<PAGE> 1
As filed with the Securities and Exchange Commission on April 28, 2000.
Registration No. 333-83023
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
POST-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)
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James D. Gallagher, President Copy to:
The Manufacturers Life Insurance Company of New York J. Sumner Jones
100 Summit Lake Drive Jones & Blouch L.L.P.
Second Floor 1025 Thomas Jefferson St., NW
Valhalla, New York 10595 Suite 405 West
(Name and Address of Agent for Service) Washington, DC 20007-0805
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-----------------------
It is proposed that this filing will become effective:
___ immediately upon filing pursuant to paragraph (b), or
_X_ on May 1, 2000 pursuant to paragraph (b), or
___ 60 days after filing pursuant to paragraph (a)(1), or
___ on (date) pursuant to paragraph (a)(1) of Rule 485.
If appropriate, check the following box:
___ this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
<PAGE> 2
THE MANUFACTURERS LIFE INSURANCE COMPANY OF NEW YORK SEPARATE ACCOUNT B
Registration Statement on Form S-6
Cross-Reference Sheet
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FORM
N-8B-2
ITEM NO. CAPTION IN PROSPECTUS
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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 *
49 *
50 General Information About Manulife New York, The Separate Account and The Trust
51 Policy Summary
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52 Other Information - Substitution of Portfolio Shares
53 **
54 *
55 *
56 *
57 *
58 *
59 Audited Financial Statements
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* 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
- the timing and amount of premium payments,
- the investments underlying the Policy Value, and
- 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.
BECAUSE OF THE SUBSTANTIAL NATURE OF SURRENDER CHARGES, THE POLICY IS NOT
SUITABLE FOR SHORT TERM INVESTMENT PURPOSES. ALSO, 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 SEC 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.
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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
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THE DATE OF THIS PROSPECTUS IS MAY 1, 2000
<PAGE> 6
TABLE OF CONTENTS
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DEFINITIONS........................................................................................................ 4
POLICY SUMMARY..................................................................................................... 6
General......................................................................................................... 6
Death Benefits.................................................................................................. 6
Premiums........................................................................................................ 6
Policy Value.................................................................................................... 6
Policy Loans.................................................................................................... 6
Surrender and Partial Withdrawals............................................................................... 6
Lapse and Reinstatement......................................................................................... 6
Charges and Deductions.......................................................................................... 7
Investment Options and Investment Advisers ..................................................................... 7
Investment Management Fees and Expenses......................................................................... 7
Table of Charges and Deductions................................................................................. 8
Table of Investment Management Fees and Expenses................................................................ 9
Table of Investment Options and Investment Advisers............................................................. 10
GENERAL INFORMATION ABOUT MANULIFE NEW YORK, THE SEPARATE ACCOUNT AND THE TRUST.................................... 11
Manulife New York............................................................................................... 11
The Separate Account............................................................................................ 12
The Trust....................................................................................................... 12
Investment Objectives of the Portfolios......................................................................... 12
ISSUING A POLICY................................................................................................... 16
Requirements.................................................................................................... 16
Temporary Insurance Agreement................................................................................... 17
Right to Examine the Policy..................................................................................... 17
Life Insurance Qualification.................................................................................... 17
DEATH BENEFITS..................................................................................................... 18
Death Benefit Options........................................................................................... 18
Changing the Face Amount........................................................................................ 19
PREMIUM PAYMENTS................................................................................................... 19
Initial Premiums................................................................................................ 19
Subsequent Premiums............................................................................................. 19
Maximum Premium Limitation...................................................................................... 20
Premium Allocation.............................................................................................. 20
CHARGES AND DEDUCTIONS............................................................................................. 20
Premium Charge.................................................................................................. 20
Surrender Charges............................................................................................... 20
Mortality and Expense Risks Charge.............................................................................. 24
Charges for Transfers........................................................................................... 24
Reduction in Charges............................................................................................ 25
SPECIAL PROVISIONS FOR EXCHANGES................................................................................... 25
COMPANY TAX CONSIDERATIONS......................................................................................... 25
POLICY VALUE....................................................................................................... 25
Determination of the Policy Value............................................................................... 25
Units and Unit Values........................................................................................... 25
Transfers of Policy Value....................................................................................... 26
POLICY LOANS....................................................................................................... 27
Maximum Loanable Amount......................................................................................... 27
Effect of Policy Loan........................................................................................... 27
Interest Charged on Policy Loans................................................................................ 27
Loan Account.................................................................................................... 27
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POLICY SURRENDER AND PARTIAL WITHDRAWALS........................................................................... 28
Policy Surrender................................................................................................ 28
Partial Withdrawals............................................................................................. 28
LAPSE AND REINSTATEMENT............................................................................................ 29
Lapse........................................................................................................... 29
No-Lapse Guarantee.............................................................................................. 29
No-Lapse Guarantee Cumulative Premium Test...................................................................... 29
Reinstatement................................................................................................... 30
THE GENERAL ACCOUNT................................................................................................ 30
Fixed Account................................................................................................... 30
Flexible Factors................................................................................................ 31
OTHER PROVISIONS OF THE POLICY..................................................................................... 31
Policyowner Rights.............................................................................................. 31
Assignment of Rights............................................................................................ 31
Beneficiary..................................................................................................... 32
Conversion Privilege............................................................................................ 32
Incontestability................................................................................................ 32
Misstatement of Age or Sex...................................................................................... 32
Suicide Exclusion............................................................................................... 32
Supplementary Benefits.......................................................................................... 32
TAX TREATMENT OF THE POLICY........................................................................................ 32
Life Insurance Qualification.................................................................................... 33
Tax Treatment of Policy Benefits................................................................................ 34
Alternate Minimum Tax........................................................................................... 37
Income Tax Reporting............................................................................................ 37
OTHER INFORMATION.................................................................................................. 37
Payment of Proceeds............................................................................................. 37
Reports to Policyowners......................................................................................... 38
Distribution of the Policies.................................................................................... 38
Responsibilities Assumed by Manulife New York and MSS........................................................... 38
Voting Rights................................................................................................... 38
Substitution of Portfolio Shares................................................................................ 39
Records and Accounts............................................................................................ 39
State Regulations............................................................................................... 39
Litigation...................................................................................................... 39
Independent Auditors............................................................................................ 39
Further Information............................................................................................. 39
Directors and Officers.......................................................................................... 40
Year 2000 Issues................................................................................................ 42
Illustrations................................................................................................... 42
Audited Financial Statements.................................................................................... 42
Appendix A - Sample Illustrations of Policy Values, Cash Surrender Values and Death Benefits....................A-1
</TABLE>
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."
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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.
Allocating net premiums only to one or a small number of the investment options
(other than the Lifestyle Trusts) should not be considered a balanced investment
strategy. In particular, allocating net premiums to a small number of investment
options that concentrate their investments in a particular business or market
sector will increase the risk that the value of your policy will be more
volatile since these investment options may react similarly to business or
market specific events. Examples of business or market sectors where this risk
historically has been and may continue to be particularly high include: (a)
technology related businesses, including internet related businesses, (b) small
cap securities and (c) foreign securities. The Company does not provide advice
regarding appropriate investment allocations, please discuss this matter with
your financial adviser.
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.
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TABLE OF CHARGES AND DEDUCTIONS
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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:
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Guaranteed Monthly Mortality Guaranteed Annual Mortality
Policy Years and Expense Risks Charge and Expense Risks Charge
------------ ------------------------ ------------------------
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1-10 0.0627% 0.75%
11+ 0.0209% 0.25%
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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 for the fiscal year ended December
31, 1999)
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OTHER EXPENSES
MANAGEMENT (AFTER EXPENSE TOTAL TRUST
TRUST PORTFOLIO FEES REIMBURSEMENT) ANNUAL EXPENSES
- --------------- ---- -------------- ---------------
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Pacific Rim Emerging Markets........ 0.850% 0.260% 1.110%
Internet Technologies............... 1.150% 0.136%(A) 1.286%
Science & Technology................ 1.100% 0.060% 1.160%
International Small Cap............. 1.100% 0.270% 1.370%
Aggressive Growth................... 1.000%(F) 0.130% 1.130%
Emerging Small Company.............. 1.050% 0.070% 1.120%
Small Company Blend................. 1.050% 0.250%(A) 1.300%(E)
Dynamic Growth...................... 1.000%(F) 0.132%(A) 1.132%
Mid Cap Stock....................... 0.925% 0.100%(A) 1.025%(E)
All Cap Growth(H)................... 0.950%(F) 0.070% 1.020%
Overseas............................ 0.950% 0.260% 1.210%
International Stock................. 1.050% 0.200% 1.250%
International Value................. 1.000% 0.230%(A) 1.230%(E)
Mid Cap Blend....................... 0.850%(F) 0.060% 0.910%
Small Company Value................. 1.050% 0.170% 1.220%
Global Equity....................... 0.900% 0.160% 1.060%
Growth.............................. 0.850% 0.050% 0.900%
Large Cap Growth.................... 0.875%(F) 0.100% 0.975%
Quantitative Equity................. 0.700% 0.060% 0.760%
Blue Chip Growth.................... 0.875%(F) 0.050% 0.925%
Real Estate Securities.............. 0.700% 0.070% 0.770%
Value............................... 0.800% 0.070% 0.870%
Tactical Allocation................. 0.900% 0.127%(A) 1.027%
Growth & Income..................... 0.750% 0.050% 0.800%
U.S. Large Cap Value................ 0.875% 0.070%(A) 0.945%(E)
Equity-Income....................... 0.875%(F) 0.060% 0.935%
Income & Value...................... 0.800%(F) 0.080% 0.880%
Balanced............................ 0.800% 0.070% 0.870%
High Yield.......................... 0.775% 0.065% 0.840%
Strategic Bond...................... 0.775% 0.095% 0.870%
Global Bond......................... 0.800% 0.180% 0.980%
Total Return........................ 0.775% 0.060%(A) 0.835%(E)
Investment Quality Bond............. 0.650% 0.120% 0.770%
Diversified Bond.................... 0.750% 0.090% 0.840%
U.S. Government Securities.......... 0.650% 0.070% 0.720%
Money Market........................ 0.500% 0.050% 0.550%
Small Cap Index..................... 0.525% 0.075%(AG) 0.600%
International Index................. 0.550% 0.050%(AG) 0.600%
Mid Cap Index....................... 0.525% 0.075%(AG) 0.600%
Total Stock Market Index............ 0.525% 0.075%(AG) 0.600%
500 Index........................... 0.525% 0.039%(AG) 0.564%
Lifestyle Aggressive 1000(D)........ 0.075% 1.060%(B) 1.135%(C)
Lifestyle Growth 820(D)............. 0.057% 1.008%(B) 1.065%(C)
Lifestyle Balanced 640(D)........... 0.057% 0.928%(B) 0.985%(C)
Lifestyle Moderate 460(D)........... 0.066% 0.869%(B) 0.935%(C)
Lifestyle Conservative 280(D)....... 0.075% 0.780%(B) 0.855%(C)
</TABLE>
(A) Based on estimates to be made during the current fiscal year.
