<PAGE> 1
As filed with the Securities and Exchange Commission on November 1, 1999.
Registration No. 333-83023
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
PRE-EFFECTIVE AMENDMENT NO. 1
ON
FORM S-6
FOR REGISTRATION UNDER THE SECURITIES ACT OF 1933
OF SECURITIES OF UNIT INVESTMENT TRUSTS
REGISTERED ON FORM N-8B-2
THE MANUFACTURERS LIFE INSURANCE COMPANY OF NEW YORK
SEPARATE ACCOUNT B
(formerly FNAL Variable Life Account I)
(Exact name of trust)
THE MANUFACTURERS LIFE INSURANCE COMPANY OF NEW YORK
(formerly First North American Life Assurance Company)
(Name of depositor)
100 Summit Lake Drive
Second Floor
Valhalla, New York 10595
(Address of depositor's principal executive offices)
James D. Gallagher, President Copy to:
The Manufacturers Life Insurance Company J. Sumner Jones
of New York Jones & Blouch L.L.P.
100 Summit Lake Drive 1025 Thomas Jefferson St., NW
Second Floor Suite 405 West
Valhalla, New York 10595 Washington, DC 20007-0805
(Name and Address of Agent for Service)
Title of Securities Being Registered: Variable Life Insurance Contracts
Approximate date of commencement of proposed public offering: As soon after the
effective date of this Registration Statement as is practicable.
The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that the Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
<PAGE> 2
THE MANUFACTURERS LIFE INSURANCE COMPANY OF NEW YORK SEPARATE ACCOUNT B
Registration Statement on Form S-6
Cross-Reference Sheet
FORM
N-8B-2
ITEM NO. CAPTION IN PROSPECTUS
1 Cover Page; General Information About Manulife New York, The
Separate Account and The Trust
2 Cover Page; General Information About Manulife New York, The
Separate Account and The Trust
3 *
4 Distribution of the Policies
5 General Information About Manulife New York, The Separate
Account and The Trust
6 General Information About Manulife New York, The Separate
Account and The Trust
7 *
8 *
9 Litigation
10 Policy Summary
11 General Information About Manulife New York, The Separate
Account and The Trust
12 General Information About Manulife New York, The Separate
Account and The Trust
13 Charges and Deductions
14 Premium Payments; Responsibilities Assumed by Manulife New
York and MSS
15 Premium Payments
16 **
17 Policy Values; Other Provisions of the Policy
18 General Information About Manulife New York, The Separate
Account and The Trust
19 Other Information - Reports to Policyowners); Responsibilities
Assumed by Manulife New York and MSS
20 *
21 Policy Summary
22 *
23 **
24 Other Provisions of the Policy
25 General Information About Manulife New York, The Separate
Account and The Trust
26 *
27 **
28 Other Information - Directors and Officers
29 General Information About Manulife New York, The Separate
Account and The Trust
30 *
31 *
32 *
33 *
34 *
35 **
36 *
37 *
38 Distribution of the Policies; Responsibilities Assumed by
Manulife New York and MSS
39 Distribution of the Policies
40 *
41 **
42 *
43 *
44 Policy Values
45 *
46 Policy Values; Other Information -- Payment of Proceeds
47 General Information About Manulife New York, The Separate
Account and The Trust
48 *
<PAGE> 3
49 *
50 General Information About Manulife New York, The Separate
Account and The Trust
51 Policy Summary
52 Other Information - Substitution of Portfolio Shares
53 **
54 *
55 *
56 *
57 *
58 *
59 Financial Statements
- --------------
* Omitted since answer is negative or item is not applicable.
** Omitted.
<PAGE> 4
PART I
PROSPECTUS
<PAGE> 5
PROSPECTUS
THE MANUFACTURERS LIFE INSURANCE COMPANY OF NEW YORK
SEPARATE ACCOUNT B
VENTURE VUL
A FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
This prospectus describes Venture VUL, a flexible premium variable universal
life insurance policy (the "Policy") offered by The Manufacturers Life Insurance
Company of New York ("Manulife New York," "we" or "us").
The Policy is designed to provide lifetime insurance protection together with
flexibility as to
o the timing and amount of premium payments,
o the investments underlying the Policy Value, and
o the amount of insurance coverage.
This flexibility allows you, the policyowner, to pay premiums and adjust
insurance coverage in light of your current financial circumstances and
insurance needs.
Policy Value may be accumulated on a fixed basis or vary with the investment
performance of the sub-accounts of The Manufacturers Life Insurance Company of
New York Separate Account B (the "Separate Account"). The assets of each
sub-account will be used to purchase shares of a particular investment portfolio
(a "Portfolio") of Manufacturers Investment Trust (the "Trust"). The
accompanying prospectus for the Trust, and the corresponding statement of
additional information, describe the investment objectives of the Portfolios in
which you may invest net premiums. Other sub-accounts and portfolios may be
added in the future.
PROSPECTIVE PURCHASERS SHOULD NOTE THAT IT MAY NOT BE ADVISABLE TO PURCHASE A
POLICY AS A REPLACEMENT FOR EXISTING INSURANCE.
The Securities and Exchange Commission (the "SEC") maintains a web site
(http://www.sec.gov) that contains material incorporated by reference and other
information regarding registrants that file electronically with the SEC.
Please read this prospectus carefully and keep it for future reference. It is
valid only when accompanied by a current prospectus for the Trust.
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED THESE
SECURITIES OR PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
<S> <C>
Home Office: Service Office Mailing Address:
The Manufacturers Life Insurance Company of New York The Manufacturers Life Insurance Company of New York
100 Summit Lake Drive P.O. Box 633, Niagara Square Station
Second Floor Buffalo, New York 14201-0633
Valhalla, New York 10595 TELEPHONE: 1-888-267-7784
</TABLE>
THE DATE OF THIS PROSPECTUS IS ______________, 1999
<PAGE> 6
TABLE OF CONTENTS
DEFINITIONS...................................................................
POLICY SUMMARY................................................................
General....................................................................
Death Benefits.............................................................
Premiums...................................................................
Policy Value...............................................................
Policy Loans...............................................................
Surrender and Partial Withdrawals..........................................
Lapse and Reinstatement....................................................
Charges and Deductions.....................................................
Investment Options and Investment Advisers ................................
Investment Management Fees and Expenses....................................
Table of Charges and Deductions............................................
Table of Investment Management Fees and Expenses...........................
Table of Investment Options and Investment Advisers........................
GENERAL INFORMATION ABOUT MANULIFE NEW YORK, THE SEPARATE ACCOUNT AND
THE TRUST.....................................................................
Manulife New York..........................................................
The Separate Account.......................................................
The Trust..................................................................
Investment Objectives of the Portfolios....................................
ISSUING A POLICY..............................................................
Requirements...............................................................
Temporary Insurance Agreement..............................................
Right to Examine the Policy................................................
DEATH BENEFITS................................................................
Life Insurance Qualification...............................................
Death Benefit Options......................................................
Changing the Face Amount...................................................
PREMIUM PAYMENTS..............................................................
Initial Premiums...........................................................
Subsequent Premiums........................................................
Maximum Premium Limitation.................................................
Premium Allocation.........................................................
CHARGES AND DEDUCTIONS........................................................
Premium Charge.............................................................
Surrender Charges..........................................................
Mortality and Expense Risk Charge..........................................
Charges for Transfers......................................................
Reduction in Charges.......................................................
SPECIAL PROVISIONS FOR EXCHANGES..............................................
COMPANY TAX CONSIDERATIONS....................................................
POLICY VALUE..................................................................
Determination of the Policy Value..........................................
Units and Unit Values......................................................
Transfers of Policy Value..................................................
POLICY LOANS..................................................................
Maximum Loanable Amount....................................................
Effect of Policy Loan......................................................
Interest Charged on Policy Loans...........................................
Loan Account...............................................................
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POLICY SURRENDER AND PARTIAL WITHDRAWALS......................................
Policy Surrender...........................................................
Partial Withdrawals........................................................
LAPSE AND REINSTATEMENT.......................................................
Lapse......................................................................
No Lapse Guarantee.........................................................
No-Lapse Guarantee Cumulative Premium Test.................................
Reinstatement..............................................................
THE GENERAL ACCOUNT...........................................................
Fixed Account..............................................................
OTHER PROVISIONS OF THE POLICY................................................
Policyowner Rights.........................................................
Assignment of Rights.......................................................
Beneficiary................................................................
Conversion Privilege........................................................
Flexible Factors...........................................................
Incontestability...........................................................
Misstatement of Age or Sex.................................................
Suicide Exclusion..........................................................
Supplementary Benefits.....................................................
TAX TREATMENT OF THE POLICY...................................................
Life Insurance Qualification...............................................
Tax Treatment of Policy Benefits...........................................
Alternate Minimum Tax......................................................
Income Tax Reporting.......................................................
OTHER INFORMATION.............................................................
Payment of Proceeds........................................................
Reports to Policyowners....................................................
Distribution of the Policies...............................................
Responsibilities Assumed by Manulife New York and MSS......................
Voting Rights..............................................................
Substitution of Portfolio Shares...........................................
Records and Accounts.......................................................
State Regulations..........................................................
Litigation.................................................................
Independent Auditors.......................................................
Further Information........................................................
Officers and Directors.....................................................
Impact of Year 2000........................................................
Illustrations..............................................................
Financial Statements.......................................................
Appendix A - Sample Illustrations of Policy Values, Cash Surrender
Values and Death Benefits................................................
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY JURISDICTION WHERE IT
WOULD NOT BE LAWFUL. YOU SHOULD RELY ON THE INFORMATION CONTAINED IN THIS
PROSPECTUS, THE PROSPECTUS OF THE TRUST, OR THE STATEMENT OF ADDITIONAL
INFORMATION OF THE TRUST. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH
INFORMATION THAT IS DIFFERENT.
Examine this prospectus carefully. The Policy Summary will briefly describe the
Policy. More detailed information will be found further in the prospectus.
<PAGE> 8
DEFINITIONS
Additional Rating
is an increase to the Cost of Insurance Rate for insureds who do not meet, at a
minimum, our underwriting requirements for the standard Risk Classification.
Age
on any date is the life insured's age on his or her nearest birthday. If no
specific age is mentioned, age means the life insured's age on the Policy
Anniversary nearest to the birthday.
Attained Age
is the age at issue plus the number of whole years that have elapsed since the
Policy Date.
Business Day
is any day that the New York Stock Exchange is open for business. A Business Day
ends at the close of regularly scheduled day-time trading of the New York Stock
Exchange on that day.
Cash Surrender Value
is the Policy Value less the Surrender Charge and any outstanding Monthly
Deductions due.
Effective Date
is the date the underwriters approve issuance of the Policy. If the Policy is
approved without the initial premium, the Effective Date will be the date we
receive at least the minimum initial premium at our Service Office. In either
case, we will take the first Monthly Deduction on the Effective Date.
Gross Withdrawal
is the amount of partial Net Cash Surrender Value the policyowner requests plus
any Surrender Charge applicable to the withdrawal.
Fixed Account
is that part of the Policy Value which reflects the value the policyowner has in
our general account.
Investment Account
is that part of the Policy Value which reflects the value the policyowner has in
one of the sub-accounts of the Separate Account.
Issue Date
is the date we issued the Policy. The Issue Date is also the date from which the
Suicide and Incontestability provisions of the Policy are measured.
Life Insured
is the person whose life is insured under this Policy.
Loan Account
is that part of the Policy Value which reflects the value transferred from the
Fixed Account or the Investment Accounts as collateral for a policy loan.
Maturity Date
is the Policy Anniversary nearest the life insured's Attained Age 100.
Monthly No-Lapse Guarantee Premium
is one-twelfth of the No-Lapse Guarantee Premium.
Net Cash Surrender Value
is the Cash Surrender Value less the Policy Debt.
Net Policy Value
is the Policy Value less the value in the Loan Account.
4
<PAGE> 9
Net Premium
is the gross premium paid less the Premium Charge. It is the amount of premium
allocated to the Fixed Account and/or Investment Accounts.
No-Lapse Guarantee
when the Policy is in the No-Lapse Guarantee Period, as long as the No-Lapse
Guarantee Cumulative Premium Test is met, the Policy will not lapse, even when
the Net Cash Surrender Value falls to or below zero.
No-Lapse Guarantee Period
is the period, set at issue, during which the No-Lapse Guarantee is provided.
The No Lapse Guarantee Period is the first five Policy Years for life insureds
with an issue age up to and including age 85. It is not offered to life insureds
whose Issue Age exceeds age 85.
No-Lapse Guarantee Premium
is the annual premium used to determine the Monthly No-Lapse Guarantee Premium.
It is set at issue and is recalculated, prospectively, whenever any of the
following changes occur under the Policy:
- - the face amount of insurance changes.
- - a Supplementary Benefit is added, changed or terminated.
- - the risk classification of the life insured changes.
- - a temporary Additional Rating is added (due to a face amount increase) or
terminated.
- - the Death Benefit Option changes.
No-Lapse Guarantee Cumulative Premium
is the minimum amount due to satisfy the No-Lapse Guarantee Cumulative Premium
Test. This amount equals the sum, from issue to the date of the test, of the
Monthly No-Lapse Guarantee Premiums.
No-Lapse Guarantee Cumulative Premium Test
is a test that, if satisfied, during the No Lapse Guarantee Period will keep the
policy in force when the Net Cash Surrender Value is less than zero. The test is
satisfied if the sum of all premiums paid, less any gross partial withdrawals
and less any Policy Debt, is greater than or equal to the sum of the monthly
No-Lapse Guarantee Premiums due since the Policy Date.
Policy Date
is the date from which charges for the first monthly deduction are calculated
and the date from which Policy Years, Policy Months, and Policy Anniversaries
are determined.
Policy Debt
as of any date equals (a) plus (b) plus (c) minus (d), where:
(a) is the total amount of loans borrowed as of such date;
(b) is the total amount of any unpaid loan interest charges which have been
borrowed against the Policy on a Policy Anniversary;
(c) is any interest charges accrued from the last Policy Anniversary to the
current date; and
(d) is the total amount of loan repayments as of such date.
Policy Value
is the sum of the values in the Loan Account, the Fixed Account, and the
Investment Accounts.
Service Office Mailing Address
is P.O. Box 633, Niagara Square Station, Buffalo, New York 14201-0633
Surrender Charge Period
is the period following the Issue Date of the Policy or following any increase
in Face Amount during which we will assess surrender charges. Surrender charges
will apply during this period if the policy terminates due to default, if the
policyowner surrenders the policy or makes a partial withdrawal.
5
<PAGE> 10
Written Request
is the policyowner's request to us which must be in a form satisfactory to us,
signed and dated by the policyowner, and received at our Service Office.
POLICY SUMMARY
GENERAL
We have prepared the following summary as a general description of the most
important features of the Policy. It is not comprehensive and you should refer
to the more detailed information contained in this prospectus. Unless otherwise
indicated or required by the context, the discussion throughout this prospectus
assumes that the Policy has not gone into default, there is no outstanding
Policy Debt, and the death benefit is not determined by the minimum death
benefit percentage.
DEATH BENEFITS
There are two death benefit options. Under Option 1 the death benefit is the
FACE AMOUNT OF THE POLICY at the date of death or, if greater, the Minimum Death
Benefit. Under Option 2 the death benefit is the FACE AMOUNT PLUS THE POLICY
VALUE OF THE POLICY at the date of death or, if greater, the Minimum Death
Benefit. You may change the death benefit option and increase or decrease the
Face Amount.
PREMIUMS
You may pay premiums at any time and in any amount, subject to certain
limitations as described under "Premium Payments - Subsequent Premiums." Net
Premiums will be allocated, according to your instructions and at our
discretion, to one or more of our general account and the sub-accounts of the
Separate Account. You may change your allocation instructions at any time. You
may also transfer amounts among the accounts.
POLICY VALUE
The Policy has a Policy Value reflecting premiums paid, certain charges for
expenses and cost of insurance, and the investment performance of the accounts
to which you have allocated premiums.
POLICY LOANS
You may borrow an amount not to exceed 90% of your Policy's Net Cash Surrender
Value. Loan interest at a rate of 5.25% during the first ten Policy Years and 4%
thereafter is due on each Policy Anniversary. We will deduct all outstanding
Policy Debt from proceeds payable at the insured's death, or upon surrender.
SURRENDER AND PARTIAL WITHDRAWALS
You may make a partial withdrawal of your Policy Value. A partial withdrawal may
result in a reduction in the Face Amount of the Policy and an assessment of a
portion of the surrender charges to which the Policy is subject.
You may surrender your Policy for its Net Cash Surrender Value at any time while
the life insured is living. The Net Cash Surrender Value is equal to the Policy
Value less Surrender Charges and outstanding Monthly Deductions due minus the
Policy Debt.
LAPSE AND REINSTATEMENT
Unless the No-Lapse Guarantee Cumulative Premium Test has been met, a Policy
will lapse (and terminate without value) when its Net Cash Surrender Value is
insufficient to pay the next monthly deduction and a grace period of 61 days
expires without your having made an adequate payment.
The Policies, therefore, differ in two important respects from conventional life
insurance policies. First, the failure to make planned premium payments will not
itself cause a Policy to lapse. Second, a Policy can lapse even if planned
premiums have been paid.
A policyowner may reinstate a lapsed Policy at any time within the five year
period following lapse provided the Policy was not surrendered for its Net Cash
Surrender Value. We will require evidence of insurability along with a certain
amount of premium as described under "Reinstatement."
6
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CHARGES AND DEDUCTIONS
We assess certain charges and deductions in connection with the Policy. These
include:
- - charges assessed monthly for mortality and expense risks, cost of
insurance, administration expenses and supplementary benefits, if
applicable,
- - charges deducted from premiums paid, and
- - charges assessed on surrender or lapse.
These charges are summarized in the Table of Charges and Deductions. We may
allow you to request that the sum of all charges assessed monthly for mortality
and expense risks, cost of insurance and administration expenses be deducted
from the Fixed Account or one or more of the sub-accounts of the Separate
Account.
In addition, there are charges deducted from each Portfolio of the Trust. These
charges are summarized in the Table of Investment Management Fees and Expenses.
INVESTMENT OPTIONS AND INVESTMENT ADVISERS
You may allocate Net Premiums to the Fixed Account or to one or more of the
sub-accounts of our Separate Account. Each of the sub-accounts invests in the
shares of one of the Portfolios of the Trust.
The Trust receives investment advisory services from Manufacturers Securities
Services, LLC ("MSS"). MSS is a registered investment adviser under the
Investment Advisers Act of 1940, as amended.
The Trust also employs subadvisers. The Table of Investment Options and
Investment Advisers shows the subadvisers that provide investment subadvisory
services to the indicated Portfolios.
INVESTMENT MANAGEMENT FEES AND EXPENSES
Each sub-account of the Separate Account purchases shares of the Portfolios at
net asset value. The net asset value of those shares reflects investment
management fees and certain expenses of the Portfolios. The fees and expenses
for each Portfolio for the Trust's last fiscal year are shown in the Table of
Investment Management Fees and Expenses below. These fees and expenses are
described in detail in the accompanying Trust prospectus to which reference
should be made.
7
<PAGE> 12
TABLE OF CHARGES AND DEDUCTIONS
Premium Charge: 6.6% of each premium paid during the first 10
Policy Years and 3.6% thereafter.
Surrender Charge: A Surrender Charge is applicable for 10
Policy Years from the Issue Date or an
increase in Face Amount. The Surrender Charge
is determined by the following formula:
Surrender Charge = (Surrender Charge Rate) x
(Face Amount Associated with the Surrender
Charge/1000) x (Grading Percentage)
The Grading Percentage is based on the Policy
Year in which the transaction causing the
assessment of the charge occurs and is set
forth in the table under "Surrender Charges."
The Surrender Charge Rate is calculated as
follows:
Surrender Charge Rate = (Rate per $1000 of
Face Amount) + ((80%) x(Surrender Charge
Premium))
The Rate per $1000 of Face Amount is based on
the age at policy issue or face amount
increase and is set forth in a table under
"Surrender Charges."
The Surrender Charge Premium is the lesser
of:
(a) the premiums paid during the first
Policy Year (or premiums attributable
to a Face Amount increase) per $1000
of Face Amount, and,
(b) the Surrender Charge Premium Limit
specified in the Policy per $1000
Face Amount.
The premiums attributable to a Face Amount
increase will equal a portion of each payment
made within one year of the increase plus a
portion of the Policy Value at the time of
the increase.
A portion of this charge will be assessed on
a partial withdrawal.
Monthly Deductions: - An administration charge of $30 per
Policy Month will be deducted in the
first Policy Year. In subsequent years,
the administration charge will be $15
per Policy Month.
- The cost of insurance charge.
- Any additional charges for supplementary
benefits, if applicable.
- A mortality and expense risks charge.
This charge is calculated as a
percentage of the value of the
Investment Accounts and is assessed
against the Investment Accounts. This
charge varies by Policy Year as follows:
Guaranteed Monthly Mortality Guaranteed Annual Mortality and
Policy Years and Expense Risks Charge and Expense Risks Charge
- ------------ ---------------------------- -------------------------------
1-10 0.0627% 0.75%
11+ 0.0209% 0.25%
All of the above charges, except the
mortality and expense risks charge, are
deducted from the Net Policy Value.
Loan Charges: A fixed loan interest rate of 5.25% during
the first 10 Policy Years and 4% thereafter.
Interest credited to amounts in the Loan
Account is guaranteed not to be less than 4%
at all times. The maximum loan amount is 90%
of the Net Cash Surrender Value.
Transfer Charge: A charge of $25 per transfer for each
transfer in excess of 12 in a Policy Year.
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TABLE OF INVESTMENT MANAGEMENT FEES AND EXPENSES
TRUST ANNUAL EXPENSES
(as a percentage of Trust average net assets)
OTHER EXPENSES
MANAGEMENT (AFTER EXPENSE TOTAL TRUST
TRUST PORTFOLIO FEES REIMBURSEMENT)*** ANNUAL EXPENSES
- --------------------------------------------------------------------------------
Pacific Rim Emerging Markets..... 0.850% 0.360% 1.210%
Science & Technology............. 1.100% 0.110% 1.210%
International Small Cap.......... 1.100% 0.150% 1.250%
Aggressive Growth................ 1.000%+ 0.090% 1.090%
Emerging Small Company........... 1.050% 0.050% 1.100%
Small Company Blend.............. 1.050% 0.150%* 1.200%
Mid Cap Growth................... 0.950%+ 0.040% 0.990%
Mid Cap Stock.................... 0.925% 0.000%* 0.925%
Overseas......................... 0.950% 0.210% 1.160%
International Stock.............. 1.050% 0.200% 1.250%
International Value.............. 1.000% 0.300%* 1.300%
Mid Cap Blend.................... 0.850%+ 0.050% 0.900%
Small Company Value.............. 1.050% 0.180% 1.230%
Global Equity.................... 0.900% 0.110% 1.010%
Growth........................... 0.850% 0.050% 0.900%
Large Cap Growth................. 0.875%+ 0.130% 1.005%
Quantitative Equity.............. 0.700% 0.060% 0.760%
Blue Chip Growth................. 0.875%+ 0.045% 0.920%
Real Estate Securities........... 0.700% 0.060% 0.760%
Value............................ 0.800% 0.050% 0.850%
Equity Index..................... 0.250% 0.150%** 0.400%**
Growth & Income.................. 0.750% 0.040% 0.790%
U.S. Large Cap Value............. 0.875% 0.100%* 0.975%
Equity-Income.................... 0.875%+ 0.050% 0.925%
Income & Value................... 0.800%+ 0.090% 0.890%
Balanced......................... 0.800% 0.070% 0.870%
High Yield....................... 0.775% 0.065% 0.840%
Strategic Bond................... 0.775% 0.075% 0.850%
Global Bond...................... 0.800% 0.110% 0.910%
Total Return..................... 0.775% 0.100%* 0.875%
Investment Quality Bond.......... 0.650% 0.070% 0.720%
Diversified Bond................. 0.750% 0.140% 0.890%
U.S. Government Securities....... 0.650% 0.070% 0.720%
Money Market..................... 0.500% 0.120% 0.620%
Lifestyle Aggressive 1000#....... 0% 1.110%*** 1.110%
Lifestyle Growth 820#............ 0% 1.000%*** 1.000%
Lifestyle Balanced 640#.......... 0% 0.920%*** 0.920%
Lifestyle Moderate 460#.......... 0% 0.830%*** 0.830%
Lifestyle Conservative 280#...... 0% 0.720%*** 0.720%
+Management Fees for the portfolios listed below changed effective May 1, 1999.
Prior to May 1, 1999, management fees were as follows:
Aggressive Growth Trust 1.050% Blue Chip Growth Trust 0.925%
Mid Cap Growth Trust 1.000% Equity-Income Trust 0.800%
Mid Cap Blend Trust 0.750% Income & Value Trust 0.750%
Large Cap Growth Trust 0.750%
*Based on estimates of payments to be made during the current fiscal year.
9
<PAGE> 14
**Under the Advisory Agreement, MSS has agreed to reduce its advisory fee or
reimburse the Equity Index Trust if the total of all expenses (excluding
advisory fees, taxes, portfolio brokerage commissions, interest, litigation and
indemnification expenses and other extraordinary expenses not incurred in the
ordinary course of the Trust's business) exceed an annual rate of 0.15% of the
average annual net assets of the Equity Index Trust. The expense limitation will
continue in effect from year to year unless otherwise terminated at any year end
by MSS on 30 days' notice to the Trust. If this expense reimbursement had not
been in effect, Total Trust Annual Expenses would have been 0.55%, and Other
Expenses would have been 0.30%, of the average annual net assets of the Equity
Index Trust.
***Reflects expenses of the Underlying Portfolios. MSS has voluntarily agreed to
pay the expenses of each Lifestyle Trust (excluding the expenses of the
Underlying Portfolios). This voluntary expense reimbursement may be terminated
at any time. If such expense reimbursement was not in effect, Total Trust Annual
Expenses would be 0.02% higher, except for the Lifestyle Conservative 280 Trust,
which would be 0.03% higher (based on expenses of the Lifestyle Trusts for the
fiscal year ended December 31, 1998) as noted in the chart below:
MANAGEMENT TOTAL TRUST
TRUST PORTFOLIO FEES OTHER EXPENSES ANNUAL EXPENSES
- -------------------------------- ---------- -------------- ---------------
Lifestyle Aggressive 1000..... 0% 1.130% 1.130%
Lifestyle Growth 820.......... 0% 1.020% 1.020%
Lifestyle Balanced 640........ 0% 0.940% 0.940%
Lifestyle Moderate 460........ 0% 0.850% 0.850%
Lifestyle Conservative 280.... 0% 0.750% 0.750%
# Each Lifestyle Trust will bear its own pro rata share of the fees and expenses
incurred by the Underlying Portfolios in which it invests, and the investment
return of each Lifestyle Trust will be net of the Underlying Portfolio expenses.
Each Lifestyle Portfolio must also bear its own expenses. However, MSS is
currently paying those expenses as described in footnote (***) above.
TABLE OF INVESTMENT OPTIONS AND INVESTMENT ADVISERS
SUBADVISER PORTFOLIO
A I M Capital Management, Inc. Mid Cap Growth Trust
Aggressive Growth Trust
AXA Rosenberg Investment Management LLC Small Company Value Trust
Capital Guardian Trust Company Small Company Blend Trust
U.S. Large Cap Value Trust
Income & Value Trust
Diversified Bond Trust
Fidelity Management Trust Company Mid Cap Blend Trust
Large Cap Growth Trust
Overseas Trust
Founders Asset Management LLC International Small Cap Trust
Balanced Trust
Franklin Advisers, Inc. Emerging Small Company Trust
Manufacturers Adviser Corporation Pacific Rim Emerging Markets
Trust
Quantitative Equity Trust
Real Estate Securities Trust
Equity Index Trust
Money Market Trust
Lifestyle Trusts
Miller Anderson & Sherrerd, LLP Value Trust
High Yield Trust
Morgan Stanley Asset Management Inc. Global Equity Trust
10
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SUBADVISER PORTFOLIO
Pacific Investment Management Company Global Bond Trust
Total Return Trust
Rowe Price-Fleming International, Inc. International Stock Trust
Salomon Brothers Asset Management Inc U.S. Government Securities
Trust
Strategic Bond Trust
State Street Global Advisors Growth Trust
T. Rowe Price Associates, Inc. Science & Technology Trust
Blue Chip Growth Trust
Equity-Income Trust
Templeton Investment Counsel, Inc. International Value Trust
Wellington Management Company, LLP Growth & Income Trust
Investment Quality Bond Trust
Mid Cap Stock Trust
Each of the Trust's Subadvisers, except Capital Guardian Trust Company, Fidelity
Management Trust Company and State Street Global Advisors, is registered as an
investment adviser under the Investment Advisers Act of 1940, as amended.
GENERAL INFORMATION ABOUT MANULIFE NEW YORK, THE SEPARATE ACCOUNT AND THE TRUST
MANULIFE NEW YORK
We are a stock life insurance company organized under the laws of New York on
February 10, 1992. Our principal office is located at 100 Summit Lake Drive,
Second Floor, Valhalla, New York 10595. We are a wholly-owned subsidiary of The
Manufacturers Life Insurance Company of North America ("Manulife North
America"). Manulife North America is a stock life insurance company organized
under the laws of Delaware in 1979 with its principal office located at 500
Boylston Street, Boston, Massachusetts 02116. Manulife-Wood Logan Holding Co.,
Inc. ("MWL"). holds all of the outstanding shares of Manulife North America and
Manulife Wood Logan, Inc. ("Manulife Wood Logan"). MWL is owned 78.4% by The
Manufacturers Life Insurance Company (U.S.A.) and 21.6% by MRL Holding, LLC. Our
ultimate parent entity is Manulife Financial Corporation ("MFC") based in
Toronto, Canada. MFC is the holding company of The Manufacturers Life Insurance
Company and its subsidiaries, collectively known as Manulife Financial.
RATINGS
Manulife New York's financial ratings are as follows:
A++ A.M. Best
Superior in financial strength; 1st category of 15
AAA Duff & Phelps
Highest in claims paying ability; 1st category of 18
AA+ Standard & Poor's
Very strong in financial strength; 2nd category of 21
These ratings, which are current as of the date of this prospectus and are
subject to change, are assigned as a measure of Manulife New York's ability to
honor the death benefit and life annuitization guarantees but not specifically
to its products, the performance (return) of these products, the value of any
investment in these products upon withdrawal or to individual securities held in
any portfolio.
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THE SEPARATE ACCOUNT
We established the Separate Account on May 6, 1997, subject to approval by the
Superintendent of Insurance of New York. The Separate Account holds assets that
are segregated from all of our other assets. The Separate Account is currently
used only to support variable life insurance policies.
ASSETS OF THE SEPARATE ACCOUNT
We are the legal owner of the assets in the Separate Account. The income, gains
and losses of the Separate Account, whether or not realized, are, in accordance
with applicable contracts, credited to or charged against the Separate Account
without regard to our other income, gains or losses. We will at all times
maintain assets in the Separate Account with a total market value at least equal
to the reserves and other liabilities relating to variable benefits under all
policies participating in the Separate Account. These assets may not be charged
with liabilities which arise from any other business we conduct. However, our
obligations under the policies are part of our general corporate obligations.
REGISTRATION
The Separate Account is registered with the SEC under the Investment Company Act
of 1940, as amended (the "1940 Act") as a unit investment trust. A unit
investment trust is a type of investment company which invests its assets in
specified securities, such as the shares of one or more investment companies,
rather than in a portfolio of unspecified securities. Registration under the
1940 Act does not involve any supervision by the SEC of the management or
investment policies or practices of the Separate Account. For state law purposes
the Separate Account is treated as a part or division of Manulife New York.
THE TRUST
Each sub-account of the Separate Account will purchase shares only of a
particular Portfolio. The Trust is registered under the 1940 Act as an open-end
management investment company. The Separate Account will purchase and redeem
shares of the Portfolios at net asset value. Shares will be redeemed to the
extent necessary for Manulife New York to provide benefits under the Policies,
to transfer assets from one sub-account to another or to the general account as
requested by policyowners, and for other purposes not inconsistent with the
Policies. Any dividend or capital gain distribution received from a Portfolio
with respect to the Policies will be reinvested immediately at net asset value
in shares of that Portfolio and retained as assets of the corresponding
sub-account.
The Trust shares are issued to fund benefits under both variable annuity
contracts and variable life insurance policies issued by us or life insurance
companies affiliated with us. We may also purchase shares through our general
account for certain limited purposes including initial portfolio seed money. For
a description of the procedures for handling potential conflicts of interest
arising from the funding of such benefits see the accompanying Trust prospectus.
INVESTMENT OBJECTIVES OF THE PORTFOLIOS
The investment objectives and certain policies of the Portfolios currently
available to policyowners through corresponding sub-accounts are set forth
below. There is, of course, no assurance that these objectives will be met. A
full description of the Trust, its investment objectives, policies and
restrictions, the risks associated therewith, its expenses, and other aspects of
its operation is contained in the accompanying Trust prospectus, which should be
read together with this prospectus.
ELIGIBLE PORTFOLIOS
The Portfolios of the Trust available under the Policies are as follows:
The PACIFIC RIM EMERGING MARKETS TRUST seeks long-term growth of capital by
investing in a diversified portfolio that is comprised primarily of common
stocks and equity-related securities of corporations domiciled in countries in
the Pacific Rim region.
The SCIENCE & TECHNOLOGY TRUST seeks long-term growth of capital. Current income
is incidental to the portfolio's objective.
The INTERNATIONAL SMALL CAP TRUST seeks capital appreciation by investing
primarily in securities issued by foreign companies which have total market
capitalization or annual revenues of $1 billion or less. These securities may
represent companies in both established and emerging economies throughout the
world.
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The AGGRESSIVE GROWTH TRUST (formerly, the Pilgrim Baxter Growth Trust) seeks
long-term capital appreciation by investing the portfolio's asset principally in
common stocks, convertible bonds, convertible preferred stocks and warrants of
companies which in the opinion of the subadviser are expected to achieve
earnings growth over time at a rate in excess of 15% per year. Many of these
companies are in the small and medium-sized category.
The EMERGING SMALL COMPANY TRUST (formerly, the Emerging Growth Trust) seeks
long-term growth of capital by investing, under normal market conditions, at
least 65% of the portfolio's total assets in common stock equity securities of
small capitalization ("small cap") growth companies. In general, companies in
which the portfolios invests will have market cap values of less than $1.5
billion at the time of purchase.
The SMALL COMPANY BLEND TRUST seeks long-term growth of capital and income by
investing the portfolio's assets, under normal market conditions, primarily in
equity and equity-related securities of companies with market capitalizations
between $50 million and $1 billion.
The MID CAP GROWTH TRUST (formerly, the Small/Mid Cap Trust) seeks long-term
capital appreciation by investing the portfolio's assets principally in common
stocks, with emphasis on medium-sized and smaller emerging growth companies.
The MID CAP STOCK TRUST seeks long-term growth of capital by investing primarily
in equity securities of companies with market capitalizations that approximately
match the range of capitalization of the Wilshire Mid Cap 750 Index.
The OVERSEAS TRUST (formerly, the International Growth & Income Trust) seeks
growth of capital by investing, under normal market conditions, at least 65% of
the portfolio's assets in foreign securities (including American Depositary
Receipts (ADRs) and European Depositary Receipts (EDRs). The portfolio expects
to invest primarily in equity securities.
The INTERNATIONAL STOCK TRUST seeks long-term growth of capital by investing
primarily in common stocks of established, non-U.S. companies.
The INTERNATIONAL VALUE TRUST seeks long-term growth of capital by investing,
under normal market conditions, primarily in equity securities of companies
located outside the U.S., including emerging markets.
The MID CAP BLEND TRUST (formerly, the Equity Trust) seeks growth of capital by
investing primarily in common stocks of United States issuers and securities
convertible into or carrying the right to buy common stocks.
The SMALL COMPANY VALUE TRUST seeks long term growth of capital by investing in
equity securities of smaller companies which are traded principally in the
markets of the United States.
