a vote of shareholders, it is required to obtain from you and other OWNERS
instructions as to 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 that BMA owns on its own behalf. Should BMA
determine that it is no longer required to comply with the above, we will vote
the shares in our own right.
Substitution
BMA may be required to substitute one of the INVESTMENT PORTFOLIOS you have
selected with another portfolio. We would not do this without the prior approval
of the Securities and Exchange Commission. We will give you notice of our intent
to do this. We may also limit further investment in an INVESTMENT PORTFOLIO if
we deem the investment inappropriate.
5. EXPENSES
There are charges and other expenses associated with the contracts that
reduce the return on your investment in the contract. These charges and expenses
are:
Coverage Charge
Each day, BMA makes a deduction for its coverage charge. BMA does this as
part of its calculation of the value of the ACCUMULATION UNITS and the ANNUITY
UNITS. The amount of the charge depends upon whether you elected the Additional
Death Benefit Option (ADBO).
The chart below tells you the amount, on an annual basis, of the coverage
charge for your contract. It is a percentage of the average daily value of the
contract invested in an INVESTMENT PORTFOLIO, after expenses have been deducted.
<TABLE>
<CAPTION>
<S> <C>
If you elect the ADBO..................................... 1.45%
If you do not elect the ADBO.............................. 1.25%
</TABLE>
In certain states, the ADBO may not be available. Check with your
registered representative regarding availability. If you purchased your contract
before May 3, 1999, the ADBO is not available.
We reserve the right to increase the coverage charge but it will never be
more than 1.75% of the average daily value of the contract invested in an
INVESTMENT PORTFOLIO, after expenses have been deducted.
This charge is for all the insurance benefits e.g., guarantee of annuity
rates, the death benefit, and for assuming the risk that the current charges
will be insufficient in the future to cover the cost of administering the
contract. This charge is also for administrative expenses, including preparation
of the contract, confirmations, annual statements, maintenance of contract
records, personnel costs, legal and accounting fees, filing fees and computer
and system costs and certain distribution expenses.
Contract Maintenance Charge
During the ACCUMULATION PHASE, every year on the anniversary of the date
when your contract was issued, BMA deducts $35 from your contract as a contract
maintenance charge. If you make a complete withdrawal from your contract, the
charge will also be deducted. A pro rata portion of the charge will be deducted
if the ANNUITY DATE is other than an anniversary. We reserve the right to
increase this charge but it will never be more than $60 each year. This charge
is for administrative expenses.
BMA will not deduct this charge, if when the deduction is to be made, the
value of your contract is $100,000 or more. If you own more than one BMA
contract, we will determine the total value of all your contracts (except in
South Carolina). If the OWNER is a non-natural person (e.g., a corporation), we
will look to the ANNUITANT to determine this information. BMA may some time in
the future discontinue this practice and deduct the charge.
After the ANNUITY DATE, the charge will be collected monthly out of each
ANNUITY PAYMENT regardless of the size of the contract.
Withdrawal Charge
During the ACCUMULATION PHASE, you can make withdrawals from your contract.
BMA keeps track of each PURCHASE PAYMENT. The withdrawal charge is equal to:
<TABLE>
<CAPTION>
Number of Complete Years Withdrawal
------------------------ ----------
<S> <C> <C>
0..................................................................................... 7%
1..................................................................................... 6%
2..................................................................................... 5%
3..................................................................................... 4%
4..................................................................................... 3%
5..................................................................................... 2%
6..................................................................................... 1%
7 and thereafter...................................................................... 0%
</TABLE>
After BMA has had a PURCHASE PAYMENT for 7 years, there is no charge when
you withdraw that PURCHASE PAYMENT. For purposes of the withdrawal charge, BMA
treats withdrawals as coming from the oldest PURCHASE PAYMENT first. When the
withdrawal is for only part of the value of your contract, the withdrawal charge
is deducted from the remaining value in your contract.
Free Withdrawal Amount
The first 10% of the contract value withdrawn (free withdrawal amount) is
not subject to the withdrawal charge (unless you have already made another
withdrawal during that same contract year), if on the day you make your
withdrawal, the value of your contract is $10,000 or more. A withdrawal charge
will be assessed against each PURCHASE PAYMENT withdrawn in excess of the free
withdrawal amount and will result in a reduction in remaining contract value.
The withdrawal charge and the free withdrawal amount are calculated at the time
of each withdrawal.
BMA does not assess the withdrawal charge on any amounts paid out as death
benefits or as ANNUITY PAYMENTS if a life ANNUITY OPTION or another option with
an ANNUITY PAYMENT period of more than 5 years is selected.
NOTE: For tax purposes, withdrawals are considered to have come from the
last money into the contract. Thus, for tax purposes, earnings are considered to
come out first.
The withdrawal charge compensates us for expenses associated with selling
the contract. Commissions will be paid to broker-dealers who sell the contracts.
In no event are commissions deducted from your PURCHASE PAYMENTS or contract
value. Rather, BMA pays commissions to the selling broker-dealer. Broker-dealers
will be paid commissions of up to 6% of PURCHASE PAYMENTS. Sometimes, BMA may
enter into an agreement with the broker-dealer to pay the broker-dealer
commissions as a combination of a certain amount of the commission at the time
of sale and a trail commission (which when totaled will not exceed 6% of
PURCHASE PAYMENTS). BMA may, from time to time, pay promotional cash incentives
that increase the amount of compensation.
Waiver of Withdrawal Charge Benefits
Under certain circumstances, after the first year, BMA will allow you to
take your money out of the contract without deducting the withdrawal charge:
1) if you become confined to a long term care facility, nursing facility or
hospital for at least 90 consecutive days;
2) if you become totally disabled;
3) if you become terminally ill (which means that you are not expected to
live more than 12 months);
4) if you are involuntarily unemployed for at least 90 consecutive days; or
5) if you get divorced.
These benefits may not be available in your state.
Reduction or Elimination of the Withdrawal Charge
BMA will reduce or eliminate the amount of the withdrawal charge when the
contract is sold under circumstances which reduce its sales expense. Some
examples are: if there is a large group of individuals that will be purchasing
the contract or a prospective purchaser already had a relationship with BMA. BMA
will not deduct a withdrawal charge under a contract issued to an officer,
director or employee of BMA or any of its affiliates.
Premium Taxes
Some states and other governmental entities (e.g., municipalities) charge
premium taxes or similar taxes. BMA is responsible for the payment of these
taxes and will make a deduction from the value of the contract for them. Some of
these taxes are due when the contract is issued, others are due when ANNUITY
PAYMENTS begin.
It is BMA's current practice, for all states except South Dakota, to not
charge anyone for these taxes until ANNUITY PAYMENTS begin. In South Dakota, BMA
will assess a charge equal to the amount of the premium tax at the time each
PURCHASE PAYMENT is made.
BMA may some time in the future discontinue this practice and assess the
charge when the tax is due. Premium taxes generally range from 0% to 4%,
depending on the state.
Transfer Fee
You can make 12 free transfers every year during the ACCUMULATION PHASE and
4 free transfers every year during the INCOME PHASE. We measure a year from the
day we issue your contract. If you make more than 12 transfers a year during the
ACCUMULATION PHASE or more than 4 transfers a year during the INCOME PHASE, we
will deduct a transfer fee of $25. The transfer fee is deducted from the amount
which is transferred. The transfer fee is for expenses in connection with
transfers.
If the transfer is part of the Dollar Cost Averaging Option, the Asset
Rebalancing Option or an approved Asset Allocation Program, it will not count in
determining the transfer fee.
Income Taxes
BMA will deduct from the contract for any income taxes which it incurs
because of the contract. At the present time, we are not making any such
deductions.
Investment Portfolio Expenses
There are deductions from and expenses paid out of the assets of the
various INVESTMENT PORTFOLIOS, which are described in the attached fund
prospectuses.
6. TAXES
NOTE: BMA has prepared the following information on taxes as a general
discussion of the subject. It is not intended as tax advice to any individual.
You should consult your own tax adviser about your own circumstances. BMA has
included in the Statement of Additional Information an additional discussion
regarding taxes.
Annuity Contracts In General
Annuity contracts are a means of setting aside money for future needs
usually retirement. Congress recognized how important saving for retirement was
and provided special rules in the Internal Revenue Code (Code) for annuities.
Simply stated, these rules provide that you will not be taxed on the
earnings on the money held in your annuity contract until you take the money
out. This is referred to as TAX DEFERRAL. There are different rules as to how
you will be taxed depending on how you take the money out and the type of
contract (QUALIFIED or NON-QUALIFIED, see the following sections).
You, as the OWNER, will not be taxed on increases in the value of your
contract until a distribution occurs-either as a withdrawal or as ANNUITY
PAYMENTS. When you make a withdrawal you are taxed on the amount of the
withdrawal that is earnings. For ANNUITY PAYMENTS, different rules apply. A
portion of each ANNUITY PAYMENT is treated as a partial return of your PURCHASE
PAYMENTS and will not be taxed. The remaining portion of the ANNUITY PAYMENT
will be treated as ordinary income. How the ANNUITY PAYMENT is divided between
taxable and non-taxable portions depends upon the period over which the ANNUITY
PAYMENTS are expected to be made. ANNUITY PAYMENTS received after you have
received all of your PURCHASE PAYMENTS are fully includible in income.
When a NON-QUALIFIED contract is owned by a non-natural person (E.G.,
corporation or certain other entities other than a trust holding the contract as
an agent for a natural person), the contract will generally not be treated as an
annuity for tax purposes.
Qualified and Non-Qualified Contracts
If you purchase the contract as an individual and not an Individual
Retirement Annuity (IRA), your contract is referred to as a NON-QUALIFIED
contract.
If you purchase the contract under an IRA, your contract is referred to as
a QUALIFIED contract.
Withdrawals-Non-Qualified Contracts
If you make a withdrawal from your contract, the Code treats such a
withdrawal as first coming from earnings and then from your PURCHASE PAYMENTS.
Such withdrawn earnings are includible in income.
The Code also provides that any amount received under an annuity contract
which is included in income may be subject to a penalty. The amount of the
penalty is equal to 10% of the amount that is includible in income. Some
withdrawals will be exempt from the penalty. They include any amounts:
(1) paid on or after the taxpayer reaches age 591/2;
(2) paid after you die;
(3) paid if the taxpayer becomes totally disabled (as that term is defined
in the Code);
(4) paid in a series of substantially equal payments made annually (or more
frequently) for life or a period not exceeding life expectancy;
(5) paid under an immediate annuity; or
(6) which come from PURCHASE PAYMENTS made prior to August 14, 1982.
Withdrawals-Qualified Contracts
The above information describing the taxation of NON-QUALIFIED contracts
does not apply to QUALIFIED contracts. There are special rules that govern with
respect to QUALIFIED contracts. We have provided a more complete discussion in
the Statement of Additional Information.
Death Benefits
Any death benefits paid under the contract are taxable to the BENEFICIARY.
The rules governing the taxation of payments from an annuity contract, as
discussed above, generally apply to the payment of death benefits and depend on
whether the death benefits are paid as a lump sum or as ANNUITY PAYMENTS.
Diversification
The Code provides that the underlying investments for a variable annuity
must satisfy certain diversification requirements in order to be treated as an
annuity contract. BMA believes that the INVESTMENT PORTFOLIOS are being managed
so as to comply with the requirements.
Neither the Code nor the Internal Revenue Service Regulations issued to
date provide guidance as to the circumstances under which you, because of the
degree of control you exercise over the underlying investments, and not BMA,
would be considered the owner of the shares of the INVESTMENT PORTFOLIOS. If you
are considered the owner of the shares, it will result in the loss of the
favorable tax treatment for the contract. It is unknown to what extent under
federal tax law OWNERS are permitted to select INVESTMENT PORTFOLIOS, to make
transfers among the INVESTMENT PORTFOLIOS or the number and type of INVESTMENT
PORTFOLIOS OWNERS may select from without being considered the owner of the
shares. If any guidance is provided which is considered a new position, then the
guidance would generally be applied prospectively. However, if such guidance is
considered not to be a new position, it may be applied retroactively. This would
mean that you, as the OWNER of the contract, could be treated as the OWNER of
the INVESTMENT PORTFOLIOS.
Due to the uncertainty in this area, BMA reserves the right to modify the
contract in an attempt to maintain favorable tax treatment.
7. ACCESS TO YOUR MONEY
You can have access to the money in your contract:
(1) by making a withdrawal (either a partial or a complete
withdrawal);
(2) by electing to receive ANNUITY PAYMENTS; or
(3) when a death benefit is paid to your BENEFICIARY.
Withdrawals can only be made during the ACCUMULATION PHASE.
When you make a complete withdrawal you will receive the value of the
contract on the day you made the withdrawal:
o less any applicable withdrawal charge,
o less any premium tax,
o less any contract maintenance charge, and
o less an interest adjustment (for amounts allocated to Fixed Account II), if
applicable.
(See Section 5. Expenses for a discussion of the charges.)
Unless you instruct BMA otherwise, any partial withdrawal will be made pro
rata from all the INVESTMENT PORTFOLIO(S) and the FIXED ACCOUNT option(s) you
selected. Under most circumstances the amount of any partial withdrawal must be
for at least $1,000 (withdrawals made pursuant to the automatic withdrawal
program and the minimum distribution option are not subject to this minimum).
BMA requires that after a partial withdrawal is made you keep at least $1,000 in
any INVESTMENT PORTFOLIO and $5,000 in Fixed Account I or any GUARANTEE PERIOD
of Fixed Account II. BMA also requires that after a partial withdrawal is made
you keep at least $10,000 in your contract.
We will pay the amount of any withdrawal from the INVESTMENT PORTFOLIOS
within 7 days of a receipt in good order of your request unless the suspension
or deferral of payments or transfers provision is in effect (see Section
10-Other Information-Suspension of Payments or Transfers). Use of a certified
check to purchase the contract may expedite the payment of your withdrawal
request if the withdrawal request is soon after your payment by certified check.
INCOME TAXES AND TAX PENALTIES MAY APPLY TO ANY WITHDRAWAL YOU MAKE.
Automatic Withdrawal Program
The Automatic Withdrawal Program provides periodic payments to you. Each
payment must be for at least $250. You may select to have payments made monthly,
quarterly, semi-annually or annually. The first 10% of the contract value
withdrawn is not subject to the withdrawal charge. A withdrawal charge will be
applied to any withdrawals in excess of the first 10% withdrawn and will result
in a reduction in remaining contract value. If you use this program, you may not
make any other withdrawals (including a partial withdrawal). For a discussion of
the withdrawal charge and the 10% free withdrawal, see Section 5. Expenses.
All Automatic Withdrawals will be made on the 15th day of the month unless
that day is not a business day. If it is not, then the payment will be the next
business day.
No Minimum Distribution payments and/or Dollar Cost Averaging transfers
will be allowed if you are participating in the Automatic Withdrawal Program.
INCOME TAXES AND TAX PENALTIES MAY APPLY TO AUTOMATIC WITHDRAWALS.
Minimum Distribution Program
If you own an IRA contract, you may select the Minimum Distribution
Program. Under this program, BMA will make payments to you from your contract
that are designed to meet the applicable minimum distribution requirements
imposed by the Internal Revenue Code for QUALIFIED plans. BMA will make payments
to you periodically (currently, monthly, quarterly, semi-annually or annually).
The payments will not be subject to the withdrawal charge and will be instead of
the 10% single free withdrawal amount each year.
No Dollar Cost Averaging transfers or Automatic Withdrawals will be allowed
if you are participating in the Minimum Distribution Program.
Suspension of Payments or Transfers
BMA may be required to suspend or postpone payments for withdrawals or
transfers for any period when:
1. the New York Stock Exchange is closed (other than customary weekend and
holiday closings);
2. trading on the New York Stock Exchange is restricted;
3. an emergency exists as a result of which disposal of shares of the
INVESTMENT PORTFOLIOS is not reasonably practicable or BMA cannot reasonably
value the shares of the INVESTMENT PORTFOLIOS;
4. during any other period when the Securities and Exchange Commission, by
order, so permits for the protection of OWNERS.
BMA has reserved the right to defer payment for a withdrawal or transfer
from the FIXED ACCOUNTS for the period permitted by law but not for more than
six months.
8. PERFORMANCE
BMA may periodically advertise performance of the various INVESTMENT
PORTFOLIOS. BMA will calculate performance by determining the percentage change
in the value of an ACCUMULATION UNIT by dividing the increase (decrease) for
that unit by the value of the ACCUMULATION UNIT at the beginning of the period.
This performance number reflects the deduction of the coverage charge and the
fees and expenses of the INVESTMENT PORTFOLIO. It does not reflect the deduction
of any applicable contract maintenance charge and withdrawal charge. The
deduction of any applicable contract maintenance charge and withdrawal charge
would reduce the percentage increase or make greater any percentage decrease.
Any advertisement will also include average annual total return figures which
will reflect the deduction of the coverage charge, contract maintenance charges,
withdrawal charges as well as the fees and expenses of the INVESTMENT PORTFOLIO.
BMA may also advertise the historical performance of certain INVESTMENT
PORTFOLIOS whose inception dates precede the date the ACCUMULATION UNITS of your
contract invested in the Portfolio.
BMA may advertise yield information. If it does, it will provide you with
information regarding how yield is calculated.
BMA may, from time to time, include in its advertising and sales materials,
tax deferred compounding charts and other hypothetical illustrations, which may
include comparisons of currently taxable and tax deferred investment programs,
based on selected tax brackets.
More detailed information regarding how performance is calculated is found
in the SAI.
Future performance will vary and the results shown are not necessarily
representative of future results.
9. DEATH BENEFIT
Upon Your Death
If you die during the ACCUMULATION PHASE, BMA will pay a death benefit to
your BENEFICIARY (see below). If you have a JOINT OWNER, the death benefit will
be paid when the first of you dies. The surviving JOINT OWNER will be treated as
the BENEFICIARY.
The amount of the death benefit depends on how old you are on the day we
issue your contract. If BMA issues your contract prior to your 80th birthday,
the death benefit will be:
During the first contract year, the greater of:
(1) the payments you have made, less any money you have taken out and
related withdrawal charges; or
(2) the value of your contract.
During the second and subsequent contract years, the greater of:
(1) the payments you have made, less any money you have taken out and
related withdrawal charges; or (2) the value of your contract; or (3)
the highest year end death benefit value. The year end death benefit
value is the Contract value on the last day of each Contract year
prior to your 81st birthday, plus payments you have made, less
withdrawals and charges since that day.
If BMA issues your contract on or after your 80th birthday, the death
benefit will be the greater of:
(1) the payments you have made, less any money you have taken out and
related withdrawal charges; or (2) the value of your contract.
THE ABOVE DEATH BENEFIT MAY NOT BE AVAILABLE IN YOUR STATE, in which case,
the death benefit will be the greater of:
1. Total PURCHASE PAYMENTS, less withdrawals (and any withdrawal charges
paid on the withdrawals); or 2. The value of your contract at the time the death
benefit is to be paid.
Additional Death Benefit Option (ADBO)
If you bought your contract on or after May 3, 1999, you can elect the ADBO
at the time you buy the contract. The ADBO may not be available in your state
(check with your registered representative regarding the availability of the
Additional Death Benefit Option). We will determine the benefit as of the date
we receive at our Service Center proof of death, an authorized request for
payment and any other necessary information for a payment option.
The Additional Death Benefit is equal to 15% of the excess of: the
''Additional Death Benefit Ending Value'' over the ''Additional Death Benefit
Base Value'' (as defined below).
If the BENEFICIARY is your spouse, is under age 81 and elects to continue
the contract after you die, the Additional Death Benefit will be added to the
contract value on the date your spouse elects to continue the contract. In that
case, a second Additional Death Benefit will apply to the continued contract. We
deem any election to continue the contract valid on the date we receive an
authorized request at our Service Center. The second Additional Death Benefit is
equal to 15% of the excess of your spouse's ''Additional Death Benefit Ending
Value'' over his or her ''Additional Death Benefit Base Value'' (as defined
below). If your spouse is 81 or older at the time we receive proof of your
death, your spouse may continue the contract, but there will not be a second
Additional Death Benefit.
Additional Death Benefit Base Value means:
For the OWNER, the sum of the PURCHASE PAYMENTS made.
For your surviving spouse, the contract value on the date of his or her
election to continue the contract, including all death benefits for the OWNER
plus any PURCHASE PAYMENTS that were made after the date of the election.
Additional Death Benefit Ending Value means the lesser of:
The contract value on the date BMA receives at its Service Center proof of
death and any other necessary information; and
The contract value on the decedent's 81st birthday, if BMA receives at its
Service Center proof of death after the decedent's 81st birthday.
If you select the ADBO, the coverage charge for your contract will be
higher than it would have been without this benefit and currently, the interest
rate we credit on amounts you have allocated to Fixed Account II will be
reduced.
Appendix B to this prospectus contains examples of how the Additional Death
Benefit is calculated.
The entire death benefit must be paid within 5 years of the date of death
unless the BENEFICIARY elects to have the death benefit payable under an ANNUITY
OPTION. The death benefit payable under an ANNUITY OPTION must be paid over the
BENEFICIARY'S lifetime or for a period not extending beyond the BENEFICIARY'S
life expectancy. Payment must begin within one year of the date of death. If the
BENEFICIARY is the spouse of the OWNER, he/she can continue the contract in
his/her own name. Payment to the BENEFICIARY (other than a lump sum) may only be
elected during the 60 day period beginning with the date we receive proof of
death. If a lump sum payment is elected and all the necessary requirements are
met, the payment will be made within 7 days.
If you or any JOINT OWNER dies during the INCOME PHASE (and you are not the
ANNUITANT) any remaining payments under the ANNUITY OPTION chosen will continue
at least as rapidly as under the method of distribution in effect at the time of
death. If you die during the INCOME PHASE, the BENEFICIARY becomes the OWNER.
See Section 6. Taxes-Death Benefits regarding the tax treatment of death
proceeds.
Death of Annuitant
If the ANNUITANT, who is not an OWNER or JOINT OWNER, dies during the
ACCUMULATION PHASE, you can name a new ANNUITANT. If no ANNUITANT is named
within 30 days of the death of the ANNUITANT, you will become the ANNUITANT.
However, if the OWNER is a non-natural person (for example, a corporation), then
the death of the ANNUITANT will be treated as the death of the OWNER, and a new
ANNUITANT may not be named.
Upon the death of the ANNUITANT during the INCOME PHASE, the death benefit,
if any, will be as provided for in the ANNUITY OPTION selected. The death
benefits will be paid at least as rapidly as under the method of distribution in
effect at the ANNUITANT'S death.
10. OTHER INFORMATION
BMA
Business Men's Assurance Company of America (BMA), BMA Tower, 700 Karnes
Blvd., Kansas City, Missouri 64108 was incorporated in 1909 under the laws of
the state of Missouri. BMA is licensed in the District of Columbia, Puerto Rico
and all states except New York. BMA is a wholly owned subsidiary of
Assicurazioni Generali S.p.A., which is the largest insurance organization in
Italy.
BMA's obligations arising under the contracts are general obligations of
BMA.
Year 2000
Some of BMA's computer systems were written using two digits rather than
four to define the applicable year. As a result, those computer systems will not
recognize the year 2000 which, if not corrected, could cause disruptions of
operations, including, among other things, an inability to process transactions
or engage in similar normal business activities.
BMA has developed a plan to modify its information technology to be ready
for the year 2000. BMA has corrected its mission critical and other data
processing systems so they correctly handle year 2000 and subsequent dates. BMA
continues to monitor and test its and its vendors' systems to make sure they
remain stable in anticipation of the year 2000.
The Separate Account
BMA has established a separate account, BMA Variable Annuity Account A
(Separate Account), to hold the assets that underlie the contracts. The Board of
Directors of BMA adopted a resolution to establish the Separate Account under
Missouri insurance law on September 9, 1996. We have registered the Separate
Account with the Securities and Exchange Commission as a unit investment trust
under the Investment Company Act of 1940. The Separate Account is divided into
sub-accounts.
The assets of the Separate Account are held in BMA's name on behalf of the
Separate Account and legally belong to BMA. However, those assets that underlie
the contracts, are not chargeable with liabilities arising out of any other
business BMA may conduct. All the income, gains and losses (realized or
unrealized) resulting from these assets are credited to or charged against the
contracts and not against any other contracts BMA may issue.
Distributor
Jones & Babson, Inc., acts as the distributor of the contracts. Jones &
Babson, Inc. is a wholly owned subsidiary of BMA.
Administration
BMA has hired NAVISYS (formerly GENELCO, Incorporated), 9735 Landmark
Parkway Drive, St. Louis, Missouri to perform certain administrative services
regarding the contracts. The administrative services include issuance of the
contracts and maintenance of contract owners' records.
Ownership
OWNER. You, as the OWNER of the contract, have all the rights under the
contract. The OWNER is as designated at the time the contract is issued, unless
changed. The BENEFICIARY becomes the OWNER upon the death of the OWNER.
JOINT OWNER. The contract can be owned by JOINT OWNERS. Any JOINT OWNER
must be the spouse of the other OWNER (except in Pennsylvania and Oregon). Upon
the death of either JOINT OWNER, the surviving OWNER will be the primary
BENEFICIARY. Any other BENEFICIARY designation will be treated as a contingent
BENEFICIARY unless otherwise indicated.
BENEFICIARY
The BENEFICIARY is the person(s) or entity you name to receive any death
benefit. The BENEFICIARY is named at the time the contract is issued unless
changed at a later date. Unless an irrevocable BENEFICIARY has been named, you
can change the BENEFICIARY at any time before you die.
Assignment
You can assign the contract at any time during your lifetime. BMA will not
be bound by the assignment until it receives the written notice of the
assignment. BMA will not be liable for any payment or other action we take in
accordance with the contract before we receive notice of the assignment. AN
ASSIGNMENT MAY BE A TAXABLE EVENT.
If the contract is issued pursuant to a QUALIFIED plan, there may be
limitations on your ability to assign the contract.
Financial Statements
The financial statements of BMA and the Separate Account have been included
in the Statement of Additional Information.
Table of Contents of The
Statement of Additional Information
Company
Experts
Legal Opinions
Distributor
Reduction or Elimination of Withdrawal Charge
Calculation of Performance Data
Federal Tax Status
Annuity Provisions
Mortality and Expense Guarantee
Financial Statements
A-2
APPENDIX A-CONDENSED FINANCIAL INFORMATION
ACCUMULATION UNIT Value History-The following schedule includes
ACCUMULATION UNIT values for the year or period ended December 31, 1998 and the
9 months ended September 30, 1999. This data has been extracted from the
Separate Account's audited December 31, 1998 financial statements and the
unaudited September 30, 1999 financial statements. This information should be
read in conjunction with the Separate Account's financial statements and related
notes that are included in the Statement of Additional Information. There is no
ACCUMULATION UNIT value history for contracts with a 1.45% coverage charge
because as of September 30, 1999, there were no contracts in force with this
coverage charge. Effective as of the date of this prospectus, there will no
longer be a 1.40% coverage charge.
<TABLE>
<CAPTION>
Contracts with 1.40% Contracts with 1.25%
Coverage Charge Coverage Charge
Year Period Period
Ended Ended Ended
12/31/98 9/30/99 9/30/99
INVESTORS MARK SERIES FUND, INC.:
MONEY MARKET SUB-ACCOUNT
<S> <C> <C> <C>
Unit value at beginning of period........................ $10.3660 $10.3985 $10.091
Unit value at end of period.............................. $10.3985 $10.6333 $10.3388
No. of ACCUMULATION UNITS Outstanding at end of period... 1,862 977 4,032
INTERMEDIATE FIXED INCOME SUB-ACCOUNT
Unit value at beginning of period........................ $10.1029 $10.4768 $10.0531
Unit value at end of period.............................. $10.4768 $10.3572 $9.9495
No. of ACCUMULATION UNITS Outstanding at end of period... 18,661 20,037 5,579
GLOBAL FIXED INCOME SUB-ACCOUNT
Unit value at beginning of period........................ $10.2068 $10.7922 $10.1741
Unit value at end of period.............................. $10.7922 $10.6367 $10.0387
No. of ACCUMULATION UNITS Outstanding at end of
period................................................... 1,279 1,522 4,715
MID CAP EQUITY SUB-ACCOUNT
Unit value at beginning of period........................ $10.1186 $10.6798 $12.0489
Unit value at end of period.............................. $10.6798 $9.893 $11.1740
No. of ACCUMULATION UNITS Outstanding at end of period... 10,784 17,207 14,589
SMALL CAP EQUITY SUB-ACCOUNT
Unit value at beginning of period........................ $ 9.7057 $8.0436 $11.6860
Unit value at end of period.............................. $ 8.0436 $ 9.2604 $13.4689
No. of ACCUMULATION UNITS Outstanding at end of period... 7,723 9,636 12,447
LARGE CAP GROWTH SUB-ACCOUNT
Unit value at beginning of period........................ $10.4344 $12.7949 $12.1679
Unit value at end of period.............................. $12.7949 $13.5558 $12.9060
No. of ACCUMULATION UNITS Outstanding at end of period... 7,110 7,911 15,678
LARGE CAP VALUE SUB-ACCOUNT
Unit value at beginning of period........................ $ 9.6830 $10.0288 $ 11.3245
Unit value at end of period.............................. $10.0288 $ 9.9947 $11.2986
No. of ACCUMULATION UNITS Outstanding at end of period... 28,430 32,019 12,171
GROWTH & INCOME SUB-ACCOUNT
Unit value at beginning of period........................ $10.0687 $11.1230 $11.9485
Unit value at end of period.............................. $11.1230 $11.6276 $12.5046
No. of ACCUMULATION UNITS Outstanding at end of period... 34,834 38,569 9,204
BALANCED SUB-ACCOUNT
Unit value at beginning of period........................ $10.0854 $9.3452 $10.5555
Unit value at end of period.............................. $ 9.3452 $9.3520 $10.5750
No. of ACCUMULATION UNITS Outstanding at end of period... 20,022 21,457 14,370
BERGER INSTITUTIONAL PRODUCTS TRUST:
BERGER/BIAM IPT-INTERNATIONAL SUB-ACCOUNT
Unit value at beginning of period........................ $10.4116 $11.9232 $11.2656
Unit value at end of period.............................. $11.9232 $12.7779 $12.0867
No. of ACCUMULATION UNITS Outstanding at end of period... 20,028 21,920 9,989
Dreyfus Corporation
Stock Index Sub-Account
Unit value at beginning of period........................ N/A $0 $0
Unit value at end of period.............................. N/A $10.3964 $10.4081
No. of ACCUMULATION UNITS Outstanding at end of period... N/A 1,077 1,544
Dreyfus Disciplined Stock Sub-Account
Unit value at beginning of period........................ N/A $0 $0
Unit value at end of period.............................. N/A $10.2278 $10.2393
No. of ACCUMULATION UNITS Outstanding at end of period... N/A 4,373 1,576
Invesco Funds Group, Inc.
High Yield Sub-Account
Unit value at beginning of period........................ N/A $0 $0
Unit value at end of period.............................. N/A $10.4291 $10.4408
No. of ACCUMULATION UNITS Outstanding at end of period... N/A 0 7,102
Equity Income Sub-Account
Unit value at beginning of period........................ N/A $0 $0
Unit value at end of period.............................. N/A $10.5233 $10.5351
No. of ACCUMULATION UNITS Outstanding at end of period... N/A 1,468 0
Lazard Asset Management:
Lazard Retirement Small Cap Sub-Account
Unit value at beginning of period........................ N/A $0 $0
Unit value at end of period.............................. N/A $10.2700 $10.2816
No. of ACCUMULATION UNITS Outstanding at end of period... N/A 713 1,590
American Century Investment Management, Inc.
VP Income & Growth Sub-Account
Unit value at beginning of period........................ N/A $0 $0
Unit value at end of period.............................. N/A $10.2629 $10.2745
No. of ACCUMULATION UNITS Outstanding at end of period... N/A 1,424 2,758
VP Value Sub-Account
Unit value at beginning of period........................ N/A $0 $0
Unit value at end of period.............................. N/A $9.9601 $9.9713
No. of ACCUMULATION UNITS Outstanding at end of period... N/A 3,412 1,675
</TABLE>
ACCUMULATION UNIT values are shown only for the nine months ended September
30, 1999. for the sub-accounts investing in VP Value, VP Income & Growth,
Dreyfus Stock Index Fund, Dreyfus Variable Investment Fund-Disciplined Stock
Portfolio, INVESCO VIF-High Yield Fund, INVESCO VIF-Equity Income Fund, and
Lazard Retirement Small Cap Portfolio because they were first offered under the
contract on December 31, 1998.
B-1
APPENDIX B-ADDITIONAL DEATH BENEFIT OPTION
The following examples show you how we calculate the additional death
benefit (ADB) if you elect the Additional Death Benefit Option.
EXAMPLE #1
Owner purchases contract at age 50;
Spouse, who is age 45, is named BENEFICIARY;
Total PURCHASE PAYMENTS at death of $100,000;
OWNER dies at age 70, with contract value of $250,000.
The Additional Death Benefit payable to the BENEFICIARY would be $22,500.
This is determined by .15 x [ADB Ending Value ($250,000) - ADB Base Value
($100,000)]-i.e. .15 x $150,000. If the basic death benefit under the contract
were equal to the contract value, the total death benefit would be $272,500.
EXAMPLE #2
Same assumptions as Example #1, except that surviving spouse elects to
continue the contract.
The contract value ($250,000) on the date of election to continue the
contract would be increased by $22,500 to $272,500. The ADB Base Value would be
$272,500. Assume the surviving spouse dies at age 75, no additional PURCHASE
PAYMENTS were made, and the contract value was $400,000. The second Additional
Death Benefit payable to the current BENEFICIARY would be $19,125. This is
determined by .15 x [ADB Ending Value ($400,000) - spouse's ADB Base Value
($272,500)]-i.e. .15 x $127,500. If the basic death benefit were equal to the
contract value, the total death benefit would be $419,125.
EXAMPLE #3
Owner purchases contract at age 70;
Spouse who is also age 70 is named as BENEFICIARY;
PURCHASE PAYMENTS total $100,000;
OWNER dies at age 85 with a contract value of $250,000;
the contract value on the OWNER'S 81st birthday was $200,000.
The Additional Death Benefit payable to the BENEFICIARY would be $15,000.
This is determined by .15 x [ADB Ending Value ($200,000, since the value at the
Owner's 81st birthday is less than the value at death) - ADB Base Value
($100,000)]-i.e. .15 x $100,000. If the basic death benefit under the contract
were equal to the contract value, the total death benefit would be $265,000. If
the surviving spouse elects to continue the contract, the contract value would
be increased to $265,000. However, since the surviving spouse is older than age
80, there would be no second Additional Death Benefit at his/her death.