(B) Reflects expenses of the Underlying Portfolios.
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(C) The investment adviser to the Trust, Manufacturers Securities Services, LLC
("MSS" or the "Adviser") has voluntarily agreed to pay certain expenses of
each Lifestyle Trust as follows:
If total expenses of a Lifestyle Trust (absent reimbursement) exceed 0.075%,
the Adviser will reduce the advisory fee or reimburse expenses of that
Lifestyle Trust by an amount such that total expenses of the Lifestyle Trust
equal 0.075%. IF the total expenses of a Lifestyle Trust (absent
reimbursement) are equal to or less than 0.075%, then no expenses will be
reimbursed by the Adviser. (For purposes of the expense reimbursement, total
expenses of a Lifestyle Trust includes the advisory fee but excludes: (a)
the expenses of the Underlying Portfolios, (b) taxes, (c) portfolio
brokerage, (d) interest, (e) litigation and (f) indemnification expenses and
other extraordinary expenses not incurred in the ordinary course of the
Trust's business.)
This voluntary expense reimbursement may be terminated at any time. If such
expense reimbursement was not in effect, Total Trust Annual Expenses would
be higher (based on current advisory fees and the Other Expenses of the
Lifestyle Trusts for the fiscal year ended December 31, 1999) as noted in
the chart below:
<TABLE>
<CAPTION>
MANAGEMENT OTHER TOTAL TRUST
TRUST PORTFOLIO FEES EXPENSES ANNUAL EXPENSES
--------------- ---- -------- ---------------
<S> <C> <C> <C>
Lifestyle Aggressive 1000...... 0.075% 1.090% 1.165%
Lifestyle Growth 820........... 0.057% 1.030% 1.087%
Lifestyle Balanced 640......... 0.057% 0.940% 0.997%
Lifestyle Moderate 460......... 0.066% 0.900% 0.966%
Lifestyle Conservative 280..... 0.075% 0.810% 0.885%
</TABLE>
(D) Each Lifestyle Trust will invest in shares of the Underlying Portfolios.
Therefore, each Lifestyle Trust will bear its 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 bear its own expenses.
However, the Adviser is currently paying certain of these expenses as
described in footnote (C) above.
(E) Annualized - For the period May 1, 1999 (commencement of operations) to
December 31, 1999.
(F) Management Fees changed effective May 1, 1999. Fees shown are the current
management fees.
(G) MSS has voluntarily agreed to pay expenses of each Index Trust (excluding
the advisory fee) that exceed the following amounts: 0.050% in the case of
the International Index Trust and 500 Index Trust and 0.075% in the case of
the Small Cap Index Trust, the Mid Cap Index Trust and Total Stock Market
Index Trust. If such expense reimbursement were not in effect, it is
estimated that "Other Expenses" and "Total Trust Annual Expenses" would be
0.022% higher for the International Index Trust, 0.014% higher for the Small
Cap Index Trust, 0.060% higher for the Mid Cap Index Trust and 0.005% higher
for the Total Stock Market Index Trust. It is estimated that the expense
reimbursement will not be effective during the year end December 31, 2000
for the 500 Index Trust. The expense reimbursement may be terminated at any
time by MSS.
(H) Formerly, the Mid Cap Growth Trust.
TABLE OF INVESTMENT OPTIONS AND INVESTMENT ADVISERS
The Trust currently has nineteen subadvisers who manage all of the portfolios,
one of which is Manufacturers Adviser Corporation. Both MSS and Manufacturers
Adviser Corporation are affiliates of ours.
<TABLE>
<CAPTION>
SUBADVISER PORTFOLIO
<S> <C>
A I M Capital Management, Inc. All Cap Growth Trust(A)
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
</TABLE>
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<PAGE> 15
<TABLE>
<CAPTION>
SUBADVISER PORTFOLIO
<S> <C>
Founders Asset Management LLC International Small Cap Trust
Balanced Trust
Franklin Advisers, Inc. Emerging Small Company Trust
Janus Capital Corporation Dynamic Growth Trust
Manufacturers Adviser Corporation Pacific Rim Emerging Markets Trust
Quantitative Equity Trust
Real Estate Securities Trust
Money Market Trust
Index Trusts
Lifestyle Trusts(B)
Miller Anderson & Sherrerd, LLP Value Trust
High Yield Trust
Mitchell Hutchins Investment Management Inc. Tactical Allocation Trust
Morgan Stanley Asset Management Inc. Global Equity Trust
Munder Capital Management Internet Technologies Trust
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
Lifestyle Trusts(B)
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
</TABLE>
(A) Formerly, the Mid Cap Growth Trust.
(B) State Street Global Advisors provides subadvisory consulting services to
Manufacturers Adviser Corporation regarding management of the Lifestyle
Trusts.
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. Our ultimate parent is Manulife
Financial Corporation ("MFC") based in Toronto, Canada.
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<PAGE> 16
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, fixed account guarantees and no lapse 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.
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
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<PAGE> 17
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 INTERNET TECHNOLOGIES TRUST seeks long-term capital appreciation by
investing the portfolio's assets primarily in companies engaged in
Internet-related business (such businesses also include Intranet-related
businesses).
The SCIENCE & TECHNOLOGY TRUST seeks long-term growth of capital by investing at
least 65% of the portfolio's total assets in common stocks of companies expected
to benefit from the development, advancement, and use of science & technology.
Current income is incidental to the portfolio's objective.
The INTERNATIONAL SMALL CAP TRUST seeks long-term 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.
The AGGRESSIVE 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 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 companies with market capitalizations that
approximately match the range of capitalization of the Russell 2000 Index
("small cap stocks") 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
that approximately match the range of capitalization of the Russell 2000 Index
("small cap stocks") at the time of purchase.
The DYNAMIC GROWTH TRUST seeks long-term growth of capital by investing the
portfolio's assets primarily in equity securities selected for their growth
potential with normally at least 50% of its equity assets in medium-sized
companies.
The MID CAP STOCK TRUST seeks long-term growth of capital by investing primarily
in equity securities with significant capital appreciation potential, with
emphasis on medium-sized companies.
The ALL CAP GROWTH TRUST (formerly, the Mid Cap Growth Trust) seeks long-term
capital appreciation by investing the portfolio's assets, under normal market
conditions, principally in common stocks of companies that are likely to benefit
from new or innovative products, services or processes as well as those that
have experienced, above-average, long-term growth in earnings and have excellent
proposals for future growth.
The OVERSEAS 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 in emerging markets.
The MID CAP BLEND TRUST seeks growth of capital by investing primarily in common
stocks of U.S. issuers and securities convertible into or carrying the right to
buy common stocks.
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<PAGE> 18
The SMALL COMPANY VALUE TRUST seeks long-term growth of capital by investing,
under normal circumstances, at least 65% of the portfolio's assets in common
stocks of companies with total market capitalization that approximately match
the range of capitalization of the Russell 2000 Index and 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 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) by investing at least 65% of the portfolio's
total assets in the common stocks of large and medium-sized blue chip companies.
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 purchase common stocks, ADRs and other equity securities of
companies with equity capitalizations usually greater than $300 million.
The TACTICAL ALLOCATION TRUST seeks total return, consisting of long-term
capital appreciation and current income by allocating the portfolio's assets
between (i) a stock portion that is designed to track the performance of the S&P
500 Composite Stock Price Index, and (ii) a fixed income portion that consists
of either five-year U.S. Treasury notes or U.S. Treasury bills with remaining
maturities of 30 days.
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 capitalization
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 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.
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<PAGE> 19
The GLOBAL 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 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.
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 U.S. entities.
The SMALL CAP INDEX TRUST seeks to approximate the aggregate total return of a
small cap U.S. domestic equity market index by attempting to track the
performance of the Russell 2000 Index. *
The INTERNATIONAL INDEX TRUST seeks to approximate the aggregate total return of
a foreign equity market index by attempting to track the performance of the
Morgan Stanley European Australian Far East Free Index (the "MSCI EAFE Index").*
The MID CAP INDEX TRUST seeks to approximate the aggregate total return of a mid
cap U.S. domestic equity market index by attempting to track the performance of
the S&P Mid Cap 400 Index. *
The TOTAL STOCK MARKET INDEX seeks to approximate the aggregate total return of
a broad U.S. domestic equity market index by attempting to track the performance
of the Wilshire 5000 Equity Index. *
The 500 INDEX TRUST seeks to approximate the aggregate total return of a broad
U.S. domestic equity market index by attempting to track the performance of the
S&P 500 Composite Stock Price Index. *
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.
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<PAGE> 20
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.
