File Nos. 333-32887
811-08325
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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. _8__ [X]
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [ ]
Amendment No. _9__ [X]
(Check appropriate box or boxes.)
BMA Variable Annuity Account A
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(Exact Name of Registrant)
Business Men's Assurance Company of America
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(Name of Depositor)
700 Karnes Boulevard, Kansas City, Missouri 64108
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(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:
_____ immediately upon filing pursuant to paragraph (b) of Rule 485
__X__ on May 1, 2000 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)
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ITEM NO. Location
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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; Investment
Options
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
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CROSS REFERENCE SHEET
(required by Rule 495)
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ITEM NO. LOCATION
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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
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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 25 investment choices-2 FIXED ACCOUNT options and
23 INVESTMENT PORTFOLIOS listed below. The 23 INVESTMENT PORTFOLIOS are part of
Investors Mark Series Fund, Inc., Berger Institutional Products Trust, The Alger
American Fund, American Century Variable Portfolios, Inc., Dreyfus Stock Index
Fund, Dreyfus Variable Investment Fund, Variable Insurance Products Fund,
Variable Insurance Products Fund II, 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
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
THE ALGER AMERICAN FUND
MANAGED BY FRED ALGER MANAGEMENT, INC.
Alger American Growth Portfolio (available as of July 14, 2000)
Alger American Leveraged AllCap Portfolio (available as of July
14, 2000)
Alger American MidCap Growth Portfolio (available as of July 14, 2000)
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 ("Dreyfus VIF")
MANAGED BY THE DREYFUS CORPORATION
Dreyfus VIF Disciplined Stock Portfolio
VARIABLE INSURANCE PRODUCTS FUND ("VIP),
VARIABLE INSURANCE PRODUCTS FUND II ("VIP II")
MANAGED BY Fidelity Management & Research Company
Fidelity VIP Overseas Portfolio (available as of July 14, 2000)
Fidelity VIP Growth Portfolio (available as of July 14, 2000)
Fidelity VIP II Contrafund Portfolio (available as of July 14, 2000)
INVESCO VARIABLE INVESTMENT FUNDS, INC.
MANAGED BY INVESCO FUNDS GROUP, INC.
INVESCO VIF-High Yield Fund
INVESCO VIF-Equity Income Fund
LAZARD RETIREMENT SERIES, INC.
MANAGED BY LAZARD ASSET MANAGEMENT
Lazard Retirement Small Cap 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.
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 May 1,
2000. 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 31 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:
o are not bank deposits
o are not federally insured
o are not endorsed by any bank or government agency
o 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.
May 1, 2000.
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TABLE OF CONTENTS
Page
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INDEX OF SPECIAL TERMS............................................................................................
SUMMARY
FEE TABLE.........................................................................................................
EXAMPLES..........................................................................................................
1. THE ANNUITY CONTRACT.........................................................................................
2. ANNUITY PAYMENTS (THE INCOME PHASE)..........................................................................
3. PURCHASE.....................................................................................................
Purchase Payments............................................................................................
Allocation of Purchase Payments..............................................................................
Accumulation Units...........................................................................................
4. INVESTMENT OPTIONS...........................................................................................
Transfers....................................................................................................
Dollar Cost Averaging Option.................................................................................
Asset Rebalancing Option.....................................................................................
Asset Allocation Option......................................................................................
Voting Rights................................................................................................
Substitution.................................................................................................
5. EXPENSES.....................................................................................................
Coverage Charge..............................................................................................
Contract Maintenance Charge..................................................................................
Withdrawal Charge............................................................................................
Waiver of Withdrawal Charge Benefits.........................................................................
Reduction or Elimination of the Withdrawal Charge............................................................
Premium Taxes................................................................................................
Transfer Fee.................................................................................................
Income Taxes.................................................................................................
Investment Portfolio Expenses................................................................................
6. TAXES........................................................................................................
Annuity Contracts in General.................................................................................
Qualified and Non-Qualified Contracts........................................................................
Withdrawals-Non-Qualified Contracts..........................................................................
Withdrawals-Qualified Contracts..............................................................................
Death Benefits...............................................................................................
Diversification..............................................................................................
7. ACCESS TO YOUR MONEY.........................................................................................
Automatic Withdrawal Program.................................................................................
Minimum Distribution Program.................................................................................
Suspension of Payments or Transfers..........................................................................
8. PERFORMANCE..................................................................................................
9. DEATH BENEFIT................................................................................................
Upon Your Death..............................................................................................
Death of Annuitant...........................................................................................
10. OTHER INFORMATION............................................................................................
BMA..........................................................................................................
The Separate Account.........................................................................................
Distributor..................................................................................................
Administration...............................................................................................
Ownership....................................................................................................
Beneficiary..................................................................................................
Assignment...................................................................................................
Financial Statements.........................................................................................
TABLE OF CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION......................................................
APPENDIX A-CONDENSED FINANCIAL INFORMATION........................................................................
APPENDIX B-ADDITIONAL DEATH BENEFIT OPTION........................................................................
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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.
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Page
Accumulation Phase..................................................................................................
Accumulation Unit...................................................................................................
Annuitant...........................................................................................................
Annuity Date........................................................................................................
Annuity Options.....................................................................................................
Annuity Payments....................................................................................................
Annuity Unit........................................................................................................
Beneficiary.........................................................................................................
Fixed Account.......................................................................................................
Guarantee Period....................................................................................................
Income Phase........................................................................................................
Investment Portfolios...............................................................................................
Joint Owner.........................................................................................................
Non-Qualified.......................................................................................................
Owner...............................................................................................................
Purchase Payment....................................................................................................
Qualified...........................................................................................................
Tax Deferral........................................................................................................
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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 23 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 whether you elect
the additional death benefit option (ADBO) (if you purchase the contract on or
after May 3, 1999). The charge is equal, on an annual basis, to 1.45% of amounts
invested in an investment portfolio if you elect the ADBO and 1.25% of amounts
invested in an investment portfolio if you do not elect the ADBO.
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.
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OWNER TRANSACTION EXPENSES
Withdrawal Charge (as a percentage of PURCHASE PAYMENT withdrawn) (See Note 1 on page 13)
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NUMBER OF COMPLETE YEARS WITHDRAWAL
FROM DATE OF PURCHASE PAYMENT CHARGE
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0 .............................................................................. 7%
1 .............................................................................. 6%
2 .............................................................................. 5%
3 .............................................................................. 4%
4 .............................................................................. 3%
5 .............................................................................. 2%
6 .............................................................................. 1%
7 and thereafter................................................................ 0%
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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).
If you elect Additional Death Benefit Option.......................................................... 1.45%
If you do not elect Additional Death Benefit Option................................................... 1.25%
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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)
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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)...................... .90% - .30% 1.20%
THE ALGER AMERICAN FUND
Alger American Growth Portfolio............................ .75% - .04% .79%
Alger American Leveraged AllCap Portfolio (c).............. .85% - .08% .93%
Alger American MidCap Growth Portfolio..................... .80% - .05% .85%
AMERICAN CENTURY VARIABLE PORTFOLIOS, INC.
VP Value................................................... 1.00% - .00% 1.00%
VP Income & Growth......................................... .70% - .00% .70%
DREYFUS STOCK INDEX FUND....................................... .25% - .01% .26%
DREYFUS VARIABLE INVESTMENT FUND
Dreyfus VIF Disciplined Stock Portfolio.................... .75% - .06% .81%
VARIABLE INSURANCE PRODUCTS FUND, VARIABLE INSURANCE
PRODUCTS FUND II, Service Class II
Fidelity VIP Overseas Portfolio............................ .73% .25% .18% 1.16%
Fidelity VIP Growth Portfolio.............................. .58% .25% .10% .93%
Fidelity VIP II Contrafund Portfolio....................... .58% .25% .12% .95%
INVESCO VARIABLE INVESTMENT FUNDS, INC.(d)
INVESCO VIF-High Yield Fund ............................... .60% - .47% 1.07%
INVESCO VIF-Equity Income Fund ............................ .75% - .42% 1.17%
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, 1999 and will continue this arrangement until April
30, 2001 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, 1999 were: 2.72% for the Money Market Portfolio; 2.25% for the Intermediate Fixed
Income Portfolio; 1.67% for the Global Fixed Income Portfolio; 2.33% for the Mid Cap Equity Portfolio; 1.72%
for the Balanced Portfolio; 1.67% for the Growth & Income Portfolio; 2.53% for the Small Cap Equity
Portfolio; 1.49% for the Large Cap Growth Portfolio; and 1.49% 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 exceed 1.20% of
the Fund's average daily net assets. Absent the voluntary waiver and reimbursement, for the year ended
December 31, 1999, the management fee for the Fund would be .90% and its "Total Annual Portfolio Expenses"
were 2.45%.
(c) The Alger American Leveraged AllCap Portfolio's "Other Expenses" include .01% of interest expense.
(d) The Fund's actual Total Annual Portfolio Expenses were lower than the figures shown because its custodian
fees were reduced under an expense offset arrangement. The expense information presented has been
restated from the financials to reflect a change in the administrative services fee.
Certain expenses of the Fund were absorbed voluntarily by INVESCO in order to ensure that expenses did
not exceed 1.05% of the High Yield Fund's average net assets and 1.15% of the Equity Income Fund's
average net assets pursuant to a commitment between the Fund and INVESCO. This commitment may be changed
at any time following consultation with the board of directors. Without such absorption, but excluding any
expense offset arrangements, Other Expenses and Total Annual Operating Expenses for the fiscal year ended
December 31, 1999 were 0.48% and 1.08% respectively of the High Yield Fund's average net assets, and 0.44%
and 1.19% respectively of the Equity Income Fund's average net assets.
(e) Lazard Asset Management, Inc., the Fund's investment adviser, has voluntarily agreed to reimburse all
expenses through December 31, 2000 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 7.31% for the Lazard Retirement Small Cap Portfolio at
December 31, 1999.
</FN>
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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
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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
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1 Year 3 Year 5 Year 10 Year
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INVESTORS MARK SERIES FUND, INC.
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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
THE ALGER AMERICAN FUND
American Growth Portfolio a) 77.68 a) 109.09 a) 143.33 a) 268.53
b) 23.84 b) 73.41 b) 125.61 b) 268.53
American Leveraged AllCap Portfolio a) 79.13 a) 113.42 a) 150.53 a) 282.83
b) 25.28 b) 77.72 b) 132.79 b) 282.83
American MidCap Growth 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
AMERICAN CENTURY VARIABLE PORTFOLIOS, INC.
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
Growth & Income 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
Dreyfus VIF Disciplined Stock Portfolio a) 77.89 a) 109.71 a) 144.36 a) 270.58
b) 24.05 b) 74.03 b) 126.64 b) 270.58
VARIABLE INSURANCE PRODUCTS FUND, II
VARIABLE INSURANCE PRODUCTS FUND II, SERVICE CLASS II
Fidelity VIP Overseas Portfolio a) 81.50 a) 120.49 a) 162.25 a) 305.87
b) 27.63 b) 84.77 b) 144.48 b) 305.87
Fidelity VIP Growth Portfolio a) 79.13 a) 113.42 a) 150.53 a) 282.83
b) 25.28 b) 77.72 b) 132.79 b) 282.83
Fidelity VIP II Contrafund Portfolio a) 79.34 a) 114.04 a) 151.56 a) 284.86
b) 25.48 b) 78.34 b) 133.82 b) 284.86
INVESCO VARIABLE INVESTMENT FUNDS, INC.
High Yield Portfolio a) 80.57 a) 117.73 a) 157.68 a) 296.92
b) 26.71 b) 82.02 b) 139.93 b) 296.92
Equity Income Portfolio a) 81.60 a) 120.80 a) 162.76 a) 306.85
b) 27.73 b) 85.07 b) 144.99 b) 306.85
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
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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 Year 5 Year 10 Year
=============================================================================================================
INVESTORS MARK SERIES FUND, INC.
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
THE ALGER AMERICAN FUND
American Growth Portfolio a) 75.62 a) 102.87 a) 132.95 a) 247.70
b) 21.79 b) 67.22 b) 115.25 b) 247.70
American Leveraged AllCap Portfolio a) 77.06 a) 107.23 a) 140.23 a) 262.32
b) 23.22 b) 71.56 b) 122.51 b) 262.32
American MidCap Growth a) 76.24 a) 104.74 a) 136.08 a) 254.00
b) 22.40 b) 69.08 b) 118.37 b) 254.00
AMERICAN CENTURY VARIABLE PORTFOLIOS, INC.
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
Growth & Income 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
Dreyfus VIF Disciplined Stock Portfolio a) 75.82 a) 103.49 a) 133.99 a) 249.81
b) 21.99 b) 67.84 b) 116.29 b) 249.81
VARIABLE INSURANCE PRODUCTS FUND,
VARIABLE INSURANCE PRODUCTS FUND II, SERVICE CLASS II
Fidelity VIP Overseas Portfolio a) 79.44 a) 114.34 a) 152.07 a) 285.87
b) 25.58 b) 78.64 b) 134.32 b) 285.87
Fidelity VIP Growth Portfolio a) 77.06 a) 107.23 a) 140.23 a) 262.32
b) 23.22 b) 71.56 b) 122.51 b) 262.32
Fidelity VIP II Contrafund Portfolio a) 77.27 a) 107.85 a) 141.26 a) 264.40
b) 23.43 b) 72.17 b) 123.54 b) 264.40
INVESCO VARIABLE INVESTMENT FUNDS, INC.
High Yield Portfolio a) 78.51 a) 111.56 a) 147.45 a) 276.73
b) 24.66 b) 75.88 b) 129.72 b) 276.73
Equity Income Portfolio a) 79.54 a) 114.65 a) 152.58 a) 286.88
b) 25.69 b) 78.95 b) 134.83 b) 286.88
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 was 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 23
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 day to 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 23 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 believe that offering
their shares in this manner will not 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
investment portfolios have the same investment advisers.
A portfolio's performance may be affected by risks specific to certain
types of investments, such as foreign securities, derivative investments,
non-investment grade debt securities, initial public offerings (IPOs) or
companies with relatively small market capitalizations. IPOs and other
investment techniques may have a magnified performance impact on a portfolio
with a small asset base. A portfolio may not experience similar performance as
its assets grow.
You should read the prospectuses for these funds carefully. 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 is a summary of the investment objectives and strategies of each
investment portfolio available under the contract. There can be no assurance
that the investment objectives will be achieved. The fund prospectuses contain
more complete information including a description of the investment objectives,
policies, restrictions and risks of each portfolio.
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 two 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 enjoy
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 focus of the fund is on undervalued, or
"cheap," stocks of mid-sized to large companies.
THE ALGER AMERICAN FUND
The Alger American Fund is a series of portfolios managed by Fred Alger
Management, Inc. The following INVESTMENT PORTFOLIOS are available under the
contract:
Alger American Growth Portfolio (available as of July 14, 2000)
This Portfolio seeks long-term capital appreciation. It focuses on
growing companies that generally have broad product lines, markets,
financial resources and depth of management. Under normal
circumstances, the portfolio invests primarily in the equity
securities of large companies.
Alger American Leveraged AllCap Portfolio (available as of July
14, 2000)
This Portfolio seeks long-term capital appreciation. Under normal
circumstances, the Portfolio invests in the equity securities of
companies of any size which demonstrate promising growth potential.
The Portfolio can leverage, that is, borrow money, in amounts up to
one-third of its total assets to buy additional securities.
Alger American MidCap Growth Portfolio (available as of July 14, 2000)
This Portfolio seeks long-term capital appreciation. It focuses on
midsize companies with promising growth potential that generally have
broad product lines, markets, financial resources and depth of
management. Under normal circumstances, the Portfolio invests
primarily in the equity securities of companies having a market
capitalization within the range of companies in the S&P MidCap 400
Index(R).
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 common stocks. The Portfolio invests in
mainly large company stocks, such as those in the Standard & Poor's
500 Composite Stock Price Index, but it also may invest in the stocks
of small and medium-size companies. The management team strives
to outperform the Standard & Poor's 500 Composite Stock Price Index
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 at
the time of purchase.
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 Price Index
(S&P 500). 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 ("Dreyfus VIF")is a mutual fund with
multiple portfolios. The Dreyfus Corporation serves as the investment adviser.
The following INVESTMENT PORTFOLIO is available under the contract:
Dreyfus VIF 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.
VARIABLE INSURANCE PRODUCTS FUND AND VARIABLE INSURANCE PRODUCTS FUND II
Variable Insurance Products Fund and Variable Insurance Products Fund II
are each mutual funds managed by Fidelity Management & Research Company. The
following INVESTMENT PORTFOLIOS are available under the contract:
Fidelity VIP Overseas Portfolio (available as of July 14, 2000)
This Portfolio seeks long-term growth of capital by investing at least
65% of total assets in foreign securities and allocating investments
across countries and regions considering the size of the market in
each country and region relative to the size of the international
market as a whole.
Fidelity VIP Growth Portfolio (available as of July 14, 2000)
This Portfolio seeks to achieve capital appreciation by investing
primarily in common stocks of companies that the Adviser believes
have above-average growth potential (stocks of these companies
are often called "growth" stocks).
Fidelity VIP II Contrafund Portfolio (available as of July 14, 2000)
This Portfolio seeks long-term capital appreciation by investing
primarily in common stocks of companies whose value the Adviser
believes is not fully recognized by the public.
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
This Portfolio seeks capital appreciation with high current
income as a secondary goal. The Portfolio normally invests at
least 65% of its assets in dividend paying common and preferred
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 30 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 23 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.
<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.
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
FROM DATE OF PURCHASE PAYMENT CHARGE
==============================================================================================================================
<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 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.
A qualified contract will not provide any necessary or additional tax
deferral if it is used to fund a qualified plan that is tax deferred. However,
the contract has features and benefits other than tax deferral that make it an
important investment for a qualified plan. You should consult your tax adviser
regarding these features and benefits prior to purchasing a qualified contract.
Withdrawals-Non-Qualified Contracts
If you make a withdrawal from your non-qualified 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 59 1/2;
(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
If you make a withdrawal from your qualified contract, a portion of the
withdrawal is treated as taxable income. This portion depends on the ratio of
pre-tax purchase payments to the after-tax purchase payments in your contract.
If all of your purchase payments were made with pre-tax money then the full
amount of any withdrawal is includible in taxable income. Special rules may
apply to withdrawals from certain types of qualified contracts.
The code also provides that any amount received under a qualified 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 you reach age 59 1/2;
(2) paid after you die;
(3) paid if you become totally disabled (as that term is defined in the Code);
(4) paid in a series of substantially equal periodic payments made annually
(or more frequently) under a lifetime annuity;
(5) paid for certain allowable medical expenses (as defined in the Code);
(6) paid on account of an IRS levy upon the qualified contract;
(7) paid from an IRA for medical insurance (as defined in the Code);
(8) paid from an IRA for qualified higher education expenses; or
(9) paid from an IRA for up to $10,000 for qualified first-time homebuyer
expenses (as defined in the Code).
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.
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>
<CAPTION>
Table of Contents of The
Statement of Additional Information
<S> <C>
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
</TABLE>
<TABLE>
<CAPTION>
B-5
APPENDIX A-CONDENSED FINANCIAL INFORMATION
ACCUMULATION UNIT Value History-The following schedule includes ACCUMULATION UNIT values for the year or
period ended December 31, 1999 and 1998. This data has been extracted from the Separate Account's audited
December 31, 1999 financial statements. This information should be read in conjunction with the Separate
Account's financial statements and related notes which 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 December 31,
1999, there were no contracts in force with this coverage charge. Therefore, there are no ACCUMULATION UNIT
values for contracts with that coverage charge for the periods shown below.
Contracts with 1.25%
Coverage Charge
=================================================================================================================
Year Period from
Ended 9/6/98 to
12/31/99 12/31/98
=================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
INVESTORS MARK SERIES FUND, INC.:
MONEY MARKET SUB-ACCOUNT
Unit value at beginning of period......................................... $10.0910 $10.00
Unit value at end of period............................................... $10.7272 $10.0910
No. of ACCUMULATION UNITS Outstanding at end of period.................... 6,648 17,747
INTERMEDIATE FIXED INCOME SUB-ACCOUNT
Unit value at beginning of period......................................... $10.0531 $10.00
Unit value at end of period............................................... $10.3128 $10.0531
No. of ACCUMULATION UNITS Outstanding at end of period.................... 28,681 0
GLOBAL FIXED INCOME SUB-ACCOUNT
Unit value at beginning of period......................................... $10.1741 $10.00
Unit value at end of period............................................... $10.6143 $10.1741
No. of ACCUMULATION UNITS Outstanding at end of
period.................................................................... 5,890 0
MID CAP EQUITY SUB-ACCOUNT
Unit value at beginning of period......................................... $12.0489 $10.00
Unit value at end of period............................................... $10.7602 $12.0489
No. of ACCUMULATION UNITS Outstanding at end of period.................... 37,267 6,884
SMALL CAP EQUITY SUB-ACCOUNT
Unit value at beginning of period......................................... $11,6860 $10.00
Unit value at end of period............................................... $12.8633 $11.6860
No. of ACCUMULATION UNITS Outstanding at end of period.................... 29,139 6,990
LARGE CAP GROWTH SUB-ACCOUNT
Unit value at beginning of period......................................... $12.1679 $10.00
Unit value at end of period............................................... $17.0939 $12.1679
No. of ACCUMULATION UNITS Outstanding at end of period.................... 24,654 8,207
LARGE CAP VALUE SUB-ACCOUNT
Unit value at beginning of period......................................... $11.3245 $10.00
Unit value at end of period............................................... $9.9680 $11.3245
No. of ACCUMULATION UNITS Outstanding at end of period.................... 47,627 7,921
GROWTH & INCOME SUB-ACCOUNT
Unit value at beginning of period......................................... $11.9485 $10.00
Unit value at end of period............................................... $12.7758 $11.9485
No. of ACCUMULATION UNITS Outstanding at end of period.................... 51,979 1,966
BALANCED SUB-ACCOUNT
Unit value at beginning of period......................................... $10.5555 $10.00
Unit value at end of period............................................... $9.9724 $10.5555
No. of ACCUMULATION UNITS Outstanding at end of period.................... 41,270 0
Contracts with 1.25%
Coverage Charge
================================================================================================================
Year Period from
Ended 9/6/98 to
12/31/99 12/31/98
================================================================================================================
BERGER INSTITUTIONAL PRODUCTS TRUST:
BERGER/BIAM IPT-INTERNATIONAL SUB-ACCOUNT
Unit value at beginning of period.................................. $11.2656 $10.00
Unit value at end of period........................................ $15.4324 $11.2656
No. of ACCUMULATION UNITS Outstanding at end of
period............................................................ 35,993 938
DREYFUS STOCK INDEX SUB-ACCOUNT
Unit value at beginning of period.................................. $10.00 $0
Unit value at end of period........................................ $11.8936 $10.00
No. of ACCUMULATION UNITS Outstanding at end of
period............................................................ 3,788 0
DREYFUS VARIABLE INVESTMENT FUND
DREYFUS VIF DISCIPLINED STOCK SUB-ACCOUNT
Unit value at beginning of period.................................. $10.00 $0
Unit value at end of period........................................ $11.6811 $10.00
No. of ACCUMULATION UNITS Outstanding at end of
period............................................................ 9,494 0
INVESCO VARIABLE INVESTMENT FUNDS, INC.
INVESCO VIF HIGH YIELD SUB-ACCOUNT
Unit value at beginning of period.................................. $10.00 $0
Unit value at end of period........................................ $10.7689 $10.00
No. of ACCUMULATION UNITS Outstanding at end of
period............................................................ 7,453 0
INVESCO VIF EQUITY INCOME SUB-ACCOUNT
Unit value at beginning of period.................................. $10.00 $0
Unit value at end of period........................................ $11.3253 $10.00
No. of ACCUMULATION UNITS Outstanding at end of
period............................................................ 2,016 0
LAZARD RETIREMENT SERIES, INC.
LAZARD RETIREMENT SMALL CAP SUB-ACCOUNT
Unit value at beginning of period.................................. $10.00 $0
Unit value at end of period........................................ $10.3673 $10.00
No. of ACCUMULATION UNITS Outstanding at end of
period............................................................ 6,992 0
AMERICAN CENTURY VARIABLE PORTFOLIOS, INC.
VP INCOME & GROWTH SUB-ACCOUNT
Unit value at beginning of period.................................. $10.00 $0
Unit value at end of period........................................ $11.6388 $10.00
No. of ACCUMULATION UNITS Outstanding at end of
period............................................................ 10,395 0
VP VALUE SUB-ACCOUNT
Unit value at beginning of period.................................. $10.00 $0
Unit value at end of period........................................ $9.7779 $10.00
No. of ACCUMULATION UNITS Outstanding at end of
period............................................................ 10,905 0
There are no accumulation unit values shown for sub-accounts investing The
Alger American Fund, Variable Insurance Products Fund and Variable Insurance
Products Fund II because they were not available under the contracts until
May 1, 2000.
</TABLE>
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.
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
May 1, 2000 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 May 1,
2000.
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..............................................17
ANNUITY PROVISIONS..............................................25
MORTALITY AND EXPENSE GUARANTEE.................................27
FINANCIAL STATEMENTS............................................27
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 at December 31, 1999,
and 1998, and the consolidated financial statements of Business Men's Assurance
Company of America at December 31, 1999 and 1998, and for each of the three
years in the period ended December 31, 1999, have been audited by Ernst & Young
LLP, 1200 Main Street, Kansas City, Missouri 64105, independent auditors, as set
forth in their reports thereon appearing elsewhere herein, and are included in
reliance upon such reports given upon the authority of such firm as experts in
accounting and auditing.
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
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.
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.
There is no performance shown for the Portfolios of The Alger American Fund,
Variable Insurance Products Fund and Variable Insurance Products Fund II
because the Portfolios were not available under the contract until May 1, 2000.
<TABLE>
<CAPTION>
Chart 1-A (reflects 1.45% coverage charge and Portfolio expenses) ANNUAL TOTAL
RETURN FOR PERIODS ENDING 12/31/1999:
SEPARATE ACCOUNT
INCEPTION
DATE SINCE
IN PORTFOLIO 1 YEAR INCEPTION
<S> <C> <C> <C>
Intermediate Fixed Income 11/24/97 -1.63% 1.43%
Mid Cap Equity 11/24/97 0.79% 5.24%
Money Market 11/24/97 3.09% 3.36%
Global Fixed Income 11/24/97 -1.71% 2.52%
Small Cap Equity 11/24/97 59.83% 12.30%
Large Cap Growth 11/24/97 33.51% 30.00%
Large Cap Value 11/24/97 -0.66% -0.20%
Growth & Income 11/24/97 14.97% 13.93%
Balanced 11/24/97 6.65% -0.57%
Berger / BIAM IPT-International 11/24/97 29.35% 14.50%
Dreyfus Stock Index 12/31/98 18.86% 18.86%
Dreyfus VIF Disciplined Stock 12/31/98 16.74% 16.74%
INVESCO High Yield 12/31/98 7.63% 7.63%
INVESCO Industrial Income 12/31/98 13.19% 13.19%
Lazard Small Cap 12/31/98 3.62% 3.62%
American Century VP Income & Growth 12/31/98 16.32% 16.32%
American Century VP Value 12/31/98 -2.28% -2.28%
Chart 1-B (reflects 1.25% coverage charge and Portfolio expenses) ANNUAL TOTAL
RETURN FOR PERIODS ENDING 12/31/1999:
SEPARATE ACCOUNT
INCEPTION
DATE SINCE
IN PORTFOLIO 1 YEAR INCEPTION
- --------------------------------------------------------------------------------------------------------
Intermediate Fixed Income 11/24/97 -1.43% 1.63%
Mid Cap Equity 11/24/97 0.99% 5.45%
Money Market 11/24/97 3.30% 3.57%
Global Fixed Income 11/24/97 -1.51% 2.73%
Small Cap Equity 11/24/97 60.15% 12.52%
Large Cap Growth 11/24/97 33.78% 30.26%
Large Cap Valueh 11/24/97 -0.46% 0.00%
Growth & Income 11/24/97 15.20% 14.15%
Balanced 11/24/97 6.87% -0.37%
Berger / BIAM IPT-Internationa 11/24/97 29.61% 14.73%
Dreyfus Stock Index 12/31/98 19.10% 19.10%
Dreyfus VIF Disciplined Stock 12/31/98 16.98% 16.98%
INVESCO High Yield 12/31/98 7.84% 7.84%
INVESCO Equity Income 12/31/98 13.41% 13.41%
Lazard Small Cap 12/31/98 3.82% 3.82%
American Century VP Income & Growth 12/31/98 16.55% 16.55%
American Century Value 12/31/98 -2.08% -2.08%
Chart 2-A (reflects 1.45% coverage charge, contract maintenance charge,
withdrawal Charge and Portfolio expenses) AVERAGE ANNUAL TOTAL RETURN FOR
PERIODS ENDING 12/31/1999:
SEPARATE ACCOUNT
INCEPTION
DATE SINCE
IN PORTFOLIO 1 YEAR INCEPTION
- --------------------------------------------------------------------------------------------------------
Intermediate Fixed Fund 11/24/97 -7.22% -0.96%
Mid Cap Equity 11/24/97 -4.79% 2.97%
Money Market 11/24/97 -2.48% 1.02%
Global Fixed Income 11/24/97 -7.30% 0.17%
Small Cap Equity 11/24/97 54.49% 10.08%
Large Cap Growth 11/24/97 28.07% 28.25%
Large Cap Value 11/24/97 -6.25% -2.64%
Growth & Income 11/24/97 9.45% 11.85%
Balanced 11/24/97 1.10% -3.04%
Berger / BIAM IPT-International 11/24/97 23.89% 12.41%
Dreyfus Stock Index 12/31/98 13.36% 13.36%
Dreyfus VIF Disciplined Stock 12/31/98 11.23% 11.23%
INVESCO High Yield 12/31/98 2.08% 2.08%
INVESCO Equity Income 12/31/98 7.66% 7.66%
Lazard Small Cap 12/31/98 -1.95% -1.95%
American Century VP Income & Growth 12/31/98 10.81% 10.81%
American Century Value 12/31/98 -7.87% -7.87%
Chart 2-B (reflects 1.25% coverage charge, contract maintenance charge,
withdrawal charge and Portfolio expenses) AVERAGE ANNUAL TOTAL RETURN FOR
PERIODS ENDING 12/31/1999:
SEPARATE ACCOUNT
INCEPTION
DATE SINCE
IN PORTFOLIO 1 YEAR INCEPTION
- --------------------------------------------------------------------------------------------------------
Intermediate Fixed Income 11/24/97 -7.02% -0.75%
Mid Cap Equity 11/24/97 -4.59% 3.18%
Money Market 11/24/97 -2.27% 1.24%
Global Fixed Income 11/24/97 -7.10% 0.38%
Small Cap Equity 11/24/97 54.81% 10.31%
Large Cap Growth 11/24/97 28.33% 28.52%
Large Cap Value 11/24/97 -6.05% -2.43%
Growth & Income 11/24/97 9.68% 12.09%
Balanced 11/24/97 1.31% -2.84%
Berger / BIAM IPT-International 11/24/97 24.15% 12.64%
Dreyfus Stock Index 12/31/98 13.60% 13.60%
Dreyfus VIF Disciplined Stock 12/31/98 11.47% 11.47%
INVESCO High Yield 12/31/98 2.29% 2.29%
INVESCO Equity Income 12/31/98 7.89% 7.89%
Lazard Small Cap 12/31/98 -1.74% -1.74%
American Century VP Income & Growth 12/31/98 11.04% 11.04%
American Century Value 12/31/98 -7.67% -7.67%
</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.
<TABLE>
<CAPTION>
Chart 3-A (reflects 1.45% coverage charge and Portfolio expenses)
ANNUAL TOTAL RETURN FOR PERIODS ENDING 12/31/1999:
PORTFOLIO 10 YEARS
INCEPTION OR SINCE
DATE 1 YEAR 5 YEARS INCEPTION
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Dreyfus Stock Index 09/27/89 18.86% 26.23% 16.01%
Dreyfus VIF Disciplined Stock 04/29/96 16.74% N/A 24.79%
INVESCO High Yield 05/24/94 7.63% 11.03% 9.74%
INVESCO Equity Income 08/08/94 13.19% 20.06% 18.61%
Lazard Small Cap 11/02/97 3.62% N/A -1.31%
American Century VP Income & Growth 10/30/97 16.32% N/A 22.90%
American Century VP Value 04/29/96 -2.28% N/A 9.50%
Fidelity VIP Overseas * 01/28/87 40.34% 15.63% 9.29%
Fidelity VIP Growth * 10/09/86 35.31% 27.81% 17.03%
Fidelity VIP II Contrafund * 01/03/95 22.36% N/A 25.85%
Alger American Growth * 01/09/89 31.81% 29.06% 21.28%
Alger American MidCap Growth * 05/03/93 29.95% 24.32% 22.92%
Alger American Leveraged AllCap * 01/25/95 75.50% N/A 44.33%
*Available under the Contract as of July 14, 2000
Chart 3-B (reflects 1.25% coverage charge and Portfolio expenses)
ANNUAL TOTAL RETURN FOR PERIODS ENDING 12/31/1999:
PORTFOLIO 10 YEARS
INCEPTION OR SINCE
DATE 1 YEAR 5 YEARS INCEPTION
- -----------------------------------------------------------------------------------------------------------------------
Dreyfus Stock Index 09/27/89 19.10% 26.48% 16.24%
Dreyfus VIF Disciplined Stock 04/29/96 16.98% N/A 25.04%
INVESCO High Yield 05/24/94 7.84% 11.25% 9.96%
INVESCO Equity Income 08/08/94 13.41% 20.30% 18.85%
Lazard Small Cap 11/02/97 3.82% N/A -1.11%
American Century VP Income & Growth 10/30/97 16.55% N/A 23.14%
American Century VP Value 04/29/96 -2.08% N/A 9.72%
Fidelity VIP Overseas * 01/28/87 40.62% 15.86% 9.51%
Fidelity VIP Growth * 10/09/86 35.58% 28.07% 17.26%
Fidelity VIP II Contrafund * 01/03/95 22.61% N/A 26.10%
Alger American Growth * 01/09/89 32.08% 29.31% 21.52%
Alger American MidCap Growth * 05/03/93 30.21% 24.57% 23.17%
Alger American Leveraged AllCap * 01/25/95 75.85% N/A 44.62%
*Available under the Contract as of July 14, 2000
Chart 4-A (reflects 1.45% coverage charge, contract maintenance charge,
withdrawal charge and Portfolio expenses)
AVERAGE ANNUAL TOTAL RETURN FOR PERIODS ENDING 12/31/1999:
PORTFOLIO 10 YEARS
INCEPTION OR SINCE
DATE 1 YEAR 5 YEARS INCEPTION
- -----------------------------------------------------------------------------------------------------------------------
Dreyfus Stock Index 09/27/89 13.04% 25.91% 15.86%
Dreyfus VIF Disciplined Stock 04/29/96 10.91% N/A 24.00%
INVESCO High Yield 05/24/94 1.78% 10.48% 9.20%
INVESCO Equity Income 08/08/94 7.35% 19.66% 18.20%
Lazard Small Cap 11/02/97 -2.23% N/A -4.14%
American Century VP Income & Growth 10/30/97 10.49% N/A 20.77%
American Century VP Value 04/29/96 -8.14% N/A 8.37%
Fidelity VIP Overseas * 01/28/87 34.92% 15.31% 9.20%
Fidelity VIP Growth * 10/09/86 29.88% 27.62% 16.99%
Fidelity VIP II Contrafund * 01/03/95 16.87% N/A 25.60%
Alger American Growth * 01/09/89 26.36% 28.88% 21.24%
Alger American MidCap Growth * 05/03/93 24.49% 24.11% 22.82%
Alger American Leveraged AllCap * 01/25/95 70.23% N/A 44.20%
*Available under the Contract as of July 14, 2000
Chart 4-B (reflects 1.25% coverage charge, contract maintenance charge,
withdrawal charge and Portfolio expenses)
AVERAGE ANNUAL TOTAL RETURN FOR PERIODS ENDING 12/31/1999:
PORTFOLIO 10 YEARS
INCEPTION OR SINCE
DATE 1 YEAR 5 YEARS INCEPTION
- ----------------------------------------------------------------------------------------------------------------------
Dreyfus Stock Index 09/27/89 13.28% 26.16% 16.09%
Dreyfus VIF Disciplined Stock 04/29/96 11.15% N/A 24.25%
INVESCO High Yield 05/24/94 2.00% 10.71% 9.42%
INVESCO Equity Income 08/08/94 7.58% 19.91% 18.45%
Lazard Small Cap 11/02/97 -2.02% N/A -3.94%
American Century VP Income & Growth 10/30/97 10.72% N/A 21.02%
American Century VP Value 04/29/96 -7.94% N/A 8.60%
Fidelity VIP Overseas * 01/28/87 35.21% 15.54% 9.43%
Fidelity VIP Growth * 10/09/86 30.15% 27.88% 17.23%
Fidelity VIP II Contrafund * 01/03/95 17.12% N/A 25.85%
Alger American Growth* 01/09/89 26.63% 29.14% 21.49%
Alger American MidCap Growth * 05/03/93 24.75% 24.36% 23.07%
Alger American Leveraged AllCap * 01/25/95 70.58% N/A 44.49%
*Available under the Contract as of July 14, 2000
</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
`orporations 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.
Partial 1035 Exchanges
Section. 1035 of the Code provides that an annuity contract may be exchanged in
a tax-free transaction for another annuity contract. Historically, it was
presumed that only the exchange of an entire contract, as opposed to a partial
exchange, would be accorded tax-free status. In 1998 in Conway vs. Commissioner,
the Tax Court held that the direct transfer of a portion of an annuity contract
into another annuity contract qualified as a non-taxable exchange. On November
22, 1999, the Internal Revenue Service filed an Action on Decision which
indicated that it acquiesced in the Tax Court decision in Conway. However, in
its acquiescence with the decision of the Tax Court, the Internal Revenue
Service stated that it will challenge transactions where taxpayers enter into a
series of partial exchanges and annuitizations as part of a design to avoid
application of the 10% premature distribution penalty or other limitations
imposed on annuity contracts under the Code. In the absence of further guidance
from the Internal Revenue Service it is unclear what specific types of partial
exchange designs and transactions will be challenged by the Internal Revenue
Service. Due to the uncertainty in this area, owners should consult their own
tax advisers prior to entering into a partial exchange of an annuity contract.
BMA does not currently accept partial 1035 Exchanges.
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.
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.
A Qualified Contract will not provide any necessary or additional tax deferral
if it is used to fund a qualified plan that is tax deferred. However, the
contract has features and benefits other than tax deferral that make it an
important investment for a qualified 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 made on account of an IRS levy upon the Qualified Contract; (g)
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 (h) 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 audited balance sheet of BMA Variable Annuity Account A as of December 31,
1999 and the related statement of operations and changes in net assets for the
years ended December 31, 1998 and 1999, 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,
1999 and 1998, and for each of the years in the three year period ended December
31, 1999, 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>
Financial Statements
BMA Variable Annuity Account A
Years ended December 31, 1999 and 1998
with Report of Independent Auditors
<PAGE>
BMA Variable Annuity Account A
Financial Statements
Years ended December 31, 1999 and 1998
<TABLE>
<CAPTION>
Contents
<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......................................... 9
</TABLE>
<PAGE>
Report of Independent Auditors
The Contract Owners
BMA Variable Annuity Account A
and
The Board of Directors
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, 1999, and the
related statements of operations and changes in net assets for the years ended
December 31, 1999 and 1998. 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 auditing standards generally accepted
in the United States. 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, 1999, 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, 1999, and the results of its operations and changes in net
assets for the years ended December 31, 1999 and 1998, in conformity with
accounting principles generally accepted in the United States.