[THIS PAGE INTENTIONALLY LEFT BLANK]
Detach and mail to:
BUSINESS MEN'S ASSURANCE COMPANY OF AMERICA
9735 LANDMARK PARKWAY DRIVE
ST. LOUIS, MO 63127-1690
Please send me, at no charge, the Statement of Additional Information dated
____, 1999 for the Annuity Contract issued by BMA.
(Please print or type and fill in all information)
- --------------------------------------------------------------------------------
Name
- --------------------------------------------------------------------------------
Address
- --------------------------------------------------------------------------------
City State Zip Code
Business Men's Assurance Company of America
P.O. Box 412879 / Kansas City, MO 64141
PART B
STATEMENT OF ADDITIONAL INFORMATION
INDIVIDUAL FLEXIBLE PAYMENT
VARIABLE ANNUITY CONTRACTS
ISSUED BY
BMA VARIABLE ANNUITY ACCOUNT A
AND
BUSINESS MEN'S ASSURANCE COMPANY OF AMERICA
-----------------
THIS IS NOT A PROSPECTUS. THIS STATEMENT OF ADDITIONAL INFORMATION SHOULD BE
READ IN CONJUNCTION WITH THE PROSPECTUS FOR THE INDIVIDUAL FLEXIBLE PAYMENT
VARIABLE ANNUITY CONTRACTS WHICH ARE REFERRED TO HEREIN.
THE PROSPECTUS CONCISELY SETS FORTH INFORMATION THAT A PROSPECTIVE INVESTOR
OUGHT TO KNOW BEFORE INVESTING. FOR A COPY OF THE PROSPECTUS, CALL OR WRITE THE
COMPANY AT: 1-888-262-8131, 9735 Landmark Parkway Drive, St. Louis, MO
63127-1690.
THIS STATEMENT OF ADDITIONAL INFORMATION AND THE PROSPECTUS ARE DATED
DECEMBER 29, 1999.
TABLE OF CONTENTS
COMPANY ............................................................3
EXPERTS ............................................................3
LEGAL OPINIONS.......................................................3
DISTRIBUTOR..........................................................3
REDUCTION OR ELIMINATION OF THE WITHDRAWAL CHARGE....................3
CALCULATION OF PERFORMANCE DATA......................................4
FEDERAL TAX STATUS..................................................14
ANNUITY PROVISIONS..................................................21
MORTALITY AND EXPENSE GUARANTEE.....................................22
FINANCIAL STATEMENTS................................................22
COMPANY
Business Men's Assurance Company of America ("BMA" or the "Company"), BMA Tower,
700 Karnes Blvd., Kansas City, Missouri, 64108 was incorporated in 1909 under
the laws of the state of Missouri. BMA is licensed in the District of Columbia,
Puerto Rico and all states except New York. BMA is a wholly owned subsidiary of
Assicurazioni Generali S.p.A., which is the largest insurance organization in
Italy.
EXPERTS
The financial statements of BMA Variable Annuity Account A as of and for the
year ended December 31, 1998, and for the period from November 24, 1997
(inception) to December 31, 1997, and the consolidated financial statements of
Business Men's Assurance Company of America at December 31, 1998 and 1997, and
for each of the three years in the period ended December 31, 1998, have been
audited by Ernst & Young LLP, 1200 Main Street, Kansas City, Missouri 64105,
independent auditors, as set forth in their reports, and are given upon the
authority of such firm as experts in accounting and auditing.
<PAGE>
LEGAL OPINIONS
Blazzard, Grodd & Hasenauer, P.C., Westport, Connecticut has provided advice on
certain matters relating to the federal securities and income tax laws in
connection with the contracts.
DISTRIBUTOR
Jones & Babson, Inc., acts as the distributor. The offering is on a continuous
basis.
REDUCTION OR ELIMINATION OF THE WITHDRAWAL CHARGE
The amount of the Withdrawal Charge on the Contracts may be reduced or
eliminated when sales of the Contracts are made to individuals or to a group of
individuals in a manner that results in savings of sales expenses. The
entitlement to reduction of the Withdrawal Charge will be determined by the
Company after examination of all the relevant factors such as:
1. The size and type of group to which sales are to be made will be
considered. Generally, the sales expenses for a larger group are less than for a
smaller group because of the ability to implement large numbers of Contracts
with fewer sales contacts.
2. The total amount of purchase payments to be received will be considered.
Per Contract sales expenses are likely to be less on larger purchase payments
than on smaller ones.
3. Any prior or existing relationship with the Company will be considered.
Per Contract sales expenses are likely to be less when there is a prior existing
relationship because of the likelihood of implementing the Contract with fewer
sales contacts.
4. There may be other circumstances, of which the Company is not presently
aware, which could result in reduced sales expenses.
If, after consideration of the foregoing factors, the Company determines that
there will be a reduction in sales expenses, the Company may provide for a
reduction or elimination of the Withdrawal Charge.
The Withdrawal Charge may be eliminated when the Contracts are issued to an
officer, director or employee of the Company or any of its affiliates. In no
event will any reduction or elimination of the Withdrawal Charge be permitted
where the reduction or elimination of the Withdrawal Charge will be unfairly
discriminatory to any person.
CALCULATION OF PERFORMANCE DATA
Total Return
From time to time, the Company may advertise performance data. Such data will
show the percentage change in the value of an accumulation unit based on the
performance of an investment portfolio over a period of time, usually a calendar
year, determined by dividing the increase (decrease) in value for that unit by
the accumulation unit value at the beginning of the period.
Any such advertisement will include average annual total return figures for the
time periods indicated in the advertisement. Such total return figures will
reflect the deduction of the coverage charge, the expenses for the underlying
investment portfolio being advertised and any applicable contract maintenance
charges and withdrawal charges.
The hypothetical value of a Contract purchased for the time periods described in
the advertisement will be determined by using the actual accumulation unit
values for an initial $1,000 purchase payment, and deducting any applicable
contract maintenance charges and any applicable withdrawal charges to arrive at
the ending hypothetical value. The average annual total return is then
determined by computing the fixed interest rate that a $1,000 purchase payment
would have to earn annually, compounded annually, to grow to the hypothetical
value at the end of the time periods described.
The formula used in these calculations is:
n
P ( 1 + T) = ERV
<PAGE>
Where:
P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value at the end of the time periods used (or
fractional portion thereof) of a hypothetical $1,000 payment made at
the beginning of the time periods used.
The Company may also advertise performance data which will be calculated in the
same manner as described above but which will not reflect the deduction of any
withdrawal charge and contract maintenance charge. The deduction of any
withdrawal charge and contract maintenance charge would reduce any percentage
increase or make greater any percentage decrease.
You should note that the investment results of each investment portfolio will
fluctuate over time, and any presentation of the investment portfolio's total
return for any period should not be considered as a representation of what an
investment may earn or what your total return may be in any future period.
Yield
THE MONEY MARKET PORTFOLIO. The Company may advertise yield and effective
information for the Money Market Portfolio. Both yield figures are based on
historical earnings and are not intended to indicate future performance. The
"yield" of the subaccount refers to the income generated by an investment in the
subaccount over a seven-day period (which period will be stated in the
advertisement). This income is then "annualized." That is, the amount of income
generated by the investment during that week is assumed to be generated each
week over a 52-week period and is shown as a percentage of the investment. The
"effective yield" is calculated similarly but, when annualized, the income
earned by an investment in the subaccount is assumed to be reinvested. The
"effective yield" will be slightly higher than the "yield" because of the
compounding effect of this assumed reinvestment.
The Money Market Portfolio's current yield is computed on a base period return
of a hypothetical Contract having a beginning balance of one accumulation unit
for a particular period of time (generally seven days). The return is determined
by dividing the net change (exclusive of any capital changes) in such
accumulation unit by its beginning value, and then multiplying it by 365/7 to
get the annualized current yield. The calculation of net change reflects the
value of additional shares purchased with the dividends paid by the Portfolio,
and the deduction of the coverage charge and contract maintenance charge. The
effective yield reflects the effects of compounding and represents an
annualization of the current return with all dividends reinvested.
(Effective yield = [(Base Period Return + 1)365/7]-1.)
The Company does not currently advertise any yield information for the Money
Market Portfolio.
OTHER PORTFOLIOS. The Company may also quote current yield in sales literature,
advertisements and Owner communications for the other Portfolios. Each Portfolio
other than the Money Market Portfolio) will publish standardized total return
information with any quotation of current yield.
The yield computation is determined by dividing the net investment income per
accumulation unit earned during the period (minus the deduction for the coverage
charge and the contract maintenance charge) by the accumulation unit value on
the last day of the period, according to the following formula:
6
Yield = 2 [[(a-b) + 1] - 1]
----
cd
Where:
a = net investment income earned during the period by the Portfolio
attributable to shares owned by the subaccount.
b = expenses accrued for the period (net of reimbursements).
c = the average daily number of accumulation units outstanding during
the period.
d = the maximum offering price per accumulation unit on the last day of
the period.
<PAGE>
The above formula will be used in calculating quotations of yield, based on
specified 30-day periods identified in the advertisement or communication. Yield
calculations assume no withdrawal charge. The Company does not currently
advertise any yield information for any Portfolio. Performance Information
Section I - PERFORMANCE INFORMATION OF SEPARATE ACCOUNT
The following total return information reflects performance for the accumulation
units of the Separate Account investing in Investors Mark Series Fund, Inc. for
the periods shown. Charts 1A-B reflect the deduction of the coverage charge and
the operating expenses of the Portfolio. Charts 2A-B reflect the deduction of
the coverage charge, contract maintenance charge, withdrawal charge and the
operating expenses of the Portfolio. The inception dates shown below reflect the
dates the Separate Account first invested in the Portfolio. PAST PERFORMANCE
DOES NOT GUARANTEE FUTURE RESULTS.
Chart 1-A (reflects 1.45% coverage charge and Portfolio expenses) ANNUAL TOTAL
RETURN FOR PERIODS ENDING 9/30/99:
<TABLE>
<CAPTION>
Separate
Account
Inception
Date in 1 Year Since Inception
Portfolio
Investors Mark Series Fund
<S> <C> <C> <C> <C>
Intermediate Fixed Income 11/24/97 -2.13% 2.02%
Mid Cap Equity 11/24/97 9.39% 1.42%
Money Market 11/24/97 2.91% 3.57%
Fixed Income 11/24/97 -1.03% 3.19%
Small Cap Equity 11/24/97 29.70% -4.36%
Large Cap Growth 11/24/97 30.49% 20.07%
Large Cap Value 11/24/97 12.50% 0.00%
Growth & Income 11/24/97 21.91% 10.76%
Balanced 11/24/97 4.58% -4.12%
Berger/BIAM IPT-International 11/24/97 27.87% 7.41%
Dreyfus / Stock Index 2/8/99 N/A 2.34%
Dreyfus / Disciplined Stock 3/24/99 N/A 2.55%
Invesco / High Yield 3/11/99 N/A 2.66%
Invesco / Industrial Income 2/16/99 N/A 7.21%
Lazard / Small Cap 4/6/99 N/A 23.76%
American Century / VP Income & Growth 2/8/99 N/A 4.23%
American Century / VP Value 3/24/99 N/A 8.46%
</TABLE>
Chart 1-B (reflects 1.25% coverage charge and Portfolio expenses) ANNUAL TOTAL
RETURN FOR PERIODS ENDING 9/30/99:
<TABLE>
<CAPTION>
Separate
Account
Inception
Date in 1 Year Since Inception
Portfolio
Investors Mark Series Fund
<S> <C> <C> <C> <C>
Intermediate Fixed Income 11/24/97 -1.93% 2.22%
Mid Cap Equity 11/24/97 9.61% 1.62%
Money Market 11/24/97 3.11% 3.77%
Fixed Income 11/24/97 -0.83% 3.40%
Small Cap Equity 11/24/97 29.96% -4.17%
Large Cap Growth 11/24/97 30.76% 20.31%
Large Cap Value 11/24/97 12.72% 0.20%
Growth & Income 11/24/97 22.15% 10.98%
Balanced 11/24/97 4.79% -3.93%
Berger/BIAM IPT-International 11/24/97 28.13% 7.63%
Dreyfus / Stock Index 2/8/99 N/A 2.55%
Dreyfus / Disciplined Stock 3/24/99 N/A 2.76%
Invesco / High Yield 3/11/99 N/A 2.87%
Invesco / Industrial Income 2/16/99 N/A 7.43%
Lazard / Small Cap 4/6/99 N/A 24.01%
American Century / VP Income & Growth 2/8/99 N/A 4.44%
American Century / VP Value 3/24/99 N/A 8.67%
</TABLE>
Chart 2-A (reflects 1.45% coverage charge, contract maintenance charge,
withdrawal Charge and Portfolio expenses) AVERAGE ANNUAL TOTAL RETURN FOR
PERIODS ENDING 9/30/99:
<TABLE>
<CAPTION>
Separate
Account 1 Year Since Inception
Inception
Date in
Portfolio
<S> <C> <C> <C> <C>
Intermediate Fixed Income 11/24/97 -7.72% -1.07%
Mid Cap Equity 11/24/97 3.85% -1.71%
Money Market 11/24/97 -2.66% 0.52%
Fixed Income 11/24/97 -6.61% 0.14%
Small Cap Equity 11/24/97 24.24% -7.73%
Large Cap Growth 11/24/97 25.04% 17.43%
Large Cap Value 11/24/97 6.97% -3.19%
Growth & Income 11/24/97 16.42% 7.89%
Balanced 11/24/97 -0.98% -7.44%
Berger/BIAM IPT-International 11/24/97 22.41% 4.43%
Dreyfus / Stock Index 2/8/99 N/A -7.72%
Dreyfus / Disciplined Stock 3/24/99 N/A -9.74%
Invesco / High Yield 3/11/99 N/A -8.82%
Invesco / Industrial Income 2/16/99 N/A -3.33%
Lazard / Small Cap 4/6/99 N/A 9.42%
American Century / VP Income & Growth 2/8/99 N/A -5.88%
American Century / VP Value 3/24/99 N/A -4.09%
</TABLE>
Chart 2-B (reflects 1.25% coverage charge, contract maintenance charge,
withdrawal charge and Portfolio expenses) AVERAGE ANNUAL TOTAL RETURN FOR
PERIODS ENDING 9/30/99:
<TABLE>
<CAPTION>
Separate
Account I Year Since Inception
Inception
Date in
Portfolio
<S> <C> <C> <C> <C>
Intermediate Fixed Income 11/24/97 -7.52% -0.86%
Mid Cap Equity 11/24/97 4.07% -1.50%
Money Market 11/24/97 -2.45% 0.73%
Fixed Income 11/24/97 -6.41% 0.35%
Small Cap Equity 11/24/97 24.50% -7.53%
Large Cap Growth 11/24/97 25.31% 17.68%
Large Cap Value 11/24/97 7.20% -2.98%
Growth & Income 11/24/97 16.67% 8.12%
Balanced 11/24/97 -0.77% -7.24%
Berger/BIAM IPT-International 11/24/97 22.67% 4.65%
Dreyfus / Stock Index 2/8/99 N/A -7.52%
Dreyfus / Disciplined Stock 3/24/99 N/A -9.34%
Invesco / High Yield 3/11/99 N/A -8.63%
Invesco / Industrial Income 2/16/99 N/A -3.13%
Lazard / Small Cap 4/6/99 N/A 9.65%
American Century / VP Income & Growth 2/8/99 N/A -5.68%
American Century / VP Value 3/24/99 N/A -3.89%
</TABLE>
SECTION II - HISTORICAL PERFORMANCE OF CERTAIN PORTFOLIOS
Certain Portfolios have been in existence for some time and consequently have
investment performance history. In order to demonstrate how the historical
investment experience of certain Portfolios affects accumulation unit values, we
have developed the following performance information. The information is based
upon the historical experience of the Portfolios and is for the periods shown.
Charts 3A-B reflect the deduction of the coverage charge and the operating
expenses of the Portfolio. Charts 4A-B reflect the deduction of the coverage
charge, contract maintenance charge, withdrawal charge and the operating
expenses of the Portfolio. The inception dates shown below are the dates the
underlying Portfolios commenced investment operations. PAST PERFORMANCE DOES NOT
GUARANTEE FUTURE RESULTS.
Chart 3-A (reflects 1.45% coverage charge and Portfolio expenses) ANNUAL TOTAL
RETURN FOR PERIODS ENDING 9/30/99:
<TABLE>
<CAPTION>
Portfolio 10 Years/
Inception Date 1 Year 5 Years Since Inception
-------------- ------ ------- ---------------
<S> <C> <C> <C> <C> <C>
Dreyfus Stock Index 09/27/89 25.52% 22.77% 14.66%
Dreyfus Disciplined Stock 04/29/96 25.00% n/a 21.53%
Invesco High Yield 05/25/94 6.63% n/a 9.57%
Invesco Industrial Income 08/08/94 18.62% n/a 17.92%
Lazard Small Cap 11/02/97 14.71% n/a -1.96%
American Century Growth & Income 10/30/97 24.38% n/a 18.26%
American Century Value 04/29/96 10.17% n/a 10.84%
</TABLE>
Chart 3-B (reflects 1.25% coverage charge and Portfolio expenses) ANNUAL TOTAL
RETURN FOR PERIODS ENDING 9/30/99:
<TABLE>
<CAPTION>
Portfolio 10 Years/
Inception Date 1 Year 5 Years Since Inception
-------------- ------ ------- ---------------
<S> <C> <C> <C> <C> <C>
Dreyfus Stock Index 09/27/89 25.77% 23.01% 14.88%
Dreyfus Disciplined Stock 04/29/96 25.25% n/a 21.78%
Invesco High Yield 05/25/94 6.85% n/a 9.79%
Invesco Industrial Income 08/08/94 18.85% n/a 18.15%
Lazard Small Cap 11/02/97 14.94% n/a -1.77%
American Century Growth & Income 10/30/97 24.63% n/a 18.50%
American Century Value 04/29/96 10.39% n/a 11.06%
</TABLE>
Chart 4-A (reflects 1.45% coverage charge, contract maintenance charge,
withdrawal charge and Portfolio expenses) AVERAGE ANNUAL TOTAL RETURN FOR
PERIODS ENDING 9/30/99:
<TABLE>
<CAPTION>
Portfolio 10 Years/
Inception Date 1 Year 5 Years Since Inception
-------------- ------ ------- ---------------
<S> <C> <C> <C> <C> <C>
Dreyfus Stock Index 09/27/89 20.04% 22.54% 14.58%
Dreyfus Disciplined Stock 04/29/96 19.53% n/a 20.78%
Invesco High Yield 05/25/94 1.08% n/a 9.21%
Invesco Industrial Income 08/08/94 13.12% n/a 17.64%
Lazard Small Cap 11/02/97 9.20% n/a -5.12%
American Century Growth & Income 10/30/97 18.91% n/a 15.72%
American Century Value 04/29/96 4.63% n/a 9.87%
</TABLE>
Chart 4-B (reflects 1.25% coverage charge, contract maintenance charge,
withdrawal charge and Portfolio expenses AVERAGE ANNUAL TOTAL RETURN FOR PERIODS
ENDING 9/30/99:
<TABLE>
<CAPTION>
Portfolio 10 Years/
Inception Date 1 Year 5 Years Since Inception
-------------- ------ ------- ---------------
<S> <C> <C> <C> <C> <C>
Dreyfus Stock Index 09/27/89 20.30% 22.79% 14.81%
Dreyfus Disciplined Stock 04/29/96 19.78% n/a 21.03%
Invesco High Yield 05/25/94 1.30% n/a 9.44%
Invesco Industrial Income 08/08/94 13.36% n/a 17.88%
Lazard Small Cap 11/02/97 9.43% n/a -4.92%
American Century Growth & Income 10/30/97 19.16% n/a 15.96%
American Century Value 04/29/96 4.86% n/a 10.10%
</TABLE>
Historical Unit Values
The Company may also show historical accumulation unit values in certain
advertisements containing illustrations. These illustrations will be based on
actual accumulation unit values.
In addition, the Company may distribute sales literature which compares the
percentage change in accumulation unit values for any of the investment
portfolios against established market indices such as the Standard & Poor's 500
Composite Stock Price Index, the Dow Jones Industrial Average or other
management investment companies which have investment objectives similar to the
investment portfolio being compared. The Standard & Poor's 500 Composite Stock
Price Index is an unmanaged, unweighted average of 500 stocks, the majority of
which are listed on the New York Stock Exchange. The Dow Jones Industrial
Average is an unmanaged, weighted average of thirty blue chip industrial
corporations listed on the New York Stock Exchange. Both the Standard & Poor's
500 Composite Stock Price Index and the Dow Jones Industrial Average assume
quarterly reinvestment of dividends.
Reporting Agencies
The Company may also distribute sales literature which compares the performance
of the accumulation unit values of the Contracts with the unit values of
variable annuities issued by other insurance companies. Such information will be
derived from the Lipper Variable Insurance Products Performance Analysis
Service, the VARDS Report or from Morningstar.
The Lipper Variable Insurance Products Performance Analysis Service is published
by Lipper Analytical Services, Inc., a publisher of statistical data which
currently tracks the performance of almost 4,000 investment companies. The
rankings compiled by Lipper may or may not reflect the deduction of asset-based
insurance charges. The Company's sales literature utilizing these rankings will
indicate whether or not such charges have been deducted. Where the charges have
not been deducted, the sales literature will indicate that if the charges had
been deducted, the ranking might have been lower.
The VARDS Report is a monthly variable annuity industry analysis compiled by
Variable Annuity Research & Data Service of Roswell, Georgia and published by
financial Planning Resources, Inc. The VARDS rankings may or may not reflect the
deduction of asset-based insurance charges. In addition, VARDS prepares risk
adjusted rankings, which consider the effects of market risk on total return
performance. This type of ranking may address the question as to which funds
provide the highest total return with the least amount of risk. Other ranking
services may be used as sources of performance comparison, such as
CDA/Weisenberger.
Morningstar rates a variable annuity against its peers with similar investment
objectives. Morningstar does not rate any variable annuity that has less than
three years of performance data.
FEDERAL TAX STATUS
General
NOTE: THE FOLLOWING DESCRIPTION IS BASED UPON THE COMPANY'S UNDERSTANDING OF
CURRENT FEDERAL INCOME TAX LAW APPLICABLE TO ANNUITIES IN GENERAL. THE COMPANY
CANNOT PREDICT THE PROBABILITY THAT ANY CHANGES IN SUCH LAWS WILL BE MADE.
PURCHASERS ARE CAUTIONED TO SEEK COMPETENT TAX ADVICE REGARDING THE POSSIBILITY
OF SUCH CHANGES. THE COMPANY DOES NOT GUARANTEE THE TAX STATUS OF THE CONTRACTS.
PURCHASERS BEAR THE COMPLETE RISK THAT THE CONTRACTS MAY NOT BE TREATED AS
"ANNUITY CONTRACTS" UNDER FEDERAL INCOME TAX LAWS. IT SHOULD BE FURTHER
UNDERSTOOD THAT THE FOLLOWING DISCUSSION IS NOT EXHAUSTIVE AND THAT SPECIAL
RULES NOT DESCRIBED HEREIN MAY BE APPLICABLE IN CERTAIN SITUATIONS. MOREOVER, NO
ATTEMPT HAS BEEN MADE TO CONSIDER ANY APPLICABLE STATE OR OTHER TAX LAWS.
Section 72 of the Code governs taxation of annuities in general. An Owner is not
taxed on increases in the value of a Contract until distribution occurs, either
in the form of a lump sum payment or as annuity payments under the Annuity
Option selected. For a lump sum payment received as a total withdrawal (total
surrender), the recipient is taxed on the portion of the payment that exceeds
the cost basis of the Contract. For Non-Qualified Contracts, this cost basis is
generally the purchase payments, while for Qualified Contracts there may be no
cost basis. The taxable portion of the lump sum payment is taxed at ordinary
income tax rates.
For annuity payments, a portion of each payment in excess of an exclusion amount
is includible in taxable income. The exclusion amount for payments based on a
fixed annuity option is determined by multiplying the payment by the ratio that
the cost basis of the Contract (adjusted for any period or refund feature) bears
to the expected return under the Contract. The exclusion amount for payments
based on a variable annuity option is determined by dividing the cost basis of
the Contract (adjusted for any period certain or refund guarantee) by the number
of years over which the annuity is expected to be paid. Payments received after
the investment in the Contract has been recovered (i.e. when the total of the
excludable amount equals the investment in the Contract) are fully taxable. The
taxable portion is taxed at ordinary income tax rates. For certain types of
Qualified Plans there may be no cost basis in the Contract within the meaning of
Section 72 of the Code. Owners, Annuitants and Beneficiaries under the Contracts
should seek competent financial advice about the tax consequences of any
distributions. The Company is taxed as a life insurance company under the Code.
For federal income tax purposes, the Separate Account is not a separate entity
from the Company, and its operations form a part of the Company.
Diversification
Section 817(h) of the Code imposes certain diversification standards on the
underlying assets of variable annuity contracts. The Code provides that a
variable annuity contract will not be treated as an annuity contract for any
period (and any subsequent period) for which the investments are not, in
accordance with regulations prescribed by the United States Treasury Department
("Treasury Department"), adequately diversified. Disqualification of the
Contract as an annuity contract would result in the imposition of federal income
tax to the Owner with respect to earnings allocable to the Contract prior to the
receipt of payments under the Contract. The Code contains a safe harbor
provision which provides that annuity contracts such as the Contract meet the
diversification requirements if, as of the end of each quarter, the underlying
assets meet the diversification standards for a regulated investment company and
no more than fifty-five percent (55%) of the total assets consist of cash, cash
items, U.S. Government securities and securities of other regulated investment
companies.
On March 2, 1989, the Treasury Department issued Regulations (Treas.
Reg.1.817-5), which established diversification requirements for the investment
portfolios underlying variable contracts such as the Contract. The Regulations
amplify the diversification requirements for variable contracts set forth in the
Code and provide an alternative to the safe harbor provision described above.
Under the Regulations, an investment portfolio will be deemed adequately
diversified if: (1) no more than 55% of the value of the total assets of the
portfolio is represented by any one investment; (2) no more than 70% of the
value of the total assets of the portfolio is represented by any two
investments; (3) no more than 80% of the value of the total assets of the
portfolio is represented by any three investments; and (4) no more than 90% of
the value of the total assets of the portfolio is represented by any four
investments.
The Code provides that, for purposes of determining whether or not the
diversification standards imposed on the underlying assets of variable contracts
by Section 817(h) of the Code have been met, "each United States government
agency or instrumentality shall be treated as a separate issuer."
The Company intends that all investment portfolios underlying the Contracts will
be managed in such a manner as to comply with these diversification
requirements.
The Treasury Department has indicated that the diversification Regulations do
not provide guidance regarding the circumstances in which Owner control of the
investments of the Separate Account will cause the Owner to be treated as the
owner of the assets of the Separate Account, thereby resulting in the loss of
favorable tax treatment for the Contract. At this time it cannot be determined
whether additional guidance will be provided and what standards may be contained
in such guidance.
The amount of Owner control which may be exercised under the Contract is
different in some respects from the situations addressed in published rulings
issued by the Internal Revenue Service in which it was held that the policy
owner was not the owner of the assets of the separate account. It is unknown
whether these differences, such as the Owner's ability to transfer among
investment choices or the number and type of investment choices available, would
cause the Owner to be considered as the owner of the assets of the Separate
Account resulting in the imposition of federal income tax to the Owner with
respect to earnings allocable to the Contract prior to receipt of payments under
the Contract.
In the event any forthcoming guidance or ruling is considered to set forth a new
position, such guidance or ruling will generally be applied only prospectively.
However, if such ruling or guidance was not considered to set forth a new
position, it may be applied retroactively resulting in the Owners being
retroactively determined to be the owners of the assets of the Separate Account.
Due to the uncertainty in this area, the Company reserves the right to modify
the Contract in an attempt to maintain favorable tax treatment.
Multiple Contracts
The Code provides that multiple non-qualified annuity contracts which are issued
within a calendar year to the same contract owner by one company or its
affiliates are treated as one annuity contract for purposes of determining the
tax consequences of any distribution. Such treatment may result in adverse tax
consequences including more rapid taxation of the distributed amounts from such
combination of contracts. For purposes of this rule, contracts received in a
Section 1035 exchange will be considered issued in the year of the exchange.
Owners should consult a tax adviser prior to purchasing more than one
non-qualified annuity contract in any calendar year.
Contracts Owned by Other than Natural Persons
Under Section 72(u) of the Code, the investment earnings on premiums for the
Contracts will be taxed currently to the Owner if the Owner is a non-natural
person, e.g., a corporation or certain other entities. Such Contracts generally
will not be treated as annuities for federal income tax purposes. However, this
treatment is not applied to a Contract held by a trust or other entity as an
agent for a natural person nor to Contracts held by Qualified Plans. Purchasers
should consult their own tax counsel or other tax adviser before purchasing a
Contract to be owned by a non-natural person.
Tax Treatment of Assignments
An assignment or pledge of a Contract may be a taxable event. Owners should
therefore consult competent tax advisers should they wish to assign or pledge
their Contracts.
Death Benefits
Any death benefits paid under the Contract are taxable to the beneficiary. The
rules governing the taxation of payments from an annuity contract, as discussed
above, generally apply to the payment of death benefits and depend on whether
the death benefits are paid as a lump sum or as annuity payments. Estate taxes
may also apply.
Income Tax Withholding
All distributions or the portion thereof which is includible in the gross income
of the Owner are subject to federal income tax withholding. Generally, amounts
are withheld from periodic payments at the same rate as wages and at the rate of
10% from non-periodic payments. However, the Owner, in most cases, may elect not
to have taxes withheld or to have withholding done at a different rate.
Effective January 1, 1993, certain distributions from retirement plans qualified
under Section 401 or Section 403(b) of the Code, which are not directly rolled
over to another eligible retirement plan or individual retirement account or
individual retirement annuity, are subject to a mandatory 20% withholding for
federal income tax. The 20% withholding requirement generally does not apply to:
a) a series of substantially equal payments made at least annually for the life
or life expectancy of the participant or joint and last survivor expectancy of
the participant and a designated beneficiary, or for a specified period of 10
years or more; or b) distributions which are required minimum distributions; or
c) the portion of the distributions not includible in gross income (i.e. returns
of after-tax contributions); or d) hardship withdrawals. Participants should
consult their own tax counsel or other tax adviser regarding withholding
requirements.
Tax Treatment of Withdrawals - Non-Qualified Contracts
Section 72 of the Code governs treatment of distributions from annuity
contracts. It provides that if the Contract Value exceeds the aggregate purchase
payments made, any amount withdrawn will be treated as coming first from the
earnings and then, only after the income portion is exhausted, as coming from
the principal. Withdrawn earnings are includible in gross income. It further
provides that a ten percent (10%) penalty will apply to the income portion of
any premature distribution. However, the penalty is not imposed on amounts
received: (a) after the taxpayer reaches age 59 1/2; (b) after the death of the
Owner; (c) if the taxpayer is totally disabled (for this purpose disability is
as defined in Section 72(m)(7) of the Code); (d) in a series of substantially
equal periodic payments made not less frequently than annually for the life (or
life expectancy) of the taxpayer or for the joint lives (or joint life
expectancies) of the taxpayer and his or her Beneficiary; (e) under an immediate
annuity; or (f) which are allocable to purchase payments made prior to August
14, 1982.
With respect to (d) above, if the series of substantially equal periodic
payments is modified before the later of your attaining age 59 1/2 or 5 years
from the date of the first periodic payment, then the tax for the year of
modification is increased by an amount equal to the tax which would have been
imposed (the 10% penalty tax) but for the exception, plus interest for the tax
years in which the exception is used.
The above information does not apply to Qualified Contracts. However, separate
tax withdrawal penalties and restrictions may apply to such Qualified Contracts.
(See "Tax Treatment of Withdrawals - Qualified Contracts" below.)
Qualified Plans
The Contracts offered herein may also be used as Qualified Contracts. Owners,
Annuitants and Beneficiaries are cautioned that benefits under a Qualified
Contract may be subject to the terms and conditions of the plan regardless of
the terms and conditions of the Contracts issued pursuant to the plan. The
following discussion of Qualified Contracts is not exhaustive and is for general
informational purposes only. The tax rules regarding Qualified Contracts are
very complex and will have differing applications depending on individual facts
and circumstances. Each purchaser should obtain competent tax advice prior to
purchasing Qualified Contracts.
Qualified Contracts include special provisions restricting Contract provisions
that may otherwise be available as described herein. Generally, Qualified
Contracts are not transferable except upon surrender or annuitization.
On July 6, 1983, the Supreme Court decided in Arizona Governing Committee v.
Norris that optional annuity benefits provided under an employer's deferred
compensation plan could not, under Title VII of the Civil Rights Act of 1964,
vary between men and women. Qualified Contracts will utilize annuity tables
which do not differentiate on the basis of sex. Such annuity tables will also be
available for use in connection with certain non-qualified deferred compensation
plans.
Individual Retirement Annuities
Section 408(b) of the Code permits eligible individuals to contribute to an
individual retirement program known as an Individual Retirement Annuity (IRA).
Under applicable limitations, certain amounts may be contributed to an IRA which
will be deductible from the individual's taxable income. These IRAs are subject
to limitations on eligibility, contributions, transferability and
distributions.(See "Tax Treatment of Withdrawals - Qualified Contracts" below.)
Under certain conditions, distributions from other IRAs and other Qualified
Plans may be rolled over or transferred on a tax-deferred basis into an IRA.
Sales of Contracts for use with IRAs are subject to special requirements imposed
by the Code, including the requirement that certain informational disclosure be
given to persons desiring to establish an IRA. Purchasers of Contracts to be
qualified as Individual Retirement Annuities should obtain competent tax advice
as to the tax treatment and suitability of such an investment.
ROTH IRAS
Section 408(A) of the Code provides that beginning in 1998, individuals may
purchase a new type of non-deductible IRA, known as a Roth IRA. Purchase
payments for a Roth IRA are limited to a maximum of $2,000 per year and are not
deductible from taxable income. Lower maximum limitations apply to individuals
with adjusted gross incomes between $95,000 and $110,000 in the case of single
taxpayers, between $150,000 and $160,000 in the case of married taxpayers filing
joint returns, and between $0 and $10,000 in the case of married taxpayers
filing separately. An overall $2,000 annual limitation continues to apply to all
of a taxpayer's IRA contributions, including Roth IRA and non-Roth IRAs.