The GLOBAL EQUITY TRUST seeks long-term capital appreciation by investing
primarily in equity securities throughout the world, including U.S. issuers and
emerging markets.
The GROWTH TRUST seeks long-term growth of capital by investing primarily in
large capitalization growth securities (market capitalizations of approximately
$1 billion or greater).
The LARGE CAP GROWTH TRUST (formerly, the Aggressive Asset Allocation Trust)
seeks long-term growth of capital by investing, under normal market conditions,
at least 65% of the portfolio's assets in equity securities of companies with
large market capitalizations.
The QUANTITATIVE EQUITY TRUST seeks to achieve intermediate and long-term growth
through capital appreciation and current income by investing in common stocks
and other equity securities of well established companies with promising
prospects for providing an above average rate of return.
The BLUE CHIP GROWTH TRUST seeks to achieve long-term growth of capital (current
income is a secondary objective) and many of the stocks in the portfolio are
expected to pay dividends.
The REAL ESTATE SECURITIES TRUST seeks to achieve a combination of long-term
capital appreciation and satisfactory current income by investing in real estate
related equity and debt securities.
The VALUE TRUST seeks to realize an above-average total return over a market
cycle of three to five years, consistent with reasonable risk, by investing
primarily in common and preferred stocks, convertible securities, rights and
warrants to
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purchase common stocks, ADRs and other equity securities of companies with
equity capitalizations usually greater than $300 million.
The EQUITY INDEX TRUST seeks to achieve investment results which approximate the
aggregate total return of publicly traded common stocks which are included in
the Standard & Poor's 500 Composite Stock Price Index.
The GROWTH & INCOME TRUST seeks long-term growth of capital and income,
consistent with prudent investment risk, by investing primarily in a diversified
portfolio of common stocks of United States issuers which the subadviser
believes are of high quality.
The U.S. LARGE CAP VALUE TRUST seeks long-term growth of capital and income by
investing the portfolio's assets, under normal market conditions, primarily in
equity and equity-related securities of companies with market capitalizations
greater than $500 million.
The EQUITY-INCOME TRUST seeks to provide substantial dividend income and also
long-term capital appreciation by investing primarily in dividend-paying common
stocks, particularly of established companies with favorable prospects for both
increasing dividends and capital appreciation.
The INCOME & VALUE TRUST (formerly, the Moderate Asset Allocation Trust) seeks
the balanced accomplishment of (a) conservation of principal and (b) long-term
growth of capital and income by investing the portfolio's assets in both equity
and fixed-income securities. The subadviser has full discretion to determine the
allocation between equity and fixed-income securities.
The BALANCED TRUST seeks current income and capital appreciation by investing in
a balanced portfolio of common stocks, U.S. and foreign government obligations
and a variety of corporate fixed-income securities.
The HIGH YIELD TRUST seeks to realize an above-average total return over a
market cycle of three to five years, consistent with reasonable risk, by
investing primarily in high yield debt securities, including corporate bonds and
other fixed-income securities.
The STRATEGIC BOND TRUST seeks a high level of total return consistent with
preservation of capital by giving its subadviser broad discretion to deploy the
portfolio's assets among certain segments of the fixed-income market as the
subadviser believes will best contribute to achievement of the portfolio's
investment objective.
The GLOBAL BOND TRUST (formerly, the Global Government Bond Trust) seeks to
realize maximum total return, consistent with preservation of capital and
prudent investment management by investing the portfolio's asset primarily in
fixed income securities denominated in major foreign currencies, baskets of
foreign currencies (such as the ECU), and the U.S. dollar.
The TOTAL RETURN TRUST seeks to realize maximum total return, consistent with
preservation of capital and prudent investment management by investing, under
normal market conditions, at least 65% of the portfolio's assets in a
diversified portfolio of fixed income securities of varying maturities. The
average portfolio duration will normally vary within a three- to six-year time
frame based on the subadviser's forecast for interest rates.
The INVESTMENT QUALITY BOND TRUST seeks a high level of current income
consistent with the maintenance of principal and liquidity, by investing
primarily in a diversified portfolio of investment grade corporate bonds and
U.S. Government bonds with intermediate to longer term maturities. The portfolio
may also invest up to 20% of its assets in non-investment grade fixed income
securities.
The DIVERSIFIED BOND TRUST (formerly, the Conservative Asset Allocation Trust)
seeks high total return as is consistent with the conservation of capital by
investing at least 75% of the portfolio's assets in fixed-income securities.
The U.S. GOVERNMENT SECURITIES TRUST seeks a high level of current income
consistent with preservation of capital and maintenance of liquidity, by
investing in debt obligations and mortgage-backed securities issued or
guaranteed by the U.S. Government, its agencies or instrumentalities and
derivative securities such as collateralized mortgage obligations backed by such
securities.
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The MONEY MARKET TRUST seeks maximum current income consistent with preservation
of principal and liquidity by investing in high quality money market instruments
with maturities of 397 days or less issued primarily by United States entities.
The LIFESTYLE AGGRESSIVE 1000 TRUST seeks to provide long-term growth of capital
(current income is not a consideration) by investing 100% of the Lifestyle
Trust's assets in other portfolios of the Trust ("Underlying Portfolios") which
invest primarily in equity securities.
The LIFESTYLE GROWTH 820 TRUST seeks to provide long-term growth of capital with
consideration also given to current income by investing approximately 20% of the
Lifestyle Trust's assets in Underlying Portfolios which invest primarily in
fixed income securities and approximately 80% of its assets in Underlying
Portfolios which invest primarily in equity securities.
The LIFESTYLE BALANCED 640 TRUST seeks to provide a balance between a high level
of current income and growth of capital with a greater emphasis given to capital
growth by investing approximately 40% of the Lifestyle Trust's assets in
Underlying Portfolios which invest primarily in fixed income securities and
approximately 60% of its assets in Underlying Portfolios which invest primarily
in equity securities.
The LIFESTYLE MODERATE 460 TRUST seeks to provide a balance between a high level
of current income and growth of capital with a greater emphasis given to current
income by investing approximately 60% of the Lifestyle Trust's assets in
Underlying Portfolios which invest primarily in fixed income securities and
approximately 40% of its assets in Underlying Portfolios which invest primarily
in equity securities.
The LIFESTYLE CONSERVATIVE 280 TRUST seeks to provide a high level of current
income with some consideration also given to growth of capital by investing
approximately 80% of the Lifestyle Trust's assets in Underlying Portfolios which
invest primarily in fixed income securities and approximately 20% of its assets
in Underlying Portfolios which invest primarily in equity securities.
ISSUING A POLICY
REQUIREMENTS
To purchase a Policy, an applicant must submit a completed application. A Policy
will not be issued until the underwriting process has been completed to our
satisfaction.
Policies may be issued on a basis which does not distinguish between the
insured's sex, with prior approval from Manulife New York. A Policy will
generally be issued only on the lives of insureds from ages 0 through 90.
Each Policy has a Policy Date, an Effective Date, an Issue Date, and a Maturity
Date (See "Definitions" above).
The Policy Date is the date from which the first monthly deductions are
calculated and from which Policy Years, Policy Months and Policy Anniversaries
are determined. The Effective Date is the date we become obligated under the
Policy and when the first monthly deductions are deducted from the Policy Value.
The Issue Date is the date from which Suicide and Incontestability are measured.
If an application is accompanied by a check for the initial premium and the
application is accepted:
(i) the Policy Date will be the date the application and check were received at
the Service Office (unless a special Policy Date is requested (See
"Backdating a Policy" below));
(ii) the Effective Date will be the date our underwriters approve issuance of
the Policy; and
(iii) the Issue Date will be the date we issue the Policy.
If an application accepted by Manulife New York is not accompanied by a check
for the initial premium:
(i) the Policy Date will be the date we issue the Policy (unless a special
Policy Date is requested (See "Backdating a Policy" below));
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(ii) the Effective Date will be the date the Service Office receives the
initial premium; and
(iii) the Issue Date will be the date we issue the Policy.
The initial premium must be received within 60 days after the Policy Date. If
the premium is not paid or if the application is rejected, the Policy will be
canceled and any partial premiums paid will be returned to the applicant.
MINIMUM INITIAL FACE AMOUNT
Manulife New York will generally issue a Policy only if it has a Face Amount of
at least $100,000.
BACKDATING A POLICY
Under limited circumstances, we may backdate a Policy, upon request, by
assigning a Policy Date earlier than the date the application is signed.
However, in no event will a Policy be backdated earlier than six months before
the date of the application for the Policy. Monthly deductions will be made for
the period the Policy Date is backdated. Regardless of whether or not a policy
is backdated, Net Premiums received prior to the Effective Date of a Policy will
be credited with interest from the date of receipt at the rate of return then
being earned on amounts allocated to the Money Market portfolio.
As of the Effective Date, the premiums paid plus interest credited, net of the
premium charge, will be allocated among the Investment Accounts and/or Fixed
Account in accordance with the policyowner's instructions unless such amount is
first allocated to the Money Market portfolio for the duration of the Right to
Examine period.
TEMPORARY INSURANCE AGREEMENT
In accordance with Manulife New York's underwriting practices, temporary
insurance coverage may be provided under the terms of a Temporary Insurance
Agreement. Generally, temporary life insurance may not exceed $1,000,000 and may
not be in effect for more than 90 days. This temporary insurance coverage will
be issued on a conditional receipt basis, which means that any benefits under
such temporary coverage will only be paid if the life insured meets our usual
and customary underwriting standards for the coverage applied for.
The acceptance of an application is subject to our underwriting rules, and we
reserve the right to request additional information or to reject an application
for any reason.
Persons failing to meet standard underwriting classification may be eligible for
a Policy with an additional risk rating assigned to it.
RIGHT TO EXAMINE THE POLICY
A Policy may be returned for a refund of the premium within 10 days after it is
received. This ten day period is known as the "free look" period. The Policy can
be mailed or delivered to the Manulife New York agent who sold it or to the
Manulife New York Service Office. Immediately on such delivery or mailing, the
Policy shall be deemed void from the beginning. Within seven days after receipt
of the returned Policy at its Service Office, Manulife New York will refund any
premium paid. Manulife New York reserves the right to delay the refund of any
premium paid by check until the check has cleared.
If the Policy is purchased in connection with a replacement of an existing
policy (as defined below), the policyowner may also cancel the Policy by
returning it to the Service Office or the Manulife New York agent who sold it at
any time within 60 days after receipt of the Policy. Within 10 days of receipt
of the Policy by Manulife New York, it will pay the policyowner the Policy
Value, computed at the end of the valuation period during which the Policy is
received by Manulife New York. In the case of a replacement of a policy issued
by a New York insurance company, the policyowner may have the right to reinstate
the prior policy. The policyowner should consult with his or her attorney or the
Manulife New York agent regarding this matter prior to purchasing the new
Policy.
Replacement of an existing life insurance policy generally is defined as the
purchase of a new life insurance policy in connection with (a) the lapse,
surrender or change of, or borrowing from, an existing life insurance policy or
(b) the assignment to a new issuer or an existing life insurance policy. This
description, however, does not necessarily cover all situations which could be
considered a replacement of an existing life insurance policy. Therefore, a
policyowner should consult with his or her attorney or Manulife New York agent
regarding whether the purchase of a new life insurance policy is a replacement
of an existing life insurance policy.
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If you request an increase in face amount which results in new surrender
charges, you will have the same rights as described above to cancel the
increase. If canceled, the Policy Value and the surrender charges will be
recalculated to the amounts they would have been had the increase not taken
place. You may request a refund of all or any portion of premiums paid during
the free look period, and the Policy Value and the surrender charges will be
recalculated to the amounts they would have been had the premiums not been paid.
LIFE INSURANCE QUALIFICATION
A Policy must satisfy either one of two tests to qualify as a life insurance
contract for purposes of Section 7702 of the Internal Revenue Code of 1986, as
amended (the "Code"). At the time of application, the policyowner must choose
either the Cash Value Accumulation Test or the Guideline Premium Test. The test
cannot be changed once the Policy is issued.
CASH VALUE ACCUMULATION TEST
Under the Cash Value Accumulation Test ("CVAT"), the Policy Value must be less
than the Net Single Premium necessary to fund future Policy benefits, assuming
guaranteed charges and 4% net interest. To ensure that a Policy meets the CVAT,
we will generally increase the death benefit, temporarily, to the required
minimum amount. However, we reserve the right to require evidence of
insurability should a premium payment cause the death benefit to increase by
more than the premium payment amount. Any excess premiums will be refunded.
GUIDELINE PREMIUM TEST
The Guideline Premium Test restricts the maximum premiums that may be paid into
a life insurance policy for a given death benefit. The policy's death benefit
must also be at least equal to the Minimum Death Benefit (described below).
Changes to the Policy may affect the maximum amount of premiums, such as:
- - a change in the Policy's Face Amount.
- - a change in the death benefit option.
- - partial withdrawals.
- - addition or deletion of supplementary benefits.
Any of the above changes could cause the total premiums paid to exceed the new
maximum limit. In this situation, we may refund any excess premiums paid. In
addition, these changes could reduce the future premium limitations.
The Guideline Premium Test requires a life insurance policy to meet minimum
ratios of life insurance coverage to policy value. This is achieved by ensuring
that the death benefit is at all times at least equal to the Minimum Death
Benefit. The Minimum Death Benefit on any date is defined as the Policy Value on
that date times the applicable Minimum Death Benefit Percentage for the Attained
Age of the life insured. The Minimum Death Benefit Percentages for this test
appear in the Policy.
DEATH BENEFITS
If the Policy is in force at the time of the death of the life insured, we will
pay an insurance benefit. The amount payable will be the death benefit under the
selected death benefit option, plus any amounts payable under any supplementary
benefits added to the Policy, less the Policy Debt and less any outstanding
monthly deductions due. The insurance benefit will be paid in one lump sum
unless another form of settlement option is agreed to by the beneficiary and
Manulife New York. If the insurance benefit is paid in one sum, we will pay
interest from the date of death to the date of payment. If the life insured
should die after our receipt of a request for surrender, no insurance benefit
will be payable, and we will pay only the Net Cash Surrender Value.
DEATH BENEFIT OPTIONS
There are two death benefit options, described below.
DEATH BENEFIT OPTION 1
Under Option 1 the death benefit is the Face Amount of the Policy at the date of
death or, if greater, the Minimum Death Benefit.
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DEATH BENEFIT OPTION 2
Under Option 2 the death benefit is the Face Amount plus the Policy Value of the
Policy at the date of death or, if greater, the Minimum Death Benefit.
CHANGING THE DEATH BENEFIT OPTION
The death benefit option may be changed once each Policy Year after the first
Policy Year. The change will occur on the first day of the next Policy Month
after a written request for a change is received at the Service Office. We
reserve the right to limit a request for a change if the change would cause the
Policy to fail to qualify as life insurance for tax purposes. We will not allow
a change in death benefit option if it would cause the Face Amount to decrease
below $100,000.
A change in the death benefit option will result in a change in the Policy's
Face Amount, in order to avoid any change in the amount of the death benefit, as
follows:
CHANGE FROM OPTION 1 TO OPTION 2
The new Face Amount will be equal to the Face Amount prior to the change minus
the Policy Value as of the date of the change.
CHANGE FROM OPTION 2 TO OPTION 1
The new Face Amount will be equal to the Face Amount prior to the change plus
the Policy Value as of the date of the change.
No new Surrender Charges will apply to an increase in Face Amount solely due to
a change in the death benefit option.
CHANGING THE FACE AMOUNT
Subject to the limitations stated in this Prospectus, a policyowner may, upon
written request, increase or decrease the Face Amount of the Policy. We reserve
the right to limit a change in Face Amount so as to prevent the Policy from
failing to qualify as life insurance for tax purposes.
INCREASE IN FACE AMOUNT
Increases in Face Amount may be made once each Policy Year after the first
Policy Year. Any increase in Face Amount must be at least $50,000. An increase
will become effective at the beginning of the policy month following the date we
approve the requested increase. Increases in Face Amount are subject to
satisfactory evidence of insurability. We reserve the right to refuse a
requested increase if the life insured's Attained Age at the effective date of
the increase would be greater than 90.
NEW SURRENDER CHARGES FOR AN INCREASE
An increase in face amount will usually result in the Policy being subject to
new surrender charges. The new surrender charges will be computed as if a new
Policy were being purchased for the increase in Face Amount. The premiums
attributable to the new Face Amount will not exceed the surrender charge premium
limit associated with that increase. There will be no new surrender charges
associated with restoration of a prior decrease in Face Amount. As with the
purchase of a Policy, a policyowner will have a free look right with respect to
any increase resulting in new surrender charges.
An additional premium may be required for a face amount increase, and a new
No-Lapse Guarantee Premium will be determined, if the No-Lapse Guarantee is in
effect at the time of the face amount increase.
INCREASE WITH PRIOR DECREASES
If, at the time of the increase, there have been prior decreases in Face Amount,
these prior decreases will be restored first. The insurance coverage eliminated
by the decrease of the oldest Face Amount will be deemed to be restored first.
CHANGING BOTH THE FACE AMOUNT AND THE DEATH BENEFIT OPTION
If a policyowner requests to change both the Face Amount and the Death Benefit
Option in the same month, the Death Benefit Option change shall be deemed to
occur first.
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DECREASE IN FACE AMOUNT
Decreases in Face Amount may be made once each Policy Year after the first
Policy Year. Any decrease in Face Amount must be at least $50,000. A written
request from a policyowner for a decrease in the Face Amount will be effective
at the beginning of the Policy Month following the date Manulife New York
approves the requested decrease. If there have been previous increases in Face
Amount, the decrease will be applied to the most recent increase first and
thereafter to the next most recent increases successively. We will not allow a
decrease in the Face Amount if it is for the reduction or termination of a prior
Face Amount increase which has been in force for less than one year. Under no
circumstances should the sum of all decreases cause the policy to fall below the
minimum Face Amount of $100,000. Decreases in Face Amount will not result in a
decrease in surrender charges.
PREMIUM PAYMENTS
INITIAL PREMIUMS
No premiums will be accepted prior to receipt of a completed application by
Manulife New York. All premiums received prior to the Effective Date of the
Policy will be held in the general account and credited with interest from the
date of receipt at the rate of return then being earned on amounts allocated to
the Money Market Trust.
The minimum initial premium is one-twelfth of the No-Lapse Guarantee Premium.
On the later of the Effective Date or the date a premium is received, the Net
Premiums paid plus interest credited will be allocated among the Investment
Accounts or the Fixed Account in accordance with the policyowner's instructions.
SUBSEQUENT PREMIUMS
After the payment of the initial premium, premiums may be paid at any time and
in any amount until the Maturity Date, subject to the limitations on premium
amount described below.
A Policy will be issued with a planned premium, which is based on the amount of
premium the policyowner wishes to pay. Manulife New York will send notices to
the policyowner setting forth the planned premium at the payment interval
selected by the policyowner. However, the policyowner is under no obligation to
make the indicated payment.
We may refuse any premium payment that would cause the Policy to fail to qualify
as life insurance under the Code. We also reserve the right to request evidence
of insurability if a premium payment would result in an increase in the Death
Benefit that is greater than the increase in Policy Value.
Payment of premiums will not guarantee that the Policy will stay in force.
Conversely, failure to pay premiums will not necessarily cause the Policy to
lapse.
All Net Premiums received on or after the Effective Date will be allocated among
Investment Accounts or the Fixed Account as of the Business Day the premiums
were received at the Service Office. Monthly deductions are due on the Policy
Date and at the beginning of each Policy Month thereafter. However, if due prior
to the Effective Date, they will be taken on the Effective Date instead of the
dates they were due.
MAXIMUM PREMIUM LIMITATION
If the Policy is issued under the Guideline Premium Test, in no event may the
total of all premiums paid exceed the then current maximum premium limitations
established by Federal income tax law for a Policy to qualify as life insurance.
If, at any time, a premium is paid which would result in total premiums
exceeding the above maximum premium limitation, we will only accept that portion
of the premium which will make the total premiums equal to the maximum. Any part
of the premium in excess of that amount will be returned and no further premiums
will be accepted until allowed by the then current maximum premium limitation.
PREMIUM ALLOCATION
Premiums may be allocated to the Fixed Account for accumulation at a rate of
interest equal to at least 4% or to one or more of the Investment Accounts for
investment in the Portfolio shares held by the corresponding sub-account of the
Separate Account. Allocations among the Investment Accounts and the Fixed
Account are made as a percentage of the premium. The percentage allocation to
any account may be any number between zero and 100, provided the total
allocation equals 100. A
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policyowner may change the way in which premiums are allocated at any time
without charge. The change will take effect on the date a written request for
change satisfactory to Manulife New York is received at its Service Office.
CHARGES AND DEDUCTIONS
PREMIUM CHARGE
During the first 10 Policy Years, we deduct a premium charge from each premium
payment, equal to 6.6% of the premium. Thereafter the premium charge is equal to
3.6% of the premium. The premium charge is designed to cover a portion of our
acquisition and sales expenses and premium taxes.
SURRENDER CHARGES
We will deduct a Surrender Charge if during the first 10 years following the
Policy Date, or the effective date of a Face Amount increase:
- - the Policy is surrendered for its Net Cash Surrender Value,
- - a partial withdrawal is made, or
- - the Policy lapses.
The surrender charge, together with a portion of the premium charge, is designed
to compensate us for some of the expenses we incur in selling and distributing
the Policies, including agents' commissions, advertising, agent training and the
printing of prospectuses and sales literature.
SURRENDER CHARGE CALCULATION
The Surrender Charge is determined by the following formula (the calculation is
also described in words below):
Surrender Charge = (Surrender Charge Rate) x (Face Amount associated with the
Surrender Charge / 1000) x (Grading Percentage)
DEFINITIONS OF THE FORMULA FACTORS ABOVE
Face Amount of the Policy Associated with the Surrender Charge
The Face Amount associated with the Surrender Charge equals the Face Amount for
which the Surrender Charge is being applied.
Surrender Charge Rate (the calculation is also described in words
below)
Surrender Charge Rate = (X) + ((80%) x (Surrender Charge Premium))
Where "X" is equal to:
Table for Rate per $1,000 of Face:
Age at Issue or Age at Issue
Increase Rate per $1,000 of Face or Increase Rate per $1,000 of Face
0 $2.00 18 $4.25
1 2.13 19 4.38
2 2.25 20 4.50
3 2.38 21 5.00
4 2.50 22 5.50
5 2.63 23 6.00
6 2.75 24 6.50
7 2.88 25 7.00
8 3.00 26 7.20
9 3.13 27 7.40
10 3.25 28 7.60
11 3.38 29 7.80
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Age at Issue or Age at Issue
Increase Rate per $1,000 of Face or Increase Rate per $1,000 of Face
12 3.50 30 8.00
13 3.63 31 8.04
14 3.75 32 8.08
15 3.88 33 8.12
16 4.00 34 8.16
17 4.13 35 and over 8.20
The SURRENDER CHARGE PREMIUM is the lesser of:
a. the premiums paid during the first Policy Year per $1,000
of Face Amount at issue or following a Face Amount
increase, and
b. the Surrender Charge Premium Limit specified in the
Policy per $1,000 of Face Amount.
Grading Percentage
The grading percentages during the Surrender Charge Period and set forth in the
table below apply to the initial Face Amount and to all subsequent Face Amount
increases.
The grading percentage is based on the Policy Year in which the transaction
causing the assessment of the charge occurs as set forth in the table below:
Surrender Surrender Charge
Charge Period Grading Percentage
1 100%
2 90%
3 80%
4 70%
5 60%
6 50%
7 40%
8 30%
9 20%
10 10%
11 0%
Within a Policy Year, grading percentages will be interpolated on a monthly
basis. For example, if the policyowner surrenders the Policy during the fourth
month of Policy Year 4, the grading percentage will be 67.5%.
Formulas Described in Words
Surrender Charge
The Surrender Charge is determined by multiplying the Surrender Charge Rate by
the Face Amount associated with the Surrender Charge divided by 1000. The amount
obtained is then multiplied by the Grading Percentage, a percent which starts at
100% and grades down each policy month to zero over a period not to exceed 10
years.
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Surrender Charge Rate
The Surrender Charge Rate is equal to the sum of (a) plus (b) where (a) equals
"X" (see Table above) and (b) equals 80% times the Surrender Charge Premium.
ILLUSTRATION OF MAXIMUM SURRENDER CHARGE CALCULATION
Assumptions
- - 45 year old male (standard risks and nonsmoker status)
- - Policy issued 7 years ago
- - $7,785 in premiums has been paid on the Policy in equal annual installments
over the 7 year period
- - Surrender Charge Premium for the Policy is $15.26
- - Face Amount of the Policy at issue is $500,000 and no increases have
occurred
- - Policy is surrendered during the first month of the seventh policy year.
Maximum Surrender Charge
The maximum Surrender Charge to be assessed would be $4,082 determined as
follows:
First, the Surrender Charge Rate is determined by applying the Surrender Charge
Rate formula as set forth below.
Surrender Charge Rate = (8.20) + ((80%) x (Surrender Charge Premium))
$20.41 = (8.20) + ((80%) x (15.26))
The Surrender Charge Rate is equal to $20.41
Second, the Surrender Charge Rate is entered into the Surrender Charge formula
and the Surrender Charge is determined as set forth below.
Surrender Charge = (Surrender Charge Rate)x (Face Amount of the Policy
associated with the Surrender Charge / 1000)x (Grading Percentage)
$4,082 = (20.41) x ($500,000 /1000) x (40%)
The maximum Surrender Charge is equal to $4,082.
Depending upon the Face Amount of the Policy, the age of the insured at issue,
premiums paid under the Policy and the performance of the underlying investment
options, the Policy may have no Cash Surrender Value and therefore, the
policyowner may receive no surrender proceeds upon surrendering the Policy.
SURRENDER CHARGES ON A PARTIAL WITHDRAWAL
A partial withdrawal will result in the assessment of a portion of the Surrender
Charges to which the Policy is subject. The portion of the Surrender Charges
assessed will be based on the ratio of the amount of the withdrawal to the Net
Cash Surrender Value of the Policy as at the date of the withdrawal. The
Surrender Charges will be deducted from the Policy Value at the time of the
partial withdrawal on a pro-rata basis from each of the Investment Accounts and
the Fixed Account. If the amount in the accounts is not sufficient to pay the
Surrender Charges assessed, then the amount of the withdrawal will be reduced.
Whenever a portion of the surrender charges is deducted as a result of a partial
withdrawal, the Policy's remaining surrender charges will be reduced in the same
proportion that the surrender charge deducted bears to the total surrender
charge immediately before the partial withdrawal.
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MONTHLY CHARGES
On the Policy Date and at the beginning of each Policy Month, a deduction is due
from the Net Policy Value to cover certain charges in connection with the Policy
until the Maturity Date. If there is a Policy Debt under the Policy, loan
interest and principal is payable at the beginning of each Policy Month. Monthly
deductions due prior to the Effective Date will be taken on the Effective Date
instead of the dates they were due. These charges consist of:
- - an administration charge;
- - a charge for the cost of insurance;
- - a mortality and expense risks charge;
- - if applicable, a charge for any supplementary benefits added to the Policy.
Unless otherwise allowed by us and specified by the policyowner, the Monthly
Deductions will be allocated among the Investment Accounts and the Fixed Account
in the same proportion as the Policy Value in each bears to the Net Policy
Value.
If the Policy is still in force on the Maturity Date, we will pay the
policyowner the Net Cash Surrender Value as of the Maturity Date of the Policy.
ADMINISTRATION CHARGE
This charge will be equal to $30 per Policy Month in the first Policy Year. For
all subsequent Policy Years, the administration charge will be $15 per Policy
Month. The charge is designed to cover certain administrative expenses
associated with the Policy, including maintaining policy records, collecting
premiums and processing death claims, surrender and withdrawal requests and
various changes permitted under the Policy.
COST OF INSURANCE CHARGE
The monthly charge for the cost of insurance is determined by multiplying the
applicable cost of insurance rate times the net amount at risk at the beginning
of each Policy Month. The cost of insurance rate and the net amount at risk are
determined separately for the initial Face Amount and for each increase in Face
Amount. In determining the net amount at risk, if there have been increases in
the Face Amount, the Policy Value shall first be considered a part of the
initial Face Amount. If the Policy Value exceeds the initial Face Amount, it
shall then be considered a part of the additional increases in Face Amount
resulting from the increases, in the order the increases occurred.
For Death Benefit Option 1, the net amount at risk is equal to the greater of
zero, or the result of (a) minus (b) where:
(a) is the death benefit as of the first day of the Policy Month, divided by
1.0032737; and
(b) is the Policy Value as of the first day of the Policy Month after the
deduction of monthly cost of insurance.
For Death Benefit Option 2, the net amount at risk is equal to the Face Amount
of insurance.
The rates for the cost of insurance are based upon the issue age, duration of
coverage, sex, and Risk Classification of the life insured. These rates may be
higher in early Policy Years due to recovery of initial acquisition costs.
Cost of insurance rates will generally increase with the age of the life
insured. The first year cost of insurance rate is guaranteed.
The cost of insurance rates reflect our expectations as to future mortality
experience. The rates may be re-determined from time to time on a basis which
does not unfairly discriminate within the class of life insured. In no event
will the cost of insurance rates exceed the guaranteed rates set forth in the
Policy except to the extent that an extra charge is imposed because of an
additional rating applicable to the life insured. After the first Policy Year,
the cost of insurance will generally increase on each Policy Anniversary. The
guaranteed rates are based on the 1980 Commissioners Smoker Distinct Mortality
tables.
CHARGES FOR SUPPLEMENTARY BENEFITS
If the Policy includes Supplementary Benefits, a charge may apply to such
Supplementary Benefits.
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MORTALITY AND EXPENSE RISKS CHARGE
A monthly charge equal to a percentage of the value of the Investment Accounts
is assessed against the Investment Accounts. This charge is to compensate us for
the mortality and expense risks we assume under the Policy. The mortality risk
assumed is that the life insured may live for a shorter period of time than we
estimated. The expense risk assumed is that expenses incurred in issuing and
administering the Policy will be greater than we estimated. We will realize a
gain from this charge to the extent it is not needed to provide benefits and pay
expenses under the Policy.
The charge varies by Policy Year as follows:
Policy Year Guaranteed Monthly Mortality and Equivalent Annual Mortality and
Expense Risk Charge Expense Risk Charge
----------- -------------------------------- -------------------------------
1-10 0.0627% 0.75%
11 0.0209% 0.25%
CHARGES FOR TRANSFERS
A charge of $25 will be imposed on each transfer in excess of twelve in a Policy
Year. The charge will be deducted from the Investment Account or the Fixed
Account to which the transfer is being made. All transfer requests received by
us on the same Business Day are treated as a single transfer request.
Transfers under the Dollar Cost Averaging and Asset Allocation Balancer programs
do not count against the number of free transfers permitted per Policy Year.
REDUCTION IN CHARGES
The Policy is available for purchase by corporations and other groups or
sponsoring organizations. Group or sponsored arrangements may include reduction
or elimination of withdrawal charges and deductions for employees, officers,
directors, agents and immediate family members of the foregoing. We reserve the
right to reduce any of the Policy's charges on certain cases where it is
expected that the amount or nature of such cases will result in savings of
sales, underwriting, administrative, commissions or other costs. Eligibility for
these reductions and the amount of reductions will be determined by a number of
factors, including the number of lives to be insured, the total premiums
expected to be paid, total assets under management for the policyowner, the
nature of the relationship among the insured individuals, the purpose for which
the policies are being purchased, expected persistency of the individual
policies, and any other circumstances which we believe to be relevant to the
expected reduction of its expenses. Some of these reductions may be guaranteed
and others may be subject to withdrawal or modification, on a uniform case
basis. Reductions in charges will not be unfairly discriminatory to any
policyowners. We may modify from time to time, on a uniform basis, both the
amounts of reductions and the criteria for qualification.
SPECIAL PROVISIONS FOR EXCHANGES
We will permit owners of certain fixed life insurance policies issued either by
Manulife New York to exchange their policies for the Policies described in this
prospectus (and likewise, owners of Policies described in this Prospectus may
also exchange their Policies for certain fixed policies issued either by
Manulife New York). Policyowners considering an exchange should consult their
tax advisors as to the tax consequences of an exchange.
COMPANY TAX CONSIDERATIONS
At the present time, we make no charge to the Separate Account for any Federal,
state, or local taxes that we incur that may be attributable to the Separate
Account or to the Policies. We, however, reserve the right in the future to make
a charge for any such tax or other economic burden resulting from the
application of the tax laws that it determines to be properly attributable to
the Separate Account or to the Policies.
POLICY VALUE
DETERMINATION OF THE POLICY VALUE
A Policy has a Policy Value, a portion of which is available to the policyowner
by making a policy loan or partial withdrawal, or upon surrender of the Policy.
The Policy Value may also affect the amount of the death benefit. The Policy
Value at any time is equal to the sum of the values in the Investment Accounts,
the Fixed Account, and the Loan Account.
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INVESTMENT ACCOUNTS
An Investment Account is established under each Policy for each sub-account of
the Separate Account to which net premiums or transfer amounts have been
allocated. Each Investment Account under a Policy measures the interest of the
Policy in the corresponding sub-account. The value of the Investment Account
established for a particular sub-account is equal to the number of units of that
sub-account credited to the Policy times the value of such units.
FIXED ACCOUNT
Amounts in the Fixed Account do not vary with the investment performance of any
sub-account. Instead, these amounts are credited with interest at a rate
determined by us. For a detailed description of the Fixed Account, see "The
General Account - Fixed Account".
LOAN ACCOUNT
Amounts borrowed from the Policy are transferred to the Loan Account. Amounts in
the Loan Account do not vary with the investment performance of any sub-account.
Instead, these amounts are credited with interest at a rate which is equal to
the amount charged on the outstanding Policy Debt less the Loan Spread. For a
detailed description of the Loan Account, see "Policy Loans - Loan Account".
UNITS AND UNIT VALUES
CREDITING AND CANCELING UNITS
Units of a particular sub-account are credited to a Policy when net premiums are
allocated to that sub-account or amounts are transferred to that sub-account.
Units of a sub-account are canceled whenever amounts are deducted, transferred
or withdrawn from the sub-account. The number of units credited or canceled for
a specific transaction is based on the dollar amount of the transaction divided
by the value of the unit on the Business Day on which the transaction occurs.
The number of units credited with respect to a premium payment will be based on
the applicable unit values for the Business Day on which the premium is received
at the Service Office, except for any premiums received before the Effective
Date. For premiums received before the Effective Date, the values will be
determined on the Effective Date.
A Business Day is any day that the New York Stock Exchange is open for business.
A Business Day ends at the close of regularly scheduled day-time trading of the
New York Stock Exchange on that day.
Units are valued at the end of each Business Day. When an order involving the
crediting or canceling of units is received after the end of a Business Day, or
on a day which is not a Business Day, the order will be processed on the basis
of unit values determined on the next Business Day. Similarly, any determination
of Policy Value, Investment Account value or death benefit to be made on a day
which is not a Business Day will be made on the next Business Day.
UNIT VALUES
The value of a unit of each sub-account was initially fixed at $10.00. For each
subsequent Business Day the unit value for that sub-account is determined by
multiplying the unit value for the immediately preceding Business Day by the net
investment factor for the that sub-account on such subsequent Business Day.
The net investment factor for a sub-account on any Business Day is equal to (a)
divided by (b) where:
(a) is the net asset value of the underlying Portfolio shares held by that
sub-account as of the end of such Business Day before any policy
transactions are made on that day; and
(b) is the net asset value of the underlying Portfolio shares held by that
sub-account as of the end of the immediately preceding Business Day after
all policy transactions were made for that day;
The value of a unit may increase, decrease, or remain the same, depending on the
investment performance of a sub-account from one Business Day to the next.
TRANSFERS OF POLICY VALUE
At any time, a policyowner may transfer Policy Value from one sub-account to
another or to the Fixed Account. (Transfers involving the Fixed Account are
subject to certain limitations noted below under "Transfers Involving Fixed
Account.") Transfer requests must be in writing in a format satisfactory to
Manulife New York.