Ernst & Young LLP
Kansas City, Missouri
February 3, 2000
1
<PAGE>
BMA Variable Annuity Account A
Statement of Assets and Liabilities
December 31, 1999
<TABLE>
<CAPTION>
Balance
Number of Share Sheet
Shares Value Amount
------------------------------------
<S> <C> <C> <C>
Assets
Investments (Notes 1 and 3):
Investors Mark Series Fund, Inc.:
Balanced (cost, $431,415) 45,375 $ 9.08 $ 412,005
Growth and Income (cost, $592,888) 52,554 12.65 664,807
Large Cap Value (cost, $503,973) 50,560 9.40 475,264
Small Cap Equity (cost, $231,545) 28,427 13.20 375,232
Large Cap Growth (cost, $292,354) 23,399 18.03 421,879
Intermediate Fixed Income (cost, $320,699) 31,909 9.28 296,112
Mid Cap Equity (cost, $368,069) 35,556 11.29 401,422
Money Market (cost, $71,093) 71,093 1.00 71,093
Global Fixed Income (cost, $67,372) 6,796 9.21 62,587
Berger Institutional Products Trust (Berger IPT):
Berger IPT International (cost, $426,528) 38,008 14.63 556,062
Dreyfus Corporation:
Dreyfus Stock Index Fund (cost, $40,701) 1,173 38.45 45,102
Dreyfus Variable Investment Fund Disciplined
Stock Portfolio (cost, $102,306) 4,124 26.92 111,023
INVESCO Funds Group, Inc.:
INVESCO VIF High Yield Income (cost, $82,723)
6,980 11.51 80,341
INVESCO VIF Equity Income Fund (cost, $22,288)
1,088 21.01 22,852
Lazard Asset Management:
Lazard Retirement Small Cap Portfolio (cost,
$71,122) 7,390 9.82 72,572
American Century Investment Management, Inc.:
VP Income & Growth (cost, $110,985) 15,140 8.00 121,116
VP Value (cost, $111,122) 17,940 5.95 106,741
Receivable from BMA 225
----------
Total assets 4,296,435
Liability - coverage charge payable 4,562
----------
Net assets $4,291,873
==========
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
Net assets are represented by (Note 3):
Number
of Units Unit Value Amount
-------------------------------------------------
<S> <C> <C> <C>
Investors Mark Series Funds, Inc.
Balanced
Accumulation units 41,270 $ 9.9724 $ 411,561
Growth and Income
Accumulation units 51,979 12.7758 664,077
Large Cap Value
Accumulation units 47,627 9.9680 474,744
Small Cap Equity
Accumulation units 29,139 12.8633 374,832
Large Cap Growth
Accumulation units 24,654 17.0939 421,441
Intermediate Fixed Income
Accumulation units 28,681 10.3128 295,786
Mid Cap Equity
Accumulation units 37,267 10.7602 400,995
Money Market
Accumulation units 6,648 10.7272 71,318
Global Fixed Income
Accumulation units 5,890 10.6143 62,520
Berger IPT International
Accumulation units 35,993 15.4324 555,460
Dreyfus Stock Index Fund
Accumulation units 3,788 11.8936 45,054
Dreyfus Variable Investment Fund Discipline
Stock Portfolio
Accumulation units 9,494 11.6811 110,902
INVESCO VIF High Yield Income
Accumulation units 7,453 10.7689 80,255
INVESCO VIF Equity Income Fund
Accumulation units 2,016 11.3253 22,828
Lazard Retirement Small Cap Portfolio
Accumulation units 6,992 10.3673 72,487
American Century VP Income & Growth
Accumulation units 10,395 11.6388 120,987
American Century VP Value
Accumulation units 10,905 9.7779 106,626
----------
Net assets $4,291,873
==========
</TABLE>
See accompanying notes.
3
<PAGE>
BMA Variable Annuity Account A
Statement of Operations and Changes in Net Assets
Year ended December 31, 1999
<TABLE>
<CAPTION>
Growth and Large Small Cap Large Cap Intermediate
Balanced Income Cap Value Equity Growth Fixed Income
-----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net investment income (loss):
Dividend income $ 22,597 $ 38,169 $ 26,394 $ -- $ -- $ 19,469
Coverage charges (Note 2) 3,890 7,265 5,858 3,269 4,029 3,260
-----------------------------------------------------------------------------
Net investment income (loss) 18,707 30,904 20,536 (3,269) (4,029) 16,209
Net realized and unrealized gain (loss)
on investments:
Net realized gain (loss) on investment
transactions (1,971) 2,176 1,331 720 5,248 (359)
Unrealized appreciation (depreciation)
on investments 69 37,483 (29,377) 139,372 95,724 (19,526)
-----------------------------------------------------------------------------
Net realized and unrealized gain (loss)
on investments (1,902) 39,659 (28,046) 140,092 100,972 (19,885)
-----------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from operations 16,805 70,563 (7,510) 136,823 96,943 (3,676)
Capital share transactions:
Transfers of net variable annuity deposits 16,250 55,310 29,973 18,531 35,359 33,515
Transfers of surrenders and death benefits (1,102) (4,553) (1,211) (3,535) (3,377) (1,252)
Transfers of contract maintenance and other
charges (292) (313) (267) 362 2,072 (345)
Transfers between subaccounts, including
fixed interest subaccount 191,857 128,196 75,299 74,764 95,202 71,011
-----------------------------------------------------------------------------
Net increase (decrease) in net assets 206,713 178,640 103,794 90,122 129,256 102,929
Net assets at beginning of year 188,043 414,874 378,460 147,887 195,242 196,533
-----------------------------------------------------------------------------
Net assets at end of year $411,561 $664,077 $474,744 $374,832 $421,441 $295,786
=============================================================================
</TABLE>
4
<PAGE>
BMA Variable Annuity Account A
Statement of Operations and Changes in Net Assets (continued)
Year ended December 31, 1999
<TABLE>
<CAPTION>
Global Berger Dreyfus Dreyfus
Mid Cap Money Fixed IPT Stock Disciplined
Equity Market Income International Index Stock
------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net investment income (loss):
Dividend income $ 2,122 $ 3,556 $ 4,327 $ 3,061 $ 597 $ 1,074
Coverage charges (Note 2) 3,941 1,023 533 5,292 299 510
------------------------------------------------------------------------
Net investment income (loss) (1,819) 2,533 3,794 (2,231) 298 564
Net realized and unrealized gain (loss) on investments:
Net realized gain (loss) on investment transactions 464 - (86) 4,551 23 174
Unrealized appreciation (depreciation) on investments 11,191 - (4,318) 110,733 4,400 8,717
------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments 11,655 - (4,404) 115,284 4,423 8,891
------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from
operations 9,836 2,533 (610) 113,053 4,721 9,455
Capital share transactions:
Transfers of net variable annuity deposits 39,108 695,746 16,000 52,276 28,595 71,613
Transfers of surrenders and death benefits (3,867) (3,997) (1,105) (6,337) (25) (450)
Transfers of contract maintenance and other charges (238) (296) (4) 1,932 16 -
Transfers between subaccounts, including fixed
interest subaccount 152,718 (822,293) 33,358 139,421 11,747 30,284
------------------------------------------------------------------------
Net increase (decrease) in net assets 187,721 (130,840) 48,249 187,292 40,333 101,447
Net assets at beginning of year 203,438 199,625 14,881 255,115 - -
------------------------------------------------------------------------
Net assets at end of year $400,995 $ 71,318 $62,520 $555,460 $45,054 $110,902
========================================================================
</TABLE>
5
<PAGE>
BMA Variable Annuity Account A
Statement of Operations and Changes in Net Assets (continued)
Year ended December 31, 1999
<TABLE>
<CAPTION>
INVESCO INVESCO Lazard
VIF High VIF Equity Retirement VP Income
Yield Income Income Small Cap & Growth VP Value Total
-------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net investment income (loss):
Dividend income $ 5,486 $ 354 $ 1,295 $ 3 $ - $ 128,504
Coverage charges (Note 2) 530 97 224 530 475 41,025
-------------------------------------------------------------------------
Net investment income (loss) 4,956 257 1,071 (527) (475) 87,479
Net realized and unrealized gain (loss) on investments:
Net realized gain (loss) on investment transactions 2 7 (1,913) 69 46 10,482
Unrealized appreciation (depreciation) on investments (2,382) 564 1,450 10,132 (4,381) 359,851
-------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments (2,380) 571 (463) 10,201 (4,335) 370,333
-------------------------------------------------------------------------
Net increase (decrease) in net assets resulting
from operations 2,576 828 608 9,674 (4,810) 457,812
Capital share transactions:
Transfers of net variable annuity deposits 33,092 12,000 36,516 86,063 84,729 1,344,676
Transfers of surrenders and death benefits (19) - (243) (449) (422) (31,944)
Transfers of contract maintenance and other charges 5 - 1,069 1,463 838 6,002
Transfers between subaccounts, including fixed
interest subaccount 44,601 10,000 34,537 24,236 26,291 321,229
-------------------------------------------------------------------------
Net increase (decrease) in net assets 77,679 22,000 71,879 111,313 111,436 1,639,963
Net assets at beginning of year - - - - - 2,194,098
-------------------------------------------------------------------------
Net assets at end of year $80,255 $22,828 $72,487 $120,987 $106,626 $4,291,873
=========================================================================
</TABLE>
See accompanying notes.
6
<PAGE>
BMA Variable Annuity Account A
Statement of Operations and Changes in Net Assets
Year ended December 31, 1998
<TABLE>
<CAPTION>
Growth and Large Small Cap Large Cap Intermediate
Balanced Income Cap Value Equity Growth Fixed Income
-------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net investment income (loss):
Dividend income $ 9,519 $ 4,587 $ 10,874 $ 63 $ 115 $ 11,817
Coverage charges (Note 2) 1,876 4,791 3,644 969 1,030 2,216
-------------------------------------------------------------------------
Net investment income (loss) 7,643 (204) 7,230 (906) (915) 9,601
Net realized and unrealized gain (loss) on investments:
Net realized gain (loss) on investment transactions (87) 626 712 (176) 1,020 17
Unrealized appreciation (depreciation) on investments (19,483) 34,385 648 4,389 33,699 (5,066)
-------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments (19,570) 35,011 1,360 4,213 34,719 (5,049)
Net increase (decrease) in net assets resulting from
operations (11,927) 34,807 8,590 3,307 33,804 4,552
Capital share transactions:
Transfers of net variable annuity deposits 127,795 333,303 323,292 119,532 148,962 164,259
Transfers of surrenders and death benefits - - - - - -
Transfers of contract maintenance and other charges (43) (80) (89) (5) - -
Transfers between subaccounts, including fixed
interest subaccount 71,209 43,294 43,146 20,130 8,876 26,711
-------------------------------------------------------------------------
Net increase in net assets 198,961 376,517 366,349 139,657 157,838 190,970
Net assets at beginning of year 1,009 3,550 3,521 4,923 3,600 1,011
-------------------------------------------------------------------------
Net assets at end of year $188,043 $414,874 $378,460 $147,887 $195,242 $196,533
=========================================================================
</TABLE>
7
<PAGE>
BMA Variable Annuity Account A
Statement of Operations and Changes in Net Assets (continued)
Year ended December 31, 1998
<TABLE>
<CAPTION>
Global
Mid Cap Money Fixed Berger IPT
Equity Market Income International Total
---------------------------------------------------------------
Net investment income (loss):
<S> <C> <C> <C> <C> <C>
Dividend income $ 2,000 $ 1,351 $ 1,250 $ 3,578 $ 45,154
Coverage charges (Note 2) 1,903 401 190 2,761 19,781
---------------------------------------------------------------
Net investment income (loss) 97 950 1,060 817 25,373
Net realized and unrealized gain (loss) on investments:
Net realized gain (loss) on investment transactions 190 - 70 626 2,998
Unrealized appreciation (depreciation) on investments 22,170 - (480) 18,779 89,041
---------------------------------------------------------------
Net realized and unrealized gain (loss) on investments 22,360 - (410) 19,405 92,039
---------------------------------------------------------------
Net increase (decrease) in net assets resulting from
operations 22,457 950 650 20,222 117,412
Capital share transactions:
Transfers of net variable annuity deposits 147,193 397,036 11,779 221,832 1,994,983
Transfers of surrenders and death benefits - - - -
Transfers of contract maintenance and other charges - - - - (217)
Transfers between subaccounts, including fixed interest
subaccount 28,294 (199,364) 1,431 8,044 51,771
---------------------------------------------------------------
Net increase in net assets 175,487 197,672 13,210 229,876 2,046,537
Net assets at beginning of year 5,494 1,003 1,021 5,017 30,149
---------------------------------------------------------------
Net assets at end of year $203,438 $ 199,625 $14,881 $255,115 $2,194,098
===============================================================
</TABLE>
See accompanying notes.
8
<PAGE>
BMA Variable Annuity Account A
Notes to Financial Statements
December 31, 1999
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) established to fund single and flexible
premium variable annuity policies. 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 17 separate subaccounts, each
of which invests solely 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).
Dreyfus Stock Index Fund (objective of which is to match, as closely as
possible, the performance of the Standard & Poor's 500 Composite Stock Price
Index).
Dreyfus Variable Investment Fund Disciplined Stock Portfolio (emphasis on
seeking investment returns that are greater than the total return of stocks
represented by the Standard & Poor's 500 Composite Stock Price Index).
INVESCO VIF High Yield Income (objective of which 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).
9
<PAGE>
BMA Variable Annuity Account A
Notes to Financial Statements (continued)
1. Summary of Significant Accounting Policies (continued)
INVESCO VIF Equity Income Fund (emphasis on high current income with capital
appreciation as a secondary goal).
Lazard Retirement Small Cap Portfolio (emphasis on long-term capital
appreciation).
American Century Variable Portfolios: VP Income & Growth (seeks dividend
growth, current income and capital appreciation by investing in a
diversified portfolio of U.S. Stocks) and VP Value (emphasis on long-term
capital growth with income as a secondary objective).
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.
Dreyfus Corporation serves as the fund manager for the Dreyfus Stock Index Fund.
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.
Dreyfus Variable Investment Fund is a mutual fund with multiple portfolios. The
Dreyfus Corporation serves as the investment advisor for this fund. The
Disciplined Stock Portfolio is one of these portfolios under the fund.
10
<PAGE>
BMA Variable Annuity Account A
Notes to Financial Statements (continued)
1. Summary of Significant Accounting Policies (continued)
INVESCO Variable Investment Funds, Inc. is a mutual fund with multiple
portfolios, among them the INVESCO VIF High Yield Income and the INVESCO VIF
Equity Income Fund. INVESCO Funds Group, Inc. is the investment advisor.
American Century Variable Portfolios, Inc. is a series of funds managed by
American Century Investment Management, Inc. VP Income & Growth and VP Value are
two of these funds.
Investment Valuation
Investments in mutual fund shares are carried in the statement of assets and
liabilities 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 investment securities sold
by subaccount were as follows:
<TABLE>
<CAPTION>
Year ended December 31
1999 1998
-------------------------------------------------------------
Cost of Proceeds Cost of Proceeds
Purchases from Sales Purchases from Sales
-------------------------------------------------------------
<S> <C> <C> <C> <C>
IMSF Balanced $ 250,906 $ 27,303 $ 211,341 $ 4,447
IMSF Growth and Income 221,187 9,266 383,734 6,893
IMSF Large Cap Value 138,712 13,043 382,110 8,021
IMSF Small Cap Equity 101,654 13,844 140,032 1,121
IMSF Large Cap Growth 146,201 14,469 161,199 5,169
IMSF Intermediate Fixed Income 136,979 18,226 205,008 4,087
IMSF Mid Cap Equity 198,808 12,269 180,591 4,757
IMSF Money Market 793,007 921,345 398,110 199,682
IMSF Global Fixed Income 54,514 2,519 16,104 1,805
Berger IPT International 205,488 15,601 235,706 4,691
Dreyfus Stock Index Fund 40,914 213 - -
Dreyfus Variable Investment Fund
Disciplined Stock Portfolio 103,993 1,687 - -
INVESCO VIF High Yield Income 83,210 488 - -
INVESCO VIF Equity Income Fund 22,354 66 - -
Lazard Retirement Small Cap Portfolio 298,325 227,203 - -
American Century VP Income & Growth 111,512 528 - -
American Century VP Value 111,758 636 - -
-------------------------------------------------------------
Total $3,019,522 $1,278,706 $2,313,935 $240,673
=============================================================
</TABLE>
11
<PAGE>
BMA Variable Annuity Account A
Notes to Financial Statements (continued)
1. Summary of Significant Accounting Policies (continued)
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. Under current law, no federal income taxes are payable with respect to the
Account's net investment income or net realized gain on investments.
Accordingly, no charge for income tax is currently being made to the Account. If
such taxes are incurred by BMA in the future, a charge to the account may be
assessed.
Use of Estimates
The preparation of financial statements in accordance with accounting principles
generally accepted in the United States 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.
Reclassifications
Certain amounts in the 1998 financial statements have been reclassified to
conform with the 1999 presentation.
2. Variable Annuity Contract Charges
The Account pays BMA certain amounts relating to the distribution and
administration of the policies funded by the Account and as reimbursement for
certain mortality and other risks assumed by BMA. The following summarizes those
amounts:
Coverage Charges: Until December 13, 1999, mortality and expense risks assumed
by BMA are compensated for by a fee equivalent to an annual rate of 1.40% of the
average daily value of each contract. Subsequent to December 12, 1999, BMA
changed the coverage charge for new and existing contracts to an annual rate of
1.25% of the average daily value of each contract.
12
<PAGE>
BMA Variable Annuity Account A
Notes to Financial Statements (continued)
2. Variable Annuity Contract Charges (continued)
On May 5, 1999, BMA introduced a new product with an additional death benefit
option. If this option is selected, BMA is compensated by a fee equivalent to an
annual rate of 1.45% of the average daily value of the contract. There were no
outstanding contracts with this option during 1999.
Contract Maintenance Charge: BMA deducts an administrative fee of $35 per year
for each contract, except for certain contracts based on a minimum account
value.
Other Charges: Transfers in excess of 12 during the accumulation phase, and in
excess of four during the income phase, during a one-year period result in a $25
transfer fee assessment against the contract. 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.
Withdrawal Charge: 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
aggregated $41,025 and $19,781 during the years ended December 31, 1999 and
1998, respectively.
3. Summary of Unit Transactions
Account deposits and terminations, withdrawals and expense charges by units
follow:
<TABLE>
<CAPTION>
Number of Units
----------------------
Year ended December 31
1999 1998
----------------------
<S> <C> <C>
IMSF Balanced:
Variable annuity deposits 21,291 27,455
Terminations, withdrawals and expense charges 143 7,433
IMSF Growth and Income:
Variable annuity deposits 15,641 48,186
Terminations, withdrawals and expense charges 815 11,386
</TABLE>
13
<PAGE>
BMA Variable Annuity Account A
Notes to Financial Statements (continued)
3. Summary of Unit Transactions (continued)
Number of Units
----------------------------
Year ended December 31
1999 1998
----------------------------
IMSF Large Cap Value:
Variable annuity deposits 11,054 51,953
Terminations, withdrawals and expense charges 141 15,603
IMSF Small Cap Equity:
Variable annuity deposits 14,341 20,346
Terminations, withdrawals and expense charges 421 5,633
IMSF Large Cap Growth:
Variable annuity deposits 9,527 24,279
Terminations, withdrawals and expense charges 535 8,962
IMSF Intermediate Fixed Income:
Variable annuity deposits 10,046 19,058
Terminations, withdrawals and expense charges 126 397
IMSF Mid Cap Equity:
Variable annuity deposits 19,510 30,935
Terminations, withdrawals and expense charges 414 13,307
IMSF Money Market:
Variable annuity deposits 65,572 86,798
Terminations, withdrawals and expense charges 78,633 67,189
IMSF Global Fixed Income:
Variable annuity deposits 4,616 1,483
Terminations, withdrawals and expense charges 105 204
Berger IPT International:
Variable annuity deposits 15,088 22,698
Terminations, withdrawals and expense charges 543 1,732
Dreyfus Stock Index Fund:
Variable annuity deposits 3,790 -
Terminations, withdrawals and expense charges 2 -
Dreyfus Disciplined Stock Portfolio:
Variable annuity deposits 9,598 -
Terminations, withdrawals and expense charges 104 -
INVESCO VIF High Yield Income:
Variable annuity deposits 7,454 -
Terminations, withdrawals and expense charges 1 -
14
<PAGE>
BMA Variable Annuity Account A
Notes to Financial Statements (continued)
3. Summary of Unit Transactions (continued)
<TABLE>
<CAPTION>
Number of Units
----------------------
Year ended December 31
1999 1998
----------------------
<S> <C> <C>
INVESCO VIF Equity Income Fund:
Variable annuity deposits 2,016 -
Terminations, withdrawals and expense charges - -
Lazard Retirement Small Cap Portfolio:
Variable annuity deposits 7,052 -
Terminations, withdrawals and expense charges 60 -
American Century VP Income & Growth:
Variable annuity deposits 10,500 -
Terminations, withdrawals and expense charges 105 -
American Century VP Value:
Variable annuity deposits 11,018 -
Terminations, withdrawals and expense charges 113 -
</TABLE>
15
<PAGE>
CONSOLIDATED FINANCIAL STATEMENTS
BUSINESS MEN'S ASSURANCE COMPANY OF AMERICA
(A Member of the Generali Group of Companies)
Years ended December 31, 1999, 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, 1999, 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 (Loss)...................... 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, 1999 and 1998, and the
related consolidated statements of operations, comprehensive income (loss),
stockholder's equity and cash flows for each of the three years in the period
ended December 31, 1999. 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 auditing standards generally
accepted in the United States. 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, 1999 and 1998,
and the consolidated results of its operations and its cash flows for each of
the three years in the period ended December 31, 1999, in conformity with
accounting principles generally accepted in the United States.
/s/ Ernst & Young LLP
Kansas City, Missouri
February 3, 2000
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
---------------------
1999 1998
---------- ----------
(In Thousands)
<S> <C> <C>
Assets
Investments (Notes 1 and 3):
Securities available-for-sale, at fair value:
Fixed maturities (amortized cost--$1,284,919,000 in
1999 and
$1,257,705,000 in 1998).............................. $1,231,419 $1,277,121
Equity securities (cost--$45,102,000 in 1999 and
$36,214,000 in 1998)................................. 43,204 40,373
Mortgage loans on real estate, net of allowance for
credit losses of $10,385,000 in 1999
and $9,185,000 in 1998................................ 875,882 875,117
Policy loans........................................... 57,935 59,780
Short-term investments................................. 7,476 10,779
Other (Note 3)......................................... 32,444 44,084
---------- ----------
Total investments..................................... 2,248,360 2,307,254
Cash..................................................... 97,678 30,567
Accrued investment income................................ 20,054 18,078
Premium and other receivables............................ 20,271 12,017
Deferred policy acquisition costs........................ 134,343 112,311
Property, equipment and software (Note 6)................ 14,798 16,276
Reinsurance recoverables:
Paid benefits.......................................... 2,441 6,549
Benefits and claim reserves ceded...................... 111,515 95,476
Other assets (Note 1).................................... 13,099 14,852
Assets held in separate accounts (Note 1)................ 415,077 300,366
---------- ----------
Total assets.......................................... $3,077,636 $2,913,746
========== ==========
Liabilities and stockholder's equity
Future policy benefits:
Life and annuity (Notes 4 and 10)...................... $1,294,708 $1,253,531
Health................................................. 89,539 78,527
Contract account balances (Note 4)....................... 681,958 677,444
Policy and contract claims............................... 72,163 62,953
Unearned revenue reserve................................. 10,056 9,924
Other policyholder funds................................. 14,155 14,671
Current income taxes payable (Note 7).................... 486 2,300
Deferred income taxes (Note 7)........................... 7,936 10,650
Payable to affiliate (Note 10)........................... 627 771
Other liabilities (Note 12).............................. 80,831 84,183
Liabilities related to separate accounts (Notes 1 and 4). 415,077 300,366
---------- ----------
Total liabilities........................................ 2,667,536 2,495,320
Commitments and contingencies (Note 5)
Stockholder's equity (Notes 2 and 11):
Preferred stock of $1 par value per share; authorized
3,000,000 shares, none issued and outstanding......... -- --
Common stock of $1 par value per share; 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 (loss) (41,667) 10,730
Retained earnings...................................... 399,661 355,590
---------- ----------
Total stockholder's equity............................ 410,100 418,426
---------- ----------
Total liabilities and stockholder's equity............ $3,077,636 $2,913,746
========== ==========
</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
---------------------------
1999 1998 1997
-------- -------- --------
(In Thousands)
<S> <C> <C> <C>
Revenues:
Premiums (Note 9):
Life and annuity.............................. $131,667 $115,863 $108,816
Health........................................ 4,863 10,828 17,035
Other insurance considerations.................. 33,788 37,599 37,928
Net investment income (Note 3).................. 185,521 176,085 162,478
Realized gains, net (Note 3).................... 8,458 10,556 5,121
Other income.................................... 37,242 43,886 35,548
-------- -------- --------
Total revenues.............................. 401,539 394,817 366,926
Benefits and expenses:
Life and annuity benefits....................... 99,280 107,033 95,286
Health benefits................................. 938 3,021 6,533
Increase in policy liabilities including
interest credited to account balances.......... 115,785 103,298 103,012
Commissions..................................... 50,568 43,949 45,019
(Increase) decrease in deferred policy
acquisition costs.............................. 330 11,271 (1,229)
Taxes, licenses and fees........................ 2,417 2,579 3,329
Other operating costs and expenses.............. 63,019 71,991 76,782
-------- -------- --------
Total benefits and expenses................. 332,337 343,142 328,732
-------- -------- --------
Income from continuing operations before income
tax expense...................................... 69,202 51,675 38,194
Income tax expense (Note 7)....................... 23,119 15,876 2,353
-------- -------- --------
Income from continuing operations................. 46,083 35,799 35,841
Discontinued operations (Note 13):
Earnings (loss) from discontinued operations,
net of income tax benefit of $994,000 in 1999
and expense of $929,000 in 1998 and $179,000 in
1997........................................... (2,012) 2,527 348
-------- -------- --------
Income (loss) from discontinued operations........ (2,012) 2,527 348
-------- -------- --------
Net income.................................. $ 44,071 $ 38,326 $ 36,189
======== ======== ========
</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 (LOSS)
<TABLE>
<CAPTION>
Year ended December 31
-------------------------
1999 1998 1997
------- ------- -------
(In Thousands)
<S> <C> <C> <C>
Net income.......................................... $44,071 $38,326 $36,189
Other comprehensive income (loss):
Unrealized holding gains (losses) arising during
period........................................... (76,822) 2,597 25,009
Less realized gains included in net income........ 12,473 6,760 1,868
------- ------- -------
Net unrealized gains (losses)................... (89,295) (4,163) 23,141
Effect on deferred policy acquisition costs......... 22,362 (1,483) (7,189)
Effect on unearned revenue reserve.................. (1,370) 55 474
Related deferred income taxes....................... 15,906 1,957 (5,748)
------- ------- -------
Other comprehensive income (loss)................... (52,397) (3,634) 10,678
------- ------- -------
Comprehensive income (loss)..................... $(8,326) $34,692 $46,867
======= ======= =======
</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
----------------------------
1999 1998 1997
-------- -------- --------
(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 and end of year............. 40,106 40,106 40,106
Accumulated other comprehensive income (loss):
Balance at beginning of year..................... 10,730 14,364 3,686
Net change in net unrealized gains (losses).... (52,397) (3,634) 10,678
-------- -------- --------
Balance at end of year........................... (41,667) 10,730 14,364
Retained earnings:
Balance at beginning of year..................... 355,590 317,264 281,075
Net income..................................... 44,071 38,326 36,189
-------- -------- --------
Balance at end of year........................... 399,661 355,590 317,264
-------- -------- --------
Total stockholder's equity......................... $410,100 $418,426 $383,734
======== ======== ========
</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
-------------------------------
1999 1998 1997
--------- --------- ---------
(In Thousands)
<S> <C> <C> <C>
Operating activities
Net income.................................... $ 44,071 $ 38,326 $ 36,189
Adjustments to reconcile net income to net
cash provided by operating activities:
Deferred income tax expense (benefit)........ 13,192 363 (8,416)
Realized gains, net.......................... (8,458) (10,556) (5,121)
Premium amortization (discount accretion),
net......................................... 193 (1,618) (975)
Policy loans lapsed in lieu of surrender
benefits.................................... 2,858 3,740 1,021
Depreciation................................. 2,469 2,524 3,778
Amortization................................. 782 782 782
Changes in assets and liabilities:
(Increase) decrease in accrued investment
income.................................... (1,976) 442 19
Increase in receivables and reinsurance
recoverables (net of $505,000 realized
loss in 1999)............................. (20,834) (24,876) (15,425)
Policy acquisition costs deferred.......... (25,451) (22,484) (28,449)
Policy acquisition costs amortized......... 25,781 33,755 27,220
Increase (decrease) in income taxes
payable................................... (1,814) 142 (2,187)
Increase in accrued policy benefits, claim
reserves, unearned revenues and
policyholder funds........................ 41,215 19,189 30,777
Interest credited to policyholder accounts. 80,499 77,358 79,312
(Increase) decrease in other assets and
other liabilities, net.................... (18,030) 2,344 7,269
Other, net................................... 391 19 (433)
--------- --------- ---------
Net cash provided by operating activities..... 134,888 119,450 125,361
Investing activities
Purchases of investments:
Securities available-for-sale:
Fixed maturities........................... (558,982) (603,142) (464,419)
Equity securities.......................... (48,088) (12,969) (31,625)
Mortgage and policy loans.................... (172,625) (310,127) (237,990)
Other........................................ (19,572) (41,118) --
Sales, calls or maturities of investments:
Maturities and calls of securities
available-for-sale:
Fixed maturities........................... 225,728 305,013 167,000
Sales of securities available-for-sale:
Fixed maturities........................... 312,069 360,296 284,124
Equity securities.......................... 44,158 22,632 14,379
Mortgage and policy loans.................... 169,498 277,325 98,554
Real estate.................................. -- -- 5,854
Purchase of property, equipment and software.. (1,331) (1,805) (1,949)
Net (increase) decrease in short-term
investments.................................. 3,303 (3,623) (1,456)
Distributions from unconsolidated related
parties...................................... 30,793 1,466 1,514
--------- --------- ---------
Net cash used in investing activities......... (15,049) (6,052) (166,014)
Financing activities
Deposits from interest sensitive and
investment-type contracts.................... 290,119 245,620 323,487
Withdrawals from interest sensitive and
investment-type contracts.................... (347,673) (375,459) (295,633)
Net proceeds from reverse repurchase
borrowing.................................... 143,200 30,189 40,925
Retirement of reverse repurchase borrowing.... (144,989) (20,863) (20,062)
Net proceeds from other borrowing............. 6,615 -- --
--------- --------- ---------
Net cash provided by (used in) financing
activities................................... (52,728) (120,513) 48,717
--------- --------- ---------
Net increase (decrease) in cash............... 67,111 (7,115) 8,064
Cash at beginning of year..................... 30,567 37,682 29,618
--------- --------- ---------
Cash at end of year........................... $ 97,678 $ 30,567 $ 37,682
========= ========= =========
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 equivalents
Cash paid during the year for:
Income taxes................................. $ 10,747 $ 16,300 $ 13,135
========= ========= =========
Interest paid on reverse repurchase and
other borrowings............................ $ 1,884 $ 299 $ 369
========= ========= =========
Supplemental schedule of noncash investing and
financing activities
Real estate acquired through foreclosure...... $ -- $ -- $ 1,236
========= ========= =========
</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
December 31, 1999
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.
Use of Estimates
The preparation of consolidated financial statements in conformity with
accounting principles generally accepted in the United States 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.
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) unearned revenue
reserve (URR) and related deferred income taxes, are reported as unrealized
gains or losses directly in accumulated other comprehensive income (loss). The
DPAC and URR offsets to the unrealized gains or losses represents valuation
adjustments or reinstatements of DPAC and URR 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,
1999 and 1998, 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 declines 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 income on the
specific identification 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)
Impairment of Loans
The Financial Accounting Standards Board's (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.
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
F-8
<PAGE>
BUSINESS MEN'S ASSURANCE COMPANY OF AMERICA
(A Member of the Generali Group of Companies)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
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.
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, 1999 and 1998 was $32,791,000 and
$30,262,000, 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 (GICs). 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 $6,297,000
on December 31, 1999 and $3,409,000 on December 31, 1998.
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
(loss).
F-9
<PAGE>
BUSINESS MEN'S ASSURANCE COMPANY OF AMERICA
(A Member of the Generali Group of Companies)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
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 income in
the accompanying consolidated statements of operations. The guaranteed
interest payable 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 $408,780,000 on
December 31, 1999 and $296,957,000 on December 31, 1998.
Intangible Assets
At December 31, 1999, goodwill of $10,759,000 (1998--$11,541,000), net of
accumulated amortization of $4,889,000 (1998--$4,107,000) 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, 1999, 1998 and
1997.
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. The following represents the carrying amount
and fair value of significant assets and liabilities at December 31, 1999 and
1998:
<TABLE>
<CAPTION>
December 31, 1999 December 31, 1998
--------------------- ---------------------
Carrying Carrying
Amount Fair Value Amount Fair Value
---------- ---------- ---------- ----------
(In Thousands)
<S> <C> <C> <C> <C>
Fixed maturities (Note 3).......... $1,231,419 $1,231,419 $1,277,121 $1,277,121
Equity securities (Note 3)......... 43,204 43,204 40,373 40,373
Mortgage loans on real estate...... 875,882 852,238 875,117 934,712
Policy loans....................... 57,935 53,844 59,780 55,579
Short-term investments............. 7,476 7,476 10,779 10,779
Cash............................... 97,678 97,678 30,567 30,567
Reinsurance recoverables:
Paid benefits.................... 2,441 2,441 6,549 6,549
Benefits and claim reserves
ceded........................... 111,515 111,515 95,476 95,476
Assets held in separate accounts... 415,077 406,474 300,366 302,549
Investment-type insurance contracts
(Note 4).......................... 1,603,965 1,559,623 1,456,634 1,453,909
</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.
F-10
<PAGE>
BUSINESS MEN'S ASSURANCE COMPANY OF AMERICA
(A Member of the Generali Group of Companies)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
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.
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 on real estate and policy loans: The fair value for
mortgage loans on real estate 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.
Liabilities for flexible and single premium deferred annuities: The cash
surrender value of flexible and single premium deferred annuities
approximates their fair value.
Liabilities for 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, 1999 and
1998.
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.
Comprehensive Income (Loss)
Unrealized gains and losses on our available-for-sale securities are
included in other comprehensive income (loss) in stockholder's equity. Other
comprehensive income (loss) excludes net investment gains (losses) included in
net income which merely represent transfers from unrealized to realized gains
and losses. These amounts, which have been measured through the beginning of
the year, are net of income taxes and adjustments to deferred policy
acquisition costs, value of insurance in force acquired and unearned revenue
reserve.
F-11
<PAGE>
BUSINESS MEN'S ASSURANCE COMPANY OF AMERICA
(A Member of the Generali Group of Companies)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Reclassifications
Certain amounts for 1998 and 1997 have been reclassified to conform to the
current year presentation.
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, 1999 and 1998, the Company's statutory stockholder's
equity was $250,774,000 and $226,345,000, respectively. Statutory net gain
from operations before realized capital gains and net income for each of the
three years in the period ended December 31, 1999 were as follows:
<TABLE>
<CAPTION>
Year ended December 31
-----------------------
1999 1998 1997
------- ------- -------
(In Thousands)
<S> <C> <C> <C>
Net gain from operations before realized capital
gains.......................................... $29,369 $36,305 $18,545
Net income...................................... 32,915 44,692 14,540
</TABLE>
3. Investment Operations
The Company's investments in securities available-for-sale are summarized
as follows:
<TABLE>
<CAPTION>
December 31, 1999
-------------------------------------------
Gross Gross
Amortized Unrealized Unrealized
Cost Gains Losses Fair Value
---------- ---------- ---------- ----------
(In Thousands)
<S> <C> <C> <C> <C>
Fixed maturities:
Bonds:
U.S. Treasury securities and
obligations of U.S. government
corporations and agencies..... $ 74,125 $ -- $ (4,591) $ 69,534
Obligations of states and
political subdivisions........ 8,165 -- (121) 8,044
Debt securities issued by
foreign governments........... 3,560 29 (133) 3,456
Corporate securities........... 417,899 593 (14,941) 403,551
Mortgage-backed securities..... 761,504 356 (33,191) 728,669
Redeemable preferred stocks.... 19,666 -- (1,501) 18,165
---------- ------ -------- ----------
Total fixed maturities............. 1,284,919 978 (54,478) 1,231,419
Equity securities.................. 45,102 2,221 (4,119) 43,204
---------- ------ -------- ----------
$1,330,021 $3,199 $(58,597) $1,274,623
========== ====== ======== ==========
</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, 1998
-------------------------------------------
Gross Gross
Amortized Unrealized Unrealized
Cost Gains Losses Fair Value
---------- ---------- ---------- ----------
(In Thousands)
<S> <C> <C> <C> <C>
Fixed maturities:
Bonds:
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 fixed securities............. 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>
The amortized cost and estimated fair value of fixed maturity securities at
December 31, 1999, 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............................ $ 15,545 $ 15,573
Due after one year through five years.............. 224,803 219,427
Due after five years through 10 years.............. 175,009 166,123
Due after 10 years................................. 108,058 101,627
---------- ----------
523,415 502,750
Mortgage-backed securities......................... 761,504 728,669
---------- ----------
Total fixed maturity securities.................... $1,284,919 $1,231,419
========== ==========
</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
-----------------
1999 1998
-------- --------
(In Thousands)
<S> <C> <C>
State:
Missouri.............................................. $ 74,922 $ 62,462
California............................................ 67,674 69,913
Arizona............................................... 66,812 65,135
Texas................................................. 62,166 59,900
Florida............................................... 50,246 49,789
Utah.................................................. 48,450 44,110
Oklahoma.............................................. 39,410 38,394
Washington............................................ 33,674 38,136
Kansas................................................ 32,485 38,509
Other................................................. 400,043 408,769
-------- --------
$875,882 $875,117
======== ========
</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>
1999 1998 1997
---- ---- ------
(In Thousands)
<S> <C> <C> <C>
Impaired mortgage loans................................ $-- $ -- $1,069
Allowance for credit losses............................ -- -- 244
--- ---- ------
Net recorded investment in impaired loans.............. $-- $ -- $ 825
=== ==== ======
Average recorded investment in impaired loans.......... $-- $413 $1,325
=== ==== ======
Interest income on impaired loans...................... $-- $ -- $ 57
=== ==== ======
</TABLE>
F-14
<PAGE>
BUSINESS MEN'S ASSURANCE COMPANY OF AMERICA
(A Member of the Generali Group of Companies)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Bonds, mortgage loans, preferred stocks and common stocks approximating
$3,840,000 and $4,900,000 were on deposit with regulatory authorities at
December 31, 1999 and 1998, respectively.
Set forth below is a summary of consolidated net investment income for the
years ended December 31:
<TABLE>
<CAPTION>
Year ended December 31
--------------------------
1999 1998 1997
-------- -------- --------
(In Thousands)
<S> <C> <C> <C>
Fixed maturities:
Bonds....................................... $102,990 $ 94,975 $ 92,741
Redeemable preferred stocks................. 1,917 1,603 1,309
Equity securities:
Common stocks............................... 957 702 793
Nonredeemable preferred stocks.............. 43 237 541
Mortgage loans on real estate................. 78,462 75,768 66,053
Real estate................................... 11 18 612
Policy loans.................................. 3,486 3,667 3,906
Short-term investments........................ 3,115 4,334 2,955
Other......................................... 2,898 2,685 1,223
-------- -------- --------
193,879 183,989 170,133
Less:
Net investment income from discontinued
operations................................. 5,681 5,443 5,480
Investment expenses......................... 2,677 2,461 2,175
-------- -------- --------
Net investment income from continuing
operations................................... $185,521 $176,085 $162,478
======== ======== ========
</TABLE>
Realized gains (losses) on securities disposed of during 1999, 1998 and
1997 consisted of the following:
<TABLE>
<CAPTION>
Year ended December 31
-------------------------
1999 1998 1997
------- ------- -------
(In Thousands)
<S> <C> <C> <C>
Fixed maturity securities:
Gross realized gains....................... $ 6,615 $ 5,149 $10,499
Gross realized losses...................... (1,636) (1,420) (4,690)
Equity securities:
Gross realized gains....................... 6,299 7,395 3,204
Gross realized losses...................... (744) (1,636) (777)
Other investments............................ (2,076) 1,068 (3,115)
------- ------- -------
Net realized gains........................... $ 8,458 $10,556 $ 5,121
======= ======= =======
</TABLE>
Sales of investments in securities in 1999, 1998 and 1997, excluding
maturities and calls, resulted in gross realized gains of $12,338,000,
$10,980,000 and $8,362,000 and gross realized losses of $2,318,000, $2,304,500
and $1,017,000, respectively.