Qualified distributions from Roth IRAs are free from federal income tax. A
qualified distribution requires that an individual has held the Roth IRA for at
least five years and, in addition, that the distribution is made either after
the individual reaches age 59 1/2, on the individual's death or disability, or
as a qualified first-time home purchase, subject to a $10,000 lifetime maximum,
for the individual, a spouse, child, grandchild, or ancestor. Any distribution
which is not a qualified distribution is taxable to the extent of earnings in
the distribution. Distributions are treated as made from contributions first and
therefore no distributions are taxable until distributions exceed the amount of
contributions to the Roth IRA. The 10% penalty tax and the regular IRA
exceptions to the 10% penalty tax apply to taxable distributions from a Roth
IRA.
Amounts may be rolled over from one Roth IRA to another Roth IRA. Furthermore,
an individual may make a rollover contribution from a non-Roth IRA to a Roth
IRA, unless the individual has adjusted gross income over $100,000 or the
individual is a married taxpayer filing a separate return. The individual must
pay tax on any portion of the IRA being rolled over that represents income or a
previously deductible IRA contribution. However, for rollovers in 1998, the
individual may pay that tax ratably over the four taxable year period beginning
with tax year 1998.
Purchasers of Contracts to be qualified as a Roth IRA should obtain competent
tax advice as to the tax treatment and suitability of such an investment.
Tax Treatment of Withdrawals - Qualified Contracts
Section 72(t) of the Code imposes a 10% penalty tax on the taxable portion of
any distribution from qualified retirement plans, including Contracts issued and
qualified under Code Section 408 and 408A (Individual Retirement Annuities). To
the extent amounts are not includible in gross income because they have been
rolled over to an IRA or to another eligible Qualified Plan, no tax penalty will
be imposed. The tax penalty will not apply to the following distributions: (a)
if distribution is made on or after the date on which the Annuitant reaches age
59 1/2; (b) distributions following the death or disability of the Annuitant
(for this purpose disability is as defined in Section 72(m)(7) of the Code); (c)
distributions that are part of substantially equal periodic payments made not
less frequently than annually for the life (or life expectancy) of the Annuitant
or the joint lives (or joint life expectancies) of the Annuitant and his or her
designated Beneficiary; (d) distributions made to the Annuitant to the extent
such distributions do not exceed the amount allowable as a deduction under Code
Section 213 to the Annuitant for amounts paid during the taxable year for
medical care; (e) distributions from an Individual Retirement Annuity for the
purchase of medical insurance (as described in Section 213(d)(1)(D) of the Code)
for the Annuitant and his or her spouse and dependents if the Annuitant has
received unemployment compensation for at least 12 weeks (this exception will no
longer apply after the Annuitant has been re-employed for at least 60 days); (f)
distributions from an Individual Retirement Annuity made to the Annuitant to the
extent such distributions do not exceed the qualified higher education expenses
(as defined in Section 72(t)(7) of the Code) of the Annuitant for the taxable
year; and (g) distributions from an Individual Retirement Annuity made to the
Annuitant which are qualified first-time home buyer distributions (as defined in
Section 72(t)(8) of the Code).
With respect to (c) above, if the series of substantially equal periodic
payments is modified before the later of your attaining age 59 1/2 or 5 years
from the date of the first periodic payment, then the tax for the year of the
modification is increased by an amount equal to the tax which would have been
imposed (the 10% penalty tax) but for the exception, plus interest for the tax
years in which the exception is used.
Generally, distributions from a qualified plan must commence no later than April
1 of the calendar year following the year in which the employee attains age 70
1/2. Required distributions must be over a period not exceeding the life
expectancy of the individual or the joint lives or life expectancies of the
individual and his or her designated beneficiary. If the required minimum
distributions are not made, a 50% penalty tax is imposed as to the amount not
distributed.
ANNUITY PROVISIONS
Fixed Annuity
A fixed annuity is an annuity with payments which are guaranteed as to dollar
amount by the Company and do not vary with the investment experience of the
Separate Account. The dollar amount of each fixed annuity will be determined in
accordance with annuity tables contained in the contract.
Variable Annuity
A variable annuity is an annuity with payments which: (1) are not predetermined
as to dollar amount; and (2) will vary in amount with the net investment results
of the applicable investment portfolio(s) of the Separate Account.
Annuity Unit Value
On the Annuity Date a fixed number of Annuity Units will be purchased as
follows:
For each Subaccount the fixed number of Annuity Units is equal to the Adjusted
Contract Value for all Subaccounts, divided first by $1000, then multiplied by
the appropriate Annuity Payment amount from the Annuity Table contained in the
Contract for each $1000 of value for the Annuity Option selected, and then
divided by the Annuity Unit value for that Subaccount on the Annuity Date. After
that, the number of Annuity Units in each Subaccount remains unchanged unless
you elect to transfer between Subaccounts. All calculations will appropriately
reflect the Annuity Payment frequency selected.
On each Annuity Payment date, the total Variable Annuity Payment is the sum of
the Annuity Payments for each Subaccount. The Variable Annuity Payment in each
Subaccount is determined by multiplying the number of Annuity Units then
allocated to such Subaccount by the Annuity Unit value for that Subaccount. On
each subsequent business day, the value of an Annuity Unit is determined in the
following way:
First: The net Investment Factor is determined as described in the Prospectus
under "Accumulation Units".
Second: The value of an Annuity Unit for a business day is equal to:
a. the value of the Annuity Unit for the immediately preceding business
day;
b. multiplied by the Net Investment Factor for current business day;
c. divided by the Assumed Net Investment Factor (see below) for the
business day.
The Assumed Net Investment Factor is equal to one plus the Assumed Investment
Return which is used in determining the basis for the purchase of an Annuity,
adjusted to reflect the particular business day. The Assumed Investment Return
that we will use is 3 1/2%. However, we may agree with you to use a different
value.
BMA may elect to determine the amount of each annuity payment up to 10 business
days prior to the elected payment date. The value of your contract less any
applicable premium tax is applied to the applicable annuity table to determine
the initial annuity payment.
MORTALITY AND EXPENSE GUARANTEE
We guarantee that the dollar amount of each Annuity Payment after the first will
not be affected by variations in mortality or expense experience.
FINANCIAL STATEMENTS
The unaudited balance sheet of BMA Variable Annuity Account A as of September
30,1999 and the related statement of operations and changes in net assets for
the period ended September 30, 1999 and 1998 follow.
The audited balance sheet of BMA Variable Annuity Account A as of December 31,
1998 and the related statement of operations and changes in net assets for the
year ended December 31, 1998, and for the period from November 24, 1997
(inception), to December 31, 1997, and the report of Ernst and Young LLP,
independent auditors with respect thereto, follow.
The audited consolidated financial statements of the Company as of December 31,
1998 and 1997, and for each of the years in the three year period ended December
31, 1998, which are also included herein should be considered only as bearing
upon the ability of the Company to meet its obligations under the Contracts.
<PAGE>
BMA Variable Annuity Account A
Statement of Assets and Liabilities
Assets
<TABLE>
<CAPTION>
September 30,
1999
(Unaudited)
<S> <C>
Investments:
Investors Mark Series Fund, Inc. (IMSF):
Balanced - 39,311 shares at net asset value of $8.98 per share (cost, $377,491) $353,013
Growth and Income - 46,321 shares at net asset value of $12.18 per share (cost, $512,349) 564,191
Large Cap Value - 46,033 shares at net asset value of $9.95 per share (cost, $460,617) 458,032
Small Cap Equity - 27,155 shares at net asset value of $9.47 per share (cost, $216,676) 257,157
Large Cap Growth - 21,748 shares at net asset value of $14.25 per share (cost, $263,398) 309,911
Intermediate Fixed Income - 26,492 shares at net asset value of $9.94 per share (cost,
$268,026) 263,332
Mid Cap Equity - 32,077 shares at net asset value of $10.40 per share (cost, $331,353) 333,605
Money Market - 51,864 shares at net asset value of $1.00 per share (cost, $51,864) 51,864
Global Fixed Income - 6,436 shares at net asset value of $9.88 per share (cost, $64,162) 63,585
Berger Institutional Products Trust (Berger IBT):
Berger IPT International Fund - 33,054 shares at net asset value of $12.14 per share (cost,
$360,384) 401,274
Dreyfus Corporation:
Dreyfus Stock Index Fund - 810 shares at net asset value of $33.73 per share (cost, $27,694) 27,325
Dreyfus Disciplined Stock Portfolio - 2,569 shares at net asset value of $23.72 per share
(cost, $62,346) 60,947
INVESCO Funds Group, Inc.:
INVESCO VIF - High Yield Fund - 6,226 shares at net asset value of $11.93 per share (cost,
$73,914) 74,274
INVESCO VIF - Equity Income Fund - 782 shares at net asset value of $19.79 per share (cost,
$15,990) 15,468
Lazard Asset Management:
Lazard Retirement Small Cap Portfolio - 2,400 shares at net asset value of 9.88 per share
(cost, $24,788) 23,712
American Century Investment Management, Inc.:
VP Income & Growth - 6,122 shares at net asset value of $7.03 per share (cost, $42,839) 43,036
VP Value - 8,406 shares at net asset value of $6.04 per share (cost, $52,614) 50,770
Receivable from BMA 207
----------
Total Assets $3,351,703
==========
</TABLE>
See accompanying notes to unaudited financial statements.
<PAGE>
Liabilities and net assets
<TABLE>
<CAPTION>
Mortality and expense risks payable $3,778
Net assets are represented by:
---------------------------------
Number Unit
Of Units Value Amount
---------------------------------
<S> <C> <C> <C>
IMSF Balanced:
Accumulation units 35,827 $ 9.8425 352,630
IMSF Growth and Income
Accumulation units 47,773 11.7966 563,558
IMSF Large Cap Value
Accumulation units 44,190 10.3538 457,538
IMSF Small Cap Equity
Accumulation units 22,083 11.6324 256,882
IMSF Large Cap Growth
Accumulation units 23,589 13.1239 309,577
IMSF Intermediate Fixed Income
Accumulation units 25,616 10.2684 263,037
IMSF Mid Cap Equity
Accumulation units 31,796 10.4808 333,249
IMSF Money Market
Accumulation units 5,009 10.3962 52,072
IMSF Global Fixed Income
Accumulation units 6,237 10.1847 63,518
Berger IPT International
Accumulation units 31,909 12.5615 400,825
Dreyfus Stock Index
Accumulation units 2,621 10.4033 27,266
Dreyfus Stock Portfolio
Accumulation units 5,949 10.2309 60,860
INVESCO VIF - High Yield Fund
Accumulation units 7,102 10.4408 74,147
INVESCO VIF - Equity Index Fund
Accumulation units 1,468 10.5233 15,450
Lazard Retirement Small Cap Portfolio
Accumulation units 2,303 10.2780 23,671
American Century VP Income & Growth
Accumulation units 4,182 10.2705 42,955
American Century VP Value
Accumulation units 5,087 9.9638 50,690
----------
Net Assets 3,347,925
----------
Total liabilities and net assets $3,351,703
==========
</TABLE>
See accompanying notes to unaudited financial statements.
<PAGE>
BMA Variable Annuity Account A
Statement of Operations and Changes in Net Assets
Nine Months Ended September 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
Growth Large Cap Small Cap Large Cap Intermediate Mid Cap
Balanced & Income Value Equity Growth Fixed Income Equity
-----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Investment Income $ 0 0 0 0 0 0 0
Mortality, expense and
administrative charges 2,662 5,080 4,382 1,714 263 2,547 3,012
-----------------------------------------------------------------------------------
Net investment income (loss) (2,662) (5,080) (4,382) (1,714) (263) (2,547) (3,012)
Capital gain distributions 0 0 0 0 0 0 0
Realized gain (loss) on investments (1,382) 1,293 1,312 (291) 3,233 (340) 432
Unrealized appreciation
(depreciation) on investments (4,999) 17,406 (3,253) 36,165 12,711 368 (19,910)
-----------------------------------------------------------------------------------
Net realized and unrealized gain
(loss) on investments (6,381) 18,699 (1,941) 35,874 15,944 28 (19,478)
----------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from operations (9,043) 13,619 (6,323) 34,160 15,681 (2,519) (22,490)
Net assets at beginning of year 188,043 414,874 378,460 147,887 195,242 196,533 203,438
Variable annuity deposits 11,250 29,005 22,089 13,089 11,994 24,236 21,698
Terminations and Withdrawals (1,164) (1,940) (1,268) (3,585) (1,426) (1,058) (3,931)
Transfers* 163,544 108,000 64,580 65,331 88,086 45,845 134,534
-----------------------------------------------------------------------------------
Net assets at end of period $352,630 563,558 457,538 256,882 309,577 263,037 333,249
===================================================================================
</TABLE>
<TABLE>
<CAPTION>
Money Global Fixed Berger IPT
Market Income International Subtotal
--------------------------------------------------------------
<S> <C> <C> <C> <C>
Investment Income 2,310 0 0 $ 2,310
Mortality, expense and
administrative charges 794 328 2,895 23,677
--------------------------------------------------------------
Net investment income (loss) 1,516 (328) (2,895) (21,367)
Capital gain distributions 0 0 0 0
Realized gain (loss) on investments 0 (47) 2,636 6,846
Unrealized appreciation
(depreciation) on investments 0 (111) 22,089 60,466
--------------------------------------------------------------
Net realized and unrealized gain
(loss) on investments 0 (158) 24,725 67,312
--------------------------------------------------------------
Net increase (decrease) in net assets
resulting from operations 1,516 (486) 21,830 45,945
Net assets at beginning of year 199,625 14,881 255,115 2,194,098
Variable annuity deposits 555,218 16,000 14,897 719,476
Terminations and Withdrawals (1,068) (1,064) (6,133) (22,637)
Transfers* (703,219) 34,187 115,116 116,004
--------------------------------------------------------------
Net assets at end of period 52,072 63,518 400,825 3,052,886
==============================================================
</TABLE>
*Includes transfer activity from (to) other subaccounts and transfers (from) to
the fixed accounts.
See accompanying notes to unaudited financial statements.
<PAGE>
BMA Variable Annuity Account A
Statement of Operations and Changes in Net Assets (continued)
Nine Months Ended September 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
Dreyfus Dreyfus INVESCO INVESCO Lazard
Stock Disciplined VIF High VIF Equity Retirement
Income Stock Yield Income Small Cap
---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Investment Income $283 0 0 0 0
Mortality, expense and
Administrative charges 170 199 278 29 49
---------------------------------------------------------------------------------------
Net investment income (loss) 113 (199) (278) (29) (49)
Capital gain distributions 0 0 0 0 0
Realized gain (loss) on investments 9 12 4 1 269
Unrealized appreciation
(depreciation) on investments (369) (1,399) 360 (522) (1,076)
---------------------------------------------------------------------------------------
Net realized and unrealized gain
(loss) on investments (360) (1,387) 364 (521) (807)
---------------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from operations (247) (1,586) 86 (550) (856)
Net assets at beginning of year 0 0 0 0 0
Variable annuity deposits 25,730 45,250 32,000 12,000 3,412
Terminations and Withdrawals 0 0 0 0 0
Transfers* 1,783 17,196 42,061 4,000 21,115
---------------------------------------------------------------------------------------
Net assets at end of period $27,266 60,860 74,147 15,450 23,671
=========================================================================================
</TABLE>
*Includes transfer activity from (to) other subaccounts and transfers (from) to
the fixed accounts.
See accompanying notes to unaudited financial statements.
<TABLE>
<CAPTION>
VP
Income & VP
Growth Value Subtotal Total
-------------------------------------------------
<S> <C> <C> <C> <C>
Investment Income 3 0 286 2,596
Mortality, expense and
Administrative charges 245 205 1,175 24,256
-------------------------------------------------
Net investment income (loss) (242) (205) (889) (22,256)
Capital gain distributions 0 0 0 0
Realized gain (loss) on investments 15 31 341 7,187
Unrealized appreciation
(depreciation) on investments 197 (1,844) (4,653) 55,813
-------------------------------------------------
Net realized and unrealized gain
(loss) on investments 212 (1,813) (4,312) 63,000
-------------------------------------------------
Net increase (decrease) in net assets
resulting from operations (30) (2,018) (5,201) 40,744
Net assets at beginning of year 0 0 0 2,194,098
Variable annuity deposits 37,200 41,250 196,842 916,318
Terminations and Withdrawals 0 0 0 (22,637)
Transfers* 5,785 11,458 103,398 219,402
-------------------------------------------------
Net assets at end of period 42,955 50,690 295,039 3,347,925
=================================================
</TABLE>
<PAGE>
BMA Variable Annuity Account A
Statement of Operations and Changes in Net Assets
Nine Months Ended September 30, 1998 (Unaudited)
<TABLE>
<CAPTION>
Growth Large Cap Small Cap Large Cap Intermediate Mid Cap
Balanced & Income Value Equity Growth Fixed Income Equity
--------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Investment Income $0 0 0 0 0 0 0
Mortality, expense and
administrative charges 1,195 2,853 2,082 501 425 1,572 698
---------------------------------------------------------------------------------------------
Net investment income (loss) (1,195) (2,853) (2,082) (501) (425) (1,572) (698)
Capital gain distributions 0 0 0 0 0 0 0
Realized gain (loss) on investments 53 210 637 9 783 8 161
Unrealized appreciation
(depreciation) on investments (17,905) (21,713) (31,269) (17,596) (1,737) 7,556 (10,461)
---------------------------------------------------------------------------------------------
Net realized and unrealized gain
(loss) on investments (17,852) (21,503) (30,632) (17,587) (954) 7,564 (10,300)
---------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from operations (19,047) (24,356) (32,714) (18,088) (1,379) 5,992 (10,998)
Net assets at beginning of year 1,009 3,550 3,521 4,923 3,600 1,011 5,494
Variable annuity deposits 127,795 313,553 243,257 51,897 41,800 164,279 78,807
Terminations and Withdrawals (43) (80) (89) (5) 0 0 0
Transfers* 49,230 30,322 30,215 14,477 8,393 8,902 3,385
---------------------------------------------------------------------------------------------
Net assets at end of period $158,944 322,989 244,190 53,204 52,414 180,184 76,688
=============================================================================================
</TABLE>
*Includes transfer activity from (to) other subaccounts and transfers (from) to
the fixed accounts.
See accompanying notes to unaudited financial statements.
<TABLE>
<CAPTION>
Money Global Fixed Berger IPT
Market Income International Total
------------------------------------------------------------
<S> <C> <C> <C> <C>
Investment Income 888 0 0 $888
Mortality, expense and
administrative charges 243 135 1,683 11,387
------------------------------------------------------------
Net investment income (loss) 645 (135) (1,683) (10,499)
Capital gain distributions 0 0 0 0
Realized gain (loss) on investments 0 5 394 2,260
Unrealized appreciation
(depreciation) on investments 0 744 (17,110) (109,491)
------------------------------------------------------------
Net realized and unrealized gain
(loss) on investments 0 749 (16,716) (107,231)
------------------------------------------------------------
Net increase (decrease) in net assets
resulting from operations 645 614 (18,399) (117,730)
Net assets at beginning of year 1,003 1,021 5,017 30,149
Variable annuity deposits 217,958 11,779 188,334 1,439,459
Terminations and Withdrawals 0 0 0 (217)
Transfers* (157,438) 2,499 6,176 (3,839)
------------------------------------------------------------
Net assets at end of period 62,168 15,913 181,128 1,347,822
============================================================
</TABLE>
<PAGE>
BMA Variable Annuity Account A
Notes to Unaudited Financial Statements
September 30, 1999
These financial statements are unaudited but, in management opinion, include all
adjustments necessary for a fair presentation of results.
These interim financial statements should be read in conjunction with the BMA
Variable Annuity Account A report for the year ended December 31, 1998 and the
period from November 24, 1997 (inception) to December 31, 1997.
<PAGE>
FINANCIAL STATEMENTS
BMA VARIABLE ANNUITY ACCOUNT A
Year ended December 31, 1998 and
period from November 24, 1997 (inception)
to December 31, 1997
with Report of Independent Auditors.
1
<PAGE>
BMA VARIABLE ANNUITY ACCOUNT A
FINANCIAL STATEMENTS
Year ended December 31, 1998 and period from
November 24, 1997 (inception) to December 31, 1997
<TABLE>
<CAPTION>
Contents Page
- -------- ----
<S> <C>
Report of Independent Auditors............................................. 1
Audited Financial Statements
Statement of Assets and Liabilities........................................ 2
Statements of Operations and Changes in Net Assets......................... 4
Notes to Financial Statements.............................................. 6
</TABLE>
1
<PAGE>
REPORT OF INDEPENDENT AUDITORS
The Contract Owners of BMA Variable Annuity
Account A and The Board of Directors of
Business Men's Assurance Company of America
We have audited the accompanying statement of assets and liabilities of BMA
Variable Annuity Account A (the Account) as of December 31, 1998 and the
related statements of operations and changes in net assets for the year ended
December 31, 1998 and for the period from November 24, 1997 (inception) to
December 31, 1997. These financial statements are the responsibility of the
Account's management. Our responsibility is to express an opinion on these
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. Our
procedures included confirmation of securities owned as of December 31, 1998,
by correspondence with the mutual funds' transfer agents. An audit also
includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of BMA Variable Annuity
Account A at December 31, 1998, and the results of its operations and changes
in net assets for the year ended December 31, 1998 and for the period from
November 24, 1997 (inception) to December 31, 1997, in conformity with
generally accepted accounting principles.
Ernst & Young LLP
February 5, 1999
1
<PAGE>
BMA VARIABLE ANNUITY ACCOUNT A
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1998
<TABLE>
<S> <C>
Assets
Investments (Notes 1 and 3):
Investors Mark Series Fund, Inc. (IMSF):
Balanced--21,209 shares at net asset value of $8.88 per share
(cost, $207,813)................................................. $ 188,334
Growth and Income--36,028 shares at net asset value of $11.53 per
share (cost, $380,968)........................................... 415,404
Large Cap Value--38,357 shares at net asset value of $9.88 per
share (cost, $378,304)........................................... 378,972
Small Cap Equity--18,188 shares at net asset value of $8.14 per
(cost $143,735).................................................. 148,051
Large Cap Growth--14,603 shares at net asset value of $13.31 per
share (cost, $160,550)........................................... 194,424
Intermediate Fixed Income--19,787 shares at net asset value of
$9.95 per share (cost, $201,945)................................. 196,884
Mid Cap Equity--18,334 shares at net asset value of $11.11 per
share (cost, $181,530)........................................... 203,692
Money Market--199,432 shares at net asset value of $1.00 per share
(cost, $199,432)................................................. 199,432
Global Fixed Income--1,503 shares at net asset value of $9.92 per
share (cost, $15,377)............................................ 14,911
Berger Institutional Products Trust (Berger IBT):
Berger IPT International Fund--22,787 shares at net asset value of
$11.21 per share (cost, $236,641)................................ 255,442
Receivable from BMA................................................. 1,029
----------
Total assets.................................................. $2,196,575
==========
</TABLE>
2
<PAGE>
Liabilities and net assets
<TABLE>
<S> <C> <C> <C>
Mortality and expense risks payable................................. $ 2,477
Net assets are represented by (Note 3):
<CAPTION>
Number
of Unit
Units Value Amount
------ ----- ----------
<S> <C> <C> <C>
Investors Mark Series Fund Inc. (IMSF):
Balanced:
Accumulation units................................. 20,112 $9.35 188,043
Growth and Income:
Accumulation units................................. 37,309 11.12 414,874
Large Cap Value:
Accumulation units................................. 37,733 10.03 378,460
Small Cap Equity:
Accumulation units................................. 18,394 8.04 147,887
Large Cap Growth:
Accumulation units................................. 15,406 12.67 195,242
Intermediate Fixed Income:
Accumulation units................................. 18,755 10.48 196,533
Mid Cap Equity:
Accumulation units................................. 19,049 10.68 203,438
Money Market:
Accumulation units................................. 19,195 10.40 199,625
Global Fixed Income:
Accumulation units................................. 1,379 10.79 14,881
Berger IPT International:
Accumulation units................................. 21,402 11.92 255,115
----------
Net assets............................................. 2,194,098
----------
Total liabilities and net assets................. $2,196,575
==========
</TABLE>
See accompanying notes.
3
<PAGE>
BMA VARIABLE ANNUITY ACCOUNT A
STATEMENT OF OPERATIONS AND CHANGES IN NET ASSETS
Year ended December 31, 1998
<TABLE>
<CAPTION>
IMSF IMSF IMSF IMSF IMSF
Growth Large Small Large IMSF IMSF IMSF Global
IMSF and Cap Cap Cap Intermediate Mid Cap Money Fixed Berger IPT
Balanced Income Value Equity Growth Fixed Income Equity Market Income International
-------- -------- -------- -------- -------- ------------ -------- -------- -------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Investment
income........... $ 9,519 $ 4,587 $ 10,874 $ 63 $ 115 $ 11,817 $ 2,000 $ 1,351 $ 1,250 $ 3,578
Expenses (Note
2):
Mortality,
expense and
administrative
charges......... 1,876 4,791 3,644 969 1,030 2,216 1,903 401 190 2,761
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Net investment
income........... 7,643 (204) 7,230 (906) (915) 9,601 97 950 1,060 817
Realized gains
(losses) on
investments...... (87) 626 712 (176) 1,020 17 190 -- 70 626
Unrealized
appreciation
(depreciation) on
investments...... (19,483) 34,385 648 4,389 33,699 (5,066) 22,170 -- (480) 18,779
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Net realized and
unrealized gain
(loss) on
investments...... (19,570) 35,011 1,360 4,213 34,719 (5,049) 22,360 -- (410) 19,405
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Net increase
(decrease) in net
assets resulting
from operations.. (11,927) 34,807 8,590 3,307 33,804 4,552 22,457 950 650 20,222
Variable annuity
deposits (Notes 2
and 3)........... 127,795 333,303 323,292 119,532 148,962 164,259 147,193 397,036 11,779 221,832
Terminations and
withdrawals...... (43) (80) (89) (5) -- -- -- -- -- --
Transfers*....... 71,209 43,294 43,146 20,130 8,876 26,711 28,294 (199,364) 1,431 8,044
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Net increase..... 187,034 411,324 374,939 142,964 191,642 195,522 197,944 198,622 13,860 250,098
Net assets at
beginning of
year............. 1,009 3,550 3,521 4,923 3,600 1,011 5,494 1,003 1,021 5,017
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Net assets at end
of year.......... $188,043 $414,874 $378,460 $147,887 $195,242 $196,533 $203,438 $199,625 $ 14,881 $255,115
======== ======== ======== ======== ======== ======== ======== ======== ======== ========
<CAPTION>
Total
-----------
<S> <C>
Investment
income........... $ 45,154
Expenses (Note
2):
Mortality,
expense and
administrative
charges......... 19,781
-----------
Net investment
income........... 25,373
Realized gains
(losses) on
investments...... 2,998
Unrealized
appreciation
(depreciation) on
investments...... 89,041
-----------
Net realized and
unrealized gain
(loss) on
investments...... 92,039
-----------
Net increase
(decrease) in net
assets resulting
from operations.. 117,412
Variable annuity
deposits (Notes 2
and 3)........... 1,994,983
Terminations and
withdrawals...... (217)
Transfers*....... 51,771
-----------
Net increase..... 2,163,949
Net assets at
beginning of
year............. 30,149
-----------
Net assets at end
of year.......... $2,194,098
===========
</TABLE>
*Includes transfer activity from (to) other subaccounts and transfers from
(to) the fixed accounts.
See accompanying notes.
4
<PAGE>
BMA VARIABLE ANNUITY ACCOUNT A
STATEMENT OF OPERATIONS AND CHANGES IN NET ASSETS
Period from November 24, 1997 (inception) to December 31, 1997
<TABLE>
<CAPTION>
IMSF
IMSF IMSF IMSF IMSF IMSF IMSF IMSF Global
IMSF Growth and Large Cap Small Cap Large Cap Intermediate Mid Cap Money Fixed Berger IPT
Balanced Income Value Equity Growth Fixed Income Equity Market Income International Total
-------- ---------- --------- --------- --------- ------------ ------- ------ ------ ------------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Investment
income........... $ 6 $ 1 $ 3 $ -- $ -- $ 7 $ 6 $ 4 $ 8 $ -- $ 35
Expenses (Note
2):
Mortality,
expense and
administrative
charges......... 1 2 2 4 2 1 4 1 2 5 24
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ -------
Net investment
income........... 5 (1) 1 (4) (2) 6 2 3 6 (5) 11
Unrealized
appreciation
(depreciation) on
investments...... 4 51 20 (73) 102 5 (8) -- 15 22 138
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ -------
Net realized and
unrealized gain
(loss) on
investments...... 4 51 20 (73) 102 5 (8) -- 15 22 138
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ -------
Net increase
(decrease) in net
assets resulting
from operations.. 9 50 21 (77) 100 11 (6) 3 21 17 149
Variable annuity
deposits (Notes 2
and 3)........... 1,000 3,500 3,500 5,000 3,500 1,000 5,500 1,000 1,000 5,000 30,000
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ -------
Net increase..... 1,009 3,550 3,521 4,923 3,600 1,011 5,494 1,003 1,021 5,017 30,149
Net assets at
beginning of
period........... -- -- -- -- -- -- -- -- -- -- --
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ -------
Net assets at end
of period........ $1,009 $3,550 $3,521 $4,923 $3,600 $1,011 $5,494 $1,003 $1,021 $5,017 $30,149
====== ====== ====== ====== ====== ====== ====== ====== ====== ====== =======
</TABLE>
See accompanying notes.
F-5
<PAGE>
BMA VARIABLE ANNUITY ACCOUNT A
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998 and 1997
1. Summary of Significant Accounting Policies
Organization
BMA Variable Annuity Account A (the Account) is a separate account of
Business Men's Assurance Company of America (BMA). The Account is registered
as a unit investment trust under the Investment Company Act of 1940, as
amended.
Deposits received by the Account are invested in the various funds (mutual
funds not otherwise available to the public) as directed by the owners.
Amounts may be invested in shares of the following portfolios:
Investors Mark Series Funds, Inc. (IMSF): Balanced (emphasis on long-term
growth and high current income); Growth and Income (emphasis on long-term
growth and income without a lot of fluctuation in market value); Large Cap
Value (emphasis on long-term capital growth); Small Cap Equity (emphasis on
long-term growth by investing in small- and medium-sized companies); Large
Cap Growth (emphasis on long-term capital appreciation); Intermediate Fixed
Income (emphasis on current income with stability of principal and
liquidity); Mid Cap Equity (emphasis on long-term growth by investing in
common stock of mid-sized companies); Money Market (emphasis on current
income while preserving capital and maintaining liquidity) and Global Fixed
Income (emphasis on maximizing total return and generating a market-level
return while preserving both liquidity and principal).
Berger IPT International (emphasis on long-term capital appreciation
through investments in non-U.S. equity securities of well-established
companies)
Under the terms of the investment advisory contracts, portfolio investments
of the underlying mutual funds of IMSF are made by Investors Mark Series Fund,
LLC (IMSF, LLC), which is owned by Jones & Babson, Inc., a wholly-owned
subsidiary of BMA. IMSF, LLC has engaged Standish, Ayer & Wood, Inc. to
provide subadvisory services for the Intermediate Fixed Income Portfolio, the
Mid Cap Equity Portfolio and the Money Market Portfolio. IMSF, LLC has engaged
Standish International Management Company, L.P. to provide subadvisory
services for the Global Fixed Income Portfolio. IMSF, LLC has engaged Stein
Roe & Farnam, Incorporated to provide subadvisory services for the Small Cap
Equity Portfolio and the Large Cap Growth Portfolio. IMSF, LLC has engaged
David L. Babson & Co., Inc. to provide subadvisory services for the Large Cap
Value Portfolio. IMSF, LLC has engaged Lord, Abbett & Co. to provide
subadvisory services for the Growth and Income Portfolio. IMSF, LLC has
engaged Kornitzer Capital Management, Inc. to provide subadvisory services for
the Balanced Portfolio.
Berger Institutional Products Trust is a mutual fund with multiple
portfolios, one of which, the Berger/BIAM IPT - International Fund, is managed
by BBOI Worldwide LLC. BBOI Worldwide LLC has retained Bank of Ireland Asset
Management (U.S.) Limited (BIAM) as subadvisor.
F-6
<PAGE>
BMA VARIABLE ANNUITY ACCOUNT A
NOTES TO FINANCIAL STATEMENTS--(Continued)
Investment Valuation
Investments in mutual fund shares are carried in the balance sheet at
market value (net asset value of the underlying mutual fund). The first-in,
first-out method is used to determine gains and losses. Security transactions
are accounted for on the trade date, and dividend income from the funds to the
Account is recorded on the ex-dividend date and reinvested upon receipt.
Capital gain distributions from the mutual funds to the Account also are
reinvested upon receipt.
The cost of investments purchased and proceeds from sales were as follows:
<TABLE>
<CAPTION>
Period from
November 24, 1997
Year ended (inception) to
December 31, 1998 December 31, 1997
--------------------- ------------------
Proceeds
Cost of from Cost of
Purchases Sales Purchases
----------- --------- ------------------
<S> <C> <C> <C>
IMSF Balanced.......................... $ 211,341 $ 4,447 $ 1,006
IMSF Growth and Income................. 383,734 6,893 3,501
IMSF Large Cap Value................... 382,110 8,021 3,503
IMSF Small Cap Equity.................. 140,032 1,121 5,000
IMSF Large Cap Growth.................. 161,199 5,169 3,500
IMSF Intermediate Fixed Income......... 205,008 4,087 1,007
IMSF Mid Cap Equity.................... 180,591 4,757 5,506
IMSF Money Market...................... 398,110 199,682 1,004
IMSF Global Fixed Income............... 16,104 1,805 1,008
Berger IPT International............... 235,706 4,691 5,000
----------- --------- --------
Total................................ $ 2,313,935 $ 240,673 $ 30,035
=========== ========= ========
</TABLE>
Federal Income Taxes
The operations of the Account form a part of, and are taxed with, the
operations of BMA, which is taxed as a life insurance company under the
Internal Revenue Code. As a result, the net asset values of the subaccounts
are not affected by federal income taxes on income distributions received by
the subaccounts.
Use of Estimates
The preparation of financial statements in accordance with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
2. Variable Annuity Contract Charges
BMA deducts an administrative fee of $35 per year for each contract, except
for certain contracts based on a minimum account value. Mortality and expense
risks assumed by BMA are compensated for by a fee equivalent to an annual rate
of 1.40% annually of the average daily value of each contract. Initial
purchase payments (excluding amounts allocated to Fixed Account II in the
general account of BMA) in amounts of $75,000 or more made after September 8,
1998 incur a coverage charge of 1.25% annually.
When applicable, an amount for state premium taxes is deducted as provided
by pertinent state law, either from purchase payments or from the amount
applied to effect an annuity at the time annuity payments commence.