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We reserve the right to impose limitations on transfers, including the maximum
amount that may be transferred. We also reserve the right to modify or terminate
the transfer privilege at any time in accordance with applicable law. Transfers
may also be delayed when any of the events described under items (i) through
(iii) in "Payment of Proceeds" occur. Transfer privileges are also subject to
any restrictions that may be imposed by the Trust. In addition, we reserve the
right to defer the transfer privilege at any time when we are unable to purchase
or redeem shares of the Trust.
While the Policy is in force, the policyowner may transfer the Policy Value from
any of the Investment Accounts to the Fixed Account without incurring transfer
charges:
(a) within eighteen months after the Issue Date; or
(b) within 60 days of the effective date of a material change in the investment
objectives of any of the sub-accounts or within 60 days of the date of
notification of such change, whichever is later.
Such transfers will not count against the twelve transfers that may be made free
of charge in any Policy Year.
TRANSFERS INVOLVING FIXED ACCOUNT
The maximum amount that may be transferred from the Fixed Account in any one
Policy Year is the greater of $500 or 15% of the Fixed Account Value at the
previous Policy Anniversary. Any transfer which involves a transfer out of the
Fixed Account may not involve a transfer to the Investment Account for the Money
Market Trust.
DOLLAR COST AVERAGING
The Company will offer policyowners a Dollar Cost Averaging ("DCA") program.
Under DCA program, the policyowner will designate an amount which will be
transferred monthly from one Investment Account into any other Investment
Account(s) or the Fixed Account. Currently, no charge will be made for this
program, although we reserve the right to institute a charge on 90 days' written
notice to the policyholder. If insufficient funds exist to effect a DCA
transfer, the transfer will not be effected and the policyowner will be so
notified.
We reserve the right to cease to offer this program as of 90 days after written
notice is sent to the policyowner.
ASSET ALLOCATION BALANCER TRANSFERS
Under the Asset Allocation Balancer program the policyowner will designate an
allocation of Policy Value among Investment Accounts. At six-month intervals
beginning six months after the Policy Date, we will move amounts among the
Investment Accounts as necessary to maintain the policyowner's chosen
allocation. A change to the policyowner premium allocation instructions will
automatically result in a change in Asset Allocation Balancer instructions so
that the two are identical unless the policyowner either instructs Manulife New
York otherwise or has elected the Dollar Cost Averaging program. Currently,
there is no charge for this program; however, we reserve the right to institute
a charge on 90 days' written notice to the policyowner.
We reserve the right to cease to offer this program as of 90 days after written
notice is sent to the policyowner.
POLICY LOANS
While this Policy is in force and has an available loan value, a policyowner may
borrow against the Policy Value of the Policy. The Policy serves as the only
security for the loan. Policy loans may have tax consequences, see "Tax
Treatment of Policy Benefits - Interest on Policy Loans After Ten Years" and
"Tax Treatment of Policy Benefits - Policy Loan Interest."
MAXIMUM LOANABLE AMOUNT
The Maximum Loanable Amount is 90% of the Policy's Net Cash Surrender Value.
EFFECT OF POLICY LOAN
A policy loan will have an effect on future Policy Values, since that portion of
the Policy Value in the Loan Account will increase in value at the crediting
interest rate rather than varying with the performance of the underlying
Portfolios or increasing in value at the rate of interest credited for amounts
allocated to the Fixed Account. A policy loan may cause a Policy to be more
susceptible to going into default since a policy loan will be reflected in the
Net Cash Surrender Value. See "Lapse and Reinstatement." In addition, a policy
loan may result in a Policy's failing to satisfy the No-Lapse Guarantee
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<PAGE> 31
Cumulative Premium Test since the Policy Debt is subtracted from the sum of the
premiums paid in determining whether this test is satisfied. Finally, a policy
loan will affect the amount payable on the death of the life insured, since the
death benefit is reduced by the Policy Debt at the date of death in arriving at
the insurance benefit.
INTEREST CHARGED ON POLICY LOANS
Interest on the Policy Debt will accrue daily and be payable annually on the
Policy Anniversary. During the first 10 Policy Years, the rate of interest
charged will be an effective annual rate of 5.25%. Thereafter, the rate of
interest charged will be an effective annual rate of 4%, subject to our
reservation of the right to increase the rate as described under the heading
"Tax Treatment of the Policy - Interest on Policy Loans After Year 10." If the
interest due on a Policy Anniversary is not paid by the policyowner, the
interest will be borrowed against the Policy.
The Policy will go into default at any time the Policy Debt exceeds the Cash
Surrender Value. At least 61 days prior to termination, we will send the
policyowner a notice of the pending termination. Payment of interest on the
Policy Debt during the 61 day grace period will bring the policy out of default.
LOAN ACCOUNT
When a loan is made, an amount equal to the loan principal, plus interest to the
next Policy Anniversary, will be deducted from the Investment Accounts or the
Fixed Account and transferred to the Loan Account. Amounts transferred into the
Loan Account cover the loan principal plus loan interest due to the next Policy
Anniversary. The policyowner may designate how the amount to be transferred to
the Loan Account is allocated among the accounts from which the transfer is to
be made. In the absence of instructions, the amount to be transferred will be
allocated to each account in the same proportion as the value in each Investment
Account and the Fixed Account bears to the Net Policy Value. A transfer from an
Investment Account will result in the cancellation of units of the underlying
sub-account equal in value to the amount transferred from the Investment
Account. However, since the Loan Account is part of the Policy Value, transfers
made in connection with a loan will not change the Policy Value.
INTEREST CREDITED TO THE LOAN ACCOUNT
Interest will be credited to amounts in the Loan Account at an effective annual
rate of at least 4.00%. The actual rate credited is equal to the rate of
interest charged on the policy loan less the Loan Interest Credited
Differential, which is currently 1.25% during the first ten policy years and 0%
thereafter, and is guaranteed not to exceed 1.25%. (The Loan Interest Credited
Differential is the difference between the rate of interest charged on a policy
loan and the rate of interest credited to amounts in the Loan Account.) We may
change the Current Loan Interest Credited Differential as of 90 days after
sending you written notice of such change.
For a Policy that is not a MEC, the tax consequences associated with a loan
interest credited differential of 0% are unclear. A tax advisor should be
consulted before effecting a loan to evaluate the tax consequences that may
arise in such a situation. If we determine, in our sole discretion, that there
is a substantial risk that a loan will be treated as a taxable distribution
under Federal tax law as a result of the differential between the credited
interest rate and the loan interest rate, we retain the right to increase the
loan interest rate to an amount that would result in the transaction being
treated as a loan under Federal tax law. If this amount is not prescribed by any
IRS ruling or regulation or any court decision, the amount of increase will be
that which we consider to be most likely to result in the transaction being
treated as a loan under Federal tax law.
LOAN ACCOUNT ADJUSTMENTS
On the first day of each Policy Anniversary the difference between the Loan
Account and the Policy Debt is transferred to the Loan Account from the
Investment Accounts or the Fixed Account. Amounts transferred to the Loan
Account will be taken from the Investment Accounts and the Fixed Account in the
same proportion as the value in each Investment Account and the Fixed Account
bears to the Net Policy Value.
LOAN REPAYMENTS
Policy Debt may be repaid in whole or in part at any time prior to the death of
the life insured, provided that the Policy is in force. When a repayment is
made, the amount is credited to the Loan Account and transferred to the Fixed
Account or the Investment Accounts. Loan repayments will be allocated first to
the Fixed Account until the associated Loan Sub-Account is reduced to zero and
then to each Investment Account in the same proportion as the value in the
corresponding Loan Sub-Account bears to the value of the Loan Account. Amounts
paid to Manulife New York not specifically designated in writing as loan
repayments will be treated as premiums. However, when a portion of the Loan
Account amount is allocated to the Fixed Account, we reserve the right to
require that premium payments be applied as loan repayments.
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POLICY SURRENDER AND PARTIAL WITHDRAWALS
POLICY SURRENDER
A Policy may be surrendered for its Net Cash Surrender Value at any time while
the life insured is living. The Net Cash Surrender Value is equal to the Policy
Value less any surrender charges and outstanding monthly deductions due (the
"Cash Surrender Value") minus the Policy Debt. If there have been any prior Face
Amount increases, the Surrender Charge will be the sum of the Surrender Charge
for the Initial Face Amount plus the Surrender Charge for each increase. The Net
Cash Surrender Value will be determined as of the end of the Business Day on
which Manulife New York receives the Policy and a written request for surrender
at its Service Office. After a Policy is surrendered, the insurance coverage and
all other benefits under the Policy will terminate.
PARTIAL WITHDRAWALS
A policyowner may make a partial withdrawal of the Net Cash Surrender Value once
each Policy Month after the first Policy Anniversary. The policyowner may
specify the portion of the withdrawal to be taken from each Investment Account
and the Fixed Account. In the absence of instructions, the withdrawal will be
allocated among such accounts in the same proportion as the Policy Value in each
account bears to the Net Policy Value. For information on Surrender Charges on a
Partial Withdrawal see "Charges and Deductions - Surrender Charges."
Withdrawals will be limited if they would otherwise cause the Face Amount to
fall below $100,000.
REDUCTION IN FACE AMOUNT DUE TO A PARTIAL WITHDRAWAL
If Death Benefit Option 1 is in effect when a partial withdrawal is made, the
Face Amount of the Policy will be reduced by the amount of the withdrawal plus
any applicable Surrender Charges.
If the death benefit is based upon the Policy Value times the minimum death
benefit percentage set forth under "Death Benefit - Minimum Death Benefit," the
Face Amount will be reduced only to the extent that the amount of the withdrawal
plus the portion of the Surrender Charge assessed exceeds the difference between
the death benefit and the Face Amount. When the Face Amount of a Policy is based
on one or more increases subsequent to issuance of the Policy, a reduction
resulting from a partial withdrawal will be applied in the same manner as a
requested decrease in Face Amount, i.e., against the Face Amount provided by the
most recent increase, then against the next most recent increases successively
and finally against the initial Face Amount.
Partial withdrawals do not affect the Face Amount of a Policy if Death Benefit
Option 2 is in effect.
LAPSE AND REINSTATEMENT
LAPSE
Unless the No-Lapse Guarantee is in effect, a Policy will go into default if at
the beginning of any Policy Month the Policy's Net Cash Surrender Value would be
zero or below after deducting the monthly deduction then due. Therefore, a
Policy could lapse eventually if increases in Policy Value (prior to deduction
of Policy charges) are not sufficient to cover Policy charges. A lapse could
have adverse tax consequences as described under "Tax Treatment of the Policy -
Tax Treatment of Policy Benefits - Surrender or Lapse." We will notify the
policyowner of the default and will allow a 61 day grace period in which the
policyowner may make a premium payment sufficient to bring the Policy out of
default. The required payment will be equal to the amount necessary to bring the
Net Cash Surrender Value to zero, if it was less than zero on the date of
default, plus the monthly deductions due at the date of default and payable at
the beginning of each of the two Policy Months thereafter, plus any applicable
premium charge. If the required payment is not received by the end of the grace
period, the Policy will terminate with no value.
NO-LAPSE GUARANTEE
As long as the No-Lapse Guarantee Cumulative Premium Test is satisfied during
the No-Lapse Guarantee Period, as described below, we will guarantee that the
Policy will not go into default, even if adverse investment experience or other
factors should cause the Policy's Net Cash Surrender Value to fall to zero or
below during such period.
The Monthly No-Lapse Guarantee Premium is one-twelfth of the No-Lapse Guarantee
Premium.
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The No-Lapse Guarantee Premium is set at issue and reflects any Additional
Rating and Supplementary Benefits, if applicable. It is subject to change if (i)
the face amount of the Policy is changed, (ii) there is a Death Benefit Option
change, (iii) there is a decrease in the Face Amount of insurance due to a
partial withdrawal, or (iv) there is any change in the supplementary benefits
added to the Policy or in the risk classification of the life insured.
The No Lapse Guarantee Period is the first five Policy Years for life insureds
with an issue age up to and including age 85. It is not offered to life insureds
whose Issue Age exceeds age 85.
While the No-Lapse Guarantee is in effect, we will determine at the beginning of
the Policy Month that your policy would otherwise be in default, whether the
No-Lapse Guarantee Cumulative Premium Test, described below, has been met. If
the test has not been satisfied, we will notify the policyowner of that fact and
allow a 61 day grace period in which the policyowner may make a premium payment
sufficient to keep the policy from going into default. This required payment, as
described in the notification to the policyowner, will be equal to the lesser
of:
(a) the outstanding premium requirement to satisfy the No-Lapse Guarantee
Cumulative Premium Test at the date of default, plus the Monthly No-Lapse
Guarantee Premium due for the next two Policy Months, or
(b) the amount necessary to bring the Net Cash Surrender Value to zero plus the
monthly deductions due, plus the next two monthly deductions plus the
applicable premium charge.
If the required payment is not received by the end of the grace period, the
No-Lapse Guarantee and the Policy will terminate.
NO-LAPSE GUARANTEE CUMULATIVE PREMIUM TEST
The No-Lapse Guarantee Cumulative Premium Test is satisfied if, as of the
beginning of the Policy Month that your policy would otherwise be in default,
the sum of all premiums paid to date less any gross withdrawals taken on or
before the date of the test and less any policy debt is equal to or exceeds the
sum of the Monthly No-Lapse Guarantee Premiums due from the Policy Date to the
date of the test.
DEATH DURING GRACE PERIOD
If the life insured should die during the grace period, the Policy Value used in
the calculation of the death benefit will be the Policy Value as of the date of
default and the insurance benefit will be reduced by any outstanding Monthly
Deductions due at the time of death.
REINSTATEMENT
A policyowner can reinstate a Policy which has terminated after going into
default at any time within 21 days following the date of termination without
furnishing evidence of insurability, subject to the following conditions:
(a) The life insured's risk classification is standard or preferred, and
(b) The life insured's Attained Age is less than 46.
A policyowner can, by making a written request, reinstate a Policy which has
terminated after going into default at any time within the five-year period
following the date of termination subject to the following conditions:
(a) Evidence of the life insured's insurability, satisfactory to Manulife New
York is provided to Manulife New York; and
(b) A premium equal to the amount that was required during the 61 day grace
period following default plus the next two Monthly Deductions must be paid
to Manulife New York.
If the reinstatement is approved, the date of reinstatement will be the later of
the date we approve the policyowner's request or the date the required payment
is received at our Service Office. In addition, any surrender charges will be
reinstated to the amount they were at the date of default. The Policy Value on
the date of reinstatement, prior to the crediting of any Net Premium paid on the
reinstatement, will be equal to the Policy Value on the date the Policy
terminated.
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TERMINATION AND MATURITY BENEFIT
TERMINATION OF THE POLICY
Your Policy will terminate on the earliest of the following events:
(a) the end of the grace period for which you have not paid the amount necessary
to bring the Policy out of default;
(b) surrender of the Policy for its Net Cash Surrender Value;
(c) the death of the life insured; or
(d) the Maturity Date.
MATURITY BENEFIT
We will pay you the Net Cash Surrender Value of your Policy as of the Maturity
Date provided the Policy has not terminated and the life insured is alive.
THE GENERAL ACCOUNT
The general account of Manulife New York consists of all assets owned by it
other than those in the Separate Account and other separate accounts of Manulife
New York. Subject to applicable law, we have sole discretion over the investment
of the assets of the general account.
By virtue of exclusionary provisions, interests in the general account of
Manulife New York have not been registered under the Securities Act of 1933 and
the general account has not been registered as an investment company under the
1940 Act. Accordingly, neither the general account nor any interests therein are
subject to the provisions of these acts, and as a result the staff of the SEC
has not reviewed the disclosures in this prospectus relating to the general
account. Disclosures regarding the general account may, however, be subject to
certain generally applicable provisions of the Federal securities laws relating
to the accuracy and completeness of statements made in a prospectus.
FIXED ACCOUNT
A policyowner may elect to allocate net premiums to the Fixed Account or to
transfer all or a portion of the Policy Value to the Fixed Account from the
Investment Accounts. Manulife New York will hold the reserves required for any
portion of the Policy Value allocated to the Fixed Account in its general
account. Transfers from the Fixed Account to the Investment Accounts are subject
to restrictions.
POLICY VALUE IN THE FIXED ACCOUNT
The Policy Value in the Fixed Account is equal to:
(a) the portion of the net premiums allocated to it; plus
(b) any amounts transferred to it; plus
(c) interest credited to it; less
(d) any charges deducted from it; less
(e) any partial withdrawals from it; less
(f) any amounts transferred from it.
INTEREST ON THE FIXED ACCOUNT
An allocation of Policy Value to the Fixed Account does not entitle the
policyowner to share in the investment experience of the general account.
Instead, Manulife New York guarantees that the Policy Value in the Fixed Account
will accrue interest daily at an effective annual rate of at least 4%, without
regard to the actual investment experience of the general account. Consequently,
if a policyowner pays the planned premiums, allocates all net premiums only to
the general account and makes no transfers, partial withdrawals, or policy
loans, the minimum amount and duration of the death benefit of the Policy will
be determinable and guaranteed.
FLEXIBLE FACTORS
When determining the rate of interest to be used in crediting interest to the
portion of the Policy Value in the Fixed Account, and any changes in that rate,
we will consider the following factors: expected mortality and persistency
experience; expected investment earnings; and expected operating expenses. We
will consider the same factors when we determine the actual cost of insurance;
the deductions from premiums for premium load; administrative charges; and
whenever changes are made to any of these charges. We will not try to recover
any losses in earlier years by increasing your charges in later years.
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Adjustments to flexible factors will be by class and be determined by us from
time to time based on future expectations for such factors. Any change will be
determined in accordance with procedures and standards on file with the
Superintendent of Insurance of the state of New York.
OTHER PROVISIONS OF THE POLICY
POLICYOWNER RIGHTS
Unless otherwise restricted by a separate agreement, the policyowner may, until
the earlier of life insured's death or when life insured reaches Attained Age
100:
- - Vary the premiums paid under the Policy.
- - Change the death benefit option.
- - Change the premium allocation for future premiums.
- - Transfer amounts between sub-accounts.
- - Take loans and/or partial withdrawals.
- - Surrender the contract.
- - Transfer ownership to a new owner.
- - Name a contingent owner that will automatically become owner if the
policyowner dies before the insured.
- - Change or revoke a contingent owner.
- - Change or revoke a beneficiary.
ASSIGNMENT OF RIGHTS
Manulife New York will not be bound by an assignment until it receives a copy of
the assignment at its Service Office. Manulife New York assumes no
responsibility for the validity or effects of any assignment.
BENEFICIARY
One or more beneficiaries of the Policy may be appointed by the policyowner by
naming them in the application. Beneficiaries may be appointed in three classes
- - primary, secondary, and final. Beneficiaries may also be revocable or
irrevocable. Unless an irrevocable designation has been elected, the beneficiary
may be changed by the policyowner during the life insured's lifetime by giving
written notice to Manulife New York in a form satisfactory to Manulife New York.
The change will take effect as of the date such notice is signed. If the life
insured dies and there is no surviving beneficiary, the policyowner, or the
policyowner's estate if the policyowner is the life insured, will be the
beneficiary. If a beneficiary dies before the seventh day after the death of the
life insured, we will pay the insurance benefit as if the beneficiary had died
before the life insured.
CONVERSION PRIVILEGE
You may convert your Policy, at any Policy Anniversary, to a fixed paid-up
benefit, without evidence of insurability. The Death Benefit, Policy Value,
other values based on the Policy Value and the Investment Account values will be
determined as of the Business Day on which we receive the written request for
conversion. Thereafter, the basis for determining the Policy Value will be the
Commissioners 1980 Standard Ordinary Smoker or Non-Smoker Mortality Table and an
interest rate of 4% per year. The Flexible Premium Variable Life coverage cannot
be reinstated after the date of the conversion. After the date of the
conversion, no further Monthly Deductions will be taken from Policy Value.
INCONTESTABILITY
Manulife New York will not contest the validity of a Policy after it has been in
force during any life insured's lifetime for two years from the Issue Date. It
will not contest the validity of an increase in Face Amount, after such increase
or addition has been in force during the lifetime of the life insured for two
years. If a Policy has been reinstated and been in force during the lifetime of
the life insured for less than two years from the reinstatement date, we can
contest any misrepresentation of a fact material to the reinstatement.
MISSTATEMENT OF AGE OR SEX
If the stated age or sex, or both, of the life insured in the Policy are
incorrect, Manulife New York will change the Face Amount so that the death
benefit will be that which the most recent monthly charge for the cost of
insurance would have purchased for the correct age and sex.
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SUICIDE EXCLUSION
If the life insured dies by suicide within two years after the Issue Date, the
Policy will terminate and we will pay only the premiums paid less any partial
Net Cash Surrender Value withdrawal and less any Policy Debt.
If the life insured dies by suicide within two years after an applied for
increase in Face Amount takes effect, we will credit the amount of any Monthly
Deductions taken for the increase and reduce the Face Amount to what it was
prior to the increase. If the life insured's death is by suicide, the Death
Benefit for that increase will be limited to the Monthly Deductions taken for
the increase.
We reserve the right to obtain evidence of the manner and cause of death of the
life insured.
SUPPLEMENTARY BENEFITS
Subject to certain requirements, one or more supplementary benefits may be added
to a Policy, including those providing a death benefit guarantee, term insurance
for an additional insured, providing accidental death coverage, waiving monthly
deductions upon disability, and, in the case of corporate-owned policies,
permitting a change of the life insured. More detailed information concerning
these supplementary benefits may be obtained from an authorized agent of
Manulife New York. The cost, if any, for supplementary benefits will be deducted
as part of the monthly deduction.
TAX TREATMENT OF THE POLICY
The following summary provides a general description of the Federal income tax
considerations associated with the Policy and does not purport to be complete or
to cover all situations. This discussion is not intended as tax advice. Counsel
or other competent tax advisors should be consulted for more complete
information. This discussion is based upon our understanding of the present
Federal income tax laws as they are currently interpreted by the Internal
Revenue Service (the "IRS"). No representation is made as to the likelihood of
continuation of the present Federal income tax laws nor of the current
interpretations by the IRS. Manulife New York does not make any guarantee
regarding the tax status of any Policy or any transaction regarding the
Policies.
The Policies may be used in various arrangements, including non-qualified
deferred compensation or salary continuation plans, split dollar insurance
plans, executive bonus plans, retiree medical benefit plans and others. The tax
consequences of such plans may vary depending on the particular facts and
circumstances of each individual arrangement. Therefore, if the use of such
Policies in any such arrangement, the value of which depends in part on the tax
consequences, is contemplated, a qualified tax advisor should be consulted for
advice on the tax attributes of the particular arrangement.
LIFE INSURANCE QUALIFICATION
There are several requirements that must be met for a Policy to be considered a
Life Insurance Contract under the Code, and thereby to enjoy the tax benefits of
such a contract:
- - The Policy must satisfy the definition of life insurance under Section 7702
of the Code.
- - The investments of the Separate Account must be "adequately diversified" in
accordance with Section 817(h) of the Code and Treasury Regulations.
- - The Policy must be a valid life insurance contract under applicable state
law.
- - The Policyowner must not possess "incidents of ownership" in the assets of
the Separate Account.
These four items are discussed in detail below.
DEFINITION OF LIFE INSURANCE
Section 7702 of the Code sets forth a definition of a life insurance contract
for Federal tax purposes. For a Policy to be a life insurance contract, it must
satisfy either the Cash Value Accumulation Test or the Guideline Premium Test.
The Cash Value Accumulation Test requires a minimum death benefit for a given
Policy Value. The Guideline Premium Test also requires a minimum death benefit,
but in addition limits the total premiums that can be paid into a Policy for a
given amount of death benefit.
With respect to a Policy which is issued on the basis of a standard rate class,
we believe (largely in reliance on IRS Notice 88-128 and the proposed mortality
charge regulations under Section 7702, issued on July 5, 1991) that such a
Policy should meet the Section 7702 definition of a life insurance contract.
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With respect to a Policy that is issued on a substandard basis (i.e., a rate
class involving higher-than-standard mortality risk), there is less guidance, in
particular as to how mortality and other expense requirements of Section 7702
are to be applied in determining whether such a Policy meets the Section 7702
definition of a life insurance contract. Thus it is not clear whether or not
such a Policy would satisfy Section 7702, particularly if the policyowner pays
the full amount of premiums permitted under the Policy.
The Secretary of the Treasury (the "Treasury") is authorized to prescribe
regulations implementing Section 7702. However, while proposed regulations and
other interim guidance have been issued, final regulations have not been adopted
and guidance as to how Section 7702 is to be applied is limited. If a Policy
were determined not to be a life insurance contract for purposes of Section
7702, such a Policy would not provide the tax advantages normally provided by a
life insurance policy.
If it is subsequently determined that a Policy does not satisfy Section 7702, we
may take whatever steps are appropriate and reasonable to attempt to cause such
a Policy to comply with Section 7702. For these reasons, we reserve the right to
restrict Policy transactions as necessary to attempt to qualify it as a life
insurance contract under Section 7702.
DIVERSIFICATION
Section 817(h) of the Code requires that the investments of the Separate Account
be "adequately diversified" in accordance with Treasury regulations in order for
the Policy to qualify as a life insurance contract under Section 7702 of the
Code (discussed above). The Separate Account, through the Trust, intends to
comply with the diversification requirements prescribed in Treas. Reg. Sec.
1.817-5, which affect how the Trust's assets are to be invested. We believe that
the Separate Account will thus meet the diversification requirement, and we will
monitor continued compliance with the requirement.
STATE LAW
State regulations require that the policyowner have appropriate insurable
interest in the life insured. Failure to establish an insurable interest may
result in the Policy not qualifying as a life insurance contract for Federal tax
purposes.
INVESTOR CONTROL
In certain circumstances, owners of variable life insurance policies may be
considered the owners, for Federal income tax purposes, of the assets of the
separate account used to support their policies. In those circumstances, income
and gains from the separate account assets would be includible in the variable
policyowner's gross income. The IRS has stated in published rulings that a
variable policyowner will be considered the owner of separate account assets if
the policyowner possesses incidents of ownership in those assets, such as the
ability to exercise investment control over the assets. The Treasury has also
announced, in connection with the issuance of regulations concerning
diversification, that those regulations "do not provide guidance concerning the
circumstances in which investor control of the investments of a segregated asset
account may cause the investor (i.e., the policyowner), rather than the
insurance company, to be treated as the owner of the assets in the account."
This announcement also stated that guidance would be issued by way of
regulations or rulings on the "extent to which policyowners may direct their
investments to particular sub-accounts without being treated as owners of the
underlying." As of the date of this prospectus, no such guidance has been
issued.
The ownership rights under the Policy are similar to, but different in certain
respects from, those described by the IRS in rulings in which it was determined
that policyowners were not owners of separate account assets. For example, the
policyowner has additional flexibility in allocating premium payments and Policy
Values. These differences could result in an owner being treated as the owner of
a pro-rata portion of the assets of the Separate Account. In addition, we does
not know what standards will be set forth, if any, in the regulations or rulings
which the Treasury has stated it expects to issue. We therefore reserve the
right to modify the Policy as necessary to attempt to prevent an owner from
being considered the owner of a pro rata share of the assets of the Separate
Account.
TAX TREATMENT OF POLICY BENEFITS
The following discussion assumes that the Policy will qualify as a life
insurance contract for Federal income tax purposes. We believe that the proceeds
and cash value increases of a Policy should be treated in a manner consistent
with a fixed-benefit life insurance policy for Federal income tax purposes.
Depending on the circumstances, the exchange of a Policy, a change in the
Policy's death benefit option, a Policy loan, partial withdrawal, surrender,
change in ownership, the addition of an accelerated death benefit rider, or an
assignment of the Policy may have Federal income tax consequences. In addition,
Federal, state and local transfer, and other tax consequences of ownership or
receipt of Policy proceeds depend on the circumstances of each policyowner or
beneficiary.
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DEATH BENEFIT
The death benefit under the Policy should be excludable from the gross income of
the beneficiary under Section 101(a)(1) of the Code.
CASH VALUES
Generally, the policyowner will not be deemed to be in constructive receipt of
the Policy Value until there is a distribution. This includes additions
attributable to interest, dividends, appreciation or gains realized on transfers
among sub-accounts.
INVESTMENT IN THE POLICY
Investment in the Policy means:
- - the aggregate amount of any premiums or other consideration paid for a
Policy; minus
- - the aggregate amount, other than loan amounts, received under the Policy
which has been excluded from the gross income of the policyowner (except
that the amount of any loan from, or secured by, a Policy that is a
Modified Endowment Contract ("MEC"), to the extent such amount has been
excluded from gross income, will be disregarded); plus
- - the amount of any loan from, or secured by a Policy that is a MEC to the
extent that such amount has been included in the gross income of the
policyowner.
The repayment of a policy loan, or the payment of interest on a loan, does not
affect the Investment in the Policy.
INTEREST ON POLICY LOANS AFTER YEAR 10
If we determine, in our sole discretion, that there is a substantial risk that a
loan will be treated as a taxable distribution under Federal tax law as a result
of the differential between the credit interest rate and the loan interest rate,
we retain the right to increase the loan interest rate to an amount that would
result in the transaction being treated as a loan under Federal tax law. If this
amount is not prescribed by any IRS ruling or regulation or any court decision,
the amount will be that which we consider to be most likely to result in the
transaction being treated as a loan under Federal tax law.
The tax consequences associated with a loan interest credited differential of 0%
are unclear. A tax advisor should be consulted before effecting a loan to
evaluate the tax consequences that may arise in such a situation. If we
determine, in our sole discretion, that there is a substantial risk that a loan
will be treated as a taxable distribution under Federal tax law as a result of
the differential between the credited interest rate and the loan interest rate,
we retain the right to increase the loan interest rate to an amount that would
result in the transaction being treated as a loan under Federal tax law. If this
amount is not prescribed by any IRS ruling or regulation or any court decision,
the amount of increase will be that which we consider to be most likely to
result in the transaction being treated as a loan under Federal tax law.
SURRENDER OR LAPSE
Upon a complete surrender or lapse of a Policy or when benefits are paid at a
Policy's maturity date, if the amount received plus the amount of Policy Debt
exceeds the total investment in the Policy, the excess will generally be treated
as ordinary income subject to tax.
If, at the time of lapse, a Policy has a loan, the loan is extinguished and the
amount of the loan is a deemed payment to the policyholder. If the amount of
this deemed payment exceeds the investment in the contract, the excess is
taxable income and is subject to IRS reporting requirements.
DISTRIBUTIONS
The tax consequences of distributions from, and loans taken from or secured by,
a Policy depend on whether the Policy is classified as a MEC.
DISTRIBUTIONS FROM NON-MEC'S
A distribution from a non-MEC is generally treated as a tax-free recovery by the
policyowner of the Investment in the Policy to the extent of such Investment in
the Policy, and as a distribution of taxable income only to the extent the
distribution exceeds the Investment in the Policy. Loans from, or secured by, a
non-MEC are not treated as distributions. Instead, such loans are treated as
indebtedness of the policyowner.
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Force Outs
An exception to this general rule occurs in the case of a decrease in the
Policy's death benefit or any other change that reduces benefits under the
Policy in the first 15 years after the Policy is issued and that results in a
cash distribution to the policyowner in order for the Policy to continue to
comply with the Section 7702 definitional limits. Such a cash distribution will
be taxed in whole or in part as ordinary income (to the extent of any gain in
the Policy) under rules prescribed in Section 7702. Changes include partial
withdrawals and death benefit option changes.
DISTRIBUTIONS FROM MEC'S
Policies classified as MEC's will be subject to the following tax rules:
- - First, all partial withdrawals from such a Policy are treated as ordinary
income subject to tax up to the amount equal to the excess (if any) of the
Policy Value immediately before the distribution over the Investment in the
Policy at such time.
- - Second, loans taken from or secured by such a Policy are treated as partial
withdrawals from the Policy and taxed accordingly. Past-due loan interest
that is added to the loan amount is treated as a loan.
- - Third, a 10% additional income tax is imposed on the portion of any
distribution (including distributions on surrender) from, or loan taken
from or secured by, such a policy that is included in income except where
the distribution or loan:
- is made on or after the policyowner attains age 59 1/2;
- is attributable to the policyowner becoming disabled; or
- is part of a series of substantially equal periodic payments for the
life (or life expectancy) of the policyowner or the joint lives (or
joint life expectancies) of the policyowner and the policyowner's
beneficiary.
These exceptions are not likely to apply in situations where the Policy is not
owned by an individual.
Definition of Modified Endowment Contracts
Section 7702A establishes a class of life insurance contracts designated as
"Modified Endowment Contracts," or "MEC" which applies to Policies entered into
or materially changed after June 20, 1988.
In general, a Policy will be a MEC if the accumulated premiums paid at any time
during the first seven Policy Years exceed the "seven-pay premium limit". The
seven-pay premium limit on any date is equal to the sum of the net level
premiums that would have been paid on or before such date if the policy provided
for paid-up future benefits after the payment of seven level annual premiums
(the "seven-pay premium").
The rules relating to whether a Policy will be treated as a MEC are extremely
complex and cannot be adequately described in the limited confines of this
summary. Therefore, a current or prospective policyowner should consult with a
competent adviser to determine whether a transaction will cause the Policy to be
treated as a MEC.
Material Changes
A Policy that is not a MEC may become a MEC if it is "materially changed." If
there is a material change to the Policy, the seven year testing period for MEC
status is restarted. The material change rules for determining whether a Policy
is a MEC are complex. In general, however, the determination of whether a Policy
will be a MEC after a material change generally depends upon the relationship
among the death benefit of the Policy at the time of such change, the Policy
Value at the time of the change, and the additional premiums paid into the
Policy during the seven years starting with the date on which the material
change occurs.
Reductions in Face Amount
If there is a reduction in benefits during any Policy Year, the seven-pay
premium limit is recalculated as if the policy had been originally issued at the
reduced benefit level. Failure to comply would result in classification as a MEC
regardless of any efforts by Manulife New York to provide a payment schedule
that will not violate the seven pay test.
Exchanges
A life insurance contract received in exchange for a MEC will also be treated as
a MEC.
Processing of Premiums
If a premium is received which would cause the Policy to become a MEC within 23
days of the next Policy Anniversary, we will not apply the portion of the
premium which would cause MEC status ("excess premium") to the Policy when
received. The excess premium will be placed in a suspense account until the next
anniversary date, at which point the excess premium,
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along with interest, earned on the excess premium at a rate of 3.5% from the
date the premium was received, will be applied to the Policy. The policyowner
will be advised of this action and will be offered the opportunity to have the
premium credited as of the original date received or to have the premium
returned. If the policyowner does not respond, the premium and interest will be
applied to the Policy as of the first day of the next anniversary.
If a premium is received which would cause the Policy to become a MEC more than
23 days prior to the next Policy Anniversary, we will refund any excess premium
to the policyowner. The portion of the premium which is not excess will be
applied as of the date received. The policyowner will be advised of this action
and will be offered the opportunity to return the premium and have it credited
to the account as of the original date received.
Multiple Policies
All MEC's that are issued by Manulife New York (or its affiliates) to the same
policyowner during any calendar year are treated as one MEC for purposes of
determining the amount includible in gross income under Section 72(e) of the
Code.
POLICY LOAN INTEREST
Generally, personal interest paid on any loan under a Policy which is owned by
an individual is not deductible. For policies purchased on or after January 1,
1996, interest on any loan under a Policy owned by a taxpayer and covering the
life of any individual who is an officer or employee of or is financially
interested in the business carried on by the taxpayer will not be tax deductible
unless the employee is a key person within the meaning of Section 264 of the
Code. A deduction will not be permitted for interest on a loan under a Policy
held on the life of a key person to the extent the aggregate of such loans with
respect to contracts covering the key person exceed $50,000. The number of
employees who can qualify as key persons depends in part on the size of the
employer but cannot exceed 20 individuals.
Furthermore, if a non-natural person owns a Policy, or is the direct or indirect
beneficiary under a Policy, Section 264(f) of the Code disallows a pro-rata
portion of the taxpayer's interest expense allocable to unborrowed Policy cash
values attributable to insurance held on the lives of individuals who are not
20% (or more) owners of the taxpayer-entity, officers, employees, or former
employees of the taxpayer.