There were no nonincome producing investments at December 31, 1999 and
1998.
F-15
<PAGE>
BUSINESS MEN'S ASSURANCE COMPANY OF AMERICA
(A Member of the Generali Group of Companies)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
The Company began investing in the Cypress Tree Investment Fund LLC during
1998. At December 31, 1999 and 1998, the Company has invested $18 million and
$40 million, respectively, in the partnership, which primarily invests in
senior secured loans. The Company's portion of the investment is approximately
16% and 43% of the total fund value at December 31, 1999 and 1998,
respectively, 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 (loss).
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>
December 31
-------------------------------------------
1999 1998
--------------------- ---------------------
Carrying Carrying
Amount Fair Value Amount Fair Value
---------- ---------- ---------- ----------
(In Thousands)
<S> <C> <C> <C> <C>
Guaranteed investment
contracts................... $ 645,619 $ 629,240 $ 640,137 $ 651,809
Flexible and single premium
deferred annuities.......... 543,269 523,519 516,131 495,873
Separate accounts............ 415,077 406,864 300,366 306,227
---------- ---------- ---------- ----------
Total investment-type
insurance contracts......... $1,603,965 $1,559,623 $1,456,634 $1,453,909
========== ========== ========== ==========
</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 April 2004. Certain other equipment and
facilities are rented monthly. Rental expense amounted to $781,000, $1,364,000
and $2,137,000 for the years ended December 31, 1999, 1998 and 1997,
respectively. As of December 31, 1999, the minimum future payments under
noncancelable operating leases for each of the next five years are as follows
(in thousands):
<TABLE>
<CAPTION>
Year ending December 31
-----------------------
<S> <C>
2000........................... $ 773
2001........................... 611
2002........................... 362
2003........................... 116
2004........................... 10
------
Total........................ $1,872
======
</TABLE>
Total outstanding commitments to fund mortgage loans were $11,632,500 and
$32,275,000 atDecember 31, 1999 and 1998, respectively.
F-16
<PAGE>
BUSINESS MEN'S ASSURANCE COMPANY OF AMERICA
(A Member of the Generali Group of Companies)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
The increase in the number of insurance companies that are under regulatory
supervision has resulted, and is expected to continue to result, in increased
assessments by state guaranty funds to cover losses to policyholders of
insolvent or rehabilitated insurance companies. Those mandatory assessments may
be partially recovered through a reduction in future premium taxes in certain
states. At December 31, 1999 and 1998, the Company accrued $350,000 and
$541,000, respectively, for guaranty fund assessments. Expenses incurred for
guaranty fund assessments were $333,000, $417,000 and $445,000 in 1999, 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.
6. Property, Equipment and Software
A summary of property, equipment and software and their respective
depreciation rates is as follows:
<TABLE>
<CAPTION>
December 31
Rate of ------------------
Depreciation 1999 1998
------------ -------- --------
(In Thousands)
<S> <C> <C> <C>
Home office building, including land
with a cost of $425,000............... 2% $ 23,218 $ 23,158
Other real estate not held-for-sale or
rental................................ 4% 208 820
Less accumulated depreciation.......... (13,667) (13,097)
-------- --------
9,759 10,881
Equipment and software................. 5%-33% 20,785 21,701
Less accumulated depreciation.......... (15,746) (16,306)
-------- --------
5,039 5,395
-------- --------
Total property, equipment and software. $ 14,798 $ 16,276
======== ========
</TABLE>
F-17
<PAGE>
BUSINESS MEN'S ASSURANCE COMPANY OF AMERICA
(A Member of the Generali Group of Companies)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
7. Federal Income Taxes
The Company and its subsidiaries file a consolidated federal tax return.
Under a written agreement approved by the Board of Directors, the Company
collects from, or refunds to, the subsidiaries the amount of taxes or benefits
determined as if the Company and the subsidiaries filed separate returns.
The components of the provision for income taxes and the temporary
differences generating deferred income taxes are as follows:
<TABLE>
<CAPTION>
Year ended December 31
--------------------------
1999 1998 1997
------- ------- --------
(In Thousands)
<S> <C> <C> <C>
Current...................................... $ 8,933 $16,442 $ 10,948
Deferred:
Deferred policy acquisition costs.......... (204) (3,385) 143
Future policy benefits..................... 9,501 6,620 3,783
Accrual of discount........................ 438 560 197
Tax on realized gains greater than book.... (780) (1,610) 571
Recognition of tax effect previously
deferred on sale of affiliate stock in
prior period.............................. -- (1,311) (11,169)
Employee benefit plans..................... 3,002 (2,014) (2,206)
Prior year taxes........................... 1,698 1,018 --
Other, net................................. (463) 485 265
------- ------- --------
13,192 363 (8,416)
------- ------- --------
Total income tax expense..................... 22,125 16,805 2,532
Less income tax expense (benefit) from
discontinued operations..................... (994) 929 179
------- ------- --------
Total income tax expense from continuing
operations.................................. $23,119 $15,876 $ 2,353
======= ======= ========
</TABLE>
At December 31, 1999, the Company recorded an $8,000,000 valuation
allowance against deferred tax assets resulting from cumulative unrealized
losses on available-for-sale securities. The Company did not record any
valuation allowances against deferred tax assets at December 31, 1998 or 1997.
Total income taxes vary from the amounts computed by applying the federal
income tax rate of 35% to income before income tax expense for the following
reasons:
<TABLE>
<CAPTION>
Year ended December 31
--------------------------
1999 1998 1997
------- ------- --------
(In Thousands)
<S> <C> <C> <C>
Application of statutory rate to income
before taxes on income...................... $23,168 $19,296 $ 13,552
Tax-exempt municipal bond interest and
dividends received deductions............... (171) (287) (361)
Recognition of tax effect previously deferred
on sale of affiliate stock in a prior
period...................................... -- (1,311) (11,169)
Other........................................ (872) (893) 510
------- ------- --------
$22,125 $16,805 $ 2,532
======= ======= ========
</TABLE>
F-18
<PAGE>
BUSINESS MEN'S ASSURANCE COMPANY OF AMERICA
(A Member of the Generali Group of Companies)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
The significant components comprising the Company's deferred income tax
assets and liabilities as of December 31, 1999 and 1998 are as follows:
<TABLE>
<CAPTION>
December 31
---------------
1999 1998
------- -------
(In Thousands)
<S> <C> <C>
Deferred income tax liabilities:
Deferred policy acquisition costs...................... $26,142 $26,340
Unrealized investment gains............................ -- 5,778
Other.................................................. 9,754 9,860
------- -------
Total deferred income tax liability...................... 35,896 41,978
Deferred income tax assets:
Reserve for future policy benefits..................... 6,142 15,093
Unrealized investment losses, net of valuation
allowance of $8,000 in 1999........................... 10,128 --
Accrued expenses....................................... 6,642 10,969
Other.................................................. 5,048 5,266
------- -------
Total deferred income tax assets......................... 27,960 31,328
------- -------
Net deferred income tax liability........................ $ 7,936 $10,650
======= =======
</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 $297,000,000 at December 31,
1999.
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 1999, approximately
$3.4 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.
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 following table sets forth the plan's funded status at December 31:
<TABLE>
<CAPTION>
December 31
------------------
1999 1998
-------- --------
(In Thousands)
<S> <C> <C>
Change in benefit obligations:
Benefit obligation at beginning of year............ $ 66,944 $ 62,683
Service cost....................................... 1,835 1,873
Interest cost...................................... 4,556 4,557
Plan participants' contributions................... -- 1
Actuarial (gains) losses........................... (5,626) 1,249
Benefits paid...................................... (3,313) (3,419)
-------- --------
Benefit obligation at end of year.................... 64,396 66,944
Change in plan assets:
Fair value of plan assets at beginning of year..... 95,175 85,605
Actual return on plan assets....................... 18,537 12,988
Plan participant's contributions................... -- 1
Benefits paid...................................... (3,313) (3,419)
-------- --------
Fair value of plan assets at end of year............. 110,399 95,175
-------- --------
Funded status of the plan............................ 46,003 28,231
Unrecognized net actuarial loss...................... (41,634) (26,877)
Unrecognized prior service cost...................... 650 1,342
Unrecognized net asset at January 1, 1987 being
recognized over 15 years............................ (589) (883)
Adjustment to recognized minimum liability........... -- (2)
-------- --------
Prepaid pension cost................................. $ 4,430 $ 1,811
======== ========
</TABLE>
The additional minimum pension liability noted above results from the
pension plan for the Company's subsidiary, BMA Financial Services, Inc. Net
pension cost included the following components:
<TABLE>
<CAPTION>
Year ended December 31
--------------------------
1999 1998 1997
-------- ------- -------
(In Thousands)
<S> <C> <C> <C>
Service cost--benefits earned during the
period..................................... $ 1,835 $ 1,873 $ 1,767
Interest cost on projected benefit
obligation................................. 4,556 4,557 4,374
Actual return on plan assets................ (18,537) (12,988) (10,316)
Net amortization and deferral............... 9,529 5,005 2,812
-------- ------- -------
Net pension benefit......................... $ (2,617) $(1,553) $(1,363)
======== ======= =======
</TABLE>
In determining the actuarial present value of the projected benefit
obligation, the weighted-average discount rate utilized was 7.75% for 1999, 7%
for 1998 and 7.5% for 1997. The rate of increase in future compensation levels
used for 1999 was 7.5% for employees at the younger attained ages grading to
3.5% for older employees, the rate was 7% grading to 3% for 1998 and 5% for
1997. The expected long-term rate of return on assets was 8% in 1999, 1998 and
1997.
F-20
<PAGE>
BUSINESS MEN'S ASSURANCE COMPANY OF AMERICA
(A Member of the Generali Group of Companies)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
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.
The following table sets forth the combined supplemental retirement
programs' and deferred compensation plan's funded status at:
<TABLE>
<CAPTION>
December 31
------------------
1999 1998
-------- --------
(In Thousands)
<S> <C> <C>
Change in benefit obligations:
Benefit obligation at beginning of year............ $ 12,512 $ 11,281
Service cost....................................... 292 235
Interest cost...................................... 844 813
Actuarial losses................................... 563 1,085
Benefits paid...................................... (938) (902)
-------- --------
Benefit obligation at end of year.................... 13,273 12,512
Change in plan assets:
Fair value of plan assets at beginning and end of
year.............................................. -- --
-------- --------
Funded status of the plan (underfunded).............. (13,273) (12,512)
Unrecognized net actuarial loss...................... 3,460 3,164
Unrecognized prior service cost...................... 429 659
Unrecognized net asset at January 1, 1987 being
recognized over 15 years............................ 260 389
Adjustment to recognized minimum liability........... (2,212) (2,789)
-------- --------
Accrued pension cost................................. (11,336) (11,089)
Accrued benefit liability............................ 10,648 10,041
Intangible asset..................................... 688 1,048
-------- --------
Net amount recognized................................ $ -- $ --
======== ========
</TABLE>
F-21
<PAGE>
BUSINESS MEN'S ASSURANCE COMPANY OF AMERICA
(A Member of the Generali Group of Companies)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Net pension cost included the following components:
<TABLE>
<CAPTION>
Year ended December
31
--------------------
1999 1998 1997
------ ------ ------
(In Thousands)
<S> <C> <C> <C>
Service cost--benefits earned during the period..... $ 292 $ 235 $ 190
Interest cost on projected benefit obligation....... 844 813 783
Net amortization and deferral....................... 626 541 469
------ ------ ------
Net pension cost.................................... $1,762 $1,589 $1,442
====== ====== ======
</TABLE>
In determining the actuarial present value of the projected benefit
obligation, the weighted-average discount rate utilized was 7.75% for 1999, 7%
for 1998 and 7.5% for 1997. The rate of increase in future compensation levels
used was 5.25% for 1999, 4.5% for 1998 and 5% for 1997.
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 $1,086,000 in 1999, $1,153,000 in 1998 and $1,099,000 in 1997.
Participants are fully vested in the Company match after five years of
service.
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 no costs
related to this plan in 1999, $33,000 in 1998 and $230,000 in 1997.
F-22
<PAGE>
BUSINESS MEN'S ASSURANCE COMPANY OF AMERICA
(A Member of the Generali Group of Companies)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
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:
<TABLE>
<CAPTION>
December 31
------------------
1999 1998
-------- --------
(In Thousands)
<S> <C> <C>
Change in benefit obligations:
Projected benefit obligation at beginning of year. $ 11,401 $ 11,490
Service cost...................................... 112 108
Interest cost..................................... 760 777
Actuarial (gains) losses.......................... (73) 260
Benefits paid..................................... (1,545) (1,234)
-------- --------
Projected benefit obligation at end of year......... 10,655 11,401
Change in plan assets:
Fair value of plan assets at beginning and end of
year............................................. -- --
-------- --------
Funded status of the plan (underfunded)............. (10,655) (11,401)
Unrecognized net actuarial loss..................... 455 529
Unrecognized prior service cost..................... 1,921 2,215
Unrecognized transition obligation.................. 3,814 4,107
-------- --------
Accrued pension cost................................ (4,465) (4,550)
Accrued benefit liability........................... 4,465 4,550
-------- --------
Net amount recognized............................... $ -- $ --
======== ========
</TABLE>
Net periodic postretirement benefit cost includes the following components:
<TABLE>
<CAPTION>
Year ended December
31
--------------------
1999 1998 1997
------ ------ ------
(In Thousands)
<S> <C> <C> <C>
Service cost........................................ $ 112 $ 108 $ 122
Interest cost....................................... 760 777 878
Amortization of transition obligation over 20 years. 293 293 327
Amortization of past service costs.................. 294 295 407
------ ------ ------
Net periodic benefit cost........................... 1,459 1,473 1,734
Plan curtailment adjustment......................... -- 770 --
------ ------ ------
Final periodic postretirement benefit cost.......... $1,459 $2,243 $1,734
====== ====== ======
</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.
F-23
<PAGE>
BUSINESS MEN'S ASSURANCE COMPANY OF AMERICA
(A Member of the Generali Group of Companies)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
The weighted-average discount rate used in determining the accumulated
postretirement benefit obligation was 7.75%, 7.00% and 7.25% at December 31,
1999, 1998 and 1997, respectively.
As part 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>
Year ended December 31
-----------------------------
1999 1998 1997
--------- -------- --------
(In Thousands)
<S> <C> <C> <C>
Direct.................................... $ 144,224 $118,315 $118,192
Assumed................................... 174,794 152,844 134,541
Ceded..................................... (78,023) (73,466) (54,613)
--------- -------- --------
Total net premium......................... 240,995 197,693 198,120
Less net premium from discontinued
operations............................... (104,465) (71,002) (72,269)
--------- -------- --------
Total net premium from continuing
operations............................... $ 136,530 $126,691 $125,851
========= ======== ========
</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, 1999, the Company had
ceded to other life insurance companies individual life insurance in force of
approximately $33.1 billion and group life of approximately $1.2 billion.
Benefits and reserves ceded to other insurers amounted to $73,536,000,
$54,670,000 and $42,069,000 during the years ended December 31, 1999, 1998 and
1997, respectively. At December 31, 1999 and 1998, policy reserves ceded to
other insurers were $89,362,000 and $77,460,000, respectively. Claim reserves
ceded amounted to $22,153,000 and $18,016,000 at December 31, 1999 and 1998,
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.
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 1999, 1998 or
1997. The Company retrocedes a portion of the life insurance it assumes to
Generali. In accordance with this agreement, the Company ceded premiums of
$575,000, $756,000 and $873,000 during 1999, 1998 and 1997, respectively. The
Company ceded claims of $121,000 during 1999, $240,000 during 1998 and no
claims during 1997.
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, $9 million, $8 million and $35
million in account balances were ceded to Generali in 1999, 1998 and 1997,
respectively, and Generali loaned such amounts back to the Company. Account
balances ceded and loaned back at December 31, 1999 and
F-24
<PAGE>
BUSINESS MEN'S ASSURANCE COMPANY OF AMERICA
(A Member of the Generali Group of Companies)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
1998 were $184 million and $196 million, respectively. The recoverable amount
from Generali was offset against the loan. The net expense related to this
agreement was $2,034,000, $1,564,000 and $1,895,000 for the years ended
December 31, 1999, 1998 and 1997, respectively. The Company held payables to
Generali of $627,000 and $771,000 at December 31, 1999 and 1998, 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 (loss)" in
stockholder's equity are summarized as follows:
<TABLE>
<CAPTION>
December 31
----------------------
1999 1998
-------- -------
(In Thousands)
<S> <C> <C> <C>
Net unrealized gains (losses) on securities:
Fixed maturities................................. $(53,500) $19,416
Equity securities................................ (1,898) 4,159
Securities held in separate account.............. (9,315) 1,593
Other............................................ 148 (438)
-------- -------
Net unrealized gains (losses)...................... (64,565) 24,730
Adjustment to deferred policy acquisition costs.... 13,655 (8,707)
Adjustment to unearned revenue reserve............. (885) 485
Deferred income taxes.............................. 10,128 (5,778)
-------- -------
Net unrealized gains (losses)...................... $(41,667) $10,730
======== =======
</TABLE>
12. Borrowed Money
The Company has an outstanding liability for borrowed money in the amount
of $35,015,000 as of December 31, 1999, which is included in other
liabilities. This includes $28,400,000 that is a 90-day reverse repurchase
agreement due February 11, 2000 at a rate of 5.70%. Pledged collateral for
this debt consists of GNMA and FNMA securities with a face amount of
$36,509,000. On the trade date of this agreement, November 10, 1999, these
securities had a market value of $31,710,000. The remaining $6,615,000 are two
separate longer term items through the Federal Home Loan Bank: $3,535,000 is
due January 16, 2002 at a rate of 6.36% and $3,080,000 is due August 2, 2001
at a rate of 6.33%. The Company has the ability to borrow up to $80 million
from the Federal Home Loan Bank. The Company's intent is to take advantage of
investment opportunities by matching borrowing maturities to asset maturities
that have a favorable interest rate spread.
13. Discontinued Operations
In October of 1999, the Company adopted a plan to dispose of its group
insurance line of business. Accordingly, the group line of business was
considered a discontinued operation during the year ended 1999 and the
consolidated statement of operations for 1999, 1998 and 1997 separately
reported the operating results of the discontinued operations, net of related
income taxes.
The Company reached an agreement to sell the group line of business in
January 2000 and expects to close the sale in 2000. The Company estimates that
a gain on the disposal of this line of business will be realized and
recognized in 2000.
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.(a) Form of Fund Participation Agreement**
8.(b) Form of Fund Participation Agreement among Variable Insurance
Products Fund, Fidelity Distributors Corporation and the Company
8.(c) Form of Fund Participation Agreement among Variable Insurance
Products Fund II, Fidelity Distributors Corporation and the Company
8.(d) Form of Fund Participation Agreement among The Alger American Fund,
Fred Alger and Company, Incorporated and the Company
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.
+++ Incorporated by reference to Registrant's Post-Effective Amendment No. 7
to Form N-4, as electronically filed on December 29, 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
William Thomas Grant II Director
Donald Joyce Hall, Jr. Director
Allan Drue Jennings Director
David Woods Kemper Director
John Kessander Lundberg Director
John Pierre Mascotte Director
Andrea Rabusin Director
Renzo Isler Director
Mel G. Carvill 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 March 31, 2000, there were 69 Non-Qualified Contract Owners and
27 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 19th day of April,
2000.
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 4/19/00
Giorgio Balzer and Chief Executive Officer ---------
Date
Thomas Morton Bloch* 4/19/00
- - - --------------------- Director ---------
Thomas Morton Bloch Date
Mel G. Carvill*
- ------------------------- 4/19/00
Mel G. Carvill Director ----------
William Thomas Grant II * 4/19/00
- - - --------------------------- Director ---------
William Thomas Grant II Date
Donald Joyce Hall, Jr.* 4/19/00
- - - --------------------------- Director ---------
Donald Joyce Hall, Jr. Date
Renzo Isler* 4/19/00
- ------------------------------- Director ---------
Renzo Isler Date
Allan Drue Jennings* 4/19/00
- - - --------------------------- Director ---------
Allan Drue Jennings Date
David Woods Kemper* 4/19/00
- - - --------------------------- Director ---------
David Woods Kemper Date
- - - --------------------------- Director ---------
Andrea Rabusin Date
John Kessander Lundberg* 4/19/00
- - - --------------------------- Director ---------
John Kessander Lundberg Date
John Pierre Mascotte* 4/19/00
- - - ---------------------------- Director ---------
John Pierre Mascotte Date
/S/ ROBERT THOMAS RAKICH 4/19/00
- - - --------------------------- Director, President and Chief ---------
Robert Thomas Rakich Operating Officer Date
/S/ VERNON WIRT VOORHEES II 4/19/00
- - - --------------------------- Director, Senior Vice President - ---------
Vernon Wirt Voorhees II Corporate Services & Secretary Date
/S/ DAVID L. HIGLEY 4/19/00
- - - -------------------------- Senior Vice President & Chief ---------
David Lee Higley Financial Officer Date
/S/ SUSAN A. SWEENEY 4/19/00
- - - ------------------------- Vice President - Treasurer & ----------
Susan Annette Sweeney Controller Date
</TABLE>
*By: /S/ VERNON W. VOORHEES II
----------------------------
Attorney-in-Fact
*By: /S/ ROBERT THOMAS RAKICH
-----------------------------
Attorney-in-Fact
LIMITED POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that I, Renzo Isler, a Director of Business Men's
Assurance Company of America (the "Company"), a corporation duly organized under
the laws of the state of Missouri, do hereby appoint Robert T. Rakich and Vernon
W. Voorhees, each individually, as my attorney and agent, for me, and in my name
as a Director of the Company on behalf of the company or otherwise, with full
power to execute, deliver and file with the Securities and Exchange Commission
all documents required for registration of a security under the Securities Act
of 1933, as amended, and the Investment Company Act of 1940, as amended, and do
and perform each and every act that said attorney may deem necessary or
advisable to comply with the intent of the aforesaid Acts.
WITNESS my hand and seal this fourteenth day of April, 2000.
WITNESS:
/S/ RENZO ISLER
- ---------------------------
LIMITED POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that I, Mel G. Carvill, a Director of Business
Men's Assurance Company of America (the "Company"), a corporation duly organized
under the laws of the state of Missouri, do hereby appoint Robert T. Rakich and
Vernon W. Voorhees, each individually, as my attorney and agent, for me, and in
my name as a Director of the Company on behalf of the company or otherwise, with
full power to execute, deliver and file with the Securities and Exchange
Commission all documents required for registration of a security under the
Securities Act of 1933, as amended, and the Investment Company Act of 1940, as
amended, and do and perform each and every act that said attorney may deem
necessary or advisable to comply with the intent of the aforesaid Acts.
WITNESS my hand and seal this fourteenth day of April, 2000.
WITNESS:
/S/ MEL G. CARVILL
- ---------------------------
EXHIBITS
TO
POST-EFFECTIVE AMENDMENT NO. 8 TO
FORM N-4
BMA VARIABLE ANNUITY ACCOUNT A
BUSINESS MEN'S ASSURANCE COMPANY OF AMERICA
INDEX TO EXHIBITS
Exhibit Page
EX-99.B8.(b) Form of Fund Participation Agreement among Variable Insurance
Products Fund, Fidelity Distributors Corporation and the Company
EX-99.B8.(c) Form of Fund Participation Agreement among Variable Insurance
Products Fund II, Fidelity Distributors Corporation and the
Company
EX-99.B8(d) Form of Fund Participation Agreement among The Alger American
Fund,
Fred Alger and Company, Incorporated and the Company
EX-99.B9 Opinion and Consent of Counsel
EX-99.B10 Independent Auditors' Consent
EX-99.B13 Calculation of Performance Information
PARTICIPATION AGREEMENT
Among
VARIABLE INSURANCE PRODUCTS FUND,
FIDELITY DISTRIBUTORS CORPORATION
and
BUSINESS MEN'S ASSURANCE COMPANY OF AMERICA
THIS AGREEMENT, made and entered into as of the 1st day of May, 2000 by and
among BUSINESS MEN'S ASSURANCE COMPANY OF AMERICA, (hereinafter the "Company"),
a Missouri corporation, on its own behalf and on behalf of each segregated asset
account of the Company set forth on Schedule A hereto as may be amended from
time to time (each such account hereinafter referred to as the "Account"), and
the VARIABLE INSURANCE PRODUCTS FUND, an unincorporated business trust organized
under the laws of the Commonwealth of Massachusetts (hereinafter the "Fund") and
FIDELITY DISTRIBUTORS CORPORATION (hereinafter the "Underwriter"), a
Massachusetts corporation.
WHEREAS, the Fund engages in business as an open-end management investment
company and is available to act as the investment vehicle for separate accounts
established for variable life insurance policies and variable annuity contracts
(collectively, the "Variable Insurance Products") to be offered by insurance
companies which have entered into participation agreements with the Fund and the
Underwriter (hereinafter "Participating Insurance Companies"); and
WHEREAS, the beneficial interest in the Fund is divided into several series
of shares, each representing the interest in a particular managed portfolio of
securities and other assets, any one or more of which may be made available
under this Agreement, as may be amended from time to time by mutual agreement of
the parties hereto (each such series hereinafter referred to as a "Portfolio");
and
WHEREAS, the Fund has obtained an order from the Securities and Exchange
Commission, dated October 15, 1985 (File No. 812-6102), granting Participating
Insurance Companies and variable annuity and variable life insurance separate
accounts exemptions from the provisions of sections 9(a), 13(a), 15(a), and
15(b) of the Investment Company Act of 1940, as amended, (hereinafter the "1940
Act") and Rules 6e-2(b) (15) and 6e-3(T) (b) (15) thereunder, to the extent
necessary to permit shares of the Fund to be sold to and held by variable
annuity and variable life insurance separate accounts of both affiliated and
unaffiliated life insurance companies (hereinafter the "Shared Funding Exemptive
Order"); and
WHEREAS, the Fund is registered as an open-end management investment
company under the 1940 Act and its shares are registered under the Securities
Act of 1933, as amended (hereinafter the "1933 Act"); and
WHEREAS, Fidelity Management & Research Company (the "Adviser") is duly
registered as an investment adviser under the federal Investment Advisers Act of
1940 and any applicable state securities law; and
WHEREAS, the Company has registered or will register certain variable life
insurance and/or variable annuity products identified on Exhibit A hereto
("Contracts") under the 1933 Act; and
WHEREAS, each Account is a duly organized, validly existing segregated
asset account, established by resolution of the Board of Directors of the
Company, on the date shown for such Account on Schedule A hereto, to set aside
and invest assets attributable to the aforesaid variable annuity contracts; and
WHEREAS, the Company has registered or will register each Account as a unit
investment trust under the 1940 Act; and
WHEREAS, the Underwriter is registered as a broker dealer with the
Securities and Exchange Commission ("SEC") under the Securities Exchange Act of
1934, as amended, (hereinafter the "1934 Act"), and is a member in good standing
of the National Association of Securities Dealers, Inc. (hereinafter "NASD");
and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company intends to purchase shares in the Portfolios on behalf
of each Account to fund certain of the aforesaid Contracts and the Underwriter
is authorized to sell such shares to unit investment trusts such as each Account
at net asset value;
NOW, THEREFORE, in consideration of their mutual promises, the Company, the
Fund and the Underwriter agree as follows:
ARTICLE I. Sale of Fund Shares
1.1. The Underwriter agrees to sell to the Company those shares of the Fund
which each Account orders, executing such orders on a daily basis at the net
asset value next computed after receipt by the Fund or its designee of the order
for the shares of the Fund. For purposes of this Section 1.1, the Company shall
be the designee of the Fund for receipt of such orders from each Account and
receipt by such designee shall constitute receipt by the Fund; provided that the
Fund receives notice of such order by 9:00 a.m. Boston time on the next
following Business Day. Beginning within three months of the effective date of
this Agreement, Company agrees that orders for the purchase or redemption of
shares of the Funds on behalf of the Accounts will be placed directly by Company
with the Funds or their transfer agent by electronic transmission. "Business
Day" shall mean any day on which the New York Stock Exchange is open for trading
and on which the Fund calculates its net asset value pursuant to the rules of
the Securities and Exchange Commission.
1.2. The Fund agrees to make its shares available indefinitely for purchase
at the applicable net asset value per share by the Company and its Accounts on
those days on which the Fund calculates its net asset value pursuant to rules of
the Securities and Exchange Commission and the Fund shall use reasonable efforts
to calculate such net asset value on each day which the New York Stock Exchange
is open for trading. Notwithstanding the foregoing, the Board of Trustees of the
Fund (hereinafter the "Board") may refuse to sell shares of any Portfolio to any
person, or suspend or terminate the offering of shares of any Portfolio if such
action is required by law or by regulatory authorities having jurisdiction or
is, in the sole discretion of the Board acting in good faith and in light of
their fiduciary duties under federal and any applicable state laws, necessary in
the best interests of the shareholders of such Portfolio.
1.3. The Fund and the Underwriter agree that shares of the Fund will be
sold only to Participating Insurance Companies and their separate accounts
and/or to qualified plans. No shares of any Portfolio will be sold to the
general public.
1.4. The Fund and the Underwriter will not sell Fund shares to any
insurance company or separate account unless an agreement containing provisions
substantially the same as Articles I, III, V, VII and Section 2.5 of Article II
of this Agreement is in effect to govern such sales.
1.5. The Fund agrees to redeem for cash, on the Company's request, any full
or fractional shares of the Fund held by the Company, executing such requests on
a daily basis at the net asset value next computed after receipt by the Fund or
its designee of the request for redemption. For purposes of this Section 1.5,
the Company shall be the designee of the Fund for receipt of requests for
redemption from each Account and receipt by such designee shall constitute
receipt by the Fund; provided that the Fund receives notice of such request for
redemption on the next following Business Day.
1.6. The Company agrees that purchases and redemptions of Portfolio shares
offered by the then current prospectus of the Fund shall be made in accordance
with the provisions of such prospectus.
1.7. The Company shall pay for Fund shares on the next Business Day after
an order to purchase Fund shares is made in accordance with the provisions of
Section 1.1 hereof. Payment shall be in federal funds transmitted by wire. For
purpose of Section 2.10 and 2.11, upon receipt by the Fund of the federal funds
so wired, such funds shall cease to be the responsibility of the Company and
shall become the responsibility of the Fund.
1.8. Issuance and transfer of the Fund's shares will be by book entry only.
Stock certificates will not be issued to the Company or any Account. Shares
ordered from the Fund will be recorded in an appropriate title for each Account
or the appropriate subaccount of each Account.
1.9. The Fund shall furnish same day notice (by wire or telephone, followed
by written confirmation) to the Company of any income, dividends or capital gain
distributions payable on the Fund's shares. The Company hereby elects to receive
all such income dividends and capital gain distributions as are payable on the
Portfolio shares in additional shares of that Portfolio. The Company reserves
the right to revoke this election and to receive all such income dividends and
capital gain distributions in cash. The Fund shall notify the Company of the
number of shares so issued as payment of such dividends and distributions.
1.10. The Fund shall make the net asset value per share for each Portfolio
available to the Company on a daily basis as soon as reasonably practical after
the net asset value per share is calculated (normally by 6:30 p.m. Boston time)
and shall use its best efforts to make such net asset value per share available
by 7 p.m. Boston time.
ARTICLE II. Representations and Warranties
2.1. The Company represents and warrants that the Contracts are or will be
registered under the 1933 Act; that the Contracts will be issued and sold in
compliance in all material respects with all applicable Federal and State laws
and that the sale of the Contracts shall comply in all material respects with
state insurance suitability requirements. The Company further represents and
warrants that it is an insurance company duly organized and in good standing
under applicable law and that it has legally and validly established each
Account prior to any issuance or sale thereof as a segregated asset account
under the Missouri Insurance Code and has registered or, prior to any issuance
or sale of the Contracts, will register each Account as a unit investment trust
in accordance with the provisions of the 1940 Act to serve as a segregated
investment account for the Contracts.
2.2. The Fund represents and warrants that Fund shares sold pursuant to
this Agreement shall be registered under the 1933 Act, duly authorized for
issuance and sold in compliance with the laws of the State of Missouri and all
applicable federal and state securities laws and that the Fund is and shall
remain registered under the 1940 Act. The Fund shall amend the Registration
Statement for its shares under the 1933 Act and the 1940 Act from time to time
as required in order to effect the continuous offering of its shares. The Fund
shall register and qualify the shares for sale in accordance with the laws of
the various states only if and to the extent deemed advisable by the Fund or the
Underwriter.
2.3. The Fund represents that it is currently qualified as a Regulated
Investment Company under Subchapter M of the Internal Revenue Code of 1986, as
amended, (the "Code") and that it will make every effort to maintain such
qualification (under Subchapter M or any successor or similar provision) and
that it will notify the Company immediately upon having a reasonable basis for
believing that it has ceased to so qualify or that it might not so qualify in
the future.
2.4. The Company represents that the Contracts are currently treated as
endowment, life insurance or annuity insurance contracts, under applicable
provisions of the Code and that it will make every effort to maintain such
treatment and that it will notify the Fund and the Underwriter immediately upon
having a reasonable basis for believing that the Contracts have ceased to be so
treated or that they might not be so treated in the future.
2.5. (a) With respect to Initial Class shares, the Fund currently does not
intend to make any payments to finance distribution expenses pursuant to Rule
12b-1 under the 1940 Act or otherwise, although it may make such payments in the
future. The Fund has adopted a "no fee" or "defensive" Rule 12b-1 Plan under
which it makes no payments for distribution expenses. To the extent that it
decides to finance distribution expenses pursuant to Rule 12b-1, the Fund
undertakes to have a board of trustees, a majority of whom are not interested
persons of the Fund, formulate and approve any plan under Rule 12b-1 to finance
distribution expenses.
(b) With respect to Service Class shares and Service Class 2 shares, the
Fund has adopted Rule 12b-1 Plans under which it makes payments to finance
distribution expenses. The Fund represents and warrants that it has a board of
trustees, a majority of whom are not interested persons of the Fund, which has
formulated and approved each of its Rule 12b-1 Plans to finance distribution
expenses of the Fund and that any changes to the Fund's Rule 12b-1 Plans will be
approved by a similarly constituted board of trustees.
2.6. The Fund makes no representation as to whether any aspect of its
operations (including, but not limited to, fees and expenses and investment
policies) complies with the insurance laws or regulations of the various states
except that the Fund represents that the Fund's investment policies, fees and
expenses are and shall at all times remain in compliance with the laws of the
State of Missouri and the Fund and the Underwriter represent that their
respective operations are and shall at all times remain in material compliance
with the laws of the State of Missouri to the extent required to perform this
Agreement.
2.7. The Underwriter represents and warrants that it is a member in good
standing of the NASD and is registered as a broker-dealer with the SEC. The
Underwriter further represents that it will sell and distribute the Fund shares
in accordance with the laws of the Commonwealth of Massachusetts and all
applicable state and federal securities laws, including without limitation the
1933 Act, the 1934 Act, and the 1940 Act.
2.8. The Fund represents that it is lawfully organized and validly existing
under the laws of the Commonwealth of Massachusetts and that it does and will
comply in all material respects with the 1940 Act.
2.9. The Underwriter represents and warrants that the Adviser is and shall
remain duly registered in all material respects under all applicable federal and
state securities laws and that the Adviser shall perform its obligations for the
Fund in compliance in all material respects with the laws of the Commonwealth of
Massachusetts and any applicable state and federal securities laws.
2.10. The Fund and Underwriter represent and warrant that all of their
directors, officers, employees, investment advisers, and other
individuals/entities dealing with the money and/or securities of the Fund are
and shall continue to be at all times covered by a blanket fidelity bond or
similar coverage for the benefit of the Fund in an amount not less than the
minimal coverage as required currently by Rule 17g-(1) of the 1940 Act or
related provisions as may be promulgated from time to time. The aforesaid Bond
shall include coverage for larceny and embezzlement and shall be issued by a
reputable bonding company.
2.11. The Company represents and warrants that all of its directors,
officers, employees, investment advisers, and other individuals/entities dealing
with the money and/or securities of the Fund are covered by a blanket fidelity
bond or similar coverage for the benefit of the Fund, and that said bond is
issued by a reputable bonding company, includes coverage for larceny and
embezzlement, and is in an amount not less than $5 million. The Company agrees
to make all reasonable efforts to see that this bond or another bond containing
these provisions is always in effect, and agrees to notify the Fund and the
Underwriter in the event that such coverage no longer applies.
ARTICLE III. Prospectuses and Proxy Statements; Voting
3.1. The Underwriter shall provide the Company with as many printed copies
of the Fund's current prospectus and Statement of Additional Information as the
Company may reasonably request. If requested by the Company in lieu thereof, the
Fund shall provide camera-ready film containing the Fund's prospectus and
Statement of Additional Information, and such other assistance as is reasonably
necessary, including a diskette in form sent to the financial printer, in order
for the Company once each year (or more frequently if the prospectus and/or
Statement of Additional Information for the Fund is amended during the year) to
have the prospectus for the Contracts and the Fund's prospectus printed together
in one document, and to have the Statement of Additional Information for the
Fund and the Statement of Additional Information for the Contracts printed
together in one document. Alternatively, the Company may print the Fund's
prospectus and/or its Statement of Additional Information in combination with
other fund companies' prospectuses and statements of additional information.
Except as provided in the following three sentences, all expenses of printing
and distributing Fund prospectuses and Statements of Additional Information
shall be the expense of the Company. For prospectuses and Statements of
Additional Information provided by the Company to its existing owners of
Contracts in order to update disclosure annually as required by the 1933 Act
and/or the 1940 Act, the cost of printing shall be borne by the Fund. If the
Company chooses to receive camera-ready film or diskette in lieu of receiving
printed copies of the Fund's prospectus, the Fund will reimburse the Company in
an amount equal to the product of A and B where A is the number of such
prospectuses distributed to owners of the Contracts, and B is the Fund's per
unit cost of typesetting and printing the Fund's prospectus. The same procedures
shall be followed with respect to the Fund's Statement of Additional
Information.
The Company agrees to provide the Fund or its designee with such
information as may be reasonably requested by the Fund to assure that the Fund's
expenses do not include the cost of printing any prospectuses or Statements of
Additional Information other than those actually distributed to existing owners
of the Contracts.
3.2. The Fund's prospectus shall state that the Statement of Additional
Information for the Fund is available from the Underwriter or the Company (or in
the Fund's discretion, the Prospectus shall state that such Statement is
available from the Fund).
3.3. The Fund, at its expense, shall provide the Company with copies of its
proxy statements, reports to shareholders, and other communications (except for
prospectuses and Statements of Additional Information, which are covered in
Section 3.1) to shareholders in such quantity as the Company shall reasonably
require for distributing to Contract owners.
3.4. If and to the extent required by law the Company shall:
(i) solicit voting instructions from Contract owners;
(ii) vote the Fund shares in accordance with instructions received
from Contract owners; and
(iii)vote Fund shares for which no instructions have been received in
a particular separate account in the same proportion as Fund
shares of such portfolio for which instructions have been
received in that separate account,
so long as and to the extent that the Securities and Exchange
Commission continues to interpret the 1940 Act to require
pass-through voting privileges for variable contract owners. The
Company reserves the right to vote Fund shares held in any
segregated asset account in its own right, to the extent
permitted by law. Participating Insurance Companies shall be
responsible for assuring that each of their separate accounts
participating in the Fund calculates voting privileges in a
manner consistent with the standards set forth on Schedule B
attached hereto and incorporated herein by this reference, which
standards will also be provided to the other Participating
Insurance Companies.
3.5. The Fund will comply with all provisions of the 1940 Act requiring
voting by shareholders, and in particular the Fund will either provide for
annual meetings or comply with Section 16(c) of the 1940 Act (although the Fund
is not one of the trusts described in Section 16(c) of that Act) as well as with
Sections 16(a) and, if and when applicable, 16(b). Further, the Fund will act in
accordance with the Securities and Exchange Commission's interpretation of the
requirements of Section 16(a) with respect to periodic elections of trustees and
with whatever rules the Commission may promulgate with respect thereto.
ARTICLE IV. Sales Material and Information
4.1. The Company shall furnish, or shall cause to be furnished, to the Fund
or its designee, each piece of sales literature or other promotional material in
which the Fund or its investment adviser or the Underwriter is named, at least
fifteen Business Days prior to its use. No such material shall be used if the
Fund or its designee reasonably objects to such use within fifteen Business Days
after receipt of such material.
