As filed with the Securities and Exchange Commission on June 11, 1998
Registration Nos. 333-47219
No. 811-08677
----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C 20549
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FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. 1
Post-Effective Amendment No. ____
And
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 1
SEPARATE ACCOUNT VA-6NY
(Exact Name of Registrant)
TRANSAMERICA LIFE INSURANCE COMPANY OF NEW YORK
(Name of Depositor)
100 Manhattanville Road, Purchase, New York 10577
(Address of Depositor's Principal Executive Offices)
Depositor's Telephone Number, including Area Code: (914) 701-6000
Name and Address of Agent for Service: Copy to:
JAMES W. DEDERER, Esq. FREDERICK R. BELLAMY, Esq.
General Counsel Sutherland, Asbill & Brennan, LLP
1275 Pennsylvania Avenue, N.W.
Transamerica Life Insurance Washington, D.C. 20004-2404
Company of New York
100 Manhattanville Road
Purchase, New York 10577
Approximate date of proposed public
offering: As soon as practicable after effectiveness of
the Registration Statement.
Title of securities being registered:
Interests in a separate account under flexible premium deferred
variable annuity contracts.
The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
shall determine.
<PAGE>
CROSS REFERENCE SHEET
Pursuant to Rule 495
Showing Location in Part A (Prospectus),
Part B (Statement of Additional Information) and Part C
of Registration Statement Information Required by Form N-4
<TABLE>
<CAPTION>
PART A
Item of Form N-4 Prospectus Caption
<S> <C> <C>
1. Cover Page.............................................. Cover Page
2. Definitions............................................. Definitions
3. Synopsis................................................ Summary of this Prospectus; Variable Account
Fee Table
4. Condensed Financial Information......................... Condensed Financial Information
5. General
(a) Depositor.......................................... Transamerica and the Separate Account
(b) Registrant......................................... Transamerica and the Separate Account
(c) Portfolio Company.................................. The Funds
(d) Fund Prospectus.................................... The Funds
(e) Voting Rights...................................... Voting Rights
(f) Administrator....................................... Charges under the Contracts
6. Deductions and Expenses
(a) General............................................ Charges under the Contracts
(b) Sales Load %....................................... Charges under the Contracts
(c) Special Purchase Plan.............................. Not Applicable
(d) Commissions........................................ Underwriter
(e) Fund Expenses...................................... Charges under the Contracts
(f) Operating Expenses................................. Fee Table
7. Contracts
(a) Persons with Rights................................ Description of the Contracts; Surrender of a
Contract; Death Benefits; Voting Rights;
Ownership
(b) (i) Allocation of Purchase Payments
Payments..................................... Description of the Contracts
(ii) Transfers.................................... Transfers
(iii) Exchanges.................................... Federal Tax Matters
(c) Changes............................................ The Funds; Voting Rights
(d) Inquiries.......................................... Voting Rights
8. Annuity Period.......................................... Settlement Payments
9. Death Benefit........................................... Death Benefits
10. Purchase and Contract Value
(a) Purchases.......................................... Description of the Contracts
(b) Valuation.......................................... Description of the Contracts
(c) Daily Calculation.................................. Description of the Contracts
(d) Underwriter........................................ Underwriter
11. Redemptions
(a) By Contract Owners................................. Surrender of a Contract
By Annuitant....................................... Not Applicable
(b) Texas ORP.......................................... Not Applicable
(c) Check Delay........................................ Surrender of a Contract
(d) Lapse.............................................. Not Applicable
(e) Free Look.......................................... Right to Cancel
12. Taxes................................Federal Tax Matters
13. Legal Proceedings....................................... Legal Proceedings
14. Table of Contents for the
Statement of
Additional Information.................................. Table of Contents of the Statement of
Additional Information
PART B
Item of Form N-4 Statement of Additional Information Caption
15. Cover Page.............................................. Cover Page
16. Table of Contents....................................... Table of Contents
17. General Information
and History............................................. General Information and History
18. Services
(a) Fees and Expenses
of Registrant...................................... (Prospectus) Variable Account Fee Table;
(Prospectus) The Funds
(b) Management Contracts............................... Not Applicable
(c) Custodian.......................................... Safekeeping of Separate Account Assets; Records
and Reports
Independent Auditors ............................. Accountants
(d) Assets of Registrant............................... Not Applicable
(e) Affiliated Person.................................. Not Applicable
(f) Principal Underwriter.............................. The Underwriter
19. Purchase of Securities
Being Offered........................................... (Prospectus) Description of the Contracts
Offering Sales Load..................................... Charges under the Contracts
20. Underwriters............................................ The Underwriter
21. Calculation of Performance Data......................... Calculation of Yields and Total Returns
22. Annuity Payments........................................ (Prospectus) Settlement Option Payments
23. Financial Statements.................................... Financial Statements
PART C -- OTHER INFORMATION
Item of Form N-4 Part C Caption
24. Financial STATEMENTS
and Exhibits
(a) Financial Statements............................... Financial Statements
(b) Exhibits........................................... Exhibits
25. Directors and Officers of
the Depositor........................................... Directors and Officers of the Depositor
26. Persons Controlled By or Under Common Control
with the Depositor or Registrant ....................... Persons Controlled By or Under Common Control
with the Depositor or Registrant
27. Number of Contract Owners............................... Number of Contract Owners
28. Indemnification......................................... Indemnification
29. Principal Underwriters.................................. Principal Underwriter
30. Location of Accounts
and Records............................................. Location of Accounts and Records
31. Management Services..................................... Management Services
32. Undertakings............................................ Undertakings
Signature Page.......................................... Signature Page
</TABLE>
<PAGE>
4
TRANSAMERICA SERIES sm
TRANSAMERICA CLASSIC sm
VARIABLE ANNUITY
A Flexible Premium Deferred Variable Annuity
Issued by
Transamerica Life Insurance Company of New York
100 Manhattanville Road, Purchase, New York 10577
This prospectus describes the Transamerica Classic Variable Annuity, a
variable annuity policy ("policy") issued by Transamerica Life Insurance Company
of New York (referred to as "Transamerica"). The policy allows you, the owner,
to accumulate assets on a tax-deferred basis for retirement and other long-term
financial purposes.
You may direct your premiums, as well as any value accumulated under
the policy, to one or more variable sub-accounts of Separate Account VA-6NY or
to the fixed account, or to both. The money you place in each variable
sub-account will be invested solely in a corresponding mutual fund investment
portfolio ("portfolio"). The value of each variable sub-account will vary in
accordance with the investment performance of the portfolio in which that
variable sub-account invests. You bear the entire investment risk for all assets
you place in the variable sub-accounts. This means that, depending on market
conditions, the amount you invest in the variable sub-accounts may increase or
decline. Currently you may choose among the following 17 variable sub-accounts:
Alger American Income & Growth MFS VIT Research
Alliance VPF Growth & Income Morgan Stanley UF Fixed Income
Alliance VPF Premier Growth Morgan Stanley UF High Yield
Dreyfus VIF Capital Appreciation Morgan Stanley UF International Magnum
Dreyfus VIF Small Cap OCC Accumulation Trust Managed
Janus Aspen Balanced OCC Accumulation Trust Small Cap
Janus Aspen Worldwide Growth Transamerica VIF Growth Portfolio
MFS VIT Emerging Growth Transamerica VIF Money Market
MFS VIT Growth with Income
You may also place your premiums or variable accumulated value in the
fixed account. For premiums allocated to the fixed account, Transamerica
guarantees the return of the amount invested at a specified rate of interest for
at least 12 months. Transamerica will periodically declare the rate of interest
applicable to each amount allocated to the fixed account. The minimum rate of
interest credited to the fixed account will be 3%.
This prospectus contains vital information that you should know before
investing. You can obtain more information about the policy by requesting a copy
of the Statement of Additional Information ("SAI") datedJune , 1998. The SAI is
available free by writing to Transamerica Life Insurance Company of New York,
Annuity Service Center, 401 North Tryon Street, Charlotte, North Carolina 28202
or by calling (800) 420-7749. The current SAI has been filed with the Securities
and Exchange Commission and is incorporated by reference into this prospectus.
The table of contents of the SAI is included at the end of this prospectus.
These securities have not been approved or disapproved by the Securities and
Exchange Commission, nor has the Commission passed upon the accuracy or adequacy
of this prospectus. Any representation to the contrary is a criminal offense.
For your own benefit and protection, please
read this prospectus carefully before you
invest. Keep it on hand for future
reference.
The date of this prospectus is June , 1998.
<PAGE>
Under the terms of the policy, we promise to pay you a series of
monthly settlement option payments. Payments may be for a fixed or a variable
amount or a combination of both, for the life of the annuitant or for some other
period as you select prior to the annuity date.
On or before the annuity date, you may transfer assets between and
among the variable sub-accounts and the fixed account. The fixed account has
restrictions on certain transfers. After the annuity date, transfers are
permitted among the variable sub-accounts only if you elect to receive variable
settlement option payments.
On or before the annuity date, you may elect to withdraw all or a
portion of your cash surrender value in exchange for a cash payment. Withdrawals
may be subject to a contingent deferred sales load, certain administrative fees,
premium tax charges, federal, state or local income taxes, and/or a tax penalty.
This prospectus must be accompanied by current prospectuses
for the portfolios.
THIS PROSPECTUS MAY NOT BE OFFERED IN ANY JURISDICTION WHERE SUCH OFFERING IS
UNLAWFUL. ANY INFORMATION THAT A DEALER, SALESPERSON, OR OTHER PERSON GIVES YOU
ABOUT THIS POLICY SHOULD BE CONTAINED IN THIS PROSPECTUS. IF YOU RECEIVE ANY
INFORMATION ABOUT THE POLICY THAT IS NOT CONTAINED IN THIS PROSPECTUS, YOU
SHOULD NOT RELY ON THAT INFORMATION.
Please note that your investment in the policy:
o is not a bank deposit
o is not federally insured
o is not endorsed by any bank or government agency.
Investing in the policy involves certain investment risks, including possible
loss of principal.
This prospectus generally describes only the
variable account portion of the policy,
except when the fixed account is
specifically mentioned.
<PAGE>
TABLE OF CONTENTS Page
DEFINITIONS..............................................................6
SUMMARY..................................................................8
CONDENSED FINANCIAL INFORMATION.........................................16
TRANSAMERICA LIFE INSURANCE COMPANY OF NEW YORK AND THE VARIABLE ACCOUNT......16
Transamerica Life Insurance Company of New York........16
Published Ratings......................................16
The Variable Account...................................16
THE PORTFOLIOS..................................................17
THE POLICY......................................................22
Ownership..............................................22
PREMIUMS........................................................23
Premiums...............................................23
Allocation of Premiums.................................23
Investment Option Limits...............................24
POLICY VALUE....................................................24
TRANSFERS........................................................25
Before the Annuity Date.................................25
Other Restrictions......................................25
Dollar Cost Averaging...................................26
Automatic Asset Rebalancing.............................26
After the Annuity Date..................................26
CASH WITHDRAWALS.................................................26
Systematic Withdrawal Option............................27
Automatic Payment Option (APO)..........................28
DEATH BENEFIT....................................................28
Payment of Death Benefit................................29
Designation of Beneficiaries............................29
Death of Owner Before Annuity Date......................29
If Annuitant Dies Before Annuity Date...................30
Death After Annuity Date................................30
Survival Provision......................................31
CHARGES, FEES AND DEDUCTIONS.....................................31
Contingent Deferred Sales Load..........................31
Free Withdrawals - Allowed Amount.......................31
Other Free Withdrawals..................................32
Administrative Charges..................................32
Mortality and Expense Risk Charge.......................32
Premium Tax Charges......................................33
Transfer Fee.............................................33
Option and Service Fees..................................33
Taxes....................................................33
Portfolio Expenses.......................................33
Sales in Special Situations................................
DISTRIBUTION OF THE POLICY..........................................
SETTLEMENT OPTION PAYMENTS........................................33
Annuity Date.............................................33
Settlement Option Payments...............................34
Election of Settlement Option Forms and Payment Options..34
Payment Options..........................................34
Fixed Payment Option.....................................35
Variable Payment Option..................................35
Settlement Option Forms..................................35
FEDERAL TAX MATTERS...............................................36
Introduction.............................................36
Premiums.................................................36
Taxation of Annuities....................................37
Qualified Policies.......................................39
Taxation of Transamerica ................................40
Tax Status of Policy.....................................41
Possible Changes in Taxation.............................42
Other Tax Consequences...................................42
PERFORMANCE DATA .................................................42
PREPARING FOR YEAR 2000
LEGAL PROCEEDINGS..........................................................44
LEGAL MATTERS..............................................................44
ACCOUNTANTS................................................................44
VOTING RIGHTS..............................................................44
AVAILABLE INFORMATION......................................................45
STATEMENT OF ADDITIONAL INFORMATION - TABLE OF CONTENTS....................46
APPENDIX A - THE FIXED ACCOUNT............................................A-1
APPENDIX B................................................................B-1
Example of Variable Accumulation Unit Value Calculations.........B-1
Example of Variable Annuity Unit Value Calculations..............B-1
Example of Variable Annuity Payment Calculations.................B-1
APPENDIX C
Disclosure Statement for Individual Retirement
Annuities ..................................................C-1
The policy is available only in New York.
<PAGE>
DEFINITIONS
Annuity Date: The date on which the annuitization phase of the policy begins.
Cash Surrender Value: The amount we will pay to the owner if the policy is
surrendered on or before the annuity date. The cash surrender value is equal to:
the policy value; less any policy fee, contingent deferred sales load, and
premium tax charges.
Code: The Internal Revenue Code of 1986, as amended, and the rules and
regulations issued under it.
Policy Anniversary: The anniversary of the policy effective date each year.
Policy Effective Date: The effective date of the policy as shown on the
information page of the policy.
Policy Year: A 12-month period starting on the policy effective date and ending
with the day before the policy anniversary, and each 12-month period thereafter.
Fixed Account: An account which credits a rate of interest for a period of at
least twelve months for each allocation or transfer.
Fixed Account Accumulated Value: The total dollar value of all amounts the owner
allocates or transfers to the fixed account; plus interest credited; less any
amounts withdrawn, applicable fees or premium tax charges, or transfers out to
the variable account prior to the annuity date.
Policy Value: The sum of the variable accumulated value and the fixed account
accumulated value.
Portfolio: The investment portfolio underlying each variable sub-account in
which we will invest any amounts the owner allocates to that variable
sub-account.
Service Center: Transamerica's Annuity Service Center, at P.O. Box 31848,
Charlotte, North Carolina 28231-1848,
telephone (800) 258-4260.
Status (Qualified and Non-Qualified): The policy has a qualified status if it is
issued in connection with a tax-favored retirement plan or program. Otherwise,
the status is non-qualified.
Valuation Day: Any day the New York Stock Exchange is open. To determine the
value of an asset on a day that is not a valuation day, we will use the value of
that asset as of the end of the next valuation day.
Valuation Period: The time interval between the closing (generally 4:00 p.m.
Eastern Time) of the New York Stock Exchange on consecutive valuation days.
Variable Account: Separate Account VA-6NY, a separate account established and
maintained by Transamerica for the investment of a portion of its assets
pursuant to Section 4240 of the New York Insurance Code.
Variable Accumulation Unit: A unit of measure used to determine the variable
accumulated value before the annuity date. The value of a variable accumulation
unit varies with each variable sub-account.
Variable Accumulated Value: The total dollar value of all variable accumulation
units under this policy prior to the annuity date.
Variable Sub-Account(s): One or more divisions of the variable account which
invests solely in shares of one of the underlying portfolios.
We: The company, Transamerica.
You: The owner.
<PAGE>
SUMMARY
The Policy
The Transamerica Classic sm Variable Annuity is a flexible premium
deferred annuity that is designed to aid your long-term financial planning and
retirement needs. The policy may be used in connection with a retirement plan
which qualifies as a retirement program under Sections 403(b), 408 or 408A of
the Code, with various types of qualified pension and profit sharing plans under
Section 401 of the Code, or with non-qualified plans. Some qualified policies
may not be available in all situations. The policy is issued by Transamerica
Life Insurance Company of New York (formerly called First Transamerica Life
Insurance Company) ("Transamerica"), a wholly-owned subsidiary of Transamerica
Occidental Life Insurance Company. Its principal office is at 100 Manhattanville
Road, Purchase, New York 10577, telephone (914) 701-6000. The change in name to
Transamerica Life Insurance Company of New York became effective May 1, 1997.
Transamerica will establish and maintain an account for each policy.
Each owner will receive an individual annuity policy. The policy provides that
the policy value, after certain adjustments, will be applied to a settlement
option on a future date you select ("annuity date").
You may allocate all or portions of your premiums to one or more
variable sub-accounts or to the fixed account.
The policy value prior to the annuity date, except for amounts in the
fixed account, will vary depending on the investment experience of each of the
variable sub-accounts selected by the owner. All benefits and values provided
under the policy, when based on the investment experience of the variable
account, are variable and are not guaranteed as to dollar amount. Therefore,
prior to the annuity date the owner bears the entire investment risk under the
policy for amounts allocated to the variable account.
There is no guaranteed or minimum cash surrender value on amounts
allocated to the variable account, so the proceeds of a surrender could be less
than the amount invested.
The initial premium for each policy must be at least $5,000 ($2,000 for
contributory IRAs, SEP/IRAs and Roth IRAs). Generally each additional premium
must be at least $1,000, unless an automatic premium plan is selected. See
"Premiums" page 28.
The Variable Account
The variable account is a separate account (designated Separate Account
VA-6NY) that is subdivided into variable sub-accounts. See "The Variable
Account" page 21. Assets of each variable sub-account are invested in a
specified mutual fund portfolio ("portfolio"). The variable sub-accounts
currently available for investment are:
Alger American Income & Growth ........MFS VIT Research
Alliance VPF Growth & Income Morgan Stanley UF Fixed Income
Alliance VPF Premier Growth Morgan Stanley UF High Yield
Dreyfus VIF Capital Appreciation .Morgan Stanley UF International Magnum
Dreyfus VIF Small Cap OCC Accumulation Trust Managed
Janus Aspen Balanced OCC Accumulation Trust Small Cap
Janus Aspen Worldwide Growth ........Transamerica VIF Growth Portfolio
MFS VIT Emerging Growth ........Transamerica VIF Money Market
MFS VIT Growth with Income
The portfolios pay their investment advisers and administrators certain
fees charged against the assets of each portfolio. The variable accumulated
value, if any, of a policy and the amount of any variable settlement option
payments will vary to reflect the investment performance of the variable
sub-accounts to which amounts have been allocated. Additionally, applicable
charges are deducted. See "Charges, Fees and Deductions" page 37. For more
information about the portfolios, see "The Portfolios" page 21 and the
accompanying portfolios' prospectuses.
The Fixed Account
The policy provides an option to invest premiums in a fixed account
which is part of the general account of Transamerica.
The amounts in the fixed account will be credited interest at a rate of
not less than 3% annually. Transamerica may credit interest at a rate in excess
of 3% at its discretion for any class. Each interest rate will be guaranteed to
be credited for at least 12 months.
Investment Option Limits
Currently, the owner may not elect more than a total of eighteen
investment options over the life of the policy. Investment options include
variable sub-accounts and the fixed account. See "Investment Option Limits" page
29.
Transfers Before the Annuity Date
Prior to the annuity date, you may transfer values between the variable
sub-accounts and the fixed account (within limits). For transfers after the
annuity date, see "After the Annuity Date" page 32
Transfers out of the fixed account are restricted to four per policy
year and to a limited percentage of the fixed policy value. More frequent
transfers may be allowed under certain services and options, for example, dollar
cost averaging. See "The Fixed Account" in Appendix A.
Transamerica currently imposes a transfer fee of $10 for each transfer
in excess of 12 made during the same policy year. See "Transfers" on page 30 for
additional limitations and information regarding transfers.
Withdrawals
You may withdraw all or part of the cash surrender value on or before
the annuity date. The cash surrender value of your policy is the policy value
less any policy fee, contingent deferred sales load and premium tax charges. The
policy fee generally will be deducted on a full surrender of a policy if the
policy value is then less than $50,000. Transamerica may delay payment of any
withdrawal from the fixed account for up to six months. See "Cash Withdrawals"
page 32
Withdrawals may be taxable, subject to withholding and subject to a penalty tax.
Withdrawals from a qualified policy may be subject to severe restrictions and,
in certain circumstances, prohibited. See "Federal Tax Matters" page 43.
Contingent Deferred Sales Load
Transamerica does not deduct a sales charge when premiums are paid
(although premium tax charges may be deducted). However, if any part of the
policy value is withdrawn, a contingent deferred sales load of up to 6% of
premiums may be deducted. After a premium has been held by Transamerica for
seven years, it may be withdrawn without charge. No contingent deferred sales
load is assessed on payment of the death benefit, on transfers within the
policy, or on certain annuitizations. See "Contingent Deferred Sales Load" page
37, and "Withdrawals" page 32.
Also, beginning 30 days from the policy effective date (or the end of
the free look period if later), any portion of the "allowed amount" may be
withdrawn each policy year without imposition of any contingent deferred sales
load. The allowed amount for each policy year is equal to 10% of premiums, that
were received during the last seven years, as of the prior policy anniversary,
less any withdrawals already taken that policy year. All premiums not previously
withdrawn that have been held at least seven years are not subject to a
contingent deferred sales load. For purposes of calculating the contingent
deferred sales load, withdrawals will be considered to be taken first from
premiums, on a first in/first out basis, and then from earnings.
Other Charges and Deductions
Transamerica deducts a mortality and expense risk charge of 1.20%
(annually) of the assets in the variable account and an administrative expense
charge of 0.15% (annually) of these assets. The administrative expense charge
may change, but it is guaranteed not to exceed a maximum effective annual rate
of 0.35%. See "Mortality and Expense Risk Charge" page 39 and "Administrative
Charges" page 38.
An policy fee of currently $30 (or 2% of the policy value, if less) is
deducted at the end of each policy year and upon surrender. This fee may change
but it is guaranteed not to exceed $60 (or 2% of the policy value, if less) per
policy year. If the policy value is more than $50,000 on the last business day
of a policy year (or as of the date the policy is surrendered), the policy fee
will be waived for that year.
After the annuity date, the annual annuity fee of $30 will be deducted
in equal installments from each periodic payment under the variable payment
option.
For each transfer in excess of 12 during a policy year, a transfer fee of $10
will be imposed. See "Transfer Fee" page 40.
Also, New York currently has no premium tax nor retaliatory premium
tax. If New York imposes these taxes in the future, or if the owner is or
becomes a resident of a state other than New York where such taxes apply, the
charges could be deducted from premiums and/or from the annuity purchase amount
upon annuitization (See "Premium Taxes" page 39.)
Currently, no fees are deducted for any other services or options under
the policy. However, Transamerica does reserve the right to impose fees to cover
processing for certain services and options in the future, including dollar cost
averaging, systematic withdrawals, automatic payouts, asset allocation and asset
rebalancing.
Variable Policy Fee Table
The purpose of this table is to assist in understanding the various
costs and expenses that the owner will bear directly and indirectly. The table
reflects expenses of the variable account as well as of the mutual fund
portfolios. The table assumes that the entire policy value is in the variable
account. The information below should be considered together with the narrative
provided under the heading "Charges, Fees and Deductions" on page 31 of this
prospectus, and with the prospectuses for the portfolios. In addition to the
expenses listed below, premium tax charges may be applicable.
Sales Load(1)
Sales Load Imposed on Premiums 0
Maximum Contingent Deferred Sales Load(2) 6%
Range of Contingent Deferred Sales Load Over Time
Years Since Contingent Deferred Sales Load
Premium Receipt (as a percentage of premium)
Less than 1 year 6%
1 year but less than 2 years 6%
2 years but less than 3 years 5%
3 years but less than 4 years 5%
4 years but less than 5 years 4%
5 years but less than 6 years 4%
6 years but less 7 years 2%
7 or more years 0%
<PAGE>
Other Policy Expenses
Transfer Fee (first 12 per policy year)(3) 0
Fees For Other Services and Options(4) 0
Policy Fee(5) $30
Variable Account Annual Expenses(6)
(as a percentage of the variable accumulated value)
Mortality and Expense Risk Charge 1.20%
Administrative Expense Charge(7) 0.15%
Total Variable Account Annual Expenses 1.35%
Portfolio Expenses
(as a percentage of assets after fee waiver and/or expense reimbursement)(7)
<TABLE>
<CAPTION>
Total
Portfolio
Management Other Annual
Portfolio Fees Expenses Expenses
<S> <C> <C> <C>
Alger American Income & Growth 0.625 0.115 0.74
Alliance VPF Growth & Income 0.63 0.09 0.72
Alliance VPF Premier Growth 0.85 0.10 0.95
Dreyfus VIF Capital Appreciation 0.75 0.05 0.80
Dreyfus VIF Small Cap 0.75 0.03 0.78
Janus Aspen Balanced 0.76 0.07 0.83
Janus Aspen Worldwide Growth 0.66 0.08 0.74
MFS VIT Emerging Growth 0.75 0.12 0.87
MFS VIT Growth with Income 0.75 0.25 1.00
MFS VIT Research 0.75 0.13 0.88
Morgan Stanley UF Fixed Income 0.00 0.70 0.70
Morgan Stanley UF High Yield 0.00 0.80 0.80
Morgan Stanley UF International Magnum 0.00 1.15 1.15
OCC Accumulation Trust Managed 0.80 0.07 0.87
OCC Accumulation Trust Small Cap 0.80 0.17 0.97
Transamerica VIF Growth 0.62 0.23 0.85
Transamerica VIF Money Market 0.35 0.25 0.60
</TABLE>
Expense information regarding the portfolios has been provided by the
portfolios. In preparing the tables above and below and the examples that
follow, Transamerica has relied on the figures provided by the portfolios.
Transamerica has no reason to doubt the accuracy of that information, but
Transamerica has not verified those figures. These figures are for the year
ended December 31, 1997, except for the Transamerica VIF Money Market Portfolio
which are estimates for the year 1998, its first year of operation. Actual
expenses in future years
may be higher or lower than these figures.
Notes to Fee Table:
(1) The contingent deferred sales load applies to each policy, regardless
of how the account value is allocated between the variable account and
the general account options.
(2) A portion of the premiums may be withdrawn each policy year without
imposition of any contingent deferred sales load, and after seven
years, a premium may be withdrawn free of any contingent deferred sales
load. See "Charges, Fees and deductions" page 35.
(3) A transfer fee of $10 will be imposed for each transfer in excess of 18 in a
policy year. See "Charges, Fees and Deductions" page 35.
(4) Transamerica currently does not impose fees for any other services, or
options. However, Transamerica reserves the right to impose a fee for
various services and options including dollar cost averaging,
systematic withdrawals, automatic payouts, asset allocation and asset
rebalancing.
(5) The current account fee is $30 (or 2% of the account value, if less) per
policy year. This fee will be waived for account values over $50,000. This limit
may be changed in the future. The fee may be changed, but it may not exceed $60
(or 2% of the account value, if less). See "Charges, Fees and Deductions" page
35.
(6) The variable account annual expenses do not apply to the general account
options.
(7) The current annual administrative expense charge of 0.15% may be increased
to 0.35%. See "Charges, Fees and Deductions" page 35.
(8) From time to time, the portfolios' investment advisers, each in its own
discretion, may voluntarily waive all or part of their fees and/or
voluntarily assume certain portfolio expenses. The expenses shown in
the Portfolio Expenses table are the expenses paid for 1997 (except for
the Transamerica VIF Money Market Portfolio, which are estimates). The
expenses shown in that table reflect a portfolio's adviser's waivers of
fees or reimbursement of expenses, if applicable. It is anticipated
that such waivers or reimbursements will continue for calendar year
1998, except for Alliance VPF Premier Growth for which the management
fee, other expenses and total portfolios annual expenses for 1998
without waivers or reimbursements are estimated to be 1.00%, 0.08% and
1.08%, respectively. Without such waivers or reimbursements, the annual
expenses for 1997 for certain portfolios would have been, as a
percentage of assets, as follows:
<PAGE>
<TABLE>
<CAPTION>
Total Portfolio
Annual Expenses
Management Other Expenses
Fee
<S> <C> <C> <C>
Alliance VPF Growth & Income 0.63 0.09 0.72
Alliance VPF Premier Growth 1.00 0.10 1.10
Janus Aspen Balanced 0.77 0.06 0.83
Janus Aspen Worldwide Growth 0.72 0.09 0.81
MFS VIT Growth with Income 0.75 0.35 1.10
Morgan Stanley UF Fixed Income 0.40 1.31 1.71
Morgan Stanley UF High Yield 0.80 0.88 1.68
Morgan Stanley UF International Magnum 0.80 1.98 2.78
Transamerica VIF Growth 0.75 0.23 0.98
</TABLE>
Without expense reimbursements, the management fee, other expenses and
total portfolios expenses for the first year of operation for the
Transamerica VIF Money Market Portfolio are expected to be 0.35%, 0.45%
and 0.80%, respectively. There were no fee waivers or expense
reimbursements during 1997 for the Alger American Income and Growth
Portfolio, Dreyfus VIF Capital Appreciation Portfolio, Dreyfus VIF
Small Cap Portfolio, MFS VIT Emerging Growth Portfolio, MFS VIT
Research Portfolio, OCC Accumulation Trust Managed Portfolio or OCC
Accumulation Trust Small Cap Portfolio.
<PAGE>
EXAMPLES
The following tables show the total expenses an owner would
incur in various situations assuming a $1,000 investment and a 5%
annual return on assets.
These examples assume an average policy value of $40,000 and,
therefore, a deduction of 0.075% has been made to reflect the $30
policy fee. These examples also assume that all amounts were allocated
to the variable sub-account indicated. These examples also assume that
no transfer fees or other option or service fees or premium tax
charges have been assessed. Premium tax charges may be applicable, but
are not currently assessed by the State of New York. See "Premium Tax
Charges" page 39.
Examples 1 through 3 show expenses for policies based upon
the expenses incurred by the portfolio for 1997, including any fee
waivers or expenses reimbursements for the portfolios for1997. There
is no guarantee that any fee waivers or expense reimbursements will
continue in the future. For annuitizations before the first policy
anniversary, and for annuitizations under a form that does not include
life contingencies, the contingent deferred sales load may apply (see
expense examples in column 1).
<TABLE>
<CAPTION>
3. If the owner
Examples 1-3 elects to annuitize at
An owner would pay the following expenses 1. If the owner 2. If the owner does the end of the
on a $1,000 investment, assuming a 5% surrenders the policy not surrender and applicable period
annual return on assets: at the end of the does not annuitize under a Settlement
applicable time period: the policy: Option with life
contingencies:
1 Year 3 Years 1 Year 3 Years 1 Year 3 Years
<S> <C> <C> <C> <C> <C> <C>
75.96 112.76 21.96 67.76 21.96 67.76
Alger American Income & Growth
75.76 112.15 21.76 67.15 21.76 67.15
Alliance VPF Growth and Income
78.06 119.10 24.06 74.10 24.06 74.10
Alliance VPF Premium Growth
76.56 114.57 22.56 69.57 22.56 69.57
Dreyfus VIF Capital Appreciation
76.36 113.97 22.36 68.97 22.36 68.97
Dreyfus VIF Small Cap
76.86 115.48 22.86 70.48 22.86 70.48
Janus Aspen Balanced
75.96 112.76 21.96 67.76 21.96 67.76
Janus Aspen Worldwide Growth
78.56 120.60 24.56 75.60 24.56 75.60
MFS VIF Growth with Income
77.26 116.69 23.26 71.69 23.26 71.69
MFS VIT Emerging Growth
77.36 116.99 23.36 71.99 23.36 71.99
MFS VIT Research
75.56 111.54 21.56 66.54 21.56 66.54
Morgan Stanley UF Fixed Income
76.56 114.57 22.56 69.57 22.56 69.57
Morgan Stanley UF High Yield
80.06 125.10 26.06 80.10 26.06 80.10
Morgan Stanley UF International Magnum
77.23 116.39 23.23 71.39 23.23 71.39
OCC Accumulation Trust Managed
78.24 119.50 24.24 74.50 24.24 74.50
OCC Accumulation Trust Small Cap
77.06 116.08 23.06 71.08 23.06 71.08
Transamerica VIF Growth
74.55 108.51 20.55 63.51 20.55 63.51
Transamerica VIF Money Market
</TABLE>
THIS EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES. ACTUAL EXPENSES PAID MAY BE GREATER OR LESS THAN THOSE SHOWN, SUBJECT
TO THE GUARANTEES IN THE POLICY. THE ASSUMED 5% ANNUAL RATE OF RETURN IS
HYPOTHETICAL AND SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
ANNUAL RETURNS, WHICH MAY BE GREATER OR LESS THAN THIS ASSUMED RATE.
Settlement Option Payments
Settlement option payments will be made either on a fixed basis or a
variable basis or a combination of a fixed and variable basis, as you select.
You have flexibility in choosing the annuity date, but it may generally not be a
date later than the annuitant's 90th birthday. Certain qualified policies may
have restrictions as to the annuity date and the types of settlement options
available. See "Settlement Option Payments" page 40.
Four settlement options are
available under the policy: (1) life
annuity; (2) life and contingent annuity;
(3) life annuity with period certain; and
(4) joint and survivor annuity. See
"Settlement Option Forms" page 42.
Death of Owner Before the Annuity Date
If an owner dies prior to the annuity date and before either the
owner's or any joint owner's 85th birthday, the death benefit for the policy
will be the greatest of (a) the policy value or (b) the sum of all premiums paid
to the policy, less withdrawals and applicable premium tax charges, or (c) the
highest policy value on any policy anniversary prior to the earlier of the
owner's or joint owner's 85th birthday, plus premiums made and less withdrawals
and applicable premium tax charges since that policy anniversary. If death
occurs after the earlier of the owner's or joint owner's 85th birthday, the
death benefit will be the policy value. If the owner is not a natural person,
the annuitant will be treated as the owner(s) for purposes of the death benefit.
The death benefit will generally be paid within seven days of receipt
of the required proof of death of the owner and election of the method of
settlement or as soon thereafter as Transamerica has sufficient information to
make the payment. If no settlement method is elected the death benefit will be
distributed within five years after the owner's death. No contingent deferred
sales load is imposed. The death benefit may be paid as either a lump sum or as
a settlement option. See "Death Benefit" page 34.
Federal Income Tax Consequences
An owner who is a natural person generally should not be taxed on
increases in the policy value until a distribution under the policy occurs
(e.g., a withdrawal or settlement option payment) or is deemed to occur (e.g., a
pledge, loan, or assignment of a policy). Generally, a portion (up to 100%) of
any distribution or deemed distribution is taxable as ordinary income. The
taxable portion of distributions is generally subject to income tax withholding
unless the recipient elects otherwise (although withholding is mandatory for
certain qualified policies). In addition, a federal penalty tax may apply to
certain distributions. See "Federal Tax Matters" page 43.
Right to Cancel
The owner has the right to examine the policy for a limited period,
known as a "free look period." The owner can cancel the policy during this
period by delivering a written notice of cancellation or sending a telegram and
returning the policy to (a) the agent through whom the policy was purchased or
(b) the Service Center before midnight of the tenth day after receipt of the
policy (or longer if required by state law). Notice given by mail and return of
the policy by mail, properly addressed and postage prepaid, will be deemed by
Transamerica to have been made on the date postmarked. Unless otherwise required
by law, Transamerica will refund the premium(s) allocated to the fixed account
(less any withdrawals) plus the variable accumulated value as of the date the
written notice and the policy are received by Transamerica. See "Premiums" page
28 and "Policy Value" page 26.
Questions
Questions about procedures or the policy can be answered by the
Transamerica Annuity Service Center ("Service Center"), at P.O. Box 31848,
Charlotte, North Carolina 28231-1848, telephone (800) 258-4260. All inquiries
should include the policy number and the owner's name.
NOTE: The foregoing summary is qualified in its entirety by the
detailed information in the remainder of this prospectus and in the prospectuses
for the portfolios which should be referred to for more detailed information.
With respect to qualified policies, it should be noted that the requirements of
a particular retirement plan, an endorsement to the policy, or limitations or
penalties imposed by the Code or the Employee Retirement Income Security Act of
1974, as amended, may impose additional limits or restrictions on premiums,
withdrawals, distributions, or benefits, or on other provisions of the policy.
This prospectus does not describe such limitations or restrictions. See "Federal
Tax Matters" page 43.
CONDENSED FINANCIAL INFORMATION
Because the variable account has not yet commenced operations, there
are no financial statements available.
TRANSAMERICA LIFE INSURANCE COMPANY OF NEW
YORK AND THE VARIABLE ACCOUNT
Transamerica Life Insurance Company of New
York
Transamerica Life Insurance Company of New York (formerly called First
Transamerica Life Insurance Company) ("Transamerica") is a stock life insurance
company incorporated under the laws of the State of New York on February 5,
1986. It is principally engaged in the sale of life insurance and annuity
policies. Transamerica is a wholly-owned subsidiary of Transamerica Occidental
Life Insurance Company, which in turn is an indirect wholly-owned subsidiary of
Transamerica Corporation, a financial services organization. The address of
Transamerica is 100 Manhattanville Road, Purchase, New York 10577. The name
change for Transamerica became effective May 1, 1997.
Published Ratings
Transamerica may from time to time publish in advertisements, sales
literature and reports to owners, the ratings and other information assigned to
it by one or more independent rating organizations such as A.M. Best Company,
Standard & Poor's, Moody's, and Duff & Phelps. The ratings reflect the financial
strength and/or claims-paying ability of Transamerica and should not be
considered as bearing on the investment performance of the variable account.
Each year the A.M. Best Company reviews the financial status of thousands of
insurers, culminating in the assignment of Best's Ratings. These ratings reflect
their current opinion of the relative financial strength and operating
performance of an insurance company in comparison to the norms of the
life/health insurance industry. In addition, the claims-paying ability of
Transamerica as measured by Standard & Poor's Insurance Ratings Services,
Moody's, or Duff & Phelps may be referred to in advertisements or sales
literature or in reports to owners. These ratings are opinions of an operating
insurance company's financial capacity to meet the obligations of its insurance
and annuity policies in accordance with their terms, including its obligations
under the fixed account of this policy. Such ratings do not reflect the
investment performance of the variable account or the degree of risk associated
with an investment in the variable account.
The Variable Account
Separate Account VA-6NY of Transamerica (the "variable account") was
established by Transamerica as a separate account under the laws of the State of
New York pursuant to September 11, 1996, resolutions of Transamerica's Board of
Directors. The variable account is registered with the Securities and Exchange
Commission ("Commission") under the Investment Company Act of 1940 (the "1940
Act") as a unit investment trust. It meets the definition of a separate account
under the federal securities laws. However, the Commission does not supervise
the management or the investment practices or policies of the variable account.
The assets of the variable account are owned by Transamerica but they
are held separately from the other assets of Transamerica. Section 4240 of the
New York Insurance Code provides that the assets of a separate account are not
chargeable with liabilities incurred in any other business operation of the
insurance company (except to the extent that assets in the separate account
exceed the reserves and other liabilities of the separate account). Income,
gains and losses incurred on the assets in the variable account, whether or not
realized, are credited to or charged against the variable account without regard
to other income, gains or losses of Transamerica. Therefore, the investment
performance of the variable account is entirely independent of the investment
performance of Transamerica's general account assets or any other separate
account maintained by Transamerica.
The variable account currently has seventeen variable sub-accounts
available under the policy, each of which invests solely in a specific
corresponding portfolio. Changes to the variable sub-accounts may be made at the
discretion of Transamerica. See "Addition, Deletion, or Substitution" page 26.
THE PORTFOLIOS
Each of the variable sub-accounts offered under the policy invests
exclusively in one of the portfolios. Descriptions of each portfolio's
investment objectives follow. The management fees listed below are fees
specified in the applicable advisory policy (i.e., before any fee waivers).
The Income and Growth Portfolio of The Alger American Fund seeks, primarily, a
high level of dividend income. Capital appreciation is a secondary objective of
the portfolio. Except during temporary defensive periods, the portfolio attempts
to invest 100%, and it is a fundamental policy of the portfolio to invest at
least 65%, of its total assets in dividend paying equity securities. Alger
Management will favor securities it believes also offer opportunities for
capital appreciation. The portfolio may invest up to 35% of its total assets in
money market instruments and repurchase agreements and in excess of that amount
(up to 100% of its assets) during temporary defensive periods.
Adviser: Fred Alger Management, Inc.
Management Fee: 0.625%.
The Growth and Income Portfolio of the Alliance Variable Products Series Fund,
Inc., seeks reasonable current income and reasonable opportunity for
appreciation through investments primarily in dividend-paying common stocks of
good quality. Whenever the economic outlook is unfavorable for investment in
common stock, investments in other types of securities, such as bonds,
convertible bonds, preferred stock and convertible preferred stocks may be made
by the portfolio. Purchases and sales of portfolio securities are made at such
times and in such amounts as are deemed advisable in light of market, economic
and other conditions.
Adviser: Alliance Capital Management L.P.
Management Fee: 0.625%.