F-7
<PAGE>
BMA VARIABLE ANNUITY ACCOUNT A
NOTES TO FINANCIAL STATEMENTS--(Continued)
A contingent deferred sales charge is assessed by BMA against certain
withdrawals during the first seven years of the contract, declining from 7% in
the first year to 1% in the seventh year.
Contract charges retained by BMA from the proceeds of sales of annuity
contracts were not significant during 1998 or 1997.
3. Summary of Unit Transactions
Account deposits and terminations, withdrawals and expense charges by units
follow:
<TABLE>
<CAPTION>
Number of Units Number of Units
--------------- ----------------
Period from
November 24,
Year ended 1997 (inception)
December 31, to December 31,
1998 1997
------------ ----------------
<S> <C> <C>
Balanced:
Variable annuity deposits................... 27,455 100
Terminations, withdrawals and expense
charges.................................... 7,433
Growth and Income:
Variable annuity deposits................... 48,186 353
Terminations, withdrawals and expense
charges.................................... 11,386
Large Cap Value:
Variable annuity deposits................... 51,953 364
Terminations, withdrawals and expense
charges.................................... 15,603
Small Cap Equity:
Variable annuity deposits................... 20,346 507
Terminations, withdrawals and expense
charges.................................... 5,633
Large Cap Growth:
Variable annuity deposits................... 24,279 345
Terminations, withdrawals and expense
charges.................................... 8,962
Intermediate Fixed Income:
Variable annuity deposits................... 19,058 100
Terminations, withdrawals and expense
charges.................................... 397
Mid Cap Equity:
Variable annuity deposits................... 30,935 543
Terminations, withdrawals and expense
charges.................................... 13,307
Money Market:
Variable annuity deposits................... 86,798 100
Terminations, withdrawals and expense
charges.................................... 67,189
Global Fixed Income:
Variable annuity deposits................... 1,483 100
Terminations, withdrawals and expense
charges.................................... 204
Berger IPT International:
Variable annuity deposits................... 22,698 482
Terminations, withdrawals and expense
charges.................................... 1,732
</TABLE>
F-8
<PAGE>
BMA VARIABLE ANNUITY ACCOUNT A
NOTES TO FINANCIAL STATEMENTS--(Continued)
4. Impact of Year 2000 (Unaudited)
BMA continues to monitor the potential impact of the year 2000 on its
systems and those of its primary vendors and business partners. This
assessment extends to both informational technology systems and noninformation
technology systems. All identified modifications to BMA's critical operating
systems have been completed as of December 31, 1998, and BMA continues to
validate completed systems to ensure ongoing compliance. Contingency plans are
being developed and management estimates that these plans will be completed by
mid-1999, prior to any anticipated impact on its operating systems. Total
costs of the modifications have been immaterial to BMA's operations and have
been expensed as incurred.
BMA does risk that one or more of its critical suppliers or customers
(external relationships) will not be able to interact with BMA due to the
third parties' inability to resolve their own year 2000 issues. BMA is
actively monitoring the compliance programs of those third parties, and formal
communication has been initiated with all major outside service providers.
However, BMA is unable to predict with certainty to what extent its external
relationships will be year 2000 ready.
The forecast costs, consequences of the year 2000 problem and the dates by
which BMA believes it will complete its various year 2000 computer
modifications are based on its best estimates, which in turn were based on
numerous assumptions of future events including third-party modification and
compliance plans, continued availability of resources and other factors. BMA
cannot be sure that these estimates will be achieved or that the assumptions
are accurate, and actual results could differ materially from those
anticipated.
F-9
<PAGE>
CONSOLIDATED FINANCIAL STATEMENTS
BUSINESS MEN'S ASSURANCE COMPANY OF AMERICA
(A Member of the Generali Group of Companies)
Years ended December 31, 1998 and 1997
with Report of Independent Auditors
<PAGE>
BUSINESS MEN'S ASSURANCE COMPANY OF AMERICA
(A Member of the Generali Group of Companies)
CONSOLIDATED FINANCIAL STATEMENTS
Years ended December 31, 1998 and 1997
CONTENTS
<TABLE>
<S> <C>
Report of Independent Auditors.............................................. 1
Audited Consolidated Financial Statements
Consolidated Balance Sheets................................................. 2
Consolidated Statements of Operations....................................... 3
Consolidated Statements of Comprehensive Income............................. 4
Consolidated Statements of Stockholder's Equity............................. 5
Consolidated Statements of Cash Flows....................................... 6
Notes to Consolidated Financial Statements.................................. 7
</TABLE>
<PAGE>
REPORT OF INDEPENDENT AUDITORS
The Board of Directors
Business Men's Assurance Company of America
We have audited the accompanying consolidated balance sheets of Business
Men's Assurance Company of America (an ultimate subsidiary of Assicurazioni
Generali, S.p.A.) (the Company) as of December 31, 1998 and 1997, and the
related consolidated statements of operations, comprehensive income,
stockholder's equity and cash flows for each of the three years in the 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 consolidated financial
statements are free of material misstatement. An audit includes examining, on
a test basis, evidence supporting the amounts and disclosures in the
consolidated financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as
well as evaluating the overall consolidated 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 consolidated financial position
of Business Men's Assurance Company of America at December 31, 1998 and 1997,
and the consolidated results of its operations and its cash flows for each of
the three years in the period ended December 31, 1998, in conformity with
generally accepted accounting principles.
Ernst & Young LLP
Kansas City, Missouri
February 4, 1999
F-1
<PAGE>
BUSINESS MEN'S ASSURANCE COMPANY OF AMERICA
(A Member of the Generali Group of Companies)
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
December 31
---------------------
1998 1997
---------- ----------
(In Thousands)
<S> <C> <C>
Assets
Investments (Notes 1 and 3):
Securities available-for-sale, at fair value:
Fixed maturities (amortized cost--$1,257,705 in 1998
and $1,308,458 in 1997)............................. $1,277,121 $1,326,018
Equity securities (cost--$36,214 in 1998 and $46,807
in 1997)............................................ 40,373 57,806
Mortgage loans on real estate, net of allowance for
losses of $9,185 in 1998 and $8,435 in 1997........... 875,117 842,149
Policy loans........................................... 59,780 62,207
Short-term investments................................. 38,815 47,507
Other.................................................. 44,084 3,424
---------- ----------
Total investments.................................... 2,335,290 2,339,111
Cash..................................................... 2,531 --
Accrued investment income................................ 18,078 18,520
Premium and other receivables............................ 12,017 10,606
Deferred policy acquisition costs........................ 112,311 125,065
Property, equipment and software (Note 6)................ 16,276 16,753
Reinsurance recoverables:
Paid benefits.......................................... 6,549 6,588
Benefits and claim reserves ceded...................... 95,476 72,000
Other assets (Note 1).................................... 14,852 16,216
Assets held in separate accounts (Note 1)................ 300,366 76,964
---------- ----------
Total assets......................................... $2,913,746 $2,681,823
========== ==========
Liabilities and stockholder's equity
Future policy benefits:
Life and annuity (Note 10)............................. $1,253,531 $1,259,319
Health................................................. 78,527 87,883
Contract account balances................................ 677,444 699,244
Policy and contract claims............................... 62,953 58,381
Unearned revenue reserve................................. 9,924 11,284
Other policyholder funds................................. 14,671 14,286
Outstanding checks in excess of bank balances............ -- 2,669
Current income taxes payable (Note 7).................... 2,300 2,158
Deferred income taxes (Note 7)........................... 10,650 12,244
Payable to affiliate (Note 10)........................... 771 799
Other liabilities........................................ 84,183 72,858
Liabilities related to separate accounts (Note 1)........ 300,366 76,964
---------- ----------
Total liabilities........................................ 2,495,320 2,298,089
Commitments and contingencies (Note 5)
Stockholder's equity (Notes 2 and 11):
Preferred stock of $1 par value; authorized 3,000,000
shares, none issued and outstanding................... -- --
Common stock of $1 par value; authorized 24,000,000
shares, 12,000,000 shares issued and outstanding...... 12,000 12,000
Paid-in capital........................................ 40,106 40,106
Accumulated other comprehensive income................. 10,730 14,364
Retained earnings...................................... 355,590 317,264
---------- ----------
Total stockholder's equity........................... 418,426 383,734
---------- ----------
Total liabilities and stockholder's equity........... $2,913,746 $2,681,823
========== ==========
</TABLE>
See accompanying notes.
F-2
<PAGE>
BUSINESS MEN'S ASSURANCE COMPANY OF AMERICA
(A Member of the Generali Group of Companies)
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Year ended December 31
---------------------------
1998 1997 1996
-------- -------- --------
(In Thousands)
<S> <C> <C> <C>
Revenues:
Premiums:
Life and annuity.............................. $170,494 $154,602 $142,461
Health........................................ 27,199 43,518 60,491
Other insurance considerations.................. 37,599 37,928 38,780
Net investment income (Note 3).................. 181,528 167,958 146,564
Realized gains, net (Note 3).................... 10,556 5,121 5,906
Other income.................................... 44,123 35,941 26,802
-------- -------- --------
Total revenues.............................. 471,499 445,068 421,004
Benefits and expenses:
Life and annuity benefits....................... 144,979 126,345 122,915
Health benefits................................. 15,547 27,812 42,224
Increase in policy liabilities including
interest credited to account balances.......... 101,650 104,581 94,530
Commissions..................................... 51,881 53,622 55,180
(Increase) decrease in deferred policy
acquisition costs.............................. 11,271 (1,229) (5,459)
Taxes, licenses and fees........................ 3,739 4,654 5,229
Other operating costs and expenses.............. 87,301 90,562 78,133
-------- -------- --------
Total benefits and expenses................. 416,368 406,347 392,752
-------- -------- --------
Income from continuing operations before income
tax expense...................................... 55,131 38,721 28,252
Income tax expense (Note 7)....................... 16,805 2,532 10,168
-------- -------- --------
Income from continuing operations................. 38,326 36,189 18,084
Discontinued operations (Note 12):
Gain on sale of discontinued operations, net of
income tax expense of $735 in 1996............. -- -- 1,416
-------- -------- --------
Income from discontinued operations............... -- -- 1,416
-------- -------- --------
Net income.................................. $ 38,326 $ 36,189 $ 19,500
======== ======== ========
</TABLE>
See accompanying notes.
F-3
<PAGE>
BUSINESS MEN'S ASSURANCE COMPANY OF AMERICA
(A Member of the Generali Group of Companies)
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
<TABLE>
<CAPTION>
Year ended December 31
-------------------------
1998 1997 1996
------- ------- -------
(In Thousands)
<S> <C> <C> <C>
Net income.......................................... $38,326 $36,189 $19,500
Other comprehensive income:
Unrealized holding gains (losses) arising during
period........................................... 2,597 25,009 (21,346)
Less realized gains included in net income........ 6,760 1,868 7,851
------- ------- -------
Net unrealized gains (losses)................... (4,163) 23,141 (29,197)
Effect on deferred policy acquisition costs......... (1,483) (7,189) 13,418
Effect on unearned revenue reserve.................. 55 474 (2,082)
Deferred income taxes............................... 1,957 (5,748) 6,250
------- ------- -------
Other comprehensive income.......................... (3,634) 10,678 (11,611)
------- ------- -------
Comprehensive income............................ $34,692 $46,867 $ 7,889
======= ======= =======
</TABLE>
See accompanying notes.
F-4
<PAGE>
BUSINESS MEN'S ASSURANCE COMPANY OF AMERICA
(A Member of the Generali Group of Companies)
CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY
<TABLE>
<CAPTION>
Year ended December 31
---------------------------
1998 1997 1996
-------- -------- --------
(In Thousands)
<S> <C> <C> <C>
Common stock:
Balance at beginning and end of year............. $ 12,000 $ 12,000 $ 12,000
Paid-in capital:
Balance at beginning of year..................... 40,106 40,106 25,106
Additional paid-in capital..................... -- -- 15,000
-------- -------- --------
Balance at end of year........................... 40,106 40,106 40,106
Accumulated other comprehensive income:
Balance at beginning of year..................... 14,364 3,686 15,297
Change in net unrealized gains (losses)........ (3,634) 10,678 (11,611)
-------- -------- --------
Balance at end of year........................... 10,730 14,364 3,686
Retained earnings:
Balance at beginning of year..................... 317,264 281,075 266,575
Net income..................................... 38,326 36,189 19,500
Dividends declared (Note 2).................... -- -- (5,000)
-------- -------- --------
Balance at end of year........................... 355,590 317,264 281,075
-------- -------- --------
Total stockholder's equity......................... $418,426 $383,734 $336,867
======== ======== ========
</TABLE>
See accompanying notes.
F-5
<PAGE>
BUSINESS MEN'S ASSURANCE COMPANY OF AMERICA
(A Member of the Generali Group of Companies)
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Year ended December 31
-------------------------------
1998 1997 1996
--------- --------- ---------
(In Thousands)
<S> <C> <C> <C>
Operating activities
Net income.................................... $ 38,326 $ 36,189 $ 19,500
Adjustments to reconcile net income to net
cash provided by operating activities:
Deferred income tax (benefit)............... 363 (8,416) 4,146
Realized gains, net......................... (10,556) (5,121) (5,906)
Gain on disposal of discontinued segment.... -- -- (2,151)
Discount accretion, net..................... (1,618) (975) (1,246)
Policy loans lapsed in lieu of surrender
benefits................................... 3,740 1,021 2,996
Depreciation................................ 2,524 3,778 4,153
Amortization................................ 782 782 782
Changes in assets and liabilities:
(Increase) decrease in accrued investment
income.................................... 442 19 (1,392)
(Increase) decrease in receivables and
reinsurance recoverables.................. (24,876) (15,425) 2,761
Policy acquisition costs deferred.......... (22,484) (28,449) (31,745)
Policy acquisition costs amortized......... 33,755 27,220 26,286
Increase (decrease) in income taxes
payable................................... 142 (2,187) 5,518
Increase in accrued policy benefits, claim
reserves, unearned revenues and
policyholder funds........................ 19,189 30,777 32,331
Interest credited to policyholder accounts. 77,358 79,312 69,494
Increase (decrease) in outstanding checks
in excess of bank balances................ (2,669) (2,004) 805
Decrease in other assets and other
liabilities, net.......................... 2,344 7,269 412
Other, net................................... 19 (433) (1,208)
--------- --------- ---------
Net cash provided by operating activities..... 116,781 123,357 125,536
Investing activities
Purchases of investments:
Securities available-for-sale:
Fixed maturities........................... (603,142) (464,419) (527,172)
Equity securities.......................... (12,969) (31,625) (17,586)
Mortgage and policy loans.................... (310,127) (237,990) (259,438)
Other........................................ (41,118) -- --
Sales, calls or maturities of investments:
Maturities and calls of securities
available-for-sale:
Fixed maturities........................... 305,013 167,000 117,057
Sales of securities available-for-sale:
Fixed maturities........................... 360,296 284,124 238,051
Equity securities.......................... 22,632 14,379 12,444
Mortgage and policy loans.................... 277,325 98,554 66,934
Real estate.................................. -- 5,854 2,194
Purchase of property, equipment and software.. (1,805) (1,949) (290)
Net (increase) decrease in short-term
investments.................................. 8,692 (7,516) 36,272
Proceeds from sale of discontinued operations. -- -- 632
Distributions from unconsolidated related
parties...................................... 1,466 1,514 718
--------- --------- ---------
Net cash provided by (used in) investing
activities................................... 6,263 (172,074) (330,184)
Financing activities
Dividends paid................................ -- -- (5,000)
Additional paid-in capital.................... -- -- 15,000
Deposits from interest sensitive and
investment-type contracts.................... 245,620 323,487 381,865
Withdrawals from interest sensitive and
investment-type contracts.................... (375,459) (295,633) (187,217)
Net proceeds from reverse repurchase
borrowing.................................... 30,189 40,925 35,173
Retirement of reverse repurchase borrowing.... (20,863) (20,062) (35,173)
--------- --------- ---------
Net cash provided by (used in) financing
activities................................... (120,513) 48,717 204,648
--------- --------- ---------
Net increase in cash.......................... 2,531 -- --
Cash at beginning of year..................... -- -- --
--------- --------- ---------
Cash at end of year........................... $ 2,531 $ -- $ --
========= ========= =========
Supplemental disclosures of cash flow
information
For purposes of the statements of cash flows,
Business Men's Assurance Company of America
considers only cash on hand and demand
deposits to be cash
Cash paid during the year for:
Income taxes................................. $ 16,300 $ 13,135 $ 1,239
========= ========= =========
Interest paid on reverse repurchase
borrowing................................... $ 299 $ 369 $ 620
========= ========= =========
Supplemental schedule of noncash investing and
financing activities
Real estate acquired through foreclosure...... $ -- $ 1,236 $ 3,033
========= ========= =========
</TABLE>
See accompanying notes.
F-6
<PAGE>
BUSINESS MEN'S ASSURANCE COMPANY OF AMERICA
(A Member of the Generali Group of Companies)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Summary of Significant Accounting Policies
Organization
Business Men's Assurance Company of America (the Company) is a Missouri-
domiciled life insurance company licensed to sell insurance products in 49
states and the District of Columbia. The Company offers a diversified
portfolio of individual and group insurance and investment products both
directly, primarily distributed through general agencies, and through
reinsurance assumptions. Assicurazioni Generali S.p.A. (Generali), an Italian
insurer, is the ultimate parent company.
Principles of Consolidation and Basis of Presentation
The accompanying consolidated financial statements include the accounts of
the Company and all majority-owned subsidiaries. All significant intercompany
transactions have been eliminated in consolidation.
Investments
The Company's entire investment portfolio is designated as available-for-
sale. Changes in fair values of available-for-sale securities, after
adjustment of deferred policy acquisition costs (DPAC) and deferred income
taxes, are reported as unrealized gains or losses directly in accumulated
other comprehensive income. The DPAC offset to the unrealized gains or losses
represents valuation adjustments or reinstatements of DPAC that would have
been required as a charge or credit to operations had such unrealized amounts
been realized.
The amortized cost of fixed maturity investments classified as available-
for-sale is adjusted for amortization of premiums and accretion of discounts.
That amortization or accretion is included in net investment income.
Mortgage loans and mortgage-backed securities are carried at unpaid
balances adjusted for accrual of discount and allowances for other than
temporary decline in value. Policy loans are carried at unpaid balances.
Real estate is stated at the lower of cost or fair value. At December 31,
1998 and 1997, no real estate was owned. Profit is recognized on real estate
sales when down payment, continuing investment and transfer of risk criteria
have been satisfied. Property, equipment and software, and the home office
building are generally valued at cost, including development costs, less
allowances for depreciation and other than temporary decline in value.
Property, equipment and software are being depreciated over the estimated
useful lives of the assets, principally on a straight-line basis. Depreciation
rates on these assets are set forth in Note 6.
Realized gains and losses on sales of investments and declines in value
considered to be other than temporary are recognized in net earnings on the
specific identification basis.
Impairment of Loans
Financial Accounting Standards Board (FASB) Statement of Financial
Accounting Standards (SFAS) No. 114, "Accounting by Creditors for Impairment
of a Loan," and SFAS No. 118, "Accounting by Creditors for Impairment of a
Loan-Income Recognition and Disclosures," require that an impaired mortgage
loan's fair value be measured based on the present value of future cash flows
discounted at the loan's effective interest rate, at the loan's observable
market price or at the fair value of the collateral if the loan is collateral
dependent. If the fair value of a mortgage loan is less than the recorded
investment in the loan, the difference is recorded as an allowance for
mortgage loan losses. The change in the allowance for mortgage loan losses is
reported with realized gains or losses on investments. Interest income on
impaired loans is recognized on a cash basis.
F-7
<PAGE>
BUSINESS MEN'S ASSURANCE COMPANY OF AMERICA
(A Member of the Generali Group of Companies)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Use of Estimates
The preparation of consolidated financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the amounts reported in the consolidated financial
statements and accompanying notes. Actual results could differ from those
estimates.
Deferred Policy Acquisition Costs
Certain commissions, expenses of the policy issue and underwriting
departments and other variable policy issue expenses have been deferred. For
limited payment and other traditional life insurance policies, these deferred
acquisition costs are being amortized over a period of not more than 25 years
in proportion to the ratio of the expected annual premium revenue to the
expected total premium revenue. Expected premium revenue was estimated with
the same assumptions used for computing liabilities for future policy benefits
for these policies.
For universal life-type insurance and investment-type products, the
deferred policy acquisition costs are amortized over a period of not more than
25 years in relation to the present value of estimated gross profits arising
from estimates of mortality, interest, expense and surrender experience. The
estimates of expected gross profits are evaluated regularly and are revised if
actual experience or other evidence indicates that revision is appropriate.
Upon revision, total amortization recorded to date is adjusted by a charge or
credit to current earnings.
Deferred policy acquisition costs are evaluated to determine that the
unamortized portion of such costs does not exceed recoverable amounts after
considering anticipated investment income.
Recognition of Insurance Revenue and Related Expenses
For limited payment and other traditional life insurance policies, premium
income is reported as earned when due, with past-due premiums being reserved.
Profits are recognized over the life of these contracts by associating
benefits and expenses with insurance in force for limited payment policies and
with earned premiums for other traditional life policies. This association is
accomplished by a provision for liability for future policy benefits and the
amortization of policy acquisition costs. Accident and health premium revenue
is recognized on a pro rata basis over the terms of the policies.
For universal life and investment-type policies, contract charges for
mortality, surrender and expense, other than front-end expense charges, are
reported as other insurance considerations revenue when charged to
policyholders' accounts. Expenses consist primarily of benefit payments in
excess of policyholder account values and interest credited to policyholder
accounts. Profits are recognized over the life of universal life-type
contracts through the amortization of policy acquisition costs and deferred
front-end expense charges with estimated gross profits from mortality,
interest, surrender and expense.
Policy Liabilities and Contract Values
The liability for future policy benefits for limited payment and other
traditional life insurance contracts has been computed primarily by a net
level premium reserve method based on estimates of future investment yield,
mortality and withdrawals made at the time gross premiums were calculated.
Assumptions used in computing future policy benefits are as follows: interest
rates range from 3.25% to 8.50%, depending on the year of issue; withdrawal
rates for individual life policies issued in 1966 and after are based on
Company experience, and policies issued prior to 1966 are based on industry
tables; and mortality rates are based on mortality tables that consider
Company experience. The liability for future policy benefits is graded to
reserves stipulated by the policy over a period of 20 to 25 years or the end
of the premium paying period, if less.
F-8
<PAGE>
BUSINESS MEN'S ASSURANCE COMPANY OF AMERICA
(A Member of the Generali Group of Companies)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
For universal life and investment-type contracts, the account value before
deduction of any surrender charges is held as the policy liability. An
additional liability is established for deferred front-end expense charges on
universal life-type policies. These expense charges are recognized in income
as insurance considerations using the same assumptions as are used to amortize
deferred policy acquisition costs.
Claims and benefits payable for reported disability income claims have been
computed as the present value of expected future benefit payments based on
estimates of future investment yields and claim termination rates. The amount
of benefits payable included in the future policy benefit reserves and policy
and contract claims for December 31, 1998 and 1997 was $30,262,000 and
$47,211,000, respectively. Interest rates used in the calculation of future
investment yields vary based on the year the claim was incurred and range from
3% to 8.75%. Claim termination rates are based on industry tables.
Other accident and health claims and benefits payable for reported claims
and incurred but not reported claims are estimated using prior experience. The
methods of calculating such estimates and establishing the related liabilities
are periodically reviewed and updated. Any adjustments needed as a result of
periodic reviews are reflected in current operations.
Federal Income Taxes
Deferred federal income taxes have been provided in the consolidated
financial statements to recognize temporary differences between the financial
reporting and tax bases of assets and liabilities measured using enacted tax
rates and laws (See Note 7). Temporary differences are principally related to
deferred policy acquisition costs, the provision for future policy benefits,
accrual of discounts on investments, accrued expenses, accelerated
depreciation and unrealized investment gains and losses.
Separate Accounts
These accounts arise from four lines of business--variable annuities,
variable universal life, variable 401(k) and MBIA insured guaranteed
investment contracts (GIC). The separate account assets are legally segregated
and are not subject to the claims which may arise from any other business of
the Company.
The assets and liabilities of the variable lines of business are reported
at fair value since the underlying investment risks are assumed by the
policyowners. Investment income and gains or losses arising from the variable
line of business accrue directly to the policyowners and are, therefore, not
included in investment earnings in the accompanying consolidated statements of
operations. Revenues to the Company from variable products consist primarily
of contract maintenance charges and administration fees. Separate account
assets and liabilities for the variable lines of business totaled $3,409,000
on December 31, 1998 and $30,000 on December 31, 1997.
The assets of the MBIA GIC line of business are maintained at an amount
equal to the related liabilities. These assets related to the MBIA GIC line of
business include securities available-for-sale reported at fair value and
mortgage loans carried at unpaid balances. Changes in fair values of
available-for-sale securities, net of deferred income taxes, are reported as
unrealized gains or losses directly in accumulated other comprehensive income.
The liabilities are reported at the original deposit amount plus accrued
interest guaranteed to the contractholders. Investment income and gains or
losses arising from MBIA GIC investments are included in investment earnings
in the accompanying consolidated statements of operations. The guaranteed
interest payable
F-9
<PAGE>
BUSINESS MEN'S ASSURANCE COMPANY OF AMERICA
(A Member of the Generali Group of Companies)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
is included in the increase in policy liabilities in the accompanying
consolidated statements of operations. Separate account assets and liabilities
for the MBIA GIC line of business totaled $296,957,000 on December 31, 1998
and $76,934,000 on December 31, 1997.
Intangible Assets
At December 31, 1998, goodwill of $11,541,000 (1997--$12,323,000), net of
accumulated amortization of $4,107,000 (1997--$3,325,000) resulting from the
acquisition of a subsidiary, is included in other assets. Goodwill is being
amortized over a period of 20 years on a straight-line basis, and amortization
amounted to $782,000 for each of the years ended December 31, 1998, 1997 and
1996.
Fair Values of Financial Instruments
SFAS No. 107, "Disclosures about Fair Value of Financial Instruments,"
requires disclosure of fair value information about financial instruments,
whether or not recognized in the balance sheets, for which it is practicable
to estimate that value. In cases where quoted market prices are not available,
fair values are based on estimates using present value or other valuation
techniques. Those techniques are significantly affected by the assumptions
used, including the discount rate and estimates of future cash flows. In that
regard, the derived fair value estimates cannot be substantiated by comparison
to independent markets and, in many cases, could not be realized in immediate
settlement of the instruments. SFAS No. 107 excludes certain financial
instruments and all nonfinancial instruments from its disclosure requirements.
Accordingly, the aggregate fair value amounts presented do not represent the
underlying value of the Company:
<TABLE>
<CAPTION>
December 31, 1998 December 31, 1997
--------------------- ---------------------
Carrying Carrying
Amount Fair Value Amount Fair Value
---------- ---------- ---------- ----------
(In Thousands)
<S> <C> <C> <C> <C>
Fixed maturities (Note 3).......... $1,277,121 $1,277,121 $1,326,018 $1,326,018
Equity securities (Note 3)......... 43,373 40,373 57,806 57,806
Mortgage loans..................... 875,117 934,712 842,149 867,552
Policy loans....................... 59,780 55,579 62,207 57,491
Short-term investments............. 38,815 38,815 47,507 47,507
Cash............................... 2,531 2,531 -- --
Reinsurance recoverables:
Paid benefits.................... 6,549 6,549 6,588 6,588
Benefits and claim reserves...... 95,476 95,476 72,000 72,000
Assets held in separate accounts... 300,366 302,549 76,964 77,061
Investment-type insurance contracts
(Note 4).......................... 1,456,634 1,453,909 1,277,362 1,256,129
</TABLE>
The following methods and assumptions were used by the Company in
estimating its fair value disclosures for financial instruments:
Cash and short-term investments: The carrying amounts reported in the
balance sheets for these instruments approximate their fair values.
Investment securities: Fair values for fixed maturity securities are
based on quoted market prices, where available. For fixed maturity
securities not actively traded, fair values are estimated using values
obtained from independent pricing services or, in the case of private
placements, by discounting expected future cash flows using a current
market rate applicable to the yield, credit quality and maturity of the
investments. The fair value for equity securities is based on quoted market
prices.
F-10
<PAGE>
BUSINESS MEN'S ASSURANCE COMPANY OF AMERICA
(A Member of the Generali Group of Companies)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Off-balance-sheet instruments: The fair value for outstanding loan
commitments approximates the amount committed, as all loan commitments were
made within the last 60 days of the year.
Mortgage loans and policy loans: The fair value for mortgage loans and
policy loans is estimated using discounted cash flow analyses, using
interest rates currently being offered for loans with similar terms to
borrowers of similar credit quality. Loans with similar characteristics are
aggregated for purposes of the calculations. The carrying amount of accrued
interest approximates its fair value.
Reinsurance recoverables: The carrying values of reinsurance
recoverables approximate their fair values.
Flexible and single premium deferred annuities: The cash surrender value
of flexible and single premium deferred annuities approximates their fair
value.
Guaranteed investment contracts: The fair value for the Company's
liabilities under guaranteed investment contracts is estimated using
discounted cash flow analyses, using interest rates currently being offered
for similar contracts with maturities consistent with those remaining for
the contracts being valued.
Financial Instruments with Off-Balance-Sheet Risk
In the normal course of business, the Company becomes a party to various
financial transactions to reduce its exposure to fluctuations in interest
rates. The Company has entered into interest rate swap contracts for the
purpose of converting either the variable interest rate characteristics of
certain investments to fixed rates or from fixed rates to variable rates. The
purpose of these swaps is to better match the invested assets of the Company
with the related insurance liabilities (guaranteed investment contracts) that
the investments are supporting. The net interest effect of such swap
transactions is reported as an adjustment of interest income as incurred. The
notional amount of these contracts was $40,000,000 at December 31, 1998 and
$25,000,000 at December 31, 1997.
Postretirement Benefits
The projected future cost of providing postretirement benefits, such as
health care and life insurance, is recognized as an expense as employees
render service. See Note 8 for further disclosures with respect to
postretirement benefits other than pensions.
Accounting Changes
In 1998, the Company adopted SFAS No. 130, "Reporting Comprehensive
Income." SFAS No. 130 establishes new rules for the reporting and display of
comprehensive income and its components; however, the adoption of this
statement had no impact on the Company's net income or stockholder's equity.
SFAS No. 130 requires unrealized gains or losses on the Company's
available-for-sale securities, which prior to adoption were reported
separately in equity, to be included in other comprehensive income. Prior year
consolidated financial statements have been reclassified to conform to the
requirements of SFAS No. 130.
SFAS No. 132, "Employer's Disclosures about Pension and Other
Postretirement Benefits," enhances disclosure requirements from previously
adopted SFAS Nos. 87 and 106. This standard has no financial impact and was
adopted at year end 1998.
Reclassification
Certain amounts for 1997 and 1996 have been reclassified to conform to the
current year presentation.
F-11
<PAGE>
BUSINESS MEN'S ASSURANCE COMPANY OF AMERICA
(A Member of the Generali Group of Companies)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
2. Dividend Limitations
Missouri has legislation that requires prior reporting of all dividends to
the Director of Insurance. The Company, as a regulated life insurance company,
may pay a dividend from unassigned surplus without the approval of the
Missouri Department of Insurance if the aggregate of all dividends paid during
the preceding 12-month period does not exceed the greater of 10% of statutory
stockholder's equity at the end of the preceding calendar year or the
statutory net gain from operations for the preceding calendar year. A portion
of the statutory equity of the Company that is available for dividends would
be subject to additional federal income taxes should distribution be made from
"policyholders' surplus" (see Note 7).
As of December 31, 1998 and 1997, the Company's statutory stockholder's
equity was $226,345,000 and $188,193,000, respectively. Statutory net gain
from operations and net income for each of the three years in the period ended
December 31, 1998 were as follows:
<TABLE>
<CAPTION>
Year ended December 31
-----------------------
1998 1997 1996
------- ------- -------
(In Thousands)
<S> <C> <C> <C>
Net gain from operations......................... $36,305 $18,545 $10,898
Net income....................................... 44,692 14,540 10,381
</TABLE>
3. Investment Operations
The Company's investments in securities are summarized as follows:
<TABLE>
<CAPTION>
December 31, 1998
-------------------------------------------
Gross Gross
Amortized Unrealized Unrealized
Cost Gains Losses Fair Value
---------- ---------- ---------- ----------
(In Thousands)
<S> <C> <C> <C> <C>
Fixed maturities:
U.S. Treasury securities and
obligations of U.S.
government corporations and
agencies..................... $ 83,444 $ 1,848 $ (159) $ 85,133
Obligations of states and
political subdivisions 27,093 2,160 -- 29,253
Debt securities issued by
foreign governments 4,416 82 (24) 4,474
Corporate securities.......... 411,490 12,676 (2,877) 421,289
Mortgage-backed securities.... 712,853 9,028 (3,833) 718,048
Redeemable preferred stocks... 18,409 524 (9) 18,924
---------- ------- ------- ----------
Total........................... 1,257,705 26,318 (6,902) 1,277,121
Equity securities............... 36,214 5,981 (1,822) 40,373
---------- ------- ------- ----------
$1,293,919 $32,299 $(8,724) $1,317,494
========== ======= ======= ==========
</TABLE>
F-12
<PAGE>
BUSINESS MEN'S ASSURANCE COMPANY OF AMERICA
(A Member of the Generali Group of Companies)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
<TABLE>
<CAPTION>
December 31, 1997
-------------------------------------------
Gross Gross
Amortized Unrealized Unrealized
Cost Gains Losses Fair Value
---------- ---------- ---------- ----------
(In Thousands)
<S> <C> <C> <C> <C>
Fixed maturities:
U.S. Treasury securities and
obligations of U.S.
government corporations and
agencies..................... $ 67,406 $ 1,233 $ (46) $ 68,593
Obligations of states and
political subdivisions....... 36,053 1,472 (9) 37,516
Debt securities issued by
foreign governments.......... 3,975 121 (126) 3,970
Corporate securities.......... 427,242 8,955 (2,004) 434,193
Mortgage-backed securities.... 755,467 10,153 (2,330) 763,290
Redeemable preferred stocks... 18,315 206 (65) 18,456
---------- ------- ------- ----------
Total........................... 1,308,458 22,140 (4,580) 1,326,018
Equity securities............... 46,807 12,419 (1,420) 57,806
---------- ------- ------- ----------
$1,355,265 $34,559 $(6,000) $1,383,824
========== ======= ======= ==========
<CAPTION>
</TABLE>
The amortized cost and estimated fair value of fixed maturity securities at
December 31, 1998, by contractual maturity, are as follows. Expected maturities
will differ from contractual maturities because borrowers may have the right to
call or prepay obligations with or without call or prepayment penalties.