*"Standard & Poor's(R)," "S&P 500(R)," "Standard & Poor's 500(R)," and "Standard
& Poor's 400(R)"are trademarks of The McGraw-Hill Companies, Inc. "Russell
2000(R)" is a trademark of Frank Russell Company. "Wilshire 5000(R)" is a
trademark of Wilshire Associates. "Morgan Stanley European Australian Far East
Free" and "EAFE(R)" are trademarks of Morgan Stanley & Co. Incorporated. None of
the Index Trusts are sponsored, endorsed, managed, advised, sold or promoted by
any of these companies, and none of these companies make any representation
regarding the advisability of investing in the Trust.
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 20 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 and no request to backdate the Policy has been made:
(i) the Policy Date and the Effective Date will be the date we
receive the check at our Service Office; and
(ii) the Issue Date will be the date we issue the Policy.
The initial premium must be received within 60 days after the Issue Date and the
policyowner must be in good health on the date the initial premium is received.
If the initial 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.
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.
MINIMUM INITIAL FACE AMOUNT
Manulife New York will generally issue a Policy only if it has a Face Amount of
at least $100,000.
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<PAGE> 21
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.
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.
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. You should consult your registered
representative for more information so you can select the test that best
accomplishes your goals.
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.
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<PAGE> 22
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.
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.
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<PAGE> 23
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.
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 an
assessment of 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.
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<PAGE> 24
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 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.
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<PAGE> 25
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:
<TABLE>
<CAPTION>
Age at Issue or Age at Issue
Increase Rate per $1,000 of Face or Increase Rate per $1,000 of Face
<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>
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.
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<PAGE> 26
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 Surrender Charge
Charge Period 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%.
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.
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.
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<PAGE> 27
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.
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
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<PAGE> 28
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.
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:
<TABLE>
<CAPTION>
Policy Year Guaranteed Monthly Mortality and Equivalent Annual Mortality and
Expense Risk Charge Expense Risk Charge
----------- ------------------- -------------------
<S> <C> <C>
1-10 0.0627% 0.75%
11 0.0209% 0.25%
</TABLE>
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.
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<PAGE> 29
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.
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
25
<PAGE> 30
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.
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
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<PAGE> 31
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
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.
27
<PAGE> 32
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 loan amount that was transferred from it is fully
repaid; then to each Investment Account in the same proportion that the loan
amount that was transferred from it 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.
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
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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.
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.
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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.
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
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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.
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.
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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. 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 or the addition of a
Supplementary Benefit, after such increase or addition which requires evidence
of insurability 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.
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
A death benefit guarantee supplementary benefit will be included as part of the
policy when it is issued. Subject to certain requirements, one or more
supplementary benefits may also be added to a Policy, including those 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.
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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.
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
A policy must qualify as a valid life insurance contract under New York State
laws. 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
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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 assets." 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 do 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, 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.
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, including increments thereof, 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.
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 surrender or 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.
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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.
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.
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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, 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.
If in connection with the application or issue of the policy, the policyowner
acknowledges that the policy is or will become a mec, excess premiums that would
cause mec status, will be 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.
INTEREST ON POLICY LOANS AFTER YEAR 10
Interest 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 the interest
charged on the policy loan less than 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 tax consequences associated with a
loan interest credited differential of 0% are unclear. A tax advisor should be
consulted before effecting a
36
<PAGE> 41
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 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 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. We will
only increase the loan interest 60 days after filing the change with the
Superintendent of Insurance of the State of New York.
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.
The receipt of cash or forgiveness of indebtedness is treated as "boot" which is
taxable up to the amount of the gain in the policy. 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.
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 or (iv) the SEC, by order, so permits for the
protection of security holders; provided that applicable rules and regulations
of the SEC shall govern as to whether the conditions described in (ii) and (iii)
exist.
37
<PAGE> 42
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.
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.
38
<PAGE> 43
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.
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, 1999 and 1998, and for each of the three years ended December
31, 1999 and the financial statements of The Manufacturers Life Insurance
Company of New York Separate Account B for the period from August 26, 1999 to
December 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 the 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.
39
<PAGE> 44
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:
<TABLE>
<CAPTION>
Name, Age and Principal Business Position with the
Address Company Principal Occupation
- ------- ------- --------------------
<S> <C> <C>
Bruce Avedon Director* Director, Manulife New York, March 1992 to present; Consultant
Age: 71 (self-employed) September 1983 to present.
6601 Hitching Post Lane
Cincinnati, OH 45230
Thomas Borshoff Director* Director, Manulife New York, February 1999 to present; Self-employed,
Age: 53 Real Estate Owner/Manager; Chief Executive Officer and Chairman, First
3 Robin Drive Federal Savings and Loan of Rochester, 1983 to 1997.
Rochester, NY 14618
James R. Boyle Director* Director, Manulife New York, August 1999 to present; Senior Vice
Age: 40 President, U.S. Annuities, Manulife Financial, July 1999 to present;
500 Boylston Street President, Manulife North America, July 1999 to present; Treasurer,
Boston, MA 02116 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 1999 to present; Director, Manulife
Age: 45 New York, February 1999 to present; Senior Vice President, U.S.
73 Tremont Street Insurance, Manulife Financial, January 1999 to present; Vice
Boston, MA 02108 President, U.S. Insurance, Manulife Financial, 1995 to December 1998.
John D. DesPrez III Director* and Executive Vice President, U.S. Operations, Manulife Financial, January
Age: 43 Chairman of the 1999 to present; Director, Manulife Wood Logan, October 1996 to
73 Tremont Street Board of Directors present; Director, September 1996 to present and Chairman of the
Boston, MA 02108 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.
</TABLE>
40
<PAGE> 45
<TABLE>
<CAPTION>
Name, Age and Principal Business Position with the
Address Company Principal Occupation
- ------- ------- --------------------
<S> <C> <C>
Ruth Ann Fleming Director* Director, Manulife New York, March 1992 to present; Attorney,
Age: 41 consulting services and pro bono activities.
205 Highland Avenue
Short Hills, NJ 07078
James D. Gallagher Director* and Director and President, Manulife New York, August 1999 to present;
Age: 45 President Director, Secretary and General Counsel, The Manufacturers Life
73 Tremont Street Insurance Company of America, May 1996 to present; Vice President,
Boston, MA 02108 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.
David W. Libbey Treasurer Vice President, Treasurer and Chief Financial Officer, Manulife North
Age: 53 America, December 1997 to present; Treasurer, Manulife New York,
500 Boylston Street November 1997 to present; Vice President, Finance, Manulife North
Boston, MA 02116 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, December 1995 to present; Attorney
Age: 69 (self-employed), April 1994 to present; Attorney, Wilson Elser, 1979
35-35 161st Street to 1994.
Flushing, NY 11358
James P. O'Malley Director* Senior Vice President, U.S. Pensions, Manulife Financial, January
Age: 54 1999 to present; Director, Manulife New York, November 1998 to
200 Bloor Street East present; Director, ManAmerica, November 1998 to present; Vice
Toronto, Ontario President, Systems New Business Pensions, Manulife Financial, 1984 to
Canada M4W 1E5 December 1998.
James K. Robinson Director* Director, Manulife New York, March 1992 to present; Retired; Attorney
Age: 73 and Assistant Secretary, Eastman Kodak Company, 1958 to 1991.
7 Summit Drive
Rochester, NY 14620
Gretchen Swanz Secretary and Secretary and Counsel, Manulife New York, February 2000 to present;
Age: 31 Counsel Counsel, Manulife Financial, February 1999 to present.
73 Tremont Street
Boston, MA 02108
John G. Vrysen Vice President Chief Financial Officer and Treasurer, MWL, January 1996 to present;
Age: 44 and Chief Actuary Vice President and Chief Financial Officer, U.S. Operations, Manulife
73 Tremont Street Financial, January 1996 to present; Appointed Actuary, ManAmerica,
Boston, MA 02108 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.
</TABLE>
*Each Director is elected to serve until the next annual meeting of shareholders
or until his or her successor is elected and qualified.
41
<PAGE> 46
YEAR 2000 ISSUES
The Year 2000 Issue arises because many computerized systems use two digits
rather than four to identify a year. Date-sensitive systems may recognize the
year 2000 as 1900 or some other date, resulting in errors when information using
year 2000 dates is processed. In addition, similar problems may arise in some
systems which use certain dates in 1999 to represent something other than a
date. Although the change in date has occurred, it is not possible to conclude
that all aspects of the Year 2000 Issue that may affect us, including those
related to customers, suppliers, or other third parties, have been fully
resolved.
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.
AUDITED FINANCIAL STATEMENTS
Our financial statements included herein should be distinguished from the
financial statements of the Separate Account and should be considered only as
bearing upon our ability to meet our obligations under the Policies.
42
<PAGE> 47
Audited Financial Statements
The Manufacturers Life Insurance
Company of New York
Separate Account B
Period from August 26, 1999 to December 31, 1999
with Report of Independent Auditors
<PAGE> 48
The Manufacturers Life Insurance Company of New York
Separate Account B
Audited Financial Statements
Period from August 26, 1999 to December 31, 1999
CONTENTS
<TABLE>
<S> <C>
Report of Independent Auditors........................................ 1
Audited Financial Statements
Statement of Assets and Contract Owners' Equity....................... 2
Statement of Operations and Changes in Contract Owners' Equity........ 3
Notes to Financial Statements......................................... 4
</TABLE>
<PAGE> 49
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 as of
December 31, 1999, and the related statements of operations and changes in
contract owners' equity for the period from August 26, 1999 to December 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 auditing standards generally accepted
in the United States. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. 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 December 31, 1999, and the
results of its operations and the changes in its contract owners' equity for
the period from August 26, 1999 to December 31, 1999, in conformity with
accounting principles generally accepted in the United States.