The Premier Growth Portfolio of Alliance Variable Products Series Fund, Inc.,
seeks growth of capital by pursuing aggressive investment policies. Since
investments will be made based upon their potential for capital appreciation,
current income will be incidental to the objective of capital growth. The
portfolio will invest predominantly in the equity securities (common stocks,
securities convertible into commons stocks and rights and warrants to subscribe
for or purchase common stocks) of a limited number of large, carefully selected,
high-quality U.S. companies that, in the judgment of the Adviser, are likely to
achieve superior earnings growth. The portfolio investments in the 25 such
companies most highly regarded at any point in time by the Adviser will usually
constitute approximately 70% of the portfolio's net assets. The portfolio thus
differs from more typical equity mutual funds by investing most of its assets in
a relatively small number of intensively researched companies. The portfolio
will, under normal circumstances, invest at least 85% of the value of its total
assets in the equity securities of U.S. companies.
Adviser: Alliance Capital Management L.P.
Management Fee: 1%.
The Capital Appreciation Portfolio of the Dreyfus Variable Investment Fund is a
diversified portfolio, the primary investment objective of which is to provide
long-term capital growth consistent with the preservation of capital; current
income is a secondary investment objective. During periods which the Sub-Adviser
determines to be of market strength, the portfolio acts aggressively to increase
shareholders' capital by investing principally in common stocks of domestic and
foreign issuers, common stocks with warrants attached and debt securities of
foreign governments. The portfolio will seek investment opportunities generally
in large capitalization companies (those with market capitalizations exceeding
$500 million) which the Sub-Adviser believes have the potential to experience
above average and predictable earnings growth.
Adviser: The Dreyfus Corporation.
Sub-Adviser: Fayez Sarofim & Co. Management
Fee: 0.75%.
The Small Cap Portfolio of the Dreyfus Variable Investment Fund seeks to
maximize capital appreciation. It seeks to achieve its objective by investing
principally in common stocks. Under normal market conditions, the portfolio will
invest at least 65% of its total assets in companies with market capitalizations
of less than $1.5 billion at the time of purchase which The Dreyfus Corporation
believes to be characterized by new or innovative products, services or
processes which should enhance prospects for growth in future earnings.
Adviser: The Dreyfus Corporation.
Management Fee: 0.75%.
The Balanced Portfolio of the Janus Aspen Series seeks long-term capital growth,
consistent with preservation of capital and balanced by current income. It is a
diversified portfolio that, under normal circumstances, pursues its objective by
investing 40-60% of its assets in securities selected primarily for their growth
potential and 40-60% of its assets in securities selected primarily for their
income potential. This portfolio normally invests at least 25% of its assets in
fixed-income senior securities, which include debt securities and preferred
stocks.
Adviser: Janus Capital Corporation.
Management Fee: 0.75% of the first $300
million plus 0.70% of the next $200 million
plus 0.65% of the assets over $500 million.
The Worldwide Growth Portfolio of the Janus Aspen Series seeks long-term growth
of capital in a manner consistent with the preservation of capital. It is a
diversified portfolio that pursues its objective primarily through investments
in common stocks of foreign and domestic issuers. The portfolio has the
flexibility to invest on a worldwide basis in companies and other organizations
of any size, regardless of country of organization or place of principal
business activity. The portfolio normally invests in issuers from at least five
different countries, including the United States. The portfolio may at times
invest in fewer than five countries or even a single country.
Adviser: Janus Capital Corporation.
Management Fee: 0.75% of the first $300
million plus 0.70% of the next $200 million
plus 0.65% of the assets over $500 million.
The Emerging Growth Series of the MFS Variable Insurance Trust seeks to provide
long-term growth of capital. Dividend and interest income from portfolio
securities, if any, is incidental to the investment objective of long-term
growth of capital. The policy is to invest primarily (i.e., at least 80% of its
assets under normal circumstances) in common stocks of companies that the
Adviser believes are early in their life cycle but which have the potential to
become major enterprises (emerging growth companies). While the portfolio will
invest primarily in common stocks, the portfolio may, to a limited extent, seek
appreciation in other types of securities such as fixed income securities (which
may be unrated), convertible securities and warrants when relative values make
such purchases appear attractive either as individual issues or as types of
securities in certain economic environments. The portfolio may invest in
non-convertible fixed income securities rated lower than "investment grade"
(commonly known as "junk bonds") or in comparable unrated securities, when, in
the opinion of the Adviser, such an investment presents a greater opportunity
for appreciation with comparable risk to an investment in "investment grade"
securities. Under normal market conditions the portfolio will invest not more
than 5% of its nets assets in these securities. Consistent with its investment
objective and policies described above, the portfolio may also invest up to 25%
(and generally expects to invest not more than 15%) of its net assets in foreign
securities (including emerging market securities and Brady Bonds) which are not
traded on a U.S. exchange.
Adviser: Massachusetts Financial Services
Company. Management Fee: 0.75%.
The Growth with Income Series of the MFS Variable Insurance Trust seeks
reasonable current income and long-term growth of capital and income. Under
normal market conditions, the portfolio will invest at least 65% of its assets
in equity securities of companies that are believed to have long-term prospects
for growth and income. Equity securities in which the portfolio may invest
include the following: common stocks, preferred stocks and preference stock;
securities such as bonds, warrants or rights that are convertible into stocks;
and depository receipts for those securities. These securities may be listed on
securities exchanges, traded in various over-the-counter markets or have no
organized markets. Consistent with its investment objective and policies
described above, the portfolio may also invest up to 75% (and generally expects
to invest no more than 15%) of its net assets in foreign securities (including
emerging market securities and Brady Bonds) which are not traded on a U.S.
exchange.
Adviser: Massachusetts Financial Services
Company. Management Fee: 0.75%.
The Research Series of the MFS Variable Insurance Trust seeks long-term growth
of capital and future income. The policy is to invest a substantial proportion
of its assets in equity securities of companies believed to possess better than
average prospects for long-term growth. Equity securities in which the portfolio
may invest include the following: common stocks, preferred stocks and preference
stocks, securities such as bonds, warrants or rights that are convertible into
stocks and depository receipts for those securities. These securities may be
listed on securities exchanges, traded in various over-the-counter markets or
have no organized markets. A smaller proportion of the assets may be invested in
bonds, short-term obligations, preferred stocks or common stocks whose principal
characteristic is income production rather than growth. Such securities may also
offer opportunities for growth of capital as well as income. In the case of both
growth stocks and income issues, emphasis is placed on the selection of
progressive, well-managed companies. The portfolio's non-convertible debt
investments, if any, may consist of "investment grade" securities, and, with
respect to no more than 10% of the portfolio's net assets, securities in the
lower rated categories or securities which the Adviser believes to be a similar
quality to these lower rated securities (commonly know as "junk bonds").
Consistent with its investment objective and policies described above, the
portfolio may also invest up to 20% of its net assets in foreign securities
(including emerging market securities) which are not traded on a U.S. exchange.
Adviser: Massachusetts Financial Services
Company. Management Fee: 0.75%.
The Fixed Income Portfolio of the Morgan Stanley Universal Funds, Inc., seeks
above-average total return over a market cycle of three to five years by
investing primarily in a diversified portfolio of U.S. government and agencies,
corporate bonds, mortgage backed securities, foreign bonds and other fixed
income securities and derivatives. The portfolio's average weighted maturity
will ordinarily exceed five years and will usually be between five and fifteen
years.
Adviser: Miller Anderson & Sherrerd, LLP.
Management Fee: 0.40% of the first $500
million plus 0.35% of the next $500 million
plus 0.30% of the assets over $1 billion.
The High Yield Portfolio of the Morgan Stanley Universal Funds, Inc., seeks
above-average total return over a market cycle of three to five years by
investing primarily in high yield securities of U. S. and foreign issuers,
including corporate bonds and other fixed income securities and derivatives.
High yield securities are rated below investment grade and are commonly referred
to as "junk bonds." The portfolio's average weighted maturity will ordinarily
exceed five years and will usually be between five and fifteen years.
Adviser: Miller Anderson & Sherrerd, LLP.
Management Fee: 0.50% of first $500 million
plus 0.45% of next $500 million plus 0.40% of
the assets over $1 billion.
The International Magnum Portfolio of the Morgan Stanley Universal Funds, Inc.,
seeks long-term capital appreciation by investing primarily in equity securities
of non-U.S. issuers domiciled in EAFE countries. The countries in which the
portfolio will invest are those comprising the Morgan Stanley Capital
International EAFE Index, which includes Australia, Japan, New Zealand, most
nations located in Western Europe and certain developed countries in Asia, such
as Hong Kong and Singapore (collectively the "EAFE countries"). The portfolio
may invest up to 5% of its total assets in securities of issuers domiciled in
non-EAFE countries. Under normal circumstances, at least 65% of the total assets
of the portfolio will be invested in equity securities of issuers in at least
three different EAFE countries.
Adviser: Morgan Stanley Asset Management
Inc. Management Fee: 0.80% of the first
$500 million plus 0.75% of the next $500
million plus 0.70% of the assets over $1
billion.
The Managed Portfolio of the OCC Accumulation Trust seeks growth of capital over
time through investment in a portfolio consisting of common stocks, bonds and
cash equivalents, the percentages of which will vary based on the Adviser's
assessments of the relative outlook for such investments. Debt securities are
expected to be predominantly investment grade intermediate to long term U.S.
Government and corporate debt, although the portfolio will also invest in high
quality short term money market and cash equivalent securities and may invest
almost all of its assets in such securities when the Adviser deems it advisable
in order to preserve capital. In addition, the portfolio may also purchase
foreign securities provided that they are listed on a domestic or foreign
securities exchange or are represented by American depository receipts listed on
a domestic securities exchange or traded in domestic or foreign over-the-counter
markets.
Adviser: OpCap Advisors. Management Fee:
0.80% of first $400 million plus 0.75% of
next $400 million plus 0.70% of the assets
over $800 million.
The Small Cap Portfolio of the OCC Accumulation Trust seeks capital appreciation
through investments in a diversified portfolio consisting primarily of equity
securities of companies with market capitalizations of under $1 billion. Under
normal circumstances at least 65% of the portfolio's assets will be invested in
equity securities. The majority of securities purchased by the portfolio will be
traded on the New York Stock Exchange, the American Stock Exchange or in the
over-the-counter market, and will also include options, warrants, bonds, notes
and debentures which are convertible into or exchangeable for, or which grant a
right to purchase or sell, such securities. In addition, the portfolio may also
purchase foreign securities provided that they are listed on a domestic or
foreign securities exchange or are represented by American depository receipts
listed on a domestic securities exchange or traded in domestic or foreign
over-the-counter markets.
Adviser: OpCap Advisors. Management Fee:
0.80% of the first $400 million plus 0.75% of
the next $400 million plus 0.70% of assets
over $800 million.
The Growth Portfolio of the Transamerica Variable Insurance Fund, Inc., seeks
long-term capital growth. Common stock (listed and unlisted) is the basic form
of investment. The Growth Portfolio invests primarily in common stocks of growth
companies that are considered by the manager to be premier companies. In the
manager's view, characteristics of premier companies include one or more of the
following: dominant market share; leading brand recognition; proprietary
products or technology; low-cost production capability; and excellent management
with shareholder orientation. The manager of the Portfolio believes in long-term
investing and places great emphasis on the sustainability of the above
competitive advantages. Unless market conditions indicate otherwise, the manager
also tries to keep the Portfolio fully invested in equity-type securities and
does not try to time stock market movements. When in the judgment of the
Sub-Adviser market conditions warrant, the portfolio may, for temporary
defensive purposes, hold part or all of its assets in cash, debt or money market
instruments. The portfolio may invest up to 10% of its assets in debt securities
having a call on common stocks that are rated below investment grade.
Adviser: Transamerica Occidental Life
Insurance Company. Sub-Adviser:
Transamerica Investment Services, Inc.
Management Fee: 0.75%.
The Money Market Portfolio of the
Transamerica Variable Insurance Fund, Inc.,
seeks to maximize current income from money
market securities consistent with liquidity
and the preservation of principal. The
portfolio invests primarily in high quality
U. S. dollar-denominated money market
instruments with remaining maturities of 13
months or less, including: obligations
issued or guaranteed by the U. S. and
foreign governments and their agencies and
instrumentalities; obligations of U. S. and
foreign banks, or their foreign branches,
and U. S. savings banks; short-term
corporate obligations, including commercial
paper, notes and bonds; other short-term
debt obligations with remaining maturities
of 397 days or less; and repurchase
agreements involving any of the securities
mentioned above. The portfolio may also
purchase other marketable, non-convertible
corporate debt securities of U. S.
issuers. These investments include bonds,
debentures, floating rate obligations, and
issues with optional maturities.
Adviser: Transamerica Occidental Life
Insurance Company. Sub-Adviser:
Transamerica Investment Services, Inc.
Management Fee: 0.35%.
Meeting investment objectives depends on various factors, including,
but not limited to, how well the portfolio managers anticipate changing economic
and market conditions. THERE IS NO ASSURANCE THAT ANY OF THESE PORTFOLIOS WILL
ACHIEVE THEIR STATED OBJECTIVES.
An investment in the policy is not a deposit or obligation of, or
guaranteed or endorsed, by any bank, nor is the policy federally insured by the
Federal Deposit Insurance Corporation or any other government agency. Investing
in the policy involves certain investment risks, including possible loss of
principal.
Since all of the portfolios are available to registered separate
accounts offering variable annuity and variable life products of Transamerica as
well as other insurance companies, there is a possibility that a material
conflict may arise between the interests of the variable account and one or more
other separate accounts investing in the portfolios. In the event of a material
conflict, the affected insurance companies will take any necessary steps to
resolve the matter, including stopping their separate accounts from investing in
the portfolios. See the portfolios' prospectuses for greater details.
Additional information concerning the investment objectives and
policies of all of the portfolios, the investment advisory services and
administrative services and charges can be found in the current prospectuses for
the portfolios which accompany this prospectus. The portfolios' prospectuses
should be read carefully before any decision is made concerning the allocation
of premiums to, or transfers among, the variable sub-accounts.
Transamerica may receive payments
from some or all of the portfolios or their
advisers, in varying amounts, that may be
based on the amount of assets allocated to
the portfolios. The payments are for
administrative or distribution services.
Addition, Deletion, or Substitution
Transamerica does not control the portfolios and cannot guarantee that
any of the variable sub-accounts offered under this policy or any of the
portfolios will always be available for allocation of premiums or transfers.
Transamerica retains the right to make changes in the variable account and in
its investments.
Transamerica reserves the right to eliminate the shares of any
portfolio held by a variable sub-account and to substitute shares of another
portfolio or of another investment company for the shares of any portfolio, if
the shares of the portfolio are no longer available for investment or if, in
Transamerica's judgment, investment in any portfolio would be inappropriate in
view of the purposes of the variable account. To the extent required by the 1940
Act, a substitution of shares attributable to the owner's interest in a variable
sub-account will not be made without prior notice to the owner and the prior
approval of the Commission. Nothing contained herein shall prevent the variable
account from purchasing other securities for other series or classes of variable
annuity policies, or from effecting an exchange between series or classes of
variable policies on the basis of requests made by owners.
New variable sub-accounts for the policies may be established when, in
the sole discretion of Transamerica, marketing, tax, investment or other
conditions so warrant. Any new variable sub-accounts will be made available to
existing owners on a basis to be determined by Transamerica. Each additional
variable sub-account will purchase shares in a mutual fund portfolio or other
investment vehicle. Transamerica may also eliminate one or more variable
sub-accounts if, in its sole discretion, marketing, tax, investment or other
conditions so warrant. In the event any variable sub-account is eliminated,
Transamerica will notify owners and request a re-allocation of the amounts
invested in the eliminated variable sub-account.
In the event of any substitution or change, Transamerica may make such
changes in the policy as may be necessary or appropriate to reflect such
substitution or change. Furthermore, if deemed to be in the best interests of
persons having voting rights under the policies, the variable account may be
operated as a management company under the 1940 Act or any other form permitted
by law, may be de-registered under such Act in the event such registration is no
longer required, or may be combined with one or more other separate accounts.
Subject to the approval of the New York Insurance Department, Transamerica
reserves the right to eliminate the shares of any Portfolio held by a
sub-account, and to substitute shares of another portfolio or of another
investment company for the shares of any portfolio, if the shares of the
portfolio are no longer available for investment or if, in Transamerica's
judgment, investment in any portfolio would be inappropriate in view of the
purposes of the variable account. To the extent required by the 1940 Act, a
substitution of shares attributable to the owner's interest in a sub-account
will not be made without prior notice to the owner and the prior approval of the
Commission. Nothing contained herein shall prevent the variable account from
purchasing other securities for other series or classes of variable annuity
policies, or from effecting an exchange between series or classes of variable
policies on the basis of requests made by Owners.
THE CONTRACTTHE POLICY
The policy is a flexible premium deferred annuity policy. The rights
and benefits are described below and in the individual policy; however,
Transamerica reserves the right to make any modification to conform the policy
to, or give the owner the benefit of, any federal or state statute or rule or
regulation. The obligations under the policy are obligations of Transamerica.
The policies are available on a non-qualified basis and on a qualified basis.
Policies available on a qualified basis are as follows: (1) rollover and
contributory individual retirement annuities (IRAs) under Code Sections 408(a)
and 408(b); (2) conversion and contributory Roth IRAs under Code Section 408A;
(3) simplified employee pension plans (SEP/IRAs) that qualify for special
federal income tax treatment under Code Section 408(k); (4) Code Section 403(b)
annuities; and (5) qualified pension and profit sharing plans intended to
qualify under Code Section 401. Generally, qualified policies contain certain
restrictive provisions limiting the timing and amount of premiums to, and
distributions from, the qualified policy. For further discussion concerning
qualified policies, see "Federal Tax Matters" page 43.
Ownership
The owner is entitled to the rights granted by the policy. If the owner
dies, the rights of the owner belong to the joint owner, if any, and then to the
owner's beneficiary. If there are joint owners, the one designated as the
primary owner will receive all mail and any tax reporting information.
For non-qualified policies, the owner is entitled to designate the
annuitant(s) and, if the owner is an individual, the owner can change the
annuitant(s) at any time before the annuity date. Any such change will be
subject to our then current underwriting requirements. Transamerica reserves the
right to reject any change of annuitant(s) which has been made without our prior
written consent.
If the owner is not an individual, the annuitant(s) may not be changed
once the policy is issued. Different rules apply to qualified contracts. See
"Federal Tax Matters," page 43.
For each policy, a different account will be established and values,
benefits and charges will be calculated separately. The various administrative
rules described below will apply separately to each policy, unless otherwise
noted.
PREMIUMS
Premiums
All premiums must be paid to the Service Center. A confirmation will be
issued to the owner upon the acceptance of each premium.
The initial premium must be at
least $5,000 ($2,000 for contributory IRAs,
SEP/IRAs and Roth IRAs).
The policy will be issued and the initial premium generally will be
credited within two business days after the receipt of both sufficient
information to issue a policy and the initial premium at the Service Center.
Acceptance is subject to sufficient information being provided in a form
acceptable to Transamerica, and Transamerica reserves the right to reject any
request for issuance of a policy or premium. Contracts normally will not be
issued with respect to owners, joint owners, or annuitants more than 90 years
old, although Transamerica in its discretion may waive this restriction in
appropriate cases. Transamerica further reserves the right to not accept
premiums after the owners' (or annuitants' if non-individual owner) 91st
birthday.
If the initial premium allocated to the variable sub-account(s) cannot
be credited within two days of receipt of the premium and information requesting
issuance of a policy because the information is incomplete or for any other
reason, then Transamerica will contact the owner, explain the reason for the
delay and will refund the initial premium within five business days, unless the
owner consents to Transamerica retaining the initial premium and crediting it as
soon as the requirements are fulfilled.
Additional premiums may be made at any time prior to the annuity date.
Additional premiums must be at least $1,000 or at least $100 if made pursuant to
an automatic premium plan under which the additional premiums are automatically
deducted from a bank account and allocated to the policy. In addition, minimum
allocation amounts apply (see "Allocation of Purchase Payments" below).
Additional premiums are credited to the policy as of the date the payment is
received.
Total premiums for any policy may not exceed $1,000,000 without prior
approval of Transamerica.
In no event may the sum of all premiums for a policy during any taxable
year exceed the limits imposed by any applicable federal or state law, rules, or
regulations.
Allocation of Premiums
You specify how premiums will be allocated under the policy. You may
allocate premiums between and among one or more of the variable sub-accounts and
the general account options as long as the portions are whole number percentages
and any allocation percentage for a variable sub-account is at least 10%. In
addition, there is a minimum allocation of $100 to any variable sub-account and
the fixed account. Transamerica may waive this minimum allocation amount under
certain options and circumstances.
Each premium will be subject to the allocation percentages in effect at
the time of receipt of such premium. The allocation percentages for additional
premiums may be changed by the owner at any time by submitting a request for
such change, in a form and manner acceptable to Transamerica, to the Service
Center. Any changes to the allocation percentages are subject to the
limitation(s) above. Any change will take effect with the first premium received
with or after receipt by the Service Center of the request for such change and
will continue in effect until subsequently changed.
In certain jurisdictions and under certain conditions where by law
Transamerica is required to return upon the exercise of the free look option,
either (1) the premium or (2) the greater of the premium or account value, any
initial allocation to the variable account may be held in the money market
variable sub-account during the applicable free look period plus 5 days for
delivery. Any such allocations to the money market variable sub-account will
automatically be transferred at the end of the free-look period plus 5 days
according to the owner's requested allocation. Such transfer will not count
against the 12 allowed transfers without charge during the first policy year.
Investment Option Limits
Currently, the owner may not allocate amounts to more than eighteen
investment options over the life of the policy. Investment options include
variable sub-accounts and general account options. Each variable sub-account,
each duration of guarantee period under the guarantee period account and the
fixed account that ever received a transfer or premium allocation count as one
towards this total of eighteen limit. Transamerica may waive this limit in the
future.
For example, if the owner makes an allocation to the money market
variable sub-account and later transfers all amounts out of this money market
variable sub-account, it would still count as one for the purposes of the
limitation even if it held no value. If the owner transfers from a variable
sub-account to another variable sub-account and later back to the first, the
count towards the limitation would be two, not three. If the owner selects a
guarantee period and renews for the same term, the count will be one; but if the
owner renews to a guarantee period with a different term, the count will be two.
POLICY VALUE
Before the annuity date, the policy value is equal to: (a) the fixed
account accumulated value plus (b) the variable accumulated value.
The variable accumulated value is determined at the end of each
valuation day. To determine the variable accumulated value on a day that is not
a valuation day, the value as of the end of the next valuation day will be used.
The variable accumulated value is expected to change from valuation period to
valuation period, reflecting the investment experience of the selected
portfolios as well as the deductions for charges and fees. A valuation period is
the period between successive valuation days. It begins at the close of the New
York Stock Exchange (generally 4:00 p.m. ET) on each valuation day and ends at
the close of the New York Stock Exchange on the next succeeding valuation day. A
valuation day is each day that the New York Stock Exchange is open for regular
business.
Premiums allocated to a variable sub-account are credited to the
variable accumulated value in the form of variable accumulation units. The
number of variable accumulation units credited for each variable sub-account is
determined by dividing the premium allocated to the variable sub-account by the
variable accumulation unit value for that variable sub-account. In the case of
the initial premium, variable accumulation units for that payment will be
credited to the variable accumulated value within two valuation days of the
later of: (a) the date sufficient information, in an acceptable manner and form,
is received at our Service Center; or (b) the date our Service Center receives
the initial premium. In the case of any additional premium, variable
accumulation units for that premium will be credited at the end of the valuation
period during which Transamerica receives the premium.
The value of a variable accumulation unit for each variable sub-account
is established at the end of each valuation period and is calculated by
multiplying the value of that unit at the end of the prior valuation period by
the variable sub-account's net investment factor for the valuation period. The
value of a variable accumulation unit may go up or down. The value of a variable
accumulation unit is affected by the investment performance, expenses and
deduction of certain charges of the portfolio in which that variable sub-account
invests.
The net investment factor is used to determine the value of
accumulation and annuity unit values for the end of a valuation period. The
applicable formula can be found in the Statement of Additional Information.
Transfers involving variable sub-accounts will result in the crediting
and/or cancellation of variable accumulation units having a total value equal to
the dollar amount being transferred to or from a particular variable
sub-account. The crediting and cancellation of such units is made using the
variable accumulation unit value of the applicable variable sub-account as of
the end of the valuation day in which the transfer is effective.
TRANSFERS
Before the Annuity Date
Before the annuity date, you may
transfer all or any portion of the policy
value among the variable sub-accounts.
Transfers are restricted into or out of the
fixed account. See "The Fixed Account" in
Appendix A.
Transfers among the variable sub-accounts may be made by submitting a
request, in a form and manner acceptable to Transamerica, to the Service Center.
The transfer request must specify: (1) the variable sub-account(s) and/or fixed
account from which the transfer is to be made; (2) the amount of the transfer;
and (3) the variable sub-account(s) to receive the transferred amount. The
minimum amount which may be transferred from the variable sub-accounts is
$1,000. Transfers among the variable sub-accounts are also subject to such terms
and conditions as may be imposed by the portfolios.
Transamerica currently imposes a transfer fee of $10 for each transfer
in excess of 12 made during the same policy year. Transamerica reserves the
right to waive the transfer fee or vary the number of transfers without charge
or not count transfers under certain options or services for purposes of the
allowed number without charge. A transfer generally will be effective on the
date the request for transfer is received by the Service Center.
If a transfer reduces the value in a variable sub-account or in the
fixed account to less than $1,000, then Transamerica reserves the right to
transfer the remaining amount along with the amount requested to be transferred
in accordance with the transfer instructions provided by the owner. Under
current law, there will not be any tax liability for transfers within the
policy.
Other Restrictions
Transamerica reserves the right without prior notice to modify,
restrict, suspend or eliminate the transfer privileges at any time and for any
reason. For example, restrictions may be necessary to protect owners from
adverse impacts on portfolio management of large and/or numerous transfers by
market timers or others. Transamerica has determined that the movement of
significant variable sub-policy values from one variable sub-account to another
may prevent the underlying portfolio from taking advantage of investment
opportunities because the portfolio must maintain a significant cash position in
order to handle redemptions. Such movement may also cause a substantial increase
in portfolio transaction costs which must be indirectly borne by owners.
Therefore, Transamerica reserves the right to require that all transfer requests
be made by the owner and not by a third party holding a power of attorney and to
require that each transfer request be made by a separate communication to
Transamerica. Transamerica also reserves the right to require that each transfer
request be submitted in writing and be manually signed by the owner(s).
Dollar Cost Averaging
Prior to the annuity date, the owner may request that amounts be
automatically transferred on a monthly basis from a "source account," which is
currently either the money market sub-account or the fixed account, to any of
the variable sub-accounts by submitting a request to the Service Center in a
form and manner acceptable to Transamerica. Other source accounts may be
available; call the Service Center for availability. Only one source account can
be elected at a time.
The transfers will begin when the owner requests, but no sooner than
one week following, receipt of such request, provided that dollar cost averaging
transfers will not commence until the later of (a) 30 days after the policy
effective date, or (b) the estimated end of the free look period (allowing 5
days for delivery). Transfers will continue for the number of consecutive months
selected by the owner unless (1) terminated by the owner, (2) automatically
terminated by Transamerica because there are insufficient amounts in the source
account, or (3) for other reasons as described in the election form. The owner
may request that monthly transfers be continued for a term then available by
giving notice to the Service Center in a form and manner acceptable to
Transamerica within 30 days prior to the last monthly transfer. If no request to
continue the monthly transfers is made by the owner, this option will terminate
automatically with the last transfer at the end of the term.
In order to be eligible for dollar cost averaging, the following
conditions must be met: (1) the value of the source account must be at least
$5,000; (2) the minimum amount that can be transferred out of the source account
is $250 per month; and (3) the minimum amount transferred into any other
variable sub-account is the greater of $250 or 10% of the amount being
transferred. These limits may be changed for new elections of this service.
Dollar cost averaging transfers can not be made from a source account from which
systematic withdrawals or automatic payouts are also being made. Dollar cost
averaging may not be elected at the same time automatic asset rebalancing is in
effect.
There is currently no charge for the dollar cost averaging option and
transfers due to dollar cost averaging currently will not count toward the
number of transfers allowed without charge per policy year. Transamerica may
charge in the future for dollar cost averaging.
Dollar cost averaging transfers may not be made to the fixed account.
Automatic Asset Rebalancing
After premiums have been allocated among the variable sub-accounts, the
performance of each variable sub-account may cause proportions of the values in
the variable sub-accounts to vary from the allocation percentages. The owner may
instruct Transamerica to automatically rebalance the amounts in the variable
account by reallocating amounts among the variable sub-accounts, at the time,
and in the percentages, specified in the owner instructions to Transamerica and
accepted by Transamerica. The owner may elect to have the rebalancing done on an
annual, semi-annual or quarterly basis. The owner may elect to have amounts
allocated among the variable sub-accounts using whole percentages, with a
minimum of 10% allocated to each variable sub-account.
The owner may elect to establish, change or terminate the automatic
asset rebalancing by submitting a request to the Service Center in a form and
manner acceptable to Transamerica. Automatic asset rebalancing currently will
not count towards the number of transfers without charge in a policy year.
Transamerica reserves the right to discontinue the automatic asset rebalancing
service at any time for any reason. There is currently no charge for the
automatic asset rebalancing service. Transamerica may in the future charge for
this service and may count the transfers toward those allowed without charge.
Automatic asset rebalancing may
not be elected at the same time that dollar
cost averaging is in effect.
After the Annuity Date
If a variable payment option is elected, the owner may make transfers
among variable sub-accounts after the annuity date by giving a written request
to the Service Center, subject to the following provisions: (1) transfers after
the annuity date may be made no more than four times during any policy year; and
(2) the minimum amount transferred from one variable sub-account to another is
the amount supporting a current $50 monthly payment.
Transfers among variable sub-accounts after the annuity date will be
processed based on the formula outlined in the appendix in the Statement of
Additional Information.
CASH WITHDRAWALS
The owner of a non-qualified policy may withdraw all or part of the
cash surrender value at any time prior to the annuity date by giving a written
request to the Service Center. For qualified policies, reference should be made
to the terms of the particular retirement plan or arrangement for any additional
limitations or restrictions, including prohibitions on cash withdrawals. See
"Federal Tax Matters," page 43. The cash surrender value is equal to the policy
value, less any policy fee, contingent deferred sales load and premium tax
charges. A full surrender will result in a cash withdrawal payment equal to the
cash surrender value at the end of the valuation period during which the
election is received along with all completed forms then required by
Transamerica. No surrenders or withdrawals may be made after the annuity date.
Partial withdrawals must be at least $1,000.
In the case of a partial withdrawal, you may direct the Service Center
to withdraw amounts from specific variable sub-account(s) and/or from the fixed
account. If the owner does not specify, the withdrawal will be taken pro rata
from policy value.
A partial withdrawal request cannot be made if it would reduce the
policy value to less than $2,000. In that case, the owner will be notified.
Withdrawal (including surrender) requests generally will be processed
as of the end of the valuation period during which the request, including all
completed forms, is received. Payment of any cash withdrawal, settlement option
payment or lump sum death benefit due from the variable account and processing
of any transfers will occur within seven days from the date the election is
received, except that Transamerica may postpone such payment if: (1) the New
York Stock Exchange is closed for other than usual weekends or holidays, or
trading on the Exchange is otherwise restricted; or (2) an emergency exists as
defined by the Commission, or the Commission requires that trading be
restricted; or (3) the Commission permits a delay for the protection of owners.
The withdrawal request will be effective when all required withdrawal request
forms are received. Payments of any amounts derived from a premium paid by check
may be delayed until the check has cleared the owner's bank.
Transamerica may delay payment of any withdrawal from the fixed account
for up to six months after Transamerica receives the request for such
withdrawal. If Transamerica delays payment for more than 30 days, Transamerica
will pay interest on the withdrawal amount up to the date of payment.
SINCE THE OWNER ASSUMES THE INVESTMENT RISK FOR ALL AMOUNTS IN THE
VARIABLE ACCOUNT AND BECAUSE CERTAIN WITHDRAWALS ARE SUBJECT TO A CONTINGENT
DEFERRED SALES LOAD AND OTHER CHARGES, THE TOTAL AMOUNT PAID UPON SURRENDER OF
THE POLICY MAY BE MORE OR LESS THAN THE TOTAL PREMIUMS CONTRIBUTED.
An owner may elect, under the systematic withdrawal option or automatic
payout option (but not both), to withdraw certain amounts on a periodic basis
from the variable sub-accounts prior to the annuity date.
The tax consequences of a
withdrawal or surrender are discussed later
in this prospectus. See "Federal Tax
Matters" page 43.
Systematic Withdrawal Option
Prior to the annuity date, you may elect to have withdrawals
automatically made from one or more variable sub-account(s) on a monthly basis.
Other distribution modes may be permitted. The withdrawals will not begin until
the later of (a) 30 days after the policy effective date or (b) the end of the
free look period. Withdrawals will be from the variable sub-account(s) and in
the percentage allocations that you specify. If no specifications are made,
withdrawals will be pro rata based on value from all variable sub-account(s) and
the fixed account, if it has values. Systematic withdrawals cannot be made from
a variable sub-account from which dollar cost averaging transfers are being made
and cannot be elected concurrently with the automatic payout option. The
systematic withdrawal option is currently not available with respect to the
fixed account.
To be eligible for the systematic withdrawal option, the policy value
must be at least $12,000 at the time of election. The minimum monthly amount
that can be withdrawn is $100. Currently, the owner can elect any amount over
$100 to be withdrawn systematically. The owner may also make partial withdrawals
while receiving systematic withdrawals. If the total withdrawals (systematic,
automatic, or partial) in a policy year exceed the allowed amount to be
withdrawn without charge for that year, any applicable contingent deferred sales
load will then apply.
The withdrawals will continue indefinitely unless terminated. If this
option is terminated it may not be elected again until the end of the next 12
full months.
Transamerica reserves the right to impose an annual fee of up to $25
for processing payments under this option. This fee, which is currently waived,
will be deducted in equal installments from each systematic withdrawal during a
policy year.
Systematic withdrawals may be
taxable and, prior to age 59 1/2, subject to a
10% federal tax penalty. See "Federal Tax Matters," page 43.
Automatic Payout Option ("APO")
Prior to the annuity date, for qualified policies, the owner may elect
the automatic payout option (APO) to satisfy minimum distribution requirements
under Sections 401(a)(9), 403(b), and 408(b)(3) of the Code. See "Federal Tax
Matters" page 43. For IRAs and SEP/IRAs this may be elected no earlier than six
months prior to the calendar year in which the owner attains age 701?2, but
payments may not begin earlier than January of such calendar year. For other
qualified policies, APO can be elected no earlier than six months prior to the
later of when the owner (a) attains age 70 1/2; and (b) retires from employment.
Additionally, APO withdrawals may not begin before the later of (a) 30 days
after the policy effective date or (b) the end of the free look period. APO may
be elected in any calendar month, but no later than the month of the owner's
84th birthday.
Withdrawals will be from the variable sub-account(s) and in the
percentage allocations you specify. If no specifications are made, withdrawals
will be pro rata based on policy value. Withdrawals can not be made from a
variable sub-account from which dollar cost averaging transfers are being made.
The APO is not currently available with respect to the fixed account. The
calculation of the APO amount will reflect the total policy value although the
withdrawals are only from the variable sub-accounts. This calculation and APO
are based solely on value in this policy.
To be eligible for this option, the following conditions must be met:
(1) the policy value must be at least $12,000 at the time of election; (2) the
annual withdrawal amount is the larger of the required minimum distribution
under Code Sections 401(a)(9) or 408(b)(3) or $500. These conditions may change.
Currently, withdrawals under this option are only paid annually.
The withdrawals will continue indefinitely unless terminated. If there
are insufficient amounts in the variable account to make a withdrawal, this
option generally will terminate. Once terminated, APO may not be elected again.
DEATH BENEFIT
If an owner dies before the annuity date, a death benefit is payable.
If death occurs prior to any owner's or joint owner's 85th birthday, the death
benefit will be equal to the greatest of (a) the policy value, or (b) the sum of
all premiums made to the policy less withdrawals and applicable premium tax
charges, or (c) the highest policy value on any policy anniversary prior to the
earlier of the owner's or joint owner's 85th birthday, plus premiums made less
withdrawals and applicable premium tax charges since that policy anniversary. If
the owner or joint owner dies before the annuity date and after either the
deceased owner's or joint owner's 85th birthday, the death benefit is equal to
the policy value. For purposes of calculating such death benefit, the policy
value is determined as of the date the benefit is paid. If the owner is not a
natural person, the annuitant(s) will be treated as the owner(s) for purposes of
the death benefit. For example, if the owner is a trust that allows a person(s)
other than the trustee to exercise the ownership rights under this certificate,
such person(s) must be named annuitant(s) and will be treated as the owner(s) so
the death benefit will be determined based on the age of the annuitant(s).
An ownership change will be subject to our then current underwriting
rules and may decrease the death benefit. However, such reduction will never
decrease the death benefit below the policy value.
Payment of Death Benefit
The death benefit is generally payable upon receipt of proof of death
of the owner. Upon receipt of this proof and an election of a method of
settlement, the death benefit generally will be paid within seven days, or as
soon thereafter as Transamerica has sufficient information about the beneficiary
to make the payment.
The death benefit will be determined as of the end of the valuation
period during which our Service Center receives both proof of death of the owner
or joint owner and the written notice of the settlement option elected by the
person to whom the death benefit is payable. If no settlement method is elected,
the death benefit will be a lump sum distributed within five years after the
owner's death. No contingent deferred sales load will apply.
Until the death benefit is paid, the policy value allocated to the
variable account remains in the variable account, and fluctuates with investment
performance of the applicable portfolio(s). Accordingly, the amount of the death
benefit depends on the policy value at the time the death benefit is paid, not
at the time of death.
Designation of Beneficiaries
The owner may select one or more beneficiaries by designating the
person(s) to receive the amounts payable under this policy if: the owner dies
before the annuity date and there is no joint owner, or the owner dies after the
annuity date and settlement option payments have begun under a selected
settlement option that guarantees payments for a certain period of time. The
interest of any beneficiary who dies before the owner will terminate at time of
death of such beneficiary.
A beneficiary may be named or changed at any time in a form and manner
acceptable to us. Any change made to an irrevocable beneficiary must also
include the written consent of the beneficiary, except as otherwise required by
law.
If more than one beneficiary is named, each named beneficiary will
share equally in any benefits or rights granted by this policy unless the owner
gives us other instructions at the time the beneficiaries are named.
Transamerica may rely on any
affidavit by any responsible person in
determining the identity or non-existence
of any beneficiary not identified by name
Death of Owner or Joint Owner Before the
Annuity Date
If the owner or joint owner dies before the annuity date, we will pay
the death benefit as specified in this section. The entire death benefit will be
distributed within five years after the owner's death. If the owner is not an
individual, an annuitant's death will be treated as the death of the owner as
provided in Code Section 72 (s)(6). For example, the policy will remain in force
with the annuitant's surviving spouse as the new annuitant if:
o This policy is owned by a
trust; and
o The beneficiary is either the annuitant's surviving spouse or
a trust holding the policy solely for the benefit of such
spouse.
The manner in which we will pay the death benefit depends on the status
of the person(s) involved in the policy. The death benefit will be payable to
the first person from the applicable list below:
If the owner is the annuitant:
o The joint owner, if any,
then
o The beneficiary, if any.
If the owner is not the annuitant:
o The joint owner, if any;
then
o The beneficiary, if any;
then
o The annuitant; then
o The joint annuitant; if
any.
If the death benefit is payable to the owner's surviving spouse (or to a trust
for the sole benefit of such surviving spouse),
We will continue this policy with the owner's spouse as the new
annuitant (if the owner was the annuitant) and the new owner (if applicable),
unless such spouse selects another option as provided below.
If the death benefit is payable to someone
other that the owner's surviving spouse,
We will pay the death benefit in a lump sum payment to, or for the
benefit of, such person within five years after the owner's death, unless such
person(s) selects another option as provided below.
In lieu of the automatic form of death
benefit specified above,
The person(s) to whom the death benefit is payable may elect to receive
it:
o In a lump sum; or
o As settlement option
payments, provided the
person making the
election is an
individual. Such
payments must begin
within one year after the
owner's death and must be
in equal amounts over a
period of time not
extending beyond the
individual's life or life
expectancy.
Election of either option must be made no later than 60 days prior to
the one-year anniversary of the owner's death. Otherwise, the death benefit will
be settled under the appropriate automatic form of benefit specified above.
If the person to whom the death benefit is
payable dies before the entire death
benefit is paid,
We will pay the remaining death benefit in a lump sum to the payee
named by such person or, if no payee was named, to such person's estate.
If the death benefit is payable to a non-individual (subject to the special rule
for a trust for the sole benefit of a surviving spouse),
We will pay the death benefit in a lump sum within one year after the
owner's death.