4.2. The Company shall not give any information or make any representations
or statements on behalf of the Fund or concerning the Fund in connection with
the sale of the Contracts other than the information or representations
contained in the registration statement or prospectus for the Fund shares, as
such registration statement and prospectus may be amended or supplemented from
time to time, or in reports or proxy statements for the Fund, or in sales
literature or other promotional material approved by the Fund or its designee or
by the Underwriter, except with the permission of the Fund or the Underwriter or
the designee of either.
4.3. The Fund, Underwriter, or its designee shall furnish, or shall cause
to be furnished, to the Company or its designee, each piece of sales literature
or other promotional material in which the Company and/or its separate
account(s), is named at least fifteen Business Days prior to its use. No such
material shall be used if the Company or its designee reasonably objects to such
use within fifteen Business Days after receipt of such material.
4.4. The Fund and the Underwriter shall not give any information or make
any representations on behalf of the Company or concerning the Company, each
Account, or the Contracts other than the information or representations
contained in a registration statement or prospectus for the Contracts, as such
registration statement and prospectus may be amended or supplemented from time
to time, or in published reports for each Account which are in the public domain
or approved by the Company for distribution to Contract owners, or in sales
literature or other promotional material approved by the Company or its
designee, except with the permission of the Company.
4.5. The Fund will provide to the Company at least one complete copy of all
registration statements, prospectuses, Statements of Additional Information,
reports, proxy statements, sales literature and other promotional materials,
applications for exemptions, requests for no-action letters, and all amendments
to any of the above, that relate to the Fund or its shares, contemporaneously
with the filing of such document with the Securities and Exchange Commission or
other regulatory authorities.
4.6. The Company will provide to the Fund at least one complete copy of all
registration statements, prospectuses, Statements of Additional Information,
reports, solicitations for voting instructions, sales literature and other
promotional materials, applications for exemptions, requests for no action
letters, and all amendments to any of the above, that relate to the Contracts or
each Account, contemporaneously with the filing of such document with the SEC or
other regulatory authorities.
4.7. For purposes of this Article IV, the phrase "sales literature or other
promotional material" includes, but is not limited to, any of the following that
refer to the Fund or any affiliate of the Fund: advertisements (such as material
published, or designed for use in, a newspaper, magazine, or other periodical,
radio, television, telephone or tape recording, videotape display, signs or
billboards, motion pictures, or other public media), sales literature (i.e., any
written communication distributed or made generally available to customers or
the public, including brochures, circulars, research reports, market letters,
form letters, seminar texts, reprints or excerpts of any other advertisement,
sales literature, or published article), educational or training materials or
other communications distributed or made generally available to some or all
agents or employees, and registration statements, prospectuses, Statements of
Additional Information, shareholder reports, and proxy materials.
ARTICLE V. Fees and Expenses
5.1. The Fund and Underwriter shall pay no fee or other compensation to the
Company under this agreement, except that if the Fund or any Portfolio adopts
and implements a plan pursuant to Rule 12b-1 to finance distribution expenses,
then the Underwriter may make payments to the Company or to the underwriter for
the Contracts if and in amounts agreed to by the Underwriter in writing and such
payments will be made out of existing fees otherwise payable to the Underwriter,
past profits of the Underwriter or other resources available to the Underwriter.
No such payments shall be made directly by the Fund.
5.2. All expenses incident to performance by the Fund under this Agreement
shall be paid by the Fund. The Fund shall see to it that all its shares are
registered and authorized for issuance in accordance with applicable federal law
and, if and to the extent deemed advisable by the Fund, in accordance with
applicable state laws prior to their sale. The Fund shall bear the expenses for
the cost of registration and qualification of the Fund's shares, preparation and
filing of the Fund's prospectus and registration statement, proxy materials and
reports, setting the prospectus in type, setting in type and printing the proxy
materials and reports to shareholders (including the costs of printing a
prospectus that constitutes an annual report), the preparation of all statements
and notices required by any federal or state law, and all taxes on the issuance
or transfer of the Fund's shares.
5.3. The Company shall bear the expenses of distributing the Fund's
prospectus and reports to owners of Contracts issued by the Company. The Fund
shall bear the costs of soliciting Fund proxies from Contract owners, including
the costs of mailing proxy materials and tabulating proxy voting instructions,
not to exceed the costs charged by any service provider engaged by the Fund for
this purpose. The Fund and the Underwriter shall not be responsible for the
costs of any proxy solicitations other than proxies sponsored by the Fund.
ARTICLE VI. Diversification
6.1. The Fund will at all times invest money from the Contracts in such a
manner as to ensure that the Contracts will be treated as variable contracts
under the Code and the regulations issued thereunder. Without limiting the scope
of the foregoing, the Fund will at all times comply with Section 817(h) of the
Code, including without limitation subsection 817(h)(4) thereof, and Treasury
Regulation 1.817-5, relating to the diversification requirements for variable
annuity, endowment, or life insurance contracts and any amendments or other
modifications to such Section or Regulations. In the event of a breach of this
Article VI by the Fund, it will take all reasonable steps (a) to notify Company
of such breach and (b) to adequately diversify the Fund so as to achieve
compliance within the grace period afforded by Regulation 1.817-5.
ARTICLE VII. Potential Conflicts
7.1. The Board will monitor the Fund for the existence of any material
irreconcilable conflict between the interests of the contract owners of all
separate accounts investing in the Fund. An irreconcilable material conflict may
arise for a variety of reasons, including: (a) an action by any state insurance
regulatory authority; (b) a change in applicable federal or state insurance,
tax, or securities laws or regulations, or a public ruling, private letter
ruling, no-action or interpretative letter, or any similar action by insurance,
tax, or securities regulatory authorities; (c) an administrative or judicial
decision in any relevant proceeding; (d) the manner in which the investments of
any Portfolio are being managed; (e) a difference in voting instructions given
by variable annuity contract and variable life insurance contract owners; or (f)
a decision by an insurer to disregard the voting instructions of contract
owners. The Board shall promptly inform the Company if it determines that an
irreconcilable material conflict exists and the implications thereof.
7.2. The Company will report any potential or existing conflicts of which
it is aware to the Board. The Company will assist the Board in carrying out its
responsibilities under the Shared Funding Exemptive Order, by providing the
Board with all information reasonably necessary for the Board to consider any
issues raised. This includes, but is not limited to, an obligation by the
Company to inform the Board whenever contract owner voting instructions are
disregarded.
7.3. If it is determined by a majority of the Board, or a majority of its
disinterested trustees, that a material irreconcilable conflict exists, the
Company and other Participating Insurance Companies shall, at their expense and
to the extent reasonably practicable (as determined by a majority of the
disinterested trustees), take whatever steps are necessary to remedy or
eliminate the irreconcilable material conflict, up to and including: (1),
withdrawing the assets allocable to some or all of the separate accounts from
the Fund or any Portfolio and reinvesting such assets in a different investment
medium, including (but not limited to) another Portfolio of the Fund, or
submitting the question whether such segregation should be implemented to a vote
of all affected Contract owners and, as appropriate, segregating the assets of
any appropriate group (i.e., annuity contract owners, life insurance contract
owners, or variable contract owners of one or more Participating Insurance
Companies) that votes in favor of such segregation, or offering to the affected
contract owners the option of making such a change; and (2), establishing a new
registered management investment company or managed separate account.
7.4. If a material irreconcilable conflict arises because of a decision by
the Company to disregard contract owner voting instructions and that decision
represents a minority position or would preclude a majority vote, the Company
may be required, at the Fund's election, to withdraw the affected Account's
investment in the Fund and terminate this Agreement with respect to such
Account; provided, however that such withdrawal and termination shall be limited
to the extent required by the foregoing material irreconcilable conflict as
determined by a majority of the disinterested members of the Board. Any such
withdrawal and termination must take place within six (6) months after the Fund
gives written notice that this provision is being implemented, and until the end
of that six month period the Underwriter and Fund shall continue to accept and
implement orders by the Company for the purchase (and redemption) of shares of
the Fund.
7.5. If a material irreconcilable conflict arises because a particular
state insurance regulator's decision applicable to the Company conflicts with
the majority of other state regulators, then the Company will withdraw the
affected Account's investment in the Fund and terminate this Agreement with
respect to such Account within six months after the Board informs the Company in
writing that it has determined that such decision has created an irreconcilable
material conflict; provided, however, that such withdrawal and termination shall
be limited to the extent required by the foregoing material irreconcilable
conflict as determined by a majority of the disinterested members of the Board.
Until the end of the foregoing six month period, the Underwriter and Fund shall
continue to accept and implement orders by the Company for the purchase (and
redemption) of shares of the Fund.
7.6. For purposes of Sections 7.3 through 7.6 of this Agreement, a majority
of the disinterested members of the Board shall determine whether any proposed
action adequately remedies any irreconcilable material conflict, but in no event
will the Fund be required to establish a new funding medium for the Contracts.
The Company shall not be required by Section 7.3 to establish a new funding
medium for the Contracts if an offer to do so has been declined by vote of a
majority of Contract owners materially adversely affected by the irreconcilable
material conflict. In the event that the Board determines that any proposed
action does not adequately remedy any irreconcilable material conflict, then the
Company will withdraw the Account's investment in the Fund and terminate this
Agreement within six (6) months after the Board informs the Company in writing
of the foregoing determination, provided, however, that such withdrawal and
termination shall be limited to the extent required by any such material
irreconcilable conflict as determined by a majority of the disinterested members
of the Board.
7.7. If and to the extent that Rule 6e-2 and Rule 6e-3(T) are amended, or
Rule 6e-3 is adopted, to provide exemptive relief from any provision of the Act
or the rules promulgated thereunder with respect to mixed or shared funding (as
defined in the Shared Funding Exemptive Order) on terms and conditions
materially different from those contained in the Shared Funding Exemptive Order,
then (a) the Fund and/or the Participating Insurance Companies, as appropriate,
shall take such steps as may be necessary to comply with Rules 6e-2 and 6e-3(T),
as amended, and Rule 6e-3, as adopted, to the extent such rules are applicable;
and (b) Sections 3.4, 3.5, 7.1, 7.2, 7.3, 7.4, and 7.5 of this Agreement shall
continue in effect only to the extent that terms and conditions substantially
identical to such Sections are contained in such Rule(s) as so amended or
adopted.
ARTICLE VIII. Indemnification
8.1. Indemnification By The Company
8.1(a). The Company agrees to indemnify and hold harmless the Fund and
each trustee of the Board and officers and each person, if any, who
controls the Fund within the meaning of Section 15 of the 1933 Act
(collectively, the "Indemnified Parties" for purposes of this Section 8.1)
against any and all losses, claims, damages, liabilities (including amounts
paid in settlement with the written consent of the Company) or litigation
(including legal and other expenses), to which the Indemnified Parties may
become subject under any statute, regulation, at common law or otherwise,
insofar as such losses, claims, damages, liabilities or expenses (or
actions in respect thereof) or settlements are related to the sale or
acquisition of, or investment in, the Fund's shares or the Contracts and:
(i) arise out of or are based upon any untrue statements or
alleged untrue statements of any material fact contained in the
Registration Statement or prospectus for the Contracts or contained in
the Contracts or sales literature for the Contracts (or any amendment
or supplement to any of the foregoing), or arise out of or are based
upon the omission or the alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements
therein not misleading, provided that this agreement to indemnify
shall not apply as to any Indemnified Party if such statement or
omission or such alleged statement or omission was made in reliance
upon and in conformity with information furnished to the Company by or
on behalf of the Fund for use in the Registration Statement or
prospectus for the Contracts or in the Contracts or sales literature
(or any amendment or supplement) or otherwise for use in connection
with the sale of the Contracts or Fund shares; or
(ii) arise out of or as a result of statements or representations
(other than statements or representations contained in the
Registration Statement, prospectus or sales literature of the Fund not
supplied by the Company, or persons under its control) or wrongful
conduct of the Company or persons under its control, with respect to
the sale or distribution of the Contracts or Fund Shares; or
(iii) arise out of any untrue statement or alleged untrue
statement of a material fact contained in a Registration Statement,
prospectus, or sales literature of the Fund or any amendment thereof
or supplement thereto or the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to
make the statements therein not misleading if such a statement or
omission was made in reliance upon and in conformity with information
furnished to the Fund by or on behalf of the Company; or
(iv) arise as a result of any failure by the Company to provide
the services and furnish the materials under the terms of this
Agreement; or
(v) arise out of or result from any material breach of any
representation and/or warranty made by the Company in this Agreement
or arise out of or result from any other material breach of this
Agreement by the Company,
as limited by and in accordance with the provisions of Sections 8.1(b)
and 8.1(c) hereof.
8.1(b). The Company shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or
litigation incurred or assessed against an Indemnified Party as such may
arise from such Indemnified Party's willful misfeasance, bad faith, or
gross negligence in the performance of such Indemnified Party's duties or
by reason of such Indemnified Party's reckless disregard of obligations or
duties under this Agreement or to the Fund, whichever is applicable.
8.1(c). The Company shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party
unless such Indemnified Party shall have notified the Company in writing
within a reasonable time after the summons or other first legal process
giving information of the nature of the claim shall have been served upon
such Indemnified Party (or after such Indemnified Party shall have received
notice of such service on any designated agent), but failure to notify the
Company of any such claim shall not relieve the Company from any liability
which it may have to the Indemnified Party against whom such action is
brought otherwise than on account of this indemnification provision. In
case any such action is brought against the Indemnified Parties, the
Company shall be entitled to participate, at its own expense, in the
defense of such action. The Company also shall be entitled to assume the
defense thereof, with counsel satisfactory to the party named in the
action. After notice from the Company to such party of the Company's
election to assume the defense thereof, the Indemnified Party shall bear
the fees and expenses of any additional counsel retained by it, and the
Company will not be liable to such party under this Agreement for any legal
or other expenses subsequently incurred by such party independently in
connection with the defense thereof other than reasonable costs of
investigation.
8.1(d). The Indemnified Parties will promptly notify the Company of
the commencement of any litigation or proceedings against them in
connection with the issuance or sale of the Fund Shares or the Contracts or
the operation of the Fund.
8.2. Indemnification by the Underwriter
8.2(a). The Underwriter agrees to indemnify and hold harmless the
Company and each of its directors and officers and each person, if any, who
controls the Company within the meaning of Section 15 of the 1933 Act
(collectively, the "Indemnified Parties" for purposes of this Section 8.2)
against any and all losses, claims, damages, liabilities (including amounts
paid in settlement with the written consent of the Underwriter) or
litigation (including legal and other expenses) to which the Indemnified
Parties may become subject under any statute, at common law or otherwise,
insofar as such losses, claims, damages, liabilities or expenses (or
actions in respect thereof) or settlements are related to the sale or
acquisition of, or investment in, the Fund's shares or the Contracts and:
(i) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in the
Registration Statement or prospectus or sales literature of the Fund
(or any amendment or supplement to any of the foregoing), or arise out
of or are based upon the omission or the alleged omission to state
therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, provided that this
agreement to indemnify shall not apply as to any Indemnified Party if
such statement or omission or such alleged statement or omission was
made in reliance upon and in conformity with information furnished to
the Underwriter or Fund by or on behalf of the Company for use in the
Registration Statement or prospectus for the Fund or in sales
literature (or any amendment or supplement) or otherwise for use in
connection with the sale of the Contracts or Fund shares; or
(ii) arise out of or as a result of statements or representations
(other than statements or representations contained in the
Registration Statement, prospectus or sales literature for the
Contracts not supplied by the Underwriter or persons under its
control) or wrongful conduct of the Fund, Adviser or Underwriter or
persons under their control, with respect to the sale or distribution
of the Contracts or Fund shares; or
(iii)arise out of any untrue statement or alleged untrue
statement of a material fact contained in a Registration Statement,
prospectus, or sales literature covering the Contracts, or any
amendment thereof or supplement thereto, or the omission or alleged
omission to state therein a material fact required to be stated
therein or necessary to make the statement or statements therein not
misleading, if such statement or omission was made in reliance upon
and in conformity with information furnished to the Company by or on
behalf of the Fund; or
(iv) arise as a result of any failure by the Fund to provide the
services and furnish the materials under the terms of this Agreement
(including a failure, whether unintentional or in good faith or
otherwise, to comply with the diversification requirements specified
in Article VI of this Agreement); or
(v) arise out of or result from any material breach of any
representation and/or warranty made by the Underwriter in this
Agreement or arise out of or result from any other material breach of
this Agreement by the Underwriter;
as limited by and in accordance with the provisions of Sections 8.2(b)
and 8.2(c) hereof.
8.2(b). The Underwriter shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or
litigation to which an Indemnified Party would otherwise be subject by
reason of such Indemnified Party's willful misfeasance, bad faith, or gross
negligence in the performance of such Indemnified Party's duties or by
reason of such Indemnified Party's reckless disregard of obligations and
duties under this Agreement or to each Company or the Account, whichever is
applicable.
8.2(c). The Underwriter shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party
unless such Indemnified Party shall have notified the Underwriter in
writing within a reasonable time after the summons or other first legal
process giving information of the nature of the claim shall have been
served upon such Indemnified Party (or after such Indemnified Party shall
have received notice of such service on any designated agent), but failure
to notify the Underwriter of any such claim shall not relieve the
Underwriter from any liability which it may have to the Indemnified Party
against whom such action is brought otherwise than on account of this
indemnification provision. In case any such action is brought against the
Indemnified Parties, the Underwriter will be entitled to participate, at
its own expense, in the defense thereof. The Underwriter also shall be
entitled to assume the defense thereof, with counsel satisfactory to the
party named in the action. After notice from the Underwriter to such party
of the Underwriter's election to assume the defense thereof, the
Indemnified Party shall bear the fees and expenses of any additional
counsel retained by it, and the Underwriter will not be liable to such
party under this Agreement for any legal or other expenses subsequently
incurred by such party independently in connection with the defense thereof
other than reasonable costs of investigation.
8.2(d). The Company agrees promptly to notify the Underwriter of the
commencement of any litigation or proceedings against it or any of its
officers or directors in connection with the issuance or sale of the
Contracts or the operation of each Account.
8.3. Indemnification By the Fund
8.3(a). The Fund agrees to indemnify and hold harmless the Company,
and each of its directors and officers and each person, if any, who
controls the Company within the meaning of Section 15 of the 1933 Act
(collectively, the "Indemnified Parties" for purposes of this Section 8.3)
against any and all losses, claims, damages, liabilities (including amounts
paid in settlement with the written consent of the Fund) or litigation
(including legal and other expenses) to which the Indemnified Parties may
become subject under any statute, at common law or otherwise, insofar as
such losses, claims, damages, liabilities or expenses (or actions in
respect thereof) or settlements result from the gross negligence, bad faith
or willful misconduct of the Board or any member thereof, are related to
the operations of the Fund and:
(i) arise as a result of any failure by the Fund to provide the
services and furnish the materials under the terms of this Agreement
(including a failure to comply with the diversification requirements
specified in Article VI of this Agreement);or
(ii) arise out of or result from any material breach of any
representation and/or warranty made by the Fund in this Agreement or
arise out of or result from any other material breach of this
Agreement by the Fund;
as limited by and in accordance with the provisions of Sections 8.3(b)
and 8.3(c) hereof.
8.3(b). The Fund shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or
litigation incurred or assessed against an Indemnified Party as such may
arise from such Indemnified Party's willful misfeasance, bad faith, or
gross negligence in the performance of such Indemnified Party's duties or
by reason of such Indemnified Party's reckless disregard of obligations and
duties under this Agreement or to the Company, the Fund, the Underwriter or
each Account, whichever is applicable.
8.3(c). The Fund shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party
unless such Indemnified Party shall have notified the Fund in writing
within a reasonable time after the summons or other first legal process
giving information of the nature of the claim shall have been served upon
such Indemnified Party (or after such Indemnified Party shall have received
notice of such service on any designated agent), but failure to notify the
Fund of any such claim shall not relieve the Fund from any liability which
it may have to the Indemnified Party against whom such action is brought
otherwise than on account of this indemnification provision. In case any
such action is brought against the Indemnified Parties, the Fund will be
entitled to participate, at its own expense, in the defense thereof. The
Fund also shall be entitled to assume the defense thereof, with counsel
satisfactory to the party named in the action. After notice from the Fund
to such party of the Fund's election to assume the defense thereof, the
Indemnified Party shall bear the fees and expenses of any additional
counsel retained by it, and the Fund will not be liable to such party under
this Agreement for any legal or other expenses subsequently incurred by
such party independently in connection with the defense thereof other than
reasonable costs of investigation.
8.3(d). The Company and the Underwriter agree promptly to notify the
Fund of the commencement of any litigation or proceedings against it or any
of its respective officers or directors in connection with this Agreement,
the issuance or sale of the Contracts, with respect to the operation of
either Account, or the sale or acquisition of shares of the Fund.
ARTICLE IX. Applicable Law
9.1. This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of the Commonwealth of
Massachusetts.
9.2. This Agreement shall be subject to the provisions of the 1933, 1934
and 1940 acts, and the rules and regulations and rulings thereunder, including
such exemptions from those statutes, rules and regulations as the Securities and
Exchange Commission may grant (including, but not limited to, the Shared Funding
Exemptive Order) and the terms hereof shall be interpreted and construed in
accordance therewith.
ARTICLE X. Termination
10.1. This Agreement shall continue in full force and effect until the
first to occur of:
(a) termination by any party for any reason by four (4) months' advance
written notice delivered to the other parties; or
(b) termination by the Company by written notice to the Fund and the
Underwriter with respect to any Portfolio based upon the Company's
determination that shares of such Portfolio are not reasonably
available to meet the requirements of the Contracts; or
(c) termination by the Company by written notice to the Fund and the
Underwriter with respect to any Portfolio in the event any of the
Portfolio's shares are not registered, issued or sold in accordance
with applicable state and/or federal law or such law precludes the use
of such shares as the underlying investment media of the Contracts
issued or to be issued by the Company; or
(d) termination by the Company by written notice to the Fund and the
Underwriter with respect to any Portfolio in the event that such
Portfolio ceases to qualify as a Regulated Investment Company under
Subchapter M of the Code or under any successor or similar provision,
or if the Company reasonably believes that the Fund may fail to so
qualify; or
(e) termination by the Company by written notice to the Fund and the
Underwriter with respect to any Portfolio in the event that such
Portfolio fails to meet the diversification requirements specified in
Article VI hereof, or if the Company reasonably believes that the Fund
may fail to so qualify and notifies the Fund of this belief thirty
(30) days in advance of termination; or
(f) termination by either the Fund or the Underwriter by written notice to
the Company, if either one or both of the Fund or the Underwriter
respectively, shall determine, in their sole judgment exercised in
good faith, that the Company and/or its affiliated companies has
suffered a material adverse change in its business, operations,
financial condition or prospects since the date of this Agreement or
is the subject of material adverse publicity; or
(g) termination by the Company by written notice to the Fund and the
Underwriter, if the Company shall determine, in its sole judgment
exercised in good faith, that either the Fund or the Underwriter has
suffered a material adverse change in its business, operations,
financial condition or prospects since the date of this Agreement or
is the subject of material adverse publicity; or
(h) at the option of the Company, upon the Fund's or the Underwriter's
breach of any material provision of this Agreement, which breach has
not been cured to the satisfaction of the Company within thirty (30)
days after written notice of such breach is delivered to the Fund and
the Underwriter; or
(i) at the option of the Fund or the Underwriter, upon the Company's
breach of any material provision of this Agreement, which breach has
not been cured to the satisfaction of the Fund or Underwriter within
thirty (30) days after written notice of such breach is delivered to
the Company.
10.2. Notwithstanding any termination of this Agreement, the Fund and the
Underwriter shall at the option of the Company, continue to make available
additional shares of the Fund pursuant to the terms and conditions of this
Agreement, for all Contracts in effect on the effective date of termination of
this Agreement (hereinafter referred to as "Existing Contracts"). Specifically,
without limitation, the owners of the Existing Contracts shall be permitted to
reallocate investments in the Fund, redeem investments in the Fund and/or invest
in the Fund upon the making of additional purchase payments under the Existing
Contracts. The parties agree that this Section 10.2 shall not apply to any
terminations under Article VII and the effect of such Article VII terminations
shall be governed by Article VII of this Agreement.
10.3. The provisions of Articles II (Representations and Warranties), VIII
(Indemnification), IX (Applicable Law) and XII (Miscellaneous) shall survive
termination of this Agreement. In addition, all other applicable provisions of
this Agreement shall survive termination as long as shares of the Fund are held
on behalf of Contract owners in accordance with section 10.2, except that the
Fund and Underwriter shall have no further obligation to make Fund shares
available in Contracts issued after termination.
10.4. The Company shall not redeem Fund shares attributable to the
Contracts (as opposed to Fund shares attributable to the Company's assets held
in the Account) except (i) as necessary to implement Contract Owner initiated or
approved transactions, or (ii) as required by state and/or federal laws or
regulations or judicial or other legal precedent of general application
(hereinafter referred to as a "Legally Required Redemption") or (iii) as
permitted by an order of the SEC pursuant to Section 26(b) of the 1940 Act. Upon
request, the Company will promptly furnish to the Fund and the Underwriter the
opinion of counsel for the Company (which counsel shall be reasonably
satisfactory to the Fund and the Underwriter) to the effect that any redemption
pursuant to clause (ii) above is a Legally Required Redemption. Furthermore,
except in cases where permitted under the terms of the Contracts, the Company
shall not prevent Contract Owners from allocating payments to a Portfolio that
was otherwise available under the Contracts without first giving the Fund or the
Underwriter 60 days notice of its intention to do so.
ARTICLE XI. Notices
Any notice shall be sufficiently given when sent by registered or certified
mail to the other party at the address of such party set forth below or at such
other address as such party may from time to time specify in writing to the
other party.
If to the Fund:
82 Devonshire Street
Boston, Massachusetts 02109
Attention: Treasurer
If to the Company:
Business Men's Assurance Company of America
700 Karnes Boulevard
Kansas City, MO 64108
Attention: Michael Deardorff, Vice President
If to the Underwriter:
82 Devonshire Street
Boston, Massachusetts 02109
Attention: Treasurer
ARTICLE XII. Miscellaneous
12.1 All persons dealing with the Fund must look solely to the property of
the Fund for the enforcement of any claims against the Fund as neither the
Board, officers, agents or shareholders assume any personal liability for
obligations entered into on behalf of the Fund.
12.2 Subject to the requirements of legal process and regulatory authority,
each party hereto shall treat as confidential the names and addresses of the
owners of the Contracts and all information reasonably identified as
confidential in writing by any other party hereto and, except as permitted by
this Agreement, shall not disclose, disseminate or utilize such names and
addresses and other confidential information until such time as it may come into
the public domain without the express written consent of the affected party.
12.3 The captions in this Agreement are included for convenience of
reference only and in no way define or delineate any of the provisions hereof or
otherwise affect their construction or effect.
12.4 This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
12.5 If any provision of this Agreement shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of the Agreement shall
not be affected thereby.
12.6 Each party hereto shall cooperate with each other party and all
appropriate governmental authorities (including without limitation the SEC, the
NASD and state insurance regulators) and shall permit such authorities
reasonable access to its books and records in connection with any investigation
or inquiry relating to this Agreement or the transactions contemplated hereby.
Notwithstanding the generality of the foregoing, each party hereto further
agrees to furnish the California Insurance Commissioner with any information or
reports in connection with services provided under this Agreement which such
Commissioner may request in order to ascertain whether the insurance operations
of the Company are being conducted in a manner consistent with the California
Insurance Regulations and any other applicable law or regulations.
12.7 The rights, remedies and obligations contained in this Agreement are
cumulative and are in addition to any and all rights, remedies and obligations,
at law or in equity, which the parties hereto are entitled to under state and
federal laws.
12.8. This Agreement or any of the rights and obligations hereunder may not
be assigned by any party without the prior written consent of all parties
hereto; provided, however, that the Underwriter may assign this Agreement or any
rights or obligations hereunder to any affiliate of or company under common
control with the Underwriter, if such assignee is duly licensed and registered
to perform the obligations of the Underwriter under this Agreement. The Company
shall promptly notify the Fund and the Underwriter of any change in control of
the Company.
12.9. The Company shall furnish, or shall cause to be furnished, to the
Fund or its designee copies of the following reports:
(a) the Company's annual statement (prepared under statutory accounting
principles) and annual report (prepared under generally accepted
accounting principles ("GAAP"), if any), as soon as practical and in
any event within 90 days after the end of each fiscal year;
(b) the Company's quarterly statements (statutory) (and GAAP, if any), as
soon as practical and in any event within 45 days after the end of
each quarterly period:
(c) any financial statement, proxy statement, notice or report of the
Company sent to stockholders and/or policyholders, as soon as
practical after the delivery thereof to stockholders;
(d) any registration statement (without exhibits) and financial reports of
the Company filed with the Securities and Exchange Commission or any
state insurance regulator, as soon as practical after the filing
thereof;
(e) any other non-confidential report submitted to the Company by
independent accountants in connection with any annual, interim or
special audit made by them of the books of the Company, as soon as
practical after the receipt thereof.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be executed in its name and on its behalf by its duly authorized representative.
BUSINESS MEN'S ASSURANCE COMPANY OF AMERICA
By: _________________________
Name: _________________________
Title: _________________________
VARIABLE INSURANCE PRODUCTS FUND
By: ________________________
Robert C. Pozen
Senior Vice President
FIDELITY DISTRIBUTORS CORPORATION
By: _______________________
Kevin J. Kelly
Vice President
Schedule A
Separate Accounts and Associated Contracts
Name of Separate Account and Policy Form Numbers of Contracts
Date Established by Board of Directors Funded By Separate Account
BMA Variable Life Account A Variable Life Contract VL-50
September 9, 1996
BMA Variable Annuity Account A Variable Annuity VA-20
September 9, 1996
SCHEDULE B
PROXY VOTING PROCEDURE
The following is a list of procedures and corresponding responsibilities for the
handling of proxies relating to the Fund by the Underwriter, the Fund and the
Company. The defined terms herein shall have the meanings assigned in the
Participation Agreement except that the term "Company" shall also include the
department or third party assigned by the Insurance Company to perform the steps
delineated below.
1. The number of proxy proposals is given to the Company by the Underwriter as
early as possible before the date set by the Fund for the shareholder
meeting to facilitate the establishment of tabulation procedures. At this
time the Underwriter will inform the Company of the Record, Mailing and
Meeting dates. This will be done verbally approximately two months before
meeting.
2. Promptly after the Record Date, the Company will perform a "tape run", or
other activity, which will generate the names, addresses and number of
units which are attributed to each contractowner/policyholder (the
"Customer") as of the Record Date. Allowance should be made for account
adjustments made after this date that could affect the status of the
Customers' accounts as of the Record Date.
Note: The number of proxy statements is determined by the activities
described in Step #2. The Company will use its best efforts to call in the
number of Customers to Fidelity, as soon as possible, but no later than two
weeks after the Record Date.
3. The Fund's Annual Report no longer needs to be sent to each Customer by the
Company either before or together with the Customers' receipt of a proxy
statement. Underwriter will provide the last Annual Report to the Company
pursuant to the terms of Section 3.3 of the Agreement to which this
Schedule relates.
4. The text and format for the Voting Instruction Cards ("Cards" or "Card") is
provided to the Company by the Fund. The Company, at its expense, shall
produce and personalize the Voting Instruction Cards. The Legal Department
of the Underwriter or its affiliate ("Fidelity Legal") must approve the
Card before it is printed. Allow approximately 2-4 business days for
printing information on the Cards. Information commonly found on the Cards
includes:
a. name (legal name as found on account registration)
b. address
c. Fund or account number
d. coding to state number of units
e. individual Card number for use in tracking and verification of
votes (already on Cards as printed by the Fund)
(This and related steps may occur later in the chronological process due to
possible uncertainties relating to the proposals.)
5. During this time, Fidelity Legal will develop, produce, and the Fund will
pay for the Notice of Proxy and the Proxy Statement (one document). Printed
and folded notices and statements will be sent to Company for insertion
into envelopes (envelopes and return envelopes are provided and paid for by
the Insurance Company). Contents of envelope sent to Customers by Company
will include:
a. Voting Instruction Card(s)
b. One proxy notice and statement (one document)
c. return envelope (postage pre-paid by Company) addressed to the
Company or its tabulation agent
d. "urge buckslip" - optional, but recommended. (This is a small,
single sheet of paper that requests Customers to vote as quickly
as possible and that their vote is important. One copy will be
supplied by the Fund.)
e. cover letter - optional, supplied by Company and reviewed and
approved in advance by Fidelity Legal.
6. The above contents should be received by the Company approximately 3-5
business days before mail date. Individual in charge at Company reviews and
approves the contents of the mailing package to ensure correctness and
completeness. Copy of this approval sent to Fidelity Legal.
7. Package mailed by the Company.
* The Fund must allow at least a 15-day solicitation time to the Company
as the shareowner. (A 5-week period is recommended.) Solicitation time
is calculated as calendar days from (but not including) the meeting,
counting backwards.
8. Collection and tabulation of Cards begins. Tabulation usually takes place
in another department or another vendor depending on process used. An often
used procedure is to sort Cards on arrival by proposal into vote categories
of all yes, no, or mixed replies, and to begin data entry.
Note: Postmarks are not generally needed. A need for postmark information
would be due to an insurance company's internal procedure and has not been
required by Fidelity in the past.
9. Signatures on Card checked against legal name on account registration which
was printed on the Card.
Note: For Example, If the account registration is under "Bertram C. Jones,
Trustee," then that is the exact legal name to be printed on the Card and
is the signature needed on the Card.
10. If Cards are mutilated, or for any reason are illegible or are not signed
properly, they are sent back to Customer with an explanatory letter, a new
Card and return envelope. The mutilated or illegible Card is disregarded
and considered to be not received for purposes of vote tabulation. Any
Cards that have "kicked out" (e.g. mutilated, illegible) of the procedure
are "hand verified," i.e., examined as to why they did not complete the
system. Any questions on those Cards are usually remedied individually.
11. There are various control procedures used to ensure proper tabulation of
votes and accuracy of that tabulation. The most prevalent is to sort the
Cards as they first arrive into categories depending upon their vote; an
estimate of how the vote is progressing may then be calculated. If the
initial estimates and the actual vote do not coincide, then an internal
audit of that vote should occur. This may entail a recount.
12. The actual tabulation of votes is done in units which is then converted to
shares. (It is very important that the Fund receives the tabulations stated
in terms of a percentage and the number of shares.) Fidelity Legal must
review and approve tabulation format.
13. Final tabulation in shares is verbally given by the Company to Fidelity
Legal on the morning of the meeting not later than 10:00 a.m. Boston time.
Fidelity Legal may request an earlier deadline if required to calculate the
vote in time for the meeting.
14. A Certification of Mailing and Authorization to Vote Shares will be
required from the Company as well as an original copy of the final vote.
Fidelity Legal will provide a standard form for each Certification.
15. The Company will be required to box and archive the Cards received from the
Customers. In the event that any vote is challenged or if otherwise
necessary for legal, regulatory, or accounting purposes, Fidelity Legal
will be permitted reasonable access to such Cards.
16. All approvals and "signing-off" may be done orally, but must always be
followed up in writing.
4
SUB-LICENSE AGREEMENT
Agreement effective as of this __th of _______, 199_, by and between
Fidelity Distributors Corporation (hereinafter called "Fidelity"), a corporation
organized and existing under the laws of the Commonwealth of Massachusetts, with
a principal place of business at 82 Devonshire Street, Boston, Massachusetts,
and Business Men's Assurance Company of America (hereinafter called "Company"),
a company organized and existing under the laws of the State of Missouri, with a
principal place of business at 700 Karnes Boulevard, Kansas City, Missouri
64108.
WHEREAS, FMR Corp., a Massachusetts corporation, the parent company of
Fidelity, is the owner of the trademark and the tradename "FIDELITY INVESTMENTS"
and is the owner of a trademark in a pyramid design (hereinafter, collectively
the "Fidelity Trademarks"), a copy of each of which is attached hereto as
Exhibit "A"; and
WHEREAS, FMR Corp. has granted a license to Fidelity (the "Master License
Agreement") to sub-license the Fidelity Trademarks to third parties for their
use in connection with Promotional Materials as hereinafter defined; and
WHEREAS, Company is desirous of using the Fidelity Trademarks in connection
with distribution of "sales literature and other promotional material" with
information, including the Fidelity Trademarks, printed in said material (such
material hereinafter called the Promotional Material). For the purpose of this
Agreement, "sales literature and other promotional material" shall have the same
meaning as in the certain Participation Agreement dated as of the __ day of
_______, 199_, among Fidelity, Company and Variable Insurance Products Fund
(hereinafter "Participation Agreement"); and
WHEREAS, Fidelity is desirous of having the Fidelity Trademarks used in
connection with the Promotional Material.
NOW, THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt and adequacy whereof is hereby acknowledged,
and of the mutual promises hereinafter set forth, the parties hereby agree as
follows:
1. Fidelity hereby grants to Company a non-exclusive, non-transferable
license to use the Fidelity Trademarks in connection with the promotional
distribution of the Promotional Material and Company accepts said license,
subject to the terms and conditions set forth herein.
2. Company acknowledges that FMR Corp. is the owner of all right, title and
interest in the Fidelity Trademarks and agrees that it will do nothing
inconsistent with the ownership of the Fidelity Trademarks by FMR Corp., and
that it will not, now or hereinafter, contest any registration or application
for registration of the Fidelity Trademarks by FMR Corp., nor will it, now or
hereafter, aid anyone in contesting any registration or application for
registration of the Fidelity Trademarks by FMR Corp.
3. Company agrees to use the Fidelity Trademarks only in the form and
manner approved by Fidelity and not to use any other trademark, service mark or
registered trademark in combination with any of the Fidelity Trademarks without
approval by Fidelity.
4. Company agrees that it will place all necessary and proper notices and
legends in order to protect the interests of FMR Corp. and Fidelity therein
pertaining to the Fidelity Trademarks on the Promotional Material including, but
not limited to, symbols indicating trademarks, service marks and registered
trademarks. Company will place such symbols and legends on the Promotional
Material as requested by Fidelity or FMR Corp. upon receipt of notice of same
from Fidelity or FMR Corp.
5. Company agrees that the nature and quality of all of the Promotional
Material distributed by Company bearing the Fidelity Trademarks shall conform to
standards set by, and be under the control of, Fidelity.
6. Company agrees to cooperate with Fidelity in facilitating Fidelity's
control of the use of the Fidelity Trademarks and of the quality of the
Promotional Material to permit reasonable inspection of samples of same by
Fidelity and to supply Fidelity with reasonable quantities of samples of the
Promotional Material upon request.
7. Company shall comply with all applicable laws and regulations and obtain
any and all licenses or other necessary permits pertaining to the distribution
of said Promotional Material.
8. Company agrees to notify Fidelity of any unauthorized use of the
Fidelity Trademarks by others promptly as it comes to the attention of Company.
Fidelity or FMR Corp. shall have the sole right and discretion to commence
actions or other proceedings for infringement, unfair competition or the like
involving the Fidelity Trademarks and Company shall cooperate in any such
proceedings if so requested by Fidelity or FMR Corp.
9. This agreement shall continue in force until terminated by Fidelity.
This agreement shall automatically terminate upon termination of the Master
License Agreement. In addition, Fidelity shall have the right to terminate this
agreement at any time upon notice to Company, with or without cause. Upon any
such termination, Company agrees to cease immediately all use of the Fidelity
Trademarks and shall destroy, at Company's expense, any and all materials in its
possession bearing the Fidelity Trademarks, and agrees that all rights in the
Fidelity Trademarks and in the goodwill connected therewith shall remain the
property of FMR Corp. Unless so terminated by Fidelity, or extended by written
agreement of the parties, this agreement shall expire on the termination of that
certain Participation Agreement.
10. Company shall indemnify Fidelity and FMR Corp. and hold each of them
harmless from and against any loss, damage, liability, cost or expense of any
nature whatsoever, including without limitation, reasonable attorneys' fees and
all court costs, arising out of use of the Fidelity Trademarks by Company.
11. In consideration for the promotion and advertising of Fidelity as a
result of the distribution by Company of the Promotional Material, Company shall
not pay any monies as a royalty to Fidelity for this license.