/s/ Ernst & Young LLP
Philadelphia, Pennsylvania
February 4, 2000
1
<PAGE> 50
The Manufacturers Life Insurance Company of New York
Separate Account B
Statement of Assets and Contract Owners' Equity
December 31, 1999
<TABLE>
<S> <C>
ASSETS
Investments at market value:
Sub-Accounts:
Quantitative Equity Trust -- 9.990 shares (cost $256) $ 281
Growth and Income Trust -- 8.328 shares (cost $257) 272
-----
Total assets $ 553
=====
CONTRACT OWNERS' EQUITY
Variable universal life contracts $ 553
=====
</TABLE>
See accompanying notes.
2
<PAGE> 51
The Manufacturers Life Insurance Company of New York
Separate Account B
Statement of Operations and Changes in Contract Owners' Equity
Period from August 26, 1999 to December 31, 1999
<TABLE>
<CAPTION>
SUB-ACCOUNT
--------------------------------------------------------------------
QUANTITATIVE
EQUITY GROWTH AND INCOME TOTAL
--------------------------------------------------------------------
PERIOD ENDED* PERIOD ENDED* PERIOD ENDED*
DEC. 31/99 DEC. 31/99 DEC. 31/99
--------------------------------------------------------------------
<S> <C> <C> <C>
Income:
Unrealized appreciation during the period ................. $ 25 $ 15 $ 40
----- ------ -----
Net increase in assets from operations ..................... 25 15 40
----- ------ -----
Changes from principal transactions:
Transfer of net premiums ............................... 403 403 806
Transfer on termination ................................ (147) (146) (293)
----- ------ -----
Net increase in assets from principal transactions ......... 256 257 513
----- ------ -----
Total increase in assets ................................... 281 272 553
Assets at beginning of period............................... -- -- --
----- ------ -----
Assets at end of period .................................... $ 281 $ 272 $ 553
===== ===== =====
</TABLE>
* Reflects the period from commencement of operations August 26, 1999 through
December 31, 1999.
See accompanying notes.
3
<PAGE> 52
The Manufacturers Life Insurance Company of New York
Separate Account B
Notes to Financial Statements
December 31, 1999
1. ORGANIZATION
The Manufacturers Life Insurance Company of New York Separate Account B (the
Account) 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 invests in
thirty-nine sub-accounts of Manufacturers Investment Trust (the Trust). The
Account is a funding vehicle for single premium and variable universal life
policies (the Contracts) 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 the Manufacturers Life Insurance
Company ("Manulife Financial"), a Canadian life insurance company. Each
investment sub-account invests solely in shares of a particular Manufacturers
Investment Trust. Manufacturers Investment Trust is registered under the
Investment Company Act of 1940 as an open-end management investment company.
The Company is required to maintain assets in the Account with a total market
value at least equal to the reserves and other liabilities relating to the
variable benefits under all contracts participating in the Account. These assets
may not be charged with liabilities which arise from any other business the
Company conducts. However, all obligations under the variable contracts are
general corporate obligations of the Company.
Additional assets are held in the Company's general account to cover the
contingency that the guaranteed minimum death benefit might exceed the death
benefit which would have been payable in the absence of such guarantee.
4
<PAGE> 53
The Manufacturers Life Insurance Company of New York
Separate Account B
Notes to Financial Statements (continued)
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 accounting
principles generally accepted in the United States requires management to make
estimates and assumptions that affect the amounts reported in the financial
statements and accompanying notes. Such estimates and assumptions could change
in the future as more information becomes known, which could impact the amounts
reported and disclosed herein.
3. 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
<PAGE> 54
The Manufacturers Life Insurance Company of New York
Separate Account B
Notes to Financial Statements (continued)
4. PURCHASES AND SALES OF INVESTMENTS
The following table shows aggregate cost of shares purchased and proceeds from
sales of each Trust portfolio for the period ended December 31, 1999.
<TABLE>
<CAPTION>
PURCHASES SALES
--------- -----
<S> <C> <C>
Quantitative Equity Trust $ 256 $ --
Growth and Income Trust 257 --
--------- -----
Total $ 513 $ --
========= =====
</TABLE>
5. UNIT VALUES
A summary of the accumulation unit values outstanding at December 31, 1999 and
accumulation units and dollar value outstanding at December 31, 1999 for the
variable life contracts are as follows:
<TABLE>
<CAPTION>
UNIT VALUE UNITS DOLLARS
---------- ----- -------
<S> <C> <C> <C>
Quantitative Equity Trust $ 11.76 23.92 $ 281
Growth and Income Trust 11.40 23.87 272
-------
Total $ 553
=======
</TABLE>
6. RELATED PARTY TRANSACTIONS
The Company has a formal service agreement with its affiliate, The
Manufacturers Life Insurance Company, which can be terminated by either party
upon 30 days' notice. Under this agreement, the Company pays for legal,
actuarial, investment and certain other administrative services. The Company
has an underwriting agreement with its affiliate, Manufacturers Securities
Services LLC (MSS). MSS has an Administrative Services Agreement with Wood
Logan for marketing services for the sale of variable universal life contracts.
6
<PAGE> 55
AUDITED FINANCIAL STATEMENTS
THE MANUFACTURERS LIFE INSURANCE
COMPANY OF NEW YORK
Years ended December 31, 1999, 1998 and 1997
<PAGE> 56
The Manufacturers Life Insurance Company of New York
Audited Financial Statements
Years ended December 31, 1999, 1998 and 1997
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> 57
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 (the Company) as of December 31, 1999 and 1998,
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, 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 audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. 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, 1999 and 1998, and the results of
its operations and its cash flows for each of the three years in the period
ended December 31, 1999, in conformity with accounting principles generally
accepted in the United States.
/s/ ERNST & YOUNG LLP
Boston, Massachusetts
February 21, 2000
1
<PAGE> 58
THE MANUFACTURERS LIFE INSURANCE COMPANY OF NEW YORK
BALANCE SHEETS
<TABLE>
<CAPTION>
As at December 31
ASSETS ($ thousands) 1999 1998
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
INVESTMENTS:
Fixed maturity securities available-for-sale, at fair value
(note 3)
(amortized cost: 1999 $125,429; 1998 $120,902) $ 122,301 $ 125,088
Investment in unconsolidated affiliate 175 175
Policy loans 930 552
Short-term investments 41,311 10,032
- --------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS $ 164,717 $ 135,847
- --------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents 7,093 5,946
Accrued investment income 3,036 3,073
Deferred acquisition costs (note 5) 50,476 36,831
Other assets 456 1,834
Separate account assets 1,119,103 833,693
- --------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS $1,344,881 $1,017,224
====================================================================================================================
LIABILITIES AND SHAREHOLDER'S EQUITY ($ thousands)
- --------------------------------------------------------------------------------------------------------------------
LIABILITIES:
Policyholder liabilities and accruals $ 131,104 $ 94,492
Payable to affiliates 3,825 4,114
Deferred income taxes (note 6) 4,382 3,615
Other liabilities 5,258 1,943
Separate account liabilities 1,119,103 833,693
- --------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES $1,263,672 $ 937,857
- --------------------------------------------------------------------------------------------------------------------
SHAREHOLDER'S EQUITY:
Common stock (note 7) $ 2,000 $ 2,000
Additional paid-in capital 72,706 72,706
Retained earnings 8,947 3,209
Accumulated other comprehensive income (loss) (2,444) 1,452
- --------------------------------------------------------------------------------------------------------------------
TOTAL SHAREHOLDER'S EQUITY $ 81,209 $ 79,367
- --------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND SHAREHOLDER'S EQUITY $1,344,881 $1,017,224
====================================================================================================================
</TABLE>
See accompanying notes.
2
<PAGE> 59
THE MANUFACTURERS LIFE INSURANCE COMPANY OF NEW YORK
STATEMENTS OF INCOME
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31
($ thousands) 1999 1998 1997
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
REVENUES:
Fees from separate accounts and policyholder liabilities $14,670 $10,961 $ 7,395
Premiums 175 - -
Net investment income (note 3) 16,944 9,786 6,717
Net realized investment (losses) gains (222) 713 769
- ---------------------------------------------------------------------------------------------------------------------
TOTAL REVENUE $31,567 $21,460 $14,881
- ---------------------------------------------------------------------------------------------------------------------
BENEFITS AND EXPENSES:
Policyholder benefits and claims $ 6,613 $ 4,603 $ 4,747
Amortization of deferred acquisition costs (note 5) 4,287 4,849 3,393
Other insurance expenses 11,834 10,359 5,845
- ---------------------------------------------------------------------------------------------------------------------
TOTAL BENEFITS AND EXPENSES $22,734 $19,811 $13,985
- ---------------------------------------------------------------------------------------------------------------------
INCOME BEFORE INCOME TAXES $ 8,833 $ 1,649 $ 896
- ---------------------------------------------------------------------------------------------------------------------
INCOME TAXES (NOTE 6) $ 3,095 $ 576 $ 310
- ---------------------------------------------------------------------------------------------------------------------
NET INCOME $ 5,738 $ 1,073 $ 586
=====================================================================================================================
</TABLE>
See accompanying notes.
3
<PAGE> 60
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 (LOSS) EQUITY
(NOTE 7)
-------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balance at January 1, 1997 $2,000 $24,800 $1,550 $ 419 $28,769
Capital contribution - 47,731 - - 47,731
Comprehensive income (note 4) - - 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 4) - - 1,073 357 1,430
-------------------------------------------------------------------------------------------------------------------
BALANCE, DECEMBER 31, 1998 2,000 72,706 3,209 1,452 79,367
Comprehensive income (Loss) (note 4) - - 5,738 (3,896) 1,842
-------------------------------------------------------------------------------------------------------------------
BALANCE, DECEMBER 31, 1999 $2,000 $72,706 $8,947 $ (2,444) $81,209
===================================================================================================================
</TABLE>
See accompanying notes.