If the Annuitant Dies Before the Annuity
Date
If an owner and an annuitant are not the same individual and the
annuitant (or the last of joint annuitants) dies before the annuity date, the
owner will become the annuitant until a new annuitant is selected.
Death after the Annuity Date
If an owner or the annuitant dies after the annuity date, any amounts
payable will continue to be distributed at least as rapidly as under the
settlement and payment option then in effect on the date of death.
Upon the owner's death after the annuity date, any remaining ownership
rights granted under this policy will pass to the person to whom the death
benefit would have been paid if the owner had died before the annuity date, as
specified above.
Survival Provision
The interest of any person to whom the death benefit is payable who
dies at the time of, or within 30 days after, the death of the owner will also
terminate if no benefits have been paid to such beneficiary, unless the owner
had given us written notice of some other arrangement.
CHARGES, FEES AND DEDUCTIONS
No deductions are currently made from premiums (although we reserve the
right to charge for any applicable premium tax charges). Therefore, the full
amount of the premiums are invested in one or more of the variable sub-accounts
and/or the fixed account.
Contingent Deferred Sales Load
No deduction for sales charges is made from premiums at the time they
are made. However, a contingent deferred sales load of up to 6% of premiums may
be imposed on certain withdrawals or surrenders to partially cover certain
expenses incurred by Transamerica relating to the sale of the policy, including
commissions paid to salespersons, the costs of preparation of sales literature
and other promotional costs and acquisition expenses.
The contingent deferred sales load percentage varies according to the
number of years between when a premium was credited to the policy and when the
withdrawal is made. The amount of the contingent deferred sales load is
determined by multiplying the amount withdrawn subject to the contingent
deferred sales load by the contingent deferred sales load percentage in
accordance with the following table. In no event shall the aggregate contingent
deferred sales load assessed against the policy exceed 6% of the aggregate
premiums.
Number of Years Since
Contingent Deferred Sales Load
Receipt of Premium
As a Percentage of Premium
Less than one year
6%
1 year but less than 2 years
6%
2 years but less than 3 years 5%
3 years but less than 4 years 5%
4 years but less than 5 years 4%
5 years but less than 6 years 4%
6 years but less than 7 years 2%
7 or more years
0%
Free Withdrawals - Allowed Amount
Beginning 30 days after the policy effective date (or the end of the
free-look period, if later), the owner may make a withdrawal up to the "allowed
amount", without incurring a contingent deferred sales load each policy year,
before the annuity date.
The allowed amount each policy year is equal to 10% of the total
premiums received during the last seven years determined as of the last policy
anniversary less any withdrawals during the present policy year. In the first
policy year, the 10% will be applied to the total premiums paid at the time of
the first withdrawal.
Premiums held for seven full years or more may be withdrawn without
charge.
Withdrawals will be made first from premiums on a first-in/first-out
basis and then from earnings. The allowed amount may vary depending on the state
of issuance. If the allowed amount is not fully withdrawn or paid out during a
policy year, it does not carry over to the next policy year.
Other Free Withdrawals
In addition, no contingent deferred sales load is assessed: upon
annuitization after the first policy year to an option involving life
contingencies; upon payment of the death benefit; or upon transfers of policy
value. Any applicable contingent deferred sales load will be deducted from the
amount requested for both partial withdrawals (including withdrawals under the
systematic withdrawal option or the APO) and full surrenders unless the owner
elects to "gross-up" the amount for a partial withdrawal to cover the applicable
contingent deferred sales load.
Administrative Charges
Policy Fee
At the end of each policy year before the annuity date, Transamerica
deducts an annual policy fee as partial compensation for expenses relating to
the issue and maintenance of the policy and the variable account. The annual
policy fee is equal to the lesser of $30 or 2% of the policy value. The policy
fee may be increased upon 30 days advance written notice subject to the prior
approval of the New York State Insurance Department, but in no event may it
exceed $60 (or 2% of the policy value, if less) per policy year. If the policy
is surrendered, the policy fee, unless waived, will be deducted from a full
surrender before the application of any continent deferred sales load. The
policy fee will be deducted on a pro rata basis (based on values) from the
policy value including both the variable sub-accounts and the fixed account. The
policy fee for a policy year will be waived if the policy value exceeds $50,000
on the last business day of that policy year or as of the date the policy is
surrendered.
Annuity Fee
After the annuity date, an annual annuity fee of $30 to help cover
processing costs will be deducted in equal amounts from each variable payment
made during the year ($2.50 each month if monthly payments). This fee will not
be changed but may be waived. No annuity fee will be deducted from fixed
payments.
Administrative Expense Charge
Transamerica also makes a daily deduction (the administrative expense
charge) from the variable account (both before and after the policy date) at an
effective current annual rate of 0.15% of assets held in each variable
sub-account to reimburse Transamerica for administrative expenses. Transamerica
has the ability in most states to increase or decrease this charge, but the
charge is guaranteed not to exceed 0.35%. Transamerica will provide 30 days
written notice of any change in fees. The administrative charges do not bear any
relationship to the actual administrative costs of a particular policy. The
administrative expense charge is reflected in the variable accumulation or
variable annuity unit values for each variable sub-account.
Mortality and Expense Risk Charge
Transamerica deducts a charge for bearing certain mortality and expense
risks under the policies. This is a daily charge at an effective annual rate of
1.20% of the assets in the variable account. Transamerica guarantees that this
charge of 1.20% will never increase. The mortality and expense risk charge is
reflected in the variable accumulation and variable annuity unit values for each
variable sub-account.
Variable accumulated values and variable settlement option payments are
not affected by changes in actual mortality experience incurred by Transamerica.
The mortality risks assumed by Transamerica arise from its contractual
obligations to make settlement option payments determined in accordance with the
settlement option tables and other provisions contained in the policy and to pay
death benefits prior to the annuity date.
The expense risk assumed by Transamerica is the risk that
Transamerica's actual expenses in administering the policies and the variable
account will exceed the amount recovered through the administrative expense
charge, policy fees, transfer fees and any fees imposed for certain options and
services.
If the mortality and expense risk charge is insufficient to cover
actual costs and risks assumed, the loss will fall on Transamerica. Conversely,
if this charge is more than sufficient, any excess will be profit to
Transamerica. Currently, Transamerica expects a profit from this charge.
Transamerica anticipates that the contingent deferred sales load will
not generate sufficient funds to pay the cost of distributing the policies. To
the extent that the contingent deferred sales load is insufficient to cover the
actual cost of policy distribution, the deficiency will be met from
Transamerica's general corporate assets which may include amounts, if any,
derived from the mortality and expense risk charge.
Premium Tax Charges
Currently, New York has no premium tax or retaliatory premium tax. If
New York imposes these taxes in the future, or if the owner is or becomes a
resident of a state where such taxes apply, Transamerica will deduct applicable
premium taxes, including any retaliatory taxes paid with respect to a particular
policy from the premiums, from amounts withdrawn, or from amounts applied on the
Annuity Date.
Transfer Fee
Transamerica currently imposes a fee for each transfer in excess of the
first 12 in a single policy year. Transamerica will deduct the charge from the
amount transferred. This fee is $10 and will be used to help cover
Transamerica's costs of processing transfers. Transamerica reserves the right to
waive this fee or to not count transfers under certain options and services as
part of the number of allowed annual transfers without charge.
Option and Service Fees
Transamerica reserves the right to impose reasonable fees for
administrative expenses associated with processing certain options and services.
These fees would be deducted from each use of the option or service during a
policy year.
Taxes
No charges are currently made for taxes. However, Transamerica reserves
the right to deduct charges in the future for federal, state, and local taxes or
the economic burden resulting from the application of any tax laws that
Transamerica determines to be attributable to the policies.
Portfolio Expenses
The value of the assets in the variable account reflects the value of
portfolio shares and therefore the fees and expenses paid by each portfolio. A
complete description of the fees, expenses, and deductions from the portfolios
are found in the portfolios' prospectuses. See "The Portfolios" page 21.
Sales in Special Situations
Transamerica may sell the contracts in special situations that are
expected to involve reduced expenses for Transamerica. These instances may
include: 1) sales in certain group arrangements, such as employee savings plans;
2) sales to current or former officers, directors and employees (and their
families) of Transamerica and its affiliates; 3) sales to officers, directors,
and employees (and their families) of the portfolios' investment advisers and
their affiliates; and 4) sales to officers, directors, employees and sales
agents (registered representatives) (and their families) of broker-dealers and
other financial institutions that have sales agreements with Transamerica to
sell the contracts. In these situations, 1) the contingent deferred sales load
may be reduced or waived, 2) the mortality and expense risk charge or
administration charges may be reduced or waived; and/or 3) certain amounts may
be credited to the contract account value (for examples, amounts related to
commissions or sales compensation otherwise payable to a broker-dealer may be
credited to the contract account value. These reductions in fees or charges or
credits to account value will not unfairly discriminate against any contract
owner. These reductions in fees or charges or credits to account value are
generally taxable and treated as purchase payments for purposes of income tax
and any possible premium tax charge.
DISTRIBUTION OF THE POLICY
Transamerica Securities Sales Corporation ("TSSC") is the principal
underwriter of the policies under a Distribution Agreement with Transamerica.
TSSC may also serve as an underwriter and distributor of other policies issued
through the variable account and certain other separate accounts of Transamerica
and affiliates of Transamerica. TSSC is an indirect wholly-owned subsidiary of
Transamerica Corporation. TSSC is registered with the Commission as a
broker/dealer and is a member of the National Association of Securities Dealers,
Inc. ("NASD"). Its principal offices are located at 1150 South Olive Street, Los
Angeles, California 90015. TSSC may enter into sales agreements with
broker/dealers to solicit applications for the policies through registered
representatives who are licensed to sell securities and variable insurance
products.
Under the Sales Agreements, TSSC will pay broker-dealers compensation
based on a percentage of each premium. The percentage may be up to 5.75% and in
certain situations additional amounts for marketing allowances, production
bonuses, service fees, sales awards and meetings, and asset based trailer
commissions may be paid. The compensation amounts paid brokers-dealers by TSSC
are not deducted directly from, or directly reduce, a policy's value.
SETTLEMENT OPTION PAYMENTS
Annuity Date
The annuity date is the date that the annuitization phase of the policy
begins. On the annuity date, we will apply the annuity amount (defined below) to
provide payments under the settlement option selected by the owner. The annuity
date is selected by the owner and may be changed from time to time by the owner
by giving notice, in a form and manner acceptable to Transamerica, to the
Service Center, provided that notice of each change is received by the Service
Center at least thirty (30) days prior to the then-current annuity date. The
annuity date cannot be earlier than the first policy anniversary except for
certain qualified policies. The latest annuity date which may be elected is the
first day of the calendar month immediately preceding the month of the
annuitant's or joint annuitants' 90th birthday.
The annuity date must be the first day of a calendar month. The first
settlement option payment will be on the first day of the month immediately
following the annuity date. Certain qualified policies may have restrictions as
to the annuity date and the types of settlement options available. See "Federal
Tax Matters," page 43.
Settlement Option Payments
The annuity amount is the policy value, less any applicable contingent
deferred sales load, and less any applicable premium tax charges. Any contingent
deferred sales load will be waived if the settlement option payments involve
life contingencies and begin on or after the first policy anniversary.
If the amount of the monthly payment from the settlement option
selected by the owner would result in a monthly settlement option payment of
less than $20, or if the annuity amount is less than $2,000, Transamerica
reserves the right to offer a less frequent mode of payment or pay the policy
value in a cash payment. Monthly settlement option payments from the variable
payment option will further be subject to a minimum monthly payment of $50 from
each variable sub-account from which such payments are made.
The owner may choose from the settlement options below. Transamerica
may consent to other plans of payment before the annuity date. For settlement
options involving life contingencies, the actual age and/or sex of the
annuitant, or a joint annuitant will affect the amount of each payment.
Sex-distinct rates generally are not allowed under certain qualified policies.
Transamerica reserves the right to ask for satisfactory proof of the annuitant's
(or joint annuitant's) age. Transamerica may delay settlement option payments
until satisfactory proof is received. Since payments to older annuitants are
expected to be fewer in number, the amount of each annuity payment shall be
greater for older annuitants than for younger annuitants.
The owner may choose from the two payment options described below. The
annuity date and settlement options available for qualified policies may also be
controlled by endorsements, the plan or applicable law.
Election of Settlement Option Forms and
Payment Options
Before the annuity date, and while the annuitant is living, the owner
may, by written request, change the settlement option or payment option. The
request for change must be received by the Service Center at least 30 days prior
to the annuity date.
In the event that a settlement option form and payment option is not
selected at least 30 days before the annuity date, Transamerica will make
settlement option payments in accordance with the 120 month period certain and
life settlement option and the applicable provisions of the policy.
Payment Options
Owners may elect a fixed or a variable payment option, or a combination
of both (in 25% increments of the annuity amount).
Unless specified otherwise, the annuity amount in the variable account
will be used to provide a variable payment option and the amount in the fixed
account will be used to provide a fixed payment option. In this event, the
initial allocation of variable annuity units for the variable sub-accounts will
be in proportion to the policy value in the variable sub-accounts on the annuity
date. Fixed Payment Option
A fixed payment option provides for payments which will remain constant
pursuant to the terms of the settlement option elected. If a fixed payment
option is selected, the portion of the annuity amount used to provide that
payment option will be transferred to the general account assets of
Transamerica, and the amount of payments will be established by the fixed
settlement option selected and the age and sex (if sex-distinct rates are
allowed by law) of the annuitant(s) and will not reflect investment experience
after the annuity date. The fixed payment amounts are determined by applying the
fixed settlement option purchase rate specified in the policy to the portion of
the annuity amount applied to the payment option. Payments may vary after the
death of an annuitant under some options; the amounts of variances are fixed on
the annuity date.
Variable Payment Option
A variable payment option provides for payments that vary in dollar
amount, based on the investment performance of the selected variable
sub-account(s). The variable settlement option purchase rate tables in the
policy reflect an assumed annual interest rate of 4%, so if the actual net
investment performance of the variable sub-account(s) is less than 4%, then the
dollar amount of the actual payments will decrease. If the actual net investment
performance of the variable sub-account(s) is higher than 4%, then the dollar
amount of the actual payments will increase. If the net investment performance
exactly equals the 4% rate, then the dollar amount of the actual payments will
remain constant. Transamerica may offer other assumed annual interest rates.
Variable payments will be based on the variable sub-accounts selected
by the owner, and on the allocations among the variable sub-accounts.
For further details as to the determination of variable payments, see
the Statement of Additional Information.
Settlement Option Forms
The owner may choose any of the settlement option forms described
below. Subject to approval by Transamerica, the owner may select any other
settlement option form then being offered by Transamerica.
(1) Life Annuity. Payments start on the first day of the month
immediately following the annuity date, if the annuitant is living. Payments end
with the payment due just before the annuitant's death. There is no death
benefit. It is possible that no payment will be made if the annuitant dies after
the annuity date but before the first payment is due; only one payment will be
made if the annuitant dies before the second payment is due, and so forth.
(2) Life and Contingent Annuity. Payments start on the first day of the
month immediately following the annuity date, if the annuitant is living.
Payments will continue for as long as the annuitant lives. After the annuitant
dies, payments will be made to the contingent annuitant, for as long as the
contingent annuitant lives. The continued payments can be in the same amount as
the original payments, or in an amount equal to one-half or two-thirds thereof.
Payments will end with the payment due just before the death of the contingent
annuitant. There is no death benefit after both die. If the contingent annuitant
does not survive the annuitant, payments will end with the payment due just
before the death of the annuitant. It is possible that no payments or very few
payments will be made, if the annuitant and contingent annuitant die shortly
after the annuity date.
The written request for this form must: (a) name the contingent
annuitant; and (b) state the percentage of payments to be made after the
annuitant dies. Once payments start under this settlement option form, the
person named as contingent annuitant for purposes of being the measuring life,
may not be changed. Transamerica will require proof of age for the annuitant and
for the contingent annuitant before payments start.
(3) Life Annuity With Period
Certain. Payments start on the first day
of the month immediately following the
annuity date, if the annuitant is living.
Payments will be made for the longer of:
(a) the annuitant's life; or (b) the period
certain. The period certain may be 120 or
180 or 240 months.
If the annuitant dies after all payments have been made for the period
certain, payments will cease with the payment due just before the annuitant's
death. No benefit will then be payable to the beneficiary.
If the annuitant dies during the period certain, the rest of the period
certain payments will be made to the beneficiary, unless the owner provides
otherwise.
The written request for this form
must: (a) state the length of the period
certain; and (b) name the beneficiary.
(4) Joint and Survivor Annuity. Payments will be made starting on the
first day of the month immediately following the annuity date, if and for as
long as the annuitant and joint annuitant are living. After the annuitant or
joint annuitant dies, payments will continue for so long as the survivor lives.
Payments end with the payment due just before the death of the survivor. The
continued payments can be in the same amount as the original payments, or in an
amount equal to one-half or two-thirds thereof. It is possible that no payments
or very few payments will be made under this form if the annuitant and joint
annuitant both die shortly after the annuity date.
The written request for this form must: (a) name the joint annuitant;
and (b) state the percentage of continued payments to be made after the first
death. Once payments start under this settlement option form, the person named
as joint annuitant, for the purpose of being the measuring life, may not be
changed. Transamerica will need proof of age for the annuitant and joint
annuitant before payments start.
(5) Other Forms of Payment. Benefits can be provided under other
settlement options not described in this section subject to Transamerica's
agreement and any applicable state or federal law or regulation. Requests for
any other settlement option must be made in writing to the Service Center at
least 30 days before the annuity date.
After the annuity date, (a) no changes can be made in the settlement
option and payment option; (b) no additional premium will be accepted under the
policy; and (c) no further withdrawals will be allowed.
The owner of a non-qualified policy may, at any time after the annuity
date by written notice to us at the Service Center, change the payee of benefits
being provided under the policy. The effective date of change in payee will be
the latter of: (a) the date we receive the written request for such change; or
(b) the date specified by the owner. The owner of a qualified policy may not
change payees, except as permitted by the plan, arrangement or federal law.
FEDERAL TAX MATTERS
Introduction
The following discussion is a general description of federal tax
considerations relating to the policy and is not intended as tax advice. This
discussion is not intended to address the tax consequences resulting from all of
the situations in which a person may be entitled to or may receive a
distribution under the policy. Any person concerned about these tax implications
should consult a competent tax adviser before initiating any transaction. This
discussion is based upon Transamerica's understanding of the present federal
income tax laws as they are currently interpreted by the Internal Revenue
Service ("IRS"). No representation is made as to the likelihood of the
continuation of the present federal income tax laws or of the current
interpretation by the IRS. Moreover, no attempt has been made to consider any
applicable state or other tax laws.
The policy contract may be purchased on a non-tax qualified basis
("non-qualified policy") or purchased and used in connection with plans or
arrangements qualifying for special tax treatment ("qualified policy").
Qualified policies are designed for use in connection with plans or arrangements
entitled to special income tax treatment under Sections 401, 403(b), 408 and
408A of the Code. The ultimate effect of federal income taxes on the amounts
held under a policy, on settlement option payments, and on the economic benefit
to the owner, the annuitant, or the beneficiary may depend on the type of
retirement plan or arrangement for which the policy is purchased, on the tax and
employment status of the individual concerned, and on Transamerica's tax status.
In addition, certain requirements must be satisfied in purchasing a qualified
policy with proceeds from a tax qualified retirement plan or arrangement and
receiving distributions from a qualified policy in order to continue receiving
favorable tax treatment. Therefore, purchasers of qualified policies should seek
competent legal and tax advice regarding the suitability of the policy for their
situation, the applicable requirements, and the tax treatment of the rights and
benefits of the policy. The following discussion is based on the assumption that
the policy qualifies as an annuity for federal income tax purposes and that all
premiums made to qualified policies are in compliance with all requirements
under the Code and the specific retirement plan or arrangement.
Purchase PaymentsPremiums
At the time the initial premium purchase payment is paid, a prospective
purchaser must specify whether he or she is purchasing a non-qualified policy
contract or a qualified policy contract. If the initial premium purchase payment
is derived from an exchange, transfer, conversion or surrender of another
annuity policy contract, Transamerica may require that the prospective purchaser
provide information with regard to the federal income tax status of the previous
annuity policy contract. Transamerica will require that persons purchase
separate contracts if they desire to invest monies qualifying for different
annuity tax treatment under the Code. Each such separate policy contract would
require the minimum initial premium purchase payment previously described.
Additional premium purchase payments under a policy contract must qualify for
the same federal income tax treatment as the initial premium purchase payment
under the policy contract Transamerica will not accept an additional premium
purchase payment under a policy contract if the federal income tax treatment of
such premium purchase payment would be different from that of the initial
premium purchase payment.
Taxation of Annuities
In General
Section 72 of the Code governs taxation of annuities in general.
Transamerica believes that an owner who is a natural person, generally, is not
taxed on increases in the value of a policy until distribution occurs by
withdrawing all or part of the policy value (e.g., withdrawals or settlement
option payments). For this purpose, the assignment, pledge, or agreement to
assign or pledge any portion of the policy value (and in the case of a qualified
policy, any portion of an interest in the plan) generally will be treated as a
distribution. The taxable portion of a distribution is taxable as ordinary
income.
The owner of any policy who is not a natural person generally must
include in income any increase in the excess of the policy value over the
"investment in the policy" (discussed below) during the taxable year. There are
some exceptions to this rule and a prospective owner that is not a natural
person should discuss these with a competent tax adviser.
The following discussion generally applies to a policy owned by a
natural person.
Withdrawals
With respect to non-qualified policies, partial withdrawals (including
withdrawals under the systematic withdrawal option) are generally treated as
taxable income to the extent that the policy value immediately before the
withdrawal exceeds the "investment in the policy" at that time. The "investment
in the policy" generally equals the amount of non-deductible premiums made.
In the case of a withdrawal from qualified policies (including
withdrawals under the systematic withdrawal option or the automatic payout
option), a ratable portion of the amount received is taxable, generally based on
the ratio of the "investment in the policy" to the individual's total accrued
benefit under the retirement plan or arrangement. The "investment in the policy"
generally equals the amount of non-deductible premiums made by or on behalf of
any individual. For certain qualified policies, the "investment in the policy"
can be zero. Special tax rules applicable to certain distributions from
qualified policies are discussed below, under "Qualified Policies."
Full surrenders are treated as taxable income to the extent that the
amount received exceeds the "investment in the policy."
Settlement Option Payments
Although the tax consequences may vary depending on the settlement
option elected under the policy, in general a ratable portion of each payment
that represents the amount by which the policy value exceeds the "investment in
the policy" will be taxed based on the ratio of the "investment in the policy"
to the total benefit payable; after the "investment in the policy" is recovered,
the full amount of any additional settlement option payments is taxable.
For variable payments, the taxable portion is generally determined by
an equation that establishes a specific dollar amount of each payment that is
not taxed. The dollar amount is determined by dividing the "investment in the
policy" by the total number of expected periodic payments. However, the entire
distribution will be taxable once the recipient has recovered the dollar amount
of his or her "investment in the policy."
For fixed payments, in general there is no tax on the portion of each
payment which represents the same ratio that the "investment in the policy"
bears to the total expected value of the payments for the term selected;
however, the remainder of each settlement option payment is taxable. Once the
"investment in the policy" has been fully recovered, the full amount of any
additional settlement option payments is taxable. If settlement option payments
cease as a result of an annuitant's death before full recovery of the
"investment in the policy," consult a competent tax adviser regarding
deductibility of the unrecovered amount.
Withholding
The Code requires Transamerica to withhold federal income tax from
withdrawals. However, except for certain qualified policies, an owner will be
entitled to elect, in writing, not to have tax withholding apply. Withholding
applies to the portion of the distribution which is includible in income and
subject to federal income tax. The federal income tax withholding rate is 10%,
or 20% in the case of certain qualified plans, of the taxable amount of the
distribution. Withholding applies only if the taxable amount of the distribution
is at least $200. Some states also require withholding for state income taxes.
Penalty Tax
There may be imposed a federal income tax penalty equal to 10% of the
amount treated as taxable income. In general, however, there is no penalty tax
on distributions: (1) made on or after the date on which the owner attains age
591?2; (2) made as a result of death or disability of the owner; or (3) received
in substantially equal periodic payments as a life annuity or a joint and
survivor annuity for the life(ves) or life expectancy(ies) of the owner and a
"designated beneficiary." Other exceptions to the tax penalty may apply to
certain distributions from a qualified policy.
Taxation of Death Benefit Proceeds
Amounts may be distributed from the policy because of the death of an
owner. Generally such amounts are includible in the income of the recipient as
follows: (1) if distributed in a lump sum, they are taxed in the same manner as
a full surrender as described above, or (2) if distributed under a settlement
option, they are taxed in the same manner as settlement option payments, as
described above. For these purposes, the investment in the policy is not
affected by the owner's death. That is, the investment in the policy remains the
amount of any premiums paid which are not excluded from gross income.
Transfers, Assignments, or
Exchanges of the Policy
For non-qualified policies, a transfer of ownership of a policy, the
designation of an annuitant, payee, or other beneficiary who is not also the
owner, or the exchange of a policy may result in certain tax consequences to the
owner that are not discussed herein. An owner contemplating any such
designation, transfer, assignment, or exchange should contact a competent tax
adviser with respect to the potential tax effects of such a transaction.
Qualified policies may not be assigned or transferred, except as permitted by
the Code or the Employee Retirement Income Security Act of 1974 (ERISA).
Multiple Policies
All deferred non-qualified policies that are issued by Transamerica (or
its affiliates) to the same owner during any calendar year are treated as one
policy for purposes of determining the amount includible in gross income under
Section 72(e) of the Code. In addition, the Treasury Department has specific
authority to issue regulations that prevent the avoidance of Section 72(e)
through the serial purchase of policies or otherwise. Congress has also
indicated that the Treasury Department may have authority to treat the
combination purchase of an immediate annuity policy and separate deferred
annuity policies as a single annuity policy under its general authority to
prescribe rules as may be necessary to enforce the income tax laws.
Qualified Policies
In General
The qualified policies are designed for use with several types of
retirement plans and arrangements. The tax rules applicable to participants and
beneficiaries in retirement plans or arrangements vary according to the type of
plan and the terms and conditions of the plan. Special tax treatment may be
available for certain types of contributions and distributions. Adverse tax
consequences may result from contributions in excess of specified limits;
distributions prior to age 591?2 (subject to certain exceptions); distributions
that do not conform to specified commencement and minimum distribution rules;
aggregate distributions in excess of a specified annual amount; and in other
specified circumstances.
We make no attempt to provide more than general information about use
of the policies with the various types of retirement plans. Owners and
participants under retirement plans, as well as annuitants and beneficiaries,
are cautioned that the rights of any person to any benefits under qualified
policies may be subject to the terms and conditions of the plans themselves,
regardless of the terms and conditions of the policy (including any
endorsements) issued in connection with such a plan. Some retirement plans are
subject to distribution and other requirements that are not incorporated in the
administration of the policies. Owners are responsible for determining that
contributions and other transactions with respect to the policies satisfy
applicable law. Purchasers of policies for use with any retirement plan should
consult their legal counsel and tax adviser regarding the suitability of the
policy.
Qualified Pension and Profit
Sharing Plans
Section 401(a) of the Code permits employers to establish various types
of retirement plans for employees. Such retirement plans may permit the purchase
of the policy in order to provide retirement savings under the plans. Adverse
tax consequences to the plan, to the participant or to both may result if this
policy is assigned or transferred to any individual as a means to provide
benefits payments. Purchasers of a policy for use with such plans should seek
competent advice regarding the suitability of the proposed plan documents and
the policy to their specific needs.
Individual Retirement Annuities,
Simplified Employee Plans and Roth IRAs
The policy is also designed for use with IRA rollovers and contributory
IRA's. A contributory IRA is a policy to which initial and subsequent premiums
are subject to limitations imposed by the Code. Section 408 of the Code permits
eligible individuals to contribute to an individual retirement program known as
an Individual Retirement Annuity or Individual Retirement Account (each
hereinafter referred to as an "IRA"). Also, distributions from certain other
types of qualified plans may be "rolled over" on a tax-deferred basis into an
IRA.
The sale of a policy for use with an IRA may be subject to special
disclosure requirements of the Internal Revenue Service. Purchasers of a policy
for use with IRAs will be provided with supplemental information required by the
Internal Revenue Service or other appropriate agency. Such purchasers will have
the right to revoke their purchase within 7 days of the earlier of the
establishment of the IRA or their purchase. Purchasers should seek competent
advice as to the suitability of the policy for use with IRAs.
Eligible employers that meet specified criteria under Code Section
408(k) could establish simplified employee pension plans (SEP/IRAs) for their
employees using IRAs. Employer contributions that may be made to such plans are
larger than the amounts that may be contributed to regular IRAs, and may be
deductible to the employer.
The policy may also be used for Roth IRA conversions and contributory
Roth IRAs. A contributory Roth IRA is a policy to which initial and subsequent
premiums are subject to limitations imposed by the Code. Section 408A of the
Code permits eligible individuals to contribute to an individual retirement
program known as a Roth IRA on a non-deductible basis. In addition,
distributions from a non-Roth IRA may be converted to a Roth IRA. A non-Roth IRA
is an individual retirement account or annuity described in section 408(a) or
408(b), other than a Roth IRA. Purchasers should seek competent advise as to the
suitability of the policy for use with Roth IRAs.
Tax Sheltered Annuities
Under Code Section 403(b), payments made by public school systems and
certain tax exempt organizations to purchase annuity policies for their
employees are excludable from the gross income of the employee, subject to
certain limitations. However, these payments may be subject to Social Security
and Medicare (FICA) taxes.
Code Section 403(b)(11) restricts the distribution under Code Section
403(b) annuity policies of: (1) elective contributions made in years beginning
after December 31, 1988; (2) earnings on those contributions; and (3) earnings
in such years on amounts held as of the last year beginning before January 1,
1989. Distribution of those amounts may only occur upon death of the employee,
attainment of age 59 1/2, separation from service, disability, or financial
hardship. In addition, income attributable to elective contributions may not be
distributed in the case of hardship.
Pre-1989 contributions and earnings through December 31, 1989 are not
subject to the restrictions described above. However, funds transferred to a
qualified policy from a Section 403(b)(7) custodial account will be subject to
the restrictions.
Restrictions under Qualified
Policies
Other restrictions with respect to the election, commencement, or
distribution of benefits may apply under qualified policies or under the terms
of the plans in respect of which qualified policies are issued.
Taxation of Transamerica
Transamerica is taxed as a life insurance company under Part I of
Subchapter L of the Code. Since the variable account is not an entity separate
from Transamerica, and its operations form a part of Transamerica, it will not
be taxed separately as a "regulated investment company" under Subchapter M of
the Code. Investment income and realized capital gains are automatically applied
to increase reserves under the policies. Under existing federal income tax law,
Transamerica believes that the variable account investment income and realized
net capital gains will not be taxed to the extent that such income and gains are
applied to increase the reserves under the policies.
Accordingly, Transamerica does not anticipate that it will incur any
federal income tax liability attributable to the variable account and,
therefore, Transamerica does not intend to make provisions for any such taxes.
However, if changes in the federal tax laws or interpretations thereof result in
Transamerica being taxed on income or gains attributable to the variable
account, then Transamerica may impose a charge against the variable account
(with respect to some or all policies) in order to set aside provisions to pay
such taxes.
Tax Status of the Policy
Diversification Requirements
Section 817(h) of the Code requires that with respect to
non-qualified policies, the investments of the portfolios be "adequately
diversified" in accordance with Treasury regulations in order for the policies
to qualify as annuity policies under federal tax law. The variable account,
through the portfolios, intends to comply with the diversification requirements
prescribed by the Treasury in Reg. Sec. 1.817-5, which affect how the
portfolios' assets may be invested.
In certain circumstances, owners of variable annuity policies may be
considered the owners, for federal income tax purposes, of the assets of the
separate accounts used to support their policies. In those circumstances, income
and gains from the separate account assets would be includible in the variable
policy owner's gross income. The IRS has stated in published rulings that a
variable policy owner will be considered the owner of separate account assets if
the policy owner possesses incidents of ownership in those assets, such as the
ability to exercise investment control over the assets. The Treasury Department
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 for the investments of a segregated
asset account may cause the investor (i.e., the owner), 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 policyholders may direct their
investments to particular Sub-Accounts without being treated as owners of the
underlying assets."
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 policy owners were not owners of separate account assets. For
example, the owner 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 variable account. In addition,
Transamerica does not know what standards will be set forth, if any, in the
regulations or rulings which the Treasury Department has stated it expects to
issue. Transamerica therefore reserves 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 variable account.
Required Distributions
In order to be treated as an annuity policy for federal income tax
purposes, section 72(s) of the Code requires any non-qualified policy to provide
that (a) if any owner dies on or after the annuity date but prior to the time
the entire interest in the policy has been distributed, the remaining portion of
such interest will be distributed at least as rapidly as under the method of
distribution being used as of the date of that owner's death; and (b) if any
owner dies prior to the annuity date, the entire interest in the policy will be
distributed within five years after the date of the owner's death. These
requirements will be considered satisfied as to any portion of the owner's
interest which is payable to or for the benefit of a "designated beneficiary"
and which is distributed over the life of such "designated beneficiary" or over
a period not extending beyond the life expectancy of that beneficiary, provided
that such distributions begin within one year of the owner's death. The owner's
"designated beneficiary" refers to a natural person designated by such owner as
a beneficiary and to whom ownership of the policy passes by reason of death.
However, if the owner's "designated beneficiary" is the surviving spouse of the
deceased owner, the policy may be continued with the surviving spouse as the new
owner.
The non-qualified policies contain provisions which are intended to
comply with the requirements of Section 72(s) of the Code, although no
regulations interpreting these requirements have yet been issued. All provisions
in the policy will be interpreted to maintain such tax qualification. We may
make changes in order to maintain this qualification or to conform the policy to
any applicable changes in the tax qualification requirements. We will provide
you with a copy of any changes made to the policy.
Possible Changes in Taxation
In past years, legislation has been proposed that would have adversely
modified the federal taxation of certain annuities. For example, one such
proposal would have changed the tax treatment of non-qualified annuities that
did not have "substantial life contingencies" by taxing income as it is credited
to the annuity. Although as of the date of this prospectus Congress is not
actively considering any legislation regarding the taxation of annuities, there
is always the possibility that the tax treatment of annuities could change by
legislation or other means (such as IRS regulations, revenue rulings, judicial
decisions, etc.). Moreover, it is also possible that any change could be
retroactive (that is, effective prior to the date of the change).
Other Tax Consequences
As noted above, the foregoing discussion of the federal income tax
consequences is not exhaustive and special rules are provided with respect to
other tax situations not discussed in this prospectus. Further, the federal
income tax consequences discussed herein reflect Transamerica's understanding of
current law and the law may change. Federal estate and gift tax consequences and
state and local estate, inheritance, and other tax consequences of ownership or
receipt of distributions under the policy depend on the individual circumstances
of each owner or recipient of the distribution. A competent tax adviser should
be consulted for further information.
PERFORMANCE DATA
From time to time, Transamerica may advertise yields and average annual
total returns for the variable sub-accounts. In addition, Transamerica may
advertise the effective yield of the money market variable sub-account. These
figures will be based on historical information and are not intended to indicate
future performance.
The yield of the money market variable sub-account refers to the
annualized income generated by an investment in that variable sub-account over a
specified seven-day period. The yield is calculated by assuming that the income
generated for that seven-day period is generated each seven-day period over a
52-week period and is shown as a percentage of the investment. The effective
yield is calculated similarly but, when annualized, the income earned by an
investment in that variable sub-account is assumed to be reinvested. The
effective yield will be slightly higher than the yield because of the
compounding effect of this assumed reinvestment.
The yield of a variable sub-account (other than the money market
variable sub-account) refers to the annualized income generated by an investment
in the variable sub-account over a specified thirty-day period. The yield is
calculated by assuming that the income generated by the investment during that
thirty-day period is generated each thirty-day period over a twelve-month period
and is shown as a percentage of the investment.
The yield calculations do not reflect the effect of any contingent
deferred sales load or premium taxes that may be applicable to a particular
policy. To the extent that the contingent deferred sales load or premium taxes
are applicable to a particular policy, the yield of that policy will be reduced.
For additional information regarding yields and total returns, please refer to
the Statement of Additional Information.
The average annual total return of a variable sub-account refers to
return quotations assuming an investment has been held in the variable
sub-account for various periods of time including, but not limited to, a period
measured from the date the variable sub-account commenced operations. When a
variable sub-account has been in operation for 1, 5, and 10 years, respectively,
the average annual total return for these periods will be provided. The average
annual total return quotations will represent the average annual compounded
rates of return that would equate an initial investment of $1,000 to the
redemption value of that investment (including the deduction of any applicable
contingent deferred sales load but excluding deduction of any premium taxes) as
of the last day of each of the periods for which total return quotations are
provided.
Performance information for any variable sub-account reflects only the
performance of a hypothetical policy under which policy value is allocated to a
variable sub-account during a particular time period on which the calculations
are based. Performance information should be considered in light of the
investment objectives and policies and characteristics of the portfolios in
which the variable sub-account invests, and the market conditions during the
given time period, and should not be considered as a representation of what may
be achieved in the future. For a description of the methods used to determine
yield and total returns, see the Statement of Additional Information.
Reports and promotional literature may also contain other information
including (1) the ranking of any variable sub-account derived from rankings of
variable annuity separate accounts or their investment products tracked by
Lipper Analytical Services, Inc., VARDS, IBC/Donoghue's Money Fund Report,
Financial Planning Magazine, Money Magazine, Bank Rate Monitor, Standard and
Poor's Indices, Dow Jones Industrial Average, and other rating services,
companies, publications, or other persons who rank separate accounts or other
investment products on overall performance or other criteria, and (2) the effect
of tax deferred compounding on variable sub-account investment returns, or
returns in general, which may be illustrated by graphs, charts, or otherwise,
and which may include a comparison, at various points in time, of the return
from an investment in a policy (or returns in general) on a tax-deferred basis
(assuming one or more tax rates) with the return on a currently taxable basis.
Other ranking services and indices may be used.
In its advertisements and sales literature, Transamerica may discuss,
and may illustrate by graphs, charts, or otherwise, the implications of longer
life expectancy for retirement planning, the tax and other consequences of
long-term investment in the policy, the effects of the policy's lifetime payout
options, and the operation of certain special investment features of the policy
- -- such as the dollar cost averaging option. Transamerica may explain and depict
in charts, or other graphics, the effects of certain investment strategies, such
as allocating premiums between the fixed account and a variable sub-account.
Transamerica may also discuss the Social Security system and its projected
payout levels and retirement plans generally, using graphs, charts and other
illustrations.
Transamerica may from time to time also disclose average annual total
return in non-standard formats and cumulative (non-annualized) total return for
the variable sub-accounts. The non-standard average annual total return and
cumulative total return will assume that no contingent deferred sales load is
applicable. Transamerica may from time to time also disclose yield, standard
total returns, and non-standard total returns for any or all variable
sub-accounts.
All non-standard performance data will only be disclosed if the
standard performance data is also disclosed. For additional information
regarding the calculation of other performance data, please refer to the
Statement of Additional Information.
Transamerica may also advertise performance figures for the variable
sub-accounts based on the performance of a portfolio prior to the time the
variable account commenced operations.
PREPARING FOR YEAR 2000
As a result of computer systems that may recognize a date of 12/31/00
as the year 1900 rather than the year 2000, disruptions of business activities
may occur with the year 2000. In response, Transamerica established in 1997 a
"Y2K" committee to address this issue. With regard to the systems and software
which administer and affect the contracts, Transamerica has determined that is
own internal systems will be Year 2000 compliant. Additionally, Transamerica
requires any third party vendor which supplies software or administrative
services to Transamerica in connection with the administration of the contracts,
to certify that the software or services will be Year 2000 compliant. In
determining the variable accumulation unit values for each variable sub-account,
Transamerica is reliant upon information received from the portfolios and is
confirming that Year 2000 issues will not interfere with this flow of
information. As of the date of this prospectus, it is not anticipated that
contract owners will experience negative affects on their investment, or on the
services received in connection with their contracts, as a result of Year 2000
issues. However, especially when taking into account interaction with other
systems, it is difficult to predict with precision that there will be no
disruption of service connection with the year 2000.
LEGAL PROCEEDINGS
There is no pending, material legal proceeding affecting the variable
account. Transamerica is involved in various kinds of routine litigation which,
in management's judgment, are not of material importance to Transamerica's
assets or to the variable account.
LEGAL MATTERS
The organization of Transamerica,
its authority to issue the policy and the
validity of the form of the policy have
been passed upon by David M. Goldstein,
Counsel to Transamerica.
ACCOUNTANTS
The financial statements of Transamerica for each of the three years in
the period ended December 31, 1997, have been audited by Ernst & Young LLP,
Independent Auditors, 515 South Flower Street, Los Angeles, California 90071, as
set forth in their reports appearing in the Statement of Additional Information,
and are included in reliance upon such reports given upon the authority of such
firm as experts in accounting and auditing. There are no audited financial
statements for the variable account since it had not commenced operations as of
the date of this prospectus.