The portion of the interest expense that is allocable to unborrowed Policy cash
values is an amount that bears the same ratio to that interest expense as the
taxpayer's average unborrowed Policy cash values under such life insurance
policies bear to the average adjusted bases for all assets of the taxpayer.
If the taxpayer is not the Policyowner, but is the direct or indirect
beneficiary under the Policy, then the amount of unborrowed cash value of the
Policy taken into account in computing the portion of the taxpayer's interest
expense allocable to unborrowed Policy cash values cannot exceed the benefit to
which the taxpayer is directly or indirectly entitled under the Policy.
POLICY EXCHANGES
A policyowner generally will not recognize gain upon the exchange of a Policy
for another life insurance policy issued by Manulife New York or another
insurance company, except to the extent that the policyowner receives cash in
the exchange or is relieved of Policy indebtedness as a result of the exchange.
In no event will the gain recognized exceed the amount by which the Policy Value
(including any unpaid loans) exceeds the policyowner's Investment in the Policy.
OTHER TRANSACTIONS
A transfer of the Policy, a change in the owner, a change in the beneficiary,
and certain other changes to the Policy, as well as particular uses of the
Policy (including use in a so called "split-dollar" arrangement) may have tax
consequences depending upon the particular circumstances and should not be
undertaken prior to consulting with a qualified tax advisor. For instance, if
the owner transfers the Policy or designates a new owner in return for valuable
consideration (or, in some cases, if the transferor is relieved of a liability
as a result of the transfer), then the Death Benefit payable upon the death of
the life insured may in certain circumstances be includible in taxable income to
the extent that the Death Benefit exceeds the prior consideration paid for the
transfer and any premiums or other amounts subsequently paid by the transferee.
Further, in such a case, if the consideration received exceeds the transferor's
Investment in the Policy, the difference will be taxed to the transferor as
ordinary income.
Federal estate and state and local estate, inheritance and other tax
consequences of ownership or receipt of Policy proceeds depend on the individual
circumstances of each policyowner and beneficiary.
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ALTERNATE MINIMUM TAX
Corporate owners may be subject to Alternate Minimum Tax on the annual increases
in Cash Surrender Values and on the Death Benefit proceeds.
INCOME TAX REPORTING
In certain employer-sponsored life insurance arrangements, including equity
split dollar arrangements, participants may be required to report for income tax
purposes, one or more of the following:
- - the value each year of the life insurance protection provided;
- - an amount equal to any employer-paid premiums; or
- - some or all of the amount by which the current value exceeds the employer's
interest in the Policy.
Participants should consult with their tax advisor to determine the tax
consequences of these arrangements.
OTHER INFORMATION
PAYMENT OF PROCEEDS
As long as the Policy is in force, Manulife New York will ordinarily pay any
policy loans, surrenders, partial withdrawals or insurance benefit within seven
days after receipt at its Service Office of all the documents required for such
a payment. We may delay for up to six months the payment from the Fixed Account
of any policy loans, surrenders, partial withdrawals, or insurance benefit. In
the case of any such payments from any Investment Account we may delay payment
during any period during which (i) the New York Stock Exchange is closed for
trading (except for normal weekend and holiday closings), (ii) trading on the
New York Stock Exchange is restricted, and (iii) an emergency exists as a result
of which disposal of securities held in the Separate Account is not reasonably
practicable or it is not reasonably practicable to determine the value of the
Separate Account's net assets; provided that applicable rules and regulations of
the SEC shall govern as to whether the conditions described in (ii) and (iii)
exist.
REPORTS TO POLICYOWNERS
Within 30 days after each Policy Anniversary, Manulife New York will send the
policyowner a statement showing, among other things:
- - the amount of death benefit;
- - the Policy Value and its allocation among the Investment Accounts, the
Fixed Account and the Loan Account;
- - the value of the units in each Investment Account to which the Policy Value
is allocated;
- - the Policy Debt and any loan interest charged since the last report;
- - the premiums paid and other Policy transactions made during the period
since the last report; and
- - any other information required by law.
Each policyowner will also be sent an annual and a semi-annual report for the
Trust which will include a list of the securities held in each Portfolio as
required by the 1940 Act.
DISTRIBUTION OF THE POLICIES
MSS is a Delaware limited liability company organized on October 1, 1997, with
its principal offices located at 73 Tremont Street, Boston, Massachusetts 02108.
MSS acts as the principal underwriter of, and continuously offers, the Policies
pursuant to an Underwriting and Distribution Agreement with us. MSS is a
subsidiary of Manulife North America, the ultimate parent of which is Manulife
Financial. We have a 10% equity interest in MSS. MSS is registered as a
broker-dealer under the Securities Exchange Act of 1934, is a member of the
National Association of Securities Dealers and is duly appointed and licensed as
our insurance agent. The Policies will be sold by registered representatives of
broker-dealers having distribution agreements with MSS who are also licensed by
the New York State Insurance Department and appointed with us. A registered
representative will receive commissions not to exceed 99% of premiums in the
first year. A registered representative will receive commissions which are
normally 2% of all premiums paid in the second year and after, and after the
second anniversary 0.15% of the Net Policy Value per year.
37
<PAGE> 42
RESPONSIBILITIES ASSUMED BY MANULIFE NEW YORK AND MSS
We have entered into an agreement with MSS pursuant to which MSS will pay
selling broker-dealers maximum commission and expense allowance payments subject
to limitations imposed by New York Insurance Law. We will prepare and maintain
all books and records required to be prepared and maintained by MSS with respect
to the Policies, and send all confirmations required to be sent by MSS with
respect to the Policies. We will pay MSS for expenses incurred and services
performed under the terms of the agreement in such amounts and at such times as
agreed to by the parties.
Manulife Financial has also entered into a Service Agreement with us pursuant to
which Manulife Financial or its designee will provide to us all issue,
administrative, general services and recordkeeping functions on our behalf with
respect to all of our insurance policies including the Policies.
Finally, we may, from time to time at our sole discretion, enter into one or
more reinsurance agreements with other life insurance companies, under which
policies issued by us may be automatically reinsured, such that our total amount
at risk under a policy would be limited for the life of the insured.
VOTING RIGHTS
As stated previously, all of the assets held in the sub-accounts of the Separate
Account will be invested in shares of a particular Portfolio of the Trust.
Manulife New York is the legal owner of those shares and as such has the right
to vote upon certain matters that are required by the 1940 Act to be approved or
ratified by the shareholders of a mutual fund and to vote upon any other matters
that may be voted upon at a shareholders' meeting. However, Manulife New York
will vote shares held in the sub-accounts in accordance with instructions
received from policyowners having an interest in such sub-accounts. Shares held
in each sub-account for which no timely instructions from policyowners are
received, including shares not attributable to the Policies, will be voted by
Manulife New York in the same proportion as those shares in that sub-account for
which instructions are received. Should the applicable Federal securities laws
or regulations change so as to permit Manulife New York to vote shares held in
the Separate Account in its own right, it may elect to do so.
The number of shares in each sub-account for which instructions may be given by
a policyowner is determined by dividing the portion of the Policy Value derived
from participation in that sub-account, if any, by the value of one share of the
corresponding Portfolio. The number will be determined as of a date chosen by
Manulife New York, but not more than 90 days before the shareholders' meeting.
Fractional votes are counted. Voting instructions will be solicited in writing
at least 14 days prior to the meeting.
Manulife New York may, if required by state officials, disregard voting
instructions if such instructions would require shares to be voted so as to
cause a change in the sub-classification or investment policies of one or more
of the Portfolios, or to approve or disapprove an investment management
contract. In addition, Manulife New York itself may disregard voting
instructions that would require changes in the investment policies or investment
adviser, provided that Manulife New York reasonably disapproves such changes in
accordance with applicable Federal regulations. If Manulife New York does
disregard voting instructions, it will advise policyowners of that action and
its reasons for such action in the next communication to policyowners.
SUBSTITUTION OF PORTFOLIO SHARES
Although we believe it to be unlikely, it is possible that in the judgment of
our management, one or more of the Portfolios may become unsuitable for
investment by the Separate Account because of a change in investment policy or a
change in the applicable laws or regulations, because the shares are no longer
available for investment, or for some other reason. In that event, we may seek
to substitute the shares of another Portfolio or of an entirely different mutual
fund. Before this can be done, the approval of the SEC and the Superintendent of
Insurance of the state of New York may be required.
We also reserve the right to create new separate accounts, combine other
separate accounts with the Separate Account, to establish additional
sub-accounts within the Separate Account, to combine sub-accounts or to transfer
assets in one sub-account to another sub-account, to eliminate existing
sub-accounts and stop accepting new allocations and transfers into the
corresponding fund, to operate the Separate Account as a management investment
company or other form permitted by law, to transfer assets from this Separate
Account to another separate account and from another separate account to this
Separate Account, and to de-register the Separate Account under the 1940 Act. We
would make the change only if permissible under applicable Federal and New York
state law.
38
<PAGE> 43
RECORDS AND ACCOUNTS
The Service Office will perform administrative functions, such as decreases,
increases, surrenders and partial withdrawals, and fund transfers on behalf of
Manulife New York.
All records and accounts relating to the Separate Account and the Portfolios
will be maintained by us. All financial transactions will be handled by us. All
reports required to be made and information required to be given will be
provided by us.
STATE REGULATIONS
We are subject to the laws of the State of New York governing insurance
companies and to the regulation of the New York Insurance Department. Regulation
by the New York Insurance Department includes periodic examination of our
financial position and operations, including contract liabilities and reserves.
Regulation by supervisory agencies includes licensing to transact business,
overseeing trade practices, licensing agents, approving policy forms,
establishing reserve requirements, fixing maximum interest rates on life
insurance policy loans and minimum rates for accumulation of surrender values,
prescribing the form and content of required financial statements and regulation
of the type and amounts of permitted investments. Our books and accounts are
subject to review by the New York Insurance Department and other supervisory
agencies at all times, and we file annual statements with these agencies.
LITIGATION
No litigation is pending that would have a material effect upon the Separate
Account or the Trust.
INDEPENDENT AUDITORS
The financial statements of The Manufacturers Life Insurance Company of New York
at December 31, 1998 and 1997, and for each of the three years in the period
ended December 31, 1998, and the financial statements of The Manufacturers Life
Insurance Company of New York Separate Account B at August 31, 1999 and for the
period from August 26, 1999 (commencement of operations) to August 31, 1999,
appearing in this Prospectus and Registration Statement have been audited by
Ernst & Young LLP, independent auditors, as set forth in their reports thereon
appearing elsewhere herein, and are included in reliance upon such reports given
on authority of such firm as experts in accounting and auditing.
FURTHER INFORMATION
A registration statement under the Securities Act of 1933 has been filed with
the SEC relating to the offering described in this prospectus. This prospectus
does not include all the information set forth in the registration statement.
The omitted information may be obtained from the SEC's principal office in
Washington D.C. upon payment of the prescribed fee. The SEC also maintains a Web
site that contains reports, proxy and information statements and other
information regarding registrants that file electronically with the SEC which is
located at http://www.sec.gov.
For further information you may also contact Manulife New York's Home Office,
the address and telephone number of which are on the first page of the
prospectus.
DIRECTORS AND OFFICERS
Our Directors and Officers, together with their principal occupations during the
past five years, are as follows:
Name, Age and Position with the
Principal Business Company Principal Occupation
Address
- ----------------------- ----------------- -----------------------------------
Bruce Avedon Director* Director, Manulife New York, March
Age: 70 1992 to present; Consultant (self-
6601 Hitching Post Lane employed) September 1983 to
Cincinnati, OH 45230 present.
Thomas Borshoff Director* Director, Manulife New York,
Age: 52 February 1999 to present; Self-
3 Robin Drive employed, Real Estate
Rochester, NY 14618 Owner/Manager; Chief Executive
Officer and Chairman, First Federal
Savings and Loan of Rochester, 1983
to 1997.
39
<PAGE> 44
Name, Age and Position with the
Principal Business Company Principal Occupation
Address
- ----------------------- ----------------- -----------------------------------
James R. Boyle Director* Director, Manulife New York, August
Age: 40 1999 to present; Senior Vice
500 Boylston Street President, U.S. Annuities, Manulife
Boston, MA 02116 Financial, July 1999 to present;
President, Manulife North America,
July 1999 to present; Treasurer,
Manufacturers Investment Trust,
June 1998 to present; Vice
President, Institutional Markets,
Manulife Financial, May 1998 to
July 1999; Vice President,
Administration and Chief
Administrative Officer, Manulife
North America, September 1996 to
May 1998; Vice President, Chief
Financial Officer and Chief
Administrative Officer, Manulife
North America, August 1994 to
September 1996.
Robert A. Cook Director* Director, ManEquity, Inc., April
Age: 44 1999 to present; Director, Manulife
73 Tremont Street New York, February 1999 to present;
Boston, MA 02108 Senior Vice President, U.S.
Insurance, Manulife Financial,
January 1999 to present; Vice
President, U.S. Insurance, Manulife
Financial, 1995 to December 1998.
John D. DesPrez III Director* Executive Vice President, U.S.
Age: 42 Operations, Manulife Financial,
73 Tremont Street January 1999 to present; Director,
Boston, MA 02108 Manulife Wood Logan, October 1996
to present; Director, September
1996 to present and Chairman of the
Board, January 1999 to present, of
Manulife North America; President,
Manulife North America, September
1996 to December 1998; President,
MIT September 1996 to present;
Senior Vice President, U.S.
Annuities, Manulife Financial,
September 1996 to December 1998;
Vice President, Mutual Funds,
Manulife Financial, January 1995 to
September 1996; Director, MWL,
December 1995 to present; Director,
Wood Logan Distributors, March 1993
to present; President, North
American Funds, March 1993 to
September 1996; Director, Manulife
New York, March 1992 to present;
Ruth Ann Fleming Director* Director, Manulife New York, March
Age: 41 1992 to present; Attorney,
205 Highland Avenue consulting services and pro bono
Short Hills, NJ 07078 activities.
James D. Gallagher Director* and Director and President, Manulife
Age: 45 President New York, August 1999 to present;
73 Tremont Street Director, Secretary and General
Boston, MA 02108 Counsel, The Manufacturers Life
Insurance Company of America, May
1996 to present; Vice President,
U.S. Law & Government Relations,
U.S. Operations, Manulife
Financial, January 1996 to present;
Secretary and General Counsel, MWL,
January 1996 to present; Vice
President, Secretary and General
Counsel, Manulife North America,
June 1994 to present; Secretary,
Manufacturers Investment Trust,
June 1994 to present.
Tracy A. Kane Secretary and Secretary and Counsel, Manulife New
Age: 37 Counsel York, May 1994 to present;
73 Tremont Street Assistant Vice President and Senior
Boston, MA 02108 Counsel, Manulife Financial, April
1993 to present; Counsel, Fidelity
Investments, prior to April 1993.
40
<PAGE> 45
Name, Age and Position with the
Principal Business Company Principal Occupation
Address
- ----------------------- ----------------- -----------------------------------
David W. Libbey Treasurer Vice President, Treasurer and Chief
Age: 52 Financial Officer, Manulife North
500 Boylston Street America, December 1997 to present;
Boston, MA 02116 Treasurer, Manulife New York,
November 1997 to present; Vice
President, Finance, Manulife North
America, June 1997 to December
1997; Vice President, Finance,
Annuities, Manulife Financial, June
1997 to present; Vice President &
Actuary, Paul Revere Insurance
Group, June 1970 to March 1997.
Neil M. Merkl, Esq. Director* Director, Manulife New York,
Age: 68 December 1995 to present; Attorney
35-35 161st Street (self-employed), April 1994 to
Flushing, NY 11358 present; Attorney, Wilson Elser,
1979 to 1994.
James P. O'Malley Director* Senior Vice President, U.S.
Age: 53 Pensions, Manulife Financial,
200 Bloor Street East January 1999 to present; Director,
Toronto, Ontario Manulife New York, November 1998 to
Canada M4W 1E5 present; Director, ManAmerica,
November 1998 to present; Vice
President, Systems New Business
Pensions, Manulife Financial, 1984
to December 1998.
John D. Richardson Director and Senior Executive Vice President,
Age: 61 Chairman of the Manulife Financial, January 1999 to
200 Bloor Street East Board of present; Executive Vice President,
Toronto, Ontario Directors* U.S. Operations, Manulife
Canada M4W 1E5 Financial, November 1997 to
December 1998; Chairman of the
Board, MWL, April 1997 to present;
Director, March 1997 to present and
Chairman of the Board, March 1997
to December 1998, Manulife North
America; Director and Chairman of
the Board, Manulife New York,
November 1996 to present; Director,
MWL, December 1995 to present;
Director and Chairman of the Board,
ManAmerica, January 1995 to
present; Senior Vice President and
General Manager, U.S. Operations,
Manulife Financial, January 1995 to
October 1997; Senior Vice President
and General Manager, Canadian
Operations, Manulife Financial,
June 1992 to December 1994.
James K. Robinson Director* Director, Manulife New York, March
Age: 72 1992 to present; Retired; Attorney
7 Summit Drive and Assistant Secretary, Eastman
Rochester, NY 14620 Kodak Company, 1958 to 1991.
E. Paige Sabine Chief Assistant Vice President and Chief
Age: 32 Administrative Administrative Officer, Manulife
73 Tremont Street Officer New York, August 1998 to present;
Boston, MA 02108 Director - Divisional Compliance,
Manulife Financial, August 1998 to
November 1998; Manager - US Market
Conduct and Compliance, Manulife
Financial, June 1996 to August
1998; Paralegal Manager, Manulife
Financial, April 1995 to June 1996;
Paralegal, Manulife Financial,
November 1992 to April 1995.
41
<PAGE> 46
Name, Age and Position with the
Principal Business Company Principal Occupation
Address
- ----------------------- ----------------- -----------------------------------
John G. Vrysen Vice President Chief Financial Officer and
Age: 44 and Chief Actuary Treasurer, MWL, January 1996 to
73 Tremont Street present; Vice President and Chief
Boston, MA 02108 Financial Officer, U.S. Operations,
Manulife Financial, January 1996 to
present; Appointed Actuary,
ManAmerica, May 1996 to present;
Director, MWL, December 1995 to
present; Vice President and Chief
Actuary, Manulife New York, March
1992 to present; Director, Manulife
New York, March 1992 to February
1998; Vice President and Chief
Actuary, Manulife North America,
January 1986 to present.
*Each Director is elected to serve until the next annual meeting of shareholders
or until his or her successor is elected and qualified.
IMPACT OF YEAR 2000
Manulife New York makes extensive use of information systems in the operations
of its various businesses, including for the exchange of financial data and
other information with customers, suppliers and other counterparties. We also
use software and information systems provided by third parties in our
accounting, business and investment systems.
The Year 2000 risk, as it is commonly known, is the result of computer programs
being written using two digits, rather than four, to define the applicable year.
Any of our computer programs that have date-sensitive software may recognize a
date using "00" as the year 1900 rather than the year 2000. This could result in
systems' failures or miscalculations causing disruptions of operations,
including, among other things, a temporary inability to process transactions,
send premium billing notices, make claims payments or engage in other normal
business activities.
The systems used by Manulife New York have been assessed as part of a
comprehensive written plan conducted by our ultimate parent company The
Manufacturers Life Insurance Company (collectively with its subsidiaries
"Manulife Financial") to ensure that the computer systems and processes of
Manulife Financial, including Manulife New York's, will continue to perform
through the end of this century and in the next.
In 1996, in order to make Manulife Financial's systems Year 2000 compliant, a
Project was instituted to modify or replace both Manulife Financial's
information technology systems ("IT systems") and embedded technology systems
("Non-IT systems"). The phases of this Project include (i) an inventory and
assessment of all systems to determine which are critical, (ii) planning and
designing the required modifications and replacements, (iii) making these
modifications and replacements, (iv) testing modified or replaced systems, (v)
redeploying modified or replaced systems and (vi) final management review and
certification.
As at June 30, 1999, management believes that the certification phase has been
completed for all Manulife New York's critical IT and Non-IT systems. Management
believes that our non-critical systems were Year 2000 compliant as of the first
quarter 1999.
In addition to efforts directed at Manulife Financial's own systems, Manulife
Financial consulted vendors, customers, and other third parties with which it
deals in an effort to ensure that no material aspect of Manulife Financial's
operations will be hindered by Year 2000 problems of these third parties. This
process included providing third parties with questionnaires regarding the state
of their Year 2000 readiness and, where possible or where appropriate,
conducting further due diligence activities. Where appropriate, risk management
steps are being followed as a result of the third-party assessment.
The Year 2000 Project Management Office for Manulife Financial's U.S. Division
has coordinated the preparation and completion of contingency plans on behalf of
U.S. Division affiliates and subsidiaries, including Manulife New York, in the
event that Manulife Financial's Year 2000 Project has not fully resolved its
Year 2000 issues.
Management currently believes that, due to the modifications made to existing
software and conversions to new software, the Year 2000 risk will not pose
significant operational problems for our computer systems. As part of
42
<PAGE> 47
the Year 2000 Project, critical systems were "time-shift" tested in the year
2000 and beyond to confirm that they will continue to function properly before,
during and after the change to the year 2000. However, there can be no assurance
that Manulife Financial's Year 2000 Project, including consulting third parties
and its contingency planning, will avoid any material adverse effect on our
operations, customer relations or financial condition.
Manulife Financial estimates the total cost of its Year 2000 Project will be
approximately $61.2 million,* of which $56.3 million* has been incurred through
June 30, 1999. In addition, previously unbudgeted costs associated with the
start up of a new joint venture in Japan in April 1999 are estimated to be $4.6
million,* of which $1.4 million* was incurred through June 30, 1999. These
previously unbudgeted costs will be shared by Manulife Financial and its joint
venture partner. There can be no assurance that the actual costs incurred will
not be materially higher than estimated. Manulife Financial's Year 2000 costs
were $8.5 million* for the first six months of 1999, including the total joint
venture costs, and $15.9 million* for the first six months of 1998. Most costs
will be expensed as incurred; however, those costs attributed to the purchase of
new software and hardware will generally be capitalized. A proportional amount
of the total cost will be allocated to Manulife New York and is not expected to
have a material effect on Manulife New York's net operating income.
*All figures are shown in US dollars converted from Canadian dollars using the
average exchange rate of 1.493 in effect June 30, 1999.
ILLUSTRATIONS
The tables set forth in Appendix A illustrate the way in which a Policy's Death
Benefit, Policy Value, and Cash Surrender Value could vary over an extended
period of time.
43
<PAGE> 48
AUDITED FINANCIAL STATEMENTS
THE MANUFACTURERS LIFE
INSURANCE COMPANY OF NEW YORK
SEPARATE ACCOUNT B
Period from August 26, 1999 (commencement
of operations) to August 31, 1999
<PAGE> 49
The Manufacturers Life Insurance Company of New York
Separate Account B
Audited Financial Statements
Period from August 26, 1999 (commencement of operations) to August 31, 1999
CONTENTS
Report of Independent Auditors.................................................1
Audited Financial Statements
Statement of Assets and Contract Owners' Equity................................2
Statements of Operations and Changes in Contract Owners' Equity................3
Notes to Financial Statements..................................................4
<PAGE> 50
Report of Independent Auditors
To the Contract Owners of
The Manufacturers Life Insurance Company of New York
Separate Account B
We have audited the accompanying statement of assets and contract owners' equity
of The Manufacturers Life Insurance Company of New York Separate Account B of
The Manufacturers Life Insurance Company of New York as of August 31, 1999, and
the related statements of operations and changes in contract owners' equity for
the period from August 26, 1999 (commencement of operations) to August 31, 1999.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides 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 The Manufacturers Life
Insurance Company of New York Separate Account B at August 31, 1999, and the
results of its operations and the changes in its contract owners' equity for the
period from August 26, 1999 (commencement of operations) to August 31, 1999 in
conformity with generally accepted accounting principles.
October 20, 1999
1
<PAGE> 51
The Manufacturers Life Insurance Company of New York
Separate Account B
Statement of Assets and Contract Owners' Equity
August 31, 1999
ASSETS
Investments at market value:
Sub-accounts:
Growth and Income Portfolio - 1.663 shares (cost $51.50) $ 50
Quantitative Equity Portfolio - 2.024 shares (cost $51.50) 50
----
Total assets $100
====
CONTRACT OWNERS' EQUITY
Variable universal life contract $100
====
See accompanying notes.
2
<PAGE> 52
The Manufacturers Life Insurance Company of New York
Separate Account B
Statements of Operations and Changes in Contract Owners' Equity
SUB-ACCOUNT
-------------------------------------------------------
GROWTH AND INCOME QUANTITATIVE EQUITY TOTAL
-------------------------------------------------------
PERIOD ENDED* PERIOD ENDED* PERIOD ENDED*
AUGUST 31, 1999 AUGUST 31, 1999 AUGUST 31, 1999
-------------------------------------------------------
Income:
Unrealized depreciation
during the period $ (2) $(1) $ (3)
---- --- ----
Net decrease in
contract owners'
equity from
operations (2) (1) (3)
---- --- ----
Changes from principal
transactions:
Purchase payments 103
52 51
---- --- ----
Net increase in
contract owners'
equity from principal
transactions 52 51 103
---- --- ----
Total increase in
contract owners'
equity 50 50 100
Contract owners' equity
at beginning of period 0 0 0
---- --- ----
Contract owners' equity
at end of period $ 50 $50 $100
==== === ====
Reflects the period from August 26, 1999 (commencement of operations) through
August 31, 1999.
See accompanying notes.
3
<PAGE> 53
The Manufacturers Life Insurance Company of New York
Separate Account B
Notes to Financial Statements
August 31, 1999
1. ORGANIZATION
The Manufacturers Life Insurance Company of New York Separate Account B (the
Account), which commenced operations on August 26, 1999, is a separate account
established by The Manufacturers Life Insurance Company of New York (the
Company). The Account operates as a Unit Investment Trust under the Investment
Company Act of 1940, as amended, and can invest in thirty-nine sub-accounts of
Manufacturers Investment Trust (the Trust). The Account is a funding vehicle for
flexible premium variable universal life policies (the Policies) issued by the
Company. The Company is a wholly-owned subsidiary of The Manufacturers Life
Insurance Company of North America (MNA). MNA is an indirect, wholly-owned
subsidiary of Manulife Financial Corporation ("Manulife Financial"), a Canadian
stock-life insurance company.
2. SIGNIFICANT ACCOUNTING POLICIES
Investments are made in the portfolios of the Trust and are valued at the
reported net asset value of such portfolios. Transactions are recorded on the
trade date. Income from dividends is recorded on the ex-dividend date. Realized
gains and losses on the sales of investments are computed on the basis of the
identified cost of the investment sold.
The operations of the Account are included in the federal income tax return of
the Company, which is taxed as a life insurance company under the provisions of
the Internal Revenue Code (the Code). Under the current provisions of the Code,
the Company does not expect to incur federal income taxes on the earnings of the
Account to the extent the earnings are credited under the contracts. Based on
this, no charge is being made currently to the Account for federal income taxes.
The Company will review periodically the status of such decision based on
changes in the tax law. Such a charge may be made in future years for any
federal income taxes that would be attributable to the contract.
The preparation of financial statements in conformity with generally accepted
accounting principals requires management to make estimates and assumptions that
affect the amounts reported in the financial statements and accompanying notes.
Such estimates and assumptions could change in the future as more information
becomes known, which could impact the amounts reported and disclosed herein.
4
<PAGE> 54
The Manufacturers Life Insurance Company of New York
Separate Account B
Notes to Financial Statements (continued)
3. AFFILIATED COMPANY TRANSACTIONS
The Company has an Administrative Services Agreement with Manulife Financial,
whereby Manulife Financial or its designee, with the consent of the Company,
performs certain services on behalf of the Company necessary for the operation
of the separate account. The Company has an underwriting and distribution
agreement with its affiliate, Manufacturers Securities Services LLC (MSS). MSS
is owned 90% by MNA and 10% by the Company.
4. CONTRACT CHARGES
The Company currently makes no deductions from purchase payments for sales
charges at the time of purchase. In the event of a surrender, surrender charges
may be made by the Company to cover sales expenses and administrative expenses
associated with underwriting and policy issue. Each month a deduction consisting
of an administration charge, a charge for cost of insurance, a charge for
mortality and expense risk and charges for supplementary benefits is deducted
from the policy value.
5. PURCHASES AND SALES OF INVESTMENTS
The following table shows aggregate cost of shares purchased for each portfolio
for the period ended August 31, 1999.
PURCHASES
---------
Quantitative Equity Portfolio $ 51
Growth and Income Portfolio $ 52
----
Total $103
====
6. UNIT VALUES
A summary of the accumulation unit values outstanding at August 31, 1999 is as
follows:
UNIT VALUE UNITS DOLLARS
----------------------------------------
Growth and Income Portfolio $10.48 4.766 $ 50
Quantitative Equity Portfolio $10.33 4.848 $ 50
----
Total Contract Owners' Equity $100
====
5
<PAGE> 55
The Manufacturers Life Insurance Company of New York
Separate Account B
Notes to Financial Statements (continued)
7. DIVERSIFICATION REQUIREMENTS
Under the provisions of Section 817(h) of the Internal Revenue Code, a variable
life contract other than a contract issued in connection with certain types of
employee benefits plans, will not be treated as a life insurance contract for
federal tax purposes for any period for which the investments of the segregated
asset account on which the contract is based are not adequately diversified. The
Code provides that the "adequately diversified" requirement may be met if the
underlying investments satisfy either a statutory safe harbor test or
diversification requirements set forth in regulations issued by the Secretary of
Treasury.
The Internal Revenue Service has issued regulations under Section 817(h) of the
Code. The Company believes that the Account satisfies the current requirements
of the regulations, and it intends that the Account will continue to meet such
requirements.
8. IMPACT OF YEAR 2000 (UNAUDITED)
The Year 2000 risk is the result of computer programs being written using two
digits, rather than four, to define the applicable year. Any of the Company's
Computer programs that have date-sensitive software may recognize a date using
"00" as the year 1900 rather than the year 2000. The effects of the Year 2000
risk may be experienced before, on, or after January 1, 2000 and, if not
addressed, could result in systems failures or miscalculations causing
disruptions of normal business operations. It is not possible to be certain that
the Company's year 2000 program will fully resolve all aspects of the Year 2000
risk, including those related to third parties.
6
<PAGE> 56
Financial Statements
The Manufacturers Life Insurance
Company of New York
Six months ended June 30, 1999
(with December 31, 1998 comparative)
CONTENTS
<TABLE>
<CAPTION>
<S> <C>
Balance Sheets .................................................................... 2
Statements of Income .............................................................. 3
Statement of Changes in Shareholder's Equity ...................................... 4
Statement of Cash Flows ........................................................... 5
Notes to Financial Statements ..................................................... 6
</TABLE>
<PAGE> 57
THE MANUFACTURERS LIFE INSURANCE COMPANY OF NEW YORK
BALANCE SHEETS
<TABLE>
<CAPTION>
AS AT AS AT
JUNE 30 DECEMBER 31
ASSETS ($ thousands) 1999 1998
- ---------------------------------------------------------------------------------------------
(UNAUDITED)
<S> <C> <C>
INVESTMENTS:
Fixed maturity securities available-for-sale, at fair value
(amortized cost: 1999 $124,900; 1998 $120,902) $ 123,831 $ 125,088
Investment in unconsolidated affiliate 175 175
Policy loans 587 552
Short-term investments 37,767 10,032
- ---------------------------------------------------------------------------------------------
TOTAL INVESTMENTS $ 162,360 $ 135,847
- ---------------------------------------------------------------------------------------------
Cash and cash equivalents $ 4,624 $ 5,946
Accrued investment income 3,111 3,073
Deferred acquisition costs 44,538 36,831
Receivable for undelivered securities 11,643 -
Other assets 115 1,834
Separate account assets 967,769 833,693
- ---------------------------------------------------------------------------------------------
TOTAL ASSETS $1,194,160 $1,017,224
- ---------------------------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDER'S EQUITY ($ thousands)
- ---------------------------------------------------------------------------------------------
LIABILITIES:
Policyholder liabilities and accruals $ 116,699 $ 94,492
Payable to affiliates 8,075 4,114
Deferred income taxes 3,358 3,615
Payable for securities 14,208 --
Other liabilities 3,932 1,943
Separate account liabilities 967,769 833,693
- ---------------------------------------------------------------------------------------------
TOTAL LIABILITIES $1,114,041 $ 967,857
- ---------------------------------------------------------------------------------------------
SHAREHOLDER'S EQUITY:
Common Stock $ 2,000 $ 2,000
Additional paid-in capital 72,706 72,706
Retained earnings 5,808 3,209
Accumulated other comprehensive income (395) 1,452
- ---------------------------------------------------------------------------------------------
TOTAL SHAREHOLDER'S EQUITY $ 80,119 $ 79,367
- ---------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND SHAREHOLDER'S EQUITY $1,194,160 $1,017,224
- ---------------------------------------------------------------------------------------------
</TABLE>
2
<PAGE> 58
THE MANUFACTURERS LIFE INSURANCE COMPANY OF NEW YORK
STATEMENTS OF INCOME (UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30 JUNE 30
($ thousands) 1999 1998 1999 1998
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
REVENUE:
Fees from separate accounts and policyholder liabilities $3,582 $2,916 $ 6,857 $5,215
Premiums 14 - 23 -
Net investment income 3,813 2,282 7,699 4,541
Net realized investment gains (losses) (125) 126 78 203
- -----------------------------------------------------------------------------------------------------------
TOTAL REVENUE $7,284 $5,324 $14,657 $9,959
- -----------------------------------------------------------------------------------------------------------
BENEFITS AND EXPENSES:
Policyholder benefits and claims $1,372 $1,222 $ 2,687 $2,495
Amortization of deferred acquisition costs 904 1,212 2,468 1,405
Other insurance expenses 2,606 2,436 5,504 3,872
- -----------------------------------------------------------------------------------------------------------
TOTAL BENEFITS AND EXPENSES $4,882 $4,870 $10,659 $7,772
- -----------------------------------------------------------------------------------------------------------
INCOME BEFORE INCOME TAXES $2,402 $ 454 $ 3,998 $2,187
- -----------------------------------------------------------------------------------------------------------
INCOME TAX EXPENSE $ 841 $ 160 $ 1,399 $ 766
- -----------------------------------------------------------------------------------------------------------
NET INCOME $1,561 $ 294 $ 2,599 $1,421
- -----------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes.
3
<PAGE> 59
THE MANUFACTURERS LIFE INSURANCE COMPANY OF NEW YORK
STATEMENT OF CHANGES IN SHAREHOLDER'S EQUITY
(UNAUDITED)
<TABLE>
<CAPTION>
ACCUMULATED
OTHER TOTAL
COMMON ADDITIONAL RETAINED COMPREHENSIVE SHAREHOLDER'S
($ thousands) STOCK PAID-IN CAPITAL EARNINGS INCOME EQUITY
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balance at January 1, 1999 $2,000 $72,706 $3,209 $ 1,452 $79,367
Comprehensive income (note 2) 2,599 (1,847) 752
- ---------------------------------------------------------------------------------------------------------
BALANCE, JUNE 30, 1999 $2,000 $72,706 $5,808 $ (395) $80,119
- ---------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes.