12. This agreement is not intended in any manner to modify the terms and
conditions of the Participation Agreement. In the event of any conflict between
the terms and conditions herein and thereof, the terms and conditions of the
Participation Agreement shall control.
13. This agreement shall be interpreted according to the laws of the
Commonwealth of Massachusetts.
IN WITNESS WHEREOF, the parties hereunto set their hands and seals, and
hereby execute this agreement, as of the date first above written.
FIDELITY DISTRIBUTORS CORPORATION
By: _____________________
Name: _____________________
Title: _____________________
COMPANY
By: _____________________
Name: _____________________
Title: _____________________
EXHIBIT A
<TABLE>
<CAPTION>
<S> <C>
Int. Cl.: 36
Prior U.S. Cls.: 101 and 102
Reg. No. 1,481,040
United States Patent and Trademark Office Registered Mar. 15, 1988
SERVICE MARK
PRINCIPAL REGISTER
========================== ===================================================================
[GRAPHIC Fidelity
========================== ===================================================================
============================================================ =========================================================
FMR CORP. (MASSACHUSETTS CORPORATION) FIRST USE 2-22-1984; IN COMMERCE 2-22-1984.
============================================================ =========================================================
</TABLE>
PARTICIPATION AGREEMENT
Among
VARIABLE INSURANCE PRODUCTS FUND II,
FIDELITY DISTRIBUTORS CORPORATION
and
BUSINESS MEN'S ASSURANCE COMPANY OF AMERICA
THIS AGREEMENT, made and entered into as of the 1st day of May, 2000 by and
among BUSINESS MEN'S ASSURANCE COMPANY OF AMERICA, (hereinafter the "Company"),
a Missouri corporation, on its own behalf and on behalf of each segregated asset
account of the Company set forth on Schedule A hereto as may be amended from
time to time (each such account hereinafter referred to as the "Account"), and
the VARIABLE INSURANCE PRODUCTS FUND II, an unincorporated business trust
organized under the laws of the Commonwealth of Massachusetts (hereinafter the
"Fund") and FIDELITY DISTRIBUTORS CORPORATION (hereinafter the "Underwriter"), a
Massachusetts corporation.
WHEREAS, the Fund engages in business as an open-end management investment
company and is available to act as the investment vehicle for separate accounts
established for variable life insurance policies and variable annuity contracts
(collectively, the "Variable Insurance Products") to be offered by insurance
companies which have entered into participation agreements with the Fund and the
Underwriter (hereinafter "Participating Insurance Companies"); and
WHEREAS, the beneficial interest in the Fund is divided into several series
of shares, each representing the interest in a particular managed portfolio of
securities and other assets, any one or more of which may be made available
under this Agreement, as may be amended from time to time by mutual agreement of
the parties hereto (each such series hereinafter referred to as a "Portfolio");
and
WHEREAS, the Fund has obtained an order from the Securities and Exchange
Commission, dated September 17, 1986 (File No. 812-6422), granting Participating
Insurance Companies and variable annuity and variable life insurance separate
accounts exemptions from the provisions of sections 9(a), 13(a), 15(a), and
15(b) of the Investment Company Act of 1940, as amended, (hereinafter the "1940
Act") and Rules 6e-2(b) (15) and 6e-3(T) (b) (15) thereunder, to the extent
necessary to permit shares of the Fund to be sold to and held by variable
annuity and variable life insurance separate accounts of both affiliated and
unaffiliated life insurance companies (hereinafter the "Shared Funding Exemptive
Order"); and
WHEREAS, the Fund is registered as an open-end management investment
company under the 1940 Act and its shares are registered under the Securities
Act of 1933, as amended (hereinafter the "1933 Act"); and
WHEREAS, Fidelity Management & Research Company (the "Adviser") is duly
registered as an investment adviser under the federal Investment Advisers Act of
1940 and any applicable state securities law; and
WHEREAS, the Company has registered or will register certain variable life
insurance and/or variable annuity products identified on Exhibit A hereto
("Contracts") under the 1933 Act; and
WHEREAS, each Account is a duly organized, validly existing segregated
asset account, established by resolution of the Board of Directors of the
Company, on the date shown for such Account on Schedule A hereto, to set aside
and invest assets attributable to the aforesaid variable annuity contracts; and
WHEREAS, the Company has registered or will register each Account as a unit
investment trust under the 1940 Act; and
WHEREAS, the Underwriter is registered as a broker dealer with the
Securities and Exchange Commission ("SEC") under the Securities Exchange Act of
1934, as amended, (hereinafter the "1934 Act"), and is a member in good standing
of the National Association of Securities Dealers, Inc. (hereinafter "NASD");
and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company intends to purchase shares in the Portfolios on behalf
of each Account to fund certain of the aforesaid Contracts and the Underwriter
is authorized to sell such shares to unit investment trusts such as each Account
at net asset value;
NOW, THEREFORE, in consideration of their mutual promises, the Company, the
Fund and the Underwriter agree as follows:
ARTICLE I. Sale of Fund Shares
1.1. The Underwriter agrees to sell to the Company those shares of the Fund
which each Account orders, executing such orders on a daily basis at the net
asset value next computed after receipt by the Fund or its designee of the order
for the shares of the Fund. For purposes of this Section 1.1, the Company shall
be the designee of the Fund for receipt of such orders from each Account and
receipt by such designee shall constitute receipt by the Fund; provided that the
Fund receives notice of such order by 9:00 a.m. Boston time on the next
following Business Day. Beginning within three months of the effective date of
this Agreement, Company agrees that orders for the purchase or redemption of
shares of the Funds on behalf of the Accounts will be placed directly by Company
with the Funds or their transfer agent by electronic transmission. "Business
Day" shall mean any day on which the New York Stock Exchange is open for trading
and on which the Fund calculates its net asset value pursuant to the rules of
the Securities and Exchange Commission.
1.2. The Fund agrees to make its shares available indefinitely for purchase
at the applicable net asset value per share by the Company and its Accounts on
those days on which the Fund calculates its net asset value pursuant to rules of
the Securities and Exchange Commission and the Fund shall use reasonable efforts
to calculate such net asset value on each day which the New York Stock Exchange
is open for trading. Notwithstanding the foregoing, the Board of Trustees of the
Fund (hereinafter the "Board") may refuse to sell shares of any Portfolio to any
person, or suspend or terminate the offering of shares of any Portfolio if such
action is required by law or by regulatory authorities having jurisdiction or
is, in the sole discretion of the Board acting in good faith and in light of
their fiduciary duties under federal and any applicable state laws, necessary in
the best interests of the shareholders of such Portfolio.
1.3. The Fund and the Underwriter agree that shares of the Fund will be
sold only to Participating Insurance Companies and their separate accounts
and/or to qualified plans. No shares of any Portfolio will be sold to the
general public.
1.4. The Fund and the Underwriter will not sell Fund shares to any
insurance company or separate account unless an agreement containing provisions
substantially the same as Articles I, III, V, VII and Section 2.5 of Article II
of this Agreement is in effect to govern such sales.
1.5. The Fund agrees to redeem for cash, on the Company's request, any full
or fractional shares of the Fund held by the Company, executing such requests on
a daily basis at the net asset value next computed after receipt by the Fund or
its designee of the request for redemption. For purposes of this Section 1.5,
the Company shall be the designee of the Fund for receipt of requests for
redemption from each Account and receipt by such designee shall constitute
receipt by the Fund; provided that the Fund receives notice of such request for
redemption on the next following Business Day.
1.6. The Company agrees that purchases and redemptions of Portfolio shares
offered by the then current prospectus of the Fund shall be made in accordance
with the provisions of such prospectus.
1.7. The Company shall pay for Fund shares on the next Business Day after
an order to purchase Fund shares is made in accordance with the provisions of
Section 1.1 hereof. Payment shall be in federal funds transmitted by wire. For
purpose of Section 2.10 and 2.11, upon receipt by the Fund of the federal funds
so wired, such funds shall cease to be the responsibility of the Company and
shall become the responsibility of the Fund.
1.8. Issuance and transfer of the Fund's shares will be by book entry only.
Stock certificates will not be issued to the Company or any Account. Shares
ordered from the Fund will be recorded in an appropriate title for each Account
or the appropriate subaccount of each Account.
1.9. The Fund shall furnish same day notice (by wire or telephone, followed
by written confirmation) to the Company of any income, dividends or capital gain
distributions payable on the Fund's shares. The Company hereby elects to receive
all such income dividends and capital gain distributions as are payable on the
Portfolio shares in additional shares of that Portfolio. The Company reserves
the right to revoke this election and to receive all such income dividends and
capital gain distributions in cash. The Fund shall notify the Company of the
number of shares so issued as payment of such dividends and distributions.
1.10. The Fund shall make the net asset value per share for each Portfolio
available to the Company on a daily basis as soon as reasonably practical after
the net asset value per share is calculated (normally by 6:30 p.m. Boston time)
and shall use its best efforts to make such net asset value per share available
by 7 p.m. Boston time.
ARTICLE II. Representations and Warranties
2.1. The Company represents and warrants that the Contracts are or will be
registered under the 1933 Act; that the Contracts will be issued and sold in
compliance in all material respects with all applicable Federal and State laws
and that the sale of the Contracts shall comply in all material respects with
state insurance suitability requirements. The Company further represents and
warrants that it is an insurance company duly organized and in good standing
under applicable law and that it has legally and validly established each
Account prior to any issuance or sale thereof as a segregated asset account
under the Missouri Insurance Code and has registered or, prior to any issuance
or sale of the Contracts, will register each Account as a unit investment trust
in accordance with the provisions of the 1940 Act to serve as a segregated
investment account for the Contracts.
2.2. The Fund represents and warrants that Fund shares sold pursuant to
this Agreement shall be registered under the 1933 Act, duly authorized for
issuance and sold in compliance with the laws of the State of Missouri and all
applicable federal and state securities laws and that the Fund is and shall
remain registered under the 1940 Act. The Fund shall amend the Registration
Statement for its shares under the 1933 Act and the 1940 Act from time to time
as required in order to effect the continuous offering of its shares. The Fund
shall register and qualify the shares for sale in accordance with the laws of
the various states only if and to the extent deemed advisable by the Fund or the
Underwriter.
2.3. The Fund represents that it is currently qualified as a Regulated
Investment Company under Subchapter M of the Internal Revenue Code of 1986, as
amended, (the "Code") and that it will make every effort to maintain such
qualification (under Subchapter M or any successor or similar provision) and
that it will notify the Company immediately upon having a reasonable basis for
believing that it has ceased to so qualify or that it might not so qualify in
the future.
2.4. The Company represents that the Contracts are currently treated as
endowment, life insurance or annuity insurance contracts, under applicable
provisions of the Code and that it will make every effort to maintain such
treatment and that it will notify the Fund and the Underwriter immediately upon
having a reasonable basis for believing that the Contracts have ceased to be so
treated or that they might not be so treated in the future.
2.5. (a) With respect to Initial Class shares, the Fund currently does not
intend to make any payments to finance distribution expenses pursuant to Rule
12b-1 under the 1940 Act or otherwise, although it may make such payments in the
future. The Fund has adopted a "no fee" or "defensive" Rule 12b-1 Plan under
which it makes no payments for distribution expenses. To the extent that it
decides to finance distribution expenses pursuant to Rule 12b-1, the Fund
undertakes to have a board of trustees, a majority of whom are not interested
persons of the Fund, formulate and approve any plan under Rule 12b-1 to finance
distribution expenses.
(b) With respect to Service Class shares and Service Class 2 shares, the
Fund has adopted Rule 12b-1 Plans under which it makes payments to finance
distribution expenses. The Fund represents and warrants that it has a board of
trustees, a majority of whom are not interested persons of the Fund, which has
formulated and approved each of its Rule 12b-1 Plans to finance distribution
expenses of the Fund and that any changes to the Fund's Rule 12b-1 Plans will be
approved by a similarly constituted board of trustees.
2.6. The Fund makes no representation as to whether any aspect of its
operations (including, but not limited to, fees and expenses and investment
policies) complies with the insurance laws or regulations of the various states
except that the Fund represents that the Fund's investment policies, fees and
expenses are and shall at all times remain in compliance with the laws of the
State of Missouri and the Fund and the Underwriter represent that their
respective operations are and shall at all times remain in material compliance
with the laws of the State of Missouri to the extent required to perform this
Agreement.
2.7. The Underwriter represents and warrants that it is a member in good
standing of the NASD and is registered as a broker-dealer with the SEC. The
Underwriter further represents that it will sell and distribute the Fund shares
in accordance with the laws of the Commonwealth of Massachusetts and all
applicable state and federal securities laws, including without limitation the
1933 Act, the 1934 Act, and the 1940 Act.
2.8. The Fund represents that it is lawfully organized and validly existing
under the laws of the Commonwealth of Massachusetts and that it does and will
comply in all material respects with the 1940 Act.
2.9. The Underwriter represents and warrants that the Adviser is and shall
remain duly registered in all material respects under all applicable federal and
state securities laws and that the Adviser shall perform its obligations for the
Fund in compliance in all material respects with the laws of the Commonwealth of
Massachusetts and any applicable state and federal securities laws.
2.10. The Fund and Underwriter represent and warrant that all of their
directors, officers, employees, investment advisers, and other
individuals/entities dealing with the money and/or securities of the Fund are
and shall continue to be at all times covered by a blanket fidelity bond or
similar coverage for the benefit of the Fund in an amount not less than the
minimal coverage as required currently by Rule 17g-(1) of the 1940 Act or
related provisions as may be promulgated from time to time. The aforesaid Bond
shall include coverage for larceny and embezzlement and shall be issued by a
reputable bonding company.
2.11. The Company represents and warrants that all of its directors,
officers, employees, investment advisers, and other individuals/entities dealing
with the money and/or securities of the Fund are covered by a blanket fidelity
bond or similar coverage for the benefit of the Fund, and that said bond is
issued by a reputable bonding company, includes coverage for larceny and
embezzlement, and is in an amount not less than $5 million. The Company agrees
to make all reasonable efforts to see that this bond or another bond containing
these provisions is always in effect, and agrees to notify the Fund and the
Underwriter in the event that such coverage no longer applies.
ARTICLE III. Prospectuses and Proxy Statements; Voting
3.1. The Underwriter shall provide the Company with as many printed copies
of the Fund's current prospectus and Statement of Additional Information as the
Company may reasonably request. If requested by the Company in lieu thereof, the
Fund shall provide camera-ready film containing the Fund's prospectus and
Statement of Additional Information, and such other assistance as is reasonably
necessary, including a diskette in form sent to the financial printer, in order
for the Company once each year (or more frequently if the prospectus and/or
Statement of Additional Information for the Fund is amended during the year) to
have the prospectus for the Contracts and the Fund's prospectus printed together
in one document, and to have the Statement of Additional Information for the
Fund and the Statement of Additional Information for the Contracts printed
together in one document. Alternatively, the Company may print the Fund's
prospectus and/or its Statement of Additional Information in combination with
other fund companies' prospectuses and statements of additional information.
Except as provided in the following three sentences, all expenses of printing
and distributing Fund prospectuses and Statements of Additional Information
shall be the expense of the Company. For prospectuses and Statements of
Additional Information provided by the Company to its existing owners of
Contracts in order to update disclosure annually as required by the 1933 Act
and/or the 1940 Act, the cost of printing shall be borne by the Fund. If the
Company chooses to receive camera-ready film or diskette in lieu of receiving
printed copies of the Fund's prospectus, the Fund will reimburse the Company in
an amount equal to the product of A and B where A is the number of such
prospectuses distributed to owners of the Contracts, and B is the Fund's per
unit cost of typesetting and printing the Fund's prospectus. The same procedures
shall be followed with respect to the Fund's Statement of Additional
Information.
The Company agrees to provide the Fund or its designee with such
information as may be reasonably requested by the Fund to assure that the Fund's
expenses do not include the cost of printing any prospectuses or Statements of
Additional Information other than those actually distributed to existing owners
of the Contracts.
3.2. The Fund's prospectus shall state that the Statement of Additional
Information for the Fund is available from the Underwriter or the Company (or in
the Fund's discretion, the Prospectus shall state that such Statement is
available from the Fund).
3.3. The Fund, at its expense, shall provide the Company with copies of its
proxy statements, reports to shareholders, and other communications (except for
prospectuses and Statements of Additional Information, which are covered in
Section 3.1) to shareholders in such quantity as the Company shall reasonably
require for distributing to Contract owners.
3.4. If and to the extent required by law the Company shall:
(i) solicit voting instructions from Contract owners;
(ii) vote the Fund shares in accordance with instructions received
from Contract owners; and
(iii)vote Fund shares for which no instructions have been received in
a particular separate account in the same proportion as Fund
shares of such portfolio for which instructions have been
received in that separate account,
so long as and to the extent that the Securities and Exchange
Commission continues to interpret the 1940 Act to require
pass-through voting privileges for variable contract owners. The
Company reserves the right to vote Fund shares held in any
segregated asset account in its own right, to the extent
permitted by law. Participating Insurance Companies shall be
responsible for assuring that each of their separate accounts
participating in the Fund calculates voting privileges in a
manner consistent with the standards set forth on Schedule B
attached hereto and incorporated herein by this reference, which
standards will also be provided to the other Participating
Insurance Companies.
3.5. The Fund will comply with all provisions of the 1940 Act requiring
voting by shareholders, and in particular the Fund will either provide for
annual meetings or comply with Section 16(c) of the 1940 Act (although the Fund
is not one of the trusts described in Section 16(c) of that Act) as well as with
Sections 16(a) and, if and when applicable, 16(b). Further, the Fund will act in
accordance with the Securities and Exchange Commission's interpretation of the
requirements of Section 16(a) with respect to periodic elections of trustees and
with whatever rules the Commission may promulgate with respect thereto.
ARTICLE IV. Sales Material and Information
4.1. The Company shall furnish, or shall cause to be furnished, to the Fund
or its designee, each piece of sales literature or other promotional material in
which the Fund or its investment adviser or the Underwriter is named, at least
fifteen Business Days prior to its use. No such material shall be used if the
Fund or its designee reasonably objects to such use within fifteen Business Days
after receipt of such material.
4.2. The Company shall not give any information or make any representations
or statements on behalf of the Fund or concerning the Fund in connection with
the sale of the Contracts other than the information or representations
contained in the registration statement or prospectus for the Fund shares, as
such registration statement and prospectus may be amended or supplemented from
time to time, or in reports or proxy statements for the Fund, or in sales
literature or other promotional material approved by the Fund or its designee or
by the Underwriter, except with the permission of the Fund or the Underwriter or
the designee of either.
4.3. The Fund, Underwriter, or its designee shall furnish, or shall cause
to be furnished, to the Company or its designee, each piece of sales literature
or other promotional material in which the Company and/or its separate
account(s), is named at least fifteen Business Days prior to its use. No such
material shall be used if the Company or its designee reasonably objects to such
use within fifteen Business Days after receipt of such material.
4.4. The Fund and the Underwriter shall not give any information or make
any representations on behalf of the Company or concerning the Company, each
Account, or the Contracts other than the information or representations
contained in a registration statement or prospectus for the Contracts, as such
registration statement and prospectus may be amended or supplemented from time
to time, or in published reports for each Account which are in the public domain
or approved by the Company for distribution to Contract owners, or in sales
literature or other promotional material approved by the Company or its
designee, except with the permission of the Company.
4.5. The Fund will provide to the Company at least one complete copy of all
registration statements, prospectuses, Statements of Additional Information,
reports, proxy statements, sales literature and other promotional materials,
applications for exemptions, requests for no-action letters, and all amendments
to any of the above, that relate to the Fund or its shares, contemporaneously
with the filing of such document with the Securities and Exchange Commission or
other regulatory authorities.
4.6. The Company will provide to the Fund at least one complete copy of all
registration statements, prospectuses, Statements of Additional Information,
reports, solicitations for voting instructions, sales literature and other
promotional materials, applications for exemptions, requests for no action
letters, and all amendments to any of the above, that relate to the Contracts or
each Account, contemporaneously with the filing of such document with the SEC or
other regulatory authorities.
4.7. For purposes of this Article IV, the phrase "sales literature or other
promotional material" includes, but is not limited to, any of the following that
refer to the Fund or any affiliate of the Fund: advertisements (such as material
published, or designed for use in, a newspaper, magazine, or other periodical,
radio, television, telephone or tape recording, videotape display, signs or
billboards, motion pictures, or other public media), sales literature (i.e., any
written communication distributed or made generally available to customers or
the public, including brochures, circulars, research reports, market letters,
form letters, seminar texts, reprints or excerpts of any other advertisement,
sales literature, or published article), educational or training materials or
other communications distributed or made generally available to some or all
agents or employees, and registration statements, prospectuses, Statements of
Additional Information, shareholder reports, and proxy materials.
ARTICLE V. Fees and Expenses
5.1. The Fund and Underwriter shall pay no fee or other compensation to the
Company under this agreement, except that if the Fund or any Portfolio adopts
and implements a plan pursuant to Rule 12b-1 to finance distribution expenses,
then the Underwriter may make payments to the Company or to the underwriter for
the Contracts if and in amounts agreed to by the Underwriter in writing and such
payments will be made out of existing fees otherwise payable to the Underwriter,
past profits of the Underwriter or other resources available to the Underwriter.
No such payments shall be made directly by the Fund.
5.2. All expenses incident to performance by the Fund under this Agreement
shall be paid by the Fund. The Fund shall see to it that all its shares are
registered and authorized for issuance in accordance with applicable federal law
and, if and to the extent deemed advisable by the Fund, in accordance with
applicable state laws prior to their sale. The Fund shall bear the expenses for
the cost of registration and qualification of the Fund's shares, preparation and
filing of the Fund's prospectus and registration statement, proxy materials and
reports, setting the prospectus in type, setting in type and printing the proxy
materials and reports to shareholders (including the costs of printing a
prospectus that constitutes an annual report), the preparation of all statements
and notices required by any federal or state law, and all taxes on the issuance
or transfer of the Fund's shares.
5.3. The Company shall bear the expenses of distributing the Fund's
prospectus and reports to owners of Contracts issued by the Company. The Fund
shall bear the costs of soliciting Fund proxies from Contract owners, including
the costs of mailing proxy materials and tabulating proxy voting instructions,
not to exceed the costs charged by any service provider engaged by the Fund for
this purpose. The Fund and the Underwriter shall not be responsible for the
costs of any proxy solicitations other than proxies sponsored by the Fund.
ARTICLE VI. Diversification
6.1. The Fund will at all times invest money from the Contracts in such a
manner as to ensure that the Contracts will be treated as variable contracts
under the Code and the regulations issued thereunder. Without limiting the scope
of the foregoing, the Fund will at all times comply with Section 817(h) of the
Code, including without limitation subsection 817(h)(4) thereof, and Treasury
Regulation 1.817-5, relating to the diversification requirements for variable
annuity, endowment, or life insurance contracts and any amendments or other
modifications to such Section or Regulations. In the event of a breach of this
Article VI by the Fund, it will take all reasonable steps (a) to notify Company
of such breach and (b) to adequately diversify the Fund so as to achieve
compliance within the grace period afforded by Regulation 1.817-5.
ARTICLE VII. Potential Conflicts
7.1. The Board will monitor the Fund for the existence of any material
irreconcilable conflict between the interests of the contract owners of all
separate accounts investing in the Fund. An irreconcilable material conflict may
arise for a variety of reasons, including: (a) an action by any state insurance
regulatory authority; (b) a change in applicable federal or state insurance,
tax, or securities laws or regulations, or a public ruling, private letter
ruling, no-action or interpretative letter, or any similar action by insurance,
tax, or securities regulatory authorities; (c) an administrative or judicial
decision in any relevant proceeding; (d) the manner in which the investments of
any Portfolio are being managed; (e) a difference in voting instructions given
by variable annuity contract and variable life insurance contract owners; or (f)
a decision by an insurer to disregard the voting instructions of contract
owners. The Board shall promptly inform the Company if it determines that an
irreconcilable material conflict exists and the implications thereof.
7.2. The Company will report any potential or existing conflicts of which
it is aware to the Board. The Company will assist the Board in carrying out its
responsibilities under the Shared Funding Exemptive Order, by providing the
Board with all information reasonably necessary for the Board to consider any
issues raised. This includes, but is not limited to, an obligation by the
Company to inform the Board whenever contract owner voting instructions are
disregarded.
7.3. If it is determined by a majority of the Board, or a majority of its
disinterested trustees, that a material irreconcilable conflict exists, the
Company and other Participating Insurance Companies shall, at their expense and
to the extent reasonably practicable (as determined by a majority of the
disinterested trustees), take whatever steps are necessary to remedy or
eliminate the irreconcilable material conflict, up to and including: (1),
withdrawing the assets allocable to some or all of the separate accounts from
the Fund or any Portfolio and reinvesting such assets in a different investment
medium, including (but not limited to) another Portfolio of the Fund, or
submitting the question whether such segregation should be implemented to a vote
of all affected Contract owners and, as appropriate, segregating the assets of
any appropriate group (i.e., annuity contract owners, life insurance contract
owners, or variable contract owners of one or more Participating Insurance
Companies) that votes in favor of such segregation, or offering to the affected
contract owners the option of making such a change; and (2), establishing a new
registered management investment company or managed separate account.
7.4. If a material irreconcilable conflict arises because of a decision by
the Company to disregard contract owner voting instructions and that decision
represents a minority position or would preclude a majority vote, the Company
may be required, at the Fund's election, to withdraw the affected Account's
investment in the Fund and terminate this Agreement with respect to such
Account; provided, however that such withdrawal and termination shall be limited
to the extent required by the foregoing material irreconcilable conflict as
determined by a majority of the disinterested members of the Board. Any such
withdrawal and termination must take place within six (6) months after the Fund
gives written notice that this provision is being implemented, and until the end
of that six month period the Underwriter and Fund shall continue to accept and
implement orders by the Company for the purchase (and redemption) of shares of
the Fund.
7.5. If a material irreconcilable conflict arises because a particular
state insurance regulator's decision applicable to the Company conflicts with
the majority of other state regulators, then the Company will withdraw the
affected Account's investment in the Fund and terminate this Agreement with
respect to such Account within six months after the Board informs the Company in
writing that it has determined that such decision has created an irreconcilable
material conflict; provided, however, that such withdrawal and termination shall
be limited to the extent required by the foregoing material irreconcilable
conflict as determined by a majority of the disinterested members of the Board.
Until the end of the foregoing six month period, the Underwriter and Fund shall
continue to accept and implement orders by the Company for the purchase (and
redemption) of shares of the Fund.
7.6. For purposes of Sections 7.3 through 7.6 of this Agreement, a majority
of the disinterested members of the Board shall determine whether any proposed
action adequately remedies any irreconcilable material conflict, but in no event
will the Fund be required to establish a new funding medium for the Contracts.
The Company shall not be required by Section 7.3 to establish a new funding
medium for the Contracts if an offer to do so has been declined by vote of a
majority of Contract owners materially adversely affected by the irreconcilable
material conflict. In the event that the Board determines that any proposed
action does not adequately remedy any irreconcilable material conflict, then the
Company will withdraw the Account's investment in the Fund and terminate this
Agreement within six (6) months after the Board informs the Company in writing
of the foregoing determination, provided, however, that such withdrawal and
termination shall be limited to the extent required by any such material
irreconcilable conflict as determined by a majority of the disinterested members
of the Board.
7.7. If and to the extent that Rule 6e-2 and Rule 6e-3(T) are amended, or
Rule 6e-3 is adopted, to provide exemptive relief from any provision of the Act
or the rules promulgated thereunder with respect to mixed or shared funding (as
defined in the Shared Funding Exemptive Order) on terms and conditions
materially different from those contained in the Shared Funding Exemptive Order,
then (a) the Fund and/or the Participating Insurance Companies, as appropriate,
shall take such steps as may be necessary to comply with Rules 6e-2 and 6e-3(T),
as amended, and Rule 6e-3, as adopted, to the extent such rules are applicable;
and (b) Sections 3.4, 3.5, 7.1, 7.2, 7.3, 7.4, and 7.5 of this Agreement shall
continue in effect only to the extent that terms and conditions substantially
identical to such Sections are contained in such Rule(s) as so amended or
adopted.
ARTICLE VIII. Indemnification
8.1. Indemnification By The Company
8.1(a). The Company agrees to indemnify and hold harmless the Fund and
each trustee of the Board and officers and each person, if any, who
controls the Fund within the meaning of Section 15 of the 1933 Act
(collectively, the "Indemnified Parties" for purposes of this Section 8.1)
against any and all losses, claims, damages, liabilities (including amounts
paid in settlement with the written consent of the Company) or litigation
(including legal and other expenses), to which the Indemnified Parties may
become subject under any statute, regulation, at common law or otherwise,
insofar as such losses, claims, damages, liabilities or expenses (or
actions in respect thereof) or settlements are related to the sale or
acquisition of, or investment in, the Fund's shares or the Contracts and:
(i) arise out of or are based upon any untrue statements or
alleged untrue statements of any material fact contained in the
Registration Statement or prospectus for the Contracts or contained in
the Contracts or sales literature for the Contracts (or any amendment
or supplement to any of the foregoing), or arise out of or are based
upon the omission or the alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements
therein not misleading, provided that this agreement to indemnify
shall not apply as to any Indemnified Party if such statement or
omission or such alleged statement or omission was made in reliance
upon and in conformity with information furnished to the Company by or
on behalf of the Fund for use in the Registration Statement or
prospectus for the Contracts or in the Contracts or sales literature
(or any amendment or supplement) or otherwise for use in connection
with the sale of the Contracts or Fund shares; or
(ii) arise out of or as a result of statements or representations
(other than statements or representations contained in the
Registration Statement, prospectus or sales literature of the Fund not
supplied by the Company, or persons under its control) or wrongful
conduct of the Company or persons under its control, with respect to
the sale or distribution of the Contracts or Fund Shares; or
(iii) arise out of any untrue statement or alleged untrue
statement of a material fact contained in a Registration Statement,
prospectus, or sales literature of the Fund or any amendment thereof
or supplement thereto or the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to
make the statements therein not misleading if such a statement or
omission was made in reliance upon and in conformity with information
furnished to the Fund by or on behalf of the Company; or
(iv) arise as a result of any failure by the Company to provide
the services and furnish the materials under the terms of this
Agreement; or
(v) arise out of or result from any material breach of any
representation and/or warranty made by the Company in this Agreement
or arise out of or result from any other material breach of this
Agreement by the Company,
as limited by and in accordance with the provisions of Sections 8.1(b)
and 8.1(c) hereof.
8.1(b). The Company shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or
litigation incurred or assessed against an Indemnified Party as such may
arise from such Indemnified Party's willful misfeasance, bad faith, or
gross negligence in the performance of such Indemnified Party's duties or
by reason of such Indemnified Party's reckless disregard of obligations or
duties under this Agreement or to the Fund, whichever is applicable.
8.1(c). The Company shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party
unless such Indemnified Party shall have notified the Company in writing
within a reasonable time after the summons or other first legal process
giving information of the nature of the claim shall have been served upon
such Indemnified Party (or after such Indemnified Party shall have received
notice of such service on any designated agent), but failure to notify the
Company of any such claim shall not relieve the Company from any liability
which it may have to the Indemnified Party against whom such action is
brought otherwise than on account of this indemnification provision. In
case any such action is brought against the Indemnified Parties, the
Company shall be entitled to participate, at its own expense, in the
defense of such action. The Company also shall be entitled to assume the
defense thereof, with counsel satisfactory to the party named in the
action. After notice from the Company to such party of the Company's
election to assume the defense thereof, the Indemnified Party shall bear
the fees and expenses of any additional counsel retained by it, and the
Company will not be liable to such party under this Agreement for any legal
or other expenses subsequently incurred by such party independently in
connection with the defense thereof other than reasonable costs of
investigation.
8.1(d). The Indemnified Parties will promptly notify the Company of
the commencement of any litigation or proceedings against them in
connection with the issuance or sale of the Fund Shares or the Contracts or
the operation of the Fund.
8.2. Indemnification by the Underwriter
8.2(a). The Underwriter agrees to indemnify and hold harmless the
Company and each of its directors and officers and each person, if any, who
controls the Company within the meaning of Section 15 of the 1933 Act
(collectively, the "Indemnified Parties" for purposes of this Section 8.2)
against any and all losses, claims, damages, liabilities (including amounts
paid in settlement with the written consent of the Underwriter) or
litigation (including legal and other expenses) to which the Indemnified
Parties may become subject under any statute, at common law or otherwise,
insofar as such losses, claims, damages, liabilities or expenses (or
actions in respect thereof) or settlements are related to the sale or
acquisition of, or investment in, the Fund's shares or the Contracts and:
(i) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in the
Registration Statement or prospectus or sales literature of the Fund
(or any amendment or supplement to any of the foregoing), or arise out
of or are based upon the omission or the alleged omission to state
therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, provided that this
agreement to indemnify shall not apply as to any Indemnified Party if
such statement or omission or such alleged statement or omission was
made in reliance upon and in conformity with information furnished to
the Underwriter or Fund by or on behalf of the Company for use in the
Registration Statement or prospectus for the Fund or in sales
literature (or any amendment or supplement) or otherwise for use in
connection with the sale of the Contracts or Fund shares; or
(ii) arise out of or as a result of statements or representations
(other than statements or representations contained in the
Registration Statement, prospectus or sales literature for the
Contracts not supplied by the Underwriter or persons under its
control) or wrongful conduct of the Fund, Adviser or Underwriter or
persons under their control, with respect to the sale or distribution
of the Contracts or Fund shares; or
(iii)arise out of any untrue statement or alleged untrue
statement of a material fact contained in a Registration Statement,
prospectus, or sales literature covering the Contracts, or any
amendment thereof or supplement thereto, or the omission or alleged
omission to state therein a material fact required to be stated
therein or necessary to make the statement or statements therein not
misleading, if such statement or omission was made in reliance upon
and in conformity with information furnished to the Company by or on
behalf of the Fund; or
(iv) arise as a result of any failure by the Fund to provide the
services and furnish the materials under the terms of this Agreement
(including a failure, whether unintentional or in good faith or
otherwise, to comply with the diversification requirements specified
in Article VI of this Agreement); or
(v) arise out of or result from any material breach of any
representation and/or warranty made by the Underwriter in this
Agreement or arise out of or result from any other material breach of
this Agreement by the Underwriter;
as limited by and in accordance with the provisions of Sections 8.2(b)
and 8.2(c) hereof.
8.2(b). The Underwriter shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or
litigation to which an Indemnified Party would otherwise be subject by
reason of such Indemnified Party's willful misfeasance, bad faith, or gross
negligence in the performance of such Indemnified Party's duties or by
reason of such Indemnified Party's reckless disregard of obligations and
duties under this Agreement or to each Company or the Account, whichever is
applicable.
8.2(c). The Underwriter shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party
unless such Indemnified Party shall have notified the Underwriter in
writing within a reasonable time after the summons or other first legal
process giving information of the nature of the claim shall have been
served upon such Indemnified Party (or after such Indemnified Party shall
have received notice of such service on any designated agent), but failure
to notify the Underwriter of any such claim shall not relieve the
Underwriter from any liability which it may have to the Indemnified Party
against whom such action is brought otherwise than on account of this
indemnification provision. In case any such action is brought against the
Indemnified Parties, the Underwriter will be entitled to participate, at
its own expense, in the defense thereof. The Underwriter also shall be
entitled to assume the defense thereof, with counsel satisfactory to the
party named in the action. After notice from the Underwriter to such party
of the Underwriter's election to assume the defense thereof, the
Indemnified Party shall bear the fees and expenses of any additional
counsel retained by it, and the Underwriter will not be liable to such
party under this Agreement for any legal or other expenses subsequently
incurred by such party independently in connection with the defense thereof
other than reasonable costs of investigation.
8.2(d). The Company agrees promptly to notify the Underwriter of the
commencement of any litigation or proceedings against it or any of its
officers or directors in connection with the issuance or sale of the
Contracts or the operation of each Account.
8.3. Indemnification By the Fund
8.3(a). The Fund agrees to indemnify and hold harmless the Company,
and each of its directors and officers and each person, if any, who
controls the Company within the meaning of Section 15 of the 1933 Act
(collectively, the "Indemnified Parties" for purposes of this Section 8.3)
against any and all losses, claims, damages, liabilities (including amounts
paid in settlement with the written consent of the Fund) or litigation
(including legal and other expenses) to which the Indemnified Parties may
become subject under any statute, at common law or otherwise, insofar as
such losses, claims, damages, liabilities or expenses (or actions in
respect thereof) or settlements result from the gross negligence, bad faith
or willful misconduct of the Board or any member thereof, are related to
the operations of the Fund and:
(i) arise as a result of any failure by the Fund to provide the
services and furnish the materials under the terms of this Agreement
(including a failure to comply with the diversification requirements
specified in Article VI of this Agreement);or
(ii) arise out of or result from any material breach of any
representation and/or warranty made by the Fund in this Agreement or
arise out of or result from any other material breach of this
Agreement by the Fund;
as limited by and in accordance with the provisions of Sections 8.3(b)
and 8.3(c) hereof.
8.3(b). The Fund shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or
litigation incurred or assessed against an Indemnified Party as such may
arise from such Indemnified Party's willful misfeasance, bad faith, or
gross negligence in the performance of such Indemnified Party's duties or
by reason of such Indemnified Party's reckless disregard of obligations and
duties under this Agreement or to the Company, the Fund, the Underwriter or
each Account, whichever is applicable.
8.3(c). The Fund shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party
unless such Indemnified Party shall have notified the Fund in writing
within a reasonable time after the summons or other first legal process
giving information of the nature of the claim shall have been served upon
such Indemnified Party (or after such Indemnified Party shall have received
notice of such service on any designated agent), but failure to notify the
Fund of any such claim shall not relieve the Fund from any liability which
it may have to the Indemnified Party against whom such action is brought
otherwise than on account of this indemnification provision. In case any
such action is brought against the Indemnified Parties, the Fund will be
entitled to participate, at its own expense, in the defense thereof. The
Fund also shall be entitled to assume the defense thereof, with counsel
satisfactory to the party named in the action. After notice from the Fund
to such party of the Fund's election to assume the defense thereof, the
Indemnified Party shall bear the fees and expenses of any additional
counsel retained by it, and the Fund will not be liable to such party under
this Agreement for any legal or other expenses subsequently incurred by
such party independently in connection with the defense thereof other than
reasonable costs of investigation.
8.3(d). The Company and the Underwriter agree promptly to notify the
Fund of the commencement of any litigation or proceedings against it or any
of its respective officers or directors in connection with this Agreement,
the issuance or sale of the Contracts, with respect to the operation of
either Account, or the sale or acquisition of shares of the Fund.
ARTICLE IX. Applicable Law
9.1. This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of the Commonwealth of
Massachusetts.
9.2. This Agreement shall be subject to the provisions of the 1933,
1934 and 1940 acts, and the rules and regulations and rulings thereunder,
including such exemptions from those statutes, rules and regulations as the
Securities and Exchange Commission may grant (including, but not limited
to, the Shared Funding Exemptive Order) and the terms hereof shall be
interpreted and construed in accordance therewith.
ARTICLE X. Termination
10.1. This Agreement shall continue in full force and effect until the
first to occur of:
(a) termination by any party for any reason by four (4) months' advance
written notice delivered to the other parties; or
(b) termination by the Company by written notice to the Fund and the
Underwriter with respect to any Portfolio based upon the Company's
determination that shares of such Portfolio are not reasonably
available to meet the requirements of the Contracts; or
(c) termination by the Company by written notice to the Fund and the
Underwriter with respect to any Portfolio in the event any of the
Portfolio's shares are not registered, issued or sold in accordance
with applicable state and/or federal law or such law precludes the use
of such shares as the underlying investment media of the Contracts
issued or to be issued by the Company; or
(d) termination by the Company by written notice to the Fund and the
Underwriter with respect to any Portfolio in the event that such
Portfolio ceases to qualify as a Regulated Investment Company under
Subchapter M of the Code or under any successor or similar provision,
or if the Company reasonably believes that the Fund may fail to so
qualify; or
(e) termination by the Company by written notice to the Fund and the
Underwriter with respect to any Portfolio in the event that such
Portfolio fails to meet the diversification requirements specified in
Article VI hereof, or if the Company reasonably believes that the Fund
may fail to so qualify and notifies the Fund of this belief thirty
(30) days in advance of termination; or
(f) termination by either the Fund or the Underwriter by written notice to
the Company, if either one or both of the Fund or the Underwriter
respectively, shall determine, in their sole judgment exercised in
good faith, that the Company and/or its affiliated companies has
suffered a material adverse change in its business, operations,
financial condition or prospects since the date of this Agreement or
is the subject of material adverse publicity; or
(g) termination by the Company by written notice to the Fund and the
Underwriter, if the Company shall determine, in its sole judgment
exercised in good faith, that either the Fund or the Underwriter has
suffered a material adverse change in its business, operations,
financial condition or prospects since the date of this Agreement or
is the subject of material adverse publicity; or
(h) at the option of the Company, upon the Fund's or the Underwriter's
breach of any material provision of this Agreement, which breach has
not been cured to the satisfaction of the Company within thirty (30)
days after written notice of such breach is delivered to the Fund and
the Underwriter; or
(i) at the option of the Fund or the Underwriter, upon the Company's
breach of any material provision of this Agreement, which breach has
not been cured to the satisfaction of the Fund or Underwriter within
thirty (30) days after written notice of such breach is delivered to
the Company.