VOTING RIGHTS
To the extent required by applicable law, all portfolio shares held in
the variable account will be voted by Transamerica at regular and special
shareholder meetings of the respective portfolio in accordance with instructions
received from persons having voting interests in the corresponding variable
sub-account. If, however, the 1940 Act or any regulation thereunder should be
amended, or if the present interpretation thereof should change, or if
Transamerica determines that it is allowed to vote all portfolio shares in its
own right, Transamerica may elect to do so.
The person with the voting interest is the owner. The number of votes
which are available to an owner will be calculated separately for each variable
sub-account. Before the annuity date, that number will be determined by applying
his or her percentage interest, if any, in a particular variable sub-account to
the total number of votes attributable to that variable sub-account. The owner
holds a voting interest in each variable sub-account to which the policy value
is allocated. After the annuity date, the number of votes decreases as
settlement option payments are made and as the reserves for the policy decrease.
The number of votes of a portfolio will be determined as of the date
coinciding with the date established by that portfolio for determining
shareholders eligible to vote at the meeting of the portfolios. Voting
instructions will be solicited by written communication prior to such meeting in
accordance with procedures established by the respective portfolios.
Shares as to which no timely instructions are received and shares held
by Transamerica as to which owners have no beneficial interest will be voted in
proportion to the voting instructions which are received with respect to all
policies participating in the variable sub-account. Voting instructions to
abstain on any item to be voted upon will be applied on a pro rata basis.
Each person or entity having a voting interest in a variable
sub-account will receive proxy material, reports and other material relating to
the appropriate portfolio.
It should be noted that generally the portfolios are not required, and
do not intend, to hold annual or other regular meetings of shareholders.
AVAILABLE INFORMATION
Transamerica has filed a registration statement (the "Registration
Statement") with the Securities and Exchange Commission under the 1933 Act
relating to the policy offered by this prospectus. This prospectus has been
filed as a part of the Registration Statement and does not contain all of the
information set forth in the Registration Statement and exhibits thereto, and
reference is hereby made to such Registration Statement and exhibits for further
information relating to Transamerica and the policy. Statements contained in
this prospectus, as to the content of the policy and other legal instruments,
are summaries. For a complete statement of the terms thereof, reference is made
to the instruments filed as exhibits to the Registration Statement. The
Registration Statement and the exhibits thereto may be inspected and copied at
the office of the Commission, located at 450 Fifth Street, N.W., Washington,
D.C.
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
A Statement of Additional Information is available which contains more
details concerning the subjects discussed in this prospectus. The following is
the Table of Contents for that Statement:
TABLE OF CONTENTS Page
THE POLICY ................................3
NET INVESTMENT FACTOR......................3
SETTLEMENT OPTION PAYMENTS.................3
Variable Annuity Units and Payments3
Variable Annuity Unit Value.......3
Transfers After the Annuity Date .4
GENERAL PROVISIONS ........................4
IRS Required Distributions........4
Non-Participating.................4
Misstatement of Age or Sex .......4
Proof of Existence and Age .......4
Annuity Data......................4
Assignment........................5
Annual Report.....................5
Incontestability..................5
Entire Policy.....................5
Changes in the Policy.............5
Protection of Benefits............5
Delay of Payments.................5
Notices and Directions............6
CALCULATION OF YIELDS AND TOTAL RETURNS....6
Money Market Sub-Account Yield
Calculation................................6
Other Sub-Account Yield
Calculations...............................6
Standard Total Return Calculations7
Adjusted Historical Portfolio
Performance Data...........................7
Other Performance Data............7
HISTORIC PERFORMANCE DATA..................8
General Limitations...............8
Adjusted Historical Sub-Account
Performance Data...........................8
DISTRIBUTION OF THE POLICY................18
SAFEKEEPING OF VARIABLE ACCOUNT ASSETS....18
STATE REGULATION..........................18
RECORDS AND REPORTS.......................18
FINANCIAL STATEMENTS......................18
APPENDIX - Accumulation Transfer Formula..19
<PAGE>
A-1
Appendix A
THE FIXED ACCOUNT
.........This prospectus is generally intended to serve as a disclosure document
only for the variable account of the policy. For complete details regarding the
fixed account, see the policy itself.
.........The account value allocated to the fixed account becomes part of the
general account of Transamerica, which supports insurance and annuity
obligations. Because of exemptive and exclusionary provisions, interests in the
general account have not been registered under the Securities Act of 1933 (the
"1933 Act"), nor is the general account registered as an investment company
under the 1940 Act. Accordingly, neither the general account nor any interests
therein are generally subject to the provisions of the 1933 Act or the 1940 Act,
and the staff of the Securities and Exchange Commission has not reviewed the
disclosures in this prospectus which relate to the fixed account.
.........The fixed account is part of the general account of Transamerica. The
general account of Transamerica consists of all the general assets of
Transamerica, other than those in the variable account, or in any other separate
account. Transamerica has sole discretion to invest the assets of its general
account subject to
applicable law.
.........The allocation or transfer of funds to the fixed account does not
entitle the owner to share in the investment experience of Transamerica's
general account.
.........Currently, Transamerica guarantees that it will credit interest at a
rate of not less than 3% per year, compounded annually, to amounts allocated to
the fixed account under the policies. However, Transamerica reserves the right
to change the minimum rate according to state insurance law. Transamerica may
credit interest at a rate in excess of 3% per year. There is no specific formula
for the determination of excess interest credits. Some of the factors that the
company may consider in determining whether to credit excess interest to amounts
allocated to the fixed account and amounts in that account are general economic
trends, rates of return currently available and anticipated on the company's
investments, regulatory and tax requirements, and
competitive factors.
=====================================================
Any interest credited to amounts allocated to the fixed account
in excess of 3% per year will be determined in the sole discretion of
Transamerica. The owner assumes the risk that interest credited to the fixed
account allocations may not exceed the minimum guarantee of 3% for any given
year.=====================================================
.........Rates of interest credited to the fixed account will be guaranteed for
at least twelve months and will vary by the timing and class of the allocation,
transfer or renewal. At any time after the end of the twelve month period for a
particular allocation, Transamerica may change the annual rate of interest for
that class; this new annual rate of interest will remain in effect for at least
twelve months. New purchase payments made to the policy which are allocated to
the fixed account may receive different rates of interest. These rates of
interest may differ from those interest rates credited to amounts transferred
from the variable sub-accounts or guarantee period account and from those
credited amounts remaining in the fixed account and receiving renewal rates.
These rates of interest may also differ from those rates for allocations applied
under certain options and services Transamerica may be offering.
Transfers
.........Each policy year the owner may transfer a percentage of the value of
the fixed account to variable sub-accounts. The maximum percentage that may be
transferred will be declared annually by Transamerica. This percentage will be
determined by Transamerica at its sole discretion, but will not be less than 10%
of the value of the fixed account on the preceding policy anniversary and will
be declared each year. Currently, this percentage is 25%. The owner is limited
to four transfers from the fixed account each policy year, and the total of all
such transfers cannot exceed the current maximum. If Transamerica permits dollar
cost averaging from the fixed account to the variable sub-accounts, the above
restrictions are not applicable. .........Generally, transfers may not be made
from any variable sub-account to the fixed account for the 90-day period
following any transfer from the fixed account to one or more of the variable
sub-accounts. Transamerica reserves the right to modify the limitations on
transfers to and from the fixed account and to defer transfers
from the fixed account for up to six months from the date of request.
============================================================
<PAGE>
B-1
Appendix B
Example of Variable Accumulation Unit Value Calculations
Suppose the net asset value per share of a portfolio at the end of the
current valuation period is $20.15; at the end of the immediately preceding
valuation period it was $20.10; the valuation period is one day; and no
dividends or distributions caused the portfolio to go "ex-dividend" during the
current valuation period. $20.15 divided by $20.10 is 1.002488. Subtracting the
one day risk factor for mortality and expense risk charge and the administrative
expense charge of .00367% (the daily equivalent of the current charge of 1.35%
on an annual basis) gives a net investment factor of 1.00245. If the value of
the variable accumulation unit for the immediately preceding valuation period
had been 15.500000, the value for the current valuation period would be 15.53798
(15.5 x 1.00245).
Example of Variable Annuity Unit Value Calculations
Suppose the circumstances of the first example exist, and the value of
a variable annuity unit for the immediately preceding valuation period had been
13.500000. If the first variable annuity payment is determined by using an
annuity payment based on an assumed interest rate of 4% per year, the value of
the variable annuity unit for the current valuation period would be 13.53163
(13.5 x 1.00245 (the net investment factor) x 0.999893). 0.999893 is the factor,
for a one day valuation period, that neutralizes the assumed rate of four
percent (4%) per year used to establish the variable annuity rates found in the
contract.
Example of Variable Annuity Payment Calculations
Suppose that the account is currently credited with 3,200.000000
variable accumulation units of a particular variable sub-account.
Also suppose that the variable accumulation unit value and the variable
annuity unit value for the particular variable sub-account for the valuation
period which ends immediately preceding the first day of the month is 15.500000
and 13.500000 respectively, and that the variable annuity rate for the age and
elected is $5.73 per $1,000. Then the first variable annuity payment would be:
3,200 x 15.5 x 5.73 divided by 1,000 = $284.21,
and the number of variable annuity units credited for future payments
would be: 284.21 divided by 13.5 = 21.052444.
For the second monthly payment, suppose that the variable annuity unit
value on the 10th day of the second month is 13.565712. Then the second variable
annuity payment would be $285.59 (21.052444 x 13.565712).
<PAGE>
C-1
Appendix C
Transamerica Life Insurance Company of New York
DISCLOSURE STATEMENT
for Individual Retirement Annuities, IRA's and SEP-IRA
The following information is being provided to you, the Owner, in
accordance with the requirements of the Internal Revenue Service (IRS). This
Disclosure Statement contains information about opening and maintaining an
Individual Retirement Annuity ("IRA") and summarizes some of the financial and
tax consequences of establishing an IRA. Part I of this Disclosure Statement
discusses Traditional IRAs, while Part II addresses Roth IRAs. Because the tax
consequences of the two categories of IRAs differ significantly, it is important
that you review the correct part of this Disclosure Statement to learn about
your particular IRA. It is intended to be read together with, and be a part of,
the prospectus and the terms used here will have the same meaning as in the
prospectus, unless otherwise stated.
We have filed the Transamerica Life Individual Retirement Annuity
("Transamerica Life IRA") Contract with the IRS for approval. Please note that
IRS approval applies only to the form of the contract and does not represent a
determination of the merits of such IRA contract.
It may be necessary for us to amend your Transamerica Life IRA Contract
in order for us to obtain or maintain IRS approval. In addition, laws and
regulations adopted in the future may require changes to your contract in order
to preserve its status as an IRA. We will send you a copy of any such amendment.
No contribution will be accepted under a SIMPLE plan established by any
employer pursuant to Internal Revenue Code Section 408(p). No transfer or
rollover of funds attributable to contributions made by a employer to your
SIMPLE IRA under the employer's SIMPLE plan may be transferred or rolled over to
your Transamerica Life IRA prior to the expiration of the two (2) year period
beginning on the date you first participated in the employer's SIMPLE plan. In
addition, depending on the annuity contract you purchased, contributory IRAs may
or may not be available. Please refer to your prospectus.
This Disclosure Statement includes the non-technical explanation of
some of the changes made by the Tax Reform Act of 1986 applicable to IRAs and
more recent changes made by the Small Business Job Protection Act of 1996
(SBA-96), the Health Insurance Portability and Accountability Act of 1996
(HIPAA) and the Tax Relief Act of 1997 (TRA-97). The information provided
applies to contributions made and distributions received after December 31,
1986, and reflects the relevant provisions of the Code as in effect on January
1, 1998. This Disclosure Statement is not intended to constitute tax advice, and
you should consult a tax professional if you have questions about your own
circumstances.
Definitions
Contributions - Purchase Payments or Premiums as applicable to your Contract.
Policy - Certificate or contract as applicable.
Compensation - For purposes of determining allowable contributions, the term
"Compensation" includes all earned-income, including net earnings from self
employment and alimony or separate maintenance payments received and includable
in your gross income, but does not include deferred compensation or any amount
received as a pension or annuity.
<PAGE>
Revocation of Your IRA or Roth IRA
You have the right to revoke your IRA or Roth IRA during the seven
calendar day period following its establishment. The establishment of your IRA
or Roth IRA will be the contract effective date for your contract. This seven
day calendar period may or may not coincide with the free look period of your
contract. In order to revoke your IRA or Roth IRA, you must notify us in writing
and you must mail or deliver your revocation to us postage prepaid, at: P.O. Box
31848, Charlotte, NC 28231-1848. The date of the postmark (or the date of
certification or registration if sent by certified or registered mail) will be
considered your revocation date. If you revoke your IRA or Roth IRA during the
seven day period, an amount equal to your purchase payment (without any
adjustments for items such as administrative expenses, fees, or fluctuation in
market value) will be returned to you.
The rules that apply to a Traditional Individual Retirement Annuity
(which is referred to in this Disclosure Statement simply as an "IRA" or as a
"Traditional IRA) generally also apply to IRAs under Simplified Employee Pension
plans (SEP-IRAs), unless specific rules for SEP-IRAs are stated.
Contributions
(a) Regular IRA. You may make contributions to a regular IRA in any
amount up to the combined tax deductible and non-tax deductible contribution
limit described in Part I Section 2 of this Disclosure Statement. Such
contributions are also subject to the minimum amount under the contract. Such
contributions shall be in cash. Your contribution to a regular IRA for a tax
year must be made by the due date (not including extensions) for your federal
tax return for that tax year.
(b) Spousal IRA. If you and a non-working spouse file a joint federal
income tax return for the taxable year and if your spouse's compensation, if
any, includable in gross income for the year is less than the compensation
includable in your gross income for the year, you and your spouse may each
establish your own individual IRA and may make contributions to those IRAs in
accordance with the rules and limits for tax deductible and non-tax deductible
contributions contained in Section 219(c) of the Code, which are summarized in
Part I, section 2 of this Disclosure Statement. Such contributions shall be in
cash. Your contribution to a Spousal IRA for a tax year must be made by the due
date (not including extension) for your federal income tax return for that tax
year.
(c) Rollover IRA. Rollover contributions are unlimited in dollar
amount. These consist of eligible distributions received by you from another IRA
or tax-qualified retirement plan. If you elect to make a direct rollover from
another IRA, your distribution will be directly deposited into your rollover
IRA. However, you may only rollover the amounts from one IRA into another IRA
once in any 365-day period. A direct rollover distribution is not taxable until
you withdraw the amounts from your rollover IRA, and no income tax will be
withheld from the direct rollover distribution. If a distribution is paid to you
and you want to roll over all or part of the distributed amount to this IRA, the
rollovers must be accomplished within 60 days of the date you receive the amount
to be rolled over. Generally, any distribution from a tax-qualified retirement
plan, such as a pension plan, 401(k) plan, profit sharing or Keogh plan, can be
rolled over unless it is a "minimum required distribution" (see below). A direct
transfer from a tax-qualified retirement plan to an IRA is considered a
rollover. However, distributions of "after-tax" plan contributions (i.e. amounts
which are not subject to federal income tax when distributed from a
tax-qualified retirement plan) cannot be rolled over to an IRA. In addition, you
may not roll over any payment that is a minimum required distribution (as
discussed in Part I, Section 4(a), or that is part of a series of payments that
are to be made to you from a tax-qualified retirement plan or IRA that is to be
paid to your over your life, life expectancy, or for a period of at least 10
years.
Strict limitations apply to rollovers, and you should seek competent
tax advice in order to comply with all the rules governing rollovers.
(d) Transfers. You may make an initial or subsequent contribution to
your Transamerica IRA hereunder by directing a Trustee of an existing individual
retirement account or IRA to transfer an amount in cash to this IRA.
(e) Simplified Employee Pension Plan (SEP-IRA). If an IRA is
established that meets the requirements of a SEP-IRA, your employer may
contribute an amount not to exceed the lesser of 15% of your includable
compensation ($160,000 for 1998, adjusted for inflation thereafter) or $30,000.
The amount of such contribution is not includable in your income as wages for
federal income tax purposes. Within that overall limit you may elect to defer up
to $10,000 of your compensation in 1998 (as adjusted for inflation in accordance
with the Code) if your employer's SEP-IRA plan permits and if the compensation
deferral feature was in effect prior to January 1, 1997. The amount of such
elective deferral is excludable from your income as wages for federal income tax
purposes.
Your employer is not required to make a SEP-IRA contribution in any
year nor make the same percentage contribution each year. But, if contributions
are made, they must be made to the SEP-IRA for all eligible employees and must
not discriminate in favor of highly compensated employees. If the rules are not
met, any SEP-IRA contributions by the employer will be treated as taxable to the
employees and could result in adverse tax consequences to the participating
employee. For further details, see your employer.
(f) Responsibility of the Owner. Contributions, rollovers, or transfers
to this IRA must be made in accordance with the appropriate sections of the
Code. It is your full and sole responsibility to determine the tax deductibility
of any contribution, and to make such contributions in accordance with the Code.
Transamerica does not provide tax advice, and assumes no liability for the tax
consequences of any contribution to this IRA.
3. Deductibility of Contributions
(a) Eligibility. If neither you, nor your spouse, is an active
participant (see b. below) and you file a joint income tax return, for each
taxable year you and your spouse may contribute up to $4,000 together (but no
more than $2,000 to each IRA) if your combined compensation is at least equal to
that amount. In this case you and your spouse may take a deduction for the
entire amount contributed. If you are an active participant but have an adjusted
gross income (AGI) below a certain level (see c. below), you may make a
deductible contribution as under current law. If, however, you or your spouse is
an active participant and your combined AGI is above the specified level, the
amount of the deductible contribution you may make to an IRA is phased out and
eventually eliminated. Beginning in 1998, if you are not an active participant
(even though your spouse is), you may take a full $2,000 deduction for
contributions to an IRA. This deduction is subject to phase out at joint AGI
levels between $150,000 and $160,000, and is eliminated for AGI levels above
$160,000.
(b) Active Participant. You are an "active participant" for a year if
you participate in a retirement plan. For example, if you participate in a
pension plan, profit sharing plan, a 401 plan, certain government plans, a
tax-sheltered arrangement under Code Section 403, or a SEP-IRA plan, you are
considered to be an active participant. Your Form W-2 for the year should
indicate your participation status.
(c) Adjusted Gross Income (AGI). If you are an active participant, you
must look at your AGI for the year (or if you and your spouse file a joint tax
return, you use your combined AGI) to determine whether you can make a
deductible IRA contribution for that taxable year. The instructions for your tax
return will show you how to calculate your AGI for this purpose. If you are at
or below a certain AGI level, called the Threshold Level, you are treated as if
you were not an active participant and can make a deductible contribution under
the same rules as a person who is not an active participant.
Your Threshold Level depends upon whether you are a married taxpayer
filing a joint tax return, an unmarried taxpayer, or a married taxpayer filing a
separate tax return. If you are a married taxpayer but file a separate tax
return, the Threshold Level is $0. If you are a married taxpayer filing a joint
tax return, or an unmarried taxpayer, your Threshold Level depends upon the
taxable year, and can be determined using the appropriate table below:
Married Filing Jointly Unmarried
Taxable Applicable Taxable Applicable
Year Dollar Limitation Year Dollar Limitation
1997...........$40,000 1997................ $25,000
1998...........$50,000 1998................ $30,000
1999...........$51,000 1999................ $31,000
2000...........$52,000 2000................ $32,000
2001...........$53,000 2001.................$33,000
2002...........$54,000 2002.................$34,000
2003...........$60,000 2003.................$40,000
2004...........$65,000 2004.................$45,000
2005...........$70,000 2005 and
2006...........$75,000 thereafter...........$50,000
2007 and
thereafter.....$80,000
If your AGI is less than $10,000 above your Threshold Level ($20,000
for married taxpayers filing jointly for the taxable year beginning on or after
January 1, 2007) you will still be able to make a deductible contribution, but
it will be limited in amount. The amount by which your AGI exceeds your
Threshold Level is called your Excess AGI. The Maximum Allowable Deduction is
$2,000 (and an additional $2,000 for a Spousal IRA).
You can calculate your Deduction Limit as follows:
10,000 - Excess AGI x Maximum Allowable Deduction = Deduction Limit
-------------------
10,000
For taxable years beginning on or after January 1, 2007, married
taxpayers filing jointly should substitute 20,000 for 10,000 in the numerator
and denominator of the above equation.
You must round up the result to the next highest $10 level (the next
highest number which ends in zero). For example, if the result is $1,525, you
must round it up to $1,530. If the final result is below $200 but above zero,
your Deduction Limit is $200. Your Deduction Limit cannot in any event exceed
100% of your earned income.
(d) Restrictions.No deduction is allowed for (i) contributions other
than in cash; (ii) contributions (other than those by an employer to a SEP-IRA)
made during the calendar year in which you attain age 70 1/2 or thereafter; or
(iii) for any amount you contribute which was a distribution from another
retirement plan ("rollover" contribution). However, the limitations in
paragraphs a. and c. of this section do not apply to rollover contributions.
3. Nondeductible Contributions to IRAs
Even if you are above the Threshold Level and, thus, may not make a
deductible contribution of $2,000 (and an additional $2,000 for a Spousal IRA),
you may still contribute up to the lesser of 100% of compensation or $2,000 to
an IRA (and an additional $2,000 for a Spousal IRA). The amount of your
contribution which is not deductible will be a nondeductible contribution to the
IRA. You may also choose to make a nondeductible contribution even if you could
have deducted part or all of the contribution. Interest or other earnings on
your IRA contribution, whether from deductible or nondeductible contributions,
will not be taxed until taken out of your IRA and distributed to you.
If you make a nondeductible contribution to an IRA you must report the
amount of the nondeductible contribution to the IRS as a part of your tax return
for the year.
4. Distributions
(a) Required Minimum Distributions. Distribution of your IRA must be
made or begin no later than April 1 of the calendar year following the calendar
year in which you attain age 70 1/2 (the required beginning date). You may take
required minimum distributions from any IRA you maintain as long as: (i)
distributions begin when required; (ii) periodic payments are made at least once
a year; and (iii) the amount to be distributed is not less than the minimum
required under current federal law. If you own more than on IRA, you can choose
whether to take your minimum distribution from one IRA or a combination of your
IRAs. A distribution may be made at once in a lump sum, or it may be made in
installments. Installment payments must be made in equal or substantially equal
amounts over: (i) your life or the joint lives of you and your beneficiary; or
(ii) a period not exceeding your life expectancy (as re-determined annually
under IRA tables), or the joint life expectancy of you and your beneficiary (as
re-determined annually, if that beneficiary is your spouse). Also, special rules
may apply if the age difference between you and your designated beneficiary
(other than your spouse) is greater than ten year.
If settlement option payments start prior to the April 1 following the
year you turn age 70 1/2, then the annuity date of such settlement option
payments will be treated as the required beginning date for purposes of the
death benefit provisions below.
If you die before the entire interest in your IRA is distributed to
you, but after your required beginning date, the entire interest in the IRA must
be distributed to your beneficiary at least as rapidly as your IRA was being
distributed prior to your death. If you die before your required beginning date
and if you have no designated beneficiary, distribution must be completed by
December 31 of the calendar year that is five years after your death. If you die
before your required beginning date and if you have a designated beneficiary,
distributions to your designated beneficiary must be made in substantially equal
installments over the life of life expectancy of the designated beneficiary,
beginning by December 31 of the calendar year that is one year after your death.
If the beneficiary is your surviving spouse, and you die before your
required beginning date will become the new owner/annuitant and can continue
this IRA on the same basis as before your death. If your surviving spouse does
not wish to continue this contract as his or her IRA, he or she may elect to
receive the death benefit in the form of settlement option payments. Such
payments must be in equal amounts over your spouse's life or a period not
extending beyond his or her life expectancy. The surviving spouse must elect
this option and begin receiving payments no later than the earliest of the
following dates: (i) December 31 of the year following the year you died; or
(ii) December 31 of the year in which you would have reached the required
beginning date if you had not died. Either you or, if applicable, your
beneficiary, is responsible for assuring that the required minimum distribution
is taken in a timely manner and that the correct amount is distributed.
(b) Taxation of IRA Distributions.Because nondeductible IRA
contributions are made using income which has already been taxed (that is, they
are not deductible contributions), the portion of the IRA distributions
consisting of nondeductible contributions will not be taxed again when received
by you. If you make any nondeductible IRA contributions, each distribution from
your IRAs will consist of a nontaxable portion (return of nondeductible
contributions) and a taxable portion (return of deductible contributions, if
any, and earnings).
Thus, if you require a distribution from your IRA and you previously
made deductible and nondeductible contributions, you may not take an IRA
distribution which is entirely tax-free. The following formula is used to
determine the nontaxable portion of your distributions for a taxable year.
Remaining Nondeductible contributions Total distributions
Year-end total IRA balances X (for the year)
Nontaxable distributions
= (for the year)
To figure the year-end total IRA balance, you must treat all of your
IRAs as a single IRA. This includes all regular IRAs, as well as SEP-IRAs, and
Rollover IRAs. You also add back the distributions taken during the year. Please
refer to IRS Publication 590, Individual Retirement Arrangements, for
instructions, including worksheets that can assist you in these calculations.
Transamerica Life will report all distributions to the IRS as fully taxable
income to you.
Even if you withdrew all of the money in your IRA in a lump sum, you
will not be entitled to use any form of income averaging to reduce the federal
income tax on your distribution. Also, no portion of your distribution is
taxable as a capital gain.
(c) Withholding. Unless you elect not to have withholding apply,
federal income tax will be withheld from your IRA distributions currently at a
10% rate. If payments are delivered to foreign countries, federal income, tax
will generally be withheld at a 10% rate unless you certify to Transamerica Life
that you are not a U.S. citizen residing abroad or a "tax avoidance expatriate"
as defined in Code Section 877. Such certification may result in mandatory
withholding of federal income taxes at a different rate.
6. Penalties
(a) Excess Contributions. If at the end of any taxable year your IRA
contributions (other than rollovers or transfers) exceed the maximum allowable
(deductible and nondeductible) contributions for that year, the excess
contribution amount will be subject to a nondeductible 6% excise (penalty) tax.
However, if you withdraw the excess contribution, plus any earnings on it,
before the due date for filing your federal income tax return for the year
(including extensions) for the taxable year in which you made the excess
contribution, the excess contribution will not be subject to the 6% penalty tax.
The amount of the excess contribution withdrawn will not be considered an early
distribution, but the earnings withdrawn will be taxable income to you and may
be subject to an additional 10% tax on early distributions. Alternatively,
excess contributions for one year maybe withdrawn in a later year or may be
carried forward as IRA contributions in the following year to the extent that
the excess, when aggregated with your IRA contribution (if any) for the
subsequent year, does not exceed the maximum allowable (deductible and
nondeductible) amount for that year. The 6% excise tax will be imposed on excess
contributions in each year they are neither returned to you or applied as
contributions in subsequent years.
Excess contributions that were withdrawn will not be taxable income to
you if you did not take a deduction for the excess amount.
(b) Early Distributions. Since the purpose of an IRA is to accumulate
funds for retirement, your receipt or use of any portion of your IRA before you
attain age 59 1/2 constitutes an early distribution subject to a 10% penalty tax
unless the distribution occurs as a result of your death or disability or is
part of a series of substantially equal payments made over your life expectancy
(as determined from IRS tables in the income tax regulations) or the joint life
expectancies of you and your beneficiary. Also, the 10% penalty will not apply
if distributions are used to pay for medical expenses in excess of 7.5% of your
AGI or if distributions are used to pay for health insurance premiums for you,
your spouse and/or your dependents if you are an unemployed individual who is
receiving unemployment compensation under federal or state programs for at least
12 consecutive weeks. Effective for distribution made in 1998 or later, the 10%
penalty also will not apply to an early distribution made to pay for first-time
homebuyer expenses of you or certain family members, or for higher education
expenses for you or certain family members. First-time homebuyer expenses must
be paid within 120 days of the distribution from the IRA and include up to
$10,000 of the costs of acquiring, constructing, or reconstructing a principal
residence, including settlement, financing and closing costs. Higher education
expenses include tuition, fees, books, supplies, and equipment required for
enrollment, attendance, and room and board at a post-secondary educational
institution. The amount of an early distribution (excluding any nondeductible
contribution included therein) is includable in your gross income and may be
subject to the 10% penalty tax unless you transfer it to another IRA as a
qualifying rollover contribution.
(c) Required Minimum Distributions (RMD). If the RMD rules described in
Part I, section 4 (a) of this Disclosure Statement apply to you and if the
amount distributed during a calendar year is less than the minimum amount
required to be distributed, you will be subject to a penalty tax equal to 50% of
the difference between the amount required to be distributed and the amount
actually distributed.
(d) Prohibited Transactions. If you or the beneficiary engage in any
prohibited transaction (such as any sale, exchange or leasing of any property
between you and the IRA, or any interference with the independent status of the
IRA), the IRA will lose its tax exemption and be treated as having been
distributed to you. The value of the entire IRA (excluding any nondeductible
contributions included therein) will be includable in your gross income; and, if
at the time of the prohibited transaction you are under age 59 1/2, you may also
be subject to the 10% penalty tax on early distributions. If you pledge your
IRA, or your benefits under the contract, as security for a loan, the portion
pledged as security will cease to be tax-qualified, the value of that portion
will be treated as distributed to you, and you will have to include the value of
the portion pledged as security in your income that year for federal tax
purposes. You may also be subject to early withdrawal penalties, as described in
Part I, Section 5.B.
(e) Overstatement or Understatement of Nondeductible Contributions. If
you overstate your nondeductible IRA contributions on your federal income tax
return (without reasonable cause) you may be subject to a penalty. A penalty
also applies for failure to file any form required by the IRS to report
nondeductible contributions. These penalties are (in addition to any generally
applicable tax, interest, and penalties for which you may be liable if you
understate income upon receiving a distribution from your IRA'S). See Part I,
section 4(b) of this Disclosure Statement. See Part I, section 4(b).
IRA PART II: ROTH IRAs
1. Contributions
(a) Regular Roth IRA. You may make contributions to a regular Roth IRA
in any amount up to the contribution limits described in Part II, Section 3 of
this Disclosure Statement. Such contributions are also subject to the minimum
amount under the Contract. Such contribution shall be in cash. Your contribution
for a tax year must be made by the due date (not including extensions) for your
federal income tax return for that tax year.
Spousal Roth IRA. If you and your spouse file a joint federal income
tax return for the taxable year and if your spouse's compensation, if any,
includable in gross income for the year is less than the compensation includable
in your gross income for the year, you and your spouse may each establish your
own individual IRA and may make contributions to those IRAs in accordance with
the rules and limits for contributions contained in the Code, which are
described in Part II, Section 3 of this Disclosure Statement. Such contributions
shall be in cash. Your contribution to a Spousal Roth IRA for a tax year must be
made by the due date (not including extensions) for your federal income tax
return for that tax year.
(c) Rollover Roth IRA. You may make contributions to a Rollover Roth
IRA within 60 days after receiving a distribution from an existing Roth IRA,
subject to certain limitations discussed in Part II, Section 3.
(d) Transfer Roth IRA. You may make an initial or subsequent
contribution hereunder by directing a Trustee of an existing Roth IRA to
transfer the assets in that Roth IRA to your new Roth IRA.
(e) Conversion Roth IRA. You may open a Conversion Roth IRA within 60
days of receiving a distribution form an existing Traditional IRA or by
instructing the Trustee or issuer of an existing Traditional IRA to transfer the
assets in that Traditional IRA account to your new Roth IRA, subject to certain
restrictions and subject to income tax on some or all of the converted amounts.
If your Adjusted Gross Income ("AGI"), not including the rollover or transfer
amount, is greater than $100,000, or if you are married and you and your spouse
file separate tax returns, you may not roll over or transfer a Traditional IRA
into a Roth IRA.
(f) Responsibility of the Owner. Contributions, rollovers or transfers
to this Roth IRA must be made in accordance with the appropriate sections of the
Code. It is your full and sole responsibility to make contributions to your Roth
IRA in accordance with the Code. Transamerica Life Insurance and Annuity Company
does not provide tax advice, and assumes no liability for the tax consequences
of any contribution to your Roth IRA.
2. Deductibility of Contributions
Your Roth IRA permits only nondeductible after-tax contributions.
However, distributions from your Roth IRA are generally not subject to federal
income tax (see Part II, 4(b) below). This is unlike a Traditional IRA, which
permits deductible and nondeductible contributions, but which provides that most
distributions are subject to federal income tax.
3. Contribution Limits
Contributions for each taxable year to all Traditional and Roth IRAs
may not exceed the lesser of 100% of your compensation or $2,000 each year.
Rollover, transfer and conversion contributions, if properly made, do not count
towards your maximum annual contribution limit.
(a) Regular Roth IRAs. The maximum amount you may contribute to a
Regular Roth IRA will depend on the amount of your income. Your maximum $2,000
contribution begins to phase out when your AGI reaches $95,000 (unmarried) or
$150,000 (married filing jointly). Under the phase out, your maximum
contributions generally will not be less than $200; however, no contribution is
allowed if your AGI exceeds $110,000(unmarried) or ($160,000 (married filing
jointly). If you are married and you and your spouse file separate tax returns,
your maximum contribution phases out between $0 and $10,000. You should consult
your tax advisor to determine your maximum contribution.
If you are married but you and your spouse lived apart for the entire
taxable year and file separate federal income tax returns, your maximum
contribution is calculated as if you were not married.
(b) Spousal Roth IRAs. Contributions to your lower-earning spouse's
Spousal Roth IRA may not exceed the lesser of (a) 100% of both spouses' combined
compensation minus any Roth or deductible Traditional IRA contribution for the
spouse with the higher compensation or (b) $2,000. A maximum of $4,000 may be
contributed to both spouses' Spousal Roth IRAs. Contributions can be divided
between the spouses' Roth IRAs as you and your spouse wish, but no more than
$2,000 can be contributed to either one of the Roth IRAs each year.
(c) Rollover Roth IRAs. There is no contribution limit on the amounts
that you may rollover form another Roth IRA into this Roth IRA. You may roll
over a distribution from any single Roth IRA to another Roth IRA only once in
any 365-day period.
(d) Transfer Roth IRAs. There is no contribution limit on amounts that
you transfer from another Roth IRA into this Roth IRA.
(e) Conversion Roth IRAs. There is no contribution limit on amounts
that you convert from your Traditional IRA into this Roth IRA if you are
eligible to open a Conversion Roth IRA as described above. However, the
distribution proceeds from your Traditional IRA are includable in your taxable
income to the extent that they represent a return of deductible contributions
and earnings on any contributions. The distribution proceeds form your
Traditional are not subject to the 10% premature withdrawal tax (described
below) if the distribution proceeds are deposited to your Rollover Roth IRA
within 60 days. You may roll over a distribution from any single Traditional IRA
to a Rollover Roth IRA or any other IRA only once in any 365-day period.
You can also open a Conversion Roth IRA by instructing the issuer,
custodian or trustee of your existing Traditional IRA to transfer your
Traditional IRA assets to Roth IRA, which will be the successor to your existing
Traditional IRA. The transfer will be treated as a distribution from your
Traditional IRA, and that amount will be includable in your taxable income to
the extent that it represents a return of deductible contributions and earnings
on any contributions, but will not be subject to the 10% premature withdrawal
tax.
For tax years before 1999, if you make a rollover or transfer from a
Traditional IRA to a Roth IRA, you may pay the income tax due upon distribution
from the Traditional IRA ratably over four years beginning in the year of the
rollover.
Also, consult your tax advisor before combining amounts in a Conversion
Roth IRA with any regular contributions or with amounts rolled over or
transferred into the Conversion IRA in other tax years.
4. Distributions
(a) Required Minimum Distribution. Unlike a Traditional IRA, there are
no rules that require that distribution be made to you from Roth IRA during your
lifetime.
If you die before the entire value of your Roth IRA is distributed to
you, the balance of your Roth IRA must be distributed by December 31 of the
calendar year that is five years after your death. However, if you die and you
have a designated beneficiary, distributions to your designated beneficiary must
be made in substantially equal installments over the life or life expectancy of
the designated beneficiary, beginning by December 31 of the calendar year that
is one year after your death.
If your beneficiary is your surviving spouse, he or she will become a
new owner/annuitant and can continue this Roth IRA on the same basis as before
your death. If your surviving spouse does not wish to continue this Contract as
his or her Roth IRA, he or she may elect to receive the death benefit in the
form of settlement option payments. Such payments must be in equal amounts over
the spouse's life not extending beyond his or her expectancy. The surviving
spouse must elect this option and begin receiving payments no later than the
earliest of the following dates: (i) December 31 of the year following the year
you died; or (ii) December 31 of the year in which you would have reached age
70 1/2. Your beneficiary is responsible for assuring that the required minimum
distribution following your death is taken in a timely manner and that the
correct amount is distributed.
(b) Taxation of Roth IRA Distributions. The amounts that you withdraw
from your Roth IRA are generally tax-free. However, since the purpose of a Roth
IRA is to accumulate funds for retirement, your receipt or use of Roth IRA
earnings before you attain age 59 1/2 , or within 5 years of your first
contribution to the Roth IRA, or within 5 years of a contribution rolled over or
transferred from a Traditional IRA, will generally be treated as a premature
withdrawal subject to a regular income tax. No income tax will apply to earnings
that are withdrawn before you attain age 59 1/2, but which are withdrawn five or
more years after the first contribution or the rollover or transfer contribution
from a Traditional IRA to the Roth IRA, where the withdrawal is made (I) upon
your death or disability, or (ii) to pay first-time homebuyer expenses of you or
certain family members. Note that for amounts converted from a Traditional IRA
to a Roth IRA, the five-year period applies separately to amounts converted. No
portion of your distribution is taxable as a capital gain.
(c) Withholding. If the distribution from your Roth IRA is subject to
federal income tax, unless you elect not to have withholding apply, federal
income tax will be withheld from your Roth IRA distributions (currently, at a
10% rate). If payments are delivered to foreign countries, federal income tax
will generally be withheld at a 10% rate unless you certify to Transamerica Life
Insurance and Annuity Company that you are not a U.S. citizen residing abroad or
a "tax avoidance expatriate" as defined in Code Section 877. Such certification
may result in mandatory withholding of federal income taxes at a different rate.
5. Penalties
(a) Excess Contributions. If at the end of any taxable year your Roth
IRA contributions (other than rollovers or transfers) exceed the maximum
allowable contributions for that year, the excess contribution amount will be
subject to a nondeductible 6% excise (penalty) tax. However, if you withdraw the
excess contribution, plus any earnings on it, before the due date for filing
your federal income tax return for the year (including extensions) for the
taxable year in which you made the excess contribution, the excess contribution
will not be subject to the 6% penalty tax. The amount of the excess contribution
withdrawn will not be considered an early distribution, but the earnings
withdrawn will be taxable income to you and may be subject to an additional 10%
tax on early distributions. Alternatively, excess contributions for one year may
be withdrawn in a later year or may be carried forward as Roth IRA contributions
in a later year to the extent that the excess, when aggregated with your Roth
IRA contribution (if any) for the subsequent year, does not exceed the maximum
allowable contribution for that year. The 6% excise tax will be imposed on
excess contributions in each year they are neither returned to your nor applied
as contributions in subsequent years.
(b) Early Distributions. Since the purpose of a Roth IRA is to
accumulate funds for retirement, your receipt or use of any portion of your Roth
IRA before you attain age 59 1/2 , or within 5 years of your first contribution
to the Roth IRA, or within 5 years of a contribution rolled over or transferred
from a Traditional IRA, constitutes an early distribution subject a 10% penalty
tax on the earnings in your Roth IRA. This penalty tax will not apply if the
distribution occurs as a result of your death or disability or is part of a
series of substantially equal payments made over your life expectancy (as
determined from IRA tables in the income tax regulations) or the joint life
expectancies of you and your beneficiary. also, the 10% penalty will not apply
if distributions are used to pay for medical expenses in excess of 7.5% or your
AGI; or if distributions are used to pay for health insurance premiums for you,
your spouse and/or your dependents if you are unemployed individual who is
receiving unemployment compensation under federal or state programs for at least
12 consecutive weeks. The 10% penalty also will not apply to an early
distribution made to pay for first-time homebuyer expenses of your or certain
family members, or for higher education expenses for you or certain family
members. First-time homebuyer expenses must be paid within 120 days of the
distribution from the IRA and include up to $10,000 of the costs of acquiring,
constructing, or reconstructing a principle residence, including settlement,
financing and closing costs. Higher education expenses include tuition, fees,
books, supplies, and equipment required for enrollment, attendance, and room and
board at a post-secondary educational institution.
In addition, it is likely that the law will change in 1998 to provide
retroactively that if amounts transferred or rolled-over from a Traditional IRA
to a Roth IRA are withdrawn before five years, (i) the entire amount that was
transferred or rolled over, not just the earnings, may be subject to the 10%
penalty tax, and (ii) an additional 10% tax may apply if the amounts transferred
or rolled over were (or are to be) included in income ratably over four years.