Maturities of mortgage-backed securities have not been set forth in the
following table, as such securities are not due at a single maturity date:
<TABLE>
<CAPTION>
Amortized
Cost Fair Value
---------- ----------
(In Thousands)
<S> <C> <C>
Due in one year or less............................ $ 8,022 $ 8,120
Due after one year through five years.............. 194,668 199,802
Due after five years through 10 years.............. 221,128 228,871
Due after 10 years................................. 121,034 122,280
---------- ----------
544,852 559,073
Mortgage-backed securities......................... 712,853 718,048
---------- ----------
Total fixed maturity securities.................... $1,257,705 $1,277,121
========== ==========
</TABLE>
F-13
<PAGE>
BUSINESS MEN'S ASSURANCE COMPANY OF AMERICA
(A Member of the Generali Group of Companies)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
The majority of the Company's mortgage loan portfolio is secured by real
estate. The following table presents information about the location of the
real estate that secures mortgage loans in the Company's portfolio:
<TABLE>
<CAPTION>
Carrying Amount
as of December 31
-----------------
1998 1997
-------- --------
(In Thousands)
<S> <C> <C>
State:
California............................................ $ 69,913 $ 71,675
Arizona............................................... 65,135 65,030
Missouri.............................................. 62,462 51,839
Texas................................................. 59,900 60,821
Florida............................................... 49,789 42,549
Utah.................................................. 44,110 37,821
Kansas................................................ 38,509 34,267
Oklahoma.............................................. 38,394 47,569
Washington............................................ 38,136 39,824
Other................................................. 408,769 390,754
-------- --------
$875,117 $842,149
======== ========
</TABLE>
The following table lists the Company's investment in impaired mortgage
loans and related allowance for credit losses at December 31. The table also
includes the average recorded investment in impaired loans and interest income
on impaired loans:
<TABLE>
<CAPTION>
1998 1997 1996
---- ------ ------
(In Thousands)
<S> <C> <C> <C>
Impaired mortgage loans............................... $-- $1,069 $2,516
Allowance for credit losses........................... -- 244 691
---- ------ ------
Net recorded investment in impaired loans............. $-- $ 825 $1,825
==== ====== ======
Average recorded investment in impaired loans......... $413 $1,325 $2,667
==== ====== ======
Interest income on impaired loans..................... $-- $ 57 $ 115
==== ====== ======
</TABLE>
Bonds, mortgage loans, preferred stocks and common stocks approximating
$4,900,000 and $4,600,000 were on deposit with regulatory authorities at
December 31, 1998 and 1997, respectively.
F-14
<PAGE>
BUSINESS MEN'S ASSURANCE COMPANY OF AMERICA
(A Member of the Generali Group of Companies)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Set forth below is a summary of consolidated net investment income for the
years ended December 31:
<TABLE>
<CAPTION>
1998 1997 1996
-------- -------- --------
(In Thousands)
<S> <C> <C> <C>
Fixed maturities:
Bonds....................................... $ 94,975 $ 92,741 $ 86,066
Redeemable preferred stocks................. 1,603 1,309 814
Equity securities:
Common stocks............................... 702 793 579
Nonredeemable preferred stocks.............. 237 541 438
Mortgage loans on real estate................. 75,768 66,053 52,973
Real estate................................... 18 612 935
Policy loans.................................. 3,667 3,906 3,953
Short-term investments........................ 4,334 2,955 3,016
Other......................................... 2,685 1,223 269
-------- -------- --------
183,989 170,133 149,043
Less:
Investment expenses......................... 2,461 2,175 2,479
-------- -------- --------
Net investment income from continuing
operations................................... $181,528 $167,958 $146,564
======== ======== ========
</TABLE>
Realized gains (losses) on securities disposed of during 1998, 1997 and
1996 consisted of the following:
<TABLE>
<CAPTION>
1998 1997 1996
------- ------- -------
(In Thousands)
<S> <C> <C> <C>
Fixed maturity securities:
Gross realized gains....................... $ 5,149 $10,499 $ 7,953
Gross realized losses...................... (1,420) (4,690) (1,622)
Equity securities:
Gross realized gains....................... 7,395 3,204 2,001
Gross realized losses...................... (1,636) (777) --
Other investments............................ 1,068 (3,115) (2,426)
------- ------- -------
Net realized gains........................... $10,556 $ 5,121 $ 5,906
======= ======= =======
</TABLE>
Sales of investments in securities in 1998, 1997 and 1996, excluding
maturities and calls, resulted in gross realized gains of $10,980,000,
$8,362,000 and $9,798,800 and gross realized losses of $2,304,500, $1,017,000
and $1,290,500 respectively.
There were no nonincome producing investments at December 31, 1998 and
1997.
The Company began investing in the Cypress Tree Investment Fund LLC during
1998. The Company has invested $40 million in the partnership, which primarily
invests in senior secured loans. The Company's portion of the investment is
approximately 43% of the total fund value at December 31, 1998 and has been
recorded under the guidelines of equity accounting. This investment is
classified in other investments on the balance sheets, with unrealized gains
and losses being reflected in accumulated other comprehensive income.
F-15
<PAGE>
BUSINESS MEN'S ASSURANCE COMPANY OF AMERICA
(A Member of the Generali Group of Companies)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
4. Investment Contracts
The carrying amounts and fair values of the Company's liabilities for
investment-type insurance contracts (included with future policy benefits,
contract account balances and separate accounts in the balance sheets) at
December 31 are as follows:
<TABLE>
<CAPTION>
1998 1997
--------------------- ---------------------
Carrying Fair Carrying Fair
Amount Value Amount Value
---------- ---------- ---------- ----------
(In Thousands)
<S> <C> <C> <C> <C>
Guaranteed investment
contracts................... $ 640,137 $ 651,809 $ 660,782 $ 662,281
Flexible and single premium
deferred annuities.......... 516,131 495,873 539,616 516,343
Separate accounts............ 300,366 306,227 76,964 77,505
---------- ---------- ---------- ----------
Total investment-type
insurance contracts......... $1,456,634 $1,453,909 $1,277,362 $1,256,129
========== ========== ========== ==========
</TABLE>
Fair values of the Company's insurance contracts other than investment
contracts are not required to be disclosed. However, the fair values of
liabilities under all insurance contracts are taken into consideration in the
Company's overall management of interest rate risk which minimizes exposure to
changing interest rates through the matching of investment maturities with
amounts due under insurance contracts.
5. Commitments and Contingencies
The Company leases equipment and certain office facilities from others
under operating leases through 2003. Certain other equipment and facilities
are rented monthly. Rental expense amounted to $1,364,000, $2,137,000 and
$2,117,000 for the years ended December 31, 1998, 1997 and 1996, respectively.
As of December 31, 1998, the minimum future payments under noncancelable
operating leases for each of the next five years are as follows (in
thousands):
<TABLE>
<S> <C>
1999.............................. $ 901
2000.............................. 622
2001.............................. 504
2002.............................. 265
2003.............................. 58
------
Total........................... $2,350
======
</TABLE>
Total outstanding commitments to fund mortgage loans were $32,275,000 and
$74,496,000 at December 31, 1998 and 1997, respectively.
The Company and its subsidiaries are parties to certain claims and legal
actions arising during the ordinary course of business. In the opinion of
management, these matters will not have a materially adverse effect on the
operations or financial position of the Company.
F-16
<PAGE>
BUSINESS MEN'S ASSURANCE COMPANY OF AMERICA
(A Member of the Generali Group of Companies)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
6. Property, Equipment and Software
A summary of property, equipment and software at December 31 and their
respective depreciation rates is as follows:
<TABLE>
<CAPTION>
Rate of
Depreciation 1998 1997
------------ -------- --------
(In Thousands)
<S> <C> <C> <C>
Home office building, including land
with a cost of $425,000............... 2% $ 23,158 $ 23,158
Other real estate not held-for-sale or
rental................................ 4% 820 973
Less accumulated depreciation.......... (13,097) (12,530)
-------- --------
10,881 11,601
Equipment and software................. 5%-33% 21,701 23,937
Less accumulated depreciation.......... (16,306) (18,785)
-------- --------
5,395 5,152
-------- --------
Total property, equipment and software. $ 16,276 $ 16,753
======== ========
</TABLE>
7. Federal Income Taxes
The components of the provision for income taxes and the temporary
differences generating deferred income taxes for the years ended December 31
are as follows:
<TABLE>
<CAPTION>
1998 1997 1996
------- -------- -------
(In Thousands)
<S> <C> <C> <C>
Current............................................ $16,442 $ 10,948 $ 6,757
Deferred:
Deferred policy acquisition costs................ (3,385) 143 1,322
Future policy benefits........................... 6,620 3,783 2,424
Accrual of discount.............................. 560 197 408
Tax on realized gains greater than book.......... (1,610) 571 (1,076)
Recognition of tax effect previously deferred on
sale of affiliate stock in prior period......... (1,311) (11,169) --
Employee benefit plans........................... (2,014) (2,206) 86
Prior year taxes................................. 1,018 -- --
Other, net....................................... 485 265 982
------- -------- -------
363 (8,416) 4,146
------- -------- -------
Total.............................................. 16,805 2,532 10,903
Less taxes from discontinued operations:
Current.......................................... -- -- (149)
Deferred......................................... -- -- 884
------- -------- -------
-- -- 735
------- -------- -------
Total taxes from continuing operations............. $16,805 $ 2,532 $10,168
======= ======== =======
</TABLE>
The Company did not record any valuation allowances against deferred tax
assets at December 31, 1998, 1997 or 1996.
F-17
<PAGE>
BUSINESS MEN'S ASSURANCE COMPANY OF AMERICA
(A Member of the Generali Group of Companies)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Total taxes vary from the amounts computed by applying the federal income
tax rate of 35% to earnings from continuing operations for the following
reasons:
<TABLE>
<CAPTION>
1998 1997 1996
------- ------- -------
(In Thousands)
<S> <C> <C> <C>
Application of statutory rate to income before
taxes on income.............................. $19,296 $13,552 $ 9,888
Tax-exempt municipal bond interest and
dividends received deductions................ (287) (361) (291)
Recognition of tax effect previously deferred
on sale of affiliate stock in a prior period. (1,311) (11,169) --
Other......................................... (893) 510 571
------- ------- -------
$16,805 $ 2,532 $10,168
======= ======= =======
</TABLE>
The significant components comprising the Company's deferred tax assets and
liabilities as of December 31, 1998 and 1997 are as follows:
<TABLE>
<CAPTION>
1998 1997
------- -------
(In Thousands)
<S> <C> <C>
Deferred tax liabilities:
Deferred acquisition costs............................. $26,340 $29,641
Unrealized investment gains and losses................. 5,778 7,735
Other.................................................. 9,860 9,655
------- -------
Total deferred tax liability............................. 41,978 47,031
Deferred tax assets:
Reserve for future policy benefits..................... 15,093 21,411
Accrued expenses....................................... 10,969 8,504
Other.................................................. 5,266 4,872
------- -------
Total deferred tax assets................................ 31,328 34,787
------- -------
Net deferred tax liability............................... $10,650 $12,244
======= =======
</TABLE>
Certain amounts that were not currently taxed under pre-1984 tax law were
credited to a "policyholders' surplus" account. This account is frozen under
the 1984 Tax Act and is taxable only when distributed to stockholders at which
time it is taxed at regular corporate rates. The policyholders' surplus of the
Company approximates $87,000,000. The Company has no present plan for
distributing the amount in policyholders' surplus. Consequently, no provision
has been made in the consolidated financial statements for the taxes thereon.
However, if such taxes were assessed, the amount of taxes payable would be
approximately $30,000,000.
Earnings taxed on a current basis are accumulated in a "shareholder's
surplus" account and can be distributed to the shareholder without tax. The
shareholder's surplus amounted to approximately $278,000,000 at December 31,
1998.
F-18
<PAGE>
BUSINESS MEN'S ASSURANCE COMPANY OF AMERICA
(A Member of the Generali Group of Companies)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
8. Benefit Plans
Trusteed Employee Retirement Plan
The Company has a trusteed employee retirement plan for the benefit of
salaried employees who have reached age 21 and who have completed one year of
service. The plan, which is administered by an Employees' Retirement Committee
consisting of at least three officers appointed by the Board of Directors of
the Company, provides for normal retirement at age 65 or earlier retirement
based on minimum age and service requirements. Retirement may be deferred to
age 70. Upon retirement, the retirees receive monthly benefit payments from
the plan's BMA group pension investment contract. During 1998, approximately
$3.1 million of annual benefits were covered by a group pension investment
contract issued by the Company. Assets of the plan, primarily equities, are
held by three trustees appointed by the Board of Directors.
The following table sets forth the plan's funded status at December 31:
<TABLE>
<CAPTION>
1998 1997
------- -------
(In Thousands)
<S> <C> <C>
Change in benefit obligations:
Benefit obligation at beginning of year.............. $62,683 $57,187
Service cost......................................... 1,873 1,767
Interest cost........................................ 4,557 4,374
Plan participants' contributions..................... 1 1
Amendments........................................... -- 118
Actuarial losses..................................... 1,249 3,627
Benefits paid........................................ (3,419) (4,391)
------- -------
Benefit obligation at end of year...................... 66,944 62,683
Change in plan assets:
Fair value of plan assets at beginning of year....... 85,605 79,679
Actual return on plan assets......................... 12,988 10,316
Plan participant's contributions..................... 1 1
Benefits paid........................................ (3,419) (4,391)
------- -------
Fair value of plan assets at end of year............... 95,175 85,605
------- -------
Funded status of the plan.............................. 28,231 22,922
Unrecognized net actuarial loss........................ (26,877) (23,519)
Unrecognized prior service cost........................ 1,342 2,034
Unrecognized net asset at January 1, 1987 being
recognized over 15 years.............................. (883) (1,177)
Adjustment to recognized minimum liability............. (2) (50)
------- -------
Prepaid pension cost................................... $ 1,811 $ 210
======= =======
</TABLE>
F-19
<PAGE>
BUSINESS MEN'S ASSURANCE COMPANY OF AMERICA
(A Member of the Generali Group of Companies)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
The additional minimum pension liability noted above results from the
pension plan for the Company's subsidiary, BMA Financial Services, Inc.
<TABLE>
<CAPTION>
1998 1997 1996
------- ------- ------
(In Thousands)
<S> <C> <C> <C>
Net pension cost included the following components:
Service cost--benefits earned during the period.... $ 1,873 $ 1,767 $1,797
Interest cost on projected benefit obligation...... 4,557 4,374 4,195
Actual return on plan assets....................... (12,988) (10,316) (9,745)
Net amortization and deferral...................... 5,005 2,812 3,102
------- ------- ------
Net pension benefit.................................. $(1,553) $(1,363) $ (651)
======= ======= ======
</TABLE>
In determining the actuarial present value of the projected benefit
obligation, the weighted-average discount rate utilized was 7% for 1998, 7.5%
for 1997 and 8% for 1996. The rate of increase in future compensation levels
used for 1998 was 7% for employees at the younger attained ages grading to 3%
for older employees, the rate was 5% for 1997 and 5.5% for 1996. The expected
long-term rate of return on assets was 8% in 1998, 1997 and 1996.
Supplemental Retirement Programs and Deferred Compensation Plan
The Company has supplemental retirement programs for senior executive
officers and for group sales managers and group sales persons who are
participants in the trusteed retirement plan. These programs are not qualified
under Section 401(a) of the Internal Revenue Code and are not prefunded.
Benefits are paid directly by the Company as they become due. Benefits are
equal to an amount computed on the same basis as under the trusteed retirement
plan (except incentive compensation is included and limitations under Sections
401 and 415 of the Internal Revenue Code are not considered) less the actual
benefit payable under the trusteed plan.
The Company also has a deferred compensation plan for the Company's
managers that provides retirement benefits based on renewal premium income at
retirement resulting from the sales unit developed by the manager. This
program is not qualified under Section 401(a) of the Internal Revenue Code and
is not prefunded. As of January 1, 1987, the plan was frozen with respect to
new entrants. Currently, there are two managers who have not retired and will
be entitled to future benefits under the program. The actuarial present value
of benefits shown below includes these active managers, as well as all
managers who have retired and are entitled to benefits under the program.
F-20
<PAGE>
BUSINESS MEN'S ASSURANCE COMPANY OF AMERICA
(A Member of the Generali Group of Companies)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
The following table sets forth the combined supplemental retirement
programs' and deferred compensation plan's funded status at December 31:
<TABLE>
<CAPTION>
1998 1997
-------- --------
(In Thousands)
<S> <C> <C>
Change in benefit obligations:
Benefit obligation at beginning of year............ $ 11,281 $ 10,179
Service cost....................................... 235 190
Interest cost...................................... 813 783
Actuarial losses................................... 1,085 1,050
Benefits paid...................................... (902) (921)
-------- --------
Benefit obligation at end of year.................... 12,512 11,281
Change in plan assets:
Fair value of plan assets at beginning and end of
year.............................................. -- --
-------- --------
Funded status of the plan (underfunded).............. (12,512) (11,281)
Unrecognized net actuarial loss...................... 3,164 2,260
Unrecognized prior service cost...................... 659 888
Unrecognized net asset at January 1, 1987 being
recognized over 15 years............................ 389 519
Adjustment to recognized minimum liability........... (2,789) (2,486)
-------- --------
Accrued pension cost................................. (11,089) (10,100)
Accrued benefit liability............................ 10,041 8,653
Intangible asset..................................... 1,048 1,447
-------- --------
Net amount recognized................................ $ -- $ --
======== ========
</TABLE>
<TABLE>
<CAPTION>
1998 1997 1996
------ ------ ------
(In Thousands)
<S> <C> <C> <C>
Net pension cost included the following
components:
Service cost--benefits earned during the period. $ 235 $ 190 $ 189
Interest cost on projected benefit obligation... 813 783 761
Net amortization and deferral................... 541 469 513
------ ------ ------
Net pension cost.................................. $1,589 $1,442 $1,463
====== ====== ======
</TABLE>
In determining the actuarial present value of the projected benefit
obligation, the weighted-average discount rate utilized was 7% for 1998, 7.5%
for 1997 and 8% for 1996. The rate of increase in future compensation levels
used was 4.5% for 1998, 5% for 1997 and 5.5% for 1996.
Savings and Investment Plans
The Company has savings and investment plans qualifying under Section
401(k) of the Internal Revenue Code. Employees and sales representatives are
eligible to participate after one year of service. Participant contributions
are invested by the trustees for the plans at the direction of the participant
in any one or more of four investment funds. The Company makes matching
contributions in varying amounts. The Company's matching contributions
amounted to $1,153,000 in 1998, $1,099,000 in 1997 and $1,284,000 in 1996.
Participants are fully vested in the Company match after five years of
service.
F-21
<PAGE>
BUSINESS MEN'S ASSURANCE COMPANY OF AMERICA
(A Member of the Generali Group of Companies)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
The Company has a field force retirement plan for the benefit of agents and
managers. The plan is a defined contribution plan with contributions made
entirely by the Company. Each agent or manager under a standard contract with
one year of service with the Company is eligible to participate. The Company
makes an annual contribution for each participant equal to 3% of eligible
earnings up to the Social Security wage base and 6% of eligible earnings which
are in excess of the Social Security wage base. Each participant is fully
vested in his retirement account after five years of service. Assets of the
plan are deposited in a retirement trust fund and maintained by the plan
trustees who are appointed by the Company. The Company incurred costs related
to this plan of $33,000 in 1998, $230,000 in 1997 and $225,000 in 1996.
Defined Benefit Health Care Plan
In addition to the Company's other benefit plans, the Company sponsors an
unfunded defined benefit health care plan that provides postretirement medical
benefits to full-time employees for whom the sum of the employee's age and
years of service equals or exceeds 75, with a minimum age requirement of 50
and at least 10 years of service. The plan is contributory, with retiree
contributions adjusted annually, and contains other cost-sharing features such
as deductibles and coinsurance. The accounting for the plan anticipates a
future cost-sharing arrangement with retirees that is consistent with the
Company's past practices.
The following table presents the plan's funded status at December 31:
<TABLE>
<CAPTION>
1998 1997
------- -------
(In Thousands)
<S> <C> <C>
Change in benefit obligations:
Projected benefit obligation at beginning of year.... $11,490 $12,253
Service cost......................................... 108 122
Interest cost........................................ 777 878
Amendments........................................... -- (793)
Actuarial losses..................................... 260 143
Benefits paid........................................ (1,234) (1,113)
------- -------
Projected benefit obligation at end of year............ 11,401 11,490
Change in plan assets:
Fair value of plan assets at beginning and end of
year................................................ -- --
------- -------
Funded status of the plan (underfunded)................ (11,401) (11,490)
Unrecognized net actuarial loss........................ 529 268
Unrecognized prior service cost........................ 2,215 2,808
Unrecognized transition obligation..................... 4,107 4,873
------- -------
Accrued pension cost................................... (4,550) (3,541)
Accrued benefit liability.............................. 4,550 3,541
------- -------
Net amount recognized.................................. $ -- $ --
======= =======
</TABLE>
F-22
<PAGE>
BUSINESS MEN'S ASSURANCE COMPANY OF AMERICA
(A Member of the Generali Group of Companies)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Net periodic postretirement benefit cost includes the following components:
<TABLE>
<CAPTION>
1998 1997 1996
------ ------ ------
(In Thousands)
<S> <C> <C> <C>
Service cost........................................ $ 108 $ 122 $ 118
Interest cost....................................... 777 878 867
Amortization of transition obligation over 20 years. 293 327 327
Amortization of past service costs.................. 295 407 407
------ ------ ------
Net periodic benefit cost........................... 1,473 1,734 1,719
Plan curtailment adjustment......................... 770 -- --
------ ------ ------
Final periodic postretirement benefit cost.......... $2,243 $1,734 $1,719
====== ====== ======
</TABLE>
The weighted-average annual assumed rate of increase in the per capita cost
of covered benefits (i.e., health care cost trend rate) varies per year, equal
to the maximum contractual increase of the Company's contribution. Because the
Company's future contributions are contractually limited as discussed above,
an increase in the health care cost trend rate has a minimal impact on
expected benefit payments.
The weighted-average discount rate used in determining the accumulated
postretirement benefit obligation was 7%, 7.25% and 7.5% at December 31, 1998,
1997 and 1996, respectively.
As part of the restatement of the 1998 net periodic postretirement benefit
cost, a curtailment loss was recognized. The curtailment resulted from closing
certain field locations in March 1998.
9. Reinsurance
The Company actively solicits reinsurance from other companies. The Company
also cedes portions of the insurance it writes as described in the next
paragraph. The effect of reinsurance on premiums earned from continuing
operations was as follows:
<TABLE>
<CAPTION>
1998 1997 1996
-------- -------- --------
(In Thousands)
<S> <C> <C> <C>
Direct...................................... $118,315 $118,192 $124,912
Assumed..................................... 152,844 134,541 116,154
Ceded....................................... (73,466) (54,613) (38,114)
-------- -------- --------
Total net premium........................... $197,693 $198,120 $202,952
======== ======== ========
</TABLE>
The Company reinsures with other companies portions of the insurance it
writes, thereby limiting its exposure on larger risks. Normal retentions
without reinsurance are $750,000 on an individual life policy, $1,000,000 on
individual life insurance assumed and $200,000 on an individual life insured
under a single group life policy. As of December 31, 1998, the Company had
ceded to other life insurance companies individual life insurance in force of
approximately $29.6 billion and group life of approximately $890 million.
Benefits and reserves ceded to other insurers amounted to $54,670,000,
$42,069,000 and $28,132,000 during the years ended December 31, 1998, 1997 and
1996, respectively. At December 31, 1998 and 1997, policy reserves ceded to
other insurers were $77,460,000 and $55,568,000, respectively. Claim reserves
ceded amounted to $18,016,000 and $16,432,000 at December 31, 1998 and 1997,
respectively. The Company remains contingently liable on all reinsurance ceded
by it to others. This contingent liability would become an actual liability in
the event an assuming reinsurer should fail to perform its obligations under
its reinsurance agreement with the Company.
F-23
<PAGE>
BUSINESS MEN'S ASSURANCE COMPANY OF AMERICA
(A Member of the Generali Group of Companies)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
10. Related-Party Transactions
The Company reimburses Generali's U.S. branch for certain expenses incurred
on the Company's behalf. These expenses were not material in 1998, 1997 or
1996. The Company retrocedes a portion of the life insurance it assumes to
Generali. In accordance with this agreement, the Company ceded premiums of
$756,000, $873,000 and $1,035,000 during 1998, 1997 and 1996, respectively.
The Company ceded claims of $240,000 during 1998 and no claims during 1997 or
1996.
In 1995, the Company entered into a modified coinsurance agreement with
Generali to cede 50% of certain single-premium deferred annuity contracts
issued. In accordance with this agreement, $8 million, $35 million and $60
million in account balances were ceded to Generali in 1998, 1997 and 1996,
respectively, and Generali loaned such amounts back to the Company. Account
balances ceded and loaned back at December 31, 1998 and 1997 were $196 million
and $213 million, respectively. The recoverable amount from Generali was
offset against the loan. The net expense related to this agreement was
$1,564,000, $1,895,000 and $1,344,000 for the years ended December 31, 1998,
1997 and 1996, respectively. The Company held payables to Generali of $771,000
and $799,000 at December 31, 1998 and 1997, respectively.
11. Stockholder's Equity
The changes in net unrealized gains (losses) that have been included in the
balance sheet caption "other accumulated comprehensive income" in
stockholder's equity are summarized as follows:
<TABLE>
<CAPTION>
1998 1997
------- -------
(In Thousands)
<S> <C> <C>
Net unrealized gains (losses) on securities:
Fixed maturities...................................... $19,416 $17,560
Equity securities..................................... 4,159 10,999
Securities held in separate account................... 1,593 334
Other................................................. (438) --
------- -------
Net unrealized gains.................................... 24,730 28,893
Adjustment to deferred policy acquisition costs......... (8,707) (7,224)
Adjustment to unearned revenue reserve.................. 485 430
Deferred income taxes................................... (5,778) (7,735)
------- -------
Net unrealized gains.................................... $10,730 $14,364
======= =======
</TABLE>
12. Discontinued Operations
In June of 1994, the Company adopted a plan to dispose of its medical line
of business. Accordingly, the medical line of business was considered a
discontinued operation for the year ended 1996 and the consolidated financial
statements reported separately the net assets and operating results of the
discontinued operations.
The Company also entered into an agreement during 1994 to dispose of the
remainder of its medical line of business effective January 1, 1995. This
transaction closed January 31, 1995 and, accordingly, was reflected in the
1995 consolidated financial statements. The agreement provided for the
reinsurance of substantially all of the Company's remaining group and
individual medical business through the renewal dates of the related
contracts. Under the agreement, the Company continued to remain primarily
liable for claims, billing and receipts through the next anniversary dates of
the policies reinsured. The estimated gain on disposal of this was recorded in
1995. An additional gain of $1,416,000, net of income taxes, was recorded in
1996 reflecting various adjustments to initial estimates.
F-24
<PAGE>
BUSINESS MEN'S ASSURANCE COMPANY OF AMERICA
(A Member of the Generali Group of Companies)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
13. Impact of Year 2000 (Unaudited)
The Company continues to monitor the potential impact of the year 2000 on
its systems and that of its primary vendors and business partners. This
assessment extends to both informational technology systems and noninformation
technology systems. All identified modifications to critical operating systems
have been completed as of December 31, 1998, and the Company continues to
validate completed systems to ensure ongoing compliance. Contingency plans are
being developed and management estimates that these plans will be completed by
mid 1999, which is prior to any anticipated impact on its operating systems.
Total costs of the modifications have been immaterial to the Company's
operations and have been expensed as incurred.
The Company does face the risk that one or more of its critical suppliers
or customers (external relationships) will not be able to interact with the
Company due to the third parties' inability to resolve their own year 2000
issues. The Company is actively monitoring the compliance programs of those
third parties, and formal communication has been initiated with all major
outside service providers. However, the Company is unable to predict with
certainty to what extent its external relationships will be year 2000 ready.
The forecast costs, consequences of the year 2000 problem and the dates on
which the Company believes it will complete its various year 2000 computer
modifications are based on its best estimates, which, in turn, were based on
numerous assumptions of future events, including third-party modification and
compliance plans, continued availability of resources and other factors. The
Company cannot be sure that these estimates will be achieved or that the
assumptions are accurate, and actual results could differ materially from
those anticipated.
F-25
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
a. Financial Statements
The financial statements of the Separate Account and the Company are included
in Part B hereof.
b. Exhibits
1. Resolution of Board of Directors of the Company authorizing the
establishment of the Variable Account*
2. Not Applicable
3.(a) Principal Underwriter's Agreement **
3.(b) Form of Selling Agreement**
4.(a) Individual Variable Annuity Contract
4.(b) Waiver of Withdrawal Charge and Interest Adjustment Rider**
4.(c) Death Benefit Endorsement +
4.(d) Additional Death Benefit Endorsement ++
5. Application for Individual Variable Annuity Contract**
6. (i) Copy of Articles of Incorporation of the Company**
(ii) Copy of the Bylaws of the Company**
7. Not Applicable
8. Form of Fund Participation Agreement**
9. Opinion and Consent of Counsel
10. Independent Auditors' Consent
11. Not Applicable
12. Not Applicable
13. Calculation of Performance Information
14. Company Organizational Chart**
27. Not Applicable
*Incorporated by reference to Registrant's Form N-4, as electronically
filed on August 5, 1997.
**Incorporated by reference to Registrant's Pre-Effective Amendment No. 1 to
Form N-4, as electronically filed on October 17, 1997.
***Incorporated by reference to Registrant's Post-Effective Amendment No.2 to
Form N-4, as electronically filed on July 8, 1998.
+ Incorporated by reference to Registrant's Post-Effective Amendment No. 3 to
Form N-4, as electronically filed on August 14, 1998.
++ Incorporated by reference to Registrant's Post-Effective Amendment No. 5 to
Form N-4, as electronically filed on February 17, 1999.
Item 25. Directors and Officers of the Depositor
The following are the Officers and Directors of the Company:
<TABLE>
<CAPTION>
Name and Principal Positions and Offices
Business Address with Depositor
<S> <C>
Giorgio Balzer Director, Chairman of the Board and
BMA Tower Chief Executive Officer
700 Karnes Blvd.
Kansas City, MO 64108-3306
Robert Thomas Rakich Director, President and Chief Operating Officer
BMA Tower
700 Karnes Blvd.
Kansas City, MO 64108-3306
Dennis Keith Cisler Senior Vice President - Information
BMA Tower Systems
700 Karnes Blvd.
Kansas City, MO 64108-3306
David Lee Higley Senior Vice President & Chief Financial
BMA Tower Officer
700 Karnes Blvd.
Kansas City, MO 64108-3306
Stephen Stanley Soden Senior Vice President - BMA Financial
BMA Tower Group
700 Karnes Blvd.
Kansas City, MO 64108-3306
Michael Kent Deardorff Senior Vice President - Marketing,
BMA Tower BMA Financial Group
700 Karnes Blvd.
Kansas City, MO 64108-3306
James Evan Kilmer Vice President - Taxes
BMA Tower
700 Karnes Blvd.
Kansas City, MO 64108-3306
Edward Scott Ritter Senior Vice President - Insurance Services,
BMA Tower Corporate Development & Communications
700 Karnes Blvd.
Kansas City, MO 64108-3306
David A. Gates Vice President & General Counsel
BMA Tower
700 Karnes Blvd.
Kansas City, MO 64108-3306
Martin Jefferson Fuller Senior Vice President - Workplace
BMA Tower Benefits
700 Karnes Blvd.
Kansas City, MO 64108-3306
Robert Noel Sawyer Senior Vice President & Chief Investment
BMA Tower Officer
700 Karnes Blvd.
Kansas City, MO 64108-3306
Vernon Wirt Voorhees II Director, Senior Vice President -
BMA Tower Corporate Services & Secretary
700 Karnes Blvd.
Kansas City, MO 64108-3306
Margaret Mary Heidkamp Vice President - Operations, Variable and
BMA Tower Asset Accumulation Products
700 Karnes Blvd.
Kansas City, MO 64108-3306
Jay Brian Kinnamon Vice President & Corporate Actuary
BMA Tower
700 Karnes Blvd.
Kansas City, MO 64108-3306
Susan Annette Sweeney Vice President - Treasurer & Controller
BMA Tower
700 Karnes Blvd.
Kansas City, MO 64108-3306
Gerald W. Selig Vice President & Actuary - Accumulation
BMA Tower Products
700 Karnes Blvd.
Kansas City, MO 64108-3306
Thomas Morton Bloch Director
Gianguido Castagno Director
William Thomas Grant II Director
Donald Joyce Hall, Jr. Director
Allan Drue Jennings Director
David Woods Kemper Director
Giorgio Liveris Director
John Kessander Lundberg Director
John Pierre Mascotte Director
Giovanni Perissinotto Director
</TABLE>
Item 26. Persons Controlled by or Under Common Control with the Depositor
or Registrant
The Company organizational chart was filed as Exhibit 14 in Pre-Effective
Amendment No. 1 to Form N-4 and is incorporated herein by reference.
Item 27. Number of Contract Owners
As of December 17, 1999, there were 55 Non-Qualified Contract
Owners and 23 Qualified Contract Owners.
Not Applicable
Item 28. Indemnification
The Bylaws of the Company (Article IV) provide that:
Section 1: Indemnification. Each person who is or was a Director, officer or
employee of the Corporation or is or was serving at the request of the
Corporation as a Director, officer or employee of another corporation,
partnership, joint venture, trust or other enterprise (including the heirs,
executors, administrators or estate of such person) shall be indemnified by the
Corporation as a right to the full extent permitted or authorized by the laws of
the State of Missouri, as now in effect and as hereafter amended, against any
liability, judgment, fine, amount paid in settlement, cost and expense
(including attorneys' fees) asserted or threatened against and incurred by such
person in his capacity as or arising out of his status as a Director, officer or
employee of the Corporation, or if serving at the request of the Corporation, as
a Director, officer or employee of another corporation, partnership, joint
venture, trust or other enterprise. The indemnification provided by this Bylaw
provision shall not be exclusive of any other rights to which those indemnified
may be entitled under any other bylaw or under any agreement, vote of
shareholders or disinterested directors or otherwise, and shall not limit in any
way any right which the Corporation may have to make different or further
indemnifications with respect to the same or different persons or classes of
persons.
Without limiting the foregoing, the Corporation is authorized to enter into an
agreement with any Director, officer or employee of the Corporation providing
indemnification for such person against expenses, including attorneys' fees,
judgments, fines and amounts paid in settlement that result from any threatened,
pending or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative, including any action by or in the right of the
Corporation, that arises by reason of the fact that such person is or was a
Director, officer or employee of the Corporation, or is or was serving at the
request of the Corporation as a Director, officer or employee of another
corporation, partnership, joint venture, trust or other enterprise, to the full
extent allowed by law, whether or not such indemnification would otherwise be
provided for in this Bylaw, except that no such agreement shall indemnify any
person from or on account of such person's conduct which was finally adjudged to
have been knowingly fraudulent, deliberately dishonest or willful misconduct.