4
<PAGE> 61
THE MANUFACTURERS LIFE INSURANCE COMPANY OF NEW YORK
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31
($ thousands) 1999 1998 1997
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Net income $ 5,738 $ 1,073 $ 586
Adjustments to reconcile net income to net cash provided by (used in)
operating activities:
Amortization of bond discount and premium 585 434 333
Net realized investment losses (gains) 222 (713) (769)
Provision for deferred income tax 1,857 1,153 (29)
Amortization of deferred acquisition costs 4,287 4,849 3,393
Policy acquisition costs deferred (15,604) $ (14,515) $ (11,684)
Return credited to policyholders and other benefits 6,613 4,603 4,747
Changes in assets and liabilities:
Accrued investment income 37 (672) (873)
Other assets 1,378 (1,603) (80)
Payable to affiliates (289) (231) 2,328
Other liabilities 3,315 956 115
- ------------------------------------------------------------------------------------------------------------------------
Net cash provided by (used in) operating activities $ 8,139 $ (4,666) $ (1,933)
- ------------------------------------------------------------------------------------------------------------------------
INVESTING ACTIVITIES:
Fixed maturity securities sold, matured or repaid $ 73,626 $ 30,591 $ 59,307
Fixed maturity securities purchased (78,960) $ (24,500) (103,383)
Net change in short-term investments (31,279) (34) (6,011)
Policy loans advanced, net (378) (154) (215)
- ------------------------------------------------------------------------------------------------------------------------
Cash (used in) provided by investing activities $ (36,991) $ 5,903 $ (50,302)
- ------------------------------------------------------------------------------------------------------------------------
FINANCING ACTIVITIES:
Deposits to policyholder funds $ 50,351 $ 14,212 17,212
Return of policyholder funds (20,352) (10,934) (15,382)
Capital contribution by parent - - 47,731
- ------------------------------------------------------------------------------------------------------------------------
Cash provided by financing activities $ 29,999 $ 3,278 $ 49,561
- ------------------------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS:
Increase (decrease) during the year 1,147 4,515 (2,674)
Balance, beginning of year 5,946 1,431 4,105
- ------------------------------------------------------------------------------------------------------------------------
BALANCE, END OF YEAR $ 7,093 $ 5,946 $ 1,431
========================================================================================================================
</TABLE>
See accompanying notes
5
<PAGE> 62
THE MANUFACTURERS LIFE INSURANCE COMPANY OF NEW YORK
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999
(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 ("NASL") and hereinafter referred to as "MNA"), which
is, in turn, a wholly-owned subsidiary of Manulife-Wood Logan Holding
Co., Inc. (hereinafter referred to as "MWLH"). MWLH is an indirect
wholly-owned subsidiary of The Manufacturers Life Insurance Company
("MLI"); prior to June 1, 1999, MLI indirectly owned 85% of MWLH, and
minority shareholders associated with MWLH owned the remaining 15%. MLI
is a wholly-owned subsidiary of Manulife Financial Corporation, a
publicly traded company. Manulife Financial Corporation and its
subsidiaries are known collectively as "Manulife Financial."
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 noninsulated 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 either the shares of 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
6
<PAGE> 63
1. ORGANIZATION (CONTINUED)
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.
Prior to October 1, 1997, Manulife Wood Logan, Inc. (formerly Wood
Logan Associates and hereinafter referred to as "MWL"), a subsidiary of
MWLH, 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 MLI. Currently, services are provided by MLI, MWLH, MNA and
The Manufacturers Life Insurance Company (U.S.A.)
("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") in
the United States.
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) In June 1998, the Financial Accounting Standards Board (FASB) issued
Statement No. 133, "Accounting for Derivative Instruments and Hedging
Activities" (SFAS No. 133). SFAS No. 133 establishes accounting and
reporting standards for derivative instruments and for hedging
activities. Contracts that contain embedded derivatives, such as
certain insurance contracts, are also addressed by the Statement. SFAS
No. 133 requires that an entity recognize all derivatives as either
assets or liabilities in the statement of financial position and
measure those instruments at fair value. In July 1999, the FASB issued
Statement 137, which delayed the effective date of SFAS No. 133 to
fiscal years beginning after June 15, 2000. The Company is evaluating
the accounting implications of SFAS No. 133 and has not determined its
impact on the Company's results of operations or its financial
condition.
7
<PAGE> 64
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
b) RECENT ACCOUNTING STANDARDS (CONTINUED)
ii) In December 1997, the American Institute of Certified Public
Accountant's Accounting Standards Executive Committee (AcSEC) issued
Statement of Position (SOP) 97-3, "Accounting by Insurance and Other
Enterprises for Insurance-Related Assessments." SOP 97-3 provides
guidance on the recognition and measurement of liabilities for various
assessments related to insurance activities, including those by state
guaranty funds. The Company adopted SOP 97-3 during 1999. Prior to the
adoption of SOP 97-3, the Company expensed and recognized liabilities
for such assessments on a "pay-as-you-go" basis. The effect of adopting
SOP 97-3 did not have a material impact on the results of operations
and financial condition of the Company for the year ended December 31,
1999.
iii) In March 1998, AcSEC issued SOP 98-1, "Accounting for the Costs of
Computer Software Developed or Obtained for Internal Use." SOP 98-1
requires the capitalization of certain costs incurred in connection
with developing or obtaining internal-use software. The Company adopted
SOP 98-1 during 1999. Prior to the adoption of SOP 98-1, the Company
expensed internal-use software-related costs as incurred. The effect of
adopting SOP 98-1 did not have a material impact on the results of
operations and financial condition of the Company for the year ended
December 31, 1999.
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.
8
<PAGE> 65
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
c) INVESTMENTS (CONTINUED)
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 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.
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 nonparticipating 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 adverse deviation.
9
<PAGE> 66
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
g) SEPARATE ACCOUNTS
Separate account assets and liabilities that are reported in the
accompanying balance sheets represent investments in either 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.
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
nonparticipating life insurance policies are recognized as revenue when
due. 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.
10
<PAGE> 67
3. INVESTMENTS AND INVESTMENT INCOME
a) FIXED-MATURITY SECURITIES
At December 31, 1999 and 1998, 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) 1999 1998 1999 1998 1999 1998 1999 1998
-------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
U.S. government $ 21,147 $ 11,018 $ - $ 591 $ (536) $(15) $ 20,611 $ 11,594
Corporate securities 92,532 99,696 122 3,321 (2,486) (35) 90,168 102,982
Mortgage-backed securities 8,278 6,680 27 125 (184) (21) 8,121 6,784
Foreign governments 2,414 2,449 23 111 - - 2,437 2,560
States/political subdivisions 1,058 1,059 - 109 (94) - 964 1,168
-------------------------------------------------------------------------------------------------------------------
TOTAL FIXED-MATURITY SECURITIES $125,429 $120,902 $172 $4,257 $(3,300) $(71) $122,301 $125,088
-------------------------------------------------------------------------------------------------------------------
</TABLE>
Proceeds from sales of fixed-maturity securities during 1999 were
$60,595 (1998, $17,985; 1997, $45,217). Gross gains of $301 and gross
losses of $523 were realized on those sales (1998, $715 and $2; 1997,
$772 and $6, respectively).
The contractual maturities of fixed-maturity securities at December 31,
1999 are shown below. Expected maturities may differ from contractual
maturities because borrowers may have the right to call or prepay
obligations with or without prepayment penalties. Corporate
requirements and investment strategies may result in the sale of
investments before maturity.
<TABLE>
<CAPTION>
($ thousands) AMORTIZED COST FAIR VALUE
-----------------------------------------------------------------------------------------------------------
<S> <C> <C>
FIXED-MATURITY SECURITIES
One year or less $ 38,416 $ 38,507
Greater than 1; up to 5 years 46,376 45,790
Greater than 5; up to 10 years 15,922 15,114
Due after 10 years 16,437 14,769
Mortgage-backed securities 8,278 8,121
-----------------------------------------------------------------------------------------------------------
TOTAL FIXED-MATURITY SECURITIES $125,429 $122,301
-----------------------------------------------------------------------------------------------------------
</TABLE>
Fixed-maturity securities with a fair value of $438 and $410 at December
31, 1999 and 1998, respectively, were on deposit with or in custody
accounts on behalf of New York State Insurance Department to satisfy
regulatory requirements.
11
<PAGE> 68
3. INVESTMENTS AND INVESTMENT INCOME (CONTINUED)
b) INVESTMENT INCOME
Income by type of investment was as follows:
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31
($ thousands) 1999 1998 1997
-----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Fixed-maturity securities $ 8,147 $8,338 $6,342
Other invested assets 7,476 830 -
Short-term investments 1,443 762 477
-----------------------------------------------------------------------------------------------------------
Gross investment income 17,066 9,930 6,819
-----------------------------------------------------------------------------------------------------------
Investment expenses
(122) (144) (102)
-----------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME $16,944 $9,786 $6,717
===========================================================================================================
</TABLE>
The Company includes income earned from its investment in MSS in the
other invested assets category. Income earned from the Company's
investment in MSS was $7,453 and $813 for the years ended December 31,
1999 and 1998, respectively.
4. COMPREHENSIVE INCOME
Total comprehensive income was as follows:
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31
($ thousands) 1999 1998 1997
-----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
NET INCOME $ 5,738 $1,073 $ 586
-----------------------------------------------------------------------------------------------------------
OTHER COMPREHENSIVE (LOSS) INCOME, NET OF TAX (BENEFITS):
Unrealized holding (losses) gains arising
during the year (4,038) 820 1,176
Less:
Reclassification adjustment for realized
(losses) gains included in net income (142) 463 500
-----------------------------------------------------------------------------------------------------------
Other comprehensive (loss) income (3,896) 357 676
-----------------------------------------------------------------------------------------------------------
COMPREHENSIVE INCOME $ 1,842 $1,430 $1,262
===========================================================================================================
</TABLE>
Other comprehensive (loss) income is reported net of income taxes
(benefit) of $(1,088), $192, and $364 for 1999, 1998 and 1997,
respectively.