Special rules may apply to withdrawals from a Roth IRA that includes both
amounts transferred or rolled over from a Traditional IRA and annual
contributions to the Roth IRA; for that reason, it may be advisable to establish
separate Roth IRAs for amounts transferred or rolled over and annual
contributions.
(c) Required Distributions Upon Death. If the required minimum
distribution rules described in Part II, Section 4(a) of this Disclosure
Statement apply to your beneficiary and if the amount distributed in during a
calendar year is less than the minimum amount required to be distributed, your
beneficiary will be subject to a penalty tax equal to 50% of the difference
between the amount required to be distributed and the amount actually
distributed.
(d) Prohibited Transactions. If you or the beneficiary engage in any
prohibited transaction (such as any sale, exchange or leasing of any property
between you and the Roth IRA, or any interference with the independent status of
the Roth IRA), the Roth IRA will lose its tax exemption and be treated as having
been distributed to you. The value of any earnings on your Roth IRA
contributions will be includable in your gross income; and if at the time you
are under age 59 1/2 or its is within five years of your first contribution to
the Roth IRA, or within five year of a rollover contribution from a Traditional
IRA, you may also be subject to the 10% penalty tax on early distributions. If
you pledge your Roth IRA, your benefits under the contract, as a security for a
loan, the portion pledged as security will cease to be tax-qualified, the value
of that portion will be treated as distributed to you, and you may be subject to
the 10% penalty tax on premature distributions from a Roth IRA.
7. Federal Estate and Gift Taxes
Any amount distributed from your IRA's upon your death may be subject
to federal estate and gift taxes. The exercise or non-exercise of an option to
pay an annuity to your beneficiary at or after your death will not be considered
a transfer for gift tax purposes under Code Section 2517.
8. Tax Reporting
You need not file IRS Form 5329 with your income tax return unless
during the taxable year there is an excess contribution to, an early
distribution from, or insufficient minimum required distributions from your IRA
or Roth IRA. You must report contributions to, and distributions from your IRA
and Roth IRA (including the year end aggregate account balance of all IRAs and
Roth IRA) on your federal income tax return for the year. For Traditional IRA,
you must designate on the return how much of your annual contribution is
deductible and how much is nondeductible.
(3) IRS Approval
This contract has been filed with the IRS for approval as to its form.
Such approval is a determination only as to the form of the annuity and does not
represent a determination of the merits of such annuity.
(4) Vesting
Your interest in your IRA and Roth IRA must be nonforfeitable at all
times.
(5) Exclusive Benefit
Your interest in your IRA and Roth IRA is for the exclusive benefit of
you and your beneficiaries.
(6) Publication 590
Additional information about your IRA or Roth IRA can be obtained from
any district office of the IRS and by calling 1-800-TAX-FORM for a free copy of
Publication 590, Individual Retirement Arrangements.
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION FOR
TRANSAMERICA SERIES sm -
TRANSAMERICA CLASSIC sm
VARIABLE ANNUITY
Issued By
Transamerica Life Insurance Company of New York
This statement of additional information expands upon subjects
discussed in the June ___, 1998, prospectus for the Transamerica Classic sm
Variable Annuity ("policy") issued by Transamerica Life Insurance Company of New
York ("Transamerica") through Separate Account VA-6-NY. The owner may obtain a
free copy of the prospectus by writing to: Transamerica Life Insurance Company
of New York, Annuity Service Center, 401 North Tryon Street, Suite 700,
Charlotte, North Carolina 28202 or calling (800) 420-7749. Terms used in the
current prospectus for the policy are incorporated into this statement.
THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A
PROSPECTUS AND SHOULD BE READ ONLY IN
CONJUNCTION WITH THE PROSPECTUS FOR THE
POLICY AND THE PORTFOLIOS.
June ___, 1998
<PAGE>
TABLE OF CONTENTS Page
THE POLICY ...........................................................3
NET INVESTMENT FACTOR.................................................3
SETTLEMENT OPTION PAYMENTS............................................3
Variable Annuity Units and Payments..........................3
Variable Annuity Unit Value..................................3
Transfers After the Annuity Date ............................4
GENERAL PROVISIONS ...................................................4
IRS Required Distributions...................................4
Non-Participating............................................4
Misstatement of Age or Sex ..................................4
Proof of Existence and Age ..................................5
Annuity Data.................................................5
Assignment...................................................5
Annual Report................................................5
Incontestability.............................................5
Entire Policy................................................5
Changes in the Policy........................................5
Protection of Benefits.......................................5
Delay of Payments............................................6
Notices and Directions.......................................6
CALCULATION OF YIELDS AND TOTAL RETURNS...............................6
Money Market Sub-Account Yield Calculation...................6
Other Sub-Account Yield Calculations.........................7
Standard Total Return Calculations...........................8
Adjusted Historical Portfolio Performance Data...............8
Other Performance Data.......................................8
HISTORIC PERFORMANCE DATA.............................................9
General Limitations..........................................9
Adjusted Historical Sub-Account Performance Data.............9
DISTRIBUTION OF THE POLICY...........................................20
SAFEKEEPING OF VARIABLE ACCOUNT ASSETS.............................2120
STATE REGULATION.....................................................21
RECORDS AND REPORTS...................................................21
FINANCIAL STATEMENTS..................................................21
APPENDIX - Accumulation Transfer Formula..............................22
<PAGE>
THE POLICY
The following pages provide additional information about the policy
which may be of interest to some owners.
NET INVESTMENT FACTOR
For any sub-account of the variable account, the net investment factor
for a valuation period, before the annuity date, is (a) divided by (b), minus
(c) minus (d):
Where (a) is:
The net asset value per share held in the sub-account, as of the end of
the valuation period; plus the per-share amount of any dividend or
capital gain distributions if the "ex-dividend" date occurs in the
valuation period; plus or minus a per-share charge or credit as
Transamerica may determine, as of the end of the valuation period, for
taxes.
Where (b) is:
The net asset value per share held in the sub-account as of the end of
the last prior valuation period.
Where (c) is:
The daily charge of 0.00329% (1.20% annually) for the mortality and
expense risk charge times the number of calendar days in the current
valuation period.
Where (d) is:
The daily administrative expense charge, currently 0.000411% (0.15%
annually) times the number of calendar days in the current valuation
period. This charge may be increased, but will not exceed 0.00096%
(0.35% annually).
A valuation day is defined as any day that the New York Stock
Exchange is open.
SETTLEMENT OPTION PAYMENTS The variable settlement options provide for payments
that fluctuate in dollar amount, based on the investment performance of the
selected variable sub-account(s).
Variable Annuity Units and Payments
For the first monthly payment, the number of variable annuity units
credited in each variable sub-account will be determined by dividing: (a) the
product of the portion of the value to be applied to the variable sub-account
and the variable annuity purchase rate specified in the policy; by (b) the value
of one variable annuity unit in that sub-account on the annuity date.
The amount of each subsequent variable payment equals the product of
the number of variable annuity units in each variable sub-account and the
variable sub-account's variable annuity unit value as of the tenth day of the
month before the payment due date. The amount of each payment may vary.
Variable Annuity Unit Value
The value of a variable annuity unit in a variable sub-account on any
valuation day is determined as described below.
The net investment factor for the valuation period (for the appropriate
payment frequency) just ended is multiplied by the value of the variable annuity
unit for the sub-account on the preceding valuation day. The net investment
factor after the annuity date is calculated in the same manner as before the
annuity date and then multiplied by an interest factor. The interest factor
equals (.999893)n where n is the number of days since the preceding valuation
day. This compensates for the 4% interest assumption built into the variable
annuity purchase rates. Transamerica may offer other assumed interest rates than
4%. The appropriate interest factor will be applied to compensate for the
assumed interest rate.
Transfers After the Annuity Date
After the annuity date, the owner may transfer variable annuity units
from one sub-account to another, subject to certain limitations. See "Transfers"
page _25_ of the prospectus. The dollar amount of each subsequent monthly
annuity payment after the transfer must be determined using the new number of
variable annuity units multiplied by the variable sub-account's variable annuity
unit value on the tenth day of the month preceding payment. Transamerica
reserves the right to change this day of the month.
The formula used to determine a transfer after the annuity date can be
found in the Appendix to this statement of additional information.
GENERAL PROVISIONS
IRS Required Distributions
If any owner under a non-qualified policy dies before the entire
interest in the policy is distributed, the value generally must be distributed
to the designated beneficiary so that the policy qualifies as an annuity under
the Code. (See "Federal Tax Matters" page _36_ of the prospectus.)
Non-Participating
The policy is non-participating. No dividends are payable and the
policy will not share in the profits or surplus earnings of Transamerica.
Misstatement of Age or Sex
If the age or sex of the annuitant or any other measuring life has been
misstated in the application, the settlement option payments under the policy
will be whatever the annuity amount applied on the annuity date would purchase
on the basis of the correct age or sex of the annuitant and/or other measuring
life. Any overpayments or underpayments by Transamerica as a result of any such
misstatement may be respectively charged against or credited to the settlement
option payment or payments to be made after the correction so as to adjust for
such overpayment or underpayment.
Proof of Existence and Age
Before making any payment under the policy, Transamerica may require
proof of the existence and/or proof of the age of the annuitant or any other
measuring life, or any other information deemed necessary in order to provide
benefits under the policy.
Annuity Data
Transamerica will not be liable for obligations which depend on
receiving information from a payee or measuring life until such information is
received in a satisfactory form.
Assignment
No assignment of a policy will be binding on Transamerica unless made
in writing and given to Transamerica at the Service Center. Transamerica is not
responsible for the adequacy of any assignment. The owner's rights and the
interest of any annuitant or non-irrevocable beneficiary will be subject to the
rights of any assignee of record.
Annual Report
At least once each policy year prior to the annuity date, the owner
will be given a report of the current account value allocated to each
sub-account of the variable account and the fixed account. This report will also
include any other information required by law or regulation. After the annuity
date, a confirmation will be provided with every variable annuity payment.
Incontestability
Each policy is incontestable from the policy effective date.
Entire Policy
Transamerica has issued the policy in consideration and acceptance of
the application and payment of the initial premium. A copy of the application is
attached to and is part of the policy and along with the policy constitutes the
entire contract. All statements made by the Owner are considered representations
and not warranties. Transamerica will not use any statement in defense of a
claim unless it is made in the application and a copy of the application is
attached to the policy when issued.
Changes in the Policy
Only two authorized officers of Transamerica, acting together, have the
authority to bind Transamerica or to make any change in the individual policy
and then only in writing. Transamerica will not be bound by any promise or
representation made by any other persons.
Transamerica may not change or amend the policy, except as provided in
the policy, without the Owner's consent. However, Transamerica may change or
amend the individual policy if such change or amendment is necessary for the
individual policy to comply with any state or federal law, rule or regulation.
Protection of Benefits
To the extent permitted by law, no benefit (including death benefits)
under the policy will be subject to any claim or process of law by any creditor.
Delay of Payments
Payment of any cash withdrawal, lump sum death benefit, or variable
payment or transfer due from the variable account will occur within seven days
from the date the election becomes effective, except that Transamerica may be
permitted to postpone such payment if: (1) the New York Stock Exchange is closed
for other than usual weekends or holidays, or trading on the Exchange is
otherwise restricted; or (2) an emergency exists as defined by the Securities
and Exchange Commission (Commission), or the Commission requires that trading be
restricted; or (3) the Commission permits a delay for the protection of owners.
In addition, while it is our intention to process all transfers from
the sub-accounts immediately upon receipt of a transfer request, we have the
right to delay effecting a transfer from a variable sub-account for up to seven
days, but only in certain limited circumstances. We may delay effecting such a
transfer if there is a delay of payment from an affected portfolio. If this
happens, then we will calculate the dollar value or number of units involved in
the transfer from a variable sub-account on or as of the date we receive a
transfer request in a acceptable form and manner, but will not process the
transfer to the transferee sub-account until a later date during the seven-day
delay period when the portfolio underlying the transferring sub-account obtains
liquidity to fund the transfer request through sales of portfolio securities,
new premiums, transfers by investors or otherwise. During this period, the
amount transferred would not be invested in a variable sub-account.
Transamerica may delay payment of any withdrawal from the fixed account
for a period of not more than six months after Transamerica receives the request
for such withdrawal. If Transamerica delays payment for more than 10 days,
Transamerica will pay interest on the withdrawal amount up to the date of
payment. See "Cash Withdrawals" page _26_ of the prospectus.
Notices and Directions
Transamerica will not be bound by any authorization, direction,
election or notice which is not, in a form and manner acceptable to
Transamerica, and received at the Service Center.
Any written notice requirement by Transamerica to the owner will be
satisfied by our mailing of any such required written notice, by first-class
mail, to the owner's last known address as shown on our records.
CALCULATION OF YIELDS AND TOTAL RETURNS
Money Market Sub-Account Yield Calculation
In accordance with regulations adopted by the Commission, Transamerica
is required to compute the money market sub-account's current annualized yield
for a seven-day period in a manner which does not take into consideration any
realized or unrealized gains or losses on shares of the money market series or
on its portfolio securities. This current annualized yield is computed by
determining the net change (exclusive of realized gains and losses on the sale
of securities and unrealized appreciation and depreciation) in the value of a
hypothetical account having a balance of one unit of the money market
sub-account at the beginning of such seven-day period, dividing such net change
in account value by the value of the account at the beginning of the period to
determine the base period return and annualizing this quotient on a 365-day
basis. The net change in account value reflects the deductions for the annual
account fee, the mortality and expense risk charge and administrative expense
charges and income and expenses accrued during the period. Because of these
deductions, the yield for the money market sub-account of the variable account
will be lower than the yield for the money market series or any comparable
substitute funding vehicle.
The Commission also permits Transamerica to disclose the effective
yield of the money market sub-account for the same seven-day period, determined
on a compounded basis. The effective yield is calculated by compounding the
unannualized base period return by adding one to the base period return, raising
the sum to a power equal to 365 divided by 7, and subtracting one from the
result.
The yield on amounts held in the money market sub-account normally will
fluctuate on a daily basis. Therefore, the disclosed yield for any given past
period is not an indication or representation of future yields or rates of
return. The money market sub-account's actual yield is affected by changes in
interest rates on money market securities, average portfolio maturity of the
money market series or substitute funding vehicle, the types and quality of
portfolio securities held by the money market series or substitute funding
vehicle, and operating expenses. In addition, the yield figures do not reflect
the effect of any contingent deferred sales load (of up to 6% of premiums) that
may be applicable to a policy.
Other Sub-Account Yield Calculations
Transamerica may from time to time disclose the current annualized
yield of one or more of the variable sub-accounts (except the money market
sub-account) for 30-day periods. The annualized yield of a sub-account refers to
the income generated by the sub-account over a specified 30-day period. Because
this yield is annualized, the yield generated by a sub-account during the 30-day
period is assumed to be generated each 30-day period. The yield is computed by
dividing the net investment income per variable accumulation unit earned during
the period by the price per unit on the last day of the period, according to the
following formula:
YIELD = 2[{a-b + 1}6 - 1]
cd
Where:
a = net investment income earned during the period by the
portfolio attributable to the shares owned by the sub-account.
b = expenses for the sub-account accrued for the period (net of
reimbursements). c = the average daily number of variable accumulation
units outstanding during the period. d = the maximum offering price per
variable accumulation unit on the last day of the period.
Net investment income will be determined in accordance with rules
established by the Commission. Accrued expenses will include all recurring fees
that are charged to all policies. The yield calculations do not reflect the
effect of any contingent deferred sales load that may be applicable to a
particular policy. Contingent deferred sales load range from 6% to 0% of the
amount of account value withdrawn depending on the elapsed time since the
receipt of each premium.
Because of the charges and deductions imposed by the variable account,
the yield for the sub-account will be lower than the yield for the corresponding
portfolio. The yield on amounts held in the variable sub-accounts normally will
fluctuate over time. Therefore, the disclosed yield for any given period is not
an indication or representation of future yields or rates of return. The
variable sub-account's actual yield will be affected by the types and quality of
portfolio securities held by the portfolio, and its operating expenses.
Standard Total Return Calculations
Transamerica may from time to time also disclose average annual total
returns for one or more of the sub-accounts for various periods of time. Average
annual total return quotations are computed by finding the average annual
compounded rates of return over one, five and ten year periods that would equate
the initial amount invested to the ending redeemable value, according to the
following formula:
P{1 + T}n = ERV
Where:
P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value of a hypothetical $1,000
payment made at the beginning of the one, five or
ten-year period at the end of the one, five, or
ten-year period (or fractional portion of such
period).
All recurring fees are recognized in the ending redeemable value. The
standard average annual total return calculations will reflect the effect of any
contingent deferred sales loads that may be applicable to a particular period.
Adjusted Historical Portfolio Performance Data
Transamerica may also disclose "historic" performance data for a
portfolio, for periods before the variable sub-account commenced operations.
Such performance information will be calculated based on the performance of the
portfolio and the assumption that the sub-account was in existence for the same
periods as those indicated for the portfolio, with a level of policy charges
currently in effect.
This type of adjusted historical performance data may be disclosed on
both an average annual total return and a cumulative total return basis.
Moreover, it may be disclosed assuming that the policy is not surrendered (i.e.,
with no deduction for the contingent deferred sales load) and assuming that the
policy is surrendered at the end of the applicable period (i.e., reflecting a
deduction for any applicable contingent deferred sales load).
Other Performance Data
Transamerica may from time to time also disclose average annual total
returns in a non-standard format in conjunction with the standard described
above. The non-standard format will be identical to the standard format except
that the contingent deferred sales load percentage will be assumed to be 0%.
Transamerica may from time to time also disclose cumulative total
returns in conjunction with the standard format described above. The cumulative
returns will be calculated using the following formula assuming that the
contingent deferred sales load percentage will be 0%.
CTR = {ERV/P} - 1
Where:
CTR = the cumulative total return net of sub-account
recurring charges for the period.
ERV = ending redeemable value of a hypothetical $1,000
payment at the beginning of the one,
five, or ten-year period at the end of the one, five,
or ten-year period (or fractional portion of the
period).
P = a hypothetical initial payment of $1,000.
All non-standard performance data will be advertised only if the
standard performance data is also disclosed.
HISTORIC PERFORMANCE DATA
General Limitations
The figures below represent past performance and are not indicative of
future performance. The figures may reflect the waiver of advisory fees and
reimbursement of other expenses which may not continue in the future.
Portfolio information, including historical daily net asset values and
capital gains and dividends distributions regarding each portfolio has been
provided by that portfolio. The adjusted historical sub-account performance data
is derived from the data provided by the portfolios. Transamerica has no reason
to doubt the accuracy of the figures provided by the portfolios. Transamerica
has not verified these figures.
Adjusted Historical Sub-Account Performance Data
The charts below show adjusted historical performance data for
sub-accounts for the periods, prior to the inception of the sub-accounts, based
on the performance of the corresponding portfolios since their inception date,
with a level of charges equal to those currently assessed under the policies.
These figures are not an indication of the future performance of the
sub-accounts.
The dates next to each sub-account name indicates the date of
commencement of operation of the corresponding portfolio. The sub-accounts have
not yet commenced operations. Hence, there is no actual performance data for
these sub-accounts.
Notes:
1. On September 16, 1994, an investment company which had commenced operations
on August 1, 1988, called Quest for Value Accumulation Trust (the "Old Trust")
at which time the Present Trust commenced operations. The total net assets of
the Small Cap Portfolio immediately after the transaction were $139,812,573 in
the Old Trust and $8,129,274 in the Present Trust. For the period prior to
September 16, 1994, the performance figures for the Small Cap Portfolio of the
Present Trust reflect the performance of the Small Cap Portfolio of the Old
Trust.
2. The Growth Portfolio of the Transamerica Variable Insurance Fund, Inc., is
the successor to Separate Account Fund C of Transamerica Occidental Life
Insurance Company, a management investment company funding variable annuities,
through a reorganization on November 1, 1996. Accordingly, the performance data
for the Transamerica VIF Growth Portfolio includes performance of its
predecessor.
3. On September 16, 1994, an investment company which had commenced operations
on August 1, 1988, called Quest for Value Accumulation Trust (the "Old Trust")
was effectively divided into two investment funds - The Old Trust and the
present OCC Accumulation Trust (the "Present Trust") at the time of the
transaction there was $682,601,380 in the Old Trust and $51,345,102 in the
Present Trust. For the period prior to September 16, 1994, the performance
figures for the Managed Portfolio of the Present Trust reflect the performance
of the Managed Portfolio of the Old Trust.
Adjusted Historical Performance Data Charts
1. Average Annual Total Returns - Assuming surrender
2. Average Annual Total Returns - Assuming no surrender
3. Cumulative Returns - Assuming surrender
4. Cumulative Returns - Assuming no surrender
Cumulative Returns - Assuming no surrender but reflecting Living Benefits Rider
1. Average Annual Total Returns - Assuming surrender
Average annual total returns for periods since inception of the
portfolio, including adjusted historical performance for each sub-account are as
follows. These figures include mortality and expenses charges of 1.20% per
annum, administrative expenses charge of 0.15% per annum, an account fee of $30
per annum adjusted for average account size and the applicable contingent
deferred sales load (maximum of 6% of purchase payments).
<TABLE>
<CAPTION>
- --------------------------------- -------------- --------------- ---------------- ----------------- ------------------
SUB-ACCOUNT For the For the For the 5-year For the 10-year For the period
(date of commencement 1-year 3-year period period ending period ending from
of operation of period ending ending 12/31/97 12/31/97 commencement of
corresponding portfolio) 12/31/97 12/31/97 portfolio
operations to
12/31/97
- --------------------------------- -------------- --------------- ---------------- ----------------- ------------------
<S> <C> <C> <C> <C> <C>
Janus Aspen Worldwide Growth 16.23% 23.30% N/A N/A 20.61%
(9/12/93)
- --------------------------------- -------------- --------------- ---------------- ----------------- ------------------
Morgan Stanley UF International -3.06% N/A N/A N/A -3.07%
Magnum (1/1/97)
- --------------------------------- -------------- --------------- ---------------- ----------------- ------------------
Dreyfus VIF Small Cap (8/30/90) 11.81% 18.47% 24.26% N/A 41.94%
- --------------------------------- -------------- --------------- ---------------- ----------------- ------------------
OCC Accumulation Trust Small 16.10% 16.43% 12.63% N/A 13.83%
Cap (7/31/88) (1)
- --------------------------------- -------------- --------------- ---------------- ----------------- ------------------
MFS VIT Emerging Growth 16.08% N/A N/A N/A 20.09%
(7/23/95)
- --------------------------------- -------------- --------------- ---------------- ----------------- ------------------
Alliance VPF Premier Growth 28.03% 30.93% 19.02% N/A 19.73%
(6/26/92)
- --------------------------------- -------------- --------------- ---------------- ----------------- ------------------
Dreyfus VIF Capital 21.44% 26.29% N/A N/A 18.05%
Appreciation (4/27/93)
- --------------------------------- -------------- --------------- ---------------- ----------------- ------------------
MFS VIT Research (7/25/95) 14.36% N/A N/A N/A 18.98%
- --------------------------------- -------------- --------------- ---------------- ----------------- ------------------
Transamerica VIF Growth 44.91% 41.87% 29.69% 24.09% N/A
(12/1/80) (2)
- --------------------------------- -------------- --------------- ---------------- ----------------- ------------------
Alger American Income & Growth 30.76% 27.39% 15.49% N/A 12.19%
(11/14/88)
- --------------------------------- -------------- --------------- ---------------- ----------------- ------------------
Alliance VPF Growth & Income 22.85% 26.93% 17.25% N/A 13.57%
(1/14/91)
- --------------------------------- -------------- --------------- ---------------- ----------------- ------------------
MFS VIT Growth w/ Income 23.66% N/A N/A N/A 24.28%
(10/5/95)
- --------------------------------- -------------- --------------- ---------------- ----------------- ------------------
Janus Aspen Balanced (9/12/93) 15.81% 18.17% N/A N/A 14.11%
- --------------------------------- -------------- --------------- ---------------- ----------------- ------------------
OCC Accumulation Trust Managed 15.78% 26.98% 17.92% N/A 18.64%
(7/31/88) (3)
- --------------------------------- -------------- --------------- ---------------- ----------------- ------------------
Morgan Stanley UF High Yield 6.53% N/A N/A N/A 6.57%
(1/1/97)
- --------------------------------- -------------- --------------- ---------------- ----------------- ------------------
Morgan Stanley UF Fixed Income 2.99% N/A N/A N/A 3.00%
(1/1/97)
- --------------------------------- -------------- --------------- ---------------- ----------------- ------------------
Transamerica VIF Money Market N/A N/A N/A N/A N/A
(1/1/98)
- --------------------------------- -------------- --------------- ---------------- ----------------- ------------------
</TABLE>
2. Average Annual
Total Returns - Assuming
no surrender
Average annual total returns for periods since inception of the
portfolio, including adjusted historical performance for each sub-account are as
follows. These figures include mortality and expenses charges of 1.20% per
annum, administrative expenses charge of 0.15% per annum and an account fee of
$30 per annum adjusted for average account size, but do not reflect any
applicable contingent deferred sales load (maximum of 6% of purchase payments).
<TABLE>
<CAPTION>
- ---------------------------- --------------- ---------------- --------------- ---------------- ----------------------
SUB-ACCOUNT For the For the 3-year For the For the For the period from
(date of commencement of 1-year period period ending 5-year period 10-year period commencement of
operation of ending 12/31/97 ending ending 12/31/97 portfolio operations
corresponding portfolio) 12/31/97 12/31/97 to 12/31/97
- ---------------------------- --------------- ---------------- --------------- ---------------- ----------------------
<S> <C> <C> <C> <C> <C>
Janus Aspen Worldwide 21.63% 24.28% N/A N/A 21.17%
Growth (9/12/93)
- ---------------------------- --------------- ---------------- --------------- ---------------- ----------------------
Morgan Stanley UF 2.34% N/A N/A N/A 2.36%
International Magnum
(1/1/97)
- ---------------------------- --------------- ---------------- --------------- ---------------- ----------------------
Dreyfus VIF Small Cap 17.21% 19.53% 24.56% N/A 41.94%
(8/30/90)
- ---------------------------- --------------- ---------------- --------------- ---------------- ----------------------
OCC Accumulation Trust 21.50% 17.53% 13.08% N/A 13.83%
Small Cap (7/31/88) (1)
- ---------------------------- --------------- ---------------- --------------- ---------------- ----------------------
MFS VIT Emerging Growth 21.48% N/A N/A N/A 21.77%
(7/23/95)
- ---------------------------- --------------- ---------------- --------------- ---------------- ----------------------
Alliance VPF Premier 33.43% 31.80% N/A N/A 20.02%
Growth (6/26/92)
- ---------------------------- --------------- ---------------- --------------- ---------------- ----------------------
Dreyfus VIF Capital 26.84% 27.22% N/A N/A 18.46%
Appreciation (4/27/93)
- ---------------------------- --------------- ---------------- --------------- ---------------- ----------------------
MFS VIT Research (7/25/95) 19.76% N/A N/A N/A 20.41%
- ---------------------------- --------------- ---------------- --------------- ---------------- ----------------------
Transamerica VIF Growth 50.31% 42.61% 29.95% 24.09% N/A
(12/1/80) (2)
- ---------------------------- --------------- ---------------- --------------- ---------------- ----------------------
Alger American Income & 36.16% 28.31% 15.89% N/A 12.19%
Growth (11/14/88)
- ---------------------------- --------------- ---------------- --------------- ---------------- ----------------------
Alliance VPF Growth & 28.25% 27.86% 17.63% N/A 13.69%
Income (1/14/91)
- ---------------------------- --------------- ---------------- --------------- ---------------- ----------------------
MFS VIT Growth w/ Income 29.06% N/A N/A N/A 25.81%
(10/8/95)
- ---------------------------- --------------- ---------------- --------------- ---------------- ----------------------
Janus Aspen Balanced 21.21% 19.23% N/A N/A 14.65%
(9/12/93)
- ---------------------------- --------------- ---------------- --------------- ---------------- ----------------------
OCC Accumulation Trust 21.18% 27.91% 18.29% N/A 18.64%
Managed (7/31/88) (3)
- ---------------------------- --------------- ---------------- --------------- ---------------- ----------------------
Morgan Stanley UF High 11.93% N/A N/A N/A 12.00%
Yield (1/1/97)
- ---------------------------- --------------- ---------------- --------------- ---------------- ----------------------
Morgan Stanley UF Fixed 8.39% N/A N/A N/A 8.44%
Income (1/1/97)
- ---------------------------- --------------- ---------------- --------------- ---------------- ----------------------
Transamerica VIF Money N/A N/A N/A N/A N/A
Market (1/1/98)
- ---------------------------- --------------- ---------------- --------------- ---------------- ----------------------
</TABLE>
3. Cumulative Returns -
Assuming surrender
Adjusted historical
cumulative total returns for
periods since inception of the portfolio for each sub-account are as follows.
These figures include mortality and expenses charges of 1.20% per annum,
administrative expenses charge of 0.15% per annum, an account fee of $30 per
annum adjusted for average account size and the applicable contingent deferred
sales load (maximum of 6% of purchase payments).
<TABLE>
<CAPTION>
SUB-ACCOUNT
- --------------------------- --------------- ---------------- ---------------- ---------------- ----------------------
(date of commencement of For the 1- For the 3- For the 5- For the 10- For the period from
operation of year period year period year period year period commencement of
corresponding portfolio) ending ending 12/31/97 ending 12/31/97 ending 12/31/97 portfolio operations
12/31/97 to 12/31/97
- --------------------------- --------------- ---------------- ---------------- ---------------- ----------------------
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Janus Aspen Worldwide 16.23% 87.45% N/A N/A 123.91%
Growth (9/12/93)
- ---------------------------------------------------------------------------------------------------------------------
Morgan Stanley UF -3.06% N/A N/A N/A -3.06%
International Magnum
(1/1/97)
- ---------------------------------------------------------------------------------------------------------------------
Dreyfus VIF Small Cap 11.81% 66.26% 196.23% N/A 1207.41%
(8/30/90)
- ---------------------------------------------------------------------------------------------------------------------
OCC Accumulation Trust 16.10% 57.83% 81.28% N/A 239.00%
Small Cap (7/31/88) (1)
- ---------------------------------------------------------------------------------------------------------------------
MFS VIT Emerging Growth 16.08% N/A N/A NA/ 56.35%
(7/23/95)
- ---------------------------------------------------------------------------------------------------------------------
Alliance VPF Premier 28.03% 124.45% N/A N/A 170.07%
Growth (6/26/92)
- ---------------------------------------------------------------------------------------------------------------------
Dreyfus VIF Capital 21.44% 101.41% N/A N/A 117.34%
Appreciation (4/27/93)
- ---------------------------------------------------------------------------------------------------------------------
MFS VIT Research (7/25/95) 14.36% N/A N/A N/A 52.70%
- ---------------------------------------------------------------------------------------------------------------------
Transamerica VIF Growth 44.91% 185.53% 266.95% 765.61% N/A%
(12/1/80) (2)
- ---------------------------------------------------------------------------------------------------------------------
Alger American Income & 30.76% 106.75% 105.43% N/A 185.94%
Growth (11/14/88)
- ---------------------------------------------------------------------------------------------------------------------
Alliance VPF Growth & 22.85% 104.51% 121.60% N/A 142.60%
Income (1/14/91)
- ---------------------------------------------------------------------------------------------------------------------
MFS VIT Growth w/ Income 23.66% N/A N/A N/A 62.38%
(10/8/95)
- ---------------------------------------------------------------------------------------------------------------------
Janus Aspen Balanced 15.81% 65.01% N/A NA/ 76.45%
(9/12/93)
- ---------------------------------------------------------------------------------------------------------------------
OCC Accumulation Trust 15.78% 104.76% 127.97% N/A 400.31%
Managed (7/31/88) (3)
- ---------------------------------------------------------------------------------------------------------------------
Morgan Stanley UF High 6.53% N/A N/A N/A 6.53%
Yield (1/1/97)
- ---------------------------------------------------------------------------------------------------------------------
Morgan Stanley UF Fixed 2.99% N/A N/A N/A 2.99%
Income (1/1/97)
- ---------------------------------------------------------------------------------------------------------------------
Transamerica VIF Money N/A N/A N/A N/A N/A
Market (1/1/98)
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
4. Cumulative Returns - Assuming no surrender
Adjusted historical cumulative total returns for periods since
inception of the portfolio for each sub-account are as follow. These figures
include mortality and expenses charges of 1.20% per annum, administrative
expenses charge of 0.15% per annum and an account fee of $30 per annum adjusted
for average account size but do not reflect any applicable contingent deferred
sales load (maximum of 6% of purchase payments).
<TABLE>
<CAPTION>
SUB-ACCOUNT
- ---------------------------- ---------------- ---------------- --------------- --------------- ----------------------
(date of commencement of For the 1- For the 3-year For the For the For the period from
operation of year period period ending 5-year period 10-year commencement of
corresponding portfolio) ending 12/31/97 ending period ending portfolio operations
12/31/97 12/31/97 12/31/97 to 12/31/97
- ---------------------------- ---------------- ---------------- --------------- --------------- ----------------------
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Janus Aspen Worldwide 21.63% 91.95% N/A N/A 128.41%
Growth (9/12/93)
- ---------------------------------------------------------------------------------------------------------------------
Morgan Stanley UF 2.34% N/A N/A N/A 2.34%
International Magnum
(1/1/97)
- ---------------------------------------------------------------------------------------------------------------------
Dreyfus VIF Small Cap 17.21% 70.76% 199.83% N/A 1207.41%
(8/30/90)
- ---------------------------------------------------------------------------------------------------------------------
OCC Accumulation Trust 21.50% 62.33% 84.88% N/A 239.00%
Small Cap (7/31/88) (1)
- ---------------------------------------------------------------------------------------------------------------------
MFS VIT Emerging Growth 21.48% N/A N/A N/A 61.75%
(7/23/95)
- ---------------------------------------------------------------------------------------------------------------------
Alliance VPF Premier 33.43% 128.95% N/A N/A 173.67%
Growth (6/26/92)
- ---------------------------------------------------------------------------------------------------------------------
Dreyfus VIF Capital 26.84% 105.91% N/A N/A 120.94%
Appreciation (4/27/93)
- ---------------------------------------------------------------------------------------------------------------------
MFS VIT Research (7/25/95) 19.76% N/A N/A N/A 57.20%
- ---------------------------------------------------------------------------------------------------------------------
Transamerica VIF Growth 50.31% 190.03% 270.55% 765.61% N/A
(12/1/80) (2)
- ---------------------------------------------------------------------------------------------------------------------
Alger American Income & 36.16% 111.25% 109.03% N/A 185.94%
Growth (11/14/88)
- ---------------------------------------------------------------------------------------------------------------------
Alliance VPF Growth & 28.25% 109.01% 125.20% N/A 144.40%
Income (1/14/91)
- ---------------------------------------------------------------------------------------------------------------------
MFS VIT Growth w/ Income 29.06% N/A N/A N/A 66.88%
(10/8/95)
- ---------------------------------------------------------------------------------------------------------------------
Janus Aspen Balanced 21.21% 69.51% N/A N/A 80.05%
(9/12/93)
- ---------------------------------------------------------------------------------------------------------------------
OCC Accumulation Trust 21.18% 109.26% 131.57% N/A 400.31%
Managed (7/31/88) (3)
- ---------------------------------------------------------------------------------------------------------------------
Morgan Stanley UF High 11.93% N/A N/A N/A 11.93%
Yield (1/1/97)
- ---------------------------------------------------------------------------------------------------------------------
Morgan Stanley UF Fixed 8.39% N/A N/A N/A 8.39%
Income (1/1/97)
- ---------------------------------------------------------------------------------------------------------------------
Transamerica VIF Money N/A N/A N/A N/A N/A
Market (1/1/98)
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
DISTRIBUTION OF THE POLICY
Transamerica Securities Sales Corporation ("TSSC") is principal
underwriter of the policies. TSSC may also serve as principal underwriter and
distributor of other policies issued through the variable account and certain
other separate accounts of Transamerica and any affiliated of Transamerica. TSSC
is a wholly owned subsidiary of Transamerica Insurance Corporation of
California, which is a subsidiary of Transamerica Corporation. TSSC is
registered with the Commission as a broker-dealer and is a member of the
National Association of Securities Dealers, Inc. ("NASD"). Transamerica pays
TSSC for acting as the principal underwriter under a distribution agreement.
TSSC has entered
into sales agreements with
other broker-dealers to
solicit applications for
the policies through
registered representatives
who are licensed to sell
securities and variable
insurance products. These
agreements provide that
applications for the
policies may be solicited
by registered
representatives of the
broker-dealers appointed
by Transamerica to sell
its variable life
insurance and variable
annuities. These
broker-dealers are
registered with the
Commission and are members
of the NASD. The
registered representatives
are authorized under
applicable state
regulations to sell
variable life insurance
and variable annuities.
Under the agreements, applications for policies will be sold by
broker-dealers which will receive compensation as described in the Prospectus.
The offering of the policies is expected to be continuous and TSSC does
not anticipate discontinuing the offering of the policies. However, TSSC
reserves the right to discontinue the offering of the policies.
During fiscal year 1997, no commissions were paid to TSSC as
underwriter of the policies; no amounts were retained by TSSC. Under the Sales
Agreement, TSSC will pay broker-dealers compensation based on a percentage of
each premium. The percentage may be up to 5.75% and in certain situations
additional amounts for marketing allowances, production bonuses, service fees,
sales awards and meetings, and asset based trailer commission may be paid.
SAFEKEEPING OF VARIABLE
ACCOUNT ASSETS
Title to assets
of the variable account is
held by Transamerica. The
assets of the variable
account are kept separate
and apart from
Transamerica general
account assets. Records
are maintained of all
purchases and redemptions
of portfolio shares held
by each of the
sub-accounts.
STATE REGULATION
Transamerica is
subject to the insurance
laws and regulations of
all the states where it is
licensed to operate. The
availability of certain
policy rights and
provisions depends on
state approval and/or
filing and review
processes. Where required
by state law or
regulation, the policy
will be modified
accordingly.
RECORDS AND REPORTS
All records and accounts relating to the variable account will be
maintained by Transamerica or by the Service Center. As presently required by
the provisions of the 1940 Act and regulations promulgated thereunder which
pertain to the variable account, reports containing such information as may be
required under the 1940 Act or by other applicable law or regulation will be
sent to owners semi-annually at their last known address of record.
FINANCIAL STATEMENTS
Because the
variable account has not
yet commenced operations,
there is no financial
statement for the variable
account.
The financial
statements for
Transamerica included in
this statement of
additional information
should be considered only
as bearing on the ability
of Transamerica to meet
its obligations under the
policies. They should not
be considered as bearing
on the investment
performance of the assets
in the variable account.
<PAGE>
APPENDIX
Accumulation
Transfer Formula
Transfers after
the annuity date
are implemented
according to the
following
formulas:
(1) Determine the
number of units
to be transferred
from the variable
sub-account as
follows:
= AT/AUV1
(2) Determine the
number of
variable
accumulation
units remaining
in such variable
sub-account
(after the
transfer):
= UNIT1 AT/AUV1
(3) Determine the
number of
variable
accumulation
units in the
transferee
variable
sub-account
(after the
transfer):
= UNIT2 + AT/AUV2
(4) Subsequent variable accumulation payments will reflect the changes
in variable accumulation units in each variable sub-account as of the
next variable accumulation payment's due date.
Where:
(AUV1) is the variable accumulation unit value of the variable
sub-account that the transfer is being made from as of the end of the
valuation period in which the transfer request was received.
(AUV2) is the variable accumulation unit value of the variable
sub-account that the transfer is being made to as of the end of the
valuation period in which the transfer request was received.
(UNIT1) is the number of variable accumulation units in the variable
sub-account that the transfer is being made from, before the transfer.
(UNIT2) is the number of variable accumulation units in the variable
sub-account that the transfer is being made to, before the transfer.
(AT) is the dollar amount being transferred from the variable
sub-account.
<PAGE>
Audited Financial Statements
Transamerica Life
Insurance Company of New York
December 31, 1997
<PAGE>
TRANSAMERICA LIFE INSURANCE COMPANY OF NEW YORK
Audited Financial Statements
December 31, 1997
Report of Independent Auditors....................... 1
Balance Sheet........................................ 2
Statement of Income.................................. 3
Statement of Shareholder's Equity.................... 4
Statement of Cash Flows.............................. 5
Notes to Financial Statements........................ 6
<PAGE>
1
3324/Folder T
REPORT OF INDEPENDENT AUDITORS
Transamerica Corporation
and
Board of Directors
Transamerica Life Insurance Company of New York
We have audited the accompanying balance sheet of Transamerica Life Insurance
Company of New York as of December 31, 1997 and 1996, and the related statements
of income, shareholder's equity, and cash flows for each of the three years in
the period ended December 31, 1997. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Transamerica Life Insurance
Company of New York at December 31, 1997 and 1996, and the results of its
operations and its cash flows for each of the three years in the period ended
December 31, 1997, in conformity with generally accepted accounting principles.