Insofar as indemnification for liability arising under the Securities Act of
1933 may be permitted for directors and officers or controlling persons of the
Company pursuant to the foregoing, or otherwise, the Company 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, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Company of expenses incurred or paid
by a director, officer or controlling person of the Company 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
Company will, unless in the opinion of its counsel the matter has been settled
by controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.
Item 29. Principal Underwriters
a. Jones & Babson, Inc. is the principal underwriter for the Contracts.
It is also the principal underwriter for: BMA Variable Life Account A,
David L. Babson Growth Fund, Inc., D. L. Babson Money Market Fund, Inc., D. L.
Babson Tax-Free Income Fund, Inc., Babson Enterprise Fund, Inc., Babson
Enterprise Fund II, Inc., Babson Value Fund, Inc., Shadow Stock Fund, Inc., D.
L. Babson Bond Trust, Scout Stock Fund, Inc., Scout Bond Fund, Inc., Scout Money
Market Fund, Inc., Scout Tax-Free Money Market Fund, Inc., Scout Regional Fund,
Inc., Scout WorldWide Fund, Inc., Scout Balanced Fund, Inc., Buffalo Balanced
Fund, Inc., Buffalo Equity Fund, Inc., Buffalo High Yield Fund, Inc., Buffalo
USA Global Fund, Inc., Buffalo Small Cap Fund, Inc., Scout Capital Preservation
Fund, Inc., Scout Kansas Tax-Exempt Bond Fund, Inc. and AFBA Five Star Fund,
Inc.
b. The following are the officers and directors of Jones & Babson, Inc.:
<TABLE>
<CAPTION>
Name and Positions and Offices
Business Address with Underwriter
- - ------------------------- ---------------------
<S> <C>
Larry D. Armel President,
5540 Belinder Director and CEO
Shawnee Mission, KS 66205
P. Bradley Adams Vice President, Chief
12019 Cherokee Lane Financial Officer and
Leawood, KS 66209 Treasurer
William G. Cooke Chief Compliance Officer
BMA Tower
700 Karnes Blvd.
Kansas City, MO 64108-3306
Martin A. Cramer Legal Regulatory Affairs-
13885 S. Brougham Drive Vice President and
Olathe, KS 66062 Secretary
Constance B. Martin Asst. Vice President
2305 W 95th Street
Leawood, KS 66206
Stephen S. Soden Chairman of the Board and
BMA Tower Director
One Penn Valley Park
Kansas City, MO 64141
Giorgio Balzer Director
BMA Tower
One Penn Valley Park
Kansas City, MO 64141
Robert T. Rakich Director
BMA Tower
One Penn Valley Park
Kansas City, MO 64141
Edward S. Ritter Director
BMA Tower
One Penn Valley Park
Kansas City, MO 64141
Robert N. Sawyer Director
BMA Tower
One Penn Valley Park
Kansas City, MO 64141
Vernon W. Voorhees Director
BMA Tower
One Penn Valley Park
Kansas City, MO 64141
</TABLE>
Item 30. Location of Accounts and Records
The physical possession of the accounts, books or documents of the Separate
Account which are required to be maintained by Section 31(a) of the Investment
Company Act of 1940, as amended, and the rules promulgated thereunder will be
maintained by the Company at 700 Karnes Boulevard, Kansas City Missouri 64108.
Item 31. Management Services
Not Applicable
Item 32. Undertakings
a. Registrant hereby undertakes to file a post-effective amendment to this
registration statement as frequently as is necessary to ensure that the audited
financial statements in the registration statement are never more than sixteen
(16) months old for so long as payment under the variable annuity contracts may
be accepted.
b. Registrant hereby undertakes to include either (1) as part of any
application to purchase a contract offered by the Prospectus, a space that an
applicant can check to request a Statement of Additional Information, or (2) a
postcard or similar written communication affixed to or included in the
Prospectus that the applicant can remove to send for a Statement of Additional
Information.
c. Registrant hereby undertakes to deliver any Statement of Additional
Information and any financial statements required to be made available under
this Form promptly upon written or oral request.
d. Business Men's Assurance Company of America ("Company") hereby
represents that the fees and charges deducted under the Contracts described in
the Prospectus, in the aggregate, are reasonable in relation to the services
rendered, the expenses to be incurred and the risks assumed by the Company.
SIGNATURES
As required by the Securities Act of 1933 and the Investment Company Act of
1940, as amended, the Registrant certifies that it meets the requirements of
Securities Act Rule 485(b) for the effectiveness of this registration statement
and has caused this Registration Statement to be signed on its behalf in the
City of Kansas City and the State of Missouri, on this 29th day of December,
1999.
BMA VARIABLE ANNUITY ACCOUNT A
(Registrant)
By: BUSINESS MEN'S ASSURANCE COMPANY OF AMERICA
(Depositor)
By: /S/ DAVID A. GATES
--------------------------------
BUSINESS MEN'S ASSURANCE COMPANY OF AMERICA
(Depositor)
By: /S/ MICHAEL K. DEARDORFF
---------------------------------
Pursuant to the requirements of the Securities Act of 1933, this registration
statement has been signed by the following persons in the capacities and on the
dates indicated.
SIGNATURE AND TITLE
<TABLE>
<CAPTION>
<S> <C> <C>
Giorgio Balzer*
- - --------------------- Director, Chairman of the Board 12/17/99
Giorgio Balzer and Chief Executive Officer ---------
Date
Thomas Morton Bloch* 12/17/99
- - --------------------- Director ---------
Thomas Morton Bloch Date
Gianguido Castagno* 12/17/99
- - -------------------------- Director ---------
Gianguido Castagno Date
William Thomas Grant II * 12/17/99
- - --------------------------- Director ---------
William Thomas Grant II Date
Donald Joyce Hall, Jr.* 12/17/99
- - --------------------------- Director --------
Donald Joyce Hall, Jr. Date
Allan Drue Jennings* 12/17/99
- - --------------------------- Director ---------
Allan Drue Jennings Date
David Woods Kemper* 12/17/99
- - --------------------------- Director ---------
David Woods Kemper Date
Giorgio Liveris* 12/17/99
- - --------------------------- Director --------
Giorgio Liveris Date
John Kessander Lundberg* 12/17/99
- - --------------------------- Director ----------
John Kessander Lundberg Date
John Pierre Mascotte* 12/17/99
- - ---------------------------- Director ----------
John Pierre Mascotte Date
Giovanni Perissinotto* 12/17/99
- - --------------------------- Director ----------
Giovanni Perissinotto Date
/S/ ROBERT T. RAKICH 12/15/99
- - --------------------------- Director, President and Chief ---------
Robert Thomas Rakich Operating Officer Date
/S/ VERNON W. VOORHEES II 12/15/99
- - --------------------------- Director, Senior Vice President - ---------
Vernon Wirt Voorhees II Corporate Services & Secretary Date
/S/ DAVID L. HIGLEY 12/15/99
- - -------------------------- Senior Vice President & Chief ---------
David Lee Higley Financial Officer Date
/S/ SUSAN A. SWEENEY 12/15/99
- - ------------------------- Vice President - Treasurer & --------
Susan Annette Sweeney Controller Date
</TABLE>
*By: /S/ ROBERT T. RAKICH
----------------------------
Attorney-in-Fact
*By: /S/ VERNON W. VOORHEES II
-----------------------------
Attorney-in-Fact
EXHIBITS
TO
POST-EFFECTIVE AMENDMENT NO. 7 TO
FORM N-4
BMA VARIABLE ANNUITY ACCOUNT A
BUSINESS MEN'S ASSURANCE COMPANY OF AMERICA
INDEX TO EXHIBITS
Exhibit Page
EX-99.B4(a) Individual Variable Annuity Contract
EX-99.B9 Opinion and Consent of Counsel
EX-99.B10 Independent Auditors' Consent
EX-99.B13 Calculation of Performance Information
VA20 (8/97)
- --------------------------------------------- ----------------------------------
[GRAPHIC OMITTED][GRAPHIC OMITTED] INDIVIDUAL FLEXIBLE PAYMENT
- --------------------------------------------- ----------------------------------
BUSINESS MEN'S ASSURANCE COMPANY OF AMERICA
P. O. BOX 412879
700 KARNES BLVD.
KANSAS CITY, MO 64141
Call (800) 423-9398 for assistance or questions
BUSINESS MEN'S ASSURANCE COMPANY OF AMERICA (referred to in this Contract as us,
we) will make Annuity Payments as set forth in this Contract beginning on the
Annuity Date.
This Contract is issued in consideration of the payment of the initial Purchase
Payment.
FREE LOOK
This Contract may be returned within [10] days after you receive it. It can be
mailed or delivered to either us or the agent who sold it. Return of this
Contract by mail is effective on being postmarked, properly addressed and
postage prepaid to Post Office Box 66821, St. Louis, Missouri, 63166-6821. The
returned Contract will be treated as if we had never issued it. We will promptly
refund your Contract Value in states where permitted which may be less than your
Purchase Payment. In some states, we may be required to refund the Purchase
Payment. In those states, we will allocate the initial Purchase Payments to the
Money Market Subaccount for [15] days from the Issue Date. Upon the expiration
of the [15] days, the Contract Value in the Money Market Subaccount will be
allocated as you have directed. If we allocate your Purchase Payment to the
Money Market Subaccount, we will refund the greater of your Purchase Payments,
less any withdrawals and related charges, or your Contract Value.
Executed by us on the Issue Date.
[OBJECT OMITTED][IMPORT OMITTED] [GRAPHIC OMITTED][GRAPHIC OMITTED]
Secretary President
THIS IS A LEGAL CONTRACT, PLEASE READ IT CAREFULLY
ANNUITY PAYMENTS AND VALUES PROVIDED BY THIS CONTRACT, WHEN BASED ON THE
INVESTMENT EXPERIENCE OF THE SEPARATE ACCOUNT, ARE VARIABLE AND ARE NOT
GUARANTEED AS TO DOLLAR AMOUNT.
INDEX
PAGE
CONTRACT SCHEDULE
.............................................................
DEFINITIONS..................................................
PURCHASE PAYMENTS
PROVISION....................................................
CONTRACT VALUE
PROVISION....................................................
SEPARATE ACCOUNT
PROVISION....................................................
CONTRACT MAINTENANCE CHARGE PROVISION........................
TRANSFER
PROVISION....................................................
WITHDRAWAL
PROVISION....................................................
DEATH BENEFIT
PROVISION....................................................
ANNUITY
PROVISION....................................................
ANNUITANT, OWNERSHIP, ASSIGNMENT PROVISION...................
BENEFICIARY.................................................
SUSPENSION OF DEFERRAL OF PAYMENTS OR TRANSFERS
FROM THE SEPARATE
ACCOUNT......................................................
GENERAL
PROVISIONS...................................................
RESERVES, VALUES AND
BENEFITS.....................................................
ANNUITY
TABLES.......................................................
<TABLE>
<CAPTION>
CONTRACT SCHEDULE
<S> <C>
OWNER: [John Doe] AGE AT ISSUE: [52]
JOINT OWNER: [Mary Doe] AGE AT ISSUE: [50]
ANNUITANT: [John Doe] AGE AT ISSUE: [52]
CONTRACT NUMBER: [12345] ISSUE DATE: [May 1, 1997]
PLAN TYPE: [Non-qualified] ANNUITY DATE: [2015]
PURCHASE PAYMENTS:
Initial Purchase Payment: [$10,000 Non-Qualified; $2,000 IRA]
Minimum Subsequent Purchase Payment: [$1,000]
Maximum Total Purchase Payments: [$1 million, without our prior approval]
BENEFICIARY:
As designated by Owner at Issue Date unless changed in accordance with the Contract provisions.
CONTRACT MAINTENANCE CHARGE:
[The Contract Maintenance Charge is currently [$35.00] each Contract Year. [We reserve the right to
increase the Contract Maintenance Charge, but it will not exceed $60 per Contract Year.] The Contract
Maintenance Charge will be deducted from the Contract Value on each Contract Anniversary while this
Contract is in force. However, during the Accumulation Period, if your Contract Value on a Contract
Anniversary is at least [$100,000], then no Contract Maintenance Charge is deducted. If a total
withdrawal is made on other than a Contract Anniversary and your Contract Value for the Business Day
during which the total withdrawal is made is less than [$100,000], the full Contract Maintenance Charge
will be deducted at the time of the total withdrawal. The Contract Maintenance Charge will be deducted
from the Subaccounts and any Fixed Account Option selected in the same proportion that the amount of the
Contract Value in each Subaccount and/or Fixed Account bears to the total Contract Value. During the
Annuity Period, the Contract Maintenance Charge will be collected pro rata from each Annuity Payment.
[In the event you own more than one Contract, we will determine the total Contract Value for all of the
Contracts. If the total Contract Value exceeds [$100,000], we will not assess the Contract Maintenance
Charge.] If the Contract Owner is not a natural person, we will look to the Annuitant in determining
the foregoing.
COVERAGE CHARGE:
Equal on an annual basis to 1.25% of the average daily net asset value of the Separate Account. [We may
increase this charge, but it may not be greater than [1.75%].]
INVESTMENT OPTIONS:
[INVESTORS MARK SERIES FUND, INC.]
[Intermediate Fixed Income Portfolio
Global Fixed Income Portfolio
Balanced Portfolio
Small Cap Equity Portfolio
Mid Cap Equity Portfolio
Large Cap Value Portfolio
Large Cap Growth Portfolio
Growth & Income Portfolio
International Equity Portfolio
Money Market Portfolio]
[THE BERGER INSTITUTIONAL PRODUCTS TRUST]
[Berger/BIAM IPT - International Fund]
[AMERICAN CENTURY INVESTMENT MANAGEMENT, INC.]
[VP Income and Growth Fund
VP Value Fund]
[DREYFUS CORPORATION]
[Dreyfus Stock Index Fund
Dreyfus Disciplined Stock Portfolio]
[INVESCO FUNDS GROUP, INC.]
[VIF-High Yield Fund Portfolio
VIF-Equity Income Fund Portfolio]
[LAZARD ASSET MANAGEMENT]
[Lazard Retirement Small Cap Portfolio]
SEPARATE ACCOUNT: [BMA Variable Annuity Account A]
</TABLE>
ALLOCATION GUIDELINES:
[1. Currently, you can select as many Subaccounts as you wish.
However, we reserve the right to limit this in the future.
2. Currently, you can also select Fixed Account I or any Guarantee
Period option within Fixed Account II which is available at the time
the Purchase Payment or transfer is made.
3. Any allocation to Fixed Account I or to any Guarantee Period option
of Fixed Account II which is selected must be at least $5,000 and any
allocation to a Subaccount must be at least $1,000.
4. If the Purchase Payment and forms required to issue a Contract are
in good order, the initial Purchase Payment will be credited to your
Contract within two (2) business days after receipt at the BMA Service
Center. Additional Purchase Payments, which are in good order, will be
credited to your Contract as of the Business Day they are received.
5. Allocation percentages must be in whole numbers. Each allocation
must be at least [1%]. Allocations made pursuant to a pre-scheduled
transfer are not subject to these limitations.]
TRANSFERS:
Number of Transfers Permitted: [During the Accumulation Period:
Subject to any transfer fees and any minimum and maximum amounts that
may be transferred, there is no limitation on the number of transfers
that can currently be made between Subaccounts. Currently, you can
make unlimited transfers to any Fixed Account Option, subject to any
transfer fees and any required minimum and maximum amounts that may be
transferred. You can make a transfer from any Guarantee Period of
Fixed Account II, without any limitation or transfer fee, at the end
of the Guarantee Period. We reserve the right to modify the above, but
the Owner will always be allowed at least [12] transfers between
Subaccounts in a Contract Year during the Accumulation Period.
During the Annuity Period: Currently, during a Contract Year you can
make [4] transfers between Subaccounts of the Separate Account,
subject to any minimum and maximum amounts that may be transferred.
Currently you can make [4] transfers each Contract Year from one or
more Subaccounts to the General Account, subject to any minimum and
maximum amounts that may be transferred. You may not make a transfer
from the General Account to the Separate Account.]
Number of Free Transfers: [Currently, you are allowed [12] free
transfers each Contract Year during the Accumulation Period and [4]
free transfers each Contract Year during the Annuity Period.]
Transfer Fee: [For each transfer in excess of the free transfers
permitted, the Transfer Fee is [$25]. Transfers made pursuant to a
pre-scheduled transfer will not be counted in determining the
application of the transfer fee.]
Minimum and Maximum Amount to be Transferred: [The minimum amount
which can be transferred is $250 or your entire interest in any
Subaccount, Fixed Account I or any Guarantee Period of Fixed Account
II, if less. At the Company's discretion, the maximum amount which can
be transferred from any Fixed Account Option, unless the transfer is
from a Guarantee Period just expiring, may be limited to 25% of the
amount in Fixed Account I or any Guarantee Period of Fixed Account II.
This requirement is waived if the transfer is pursuant to a
pre-scheduled transfer or applied to an Annuity Option.]
Minimum Amount Which Must Remain in an Account After a Transfer:
[$1,000 in any Subaccount or $5,000 in Fixed Account I or any
Guarantee Period of Fixed Account II.]
Pre-scheduled Transfers: [You can elect the Dollar Cost Averaging
Option, the Asset Allocation Option and the Asset Rebalancing Option.
However, that portion of Contract Value held in any Fixed Account
options is not included in any pre-scheduled transfer option except
you can elect to have Fixed Account I as the source fund for Dollar
Cost Averaging. We reserve the right to limit the availability of any
Account for a Pre-Scheduled Transfer.]
WITHDRAWALS:
Withdrawal Charge: [A Withdrawal Charge is assessed against each
Purchase Payment withdrawn and will result in a reduction in remaining
Contract Value. The Withdrawal Charge is calculated at the time of
each withdrawal. Each Purchase Payment is tracked from its date of
receipt and withdrawals are determined on a first-in, first-out basis.
The Withdrawal Charges are determined in accordance with the
following:
<TABLE>
<CAPTION>
Number of Complete Years
from Date of Purchase Payment Withdrawal Charge
----------------------------- -----------------
<S> <C> <C>
0 7%
1 6%
2 5%
3 4%
4 3%
5 2%
6 1%
7 and thereafter 0%
</TABLE>
Waiver of Withdrawal Charge: [During the accumulation phase, the first
10% of the Contract Value withdrawn may be made free from the
Withdrawal Charge (unless you have already made another withdrawal
during that same Contract Year) on a non-cumulative basis as follows:
1. Once each Contract Year as a single sum payment; or
2. At any time, subject to any conditions and fees we may impose, as
equal periodic installments.]
Minimum Partial Withdrawal Amount: [$1,000. Withdrawals made pursuant
to the Automatic Withdrawal Option or the Minimum Distribution Option
are not subject to this minimum.]
Minimum Contract Value which must remain in an Account after a Partial
Withdrawal: [$1,000 in any Subaccount or $5,000 in Fixed Account I or
any Guarantee Period of Fixed Account II.]
Minimum Contract Value which must remain in the Contract after a
Partial Withdrawal: [$10,000]
<TABLE>
<CAPTION>
<S> <C>
[FIXED ACCOUNT OPTIONS:
Fixed Account I:
Minimum Guarantee Interest Rate: [3%]
Current Interest Rate as of Issue Date [ X%, guaranteed for any Purchase Payments allocated or
transferred to Fixed Account I during the calendar month in which this Contract is issued. This
rate is guaranteed for 12 months.]
Fixed Account II:
Minimum Guarantee Interest Rate: [3%]
Current Fixed Account II Guarantee Periods : [2, 3, 4, 5, 6, 7, 8, 9, 10]
Current Interest Rates for Selective Guarantee Period(s): Each current interest rate applies only
to Purchase Payments allocated or transferred to Fixed Account II during the calendar month in
which this Contract is issued.
[2 Years - %
3 Years - %
4 Years - %
5 Years - %
6 Years - %
7 Years - %
8 Years - %
9 Years - %
10 Years- %]
Interest Adjustment Factor: If a total or partial withdrawal or transfer is made from Fixed Account II
other than at the end of a Guarantee Period, an Interest Adjustment will be made to the Contract Value.
The Interest Adjustment Factor with respect to each purchase payment or transfer allocated to Fixed
Account II is:
(.75 x (A-B) x N/12) where:
A = the guaranteed interest rate (expressed as a decimal) in effect for the specific
purchase payment or transfer.
B = the guaranteed interest rate (expressed as a decimal) available for new contracts of this
type of contract for the applicable guarantee period, as of the withdrawal or transfer. If a
guaranteed interest rate is not available for the same type of contract, a suitable replacement rate
will be determined by us.
N = the number of complete months from the date of the withdrawal or transfer to the end of
the applicable Guarantee Period as shown on the Contract Schedule.
The amount of the Interest Adjustment with respect to each Purchase Payment or transfer is equal to the
Interest Adjustment Factor multiplied by the amount of the withdrawal or transfer.
If the Interest Adjustment is a negative value, the Interest Adjustment is subtracted from the Contract
Value. If the Interest Adjustment is a positive value, the Interest Adjustment is added to the Contract
Value.
Within each guarantee period of Fixed Account II, withdrawals and transfers will be determined on a
first-in, first-out (FIFO) basis.
ENDORSEMENTS:
[Individual Retirement Annuity Endorsement]
[Fixed Account I Endorsement]
[Fixed Account II Endorsement]
[Death Benefit Endorsement]
[Waiver of Withdrawal Charges & Interest Adjustment Rider]
BMA SERVICE CENTER:
[BMA
9735 Landmark Parkway Dr.
St. Louis, MO 63127-1690]
</TABLE>
DEFINITIONS
ACCOUNT: Any Subaccount, any available Fixed Account Option or the General
Account.
ACCUMULATION PERIOD: The period prior to the Annuity Date during which you can
make Purchase Payments.
ACCUMULATION UNIT: A unit of measure used to calculate the Contract Value prior
to the Annuity Date.
ADJUSTED CONTRACT VALUE: The Contract Value less any applicable Premium Tax.
This amount is applied to the applicable Annuity Table to determine the initial
Annuity Payment.
AGE: Age last birthday, except when calculating age for the Annuity Date when it
is the actual age to the nearest month.
ANNUITANT: The natural person upon whose continuation of life any Annuity
Payment involving life contingencies depends. You may change the Annuitant at
any time prior to the Annuity Date unless the Contract Owner is not a natural
person. On or after the Annuity Date, any reference to Annuitant shall also
include any Joint Annuitant.
ANNUITY DATE: The date on which Annuity Payments are to begin.
ANNUITY OPTION: An arrangement under which Annuity Payments are made under this
Contract.
ANNUITY PAYMENTS: The series of payments made to you or any named payee after
the Annuity Date under the Annuity Option selected.
ANNUITY PERIOD: The period of time beginning on the Annuity Date during which
Annuity Payments are made.
ANNUITY RESERVE: The assets which support the Annuity Option you have selected
during the Annuity Period.
ANNUITY UNIT: A unit of measure used to calculate Annuity Payments after the
Annuity Date.
AUTHORIZED REQUEST: A request, in a form satisfactory to us, which is received
by the BMA Service Center.
BMA SERVICE CENTER: The office indicated on the Contract Schedule of the
Contract to which notices, requests and Purchase Payments must be sent. All sums
payable to us under the Contract are payable only at the BMA Service Center.
BENEFICIARY: The person(s) or entity(ies) who will receive any death benefit
payable under this Contract.
BUSINESS DAY: Each day that the New York Stock Exchange is open for trading. The
Separate Account will be valued each Business Day.
COMPANY: Business Men's Assurance Company of America (BMA).
CONTRACT ANNIVERSARY: A calendar year anniversary of the Issue Date of this
Contract.
CONTRACT WITHDRAWAL VALUE: The Contract Value less any applicable Premium Tax,
less any Withdrawal Charge and less any applicable Contract Maintenance Charge.
CONTRACT VALUE: The dollar value as of any Business Day of all amounts
accumulated under this Contract.
CONTRACT YEAR: Any period of twelve (12) months commencing with the Issue Date
and each Contract Anniversary thereafter.
INVESTMENT OPTION(S): Those investments available under the Contract. Current
Investment Option(s) are shown on the Contract Schedule.
GENERAL ACCOUNT: Our general investment account which contains all of our assets
with the exception of the Separate Account and other segregated asset accounts.
ISSUE DATE: The date shown on the Contract Schedule on which the first Contract
Year begins.
JOINT OWNER: If there is more than one Owner, each Owner shall be a Joint Owner
of the Contract. Joint Owners have equal ownership rights and, except for
telephone transfers, must both authorize any exercising of those ownership
rights unless otherwise allowed by us. Any Joint Owner must be the spouse of the
other Joint Owner.
OWNER: The person(s) or entity(ies) entitled to the ownership rights stated in
this Contract. If Joint Owners are named, all references to Owner shall mean the
Joint Owners.
PREMIUM TAX: Any premium taxes owed by us to any governmental entity and
assessed against Purchase Payments or Contract Value.
PURCHASE PAYMENT: A payment you make toward this Contract.
SEPARATE ACCOUNT: A segregated asset account maintained by us in which a portion
of our assets has been allocated for this and certain other contracts. It has
been designated on the Contract Schedule.
SUBACCOUNT: Separate Account assets are divided into Subaccounts. Assets of each
Subaccount will be invested in shares of an Investment Option.
PURCHASE PAYMENTS PROVISION
PURCHASE PAYMENTS: Purchase Payments are payable according to the frequency and
in the amount selected by you. The initial Purchase Payment is due on the Issue
Date. We reserve the right to decline any Purchase Payment. The Minimum
Subsequent Purchase Payment allowed and the Maximum Total Purchase Payments
accepted without our prior permission are shown on the Contract Schedule.
CHANGE IN PURCHASE PAYMENTS: You may elect to increase or decrease or to change
the frequency of Purchase Payments. Unless surrendered, this Contract remains in
force until the Annuity Date and will not be in default if no additional
Purchase Payments are made.
ALLOCATION OF PURCHASE PAYMENTS: Purchase Payments are allocated to one or more
of the Subaccounts of the Separate Account or the available Fixed Account
Options in accordance with your selection. The allocation of the initial
Purchase Payment is made in accordance with your selection made at the Issue
Date. Unless you inform us otherwise, subsequent Purchase Payments are allocated
in the same manner as the Initial Purchase Payment. However, the Company has
reserved the right to allocate the initial Purchase Payment to the Money Market
Subaccount as set forth on the face page of this Contract. All allocations of
Purchase Payments are subject to the Allocation Guidelines shown on the Contract
Schedule.
CONTRACT VALUE PROVISION
The Contract Value for any Business Day is equal to the total dollar value
accumulated under this Contract.
The Contract Value in a Subaccount of the Separate Account is determined by
multiplying the number of Accumulation Units allocated to the Contract Value for
the Subaccount by the Accumulation Unit Value for that Subaccount.
Purchase Payments, withdrawals and transfers from or to a Subaccount will result
in the addition of or the cancellation of Accumulation Units in a Subaccount.
SEPARATE ACCOUNT PROVISION
THE SEPARATE ACCOUNT: The Separate Account is designated on the Contract
Schedule. It consists of assets we have set aside and have kept separate from
the rest of our assets and those of our other separate accounts. The assets of
the Separate Account, equal to reserves and other liabilities of your Contract
and those of other Owners, will not be charged with liabilities arising out of
any other business we may conduct.
The Separate Account assets are divided into Subaccounts. The assets of the
Subaccounts are allocated to the Investment Option(s) shown on the Contract
Schedule. We may add additional Investment Option(s) to those shown. You may be
permitted to transfer your Contract Value or allocate Purchase Payments to the
additional Subaccount(s). However, the right to make such transfers or
allocations will be limited by any terms and conditions we may impose.
Should the shares of any Investment Option(s) become unavailable for investment
by the Separate Account, or our Board of Directors deems further investment in
the shares inappropriate, we may limit further purchase of such shares or
substitute shares of another Investment Option for shares already purchased.
VALUATION OF ASSETS: Assets of Investment Options held within the Subaccounts
will be valued at their net asset value on each Business Day.
ACCUMULATION UNITS: Accumulation Units shall be used to account for all amounts
allocated to or withdrawn from the Subaccounts of the Separate Account as a
result of Purchase Payments, withdrawals, transfers, or fees and charges. We
will determine the number of Accumulation Units of a Subaccount purchased or
canceled. This will be done by dividing the amount allocated to (or the amount
withdrawn from) the Subaccount by the dollar value of one Accumulation Unit of
the Subaccount as of the end of the Business Day during which the request for
the transaction is received at the BMA Service Center.
ACCUMULATION UNIT VALUE: The Accumulation Unit Value for each Subaccount was
arbitrarily set initially at $10. Subsequent Accumulation Unit Values for each
Subaccount are determined by multiplying the Accumulation Unit Value for the
immediately preceding Business Day by the Net Investment Factor for the
Subaccount for the current Business Day.
The Accumulation Unit Value may increase or decrease from Business Day to
Business Day.
NET INVESTMENT FACTOR: The Net Investment Factor for each Subaccount is
determined by dividing A by B and multiplying by (1 - C) where:
A is (i) the net asset value per share of the Investment Option held by
the Subaccount at the end of the current Business Day; plus
(ii) any dividend or capital gains per share declared on behalf of
such Investment Option that has an ex-dividend date within the
current Business Day.
B is the net asset value per share of the Investment Option held by the
Subaccount for the immediately preceding Business Day.
C is (i) the Business Day equivalent of the Coverage Charge, which is
shown on the Contract Schedule; plus
(ii) a charge factor, if any, for any taxes or any tax reserve we have
established as a result of the operation or maintenance of the
Subaccount.
COVERAGE CHARGE: Each Business Day, we deduct a Coverage Charge from the
Subaccounts of the Separate Account which is equal, on an annual basis, to the
amount shown on the Contract Schedule.
CONTRACT MAINTENANCE CHARGE PROVISION
We deduct an annual Contract Maintenance Charge shown on the Contract Schedule.
TRANSFER PROVISION
A transfer is subject to the following:
1. the maximum number of transfers and the number of transfers which may
be made which are not subject to a Transfer Fee are shown on the
Contract Schedule;
2. a Transfer Fee is deducted if a transfer exceeds the maximum number of
free transfers. The Transfer Fee is shown on the Contract Schedule.
The Transfer Fee is deducted from the amount which is transferred.
3. you may not make a transfer until after the end of the Free Look
period.
4. the minimum and maximum amounts which may be transferred are shown on
the Contract Schedule.
5. a transfer will be effected as of the end of the Business Day when we
receive an acceptable transfer request containing all required
information.
6. neither us nor our BMA Service Center are liable for a transfer made
in accordance with your instructions.
7. we reserve the right to restrict the number of transfers per year and
to restrict transfers from being made on consecutive Business Days.
8. your right to make transfers is subject to modification if we
determine, in our sole opinion, that the exercise of the right by one
or more Owners is, or would be, to the disadvantage of other Owners.
Restrictions may be applied in any manner reasonably designed to
prevent any use of the transfer right which is considered by us to be
the disadvantage of other Owners. A modification could be applied to
transfers to or from one or more of the Subaccounts and could include,
but not be limited to:
a. the requirement of a minimum time period between each transfer;
b. not accepting transfer requests of an agent acting under a power
of attorney on behalf of more than one Owner; or
c. limiting the dollar amount that may be transferred by an Owner at
any one time.
9. In addition to the above, transfers made during the Annuity Period are
subject to the following:
the amount transferred to the General Account from a Subaccount of the
Separate Account will be equal to the Annuity Reserve which was
transferred from the payee's interest in that Subaccount. The Annuity
Reserve is the product of "(a)" multiplied by "(b)" multiplied by
"(c)", where (a) is the number of Annuity Units representing the
Owner's interest in the Subaccount per Annuity Payment; (b) is the
Annuity Unit Value for the Subaccount; and (c) is the present value of
$1.00 per payment period based on the Age of the Annuitant at time of
transfer for the Annuity Option, determined using the 1983 Individual
Annuity Mortality Tables, with mortality projected to the year 2000
and with an annual effective interest rate of 3 1/2%. Amounts
transferred to the General Account will be applied under the Annuity
Option elected at the Age of the Annuitant at the time of the
transfer. All amounts and Annuity Unit Values will be determined as of
the end of the Business Day preceding the effective date of the
transfer.
If you elect to use your transfer privilege, neither us nor our BMA Service
Center will be liable for transfers made in accordance with your instructions.
If there are Joint Owners, we will accept telephone transfer instructions from
either Owner.
WITHDRAWAL PROVISION
WITHDRAWALS: During the Accumulation Period, you may, upon Authorized Request,
make a total or partial withdrawal of the Contract Withdrawal Value. Withdrawals
will result in the cancellation of Accumulation Units from each Subaccount in
the ratio that the value of each Subaccount bears to the total Contract Value.
You must specify, by Authorized Request, which Accumulation Units are to be
canceled if other than the above mentioned method of cancellation is desired. We
will pay the amount of any withdrawal within seven (7) days of receipt, in good
order, of a request unless the "Suspension or Deferral of Payment or Transfers
from the Separate Account Provision" is in effect.
Each partial withdrawal must be for an amount which is not less than the amount
shown on the Contract Schedule. The minimum Contract Value which must remain in
an Account and in the Contract after a partial withdrawal is shown on the
Contract Schedule.
WITHDRAWAL CHARGE: Upon a total or partial withdrawal of Contract Value a
Withdrawal Charge as set forth on the Contract Schedule may be assessed. Under
certain circumstances, we allow withdrawals without the Withdrawal Charge.
DEATH BENEFIT PROVISION
DEATH OF OWNER DURING THE ACCUMULATION PERIOD: Upon the death of the Owner
during the Accumulation Period, the death benefit will be paid to the
Beneficiary(ies) designated by the Owner. Upon the death of a Joint Owner during
the Accumulation Period, the surviving Joint Owner will become the primary
Beneficiary to whom the death benefit will be paid. Any other Beneficiary
designation on record at the time of such death will be treated as a contingent
Beneficiary.
DEATH BENEFIT AMOUNT DURING THE ACCUMULATION PERIOD: The death benefit will be
the greater of (a) the Purchase Payment, less any withdrawals and related
Withdrawal Charges; or (b) the Contract Value determined as of the end of the
Business Day during which we receive both due proof of death and an election for
the payment method.
DEATH BENEFIT OPTIONS DURING THE ACCUMULATION: A Beneficiary must request that
the death benefit be paid under one of the Death Benefit Options below. In
addition, if the Beneficiary is the spouse of the Owner, he or she may elect to
continue the Contract in his or her own name and exercise all the Owner's rights
under the Contract.