10.2. Notwithstanding any termination of this Agreement, the Fund and the
Underwriter shall at the option of the Company, continue to make available
additional shares of the Fund pursuant to the terms and conditions of this
Agreement, for all Contracts in effect on the effective date of termination of
this Agreement (hereinafter referred to as "Existing Contracts"). Specifically,
without limitation, the owners of the Existing Contracts shall be permitted to
reallocate investments in the Fund, redeem investments in the Fund and/or invest
in the Fund upon the making of additional purchase payments under the Existing
Contracts. The parties agree that this Section 10.2 shall not apply to any
terminations under Article VII and the effect of such Article VII terminations
shall be governed by Article VII of this Agreement.
10.3. The provisions of Articles II (Representations and Warranties), VIII
(Indemnification), IX (Applicable Law) and XII (Miscellaneous) shall survive
termination of this Agreement. In addition, all other applicable provisions of
this Agreement shall survive termination as long as shares of the Fund are held
on behalf of Contract owners in accordance with section 10.2, except that the
Fund and Underwriter shall have no further obligation to make Fund shares
available in Contracts issued after termination.
10.4. The Company shall not redeem Fund shares attributable to the
Contracts (as opposed to Fund shares attributable to the Company's assets held
in the Account) except (i) as necessary to implement Contract Owner initiated or
approved transactions, or (ii) as required by state and/or federal laws or
regulations or judicial or other legal precedent of general application
(hereinafter referred to as a "Legally Required Redemption") or (iii) as
permitted by an order of the SEC pursuant to Section 26(b) of the 1940 Act. Upon
request, the Company will promptly furnish to the Fund and the Underwriter the
opinion of counsel for the Company (which counsel shall be reasonably
satisfactory to the Fund and the Underwriter) to the effect that any redemption
pursuant to clause (ii) above is a Legally Required Redemption. Furthermore,
except in cases where permitted under the terms of the Contracts, the Company
shall not prevent Contract Owners from allocating payments to a Portfolio that
was otherwise available under the Contracts without first giving the Fund or the
Underwriter 60 days notice of its intention to do so.
ARTICLE XI. Notices
Any notice shall be sufficiently given when sent by registered or certified
mail to the other party at the address of such party set forth below or at such
other address as such party may from time to time specify in writing to the
other party.
If to the Fund:
82 Devonshire Street
Boston, Massachusetts 02109
Attention: Treasurer
If to the Company:
Business Men's Assurance Company of America
700 Karnes Boulevard
Kansas City, MO 64108
Attention: Michael Deardorff, Vice President
If to the Underwriter:
82 Devonshire Street
Boston, Massachusetts 02109
Attention: Treasurer
ARTICLE XII. Miscellaneous
12.1 All persons dealing with the Fund must look solely to the property of
the Fund for the enforcement of any claims against the Fund as neither the
Board, officers, agents or shareholders assume any personal liability for
obligations entered into on behalf of the Fund.
12.2 Subject to the requirements of legal process and regulatory authority,
each party hereto shall treat as confidential the names and addresses of the
owners of the Contracts and all information reasonably identified as
confidential in writing by any other party hereto and, except as permitted by
this Agreement, shall not disclose, disseminate or utilize such names and
addresses and other confidential information until such time as it may come into
the public domain without the express written consent of the affected party.
12.3 The captions in this Agreement are included for convenience of
reference only and in no way define or delineate any of the provisions hereof or
otherwise affect their construction or effect.
12.4 This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
12.5 If any provision of this Agreement shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of the Agreement shall
not be affected thereby.
12.6 Each party hereto shall cooperate with each other party and all
appropriate governmental authorities (including without limitation the SEC, the
NASD and state insurance regulators) and shall permit such authorities
reasonable access to its books and records in connection with any investigation
or inquiry relating to this Agreement or the transactions contemplated hereby.
Notwithstanding the generality of the foregoing, each party hereto further
agrees to furnish the California Insurance Commissioner with any information or
reports in connection with services provided under this Agreement which such
Commissioner may request in order to ascertain whether the insurance operations
of the Company are being conducted in a manner consistent with the California
Insurance Regulations and any other applicable law or regulations.
12.7 The rights, remedies and obligations contained in this Agreement are
cumulative and are in addition to any and all rights, remedies and obligations,
at law or in equity, which the parties hereto are entitled to under state and
federal laws.
12.8. This Agreement or any of the rights and obligations hereunder may not
be assigned by any party without the prior written consent of all parties
hereto; provided, however, that the Underwriter may assign this Agreement or any
rights or obligations hereunder to any affiliate of or company under common
control with the Underwriter, if such assignee is duly licensed and registered
to perform the obligations of the Underwriter under this Agreement. The Company
shall promptly notify the Fund and the Underwriter of any change in control of
the Company.
12.9. The Company shall furnish, or shall cause to be furnished, to the
Fund or its designee copies of the following reports:
(a) the Company's annual statement (prepared under statutory accounting
principles) and annual report (prepared under generally accepted
accounting principles ("GAAP"), if any), as soon as practical and in
any event within 90 days after the end of each fiscal year;
(b) the Company's quarterly statements (statutory) (and GAAP, if any), as
soon as practical and in any event within 45 days after the end of
each quarterly period:
(c) any financial statement, proxy statement, notice or report of the
Company sent to stockholders and/or policyholders, as soon as
practical after the delivery thereof to stockholders;
(d) any registration statement (without exhibits) and financial reports of
the Company filed with the Securities and Exchange Commission or any
state insurance regulator, as soon as practical after the filing
thereof;
(e) any other non-confidential report submitted to the Company by
independent accountants in connection with any annual, interim or
special audit made by them of the books of the Company, as soon as
practical after the receipt thereof.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be executed in its name and on its behalf by its duly authorized representative.
BUSINESS MEN'S ASSURANCE COMPANY OF AMERICA
By: _________________________
Name: _________________________
Title: _________________________
VARIABLE INSURANCE PRODUCTS FUND II
By: ________________________
Robert C. Pozen
Senior Vice President
FIDELITY DISTRIBUTORS CORPORATION
By: _______________________
Kevin J. Kelly
Vice President
Schedule A
Separate Accounts and Associated Contracts
Name of Separate Account and Policy Form Numbers of Contracts
Date Established by Board of Directors Funded By Separate Account
BMA Variable Life Account A Variable Life Contract VL-50
September 9, 1996
BMA Variable Annuity Account A Variable Annuity VA-20
September 9, 1996
SCHEDULE B
PROXY VOTING PROCEDURE
The following is a list of procedures and corresponding responsibilities for the
handling of proxies relating to the Fund by the Underwriter, the Fund and the
Company. The defined terms herein shall have the meanings assigned in the
Participation Agreement except that the term "Company" shall also include the
department or third party assigned by the Insurance Company to perform the steps
delineated below.
1. The number of proxy proposals is given to the Company by the Underwriter as
early as possible before the date set by the Fund for the shareholder
meeting to facilitate the establishment of tabulation procedures. At this
time the Underwriter will inform the Company of the Record, Mailing and
Meeting dates. This will be done verbally approximately two months before
meeting.
2. Promptly after the Record Date, the Company will perform a "tape run", or
other activity, which will generate the names, addresses and number of
units which are attributed to each contractowner/policyholder (the
"Customer") as of the Record Date. Allowance should be made for account
adjustments made after this date that could affect the status of the
Customers' accounts as of the Record Date.
Note: The number of proxy statements is determined by the activities
described in Step #2. The Company will use its best efforts to call in the
number of Customers to Fidelity, as soon as possible, but no later than two
weeks after the Record Date.
3. The Fund's Annual Report no longer needs to be sent to each Customer by the
Company either before or together with the Customers' receipt of a proxy
statement. Underwriter will provide the last Annual Report to the Company
pursuant to the terms of Section 3.3 of the Agreement to which this
Schedule relates.
4. The text and format for the Voting Instruction Cards ("Cards" or "Card") is
provided to the Company by the Fund. The Company, at its expense, shall
produce and personalize the Voting Instruction Cards. The Legal Department
of the Underwriter or its affiliate ("Fidelity Legal") must approve the
Card before it is printed. Allow approximately 2-4 business days for
printing information on the Cards. Information commonly found on the Cards
includes: a. name (legal name as found on account registration) b. address
c. Fund or account number d. coding to state number of units e. individual
Card number for use in tracking and verification of votes (already on Cards
as printed by the Fund) (This and related steps may occur later in the
chronological process due to possible uncertainties relating to the
proposals.)
5. During this time, Fidelity Legal will develop, produce, and the Fund will
pay for the Notice of Proxy and the Proxy Statement (one document). Printed
and folded notices and statements will be sent to Company for insertion
into envelopes (envelopes and return envelopes are provided and paid for by
the Insurance Company). Contents of envelope sent to Customers by Company
will include:
a. Voting Instruction Card(s)
b. One proxy notice and statement (one document)
c. return envelope (postage pre-paid by Company) addressed to the Company
or its tabulation agent
d. "urge buckslip" - optional, but recommended. (This is a small, single
sheet of paper that requests Customers to vote as quickly as possible
and that their vote is important. One copy will be supplied by the
Fund.)
e. cover letter - optional, supplied by Company and reviewed and approved
in advance by Fidelity Legal.
6. The above contents should be received by the Company approximately 3-5
business days before mail date. Individual in charge at Company reviews and
approves the contents of the mailing package to ensure correctness and
completeness. Copy of this approval sent to Fidelity Legal.
7. Package mailed by the Company.
* The Fund must allow at least a 15-day solicitation time to the Company
as the shareowner. (A 5-week period is recommended.) Solicitation time
is calculated as calendar days from (but not including) the meeting,
counting backwards.
8. Collection and tabulation of Cards begins. Tabulation usually takes place
in another department or another vendor depending on process used. An often
used procedure is to sort Cards on arrival by proposal into vote categories
of all yes, no, or mixed replies, and to begin data entry.
Note: Postmarks are not generally needed. A need for postmark information
would be due to an insurance company's internal procedure and has not been
required by Fidelity in the past.
9. Signatures on Card checked against legal name on account registration which
was printed on the Card.
Note: For Example, If the account registration is under "Bertram C. Jones,
Trustee," then that is the exact legal name to be printed on the Card and
is the signature needed on the Card.
10. If Cards are mutilated, or for any reason are illegible or are not signed
properly, they are sent back to Customer with an explanatory letter, a new
Card and return envelope. The mutilated or illegible Card is disregarded
and considered to be not received for purposes of vote tabulation. Any
Cards that have "kicked out" (e.g. mutilated, illegible) of the procedure
are "hand verified," i.e., examined as to why they did not complete the
system. Any questions on those Cards are usually remedied individually.
11. There are various control procedures used to ensure proper tabulation of
votes and accuracy of that tabulation. The most prevalent is to sort the
Cards as they first arrive into categories depending upon their vote; an
estimate of how the vote is progressing may then be calculated. If the
initial estimates and the actual vote do not coincide, then an internal
audit of that vote should occur. This may entail a recount.
12. The actual tabulation of votes is done in units which is then converted to
shares. (It is very important that the Fund receives the tabulations stated
in terms of a percentage and the number of shares.) Fidelity Legal must
review and approve tabulation format.
13. Final tabulation in shares is verbally given by the Company to Fidelity
Legal on the morning of the meeting not later than 10:00 a.m. Boston time.
Fidelity Legal may request an earlier deadline if required to calculate the
vote in time for the meeting.
14. A Certification of Mailing and Authorization to Vote Shares will be
required from the Company as well as an original copy of the final vote.
Fidelity Legal will provide a standard form for each Certification.
15. The Company will be required to box and archive the Cards received from the
Customers. In the event that any vote is challenged or if otherwise
necessary for legal, regulatory, or accounting purposes, Fidelity Legal
will be permitted reasonable access to such Cards.
16. All approvals and "signing-off" may be done orally, but must always be
followed up in writing.
PARTICIPATION AGREEMENT
THIS AGREEMENT is made this day of , by and among The Alger American
Fund (the "Trust"), an open-end management investment company organized as a
Massachusetts business trust, Business Men's Assurance Company of America, a
life insurance company organized as a corporation under the laws of the State of
Missouri, (the "Company"), on its own behalf and on behalf of each segregated
asset account of the Company set forth in Schedule A, as may be amended from
time to time (the "Accounts"), and Fred Alger and Company, Incorporated, a
Delaware corporation, the Trust's distributor (the "Distributor").
WHEREAS, the Trust is registered with the Securities and Exchange
Commission (the "Commission") as an open-end management investment company under
the Investment Company Act of 1940, as amended (the "1940 Act"), and has an
effective registration statement relating to the offer and sale of the various
series of its shares under the Securities Act of 1933, as amended (the "1933
Act");
WHEREAS, the Trust and the Distributor desire that Trust shares be used as
an investment vehicle for separate accounts established for variable life
insurance policies and variable annuity contracts to be offered by life
insurance companies which have entered into fund participation agreements with
the Trust (the "Participating Insurance Companies");
WHEREAS, shares of beneficial interest in the Trust are divided into the
following series which are available for purchase by the Company for the
Accounts: Alger American Small Capitalization Portfolio, Alger American Growth
Portfolio, Alger American Income & Growth Portfolio, Alger American Balanced
Portfolio, Alger American MidCap Growth Portfolio, and Alger American Leveraged
AllCap Portfolio;
WHEREAS, the Trust has received an order from the Commission, dated
February 17, 1989 (File No. 812-7076), granting Participating Insurance
Companies and their separate accounts exemptions from the provisions of Sections
9(a), 13(a), 15(a) and 15(b) of the 1940 Act, and Rules 6e-2(b)(15) and
6e-3(T)(b)(15) thereunder, to the extent necessary to permit shares of the
Portfolios of the Trust to be sold to and held by variable annuity and variable
life insurance separate accounts of both affiliated and unaffiliated life
insurance companies (the "Shared Funding Exemptive Order");
WHEREAS, the Company has registered or will register under the 1933 Act
certain variable life insurance policies and variable annuity contracts to be
issued by the Company under which the Portfolios are to be made available as
investment vehicles (the "Contracts");
WHEREAS, the Company has registered or will register each Account as a unit
investment trust under the 1940 Act unless an exemption from registration under
the 1940 Act is available and the Trust has been so advised;
WHEREAS, the Company desires to use shares of one or more Portfolios as
investment vehicles for the Accounts;
NOW THEREFORE, in consideration of their mutual promises, the parties agree
as follows:
ARTICLE I.
PURCHASE AND REDEMPTION OF TRUST PORTFOLIO SHARES
1.1. For purposes of this Article I, the Company shall be the Trust's agent for
the receipt from each account of purchase orders and requests for
redemption pursuant to the Contracts relating to each Portfolio, provided
that the Company notifies the Trust of such purchase orders and requests
for redemption by 9:30 a.m. Eastern time on the next following Business
Day, as defined in Section 1.3.
1.2. The Trust shall make shares of the Portfolios available to the Accounts at
the net asset value next computed after receipt of a purchase order by the
Trust (or its agent), as established in accordance with the provisions of
the then current prospectus of the Trust describing Portfolio purchase
procedures. The Company will transmit orders from time to time to the Trust
for the purchase and redemption of shares of the Portfolios. The Trustees
of the Trust (the "Trustees") may refuse to sell shares of any Portfolio to
any person, or suspend or terminate the offering of shares of any Portfolio
if such action is required by law or by regulatory authorities having
jurisdiction or if, in the sole discretion of the Trustees acting in good
faith and in light of their fiduciary duties under federal and any
applicable state laws, such action is deemed in the best interests of the
shareholders of such Portfolio.
1.3. The Company shall pay for the purchase of shares of a Portfolio on behalf
of an Account with federal funds to be transmitted by wire to the Trust,
with the reasonable expectation of receipt by the Trust by 2:00 p.m.
Eastern time on the next Business Day after the Trust (or its agent)
receives the purchase order. Upon receipt by the Trust of the federal funds
so wired, such funds shall cease to be the responsibility of the Company
and shall become the responsibility of the Trust for this purpose.
"Business Day" shall mean any day on which the New York Stock Exchange is
open for trading and on which the Trust calculates its net asset value
pursuant to the rules of the Commission.
1.4. The Trust will redeem for cash any full or fractional shares of any
Portfolio, when requested by the Company on behalf of an Account, at the
net asset value next computed after receipt by the Trust (or its agent) of
the request for redemption, as established in accordance with the
provisions of the then current prospectus of the Trust describing Portfolio
redemption procedures. The Trust shall make payment for such shares in the
manner established from time to time by the Trust. Proceeds of redemption
with respect to a Portfolio will normally be paid to the Company for an
Account in federal funds transmitted by wire to the Company by order of the
Trust with the reasonable expectation of receipt by the Company by 2:00
p.m. Eastern time on the next Business Day after the receipt by the Trust
(or its agent) of the request for redemption. Such payment may be delayed
if, for example, the Portfolio's cash position so requires or if
extraordinary market conditions exist, but in no event shall payment be
delayed for a greater period than is permitted by the 1940 Act. The Trust
reserves the right to suspend the right of redemption, consistent with
Section 22(e) of the 1940 Act and any rules thereunder.
1.5. Payments for the purchase of shares of the Trust's Portfolios by the
Company under Section 1.3 and payments for the redemption of shares of the
Trust's Portfolios under Section 1.4 on any Business Day may be netted
against one another for the purpose of determining the amount of any wire
transfer.
1.6. Issuance and transfer of the Trust's Portfolio shares will be by book entry
only. Stock certificates will not be issued to the Company or the Accounts.
Portfolio Shares purchased from the Trust will be recorded in the
appropriate title for each Account or the appropriate subaccount of each
Account.
1.7. The Trust shall furnish, on or before the ex-dividend date, notice to the
Company of any income dividends or capital gain distributions payable on
the shares of any Portfolio of the Trust. The Company hereby elects to
receive all such income dividends and capital gain distributions as are
payable on a Portfolio's shares in additional shares of that Portfolio. The
Trust shall notify the Company of the number of shares so issued as payment
of such dividends and distributions.
1.8. The Trust shall calculate the net asset value of each Portfolio on each
Business Day, as defined in Section 1.3. The Trust shall make the net asset
value per share for each Portfolio available to the Company or its
designated agent on a daily basis as soon as reasonably practical after the
net asset value per share is calculated and shall use its best efforts to
make such net asset value per share available to the Company by 6:30 p.m.
Eastern time each Business Day.
1.9. The Trust agrees that its Portfolio shares will be sold only to
Participating Insurance Companies and their segregated asset accounts, to
the Fund Sponsor or its affiliates and to such other entities as may be
permitted by Section 817(h) of the Code, the regulations hereunder, or
judicial or administrative interpretations thereof. No shares of any
Portfolio will be sold directly to the general public. The Company agrees
that it will use Trust shares only for the purposes of funding the
Contracts through the Accounts listed in Schedule A, as amended from time
to time.
1.10.The Trust agrees that all Participating Insurance Companies shall have the
obligations and responsibilities regarding pass-through voting and
conflicts of interest corresponding materially to those contained in
Section 2.9 and Article IV of this Agreement.
ARTICLE II.
OBLIGATIONS OF THE PARTIES
2.1. The Trust shall prepare and be responsible for filing with the Commission
and any state regulators requiring such filing all shareholder reports,
notices, proxy materials (or similar materials such as voting instruction
solicitation materials), prospectuses and statements of additional
information of the Trust. The Trust shall bear the costs of registration
and qualification of shares of the Portfolios, preparation and filing of
the documents listed in this Section 2.1 and all taxes to which an issuer
is subject on the issuance and transfer of its shares.
2.2. The Company shall distribute such prospectuses, proxy statements and
periodic reports of the Trust to the Contract owners as required to be
distributed to such Contract owners under applicable federal or state law.
2.3. The Trust shall provide such documentation (including a final copy of the
Trust's prospectus as set in type or in camera-ready copy) and other
assistance as is reasonably necessary in order for the Company to print
together in one document the current prospectus for the Contracts issued by
the Company and the current prospectus for the Trust. The Trust shall bear
the expense of printing copies of its current prospectus that will be
distributed to existing Contract owners, and the Company shall bear the
expense of printing copies of the Trust's prospectus that are used in
connection with offering the Contracts issued by the Company.
2.4. The Trust and the Distributor shall provide (1) at the Trust's expense, one
copy of the Trust's current Statement of Additional Information ("SAI") to
the Company and to any Contract owner who requests such SAI, (2) at the
Company's expense, such additional copies of the Trust's current SAI as the
Company shall reasonably request and that the Company shall require in
accordance with applicable law in connection with offering the Contracts
issued by the Company.
2.5. The Trust, at its expense, shall provide the Company with copies of its
proxy material, periodic reports to shareholders and other communications
to shareholders in such quantity as the Company shall reasonably require
for purposes of distributing to Contract owners. The Trust, at the
Company's expense, shall provide the Company with copies of its periodic
reports to shareholders and other communications to shareholders in such
quantity as the Company shall reasonably request for use in connection with
offering the Contracts issued by the Company. If requested by the Company
in lieu thereof, the Trust shall provide such documentation (including a
final copy of the Trust's proxy materials, periodic reports to shareholders
and other communications to shareholders, as set in type or in camera-ready
copy) and other assistance as reasonably necessary in order for the Company
to print such shareholder communications for distribution to Contract
owners.
2.6. The Company agrees and acknowledges that the Distributor is the sole owner
of the name and mark "Alger" and that all use of any designation comprised
in whole or part of such name or mark under this Agreement shall inure to
the benefit of the Distributor. Except as provided in Section 2.5, the
Company shall not use any such name or mark on its own behalf or on behalf
of the Accounts or Contracts in any registration statement, advertisement,
sales literature or other materials relating to the Accounts or Contracts
without the prior written consent of the Distributor. Upon termination of
this Agreement for any reason, the Company shall cease all use of any such
name or mark as soon as reasonably practicable.
2.7. The Company shall furnish, or cause to be furnished, to the Trust or its
designee a copy of each Contract prospectus and/or statement of additional
information describing the Contracts, each report to Contract owners, proxy
statement, application for exemption or request for no-action letter in
which the Trust or the Distributor is named contemporaneously with the
filing of such document with the Commission. The Company shall furnish, or
shall cause to be furnished, to the Trust or its designee each piece of
sales literature or other promotional material in which the Trust or the
Distributor is named, at least five Business Days prior to its use. No such
material shall be used if the Trust or its designee reasonably objects to
such use within three Business Days after receipt of such material.
2.8. The Company shall not give any information or make any representations or
statements on behalf of the Trust or concerning the Trust or the
Distributor in connection with the sale of the Contracts other than
information or representations contained in and accurately derived from the
registration statement or prospectus for the Trust shares (as such
registration statement and prospectus may be amended or supplemented from
time to time), annual and semi-annual reports of the Trust, Trust-sponsored
proxy statements, or in sales literature or other promotional material
approved by the Trust or its designee, except as required by legal process
or regulatory authorities or with the prior written permission of the
Trust, the Distributor or their respective designees. The Trust and the
Distributor agree to respond to any request for approval on a prompt and
timely basis. The Company shall adopt and implement procedures reasonably
designed to ensure that "broker only" materials including information
therein about the Trust or the Distributor are not distributed to existing
or prospective Contract owners.
2.9. The Trust shall use its best efforts to provide the Company, on a timely
basis, with such information about the Trust, the Portfolios and the
Distributor, in such form as the Company may reasonably require, as the
Company shall reasonably request in connection with the preparation of
registration statements, prospectuses and annual and semi-annual reports
pertaining to the Contracts.
2.10.The Trust and the Distributor shall not give, and agree that no affiliate
of either of them shall give, any information or make any representations
or statements on behalf of the Company or concerning the Company, the
Accounts or the Contracts other than information or representations
contained in and accurately derived from the registration statement or
prospectus for the Contracts (as such registration statement and prospectus
may be amended or supplemented from time to time), or in materials approved
by the Company for distribution including sales literature or other
promotional materials, except as required by legal process or regulatory
authorities or with the prior written permission of the Company. The
Company agrees to respond to any request for approval on a prompt and
timely basis.
2.11.So long as, and to the extent that, the Commission interprets the 1940 Act
to require pass- through voting privileges for Contract owners, the Company
will provide pass-through voting privileges to Contract owners whose cash
values are invested, through the registered Accounts, in shares of one or
more Portfolios of the Trust. The Trust shall require all Participating
Insurance Companies to calculate voting privileges in the same manner and
the Company shall be responsible for assuring that the Accounts calculate
voting privileges in the manner established by the Trust. With respect to
each registered Account, the Company will vote shares of each Portfolio of
the Trust held by a registered Account and for which no timely voting
instructions from Contract owners are received in the same proportion as
those shares for which voting instructions are received. The Company and
its agents will in no way recommend or oppose or interfere with the
solicitation of proxies for Portfolio shares held to fund the Contacts
without the prior written consent of the Trust, which consent may be
withheld in the Trust's sole discretion. The Company reserves the right, to
the extent permitted by law, to vote shares held in any Account in its sole
discretion.
2.12.The Company and the Trust will each provide to the other information about
the results of any regulatory examination relating to the Contracts or the
Trust, including relevant portions of any "deficiency letter" and any
response thereto.
2.13.No compensation shall be paid by the Trust to the Company, or by the
Company to the Trust, under this Agreement (except for specified expense
reimbursements). However, nothing herein shall prevent the parties hereto
from otherwise agreeing to perform, and arranging for appropriate
compensation for, other services relating to the Trust, the Accounts or
both.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES
3.1. The Company represents and warrants that it is an insurance company duly
organized and in good standing under the laws of the State of Missouri and
that it has legally and validly established each Account as a segregated
asset account under such law as of the date set forth in Schedule A, and
that Jones & Babson, Inc. and Conseco Equity Sales, Inc., the co-principal
underwriters for the Contracts, are registered as broker-dealers under the
Securities Exchange Act of 1934 and are members in good standing of the
National Association of Securities Dealers, Inc.
3.2. The Company represents and warrants that it has registered or, prior to any
issuance or sale of the Contracts, will register each Account as a unit
investment trust in accordance with the provisions of the 1940 Act and
cause each Account to remain so registered to serve as a segregated asset
account for the Contracts, unless an exemption from registration is
available.
3.3. The Company represents and warrants that the Contracts will be registered
under the 1933 Act unless an exemption from registration is available prior
to any issuance or sale of the Contracts; the Contracts will be issued and
sold in compliance in all material respects with all applicable federal and
state laws; and the sale of the Contracts shall comply in all material
respects with state insurance law suitability requirements.
3.4. The Trust represents and warrants that it is duly organized and validly
existing under the laws of the Commonwealth of Massachusetts and that it
does and will comply in all material respects with the 1940 Act and the
rules and regulations thereunder.
3.5. The Trust and the Distributor represent and warrant that the Portfolio
shares offered and sold pursuant to this Agreement will be registered under
the 1933 Act and sold in accordance with all applicable federal and state
laws, and the Trust shall be registered under the 1940 Act prior to and at
the time of any issuance or sale of such shares. The Trust shall amend its
registration statement under the 1933 Act and the 1940 Act from time to
time as required in order to effect the continuous offering of its shares.
The Trust shall register and qualify its shares for sale in accordance with
the laws of the various states only if and to the extent deemed advisable
by the Trust.
3.6. The Trust represents and warrants that the investments of each Portfolio
will comply with the diversification requirements for variable annuity,
endowment or life insurance contracts set forth in Section 817(h) of the
Internal Revenue Code of 1986, as amended (the "Code"), and the rules and
regulations thereunder, including without limitation Treasury Regulation
1.817-5, and will notify the Company immediately upon having a reasonable
basis for believing any Portfolio has ceased to comply or might not so
comply and will immediately take all reasonable steps to adequately
diversify the Portfolio to achieve compliance within the grace period
afforded by Regulation 1.817-5.
3.7. The Trust represents and warrants that it is currently qualified as a
"regulated investment company" under Subchapter M of the Code, that it will
make every effort to maintain such qualification and will notify the
Company immediately upon having a reasonable basis for believing it has
ceased to so qualify or might not so qualify in the future.
3.8. The Trust represents and warrants that it, its directors, officers,
employees and others dealing with the money or securities, or both, of a
Portfolio shall at all times be covered by a blanket fidelity bond or
similar coverage for the benefit of the Trust in an amount not less than
the minimum coverage required by Rule 17g-1 or other applicable regulations
under the 1940 Act. Such bond shall include coverage for larceny and
embezzlement and be issued by a reputable bonding company.
3.9. The Distributor represents that it is duly organized and validly existing
under the laws of the State of Delaware and that it is registered, and will
remain registered, during the term of this Agreement, as a broker-dealer
under the Securities Exchange Act of 1934 and is a member in good standing
of the National Association of Securities Dealers, Inc.
ARTICLE IV.
POTENTIAL CONFLICTS
4.1. The parties acknowledge that a Portfolio's shares may be made available for
investment to other Participating Insurance Companies. In such event, the
Trustees will monitor the Trust for the existence of any material
irreconcilable conflict between the interests of the contract owners of all
Participating Insurance Companies. A material irreconcilable conflict may
arise for a variety of reasons, including: (a) an action by any state
insurance regulatory authority; (b) a change in applicable federal or state
insurance, tax or securities laws or regulations, or a public ruling,
private letter ruling, no-action or interpretative letter, or any similar
action by insurance, tax, or securities regulatory authorities; (c) an
administrative or judicial decision in any relevant proceeding; (d) the
manner in which the investments of any Portfolio are being managed; (e) a
difference in voting instructions given by variable annuity contract and
variable life insurance contract owners; or (f) a decision by an insurer to
disregard the voting instructions of contract owners. The Trust shall
promptly inform the Company of any determination by the Trustees that a
material irreconcilable conflict exists and of the implications thereof.
4.2. The Company agrees to report promptly any potential or existing conflicts
of which it is aware to the Trustees. The Company will assist the Trustees
in carrying out their responsibilities under the Shared Funding Exemptive
Order by providing the Trustees with all information reasonably necessary
for and requested by the Trustees to consider any issues raised including,
but not limited to, information as to a decision by the Company to
disregard Contract owner voting instructions. All communications from the
Company to the Trustees may be made in care of the Trust.
4.3. If it is determined by a majority of the Trustees, or a majority of the
disinterested Trustees, that a material irreconcilable conflict exists that
affects the interests of contract owners, the Company shall, in cooperation
with other Participating Insurance Companies whose contract owners are also
affected, at its own expense and to the extent reasonably practicable (as
determined by the Trustees) take whatever steps are necessary to remedy or
eliminate the material irreconcilable conflict, which steps could include:
(a) withdrawing the assets allocable to some or all of the Accounts from
the Trust or any Portfolio and reinvesting such assets in a different
investment medium, including (but not limited to) another Portfolio of the
Trust, or submitting the question of whether or not such segregation should
be implemented to a vote of all affected Contract owners and, as
appropriate, segregating the assets of any appropriate group (i.e., annuity
contract owners, life insurance contract owners, or variable contract
owners of one or more Participating Insurance Companies) that votes in
favor of such segregation, or offering to the affected Contract owners the
option of making such a change; and (b) establishing a new registered
management investment company or managed separate account.
4.4. If a material irreconcilable conflict arises because of a decision by the
Company to disregard Contract owner voting instructions and that decision
represents a minority position or would preclude a majority vote, the
Company may be required, at the Trust's election, to withdraw the affected
Account's investment in the Trust and terminate this Agreement with respect
to such Account; provided, however that such withdrawal and termination
shall be limited to the extent required by the foregoing material
irreconcilable conflict as determined by a majority of the disinterested
Trustees. Any such withdrawal and termination must take place within six
(6) months after the Trust gives written notice that this provision is
being implemented. Until the end of such six (6) month period, the Trust
shall continue to accept and implement orders by the Company for the
purchase and redemption of shares of the Trust.
4.5. If a material irreconcilable conflict arises because a particular state
insurance regulator's decision applicable to the Company conflicts with the
majority of other state regulators, then the Company will withdraw the
affected Account's investment in the Trust and terminate this Agreement
with respect to such Account within six (6) months after the Trustees
inform the Company in writing that the Trust has determined that such
decision has created a material irreconcilable conflict; provided, however,
that such withdrawal and termination shall be limited to the extent
required by the foregoing material irreconcilable conflict as determined by
a majority of the disinterested Trustees. Until the end of such six (6)
month period, the Trust shall continue to accept and implement orders by
the Company for the purchase and redemption of shares of the Trust.
4.6. For purposes of Section 4.3 through 4.6 of this Agreement, a majority of
the disinterested Trustees shall determine whether any proposed action
adequately remedies any material irreconcilable conflict, but in no event
will the Trust be required to establish a new funding medium for any
Contract. The Company shall not be required to establish a new funding
medium for the Contracts if an offer to do so has been declined by vote of
a majority of Contract owners materially adversely affected by the material
irreconcilable conflict. In the event that the Trustees determine that any
proposed action does not adequately remedy any material irreconcilable
conflict, then the Company will withdraw the Account's investment in the
Trust and terminate this Agreement within six (6) months after the Trustees
inform the Company in writing of the foregoing determination; provided,
however, that such withdrawal and termination shall be limited to the
extent required by any such material irreconcilable conflict as determined
by a majority of the disinterested Trustees.
4.7. The Company shall at least annually submit to the Trustees such reports,
materials or data as the Trustees may reasonably request so that the
Trustees may fully carry out the duties imposed upon them by the Shared
Funding Exemptive Order, and said reports, materials and data shall be
submitted more frequently if reasonably deemed appropriate by the Trustees.
4.8. If and to the extent that Rule 6e-3(T) is amended, or Rule 6e-3 is adopted,
to provide exemptive relief from any provision of the 1940 Act or the rules
promulgated thereunder with respect to mixed or shared funding (as defined
in the Shared Funding Exemptive Order) on terms and conditions materially
different from those contained in the Shared Funding Exemptive Order, then
the Trust and/or the Participating Insurance Companies, as appropriate,
shall take such steps as may be necessary to comply with Rule 6e-3(T), as
amended, or Rule 6e-3, as adopted, to the extent such rules are applicable.
ARTICLE V.
INDEMNIFICATION
5.1. Indemnification By the Company. The Company agrees to indemnify and hold
harmless the Distributor, the Trust and each of its Trustees, officers,
employees and agents and each person, if any, who controls the Trust within
the meaning of Section 15 of the 1933 Act (collectively, the "Indemnified
Parties" for purposes of this Section 5.1) against any and all losses,
claims, damages, liabilities (including amounts paid in settlement with the
written consent of the Company, which consent shall not be unreasonably
withheld) or expenses (including the reasonable costs of investigating or
defending any alleged loss, claim, damage, liability or expense and
reasonable legal counsel fees incurred in connection therewith)
(collectively, "Losses"), to which the Indemnified Parties may become
subject under any statute or regulation, or at common law or otherwise,
insofar as such Losses are related to the sale or acquisition of the
Contracts or Trust shares and:
(a) arise out of or are based upon any untrue statements or alleged untrue
statements of any material fact contained in a registration statement
or prospectus for the Contracts or in the Contracts themselves or in
sales literature generated or approved by the Company on behalf of the
Contracts or Accounts (or any amendment or supplement to any of the
foregoing) (collectively, "Company Documents" for the purposes of this
Article V), or arise out of or are based upon the omission or the
alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not
misleading, provided that this indemnity shall not apply as to any
Indemnified Party if such statement or omission or such alleged
statement or omission was made in reliance upon and was accurately
derived from written information furnished to the Company by or on
behalf of the Trust for use in Company Documents or otherwise for use
in connection with the sale of the Contracts or Trust shares; or
(b) arise out of or result from statements or representations (other than
statements or representations contained in and accurately derived from
Trust Documents as defined in Section 5.2(a)) or wrongful conduct of
the Company or persons under its control, with respect to the sale or
acquisition of the Contracts or Trust shares; or
(c) arise out of or result from any untrue statement or alleged untrue
statement of a material fact contained in Trust Documents as defined
in Section 5.2(a) or the omission or alleged omission to state therein
a material fact required to be stated therein or necessary to make the
statements therein not misleading if such statement or omission was
made in reliance upon and accurately derived from written information
furnished to the Trust by or on behalf of the Company; or
(d) arise out of or result from any failure by the Company to provide the
services or furnish the materials required under the terms of this
Agreement; or
(e) arise out of or result from any material breach of any representation
and/or warranty made by the Company in this Agreement or arise out of
or result from any other material breach of this Agreement by the
Company; or
(f) arise out of or result from the provision by the Company to the Trust
of insufficient or incorrect information regarding the purchase or
sale of shares of any Portfolio, or the failure of the Company to
provide such information on a timely basis.
5.2. Indemnification by the Distributor. The Distributor agrees to indemnify and
hold harmless the Company and each of its directors, officers, employees,
and agents and each person, if any, who controls the Company within the
meaning of Section 15 of the 1933 Act (collectively, the "Indemnified
Parties" for the purposes of this Section 5.2) against any and all losses,
claims, damages, liabilities (including amounts paid in settlement with the
written consent of the Distributor, which consent shall not be unreasonably
withheld) or expenses (including the reasonable costs of investigating or
defending any alleged loss, claim, damage, liability or expense and
reasonable legal counsel fees incurred in connection therewith)
(collectively, "Losses"), to which the Indemnified Parties may become
subject under any statute or regulation, or at common law or otherwise,
insofar as such Losses are related to the sale or acquisition of the
Contracts or Trust shares and:
(a) arise out of or are based upon any untrue statements or alleged untrue
statements of any material fact contained in the registration
statement or prospectus for the Trust (or any amendment or supplement
thereto) (collectively, "Trust Documents" for the purposes of this
Article V), or arise out of or are based upon the omission or the
alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not
misleading, provided that this indemnity shall not apply as to any
Indemnified Party if such statement or omission or such alleged
statement or omission was made in reliance upon and was accurately
derived from written information furnished to the Distributor or the
Trust by or on behalf of the Company for use in Trust Documents or
otherwise for use in connection with the sale of the Contracts or
Trust shares and; or
(b) arise out of or result from statements or representations (other than
statements or representations contained in and accurately derived form
Company Documents) or wrongful conduct of the Distributor or persons
under its control, with respect to the sale or acquisition of the
Contracts or Portfolio shares; or
(c) arise out of or result from any untrue statement or alleged
untrue statement of a material fact contained in Company
Documents or the omission or alleged omission to state therein
a material fact required to be stated therein or necessary to
make the statements therein not misleading if such statement
or omission was made in reliance upon and accurately derived
from written information furnished to the Company by or on
behalf of the Trust; or
(d) arise out of or result from any failure by the Distributor or
the Trust to provide the services or furnish the materials
required under the terms of this Agreement; or
(e) arise out of or result from any material breach of any
representation and/or warranty made by the Distributor or the
Trust in this Agreement or arise out of or result from any
other material breach of this Agreement by the Distributor or
the Trust.
5.3. None of the Company, the Trust or the Distributor shall be liable under the
indemnification provisions of Sections 5.1 or 5.2, as applicable, with
respect to any Losses incurred or assessed against an Indemnified Party
that arise from such Indemnified Party's willful misfeasance, bad faith or
negligence in the performance of such Indemnified Party's duties or by
reason of such Indemnified Party's reckless disregard of obligations or
duties under this Agreement.