January 23, 1998
<PAGE>
TRANSAMERICA LIFE INSURANCE COMPANY OF NEW YORK
9
2
TRANSAMERICA LIFE INSURANCE COMPANY OF NEW YORK
BALANCE SHEET
<TABLE>
<CAPTION>
December 31
1997 1996
--------------------- --------------
(In thousands, except
for share data)
ASSETS
Investments:
<S> <C> <C>
Fixed maturities available for sale $ 489,053 $ 464,153
Investment real estate 343 353
Policy loans 13,595 11,973
--------------------- ---------------------
502,991 476,479
Cash 3,029 9,079
Accrued investment income 9,245 8,840
Accounts receivable 3,419 3,214
Reinsurance recoverable on paid and unpaid losses 10,204 12,241
Deferred policy acquisitions costs 52,181 56,632
Other assets 5,364 7,047
Separate account assets 308,590 195,363
--------------------- ---------------------
$ 895,023 $ 768,895
===================== =====================
LIABILITIES AND SHAREHOLDER'S EQUITY
Policy liabilities:
Policyholder contract deposits $ 483,477 $ 482,561
Reserves for future policy benefits 10,449 10,264
Policy claims and other 1,810 3,890
--------------------- ---------------------
495,736 496,715
Income tax liabilities 8,008 3,849
Accounts payable and other liabilities 7,418 6,994
Separate account liabilities 308,590 195,363
--------------------- ---------------------
819,752 702,921
Shareholder's equity:
Common Stock ($1,000 par value):
Authorized--2,000 shares
Issued and outstanding--2,000 shares 2,000 2,000
Additional paid-in capital 52,320 52,320
Retained earnings 13,224 9,397
Net unrealized investment gains 7,727 2,257
--------------------- ---------------------
75,271 65,974
--------------------- ---------------------
$ 895,023 $ 768,895
===================== =====================
See notes to financial statements.
<PAGE>
STATEMENT OF INCOME
Year Ended December 31
1997 1996 1995
--------------- --------------- ----------
(In thousands)
Revenues:
Premiums and other considerations $ 17,833 $ 15,624 $ 13,495
Net investment income 37,068 34,834 30,897
Net realized investment gains 6 99 19
--------------- --------------- ---------------
TOTAL REVENUES 54,907 50,557 44,411
Benefits:
Benefits paid or provided 37,680 34,455 31,984
Increase (decrease) in policy reserves and liabilities (424) (711) 316
---------------- --------------- ---------------
37,256 33,744 32,300
Expenses:
Amortization of deferred policy acquisition costs 3,974 3,002 2,197
Salaries and salary related expenses 3,486 3,518 3,206
Other expenses 4,789 3,789 3,219
--------------- --------------- ---------------
12,249 10,309 8,622
--------------- --------------- ---------------
TOTAL BENEFITS AND EXPENSES 49,505 44,053 40,922
--------------- --------------- ---------------
INCOME BEFORE INCOME TAXES 5,402 6,504 3,489
Provision for income taxes 1,575 2,175 1,331
--------------- --------------- ---------------
NET INCOME $ 3,827 $ 4,329 $ 2,158
=============== =============== ===============
</TABLE>
See notes to financial statements.
<PAGE>
STATEMENT OF SHAREHOLDER'S EQUITY
<TABLE>
<CAPTION>
Net
Unrealized
Additional Investment
Common Stock Paid-in Retained Gains
Shares Amount Capital Earnings (Losses)
(In thousands, except for share data)
<S> <C> <C> <C> <C> <C> <C>
Balance at January 1, 1995 2,000 $ 2,000 $ 47,320 $ 2,910 $ (3,912)
Net income 2,158
Capital contributions from parent 5,000
Change in net unrealized
investment gains (losses) 10,793
Balance at December 31, 1995 2,000 2,000 52,320 5,068 6,881
Net income 4,329
Change in net unrealized
investment gains (losses) (4,624)
------------ ------------ ------------ ----------- --------------
2,000 2,000 52,320 9,397 2,257
Balance at December 31, 1996
Net income 3,827
Change in net unrealized
investment gains (losses) 5,470
------------ ------------ ------------ ----------- --------------
Balance at December 31, 1997 2,000 $ 2,000 $ 52,320 $ 13,224 $ 7,727
============ ============ ============ =========== ==============
</TABLE>
See notes to financial statements.
<PAGE>
STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
Year Ended December 31
1997 1996 1995
--------------- --------------- ----------
(In thousands)
OPERATING ACTIVITIES
<S> <C> <C> <C>
Net income $ 3,827 $ 4,329 $ 2,158
Adjustments to reconcile net income to net cash
provided (used) by operating activities:
Changes in:
Reinsurance recoverable and accounts
receivable 1,832 223 2,498
Accrued investment income (405) (1,329) (1,351)
Policy liabilities (1,893) 7,850 11,693
Other assets, accounts payable and other
liabilities, and income taxes 3,525 (4,130) 786
Policy acquisition costs deferred (13,256) (12,288) (12,126)
Amortization of deferred policy acquisition costs 3,974 3,002 2,197
Net realized gains on investment transactions (6) (99) (19)
Other (43) 1,179 (698)
---------------- --------------- ---------------
NET CASH PROVIDED (USED) BY
OPERATING ACTIVITIES (2,445) (1,263) 5,138
INVESTMENT ACTIVITIES
Purchases of securities and other investments (92,398) (92,243) (79,260)
Sales of investments 84,805 39,469 28,738
Maturities of securities 3,668 2,500 2,000
Other (596) (75) (77)
---------------- --------------- ---------------
NET CASH USED
BY INVESTING ACTIVITIES (4,521) (50,349) (48,599)
FINANCING ACTIVITIES
Additions to policyholder contract deposits 40,978 75,283 65,019
Withdrawals from policyholder contract deposits (40,062) (30,849) (26,078)
Capital contributions from parent - - 5,000
--------------- --------------- ---------------
NET CASH PROVIDED BY
FINANCING ACTIVITIES 916 44,434 43,941
--------------- --------------- ---------------
(DECREASE) INCREASE IN CASH (6,050) (7,178) 480
Cash at beginning of year 9,079 16,257 15,777
--------------- --------------- ---------------
CASH AT END OF YEAR $ 3,029 $ 9,079 $ 16,257
=============== =============== ===============
</TABLE>
See notes to financial statements.
<PAGE>
NOTES TO FINANCIAL STATEMENTS
December 31, 1997
NOTE A--SIGNIFICANT ACCOUNTING POLICIES
Business: Transamerica Life Insurance Company of New York (the "Company") is
domiciled in New York. The Company
is a wholly owned subsidiary of Transamerica Occidental Life Insurance Company
("TOLIC"), which is an indirect
subsidiary of Transamerica Corporation. Prior to 1997, the Company was named
First Transamerica Life Insurance
Company.
The Company engages primarily in providing life insurance, annuity products, and
structured settlements. The Company's customers are primarily in the state of
New York.
Basis of Presentation: The accompanying financial statements have been prepared
in accordance with generally accepted accounting principles which differ from
statutory accounting practices prescribed or permitted by regulatory
authorities.
Reclassifications: Certain reclassifications of prior year amounts have been
made to conform to the 1997
presentation.
Use of Estimates: Certain amounts reported in the accompanying financial
statements are based on the management's best estimates and judgment. Actual
results could differ from those estimates.
New Accounting Standards: In June of 1997, the Financial Accounting Standards
Board issued a new standard on reporting comprehensive income, which establishes
standards for reporting and displaying comprehensive income and its components
in the financial statements. This standard is effective for interim and annual
periods beginning after December 15, 1997. Reclassification of financial
statements for all periods presented will be required upon adoption. Application
of this statement will not change recognition or measurement of net income and,
therefore, will not impact the Company's results of operations or financial
position.
In 1997, the Company adopted the Financial Accounting Standards Board's new
standard on accounting for transfers of financial assets, servicing of financial
assets and extinguishment of liabilities. The standard requires that a transfer
of financial assets be accounted for as a sale only if certain specified
conditions for surrender of control over the transferred assets exist. There was
no material effect on the financial position or results of operations of the
Company.
In 1996, the Company adopted the Financial Accounting Standards Board's new
standard on accounting for the impairment of long-lived assets and for
long-lived assets to be disposed of. The standard requires that an impaired
long-lived asset be measured based on the fair value of the asset to be held and
used or the fair value less cost to sell of the asset to be disposed of. There
was no material effect on the financial position or results of operations of the
Company.
Investments: Investments are reported on the following bases:
Fixed maturities--All debt securities are classified as available for sale
and carried at fair value. The Company does not carry any debt securities
principally for the purpose of trading. Prepayments are considered in
establishing amortization periods for premiums and discounts and amortized
cost is further adjusted for other-than-temporary fair value declines.
Investment real estate--at cost, less allowance for depreciation and
possible impairment.
Policy loans--at unpaid balances.
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued)
December 31, 1997
NOTE A--SIGNIFICANT ACCOUNTING POLICIES (Continued)
Realized gains and losses on disposal of investments are determined on a
specific identification basis. Changes in fair values of fixed maturities
available for sale are included in net unrealized investment gains or losses
after adjustment of deferred policy acquisition costs and deferred income taxes
as a separate component of shareholder's equity and, accordingly, have no effect
on net income.
Deferred Policy Acquisition Costs (DPAC): Certain costs of acquiring new and
renewal insurance contracts, principally commissions, medical examination and
inspection report fees, and certain variable sales, underwriting and issue
expenses, all of which vary with and are primarily related to the production of
such business, have been deferred. DPAC for non-traditional life and
investment-type products are amortized over the life of the related policies
generally in relation to estimated future gross profits. DPAC for traditional
life insurance products are amortized over the premium-paying period of the
related policies in proportion to premium revenue recognized, using principally
the same assumptions used for computing future policy benefit reserves. DPAC
related to non-traditional and investment-type products is adjusted as if
unrealized gains or losses on securities available for sale were realized.
Changes in such adjustments are included in net unrealized investment gains or
losses on an after tax basis as a separate component of shareholder's equity
and, accordingly, have no effect on net income.
Separate Accounts: The Company administers segregated asset accounts for
variable annuity contracts. The assets held in these Separate Accounts are
invested in various mutual fund portfolios managed by third party companies. The
Separate Account assets are stated at fair value and are not subject to
liabilities arising out of any other business the Company may conduct.
Investment risks associated with fair value changes are borne by the contract
holders. Accordingly, investment income and realized gains and losses
attributable to Separate Accounts are not reported in the Company's results of
operations.
Policyholder Contract Deposits: Non-traditional life insurance products include
universal life and other interest-sensitive life insurance policies.
Investment-type products include single and flexible premium deferred annuities
and single premium immediate annuities. Policyholder contract deposits on
universal life and investment products represent premiums received plus
accumulated interest, less mortality charges on universal life products and
other administration charges as applicable under the contract. Interest credited
to these policies ranged from 5.0% to 7.15% in 1997 and from 5.2% to 7.2% in
1996 and from 5.5% to 7.8% in 1995.
Reserves for Future Policy Benefits: Traditional life insurance products
primarily include those contracts with fixed and guaranteed premiums and
benefits and consist principally of whole life and term insurance policies,
limited-payment life insurance policies and certain annuities with life
contingencies. The reserve for future policy benefits for traditional life
insurance products has been provided on a net-level premium method based upon
estimated investment yields, withdrawals, mortality, and other assumptions which
were appropriate at the time the policies were issued. Such estimates are based
upon past experience with a margin for adverse deviation. The initial interest
assumptions range from 4.0% to 5.5%.
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued)
December 31, 1997
NOTE A--SIGNIFICANT ACCOUNTING POLICIES (Continued)
Recognition of Revenue and Costs: Traditional life insurance contract premiums
are recognized as revenue over the premium-paying period, with reserves for
future policy benefits established from such premiums.
Revenues for universal life and investment products consist of policy charges
for the cost of insurance, policy administration charges, amortization of policy
initiation fees, and surrender charges assessed against policyholder account
balances during the period. Expenses related to these products consist of
interest credited to policyholder account balances and benefit claims incurred
in excess of policyholder account balances.
Claim reserves include provisions for reported claims and claims incurred but
not reported.
Reinsurance: Coinsurance premiums, commissions, expense reimbursements, and
reserves related to reinsured business are accounted for on bases consistent
with those used in accounting for the original policies and the terms of the
reinsurance contracts. Yearly renewable term reinsurance is accounted for the
same as direct business. Premiums ceded and recoverable losses have been
reported as a reduction of premium income and benefits, respectively. The ceded
amounts related to policy liabilities have been reported as an asset.
Income Taxes: The Company is included in the consolidated federal income tax
return of TOLIC which, with its domestic subsidiaries and affiliates, is
included in the consolidated federal income tax returns filed by Transamerica
Corporation, which by the terms of a tax sharing agreement generally requires
the Company to accrue and settle income tax obligations in amounts that would
result if the Company filed separate tax returns with federal taxing
authorities.
Deferred income taxes arise from temporary differences between the bases of
assets and liabilities for financial reporting purposes and income tax purposes,
based on enacted tax rates in effect for the years in which the temporary
differences are expected to reverse.
Fair Values of Financial Instruments: Fair values for debt securities are
based on quoted market prices, where
available.
Fair values for policy loans are estimated using discounted cash flow
calculations, based on interest rates currently being offered for similar loans
to borrowers.
The carrying amounts of cash and accrued investment income approximate their
fair value.
Fair values for liabilities under investment-type contracts are estimated using
discounted cash flow calculations, based on interest rates currently being
offered by similar contracts with maturities consistent with those remaining for
the contracts being valued. The liabilities under investment-type contracts are
included in policyholder contract deposits in the accompanying balance sheet.
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued)
December 31, 1997
NOTE B--INVESTMENTS
The cost and fair value of fixed maturities available for sale are as follows
(in thousands):
<TABLE>
<CAPTION>
Gross Gross
Unrealized Unrealized Fair
Cost Gain Loss Value
December 31, 1997
U.S. Treasury securities and
obligations of U.S. government
<S> <C> <C> <C> <C>
corporations and agencies $ 828 $ 75 $ - $ 903
Obligations of states and political
subdivisions 21,195 1,672 - 22,867
Corporate securities 345,198 25,661 139 370,720
Public utilities 84,557 7,542 79 92,020
Mortgage-backed securities 2,334 209 - 2,543
---------------- ---------------- ---------------- ----------------
$ 454,112 $ 35,159 $ 218 $ 489,053
================ ================ ================ ================
December 31, 1996
U.S. Treasury securities and
obligations of U.S. government
corporations and agencies $ 843 $ 58 $ - $ 901
Obligations of states and political
subdivisions 23,193 801 6 23,988
Corporate securities 280,021 10,485 $ 2,473 288,033
Public utilities 114,746 4,267 1,136 117,877
Mortgage-backed securities 32,722 632 - 33,354
---------------- ---------------- ---------------- ----------------
$ 451,525 $ 16,243 $ 3,615 $ 464,153
================ ================ ================ ================
</TABLE>
The cost and fair value of fixed maturities available for sale at December 31,
1997, by contractual maturity, are shown below. Expected maturities will differ
from contractual maturities because borrowers may have the right to call or
prepay obligations with or without call or prepayment penalties (in thousands):
<TABLE>
<CAPTION>
Fair
Cost Value
<S> <C> <C> <C>
Due in 1998 $ 7,897 $ 8,032
Due in 1999-2002 53,875 56,505
Due in 2003-2007 108,204 113,808
Due after 2007 281,802 308,165
---------------- ----------------
451,778 486,510
Mortgage-backed securities 2,334 2,543
---------------- ----------------
$ 454,112 $ 489,053
================ ================
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued)
December 31, 1997
NOTE B--INVESTMENTS (Continued)
As of December 31, 1997, the Company held investments in one issuer, other than
the United States Government or a United States Government agency or authority,
which exceeded 10% of total shareholder's equity as follows (in thousands):
Name of Issuer Carrying Value
Hill Street Funding $ 9,178
=============
The carrying value of those assets that were on deposit with public officials in
compliance with regulatory requirements was $0.9 million at December 31, 1997.
Net investment income by major investment category is summarized as follows (in
thousands):
<TABLE>
<CAPTION>
1997 1996 1995
-------------- -------------- ---------
<S> <C> <C> <C>
Fixed maturities $ 35,740 $ 34,431 $ 30,865
Short-term, policy loans and other
investments 1,686 631 582
-------------- -------------- --------------
37,426 35,062 31,447
Investment expenses (358) (228) (550)
-------------- -------------- --------------
Net investment income $ 37,068 $ 34,834 $ 30,897
============== ============== ==============
The following summarizes realized investment gains and losses and other
information related to investments (in thousands):
1997 1996 1995
-------------- -------------- ---------
Gross gains on disposition of investment in
fixed maturities $ 664 $ 99 $ 283
Gross losses on disposition of investment in
fixed maturities (658) - (264)
-------------- ------------- -------------
Net gains on disposition of investment in
fixed maturities $ 6 $ 99 $ 19
============= ============= ============
Proceeds from disposition of investment in
fixed maturities $ 84,805 $ 39,469 $ 28,738
============= ============= ============
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued)
December 31, 1997
NOTE B--INVESTMENTS (Continued)
The components of change in net unrealized investment gains (losses) in the
accompanying statement of shareholder's equity are as follows (in thousands):
<TABLE>
<CAPTION>
1997 1996
-------------- ---------
Unrealized gains on investment in fixed
<S> <C> <C>
maturities $ 34,941 $ 12,628
Fair value adjustments to DPAC (23,053) (9,320)
Related deferred taxes (4,161) (1,051)
-------------- -------------
$ 7,727 $ 2,257
============== =============
</TABLE>
NOTE C--DEFERRED POLICY ACQUISITION COSTS (DPAC)
Significant components of changes in DPAC are as follows (in thousands):
<TABLE>
<CAPTION>
1997 1996 1995
-------------- -------------- ---------
<S> <C> <C> <C>
Balance at beginning of year $ 56,632 $ 35,588 $ 61,435
Amounts deferred:
Commissions 10,204 9,045 8,645
Other 3,052 3,243 3,481
Amortization (3,974) (3,002) (2,197)
Fair value adjustment (13,733) 11,758 (35,776)
-------------- -------------- --------------
Balance at end of year $ 52,181 $ 56,632 $ 35,588
============== ============== ==============
</TABLE>
NOTE D--POLICY LIABILITIES
Components of policyholder contract deposits are as follows (in thousands):
<TABLE>
<CAPTION>
December 31
1997 1996
<S> <C> <C>
Liabilities for investment-type products $ 316,628 $ 289,762
Liabilities for non-traditional life insurance
products 166,849 192,799
------------- --------------
$ 483,477 $ 482,561
============= ==============
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued)
December 31, 1997
NOTE E--INCOME TAXES
Components of income tax liabilities are as follows (in thousands):
<TABLE>
<CAPTION>
December 31
1997 1996
<S> <C> <C>
Current tax liabilities $ 294 $ 951
Deferred tax liabilities 7,714 2,898
------------- --------------
$ 8,008 $ 3,849
============= ==============
Significant components of deferred tax liabilities (assets) are as follows (in
thousands):
December 31
1997 1996
Deferred policy acquisition costs $ 21,897 $ 18,046
Unrealized investment gains 4,161 1,051
Other - net - 136
------------- -------------
Total deferred tax liabilities 26,058 19,233
Life insurance policy liabilities (18,344) (16,335)
------------- -------------
Total deferred tax assets (18,344) (16,335)
------------- -------------
$ 7,714 $ 2,898
============= =============
</TABLE>
The Company offsets all deferred tax assets and liabilities and presents them in
a single amount in the balance sheet.
Components of provisions for income taxes (benefits) are as follows (in
thousands):
<TABLE>
<CAPTION>
1997 1996 1995
-------------- -------------- ---------
<S> <C> <C> <C>
Current tax expense (benefit) $ (238) $ 751 $ (665)
Deferred tax expense 1,813 1,424 1,996
-------------- -------------- --------------
$ 1,575 $ 2,175 $ 1,331
============== ============== ==============
</TABLE>
The differences between federal income taxes computed at the statutory rate and
provision for income taxes are primarily due to tax exempt income.
An income tax payment of $0.4 million and $0.3 million and an income tax refund
of $0.1 million in 1997, 1996 and 1995, respectively, was received from or paid
to TOLIC.
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued)
December 31, 1997
NOTE F--REINSURANCE (Continued)
The Company is involved in the cession of reinsurance to affiliated companies.
Risks are reinsured with other companies to permit the recovery of a portion of
the direct losses; however, the Company remains liable to the extent the
reinsuring companies do not meet their obligations under these reinsurance
agreements.
The components of the Company's life insurance in force and premiums and other
considerations are summarized as follows (in thousands):
<TABLE>
<CAPTION>
Ceded to
Gross Ceded to Non-affiliated Net
Amount TOLIC Companies Amount
1997
Life insurance in force,
<S> <C> <C> <C> <C>
at end of year $ 4,588,120 $ 297,518 $ 2,765,285 $ 1,525,317
=============== ================= ================== ==================
Premiums and other
considerations $ 23,686 $ 768 $ 5,085 $ 17,833
================== ================= ================== ==================
Benefits paid or
provided $ 45,434 $ 1,400 $ 6,354 $ 37,680
================== ================= ================== ==================
1996
Life insurance in force,
at end of year $ 4,769,031 $ 177,437 $ 2,323,447 $ 2,268,147
================== ================= ================== ==================
Premiums and other
considerations $ 24,652 $ 753 $ 8,275 $ 15,624
================== ================= ================== ==================
Benefits paid or
provided $ 43,440 $ 539 $ 8,446 $ 34,455
================== ================= ================== ==================
1995
Life insurance in force,
at end of year $ 5,216,397 $ 198,199 $ 2,643,198 $ 2,375,000
================== ================= ================== ==================
Premiums and other
considerations $ 23,367 $ - $ 9,872 $ 13,495
================== ================= ================== ==================
Benefits paid or
provided $ 39,432 $ 1,822 $ 5,626 $ 31,984
================== ================= ================== ==================
</TABLE>
NOTE G--PENSION PLAN AND OTHER POSTRETIREMENT BENEFITS
Substantially all employees of the Company are covered by the Retirement Plan
for Salaried Employees of Transamerica Corporation and Affiliates (the "Plan").
Pension benefits are based on the employee's compensation during the highest
paid 60 consecutive months during the 120 months before retirement. Annual
contributions to the Plan generally include a provision for current service
costs plus amortization of prior service costs over periods ranging from 10 to
30 years. Assets of the plans are primarily invested in publicly traded stocks
and bonds.
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued)
December 31, 1997
NOTE G--PENSION PLAN AND OTHER POSTRETIREMENT BENEFITS (Continued)
The Company's pension costs charged to income were not significant in 1997, 1996
or 1995.
The Company also participates in various contributory defined benefit programs
sponsored by Transamerica Corporation that provide medical and certain other
benefits to eligible retirees. Postretirement benefit costs charged to income
were not significant.
NOTE H--RELATED PARTY TRANSACTIONS
The Company has various transactions with TOLIC and certain of its other
affiliates in the normal course of operations, including reinsurance
transactions, computer services, investment services and advertising services.
The reinsurance recoverable from TOLIC, including the amount receivable for
policy claims paid, amounted to $123,000 and $300,000 at December 31, 1997 and
1996, respectively.
NOTE I--LEASES
Substantially all leases of the Company are operating leases principally for the
rental of real estate. Rental expense for properties occupied by the Company was
$1.0 million in 1997 and $0.9 million in 1996 and 1995. The following is a
schedule by year of future minimum rental payments required under operating
leases that have initial or remaining noncancelable lease terms in excess of one
year as of December 31, 1997 (in thousands):
Year ending December 31
DecemDecember331:DEcDecember 31:
1998 $ 1,141
1999 1,141
2000 707
2001 328
2002 328
Later years 4,097
-------------
$ 7,742
NOTE J--LITIGATION
The Company is a defendant in various legal actions arising from its operations.
These include legal actions similar to those faced by many other major life
insurers which allege damages related to sales practices for universal life
policies sold between January 1981 and June 1996. In one such action, the
Company (along with TOLIC and Transamerica Assurance Company, an affiliate) and
plaintiff's counsel entered into a settlement which was approved on June 26,
1997. The settlement required prompt notification to affected policyholders.
Administrative and policy benefit costs associated with the settlement have been
accrued. The portion which relates to the Company is not material. Additional
costs related to the settlement are not expected to be material and will be
incurred over a period of years. Additional costs related to the settlement are
not currently determinable.
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued)
December 31, 1997
NOTE J--LITIGATION (Continued)
In the opinion of the Company, any ultimate liability which might result from
other litigation would not have a materially adverse effect on the financial
position of the Company or the results of its operations.
NOTE K--REGULATORY MATTERS
The Company is subject to state insurance laws and regulations, principally
those of the State of New York. Such regulations include the risk based capital
requirement and the restriction on the payment of dividends. Generally,
dividends during any year may not be paid, without prior regulatory approval, in
excess of the greater of 10% of the Company's statutory capital and surplus as
of the preceding year end or the Company's statutory net income from operations
for the preceding year. Those statutory amounts are determined in conformity
with statutory accounting practices prescribed or permitted by the Department of
Insurance of New York ("New York Department"). Currently, no dividends can be
paid by the Company without prior approval of New York Department.
The Company's statutory net income income (loss) and capital and surplus are
summarized as follows (in thousands):
<TABLE>
<CAPTION>
1997 1996 1995
-------------- -------------- ---------
<S> <C> <C> <C>
Statutory net income (loss) $ 395 $ (551) $ 1,779
Statutory capital and surplus, at end of year 23,591 22,822 22,713
NOTE L--FINANCIAL INSTRUMENTS
The carrying values and estimated fair values of financial instruments are as
follows (in thousands):
December 31
1997 1996
------------------------------- ------------------
Carrying Fair Carrying Fair
Value Value Value Value
Financial Assets:
Fixed maturities $ 489,053 $ 489,053 $ 464,153 $ 464,153
Policy loans 13,595 13,595 11,973 11,973
Cash 3,029 3,029 9,079 9,079
Accrued investment income 9,245 9,245 8,840 8,840
Financial Liabilities:
Liabilities for investment-type
contracts:
Single and flexible premium
deferred annuities 151,173 150,577 146,524 144,207
Single premium immediate
annuities 165,455 165,881 143,238 130,297
</TABLE>
<PAGE>
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements:
Not Applicable.
(b) Exhibits:
(1) Resolutions of Board of Directors of Transamerica
Life Insurance Company of New York (the "Company")
authorizing the creation of Separate Account
VA-6NY (the "Separate Account"). 1/
(2) Not Applicable.
(3) Form of Underwriting Agreement between the
Company, the Separate Account and Transamerica
Securities Sales Corporation. 1/
(4) Form of Flexible Premium Deferred Variable Annuity
Contract. 1/
(5) Form of Application for Flexible Premium Variable
Annuity. 1/
(6) (a) Articles of Incorporation of Transamerica
Life Insurance Company of New York. 1/2/
(b) By-Laws of Transamerica Life Insurance
Company of New York. 1/2/
(7) Not Applicable.
(8) Form of Participation Agreements regarding the
Portfolio.
(a) re The Alger American Fund 1/
(b) re Alliance Variable Products Series Fund,
Inc. 1/
(c) re Dreyfus Variable Investment Fund 2/
(d) re Janus Aspen Series 1/
(e) re MFS Variable Insurance Trust 1/
(f) re Morgan Stanley Universal Funds, Inc. 1/
(g) re OCC Accumulation Trust 1/
(h) re Transamerica Variable Insurance Fund,
Inc. 1/
(9) Opinion and Consent of Counsel. 1/
<PAGE>
(10) (a) Consent of Counsel. 1/
(b) Consent of Independent Auditors. 1/2/
(11) No financial statements are omitted from Item 23.
(12) Not Applicable.
(13) Performance Data Calculations. 1/
(14) Not Applicable.
(15) Powers of Attorney. 1/2
Thomas O'Neill
- ----------------------------
1/ Incorporated by reference to the like- numbered exhibit to the initial
filing of the Registration Statement of Transamerica Life Insurance
Company of New York's Separate Account VA-6NY on Form N-4, File No.
333-
47219 (March 4, 1998).
2/ Filed herewith.
<PAGE>
Item 25. Directors and Officers of the Depositor.
The names of Directors and Executive Officers of the Company, their
positions and offices with the Company, and their other affiliations
are as follows. The address of Directors and Executive Officers is 1150
South Olive Street, Los Angeles, California 90015-2211, unless
indicated by asterisk.
List of Directors of Transamerica Life Insurance Company of
New York:
Marc C. Abrahms*
James T. Byrne, Jr.*
Alan T. Cunningham*
John A. Fibiger
Daniel E. Jund
Thomas O'Neill**
James B. Roszak
Robert Rubinstein*
Nooruddin S. Veerjee
*100 Manhattanville Road, Purchase, New York 10577
**Transamerica Square, 401 N. Tryon Street, Charlotte, North
Carolina 28202
List of Officers for Transamerica Life Insurance Company of
New York:
<TABLE>
<CAPTION>
<S> <C> <C>
Nooruddin S. Veerjee Chairman
James W. Dederer CLU General Counsel
Alan T. Cunningham President
Robert Rubinstein Senior Vice President,
Chief Actuary, Chief
Operating Officer and
Secretary
Gary U. Rolle Investment Officer
Susan A. Silbert Investment Officer
Nicki Bair FSA,MAAA Vice President
Roy Chong-Kit FSA,MAAA Vice President
Paul Hankwitz MD Vice President and
Chief Medical Director
Ken Kilbane Vice President
William J. Lyons Vice President and Chief
<PAGE>
Underwriter
Alexander Smith, Jr. Vice President,
Administration and Controller
Kamran Haghighi Tax Officer
William M. Hurst Assistant Secretary
Timothy Weis Vice President
Sally S. Yamada CPA,FLMI Treasurer
</TABLE>
Item 26. Persons Controlled by or Under Common Control with the
Depositor or Registrant
Registrant is a separate account of Transamerica Life
Insurance Company of new York, is controlled by the Contract
Owners, and is not controlled by or under common control with
any other person. The Depositor, Transamerica Life Insurance
Company of New York, is wholly owned by Transamerica
Occidental Life Insurance Company, which is wholly owned by
Transamerica Insurance Corporation of California
(Transamerica- California). Transamerica-California may be
deemed to be controlled by its parent, Transamerica
Corporation.
The following chart indicates the persons controlled by or
under common control with Transamerica.
TRANSAMERICA CORPORATION AND SUBSIDIARIES
WITH STATE OR COUNTRY OF INCORPORATION
Transamerica Corporation - DE
ARC Reinsurance Corporation - HI
Transamerica Management, Inc. - DE
Criterion Investment Management Company - TX
Inter-America Corporation - CA
Mortgage Corporation of America - CA
Pyramid Insurance Company, Ltd. - HI
Pacific Cable Ltd. - Bmda.
TC Cable, Inc. - DE
RTI Holdings, Inc. - DE
Transamerica Airlines, Inc. - DE
Transamerica Business Technologies Corporation - DE
Transamerica CBO I, Inc. - DE
Transamerica Corporation (Oregon) - OR
Transamerica Delaware, L.P. - DE
Transamerica Finance Corporation - DE
TA Leasing Holding Co., Inc. - DE
Trans Ocean Ltd. - DE
<PAGE>
Trans Ocean Container Corp. - DE
SpaceWise Inc. - DE
TOD Liquidating Corp. - CA
TOL S.R.L. - Itl.
Trans Ocean Container Finance Corp. - DE
Trans Ocean Leasing Deutschland GmbH - Ger.
Trans Ocean Leasing PTY Limited - Aust.
Trans Ocean Management Corporation - CA
Trans Ocean Management S.A. - SWTZ
Trans Ocean Regional Corporate Holdings - CA
Trans Ocean Tank Services Corporation - DE
Transamerica Leasing Inc. - DE
Better Asset Management Company LLC - DE
Transamerica Leasing Holdings Inc. - DE
Greybox Logistics Services Inc. - DE
Greybox L.L.C. - DE
Transamerica Trailer Leasing S.N.C. - Fra.
Greybox Services Limited - U.K.
Intermodal Equipment, Inc. - DE
Transamerica Leasing N.V. - Belg.
Transamerica Leasing SRL - Itl.
Transamerica Distribution Services Inc. - DE
Transamerica Leasing Coordination Center -
Belg.
Transamerica Leasing do Brasil Ltda. - Braz.
Transamerica Leasing GmbH - Ger.
Transamerica Leasing Limited - U.K.
ICS Terminals (UK) Limited - U.K.
Transamerica Leasing Pty. Ltd. - Aust.
Transamerica Leasing (Canada) Inc. - Can.
Transamerica Leasing (HK) Ltd. - H.K.
Transamerica Leasing (Proprietary) Limited -
S.Afr.
Transamerica Tank Container Leasing Pty.
Limited - Aust.
Transamerica Trailer Holdings I Inc. - DE
Transamerica Trailer Holdings II Inc. - DE
Transamerica Trailer Holdings III Inc. - DE
Transamerica Trailer Leasing AB - Swed.
Transamerica Trailer Leasing AG - SWTZ
Transamerica Trailer Leasing A/S - Denmk.
Transamerica Trailer Leasing GmbH - Ger.
Transamerica Trailer Leasing (Belgium) N.V. -
Belg.
Transamerica Trailer Leasing (Netherlands) B.V.
- - Neth.
Transamerica Trailer Spain S.A. - Spn.
Transamerica Transport Inc. - NJ
Transamerica Commercial Finance Corporation, I - DE
BWAC Credit Corporation - DE
BWAC International Corporation - DE
BWAC Twelve, Inc. - DE
TIFCO Lending Corporation - IL
Transamerica Insurance Finance Corporation - MD
<PAGE>
Transamerica Insurance Finance Company (Europe)
- - MD
Transamerica Insurance Finance Corporation,
California - CA
Transamerica Insurance Finance Corporation,
Canada - ON
Transamerica Business Credit Corporation - DE
Direct Capital Equity Investment, Inc. - DE
TA Air East, Corp. -
TA Air III, Corp. - DE
TA Air II, Corp. - DE
TA Air IV, Corp. - DE
TA Air I, Corp. - DE
TBC III, Inc. - DE
TBC II, Inc. - DE
TBC IV, Inc. -
TBC I, Inc. - DE
TBC Tax III, Inc. -
TBC Tax II, Inc. -
TBC Tax IV, Inc. -
TBC Tax IX, Inc. -
TBC Tax I, Inc. -
TBC Tax VIII, Inc. -
TBC Tax VII, Inc. -
TBC Tax VI, Inc. -
TBC Tax V, Inc. -
TBC Tax XII, Inc. -
TBC Tax XI, Inc. -
TBC V, Inc. -
The Plain Company - DE
Transamerica Distribution Finance Corporation - DE
Transamerica Accounts Holding Corporation - DE
Transamerica Commercial Finance Corporation - DE
Inventory Funding Trust - DE
Inventory Funding Company, LLC - DE
TCF Asset Management Corporation - CO
Transamerica Joint Ventures, Inc. - DE
Transamerica Inventory Finance Corporation - DE
BWAC Seventeen, Inc. - DE
Transamerica Commercial Finance Canada,
Limited - ON
Transamerica Commercial Finance Corporation,
Canada - Can.
BWAC Twenty-One, Inc. - DE
Transamerica Commercial Finance Limited -
U.K.
WFC Polska Sp. Zo.o -
Transamerica Commercial Holdings Limited -
U.K.
Transamerica Commercial Holdings, Inc. -
Transamerica Trailer Leasing Limited - NY
Transamerica Commercial Finance France S.A. -
Fra.
Transamerica GmbH Inc. - DE
<PAGE>
Transamerica Retail Financial Services Corporation
- - DE
Transamerica Consumer Finance Holding Company -
DE
Metropolitan Mortgage Company - FL
Easy Yes Mortgage, Inc. - FL
Easy Yes Mortgage, Inc. - GA
First Florida Appraisal Services, Inc. -
FL
First Georgia Appraisal Services, Inc.
- - GA
Freedom Tax Services, Inc. - FL
J.J. & W. Advertising, Inc. - FL
J.J. & W. Realty Corporation - FL
Liberty Mortgage Company of Ft. Myers,
Inc. - FL
Metropolis Mortgage Company - FL
Perfect Mortgage Company - FL
Whirlpool Financial National Bank - DE
Transamerica Vendor Financial Services - DE
Transamerica Distribution Finance Corporation de
Mexico -
Transamerica Corporate Services de Mexico -
Transamerica Federal Savings Bank -
Transamerica HomeFirst, Inc. - CA
Transamerica Home Loan - CA
Transamerica Lending Company - DE
Transamerica Financial Products, Inc. - CA
Transamerica Foundation - CA
Transamerica Insurance Corporation of California - CA
Arbor Life Insurance Company - AZ
Plaza Insurance Sales, Inc. - CA
Transamerica Advisors, Inc. - CA
Transamerica Annuity Service Corporation - NM
Transamerica Financial Resources, Inc. - DE
Financial Resources Insurance Agency of Texas - TX
TBK Insurance Agency of Ohio, Inc. - OH
Transamerica Financial Resources Insurance Agency of
Alabama Inc. - AL
Transamerica Financial Resources Insurance Agency of
Massachusetts Inc. - MA
Transamerica International Insurance Services, Inc. - DE
Home Loans and Finance Ltd. - U.K.
Transamerica Occidental Life Insurance Company - CA
NEF Investment Company - CA
Transamerica China Investments Holdings Limited -
H.K.
Transamerica Life Insurance and Annuity Company - NC
Transamerica Assurance Company - CO
Transamerica Life Insurance Company of Canada - Can.
Transamerica Life Insurance Company of New York - NY
Transamerica South Park Resources, Inc. - DE
Transamerica Variable Insurance Fund, Inc. - MD
USA Administration Services, Inc. - KS
<PAGE>
Transamerica Products, Inc. - CA
Transamerica Leasing Ventures, Inc. - CA
Transamerica Products II, Inc. - CA
Transamerica Products IV, Inc. - CA
Transamerica Products I, Inc. - CA
Transamerica Securities Sales Corporation - MD
Transamerica Service Company - DE
Transamerica Intellitech, Inc. - DE
Transamerica International Holdings, Inc. - DE
Transamerica Investment Services, Inc. - DE
Transamerica Income Shares, Inc. (managed by TA
Investment Services) - MD
Transamerica LP Holdings Corp. - DE
Transamerica Real Estate Tax Service (A Division of
Transamerica Corporation) - N/A
Transamerica Flood Hazard Certification (A Division of
TA Real Estate Tax Service) - N/A
Transamerica Realty Services, Inc. - DE
Bankers Mortgage Company of California - CA
Pyramid Investment Corporation - DE
The Gilwell Company - CA
Transamerica Affordable Housing, Inc. - CA
Transamerica Minerals Company - CA
Transamerica Oakmont Corporation - CA
Ventana Inn, Inc. - CA
Transamerica Senior Properties, Inc. - DE
Transamerica Senior Living, Inc. - DE
<PAGE>
<PAGE>
<PAGE>
Item 27. Number of Contractowners
None.
Item 28. Indemnification
Transamerica Life Insurance Company of New York's ByLaws
provide in Article VIII as follows:
The Corporation shall indemnify to the fullest extent now or
hereafter provided for or permitted by law each person
involved in, or made or threatened to be made a party to, any
action suit, claim or proceeding, whether civil or criminal,
including any investigative, administrative, legislative, or
other proceeding, and including any action by or in the right
of the Corporation or any other corporation, or any
partnership, joint venture, trust, employee benefit plan, or
other enterprise (any such entity, other than the Corporation,
being hereinafter referred to as an "Enterprise"), and
including appeals therein (any such action or process being
hereinafter referred to as a "Proceeding"), by reason of the
fact that such person, such person's testator or intestate (i)
is or
<PAGE>
was a director or officer of the Corporation, or (ii) is or
was serving, at the request of the Corporation, as a director,
officer, or in any other capacity, or any other Enterprise,
against any and all judgments, amounts paid in settlement, and
expenses, including attorney's fees, actually and reasonably
incurred as a result of or in connection with any Proceeding,
except as provided in Subsection (b) below.
(b) No indemnification shall be made to or on
behalf of any such person if a judgment or other
final adjudication adverse to such person
establishes that such person's acts were committed
in bad faith or were the result of active and
deliberate dishonesty and were material to the cause
of action so adjudicated, or that such person
personally gained in fact a financial profit or
other advantage to which such person was not legally
entitled. In addition, no indemnification shall be
made with respect to any Proceeding initiated by any
such person against the Corporation, or a director
or officer of the Corporation, other than to enforce
the terms of this Article VIII, unless such
Proceeding was authorized by the Board of Directors.
Further, no indemnification shall be made with
respect to any settlement or compromise of any
Proceeding unless and until the Corporation has
consented to such settlement or compromise.
(c) Written notice of any Proceeding for which
indemnification may be sought by any person shall be
given to the Corporation as soon as practicable.