12
<PAGE> 69
5. DEFERRED ACQUISITION COSTS
The components of the change in DAC were as follows:
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31
($ thousands) 1999 1998 1997
----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Balance at January 1 $36,831 $28,364 $20,208
Capitalization 15,604 14,515 11,684
Amortization (4,287) (4,849) (3,393)
Effect of net unrealized losses (gains)
on securities available-for-sale 2,328 (1,199) (135)
----------------------------------------------------------------------------------------------------------
BALANCE AT DECEMBER 31 $50,476 $36,831 $28,364
==========================================================================================================
</TABLE>
6. INCOME TAXES
The components of income tax expense were as follows:
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31
($ thousands) 1999 1998 1997
----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Current expense (benefit) $1,238 $ (577) $339
Deferred expense (benefit) 1,857 1,153 (29)
----------------------------------------------------------------------------------------------------------
TOTAL EXPENSE $3,095 $ 576 $310
==========================================================================================================
</TABLE>
Components of the Company's net deferred tax liability are as follows:
<TABLE>
<CAPTION>
AS AT DECEMBER 31
($ thousands) 1999 1998
-----------------------------------------------------------------------------------------------------------
<S> <C> <C>
DEFERRED TAX ASSETS:
Reserves $ 708 $ 389
Unrealized losses on securities available-for-sale 963 -
-----------------------------------------------------------------------------------------------------------
Gross deferred tax assets 1,671 389
Valuation allowance -
(657) -
-----------------------------------------------------------------------------------------------------------
Net deferred tax assets 1,014 389
-----------------------------------------------------------------------------------------------------------
DEFERRED TAX LIABILITIES:
Deferred acquisition costs (5,147) (2,203)
Unrealized gains on securities available-for-sale - (784)
Other (249) (1,017)
-----------------------------------------------------------------------------------------------------------
Total deferred tax liabilities (5,396) (4,004)
-----------------------------------------------------------------------------------------------------------
NET DEFERRED TAX LIABILITY $(4,382) $(3,615)
===========================================================================================================
</TABLE>
As of December 31, 1999, the Company had $3,128 of unrealized capital
losses in its available for sale portfolio. Under federal tax law,
utilization of these capital losses, when realized, is limited to use
as an offset against capital gains. The Company believes that it is
more likely than not that it will be unable to realize the benefit of
the full deferred tax asset related to the net unrealized capital
losses. The Company has therefore established a valuation allowance for
13
<PAGE> 70
6. INCOME TAXES (CONTINUED)
the amount in excess of the available capital gains. The Company
believes that it will realize the full benefit of its remaining
deferred tax assets.
The Company participates as a member of the MWLH-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 received a refund of $719 in 1999 and made tax payments of
$1,121 and $531 in 1998 and 1997, respectively.
7. SHAREHOLDER'S EQUITY
The Company has one class of common stock:
<TABLE>
<CAPTION>
AS AT DECEMBER 31:
($ thousands) 1999 1998
-----------------------------------------------------------------------------------------------------------
<S> <C> <C>
AUTHORIZED, ISSUED AND OUTSTANDING:
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, 1999 was $63,470 (1998, $62,881). The aggregate statutory net
income (loss) of the Company for the year ended 1999 was $932; (1998,
($5,678); 1997, ($1,562)). 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, nonadmitted asset
balances, and reserves.
8. REINSURANCE
The Company has entered into reinsurance agreements with various
reinsurers to reinsure any face amounts in excess of $100 for its
traditional nonparticipating 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.
14
<PAGE> 71
9. RELATED-PARTY TRANSACTIONS
The Company utilized various services provided by MLI and affiliates,
such as legal, personnel, investment accounting and other corporate
services. Prior to October 1, 1997, MLI and MNA charged the Company for
those services. In the first nine months of 1997, MLI and MNA charged
the Company approximately $623. Effective October 1, 1997, pursuant to
a revised plan of operations, all intercompany expenses were billed
through MLI. For the years ended December 31, 1999 and 1998, and for
the fourth quarter of 1997, MLI billed the Company expenses of $6,391,
$4,685 and $869, respectively. At December 31, 1999 and 1998, the
Company had a net liability to MLI of $2,664 and $2,372, respectively,
for those services.
For the nine months ended September 30, 1997, the Company paid
underwriting commissions to NASL Financial of $8,421. NASL Financial
then reimbursed MWL 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 MWL marketing services
expenses were paid by MLI, who was then reimbursed by the Company.
Underwriting commissions and marketing services expense of $19,575 and
$17,838 was incurred during the years ended December 31, 1999 and 1998,
respectively, and $4,431 was incurred during the fourth quarter of
1997. At December 31, 1999 and 1998, the Company had a net liability of
$1,161 and $799, 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, 6, 11 and 14 for additional related-party transactions).
10. 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 advances
under the line of credit at December 31, 1999 and 1998.
11. EMPLOYEE BENEFITS
a) RETIREMENT PLAN
Prior to July 1, 1998, the Company and MNA participated in a
noncontributory defined benefit pension plan (the Nalaco Plan)
sponsored by MLI, 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.
15
<PAGE> 72
11. EMPLOYEE BENEFITS (CONTINUED)
a) RETIREMENT PLAN (CONTINUED)
Effective July 1, 1998, the Nalaco Plan was merged into the Manulife
Plan as approved by the Board of Directors of MLI. 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 plan sponsor in 1999, 1998 or 1997 because the
plan was subject to the full funding limitation under the Internal
Revenue Code.
At December 31, 1999, the projected benefit obligation based on an
assumed interest rate of 7.5% was $47,124. The fair value of plan
assets invested in ManUSA's general fund deposit administration
insurance contracts was $86,777.
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 (NASL 401k), 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 costs
associated with the Plan were charged to the Company and were not
material.
c) OTHER POSTRETIREMENT BENEFIT PLAN
In addition to the retirement plan, the Company participates in the
other postretirement benefit plan of MNA which provides retiree medical
and life insurance benefits to those who have attained age 55 with ten
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.
16
<PAGE> 73
11. EMPLOYEE BENEFITS (CONTINUED)
c) OTHER POSTRETIREMENT BENEFIT PLAN (CONTINUED)
The other postretirement benefit cost of the Company, which includes
the expected cost of post-retirement 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.
12. FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying values and estimated fair values of the Company's
financial instruments at December 31 were as follows:
<TABLE>
<CAPTION>
1999 1998
-----------------------------------------------------------------------------
CARRYING FAIR CARRYING FAIR
VALUE VALUE VALUE VALUE
-----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Assets:
Fixed-maturity securities $122,301 $122,301 $125,088 $125,088
Policy loans 930 930 552 552
Short-term investments 41,311 41,311 10,032 10,032
Cash and cash equivalents 7,093 7,093 5,946 5,946
Liabilities:
Policyholder liabilities and
accruals 130,808 126,272 94,492 91,113
</TABLE>
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.
Policy Loans: Carrying values approximate fair values.
Short-Term Investment and Cash and Cash Equivalents: 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.
13. LEASES
The Company leases office space under various operating lease
agreements which will expire between 2000 and 2005. For the years ended
December 31, 1999, 1998 and 1997 the Company incurred rent expense of
$166, $95 and $84, respectively.
17
<PAGE> 74
13. LEASES (CONTINUED)
The minimum lease payments associated with the office space under the
operating lease agreements are as follows:
YEAR ENDED MINIMUM LEASE PAYMENTS
---------------------------------------------
2000 $ 247
2001 231
2002 235
2003 221
2004 and after 346
---------------------------------------------
Total $1,280
---------------------------------------------
14. CAPITAL MAINTENANCE AGREEMENT
Pursuant to a capital maintenance agreement and subject to regulatory
approval, MLI 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.