5.4. None of the Company, the Trust or the Distributor shall be liable under the
indemnification provisions of Sections 5.1 or 5.2, as applicable, with
respect to any claim made against an Indemnified party unless such
Indemnified Party shall have notified the other party in writing within a
reasonable time after the summons, or other first written notification,
giving information of the nature of the claim shall have been served upon
or otherwise received by such Indemnified Party (or after such Indemnified
Party shall have received notice of service upon or other notification to
any designated agent), but failure to notify the party against whom
indemnification is sought of any such claim shall not relieve that party
from any liability which it may have to the Indemnified Party in the
absence of Sections 5.1 and 5.2.
5.5. In case any such action is brought against an Indemnified Party, the
indemnifying party shall be entitled to participate, at its own expense, in
the defense of such action. The indemnifying party also shall be entitled
to assume the defense thereof, with counsel reasonably satisfactory to the
party named in the action. After notice from the indemnifying party to the
Indemnified Party of an election to assume such defense, the Indemnified
Party shall bear the fees and expenses of any additional counsel retained
by it, and the indemnifying party will not be liable to the Indemnified
Party under this Agreement for any legal or other expenses subsequently
incurred by such party independently in connection with the defense thereof
other than reasonable costs of investigation.
ARTICLE VI.
TERMINATION
6.1. This Agreement shall terminate:
(a) at the option of any party upon 60 days advance written notice to the
other parties, unless a shorter time is agreed to by the parties;
(b) at the option of the Trust or the Distributor if the Contracts issued
by the Company cease to qualify as annuity contracts or life insurance
contracts, as applicable, under the Code or if the Contracts are not
registered, issued or sold in accordance with applicable state and/or
federal law; or
(C) at the option of any party upon a determination by a majority of the
Trustees of the Trust, or a majority of its disinterested Trustees,
that a material irreconcilable conflict exists; or
(d) at the option of the Company upon institution of formal proceedings
against the Trust or the Distributor by the NASD, the SEC, or any
state securities or insurance department or any other regulatory body
regarding the Trust's or the Distributor's duties under this Agreement
or related to the sale of Trust shares or the operation of the Trust;
or
(e) at the option of the Company if the Trust or a Portfolio fails to meet
the diversification requirements specified in Section 3.6 hereof; or.
(f) at the option of the Company if shares of the Series are not
reasonably available to meet the requirements of the Variable
Contracts issued by the Company, as determined by the Company, and
upon prompt notice by the Company to the other parties; or
(g) at the option of the Company in the event any of the shares of the
Portfolio are not registered, issued or sold in accordance with
applicable state and/or federal law, or such law precludes the use of
such shares as the underlying investment media of the Variable
Contracts issued or to be issued by the Company; or
(h) at the option of the Company, if the Portfolio fails to qualify as a
Regulated Investment Company under Subchapter M of the Code; or
(i) at the option of the Distributor if it shall determine in its sole
judgment exercised in good faith, that the Company and/or its
affiliated companies has suffered a material adverse change in its
business, operations, financial condition or prospects since the date
of this Agreement or is the subject of material adverse publicity.
6.2. Notwithstanding any termination of this Agreement, the Trust shall, at the
option of the Company, continue to make available additional shares of any
Portfolio and redeem shares of any Portfolio pursuant to the terms and
conditions of this Agreement for all Contracts in effect on the effective
date of termination of this Agreement.
6.3. The provisions of Article V shall survive the termination of this
Agreement, and the provisions of Article IV and Section 2.9 shall survive
the termination of this Agreement as long as shares of the Trust are held
on behalf of Contract owners in accordance with Section 6.2.
ARTICLE VII.
NOTICES
Any notice shall be sufficiently given when sent by registered or certified
mail to the other party at the address of such party set forth below or at such
other address as such party may from time to time specify in writing to the
other party.
If to the Trust or its Distributor:
Fred Alger Management, Inc.
30 Montgomery Street
Jersey City, NJ 07302
Attn: Gregory S. Duch
If to the Company:
Business Men's Assurance Company of America
700 Karnes Blvd.
Kansas City, MO 64108
Attn.:
ARTICLE VIII.
MISCELLANEOUS
8.1. The captions in this Agreement are included for convenience of reference
only and in no way define or delineate any of the provisions hereof or
otherwise affect their construction or effect.
8.2. This Agreement may be executed in two or more counterparts, each of which
taken together shall constitute one and the same instrument.
8.3. If any provision of this Agreement shall be held or made invalid by a court
decision, statute, rule or otherwise, the remainder of the Agreement shall
not be affected thereby.
8.4. This Agreement shall be construed and the provisions hereof interpreted
under and in accordance with the laws of the State of ________. It shall
also be subject to the provisions of the federal securities laws and the
rules and regulations thereunder and to any orders of the Commission
granting exemptive relief therefrom and the conditions of such orders.
Copies of any such orders shall be promptly forwarded by the Trust to the
Company.
8.5. All liabilities of the Trust arising, directly or indirectly, under this
Agreement, of any and every nature whatsoever, shall be satisfied solely
out of the assets of the Trust and no Trustee, officer, agent or holder of
shares of beneficial interest of the Trust shall be personally liable for
any such liabilities.
8.6. Each party shall cooperate with each other party and all appropriate
governmental authorities (including without limitation the Commission, the
National Association of Securities Dealers, Inc. and state insurance
regulators) and shall permit such authorities reasonable access to its
books and records in connection with any investigation or inquiry relating
to this Agreement or the transactions contemplated hereby.
8.7. The rights, remedies and obligations contained in this Agreement are
cumulative and are in addition to any and all rights, remedies and
obligations, at law or in equity, which the parties hereto are entitled to
under state and federal laws.
8.8. This Agreement shall not be exclusive in any respect.
8.9. Neither this Agreement nor any rights or obligations hereunder may be
assigned by either party without the prior written approval of the other
party.
8.10.No provisions of this Agreement may be amended or modified in any manner
except by a written agreement properly authorized and executed by both
parties.
8.11.Each party hereto shall, except as required by law or otherwise permitted
by this Agreement, treat as confidential the names and addresses of the
owners of the Contracts and all information reasonably identified as
confidential in writing by any other party hereto, and shall not disclose
such confidential information without the written consent of the affected
party unless such information has become publicly available.
IN WITNESS WHEREOF, the parties have caused their duly authorized officers
to execute this Participation Agreement as of the date and year first above
written.
Fred Alger and Company, Incorporated
By:
-----------------------
Name:
Title:
The Alger American Fund
By:
-----------------------
Name:
Title:
Business Men's Assurance Company of America
By:
------------------------
Name:
Title:
SCHEDULE A
SEGREGATED ASSET ACCOUNTS
Blazzard, Grodd & Hasenauer, P.C.
943 Post Road East
Westport, CT 06880
(203) 226-7866
May 1, 2000
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 Counsel in 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 3, 2000 with respect to the consolidated
financial statements of Business Men's Assurance Company of
America and our report dated February 3, 2000 with respect to
the financial statements of BMA Variable Annuity Account A
included in the Post-Effective Amendment No. 8 to the Registration
Statement under the Securities Act of 1933 (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
April 28, 2000
<TABLE>
<CAPTION>
==================================================================================
Standish Ayer & Wood Intermediate Fixed Income
==================================================================================
==================================================================================
==================================================================================
==================================================================================
One Year Results
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Additional Death Benefit No Yes
==================================================================================
==================================================================================
<S> <C> <C>
Annual Growth Rate (after Fund Management) -0.19% -0.19%
==================================================================================
==================================================================================
**'Calendar Days Since Deposit 365 365
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Dependent Variables
==================================================================================
==================================================================================
M&E Charge (no Contract Chg.; Daily, Simple) 1.25% 1.45%
==================================================================================
==================================================================================
**Whole Years Since Deposit 1 1
==================================================================================
==================================================================================
**Days into Current Year 0 0
==================================================================================
==================================================================================
**Basic Surrender Charge 6% 6%
==================================================================================
==================================================================================
**Non-Standard Daily Factor 0.999961 0.999955
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Results
==================================================================================
==================================================================================
Arbitrary Premium
==================================================================================
==================================================================================
Non-Standard FV (M&E Only)
==================================================================================
==================================================================================
Non-Standard Annual Return -1.43% -1.63%
==================================================================================
==================================================================================
**Standard Before Surrender Chg
==================================================================================
==================================================================================
Standard FV (M&E, Contract Chg, Surr. Chg.)
==================================================================================
==================================================================================
Standard Annualized Performance -7.02% -7.22%
==================================================================================
==================================================================================
==================================================================================
==================================================================================
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Since Inception 11/24/97 12/31/99
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Additional Death Benefit No Yes
==================================================================================
==================================================================================
Annual Growth Rate (after Fund Management) 2.91% 2.91%
==================================================================================
==================================================================================
Calendar Days Since Inception 767 767
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Dependent Variables
==================================================================================
==================================================================================
M&E Charge (no Contract Chg.; Daily, Simple) 1.25% 1.45%
==================================================================================
==================================================================================
**Whole Years Since Deposit 2 2
==================================================================================
==================================================================================
**Days into Current Year 37 37
==================================================================================
==================================================================================
**Basic Surrender Charge 5% 5%
==================================================================================
==================================================================================
**Non-Standard Daily Factor 1.000044 1.000039
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Results
==================================================================================
==================================================================================
Arbitrary Premium
==================================================================================
==================================================================================
Non-Standard FV (M&E Only)
==================================================================================
==================================================================================
Non-Standard Annual Return 1.63% 1.43%
==================================================================================
==================================================================================
**Standard Before Surrender Chg
==================================================================================
==================================================================================
Standard FV (M&E, Contract Chg, Surr. Chg.)
==================================================================================
==================================================================================
Standard Annualized Performance -0.75% -0.96%
==================================================================================
==================================================================================
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Contract Charge Ratio (One Year) 5.13%
==================================================================================
==================================================================================
Contract Charge Ratio (Inception) 5.13%
==================================================================================
==================================================================================
Sheet Index 3
==================================================================================
==================================================================================
Standish Ayer & Wood Mid Cap Equity
==================================================================================
==================================================================================
==================================================================================
==================================================================================
One Year Results
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Additional Death Benefit No Yes
==================================================================================
==================================================================================
Annual Growth Rate (after Fund Management) 2.26% 2.26%
==================================================================================
==================================================================================
**'Calendar Days Since Deposit 365 365
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Dependent Variables
==================================================================================
==================================================================================
M&E Charge (no Contract Chg.; Daily, Simple) 1.25% 1.45%
==================================================================================
==================================================================================
**Whole Years Since Deposit 1 1
==================================================================================
==================================================================================
**Days into Current Year 0 0
==================================================================================
==================================================================================
**Basic Surrender Charge 6% 6%
==================================================================================
==================================================================================
**Non-Standard Daily Factor 1.000027 1.000022
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Results
==================================================================================
==================================================================================
Arbitrary Premium
==================================================================================
==================================================================================
Non-Standard FV (M&E Only)
==================================================================================
==================================================================================
Non-Standard Annual Return 0.99% 0.79%
==================================================================================
==================================================================================
**Standard Before Surrender Chg
==================================================================================
==================================================================================
Standard FV (M&E, Contract Chg, Surr. Chg.)
==================================================================================
==================================================================================
Standard Annualized Performance -4.59% -4.79%
==================================================================================
==================================================================================
==================================================================================
==================================================================================
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Since Inception 11/24/97 12/31/99
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Additional Death Benefit No Yes
==================================================================================
==================================================================================
Annual Growth Rate (after Fund Management) 6.78% 6.78%
==================================================================================
==================================================================================
Calendar Days Since Inception 767 767
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Dependent Variables
==================================================================================
==================================================================================
M&E Charge (no Contract Chg.; Daily, Simple) 1.25% 1.45%
==================================================================================
==================================================================================
**Whole Years Since Deposit 2 2
==================================================================================
==================================================================================
**Days into Current Year 37 37
==================================================================================
==================================================================================
**Basic Surrender Charge 5% 5%
==================================================================================
==================================================================================
**Non-Standard Daily Factor 1.000145 1.000140
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Results
==================================================================================
==================================================================================
Arbitrary Premium
==================================================================================
==================================================================================
Non-Standard FV (M&E Only)
==================================================================================
==================================================================================
Non-Standard Annual Return 5.45% 5.24%
==================================================================================
==================================================================================
**Standard Before Surrender Chg
==================================================================================
==================================================================================
Standard FV (M&E, Contract Chg, Surr. Chg.)
==================================================================================
==================================================================================
Standard Annualized Performance 3.18% 2.97%
==================================================================================
==================================================================================
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Contract Charge Ratio (One Year) 5.25%
==================================================================================
==================================================================================
Contract Charge Ratio (Inception) 5.25%
==================================================================================
==================================================================================
Sheet Index 8
==================================================================================
==================================================================================
Standish Ayer & Wood Money Market
==================================================================================
==================================================================================
==================================================================================
==================================================================================
One Year Results
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Additional Death Benefit No Yes
==================================================================================
==================================================================================
Annual Growth Rate (after Fund Management) 4.60% 4.60%
==================================================================================
==================================================================================
**'Calendar Days Since Deposit 365 365
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Dependent Variables
==================================================================================
==================================================================================
M&E Charge (no Contract Chg.; Daily, Simple) 1.25% 1.45%
==================================================================================
==================================================================================
**Whole Years Since Deposit 1 1
==================================================================================
==================================================================================
**Days into Current Year 0 0
==================================================================================
==================================================================================
**Basic Surrender Charge 6% 6%
==================================================================================
==================================================================================
**Non-Standard Daily Factor 1.000089 1.000083
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Results
==================================================================================
==================================================================================
Arbitrary Premium 1,000.00 1,000.00
==================================================================================
==================================================================================
Non-Standard FV (M&E Only) 1,033.01 1,030.94
==================================================================================
==================================================================================
Non-Standard Annual Return 3.30% 3.09%
==================================================================================
==================================================================================
**Standard Before Surrender Chg 1,031.13 1,029.06
==================================================================================
==================================================================================
Standard FV (M&E, Contract Chg, Surr. Chg.) 977.31 975.24
==================================================================================
==================================================================================
Standard Annualized Performance -2.27% -2.48%
==================================================================================
==================================================================================
==================================================================================
==================================================================================
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Since Inception 11/24/97 12/31/99
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Additional Death Benefit No Yes
==================================================================================
==================================================================================
Annual Growth Rate (after Fund Management) 4.87% 4.87%
==================================================================================
==================================================================================
Calendar Days Since Inception 767 767
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Dependent Variables
==================================================================================
==================================================================================
M&E Charge (no Contract Chg.; Daily, Simple) 1.25% 1.45%
==================================================================================
==================================================================================
**Whole Years Since Deposit 2 2
==================================================================================
==================================================================================
**Days into Current Year 37 37
==================================================================================
==================================================================================
**Basic Surrender Charge 5% 5%
==================================================================================
==================================================================================
**Non-Standard Daily Factor 1.000096 1.000091
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Results
==================================================================================
==================================================================================
Arbitrary Premium 1,000.00 1,000.00
==================================================================================
==================================================================================
Non-Standard FV (M&E Only) 1,076.44 1,071.92
==================================================================================
==================================================================================
Non-Standard Annual Return 3.57% 3.36%
==================================================================================
==================================================================================
**Standard Before Surrender Chg 1,070.79 1,066.28
==================================================================================
==================================================================================
Standard FV (M&E, Contract Chg, Surr. Chg.) 1,026.15 1,021.61
==================================================================================
==================================================================================
Standard Annualized Performance 1.24% 1.02%
==================================================================================
==================================================================================
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Contract Charge Ratio (One Year) 5.37%
==================================================================================
==================================================================================
Contract Charge Ratio (Inception) 5.37%
==================================================================================
==================================================================================
Sheet Index 1
==================================================================================
==================================================================================
Standish Global Fixed Income
==================================================================================
==================================================================================
==================================================================================
==================================================================================
One Year Results
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Additional Death Benefit No Yes
==================================================================================
==================================================================================
Annual Growth Rate (after Fund Management) -0.27% -0.27%
==================================================================================
==================================================================================
**'Calendar Days Since Deposit 365 365
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Dependent Variables
==================================================================================
==================================================================================
M&E Charge (no Contract Chg.; Daily, Simple) 1.25% 1.45%
==================================================================================
==================================================================================
**Whole Years Since Deposit 1 1
==================================================================================
==================================================================================
**Days into Current Year 0 0
==================================================================================
==================================================================================
**Basic Surrender Charge 6% 6%
==================================================================================
==================================================================================
**Non-Standard Daily Factor 0.999958 0.999953
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Results
==================================================================================
==================================================================================
Arbitrary Premium
==================================================================================
==================================================================================
Non-Standard FV (M&E Only)
==================================================================================
==================================================================================
Non-Standard Annual Return -1.51% -1.71%
==================================================================================
==================================================================================
**Standard Before Surrender Chg
==================================================================================
==================================================================================
Standard FV (M&E, Contract Chg, Surr. Chg.)
==================================================================================
==================================================================================
Standard Annualized Performance -7.10% -7.30%
==================================================================================
==================================================================================
==================================================================================
==================================================================================
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Since Inception 11/24/97 12/31/99
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Additional Death Benefit No Yes
==================================================================================
==================================================================================
Annual Growth Rate (after Fund Management) 4.02% 4.02%
==================================================================================
==================================================================================
Calendar Days Since Inception 767 767
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Dependent Variables
==================================================================================
==================================================================================
M&E Charge (no Contract Chg.; Daily, Simple) 1.25% 1.45%
==================================================================================
==================================================================================
**Whole Years Since Deposit 2 2
==================================================================================
==================================================================================
**Days into Current Year 37 37
==================================================================================
==================================================================================
**Basic Surrender Charge 5% 5%
==================================================================================
==================================================================================
**Non-Standard Daily Factor 1.000074 1.000068
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Results
==================================================================================
==================================================================================
Arbitrary Premium
==================================================================================
==================================================================================
Non-Standard FV (M&E Only)
==================================================================================
==================================================================================
Non-Standard Annual Return 2.73% 2.52%
==================================================================================
==================================================================================
**Standard Before Surrender Chg
==================================================================================
==================================================================================
Standard FV (M&E, Contract Chg, Surr. Chg.)
==================================================================================
==================================================================================
Standard Annualized Performance 0.38% 0.17%
==================================================================================
==================================================================================
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Contract Charge Ratio (One Year) 5.12%
==================================================================================
==================================================================================
Contract Charge Ratio (Inception) 5.12%
==================================================================================
==================================================================================
Sheet Index 2
==================================================================================
==================================================================================
Stein, Roe & Farnham Small Cap Equity
==================================================================================
==================================================================================
==================================================================================
==================================================================================
One Year Results
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Additional Death Benefit No Yes
==================================================================================
==================================================================================
Annual Growth Rate (after Fund Management) 62.16% 62.16%
==================================================================================
==================================================================================
**'Calendar Days Since Deposit 365 365
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Dependent Variables
==================================================================================
==================================================================================
M&E Charge (no Contract Chg.; Daily, Simple) 1.25% 1.45%
==================================================================================
==================================================================================
**Whole Years Since Deposit 1 1
==================================================================================
==================================================================================
**Days into Current Year 0 0
==================================================================================
==================================================================================
**Basic Surrender Charge 6% 6%
==================================================================================
==================================================================================
**Non-Standard Daily Factor 1.001291 1.001286
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Results
==================================================================================
==================================================================================
Arbitrary Premium
==================================================================================
==================================================================================
Non-Standard FV (M&E Only)
==================================================================================
==================================================================================
Non-Standard Annual Return 60.15% 59.83%
==================================================================================
==================================================================================
**Standard Before Surrender Chg
==================================================================================
==================================================================================
Standard FV (M&E, Contract Chg, Surr. Chg.)
==================================================================================
==================================================================================
Standard Annualized Performance 54.81% 54.49%
==================================================================================
==================================================================================
==================================================================================
==================================================================================
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Since Inception 11/24/97 12/31/99
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Additional Death Benefit No Yes
==================================================================================
==================================================================================
Annual Growth Rate (after Fund Management) 13.94% 13.94%
==================================================================================
==================================================================================
Calendar Days Since Inception 767 767
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Dependent Variables
==================================================================================
==================================================================================
M&E Charge (no Contract Chg.; Daily, Simple) 1.25% 1.45%
==================================================================================
==================================================================================
**Whole Years Since Deposit 2 2
==================================================================================
==================================================================================
**Days into Current Year 37 37
==================================================================================
==================================================================================
**Basic Surrender Charge 5% 5%
==================================================================================
==================================================================================
**Non-Standard Daily Factor 1.000323 1.000318
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Results
==================================================================================
==================================================================================
Arbitrary Premium
==================================================================================
==================================================================================
Non-Standard FV (M&E Only)
==================================================================================
==================================================================================
Non-Standard Annual Return 12.52% 12.30%
==================================================================================
==================================================================================
**Standard Before Surrender Chg
==================================================================================
==================================================================================
Standard FV (M&E, Contract Chg, Surr. Chg.)
==================================================================================
==================================================================================
Standard Annualized Performance 10.31% 10.08%
==================================================================================
==================================================================================
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Contract Charge Ratio (One Year) 8.33%
==================================================================================
==================================================================================
Contract Charge Ratio (Inception) 8.33%
==================================================================================
==================================================================================
Sheet Index 9
==================================================================================
==================================================================================
Stein Roe & Farnham Large Cap Growth
==================================================================================
==================================================================================
==================================================================================
==================================================================================
One Year Results
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Additional Death Benefit No Yes
==================================================================================
==================================================================================
Annual Growth Rate (after Fund Management) 35.46% 35.46%
==================================================================================
==================================================================================
**'Calendar Days Since Deposit 365 365
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Dependent Variables
==================================================================================
==================================================================================
M&E Charge (no Contract Chg.; Daily, Simple) 1.25% 1.45%
==================================================================================
==================================================================================
**Whole Years Since Deposit 1 1
==================================================================================
==================================================================================
**Days into Current Year 0 0
==================================================================================
==================================================================================
**Basic Surrender Charge 6% 6%
==================================================================================
==================================================================================
**Non-Standard Daily Factor 1.000798 1.000792
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Results
==================================================================================
==================================================================================
Arbitrary Premium
==================================================================================
==================================================================================
Non-Standard FV (M&E Only)
==================================================================================
==================================================================================
Non-Standard Annual Return 33.78% 33.51%
==================================================================================
==================================================================================
**Standard Before Surrender Chg
==================================================================================
==================================================================================
Standard FV (M&E, Contract Chg, Surr. Chg.)
==================================================================================
==================================================================================
Standard Annualized Performance 28.33% 28.07%
==================================================================================
==================================================================================
==================================================================================
==================================================================================
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Since Inception 11/24/97 12/31/99
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Additional Death Benefit No Yes
==================================================================================
==================================================================================
Annual Growth Rate (after Fund Management) 31.90% 31.90%
==================================================================================
==================================================================================
Calendar Days Since Inception 767 767
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Dependent Variables
==================================================================================
==================================================================================
M&E Charge (no Contract Chg.; Daily, Simple) 1.25% 1.45%
==================================================================================
==================================================================================
**Whole Years Since Deposit 2 2
==================================================================================
==================================================================================
**Days into Current Year 37 37
==================================================================================
==================================================================================
**Basic Surrender Charge 5% 5%
==================================================================================
==================================================================================
**Non-Standard Daily Factor 1.000725 1.000719
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Results
==================================================================================
==================================================================================
Arbitrary Premium
==================================================================================
==================================================================================
Non-Standard FV (M&E Only)
==================================================================================
==================================================================================
Non-Standard Annual Return 30.26% 30.00%
==================================================================================
==================================================================================
**Standard Before Surrender Chg
==================================================================================
==================================================================================
Standard FV (M&E, Contract Chg, Surr. Chg.)
==================================================================================
==================================================================================
Standard Annualized Performance 28.52% 28.25%
==================================================================================
==================================================================================
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Contract Charge Ratio (One Year) 6.96%
==================================================================================
==================================================================================
Contract Charge Ratio (Inception) 6.96%
==================================================================================
==================================================================================
Sheet Index 6
==================================================================================
==================================================================================
Babson Large Cap Value
==================================================================================
==================================================================================
==================================================================================
==================================================================================
One Year Results
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Additional Death Benefit No Yes
==================================================================================
==================================================================================
Annual Growth Rate (after Fund Management) 0.79% 0.79%
==================================================================================
==================================================================================
**'Calendar Days Since Deposit 365 365
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Dependent Variables
==================================================================================
==================================================================================
M&E Charge (no Contract Chg.; Daily, Simple) 1.25% 1.45%
==================================================================================
==================================================================================
**Whole Years Since Deposit 1 1
==================================================================================
==================================================================================
**Days into Current Year 0 0
==================================================================================
==================================================================================
**Basic Surrender Charge 6% 6%
==================================================================================
==================================================================================
**Non-Standard Daily Factor 0.999987 0.999982
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Results
==================================================================================
==================================================================================
Arbitrary Premium
==================================================================================
==================================================================================
Non-Standard FV (M&E Only)
==================================================================================
==================================================================================
Non-Standard Annual Return -0.46% -0.66%
==================================================================================
==================================================================================
**Standard Before Surrender Chg
==================================================================================
==================================================================================
Standard FV (M&E, Contract Chg, Surr. Chg.)
==================================================================================
==================================================================================
Standard Annualized Performance -6.05% -6.25%
==================================================================================
==================================================================================
==================================================================================
==================================================================================
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Since Inception 11/24/97 12/31/99
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Additional Death Benefit No Yes
==================================================================================
==================================================================================
Annual Growth Rate (after Fund Management) 1.26% 1.26%
==================================================================================
==================================================================================
Calendar Days Since Inception 767 767
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Dependent Variables
==================================================================================
==================================================================================
M&E Charge (no Contract Chg.; Daily, Simple) 1.25% 1.45%
==================================================================================
==================================================================================
**Whole Years Since Deposit 2 2
==================================================================================
==================================================================================
**Days into Current Year 37 37
==================================================================================
==================================================================================
**Basic Surrender Charge 5% 5%
==================================================================================
==================================================================================
**Non-Standard Daily Factor 1.000000 0.999995
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Results
==================================================================================
==================================================================================
Arbitrary Premium
==================================================================================
==================================================================================
Non-Standard FV (M&E Only)
==================================================================================
==================================================================================
Non-Standard Annual Return 0.00% -0.20%
==================================================================================
==================================================================================
**Standard Before Surrender Chg
==================================================================================
==================================================================================
Standard FV (M&E, Contract Chg, Surr. Chg.)
==================================================================================
==================================================================================
Standard Annualized Performance -2.43% -2.64%
==================================================================================
==================================================================================
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Contract Charge Ratio (One Year) 5.18%
==================================================================================
==================================================================================
Contract Charge Ratio (Inception) 5.18%
==================================================================================
==================================================================================
Sheet Index 7
==================================================================================
==================================================================================
Lord, Abbett Growth & Income
==================================================================================
==================================================================================
==================================================================================
==================================================================================
One Year Results
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Additional Death Benefit No Yes
==================================================================================
==================================================================================
Annual Growth Rate (after Fund Management) 16.65% 16.65%
==================================================================================
==================================================================================
**'Calendar Days Since Deposit 365 365
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Dependent Variables
==================================================================================
==================================================================================
M&E Charge (no Contract Chg.; Daily, Simple) 1.25% 1.45%
==================================================================================
==================================================================================
**Whole Years Since Deposit 1 1
==================================================================================
==================================================================================
**Days into Current Year 0 0
==================================================================================
==================================================================================
**Basic Surrender Charge 6% 6%
==================================================================================
==================================================================================
**Non-Standard Daily Factor 1.000388 1.000382
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Results
==================================================================================
==================================================================================
Arbitrary Premium
==================================================================================
==================================================================================
Non-Standard FV (M&E Only)
==================================================================================
==================================================================================
Non-Standard Annual Return 15.20% 14.97%
==================================================================================
==================================================================================
**Standard Before Surrender Chg
==================================================================================
==================================================================================
Standard FV (M&E, Contract Chg, Surr. Chg.)
==================================================================================
==================================================================================
Standard Annualized Performance 9.68% 9.45%
==================================================================================
==================================================================================
==================================================================================
==================================================================================
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Since Inception 11/24/97 12/31/99
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Additional Death Benefit No Yes
==================================================================================
==================================================================================
Annual Growth Rate (after Fund Management) 15.59% 15.59%
==================================================================================
==================================================================================
Calendar Days Since Inception 767 767
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Dependent Variables
==================================================================================
==================================================================================
M&E Charge (no Contract Chg.; Daily, Simple) 1.25% 1.45%
==================================================================================
==================================================================================
**Whole Years Since Deposit 2 2
==================================================================================
==================================================================================
**Days into Current Year 37 37
==================================================================================
==================================================================================
**Basic Surrender Charge 5% 5%
==================================================================================
==================================================================================
**Non-Standard Daily Factor 1.000363 1.000357
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Results
==================================================================================
==================================================================================
Arbitrary Premium
==================================================================================
==================================================================================
Non-Standard FV (M&E Only)
==================================================================================
==================================================================================
Non-Standard Annual Return 14.15% 13.93%
==================================================================================
==================================================================================
**Standard Before Surrender Chg
==================================================================================
==================================================================================
Standard FV (M&E, Contract Chg, Surr. Chg.)
==================================================================================
==================================================================================
Standard Annualized Performance 12.09% 11.85%
==================================================================================
==================================================================================
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Contract Charge Ratio (One Year) 5.99%
==================================================================================
==================================================================================
Contract Charge Ratio (Inception) 5.99%
==================================================================================
==================================================================================
Sheet Index 4
==================================================================================
==================================================================================
Kornitzer Balanced
==================================================================================
==================================================================================
==================================================================================
==================================================================================
One Year Results
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Additional Death Benefit No Yes
==================================================================================
==================================================================================
Annual Growth Rate (after Fund Management) 8.21% 8.21%
==================================================================================
==================================================================================
**'Calendar Days Since Deposit 365 365
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Dependent Variables
==================================================================================
==================================================================================
M&E Charge (no Contract Chg.; Daily, Simple) 1.25% 1.45%
==================================================================================
==================================================================================
**Whole Years Since Deposit 1 1
==================================================================================
==================================================================================
**Days into Current Year 0 0
==================================================================================
==================================================================================
**Basic Surrender Charge 6% 6%
==================================================================================
==================================================================================
**Non-Standard Daily Factor 1.000182 1.000176
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Results
==================================================================================
==================================================================================
Arbitrary Premium
==================================================================================
==================================================================================
Non-Standard FV (M&E Only)
==================================================================================
==================================================================================
Non-Standard Annual Return 6.87% 6.65%
==================================================================================
==================================================================================
**Standard Before Surrender Chg
==================================================================================
==================================================================================
Standard FV (M&E, Contract Chg, Surr. Chg.)
==================================================================================
==================================================================================
Standard Annualized Performance 1.31% 1.10%
==================================================================================
==================================================================================
==================================================================================
==================================================================================
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Since Inception 11/24/97 12/31/99
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Additional Death Benefit No Yes
==================================================================================
==================================================================================
Annual Growth Rate (after Fund Management) 0.88% 0.88%
==================================================================================
==================================================================================
Calendar Days Since Inception 767 767
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Dependent Variables
==================================================================================
==================================================================================
M&E Charge (no Contract Chg.; Daily, Simple) 1.25% 1.45%
==================================================================================
==================================================================================
**Whole Years Since Deposit 2 2
==================================================================================
==================================================================================
**Days into Current Year 37 37
==================================================================================
==================================================================================
**Basic Surrender Charge 5% 5%
==================================================================================
==================================================================================
**Non-Standard Daily Factor 0.999990 0.999984
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Results
==================================================================================
==================================================================================
Arbitrary Premium
==================================================================================
==================================================================================
Non-Standard FV (M&E Only)
==================================================================================
==================================================================================
Non-Standard Annual Return -0.37% -0.57%
==================================================================================
==================================================================================
**Standard Before Surrender Chg
==================================================================================
==================================================================================
Standard FV (M&E, Contract Chg, Surr. Chg.)
==================================================================================
==================================================================================
Standard Annualized Performance -2.84% -3.04%
==================================================================================
==================================================================================
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Contract Charge Ratio (One Year) 5.56%
==================================================================================
==================================================================================
Contract Charge Ratio (Inception) 5.56%
==================================================================================
==================================================================================
Sheet Index 5
==================================================================================
==================================================================================
BBOI International
==================================================================================
==================================================================================
==================================================================================
==================================================================================
One Year Results
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Additional Death Benefit No Yes
==================================================================================
==================================================================================
Annual Growth Rate (after Fund Management) 31.24% 31.24%
==================================================================================
==================================================================================
**'Calendar Days Since Deposit 365 365
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Dependent Variables
==================================================================================
==================================================================================
M&E Charge (no Contract Chg.; Daily, Simple) 1.25% 1.45%
==================================================================================
==================================================================================
**Whole Years Since Deposit 1 1
==================================================================================
==================================================================================
**Days into Current Year 0 0
==================================================================================
==================================================================================
**Basic Surrender Charge 6% 6%
==================================================================================
==================================================================================
**Non-Standard Daily Factor 1.000711 1.000705
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Results
==================================================================================
==================================================================================
Arbitrary Premium
==================================================================================
==================================================================================
Non-Standard FV (M&E Only)
==================================================================================
==================================================================================
Non-Standard Annual Return 29.61% 29.35%
==================================================================================
==================================================================================
**Standard Before Surrender Chg
==================================================================================
==================================================================================
Standard FV (M&E, Contract Chg, Surr. Chg.)
==================================================================================
==================================================================================
Standard Annualized Performance 24.15% 23.89%
==================================================================================
==================================================================================
==================================================================================
==================================================================================
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Since Inception 11/24/97 12/31/99
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Additional Death Benefit No Yes
==================================================================================
==================================================================================
Annual Growth Rate (after Fund Management) 16.17% 16.17%
==================================================================================
==================================================================================
Calendar Days Since Inception 767 767
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Dependent Variables
==================================================================================
==================================================================================
M&E Charge (no Contract Chg.; Daily, Simple) 1.25% 1.45%
==================================================================================
==================================================================================
**Whole Years Since Deposit 2 2
==================================================================================
==================================================================================
**Days into Current Year 37 37
==================================================================================
==================================================================================
**Basic Surrender Charge 5% 5%
==================================================================================
==================================================================================
**Non-Standard Daily Factor 1.000376 1.000371
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Results
==================================================================================
==================================================================================
Arbitrary Premium
==================================================================================
==================================================================================
Non-Standard FV (M&E Only)
==================================================================================
==================================================================================
Non-Standard Annual Return 14.73% 14.50%
==================================================================================
==================================================================================
**Standard Before Surrender Chg
==================================================================================
==================================================================================
Standard FV (M&E, Contract Chg, Surr. Chg.)