4
<PAGE> 60
THE MANUFACTURERS LIFE INSURANCE COMPANY OF NEW YORK
STATEMENTS OF CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30
($ thousands) 1999 1998
- ---------------------------------------------------------------------------------------------
<S> <C> <C>
OPERATING ACTIVITIES:
Net income $ 2,599 $ 1,421
Adjustments to reconcile net incomce to net cash used in
operating activities:
Amortization of bond discount and premium 277 200
Net realized investment gain (78) (203)
Deferred income tax provision 737 1,157
Amortization of deferred acquisitions costs 2,468 1,405
Acquisition costs deferred (7,761) (8,035)
Return credited to policyholders and other benefits 2,687 2,495
Changes in assets and liabilities:
Accrued investment income (38) (76)
Other assets 1,719 (1,435)
Payable to affiliates 3,961 24
Other liabilities 1,989 998
- ---------------------------------------------------------------------------------------------
Net cash provided by (used in) operating activities $ 8,560 $ (2,049)
- ---------------------------------------------------------------------------------------------
INVESTING ACTIVITIES:
Purchase of fixed maturity securities $(47,384) $(19,719)
Proceeds from fixed maturity securities sold, matured or repaid 43,187 20,384
Net change in short-term investments (27,735) 2,617
Net change in policy loans (35) 39
Net change in receivable for undelivered securities (11,643) --
Net change in payable for securities 14,208) --
- ---------------------------------------------------------------------------------------------
Net cash provided by (used in) investing activities $(29,402) $ 3,321
- ---------------------------------------------------------------------------------------------
FINANCING ACTIVITIES:
Receipts credited to policyholder funds $ 26,246 $ 6,333
Return of policyholder funds (6,726) (6,749)
- ---------------------------------------------------------------------------------------------
Net cash provided by (used in) financing activities $ 19,520 $ (416)
- ---------------------------------------------------------------------------------------------
Increase (decrease) in cash and cash equivalent during the period $ (1,322) $ 856
Cash and cash equivalents at beginning of year 5,946 1,431
- ---------------------------------------------------------------------------------------------
BALANCE, END OF PERIOD $ 4,624 $ 2,287
- ---------------------------------------------------------------------------------------------
</TABLE>
5
<PAGE> 61
THE MANUFACTURERS LIFE INSURANCE COMPANY OF NEW YORK
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1999
(UNAUDITED)
1. BASIS OF PRESENTATION
The accompanying unaudited financial statements of the Company have
been prepared in accordance with generally accepted accounting
principles ("GAAP"), except that they do not contain complete notes.
However, in the opinion of management, these statements include all
normal recurring adjustments necessary for a fair presentation of the
results. These financial statements should be read in conjunction with
the financial statements and the related notes included in the
Company's annual report on form 10-K for the year ended December 31,
1998. Operating results for the six months ended June 30, 1999 are not
necessarily indicative of the results that may be expected for the full
year ending December 31, 1999.
2. COMPREHENSIVE INCOME
Total comprehensive income was as follows:
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30 JUNE 30
COMPREHENSIVE INCOME:
($ thousands) 1999 1998 1999 1998
<S> <C> <C> <C> <C>
------------------------------------------------------------------------------------
NET INCOME $ 1,561 $294 $ 2,599 $1,421
------------------------------------------------------------------------------------
OTHER COMPREHENSIVE INCOME, NET OF TAX:
Unrealized holding gains (losses) arising
during the year (1,002) 78 (1,796) 237
Less:
Reclassification adjustment for realized
(gains) losses included in net income 81 (82) (51) (132)
------------------------------------------------------------------------------------
Other comprehensive income (loss) (921) (4) (1,847) 105
------------------------------------------------------------------------------------
COMPREHENSIVE INCOME $ 640 $290 $ 752 $1,526
------------------------------------------------------------------------------------
</TABLE>
Other comprehensive income is reported net of taxes recoverable
(payable) of $495 and $2 for the three months and $994 and $(57) for
the six months ended June 30, 1999 and 1998, respectively.
6
<PAGE> 62
3. SEGMENT DISCLOSURES
The Company reports three business segments: Annuities, Pensions, and Life
Insurance. The Annuities segment consists of annuity contracts that provide
the customer with the opportunity to invest in mutual funds managed by
independent investement managers and the Company or in the general account
of the Company, with investment returns accumulating on a tax-deferred
basis. The Pensions segment offers 401(k) products to customers in the
State of New York. The Individual Life Insurance segment offers traditional
non-participating life insurance to the New York State market. The Pensions
segment was launched in 1988 and the Individual Life Insurance segment was
launched in late 1997. Both these segments are considered to be in the
start-up phase. No significant assets or revenues have been generated to
date in these two segments. The following is a summary of the contribution
to net income of the three business segments:
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30 JUNE 30
1999 1998 1999 1998
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Annuities $ 2,221 $ 418 $ 3,368 $ 1,812
Penisons (497) (74) (743) (83)
Life Insurance (163) (50) (26) (308)
- ---------------------------------------------------------------------------------------------
NET INCOME (LOSS) $ 1,561 $ 294 $ 2,599 $ 1,421
- ---------------------------------------------------------------------------------------------
</TABLE>
7
<PAGE> 63
AUDITED FINANCIAL STATEMENTS
THE MANUFACTURERS LIFE INSURANCE COMPANY OF NEW YORK
Years ended December 31, 1998, 1997 and 1996
<PAGE> 64
The Manufacturers Life Insurance Company of New York
Audited Financial Statements
Years ended December 31, 1998, 1997 and 1996
CONTENTS
Report of Independent Auditors................................................1
Audited Financial Statements
Balance Sheets................................................................2
Statements of Income..........................................................3
Statements of Changes in Shareholder's Equity.................................4
Statements of Cash Flows......................................................5
Notes to Financial Statements.................................................6
<PAGE> 65
Report of Independent Auditors
The Board of Directors and Shareholder
The Manufacturers Life Insurance Company of New York
We have audited the accompanying balance sheets of The Manufacturers Life
Insurance Company of New York (formerly First North American Life Assurance
Company and hereinafter referred to as the Company) as of December 31, 1998 and
1997, and the related statements of income, changes in shareholder's equity, and
cash flows for each of the three years in the period ended December 31, 1998.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. 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 The Manufacturers Life
Insurance Company of New York at December 31, 1998 and 1997, and the results of
its operations and its cash flows for each of the three years in the period
ended December 31, 1998, in conformity with generally accepted accounting
principles.
/s/ ERNST & YOUNG LLP
Boston, Massachusetts
February 22, 1999
1
<PAGE> 66
THE MANUFACTURERS LIFE INSURANCE COMPANY OF NEW YORK
BALANCE SHEETS
<TABLE>
<CAPTION>
As at December 31
ASSETS ($ thousands) 1998 1997
- --------------------------------------------------------------------------------------------------------------------
Investments
Fixed maturity securities available-for-sale, at fair value
<S> <C> <C>
(note 3) $ 125,088 $ 129,151
(amortized cost: 1998 $120,902; 1997 $126,714)
Investment in unconsolidated affiliate 175 -
Policy loans 552 398
Short-term investments 10,032 9,998
- --------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS $ 135,847 $ 139,547
- --------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents $ 5,946 $ 1,431
Accrued investment income 3,073 2,401
Deferred acquisition costs (note 4) 36,831 28,364
Other assets 1,834 231
Separate account assets 833,693 597,193
- --------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS $ 1,017,224 $ 769,167
- --------------------------------------------------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDER'S EQUITY ($ thousands)
- --------------------------------------------------------------------------------------------------------------------
Liabilities:
Policyholder liabilities and accruals $ 94,492 $ 86,611
Payable to affiliates 4,114 4,345
Deferred income taxes (note 5) 3,615 2,269
Other liabilities 1,943 987
Separate account liabilities 833,693 597,193
- --------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES $ 937,857 $ 691,405
- --------------------------------------------------------------------------------------------------------------------
Shareholder's equity:
Common stock (note 6) $ 2,000 $ 2,000
Additional paid-in capital 72,706 72,531
Retained earnings 3,209 2,136
Accumulated other comprehensive income 1,452 1,095
- --------------------------------------------------------------------------------------------------------------------
TOTAL SHAREHOLDER'S EQUITY $ 79,367 $ 77,762
- --------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND SHAREHOLDER'S EQUITY $ 1,017,224 $ 769,167
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes
2
<PAGE> 67
THE MANUFACTURERS LIFE INSURANCE COMPANY OF NEW YORK
STATEMENTS OF INCOME
<TABLE>
<CAPTION>
For the years ended December 31
($ thousands) 1998 1997 1996
- --------------------------------------------------------------- ------------------- ---------------- ----------------
REVENUES:
<S> <C> <C> <C>
Fees from separate accounts and policyholder liabilities $ 10,961 $ 7,395 $ 4,762
Net investment income (note 3) 9,786 6,717 5,224
Net realized investment gains 713 769 89
- --------------------------------------------------------------- ------------------- ---------------- ----------------
TOTAL REVENUE $ 21,460 $ 14,881 $ 10,075
- --------------------------------------------------------------- ------------------- ---------------- ----------------
BENEFITS AND EXPENSES:
Policyholder benefits and claims $ 4,603 $ 4,747 $ 4,189
Amortization of deferred acquisition costs (note 4) 4,849 3,393 2,319
Other insurance expenses 10,359 5,845 1,192
- --------------------------------------------------------------- ------------------- ---------------- ----------------
TOTAL BENEFITS AND EXPENSES $ 19,811 $ 13,985 $ 7,700
- --------------------------------------------------------------- ------------------- ---------------- ----------------
INCOME BEFORE INCOME TAXES $ 1,649 $ 896 $ 2,375
- --------------------------------------------------------------- ------------------- ---------------- ----------------
INCOME TAXES (note 5) $ 576 $ 310 $ 833
- --------------------------------------------------------------- ------------------- ---------------- ----------------
NET INCOME $ 1,073 $ 586 $ 1,542
- --------------------------------------------------------------- ------------------- ---------------- ----------------
</TABLE>
See accompanying notes.
3
<PAGE> 68
THE MANUFACTURERS LIFE INSURANCE COMPANY OF NEW YORK
STATEMENTS OF CHANGES IN SHAREHOLDER'S EQUITY
<TABLE>
<CAPTION>
Accumulated
Other Total
Common Additional Retained Comprehensive Shareholder's
($ thousands) Stock Paid-in Capital Earnings Income Equity
-------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balance at January 1, 1996 $2,000 $ 11,500 $ 8 $ 1,704 $ 15,212
Capital contribution 13,300 13,300
Comprehensive income (note 2) 1,542 (1,285) 257
-------------------------------------------------------------------------------------------------------------------
BALANCE, DECEMBER 31, 1996 $2,000 $ 24,800 $ 1,550 $ 419 $ 28,769
Capital contribution 47,731 47,731
Comprehensive income (note 2) 586 676 1,262
-------------------------------------------------------------------------------------------------------------------
BALANCE, DECEMBER 31, 1997 $2,000 $ 72,531 $ 2,136 $ 1,095 $ 77,762
Capital contribution 175 175
Comprehensive income (note 2) 1,073 357 1,430
-------------------------------------------------------------------------------------------------------------------
BALANCE, DECEMBER 31, 1998 $2,000 $ 72,706 $ 3,209 $ 1,452 $ 79,367
-------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes.
4
<PAGE> 69
THE MANUFACTURERS LIFE INSURANCE COMPANY OF NEW YORK
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
For the years ended December 31
($ thousands) 1998 1997 1996
- ---------------------------------------------------------------------------- --------------- ------------ ------------
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Net income $ 1,073 $ 586 $ 1,542
Adjustments to reconcile net income to net cash (used in) provided by
operating activities:
Amortization of bond discount and premium 434 333 141
Net realized investment gains (713) (769) (89)
Provision for deferred income tax 1,153 (29) 220
Amortization of deferred acquisition costs 4,849 3,393 2,319
Policy acquisition costs deferred (14,515) (11,684) (7,224)
Return credited to policyholders and other benefits 4,603 4,747 4,189
Changes in assets and liabilities:
Accrued investment income (672) (873) (7)
Other assets (1,603) (80) 196
Payable to affiliates (231) 2,328 865
Other liabilities 956 115 (153)
- ---------------------------------------------------------------------------- --------------- ------------ ------------
Net cash (used in) provided by operating activities $ (4,666) $ (1,933) $ 1,999
- ---------------------------------------------------------------------------- --------------- ------------ ------------
INVESTING ACTIVITIES:
Fixed maturity securities sold, matured or repaid $ 30,591 $ 59,307 $ 31,659
Fixed maturity securities purchased (24,500) (103,383) (41,409)
Net change in short-term investments (34) (6,011) (3,985)
Policy loans advanced, net (154) (215) (116)
- ---------------------------------------------------------------------------- --------------- ------------ ------------
Cash provided by (used in) investing activities $ 5,903 $ (50,302) $ (13,851)
- ---------------------------------------------------------------------------- --------------- ------------ ------------
FINANCING ACTIVITIES:
Deposits and interest credited to policyholder funds 14,212 17,212 18,408
Return of policyholder funds (10,934) (15,382) (24,676)
Change in notes payable - - (2,000)
Capital contribution by parent - 47,731 13,300
- ---------------------------------------------------------------------------- --------------- ------------ ------------
CASH PROVIDED BY FINANCING ACTIVITIES $ 3,278 $ 49,561 $ 5,032
- ---------------------------------------------------------------------------- --------------- ------------ ------------
Cash and cash equivalents:
Increase (decrease) during the year 4,515 (2,674) (6,820)
Balance, beginning of year 1,431 4,105 10,925
- ---------------------------------------------------------------------------- --------------- ------------ ------------
BALANCE, END OF YEAR $ 5,946 $ 1,431 $ 4,105
- ---------------------------------------------------------------------------- --------------- ------------ ------------
</TABLE>
See accompanying notes
5
<PAGE> 70
The Manufacturers Life Insurance Company of New York
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998
(In Thousands of Dollars)
1. ORGANIZATION
The Manufacturers Life Insurance Company of New York (First North
American Life Assurance Company prior to October 1, 1997, and
hereinafter referred to as "the Company"), is a stock life insurance
company which was organized on February 10, 1992 under the laws of the
State of New York. The New York Insurance Department ("the Department")
granted the Company a license to operate on July 22, 1992. The Company
is a wholly-owned subsidiary of The Manufacturers Life Insurance
Company of North America (formerly North American Security Life
Insurance Company and hereinafter referred to as "MNA"), which is in
turn a wholly-owned subsidiary of Manulife-Wood Logan Holding Co., Inc.
("MWL"). MWL is 62.5% owned by The Manufacturers Life Insurance Company
(USA) (ManUSA), 22.5% by MRL Holding, LLC, ("MRL") and 15% by minority
interest shareholders. ManUSA and MRL are indirectly wholly-owned
subsidiaries of The Manufacturers Life Insurance Company ("Manulife
Financial"), a federally chartered Canadian mutual life insurance
company.
The Company issues individual and group annuity and individual life
insurance contracts (collectively, the contracts) in the State of New
York. Amounts invested in the fixed portion of the contracts are
allocated to the general account or a non-insulated separate account of
the Company. Amounts invested in the variable portion of the contracts
are allocated to the separate accounts of the Company. Each of these
separate accounts invests in shares of the various portfolios of the
Manufacturers Investment Trust (formerly NASL Series Trust and
hereinafter referred to as "MIT"), a no-load, open-end investment
management company organized as a Massachusetts business trust, or in
open-end investment management companies offered and managed by
unaffiliated third parties.
Prior to October 1, 1997, the Company sold and administered only
combination fixed and variable annuity products. On October 21, 1997,
the Company received approval from the Department for a revised plan of
operations which expanded its product offerings. MNA contributed
$47,731 to the Company in support of the revised plan of operations.
Prior to October 1, 1997, NASL Financial Services Inc. ("NASL
Financial"), an affiliate of the Company, acted as investment adviser
to MIT and as principal underwriter of the annuity contracts issued by
the Company. Effective October 1, 1997, Manufacturers Securities
Services, LLC ("MSS"), the successor to NASL Financial and an affiliate
of the Company, replaced NASL Financial as the investment advisor to
MIT and as the principal underwriter for the variable contracts and
exclusive distributor of all contracts issued by the Company.
6
<PAGE> 71
1. ORGANIZATION (CONTINUED)
Prior to October 1, 1997, Wood Logan Associates Inc. ("WLA"), a
subsidiary of MWL, acted as the promotional agent for the sale of the
Company's contracts. Since October 1, 1997, marketing services for the
sale of all contracts issued by the Company and other services are
provided by certain affiliates of the Company pursuant to an
Administrative Services Agreement and an Investment Services Agreement
between the Company and Manulife Financial. Currently, services are
provided by Manulife Financial, WLA, MNA, and ManUSA.
On October 31, 1998, the Company received a 10% interest in the
members' equity of MSS from MNA, the managing member of MSS. The
Company treated the receipt of its equity interest as a contribution to
paid-in capital of $175.
2. SIGNIFICANT ACCOUNTING POLICIES
a) BASIS OF PRESENTATION
The accompanying financial statements of the Company have been prepared
in conformity with generally accepted accounting principles ("GAAP").
The preparation of financial statements in conformity with GAAP
requires management to make estimates and assumptions that affect the
amounts reported in the financial statements and accompanying notes.
Actual results could differ from reported results using those
estimates.
b) RECENT ACCOUNTING STANDARDS
i) During 1998, the Company adopted Statement of Financial
Accounting Standards (SFAS) No. 130, "Reporting Comprehensive
Income." SFAS No. 130 establishes standards for reporting and
displaying comprehensive income and its components in a full set
of general-purpose annual financial statements. Comprehensive
income includes all changes in shareholder's equity during a
period except those resulting from investments by and
distributions to shareholders. The adoption of SFAS No. 130
resulted in revised and additional disclosures but had no effect
on the financial position, results of operations, or liquidity of
the Company.
7
<PAGE> 72
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Total comprehensive income was as follows:
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31
($ thousands) 1998 1997 1996
---------------------------------------------------------------- -------------- ------------ -------------
<S> <C> <C> <C>
NET INCOME $ 1,073 $ 586 $ 1,542
---------------------------------------------------------------- -------------- ------------ -------------
Other comprehensive income, net of tax:
Unrealized holding gains (losses) arising during the year 820 1,176 (1,227)
Less:
Reclassification adjustment for realized gains included in
net Income 463 500 58
---------------------------------------------------------------- -------------- ------------ -------------
Other comprehensive income (loss) 357 676 (1,285)
---------------------------------------------------------------- -------------- ------------ -------------
COMPREHENSIVE INCOME $ 1,430 $ 1,262 $ 257
---------------------------------------------------------------- -------------- ------------ -------------
</TABLE>
Other comprehensive income (loss) is reported net of taxes of $192,
$364, and ($692) for 1998, 1997, and 1996, respectively.
ii) During 1998, the Company adopted SFAS No. 131, "Disclosures about
Segments of an Enterprise and Related Information." SFAS No. 131
establishes standards for the disclosure of information about the
Company's operating segments, including disclosures about products
and services, geographic areas, and major customers. The adoption
of SFAS No. 131 did not affect results of operations or financial
position, nor did it affect the manner in which the Company defines
its operating segments. The Company reports three business segments:
Annuities, Savings and Retirement Services, and Life Insurance. The
Annuities segment consists of annuity contracts that provide the
customer with the opportunity to invest in mutual funds managed by
independent investment managers and the Company or in the general
account of the Company, with investment returns accumulating on a
tax-deferred basis. The Savings and Retirement Services segment
offers 401(k) products to customers in the State of New York. The
Individual Life Insurance segment offers traditional non-
participating life insurance to the New York market. The Savings
and Retirement Services segment was launched in mid - 1998 and
the Individual Life Insurance segment was launched in late 1997.
Both these segments are considered to be in the start-up phase.
No significant assets or revenues have been generated to date in
these two segments. Start-up costs, on a pre-tax basis, reported
for these two segments totaled approximately $534 and $2,399,
respectively in 1998 and $1,551 for the Individual Life Insurance
segment in 1997. The following is a summary of the contribution
to net income of the three business segments:
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31
($ thousands) 1998 1997 1996
-------------------------------------------------------- ----------------- --------------- ---------------
<S> <C> <C> <C>
Annuities $ 2,623 $ 1,594 $ 1,542
Savings and Retirement Services - -
(318)
Life Insurance (1,008) -
(1,232)
-------------------------------------------------------- ----------------- --------------- ---------------
NET INCOME (LOSS) $ 1,073 $ 586 $ 1,542
-------------------------------------------------------- ----------------- --------------- ---------------
</TABLE>
8
<PAGE> 73
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
c) INVESTMENTS
The Company classifies all of its fixed maturity securities as
available-for-sale and records these securities at fair value. Realized
gains and losses on sales of securities classified as
available-for-sale are recognized in net income using the specific
identification method. Changes in the fair value of securities
available-for-sale are reflected directly in accumulated other
comprehensive income after adjustments for deferred taxes and deferred
acquisition costs. Discounts and premiums on investments are amortized
using the effective interest method.
The cost of fixed maturity securities is adjusted for the amortization
of premiums and accretion of discounts using the interest method. This
amortization or accretion is included in net investment income.
For the mortgage-backed bond portion of the fixed maturity securities
portfolio, the Company recognizes amortization using a constant
effective yield based on anticipated prepayments and the estimated
economic life of the securities. When actual prepayments differ
significantly from anticipated prepayments, the effective yield is
recalculated to reflect actual payments to date and anticipated future
payments. The net investment in the security is adjusted to the amount
that would have existed had the new effective yield been applied since
the acquisition of the security. That adjustment is included in net
investment income.
Policy loans are reported at aggregate unpaid balances which
approximate fair value.
Short-term investments which include investments with maturities of
less than one year and greater than 90 days at the date of acquisition,
are reported at amortized cost which approximates fair value.
d) CASH EQUIVALENTS
The Company considers all highly liquid debt instruments purchased with
an original maturity date of three months or less to be cash
equivalents. Cash equivalents are stated at cost plus accrued interest,
which approximates fair value.
9
<PAGE> 74
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
e) DEFERRED ACQUISITION COSTS (DAC)
Commissions and other expenses which vary with and are primarily
related to the production of new business are deferred to the extent
recoverable and included as an asset. Acquisition costs associated with
annuity contracts and investment pension contracts are being amortized
generally in proportion to the present value of expected gross profits
from surrender charges and investment, mortality and expense margins.
The amortization is adjusted retrospectively when estimates of current
or future gross profits are revised. DAC associated with traditional
non-participating individual insurance policies is charged to expense
over the premium paying period of the related policies. DAC is adjusted
for the impact on estimated future gross profits assuming the
unrealized gains or losses on securities had been realized at year-end.
The impact of any such adjustments is included in net unrealized gains
(losses) in accumulated other comprehensive income. DAC is reviewed
annually to determine recoverability from future income and, if not
recoverable, it is immediately expensed.
f) POLICYHOLDER LIABILITIES AND ACCRUALS
Policyholder liabilities equal the policyholder account value for the
fixed portion of annuity contracts and for investment pension contracts
with no substantial mortality risk. Account values are increased for
deposits received and interest credited and are reduced by withdrawals.
For traditional non-participating life insurance policies, policyholder
liabilities are computed using the net level premium method and are
based upon estimates as to future mortality, persistency, maintenance
expenses and interest rate yields that are applicable in the year of
issue. The assumptions include a provision for the risk of adverse
deviation.
g) SEPARATE ACCOUNTS
Separate account assets and liabilities that are reported in the
accompanying balance sheets represent investments in MIT, which are
mutual funds that are separately administered for the exclusive benefit
of the policyholders of the Company and its affiliates, or open-end
investment management companies offered and managed by unaffiliated
third parties, which are mutual funds that are separately administered
for the benefit of the Company's policyholders and other shareholders.
These assets and liabilities are reported at fair value. The
policyholders, rather than the Company, bear the investment risk. The
operations of the separate accounts are not included in the
accompanying financial statements. Fees charged on separate account
policyholder funds are included in revenues.
10
<PAGE> 75
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
h) REVENUE RECOGNITION
Fee income from separate accounts, annuity contracts and investment
pension contracts consists of charges for mortality, expenses and
surrender and administration charges that have been assessed against
the policyholder account balances. Premiums on traditional
non-participating life insurance policies are recognized as revenue
when due and currently are included in Fees from Separate Accounts and
Policyholder Liabilities in the statements of income. Investment income
is recorded as revenue when due.
i) POLICYHOLDER BENEFITS AND CLAIMS
Benefits for annuity contracts and investment pension contracts include
interest credited to policyholder account balances and benefit claims
incurred during the period in excess of policyholder account balances.
j) INCOME TAXES
Income taxes have been provided using the liability method in
accordance with SFAS No. 109, "Accounting for Income Taxes." Under this
method, deferred tax assets and liabilities are determined based on
differences between the financial reporting and tax bases of assets and
liabilities and are measured using the enacted tax rates and laws that
likely will be in effect when the differences are expected to reverse.
The measurement of deferred tax assets is reduced by a valuation
allowance if, based upon the available evidence, it is more likely than
not that some or all of the deferred tax assets will not be realized.
3. INVESTMENTS AND INVESTMENT INCOME
a) FIXED MATURITY SECURITIES
At December 31, 1998 and 1997, all fixed maturity securities have been
classified as available-for-sale and reported at fair value. The
amortized cost and fair value are summarized as follows:
<TABLE>
<CAPTION>
GROSS GROSS
AMORTIZED COST UNREALIZED UNREALIZED FAIR VALUE
AS AT DECEMBER 31, GAINS LOSSES
($ thousands) 1998 1997 1998 1997 1998 1997 1998 1997
------------------------------- ----------- ---------- -------- ------- ------- ------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
U.S. government $ 11,018 $ 7,422 $ 591 $ 284 ($15) $ $ 11,594 $ 7,706
-
Corporate securities 99,696 108,682 3,321 1,879 (35) (23) 102,982 110,538
Mortgage-backed securities 6,680 5,016 125 69 (21) - 6,784 5,085
Foreign governments 2,449 - 111 - - - 2,560 -
States/political subdivisions 1,059 5,594 109 228 - - 1,168 5,822
------------------------------- ----------- ---------- -------- ------- ------- ------- ---------- ---------
Total fixed maturity securities $ 120,902 $126,714 $ 4,257 $2,460 ($71) ($23) $ 125,088 $129,151
------------------------------- ----------- ---------- -------- ------- ------- ------- ---------- ---------
</TABLE>
11
<PAGE> 76
3. INVESTMENTS AND INVESTMENT INCOME (CONTINUED)
Proceeds from sales of fixed maturity securities during 1998 were
$17,985 (1997 $45,217; 1996 $6,559). Gross gains of $715 and gross
losses of $2 were realized on those sales (1997 $772 and $6; 1996 $91
and $2 respectively).
The contractual maturities of fixed maturity securities at December 31,
1998 are shown below. Expected maturities may differ from contractual
maturities because borrowers may have the right to call or prepay
obligations with or without prepayment penalties. Corporate
requirements and investment strategies may result in the sale of
investments before maturity.
<TABLE>
<CAPTION>
($ thousands) AMORTIZED COST FAIR VALUE
-----------------------------------------------------------------------------------------------------------
FIXED MATURITY SECURITIES
<S> <C> <C>
One year or less $ 13,083 $13,117
Greater than 1; up to 5 years 61,861 63,525
Greater than 5; up to 10 years 21,812 22,807
Due after 10 years 17,466 18,855
Mortgage-backed securities 6,680 6,784
-----------------------------------------------------------------------------------------------------------
TOTAL FIXED MATURITY SECURITIES $120,902 $125,088
-----------------------------------------------------------------------------------------------------------
</TABLE>
Fixed maturity securities with a fair value of $410 and $414 at December
31, 1998 and 1997, respectively, were on deposit with, or in custody
accounts on behalf of, New York State Insurance Department to satisfy
regulatory requirements.
b) Investment Income
Income by type of investment was as follows:
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31
($ thousands) 1998 1997 1996
-----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Fixed maturity securities $8,338 $ 6,343 $4,476
Other invested assets 830
Short-term investments 762 477 873
-----------------------------------------------------------------------------------------------------------
Gross investment income 9,930 6,819 5,349
-----------------------------------------------------------------------------------------------------------
Investment expenses (144) (102) (125)
-----------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME $9,786 $ 6,717 $5,224
-----------------------------------------------------------------------------------------------------------
</TABLE>
12
<PAGE> 77
4. DEFERRED ACQUISITION COSTS
The components of the change in DAC were as follows:
FOR THE YEARS ENDED DECEMBER 31
<TABLE>
<CAPTION>
($ thousands) 1998 1997 1996
----------------------------------------------- -------------------- ------------------- ------------------
<S> <C> <C> <C>
Balance at January 1, $ 28,364 $ 20,208 $ 15,919
Capitalization 14,515 11,684 7,224
Amortization (4,849) (3,393) (2,319)
Effect of net unrealized gains
on securities available for sale (1,199) (135) (616)
----------------------------------------------- -------------------- ------------------- ------------------
BALANCE AT DECEMBER 31 $ 36,831 $ 28,364 $ 20,208
----------------------------------------------- -------------------- ------------------- ------------------
</TABLE>
To date, the DAC balance is primarily attributable to the Annuities
segment.
5. INCOME TAXES
The components of income tax expense were as follows:
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31
($ thousands) 1998 1997 1996
----------------------------------------------------- ----------------- ----------------- -----------------
<S> <C> <C> <C>
Current expense (benefit) $ (577) $339 $613
Deferred expense (benefit) 1,153 (29) 220
----------------------------------------------------- ----------------- ----------------- -----------------
TOTAL EXPENSE $ 576 $310 $833
----------------------------------------------------- ----------------- ----------------- -----------------
</TABLE>
Deferred income taxes reflect the net tax effects of temporary
differences between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for income tax
purposes. Significant components of the Company's net deferred tax
liability are as follows:
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------
AS AT DECEMBER 31
($ thousands) 1998 1997
-----------------------------------------------------------------------------------------------------------
DEFERRED TAX ASSETS:
<S> <C> <C>
Asset reserves $ 389 $ 92
-----------------------------------------------------------------------------------------------------------
Total deferred tax assets 389 92
-----------------------------------------------------------------------------------------------------------
DEFERRED TAX LIABILITIES:
Deferred acquisition costs (2,203) (1,135)
Reserves (4)
Unrealized gains on securities available-for-sale (784) (589)
Other (1,017) (633)
-----------------------------------------------------------------------------------------------------------
Total deferred tax liabilities (4,004) (2,361)
-----------------------------------------------------------------------------------------------------------
NET DEFERRED TAX LIABILITY $ (3,615) $ (2,269)
-----------------------------------------------------------------------------------------------------------
</TABLE>
13
<PAGE> 78
5. INCOME TAXES (CONTINUED)
The Company participates as a member of the MWL affiliated group,
filing a consolidated federal income tax return. The Company files a
separate New York State return.
The method of allocation between the companies is subject to a tax
sharing agreement under which the tax liability is allocated to each
member of the group on a pro-rata basis based on the relationship that
the member's tax liability (computed on a separate return basis) bears
to the tax liability of the consolidated group. The tax charge to the
Company will not be more than the Company would have paid on a separate
return basis. Settlement of taxes are made through an increase or
reduction to the payable to parent, subsidiaries and affiliates which
is settled periodically.
The Company made estimated tax payments of $1,121 in 1998 and $531 and
$0 in 1997 and 1996, respectively.
6. Shareholder's Equity
The Company has one class of common stock:
<TABLE>
<CAPTION>
AS AT DECEMBER 31:
($ thousands) 1998 1997
--------------------------------------------------------------------- ------------------- -----------------
Authorized, issued and outstanding:
<S> <C> <C> <C>
2,000,000 Common shares, Par value $1 $2,000 $2,000
--------------------------------------------------------------------- ------------------- -----------------
</TABLE>
The net assets of the Company available for the Parent as dividends are
generally limited to and cannot be made except from earned
statutory-basis profits. The maximum amount of dividends that may be
paid by life insurance companies without prior approval of the New York
Insurance Commissioner is subject to restrictions relating to statutory
surplus and net gain from operations on a statutory basis.
The aggregate statutory capital and surplus of the Company at December
31, 1998 was $62,881 (1997 $68,336). The aggregate statutory net income
(loss) of the Company for the year ended 1998 was ($5,678) (1997
($1,562); 1996 $231). State regulatory authorities prescribe statutory
accounting practices that differ in certain respects from generally
accepted accounting principles followed by stock life insurance
companies. The significant differences relate to investments, deferred
acquisition costs, deferred income taxes, non-admitted asset balances
and reserves.
14
<PAGE> 79
7. REINSURANCE
The Company has entered into reinsurance agreements with various
reinsurers to reinsure any face amounts in excess of $100 for its
traditional non-participating insurance products. The Company remains
liable for amounts ceded in the event that reinsurers do not meet their
obligations. To date, there have been no reinsurance recoveries under
these agreements.
8. RELATED-PARTY TRANSACTIONS
The Company utilizes various services administered by Manulife
Financial and affiliates such as legal, personnel, investment
accounting and other corporate services. Prior to October 1, 1997,
Manulife Financial and MNA charged the Company for those services. In
the first nine months of 1997 and for the full year 1996, Manulife
Financial and MNA charged the Company approximately $623 and $661,
respectively. Effective October 1, 1997, pursuant to a revised plan of
operations, all intercompany expenses were billed through Manulife
Financial. For the year ended December 31, 1998 and for the fourth
quarter of 1997, Manulife Financial billed the Company expenses of
$4,685 and $869, respectively. At December 31, 1998 and 1997, the
Company had a net liability to Manulife Financial of $2,372 and $2,977,
respectively, for those services.
For the nine months ended September 30, 1997 and for the full year
1996, the Company paid underwriting commissions to NASL Financial of
$8,421 and $7,050, respectively. NASL Financial then reimbursed WLA for
promotional agent services. Effective October 1, 1997, MSS replaced
NASL Financial as underwriter. Thereafter, all commissions were paid to
MSS by the Company, and WLA marketing services expenses were paid by
Manulife Financial who was then reimbursed by the Company. Underwriting
commissions and marketing services expense of $17,838 and $4,431,
respectively, were incurred during the year ended December 31, 1998 and
the fourth quarter of 1997. At December 31, 1998 and 1997, the Company
had a net liability of $799 and $1,368, respectively, for these
services.
The financial statements have been prepared from the records maintained
by the Company and may not necessarily be indicative of the financial
conditions or results of operations that would have occurred if the
Company had been operated as an unaffiliated corporation (see also
Notes 1, 5, 10 and 13 for additional related-party transactions).
9. BORROWED MONEY
The Company has an unsecured line of credit with State Street Bank and
Trust in the amount of $5,000, bearing interest at the bank's money
market rate plus 50 basis points. There were no outstanding
advancements under the line of credit at December 31, 1998 and 1997.
15
<PAGE> 80
10. EMPLOYEE BENEFITS
a) RETIREMENT PLAN
Prior to July 1, 1998, the Company and MNA participated in a
non-contributory defined benefit pension plan (the " Nalaco Plan")
sponsored by Manulife Financial, covering its employees. A similar plan
(the "Manulife Plan") also existed for ManUSA. Both plans provided
pension benefits based on length of service and final average earnings.
Vested benefits are fully funded; current pension costs are funded as
they accrue.
Effective July 1, 1998, the Nalaco Plan was merged into the Manulife
Plan as approved by the Board of Directors of Manulife Financial. The
merged plan was then restated as a cash balance pension plan entitled,
"The Manulife Financial U.S. Cash Balance Pension Plan" ("Cash Balance
Plan"). Participants in the two prior plans ceased accruing benefits
under the old plan effective June 30, 1998, and became participants in
the Cash Balance Plan on July 1, 1998. Also effective July 1, ManUSA
became the sponsor of the Cash Balance Plan. Each participant who was a
participant in one of the prior plans received an opening account
balance equal to the present value of their June 30, 1998 accrued
benefit under the prior plan, using Pension Benefit Guaranty
Corporation rates. Future contribution credits under the Cash Balance
Plan vary by service, and interest credits are a function of interest
rate levels. Pension benefits are provided to participants after three
years of vesting service, and the normal retirement benefit is
actuarially equivalent to the cash balance account at normal retirement
date. The normal form of payment under the Cash Balance Plan is a life
annuity with various optional forms available.
Actuarial valuation of accumulated plan benefits are based on projected
salaries and best estimates of investment yields on plan assets,
mortality of participants, employee termination and ages at retirement.
Pension costs relating to current service and amortization of
experience gains and losses are amortized to income over the estimated
average remaining service lives of the participants. No pension expense
was recognized by the sponsor in 1998, 1997, or 1996 because the plan
was subject to the full funding limitation under the Internal Revenue
Code.