Option 1 - lump sum payment of the death benefit; or
Option 2 - the payment of the entire death benefit within 5 years of the
date of the death of the Owner or any Joint Owner; or
Option 3 - payment of the death benefit under an Annuity Option over the
lifetime of the Beneficiary or over a period not extending beyond the life
expectancy of the Beneficiary with distribution beginning within one year
of the date of death of the Owner or any Joint Owner.
Any portion of the death benefit not applied under Option 3 within one year of
the date of the Owners' death, must be distributed within five years of the date
of death.
If a lump sum payment is requested, the amount will be paid within seven (7)
days of receipt of proof of death and the election, unless the "Suspension or
Deferral of Payment or Transfers from the Separate Account Provision" is in
effect.
Payment to the Beneficiary, other than in a single sum, may only be elected
during the sixty-day period beginning with the date of receipt of proof of
death.
DEATH OF OWNER DURING THE ANNUITY PERIOD: If you, or any Joint Owner, dies
during the Annuity Period and you are not an Annuitant, any remaining payments
under the Annuity Option elected will continue at least as rapidly as under the
method of distribution in effect at such Owner's death. Upon your death during
the Annuity Period, the Beneficiary becomes the Owner.
DEATH OF ANNUITANT: Upon the death of an Annuitant, who is not the Owner, during
the Accumulation Period, you may designate a new Annuitant, subject to our
underwriting rules then in effect. If no designation is made within 30 days of
the death of the Annuitant, you will become the Annuitant. If the Owner is a
non-natural person, the death of the Annuitant will be treated as the death of
the Owner and a new Annuitant may not be designated.
Upon the death of the Annuitant during the Annuity Period, the death benefit, if
any, will be as specified in the Annuity Option elected. Death benefits will be
paid at least as rapidly as under the method of distribution in effect at the
Annuitant's death.
PAYMENT OF DEATH BENEFIT: We will require due proof of death before any death
benefit is paid. Due proof of death will be:
1. a certified death certificate; or
2. a certified decree of a court of competent jurisdiction as to the
finding of death; or
3. any other proof satisfactory to us.
All death benefits will be paid in accordance with applicable law or regulations
governing death benefit payments.
ANNUITY PROVISION
GENERAL: On the Annuity Date, the Adjusted Contract Value will be applied under
the Annuity Option you have selected. You may elect to have the Adjusted
Contract Value applied to provide a Fixed Annuity, a Variable Annuity or a
combination Fixed and Variable Annuity. If a combination is elected, you must
specify what part of the Adjusted Contract Value is to be applied to the Fixed
and Variable Options.
ANNUITY DATE: You select an Annuity Date at the time of issue. The earliest
Annuity Date you can select is one year after the Issue Date. The latest Annuity
Date you can select is the later of the first day of the first calender month
following the Annuitant's 95th birthday or 10 years from the Issue Date, or the
maximum date permitted under state law. You may, at any time prior to the
Annuity Date, change the Annuity Date by Authorized Request 30 days in advance.
SELECTION OF AN ANNUITY OPTION: You can select an Annuity Option by Authorized
Request. If no Annuity Option is selected, Option 2, with 120 Monthly Payments
Guaranteed, will automatically be applied. You may, at any time prior to the
Annuity Date, by an Authorized Request made 30 days in advance, select and/or
change the Annuity Option.
FREQUENCY AND AMOUNT OF ANNUITY PAYMENTS: Annuity Payments are paid in monthly
installments. The Adjusted Contract Value is applied to the Annuity Table for
the Annuity Option selected. If the Adjusted Contract Value to be applied under
an Annuity Option is less than $10,000, the Company reserves the right to make a
lump sum payment in lieu of Annuity Payments. If the Annuity Payment would be or
become less than $250, the Company reserves the right to reduce the frequency of
payments to an interval which will result in each payment being at least $250.
ANNUITY OPTIONS: This Contract provides for Annuity Payments under one of the
Annuity Options described below. Any other Annuity Option acceptable to us may
be selected.
OPTION 1 - LIFE ANNUITY. We will make monthly Annuity Payments during the life
of the Annuitant and ceasing with the last Annuity Payment due prior to the
Annuitant's death.
OPTION 2 - LIFE ANNUITY WITH 120 OR 240 MONTHLY ANNUITY PAYMENTS GUARANTEED. We
will make monthly Annuity Payments during the life of the Annuitant with a
guarantee that if at the Annuitant's death there have been less than 120 or 240
monthly Annuity Payments made as selected, monthly Annuity Payments will
continue for the remainder of the guaranteed period. You may elect to have the
present value of the guaranteed monthly Annuity Payments remaining, as of the
date notice of the Annuitant's death is received at the BMA Service Center,
commuted at the Assumed Investment Return selected for a Variable Annuity or for
a Fixed Annuity the Statutory Calendar Year Interest Rate based on the NAIC
Standard Valuation Law for Single Premium Immediate Annuities corresponding to
the Annuity Date. We will require the return of this Contract and proof of death
prior to the payment of any commuted values.
OPTION 3 - JOINT AND LAST SURVIVOR ANNUITY. We will make monthly Annuity
Payments during the joint lifetime of the Annuitant and the Joint Annuitant.
Upon the death of the Annuitant, if the Joint Annuitant is then living, Annuity
Payments will continue to be paid during the remaining lifetime of the Joint
Annuitant at a level of 100%, 75% or 50% of the previous level, as selected.
Monthly Annuity Payments cease with the final Annuity Payment due prior to the
last survivor's death.
OPTION 4 - JOINT AND LAST SURVIVOR ANNUITY WITH 120 OR 240 MONTHLY ANNUITY
PAYMENTS GUARANTEED. We will make monthly Annuity Payments during the joint
lifetime of the Annuitant and the Joint Annuitant. Monthly Annuity Payments will
continue to be paid during the remaining lifetime of the Joint Annuitant at 100%
of the previous level, as selected. If at the last death of the Annuitant and
the Joint Annuitant, there have been less than 120 or 240 monthly Annuity
Payments made as selected, monthly Annuity Payments will continue to be made for
the remainder of the guaranteed period. You may elect to have the present value
of the guaranteed monthly Annuity Payments remaining, as of the date notice of
the last Annuitant's death is received by us, commuted at the Assumed Investment
Return selected for a Variable Annuity or for a Fixed Annuity the Statutory
Calendar Year Interest Rate based on the NAIC Standard Valuation Law for Single
Premium Immediate Annuities corresponding to the Annuity Date. We will require
the return of this Contract and proof of death prior to the payment of any
commuted values.
ANNUITY: If you select a Fixed Annuity, the Adjusted Contract Value is allocated
to the General Account and the Annuity is paid as a Fixed Annuity. If you select
a Variable Annuity, the Adjusted Contract Value will be allocated to the
Subaccounts of the Separate Account in accordance with your selection, and the
Annuity will be paid as a Variable Annuity. You may also select a combination of
a Fixed Annuity and a Variable Annuity in which case your Annuity Payment would
be the sum of the Fixed Annuity and the Variable Annuity. Unless you designate
another payee, you will be the payee of the Annuity Payments. If when Annuity
Payments begin we are using tables of annuity rates for these Contracts which
result in larger Annuity Payments, we will use those tables instead. Where
permitted, Annuity Payments will depend on the Age and sex of the Annuitant.
The first annuity payment will be due one month (or one modal period if other
than a monthly Annuity Payment frequency is elected) following the later of the
Annuity Date or the date of receipt of all required forms.
BMA may elect to determine the amount of each Annuity Payment up to 10 business
days prior to the elected payment date.
FIXED ANNUITY: You may elect to have the Adjusted Contact Value applied to
provide a Fixed Annuity. The dollar amount of each Fixed Annuity Payment shall
be determined in accordance with Annuity Tables contained in this Contract which
are based on the 1983 Individual Annuity Mortality Table with mortality
projected to the year 2000 by projection scale G and with an annual effective
interest rate of 3 1/2%.
VARIABLE ANNUITY: You may elect to have the Adjusted Contract Value applied to
provide a Variable Annuity. Variable Annuity Payments reflect the investment
performance of the Separate Account in accordance with the allocation of the
Adjusted Contract Value to the Subaccounts during the Annuity Period. Variable
Annuity Payments are not guaranteed as to dollar amount.
On the Annuity Date a fixed number of Annuity Units will be purchased as
follows:
For each Subaccount the fixed number of Annuity Units is equal to the Adjusted
Contract Value for all Subaccounts, divided first by $1000, then multiplied by
the appropriate Annuity Payment amount from the Annuity Table contained in this
Contract for each $1000 of value for the Annuity Option selected, and then
divided by the Annuity Unit value for that Subaccount on the Annuity Date.
Thereafter, the number of Annuity Units in each Subaccount remains unchanged
unless you elect to transfer between Subaccounts. All calculations will
appropriately reflect the Annuity Payment frequency selected.
On each Annuity Payment date, the total Variable Annuity Payment is the sum of
the Annuity Payments for each Subaccount. The Variable Annuity Payment in each
Subaccount is determined by multiplying the number of Annuity Units then
allocated to such Subaccount by the Annuity Unit value for that Subaccount.
On each subsequent Business Day, the value of an Annuity Unit is determined in
the following way:
First: The Net Investment Factor is determined as described under "Separate
Account Provision - Net Investment Factor" above.
Second: The value of an Annuity Unit for a Business Day is equal to:
a. the value of the Annuity Unit for the immediately preceding Business
Day;
b. multiplied by the Net Investment Factor for the current Business Day;
c. divided by the Assumed Net Investment Factor (see below) for the
Business Day.
The Assumed Net Investment Factor is equal to one plus the Assumed Investment
Return which is used in determining the basis for the purchase of an Annuity,
adjusted to reflect the particular Business Day. The Assumed Investment Return
that we will use is [3 1/2%]. However, we may agree with you to use a different
value.
MORTALITY AND EXPENSE GUARANTEE: We guarantee that the dollar amount of each
Annuity Payment after the first will not be affected by variations in mortality
or expense experience.
ANNUITANT, OWNERSHIP, ASSIGNMENT PROVISION
OWNER: As the Owner you have all the interest and rights under this Contract.
The Owner is the person designated as such on the Issue Date, unless changed.
Any change of Owner is subject to our underwriting rules then in effect.
You may change Owners of the Contract at any time by Authorized Request. A
change of Owner will automatically revoke any prior designation of Owner. The
change will become effective as of the date the Authorized Request is signed. We
will not be liable for any payment made or action taken before we record the
change.
JOINT OWNER: A Contract may be owned by Joint Owners. If Joint Owners are named,
any Joint Owner must be the spouse of the other Owner. Upon the death of either
Owner, the surviving spouse will be the Primary Beneficiary. Any other
Beneficiary designation will be treated as a Contingent Beneficiary unless
otherwise indicated in an Authorized Request.
ANNUITANT: The Annuitant is the person on whose life Annuity Payments are based.
The Annuitant is the person designated by you at the Issue Date, unless changed
prior to the Annuity Date. The Annuitant may not be changed in a Contract which
is owned by a non-natural person. Any change of Annuitant is subject to our
underwriting rules then in effect.
ASSIGNMENT OF A CONTRACT: An Authorized Request specifying the terms of an
assignment of a Contract must be provided to the BMA Service Center. We will not
be liable for any payment made or action taken before we record the assignment.
We will not be responsible for the validity or tax consequences of any
assignment. Any assignment made after the death benefit has become payable will
be valid only with our consent.
If the Contract is assigned, your rights may only be exercised with the consent
of the assignee of record.
BENEFICIARY
BENEFICIARY: The Beneficiary designation in effect on the Issue Date will remain
in effect until changed. The Beneficiary is entitled to receive the benefits to
be paid at your death.
Unless you provide otherwise, the death benefit will be paid in equal shares to
the survivor(s) as follows:
1. to the primary Beneficiary(ies) who survive you and/or the Annuitant's
death, as applicable; or if there are none
2. to the contingent Beneficiary(ies) who survive you and/or the
Annuitant's death, as applicable; or if there are none
3. to your estate.
CHANGE OF BENEFICIARY: Subject to the rights of any irrevocable
Beneficiary(ies), you may change the Primary Beneficiary(ies) or Contingent
Beneficiary(ies). A change may be made by Authorized Request. The change will
take effect as of the date the Authorized Request is signed. The Company will
not be liable for any payment made or action taken before it records the change.
SUSPENSION OF DEFERRAL OF PAYMENTS OR TRANSFERS
FROM THE SEPARATE ACCOUNT
The Company reserves the right to suspend or postpone payments from the Separate
Account for a withdrawal or transfer for any period when:
1. the New York Stock Exchange is closed (other than customary weekend
and holiday closings);
2. trading on the New York Stock Exchange is restricted;
3. an emergency exists as a result of which disposal of securities held
in the Separate Account is not reasonably practicable or it is not
reasonably practicable to determine the value of the Separate
Account's net assets; or
4. during any other period when the Securities and Exchange Commission,
by order, so permits for the protection of Owners;
provided that applicable rules and regulations of the Securities and Exchange
Commission will govern as to whether the conditions described in (2) and (3)
exist.
GENERAL PROVISIONS
THE CONTRACT: The entire Contract consists of this Contract, and any attached
application, endorsements or riders. This Contract may be changed or altered
only by our President or Secretary. Any change, modification or waiver must be
made in writing.
NON-PARTICIPATING IN SURPLUS: This Contract does not share in any distribution
of our profits or surplus.
INCONTESTABILITY: We will not contest this Contract from its Issue Date.
MISSTATEMENT OF AGE OR SEX: We may require proof of Age of the Annuitant before
making any life contingent Annuity Payment provided for by this Contract. If the
Age or sex of the Annuitant has been misstated the amount payable will be the
amount that the Contract Value would have provided at the true Age or sex.
Once Annuity Payments have begun, any underpayments will be made up in one sum
with the next Annuity Payment, and overpayments will be deducted from the future
Annuity Payments until the total is repaid.
CONTRACT SETTLEMENT: This Contract must be returned to us upon any settlement.
Prior to any settlement as a death claim, due proof of death must be submitted
to us. Any paid-up annuity, withdrawal or death benefits that may be available
are not less than the minimum benefits required by statute.
REPORTS: We will furnish you with a report showing the Contract Value at least
once each calender year. We will also furnish an annual report of the Separate
Account. These reports will be sent to your last known address.
TAXES: Any taxes paid to any governmental entity will be charged against the
Contract Value. We will, in our sole discretion, determine when taxes have
resulted from: the investment experience of the Separate Account; receipt by us
of the Purchase Payment(s); or commencement of Annuity Payments. We may, at our
discretion, pay taxes when due and deduct that amount from the Contract Value at
a later date. Payment at an earlier date does not waive any right we may have to
deduct amounts at a later date. We reserve the right to establish a provision
for federal income taxes if we determine, in our sole discretion, that we will
incur a tax as a result of the operation of the Separate Account. We will deduct
for any income taxes incurred by it as a result of the operation of the Separate
Account whether or not there was a provision for taxes and whether or not it was
sufficient. We will deduct any withholding taxes required by applicable law.
EVIDENCE OF SURVIVAL: Where any benefits under this Contract are contingent upon
the recipient being alive on a given date, we may require proof satisfactory to
us that the condition has been met.
PROTECTION OF PROCEEDS: No Beneficiary may commute, encumber, alienate or assign
any payments under this Contract before they are due. To the extent permitted by
law, no payments will be subject to the debts, contracts or engagements of any
Beneficiary or to any judicial process to levy upon or attach the same for
payment thereof.
MODIFICATION OF CONTRACT: This Contract may not be modified by us without your
consent except as may be required by applicable law.
RESERVES, VALUES AND BENEFITS
All reserves are greater to or equal to those required by statute. Any values
and death benefits that may be available under this Contract are not less than
the minimum benefits required by any law in the state in which this Contract is
delivered.
<TABLE>
<CAPTION>
Annuity Tables
VA20 21
Annuity Payments for a Fixed Period
- ------------ ------------ --------- ------------ ---------- ----------- ---------- ----------- ---------- ------------
Years Amount Years Amount Years Amount Years Amount Years Amount
- ------------ ------------ --------- ------------ ---------- ----------- ---------- ----------- ---------- ------------
- ------------ ------------ --------- ------------ ---------- ----------- ---------- ----------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 84.47 6 15.14 11 8.86 16 6.53 25 4.71
- ------------ ------------ --------- ------------ ---------- ----------- ---------- ----------- ---------- ------------
- ------------ ------------ --------- ------------ ---------- ----------- ---------- ----------- ---------- ------------
2 42.86 7 13.16 12 8.24 17 6.23
- ------------ ------------ --------- ------------ ---------- ----------- ---------- ----------- ---------- ------------
- ------------ ------------ --------- ------------ ---------- ----------- ---------- ----------- ---------- ------------
3 28.99 8 11.68 13 7.71 18 5.96 30 4.18
- ------------ ------------ --------- ------------ ---------- ----------- ---------- ----------- ---------- ------------
- ------------ ------------ --------- ------------ ---------- ----------- ---------- ----------- ---------- ------------
4 22.06 9 10.53 14 7.26 19 5.73
- ------------ ------------ --------- ------------ ---------- ----------- ---------- ----------- ---------- ------------
- ------------ ------------ --------- ------------ ---------- ----------- ---------- ----------- ---------- ------------
5 17.91 10 9.61 15 6.87 20 5.51
- ------------ ------------ --------- ------------ ---------- ----------- ---------- ----------- ---------- ------------
Annuity Payments for the Life of the Payee, with Guaranteed Periods
- --------------- --------------------------------------------- -- ------------ ----------------------------------------------
Monthly Payment Per $1000 of Adj. Contract Monthly Payment Per $1000 of Adj.
- --------------- --------------------------------------------- -- ------------ ----------------------------------------------
- --------------- ----------- ---------------- ---------------- -- ------------ ------------ ---------------- ----------------
Annuitant Age Life 10 Years 20 Years Annuitant Life 10 Years 20 Years
- --------------- ----------- ---------------- ---------------- -- ------------ ------------ ---------------- ----------------
- --------------- ----------- ---------------- ---------------- -- ------------ ------------ ---------------- ----------------
50 4.37 4.33 4.23 50 4.05 4.03 3.99
- --------------- ----------- ---------------- ---------------- -- ------------ ------------ ---------------- ----------------
- --------------- ----------- ---------------- ---------------- -- ------------ ------------ ---------------- ----------------
51 4.44 4.40 4.28 51 4.10 4.08 4.03
- --------------- ----------- ---------------- ---------------- -- ------------ ------------ ---------------- ----------------
- --------------- ----------- ---------------- ---------------- -- ------------ ------------ ---------------- ----------------
52 4.51 4.47 4.34 52 4.16 4.14 4.08
- --------------- ----------- ---------------- ---------------- -- ------------ ------------ ---------------- ----------------
- --------------- ----------- ---------------- ---------------- -- ------------ ------------ ---------------- ----------------
53 4.58 4.54 4.39 53 4.22 4.20 4.13
- --------------- ----------- ---------------- ---------------- -- ------------ ------------ ---------------- ----------------
- --------------- ----------- ---------------- ---------------- -- ------------ ------------ ---------------- ----------------
54 4.66 4.61 4.45 54 4.28 4.26 4.18
- --------------- ----------- ---------------- ---------------- -- ------------ ------------ ---------------- ----------------
- --------------- ----------- ---------------- ---------------- -- ------------ ------------ ---------------- ----------------
- --------------- ----------- ---------------- ---------------- -- ------------ ------------ ---------------- ----------------
- --------------- ----------- ---------------- ---------------- -- ------------ ------------ ---------------- ----------------
55 4.75 4.69 4.51 55 4.35 4.32 4.24
- --------------- ----------- ---------------- ---------------- -- ------------ ------------ ---------------- ----------------
- --------------- ----------- ---------------- ---------------- -- ------------ ------------ ---------------- ----------------
56 4.84 4.77 4.57 56 4.42 4.39 4.29
- --------------- ----------- ---------------- ---------------- -- ------------ ------------ ---------------- ----------------
- --------------- ----------- ---------------- ---------------- -- ------------ ------------ ---------------- ----------------
57 4.93 4.86 4.63 57 4.49 4.46 4.35
- --------------- ----------- ---------------- ---------------- -- ------------ ------------ ---------------- ----------------
- --------------- ----------- ---------------- ---------------- -- ------------ ------------ ---------------- ----------------
58 5.04 4.95 4.69 58 4.57 4.54 4.41
- --------------- ----------- ---------------- ---------------- -- ------------ ------------ ---------------- ----------------
- --------------- ----------- ---------------- ---------------- -- ------------ ------------ ---------------- ----------------
59 5.14 5.05 4.76 59 4.66 4.62 4.48
- --------------- ----------- ---------------- ---------------- -- ------------ ------------ ---------------- ----------------
- --------------- ----------- ---------------- ---------------- -- ------------ ------------ ---------------- ----------------
- --------------- ----------- ---------------- ---------------- -- ------------ ------------ ---------------- ----------------
- --------------- ----------- ---------------- ---------------- -- ------------ ------------ ---------------- ----------------
60 5.26 5.15 4.82 60 4.75 4.70 4.54
- --------------- ----------- ---------------- ---------------- -- ------------ ------------ ---------------- ----------------
- --------------- ----------- ---------------- ---------------- -- ------------ ------------ ---------------- ----------------
61 5.38 5.26 4.89 61 4.84 4.79 4.61
- --------------- ----------- ---------------- ---------------- -- ------------ ------------ ---------------- ----------------
- --------------- ----------- ---------------- ---------------- -- ------------ ------------ ---------------- ----------------
62 5.51 5.37 4.95 62 4.94 4.88 4.68
- --------------- ----------- ---------------- ---------------- -- ------------ ------------ ---------------- ----------------
- --------------- ----------- ---------------- ---------------- -- ------------ ------------ ---------------- ----------------
63 5.65 5.49 5.01 63 5.05 4.98 4.74
- --------------- ----------- ---------------- ---------------- -- ------------ ------------ ---------------- ----------------
- --------------- ----------- ---------------- ---------------- -- ------------ ------------ ---------------- ----------------
64 5.80 5.62 5.08 64 5.17 5.09 4.81
- --------------- ----------- ---------------- ---------------- -- ------------ ------------ ---------------- ----------------
- --------------- ----------- ---------------- ---------------- -- ------------ ------------ ---------------- ----------------
- --------------- ----------- ---------------- ---------------- -- ------------ ------------ ---------------- ----------------
- --------------- ----------- ---------------- ---------------- -- ------------ ------------ ---------------- ----------------
65 5.96 5.75 5.14 65 5.29 5.20 4.88
- --------------- ----------- ---------------- ---------------- -- ------------ ------------ ---------------- ----------------
- --------------- ----------- ---------------- ---------------- -- ------------ ------------ ---------------- ----------------
66 6.13 5.89 5.20 66 5.42 5.32 4.95
- --------------- ----------- ---------------- ---------------- -- ------------ ------------ ---------------- ----------------
- --------------- ----------- ---------------- ---------------- -- ------------ ------------ ---------------- ----------------
67 6.32 6.03 5.25 67 5.56 5.44 5.02
- --------------- ----------- ---------------- ---------------- -- ------------ ------------ ---------------- ----------------
- --------------- ----------- ---------------- ---------------- -- ------------ ------------ ---------------- ----------------
68 6.51 6.18 5.31 68 5.71 5.57 5.09
- --------------- ----------- ---------------- ---------------- -- ------------ ------------ ---------------- ----------------
- --------------- ----------- ---------------- ---------------- -- ------------ ------------ ---------------- ----------------
69 6.72 6.33 5.36 69 5.88 5.71 5.16
- --------------- ----------- ---------------- ---------------- -- ------------ ------------ ---------------- ----------------
- --------------- ----------- ---------------- ---------------- -- ------------ ------------ ---------------- ----------------
- --------------- ----------- ---------------- ---------------- -- ------------ ------------ ---------------- ----------------
- --------------- ----------- ---------------- ---------------- -- ------------ ------------ ---------------- ----------------
70 6.94 6.49 5.41 70 6.05 5.85 5.22
- --------------- ----------- ---------------- ---------------- -- ------------ ------------ ---------------- ----------------
- --------------- ----------- ---------------- ---------------- -- ------------ ------------ ---------------- ----------------
71 7.18 6.65 5.46 71 6.24 6.01 5.29
- --------------- ----------- ---------------- ---------------- -- ------------ ------------ ---------------- ----------------
- --------------- ----------- ---------------- ---------------- -- ------------ ------------ ---------------- ----------------
72 7.44 6.82 5.50 72 6.44 6.17 5.35
- --------------- ----------- ---------------- ---------------- -- ------------ ------------ ---------------- ----------------
- --------------- ----------- ---------------- ---------------- -- ------------ ------------ ---------------- ----------------
73 7.71 6.98 5.54 73 6.66 6.34 5.40
- --------------- ----------- ---------------- ---------------- -- ------------ ------------ ---------------- ----------------
- --------------- ----------- ---------------- ---------------- -- ------------ ------------ ---------------- ----------------
74 7.99 7.15 5.57 74 6.90 6.51 5.45
- --------------- ----------- ---------------- ---------------- -- ------------ ------------ ---------------- ----------------
- --------------- ----------- ---------------- ---------------- -- ------------ ------------ ---------------- ----------------
- --------------- ----------- ---------------- ---------------- -- ------------ ------------ ---------------- ----------------
- --------------- ----------- ---------------- ---------------- -- ------------ ------------ ---------------- ----------------
75 8.30 7.33 5.60 75 7.16 6.69 5.50
- --------------- ----------- ---------------- ---------------- -- ------------ ------------ ---------------- ----------------
- --------------- ----------- ---------------- ---------------- -- ------------ ------------ ---------------- ----------------
76 8.63 7.50 5.63 76 7.44 6.88 5.54
- --------------- ----------- ---------------- ---------------- -- ------------ ------------ ---------------- ----------------
- --------------- ----------- ---------------- ---------------- -- ------------ ------------ ---------------- ----------------
77 8.98 7.67 5.65 77 7.75 7.07 5.58
- --------------- ----------- ---------------- ---------------- -- ------------ ------------ ---------------- ----------------
- --------------- ----------- ---------------- ---------------- -- ------------ ------------ ---------------- ----------------
78 9.35 7.84 5.67 78 8.07 7.26 5.61
- --------------- ----------- ---------------- ---------------- -- ------------ ------------ ---------------- ----------------
- --------------- ----------- ---------------- ---------------- -- ------------ ------------ ---------------- ----------------
79 9.76 8.01 5.69 79 8.42 7.46 5.64
- --------------- ----------- ---------------- ---------------- -- ------------ ------------ ---------------- ----------------
- --------------- ----------- ---------------- ---------------- -- ------------ ------------ ---------------- ----------------
- --------------- ----------- ---------------- ---------------- -- ------------ ------------ ---------------- ----------------
- --------------- ----------- ---------------- ---------------- -- ------------ ------------ ---------------- ----------------
80 10.18 8.18 5.70 80 8.80 7.66 5.66
- --------------- ----------- ---------------- ---------------- -- ------------ ------------ ---------------- ----------------
- --------------- ----------- ---------------- ---------------- -- ------------ ------------ ---------------- ----------------
81 10.64 8.33 5.72 81 9.20 7.85 5.68
- --------------- ----------- ---------------- ---------------- -- ------------ ------------ ---------------- ----------------
- --------------- ----------- ---------------- ---------------- -- ------------ ------------ ---------------- ----------------
82 11.12 8.49 5.73 82 9.64 8.04 5.70
- --------------- ----------- ---------------- ---------------- -- ------------ ------------ ---------------- ----------------
- --------------- ----------- ---------------- ---------------- -- ------------ ------------ ---------------- ----------------
83 11.64 8.64 5.73 83 10.12 8.22 5.71
- --------------- ----------- ---------------- ---------------- -- ------------ ------------ ---------------- ----------------
- --------------- ----------- ---------------- ---------------- -- ------------ ------------ ---------------- ----------------
84 12.20 8.77 5.74 84 10.63 8.40 5.72
- --------------- ----------- ---------------- ---------------- -- ------------ ------------ ---------------- ----------------
- --------------- ----------- ---------------- ---------------- -- ------------ ------------ ---------------- ----------------
- --------------- ----------- ---------------- ---------------- -- ------------ ------------ ---------------- ----------------
- --------------- ----------- ---------------- ---------------- -- ------------ ------------ ---------------- ----------------
85 12.77 8.90 5.74 85 11.19 8.57 5.73
- --------------- ----------- ---------------- ---------------- -- ------------ ------------ ---------------- ----------------
</TABLE>
<TABLE>
<CAPTION>
Annuity Payments for Joint Life, with Guaranteed Periods
---------------------- ----------------- ----------------------------------------------------------------------------
Primary Contingent Monthly Payment Per $1000 of Adj. Contract Value*
---------------------- ----------------- ----------------------------------------------------------------------------
---------------------- ----------------- -------------------------- -------------------------- ----------------------
Annuitant Annuitant Joint Life 10 Years 20 Years
---------------------- ----------------- -------------------------- -------------------------- ----------------------
---------------------- ----------------- -------------------------- -------------------------- ----------------------
Age Age Only Guaranteed Guaranteed
---------------------- ----------------- -------------------------- -------------------------- ----------------------
---------------------- ----------------- -------------------------- -------------------------- ----------------------
<S> <C> <C> <C> <C> <C>
50 50 3.78 3.78 3.78
---------------------- ----------------- -------------------------- -------------------------- ----------------------
---------------------- ----------------- -------------------------- -------------------------- ----------------------
51 51 3.82 3.82 3.82
---------------------- ----------------- -------------------------- -------------------------- ----------------------
---------------------- ----------------- -------------------------- -------------------------- ----------------------
52 52 3.87 3.87 3.87
---------------------- ----------------- -------------------------- -------------------------- ----------------------
---------------------- ----------------- -------------------------- -------------------------- ----------------------
53 53 3.91 3.91 3.91
---------------------- ----------------- -------------------------- -------------------------- ----------------------
---------------------- ----------------- -------------------------- -------------------------- ----------------------
54 54 3.96 3.96 3.95
---------------------- ----------------- -------------------------- -------------------------- ----------------------
---------------------- ----------------- -------------------------- -------------------------- ----------------------
---------------------- ----------------- -------------------------- -------------------------- ----------------------
---------------------- ----------------- -------------------------- -------------------------- ----------------------
55 55 4.01 4.01 4.00
---------------------- ----------------- -------------------------- -------------------------- ----------------------
---------------------- ----------------- -------------------------- -------------------------- ----------------------
56 56 4.07 4.07 4.06
---------------------- ----------------- -------------------------- -------------------------- ----------------------
---------------------- ----------------- -------------------------- -------------------------- ----------------------
57 57 4.13 4.13 4.11
---------------------- ----------------- -------------------------- -------------------------- ----------------------
---------------------- ----------------- -------------------------- -------------------------- ----------------------
58 58 4.19 4.19 4.17
---------------------- ----------------- -------------------------- -------------------------- ----------------------
---------------------- ----------------- -------------------------- -------------------------- ----------------------
59 59 4.25 4.25 4.23
---------------------- ----------------- -------------------------- -------------------------- ----------------------
---------------------- ----------------- -------------------------- -------------------------- ----------------------
---------------------- ----------------- -------------------------- -------------------------- ----------------------
---------------------- ----------------- -------------------------- -------------------------- ----------------------
60 60 4.32 4.32 4.29
---------------------- ----------------- -------------------------- -------------------------- ----------------------
---------------------- ----------------- -------------------------- -------------------------- ----------------------
61 61 4.39 4.39 4.36
---------------------- ----------------- -------------------------- -------------------------- ----------------------
---------------------- ----------------- -------------------------- -------------------------- ----------------------
62 62 4.47 4.47 4.42
---------------------- ----------------- -------------------------- -------------------------- ----------------------
---------------------- ----------------- -------------------------- -------------------------- ----------------------
63 63 4.56 4.55 4.49
---------------------- ----------------- -------------------------- -------------------------- ----------------------
---------------------- ----------------- -------------------------- -------------------------- ----------------------
64 64 4.64 4.64 4.57
---------------------- ----------------- -------------------------- -------------------------- ----------------------
---------------------- ----------------- -------------------------- -------------------------- ----------------------
---------------------- ----------------- -------------------------- -------------------------- ----------------------
---------------------- ----------------- -------------------------- -------------------------- ----------------------
65 65 4.74 4.73 4.64
---------------------- ----------------- -------------------------- -------------------------- ----------------------
---------------------- ----------------- -------------------------- -------------------------- ----------------------
66 66 4.84 4.83 4.72
---------------------- ----------------- -------------------------- -------------------------- ----------------------
---------------------- ----------------- -------------------------- -------------------------- ----------------------
67 67 4.95 4.93 4.80
---------------------- ----------------- -------------------------- -------------------------- ----------------------
---------------------- ----------------- -------------------------- -------------------------- ----------------------
68 68 5.06 5.05 4.88
---------------------- ----------------- -------------------------- -------------------------- ----------------------
---------------------- ----------------- -------------------------- -------------------------- ----------------------
69 69 5.18 5.16 4.96
---------------------- ----------------- -------------------------- -------------------------- ----------------------
---------------------- ----------------- -------------------------- -------------------------- ----------------------
---------------------- ----------------- -------------------------- -------------------------- ----------------------
---------------------- ----------------- -------------------------- -------------------------- ----------------------
70 70 5.31 5.29 5.04
---------------------- ----------------- -------------------------- -------------------------- ----------------------
---------------------- ----------------- -------------------------- -------------------------- ----------------------
71 71 5.45 5.42 5.11
---------------------- ----------------- -------------------------- -------------------------- ----------------------
---------------------- ----------------- -------------------------- -------------------------- ----------------------
72 72 5.61 5.56 5.19
---------------------- ----------------- -------------------------- -------------------------- ----------------------
---------------------- ----------------- -------------------------- -------------------------- ----------------------
73 73 5.77 5.71 5.26
---------------------- ----------------- -------------------------- -------------------------- ----------------------
---------------------- ----------------- -------------------------- -------------------------- ----------------------
74 74 5.94 5.88 5.32
---------------------- ----------------- -------------------------- -------------------------- ----------------------
---------------------- ----------------- -------------------------- -------------------------- ----------------------
---------------------- ----------------- -------------------------- -------------------------- ----------------------
---------------------- ----------------- -------------------------- -------------------------- ----------------------
75 75 6.13 6.04 5.39
---------------------- ----------------- -------------------------- -------------------------- ----------------------
---------------------- ----------------- -------------------------- -------------------------- ----------------------
76 76 6.33 6.22 5.45
---------------------- ----------------- -------------------------- -------------------------- ----------------------
---------------------- ----------------- -------------------------- -------------------------- ----------------------
77 77 6.54 6.40 5.50
---------------------- ----------------- -------------------------- -------------------------- ----------------------
---------------------- ----------------- -------------------------- -------------------------- ----------------------
78 78 6.78 6.59 5.54
---------------------- ----------------- -------------------------- -------------------------- ----------------------
---------------------- ----------------- -------------------------- -------------------------- ----------------------
79 79 7.02 6.79 5.58
---------------------- ----------------- -------------------------- -------------------------- ----------------------
---------------------- ----------------- -------------------------- -------------------------- ----------------------
---------------------- ----------------- -------------------------- -------------------------- ----------------------
---------------------- ----------------- -------------------------- -------------------------- ----------------------
80 80 7.29 6.99 5.62
---------------------- ----------------- -------------------------- -------------------------- ----------------------
---------------------- ----------------- -------------------------- -------------------------- ----------------------
81 81 7.58 7.20 5.65
---------------------- ----------------- -------------------------- -------------------------- ----------------------
---------------------- ----------------- -------------------------- -------------------------- ----------------------
82 82 7.88 7.41 5.67
---------------------- ----------------- -------------------------- -------------------------- ----------------------
---------------------- ----------------- -------------------------- -------------------------- ----------------------
83 83 8.21 7.62 5.69
---------------------- ----------------- -------------------------- -------------------------- ----------------------
---------------------- ----------------- -------------------------- -------------------------- ----------------------
84 84 8.57 7.82 5.71
---------------------- ----------------- -------------------------- -------------------------- ----------------------
---------------------- ----------------- -------------------------- -------------------------- ----------------------
---------------------- ----------------- -------------------------- -------------------------- ----------------------
---------------------- ----------------- -------------------------- -------------------------- ----------------------
85 85 8.94 8.03 5.72
---------------------- ----------------- -------------------------- -------------------------- ----------------------
<FN>
*Payments continue at 100% of the chart value until the death of the last surviving annuitant or until the end of
the guaranteed period, if later.