The Corporation shall then be permitted to
participate in the defense of any such proceeding
or, unless conflicts of interest or position exist
between such person and the Corporation in the
conduct of such defense, to assume such defense. In
the event that the Corporation assumes the defense
of any such Proceeding, legal counsel selected by
the Corporation shall be reasonably acceptable to
such person. After such an assumption, the
Corporation shall not be liable to such person for
any legal or other expenses subsequently incurred
unless such expenses have been expressly authorized
by the Corporation. In the event that the
Corporation participates in the defense of any such
Proceeding, such person may select counsel to
represent him in regard to such a Proceeding;
however, such person shall cooperate in good faith
with any request that common counsel be utilized by
the parties to any Proceeding who are similarly
situated, unless to do so would be inappropriate due
to actual or potential differing interests between
or among such parties.
<PAGE>
(d)In making any determination regarding any
person's entitlement to indemnification hereunder,
it shall be presumed that such person is entitled to
indemnification, and the Corporation shall have the
burden of proving the contrary.
Insofar as indemnification for liability arising under the
Securities Act of 1933 may be permitted to directors, officers
and controlling person of the registrant pursuant to the
foregoing provisions, or otherwise, the registrant has been
advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the
1933 Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liability (other than
the payment by the registrant of expenses incurred or paid by
the 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 1933 Act and will be governed by the final adjudication of
such issue.
The directors and officers of Transamerica Life Insurance
Company of New York are covered under a Directors and Officers
liability program which includes direct coverage to directors
and officers (Coverage A) and corporate reimbursement
(Coverage B) to reimburse the Company for indemnification of
its directors and officers. Such directors and officers are
indemnified for loss arising from any covered claim by reason
of any Wrongful Act in their capacities as directors or
officers. In general, the term "loss" means any amount which
the insureds are legally obligated to pay for a claim for
Wrongful Acts. In general, the term "Wrongful Acts" means any
breach of duty, neglect, error, misstatement, misleading
statement or omission caused, committed or attempted by a
director or officer while acting individually or collectively
in their capacity as such, claimed against them solely by
reason of their being directors and officers.
Item 29. Principal Underwriter
(a) Transamerica Securities Sales Corporation, the
principal underwriter, is also the underwriter
for: Transamerica Investors, Inc.; Transamerica
Variable Insurance Fund, Inc.; Transamerica
Occidental Life Insurance Company's Separate
<PAGE>
Accounts: VA-2; VA-2L; VA-2NL; VA-2NLNY; VA-5;
and VA-5NLNY; Transamerica Life Insurance and
Annuity Company's Separate Accounts VL and VA-1.
The Underwriter is wholly-owned by Transamerica
Insurance Corporation of California.
(b) The following table furnishes information with
respect to each director and officer of the principal
Underwriter currently distributing securities of the
registrant:
Barbara Kelley Director & President
Regina Fink Director & Secretary
Nooruddin Veerjee Director
Dan Trivers Senior Vice President
Nicki Bair Vice President
Chris Shaw Second Vice President
Ben Tang Treasurer
Item 30. Location of Accounts and Records
Physical possession of each account, book, or other
document required to be maintained is kept at the
Company's offices at 100 Manhattanville Road, Purchase,
New York 10577.
Item 31. Management Services
Not applicable.
Item 32. Undertakings
(a) The registrant undertakes that it will file a
post-effective amendment to this registration
statement as frequently as is necessary to ensure
that the audited financial statements in the
registration statement are never more than 16
months old for as long as premiums under the
policies offered herein are being accepted.
(b) Registrant hereby undertakes to include either
(1) as part of any application to purchase a
Contract offered by the prospectus, a space
that an applicant can check to request a
Statement of Additional Information, or (2) a
post card or similar written communication
affixed to or included in the prospectus that
the applicant can remove to send for a
Statement of Additional Information;
<PAGE>
(c) Registrant hereby undertakes to deliver any
Statement of Additional Information and any
financial statements required to be made
available under Form N-4 promptly upon written
or oral request.
(d) Transamerica hereby represents that the fees and
charges deducted under the Contracts, in the
aggregate, are reasonable in relation to the
services rendered, the expenses expected to be
incurred, and the risks assumed by Transamerica.
<PAGE>
SIGNATURES
As required by the Securities Act of 1933 and the Investment Company Act of
1940, Transamerica Life Insurance Company of New York certifies it meets the
requirements of Securities Act Rule 485(b) and that it has caused this N-4
Registration Statement to be signed on its behalf in the City of Los Angeles,
State of California, on the 5th day of June, 1998.
SEPARATE ACCOUNT VA-6NY OF
TRANSAMERICA LIFE INSURANCE COMPANY OF NEW YORK
(REGISTRANT)
TRANSAMERICA LIFE INSURANCE COMPANY OF NEW YORK
(DEPOSITOR)
----------------------------
David M. Goldstein
Vice President
As required by the Securities Act of 1933, this Registration Statement has been
signed below on June 5, 1998 by the following persons or by their duly appointed
attorney-in-fact in the capacities specified:
<TABLE>
<CAPTION>
Signatures Titles Date
<S> <C> <C>
______________________* Director June 5, 1998
Nooruddin S. Veerjee, and Chairman
______________________* Director June 5,
1998
Marc C. Abrahms
______________________* Director June 5,
1998
James T. Byrne, Jr.
______________________* Director June 5,
1998
Alan T. Cunningham
<PAGE>
______________________* Director June 5,
1998
John A. Fibiger
______________________* Director June 5,
1998
Daniel E. Jund
______________________* Director June 5,
1998
Thomas O'Neill
______________________* Director June 5,
1998
James B. Roszak
______________________* Director June 5,
1998
Robert Rubinstein
</TABLE>
*By: David M. Goldstein On June
5, 1998 as Attorney-
in-Fact pursuant to
powers of attorney
filed herewith.
<PAGE>
Exhibit (6) (a) Articles of Incorporation of Transamerica
Life Insurance Company of New York. 1/2
<PAGE>
4
1
RESTATED CHARTER
OF
TRANSAMERICA LIFE INSURANCE COMPANY OF NEW YORK
UNDER
SECTION 807 OF THE BUSINESS CORPORATION LAW
AND
SECTION 1206 OF THE INSURANCE LAW
WE, THE UNDERSIGNED, being the Chairman and the Assistant Secretary of
Transamerica Life Insurance Company of New York, hereby certify and set forth:
1. The name of the corporation is Transamerica Life Insurance Company
of New York. The corporation was originally incorporated under the name of First
Transamerica Life Insurance Company.
2. The Charter of Transamerica Life Insurance Company of New York
(formerly First Transamerica Life Insurance Company) was filed in the office of
the Superintendent of Insurance of the State of New York on February 5, 1986,
amended on August 22, 1989, December 27, 1996, and May 1, 1997, and restated on
October 10, 1997.
3. Article V, Section 1 of the October 10, 1997 Restated Charter was
amended to reduce the minimum number of directors.
4. The Charter of Transamerica Life Insurance Company of New York is
hereby restated in its entirety as follows:
ARTICLE I
The name of this Corporation shall be:
TRANSAMERICA LIFE INSURANCE COMPANY OF NEW YORK.
ARTICLE II
The principal office of this Corporation shall be in the County of
Westchester, in the State of New York.
ARTICLE III
SECTION 1. The kinds of insurance to be transacted by the Corporation
are those kinds specified in Paragraphs "1", "2", and "3", of Section 1113(a) of
the Insurance Law of the State of New York as follows:
(1) "Life Insurance," means every insurance upon the lives of human
beings, and every insurance appertaining thereto, including the
granting of endowment benefits, additional benefits in the event of
death by accident, additional benefits to safeguard the contract from
lapse, accelerated payments of part or all of the death benefit or a
special surrender value upon diagnosis (A) of terminal illness defined
as a life expectancy of twelve months or less, or (B) of a medical
condition requiring extraordinary medical care or treatment regardless
of life expectancy, or provide a special surrender value, upon total
and permanent disability of the insured, and optional modes of
settlement of proceeds. "Life insurance" also includes additional
benefits to safeguard the contract against lapse in the event of
unemployment of the insured. Amounts paid the insurer for life
insurance and proceeds applied under optional modes of settlement or
under dividend options may be allocated by the insurer to one or more
separate accounts pursuant to Section Four Thousand Two Hundred Forty
of this Chapter.
(2) "Annuities," means all agreements to make periodical payments for a
period certain or where the making or continuance of all or some of a
series of such payments, or the amount of any such payment, depends
upon the continuance of human life, except payments made under the
authority of paragraph one hereof. Amounts paid the insurer to provide
annuities and proceeds applied under optional modes of settlement or
under dividend options may be allocated by the insurer to one or more
separate accounts pursuant to Section Four Thousand Two Hundred Forty
of this Chapter.
(3) "Accident and Health Insurance," means (i) insurance against death
or personal injury by accident or by any specified kind or kinds of
accident and insurance against sickness, ailment or bodily injury,
including insurance providing disability benefits pursuant to Article 9
of the workers' compensation law, except as specified in item (ii)
hereof; and (ii) non-cancellable disability insurance, meaning
insurance against disability resulting from sickness, ailment or bodily
injury (but excluding insurance solely against accidental injury) under
any contract which does not give the insurer the option to cancel or
otherwise terminate the contract at or after one year from its
effective date or renewal date.
SECTION 2. The Corporation may also engage in the reinsurance of the
kinds of insurance business it is authorized to do.
SECTION 3. The foregoing enumeration of specific kinds of insurance
shall not be held to limit or restrict the powers of the Corporation to carry on
any other business to the extent necessarily or properly incidental to such
kinds of insurance.
<PAGE>
SECTION 4. The Corporation shall have full power and authority to cede
reinsurance of any risks taken by it subject to the Insurance Law and the rules
and regulations of the Insurance Department of the State of New York.
ARTICLE IV
The mode and manner in which the corporate powers of the Corporation
shall be exercised is through a Board of Directors and through such Committees
of the Board of Directors, officers and agents as such Board and the By-Laws of
the Corporation shall empower.
ARTICLE V
SECTION 1. The number of directors of the Corporation shall be not less
than nine (9) nor more than twenty-one (21) and shall be determined by the
provisions of the By-Laws, provided, however, that the number of directors shall
be increased to not less than thirteen (13) directors within one year following
the end of the calendar year in which the Corporation's admitted assets exceed
$1,500,000,000. At least one third of the directors, but not less than four (4)
of the directors, shall not be officers or employees of the Corporation or of
any company controlling, controlled by or under common control with, the
Corporation and shall not be beneficial owners of a controlling interest in the
voting stock of the Corporation or of any such company. In no case shall a
decrease in the number of directors shorten the term of any incumbent director.
SECTION 2. The directors shall be elected at each annual meeting of the
shareholders of the Corporation, which shall be held on the first Monday in May
of each year, and the directors so elected shall hold office for one year and
until their respective successors shall have been elected and shall have
qualified. The directors shall be chosen and elected by a plurality of the whole
number of shares voted.
SECTION 3. At all times a majority of the directors shall be citizens
and residents of the United States, and not less than three (3) thereof shall be
residents of the State of New York, and each director shall be at least eighteen
(18) years of age.
ARTICLE VI
The amount of the authorized capital of this Corporation shall be TWO
MILLION DOLLARS ($2,000,000), to consist of TWO THOUSAND (2,000) shares of stock
of the par value of ONE THOUSAND DOLLARS ($1,000) per share.
ARTICLE VII
The holders of stock of the Corporation shall not have any pre-emptive,
preferential or other right to subscribe for or purchase or acquire any shares
of any class of stock or any other securities of the Corporation, whether now or
hereafter authorized, and whether or not convertible into, or evidencing or
carrying the right to purchase, shares of stock of any class or any other
securities now or hereafter authorized.
ARTICLE VIII
The Board of Directors shall have the power to adopt By-Laws of the
Corporation and to amend the same from time to time in whole or in part.
ARTICLE IX
The duration of the corporate existence of this Corporation shall be
perpetual.
ARTICLE X
No director shall be personally liable to the Corporation or any of its
shareholders for damages for any breach of duty as a director; provided,
however, that the foregoing provision shall not eliminate or limit (i) the
liability of a director if a judgment or other final adjudication adverse to him
or her establishes that his or her acts or omissions were in bad faith or
involved intentional misconduct or any violation of the Insurance Law or knowing
violation of any other law or that he or she personally gained in fact a
financial profit or other advantage to which he or she was not legally entitled;
or (ii) the liability of a director for any act or omission prior to the
adoption of this restatement by the shareholders of the Corporation.
5. This Restated Charter of Transamerica Life Insurance Company of New
York was authorized by the Board of Directors at a meeting held on May , 1998,
followed by the affirmative vote of the sole shareholder by written consent in
lieu of a special meeting executed as of May , 1998.
IN WITNESS, the undersigned have executed and signed this Certificate
this day of May, 1998.
Nooruddin S. Veerjee
(SEAL) Chairman
William M. Hurst
Assistant Secretary
CORPORATE ACKNOWLEDGMENT
STATE OF CALIFORNIA )
) SS.
COUNTY OF LOS ANGELES )
On the day of May, 1998, before me, Doris D. Motherspaw, Notary Public,
personally appeared Nooruddin S. Veerjee and William M. Hurst, personally known
to me or proved to me on the basis of satisfactory evidence to be the persons
whose names are subscribed to the within instrument and acknowledged to me that
they executed the same in their authorized capacity of Chairman and Assistant
Secretary of Transamerica Life Insurance Company of New York, and that by their
signatures on the instrument the entity upon behalf of which the persons acted,
and executed the instrument.
WITNESS my hand and official seal.
Notary Public
My commission expires: May 29, 1998
<PAGE>
Exhibit (6) (b) By-Laws of Transamerica Life Insurance
Company of New York. 1/2
<PAGE>
11
RESTATED
BY-LAWS
OF
TRANSAMERICA LIFE INSURANCE COMPANY OF NEW YORK
ARTICLE I
LOCATION
Section 1. The principal office of the Corporation shall be in the
County of Westchester and the State of New York. The Corporation may, in
addition to the principal office, establish and maintain such other office or
offices, whether in the State of New York or otherwise, as the Board of
Directors may from time to time designate or the business of the Corporation may
require.
ARTICLE II
CORPORATE SEAL
Section 1. The Corporation shall have a seal. The corporate seal shall
have inscribed thereon the name of the Corporation. The corporate seal shall be
in seal form and have inscribed thereon such additional words and symbols as the
Board of Directors may from time to time prescribe. The seal may be used by
causing it or a facsimile thereof to be impressed or affixed or otherwise
reproduced.
<PAGE>
ARTICLE III
MEETINGS OF SHAREHOLDERS
Section 1. Time and Place. All meetings of the shareholders for the
election of directors and all meetings of shareholders for that or any other
purpose may be held at such place within or without the State of New York, and
at such time as may be designated in the notice of meeting.
Section 2. Annual Meetings. The annual meeting of shareholders shall be
held on the first Monday of May in each year, if not a legal holiday, and if a
legal holiday, then on the next succeeding business day, at 10:00 o'clock a.m.,
or at such other hour as may from time to time be designated by the Board of
Directors.
Section 3. Special Meetings. Except as otherwise provided by statute,
special meetings of shareholders may be called for any purpose or purposes at
any time by the Chairman of the Board of Directors, the President, the Board of
Directors, or by the President and Secretary upon the written request of one or
more shareholders holding a majority in interest of the stock of the Corporation
issued and outstanding and entitled to vote at such meeting. Any such request
shall state the purpose or purposes of the proposed meeting.
<PAGE>
Section 4. Notice of Meeting. Notice of the time and place of holding
each annual and special meeting of the shareholders shall be in writing and
signed by the President or a Vice President, or the Secretary or an Assistant
Secretary, and a copy thereof shall be served, either personally or by mail,
upon each shareholder entitled to vote at such meeting, not less than ten (10)
nor more than fifty (50) days before the meeting, and if mailed, it shall be
directed to such shareholder at such shareholder's address as it appears on the
books of the Corporation unless a written request be given that notices intended
for such shareholder be mailed to some other address, in which case it shall be
mailed to the address designated in such request.
The notice of every special meeting, besides stating the time and place
of such meeting, shall state the purpose or purposes thereof, and no business
other than that specified in such notice or germane thereto shall be transacted
at the meeting.
Section 5. Waiver of Notice. Notice of meeting need not be given (1) to
any shareholder who submits a signed waiver of notice, or (2) to any shareholder
who is in attendance at any meeting, in person or by proxy, without protesting
prior to the conclusion of the meeting the lack of notice of such meeting.
Section 6. Quorum. At every meeting of the shareholders of the
Corporation, except as otherwise provided by law, the holders of a majority of
the issued and outstanding shares of capital stock of the Corporation, present
in person or by proxy and entitled to vote thereat, shall constitute a quorum,
for the transaction of business. In the absence of a quorum a majority in
interest of the shareholders so present or represented and entitled to vote
thereat may adjourn the meeting from time to time and place to place until a
quorum is obtained, and the meeting may be held as adjourned without further
notice. At any such adjourned meeting at which a quorum is present any business
may be transacted which might have been transacted at the meeting as originally
called. The shareholders present at a duly called or held meeting at which a
quorum is present may continue to transact business until a final adjournment,
notwithstanding the withdrawal of enough shareholders to leave less than a
quorum.
Section 7. Voting. At all meetings of shareholders, every shareholder
entitled to vote thereat shall be entitled to one vote, in person or by proxy,
for each share of stock outstanding in such shareholder's name on the books of
the Corporation on the date for the determination of shareholders entitled to
vote at such meeting. Every proxy must be executed in writing by the shareholder
or by his duly authorized attorney and must be delivered to the Secretary of the
meeting. No proxy shall be valid after the expiration of eleven (11) months from
the date of its execution unless the shareholder executing it shall have
specified therein a longer duration. At all meetings of the shareholders, a
quorum being present, all matters except as otherwise provided by law, or the
Charter of the Corporation, or these by-laws, shall be decided by a majority in
interest of the shareholders of the Corporation present in person or by proxy
and entitled to vote. All elections of directors may, but need not be, held by
ballot.
Section 8. Organization. Meetings of the shareholders shall be presided
over by the Chairman of the Board of Directors, or, if he is not present, by the
President, and if the President is not present, by a Vice President in the order
determined by the President; or, if none of the foregoing are present, by a
chairman to be chosen by a majority of the shareholders entitled to vote who are
present in person or by proxy at the meeting. The Secretary of the Corporation,
or in his or her absence, an Assistant Secretary, shall act as Secretary of
every meeting, but if neither the Secretary nor an Assistant Secretary is
present, the meeting shall choose any person present to act as Secretary of the
meeting.
Section 9. Consent. Whenever by any provision of law or of the Charter
of this Corporation the vote of shareholders at a meeting thereof is required or
permitted to be taken in connection with any corporate action, the meeting and
vote of shareholders may be dispensed with, if all the shareholders who would
have been entitled to vote upon the action, if such meeting were held, shall
consent in writing to such action being taken. However, this section shall not
be construed to alter or modify any provision of law or of the Charter under
which the written consent of the holders of less than all outstanding shares is
sufficient for corporate action.
ARTICLE IV
BOARD OF DIRECTORS
Section 1. Election and Qualification of Directors. Directors shall be
elected at the annual meeting of shareholders by a plurality of the votes cast
and shall hold office for one (1) year and until their respective successors
shall have been elected and shall have qualified. All directors shall be at
least eighteen (18) years of age and at least three (3) shall be citizens and
residents of the State of New York. Directors need not be shareholders. A copy
of the notice of any meeting at which directors are elected, which is sent to
the shareholders, shall be filed in the Office of the Superintendent of
Insurance of the State of New York at least ten (10) days before the day on
which such meeting is to be held.
Section 2. Number of Directors. The number of directors of the
Corporation shall be not less than nine (9) nor more than twenty-one (21) and
shall be determined by the provisions of the By-Laws, provided, however, that
the number of directors shall be increased to not less than thirteen (13)
directors within one year following the end of the calendar year in which the
Corporation's admitted assets exceed $1,500,000,000. At least one-third of the
directors, but not less than four (4) directors, shall not be officers or
employees of the Corporation or of any company controlling, controlled by, or
under common control with the Corporation, and shall not be beneficial owners of
a controlling interest in the voting stock of the Corporation or of any such
company. Subject to the immediately preceding sentence and to change by action
of the shareholders or by resolution of the Board of Directors, the number of
directors of the Corporation shall be nine (9). Any change in the number of
directors made by resolution of the Board of Directors shall require the
affirmative vote of a majority of all directors then in office, but no decrease
in the number of directors so made shall shorten the term of any incumbent
director.
Section 3. Vacancies. A vacancy or vacancies in the Board resulting
from death, resignation or removal of any director, or from the increase in the
number of directors, or for any other cause, may be filled for the remainder of
the term by majority vote of the remaining directors at any regular meeting of
the Board or at any special meeting called for that purpose. A director so
elected shall not take office or exercise the duties thereof until ten (10) days
after written notice of his or her election shall have been filed in the Office
of the Superintendent of Insurance of the State of New York.
Section 4. Duties and Powers. The Board of Directors shall have control
and management of the affairs and property of the Corporation and may adopt such
rules and regulations for the conduct of their meetings and the management of
the Corporation as they deem proper not inconsistent with law or with the
Charter of the Corporation or with these By-Laws.
Section 5. Meetings. Meetings of the Board of Directors shall be held
at such place within or without the State of New York as may from time to time
be fixed by resolution of the Board of Directors, or as may be specified in the
notice of the meeting. Regular meetings of the Board of Directors shall be held
at such times as may from time to time be fixed by resolution of the Board of
Directors and special meetings may be held at any time upon the call of the
Chairman of the Board of Directors, the President or Vice President, or the
Secretary or an Assistant Secretary, or any two (2) directors or by oral,
telegraphic, or written notice duly served on or sent or mailed to each director
not less than two (2) days before such meeting. A meeting of the Board of
Directors may be held without notice immediately after the annual meeting of
shareholders. Notice need not be given of regular meetings of the Board of
Directors. Meetings may be held at any time without notice if all the directors
are present, or if at any time before or after the meeting those not present
waive notice of the meeting in writing.
Any one or more members of the Board of Directors or any committee
thereof may participate in a meeting of such Board of Directors or committee by
means of a conference telephone or similar communications equipment allowing all
persons participating in the meeting to hear each other at the same time.
Participation by such means shall constitute presence in person at a meeting.
Any action required or permitted to be taken by the Board of Directors
(or any committee thereof) may be taken without a meeting if all directors (or
members of the committee) consent in writing to the adoption of a resolution
authorizing the action. The resolution and the written consent thereto shall be
filed with the minutes of such meeting.
Section 6. Quorum. A majority of the Board of Directors then in office
at a meeting duly assembled shall be necessary to constitute a quorum for the
transaction of business. At least one Non-Affiliated Director, as defined in
Article V, Section 1, must be included in any quorum for the transaction of
business at any meeting of the Board of Directors. Except as otherwise provided
by law or by the Charter of the Corporation, the act of a majority of directors
present at such meeting shall be the act of the Board.
Section 7. Resignations. Any director of the Corporation may resign at
any time by giving written notice to the Board or to the President or to the
Secretary of the Corporation. Such resignation shall take effect at the time
specified therein; and unless otherwise specified therein the acceptance of such
resignation shall not be necessary to make it effective.
Section 8. Removal. Any one or more of the directors may be removed
either with or without cause at any time by a vote of a majority of the shares
issued and outstanding and entitled to vote. Not less than one-third (1/3) of
the directors may call a special meeting for the purpose of removing for cause
any other director and at such special meeting so called, such director may be
removed by the affirmative vote of a majority of the remaining directors present
at such meeting. Immediately following each vote by which a director is removed
the Board of Directors shall declare the office of the removed director to be
vacant.
Section 9. Compensation of Directors. Directors may, by resolution of
the Directors, be allowed a sum for serving as directors and expenses for
attendance at regular or special meetings of the Board of Directors; provided
that nothing herein contained shall be construed to preclude any director from
serving the Corporation in any other capacity and receiving compensation
therefor. Members of special or standing committees, and others who attend
pursuant to
<PAGE>
32 direction, may, by vote of the Board of Directors, be allowed a fixed sum
and expenses for attending committee meetings. Section 10. Chairman of the
Board. The Board of Directors shall, immediately after the organization of
the Corporation, and thereafter at their first meeting following the annual
election of directors, elect from among their number, a Chairman of the
Board who shall preside at all meetings of the shareholders and of the
Board of Directors. He or she shall have such other powers and perform such
other duties as may be assigned to him by the Board of Directors. ARTICLE V
COMMITTEES Section 1. Executive Committee. The Board of Directors may, by
resolution adopted by a majority of the entire Board, designate an
Executive Committee from among its members consisting of three (3) or more
directors as it may, in its discretion, think proper and shall so designate
by resolution. The Executive Committee shall have and may exercise, when
the Board is not in session, so far as may be permitted by law, all of the
rights and powers of the Board of Directors in the management of the
business and affairs of the Corporation, except to the extent such powers
of the Board are by resolution of the Board or by these By-Laws reserved to
the Board or to other committees of the Board, and shall have power to
authorize the seal of the Corporation to be affixed to all papers which may
require it; but the Executive Committee shall not have power to: fill
vacancies in the Board; to make or amend the By-Laws of the Corporation; to
fix the compensation of directors for serving on the Board or any
Committee; to amend or repeal any resolution of the Board which by its
terms shall not be so amendable or repealable; or to make investments or
loans which shall be the function of the Finance Committee. The Board shall
have the power at any time to fill vacancies in, to change the membership
of, to change the number of members of, designate one or more alternate
members of, or to dissolve the Executive Committee. The Executive Committee
may make rules for the conduct of this business and may appoint such
committees and assistants as it shall from time to time deem necessary. The
Committee shall keep a record of its proceedings and shall adopt its own
rules of procedure except that a quorum shall consist of a majority of the
committee, but not less than three (3) members, at least one of which shall
not be (i) an officer or employee of the Corporation or of any company
controlling, controlled by, or under common control with, the Corporation
or (ii) a beneficial owner of a controlling interest in the voting stock of
the Corporation or of any such company (hereinafter referred to as a
"Non-Affiliated Director"). The Committee shall submit copies of its
minutes to the Board of Directors. Section 2. Finance Committee. The
investments and loans, other than policy loans of the Corporation, shall be
managed and controlled by the Board of Directors or by a Finance Committee
appointed by the Board. Any such Finance Committee shall consist of at
least three (3) members who shall be appointed by the Board of Directors
from its own membership at the annual or a special meeting of the Board of
Directors to serve until the next succeeding annual meeting and until their
successors on the Committee have been appointed. The Board shall have the
power at any time to fill vacancies in, to change the membership of, to
change the number of members of, to designate one (1) or more alternate
members of, or to dissolve, the Finance Committee. The Finance Committee
shall have and may exercise, when the Board is not in session, all the
rights and powers of the Board of Directors to make, supervise, and control
the investments of the Corporation, inclusive of all real and personal
property acquired by virtue of or incidental to any investment, to sell,
assign, exchange, lease or otherwise dispose of such investments and
property; and to do and perform all things deemed necessary and proper in
relation to such investments and property. The Committee shall keep a
record of its proceedings and shall adopt its own rules of procedure,
except that a quorum shall consist of a majority of the Committee, but not
less than three (3) members, at least one of which must be a Non-Affiliated
Director. The Committee shall submit copies of its minutes to the Board of
Directors and shall report all investments to the Executive Committee when
the Board is not in session. Section 3. Audit Committee. The Audit
Committee shall consist of three (3) or more members who shall be appointed
by the Board of Directors from its own membership at the annual meeting of
the Board of Directors to serve until the next succeeding annual meeting
and until their successors on the Committee have been appointed. The Board
shall have the power at any time to fill vacancies in, to change the
membership of, to change the number of members of, to designate one (1) or
more alternate members of, or to dissolve, the Audit Committee. The Audit
Committee will meet with the Internal Auditor and shall review the results
of audits conducted by the Internal Audit staff. The Committee shall also
review the audit schedule and may direct the Internal Auditor to carry out
any additional audits that it deems necessary. The Committee shall keep a
record of its proceedings and shall adopt its own rules of procedure except
that a quorum shall consist of a majority of the Committee, but not less
than three (3) members, at least one of which must be a Non-Affiliated
Director. The Committee shall submit copies of its minutes to the Board of
Directors. Section 4. Independent Committee. The Independent Committee
shall consist of three (3) or more members who shall be appointed by the
Board of Directors from its own membership at the annual meeting of the
Board of Directors to serve until the next succeeding annual meeting and
until their successors on the Committee have been appointed. The Board
shall have the power at any time to fill vacancies in, to change the
membership of, to change the number of members of, to designate one or more
alternate members of, or to dissolve the Independent Committee. All of the
members of the Independent Committee shall be individuals who are not
officers or employees of the Corporation or of any entity controlling,
controlled by, or under common control with the Corporation and who are not
beneficial owners of a controlling interest in the voting stock of the
Corporation or any such entity. The Independent Committee shall have the
following functions: 1. Responsibility for recommending the selection of
independent certified public accountants; 2. Responsibility for reviewing
the Corporation's financial condition; 3. Responsibility for final review
of the scope and results of the independent audit and any internal audit;
4. Responsibility for nominating candidates for director for election by
shareholders; and 5. Responsibility for evaluating the performance of
officers deemed to be principal officers of the Corporation and
recommending to the Board of Directors the selection and compensation of
such principal officers. The Committee shall keep a record of its
proceedings and shall adopt its own rules of procedure, except that a
quorum shall consist of a majority of the Committee, but not less than
three (3) members. The Committee shall submit copies of its minutes to the
Board of Directors. Section 5. Other Committees. The Board of Directors may
from time to time by resolution create such other committee or committees
of Directors, officers, employees or other persons designated by the Board,
to advise with the Board, the Executive Committee and the officer and
employees of the Corporation in all such matters as the Board shall deem
advisable, and with such functions and duties as the Board shall by
resolution prescribe. A majority of all members of any such committee may
determine its actions and fix the time and place of its meeting, unless the
Board of Directors shall otherwise provide. The Board of Directors shall
have power to change the members of any such committee at any time, and to
discharge any such committee, either with or without cause at any time.
ARTICLE VI OFFICERS Section 1. Officers. The Board of Directors shall,
immediately after the organization of the Corporation, and thereafter at
their first meeting following the annual election of directors, elect from
among their number a President, and shall also elect a Secretary and a
Treasurer, who need not be members of the Board of Directors. The Board
may, at any time, also elect one or more Vice Presidents, and such
Assistant Treasurers and Assistant Secretaries, or other officers, as it
may deem proper. More than one office may be held by the same person,
except that the offices of President and Secretary may not be held by the
same person. Section 2. Term. Each officer of the Corporation elected by
the Board of Directors shall hold office until his or her successor is
chosen and qualified, or until he or she shall have died or resigned or
shall have been removed as hereinafter provided. A vacancy in any office
arising from any cause may be filled by the Board of Directors. Section 3.
Duties of the President. The President shall be the Chief Executive Officer
of the Corporation unless otherwise directed by the Board. He or she shall
have general and active supervision and direction over the business offices
of the Corporation, subject to the control of the Board of Directors whose
policies he or she shall execute. He or she shall see that all orders and
resolutions of the Board of Directors are carried into effect and shall, in
the absence of the Chairman of the Board, preside at all meetings of
shareholders and of the Board of Directors. Except when inconsistent with
the Corporation's Charter, these by-laws, or with the orders and
resolutions of the Board of Directors, he or she shall have the power to
employ, fix the duties, and discharge such employees as he or she may deem
necessary and proper. The President shall make such reports to the Board of
Directors as it may require. Section 4. Duties of Vice President. Each Vice
President, shall undertake such of the duties of the President or such
other duties, as may be delegated to him or her from time to time by the
Board of Directors. Section 5. Duties of Secretary. The Secretary shall
attend all meetings of the shareholders, of the Board of Directors, and of
the Executive Committee of the Board, and record their proceedings in a
book kept for that purpose. He or she shall perform other duties incident
to his or her office and such other duties as may be delegated to him or
her by the Board of Directors or the President. He or she shall see that
proper notice is given of all meetings of the shareholders of the
Corporation and of the Board of Directors, and he or she shall have charge
of the corporate seal, the minute books, and such other corporate records
as are not otherwise provided for. He or she shall affix the seal to any
instrument requiring the same. Any Assistant Secretary may perform duties
of the Secretary in his or her absence, and such of the duties of the
Secretary as may be delegated to him or her by that officer or by the Board
of Directors or the President. Section 6. Duties of Treasurer. The
Treasurer shall be charged with the supervision of the keeping of the funds
and books of account of the Corporation and with their safekeeping, shall
carry out such duties as are incident to his or her office and shall
further perform such other duties as may be delegated to him or her by the
Board of Directors or by the President. Any Assistant Treasurer may perform
the duties of the Treasurer in his or her absence, and such of the duties
of the Treasurer as may be delegated to him or her by that officer or by
the Board of Directors or the President. ARTICLE VII SHARE CERTIFICATES
Section 1. Form of Certificates. The shares of the Corporation shall be
represented by certificates, in such form as the Board of Directors may
from time to time prescribe, signed by the Chairman of the Board of
Directors, the President, or a Vice President and the Secretary or an
Assistant Secretary or the Treasurer or an Assistant Treasurer, and sealed
with the seal of the Corporation. Such seal may be a facsimile, engraved or
printed. Where any such certificate is signed by a transfer agent or
transfer clerk and by a registrar, the signatures of any such Chairman of
the Board of Directors, President, Vice President, Secretary, Assistant
Secretary, Treasurer, or Assistant Treasurer upon such certificate may be
facsimiles, engraved or printed. In case any such officer who has signed or
whose facsimile signature has been placed upon such certificate shall have
ceased to be such before such certificate is issued, it may be issued by
the Corporation with the same effect as if such officer had not ceased to
be such at the date of its issue. Every certificate representing shares
issued by the Corporation shall plainly state upon the face thereof the
number, kind and class of shares which it represents. Section 2. Transfers.
Transfers of shares shall be made only upon the books of the Corporation by
the registered holders in person or by power of attorney duly executed and
acknowledged and filed with the Secretary of the Corporation, or with a
duly appointed Transfer Agent acting for and on behalf of the Secretary,
and upon the surrender of the certificate or certificates for such shares.
Section 3. Lost Certificates. If any certificate or shares shall be lost,
the holder thereof shall forthwith notify the Corporation of the facts and
the Board of Directors or the Executive Committee may then authorize a new
certificate to be issued to him. The Board of Directors or the Executive
Committee may in its discretion require, as a condition precedent, deposit
of a bond in such amount and in such form and with surety or sureties as
the Board of the said Committee may direct. Section 4. Closing Share Books.
The Board of Directors or the Executive Committee may by resolution
prescribe a period not less than ten (10) nor more than fifty (50) days
prior to any meeting of shareholders during which no transfer of shares on
the books of the Corporation may be made; or in lieu of prohibiting the
transfer of share may fix a day and hour not less than ten (10) nor more
than fifty (50) days prior to the holding of any meeting of shareholders as
the time as of which shareholders entitled to notice of any to vote at such
meeting shall be determined or for the making of a dividend list. The share
books may also be closed for the payment of dividends for such like period,
if any, as may be prescribed by resolution of the Board of Directors or of
the Executive Committee. Section 5. Transfer Agent and Registrar. The Board
of Directors may appoint one or more transfer clerks or one or more
transfer agents, and one or more registrars, and may require all
certificates for shares to bear the signature or signatures of any of them.
ARTICLE VIII Indemnification of Officers and Directors Section 1.
Indemnification. (a) The Corporation shall indemnify to the fullest extent
now or hereafter provided for or permitted by law each person involved in,
or made or threatened to be made a party to, any action suit, claim or
proceeding, whether civil or criminal, including any investigative,
administrative, legislative, or other proceeding, and including any action
by or in the right of the Corporation or any other corporation, or any
partnership, joint venture, trust, employee benefit plan, or other
enterprise (any such entity, other than the Corporation, being hereinafter
referred to as an "Enterprise"), and including appeals therein (any such
action or process being hereinafter referred to as a "Proceeding"), by
reason of the fact that such person, such person's testator or intestate
(i) is or was a director or officer of the Corporation, or (ii) is or was
serving, at the request of the Corporation, as a director, officer, or in
any other capacity, or any other Enterprise, against any and all judgments,
amounts paid in settlement, and expenses, including attorney's fees,
actually and reasonably incurred as a result of or in connection with any
Proceeding, except as provided in Subsection (b) below. (b) No
indemnification shall be made to or on behalf of any such person if a
judgment or other final adjudication adverse to such person establishes
that such person's acts were committed in bad faith or were the result of
active and deliberate dishonesty and were material to the cause of action
so adjudicated, or that such person personally gained in fact a financial
profit or other advantage to which such person was not legally entitled. In
addition, no indemnification shall be made with respect to any Proceeding
initiated by any such person against the Corporation, or a director or
officer of the Corporation, other than to enforce the terms of this Article
VIII, unless such Proceeding was authorized by the Board of Directors.
Further, no indemnification shall be made with respect to any settlement or
compromise of any Proceeding unless and until the Corporation has consented
to such settlement or compromise. (c) Written notice of any Proceeding for
which indemnification may be sought by any person shall be given to the
Corporation as soon as practicable. The Corporation shall then be permitted
to participate in the defense of any such proceeding or, unless conflicts
of interest or position exist between such person and the Corporation in
the conduct of such defense, to assume such defense. In the event that the
Corporation assumes the defense of any such Proceeding, legal counsel
selected by the Corporation shall be reasonably acceptable to such person.
After such an assumption, the Corporation shall not be liable to such
person for any legal or other expenses subsequently incurred unless such
expenses have been expressly authorized by the Corporation. In the event
that the Corporation participates in the defense of any such Proceeding,
such person may select counsel to represent him in regard to such a
Proceeding; however, such person shall cooperate in good faith with any
request that common counsel be utilized by the parties to any Proceeding
who are similarly situated, unless to do so would be inappropriate due to
actual or potential differing interests between or among such parties. (d)
In making any determination regarding any person's entitlement to
indemnification hereunder, it shall be presumed that such person is
entitled to indemnification, and the Corporation shall have the burden of
proving the contrary. Section 2. Advancement of Expenses. Except in the
case of a Proceeding against a director, officer, or other person
specifically approved by the Board of Directors, the Corporation shall,
subject to Section 1 of this Article VIII above, pay expenses actually and
reasonably incurred by or on behalf of such a person in defending any
Proceeding in advance of the final disposition of such Proceeding. Such
payments shall be made promptly upon receipt by the Corporation, from time
to time, or of written demand by such person for such advancement, together
with an undertaking by or on behalf of such person to repay any expenses so
advanced to the extent that the person receiving the advancement is
ultimately found not to be entitled to indemnification for part or all of
such expenses. Section 3. Rights Not Exclusive. The rights to
indemnification and advancement of expenses granted by or pursuant to this
Article VIII (i) shall not limit or exclude, but shall be in addition to,
any other rights which may be granted by or pursuant to any statute,
corporate charter, by-law, resolution of shareholders or directors or
agreement, (ii) shall be deemed to constitute contractual obligations of
the Corporation to any person who serves in a capacity referred to in
Section 1 of this Article VIII at any tine while this Article VIII is in
effect, (iii) shall continue to exist after the repeal or modification of
this Article VIII with respect to events occurring prior thereto, and (iv)
shall continue as to a person who has ceased to be a director or officer
and shall inure to the benefit of the estate, spouse, heirs, executors,
administrators or assigns of such person. It is the intent of this Article
VIII to require the Corporation to indemnify the persons referred to herein
for the aforementioned judgments, amounts paid in settlement, and expenses,
including attorneys' fees, in each and every circumstance in which such
indemnification could lawfully be permitted by express provisions of
by-laws, and the indemnification required by this Article VIII shall not be
limited by the absence of an express recital of such circumstances. Section
4. Indemnification of Employees and Others. The Corporation may, from time
to time, with the approval of the Board of Directors, and to the extent
authorized, grant rights to indemnification, and to the advancement of
expenses, to any employee or agent of the Corporation or to any person
serving at the request of the Corporation as a director or officer, or in
any other capacity, of any other Enterprise, to the fullest extent of the
provisions of this Article VIII with respect to the indemnification and
advancement of expenses of directors and officers of the Corporation.
Section 5. Authorization of Contracts. The Corporation may, with the
approval of the Board of Directors, enter into an agreement with any person
who is, or is about to become, a director, officer, employee or agent of
the Corporation, or who is serving, or is about to serve, at the request of
the Corporation, as a director, officer, or in any other capacity, of any
other Enterprise, which agreement may provide for indemnification of such
person and advancement of expenses to such person upon terms, and to the
extent, not prohibited by law. The failure to enter into any such agreement
shall not affect or limit the rights of any such person under this Article
VIII. Section 6. Insurance. The Corporation may purchase and maintain
insurance to indemnify the Corporation and any person eligible to be
indemnified under this Article VIII within the limits permitted by law.