At December 31, 1998, the projected benefit obligation based on an
assumed interest rate of 6.5% was $51,757. The fair value of plan
assets invested in ManUSA's general fund deposit administration
insurance contracts and in an investment portfolio of equities and
fixed income securities managed by an affiliate were $52,541 and
$32,145, respectively.
16
<PAGE> 81
10. EMPLOYEE BENEFITS (CONTINUED)
b) 401(k) PLAN
Prior to July 1, 1998, the Company also participated in a defined
contribution plan sponsored by MNA, the North American Security Life
401(k) Savings Plan, which was subject to the provisions of the
Employee Retirement Income Security Act of 1974 ("ERISA"). A similar
plan, the Manulife Financial 401k Savings Plan, also existed for
employees of ManUSA. These two plans were effectively merged on July 1,
1998 into one defined contribution plan sponsored by ManUSA, as
approved by the Board of Directors on March 26, 1998. The Company's
costs associated with the plan were charged to the Company and were not
material.
c) POSTRETIREMENT BENEFIT PLAN
In addition to the retirement plan, the Company participates in the
postretirement benefit plan of ManUSA which provides retiree medical
and life insurance benefits to those who have attained age 55 with 10
or more years of service. The plan provides the medical coverage for
retirees and spouses under age 65. When the retirees or the covered
dependents reach age 65, Medicare provides primary coverage and the
plan provides secondary coverage. There is no contribution for post-age
65 coverage, and no contributions are required for retirees for life
insurance coverage. The plan is unfunded.
The postretirement benefit cost to the Company, which includes the
expected cost of postretirement benefits for newly eligible employees
and for vested employees, interest cost, and gains and losses arising
from differences between actuarial assumptions and actual experience,
is accounted for by the plan sponsor, ManUSA.
11. FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying values and estimated fair values of the Company's
financial instruments at December 31, 1998 were as follows:
<TABLE>
<CAPTION>
December 31, 1998 December 31, 1997
-----------------------------------------------------------------------------
CARRYING FAIR CARRYING FAIR
VALUE VALUE VALUE VALUE
-----------------------------------------------------------------------------
Assets:
<S> <C> <C> <C> <C>
Fixed maturity securities $125,088 $125,088 $129,151 $129,151
Short-term investments 10,032 10,032 9,998 9,998
Policy loans 552 552 398 398
Cash and cash equivalents 5,946 5,946 1,431 1,431
Liabilities:
Policyholder liabilities and
accruals 94,492 91,113 86,611 81,715
</TABLE>
17
<PAGE> 82
11. FAIR VALUE OF FINANCIAL INSTRUMENTS (CONTINUED)
The following methods and assumptions were used by the Company in
estimating the fair value disclosures for financial instruments:
Fixed Maturity Securities: Fair values for fixed maturity securities
are obtained from an independent pricing service.
Short-Term Investment and Cash and Cash Equivalents: Carrying values
approximate fair values.
Policy Loans: Carrying values approximate fair values.
Policyholder Liabilities and Accruals: Fair values of the Company's
liabilities under contracts not involving significant mortality risk
(deferred annuities) are estimated to be the cash surrender value, or
the cost the Company would incur to extinguish the liability.
12. LEASES
The Company leases office space under an operating lease agreement
which expires in 1999 and is subject to a renewal option at market
rates prevailing at the time of renewal. For the years ended December
31, 1998 and 1997, the Company incurred rent expense of $95 and $84,
respectively. The minimum lease payments associated with the office
space are $61 in 1999.
13. CAPITAL MAINTENANCE AGREEMENT
Pursuant to a capital maintenance agreement and subject to regulatory
approval, Manulife Financial has agreed to maintain the Company's
statutory capital and surplus at a specified level and to ensure that
sufficient funds are available for the timely payment of contractual
obligations.
14. CONTINGENCIES
The Company is subject to various lawsuits that have arisen in the
course of its business. Contingent liabilities arising from litigation,
income taxes and other matters are not considered material in relation
to the financial position of the Company.
18
<PAGE> 83
15. UNCERTAINTY DUE TO THE YEAR 2000 RISK (UNAUDITED)
The Year 2000 risk is the result of computer programs being written
using two digits, rather than four, to define the applicable year. Any
of the Company's computer programs that have date-sensitive software
may recognize a date using "00" as the year 1900 rather than the year
2000. The effects of the Year 2000 risk may be experienced before, on,
or after January 1, 2000 and, if not addressed, could result in systems
failures or miscalculations causing disruptions of normal business
operations. It is not possible to be certain that the Company's Year
2000 program will fully resolve all aspects of the Year 2000 risk,
including those related to third parties.
19
<PAGE> 84
APPENDIX A
SAMPLE ILLUSTRATIONS OF POLICY VALUES, CASH SURRENDER VALUES AND DEATH BENEFITS
The following tables have been prepared to help show how values under the Policy
change with investment performance. The tables include both Policy Values and
Cash Surrender Values as well as Death Benefits. The Policy Value is the sum of
the values in the Investment Accounts, as the tables assume no values in the
Fixed Account or Loan Account. The Cash Surrender Value is the Policy Value less
any applicable surrender charges. The tables illustrate how Policy Values and
Cash Surrender Values, which reflect all applicable charges and deductions, and
Death Benefits of the Policy on an insured of given age would vary over time if
the return on the assets of the Portfolios was a uniform, gross, after-tax,
annual rate of 0%, 6% or 12%. The Policy Values, Death Benefits and Cash
Surrender Values would be different from those shown if the returns averaged 0%,
6% or 12%, but fluctuated over and under those averages throughout the years.
The charges reflected in the tables include those for deductions from premiums,
surrender charges, and monthly deductions.
The amounts shown for the Policy Value, Death Benefit and Cash Surrender Value
as of each Policy Year reflect the fact that the net investment return on the
assets held in the sub-accounts is lower than the gross, after-tax return. This
is because the expenses and fees borne by Manufacturers Investment Trust are
deducted from the gross return. The illustrations reflect a simple average of
those Portfolios' current expenses, which is approximately 0.949% per annum. The
gross annual rates of return of 0%, 6% and 12% correspond to approximate net
annual rates of return of -0.944%, 4.999% and 10.942%. The illustrations reflect
the expense reimbursement in effect for the Lifestyle Trust and the expense
limitation in effect for the Equity Index Trust. In the absence of such expense
reimbursement and expense limitation, the average of the Portfolio's current
expenses would have been 0.953 % per annum and the gross annual rates of return
of 0%, 6% and 12% would have corresponded to approximate net annual rates of
return of -0.949%, 4.994% and 10.938%. The expense reimbursement for the
Lifestyle Trusts and the expense limitation for the Equity Index Trust are
expected to remain in effect during the fiscal year ended December 31, 1999 and
the fiscal year ended December 31, 2000. Were the expense reimbursement and
expense limitation to terminate, the average of the Portfolios' current expenses
would be higher and the approximate net annual rates of return would be lower.
The tables assume that no premiums have been allocated to the Fixed Account,
that planned premiums are paid on the Policy Anniversary and that no transfers,
partial withdrawals, Policy loans, changes in death benefit options or changes
in face amount have been made. The tables reflect the fact that no charges for
federal, state or local taxes are currently made against the Separate Account.
If such a charge is made in the future, it would take a higher gross rate of
return to produce after-tax returns of 0%, 6% and 12% than it does now.
There are two tables shown for each combination of age and death benefit option
for a Policy issued to a male non-smoker, one based on current cost of insurance
charges assessed by Manulife New York and the other based on the maximum cost of
insurance charges based on the 1980 Commissioners Smoker Distinct Mortality
Tables. Current cost of insurance charges are not guaranteed and may be changed.
Upon request, Manulife New York will furnish a comparable illustration based on
the proposed life insured's issue age, sex (unless unisex rates are required by
law, or are requested) and risk classes, any additional ratings and the death
benefit option, face amount and planned premium requested. Illustrations for
smokers would show less favorable results than the illustrations shown below.
From time to time, in advertisements or sales literature for the Policies that
quote performance data of one or more of the Portfolios, Manulife New York may
include Cash Surrender Values and Death Benefit figures computed using the same
methodology as that used in the following illustrations, but with the average
annual total return of the Portfolio for which performance data is shown in the
advertisement replacing the hypothetical rates of return shown in the following
tables. This information may be shown in the form of graphs, charts, tables and
examples.
The Policies have been offered to the public only since approximately _______,
1999. However, total return data may be advertised for as long a period of time
as the underlying Portfolio has been in existence. The results for any period
prior to the Policies' being offered would be calculated as if the Policies had
been offered during that period of time, with all charges assumed to be those
applicable to the Policies.
A-1
<PAGE> 85
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
MALE NON-SMOKER ISSUE AGE 35 (STANDARD)
$500,000 FACE AMOUNT DEATH BENEFIT OPTION 1
$2,260 ANNUAL PLANNED PREMIUM
ASSUMING CURRENT CHARGES
<TABLE>
<CAPTION>
0% Hypothetical 6% Hypothetical 12% Hypothetical
Gross Investment Return Gross Investment Return Gross Investment Return
----------------------- ----------------------- -----------------------
End Of Accumulated Policy Cash Death Policy Cash Death Policy Cash Death
Policy Premiums (2) Value Surrender Benefit Value Surrender Benefit Value Surrender Benefit
Year (1) Value (3) Value (3) Value (3)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 2,373 944 0 500,000 1,032 0 500,000 1,121 0 500,000
2 4,865 2,028 0 500,000 2,269 0 500,000 2,522 0 500,000
3 7,481 3,037 0 500,000 3,500 0 500,000 4,005 0 500,000
4 10,228 4,001 407 500,000 4,755 1,160 500,000 5,609 2,015 500,000
5 13,112 4,951 1,948 500,000 6,064 3,061 500,000 7,379 4,376 500,000
6 16,141 5,828 3,415 500,000 7,371 4,959 500,000 9,269 6,857 500,000
7 19,321 6,627 4,805 500,000 8,669 6,848 500,000 11,286 9,465 500,000
8 22,660 7,379 6,148 500,000 9,989 8,759 500,000 13,476 12,245 500,000
9 26,166 8,121 7,480 500,000 11,368 10,728 500,000 15,891 15,251 500,000
10 29,847 8,845 8,796 500,000 12,801 12,752 500,000 18,550 18,501 500,000
11 33,713 9,584 9,584 500,000 14,350 14,350 500,000 21,575 21,575 500,000
12 37,771 10,234 10,234 500,000 15,892 15,892 500,000 24,845 24,845 500,000
13 42,033 10,786 10,786 500,000 17,416 17,416 500,000 28,377 28,377 500,000
14 46,508 11,233 11,233 500,000 18,917 18,917 500,000 32,196 32,196 500,000
15 51,206 11,584 11,584 500,000 20,399 20,399 500,000 36,340 36,340 500,000
16 56,139 11,850 11,850 500,000 21,873 21,873 500,000 40,858 40,858 500,000
17 61,319 12,044 12,044 500,000 23,353 23,353 500,000 45,806 45,806 500,000
18 66,758 12,168 12,168 500,000 24,837 24,837 500,000 51,231 51,231 500,000
19 72,469 12,243 12,243 500,000 26,351 26,351 500,000 57,210 57,210 500,000
20 78,466 12,284 12,284 500,000 27,908 27,908 500,000 63,819 63,819 500,000
21 84,762 12,115 12,115 500,000 29,336 29,336 500,000 70,962 70,962 500,000
22 91,373 11,762 11,762 500,000 30,653 30,653 500,000 78,728 78,728 500,000
23 98,315 11,214 11,214 500,000 31,844 31,844 500,000 87,181 87,181 500,000
24 105,603 10,437 10,437 500,000 32,868 32,868 500,000 96,376 96,376 500,000
25 113,256 9,409 9,409 500,000 33,693 33,693 500,000 106,385 106,385 500,000
26 121,292 8,094 8,094 500,000 34,277 34,277 500,000 117,281 117,281 500,000
27 129,730 6,447 6,447 500,000 34,561 34,561 500,000 129,141 129,141 500,000
28 138,589 4,431 4,431 500,000 34,494 34,494 500,000 142,066 142,066 500,000
29 147,892 2,014 2,014 500,000 34,028 34,028 500,000 156,178 156,178 500,000
30 157,659 0 (4) 0 (4) 0 (4) 33,095 33,095 500,000 171,605 171,605 500,000
31 167,915 31,646 31,646 500,000 188,519 188,519 500,000
32 178,684 29,593 29,593 500,000 207,094 207,094 500,000
33 189,991 26,835 26,835 500,000 227,534 227,534 500,000
34 201,864 23,265 23,265 500,000 250,085 250,085 500,000
35 214,330 18,756 18,756 500,000 275,035 275,035 500,000
36 227,420 13,158 13,158 500,000 302,724 302,724 500,000
37 241,164 6,234 6,234 500,000 333,537 333,537 500,000
38 255,595 0 (4) 0 (4) 0 (4) 367,971 367,971 500,000
39 270,747 406,629 406,629 500,000
40 286,658 450,242 450,242 500,000
41 303,364 499,533 499,533 524,509
42 320,905 554,123 554,123 581,829
43 339,323 614,319 614,319 645,035
44 358,662 680,669 680,669 714,702
45 378,968 753,768 753,768 791,456
46 400,290 834,262 834,262 875,975
</TABLE>
A-2
<PAGE> 86
<TABLE>
<CAPTION>
0% Hypothetical 6% Hypothetical 12% Hypothetical
Gross Investment Return Gross Investment Return Gross Investment Return
----------------------- ----------------------- -----------------------
End Of Accumulated Policy Cash Death Policy Cash Death Policy Cash Death
Policy Premiums (2) Value Surrender Benefit Value Surrender Benefit Value Surrender Benefit
Year (1) Value (3) Value (3) Value (3)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
47 422,677 922,854 922,854 968,996
48 446,184 1,020,304 1,020,304 1,071,319
49 470,866 1,127,437 1,127,437 1,183,809
50 496,783 1,245,127 1,245,127 1,307,383
51 523,995 1,374,310 1,374,310 1,443,026
52 552,568 1,516,032 1,516,032 1,591,833
53 582,569 1,671,381 1,671,381 1,754,950
54 614,071 1,841,520 1,841,520 1,933,596
55 647,147 2,027,698 2,027,698 2,129,083
56 681,877 2,231,266 2,231,266 2,342,829
57 718,344 2,457,329 2,457,329 2,555,622
58 756,634 2,709,109 2,709,109 2,790,383
59 796,839 2,990,416 2,990,416 3,050,224
60 839,054 3,305,765 3,305,765 3,338,822
61 883,380 3,660,531 3,660,531 3,660,531
62 929,922 4,053,131 4,053,131 4,053,131
63 978,791 4,487,601 4,487,601 4,487,601
64 1,030,104 4,968,405 4,968,405 4,968,405
65 1,083,982 5,500,485 5,500,485 5,500,485
</TABLE>
(1) All values shown are as of the end of the policy year indicated, have been
rounded to the nearest dollar, and assume that (a) premiums paid after the
initial premium are received on the policy anniversary, (b) no policy loan
has been made, (c) no partial withdrawal of the Cash Surrender Value has
been made and (d) no premiums have been allocated to the Fixed Account.
(2) Assumes net interest of 5% compounded annually.
(3) Provided the No Lapse Guarantee Cumulative Premium Test has been and
continues to be met, the No Lapse Guarantee will keep the Policy in force
until the end of the first 10 Policy Years. Provided the Death Benefit
Guarantee Cumulative Premium Test has been selected and continues to be
met, the Death Benefit Guarantee will keep the Policy in force on all
policies until age 100.
(4) In the absence of additional premium payments, the Policy will lapse.
THE POLICY VALUE, CASH SURRENDER VALUE AND THE DEATH BENEFIT WILL DIFFER IF
PREMIUMS ARE PAID IN DIFFERENT AMOUNTS OR FREQUENCIES. IT IS EMPHASIZED THAT THE
HYPOTHETICAL INVESTMENT RETURNS ARE ILLUSTRATIVE ONLY, AND SHOULD NOT BE DEEMED
A REPRESENTATION OF PAST OR FUTURE RESULTS. ACTUAL INVESTMENT RETURNS MAY BE
MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING
THE INVESTMENT ALLOCATION MADE BY THE POLICYOWNER, AND THE INVESTMENT RETURNS
FOR THE FUNDS OF MANUFACTURERS INVESTMENT TRUST. THE POLICY VALUE, CASH
SURRENDER VALUE AND DEATH BENEFIT FOR A POLICY WOULD BE DIFFERENT FROM THOSE
SHOWN IF ACTUAL RATES OF INVESTMENT RETURN AVERAGED THE RATE SHOWN ABOVE OVER A
PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL
POLICY YEARS. NO REPRESENTATIONS CAN BE MADE THAT THESE HYPOTHETICAL RATES OF
RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
A-3
<PAGE> 87
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
MALE NON-SMOKER ISSUE AGE 35 (STANDARD)
$500,000 FACE AMOUNT DEATH BENEFIT OPTION 1
$2,260 ANNUAL PLANNED PREMIUM
ASSUMING MAXIMUM CHARGES
<TABLE>
<CAPTION>
0% Hypothetical 6% Hypothetical 12% Hypothetical
Gross Investment Return Gross Investment Return Gross Investment Return
----------------------- ----------------------- -----------------------
End Of Accumulated Policy Cash Death Policy Cash Death Policy Cash Death
Policy Premiums (2) Value Surrender Benefit Value Surrender Benefit Value Surrender Benefit
Year (1) Value (3) Value (3) Value (3)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 2,373 944 0 500,000 1,032 0 500,000 1,121 0 500,000
2 4,865 1,954 0 500,000 2,193 0 500,000 2,444 0 500,000
3 7,481 2,896 0 500,000 3,350 0 500,000 3,846 0 500,000
4 10,228 3,765 171 500,000 4,497 903 500,000 5,330 1,736 500,000
5 13,112 4,552 1,549 500,000 5,624 2,621 500,000 6,895 3,892 500,000
6 16,141 5,254 2,841 500,000 6,726 4,313 500,000 8,544 6,131 500,000
7 19,321 5,858 4,036 500,000 7,786 5,964 500,000 10,271 8,450 500,000
8 22,660 6,365 5,134 500,000 8,803 7,573 500,000 12,085 10,855 500,000
9 26,166 6,763 6,123 500,000 9,761 9,121 500,000 13,981 13,341 500,000
10 29,847 7,053 7,004 500,000 10,658 10,608 500,000 15,967 15,918 500,000
11 33,713 7,326 7,326 500,000 11,604 11,604 500,000 18,205 18,205 500,000
12 37,771 7,464 7,464 500,000 12,464 12,464 500,000 20,553 20,553 500,000
13 42,033 7,460 7,460 500,000 13,224 13,224 500,000 23,015 23,015 500,000
14 46,508 7,306 7,306 500,000 13,868 13,868 500,000 25,595 25,595 500,000
15 51,206 6,981 6,981 500,000 14,372 14,372 500,000 28,287 28,287 500,000
16 56,139 6,477 6,477 500,000 14,718 14,718 500,000 31,097 31,097 500,000
17 61,319 5,762 5,762 500,000 14,865 14,865 500,000 34,004 34,004 500,000
18 66,758 4,802 4,802 500,000 14,765 14,765 500,000 36,989 36,989 500,000
19 72,469 3,567 3,567 500,000 14,377 14,377 500,000 40,034 40,034 500,000
20 78,466 2,013 2,013 500,000 13,640 13,640 500,000 43,107 43,107 500,000
21 84,762 106 106 500,000 12,499 12,499 500,000 46,180 46,180 500,000
22 91,373 0 (4) 0 (4) 0 (4) 10,888 10,888 500,000 49,221 49,221 500,000
23 98,315 8,755 8,755 500,000 52,207 52,207 500,000
24 105,603 6,029 6,029 500,000 55,104 55,104 500,000
25 113,256 2,610 2,610 500,000 57,851 57,851 500,000
26 121,292 0 (4) 0 (4) 0 (4) 60,380 60,380 500,000
27 129,730 62,611 62,611 500,000
28 138,589 64,429 64,429 500,000
29 147,892 65,693 65,693 500,000
30 157,659 66,235 66,235 500,000
31 167,915 65,873 65,873 500,000
32 178,684 64,414 64,414 500,000
33 189,991 61,614 61,614 500,000
34 201,864 57,194 57,194 500,000
35 214,330 50,787 50,787 500,000
36 227,420 41,893 41,893 500,000
37 241,164 29,572 29,572 500,000
38 255,595 13,517 13,517 500,000
39 270,747 0 (4) 0 (4) 0 (4)
</TABLE>
(1) All values shown are as of the end of the policy year indicated, have been
rounded to the nearest dollar, and assume that (a) premiums paid after the
initial premium are received on the policy anniversary, (b) no policy loan
has been made, (c) no partial withdrawal of the Cash Surrender Value has
been made and (d) no premiums have been allocated to the Fixed Account.
(2) Assumes net interest of 5% compounded annually.
A-4
<PAGE> 88
(3) Provided the No Lapse Guarantee Cumulative Premium Test has been and
continues to be met, the No Lapse Guarantee will keep the Policy in force
until the end of the first 10 Policy Years. Provided the Death Benefit
Guarantee Cumulative Premium Test has been selected and continues to be
met, the Death Benefit Guarantee will keep the Policy in force on all
policies until age 100.
(4) In the absence of additional premium payments, the Policy will lapse.
THE POLICY VALUE, CASH SURRENDER VALUE AND THE DEATH BENEFIT WILL DIFFER IF
PREMIUMS ARE PAID IN DIFFERENT AMOUNTS OR FREQUENCIES. IT IS EMPHASIZED THAT THE
HYPOTHETICAL INVESTMENT RETURNS ARE ILLUSTRATIVE ONLY, AND SHOULD NOT BE DEEMED
A REPRESENTATION OF PAST OR FUTURE RESULTS. ACTUAL INVESTMENT RETURNS MAY BE
MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING
THE INVESTMENT ALLOCATION MADE BY THE POLICYOWNER, AND THE INVESTMENT RETURNS
FOR THE FUNDS OF MANUFACTURERS INVESTMENT TRUST. THE POLICY VALUE, CASH
SURRENDER VALUE AND DEATH BENEFIT FOR A POLICY WOULD BE DIFFERENT FROM THOSE
SHOWN IF ACTUAL RATES OF INVESTMENT RETURN AVERAGED THE RATE SHOWN ABOVE OVER A
PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL
POLICY YEARS. NO REPRESENTATIONS CAN BE MADE THAT THESE HYPOTHETICAL RATES OF
RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
A-5
<PAGE> 89
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
MALE NON-SMOKER ISSUE AGE 35 (STANDARD)
$500,000 FACE AMOUNT DEATH BENEFIT OPTION 2
$3,070 ANNUAL PLANNED PREMIUM
ASSUMING CURRENT CHARGES
<TABLE>
<CAPTION>
0% Hypothetical 6% Hypothetical 12% Hypothetical
Gross Investment Return Gross Investment Return Gross Investment Return
----------------------- ----------------------- -----------------------
End Of Accumulated Policy Cash Death Policy Cash Death Policy Cash Death
Policy Premiums (2) Value Surrender Benefit Value Surrender Benefit Value Surrender Benefit
Year (1) Value (3) Value (3) Value (3)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 3,224 1,685 0 501,685 1,818 0 501,818 1,951 0 501,951
2 6,608 3,497 0 503,497 3,872 0 503,872 4,265 0 504,265
3 10,162 5,219 575 505,219 5,952 1,308 505,952 6,749 2,105 506,749
4 13,894 6,882 2,894 506,882 8,089 4,100 508,089 9,453 5,464 509,453
5 17,812 8,517 5,184 508,517 10,315 6,983 510,315 12,430 9,097 512,430
6 21,926 10,065 7,388 510,065 12,575 9,897 512,575 15,645 12,968 515,645
7 26,246 11,522 9,500 511,522 14,862 12,840 514,862 19,115 17,094 519,115
8 30,782 12,918 11,553 512,918 17,208 15,842 517,208 22,899 21,533 522,899
9 35,544 14,291 13,581 514,291 19,654 18,944 519,654 27,066 26,355 527,066
10 40,545 15,635 15,581 515,635 22,196 22,142 522,196 31,647 31,592 531,647
11 45,796 17,041 17,041 517,041 24,972 24,972 524,972 36,880 36,880 536,880
12 51,309 18,347 18,347 518,347 27,794 27,794 527,794 42,583 42,583 542,583
13 57,098 19,543 19,543 519,543 30,652 30,652 530,652 48,793 48,793 548,793
14 63,176 20,623 20,623 520,623 33,540 33,540 533,540 55,558 55,558 555,558
15 69,558 21,595 21,595 521,595 36,467 36,467 536,467 62,943 62,943 562,943
16 76,260 22,472 22,472 522,472 39,447 39,447 539,447 71,027 71,027 571,027
17 83,296 23,267 23,267 523,267 42,494 42,494 542,494 79,898 79,898 579,898
18 90,685 23,982 23,982 523,982 45,612 45,612 545,612 89,639 89,639 589,639
19 98,442 24,640 24,640 524,640 48,828 48,828 548,828 100,367 100,367 600,367
20 106,588 25,255 25,255 525,255 52,160 52,160 552,160 112,202 112,202 612,202
21 115,141 25,649 25,649 525,649 55,430 55,430 555,430 125,072 125,072 625,072
22 124,122 25,848 25,848 525,848 58,657 58,657 558,657 139,112 139,112 639,112
23 133,551 25,843 25,843 525,843 61,829 61,829 561,829 154,434 154,434 654,434
24 143,452 25,600 25,600 525,600 64,906 64,906 564,906 171,138 171,138 671,138
25 153,848 25,098 25,098 525,098 67,859 67,859 567,859 189,344 189,344 689,344
26 164,764 24,305 24,305 524,305 70,644 70,644 570,644 209,176 209,176 709,176
27 176,226 23,177 23,177 523,177 73,206 73,206 573,206 230,757 230,757 730,757
28 188,261 21,682 21,682 521,682 75,497 75,497 575,497 254,234 254,234 754,234
29 200,897 19,794 19,794 519,794 77,473 77,473 577,473 279,779 279,779 779,779
30 214,166 17,472 17,472 517,472 79,070 79,070 579,070 307,562 307,562 807,562
31 228,097 14,702 14,702 514,702 80,252 80,252 580,252 337,801 337,801 837,801
32 242,726 11,430 11,430 511,430 80,938 80,938 580,938 370,697 370,697 870,697
33 258,086 7,603 7,603 507,603 81,043 81,043 581,043 406,468 406,468 906,468
34 274,213 3,167 3,167 503,167 80,478 80,478 580,478 445,359 445,359 945,359
35 291,148 0 (4) 0 (4) 0 (4) 79,144 79,144 579,144 487,633 487,633 987,633
36 308,928 76,926 76,926 576,926 533,567 533,567 1,033,567
37 327,598 73,632 73,632 573,632 583,402 583,402 1,083,402
38 347,202 69,128 69,128 569,128 637,464 637,464 1,137,464
39 367,785 63,258 63,258 563,258 696,102 696,102 1,196,102
40 389,398 55,845 55,845 555,845 759,692 759,692 1,259,692
41 412,091 46,506 46,506 546,506 828,439 828,439 1,328,439
42 435,920 34,975 34,975 534,975 902,716 902,716 1,402,716
43 460,939 20,936 20,936 520,936 982,891 982,891 1,482,891
44 487,209 4,054 4,054 504,054 1,069,372 1,069,372 1,569,372
45 514,793 0 (4) 0 (4) 0 (4) 1,162,592 1,162,592 1,662,592
46 543,757 1,263,022 1,263,022 1,763,022
</TABLE>
A-6
<PAGE> 90
<TABLE>
<CAPTION>
0% Hypothetical 6% Hypothetical 12% Hypothetical
Gross Investment Return Gross Investment Return Gross Investment Return
----------------------- ----------------------- -----------------------
End Of Accumulated Policy Cash Death Policy Cash Death Policy Cash Death
Policy Premiums (2) Value Surrender Benefit Value Surrender Benefit Value Surrender Benefit
Year (1) Value (3) Value (3) Value (3)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
47 574,168 1,371,159 1,371,159 1,871,159
48 606,100 1,487,592 1,487,592 1,987,592
49 639,628 1,612,947 1,612,947 2,112,947
50 674,833 1,747,781 1,747,781 2,247,781
51 711,798 1,892,690 1,892,690 2,392,690
52 750,612 2,048,641 2,048,641 2,548,641
53 791,366 2,216,437 2,216,437 2,716,437
54 834,158 2,396,956 2,396,956 2,896,956
55 879,089 2,591,246 2,591,246 3,091,246
56 926,267 2,800,542 2,800,542 3,300,542
57 975,804 3,026,853 3,026,853 3,526,853
58 1,027,818 3,271,863 3,271,863 3,771,863
59 1,082,432 3,537,433 3,537,433 4,037,433
60 1,139,777 3,825,623 3,825,623 4,325,623
61 1,199,989 4,138,724 4,138,724 4,638,724
62 1,263,212 4,479,096 4,479,096 4,979,096
63 1,329,597 4,849,534 4,849,534 5,349,534
64 1,399,300 5,253,144 5,253,144 5,753,144
65 1,472,488 5,693,361 5,693,361 6,193,361
</TABLE>
(1) All values shown are as of the end of the policy year indicated, have been
rounded to the nearest dollar, and assume that (a) premiums paid after the
initial premium are received on the policy anniversary, (b) no policy loan
has been made, (c) no partial withdrawal of the Cash Surrender Value has
been made and (d) no premiums have been allocated to the Fixed Account.
(2) Assumes net interest of 5% compounded annually.
(3) Provided the No Lapse Guarantee Cumulative Premium Test has been and
continues to be met, the No Lapse Guarantee will keep the Policy in force
until the end of the first 10 Policy Years. Provided the Death Benefit
Guarantee Cumulative Premium Test has been selected and continues to be
met, the Death Benefit Guarantee will keep the Policy in force on all
policies until age 100.
(4) In the absence of additional premium payments, the Policy will lapse.
THE POLICY VALUE, CASH SURRENDER VALUE AND THE DEATH BENEFIT WILL DIFFER IF
PREMIUMS ARE PAID IN DIFFERENT AMOUNTS OR FREQUENCIES. IT IS EMPHASIZED THAT THE
HYPOTHETICAL INVESTMENT RETURNS ARE ILLUSTRATIVE ONLY, AND SHOULD NOT BE DEEMED
A REPRESENTATION OF PAST OR FUTURE RESULTS. ACTUAL INVESTMENT RETURNS MAY BE
MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING
THE INVESTMENT ALLOCATION MADE BY THE POLICYOWNER, AND THE INVESTMENT RETURNS
FOR THE FUNDS OF MANUFACTURERS INVESTMENT TRUST. THE POLICY VALUE, CASH
SURRENDER VALUE AND DEATH BENEFIT FOR A POLICY WOULD BE DIFFERENT FROM THOSE
SHOWN IF ACTUAL RATES OF INVESTMENT RETURN AVERAGED THE RATE SHOWN ABOVE OVER A
PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL
POLICY YEARS. NO REPRESENTATIONS CAN BE MADE THAT THESE HYPOTHETICAL RATES OF
RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
A-7
<PAGE> 91
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
MALE NON-SMOKER ISSUE AGE 35 (STANDARD)
$500,000 FACE AMOUNT DEATH BENEFIT OPTION 2
$3,070 ANNUAL PLANNED PREMIUM
ASSUMING MAXIMUM CHARGES
<TABLE>
<CAPTION>
0% Hypothetical 6% Hypothetical 12% Hypothetical
Gross Investment Return Gross Investment Return Gross Investment Return
----------------------- ----------------------- -----------------------
End Of Accumulated Policy Cash Death Policy Cash Death Policy Cash Death
Policy Premiums (2) Value Surrender Benefit Value Surrender Benefit Value Surrender Benefit
Year (1) Value (3) Value (3) Value (3)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 3,224 1,685 0 501,685 1,818 0 501,818 1,951 0 501,951
2 6,608 3,423 0 503,423 3,796 0 503,796 4,186 0 504,186
3 10,162 5,077 433 505,077 5,801 1,158 505,801 6,589 1,945 506,589
4 13,894 6,644 2,656 506,644 7,830 3,842 507,830 9,172 5,183 509,172
5 17,812 8,115 4,783 508,115 9,873 6,540 509,873 11,942 8,609 511,942
6 21,926 9,488 6,811 509,488 11,925 9,248 511,925 14,913 12,236 514,913
7 26,246 10,748 8,726 510,748 13,971 11,950 513,971 18,091 16,069 518,091
8 30,782 11,898 10,532 511,898 16,013 14,647 516,013 21,495 20,129 521,495
9 35,544 12,925 12,214 512,925 18,033 17,322 518,033 25,132 24,422 525,132
10 40,545 13,830 13,776 513,830 20,031 19,976 520,031 29,028 28,973 529,028
11 45,796 14,767 14,767 514,767 22,198 22,198 522,198 33,459 33,459 533,459
12 51,309 15,559 15,559 515,559 24,329 24,329 524,329 38,222 38,222 538,222
13 57,098 16,197 16,197 516,197 26,413 26,413 526,413 43,339 43,339 543,339
14 63,176 16,675 16,675 516,675 28,438 28,438 528,438 48,839 48,839 548,839
15 69,558 16,973 16,973 516,973 30,379 30,379 530,379 54,740 54,740 554,740
16 76,260 17,084 17,084 517,084 32,224 32,224 532,224 61,077 61,077 561,077
17 83,296 16,977 16,977 516,977 33,930 33,930 533,930 67,857 67,857 567,857
18 90,685 16,618 16,618 516,618 35,457 35,457 535,457 75,091 75,091 575,091
19 98,442 15,980 15,980 515,980 36,765 36,765 536,765 82,797 82,797 582,797
20 106,588 15,024 15,024 515,024 37,797 37,797 537,797 90,977 90,977 590,977
21 115,141 13,718 13,718 513,718 38,505 38,505 538,505 99,645 99,645 599,645
22 124,122 12,026 12,026 512,026 38,832 38,832 538,832 108,810 108,810 608,810
23 133,551 9,928 9,928 509,928 38,736 38,736 538,736 118,499 118,499 618,499
24 143,452 7,395 7,395 507,395 38,159 38,159 538,159 128,733 128,733 628,733
25 153,848 4,372 4,372 504,372 37,018 37,018 537,018 139,504 139,504 639,504
26 164,764 805 805 500,805 35,226 35,226 535,226 150,807 150,807 650,807
27 176,226 0 (4) 0 (4) 0 (4) 32,684 32,684 532,684 162,632 162,632 662,632
28 188,261 29,264 29,264 529,264 174,937 174,937 674,937
29 200,897 24,819 24,819 524,819 187,664 187,664 687,664
30 214,166 19,187 19,187 519,187 200,742 200,742 700,742
31 228,097 12,210 12,210 512,210 214,104 214,104 714,104
32 242,726 3,742 3,742 503,742 227,694 227,694 727,694
33 258,086 0 (4) 0 (4) 0 (4) 241,438 241,438 741,438
34 274,213 255,257 255,257 755,257
35 291,148 269,032 269,032 769,032
36 308,928 282,565 282,565 782,565
37 327,598 295,285 295,285 795,285
38 347,202 307,440 307,440 807,440
39 367,785 318,319 318,319 818,319
40 389,398 327,472 327,472 827,472
41 412,091 334,503 334,503 834,503
42 435,920 338,987 338,987 838,987
43 460,939 340,482 340,482 840,482
44 487,209 338,538 338,538 838,538
45 514,793 332,568 332,568 832,568
46 543,757 321,772 321,772 821,772
</TABLE>
A-8
<PAGE> 92
<TABLE>
<CAPTION>
0% Hypothetical 6% Hypothetical 12% Hypothetical
Gross Investment Return Gross Investment Return Gross Investment Return
----------------------- ----------------------- -----------------------
End Of Accumulated Policy Cash Death Policy Cash Death Policy Cash Death
Policy Premiums (2) Value Surrender Benefit Value Surrender Benefit Value Surrender Benefit
Year (1) Value (3) Value (3) Value (3)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
47 574,168 305,163 305,163 805,163
48 606,100 281,515 281,515 781,515
49 639,628 249,407 249,407 749,407
50 674,833 207,384 207,384 707,384
51 711,798 153,984 153,984 653,984
52 750,612 87,725 87,725 587,725
53 791,366 7,028 7,028 507,028
54 834,158 0 (4) 0 (4) 0 (4)
</TABLE>
(1) All values shown are as of the end of the policy year indicated, have been
rounded to the nearest dollar, and assume that (a) premiums paid after the
initial premium are received on the policy anniversary, (b) no policy loan
has been made, (c) no partial withdrawal of the Cash Surrender Value has
been made and (d) no premiums have been allocated to the Fixed Account.