15. 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> 75
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 0.945% per annum. The
gross annual rates of return of 0%, 6% and 12% correspond to approximate net
annual rates of return of -0.941%, 5.003% and 10.947%. The illustrations reflect
the current expense reimbursements in effect for the Lifestyle Trusts and Index
Trusts. In the absence of such expense reimbursements, the average of the
Portfolio's current expenses would have been 0.950% 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 -0.946%, 4.998% and 10.941%. The expense
reimbursements for the Lifestyle Trusts and Index Trusts is expected to remain
in effect during the fiscal year ended December 31, 2000. Were the expense
reimbursements 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
__________. 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> 76
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 Value Surrender Benefit Value Surrender Benefit Value Surrender Benefit
Year(1) (2) 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 2,270 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 4,002 408 500,000 4,755 1,161 500,000 5,610 2,016 500,000
5 13,112 4,952 1,948 500,000 6,065 3,062 500,000 7,380 4,377 500,000
6 16,141 5,829 3,416 500,000 7,372 4,960 500,000 9,271 6,858 500,000
7 19,321 6,628 4,806 500,000 8,671 6,849 500,000 11,289 9,467 500,000
8 22,660 7,381 6,150 500,000 9,991 8,761 500,000 13,478 12,248 500,000
9 26,166 8,122 7,482 500,000 11,370 10,730 500,000 15,895 15,255 500,000
10 29,847 8,847 8,798 500,000 12,805 12,755 500,000 18,555 18,506 500,000
15 51,206 11,588 11,588 500,000 20,407 20,407 500,000 36,355 36,355 500,000
20 78,466 12,290 12,290 500,000 27,924 27,924 500,000 63,857 63,857 500,000
25 113,256 9,418 9,418 500,000 33,721 33,721 500,000 106,472 106,472 500,000
30 157,659 0(4) 0(4) 0(4) 33,139 33,139 500,000 171,792 171,792 500,000
35 214,330 18,823 18,823 500,000 275,424 275,424 500,000
40 286,658 0(4) 0(4) 0(4) 451,056 451,056 500,000
45 378,968 755,277 755,277 793,041
50 496,783 1,247,840 1,247,840 1,310,232
55 647,147 2,032,488 2,032,488 2,134,113
60 839,054 3,314,199 3,314,199 3,347,341
65 1,083,982 5,515,578 5,515,578 5,515,578
</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 5 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-2
<PAGE> 77
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 Value Surrender Benefit Value Surrender Benefit Value Surrender Benefit
Year(1) (2) 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 1,955 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 4,498 904 500,000 5,331 1,737 500,000
5 13,112 4,552 1,549 500,000 5,625 2,622 500,000 6,896 3,893 500,000
6 16,141 5,255 2,842 500,000 6,727 4,314 500,000 8,545 6,133 500,000
7 19,321 5,859 4,037 500,000 7,787 5,966 500,000 10,273 8,452 500,000
8 22,660 6,366 5,136 500,000 8,805 7,574 500,000 12,088 10,857 500,000
9 26,166 6,764 6,124 500,000 9,764 9,124 500,000 13,985 13,345 500,000
10 29,847 7,055 7,005 500,000 10,661 10,611 500,000 15,972 15,922 500,000
15 51,206 6,984 6,984 500,000 14,379 14,379 500,000 28,301 28,301 500,000
20 78,466 2,018 2,018 500,000 13,652 13,652 500,000 43,140 43,140 500,000
25 113,256 0 (4) 0 (4) 0 (4) 2,629 2,629 500,000 57,922 57,922 500,000
30 157,659 0 (4) 0 (4) 0 (4) 66,380 66,380 500,000
35 214,330 51,079 51,079 500,000
40 286,658 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 5 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> 78
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 3,873 0 503,873 4,265 0 504,265
3 10,162 5,219 575 505,219 5,953 1,309 505,953 6,750 2,106 506,750
4 13,894 6,883 2,894 506,883 8,089 4,101 508,089 9,454 5,465 509,454
5 17,812 8,518 5,185 508,518 10,317 6,984 510,317 12,431 9,099 512,431
6 21,926 10,066 7,389 510,066 12,576 9,899 512,576 15,647 12,970 515,647
7 26,246 11,524 9,502 511,524 14,864 12,843 514,864 19,119 17,098 519,119
8 30,782 12,921 11,555 512,921 17,212 15,846 517,212 22,904 21,538 522,904
9 35,544 14,294 13,584 514,294 19,658 18,948 519,658 27,072 26,362 527,072
10 40,545 15,639 15,584 515,639 22,202 22,147 522,202 31,655 31,601 531,655
15 69,558 21,602 21,602 521,602 36,480 36,480 536,480 62,969 62,969 562,969
20 106,588 25,267 25,267 525,267 52,188 52,188 552,188 112,268 112,268 612,268
25 153,848 25,114 25,114 525,114 67,906 67,906 567,906 189,490 189,490 689,490
30 214,166 17,492 17,492 517,492 79,147 79,147 579,147 307,866 307,866 807,866
35 291,148 0 (4) 0 (4) 0 (4) 79,260 79,260 579,260 488,238 488,238 988,238
40 389,398 56,007 56,007 556,007 760,853 760,853 1,260,853
45 514,793 0 (4) 0 (4) 0 (4) 1,164,760 1,164,760 1,664,760
50 674,833 1,751,745 1,751,745 2,251,745
55 879,089 2,598,371 2,598,371 3,098,371
60 1,139,777 3,838,254 3,838,254 4,338,254
65 1,472,488 5,715,523 5,715,523 6,215,523
</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 5 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-4
<PAGE> 79
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 Value Surrender Benefit Value Surrender Benefit Value Surrender Benefit
Year (1) (2) Value Value (3) Value (3)
(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 5,078 434 505,078 5,802 1,158 505,802 6,589 1,946 506,589
4 13,894 6,645 2,657 506,645 7,831 3,843 507,831 9,173 5,185 509,173
5 17,812 8,116 4,784 508,116 9,874 6,541 509,874 11,944 8,611 511,944
6 21,926 9,489 6,812 509,489 11,926 9,249 511,926 14,916 12,239 514,916
7 26,246 10,750 8,728 510,750 13,974 11,952 513,974 18,094 16,073 518,094
8 30,782 11,900 10,534 511,900 16,016 14,650 516,016 21,499 20,134 521,499
9 35,544 12,928 12,217 512,928 18,037 17,326 518,037 25,139 24,428 525,139
10 40,545 13,834 13,779 513,834 20,036 19,981 520,036 29,036 28,981 529,036
15 69,558 16,979 16,979 516,979 30,392 30,392 530,392 54,764 54,764 554,764
20 106,588 15,034 15,034 515,034 37,820 37,820 537,820 91,035 91,035 591,035
25 153,848 4,383 4,383 504,383 37,057 37,057 537,057 139,630 139,630 639,630
30 214,166 0 (4) 0 (4) 0 (4) 19,243 19,243 519,243 200,996 200,996 700,996
35 291,148 0 (4) 0 (4) 0 (4) 269,513 269,513 769,513
40 389,398 328,347 328,347 828,347
45 514,793 334,106 334,106 834,106
50 674,833 210,013 210,013 710,013
55 879,089 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 5 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> 80
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 Value Surrender Benefit Value Surrender Benefit Value Surrender Benefit
Year (1) (2) 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 7,277 0 500,000 8,161 0 500,000 9,089 640 500,000
3 26,282 10,712 3,309 500,000 12,390 4,987 500,000 14,223 6,820 500,000
4 35,934 13,901 7,543 500,000 16,611 10,253 500,000 19,695 13,336 500,000
5 46,067 17,062 11,748 500,000 21,045 15,732 500,000 25,767 20,454 500,000
6 56,708 19,897 15,629 500,000 25,399 21,131 500,000 32,198 27,930 500,000
7 67,880 22,425 19,203 500,000 29,687 26,464 500,000 39,047 35,824 500,000
8 79,611 24,748 22,570 500,000 34,007 31,830 500,000 46,468 44,290 500,000
9 91,928 26,957 25,825 500,000 38,457 37,324 500,000 54,621 53,488 500,000
10 104,862 29,095 29,008 500,000 43,083 42,996 500,000 63,630 63,543 500,000
15 179,900 31,657 31,657 500,000 62,557 62,557 500,000 120,164 120,164 500,000
20 275,671 15,627 15,627 500,000 69,276 69,276 500,000 202,896 202,896 500,000
25 397,901 0 (4) 0 (4) 0 (4) 40,651 40,651 500,000 333,111 333,111 500,000
30 553,901 0 (4) 0 (4) 0 (4) 574,471 574,471 603,195
35 753,000 979,835 979,835 1,028,827
40 1,007,108 1,641,815 1,641,815 1,658,233
45 1,331,420 2,776,776 2,776,776 2,776,776
</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 5 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-6
<PAGE> 81
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 6,633 0 500,000 7,497 0 500,000 8,405 0 500,000
3 26,282 9,052 1,648 500,000 10,640 3,237 500,000 12,383 4,980 500,000
4 35,934 11,003 4,645 500,000 13,485 7,127 500,000 16,331 9,973 500,000
5 46,067 12,436 7,122 500,000 15,962 10,649 500,000 20,193 14,880 500,000
6 56,708 13,298 9,030 500,000 17,998 13,730 500,000 23,908 19,640 500,000
7 67,880 13,531 10,309 500,000 19,508 16,285 500,000 27,403 24,180 500,000
8 79,611 13,052 10,874 500,000 20,379 18,202 500,000 30,571 28,394 500,000
9 91,928 11,758 10,625 500,000 20,473 19,341 500,000 33,283 32,150 500,000
10 104,862 9,537 9,450 500,000 19,636 19,549 500,000 35,382 35,295 500,000
15 179,900 0 (4) 0 (4) 0 (4) 0 (4) 0 (4) 0 (4) 33,431 33,431 500,000
20 275,671 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 5 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> 82
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 Value Surrender Benefit Value Surrender Benefit Value Surrender Benefit
Year (1) (2) 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 7,600 0 507,600 8,125 0 508,125
2 24,915 13,797 2,997 513,797 15,276 4,476 515,276 16,821 6,022 516,821
3 38,315 20,368 10,905 520,368 23,239 13,775 523,239 26,358 16,895 526,358
4 52,384 26,610 18,483 526,610 31,311 23,183 531,311 36,627 28,499 536,627
5 67,157 32,747 25,955 532,747 39,723 32,932 539,723 47,934 41,142 547,934
6 82,669 38,472 33,016 538,472 48,172 42,716 548,172 60,057 54,601 560,057
7 98,956 43,804 39,684 543,804 56,671 52,552 556,671 73,091 68,971 573,091
8 116,057 48,850 46,067 548,850 65,326 62,543 565,326 87,235 84,451 587,235
9 134,014 53,711 52,264 553,711 74,242 72,795 574,242 102,702 101,255 602,702
10 152,869 58,431 58,320 558,431 83,473 83,362 583,473 119,671 119,560 619,671
15 262,260 73,775 73,775 573,775 129,119 129,119 629,119 228,734 228,734 728,734
20 401,875 69,201 69,201 569,201 164,668 164,668 664,668 384,412 384,412 884,412
25 580,063 28,838 28,838 528,838 168,352 168,352 668,352 595,974 595,974 1,095,974
30 807,481 0 (4) 0 (4) 0 (4) 100,250 100,250 600,250 863,653 863,653 1,363,653
35 1,097,730 0 (4) 0 (4) 0 (4) 1,180,204 1,180,204 1,680,204
40 1,468,170 1,540,121 1,540,121 2,040,121
45 1,940,956 1,956,573 1,956,573 2,456,573
</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 5 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-8
<PAGE> 83
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 7,600 0 507,600 8,125 0 508,125
2 24,915 13,144 2,344 513,144 14,602 3,803 514,602 16,126 5,327 516,126
3 38,315 18,684 9,221 518,684 21,460 11,997 521,460 24,485 15,021 524,485
4 52,384 23,672 15,544 523,672 28,134 20,007 528,134 33,199 25,072 533,199
5 67,157 28,056 21,265 528,056 34,553 27,762 534,553 42,244 35,453 542,244
6 82,669 31,789 26,334 531,789 40,646 35,191 540,646 51,588 46,133 551,588
7 98,956 34,817 30,698 534,817 46,334 42,214 546,334 61,195 57,075 561,195
8 116,057 37,062 34,279 537,062 51,506 48,722 551,506 70,995 68,211 570,995
9 134,014 38,435 36,988 538,435 56,034 54,586 556,034 80,898 79,450 580,898
10 152,869 38,840 38,729 538,840 59,779 59,667 559,779 90,798 90,687 590,798
15 262,260 26,396 26,396 526,396 66,039 66,039 566,039 142,714 142,714 642,714
20 401,875 0 (4) 0 (4) 0 (4) 25,999 25,999 525,999 173,988 173,988 673,988
25 580,063 0 (4) 0 (4) 0 (4) 133,995 133,995 633,995
30 807,481 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 5 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> 84
PART II
OTHER INFORMATION
UNDERTAKINGS
Undertaking to File Reports.