==================================================================================
==================================================================================
Standard Annualized Performance 12.64% 12.41%
==================================================================================
==================================================================================
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Contract Charge Ratio (One Year) 6.74%
==================================================================================
==================================================================================
Contract Charge Ratio (Inception) 6.74%
==================================================================================
==================================================================================
Sheet Index 10
==================================================================================
==================================================================================
Alger Growth
==================================================================================
==================================================================================
==================================================================================
==================================================================================
One Year Results
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Additional Death Benefit No Yes
==================================================================================
==================================================================================
Annual Growth Rate (after Fund Management) 33.74% 33.74%
==================================================================================
==================================================================================
**'Calendar Days Since Deposit 365 365
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Dependent Variables
==================================================================================
==================================================================================
M&E Charge (no Contract Chg.; Daily, Simple) 1.25% 1.45%
==================================================================================
==================================================================================
**Whole Years Since Deposit 1 1
==================================================================================
==================================================================================
**Days into Current Year 0 0
==================================================================================
==================================================================================
**Basic Surrender Charge 6% 6%
==================================================================================
==================================================================================
**Non-Standard Daily Factor 1.000763 1.000757
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Results
==================================================================================
==================================================================================
Arbitrary Premium 1,000.00 1,000.00
==================================================================================
==================================================================================
Non-Standard FV (M&E Only) 1,320.79 1,318.15
==================================================================================
==================================================================================
Non-Standard Annual Return 32.08% 31.81%
==================================================================================
==================================================================================
**Standard Before Surrender Chg 1,318.38 1,315.74
==================================================================================
==================================================================================
Standard FV (M&E, Contract Chg, Surr. Chg.) 1,266.29 1,263.64
==================================================================================
==================================================================================
Standard Annualized Performance 26.63% 26.36%
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Since Inception 1/9/89 12/31/99
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Additional Death Benefit No Yes
==================================================================================
==================================================================================
Annual Growth Rate (after Fund Management) 23.05% 23.05%
==================================================================================
==================================================================================
Calendar Days Since Inception 4,008 4,008
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Dependent Variables
==================================================================================
==================================================================================
M&E Charge (no Contract Chg.; Daily, Simple) 1.25% 1.45%
==================================================================================
==================================================================================
**Whole Years Since Deposit 10 10
==================================================================================
==================================================================================
**Days into Current Year 358 358
==================================================================================
==================================================================================
**Basic Surrender Charge 0% 0%
==================================================================================
==================================================================================
**Non-Standard Daily Factor 1.000534 1.000529
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Results
==================================================================================
==================================================================================
Arbitrary Premium 1,000.00 1,000.00
==================================================================================
==================================================================================
Non-Standard FV (M&E Only) 8,502.72 8,318.01
==================================================================================
==================================================================================
Non-Standard Annual Return 21.52% 21.28%
==================================================================================
==================================================================================
**Standard Before Surrender Chg 8,476.26 8,291.56
==================================================================================
==================================================================================
Standard CV (M&E, Contract Chg, Surr. Chg.) 8,476.26 8,291.56
==================================================================================
==================================================================================
Standard Annualized Performance 21.49% 21.24%
==================================================================================
==================================================================================
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Contract Charge Ratio (One Year) 6.87%
==================================================================================
==================================================================================
Contract Charge Ratio (Inception) 6.87%
==================================================================================
==================================================================================
Sheet Index 12
==================================================================================
==================================================================================
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Five Year Results
==================================================================================
==================================================================================
Additional Death Benefit Yes No
==================================================================================
==================================================================================
Annual Growth Rate (after Fund Management) 30.94% 30.94%
==================================================================================
==================================================================================
Calendar Days Since Inception 1825 1825
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Dependent Variables
==================================================================================
==================================================================================
M&E Charge (no Contract Chg.; Daily, Simple) 1.25% 1.45%
==================================================================================
==================================================================================
**Whole Years Since Deposit 5 5
==================================================================================
==================================================================================
**Days into Current Year 0 0
==================================================================================
==================================================================================
**Basic Surrender Charge 2% 2%
==================================================================================
==================================================================================
**Non-Standard Daily Factor 1.000705 1.000699
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Results
==================================================================================
==================================================================================
Arbitrary Premium 1,000.00 1,000.00
==================================================================================
==================================================================================
Non-Standard FV (M&E Only) 3,615.91 3,579.93
==================================================================================
==================================================================================
Non-Standard Annual Return 29.31% 29.06%
==================================================================================
==================================================================================
**Standard Before Surrender Chg 3,603.89 3,567.91
==================================================================================
==================================================================================
Standard FV (M&E, Contract Chg, Surr. Chg.) 3,591.09 3,555.04
==================================================================================
==================================================================================
Standard Annualized Performance 29.14% 28.88%
==================================================================================
==================================================================================
Alger MidCap Growth
==================================================================================
==================================================================================
==================================================================================
==================================================================================
One Year Results
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Additional Death Benefit No Yes
==================================================================================
==================================================================================
Annual Growth Rate (after Fund Management) 31.85% 31.85%
==================================================================================
==================================================================================
**'Calendar Days Since Deposit 365 365
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Dependent Variables
==================================================================================
==================================================================================
M&E Charge (no Contract Chg.; Daily, Simple) 1.25% 1.45%
==================================================================================
==================================================================================
**Whole Years Since Deposit 1 1
==================================================================================
==================================================================================
**Days into Current Year 0 0
==================================================================================
==================================================================================
**Basic Surrender Charge 6% 6%
==================================================================================
==================================================================================
**Non-Standard Daily Factor 1.000724 1.000718
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Results
==================================================================================
==================================================================================
Arbitrary Premium 1,000.00 1,000.00
==================================================================================
==================================================================================
Non-Standard FV (M&E Only) 1,302.12 1,299.52
==================================================================================
==================================================================================
Non-Standard Annual Return 30.21% 29.95%
==================================================================================
==================================================================================
**Standard Before Surrender Chg 1,299.75 1,297.15
==================================================================================
==================================================================================
Standard FV (M&E, Contract Chg, Surr. Chg.) 1,247.55 1,244.93
==================================================================================
==================================================================================
Standard Annualized Performance 24.75% 24.49%
==================================================================================
==================================================================================
==================================================================================
==================================================================================
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Since Inception 5/3/93 12/31/99
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Additional Death Benefit No Yes
==================================================================================
==================================================================================
Annual Growth Rate (after Fund Management) 24.72% 24.72%
==================================================================================
==================================================================================
Calendar Days Since Inception 2,433 2,433
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Dependent Variables
==================================================================================
==================================================================================
M&E Charge (no Contract Chg.; Daily, Simple) 1.25% 1.45%
==================================================================================
==================================================================================
**Whole Years Since Deposit 6 6
==================================================================================
==================================================================================
**Days into Current Year 243 243
==================================================================================
==================================================================================
**Basic Surrender Charge 1% 1%
==================================================================================
==================================================================================
**Non-Standard Daily Factor 1.000571 1.000566
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Results
==================================================================================
==================================================================================
Arbitrary Premium 1,000.00 1,000.00
==================================================================================
==================================================================================
Non-Standard FV (M&E Only) 4,011.43 3,958.31
==================================================================================
==================================================================================
Non-Standard Annual Return 23.17% 22.92%
==================================================================================
==================================================================================
**Standard Before Surrender Chg 3,994.84 3,941.71
==================================================================================
==================================================================================
Standard CV (M&E, Contract Chg, Surr. Chg.) 3,988.83 3,935.65
==================================================================================
==================================================================================
Standard Annualized Performance 23.07% 22.82%
==================================================================================
==================================================================================
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Contract Charge Ratio (One Year) 6.77%
==================================================================================
==================================================================================
Contract Charge Ratio (Inception) 6.77%
==================================================================================
==================================================================================
Sheet Index 12
==================================================================================
==================================================================================
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Five Year Results
==================================================================================
==================================================================================
Additional Death Benefit Yes No
==================================================================================
==================================================================================
Annual Growth Rate (after Fund Management) 26.14% 26.14%
==================================================================================
==================================================================================
Calendar Days Since Inception 1825 1825
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Dependent Variables
==================================================================================
==================================================================================
M&E Charge (no Contract Chg.; Daily, Simple) 1.25% 1.45%
==================================================================================
==================================================================================
**Whole Years Since Deposit 5 5
==================================================================================
==================================================================================
**Days into Current Year 0 0
==================================================================================
==================================================================================
**Basic Surrender Charge 2% 2%
==================================================================================
==================================================================================
**Non-Standard Daily Factor 1.000602 1.000597
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Results
==================================================================================
==================================================================================
Arbitrary Premium 1,000.00 1,000.00
==================================================================================
==================================================================================
Non-Standard FV (M&E Only) 2,999.99 2,970.14
==================================================================================
==================================================================================
Non-Standard Annual Return 24.57% 24.32%
==================================================================================
==================================================================================
**Standard Before Surrender Chg 2,988.14 2,958.29
==================================================================================
==================================================================================
Standard FV (M&E, Contract Chg, Surr. Chg.) 2,974.11 2,944.20
==================================================================================
==================================================================================
Standard Annualized Performance 24.36% 24.11%
==================================================================================
==================================================================================
Alger Leveraged
==================================================================================
==================================================================================
==================================================================================
==================================================================================
One Year Results
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Additional Death Benefit No Yes
==================================================================================
==================================================================================
Annual Growth Rate (after Fund Management) 78.06% 78.06%
==================================================================================
==================================================================================
**'Calendar Days Since Deposit 365 365
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Dependent Variables
==================================================================================
==================================================================================
M&E Charge (no Contract Chg.; Daily, Simple) 1.25% 1.45%
==================================================================================
==================================================================================
**Whole Years Since Deposit 1 1
==================================================================================
==================================================================================
**Days into Current Year 0 0
==================================================================================
==================================================================================
**Basic Surrender Charge 6% 6%
==================================================================================
==================================================================================
**Non-Standard Daily Factor 1.001548 1.001542
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Results
==================================================================================
==================================================================================
Arbitrary Premium 1,000.00 1,000.00
==================================================================================
==================================================================================
Non-Standard FV (M&E Only) 1,758.48 1,754.97
==================================================================================
==================================================================================
Non-Standard Annual Return 75.85% 75.50%
==================================================================================
==================================================================================
**Standard Before Surrender Chg 1,755.28 1,751.77
==================================================================================
==================================================================================
Standard FV (M&E, Contract Chg, Surr. Chg.) 1,705.81 1,702.28
==================================================================================
==================================================================================
Standard Annualized Performance 70.58% 70.23%
==================================================================================
==================================================================================
==================================================================================
==================================================================================
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Since Inception 1/25/95 12/31/99
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Additional Death Benefit No Yes
==================================================================================
==================================================================================
Annual Growth Rate (after Fund Management) 46.44% 46.44%
==================================================================================
==================================================================================
Calendar Days Since Inception 1,801 1,801
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Dependent Variables
==================================================================================
==================================================================================
M&E Charge (no Contract Chg.; Daily, Simple) 1.25% 1.45%
==================================================================================
==================================================================================
**Whole Years Since Deposit 4 4
==================================================================================
==================================================================================
**Days into Current Year 341 341
==================================================================================
==================================================================================
**Basic Surrender Charge 3% 3%
==================================================================================
==================================================================================
**Non-Standard Daily Factor 1.001011 1.001006
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Results
==================================================================================
==================================================================================
Arbitrary Premium 1,000.00 1,000.00
==================================================================================
==================================================================================
Non-Standard FV (M&E Only) 6,174.74 6,114.11
==================================================================================
==================================================================================
Non-Standard Annual Return 44.62% 44.33%
==================================================================================
==================================================================================
**Standard Before Surrender Chg 6,158.73 6,098.10
==================================================================================
==================================================================================
Standard CV (M&E, Contract Chg, Surr. Chg.) 6,147.21 6,086.39
==================================================================================
==================================================================================
Standard Annualized Performance 44.49% 44.20%
==================================================================================
==================================================================================
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Contract Charge Ratio (One Year) 9.15%
==================================================================================
==================================================================================
Contract Charge Ratio (Inception) 9.15%
==================================================================================
==================================================================================
Sheet Index 12
==================================================================================
==================================================================================
American Century Growth & Income
==================================================================================
==================================================================================
==================================================================================
==================================================================================
One Year Results
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Additional Death Benefit No Yes
==================================================================================
==================================================================================
Annual Growth Rate (after Fund Management) 18.02% 18.02%
==================================================================================
==================================================================================
**'Calendar Days Since Deposit 365 365
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Dependent Variables
==================================================================================
==================================================================================
M&E Charge (no Contract Chg.; Daily, Simple) 1.25% 1.45%
==================================================================================
==================================================================================
**Whole Years Since Deposit 1 1
==================================================================================
==================================================================================
**Days into Current Year 0 0
==================================================================================
==================================================================================
**Basic Surrender Charge 6% 6%
==================================================================================
==================================================================================
**Non-Standard Daily Factor 1.000420 1.000414
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Results
==================================================================================
==================================================================================
Arbitrary Premium
==================================================================================
==================================================================================
Non-Standard FV (M&E Only)
==================================================================================
==================================================================================
Non-Standard Annual Return 16.55% 16.32%
==================================================================================
==================================================================================
**Standard Before Surrender Chg
==================================================================================
==================================================================================
Standard FV (M&E, Contract Chg, Surr. Chg.)
==================================================================================
==================================================================================
Standard Annualized Performance 10.72% 10.49%
==================================================================================
==================================================================================
==================================================================================
==================================================================================
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Since Inception 10/30/97 12/31/99
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Additional Death Benefit No Yes
==================================================================================
==================================================================================
Annual Growth Rate (after Fund Management) 24.69% 24.69%
==================================================================================
==================================================================================
Calendar Days Since Inception 792 792
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Dependent Variables
==================================================================================
==================================================================================
M&E Charge (no Contract Chg.; Daily, Simple) 1.25% 1.45%
==================================================================================
==================================================================================
**Whole Years Since Deposit 2 2
==================================================================================
==================================================================================
**Days into Current Year 62 62
==================================================================================
==================================================================================
**Basic Surrender Charge 5% 5%
==================================================================================
==================================================================================
**Non-Standard Daily Factor 1.000570 1.000565
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Results
==================================================================================
==================================================================================
Arbitrary Premium
==================================================================================
==================================================================================
Non-Standard FV (M&E Only)
==================================================================================
==================================================================================
Non-Standard Annual Return 23.14% 22.90%
==================================================================================
==================================================================================
**Standard Before Surrender Chg
==================================================================================
==================================================================================
Standard FV (M&E, Contract Chg, Surr. Chg.)
==================================================================================
==================================================================================
Standard Annualized Performance 21.02% 20.77%
==================================================================================
==================================================================================
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Contract Charge Ratio (One Year) 15.03%
==================================================================================
==================================================================================
Contract Charge Ratio (Inception) 15.03%
==================================================================================
==================================================================================
Sheet Index 11
==================================================================================
==================================================================================
American Century Value
==================================================================================
==================================================================================
==================================================================================
==================================================================================
One Year Results
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Additional Death Benefit No Yes
==================================================================================
==================================================================================
Annual Growth Rate (after Fund Management) -0.85% -0.85%
==================================================================================
==================================================================================
**'Calendar Days Since Deposit 365 365
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Dependent Variables
==================================================================================
==================================================================================
M&E Charge (no Contract Chg.; Daily, Simple) 1.25% 1.45%
==================================================================================
==================================================================================
**Whole Years Since Deposit 1 1
==================================================================================
==================================================================================
**Days into Current Year 0 0
==================================================================================
==================================================================================
**Basic Surrender Charge 6% 6%
==================================================================================
==================================================================================
**Non-Standard Daily Factor 0.999942 0.999937
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Results
==================================================================================
==================================================================================
Arbitrary Premium
==================================================================================
==================================================================================
Non-Standard FV (M&E Only)
==================================================================================
==================================================================================
Non-Standard Annual Return -2.08% -2.28%
==================================================================================
==================================================================================
**Standard Before Surrender Chg
==================================================================================
==================================================================================
Standard FV (M&E, Contract Chg, Surr. Chg.)
==================================================================================
==================================================================================
Standard Annualized Performance -7.94% -8.14%
==================================================================================
==================================================================================
==================================================================================
==================================================================================
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Since Inception 4/29/96 12/31/99
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Additional Death Benefit No Yes
==================================================================================
==================================================================================
Annual Growth Rate (after Fund Management) 11.10% 11.10%
==================================================================================
==================================================================================
Calendar Days Since Inception 1,341 1,341
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Dependent Variables
==================================================================================
==================================================================================
M&E Charge (no Contract Chg.; Daily, Simple) 1.25% 1.45%
==================================================================================
==================================================================================
**Whole Years Since Deposit 3 3
==================================================================================
==================================================================================
**Days into Current Year 246 246
==================================================================================
==================================================================================
**Basic Surrender Charge 4% 4%
==================================================================================
==================================================================================
**Non-Standard Daily Factor 1.000254 1.000249
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Results
==================================================================================
==================================================================================
Arbitrary Premium
==================================================================================
==================================================================================
Non-Standard FV (M&E Only)
==================================================================================
==================================================================================
Non-Standard Annual Return 9.72% 9.50%
==================================================================================
==================================================================================
**Standard Before Surrender Chg
==================================================================================
==================================================================================
Standard CV (M&E, Contract Chg, Surr. Chg.)
==================================================================================
==================================================================================
Standard Annualized Performance 8.60% 8.37%
==================================================================================
==================================================================================
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Contract Charge Ratio (One Year) 12.62%
==================================================================================
==================================================================================
Contract Charge Ratio (Inception) 12.62%
==================================================================================
==================================================================================
Sheet Index 12
==================================================================================
=============================================================
Dreyfus Stock Index
=============================================================
=============================================================
=============================================================
=============================================================
One Year Results
=============================================================
=============================================================
=============================================================
=============================================================
Additional Death Benefit No Yes
=============================================================
=============================================================
Annual Growth Rate (after Fund 20.60% 20.60%
=============================================================
=============================================================
**'Calendar Days Since Deposit 365 365
=============================================================
=============================================================
=============================================================
=============================================================
Dependent Variables
=============================================================
=============================================================
M&E Charge (no Contract Chg.; Daily, 1.25% 1.45%
=============================================================
=============================================================
**Whole Years Since Deposit 1 1
=============================================================
=============================================================
**Days into Current Year 0 0
=============================================================
=============================================================
**Basic Surrender Charge 6% 6%
=============================================================
=============================================================
**Non-Standard Daily Factor 1.000479 1.000474
=============================================================
=============================================================
=============================================================
=============================================================
Results
=============================================================
=============================================================
Arbitrary Premium
=============================================================
=============================================================
Non-Standard FV (M&E Only)
=============================================================
=============================================================
Non-Standard Annual Return 19.10% 18.86%
=============================================================
=============================================================
**Standard Before Surrender Chg
=============================================================
=============================================================
Standard FV (M&E, Contract Chg, Surr.
=============================================================
=============================================================
Standard Annualized Performance 13.28% 13.04%
=============================================================
=============================================================
=============================================================
=============================================================
=============================================================
=============================================================
=============================================================
=============================================================
Since Inception 9/27/89 12/31/99
=============================================================
=============================================================
=============================================================
=============================================================
Additional Death Benefit No Yes
=============================================================
=============================================================
Annual Growth Rate (after Fund 17.70% 17.70%
=============================================================
=============================================================
Calendar Days Since Inception 3,747 3,747
=============================================================
=============================================================
=============================================================
=============================================================
Dependent Variables
=============================================================
=============================================================
M&E Charge (no Contract Chg.; Daily, 1.25% 1.45%
=============================================================
=============================================================
**Whole Years Since Deposit 10 10
=============================================================
=============================================================
**Days into Current Year 97 97
=============================================================
=============================================================
**Basic Surrender Charge 0% 0%
=============================================================
=============================================================
**Non-Standard Daily Factor 1.000412 1.000407
=============================================================
=============================================================
=============================================================
=============================================================
Results
=============================================================
=============================================================
Arbitrary Premium
=============================================================
=============================================================
Non-Standard FV (M&E Only)
=============================================================
=============================================================
Non-Standard Annual Return 16.24% 16.01%
=============================================================
=============================================================
**Standard Before Surrender Chg
=============================================================
=============================================================
Standard FV (M&E, Contract Chg, Surr.
=============================================================
=============================================================
Standard Annualized Performance 16.09% 15.86%
=============================================================
=============================================================
=============================================================
=============================================================
=============================================================
=============================================================
Contract Charge Ratio (One Year) 15.36%
=============================================================
=============================================================
Contract Charge Ratio (Inception) 15.36%
=============================================================
=============================================================
Sheet Index 13
=============================================================
=============================================================
=============================================================
=============================================================
=============================================================
=============================================================
Five Year Results
=============================================================
=============================================================
Additional Death Benefit Yes No
=============================================================
=============================================================
Annual Growth Rate (after Fund 28.07% 28.07%
=============================================================
=============================================================
Calendar Days Since Inception 1825 1825
=============================================================
=============================================================
=============================================================
=============================================================
Dependent Variables
=============================================================
=============================================================
M&E Charge (no Contract Chg.; Daily, 1.25% 1.45%
=============================================================
=============================================================
**Whole Years Since Deposit 5 5
=============================================================
=============================================================
**Days into Current Year 0 0
=============================================================
=============================================================
**Basic Surrender Charge 2% 2%
=============================================================
=============================================================
**Non-Standard Daily Factor 1.000644 1.000638
=============================================================
=============================================================
=============================================================
=============================================================
Results
=============================================================
=============================================================
Arbitrary Premium
=============================================================
=============================================================
Non-Standard FV (M&E Only)
=============================================================
=============================================================
Non-Standard Annual Return 26.48% 26.23%
=============================================================
=============================================================
**Standard Before Surrender Chg
=============================================================
=============================================================
Standard FV (M&E, Contract Chg, Surr.
=============================================================
=============================================================
Standard Annualized Performance 26.16% 25.91%
=============================================================
==================================================================================
Dreyfus Disciplined Stock
==================================================================================
==================================================================================
==================================================================================
==================================================================================
One Year Results
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Additional Death Benefit No Yes
==================================================================================
==================================================================================
Annual Growth Rate (after Fund Management) 18.45% 18.45%
==================================================================================
==================================================================================
**'Calendar Days Since Deposit 365 365
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Dependent Variables
==================================================================================
==================================================================================
M&E Charge (no Contract Chg.; Daily, Simple) 1.25% 1.45%
==================================================================================
==================================================================================
**Whole Years Since Deposit 1 1
==================================================================================
==================================================================================
**Days into Current Year 0 0
==================================================================================
==================================================================================
**Basic Surrender Charge 6% 6%
==================================================================================
==================================================================================
**Non-Standard Daily Factor 1.000430 1.000424
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Results
==================================================================================
==================================================================================
Arbitrary Premium
==================================================================================
==================================================================================
Non-Standard FV (M&E Only)
==================================================================================
==================================================================================
Non-Standard Annual Return 16.98% 16.74%
==================================================================================
==================================================================================
**Standard Before Surrender Chg
==================================================================================
==================================================================================
Standard FV (M&E, Contract Chg, Surr. Chg.)
==================================================================================
==================================================================================
Standard Annualized Performance 11.15% 10.91%
==================================================================================
==================================================================================
==================================================================================
==================================================================================
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Since Inception 4/29/96 12/31/99
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Additional Death Benefit No Yes
==================================================================================
==================================================================================
Annual Growth Rate (after Fund Management) 26.61% 26.61%
==================================================================================
==================================================================================
Calendar Days Since Inception 1,341 1,341
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Dependent Variables
==================================================================================
==================================================================================
M&E Charge (no Contract Chg.; Daily, Simple) 1.25% 1.45%
==================================================================================
==================================================================================
**Whole Years Since Deposit 3 3
==================================================================================
==================================================================================
**Days into Current Year 246 246
==================================================================================
==================================================================================
**Basic Surrender Charge 4% 4%
==================================================================================
==================================================================================
**Non-Standard Daily Factor 1.000612 1.000607
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Results
==================================================================================
==================================================================================
Arbitrary Premium
==================================================================================
==================================================================================
Non-Standard FV (M&E Only)
==================================================================================
==================================================================================
Non-Standard Annual Return 25.04% 24.79%
==================================================================================
==================================================================================
**Standard Before Surrender Chg
==================================================================================
==================================================================================
Standard FV (M&E, Contract Chg, Surr. Chg.)
==================================================================================
==================================================================================
Standard Annualized Performance 24.25% 24.00%
==================================================================================
==================================================================================
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Contract Charge Ratio (One Year) 15.08%
==================================================================================
==================================================================================
Contract Charge Ratio (Inception) 15.08%
==================================================================================
==================================================================================
Sheet Index 14
==================================================================================
==================================================================================
Fidelity Overseas
==================================================================================
==================================================================================
==================================================================================
==================================================================================
One Year Results
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Additional Death Benefit No Yes
==================================================================================
==================================================================================
Annual Growth Rate (after Fund Management) 42.39% 42.39%
==================================================================================
==================================================================================
**'Calendar Days Since Deposit 365 365
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Dependent Variables
==================================================================================
==================================================================================
M&E Charge (no Contract Chg.; Daily, Simple) 1.25% 1.45%
==================================================================================
==================================================================================
**Whole Years Since Deposit 1 1
==================================================================================
==================================================================================
**Days into Current Year 0 0
==================================================================================
==================================================================================
**Basic Surrender Charge 6% 6%
==================================================================================
==================================================================================
**Non-Standard Daily Factor 1.000934 1.000929
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Results
==================================================================================
==================================================================================
Arbitrary Premium
==================================================================================
==================================================================================
Non-Standard FV (M&E Only)
==================================================================================
==================================================================================
Non-Standard Annual Return 40.62% 40.34%
==================================================================================
==================================================================================
**Standard Before Surrender Chg
==================================================================================
==================================================================================
Standard FV (M&E, Contract Chg, Surr. Chg.)
==================================================================================
==================================================================================
Standard Annualized Performance 35.21% 34.92%
==================================================================================
==================================================================================
==================================================================================
==================================================================================
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Since Inception 1/28/87 12/31/99
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Additional Death Benefit No Yes
==================================================================================
==================================================================================
Annual Growth Rate (after Fund Management) 10.89% 10.89%
==================================================================================
==================================================================================
Calendar Days Since Inception 4,720 4,720
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Dependent Variables
==================================================================================
==================================================================================
M&E Charge (no Contract Chg.; Daily, Simple) 1.25% 1.45%
==================================================================================
==================================================================================
**Whole Years Since Deposit 12 12
==================================================================================
==================================================================================
**Days into Current Year 340 340
==================================================================================
==================================================================================
**Basic Surrender Charge 0% 0%
==================================================================================
==================================================================================
**Non-Standard Daily Factor 1.000249 1.000244
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Results
==================================================================================
==================================================================================
Arbitrary Premium
==================================================================================
==================================================================================
Non-Standard FV (M&E Only)
==================================================================================
==================================================================================
Non-Standard Annual Return 9.51% 9.29%
==================================================================================
==================================================================================
**Standard Before Surrender Chg
==================================================================================
==================================================================================
Standard CV (M&E, Contract Chg, Surr. Chg.)
==================================================================================
==================================================================================
Standard Annualized Performance 9.43% 9.20%
==================================================================================
==================================================================================
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Contract Charge Ratio (One Year) 7.32%
==================================================================================
==================================================================================
Contract Charge Ratio (Inception) 7.32%
==================================================================================
==================================================================================
Sheet Index 12
==================================================================================
==================================================================================
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Five Year Results
==================================================================================
==================================================================================
Additional Death Benefit Yes No
==================================================================================
==================================================================================
Annual Growth Rate (after Fund Management) 17.32% 17.32%
==================================================================================
==================================================================================
Calendar Days Since Inception 1825 1825
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Dependent Variables
==================================================================================
==================================================================================
M&E Charge (no Contract Chg.; Daily, Simple) 1.25% 1.45%
==================================================================================
==================================================================================
**Whole Years Since Deposit 5 5
==================================================================================
==================================================================================
**Days into Current Year 0 0
==================================================================================
==================================================================================
**Basic Surrender Charge 2% 2%
==================================================================================
==================================================================================
**Non-Standard Daily Factor 1.000403 1.000398
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Results
==================================================================================
==================================================================================
Arbitrary Premium
==================================================================================
==================================================================================
Non-Standard FV (M&E Only)
==================================================================================
==================================================================================
Non-Standard Annual Return 15.86% 15.63%
==================================================================================
==================================================================================
**Standard Before Surrender Chg
==================================================================================
==================================================================================
Standard FV (M&E, Contract Chg, Surr. Chg.)
==================================================================================
==================================================================================
Standard Annualized Performance 15.54% 15.31%
==================================================================================
==================================================================================
Fidelity Growth
==================================================================================
==================================================================================
==================================================================================
==================================================================================
One Year Results
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Additional Death Benefit No Yes
==================================================================================
==================================================================================
Annual Growth Rate (after Fund Management) 37.29% 37.29%
==================================================================================
==================================================================================
**'Calendar Days Since Deposit 365 365
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Dependent Variables
==================================================================================
==================================================================================
M&E Charge (no Contract Chg.; Daily, Simple) 1.25% 1.45%
==================================================================================
==================================================================================
**Whole Years Since Deposit 1 1
==================================================================================
==================================================================================
**Days into Current Year 0 0
==================================================================================
==================================================================================
**Basic Surrender Charge 6% 6%
==================================================================================
==================================================================================
**Non-Standard Daily Factor 1.000834 1.000829
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Results
==================================================================================
==================================================================================
Arbitrary Premium
==================================================================================
==================================================================================
Non-Standard FV (M&E Only)
==================================================================================
==================================================================================
Non-Standard Annual Return 35.58% 35.31%
==================================================================================
==================================================================================
**Standard Before Surrender Chg
==================================================================================
==================================================================================
Standard FV (M&E, Contract Chg, Surr. Chg.)
==================================================================================
==================================================================================
Standard Annualized Performance 30.15% 29.88%
==================================================================================
==================================================================================
==================================================================================
==================================================================================
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Since Inception 10/9/86 12/31/99
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Additional Death Benefit No Yes
==================================================================================
==================================================================================
Annual Growth Rate (after Fund Management) 18.74% 18.74%
==================================================================================
==================================================================================
Calendar Days Since Inception 4,831 4,831
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Dependent Variables
==================================================================================
==================================================================================
M&E Charge (no Contract Chg.; Daily, Simple) 1.25% 1.45%
==================================================================================
==================================================================================
**Whole Years Since Deposit 13 13
==================================================================================
==================================================================================
**Days into Current Year 86 86
==================================================================================
==================================================================================
**Basic Surrender Charge 0% 0%
==================================================================================
==================================================================================
**Non-Standard Daily Factor 1.000436 1.000431
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Results
==================================================================================
==================================================================================
Arbitrary Premium
==================================================================================
==================================================================================
Non-Standard FV (M&E Only)
==================================================================================
==================================================================================
Non-Standard Annual Return 17.26% 17.03%
==================================================================================
==================================================================================
**Standard Before Surrender Chg
==================================================================================
==================================================================================
Standard CV (M&E, Contract Chg, Surr. Chg.)
==================================================================================
==================================================================================
Standard Annualized Performance 17.23% 16.99%
==================================================================================
==================================================================================
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Contract Charge Ratio (One Year) 7.05%
==================================================================================
==================================================================================
Contract Charge Ratio (Inception) 7.05%
==================================================================================
==================================================================================
Sheet Index 12
==================================================================================
==================================================================================
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Five Year Results
==================================================================================
==================================================================================
Additional Death Benefit Yes No
==================================================================================
==================================================================================
Annual Growth Rate (after Fund Management) 29.68% 29.68%
==================================================================================
==================================================================================
Calendar Days Since Inception 1825 1825
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Dependent Variables
==================================================================================
==================================================================================
M&E Charge (no Contract Chg.; Daily, Simple) 1.25% 1.45%
==================================================================================
==================================================================================
**Whole Years Since Deposit 5 5
==================================================================================
==================================================================================
**Days into Current Year 0 0
==================================================================================
==================================================================================
**Basic Surrender Charge 2% 2%
==================================================================================
==================================================================================
**Non-Standard Daily Factor 1.000678 1.000673
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Results
==================================================================================
==================================================================================
Arbitrary Premium
==================================================================================
==================================================================================
Non-Standard FV (M&E Only)
==================================================================================
==================================================================================
Non-Standard Annual Return 28.07% 27.81%
==================================================================================
==================================================================================
**Standard Before Surrender Chg
==================================================================================
==================================================================================
Standard FV (M&E, Contract Chg, Surr. Chg.)
==================================================================================
==================================================================================
Standard Annualized Performance 27.88% 27.62%
==================================================================================
==================================================================================
Fidelity Contrafund
==================================================================================
==================================================================================
==================================================================================
==================================================================================
One Year Results
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Additional Death Benefit No Yes
==================================================================================
==================================================================================
Annual Growth Rate (after Fund Management) 24.15% 24.15%
==================================================================================
==================================================================================
**'Calendar Days Since Deposit 365 365
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Dependent Variables
==================================================================================
==================================================================================
M&E Charge (no Contract Chg.; Daily, Simple) 1.25% 1.45%
==================================================================================
==================================================================================
**Whole Years Since Deposit 1 1
==================================================================================
==================================================================================
**Days into Current Year 0 0
==================================================================================
==================================================================================
**Basic Surrender Charge 6% 6%
==================================================================================
==================================================================================
**Non-Standard Daily Factor 1.000559 1.000553
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Results
==================================================================================
==================================================================================
Arbitrary Premium
==================================================================================
==================================================================================
Non-Standard FV (M&E Only)
==================================================================================
==================================================================================
Non-Standard Annual Return 22.61% 22.36%
==================================================================================
==================================================================================
**Standard Before Surrender Chg
==================================================================================
==================================================================================
Standard FV (M&E, Contract Chg, Surr. Chg.)
==================================================================================
==================================================================================
Standard Annualized Performance 17.12% 16.87%
==================================================================================
==================================================================================
==================================================================================
==================================================================================
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Since Inception 1/3/95 12/31/99
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Additional Death Benefit No Yes
==================================================================================
==================================================================================
Annual Growth Rate (after Fund Management) 27.69% 27.69%
==================================================================================
==================================================================================
Calendar Days Since Inception 1,823 1,823
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Dependent Variables
==================================================================================
==================================================================================
M&E Charge (no Contract Chg.; Daily, Simple) 1.25% 1.45%
==================================================================================
==================================================================================
**Whole Years Since Deposit 4 4
==================================================================================
==================================================================================
**Days into Current Year 363 363
==================================================================================
==================================================================================
**Basic Surrender Charge 3% 3%
==================================================================================
==================================================================================
**Non-Standard Daily Factor 1.000636 1.000630
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Results
==================================================================================
==================================================================================
Arbitrary Premium
==================================================================================
==================================================================================
Non-Standard FV (M&E Only)
==================================================================================
==================================================================================
Non-Standard Annual Return 26.10% 25.85%
==================================================================================
==================================================================================
**Standard Before Surrender Chg
==================================================================================
==================================================================================
Standard CV (M&E, Contract Chg, Surr. Chg.)
==================================================================================
==================================================================================
Standard Annualized Performance 25.85% 25.60%
==================================================================================
==================================================================================
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Contract Charge Ratio (One Year) 6.38%
==================================================================================
==================================================================================
Contract Charge Ratio (Inception) 6.38%
==================================================================================
==================================================================================
Sheet Index 12
==================================================================================
==================================================================================
Invesco High Yield
==================================================================================
==================================================================================
==================================================================================
==================================================================================
One Year Results
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Additional Death Benefit No Yes
==================================================================================
==================================================================================
Annual Growth Rate (after Fund Management) 9.20% 9.20%
==================================================================================
==================================================================================
**'Calendar Days Since Deposit 365 365
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Dependent Variables
==================================================================================
==================================================================================
M&E Charge (no Contract Chg.; Daily, Simple) 1.25% 1.45%
==================================================================================
==================================================================================
**Whole Years Since Deposit 1 1
==================================================================================
==================================================================================
**Days into Current Year 0 0
==================================================================================
==================================================================================
**Basic Surrender Charge 6% 6%
==================================================================================
==================================================================================
**Non-Standard Daily Factor 1.000207 1.000201
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Results
==================================================================================
==================================================================================
Arbitrary Premium
==================================================================================
==================================================================================
Non-Standard FV (M&E Only)
==================================================================================
==================================================================================
Non-Standard Annual Return 7.84% 7.63%
==================================================================================
==================================================================================
**Standard Before Surrender Chg
==================================================================================
==================================================================================
Standard FV (M&E, Contract Chg, Surr. Chg.)
==================================================================================
==================================================================================
Standard Annualized Performance 2.00% 1.78%
==================================================================================
==================================================================================
==================================================================================
==================================================================================
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Since Inception 5/24/94 12/31/99
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Additional Death Benefit No Yes
==================================================================================
==================================================================================
Annual Growth Rate (after Fund Management) 11.34% 11.34%
==================================================================================
==================================================================================
Calendar Days Since Inception 2,047 2,047
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Dependent Variables
==================================================================================
==================================================================================
M&E Charge (no Contract Chg.; Daily, Simple) 1.25% 1.45%
==================================================================================
==================================================================================
**Whole Years Since Deposit 5 5
==================================================================================
==================================================================================
**Days into Current Year 222 222
==================================================================================
==================================================================================
**Basic Surrender Charge 2% 2%
==================================================================================
==================================================================================
**Non-Standard Daily Factor 1.000260 1.000255
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Results
==================================================================================
==================================================================================
Arbitrary Premium
==================================================================================
==================================================================================
Non-Standard FV (M&E Only)
==================================================================================
==================================================================================
Non-Standard Annual Return 9.96% 9.74%
==================================================================================
==================================================================================
**Standard Before Surrender Chg
==================================================================================
==================================================================================
Standard FV (M&E, Contract Chg, Surr. Chg.)
==================================================================================
==================================================================================
Standard Annualized Performance 9.42% 9.20%
==================================================================================
==================================================================================
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Contract Charge Ratio (One Year) 13.90%
==================================================================================
==================================================================================
Contract Charge Ratio (Inception) 13.90%
==================================================================================
==================================================================================
Sheet Index 15
==================================================================================
==================================================================================
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Five Year Results
==================================================================================
==================================================================================
Additional Death Benefit Yes No
==================================================================================
==================================================================================
Annual Growth Rate (after Fund Management) 12.65% 12.65%
==================================================================================
==================================================================================
Calendar Days Since Inception 1825 1825
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Dependent Variables
==================================================================================
==================================================================================
M&E Charge (no Contract Chg.; Daily, Simple) 1.25% 1.45%
==================================================================================
==================================================================================
**Whole Years Since Deposit 5 5
==================================================================================
==================================================================================
**Days into Current Year 0 0
==================================================================================
==================================================================================
**Basic Surrender Charge 2% 2%
==================================================================================
==================================================================================
**Non-Standard Daily Factor 1.000292 1.000287
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Results
==================================================================================
==================================================================================
Arbitrary Premium
==================================================================================
==================================================================================
Non-Standard FV (M&E Only)
==================================================================================
==================================================================================
Non-Standard Annual Return 11.25% 11.03%
==================================================================================
==================================================================================
**Standard Before Surrender Chg
==================================================================================
==================================================================================
Standard FV (M&E, Contract Chg, Surr. Chg.)
==================================================================================
==================================================================================
Standard Annualized Performance 10.71% 10.48%
==================================================================================
==================================================================================
Invesco Industrial Income
==================================================================================
==================================================================================
==================================================================================
==================================================================================
One Year Results
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Additional Death Benefit No Yes
==================================================================================
==================================================================================
Annual Growth Rate (after Fund Management) 14.84% 14.84%
==================================================================================
==================================================================================
**'Calendar Days Since Deposit 365 365
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Dependent Variables
==================================================================================
==================================================================================
M&E Charge (no Contract Chg.; Daily, Simple) 1.25% 1.45%
==================================================================================
==================================================================================
**Whole Years Since Deposit 1 1
==================================================================================
==================================================================================
**Days into Current Year 0 0
==================================================================================
==================================================================================
**Basic Surrender Charge 6% 6%
==================================================================================
==================================================================================
**Non-Standard Daily Factor 1.000345 1.000339
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Results
==================================================================================
==================================================================================
Arbitrary Premium
==================================================================================
==================================================================================
Non-Standard FV (M&E Only)
==================================================================================
==================================================================================
Non-Standard Annual Return 13.41% 13.19%
==================================================================================
==================================================================================
**Standard Before Surrender Chg
==================================================================================
==================================================================================
Standard FV (M&E, Contract Chg, Surr. Chg.)
==================================================================================
==================================================================================
Standard Annualized Performance 7.58% 7.35%
==================================================================================
==================================================================================
==================================================================================
==================================================================================
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Since Inception 8/8/94 12/31/99
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Additional Death Benefit No Yes
==================================================================================
==================================================================================
Annual Growth Rate (after Fund Management) 20.34% 20.34%
==================================================================================
==================================================================================
Calendar Days Since Inception 1,971 1,971
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Dependent Variables
==================================================================================
==================================================================================
M&E Charge (no Contract Chg.; Daily, Simple) 1.25% 1.45%
==================================================================================
==================================================================================
**Whole Years Since Deposit 5 5
==================================================================================
==================================================================================
**Days into Current Year 146 146
==================================================================================
==================================================================================
**Basic Surrender Charge 2% 2%
==================================================================================
==================================================================================
**Non-Standard Daily Factor 1.000473 1.000468
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Results
==================================================================================
==================================================================================
Arbitrary Premium
==================================================================================
==================================================================================
Non-Standard FV (M&E Only)
==================================================================================
==================================================================================
Non-Standard Annual Return 18.85% 18.61%
==================================================================================
==================================================================================
**Standard Before Surrender Chg
==================================================================================
==================================================================================
Standard FV (M&E, Contract Chg, Surr. Chg.)
==================================================================================
==================================================================================
Standard Annualized Performance 18.45% 18.20%
==================================================================================
==================================================================================
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Contract Charge Ratio (One Year) 14.62%
==================================================================================
==================================================================================
Contract Charge Ratio (Inception) 14.62%
==================================================================================
==================================================================================
Sheet Index 16
==================================================================================
==================================================================================
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Five Year Results
==================================================================================
==================================================================================
Additional Death Benefit Yes No
==================================================================================
==================================================================================
Annual Growth Rate (after Fund Management) 21.81% 21.81%
==================================================================================
==================================================================================
Calendar Days Since Inception 1825 1825
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Dependent Variables
==================================================================================
==================================================================================
M&E Charge (no Contract Chg.; Daily, Simple) 1.25% 1.45%
==================================================================================
==================================================================================
**Whole Years Since Deposit 5 5
==================================================================================
==================================================================================
**Days into Current Year 0 0
==================================================================================
==================================================================================
**Basic Surrender Charge 2% 2%
==================================================================================
==================================================================================
**Non-Standard Daily Factor 1.000506 1.000501
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Results
==================================================================================
==================================================================================
Arbitrary Premium
==================================================================================
==================================================================================
Non-Standard FV (M&E Only)
==================================================================================
==================================================================================
Non-Standard Annual Return 20.30% 20.06%
==================================================================================
==================================================================================
**Standard Before Surrender Chg
==================================================================================
==================================================================================
Standard FV (M&E, Contract Chg, Surr. Chg.)
==================================================================================
==================================================================================
Standard Annualized Performance 19.91% 19.66%
==================================================================================
==================================================================================
Lazard Small Cap
==================================================================================
==================================================================================
==================================================================================
==================================================================================
One Year Results
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Additional Death Benefit No Yes
==================================================================================
==================================================================================
Annual Growth Rate (after Fund Management) 5.13% 5.13%
==================================================================================
==================================================================================
**'Calendar Days Since Deposit 365 365
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Dependent Variables
==================================================================================
==================================================================================
M&E Charge (no Contract Chg.; Daily, Simple) 1.25% 1.45%
==================================================================================
==================================================================================
**Whole Years Since Deposit 1 1
==================================================================================
==================================================================================
**Days into Current Year 0 0
==================================================================================
==================================================================================
**Basic Surrender Charge 6% 6%
==================================================================================
==================================================================================
**Non-Standard Daily Factor 1.000103 1.000097
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Results
==================================================================================
==================================================================================
Arbitrary Premium
==================================================================================
==================================================================================
Non-Standard FV (M&E Only)
==================================================================================
==================================================================================
Non-Standard Annual Return 3.82% 3.62%
==================================================================================
==================================================================================
**Standard Before Surrender Chg
==================================================================================
==================================================================================
Standard FV (M&E, Contract Chg, Surr. Chg.)
==================================================================================
==================================================================================
Standard Annualized Performance -2.02% -2.23%
==================================================================================
==================================================================================
==================================================================================
==================================================================================
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Since Inception 11/2/97 12/31/99
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Additional Death Benefit No Yes
==================================================================================
==================================================================================
Annual Growth Rate (after Fund Management) 0.13% 0.13%
==================================================================================
==================================================================================
Calendar Days Since Inception 789 789
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Dependent Variables
==================================================================================
==================================================================================
M&E Charge (no Contract Chg.; Daily, Simple) 1.25% 1.45%
==================================================================================
==================================================================================
**Whole Years Since Deposit 2 2
==================================================================================
==================================================================================
**Days into Current Year 59 59
==================================================================================
==================================================================================
**Basic Surrender Charge 5% 5%
==================================================================================
==================================================================================
**Non-Standard Daily Factor 0.999969 0.999964
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Results
==================================================================================
==================================================================================
Arbitrary Premium
==================================================================================
==================================================================================
Non-Standard FV (M&E Only)
==================================================================================
==================================================================================
Non-Standard Annual Return -1.11% -1.31%
==================================================================================
==================================================================================
**Standard Before Surrender Chg
==================================================================================
==================================================================================
Standard FV (M&E, Contract Chg, Surr. Chg.)
==================================================================================
==================================================================================
Standard Annualized Performance -3.94% -4.14%
==================================================================================
==================================================================================
==================================================================================
==================================================================================
==================================================================================
==================================================================================
Contract Charge Ratio (One Year) 13.39%
==================================================================================
==================================================================================
Contract Charge Ratio (Inception) 13.39%
==================================================================================
==================================================================================
Sheet Index 17
==================================================================================
</TABLE>