(2) Assumes net interest of 5% compounded annually.
(3) Provided the No Lapse Guarantee Cumulative Premium Test has been and
continues to be met, the No Lapse Guarantee will keep the Policy in force
until the end of the first 10 Policy Years. Provided the Death Benefit
Guarantee Cumulative Premium Test has been selected and continues to be
met, the Death Benefit Guarantee will keep the Policy in force on all
policies until age 100.
(4) In the absence of additional premium payments, the Policy will lapse.
THE POLICY VALUE, CASH SURRENDER VALUE AND THE DEATH BENEFIT WILL DIFFER IF
PREMIUMS ARE PAID IN DIFFERENT AMOUNTS OR FREQUENCIES. IT IS EMPHASIZED THAT THE
HYPOTHETICAL INVESTMENT RETURNS ARE ILLUSTRATIVE ONLY, AND SHOULD NOT BE DEEMED
A REPRESENTATION OF PAST OR FUTURE RESULTS. ACTUAL INVESTMENT RETURNS MAY BE
MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING
THE INVESTMENT ALLOCATION MADE BY THE POLICYOWNER, AND THE INVESTMENT RETURNS
FOR THE FUNDS OF MANUFACTURERS INVESTMENT TRUST. THE POLICY VALUE, CASH
SURRENDER VALUE AND DEATH BENEFIT FOR A POLICY WOULD BE DIFFERENT FROM THOSE
SHOWN IF ACTUAL RATES OF INVESTMENT RETURN AVERAGED THE RATE SHOWN ABOVE OVER A
PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL
POLICY YEARS. NO REPRESENTATIONS CAN BE MADE THAT THESE HYPOTHETICAL RATES OF
RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
A-9
<PAGE> 93
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
MALE NON-SMOKER ISSUE AGE 55 (STANDARD)
$500,000 FACE AMOUNT DEATH BENEFIT OPTION 1
$7,940 ANNUAL PLANNED PREMIUM
ASSUMING CURRENT CHARGES
<TABLE>
<CAPTION>
0% Hypothetical 6% Hypothetical 12% Hypothetical
Gross Investment Return Gross Investment Return Gross Investment Return
----------------------- ----------------------- -----------------------
End Of Accumulated Policy Cash Death Policy Cash Death Policy Cash Death
Policy Premiums (2) Value Surrender Benefit Value Surrender Benefit Value Surrender Benefit
Year (1) Value (3) Value (3) Value (3)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 8,337 3,773 0 500,000 4,099 0 500,000 4,426 0 500,000
2 17,091 7,276 0 500,000 8,161 0 500,000 9,088 639 500,000
3 26,282 10,711 3,308 500,000 12,389 4,986 500,000 14,222 6,819 500,000
4 35,934 13,900 7,541 500,000 16,609 10,251 500,000 19,692 13,334 500,000
5 46,067 17,059 11,746 500,000 21,042 15,728 500,000 25,763 20,450 500,000
6 56,708 19,894 15,626 500,000 25,394 21,127 500,000 32,192 27,924 500,000
7 67,880 22,421 19,198 500,000 29,681 26,458 500,000 39,039 35,816 500,000
8 79,611 24,742 22,565 500,000 34,000 31,822 500,000 46,457 44,280 500,000
9 91,928 26,951 25,819 500,000 38,447 37,315 500,000 54,607 53,474 500,000
10 104,862 29,087 29,000 500,000 43,071 42,984 500,000 63,612 63,525 500,000
11 118,442 30,770 30,770 500,000 47,598 47,598 500,000 73,449 73,449 500,000
12 132,701 31,945 31,945 500,000 51,893 51,893 500,000 83,978 83,978 500,000
13 147,673 32,505 32,505 500,000 55,843 55,843 500,000 95,203 95,203 500,000
14 163,394 32,422 32,422 500,000 59,409 59,409 500,000 107,217 107,217 500,000
15 179,900 31,643 31,643 500,000 62,528 62,528 500,000 120,108 120,108 500,000
16 197,233 30,083 30,083 500,000 65,106 65,106 500,000 133,961 133,961 500,000
17 215,431 27,717 27,717 500,000 67,100 67,100 500,000 148,934 148,934 500,000
18 234,540 24,527 24,527 500,000 68,476 68,476 500,000 165,228 165,228 500,000
19 254,604 20,497 20,497 500,000 69,196 69,196 500,000 183,074 183,074 500,000
20 275,671 15,606 15,606 500,000 69,218 69,218 500,000 202,747 202,747 500,000
21 297,791 8,816 8,816 500,000 67,571 67,571 500,000 223,937 223,937 500,000
22 321,018 214 214 500,000 64,264 64,264 500,000 247,122 247,122 500,000
23 345,406 0 (4) 0 (4) 0 (4) 58,947 58,947 500,000 272,653 272,653 500,000
24 371,013 51,211 51,211 500,000 300,992 300,992 500,000
25 397,901 40,548 40,548 500,000 332,740 332,740 500,000
26 426,133 26,343 26,343 500,000 368,684 368,684 500,000
27 455,777 7,818 7,818 500,000 409,860 409,860 500,000
28 486,902 0 (4) 0 (4) 0 (4) 457,642 457,642 500,000
29 519,584 512,837 512,837 538,479
30 553,901 573,613 573,613 602,294
31 589,933 640,352 640,352 672,370
32 627,766 713,598 713,598 749,278
33 667,492 793,919 793,919 833,615
34 709,203 881,921 881,921 926,017
35 753,000 978,256 978,256 1,027,169
36 798,987 1,083,627 1,083,627 1,137,809
37 847,274 1,200,576 1,200,576 1,248,599
38 897,974 1,330,751 1,330,751 1,370,673
39 951,210 1,476,098 1,476,098 1,505,620
40 1,007,108 1,638,928 1,638,928 1,655,318
41 1,065,800 1,821,993 1,821,993 1,821,993
42 1,127,427 2,024,581 2,024,581 2,024,581
43 1,192,135 2,248,774 2,248,774 2,248,774
44 1,260,079 2,496,876 2,496,876 2,496,876
45 1,331,420 2,771,438 2,771,438 2,771,438
</TABLE>
A-10
<PAGE> 94
(1) All values shown are as of the end of the policy year indicated, have been
rounded to the nearest dollar, and assume that (a) premiums paid after the
initial premium are received on the policy anniversary, (b) no policy loan
has been made, (c) no partial withdrawal of the Cash Surrender Value has
been made and (d) no premiums have been allocated to the Fixed Account.
(2) Assumes net interest of 5% compounded annually.
(3) Provided the No Lapse Guarantee Cumulative Premium Test has been and
continues to be met, the No Lapse Guarantee will keep the Policy in force
until the end of the first 10 Policy Years. Provided the Death Benefit
Guarantee Cumulative Premium Test has been selected and continues to be
met, the Death Benefit Guarantee will keep the Policy in force on all
policies until age 100.
(4) In the absence of additional premium payments, the Policy will lapse.
THE POLICY VALUE, CASH SURRENDER VALUE AND THE DEATH BENEFIT WILL DIFFER IF
PREMIUMS ARE PAID IN DIFFERENT AMOUNTS OR FREQUENCIES. IT IS EMPHASIZED THAT THE
HYPOTHETICAL INVESTMENT RETURNS ARE ILLUSTRATIVE ONLY, AND SHOULD NOT BE DEEMED
A REPRESENTATION OF PAST OR FUTURE RESULTS. ACTUAL INVESTMENT RETURNS MAY BE
MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING
THE INVESTMENT ALLOCATION MADE BY THE POLICYOWNER, AND THE INVESTMENT RETURNS
FOR THE FUNDS OF MANUFACTURERS INVESTMENT TRUST. THE POLICY VALUE, CASH
SURRENDER VALUE AND DEATH BENEFIT FOR A POLICY WOULD BE DIFFERENT FROM THOSE
SHOWN IFACTUAL RATES OF INVESTMENT RETURN AVERAGED THE RATE SHOWN ABOVE OVER A
PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL
POLICY YEARS. NO REPRESENTATIONS CAN BE MADE THAT THESE HYPOTHETICAL RATES OF
RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
A-11
<PAGE> 95
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
MALE NON-SMOKER ISSUE AGE 55 (STANDARD)
$500,000 FACE AMOUNT DEATH BENEFIT OPTION 1
$7,940 ANNUAL PLANNED PREMIUM
ASSUMING MAXIMUM CHARGES
<TABLE>
<CAPTION>
0% Hypothetical 6% Hypothetical 12% Hypothetical
Gross Investment Return Gross Investment Return Gross Investment Return
----------------------- ----------------------- -----------------------
End Of Accumulated Policy Cash Death Policy Cash Death Policy Cash Death
Policy Premiums (2) Value Surrender Benefit Value Surrender Benefit Value Surrender Benefit
Year (1) Value (3) Value (3) Value (3)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 8,337 3,773 0 500,000 4,099 0 500,000 4,426 0 500,000
2 17,091 6,632 0 500,000 7,497 0 500,000 8,405 0 500,000
3 26,282 9,051 1,647 500,000 10,639 3,236 500,000 12,382 4,978 500,000
4 35,934 11,001 4,643 500,000 13,483 7,125 500,000 16,329 9,971 500,000
5 46,067 12,434 7,120 500,000 15,960 10,646 500,000 20,190 14,877 500,000
6 56,708 13,295 9,027 500,000 17,994 13,726 500,000 23,903 19,635 500,000
7 67,880 13,528 10,305 500,000 19,503 16,281 500,000 27,396 24,173 500,000
8 79,611 13,048 10,870 500,000 20,373 18,195 500,000 30,563 28,385 500,000
9 91,928 11,753 10,621 500,000 20,466 19,334 500,000 33,271 32,139 500,000
10 104,862 9,532 9,445 500,000 19,627 19,540 500,000 35,368 35,281 500,000
11 118,442 6,578 6,578 500,000 18,071 18,071 500,000 37,173 37,173 500,000
12 132,701 2,478 2,478 500,000 15,280 15,280 500,000 38,103 38,103 500,000
13 147,673 0 (4) 0 (4) 0 (4) 11,055 11,055 500,000 37,953 37,953 500,000
14 163,394 5,178 5,178 500,000 36,486 36,486 500,000
15 179,900 0 (4) 0 (4) 0 (4) 33,393 33,393 500,000
16 197,233 28,237 28,237 500,000
17 215,431 20,159 20,159 500,000
18 234,540 8,971 8,971 500,000
19 254,604 0 (4) 0 (4) 0 (4)
</TABLE>
(1) All values shown are as of the end of the policy year indicated, have been
rounded to the nearest dollar, and assume that (a) premiums paid after the
initial premium are received on the policy anniversary, (b) no policy loan
has been made, (c) no partial withdrawal of the Cash Surrender Value has
been made and (d) no premiums have been allocated to the Fixed Account.
(2) Assumes net interest of 5% compounded annually.
(3) Provided the No Lapse Guarantee Cumulative Premium Test has been and
continues to be met, the No Lapse Guarantee will keep the Policy in force
until the end of the first 10 Policy Years. Provided the Death Benefit
Guarantee Cumulative Premium Test has been selected and continues to be
met, the Death Benefit Guarantee will keep the Policy in force on all
policies until age 100.
(4) In the absence of additional premium payments, the Policy will lapse.
THE POLICY VALUE, CASH SURRENDER VALUE AND THE DEATH BENEFIT WILL DIFFER IF
PREMIUMS ARE PAID IN DIFFERENT AMOUNTS OR FREQUENCIES. IT IS EMPHASIZED THAT THE
HYPOTHETICAL INVESTMENT RETURNS ARE ILLUSTRATIVE ONLY, AND SHOULD NOT BE DEEMED
A REPRESENTATION OF PAST OR FUTURE RESULTS. ACTUAL INVESTMENT RETURNS MAY BE
MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING
THE INVESTMENT ALLOCATION MADE BY THE POLICYOWNER, AND THE INVESTMENT RETURNS
FOR THE FUNDS OF MANUFACTURERS INVESTMENT TRUST. THE POLICY VALUE, CASH
SURRENDER VALUE AND DEATH BENEFIT FOR A POLICY WOULD BE DIFFERENT FROM THOSE
SHOWN IF ACTUAL RATES OF INVESTMENT RETURN AVERAGED THE RATE SHOWN ABOVE OVER A
PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL
POLICY YEARS. NO REPRESENTATIONS CAN BE MADE THAT THESE HYPOTHETICAL RATES OF
RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
A-12
<PAGE> 96
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
MALE NON-SMOKER ISSUE AGE 55 (STANDARD)
$500,000 FACE AMOUNT DEATH BENEFIT OPTION 2
$11,575 ANNUAL PLANNED PREMIUM
ASSUMING CURRENT CHARGES
<TABLE>
<CAPTION>
0% Hypothetical 6% Hypothetical 12% Hypothetical
Gross Investment Return Gross Investment Return Gross Investment Return
----------------------- ----------------------- -----------------------
End Of Accumulated Policy Cash Death Policy Cash Death Policy Cash Death
Policy Premiums (2) Value Surrender Benefit Value Surrender Benefit Value Surrender Benefit
Year (1) Value (3) Value (3) Value (3)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 12,154 7,076 0 507,076 7,599 0 507,599 8,125 0 508,125
2 24,915 13,796 2,996 513,796 15,275 4,475 515,275 16,820 6,020 516,820
3 38,315 20,366 10,903 520,366 23,236 13,773 523,236 26,356 16,892 526,356
4 52,384 26,607 18,480 526,607 31,307 23,180 531,307 36,622 28,495 536,622
5 67,157 32,742 25,951 532,742 39,718 32,926 539,718 47,927 41,136 547,927
6 82,669 38,466 33,010 538,466 48,164 42,709 548,164 60,047 54,592 560,047
7 98,956 43,796 39,677 543,796 56,661 52,541 556,661 73,077 68,957 573,077
8 116,057 48,841 46,058 548,841 65,313 62,529 565,313 87,216 84,433 587,216
9 134,014 53,700 52,253 553,700 74,225 72,778 574,225 102,677 101,230 602,677
10 152,869 58,418 58,306 558,418 83,452 83,341 583,452 119,639 119,528 619,639
11 172,666 62,826 62,826 562,826 92,981 92,981 592,981 138,449 138,449 638,449
12 193,453 66,642 66,642 566,642 102,403 102,403 602,403 158,690 158,690 658,690
13 215,279 69,752 69,752 569,752 111,590 111,590 611,590 180,388 180,388 680,388
14 238,197 72,136 72,136 572,136 120,501 120,501 620,501 203,666 203,666 703,666
15 262,260 73,748 73,748 573,748 129,068 129,068 629,068 228,637 228,637 728,637
16 287,527 74,515 74,515 574,515 137,187 137,187 637,187 255,391 255,391 755,391
17 314,057 74,429 74,429 574,429 144,820 144,820 644,820 284,102 284,102 784,102
18 341,914 73,500 73,500 573,500 151,943 151,943 651,943 314,977 314,977 814,977
19 371,163 71,739 71,739 571,739 158,532 158,532 658,532 348,246 348,246 848,246
20 401,875 69,160 69,160 569,160 164,569 164,569 664,569 384,172 384,172 884,172
21 434,123 64,746 64,746 564,746 168,965 168,965 668,965 421,945 421,945 921,945
22 467,983 58,691 58,691 558,691 171,822 171,822 671,822 461,944 461,944 961,944
23 503,536 50,807 50,807 550,807 172,851 172,851 672,851 504,186 504,186 1,004,186
24 540,866 40,906 40,906 540,906 171,751 171,751 671,751 548,688 548,688 1,048,688
25 580,063 28,789 28,789 528,789 168,188 168,188 668,188 595,452 595,452 1,095,452
26 621,220 14,248 14,248 514,248 161,807 161,807 661,807 644,472 644,472 1,144,472
27 664,435 0 (4) 0 (4) 0 (4) 152,209 152,209 652,209 695,717 695,717 1,195,717
28 709,810 139,017 139,017 639,017 749,191 749,191 1,249,191
29 757,455 121,808 121,808 621,808 804,871 804,871 1,304,871
30 807,481 100,011 100,011 600,011 862,601 862,601 1,362,601
31 860,009 73,005 73,005 573,005 922,182 922,182 1,422,182
32 915,163 40,438 40,438 540,438 983,705 983,705 1,483,705
33 973,075 1,685 1,685 501,685 1,047,004 1,047,004 1,547,004
34 1,033,883 0 (4) 0 (4) 0 (4) 1,111,881 1,111,881 1,611,881
35 1,097,730 1,178,197 1,178,197 1,678,197
36 1,164,771 1,245,870 1,245,870 1,745,870
37 1,235,163 1,315,456 1,315,456 1,815,456
38 1,309,075 1,387,026 1,387,026 1,887,026
39 1,386,682 1,460,659 1,460,659 1,960,659
40 1,468,170 1,536,442 1,536,442 2,036,442
41 1,553,733 1,614,485 1,614,485 2,114,485
42 1,643,573 1,694,732 1,694,732 2,194,732
43 1,737,905 1,777,303 1,777,303 2,277,303
44 1,836,954 1,862,345 1,862,345 2,362,345
45 1,940,956 1,950,021 1,950,021 2,450,021
</TABLE>
A-13
<PAGE> 97
(1) All values shown are as of the end of the policy year indicated, have been
rounded to the nearest dollar, and assume that (a) premiums paid after the
initial premium are received on the policy anniversary, (b) no policy loan
has been made, (c) no partial withdrawal of the Cash Surrender Value has
been made and (d) no premiums have been allocated to the Fixed Account.
(2) Assumes net interest of 5% compounded annually.
(3) Provided the No Lapse Guarantee Cumulative Premium Test has been and
continues to be met, the No Lapse Guarantee will keep the Policy in force
until the end of the first 10 Policy Years. Provided the Death Benefit
Guarantee Cumulative Premium Test has been selected and continues to be
met, the Death Benefit Guarantee will keep the Policy in force on all
policies until age 100.
(4) In the absence of additional premium payments, the Policy will lapse.
THE POLICY VALUE, CASH SURRENDER VALUE AND THE DEATH BENEFIT WILL DIFFER IF
PREMIUMS ARE PAID IN DIFFERENT AMOUNTS OR FREQUENCIES. IT IS EMPHASIZED THAT THE
HYPOTHETICAL INVESTMENT RETURNS ARE ILLUSTRATIVE ONLY, AND SHOULD NOT BE DEEMED
A REPRESENTATION OF PAST OR FUTURE RESULTS. ACTUAL INVESTMENT RETURNS MAY BE
MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING
THE INVESTMENT ALLOCATION MADE BY THE POLICYOWNER, AND THE INVESTMENT RETURNS
FOR THE FUNDS OF MANUFACTURERS INVESTMENT TRUST. THE POLICY VALUE, CASH
SURRENDER VALUE AND DEATH BENEFIT FOR A POLICY WOULD BE DIFFERENT FROM THOSE
SHOWN IF ACTUAL RATES OF INVESTMENT RETURN AVERAGED THE RATE SHOWN ABOVE OVER A
PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL
POLICY YEARS. NO REPRESENTATIONS CAN BE MADE THAT THESE HYPOTHETICAL RATES OF
RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
A-14
<PAGE> 98
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
MALE NON-SMOKER ISSUE AGE 55 (STANDARD)
$500,000 FACE AMOUNT DEATH BENEFIT OPTION 2
$11,575 ANNUAL PLANNED PREMIUM
ASSUMING MAXIMUM CHARGES
<TABLE>
<CAPTION>
0% Hypothetical 6% Hypothetical 12% Hypothetical
Gross Investment Return Gross Investment Return Gross Investment Return
----------------------- ----------------------- -----------------------
End Of Accumulated Policy Cash Death Policy Cash Death Policy Cash Death
Policy Premiums (2) Value Surrender Benefit Value Surrender Benefit Value Surrender Benefit
Year (1) Value (3) Value (3) Value (3)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 12,154 7,076 0 507,076 7,599 0 507,599 8,125 0 508,125
2 24,915 13,143 2,343 513,143 14,601 3,802 514,601 16,125 5,326 516,125
3 38,315 18,682 9,219 518,682 21,458 11,995 521,458 24,482 15,019 524,482
4 52,384 23,669 15,542 523,669 28,131 20,003 528,131 33,195 25,068 533,195
5 67,157 28,052 21,261 528,052 34,548 27,757 534,548 42,238 35,446 542,238
6 82,669 31,784 26,329 531,784 40,639 35,184 540,639 51,579 46,124 551,579
7 98,956 34,810 30,691 534,810 46,324 42,205 546,324 61,182 57,063 561,182
8 116,057 37,054 34,271 537,054 51,494 48,710 551,494 70,978 68,195 570,978
9 134,014 38,425 36,978 538,425 56,019 54,572 556,019 80,876 79,429 580,876
10 152,869 38,829 38,718 538,829 59,761 59,649 559,761 90,771 90,659 590,771
11 172,666 38,748 38,748 538,748 63,292 63,292 563,292 101,477 101,477 601,477
12 193,453 37,543 37,543 537,543 65,831 65,831 565,831 112,130 112,130 612,130
13 215,279 35,135 35,135 535,135 67,232 67,232 567,232 122,622 122,622 622,622
14 238,197 31,448 31,448 531,448 67,349 67,349 567,349 132,843 132,843 632,843
15 262,260 26,378 26,378 526,378 66,001 66,001 566,001 142,637 142,637 642,637
16 287,527 19,760 19,760 519,760 62,927 62,927 562,927 151,763 151,763 651,763
17 314,057 11,100 11,100 511,100 57,520 57,520 557,520 159,607 159,607 659,607
18 341,914 737 737 500,737 49,991 49,991 549,991 166,365 166,365 666,365
19 371,163 0 (4) 0 (4) 0 (4) 39,611 39,611 539,611 171,273 171,273 671,273
20 401,875 25,938 25,938 525,938 173,817 173,817 673,817
21 434,123 8,612 8,612 508,612 173,535 173,535 673,535
22 467,983 0 (4) 0 (4) 0 (4) 169,925 169,925 669,925
23 503,536 162,463 162,463 662,463
24 540,866 150,608 150,608 650,608
25 580,063 133,669 133,669 633,669
26 621,220 110,735 110,735 610,735
27 664,435 80,693 80,693 580,693
28 709,810 42,179 42,179 542,179
29 757,455 0 (4) 0 (4) 0 (4)
</TABLE>
(1) All values shown are as of the end of the policy year indicated, have been
rounded to the nearest dollar, and assume that (a) premiums paid after the
initial premium are received on the policy anniversary, (b) no policy loan
has been made, (c) no partial withdrawal of the Cash Surrender Value has
been made and (d) no premiums have been allocated to the Fixed Account.
(2) Assumes net interest of 5% compounded annually.
(3) Provided the No Lapse Guarantee Cumulative Premium Test has been and
continues to be met, the No Lapse Guarantee will keep the Policy in force
until the end of the first 10 Policy Years. Provided the Death Benefit
Guarantee Cumulative Premium Test has been selected and continues to be
met, the Death Benefit Guarantee will keep the Policy in force on all
policies until age 100.
(4) In the absence of additional premium payments, the Policy will lapse.
THE POLICY VALUE, CASH SURRENDER VALUE AND THE DEATH BENEFIT WILL DIFFER IF
PREMIUMS ARE PAID IN DIFFERENT AMOUNTS OR FREQUENCIES. IT IS EMPHASIZED THAT THE
HYPOTHETICAL INVESTMENT RETURNS ARE ILLUSTRATIVE ONLY, AND SHOULD NOT BE DEEMED
A REPRESENTATION OF PAST OR FUTURE RESULTS. ACTUAL INVESTMENT RETURNS MAY BE
MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING
THE INVESTMENT ALLOCATION MADE BY THE POLICYOWNER, AND THE INVESTMENT RETURNS
A-15
<PAGE> 99
FOR THE FUNDS OF MANUFACTURERS INVESTMENT TRUST. THE POLICY VALUE, CASH
SURRENDER VALUE AND DEATH BENEFIT FOR A POLICY WOULD BE DIFFERENT FROM THOSE
SHOWN IF ACTUAL RATES OF INVESTMENT RETURN AVERAGED THE RATE SHOWN ABOVE OVER A
PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL
POLICY YEARS. NO REPRESENTATIONS CAN BE MADE THAT THESE HYPOTHETICAL RATES OF
RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
A-16
<PAGE> 100
PART II
OTHER INFORMATION
UNDERTAKINGS
REPRESENTATION OF INSURER PURSUANT TO SECTION 26 OF THE INVESTMENT COMPANY ACT
OF 1940, AS AMENDED.
The Manufacturers Life Insurance Company of New York (the "Company") hereby
represents that the fees and charges deducted under the contracts issued
pursuant to this registration statement, in the aggregate, are reasonable in
relation to the services rendered, the expenses expected to be incurred, and the
risks assumed by the Company.
CONTENTS OF REGISTRATION STATEMENT
This registration statement comprises the following papers and documents:
The facing sheet;
The Prospectus, consisting of 100 pages;
Representation pursuant to Section 26 of the Investment Company Act of
1940; The signatures; Written consents of the following persons:
Tracy Kane
Brian Koop
Ernst & Young LLP
The following exhibits are filed as part of this Registration Statement:
1. Copies of all exhibits required by paragraph A of the instructions as
to exhibits in Form N-8B-2 are set forth below under designations
based on such instructions:
A(1) Resolutions of Board of Directors of First North American
Life Assurance Company establishing FNAL Variable Life
Account I were previously filed in the Registrant's initial
registration statement on Form S-6 (File No. 333-33351) as
filed with the Commission on August 8, 1997.
A(2) Not applicable.
A(3)(a) Underwriting and Distribution Agreement between The
Manufacturers Life Insurance Company of New York (Depositor)
and Manufacturers Securities Services, LLC (Underwriter) is
incorporated by reference to Exhibit (b)(3)(a) to
post-effective amendment No. 7 to the Registration Statement
on Form N-4, file number 33-46217, filed February 25, 1998
on behalf of The Manufacturers Life Insurance Company of New
York Separate Account A.
A(3)(b) Selling Agreement between The Manufacturers Life Insurance
Company of New York, Manufactures Securities Services, LLC
(Underwriter), Selling Broker Dealers, and General Agent is
incorporated by reference to Exhibit (b)(3)(b) to
post-effective amendment No. 7 to the Registration Statement
on Form N-4, file number 33-46217, filed February 25, 1998
on behalf of The Manufacturers Life Insurance Company of New
York Separate Account A.
A(3)(c) Not applicable.
A(4) Not applicable.
A(5) Form of Flexible Premium Variable Life Insurance Policy was
previously filed as Exhibit A(5) to the initial registration
statement on Form S-6, file number 333-83023, filed July 16,
1999.
<PAGE> 101
A(6)(a)(i) Declaration of Intention and Charter of First North
American Life Assurance Company is incorporated by reference
to Exhibit (b)(6)(i) to post-effective amendment No. 7 to
the Registration Statement on Form N-4, file number
33-46217, filed February 25, 1998 on behalf of The
Manufacturers Life Insurance Company of New York Separate
Account A.
A(6)(a)(ii) Certificate of amendment of the Declaration of Intention
and Charter of First North American Life Assurance Company
is incorporated by reference to Exhibit (b)(6)(i) to
post-effective amendment No. 7 to the Registration Statement
on Form N-4, file number 33-46217, filed February 25, 1998
on behalf of The Manufacturers Life Insurance Company of New
York Separate Account A.
A(6)(a)(iii) Certificate of amendment of the Declaration of Intention
and Charter of The Manufacturers Life Insurance Company of
New York is incorporated by reference to Exhibit (b)(6)(i)
to post-effective amendment No. 7 to the Registration
Statement on Form N-4, file number 33-46217, filed February
25, 1998 on behalf of The Manufacturers Life Insurance
Company of New York Separate Account A.
A(6)(b) By-laws of The Manufacturers Life Insurance Company of New
York are incorporated by reference to Exhibit (b)(6)(i) to
post-effective amendment No. 7 to the Registration Statement
on Form N-4, file number 33-46217, filed February 25, 1998
on behalf of The Manufacturers Life Insurance Company of New
York Separate Account A.
A(7) Not applicable.
A(8)(a) Form of Reinsurance Agreement between The Manufacturers Life
Insurance Company of New York and The Manufacturers Life
Insurance Company (USA) is incorporated by reference to
Exhibit A(8)(a) to pre-effective amendment No. 1 to a
Registration Statement on Form S-6, file number 333-33351,
filed on March 16, 1998 on behalf of The Manufacturers Life
Insurance Company of New York Separate Account B.
A(8)(b) Administrative Services Agreement between The Manufacturers
Life Insurance Company and The Manufacturers Life Insurance
Company of New York is incorporated by reference to Exhibit
(b)(8)(a) to post-effective amendment No. 7 to the
Registration Statement on Form N-4, file number 33-46217,
filed February 25, 1998 on behalf of The Manufacturers Life
Insurance Company of New York Separate Account A.
A(8)(c) Investment Services Agreement between The Manufacturers Life
Insurance Company of New York and The Manufacturers Life
Insurance Company is incorporated by reference to Exhibit
A(8)(a) to pre-effective amendment No. 1 to a Registration
Statement on Form S-6, file number 333-33351, filed on March
16, 1998 on behalf of The Manufacturers Life Insurance
Company of New York Separate Account B.
A(9) Not applicable.
A(10)(a) Form of Application for Flexible Premium Variable Life
Insurance Policy is incorporated by reference to Exhibit
A(8)(a) to pre-effective amendment No. 1 to a Registration
Statement on Form S-6, file number 333-33351, filed on March
16, 1998 on behalf of The Manufacturers Life Insurance
Company of New York Separate Account B.
<PAGE> 102
2. Consents of the following are filed herein:
A Opinion and consent of Tracy A. Kane, Esq., Secretary and Counsel
of The Manufacturers Life Insurance Company of New York
B Consent of Brian Koop, Illustration Actuary of The Manufacturers
Life Insurance Company of New York
Consent of Ernst & Young LLP
3. No financial statements are omitted from the prospectus pursuant to
instruction 1(b) or (c) of Part I.
4. Not applicable.
5. Not applicable.
6. Memorandum Regarding Purchase, Transfer and Redemption Procedures for
the Policies is filed herein.
7.(i) Powers of Attorney are incorporated by reference to Exhibit A(7) to
pre-effective amendment No. 1 to a Registration Statement on Form S-6,
file number 333-33351, filed on March 17, 1998 on behalf of The
Manufacturers Life Insurance Company of New York Separate Account B.
7.(ii) Power of Attorney, James O'Malley and Thomas Borshoff - previously
filed as Exhibit (b)(14)(b) to post-effective amendment no. 6 to
Registrant's Registration Statement on Form N-4 File, No. 33-79112,
filed March 2, 1999.
7.(iii) Power of Attorney, James D. Gallagher and James R. Boyle are filed
herein.
<PAGE> 103
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 the registrant,
THE MANUFACTURERS LIFE INSURANCE COMPANY OF NEW YORK SEPARATE ACCOUNT B, and the
depositor, THE MANUFACTURERS LIFE INSURANCE COMPANY OF NEW YORK, have duly
caused this amended registration statement to be signed on their behalf by the
undersigned thereunto duly authorized, in the city of Boston, and Commonwealth
of Massachusetts, on the 29th day of October, 1999.
THE MANUFACTURERS LIFE INSURANCE COMPANY
OF NEW YORK SEPARATE ACCOUNT B
(Registrant)
By: THE MANUFACTURERS LIFE INSURANCE
COMPANY OF NEW YORK
(Depositor)
By:/s/ JAMES D. GALLAGHER
-------------------------------
James D. Gallagher
President
Attest
/s/ TRACY A. KANE
- -------------------------------
Tracy A. Kane
Secretary
<PAGE> 104
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, this Amended
Registration Statement has been signed by the following persons in the
capacities indicated on this 29th day of October, 1999.
NAME TITLE
/s/JAMES D. GALLAGHER Director and President
- ---------------------------- (Principal Executive
James D. Gallagher Officer)
* Chairman of the Board
- ---------------------------- of Directors
John D. Richardson
* Director
- ----------------------------
John D. DesPrez, III
* Director
- ----------------------------
Ruth Ann Flemming
* Director
- ----------------------------
Neil M. Merkl
* Director
- ----------------------------
Thomas Borshoff
* Director
- ----------------------------
James K. Robinson
* Director
- ----------------------------
James R. Boyle
* Director
- ----------------------------
Bruce Avedon
* Director
- ----------------------------
James O'Malley
* Director
- ----------------------------
Robert Cook
/s/ DAVID W. LIBBEY Treasurer (Principal
- ---------------------------- Financial and Accounting
David W. Libbey Officer)
*By: /s/ TRACY A. KANE
-----------------------
Tracy A. Kane
Attorney-in-Fact Pursuant
to Powers of Attorney
<PAGE> 105
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Description
- ----------- -----------
<S> <C>
2(A). Opinion and consent of Tracy A. Kane, Esq., Secretary and Counsel of The Manufacturers Life Insurance
Company of New York
2(B). Consent of Brian Koop, Illustration Actuary of The Manufacturers Life Insurance Company of New York
2(C). Consent of Ernst & Young LLP
6. Memorandum Regarding Purchase, Transfer and Redemption Procedures for the Policies
7.(iii) Power of Attorney, James D. Gallagher and James R. Boyle
</TABLE>
<PAGE> 1
The Manufacturers Life Insurance Company of New York
100 Summit Lake Drive
Second Floor
Valhalla, New York 10595
October 29, 1999
To whom it may concern,
This opinion is written in reference to the flexible premium variable life
insurance policy (the "Policy") to be issued by The Manufacturers Life Insurance
Company of New York, a New York corporation (the "Company"), with respect to the
variable portion of which a Registration Statement on Form S-6 (the
"Registration Statement") is being filed under the Securities Act of 1933, as
amended.
As Counsel to the Company, I have examined such records and documents and
reviewed such question of law as I deemed necessary for purposes of this
opinion.
1. The Company has been duly incorporated under the laws of the state of New
York and is a validly existing corporation.
2. The Manufacturers Life Insurance Company of New York Separate Account B (the
"Variable Life Account") is a separate account of the Company and is duly
created and validly existing pursuant to Article 42, Section 4240 of the New
York Insurance Laws.
3. The portion of the assets to be held in the Variable Life Account equal to
the reserves and other liabilities under the Policy is not chargeable with
liabilities arising out of any other business the Company may conduct.
4. The Policy, when issued in accordance with the prospectus contained in the
effective Registration Statement and upon compliance with applicable local law,
will be legal and binding obligations of the Company.
I consent to the filing of this opinion with the Securities and Exchange
Commission as an exhibit to the Registration Statement on Form S-6.
Very truly yours,
/s/ TRACY A. KANE
Tracy A. Kane
Secretary and Counsel
<PAGE> 1
October 29, 1999
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, DC 20549
Re: Actuarial Opinion on Illustrations Contained in Pre-Effective Amendment No.
1 to a Registration Statement on Form S-6 (File No. 333-83023).
Dear Sirs:
This opinion is furnished in connection with the above-referenced registration
statement under the Securities Act of 1933, as amended, describing a flexible
premium variable universal life insurance policy (the "Policy") that will be
offered and sold by The Manufacturers Life Insurance Company of New York (the
"Company").
The hypothetical illustrations of death benefits, Policy values and surrender
values used in this registration statement are consistent with the provisions of
the Policy and the Company's administrative procedures. The rate structure of
the Policy has not been designed so as to make the relationship between premiums
and benefits, as shown in the illustrations, appear disproportionately more
favorable to a prospective purchaser of the Policy for the age and risk class
illustrated than for any other prospective purchaser. The particular
illustrations shown are for a commonly used risk class and for premium amounts
and ages appropriate to the markets in which the Policy is sold.