Section 7. Severability. If any provision of this Article VIII is
determined at any time to be unenforceable in any respect, the other
provisions shall not in any way be affected or impaired thereby. ARTICLE IX
DIVIDENDS Section 1. Dividends. Dividends on the issued and outstanding
stock from the profits made by the Corporation, not including the surplus
arising from the sale of stock, may be declared by the Board of Directors,
from time to time. The Board of Directors shall fix the date of payment of
dividends and the record date of stock entitled thereto. ARTICLE X
MISCELLANEOUS Section 1. Execution of Contracts and Other Instruments. The
President and Vice President, the Secretary, and the Treasurer shall each
have general authority to execute contracts, bonds, deeds and powers of
attorney in the name and on behalf of the Corporation. Any contract, bond,
deed or power of attorney may also be executed in the name of and on behalf
of the Corporation by such other officer or such other agent as the Board
of Directors may from time to time direct. The provisions of this Section 1
are supplementary to any other provision of these By-Laws. Section 2.
Shares of Other Corporations. The President and any Vice President is
authorized to vote, represent and exercise on behalf of the Corporation,
all rights incident to any and all shares of any other corporation or
corporations standing in the name of the Corporation. The authority herein
granted to said officer to vote or represent on behalf of the Corporation
any and all shares held by the Corporation in any other corporation or
corporations may be exercised either by said officer in person or by any
person authorized so to do by proxy or power of attorney duly executed by
said officer. Notwithstanding the above, however, the Board of Directors,
in its discretion, may designate by resolution the person to vote or
represent said shares of other corporations.
<PAGE>
ARTICLE XI
AMENDMENTS
Section 1. Power to Amend. These By-Laws may be altered, repealed,
or amended in whole or in part by the Board of Directors at any regular meeting
of the Board of Directors, or at a special meeting called for that purpose,
provided that notice of the proposed change is incorporated in the notice of
such special meeting.
Section 2. Notice to Shareholders. If any By-Law regulating an
impending election of directors is adopted, amended or repealed by the Board of
Directors, there shall be set forth in the notice of the next meeting of
shareholders for the election of directors the By-Laws so adopted, amended or
repealed, together with a concise statement of the changes made.
<PAGE>
Exhibit (8) Form of Participation Agreements regarding the
Portfolio.
(c) re Dreyfus Variable Investment Fund 2/
<PAGE>
FUND PARTICIPATION AGREEMENT
This Agreement is entered into as of the day of _________, 1998, between
Transamerica Life Insurance Company of New York a life insurance company
organized under the laws of the State of New York ("Insurance Company"), and
DREYFUS VARIABLE INVESTMENT FUND("Fund").
----
ARTICLE I
DEFINITIONS
1.1 "Act" shall mean the Investment Company Act of 1940, as amended.
1.2 "Board" shall mean the Board of Directors or Trustees, as the case may be,
of a Fund, which has the responsibility for management and control of the Fund.
1.3 "Business Day" shall mean any day for which a Fund calculates net asset
value per share as described in the Fund's Prospectus.
1.4 "Commission" shall mean the Securities and Exchange Commission.
1.5 "Contract" shall mean a variable annuity or life insurance contract that
uses any Participating Fund (as defined below) as an underlying investment
medium. Individuals who participate under a group Contract are "Participants."
1.6 "Contractholder" shall mean any entity that is a party to a Contract with a
Participating Company (as defined below).
1.7 "Disinterested Board Members" shall mean those members of the Board of a
Fund that are not deemed to be "interested persons" of the Fund, as defined
by the Act.
1.8 "Dreyfus" shall mean The Dreyfus Corporation and its affiliates, including
Dreyfus Service Corporation.
1.9 "Participating Companies" shall mean any insurance company (including
Insurance Company) that offers variable annuity and/or variable life insurance
contracts to the public and that has entered into an agreement with one or more
of the Funds.
1.10 "Participating Fund" shall mean each Fund, including, as applicable, any
series thereof, specified in Exhibit A, as such Exhibit may be amended from time
to time by agreement of the parties hereto, the shares of which are available to
serve as the underlying investment medium for the aforesaid Contracts.
1.11 "Prospectus" shall mean the current prospectus and statement of additional
information of a Fund, as most recently filed with the Commission.
1.12 "Separate Account" shall mean Separate Account VA-6, a separate account
established by Insurance Company in accordance with the laws of the State of New
York.
1.13 "Software Program" shall mean the software program used by a Fund for
providing Fund and account balance information including net asset value per
share. Such Program may include the Lion System. In situations where the Lion
System or any other Software Program used by a Fund is not available, such
information may be provided by telephone. The Lion System shall be provided to
Insurance Company at no charge.
1.14 "Insurance Company's General Account(s)" shall mean the general account(s)
of Insurance Company and its affiliates that invest in a Fund.
ARTICLE II
REPRESENTATIONS
2.1 Insurance Company represents and warrants that (a) it is an insurance
company duly organized and in good standing under applicable law; (b) it has
legally and validly established the Separate Account pursuant to the New York
Insurance Code for the purpose of offering to the public certain individual and
group variable annuity and life insurance contracts; (c) it has registered the
Separate Account as a unit investment trust under the Act to serve as the
segregated investment account for the
Contracts; and (d) the Separate Account is eligible to invest in shares
of each Participating Fund without such investment disqualifying any
Participating Fund as an investment medium for insurance company separate
accounts supporting variable annuity contracts or variable life insurance
contracts.
2.2 Insurance Company represents and warrants that (a) the Contracts will be
described in a registration statement filed under the Securities Act of 1933, as
amended ("1933 Act"); (b) the Contracts will be issued and sold in compliance in
all material respects with all applicable federal and state laws; and (c) the
sale of the Contracts shall comply in all material respects with state insurance
law requirements. Insurance Company agrees to notify each Participating Fund
promptly of any investment
restrictions imposed by state insurance law and applicable to the
Participating Fund.
2.3 Insurance Company represents and warrants that the income, gains and losses,
whether or not realized, from assets allocated to the Separate Account
are, in accordance with the applicable Contracts, to be credited to or charged
against such Separate Account without regard to other income, gains or losses
from assets allocated to any other accounts of Insurance Company. Insurance
Company represents and warrants that the assets of the Separate Account are
and will be kept separate from Insurance
Company's General Account and any other separate accounts Insurance
Company may have, and will not be charged with liabilities from any business
that Insurance Company may conduct or the liabilities of any companies
affiliated with Insurance Company.
2.4 Each Participating Fund represents that it is registered with the Commission
under the Act as an open-end, management investment company and possesses, and
shall maintain, all legal and regulatory licenses, approvals, consents and/or
exemptions required for the Participating Fund to operate and offer its shares
as an underlying investment medium for Participating Companies.
2.5 Each Participating Fund represents that it is currently qualified as a
regulated investment company under Subchapter M of the Internal Revenue Code of
1986, as amended (the "Code"), and that it will make every effort to maintain
such qualification (under Subchapter M or any successor or similar provision)
and that it will notify Insurance Company immediately upon having a reasonable
basis for believing that it has ceased to so qualify or that it might not so
qualify in the future.
2.6 Insurance Company represents and agrees that the Contracts are currently,
and at the time of issuance will be, treated as life insurance
policies or annuity contracts, whichever is appropriate, under applicable
provisions of the Code, and that it will make every effort to maintain such
treatment and that it will notify each Participating Fund and Dreyfus
immediately upon having a reasonable basis for believing that the Contracts
have ceased to be so treated or that they might not be so treated in
the future. Insurance Company agrees that any prospectus offering a
Contract that is a "modified endowment contract," as that term is defined in
Section 7702A of the Code, will identify such Contract as a modified endowment
contract (or policy).
2.7 Each Participating Fund agrees that its assets shall be managed and invested
in a manner that complies with the requirements of Section 817(h) of the Code.
2.8 Insurance Company agrees that each Participating Fund shall be permitted
(subject to the other terms of this Agreement) to make its shares available to
other Participating Companies and Contractholders.
2.9 Each Participating Fund represents and warrants that any of its directors,
trustees, officers, employees, investment advisers, and other
individuals/entities who deal with the money and/or securities of the
Participating Fund are and shall continue to be at all times covered by a
blanket fidelity bond or similar coverage for the benefit of the Participating
Fund in an amount not less than that required by Rule 17g-1 under the Act. The
aforesaid Bond shall include coverage for larceny and
embezzlement and shall be issued by a reputable bonding company.
2.10 Insurance Company represents and warrants that all of its employees and
agents who deal with the money and/or securities of each Participating Fund
are and shall continue to be at all times covered by a blanket fidelity bond or
similar coverage in an amount not less than the coverage required to be
maintained by the Participating Fund. The aforesaid Bond shall include coverage
for larceny and embezzlement and shall be issued by a reputable bonding
company.
2.11 Insurance Company agrees that Dreyfus shall be deemed a third party
beneficiary under this Agreement and may enforce any and all rights conferred by
virtue of this Agreement.
ARTICLE III 3.
FUND SHARES
3.1 The Contracts funded through the Separate Account will provide for the
investment of certain amounts in shares of each Participating Fund.
3.2 Each Participating Fund agrees to make its shares available for purchase at
the then applicable net asset value per share by Insurance Company and the
Separate Account on each Business Day pursuant to rules of the Commission.
Notwithstanding the foregoing, each Participating Fund may refuse to sell its
shares to any person, or suspend or terminate the offering of its shares, if
such action is required by law or by regulatory authorities having jurisdiction
or is, in the sole discretion of its
Board, acting in good faith and in light of its fiduciary duties under
federal and any applicable state laws, necessary and in the best interests of
the Participating Fund's shareholders.
3.3 Each Participating Fund agrees that shares of the Participating Fund will be
sold only to (a) Participating Companies and their separate accounts or
(b) "qualified pension or retirement plans" as determined under Section 817(h)
(4) of the Code. Except as otherwise set forth in this Section 3.3, no shares of
any Participating Fund will be sold to the general public.
3.4 Each Participating Fund shall use its best efforts to provide closing net
asset value, dividend and capital gain information on a per-share basis to
Insurance Company by 6:00 p.m. Eastern time on each Business Day. Any material
errors in the calculation of net asset value, dividend and capital gain
information shall be reported immediately upon discovery to Insurance Company.
Non-material errors will be corrected in the next Business Day's net asset
value per share.
3.5 At the end of each Business Day, Insurance Company will use the information
described in Sections 3.2 and 3.4 to calculate the unit values of the Separate
Account for the day. Using this unit value, Insurance Company will process the
day's Separate Account transactions received by it by the close of trading on
the floor of the New York Stock Exchange (currently 4:00 p.m. Eastern time) to
determine the net dollar amount of each Participating Fund's shares that will be
purchased or redeemed at
that day's closing net asset value per share. The net purchase or
redemption orders will be transmitted to each Participating Fund by Insurance
Company by 11:00 a.m. Eastern time on the Business Day next following
Insurance Company's receipt of that information. Subject to Sections 3.6 and
3.8, all purchase and redemption orders for Insurance Company's General Accounts
shall be effected at the net asset value per share of each
Participating Fund next calculated after receipt of the order by the
Participating Fund or its Transfer Agent.
3.6 Each Participating Fund appoints Insurance Company as its agent for the
limited purpose of accepting orders for the purchase and redemption of
Participating Fund shares for the Separate Account. Each Participating
Fund will execute orders at the applicable net asset value per share
determined as of the close of trading on the day of receipt of such
orders by Insurance Company acting as agent ("effective trade date"),
provided that the Participating Fund receives notice of such orders by
11:00 a.m. Eastern time on the next following Business Day and, if such
orders request the purchase of Participating Fund shares, the
conditions specified in Section 3.8, as applicable, are satisfied. A
redemption or purchase request that does not satisfy the conditions
specified above and in Section 3.8, as applicable, will be effected at
the net asset value per share computed on the Business Day immediately
preceding the next following Business Day upon which such conditions
have been satisfied in accordance with the requirements of this Section
and Section 3.8. Insurance Company represents and warrants that all
orders submitted by the Insurance Company for execution on the
effective trade date shall represent purchase or redemption orders
received from Contractholders prior to the close of trading on the New
York Stock Exchange on the effective trade date.
3.7 Insurance Company will make its best efforts to notify each applicable
Participating Fund in advance of any unusually large purchase or redemption
orders.
3.8 If Insurance Company's order requests the purchase of a Participating
Fund's shares, Insurance Company will pay for such purchases by wiring
Federal Funds to the Participating Fund or its designated custodial
account on the day the order is transmitted. Insurance Company shall
make all reasonable efforts to transmit to the applicable Participating
Fund payment in Federal Funds by 12:00 noon Eastern time on the
Business Day the Participating Fund receives the notice of the order
pursuant to Section 3.5. Each applicable Participating Fund will
execute such orders at the applicable net asset value per share
determined as of the close of trading on the effective trade date if
the Participating Fund receives payment in Federal Funds by 12:00
midnight Eastern time on the Business Day the Participating Fund
receives the notice of the order pursuant to Section 3.5. If payment in
Federal Funds for any purchase is not received or is received by a
Participating Fund after 12:00 noon Eastern time on such Business Day,
Insurance Company shall promptly, upon each applicable Participating
Fund's request, reimburse the respective Participating Fund for any
charges, costs, fees, interest or other expenses incurred by the
Participating Fund in connection with any advances to, or borrowings or
overdrafts by, the Participating Fund, or any similar expenses incurred
by the Participating Fund, as a result of portfolio transactions
effected by the Participating Fund based upon such purchase request. If
Insurance Company's order requests the redemption of any Participating
Fund's shares valued at or greater than $1 million dollars, the
Participating Fund will wire such amount to Insurance Company within
seven days of the order.
3.9 Each Participating Fund has the obligation to ensure that its shares are
registered with applicable federal agencies at all times.
3.10 Each Participating Fund will confirm each purchase or redemption order made
by Insurance Company. Transfer of Participating Fund shares will
be by book entry only. No share certificates will be issued to Insurance
Company. Insurance Company will record shares ordered from a Participating Fund
in an appropriate title for the corresponding account.
3.11 Each Participating Fund shall credit Insurance Company with the appropriate
number of shares.
3.12 On each ex-dividend date of a Participating Fund or, if not a Business Day,
on the first Business Day thereafter, each Participating Fund shall
communicate to Insurance Company the amount of dividend and capital gain, if
any, per share. All dividends and capital gains shall be automatically
reinvested in additional shares of the applicable Participating Fund at the
net asset value per share on the ex-dividend date. Each Participating Fund
shall, on the day after the ex-dividend date or, if not
a Business Day, on the first Business Day thereafter, notify Insurance
Company of the number of shares so issued.
ARTICLE IV 4.
STATEMENTS AND REPORTS
4.1 Each Participating Fund shall provide monthly statements of account as of
the end of each month for all of Insurance Company's accounts by the fifteenth
(15th) Business Day of the following month.
4.2 Each Participating Fund shall distribute to Insurance Company copies of the
Participating Fund's Prospectuses, proxy materials, notices, periodic
reports and other printed materials (which the Participating Fund customarily
provides to its shareholders) in quantities as Insurance Company may reasonably
request for distribution to each Contractholder and Participant.
4.3 Each Participating Fund will provide to Insurance Company at least one
complete copy of all registration statements, Prospectuses, reports, proxy
statements, sales literature and other promotional materials, applications for
exemptions, requests for no-action letters, and all amendments to any of the
above, that relate to the Participating Fund or its shares, contemporaneously
with the filing of such document with the Commission or other regulatory
authorities.
4.4 Insurance Company will provide to each Participating Fund at least one copy
of all registration statements, Prospectuses, reports, proxy statements, sales
literature and other promotional materials, applications for exemptions,
requests for no-action letters, and all amendments to any of the above, that
relate to the Contracts or the Separate Account, contemporaneously with the
filing of such document with the Commission.
<PAGE>
ARTICLE V 5.
EXPENSES
5.1 The charge to each Participating Fund for all expenses and costs of the
Participating Fund, including but not limited to management fees, administrative
expenses and legal and regulatory costs, will be made in the determination of
the Participating Fund's daily net asset value per share so as
to accumulate to an annual charge at the rate set forth in the Participating
Fund's Prospectus. Excluded from the expense limitation described herein shall
be brokerage commissions and transaction fees and
extraordinary expenses.
5.2 Except as provided in this Article V and, in particular in the next
sentence, Insurance Company shall not be required to pay directly any expenses
of any Participating Fund or expenses relating to the distribution of its
shares. Insurance Company shall pay the following expenses or costs:
a. Such amount of the production expenses of any Participating Fund
materials, including the cost of printing a Participating Fund's Prospectus, or
marketing materials for prospective Insurance Company Contractholders and
Participants as Dreyfus and Insurance Company shall agree from time to time.
b. Distribution expenses of any Participating Fund materials or
marketing materials for prospective Insurance Company Contractholders and
Participants.
c. Distribution expenses of any Participating Fund materials or
marketing materials for Insurance Company Contractholders and Participants.
Except as provided herein, all other expenses of each Participating
Fund shall not be borne by Insurance Company.
ARTICLE VI
6. EXEMPTIVE RELIEF
6.1 Insurance Company has reviewed a copy of (i) the amended order dated
December 31, 1997 of the Securities and Exchange Commission under
Section 6(c) of the Act with respect to Dreyfus Variable Investment
Fund and Dreyfus Life and Annuity Index Fund, Inc.; and (ii) the order
dated February 5, 1998 of the Securities and Exchange Commission under
Section 6(c) of the Act with respect to The Dreyfus Socially
Responsible Growth Fund, Inc. and Dreyfus Investment Portfolios, and,
in particular, has reviewed the conditions to the relief set forth in
each related Notice. As set forth therein, if Dreyfus Variable
Investment Fund, Dreyfus Life and Annuity Index Fund, Inc., The Dreyfus
Socially Responsible Growth Fund, Inc. or Dreyfus Investment Portfolios
is a Participating Fund, Insurance Company agrees, as applicable, to
report any potential or existing conflicts promptly to the respective
Board of Dreyfus Variable Investment Fund, Dreyfus Life and Annuity
Index Fund, Inc., The Dreyfus Socially Responsible Growth Fund, Inc.
and/or Dreyfus Investment Portfolios, and, in particular, whenever
contract voting instructions are disregarded, and recognizes that it
will be responsible for assisting each applicable Board in carrying out
its responsibilities under such application. Insurance Company agrees
to carry out such responsibilities with a view to the interests of
existing Contractholders.
6.2 If a majority of the Board, or a majority of Disinterested Board Members,
determines that a material irreconcilable conflict exists with regard to
Contractholder investments in a Participating Fund, the Board shall
give prompt notice to all Participating Companies and any other Participating
Fund. If the Board determines that Insurance Company is responsible for causing
or creating said conflict, Insurance Company shall at its sole cost and
expense, and to the extent reasonably practicable (as
determined by a majority of the Disinterested Board Members), take such
action as is necessary to remedy or eliminate the irreconcilable material
conflict. Such necessary action may include, but shall not be limited to:
a. Withdrawing the assets allocable to the Separate Account from the
Participating Fund and reinvesting such assets in another Participating Fund (if
applicable) or a different investment medium, or
submitting the question of whether such segregation should be implemented to
a vote of all affected Contractholders; and/or
b. Establishing a new registered management investment company.
6.3 If a material irreconcilable conflict arises as a result of a decision by
Insurance Company to disregard Contractholder voting instructions and said
decision represents a minority position or would preclude a majority vote by all
Contractholders having an interest in a Participating Fund, Insurance Company
may be required, at the Board's election, to withdraw the investments of the
Separate Account in that Participating Fund.
6.4 For the purpose of this Article, a majority of the Disinterested Board
Members shall determine whether or not any proposed action adequately remedies
any irreconcilable material conflict, but in no event will any Participating
Fund be required to bear the expense of establishing a new funding medium for
any Contract. Insurance Company shall not be required by this Article to
establish a new funding medium for any Contract if an offer to
do so has been declined by vote of a majority of the
Contractholders materially adversely affected by the irreconcilable
material conflict.
6.5 No action by Insurance Company taken or omitted, and no action by the
Separate Account or any Participating Fund taken or omitted as a result of any
act or failure to act by Insurance Company pursuant to this Article VI, shall
relieve Insurance Company of its obligations under, or otherwise affect the
operation of, Article V.
ARTICLE VII 7.
VOTING OF PARTICIPATING FUND SHARES
7.1 Each Participating Fund shall provide Insurance Company with copies, at no
cost to Insurance Company, of the Participating Fund's proxy material, reports
to shareholders and other communications to shareholders in such quantity as
Insurance Company shall reasonably require for distributing to Contractholders
or Participants.
Insurance Company shall:
(a) solicit voting instructions from Contractholders or
Participants on a timely basis and in accordance with applicable law;
(b) vote the Participating Fund shares in accordance with instructions
received from Contractholders or Participants; and
(c) vote the Participating Fund shares for which no instructions have
been received in the same proportion as Participating Fund shares for which
instructions have been received.
Insurance Company agrees at all times to vote its General Account
shares in the same proportion as the Participating Fund shares for which
instructions have been received from Contractholders or Participants.
Insurance Company further agrees to be responsible for assuring that voting
the Participating Fund shares for the Separate Account is conducted in a manner
consistent with other Participating Companies.
7.2 Insurance Company agrees that it shall not, without the prior written
consent of each applicable Participating Fund and Dreyfus, solicit, induce or
encourage Contractholders to (a) change or supplement the Participating Fund's
current investment adviser or (b) change, modify, substitute, add to or delete
from the current investment media for the Contracts.
ARTICLE VIII 8.
MARKETING AND REPRESENTATIONS
8.1 Each Participating Fund or its underwriter shall periodically furnish
Insurance Company with the following documents, in quantities as Insurance
Company may reasonably request:
a. Current Prospectus and any supplements thereto; and
b. Other marketing materials.
Expenses for the production of such documents shall be borne by
Insurance Company in accordance with Section 5.2 of this Agreement.
8.2 Insurance Company shall designate certain persons or entities that shall
have the requisite licenses to solicit applications for the sale of Contracts.
No representation is made as to the number or amount of Contracts that are to be
sold by Insurance Company. Insurance Company shall make reasonable efforts to
market the Contracts and shall comply with all applicable federal and state laws
in connection therewith.
8.3 Insurance Company shall furnish, or shall cause to be furnished, to each
applicable Participating Fund or its designee, each piece of sales
literature or other promotional material in which the Participating Fund, its
investment adviser or the administrator is named, at least fifteen Business Days
prior to its use. No such material shall be used unless the Participating Fund
or its designee approves such material. Such approval (if given) must be in
writing and shall be presumed not given if
not received within ten Business Days after receipt of such material.
Each applicable Participating Fund or its designee, as the case may be, shall
use all reasonable efforts to respond within ten days of receipt.
8.4 Insurance Company shall not give any information or make any representations
or statements on behalf of a Participating Fund or concerning a Participating
Fund in connection with the sale of the Contracts other than the information or
representations contained in the registration statement or Prospectus of, as may
be amended or supplemented from time to time, or in reports or proxy statements
for, the applicable Participating Fund, or in sales
literature or other promotional material approved by
the applicable Participating Fund.
8.5 Each Participating Fund shall furnish, or shall cause to be furnished, to
Insurance Company, each piece of the Participating Fund's sales literature
or other promotional material in which Insurance Company or the Separate Account
is named, at least fifteen Business Days prior to its use. No such material
shall be used unless Insurance Company approves such material. Such approval (if
given) must be in writing and shall be presumed not given if not received within
ten Business Days after receipt
of such material. Insurance Company shall use all reasonable efforts
to respond within ten days of receipt.
8.6 Each Participating Fund shall not, in connection with the sale of
Participating Fund shares, give any information or make any representations on
behalf of Insurance Company or concerning Insurance Company, the Separate
Account, or the Contracts other than the information or representations
contained in a registration statement or prospectus for the Contracts, as may
be amended or supplemented from time to time, or in published reports for the
Separate Account that are in the public domain or
approved by Insurance Company for distribution to Contractholders or
Participants, or in sales literature or other promotional material approved by
Insurance Company.
8.7 For purposes of this Agreement, the phrase "sales literature or other
promotional material" or words of similar import include, without
limitation, advertisements (such as material published, or designed for
use, in a newspaper, magazine or other periodical, radio, television,
telephone or tape recording, videotape display, signs or billboards,
motion pictures or other public media), sales literature (such as any
written communication distributed or made generally available to
customers or the public, including brochures, circulars, research
reports, market letters, form letters, seminar texts, or reprints or
excerpts of any other advertisement, sales literature, or published
article), educational or training materials or other communications
distributed or made generally available to some or all agents or
employees, registration statements, prospectuses, statements of
additional information, shareholder reports and proxy materials, and
any other material constituting sales literature or advertising under
National Association of Securities Dealers, Inc. rules, the Act or the
1933 Act.
ARTICLE IX 9.
INDEMNIFICATION
9.1 Insurance Company agrees to indemnify and hold harmless each Participating
Fund, Dreyfus, each respective Participating Fund's investment adviser and
sub-investment adviser (if applicable), each respective Participating Fund's
distributor, and their respective affiliates, and each of their directors,
trustees, officers, employees, agents and each person, if any, who controls or
is associated with any of the foregoing entities or persons within the meaning
of the 1933 Act (collectively, the
"Indemnified Parties" for purposes of Section 9.1), against any and all
losses, claims, damages or liabilities joint or several (including any
investigative, legal and other expenses reasonably incurred in connection with,
and any amounts paid in settlement of, any action, suit or proceeding or any
claim asserted) for which the Indemnified Parties may become subject, under the
1933 Act or otherwise, insofar as such losses, claims, damages or liabilities
(or actions in respect to thereof) (i) aris
out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in information furnished by Insurance
Company for use in the registration statement or Prospectus or sales literature
or advertisements of the respective Participating Fund or with respect to the
Separate Account or Contracts, or arise out of or are based upon the omission
or the alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements
therein not misleading; (ii) arise out of or as a result of conduct,
statements or representations (other than statements or representations
contained in the Prospectus and sales literature or advertisements of the
respective Participating Fund) of Insurance Company or its agents, with respect
to the sale and distribution of Contracts for which the respective
Participating Fund's shares are an underlying investment; (iii) arise out of the
wrongful conduct of Insurance Company or persons under its
control with respect to the sale or distribution of the Contracts or
the respective Participating Fund's shares; (iv) arise out of Insurance
Company's incorrect calculation and/or untimely reporting of net purchase or
redemption orders; or (v) arise out of any breach by Insurance Company of a
material term of this Agreement or as a result of any failure by Insurance
Company to provide the services and furnish the materials or to make any
payments provided for in this Agreement. Insurance Company
will reimburse any Indemnified Party in connection with investigating
or defending any such loss, claim, damage, liability or action; provided,
however, that with respect to clauses (i) and (ii) above Insurance Company will
not be liable in any such case to the extent that any such loss, claim,
damage or liability arises out of or is based upon any untrue statement or
omission or alleged omission made in such registration statement, prospectus,
sales literature, or advertisement in conformity
with written information furnished to Insurance Company by the
respective Participating Fund specifically for use therein. This indemnity
agreement will be in addition to any liability which Insurance Company may
otherwise have.
9.2 Each Participating Fund severally agrees to indemnify and hold harmless
Insurance Company and each of its directors, officers, employees,
agents and each person, if any, who controls Insurance Company within
the meaning of the 1933 Act against any losses, claims, damages or
liabilities to which Insurance Company or any such director, officer,
employee, agent or controlling person may become subject, under the
1933 Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) (1) arise out of or are
based upon any untrue statement or alleged untrue statement of any
material fact contained in the registration statement or Prospectus or
sales literature or advertisements of the respective Participating
Fund; (2) arise out of or are based upon the omission to state in the
registration statement or Prospectus or sales literature or
advertisements of the respective Participating Fund any material fact
required to be stated therein or necessary to make the statements
therein not misleading; or (3) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact
contained in the registration statement or Prospectus or sales
literature or advertisements with respect to the Separate Account or
the Contracts and such statements were based on information provided to
Insurance Company by the respective Participating Fund; and the
respective Participating Fund will reimburse any legal or other
expenses reasonably incurred by Insurance Company or any such director,
officer, employee, agent or controlling person in connection with
investigating or defending any such loss, claim, damage, liability or
action; provided, however, that the respective Participating Fund will
not be liable in any such case to the extent that any such loss, claim,
damage or liability arises out of or is based upon an untrue statement
or omission or alleged omission made in such registration statement,
Prospectus, sales literature or advertisements in conformity with
written information furnished to the respective Participating Fund by
Insurance Company specifically for use therein. This indemnity
agreement will be in addition to any liability which the respective
Participating Fund may otherwise have.
9.3 Each Participating Fund severally shall indemnify and hold Insurance
Company harmless against any and all liability, loss, damages, costs or
expenses which Insurance Company may incur, suffer or be required to
pay due to the respective Participating Fund's (1) incorrect
calculation of the daily net asset value, dividend rate or capital gain
distribution rate; (2) incorrect reporting of the daily net asset
value, dividend rate or capital gain distribution rate; and (3)
untimely reporting of the net asset value, dividend rate or capital
gain distribution rate; provided that the respective Participating Fund
shall have no obligation to indemnify and hold harmless Insurance
Company if the incorrect calculation or incorrect or untimely reporting
was the result of incorrect information furnished by Insurance Company
or information furnished untimely by Insurance Company or otherwise as
a result of or relating to a breach of this Agreement by Insurance
Company.
9.4 Promptly after receipt by an indemnified party under this Article of
notice of the commencement of any action, such indemnified party will,
if a claim in respect thereof is to be made against the indemnifying
party under this Article, notify the indemnifying party of the
commencement thereof. The omission to so notify the indemnifying party
will not relieve the indemnifying party from any liability under this
Article IX, except to the extent that the omission results in a failure
of actual notice to the indemnifying party and such indemnifying party
is damaged solely as a result of the failure to give such notice. In
case any such action is brought against any indemnified party, and it
notified the indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate therein and, to the
extent that it may wish, assume the defense thereof, with counsel
satisfactory to such indemnified party, and to the extent that the
indemnifying party has given notice to such effect to the indemnified
party and is performing its obligations under this Article, the
indemnifying party shall not be liable for any legal or other expenses
subsequently incurred by such indemnified party in connection with the
defense thereof, other than reasonable costs of investigation.
Notwithstanding the foregoing, in any such proceeding, any indemnified
party shall have the right to retain its own counsel, but the fees and
expenses of such counsel shall be at the expense of such indemnified
party unless (i) the indemnifying party and the indemnified party shall
have mutually agreed to the retention of such counsel or (ii) the named
parties to any such proceeding (including any impleaded parties)
include both the indemnifying party and the indemnified party and
representation of both parties by the same counsel would be
inappropriate due to actual or potential differing interests between
them. The indemnifying party shall not be liable for any settlement of
any proceeding effected without its written consent.
A successor by law of the parties to this Agreement shall be entitled
to the benefits of the indemnification contained in this Article IX. The
provisions of this Article IX shall survive termination of this Agreement.
9.5 Insurance Company shall indemnify and hold each respective Participating
Fund, Dreyfus and sub-investment adviser of the Participating Fund harmless
against any tax liability incurred by the Participating Fund under Section 851
of the Code arising from purchases or redemptions by Insurance Company's General
Accounts or the account of its affiliates.
ARTICLE X
COMMENCEMENT AND TERMINATION
10.1 This Agreement shall be effective as of the date hereof and shall continue
in force until terminated in accordance with the provisions herein.
10.2 This Agreement shall terminate without penalty:
a. As to any Participating Fund, at the option of Insurance Company or
the Participating Fund at any time from the date hereof upon 180 days' notice,
unless a shorter time is agreed to by the respective Participating
Fund and Insurance Company;
b. As to any Participating Fund, at the option of Insurance Company, if
shares of that Participating Fund are not reasonably available to meet the
requirements of the Contracts as determined by Insurance Company. Prompt notice
of election to terminate shall be furnished by Insurance Company,
said termination to be effective ten days after receipt of notice unless the
Participating Fund makes available a sufficient number of shares to meet the
requirements of the Contracts within said ten-
day period;
c. As to a Participating Fund, at the option of Insurance Company, upon
the institution of formal proceedings against that Participating Fund by the
Commission, National Association of Securities Dealers or any other regulatory
body, the expected or anticipated ruling, judgment or outcome of which would, in
Insurance Company's reasonable judgment, materially impair that Participating
Fund's ability to meet and perform the Participating Fund's obligations and
duties hereunder. Prompt notice
of election to terminate shall be furnished by Insurance
Company with said termination to be effective upon receipt of notice;
d. As to a Participating Fund, at the option of each Participating
Fund, upon the institution of formal proceedings against
Insurance Company by the Commission, National Association of Securities Dealers
or any other regulatory body, the expected or anticipated ruling, judgment or
outcome of which would, in the Participating Fund's reasonable judgment,
materially impair Insurance Company's ability to meet and perform Insurance
Company's obligations and duties hereunder. Prompt notice of
election to terminate shall be furnished by such Participating
Fund with said termination to be effective upon receipt of notice;
e. As to a Participating Fund, at the option of that
Participating Fund, if the Participating Fund shall determine,
in its sole judgment reasonably exercised in good faith, that
Insurance Company has suffered a material adverse change in
its business or financial condition or is the subject of
material adverse publicity and such material adverse change or
material adverse publicity is likely to have a material
adverse impact upon the business and operation of that
Participating Fund or Dreyfus, such Participating Fund shall
notify Insurance Company in writing of such determination and
its intent to terminate this Agreement, and after considering
the actions taken by Insurance Company and any other changes
in circumstances since the giving of such notice, such
determination of the Participating Fund shall continue to
apply on the sixtieth (60th) day following the giving of such
notice, which sixtieth day shall be the effective date of
termination;
f. As to a Participating Fund, upon termination of the Investment
Advisory Agreement between that Participating Fund and Dreyfus or its successors
unless Insurance Company specifically approves the selection of a new
Participating Fund investment adviser. Such Participating Fund shall promptly
furnish notice of such termination to Insurance Company;
g. As to a Participating Fund, in the event that Participating Fund's
shares are not registered, issued or sold in accordance with applicable
federal law, or such law precludes the use of such shares as the underlying
investment medium of Contracts issued or to be issued by Insurance Company.
Termination shall be effective immediately as to that Participating Fund only
upon such occurrence without notice;
h. At the option of a Participating Fund upon a determination by its
Board in good faith that it is no longer advisable and in the best
interests of shareholders of that Participating Fund to continue to operate
pursuant to this Agreement. Termination pursuant to this Subsection (h) shall be
effective upon notice by such Participating Fund to Insurance Company of such
termination;
i. At the option of a Participating Fund if the Contracts cease to
qualify as annuity contracts or life insurance policies, as applicable, under
the Code, or if such Participating Fund reasonably believes that the Contracts
may fail to so qualify;
j. At the option of any party to this Agreement, upon another party's
breach of any material provision of this Agreement;
k. At the option of a Participating Fund, if the Contracts are not
registered, issued or sold in accordance with applicable federal and/or
state law; or
l. Upon assignment of this Agreement, unless made with the written
consent of every other non-assigning party.
Any such termination pursuant to Section 10.2a, 10.2d, 10.2e, 10.2f or
10.2k herein shall not affect the operation of Article V of this Agreement.
Any termination of this Agreement shall not affect the operation of Article IX
of this Agreement.
10.3 Notwithstanding any termination of this Agreement pursuant to Section
10.2 hereof, each Participating Fund and Dreyfus may, at the option of
the Participating Fund, continue to make available additional shares of
that Participating Fund for as long as the Participating Fund desires
pursuant to the terms and conditions of this Agreement as provided
below, for all Contracts in effect on the effective date of termination
of this Agreement (hereinafter referred to as "Existing Contracts").
Specifically, without limitation, if that Participating Fund and
Dreyfus so elect to make additional Participating Fund shares
available, the owners of the Existing Contracts or Insurance Company,
whichever shall have legal authority to do so, shall be permitted to
reallocate investments in that Participating Fund, redeem investments
in that Participating Fund and/or invest in that Participating Fund
upon the making of additional purchase payments under the Existing
Contracts. In the event of a termination of this Agreement pursuant to
Section 10.2 hereof, such Participating Fund and Dreyfus, as promptly
as is practicable under the circumstances, shall notify Insurance
Company whether Dreyfus and that Participating Fund will continue to
make that Participating Fund's shares available after such termination.
If such Participating Fund shares continue to be made available after
such termination, the provisions of this Agreement shall remain in
effect and thereafter either of that Participating Fund or Insurance
Company may terminate the Agreement as to that Participating Fund, as
so continued pursuant to this Section 10.3, upon prior written notice
to the other party, such notice to be for a period that is reasonable
under the circumstances but, if given by the Participating Fund, need
not be for more than six months.
10.4 Termination of this Agreement as to any one Participating Fund shall not be
deemed a termination as to any other Participating Fund unless Insurance
Company or such other Participating Fund, as the case may be, terminates this
Agreement as to such other Participating Fund in accordance with this Article X.
ARTICLE XI 11.
AMENDMENTS
11.1 Any other changes in the terms of this Agreement, except for the addition
or deletion of any Participating Fund as specified in Exhibit A, shall be made
by agreement in writing between Insurance Company and each
respective Participating Fund.
ARTICLE XII
NOTICE
12.1 Each notice required by this Agreement shall be given by certified mail,
return receipt requested, to the appropriate parties at the following addresses:
Insurance Company: Transamerica Life Insurance
Company of New York
100 Manhantanville Road
Purchase, New York 10577
Participating Funds: Dreyfus Variable Investment Fund
c/o Premier Mutual Fund Services, Inc.
200 Park Avenue
New York, New York 10166
Attn: Vice President and Assistant Secretary
with copies to: [Name of Fund]
c/o The Dreyfus Corporation
200 Park Avenue
New York, New York 10166
Attn: Mark N. Jacobs, Esq.
Lawrence B. Stoller, Esq.
Stroock & Stroock & Lavan
180 Maiden Lane
New York, New York 10038-4982
Attn: Lewis G. Cole, Esq.
Stuart H. Coleman, Esq.
Notice shall be deemed to be given on the date of receipt by the
addresses as evidenced by the return receipt.
ARTICLE XIII
12.
MISCELLANEOUS
13.1 This Agreement has been executed on behalf of each Fund by the undersigned
officer of the Fund in his capacity as an officer of the Fund.
The obligations of this Agreement shall only be binding upon the assets and
property of the Fund and shall not be binding upon any director, trustee,
officer or shareholder of the Fund individually. It is agreed that the
obligations of the Funds are several and not joint, that no Fund shall be liable
for any amount owing by another Fund and that the Funds
have executed one instrument for convenience only.
ARTICLE XIV 13.
LAW
14.1 This Agreement shall be construed in accordance with the internal laws of
the State of New York, without giving effect to principles of conflict
of laws.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement to be duly
executed and attested as of the date first above written.
Transamerica Life Insurance
Company of New York
By:
Its:
Attest:_____________________
DREYFUS VARIABLE INVESTMENT FUND
By:
Its:
Attest:_____________________
<PAGE>
EXHIBIT A
LIST OF PARTICIPATING FUNDS
<PAGE>
Exhibit (10) (b) Consent of Independent Auditors. 1/2
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CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Accountants" in
Pre-Effective Amendment No. 1 under the Securities Act of 1933 and Pre-Effective
Amendment No. 1 under the Investment Company Act of 1940 to the Registration
Statement (Form N-4 No. 333-47219) and related Prospectus and Statement of
Additional Information of Separate Account VA-6NY of Transamerica Life Insurance
COmpany of New YOrk and to the use of our report dated January 23, 1998 with
respect to the financial statements of Transamerica Life Insurance Company of
New York included in the Statement of Additional Information.
/s/Ernst & Young LLP
Los Angeles, California
June 4, 1998
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Exhibit (15) Power of Attorney
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POWER OF ATTORNEY
The undersigned director of Transamerica Life Insurance Company of New
York, a New York corporation (the "Company"), hereby constitutes and appoints
Aldo Davanzo, James W. Dederer, David M. Goldstein, David E. Gooding, and
William M. Hurst and each of them (with full power to each of them to act
alone), his true and lawful attorney-in-fact and agent, with full power of
substitution to each, for him and on his behalf and in his name, place and
stead, to execute and file any of the documents referred to below relating to
registrations under the Securities Act of 1933 and under the Investment Company
Act of 1940 with respect to any life insurance and annuity policies:
registration statements on any form or forms under the Securities Act of 1933
and under the Investment Company Act of 1940, and any and all amendments and
supplements thereto, with all exhibits and all instruments necessary or
appropriate in connection therewith, each of said attorneys-in-fact and agents
and his or their substitutes being empowered to act with or without the others
or other, and to have full power and authority to do or cause to be done in the
name and on behalf of the undersigned each and every act and thing requisite and
necessary or appropriate with respect thereto to be done in and about the
premises in order to effectuate the same, as fully to all intents and purposes
as the undersigned might or could do in person, hereby ratifying and confirming
all that said attorneys-in-fact and agents, or any of them, may do or cause to
be done by virtue thereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand, this
_____ day of June, 1998.
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Thomas O'Neill
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