Payment factors for ages and annuity forms provided by this contract, but not shown above, are available upon
request.
</FN>
</TABLE>
<TABLE>
<CAPTION>
Annuity Tables
VA20 21
VA20 (8/97)
<S> <C>
- --------------------------------------------- --------------------------------------------------------------------------------------
[GRAPHIC OMITTED][GRAPHIC OMITTED] INDIVIDUAL FLEXIBLE PAYMENT
- --------------------------------------------- --------------------------------------------------------------------------------------
</TABLE>
BUSINESS MEN'S ASSURANCE COMPANY OF AMERICA
P. O. BOX 412879
700 KARNES BLVD.
KANSAS CITY, MO 64141
Call (816) 753-8000 for assistance or questions
Blazzard, Grodd & Hasenauer, P.C.
943 Post Road East
Westport, CT 06880
(203) 226-7866
December 29, 1999
Board of Directors
Business Men's Assurance Company of America
700 Karnes Boulevard
Kansas City, MO 64108
Re: Opinion of Counsel - BMA Variable Annuity Account A
Gentlemen:
You have requested our Opinion of Counselin connection with the filing with the
Securities and Exchange Commission of a Post-Effective Amendment to a
Registration Statement on Form N-4 for the Individual Flexible Payment Deferred
Variable Annuity Contract (the "Contract") to be issued by Business Men's
Assurance Company of America and its separate account, BMA Variable Annuity
Account A.
We have made such examination of the law and have examined such records and
documents as in our judgment are necessary or appropriate to enable us to render
the opinions expressed below.
We are of the following opinions:
1. BMA Variable Annuity Account A is a Unit Investment Trust as the term is
defined in Section 4(2) of the Investment Company Act of 1940 ( the "Act"), and
is currently registered with the Securities and Exchange Commission, pursuant to
Section 8(a) of the "Act".
2. Upon the acceptance of purchase payments made by a Contract Owner
pursuant to a Contract issued in accordance with the Prospectus contained in the
Registration Statement and upon compliance with applicable law, such a Contract
Owner will have a legally-issued, fully-paid, non-assessable contractual
interest under such Contract.
You may use this opinion letter, or a copy thereof, as an exhibit to the
Registration Statement.
We consent to the reference to our Firm under the caption "Legal Opinions"
contained in the Statement of Additional Information which forms a part of the
Registration Statement.
Sincerely,
BLAZZARD, GRODD & HASENAUER, P.C.
By: /S/ LYNN KORMAN STONE
__________________________
Lynn Korman Stone
Consent of Independent Auditors
We consent to the reference to our firm under the captions "Experts" and
"Financial Statements" and to the use of our report dated February 4,
1999 with respect to the consolidated financial statements of Business
Men's Assurance Company of America and our report dated February 5,
1999 with respect to the financial statements of BMA Variable Annuity
Account A included in Post-Effective Amendment No. 7 to the Registration
Statement (Form N-4 No. 333-32887) and the related Statement of
Additional Information accompanying the Prospectus of BMA Variable
Annuity Account A.
/S/ ERNST & YOUNG LLP
Ernst & Young LLP
Kansas City, Missouri
December 29, 1999
<TABLE>
<CAPTION>
Standish Ayer & Wood Intermediate Fixed Income
One Year Results
Additional Death Benefit ADB NO ADB
<S> <C> <C>
Annual Growth Rate (after Fund Management) -0.70% -0.70%
**'Calendar Days Since Deposit 365 365
Dependent Variables
M&E Charge (no Contract Chg.; Daily, Simple) 1.45% 1.25%
**Whole Years Since Deposit 1 1
**Days into Current Year 0 0
**Basic Surrender Charge 6% 6%
**Non-Standard Daily Factor 0.999941 0.999947
Results
Arbitrary Premium 1,000.00 1,000.00
Non-Standard FV (M&E Only) 978.71 980.66
Non-Standard Annual Return -2.13% -1.93%
**Standard Before Surrender Chg 976.96 978.91
Standard FV (M&E, Contract Chg, Surr. Chg.) 922.82 924.79
Standard Annualized Performance -7.72% -7.52%
Since Inception
Additional Death Benefit ADB NO ADB
Annual Growth Rate (after Fund Management) 3.51% 3.51%
Calendar Days Since Inception 674 674
Dependent Variables
M&E Charge (no Contract Chg.; Daily, Simple) 1.45% 1.25%
**Whole Years Since Deposit 1 1
**Days into Current Year 309 309
**Basic Surrender Charge 6% 6%
**Non-Standard Daily Factor 1.000055 1.000060
Results
Arbitrary Premium 1,000.00 1,000.00
Non-Standard FV (M&E Only) 1,037.62 1,041.46
Non-Standard Annual Return 2.02% 2.22%
**Standard Before Surrender Chg 1,034.12 1,037.96
Standard FV (M&E, Contract Chg, Surr. Chg.) 980.32 984.18
Standard Annualized Performance -1.07% -0.86%
Standish Ayer & Wood Mid Cap Equity
One Year Results
Additional Death Benefit ADB No ADB
Annual Growth Rate (after Fund Management) 10.99% 10.99%
**'Calendar Days Since Deposit 365 365
Dependent Variables
M&E Charge (no Contract Chg.; Daily, Simple) 1.45% 1.25%
**Whole Years Since Deposit 1 1
**Days into Current Year 0 0
**Basic Surrender Charge 6% 6%
**Non-Standard Daily Factor 1.000246 1.000251
Results
Arbitrary Premium 1,000.00 1,000.00
Non-Standard FV (M&E Only) 1,093.92 1,096.11
Non-Standard Annual Return 9.39% 9.61%
**Standard Before Surrender Chg 1,091.97 1,094.16
Standard FV (M&E, Contract Chg, Surr. Chg.) 1,038.52 1,040.72
Standard Annualized Performance 3.85% 4.07%
Since Inception
Additional Death Benefit ADB No ADB
Annual Growth Rate (after Fund Management) 2.90% 2.90%
Calendar Days Since Inception 674 674
Dependent Variables
M&E Charge (no Contract Chg.; Daily, Simple) 1.45% 1.25%
**Whole Years Since Deposit 1 1
**Days into Current Year 309 309
**Basic Surrender Charge 6% 6%
**Non-Standard Daily Factor 1.000039 1.000044
Results
Arbitrary Premium 1,000.00 1,000.00
Non-Standard FV (M&E Only) 1,026.35 1,030.15
Non-Standard Annual Return 1.42% 1.62%
**Standard Before Surrender Chg 1,022.44 1,026.24
Standard FV (M&E, Contract Chg, Surr. Chg.) 968.58 972.40
Standard Annualized Performance -1.71% -1.50%
Standish Ayer & Wood Money Market
One Year Results
Additional Death Benefit ADB No ADB
Annual Growth Rate (after Fund Management) 4.41% 4.41%
**'Calendar Days Since Deposit 365 365
Dependent Variables
M&E Charge (no Contract Chg.; Daily, Simple) 1.45% 1.25%
**Whole Years Since Deposit 1 1
**Days into Current Year 0 0
**Basic Surrender Charge 6% 6%
**Non-Standard Daily Factor 1.000079 1.000084
Results
Arbitrary Premium 1,000.00 1,000.00
Non-Standard FV (M&E Only) 1,029.07 1,031.13
Non-Standard Annual Return 2.91% 3.11%
**Standard Before Surrender Chg 1,027.23 1,029.29
Standard FV (M&E, Contract Chg, Surr. Chg.) 973.39 975.47
Standard Annualized Performance -2.66% -2.45%
Since Inception
Additional Death Benefit ADB No ADB
Annual Growth Rate (after Fund Management) 5.08% 5.08%
Calendar Days Since Inception 674 674
Dependent Variables
M&E Charge (no Contract Chg.; Daily, Simple) 1.45% 1.25%
**Whole Years Since Deposit 1 1
**Days into Current Year 309 309
**Basic Surrender Charge 6% 6%
**Non-Standard Daily Factor 1.000096 1.000102
Results
Arbitrary Premium 1,000.00 1,000.00
Non-Standard FV (M&E Only) 1,066.87 1,070.81
Non-Standard Annual Return 3.57% 3.77%
**Standard Before Surrender Chg 1,063.19 1,067.13
Standard FV (M&E, Contract Chg, Surr. Chg.) 1,009.56 1,013.54
Standard Annualized Performance 0.52% 0.73%
Standish Global Fixed Income
One Year Results
Additional Death Benefit ADB No ADB
Annual Growth Rate (after Fund Management) 0.42% 0.42%
**'Calendar Days Since Deposit 365 365
Dependent Variables
M&E Charge (no Contract Chg.; Daily, Simple) 1.45% 1.25%
**Whole Years Since Deposit 1 1
**Days into Current Year 0 0
**Basic Surrender Charge 6% 6%
**Non-Standard Daily Factor 0.999972 0.999977
Results
Arbitrary Premium 1,000.00 1,000.00
Non-Standard FV (M&E Only) 989.74 991.73
Non-Standard Annual Return -1.03% -0.83%
**Standard Before Surrender Chg 987.97 989.96
Standard FV (M&E, Contract Chg, Surr. Chg.) 933.90 935.90
Standard Annualized Performance -6.61% -6.41%
Since Inception
Additional Death Benefit ADB No ADB
Annual Growth Rate (after Fund Management) 4.70% 4.70%
Calendar Days Since Inception 674 674
Dependent Variables
M&E Charge (no Contract Chg.; Daily, Simple) 1.45% 1.25%
**Whole Years Since Deposit 1 1
**Days into Current Year 309 309
**Basic Surrender Charge 6% 6%
**Non-Standard Daily Factor 1.000086 1.000092
Results
Arbitrary Premium 1,000.00 1,000.00
Non-Standard FV (M&E Only) 1,059.75 1,063.67
Non-Standard Annual Return 3.19% 3.40%
**Standard Before Surrender Chg 1,056.21 1,060.13
Standard FV (M&E, Contract Chg, Surr. Chg.) 1,002.55 1,006.49
Standard Annualized Performance 0.14% 0.35%
Stein, Roe & Farnham Small Cap Equity
One Year Results
Additional Death Benefit ADB No ADB
Annual Growth Rate (after Fund Management) 31.59% 31.59%
**'Calendar Days Since Deposit 365 365
Dependent Variables
M&E Charge (no Contract Chg.; Daily, Simple) 1.45% 1.25%
**Whole Years Since Deposit 1 1
**Days into Current Year 0 0
**Basic Surrender Charge 6% 6%
**Non-Standard Daily Factor 1.000713 1.000718
Results
Arbitrary Premium 1,000.00 1,000.00
Non-Standard FV (M&E Only) 1,296.96 1,299.55
Non-Standard Annual Return 29.70% 29.96%
**Standard Before Surrender Chg 1,294.64 1,297.23
Standard FV (M&E, Contract Chg, Surr. Chg.) 1,242.41 1,245.02
Standard Annualized Performance 24.24% 24.50%
Since Inception
Additional Death Benefit ADB No ADB
Annual Growth Rate (after Fund Management) -2.96% -2.96%
Calendar Days Since Inception 674 674
Dependent Variables
M&E Charge (no Contract Chg.; Daily, Simple) 1.45% 1.25%
**Whole Years Since Deposit 1 1
**Days into Current Year 309 309
**Basic Surrender Charge 6% 6%
**Non-Standard Daily Factor 0.999878 0.999883
Results
Arbitrary Premium 1,000.00 1,000.00
Non-Standard FV (M&E Only) 921.03 924.44
Non-Standard Annual Return -4.36% -4.17%
**Standard Before Surrender Chg 916.39 919.80
Standard FV (M&E, Contract Chg, Surr. Chg.) 861.89 865.32
Standard Annualized Performance -7.73% -7.53%
Stein Roe & Farnham Large Cap Growth
One Year Results
Additional Death Benefit ADB No ADB
Annual Growth Rate (after Fund Management) 32.40% 32.40%
**'Calendar Days Since Deposit 365 365
Dependent Variables
M&E Charge (no Contract Chg.; Daily, Simple) 1.45% 1.25%
**Whole Years Since Deposit 1 1
**Days into Current Year 0 0
**Basic Surrender Charge 6% 6%
**Non-Standard Daily Factor 1.000729 1.000735
Results
Arbitrary Premium 1,000.00 1,000.00
Non-Standard FV (M&E Only) 1,304.94 1,307.55
Non-Standard Annual Return 30.49% 30.76%
**Standard Before Surrender Chg 1,302.61 1,305.22
Standard FV (M&E, Contract Chg, Surr. Chg.) 1,250.42 1,253.05
Standard Annualized Performance 25.04% 25.31%
Since Inception
Additional Death Benefit ADB No ADB
Annual Growth Rate (after Fund Management) 21.82% 21.82%
Calendar Days Since Inception 674 674
Dependent Variables
M&E Charge (no Contract Chg.; Daily, Simple) 1.45% 1.25%
**Whole Years Since Deposit 1 1
**Days into Current Year 309 309
**Basic Surrender Charge 6% 6%
**Non-Standard Daily Factor 1.000501 1.000507
Results
Arbitrary Premium 1,000.00 1,000.00
Non-Standard FV (M&E Only) 1,401.71 1,406.89
Non-Standard Annual Return 20.07% 20.31%
**Standard Before Surrender Chg 1,397.04 1,402.23
Standard FV (M&E, Contract Chg, Surr. Chg.) 1,345.42 1,350.64
Standard Annualized Performance 17.43% 17.68%
Babson Large Cap Value
One Year Results
Additional Death Benefit ADB No ADB
Annual Growth Rate (after Fund Management) 14.14% 14.14%
**'Calendar Days Since Deposit 365 365
Dependent Variables
M&E Charge (no Contract Chg.; Daily, Simple) 1.45% 1.25%
**Whole Years Since Deposit 1 1
**Days into Current Year 0 0
**Basic Surrender Charge 6% 6%
**Non-Standard Daily Factor 1.000323 1.000328
Results
Arbitrary Premium 1,000.00 1,000.00
Non-Standard FV (M&E Only) 1,124.97 1,127.22
Non-Standard Annual Return 12.50% 12.72%
**Standard Before Surrender Chg 1,122.96 1,125.21
Standard FV (M&E, Contract Chg, Surr. Chg.) 1,069.69 1,071.96
Standard Annualized Performance 6.97% 7.20%
Since Inception
Additional Death Benefit ADB No ADB
Annual Growth Rate (after Fund Management) 1.46% 1.46%
Calendar Days Since Inception 674 674
Dependent Variables
M&E Charge (no Contract Chg.; Daily, Simple) 1.45% 1.25%
**Whole Years Since Deposit 1 1
**Days into Current Year 309 309
**Basic Surrender Charge 6% 6%
**Non-Standard Daily Factor 1.000000 1.000005
Results
Arbitrary Premium 1,000.00 1,000.00
Non-Standard FV (M&E Only) 999.99 1,003.69
Non-Standard Annual Return 0.00% 0.20%
**Standard Before Surrender Chg 995.97 999.67
Standard FV (M&E, Contract Chg, Surr. Chg.) 941.94 945.66
Standard Annualized Performance -3.19% -2.98%
Lord, Abbett Growth & Income
One Year Results
Additional Death Benefit ADB No ADB
Annual Growth Rate (after Fund Management) 23.69% 23.69%
**'Calendar Days Since Deposit 365 365
Dependent Variables
M&E Charge (no Contract Chg.; Daily, Simple) 1.45% 1.25%
**Whole Years Since Deposit 1 1
**Days into Current Year 0 0
**Basic Surrender Charge 6% 6%
**Non-Standard Daily Factor 1.000543 1.000548
Results
Arbitrary Premium 1,000.00 1,000.00
Non-Standard FV (M&E Only) 1,219.09 1,221.53
Non-Standard Annual Return 21.91% 22.15%
**Standard Before Surrender Chg 1,216.91 1,219.35
Standard FV (M&E, Contract Chg, Surr. Chg.) 1,164.22 1,166.67
Standard Annualized Performance 16.42% 16.67%
Since Inception
Additional Death Benefit ADB No ADB
Annual Growth Rate (after Fund Management) 12.38% 12.38%
Calendar Days Since Inception 674 674
Dependent Variables
M&E Charge (no Contract Chg.; Daily, Simple) 1.45% 1.25%
**Whole Years Since Deposit 1 1
**Days into Current Year 309 309
**Basic Surrender Charge 6% 6%
**Non-Standard Daily Factor 1.000280 1.000286
Results
Arbitrary Premium 1,000.00 1,000.00
Non-Standard FV (M&E Only) 1,207.74 1,212.21
Non-Standard Annual Return 10.76% 10.98%
**Standard Before Surrender Chg 1,203.38 1,207.85
Standard FV (M&E, Contract Chg, Surr. Chg.) 1,150.60 1,155.09
Standard Annualized Performance 7.89% 8.12%
Kornitzer Balanced
One Year Results
Additional Death Benefit ADB No ADB
Annual Growth Rate (after Fund Management) 6.11% 6.11%
**'Calendar Days Since Deposit 365 365
Dependent Variables
M&E Charge (no Contract Chg.; Daily, Simple) 1.45% 1.25%
**Whole Years Since Deposit 1 1
**Days into Current Year 0 0
**Basic Surrender Charge 6% 6%
**Non-Standard Daily Factor 1.000123 1.000128
Results
Arbitrary Premium 1,000.00 1,000.00
Non-Standard FV (M&E Only) 1,045.82 1,047.92
Non-Standard Annual Return 4.58% 4.79%
**Standard Before Surrender Chg 1,043.95 1,046.05
Standard FV (M&E, Contract Chg, Surr. Chg.) 990.22 992.32
Standard Annualized Performance -0.98% -0.77%
Since Inception
Additional Death Benefit ADB No ADB
Annual Growth Rate (after Fund Management) -2.72% -2.72%
Calendar Days Since Inception 674 674
Dependent Variables
M&E Charge (no Contract Chg.; Daily, Simple) 1.45% 1.25%
**Whole Years Since Deposit 1 1
**Days into Current Year 309 309
**Basic Surrender Charge 6% 6%
**Non-Standard Daily Factor 0.999885 0.999890
Results
Arbitrary Premium 1,000.00 1,000.00
Non-Standard FV (M&E Only) 925.24 928.67
Non-Standard Annual Return -4.12% -3.93%
**Standard Before Surrender Chg 921.50 924.93
Standard FV (M&E, Contract Chg, Surr. Chg.) 867.03 870.48
Standard Annualized Performance -7.44% -7.24%
BBOI International
One Year Results
Additional Death Benefit ADB No ADB
Annual Growth Rate (after Fund Management) 29.74% 29.74%
**'Calendar Days Since Deposit 365 365
Dependent Variables
M&E Charge (no Contract Chg.; Daily, Simple) 1.45% 1.25%
**Whole Years Since Deposit 1 1
**Days into Current Year 0 0
**Basic Surrender Charge 6% 6%
**Non-Standard Daily Factor 1.000674 1.000679
Results
Arbitrary Premium 1,000.00 1,000.00
Non-Standard FV (M&E Only) 1,278.72 1,281.28
Non-Standard Annual Return 27.87% 28.13%
**Standard Before Surrender Chg 1,276.44 1,279.00
Standard FV (M&E, Contract Chg, Surr. Chg.) 1,224.10 1,226.67
Standard Annualized Performance 22.41% 22.67%
Since Inception
Additional Death Benefit ADB No ADB
Annual Growth Rate (after Fund Management) 8.98% 8.98%
Calendar Days Since Inception 674 674
Dependent Variables
M&E Charge (no Contract Chg.; Daily, Simple) 1.45% 1.25%
**Whole Years Since Deposit 1 1
**Days into Current Year 309 309
**Basic Surrender Charge 6% 6%
**Non-Standard Daily Factor 1.000196 1.000201
Results
Arbitrary Premium 1,000.00 1,000.00
Non-Standard FV (M&E Only) 1,141.13 1,145.35
Non-Standard Annual Return 7.41% 7.63%
**Standard Before Surrender Chg 1,136.56 1,140.78
Standard FV (M&E, Contract Chg, Surr. Chg.) 1,083.38 1,087.62
Standard Annualized Performance 4.43% 4.65%
Dreyfus Stock Index
One Year Results
Additional Death Benefit ADB No ADB
Annual Growth Rate (after Fund Management) 27.35% 27.35%
**'Calendar Days Since Deposit 365 365
Dependent Variables
M&E Charge (no Contract Chg.; Daily, Simple) 1.45% 1.25%
**Whole Years Since Deposit 1 1
**Days into Current Year 0 0
**Basic Surrender Charge 6% 6%
**Non-Standard Daily Factor 1.000623 1.000628
Results
Arbitrary Premium 1,000.00 1,000.00
Non-Standard FV (M&E Only) 1,255.17 1,257.68
Non-Standard Annual Return 25.52% 25.77%
**Standard Before Surrender Chg 1,252.92 1,255.44
Standard FV (M&E, Contract Chg, Surr. Chg.) 1,200.44 1,202.97
Standard Annualized Performance 20.04% 20.30%
Since Inception
Additional Death Benefit ADB No ADB
Annual Growth Rate (after Fund Management) 16.33% 16.33%
Calendar Days Since Inception 3654 3654
Dependent Variables
M&E Charge (no Contract Chg.; Daily, Simple) 1.45% 1.25%
**Whole Years Since Deposit 10 10
**Days into Current Year 4 4
**Basic Surrender Charge 0% 0%
**Non-Standard Daily Factor 1.000375 1.000380
Results
Arbitrary Premium 1,000.00 1,000.00
Non-Standard FV (M&E Only) 3,931.83 4,011.34
Non-Standard Annual Return 14.66% 14.88%
**Standard Before Surrender Chg 3,907.14 3,986.66
Standard FV (M&E, Contract Chg, Surr. Chg.) 3,907.14 3,986.66
Standard Annualized Performance 14.58% 14.81%
Five Year Results
Additional Death Benefit No ADB ADB
Annual Growth Rate (after Fund Management) 24.56% 24.56%
Calendar Days Since Inception 1825 1825
Dependent Variables
M&E Charge (no Contract Chg.; Daily, Simple) 1.45% 1.25%
**Whole Years Since Deposit 5 5
**Days into Current Year 0 0
**Basic Surrender Charge 2% 2%
**Non-Standard Daily Factor 1.000562 1.000568
Results
Arbitrary Premium 1,000.00 1,000.00
Non-Standard FV (M&E Only) 2,788.73 2,816.76
Non-Standard Annual Return 22.77% 23.01%
**Standard Before Surrender Chg 2,777.50 2,805.53
Standard FV (M&E, Contract Chg, Surr. Chg.) 2,763.06 2,791.14
Standard Annualized Performance 22.54% 22.79%
Dreyfus Disciplined Stock
One Year Results
Additional Death Benefit ADB No ADB
Annual Growth Rate (after Fund Management) 26.83% 26.83%
**'Calendar Days Since Deposit 365 365
Dependent Variables
M&E Charge (no Contract Chg.; Daily, Simple) 1.45% 1.25%
**Whole Years Since Deposit 1 1
**Days into Current Year 0 0
**Basic Surrender Charge 6% 6%
**Non-Standard Daily Factor 1.000612 1.000617
Results
Arbitrary Premium 1,000.00 1,000.00
Non-Standard FV (M&E Only) 1,250.04 1,252.54
Non-Standard Annual Return 25.00% 25.25%
**Standard Before Surrender Chg 1,247.81 1,250.31
Standard FV (M&E, Contract Chg, Surr. Chg.) 1,195.29 1,197.81
Standard Annualized Performance 19.53% 19.78%
Since Inception
Additional Death Benefit ADB No ADB
Annual Growth Rate (after Fund Management) 23.31% 23.31%
Calendar Days Since Inception 1248 1248
Dependent Variables
M&E Charge (no Contract Chg.; Daily, Simple) 1.45% 1.25%
**Whole Years Since Deposit 3 3
**Days into Current Year 153 153
**Basic Surrender Charge 4% 4%
**Non-Standard Daily Factor 1.000534 1.000540
Results
Arbitrary Premium 1,000.00 1,000.00
Non-Standard FV (M&E Only) 1,948.08 1,961.45
Non-Standard Annual Return 21.53% 21.78%
**Standard Before Surrender Chg 1,939.14 1,952.51
Standard FV (M&E, Contract Chg, Surr. Chg.) 1,906.90 1,920.32
Standard Annualized Performance 20.78% 21.03%
Invesco High Yield
One Year Results
Additional Death Benefit ADB No ADB
Annual Growth Rate (after Fund Management) 8.19% 8.19%
**'Calendar Days Since Deposit 365 365
Dependent Variables
M&E Charge (no Contract Chg.; Daily, Simple) 1.45% 1.25%
**Whole Years Since Deposit 1 1
**Days into Current Year 0 0
**Basic Surrender Charge 6% 6%
**Non-Standard Daily Factor 1.000176 1.000181
Results
Arbitrary Premium 1,000.00 1,000.00
Non-Standard FV (M&E Only) 1,066.33 1,068.46
Non-Standard Annual Return 6.63% 6.85%
**Standard Before Surrender Chg 1,064.42 1,066.55
Standard FV (M&E, Contract Chg, Surr. Chg.) 1,010.81 1,012.95
Standard Annualized Performance 1.08% 1.30%
Since Inception
Additional Death Benefit ADB No ADB
Annual Growth Rate (after Fund Management) 11.17% 11.17%
Calendar Days Since Inception 1953 1953
Dependent Variables
M&E Charge (no Contract Chg.; Daily, Simple) 1.45% 1.25%
**Whole Years Since Deposit 5 5
**Days into Current Year 128 128
**Basic Surrender Charge 2% 2%
**Non-Standard Daily Factor 1.000250 1.000256
Results
Arbitrary Premium 1,000.00 1,000.00
Non-Standard FV (M&E Only) 1,630.68 1,648.23
Non-Standard Annual Return 9.57% 9.79%
**Standard Before Surrender Chg 1,619.24 1,636.79
Standard FV (M&E, Contract Chg, Surr. Chg.) 1,602.48 1,620.06
Standard Annualized Performance 9.21% 9.44%
Invesco Industrial Income
One Year Results
Additional Death Benefit ADB No ADB
Annual Growth Rate (after Fund Management) 20.35% 20.35%
**'Calendar Days Since Deposit 365 365
Dependent Variables
M&E Charge (no Contract Chg.; Daily, Simple) 1.45% 1.25%
**Whole Years Since Deposit 1 1
**Days into Current Year 0 0
**Basic Surrender Charge 6% 6%
**Non-Standard Daily Factor 1.000468 1.000473
Results
Arbitrary Premium 1,000.00 1,000.00
Non-Standard FV (M&E Only) 1,186.17 1,188.55
Non-Standard Annual Return 18.62% 18.85%
**Standard Before Surrender Chg 1,184.05 1,186.43
Standard FV (M&E, Contract Chg, Surr. Chg.) 1,131.16 1,133.55
Standard Annualized Performance 13.12% 13.35%
Since Inception
Additional Death Benefit ADB No ADB
Annual Growth Rate (after Fund Management) 19.64% 19.64%
Calendar Days Since Inception 1878 1878
Dependent Variables
M&E Charge (no Contract Chg.; Daily, Simple) 1.45% 1.25%
**Whole Years Since Deposit 5 5
**Days into Current Year 53 53
**Basic Surrender Charge 2% 2%
**Non-Standard Daily Factor 1.000452 1.000457
Results
Arbitrary Premium 1,000.00 1,000.00
Non-Standard FV (M&E Only) 2,335.01 2,359.16
Non-Standard Annual Return 17.92% 18.15%
**Standard Before Surrender Chg 2,322.28 2,346.44
Standard FV (M&E, Contract Chg, Surr. Chg.) 2,306.93 2,331.13
Standard Annualized Performance 17.64% 17.88%
Lazard Small Cap
One Year Results
Additional Death Benefit ADB No ADB
Annual Growth Rate (after Fund Management) 16.39% 16.39%
**'Calendar Days Since Deposit 365 365
Dependent Variables
M&E Charge (no Contract Chg.; Daily, Simple) 1.45% 1.25%
**Whole Years Since Deposit 1 1
**Days into Current Year 0 0
**Basic Surrender Charge 6% 6%
**Non-Standard Daily Factor 1.000376 1.000382
Results
Arbitrary Premium 1,000.00 1,000.00
Non-Standard FV (M&E Only) 1,147.14 1,149.44
Non-Standard Annual Return 14.71% 14.94%
**Standard Before Surrender Chg 1,145.09 1,147.39
Standard FV (M&E, Contract Chg, Surr. Chg.) 1,091.96 1,094.27
Standard Annualized Performance 9.20% 9.43%
Since Inception
Additional Death Benefit ADB No ADB
Annual Growth Rate (after Fund Management) -0.53% -0.53%
Calendar Days Since Inception 696 696
Dependent Variables
M&E Charge (no Contract Chg.; Daily, Simple) 1.45% 1.25%
**Whole Years Since Deposit 1 1
**Days into Current Year 331 331
**Basic Surrender Charge 6% 6%
**Non-Standard Daily Factor 0.999946 0.999951
Results
Arbitrary Premium 1,000.00 1,000.00
Non-Standard FV (M&E Only) 962.92 966.60
Non-Standard Annual Return -1.96% -1.77%
**Standard Before Surrender Chg 958.82 962.50
Standard FV (M&E, Contract Chg, Surr. Chg.) 904.57 908.27
Standard Annualized Performance -5.12% -4.92%
American Century Growth & Income
One Year Results
Additional Death Benefit ADB No ADB
Annual Growth Rate (after Fund Management) 26.20% 26.20%
**'Calendar Days Since Deposit 365 365
Dependent Variables
M&E Charge (no Contract Chg.; Daily, Simple) 1.45% 1.25%
**Whole Years Since Deposit 1 1
**Days into Current Year 0 0
**Basic Surrender Charge 6% 6%
**Non-Standard Daily Factor 1.000598 1.000603
Results
Arbitrary Premium 1,000.00 1,000.00
Non-Standard FV (M&E Only) 1,243.83 1,246.32
Non-Standard Annual Return 24.38% 24.63%
**Standard Before Surrender Chg 1,241.61 1,244.10
Standard FV (M&E, Contract Chg, Surr. Chg.) 1,189.06 1,191.56
Standard Annualized Performance 18.91% 19.16%
Since Inception
Additional Death Benefit ADB No ADB
Annual Growth Rate (after Fund Management) 19.99% 19.99%
Calendar Days Since Inception 699 699
Dependent Variables
M&E Charge (no Contract Chg.; Daily, Simple) 1.45% 1.25%
**Whole Years Since Deposit 1 1
**Days into Current Year 334 334
**Basic Surrender Charge 6% 6%
**Non-Standard Daily Factor 1.000460 1.000465
Results
Arbitrary Premium 1,000.00 1,000.00
Non-Standard FV (M&E Only) 1,378.82 1,384.11
Non-Standard Annual Return 18.26% 18.50%
**Standard Before Surrender Chg 1,374.37 1,379.67
Standard FV (M&E, Contract Chg, Surr. Chg.) 1,322.62 1,327.94
Standard Annualized Performance 15.72% 15.96%
American Century Value
One Year Results
Additional Death Benefit ADB No ADB
Annual Growth Rate (after Fund Management) 11.78% 11.78%
**'Calendar Days Since Deposit 365 365
Dependent Variables
M&E Charge (no Contract Chg.; Daily, Simple) 1.45% 1.25%
**Whole Years Since Deposit 1 1
**Days into Current Year 0 0
**Basic Surrender Charge 6% 6%
**Non-Standard Daily Factor 1.000265 1.000271
Results
Arbitrary Premium 1,000.00 1,000.00
Non-Standard FV (M&E Only) 1,101.71 1,103.91
Non-Standard Annual Return 10.17% 10.39%
**Standard Before Surrender Chg 1,099.74 1,101.94
Standard FV (M&E, Contract Chg, Surr. Chg.) 1,046.34 1,048.56
Standard Annualized Performance 4.63% 4.86%
Since Inception
Additional Death Benefit ADB No ADB
Annual Growth Rate (after Fund Management) 12.46% 12.46%
Calendar Days Since Inception 1248 1248
Dependent Variables
M&E Charge (no Contract Chg.; Daily, Simple) 1.45% 1.25%
**Whole Years Since Deposit 3 3
**Days into Current Year 153 153
**Basic Surrender Charge 4% 4%
**Non-Standard Daily Factor 1.000282 1.000288
Results
Arbitrary Premium 1,000.00 1,000.00
Non-Standard FV (M&E Only) 1,421.80 1,431.56
Non-Standard Annual Return 10.84% 11.06%
**Standard Before Surrender Chg 1,413.92 1,423.68
Standard CV (M&E, Contract Chg, Surr. Chg.) 1,379.58 1,389.37
Standard Annualized Performance 9.87% 10.10%
</TABLE>