I hereby consent to the use of this opinion as an exhibit to the Securities Act
Registration Statement on Form S-6.
Sincerely,
/s/ BRIAN KOOP
Brian Koop, FSA, MAAA, FCIA
AVP & Pricing Actuary
<PAGE> 1
Consent of Independent Auditors
We consent to the reference to our firm under the caption "Independent Auditors"
and to the use of our reports dated February 22, 1999 with respect to the
financial statements of The Manufacturers Life Insurance Company of New York and
October 20, 1999 with respect to the financial statements of The Manufacturers
Life Insurance Company of New York Separate Account B in Pre-Effective Amendment
No. 1 to the Registration Statement (Form S-6 File No. 333-83023).
ERNST & YOUNG LLP
Boston, Massachusetts
October 29, 1999
<PAGE> 1
EXHIBIT 6
THE MANUFACTURERS INSURANCE COMPANY OF NEW YORK
DESCRIPTION OF PURCHASE, TRANSFER AND REDEMPTION PROCEDURES
VARIABLE UNIVERSAL LIFE INSURANCE POLICIES
(1933 FILE ACT NO. 333-83023)
This document sets forth, as required by Rule 6e-3(T)(b)(12)(iii), the
administrative procedures that will be followed by The Manufacturers Life
Insurance Company of New York (the "Company") and any office the Company
designates for the receipt of payments and processing of policyowner requests
(the "Service Office") in connection with the issuance of its flexible premium
variable universal life insurance policies described in this registration
statement (1933 Act file no. 333-83023) (the "Policy"), the transfer of assets
held thereunder, and the redemption by policyowners of their interests in the
Policy.
I. ISSUING A POLICY
A. PREMIUMS
This Policy is a flexible premium variable universal life insurance policy.
The Policy permits the policyowner to pay flexible premiums. After payment
of the initial premium, premiums may be paid at any time and in any amount
during the lifetime of the insured. A Policy will be issued with a planned
premium, which is based on the amount of premium the policyowner wished to
pay. In no event may the total of all premiums paid exceed the then-current
maximum premium limitations established by federal income tax law for
Policies that qualify as life insurance under the Guideline Premium Test or
the Cash Value Accumulation Test. If, at any time, a premium is paid which
would result in total premiums exceeding the above maximum premium
limitation, the Company will only accept that portion of the premium which
will make the total premiums equal to the maximum. Any part of the premium
in excess of that amount will be returned and no further premiums will be
accepted until allowed by the then-current maximum premium limitation. The
Company also reserves the right to request evidence of insurability if a
premium payment would result in an increase in the death benefit that is
greater than the increase in Policy Value.
B. UNDERWRITING
The acceptance of an application is subject to the Company's underwriting
rules, and the Company reserves the right to request additional information
or to reject an application for any reason. The Company will require
satisfactory evidence of insurability. This may include medical exams and
other information. Persons failing to meet standard underwriting
classification may be eligible for a Policy with an additional rating
assigned to it.
C. APPLICATION
To purchase a Policy, an applicant must submit a completed application. A
Policy will not be issued until the underwriting process has been completed
to the Company's satisfaction.
Policies may be issued on a basis which does not distinguish between the
insured's sex, with prior approval from the Company. Generally, a Policy
will only be issued on the lives of insureds from ages 0 through 90.
Each Policy is issued with a Policy Date, an Effective Date and an Issue
Date.
The POLICY DATE is the date coverage takes effect under the Policy,
provided the Company receives the minimum initial premium at its Service
Office, and is the date from which the first monthly deductions are
calculated and from which Policy Years, Policy Months and Policy
Anniversaries are determined.
<PAGE> 2
The EFFECTIVE DATE is the date the underwriters approve issuance of the
Policy. If the Policy is approved without the initial premium, the
Effective Date will be the date the Company receives at least the minimum
initial premium at its Service Office.
The ISSUE DATE is the date the Company issued the Policy. It is the date
from which the suicide and incontestability provisions are measured.
If an application is accompanied by a check for the initial premium and the
application is accepted:
(i) the Policy Date will be the date the application and check were
received at the Service Office (unless a special Policy Date is
requested (See "Backdating a Policy" below);
(ii) the Effective Date will be the date the Company's underwriters
approve issuance of the Policy; and
(iii) the Issue Date will be the date the Company issues the Policy.
If an application accepted by the Company is not accompanied by a check for
the initial premium:
(i) the Policy Date will be the date the Company issues the Policy
(unless a special Policy Date is requested (See "Backdating a Policy"
below);
(ii) the Effective Date will be the date the Service Office receives
the initial premium; and
(iii) the Issue Date will be the date the Company issues the Policy.
The initial premium must be received within 60 days after the Policy Date.
If the premium is not paid or if the application is rejected, the Policy
will be canceled and any partial premiums paid will be returned to the
applicant.
D. MINIMUM INITIAL FACE AMOUNT
The Company will generally issue a Policy only if it has a Face Amount of
at least $100,000.
E. BACKDATING A POLICY
Under limited circumstances, the Company may backdate a Policy, upon
request, by assigning a Policy Date earlier than the date the application
is signed. However, in no event will a Policy be backdated earlier than six
months before the date of the application for the Policy. Monthly
deductions will be made for the period the Policy Date is backdated.
Regardless of whether or not a policy is backdated, Net Premiums (premium
paid less premium charge) received prior to the Effective Date of a Policy
will be credited with interest from the date of receipt at the rate of
return then being earned on amounts allocated to the Money Market
portfolio.
As of the Effective Date, the premiums paid plus interest credited, net of
the premium charge, will be allocated among the Investment Accounts (as
described below under ("Policy Value - Investment Accounts") and/or Fixed
Account in accordance with the policyowner's instructions.
F. TEMPORARY INSURANCE
In accordance with the Company's underwriting practices, temporary
insurance coverage may be provided under the terms of a Temporary Insurance
Agreement. Generally, temporary life insurance may not exceed $1,000,000
and may not be in effect for more than 90 days. This temporary insurance
coverage will be issued on a conditional receipt basis, which means that
any benefits under such temporary coverage will only be paid if the life
insured meets the Company's usual and customary underwriting standards for
the coverage applied for.
2
<PAGE> 3
The acceptance of an application is subject to the Company's underwriting
rules, and the Company reserves the right to request additional information
or to reject an application for any reason.
Persons failing to meet standard underwriting classification may be
eligible for a Policy with an additional rating assigned to it.
G. RIGHT TO EXAMINE THE POLICY
A Policy may be returned for a refund of the premium within 10 days after
it is received. This ten day period is known as the "free look" period. The
Policy can be mailed or delivered to the Company's agent who sold it or to
the Service Office. Immediately on such delivery or mailing, the Policy
shall be deemed void from the beginning. Within seven days after receipt of
the returned Policy at its Service Office, the Company will refund any
premium paid. The Company reserves the right to delay the refund of any
premium paid by check until the check has cleared.
If the Policy is purchased in connection with a replacement of an existing
policy (as defined below), the policyowner may also cancel the Policy by
returning it to the Service Office or the Company's agent who sold it at
any time within 60 days after receipt of the Policy. Within 10 days of
receipt of the Policy by the Company, it will pay the policyowner the
Policy Value, computed at the end of the valuation period during which the
Policy is received by the Company. In the case of a replacement of a policy
issued by a New York insurance company, the policyowner may have the right
to reinstate the prior policy.
If a policyowner requests an increase in face amount which results in new
surrender charges, he or she will have the same rights as described above
to cancel the increase. If canceled, the Policy Value and the surrender
charges will be recalculated to the amounts they would have been had the
increase not taken place. A policyowner may request a refund of all or any
portion of premiums paid during the free look period, and the Policy Value
and the surrender charges will be recalculated to the amounts they would
have been had the premiums not been paid.
H. PREMIUM ALLOCATION
No premiums will be accepted prior to receipt of a completed application by
the Company. All premiums received prior to the Effective Date of the
Policy will be held in the general account of the Company and credited with
interest from the date of receipt at the rate of return then being earned
on amounts allocated to the Money Market Trust.
On the later of the Effective Date or the date a premium is received, the
Net Premiums paid plus interest credited will be allocated among the
Investment Accounts or the Fixed Account in accordance with the
policyowner's instructions.
All Net Premiums received on or after the Effective Date will be allocated
among Investment Accounts or the Fixed Account as of the business day the
premiums were received at the Service Office. Monthly deductions are due on
the Policy Date and at the beginning of each policy month thereafter.
However, if due prior to the Effective Date, they will be taken on the
Effective Date instead of the dates they were due.
Premiums may be allocated to either the Fixed Account for accumulation at a
rate of interest determined by the Company (the rate of interest will be at
least 4%) or to one or more of the Investment Accounts for investment in
the Portfolio shares held by the corresponding sub-account of the Separate
Account. Allocations among the Investment Accounts and the Fixed Account
are made as a percentage of the premium. The percentage allocation to any
account may be any number between zero and 100, provided the total
allocation equals 100. A policyowner may change the way in which premiums
are allocated at any time without charge. The change will take effect on
the date a written request for change satisfactory to the Company is
received at the Service Office.
3
<PAGE> 4
II. DEATH BENEFIT OPTION CHANGES
The death benefit option may be changed once each Policy Year after the
first Policy Year. The change will occur on the first day of the next
Policy month after a written request for a change is received at the
Service Office. The Company reserves the right to limit a request for a
change if the change would cause the Policy to fail to qualify as life
insurance for tax purposes. The Company will not allow a change in death
benefit option if it would cause the face amount to decrease below
$100,000.
A change in the death benefit option will result in a change in the
Policy's Face Amount, in order to avoid any change in the amount of the
death benefit, as follows:
Change from Option 1 to Option 2
The new Face Amount will be equal to the Face Amount prior to the change
minus the Policy Value as of the date of the change.
Change from Option 2 to Option 1
The new Face Amount will be equal to the Face Amount prior to the change
plus the Policy Value as of the date of the change. No new surrender
charges will apply to an increase in Face Amount solely due to a change in
the death benefit option.
III. FACE AMOUNT CHANGES
Subject to the limitations stated in the prospectus for the Policy and
stated in this memorandum, a policyowner may, upon written request,
increase or decrease the Face Amount of the Policy. The Company reserves
the right to limit a change in Face Amount so as to prevent the Policy from
failing to qualify as life insurance for tax purposes.
A. INCREASE IN FACE AMOUNT
Increases in Face Amount are subject to satisfactory evidence of
insurability. An increase in Face Amount may be made once each Policy Year
after the first Policy Year. Any increase in Face Amount must be at least
$50,000. An increase will become effective at the beginning of the Policy
Month following the date the Company approves the requested increase. The
Company reserves the right to refuse a requested increase if the life
insured's Attained Age (the age at issue plus the number of whole years
that have elapsed since the Policy Date) at the effective date of the
increase would be greater than 90.
B. NEW SURRENDER CHARGES FOR AN INCREASE
An increase in Face Amount will usually result in the Policy being subject
to new surrender charges. The new surrender charges will be computed as if
a new Policy were being purchased for the increase in Face Amount. The
premiums attributable to the new Face Amount will not exceed the surrender
charge premium limit associated with that increase. There will be no new
surrender charges associated with restoration of a prior decrease in Face
Amount. As with the purchase of a Policy, a policyowner will have a free
look right with respect to any increase resulting in new surrender charges.
An additional premium may be required for a face amount increase, and a new
No-Lapse Guarantee Premium will be determined, if the No-Lapse Guarantee is
in effect at the time of the face amount increase.
C. INCREASE WITH PRIOR DECREASES
If, at the time of the increase, there have been prior decreases in Face
Amount, these prior decreases will be restored first. The insurance
coverage eliminated by the decrease of the oldest Face Amount will be
deemed to be restored first.
4
<PAGE> 5
D. DECREASE IN FACE AMOUNT
Decreases in Face Amount may be made once each Policy Year after the first
Policy Year. Any decrease in Face Amount must be at least $50,000. A
written request from a policyowner for a decrease in the Face Amount will
be effective at the beginning of the Policy Month following the date the
Company approves the requested decrease. If there have been previous
increases in Face Amount, the decrease will be applied to the most recent
increase first and thereafter to the next most recent increases
successively. The Company will not allow a decrease in the Face Amount if
it is for the reduction or termination of a prior Face Amount increase
which has been in force for less than one year. Under no circumstances
should the sum of all decreases cause the Policy to fall below the minimum
Face Amount of $100,000. Decreases in Face Amount will not result in a
decrease in surrender charges.
E. CHANGING BOTH THE FACE AMOUNT AND THE DEATH BENEFIT OPTION
If a policyowner requests to change both the Face Amount and the Death
Benefit Option in the same month, the Death Benefit Option change shall be
deemed to occur first.
IV. POLICY VALUE
A. DETERMINATION OF THE POLICY VALUE
A Policy has a Policy Value, a portion of which is available to the
policyowner by making a policy loan or partial withdrawal, or upon
surrender of the Policy. The Policy Value may also affect the amount of the
death benefit. The Policy Value at any time is equal to the sum of the
values in the Investment Accounts, the Fixed Account, and the Loan Account.
B. INVESTMENT ACCOUNTS
An Investment Account is established under each Policy for each sub-account
of the Separate Account to which net premiums or transfer amounts have been
allocated. Each Investment Account under a Policy measures the interest of
the Policy in the corresponding sub-account. The value of the Investment
Account established for a particular sub-account is equal to the number of
units of that sub-account credited to the Policy times the value of such
units.
C. FIXED ACCOUNT
Amounts in the Fixed Account do not vary with the investment performance of
any sub-account. Instead, these amounts are credited with interest at a
rate determined by the Company.
D. LOAN ACCOUNT
Amounts borrowed from the Policy are transferred to the Loan Account.
Amounts in the Loan Account do not vary with the investment performance of
any sub-account. Instead, these amounts are credited with interest at a
rate which is equal to the amount charged on the outstanding Policy Debt
(the aggregate amount of policy loans, including borrowed and accrued
interest, less any loan repayments) less the Loan Spread set forth in the
Policy. (See "Policy Loans - Interested Credited to the Loan Account"
below).
E. UNITS AND UNIT VALUES
Crediting and Canceling Units
Units of a particular sub-account are credited to a Policy when net
premiums are allocated to that sub-account or amounts are transferred to
that sub-account. Units of a sub-account are canceled whenever amounts are
deducted, transferred or withdrawn from the sub-account. The number of
units credited or canceled for a specific transaction is based on the
dollar amount of the transaction divided by the value of the unit on the
Business Day* on which the transaction occurs. The number of units credited
with respect to a premium payment will be based on the applicable unit
values for the Business Day on which the premium is received at the Service
Office, except for any premiums received before the Effective Date.
5
<PAGE> 6
For premiums received before the Effective Date, the values will be
determined on the Effective Date.
Units are valued at the end of each Business Day. When an order involving
the crediting or canceling of units is received after the end of a Business
Day, or on a day which is not a Business Day, the order will be processed
on the basis of unit values determined on the next Business Day. Similarly,
any determination of Policy Value, Investment Account value or death
benefit to be made on a day which is not a Business Day will be made on the
next Business Day.
*Business Day is any day that the New York Stock Exchange is open for
business. A Business Day ends at the close of regularly scheduled day-time
trading of the New York Stock Exchange on that day.
Unit Values
The value of a unit of each sub-account was initially fixed at $10.00. For
each subsequent Business Day the unit value for that sub-account is
determined by multiplying the unit value for the immediately preceding
Business Day by the net investment factor for the sub-account on such
subsequent Business Day.
The net investment factor for a sub-account on any Business Day is equal to
(a) divided by (b), where:
(a) is the net asset value of the underlying Portfolio shares of
Manufacturers Investment Trust held by that sub-account as of the end of
such Business Day before any policy transactions are made on that day; and
(b) is the net asset value of the underlying Portfolio shares held by that
sub-account as of the end of the immediately preceding Business Day after
all policy transactions were made for that day.
The value of a unit may increase, decrease, or remain the same, depending
on the investment performance of a sub-account from one Business Day to the
next.
V. TRANSFER OF POLICY VALUE
A. GENERAL TRANSFERS
At any time, a policyowner may transfer Policy Value (the sum of the values
in the Loan Account, the Fixed Account and the Investment Accounts) from
one sub-account to another or to the Fixed Account. (Transfers involving
the Fixed Account are subject to certain limitations noted below.) Transfer
requests must be in writing in a format satisfactory to the Company.
These transfer privileges are subject to the Company's consent. The Company
reserves the right to impose limitations on transfers, including the
maximum amount that may be transferred. The Company also reserves the right
to modify or terminate the transfer privilege at any time in accordance
with applicable law. Transfers may also be delayed during any period which
(i) the New York Stock Exchange is closed for trading (except for normal
weekend and holiday closings), (ii) trading on the New York Stock Exchange
is restricted, and (iii) an emergency exists as a result of which disposal
of securities held in the Separate Account is not reasonably practicable or
it is not reasonably practicable to determine the value of the Separate
Account's net assets. Transfer privileges are also subject to any
restrictions that may be imposed by Manufacturers Investment Trust. In
addition, the Company reserves the right to defer the transfer privilege at
any time when we are unable to purchase or redeem shares of Manufacturers
Investment Trust.
While the Policy is in force, the policyowner may transfer the Policy Value
from any of the Investment Accounts to the Fixed Account without incurring
transfer charges:
(a) within eighteen months after the Issue Date; or
(b) within 60 days of the effective date of a material change in the
investment objectives of any of the sub-accounts or within 60 days of
the date of notification of such change, whichever is later.
Such transfers will not count against the twelve transfers that may be made
free of charge in any Policy Year as described below.
6
<PAGE> 7
A policyowner may make up to twelve transfers each policy year free of
charge. Additional transfers in each policy year may be made at a cost of
per transfer as set forth in the currently effective prospectus. This
charge will be deducted from the Investment Account or the Fixed Account to
which the transfer is being made. All transfer requests received by the
Company on the same Business Day are treated as a single transfer request.
The maximum amount that may be transferred from the Fixed Account in any
one policy year is the greater of $500 or 15% of the Fixed Account Value at
the previous Policy Anniversary. Any transfer which involves a transfer out
of the Fixed Account may not involve a transfer to the Investment Account
for the Money Market Trust.
VI. POLICY SURRENDER AND PARTIAL WITHDRAWALS
A. POLICY SURRENDER
A Policy may be surrendered for its Net Cash Surrender Value at any time
while the life insured is living. The Net Cash Surrender Value is equal to
the Policy Value less any surrender charges and outstanding monthly
deductions due (the "Cash Surrender Value") minus the Policy Debt. If there
have been any prior Face Amount increases, the Surrender Charge will be the
sum of the Surrender Charge for the Initial Face Amount plus the Surrender
Charge for each increase. The Net Cash Surrender Value will be determined
at the end of the Business Day on which the Company receives the Policy and
a written request for surrender at its Service Office. After a Policy is
surrendered, the insurance coverage and all other benefits under the Policy
will terminate.
A policyowner may make a partial withdrawal of the Net Cash Surrender Value
once each Policy Month after the first Policy Anniversary. The policyowner
may specify the portion of the withdrawal to be taken from each Investment
Account and the Fixed Account. In the absence of instructions, the
withdrawal will be allocated among such accounts in the same proportion as
the Policy Value in each account bears to the Net Policy Value (Policy
Value less the value in the Loan Account). Withdrawals will be limited if
they would otherwise cause the Face Amount to fall below $100,000.
If Death Benefit Option 1 is in effect when a partial withdrawal is made,
the Face Amount of the Policy will be reduced by the amount of the
withdrawal plus any applicable Surrender Charges.
If the death benefit is based upon the Policy Value times the minimum death
benefit percentage, the Face Amount will be reduced only to the extent that
the amount of the withdrawal plus the portion of the Surrender Charge
assessed exceeds the difference between the death benefit and the Face
Amount. When the Face Amount of a Policy is based on one or more increases
subsequent to issuance of the Policy, a reduction resulting from a partial
withdrawal will be applied in the same manner as a requested decrease in
Face Amount, i.e., against the Face Amount provided by the most recent
increase, then against the next most recent increases successively and
finally against the initial Face Amount.
As long as the Policy is in force, the Company will ordinarily pay any
policy loans, surrenders, partial withdrawals or insurance benefit within
seven days after receipt at its Service Office of all the documents
required for such a payment. The Company may delay for up to six months the
payment from the Fixed Account of any policy loans, surrenders, partial
withdrawals, or insurance benefit. In the case of any such payments from
any Investment Account, the Company may delay payment during any period
during which (i) the New York Stock Exchange is closed for trading (except
for normal weekend and holiday closings), (ii) trading on the New York
Stock Exchange is restricted, and (iii) an emergency exists as a result of
which disposal of securities held in the Separate Account is not reasonably
practicable or it is not reasonably practicable to determine the value of
the Separate Account's net assets; provided that applicable rules and
regulations of the SEC shall govern as to whether the conditions described
in (ii) and (iii) exist.
B. SURRENDER CHARGES
The Company will deduct a Surrender Charge if during the first 10 years
following the Policy date, or the
7
<PAGE> 8
effective date of a Face Amount increase:
- the Policy is surrendered for its Net Cash Surrender Value,
- a partial withdrawal is made, or
- the Policy lapses.
Surrender Charge Calculation
The Surrender Charge for the initial Face Amount or for the amount of any
increase in Face Amount is determined by the following formula (the
calculation is also described in words below):
Surrender Charge = (Surrender Charge Rate) x (Face Amount associated with
the Surrender Charge / 1000) x (Grading Percentage)
Surrender Charge Rate (the calculation is also described in words below)
Surrender Charge Rate = (X) + ((80%)x (Surrender Charge Premium)) where "X"
is equal to:
Table for Rate per $1,000 of Face Amount:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
Age at Issue or Increase Rate per $1,000 of Face Age at Issue or Increase Rate per $1,000 of Face
Amount Amount
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
0 $2.00 18 $4.25
- ----------------------------------------------------------------------------------------------------------------------
1 2.13 19 4.38
- ----------------------------------------------------------------------------------------------------------------------
2 2.25 20 4.50
- ----------------------------------------------------------------------------------------------------------------------
3 2.38 21 5.00
- ----------------------------------------------------------------------------------------------------------------------
4 2.50 22 5.50
- ----------------------------------------------------------------------------------------------------------------------
5 2.63 23 6.00
- ----------------------------------------------------------------------------------------------------------------------
6 2.75 24 6.50
- ----------------------------------------------------------------------------------------------------------------------
7 2.88 25 7.00
- ----------------------------------------------------------------------------------------------------------------------
8 3.00 26 7.20
- ----------------------------------------------------------------------------------------------------------------------
9 3.13 27 7.40
- ----------------------------------------------------------------------------------------------------------------------
10 3.25 28 7.60
- ----------------------------------------------------------------------------------------------------------------------
11 3.38 29 7.80
- ----------------------------------------------------------------------------------------------------------------------
12 3.50 30 8.00
- ----------------------------------------------------------------------------------------------------------------------
13 3.63 31 8.04
- ----------------------------------------------------------------------------------------------------------------------
14 3.75 32 8.08
- ----------------------------------------------------------------------------------------------------------------------
15 3.88 33 8.12
- ----------------------------------------------------------------------------------------------------------------------
16 4.00 34 8.16
- ----------------------------------------------------------------------------------------------------------------------
17 4.13 35 and over 8.20
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
DEFINITIONS OF THE FORMULA FACTORS ABOVE
The SURRENDER CHARGE PREMIUM is the lesser of:
(a) the premiums paid during the first policy year per $1,000 of Face
Amount at issue or following a Face Amount increase, and
(b) the Surrender Charge Premium Limit specified in the Policy per $1,000
of Face Amount.
Face of the Policy Associated with the Surrender Charge
The Face Amount associated with the Surrender Charge equals the Face Amount
for which the Surrender Charge is being applied.
8
<PAGE> 9
Grading Percentage
The grading percentages during the Surrender Charge Period and set forth in
the table below apply to the initial Face Amount and to all subsequent Face
Amount increases.
The grading percentage is based on the Policy Year in which the transaction
causing the assessment of the charge occurs as set forth in the table
below:
<TABLE>
<CAPTION>
SURRENDER CHARGE PERIOD SURRENDER CHARGE GRADING
PERCENTAGE
----------------------------------------------------
<S> <C>
1 100%
2 90%
3 80%
4 70%
5 60%
6 50%
7 40%
8 30%
9 20%
10 10%
11 0%
</TABLE>
Within a Policy Year, grading percentages will be interpolated on a monthly
basis. For example, if the policyowner surrenders the Policy during the
fourth month of Policy Year 4, the grading percentage will be 67.5%.
SURRENDER CHARGES ON A PARTIAL WITHDRAWAL
A partial withdrawal will result in the assessment of a portion of the
Surrender Charges to which the Policy is subject. The portion of the
Surrender Charges assessed will be based on the ratio of the amount of the
withdrawal to the Net Cash Surrender Value of the Policy as at the date of
the withdrawal. The Surrender Charges will be deducted from the Policy
Value at the time of the partial withdrawal on a pro-rata basis from each
of the Investment Accounts and the Fixed Account. If the amount in the
accounts is not sufficient to pay the Surrender Charges assessed, then the
amount of the withdrawal will be reduced.
Whenever a portion of the surrender charges is deducted as a result of a
partial withdrawal, the Policy's remaining surrender charges will be
reduced in the same proportion that the surrender charge deducted bears to
the total surrender charge immediately before the partial withdrawal.
VII. LAPSE AND REINSTATEMENT
A. LAPSE
Unless the No-Lapse Guarantee is in effect, a Policy will go into default
if at the beginning of any Policy Month the Policy's Net Cash Surrender
Value would be zero or below after deducting the monthly deduction then
due. The Company will notify the policyowner of the default and will allow
a 61 day grace period in which the policyowner may make a premium payment
sufficient to bring the Policy out of default. The required payment will be
equal to the amount necessary to bring the Net Cash Surrender Value to
zero, if it was less than zero on the date of default, plus the monthly
deductions due at the date of default and payable at the beginning of each
of the two Policy Months thereafter, plus any applicable premium charge. If
the required payment is not received by the end of the grace period, the
Policy will terminate with no value.
9
<PAGE> 10
Death During Grace Period
If the life insured should die during the grace period, the Policy Value
used in the calculation of the death benefit will be the Policy Value as of
the date of default and the insurance benefit will be reduced by any
outstanding monthly deductions due at the time of death.
No-Lapse Guarantee
As long as the No-Lapse Guarantee Cumulative Premium Test is satisfied
during the No-Lapse Guarantee Period, as described below, the Company will
guarantee that the Policy will not go into default, even if adverse
investment experience or other factors should cause the Policy's Net Cash
Surrender Value to fall to zero or below during such period.
The No-Lapse Guarantee Period is the first five Policy Years for life
insureds with an issue age up to and including age 85. It is not offered to
life insureds whose Issue Age exceeds age 85.
While the No-Lapse Guarantee is in effect, the Company will determine at
the beginning of the Policy Month that the Policy would otherwise be in
default, whether the No-Lapse Guarantee Cumulative Premium Test, described
in the Policy, has been met. If it has not been satisfied, the Company will
notify the policyowner of that fact and allow a 61 day grace period in
which the policyowner may make a premium payment sufficient to keep the
policy from going into default. This required payment is described in the
notification to the policyowner.
If the required payment is not received by the end of the grace period, the
No-Lapse Guarantee and the Policy will terminate.
B. REINSTATEMENT
A policyowner can reinstate a Policy which has terminated after going into
default at any time within 21 days following the date of termination
without furnishing evidence of insurability, subject to the following
conditions:
(a) the life insured's risk classification is standard or preferred, and
(b) the life insured's Attained Age is less than 46.
A policyowner can, by making a written request, reinstate a Policy which
has terminated after going into default at any time within the five-year
period following the date of termination subject to the following
conditions:
(a) Evidence of the life insured's insurability, satisfactory to the
Company, is provided to the Company;
(b) A premium equal to the amount that was required during the 61 day
grace period following default plus the next two monthly deductions
must be paid to the Company.
If the reinstatement is approved, the date of reinstatement will be the
later of the date the Company approves the policyowner's request or the
date the required payment is received at the Company's Service Office. In
addition, any surrender charges will be reinstated to the amount they were
at the date of default. The Policy Value on the date of reinstatement,
prior to the crediting of any Net Premium paid on the reinstatement, will
be equal to the Policy Value on the date the Policy terminated.
VIII. POLICY LOANS
While the Policy is in force and has an available loan value, a policyowner
may borrow against the Policy Value of the Policy. The Policy serves as the
only security for the loan.
A. AVAILABLE LOAN VALUE
The amount of any loan cannot exceed 90% of the Net Cash Surrender Value.
10
<PAGE> 11
B. INTEREST CHARGED ON POLICY LOANS
Interest on the Policy Debt will accrue daily and be payable annually on
the Policy Anniversary. During the first ten Policy Years, the rate of
interest charged will be an effective annual rate of 5.25%. Thereafter the
rate of interest charged will be an effective annual rate of 4%, subject to
the Company's reservation of the right to increase the rate if the Company
determines, in its sole discretion, that there is a substantial risk that a
loan will be treated as a taxable distribution under Federal tax law. If
the interest due on a Policy Anniversary is not paid by the policyowner,
the interest will be borrowed against the Policy.
The Policy will go into default at any time the Policy Debt exceeds the
Cash Surrender Value. At least 61 days prior to termination, the Company
will send the policyowner a notice of the pending termination. Payment of
interest on the Policy Debt during the 61 day grace period will bring the
policy out of default.
C. LOAN ACCOUNT
When a loan is made, an amount equal to the loan principal, plus interest
to the next Policy Anniversary, will be deducted from the Investment
Accounts or the Fixed Account and transferred to the Loan Account. The
policyowner may designate how the amount to be transferred to the Loan
Account is allocated among the accounts from which the transfer is to be
made. In the absence of instructions, the amount to be transferred will be
allocated to each account in the same proportion as the value in each
Investment Account and the Fixed Account bears to the Net Policy Value. A
transfer from an Investment Account will result in the cancellation of
units of the underlying sub-account equal in value to the amount
transferred from the Investment Account. However, since the Loan Account is
part of the Policy Value, transfers made in connection with a loan will not
change the Policy Value.
D. INTEREST CREDITED TO THE LOAN ACCOUNT
Interest will be credited to amounts in the Loan Account at an effective
annual rate of at least 4.00%. The actual rate credited is equal to the
rate of interest charged on the policy loan less the Loan Interest Credited
Differential, which is currently 1.25% during the first ten policy years
and 0% thereafter, and is guaranteed not to exceed 1.25%. The Company may
change the Current Loan Interest Credited Differential as of 90 days after
sending you written notice of such change.
E. LOAN REPAYMENTS
Policy Debt may be repaid in whole or in part at any time prior to the
death of the life insured, provided that the Policy is in force. When a
repayment is made, the amount is credited to the Loan Account and
transferred to the Fixed Account or the Investment Accounts. Loan
repayments will be allocated first to the Fixed Account until the
associated Loan Sub-Account is reduced to zero and then to each Investment
Account in the same proportion as the value of the corresponding Loan
Sub-Account bears to the value of the Loan Account. Amounts paid to the
Company not specifically designated in writing as loan repayments will be
treated as premiums. However, when a portion of the Loan Account amount is
allocated to the Fixed Account, the Company reserves the right to require
that premium payments be applied as loan repayments.
F. LOAN ACCOUNT ADJUSTMENTS
On the first day of each Policy Anniversary the difference between the Loan
Account and the Policy Debt is transferred to the Loan Account from the
Investment Accounts or the Fixed Account. Amounts transferred to the Loan
Account will be taken from the Investment Accounts and the Fixed Account in
the same proportion as the value in each Investment Account and the Fixed
Account bears to the Net Policy Value.
11
<PAGE> 12
G. LOAN REPAYMENTS
Policy Debt may be repaid in whole or in part at any time prior to the
death of the life insured, provided that the Policy is in force. When a
repayment is made, the amount is credited to the Loan Account and
transferred to the Fixed Account or the Investment Accounts. Loan
repayments will be allocated first to the Fixed Account until the
associated Loan Sub-Account is reduced to zero and then to each Investment
Account in the same proportion as the value in the corresponding Loan
Sub-Account bears to the value of the Loan Account. Amounts paid to the
Company not specifically designated in writing as loan repayments will be
treated as premiums. However, when a portion of the Loan Account amount is
allocated to the Fixed Account, the Company reserves the right to require
that premium payments be applied as loan repayments.
12
<PAGE> 1
POWER OF ATTORNEY
I, James D. Gallagher, Director & President of The Manufacturers Life
Insurance Company of New York (the "Company"), do hereby constitute and appoint
John D. Richardson, John G. Vrysen, David Libbey, Paige Sabine or Tracy Anne
Kane, or any of them, my true and lawful attorneys to sign or execute (i)
registration statements and reports and other filings to be filed with the
Securities and Exchange Commission ("SEC") under the Securities Act of 1933, as
amended (the "1933 Act") and/or the Investment Company Act of 1940, as amended
(the "1940 Act") and (ii) reports and other filings to be filed with the SEC (or
any other regulatory entity) pursuant to the Securities Exchange Act of 1934
(the "1934 Act") and to do any and all acts and things and to sign or execute
any and all instruments for me, in my name, in the capacities indicated below,
which said attorney, may deem necessary or advisable to enable the Company to
comply with the 1933 Act, the 1940 Act and the 1934 Act, and any rules,
regulations an d requirements of the SEC, in connection with such registration
statements, reports and filings made under the 1933 Act, the 1940 Act and the
1934 Act, including specifically, but without limitation, power and authority to
sign or execute for me, in my name, and in the capacities indicated below, (i)
any and all amendments (including post-effective amendments) to such
registration statements and (ii) Form 1 O-Ks and Form 10-Qs filed under the 1934
Act; and I do hereby ratify and confirm all that the said a ttorneys, or any of
them, shall do or cause to be done by virtue of this power of attorney. This
Power of Attorney is intended to supersede any and all prior Power of Attorneys
in connection with the above mentioned acts.
SIGNATURE TITLE DATE
/s/JAMES D. GALLAGHER Director & President August 17, 1999
- -------------------------- ---------------
James D. Gallagher
<PAGE> 2
POWER OF ATTORNEY
I, James R. Boyle, Director of The Manufacturers Life Insurance Company of
New York (the "Company"), do hereby constitute and appoint John D. Richardson,
James D. Gallagher, John G. Vrysen, David Libbey, Paige Sabine or Tracy Anne
Kane, or any of them, my true and lawful attorneys to sign or execute (i)
registration statements and reports and other filings to be filed with the
Securities and Exchange Commission ("SEC") under the Securities Act of 1933, as
amended (the "1933 Act") and/or the Investm ent Company Act of 1940, as amended
(the "1940 Act") and (ii) reports and other filings to be filed with the SEC (or
any other regulatory entity) pursuant to the Securities Exchange Act of 1934
(the "1934 Act") and to do any and all acts and things and to sign or execute
any and all instruments for me, in my name, in the capacities indicated below,
which said attorney, may deem necessary or advisable to enable the Company to
comply with the 1933 Act, the 1940 Act and the 1934 Act, and any rules,
regulation s and requirements of the SEC, in connection with such registration
statements, reports and filings made under the 1933 Act, the 1940 Act and the
1934 Act, including specifically, but without limitation, power and authority to
sign or execute for me, in my name, and in the capacities indicated below, (i)
any and all amendments (including post-effective amendments) to such
registration statements and (ii) Form 10-Ks and Form 10-Qs filed under the 1934
Act; and I do hereby ratify and confirm all that the sai d attorneys, or any of
them, shall do or cause to be done by virtue of this power of attorney. This
Power of Attorney is intended to supersede any and all prior Power of Attorneys
in connection with the above mentioned acts.
SIGNATURE TITLE DATE
/s/JAMES R. BOYLE Director August 17,1999
- -------------------------- --------------
James R. Boyle