Subject to the terms and conditions of Section 15(d) of the Securities Exchange
Act of 1934, the undersigned registrant hereby undertakes to file with the
Securities and Exchange Commission such supplementary and periodic information,
documents, and reports as may be prescribed by any rule or regulation of the
Commission heretofore or hereafter duly adopted pursuant to authority conferred
in that section.
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.
Rule 484 Undertaking.
Article 10 of the Charter of the Company provides as follows:
TENTH: No director of the Corporation shall be personally liable to the
Corporation or any of its shareholders for damages for any breach of duty as a
director; provided, however, the foregoing provision shall not eliminate or
limit (i) the liability of a director if a judgment or other final adjudication
adverse to such director established his or her such acts or omissions were in
bad faith or involved intentional misconduct or were acts or omissions (a) which
he or she knew or reasonably should have known violated the New York Insurance
Law or (b) which violated a specific standard of care imposed on directors
directly, and not by reference, by a provision of the New York Insurance Law (or
any regulations promulgated thereunder) or (c) which constituted a knowing
violation of any other law, or establishes that the director personally gained
in fact a financial profit or other advantage to which the director was not
legally entitled or (ii) the liability of a director for any act or omission
prior to the adoption of this Article by the shareholders of the Corporation.
Any repeal or modification of this Article by the shareholders of the
Corporation shall be prospective only, and shall not adversely affect any
limitation on the personal liability of a director of the Corporation existing
at the time of such repeal or modification.
Article VII of the By-laws of the Company provides as follows:
Section VII.1. Indemnification of Directors and Officers. The Corporation may
indemnify any person made, or threatened to be made, a party to an action by or
in the right of the corporation to procure a judgment in its favor by reason of
the fact that he or she, his or her testator, testatrix or intestate, is or was
a director or officer of the Corporation, or is or was serving at the request of
the Corporation as a director or officer of any other corporation of any type or
kind, domestic or foreign, of any partnership, joint venture, trust, employee
benefit plan or other enterprise, against amounts paid in settlement and
reasonable expenses, including attorneys' fees, actually and necessarily
incurred by him or her in connection with the defense or settlement of such
action, or in connection with an appeal therein, if such director or officer
acted, in good faith, for a purpose which he or she reasonably believed to be
in, or, in the case of service for any other corporation or any partnership,
joint venture, trust, employee benefit plan or other enterprise, not opposed to,
the best interests of the Corporation, except that no indemnification under this
Section shall be made in respect of (1) a threatened action, or a pending action
which is settled or is otherwise disposed of, or (2) any claim, issue or matter
as to which such person shall have been adjudged to be liable to the
Corporation, unless and only to the extent that the court in which the action
was brought, or , if no action was brought, any court of competent jurisdiction,
determines upon application that, in view of
<PAGE> 85
all the circumstances of the case, the person is fairly and reasonably entitled
to indemnity for such portion of the settlement amount and expenses as the court
deems proper.
The Corporation may indemnify any person made, or threatened to be made, a party
to an action or proceeding (other than one by or in the right of the Corporation
to procure a judgment in its favor), whether civil or criminal, including an
action by or in the right of any other corporation of any type or kind, domestic
or foreign, or any partnership, joint venture, trust, employee benefit plan or
other enterprise, which any director or officer of the Corporation served in any
capacity at the request of the Corporation, by reason of the fact that he or
she, his or her testator, testatrix or intestate, was a director or officer of
the Corporation, or served such other corporation, partnership, joint venture,
trust, employee benefit plan or other enterprise in any capacity, against
judgments, fines, amounts paid in settlement and reasonable expenses, including
attorneys' fees actually and necessarily incurred as a result of such action or
proceeding, or any appeal therein, if such director or officer acted, in good
faith, for a purpose which he or she reasonably believed to be in, or, in the
case of service for any other corporation or any partnership, joint venture,
trust, employee benefit plan or other enterprise, not opposed to, the best
interests of the Corporation and, in criminal actions or proceedings, in
addition, had no reasonable cause to believe that his or her conduct was
unlawful.
The termination of any such civil or criminal action or proceeding by judgment,
settlement, conviction or upon a plea of nolo contendere, of its equivalent,
shall not in itself create a presumption that any such director or officer did
not act, in good faith, for a purpose which he or she reasonably believed to be
in, or, in the case of service for any other corporation or any partnership,
joint venture, trust, employee benefit plan or other enterprise, not opposed to,
the best interest of the Corporation or that he or she had reasonable cause to
believe that his or her conduct was unlawful.
Notwithstanding the foregoing, Registrant hereby makes the following undertaking
pursuant to Rule 484 under the Securities Act of 1933:
Insofar as indemnification for liability arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or
otherwise, the registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against
public policy as expressed in the Act and is, therefore, unenforceable.
In the event a claim for indemnification against such liabilities
(other than the payment by the registrant of expenses incurred or paid
by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by
such director, officer or controlling person in connection with the
securities being registered, the registrant will, unless in the opinion
of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act
and will be governed by the final adjudication of such issue.
CONTENTS OF REGISTRATION STATEMENT
This registration statement comprises the following papers and documents:
The facing sheet;
The Prospectus, consisting of 80 pages;
Undertaking to file reports;
Representation pursuant to Section 26 of the Investment Company Act of
1940;
Rule 484 Undertaking;
The signatures;
Written consents of the following persons:
A. Opinion and Consent of Actuary
B. Ernst & Young LLP
<PAGE> 86
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.
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.
<PAGE> 87
(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.
2. Consents of the following:
A Opinion and consent of Tracy A. Kane, Esq., Secretary and
Counsel of The Manufacturers Life Insurance Company of New
York is incorporated by reference to Exhibit 2 to
pre-effective amendment No. 1 to a Registration Statement on
Form S-6, file number 333-83023, filed on November 1, 1999 on
behalf of The Manufacturers Life Insurance Company of New York
Separate Account B.
B Consent of Brian Koop, Actuary of The Manufacturers Life
Insurance Company of New York - Filed herein.
C Consents of Ernst & Young LLP - Filed herein.
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.
<PAGE> 88
6. Memorandum Regarding Purchase, Transfer and Redemption Procedures for
the Policies is incorporated by reference to Exhibit 6 to pre-effective
amendment No. 1 to a Registration Statement on Form S-6, file number
333-83023, filed on November 1, 1999 on behalf of The Manufacturers Life
Insurance Company of New York Separate Account B.
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
incorporated by reference to Exhibit 7(iii) to pre-effective
amendment No. 1 to a Registration Statement on Form S-6, file
number 333-83023, filed on November 1, 1999 on behalf of The
Manufacturers Life Insurance Company of New York Separate Account
B.
7.(iv) Power of Attorney, Robert Cook - previously filed as Exhibit
(b)(14)(d) to post-effective amendment no. 8 to Registration
Statement on Form N-4, File, No. 33-79112, filed February 25,
2000.
<PAGE> 89
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, certify that the registrant meets all of the requirements for
effectiveness of this amended registration statement pursuant to Rule 485(b)
under the Securities Act of 1933 and 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
27th day of April, 2000.
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/ GRETCHEN H. SWANZ
- -------------------------------
Gretchen H. Swanz
Secretary
<PAGE> 90
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 27th day of April, 2000.
<TABLE>
<CAPTION>
NAME TITLE
<S> <C>
/s/ JAMES D. GALLAGHER Director and President
- ----------------------------- (Principal Executive
James D. Gallagher Officer)
* Director
- -----------------------------
John D. DesPrez, III
* Director
- -----------------------------
Ruth Ann Fleming
* 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)
</TABLE>
*By: /s/ DAVID W. LIBBEY
-----------------------------
David W. Libbey
Attorney-in-Fact Pursuant
to Powers of Attorney
<PAGE> 91
EXHIBIT INDEX
Exhibit No. Description
2B Consent of Brian Koop, Actuary of The Manufacturers Life
Insurance Company of New York
2C Consents of Ernst & Young LLP
<PAGE> 1
April 26, 2000
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, DC 20549
Re: Actuarial Opinion on Illustrations Contained in Post-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
EXHIBIT 99.2(c)(1)
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Independent
Auditors" and to the use of our report dated February 4, 2000 accompanying the
financial statements of Separate Account B of The Manufacturers Life Insurance
Company of New York in Post-Effective Amendment No. 1 to the Registration
Statement No. 333-83023 on Form S-6 and related prospectus of Separate Account
B of The Manufacturers Life Insurance Company of New York.
/s/ ERNST & YOUNG LLP
Philadelphia, Pennsylvania
April 24, 2000
<PAGE> 1
EXHIBIT 99.2(c)(2)
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Independent Auditors"
and to the use of our report dated February 21, 2000 in Post-Effective Amendment
No. 1 to the Registration Statement (Form S-6 No. 333-83023) and related
Prospectus of The Manufacturers Life Insurance Company of New York.
/s/ ERNST & YOUNG LLP
Boston, Massachusetts
April 24, 2000
